Murphy v Hilliard & Anor [2007] NSWSC 703

New South Wales Supreme Court

CITATION : Murphy v Hilliard & Anor [2007] NSWSC 703

HEARING DATE(S) : 20 June 2007

JUDGMENT DATE : 20 June 2007

JURISDICTION : Equity Division

JUDGMENT OF : Palmer J

EX TEMPORE JUDGMENT DATE : 20 June 2007

DECISION : Motions for separate trial refused.

CATCHWORDS : PRACTICE AND PROCEDURE – Whether trial of separate questions should be ordered – overlapping and complex issues of fact and law.

LEGISLATION CITED : Civil Procedure Act 2005 (NSW) – s.62(2)

- Love v Mirror Newspapers Ltd [1980] 2 NSWLR 112 CASES CITED : - Murphy v Westpac Banking Corporation [2007] NSWSC 170 - Tepko Pty Ltd v Water Board (2001) 206 CLR 1

Daniel Joseph Murphy – First Plaintiff/First Cross Defendant Fugen Constructions Pty Ltd – Second Plaintiff/Second Cross Defendant PARTIES : Westpac Banking Corporation – First Defendant (Court ordered Summons against Westpac dismissed on 21.05.07) June Charmaine Hilliard – Second Defendant/First Cross Claimant Nicki Hilliard – Third Defendant (Deactivated)/Second Cross Claimant

FILE NUMBER(S) : SC 6154/06

COUNSEL : B.W. Collins QC, P.E. Cullen – Plaintiffs/Cross Defendants G. Inatey SC, D.D. Knoll – Second Defendant/Cross Claimant

SOLICITORS : Thomson Playford – Plaintiffs/Cross Defendants McCabe Terrill – Second Defendant/Cross Claimant

6154/06 Murphy v J.C. Hilliard & Anor

JUDGMENT – Ex tempore 20 June, 2007

1 The Plaintiff applies by Notice of Motion pursuant to UCPR 28.2 and s.62(2) of the Civil Procedure Act 2005 (NSW) for an order that four claims for relief in his Further Amended Summons be heard and determined separately at a preliminary hearing. 2 The Second and Third Defendants, who are also the First Cross Claimants, apply by Notice of Motion for an order that seven issues or claims for relief be heard and determined separately at a preliminary hearing. The issues which the opposing parties wish to have separately determined are different. Each side opposes the separate hearing of the issues propounded by the other side. 3 The issues in the proceedings are complex factually and legally. Only the briefest summary is necessary for present purposes. The Plaintiff and the Second Defendant entered into an agreement for the development of land at Coogee as four residential units ("the Agreement"). The land was owned by the Second Defendant, and the Plaintiff was to purchase a certain interest in the land for $1,600,000. On the completion of the development, units 1 and 2 were to be owned by the Second Defendant and her daughter, who is the Third Defendant and also a Cross Claimant, and units 3 and 4 were to be sold, the profits being divided between the parties in specified proportions. 4 The builder engaged in the development was a company controlled by the Plaintiff. The parties borrowed a substantial sum from Westpac Bank to finance the development. That loan was secured by a mortgage over the subject land. The purchase price of $1,600,000 which the Plaintiff was to pay the Second Defendant for the acquisition of an interest in the land was left outstanding as a loan secured by mortgage to the Second Defendant of the Plaintiff's interest in the land. In the Agreement this loan to the Plaintiff is identified as the "Murphy Loan". 5 The Second and Third Defendants have now taken occupation of units 1 and 2. The Plaintiff has attempted to sell units 3 and 4. A contract for the sale of unit 3 has been entered into but the Second and Third Defendants say that the sale is at an undervalue and the Second Defendant has refused to consent to the sale as mortgagee under the Murphy Loan. 6 The Plaintiff commenced proceedings seeking declarations and orders, the effect of which is to compel the Second Defendant to give her consent to the sale of unit 3 and to restrain the Third Defendant from obstructing that sale. 7 The Second and Third Defendants defended that claim and, by Further Amended Cross Claim, the Second Defendant alleged that the Plaintiff was in default of his mortgage to her of his interest in the land. She claimed an order for possession of units 3 and 4. 8 The Plaintiff contends that he is not in default under the mortgage to the Second Defendant. He relies on a provision of clause 14 of the Agreement. Clause 14.1 provides that the Second Defendant is to pay the Plaintiff the "Construction Costs". Clause 14.3 provides that the Plaintiff "may at his option offset the Murphy Loan against his entitlement to the Construction Costs". This somewhat oblique provision is, at least arguably, capable of meaning that the Plaintiff is entitled to deduct from what he owes to the Second Defendant under the Murphy Loan what the Second Defendant owes to him pursuant to her obligation under clause 14.1 to pay him the Construction Costs. 9 The Plaintiff says that he has exercised the option conferred on him under clause 14.3 and that what he is owed by the Second Defendant in respect of Construction Costs under clause 14.1 equals or exceeds the amount which he owes to the Second Defendant under the Murphy Loan. He says that for this and other reasons, which I need not elaborate for present purposes, he is not in default under the mortgage securing the Murphy Loan so that the Second Defendant is not entitled to exercise her rights under her mortgage. The Second and Third Defendants in turn say that the Plaintiff is not entitled to set-off the Construction Costs against the Murphy Loan because the amount of such costs has not been determined. They say that there is a dispute about the amount of those costs and they rely upon Clause 14.4 of the Agreement, which provides: "If there is a dispute between the parties as to the value of the Construction Costs then: