Mills v Ruthol Pty Ltd

[2005] NSWSC 1367

CITATION:	Mills & Anor v Ruthol Pty Ltd [2005] NSWSC 1367
HEARING DATE(S):	7 September 2005
JUDGMENT DATE :	7 September 2005
JURISDICTION:	Equity Division
JUDGMENT OF:	Windeyer J at 17
DECISION:	Interim payment ordered

CATCHWORDS:	PROCEDURE - Supreme Court procedure - granding of interim payments under s82 - plaintiff previously obtained judgment against defendant - defendant using delaying tactics - in circumstances would not cause undue hardship to defendants
LEGISLATION CITED:	Civil Procedure Act 2005 s82 Supreme Court Act 1970 s68 Supreme Court Rules 1970 Pt 31
PARTIES:	Brian Mills (First Plaintiff) Elaine Mills (Second Plaintiff)
FILE NUMBER(S):	SC 2101/99
COUNSEL:	Mr A Lacey (Plaintiff) Mr M Zwar (Defendant)
SOLICITORS:	McCabes (Plaintiff) David Landa and Stewart (Defendant)

LOWER COURT JURISDICTION:

- 8 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WINDEYER J

WEDNESDAY 7 SEPTEMBER 2005

2101/99 BRIAN MILLS & ANOR V RUTHOL PTY LIMITED

JUDGMENT

1 The plaintiffs, by motion, seek an interim payment pursuant to s82 of the Civil Procedure Act 2005 (the Act). The section provides:

82 Court may order interim payments

(cf Act No 52 1970, section 76E; Act No 9 1973, section 58)

(1) In any proceedings for the recovery of damages, the court may order a defendant in the proceedings to make one or more payments to the plaintiff of part of the damages sought to be recovered in the proceedings.

(2) The court may make such an order against a defendant on the application of the plaintiff at any stage of the proceedings.

(3) The court may not make such an order unless:

(a) the defendant has admitted liability, or
(b) the plaintiff has obtained judgment against the defendant for damages to be assessed, or
(c) the court is satisfied that, if the proceedings went to trial, the plaintiff would obtain judgment for substantial damages against the defendant.

(4) The court may not make such an order if the defendant satisfies the court that:

(a) the defendant is not insured in respect of the risk giving rise to the plaintiff’s claim for the recovery of damages, and
(b) the defendant is not a public authority, and
(c) the defendant would, having regard to the defendant’s means and resources, suffer undue hardship if such a payment were to be made.


(5) The court may order a defendant to make one or more payments of such amounts as it thinks just, but not exceeding a reasonable proportion of the damages that, in the court’s opinion, are likely to be recovered by the plaintiff.

(6) In estimating those damages, the court is to take into account any relevant contributory negligence, and any cross-claims, on which the defendant may be entitled to rely.

2 It is not necessary to go into a full account of the somewhat tortured litigation which began in 1999. Most of the facts necessary for this judgment are set out in a judgment of Palmer J dated 24 June 2004.

3 In brief, the plaintiffs in an action before Palmer J obtained an order for specific performance of a contract for the purchase of a property at Mona Vale, which contract arose from the exercise of an option granted to the plaintiffs by the defendant company, Ruthol Pty Limited (Ruthol). Ruthol had, however, granted to another company Tricon Australia Pty Limited (Tricon) a lease of that property which contained an option to purchase. That lease was granted after the original option period expired. The option in favour of the plaintiffs had not been exercised as a result of deception by Ruthol. The plaintiffs purported to exercise their option on 3 March 1999. Palmer J held that the exercise was effective in view of the deception. Tricon had in the meantime exercised the option to purchase under its lease. Palmer J held that the interest of the plaintiffs prevailed over that of Tricon and made an order for specific performance in favour of the plaintiffs and he ordered Ruthol to pay damages to Tricon.

4 Ruthol appealed to the Court of Appeal. That court reversed the decision holding that the interest of Tricon prevailed. Thus Tricon obtained an order for specific performance and the plaintiffs were left to a claim for damages. That was referred back to Palmer J for assessment.

5 Palmer J by judgment dated 24 June 2004 determined separate questions pursuant to Pt 31 of the then Supreme Court Rules 1970. Those questions were (1) whether the plaintiffs were entitled to damages pursuant to s68 of the Supreme Court Act; (2) the date at which damages should be assessed. His Honour found that s68 damages were available and that the relevant date was the date of the Court of Appeal order, namely 5 November 2003.

6 Orders giving effect to the judgment were made on 15 July 2004. A declaration was made as to entitlement to s68 damages and orders were made (1) that the date for assessment was 5 November 2003; (2) that the proceedings be referred to a Master to enquire into the damages; (3) that the plaintiff’s damages should be assessed under the following heads and on the following bases: (a) damages for capital loss, being the difference between the purchase price of the property under the said Deed of Option and the market value of the property as at 5 November 2003; and (b) damages for any other losses actually suffered by the Plaintiffs by reason of the Defendant’s breach of the said Deed of Option.

7 Directions were made as to the filing of evidence, the plaintiffs to file their evidence by 13 August 2004 and the defendants by 10 September 2004. Neither party complied with that order. The plaintiffs’ evidence was filed on 22 November 2004. A number of extensions of time appear to have been granted to the defendant, but in fact no evidence was filed by the defendant until an affidavit was filed before me at the hearing on 5 September 2005, which was nearly two months after the last extension given for filing of that evidence.

8 Ruthol, by motion, applied to Palmer J to review his decision as to the assessment date. It is not necessary to go into this, although, unless the order was not taken out I have difficulty in understanding the basis on which the application was made. In any event His Honour dismissed the motion on 8 June 2005.

9 The assessment of damages has been set down for hearing before Associate Justice McLaughlin on 12 September 2005. Meanwhile Ruthol has applied for leave to appeal to the Court of Appeal from the decision of Palmer J dismissing the application for variation of his earlier order. The application for leave to appeal I was told from the bar table is to be heard some time in October.

10 The notice of motion now before the court was filed on 16 August 2005. An application was made after about one hour of hearing that I should proceed no further on the basis of the imminent final hearing on damages before an Associate Judge. That application was opposed for various reasons, one being that it was almost certain, considering the so called constant delaying tactics of the defendant company, that an application for adjournment would be made to the Associate Judge on the basis that he should not proceed until the application for leave to appeal was determined and if leave was granted until the appeal was heard and determined. I was attracted to the defendant’s application for a time, particularly after it appeared that the defendant would undertake not to apply for an adjournment, but on consideration I refused the application as I could see no reason why an interim payment should not be ordered for an amount which, on the position most favourable to the defendant, could not be contested.

11 The motion sought a payment of $1,612,383.21 or in the alternative a sum determined by the court. The first sum comprised claims for (a) the capital sum as identified by Palmer J; (b) interest on that sum; (c) rent foregone; (d) interest on that rent; (e) costs.

12 It is conceded that the claim for some payment on account of costs is not available under the Act. The claim for interest is not available either. Interest is not damages. Sections 82 and 100 of the Act make that clear. An interim payment can be awarded only of damages.

13 There is competing evidence of the capital sum. The plaintiffs’ evidence is comprised in an expert report by a valuer from Egan National Valuers. The lowest figure put forward in that report is $1,155,000 for the value of the property from which would have to be deducted the purchase price of $490,000 to calculate the capital sum. The affidavit filed in court before me for Ruthol is of an expert valuer, Mr Lyons. The lowest figure put forward by him of value at the date fixed by Palmer J is $900,000. On this application, the dispute or difference between the valuers should not be explored. I propose to work on the figure of $900,000. On that basis after deduction of the option purchase price the capital sum would be $410,000.

14 The plaintiffs’ claim for damages includes a claim for the market rent of the property from 1 July 1997 until the damages assessment date. There is no real disagreement in the valuers as to this amount apart from a GST component on part of it. The agreed figure net of GST is $459,902.27. This added to the capital sum makes a total of $869,902.27 on the basis of calculation of the capital sum which I have adopted for the purpose of this application.

15 Mr Angyal, Senior Counsel for Ruthol, in arguing that no interim payment order should be made relied on s82(4)(c) of the Act. In other words he argued that the court could not make an order as the defendant would suffer undue hardship if such a payment were to be made having regard to the defendant’s means and resources. The difficulty about that is that the sub-paragraphs of s82(4) are cumulative. While it can perhaps be thought that Ruthol would not be insured in respect of the risk giving rise to the plaintiffs’ claim for damages, the section provides that it is for the defendant to satisfy the court of that and there is no evidence of that. I should add, however, to be fair to the defendant, that the evidence would in no way satisfy me that it would suffer undue hardship if the payment which I propose were to be made. A balance sheet admitted into evidence without objection shows that Ruthol as at 30 June 2004 had current assets of $913,701 and current liabilities of $11,455. Non-current assets are shown as $1,401,010. There are no non-current liabilities shown on those accounts. Another document admitted into evidence is of no more help. There is no evidence of undue hardship.

16 The next submission of the defendant is a claim based on s82(6) of the Act. Ruthol by letter dated 2 September 2005, gave notice of a proposed cross-claim for damages for failure to remove the caveat the plaintiffs had lodged against the title to the subject property. Those damages are said to be an amount equal to rent Tricon refused to pay after 19 July 2001 which was the date when settlement of the contract pursuant to its exercise of its option to purchase would have taken place. The caveat operated to prevent the settlement of that contract taking place. The amount claimed for rent lost is $274,507. Ruthol brought an action against Tricon for that amount and in separate proceedings on 19 November 2004, Palmer J dismissed this claim. Ruthol has appealed this decision. The letter of 2 September 2005 also indicated a claim for damages for loss of use of the purchase price of $640,000 payable by Tricon under its contract. This was said to be in addition to the rent but counsel for the defendant accepted that the claim must be for one or the other and not both.

17 One cannot help noting that this claim was notified by email sent about 6.00 pm on 2 September. Mr Cottman, SC for the plaintiffs, said that this was just another delaying tactic and argued that the claim would be defeated by the defence of estoppel. It is not necessary to decide this question. It might have been appropriate to apply to bring this cross-claim as soon as the Court of Appeal gave its decision remitting the question of damages to Palmer J, but it does not mean that failure to do so at that time would certainly be fatal. In some respects damages for failure to remove a caveat are similar to claims made on an undertaking as to damages given as the price of an interlocutory injunction. In any event if the appeal last mentioned succeeds the claim would be quite different.

18 The possible cross-claim is to be taken into account when determining the appropriate order to be made. That does not necessarily mean that the court would assume that any notified cross-claim would necessarily be pursued or succeed for the full amount, nor does it mean that interest is irrelevant in considering what interim payment of damages should be ordered. After all the claim of the plaintiffs would include interest on the capital sum and on the lost rent and such interest would be far greater than any interest on the amount of the foreshadowed cross-claim. It would be somewhat illogical to take into account the full amount of any cross-claim that the defendant may make, which would no doubt include interest, yet not consider any claim for interest on which the plaintiff would clearly be expected to succeed.

19 As I have said it is wise to err on the conservative side in a claim such as this. Bearing that in mind I have concluded that the appropriate interim payment to be ordered is the sum of $670,000, which approximates to the figure which I have accepted as the basis for estimating the plaintiffs’ damages for the purposes of this action less the sum of $200,000.

20 Orders

1. Order the defendant pay to the plaintiffs the sum of $670,000 as part of the damages sought to be recovered in this action.

2. Costs of the notice of motion to be costs in the proceedings.

3. The exhibits may be returned.