Trpkovski v Russell [2001] FCA 1871

FEDERAL COURT OF AUSTRALIA

Trpkovski v Russell [2001] FCA 1871

SASHA TRPKOVSKI & ANOR v LYNN RUSSELL & ANOR A 73 of 2000 SASHA TRPKOVSKI & ANOR v LYNN RUSSELL & ANOR A 76 of 2000 HIGGINS, GYLES & STONE JJ DATE 21 December 2001 CANBERRA

GENERAL DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA A 73 OF 2000 CANBERRA DISTRICT REGISTRY A 76 OF 2000 DISTRICT REGISTRY ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN: SASHA TRPKOVSKI FIRST APPELLANT LOU BUJAROSKI SECOND APPELENT AND: LYNN RUSSELL and COLIN DOUGLAS PITSON RESPONDENTS JUDGES: HIGGINS, GYLES and STONE JJ DATE OF ORDER: 21 DECEMBER 2001 PLACE: CANBERRA THE COURT ORDERS THAT: 1. The appeal be dismissed, save that the respondents pay the costs of the day thrown away by the adjournment of the hearing on 24 November 1999. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY A 73 OF 2000 AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY A 73 OF 2000

A 76 OF 2000 A 76 OF 2000

ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN: SASHA TRPKOVSKI

FIRST APPELLANT

LOU BUJAROSKI

SECOND APPELLANT

AND: LYNN RUSSELL and COLIN DOUGLAS PITSON

RESPONDENTS

JUDGE: HIGGINS, GYLES & STONE JJ

DATE: 21 DECEMBER 2001

PLACE: CANBERRA

REASONS FOR JUDGMENT

HIGGINS J: 1 I have had the advantage of having read in draft the judgments of both Stone J and Gyles J. 2 I agree with Stone J that, on its true construction, Special Condition 1 provided that the monies payable under it were payable as a deposit ie, an earnest for performance. Otherwise, of course, the reference to the 5% of the price payable on or before completion would be otiose unless it was payable as part of the deposit. At completion, the whole of the price remaining was due and payable whether part of the deposit or not. 3 The terms of Special Condition 1, I also agree, create, on breach, an obligation upon the purchaser under each agreement that is, within the meaning of O 2 r 11 of the Supreme CourtRules, a "debt or a liquidated demand", in respect of which final judgment may be entered in default of appearance or of defence, as the case may be (see also O 14 r 4; O 31 r 2). 4 It then follows that the contract of guarantee, upon default by the purchaser (Adwan P/L) required the payment by the guarantors (the first and second appellants), of, in each case, a liquidated sum equal to the deposit reserved by Special Condition 1. 5 As to interest thereon, pre-judgment, I agree with Stone J and have nothing to add. 6 On the questions of costs, however, the issue is whether the fact that the contracts were unstamped required the appellants, if they proposed to rely upon that fact, to have pleaded it. If it was a mere objection to the admission of evidence, then it was for the defendants to have noted that, before they tendered the contracts, they needed to be stamped. 7 The relevant provision, referred to by the learned trial judge, was s 13A of the Stamp Duties and Taxes Act 1987 (ACT), (replaced by the Duties Act 1999) ("the Stamp Duties Act"). 8 Many of the State equivalents of the Stamp Duties Act merely prohibit the admission into evidence of the unstamped document. In New South Wales, the practice is to admit unstamped documents into evidence, if the tendering party's solicitor undertakes to have the document stamped and to pay the duty (if any). 9 In the Australian Capital Territory, however, the prohibition is more stringent. An unstamped document: "…shall not … be pleaded or given in evidence or be admitted to be good, useful or available in law or equity for any purpose, unless it has been pleaded." (s 13A) 10 In breach of that provision the contract were "pleaded" before stamping. On tender, they were rejected. An adjournment was granted to enable them stamped. That was able to be done within 24 hours but there was a day of hearing effectively lost. 11 The purpose of each form of this provision, those that merely render the evidence inadmissible and those such as s 13A that also prohibit the pleading of the document, is to protect the revenue. Once that protection has been accorded, the evidence becomes admissible and is admitted. See, for example, Dymock v Whymark (1964) 65 SR (NSW) 194, in relation to New South Wales practice. Hill J applied that practice in Davis v FCT (1989) 86 ALR 195. However, whether that practice would have been appropriate when, absent stamping, the pleadings are defective, is open to doubt. However, there seems no reason why, as with extension of limitation periods or the grant of leave to proceed, the subsequent stamping of an unstamped document should not cure all relevant defects nunc pro tunc (see eg, Dixon v Royal Insurance Australia Ltd (1991) 105 ACTR 1; 105 FLR 129). 12 The learned trial judge was told that the plaintiffs would not offer an undertaking, thus an adjournment was inevitable even if an undertaking would have been effective. It was expected that duty would be assessed at nil, given the rescission of the agreement, but that was not a certainty. 13 In those circumstances, even assuming that the appellants had, before the hearing, noticed that, at the time the original documents had been inspected, the contracts were then unstamped, their only remedy would have been an application to strike out the pleading which relied on the unstamped contracts. That would no doubt, have led to the stamping of the contracts. The application would then have been dismissed, though the appellants would have had the costs of the strike-out application. 14 More importantly, however, it was not in the interests of the appellants to cure possible defects in the respondents' pleadings or evidence. Further, they were defects curable, once the respondents noted the terms of s 13A of the Stamp Duties Act, within 24 hours. The appellants could not have known, though they may have suspected, that, when the matter came on for hearing, the contracts would have remained unstamped. 15 What then, of the fact that the appellants did not alert the respondents to the need to have the contracts stamped when, at inspection, it may be assumed their advisers had noted that fact? 16 It is the case, as the learned trial judge noted, that it was for the appellants to have lodged the relevant instruments for stamping (s 22 Stamp Duties Act). They did not do so but, of course, by then, they had no interest in doing so. It is not suggested, nor could it have been suggested in the circumstances, that the appellants had done anything to foster or encourage the respondents' inadvertence to the need to stamp the contracts. 17 The learned trial judge opined that there was some duty on the appellants to have put the respondents on notice concerning the non-stamping of the contracts. His Honour said: "(para 78) To wait until the day of hearing before indicating a reliance on s 13A, may have been appropriate in the days of trial by ambush, but it has no place in modern litigation. To the extent that it unnecessarily increases the cost of litigation, that increased cost may fall upon those who, wishing to take advantage of s 13A, fail to do so at a time which will avoid the incurring of unnecessary costs." 18 In so stating his Honour was drawing attention to the policy underlying O 23 r 15 of giving due notice to litigants of the case they have to meet to avoid surprise or ambush and, as a consequence, adjournments or injustice. 19 His Honour was, therefore, in my view, correct to point out, as I have done, that the appellants could have made an application to strike out a pleading relying on the unstamped instruments once the fact that the contracts were unstamped had come to attention. 20 The real question, however, is whether his Honour was correct so to characterise the failure of the appellants to take positive steps to ensure, against their interests, that the contracts were stamped before the hearing commenced. I am prepared to assume, though it is not necessary so to decide, that the terms of s 13A, prohibiting the pleading the relevant documents, was designed to prevent proceedings continuing until stamping takes place, avoiding reliance on undertakings to do so in future (thus displaying a regrettable lack of faith on the part of the legislature in solicitors' undertakings). Thus, the appellants may be taken to assume that, if the contracts remained unstamped at the hearing then, on their tender, the appellants could expect an adjournment thus throwing away the costs (or part thereof) of the day. 21 Should a party, knowing or suspecting there is a defect in the other party's case or pleadings, be required to bring that defect to the other party's attention so as to afford them the opportunity of correcting it? His Honour's approach was that both parties were at fault so neither should have the costs thrown away by the adjournment. 22 The appellants contend that the respondents were, relevantly, solely responsible for the adjournment and so should pay the appellants' costs to that extent. They were aware of the defects and had the means to remedy them. 23 I consider that the guiding principle, supported by the majority judgments in Chamberlain v Law Society of the ACT (1993) 118 ALR 54, is that a practitioner should not engage in conduct which induces or fosters error on the part of another party and that includes persistence in error which that other party has committed. In addition, rules may require positive disclosure of some matters (eg, O 23 r 15). 24 However, it seems to me that, outside of those obligations, the practice of the Supreme Court remains governed by the decision of this Court in McKanna v Aspect Homes Pty Ltd (1983) 72 FLR 476. 25 In that case the defendant (appellant) had, on advice from his legal practitioners, deliberately refrained from applying to dismiss an action for want of prosecution until after the limitation period applicable to the matter had expired. The learned judge at first instance (Gallop J) criticised the conduct of the defendant in failing to threaten action to dismiss for want of prosecution until after the limitation period had expired. That delay had removed a powerful reason to refuse the application. The reliance by the appellant on the error made by the respondent was not regarded as inappropriate, in the absence of any fostering or encouragement of the respondent in its persistent delay. Their Honours (Blackburn, Sheppard and Neaves JJ), at 481, stated: "In our opinion, and with due respect to him, the learned judge erroneously exercised his discretion to allow the late filing of the statements of claim, in that he wrongly held it against the appellant that the appellant deliberately refrained until the limitation period had expired, from moving to have the action dismissed. That was a course which the appellant was entitled to take without procedural prejudice to himself." 26 It follows that the appellants were perfectly entitled to await the production of the contracts at the hearing to see if they had, by then, been stamped and, if not, to take proper forensic advantage of that deficiency. They were not under any obligation to draw s 13A to the attention of the respondents. 27 Thus, the appellants should have been awarded, as against the respondents, the costs thrown away by the adjournment and I would allow the appeal to that extent. I certify that paragraphs numbered 1 to 27 are a true copy of the Reasons for Judgment herein of the Honourable Justice Higgins.