Powercell Pty Ltd v Cuzeno Pty Ltd - [2003] NSWSC 600

No judgment structure available for this case.

CITATION: Powercell v Cuzeno [2003] NSWSC 600

HEARING DATE(S): 2/6/03 - 6/6/03

JUDGMENT DATE:
22 July 2003

JURISDICTION:
Equity

JUDGMENT OF: Campbell J

DECISION: Issue estoppel arises from previous decision as to terms of contract, and matters going to validity of contract - no issue estoppel, in circumstances of unusual basis for earlier decision, concerning whether section 54A Conveyancing Act prevents recovery of damages for breach of contract - contract unenforceable because not complying with section 54A Conveyancing Act

CATCHWORDS: ESTOPPEL - former adjudication and matters of record or quasi record - when issue estoppel arises - respective roles of trial judge and appellate court's findings in creating issue estoppels - relevance of remarks of High Court Justices on application for special leave to issue estoppel - role of error in earlier judgment to whether issue estoppel arises - whether "special circumstances" exception to issue estoppel - CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - Statute of Frauds, section 4 - what is a "contract for the sale or other disposition of land or any interest in land" - possibility of an estoppel against application of the Statute - whether part-performance can entitle plaintiff to recover damages if contract breaches Statute - DAMAGES - measure and remoteness of damages in actions for breach of contract - circumstances in which costs of appealing are recoverable damages - CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - illegal and void contracts - application of section 23C(1)(a) Conveyancing Act to contract for disposal of interest in land

LEGISLATION CITED: Conveyancing Act 1919
Conveyancing (Amendment) Act 1930
District Court Act 1973
Law of Property Act 1925 (Eng)
Supreme Court Act 1970

CASES CITED: Action Strength Limited v International Glass Engineering IN. GL. EN. SpA [2003] UKHL 17
Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685
Angell v Duke (1875) LR 10 QB 174
Arnold v National Westminster Bank Plc [1989] 1 Ch 63
Arnold v National Westminster Bank Plc [1991] 2 AC 93
Baloglow v Konstantinidis [2001] NSWCA 451
Birmingham v Renfrew (1937) 57 CLR 666
Blair v Curran (1939) 62 CLR 464
Boston v Boston [1904] 1 KB 124
Brown v Robertson (1890) 16 VLR 786
Cachia v Isaacs (1985) 3 NSWLR 366
Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121
Cocking v Ward (1845) 1 CB 858
Commissioner of Australian Federal Police v Propend Finance Pty Limited (1997) 188 CLR 501
Cooke v Rickman [1911] 2 KB 1125
Cromwell v County of Sac (1876) 94 US 351
Cuzeno Pty Ltd v Powercell Pty Ltd [1999] NSWCA 344
Dalgety & Co Ltd v Gray (1919) 26 CLR 249
Daulia Ltd v Four Millbank Nominees Ltd [1978] Ch 231
Frost v Knight (1872) LR 7 Ex 111
Giumelli v Giumelli (1999) 196 CLR 101
Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145
Henderson v Henderson (1843) 3 Hare 100; 67 ER 313
Hoffman v Cali (1985) 1 QdR 253
Horsey v Graham (1862) LR 5 CP 9
Horton v Jones (1935) 53 CLR 475
Howlett v Tarte (1861) 10 CBNS 813; 142 ER 673
Hoysted v Federal Commissioner of Taxation (1921) 29 CLR 537
Hoysted v Federal Commissioner of Taxation [1926] AC 155
Humphries v Humphries [1910] 2 KB 531
Johnson v Perez (1988) 166 CLR 351
Jones v Baker [2002] NSWSC 89; (2002) 10 BPR 19,115
Kelly v Webster (1852) 12 CB 283
Lees v Fleming [1980] QdR 162
Linsley v Petrie [1998] 1 VLR 427
Mainline Investments Pty Ltd v Davlon Pty Ltd [1969] 2 NSWR 392
Malec v J C Hutton Pty Ltd (1990) 169 CLR 638
Mraz v The Queen (No.2) (1956) 96 CLR 62
O'Rourke v Hoeven [1974] 1 NSWLR 622
O'Toole v Charles David Pty Ltd (1991) 171 CLR 232
Pollnow v Armstrong [2000] NSWCA 245
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Queensland v The Commonwealth (1977) 139 CLR 585
R v Inhabitants of the Township of Hartington Middle Quarter (1855) 4 El & Bl 780; 119 ER 288
R v Storey (1978) 140 CLR 364
Radford v de Froberville [1977] 1 WLR 1262
Redken Laboratories (Aust) Pty Ltd v Docker (No.2) [2000] NSWCA 235
Riches v Hogben [1986] 1 QdR 315
Rogers v R (1994) 181 CLR 251
Selkirk v Romar Investments Limited [1963] 1 WLR 1415
Somodaj v Australian Iron and Steel Ltd (1963) 109 CLR 285
Thoday v Thoday [1964] P 181
Tiufino v Warland [2000] NSWCA 110; (2000) 50 NSWLR 104
Vogan & Co v Oulton (1898) 79 LT 384
Waddington v Silver Chain Nursing Association (1998) 20 WAR 269
Waterford v The Commonwealth (1987) 163 CLR 54
Wright v Madden [1992] 1 QdR 343
Wroth v Tyler [1974] Ch 30
Yates Property Corporation Pty Ltd v Boland [2000] FCA 1106; (2000) 179 ALR 664

PARTIES :
Powercell Pty Limited - Plaintiff
Cuzeno Pty Limited - Defendant

FILE NUMBER(S): SC 3592/97

COUNSEL: J M Ireland QC; C Dimitriadis - Plaintiff
T G R Parker; R E Steele - Defendant

SOLICITORS: Willis & Bowring - Plaintiff
Michie Shehadie & Co - Defendant

POWERCELL PTY LIMITED v CUZENO PTY LIMITED

3592/97

INDEX

Paragraph No .

The Initial Joint Venture Arrangements................................................................................................1

Powercell Pre-Sells Nine Home Units....................................................................................................5

Source of the Present Dispute...............................................................................................................11

The Purchasers’ Litigation.....................................................................................................................13

The Proceedings Now Before the Court..............................................................................................15

The Issues in 3592 of 1997.....................................................................................................................18

The Grasso Litigation – Trial Judge’s Decision..................................................................................21

Part Performance of Oral Contract as a Basis for Awarding Damages............................................29

The Grasso Litigation on Appeal..........................................................................................................32

Issue Estoppel – The Principles............................................................................................................40

From Which Decision Might Estoppels Emerge – Trial Judge,

Court of Appeal, or High Court.........................................................................................................43

The Legal Foundation of a Decision....................................................................................................46

Issue Estoppel and Errors in Judgments.............................................................................................59

Alleged Estoppel 1 – Terms of Agreement.........................................................................................62

Alleged Estoppel 2 – Absence of Necessary Parties to Contract...................................................64

Alleged Estoppel 3 – Voidness for Uncertainty.................................................................................66

Alleged Estoppel 4 – Take Over all Nine Contracts, or Only Four..................................................70

Alleged Estoppel 5 – Condition Precedent Not Complied With......................................................71

Alleged Estopels 6 & 7 – Causation of Damages and Mitigation of Loss.....................................72

Alleged Estoppel 8 – Lack of Writing..................................................................................................73

“Special Circumstances” Exception to Issue Estoppel......................................................................77

Section 23C(1)(a) Conveyancing Act 1919..........................................................................................83

Findings on Facts – Terms of Contract Between Cuzeno and Powercell.......................................91

Application of Section 54A..................................................................................................................108

Powercell’s Estoppel Claim..................................................................................................................130

Findings on Facts – Events Relevant to Breach and Causation of Damage................................139

Proceedings by Purchasers Other than Grasso................................................................................155

Agreed Facts Concerning Quantum..................................................................................................156

Conclusion Concerning Breach and Causation...............................................................................157

Contract to Indemnify?........................................................................................................................160

The Appeals Concerning Scattergood and Cannazarro.................................................................164

Principles Concerning Remoteness of Damage and Costs of Appealing....................................165

The Scattergood Appeal.....................................................................................................................172

The Cannazarro Appeal......................................................................................................................182

Orders....................................................................................................................................................189

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
EQUITY LIST

CAMPBELL J

22 JULY 2003

3592/97 POWERCELL PTY LTD v CUZENO PTY LTD

JUDGMENT

HIS HONOUR:

The Initial Joint Venture Arrangements

1 Powercell Pty Ltd (“Powercell”) is a company of which Mr Stephen Ward was, at all relevant times, Managing Director. Cuzeno Pty Ltd (“Cuzeno”) is a company which at all relevant times was controlled by Mr George Jabbour. At the beginning of 1996 Cuzeno owned two houses located at 2 and 4 Cairo Street, Rockdale. Cuzeno had a plan to redevelop the site of those two houses as a block of home units containing 18 units.

2 Mr Chris Savelle was a real estate agent whose business included the identification of sites which were capable of redevelopment and the sale of those sites to developers. He told Mr Ward that Mr Jabbour had a development site at Rockdale. In February 1996 Mr Jabbour put to Mr Ward a proposal that they enter a joint venture, on the basis that Mr Ward would organise the finance and carry out the construction, Mr Jabbour would make the land available as collateral, and the units would be divided between them equally, so that each of them received nine. Mr Ward set about obtaining an offer of finance from his bank.

3 On 29 March 1996 Mr Jabbour and Mr Ward caused two documents to be executed. The first was a contract for the sale of land, whereby Cuzeno agreed to sell to Powercell an undivided half share in 2 and 4 Cairo Street, Rockdale. There was no deposit payable, and the price was stated as being $300,000.

4 The second document was a building contract between S J Ward Pty Ltd (another company controlled by Mr Ward, and one which held a builders licence) and Cuzeno, whereby S J Ward Pty Ltd agreed to construct the 18 home units. That contract had two pages of special conditions, which were executed under seal by Powercell. Those special conditions made provision for the following matters.

· Cuzeno warranted that it had obtained development approval and building approval

· completion of the contract for sale of land was not to take place until the building contract had been completed

· Cuzeno would allow the land to be mortgaged for the purpose of raising finance for construction of the works, and Powercell would be responsible for making arrangements for financing of the works

· on completion of the land contract the 18 units would be partitioned between Cuzeno and Powercell, so that each obtained nine units, and so that the nine units retained by Cuzeno would be as near as possible of equal value to the nine units retained by Powercell

· Powercell was to ensure that, when that partitioning took place, the nine units which were transferred to Cuzeno were free of any charge, encumbrance or mortgage or any other debt

· any mortgage which Cuzeno entered would be one which did not contain any personal covenants, and where Cuzeno’s liability was limited to what was obtained by realising the nine units which Powercell would receive upon partition

· Cuzeno would accept the nine units transferred to it under the deed of partition in complete settlement of Powercell’s obligations under both the building contract, and the contract for the sale of land.

Powercell Pre-Sells Nine Home Units

5 Mr Norm Sarrif is a real estate agent who worked, in some way not gone into in the evidence, with Mr Savelle. Mr Sarrif told Mr Ward that he had nine buyers for the units which Mr Ward’s company would obtain from the joint venture, if Mr Ward wanted to pre-sell those units. Mr Savelle, purporting to act on behalf of Cuzeno, reached agreement with Mr Ward about which nine units to be constructed would be retained by Cuzeno, and which nine would pass to Powercell. Mr Jabbour must have come to know what Mr Savelle did in this respect, and never denied Mr Savelle’s authority to do so.

6 Over the period 18 April 1996 to 15 May 1996 Powercell exchanged contracts with nine different purchasers, to sell the nine units which it would acquire on completion of the building, and division of the units between Powercell and Cuzeno. The contracts were as follows:

Purchaser Date of contract Price Deposit paid

Grasso
18 April 1996

170,000

8,500

Scattergood & Morgan
1 May 1996

170,000

5,000

Cannazarro, Giacca, Grasso and Grasso
18 April 1996

170,000

8,500

Ayoub
1 May 1996

165,000

5,000

Yassmin
2 May 1996

165,000

5,000

C & C Huon Holdings Pty Ltd
1 May 1996

170,000

8,500

Markovski
29 April 1996

165,000

5,000

Karavelas
1 May 1996

170,000

8,500

Azar
15 May 1996

160,000

5,000

7 Each of the contracts was in the form published by the Law Society of New South Wales and the Real Estate Institute of New South Wales. Each made provision for the deposit which was paid to be released to the vendor. Each contained a limited guarantee, in the following form:

“The Guarantors Steve Ward and Julianne Ward of 15 Phillips Road Kogarah, in consideration of the purchasers entering into this agreement, hereby jointly and severely guarantee the due and punctual performance by the vendor of its obligations to refund the deposit paid by the purchaser to the vendor in any circumstances where the purchaser is entitled to have the deposit refunded to it.”

8 Each of the contracts except those entered with Markovski and Azar contained a special condition number 1 which said:

“The building in which the said Unit is situated is in course of construction … and this contract and completion hereof is subject to and conditional upon the due approval by the Council of the Shire of Rockdale and of the registration by the Registrar General of the Strata Plan provided that if the Strata Plan is not registered on or before the expiration of twelve (12) months from the date hereof, then either party may by notice in writing to the other rescind this Contract whereupon all monies paid by the Purchaser hereunder shall be refunded to the Purchaser and thereafter neither party shall have any action claim or demand against the other arising out of this Contract or its rescission. In any event the Vendor shall not be otherwise liable for any delay in such lodgement or registration.

9 In the Markovski contract, this special condition was modified so that it was only the purchaser who had a right of rescission if the strata plan was not registered within 12 months from the date of contract. In the Azar contract, the clause was modified so that it was only the purchaser who had a right of rescission, and that right of rescission would arise if the strata plan was not registered on or before the expiration of six months from the date of the contract.

10 The total sale price for the nine units was $1,505,000. Mr Ward had made arrangements to borrow $1.3 million dollars from his bank, which included $80,000 for interest which would accrue while the project was constructed. Mr Ward calculated that these contracts would enable him to perform his obligation to pass title of nine units to Cuzeno, once the building was completed, free of any mortgage or other encumbrance.

Source of the Present Dispute

11 Various difficulties arose concerning the project – it turned out that development approval had not been obtained, and there was some delay in obtaining a rezoning of the site which was a necessary precondition for the development approval. Also, some difficulties arose from Mr Ward’s bank submitting security documentation which called on Cuzeno to undertake more extensive obligations concerning the financing of the project than Cuzeno and Powercell had agreed, and than Powercell and its bank had agreed would be the terms of the loan. On 3 July 1996 Mr Jabbour told Mr Ward that he did not want to go ahead with the joint venture.

12 It is common ground between Powercell and Cuzeno that over the period 17 to 19 July 1996 an agreement was arrived at between them which terminated the previous joint venture, and provided for the block of units on the Cairo Street site to be constructed by Mr Ward’s company S J Ward Pty Ltd on the basis that it would be paid a sum of money for carrying out the construction work, rather than that it would cause Powercell to receive home units in specie. The dispute between Powercell and Cuzeno concerns the terms of what was agreed, the legal effect of what was agreed, and what it is now open for Cuzeno to allege, either by way of factual submission or legal argument, concerning that agreement.

The Purchasers’ Litigation

13 One outcome of the agreement entered in July 1996 is that Powercell was unable to carry out any of the contracts it had entered to sell units in the building. In due course, Powercell was sued by six of those purchasers for breach of its contract to sell a unit. Five of those purchasers have recovered a judgment and order for costs against Powercell. The claim of the sixth purchaser is not yet determined. In each of the six actions brought by the purchasers, Powercell filed a cross-claim, seeking indemnity from Cuzeno in relation to any liability which Powercell was found to have to the purchaser. In the action brought by Grasso, that cross-claim went to trial in the District Court, and resulted in Powercell being entitled to be indemnified by Cuzeno for Powercell’s liability to Grasso. Cuzeno appealed against that decision to the Court of Appeal, unsuccessfully. Cuzeno then sought special leave to appeal to the High Court of Australia against that decision of the Court of Appeal, and again was unsuccessful.

14 In the other four actions by purchasers which have gone to trial, the claim by the purchaser against Powercell for breach of contract was separately determined to the cross-claim brought by Powercell against Cuzeno.

The Proceedings Now Before the Court

15 There are now listed before me six separate proceedings. The first of them, number 3592 of 1997, is one brought by Powercell against Cuzeno. In it, Powercell alleges an agreement in the following terms:

“On or about 19 July 1996, the Plaintiff and the Defendant agreed that, in consideration of the joint venture agreement being terminated, and of the Plaintiff entering into a contract with the Defendant to construct the home unit development (“the building contract”), the Defendant would take over the Plaintiffs’ obligations under the contracts between the Plaintiff and the purchasers, and would indemnify the Plaintiff in respect of any liability which the Plaintiff might have to the purchasers under the Plaintiff’s contracts (“the July agreement”).”

16 The plaintiff alleges that in breach of that agreement Cuzeno has failed to take over Powercell’s obligations under the contracts between the plaintiff and its purchasers, and has refused to indemnify Powercell in respect of its liability to purchasers under those contracts. Powercell seeks damages in relation to:

(a) the damages which have been awarded to each of the purchasers who has so far recovered a judgment against Powercell,

(b) the costs which have been awarded to each of the purchasers who have so far recovered a judgment against Powercell,

(c) Powercell’s own legal costs of running the claim brought by each of those purchasers against Powercell,

(d) certain costs incurred by Powercell in connection with appeals brought against some of those judgments.

17 The other five proceedings which are listed are each proceedings which have been removed into the Supreme Court from either the District Court or the Local Court. In each case, they are the cross-claim which Powercell brought against Cuzeno in an action brought by a purchaser against Powercell, alleging breach of contract. Powercell accepts that the outcome of each of those cross-claims will be determined by the outcome in 3592 of 1997.

The Issues in 3592 of 1997

18 Not all of the issues which arose on the pleadings in 3592 of 1997, were ultimately pressed. However, it is convenient to state the issues as they arise on the pleadings.

(1) Cuzeno denies that the agreement made on 19 July 1996 was in the terms which I have set out in paragraph 15 above,

(2) Cuzeno says that the purchasers were necessary parties to any contract such as that which was alleged, and hence any such contract was of no legal effect,

(3) The contract is void for uncertainty,

(4) The agreement made was one to take over Powercell’s obligations under four only of the contracts Powercell had made with the purchasers, not all nine contracts,

(5) Cuzeno agreed to take over Powercell’s obligations under the contracts only on condition that there were and would be no circumstances which would cause difficulty in obtaining specific performance of those contracts, yet there were circumstances which would have caused difficulty in obtaining specific performance,

(6) Causation of damage is denied,

(7) Powercell has failed to mitigate its loss,

Conveyancing Act 1919

“(1) No action or proceedings may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action or proceedings is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person thereunto lawfully authorised by the party to be charged”

Conveyancing Act 1919

“(1) subject to the provisions of this Act with respect to the creation of interests in land by parol -

(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person’s agent thereunto lawfully authorised in writing, or by will, or by operation of law”

19 In reply, Powercell says that the judgment in proceedings 2325 of 1997 in the District Court of New South Wales (ie, the judgment in the cross-claim which was brought in the Grasso proceedings) has resulted in there being an issue estoppel. The reply has some unclarity of expression about just what it is that this issue estoppel exists in relation to, but the way the case was fought treated the reply as alleging that all the arguments listed in paragraph 18 above, down to and including the point based upon section 54A Conveyancing Act 1919, were precluded by the issue estoppel. The reply also contended that the point based upon section 23C(1)(a) was one not open to Cuzeno, because it had not been pleaded in the District Court proceedings and, under the principle in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 it could not be raised now.

20 Cuzeno filed a rejoinder. It alleged that there was insufficient identity of issues between the Grasso proceedings, and 3592 of 1997, for an issue estoppel to arise. Alternatively, it alleged that it would be unjust in the circumstances of the case to hold the defendant to an issue estoppel. The rejoinder also denies the applicability of the Anshun principle to the facts of this case, and says that (alternatively) there are special circumstances which would prevent it from applying.

The Grasso Litigation – Trial Judge’s Decision

21 Mr Grasso took proceedings number 2325 of 1997 in the District Court of New South Wales at Sydney against Powercell, and Mr and Mrs Ward. Powercell filed a cross-claim against Cuzeno and Mr Jabbour in those proceedings. That cross-claim was, by consent, heard separately. On 20 February 1998 his Honour Judge Puckeridge entered judgment in favour of Mr Grasso in the sum of $33,600 plus costs. Mr Grasso’s costs of that action were compromised at $18,000.

22 His Honour Judge Williams decided the cross-claim on 27 July 1998, awarding Powercell $73,059. That sum was made up of the $33,600 damages which Powercell had been held liable to pay Mr Grasso, Mr Grasso’s costs of $18,000, and Powercell’s own costs of that matter of $21,459.

23 The Amended Cross-Claim in the Grasso litigation pleaded the agreement on which Powercell, the cross-claimant, sued as follows:

“On or about 19 July 1996, the Cross-Claimant and the First Cross-Defendant agreed that, in consideration of the Joint Venture Agreement being terminated, and of the Cross-Claimant entering into a contract with the First Cross-Defendant to construct the home unit development (called “the Building Contract”), the First Cross-Defendant would take over the Cross-Claimant obligations under the Contract between the Cross-Claimant and the Plaintiff and would indemnify the Cross-Claimant in respect of any liability which the Cross-Claimant might have to the Plaintiff under that Building Contract (“the July Agreement”).”

24 After particularising that agreement as being an oral one, the Amended Cross-Claim alleged that “the First Cross-Defendant partly performed the Joint Venture July Agreement with the Cross-Claimant” and that “the Cross-Claimant partly performed the July Agreement.” The breach alleged was failure by Cuzeno to take over Powercell’s obligations under the contract which Powercell had entered with Mr Grasso.

25 The Notice of Grounds of Defence to that Amended Cross Claim included a denial of the agreement alleged, and an alternative allegation that any such agreement was not in writing and signed by Cuzeno, or some person thereunto lawfully authorised and consequently, by section 54A of the Conveyancing Act 1919, was not enforceable against Cuzeno.

26 His Honour Judge Williams records, (at page 4 of his judgment) the way that Powercell had put its case to him:

“That agreement is alleged to be composed of three parts. Firstly, an agreement to rescind the Joint Venture. Secondly, an agreement to enter into a contract to build the units between Cuzeno and Powercell, with Powercell being simply the builder. Thirdly Cuzeno agreeing to take over as vendor the nine contracts that Powercell had exchanged in regard to the units that were going to be its property under the rescinded agreement. Powercell alleges that between the 18th & 19th July 1996 this new agreement was entered into.”

27 After considering the evidence, his Honour concluded, at page 9:

“I am also satisfied on the balance of probabilities that there was an agreement between Mr Jabbour and Mr Ward for Mr Jabbour to take over the nine contracts that Powercell had entered into and which by the 19th July 1996 it could no longer complete.”

“for Mr Jabbour to take over the nine contracts”

“for Mr Jabbour’s company Cuzeno to take over the nine contracts”

“I find on the balance of probabilities that when it became apparent in July 1996 that, for one reason or another the parties were unable to agree on the financial situation, that in consideration for revoking the contract for the sale of the Cairo Street property on 29th March 1996, and the loan documentation from the bank of both 28th March 1996 and 18th July 1996 and in effect terminating the joint venture, Powercell would build the building for an agreed price which was the price set out in the agreement signed on 19 July 1996, and that Cuzeno would take over as vendor on any contract entered into by Powercell in regard to the nine units it had purported to sell where the purchaser insisted on the contract being performed.”

28 His Honour Judge Williams expressed “considerable doubt that the agreement that I have found existed is an agreement for the sale or other disposition of land and or any interest in land” and hence took the view that Cuzeno’s defence based on section 54A Conveyancing Act 1919 failed. His Honour held that, even if he were wrong in taking that view, there had been part performance of the agreement. He went on, on that basis, to make an award of damages for breach of contract.

Part Performance of Oral Contract as a Basis for Awarding Damages

29 In one respect the trial before his Honour Judge Williams was conducted, by counsel on both sides, on a fundamentally mistaken basis. Part performance is a doctrine invented by the Chancery Court, and provides a basis upon which a court of Equity will provide equitable relief concerning a contract, when that contract is unenforceable by reason of non-compliance with the Statute of Frauds. The equitable relief most commonly provided when acts of part performance of a contract are established is specific performance of that contract. It may be that part performance can also provide a basis for other equitable remedies, such as an injunction to enforce a provision of the contract (Meagher, Gummow & Lehane, Equity Doctrines and Remedies, 4th edition, paragraph 20-220), or some other equitable remedy (Jones v Baker [2002] NSWSC 89; (2002) 10 BPR 19,115). However, an action for damages for breach of contract is a common law action, to which part performance is irrelevant.

30 These principles are authoritatively adopted in New South Wales. In O’Rourke v Hoeven [1974] 1 NSWLR 622 at 626 Glass JA (with whom Reynolds and Hutley JJA agreed) said:

J C Williamson Ltd v Lukey and Mulholland

Supreme Court Act

Britain v Rossiter

31 Before 1858 the Court of Chancery might have had a limited jurisdiction to award damages in lieu of, or in addition to, specific performance (Meagher, Gummow and Lehane, Equity Doctrines and Remedies, 4th edition, paragraph 23-025). In 1858 Lord Cairns’ Act conferred on the Court of Chancery jurisdiction to award damages either in addition to, or in substitution for, the grant of an injunction for specific performance; that provision now has its equivalent in New South Wales in section 68 Supreme Court Act 1970 (NSW). However there was no equivalent of that section in the District Court Act in 1998 (or now). The Supreme Court’s powers under section 68 Supreme Court Act are conferred on the District Court through section 137 District Court Act, but are exercisable only in relation to actions for an injunction or specific performance where jurisdiction is conferred on the District Court by some other section of the District Court Act. No provision of the District Court Act enabled it to grant specific performance of a contract like that which Williams DCJ held existed between Powercell and Cuzeno. Thus, the award of damages for breach of contract because there were sufficient acts of part performance was an error.

The Grasso Litigation on Appeal

32 Cuzeno appealed against his Honour Judge Williams’ decision to the Court of Appeal. The appeal failed: Cuzeno Pty Ltd v Powercell Pty Ltd [1999] NSWCA 344.

33 Cuzeno’s first argument in the Court of Appeal attacked the trial judge’s factual findings, including his findings about the terms of the contract between Powercell and Cuzeno. That argument was rejected.

34 The remaining submissions on the appeal assumed that the trial judge’s factual findings were correct, but made arguments about their legal consequences. One such argument was that the agreement between Cuzeno and Powercell was one which sought to effect a novation of the underlying contracts, and hence was ineffective without the participation of the purchaser. That argument was rejected. Priestley JA (with whom Stein JA and Davies AJA agreed) said, at [23]-[24]:

“I do not think this argument is correct. I do not think there is any rule of contract law which prevented Cuzeno from agreeing with Powercell to take over Powercell's contract with Mr Grasso. Such an agreement would bind Cuzeno to take over, that is become the vendor in, the contract with Mr Grasso, and to take all necessary steps to bring that about. If Cuzeno should prove to be unable to achieve the result it had agreed with Powercell, that would mean it would be in breach of its contract with Powercell. In other words, by such an agreement, Cuzeno was assuming the risk that Mr Grasso might not agree to contract with it on the same terms as those in the contract with Powercell and leaving itself open to the consequences if he did not.

There is a further reason in the facts of the present case which makes the submission even less arguable. The facts show that Mr Grasso's solicitors were pressing Cuzeno to enter into the contract with Mr Grasso on the same terms as those in the Powercell contract. Cuzeno chose not to enter into such a contract. It could have done so. Thus, in fact, it was possible for the arrangement made between Powercell and Cuzeno to be carried out in full. Powercell and Cuzeno had agreed to do something which it was lawful for them to agree upon and which could have been done had Cuzeno not chosen itself not to carry out its contracted arrangement.”

35 Another argument on the appeal was that the trial judge had erred in holding that section 54A of the Conveyancing Act 1919 did not apply, and in holding that, even if section 54A applied, there were sufficient acts of part performance to enable Powercell’s claim to succeed. Priestley JA dealt with this argument at [26]-[29]:

“It seems to me likely that s54A was applicable to the arrangement found by the trial judge and I will assume in Cuzeno's favour, without deciding, that that was so. That brings me to the submission that the judge was wrong in holding there had been part performance.

O'Rourke v Hoeven

District Court Act

O'Rourke v Hoeven

Suttor v Gundowda Pty Ltd

Coulton v Holcombe

36 Priestley JA went on to hold that, when the question of whether there had been acts of part performance had been left to the trial judge in these circumstances, he had correctly come to the conclusion that the facts showed that there were sufficient acts of part performance.

37 Another argument advanced on the appeal concerned whether Cuzeno’s breach of contract had caused the damage which the trial judge had quantified against Cuzeno. Priestley JA rejected an argument that Cuzeno was not responsible for the damage suffered by Powercell at the suit of Mr Grasso, and rejected an argument that Powercell had failed to mitigate its damage. Priestley JA said, at [36]:

“It was said that it was likely, as at August 1996, that in due course a clause in the contract between Powercell and Mr Grasso which entitled either party to rescind if the building development was not complete by April 1997, should have been availed of by Powercell. This submission overlooks the fact that the action taken by Powercell in writing to purchasers in terms of the letter of 1 August 1996 was a way suggested by Mr Jabbour to Mr Ward of carrying out their new agreement. In such circumstances, the duty to mitigate suggested on behalf of Cuzeno simply did not arise.”

38 The final submission in the appeal, concerning the enforceability of the contract, arose from the guarantee, in the contract between Powercell and Mr Grasso, in the form I have set out in paragraph 7 above. Concerning that clause, Priestley JA said at [37]-[38]:

“It was submitted that the agreement by Cuzeno to take over Powercell's contract with Mr Grasso made no provision for what should happen about this clause. The result was said to be that the new agreement between Powercell and Cuzeno was incomplete and unenforceable.

I do not think this conclusion follows from the fact that the parties did not refer to special condition 20 in making their new agreement. No attention appears to have been given to this point in the evidence before the trial judge. On the evidence as it was left, it seems to me that the parties envisaged that their agreement would be carried out by the substitution of Cuzeno as the vendor for Powercell in Powercell's contract with Mr Grasso and that, in the absence of any agreement about an alteration to special condition 20 the guarantee of Mr and Mrs Ward would have remained in the new agreement which Cuzeno was undertaking to make with Mr Grasso. I do not think this point avails Cuzeno in the appeal.”

39 An application to the High Court of Australia for special leave to appeal against that decision of the Court of Appeal was argued on 13 October 2000, resulting in special leave being refused. The following exchange occurred in the course of that application.

MR PARKER: May I say one further thing on the overall significance of this to the parties and that is this. There are five other actions between these parties and the outcome of this litigation and the outcome of these points may be determinative therefore, not just ---

KIRBY J: You say “may”. I notice that submission. I am not at all certain that that is a ---

McHUGH J: No, neither am I.

MR PARKER: I can only point to the fact that my friends have put a point by way of res judicata on that.

KIRBY J: That will take its course in the other proceedings.

MR PARKER: Yes

KIRBY J: We cannot solve everything. We cannot even solve all the applications for special leave. We certainly cannot solve your future litigation.

MR PARKER: Your Honours, I think that ---

KIRBY J: I did understand the basis on which you put that up. You put it up as a reason why this case was elevated out of its own particular economic facts.

MR PARKER: It is not just a single case. Yes, your Honour.

KIRBY J: I am not at all convinced that it is.”

Issue Estoppel – The Principles

40 In R v Storey (1978) 140 CLR 364 at 378-379 Gibbs J said:

Hoysted v Federal Commissioner of Taxation

Carl Zeiss Stiftung v Rayner & Keeler Ltd [No 2

Blair v Curran

"A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies."

Fidelitas Shipping Co Ltd v V/O Exportchleb

Carl Zeiss Stiftung v Rayner & Keeler Ltd [No 2]

" ... once an issue has been raised and distinctly determined between the parties, then, as a general rule, neither party can be allowed to fight that issue all over again ... "

Queensland Trustees Ltd v Commissioner of Stamp Duties (Q)

Blair v Curran

Jackson v Goldsmith

Carl Zeiss Stiftung v Rayner & Keeler Ltd [No 2]

41 The classic statement of the nature and content of the doctrine of issue estoppel is that of Dixon J in Blair v Curran (1939) 62 CLR 464, at pp 531-533, as follows:

"A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies. The estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion, whether that conclusion is that a money sum be recovered or that the doing of an act be commanded or be restrained or that rights be declared. The distinction between res judicata and issue estoppel is that in the first the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order.

R v Inhabitants of the Township of Hartington Middle Quarter

Hoysted v Commissioner of Taxation

42 Some understanding of the meaning of the word “cardinal” in the second paragraph just quoted from Dixon J might be derived from the judgment of Starke J in the same case:

Blair v Curran

From Which Decision Might Estoppels Emerge – Trial Judge, Court of Appeal, or High Court

43 Spencer Bower, Turner and Handley, Res Judicata, 3rd edition, paragraph [60] says:

ab initio

Railways Commissioner (NSW) v Cavanough

D M Gordon “Effect of Reversal of Judgment

”

res judicata

Wishart v Fraser

R v Marks

44 Even though the appellate decision is the source of any estoppels, this does not necessarily mean that the content of any estoppels is derived solely from the appellate judgment. In the present case, where the Court of Appeal’s decision concerning the fact finding of the trial judge was to effect that no reason had been shown to doubt it, it is to the judgment of the trial judge that one must look for the content of the findings on factual issues litigated between the parties, which might give rise to an estoppel. If it were to happen that, in the course of an appellate court giving its own account of the facts of a case, there was any difference between that account and the findings of the trial judge, it would be the account of the appellate court which should be looked to, on any matter where there is any such difference, for the content of any estoppels concerning factual issues. In carrying through the exercise of identifying the content of any issue estoppels, whether on factual matters, legal matters, or mixed questions of fact and law, one question to be asked is, “what are the findings which the course of the litigation, considered as a whole, has resulted in”. There is then a further question of whether each of those findings is of a type which gives rise to an issue estoppel.

45 Cuzeno submits that the exchange between Mr Parker and McHugh and Kirby JJ on the application for special leave to appeal shows that their Honours were of the view that the outcome of the Grasso litigation would not be determinative of whether Cuzeno was liable to indemnify Powercell for its losses concerning other purchasers, and that that view is a matter which I should take into account in determining what issue estoppels arise from the Grasso litigation. I leave to one side whether the exchange between Mr Parker and McHugh and Kirby JJ should be read in the way for which Cuzeno contends. As a matter of principle, that exchange in the High Court does not enter into any consideration of what, if any, issue estoppels arise from the course of the Grasso litigation. The only issue which the High Court was deciding, on that occasion, was whether a case for granting special leave to appeal had been made out. Their Honours made no decision on the facts or law of the issues litigated in the Grasso litigation.

The Legal Foundation of a Decision

46 Some assistance can be provided from the case law in understanding the statement of Dixon J in Blair v Curran that a judicial determination concludes “those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion”. All cases of issue estoppel are ones where two decisions of courts are involved – I will adopt the convention of referring to the decision from which the estoppel is said to arise as “the earlier decision”, and the decision in which it is contended that estoppel should operate as “the later decision”.

47 R v Inhabitants of the Township of Hartington Middle Quarter (1855) 4 El & Bl 780; 119 ER 288 was a case where, in the earlier decision, Justices had ordered the removal of two children to Hartington Middle Quarter, on the basis that they were the “lawful children” of two named people, and that the father of the children was settled in that township. In the later decision, the question at issue was whether that township was the place of settlement of the mother of the children (who by this time had become a lunatic). Coleridge J held that the earlier decision necessarily decided the place of settlement of the father, and the marriage of the father with the mother. There was, therefore, an estoppel concerning those two facts. There being no evidence of any subsequently acquired settlement on the part of the mother, the earlier decision necessitated the conclusion that the place of settlement of the mother was in that township.

48 Hoysted v Federal Commissioner of Taxation [1926] AC 155 concerned the application of federal land tax to land in a deceased estate. The relevant legislation allowed a deduction to each of several “joint owners” of land. In the earlier decision, a question had been stated to the Full Court of the High Court of Australia which assumed that certain beneficiaries of a deceased estate were joint owners; when the answer to that stated case was known, a single judge of the High Court, without further argument, entered judgment, allowing six such deductions. In the next tax year, the Commissioner of Taxation sought to argue that the beneficiaries of the estate were not joint owners, and hence were not entitled to multiple deductions. Higgins J in the High Court (Hoysted v Federal Commissioner of Taxation (1921) 29 CLR 537), and the Privy Council on appeal from the High Court, held that the Commissioner was bound by an estoppel as to whether the beneficiaries were joint owners, because the actual result in the earlier decision could not have been arrived at if the beneficiaries were not joint owners.

49 In Mraz v The Queen(No.2) (1956) 96 CLR 62 involved facts described as follows in the headnote (at 62):

“M was indicted on a charge of murder of a woman, the Crown case being that the death of the woman had been caused during or immediately after the commission of an act of rape upon her by M. At the trial it was not disputed that there had been sexual intercourse between M and the woman and that at the time, or shortly afterwards, the woman had died, but the real issue contested was whether or not such intercourse had taken place against the woman’s will. The jury found M not guilty of murder but guilty of manslaughter. The conviction for manslaughter was quashed on appeal by the High Court. M was subsequently indicted for rape on the same facts, and to such indictment, in addition to pleading not guilty, he entered a special plea of issue estoppel in reliance on the verdict in the earlier proceedings.”

50 The High Court (Dixon CJ, Williams, Webb, Fullagar and Taylor JJ) upheld that plea of issue estoppel. Their reasoning was, in effect, that the crime of murder with which he had been charged had three elements – (1) that he committed rape, (2) that during or immediately after the commission of the crime (3) an act of his caused the death of the young woman. A finding of not guilty of murder could result if any one of these three elements was missing. However, when the jury’s verdict of not guilty of murder was coupled with a finding of guilty of manslaughter, that involved a finding that the third element was proved. Thus, the finding of not guilty of murder must have been based upon the absence of one or other of the first two elements. An examination of the course of the trial showed that it was not disputed that an act of intercourse took place and that at the time or shortly afterwards the woman died. It followed that the verdict at the first trial could only have been based upon a finding that the accused had not committed rape. While the application of issue estoppel in criminal law, since Mraz, became, first, debatable (R v Storey (1978) 140 CLR 364) then impermissible (Rogers v R (1994) 181 CLR 251) Mraz remains a useful illustration of Sir Owen Dixon’s views about the reasoning process involved in applying the law of issue estoppel.

51 In Cachia v Isaacs (1985) 3 NSWLR 366 a solicitor (Glass) had been ordered by a Consumer Claims tribunal, in the earlier decision, to pay a dissatisfied client (Cachia) $1,500, made up of $1,425 as refund of costs which the client had been ordered to pay to the opposite party in some unsuccessful litigation, and a return of $75 which the client had paid to the solicitor on account of fees. Hope JA (with whom Kirby P agreed) said, at 380:

“The order by the Tribunal that this amount be repaid to Cachia necessarily involves a conclusion that Glass was not entitled to any costs. One finding essential to reach this conclusion was that Glass had been negligent in respect of the services. However, this finding alone would not have justified the Tribunal reaching the conclusion that Glass was not entitled to any costs, and hence had to refund the $75, it would have had to conclude also that Cachia had received no benefit. Had he received a benefit, it would have been necessary for the Tribunal to identify what part of the costs included in Glass’ bill produced some benefit to Cachia, and to decide accordingly what part of the bill should be regarded as recoverable costs. If this sum amounted to $75 or more, then Cachia would not have been entitled to a refund of any part of this amount. If the sum amounted to something less than $75, Cachia could recover the difference between that sum and $75. It is only if he obtained no benefit at all from the services provided by Glass that he would be entitled to recover the whole of the $75. In other words, whether or not it was explicitly raised as an issue before the Tribunal, a necessary basis of the order of the Tribunal that Glass return the whole of the $75 was, in the circumstances, that by reason of Glass’ negligence, Cachia had received no benefit of any kind from the services the subject of Glass’ bill of costs.”

52 Thus, it was established that there was an issue estoppel that Cachia had received no benefit from Glass’ work, which meant that Glass’ claim against Cachia for unpaid fees, in the later action, failed. At 381 Hope JA said:

“It should be noted that the present case is not one where the defendant failed to raise some special defence; it is a case where a fact essential to the plaintiff’s case was assumed.”

53 In Humphries v Humphries [1910] 2 KB 531 the earlier decision had been one in a case where the plaintiff had contended there was a concluded agreement for lease of a property for 14 years; the defendant denied there was a lease, and refrained from entering into possession of the property. The plaintiff sued the defendant for rent said to have accrued during a particular period. The court in the earlier decision held that there was the agreement the plaintiff contended, and gave judgment for the rent then accrued. The plaintiff then brought the later action, suing for the second instalment of rent. In answer to that action, the defendant pleaded lack of writing of the lease to satisfy the Statute of Frauds. That issue had not been raised for adjudication at the trial of the first action. The English Court of Appeal held that there was an estoppel arising from the earlier decision, which prevented that issue being raised. The Court, at 534-535, accepted as correct the following statement by Williams J in Howlett v Tarte (1861) 10 CBNS 813 at 826; 142 ER 673.

“If the defendant (to a second action) attempted to put on record a plea which was inconsistent with any traversable allegation in the former declaration (ie in the first action) there would be an estoppel.”

54 Farwell LJ, at 535 referred to the fact that the first action was for the first instalment of rent, while the second action was for the second instalment of rent, relating to the same premises, under the same lease. He continued:

“Each action, therefore, raised two issues of fact, (1) the existence of the specified agreement for a lease, and (2) the amount due for rent thereunder on the specified dates. The allegation of the existence of the agreement raises the issue which the plaintiff has to prove, namely, the existence of that specific agreement as an agreement binding and valid at law, ie, complying amongst other things with the requirements of the Statute of Frauds.

This is the issue that was raised by the plaintiff and was traversable by the defendant, and such an issue is not the less traversable because the defendant fails to traverse, either wholly or in part, whether such failure arises from neglect to comply with the rules of Court requiring notice of reliance on the statute to be given or from omission properly to argue a point – eg that the documents tendered in evidence omitted a material provision required by the statute.

Leaf v Tuton

Howlett v Tarte

55 In Cooke v Rickman [1911] 2 KB 1125 a divisional court considered another situation where the earlier decision gave judgment to a landlord for one instalment of rent, and in the second action the tenant was sued for a second instalment of rent for the same premises under the same agreement. The tenant sought to raise a point not previously raised. The point on that occasion was that there was no consideration for the agreement sued on. The court held that the earlier decision created an issue estoppel which prevented that point from being raised. Bray J said, at 1128-1129:

Humphries v Humphries

Howlett v Tarte

Humphries v Humphries

56 Bankes J came to the same conclusion, saying, at 1130:

Humphries v Humphries,

57 It will be seen from these cases that an issue estoppel can arise even in relation to a point which was not actually decided in the earlier decision. When Dixon J, in Blair v Curran (1939) 62 CLR at 532 said:

“… the judicial determination concludes, not merely as to the point actually decided, but as to a matter which it was necessary to decide and which was actually decided as the groundwork on the decision itself, though not then directly the point in issue. Matters cardinal to the latter claim or contention cannot be raised if to raise them is necessarily to assert that the former decision was erroneous”,

“necessarily … assert that the former decision was erroneous,”

58 It will also be seen from these cases that a proper way of ascertaining what is “the legal foundation or justification” for a court’s decision upholding the claim of a plaintiff in the earlier proceeding, is to identify those elements which must be proved, as a matter of law, before a claim of that type succeeds. If a court has decided that the claim succeeds, then it can be inferred that it decided that each of those elements is present.

Issue Estoppel and Errors in Judgments

59 The law concerning issue estoppel makes the judgment that, as between the one set of parties (or their privies) a matter which is fundamental to a lawsuit ought be litigated to finality only once, and that both private benefit and public benefit flows from a rule which prevents those parties (or their privies) from contending that the court in later proceedings should come to any different conclusion concerning such a matter: Thoday v Thoday [1964] P 181 at 198; Rogers v R (1994) 181 CLR 251 at 274; Arnold v National Westminster Bank plc [1991] 2 AC 93 at 104; Queensland v The Commonwealth (1977) 139 CLR 585 at 614-615. It is an inevitable part of human imperfection that sometimes the litigation of such a question will come to a conclusion which is mistaken. Sometimes, that mistake can be cured on appeal. However, if it is not cured, or cannot be cured, the policy of the law is that, even so, an issue estoppel arises to prevent the question being litigated again. Somewhat analogously, the law of legal professional privilege makes a judgment that it is in the public interest that unrestrained confidential communication take place between lawyers and clients, even though the price is that litigation is sometimes decided on the basis of less than complete evidence (and hence perhaps decided wrongly): Waterford v The Commonwealth (1987) 163 CLR 54 at 64-65; Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121 at 128, 133-135; Commissioner of Australian Federal Police v Propend Finance Pty Limited (1997) 188 CLR 501 at 511, 563.

60 Hoysted is a case where the later decision perpetuated a mistake which had been made in the entry of judgment in the earlier decision. The issue estoppel in Mraz was held to arise even though the verdict of the jury is the first action, of not guilty of murder but guilty of manslaughter, arose from a misdirection of the trial judge. These are not isolated examples. It should be realised that every single case in which there is an argument about issue estoppel is one where the party opposing the existence of the estoppel is of the view that, given another chance, it might achieve a different result on an issue, in later litigation, to that which it achieved in an earlier decision. Every time a plea of issue estoppel is upheld, that decision automatically brings with it a consequence that the party who loses that argument will be bound by a decision which it wishes to contend is wrong. That a decision which is mistaken might continue to govern the rights of the parties is an inevitable part of the working out of the doctrine of issue estoppel. Pointing out that an earlier decision is in some way wrong – as the first instance decision on the Grasso cross-claim was wrong in assuming that part-performance provided a justification for giving damages for a breach of a contract that contravened section 54A – is in itself no reason for denying that issue estoppels arise from that decision.

61 However, the reasoning I have earlier examined about what is the legal foundation of a decision, proceeds on an assumption that the earlier decision was made by a court correctly identifying and applying the elements of the cause of action being asserted, or defence propounded. Once that assumption is shown to be wrong, closer examination of what the court making the earlier decision has actually decided is called for.

Alleged Estoppel 1 – Terms of Agreement

62 I shall now deal with the application of the principles of issue estoppel to the various contentions which Cuzeno raises. In so doing, I will adopt the numbering of those contentions set out in paragraph 18 of this judgment.

63 In the Grasso case, the issue which the litigation decided, concerning the existence and terms of the contract, was not the issue thrown up by the pleadings in the cross-claim in the Grasso litigation. The agreement alleged in the cross-claim (set out at paragraph 23 above) is one whereby Cuzeno agreed to take over Powercell’s obligations under the particular contract which Powercell had entered with Grasso, and to indemnify Powercell in respect of any liability which Powercell might have to Grasso under (surprisingly) the contract whereby Powercell agreed to construct the home unit development. That is simply not the case which was litigated. The case which was litigated is that which his Honour Judge Williams recorded in his reasons for judgment, which concerned there being an agreement for Cuzeno to take over as vendor the nine contracts that Powercell had exchanged. That contract was found to exist by the trial judge, and the Court of Appeal. While it is true that the Grasso litigation involved an allegation of only one breach of that contract, the existence of that contract was still a matter which was fundamental to the decision which resulted in Cuzeno being liable to indemnify Powercell in relation to the Grasso contract. In my view, there is an issue estoppel as to a contract having been entered in those terms.

Alleged Estoppel 2 – Absence of Necessary Parties to Contract

64 Cuzeno’s argument that the purchasers were necessary parties to any contract such as that which was alleged, and hence that any such contract was of no legal effect is an attack on the validity of the contract. The validity of the contract which was sued on in Grasso is, it seems to me, a matter which is fundamental to the decision which was arrived at on the Grasso cross-claim. There is an issue estoppel preventing this attack upon the validity of the contract.

65 In the Court of Appeal, Priestley JA dealt explicitly with the argument that the contract was defective because Mr Grasso was not a party to it (see paragraph 34 above). That aspect of the decision of the Court of Appeal is not an express decision that the contract is valid even though the other purchasers, beside Grasso, were not parties to it. Even if I were wrong in concluding that there is an issue estoppel concerning this argument of Cuzeno’s, I would regard that portion of the decision of Priestley JA as a precedent which I could not distinguish, and would apply it to reach the conclusion that the absence of each of the purchasers from the contract Powercell sues on did not result in its invalidity.

Alleged Estoppel 3 – Voidness for Uncertainty

66 Cuzeno points to two separate bases upon which it submits the contract between Powercell and Cuzeno is void for uncertainty. The first is that it was unclear what was to become of the terms in the contracts whereby Mr and Mrs Ward gave a guarantee (see paragraph 7 above). The second is that it was unclear what date should be inserted in the special condition of the contracts which enabled termination if the strata plan was not registered by a particular date (see paragraphs 8 and 9 above).

67 I regard each of these arguments as being unavailable to Cuzeno by reason of issue estoppel. These arguments also are an attack on the validity of the contract which was found to exist in the previous litigation on the Grasso cross-claim.

68 Even if that view were not correct, Priestley JA has dealt expressly with why it is that the absence of any express consideration, by Mr Ward and Mr Jabbour of what was to happen concerning the guarantee in the Grasso contract did not result in the contract which Powercell sues on being unenforceable (see paragraph 38 above). If I were wrong in thinking that there were an issue estoppel which now prevents Cuzeno from alleging that the contract on which Powercell sues is void for uncertainty, I would apply that reasoning in relation to each of the other purchasers, to reach the conclusion that the absence of agreement about what was to happen concerning the guarantees in the contracts of those other purchasers did not result in the contract which Powercell sues on being unenforceable.

69 If I were wrong about there being an issue estoppel concerning whether invalidity arose by reason of alleged uncertainty concerning what was to happen about the special condition permitting the vendor to terminate if the strata plan was not registered, I would conclude that the agreement which has been found to exist (and which, independently of estoppel, I later find to exist – see paragraph 105 below) is one whereby Cuzeno would take over the existing contracts. That means take them over as they stand, including with a contractual right of recision if the strata plan was not registered within 12 months (or six months in the case of Azar) from the date on which Powercell originally entered into the contract with each respective purchaser. In reaching that conclusion I would be fortified by the words of Priestley JA set out at paragraph 34 above, that:

“By such an agreement, Cuzeno was assuming the risk that Mr Grasso might not agree to contract with it on the same terms as those in the contract with Powercell and leaving itself open to the consequences if he did not.”

Alleged Estoppel 4 – Take Over all Nine Contracts, or Only Four

70 The terms of the contracts sued on, at least insofar as it was found that any one of them was breached, is a matter fundamental to the decision in the Grasso litigation. Thus, there is, it seems to me, an issue estoppel that Cuzeno agreed to take over all nine contracts which Powercell had entered. While there is an issue estoppel concerning that matter, it is consistent with the existence of such an estoppel that, after the contract was entered, it was varied so as to provide that Cuzeno was obliged to take over only four of the contracts. The allegation which Cuzeno wishes to make is that the Grasso contract was one of the four contracts which it agreed to take over. There is no issue estoppel which prevents Cuzeno from alleging that there has been such a variation.

Alleged Estoppel 5 – Condition Precedent Not Complied With

71 The allegation which Cuzeno wishes to make, that the contract was conditional on there being no circumstances which would cause difficulty in obtaining specific performance on those contracts, yet there were circumstances which would have caused difficulty in obtaining specific performance, does not involve an attack on the validity of the contract. However, if the contention were true, then a condition precedent to the enforceability of the contract which was sued on in the Grasso cross-claim, would not have applied. That is a consideration which might give rise to an estoppel under the principle in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. Whether it also gives rise to an issue estoppel will depend upon whether the onus of proving satisfaction of any conditions precedent to the operation of a contract lies upon a plaintiff who sues on that contract. Rather than deal with those legal questions (which were, in any event, not specifically argued before me) I have decided (paragraph 97 and 98 below) that in fact the contract was not subject to the condition which Cuzeno alleges.

Alleged Estoppels 6 & 7 – Causation of Damages and Mitigation of Loss

72 Insofar as the Grasso litigation made findings concerning causation of damage, and whether Powercell had mitigated its loss, those findings were related only to the damage which arose from the particular breach of contract whereby Cuzeno failed to take over the Grasso contract. No issue estoppel arises from those findings.

Alleged Estoppel 8 – Lack of Writing

73 To decide whether any issue estoppel arises concerning the applicability of section 54A Conveyancing Act 1919, it is necessary to look to what was actually decided concerning that issue. As there was some difference in approach between the trial judge and the Court of Appeal on that issue, it is to the decision of the Court of Appeal that one must look. That decision was one which expressly declined to decide whether the contract found by the trial judge was one to which section 54A applied. It decided that there were sufficient acts of part performance, and, in circumstances where the parties left it to the trial judge to decide whether there were sufficient acts of part performance to enable damages to be recovered, no error could be found in his conclusion that there were sufficient acts of part performance. An issue estoppel arises to the effect that there are sufficient acts of part performance – but that is of no practical use to Powercell in litigation like the present which claims damages for breach of contract.

74 It should not be concluded that an issue estoppel arises to the effect that damages can be recovered for a breach of the contract which Williams DCJ found to exist.

75 I accept that the question of whether the lack of writing in the contract sued on precluded recoverability of damages is one of the questions which was litigated, and on that question Cuzeno lost. Cuzeno’s Notice of Grounds of Defence to the Amended Cross-Claim in the Grasso litigation, expressly the effect of non-compliance with section 54A - it included the allegation:

Conveyancing Act

146 At first, Mr Tosolini’s strategy seemed as though it was going to work in relation to some purchasers. On 16 August 1996 the solicitors for Yassmin wrote to Mr Tosolini saying that their client had no objection to her contract being rescinded. On 19 August 1996 cheques in favour of “C Huon” and “W Karavelas”, each in the sum of $8,500 were drawn on Powercell’s account. On 19 August 1996 a letter from C & C Huon to Powercell said, “We accept the rescission on the condition that our deposit of $8,500 is refunded in full”. The evidence does not disclose whether the cheques in favour of “C Huon” and Mr Karavelas were ever presented. Nor does it disclose the exact circumstances in which the letter from C & C Huon dated 19 August 1996 was written – though it is at least a possibility, on the evidence, that it is a letter solicited by Mr Sarrif.

147 On 30 August 1996 solicitors acting for C & C Huon wrote to Mr Tosolini, referring to his letter of 1 August 1996, and confirming that their clients were agreeable to the contract being rescinded. The letter requested “a letter confirming mutual rescission of the contract”. The evidence does not disclose whether any such letter of confirmation was sent.

148 In relation to at least some purchasers, including both Mr Markovski and Mr Scattergood, Mr Tosolini wrote a letter on 19 September 1996 enclosing a cheque for the amount of the deposit which that purchaser had paid, and saying:

“We confirm that the acceptance of this cheque by your client will be deemed to be an acceptance of the rescission of the contract by your client and that neither party shall have any further rights either at law or in equity against the other.”

149 In relation to at least some of the purchasers (including both Mr Markovski and Mr Scattergood) the cheque was returned, with an intimation that the client considered the contract still on foot.

150 On 9 October 1996 the solicitors for Cuzeno wrote to Mr Tosolini saying:

“We refer to various correspondence we have received in these matters and confirm that as we understand it, the contract between Cuzeno Pty Ltd and Powercell Pty Ltd will be rescinded and the various contracts entered into by Powercell with certain prospective buyers of units will also be rescinded and our client will make a decision as to whether or not he wishes to enter into contracts with those purchasers.

Could you please confirm whether that is the case.”

151 Mr Ward’s affidavit evidence is that, after a few months of Mr Savelle telling him that he would arrange for the exchange of new contracts with the four purchasers for whom he had been given executed back pages, Mr Savelle said to him, “George will not exchange those contracts and he has told me to butt out of it.” Thereupon, Mr Ward rang Mr Jabbour, who told him, “I’m not exchanging on any of those units.”

152 Mr Ward’s diary for 5 November 1996 contains the entries:

“George said he will not exchange on 4 units as agreed. RENEGED ON DEAL

Rang Tosolini told him that George will not exchange on 4 as agreed and to write to buyers.”

153 I infer that it was on 5 November 1996 that the conversation just mentioned in Mr Ward’s affidavit occurred.

154 I record that counsel for Cuzeno relied on this diary entry to support a submission that any contract entered on 19 July 1996 related to four contracts only. In my view, this diary entry relates only to the conveyancing expedient which had been agreed on, of handing over executed back pages of contracts, and not to the full contract which had been arrived at on the morning of 19 July.

Proceedings by Purchasers Other Than Grasso

155 The purchasers other than Grasso who commenced proceedings against Powercell, and obtained verdicts for breach of contract, plus costs, are as follows:

Purchaser	Court	File No	Judgment date	Verdict
Scattergood & Morgan	District	3829 of 1998	23 June 1999	$45,000
Cannazarro, Giacca, Grasso and Grasso	Local	3640 of 1998	13 Sept 1999	$40,000
Ayoub	Local	8595 of 1998	14 April 2000	$40,000
Yassmin	Local	6981 of 1998	17 Aug 2000	$40,000

Agreed Facts Concerning Quantum

156 While there is vigorous disagreement about whether Powercell is entitled to recover any, and if so which, of the amounts it has paid in consequence of the litigation brought against it by the various purchasers, the lawyers acting in this case have acted as responsible litigation lawyers should, and reached agreement on the amounts which Powercell has paid, or is liable to pay, in connection with the various claims brought against it by the purchasers. That agreement appears as a schedule to this judgment. Insofar as there is an item, relating to any purchaser, for “Powercell’s costs incurred” those costs are ones which relate to the claim brought by the purchaser against Powercell, not to the cross-claim which Powercell has brought against Cuzeno in the same proceedings. Insofar as Powercell has incurred costs in those proceedings, for cross-claiming against Cuzeno, those costs are omitted from the Schedule because those cross-claims are part of the present litigation. Who pays them will depend upon the order for costs which I make at the conclusion of these proceedings.

Conclusion Concerning Breach and Causation

157 The only communication between Mr Ward and Mr Jabbour which indicated unpreparedness on Cuzeno’s part to go ahead with the agreement is the conversation which occurred on 5 November 1996, referred to in paragraphs 151 and 152 above. At no time did Mr Ward ask Mr Jabbour to carry out the contract concerning any purchaser other than the four which had been discussed on 19 July 1996. Even so, following the conversation of 5 November 1996 it was quite clear that Cuzeno was not going to perform the agreement in any way whatsoever. Cuzeno has breached its contract by not entering into agreements with all nine purchasers.

158 Cuzeno submitted that the initial preparedness of C & C Huon to accept a recision of the contract (see paragraphs 146 and 147 above) shows that the damages paid to it were not a consequence of Cuzeno’s breach of contract. The evidence simply did not explore why it was that C & C Huon came to change its mind about being willing to accept recision of its contract. On the evidence as a whole it is more likely than not that any damages, paid legal costs, and own legal costs connected with C & C Huon are caused by Cuzeno’s breach of contract.

159 It was only concerning C & C Huon that there was any serious submission put that damages were not caused by the breach. I conclude that the damages which Powercell has paid to all of the purchasers who have recovered a judgment against Powercell, the costs which Powercell has paid to those purchasers, and the legal costs which Powercell has incurred in defending the actions brought by those purchasers are a consequence of that breach. So far as the Grasso litigation goes, all of Powercell’s rights against Cuzeno have now merged, in a true res judicata, in the judgment which the Court of Appeal gave on that cross-claim. No additional damages are recoverable in these proceedings concerning the Grasso contract.

Contract to Indemnify?

160 Powercell asserts that the contract between Powercell and Cuzeno included a provision that Cuzeno would indemnify Powercell in respect of any liability which Powercell might have to purchasers. Such a term was not found by Williams DCJ. The correct legal analysis is that there is an issue estoppel against Powercell, arising from Williams DCJ’s finding of the terms of the contract, and that his Honour’s finding does not contain any term obliging Cuzeno to indemnify Powercell. Even if that view were wrong, I do not find, on the evidence before me, that there was any such term in the contract. The consequence is that, independently of the s 54A point, Powercell is not entitled to a declaration that it is entitled to be indemnified against any liability which it might suffer at the hands of C & C Huon, or at the hands of those purchasers who have not yet sued.

161 The plaintiff’s claim for damages is one in relation to all nine contracts. Thus, in relation to those purchasers who have not yet obtained a judgment, damages need to be assessed by evaluating the likelihood that damages will be suffered in the future (cf Malec v J C Hutton Pty Ltd (1990) 169 CLR 638).

162 Concerning the three purchasers who have not yet commenced proceedings, Powercell had breached its contracts to convey well prior to the end of June in 1997. Thus, each of those purchasers is now out of time for bringing an action for breach of contract. I would assess the prospects of those purchasers recovering damages at zero.

163 The claim by C & C Huon has not yet been heard. Powercell bears the onus of proving the likely quantum of damages which might be recoverable. The best guide to the damages, other side’s costs, and own costs likely to be involved is the damages, other side’s costs and own costs sustained in the actions by other purchasers. If C & C Huon were to be successful in establishing liability, I would, at this stage, assess the likely verdict as being $40,000, the likely amount of prejudgment interest at $18,000, the amount of plaintiff’s costs at $20,000, and the amount of Powercell’s costs incurred at $30,000. I would reduce each of the amounts for judgment, prejudgment interest, and plaintiff’s costs awarded by 50%, to allow for the contingency that Powercell might escape liability altogether by reason of the matters discussed in paragraphs 146 and 147 of this judgment. That results in an amount of damages, attributable to C & C Huon, totalling $69,000.

The Appeals Concerning Scattergood and Cannazarro

164 The only matters concerning mitigation of damage which Cuzeno pressed related to the costs which Powercell incurred, both for its own costs and for the costs of the opposite party, when Powercell unsuccessfully appealed against judgments which had been given in favour of the purchasers Scattergood and Cannazarro. I now turn to consider those appeals.

Principles Concerning Remoteness of Damage and Costs of Appealing

165 Cuzeno relies on principles set out in McGregor on Damages, 15th edition. At paragraphs 709-711 the learned author deals with three situations where a plaintiff can recover, as damages, costs incurred in prior litigation. Those three situations are:

· where the now plaintiff has unsuccessfully but reasonably defended an action against him, he generally recovers the taxed costs he has had to pay to the successful party and his own costs of defending the action taxed as between solicitor and client

· where the now plaintiff has unsuccessfully but reasonably brought a claim, he is entitled to the taxed costs paid by him to the other party and his own costs taxed as between solicitor and client

· where the now plaintiff has unsuccessfully defended a prosecution, he is sometimes entitled to his costs of defence.

Vogan v Oulton

G W Ry v Fisher

Vogan v Oulton

“it would be going a long way when a man has had a decision against him on a matter which is largely a question of fact, if not altogether a question of fact, to allow those to be recovered.”

Sutton v Baillie

166 Vogan & Co v Oulton (1898) 79 LT 384 was a case brought by a firm which had taken goods on hire from the defendant. The goods were defective, resulting in a person being injured. That person sued the firm which had been using the goods, and recovered damages. An appeal from the decision granting those damages was unsuccessful. The full text of Wright J’s judgment on this topic (at 385) is:

“Then there are the costs of the appeal from the County Court. I feel a difficulty about that. I do not know of any case in which the costs of the appeal have been allowed to be recovered, and it seems to me that it would be going a long way when a man has had a decision against him on a matter which is largely a question of fact, if not altogether a question of fact, to allow those to be recovered. I do not think that the appeal can be considered the natural consequence of what had taken place. I rather think that they went out of their way in appealing, and I don’t think that they ought to recover the costs of the appeal.”

167 This fuller statement of the remarks on judgment shows, by its reliance on what was a “natural consequence”, and on the plaintiffs having ‘gone out of their way in appealing’ that Wright J was not purporting to do anything other than apply the ordinary rule for remoteness of damages in contract. In Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145 Alderson B stated the rule (at 355; 151):

“Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, that is according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed as to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.”

168 What counts as “the usual course of things” can change with time. In Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685, at 693, Kirby, Hope and McHugh JJA considered the test requiring “special” or “exceptional” circumstances before a stay would be granted pending appeal. They said:

Barker v Lavery

Monk v Bantram

169 In my view today, it could not be said that if A, through breach of contract, puts B in a situation where B might be sued, it is out of the usual course of things that B might appeal if he or she were to lose in that litigation.

170 Thus, it is not possible to say that the costs of an appeal are necessarily too remote to be claimable as damages. However, in some circumstances the taking of an appeal might involve B in failing to act reasonably to mitigate his or her damage. That is to say, it is by reference to the circumstances of the individual case, not by reference to a rule about costs of appeals always being unrecoverable, that the recoverability of damages consisting in the costs of an appeal is to be judged. In Redken Laboratories (Aust) Pty Ltd v Docker (No.2) [2000] NSWCA 235 Sheller JA quoted the passage from McGregor which I have set out earlier, and said, at [13]:

Redken’s

Redken

171 This decision of his Honour’s, looking as it does to the reasonableness of the taking of the particular appeal in question, is in accordance with the principle I have just outlined.

The Scattergood Appeal

172 After judgment had been given against Powercell in the claim brought by Scattergood, Scattergood sought leave to appeal against that judgment from the Court of Appeal. The judgment in the District Court had been given by his Honour Judge Phegan. His Honour held that the letter of 1 August 1996 (set out in 142 above) was a clear repudiation. A letter from Powercell’s solicitors dated 19 September 1996 had enclosed a cheque for the deposit, but Scattergood’s solicitor had returned that cheque, and said that they regarded the contract as still on foot.

173 On 6 November 1996 Powercell’s solicitors wrote again to Scattergood’s solicitors, saying that Powercell was unable to complete the contract because it would never have title to the land. A cheque refunding the deposit was once again enclosed. On 8 November, Scattergood’s solicitor replied, purporting to return the deposit, and reiterating that the contract was valid and binding.

174 On 27 November 1996 a further letter from Powercell’s solicitor to Scattergood’s solicitor mentioned that the deposit cheque had not been actually returned, but continued “in any event, with respect, we consider this to be a futile exercise on your part. Please understand that our client will not and cannot transfer title of the units to your client as he will never acquire title”. There was no immediate response to that letter, but on 15 April 1997 Scattergood’s solicitor wrote to Powercell’s solicitor purporting to terminate the contract.

175 Powercell’s solicitors replied on 17 April, saying, “Our client advises that your client is entitled to terminate the contract.” On 2 May 1997 Powercell’s solicitors wrote again to Scattergood’s solicitors saying:

“We refer to our letter of 17 April 1997 and advise that the letter contains an error, and should have read ‘is not entitled to terminate the contract.’ Previous correspondence in relation to this matter plainly sets out our client’s position. Our client hereby rescinds the contract pursuant to special condition 1 of the contract.”

176 Scattergood argued before Phegan DCJ that the letter of Powercell’s solicitor of 6 and 27 November were each fresh acts of repudiation, which gave rise to a fresh right in Scattergood to elect whether or not to accept the repudiation. Phegan DCJ held that whether this submission was correct or not depended upon whether the undoubted repudiation which had occurred on 1 August 1996 was a “once and for all breach”. His Honour held that it was, because it made clear that Powercell had lost for all time the capacity to make a good title. Thus, the letters of 8 and 27 November were not properly to be understood as fresh acts of repudiation.

177 His Honour also held that neither, however, was the rescission of Powercell pursuant to the special condition in the contract a valid one. He set out portion of the judgment of the Privy Council in Selkirk v Romar Investments Limited [1963] 1 WLR 1415 at 1422-1423, concerning the circumstances in which a contractual right of recession can be availed of, and in particular that it cannot be availed of when a vendor has been guilty of recklessness in entering into his contract. His Honour held that recklessness of Mr Ward, subsequent to entering the contract (in particular handing back the nine executed back pages) was recklessness. Further, at least some of the delays which resulted in the strata plan not being registered within the 12 months were attributable to the actions of Powercell in insisting on conditions of finance of the joint venture which were unacceptable to Mr Jabbour. His Honour found that “These are circumstances which do fall within the spirit of the principles enunciated in Selkirk, even though they may not fall strictly within the letter”. (At judgment page 18). The purported rescission by Powercell pursuant to the special condition was, his Honour held, a repudiation, which Scattergood accepted by commencing proceedings.

178 When Powercell appealed against that judgment, it was on grounds which included that Scattergood had not pleaded that the purported exercise of a contractual right of rescission was another repudiation, and that his Honour had applied the wrong legal test in holding that Powercell was not entitled to exercise a contractual right of rescission of the contract.

179 The application for leave to appeal was dismissed on 22 May 2000 by Mason P and Heydon JA. The totality of their Honours reasons was:

“1. The claimants letter of 27 November 1996 was a clear repudiation which the opponents were entitled to treat as a basis for termination. This they did on 15 April 1997.

2. Although this argument did not appeal to the trial judge, it is flagged as a contention point by the opponents. Because that argument is correct, there is no utility in granting leave to appeal to ventilate the other issues.

3. The summons is dismissed with costs.”

180 The decision to appeal in this matter was made by Powercell on the basis of oral advice from counsel who had conducted the hearing in the District Court. That advice was to the effect that Powercell had reasonable prospects in obtaining leave to appeal and in succeeding in an appeal if leave were granted.

181 When Powercell had advice from counsel, and when the basis upon which leave was not granted was that a point not relied on by the trial judge was correct, it seems to me that the taking of the appeal proceedings did not involve any failure to act reasonably to mitigate damage. I would allow the costs involved in the Scattergood appeal.

The Cannazarro Appeal

182 Magistrate Lulham decided the case brought by Cannazarro against Powercell on 13 September 1999. He held that the letter of 1 August 1996 was a “rescission of the contract by the vendor in terms which allowed the purchasers to proceed for any damages suffered by them due to the breach by the vendor.” He said that the purchasers accepted that the contract was terminated by applying for a refund of stamp duty which had been previously paid by them.

183 The submission which Powercell put to the Magistrate, was that the contract was terminated on 12 August 1996, and that that was the appropriate date for quantification of any damages. Valuation evidence in the case showed that the value of the unit had not moved between the date of the contract and 1 August 1996. Thus, Powercell submitted that no loss had been established.

184 The Magistrate refused to accept that submission. He referred to some evidence which had been given that Cuzeno would agree to sell the same unit to the same purchasers as Powercell had contracted with and for the same price, that some attempts were made by the purchasers to obtain such a contract from Cuzeno, and that those negotiations continued to November 1996. Thereafter, they set about finding an alternative property. The purchasers had started to study advertisements, trying to find a substitute unit, before Christmas 1996. They started actually inspecting possible substitute units about the end of January or early February 1997. They entered a contract to purchase an alternative investment property in May 1997. The unit which Powercell had contracted to sell to Cannazarro was sold by Cuzeno to another purchaser on 14 March 1997 for $215,000. The learned Magistrate referred to the High Court’s decision in Johnson v Perez (1988) 166 CLR 351, and to a principle whereby “damages will be assessed at the date necessary to adequately compensate the plaintiff for the loss suffered.” He quantified the damages by reference to the price at which Powercell had agreed to sell the unit to Cannazarro, and the price at which that same unit was sold by Cuzeno in March 1997. The difference was $45,000. He entered judgment for the amount which was the upper limit of the jurisdiction of the Local Court, namely $40,000, plus costs.

185 Powercell filed a Summons for Leave to Appeal from that judgment. Again, that course was taken on the basis of oral advice of counsel who had appeared at the trial, to the effect that Powercell had reasonable prospects in obtaining leave to appeal and in succeeding in an appeal if leave were granted. The grounds for appeal related to whether the Magistrate had adopted the correct date as at which to assess damages, and whether the Magistrate had failed to give proper effect to the purchaser’s obligations to mitigate their damage.

186 The Summons for Leave to Appeal was heard by Smart AJ on 2 December 1999. His Honour delivered judgment on 7 December 1999.

187 Smart AJ considered in more detail than the Magistrate had done, the decision of the High Court in Johnson v Perez (1988) 166 CLR 351. He noted that in that case all Justices in the High Court agreed that the general rule was that damages for tort or for breach of contract were assessed at the date of breach, but in each case the courts had to work out a solution best adapted to give the wronged party that amount in damages which would most fairly compensate that party for the wrong suffered. He noted that Johnson v Perez was an action in which solicitors were sued both for professional negligence, and for breach of contract, and that Mason CJ pointed out, at 356 that the general rule had been applied more uniformly in contract than in tort, but even in contract cases courts depart from the general rule whenever it is necessary to do so in the interests of justice. Smart AJ noted that Dawson J, in Johnson v Perez, at 387, said that one category where damages for breach of contract could be given at a different date to breach is where damages are awarded in lieu of specific performance and the value of the property which is the subject matter of the contract is assessed at the date of judgment, or where a plaintiff does not move immediately to carry out repairs or to mitigate his loss but it is not unreasonable for him to delay doing so. Smart J noted that in Radford v de Froberville [1977] 1 WLR 1262 Oliver J, at 1286 had noted that, if the function of an award of damages is to put the plaintiff in as good a position as if the contract had been performed, there was no reason in principle why damages should not be assessed as at the date of judgment in the case of a breach of contract which cannot be specifically performed. Smart J noted that Radford and Wrothv Tyler [1974] Ch 30 (both cases where damages for breach of contract were awarded assessed at the date of the trial) both involved contracts for the sale of land, where if the defendant had not been in breach the plaintiff would have received land which had increased in value. His Honour considered Hoffman v Cali (1985) 1 QdR 253, where the Queensland Full Court considered the correct measure of damages where there has been an anticipatory repudiation by the vendor of an executory contract of a sale of land. They case, following the general rule laid down on Frost v Knight (1872) LR 7 Ex 111, 113, held that a plaintiff who accepts such a repudiation is entitled to such damages as would have arisen from non performance of the contract at the appointed time. Smart AJ said that, applying that principle, April 1997 was the contractual date for completion; if some allowance was made for a failure to mitigate, which took the form of delay in finding an alternative unit, March 1997 might be the appropriate date for assessment of damages. Thus, whether by following the Johnson v Perez principles, or by following those outlined in Hoffman v Cali, Smart AJ held that the Magistrate had dealt with the reasonableness of the plaintiff’s conduct and the plaintiff’s delay in finding an alternative unit in a permissible way. Smart AJ concluded that the Magistrate’s process of reasoning not only revealed no error, but also that it was correct.

188 In my view, the decision of the Magistrate involved, and should have been seen to involve, the correct application of the correct principle. The costs of the Cannazarro appeal are not recoverable.

Orders

189 Powercell’s claim in matter number 3592 of 1997 should be dismissed. Each of the other cross-claims which have been brought into the Supreme Court should also be dismissed. I direct the parties to bring in short Minutes of Order to effect that dismissal, and make any consequential orders which might be appropriate. At the same time I shall hear any arguments concerning costs.

**********

Last Modified: 02/26/2004

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Citations

Powercell Pty Ltd v Cuzeno Pty Ltd [2003] NSWSC 600

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CITATION:	Powercell v Cuzeno [2003] NSWSC 600
HEARING DATE(S):	2/6/03 - 6/6/03
JUDGMENT DATE:	22 July 2003
JURISDICTION:	Equity
JUDGMENT OF:	Campbell J
DECISION:	Issue estoppel arises from previous decision as to terms of contract, and matters going to validity of contract - no issue estoppel, in circumstances of unusual basis for earlier decision, concerning whether section 54A Conveyancing Act prevents recovery of damages for breach of contract - contract unenforceable because not complying with section 54A Conveyancing Act
CATCHWORDS:	ESTOPPEL - former adjudication and matters of record or quasi record - when issue estoppel arises - respective roles of trial judge and appellate court's findings in creating issue estoppels - relevance of remarks of High Court Justices on application for special leave to issue estoppel - role of error in earlier judgment to whether issue estoppel arises - whether "special circumstances" exception to issue estoppel - CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - Statute of Frauds, section 4 - what is a "contract for the sale or other disposition of land or any interest in land" - possibility of an estoppel against application of the Statute - whether part-performance can entitle plaintiff to recover damages if contract breaches Statute - DAMAGES - measure and remoteness of damages in actions for breach of contract - circumstances in which costs of appealing are recoverable damages - CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - illegal and void contracts - application of section 23C(1)(a) Conveyancing Act to contract for disposal of interest in land
LEGISLATION CITED:	Conveyancing Act 1919 Conveyancing (Amendment) Act 1930 District Court Act 1973 Law of Property Act 1925 (Eng) Supreme Court Act 1970
CASES CITED:	Action Strength Limited v International Glass Engineering IN. GL. EN. SpA [2003] UKHL 17 Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685 Angell v Duke (1875) LR 10 QB 174 Arnold v National Westminster Bank Plc [1989] 1 Ch 63 Arnold v National Westminster Bank Plc [1991] 2 AC 93 Baloglow v Konstantinidis [2001] NSWCA 451 Birmingham v Renfrew (1937) 57 CLR 666 Blair v Curran (1939) 62 CLR 464 Boston v Boston [1904] 1 KB 124 Brown v Robertson (1890) 16 VLR 786 Cachia v Isaacs (1985) 3 NSWLR 366 Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121 Cocking v Ward (1845) 1 CB 858 Commissioner of Australian Federal Police v Propend Finance Pty Limited (1997) 188 CLR 501 Cooke v Rickman [1911] 2 KB 1125 Cromwell v County of Sac (1876) 94 US 351 Cuzeno Pty Ltd v Powercell Pty Ltd [1999] NSWCA 344 Dalgety & Co Ltd v Gray (1919) 26 CLR 249 Daulia Ltd v Four Millbank Nominees Ltd [1978] Ch 231 Frost v Knight (1872) LR 7 Ex 111 Giumelli v Giumelli (1999) 196 CLR 101 Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145 Henderson v Henderson (1843) 3 Hare 100; 67 ER 313 Hoffman v Cali (1985) 1 QdR 253 Horsey v Graham (1862) LR 5 CP 9 Horton v Jones (1935) 53 CLR 475 Howlett v Tarte (1861) 10 CBNS 813; 142 ER 673 Hoysted v Federal Commissioner of Taxation (1921) 29 CLR 537 Hoysted v Federal Commissioner of Taxation [1926] AC 155 Humphries v Humphries [1910] 2 KB 531 Johnson v Perez (1988) 166 CLR 351 Jones v Baker [2002] NSWSC 89; (2002) 10 BPR 19,115 Kelly v Webster (1852) 12 CB 283 Lees v Fleming [1980] QdR 162 Linsley v Petrie [1998] 1 VLR 427 Mainline Investments Pty Ltd v Davlon Pty Ltd [1969] 2 NSWR 392 Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 Mraz v The Queen (No.2) (1956) 96 CLR 62 O'Rourke v Hoeven [1974] 1 NSWLR 622 O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 Pollnow v Armstrong [2000] NSWCA 245 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Queensland v The Commonwealth (1977) 139 CLR 585 R v Inhabitants of the Township of Hartington Middle Quarter (1855) 4 El & Bl 780; 119 ER 288 R v Storey (1978) 140 CLR 364 Radford v de Froberville [1977] 1 WLR 1262 Redken Laboratories (Aust) Pty Ltd v Docker (No.2) [2000] NSWCA 235 Riches v Hogben [1986] 1 QdR 315 Rogers v R (1994) 181 CLR 251 Selkirk v Romar Investments Limited [1963] 1 WLR 1415 Somodaj v Australian Iron and Steel Ltd (1963) 109 CLR 285 Thoday v Thoday [1964] P 181 Tiufino v Warland [2000] NSWCA 110; (2000) 50 NSWLR 104 Vogan & Co v Oulton (1898) 79 LT 384 Waddington v Silver Chain Nursing Association (1998) 20 WAR 269 Waterford v The Commonwealth (1987) 163 CLR 54 Wright v Madden [1992] 1 QdR 343 Wroth v Tyler [1974] Ch 30 Yates Property Corporation Pty Ltd v Boland [2000] FCA 1106; (2000) 179 ALR 664
PARTIES :	Powercell Pty Limited - Plaintiff Cuzeno Pty Limited - Defendant
FILE NUMBER(S):	SC 3592/97
COUNSEL:	J M Ireland QC; C Dimitriadis - Plaintiff T G R Parker; R E Steele - Defendant
SOLICITORS:	Willis & Bowring - Plaintiff Michie Shehadie & Co - Defendant

Purchaser	Date of contract	Price	Deposit paid
Grasso	18 April 1996	170,000	8,500
Scattergood & Morgan	1 May 1996	170,000	5,000
Cannazarro, Giacca, Grasso and Grasso	18 April 1996	170,000	8,500
Ayoub	1 May 1996	165,000	5,000
Yassmin	2 May 1996	165,000	5,000
C & C Huon Holdings Pty Ltd	1 May 1996	170,000	8,500
Markovski	29 April 1996	165,000	5,000
Karavelas	1 May 1996	170,000	8,500
Azar	15 May 1996	160,000	5,000