Hammer v Sunman
[1999] FCA 1570
•11 NOVEMBER 1999
FEDERAL COURT OF AUSTRALIA
Hammer v Sunman [1999] FCA 1570
PRACTICE AND PROCEDURE – application for reopening judgment – whether judgment should have addressed a case not made at trial – whether new case available on pleadings – whether applicants had proper opportunity fully to litigate claims against respondent – whether findings made in judgment could not have been anticipated – whether findings made in judgment provided clear foundation for new case – whether prejudice to respondent
Federal Court of Australia Act 1976 (Cth) s 22
Federal Court Rules O 35 r 7(1)Hyster Australia Pty Ltd v Anti‑Dumping Authority (1993) 41 FCR 259 applied
De L v Director‑General, NSW Department of Community Services (1997) 190 CLR 207 referred to
State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 cited
Autodesk Inc v Dyason (1993) 176 CLR 300 cited
Australian Fisheries Management Authority v PW Adams Pty Ltd (1996) 145 ALR 345 cited
AB v Federal Commissioner of Taxation (1998) 98 ATC 5100 cited
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 discussed
Leotta v Public Transport Commission (NSW) (1976) 9 ALR 437 discussed
Dare v Pulham (1982) 148 CLR 658 referred to
Pask v Owen [1987] 2 Qd R 421 referred toANDREW HAMMER, JOSEPH HAMMER AND JOLAN FULOP v
ANTHONY SUNMANNG 259 OF 1996
LEHANE J
11 NOVEMBER 1999
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 259 OF 1996
BETWEEN:
ANDREW HAMMER, JOSEPH HAMMER AND
JOLAN FULOP
ApplicantsAND:
ANTHONY SUNMAN
RespondentJUDGE:
LEHANE J
DATE OF ORDER:
11 NOVEMBER 1999
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1. The applicants’ motion filed on 17 September 1999 be dismissed.
2. The applicants pay the respondent’s costs of the motion.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 259 OF 1996
BETWEEN:
ANDREW HAMMER, JOSEPH HAMMER AND
JOLAN FULOP
ApplicantsAND:
ANTHONY SUNMAN
Respondent
JUDGE:
LEHANE J
DATE:
11 NOVEMBER 1999
PLACE:
SYDNEY
REASONS FOR JUDGMENT
The applicants, by motion, seek an order under O 35 r 7(1) of the Federal Court Rules setting aside final orders which I made on 16 July 1999. By those orders I dismissed, with costs, the applicants’ claim for relief. The orders have not been entered.
History
On 16 July 1999 I delivered lengthy reasons for the orders which I then made. The reasons incorporate an extended account of the evidence and my findings of fact. It is unnecessary to repeat that material, but a summary of some aspects of it is necessary to an understanding of the basis on which the applicants put their motion.
The proceeding concerned a block of units in Bondi. Most were residential units, but there were a small number of commercial units as well. There were also garages and car parking spaces. There was a separate title to each of the units and to each garage and parking space. The applicants had owned and operated the entire block of units. On 29 October 1993 they sold substantially all the units and all the garages and car parking spaces to Foxprize Pty Ltd (Foxprize). Foxprize borrowed a substantial portion of the purchase price from Permanent Trustee Australia Ltd (Permanent) and granted Permanent a first mortgage of the residential units. The applicants left a substantial portion of the purchase price outstanding on the security of a second mortgage of the residential units and a first mortgage of the commercial units, garages and car parking spaces. The balance of the purchase price was lent by a company called Maboli Pty Ltd (Maboli). It took a third mortgage of the residential units and a second mortgage of the commercial units. The loan by Permanent was made by it in its capacity as trustee of the Howard Mortgage Trust, the manager of which was Howard Funds Management Limited (Howard). There was some association between Howard and Maboli: Mr Robert Blann, the chairman of directors of Howard, was also substantially interested in Maboli.
The respondent, Mr Sunman, is a solicitor. He acted for Permanent and Howard; he also acted for Maboli.
The purchase was completed and the mortgages granted on 29 October 1993. It very soon became apparent that Foxprize was unable to meet its obligations under the mortgages. Under both Permanent’s mortgage and the applicants’ mortgages interest was expressed to be payable at a “higher rate” of 14.95 per cent per annum, reducible to 10.95 per cent per annum in the absence of default and if interest was paid within seven days of the due date. Foxprize was in default under the applicants’ securities from 1 December 1993. Mr Lloyd, the applicants’ solicitor, prepared and served demands for payment and instructed counsel to draw documents necessary to begin proceedings in the Supreme Court to recover possession. Howard reached an arrangement with Foxprize under which, for the time being, interest payable under Permanent’s mortgage would be deducted from the proceeds of sale of individual units and interest would be charged at the lower rate of 10.95 per cent per annum, not the higher rate of 14.95 per cent. Foxprize, however, notified Permanent of its default under the applicants’ securities; default under those securities was also default under Permanent’s mortgage; on 18 February 1994 Foxprize executed, in favour of Permanent, a deed by which it surrendered possession to Permanent. Permanent, however, did not accept the deed at that time; instead, Maboli entered into de facto possession.
During January and February Mr Lloyd and Mr Sunman corresponded and spoke on numerous occasions. It is unnecessary to recount the detail. It is sufficient to say that among various matters about which Mr Lloyd expressed concern were whether default had occurred under Permanent’s mortgage and what he perceived as the exposure of the applicants as second mortgagees. A meeting took place on 23 February 1994 between Mr Sunman, Mr Lloyd, Mr Blann and one of the applicants, Mr Andrew Hammer. In general terms there was discussion of a proposal for orderly realisation of the mortgaged property. The applicants, however, alleged that Mr Sunman, on behalf of Permanent, made two representations at the meeting, which were misleading or deceptive. One was that until Permanent notified the applicants to the contrary, Permanent would from 28 February 1994 charge Foxprize interest at the lower rate, not the higher rate to which it was entitled following default. The other was that Permanent’s interest had been paid up to 28 February but that immediately after that date Foxprize would not be able to pay interest as it was unable to do so, and would be in automatic default under Permanent’s mortgage.
In my reasons for judgment, I found that the first of those representations had not been made but that the second had and that it was misleading: misleading, in the sense that while it was literally true that the interest which had fallen due to Permanent (on 1 January) had been paid (by capitalisation, subsequently recouped out of sale proceeds) it was misleading in that it wrongly suggested that circumstances would change after 28 February. The truth of the matter was that before 28 February and afterwards Foxprize could not pay interest except by capitalisation or from the proceeds of sale of units. I found that the applicants, through Mr Hammer, were in fact misled by the representation into believing that interest payable to Permanent up to 28 February 1994 had been paid from Foxprize’s own funds – that is, otherwise than by capitalisation or application of sale proceeds.
During the meeting on 23 February, Mr Sunman gave Mr Hammer a statement of the amounts owing under the various mortgages at 28 February. It was not suggested that the statement was incorrect. It would have enabled Mr Hammer, had he made the necessary calculations, to work out that the principal sum owing to Permanent had not been reduced from sale proceeds to the extent to which it ought to have been reduced had interest been paid from an external source. Mr Hammer did not, however, make the calculation. The applicants’ claim to have suffered loss as a result of Mr Sunman’s misleading conduct was put, at the trial, on the basis that, if Mr Hammer had not been misled as to the way in which Permanent’s interest had been paid up to 28 February, he would immediately have taken steps to cause the applicants to pay to Permanent the amount owing under its mortgage and to take a transfer of that mortgage. He would have been able to do so, he said, by borrowing the necessary sum at a rate of interest substantially less than the higher rate under Permanent’s mortgage. I found, however, on the evidence that that reliance case had not been made out. Thus, the applicants failed.
Events following the meeting on 23 February 1994 can be recounted very briefly. Immediately following the meeting, Mr Hammer was inclined to agree to the “orderly sale” proposal, involving, in essence, a sale programme conducted by Maboli with the cooperation of Foxprize. The following day, however, he had changed his mind, taking the view that such a programme would involve too much risk to the applicants. He instructed Mr Lloyd that he wished to press ahead with Supreme Court proceedings for possession; Mr Lloyd sought the advice of counsel. The evidence does not disclose what advice counsel gave, but following receipt of his advice the applicants for a period entertained the orderly sale proposal. Draft priority deeds were exchanged between Mr Sunman and Mr Lloyd which would have provided a framework for it; the deeds would have provided, among other things, that if Permanent charged interest at the lower rate the applicants would do likewise. However, there was disagreement as to the form of the deeds and by 24 March the applicants had rejected the “orderly sale” proposal.
It was not until mid‑April that the applicants filed a summons in the Supreme Court seeking an order for possession. Mr Sunman did not become aware of the proceedings until 28 April, the day before the return date of the summons. He, apparently, arranged for Permanent to accept Foxprize’s deed of surrender of possession; on behalf of Permanent he instructed counsel to appear on the return date to seek the joinder of Permanent as a defendant on the footing that the mortgagor had already surrendered possession to Permanent as first mortgagee. He wrote to Howard on 3 May confirming that he had taken the view that the issue of the summons made it “imperative for the position of the trustee as first mortgagee to be protected by avoiding the Court making an order which the Sheriff might interpret as being capable of being enforced as against the trustee as mortgagee in possession”. On 11 October 1994, the applicants obtained a money judgment and an order for possession as against Foxprize: the delay was occasioned largely by a defence asserted by Foxprize (which failed) and, possibly, by the action of other parties who sought to be joined as defendants. In the end, however, I do not think anything turns on those matters.
Meantime, sales of units continued, though not at a great rate. Mr Lloyd complained frequently and vigorously about the lack of progress and repeatedly sought an account from Permanent as first mortgagee. A draft account was eventually provided in July; that account indicated that the interest payment due to Permanent on 1 January had been capitalised. It indicated also that interest had been charged by Permanent at the lower rate. Following further pressure by Mr Lloyd, a revised account was provided in August. Several adjustments had been made. Notably, interest was charged at the higher rate as from 1 March 1994 and, whereas the July draft account had indicated that interest falling due after 28 February had been paid from sale proceeds, the August account treated all interest as capitalised. Although Mr Lloyd was still expressing considerable dissatisfaction with the rate at which units were sold, the applicants made no immediate proposal, in August, to purchase Permanent’s mortgage. At the end of October Mr Sunman sought the applicants’ reaction to a “bulk sale” proposal. That prompted, in early November, the first proposal by the applicants to purchase Permanent’s mortgage. Negotiations about that proceeded, but there were substantial delays and ultimately the proposal was overtaken by the event that, by late February 1995, contracts had been exchanged for the sale of the entire property. Realisations were insufficient, by a substantial margin, to pay the amount owing by Foxprize to the applicants.
Outline of the applicants’ case on the motion
The essence of the applicants’ argument on the motion is that, given the findings of fact which I made, I could and should, on the evidence, have made further findings, on the basis of which I should have concluded that a reliance case had been established different from that on which the applicants relied at the trial, but open on the pleadings. The reliance case at trial was, as I have mentioned, that if Mr Hammer had not been misled at the meeting the applicants would have taken steps, immediately after 23 February 1994, to discharge and take a transfer of Permanent’s first mortgage. The applicants say that it was open to me to find and, having set aside my orders, I should find, that if Mr Sunman had not engaged in the misleading conduct in which I found he had engaged:
(a)the applicants would immediately have sought and would promptly have obtained orders for possession;
(b)as soon as Mr Sunman learnt of the action for possession he would have notified Permanent (or, perhaps, Howard) and Permanent would immediately have accepted the deed of surrender (this, of course, is what actually happened when Mr Sunman found out about the action commenced by the applicants in March);
(c)Mr Brett Howard, the managing director of Howard, would have had a discussion with the applicants and would have been frank about Permanent’s intentions: those discussions would have included disclosure that Permanent would charge interest at the higher rate (or at least that Permanent reserved its right to do so);
(d)the applicants, knowing then that Permanent would be charging interest at the higher rate and either capitalising it or recovering it out of sale proceeds, would have paid the amount owing to Permanent and taken a transfer of its mortgage (I shall assume, in considering the motion, that the applicants as a matter of fact could have raised the necessary funds at a rate of interest substantially lower than the higher rate payable to Permanent: that is controversial between the parties but it was not necessary for me, having found against the applicants on the reliance case made at trial, to reach a conclusion about it and I did not do so).
The pleaded reliance case
I set out below the relevant paragraph of the amended statement of claim. The “Representations” are the two alleged representations, one only of which I found was made. The “Common Security” is the residential units over which both Permanent and the applicants had mortgages. The underlined portions did not appear in the statement of claim originally filed by the applicants on 29 March 1996 but were added by amendment in accordance with leave granted on 21 November 1996:
“10.By reason of the Applicants’ reliance on the Representations the Applicants suffered loss and damage.
Particulars
(a)The Applicants would have been able to obtain possession of the Common Security from Foxprize by 31 March 1994.
(b)The Applicants would have been able to sell the Common Security by 31 August 1994, and/or, at their option, redeem and take a transfer to themselves of Permanent’s First Mortgage and then retain the Common Security until able to sell the units comprising the same at prices sufficient to clear all moneys then owing under Permanent’s First Mortgage and the Applicants’ Second Mortgage (including the moneys secured under the Applicants’ First Mortgage which were collaterally secured by the Applicants’ Second Mortgage).
(c)The Applicants would have recovered all moneys owing to them and secured by the Applicants’ Second Mortgage.
(d)In the event the Applicants were unable to obtain an order against Foxprize granting the Applicants possession of the Common Security until 12 October 1994.
(e)In the event the Applicants have lost approximately $750,000.00.”
It was submitted by counsel for the applicants that the reliance case on which they now seek to rely is within that paragraph of the amended statement of claim and the particulars which it incorporates. Counsel for Mr Sunman submitted that it is not. No very detailed submissions were made about this and, for reasons which will appear, it is not necessary for me to come to a firm conclusion about it. I am inclined to think, however, that the submission on behalf of Mr Sunman is correct. The essence of the case which the applicants now wish to propound is that they would have commenced proceedings for recovery of possession; that would have led Permanent to take possession of the Common Security; that in turn would have led to the provision to the applicants of additional information (that Permanent would, or might, charge interest at the higher rate); and that information would have impelled the applicants to buy Permanent’s mortgage. It is not clear, I think, that the pleading indicated to Mr Sunman that that was the case (or a case) which he would be required to meet.
The applicants’ reliance case at trial
I have already referred to this, but it is desirable that I describe in a little more detail the way in which the case for the applicants was conducted.
In opening the case for the applicants, counsel said this:
“Now, if it had transpired, if Mr Hammer ascertained that [Foxprize] had not paid the interest to Permanent either, then Mr Hammer knew Permanent would be entitled to charge 14.95 per cent per annum on the money and also knew as a commercial matter that Permanent would be highly unlikely to allow Mr Hammer as second mortgagee to take control of the security property and exercise powers of sale … [but] would itself act and therefore Mr Hammer appreciated that if he was going to have to act because of [Foxprize’s] defaults he was going to have to buy out or in some way get rid of Permanent as prior ranking first mortgagee and he will say that he would have done what was necessary to pay out Permanent.
In my submission, when one recognises in February 1994 the risk attached to Mr Hammer’s investment, two and half million dollars, the fact that Mr Hammer had owned this building before and knew what was required if he were to retake possession and to sell these units, and had the ability to fund the buyout of Permanent’s mortgage, it would be, we submit, self evident that that was the course that anyone in Mr Hammer’s position would really have no option but to follow.”
A little later in his opening, counsel said this:
“We will say that your Honour will find evidence that Mr Hammer had proposed buying out Permanent’s mortgage late in 1994 but even then it will be submitted that every obstacle was put in his way by Mr Sunman, particularly. But it will be, in our submission, compelling evidence that Mr Hammer’s basic claim as to what he would have done in February was quite right. The applicants[’] case is that if they had been told the truth in February they would have refinanced Permanent’s mortgage almost certainly utilising some of their own money and some money borrowed from Macquarie Bank Limited.”
Mr Andrew Hammer alone of the applicants gave evidence. His only evidence in chief as to what he would have done if not misled was contained in a brief passage in one of his affidavits. He said that if he had been told on 23 February that Permanent had capitalised unpaid interest and that it would charge interest at the higher rate, then he would have arranged to pay out the first mortgage by 31 March 1994. Closing submissions on behalf of the applicants continued the same theme; there was no suggestion of any alternative case.
The principles
Section 22 of the Federal Court of Australia Act 1976 (Cth), on which the applicants placed some reliance, provides:
“22.The Court shall, in every matter before the Court, grant, either absolutely or on such terms and conditions as the Court thinks just, all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by him or her in the matter, so that, as far as possible, all matters in controversy between the parties may be completely and finally determined and all multiplicity of proceedings concerning any of those matters avoided.”
Order 35 r 7(1) of the Federal Court Rules provides simply that the Court may vary or set aside a judgment or order before it has been entered.
Section 22 is not determinative of the motion (Hyster Australia Pty Ltd v Anti‑Dumping Authority (1993) 41 FCR 259 at 261). The power under O 35 r 7(1) is discretionary. The principles according to which the discretion is to be exercised have been considered in a number of cases. The most recent consideration of them by the High Court, in relation to the reopening of orders made by that Court, is that in De L v Director‑General, NSW Department of Community Services (1997) 190 CLR 207. In their joint judgment, Toohey, Gaudron, McHugh, Gummow and Kirby JJ said, at 215 (omitting citations of authority):
“The power of this Court to reopen its judgments or orders is not in doubt. The Court may do so if it is convinced that, in its earlier consideration of the point, it has proceeded ‘on a misapprehension as to the facts or the law’, where ‘there is some matter calling for review’ or where ‘the interests of justice so require’. It has been said repeatedly that a heavy burden is cast upon the applicant for reopening to show that such an exceptional course is required ‘without fault on his part’, ie without the attribution of neglect or default to the party seeking reopening. By such expressions of the power to reopen final orders, courts seek to recognise competing objectives of the law. On the one hand, there is the principle of finality of litigation which reinforces the respect that should be shown to orders, final on their face, addressed to the world at large and upon which conduct may be ordered reliant upon their binding authority. On the other hand, courts recognise that accidents and oversights can sometimes occur which, unrepaired, will occasion an injustice. In the case of a final court of appeal, such as this Court, that injustice may be irremediable, unless the Court itself, acting promptly, is persuaded to reopen its orders so as to afford relief in the exceptional circumstances of the case.”
The use of phrases such as “heavy burden” and “exceptional course” emphasise, in my view, that (contrary to submissions made by counsel for the applicants) the considerations relevant to an exercise of the power under O 35 r 7 are not simply those which arise on an application to amend a pleading made before (State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146) or during trial: the principle of finality is not lightly to be brushed aside. There may be a proper case for reopening where an arguably relevant provision of statute or delegated legislation has been accidentally overlooked (De L); where a party has not been given an adequate opportunity to present submissions in relation to a finding of critical importance to the court’s ultimate decision (see Autodesk Inc v Dyason (1993) 176 CLR 300 at 312 per Deane J); where the Court has misunderstood the effect of a submission made to it (Australian Fisheries Management Authority v PW Adams Pty Ltd (1996) 145 ALR 345); or, in some cases, where the Court has not given the parties an opportunity to make submissions as to the form of order appropriate to give effect to its reasons for judgment (AB v Federal Commissioner of Taxation (1998) 98 ATC 5100). The decision of the High Court in Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 suggests that there may be a proper case for reopening where equitable relief has been granted in circumstances where the Court has made a finding of fact which might have supported a discretionary defence not actually relied on by the defendant, even where, upon reopening, it might be necessary to hear further evidence. But it should be recalled that the question in Suttor was whether the point could be taken on appeal to the High Court; the question whether it was a proper case for reopening did not arise; and the Court did not consider in detail, as it has done subsequently, particularly in Autodesk and De L, the considerations relevant to an exercise of the discretion to set aside judgments or orders.
The applicants relied also on a line of authority commencing with Leotta v Public Transport Commission (NSW) (1976) 9 ALR 437 and including Dare v Pulham (1982) 148 CLR 658 and Pask v Owen [1987] 2 Qd R 421. I do not think, however, that those authorities are of any particular assistance. None of them had to do with reopening where final orders have been made. The question which arose in Leotta – and the obvious ways in which it differs from the question in this case – appear at the beginning of the joint judgment of Stephen, Mason and Jacobs JJ at 446:
“The only question which arises on this appeal is whether there was any evidence of negligence upon which the jury might find a verdict in favour of the appellant. Much attention was paid in the New South Wales Court of Appeal and in the argument upon this appeal to the fact that the case which the appellant at the trial sought to have submitted to the jury was factually different from that alleged in the statement of claim and the particulars of negligence included therein. But the duty of the trial judge was clear. If in the cause of action upon which the plaintiff sued there had emerged at the conclusion of the evidence facts which, if established, established that course of action, then it was the duty of the trial judge to leave the issue of negligence to the jury. The pleadings should have been amended in order to make the facts alleged and the particulars of negligence precisely conform to the evidence which had emerged.”
The emphasis is mine. The question in Dare was similar and equally remote from the present: see at 666. That is equally true of Pask, where Andrews CJ described the relevant issue, at 429, 430 as follows:
“Although the case as I would decide it both on negligence and on breach of statutory duty, the latter as decided as well by the learned trial judge, was not in either case precisely as the plaintiff’s case was pleaded at the trial, these decisions involve no substantive alteration to the issues as litigated and no available further evidence. I therefore find no difficulty in there having been no appropriate amendments made to the pleadings in the court below.”
Is this a proper case for reopening?
A number of aspects of the trial are, in my view, important. It was conducted over ten sitting days. Mr Hammer was cross‑examined at length, as was Mr Lloyd. So far as reliance is concerned, the cross‑examination must be taken to have proceeded on the basis of the case as opened and Mr Hammer’s evidence in chief, which was consistent with that case: a case significantly different from that which the applicants now seek to pursue. Secondly, it must have been perceived, well before the trial concluded, that the findings of fact which I ultimately made were at least possible. Both the course of the evidence and interchanges during final submissions must have made clear that it was by no means unlikely that, though I might find that the representation as to payment of interest to Permanent up to 28 February had been made and was misleading, it was considerably less likely that I would find that Mr Sunman had represented that Permanent would (whatever anyone else might do) charge interest at the lower rather than the higher rate. Equally, the course of the cross‑examination of both Mr Hammer and Mr Lloyd and interchanges in the early stages of counsel’s closing submissions suggested, in my view very clearly, that if Mr Sunman were found not to have made the representation as to the interest rate which would be charged by Permanent there were real difficulties, on the evidence, with Mr Hammer’s claim that, if he had not been misled, he would have arranged for the applicants to discharge or purchase Permanent’s mortgage. Nevertheless, that remained the only basis on which the applicants claimed to have relied on what was represented to them, so as to suffer loss. The suggestion that a different case might have been open has been made only after the delivery of judgment.
Nor can it be said that the findings of fact which I have made, or any necessary inferences from them, necessarily support the case which the applicants now seek to make. The first step in that case is that, if Mr Hammer had not been misled as to the way in which interest due to Permanent up to 28 February 1994 had been paid, he would have caused the applicants immediately to commence and vigorously to pursue a claim for possession under their securities. Certainly he gave evidence, in cross‑examination, which might be relied on to support a finding that he would have done so. Counsel for the applicants vigorously submitted that it was absurd to suppose that he would not have acted differently, knowing the truth, than he did being misled. But in my view counsel for Mr Sunman was right in submitting that an issue of credit arises. For one thing, there are differences between what Mr Hammer said in his affidavit and the evidence he gave in cross‑examination; for reasons which I explained when dealing with the issue of reliance, it is not easy to see why, when Mr Hammer after the meeting on 23 February knew precisely how much was owing to Permanent and that Foxprize could not thereafter pay interest except out of sale proceeds or by capitalisation, it should have mattered, let alone been of crucial importance, to know the source of interest paid up to 28 February. The question is by no means as straightforward as counsel for the applicants would have it. And there is an obvious prejudice to Mr Sunman in being required now to litigate reliance on a new basis after evidence has been given and witnesses cross‑examined, at length, on the basis unambiguously propounded by the applicants.
Then, while it might well be inferred that Mr Sunman would have advised Howard and Permanent, and that Howard and Permanent would have acted, if the applicants had immediately commenced possession proceedings, in the same way as they did when those proceedings were commenced later, the proposition that there would then have been a meeting, or a discussion, between Mr Howard and Mr Hammer, at which Mr Howard would have said in terms that Permanent (or Howard) would (or reserved the right to) charge interest at the higher rate, seems to me on the evidence at trial speculative at best. It is based solely on evidence given in general, though qualified, terms by Mr Howard in cross‑examination that he would deal candidly with a subsequent mortgagee. The precise proposition contended for was not put to him. Nor, when the applicants in fact commenced proceedings for possession, did any such meeting or discussion take place. Nor, indeed, is there evidence that Permanent or Howard, in fact, made a decision, before August 1994, to charge interest (retrospectively, prospectively or both) at the higher rate.
In all those circumstances, it cannot be said, in my view, that the applicants have not had a proper opportunity fully to litigate their claims against Mr Sunman. There is no proper basis, in my view, for a suggestion that the findings which I made should not have been anticipated. Nor, in my view, can it properly be said that those findings provide a clear foundation for the case now sought to be propounded. It follows, in my view, that this is not a proper case, consistently with the established principles, to exercise the power under O 35 r 7(1).
Conclusion
For those reasons the orders of the Court are that the motion is dismissed and that the applicants pay the respondent’s costs.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lehane. Associate:
Dated: 11 November 1999
Counsel for the Applicant: Mr V R W Gray Solicitor for the Applicant: John Lloyd & Co Counsel for the Respondent: Mr J T Gleeson Solicitor for the Respondent: Blake Dawson Waldron Date of Hearing: 4 November 1999 Date of Judgment: 11 November 1999
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