WHITEFORD v COMMONWEALTH OF AUSTRALIA [NO 2] SUPREME COURT OF NEW SOUTH WALES — COURT OF APPEAL CLARKE, SHELLER and COLE JJA 16 August 1996 [1996] NSWCA 558 Clarke JA. I will ask Sheller JA to give the first judgment. Sheller JA. On 10 October 1995 this Court, consisting of Kirby P, Powell JA and myself, delivered judgment in an appeal from an interlocutory decision of Rolfe J in the Common Law Division. The Court also had before it an appeal to Allen J from a decision of Master Malpass, which his Honour had removed into this Court. Both proceedings arose out of a letting by the Commonwealth to the appellants, Michael Bede Whiteford and Jennifer Whiteford, of residential premises at Lot 2, Anton Road, Luddenham. The lease, which purported to be subject to the Residential Tenancies Act 1987, was for one year ten weeks and six days,commencing on 17 May 1991 and ending on 31 July 1992. After the expiry of the lease the appellants, Mr and Mrs Whiteford, were permitted to remain in the premises on the same terms, by inference, unless and until the agreement was ended in accordance with the Act. From 28 February 1992 the appellants fell into arrears with the rent. As a result on 14 December 1992, the Commonwealth served a notice of termination on the appellants, which purported to terminate their right to occupy the premises as from 8 January 1993. The appellants remained in possession and on 23 April 1993 the Commonwealth instituted proceedings against them in the Supreme Court of New South Wales. The statement of claim sought judgment for possession, leave to issue a writ of execution for possession, judgment for unpaid rent and further rent accruing to the date of judgment or when the property was vacated, interest and costs. On 2 February 1994 judgment was entered against the appellants in default of defence. The Commonwealth was awarded possession of the land and the appellants were ordered to pay $18,400.56, as well as an amount of $898 for costs. Subsequently the appellants filed a notice of motion seeking a stay of execution of the writ of possession and an order that the possession be set aside. Finlay J granted a stay and on 5 August 1994 Rolfe J dismissed the motion. After the appeal from Rolfe J's decision to this Court was filed, the appellants filed a fresh notice of motion seeking to set aside the default judgment which Master Malpass dismissed on 26 May 1995 Allen J referred the appeal to this Court. On 16 June 1995 the Court heard argument on the appeal, limited to the issue of whether the Residential Tenancies Act precluded the Commonwealth obtaining judgment for possession in the Supreme Court. The Court resolved that issue in favour of the appellants, allowed the appeal, and made consequential orders in the form set out in the judgment of the President, which is found in 38 NSWLR 100 at 111. The parties agreed that, despite the form of order 3(a), the 2 UNREPORTED JUDGMENTS true effect of the judgment was to set aside the default judgment for possession only and that order 3(a) should be varied by inserting the words 'for possession' after the word 'judgment'. The appellants now wish to argue that part of their appeal which relates to the monetary order made for the payment of arrears of rent. The appellants submit this should have been set aside, either by Rolfe J or Master Malpass. If one looks at the proposed defence which was put before Rolfe J and, in a slightly different form, before Master Malpass, the point of it is not clear. But the parties asked this Court to determine the matter on the basis of a furtherproposed defence raising the issue whether the Commonwealth, by accepting an irrevocable authority from the appellants for the payment of all arrears of rent out of the proceeds of other proceedings to which Mr Whiteford was a party, agreed not to sue for the arrears and/or not to terminate the lease. The appellants claim that the Commonwealth accepted this authority, and further that the Commonwealth was, by its acceptance and otherwise, estopped from suing for the arrears of rent for which it obtained judgment. As I say, that defence was not clearly articulated in the form placed before either Rolfe J or Master Malpass. However that may be, in his judgment Rolfe J took the appellants" defence to be the acceptance of the authority and estoppel. In that regard I refer, without setting them out, to pages 2, 3 and 18 in his Honour's judgment of 5 August 1994. On the application before Rolfe J several affidavits were filed. Mr Whiteford swore an affidavit which was read, as did the appellants" solicitor, Mr Bryett. William Geoffrey Sweeney, who is a property consultant with the Australian Property Group within the Commonwealth Department of Administrative Services also swore an affidavit which was filed on behalf of the Commonwealth. Mr Sweeney was required to attend for cross-examination and was cross-examined on behalf of the appellants. In his judgment starting at page 18 Rolfe J went through all this evidence with some care and came to the conclusion that the evidence before him did not support the existence of the agreement claimed. Notable amongst that evidence were statements by Mr Sweeney that no agreement could be reached by him until the matter had been submitted to his State Manager, and later that he was only prepared to recommend that the termination notice be withdrawn and the authority furnished accepted, provided rent was paid from 9 January 1993. This, in fact, never took place. I am not persuaded that the conclusion that his Honour came to was not open to him on the material that the parties placed before him. On that material, I would come to the same conclusion. His Honour went on to deal with the proposed defence of estoppel. He agreed with the submissions made on behalf of the Commonwealth that there was no evidence that the Commonwealth engendered in the appellants any expectation it would not terminate the holding over, at least until rent was paid as from the date specified, and there was no evidence that the appellants acted or abstained from acting in reliance on any such expectation, or acted to their detriment upon the basis of any representation. His Honour was of the opinion that there was no such representation. Accordingly, his Honour concluded that the course of conduct did not give rise to any agreement, or, independently of any agreement, estoppel in favour of the appellants, and concluded that the appellants had failed to satisfy him that there was a bona fide defence on the merits. His Honour added: There is no suggestion that any further evidence or submissions will improve the position. I am of the opinion it is so clear there was neither an agreement nor an URJ WHITEFORD v COMMONWEALTH OF AUSTRALIA [NO 2] (Sheller JA) 3 estoppel, that there is no triable defence. Further, the defendants have failed to comply with the stated requirement, viz the payment of rent, which may have brought an estoppel into existence. On the basis of the material before him I do not see what other conclusion was open to his Honour. Submissions were put to us that his Honour went further into the merits than he should have, and that because there was some contest between the parties he should have allowed the appellants to go to trial. I do not agree with these submissions. The material from which his Honour drew his conclusions was not in contest at all. Despite the valiant efforts by reference to the cross-examination of Mr Sweeney to suggest there was some contest, I am quite unable to find any. In support of the further application to Master Malpass additional affidavit material was filed on behalf of the appellants. This included affidavits by Mr Whiteford and Mr Bryett. In Mr Bryett's affidavit of 14 March 1995 some reference was made to a telephone conversation which Mr Sweeney haddeposed to in his earlier affidavit of 11 September 1992. Mr Bryett suggested that his telephone log did not record such a telephone call on that day. Mr Bryett went on to recall having one call from Mr Sweeney. This was at his current premises where he moved in October 1992. He said that he did not recall and denied taking a call from Mr Sweeney previous to the call referred to as the one call. This material was said to be fresh evidence, putting in contest Mr Sweeney's accounts of the conversations to which Rolfe J referred. I do not agree. I do not regard this affidavit as doing anything but raised some question as to a date upon which the conversation took place. In Mr Whiteford's affidavit of 14 March 1995 an account was given of a conversation that took place with Mr Sweeney on 12 August. I do not read that account as adding, in any significant way, to what was said in evidence before Rolfe J about that conversation, or indeed about the transactions that took place before the parties. Master Malpass dealt with the proposed defence based on estoppel and set out the ways in which it was put before him, which I need not go into. He said that the defendants had sought to place additional material before the court in respect of the defence, and referred to the two affidavits to which I havereferred. The Master said whilst this additional material might provide further detail of the matter that was before Rolfe J, in substance the position is much the same as it was before his Honour. The contention that such a defence was available to the defendants had already been determined by Rolfe J who rejected the contention that there was an agreement as alleged and found that the defence based on estoppel could not succeed. The Master did not consider that the fresh material altered that situation and expressed the view the first proposed defence was not arguable. It has been submitted to us that the Master should have entertained the application before him as a hearing de novo but the Master was bound by the findings of fact made by Rolfe J, with the possible exception — and for present purposes I am prepared to accept that there is a possible exception — that if there were fresh material that threw some doubt upon his Honour's findings, those findings could be reconsidered. There was no such fresh evidence and therefore no ground for any such reconsideration. I agree with the conclusion that the learned Master came to. 4 UNREPORTED JUDGMENTS In the course of his submissions, counsel for the appellants referred to what was said to be the unfairness arising out of the failure of the Commonwealth to advise the appellants" solicitor before the default judgment was obtained. Whatever may be the accepted process in this regard, it was of no significance in a case where the appellants had an ample opportunity to put before the court any defence that they claimed to have, and to persuade the Court that that defence was one which should go to trial. Similarly, I do not regard it as of any significance in the circumstances of this case that the appellants have not had an opportunity for discovery. In my opinion this part of the appellants" appeal should be dismissed. There are procedural questions as to the orders that should be made for the amendment of the notice of appeal and the defence that the appellants proposed to file, and there may be some question as to what, in the circumstances of this case at this point of time, the precise orders should be, and I would propose that counsel have the opportunity to address on those questions. Clarke JA. I agree. Cole JA. I also agree. (Mr Gibb addressed on the orders to be made by the Court.) The parties subsequently agreed to the following orders which the Court makes: 1. That the orders made in matter No 40503/94 on 10 October 1995 be varied as follows: (a) the words 'in matter No 40503/94' be inserted after the word 'Appeal' in Order 1 and that the further words 'in part' be inserted after the word 'allowed' in that order; (b) the words 'so far as they relate to the claim for possession' be inserted after '(Rolfe J)' in Order 2; (c) the words 'for possession' be inserted after the word 'judgment' in Order 3 (a); (d) the words 'so far as they relate to the claim for possession' be inserted after the word 'instance' in Order 5; (e) the words 'in matter No 40503/94 so far as they relate to the claim for possession' be inserted after the word 'appeal' in Order 6; and (f) a further Order 6A be inserted as follows: 6A Order that otherwise the costs of the appeal in matter No 40503/94 await the determination of the balance of the outstanding issues in that appeal. 2. That the appeal in matter No 40503/94 so far as it relates to the balance of the outstanding issues in that appeal be dismissed with costs. 3. That the appeal in matter No 40170/95 be dismissed with costs. Orders accordingly. Counsel for the appellant: JP Berwick Solicitors for the appellant: Bryetts Counsel for the respondent: SW Gibb Solicitors for the respondent: Australian Government Solicitor