Nolan v MBF Investments Pty Ltd (No 2)
[2009] VSC 340
•28 July 2009
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 4991 of 2007
| DAMIEN NOLAN | Plaintiff |
| v | |
| MBF INVESTMENTS PTY LTD | Defendant |
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JUDGE: | VICKERY J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 28 JULY 2009 | |
DATE OF JUDGMENT: | 28 JULY 2009 | |
CASE MAY BE CITED AS: | NOLAN v MBF INVESTMENTS PTY LTD (No 2) | |
MEDIUM NEUTRAL CITATION: | [2009] VSC 340 | |
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PRACTICE AND PROCEDURE – Ruling on taking of accounts.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr C. Harrison SC and Mr T. Souden | Nicholas O’Donohue & Co |
| For the Defendant | Mr R. Garratt QC and Mr L. Hawas | Cornwall Stodart |
HIS HONOUR:
In this matter, the Court delivered its reasons for judgment on 18 June 2009. In those reasons, the Court stated that the method by which a court usually approaches the task of provided relief in cases such as this, where there is a breach of duty found pursuant to s.77 of the Transfer of Land Act 1958, is by way of taking an account and then entering judgment on the basis of that account. That is certainly true of cases where the allegation of breach of s.77 arises from the sale by a mortgagee at an undervalue.
The Court in this case concluded that the remedy of accounts was appropriate to breaches of a mortgagee's obligations under s.77(1) of the Transfer of Land Act, and tentatively found that it applied in this case. However, the Court, after making its observations in relation to the taking of an account, noted that neither party had addressed it on whether the taking of accounts was the appropriate relief, and that accordingly, the Court was not prepared to make such an order without first having had the advantage of hearing from the parties.
I ordered that the proceeding be adjourned and re-listed to enable the parties to make submissions on the question as to whether an order for the taking of accounts should be made, and on the form of that order. Accordingly, the matter has been now re-listed for hearing on this day in relation to whether or not an order should be made for the taking of accounts.
Mr Garratt QC, who appeared with Mr Hawas on behalf of the defendant, MBF, strongly opposed the making of orders for the taking of an account. He submitted that orders of that kind should not be made for three principal reasons.
First, that the plaintiff, Mr Nolan, brought his case against MBF as a claim for damages under s.77(4) of the Transfer of Land Act, and it was set down for trial and run as a trial on all issues. It was submitted that it would be quite irregular in those circumstances for Mr Nolan to be, in effect, given a retrial on the issue of relief after final addresses have been delivered, and the Court has given reasons for its judgment on most, but not all, of the final submissions made to it.
Secondly, it was submitted that this is not an appropriate case for an order for accounts to be taken. An account, it was submitted, is an appropriate remedy “to measure the extent of a departure from a standard which the Court has found to have occurred from a standard which the Court has found to have been breached”.
The third principal reason advanced by MBF in opposing an order for the taking of an account is that it would be contrary to authority to order the taking of an account in a case of this kind.
Accordingly, it was submitted that the Court should simply determine the appropriate relief based on the material already adduced in evidence, and do so by way of an assessment of damages based on that evidence.
As to the first ground of objection which is primarily put on the basis of unfairness to MBF, it is noted that in his amended statement of claim dated 16 July of 2008, Mr Nolan sought damages and particularised those damages in paragraph [23]. Alternatively, Mr Nolan sought equitable compensation which is also pleaded. Although in the prayer for relief there was a claim to the effect that the Court could order any other relief that it saw fit, at no point was a claim for the taking of an account specified as a claim for relief directly in the amended statement of claim.
More significantly however, the case advanced by Mr Nolan at trial was all directed to his primary and alternative claims for damages, he opened the case on that basis, led evidence on that basis and made closing submissions in support of his claims for damages based on the evidence adduced at trial. At no time did he through his counsel or lawyers seek any other relief. In particularly, the plaintiff never sought an order for the taking of accounts or submitted that this ought to be the subject of his claim for relief.
Accordingly in effect, although it was open for Mr Nolan to have done so in the conduct of his trial, he pressed only one aspect of the relief and that is a claim for damages. The claim for damages was founded on based on two bases - common law damages and equitable compensation. He unequivocally conducted his trial on that basis.
The case presented at trial was a case on liability and quantum heard together. It is the duty of a party in presenting a case at trial to advance all matters at that trial including all evidence in support of its case. It would be unfair to an opposing party, such as MBF in this case, to allow in effect a further opportunity to re-agitate its case which I am concerned would occur in this case if an order for an account was to be made. Had MBF on the other hand not opposed the suggestion that an account should be taken, the response might have been different. However, MBF has clearly opposed the application on the bases that I have summarised.
On the other hand, the position taken in this hearing by the plaintiff Mr Nolan, is that either an account should be taken, which I apprehend was his preferred course, or in the alternative the question of damages should be assessed on the evidence already led at trial.
As to the taking of an account, if that was to be ordered, the process would have to proceed upon the basis of criteria such as those identified by the Court in its reasons for judgment and would have to be identified in an appropriate order to enable an Associate Justice to proceed with the taking of such an account. Although that would not be an impossible task in my view, the formulation of the appropriate criteria would be a difficult task. That in itself is not a reason for denying an order by way of the taking of an account, but it would tend to indicate, in my view, that if liberty to apply for further directions to the Court was to be granted, as it should if such an order was to be made, there would be inevitably delay in the conduct of the taking of an account. It would give rise to the potential for one or both parties to continually approach the Court as to directions as to the way in which the conduct of the account should be undertaken. That would inevitably involve not only delay but considerable expense for the parties, in circumstances where the outcome of the process would be by no means certain.
Further, in my view the taking of accounts if it was to have been ordered, would go beyond merely an accounting exercise. It would be likely to involve findings of fact on evidence which is the subject of challenge together with the making of findings on difficult issues of causation and quantum.
Adopting the approach of the Court of Appeal in Investec Bank (Australia) Ltd v Glodale Pty Ltd which was cited to me, and here I refer to paragraphs [99], [101] and [102] in particular, in all the circumstances and having had the advantage of argument from the parties on the matter, I have come to the conclusion that there is no sound reason to adopt an alternative mode of assessment in the nature of the taking of accounts in this matter. Here, unlike the position in the Investec case, the taking of accounts, as I have indicated, was not raised in argument nor was it raised in pleadings, at least directly, as it ought to have been if it was seriously pressed. At no time was it pressed. In effect what occurred in this case was that there was an election undertaken to persist with a claim for damages only.
Accordingly I will adopt the alternative position advanced by the plaintiff Mr Nolan and proceed to determine damages on the basis of the material which has been already adduced at the trial.
In the course of argument this afternoon, Mr Nolan gave instructions to his counsel and legal advisers to apply for an amendment to plead aggravated and/or exemplary damages arising from the findings made by the Court in its reasons for judgment. I propose to make orders to facilitate that to occur.
The orders which I propose, subject to hearing further from the parties are these: By 4 p.m., 31 July 2009, the plaintiff file and serve a draft of an amended statement of claim pleading aggravated and/or exemplary damages arising from the findings made by the Court in its reasons for judgment delivered 18 June 2009. Secondly, the proceeding be relisted for hearing to determine first, whether or not the amendment should be permitted and second, whether aggravated and/or exemplary damages should be awarded and the quantum of any such award.
I might indicate, although it is not part of the order, that the hearing in relation to both of those matters would be best determined at the same time because they are likely to raise the same issues and I am conscious of the costs which the parties are burdened with.
As a third order I will also order that the costs of this day be reserved.
I would like to hear the parties on those orders, in particular when the matter should be relisted or the means by which it should be relisted for the further amendment application to be heard.
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