New South Wales Supreme Court CITATION : MK and JA Roche Pty Limited & Ors v Metro Edgley Pty Limited & Anor [2004] NSWSC 724 HEARING DATE(S) : 9/08/04 JUDGMENT DATE : 9 August 2004 JURISDICTION: Equity Division Commercial List JUDGMENT OF : Einstein J DECISION : Applications dismissed. Costs reserved. CATCHWORDS : Summary dismissal - Whether Equity Division proceedings comprise 'a trial of a common law claim' within the meaning of Part 34 rule 7 of Supreme Court Rules Judicature Act LEGISLATION CITED : Supreme Court Act 1970 Supreme Court Rules MK & JA Roche Pty Limited (ABN 25 076 529 952) (First Plaintiff) PARTIES : Michael Kevin Roche, Christopher John Roche, William Timothy Roche, Kevin Michael Roche, Gabrielle Mary Roche (Second Plaintiff) Metro Edgley Pty Limited (ABN 37 082 440 042) (First Defendant) Multiplex Limited (formerly Multiplex Constructions Pty Limited (ACN 008 687 063) (Second Defendant) FILE NUMBER(S) : SC 50069/04 COUNSEL : Mr DJ Hammerschlag SC, Mr VF Kerr (Plaintiffs) Mr CR Newlinds SC, Ms RS Francois (Defendants) SOLICITORS : Lane & Lane (Plaintiffs) Clayton Utz (Defendants) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST Einstein J Monday 9 August 2004 ex tempore Revised 18 August 2004 50069/04 MK and JA Roche Pty Limited & Ors v Metro Edgley Pty Limited & Anor JUDGMENT The proceedings 1 These proceedings concern two related contracts, each dated 26 September 2003: · a contract entitled "Waterfront Brassier Development Contract, Luna Park" ["The Development Contract"]". · a contract entitled "Liquor Licence and Fit-out Works Deed of Agreement Waterfront Brasserie Luna Park" ["The Fit-out Deed"]". 2 The first plaintiff, MK and JA Roche Pty Limited, and the second defendants, Messrs MK, CJ, WT, KM Roche and Ms GM Roche, ["the guarantors"], entered into the development contract with the first defendant, Metro Edgley Pty Limited ["Metro Edgley"], and the second defendant, Multiplex Ltd (Formerly Multiplex Construction Pty Limited) ["Multiplex"]. 3 Apparently, the proposed development was to be and is being constructed inside the entrance to the Luna Park complex. The Development Contract 4 Clause 1 of the development contract provides that: "the general conditions of contract, "including all annexures" will form and be read and construed as part of this Contract." 5 It was a term of the development contract that the obligations of the parties under the development contract, other than clause 2A itself, were conditional on satisfaction of certain conditions precedent, including the execution of a number of identified instruments. The automatic rescission provision 6 Clause 2A(b) of the general conditions of contract provided as follows: "This contract will be deemed to be automatically rescinded and of no force and effect if the condition precedent (sic) are not satisfied by 31 December 2003 (or such later date the developer may notify Roche in writing (on one or more occasions) up to the sunset date) [31 December 2004]." 7 The fit-out deed provided inter alia: (a) the obligations of the parties under this deed (other than this clause 1A) are conditional on satisfaction of the conditions precedent to the development contract; (b) this deed will be deemed to be automatically rescinded and of no force and effect if the development contract is rescinded due to the conditions precedent under the development contract not being satisfied. The Part 34 rule 7 application 8 At the end of the plaintiffs' case the defendants moved under Part 34, rule 7, for the dismissal of the plaintiffs' case. 9 The basis for the application is the submission that notwithstanding the words "deemed to be automatically rescinded", on the proper construction of clause 2A(b) of the Development Contract the plaintiff has an election to terminate or not to terminate the contract in the event that the conditions precedent be not fulfilled by the relevant date, or the relevant date as extended. No such election is said to have ever been communicated by the plaintiff to the defendant. The authorities 10 A number of authorities have been relied upon generally said to support the proposition that where a contract may expressly provide for an automatic avoidance on the occurrence of a specified event, where the event in question is one which cannot occur without default on the part of one party to the contract, the provision is construed as making the contract not void, but voidable. 11 The submission is that the case of the plaintiffs is entirety dependent upon the misconceived proposition that properly construed, clause 2A(b) of the general conditions of contract forming part of the development agreement, had the result that the contract was deemed to be automatically rescinded in the event that the conditions precedent were not satisfied by the identified date [or by such date as may have been notified by the developer extending the date up to 31 December 2004]. The applicability of Part 34 rule 7 12 An initial question arises as to the applicability of Part 34, rule 7, to the current hearing. Part 34, rule 7(1) provides: "This rule applies to a trial of a common law claim." 13 My own view is that the present proceedings are not encompassed within the meaning of the words "a trial of a common law claim". In this regard it is pertinent to contrapose use of the word "trial" as, for example, used in Part 34, rule 6(1) and in Part 34, rule 8A, with the reference in Part 34, rule 7, to "trial of a common law claim". 14 Further support for this view is to be found in a number of places. The first is the definitional section 19, the Supreme Court Act 1970 which provides: "In this Act and in the rules, except insofar as the context or subject matter otherwise indicates or requires "common law claim" means a claim for damages or other money, or for possession of land, or for detention of goods, in proceedings in the common law division." 15 Further, section 8(1)(b) of the Supreme Court Act provides: "in any…rule of court…in force immediately before the commencement of this Act, a reference to…a Judge in any of the jurisdictions specified in the First Column of the Table below or to the practice or procedure of the Court in any of those jurisdictions shall be construed as a reference to the Division specified opposite that jurisdiction in the Second Column of that Table or, as the case may be, to the practice or procedure in that Division. 16 The term "Common Law" appears in the final column of the table. The division specified opposite that term reads "Common Law Division". 17 Section 53 of the Supreme Court Act, of course, deals with the assignment of business to the different divisions of the Court. 18 Senior Counsel for the defendants has contended that in truth the claims made by the plaintiffs may be regarded as common law claims. 19 Notwithstanding that the plaintiffs' claims concern close contractual questions, the fact is that at least in relation to the claim to a refund of the deposit, the plaintiff relies upon suggested unconscionability in the behaviour of the defendants and upon unjust enrichment. 20 Further, of course, the current hearing is a hearing in the Equity Division. 21 The answer to the submission that the claims made by the plaintiffs may be regarded as common law claims for relevant purposes, rests in semantics, as it seems to me. The mere fact that a particular cause of action relies upon common law principle does not mean that the proper construction of Part 34, rule 7(1), is that that rule applies to a trial of any claim in which common law relief is sought. In my view, the proper construction of the words "trial of a common law claim" as used in Part 34, rule 7(1), is that the phrase refers to a trial being heard in the Common Law Division of the Supreme Court. 22 There is support for this construction in the observations by Parkinson "The Principles of Equity" Law Book Company 1996 at 21 – 22 in terms of an examination of the background where "the change in the legal order brought about by the Judicature Act was of a purely administrative and procedural character. There was no merger of equitable and common law principles, rules and principles, no joining of substantive legal and equitable doctrines and no alteration of legal or equitable principle…This is, of course, not to suggest that the principles of either the common law or of equity ceased to change and develop after the passing of the Judicature Act". 23 Ashburner Principles of Equity (2nd ed Butterworths, London, 1933) at 18 put the matter as follows: "[T]he two streams of jurisdiction, though they run in the same channel, run side by side and do not mingle their waters. Alternative approaches put by the defendants 24 The defendants have put forward alternative approaches. The first is that they are entitled at any time during a hearing to move to the same effect pursuant to Part 13, rule 5, where proceeding may be stayed or dismissed if no reasonable cause of action is disclosed. 25 Further, the defendants have put forward the possibility that the court may make an order for the separate determination of the issues sought to be made the subject of this threshold question. 26 Further, the defendants have put forward the possibility that the court may, presently, transfer the proceedings from the Equity Division to the Common Law Division and that I may continue to sit as a Common Law Division Judge for the purpose of hearing a Common Law suit. Informality 27 There have been no notices of motion relied upon by the defendants in putting any of these alternative approaches suggested as available to them. I am content, notwithstanding the lack of formality, to regard the defendants as presently moving without notices of motion for each of the alternatives which I have outlined. 28 In my view, the just, quick and cheap overriding purpose rule requires to be kept firmly in mind. 29 The overriding purpose rule in the present circumstances, it seems to me, requires that the proper exercise of the court's discretion is that the court proceed to hear the whole of the proceedings. The proceedings, as I have understood it, were fixed relatively recently and on the basis of special urgency. 30 Whilst I was not present in the course of any of the consideration by the list judge of the proceedings, this is the first occasion that the question of any of these summary or threshold or different approaches to the hearing have been certainly referred to me for consideration. 31 There are a large number of witnesses due to be called. 32 Without prejudice to the merits, such as there may or may not be, in the fundamental proposition put forward by the defendants, to my mind, the clearly convenient and necessary course is for the court to continue to hear the whole of the proceedings up to and including final address when all matters, including, of course, this primary contention of the defendants, will be the subject of detailed examination and, in due course, will be dealt with in the judgment. 33 I make plain that there has been very little opportunity for the court to spend proper time in looking at the close question of construction in terms of the meaning of the words "trial of the common law claim" in Part 34, rule 7. Whilst counsel have given the court some assistance in this regard, the court has been required, in the exigencies of the situation, to reach a decision at short notice in a matter of significance in terms of the accommodation of the hearing I have, within those parameters, expressed the views which I set out in the judgment. Decision 34 Each of the alternative applications is dismissed. I certify that paragraphs 1 - 34 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 9 August 2004ex tempore and revised 18 August 2004 ___________________ Susan Piggott Associate 18 August 2004 - Last Modified: 09/02/2004 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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