Fuller v Albert (No 2)

[2021] NSWCA 183

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Fuller v Albert (No 2) [2021] NSWCA 183

Hearing dates:

On the papers

Date of orders:

23 August 2021

Decision date:

23 August 2021

Before:

Macfarlan JA;
Brereton JA;
Emmett AJA

Decision:

(1)   The Alberts have leave to file an Amended Notice of Motion in the form annexed to their written submissions.

(2)   Within the times stated in (3) below, the parties may file and serve written submissions (each not exceeding 2000 words in length) as to the appropriate order concerning costs of the appeal and as to whether the proceedings should now be remitted to the Equity Division as stated in the Principal Judgment.

(3)   The Alberts are to file their submissions, if any, within three working days of today’s date, Mr Fuller within three days thereafter and the Alberts in reply within a further three days.

(4)   The Amended Notice of Motion is otherwise dismissed with costs.

Catchwords:

JUDGMENTS AND ORDERS – amending, varying and setting aside – application to reopen appeal under UCPR r 36.16 – whether Court determined the appeal on a ground not pleaded at trial – whether Court found ordinarily implied general obligation in contract to cooperate – Court found particular contractual terms pleaded, the essence of which was cooperation to achieve stated purpose

CONTRACT – remedies – specific performance – whether Court found breach of contract – order for specific performance does not require proof of breach – sufficiently reasonable apprehension of breach may support order for specific performance

JUDGMENTS AND ORDERS – reasons – duty to give reasons – whether Court gave adequate reasons in rejecting contentions of abandonment and unilateral release – matters relied on by parties referred to and rejected – reasons sufficiently explained conclusion reached – standard for reasons depends on nature of case, submissions and issues engaged

Legislation Cited:

Uniform Civil Procedure Rules 2005 (NSW), rr 36.16, 14.9

Supreme Court Act 1970 (NSW), s 68

Cases Cited:

Aktas v Westpac Banking Corporation Ltd (No 2) (2010) 241 CLR 570; [2010] HCA 47

Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300; [1993] HCA 6

DTR Nominees Pty Limited v Mona Homes Pty Limited (1978) 138 CLR 423; [1978] HCA 12

DW v The Queen [2004] ACTCA 22; (2004) 150 A Crim R 139

Fitzgerald v Masters (1956) 95 CLR 420; [1956] HCA 53

Gautam v Health Care Complaints Commission [2021] NSWCA 85

GC NSW Pty Ltd v Galati [2020] NSWCA 326

Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378

Lawrence v Ciantar (No 2) [2020] NSWCA 186

Ryder v Frohlich [2004] NSWCA 472

Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247

Summers v Commonwealth (1918) 25 CLR 144

Turner v Bladin (1951) 82 CLR 463

Waterhouse v Independent Commission Against Corruption (No 2) [2015] NSWCA 362

Wolseley Investments Pty Ltd v Gillespie [2007] NSWCA 358; (2007) 13 BPR 24,813

Texts Cited:

ICF Spry, Equitable Remedies (7th ed, 2007, Lawbook Co)

Category:

Procedural rulings

Parties:

Eric Andrew Fuller (Appellant)
Kerry Albert (First Respondent)
Sandra May Albert (Second Respondent)
Matcove Pty Ltd (Third Respondent)

Representation:

Counsel:
D L Cook SC (Appellant)
C R Newlinds SC with M E Hall (First and Second Respondents)
No appearance (Third Respondent)

Solicitors:
Crowther Sim Lawyers (Appellant)
Pure Legal (First and Second Respondents)

File Number(s):

2020/182084

 Decision under appeal 

Court or tribunal:

Supreme Court of New South Wales

Jurisdiction:

Equity – Corporations List

Citation:

[2020] NSWSC 625

[2020] NSWSC 897 (Costs)

Date of Decision:

25 May 2020
14 July 2020

Before:

Black J

File Number(s):

2017/213055

Judgment

1. THE COURT: The Court delivered judgment on this appeal on 18 May 2021 ([2021] NSWCA 88 – “the Principal Judgment”). By Notice of Motion filed on 31 May 2021 the first and second respondents to the appeal (“the Alberts”) sought orders reopening it and listing it for a further oral hearing. As the Notice of Motion was filed within 14 days of the Principal Judgment, the Court has power under Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) r 36.16 to make such orders. Nevertheless, it is well established that the Court ought not to exercise this power in the absence of special circumstances such as ones where the Court has proceeded on a misapprehension as to the facts or the law (see Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 at 302-303; [1993] HCA 6, recently cited in decisions of this Court such as Lawrence v Ciantar (No 2) [2020] NSWCA 186 at [6]-[8]). The power must be exercised with great caution, having regard to the public interest in the finality of litigation; and is not to be exercised for the purpose of allowing arguments that have already been considered by the Court to be re-agitated (ibid). As emphasised in Waterhouse v Independent Commission Against Corruption (No 2) [2015] NSWCA 362 at [17], “there is a distinction to be drawn between the court acting upon a misapprehension as to the facts or the relevant law, on the one hand, and, on the other, the court reaching a conclusion which, in the view of the applicant for re-opening, involves a mistake”.

2. By their written submissions dated 28 June 2021 filed, by leave, in support of the Notice of Motion, the Alberts sought leave to amend it in a number of respects. That leave should be granted. Pursuant to the Court’s leave, the appellant, Mr Eric Fuller, filed written submissions opposing the orders sought in the Motion and the Alberts filed a written response.

3. We address under the headings appearing below the reasons advanced by the Alberts for the orders they seek. What is said below assumes that the reader is familiar with the terms of the Principal Judgment.

The implied term found by the Court

4. The terms of the agreement that Mr Fuller pleaded in his Amended Statement of Claim are set out as paragraphs (a) to (e) in [44], quoted at [20] of the Principal Judgment. The primary judge rejected pleaded terms (a) and (d) but accepted that the others formed part of the agreement. In [36] and [37] of the Principal Judgment this Court accepted that pleaded terms (a) and (d) were also part of the agreement. Part of the reasoning included, in [31], that Mr Albert had “accepted that there will ordinarily be an implied obligation on the parties to a contract, whereby each party has an obligation to co-operate with the others to achieve contractual objectives, particularly where the contract requires or envisages co-operation and involves an ongoing business arrangement”, but it was also noted that Mr Albert asserted that no such general obligation was pleaded or alleged in the present case.

5. In [36] and [37], it was reasoned that such ordinarily implied obligations were reflected in pleaded terms (a) and (d), that is, that those were the essence of such terms. The Court’s finding was not that the ordinarily implied general obligations should be implied in the present case, but that pleaded terms (a) and (d) should be implied and that these reflected the obligations that are ordinarily implied. The latter proposition was an obvious factor favouring the implication of pleaded term (d) in particular. As is self-evident, the Court’s use of the expression “along the lines of” at the end of [37] simply indicated that it found a term to the effect of that pleaded, pleadings being parties’ contentions as to the effect of dealings or other events (see for example UCPR r 14.9 requiring the pleadings of the effect, rather than the precise terms, of documents or spoken words).

6. In support of the present Motion, the Alberts contend that this Court found, outside the ambit of Mr Fuller’s case as pleaded and conducted, that such a general obligation existed in the present case. It did not do this. Rather, it found the particular terms pleaded, as recorded in [44(a)] and [44(d)] of the Amended Statement of Claim (quoted at [20] of the Principal Judgment), the essence of which was cooperation to achieve the stated purpose of the agreement.

7. The first matter raised by the Alberts by their Amended Motion should therefore be rejected.

Whether breach of contract was or needed to be found

8. Aside from the separate issue concerning a share in Matcove Pty Ltd, the Principal Judgment was concerned with Mr Fuller’s claim for specific performance of the alleged agreement between the parties referred to above. In his Amended Statement of Claim Mr Fuller sought an order that the agreement be specifically performed; “[i]n lieu of specific performance in accordance with the Agreement, damages”; and, further or in the alternative “equitable compensation, alternatively, equitable damages, further alternatively, an account”. Later in the Amended Statement of Claim, Mr Fuller asserted:

“[49] In the premises, [Mr Fuller] is entitled to specific performance by [Mr Albert] (and, to the extent necessary, Matcove), of the Agreement or, in lieu thereof, damages”.

9. Mr Fuller’s claim for damages was thus in the alternative to his claim for specific performance and sought to invoke the Supreme Court’s power under s 68 of the Supreme Court Act 1970 (NSW) to award damages “to the party injured” in substitution for an order for specific performance of a contract or agreement (“Lord Cairns’ Act”).

10. An order for specific performance of an agreement does not require proof by the plaintiff of a breach, in a strict sense, of the agreement in question. Proof of a sufficiently “reasonable apprehension of breach” may support an application, and order, for specific performance, depending upon the circumstances of the case (see Wolseley Investments Pty Ltd v Gillespie [2007] NSWCA 358; (2007) 13 BPR 24,813 at [19]). Proceedings for specific performance can be commenced as soon as a party threatens to refuse to perform the contract or any part thereof or actually refuses to perform any promise for which the time of performance has arrived (Turner v Bladin (1951) 82 CLR 463 at 472, and see ICF Spry, Equitable Remedies (7th ed, 2007, Lawbook Co) at 77-78).

11. This accorded with Mr Fuller’s submission on appeal that an “apprehension of breach” is sufficient to found a specific performance order (appeal transcript page 94 (lines 35-50); appellant’s written submissions in reply at [55]). The Alberts complain that this submission was in reply and that they did not have an opportunity to respond to it. That complaint has no merit however because they did not seek leave to do so and in the absence of any further submissions the Court was entitled to act on the basis of the obvious import of Mr Albert’s repudiation as indicated in the next paragraph below. Moreover, Mr Fuller’s submission on appeal reflected that which he made at first instance (written submissions [78]-[82]).

12. In these circumstances, the Court did not need to find that the Alberts had breached the agreement and did not do so, at least so far as “breach” in its strict sense is concerned. The Court however found that Mr Albert had repudiated the agreement and thus shown “a clear intention not to be bound by the pleaded contract” (at [63]). Consistent with the principle that a reasonable apprehension of a breach is sufficient to found an order for specific performance, the Court said that that conduct of Mr Albert “may justify Mr Fuller’s application for specific performance of any unperformed term of the pleaded contract”.

13. The Court decided, for the reasons given in [64]-[66], that it was appropriate to remit to the Equity Division the question of whether an order for specific performance should be made and, if not, whether damages should be awarded in lieu ([63]). In the context that the Court made no finding of breach in the strict sense, but made a finding of repudiation of the agreement (or anticipatory breach), the word “breach” was used in the heading to [61] and in [63] and [66] self-evidently in the broader sense of conduct of a defendant which might justify an order for specific performance, and the reference to “damages for breach of contract” in [63] was to damages in lieu of specific performance.

14. By their Amended Notice of Motion, the Alberts complained that the Court has not made any finding of breach, “yet it has remitted the matter to the primary judge for determination of relief in the form of specific performance or damages”. For the reasons we have given above, no finding of breach in the strict sense needed to be made. The finding that Mr Albert repudiated the agreement is a sufficient foundation for an order for specific performance (or damages in lieu thereof) if the Equity Division judge is otherwise disposed to make such an order.

15. The Alberts also contend that this Court overturned unchallenged findings of the primary judge in [106], [155] and [157] of his Honour’s judgment but the complaint is founded on the misconception, explained above, that this Court found a general implied term of cooperation, and not simply that pleaded in [44(d)] of the Amended Statement of Claim.

16. A further complaint, that this Court implicitly overturned unchallenged findings of the primary judge, in [9] and [39] of his judgment, as to whether Mr Fuller demanded performance by Mr Albert, is similarly not well founded. The Court did not find that he did so, at least not until shortly prior to the commencement of proceedings – a point of time with which those paragraphs are not concerned (Principal Judgment [59]). Whether a demand was made in 2017 shortly prior to the commencement of proceedings (as Mr Fuller said in [6] and [10] of his Affidavit of 28 February 2020 that it was) is immaterial, as Mr Albert’s repudiation provided ample foundation for proceedings for specific performance.

17. For these reasons the complaints of the Alberts referred to under this heading are rejected.

The Alberts’ defences of abandonment and unilateral release

18. By their Amended Notice of Motion, the Alberts complain that the Court did not give adequate reasons in the Principal Judgment for rejecting their contention that the agreement relied upon by Mr Fuller had been abandoned by Mr Fuller, or that he had unilaterally released Mr Albert from it.

19. A finding that a contract has been discharged by abandonment involves an evaluative assessment of the conduct of the parties over a relevant period of time (see Ryder v Frohlich [2004] NSWCA 472 at [135]-[137] (per McColl JA), summarising the principles and referring inter alia to DTR Nominees Pty Limited v Mona Homes Pty Limited (1978) 138 CLR 423; [1978] HCA 12; Summers v Commonwealth (1918) 25 CLR 144; and Fitzgerald v Masters (1956) 95 CLR 420; [1956] HCA 53; see also GC NSW Pty Ltd v Galati [2020] NSWCA 326 at [112]). The Principal Judgment at [51] enumerated the four matters that the Alberts relied upon in this respect. It then expressly rejected the first, which was that Mr Fuller had not sought to pursue his entitlement to a lot until he commenced proceedings. This reflected term (e) of the agreement that “the timing of the subdivision of Mr Fuller’s and Mr Albert’s blocks would take place at the convenience of Mr Fuller or Mr Albert” ([44] quoted at [20] of the Principal Judgment). In making its evaluative decision that the conduct of Mr Fuller did not manifest an intent to abandon the contract, the Court made it clear that it was taking into account all of the matters relied upon by Mr Albert and enumerated in [51], as in [57] it referred to Mr Fuller’s conduct “as described above” and in [56] it referred to “the conduct of Mr Fuller” which was plainly also a reference back to the conduct identified in [51]. That conclusion was of course reached in the context of the Court’s finding in the judgment that at the significant meeting of December 2016 between the parties and their representatives Mr Fuller had not renounced or repudiated the agreement, despite the dealings and arrangements concerning the subdivision being the principal subjects of discussion.

20. In expressing its conclusion, the Court was not required to state again the four matters Mr Albert relied upon, as set out in [51] of the judgment. References back were more than sufficient to indicate that those matters had been taken into account. Plainly, the Court concluded that the matters relied upon were insufficient to evince an intention on the part of Mr Fuller to abandon his contractual entitlement. Bearing in mind that the conclusion was an evaluative one as to the proper characterisation of a course of conduct and the very limited nature of the Alberts’ submissions on this topic, both at first instance and on appeal, the reasons sufficiently explained why that conclusion was reached, bearing in mind that the general scope of the duty to give reasons is to explain the decision, not to write an exhaustive treatise on every aspect of the trial (DW v The Queen [2004] ACTCA 22; (2004) 150 A Crim R 139 at [27], referring to Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 385-386 and Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 259, 269-270 and 280), and that the “minimum acceptable standard” for reasons depends on the nature of the case, the nature of the submissions made by the parties and the nature of the issues engaged (see Gautam v Health Care Complaints Commission [2021] NSWCA 85, particularly [18]-[19] and [62]).

21. The same considerations apply to the Alberts’ defence of unilateral release which they sought to support by the same matters relied on in relation to abandonment.

22. The complaints of the Alberts referred to under this head should therefore also be rejected.

Remitter to the Equity Division

23. The primary judge refused to grant specific performance of the agreement upon which Mr Fuller relied. A principal reason for this was that his Honour rejected Mr Fuller’s contention that the agreement contained a term requiring the cooperation of the parties with each other as pleaded in [44(d)] of the Amended Statement of Claim. In the absence of this critical term, there was no operative obligation of which to award specific performance. On appeal, this Court took a different view but for reasons which it identified in [63]-[66] of the Principal Judgment declined to exercise the discretion concerning a specific performance order which the primary judge did not exercise. If this Court had declared that Mr Fuller was entitled to have the contract specifically performed and carried into execution, as is sometimes done, it would still have been necessary for a further inquiry to take place, if not in the Equity Division then before this Court or a Registrar, to settle detailed orders for specific performance, or to assess damages.

24. This was not an unconventional course for the Court to take. Depending on the circumstances, the Court sometimes does, and sometimes does not, exercise or re-exercise a primary judge’s discretion where this Court has found that what occurred below resulted from error on the part of the primary judge.

25. The parties ought to have anticipated that the Court might not exercise the relevant discretion. It was open to them to make appropriate submissions on that topic. Contrary to the Alberts’ assertion, the Court did not deny them procedural fairness. Parties to appeals should deal with predictable possibilities of that type. Nevertheless, the Court is prepared to give the Alberts an opportunity to make further submissions as to why remission should not occur, but they will be at risk of being ordered to pay the costs of those submissions if the Court adheres to the views expressed in the Principal Judgment.

The $175,000 paid by Mr Albert

26. In the Principal Judgment the Court referred to Mr Albert’s payment to Matcove of $175,000 and said that whether Mr Albert might have a remedy against Matcove for its recovery was not an issue in the proceedings and therefore not before the Court ([61]-[62]). By their Amended Notice of Motion, the Alberts complain that the Court failed to consider an issue in the proceedings, namely, whether Matcove “had an obligation to do equity in relation to Mr Albert’s payment of $175,000”. They refer to [43] of their Amended Defence. That paragraph however alleges an entitlement of Mr Albert to recover the funds from Matcove, but does not allege that Mr Fuller had any relevant obligation, such as an obligation to procure Matcove to do that. The Principal Judgment was correct to say there is no issue in the proceedings concerning the payment because there was none between Mr Fuller and the Alberts and there was no cross-claim between the Alberts and Matcove. Whether the conditions of any specific performance order ought address that payment will be a matter for the Equity Division to deal with on the remitter.

26. This complaint should accordingly be rejected.

The costs of the appeal

28. By its Principal Judgment, the Court ordered the Alberts to pay Mr Fuller’s costs of the appeal. The Alberts complain about this order on three bases.

29. First, they say that they should not have been ordered to pay those costs because Mr Fuller offered to pay the costs of Mrs Albert of the redemption suit (including any appeal) as recorded in [85] of the Principal Judgment. They say that Mr Fuller’s case on redemption was “totally recast at the hearing of the appeal” and the Alberts were given no opportunity to argue costs on the appeal.

30. The costs order however reflected the outcome of the appeal concerning the share redemption claim: the claim was rejected by the primary judge, principally on the basis of delay on Mr Fuller’s part, but this Court took a different view about the relevance of delay and found in favour of Mr Fuller. This justified a costs order in his favour. The fact that Mr Fuller made a general unaccepted offer to Mrs Albert to redeem does not affect that position. It is possible that if an order for redemption is ultimately made at first instance, a condition might be that Mr Fuller bear the costs of the appeal, to the extent that they are attributable to the redemption suit, but that would be a matter for the Equity Division judge.

31. In addition, it is wrong of the Alberts to assert that they were denied procedural fairness because they had no opportunity to argue costs on the appeal. The usual occasion for submissions on costs is the hearing of the appeal and parties should not assume that they will necessarily be given a further opportunity to make such submissions once a judgment is delivered (see Aktas v Westpac Banking Corporation Ltd (No 2) (2010) 241 CLR 570; [2010] HCA 47 at [6]-[7]). If they wish to make submissions on costs, they should either do so at the hearing of the appeal, addressing the foreseeable possible outcomes, or in special circumstances seek leave to make costs submissions after the outcome is known. The Alberts did not do either.

32. Although the Court is not presently persuaded by the matters raised by the Alberts in their submissions on the Amended Notice of Motion that it should vary the costs order made in the Principal Judgment, it is nevertheless prepared to give the Alberts a limited further opportunity to make submissions, but they will be at risk of being ordered to pay the costs of the submissions if the Court is not persuaded to change the order.

33. The second matter raised by the Alberts under this heading is that the Court’s costs order was founded on its acceptance of an implied term of the agreement that was not pleaded. We have earlier rejected the proposition that the Court accepted such a term.

34. Thirdly, the Alberts complain that they were not given an opportunity to make submissions concerning a possible remitter. Again, we have addressed, and rejected, their argument to this effect.

35. For these reasons the complaints made under this heading must be rejected.

Conclusion

36. In conclusion, the Court notes that the Alberts sought an oral hearing of the Amended Notice of Motion. As the Alberts’ written submissions have not made out an arguable case for reopening the appeal, the application for an oral hearing is refused.

37. The Court makes the following orders:

1. The Alberts have leave to file an Amended Notice of Motion in the form annexed to their written submissions.

2. Within the times stated in (3) below, the parties may file and serve written submissions (each not exceeding 2000 words in length) as to the appropriate order concerning costs of the appeal and as to whether the proceedings should now be remitted to the Equity Division as stated in the Principal Judgment.

3. The Alberts are to file their submissions, if any, within three working days of today’s date, Mr Fuller within three days thereafter and the Alberts in reply within a further three days.

4. The Amended Notice of Motion is otherwise dismissed with costs.

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Decision last updated: 23 August 2021