Patel v Sengun Investment Holdings Pty Ltd
[2023] VSCA 263
•31 October 2023
| SUPREME COURT OF VICTORIA COURT OF APPEAL |
| S EAPCI 2022 0084 S EAPCI 2022 0076 |
| TRUPESHKUMAR RAJENDRAKUMAR PATEL | Applicant |
| v | |
| SENGUN INVESTMENT HOLDINGS PTY LTD (ACN 126 385 206) | Respondent |
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| JUDGES: | EMERTON P, WALKER and KAYE JJA |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | Determined on the papers |
| DATE OF JUDGMENT: | 31 October 2023 |
| MEDIUM NEUTRAL CITATION: | [2023] VSCA 263 |
| JUDGMENT APPEALED FROM: | [2022] VCC 1085 (Judge Cosgrave) |
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APPEAL – Costs – Appellant successful on point not argued before trial judge – Respondent entitled to costs of trial – Applicant entitled to costs of the appeal and the cross-appeal.
JUDGMENTS AND ORDERS – Interest – Order in favour of appellant for specific performance of contract – Whether respondent entitled to interest on instalment of purchase price.
Armstrong v Boulton [1990] VR 215; Hussey v Horne-Payne (1878) 8 Ch D 670; Esdaile v Stephenson (1822) 1 Sim & St 122; Commonwealth v SCI Operations Pty Ltd (1988) 192 CLR 285; Harvela Ltd v Royal Trust Company of Canada (CI) Ltd [1986] AC 207.
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| Counsel | ||
| Applicant: | Mr JA Ribbands | |
| Respondent: | Dr O Bigos KC and Mr A Terzic | |
Solicitors | ||
| Applicant: | Koya & Co Ptd Ltd | |
| Respondent: | MS Justice Legal | |
EMERTON P
WALKER JA
KAYE JA:
On 5 October 2023, this Court delivered judgment, by which the applicant was granted leave to appeal, the appeal allowed, and the application by the respondent to cross-appeal was refused.[1] Subsequently, substantive orders were made for specific performance of the contract with which the case was concerned.
[1]Patel v Sengun Investments Holding Pty Ltd [2023] VSCA 238 (‘Reasons’).
The parties have now filed submissions concerning three remaining issues, namely:
(a)the costs of the trial;
(b)the costs of the appeal and cross-appeal;
(c)the payment of interest.
Costs of trial
In respect of the costs of the trial, the respondent submitted that, at first instance, the applicant conducted his case on the basis that the Heads of Agreement constituted a contract of sale of land. The respondent succeeded at first instance. On appeal, the applicant conducted a different case, namely, that the Heads of Agreement constituted a contract akin to a ‘call option’. In those circumstances, this Court’s conclusion, in favour of the applicant, was consistent with the conclusion of the judge, who decided the dispute between the parties, based on significantly different issues that were then argued. Accordingly, it was submitted that the costs order, in favour of the respondent at first instance, should not be disturbed.
In response, the applicant submitted that, at trial, and on appeal, the characterisation of the Heads of Agreement was not a determinative factor. Rather, it was submitted that the central issue, at first instance and on appeal, was whether the Heads of Agreement was itself a binding and enforceable contract. In those circumstances, it was submitted that the applicant, having succeeded in his claim, should be entitled to his costs of the trial.
In our reasons for judgment, we expressed the provisional view that the respondent should be entitled to its costs of the trial. We remain of that view.
Contrary to the submission by the applicant, it is clear that, at trial, the case that was asserted on his behalf was substantially different from the case that was argued before this Court. In his statement of claim, the applicant pleaded that the relevant agreement was one whereby he ‘purchased the land’ from the respondent. It was that contract for which the applicant contended before the trial judge. In written submissions, both in opening and in closing, it was specifically submitted to the judge that an enforceable contract of sale of land had been constituted between the parties. The oral submissions, made on behalf of the applicant, were basically in support of that proposition.
As we noted in our reasons, on the application for leave to appeal, counsel for the applicant accepted that the Heads of Agreement would not have constituted an agreement for the purchase of the property. Instead, he submitted that it constituted a concluded agreement which, in effect, reserved to the applicant an option to purchase the property. In our reasons, we noted that the form of agreement, thus contended for by the applicant, was different from that which the applicant pleaded and sought to establish at trial.[2] We also accepted that the contract embodied in the Heads of Agreement did not, of itself, constitute a binding contract for the sale of land.[3] Importantly, the applicant did not demonstrate any basis upon which the trial judge’s reasons were incorrect. Rather, this Court permitted the applicant to contend for a significantly different legal characterisation of the Heads of Agreement, because it was expedient and appropriate, in the interests of justice, that that question should be argued and decided by the Court.[4]
[2]Reasons, [61]-[63].
[3]Ibid [81]-[83].
[4]Ibid [65].
In those circumstances, it has not been demonstrated that the applicant was entitled to succeed on his claim at trial. Rather, in view of the basis on which the applicant’s claim was made at trial, and the different basis upon which the application for leave to appeal was conducted before this Court, it has not been demonstrated that there was any error in the judge’s reasons in concluding that the claim should be dismissed.
It follows that the applicant should not be entitled to his costs of the trial. Further, the respondent having succeeded at trial on grounds, which were not impugned on appeal, we consider that the order for costs, in favour of the respondent, made by the trial judge, should stand.
Costs of application for leave to appeal and costs of appeal
The respondent has submitted that each party ought to bear its own costs of and incidental to the application for leave to appeal and the appeal. In support of that proposition, the respondent has referred to previous decisions, including that of the Full Court of this Court in Armstrong v Boulton,[5] in support of the proposition that a successful party may be deprived of its costs where it succeeded on appeal on a point not taken by it at first instance.
[5][1990] VR 215.
This Court has a broad discretion in respect of the order for costs of an appeal. The usual order on appeal is that the successful party should be awarded its costs of the appeal. However, there are a number of cases, including Armstrong v Boulton, to which the respondent has referred, in which a successful party has been deprived of costs of an appeal where it succeeded on a point not relied on at first instance.
The decision in Armstrong v Boulton was made in somewhat different circumstances from the present case. In that case, the plaintiff succeeded in an action for damages for personal injury arising out of a motor vehicle collision. The issue, which arose before the Full Court, concerned the exercise of the judge’s discretion to order costs in favour of the plaintiff on a scale in excess of that prescribed by the Rules. On appeal on that issue, the defendant succeeded on the basis of an argument not raised at trial. Accordingly, the court declined to make an order for costs of the appeal in favour of the defendant. In reaching that conclusion, the court noted that the argument, made by the defendant to the trial judge, concerning the applicable costs scale, was ‘misconceived’[6] and that a quite different argument had succeeded on appeal that was not put to the judge. We observe that, in such circumstances, it is understandable that the court concluded that the plaintiff, who succeeded at trial, should not be burdened with an order of costs in favour of the defendant, who had, in effect, been the author of the error made by the primary judge.
[6]Ibid [222].
In Armstrong v Boulton, the Court relied, inter alia, on the decision of the Court of Appeal in Hussey v Horne-Payne,[7] in which the Court of Appeal declined to make an order for costs of a successful appeal. However, in that case, the court did award the party, which succeeded before it, the costs of the proceeding at first instance.
[7](1878) 8 Ch D 670.
In the present case, the applicant has succeeded, on the application for leave to appeal and on the appeal. In the circumstances of this case, we consider it is appropriate that the applicant be entitled to his costs of the application for leave to appeal and the appeal. The underlying issue in the case, both at first instance and on appeal, was whether the Heads of Agreement constituted a binding agreement. While, as we have noted, the argument, presented by the applicant in respect of that issue, was significantly different on appeal, nevertheless, ultimately, the applicant did succeed in establishing that the Heads of Agreement was a binding legal contract. In those circumstances, it is appropriate that he be awarded the costs of the appeal.
Costs of cross-appeal
The question of the costs of the cross-appeal is quite straightforward.
As we have noted, the judge held that, if he had concluded that the Heads of Agreement did constitute a contract for the sale of land, he would have made an order for specific performance in favour of the applicant. The respondent, by its application for leave to cross-appeal, took issue with that conclusion by the judge. Those submissions were not successful. We concluded that the judge was correct to conclude that, if the Heads of Agreement constituted a legally binding contract between the parties, an order for specific performance should be made in respect of it.
In those circumstances, it is appropriate that the respondent pay the costs of its unsuccessful application for leave to cross-appeal.
Interest
It will be recalled that the Heads of Agreement provided for payment of an initial deposit of $50,000 within one day of execution of the Heads of Agreement, and payment of a further $450,000 by 15 October 2021. A further $700,000 was to be paid within 12 months of the ‘day of sale’, and the balance ($2,900,000) was to be paid on settlement, such date to be 25 months from ‘day of sale’.
The respondent has submitted that, as a condition of the order for specific performance, the applicant should be ordered to pay interest on the outstanding instalment of $450,000, which, it is submitted, ‘is well overdue’. In support of that proposition, counsel has referred to a number of authorities, which have held that a party seeking equitable relief may be obliged to do equity by the payment of moneys with interest. In particular, counsel has relied on the decision of Leach VC in Esdaile v Stephenson[8] and the dicta of McHugh and Gummow JJ in Commonwealth v SCI Operations Pty Ltd.[9]
[8](1822) 1 Sim & St 122, 123; 57 ER 49, 50.
[9](1988) 192 CLR 285, 316-17 (SCI Operations ).
In response, counsel for the applicant submitted that the Court should not order payment of interest on the instalment. First, it was submitted, the delay in payment by the applicant to the respondent was due to the respondent’s refusal to complete the contract, constituted by the Heads of Agreement. Secondly, counsel noted that, in any event, the respondent did not, by cross-appeal, contend that the judge should have concluded that, in making an order for specific performance, the applicant should be directed to pay interest on the outstanding instalment.
A consideration of the authorities, relied on by the respondent, reveals that the principle, which is invoked by the respondent, does not apply to the circumstances of the present case.
In SCI Operations, McHugh and Gummow JJ, in considering the question whether the Commonwealth should pay interest in respect of a refund, which it was obliged to make to the respondent pursuant to the Customs Act, noted:
A purchaser who, after the date fixed for completion, seeks specific performance will be treated in equity as having been in possession from the completion date and, in general, will be required to offer the vendor interest on the purchase price from that date.[10]
[10]Ibid [317] (emphasis added).
In support of that proposition, their Honours referred to the speech of Lord Templeman in Harvela Ltd v Royal Trust Company of Canada (CI) Ltd,[11] in which His Lordship stated:
There is a well-recognised principle that, subject to any contractual provision to the contrary the vendor ought to be entitled from the completion date to interest on the purchase money, which in equity belongs to the vendor, and the purchaser ought to be entitled from the completion date to the fruits of the property, which in equity belongs to the purchaser.[12]
[11][1986] 1 AC 207.
[12]Ibid 236 (emphasis added).
In a similar respect, it is apparent that in Esdaile v Stephenson, to which McHugh and Gummow JJ referred in SCI Operations, the purchaser, who succeeded in an application for specific performance of a contract of sale, had been already in possession of the premises before the date fixed for final payment of the contract price.
It is thus apparent from the foregoing authorities that, in general, in an action for specific performance, interest may be payable by a successful purchaser from the date of completion fixed by the contract, subject to an accounting for any ‘fruits’ of the property to which it should have been entitled from that date.
In the present case, the contract of sale was dated 14 September 2021. The settlement date was 25 months from ‘the day of sale’. Accordingly, it follows, that the date for final payment either has not been reached, or is some date relatively contemporaneous with the present date. In those circumstances, the principle, to which we have just referred, does not apply to require the successful applicant to pay any interest to the respondent.
It follows that the submission, by the respondent, that the order for specific performance should be subject to a payment of interest by the applicant, to the respondent, should be rejected.
Summary of conclusions
For the foregoing reasons, we have reached the following conclusions:
(1)The respondent is entitled to the costs of the trial.
(2)The applicant is entitled to the costs of the appeal and the cross-appeal.
(3)The respondent is not entitled to an order for the payment of interest on the instalment of $450,000 payable pursuant to the terms of the Heads of Agreement.
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