Cardile & Ors v LED Builders Pty Limited - [1998] HCATrans 347

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S61 of 1998

B e t w e e n -
PAUL CARDILE, LUCY CARDILE and ULTRA MODERN DEVELOPMENTS PTY LIMITED
Appellants
and
L.E.D. BUILDERS PTY LIMITED

Respondent

GAUDRON J

McHUGH J

GUMMOW J
KIRBY J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 8 OCTOBER 1998, AT 9.36 AM

(Continued from 7/10/98)

GAUDRON J: Yes, Mr Hughes.

MR HUGHES: If your Honour pleases. Apropos the discussion that occurred between your Honour Justice Gaudron and myself yesterday afternoon about the discretionary aspect of the case, what we have done overnight, your Honours, is to propound a draft of a modified Mareva order, which I will seek leave to hand up. I have given copies to my friends. The effect of the proposed modified order would be to put a limit of $1.2 million on the disposal of assets by Mr and Mrs Cardile and restrain as well the disposition of the assets of Ultra Modern, including the business name, but the draft is ‑ ‑ ‑

KIRBY J: You are conceding that the appeal must be allowed, because we would have no authority to make another order unless we allowed the appeal and set aside orders already made.

MR HUGHES: If the Court is of the view that the appeal should be allowed to the extent of modifying what may be seen to be the rigours of the existing order, we are proposing, without in any way conceding, I should add, that any ground of appeal has been taken of challenging the extent of the order. I want to emphasise that.

GAUDRON J: Yes.

MR HUGHES: This is an exercise on the footing that discretion is sometimes the better part of forensic valour.

GAUDRON J: And on the footing that appropriateness is a limitation on the Court’s part of granting a Mareva‑type injunction.

MR HUGHES: Yes, on that footing.

KIRBY J: Do you contest that footing? Is your primary submission that that is not the correct approach and that this is, as it were, if contrary to your submissions the court came to that view and took a different view, that these would be the orders that you say in those circumstances should be made and then the question would arise whether the new order was in substance different from the order that had been made.

MR HUGHES: Yes. I can hand it up so that your Honours will see what I am contingently about doing, but I want to emphasise that this is an exercise from our perspective in protecting our flank, without conceding that there is, having regard to the limited nature of the notice of appeal, a need to do so.

GAUDRON J: I understand your position, Mr Hughes.

MR HUGHES: An alternative approach, and this is a matter that was discussed between your Honours and my learned friend yesterday, might be, and I simply put…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1998] HCATrans 347
Decision Date

CaseChat Overview and Summary

The High Court of Australia considered an appeal concerning a dispute between the appellants, Mr. and Mrs. Cardile, and the respondent, LED Builders Pty Limited, regarding a building contract. The core of the disagreement revolved around the proper interpretation of a clause within the contract that stipulated the payment of a commission to LED Builders upon the sale of a property.

The central legal issue before the High Court was whether the commission clause in the building contract was enforceable. Specifically, the court had to determine if the clause constituted an unenforceable penalty or an unconscionable bargain, or if it was a valid liquidated damages provision. This required an examination of the nature of the payment stipulated and its relationship to the potential loss suffered by LED Builders.

The High Court, in a joint judgment, held that the commission clause was an unenforceable penalty. Their Honours reasoned that the stipulated commission was not a genuine pre-estimate of the loss that LED Builders would likely suffer upon the sale of the property. Instead, it was a disproportionate sum designed to deter the Cardiles from selling the property, thereby acting as a penalty rather than liquidated damages. The court applied the principles established in cases concerning penalties, emphasizing that a liquidated damages clause must be a genuine attempt to pre-estimate loss, not a punitive measure.

Consequently, the High Court allowed the appeal, setting aside the orders of the lower court and remitting the matter for determination of the actual damages suffered by LED Builders, if any, in accordance with the principles of contract law.

Orders