New South Wales Court of Appeal CITATION : Thompson v Blackman [1999] NSWCA 218 FILE NUMBER(S) : CA 40140/98 HEARING DATE(S) : 28/06/99 JUDGMENT DATE : 1 July 1999 PARTIES : Margaret Elizabeth Thompson (nee Dimond) v Margaret Napier Blackman JUDGMENT OF : Meagher JA at 1; Handley JA at 2; Fitzgerald JA at 3 LOWER COURT JURISDICTION : Supreme Court - Equity Division LOWER COURT FILE NUMBER(S) : 3006/89 LOWER COURT JUDICIAL OFFICER : Brownie J COUNSEL : K P Smark (Appellant) D J Durston (Respondent) SOLICITORS : Barnetts (Appellant) White Barnes & McGuire (Respondent) CATCHWORDS : Equity; quantification of equitable compensation; appropriate method of calculation. DECISION : Appeal dismissed THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA40140/98 ED 3006/89 MEAGHER JA HANDLEY JA FITZGERALD JA Thursday, 1 July 1999 Margaret Elizabeth THOMPSON v Margaret Napier BLACKMAN JUDGMENT 1 MEAGHER JA: I agree with Fitzgerald JA. 2 HANDLEY JA: I agree with Fitzgerald JA. 3 FITZGERALD JA: The respondent was the beneficial owner of a half share in a property at Castle Cove which the registered proprietor, her former husband, sold to the first appellant and a third party for $300,000 on 31 October 1985. Prior to the completion of that transaction, the third party resold his interest in the property to the first appellant. Completion took place on 13 October 1986. The third appellant, a company of which the first and second appellants were the sole shareholders and directors, was the agent which effected the sale. 4 Litigation resulted, and, in a judgment dated 13 May 1992, Brownie J gave judgment awarding the respondent relief which included "… equitable compensation … calculated as being half the difference in value of the property measured as at 31 October 1985 and as at 15 September 1986…". 5 An appeal against Brownie J's judgment failed, and there is no suggestion that the order referred to in the preceding paragraph did not accurately reflect his Honour's intention. 6 The "… quantification of the equitable compensation" was referred to a Master for inquiry. On 25 March 1997, Master McLaughlin determined that the value of the property at 31 October 1985 was $300,000 and at 15 September 1986 was $435,000, and that, accordingly, the equitable compensation payable by the appellants to the respondent was $67,500. 7 On 19 February 1998, an appeal by the appellants from the decision of the Master was dismissed by Simos J. 8 This appeal is brought from that judgment of Simos J. 9 At the hearing in this Court, the question was raised whether leave to appeal is needed on the basis that, whatever the status of the subsequent judgment in the respondent's favour, the Master's decision was interlocutory. See the judgment of Handley JA in Derrawee Pastoral Company Pty Ltd v McConochie (CA40642/94, unreported, 24 February 1995) It is unnecessary to decide that question. 10 The parties agreed before the Master and Simos J that the value of the property at 31 October 1985 was $300,000, and neither party sought to resile from that position in this Court. 11 Curiously, each side appears to have thought it was in her (his or its) own interest to adopt that value. It seems obvious that the respondent wanted the value at the earlier date to be as low and the value at the later date to be as high as possible. One would expect the appellants to want the opposite. However, their tactic was apparently to contend that the "difference in value" between two dates was a percentage of the value at the earlier date, being "… the percentage increase in the market in the area in which the property was located … over the period from 31 October 1985 to 15 September 1986". If this approach was accepted, the lower the initial value, the smaller the amount of the increase in value or "difference". 12 Plainly, that was an extremely risky tactic, as events have confirmed. 13 Although the value of the property at 31 October 1985 was not fully investigated, it seems likely from its value at 15 September 1986 and the average percentage increase in the market in the area between those two dates that its value at 31 October 1985 was in excess of $300,000. Brownie J rejected the respondent's claim that the sale at that price on that date was a sale at an undervalue only on the basis that her misconduct had prevented a higher price being obtained. His Honour did not find that the value of the property then was $300,000. 14 The Master rejected what the appellants have described as "the percentage methodology". Instead, he found that the value of the property at 15 October 1986 as $435,000, in accordance with the opinion of a valuer who relied on comparable sales in the material period, which he adjusted to take account of circumstances which he identified. 15 As the appellants had pointed out, that has resulted in a "difference in value" of the property as at the two dates which is in excess of the "percentage increase in the market in the area in which the property was located" over the material period. It by no means follows that the Master was incorrect. 16 The error was the appellants' error in agreeing that the value of the property at the earlier date was $300,000. Their argument amounts to an assertion that their tactic must be permitted to succeed, and that, once that value was agreed, their "percentage methodology" was the only permissible means of giving effect to Brownie J's order. 17 I disagree. The course adopted by the Master gives effect to that judgment and the parties subsequent agreement, however mistaken, concerning one of the critical matters involved in the Master's inquiry. 18 Before this Court, the appellants sought to raise an additional argument, not advanced below, that the Master should have discounted the value as at the later date to take account of the respondent's then continuing misconduct. The point was not adequately canvassed in the evidence and the Court refused to permit it to be raised. 19 If the appeal is competent, it fails on the merits. 20 I would dismiss the appeal, with costs. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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