Pamamull v Albrizzi (Sales) Pty Ltd (No 2)

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2010 0044
VISHINO PAMAMULL	Appellant
v
ALBRIZZI (SALES) PTY LTD (No 2)	Respondent

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JUDGES:	NEAVE, HARPER and HANSEN JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	18 November 2010
DATE OF JUDGMENT:	6 September 2011
MEDIUM NEUTRAL CITATION:	[2011] VSCA 260
JUDGMENT APPEALED FROM:	Albrizzi (Sales) Pty Ltd v Pamamull (Unreported, Supreme Court of Victoria, 22 and 25 March 2010, Pagone J)

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PRACTICE AND PROCEDURE – Self-represented defendant – Application for adjournment – Adjournment refused – Natural justice – Time allowed to defendant to apply to set aside judgment – Application refused – Costs ordered against defendant’s solicitor – Leave to appellant/defendant to rely on affidavit provided by respondent/plaintiff at trial but not filed – Costs order against solicitor set aside – Appeal otherwise dismissed as no arguable defence on merits.

REAL PROPERTY – Sale of land – Contract of sale – Rescission by respondent vendor – Whether material defect in title entitling appellant purchaser to rescind – Whether respondent resold land at undervalue – No arguable defence – Appeal dismissed.

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr P N Wikramanayake SC with Mr W F Rimmer	Ravi James
For the Respondent	Mr M S Osborne	Piper Alderman

NEAVE JA
HARPER JA
HANSEN JA:

This is an appeal against orders made by a judge in the Commercial Court on 22 and 25 March 2010. The proceeding was brought by the respondent, Albrizzi (Sales) Pty Ltd, as unpaid vendor under a contract of sale of land with the appellant, Vishino Pamamull, in which the respondent, having claimed to have rescinded the contract, sought to recover a loss on resale of the land and other resulting expenses.

The proceeding came on for trial on 22 March. At the outset of the hearing the appellant’s solicitor sought and obtained leave to withdraw, following which the appellant, being unrepresented, sought an adjournment of the trial. The judge gave the appellant until 2.15 pm when he would hear the case; on the resumption the appellant again requested an adjournment. The judge refused the application. He said he would hear the case and expected to make an order. But he would defer execution for a few days and:

If you come up with something in those few days that suggests that I should vacate the order, you should apply to me and if that be shown to be the case, you will be heard.

The judge then heard the case and gave judgment for the respondent with costs.

On 25 March the judge refused the appellant’s application (made by Summons filed on 24 March) to set aside the orders and ordered the appellant’s solicitor to personally pay the costs of the application.

The appellant seeks the setting aside of the judgment and orders, desiring to defend the proceeding.

The appellant also seeks leave to rely on an affidavit sworn by the respondent’s solicitor, Mark Waters, on 22 March 2010 and served on the appellant at court on the morning of the hearing; the respondent neither filed this affidavit nor referred the judge to it during the hearings on 22 and 25 March 2010. For reasons given later, the appellant should have leave to rely on the affidavit.

The notice of appeal contains 14 grounds which in argument came down to the following -

1.The decision of the learned trial Judge to refuse to grant the appellant an adjournment of the hearing of the matter on 22 March 2010 was manifestly unreasonable.
2.The appellant was not given a proper opportunity to present his case before the learned trial Judge on 22 March 2010.
3.The appellant had good and valid defences on the merits in that his then legal advisors mistakenly alleged that he had an easement of carriageway over the neighbours property when in fact there was a substantial defect of title, in that part of the dwelling that was the subject matter of the contract of sale was on the neighbours’ property, and further the parties had entered into the contract of sale contemplating that the appellant was purchasing the land for the purpose of developing it as an apartment block, which purpose was unable to be achieved because of the encroachment of the land onto the neighbours’ property.
13.The learned trial Judge erred in law when he informed the appellant that he would not authenticate the orders until Wednesday 24 March 2010 and that if there were some basis on which the orders could be vacated he would do so, and when Senior Counsel appeared on 25 March 2010 to vacate the orders on the ground that the appellant had a good and valid defence the learned trial Judge refused to permit Senior Counsel to advance any arguments on the merits.
14.The learned trial Judge erred in law when he refused to permit Senior Counsel, when Senior Counsel appeared before him on 25 March 2010, to advance any arguments on the merits stating that the appellant could sue his former solicitors if he had a valid grievance against them.

Stated shortly, the appellant submits that the refusal of the requested adjournment, the judge’s decision to proceed to hear and determine the case, and the manner in which the judge conducted the hearing on 22 March 2010, denied him a fair opportunity to prepare and present his case. That is, he was denied natural justice. The respondent submits that the judge’s decision to refuse the adjournment and proceed with hearing the case was both open and correct. If the appellant be correct, the consequence would ordinarily be that the judgment and orders made that day are set aside. The respondent submits that should not happen as the opportunity afforded the appellant on 25 March 2010 cured the situation.

Lest it be necessary to do so, the appellant submits that on 25 March the judge erred in refusing to set aside the judgment and orders made on 22 March and in ordering the solicitor to pay costs. On that basis the appellant seeks the setting aside of the orders made on 22 and 25 March 2010. However, even if the appellant’s attack upon the orders made on 22 March fails, and the attack upon the order made on 25 March refusing to set aside the prior orders fails, there remains the appellant’s attack upon the order that the solicitor personally pay the respondent’s costs of the application.

As to 25 March, the respondent submits that the judge afforded the appellant the opportunity on that day to apply for the vacation of the judgment ‘provisionally’ announced on 22 March 2010 and to make such procedural applications as may be necessary to enable the appellant to advance his defence. However, the appellant failed satisfactorily to do so, his counsel even conceding that the pleaded defence of an easement was untenable, just as the judge had considered it to be on 22 March 2010. The respondent submitted that in these circumstances the appeal should be dismissed.

Finally, the respondent submitted, lest the court be against its submissions, that the appellant had no arguable defence. That being so, it would be futile to set aside the judgment and orders made on 22 and 25 March 2010. The appeal should thus be dismissed. To the contrary, the appellant submitted that he did have arguable grounds of defence and that he should be put back in the position of defending the proceeding and prosecuting his counterclaim.

For the reasons that follow we consider that the appellant was denied natural justice on 22 March 2010 and that, other things being equal, the orders made that day and on 25 March 2010 should be set aside. Nevertheless, there remains the question of whether the appellant has an arguable ground or grounds of defence, and as to that we consider he does not. We do, however, consider that the order that the solicitor pay the costs of the application on 25 March was erroneously made and should be set aside. Hence, the appeal should be dismissed leaving the impugned orders standing save for the setting aside of the costs order made on 25 March.

The Contract of Sale

The proceeding arose out of a contract for the sale of land at 272 Toorak Road, South Yarra dated 22 May 2008 by which the appellant agreed to purchase the land from the respondent for $2,750,000 plus GST payable by a deposit of $200,000 and the balance on 22 March 2009. The particulars of sale described the land as being ‘the whole of the land contained in Certificate of Title Volume 9491 Folio 181’. A commercial building is erected on the land. It is convenient to note now that the title boundaries of the land, and the relationship of those boundaries, and the building erected thereon, to the title boundaries of the neighbouring properties, is described in a survey report of David John Monahan dated 23 February 2010; the report is important and is referred to below.

The appellant having paid the deposit, on 23 May 2008 the respondent provided a deposit statement pursuant to s 27 of the Sale of Land Act 1962 (‘the Act’) which stated that the property was not subject to a mortgage and no caveat was lodged against title. On 23 May 2008 the appellant acknowledged receipt of the statement. Subsequently, on 27 August 2008 the appellant signed a release of the deposit – the release was endorsed on the deposit statement – which stated that ‘The Purchaser has received satisfactory answers to requisitions on title or is otherwise deemed to have accepted title.’

The appellant not having paid the balance due under the contract the respondent served a notice of rescission on 31 March 2009 on the basis of that default. The default was not remedied in the time provided for compliance or at all. The respondent resold the property on 15 July 2009 for $1,925,000 plus GST, which sale duly settled on 15 September 2009. Prior to that, on 12 August 2009 the respondent commenced the subject proceeding claiming the amount of the loss on resale plus resulting expenses, interest and costs.

The proceeding – to the hearing on 22 March

The appellant retained solicitors, Aldgate Lawyers, who filed a defence and counterclaim settled by counsel in which, in summary, the appellant denied liability and:

(a)in paragraph 5, alleged that the respondent supplied false information in the statements or certificates required to be given by s 32 of the Act, and failed to supply all information required by s 32; further, on 20 March 2009 before he had accepted title and become entitled to possession of the property or to the receipt of rents and profits he rescinded the contract under s 32(5) of the Act by letter dated 20 March 2009 and requested refund of the deposit.

In Particulars, it was stated, inter alia:

(ii)The title boundaries of the Property did not accord with the title details in the Vendor’s Statement to the Purchaser dated 18 April 2008 markedly so in respect of the Western boundary and accordingly false information was supplied to him about these matters in the statements or certificates required to be given by s 32;
(iii)There was an easement of support in favour of the neighbour to the West of the Property and/or other implied easements or “similar restrictions” within the meaning of s 32(2)(b) of the Act. No information was provided to him about these matters in the statements or certificates required to be given by s 32 … and accordingly the plaintiff failed to supply all the information required to be supplied to him in those statements or certificates;
(iv)The matters in (ii)-(iii) were material to the Defendant. The boundary problem caused a serious delay in a Town Planning application which, but for the boundary problem, would have been successful within the term of the Contract. This would in turn have increased the value of the subject property and ensured that the Defendant was able to raise the funds required to settle on the due date;

(b)in paragraphs 6 and 7, admitted service of the respondent’s notice of rescission dated 31 March 2009, by which time the appellant had rescinded the contract ‘by reason of’ the above matters. Accordingly, it was not open to the respondent to serve a notice of default and rescind the contract.
(c)in paragraphs 8 and 9, while not admitting that the respondent had resold the property, contended that if it was sold for $1,925,000 plus GST ‘it was a sale at undervalue’. Further, the respondent failed to discharge his duty to the appellant to exercise the power of sale in good faith and having regard to the interests of the appellant. Alternatively, the respondent failed to mitigate its loss and damage by granting the appellant an extension of time under the contract which would have enabled him to overcome the difficulties occasioned by the respondent’s breach of s 32.
(d)counterclaimed for the return of the deposit with interest.

In an amended reply and defence to counterclaim, the respondent:

(a) denied supplying false information in the s 32 statements or certificates; further, it was incumbent on the appellant to carry out his own searches and enquiries, but he made no requisitions on title or objections within 21 days of the date of the contract and was thus deemed to have accepted title pursuant to General Condition 1(b) of the Seventh Schedule of the Transfer of Land Act 1958 (Table A). Further, if the respondent had made an omission or mistake in the description, area or measurement of the land that, pursuant to General Condition 3 of Table A, did not invalidate the sale.

(b) alleged that on 23 May 2008 it supplied the appellant with a statement complying with s 27 of the Act, as to which the appellant did not give notice that he was not satisfied with the particulars contained in that statement. Further, on 27 August 2008[1] the appellant acknowledged that he had received satisfactory answers to requisitions on title or was otherwise deemed to have accepted title.
[1]In the amended reply and defence counterclaim this date is incorrectly stated as 27 August 2009.

(c) denied any failure to supply all information required to be supplied and contended that there was no easement or ‘restriction’ as alleged in the defence.

(d) as to the appellant’s alleged rescission by letter dated 20 March 2009, alleged that by reason of the appellant being deemed to have accepted title, the appellant was not entitled to rescind the contract; further, by letter dated 23 March 2009 the respondent confirmed that settlement was due that day.

(e) denied the property was sold at an undervalue; real estate agents undertook an independent advertising campaign and it was offered for sale by public auction.

(f) contended that, if the respondent had breached s 32, it should be excused from non-compliance under s 32(7) on the ground it had acted honestly and reasonably and ought reasonably be excused from the contraventions as the appellant was substantially in as good a position as if the provisions had been complied with.

On 27 October 2009 the respondent served a request for further and better particulars of the defence and counterclaim. Particulars were never provided pursuant to this request.

At a case management conference on 3 December 2009 the judge (being the judge who made the subject orders in March 2010) ordered that:

1.The plaintiff have leave to file and serve an Amended Reply.
2.The legal representatives of the parties to confer and agree to the appointment of a joint surveyor to survey the property at … and to determine the discrepancy, if any, between the physical boundary of the property and the boundary shown on the certificate of title volume 9491 folio 181.
3.The Plaintiff file and serve a notice … to admit facts and documents by 15 December 2009.
4.The evidence of the Plaintiff of those matters which are in dispute be given by way of witness statement in admissible form by 3 February 2010.
5.The Defendant file and serve a notice of dispute by 22 December 2009.
6.The Defendant file and serve any witness statements it intends to rely upon by 17 February 2010.
7.The proceeding be set down for trial commencing on 22 March 2010 on an estimate of 2 days.

On 14 December 2009 the respondent’s solicitor suggested to the appellant’s solicitor that the respondent’s surveyor, Mr Monahan, could prepare a survey jointly with the appellant’s surveyor, to satisfy the above order. The appellant’s solicitor did not respond.

Pursuant to the above orders, on 15 December 2009 the respondent served[2] a Notice to Admit Facts and Authenticity of Documents (‘Notice’). In accordance with r 35.03 and 35.05 the Notice stated that unless the appellant within 14 days after service of the Notice disputed the facts stated or the authenticity of the documents, the fact and authenticity shall be taken to be admitted unless the Court otherwise orders. The Notice was extensive such that if not denied it would establish the respondent’s case and deny the appellant’s case. It is to be noted that the respondents filed the Notice on 15 December 2010.
[2]Mr Waters deposed to service in an affidavit sworn on 17 March 2010. This affidavit is included in the Appeal Book but was not filed.

There being no response to the Notice, on 23 December 2009 the respondent’s solicitor noted in a facsimile to the appellant’s solicitor that the appellant had not served a Notice of Dispute and accordingly the facts and documents were taken to be admitted. The appellant’s solicitor did not respond.

On 15 January 2010 the respondent’s solicitor wrote requesting a response to the proposal in his letter of 14 December 2009. No response being received, on or about 21 January 2010 he instructed Mr Monahan to prepare an expert report.

At a directions hearing on 19 February 2010 the trial date was confirmed. There was no appearance for the appellant at the hearing. On 22 February the respondent’s solicitor wrote to the appellant’s solicitor confirming the orders made. There was no response.

On 24 February the respondent’s solicitor sent a copy of Mr Monahan’s report to the appellant’s solicitor under cover of a letter of that date which stated that he intended ‘to file Mr Monahan’s report with the Court today’.

It is to be noted that the Court file discloses that on 25 February 2010 the respondent’s solicitor filed a copy of Mr Monahan’s report together with a letter dated 24 February which stated that the report was ‘to be filed on behalf of the Plaintiff in accordance with r 44.03’ of the Rules. That is to say, it was filed as a statement of the evidence of an expert.

On 16 March 2010 the respondent’s solicitor requested that the appellant’s solicitor acknowledge receipt of the Notice, which acknowledgement was provided on 19 March.

The matters referred to in the above paragraphs [18]-[24] and [26] are deposed to in Mr Waters’ affidavit sworn on 22 March 2010.

The Monahan Report

Mr Monahan’s report was exhibited to Mr Waters’ affidavit of 22 March 2010 upon which the appellant seeks leave to rely. It is convenient to now refer to that report.

Mr Monahan was instructed to survey the property and advise whether the building thereon accorded with the title details. He was also asked to comment on an easement of support in favour of the title to the west of the property. He advised as follows:

(a)On the west side at Toorak Road the adjoining building encroached onto the subject property by 0.08 metres with a further encroachment of an architectural ornamental feature at the top of that building. There is no encroachment at the rear.
(b)On the east side at Toorak Road the subject building encroached outside the title but at no risk of potential action from the adjoining neighbour as the position of the building did not encroach on the title of that neighbour.

(c)Notwithstanding differences of building location to title, the available land on the site exceeded the title, being greater by 0.06 metres at the Toorak Road end and 0.12 metres at the rear.
(d)An application to Land Registry to amend the title, at least to the line of the east side of the building on the subject property, would be successful.
(e)No easement of support is registered on the title to the subject property or that adjoining on the west.

The hearing on 22 March 2010

As mentioned the proceeding came on for trial on 22 March 2010. The respondent was represented by counsel. Counsel also appeared for the appellant’s solicitors, but only to seek leave to file a notice that the firm had ceased to act for the appellant. The appellant was present with a separate solicitor, Indar Rohit Maharaj of the firm Ravi James Maharaj (‘Ravi James’).

In court, and shortly before the hearing commenced, the appellant was given two affidavits. First, counsel for Aldgate Lawyers served on their client (and filed) an affidavit sworn on Sunday 21 March 2010 by Bruce Travers McNab, the solicitor at Aldgate Lawyers who had the conduct of the appellant’s matter.

Secondly, the respondent served on the appellant the affidavit sworn by the respondent’s solicitor, Mark Waters on 22 March 2010. This is the affidavit upon which the appellant seeks leave to rely. As mentioned earlier, although it was served on the appellant it was not filed. We refer to its contents later.

Mr McNab commenced by stating that on 18 December 2009 the appellant had suffered a judgment against him in another proceeding and that a bankruptcy petition had been issued against him which Mr McNab believed ‘has not as yet been served on him’. Mr McNab deposed that without informing him the appellant left Australia around mid-December 2009, following which he had no contact with the appellant until 29 January 2010 when he received an email in which the appellant requested he discontinue acting and hand over the file to Ravi James solicitor. On 23 February 2010 he met with the appellant and Ravi James at the latter’s office and discussed matters being handled by Mr McNab’s firm on behalf of the appellant. Ravi James advised that he had not decided whether to take on any such matters and would discuss the matter further with the appellant. Mr McNab stated that as the result of the judgment and bankruptcy petition it was agreed that although the appellant had an arguable defence and counterclaim he would not be likely to enjoy the proceeds of a judgment in his favour and that, in any event, due to the appellant having left Australia and terminated Mr McNab’s instructions, he had been unable to properly prepare for the trial. The appellant had then said ‘Well there is no point in proceeding’. Mr McNab said that he agreed and asked the appellant for written instructions to consent to a judgment. Mr McNab deposed further that on numerous occasions he had asked the appellant to confirm his instructions but he had not done so. Then, on 17 March 2010 Ravi James wrote to his office stating that ‘We should take appropriate steps as we are on record’, and also stating that they required Mr McNab’s files to consider the matter. This was the first time Ravi James had asked for files. Mr McNab endeavoured to contact the appellant and Ravi James on 18 March 2010 but without success.

Mr McNab further deposed that on 19 March 2010 he spoke to the appellant who advised that Ravi James was appearing for him on Monday 22 March. Mr McNab then requested an employee in his office to seek from Ravi James confirmation of the appellant’s advice, to advise that the file could be collected, and to email the respondent’s solicitors with advice of developments. On 19 March at 5.13 pm his office received a facsimile from Ravi James stating that they had never indicated to the appellant that they would take on the matter. Mr McNab concluded by stating that he endeavoured to contact the appellant again but without success and that he was unable to obtain instructions from him. He requested leave to file a notice that Aldgate Lawyers had ceased to act in the proceeding.

When the hearing commenced counsel for Aldgate Lawyers applied for the leave sought. He described the basis of the application as being that the solicitors had understood the appellant had effectively terminated their services and had engaged Ravi James. Mr Maharaj had disputed that, but their instructions were that they were to cease to act for the appellant and to provide Mr Maharaj with the necessary files. On the judge asking the appellant if he had anything to say, he said that he did and that:

Up until today I’ve been under the impression that Bruce [Mr McNab] is representing me. Although I’ve told them my lawyer is Ravi, but he handled a couple of matters which he attended some other matter a few weeks ago, and for this matter, he constantly telling me to consent this judgment, which I told him I want second opinion from Ravi, and I wanted the files to be delivered to him and we being trying to get the files to Ravi for the last nearly 10 days.
It became rather very difficult to sort the opinion from a new – in the future, new appointed solicitors, it became very difficult and I also emailed him. I have a copy, if you can - - -

The appellant referred to the need for the files but it was not until Friday afternoon that he was told to collect them, as to which he said ‘It’s too late to pick up the files on Friday night’. He opposed Aldgate Lawyers being given permission to go off the record ‘because he has not given the files’ and ‘has not informed me until today, this morning’. At that the judge thanked the appellant and said that he thought he understood his position. The appellant then said:

And I request you to just adjourn the matter until we get the file.
HIS HONOUR: That’s a different question, I will deal with that a bit later.
MR PAMAMULL: I have not been given any opportunity to represent myself.

The judge then gave Aldgate Lawyers leave to file a notice of having ceased to act. He asked that counsel convey to his instructing solicitors ‘some degree of concern that this is taking so long to do and that you have done so only this morning’, stating that it was unacceptable for the solicitors to leave the matter as late as they had. Aldgate Lawyers counsel was excused and withdrew.

The judge then asked counsel for the respondent what he wanted to do next. The answer was that the respondent sought to proceed. The judge, having heard briefly from counsel for the respondent, decided to hear from the appellant first and asked him if he was appearing for himself. The appellant responded as follows:

MR PAMAMULL: I have no files given to me by Bruce McNab, it’s very difficult for me to bring the points in defence and I will only request to you – I’ve been very honest, I’ve been trying to get the files for the last 10 days. I failed to get everything and at the last minute, we come up with this mess. I would request for adjourning the matter so we can prepare and come back with my appointed solicitors.
HIS HONOUR: Mr Pamamull, why haven’t you appointed solicitors to make this application for an adjournment?
MR PAMAMULL: Because we have not received the defence and up until today I’ve been thinking that he is going to be here today. I was shocked to see he’s not here but rather than him sending application and declaration, this is a shock to me. Without him, I cannot represent and without his giving the file to the new solicitor, I cannot represent, so my difficulty is this.

The judge then asked the appellant how long he had known about the hearing being set for that day. He said that Mr McNab told him ‘a couple of weeks ago’. The judge asked him what explanation he had for not having been in contact with his previous solicitor. The appellant said he had been in contact, that the solicitor advised him to consent and he said he did not want to consent and he was ‘requested to give the files so we can sought [sic] out second opinion’, and he has been overseas. He continued in that vein. The judge stated that he had set the trial down for today in December. The appellant said that Mr McNab did not inform him. He last saw Mr McNab two or three weeks ago in February. The last time he saw him last year was in mid-December but ‘didn’t get any information when I left’. Unfortunately, and quite obviously, at this point the judge misunderstood the appellant. That is indicated by the judge asking the appellant if he was saying he did not know that he was being sued, that is that he did not know of the proceeding itself until 2010. This led to a series of questions and answers. When the appellant again said that he only knew ‘this matter three weeks ago’, he was overseas, the judge said to the appellant that he had difficulties believing what he was telling him. It is apparent, in our view, that there was in fact no difficulty at all, the judge having misapprehended that at all times in this discussion the appellant was talking about the time when he was told when the hearing was on as distinct from awareness of the existence of the proceeding itself. On the judge making the statement about having difficulty believing the appellant, the appellant immediately said:

The difficult point is that Bruce informs me whenever is the due date, few weeks before. He doesn’t send me any letters, we only talk on the phone and hardly any emails. That’s how he works with me.
HIS HONOUR: Mr Pamamull, I am not prepared to give you an adjournment. I am prepared to hear the case today.
MR PAMAMULL: I have no file, how can I defend myself?
HIS HONOUR: Mr Pamamull, if you have created circumstances in which you have no file today, that is - - -
MR PAMAMULL: The files are with Bruce, he has not given me the files so it’s not fair that I have – I’m preparing a barrister company to do the matter but we can’t do it today.
HIS HONOUR: Mr Pamamull, you have not retained anybody to come here today at all, have you?
MR PAMAMULL:[3] Would you like to say something?
HIS HONOUR: Mr Pamamull, do you want somebody go in the witness box that you can ask some questions of that person?
MR PAMAMULL: Would you like to – he can give you more highlight because he’s been trying do something.
HIS HONOUR: If you want to have somebody to go in the witness box, you can ask him some questions. Go in the witness box, you’ll be sworn.

[3]It is unclear who this speaker was.

The transcript then records Mr Maharaj as having been affirmed. He then gave the following evidence:

MR PAMAMULL: Maharaj, you are aware that we have been trying to get the files and what emails you got, what response you got? - - - Yes, I’m aware, Mr Pamamull.
HIS HONOUR: You are aware of what, Mr Maharaj? - - - That the solicitors, the law firm that has been acting for Mr Pamamull met with the principal of our firm and it was determined that they would still have carriage of the file of this particular matter and that we would provide advice on this matter upon receipt of the documents and the files from the solicitors who were acting for Mr Pamamull.
Mr Maharaj, I take it you are a solicitor, are you? - - - Yes, Your Honour.
What’s the firm that you work with? - - - Ravi James Maharaj.
So you are principal of that firm? - - - I’m a director.
Are you the principal director of that firm? - - - No, I am not.
Have you been retained to act for Mr Pamamull today? - - - No, we have not been retained.
Have you been retained to act for Mr Pamamull for an adjournment application today? - - - No, we have not been retained as yet.
I see. What have you been retained, if anything, to do? - - - We have been retained by Mr Pamamull on three or four other matters which are not related to this matter.
So you have no retainer at all for the purposes of today? - - - We do not have any retainer for today’s purposes.
Or for the proceeding that is the subject of today’s proceeding? - - - That’s right, Your Honour.
Yes. Are there any other questions you wish to ask Mr Pamamull?
MR PAMAMULL: Basically, emails – we are trying to get the files from him being exchanged by our company and until Friday he refused – he did not respond but late afternoon, he responded and you are aware of that truthness, the files were not given? - - - Yes, we are aware of it, that after we have been requested to provide advice on this matter, we have made numerous requests to Bruce McNab in particular to give us the files so that we could peruse the files and provide advice as to whether Mr Pamamull should consent to judgment, which is the advice which Bruce McNab had given to Mr Pamamull, but right up until Friday afternoon we had not received those files or any indication of what the matter was about. To go a bit further, we did make an attempt to actually get copies of the file from the court, I think it was in the chambers at the time. We contacted Bruce McNab, the solicitors, again. On Friday afternoon, I would say about 3 o’clock or 3.20, we received an email from Bruce McNab’s firm, Aldgate firm, which basically said the files are ready for collection. We immediately responded saying that it was pretty late for anyone to actually take carriage number one; number two, we had not been instructed to actually act on the matter, we had only been instructed to see if we could provide advice on the matter.
And this is the proof that you’ve been not appointed until then and I was under the impression Bruce should be here today.
HIS HONOUR: Thank you. Do you want to ask any questions, Mr Osborne?
MR OSBORNE: No, Your Honour.
HIS HONOUR: Nothing else you want to ask?
MR PAMAMULL: Well, I suppose that’s it.

The judge then said, without further discussion, that he was not willing to give the appellant an adjournment. The appellant immediately stated that he was prepared to pay the costs of the other side. The judge asked how he was going to pay the costs, given that a bankruptcy petition had been registered against him. The appellant said that whatever the cost was he would pay. The judge responded by asking where the money would come from. The appellant said he would get it from his family, stating ‘I really want to defend the matter because I have a case in it because I think that there is a variation of the title which blocked me to get the permit for the building’.

The judge then noted that he had made that claim in his defence filed in September. In responding the appellant said that before he ‘became a defaulter’ ‘there is a variation in the title which caused a lot of delays’ and he wanted an extension or reduction in the price because:

[T]he reason I took this property, because I was given 11 months’ settlement, for long settlement so I can sort out the permits and all that and because of this variation in the title, we lost all those 11 months and it was due to the not disclosing in the agreement of sale, which I have given the proof to the mediation and everything, and the whole file is with Mr McNab, I don’t have anything.

He added that:
I would like to represent with some proper legal advice. I’m not a lawyer. I think you have to sort of help me if you can.

The judge then asked counsel for the respondent what he wished to do in these circumstances. Counsel stated that he sought to proceed, the respondent’s claim being proved by way of an undisputed notice to admit. Counsel also submitted that an adjournment would be futile because the appellant’s factual matter of a variation in title, even if established, would not give the appellant the relief that he seeks. In addition, there was the discretionary basis to refuse the adjournment, the appellant having had sufficient time to defend himself.

Following discussion with counsel for the respondent the judge then told the appellant he would give him until 2.15 pm. The transcript records the following:

HIS HONOUR: Yes. Mr Pamamull, I’m going to give you until 2.15 today. You have brought in Mr Maharaj to court; he’s given evidence that he’s a solicitor. You are able to, in the next few hours, talk to him about the proceeding, if you want to, and there is the ability of Mr Osborne’s instructing solicitor to speak to Mr Maharaj if you elect to appoint Mr Maharaj to act for you today. The case will proceed at 2.15.
MR PAMAMULL: Okay.
HIS HONOUR: There have been filed some papers[4] which at the moment makes it look as though your case is hopeless. Mr Maharaj will be able to see those papers and either advise you or not, depending upon whether you retain him or not, but I am not prepared to allow the plaintiff to lose the opportunity of having its case determined today. Do you understand all of that, Mr Pamamull?
MR PAMAMULL: I need about two weeks.
HIS HONOUR: Mr Pamamull, you’ve got until 2.15 today. Do you understand that?
MR PAMAMULL: Okay. Thank you.
HIS HONOUR: Adjourn until 2.15.

[4]The judge did not identify to what papers he was referring.

On the resumption at 2.15 counsel for the respondent stated that he wished to proceed and that the appellant had just provided him with an affidavit. We interpolate that it is common ground that during the adjournment the respondent’s solicitors provided the appellant with a copy of the Notice, the writ and the defence and counterclaim. They were provided to fill the gap of the defendant not having documents.

The judge asked the appellant if he wished to say something. The appellant said that he did and that ‘we’ had tried to get the files from Mr McNab but ‘had the run around’.

The appellant then gave the judge an affidavit he had made during the morning. The judge read the affidavit. It is thus necessary at this point to provide a summary of its contents. The affidavit commenced by referring to Mr McNab’s affidavit. He said he was not aware of the judgment entered against him or of any bankruptcy petition issued against him in respect of the judgment as none had been served on him. All he knew was that a mediation in that matter was scheduled for 9 April 2010. He also referred to other steps in that proceeding. He generally denied Mr McNab’s evidence concerning the appellant going to India in December 2009. He left for overseas on 24 December 2009, prior to which he had attended Aldgate Lawyers on or about 18 December regarding other matters. He did not attend the case conference on 3 December 2009 stating that he was not asked to do so and that he had not been aware of it. He deposed that Mr McNab did not inform him of the orders made on 3 December 2009.

At this point in his affidavit the appellant referred to paragraphs [3], [5], [6] and [7] of Mr Waters’ affidavit sworn on 22 March 2010 (where reference is made to the orders of 3 December, service of the Notice, and Mr Waters’ letters of 23 December 2009 and 15 January 2010 seeking a response to the proposal for a joint survey), and deposed that he was ‘now … aware’ of the requirement that the respondent serve a Notice to Admit documents and that a Notice had been served. The appellant deposed that Mr McNab did not inform him of service of the Notice or seek his instructions or response to it.

He then deposed to events with his solicitors following 29 January 2010 when he sent Aldgate Lawyers an email expressing his desire for them to discontinue acting and hand all files to Ravi James. But the files were not handed over and, he stated, Aldgate Lawyers continued to act. At a meeting on 23 February 2010 it was made clear to Mr McNab that Ravi James could not decide on which files they would act until the files or copies were given to them. He deposed that following that meeting Aldgate Lawyers continued to act for him, and that Ravi James did not commence acting for him on any matter. On 9 March 2010 Aldgate Lawyers wrote to Ravi James referring to their recent discussion, as to which they understood that Ravi James was uncertain about whether they wished to take on various files. The letter outlined the status of various matters for their information ‘and perhaps then we can determine an appropriate course of action’. In relation to the present litigation, the letter advised that the matter was listed for trial on 21 March 2010, and that there was no point in continuing given the appellant’s financial position; the letter requested the appellant’s written instructions to consent to a judgment. The appellant deposed that this letter showed that Aldgate Lawyers continued to act for the appellant.

The appellant deposed that he did not instruct Ravi James to act for him in the matter as he first needed them to give him advice, which they could not do as Aldgate Lawyers failed to give them the relevant files. The appellant deposed that he had at all times instructed Aldgate Lawyers to defend the matter and proceed with the counterclaim but they insisted he should consent to judgment because there were other matters pressing on the appellant and it was not worth defending the matter. It now appeared that Aldgate Lawyers had not filed a response to the Notice or done other acts and things as required by the orders made on 3 December 2009.

Continuing, the appellant deposed that in the afternoon of Friday 19 March 2010 Aldgate Lawyers sent an email to Ravi James stating that the file could be picked up that afternoon. Ravi James replied that day stating that they did not act for the appellant, and that they had needed the file in order to advise the appellant. It was stated that Ravi James had attempted to examine the Court file ‘to advise him but could not do so [being] advised [that] the files were with the Judge in chambers’.

The appellant then turned to matters that had occurred in the period of the adjournment to 2.15 pm. When the matter was adjourned he immediately went by taxi to the office of Aldgate Lawyers, with Mr Maharaj. They had Friday’s email inviting collection of the file. They asked for the file and were told that it would take 30 minutes to obtain the key. The appellant and Mr Maharaj left and returned about 40 minutes later, at about 11.50 am, and were advised that the key was still not available and would not be for about another 40 minutes. Due to the matter resuming at 2.15 pm the appellant and Mr Maharaj proceeded to the Court. At about 12 noon an employee of Aldgate Lawyers called Mr Maharaj and informed him that a person with the key would be at the office at 1 pm to give the files over and she would confirm this once the employee had arrived with the key. By the time of affirming the affidavit no such call had been received. Accordingly the appellant was without the file and was ‘unable to proceed with my defence of the [respondent’s] claim or my counterclaim’. The respondent further deposed that:

In addition I have been advised that in view of Aldgate Lawyers receiving the notice to produce and other documents on 15 December 2009 and then failing to respond to the same within the time limits prescribed I am now deemed to admit the plaintiff’s claim, damages, costs and also am prevented from calling any witnesses or evidence.

The appellant concluded by stating that based on the above he asked the Court to adjourn the matter to another hearing date and give him time to collect the files from Aldgate Lawyers, engage new solicitors and counsel to act for him in the matter and prepare for the hearing or consider their advice, and that he be given an extension of time to comply with the notices and documents served on Aldgate Lawyers by the respondent on 15 December 2009 and that if any order for costs was made for the adjournment it be paid by Aldgate Lawyers.

The judge, having read the appellant’s affidavit, stated that he saw that the appellant was ‘seeking again that the matter be adjourned’, and continued:

I’m not prepared to give you an adjournment. I can’t see any foundation for me to deny the plaintiffs their entitlement to present their case today. You are a defendant in this proceeding, you have been a defendant in this proceeding since August and you have had solicitors acting for you until this morning, and your affidavit gives me no basis whatsoever to put the plaintiff to the cost and inconvenience of an adjournment.
You’ve not, in your affidavit, said anything about having retained anybody to act on your behalf, despite the fact that you’ve had Mr Maharaj here earlier on this morning and have had the ability to do something. So that in the circumstances, I propose to reject your application for an adjournment and to hear the plaintiff’s case.
MR PAMAMULL: We tried to get the files and we are not successful and we didn’t – he has not informed me for defence in December. I was here in Melbourne until 24 December. He has not informed me, so where do I stand?
HIS HONOUR: Mr Pamamull, I hear – you tell me that you were here then and I can see that you don’t have any papers on you.
MR PAMAMULL: I have evidence when I left.
HIS HONOUR: I don’t doubt you left.
MR PAMAMULL: I left on 24 December.
HIS HONOUR: I don’t doubt that.
MR PAMAMULL: I was in Melbourne.
HIS HONOUR: I don’t doubt that you left on 24 December; you were in Australia until 24 December. I made orders some time ago that this matter was going to be heard today and you are not in the position to offer the plaintiff the costs of an adjournment, you’ve not offered to put any money into the court so that their wasted costs can be made good. You have still not appointed anybody to act for you now and I can see no reason at all not to allow the plaintiffs to prove their case today.
MR PAMAMULL: How can I appoint the solicitor when the documents are not released from Bruce?
HIS HONOUR: Mr Pamamull, you don’t need to appoint somebody to act for you to have the documents – I will put that differently: you don’t need the documents before you appoint somebody to act for you. You could easily have retained somebody to act for you in the proceeding without the documents.

The appellant then asked if he could have a moment to talk to his solicitor, which was granted. It is evident that he then spoke to Mr Maharaj. The appellant then informed the judge that ‘they are reluctant to take the case because Mr McNab will not co-operate with giving them the information but my question is, how much cost is involved so I can see if I can manage to offer?’ The judge responded:
HIS HONOUR: Mr Pamamull, I don’t know what it will cost them, that’s not a matter for me to say, but you are not today in a position, this minute, to give them the security.
MR PAMAMULL: If I knew the amount - - -
HIS HONOUR: Ask Mr Osborne.
MR PAMAMULL: How much is the amount?
MR OSBORNE: What amount?
MR PAMAMULL: For adjourning the case.
MR OSBORNE: My instructions are to proceed.
MR PAMAMULL: No, I just want to know the cost.
HIS HONOUR: The position, I suppose, Mr Osborne, is if I’m asked to adjourn and your client’s economic position can be made good by an order for costs, I would need to take that into account, I think.
MR OSBORNE: Your Honour, I would say the costs of the day, which would be the costs we would be entitled to by reason of the adjournment, would be somewhere in the order of $8,000.
MR PAMAMULL: That’s okay, I can pay. I’m willing to pay the $8,000.
HIS HONOUR: You can pay that what, in the next 15 minutes, can you?
MR PAMAMULL: No, within - - -
HIS HONOUR: You would need to put into the court almost immediately that amount of money before I could be satisfied that they are adequately secured.
MR PAMAMULL: Would you give me 48 hours?
HIS HONOUR: No, not 48 hours, Mr Pamamull.
MR PAMAMULL: 24 hours?
HIS HONOUR: No, Mr Pamamull. You need to do that now.
MR PAMAMULL: 24 hours.
HIS HONOUR: Mr Pamamull, you would need to do that now, not 24 hours. You would need to do it in the next half an hour.
MR PAMAMULL: One second, please.
HIS HONOUR: Yes, Mr Pamamull.
MR PAMAMULL: I can arrange but I need a few hours, maybe until 5 pm today.
HIS HONOUR: What are you proposing to do by 5 pm, Mr Pamamull?
MR PAMAMULL: Sorry?
HIS HONOUR: What are you proposing to do?
MR PAMAMULL: I just want to see if I’ve got some money in the account, then I will give them – because I can’t get to the bank until I go to the bank. They won’t – I don’t do the telephone banking so I don’t know. I have to go to the branch - - -
HIS HONOUR: Mr Pamamull, I don’t want to deny you any opportunity that you have, but this exercise is largely a waste of time. The case of the plaintiffs is strong, the material that they have filed is very strong and I can’t see the point of giving you the time that you are asking for.[5]
MR PAMAMULL: God knows. Who could win?
[5]Here again the judge made a non-specific reference to ‘material’ on the file that was ‘very strong’.
The judge then asked the respondent’s counsel whether he saw any step or process that might usefully be undertaken that would produce some outcome that might assist everybody. Counsel did not. The judge then said that he proposed the following:

[W]hat I’m proposing to do is this: I’m going to permit the plaintiff to begin its case now. I expect that the case will be finished today. I expect that I will be able to make an order today. I will defer execution of the order for a few days. If you come up with something in those few days that suggests that I should vacate the order, you should apply to me and if that be shown to be the case, you will be heard.
MR PAMAMULL: Okay, thank you.
HIS HONOUR: But I urge you not to waste anybody’s time.
MR PAMAMULL: Thank you, sir.
HIS HONOUR: And I urge you not to incur costs for other people, and I certainly urge that anybody acting for you remember their obligations to the court and the process of the law. Mr Osborne, please begin.

Counsel for the respondent then proceeded to open his case which was established by a combination of admissions in the defence and the undisputed Notice to which the judge was taken. There was no oral evidence and the transcript discloses that no document – including the Notice and Mr Waters’ affidavit of service of the Notice sworn on 17 March 2010 – was tendered. Having heard the case thus presented the judge asked the appellant if there was anything else he wished to say ‘at this stage’; the appellant responded as follows:

MR PAMAMULL: Before rescission notice, we wrote to them that there’s a discrepancy of the title and we had difficulty getting permit for the purpose we brought the property for and we offered them to give extension or reduce the price because of that variation in the title which caused delays. The reason I paid this asking price, which was more than market, because they were giving me 11 months’ settlement.
So I can acquire also the work, but all those 11 months were lost because of this variation in the boundary, whatever you call it, and we have to redo the work and everything and it took sort of the entire 11 months, we couldn’t put the permit so we can get a better offer and be out of it, because that’s what my intention was.
Then neither they accepted extension for time, nor were they willing to give me some reduction in the price, so it left me in a very distressed situation because I lost my timing and the price was enormously paid high. Market value, as you said, they sold it for 1.9. It is unbelievable the price could not come down nearly 30 per cent in a prime location like South Yarra, so I’m failing to understand why they have to sell that property at that price. But anyway, that’s their – the ball’s in their court, that’s what they did. I would still like to represent with proper documents, but I’m not able [to] do this today.

Counsel for the respondent responded as follows:

MR OSBORNE: I could probably say two short things. Your Honour, of course Mr Pamamull’s just made some submissions from the Bar table. The matter that’s raised in his defence and counterclaim is that the title boundaries didn’t accord with the title details in respect of the western boundary and as such it was said that false information was supplied about those matters in the s 32 statement and in particular, that there was an easement which was not disclosed in the s 32.
The first stage in that, the building block of that argument is that there has to be evidence of an encroachment. There is no evidence and accordingly the claim should be dismissed. If one assumed in Mr Pamamull’s favour that there was such evidence and if one assumed that it extended to 14 centimetres, which was the assertion that was made at the case conference, then we have a built property on the western boundary which has encroached into the title of the property that was sold by 14 centimetres. It is said that gives rise to an easement which was not disclosed in the s 32.
There is, however conclusive authority which I can hand up to Your Honour, which is to the effect that an exclusive use of a piece of land, which is that which would occur by way of a building at an adjacent level intruding into the subject title, is not relevantly an easement because an easement right can’t be exclusive use. So if the evidentiary fact was able to be established, it wouldn’t have the consequence of being an easement which had to be disclosed under s 32, it would be an encroachment and a discrepancy between the built form of the property and the title details, which in some circumstances, and absent acceptance of title, may, if it was material, give rise to rights on behalf of the purchaser but in this case didn’t because firstly the purchaser had accepted title – that is another matter which is admitted but in any event, it doesn’t give rise to any rights under s 32.
So there’s no evidence and if there was, it wouldn’t give him the relief that he seeks so the counter claim ought be dismissed. If your Honour pleases.

We interpolate that although the judge asked the appellant if he had anything to say he did not ask him if he wished to give evidence, or call any other person to give evidence or ask whether there was any document he wished to rely upon. Nor did he explain the proceedings, or inform the appellant of his rights, in these respects. Nor did he inform the appellant that the Court had power under r 35.03(3) and r 35.05(3) to grant leave to withdraw an admission based on a failure to dispute a fact or document specified in a notice to admit, or that he could seek such leave.

His Honour then delivered judgment, as follows:

In this application the plaintiff seeks to recover damages from the defendant from a failure to complete a contract they entered into on 22 May 2008. The balance of the purchase price after payment of the contract [sic] was $2.52 million. It was not paid and a notice of rescission was served with effect from 14 April 2009.
A marketing campaign was subsequently undertaken for the sale by the vendor of the property which led to a second sale on 15 July 2009 and a shortfall from the sum originally agreed by the defendant to have been payable under the contract. The property was sold and settled on 15 September 2009 for a sum of $1.925 million.
The defendant was served, through the solicitors who have acted for him until this morning, with a notice to admit facts and authenticity of documents pursuant to Order 35 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) (“the Rules”). The defendant failed to serve a notice of dispute and therefore the facts and the authenticity of documents in the notice are deemed to be admitted pursuant to Rule 35.05. As a result, the existence of the contract is proven, as is its authenticity. Its terms are established and the plaintiff has the entitlement to bring its claim, as it has done.
The non-payment of the balance of the purchase price is also taken to be admitted, as are most of the integers making up the calculation of the loss claimed by the plaintiff.
In the circumstances I find that the plaintiff has established against the defendant a loss following a breach, the breach being the non-payment pursuant to the contract and the notice of rescission, the loss being $759,447.02. Interest has been calculated on that amount pursuant to statute of $46,919.16. I will order that the defendant pay the plaintiff the sum of $759,447.02, together with interest on that sum of $46,919.16.
So far as the defendant’s counterclaim is concerned, there is no evidence before me of the encroachment which is asserted by Mr Pamamull. It is not sufficient to prove an encroachment simply to assert it. In any event, I accept that even if there had been proved to be an encroachment, it would not amount to an easement as alleged in the pleadings.
Accordingly, I will dismiss the counterclaim. I will defer the effect of these orders, however, until 2.30 pm on 24 March 2010.

The respondent then sought costs and the judge ordered that the appellant pay the respondent’s costs of the proceeding including reserved costs and informed the parties that the orders could not be acted on until Wednesday (24 March) at 2.30 pm. He told the appellant that:

If there is some basis upon which those orders should be vacated, you have in effect until Wednesday afternoon to do something about it.

The judge advised counsel for the respondent there was no reason why the orders should not be authenticated as long as it was clear that one of the orders included a provision that it could not take effect until 2.30 on Wednesday. Consistently with that statement, when the order was authenticated, which was not until 14 May 2010, the final paragraph stated that ‘The effect of these orders is deferred until 2.30 pm on 24 March 2010.’
The hearing on 25 March 2010

On 24 March 2010 the parties appeared in court in accordance with his Honour’s pronouncement. The appellant, now represented by senior and junior counsel, desired to seek the setting aside of the orders. Counsel were instructed by Ravi James who filed a notice of acting on that day. They were, however, advised by the judge’s associate that the appellant was required to make his application by summons and that the matter would be heard by the judge on the following day. Accordingly, and on 24 March 2010, Ravi James filed a summons returnable on 25 March seeking orders that the judgment given on 22 March be set aside, that the time for making the application be extended, and that the costs of the application be costs in the cause. The appellant made two affidavits in support of the application. He deposed that:

(a)He bought the property with the specific intention and purpose of developing it by building serviced apartments and retail shops.
(b)The existing building on the property encroached on the neighbouring property and he was advised by senior counsel that this was a defect in title.
(c)He briefed his former solicitors and counsel and asked them to defend the proceedings and was advised by them that the building encroachment was an easement which was not disclosed in a s 32 statement.
(d)He was not advised by his former solicitors that this encroachment was a defect in title and they released the deposit pursuant to s 27 of the Sale of Land Act.
(e)He had a good defence to the present proceeding but due to the neglect of his former solicitors was unable to raise that defence or properly defend the proceeding.
(f)In regard to the Notice to Admit he instructed his solicitors to deny the contents but they did nothing to protect his interests.[6]
(g)It was only late on Friday 19 March 2010 that he became aware that Aldgate Lawyers proposed to seek leave to cease to act on his behalf; until that time they told him they were representing him but advising he should consent to judgment.

[6]This is inconsistent with the appellant’s statements in his 22 March affidavit that Mr McNab did not inform him of the Notice or seek his instructions or response.

We turn then to the submissions made to the judge.

Counsel for the appellant said that the appellant’s solicitors had done him a terrible injustice. The defence based on a failure to comply with s 32 , and relying on s 32(5), was wrong. Rather, the case concerned a defect in title, by reason of a large portion of the appellant’s property being on the neighbouring property, which entitled the appellant to rescind. However, the solicitors had not advised the appellant of his right. The judge responded that counsel had not got to the first point of principle as to having a judgment set aside, and said that it was irrelevant if the appellant had a case against his former solicitor for professional negligence. Counsel submitted that on the appellant’s affidavits there was good reason to set aside the contract. The judge responded by querying the proposition that the law allowed a judgment to be set aside ‘merely because his solicitor has given him bad advice’. The principle, counsel stated, was ‘that [the appellant] was not given a chance to adequately defend the matter.’

As to this and the power to set aside, the judge observed the time the proceeding had been on foot, that the appellant was present and had stated the matters now deposed to in his affidavits, the judge had heard the evidence based upon the Notice, the evidence was established to his satisfaction and he had heard and adjudicated the case on the merits. The appellant’s affidavits did not take the matter any further at all. Nothing had been said on behalf of the appellant ‘that would warrant any action being taken to upset the judgment’. The judge said that the allegations against the former solicitors were ‘extraordinarily serious’ and that if made out ‘the action that should be taken is against the solicitors’.

At that point counsel returned to the matter of a defect in title which, he said, entitled the appellant to rescind; if he had been properly represented the respondent should never have got judgment. The judge responded, ‘the problem was there was no evidence’. To this counsel asked that his client be given a chance to appear and put the evidence before the Court. The judge said that the appellant had had his chance, and the case conducted by the solicitors on his behalf was in stark contradiction to what he now said on oath.

Counsel stated ‘ … on the defence, there was no easement’. The defence had no merit. Counsel added that $600,000 would ‘wipe out’ the appellant, who would not be able to sue the solicitor.

The judge then said:

I’m being asked to find that the people who were instructed in this court on behalf of Mr Pamamull have engaged in the most serious dereliction of their duty to their client and the court. I would need to be satisfied of that fact, and it would need to be proved by more than an assertion by your client in an affidavit. Fortunately for the court I don’t need to go there, because even if that’s established it does not establish a case against the plaintiff’s judgment.

Counsel then said that he could ‘only urge upon your Honour the fact that my client has a good defence’. Counsel said to forget about the claim against the solicitor. The respondent’s claim could not be maintained because of the differences in measurements, to which, again, the judge said:

There’s no evidence of a survey, none. There is no evidence before me of a survey.

Counsel said that he was under the impression that a joint survey was ordered, to which the judge rejoined:
There is no evidence before me of a survey.

Counsel repeated that he was under the impression that there was a survey, but the judge returned to:
… the fact … there was simply no evidence before me of any of that.

Continuing, the judge said that if it could be proved that the appellant’s former solicitors had failed to do that which they were instructed to do, that might be a circumstance that would justify ‘the extraordinary step of reopening the case’, but it would need more than an assertion in an affidavit. Short of the solicitors coming and admitting that fact he (the judge) did not see how he could put the respondent in the position of having its entitlement depend upon a dispute between the appellant and his former solicitor. He then referred to the appearance of counsel for Aldgate Lawyers, of which the appellant’s counsel stated he was not aware, and what he (the judge) had been told which was ‘inconsistent with the story [the appellant] then said, and which is in the affidavits’. After some further reference to these events the judge observed to counsel he needed to make a case against the respondent but that the most he could do ‘is make a case against your former solicitors … and the problem with you about doing that is that I have evidence from your client’s former solicitors which means that I can’t act upon [the appellant’s] current assertions’. In response, the appellant’s counsel stated that on his careful consideration of the matter the appellant had a perfectly valid defence to the writ:

… this is a defective title, this should never have proceeded. You told me Your Honour, that my allegations are against my instructing solicitors. My allegations are also against the plaintiff in that, there is no cause of action.
HIS HONOUR: Well, there is no evidence of the no cause of action. In this court your client through his previous solicitors had every opportunity to make the cause of action - - -
MR WIKRAMANAYAKE: Yes, Your Honour - - -
HIS HONOUR: - - - and failed.
MR WIKRAMANAYAKE: They didn’t do it.
HIS HONOUR: Well, that might mean that your client has got very strong action against somebody else, not the plaintiff. Now, let me just tell you something else about why – even if there’s a matter of discretion involved – about which I think there is not – but even if there were why I would not entertain your client’s current application as a matter of discretion.
There was a lot of discussion on Monday about whether the plaintiff ‘s costs for an adjournment application could be secured, so that they were going to be rendered safe.
MR WIKRAMANAYAKE: I’m (indistinct) that, Your Honour.
HIS HONOUR: And there is no basis at all where their position is going to be made good in any way shape or form.
MR WIKRAMANAYAKE: I know, I understood that my client was asked to come up with some money, and he couldn’t do it for the adjournment and he couldn’t do it, I’ve been advised of that, but he’s come up with the money to brief me now.
HIS HONOUR: But you see, the position - this is essentially a money claim as against the plaintiff, and therefore if I could have been confident on Monday that its claim for money might not have been obtained on Monday, but it might have been obtained in a month’s time I would have said, “Well, it’s just money”, and what’s more your client’s financial position seems – on his former solicitor’s evidence – so weak that the ability that they’re going to get their money from your client seems relatively remote anyway.
So on one view what does it matter? The fact of the matter is, he wasn’t able to make good on Monday, they’re here today incurring more costs. The costs which on any view – on any conceivable view – have been thrown away – not their – for their fault – are not being made good.
MR WIKRAMANAYAKE: I don’t for a moment cavil with that, Your Honour, I have got nothing to say about that - - -
HIS HONOUR: Well that was the last line of defence.
MR WIKRAMANAYAKE: I can’t Your Honour – I am with all sincerity – I am flogging a dead horse ...

The judge then asked the appellant’s counsel, without submission from the respondent, why he should not order, under r 63.23, his instructing solicitor – who had been in court on Monday – personally to pay the costs of the application on the basis the application should never have been made. Counsel answered that he was instructed the application was brought on the insistence of the appellant.

After hearing submissions from the respondent further discussion occurred between the judge and the appellant’s counsel. In the course of this the judge stated that it was important that lawyers act with a view to ensuring that the administration of justice goes smoothly and properly. What really concerned him was that Mr Maharaj, having heard the material and what was said on Monday, permitted an application to be made based upon an affidavit of the appellant and knowing what the former solicitors had stated in an affidavit. That ‘seems to me to be squarely within’ r 63.23(1), he having failed to bring forward material that would make good the allegations against the former solicitor.

The judge then said he was minded to make an order against Mr Maharaj. Counsel interrupted the judge and advised that Mr Maharaj’s principal, Mr James, and not Mr Maharaj, had attended in conference the previous day, and counsel had only met Mr Maharaj that morning. He also said that he was ‘only one year a solicitor for Mr Maharaj’; it is unclear what this meant but, in any event, the judge said that ‘this will be a good lesson’.

The judge concluded by finding that costs had been incurred improperly and without reasonable cause or had been wasted by a failure to act with reasonable competence and expedition and decided that he would order Mr Maharaj to pay costs fixed at $1,500 personally pursuant to r 63.23.

Further evidence

We now deal with the appellant’s application that the Court receive as further evidence the affidavit of Mark Waters sworn on 22 March 2010. The application is made pursuant to r 64.22(3) which provides that the Court of Appeal ‘shall have power to receive further evidence on questions of fact … ‘.

In Watson v Hammence[7] the Full Court considered the reception of affidavits under the then O LVIII, r 4 which provided that the ‘Full Court shall have … full discretionary power to receive evidence upon questions of fact’. That rule was in the same terms as the present rule with the immaterial reference to ‘full discretionary power’ which is implicit in the present rule. Lowe J, Martin and Scholl JJ agreeing, observed of the rule that:[8]

… the language is perfectly general; it is not limited, as we think, to further facts relating to the issues between the parties, but embraces and includes matters which throw light upon the conduct of the trial.

Lowe J added that the further facts ‘may show that the manner of the trial tended or appeared to tend to bring about an injustice’. These statements were referred to with approval by a subsequent Full Court in R v Cox.[9]

[7][1957] VR 319.

[8]Ibid 321.

[9][1960] VR 665, 666.

The appellant wishes to rely on Mr Waters’ affidavit as it contains matter, and explains context, that bears on the fairness or injustice of the judge’s refusal to adjourn the hearing on 22 March which refusal led on to the decision that day and the subsequent refusal to set aside the judgment and orders. The judge said that there was no evidence of encroachment yet the respondent stayed silent about the surveyor’s report showing encroachment, which it had in its possession. In that situation the judge decided the case without consideration of the facts stated in the report. Counsel for the appellant said that the judge remained unaware of the report on 25 March; indeed, counsel said that he did not become aware of it until some time subsequent, as to which the respondent’s counsel did not question the appellant’s counsel’s bona fides.

The appellant does not rely on the affidavit as constituting ‘fresh evidence’ in the sense of evidence that has been discovered since the trial and upon the basis of which a new trial is sought. In that type of case consideration may be given to the common law rule governing applications to admit new evidence on appeal namely, that it be reasonably clear that the fresh evidence would have produced an opposite result and that the unsuccessful party had exercised reasonable diligence to procure the evidence at the trial; see Orr v Holmes;[10] Wollongong Corporation v Cowan;[11] Commonwealth Bank of Australia v Quade.[12] That rule is applicable where a new trial is sought merely on the ground of fresh evidence, as was pointed out in Commonwealth Bank of Australia v Quade.[13] In other situations different considerations arise as Dixon CJ made clear in Wollongong Corporation v Cowan[14] where he put aside from the above rule cases:

… where a trial has miscarried through misdirection, misrepresentation of evidence, wrongful rejection of evidence or other error and … cases of surprise, malpractice or fraud.

As the High Court observed in Commonwealth Bank of Australia v Quade:[15]
Such cases cannot properly be seen as mere cases of ‘fresh evidence’.

[10](1948) 76 CLR 632.

[11](1955) 93 CLR 435.

[12](1991) 178 CLR 134.

[13]Ibid 139.

[14](1955) 93 CLR 435, 444, in a judgment in which the other members of the Court agreed.

[15](1991) 178 CLR 134, 140.

In their joint judgment in CDJ v VAJ,[16] which concerned the power of the Family Court, on appeal, under s 93A(2) of the Family Law Act 1975 (Cth) ‘to receive further evidence upon questions of fact’, McHugh, Gummow and Callinan JJ stated that:

… even at common law, the grounds for admitting further evidence of matters occurring before judgment were not inflexible. The common law courts have always reserved to themselves an exceptional power to set aside a verdict on the ground of further evidence where the interests of justice require it. In McCann[17] Dixon CJ, Fullagar, Kitto and Taylor JJ said:
‘The grounds upon which the court proceeds in granting the remedy … have never become completely stereotyped; they have always possessed some flexibility and have been governed by the overriding purpose of reconciling the demands of justice with the policy in the public interest of bringing suits to a final end.’

[16](1998) 197 CLR 172, 200 [105].

[17]McCann v Parsons (1954) 93 CLR 418, 430-431.

Of course the present application is to be determined under r 64.22(3) which, similarly to the above position at common law, enables the Court, in light of the relevant circumstances, to receive ‘further evidence where the interests of justice require it’.

We turn then to Mr Waters’ affidavit. It commenced with a reference to his earlier affidavit of 17 March, to the orders made on 3 December, and then to a chronology of subsequent events in the proceeding. We referred to these matters at paragraphs [18]-[24] and [26] above. In opposing reception of the affidavit the respondent was concerned only with the evidence of encroachment in Mr Monahan’s report. That evidence was not before the judge whose reasoning on 22 and 25 March was in part that there was no evidence of encroachment. The evidence then being available, the respondent submitted that it was not ‘fresh evidence’ and should not be admitted.

In his affidavit in support of the application that the Court receive Mr Waters’ 22 March affidavit, the appellant deposed that the affidavit was served on him shortly before the start of the trial on the morning of 22 March; as mentioned, he was also served with Mr McNab’s affidavit. There was, he deposed, ‘so much happening … that I was unable to appreciate its significance’. He deposed that Mr Waters’ affidavit, together with the other affidavits before the judge, ‘gives a complete picture of the course of correspondence between [the solicitors] leading up to the trial’. In particular there was the 3 December order for a joint survey, the failure of Mr McNab to file a notice of dispute, Mr McNab’s failure to respond on the matter of the survey, the 19 February directions hearing at which Mr McNab did not appear, the service on Mr McNab of the surveyor’s report and related documents, and Mr McNab’s acknowledgement of receipt of the Notice. Mr Waters’ affidavit showed that –

… the manner in which the trial was conducted tended to bring about an injustice, in that it elucidates evidence and submissions by me … before [the judge] and trial that:
(a)I was not aware of the orders made by [the judge] on 3 December 2009;
(b)I was not aware of the respondent’s Notice to Admit or its effect on my defence of the proceeding;
(c)I was not aware that there was a directions hearing on 19 February 2010 at which the matter had been set down for trial on 22 March 2010;
(d)I had a defence to the respondent’s claim arising out of an encroachment of the building on the subject property on to adjoining land.

Finally, he deposed that the surveyor’s report showed that there was evidence available which, with proper advice and guidance, he could have put before the judge in admissible form to show that the encroachment he had attempted to communicate to his Honour gave him a good defence.

Counsel for the appellant submitted that the Court required Mr Waters’ affidavit in order to know what happened on the morning of 22 March. Unbeknown to the appellant the affidavit was not filed. Yet the affidavit disclosed the 3 December order for a survey and the subsequent preparation of a survey report, its service upon the appellant’s solicitors and intended filing with the Court, none of which matters were disclosed to the judge by the respondent’s counsel. Nor was the appellant aware of these matters. In consequence, while the judge was aware there was an issue in relation to the measurements of the land, he was not aware of these specific matters. We interpolate that these matters were not referred to in Mr McNab’s affidavit or the Notice.

Counsel submitted that the appellant was given a lot of documents on the morning at Court, and that as a layman he had not appreciated the significance of what he was given, or of the 3 December orders and the survey report. As to that, we interpolate that this submission addressed the situation in Court on the morning of 22 March; it is apparent from the appellant’s affidavit sworn in the adjournment and produced on the resumption at 2.15 pm that the appellant was then aware of or had had his attention drawn to Mr Waters’ affidavit.

In his submissions, counsel stated that the surveyor’s report was not filed, relying in this respect on the fact that the judge did not refer to it, and that in his judgment he found that there was no encroachment. We interpolate that two things may be said about this submission. First, while we accept that counsel’s understanding was that the report had not been filed, the fact is that the file shows the contrary, namely, as mentioned above, that the report was filed on 25 February 2010. Further as to counsel’s understanding of the Court file, we note that in his evidence Mr Maharaj referred to having attempted ‘to get copies of the file from the court’ but it was ‘in the chambers’ meaning, we would infer, it had been sent to the judge for the purpose of the hearing. Thus, the attempt was unsuccessful. The fact of this unsuccessful attempt is also referred to in the letter from Ravi James to Aldgate Lawyers dated 19 March 2010. We note further that the file does not include a request to search which indicates that a practitioner did not search the file. All this is consistent with counsel’s stated understanding.

Secondly, and to be precise, what the judge said was that there was no evidence of an encroachment, and, on the 25^th, that there was no evidence before him of a survey. It seems clear enough that what the judge meant by ‘evidence’ was evidence tendered at a hearing in the proper way. This also accords with the respondent’s submission which drew a distinction between that which was tendered and that which was not; the former only was ‘evidence’, as the judge referred. Thus understood, the ‘evidence’ did not include the surveyor’s report for it never went into evidence.

As mentioned, counsel for the respondent opposed the reception of the affidavit. On the basis that the question was whether the affidavit was fresh evidence in the sense of the common law rules, he submitted that the application should fail. That was because the appellant could not establish that the evidence was not reasonably available at the trial.

This was to be seen in the following. In paragraph 6 of his affidavit sworn on 22 March the appellant referred to certain paragraphs in Mr Waters’ 22 March affidavit. These references indicated that by 2.15 pm on 22 March the appellant was aware of Mr Waters’ affidavit, and in particular had referred to the paragraph which set out the orders of 3 December which included the orders for a survey and service of a notice to admit. As noted above, the appellant was provided with the Notice and attached documents after the morning adjournment. Further, Mr Monahan’s survey report was exhibited to Mr Waters’ affidavit.

In the circumstances, counsel submitted, Mr Monahan’s survey report constituted evidence of the encroachment that was available on 22 and 25 March. But on neither day did the appellant seek to rely on the survey report.

In the end, the position was that the appellant wanted a time measured in weeks to get himself into a position to consider whether to defend what was a large money claim, he had no witnesses and was unable to properly represent himself. Any prejudice to the respondent lay in interest and costs thrown away, recompense for which should have been sufficient. As to the appellant’s financial position, he had said he needed time to get to the bank, and could raise money for costs, as indeed senior counsel said he had done for the hearing on 25 March. Further, in the absence of cross-examination the judge was not in a position to accept statements of Mr McNab (in particular, as to a judgment and bankruptcy proceeding) where difference was raised by the appellant.

For these reasons, in our view grounds 1 and 2 are made out. All things being equal, that would lead to the setting aside of the orders made on 22 and 25 March, with the effect of putting the appellant in the position of being able to defend the case.

That being the case, strictly speaking it is unnecessary to consider grounds 13 and 14. As mentioned, however, the respondent submits that even if the judge erred in refusing the adjournment, the situation was cured by the opportunity afforded the appellant to seek the setting aside of the judgment on 25 March. We now deal with that contention.

Grounds 13 and 14

Grounds 13 and 14 comprehend two matters. The first is that which we have mentioned above, as to the changed nature of the hearing on 25 March. It is not necessary to repeat what we have said about the point. The point is one of substance, and in view of the fact that the judge should have adjourned the case on 22 March, unfairly prejudiced the appellant. The judge gave no consideration to this aspect. Secondly, the judge’s consideration seemed much affected by the consideration that the appellant’s remedy might lie in suing his former solicitors. In the circumstances of this case, this was of marginal significance.

We do not accept the assertion in each ground that the judge precluded argument on the merits. It is true that the discussion jumped around, but we consider he did not preclude such argument. There is another matter that should be mentioned. Although not raised in grounds 13 and 14, the reference to what was ‘evidence’ on 22 March reflects back, and continued, as it were, the difficulty as to ‘evidence’ which we have discussed, and do not repeat.

For these reasons we would, if necessary, hold that the hearing on 25 March did not cure the erroneous failure to adjourn on 22 March.

There remains, however, the matter of the order that the solicitor personally pay the costs of the application on 25 March, which the appellant seeks to be set aside. In his written outline counsel for the appellant linked the appeal against the costs order to the errors referred to in grounds 13 and 14, and thus sought the setting aside of that order. In our view the costs order ought be set aside but for reasons that do not depend upon the establishment of grounds 13 and 14.

The costs order was made under r 63.23(1) which addresses the situation where a solicitor for a party ‘has caused costs to be incurred improperly or without reasonable cause or to be wasted by a failure to act with reasonable competence and expedition’. Acting upon that rule the judge made the costs order. His discretion in doing so miscarried, in our view. We can shortly state our reasons for that conclusion. In our view, in making the order, the judge did not give proper consideration to the facts which included the following: that senior counsel, who is the eminent author of Voumard – The Sale of Land, had advised the appellant in favour of the application and submitted that the appellant had a good defence; that, as counsel stated, the solicitor’s principal, Mr James, and not Mr Maharaj, had attended in conference the previous day with senior counsel, at which it might reasonably be inferred counsel advised as to there being a defence; that (we consider) Mr Maharaj was reasonably entitled to be present in Court on 25 March when senior counsel made the application for the appellant; further, the circumstance of urgency – and the attendant shortness of time in which to fully consider the matter of a defence in law – was the product of the judge’s refusal to adjourn on 22 March. To say in these circumstances, as if it were a relevant consideration, that the order ‘will be a good lesson’ for Mr Maharaj was unwarranted and misconceived. In short, in considering whether to, and in making, the costs order the judge failed to consider relevant matters and consider the issue in a balanced and just way. For these reasons we would set aside the costs order.

A defence?

The question now is to be considered is whether the appellant has an arguable defence. The respondent contends that however the matter be regarded, the appellant has no arguable defence. To the contrary, however, the appellant, whilst conceding that the allegation of an easement in paragraph 5 of the defence is not tenable, contends that he has an arguable basis of defence, the grounds of which we refer to below.

Both counsel in their submissions referred to matters, and arguments, that were not put to the judge below. Further, the submissions in this Court concentrated upon the defence insofar as it concerned the appellant’s liability to avoid the contract. Doubtless that would also be taken to extend to the claim for repayment of the deposit. It was only in a side wind as it were, and in answer to a question from the Court, that counsel for the appellant said that it was desired to maintain the allegation that the respondent had resold the land at an undervalue, and the other allegations in paragraphs 8 and 9 of the defence. As we have said, however, all concentration was upon the contention that there was a material defect in the respondent’s title which entitled the appellant to rescind. The appellant also relied on the purpose for which he purchased the property as entitling him to rescind when it became impossible to achieve the purpose.

Early in the judgment we referred to the contract, that the appellant paid the deposit but failed to pay the residue, and to the respondent having rescinded the contract by notice dated 31 March 2009; so also, as the defence discloses, did the appellant purport to rescind on 20 March 2009. It was alleged that the appellant rescinded before he accepted title. The other important matter is the appellant’s acknowledgement on 27 August 2008 that he had received satisfactory answers to requisitions on title or was otherwise deemed to have accepted title.

These matters are to be seen in the context of certain terms of the contract, and the proposition of law which comes from cases such as Flight v Booth[23] that a purchaser may have a right to rescind a contract of sale where there has been a substantial defect in title such that it may reasonably be supposed that but for the misdescription of the subject matter of the sale, the purchaser might never have entered into the contract. As to that, it is necessary to identify the subject matter of the contract for it is the discrepancy between that agreed to be sold and that acquired which gives rise to the right to rescind. In that light it is necessary to regard the terms of the contract.
[23](1834) 131 ER 1160.

The contract contained the following special conditions. By special condition 7 it was provided that the appellant:

… admits that the land (on which the property is located) as offered by sale and inspected by him is identical with that described in the title particulars given above. He shall not make any requisition or claim any compensation for any alleged misdescription of the land or deficiency in its area or measurements or call upon the vendor to amend title or to bear all or any part of the cost of doing so. Condition 3 of Table “A” of the Seventh Schedule to the Transfer of Land Act 1958 (as amended) is not to apply to this contract.

To similar effect, special condition 12 contained an acknowledgement by the appellant that he had purchased the land as a result of his own inspection and enquiries, and that the property and improvements on or forming part of the property were sold in the present state and condition in all respects.

Having regard to these conditions and the description of the land sold in the particulars of sale, the respondent submitted that the appellant had contracted to purchase the land ‘as is’ and, further, to the extent that there was any discrepancy between the title dimensions and the built form of the property, there was no misdescription or discrepancy from that contracted for, much less a material difference entitling the appellant to rescind.

Further, the appellant had to overcome the effect of the release dated 27 August 2008 in which he acknowledged having received satisfactory answers to requisitions on title or otherwise was deemed to have accepted title. Hence, it was submitted, whatever rights the appellant might otherwise have had to refuse to complete on the basis of the alleged defects in title, the appellant had waived those rights or elected to proceed under the contract.

As the case developed below the requisitions on title and answers thereto were not referred to, and did not go into evidence. Nevertheless, counsel for the respondent informed this Court that requisitions and answers had preceded the release dated 27 August 2008. Of course, the appellant admitted as much by the terms of the release. Furthermore, it is consistent with condition 1 in Table A, which requires that requisitions on title be delivered within 21 days from the date of sale, that the appellant had delivered requisitions, if at all, within that time, which was long before the date of the release.

In the course of these submissions counsel for the respondent stated that the appellant had delivered requisitions late and had thus lost his right to object. Counsel for the appellant objected to this reference and, it seemed, the submission based on condition 1 of Table A, on the basis that such matters were not in the respondent’s written outline and he was thus taken by surprise. That may be accepted, but that does not detract from the terms and effect of the release which was relied on in counsel’s submission. Moreover, there were two parts to the release which was expressed disjunctively, the first admitting receipt of satisfactory answers to requisitions and the second being an acknowledgment that the appellant had accepted title.

As to the release, the appellant’s counsel stated that when it was given there had not been time to discover that there was a defect in the title. This accorded with the objection to title being made subsequently. The appellant’s counsel submitted that it was a matter for the trial judge to decide whether the release was ‘sufficient to exonerate’ the respondent, bearing in mind that the respondent ‘is a company and the Trade Practices Act applies’. Counsel left the submission at that, without explanation or elaboration. It was the only reference to the Trade Practices Act which, it is to be noted, is not referred to in the indicative amendments referred to below.

The appellant had one further submission which counsel put this way. First, the claim of an easement in paragraph 5 of the defence was erroneous. Secondly, the appellant’s right to rescind did not arise under s 32(5) of the Act as alleged in paragraph 5 but at common law and the appellant’s rescission could be thus upheld. Thirdly, and importantly, was the basis of the appellant’s right to rescind which counsel explained as follows. But perhaps before setting that out it is convenient to refer to a document described as Indicative Amendments to Defence and Counterclaim which counsel provided to the Court.

These indicative amendments would add to the paragraphs 5 and 7 of the defence as follows:

(a) in paragraph 5, add –

(i) Alternatively, there was a material defect to the applicant’s title as at 23 March 2009 and thereafter, the defect being the encroachment on the land having been constructed outside the title boundary. This was shown in Mr Monahan’s report and was material because it prevented the appellant from carrying out a development for which purpose he had purchased the land. Hence, the appellant was not in default and he was entitled to rescind as he did on 20 March 2009 on account of that defect.

(ii) Alternatively, the appellant purchased the land for the purpose of developing it, which purpose he disclosed to the respondent before entering into the contract of sale. Particulars refer to discussions had between the appellant and the respondent’s selling agent and state that a settlement period of 11 months was agreed to enable the appellant time to apply for a permit and be in a position to commence works promptly after settlement. But the above defect in title led the local council to advise that a planning permit would not be issued because part of the building was built outside the title boundary. Accordingly, the appellant was entitled to rescind.

(b) in paragraph 7, add that the respondent was not entitled to rescind as it could not make good title in accordance with the contract.

In his written outline the appellant’s counsel relied on Svanosio v McNamara[24] to submit that a substantial and material encroachment of a building onto neighbouring land, even if small, constituted a latent defect in title which entitled a purchaser, and in this case the appellant, to rescind. We do not accept this submission which, in our view, is precluded by a combination of the above conditions of contract and the acceptance of title before objection. Moreover, and in any event, the encroachment is not of such substantiality as to found an entitlement to rescission. We are not persuaded by the appellant’s argument that s 32(7) of the Act is inapplicable. Further, the contention, which goes to materiality and substantiality, that the defect has prevented development of the land is rested on no more than a response to a query, apparently made at some time after entering into the contract, as distinct from an actual application and unsupported by any more evidence.
[24](1956) 96 CLR 186, 196 and 205.

Counsel then referred to Lowe v Lombank[25] which concerned an agreement for the hire purchase of a motor car which contained a clause in which the hirer acknowledged having examined the goods and that there were no defects which the examination ought to have revealed. In fact the motor car had latent defects and was completely unroadworthy. The Court of Appeal held that the plaintiff was not estopped by her representation as to examination of the car from relying on the implied condition of fitness for purpose. Among other things, the clause did not extend to latent defects. Counsel submitted that the reasoning in this case could properly be applied to the application of special condition 7 in the subject contract, that is, that the admission in special condition 7 did not extend to latent defects not discoverable on examination. Counsel said that there was no authority that supported that construction of special condition 7, or a clause to like effect, in a contract of sale of land. We do not accept counsel’s submission.
[25][1960] 1 All ER 611.

Counsel then submitted that if a property is bought for a purpose and the purpose cannot be realised, the purchaser is entitled to rescind the contract. This contention is raised in the indicative amendments to the defence. As stated, the purpose was no more than that of a redevelopment, which purpose was not covered by a condition in the contract let alone said to be contained in a relevant representation by the respondent or its agent. Thus understood, in our view it gets the appellant nowhere. For, in truth, what this amounts to is that the appellant purchased with a purpose in mind, which must commonly be the case with any purchaser.

Then it was said that the respondent was in default and thus not entitled to rescind because it could not make good title. In support counsel relied on In re Puckett and Smith’s Contract.[26]With respect, that case had a significant feature not seen in the present case. That was that there the vendor’s agent had represented that the land was ‘admirably adapted’ for the purchaser’s known purpose of building. That is not this case.
[26][1902] 2 Ch 258.

For these reasons, in our opinion the appellant has no arguable defence to the respondent’s claim that it validly rescinded the contract on account of the appellant’s breach in failing to pay the residue of the purchase price.

We referred earlier to the appellant’s pleaded case that the respondent had resold the property at an under value, proper steps in relation to the resale not having been taken, and of a breach of the duty of good faith. There was also the contention that in not giving the appellant further time the respondent had failed to mitigate its loss. We can say at once that the latter point has no substance, there being no reason to suppose, and none being suggested, that further time would have proved beneficial. As to the alleged sale being in breach of the duty of good faith and the price being less than ought to have been achieved, at no time either before the judge or in this Court has any material been put forward that might substantiate the allegation; and this in the context that, throughout, the respondent’s contention has been that the defence lacked merit. It is important to remember that because this appeal was concerned with a decision whether to adjourn, and that the refusal was said to constitute a denial of natural justice, and the further hearing on 25 March having been for the purpose of vacating a judgment, it was important then, as it was on the appeal, for the appellant to put in materials that went to the substance of the matter. The substance of the matter was to be comprehended by evidence. Whether or not, as mentioned earlier, the hearing was understood by the appellant and his advisors to be in the nature of an application to vacate a judgment which one would ordinarily have to address on the merits, supported by affidavit establishing ground in that respect, the fact is that at the hearing on 25 March it was incumbent upon the appellant to address the merits; and that was done, but only to the extent exposed in the transcript of the hearing that day. The appellant did not seek to remedy its hand in that respect in this appeal. In the circumstances, we consider it reasonable to proceed on the basis that there is no evidentiary or other foundation for the pleaded allegation that the sale was at an under value in breach of the duty of good faith or that the respondent unreasonably failed to mitigate its loss. Accordingly, we would hold that the appellant has no arguable defence to the respondent’s claim.

The consequence of this is that, as the High Court said in Stead v State Government Insurance Commission:[27]

… an appellate court will not order a new trial if it would inevitably result in the making of the same order as that made by the primary judge at the first trial. An order for a new trial in such a case would be a futility.
For this reason not every departure from the rules of natural justice at a trial will entitle the aggrieved party to a new trial. By way of illustration, if all that happened at a trial was that a party was denied the opportunity of making submissions on a question of law, when, in the opinion of the appellate court, the question of law must clearly be answered unfavourably to the aggrieved party, it would be futile to order a new trial.

[27](1986) 161 CLR 141, 145 (Mason, Wilson, Brennan, Deane and Dawson JJ).

In our opinion, notwithstanding that grounds 1 and 2 were made out, it would be futile to order a retrial in circumstances where the appellant has no arguable defence to the respondent’s claim.

Conclusion

For these reasons we would order that paragraph 2 of the orders made on 25 March 2010 be set aside and that otherwise the appeal be dismissed. As to costs, the preferable course is for the parties to file written submissions which (hopefully) may be dealt with without a further hearing.

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[2011] VSCA 260

6 September 2011