Caldwell v Hill - [2000] NSWCA 239

NEW SOUTH WALES COURT OF APPEAL

CITATION: CALDWELL & ANOR v HILL & ANOR [2000] NSWCA 239

FILE NUMBER(S):
40049/99

HEARING DATE(S): 1 August 2000

JUDGMENT DATE: 04/09/2000

PARTIES:
Phillip Gordon CALDWELL & Anor v Peter David HILL & Anor

JUDGMENT OF: Mason P Meagher JA Giles JA

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): DC 7484/94

LOWER COURT JUDICIAL OFFICER: Balla ADCJ

COUNSEL:
Appellants: D H Murr SC; D A Smallbone
Respondents: P M Donohoe QC; L T Grey

SOLICITORS:
Appellants: Whiteley Ironside & Shillington
Respondents: Boyd Longhurst

CATCHWORDS:
Lease - lease for wine bar with additional rights over function room - right to use function room with prior booking - lessors’ subsequent unwritten arrangement with other persons for function room - dispute over access to function room - subsequent arrangement not a "prior booking" for purposes of original lease - repudiation of lease - lessors’ intention not to perform contract according to its terms - right to accept continuing repudiation of the lease not waived by lessees looking to sell wine bar business - appeal as to damages - insufficient reasons for damages figure - new trial as to damages - restitution of damages paid under earlier judgment - ND

LEGISLATION CITED:

DECISION:
New trial ordered as to damages

JUDGMENT:

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40049/99
DC 7484/94
MASON P
MEAGHER JA
GILES JA
Monday 4 September 2000

Phillip Gordon CALDWELL & Anor v Peter David HILL & Anor
JUDGMENT

MASON P: An appeal and a cross-appeal are brought in relation to a verdict for the appellants in the sum of $65,821.66 entered in the District Court. The appellants contend that the damages should be much higher. The respondents/cross-appellants contend that verdicts should have been entered in their favour on the claim and cross-claim filed below.
In light of the issues which they raise, the respondents should have filed a notice of contention as their response to the appellants’ claim for higher damages. The cross-appeal covers similar ground but it requires leave because of the smallish sum which the respondents claim should be awarded in their favour. However, the matter was fully argued. I would overlook the problem about a notice of contention, and grant leave to cross-appeal and to amend the cross-appeal in the form proffered at the hearing.
The factual setting
The respondents own land at Orange. Part of it fronts Sale Street and is known as the wine bar. At the back is a building known as the cottage or the function room.
On 3 December 1991 the respondents let the appellants into possession of the wine bar. The existing liquor licence was transferred on 16 January 1992 and appellants commenced business on 26 January 1992. A formal Lease was executed on 9 April 1992 for a term of one year from 1 March 1992 to 28 February 1993 with two options to renew for further terms of three years. The demised premises are described as “wine bar premises and part courtyard as hatched in the sketch annexed”.
Clause 15.11 of the Lease conferred certain rights over the cottage in the following terms:
15.11 The Lessors (and their assigns) agree that the Lessee shall have the use of the cottage shown as “Building Part Lot 2” on the Plan annexed hereto and the use of the chairs and tables situate within such building for the purpose of holding functions in such building as a part of the Lessees business conducted on the demised premises upon the following terms and conditions:
1.There being no prior booking made for the use of such building with the Lessors (or their assigns).
2.The Lessees shall first give three (3) clear business days notice to the Lessors (and their assigns) of their desire to use such building aforesaid.
3.Such building shall only be available for use by the Lessees for functions between the hours of 6.00pm and 2.00am the following morning.
4.The Lessees will be responsible for all damage to such building and such tables and chairs.
5.The Lessees acknowledge that they shall not have the right to use any other equipment which may be located in such building.
6.The Lessees shall leave such building and such tables and chairs in a neat and clean and tidy condition after each such time the building is used and vacate such building no later than 3am.
7.The Lessees shall pay to the Lessors or their assigns such sum as may be agreed upon as a hire charge for each such use and failing agreement such sum shall be determined from time to time by a member of the Australian Institute of Valuers and Land Administration (Inc) NSW Division (or the body then carrying on the functions of the Institute) to be dominated by the President or other principal office bearer on that Institute or other body and such member shall be deemed to be acting as an expert and not as an arbitrator and accordingly all legislation regulating the determination of disputes by arbitration shall not apply. The determination by such member shall be conclusive and binding on both the Lessor and the Lessee and the cost of such determination shall be borne equally between the Lessor and Lessee.
The appellants exercised the first option to renew in December 1992. However, the respondents disputed their right to do so on various grounds. There was also a live issue as to the scope of cl 15.11, with the appellants asserting that the respondents were repudiating their obligations under that clause.
The appellants filed a summons in the Equity Division in May 1993 seeking specific performance and damages. The summons also sought declaratory relief in relation to the dispute concerning cl 15.11 over access to the cottage. The proceedings were defended. However, they were not brought on for early hearing because the appellants were looking to sell the wine bar and were negotiating with the respondents as to the terms of a fresh lease that might be issued to their purchaser should a sale eventuate. During the period between February 1993 and March 1994 the dispute over access to the cottage/function room remained at a stalemate. I shall return to the particular facts later in this judgment.
Ultimately the appellants did not find a satisfactory purchaser for the wine bar business. They abandoned the attempt to sell and they served a notice to quit on 31 March 1994. In their solicitor’s covering letter it was asserted that:
…it is clear from your clients’ behaviour that the cottage will never be available for our clients for functions as provided for in Clause 15.11 of the lease.
Our clients would not have entered into the original lease nor would they have sought to exercise the option had they known that they would not have access to the cottage.
Your clients have demonstrated that they are only prepared to perform the lease in a manner inconsistent with our clients’ rights and our clients consider that this amounts to a repudiation by your client which our clients accept.
The appellants vacated the premises on 30 April 1994. The Equity proceedings were subsequently remitted to the District Court where the appellants pleaded their claim for damages in an ordinary statement of claim. The damages related to the lost opportunity to derive income from the use of the cottage.
The respondents disputed the appellants’ claim of repudiation but they accepted the appellants’ surrender of the premises on 30 April 1994. The respondents filed a defence together with a cross-claim for damages totalling $8,964.00 in relation to various alleged breaches of the Lease.
Cross-appeal
It is convenient to address the cross-appeal first.
The learned trial judge (Balla ADCJ) found that the respondents had repudiated the Lease. (Strictly speaking, it was the agreement for lease constituted by the exercised option for renewal.)
In the amended notice of cross-appeal the respondents challenge the finding of repudiation. They submit that her Honour erred in preferring the evidence of the appellants and that her reasons were inadequate. They also dispute the finding that their conduct was repudiatory and capable of acceptance as such in March 1994. The various challenges overlap and may conveniently be addressed together. The appellants’ case as to repudiation differed to a degree from the way it was pleaded in par 8 of the statement of claim. However, what follows reflects the way the case was fought at trial.
When the appellants took up possession of the wine bar in early 1992 the cottage at the back was in a poor state. It was filthy, there was a dampness problem and it was unpainted. It was the common intention of the parties that it would be fixed up by the respondents who, at that time, were themselves contemplating using it “during the day” as a coffee shop (Bl 53). By about April 1992 the repair work had been done, including roof replacement, damp work and preparation for painting. In early August 1992 the appellant Mr Caldwell approached the respondent Mr Hill. He offered help with the painting and told him that the appellants would be requiring access to the cottage from September onwards.
In September-October 1992 the appellants began advertising, inviting their patrons to consider using the wine bar for special functions. Functions would have involved the use of the cottage where appropriate. The respondents were aware of these plans.
In October 1992 Ms Gifford and Mr Tracey came upon the scene. They were negotiating with the respondents to take a lease of the cottage for the purpose of running a coffee shop. They were introduced to the appellants by the respondents and were shown a copy of cl 15.11 of the appellants’ Lease. There were discussions about the two sets of tenants working together in the event that a function organised by the appellants required the use of the cottage pursuant to cl 15.11.
I am prepared to assume that the three groups of parties started with the best of intentions, thinking that everyone’s interests could be accommodated in their evolving situations. Unfortunately, this was not to be the case.
By late 1992 the appellants were gearing themselves up to use the cottage for functions. The appellants’ letter of 8 December 1992 in which they exercised the option to renew the lease confirmed “our verbal requests last month that the ‘Function Room’ be available for our use effective from December 1”. The letter noted the respondents’ advice that the room would not be available at least until the end of January. Reference was also made to a brochure which was to be released before Christmas advertising the availability of the function room for private functions.
In mid-January 1993 Ms Gifford and Mr Tracey opened the “Union Bank Cafe” in the cottage, having spent $20,000 fitting it out. The original concept of a daytime coffee shop had progressed to one in which they were promoting and advertising an evening restaurant opening Tuesday to Saturday nights. By February 1993 they were taking dinner bookings up to two weeks in advance.
There was never a written lease between the respondents and the tenants of the cottage. This is somewhat surprising and it was a matter closely explored at trial. Nevertheless, her Honour accepted that there was an oral monthly lease.
On 12 January 1993 solicitors for the appellants wrote to solicitors for the respondents expressing concern about “the proposed Lease of the cottage”. The letter referred to an advertisement published by the incoming proprietors of the Union Bank Cafe indicating their intention to serve dinner in the evening to patrons. The letter stated that, if it was intended that the Union Bank Cafe would be open after 6pm on a regular basis, this would clearly be in conflict with the appellants’ rights under cl 15.11 of the Lease. The appellants sought an assurance that they would have access to the cottage for functions during the evening.
The respondents’ solicitors gave a non-committal reply. The requested assurance was not forthcoming. The solicitors merely said that their clients were “fully aware of their obligations and your clients’ rights under their lease and our clients will not derogate from those rights”.
An accompanying letter from the respondents’ solicitors listed a series of complaints concerning the appellants’ performance of their obligations under the Lease. The letter stipulated that the respondents reserved their rights in relation to the granting of the further lease whose rental was still to be agreed or determined. This stance justified the appellants’ commencement of proceedings in equity to enforce the option to renew.
The non-committal correspondence about cl 15.11 did not stand alone. Balla ADCJ made the following findings in relation to conversations between the parties in early 1993 (RB 27-8):
Towards the end of January 1993 or early February 1993 Ms Shipley [the second appellant] spoke to Mrs Hill and asked to book the cottage for the second week in February, either for the Friday or Saturday night. This was the first occasion on which Ms Shipley requested the use of the cottage. Mrs Hill told Ms Shipley that the cottage was fully booked for February. It was the evidence of Ms Gifford that she recalled being contacted by Mrs Hill who had asked her whether the cottage was available on 2 or 3 dates in February 1993. They had quite a few bookings and she showed the diary to Mrs Hill.
In late February 1993 Ms Shipley spoke again to Mrs Hill and asked what was the first available Friday or Saturday night. Ms Shipley claims that Mrs Hill replied “The function room is fully booked and stop pestering us because you will never get the function room we’re not prepared to give you a lease and we’re not prepared to let you use the function room”.
It was the evidence of Mr Caldwell that in March 1993 Mr Hill said to him “Face it you are not ever going to get access to the function room, accept the status quo and stop making a nuisance of yourselves. If not we will destroy your business.” This conversation was denied by Mr Hill. Mr Caldwell formed the view that the defendants had no intention of ever making the cottage available to the plaintiffs.
Later in the judgment her Honour expressed preference for the evidence of the plaintiffs to the evidence of the defendants where they conflicted. I read this as acceptance of the appellants’ evidence as recounted in this passage.
These findings lie at the heart of her Honour’s conclusions as to repudiation.
The respondents’ submission that the findings are inadequately supported in the evidence or inadequately sustained by the reasoning of the primary judge cannot be accepted, for the following reasons:
(a)The findings are consistent with the evidence of the appellants. To the extent that the respondents gave contrary evidence or evidence that the conversations as deposed to by the appellants were not recollected (cf Bk 272 K-P) the trial judge was entitled to prefer the appellants. Colour is added by the fact that the respondents were denying the validity of the exercise of option in February 1993.
(b)There is an express finding that her Honour preferred the evidence of the plaintiffs to the evidence of the defendants where they conflicted. As indicated by her Honour, this finding was not merely based on demeanour and consistency. There was corroboration in the documentary evidence, as I shall demonstrate below when analysing the nature of the repudiation. Portions of Mr Hills’ evidence must have created a very poor impression (eg Bk 184, 189-90).
(c) The judgment is not deficient for want of exposure of reasoning relating to repudiation. The passage set out at par 24 above addresses the critical issues on this topic. It was not incumbent upon her Honour to recount every instance where the evidence of the respondents contradicted or joined issue with that of the appellants. She was aware of the conflict and she resolved it in a manner that exposes no appealable error. The nature of the repudiatory conduct is sufficiently identified in the judgment and, when that is understood, the implicit finding that such repudiation continued up to the time when it was accepted by the appellants was soundly based.

The nature of the repudiation
The principal attack of the respondents accepted the findings of primary fact but disputed the conclusion that the appellants were entitled to terminate the agreement for lease because of repudiation by the respondents. The respondents submitted that their conduct did not constitute a repudiation. It was no more than a genuine disagreement as to the construction of cl 15.11. They also contended that any repudiation did not continue up until March 1994.
At the trial the respondents advanced the following case in their evidence and submissions. It was contended that the appellants’ rights under cl 15.11 were never denied or obstructed in the period from the beginning of 1993. It was always open to the appellants to secure evening access to the cottage by booking it for a date on which the tenants of the Union Bank Cafe had no forward table bookings at that time. Functions such as wedding receptions and birthday parties would normally be booked well in advance of the time when patrons of the Union Bank Cafe would be likely to book a table for an evening meal. The evidence suggested that two weeks was the maximum time in which a prospective diner would book a table in advance during the relevant period.
The learned trial judge rejected this “table booking” construction of cl 15.11. She held that the clause gave the appellants access to the cottage unless there was, at the time such access was first sought, an existing booking for the use of the whole cottage. In consequence of this finding, she held that any lease given by the respondents to Ms Gifford and Mr Tracey which incorporated a term reserving the appellants’ right to access contingent (merely) on no table bookings was inconsistent with the lease given to the appellants and evinced an intention not to be bound by that lease.
The respondents submit that there is no evidence that the lease to Gifford and Tracey over the cottage incorporated any such term. It is a little unclear whether her Honour was finding that the oral lease contained such a term as distinct from holding that such a term would have been repugnant with the appellants’ rights under cl 15.11. I incline to the view that either approach was open, given the oral lease over the cottage and the evidence of close collaboration between the respondents and the tenants of the cottage. Ultimately nothing turns on this, because the respondents are responsible for what they said and did to the appellants and for what Ms Gifford and Mr Tracey said and did with their authority. The actual terms of the oral lease to Gifford and Tracey could not trump the appellants’ rights under cl 15.11 and were, in the final analysis, only relevant to the extent that they cast any light upon repudiatory conduct viz a viz the appellants.
I find it unnecessary to consider the correctness of her Honour’s interpretation of cl 15.11. The respondents no longer press it (Written Submissions, par 1.3; Oral Submissions pp45-6). However, the respondents maintain that it is a plausible interpretation which they were entitled to assert without repudiating in 1993-1994. Indeed, I am content to assume in the respondents’ favour that they are correct in submitting that a single table booking could arguably be a “prior booking made for the use of such building” within cl 15.11. The real problem for the respondents is that this was not the approach which they adopted prior to the appellants’ termination of the agreement for lease. The repudiatory conduct expressed in word and deed was of a much blunter nature.
Balla ADCJ found that Mr Hill (incorrectly) believed and represented that the granting of the lease to Ms Gifford and Mr Tracey was a prior booking within the meaning of cl 15.11 and that this evinced an intention not to be bound by the Lease to the appellants. In my view, these findings were well open on the evidence, for the following reasons:
(a)The conversations in the passages set out in par 24 above represented in effect that the function room was unavailable regardless of existing specific bookings;
(b)In an affidavit sworn 4 November 1993 in the Equity proceedings and filed on behalf of the respondents Mr Hill said that:
…The reason the cottage is no longer available to the Plaintiff (sic) is because of a prior booking entered into between my wife and I and the current occupiers of the Union Bank Cafe.
That stance was never qualified or retracted until the trial in late 1998. See also Bk 151U, 199S.
(c)The respondents were maintaining this position in correspondence from their solicitors in April 1994 (see Bl 334V).
(d)The oral lease to Gifford and Tracey gave them the right to control access to the cottage so long as that lease lasted. There was no express reservation of the appellants’ rights. Gifford and Tracey were on notice of cl 15.11 but they were obviously encouraged by the respondents’ attitude to that clause, which effectively gave them the whiphand, even on the “table booking” approach. They conducted their affairs accordingly (see Bk 245).

The stance adopted and maintained by the respondents was a renunciation of their obligations under the contract. The respondents were intending to fulfil it only in a manner substantially inconsistent with its terms.
There is an implicit finding that the repudiation continued up to the time when it was accepted by the appellants in March 1994. That conclusion was well open in light of the blunt rebuff of the appellants in February-March 1993 and Mr Hill’s affidavit of 4 November 1993. See also Bl 69S, Bl 339M and Bl 211N for assertions that were not denied in later correspondence. The appellants were not obliged to continue banging their heads against the wall.
Her Honour addressed the argument, repeated in this Court, that the appellants effectively abandoned or waived their rights under cl 15.11. The appellants did not press for an early hearing of their summons for specific performance. In part, this was due to the fact that the respondents belatedly indicated that they accepted that the option had been validly exercised. Arrangements were put in train for a valuer to determine the rental due under the renewed lease. These arrangements were then suspended while the appellants sought to find a purchaser for the wine bar business. Had a purchaser been found, then it was on the cards that the incoming purchaser would take a fresh lease rather than an assignment of the existing lease. In my view, none of these facts evidence an election by the appellants to abandon their right to accept the continuing repudiation of the agreement for lease constituted by denial in word and deed of their enjoyment of cl 15.11. Whether or not that denial contributed to difficulties in finding a purchaser, it materially depreciated the appellants’ full enjoyment of their lease throughout the period they were conducting the wine bar. The evidence indicates that any “new lease” likely to be offered to an incoming purchaser would have excluded rights over the Union Bank Cafe (Bl 73).
The respondents submit that there was no more than a genuine disagreement about the construction of a single clause of the agreement to lease. In DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 432 the following passage appears in the joint judgment of Stephen, Mason and Jacobs JJ:
No doubt there are cases in which a party, by insisting on an incorrect interpretation of a contract, evinces an intention that he will not perform the contract according to its terms. But there are other cases in which a party, though asserting a wrong view of the contract because he believes it to be correct, is willing to perform the contract according to its tenor. He may be willing to recognize his heresy once the true doctrine is enunciated or he may be willing to accept an authoritative exposition of the correct interpretation. In either event an intention to repudiate the contract could not be attributed to him. As Pearson LJ observed in Sweet & Maxwell Ltd v Universal News Services Ltd [1964] 2 QB 699 at 734:
In the last resort, if the parties cannot agree, the true construction will have to be determined by the court. A party should not too readily be found to have refused to perform the agreement by contentious observations in the course of discussions or arguments…
In my view the respondents’ conduct fell within the first sentence of this passage. The pendency of the equity proceedings in which the respondents were the defendants did not bring the case within the Sweet & Maxwell principle. I would reject the respondents’ submission to the contrary.
The respondents adopted, propounded and acted upon an approach to cl 15.11 that amounted to a refusal to perform their obligations under it. They knew that enjoyment of the rights conferred by that clause was significant to the appellants in taking up the Lease and that the appellants were pressing for performance as their function business was hopefully set for expansion. As relations started to sour in early 1993, the respondents took the stance that the lease of the cottage to Gifford and Tracey was itself a “prior booking for the use of [the cottage] with the Lessors”. Indeed, the true nature of the respondents’ conduct exacerbated the repudiation. The conversations that took place in early 1993 that are recorded in the passage at par 24 above show the respondents expressing clear and uncompromising opposition to any future attempt by the appellants to enjoy access to the cottage.
Having adopted this stance in early 1993 the respondents never withdrew it and they took no steps to terminate or qualify the monthly oral lease of the cottage. True, Tracey and Gifford were shown cl 15.11 early in the piece, when they were entering into a lease. But the respondents were thereafter effectively put at the mercy of Gifford and Tracey who, not surprisingly, were looking to their own interests. It is no comfort to the appellants to learn (at trial) that the respondents may have been misinformed about their legal position by the advice of their prior solicitor.
The respondents now accept that cl 15.11 was concerned with the cottage as a whole and not with tables in it (Written Submissions par 1.3). However, they contend that it was not repudiatory in 1993-1994 to have interpreted cl 15.11 on the basis that the oral lease to Gifford and Tracey was a “booking” of the cottage, and that Gifford and Tracey were “assigns” of the respondents. It is urged that the arrangement with Gifford and Tracey did not prevent the appellants from using the cottage at night if they wished to, given that they had to give three clear business days notice (cl 15.11.2) and the likelihood that bookings for weddings and birthday parties would be well in advance.
I have no doubt that the appellants would have been able to negotiate with Tracey and Gifford for access to the cottage by booking it well in advance, especially on weeknights when business at Union Bank Cafe was quieter. This is regardless of the true limits of cl 15.11, because Tracey and Gifford would probably have been prepared to take such bookings. But this is really beside the point, because the appellants were entitled to look to the respondents for performance of cl 15.11 and it was the conduct of the respondents, in word and deed, that was repudiatory. The essence of the repudiatory conduct by the respondents was their stance that there was no point in trying to book the cottage and the implicit encouragement to the tenants of the cottage to act accordingly if their interests dictated. The very existence of the lease over the cottage (whatever its actual or represented terms) was said to trump cl 15.11 and the appellants were so informed in forceful terms in the conversations already referred to.
Unlike the situation in DTR Nominees (cf at 432), the appellants gave the respondents every reasonable opportunity to recognise their error in relation to the cottage. Yet the respondents’ stance, so forcefully propounded in January 1993, never softened. An untenable construction of cl 15.11 was advanced and maintained by the respondents until after the agreement was brought to an end by the appellants. It was coloured and reinforced by the harsh terms of the early 1993 conversations. The partly more defensible “table booking” interpretation was advanced for the first time at trial, but by then it was too late.
The cross appeal should be dismissed with costs.

The appeal as to damages

At trial the appellants’ case as to damages was effectively presented through an expert report of an accountant, Mr Geoff Davis. The report concluded that the appellants’ pre-tax loss included income to the time of vacation of the premises ($184,996) and a capital loss as at 30 April 1994 ($106,577 or $135,130 on two alternative scenarios). The Davis report contained a number of stated assumptions, some of which were clearly established or not in dispute, others being dependent upon inferences or the acceptance of the evidence of the appellants.
There was a serious issue at trial as to the appellants’ intentions and capacities to expand their wine bar business and exploit the rights given under cl 15.11 of the Lease. The primary judge accepted that the appellants intended from the outset to develop a function centre business which would utilise the cottage. There is ample evidence of this, albeit that the appellants were moving from a standing start. Their capacity to establish such a business on a profitable basis was more problematic, although there was evidence which, if accepted, established this.
Mr Davis’ figures were calculated on the bases that (i) there would have been two functions a week from 1 September 1992, (ii) that alcohol could have been served at those functions and (iii) that the business would have grown as assumed by Mr Davis.
Balla ADCJ was not satisfied that the plaintiffs had shown that damages should be assessed on the three specific bases just mentioned.
The appellants seek to challenge these conclusions on a number of grounds. It is submitted that the reasoning betrays an “all or nothing” approach to Mr Davis’ report and fails to grapple with alternative permutations and combinations open on the evidence of the appellants, including the evidence as to what has happened at the cottage in the meantime. The evidence as to the use of the cottage/function room since 1994 suggests that there is a market for such use perhaps on the basis of one function per week. Secondly, the finding that alcohol could not have been served is said to be against the evidence or the weight of the evidence. Thirdly, the approach adopted by her Honour is said to overlook the approach to assessment of damages with respect to hypothetical events endorsed by the High Court.
There may be merit in those submissions, but it is unnecessary to address them because a new trial is inevitable for the reasons which follow. It is inappropriate and unnecessary that I go further, because it is common ground between the parties that her Honour’s conclusion that damages should be assessed at $50,000 (plus interest) cannot be sustained. Since a new trial as to damages must take place, it is best that such trial focus on the evidence and arguments actually adduced at such trial.
After rejecting entirely the evidence of Mr Davis, her Honour concluded:
I accordingly do not consider that the damages can be assessed on the basis of any precise mathematical calculation. I consider that the sum of $50,000 would be appropriate, as it is common ground that the possible total term of the Lease could have been seven years, Mr Davis undertook enquiries with potential competitors from which he concluded that there were potential clients for a function center business and the cottage is currently being used as a function center.
Regrettably this fails to provide essential reasoning or to grapple with the issues presented by the available evidence. This was not a case that might attract a power to award a “cushion” for future economic loss that is occasionally appropriate in personal injury cases. There was in the present case material capable of grounding findings either way about the appellants’ intentions and capacities to exploit cl 15.11. Those findings may or may not have produced a substantial verdict in the appellants’ favour but they would, in my view, have been capable of translation into a verdict that offered an explanation to both sets of parties as to its broad if impressionistic basis. In fairness to her Honour I record that the Court was informed that her attention was not drawn to Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 and that she was in effect presented with the Davis report and left with that.
As indicated, it was common ground that the verdict of $50,000 (plus interest) had to be set aside.
The appellants pressed this Court to embark upon the task of reassessment. We were offered detailed calculations proceeding on a range of different assumptions said to be open on the evidence. The Court indicated that it was not prepared to embark upon this task. A new trial is to be regretted, even if confined to damages. But there is real potential for unfairness to both parties if this Court were to embark upon a complex reassessment exercise. Several critical issues depend upon conclusions about the intentions and capabilities (real and hypothetical) of the appellants and those whom they might employ over the extended terms of the two options. The judgment omits necessary findings that would enable this task to be embarked upon. The appellants’ estimates as to anticipated turnover are not to be accepted at face value. They were seriously challenged at trial and the challenge is obviously reflected in the significant discounting involved in the $50,000 verdict.
If the parties cannot now settle their differences it is to be hoped that the new trial will be focussed through being confined to the single issue of damages and based upon full access to available documents. Each group of parties is also free to invoke Part 39A r21 of the District Court Rules as a spur to the other.
The respondents submit that they are entitled to restitution with interest of the moneys paid by them under the compulsion of the unstayed judgment which will be set aside if my reasons are accepted by the other members of the Court. I agree. I do not think that TCN Channel 9 Pty Ltd v Antoniadis (No 2) (1999) 48 NSWLR 381 can be distinguished merely because the new trial there ordered extended to liability as well as damages. If this were a case in which it was clear that the appellants would recover at least the sum paid to them under the judgment to be set aside it might be in order to decline or defer restitution, but damages are at large at the present stage of this tortured litigation.
The Court was informed that $67,723.27 was paid under the judgment on 11 December 1998. I do not understand this to be in dispute. The appropriate restitution is that this sum be repaid with interest at the rates prescribed by the Rules for the time during which it was in the appellants’ hands to date of repayment. This order should be without prejudice to the right of the appellants to seek an appropriate form of Mareva order if so advised. (No material supporting such an order was put before us. I merely wish to ensure that the appellants’ rights are not prejudiced by oversight in relation to a matter that emerged at the tail end of the proceedings in this Court.)
In this Court, costs should follow the event of the appeal and cross appeal, with the respondents having a certificate under the Suitors Fund Act if qualified with respect to the appeal.
The costs of the trial should be at the discretion of the judge determining the new trial as to damages. That will be the occasion when issues stemming from the appellants’ success as to liability at the first trial, the size of the ultimate verdict, the extent to which parties have cooperated in allowing evidence tendered at the first trial to stand as evidence in the second, the impact of any unaccepted settlement offers and other relevant matters can be taken into account.
MEAGHER JA: I agree with Mason P.
GILES JA: I agree with Mason P.
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LAST UPDATED: 10/10/2000