Sydney Attractions Group Pty Ltd v Frederick Schulman (No 2)
[2013] NSWSC 1153
•22 August 2013
Supreme Court
New South Wales
Medium Neutral Citation: Sydney Attractions Group Pty Ltd v Frederick Schulman (No 2) [2013] NSWSC 1153 Hearing dates: 14 August 2013 Decision date: 22 August 2013 Jurisdiction: Equity Division Before: Sackar J Decision: See paragraph 53
Catchwords: PROCEDURE - amendment of pleadings - whether the plaintiff is effectively seeking to amend its pleadings - whether an issue not squarely raised during the hearing as an alternative case to the plaintiff's primary case can be agitated following judgment.
PROCEDURE - conduct of litigation generally - whether the defendant's conduct amounts to an admission or a concession - whether the defendant is otherwise bound by his conduct by reason of preclusionary doctrines - whether the defendant is seeking to "approbate and reprobate".
CONTRACTS - assessment of damages - whether the court should "do the best it can" on the available evidence to assess damages - whether this principle is applicable in a case where the nature of the amount to be proven permits precise calculation but there is a lack of evidence.Legislation Cited: Civil Procedure Act 2005
Water Act 1912Cases Cited: Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570
Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Casey v Australian Broadcasting Commission [1981] 1 NSWLR 305
Codrington v Codrington (1865) LR 7 HL 854
Commonwealth v Verwayen (1990) 170 CLR 394
Coulton v Holcombe (1986) 162 CLR 1
Express Newspapers plc v News (UK) Ltd [1990] 1 WLR 1320
Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641
McCrohon v Harith [2010] NSWCA 67
Nominal Defendant v Gabriel (2007) 71 NSWLR 150
Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116
Oliver Ashworth (Holdings) Ltd v Ballard (Kent) Ltd [2000] Ch 12
OneSteel Manufacturing Pty Ltd v BlueScope Steel (AIS) Pty Ltd [2013] NSWCA 27
Paino v Paino (2008) 40 Fam LR 96
Penny v Milligan (1907) 5 CLR 349
R v Associated Northern Collieries (1911) 14 CLR 387
Richards v Cornford (No 3) [2010] NSWCA 134
Smits v Roach (2006) 227 CLR 423
Stewart v Williams (1914) 18 CLR 381
Sydney Attractions Group Pty Ltd v Frederick Schulman [2013] NSWSC 858
Thompson v Palmer (1933) 49 CLR 507
Water Board v Moustakas (1988) 180 CLR 491
White v Overland [2001] FCA 1333Texts Cited: A K Turner, Spencer Bower and Turner: The Law Relating to Estoppel by Representation, 3rd ed (1977)
John S Ewart, Waiver Distributed, (1917) Cambridge: Harvard University Press
K Handley, Estoppel by Conduct and Election, (2006) Sweet & Maxwell
P W Young, C Croft and M L Smith, On Equity, (2009) Thomson ReutersCategory: Consequential orders Parties: Sydney Attractions Group Pty Ltd (Plaintiff)
Frederick Schulman (Defendant)Representation: Counsel:
R McKeand SC (Plaintiff)
N Kidd SC (Defendant)
Solicitors:
Herbert Geer (Plaintiff)
Levitt Robinson (Defendant)
File Number(s): 2010/92382
Judgment
Background
In the principal judgment in this matter handed down on 28 June 2013, I invited the parties to prepare short minutes of order reflecting my reasons and to arrange with my Associate an appropriate time to be heard on costs (Sydney Attractions Group Pty Ltd v Frederick Schulman [2013] NSWSC 858 at [321]).
As is apparent from the principal judgment, the dispute centred around a share sale deed dated 5 July 2004 (the Deed) entered into by various parties, including the parties to these proceedings. The commercial effect of the Deed was to transfer the ownership, from the defendant to the plaintiff, of an existing business known as "Skytour", and a then-unconstructed but Council-approved structure to operate a proposed second business known as "Skywalk". The ultimate total price, for the shares of the company which owned the businesses, payable by the plaintiff to the defendant under the Deed, was to be determined at some future time by various complex accounting exercises. The calculation involved a multitude of variables including the revenue of the Skywalk business, the time periods within which those revenues are earned, the number of Skywalk customers, and critically, the amount of "capital expenditure incurred [by the plaintiff] after [5 July 2004] ... in relation to the construction and completion of Skywalk" (the Skywalk Capital Expenditure).
Under clause 13.7 of the Deed, the defendant was required, among other things, and subject to other requirements, to reimburse to the plaintiff all Skywalk Capital Expenditure incurred by the plaintiff in excess of $5 million. I should note that, as apparent from the principal judgment, the term "Skywalk Capital Expenditure" is defined in the Deed with a great level of detail which it is not necessary to identify for present purposes. The plaintiff unsuccessfully sought reimbursement from the defendant of a sum of $2,009,407 it alleged was Skywalk Capital Expenditure it incurred in excess of $5 million. The basis for my rejection of the plaintiff's claim was the presence of multiple evidentiary deficiencies in the materials on which the quantum of the plaintiff's claim was based. Although it is abundantly apparent that the plaintiff incurred some amount of Skywalk Capital Expenditure, I was unable, on the evidence, to identify with any precision what that amount was. In particular, I was not satisfied that the plaintiff discharged its onus of proving that it incurred Skywalk Capital Expenditure in excess of $5 million. Consequently, the plaintiff's claim based on clause 13.7 of the Deed was unsuccessful.
A critical question, which was not addressed by the parties during the hearing, was the appropriate fallback figure, if any, which should nonetheless be adopted as Skywalk Capital Expenditure for the purpose of calculations under clauses other than clause 13.7. The question arises in this way. Clauses 5.10 and 5.11 provide for the payment of a final amount, known as the "Skywalk Final Component", by one party to another. As explained in the principal judgment, whether it is the defendant or alternatively the plaintiff, which is entitled to receive payment of the Skywalk Final Component, will depend on whether the amount is positive or negative, respectively. The method of calculation of the Skywalk Final Component involves a deduction, under clause 5.11(c) of the Deed, of an amount equal to half of the Skywalk Capital Expenditure incurred up to 19 October 2005 (up to an aggregate value of $5 million). As the plaintiff will be entitled to receive payment of the Skywalk Final Component only if the Skywalk Final Component is a negative amount, a deduction of half the Skywalk Capital Expenditure under clause 5.11(c), whatever that amount may be, is favourable to the plaintiff.
The plaintiff contended, during the hearing, that it was entitled to receive payment of a negative Skywalk Final Component of $2,657,198. The claim for that amount was rejected, because the plaintiff's calculation was relevantly infected, not only by the incorrect premise that the quantum of Skywalk Capital Expenditure was $7,009,407, but also by a relevantly erroneous construction of a closely related clause, namely clause 5.23.
The problem the plaintiff faces, and which it now seeks to address, is that in the absence of any alternative finding of a specific amount of Skywalk Capital Expenditure, it cannot obtain the benefit of a deduction under clause 5.11(c) of the Deed.
Contentions of the parties
The plaintiff says that, for a number of reasons, including because of the way the defendant conducted his case, an amount of $3,798,820 (including GST) should be adopted as the figure representing Skywalk Capital Expenditure for the purpose of clause 5.11(c) of the Deed. The plaintiff has brought to the court's attention the defendant's written closing submission which was in the following terms:
True amount of the Skywalk Capital Expenditure
[108] The defendant submits that the best evidence available of the true amount of the Skywalk Capital Expenditure is the estimate of the development costs made on 5 April 2005 by the independent quantity surveyor Rider Hunt, that being the amount upon which the section 61 contribution and DA fees paid by the Company to Council were assessed and paid. The quantity surveyor estimated total development costs to be $3,798,820 (including GST), which equals approximately $3,453,373 (excluding GST).
[In the paragraphs that follow the defendant gives reasons to support the view that the best estimate of Skywalk Capital Expenditure would be the amount provided in the Rider Hunt report.]
The plaintiff argues this amounts to an implicit submission to the court by the defendant, from which he cannot not now resile, that Skywalk Capital Expenditure is equal to the Rider Hunt estimate. The plaintiff cites Express Newspapers plc v News (UK) Ltd [1990] 1 WLR 1320 (at 1329-1330) where Browne-Wilkinson VC said:
I think that what Mr Montgomery describes as what is sauce for the goose is sauce for the gander has a rather narrower legal manifestation. There is a principle of law of general application that it is not possible to approbate and reprobate. That means you are not allowed to blow hot and cold in the attitude that you adopt. A man cannot adopt two inconsistent attitudes towards another: he must elect between them and, having elected to adopt one stance, cannot thereafter be permitted to go back and adopt an inconsistent stance.
... in my judgment, the principle is one of general application and if, as I think, justice so requires, there is no reason why it should not be adopted in the present case.
The plaintiff submits this principle was accepted by the High Court in a footnote in Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570. The plaintiff alleges that the defendant's instruction to his forensic accountancy expert to assume an amount of Skywalk Capital Expenditure of $3,798,820 (including GST) for the purpose of mathematically calculating the Skywalk Final Component, supports the view that the defendant embraced the Rider Hunt estimate.
The plaintiff further contends that the court, although unable to find with precision the exact amount of Skywalk Capital Expenditure, should follow the approach taken by the Court of Appeal in Paino v Paino (2008) 40 Fam LR 96 and McCrohon v Harith [2010] NSWCA 67, by doing the best it can even if there is a need to "guess" to assess damages, rather than reaching a grossly unfair zero result.
The defendant alleges, on the other hand, that he, in the conduct of his case, consistently asserted that the plaintiff failed to prove that Skywalk Capital Expenditure exceeded $5 million, and plainly challenged the plaintiff's entitlement to receive payment of any negative Skywalk Final Component whatever. The defendant submits that his written submission that "the best evidence available of the true amount of the Skywalk Capital Expenditure is ... $3,798,820" does not amount to an admission that Skywalk Capital Expenditure was at least that amount.
The defendant also alleges that the plaintiff is, in effect, seeking to amend its relevant pleading to claim a reduced negative Skywalk Final Component of $1,754,645, on the basis that Skywalk Capital Expenditure is a figure of $3,798,820 rather than the figure of $7,009,407 which was originally but unsuccessfully contended for. The defendant submits that the finding which will ultimately be sought through the plaintiff's proposed amendment, namely a finding of an exact amount of Skywalk Capital Expenditure, is inconsistent with a finding already made, namely that I was unable to find what the exact amount of Skywalk Capital Expenditure was (at [171]). The defendant also opposes what it characterises as a proposed amendment by the plaintiff on the basis that the defendant would have altered the manner in which he conducted his case had the plaintiff expressly asserted that Skywalk Capital Expenditure was $3,798,820 in the alternative to $7,009,407.
Therefore, in effect, the defendant submits that, as the plaintiff has neither pleaded (apart from the rejected figure of $7,009,407), nor proven, the amount of Skywalk Capital Expenditure incurred, it cannot now seek to raise the issue after judgment has been given. The defendant's response to the plaintiff's argument that the court must "do the best it can" to assess damages, is that the principle has no application to the present case where the nature of the amount to be proven permits precise calculation (unlike for example a foregone commercial opportunity which involves speculation), and where the material on which such proof would be based is exclusively within the plaintiff's camp.
Other issues between the parties, including interest, costs and appropriate treatment of GST, will be dealt with following this judgment, if it becomes necessary to do so.
The conduct of litigation generally
In the adversarial system of litigation, the parties choose the issues to be ventilated. Although the court can, by case management, indirectly influence the scope of issues ultimately to be litigated by the parties, the forensic landscape is always painted by the parties. The construction of the landscape can take many forms, but most often it is governed by the pleadings and, to a lesser extent, the particulars. The forensic landscape can also be affected by the manner in which a case is conducted, as for example, by the joinder of issues not strictly raised by the pleadings, but which arise by the tender of evidence.
A party cannot surprise another by raising issues foreign to the forensic landscape (see for example White v Overland [2001] FCA 1333 per Allsop J, as his Honour then was, and the acceptance of that approach by the New South Wales Court of Appeal in Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116). To do so would be antithetical to fundamental principles of natural justice. If parties conduct themselves in a manner strictly in accordance with the pleadings or a consensual position, or make certain statements in open court through their counsel, they may be bound to follow that course (see for example Commonwealth v Verwayen (1990) 170 CLR 394 and Smits v Roach (2006) 227 CLR 423).
Coulton v Holcombe (1986) 162 CLR 1 was an appeal from an interlocutory judgment of the New South Wales Court of Appeal allowing an issue to be raised for the first time on the hearing of the appeal and further evidence to be received. Although decided in a different context, the principles articulated are nonetheless relevant to the case before me.
Briefly, the appellants (and others) objected to an application made by the first respondents to the Water Resources Commission for a licence to divert river water to augment creek supplies. The appellants instituted proceedings in the Supreme Court seeking orders to the effect that the application contravened the Water Act 1912 and that the Commission be restrained from proceeding further with it. Lusher J made those orders. On appeal to the Court of Appeal (Kirby P, Hope and McHugh JJA), the respondents applied to amend their grounds of appeal by adding an allegation that a gazetted notice under s 20Y of the Water Act was invalid because the Commission could not have been satisfied that various statutory prerequisites had been fulfilled. The matter had not been adverted to at the trial. The Court of Appeal, in the exercise of discretionary powers, allowed the amendment. By special leave, the appellants appealed to the High Court, conceding that the order of the Court of Appeal had been within power but submitting that it departed from established appellate principles.
Gibbs CJ, Wilson, Brennan and Dawson JJ said (at 5, 6, 8 and 11, citations and footnotes omitted):
At the trial before Lusher J, the issues were clearly drawn between the parties...
...
There was no suggestion at the trial that the s 20Y declaration was not a valid exercise by the Commission of the powers conferred upon it by the Act...
...
The reason given for the failure to raise the question of validity at the trial was that the point had been overlooked. The Court of Appeal granted the application. In conjunction with an order allowing the enlargement of the grounds of appeal the Court of Appeal made consequential orders, including an order permitting the tender of further evidence...
...
... in a recent decision of six justices of this Court (University of Wollongong v Metwally [No. 2]) the Court said:
It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.
The first respondents must be bound by the conduct of their case at the trial. It would not be fair to the appellants to subject them at this stage of the proceedings to what is virtually a new trial on an entirely different issue to that which has been litigated. In the pursuit of such a course, the interests of expedition, finality and justice are denied.
In a dissenting judgment, Deane J said (at 14, 16 and 20, citations and footnotes omitted):
The members of the Court of Appeal expressly accorded "great importance" to the following considerations which they derived from cases decided in this Court: "the importance of, and public interest in, the finality of litigation; the difficulty of inducing an appeal court to consider new facts; the undesirability of encouraging tactical decisions not to present an issue at first instance: keeping it in reserve for appeal; and the need for vigilance to avoid injustice to a party having to meet new facts and new issues of law for the first time at the appeal court"...
...
... senior counsel for the appellants placed particular reliance upon the following general statement in the joint judgment of Latham CJ, Williams and Fullagar JJ in Suttor v Gundowda Pty Ltd: "Where a point is not taken in the court below and evidence could have been given there which by any possibility could have prevented the point from succeeding, it cannot be taken afterwards."
...
... the primary consideration militating against allowing the amendment and receiving further evidence [is] the need, in the interests of both the public and particular litigants, that there be finality in litigation.
In Water Board v Moustakas (1988) 180 CLR 491, a workman brought an action in negligence against his former employer for injuries sustained when the plaintiff was struck by a bus while working near an excavation in a city street. The plaintiff's case was that the bus moved out of the lane of traffic in which it was travelling into the lane in which the plaintiff was working and that the employer had failed to have provided adequate means for protecting him against such movement. The primary Judge found that the bus had not moved from one lane to another and that the only way in which the accident could have happened was for the plaintiff to have moved from the inner to the outer lane to some extent.
On appeal to the Court of Appeal, it was contended that the primary Judge should have held that the employer was negligent in not having erected a barrier to prevent the plaintiff from moving into the outer lane and hence into the path of the bus. The plaintiff's case upon trial was that he remained at all times in the inner lane and that the bus had crossed from the outer to the inner lane. In support of that contention, the plaintiff/appellant relied upon a particular of negligence that the employer had failed to provide any or any adequate barriers to delineate that portion of the street in which the plaintiff had been working. A majority of the Court of Appeal held that, upon the facts found by the primary Judge and having regard to a submission made at the trial that the employer ought to have erected a barrier to protect the plaintiff against traffic moving from the outer lane to the inner, a case of negligence had emerged against the employer based upon its failure to provide a barricade to prevent its employees from straying from the inner to the outer lane. But in the circumstances the Court considered that it would be unfair to the employer not to order that there should be a retrial.
In reversing the decision of the Court of Appeal, the majority (Mason CJ, Wilson, Brennan and Dawson JJ) said (at 495-498, citations and footnotes omitted):
The plaintiff's whole case upon trial was that he remained at all times in the first lane and that the bus crossed from the second to the first lane. It was upon the basis that the trial was conducted in this way that the plaintiff's case upon appeal was presented.
... what was put on behalf of the plaintiff at the trial was that the employer ought to have erected a barrier to protect the plaintiff against traffic moving from the second lane to the first, not to stop the plaintiff himself from moving from the first lane into the second.
...
More than once it has been held by this Court that a point cannot be raised for the first time upon appeal when it could possibly have been met by calling evidence below. Where all the facts have been established beyond controversy or where the point is one of construction or of law, then a court of appeal may find it expedient and in the interests of justice to entertain the point, but otherwise the rule is strictly applied.
In deciding whether or not a point was raised at trial no narrow or technical view should be taken. Ordinarily the pleadings will be of assistance for it is one of their functions to define the issues so that each party knows the case which he is to meet. In cases where the breach of a duty of care is alleged, the particulars should mark out the area of dispute. The particulars may not be decisive if the evidence has been allowed to travel beyond them, although where this happens and fresh issues are raised, the particulars should be amended to reflect the actual conduct of the proceedings. Nevertheless, failure to amend will not necessarily preclude a verdict upon the facts as they have emerged. In Leotta v Public Transport Commission (NSW), a case having been submitted to the jury which was factually different from that alleged in the pleadings and particulars, Stephen, Mason and Jacobs JJ observed that the pleadings should have been amended in order to make the facts alleged and the particulars of negligence precisely conform to the evidence. The failure to apply for the amendment in that case was held not to be fatal. But in Maloney v Commissioner for Railways (NSW), Jacobs J, with whom the other members of the Court agreed, pointed out that the conclusion in Leotta was reached only upon the presupposition that the new issue or new way of particularizing the existing issue had emerged at the trial and had been litigated.
It is necessary to look to the actual conduct of the proceedings to see whether a point was or was not taken at trial, especially where a particular is equivocal. The particular in question in this case falls into that category. The allegation that the employer failed to provide adequate barriers did not indicate the purpose for which it was contended that barriers ought to have been provided. The case presented by the plaintiff, however, made it quite clear that it was being alleged that the barriers ought to have been provided to prevent traffic from crossing into the first lane. The plaintiff could have presented his case in the alternative, upon the basis that the employer was negligent in failing to provide a barrier to prevent him from straying into the second lane. The relevant particular, because of its breadth, would have allowed such a case to be put. But it was not put. The plaintiff presented his case solely on the basis that he remained in the first lane and the imprecision of the relevant particular cannot be the means of attributing to the plaintiff a case which he did not make.
In OneSteel Manufacturing Pty Ltd v BlueScope Steel (AIS) Pty Ltd [2013] NSWCA 27, Allsop P (with whom Macfarlan and Meagher JJA agreed) emphasised the need for parties to be frank, and direct, and to make clear, or enunciate or express with clarity, the issues that they wish to ventilate (at [50]).
Whether or not particular conduct will bind a party, and the consequences of seeking to deviate from that to which the party is bound, will depend on the temporal stage of the proceedings and degree of the deviation sought. At an early stage of proceedings, amendments are not uncommon. But on the eve, or during the running, and certainly after the running, of the trial, amendments are generally not allowed, although the court always retains a discretion. Several decisions of the Court of Appeal have stressed the importance of giving effect to sections 56 to 60 of the Civil Procedure Act 2005 (see for example Richards v Cornford (No 3) [2010] NSWCA 134 at [98]-[110] per Allsop P (as his Honour then was) and the cases there cited). Broadly, those provisions require parties to cooperate, in the interests of efficiency.
Discussion
Should the plaintiff be permitted to change its position?
In the hearing before me, the plaintiff did not plead any alternative to its case that it incurred Skywalk Capital Expenditure in excess of $5 million, namely $7,009,407, and was therefore entitled to a reimbursement of $2,009,407 under clause 13.7. The defendant successfully challenged that allegation. The plaintiff now seeks to assert that, as an alternative to its initial case, the court should find that it incurred Skywalk Capital Expenditure in the sum of $3,798,820 for the purpose of a different calculation under clause 5.11(c). However, during the hearing, the plaintiff never embraced the Rider Hunt report on which that figure is based, and indeed criticised it as being too low. The obvious reason for this is that a fundamental aspect of the plaintiff's claim under clause 13.7 was that Skywalk Capital Expenditure was in excess of $5 million, and the Rider Hunt report provided a substantially lesser figure.
The plaintiff did not contend for a fallback position in the event that the evidentiary materials, on which the figure of $7,009,407 was based, were found, as contended by the defendant, to be technically faulty. To plead an alternative case in this manner is, of course, permissible (see comments in Casey v Australian Broadcasting Commission [1981] 1 NSWLR 305 at 308-309 per Hunt J). For example, the plaintiff could have asserted, as an alternative to its allegation of $7,009,407, that the total sum of the invoices, which I calculated in my principal judgment to be approximately $5,891,005.26 (see [141]), should be accepted as the appropriate figure for Skywalk Capital Expenditure. For reasons already expressed in the principal judgment, that allegation is likely to have been rejected, but it was simply not made. Nor did the plaintiff advance, as a less preferable but nonetheless alternative argument, that the figure estimated in the Rider Hunt estimate should be accepted as the appropriate figure for Skywalk Capital Expenditure, or as the "best evidence".
To the extent that the defendant is correct in saying that the plaintiff is effectively seeking an amendment to its pleadings, I do not propose to allow any such amendment. The plaintiff is bound by the manner in which it has conducted its case, and I would not propose to allow any amendment at this stage of the proceedings, even if requested (Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175).
The plaintiff responds by contending that it does not seek, nor does it require, any amendment to its pleadings, as its original pleading always included a claim for a negative Skywalk Final Component, and that if the quantum claimed in the pleading was found to be excessive, then the court should, as in other cases involving amounts due under a contract, simply identify what the correct amount is by "doing the best it can" on the evidence available. To the extent that this characterisation of the plaintiff's argument is correct, I will address it in due course under a subsequent heading.
I wish to make one further observation under this heading. The reality is that no real attention was given during the hearing to the evidentiary status of the Rider Hunt estimate. The fundamental thrust of the plaintiff's case was to prove that Skywalk Capital Expenditure was in excess of $5 million, and one can only speculate that the plaintiff perhaps assumed that, if and when a figure above $5 million was found, it would be used for the purpose of other calculations, including those under clause 5.11(c). In any event, the Rider Hunt material was never advanced by the plaintiff as evidence for anything. Further, even if it was so advanced, its evidentiary status is at least dubious. Its utility, admissibility and relevance, for the purpose of proving actual Skywalk Capital Expenditure, is questionable to say the least. That is because the letter, dated 5 April 2005, was merely "an estimate of the development cost of the works", prior to the commencement of any works, of expected construction costs, for the purpose of calculating a contribution under local government legislation, and was never verified as accurate by a quantity surveyor or other relevant expert, following or even during the actual event of construction.
Has the defendant adopted a position from which he cannot now resile?
In my view, the inclusion of the statement in the defendant's written submissions that the "best evidence available of the true amount of the Skywalk Capital Expenditure is the estimate of the ... independent quantity surveyor Rider Hunt, that being ... $3,798,820", must be understood in its context. Prior to reaching this point in his written submissions, the defendant had advanced several arguments as to why the evidentiary material produced by the plaintiff did not substantiate its alleged quantum of Skywalk Capital Expenditure. It was only after advancing these reasons, most of which I accepted, that the defendant concluded his submission by further asserting that, in any event, the "best evidence" available, which was not good evidence, indicated that Skywalk Capital Expenditure was in the vicinity of $3,798,820, thereby casting significant doubt on the reliability of the evidentiary basis of the plaintiff's assertion of $7,009,407.
Although counsel for the plaintiff argued that the defendant should not be permitted to resile from his previous "best evidence" submission, he did not base that argument on principles of admission or concession (see for example Nominal Defendant v Gabriel (2007) 71 NSWLR 150 at [103] and following, per Campbell JA), or on another well-established preclusionary doctrine, such as waiver, estoppel or election (see transcript around pages 5 and 6).
When asked directly to articulate the legal basis of his submission that the defendant had adopted a position from which he could not resile, counsel for the plaintiff cited the English authority of Express Newspapers plc v News (UK) Ltd [1990] 1 WLR 1320, which he alleges was accepted by the High Court, to the effect that "there is a principle of law of general application that it is not possible to approbate and reprobate".
I will briefly set out the facts of that case. The plaintiff published on 3 April 1989 in the "Daily Express" an article, based on an exclusive interview, which quoted the words of the person interviewed. The first defendant published a report of the same story in its newspaper, "Today", on the same day. In the second edition of "Today" the story appeared in an altered form, similar to that in the "Daily Express", and containing the same quotations, without acknowledgment of the source of the story or the quotations. The plaintiff brought an action for breach of copyright in respect of that report. On 9 October 1989 the first defendant published an article on an unrelated topic, also based on an exclusive interview. On 10 October 1989 the plaintiff published a similar story in one of its newspapers, the "Daily Star". On 16 October 1989 the defendants served a defence to the plaintiff's claim, and the first defendant served a counterclaim in respect of the October article which was in form, the mirror image of the plaintiff's claim. On 18 October 1989 the plaintiff obtained summary judgment on its claim, with an order for an inquiry into damages.
The first defendant's claim for summary judgment on the counterclaim succeeded. It was held that although the plaintiff had an arguable defence to the counterclaim in that it might establish a press custom of adoption of news stories appearing in other newspapers, either with or without acknowledgment, its resistance to judgment on the counterclaim was wholly inconsistent with its own claim that on legally indistinguishable facts there was no arguable defence to a claim for breach of copyright. It was held that, under the doctrine of approbation and reprobation, which was of general application, the plaintiff was not entitled to put forward two inconsistent cases. Accordingly, despite the existence of an arguable defence to the counterclaim, the first defendant was entitled to judgment.
In the subsequent case, Oliver Ashworth (Holdings) Ltd v Ballard (Kent) Ltd [2000] Ch 12, Robert Walker LJ left open whether, in cases such as these, there existed a "third route", besides estoppel and election. He did so after reference to a principle of Scottish law that recognises an equitable election, known as "approbate and reprobate". Ultimately, his Lordship put the question aside as he did not consider it necessary to decide the matter in that case.
In K Handley, Estoppel by Conduct and Election, (2006) Sweet & Maxwell, the author suggests that the "approbate/reprobate" terminology refers to the known principle of election, originally used in Scots' law in connection with selecting between inconsistent rights in wills and contracts. He comments (at [14-004], some footnotes omitted):
Equitable election, or election between estates, is sometimes referred to as the doctrine that a person cannot approbate and reprobate [Footnote: This is the description of a similar doctrine in Scots law], although this description has also been applied to election between rights. Equity requires an election when a person received a gift under a will or other instrument which purports to dispose of some of his property in favour of another. If he elects to accept a gift he must give effect to the disposition of his property or compensate the other donee. Election between estates requires a deliberate choice by the elector with knowledge of his rights. It has been a potent source of confusion because decisions on this doctrine have been cited in cases of election between rights.
In A K Turner, Spencer Bower and Turner: The Law Relating to Estoppel by Representation, 3rd ed (1977), the author comments (at [336]):
Taking a benefit: approbation and reprobation: blowing hot and cold
We have seen that an election is not final, and irrevocable by the elector, unless it has been communicated to the other party concerned, with the result moreover that that party has acted upon the faith of it so that it has become unjust that the elector should now be allowed to change his mind. But though not yet irrevocable, an election may yet be effective as between the parties, even though it has not been communicated by the elector to the other party, in a case where, though that other party has not been prejudiced, the elector has accepted a benefit which could be his only because he has followed one course rather than the other. In such a case he will not be allowed to reverse his choice and to follow the second course available, while he retains the benefit which could be his only if he followed the first course. The principle which brings about this result is sometimes stated as declaring that a man may not simultaneously approbate and reprobate, or may not "blow hot and cold".
In cases, however, where it remains possible for the elector to return the benefit which he has accepted, so as to remove the objection of his having approbated the first course, he will be allowed to do so, and when this has been done there will remain no difficulty in the way of his changing his mind and adopting the second course - so long as, in the meantime, notice of his having elected in favour of the first course has not been given to the other party interested, with the result that it has now become unjust, by reason of his having acted on the faith of the election, that such a change in attitude should be permitted.
This is well illustrated by Scarf v Jardine, usually regarded as one of the great election cases ... The explanation [of what was held in that case] lies in the doctrine of approbation and reprobation.
In P W Young, C Croft and M L Smith, On Equity, (2009) Thomson Reuters, the authors comment (at [12.640]):
In Scots' law, the doctrine of equitable election is known as the doctrine of "approbate and reprobate", and this phrase describes something of its effect. The doctrine applies when a testator makes a gift in their will to A, but also purports to make a gift of A's property to B.
In the classic work of John S Ewart, Waiver Distributed, (1917) Cambridge: Harvard University Press (at 67-69 and 112-113), the author's observations again indicate that the doctrine was first developed in the law relating to wills and succession, although he does appear to contemplate a broader application.
It appears, from these quotes and from the discussions that follow them, that the "approbate/reprobate" doctrine probably originated in a context in connection with wills and estates, but was subsequently extended to operate in a contractual context, and has been applied to the conduct of litigation (for example Express Newspapers plc v News (UK) Ltd).
The terminology "approbate and reprobate" has been referred to in passing by the High Court in a number of early cases (see for example, among numerous other cases, Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 657 per Latham CJ; R v Associated Northern Collieries (1911) 14 CLR 387 at 623 per Isaacs J; Stewart v Williams (1914) 18 CLR 381 at 408 per Isaacs J; Penny v Milligan (1907) 5 CLR 349 at 367 per Isaacs J, citing Codrington v Codrington (1865) LR 7 HL 854 at 861). In each of these cases however, it is clear that the doctrine preventing a party from departing from an assumption does not operate at large, but only operates to prevent an unjust departure from the assumption. For example, the assumption pressed by one party, from which it later seeks to depart, must have enabled it to obtain some advantage, and if the assumption is not adhered to, it would operate to another party's detriment. Whether or not a departure is unjust and inadmissible depends on the part taken by the party in occasioning its adoption by the other party (see for example Dixon J in Thompson v Palmer (1933) 49 CLR 507 at 547, whose comments on estoppel in pais were adopted by Latham CJ in Grundt v Great Boulder Pty Gold Mines Ltd as the basis for the operation of the "approbate/reprobate" doctrine).
More recently, in Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570, a majority of the High Court (Gummow, Hayne and Keifel JJ, Heydon J relevantly agreeing) indicated that the "approbate and reprobate" doctrine was "but a synonym for the equitable doctrine of election" (at [57]). Their Honours also warned of the danger of seeking to apply the doctrine in "radically different" contexts. Their Honours also indicated that the principle was not one which operated at large, but, in line with the comments made in the early High Court authorities and the texts cited above, requires something more. Their Honours said (at [57], citations omitted):
[57] It should be noted that the equitable doctrine of election has a distinct character and application, and, as explained by Viscount Maugham in Lissenden v CAV Bosch Ltd has no connection with the common law principle putting a party to an election between alternative rights or remedies. Equity fastens upon the conscience of a party taking under a deed or will and requires the party to choose between taking the benefit and accepting the burden of any stipulated conditions or rejecting the benefit. Viscount Maugham explained in this connection that the phrase "you may not both approbate and reprobate", which was derived from the civil law and "from the northern side of the Tweed", when used in English law was but a synonym for the equitable doctrine of election.
Their Honours then considered the traditional doctrines of election, forbearance, abandonment, renunciation and waiver, and finally noted (at [98]-[100]):
A residual category or general principle?
[98] As explained earlier in these reasons, the submissions in this litigation have not been based upon the existence of some residual category or general principle of "unfairness" at common law which is distinct from the case of "waiver" upon which reliance was placed, and from the principles of "election", "forbearance" and "renunciation". That makes it unnecessary to determine whether such a residual category or general principle exists in the common law of Australia. However, this silence on the subject should not be taken as an encouragement to further speculation.
[99] It may be thought that some degree of support for such a category or principle of unfairness is to be found in some decisions in other jurisdictions. However, two observations may be made respecting what has been said in certain decisions in the United Kingdom, Canada, New Zealand and the United States.
[100] First, "waiver" is sometimes used, as it is in Australia, in contexts that are far removed from the contractual context presented in this case. Decisions made in those other contexts, such as decisions about the "waiver" of constitutional rights do not bear upon issues of the kind now under consideration. Secondly, decisions in other jurisdictions lend weight to the observation of Lord Wilberforce, in Mardorf Peach & Co Ltd v Attica Sea Carriers Corporation of Liberia , that "the word 'waiver', like 'estoppel', covers a variety of situations different in their legal nature, and tends to be indiscriminately used by the courts as a means of relieving parties from bargains or the consequences of bargains which are thought to be harsh or deserving of relief". The need for coherence of legal principle and the effects of overly broad interpretations of waiver and estoppel upon other doctrines must be borne in mind. Further, in some cases the reference to "unfairness" may not be to a defining principle. For example, when analysed in the case of an estoppel, it may convey no more than that there has been no detrimental reliance to found the estoppel.
In my view, the defendant's conduct does not prevent him from taking the position which he now seeks to take. That is because, as I have said, the defendant's submission (properly understood in context) did not amount to an admission, nor a concession, nor an acceptance, nor an acknowledgement, nor even the promotion of an assumption, that Skywalk Capital Expenditure should be taken to be $3,798,820, nor did the defendant invite the court to make any finding about the quantum of Skywalk Capital Expenditure (other than that it was not proven to be above $5 million), nor was it in his forensic interests to do so. The position taken by the defendant was to put the plaintiff to proof on every dollar allegedly incurred by way of Skywalk Capital Expenditure, not just any amount above $5 million.
In my view, the defendant's "best evidence" submission was no more than one of a number of arguments to support his submission that the evidence on which the plaintiff's figure for Skywalk Capital Expenditure was based is flawed. That argument was made in closing submissions, and could therefore not have altered the manner in which the plaintiff would have conducted its case. Furthermore, it is apparent from the principal judgment that, although I noted the defendant's submission that the figure in the Rider Hunt estimate was the "best evidence" of true expenditure (at [168]-[170]), my rejection of the plaintiff's claim for Skywalk Capital Expenditure (i.e. the "advantage" obtained by defendant), was clearly not based on any acceptance of the defendant's "best evidence" submission, but simply on the basis of the multiple deficiencies in the plaintiff's evidence (at [105]-[167]). The defendant has not gained any advantage form his "best evidence" submission. Furthermore, the plaintiff did not even purport to adopt or rely on the defendant's "best evidence" submission, but indeed criticised it in reply submissions, and did not seek to rely on it as a fallback position (plaintiff's written submissions dated 13 December 2012 from [65]). I therefore do not consider the "approbate/reprobate" doctrine to be of any assistance to the plaintiff.
I also note that, in support of its argument, the plaintiff indicated that the defendant had briefed its forensic accounting expert, Mr Blythe, with an instruction to assume for the purpose of his calculations, that Skywalk Capital Expenditure was the figure of $3,798,820 contained in the Ryder Hunt report. The plaintiff says this supports its assertion that the defendant adopted a position from which he cannot now resile. I reject that submission. Mr Blythe did not verify the accuracy of the assumption he was asked to make, nor could I possibly draw the inference that a mere request by a party to its expert to make a particular assumption, as part of a set of alternative assumptions, when preparing his or her expert report, amounts to an acceptance, concession or acknowledgement of the accuracy of the assumption.
"Best evidence" principle
Even if the plaintiff is correct that the defendant has made a submission from which, on the basis of some legal principle, he cannot now resile, it remains necessary to articulate precisely what it is to which the defendant is bound. In this case, the defendant was certainly not in my view asserting that the figure for Skywalk Capital Expenditure should be taken to be $3,798,820. The defendant was simply stating that, of all the evidence available, the Rider Hunt estimate was the "best evidence", albeit also inadequate. For the reasons which follow, even if the court accepts the defendant's submission that the Rider Hunt estimate of $3,798,820 is the "best evidence" available, that does not assist the plaintiff.
The defendant submits that this is not a case where the court should simply "do the best it can" to estimate Skywalk Capital Expenditure, for the reasons that the nature of the amount to be proven permits precise calculation (unlike for example a foregone commercial opportunity which involves speculation), and the material on which such proof would be based is exclusively within the plaintiff's camp. The principle articulated in cases such as Paino v Paino (2008) 40 Fam LR 96 and McCrohon v Harith [2010] NSWCA 67 would not apply where there is a paucity of evidence which it was in the power of the plaintiff to supply.
The plaintiff could have, but failed to, call relevant employees of the major contractors or of the subcontractors who physically undertook or supervised the construction of Skywalk, or to tender contract documents specifying in some detail the scope of works undertaken, or to even brief a quantity surveyor after the event of construction to provide an estimate of the value of the actual work undertaken, provided it could be sufficiently accurately identified, which was another problem the plaintiff confronted. Clearly, there is significantly better evidence that could have been, but was not, obtained. The comments made in McCrohon v Harith [2010] NSWCA 67 by McColl JA (Campbell JA and Handley AJA agreeing) are particularly relevant (at [118]-[124], some citations omitted):
[118] There are cases in which courts will estimate damages despite a dearth of evidence. The basic principle was explained in Commonwealth v Amann by Mason and Dawson JJ as follows:
[M]ere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can ... Where precise evidence is not available the court must do the best it can: Biggin & Co Ltd v Permanite Ltd [1951] 1 KB 422, per Devlin J at 438.
[119] Devlin J's complete statement was: "[W]here precise evidence is obtainable, the court naturally expects to have it. Where it is not, the court must do the best it can." After referring to this statement with apparent approval in New South Wales v Moss (2000) 54 NSWLR 536 (at [72]) Heydon JA added:
As McPherson J said in Nilon v Bezzina [1988] 2 Qd R 420 at 424: "The degree of precision with which damages are to be proved is proportionate to the proof reasonably available". The courts on occasion cite in related contexts Bowen LJ's related but stricter observation in Ratcliffe v Evans [1892] 2 QB 524 at 532-3, an injurious falsehood case:
'... As much certainty and particularity must be insisted on ... in ... proof of damage, as is reasonable, having regard to the circumstances and the nature of the acts themselves by which the damage is done.'
...
[120] In JLW (Vic) Pty Ltd v Tsiloglou [1994] 1 VR 237 (a claim for damages for alleged misleading representation inducing entry into a lease) Brooking J reviewed the principles concerning the circumstances in which a court may assess damages notwithstanding a lack of evidence. His Honour [accepted] "the amount of the damage must be proved with certainty, but this only means as much "certainty" as is reasonable in the circumstances". His Honour distinguished cases ... where "[t]he nature of the damage may be such that the assessment of damages will really be a matter of [permissible] guesswork" from cases where "precise evidence is obtainable", where guesswork is not permissible...
[122] In Troulis v Vamvoukakis [1998] NSWCA 237 Gleeson CJ (Mason P and Stein JA agreeing) referred to Tsiloglou with approval as setting out the principles governing the approach a court should take when there had been a failure by a party carrying the onus to establish the extent of damage suffered as a result of a breach of contract or tort... Gleeson CJ held that in such circumstances there were "limits to the lengths to which a court may properly go in 'doing the best it can' to assess damages". His Honour observed that the case did not involve damages which were "inherently difficult to quantify, or which involve[d] estimating a risk, or measuring a chance, or predicting future uncertain events." ...
[123] Gleeson CJ concluded in substance, that where the damages were susceptible of evidentiary proof, and there was "an absence of the raw material to which good sense may be applied ... [j]ustice does not dictate that ... a figure should be plucked out of the air."
[124] In Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10 ... Hayne J (Gleeson CJ, McHugh, and Kirby JJ agreeing) postulated that there may be a distinction between cases where a plaintiff cannot adduce precise evidence of what has been lost (in which "estimation, if not guesswork, may be necessary in assessing the damages to be allowed") and cases where, although apparently able to do so, the plaintiff has not adduced such evidence. His Honour suggested that references to "mere difficulty in estimating damages not relieving a court from the responsibility of estimating them as best it can" might be more apt in the former rather than the latter class of case.
I do not think this is a case where more precise evidence is not available. Precise evidence, or at least better evidence, as I see it, should have been available before the court, given the monetary nature of the sum sought to be proven. The plaintiff is seeking to prove a certain type of expenditure it incurred, and therefore the evidence by which the relevant monetary sum is to be proven is entirely in the camp of the plaintiff. The exercise of determining the amount of Skywalk Capital Expenditure should not, in my view, involve proof of something which is inherently difficult to quantify, or estimating a risk, or measuring a chance, or predicting future uncertain events. What has been provided is an estimate, prepared prior to construction, providing a projection, and which is unverified by any follow-up materials. In these circumstances, I am unable to make a finding that the Skywalk Capital Expenditure should be taken to be the figure estimated in the Rider Hunt estimate.
Fundamental to the plaintiff's claim under clause 13.7 for a reimbursement of $2,009,407, was its rejection of the estimate figure in the Rider Hunt letter, and a finding or inference that the Rider Hunt estimate was grossly low or outdated or wrong. Accordingly, and unsurprisingly, the plaintiff criticised the Rider Hunt material, but sadly, did not seek to rely on it as a fallback position.
Conclusion
If the parties are still unable to resolve the outstanding issues in light of my reasons, I invite them to approach my Associate to arrange for a suitable time to have the matter listed before me, otherwise I would invite them to prepare short minutes of order reflecting my reasons.
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Decision last updated: 22 August 2013
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