Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2012 0117
SUNLAND WATERFRONT (BVI) LTD SUNLAND GROUP LIMITED (ACN 063 429 532)	First Appellant Second Appellant
v
PRUDENTIA INVESTMENTS PTY LTD (ACN 091 390 742) HANLEY INVESTMENTS PTY LTD ANGUS JOHN LUXMORE REED MATTHEW JAMES JOYCE	First Respondent Second Respondent Third Respondent Fourth Respondent

S APCI 2012 0017
SUNLAND GROUP LIMITED (ACN 063 429 532)	Appellant
v
PRUDENTIA INVESTMENTS PTY LTD (ACN 091 390 742) ANGUS JOHN LUXMORE REED MATTHEW JAMES JOYCE	First Respondent Second Respondent Third Respondent

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JUDGES	WARREN CJ, OSBORN JA and MACAULAY AJA
WHERE HELD	MELBOURNE
DATE OF HEARING	15 – 18 April and 29 July 2013
DATE OF JUDGMENT	6 September 2013
MEDIUM NEUTRAL CITATION	[2013] VSCA 237
JUDGMENTS APPEALED FROM	[2012] VSC 239 (Croft J) [2012] VSC 1 (Croft J) [2012] VSC 399 (Croft J)

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TRADE PRACTICES – Misleading or deceptive conduct – Appeal from trial judge’s dismissal of appellants’ claims for damages – Degree of precision required in pleading and proving representations where impugned conduct is alleged to be founded upon oral statements − Whether trial judge erred in not considering certain evidence said to demonstrate an intention to mislead or deceive − Whether pleaded representations were made by respondents – Whether respondents’ conduct was misleading or deceptive or otherwise in breach of statutory prohibitions – Whether the appellants relied on any conduct including misrepresentations to their detriment – Whether loss or damage established by the appellants – Whether judge erred in making adverse findings as to credit of appellants’ witnesses – Extra-territorial application of trade practices legislation – Appeal dismissed – Watson v Foxman (1995) 49 NSWLR 315 − Gould v Vaggelas (1985) 157 CLR 215 − Fox v Percy (2003) 214 CLR 118 – Trade Practices Act 1974 (Cth) ss 5(1), 52, 53, 82 – Fair Trading Act 1999 (Vic) ss 9, 12.

DECEIT − Claim for damages founded upon the same representations as alleged for claim based upon statutory contravention − Whether trial judge erred in not considering certain evidence said to demonstrate joint purpose − Claim failed for failure to prove alleged representations − Appeal dismissed.

PRACTICE AND PROCEDURE – Importance of pleadings in large and complex litigation – ASIC v Rich (2009) 236 FLR 1.

PRIVATE INTERNATIONAL LAW – Anti-suit injunction – Appeal against decision issuing an anti-suit injunction in relation to foreign proceedings – Where foreign proceedings involve similar factual dispute – Where complete relief available in the local proceedings – Whether evidence of additional cost or inconvenience required to establish that co-existence of proceedings is vexatious or oppressive – Whether vexatious or oppressive to continue foreign proceedings – Whether legitimate juridical advantage in continuing foreign proceedings – Whether abuse of court process to continue foreign proceedings – Appeal dismissed – CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345.

PRACTICE AND PROCEDURE – Application to adduce fresh evidence in an appeal – Application refused – Apostolidis v Kalenik [2011] VSCA 307.

COSTS – Appeal – Where appeal on the merits fails – Leave required to appeal against cost orders – Special costs orders – Where a proceeding is commenced or continued for some ulterior motive or in wilful disregard of the facts or clearly established law – Presumption where case hopeless – Where allegations of fraud made which are baseless – Where breaches of overarching obligations under the Civil Procedure Act 2010 – Leave refused.

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Appearances:	Counsel	Solicitors
For the Appellants	Mr D O’Callaghan SC with Mr P Zappia and Mr S Monks	Thomsons Lawyers
For the First to Third Respondents	Mr J T Rush QC with Mr H R Carmichael	Herbert Smith Freehills
For the Fourth Respondent	Mr P W Collinson SC with Mr N D Hopkins SC	Norton Rose

Table of Contents

Introduction

The Substantive Appeal

Grounds of appeal

Background

The ‘money trail’ evidence

Investigation by Dubai authorities 2008/2009

What was Sunland’s case at trial?

‘Right to acquire’
The Pleadings
The arguments at trial
Disaggregated or cumulative representations?
Sunland’s scheme case: the ‘money trail’ and other evidence

What representations did Sunland prove?

The statements upon which the appellant relies
Immediate context of the first alleged representations
Brown’s contact with Joyce
Brown’s conduct after the conversation of 15 August 2007
16 August 2007
The email exchange between Brown and Joyce on 16 August 2007
The meeting of 19 August 2007
The draft implementation agreement of 23 August 2007
The telephone conversation of 29 August 2007
The rolled-up pleading as to representations
The further September 2007 negotiations
16 September to 18 September 2007
Final implementation agreement
Hanley
Conclusion on the representations

Were the representations false?

Did Sunland rely upon any false representation when paying the fee to Hanley?

Did Sunland suffer loss and damage in reliance upon the representations?

Other alleged errors

Credit findings
Alleged errors in applying the principles of Browne v Dunn and Jones v Dunkel
Jurisdiction: extra-territorial provisions of the TPA and FTA

Conclusion on the substantive appeal

The Anti-Suit Injunction Appeal

Background

The proceedings in Dubai
The Dubai World proceeding
The applications for injunctive relief

Grounds of appeal

Applicable principles

Prima facie oppression and vexation

Onus and evidence required to establish oppression and vexation

Election

No legitimate juridical advantage

Benefit of obtaining a UAE judgment
Evidence available to the Dubai Court
Other inchoate benefits
Defending the Dubai World proceedings

Sunland’s claim in Dubai undermines the processes of this Court

Other grounds of appeal

Application to adduce fresh evidence

The fresh evidence should not be admitted

The Costs Appeal

Principles governing a special award of costs

The application for costs

The factual basis of his Honour’s costs order

Conclusion on costs

Schedule

THE COURT:

Introduction

On 1 October 2007 Sunland Water Front (BVI) Limited (‘Sunland’)[1] made an agreement with Dubai Water Front LLC (‘DWF’), a government-owned land owner in Dubai, United Arab Emirates (‘UAE’), to buy land in Dubai (‘plot D17’) for the equivalent of approximately AUD $63 million (AED 192,846,000). On that same day, Sunland paid approximately AUD $14 million (AED 44,105,780) as a ‘consultancy fee’ to Hanley Investments Pte Ltd (‘Hanley’).[2]
[1]The first appellant in the substantive appeal.
[2]The second respondent in the substantive appeal.

With Sunland’s agreement, Hanley received the fee in place of Prudentia Investments Pty Ltd (‘Prudentia’),[3] Hanley’s parent company. It is sufficiently clear that that arrangement was made purely for internal ‘structuring’ (ie taxation) reasons within the Prudentia group; otherwise the fee would have been paid to Prudentia.[4]
[3]The first respondent in both appeals.
[4]In these reasons we will chiefly refer to Prudentia as it was the entity that had all relevant dealings with Sunland and DWF.

But the reason why Sunland agreed to pay that fee at all (first to Prudentia, then to Hanley) lies at the heart of this appeal, as it did at trial.

At trial, Sunland contended that it was induced by misleading and deceptive conduct on the part of Prudentia and its then managing director, Angus Reed, [5] and on the part of Matthew Joyce,[6] the then managing director of the DWF, to believe that it was necessary to pay the fee to Prudentia in order to acquire the land from DWF. It was common ground that, as Sunland knew, Prudentia neither owned plot D17 nor had entered a sale and purchase agreement to buy it.
[5]The third respondent in the substantive appeal and the second respondent in the anti-suit injunction appeal.
[6]The fourth respondent in the substantive appeal and the third respondent in the anti-suit injunction appeal.

Sunland alleged that the misleading and deceptive conduct consisted of Prudentia (or Reed) and Joyce representing to it that: (1) Prudentia (or Reed) had a ‘right to acquire’ the land from DWF; (2) DWF could not sell the land to Sunland without Prudentia’s (or Reed’s) consent, and; (3) Sunland would need to reach agreement with Prudentia (or Reed) if it wanted to buy the land or acquire any rights to develop it. Sunland claimed that, induced by that belief, it agreed to pay Prudentia (ultimately, Hanley) the fee, calculated by reference to the price of the land from DWF, in order to assume Prudentia’s ’right’ to negotiate the purchase of the land from DWF.

Sunland further alleged that each of those representations was false because Prudentia did not have any existing right to acquire the land, DWF could sell the land to Sunland without Prudentia’s consent, and it was not necessary for Sunland to reach any agreement with Prudentia before buying the land from DWF.

It claimed damages of approximately AUD $14 million upon causes of action under s 82 of the Trade Practices Act 1974 (Cth) (‘TPA’), and Victorian statutory equivalents, as well as damages for loss of commercial reputation. Based essentially upon the same facts, Sunland also made a claim for damages upon the common law tort of deceit. Relief was claimed against Prudentia, Reed and Joyce.

The trial judge only heard evidence from witnesses called by Sunland; none of Prudentia, Reed or Joyce called witnesses. His Honour dismissed each of Sunland’s claims, rejecting every constituent element of the various causes of action.

First, his Honour held that Sunland failed to prove the representations which it pleaded.[7] Debate on this element exposed an issue that permeated much of the proceeding, namely the sense in which the expression ‘right to acquire’, found in the first pleaded representation, was to be understood on Sunland’s case.
[7]Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 2) [2012] VSC 239 (Croft J) (‘Reasons’) [240].

Secondly, his Honour held that Sunland had failed to prove the falsity of the representations, primarily because Sunland was unable to articulate or explain what it meant by ‘right to acquire’ in the first of its three alleged representations.[8] The judge was not satisfied that the first alleged representation was false if the word ‘right’ was taken to mean something less than an enforceable legal right.[9] However, ultimately, his Honour concluded that Sunland’s pleaded case did require it to establish a representation with respect to an enforceable legal right (proprietary or contractual) to the land.[10] As it was not contended by any party that Prudentia ever held such a right, his Honour’s analysis turned to the next issue, namely that of reliance.
[8]Reasons [237].
[9]Reasons [240].
[10]Reasons [243].

Thirdly, on that issue of reliance, his Honour concluded that the fee was not paid by Sunland in the belief it would thereby acquire any legally enforceable right (proprietary or contractual), or for that matter any other ‘right’, in respect of plot D17.[11] Rather, his Honour held that Sunland, a land developer, paid the fee for commercial reasons to secure Prudentia’s non-competition for the site, motivated by the prospect that it would make a very substantial return by developing the land.[12] For these reasons, his Honour found that, when entering the agreement to pay the fee, first to Prudentia then to Hanley, Sunland did not rely on any representation contended for by Sunland, whether pleaded or otherwise.[13]
[11]Reasons [294].
[12]Reasons [303].
[13]Reasons [302].

Finally, on the question of loss and damage, the trial judge found that Sunland failed to prove it suffered any loss and damage even if it could prove that it had been induced by the statutory misconduct to enter the Hanley agreement, and pay the fee. That was so whether Sunland’s hypothesis was that, but for the representations, it would not have purchased plot D17 at all (the ‘no transaction case’), or that it would have purchased plot D17, alone or in a joint venture, but without paying Hanley the fee (the ‘transaction case’).[14]
[14]Reasons [428].

On the hypothesised no transaction case, the judge found that Sunland failed to establish that it suffered any loss when one took into account the benefits it actually derived from having purchased the land, in the absence of any evidence of its ultimate net financial position.[15] On the other hand, on the hypothesis that it would have negotiated for and purchased plot D17 in any event, his Honour found that Sunland failed to establish the likelihood that DWF would have sold the land to it, rather than Prudentia, leaving the more probable inference that Sunland would have had to acquire Prudentia’s rights under a sale and purchase agreement (and, presumably, pay a sum equivalent to the fee).[16]
[15]Reasons [438].
[16]Reasons [439].

Primarily (but not solely) for the reason that he did not find that Prudentia, Reed or Joyce had made any false representation to Sunland, his Honour also dismissed the claim brought in deceit.[17]
[17]Reasons [244], [424].

In addition to and in the course of making his findings on the principal elements of the various causes of action, his Honour made other adverse findings against Sunland. He made adverse findings on the application of the rules in Jones v Dunkel[18] and Browne v Dunn[19] to aspects of the evidence. He made adverse findings as to the credit of Sunland’s two principal witnesses, namely its design director, David Brown, and its then managing director of its Dubai branch, Soheil Abedian. And, finally, he made adverse findings on the question whether s 52 of the TPA (and its state equivalents) invoked the Court’s extra territorial jurisdiction.
[18]Jones v Dunkel (1959) 101 CLR 298.
[19]Brown v Dunn (1893) 6 R 67.

In a separate judgment, the trial judge gave reasons[20] for granting an anti-suit injunction preventing Sunland Group from pursuing substantially similar claims against Prudentia, Reed and Joyce in Dubai. Our reasons in respect of the appeal from that judgment are set out at para [419] below.
[20]Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No1) [2012] VSC 1 (‘Anti-suit Reasons’).

In a further judgment, the trial judge gave reasons[21] for the making of a special costs order against Sunland to pay the defendants’ costs on an indemnity basis. Our reasons in respect of the appeal of those orders are set out at para [530] below.

The Substantive Appeal

[21]Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3) [2012] VSC 399 (‘Costs Reasons’).

Grounds of appeal

Sunland’s appeal was comprehensive, challenging all of the above findings. Its Amended Notice of Appeal, dated 10 April 2013, concerning the trial judge’s judgment on the substantive claim, contained no less than 67 enumerated grounds, with many sub-grounds. We will not set them out, but will endeavour to summarise and categorise the complaints.

The first broad head of complaint was that the trial judge did not properly consider the case theory that Sunland advanced in its pleadings and at trial.[22] One way that argument was put was that the trial judge wrongly confined Sunland’s case concerning the first alleged representation to one involving only a legally enforceable right to acquire land. Another was that the trial judge failed to properly consider Sunland’s allegation of joint purpose between Prudentia and Joyce, and certain evidence said to be germane to that allegation. Another, was a rolled-up complaint that his Honour failed to discuss or resolve a number of ‘substantial and serious’ disputed issues between the parties.
[22]Amended Notice of Appeal (‘ANOA’), grounds [1], [1A], [1B], [8], [9], [10], [11], [14], [26], [52], [59], [60].

The second broad head of complaint was that the trial judge failed, on a variety of grounds, to properly evaluate the evidence concerning the representations themselves, that is whether the representations were in fact made and whether, if made, they were false.[23]
[23]ANOA [2], [3], [4], [5], [6], [7], [15], [16], [17], [18], [19], [20], [21], [22], [23], [24], [25], [25A], [27], [30], [53].

The third broad head of complaint was that the trial judge made erroneous findings, not supported by the evidence, on the question of Sunland’s reliance upon the alleged false representations when agreeing to pay the fee.[24]
[24]ANOA [28], [29], [30], [31], [37], [38].

The fourth broad head of complaint was that the trial judge wrongly held that Sunland had failed to prove that it had suffered loss and damage (assuming the statutory misconduct or deceit claims were otherwise made out).[25]
[25]ANOA [61], [61A].

Apart from those broad heads of complaint, there were other alleged errors raised by Sunland’s notice of appeal. Those ‘other alleged errors’ may be summarised as follows:

(a)wrongly making adverse findings on the credit of Brown and Abedian;[26]
(b)failing to correctly apply the principles of Jones v Dunkel in circumstances where the respondents failed to call any witness at trial;[27]
(c)failing to correctly apply the principles of Browne v Dunn in circumstances where the respondents allegedly failed to put their versions of events to the appellant’s witnesses;[28]
(d)wrongly concluding that the extra-territorial provisions of the TPA and the Fair Trading Act1999 (Vic) (‘FTA’) were not enlivened on the facts of the case.[29]

[26]ANOA [31], [32], [33], [34], [35], [36], [36A], [37], [38], [39], [40], [41], [42], [43], [44], [45], [46], [47].

[27]ANOA [12], [13], [48], [51].

[28]ANOA [50].

[29]ANOA [54], [55], [56], [57], [58].

Based upon this summary of the complaints made on appeal, we will address ourselves to the following questions:

(a)       What was Sunland’s case at trial?
(b)      What representations did Sunland prove?
(c)       Were the proven representations false?
(d)Did Sunland rely upon any false representation when paying the fee to Hanley?
(e)If so, did Sunland suffer any loss and damage in reliance upon a false representation made to it?
(f)Did the trial judge make any of the ‘other alleged errors’?

Before turning to each of those questions in turn, we will set out in some further detail the landmark background facts.

Background[30]

[30]The narrative set out below draws heavily upon the agreed summary of facts filed by the parties.

For ease of reference, we have set out in a schedule to these reasons a table containing the names of the persons to whom we will refer, the interest they each represented, and the capacity in which they represented that interest.

Reed was the managing director of Prudentia in 2007. Joyce was the managing director of DWF. Both men were Australian. They had attended the same secondary school in Victoria, at around the same time, and had at least some prior knowledge of one another before the transaction the subject of these proceedings.

DWF was a Dubai government owned company responsible for the master development of a very large greenfield development, known as Dubai Waterfront, intended to become a new business and residential district for the city of Dubai. The Dubai Waterfront development was one of a number of projects undertaken by the Dubai Government. Each development project had its own master developer, established by an overarching government entity, Nakheel PJSC (‘Nakheel’). DWF was Nakheel’s appointed master developer for the waterfront development.

Prudentia was an Australian company. Its business involved land investments in Australia and internationally. In 2007 it had some form of association with a fund in the United States of America, Och-Ziff. The evidence suggested that, by some means, Prudentia sought to partner Och-Ziff in land investments in a number of countries.

Sunland Water Front (BVI) Limited was a company incorporated in the British Virgin Islands although, ultimately, it was a wholly owned subsidiary of a public company listed on the Australian Stock Exchange, Sunland Group Ltd. Sunland Group was a plaintiff below and is the second appellant in this appeal and the appellant in the anti-suit appeal (see para [419] below). Sunland Water Front (BVI) was the company that entered the relevant agreements and paid the fee. But until its introduction to the transaction around mid-September 2007, all relevant dealings with the Prudentia and DWF interests were undertaken by Brown and Abedian as officers for Sunland Group. No point is taken about any distinction between Sunland Group and its subsidiary Sunland Water Front BVI in the events that occurred, and (unless indicated otherwise) in these reasons ‘Sunland’ is a reference to the relevant Sunland party or parties, as appropriate. The abbreviation ‘SWB’ is used where it is necessary to refer to Sunland Water Front BVI distinctly.

Sunland was a designer and builder. Its core business was residential development, both house projects and high rise projects, including hotels. Abedian, an architect by training, had commenced building luxury houses in Australia under the ‘Sunland’ name in 1983. Brown, also an architect, joined Sunland in 2000 after 22 years in the industry. By late 2006 both Abedian and Brown had moved to a Sunland office which had been established in Dubai where Sunland was involved in two major projects, the Palazzo Versace Dubai (a hotel) and D 1 Tower. In early 2007, Sunland had also agreed to purchase a beachfront plot at Dubai waterfront, plot D5B. Sunland was interested in purchasing still more land in the Dubai waterfront precinct, if it was available, and had said so to officers at DWF.

Meanwhile, on 14 August 2007, Mr Anthony Brearley, in house counsel at DWF, provided Prudentia’s Dubai lawyers with a copy of a draft sale and purchase agreement (SPA) for plot D17. The authenticity of a document that may have preceded the sending of that draft contract was hotly contested at trial, and on appeal. The disputed document was a letter dated 10 August 2007, purportedly written to Reed by Jeff Austin, DWF’s town planning director, on Nakheel letterhead. The letter recorded Reed’s attendance at DWF’s office, and confirmed preliminary development and planning approval for a proposed subdivision for plot D17 by Prudentia.

Sunland alleged the letter was a forgery, on a number of bases. Its significance, if genuine, lay in its potential to stand as contemporaneous evidence, as at the date it bore, that Prudentia enjoyed a negotiated position with respect to the land in precedence to other suitors. But, if a forgery, Sunland contended that it supported the existence of a clandestine scheme between Reed and Joyce to mislead Sunland and extract a payment from it.

On 15 August 2007, Mr Jeff Austin had a discussion with Sunland’s Mr David Brown about plot D17. Austin told Brown that a reconfiguration of DWF’s site plan meant that a new plot, D17, would be created adjacent to plot D5B. Although plot D17 did not have absolute beachfront, the reconfiguration of the site plan would give it uninterrupted access to the beach. Austin gave Brown the name of ‘Andrew Angus Reed’ who was said to have had a ‘hold on the plot’. Brown did not ask Austin what that meant.

That same day Brown telephoned Joyce about the plot. Brown had not had many discussions with Joyce since June 2007 because there had been something of a ‘falling out’ with Joyce. Their ‘falling out’ occurred in connection with a prospective joint venture between DWF and Sunland in respect of another plot, plot A10C. Joyce had complained to Brown that Sunland, to use Brown’s words, had ‘betrayed their [DWF’s] confidences’. Brown, for his part, believed there had been a misunderstanding. The relevance of this background event lies in one explanation advanced on behalf of Joyce at trial for Joyce’s desire to have Sunland deal with Prudentia, in relation to plot D17, rather than deal directly with DWF.[31]
[31]Reasons [75].

Brown’s evidence of his conversation with Joyce on 15 August 2007 was that, at a minimum, Joyce told him that Reed was the ‘contact’ for plot D17. Whether Joyce said more than that to Brown about Prudentia’s or Reed’s relationship to the land was a matter of dispute and is discussed in greater detail below.

But it is not in dispute that Brown knew that Prudentia had not signed SPA in respect of plot D17 and that it had not paid a deposit. At the time of this conversation, plot D17 did not exist; it was being created from a series of other plots and was subject to final planning approval, although a planning template disclosing BUA (built up area), FAR (floor area ratio) and total land area had been prepared.

The next day, 16 August 2007, Brown telephoned Reed about plot D17. Reed was in Australia preparing to travel to Dubai. Reed had not met or ever talked to Brown prior to Brown’s call. Brown asked Reed if he was interested in a joint venture with Sunland to acquire and develop plot D17. Reed said that he was.

The precise content of the two conversations Brown had, first with Joyce, and then with Reed, on 15 and 16 August 2007, was in dispute at trial. They are each examined in further detail below.[32] But, in short, Sunland relied on each of them for the proposition that first Joyce, and then Reed, represented to it that Prudentia enjoyed some form of right in respect of or control over plot D17.
[32]See [172] – [193].

Brown then exchanged emails with Joyce after his (Brown’s) telephone conversation with Reed. Brown wrote to Joyce saying, ‘We have spoken to the gentleman in Australia [ie Reed], and have a tentative meeting with him on Sunday. It was a very positive discussion.’ Joyce replied and said, ‘Good luck, thanks. I thought they were based here? Anyway the issue for us is that you can come to an arrangement with them that allows you to deal directly with us.’ (our emphasis). As will be seen, Sunland placed significant reliance on the emphasised sentence from this email from Joyce in seeking to make out the second and third pleaded representations. [33]
[33]See [5] above.

Sunland and Prudentia thereafter engaged in negotiations concerning plot D17 during the latter half of August and throughout September 2007, and did so initially in pursuit of terms of the joint venture between Prudentia and Sunland as first proposed by Brown to Reed.

From very early on there were discussions between Brown and Reed about payment of a ‘premium’ to be made by Sunland to Prudentia under the terms of any joint venture arrangement. There appeared to be little if any resistance from Sunland to that notion. It was apparent from the contemplated terms of the joint venture, embodied in drafts of an agreement we come to shortly, that the concept of a ‘premium’ in this context was an uplift on the price of the land to be reimbursed to Prudentia for it having paid for the land and provided it to the joint venture. That reimbursement (incorporating the ‘premium’) was to be made at the conclusion of the joint venture development, then thought to be some six years into the future, after third party debt had been repaid but before distribution of profits to the joint venturers.

Although Reed did not accept the terms for a joint venture based upon the initial model proposed by Sunland, nevertheless, in emails he sent to Brown on 20 August 2007, he said his preferred approach was to acquire and develop plot D17 in a joint venture with Sunland, provided there were equitable financial contributions.

By 23 August 2007 a draft implementation agreement (MOU) had been prepared to progress the parties’ negotiation of headline joint venture terms. Sunland sought to make much of the fact that in the draft MOU prepared by Prudentia, and subsequent iterations of it, there appeared a recital under the heading ‘Background’, stating that ‘Prudentia has reached agreement with [DWF] to acquire and develop [plot D17]’.

In any event, the parties did not ultimately enter into a joint venture agreement. But before coming to the point of departure from that concept, a further conversation allegedly took place between Joyce and Brown upon which Sunland placed great reliance in its case against Joyce. Sunland claimed that on 29 August 2007, Joyce told Brown that Sunland should come to an agreement with Reed as soon as possible because there were other buyers around who might offer Reed a significantly higher sum of money than the sum upon which the premium, priced into the joint venture, had been calculated. By his pleading, Joyce denied the conversation.

Sunland’s pleaded case was that, by reason of the statements that had been made in documents and discussions up to and including 29 August 2007, Joyce and Reed made the three representations to Sunland set out at [5] above.

Soon after 12 September 2007 the parties moved from discussing a joint venture arrangement to a different arrangement.

On 12 September 2007, Brown emailed Reed after he had received a call from Brearley and Marcus Lee (both at DWF). Brown told Reed, amongst other things, that Brearley and Lee were concerned that DWF’s marketing people were likely to try to sell the plot and that they, Brearley and Lee, would have no control over the marketing people should they do so. According to Brown’s report of the conversation, Brearley and Lee suggested that ‘we immediately “put our foot on the Plot” to secure it’. To do so, Brown recommended to Reed, ‘we need to sign a Sale and Purchase Agreement’, and he set out some proposed terms. He further recommended that, in the first instance, Sunland should negotiate with DWF and purchase plot D17 using a Sunland subsidiary as purchaser then, later, transfer the land to a new company (presumably to be jointly owned by the parties). This email came to be known at trial, and on appeal, as the ‘put your foot on it’ email.

Reed responded to Brown by email the following day telling Brown to ‘go for it’.

The revised structure of the transaction, prompted by the expressed need for urgency, resulted in a flurry of revisions to the then proposed MOU. Out of this process emerged a completely different proposition.

On 16 September 2007, at Abedian’s suggestion, Brown telephoned Reed, said ‘this is all getting too hard’, and proposed that Sunland simply pay Prudentia AED 20 million for Prudentia to ‘walk away’ to allow Sunland to buy the land in its own right. Prudentia was amenable to that proposal. Thereafter the negotiation turned to finalising an arrangement of the kind proposed by Brown. Because, at the same time, it became possible for Sunland to obtain an even more favourable price for the land than the price that had been previously discussed (at AED 120/sqft rather than AED 135/sqft), and it was also to obtain some bonus land, Sunland agreed to pay Prudentia an additional fee of AED 24 million, taking the total fee to AED 44 million.

After several drafts and re-drafts of its terms, on 19 September 2007 Sunland and Prudentia executed an agreement. On 26 September 2007, Prudentia’s solicitor requested that, for structuring purposes, Sunland discharge the agreement with Prudentia and execute a materially identical agreement with Hanley. Later that same day, Sunland and Hanley executed their agreement. A central provision of the agreement (clause 2) was in these terms:

In consideration of payment of the Consultancy Fee [AED 44,105,780], Hanley agrees to transfer to Sunland its right to negotiate and enter into a plot sale and purchase agreement for the acquisition of [plot D17] with [DWF].

Sunland alleged that it was induced by the pleaded representations, first to negotiate the proposed joint venture with Prudentia then, secondly, to enter the Hanley agreement, buy plot D17 from DWF, and pay the consultancy fee. However, as will be seen, the different nature of the joint venture concept and the ‘premium’ as contemplated pursuant to that arrangement, on the one hand, and, on the other, the Hanley agreement and the ‘consultancy fee’ payable under it, assumed importance in submissions at trial, and in the trial judge’s conclusions, on the question of reliance (ie causation).

SWB settled its purchase of plot D17 from DWF on 1 October 2007, the same day it provided Hanley with a cheque for AED 44,105,780, being the fee payable under its agreement with Hanley.

Certain events occurring after 1 October 2007 arguably had some bearing on the findings to be made about the events that preceded that date. We will describe those events now.

The ‘money trail’ evidence

There was a body of evidence, referred to as the ‘money trail’ or ‘money flow’ evidence, which concerned the distribution of the AED 44 million after it was paid to Hanley, and some other evidence which might explain that distribution. We will briefly explain the nature of that evidence, but will need to return to it when we discuss the first question, viz ‘What was Sunland’s case at trial?’.

Documents were in evidence before the trial judge suggesting that one half of the Hanley fee (ie approximately AUD $7 million) was ultimately paid for the benefit of Joyce. Sunland wished to use that evidence as a basis from which to infer the existence of a covert arrangement between Reed and Joyce, made before negotiations with Sunland even commenced, that Joyce would be paid by Prudentia for deals he introduced or assisted with.

If that were so, Sunland contended, such a payment was relevant to the issues that had to be decided by the court. For a start, it argued that such a payment would be relevant to the cause of action in deceit. In particular, it would be relevant to the pleaded allegation that Joyce and Reed had the joint purpose of inducing Sunland to enter an agreement with Prudentia in relation to plot D17. Additionally, Sunland contended, such evidence was relevant to establishing an intention on the part of Joyce that Sunland should rely upon the representations he made, which intention could assist Sunland prove that it did in fact so rely. That is, it was also relevant to Sunland’s case on misleading and deceptive conduct. [34]
[34]See Gould v Vaggelas (1985) 157 CLR 215, 236 (Wilson J).

Investigation by Dubai authorities 2008/2009

Fourteen months after the transaction settled, on 1 December 2008, Brown was asked to attend an interview with prosecutors in Dubai concerning Sunland’s purchase of plot D17. He spoke to Mohammed Mustafa Hussein Mohammed Kamel (‘Mustafa’), the director of the Financial Audit Department of the Emirate of Dubai. That commenced an investigation which, so far as Sunland was concerned, lasted well into 2009. The investigation of Sunland was, for a time, of serious concern. The investigators told Brown that the investigation was a criminal investigation into bribery and that, in their opinion, the transaction Sunland had entered into regarding plot D17 was a bribe. Brown’s passport was taken by the authorities in January 2009 and not returned to him until 21 July 2009.

As a result of that investigation, Brown (and Abedian) made statements to the Dubai authorities, corresponded with them, and made notes and reports internally for Sunland and its lawyers. Those documents were in evidence.

Brown’s accounts of the plot D17 transaction and of his dealings with Reed and Joyce (and other DWF officers), given both to the prosecutors and to Sunland provided a substantial body of evidence against which to test the account he gave to the trial judge; likewise for Abedian.

As a consequence of the investigation by the authorities Joyce, was charged with bribery and was, for a time, imprisoned, and then later held under house arrest in Dubai awaiting trial.[35] One of the submissions the respondent parties have made in this case, at trial and on appeal, was that Brown tailored his account to the authorities of what occurred in the transaction to protect his and Sunland’s interests. That submission has been repeated on appeal as a means of supporting the trial judge’s conclusions on the credit of Brown and Abedian as witnesses.
[35]Joyce was still awaiting trial in Dubai at the time of the hearing of the proceeding before Croft J, and at the time of the hearing of this appeal. He has since been convicted.

The investigation, and the various accounts given by Brown and Abedian in the course of it, featured in the trial judge’s conclusions on the credit of Brown and Abedian, and in his findings generally. We consider it useful to set out the course of the investigation in further detail.

On 21 January 2009 Brown was interviewed for about seven hours at police headquarters. He was locked in, and his mobile phone was taken away. Brown was allowed to leave after signing a statement written in Arabic and surrendering his passport and entering into a bail bond. He was told the transaction was ‘unlegal’ as Reed did not own the site. Brown wrote a statement the following day describing Reed as saying that ‘he had a plot at Waterfront’ and, through discussions with Nakheel, Sunland understood ‘that [Sunland] had to have an arrangement with Angus Reed to be able to develop the plot together.’

On 26 January 2009 a search warrant was issued pursuant to an authorisation by the Dubai authorities. Brown was present at the search and had a discussion with Mustafa and another man. He was again told that the authorities considered the transaction illegal as Reed did not own the site, that Brown was lucky to be out and that Lee and Joyce were ‘frozen’ which Brown assumed to mean under arrest or having their passports held also. Brown was told he should try to remember everything and withhold nothing or it would be bad for him. Brown told Mustafa that their ‘contacts at Nakheel were Lee, Joyce and Brearley and they backed up Reed’s claims in so far as they knew, a group from the US was involved and Reed was the spokesperson for the group.’ Brown was asked again who the contacts were in Nakheel that had put Reed in touch with Brown. Brown said that he did not know, but assumed Reed had got their contact details from someone in Nakheel.

To this point, no mention had been made of the role of Joyce in introducing Brown to Reed, or that Joyce had asserted that Reed or Prudentia held some right over plot D17.

On 1 February 2009 Brown received confirmation that Lee and Joyce had been arrested and on 2 February spoke to a person from the Sunland Board, providing them with a signed statement.

Brown provided a document entitled ‘Brief to Prosecutors – 15 February 2009’ to the Dubai prosecutors. There are some differences between this version and an earlier draft. In particular, the draft version of the document did not make any mention of Joyce and gave no indication of why Reed chose to contact Brown. The final version of the document is amended in that it inserts a new dot point and rewrites the dot point beneath. It states:

·In mid August 2007, Matt Joyce called us and said that we [sic] there was a gentleman who controlled a site behind our D5B, and that this man had a relationship with Lend Lease and Och-Ziff in the States. Matt said we should expect a call and meet with him to discuss the property.
·A few days later, we were telephoned by an Australian, Angus Reed, who told us he represented a Group who controlled a plot at Waterfront. This was corroborated by people at Nakheel. Reed had a company in Melbourne Australia and he flew over to meet with us.

Under cross-examination Brown accepted that saying ‘Matt said we should expect a call and meet with him to discuss the property’ was highly incriminating in relation to Joyce’s position, if true, and that it indicated Joyce knew Reed or knew what was going on.

On 16 February 2009 Brown was interrogated at the Public Prosecution Headquarters. Brown described occasions where he asked Joyce about any lots adjacent to plot D5B that also overlooked the sea and was told that none were available. Brown said that Joyce introduced him to Reed, that Joyce contacted him and described Reed as having the plot Brown was seeking. Brown denied contacting Joyce initially about obtaining plot D17 because it was adjacent to plot D5B. Brown said that Reed called a few days later and said that he owned a lot and offered an investment in it. Brown said that Reed told him that he had strong relations with Och-Ziff, good relations with Nakheel management, and he could obtain privileges from them for this lot, including a discount on price, which was in fact obtained.

Brown stated that they later met and Reed offered plot D17 on the understanding that it was his. Brown said that when Reed showed him the map which Joyce had showed him, he claimed he was owner of the new plot. Brown also said that Reed spoke to him as if he had control and jurisdiction over the plot and acted as if the plot belonged to him. Brown added that Reed offered to renounce the plot in return for payment of consultation fees. Further, Brown said that he told Lee that Sunland wanted to purchase the plot from Prudentia and that Reed offered Brown the plot. He also said that he purchased the plot from Reed.

According to Brown, Joyce informed him that he they could not obtain the plot without reaching an understanding with Reed, that Reed needed to renounce the plot, and that Joyce repeatedly said that the plot belonged to Reed. Brown said that Lee encouraged him to get the plot from Reed. He also said that he felt Joyce and Lee were helping Reed to finalise the sale of the plot to Brown and were pushing him to purchase or obtain the plot from Reed.

Brown added that it would amount to fraud against him if the land did not belong to Reed or was not reserved in his name.

Brown was advised on 29 April 2009 that he was only to be a witness in the case. However, his passport was not returned, although he was told that it would soon be released. He was also told that without his cooperation the prosecutors would not have been able to prove the charges against Joyce.

It is clear from at least this stage onwards that Sunland was keeping the Dubai authorities informed and continuing to cooperate with them while simultaneously considering civil action in Australia.

Brown met with the prosecutor again, on his own instigation, on 17 May 2009. The prosecutor revisited the issue of why Sunland paid the money when Reed did not have rights to plot D17. At that meeting Brown sought an update on the investigation against Joyce and Lee and was told the prosecutor’s job was to deliver a conviction. Brown offered to assist in any way possible. Brown also told the prosecutor that Sunland was considering commencing legal proceedings in Australia and they wanted to check it was supported. He was told that it was supported, that it was recommended they start as soon as possible and that the prosecution would appreciate a copy of documents involved in the case. Brown was unable to obtain any certainty about when his passport would be returned and was told he might have it returned in two weeks.

On 18 May Brown sent an email to Soheil Abedian and Sahba Abedian (Soheil’s son, and at that time Sunland’s managing director) about the meeting, copying it also to Sunland’s lawyer, Ron Eames at DLA Phillips Fox. Brown suggested that Sunland prepare a report that could be given to the prosecutor covering their strategy for starting civil proceedings in Australia against Reed and Brearley.

Brown’s story, as it had evolved to that point, is more or less reflected in the DLA briefing paper, written by Eames, provided to the prosecutor on 31 May 2009. That paper, which Brown participated in creating, states, inter alia: that Joyce offered to introduce Sunland to Reed; that Joyce said Reed had the right to purchase D17; and, ‘Joyce advised Sunland that it had to come to an arrangement with Prudentia before Dubai Waterfront would enter into a Sales and Purchase Agreement with Sunland.’ It also said that Joyce confirmed Prudentia ‘controlled’ plot D17.

The paper said that Reed made a representation that he had development rights over plot D17. It says that ‘Sunland was lead [sic] to believe and it is the case that if Prudentia truly held the development rights for plot D17 then it would not have been possible for Sunland to purchase it without first coming to an agreement with Prudentia to acquire the development rights from it.’ It also says that ‘[a]fter making the payment Sunland discovered that Prudentia did not have a reservation contract or any rights in relation to plot D17’ and that Reed’s statements were false as ‘Prudentia did not have any enforceable rights under UAE law in relation to plot D17’ (our emphasis).

When the paper was given to the prosecutor at a meeting on 31 May 2009, he asked for a translation as soon as possible. At that meeting the possibility of issuing proceedings in Dubai was also discussed as well as a status update as to the prosecutor’s case. Another request was made for Brown’s passport, on the basis that he would need to travel to Australia regarding Sunland’s case. The prosecutor was recorded as respecting this need and saying it could be returned in a week or so. It was noted that the meeting was very positive, the prosecutor was keen to finalise the case and that Sunland’s co-operation would play a key role in supporting the proceedings.

Thus, across time, Brown’s version of the events in 2007 changed. At first it was that Reed merely held himself out to have development rights or a right to develop or acquire through Och-Ziff. It later evolved to Reed having said and acted as if the plot belonged to him and that Brown was under the impression that the land belonged to Reed or was reserved in his name or that Reed had some enforceable right under UAE law.

Brown’s version of events also changed so that the corroboration provided from Nakheel about Reed’s rights became more concrete. In addition, Joyce became more involved, ultimately being the one to introduce Reed to Brown and to confirm that Brown needed to come to an arrangement with Reed to obtain plot D17 and even confirming that Reed owned plot D17.

Much of this story was ultimately not Brown’s evidence before the Court. When cross-examined about the differences between the version of events in evidence before the court and that which was told to the Dubai prosecutors, Brown responded that it was his recollection at the time and he did not intend to mislead. He said he had access to his diary at the time. He also commented that some of the translations were wrong, although he made no attempt to correct them or the facts conveyed in them until July 2010. Brown generally denied that the visit to the prosecutor on 17 May 2009 was a tactic and that the giving of the report on 31 May was a lever to assist his own position and to obtain his passport. He claimed that the report was not prepared solely for the benefit of the prosecutor but rather that was only one of its purposes.

Sunland sent letters of demand to Brearley, Reed and Prudentia on 4 June 2009. Joyce was charged on 16 July 2009. Brown’s passport was returned on 21 July 2009. Sunland issued an ASX and Media Release stating that the Dubai authorities has finished their investigations, Brown had his passport returned and Sunland was investigating civil remedies. It also said Brown was a witness in the Dubai investigations and was never investigated or detained.[36] This was followed by a 17.2% increase in the second appellant’s share price. The Australian proceedings were issued on 10 August 2009.

What was Sunland’s case at trial? [37]

[36]In fact, as Brown admitted at trial, he was the direct subject of investigation.

[37]See [24] above.

We return to the first issue which arises on the appeal, namely Sunland’s complaint that the trial judge did not properly consider its case theory as advanced in its pleadings and at trial. It has several components as we have set out above.[38]

‘Right to acquire’

[38]See [19] above.

We first consider the issue of whether the trial judge wrongly confined Sunland’s representation case to one requiring it to establish that Reed or Prudentia had held themselves out as having a legally enforceable right to acquire plot D17.

It is correct to say that His Honour ultimately concluded that the case Sunland set out to prove was one involving a representation concerning a legally enforceable right to acquire the land:

…I think it is the position that for Sunland to establish its case it was necessary for it to establish the Representations with respect to a legally enforceable right to Plot D17, “contractual” or otherwise – and that those representations, by words or conduct, were in breach of the statutory cause or causes of action relied upon, or satisfied the elements required to establish a cause of action in deceit. Anything less than an enforceable right, on some basis, one might think would lead nowhere in either the statutory or tortious causes of action, in terms of primary liability or loss and damage.[39]

[39]Reasons [243]; see also Reasons [23] and [27].

Nevertheless, his Honour did address arguments based upon a case involving a representation concerning a lesser ‘right’, although, for reasons which we will explain we do not think it was strictly necessary to do so. The question is, what was the case his Honour was bound to consider.

After alleging the identity and characteristics of the relevant parties to the proceeding in its Second Further Amended Statement of Claim (‘SFASOC’), Sunland pleaded a series of oral and written statements made to Brown by officers of DWF and by Reed, first between 15 August 2007 and 29 August 2007,[40] and then between 12 September 2007 and 26 September 2007.[41] As we have already mentioned, the statements made up to and including 29 August 2007 were said to found the three critical representations upon which Sunland alleged it relied in various respects. The representations were alleged in these terms (with our emphasis):

19.The premises pleaded above amounted to representations (‘the Representations’) made by Joyce (namely paragraphs 9, 12, 14 and 18) and also made by Reed (namely paragraphs 13, 15, 16 and 17) that:
19.1Reed or Prudentia or both of them had a right to acquire Plot D17 or the land on which Plot D 17 was located;
19.2Dubai Waterfront could not, without the agreement of Reed or Prudentia or both of them, sell Plot D 17 or the land on which Plot D 17 was located, or any rights in connection with the development thereof, to Sunland; and
19.3If Sunland wishes to purchase Plot D17 or the land on which Plot D17 was located, or acquire any rights in connection with the development of Plot D17 it had to negotiate and make a contract with Reed or Prudentia or both of them. [42]

[40]SFASOC [10]-[18].

[41]SFASOC [24]-[32].

[42]SFASOC [19].

As we show below, the evidence led by Sunland in support of the ‘premises’ referred to in the opening words of para [19] demonstrated that the only ‘right’ in respect of plot D17 that Reed or Prudentia held themselves out has having, was a preferred right to negotiate for its purchase. It was a commercial position, not a legally enforceable right to acquire.

Whether or not it was true that Reed or Prudentia did enjoy such a commercial position with respect to the land is one thing. Another is whether Sunland’s case concerning the representations that were made to it, and upon which it relied, extended to a representation that Reed or Prudentia enjoyed a position of that kind. For it is only if it did that the trial judge was called upon to consider the truth or otherwise of such a representation, or the question whether Sunland relied upon such a representation, in entering the Hanley agreement and paying the fee.

On this issue, the respondents’ primary arguments on appeal were that Sunland’s case at trial was confined to Joyce and Reed having held Prudentia out as having a legally enforceable right to acquire the land, that is, not merely a commercial bargaining position.

Thus the question arises: what was the nature of the right that Sunland alleged was the subject of the representation made to it? We address that question upon the pleadings and upon the arguments put at trial.

The Pleadings

A valuable collection of the principles concerning the significance of pleadings in a case where a dispute arises about the nature of the case being put forward, is to be found in the judgment of Austin J in ASIC v Rich.[43] There his Honour recites a number of propositions, including that:

·a properly pleaded statement of claim ensures the basic requirement of procedural fairness that the opposite party has the opportunity of meeting the case against him or her, defines the issues for decision, and enables the court to ascertain the facts forming the ingredients of the cause of action;[44]
·particulars define the scope of evidence to be lead in support of the material facts alleged;[45]
·permission to depart from the pleadings is a matter for the discretion of the trial judge, having regard to the interests of justice;[46]
·when litigation is large and complex, with serious consequences for the defendants if the plaintiff succeeds, and the parties are required to incur very substantial costs, the imperative to hold the plaintiff to its pleaded case is strengthened.[47]

[43](2009) 236 FLR 1 [158] – [169].

[44]Ibid [158].

[45]Ibid [158].

[46]Ibid [159].

[47]Ibid [162], [163].

In our view, it is fair to say this litigation was large and complex: on appeal there were 13 volumes of appeal book, and his Honour’s reasons in his primary judgment ran to 295 pages. Millions of dollars were claimed in damages, and there were other potential serious consequences at stake for Joyce, in particular, with the Dubai criminal proceedings, involving the same matrix of facts, hanging over his head. Doubtless the parties have been required to incur very substantial costs.

These principles remind us why pleadings are important. So what did Sunland plead?

Nowhere in the paragraphs alleging the statements and conduct from which the representation was concluded does Sunland allege that Joyce or Reed ever used the particular expression ‘right to acquire’. Nor, as our analysis of the evidence will show, did Sunland prove that those words were used before 29 August 2007. So the words used in the formulation of the critical representation must be words intended to capture the sense of what Sunland contends was actually said, albeit using different words. What is in issue is therefore an interpretation or imputation to be derived from the use of other words. In order to assess whether the phrase ‘right to acquire’ is a fair description or summary of what was conveyed by the use of different words, it is critical to be precise about what Sunland meant by ‘right to acquire’.

One of the criticisms the trial judge made of Sunland’s case – fairly in our view - was its inability to identify what it meant by its own pleading. His Honour described Sunland as having ‘floundered in describing the basis of its case’.[48]
[48]Reasons [241].

In our view, Sunland’s pleadings, taken as a whole, show that Sunland set out to establish a representation as to a legally enforceable right to acquire the land.

It first should be observed that in formulating the first representation Sunland chose to use the expression ‘right to acquire’. Sunland might have chosen ‘opportunity’, or ‘valuable prospect’, or some other description of a chance to acquire unambiguously falling short of a legally enforceable right. But it chose ‘right’. Other than a moral right, the use of the word ‘right’ generally connotes legal enforceability. That is what is distinctive about a ‘right’ compared with other notions of expectations or entitlement. Particularly is that so when the word is used in conjunction with the acquisition of land in a commercial setting. The further prohibitive and imperative phrases in paras [19.2] and [19.3] of the SFASOC (emphasised above), in conjunction with the use of the phrase ‘right to acquire’, reinforce the idea of legal enforceability.

The second indication from the pleading that it carries the notion that Reed or Prudentia held themselves out to have a legally enforceable right to acquire the land, is the particulars given of the falsity of the alleged representations. Paragraphs [21.4], [21.5] and [21.6], containing those particulars, are collectively directed to there being no record of Prudentia possessing some form of ownership of the land. Those particulars allege as follows (with our emphasis):

Particulars of bases for asserting the Representations to be false
21.4On 1 December 2008 Brown met with the director of the Financial Audit Department (an organ of the Emirate of Dubai), Mohammed Mustafa Hussein Mohammed Kamel (‘Mustafa’) at the offices of the Ruler’s Court and Mustafa said to Brown words to the effect that ‘Our records show that you could have bought this land from Nakheel. There is no record of Reed or his entity having any right over the plot’.
21.5On 21 January 2009, Brown was interviewed at Dubai Police Headquarters by Khalifa Mohammad and Khalifa Mohammad said to Brown words to the effect that ‘The transaction with Reed was unlegal (sic) as Reed did not own the land and therefore could not sell it or receive a premium for its sale’.
21.6On 26 January 2009, Mustafa and a number of officials who did not reveal their names attended at Sunland’s Dubai office and conducted a search of Sunland’s computer system and paper files and during the course of that search, one of the said unnamed officials spoke to Brown and during the course of that conversation said to Brown words to the effect that ‘the transaction was illegal because Reed did not own the site’.

So, on Sunland’s case, the fact that neither Reed nor Prudentia owned the site falsified the representation that they or one of them had a ‘right to acquire’ it. These particulars strongly support the view that Sunland was alleging that Reed or Prudentia held themselves out to have a legally enforceable right to the land, tantamount to ownership.

On appeal Sunland submitted that the particulars should be construed as only demonstrating the falsity of the second and third representation, and not the first. We do not see why that is so. If that is so, there were no particulars to demonstrate the falsity of the first representation. The heading to the particulars refers to ‘the Representations’ without distinction. Additionally, as we will come back to shortly, the better view is that all three representations formed a coherent set of cumulative propositions that stood or fell together.

The third sign from the pleadings which helps interpret the meaning of the critical phrase in the first representation is to be found in the later pleadings of Prudentia, and Sunland’s reply to them.

In answer to the allegation that the first representation was false because neither Reed nor Prudentia had a right to acquire the land, Reed and Prudentia admitted that at no material time did they hold ‘an enforceable right in the nature of a conveyance or option or other legal interest in plot D17’.[49] But, they said, ‘at all material times … Prudentia’s interest in plot D17 was as a preferred negotiator with Dubai Waterfront for the right to purchase and develop plot D17’.[50] By their particulars of that assertion, Reed and Prudentia went further to explain their position, saying

‘the phrase ‘preferred negotiator’ is a description of the fact, known to Sunland Group, that Prudentia occupied a commercial position in negotiation with Dubai Waterfront for the acquisition of Plot D17 in precedence to that occupied by Sunland Group but that such position was not based on, and did not confer, an enforceable right in the nature of a conveyance or option or other legal interest in Plot D17 whether pursuant to an executed SPA or otherwise’.[51]

[49]Defence of the First and Third Defendants (‘Prudentia’s and Reed’s Defence’) [21.4(a)].

[50]Prudentia’s and Reed’s Defence [21.4(d)].

[51]Further and Better Particulars to the First and Third Respondents’ Defence [2.2.2(a)].

In reply, Sunland denied Reed’s and Prudentia’s allegation that Prudentia had the interest of a preferred negotiator and re-asserted its contention that Joyce and Reed ‘had made the representations pleaded in paragraph 19’. Furthermore, in written submissions at trial, Sunland argued that Prudentia’s plea that it had an interest as preferred negotiator, in response to the allegation that the representations were false, was ‘not responsive to the allegations of falsity of the pleaded representations’.

If all of that is so, it seems that the pleaded representation about Prudentia having a ‘right to acquire’ the land must mean something which does not include the interest of a preferred negotiator. That inference must follow because, as Sunland would have it, the assertion of such an interest does not prove the existence of the ‘right to acquire’ (and therefore the truth of the representation). In other words, a preferred right to negotiate does not answer the description of a ‘right to acquire’, the subject of the first representation.

In short, the pleadings alone provide a combination of considerations which support the conclusion that Sunland’s case was that Reed or Prudentia misled and deceived it to believe that one or other of them had an enforceable legal right to the land, namely:

•in the context of a land transaction, that is the usual sense in which the expression ‘right to acquire’ is understood;
•it was an interest of that kind which the particulars of falsity pointed to; and
•Sunland’s denial that the existence of a preferred negotiator right (ie a commercial negotiating position) proved the truth of the representation, seemed to exclude the contemplation of something less than a legally enforceable right.

The arguments at trial

In final written submissions at trial Sunland addressed the question of how its pleaded representations were to be understood. It submitted:

Contrary to the submissions of [Joyce], the plaintiffs’ case does not require the finding that the representation was to the effect that there existed a formally binding contract entitling Reed or Prudentia to the Plot. However, as will be seen, the representation was that there was an agreement which conferred upon Prudentia a ‘right’ which was capable of transfer to Sunland.[52]

[52]Plaintiffs’ Address [40] (our emphasis).

A right which was less than a formally binding contract but yet was capable of transfer plainly connoted some species of legal or equitable right.

The argument was further clarified in the oral submissions of Sunland. After submitting that it was not necessary for Sunland to go so far as to establish a representation with respect to a formally binding contract, Sunland’s counsel continued:

But in any event as your Honour will see the written representations relied upon do go that far and so we put our case on the basis that the representation did involve a representation to the effect that there existed as pleaded a contractual right to acquire Plot D17 as alleged in [subparagraph 19.1 of the SFASOC].[53]

[53]Trial Transcript, 925.

However, on appeal, Sunland sought to sidestep the position it had advanced at trial. In written submissions on appeal it argued:

A representation by a party that he has ”a right” is capable of inducing error without any need for the recipient to consider and form a view (if he is even capable of doing so) as to the legal nature, source and enforceability of that right. A statement that a person has “a right” is capable, objectively considered, of inducing the recipient to believe that he must deal with that person if he wishes to acquire an interest in the subject matter of the alleged right. To suggest that the recipient could only arrive at that conclusion by turning his mind to the source or legal nature of the right and forming a view as to its enforceability, is erroneous.[54]

[54]Sunland Appeal Submissions [18].

As Joyce pointed out on appeal, Sunland’s submission ignores the fact that the evidence did not establish that Joyce ever used the word ‘right’. Nor did Reed. Sunland’s witnesses struggled to identify what they understood the notion of ‘right’ meant, bearing in mind it was not a word actually used by the representors. The trial judge listed some of the inexact descriptions given in evidence of what Sunland witnesses perceived the representations meant, including ‘some right’, ‘some control’ and ‘some sort of contract’.[55]
[55]Reasons [241].

We are not persuaded that it was irrelevant, as Sunland would have it, what was the legal nature, source and enforceability of the right said to be the subject of the representation.

One must bear in mind the legal and forensic context in which the issue arises. Sunland alleges certain conduct and asks a court to evaluate that conduct to ascertain whether it was misleading or deceptive. To constitute statutory misconduct, such conduct, in the circumstances, must lead, or be capable of leading, a person into error.[56] Where the conduct is the speaking of words, it is necessary that they be proved – and by necessary implication pleaded – with a degree of precision sufficient to enable the court to be reasonably satisfied they were in fact misleading in the circumstances in which they were uttered.[57] The test for determining whether conduct does contravene the statute is objective, and the court must determine the question for itself.[58] And while an objective test excludes from consideration subjective matters (knowledge, intention) not known to the parties,[59] reasonable inferences, reasonable assumptions and reasonable expectations arising objectively from the circumstances will be in the constructive knowledge of the parties.
[56]Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, 198.
[57]Watson v Foxman (1995) 49 NSWLR 315, 318-319.
[58]Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82, 91.
[59]Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82, 87.

In view of those principles, and having regard to the business sophistication and experience of Brown and Abedian, experience which specifically included previous transactions with DWF, we reject Sunland’s argument that the bald representation of a ‘right’ in those circumstances could be capable of inducing error without any need for the particular recipient to consider or form a view as to its nature. This may look like a consideration more relevant to whether a proven representation was misleading, or whether reliance was placed upon a particular representation as a matter of fact. We will turn to those issues below. But for now, that same consideration reinforces our conclusion that the trial judge was correct in interpreting Sunland’s case in the manner in which he did, and confining Sunland to that case.

On appeal Sunland argued that even if its case was confined to the allegation of a representation concerning a legally enforceable right, there is (at least in Australian law) the notion of a legally enforceable right to negotiate. In this regard we were referred to the decision of Coal Cliffe Collieries Pty Ltd v Sijehama Pty Ltd.[60]
[60](1991) 24 NSWLR 1.

In that case the New South Wales Court of Appeal held that, provided it is supported by consideration, a promise to negotiate in good faith may, in particular circumstances, be enforceable. The recipient of such an enforceable promise would, presumably, have a corresponding ‘right’ to negotiate. We put aside the question whether any such ‘right’ could ever be transferable. But identifying this species of ‘right’ as a possible right the subject of Sunland’s pleaded case only serves to underscore the need for precision in the context of an asserted representation which a party says was capable of inducing error (and thus misleading), was false, and was in fact relied upon.

Not only did Sunland fail to identify such a ‘right’ as the right it was asserting, either in pleadings or in argument below, but it went perilously close to denying that is was a ‘right’ of that kind it was relying upon. That is, it denied that Reed or Prudentia had a preferred right to negotiate and, in effect, said that any such ‘right’ was not of the kind it was asserting in its case.

In conclusion on this issue, it is our view that the trial judge correctly held that Sunland’s case at trial, both on its pleadings and upon its argued case, was founded upon an essential contention that it was misled into believing that Reed or Prudentia held a legally enforceable – and, we would add, transferable – right to acquire plot D17. It was that case, and that case alone, that the trial judge had to determine.

Disaggregated or cumulative representations?

The next complaint made by Sunland concerning the judge’s alleged failure to deal with the case it put at trial was that the judge failed to deal with each of the representations separately.

In particular, Sunland complained that the trial judge failed to adequately consider the second and third pleaded representations, separately from the first. It argued that each of the representations stood alone, and could be made out upon the evidence and considered independently of the others. On the appeal this issue was discussed in terms of whether the representations could be ‘disaggregated’.

In our view, the logical reading of the pleaded case is that each succeeding representation was to be understood as being cumulative upon the preceding representation. Thus, so read, it was alleged that Reed or Prudentia represented themselves to hold a legally enforceable right to acquire the land; because of that, DWF could not, without their agreement, sell the land to Sunland; and so it followed that if Sunland wished to purchase the land from DWF it would first have to negotiate with Reed or Prudentia.

Not only does that understanding flow logically, but it is reinforced by the fact that all the representations are alleged to be derived from the same undifferentiated statements, and by the use of the conjunction ‘and’ between the second and third pleaded representation. Further, as already stated, the particulars of their falsity are stated collectively rather than individually. Lastly, in terms of reliance, Sunland claims it relied upon ‘the Representations’ without ever differentiating that it relied upon one rather than another, or in the alternative to another, at any given stage.

It followed, in our view, that it was correct to view the three representations as following logically one upon the other, with each founded upon the preceding assertion. Since Sunland was unable to establish its first allegation, concerning the representation of a ‘right to acquire’, the need to focus at length on the remaining representations was largely disposed of.

Nevertheless, Sunland did argue at trial that the second and third representations were independently made out by Joyce’s email to Brown of 16 August 2007.[61] Not only did the judge specifically record that argument,[62] his Honour dealt at length with that email.[63] He concluded, adversely to Sunland, that the email did not convey the prohibitive or imperative connotations Sunland asserted,[64] and that neither Brown nor Abedian relied upon the email for the representations as asserted (or at all).[65]

Sunland’s scheme case: the ‘money trail’ and other evidence

[61]As referred to at [32] above.

[62]Reasons [26].

[63]Reasons [64] – [80].

[64]Reasons [75], [76],[80].

[65]Reasons [76], [79].

The final way in which it was alleged the judge failed to deal with Sunland’s case concerned the evidence relating to the distribution of part of the Hanley fee to Joyce, the issue of joint purpose, forged or false documents, and Prudentia’s internal communications.

It will be recalled that Sunland pleaded causes of action against Joyce and Prudentia both in statutory misconduct and the common law action of deceit. The statutory misconduct claim was pleaded in paragraphs up to [41] of the SFASOC. Thereafter, Sunland pleaded its case in deceit as follows:

•Joyce knew the representations were false or was reckless as to their truth or falsity, [66] and he intended that Sunland would act in reliance upon them;[67]
•Reed knew the representations were false or was reckless as to their truth or falsity,[68] and he intended that Sunland would act in reliance upon them;[69]
•Joyce and Reed both knew the representations had been made by each other and had the joint purpose that each would make them to induce Sunland to enter an agreement with Prudentia in relation to plot D17;[70] and
•Joyce and Reed were therefore liable to Sunland for the tort of deceit as joint tortfeasors with each other.[71]

[66]SFASOC [42].

[67]SFASOC [43].

[68]SFASOC [44].

[69]SFASOC [45].

[70]SFASOC [46].

[71]SFASOC [47], [48].

Particulars were given of the common knowledge and joint purpose alleged against Joyce and Reed in [46] of the SFASOC. Those particulars were that:

•Joyce and Reed were friends, and had been friends since attending Geelong Grammar School together;
•Joyce and Reed did not disclose their friendship to Brown;
•the representations were made by each of them individually on separate occasions;
•Joyce and Reed both knew the representations were false, or were reckless as to their truth or falsity;
•Joyce and Reed each gave Brown identical particulars of the payment terms said to apply to Reed’s purported acquisition of plot D17; and
•the use by Reed of the identical draft reconfiguration plan as shown to Brown by Austin.

Other than that allegation of common knowledge and joint purpose, in those terms, there was no further allegation in connection with the deceit claim of any relationship, commercial or otherwise, between Joyce and Reed (or Prudentia). Neither was there any allegation of a specific relationship or association for the purpose of pleading the misleading and deceptive conduct claim.

Three days before the trial was scheduled to commence Sunland made an application to the trial judge to amend its pleading. It sought to make an amendment to introduce further particulars of the alleged common knowledge and joint purpose of Joyce and Reed. In substance those particulars alleged, were that:

•on 18 January 2006 Reed (for Prudentia) and Joyce entered an agreement whereby Joyce would be paid a fee if he identified suitable properties in the Middle East for Prudentia to buy and if Prudentia bought such properties;
•some time before 19 September 2007 Reed and Joyce agreed that Prudentia would pay Joyce a secret commission being half of any amount Prudentia obtained from Sunland by entering the Prudentia agreement [which became the Hanley agreement];
•in furtherance of that joint purpose, in about November 2007 Prudentia or Hanley, at the direction of Joyce, caused AED 22,052,890 to be transferred to a Jersey bank account; and
•neither Joyce nor Reed disclosed those matters to Brown.

Sunland submitted to the trial judge that the amendment was only sought out of an abundance of caution. It argued that it would be permitted to cross-examine Joyce in respect of those matters in any event because Joyce himself had addressed the subject in a witness statement filed on his behalf. Sunland claimed that these were matters which would not take anybody by surprise.

Unsurprisingly, the respondents (defendants at trial) vehemently objected to the late introduction of an allegation of a secret commission, a criminal offence. Furthermore, those opposing the amendment submitted that the proposed new particulars radically altered the characterisation of joint purpose and common knowledge compared to the existing version of the case.

As debate progressed, it emerged that the documents upon which the allegations were founded had been in the possession of Sunland for well over twelve months. Because of the lateness of the allegation being made, Joyce argued that he would suffer substantial detriment. At that time, Joyce was still in detention in Dubai awaiting a criminal trial. Any adjournment of the trial was likely to cause him significant prejudice but, equally, he was not in a position to then secure the attendance of the necessary witnesses he would need to meet the new allegations were the trial to proceed as scheduled.

In the result, his Honour refused the amendment application taking the view that the new matters amounted to a substantial new allegation of fraud. Procedural fairness to the defendants would require an adjournment of the trial but for a variety of reasons adjournment of the trial was simply not a practical option. Given the delay on the part of Sunland in making its application when it had the ability to make the application well in advance of the trial, his Honour refused the amendment. Sunland did not appeal that decision.

It is nevertheless apparent that many of the documents concerning the ‘money trail’ did in fact become evidence in the trial despite his Honour’s ruling. This is largely explained by the regime adopted by the judge in relation to the tender of documents. His Honour explained:

It was made clear at the commencement of the trial, and reaffirmed on a number of occasions during the trial, that the documents contained in the Court Book would stand as evidence in the case without the need to undertake any formal, specific, tender process but that I would have no regard to any documents contained in the Court Book unless they were referred to and relied upon, specifically, in the closing submissions of one or more of the parties. It was made clear that this arrangement was subject to the right of any party to object to any particular document or documents being treated as part of the evidence on this basis.[72]

[72]Reasons [7].

Such a regime, or variants of it, are not uncommon in cases conducted in the Commercial Court. As, however, the experience in this case reveals, a practice such as the one used in this case may not be desirable. His Honour’s regime reveals the possibility of documents having uncertain status. On the regime as formulated, all documents in the Court Book would ‘stand as evidence’ but some the judge would have regard to, some the judge would not have regard to, and some would not be ‘treated as part of the evidence’, depending upon whether they were the subject of submission or objection.

The same documents which Sunland said gave rise to its secret commission allegations, disallowed by the trial judge, were nevertheless in the Court Book and referred to by Sunland in its closing submissions. They were referred to in support of an argument that a ‘scheme’ was carried out between Prudentia and Joyce. Although both Prudentia and Joyce argued that Sunland should not be permitted to rely upon such a scheme, apparently no formal objection was taken to the documents being ‘treated as part of the evidence’ under the regime that his Honour described.

The so called ‘scheme’ contended for by Sunland was described, in substance, as follows:

(a)on 13 August 2007, three days before Reed had any conversation with Brown, Reed sent an email to Prudentia’s solicitors both in Dubai and in Melbourne stating:
We will need to create a deed of Exclusivity and Confidentiality for my dealing with the potential on-sale of the property to a third party so the third party will only deal with me and via there [sic] dealing with me I will consent for the vendor to be able to deal with the purchaser once I have agreed terms with the third party for the on-sale of the Site subject to acceptable terms;

(b)that email described a scheme which was formulated before any communication had occurred between Reed and Brown, and was precisely the scheme that was ultimately carried into effect in the dealings between Prudentia, Reed and Sunland with respect to plot D17;
(c)the ‘money trail’ documents showing the distribution of the Hanley fee (AED 44,105,780) showed that one half of it was paid to Joyce and this was powerful evidence of a motive on the part of Joyce, fortifying the conclusion that he was party to the representations and involved in a joint purpose to mislead Sunland into making the payment;

[392][2011] VSCA 307.

[393](2007) ACSR 576.

[394][2011] VSCA 307 [56].

After considering the evidence sought to be adduced, we are not persuaded that it satisfies the test of exceptional circumstances, nor that it falsifies a common assumption upon which the proceedings below were based, or that to refuse it would affront common sense.

Sunland submits that a basic assumption upon which the parties proceeded was that Sunland would not be able to enforce the criminal court’s order directly in order to obtain a civil remedy, but rather would have to initiate proceedings in the civil courts.

No expert directly addressed the question of whether the criminal court could, or was likely to provide a civil remedy in the absence of a civil right claim, although the possibility of the criminal court making an award of damages was foreshadowed by Mr Juma, albeit in the context of a civil right claim.[395] We are not persuaded that this was a basic assumption upon which the parties proceeded. Nor in our view can it be said that the fact that the Dubai Court appears to have had regard to evidence not considered relevant by the trial judge, and appears to have taken a different view of the evidence of Brown, undermines a common assumption upon which the Victorian proceedings were conducted. Indeed, given that the claims proceeded separately in the criminal court of Dubai and as a civil claim in the Trial Division of this Court on a different evidentiary basis, the possibility of inconsistent findings was likely, if not inevitable.
[395]See [426] above.

In the circumstances, we reject the admission of the fresh evidence on the ordinary principles. Even if it were received, we would nonetheless hold that admitting the evidence would not have altered our decision.

For the reasons set out above, we would dismiss the application and dismiss the appeal against the grant of the anti-suit injunction.

The Costs Appeal

Following the publication of the trial judge’s reasons for judgment on 8 June 2012 Prudentia, Reed and Joyce made application for orders for costs. By separate judgment dated 14 September 2012 the trial judge determined that it was appropriate in the circumstances of the case to make a special costs order in the form of an indemnity costs order against Sunland in favour of the defendants. That decision and the orders made in consequence of it are the subject of grounds 62 to 80 of the Amended Notice of Appeal.

Having failed in its appeal on the merits, Sunland must first confront the provisions of s 17A(1) of the Supreme Court Act 1986 in order to prosecute its appeal against the cost orders made by his Honour:

(1)An order made by the Trial Division constituted by a Judge of the Court—
(a) by consent of the parties; or
(b) as to costs which are in the discretion of the Trial Division—
is not subject to appeal to the Court of Appeal except by leave of the Court of Appeal or by leave of the Judge of the Court constituting the Trial Division which made the order.

Section 17A is the successor to a provision which formally provided that:

No order made by the Court or any judge … as to costs only, which by law are left to the discretion of the Court, shall be subject to any appeal, except by leave of the Court or judge making the order.

No leave to appeal the question of costs has been granted by the trial judge and for the reasons which follow we would refuse such leave.

Since Wolfe v Alsop[396] the Court has taken the view that the jurisdiction with respect to costs orders on appeal is dependent upon the grant of leave in cases such as the present where an appeal brought on the merits as of right fails.[397] Because an order for costs where the court below has a discretion is a matter of practice and procedure it seems to us that the grant of leave should be subject to the considerations which affect the grant of leave with respect to interlocutory decisions. Leave should only be granted where:
[396](1886) 12 VLR 887.
[397]Critchley v Australian Urban Investments Limited [1979] VR 374, 380; Thorne v Doug Wade Consultants Pty Ltd [1985] VR 433, 497, not following Wheeler v Summerfield (1966) 2 QB 94.

(a) the decision was wrong, or at least attended with sufficient doubt to justify granting leave; and in addition

(b) substantial injustice would be done by leaving the decision unreversed.[398]

[398]Nieman v Electronic Industries Limited [1978] VR 431.

In our view the exercise of the trial judge’s discretion with respect to costs was not attended by sufficient doubt to justify the grant of leave.

In Transport Accident Commission v O’Reilly[399] Ormiston JA observed that it has been accepted for many years that it is extraordinarily difficult to show that a court of first instance or a tribunal with wide discretionary powers has erred in the exercise of its power to award costs, if there be some basis for making an order other than the conventional order in favour of the successful party.[400]
[399][1999] 2 VR 436.
[400]Ibid 457 [46].

In Peet Ltd v Richard[401] Nettle JA (with whom Neave JA agreed) stated the principles governing appellate interference with the relevant discretion as follows:[402]

[A]n appellate court will not overturn a judge's decision on costs unless the judge is seen to have failed to exercise his or her discretion on reasonable grounds or has applied wrong principle or taken a manifestly erroneous view of the facts.
[401][2010] VSCA 71 [3]-[4].
[402]Ibid [4].

The test to be applied is not whether the Court of Appeal would have made the same order, but whether it was reasonably open to the trial judge to do so.[403]
[403]Spotless Group Ltd v Northern Suburban Properties Pty Ltd [2008] VSCA 115 [10]-[11] (Redlich JA, citing relevantly Hanlon v Brookes (1997) 15 ACLC 1626, 1632 (Callaway JA); ETNA v ARIF [1999] 2 VR 353, 378 (Batt JA).
Principles governing a special award of costs

It cannot be disputed that the successful respondents are entitled to maintain an award of costs consequential upon their success on the merits of the proceeding. What is now in issue is whether such order should have been made on a special basis.

The notice of appeal does not identify any relevant error of underlying principle in his Honour’s approach to the question of costs. This is not surprising. His Honour’s explanation of the principles relating to the relevant discretion was both careful and correct.

More particularly, his Honour identified the foundation of his discretion in s 24(1) of the Supreme Court Act 1986:

Unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court, including the administration of estates and trusts, is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid.

His Honour then acknowledged that the usual order as to costs is an award to the successful party on a party and party basis. This position is reflected in r 63.31 of Supreme Court (General Civil Procedure) Rules 2005.

In turn, as his Honour said, guidance is given by previous decisions of the courts as to circumstances that would warrant the making of a special costs order. His Honour referred to the identification by Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd[404] of some categories of circumstances which may warrant a special costs order:[405]

[T]he making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud; evidence of particular misconduct that causes loss of time to the Court and to other parties; the fact that the proceedings were commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law; the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions; an imprudent refusal of an offer to compromise and an award of costs on an indemnity basis against a contemnor.

[404](1993) 46 FCR 225.

[405]Ibid 233-4 (citations omitted).

His Honour also cited the observations of French J in J-Corp Pty Ltd v Australian Builders Labourers’ Federated Union of Workers (WA Branch) (No 2):[406]

Although there is said to be a presumption in such cases that the action was commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law, it is not a necessary condition of the power to award such costs that a collateral purpose or some species of fraud be established. It is sufficient, in my opinion, to enliven the discretion to award such costs that, for whatever reason, a party persists in what should on proper consideration be seen to be a hopeless case …[407]

[406](1993) 46 IR 301, 303.

[407]Ibid (emphasis in original).

He further referred to the summary of authorities undertaken by Harper J in Ugly Tribe Co Pty Ltd v Sikola:[408]
[408][2001] VSC 189 [7]-[8].

In seeking costs on an indemnity basis, the first defendant is asking the Court to depart from its usual course: Spencer v Dowling.[409] Special circumstances must be present to justify such a departure: Australian Electoral Commission v. Towney (No 2).[410] These include:
[409][1997] 2 VR 127, 147 (Winneke P) and 163 (Callaway JA).
[410](1994) 54 FCR 383, 388 (Foster J).
(i)The making of an allegation, known to be false, that the opposite party is guilty of fraud: Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397.
(ii)The making of an irrelevant allegation of fraud: Thors v Weekes (1989) 92 ALR 131.
(iii)Conduct which causes loss of time to the Court and to other parties: Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported, Federal Court, French J, 3 May 1991).
(iv)The commencement or continuation of proceedings for an ulterior motive: Ragata Developments Pty Ltd v Westpac Banking Corporation (unreported, Federal Court, Davies J, 5 March 1993).
(v)Conduct which amounts to a contempt of court: EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59.
(vi)The commencement or continuation of proceedings in wilful disregard of known facts or clearly established law: J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA) Branch (No 2) (1993) 46 IR 301.
(vii)The failure until after the commencement of the trial, and without explanation, to discover documents the timely discovery of which would have considerably shortened, and very possibly avoided, the trial: National Australia Bank v Petit-Breuilh (No 2) (unreported, [1990] VSC 395, 18 October 1999).

The categories of special circumstances are not closed: Tetijo Holdings, supra. The cases must not, therefore, be read ‘in an endeavour to establish a set of inflexible guidelines which should thereafter be determinative of the manner in which the Court’s discretion is to be exercised [for this] would be to fetter the Court’s discretion’: National Australia Bank v Petit-Breuilh, supra.

As his Honour concluded, authority establishes that the circumstances in which a special costs order may be justified include cases in which a proceeding is commenced or continued either for some ulterior motive or in wilful disregard of the facts or clearly established law.

In turn his Honour cited the decision of Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd[411] that a special costs order may be warranted where:

[I]t appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established laws.[412]

[411](1988) 81 ALR 397, 401.

[412]Ibid.

His Honour also referred to the decision of this Court in Macedon Ranges v Thompson,[413] which reiterated the principles stated in J-Corp Pty Ltd v Australian Builders Labourers’ Federated Union of Workers (WA Branch) (No 2)[414] and Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd.[415]
[413][2009] VSCA 209 [15] (Redlich JA and Beach AJA) (citations in original).
[414](1993) 46 IR 301.
[415](1988) 81 ALR 397.

Next, his Honour cited the judgment of Lindgren J in NMFM Property Pty Ltd v Citibank Limited (No 11)[416] as authority for the proposition that the knowledge of a party in relation to past conduct may be relevant to assessment of the conduct of that party as a litigant and that it is the conduct of the party that ultimately falls to be assessed and not that of its legal advisors.
[416](2001) 187 ALR 654, 668-9 [54]-[58].

His Honour also cited Dal Pont[417] with respect to the potential inference that may be drawn from the prosecution of a hopeless action with respect to ulterior motive or wilful disregard of known facts and law:[418]

A special costs order may ensue where it appears to the court ‘that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success’, in which case the action ‘must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law’.[419] Despite this ‘presumption’, it is not a prerequisite to the power to award special costs that a collateral purpose or a species of fraud be established. It is sufficient to enliven the discretion that, for whatever reason, a litigant, whether as plaintiff or defendant,[420] persists in what on proper consideration should be seen to be a hopeless case.[421] As explained by BW Ambrose J in Re SCA Properties Pty Ltd (in liq):[422]
In some cases it is appropriate to make an order for indemnity costs to make it known that the court will not readily accept that its time and the successful litigant’s money can be wasted on totally frivolous and thoroughly unjustified proceeding. If it appears it is not for the bona fide purpose of protecting and enforcing a legal right but to achieve an ulterior or extraneous purpose that in itself is justification for the making of an indemnity order.

[417]Gino Evan Dal Pont, Law of Costs (LexisNexis Butterworths, 2^nd ed, 2009) 539-40 [16.51].

[418]Ibid (citations in original).

[419]Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397, 401 (Woodward J) (FCA) (emphasis supplied).

[420]See, for example, Sheahan v Northern Australia Land Agency Co Ltd (SC (SA), 4 November 1993, unreported), [13] (Perry J) (ruling that the defence, including the prosecution of the counterclaim, was so unmeritorious and lacking in credibility that the defendants should be ordered to pay costs on a solicitor and client basis); Westpac Banking Corporation v Ollis [2007] NSWSC 1008, [13], [14] (Einstein J).

[421]J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers, Western Australian Branch (No 2) (1993) 46 IR 301, 303 (French J (as he then was)) (FCA); Blueseas Investments Pty Ltd v Mitchell and McGillivray [1999] FamCA 745; (1999) FLC ¶92-856 at ¶86, 130 (FC) (Nicholson CJ, Lindenmayer and O’Ryan JJ); Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation [2001] CA 26; (2001) 179 ALR 406, 415 (Callinan J); Krix and Krix v Citrus Board of South Australia [2003] SASC 387; (2003) 87 SASR 229 (FC) (Mullighan, Debelle and Gray JJ); De Alwis v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 77, [7]-[9] (Tamberlin, R D Nicholson and Emmett JJ).

[422][1999] QSC 180; (1999) 17 ACLC 1611, [70] (Ambrose J).

His Honour also considered the provisions of the Civil Procedure Act 2010 and summarised significant aspects of the relevant provisions as follows:[423]

(1)among other things, the object of the Civil Procedure Act, is to reform and modernise the practice, procedure and processes relating to civil proceedings in the Supreme Court, and other courts. Importantly, provision is made for an overarching purpose in relation to the conduct of civil proceedings which is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute in those proceedings;[424]
(2)in the exercise of its powers, the Court must seek to give effect to the overarching purpose, whether these powers arise from the procedural rules or practices of the Court or otherwise;[425]
(3)an overarching obligation is cast upon parties and legal practitioners representing or acting on behalf of a party, whether they be barristers or solicitors, to act honestly at all times in relation to a civil proceeding and not to make any claim or make a response to any claim in a civil proceeding that is frivolous, vexatious, an abuse of process or does not, on the factual and legal material available to the person at the time of making the claim or responding to the claim, have a proper basis;[426]
(4)an overarching obligation applies to the persons referred to in the preceding paragraph to disclose to each party the existence of all documents that are, or have been, in that person’s possession, custody or control of which the person is aware and which the person considers, or ought reasonably consider, are critical to the resolution of dispute. Disclosure must occur at the earliest reasonable time after the person becomes aware of the existence of the document or at such other time as the Court may direct. These provisions do not apply to any document which is protected from disclosure on the grounds that privilege which has not been expressly or impliedly waived or under any other Act (including any Commonwealth Act) or other law;[427] and
(5)in exercising any power in relation to a civil proceeding, including the exercise of the discretion as to costs, the Court may take into account any contravention of the overarching obligations.[428]

[423]Costs Reasons [19] (citations in original).

[424]See Civil Procedure Act 2010, s 1.

[425]See Civil Procedure Act 2010, s 8.

[426]See Civil Procedure Act 2010, ss 10, 17 and 18.

[427]See Civil Procedure Act 2010, s 26.

[428]See Civil Procedure Act 2010, s 28.

His Honour further noted that notions of abuse of process may inform a decision as to costs, including that the notion that if a collateral purpose is the predominate purpose of a moving party in a proceeding the proceeding will be improper and constitute an abuse of process.[429]
[429]Williams v Spautz (1992) 174 CLR 509, 529 (Mason CJ, Dawson, Toohey and McHugh JJ).

The application for costs

Prudentia, Reed and Joyce sought special costs orders at trial on the following broad bases:

(a) the proceedings were commenced or continued in wilful disregard of known facts or clearly established law, thus in circumstances where Sunland, properly advised, should have known that it had no chance of success; and

(b) where, in all the circumstances, the proceedings must be presumed to have been commenced or continued for a collateral purpose or ulterior motive.

Ultimately, his Honour concluded that special costs orders were warranted on these bases and further concluded that the award of such costs was consistent with the Civil Procedure Act because there had been a series of incidental breaches of Sunland’s obligations under that Act in the course of the prosecution of the proceeding. After summarising the relevant portions of the Civil Procedure Act his Honour observed:

For the reasons which follow it is not necessary to discuss the application of these provisions specifically. Nevertheless, as indicated in detail in these reasons, there has clearly been contravention of the overarching obligations on the part of Sunland. Accordingly the Court’s discretion as to costs has been exercised in accordance with these provisions and having regard to the nature and extent of these contraventions, on the bases and the manner set out below.[430]

[430]Costs Reasons [19].

In our view his Honour did not err in the principles which he applied to consideration of the respondents’ application. The bases articulated in principle were properly capable of founding the exercise of the relevant discretion as to costs.

The factual basis of his Honour’s costs order

The notice of appeal takes issue with a series of his Honour’s specific findings of fact in his judgment on costs.[431] The basis of these grounds fails with the appeal on the merits. Our reasons with respect to such appeal demonstrate that none of the impugned findings was manifestly wrong. In particular our findings with respect to the making of the representations alleged, falsity, reliance, and damage are fatal to Sunland’s case on the contested issues of fact raised by these grounds.
[431]ANOA [63]-[71] state:
63The trial judge erred in finding that each of Brown and Abedian understood that neither Reed nor Prudentia had any binding agreement in respect of Plot D17 and no legal interest in the Plot.
64The trial judge erred in finding that Sunland was unable to articulate the nature or content of the alleged representations.
65The trial judge erred in finding that the pleaded claim of 'right' was wholly contrived and artificial and was contrary to facts known and understood by Brown and Abedian.
66The trial judge erred in finding that it was the fact that, and further that Sunland knew that at the time Sunland became aware of the possibility-of acquiring Plot D17, Plot D17 was not capable of being dealt with in any way, and was not capable of being the subject of separate rights.
67The trial judge erred in finding that it was not plausible that Brown and Abedian could have thought that there was any representation upon which Sunland relied.
68The trial judge erred in finding that at the time Brown sent the 'put your foot on it' email, Brown believed that neither Reed nor Prudentia held a contractual right or any other right to acquire Plot D17.
69The trial judge erred in finding that having regard to Brown's conversation with Lee and Brearley on 12 September 2007 and the 'put your foot on it' email, Sunland properly advised should have known that the misrepresentation case had no prospects of success.
70The trial judge erred in finding that the introduction of Hanley as a new contracting party in place of Prudentia, using a contract in exactly the same form as the contract with Prudentia, was completely inconsistent with Sunland believing that Prudentia or Reed had any legally enforceable rights to Plot D17 or any 'right' or 'control' with respect to that land.
71The trial judge erred in finding that it was always a hopeless case for Sunland to advance the so-called 'Transaction' case (namely the case that had the representations not been made, Sunland would have successfully negotiated with Dubai Waterfront to purchase Plot D17 in its own right and would not have had to pay the fee to Hanley), and that to Sunland it must have been evidently hopeless, in particular because such findings:
71.1ignore the evidence that Sunland had previously purchased Plot D5B in its own right from Dubai Waterfront; and
71.2assume that Joyce would have acted dishonestly in ensuring that Dubai Waterfront sold Plot D17 to his friend Reed or an entity associated with Reed, instead of selling it to Sunland which, unlike Reed, Prudentia and Hanley, was a developer established in Dubai with major projects already in progress in Dubai.

Likewise any appeal on costs must fail insofar as it is founded upon an attack upon his Honour’s overall conclusions of fact. Grounds 72 and 74 are as follows:

72The trial judge erred in finding that inconsistencies in Sunland’s evidence and aspects of Sunland’s submissions at trial supported the position that Sunland commenced or continued the proceedings with wilful disregard for known facts and law.

...
74The trial judge erred in finding that Sunland could not have had any basis for believing:
74.1that it could establish the representations said to have been made;

74.2 that it relied upon the representations; and
74.3 that it suffered loss and damage.

Once again our conclusions with respect to the appeal on the merits demonstrate that none of these findings were manifestly wrong.

Ground 73 alleges an error in approach with respect to the assessment of the strengths and weaknesses of Sunland’s case:

73The trial judge erred in exercising his discretion to make a special costs order by making an ex post facto assessment of the strengths and weaknesses of Sunland’s case that relied on hindsight.

His Honour dealt with this issue at [39]-[43] of his decision. As his Honour held, it does not lie in the mouth of Sunland to say its legal advisors were entitled to take portions of the evidence of its own officers Brown and Abedian at face value in the framing and conduct of its case without regard to the fundamental inadequacies of Sunland’s case. In turn he stated in part:

In this case, Sunland relied principally upon the evidence of two of its most senior officers, Brown and Abedian. They are senior officers of a public company, clearly with access to high level legal advice. Brown, and less so Abedian, were the prime participants in relation to the Plot D17 transaction on behalf of Sunland. They, particularly Brown, know exactly what happened, or did not happen, in the course of that transaction and they must have known that, in a case of the type which Sunland brought, it would be necessary to establish with a high degree of clarity and particularity the representations said to have been made, that Sunland relied upon the representations and that loss and damage followed. To the extent that elements of the case Sunland sought to pursue may not have been clear to intelligent and relevantly experienced non-lawyers such as Brown and Abedian, there can be no doubt that they have had the benefit of high level legal advice being available at all relevant times. Ms Julianne Stringer (Clyde-Smith) and Eames immediately come to mind in connection with events as they unfolded in the course of the Plot D17 transaction. In the preparation of its case in the Federal Court of Australia and this Court, Sunland has availed itself of the advice of Senior Counsel, junior counsel and a substantial law firm. Sunland was well experienced and, in my view, it is implausible to think that it did not fully avail itself of its experience in property development in Dubai and Australia and take advantage of the legal resources available to it.[432]

[432]Costs Reasons [42].

There was no error manifest in this approach.

The notice of appeal also attacks his Honour’s findings of fact with respect to the conduct of the proceedings. Ground 62 of appeal states as follows:

62The trial judge erred in finding that Sunland had contravened its overarching obligations under the Civil Procedure Act 2010 (Vic), and in finding that the nature and extent of those contraventions justified making a special order as to costs.

We do not accept that his Honour’s decision was founded on the basis of breach of Sunland’s obligations under the Civil Procedure Act. His Honour’s findings went no further than findings that the award of special costs on the grounds advanced by Prudentia, Reed and Joyce were consistent with the Civil Procedure Act by reason of the breaches of the Act he identified.

In turn each of these breaches involved findings of fact with respect to the provision of proper discovery which were plainly open to his Honour and ground 62 must be rejected. A further breach of Sunland’s discovery obligations was also demonstrated in the course of the hearing of the appeal but we will say nothing further about this aspect of the matter because as we read his Honour’s reasons this aspect was not central to the exercise of his discretion.

Lastly, Sunland challenges the trial judge’s findings as to ulterior purpose:

75The trial judge erred in finding that Sunland commenced the proceedings for an ulterior purpose, including that it commenced the proceedings:
75.1to protect Sunland’s, and Brown’s position in Dubai, including to protect them from being charged with criminal offences in Dubai; and
75.2to create a basis for requesting the return of Brown’s passport from the Dubai authorities.

76 The trial judge erred in finding that:
76.1Abedian and Brown invented allegations that falsely implicated Joyce in a nonexistent fraud;
76.2Brown fabricated his version of events from the outset in order to protect his own personal safety; and
76.3The Dubai authorities regarded the fee paid to Prudentia/Hanley as a bribe, and that Brown knew this.

For present purposes it is sufficient to say first that, as his Honour makes clear, the exercise of his discretion was warranted by the finding that Sunland commenced and continued the proceeding in wilful disregard of known facts and the law without any finding of ulterior purpose.

Secondly, his Honour’s findings of fact as to ulterior purpose were made in part with the benefit of observations of the oral evidence of Brown and Abedian and this must cause an appellate court to exercise restraint.[433]
[433]Fox v Percy (2003) 214 CLR 118, referred to and quoted at [377] above.

Thirdly, the specific findings attacked in ground 76 were plainly open to the judge having regard to the evidence as to the content and context of statements made by Brown and Abedian to the Dubai authorities to which we have already referred.

Fourthly, his Honour’s findings of fact with respect to ulterior purpose were open to him. In particular in our view it could not be said that there was manifest error in concluding that Sunland commenced and continued the proceeding with a view to achieving the collateral purpose of defending its commercial reputation and protecting the position of Brown.

Sunland must go further than persuading this Court that the trial judge ‘erred’ in the sense that the Court would not itself have made findings of ulterior purpose. Once it is accepted that the findings were open then this Court should not interfere.

In the present case the evidence was replete with instances of conduct by Brown, Abedian and Sunland which was consistent with a motivation of ulterior purpose. We instance Brown’s initial untruthful exaggeration of the roles of Reed and Joyce to the investigating authorities; the changes in Brown’s version of events over time; the direct discussion of the desirability of instituting legal proceedings in Australia with the Dubai prosecutor; the circumstances in which Brown’s passport was released; and the terms of the statement made to the Australian Stock Exchange by Sunland at that time. It was for the judge to evaluate the whole of such evidence in conjunction with his finding that Sunland’s case was hopeless and to draw such inferences as to ulterior purpose from the whole of the evidence as he was persuaded of. In our view it was open for him to conclude:

Any of the facts and circumstances relied upon by the defendants in support of Sunland’s alleged ulterior purpose in commencing and continuing these proceedings would not, in themselves, necessarily lead to or provide a basis for drawing this inference. Nevertheless, I am of the view that all these facts and circumstances, including the way in which Sunland’s case was pleaded, the extent to which it failed in respect of all essential elements and Sunland’s dealing with the Dubai authorities provides a strong basis for a finding of ulterior purpose on Sunland’s part.[434]

[434]Costs Reasons [78].

Fifthly, insofar as the claim in deceit was in substance one for fraud, the finding that the claim was made in wilful disregard of the facts and law carried with it the necessary implication that Sunland had made allegations of fraud which it knew or ought to have known were false.[435] In our view his Honour was correct to recognise that this aspect of the matter provided a further potential basis for the exercise of his Honour’s discretion.[436]
[435]Colgate Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225; Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189 [7]-[8].
[436]Costs Reasons [79].

Conclusion on costs

In our view Sunland has not discharged the onus which it bears to establish that his Honour’s exercise of discretion was not reasonably open to him. Leave to appeal against the special costs order must be refused.

Schedule

NAME DESCRIPTION

SUNLAND

Sunland Group Ltd An Australian property development company listed on the ASX
The second appellant in the substantive appeal and the appellant in the anti-suit injunction appeal

Sunland Waterfront BVI Ltd (SWB) A British Virgin Islands company owned and controlled by Sunland Group
The first appellant in the substantive appeal

Soheil Abedian Chairman of Sunland Group; former Managing Director of Sunland’s Dubai Branch

Sahba Abedian Managing Director of Sunland Group

David Brown Former International Design Director of Sunland Group (2006); former Chief Operating Officer of Sunland’s Dubai Branch (2007)

Julianne Stringer (later Clyde-Smith) Former General Counsel of Sunland’s Dubai branch

DUBAI WATERFRONT

Nakheel PJSC A major Dubai government development entity, creating large scale projects and establishing the master developer entity for each.

Dubai Waterfront LLC (DWF) Master developer entity created by Nakheel for the Dubai Waterfront project

Matthew Joyce Former Managing Director of DWF (2007)
The fourth respondent in the substantive appeal and the third respondent in the anti-suit appeal

Jeff Austin Former Town Planning Director of DWF

Anthony Brearley Former Senior Legal Counsel of DWF

Marcus Lee Former Director of Commercial Operations of DWF

PRUDENTIA

Prudentia Investments Pty Ltd An Australian investment company, formerly controlled by Angus Reed
The first respondent in both appeals.

Hanley Investments Pte Ltd A Singaporean company owned and controlled by Prudentia
The second respondent in the substantive appeal

Angus Reed Former Managing Director of Prudentia
The third respondent in the substantive appeal and the second respondent in the anti-suit injunction appeal

Och-Ziff US Hedge fund associated with Prudentia

David Sinn Partner at Freehills, Prudentia’s solicitors

Clyde & Co Solicitors for Prudentia in Dubai (as agents for Freehills)

NAME	DESCRIPTION
SUNLAND
Sunland Group Ltd	An Australian property development company listed on the ASX The second appellant in the substantive appeal and the appellant in the anti-suit injunction appeal
Sunland Waterfront BVI Ltd (SWB)	A British Virgin Islands company owned and controlled by Sunland Group The first appellant in the substantive appeal
Soheil Abedian	Chairman of Sunland Group; former Managing Director of Sunland’s Dubai Branch
Sahba Abedian	Managing Director of Sunland Group
David Brown	Former International Design Director of Sunland Group (2006); former Chief Operating Officer of Sunland’s Dubai Branch (2007)
Julianne Stringer (later Clyde-Smith)	Former General Counsel of Sunland’s Dubai branch
DUBAI WATERFRONT
Nakheel PJSC	A major Dubai government development entity, creating large scale projects and establishing the master developer entity for each.
Dubai Waterfront LLC (DWF)	Master developer entity created by Nakheel for the Dubai Waterfront project
Matthew Joyce	Former Managing Director of DWF (2007) The fourth respondent in the substantive appeal and the third respondent in the anti-suit appeal
Jeff Austin	Former Town Planning Director of DWF
Anthony Brearley	Former Senior Legal Counsel of DWF
Marcus Lee	Former Director of Commercial Operations of DWF
PRUDENTIA
Prudentia Investments Pty Ltd	An Australian investment company, formerly controlled by Angus Reed The first respondent in both appeals.
Hanley Investments Pte Ltd	A Singaporean company owned and controlled by Prudentia The second respondent in the substantive appeal
Angus Reed	Former Managing Director of Prudentia The third respondent in the substantive appeal and the second respondent in the anti-suit injunction appeal
Och-Ziff	US Hedge fund associated with Prudentia
David Sinn	Partner at Freehills, Prudentia’s solicitors
Clyde & Co	Solicitors for Prudentia in Dubai (as agents for Freehills)

[2013] VSCA 237

6 September 2013