Brothers v Park

[2004] NSWCA 241

CITATION:	Brothers v Park and Anor [2004] NSWCA 241
HEARING DATE(S):	8 July 2004
JUDGMENT DATE:	23 July 2004
JUDGMENT OF:	Giles JA at 1; Ipp JA at 98; Wood CJatCL at 99
DECISION:	(1) Appeal upheld in part. (2) Set aside the judgment and order for costs given and made on 11 November 2003, and in lieu thereof judgment for $570,112 taking effect on 11 November 2003 and an order that the defendant pay sixty per cent of the plaintiffs' costs. (3) Appellant pay the respondents' costs of the appeal.
CATCHWORDS:	Vendor and purchasers - sale of farming property - representation as to Departmental approval to use of part for farming - clause in contract entitling purchasers to terminate if letter evidencing approval not obtained - another clause giving right of entry to prepare ground for crops in locations first approved by vendor - entry and planted and tended crop - representation false - letter not obtainable - purchasers did not terminate - vendor purported to rescind for other reasons - refused to allow purchasers to enter - rescission held ineffective - sale completed - too late to prepare ground for a further crop - whether no causation from false representation because purchasers could have terminated but did not - held causation remained because decision to continue with contract a reasonable decision itself consequential on entry into the contract under the influence of the false representation - whether the loss of profits from the further crop was too remote - held no because, on the evidence, within the contemplation of the parties - whether that loss of profits not caused by refusal of entry because locations for the further crop not proposed and so not approved by vendor - whether this point could be taken on appeal when not taken at trial - whether vendor's conduct dispensed with need for prior approval of locations - held point could be taken and succeeded - damages reduced. D
CASES CITED:	Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310; Allen v Bega Valley Council (CA, 22 December 1994, unreported); Alghussein Establishment v Eton College (1988) 2 WLR 587; Austral Standard Cable Pty Ltd v Walker Nominees Pty Ltd (1992) 26 NSWLR 524; Banque Commerciale SA en liquidation v Akhil Holdings Ltd (1990) 169 CLR 279; Cheall v Association of Professional Executive Clerical and Computer Staff (1983) 2 AC 180; Foran v Wight (1989) 168 CLR 358; Grozier v Tate (1946) 16 LGR (NSW) 57; Hadley v Baxendale (1854) 9 Exch 341; (1854) 156 ER 145; Henjo Investments Pty Ltd v Collins Marrickville (No 2) (1989) 40 FCR 76; Howard v Pickford Tool Co Ltd (1951) 1 KB 417; Lucas v Centrepoint Freehold Pty Ltd (1984) 1 FCR 110 McAllister v Richmond Brewing Co (NSW) Pty Ltd (1942) 42 SR 187; Multicon Engineering Pty Ltd v Federal Airports Corporation (2000) 47 NSWLR 631; Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235. TCN Channel 9 Pty Ltd v Hayden Enerprises Pty Ltd (1989) 16 NSWLR 130; Thompson v ASDA-MFI Group Plc (1988) Ch 241; Water Board v Moustakis (1988) 180 CLR 491.
PARTIES :	Clive Roy Brothers - Appellant Lindsay Gordon Park and Jill Park - Respondents
FILE NUMBER(S):	CA 41141/03
COUNSEL:	B Coles QC & A Rogers - Appellant D H Murr SC & J A Trebeck - Respondents
SOLICITORS:	D G Skinner & Associates - Appellant Holman Webb - Respondents

LOWER COURTJURISDICTION:	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S):	SC 1224/01
LOWER COURT JUDICIAL OFFICER :	Campbell J

CA 41141/03
ED 1224/01

GILES JA
IPP JA
WOOD CJ at CL

Friday 23 July 2004

BROTHERS v PARK & ANOR

Judgment

1 GILES JA: By a contract for sale dated 25 September 2000 Mr Clive Brothers sold to Mr Lindsay Park and Mrs Jill Park the property “Jellalabad”, now “Newmarket”. The sale was completed on 24 March 2001. The purchasers thereafter recovered damages for loss suffered by misleading conduct of the vendor and for breach of contract. The vendor appealed from the award of most of the damages.

2 The misleading conduct was, firstly, representing that the property had a 500 megalitre water storage and, secondly, representing that 11,000 acres part of the property had been approved by the Department of Land and Water Conservation (“the Department”) for farming and that the vendor could obtain a letter to that effect. Campbell J found that the differences between the price paid for the property and its value on the correct positions as to water storage and approval for farming were $140,000 and $220,000 respectively, and awarded damages in those amounts plus interest. The vendor appealed from the award of the $220,000.

3 The breach was of a term of the contract giving a qualified right of entry on the property prior to completion. The judge found that denial of entry caused a net loss of profits of $104,641 from the 2000/2001 rice crop and losses of profits of $963,852 and $83,559 from rice and wheat crops for 2001/2002, and awarded damages in those amounts plus interest. The vendor appealed from the award of the $963,852 and $83,559.

Entry into the contract

4 The property was located about 40 km west of Hay. It was a little less than 25,000 acres. It had substantial water availability, and approximately 1700 acres was laid out to irrigation and suitable for growing rice. A further area could be used for other crops. The property ran a number of cattle and a larger number of sheep.

5 Mr Park of the purchasers had been a farmer for over forty years, with extensive experience of growing rice and wheat. He was interested in purchasing a mixed farming property in the Hay area with a frontage to the Murrumbidgee River.

6 The property was advertised for an auction to be held on 25 August 2000. In mid-August 2000 Mr Park arranged for an inspection. The vendor drove the purchasers around the property. When they were driving near the Murrumbidgee River the vendor told Mr Park that that land was part of the area which had already been passed by the Department, that it had been pulled for roly poly and lignum within the last ten years, and that he would obtain a letter from the Department saying that all of that land could be farmed. On a subsequent occasion, during negotiations to buy the property but before the contract was signed, the vendor told Mr Park that the land already passed by the Department was 11,000 acres.

7 The significance of this was explained by Mr Park -

“I was aware that under certain Native Vegetation Legislation the plants ‘roly poly’ and ’lignum’ could not be removed without the Department’s consent unless the plants had been removed or cut down to ground level within the previous 10 year period. If they had not, then the plant had to remain which prevented the affected areas being utilised for the growing of crops.”

8 The legislation appears to have been the Native Vegetation Conservation Act 1997, imposing restrictions upon the removal of native vegetation without development consent. According to a brochure issued by the Department in June 1999, in the relevant District development consent did not have to be obtained for “the removal of native vegetation, whether seedlings or re-growth less than 10 years of age if the land has been previously cleared for cultivation, pastures or forestry plantation purposes”.

9 Mr Park intended to extend the area under irrigation and planted to rice. The vendor’s evidence included that during discussions to purchase the property Mr Park said that he “wanted to grow 3 x 1500 acre blocks of rice”, to which the vendor replied, “There is plenty of land to do that – but there is no infrastructure – that is your job”. Mr Park said that what he was told about the 11,000 acres “was very important to my decision to purchase the property, as it meant that there was scope for future expansion of the irrigable area, so as to take full advantage of the water available to the property”.

10 The agent told Mr Park that the vendor was not well and could not look after the farm, and wanted the purchaser immediately to take possession and look after it. Mr Park did not want to do that as he thought the farm, and particularly the cattle and sheep, had not been properly looked after. He wanted only to prepare the property for growing rice, which had to be sown no later than the end of October or early November. When pressed by the agent, he said that if the vendor was sick, he would do as the vendor wanted. There was also evidence that it was common, when a property was sold in spring, for the purchaser to be given immediate possession to grow crops, and that the agent said that the purchaser would be given possession.

11 The auction scheduled for 25 August 2000 did not go ahead. The purchasers entered into negotiations, through the agent, and a price and terms of payment were agreed. The price was $3,350,000. The terms of payment were $250,000 deposit, $250,000 on completion, and the balance of $2,850,000 secured by mortgage back and payable as to $500,000 on 7 July 2001, as to $350,000 on 7 September 2002 and as to $2,000,000 on 7 September 2005.

12 The purchasers signed the contract on 12 September 2000. Exchange of contracts took place on 25 September 2000. The date for completion was 7 December 2000.

13 The contract included as special condition 24 -

“ Early occupation by purchaser to do farming work - no reimbursement to purchaser
The purchaser may enter the property and occupy the Manager’s Cottage as licensee only at any time after the date of this Contract and payment of the deposit without payment of any occupation fee to work up ground for crops such work to be at his expense and risk and in locations first approved by the vendor. The purchaser agrees in doing such work to adopt the highest farming standards used in the local district and the purchaser’s entry shall also be governed by the provisions of special condition 25 hereof. The purchaser acknowledges that 14 days notice given to the vendor will be required prior to occupancy of the cottage, which is presently occupied.”

14 Special condition 25 provided for an indemnity to the appellant in respect of claims and losses arising out of activities of the respondents if allowed into possession or occupation of the property prior to completion.

15 Special conditions 26 and 27 provided that from exchange of contracts the purchasers would be responsible for the management of the sheep included in the sale, including that sheep could be sold with the proceeds of sale held by the agent.

16 The origin of these special conditions was presumably either the practice of giving a spring purchaser immediate possession, or the vendor’s wish that the purchaser should immediately look after the farm, although the vendor denied telling the agent that that was what he wanted. The background to the inclusion of the special conditions was not otherwise explained.

17 The contract also included as special condition 30 -

“ Land Clearing

(i) Annexed hereto and marked ‘K’ is a diagrammatic plan of the property etched in green indicting an area of approximately 11,000 acres in paddocks known as ‘Big River’, ‘South Coonoon’ and ‘North Coonoon’ cleared in 1991/92 of vegetation of the types known as roly poly and lignum together with other areas on the property which have been cleared for cultivation and pastures.

(ii) The Vendor must supply written proof to the satisfaction of the NSW Department of Land and Water Conservation of those matters referred to in 30(i) hereof.

(iii) The contract is subject to the purchasers obtaining confirmation from the Department of Land and Water Conservation that as at the date of settlement there is no impediment to the development of that area referred to in sub-clause (i) for intensive irrigation farming due to land clearing restrictions on roly poly and lignum.”

18 Mr Park said in one of his affidavits that he insisted that the contract have “a clause to the effect that completion of the contract was conditional upon me obtaining a letter from the Department of Land and Water Conservation that I was entitled to remove the roly poly and lignum from the 11,000 acres … “. The special condition appears to have been included, by arrangement between the solicitors, after 12 September 2000 and prior to exchange. That may explain Mr Park’s response, when he was taken in cross-examination to special condition 30 and asked to agree that it was his responsibility to “check if that was okay”, that he had never read special condition 30. His further response that he did not rely on special condition 30, but on what the vendor told him, is less readily reconciled with his evidence of insistence on such a clause. The cross-examination, however, did not advert to Mr Park’s evidence of insisting on such a clause, and did not challenge the asserted reliance on what the vendor told Mr Park beyond -

“CANTWELL: Q. In relation to the 11,000 acres, you rely on a conversation with Clive Brothers?
A. Two conversations.
Q. Two conversations?
A. And several other little ones but.
Q. You don’t rely on the contract?
A. No.
Q. What do you rely on the contract for?
A. The money side of it.
Q. What, the money you have to pay?
A. Yes.
Q. What about your rights under the contract, are they relevant to you?
A. They are but I rely on the solicitors to make sure everything is right.
Q. Have you asked your solicitors what their responsibility is about this 11,000 acres?
A. My solicitors?
Q. Yes?
A. I don’t think it’s their responsibility.
Q. Well, the contract is their responsibility?
A. Well, the contract is their responsibility but I didn’t take any notice of the contract with the clearing.
Q. If I put to you that the clearing aspects and conditions in relation to clearing are mentioned in the contract; are you aware of that?
A. I am now aware they are in there but at the time I didn’t. I relied on Clive.”

From contract to completion

19 The judge found that the purchasers “took possession of the property” on 12 September 2000. This was prior to exchange of contracts, but it seems that the taking possession was on a layman’s understanding that signing the contract was sufficient.

20 The judge said -

“14 At the time Mr Park took possession of the property, some of the irrigated paddocks were ploughed. Mr Park had the rest of the irrigated paddocks ploughed, and all the irrigated paddocks fertilised, rolled, and then flooded with water. He arranged for some minor damage to the banks around some of the rice paddocks to be fixed, for a rice crop to be sown, for the crop to be regularly inspected for bloodworm and weeds, and for regular measures to be taken to protect it from ducks. He spent about $225,000 on these activities, and a significant amount of his own time.”

21 Mr Park’s activities in relation to the rice crop went beyond working up ground for crops, extending to repairing water pumps, planting the rice and looking after the rice after it was planted. There was no evidence that the area sown to rice was in locations which the vendor had first approved. Mr Park also spent time and money looking after sheep. Some were in such poor condition that they were put down, others were treated. Old ewes were sent for sale, lambing ewes were segregated, and later the rams were introduced. The sale proceeds were held by the agent.

22 The purchasers did not occupy the manager’s cottage but Mr Park stayed from time to time in the homestead occupied by the vendor; the reason for that was disputed. Mr Park said that, apart from three or four days, he was at the property working about eighteen hours a day from mid-September 2000.

23 The rice crop was sown by about the beginning of November 2001. The area sown was approximately 1360 acres, substantially all the existing irrigated land. Disputes then arose. There may have been a dispute about care and sale of sheep, but the major dispute concerned reimbursement of money. Special condition 22.4 of the contract provided for the vendor to pay a deposit of $150,000 payable to the MIA Council of Horticultural Associations Inc in respect of water costs and for the purchasers to reimburse the vendor on or before 7 October 2000. It included that if the reimbursement was not paid “the Vendor may rescind this Contract … ” . The purchasers did not reimburse the vendor, according to Mr Park because the vendor agreed to defer payment until completion although according to the vendor there was agreement only on deferral for a couple of weeks. Towards the end of November the vendor complained of non-payment, there was a scuffle, and Mr Park was ejected from the homestead.

24 The relationship was plainly soured. The purchasers’ solicitors wrote to the vendor’s solicitors on 20 November 2000 requesting that the contract be varied to introduce a share-farming arrangement and defer completion until 7 December 2005. The reply was in the negative, and conveyed that the vendor was “surprised and upset” at discussion on those matters with Mr Park, “most concerned” that the purchasers had not complied with special condition 22.4 in particular, and “particularly annoyed” at the request, for reasons which were given.

25 On 27 November 2000 the purchasers’ solicitor wrote to the Department, setting out special condition 30 of the contract and saying -

“We understand that the Vendor’s solicitors have provided you with a certificate from Mark Vincent Schiller and Colin James Miller and a covering letter from Mr Clive Brothers as to the clearing of the abovementioned lands in late 1991 and early 1992. If that is the case, the only outstanding requirement is a letter from the Department confirming that there is no impediment to the development of those lands for intensive irrigation farming due to land clearing restrictions on roly poly and lignum.
We also understand that, in discussions with Mr Lindsay Park, before the purchase of the lands, you suggested that it was very important for the purchaser to hold a letter from your Department accepting that the subject lands were not subject to any such restriction. We agree: If the use of the land is restricted by the Native Vegetation Conservation Act the property becomes a grazing property only and its value is greatly reduced.
Accordingly, we should be pleased if you would give your early attention to the provision of a suitable letter. We advise that the matter is due to settle on the 7th of December next.”

26 This brought an immediate response from the Department by a letter dated 27 November 2000, which described the solicitor’s request as “for written advice regarding the interpretation of clearing exemptions on ‘Jellalabad’” and included -

“I have been advised that it is not Department of Land and Water Conservation policy to confirm exemptions under the Native Vegetation Conservation Act, 1997 in writing.
Rather, the onus is on the landholder to be aware of the exemptions, and to be able to furnish evidence of compliance with the legislation if required. … “

27 On 28 November 2000 the purchasers’ solicitors wrote to the vendor’s solicitors asking for copies of the certificate of Messrs Schuller and Miller and of a letter they believed to have been written by the Department in July 2000 “in which it was stated that the land clearing that had been carried out did not contravene the provisions of the Native Vegetation Conservation Act 1997 and there was no impediment to the use of the land for cropping.” It seems that there was a letter and that copies of the documents were provided, but they were not in evidence.

28 The purchasers’ solicitors wrote to the Department for a “pre-application inspection”, as a step to an application for permission to clear land or plant crops on new land. The evidence did not show what happened, but the application was not made until 1 March 2001.

29 On 7 December 2000 the purchasers’ solicitors wrote to the vendor’s solicitors, saying that the purchasers “will refuse to complete the Contract, today” and giving three reasons. One reason was that a stated water licence was included in the sale, by special condition 14.1(c)(i) of the contract completion was “subject to and conditional upon the licence being current and standing in the Vendors [sic] name at completion”, and the licence was not current and could not be provided on completion. Another was that there was a like deficiency under a similar special condition as to the vendor’s interest in a joint water supply scheme.

30 The other reason was -

“(b) The condition imposed by sub-clause (iii) of Special Condition 30 – Land Clearing has not been fulfilled. That is to say, the Purchasers have requested a letter from the Department of Land and Water Conservation that, as at the date of settlement (ie completion), there is no impediment to the development of the area referred to in sub-clause (i) namely ‘Big River’ ‘South Conoon’ and ‘North Conoon’ for intensive irrigation due to land clearing restrictions on roly poly and lignum. The Department have refused to provide a letter or verbal confirmation that no such impediment exists. The effect of the Native Vegetation Conservation Act , 1997 is to prohibit clearing of native vegetation from this land unless clearing takes place (or, has taken place) pursuant to an exemption provided for by the Act or subordinate legislation. Without confirmation, the Purchaser cannot be certain that the lands referred to will be available for agriculture. The Purchasers may find that an Order would be made requiring that they desist from farming these, critical areas and that the land must be allowed to return to native vegetation.”

31 The response of the vendor’s solicitors was -

“Thank you for your fax of 7 December, 2000.

We advise that our client is ready to settle this matter.

We await your further instructions.”

32 The purchasers’ solicitors wrote to the vendor’s solicitors on 11 December 2000, sending the executed mortgage and foreshadowing a tender of the balance of the purchase price, without adjustments and with a claim for compensation in relation to a deficiency of livestock, on the following Thursday. As to the adjustments, it was said -

“Unless there is to be a completion, it would be a waste of time to make the calculations when they will not be acted upon. We, respectfully, request that the Vendor agree and consent to the adjustments being made at a time when actual settlement and completion takes place”.

33 This was very odd. It is unclear whether this indicated that the purchasers were now willing to complete but thought that the vendor would refuse to complete, or whether the solicitors believed that there was some point in making a tender notwithstanding that the purchasers were not willing to complete.

34 The response of the vendor’s solicitors was to send, by a letter dated 12 December 2000, a notice purporting to rescind the contract pursuant to the right of rescission in special condition 22.4.

35 The purchasers’ solicitors wrote that the purchasers “will not accept the Vendor’s purported rescission of the Contract”, and on 19 December 2000 tendered an amount as the amount due on completion. The tender was refused. In fact the amount was a little less than the correct amount, although that was not given as the reason of the refusal.

36 By this point the purchasers clearly had waived the benefit of special condition 30(iii): it was not suggested that the condition was other than for the benefit of the purchasers alone and capable of waiver. Mr Park gave no evidence in chief of the matters operating on the purchasers’ decision to proceed with the contract notwithstanding that they could have terminated it pursuant to cl 30(iii), and nothing was put to him on that subject in cross-examination. The only hint of cross-examination upon failure to terminate the contract pursuant to special condition 30(iii) was in the passage from the transcript earlier set out, in which Mr Park was asked whether his rights under the contract were relevant to him.

37 The vendor’s solicitors wrote on 19 December 2000, confirming that the tender was refused and stating that the vendor “stands by his specific right to rescind this Contract and has no intention of withdrawing his rescission notice”. The letter went on to propose steps to unwind the transaction; I will refer in part to what it said in that respect later in these reasons.

38 It is not clear that Mr Park ceased to work at the property as from 12 December 2000. He certainly ceased on 19 December 2000, on which day the vendor told him “that I was no longer entitled to enter upon the property”. In his oral evidence Mr Park said that the vendor had “kicked me off”. The occasion of the conversation and its terms were not otherwise given in evidence.

39 On 25 January 2001 the purchasers commenced proceedings in which they sought declarations that the vendor’s rescission was ineffective and the contract was “valid and subsisting”. The proceedings were heard on 13 February 2001, with written submissions thereafter. Young J gave judgment on 27 February 2001. His Honour noted that the purchasers also sought specific performance, held that the rescission was ineffective because time under special condition 22.4 was not essential and in any event strict compliance with the time for payment had been waived, and said that “unless the parties can resolve the matter themselves, it would seem that a decree for specific performance will need to be made”.

40 It appears that, without a formal decree, there was agreement that the contract should be completed. It was completed on 24 March 2001, without the confirmation to which special condition 30(iii) referred. The judge found that the purchasers “returned to the property” in the course of March 2001. According to Mr Park, in early March 2001 he inspected the rice crop and engaged someone to look after it, and he visited the property twice a week until he had “full access” from 24 March 2001.

The damages of $220,000

41 The purchasers’ points of claim alleged misleading conduct by representations that 11,000 acres had been cleared, that the area had been approved by the Department for farming, and that the vendor could obtain a letter to that effect. A ground of appeal that the misleading conduct was not in trade and commerce was abandoned. The only allegation of falsity was that the Department had not approved the 11,000 acres for farming. The hearing seems to have gone further, and to have included falsity as to clearing and as to obtaining a letter.

42 The judge found -

“60 The Plaintiffs have failed to establish that Mr Brothers’ statement that the land had been “pulled within the last 10 years” was inaccurate. However, it was inaccurate for Mr Brothers to say that 11,000 acres of land had already been passed by the Department. There was no reasonable basis for Mr Brothers to make the statement that he could obtain a letter from the Department saying that the land could be farmed. Thus, the Plaintiff has established that the making of those statements was misleading and deceptive.
61 It remains to consider what was the effect of Mr Brothers making those statements. I am satisfied that they were a cause of the Plaintiffs entering the contract to purchase the property.”

43 The judge referred to the purchasers’ inability to obtain the confirmation from the Department to which special condition 30(iii) referred, to the vendor’s purported rescission of the contract and its ultimate completion, and to eventual permission from the Department to use 3500 to 4000 acres out of the 11,000 acres for cropping. His Honour then said -

“69 I have given consideration to whether the misrepresentations which I have found occurred concerning the availability of the 11,000 acres ought be regarded as having continued to have a causal effect when the Plaintiffs, having a right to rescind the contract under Clause 30(iii) chose, instead, to complete it. I accept the submission made by Mr Murr SC for the Plaintiffs, that at the time the Plaintiffs made that decision they had already planted a large rice crop and spent something of the order of one quarter of a million dollars on it. If the Plaintiffs chose to end the contract because Clause 30(iii) had not been complied with, they would probably have needed to bring a lawsuit if they wished to recover the expenditure which they had by that stage made on the crop. In these circumstances, where their freedom of action was circumscribed, I would not regard the decision of the Plaintiffs to complete the contract rather than terminate it as an event which severed the causal connection between the initial misrepresentation, and their now having a property of less value than it would have had had the representation been correct.”

44 His Honour went on to arrive at the damages of $220,000.

45 The judge had raised the question of causation during the purchasers’ submissions, notwithstanding that the cross-examination on behalf of the vendor had not entered upon it. The sole ground of appeal was -

“1. There was no causal connection between the alleged representation by the Appellant that 11,000 additional acres had been approved for farming and any damage suffered by the Respondents.
Particulars
The Respondents, after knowledge that there were not 11,000 additional acres available for farming, chose to complete the contract of sale when they had an unfettered right to rescind it.”

46 By s 68 of the Fair Trading Act 1987, the purchasers could recover loss suffered “by” the vendor’s misleading conduct. It was not said that the loss was not suffered by the misleading conduct as to the 11,000 acres because the purchasers had protected their position by the inclusion of special condition 30, in lieu of reliance on the representations about the 11,000 acres. No such submission had been made to the judge, and the cross-examination had not laid a foundation for it.

47 The vendor submitted that the loss represented by the damages of $220,000 was not suffered by the misleading conduct as to the 11,000 acres because the purchasers could have terminated, but did not terminate, the contract pursuant to the right conferred by special condition 30(iii). (He did not say that the loss represented by the damages of $140,000 was similarly irrecoverable because the right of termination had not been exercised.) This submission also had not been given a foundation in cross-examination, which may explain why the vendor’s argument was quite confined.

48 The vendor said that it was not correct that, if the purchasers chose to end the contract because special condition 30(iii) had not been complied with, they would probably have needed to bring a law suit if they wished to recover the expenditure which they had by that stage made on the rice crop. He pointed to his solicitors’ letter of 19 December 2000 proposing steps to unwind the transaction, in which it was said that the vendor had assumed full responsibility for the maintenance and completion of the crop and the solicitors asked the purchasers’ solicitors for “details of your clients [sic] provable expenses in relation to the crop … so that these costs can be refunded to your client”. In a further letter dated 20 December 2000 the vendor’s solicitors asked for “detail of all your clients provable and legitimate expenses arising out of … the crop presently standing on ‘Jellalabad’ … so that funds may be refunded to your clients”, and they also wrote to the agent directing it to refund the deposit to the respondents without deduction and asking for any information the agent may have as to the purchasers’ “provable costs associated with the crop on ‘Jellalabad’” so that the purchasers could be reimbursed. Thus, it was said, the purchasers could not have been deterred from terminating the contract by a perceived difficulty in recovering their expenditure on the rice crop, or for that matter in recovering the deposit, and the judge was in error in his finding as to causation.

49 The vendor did not challenge the judge’s reasoning that, if the purchasers’ freedom of action was circumscribed, the causal connection remained. It was said that his factual basis was erroneous. It may be that his Honour’s attention was not drawn to the vendor’s professed willingness to return the deposit and reimburse expenditure. Even with that in mind, the purchasers could not have been confident of either if they terminated because the condition in special condition 30(iii) had not been fulfilled. Disagreement over what expenditure was provable and legitimate could have been anticipated. In any event, in my opinion, the judge’s finding as to causation was correct.

50 The purchasers’ freedom of action was circumscribed beyond recovery of expenditure on the rice crop; put another and perhaps preferable way, their decision to proceed with the contract was a reasonable decision itself a consequence of entering into the contract under the inducement of the misleading conduct. If the purchasers terminated the contract, they would lose the benefit of their expenditure on the rice crop and the work Mr Park had done. The profit from the rice crop, the product of the expenditure and the work, would go to the vendor, not to them. Mr Park’s work in relation to the sheep would be wasted to the purchasers, who would not receive its benefit. Apart from concern over recovery of expenditure, these matters provided a sound basis for a reasonable choice to continue with the contract, sufficiently plainly in the absence of cross-examination to warrant the finding as to causation. The purchasers did not have to give up their entitlement to damages as the price of making a reasonable choice to continue with the contract.

51 The vendor referred to the observations of Lee J, in relation to the equivalent provision of the Trade Practices Act 1974 (C’th), in Henjo Investments Pty Ltd v Collins Marrickville (No 2) (1989) 40 FCR 76 at 93 -

“In assessing the extent of the pecuniary remedy available under s 82 of the Act, it may be necessary to define that measure by reference to the particular concepts of remoteness, causation, mitigation and contributory negligence: see Munchies v Belperio at 712. The inquiry as to the amount of loss or damage suffered by a person as a result of, or by reason of the conduct of another in contravention of s 52, becomes an assessment of that which is reasonable having regard to the degree of connection between the loss suffered and the contravening conduct as well as to the extent to which the loss could have been mitigated.
Therefore, if a person elects to affirm a contract induced by fraud when possessing information which would indicate to a person acting reasonably that the loss caused, and to be caused, by the tort is best mitigated by rescission of the contract, such further loss may be irrecoverable not by the analogous application of a "rule of practice" employed at common law, but because it is not within the contemplation of s 82. See T N Lucas Pty Ltd v Centrepoint Freeholds Pty Ltd at 117; Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd at 60; Tiplady v Gold Coast Carlton Pty Ltd (1984) 3 FCR 426 at 464; Neilsen v Hempston Holdings Pty Ltd (1986) 65 ALR 302.”

52 At common law a person induced by deceit to enter into a disadvantageous contract can rescind the contract, or can affirm it and recover damages. The entitlement to recover damages is not lost because the contract could have been rescinded. There may be a limit on the losses which can be recovered, and the loss to which his Honour was referring, as can be seen by the cases cited, was the loss incurred in continued unprofitable trading after it had become apparent that the person had been misled in entering into the disadvantageous contract. The “rule of practice” came from McAllister v Richmond Brewing Co (NSW) Pty Ltd (1942) 42 SR 187, cited in Lucas v Centrepoint Freehold Pty Ltd (1984) 1 FCR 110 at 113-6, in which Jordan CJ said at 192 that when the person affirms the contract -

“A rule of practice is, however, now well established that where a person complains that he has been induced by deceit to buy something and pay more for it than it was worth, the amount of damages which he is entitled to recover is restricted, prima facie at any rate, to the amount by which the price which he has paid exceeds the true value of the thing bought at the time when he bought it: Potts v Miller (1940) 64 CLR 282.”

53 The vendor’s reliance on Lee J’s observations was misplaced. The observations were not directed to the loss presently in question, represented by the difference between the value of what the person got and what the person was led to believe he would get. Further, the fact that the decision to proceed with the contract was a reasonable decision itself a consequence of entering into the contract takes this case outside Lee J’s observations. In my opinion, the loss found in the damages of $220,000 was suffered by the vendor’s misleading conduct notwithstanding that the purchasers had been entitled to terminate the contract pursuant to special condition 30(iii).

54 In my opinion, therefore, the ground of appeal has not been made out.

The damages of $963,852 and $83,559

55 In the points of claim the purchasers relevantly alleged the suffering of loss as a result of exclusion from the property from 19 December 2000 to 27 February 2001. The exclusion referred back to an allegation of wrongful exclusion on 19 December 2000 in breach of “the terms of the contract for sale alleged in paragraphs 15, 16 and 17 above”. Paragraph 15 set out special condition 24, para 16 asserted that the special condition entitled the purchasers to do all things necessary to plant and establish a rice crop, and para 17 asserted an implied term that the purchasers would continue to have access to care for the crop. Although the points of claim also alleged wrongful rescission of the contract, that was apparently only as background to the exclusion in breach of special condition 24 as supplemented by interpretation and implication.

56 The judge said -

“81 At the time of entering the contract Mr Park had formed plans for what would be done with the property, so far as cropping was concerned, after the 2000/2001 rice growing season. He intended to plant 860 hectares of rice in the 2001/2002 rice growing season. Of this, he planned that about 600 hectares was to be in the South Coonoon Paddock, and the remainder in the Dam paddock. The whole of the rice crop to be planted in 2001/2002 was to be planted on newly developed irrigation land. To be able to plant rice on that newly developed land, he would have needed first to obtain Departmental approval to plant the rice to the area in question. He would then have needed to engage a surveyor to survey the area, and mark out blocks and bays, and then to landform the area. It would also be necessary to install two river pumps to pump water from the Murrumbidgee River to the area in the South Coonoon paddock. There was already a water channel available to the area in the Dam Paddock. It would also be necessary to install irrigation stops, and various pipes, in both areas. Only after this preparatory work was done could he commence preparation of the seedbed. To fit in with the growing season for rice, the preparatory work would have to have been finished by, at the latest, September 2001.”

57 His Honour then recounted that the purchasers had a landforming business through which they could have landformed the area intended to have been planted to rice, that the landforming would have taken approximately four or five months and that for weather reasons landforming would have been commenced so as to have been completed by about the end of June 2001.

58 His Honour said -

“85 Thus, the exclusion of the Plaintiffs from the property had the effect that they lost the window of opportunity to enable landforming to be carried out, to enable 860 hectares of rice to be planted in the 2001/2002 season.

86 No other obstacle to the planting of the 860 hectares has been shown to exist. Departmental authority to plant the rice was applied for on 1 March 2001. On 11 July 2001 the Department told Mr Park that “the vegetation issue on those areas applied for rice in 01/02 will not impede your development program … you must now have soils investigation carried out over the new areas.” Mr Park had arrangements in hand for the necessary pumps. The drilling of the country has taken place.”

59 His Honour went on to assess the damages for the exclusion from the property. He found that the profits on the 860 hectares of rice would have been $1,122,829, less the profits on the rice crop in fact planted on part of the existing irrigated land in 2001/2002 giving a loss of profits of $963,852. He accepted that the purchasers would have sown to wheat the land used for the 2001/2002 rice crop, as well as the rest of the existing irrigated land, and that the loss of profits on the wheat they would have sown was $83,559.54.

60 Mr Park’s evidence of his intention to plant the 860 hectares of rice had not been entirely consistent. In one affidavit he had said that he intended to landform the paddocks “after I completed the purchase of the property and the present crop was harvested”. In a later affidavit he said that it was his intention to plant a further 860 hectares of rice in 2001/2002 and that, if the contract had been completed in December 2000, he would have been able to landform that area and plant rice in September/October 2001. In his oral evidence he said that he would have started the surveying and landforming in December 2000. The judge’s implicit finding that the landforming would have commenced prior to 24 March 2001 was not challenged in the appeal. His Honour’s reasoning was that inability to commence landforming prior to 24 March 2001 meant that the purchasers reasonably decided not to commence that work, because they could not be sure of completing it by the end of June 2001; but that if they had been allowed access to the property from 19 December 2000 they would have commenced the work and, together with the prior step of survey and the other steps of obtaining Departmental approval, installing pumps and providing irrigation works, would have planted a 2001/2002 rice crop on the newly developed irrigation land and a wheat crop on the whole of the existing irrigated land.

61 The appellant did not challenge this reasoning, or any other factual findings underpinning it. The grounds of appeal were -

“2. If the First Respondent was excluded from the property on 19 December 2000:

(i) The right of the Respondents to enter upon the property was limited to a right of entry to work up ground for crops in locations first approved by the Appellant.

(ii) The Respondents claimed loss did not relate to the working up of ground for crops.

(iii) Further, or in the alternative, there was no evidence that the Appellant had approved the locations which the Respondents claimed they had intended to work up and in relation to which the Respondents claimed to have suffered loss.
3. His Honour Campbell J erred in not having regard, and in not holding, that any damage suffered by the Respondents in relation to the 2001/2002 rice crop and the 2001 wheat crop, was not within the reasonable contemplation of the parties.”

62 The second of these grounds of appeal can conveniently be taken first, on the assumption that the purchasers were denied access to the property to which they were entitled and thereby suffered the 2001/2002 crop losses.

63 Under the so-called rule in Hadley v Baxendale (1854) 9 Exch 341; (1854) 156 ER 145 the extent of damages for breach of contract is confined to those losses which “may fairly and reasonably be considered either arising naturally, ie, according to the usual course of things, from such breach of contract itself, or such as those which may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract as the probable result of the breach of it” (see at 354; 151). These tests of remoteness have been refined in later cases, but for present purposes the refinements need not be considered. The vendor submitted that the 2001/2002 crop losses could not have been reasonably supposed to have been in the contemplation of the parties at the time the contract was made as the probable result of failure to give access in accordance with special condition 24.

64 It is unnecessary to consider whether the losses arose naturally from the failure to give access. In my opinion, they may reasonably be supposed to have been in the contemplation of the parties.

65 The purchasers would not have left the property idle, and it was within the contemplation of the parties that they would work the property for crops. They had embarked on rice cropping, exercising the entitlement to access under special condition 24 (although at this time neither the vendor nor the purchasers seem to have acted strictly in accordance with special condition 24). The vendor and Mr Park were both knowledgeable in growing rice and wheat. The vendor’s evidence included that in discussions to purchase the property Mr Park said that he wanted to grow three 1500 acre blocks of rice. In my opinion it may be taken to have been within the reasonable contemplation of the parties that, if the seasons and the requirements of preparation for and sowing crops so dictated, the purchasers would exercise the right of access under special condition 24 for further working of the property for 2001/2002 crops, in particular for some or all of the foreshadowed 3500 acres of rice, on land extending beyond the existing irrigated land.

66 That contemplation was in my view sufficient, notwithstanding that the immediate focus of special condition 24 was spring 2000 and the time during which the contractual entitlement to access might have been expected to operate was extended as a result of the purported rescission and subsequent proceedings. As was said by McHugh JA in Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310 at 365-6, the parties need not contemplate the degree or extent of the loss suffered, or the precise details of the events giving rise to the loss, and it is sufficient that they contemplate the type of loss suffered. The difficulty lies in the level of characterisation of the loss which must be suffered, but its general nature and the general nature of its suffering must be contemplated and is sufficient. Here the contemplation satisfied that requirement. The effect of the breach, if occurring, was prevention of working up the land for crops, and if occurring in December 2000 – March 2001 was prevention of working up the land for the expanded cropping which Mr Park said he wanted to undertake. The fact that the breach was delayed by the vendor’s purported rescission until December 2000 and thereafter could not work to the vendor’s advantage.

67 I return to the first of the grounds of appeal. The vendor’s submissions were directed to the access to the property, and in substance were that the purchasers did not lose a window of opportunity to plant the 2001-2002 rice crop, because their entitlement to access pursuant to special condition 24 was not shown to have permitted them to do the work which, on the judge’s reasoning, would have been done and begun prior to 24 March 2001.

68 The vendor first submitted that the survey and landforming work was not within the phrase “to work up ground for crops” in special condition 24. No direct explanation of the phrase was given in evidence. It is clear that the crops included rice, and that, if the rice was to be sown on land other than the existing irrigated land, landforming would be appropriate if not necessary and the associated work would be necessary. Working up ground for crops must mean whatever work is appropriate for the planting of the crop. In my opinion, where the crop was rice to be planted on land not already suitable for planting rice, it extended to the landforming and the associated works. I do not think that this submission should be accepted.

69 The vendor then submitted that, absent prior approval of the locations in which the ground would be worked up, there was no entitlement to enter and work up the ground. There was no evidence that the vendor had approved the locations in which Mr Park said he intended to plant the 860 hectares of rice. Thus, it was said, the purchasers did not prove that the 2001/2002 crop losses were caused by breach of special condition 24.

70 The submission had not been put to the judge, whose reasons did not address any significance in the absence of evidence. The purchasers submitted that it was not open to the vendor to rely on the absence of evidence, when he had not at the trial taken the point that prior approval of the locations was necessary. That is better deferred until the vendor’s submission has been explored.

71 What was the purchasers’ entitlement under special condition 24? The condition was poorly drafted, but the right of entry was limited to entry (a) for the purpose of occupation of the manager’s cottage, subject to giving fourteen days notice, and (b) for the purpose of working up ground for crops in locations first approved by the vendor. For the latter entry, prior approval was part of the description of the entitlement. If no location was approved, the purchasers would be entitled to enter and occupy the manager’s cottage if they had given the fourteen days notice, but they were not entitled to enter and work up any ground for crops. If a location was approved, the purchasers could enter and work up the ground for crops in that location, but not in any other location.

72 In the operation of the condition, the purchasers would propose locations which the vendor would approve or decline to approve. The context and the words “first approved” did not envisage the vendor nominating locations which the purchasers could take up or decline to take up as they chose, although if the purchasers did take up the vendor’s nomination that would be prior approval. No criteria were stated for the vendor’s approval. Either the vendor’s approval or disapproval was unfettered, or by implication the vendor could not unreasonably withhold approval.

73 As I have said, in the beginning neither the vendor nor the purchasers seem to have acted strictly in accordance with special condition 24. There must have been implicit approval of the locations in which the 2000/2001 rice crop was sown, because the vendor must have known what was being done. The vendor having told Mr Park that he was no longer entitled to enter upon the property, the judge found breach in “being deprived of the opportunity to care for the 2000/2001 rice crop”, perhaps not breach of special condition 24 but of the implied term although the judge did not find the implied term and referred only to the special condition.

74 By late December 2000 there was contractual rigidity. The purchasers did not treat the purported rescission as a repudiation, accept it, and terminate the contract. The contract remained on foot, and the purchasers had only the qualified entitlement to enter upon the property which it conferred.

75 For present purposes there can be put aside the manager’s cottage and care of the 2000/2001 crop. The vendor was not in breach of contract in excluding the purchasers from working up for crops the 860 hectares of which Mr Park spoke, because there had been no approval of any locations for working up the ground for crops. While Mr Park had prior to the contract foreshadowed the three 1500 acre blocks, his intention had been general and at the time there was no occasion for locations to be considered. The fact that the vendor responded that there was plenty of land did not mean approval of any location that the purchasers selected.

76 The purchasers submitted that it must be asked why there had been no approval of the locations for the 860 hectares. They said that the starting-point was the vendor’s purported rescission of the contract, which made it pointless for them to propose locations for approval, and that when on 19 December 2000 the vendor told Mr Park that he was no longer entitled to enter upon the property it was even more clear that it was pointless. Had the purchasers asked, the vendor would plainly have refused to consider approval or declined approval, because his position was that the contract was at an end and there was no right of entry at all. The purchasers said that in those circumstances the vendor could not take advantage of the absence of approval of the locations.

77 The principle on which the purchasers relied was that described by Dixon CJ in Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235. The defendant agreed to sell a quantity of oats to the plaintiff fob Sydney, to be loaded in January or February on a ship or ships of which the plaintiff would give fourteen days notice. At the end of January the defendant told the plaintiff that it could not supply the oats fob Sydney but could supply them fob Melbourne. The plaintiff could not find a ship leaving Melbourne, and said it required delivery in Sydney, but did not nominate a ship or ships. At the end of February the defendant said it could not supply the oats. When the plaintiff claimed damages for failure to deliver the oats, the defendant said that it was not obliged to deliver them because a ship or ships had not been nominated. It was held that the defendant was liable for non-delivery because it had “adopted an attitude clearly importing that the plaintiff need take no such course” (at 246, referring to nominating a ship or ships), and the principle was stated at 246-7 -

“Now long before the doctrine of anticipatory breach of contract was developed it was always the law that, if a contracting party prevented the fulfilment by the opposite party to the contract of a condition precedent therein expressed or implied, it was equal to performance thereof: Hotham v. East India Co . But a plaintiff may be dispensed from performing a condition by the defendant expressly or, impliedly intimating that it is useless for him to perform it and requesting him not to do so. If the plaintiff acts upon the intimation it is just as effectual as actual prevention.”

78 The principle was stated in the same case by Kitto J at 250 -

“The principle, which applies whenever the promise of one party, A, is subject to a condition to be fulfilled by the other party, B, may, I think, be stated as follows. If, although B is ready and willing to perform the contract in all respects on his part, A absolutely refuses to carry out the contract, and persists in the refusal until a time arrives at which performance of his promise would have been due if the condition had been fulfilled by B, A is liable to B in damages for breach of his promise although the condition remains unfulfilled.”

79 In Foran v Wight (1989) 168 CLR 358 a number of the justices saw the principle as founded in estoppel (see per Mason J at 409-11, Deane J at 434, Dawson J at 448-9). In Austral Standard Cable Pty Ltd v Walker Nominees Pty Ltd (1992) 26 NSWLR 524 Clarke JA, with whom Kirby P relevantly agreed, said at 533 that since Foran v Wight the dispensation “should be regarded as firmly grounded in estoppel”, its elements bring “intimation by one party that it would not perform its obligations thereby rendering nugatory any attempt by the innocent party to do so and an acting on that intimation by the innocent party to its detriment”. The term requiring fulfilment of the condition is not written out of the contract, but the party can not say that the condition has not been fulfilled.

80 The purchasers’ submission required that the condition taken to have been fulfilled was approval of the locations of the 860 hectares. I do not think that is correct. Any dispensation with performance by the purchasers (here not performance of an obligation) must be measured by what the purchasers would have done. The purchasers could have proposed the locations of the 860 hectares for approval, but that did not mean that the locations would have been approved. Let it be assumed that, but for the vendor’s purported rescission and denial of entitlement to enter upon the property, they would have proposed the locations, but did not do so because of the vendor’s stance – Mr Park gave no such evidence, but it is a readily available inference. The principle could found dispensation with proposal of the locations. But the vendor may or may not have given approval, and I do not think the principle would have the further consequence the vendor was deprived of his ability to approve or disapprove the locations.

81 This may be tested by postulating that, the contract still being on foot, the purchasers proposed the locations of the 860 hectares. If the vendor had an unfettered ability to approve or disapprove, on the facts he would have declined approval, as the purchasers accepted, and the purchasers would not have an action for breach of contract. If there was an implication that the vendor could not unreasonably withhold approval, the purchasers’ cause of action would be for unreasonably withholding approval, not for simple exclusion: the purchasers did not present such a case, and it is not self-evident. On the case they presented, it remains that they did not establish an entitlement to access permitting them to do the work for the 2001/2002 rice crop.

82 There was reference in submissions to a related but different principle, described by Lord Diplock in Cheall v Association of Professional Executive Clerical and Computer Staff (1983) 2 AC 180 at 189 that “a man cannot be permitted to take advantage of his own wrong”. An application of the principle is that a party to a contract terminating upon an event or conferring a benefit upon an event can not rely on his own breach of contract bringing about the event; many of the cases are discussed in the speech of Lord Jauncey in Alghussein Establishment v Eton College (1988) 1 WLR 587, and a local illustration of this application is TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 at 147-8, 161. It is applied as a rule of construction (ibid), but has also been seen as an implied term (Thompson v ASDA-MFI Group Plc (1988) Ch 241). The principle itself has a broader reach, for example in the interpretation of statutes (Grozier v Tate (1946) 16 LGR (NSW) 57 at 61; Allen v Bega Valley Council (CA, 22 December 1994, unreported)) and in the common law rules that an arsonist cannot recover under a fire insurance policy and murderer cannot claim in the estate of his victim.

83 I do not think this avails the purchasers. The vendor’s wrong was either his purported rescission of the contract or his denial of entry on 19 December 2000. The purported rescission was a repudiation of the contract, but the purchasers did not accept it and it was “a thing writ in water and of no value to anybody” (Howard v Pickford Tool Co Ltd (1951) 1 KB 417 at 421 per Asquith LJ). This is an overstatement, since a repudiation can have consequences such as enlivening the Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd principle, and could be a breach of contract in failing to complete on the due date. But the purchasers did not allege such a breach, and absence of approval was not a consequence of any wrong in the purported rescission. Nor was it a consequence of any wrong in the denial of entry on 19 December 2000. In either case there was no more than the dispensation with proposal of locations already considered; there was no wrongful refusal of approval to the locations of the 860 hectares.

84 If it is open to the vendor to take the point, in my opinion it should be found that the purchasers did not prove that the 2001/2002 crop losses were caused by breach of special condition 24. I go then to the purchasers’ submission that it was not open to the vendor to rely on the absence of evidence when he had not at the trial taken the point that prior approval of the locations was necessary.

85 The vendor’s points of defence stated only, “The Defendant denies each and every allegation in the Plaintiffs’ Points of Claim.” The points of defence were accompanied by a document entitled “Affidavit and Defence” in the form of an affidavit in which the vendor said -

“2. My defence is as hereunder:
(a) I rely on the Contract and the doctrine of Caveat Emptor.
(b) I deny each and every allegation of the Plaintiffs [sic] Points of Claim.”

86 This was unsatisfactory. The vendor’s then solicitor (not the solicitor at the time of the transaction or at the time of this appeal) permitted the vendor to deny on oath many incontrovertible facts, including that he was the vendor of the property. It nonetheless put the purchasers on notice that they had to prove all matters necessary to establish, amongst other things, their entitlement to damages for breach of contract.

87 The vendor was represented at the trial by his then solicitor. The solicitor cross-examined Mr Park at length, and diffusely. He was eventually put under a time limit, and was then refused an extension of the time. After the purchasers’ counsel had made his submissions, the solicitor’s submissions occupied twelve lines in the transcript. They contributed nothing.

88 To say that the point was not taken at the trial, therefore, meant that the vendor’s solicitor did not address it, and was of little significance when the solicitor took no identifiable point and the points of defence stood as a general denial. The judge did not raise the point, as he had raised the significance of special condition 30(iii) to causation and other matters, during the purchasers’ submissions, but that did not excuse proof of all matters necessary for the entitlement to damages for breach of contract. The point was taken in that the vendor required the purchasers to prove their case. A less than ideal conduct of the vendor’s case did not relieve the purchasers from any of their burden.

89 The purchasers submitted that, by analogy with Pt 15 r 13 of the Supreme Court Rules, it was necessary for the vendor to flag in the points of defence that prior approval to locations had not been given, as something which might take them by surprise or which raised a matter of fact not already arising. I do not agree. In the manner I have indicated, prior approval was part of the description of the purchasers’ entitlement. In order to establish breach of contract causing the 2001/2002 crop losses, the purchasers had to establish approval of the locations in which Mr Park said he intended to plant the 860 hectares of rice. It would have been open to the vendor’s solicitor expressly to take the point at the trial, or for the judge to have raised it and determined it.

90 In the circumstances of this case, in my opinion, the principles sufficiently identified by reference to the discussion in Multicon Engineering Pty Ltd v Federal Airports Corporation (2000) 47 NSWLR 631 at 645-7 do not preclude the vendor from now relying on the absence of evidence. The purchasers had framed their case as one of breach of the contractual entitlement conferred by special condition 24. Faced with the broad denial in the points of defence, they had full opportunity to put all necessary evidence before the Court. It is clear enough that they could not provide evidence of approval of the locations. I do not think the point is correctly described as a new ground not taken at the trial, or that it is correct to say that the vendor is departing from the course he adopted at the trial. On the ultimate question of whether it is “expedient and in the interests of justice to entertain the point” (Water Board v Moustakis (1988) 180 CLR 491 at 497; Multicon Engineering Pty Ltd v Federal Airports Corporation at 645), in my opinion the balance of expediency and justice favours doing so.

91 The circumstances are essentially the same as those in Banque Commerciale SA en liquidation v Akhil Holdings Ltd (1990) 169 CLR 279. The plaintiff sued the bank and another defendant, claiming that the defendant had procured the bank to transfer away shares held on trust for the plaintiff. The bank filed a defence pleading that the proceedings were statute barred. It did not appear at the hearing. Judgment was given for the bank and the defendant on the ground that the plaintiff had not established a beneficial interest in the shares. On appeal, the bank relied on its defence that the proceedings were statute barred. It was held that it could do so.

92 Mason CJ and Gaudron J said that the bank’s failure to appear was not a reason to treat the defence as withdrawn. After reference to the cases about taking a point for the first time on appeal, including Water Board v Moustakis, they said at 284 -

“In the present case there is no basis upon which it could be suggested that Akhil may have wished to call evidence to show that the breaches by the Bank occurred at a time inside the six-year period of limitation. Nor, by reason that the trial judge would not have been free either to disregard the defence or to treat it as withdrawn from the trial, can it be said that the case sought to be made on appeal is new or different from that which emerged at the trial. Accordingly, neither the decision in Moustakas nor the rule upon which it rests prevented the Bank from relying on its pleaded defence in the Court of Appeal.”

93 Toohey J said at 304 -

“But these decisions involved the way in which a trial was conducted and arguments presented. Here the Bank did not appear at the hearing; its absence did not affect the course of the trial and the issues as pleaded remained the issues between it and Akhil Holdings. Likewise, no question of election could arise. The failure of the Bank to appear at trial did not constitute any representation on its part that the issues for determination were other than the issues as pleaded; … “

94 In my opinion, therefore, the first of the grounds of appeal has been made out.

The result

95 The damages are reduced from $1,512,052 to $464,641, plus interest. For reasons which he gave, the judge allowed interest on the $140,000 and the $220,000 at 8.5 per cent from 24 March 2001 to the date of entry of judgment, which was 11 November 2003, and interest on the $104,641 at Schedule J rates from 1 January 2002. That interest is $105,471.

96 The judge ordered that the vendor pay ninety per cent of the purchasers’ costs, less than full costs no doubt because the purchasers failed on some further claims. The vendor has had partial, but monetarily significant, success in the appeal. He could have succeeded at the trial had the point on which he succeeded then been brought out in the manner it has been brought out on appeal. The purchasers should be put in the costs position they would have been in had the point been brought out at the trial. In my opinion, it should be ordered that the vendor pay sixty per cent of the purchasers’ costs of the trial and pay the purchasers’ costs of the appeal.

97 I propose the following orders -

(1) Appeal upheld in part.

(2) Set aside the judgment and order for costs given and made on 11 November 2003, and in lieu thereof judgment for $570,112 taking effect on 11 November 2003 and an order that the defendant pay sixty per cent of the plaintiffs’ costs.

(3) Appellant pay the respondents’ costs of the appeal.

98 IPP JA: I agree with Giles JA.

99 WOOD CJ at CL: I have read in draft form the judgment of Giles JA. I agree with the orders proposed, and with the reasons of his Honour.

**********

Last Modified: 07/26/2004