Nadinic v Drinkwater [2017] NSWCA 114

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Nadinic v Drinkwater [2017] NSWCA 114 Hearing dates: 10 April 2017 Decision date: 30 May 2017 Before: Beazley P at [1]; Leeming JA at [3]; Sackville AJA at [151] Decision: 1. Appeal allowed. 2. Set aside orders 1-4 made on 9 December 2016. 3. The parties are referred to court-annexed mediation. Such mediation is to occur by no later than 25 July 2017. 4. The parties are to attend upon the Principal Registrar of this Court forthwith to obtain a date for mediation. 5. After 25 July 2017 the proceeding is remitted to the Equity Division for a new trial before a judge other than Pembroke J. Such remitter to include the question of the costs of the first trial. 6. Ms Drinkwater to pay Mr Nadinic's costs of the appeal. 7. Ms Drinkwater's oral application made on 10 April 2017 for monies to be paid from the joint bank account is refused. Catchwords: EQUITY – fraudulent misrepresentation – rescission at law and in equity – restitutio in integrum – basis on which orders may be made to achieve "practical justice"

FRAUD – difference between fraud at common law and in equity – obligation to plead fraud with specificity – obligation to confront witness in cross-examination – inability to make findings of fraud consistent with but going beyond case advanced at trial – whether "fraud unravels all" – discretionary considerations attaching to rescission for fraudulent misrepresentation

RESCISSION – property development agreement – Deed of Settlement between two shareholders – one shareholder agreed to purchase interest of other shareholder – purchaser failed to pay purchase price – purchaser alleged she had entered into agreement by reason of other shareholder's misleading and deceptive conduct – primary judge found fraud and set aside part of Deed – appeal allowed, orders set aside and retrial ordered Legislation Cited: Australian Consumer Law, ss 18, 243, 236 Evidence Act 1995 (NSW), s 140 Fair Trading Act 1987 (NSW), s 42 Real Property Act 1900 (NSW), ss 42, 57 Strata Schemes Development Act 2015 (NSW), s 24 Trade Practices Act 1974 (Cth), s 52 Cases Cited: Alati v Kruger (1955) 94 CLR 216 Assets Company Ltd v Mere Roihi [1905] AC 176 Bale v Mills (2011) 81 NSWLR 498; [2011] NSWCA 226 Banque Commerciale SA en liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 Bibby Financial Services Australia Pty Ltd v Sharma [2014] NSWCA 37 Briginshaw v Briginshaw (1938) 60 CLR 336 Cassegrain v Gerard Cassegrain & Co Pty Ltd (2015) 254 CLR 425; [2015] HCA 2 Civil Service Co-operative Society of Victoria Ltd v Blyth (1914) 17 CLR 601 Derry v Peek (1889) 14 App Cas 337 Drew v State of New South Wales [2015] NSWCA 159 Drinkwater v Nadinic [2016] NSWSC 1364 Drinkwater v Nadinic [2016] NSWSC 1733 Erlanger v New Sombrero Phosphate Company (1878) 3 App Cas 1218 Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39 Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478; [2002] HCA 22 Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 Goodwin v Commissioner of Police [2012] NSWCA 379 Hatziandoniou v Ruddy (No 2) [2015] NSWCA 277 Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 Henjo Investments Pty Limited v Collins Marrickville Pty Ltd (1988) 39 FCR 546 Hoare v Brembridge (1872) LR 8 Ch App 22 HP Mercantile Pty Ltd v Dierickx [2013] NSWCA 479; 306 ALR 53 Kirwan v Cresvale Far East Ltd (in liq) [2002] NSWCA 395; 44 ACSR 21 Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 Kubovic v HMS Management Pty Ltd [2015] NSWCA 315 Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 Lazarus Estates Ltd v Beasley [1956] 1 QB 702 Magill v Magill (2006) 226 CLR 551; [2006] HCA 51 Maguire v Makaronis (1997) 188 CLR 449 McAllister v Richmond Brewing Co (NSW) Pty Ltd (1942) 42 SR (NSW) 187 Munchies Management Pty Ltd v Belperio (1988) 58 FCR 274 Nadinic v Drinkwater [2016] NSWCA 377 Newbigging v Adam (1886) 34 Ch D 582 Nocton v Lord Ashburton [1914] AC 932 O'Sullivan v Management Agency and Music Ltd [1985] QB 428 Polyaire Pty Ltd v K-Aire Pty Ltd (2005) 221 CLR 287; [2005] HCA 32 Redgrave v Hurd (1881) 20 Ch D 1 Roos v Director of Public Prosecutions (1994) 34 NSWLR 254 Senanayake v Cheng [1966] AC 63 Sgro v Australian Associated Motor Insurers Ltd (2015) 91 NSWLR 325; [2015] NSWCA 262 Spence v Crawford [1939] 3 All ER 271 State of New South Wales v Hunt (2014) 86 NSWLR 226; [2014] NSWCA 47 SZFDE v Minister for Immigration and Citizenship (2007) 232 CLR 189; [2007] HCA 35 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57 United Petroleum Pty Ltd v Pentaco Oil (Aust) Pty Ltd [2016] FCA 118 Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 184 CLR 102 Texts Cited: P Finn, "Common Law Divergences" (2013) 37 Melbourne University Law Review 509 M Lobban, "Nineteenth century frauds in company formation: Derry v Peek in context" (1996) 112 Law Quarterly Review 287 D O'Sullivan, S Elliott and R Zakrzewski, The Law of Rescission (2nd ed 2014, Oxford University Press) P Turner, "Rescission of the doctrine of rescission for fraud" [2016] Cambridge Law Journal 206 Category: Principal judgment Parties: Andrew Frane Nadinic (Appellant) Cheryl Drinkwater as trustee for The Drinkwater Family Trust (Respondent) Representation: Counsel: A G Martin (Appellant) M Ashhurst SC / L D Corbett (Respondent)