Blackmore Design Group Pty Ltd v Mudge

[2006] NSWDC 160

CITATION:	Blackmore Design Group Pty Ltd v Mudge [2006] NSWDC 160 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	24 November 2006
JUDGMENT DATE:	15 December 2006
JUDGMENT OF:	Rein SC DCJ
DECISION:	See [42].
CATCHWORDS:	Claims by architect for unpaid fees - Adoption of referee’s report - Principles to be applied - Identification of contracting parties - Whether alternative claims in contract against defendants can be pursued where all defendants admit contract with one of them - Identity of contracting party issue - Defendants raise points not taken before referee and change in approach by plaintiff to calculation of claim from that contained in pleading not notified to referee
CASES CITED:	Celthene Pty Ltd v W K J Hauliers Pty Ltd [1981] 1 NSWLR 606 Ciavarella v Balmer (1983) 153 CLR 438 Healey v Commonwealth Bank of Australia [1998] NSWSC 678 Homebush Abattoir Corporation v Bermria Pty Ltd (1991) 22 NSWLR 605 Johnson v Australian Casualty Co Ltd (1992) 7 ANZ Ins Cas 61-109 Karam v ANZ Banking Group Ltd [2003] NSWSC 866 MacMillan v Mumby [2006] NSWCA 74 Mulligan v Benton [1999] NSWCA 339 Multicon Engineering Pty Ltd v Federal Airports Corp (1997) 47 NSWLR 631 Nine Network Pty Ltd v Kennedy Miller Television Pty Ltd (unreported, NSWCA, 8/06/94, BC9405038) Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116; [2001] NSWCA 346 Sargent v ASL Developments Ltd (1974) 131 CLR 634 Scarf v Jardine (1882) 7 App Cas 345 Skinner & Edwards (Builders) Pty Ltd v Australian Telecommunications Corp (1992) 27 NSWLR 567 Southdown Publications Pty Ltd v ACP Magazines Pty Ltd (2003) 60 IPR 367; [2003] NSWCA 347 Super Pty Ltd v SJP Formworks (Aust) Pty Ltd (1992) 29 NSWLR 549 Taylor v J Thomas & Son (1983) 2 ANZ Ins Cas 60-524 United Australia Ltd v Barclays Bank Ltd [1941] AC 1; [1940] 4 All ER 20 White v Overland [2001] FCA 1333
PARTIES:	Blackmore Design Group Pty Ltd (Plaintiff) Phillip Mudge (First Defendant) James Ferry (Second Defendant) Rebemta Pty Ltd (Third Defendant)
FILE NUMBER(S):	777 of 2005
COUNSEL:	R Bellamy (Plaintiff) P Taylor SC; P Doyle-Gray (Defendants)
SOLICITORS:	Boyd House & Partners (Plaintiff) Swaab Attorneys (Defendants)

1 The Court is concerned with two notices of motion in relation to the adoption of a report of Ms Janet Grey, who was appointed as referee to determine all issues between the parties by order of the Court made on 17 August 2005 per Johnstone DCJ pursuant to Pt 20 r 20.20.

2 Ms Grey provided her report dated 30 October 2006 to the Court (Exhibit “A”).

3 The plaintiff (for whom Mr R Bellamy of counsel appears) seeks an order that the report be adopted in accordance with Part 20 r 20.24.

4 The defendants (for whom Mr Phillip Taylor SC with whom Mr Doyle Gray of counsel appears) oppose adoption and seek rejection of the report, or at least significant aspects of it.

5 The proceedings concern development projects at Queenscliff, Balgowlah and Harbord (referred to as “the Peninsula”) in which the defendants were involved or had an interest. The plaintiff (“Blackmore”) is a company which provided architectural services in respect of the projects. There is no dispute that fees of $338,193.33 were rendered by Blackmore, nor that an amount of $150,000 was received by Blackmore. Although there were strictly nine separate fee proposals and acceptances, they all related to the three projects. There are distinctions drawn between each of the contracts, so I shall refer to them as “The First Queenscliff Agreement”, “The Second Queenscliff Agreement”, “The Additional Works Agreement”, “The Further Queenscliff Agreement” (all of which relate to the Queenscliff Project); “The Balgowlah Agreement”, “The Second Balgowlah Agreement”, “The Third Balgowlah Agreement” (all of which relate to the Balgowlah Project); “The First Peninsula Agreement” and “The Second Peninsula Agreement” (both of which relate to the Harbord Project).

6 The learned referee saw herself as having to determine between whom the various contracts for architectural services were made, and found that the contracts were made between Blackmore on the one hand and Mr Mudge (“Mudge”) on the other, but that as Mudge was in partnership with Dr Ferry (“Ferry”) she found that Blackmore had contracted with both Mudge and Ferry.

7 The learned referee had to determine whether Blackmore’s designs were defective or deficient because they did not meet certain criteria demanded by the relevant local council. She accepted that the plans did not meet the strict requirements of the council’s parameters but she found that in one respect the architect had been instructed by Mudge (himself a town planner) to draft the plans in that way. In another respect she regarded the lack of conformity as remediable. She took the approach that in the absence of rejection of the plans by the defendant, the alleged deficiencies could in any event only constitute, if made out, a basis for a claim in damages. No evidence having been led of rectification or costs of rectification or damage consequent upon the alleged defects, she found that Mudge and Ferry had not made out any basis for resisting the claim for payment of the fees.

8 There were articulated by the defendants four points of attack on the referee’s decision.

(1) That in relation to four of the contracts (namely the Further Queenscliff Agreement, the Additional Works Agreement, the Second Balgowlah Agreement and the Third Balgowlah Agreement), the plaintiff having pleaded that there were contracts between it and Rebemta Pty Ltd (“Rebemta”), or alternatively Rebemta and Mudge, or alternatively Rebemta, Mudge and Ferry, and all three defendants having admitted that there was an agreement between the plaintiff and Rebemta, in effect in the terms pleaded (see for example para 31 of the Amended Statement of Claim and paras 41-43 of the Defence in relation to the Second Balgowlah Agreement), it was not open to the plaintiff to attempt to press on and argue that one or other of the alternatives pleaded was correct. It was noted that the referee incorrectly described the pleadings in para 6 of the report, and did not note the admission to which I have referred. I shall refer to this as “the Rebemta pleading point”.

(2) The referee erroneously in respect of all nine contracts concluded that Mudge and Ferry were the contracting parties, when she should have been found that Rebemta was the contracting party (“the identity of the parties point”).

(3) The referee wrongly found the defendants to have accepted the plans in the case of the Balgowlah contracts, because the defendants did not accept this work. The defendants assert that a wrong approach in principle was taken because the referee focussed on “core” components and she therefore wrongly determined that $188,193.33 was owing by Mudge and Ferry to Blackmore (“the defects point”).

(4) Although Blackmore pleaded in the Amended Statement of Claim in respect of the First Peninsula Agreement and the Second Peninsula Agreement similar matters to those pleaded in respect of the other agreements, at the hearing Blackmore indicated that it accepted that $37,452.80, the full amount due for architectural work in respect of the Peninsula Agreement, had been met. Evidence was led from Mr Pearson, the relevant architect employed by Blackmore, that Blackmore had applied $37,452.80 of the $150,000 paid by the defendants (or at least one of them) to the fees due on the Peninsula Agreements. At the hearing Blackmore did not seek to establish that it had done the work in respect of Peninsula, or that any money had not been paid, since it accepted that it had been paid in full for the Peninsula Agreements. It should be noted that the defendants, by their defence, denied all of the paragraphs pleaded in the Amended Statement of Claim, except for paras 48 and 53, and except for the fact that they agreed that if there was an agreement, then it was between Rebemta and was in the terms pleaded by Blackmore. The defendants argued before the referee that since no evidence had been led by Blackmore in relation to the Peninsula Agreements, the referee should reject Blackmore’s claim in respect of those agreements. The defendants assert that the referee’s finding that the Peninsula debt was paid was flawed. The defendants, I should note, do not challenge the proposition that in the absence of agreement or specific direction by the debtor, a creditor is able to apply payment to whatever debt it wishes (see Karam v ANZ Banking Group Ltd [2003] NSWSC 866; Healey v Commonwealth Bank of Australia [1998] NSWSC 678) but they submit that Blackmore, by failing to prove its entitlement to payment pursuant to the Peninsula contracts, has not established that the debt to which it was allocating the payment was in fact owing. The referee dealt with the Peninsula point at [126]-[134] of the report. I shall refer to this point as “the Peninsula Point”.

Principles in Relation to Adoption of Expert Reports

9 The principles relevant to the task which I have to perform are dealt with in cases of the NSW Court of Appeal: Super Pty Ltd v SJP Formworks (Aust) Pty Ltd (1992) 29 NSWLR 549, Homebush Abattoir Corporation v Bermria Pty Ltd (1991) 22 NSWLR 605; Mulligan v Benton [1999] NSWCA 339 and Nine Network Pty Ltd v Kennedy Miller Television Pty Ltd (unreported, NSWCA, 8/06/94, BC9405038).

10 There is a judicial discretion to review the report and decide whether to adopt, vary or reject it – consistent with both the purpose of the rule and the wider interests of justice according to law: Super at 563E.

11 Importantly, Homebush and Super are authority for the proposition that (per Gleeson CJ at 563):

“where the subject matter of dissatisfaction with a referee’s report is a question of law, or the application of legal standards to established facts, then a proper exercise of discretion would require a judge to consider and determine that matter afresh”

12 In Nine Network Gleeson CJ endorsed the statement of Giles CJ Comm Div (as he then was) who heard the matter at first instance, that:

“As a broad proposition, depending upon the circumstances of each case, the Court will not reconsider disputed questions of fact where there is factual material sufficient to entitle the referee to reach the conclusion he [or she] did, particularly where the disputed questions are in a technical area where the referee enjoys an appropriate expertise.”

13 In Super at 562, Gleeson CJ did say in the course of discussing the principles:

“I am unable to accept, either as an absolute rule, or as a prima facie rule subject to defined or definable exceptions, that a party who is dissatisfied with a referee’s report is entitled as of right to require the judge acting under part 72 r 13, to reconsider and determine afresh all issues whether of fact or law, which that party desires to contest before the Judge.”

14 In addition to the cases mentioned above, the defendants here relied on the decision of Cole J in Skinner & Edwards (Builders) Pty Ltd v Australian Telecommunications Corp (1992) 27 NSWLR 567. In Skinner, Cole J observed that the Court is not bound to review the evidence or the submissions before the referee but it may do so if the Court does not have “comfortable satisfaction” that the reasons disclosed in the report reasonably lead to the finding of fact made by the referee: see at 576B.

15 I summarise the relevant principles applicable to this case as follows:

(1) the Court has a wide discretion whether to adopt, vary or reject the report;

(2) if an error of law in the report is identified, the Court is required to consider and determine the legal issue afresh;

(3) provided the referee has factual material sufficient to entitle the referee to reach a conclusion, the Court will not reconsider disputed questions of fact, particularly if disputed questions are in a technical area where the referee enjoys appropriate expertise;

(4) there is no obligation on a Court to review the evidence or submissions before the referee in relation to facts, but it may do so particularly if it is not comfortably satisfied that the reasons disclosed in the report reasonably lead to the finding of fact made by the referee.

16 I do not accept Blackmore’s submission that in the event the report is not adopted or not adopted in its entirety, that the matter should be remitted to the referee – particularly where the points involved are questions of law, or mixed questions of fact and law, and/or involve the manner in which the matter was conducted before the referee. Although the questions at issue involve $188,000, a considerable amount of time and money have already been spent on the case.

The Pleading Point

17 This may be framed as follows: if a plaintiff pleads that it “entered into a contract with D1, or alternatively with D1 and D2, or alternatively with D1, D2 and D3”, and D1, D2 and D3 admit in their defence a contract made between the plaintiff and D1, can the plaintiff press on with a claim based on the alternative pleading of a claim against D2 and D3 as well as D1?

18 This question is one of law that, subject to one qualification with which I deal below, ought be reviewed.

19 Neither party was able to find a case precisely on point. Mr Bellamy argued that the absence of authority supports his contention that no such principle exists. He also made reference to Bullen and Leake and Jacob’s, “Precedents of Pleadings”, 12th ed, pp 41 and 79, which makes no reference to any such limitation and notes that “Where sufficient admissions are made by the defendant, by his defence or otherwise, the plaintiff may apply for such judgment or order as form those admissions he may be entitled to, without waiting for the trial; and the court may give such judgment or make such order on such application as it thinks just.” I did draw to the parties’ attention the decision of the House of Lords in United Australia Ltd v Barclays Bank Ltd [1941] AC 1; [1940] 4 All ER 20, which deals with inconsistent claims (a claim by United Australia Ltd for moneys lent or had and received against MFG Trust Ltd, which was discontinued, followed by a claim by United Australia Ltd against Barclays Bank for conversion of a cheque drawn by Lower Ancobra (Gold Coast) Areas Ltd in favour of United Australia Ltd, which cheque was indorsed to MFG Trust Ltd). The Privy Council upheld the appeal by United Australia, which had been held to have lost the right to claim against Barclays, and Lord Atkin said at 29-31 in dealing with decisions as to waiver of tort:

“It seems to me that in this respect it is essential to bear in mind the distinction between choosing one of two alternative remedies and choosing one of two inconsistent rights. As far as remedies were concerned, from the oldest time the only restriction was on the choice between real and personal actions. If you chose the one, you could not claim on the other. Real actions have long disappeared, and, subject to the difficulty of including two causes of action in one writ, which has also now disappeared, there has not been, and there certainly is not now, any compulsion to choose between alternative remedies. You may put them in the same writ, or you may put one in first and then amend and add or substitute another.

… on a question o f alternative remedies, no question of election arises until one or other claim has been brought to judgment. Up to that stage, the plaintiff may pursue both remedies together, or, pursuing one, may amend and pursue the other, but he can take judgment only for the one, and his cause of action on both will then be merged in the one.”

20 It is important to recognise that the approach of Lord Atkin focuses on remedies as opposed to rights; as the High Court emphasised in Ciavarella v Balmer (1983) 153 CLR 438 at 449, election between inconsistent rights differs from election between inconsistent remedies, and there is no inconsistency between cases such as Sargent v ASL Developments Ltd (1974) 131 CLR 634 which deal with the former and not the latter. There is no doubt that by a pleading, a party can elect to affirm a contract (see Taylor v J Thomas & Son (1983) 2 ANZ Ins Cas 60-524) or repudiate a contract: see Johnson v Australian Casualty Co Ltd (1992) 7 ANZ Ins Cas 61-109, and see also Celthene Pty Ltd v W K J Hauliers Pty Ltd [1981] 1 NSWLR 606. Indeed in Lord Atkin’s speech he makes reference to Scarf v Jardine (1882) 7 App Cas 345, in which the plaintiff elected to sue one set of partners and was held precluded from subsequently suing another set of partners, but Scarf v Jardine was not a case in which the pleading sought to keep the two inconsistent options alive by pleading them in the alternative. The creditor, Jardine, had commenced proceedings against Beech and Rogers (and not Scarf) and had lodged a proof of debt in the bankruptcy of Beech and Rogers and hence was precluded by reason of his election from suing Scarf, when prior to judgment Beech and Rogers went into bankruptcy.

21 I accept that a claim that D1 is the contracting party is inconsistent with a claim that D1, D2 and D3 are the contracting parties. If it be true that inconsistent remedies can be pursued until judgment, I can see no reason why inconsistent contractual claims cannot be pursued up to judgment, particularly where there is no admission by the defendants that any amount was owing by D1. It follows in my view that the plaintiff was entitled to seek judgment against Mudge, Ferry and Rebemta, notwithstanding their admission that there was a contract with Rebemta. It does not follow that the plaintiff was entitled to seek judgment against Mudge and Ferry alone, because that claim was not pleaded or agitated. I shall return to that point below.

22 Even were I of the view that there was an impediment of the sort asserted, the point was not taken before the referee and I do not think it is open to the defendants to now rely on a point which was not run before the referee (ie that since the defendants had admitted a contract with Rebemta, Blackmore was precluded from pressing on with a claim against Mudge and Ferry). I do not think it is in the interests of justice to permit a party to attack a referee’s report on the basis that a point which was not taken before the referee was not considered: see Multicon Engineering Pty Ltd v Federal Airports Corp (1997) 47 NSWLR 631 dealing with an appeal to the Court of Appeal.

The Identity of the Parties Point

23 The question of who in fact were parties to a contract is, I think, a mixed question of fact and law. The question of who was intended to be the contracting party is often a very difficult question: see for example Southdown Publications Pty Ltd v ACP Magazines Pty Ltd (2003) 60 IPR 367; [2003] NSWCA 347; MacMillan v Mumby [2006] NSWCA 74.

24 There appears to have been considerable confusion in respect of this issue, generated it would seem by:

(1) The variety of names and addresses in the letters and invoices sent by Blackmore from Mudge c/- Mudge Property Services (p 222 Exhibit “1”), Mudge Property Services (p 114 Exhibit “1”), Ferry and Mudge (pp 116, 294 Exhibit “1”), Rebemta (pp 70, 77 and 124). The plans drawn by Blackmore reflect the diversity of names, many of these showing the client as “Rebemta Pty Ltd” (pp 272-282, 331-335 Exhibit “1”) but the earlier ones showing “Phil Mudge and Dr Jim Ferry” (pp 245-255 Exhibit “1”).

(2) The evidence of Mudge that Mudge Property Services was a business name used by Rebemta (see para 5 of Mudge’s affidavit of 7 April 2006 p 178 Exhibit “1”) and the absence, apparently, of any attack on that evidence.

(3) The fact that each of Blackmore’s alternative counts included Rebemta and yet it sought to argue that only Mudge and Ferry were liable.

(4) The paucity of evidence from both sides as to how Pearson was notified of the name Mudge Property Services and as to how he came to use those names.

(5) A confusion as to the evidence tendered – Mr Doyle refers to an ASIC search of Mudge Property Services as showing that name as the trading name of Rebemta (see T223.11 p 598 Exhibit “1” and see T222.31-32 p 597 of Exhibit “1”). Mr Bellamy does not appear to have responded to this and the defendants have tendered the search on the motions before me. I think in all the circumstances it is appropriate to receive that evidence.

(6) The complication of arrangements between Mudge and Ferry.

25 Given that the first fee proposal (as opposed to fee estimate) was directed to “Mr Phil Mudge C/O Mudge Property Services” (see Queenscliff Fee Proposal of 11 March 2002 p 50 Exhibit “1”), and given that there was evidence of a conversation between Pearson and Mudge in which Mudge said nothing that would suggest that he would not be personally liable for the work which was requested (see paras 12-24 of Pearson’s affidavit) the referee had sufficient material to form the view that that contract was made between Blackmore and Mudge. Unless there was agreement by which that contract was novated as one between Blackmore on the one hand and Mudge and Ferry (or Rebemta) on the other, it would remain a contract between Blackmore and Mudge. Although Pearson was told by Mudge that he was bringing in a partner, that did not of itself without acceptance by Blackmore bring in an additional party to the contract.

26 In the absence of specific oral conversations concerning the individual contracts which explained why fee proposals were being addressed to Rebemta for example or “Ferry & Mudge” rather than Mudge, the fee proposals and their undisputed acceptance lead to the conclusion that the person to whom the letter was addressed was intended by Blackmore (as offeror) to be the offeree. Mr Taylor in submissions accepted this and Mr Bellamy pointed to no evidence of the type that would contradict this other than the fact, as the referee had noted, that Blackmore and Mudge had had many personal dealings before as architect and town planner.

27 In my view, therefore, attention to the named addressee of the fee proposals reveals the identity of the offeree. I do not regard “C/O” in “Mudge C/O Mudge Property Services” as indicating that Mudge is not the offeree.

28 It follows that the eight contracts involving the amounts shown were made between Blackmore as follows:

(1) $27,500 the First Queenscliff Agreement: Mudge (Exhibit 1 p 50)

(2) $99,076.01 the Second Queenscliff Agreement: Mudge & Ferry (Exhibit 1 p 61)

(3) $20,072.80 the Queenscliff Additional Works Agreement: Rebemta (Exhibit 1 p 72)

(4) $71,500 the Balgowlah Agreement: Mudge Property Services ie Rebemta (Exhibit 1 p 114)

(5) $32,070 the Second Balgowlah Agreement: Rebemta (Exhibit 1 p 124)

(6) $23,685.20 the Third Balgowlah Agreement: Rebemta (Exhibit 1 p 137)

(7) $8852.80 the First Peninsula Agreement: Mudge Property Services ie Rebemta (Exhibit 1 p 694)

(8) $28,600 the Second Peninsula Agreement: Mudge and Ferry (Exhibit 1 p 697)

29 I have in (7) and (8) referred to pp 694 and 697 of Exhibit “1”, but Exhibit “1” does not extend past p 688. I have taken the reference from the table annexed to the defendants’ written submissions of 6 November 2006.

30 So far as the one contract not listed in [28] is concerned, this was pleaded as an oral agreement. Given that Rebemta had been introduced as the contracting party for the Queenscliff Additional Works Agreement I think it is appropriate in the absence of some clear indication by the parties that the identity of the contracting party would be changed thereafter to treat Mudge as requesting the further work on behalf of Rebemta. The amount owing on that contract is $26,830.57.

31 I have taken the amounts referred to from the calculations provided by Mr Taylor.

The Defects Point

32 The defendants do not now challenge the referee’s conclusion that Rebemta (or the other parties if their submissions on the Rebemta and identity of parties points fail) did accept the work of Blackmore in relation to the Queenscliff Agreements. Mr Taylor seemed to accept that it was open to the referee to find that the defendants (or the relevant defendants) did accept the First and Second Balgowlah Agreements by entering into the Third Balgowlah Agreement. The point involves only $4160 if the referee was entitled to find acceptance of the work comprised in the First and Second Balgowlah Agreements.

33 I cannot discern in the referee’s report any finding of fact that the defendants accepted the work done, although she appears to accept that Mudge used the plans in discussions with the council. It was never pleaded by the defendants that the work of Blackmore for Balgowlah was rejected by it, and nor does it appear from the submissions of the defendants that this was argued. What was argued was that Blackmore had failed to adhere to “the core components of the brief” (T212 p 587 Exhibit “1”) and that Blackmore failed to “comply with the important elements of the brief”: p 639 Exhibit “1”. The defendants argued that Blackmore’s work on the Balgowlah Project did not comply with the brief.

34 The referee noted the “core component” argument and indicated that she was not sure what was meant by that phrase, but would assume that what was intended was a breach that “was not capable of correction but was fundamentally wrong in some way”, but she went on to indicate that although the design did not meet criteria of the local council, this was at least in part due to the specific instructions of Mudge and was rectifiable. The defendants in their submissions seek to attack the referee’s findings because of the way that the matter was approached by her. The defendants did not plead a total failure of consideration but rather that the designs were incomplete, deficient and defective.

35 Given that Blackmore led evidence of the work performed, I think it was incumbent on the defendants to show that the work was incomplete, deficient or defective and they (or the relevant defendant) had suffered loss or damage as a result. Whilst the referee accepted that the experts’ conclave had reached agreement that the three designs did not meet the requirements of various planning controls “and the alleged brief”, the referee not only did not accept that any of the alleged defects arose from any fault of Blackmore, she did not regard those that were found, in the context, to be significant, particularly since they were not intended to be final plans and were not finalised because the project was abandoned. The referee had no evidence before her of any damage. Although it was not put as a defence that there had been a total failure of consideration, the referee’s conclusion implicitly rejects any such contention. In my view, since the question of defects in the plans and their significance was so clearly part of the referee’s expertise it is incumbent on this Court to be wary of interfering with her conclusions and I am not persuaded that it is appropriate to review her conclusions of fact on this point, nor that her decision has proceeded on some incorrect view of what had to be decided, particularly having regard to the way the defendants chose to argue the case.

The Peninsula Point

36 The pleading by para 56 asserted that $338,193.94 was owing for all the fees rendered. It deducted from the total of the obligations $338,193.34, the total of $150,000 paid in three amounts. This does not appear to be an allocation by the plaintiff to any particular account or agreement. On that approach it was necessary for the plaintiff to prove that it was a creditor on each of the nine contracts including the Peninsula Agreements. It chose not to do so, but in the course of final submissions asserted contrary to the position taken in its pleadings that it would treat $37,454.80 of the money received as a payment in satisfaction of the Peninsula debt.

37 A letter sent by Blackmore on 23 July 2002 (p 317 Exhibit “1”) advised that Blackmore regarded the Peninsula invoice as paid and see also para 111 of Pearson’s affidavit (p 45 of Exhibit “1”) which was inconsistent with the approach taken in the pleadings.

38 The question arises as to whether having elected to treat the $150,000 as a reduction in a total amount by its pleadings it was open to Blackmore to resile from that election. If Blackmore was not entitled to resile from their election nothing was said by the defendants to that effect – rather the defendants chose to argue that having put nothing forward in support of the Peninsula Agreement, Blackmore must lose on that claim. The referee never determined, and was never asked to determine, whether it was open to Blackmore to proceed in the manner it did. Mr Bellamy maintains that in the absence of some protest by the defendants, that is the end of the issue. The defendants do not seek to reopen the issue but rather want to rely on the absence of any evidence called by the plaintiff.

39 The announcement by Blackmore at the reference that it was treating Peninsula as having been paid came very late in the piece: see T225 p 600 Exhibit “1”. In my view it was not open to Blackmore to alter its position as revealed in its pleadings and revert to what had been its position in 2002 after the close of evidence. I would have expected the defendants’ counsel to have objected to such an attempt to resile from the case as pleaded but no such point was taken, rather what was argued was that Blackmore had led no evidence in relation to Peninsula and therefore had to lose. The tactics on the part of both parties appear to me to be of a kind which attracted criticism in White v Overland [2001] FCA 1333, approved in Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116; [2001] NSWCA 346.

40 The referee was therefore given no proper assistance in identifying an issue and did not determine whether or not it was open to Blackmore to approach the matter in a different way to that pleaded. The referee at [128] of her reasons referred to uncontested evidence of Pearson (at para 111 of his affidavit) and had been included for calculation purposes and made no reference to the case pleaded by Blackmore, noting only the submissions: see [126]. If it was Blackmore’s intention to approach the matter on the basis that the Peninsula agreements had been paid for and with the consequent effect that it would not be seeking to prove what its pleading averred in that connection, then that should have been announced at the very latest at the commencement of the reference. Having abandoned its attempt to prove a case pleaded without amending the pleadings, Blackmore ought not be entitled to judgment.

41 In my view, the referee (for reasons that lay entirely at the feet of the parties) fell into error in allowing the claim for Peninsula, and that claim should be rejected.

Conclusion

42 It follows subject to the matter referred to in [43] below that judgment should be entered:

(1) against Mudge for (a) $27,500; (b) 99,076.01; total $126,576.01;

(2) against Ferry for $99,076.01;

(3) against Rebemta for (a) $20,072.80; (b) 26,830.53; (c) 71,500; (d) 32,070; (e) 23,685.20; total $174,158.53.

43 I have previously drawn attention to the fact that each of Blackmore’s alternative pleaded cases sought judgment against Rebemta, yet at the reference, judgment was sought against Mudge and Ferry. Before me the report was not attacked by Blackmore on the basis that Rebemta was not included when it should have been and it was not part of the defendants’ argument that Rebemta should be added where liability was found to exist against Mudge and Ferry. Accordingly the appropriate judgments are those in [42] above.

Costs

44 I will hear the parties on the issue of costs.

45 It was agreed by the parties that the figures in [42] above must be adjusted to take into account the payment of $150,000 made prior to the commencement of proceedings. The parties agreed that consequential upon the conclusions reached by the Court, the following judgments would follow in the light of the appropriate adjustments:

· Judgment in favour of the plaintiff against Mudge in the sum of $17,826.01 plus interest in the sum of $6641.53, being a total of $24,467.54.

· Verdict and judgment in favour of Ferry against the plaintiff.

· Judgment in favour of the plaintiff against Rebemta in the sum of $132,908.53 plus interest in the sum of $49,485.65 being a total of $182,394.18.

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05/03/2007 - Paragraph 45 added to include consequential orders agreed on 20/12/06. - Paragraph(s) 45