Beazley P at [1]; Leeming JA at [3]; Sackville AJA at [151]
Decision:
1. Appeal allowed. 2. Set aside orders 1-4 made on 9 December 2016. 3. The parties are referred to court-annexed mediation. Such mediation is to occur by no later than 25 July 2017. 4. The parties are to attend upon the Principal Registrar of this Court forthwith to obtain a date for mediation. 5. After 25 July 2017 the proceeding is remitted to the Equity Division for a new trial before a judge other than Pembroke J. Such remitter to include the question of the costs of the first trial. 6. Ms Drinkwater to pay Mr Nadinic’s costs of the appeal. 7. Ms Drinkwater’s oral application made on 10 April 2017 for monies to be paid from the joint bank account is refused.
Catchwords:
EQUITY – fraudulent misrepresentation – rescission at law and in equity – restitutio in integrum – basis on which orders may be made to achieve “practical justice”
FRAUD – difference between fraud at common law and in equity – obligation to plead fraud with specificity – obligation to confront witness in cross-examination – inability to make findings of fraud consistent with but going beyond case advanced at trial – whether “fraud unravels all” – discretionary considerations attaching to rescission for fraudulent misrepresentation
RESCISSION – property development agreement – Deed of Settlement between two shareholders – one shareholder agreed to purchase interest of other shareholder – purchaser failed to pay purchase price – purchaser alleged she had entered into agreement by reason of other shareholder’s misleading and deceptive conduct – primary judge found fraud and set aside part of Deed – appeal allowed, orders set aside and retrial ordered
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Nadinic v Drinkwater [2017] NSWCA 114
Case
[2017] NSWCA 114
Decision Date
CaseChat Overview and Summary
In *Nadinic v Drinkwater*, the New South Wales Court of Appeal considered an appeal from a decision of Pembroke J in the Equity Division. The dispute arose from a property development agreement and a subsequent Deed of Settlement between the two shareholders, Ms Drinkwater and Mr Nadinic. Ms Drinkwater had agreed to purchase Mr Nadinic's interest in the development but failed to pay the agreed purchase price. Ms Drinkwater alleged that she had been induced to enter into the agreement by Mr Nadinic's misleading and deceptive conduct. The primary judge found that Mr Nadinic had committed fraud and set aside part of the Deed of Settlement.
The Court of Appeal was required to determine whether the primary judge erred in finding fraud and in setting aside part of the Deed of Settlement. Specifically, the court considered the difference between fraud at common law and in equity, the obligation to plead fraud with specificity, and the extent to which a court can make findings of fraud that go beyond the case advanced at trial. The court also examined the principles governing rescission for fraudulent misrepresentation, including the requirement for *restitutio in integrum* and the basis on which orders may be made to achieve "practical justice".
The Court of Appeal allowed the appeal, finding that the primary judge had erred in making findings of fraud that were not adequately pleaded or put to Mr Nadinic in cross-examination. The court held that while fraud can unravel agreements, it must be properly established. The court noted that the primary judge's findings of fraud went beyond the case that had been advanced by Ms Drinkwater at trial, and that the obligation to confront a witness in cross-examination had not been met in relation to the allegations of fraud. Consequently, the court set aside the orders made by the primary judge and ordered a retrial.
The Court of Appeal ordered that the appeal be allowed, and the orders made on 9 December 2016 be set aside. The parties were referred to court-annexed mediation, with a deadline of 25 July 2017. Following mediation, the proceeding was remitted to the Equity Division for a new trial before a different judge, which would include determining the costs of the first trial. Ms Drinkwater was ordered to pay Mr Nadinic’s costs of the appeal, and her application for funds to be paid from the joint bank account was refused.
Orders
Orders of the court
1. Appeal allowed.
2. Set aside orders 1-4 made on 9 December 2016.
3. The parties are referred to court-annexed mediation. Such mediation is to occur by no later than 25 July 2017.
4. The parties are to attend upon the Principal Registrar of this Court forthwith to obtain a date for mediation.
5. After 25 July 2017 the proceeding is remitted to the Equity Division for a new trial before a judge other than Pembroke J. Such remitter to include the question of the costs of the first trial.
6. Ms Drinkwater to pay Mr Nadinic’s costs of the appeal.
7. Ms Drinkwater’s oral application made on 10 April 2017 for monies to be paid from the joint bank account is refused.