Netdeen Pty Ltd t/as GJ Gardner Homes v Lindfield NSW Pty Ltd (No 2)

[2025] NSWCA 218

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Netdeen Pty Ltd t/as GJ Gardner Homes v Lindfield NSW Pty Ltd (No 2) [2025] NSWCA 218

Hearing dates:

On the papers

Date of orders:

29 September 2025

Decision date:

29 September 2025

Before:

Stern JA; Ball JA; Griffiths AJA

Decision:

(1) Each party bear its own costs of the appeal.

(2) Costs of the proceedings before Elkaim AJ be costs in the cause.

(3) Pursuant to UCPR r 51.53 and/or s 89 of the CPA, and subject to any contrary or different orders by the retrial judge, on the retrial leave is granted:

(a) to the defendant below to reopen its case, so as to lead further oral evidence in chief from any of Messrs Greg Gardner, Darren Wallis, Trent Gardner and Christopher Thornton on the issue whether the defendant breached cl 4.7, on the construction determined by the Court of Appeal in its judgment on 28 August 2025 at [2025] NSWCA 196 (the breach issue), and (if necessary) leave is granted to the plaintiff to have any of those witnesses recalled for further cross-examination on the breach issue;

(b) to the parties to lead additional evidence in chief from their respective experts (in the case of the plaintiff, Mr Michael Potter and in the case of the defendant, Mr Andrew Ross) in respect of order 3(b) dated 28 August 2025, and (if necessary) leave is granted to each of the parties to have the other party’s expert recalled for further cross-examination.

(4) Pursuant to UCPR r 51.53 and/or s 89 of the CPA, and subject to any contrary or different orders by the retrial judge, the retrial proceedings are otherwise to be conducted on the basis of the respective parties’ cases, including pleadings, affidavit evidence, documentary tender, rulings on evidence, oral evidence and cross-examinations as recorded in the transcript, and any concessions or admissions made by a party at or before the hearing.

Catchwords:

COSTS — where appellant enjoyed partial success on appeal — where retrial ordered — whether to apply usual rule as to costs for costs of appeal — whether costs of trial should be costs in cause — whether to order security for costs for the retrial

CIVIL PROCEDURE — Court of Appeal — where retrial ordered — whether orders should be made affecting ambit of retrial

Legislation Cited:

Civil Procedure Act 2005 (NSW), ss 89, 98

Uniform Civil Procedure Rules 2005, rr 51.53, 42.1

Cases Cited:

Netdeen Pty Ltd t/as GJ Gardner Homes v Lindfield NSW Pty Ltd [2025] NSWCA 196

Category:

Costs

Parties:

Netdeen Pty Ltd trading as GJ Gardner Homes (Appellant)
Lindfield NSW Pty Ltd (Respondent)

Representation:

Counsel:
S Couper KC and JV Gooley (Appellant)
TD Castle SC and D Levi (Respondent)

Solicitors:
Thomson Geer (Appellant)
Addisons (Respondent)

File Number(s):

2024/00392632

Publication restriction:

Nil

JUDGMENT

1. THE COURT: On 28 August 2025, the Court published its substantive judgment in the appeal (see Netdeen Pty Ltd t/as GJ Gardner Homes v Lindfield NSW Pty Ltd [2025] NSWCA 196 (AJ)). The appeal was allowed in part. The orders below dated 17 October 2024 were set aside and a retrial was ordered limited to only two matters specified in order 3. The parties were also ordered to seek to agree costs and any other necessary orders within 21 days. If agreement could not be reached (as has been proven to be the case) each party was directed to file and serve an outline of written submissions. The parties were informed that final orders would be made on the papers and without a further hearing.

2. These reasons for judgment concern costs and other necessary orders. For convenience, we will use the same abbreviations as in AJ and familiarity with those earlier reasons for judgment will be assumed.

The parties’ respective positions

(a) Netdeen’s position

3. Netdeen contended that Lindfield should pay its costs of and incidental to the appeal, as well as 50% of Netdeen’s costs of and incidental to the proceedings below. It contended that the remainder of the costs of and incidental to the proceedings below should be reserved pending the determination by the retrial judge of the two matters specified in order 3.

4. Netdeen also sought an order that Lindfield pay security for costs in respect of the retrial in the sum of $624,862 by means agreed between the parties. Moreover, it contended that the retrial should be stayed subject to Lindfield complying with the orders sought by Netdeen.

5. As to the conduct of the retrial, Netdeen contended that the Court should order now that the retrial be conducted on the basis of the respective parties’ cases, including pleadings, affidavit evidence, documentary tender, rulings on evidence, oral evidence in cross-examinations as recorded in the transcript of the previous trial, and any concessions or admissions made by a party at or before the hearing. Netdeen asked the Court to grant leave to the parties for the purposes of the retrial to cross-examine witnesses, including the expert witnesses, strictly on the remitted matters as identified in AJ[233].

6. Netdeen also urged the Court to make orders now regarding the filing and serving of written outlines of opening submissions for the purposes of the retrial and to list the retrial for a period of 5 days on a date convenient to the retrial judge.

(b) Lindfield’s position

7. Lindfield sought an order that the parties’ costs of both the appeal and of the trial be costs in the cause. Alternatively, it submitted that there should be no order as to costs of the appeal.

8. Lindfield opposed the making of any order as to security for costs in respect of the retrial on the basis that Netdeen had not filed any motion or supporting evidence.

9. As to the retrial itself, Lindfield sought an order that the matter be remitted to the Chief Judge in Equity to allocate a new judge to conduct the retrial in accordance with order 3 dated 28 August 2025 and to set the retrial down for a hearing with an estimated time of 5 days.

10. Lindfield also sought orders pursuant to r 51.53 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and/or s 89 of the Civil Procedure Act 2005 (NSW) (CPA) so as to limit the retrial in the following manner:

1. Netdeen have leave to reopen its case in respect of order 3(a) dated 28 August 2025 so as to lead further oral evidence in chief from Messrs Greg Gardner, Darren Wallis, Trent Gardner and Christopher Thornton on the issue whether Netdeen breached cl 4.7 of the MFA dated 1 July 2014 based on the construction determined by this Court in AJ, and Lindfield have leave to have any of those witnesses recalled for further cross-examination for the purposes of order 3(a) dated 28 August 2025.

2. Lindfield have leave to reopen its case in respect of order 3(b) dated 28 August 2025, so as to allow Mr Michael Potter to be recalled for examination or cross-examination and/or to have Mr Andrew Ross recalled for further cross-examination for the purposes of the same order.

11. Lindfield also sought an order pursuant to UCPR r 51.53 that Mr Potter and Mr Ross meet in conclave and prepare a joint report at least 14 days before the hearing of the retrial.

12. Further, Lindfield sought an order pursuant to UCPR r 51.53 and/or s 89 of the CPA that the retrial judge shall, unless and to the extent overruled or clarified by the Court of Appeal:

1. Rely on all matters as they stood at the close of the respective parties’ cases at the first trial, including pleadings, affidavit evidence, documentary tender, rulings on evidence, oral evidence in cross-examination as recorded in the transcript and any concessions or admissions made by a party at or before the hearing.

2. Rely on findings of fact made by Elkaim AJ at the first trial.

3. Be entitled to a grant of leave to vary any of Lindfield’s proposed orders regarding the conduct of the retrial (apart from the first of those proposed orders) if it appeared to the retrial judge to be just and convenient to do so, on motion by a party before or during the hearing of the retrial.

4. Determine all questions of costs of the prior trial, appeal and retrial at the conclusion of the retrial.

13. In common with Netdeen, Lindfield also urged the Court to make orders now concerning the filing and service of written outlines of opening submissions. Finally, Lindfield sought an order that the parties have liberty to apply to the retrial judge on 7 days’ notice.

Disposition

14. Unsurprisingly, the parties were in broad agreement concerning the relevant principles. Costs are in the discretion of the Court (CPA s 98). The discretion should be exercised judicially and it is limited by the rules or other legislative provisions. The usual rule is that costs follow the event unless the circumstances justify some other order (UCPR r 42.1). A successful party may be deprived of costs if it has failed on substantial issues in the litigation.

(a) Costs of the appeal

15. We consider that this is an appropriate case in which the usual rule should not be applied to the costs of the appeal because, although Netdeen was successful in obtaining an order that the appeal be allowed in part, it failed on several key issues, as we will now outline.

16. At AJ[4], the Court identified the following seven key issues to be determined on the appeal:

1. The proper construction of cl 4.7 of the MFA, which places limits on the right of renewal.

2. The findings the primary judge made, or failed to make, concerning whether the requirements of cl 4.7 of the MFA were satisfied by Netdeen, and whether findings on that issue can be made on appeal.

3. Whether the primary judge erred in finding that Netdeen breached cl 4.6 of the MFA by offering renewal terms on something other than the then current master franchising agreement.

4. Whether Netdeen acted unconscionably in breach of s 21 of the ACL, whether for the reasons relied upon by the primary judge or as contended in the amended notice of contention.

5. Whether the primary judge erred in failing to find that Lindfield repudiated the MFA by reason of its involvement in establishing a rival business to the one carried on by GJ Gardner Homes through a company known as Wattle Court Homes Pty Ltd (Wattle Court) and thereby lost the right to renew the MFA.

6. Whether the primary judge erred in admitting Mr Potter’s reports into evidence.

7. Whether the primary judge erred in his Honour’s assessment of damages and, if so, whether his Honour’s assessment can be sustained having regard to the matters relied upon in the amended notice of contention.

17. In broad terms, these issues were ultimately determined in a way which resulted in both parties experiencing roughly equal amounts of success and failure. Thus, as to the first issue, neither party supported the primary judge’s construction of cl 4.7 of the MFA, but the Court ultimately did not accept either of the parties’ preferred constructions.

18. As to the second issue, neither party should bear responsibility for the primary judge’s failure to make appropriate findings below based upon the proper construction of cl 4.7, which occasions the need for a retrial on that issue.

19. As to the third issue, Netdeen failed in its challenge to the primary judge’s finding that it had breached cl 4.6 of the MFA by offering renewal terms on something other than the then current master franchising agreement.

20. As to the fourth issue, Netdeen succeeded in many of the grounds of appeal relating to the primary judge’s finding that it had engaged in unconscionable conduct in breach of s 21 of the ACL, but the Court found it unnecessary to determine grounds 11-22 of the notice of appeal. The Court also rejected those parts of Lindfield’s amended notice of contention relating to unconscionability.

21. As to the fifth issue, which related to the Wattle Court venture and whether Lindfield repudiated the MFA, Netdeen failed to establish grounds 23-27 of its notice of appeal and the Court upheld grounds 1(e), (f) and (g) of Lindfield’s amended notice of contention in relation to those matters.

22. The sixth issue related to the admissibility of Mr Potter’s reports. Netdeen failed to establish ground 29 which challenged the primary judge’s ruling on that matter.

23. Netdeen was successful in relation to the seventh issue, being the primary judge’s assessment and quantification of damages, which has resulted in that matter being remitted for retrial.

24. Some of the key issues took up more time and resources than others, as was reflected in the parties’ written and oral submissions, but adopting a broad-brush approach, none of the key issues could be described as insignificant or peripheral. Speaking generally, we reiterate that both parties enjoyed roughly even measures of success and failure.

25. In all these circumstances, we consider that it is appropriate to order each party to bear its own costs of the appeal.

(b) Costs of the trial

26. As to the costs of the trial, we accept Lindfield’s contention that those costs should be costs in the cause and left to be determined by the retrial judge who will have the benefit of knowing the outcome of the two issues remitted for retrial. The practical result of the proceedings will only be known at the conclusion of the retrial. The retrial judge should be in the best position to assess the application of UCPR r 42.1 to both the proceeding at first instance and the retrial.

(c) Security for costs

27. We also accept Lindfield’s submission that it is inappropriate for this Court to consider or determine the making of an order as to security for costs in respect of the retrial. Netdeen has not filed any notice of motion or supporting evidence on that question. It is a matter best left for determination by the retrial judge if Netdeen wishes to make an application.

(d) Conduct of the retrial

28. As to the retrial, we do not accept Lindfield’s submission that there should be an order remitting the matter to the Chief Judge in Equity so that a new judge can be appointed to conduct the retrial. Order 3 itself directs that there be a retrial limited to determining the two relevant matters. It is a matter for the parties to approach the Chief Judge in Equity to progress the matter.

29. Similarly, it is not appropriate for this Court at this time to set the retrial down for a hearing with an estimated time of 5 days as sought by both parties. The case management of the retrial should be left to the retrial judge (or the judge giving directions for the retrial), including giving directions for the provision of written outlines of submissions.

30. It is appropriate, however, that this Court make some orders affecting the ambit of the retrial with a view to ensuring that the retrial is limited to the two matters specified in order 3. The Court’s powers in relation to a retrial are set out in UCPR r 51.53 and s 89 of the CPA. The retrial regarding the matter described in order 3(a) is best viewed as a reopening of that matter in circumstances where the primary judge failed to make clear findings on the issue of whether there was a breach of cl 4.7 of the MFA, properly construed. Accordingly, we accept Lindfield’s submission that both parties should be bound by their existing pleadings, affidavit evidence, discovery orders, documentary tenders and general forensic decisions made at the first trial.

31. Leave should be granted for Netdeen to adduce further evidence from Messrs Greg Gardner, Darren Wallis, Trent Gardner and Christopher Thornton on the issue whether Netdeen breached cl 4.7, properly construed. That evidence should be led orally and not by way of further affidavits. Lindfield should have leave to cross-examine those witnesses.

32. We do not accept Lindfield’s submission that the parties should also be bound by factual findings made by the primary judge except to the extent that they have been overturned by this Court or necessarily arise within the scope of order 3. This would impose an undue and undesirable constraint on the retrial judge, who should be at liberty to make any findings of fact which are relevant to the matters remitted for retrial.

33. The orders we will make concerning the scope and conduct of the retrial will also be subject to any contrary or different order made by the retrial judge.

34. As to the retrial relating to order 3(b) (i.e. quantification of damages) we consider it appropriate that leave be given to both parties to adduce further evidence in chief from their respective experts (that is, Mr Potter and Mr Ross) and that those experts should be made available for further cross-examination. It should be left to the retrial judge (or judge giving directions for the retrial) to determine whether or not the expert witnesses should be required to provide a joint report.

Conclusion

35. For all these reasons, we make the following orders:

1. Each party bear its own costs of the appeal.

2. Costs of the proceedings before Elkaim AJ be costs in the cause.

3. Pursuant to UCPR r 51.53 and/or s 89 of the CPA, and subject to any contrary or different orders by the retrial judge, on the retrial leave is granted:

1. to the defendant below to reopen its case, so as to lead further oral evidence in chief from any of Messrs Greg Gardner, Darren Wallis, Trent Gardner and Christopher Thornton on the issue whether the defendant breached cl 4.7, on the construction determined by the Court of Appeal in its judgment on 28 August 2025 at [2025] NSWCA 196 (the breach issue), and (if necessary) leave is granted to the plaintiff to have any of those witnesses recalled for further cross-examination on the breach issue;

2. to the parties to lead additional evidence in chief from their respective experts (in the case of the plaintiff, Mr Michael Potter and in the case of the defendant, Mr Andrew Ross) in respect of order 3(b) dated 28 August 2025, and (if necessary) leave is granted to each of the parties to have the other party’s expert recalled for further cross-examination.

4. Pursuant to UCPR r 51.53 and/or s 89 of the CPA, and subject to any contrary or different orders by the retrial judge, the retrial proceedings are otherwise to be conducted on the basis of the respective parties’ cases, including pleadings, affidavit evidence, documentary tender, rulings on evidence, oral evidence and cross-examinations as recorded in the transcript, and any concessions or admissions made by a party at or before the hearing.

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Decision last updated: 29 September 2025