- NOT FOR DISTRIBUTION JUDGMENT No. a IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY ) ) ) ) No. ACT of G 71 of 1986 ) ) ) GENERAL DIVISION BETWEEN: MOGDON INVESTMENTS PrY LIMITED Applicant AND: PAUL RICHARD TARLING and SHIRLEY ANNE TARLING Respondents MINUTE OF ORDER JUDGE MAKING ORDER : Neaves J. DATE OF ORDER : 10 September 1987 WHERE MADE ~~, : Canberra THE COURT ORDERS THAT: 1. The application be dismissed. 2. The applicant pay the costs of the respondents of the application. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. 14 SEP 1987 FEDERAL cou; AUSTRALIA. OF PRINCIP, REGISTRY PN eee, ene eee eee ser ge eee ae oe ri ¢ Ne oan a IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. ACT of G 71 of 1986 DISTRICT REGISTRY wewvevewrw GENERAL DIVISION BETWEEN : MOGDON INVESTMENTS PTY LIMITED Applicant AND: PAUL RICHARD TARLING and SHIRLEY ANNE TARLING Respondents CORAM: Neaves J. DATE: 10 September 1987 REASONS FOR JUDGMENT By an application filed in this Court on 10 July 1987 Mogdon Investments Pty Limited ("Mogdon") seeks "leave to appeal from the decisions of his Honour Mr Justice Miles given in the Supreme Court of the Australian Capital Territory on 17 October 1986". ~ The respondents to the application are Paul Richard Tarling and Shirley Anne Tarling ("the Tarlings"). A notice of appeal from those decisions had been filed on behalf of Mogdon on 6 November 1986 on the basis that leave to appeal Was unnecessary. However, after the competency of the appeal as of right was questioned, the application for leave to appeal was filed. Although counsel for Mogdon, 1n opening the matter, suggested that there was a preliminary question whether leave to appeal was necessary, no substantive argument was presented on that issue. I have no doubt that, if an appeal lies in the 0 ome mow « ' Serer n st, mere ™ > vA circumstances, 1t lies only with the leave of this Court or a Judge thereof (Federal Court of Australia Act 1976 (Cth), S.24(1A)). The salient features of the history of the matter are as follows. On 22 November 1985 an agreement was entered into between Mogdon and the Tarlings for the sale by Mogdon and the purchase by the Tarlings as joint tenants of the unexpired residue of a lease from the Commonwealth of Australia of certain land known as Block 26, Section 16, Chisholm in the Australian Capital Territory. By the terms of the agreement Mogdon undertook to erect on the land a dwelling-house in accordance with an annexed plan and to include in the improvements the inclusions and basic features set out in an attached list. The consideration payable under the agreement was $86,350 payable as to $4,300 by way of deposit and as to $82,050 on completion. The deposit was paid to Reg Daly Real Estate Pty Limited as stakeholder. On "Tapia 1986 the Tarlings gave notice to Mogdon under cl.19 of the agreement that it was in default in the observance or performance of its obligations under the agreement in that two bedrooms and the study had been constructed with smaller floor areas than specified in the plan annexed to the agreement. Mogdon was required to rectify the defaults within twenty-eight days. It did not do so. By letter dated 4 April 1986 Mogdon's solicitors informed the solicitor acting for the Tarlings that Mogdon was sp pene eer ay sanseepineienenhdaanaemendaeindemed aenasener eet te 3. willing to allow the Tarlings a reduction in the contract price of $2,000 by way of compensation by reason of the dwelling not complying strictly with the plan. That offer, which was not accepted, was withdrawn by Mogdon by letter dated 15 May 1986. Accompanying that letter, though bearing date 16 May 1986, was a notice to the Tarlings pursuant to cl.19 of the agreement requiring them to complete the agreement at 2.30 p.m. on 4 June 1986. The notice made no reference to any reduction in the contract price. The Tarlings did not comply with the notice of 16 May 1986 and on 20 June 1986 Mogdon served on the Tarlings a notice under cl.20 of the agreement purporting to terminate the agreement and forfeiting the deposit paid thereunder. Clauses 19 and 20 of the agreement on which the parties purported to rely were in the following terms: "19, Notice to Complete and Default Notice (1) Where {a) a date for completion is set out in or becomes ascertained under Schedule Item 14 and (b) completion is not effected in accordance with sub-clause 2(3) either party may at any time after such date for completion give to the other party a notice in writing to complete this agreement ("notice to complete"). (2) A notice to complete shall (a) appoint a time during business hours and a date being not less Re eee ah aan a en rs wpe coer rey vrey (3) (4) (5) a. than 14 days after the service of the notice (excluding the date of service) within which and a place in the Territory at which to complete this agreement and (b) state that ait is given pursuant to this clause. Notwithstanding any rule of law or equity to the contrary a party is entitled to give a notice to complete if (a) at the time the notice is given he is not in default under this agreement and (b) at the time completion is due he 1s ready willing and able to complete or could do so but for some default or omission of the other party. Upon service of a notice to complete the period of time therein limited for completion shall be an essential term of this agreement. Where one party 1s in default in the observance or performance of any obligation on him under or by virtue of this agreement (other than failure to complete) the other party may at any time thereafter give to the party in default a notice in writing to rectify the default ("default notice"). (6). A default notice shall (7) (8) (a) specify the default and call upon ' the party to rectify the default within a period being not less than 7 days after the service of the notice (excluding the date of service) and (b) state that it is given pursuant to this clause. Notwithstanding any rule of law or equity to the contrary a party is entitled to give a default notice if at the time the notice is given he is not in default under this agreement. Upon service of default notice the period of time therein limited to rectify the specified default shall be an essential term of this agreement. ae te Se ee I a ee re 2 coed aS wa arekdel ha yr eee . - t try v ve TIS = " vs at. ior Sern ct are pooper rere . (9) Where one party does not comply with the terms of an effective default notice or notice to complete served by the other under this clause then the provisions of clause 20 shall apply. (10) The party serving a notice under this clause may at the request or with the consent of the other party extend the term of the notice for one or more specifically stated periods of time and thereupon the term of the notice shall be deemed to expire on the last day of such extended period or periods and the notice shall operate as though this clause stipulated such extended period of notice in lieu of that stated above and time shall be essential accordingly. 20. Termination of Agreement Buyer in default (1) Subject to the provisions of clause 19, if the Buyer defaults in the observance or performance of any obligation imposed on him under or by virtue of this agreement the Seller may forfeit the deposit paid by the Buyer, except so much of 1t as exceeds 10% of the Total Purchase Price. The Seller may terminate this agreement and thereafter may either (a) sue the Buyer for breach of contract, or ~(b) resell the Crown Lease and Goods (if any) as owner. (2) In the event that the Seller elects to resell pursuant to paragraph (1)(b) the deficiency (if any) arising on such resale and all expenses of and incidental to such resale or attempted resale and the Buyer's default shall be recoverable by the Seller from the Buyer as liquidated damages provided that proceedings for the recovery thereof be commenced within 12 months of the termination of this agreement. (3) The Seller may retain any money paid by the Buyer on account of the sale, other than the deposit forfeited under this clause, as security for any damages liquidated or otherwise awarded to him - mee See nr) pone - nas ea mtg se te rrr eeer iaeaty aw? 6. for the Buyer's default provided that proceedings for recovery of such damages are commenced within 12 months of the termination of this agreement. (4) If the Seller terminates the agreement under this clause the Seller or his solicitor may notify the Stakeholder in writing accordingly and the Stakeholder shall thereupon be authorised to pay the deposit forfeited under this clause to the Seller or his solicitor as stated in that notice. Seller in default (5) Subject to the provisions of clause 19, if the Seller defaults in the observance or performance of any obligation imposed on him under or by virtue of this agreement the Buyer may elect either (a) to enforce against the Seller without any further or other notice under this agreement such rights and remedies as may he available to the Buyer or (b) to terminate this agreement and without prejudice to any right of the Buyer to damages, to give notice in writing to the Seller and the Stakeholder forthwith to repay to the Buyer any deposit and any money paid on account of the Total Purchase Price but on compliance with that notice the Buyer shall no longer be entitled ~~ to any right to specific performance of this agreement and ' shall return forthwith all papers in his possession belonging to the Seller." On 30 June 1986 the Tarlings, as plaintiffs, commenced proceedings in the Supreme Court of the Australian Capital Territory by way of originating summons naming Mogdon as defendant. The summons sought the following declarations and orders: 7. "1. A declaration that the Notice to Complete dated 16 May, 1986 given by the defendant to the plaintiffs is invalid and of no effect. 2. A declaration that the plaintiffs are entitled to terminate the Agreement for Sale dated 22 November, 1985 made between the plaintiffs as buyers and the defendant as seller and thereupon to recover the deposit paid by them and damages. 3. In the alternative to Order 2 herein, a declaration that the plaintiffs are entitled to rescind the said Agreement for Sale and thereupon to recover the deposit paid by them. 4. In the alternative to Orders 2 and 3 herein, a declaration that the plaintiffs are entitled to damages. 5. An order that the matter be referred to the Registrar for an inquiry to assess and certify the quantum of damages." Affidavits were filed on behalf of the Tarlings and Mogdon and the originating summons came on for hearing before Miles C.J. on 1 August 1986. At the conclusion of the hearing the learned Judge reserved his decision. It is common ground ~that Mogdon did not disclose to the Court the fact that on the previous day, 31 July 1986, it had entered unto an agreement with Valdis Luks and Virginia Luks for the sale of the subject property. On 11 September 1986 Miles C.J. announced his findings and rulings upon the matters raised by the originating summons and published his reasons. His Honour found - meer ao pre ot en nee oe 8. (a) that the Tarlings were not entitled to give a notice of default pursuant to c1.19 of the agreement as, on the evidence, they had not established, in terms of the relevant clauses of the agreement, that Mogdon had failed to complete the construction of the dwelling in a good and workmanlike manner substantially in accordance with the plan; (b) that the Tarlings were entitled to damages in respect of the breach by Mogdon (not being a breach of a substantial nature) of its obligation to construct the dwelling in accordance with the plan, his Honour, however, expressing no view as to the quantum of such damages; and (c) that the Tarlings were not entitled to terminate or rescind the agreement nor to a declaration that the notice to complete given by Mogdon on 16 May 1986 was invalid. His Honour concluded his reasons as follows: "T propose to make declarations that the plaintiffs are entitled to damages and that the plaintiffs are obliged to comply with the notice to complete subject to the amount of damages being agreed or assessed and an appropriate deduction made from the balance of the purchase price. There is a further order sought that the matter be referred to the Registrar for an enquiry as' to damages, but I remain to he convinced that that is an appropriate way of ordering the continuation of the proceedings. In the light of the above, I make no formal orders at this stage but give liberty to the parties to bring in short minutes to give effect to my rulings, or to present further argument on the effect of the findings I have made." The matter was stood over to a date to be fixed. a ' aay "es lee weet ee eer SI rn er te meee wets a me ' 2 eh va wrt gr eer ee No steps have been taken by any party pursuant to the liberty so reserved and no formal orders to give effect to his Honour's findings have been made. His Honour was not informed prior to 11 September 1986 or on that day of the agreement between Modgon and Valdis Luks and Virginia Luks for the sale of the property or that completion of that agreement had been effected on 8 August 1986 with the transfer of the property to the purchasers on that day. On the same day, 11 September 1986, the Tarlings gave notice to Mogdon purporting to terminate the agreement dated 22 November 1985 and requiring the return of the deposit paid thereunder. On 23 September 1986 the Tarlings commenced an action (No.SC 1560 of 1986) against Mogdon in the Supreme Court claiming: ee ~ "(1) A ' declaration that the Notice of Termination of Agreement given by the plaintiffs to the defendant on the llth day of September 1986 was a valid notice effective to terminate the agreement for sale dated the 22nd day of November 1985. (2) An order that the defendant repay the plaintiffs the deposit of $4,300.00. (3) In the alternative to (2) an Order that the defendant authorise and direct Reg Daly Real Estate Pty Limited to pay the deposit of $4,300.00 to the plaintiffs. (4) Damages. ee er 10. (5) Interest pursuant to s.53A Australian Capital Territory Supreme Court Act 1933. (6) Further or other relief. (7) Costs." On 15 October 1986 a defence and counter-claim was delivered in the action on behalf of Mogdon. By its counter-claim Mogdon claims: "(i) A declaration that the Notice of Termination of Agreement given on the 20th June 1986 by the defendant to the plaintiffs was effective to terminate the Agreement hereinbefore referred to (ii) A declaration that the defendants Esicl are entitled to payment from the stakeholder of the deposit referred to in the said Agreement (iii) Liquidated damages pursuant to Clause 20(2) of the Agreement (iv) Interest pursuant to the Australian Capital Territory Supreme Court Act 1933, s.53A. (v) Costs." A yreply' to the defence and a defence to the counter-claim was delivered on behalf of the Tarlings on 1 December 1986. No further steps appear to have been taken in the action. On 15 October 1986 notice was given to the Tarlings on behalf of Mogdon that it intended to move the Supreme Court on 17 October 1986 for certain orders. The notice was expressed as having been given in the proceedings ae eet mee ee eae pene oe, ——. Ye we ne Se a a mre v 11. commenced by the originating summons issued on 30 June 1986, the Tarlings being referred to as the plaintiffs and Mogdon as the defendant. The orders sought were as follows: "l. That the Notice to Complete dated 16th May 1986 given by the defendant to the plaintiffs was valid and effectual. 2. That the Notice of Termination of the Agreement for Sale dated 20th June 1986 given by the defendant to the plaintiffs was valid and effectual. 3. That the defendant has validly forfeited and is entitled to immediate possession of the deposit paid by the plaintiffs under the said Agreement for Sale. 4. That the defendant on and from 20th June 1986 was lawfully entitled to resell the Crown Lease and goods referred to in the Agreement for Sale. 5. That the defendant is entitled to liquidated damages calculated in accordance with Clause 20(2) of the Agreement for Sale. 6. That the assessment of damages payable to the defendant and any allowances for moneys paid and goods purchased by the plaintiffs be referred to the Registrar. 7.~ That the plaintiffs pay the defendant's costs of and incidental to these proceedings." It will be apparent that the orders sought by Mogdon by the notice of motion are substantially the same as the relief sought by that company by the counter-claim delivered in the action numbered S.C. 1560 of 1986. In support of the motion an affidavit sworn by Richard Phillips on 14 October 1986 was filed on behalf of Mogdon. That affidavit put before the Supreme Court for the 12. first time the facts concerning the sale of the property to Valdis Luks and Virginia Luks. The notice of motion came before the Supreme Court (Miles C.J.) on 17 October 1986. After hearing the parties, Miles C.J. said: "On 11 September iast I made certain rulings and Findings and gave leave to the parties to bring in short minutes to give effect by declaration or order or both to those rulings and findings. The defendants filed notice of motion dated 15 October 1986 and raised fresh material or have put new material before the Court which raises fresh issues of law and fact, which 1ssues were not previously before me. In my view it is wholly inappropriate for these new issues to be dealt with in this way. I am told that the plaintiffs have sued for the deposit in separate proceedings and I think that that is the appropriate method for those further issues to be decided. I decline to make any order in pursuance of the notice of motion of 15 October." His Honour ordered that Mogdon pay the costs of the proceedings on 17 October 1986 saying that he did not think the application "was justified at ail". His Honour also decliined to entertain an application made to him by counsel for Mogdon that his Honour should make an order for costs in respect of the proceedings upon the originating summons. His Honour considered it inappropriate to do so and suggested that, if a ad 13. agreement could not be reached between the parties, the question of the final orders to be made upon the originating summons should be brought before the Court on proper notice pursuant to the leave reserved on 11 September 1986. The grounds upon which Mogdon would seek to rely on the hearing of the appeal in the event that leave to appeal were granted are set out in the notice of appeal filed on 6 November 1986. Those grounds are that Miles C.J. erred in finding that: "(a) The defendant's application by way of Notice of Motion dated the 15 October 1986 was an inappropriate way of proceeding in all the circumstances; (b) His Honour should not make any of the Orders sought by the defendant in its Notice of Motion dated 15 October 1986; (c) In failing to finalise the issues raised in the plaintiff's summons by making final orders." What__Mogdon seeks to have overturned is the decision by Miles C.J. that the notice of motion dated 15 October 1986 was not an appropriate proceeding by which to have the issues remaining between the parties resolved. His Honour expressed himself as having reached that conclusion because the notice of motion, although purporting to be given in the proceedings commenced by the originating summons issued on 30 June 1986, raised issues of law and fact which were not the subject of that proceeding. To weer ny oops ne eee 14. support the proposition that leave should be granted to permit that decision to be challenged before a Full Court of this Court, counsel for Mogdon submitted that his Honour's decision worked an injustice to Mogdon because, so it was submitted, the issues raised by the notice of motion are issues which remain outstanding in the proceeding commenced by the originating summons and those remaining issues can only be resolved satisfactorily in that proceeding. In the course of discussion, counsel for Mogdon conceded that all the issues which remain outstanding between the parties are raised in the pending action numbered SC 1560 of 1986 but it was submitted that that was not an appropriate vehicle to resolve those remaining issues because in that action the question could arise whether the partzes are entitled to litigate again the issues which were canvassed before Miles C.J. on 1 August 1986 and which were the subject of his findings and rulings published on 1i September 1986. ~~ The application was opposed by the Tarlings. The submissions put by their counsel may be summarised as follows: (a) The application is misconceived as what was done by Miles C.J. on 11 September 1986 did not amount to the making of a judgment or order from which an appeal may be brought. (b) If an appeal lies it lies only with the leave of this Court or a Judge and no sufficient ground warranting the grant of such leave has been established. ee ne rm ee ed Nee ar) - er, at oe wots vn ee ee ee ee ce ry ' A . . t et etree ne er ae eee 15. (c) In any event, leave should be refused because of the lengthy and unexplained delay on the applicant's part in making the application. There seems to me to be a serious question whether any curial order (other than an order for costs) was made by his Honour on 17 October 1986 from which an appeal may be brought to this Court. However, for the purpose of considering the present application I shall proceed on the basis that the effect of what his Honour said was to order that Mogdon's motion be dismissed on the ground that it did not provide an appropriate procedure by which to resolve the outstanding matters in dispute between the parties following the sale of the property by Mogdon to Valdis Luks and Virginia Luks. There can be no doubt that the decision which his Honour made on 17 October 1986 was a decision which related solely to the practice and procedure of the Supreme Court and involved "the exercise of a judicial discretion. it is well settled that an appellate court will exercise particular caution in reviewing such a decision, relevant matters for consideration being whether it has been demonstrated that the judge erred in principle in reaching the decision and whether it has been shown that substantial anjustice will be done to one or other of the parties if the erroneous decision is not reversed: Adam P. Brown Male yo Be peepee we oe - ee re ee yee . 16. Fashions Pty Ltd v. Philip Morris Inc. (1981) 148 C.L.R. 170 at p.177. It follows that formidable difficulties stand in the way of an applicant who seeks leave to appeal froma decision of the kind here in question. In the present case, Mogdon has not demonstrated to my satisfaction that there are cogent grounds for questioning the correctness of his Honour's decision that proceedings by way of notice of motion did not provide an appropriate procedure for the resolution of the issues which Mogdon desired to have determined. The view which his Honour took that the motion raised issues of fact and law which were additional to those raised by the originating summons and which should be determined in substantive proceedings between the parties was a view clearly open on the material before hin. It cannot seriously be suggested that appropriate procedures are not available within the Supreme Court by which the outstanding issues between the parties can be resolved. The pdnding action numbered SC 1560 of 1986 is one available avenue and there may well be others. To suggest that the pending action is not an appropriate vehicle because questions of issue estoppel may arise therein provides, to my mind, no ground for concluding that Mogdon will suffer substantial injustice unless' leave to weer 17. appeal as sought is granted. No other basis for injustice has been suggested. The application 1s dismissed. Mogdon must pay the Tarlings' costs of the application. I certify that this and f. the preceding 16 pages are i a true copy of the Reasons hs for Judgment herein of the r | Honourable Mr Justice Neaves. Vek Brow ' Associate Dated: 10 September 1987 Counsel for the applicant : Mr T.d. Higgins, Q.C. Solicitors for the applicant : Vandenberg Reid Pappas & McDonald iS Counsel for the respondents : Mr T.M. Johnstone , Solicitors for the respondents : John Harris & Co. io Date of hearing : 11 August 1987 nny