Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Ng v Filmlock Pty Ltd (No 2) [2015] NSWCA 59 Hearing dates: On the papers Date of orders: 19 March 2015 Decision date: 19 March 2015 Before: Emmett JA; Gleeson JA, Tobias AJA Decision: (1) Order (3) made on 13 November 2014 be varied to read as follows: "(3) The matter be remitted to Pembroke J for a new trial on the question of the quantum of damages to which the Vendors are entitled, including any application that a party may wish to make to adduce evidence as to the value of the land the subject of the deed of option entered into on 21 November 2005." (2) The notice of motion filed on 26 November 2014 be otherwise dismissed. (3) The applicants on the motion pay the respondent's costs of the motion. Catchwords: PROCEDURE – judgments and orders – motion to set aside orders – whether a substantial wrong or miscarriage was occasioned by the primary judge's error – whether, therefore, the necessary precondition to the Court's original order providing for limited remitter was satisfied – Uniform Civil Procedure Rules 2005 (NSW), r 51.53 Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), rr 36.16, 51.53 Cases Cited: Banque Commerciale SA (en liquidation) v Akhil Holdings Ltd [1990] HCA 11; 169 CLR 279 Category: Procedural and other rulings Parties: Samuel Ng (First Applicant) Nissi Investments Pty Ltd (ACN 112 933 436) (Second Applicant) Filmlock Pty Ltd (ACN 054 610 052) (First Respondent) Jakesam Developments Pty Ltd (in liq) (ACN 061 154 729) (Second Respondent) Pearse Property Group Pty Ltd (ACN 086 946 849) (Third Respondent) JGT Investments Pty Ltd (in liq) (ACN 111 076 398) (Fourth Respondent) Representation: Counsel: Mr BA Coles QC with Mr OR Jones (Applicants) Ms L Chan (Respondents) Solicitors: Carneys Lawyers (Applicants) PJ Donnellan & Co (Respondents) File Number(s): 2013/266475 Publication restriction: Nil Decision under appeal Court or tribunal: NSW Court of Appeal Citation: [2014] NSWCA 389 Date of Decision: 13 November 2014 Before: Emmett JA; Gleeson JA; Tobias AJA File Number(s): 2013/266475 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Judgment 1. THE COURT: By notice of motion filed on 26 November 2014, the applicants have asked the Court to reconsider the orders made by it on 13 November 2014 in an appeal brought by the applicants. Those orders were made for reasons published by the Court on that day. Terms used in these reasons have the same meaning as when used in the reasons of 13 November 2014 (the principal reasons). 2. The appeal by the applicants arose out of the default by the Purchaser under a contract for sale and purchase of the Subject Land entered into with the Vendors. The obligation of the Purchaser was guaranteed by the Guarantors. 3. The Vendors terminated the Sale Contract with the Purchaser on the basis of repudiation by the Purchaser. The Vendors subsequently entered into the Resale Contract for the Highview Estate, which included the Subject Land. The Vendors commenced proceedings in the Equity Division against the Purchaser and the Guarantors, claiming damages by reason of the Purchaser's failure to complete the Sale Contract. 4. The primary judge gave judgment for the Vendors against the Purchaser in the sum of $5,662,023 and gave judgment against each of the Guarantors in the sum of $5,799,755. This Court held that the primary judge erred in concluding that the difference between the price payable under the Sale Contract and the price realised under the Resale Contract represented the appropriate measure of the damages. In particular, this Court held that the primary judge erred in not having regard to the market value of the Subject Land as at the date of the Purchaser's breach of the Sale Contract. The Guarantors and the Purchaser did not appear before the primary judge and this Court concluded that, in the absence of contradictors, the primary judge was led into error by the Vendors. 5. The orders of this Court of 13 November 2014 were to the following effect: 1. The appeal be allowed. 2. The orders of the primary judge be set aside. 3. The matter be remitted to the primary judge for the purpose of entertaining any application that a party may wish to make to adduce evidence as to the value of the Subject Land at any relevant time. 4. There be no order as to the costs of the appeal. 5. The costs of the proceedings at first instance be determined by the primary judge. 1. By the notice of motion filed on 26 November 2014, the Purchaser and Mr Ng, one of the Guarantors, have asked that orders (3), (4) and (5) made on 13 November 2014 be set aside and that, in lieu of those orders, it be ordered that the Vendors pay the appellants' costs of the appeal. 2. Rule 36.16 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) relevantly provides that the Court may set aside or vary a judgment or order if notice of motion for the setting aside or the variation is filed before entry of the judgment or order. Under r 36.16(3A), if notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the Court may determine the matter and, if appropriate, set aside or vary the judgment or order under r 36.16(1) as if the judgment or order had not been entered. The notice of motion of 26 November 2014 was filed within 14 days of the making of the orders on 13 November 2014. 3. The focus of the present application is on the third order made on 13 November 2014, providing for a limited remitter to the primary judge. Under r 51.53(2) of the UCPR, the Court may order a new trial on any question without interfering with the decision on any other question, and under r 51.53(3), the Court may, relevantly, order a new trial as to part only of the matter in controversy if it appears to the Court that some ground for a new trial affects that part only. However, under r 51.53(1), the Court must not order a new trial on any ground unless it appears to the Court that some substantial wrong or miscarriage has been thereby occasioned. 4. The present applicants rely on the fact that this Court did not, in terms, order a new trial. However, they say, the effect of the remittal to the primary judge appears to presage the possible conduct of a new trial on any question within the meaning of r 51.53(2) or a new trial affecting part only of the matter in controversy within the meaning of r 51.53(3). Where the Court makes an order under r 51.53(2) or r 51.53(3), it may give such judgment or make such order as the nature of the case requires for the disposal of the remainder of the appeal: subrule (4). 5. The present applicants complain that there was no determination by this Court that the precondition for an order under r 51.53(1) had been satisfied. They say that the Court has not determined that it is apparent that some substantial wrong or miscarriage has been occasioned by the error of law into which the primary judge fell. They rely on the fact that neither party sought a new trial. They also rely on the fact that no application was made to adduce fresh evidence on the hearing of the appeal. 6. It is true that, in the principal reasons, the Court did not in terms state reasons for a conclusion that there was some substantial wrong or miscarriage. However, it is apparent from the principal reasons that the Court concluded that there was a substantial wrong or miscarriage, in that the primary judge misdirected himself as to the appropriate measure of damages. The measure of damages adopted was to the detriment of the present applicants. 7. As indicated in the principal reasons, the conduct of the present applicants in the proceedings at first instance was quite unsatisfactory. They took no part in the hearing. Had they done so and advanced the contentions that were advanced on the appeal, the primary judge may well have come to a different conclusion as to the appropriate measure of damages and the Vendors would have had the opportunity of adducing additional evidence if they were so advised, in the light of such contentions. However, because the present applicants elected to play no part, his Honour had no assistance in that regard. 8. The present applicants had served an expert valuation report, but it appears that they did not wish to proceed with that evidence. When an adjournment was refused, and Mr Ng was asked about serving valuation evidence, Mr Ng declined to answer any further questions. This is clearly not a case where the present applicants made a decision to let the trial proceed because they thought the evidence would not support a finding of substantial damages against them. 9. The Vendors tendered valuation evidence that would not have been admissible if there had been objection to it. The present applicants did not object to the tender of the evidence, but were apparently content for the primary judge to receive it. On one view, justice would be served if the present applicants were held to their decision to allow the case to be decided on such evidence as the Vendors chose to rely on without objection from the applicants. 10. Paragraph 27 of the statement of claim filed by the Vendors on 17 July 2009 stated as follows: By reason of: (a) the [Purchaser's] failure to complete in breach of the [Sale Contract]; and (b) the [Purchaser's] breach of warranty [that it had, prior to entry into the Sale Contract, obtained finance for the purchase on reasonable terms or had the funds available for settlement on the completion date] the [Vendors] have suffered loss and damage. Particulars (i) As at 5 May 2008, the market value of the [Subject Land] was less than $7,210,000. (ii) Alternatively to (i) above, loss suffered upon resale of the [Subject Land]. (iii) Costs, expenses and fees incurred by the [Vendors] in reselling the [Subject Land]. (iv) Holding costs from 20 December 2007, alternatively 26 March 2008 until completion of the [Resale Contract] (v) Legal expenses incurred by the [Vendors] in attempting to complete the sale of the [Subject Land] to the [Purchaser] […] Thus, the statement of claim relied on market value of the Subject Land as at 5 May 2008, the date of repudiation of the Sale Contract. 1. In its defence filed on 5 February 2010, the Purchaser stated at [27] that it "does not admit the allegations contained in [27] of the claim and says further that the plaintiffs failed to take any or any reasonable steps to mitigate any loss and damage suffered by reason of which the plaintiffs are not entitled to recover the loss and damage claimed". That is to say, there was joinder of issue on the value of the Subject Land as at 5 May 2008. Mitigation was not raised by the Purchaser on appeal. 2. Orders along the lines foreshadowed by the Court on 13 November 2014 were for the benefit of the applicants and involved, in effect, giving them a second chance. It has not been suggested that the course proposed by the Court would cause an injustice by reason of departure from the pleadings (see Banque Commerciale SA (en liquidation) v Akhil Holdings Ltd [1990] HCA 11; 169 CLR 279). 3. A substantial wrong or miscarriage was occasioned by the misdirection by the primary judge as to the appropriate measure of damages. To the extent that there is any doubt about the matter, the orders made on 13 November 2014 should be varied so as to order a new trial on the question of damages. 4. It will be entirely a matter for the primary judge, in the light of any further evidence adduced and submissions made on the question of reopening, as to whether to permit the Vendors to reopen to adduce evidence as to the value of the Subject Land at the relevant date. If his Honour refused an application to reopen, the consequence would be that his Honour would be required to determine the question on the evidence presently before him. This Court concluded on 13 November 2014 that there is no evidence as to value at the relevant date. In that context, if the primary judge did refuse an application to reopen, the likely result would be that the proceedings would be dismissed on the basis that the Vendors had failed to establish any loss. 5. On the other hand, if, in the exercise of his discretion, the primary judge allowed the Vendors leave to reopen to adduce further evidence, it would be expected that the Purchaser and Mr Ng would also be entitled to adduce evidence in response. It would then be a matter for his Honour to weigh up all the evidence and reach a conclusion as to whether or not the Vendors had established loss in accordance with the relevant principles. 6. The costs of the proceedings at first instance would then be a matter for the primary judge, according to the ultimate outcome. Whether costs would follow the event would be a matter for the primary judge, after taking into account any further submissions made by the parties or any further evidence that his Honour saw fit to admit. 7. In the principal reasons, the Court indicated that it considered the appropriate order to be that there be no order as to the costs of the appeal. The reasons for that conclusion were stated. No basis has been advanced for the Court to reconsider that exercise of discretion. However, as the present applicants have been substantially unsuccessful on this motion, they should pay the costs of the motion. 8. In order to remove any possible doubt, following orders should be made: 1. Order (3) made on 13 November 2014 be varied to read as follows: "(3) The matter be remitted to Pembroke J for a new trial on the question of the quantum of damages to which the Vendors are entitled, including any application that a party may wish to make to adduce evidence as to the value of the land the subject of the deed of option entered into on 21 November 2005." 1. The notice of motion filed on 26 November 2014 be otherwise dismissed. 2. The applicants on the motion pay the respondent's costs of the motion. ********** Amendments 20 March 2015 - Removal of the words "Decision under Review" before "Judgment" on page 1 of the body of the judgment. 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. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 March 2015