Browne v Browne - [2017] WASC 297

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: BROWNE -v- BROWNE [2017] WASC 297

CORAM: SMITH AJ

HEARD: 21 SEPTEMBER 2017

DELIVERED : 21 SEPTEMBER 2017

FILE NO/S: CIV 2044 of 2017

BETWEEN: STEVEN EDWARD BROWNE
Plaintiff
AND
EDWARD BROWNE
Defendant

Catchwords:

Practice and procedure - Order 32 r 4 - Application for separate trials of liability and compensation or damages - Factors relevant to whether separate trial of issues should be held - Turns on its own facts

Legislation:

Rules of the Supreme Court 1971 (WA), O 32 r 4

Result:

Plaintiff's application for a separate trial of issues granted

Category: A

Representation:

Counsel:

Plaintiff: Mr P B Dobson
Defendant: Mr J C Yeldon

Solicitors:

Plaintiff: Hotchkin Hanly Lawyers
Defendant: Dwyer Durack

Case(s) referred to in judgment(s):

City of Swan v Lehman Brothers Australia Ltd [2009] FCA 784
Landsdale Pty Ltd v Moore [2009] WASCA 176
Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1
SMITH AJ:

(This judgment was delivered extemporaneously on 21 September 2017 and has been edited from the transcript).

This is an application made by the plaintiff for a separate trial of issues pursuant to O 32 r 4 of the Rules of the Supreme Court 1971 (WA).
The issue in respect of which a separate trial is sought is a claim of relief for equitable compensation or damages.

Summary of factual issues relevant to this application raised in the pleadings

The plaintiff, Steven, is one of four sons of the defendant, Edward (Ted). Ted is the registered proprietor of a number of farming properties which Steven and his brothers have occupied to carry on the business of farming. One of those properties is named Burracoorong.
Steven claims that:
(a)between 1974 and 1987, Ted promised Steven that he would ultimately gift Burracoorong to him. This promise is denied by Ted;
(b)in reliance on the promise made to him, he and his wife paid for and built a house on Burracoorong in 1989 to live in, and in which they continue to live.
In or about 1974, Steven, Ted and his wife, Steven's mother, Mae, and one of Steven's brothers entered into a written partnership agreement to carry on the business of farming. The other two brothers later joined the partnership.
In or about 1999, Steven, Ted, Mae and the three brothers entered into an agreement. Whilst the terms of the agreement are in dispute, leaving aside the terms of the agreement as it was said to have applied to the other brothers, it is agreed that part of the agreement was that Steven would be entitled to conduct his own farming business on Burracoorong (which Ted said excluded one paddock), Ted and Mae would leave the partnership, and Steven would pay $16,000 per annum to Ted. Steven claims part of the agreement was that Ted would ultimately give Burracoorong to him.
Ted denies this and claims that it was agreed, among other conditions insofar as the agreement applied to Steven, that:
(a)Steven would use the land, provided he behaved appropriately to Ted and Mae, such behaviour to be determined by Ted at his absolute discretion;
(b)Ted retained ownership of Burracoorong;
(c)the amount to be paid for the use of the land was to be determined by Ted and Mae at their absolute discretion;
(d)on or about 29 February 2000, Ted, Mae, Steven and the other brothers agreed the payments would be classified as rent; and
(e)provided that Steven complied with his obligations pursuant to the agreement, both Ted and Mae would make a will which provided that, upon the death of both of them, Steven would be given Burracoorong.
Ted says that on or about 29 February 2000, he varied the use of the land at Burracoorong, so that Steven could use all of Burracoorong, and he did that pursuant to the absolute discretion clause of the agreement.
Steven says that it was a term of the agreement (which he refers to as a family agreement) that Ted would guarantee his borrowings using Burracoorong as security to enable him (Steven) to continue to farm the property.
On or about 24 December 2002, Ted agreed to guarantee a loan taken out by Steven and his wife that was secured against Burracoorong.
Sometime between 2010 and 2013, the relationship between Steven and Ted broke down. In 2013, Ted demanded Steven sign a lease for Burracoorong for a term of 10 years with an option for a further term of 10 years with a reservation to Ted of a right to sell.
On or about 1 June 2017, Ted refused to acknowledge his promise that he would give Burracoorong to Steven and refused to continue to guarantee Steven's borrowings.
Steven pleads that in reliance of the promises made by Ted, he conducted himself in accordance with a representation that has two elements as follows:
(a)that Ted would ultimately gift Burracoorong to him; and
(b)that Ted would continue to guarantee his (Steven's) borrowings until such time as the properties were gifted so he could continue to farm Burracoorong.
Steven claims he relied upon this representation by conducting his affairs on the basis of the representation, including investing in building farming infrastructure to the value of $713,000, did not invest elsewhere and did not pursue a livelihood away from Burracoorong.
Steven claims the relief claimed in [A] to [F] of the statement of claim as follows:
A.A declaration that the defendant holds his legal interest in the property known as Burracoorong on trust for the plaintiff.
B.An order that the defendant do forthwith transfer his interest in Burracoorong free of encumbrances to Steven.
C.Alternatively, orders that:
(a)Burracoorong is to be transferred to the plaintiff on the defendant's death; and
(b)the defendant continue to guarantee the plaintiff's loan, to allow Steven to continue farming Burracoorong, in an amount to be determined.
D.Alternatively, an order that the defendant pay compensation or damages to the plaintiff.
E.An order that the defendant pay the plaintiff's costs of the proceedings.
F.Such other relief as the Court sees fit.
The relief pleaded in [A] appears to be the primary claim which seems to go together with [B] being an order that the defendant do forthwith transfer his interest in Burracoorong free of encumbrances to Steven. In the alternative to [A] and [B], it is pleaded in [C] that Burracoorong is to be transferred to the plaintiff on the defendant's death, and the defendant continue to guarantee the plaintiff's loan, to allow Steven to continue farming Burracoorong, in amount to be determined.
In [D], the relief sought is put as an alternative to [A], [B] or [C], that is, an order that the defendant pay compensation or damages to the plaintiff.
Ted, in his counterclaim, claims increased rent payments of $34,000 per annum from Steven from the date of 1 July 2013, which he says is payable pursuant to the income discretion clause of the agreement entered into on or about 1999.

This matter has been expeditiously listed for hearing

The writ of summons was filed on 26 June 2017 and the matter admitted to the commercial and managed cases list on 25 July 2017.
The matter has been dealt with expeditiously by the court because Steven's loan that is secured on Burracoorong becomes due and payable on 1 January 2018, and Ted has indicated that he will not continue to guarantee the loan beyond that date. In these circumstances, the matter has been listed for trial for five days, commencing on 6 November 2017.
The plaintiff in this application seeks that the court deal separately with the question of payment of any equitable damages or compensation, as pleaded in [D] of the prayer for relief.
The plaintiff claims there is no material prejudice to the defendant if the order sought by the plaintiff is made. The plaintiff points out that if it is determined by the court on the question of liability that the promises made by Ted to gift Burracoorong to Steven is made out, and that Steven is entitled to the relief claimed in [A] and [B], or, alternatively, [C], the relief claimed in [D] will fall away. In these circumstances, the plaintiff says the parties will be spared the cost of obtaining evidence that would not be required.
The plaintiff says the value of the property, Burracoorong, is only relevant to the determination of the relief claimed in [D], and that if the court finds that the plaintiff has an equity, but that equity is not sufficient to ground the transfer of the property, or, alternatively there are other reasons why the property should not be transferred, expert evidence as to the value of the promise that is found by the court will be required. This evidence may be unnecessary if orders are to be made in terms of transferring the property, either now or on the defendant's passing, or if the claim is unsuccessful.
The defendant disagrees and claims that if the plaintiff succeeds, the most likely result is that the defendant would not be required to provide a guarantee of the loan (which, as pleaded, is not limited to Burracoorong, as the previous guarantee was) and that any claim the plaintiff will have will be limited to equitable compensation.
The defendant also points out that he has applied unsuccessfully once to adduce evidence about the value of Burracoorong. The defendant has foreshadowed to the plaintiff that he would amend his pleadings if allowed to do so and has not done so at this point in time due to the settlement negotiations.
The plaintiff points out the issues raised in [D] do not give rise to any urgency, whereas the determination of the plaintiff's claim in [A], [B] and [C] is urgent, given the defendant's unwillingness to extend his guarantee of the loan facility.
Given there is now only seven weeks to the trial, the plaintiff claims there is insufficient time to brief and prepare expert evidence, respond and have the parties' experts confer and file a joint memorandum of conferral. The plaintiff also says that if the expert evidence of valuation of Burracoorong is contested, the expert evidence could take more than one day of the five-day hearing, leaving insufficient time for the anticipated eight lay‑witnesses to give evidence and opening and closing.
The defendant disagrees and says such evidence is not complicated and would not add substantially to the hearing of the matter. The defendant also makes the submission that it is incumbent on the plaintiff to outline in his pleadings on what basis he says that he is entitled to equitable compensation or damages and to provide evidence to that effect. To leave out an alternative relief is said by the defendant to be prohibited.
The defendant points out that there has been no affidavit outlining:
(a)a basis upon which a proper assessment can be made of the likely length and cost of the trial if both issues were tried together, or the time or cost that might be saved if there were separate trials;
(b)evidence on which an assessment can be made as to the extent, if any, to which the trial of the action might be delayed if the action were to proceed to a trial of all issues.

Consideration

An application for the separation of issues is to be approached with some caution: Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1. In considering this matter, the starting point is that ordinarily the trial of an action should include all issues arising in the action. This point was made clear in the decision of the Court of Appeal in Landsdale Pty Ltd v Moore [2009] WASCA 176.
In Landsdale, Newnes JA set out the matters to be considered and balanced in determining whether there should be separate trials of issues. His Honour said [21] - [22]:
The determination of an application for separate trials requires a careful balancing of the prospective advantages and disadvantages involved in separating the issues, bearing in mind the uncertainties inherent in litigation, and that, once embarked upon, it is a course from which it may be difficult and even impossible to retreat. It should only be embarked upon where its utility, economy and fairness to the parties is clearly made out: Tepko (55).
It is impossible to provide a comprehensive description of the circumstances in which it is appropriate for there to be separate trials of liability and damages. The exercise of the discretion to make such an order will depend upon what is in the interests of justice in the particular case. However, the separate trial of issues will generally only be appropriate in cases where there is a clear line of demarcation between those issues, and the determination of one in isolation from the other is likely to result in a substantial saving in time, inconvenience and expense: Allen v Gulf Oil Refining Ltd [1981] AC 1001; Smith v Maloney (1998) 19 WAR 209, 223. Particular caution needs to be exercised in cases in tort. As Owen and Steytler JJ explained in Chenery v Conti [1999] WASCA 258:
'The practice of splitting issues often leads to unforeseen and unfortunate results. It is trite to say that a tort is not complete until damage has ensued. Matters of liability will, therefore, almost inevitably involve a consideration of damage. The question usually arises as to the wrong that a plaintiff says it has suffered (liability in the strictest sense), whether damage has ensued and whether the damage found to have been suffered was caused by the wrong done by the defendant (liability in an extended sense). The question that then follows is whether the damage found to have been suffered and to have been caused by the defendant can be quantified and compensated for in monetary terms. That is a question of remedy, not liability' [64].
In considering whether an issue should be determined in isolation from another, a range of factors may be relevant. Some of those matters were referred to by Rares J in City of Swan v Lehman Bros Australia Ltd [2009] FCA 784:
In AWB Limited v Cole [No 2] (2006) 233 ALR 453 at 460‑463 [26]‑[40], Young J reviewed the authorities from which (without reciting the authorities to which his Honour referred) I have taken the following principles:
(1)As a general rule the starting point is that all issues of fact and law should be determined at the one time.
(2)A party seeking the determination of separate questions must satisfy the Court that it is 'just and convenient' for the order to be made. The order must be made on concrete facts, either established or agreed, for the purpose of quelling a controversy between the parties so as to produce a conclusive or final judicial decision on the issue, which is of a real, not hypothetical, importance to the determination of the controversy.
(3)There are special problems where the separate issue involves a mixed question of fact and law, although it may still be able to be decided as a separate issue. However, care must be taken in precisely formulating the question and specifying the facts upon which it is to be decided.
(4)The Court must have all relevant matters before it as a precondition of it being asked to exercise its discretion if the separate question involves the grant or refusal of declaratory relief.
(5)It may still be appropriate to determine a separate question even if it will not resolve all the issues, provided that there is a strong prospect that the parties will agree upon the result when the core of the dispute has been decided or if the decision will obviate unnecessary and expensive hearings of other questions.
(6)Generally speaking an issue will not be appropriate for separate determination if it is simply one of two or more alternative ways in which an applicant or plaintiff frames its case and its determination would leave other significant issues unresolved.
(7)It is relevant to consider whether:
•the separate questions will contribute to the saving of time and cost by substantially narrowing the issues for trial or even lead to the disposal of the proceedings;
•they will contribute to the settlement of the proceedings;
•they will give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of the trial;
•there will be any significant overlap between the evidence adduced on the hearing of the separate question and a trial;
•the questions will prolong, rather than shorten, the proceedings [27].
It is incumbent on the plaintiff to show a clear demarcation of the issue which is sought to be the subject of a separate trial and to show a likely substantial saving in time, inconvenience and expense. Whilst an affidavit is usually required in support of an application for a separate trial of issues, given the urgency of this application, it is acceptable for the plaintiff's solicitor to set out the matters upon which the plaintiff relies in written submissions.
In my opinion, the plaintiff has shown that it is just and convenient to make the order sought by him. I agree there is insufficient time before the trial of this matter to obtain and exchange expert land valuation reports and for experts to confer. Further, I am not satisfied that the trial listed in November 2017 is likely to be concluded within five days if expert land valuation evidence is adduced.
Nor do I accept the defendant's contention that expert evidence of the valuation of the land, Burracoorong, will not be complicated. Whilst it could be the case that after expert land valuation evidence is obtained, after conferring, the parties will reach agreement about part or the whole of such evidence, such agreement cannot be said to be likely or to result in a short amount of time taken of the days of trial to dispose of such evidence. In my experience, contested land valuation matters are often complicated and can occupy many days, if not weeks, of hearing.
I do not agree that the issue of equitable compensation of damages is not delineated in the pleadings. The plaintiff's case pleads the facts in support of each of its claims for relief. The facts relied upon for the claim of equitable compensation and damages are set out in [25] ‑ [30] of the statement of claim, which is pleaded as a claim of estoppel in [30].
It is also relevant that it is not contended on behalf of the defendant that expert valuation of the value of Burracoorong is relevant to any issue pleaded in the statement of claim, other than the claim for equitable compensation or damages. Further, it is conceded that if the plaintiff succeeds in his claim and he is entitled to relief (but not relief in the form of the transfer of land and/or an order that the defendant continue to guarantee the plaintiff's loan) determination of the plaintiff's claim for equitable compensation and damages is not urgent.
Although the defendant has foreshadowed an application to amend his pleadings to adduce evidence about the value of Burracoorong, in the absence of such an application, it is not a relevant matter to consider in the determination of this application. If the plaintiff succeeds in his claim for relief in [A], [B] or [C], or if the plaintiff fails in establishing his claim that he has suffered a detriment in reliance on the promises made to him by the defendant, then the plaintiff's claim for equitable compensation and damages in [D] will fall away.
In these circumstances, the parties will be saved costs in engaging experts and dealing with unnecessary evidence. On the other hand, if a separate trial does proceed, it follows that there will necessarily be some additional costs that follow any split proceedings.
Whilst there is no suggestion that the separation of issues may assist in the settlement of the action, I do not regard this as a matter that outweighs the legitimate issue raised about the urgency to hear and determine the plaintiff's claim and the insufficiency of time to obtain, prepare and adduce expert land valuation evidence.

Further, I am not satisfied the defendant has raised any issue of material prejudice in granting the order sought.
For these reasons, I will make the order sought by the plaintiff.