Mills v Ruthol Pty Ltd

[2005] NSWSC 568

CITATION:	Mills & Anor v Ruthol Pty Ltd [2005] NSWSC 568
HEARING DATE(S):	8 June 2005
JUDGMENT DATE :	8 June 2005
JURISDICTION:	Equity Division
JUDGMENT OF:	Palmer J
DECISION:	Application refused with costs.

CATCHWORDS:	PRACTICE AND PROCEDURE - FINALITY - Whether a party should be entitled to re-agitate an issue determined at a final hearing because its lawyers have thought of a point which could have been raised.
LEGISLATION CITED:	Real Property Act 1900 (NSW) - s.53 Supreme Court At 1970 (NSW) - s.68
CASES CITED:	Consolidated Development Pty Ltd v Holt (1986) 6 NSWLR 607 Mercantile Credits Limited v Shell Co of Australia Ltd (1976) 136 CLR 326
PARTIES:	Brian Mills - First Plaintiff Elaine Mills - Second Plaintiff Ruthol Pty Ltd - Defendant
FILE NUMBER(S):	SC 2101/99
COUNSEL:	N.A. Cotman SC - Plaintiffs R.S. Angyal SC - Defendant
SOLICITORS:	McCabe Terrill - Plaintiffs David Landa Stewart - Defendant

LOWER COURT JURISDICTION:

1    This matter has had a long and troubled history. The proceedings commenced in 1999 with proceedings initiated by the Plaintiffs, Mr and Mrs Mills, seeking specific performance of an option for purchase of certain property owned by Ruthol Pty Ltd. Those proceedings were complicated by the fact that Tricon (Aust) Pty Ltd had been granted an option to purchase the same property. The option was granted in a lease from Ruthol which was registered.

2    There was a competition not only between Mr and Mrs Mills and Ruthol as to whether Mr and Mrs Mills had validly exercised their option for purchase, but between the Mills and Tricon as to which of the two of them had priority in respect of their respective interests in the property.

3    On 15 April 2002 I found that the Mills were entitled to specific performance of the option which they had been granted by Ruthol and that Tricon was entitled to damages for breach of contract. There was an appeal.

4    The Court of Appeal held that the Mills had validly exercised the option granted by Ruthol but that the interest of Tricon in the property prevailed over the interest of the Mills, so that Tricon was entitled to specific performance of the contract for sale of the property which had come into existence when Tricon exercised the option which had been granted to it under its lease.

5    It followed that the Mills were entitled to damages for breach of the contract which had come into existence when they validly exercised the option granted to them.

6    The assessment of the damages payable to the Mills was referred to the Master for assessment. Questions of principle arose between the parties affecting the manner in which the damages should be assessed.

7 On 5 May 2004 I directed, pursuant to Pt 31 of the Supreme Court Rules 1970 (NSW), that there be separately determined the question as to the date at which damages were to be assessed. The parties formulated the questions for determination. They are set out in a letter from Ruthol's solicitor to the Mills' solicitor of 28 May 2004. The questions for determination were as follows:

"1. Whether the Plaintiffs are entitled to recover from the Defendant damages pursuant to s68 of the Supreme Court Act 1970; and

2. what is the appropriate date as at which any damages which the Defendant is found liable to pay to the Plaintiffs ought to be assessed."

8 Although there was no formal reply to that letter, those two questions were, in fact, the questions which the parties debated, as is quite clear from their written submissions and from their oral argument. The critical questions were whether the Mills were entitled to damages under s.68 of the Supreme Court Act at all and, if they were, at what date should damages be assessed.

9 After review of the authorities, I came to the conclusion that the Mills were entitled to damages under s.68 of the Supreme Court Act because at the time they commenced their proceedings against Ruthol it was possible for them to obtain specific performance of the contract which had come into existence by their exercise of the option which had been granted to them. I then concluded that the appropriate date at which damages ought to be assessed was the date at which the Court of Appeal decided that Tricon was entitled to specific performance, so that it became impossible from that date onwards for the Mills to obtain specific performance and they should at that date have gone out into the market to mitigate their losses if possible.

10    It was expressly argued by Counsel for Ruthol at the hearing before me that any right that the Mills might have had to specific performance of their option was effectively extinguished by the grant to Tricon of an equitable interest in the property as optionee in May 1999, before the contract between the Mills and Ruthol came into existence upon exercise of the Mills option on 3 March 1999. I made a note expressly of that submission in paragraph 62 of my judgment. That argument seemed to proceed on the basis that the granting of the option to Tricon in a lease to Tricon had the effect of extinguishing the prior equitable interest of the Mills under their option. I noted further in paragraph 63 of the judgment:

"I am unable to accept this submission and, in fairness to Mr Angyal, I think that he had all but abandoned it by the close of his submissions."

11    What has now happened is that the matter has been referred to the Master for assessment but Ruthol wishes to re-agitate the very question which I noted was raised and all but abandoned in paragraph 62 and 63 of the judgment. However, the argument is now sought to be put on a slightly different footing from that which had occurred to Ruthol's advisers at the time of the hearing.

12    An affidavit from Ruthol's solicitors makes it plain that, some considerable time after the delivery of my judgment and apparently in the course of preparation for the assessment trial before the Master, Senior Counsel realised that there was a further argument which could have been advanced in support of the submission to which I have referred in paragraph 63 of the judgment. That further argument depends upon the fact that the lease to Tricon was a registered lease. The argument which Ruthol wishes to put is:

"That Tricon's interest as an option holder acquired indefeasibility from the date of registration of the (lease) with the effect that any interest that (the Mills) have or had was always from that date subject to the registered interest of Tricon (pursuant to and in accordance with s53.3 of the Real Property Act 1900."

13    It is said that there are two authorities which support that proposition, namely, Mercantile Credits Limited v Shell Co of Australia Ltd (1976) 136 CLR 326 and Consolidated Development Pty Ltd v Holt (1986) 6 NSWLR 607. Both the affidavit of Ruthol's solicitors and the submissions of Senior Counsel frankly concede that the fact that Tricon's lease was registered was a fact in existence well before the argument which took place before me resulting in the judgment of 24 June 2004. Equally frankly, it is acknowledged that the argument which is now sought to be advanced was an afterthought: it occurred to Counsel well after judgment had been delivered.

14 Ruthol now seeks leave to re-open the debate before me as to the date upon which damages ought to be assessed. It wishes to say that the date at which damages ought to be assessed ought not be 5 November 2003, when the Court of Appeal ordered specific performance in favour of Tricon but, rather, 1 February 1999, which is the date at which the Mills would have been entitled to specific performance of their contract had it not been for the paramount interest of Tricon. Ruthol wishes to say that as at 1 February 1999 the Mills ought to have realised that it was completely impossible for them to obtain specific performance of their contract because of the prior existing option of Tricon which was granted in a registered lease and therefore had priority as a legal interest by virtue of s.53(3) of the Real Property Act 1900 (NSW). There are two reasons why I conclude that I should reject the application.

15 The first is that to allow Ruthol at this stage of proceedings to re-agitate a matter which it argued and all but abandoned at the trial would be to fly in the face of one of the most basic principles of our system of justice, that is, that there should be an end to litigation. No new fact has been discovered by Ruthol's advisers. There has been no deception on the part of the Mills as to the way in which the prior hearing was conducted. An argument was advanced by Ruthol's Counsel at the prior hearing that the Mills' right to specific performance had been extinguished by the grant of Tricon's option, but the significance, if any, of s.53(3) of the Real Property Act to that argument was not then appreciated by Ruthol's legal advisers.

16    The fact that, long after a final judgment has been delivered, one of the parties' legal advisers thinks of another argument which could have been advanced and which could have prevailed is no justification for re-opening the whole matter and allowing the trial to be run again. As I have said, to allow that course of action would be to fly in the face of one of the most basic principles of our system of justice. No circumstance has therefore been shown which would allow the question decided by me on 24 June 2004 to be re-agitated.

17    The second reason for my refusal of this application is that, in any event, the new argument now sought to be raised is, with respect to Counsel, of no substance. It is true that Ruthol had an option to purchase contained in a registered lease. However, by the time that the Mills commenced their proceedings that option had not been exercised; it was not exercised until well after the commencement of those proceedings. The nub of my decision on 24 June is set out in paragraphs 64 to 66 of my judgment as follows.

“64. As at the commencement of the Mills proceedings on 18 May 1999, Tricon certainly had a leasehold estate in the property and an option to purchase it. However, Tricon did not exercise its option until well after the commencement of the Mills proceedings. As at the commencement of the Mills proceedings it was not certain that Tricon would ultimately exercise its option, thereby bringing into existence a contract for sale which would have priority over the Mills’ contract for sale.

65. Further, to use the words of Needham J in ASA Constructions , there was no inherent or necessary impossibility of the Mills obtaining specific performance at the time that they commenced their proceedings. Even if Tricon had exercised its option by the time that the suit came on for hearing, its claim to specific performance might have been defeated on discretionary grounds, if any then existed. In such a circumstance, the Court might have awarded specific performance of the Mills Option subject to the leasehold interest of Tricon in the property and might have awarded equitable damages to the Mills under s.68 to compensate them for the difference between the purchase price of the property unencumbered and free of the lease to Tricon, and the market value of the property encumbered by the Tricon lease.

66. Because the possibility of the Mills obtaining an order for specific performance was lost only after the commencement of their proceedings by reason of the exercise of Tricon’s option, I am of the opinion that the Court has power to award equitable damages under s.68 SCA.”

18    If Tricon had exercised its option to purchase and sought specific performance prior to the Mills commencing their proceedings it would have been much more difficult for the Mills to succeed in obtaining specific performance of their contract although, for the reasons I have given in paragraph 65 of my earlier judgment, even then it would not have been impossible. However, the fact that Tricon had not exercised its option by the time the Mills had commenced their proceedings left it completely open at that point in time as to whether Tricon would exercise its option at all and, if it did, whether it would opt for a remedy in damages rather than for a remedy of specific performance.

19 In those circumstances, it was quite possible as at the time that the Mills commenced their proceedings that, at the end of their proceedings, if they succeeded in establishing that they had validly exercised their option, they could obtain the remedy of specific performance. That is the critical time at which one must assess whether or not a remedy under s.68 of the Supreme Court Act is available, namely, the time at which proceedings are commenced.

20    Accordingly, it seems to me that the argument now sought to be advanced would not have availed Ruthol at all had it been advanced at the time of the hearing which resulted in the judgment of 24 June 2004.

21    For those reasons the application of Ruthol is refused.

22    I order that Ruthol pay the Mills’ costs of this application.

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