Seal & Ors v Malaugh Holdings (No 2) Pty Ltd & Ors - [2007] SASC 388

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
SEAL & ORS v MALAUGH HOLDINGS (NO 2) PTY LTD & ORS
[2007] SASC 388
Judgment of The Full Court
(The Honourable Justice Bleby, The Honourable Justice Anderson and The Honourable Justice White)
6 November 2007
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - POINTS AND OBJECTIONS NOT TAKEN BELOW - WHEN NOT ALLOWED TO BE RAISED ON APPEAL - QUESTIONS NOT RAISED ON PLEADINGS OR IN ARGUMENT
Appeal against decisions of District Court Judge in two related matters heard concurrently – application for permission to amend notices of appeal – proposed amendments not raised until three working days prior to hearing of appeal – proposed amendments substantial involving deletion of all but three grounds of the original notice of appeal and the insertion of a new ground of appeal in each case, together with amendments to the prayer for relief – further ground of appeal sought to be added on the day of the hearing of the appeal – proposed new grounds raise issues not raised in the District Court – whether permission to amend notices of appeal should be granted – Supreme Court Civil Rules 2006 r 289 – consideration of principles governing an application to amend – consideration of Land and Business (Sale and Conveyancing) Act 1994 (SA), in particular ss 8 and 15 – application for permission to amend notice of appeal refused – appeals dismissed.
Trade Practices Act 1974 (Cth) s 52; Fair Trading Act 1987 (SA) s 56; Land and Business (Sale and Conveyancing) Act 1994 (SA) ss 3, 5, 8, 15, 16; Land and Business (Sale and Conveyancing) Regulations 1995 (SA); Supreme Court Civil Rules 2006 r 289; Limitations of Actions Act 1936 (SA) s 35, referred to.
Coulton v Holcombe (1986) 162 CLR 1; Water Board v Moustakas (1988) 180 CLR 491, applied.
Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541; Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; Bloemen v The Commonwealth (1975) 49 ALJR 219; O'Brien v Komesaroff (1982) 150 CLR 310; University of Wollongong v Metwally [No 2] (1985) 59 ALJR 481; Connecticut Fire Insurance Co v Kavanagh [1892] AC 473; Green v Sommerville (1979) 141 CLR 594, considered.

SEAL & ORS v MALAUGH HOLDINGS (NO 2) PTY LTD & ORS
[2007] SASC 388
Full Court: Bleby, Anderson and White JJ
BLEBY J.
Introduction

There are two appeals before the Full Court arising out of two actions heard together in the District Court. The question for decision is whether the appellants in each case, Mr and Mrs Seal and Pinnipedia Pty Ltd (“Pinnipedia”), a company controlled by Mrs and Mrs Seal, should be granted permission to amend their notices of appeal.
The facts
The respondent Malaugh Holdings (No 2) Pty Ltd (“Malaugh”), controlled by the respondents, Mr and Mrs Pearce, was the owner of land at Athelstone on which a service station was erected. For some time prior to 8 May 1997 Mr and Mrs Seal were negotiating with Mr Pearce for the purchase by Pinnipedia of the land, certain chattels used for the conduct of a business on the land and for the benefit of a petroleum licence authorising the sale of petroleum products from the land. There is a dispute as to whether the negotiations and the contract which followed was for the sale and purchase of the business conducted on the land. I will therefore refer to the subject matter of the sale and purchase agreement as “the assets”.
During the course of the negotiations Mr and Mrs Seal were advised by a solicitor and Mr Ackroyd, a financial adviser, who also negotiated on their behalf with the ANZ Bank for the granting of a loan with which to purchase the assets. During the course of those negotiations it is apparent that the Bank required further information in support of some figures contained in a valuation of the land. In response to that enquiry Mr Pearce wrote a letter dated 14 April 1997 to Mr and Mrs Seal containing some information as to his belief as to the annual sales of petroleum products and product margins per litre. Mr Pearce also said in the letter that “this business is not being sold and therefore I am unable to provide a Form 2”.
Negotiations also included the provision of a loan by Malaugh in part payment of the purchase price.
A written contract for the sale and purchase of the assets (“the sale and purchase agreement”) was executed. It bears no date. The contract is between Malaugh as vendor and Pinnipedia as purchaser. The purchase price was $525,000, as to $450,000 for the land, $50,000 for the chattels and $25,000 for the petroleum licence. There is no mention of the vendor’s loan in the contract, but the contract was expressed to be subject to “any reputable lender” lending a minimum amount of $400,000 to Pinnipedia on certain conditions.
There was also executed on 12 May 1997 a loan agreement (“the loan agreement”) between Malaugh and Mr and Mrs Seal whereby Mr and Mrs Seal agreed to borrow $125,000 from Malaugh on certain conditions therein set out. The loan was to be repaid within 5 years from the date of the advance of the principal sum. The only reference in the loan agreement to the sale and purchase agreement was that the granting of the loan was subject to the settlement of the sale and purchase agreement.
Settlement of the sale and purchase agreement took place on 16 May 1997 with the bulk of the purchase price being provided by the ANZ Bank, the purchaser being given credit on the settlement statement for the loan of $125,000 from Malaugh to Mr and Mrs Seal. In other words, there was no cash advance by Malaugh to Mr and Mrs Seal, and the amount received by Malaugh was $125,000 less than the purchase price adjusted at settlement.
On 9 October 2002 Malaugh commenced proceedings in the District Court against Mr and Mrs Seal claiming repayment of the amount of the loan together with interest from 16 May 2002. The amended defence of Mr and Mrs Seal reflected pleadings in their amended statement of claim in a separate action which they and Pinnipedia commenced on 5 September 2003 against Malaugh and Mr and Mrs Pearce.
In both actions Mr and Mrs Seal claimed rectification of the loan agreement by the insertion of a clause providing that, in the event that any financial information given to them and Pinnipedia should be false in a material particular, the Seals would be relieved of their obligations under the loan agreement. They alleged a number of misrepresentations by Mr and Mrs Pearce by which they were induced to enter into the sale and purchase agreement. Besides the claim for rectification of the loan agreement, they alleged misrepresentation, a breach of s 52 of the Trade Practices Act 1974 (Cth), a breach of s 56 of the Fair Trading Act 1987 (SA) and claimed a declaration that they may avoid the loan agreement. They also claimed damages and interest.
The two actions were heard together in the District Court, and on 2 March 2007 judgment was entered for Malaugh in its action based on the loan agreement and against Mr and Mrs Seal in their action for rectification of the loan agreement and against Mr and Mrs Seal and Pinnipedia in their action based on the alleged breaches of the Trade Practices Act and the Fair Trading Act. The latter actions were dismissed because the Judge found that they were statute barred, as was the action for damages for misrepresentation and any action for rescission or avoidance of the loan agreement. However, the trial Judge also found that the actions based on misleading conduct and misrepresentation also failed because they had not been proved. In the further alternative, the Judge found that no loss and damage had been proved.
The appeal
On 23 March 2007 Mr and Mrs Seal and Pinnipedia filed notices of appeal in respect of the judgment in both actions. The grounds of appeal in each were the same. There were some 19 grounds of appeal challenging numerous findings of the trial Judge and the exercise of the trial Judge’s discretion in refusing to extend the time for commencing the actions. On 24 July 2007 the appellants changed their solicitors who briefed counsel who were not counsel at trial. At that time the appeals had not been set down for hearing and the appeal books and the contents of them had not been agreed between the parties. At that time there had been an application made by the appellants for an order staying the execution by Malaugh of the judgment entered by the trial Judge. On 31 July 2007 a Master of this Court made such an order subject to a condition that the appeals be prosecuted with expedition. Because of that order the appellants were under some pressure to finalise the index to the appeal books and have the appeals set down for hearing. Various difficulties were encountered in that process not necessarily of the appellants’ making. Pressure to set down was further increased by service on 24 August 2007 of an application to dismiss the appeals or to set aside the stay of execution on the grounds that the appeals had not yet been set down for hearing.
The appeals were set down for hearing on 6 September 2007, the day before a master was to hear the application to dismiss the appeals.
Counsel to argue the appeals were retained, as to senior counsel on 19 September 2007 and junior counsel on 20 September 2007. A call-over for the hearing of appeals set down for October was held on 21 September, and the appeal was listed for hearing before the Full Court on 3 October 2007.
On 27 September the appellants’ outline of argument before the Full Court was delivered to the respondents’ solicitors together with proposed amended notices of appeal in each of the appeals. By virtue of a public holiday on 1 October, those documents were served three working days before the hearing of the appeals.
The amendments proposed were substantial. They involved the deletion of all grounds of appeal except grounds 1, 3 and 18 in each case, and the insertion of a new ground of appeal as follows:
20.The learned trial Judge erred, or alternatively the trial of the action miscarried, in that the evidence at trial revealed, and the trial judge failed to find that:
(a) the Agreements the subject of the Action constituted an agreement for the sale of a small business within the meaning of section 4 of the Land and Business (Sale and Conveyancing) Act, 1994 (SA) (“the Act”);
(b) the Respondent failed to served upon the purchaser the required particulars pursuant to section 8 of the Act being a document prepared in accordance with, and containing the particulars required by, Form 2 of the Land And Business (Sale and Conveyancing) Regulations 1995 (SA) (“the Form 2”);
(c) as a result of the failure by the Respondent to comply with the requirements of section 8 of the Act to serve a Form 2, the purchaser and the Appellants suffered prejudice;
(d) the purchaser and the Appellants were entitled to the exercise of the Court’s powers pursuant to section 15 of the Act and that the Court should have exercised those powers by making orders varying the purchase price and relieving the Appellants from their obligations under the Loan Agreement.
There were also amendments proposed to the prayer for relief seeking the setting aside of the orders of the trial Judge and seeking, for the first time in the appeal proceedings, an order that the contract of sale and purchase be varied by reducing the total purchase price from the sum of $525,000 to the sum of $373,000, and an order that the appellants (i.e. Mr and Mrs Seal and Pinnipedia) be relieved of their obligations under the loan agreement. In the alternative to those orders an order was sought that the proceedings be remitted to the District Court for further hearing “on the question of the nature of the relief the Court should grant the appellants in the exercise of its powers under s 15(2) of the Land and Business (Sale and Conveyancing) Act 1994 (SA)”.
At a preliminary hearing before two members of this Court on 28 September the appellants were directed to file grounds on which permission to amend the grounds of appeal would be sought, to file any affidavit on which they wished to rely in support of the application for permission to amend and to give notice to the respondents of any documents not already in the appeal books upon which the appellants proposed to rely in support of their application for permission to amend and on the hearing of the appeals. Some further documents were identified, being documents which were not tendered at the trial, and on the day of the hearing a further additional ground 21 was sought to be added to the notice of appeal challenging the opinion of a valuer who was called at trial and the trial Judge’s reliance on his opinion.
The amendments to the notices of appeal, if allowed, will change completely the nature of the appeal. So fundamental is the nature of the change that if the amendment to include the proposed new ground 20 is not allowed, Mr Wells QC, counsel for the appellants, conceded that the remaining grounds, if successful, could not by themselves justify the orders sought. They would only become relevant if the amendment were allowed and the appeal succeeded on ground 20.
The Land and Business (Sale and Conveyancing) Act 1994 (SA)
The Land and Business (Sale and Conveyancing) Act 1994 (SA) (“the Act”) is described in its long title as “An Act to regulate the sale of land and businesses and the preparation of conveyancing instruments; and for other purposes.” Section 8 of the Act requires that a vendor of a small business (as defined) must, at least five clear days before the date of settlement, serve, or cause to be served, on the purchaser a statement in the form required by regulation (Form 2). That form must set out the rights of the purchaser to give notice of an intention not to be bound by the contract within the time prescribed by s 5 of the Act, the prescribed particulars in relation to the business and certain specified particulars in relation to the land.
Section 15 of the Act, which is now sought to be relied on by the appellants, provides as follows:
Remedies
(1)Where a vendor's statement is not given or certified as required by this Part, or the statement given is defective, the purchaser may apply to a court of competent jurisdiction for an order under this section.
(2)On the hearing of an application under subsection (1) the Court may, if satisfied that the purchaser has been prejudiced by the failure to comply with this Part, exercise any one or more of the following powers:
(a)    avoid the contract and make such other orders as the Court thinks necessary or desirable to restore the parties to the contract to their respective positions before entering into the contract;
(b)    award such damages as may, in the opinion of the Court, be necessary to compensate loss arising from the non-compliance;
(c)    make such other orders as may be just in the circumstances.
(3)Damages may be awarded under subsection (2)(b) against—
(a)    the vendor;
(b)    if it appears that the purchaser has been prejudiced by a failure on the part of an agent to carry out duties imposed by this Part—the agent,
or both.
Section 16 provides for certain defences to an application under s 15. It provides:
Defences
It is a defence to a charge of an offence, or to civil proceedings, under this Part arising from an alleged contravention or non-compliance with a requirement of this Part if the defendant proves—
(a)     that the alleged contravention or non-compliance was unintentional and did not occur by reason of the defendant's negligence or the negligence of an officer, employee or agent of the defendant; or
(b)     that the alleged contravention or non-compliance was due to reliance on information provided by a person or body to which an inquiry to obtain the information is, in accordance with the regulations, required to be made; or
(c)     that—
(i)the purchaser received independent advice from a legal practitioner in relation to waiving compliance with that requirement; and
(ii)the legal practitioner signed a certificate in the form required by regulation as to the giving of that advice; and
(iii)the purchaser waived compliance with that requirement by signing an instrument of waiver in the form required by regulation.
Section 15 of the Act and its consequences have never been pleaded in either action in the District Court. It follows that Malaugh had never been required to consider the availability of any defences under s 16 of the Act, nor had it been required to consider whether Pinnipedia had been prejudiced by the failure to comply with s 8, or what circumstances might be relevant in considering whether the Court should make an order under s 15(2)(c) of the Act. It will be noted that the amendment relies only on that paragraph to justify the relief proposed to be claimed.
Rule 289 of the Supreme Court Civil Rules 2006
Rule 289 of the Supreme Court Civil Rules 2006 provides that a notice of appeal may be amended by filing a supplementary appeal notice, but a notice of appeal may “only be amended by permission of the Court after the appeal has been set down for hearing”. Accordingly, the appellants must obtain permission of the Court before being able to amend the notice of appeal.
An application under r 289, unless consented to by the respondent, will generally require some explanation as to why the amendment was not included in the original notice of appeal, or at least as to why the notice of appeal was not amended by filing a supplementary appeal notice before the appeal was set down for hearing. In this case the period between the filing of the original notice of appeal and setting the appeal down for hearing was in excess of five months. There is no explanation before the Court as to why the additional grounds were not included in the original notice of appeal or why nothing was done to amend the notice of appeal prior to the appellants’ present solicitors being retained on 24 July 2007. There is also no satisfactory explanation why, even after that date, the first indication of the proposed amendment was given only three working days before the appeal was due to be heard, nor is there any satisfactory explanation as to why counsel were retained on the eve of the call-over at which the date for the hearing of the appeal was set. There is nothing advanced to support the granting of permission to amend beyond the mere assertion of prejudice to the appellants if permission to amend is refused. Such prejudice will always apply if permission to amend is refused. In this case the justification for including the proposed amendments has existed ever since the date of the judgment, yet no explanation for the extremely late and comprehensive amendment has been advanced.
If that were the only complaint, any prejudice caused to the respondents by the late notice of the amendment could possibly be cured by an appropriate order as to costs. However, the respondents’ objection to the amendment is more substantial than that.
Principles governing an application to amend
There are various grounds on which permission to amend a notice of appeal may be refused, depending on the circumstances. Permission may be refused because the proposed ground of appeal has no real prospect of success. The respondent may allege some form of prejudice which cannot be cured by an order for costs. The amendment, if allowed, may require an order for an extension of time under the Limitation of Actions Act 1936 (SA), and the appellant may be unable to establish that an extension would not result in significant prejudice to the respondent.[1]
[1] See Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541.

The relevant principles applicable to a case such as the present are conveniently summarised in the joint judgment of Gibbs CJ, Wilson, Brennan and Dawson JJ in Coulton v Holcombe:[2]
[2] (1986) 162 CLR 1 at 7-8, [1986] HCA 33 at [9].
The powers of an appellate court with respect to amendment are ordinarily to be exercised within the general framework of the issues so determined and not otherwise. In a case where, had the issue been raised in the court below, evidence could have been given which by any possibility could have prevented the point from succeeding, this Court has firmly maintained the principle that the point cannot be taken afterwards: see Suttor v. Gundowda Pty. Ltd.[3]; Bloemen v. The Commonwealth.[4] In O'Brien v. Komesaroff[5] Mason J., in a judgment in which the other members of the Court concurred, said:
[3] (1950) 81 CLR 418 at 438, [1950] HCA 35 at [9].
[4] (1975) 49 ALJR 219.
[5] (1982) 150 CLR 310 at 319, [1982] HCA 33 at [21].
"In some cases when a question of law is raised for the first time in an ultimate court of appeal, as for example upon the construction of a document, or upon facts either admitted or proved beyond controversy, it is expedient in the interests of justice that the question should be argued and decided.[6] However, this is not such a case. The facts are not admitted nor are they beyond controversy.
The consequence is that the appellants' case fails at the threshold. They cannot argue this point on appeal; it was not pleaded by them nor was it made an issue by the conduct of the parties at the trial".
…Finally, in a recent decision of six Justices of this Court (University of Wollongong v. Metwally [No 2][7]) the Court said:
"It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.”
The Court of Appeal recognized the great importance, in the public interest, of these principles. Their Honours summarized them in the following terms:
"the finality of litigation; the difficulty of inducing an appeal court to consider new facts; the undesirability of encouraging tactical decisions not to present an issue at first instance: keeping it in reserve for appeal; and the need for vigilance to avoid injustice to a party having to meet new facts and new issues of law for the first time at the appeal court".
[6] Connecticut Fire Insurance Co. v. Kavanagh [1892] AC 473 at 480; Suttor v. Gundowda Pty. Ltd. (1950) 81 CLR 418 at 438, [1950] HCA 35 at[9]; Green v. Sommerville (1979) 141 CLR 594 at 607-608, [1979] HCA 60 at [22].
[7] (1985) 59 ALJR 48 at 483; 60 ALR 68 at 71, [1985] HCA 28 at [7].
The High Court reaffirmed that position in Water Board v Moustakas:[8]
More than once it has been held by this Court that a point cannot be raised for the first time upon appeal when it could possibly have been met by calling evidence below. Where all the facts have been established beyond controversy or where the point is one of construction or of law, then a court of appeal may find it expedient and in the interests of justice to entertain the point, but otherwise the rule is strictly applied.[9]
[8] (1988) 180 CLR 491 at 497, Mason CJ, Wilson, Brennan and Dawson JJ, [1988] HCA 12 at [13]-[14].
[9] See Suttor v. Gundowda Pty. Ltd. (1950) 81 CLR 418 at 438, [1950] HCA 35 at [9]; University of Wollongong v. Metwally (No.2) (1985) 59 ALJR 481 at 483; 60 ALR 68 at 71, [1985] HCA 28 at 7]; Coulton v. Holcombe (1986) 162 CLR 1 at 7-8, [1986] HCA 33 at [9]; O'Brien v. Komesaroff (1982) 150 CLR 310 at 319, [1982] HCA 33 at [21].
It was the appellants’ argument that upon the facts found by the trial Judge, and without the necessity of calling further evidence, the matters arising under s 15 of the Act could be and now should be determined by this Court, or alternatively, that the matter should be remitted to the District Court for determination by that Court. It is that assertion which must now be scrutinised, for if the issue cannot properly be determined without further pleadings and the leading of additional evidence, the appellants’ application for permission to amend must fail.
The matters relied on by the appellants
Before addressing the matters relied on by the appellants in support of their application, it is necessary to examine the criteria which must be established before a remedy under s 15 of the Act can be applied. In this case the appellants must rely on a breach of s 8. The matters which must be established are:
1That Malaugh was a “vendor”. That is defined in s 3 of the Act as meaning “the person or persons named in a contract as vendor or vendors or any one or more of them, and includes a prospective vendor”.
2There must be a contract to which the vendor is a party.
3The contract must be for the sale of a business.
4The business must be a “small business” as defined.
5There must be a failure by the vendor within the required time to serve a Form 2 on the purchaser.
6The Court must be satisfied that the purchaser has been prejudiced by the failure.
7The order sought in this case is to reduce the purchase price by $152,000 and to relieve the appellants of any outstanding obligation under the loan agreement. The Court must therefore be satisfied that such an order will be “just in the circumstances”.[10]
[10] Section 15(2)(c) of the Act.
In summary, the relevant grounds relied on by the appellants were that it was not possible to identify any further contentious or other evidence relevant to the existence of the necessary pre-conditions for the exercise by the Court of the remedial powers conferred by s 15 of the Act. It was therefore open to the trial Judge to make relevant findings and to deal with any relevant questions of law. In the interest of justice those questions should now be determined.
Some of the necessary elements requiring proof that are mentioned above might well be satisfied as being beyond possible dispute. The contract of sale was exhibited before the Court. It identifies and gives a description of the vendor as Malaugh. It is a contract of sale. It may be accepted for present purposes that there was a failure by Malaugh to serve a Form 2 on Pinnipedia.
However, the first area of serious dispute is as to whether Malaugh was carrying on any business at all on the land and, if so, whether the sale and purchase agreement included the sale of that business.
In the pleadings before the District Court it was alleged by the appellants and admitted by the respondents that between 18 March 1997 and 16 May 1997 there had been conducted on the land a service station business.
The evidence at trial was that Southern Cross Petroleum Sales (S.A.) Pty Ltd (“Southern Cross”) had been lessee of the land and that that company had sold petroleum products through commission agents engaged by it. The commission agents also conducted their own shop business from the site. Southern Cross eventually became controlled by Mr Pearce while this arrangement was in place. On 28 October 1996 Southern Cross went into voluntary administration and was placed in liquidation in January 1997. Thereafter it did not pay rent. However, the commission agents, then being supplied by another petroleum wholesaler, did pay the rent to Malaugh but did not enter into any formal lease. They continued to conduct their own business from the premises. That position continued until they left the premises approximately one month before settlement, well after negotiations between Mr and Mrs Seal and Mr Pearce had commenced and after at least one draft of a sale and purchase agreement had been prepared.
The issue of who was running the business at the time of sale did not arise. The evidence was that Mr and Mrs Pearce were running the business in caretaker mode, but it is far from clear on whose behalf they were doing so, or how much of the former business, including the shop, was being conducted by them.
It is clear that, if s 15 of the Act had been raised as an issue on the pleadings, it would have been necessary for the Court to decide whether a business was being carried on on the premises, by whom and on whose behalf it was being carried on, and if by Malaugh, whether that business was included in the contract of sale.
In the pleadings it was alleged by the plaintiffs but denied by the defendants that the negotiations concerned the sale by Malaugh of, among other things, the business. There was an allegation by the appellants that Mr and Mrs Pearce had undertaken to make themselves available for assistance in various aspects of the conduct and operation of the business which they had failed to do. The appellants sought to argue that the pleading of the respondents on that issue constituted an admission that there was a sale of the business. In the context of the pleadings as a whole I do not accept that argument. The issue being pleaded to was whether or not the assistance was rendered.
While there was therefore an issue on the pleadings as to whether a business was sold, it was not an issue which had to be resolved by the trial Judge in order to reach a final decision. The relevant issue before the trial Judge was whether certain representations about some aspects of the business which had been conducted on the premises were misleading, deceptive or untrue. In order to resolve that issue, it was not necessary for the trial Judge to decide whether or not a business was sold.
Indeed, that seems to have been accepted by the appellants at trial. In opening their case their counsel said:
Our understanding of the case for the Malaugh interests is that they did not sell a business, but what we would be submitting is that it is manifestly clear that what was being sold was the means by which a business could be conducted and that that business was the business on the service station at Athelstone on that site with an associated shop of some kind, a fair and typical arrangement, indeed, with fuel sales and the shop that sold cigarettes, packets of chips and the like.
We say that the statements which were made, were made about such a business as could be conducted on that site with the aid of the plant and equipment there and we say that that was simply wrong. We say that they were wrong and it also will be our case that to the extent that they were wrong, Mr Pearce had no reasonable grounds to make the statements that he did. That too is pleaded in both the defence in 1453 and in the positive action 1388. [Emphasis added]
Therefore, even on the appellants’ case at trial, it was not necessary to resolve the question of whether a business was sold. They did not allege at trial that a business was sold. Had they done so, I have little doubt that the trial would have been conducted rather differently.
Had s 15 of the Act been raised at trial, rather than both parties apparently treating the sale of the business as an irrelevant side issue, the respondents might well have pleaded other facts and might well have led further evidence as to Malaugh’s role and as to who was carrying on the business. Counsel for the appellants would no doubt have cross-examined Mr and Mrs Pearce rather differently from the manner in which they were in fact cross-examined. While there was some evidence before the trial Judge which would no doubt contribute to a finding as to whether the business was sold, the appellants cannot successfully assert that either the pleadings would not have been different or that no other evidence on the topic would have been led.
If s 15 of the Act had been pleaded, there are unanswered questions as to what would or could have been properly included in the Form 2, if served. Neither Malaugh nor Mr and Mrs Pearce were privy to financial information concerning the business being conducted by the commission agents or to the volume of petroleum products sold after Southern Cross ceased supplying. Through his connection with Southern Cross, Mr Pearce had given some figures as to quantities sold through the site when Southern Cross was supplying the products. At most, Malaugh or Mr and Mrs Pearce could have included trading figures within their knowledge covering only a few weeks before settlement. Obvious questions would have arisen, which cannot now be answered, as to the reliability and usefulness of such figures and whether, if they could have been supplied before settlement, they would have made any difference to Mr and Mrs Seal’s position. There was no evidence as to what those figures would have shown. They might even have encouraged Mr and Mrs Seal to continue with the purchase.
I turn to the relief being sought by the appellants. In order to justify the relief proposed to be claimed by the appellants, namely that all three appellants should become the beneficiaries of a reduced purchase price and that all three appellants should be relieved of their obligations under the loan agreement, the appellants need to establish that all three of them were purchasers of the business under the contract of sale. The argument requires a reading of both contracts together as if they were one transaction. The respondents argue that the mere fact that the granting of the loan under the loan agreement may have been conditional upon settlement on the sale and purchase agreement does not mean that the loan and the sale and purchase became one transaction to which all were parties. The only purchaser named in the contract of sale was Pinnipedia. The only vendor named was Malaugh. The respondents contend that by definition in s 3 of the Act they were the only parties to the sale. They argue that there was nothing in the sale and purchase agreement making the purchase conditional upon the granting of the loan by Malaugh to Mr and Mrs Seal. The contract was conditional upon finance being granted “by any reputable lender”, and as the evidence showed, there was such a lender in the form of the ANZ Bank. That did not make the Bank a party to the purchase. The respondents argue that not only is it inevitable that, if the amendment were allowed and a plea based on s 15 of the Act succeeded, it could not affect the liability of the Seals to repay the loan under the loan agreement, neither could Pinnipedia be the beneficiary of any such order.
It is not necessary to decide the argument. It may well have some force. It may also be dependent on other facts not adverted to in evidence because of the way the trial was conducted.
The appellants put an alternative argument that the Seals, as borrowers, borrowed for the purpose of benefiting Pinnipedia, and that Pinnipedia was therefore a resulting trustee for the Seals. Such an assertion would require a much more detailed pleading and a factual analysis of the relationship between Mr and Mrs Seal and Pinnipedia, including the production of accounting records indicating how those parties treated the loan granted by Malaugh – whether as a loan by Malaugh or as a loan by Mr and Mrs Seal to Pinnipedia. Such evidence as there was concerning the accounts of the trust of which Pinnipedia was the trustee would suggest, contrary to Mr Wells’ submission, that Pinnipedia treated the loan as a loan not from Malaugh but from Mr and Mrs Seal. However, none of these aspects could be appropriately explored on the pleadings as they stood before the trial Judge. They would, nevertheless, be highly relevant to the relief now being sought to be claimed by the appellants. Although it was argued that s 15 of the Act contains no requirement that orders under s 15(2) should exclusively favour the purchaser, given the long title to the Act and its obvious purpose, s 15 should be construed as applying only to parties to a contract for the sale of land and/or business. It should not be construed as purporting to regulate the relationship between parties to such contracts and non-parties.
In order for the appellants to succeed on a claim under s 15 of the Act they would have to satisfy the Court that there was the necessary causative link between the failure to comply with s 8 and the prejudice allegedly suffered by the appellants. Questions of causation would undoubtedly have arisen on the pleadings and on the evidence if s 15 had been pleaded. If it had been pleaded real issues would have arisen as to the role of the appellants’ solicitor at the time and the advice Mr and Mrs Seal received. There would have been questions also as to the role of Mr Ackroyd, who was not called at the trial, and if he was not called, the consequences of the failure to do so in the context of alleged prejudice under s 15. I have already pointed out that the letter from Mr Pearce to Mr and Mrs Seal on 14 April 1997 referred to the inability to supply a Form 2. Had s 15 been an issue there would undoubtedly have been questions as to the understanding of Mr and Mrs Seal of what was meant by the reference to the Form 2 in that letter. These questions and others would have been relevant to the question of causation.
As to whether the appellants suffered prejudice as a result of the failure to serve the Form 2, they foreshadowed in their argument in support of the application for permission to amend that the prejudice they suffered was a denial of their right to rescind the contract under s 5 of the Act. It was submitted that the supply of a vendor’s statement provides an opportunity, by implication, the only opportunity, to make a choice and to rescind the contract. That opportunity was denied to the appellants. However, that misconceives the nature of s 5 of the Act. A purchaser has the opportunity to rescind at any time before expiry of the “prescribed time” as defined in s 5(8). If no vendor’s statement is supplied, the time up to which rescission can be effected is the time of settlement. A purchaser might well respond to a failure to supply the Form 2 by concluding that he or she had insufficient information, and could therefore exercise the right to rescind. Exercise of that right is not dependent on service of a Form 2.
In a foreshadowed amended statement of claim the appellants say they would also allege that they were deprived of the necessary information that would have been included in a Form 2, including the trading figures of the business for the immediate preceding three years, that they would have had an opportunity to consider and obtain advice about the true value of the land and the business from an independent accountant or other adviser, and that they would not have completed the purchase of the land and business and chattels for the sum of $525,000. It would be open to the respondents to plead, and on the information presently before the Court they would be likely to plead, that Malaugh was not carrying on the business and did not have the information available to it. They would also no doubt deny the assertion that the appellants would not have completed the purchase of the assets. It would certainly be relevant to cross-examine Mr and Mrs Seal as to what information they did have and what information they relied on and whether the failure to deliver the Form 2 had any bearing at all on their decision to proceed, particularly as they were aware that a Form 2 could not be supplied. None of these issues was able to be explored at the trial.
There was also evidence led at the trial from which it might be able to be inferred that Mr and Mrs Seal, or Mr Ackroyd on their behalf, misled the ANZ Bank by wrongly asserting in the application for the loan that the purchasers would be contributing $200,000 of their own funds. I express no conclusion as to whether the Bank was misled, but the respondents contended that by their amendment the appellants are seeking relief in the nature of an equitable set-off. If that is so, as the respondents argued, there would almost inevitably have arisen, if s 15 were pleaded, questions relating to the appellants’ entitlement to equitable relief if they were coming to the Court with less than clean hands.

As to whether any orders sought by the appellants would be just “in the circumstances”, it is impossible to tell what evidence might have been led by the parties as to the relevant circumstances if that had been an issue properly before the trial Judge.
The circumstances had never been pleaded. The respondents have never had an opportunity to plead or to lead evidence of other circumstances relevant to the exercise of the discretion. The respondents have not had the opportunity to cross-examine the appellants as to the circumstances relevant to the exercise of the discretion, not least of which would be the role played by the appellants’ solicitor and the advice they received from him and from Mr Ackroyd at the time.
Without referring to any possible defences under s 16 of the Act which might have been raised by the respondents if the plaintiffs had pleaded s 15 at trial, I have said enough to indicate that, had the s 15 issue been raised in the District Court, evidence may have been given “which by any possibility could have prevented the point from succeeding”,[11] and that for that reason the application for permission to amend must be refused. The issues raised by the proposed amendment cannot be decided on the evidence before the trial Judge. This is not a case where all the facts have been established beyond controversy or where the point is one of construction or of law. It is neither expedient nor in the interests of justice to entertain ground 20.[12]
[11] Coulton v Holcombe (1986) 162 CLR 1 at 7, [1986] HCA 33 at [9].
[12] Water Board v Moustakas (1988) 180 CLR 491 at 497, [1988] HCA 12 at [13]-[14].
Finally, the application raises questions as to whether the action founded on s 15 of the Act, if allowed to be pleaded, would be subject to one or more of the time limitations specified in the Limitation of Actions Act 1936 (SA). Questions arise as to whether the relief now sought to be claimed by the appellants by application under s 15 is an action “founded upon” a contract or “founded on” tort,[13] or whether it is an action for the “recovery of money … based on restitutionary grounds”.[14] The appellants’ argument is that s 15 does not create a cause of action at all but merely a discretionary remedy, and is therefore not affected by any section of the Limitation of Actions Act.
[13] Limitation of Actions Act 1936 s 35.
[14] Ibid s 38.
Given the conclusion reached above, it is not necessary to rule on these arguments. However, even if these arguments of the appellants were ultimately accepted and had the matter been properly pleaded before trial, a question would inevitably have arisen whether the discretion under s 15(2) of the Act should be exercised at all, given the delay in seeking the remedy. That would have required evidence as to the reasons for the delay and of circumstances relevant to the exercise of the Court’s discretion to grant a remedy under s 15(2) of the Act.
In view of the decision to refuse permission to amend the grounds of appeal to include ground 20, it is not necessary to consider the remaining grounds of appeal. Those sought to be deleted were not relied on. Those that remain cannot by themselves affect the outcome.
In my opinion the application for permission to amend the notices of appeal should be dismissed. It follows that the appeals must also be dismissed.
ANDERSON J. In my view permission to amend the notices of appeal should be refused. I agree that the appeals should be dismissed for the reasons given by Bleby J.
WHITE J: I agree with the orders proposed by Bleby J. I also agree with his reasons.