K & K Real Estate Pty Ltd v Adellos Pty Ltd (In Liquidation) & Anor

[2010] HCATrans 289

[2010] HCATrans 289

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S258 of 2010

B e t w e e n -

K & K REAL ESTATE PTY LTD ACN 002 532 078

Applicant

and

ADELLOS PTY LTD (IN LIQUIDATION) ACN 002 869 874

First Respondent

LA CONCRETE PTY LTD ACN 002 780 038

Second Respondent

Summons

HEYDON J

TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA BY VIDEO LINK TO SYDNEY

ON MONDAY, 8 NOVEMBER 2010, AT 9.03 AM

Copyright in the High Court of Australia

MR R.S. ANGYAL, SC:   May it please the Court, I appear for the applicant.  (instructed by Colin Biggers & Paisley Solicitors)

MR C.R.C. NEWLINDS, SC:   If your Honour pleases, I appear for both respondents.  (instructed by Era Legal)

HIS HONOUR:   Mr Angyal, you move on the affidavit of Leanne Kylie Walker sworn on 5 November 2010?

MR ANGYAL:   I do, your Honour.

HIS HONOUR:   Mr Newlinds, do you object to any part of that?

MR NEWLINDS:   No, your Honour.

HIS HONOUR:   Do you wish to cross‑examine?

MR NEWLINDS:   No, thank you, your Honour.

HIS HONOUR:   Mr Angyal, do you have any other evidence?

MR ANGYAL:   Your Honour, there is one page which the Court transmitted to Canberra this morning.

HIS HONOUR:   Is that page 443?

MR ANGYAL:   Yes, that is page 443 of the court book before his Honour Acting Justice Hamilton.  It became exhibit A.  So it is page 443 of exhibit A before his Honour Acting Justice Hamilton.

HIS HONOUR:   Mr Newlinds, do you object to that document?

MR NEWLINDS:   I do not, your Honour.

HIS HONOUR:   I will mark that exhibit A.

EXHIBIT:    Exhibit A.....Page 443 of the court book

HIS HONOUR:   I have read the affidavit of Ms Walker and I have looked at the annexures.  Mr Newlinds, do you have any evidence you want to rely on this morning?

MR NEWLINDS:   No, your Honour.

HIS HONOUR:   Very well.  I think it is simplest if we go to you, Mr Newlinds.  What is the reason why the orders which the applicant wants should not be made?

MR NEWLINDS:   There are three, your Honour.  The first is that this matter has now been looked at by four judges and not one of them has appeared to have had any doubt as to the result.  In those circumstances, the general presumption that the court below is correct perhaps has a bit more weight then usual.  The second point is this.  Our learned friends say damages is not an adequate remedy.  What they really mean by that is damages is not a remedy that they find satisfactory.  This is not a case where, if special leave would be granted at some time in the future and if an appeal be allowed, that the appellant would be without remedy.  Obviously, in those circumstances, the appellant would have its claim for damages and the exhibit, the real estate agent’s opinion that was just tendered, seems to suggest that those damages would be quantified by some sort of loss of a chance to make the profits they hope to make from this development property.

The third reason is this, your Honour.  Whilst the payment into court probably goes an awful long way to cure the prejudice to which we point, we do have a settlement arranged with another purchaser scheduled to take place at 3.00 pm today.  From close of business today, that purchaser does have the right, at its election, to rescind that contract.  We understand our learned friends give an undertaking to complete in any event and we do accept that as of today they are ready, willing and able to complete the contract, but it doesn’t follow from that concession that at some point in the future they will be in that same state of affairs.  So whilst I cannot put this submission particularly strongly, there is a risk that we would suffer prejudice.  It is not a great risk, but in the circumstances where we have the result below, it should not be us that is asked to take that risk.  Those are my submissions, your Honour.

HIS HONOUR:   Thank you, Mr Newlinds.  I do not think I need trouble you, Mr Angyal.

On 19 December 2009, the respondents entered a contract to sell certain land in Cobbitty to the applicant for $5.6 million plus GST.  A deposit of 10 per cent was paid.  The date for completion was 25 January 2010.  Completion did not take place on that day.  The respondents then served a notice to complete requiring completion by 12 February 2010.  Completion did not take place on that day either.  On 8 July 2010, the respondents purported to terminate the contract.  On 9 July 2010, the respondents entered a contract to sell the land to Dandaloo Pty Limited for $5,650,000.  No estate agent acted in relation to that contract and it therefore seems that no vendor’s commission is payable.

The applicant then instituted proceedings on 5 August 2010 seeking a decree of specific performance of its contract.  The proceedings were heard by Acting Justice Hamilton in the Supreme Court of New South Wales on 18 and 19 October 2010.  He gave reasons on 22 October 2010 indicating that he would dismiss the summons.  On 26 October 2010, he did so and he ordered that the deposit be paid to the respondents. 

An expedited appeal to the Court of Appeal was then heard by Justices Giles, Young and Handley and dismissed on 3 November 2010.  The Court of Appeal indicated that reasons for judgment would be given on a later unspecified date.  On 5 November 2010, Justice Young dismissed a motion to continue a stay of the Court of Appeal’s orders and an injunction protecting the applicant’s position until this Court could determine a foreshadowed application for special leave to appeal.  An injunction of that kind had originally been granted by Acting Justice Hamilton.  The Court of Appeal’s injunction expired on Friday, 5 November 2010.

On the same day, the applicant delivered to this Court for filing today an application for special leave to appeal, a draft notice of appeal, a summary of argument and a summons.  The summons seeks a stay of the orders of the Supreme Court of New South Wales until the expiration of three business days after the Court of Appeal publishes its reasons for judgment in relation to the hearing of 3 November 2010.  The summons also seeks an injunction of the same duration restraining the respondents from conveying the Cobbitty land to anyone except the applicant.  Justice Young was informed that the second contract with Dandaloo Pty Limited would be settled today, Monday, 8 November 2010, and it seems that it is contemplated that that will take place.  From this day on, the purchaser under that contract will have a right to terminate it if it is not completed.

This Court is in a position to add this application to the list of special leave applications to be heard in Sydney on Friday, 12 November 2010.  One problem is that it is undesirable for the application to be determined until the Court of Appeal’s reasons for judgment are published.  It might be expected that they will be published in the fairly near future but, as indicated earlier, the court was not able to say when.  The applicant contends that if the second contract is completed, its appeal to this Court and, hence, its application for special leave to appeal will be nugatory.  That is because it fears that if the orders are not made, the second contract will be completed today.

The applicant, as the price for obtaining the interlocutory relief it seeks, has indicated, through Ms Walker’s affidavit, that it will submit to certain conditions or offer certain undertakings.  The first is to pay into court the sum of $800,000 being the estimated maximum difference between the amount realisable by the respondents under the contract and the amount realisable by the respondents under the Dandaloo contract.  The second is described as an irrevocable undertaking to the court that if subsequent to 6 November 2010 Dandaloo Pty Limited rescinds the Dandaloo contract, the applicant stands ready, willing and able to and will complete its contract on terms ordered by the court.  The third is an undertaking of the usual kind to pay damages.  The fourth is framed as an undertaking to provide security for the undertaking in relation to the $800,000 and the undertaking as to damages and it is to pay into court the additional amount of $1,428,197.69.

Mr Newlinds of senior counsel, who appears today on behalf of the respondents, advances three reasons why the relief sought under the summons should not be granted.  The first is that four judges, one in the Equity Division, three in the Court of Appeal, have concluded that the applicant’s case must fail.  He might have added that they were all extremely experienced in the present field.  He submits that in those circumstances, there is a presumption that the courts below are correct.  I do not want to detract from the force of the submission, but the fact is that normally appeals to this Court, although they are appeals against orders, do depend on an analysis of the reasons why the courts below made the orders impugned.

Counsel for the applicant has in written submissions, as it were, reconstructed what the reasoning of the Court of Appeal may well have been.  Counsel for the applicant has also attacked that reconstructed reasoning.  In my opinion, it is not, except in exceptional cases, sufficient to presume the correctness of reasoning in a court below when the reasoning has, no doubt for good reasons, not been stated. 

A second argument advanced by Mr Newlinds picked up the applicant’s contention that where specific performance is sought in relation to the contract for the sale of land, damages are not an adequate remedy.  Mr Newlinds submits that all that really means is that in this case damages is not a remedy which the applicant finds satisfactory.  Mr Newlinds submits that if the Dandaloo contract proceeds and an appeal takes place and succeeds, the applicant will continue to have its claim for damages, its only interest is in making profits out of the land and it will be possible to quantify in dollar terms the value of the chance which it would have lost.  There is some force in that submission as well, but I think the applicant is entitled to maintain its position, at least for a time, that an appeal would bring it specific performance and that remedy, standard in these types of cases, should not be rendered nugatory.

The third submission which Mr Newlinds put was this.  He said that payment into court goes a long way towards protecting the position of the respondents, that is to say, the payments which are offered in Ms Walker’s affidavit.  His submission rather fastens on the proposition in the second of the undertakings that the applicant stands ready, willing and able to and will complete the contract.  He accepts that that may be the case today but that it will not necessarily be the case in the future.  In effect, Mr Newlinds is pointing to the problem that might arise if the applicant defaults on that undertaking and Dandaloo exercises its contractual rights to terminate its contract.

The undertaking referred to in Ms Walker’s affidavit was an irrevocable undertaking.  Whether or not it is a dangerous undertaking, it is one which carries with it a high likelihood of probability that the applicant will remain ready, willing and able to complete the contract because the alternative will be a painful one.  In these circumstances, in my opinion, the orders sought should be made.

Mr Angyal and Mr Newlinds, I think I will just take the course of making the orders in the summons and then we might debate the immediate future in terms of getting ready for special leave hearings and so forth.  Mr Angyal, I take it that you offer to the Court the undertakings that Ms Walker mentioned in her affidavit?

MR ANGYAL:   I am so instructed, your Honour, and I do.

HIS HONOUR:   Very well.  Upon the applicant by its counsel giving to the Court the following four undertakings:

1.an undertaking to pay into court the sum of $800,000;

2.an irrevocable undertaking to the court that if subsequent to 6 November 2010 Dandaloo Pty Limited rescinds its contract with the respondents, the applicant stands ready, willing and able to and will complete its contract on terms ordered by the court;

3.the usual undertaking as to damages;

4.as security for those undertakings, an undertaking to pay into court the additional amount of $1,428,197.69;

the Court orders:

1.That the orders of the Supreme Court of New South Wales made on 26 October 2010 be stayed until the expiration of three business days after the Court of Appeal publishes its reasons for judgment in the matter it heard on 3 November 2010.

2.An order that until the expiration of three business days after the Court of Appeal publishes its reasons for judgment in the matter heard on 3 November 2010 or further order, the respondents be restrained from conveying the property known as 1005 Cobbitty Park Road, Oran Park, New South Wales being the land in folio identifiers 293/708154A and 293/708154B other than to the applicant.

The position is this, that Mr Angyal has put on, as I said, written submissions which depend upon certain assumptions or reconstructions of what the Court of Appeal will eventually hold and those submissions might actually be adequate to the purpose, but in view of all the time factors pressing on the parties, it would be good if the special leave application could be heard in Sydney on Friday.  I take it that is agreed by the parties?

MR NEWLINDS:   It is, your Honour.

MR ANGYAL:   That is convenient, your Honour.

HIS HONOUR:   Mr Newlinds, is it better for us simply to wait and, for example, if the Court of Appeal gave some reasons for judgment on Wednesday, you could put something on on Thursday and we could go from there, or is it better for you to reciprocate, but in a hostile fashion, Mr Angyal’s tactic of reconstructing the reasons?  It is really, I think, primarily a matter for you.  There is a difficulty, the more time that goes by, the less ability will the Judges sitting on Friday have to examine the matter in detail in advance which they endeavour ordinarily to do, but it still seems desirable to have it heard on Friday if possible.  If it cannot be heard on Friday, it might have to be done on the papers whenever the reasons come down.

MR NEWLINDS:   If the Court pleases.  May I take the option of myself seeking to reconstruct the court’s reasons and if I might also have liberty to put before this Court I think ten pieces of correspondence which were really the entirety of the evidence upon which the decision turned.  My learned friend tells me that might all be in the affidavit.  I will have a look at that.  Because ultimately, as your Honour might have predicted, I am going to make a submission that whatever the proper legal test is, we pass it as a matter of fact, and that the appeal came down to a determination of fact and did not involve any misapplication of any principle of law.  So, may I take that opportunity, your Honour, and get those submissions as quickly as I can, perhaps by tomorrow midday?

HIS HONOUR:   Yes, I think that is satisfactory.

MR NEWLINDS:   If the judgment thereafter comes out, we would probably both seek to have a last minute go ‑ ‑ ‑

HIS HONOUR:   Yes, I think if the judgment comes out this week, the best thing to do is get in touch with the Registry and the Registry will advise you as to what will happen and how best to handle the problem.  What you said about preparing some additional sheets of paper and reviewing Ms Walker’s affidavit and so forth, the goal would be to have something resembling a special leave book which would contain, I suppose, the original summons, Justice Hamilton’s judgment, the Court of Appeal’s judgment and whatever else is needed, but if we could have that in as compact a form as possible, that would be desirable, I think.  It may be that Ms Walker’s affidavit is a satisfactory form.  I do think I will make any direction.  I will just leave it to you to comply with what you said.  Mr Angyal, if you want to say anything in reply in writing, you can by 10 o’clock on Thursday, or something like that.  So it may be that nothing can be done on Friday, but if it can, let us endeavour to do it.  Anything else?

MR NEWLINDS:   Not for my part, your Honour.

MR ANGYAL:   No on our part, your Honour.

HIS HONOUR:   Very well.  I am obliged to counsel.  The Court will now adjourn.

AT 9.25 AM THE MATTER WAS ADJOURNED