Thomas v HP Mercantile Pty Ltd - [2008] NSWCA 308

NEW SOUTH WALES COURT OF APPEAL

CITATION:
Thomas v HP Mercantile Pty Ltd [2008] NSWCA 308

FILE NUMBER(S):
40822/06
40220/07
40221/07

HEARING DATE(S):
6 - 7 November 2008

JUDGMENT DATE:
20 November 2008

PARTIES:
Peter Thomas
HP Mercantile Pty Limited (A.C.N 097 362 877)

JUDGMENT OF:
Spigelman CJ Tobias JA Sackville AJA

LOWER COURT JURISDICTION:
District Court

LOWER COURT FILE NUMBER(S):
2614/03, 2902/03, 2909/03

LOWER COURT JUDICIAL OFFICER:
N G Rein SC DCJ

LOWER COURT DATE OF DECISION:
30 November 2006

COUNSEL:
Appellant: Einfield QC, J Stephenson

Respondent: D Fagan SC, Mr P Stitz

SOLICITORS:
Appellant: GJ Gooden Solicitor

Respondent: Versace McKenzie Lawyers

CATCHWORDS:
ASSIGNMENT OF CHOSE IN ACTION: Deed of loan between financier and investor in orchard project – offer of assignment of debt capable only of oral acceptance – whether funds actually advanced under deed of loan – whether offer of assignment validly accepted – whether assignment supported by consideration – whether assignment was immediate and unconditional so as to be enforceable in equity.
APPEAL – Application to adduce further evidence under s 75A(7) of the Supreme Court Act 1970 (NSW) – whether “special grounds” where evidence could have been obtained at trial.

LEGISLATION CITED:
Bankruptcy Act 1966 (Cth)
Civil Procedure Act 2005 (NSW)
Crimes Act 1914 (Cth)
Family Law Act 1975 (Cth)
Federal Court of Australia Act 1976 (Cth).
Passports Act 1938 (Cth)
Supreme Court Act 1970 (NSW)

CATEGORY:
Principal judgment

CASES CITED:
Akins v National Australia Bank (1994) 34 NSWLR 155
Aztech Science Pty Ltd v Atlanta Aerospace (Woy Woy) Pty Ltd [2005] NSWCA 319
CDJ v VAJ [1998] HCA 67; 197 CLR 172
Cook v Wright (1861) 1 B & S 559 at 569; 121 ER 822
Minister for Immigration and Multicultural Affairs v Jia Legeng [2001] HCA 17; 205 CLR 507
Nolan v Marson Transport Pty Ltd [2001] NSWCA 346; 53 NSWLR 116
Norman v Federal Commissioner of Taxation [1963] HCA 21; 109 CLR 9
Nyerlucz v Dei Rocini (Court of Appeal, 8 September 1995)
Tamas v Streimer (Court of Appeal, 10 July 1981, unreported)
Wollongong Corporation v Cowan [1955] HCA 16; 93 CLR 435

TEXTS CITED:

DECISION:
1. The summons filed on 28 March 2007 by the claimant in CA No 40822 of 2006 (“Mr Thomas”) seeking leave to appeal from the decision of the primary Judge be dismissed.
2. Mr Thomas pay the costs of the opponent (“HPM”) to application for leave to appeal referred to in Order 1.
3. Mr Thomas’ summons filed on 1 October 2008, seeking an order that the Court receive further evidence, be dismissed.
4. Mr Thomas pay HPM’s costs of the summons referred to in Order 3.
5. The amended summons filed on 24 October 2008 by the claimant in CA No 40220 of 2007 (“Mr Hobson”), seeking an order extending the time for the filing and serving of a summons seeking leave to appeal, be dismissed, with costs.
6.The summons filed on 13 April 2007 by the claimant in CA No 40221 of 2007, seeking an order extending the time for the filing and serving of a summons seeking leave to appeal, be dismissed, with costs.

JUDGMENT:

- 29 -
IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40822 of 2006
CA 40220 of 2007
CA 40221 of 2007
SPIGELMAN CJ
TOBIAS JA
SACKVILLE AJA
Date 20 November 2008

PETER THOMAS v HP MERCANTILE PTY LIMITED
Judgment

SPIGELMAN CJ: I agree with Sackville AJA.
TOBIAS JA: I agree with Sackville AJA.
SACKVILLE AJA: This is an application for leave to appeal from a decision of a District Court Judge handed down on 30 November 2006 and from the orders made by his Honour on 8 December 2006. After a hearing lasting seven days, the primary Judge gave judgment in favour of the opponent (“HPM”) against the claimant (“Mr Thomas”) in the amount of $68,306.18, inclusive of interest. His Honour found that Mr Thomas was liable to HPM under a Deed of Loan entered into on or about 30 June 1991 between Mr Thomas, as borrower, and Treetop Finance Pty Ltd (”Treetop Finance”) as lender, on the basis that the benefit of the loan had been validly assigned to HPM.
Mr Thomas requires leave to appeal because the judgment and orders of the District Court do not involve any claim or civil right amounting to or of the value of $100,000 or more: District Court Act 1973 (NSW), s 127(2)(c). This Court has heard full argument on the issues raised by the application for leave to appeal and by the appeal itself (should leave be granted).
PROCEDURAL BACKGROUND
The primary Judge heard three proceedings together. Each involved a claim by HPM against a participant in a scheme known as the Tumut River Orchard Project (“the Project”) set up by Tumut River Orchard Management Ltd (“TROM”). Each of the defendants had executed a Deed of Loan. Execution of a Deed of Loan was an element in the scheme and was the means by which Treetop Finance, an entity related to TROM, financed participants in the Project.
The defendants in the proceedings were Mr Thomas, Chandelle Nominees Pty Ltd (“Chandelle”) and Adrian Hobson (“Mr Hobson”). They were sued for the amount said to be due and unpaid by each of them under the relevant Deed of Loan. The three defendants had common legal representation in the proceedings.
HPM relied on a series of assignments of the debt due under the relevant Deed of Loan, as follows:
(I)           Treetop Finance to TROM (“First Assignment”);
(ii)          TROM to Treetop Project Ltd (“TPL”) (“Second Assignment”);
(iii)         TPL to Arnott-Smith Holdings Pty Ltd, later called Merilbah Pty Ltd (“Merilbah”) (“Third Assignment”); and
(iv)         Merilbah to HPM (“Fourth Assignment”).
At the trial, the defendants challenged the existence of each of the debts alleged to be due under the relevant Deed of Loan. They also challenged the validity and efficacy of each of the assignments. The primary Judge found that the debts had been created and that, in the case of Mr Thomas, the successive assignments were valid and effective in equity. However, his Honour held that the debts of Chandelle and Mr Hobson, for reasons applicable only to them, had not been validly assigned to HPM. He therefore dismissed the actions against them.
The primary Judge dealt with the question of costs at a hearing held on 8 December 2006. His Honour ordered that Mr Thomas pay half of HPM’s costs of the three proceedings, to be assessed on the ordinary basis. While two of the three defendants had succeeded in resisting HPM’s claims, they had common representation and, for the most part, had advanced identical arguments. The particular point on which Chandelle and Mr Hobson had succeeded had not occupied a great deal of hearing time.
Mr Thomas filed his summons for leave to appeal on 28 March 2007, having previously filed a holding summons. On 8 February 2007, HPM filed holding summonses for leave to appeal against the decision dismissing its claims against Chandelle and Mr Hobson. However, on 28 March 2007, HPM discontinued its applications for leave to appeal against the decision.
On 13 April 2007, Mr Thomas, Chandelle and Mr Hobson filed summonses seeking leave to appeal from the costs orders made by the primary Judge and seeking extensions of time for the filing of the summonses. Mr Thomas’ submissions, filed in support of his own application for leave to appeal, contend that this Court should order HPM to pay Mr Thomas’ costs of the appeal and of the proceedings at first instance.
In their separate written submissions, Chandelle and Mr Hobson argue that if Mr Thomas’ substantive appeal succeeds, the costs order made by the primary Judge should be set aside and HPM should be ordered to pay Chandelle’s and Mr Hobson’s costs of the proceedings at first instance. Chandelle and Mr Hobson submit that it would be a considerable injustice if they were to be denied their costs if HPM proves to be wholly unsuccessful in the three actions. They attribute their failure to make a timely application for leave to appeal against the costs order to an oversight by their solicitor, who had mistakenly assumed that the question of costs could be agitated by way of cross-appeals to HPM’s applications for leave to appeal. That assumption proved to be unfounded when those applications were ultimately withdrawn.
On 30 September 2008, Mr Thomas filed a motion seeking an order that this Court, or alternatively the District Court, receive evidence from Mr Richard Moody on the question of whether the offer made by TROM to Treetop Project to effect the Second Assignment was accepted verbally on behalf of Treetop Project. Mr Thomas makes this application pursuant to s 75A(7) of the Supreme Court Act 1970 (NSW) which permits the Court of Appeal to “receive further evidence” if there are “special grounds” for doing so.
The significance of Mr Moody’s foreshadowed evidence is said to be as follows. One of the key issues at the trial was whether TROM’s offer to assign to TPL the debts of participants in the Project was accepted by TPL within the time specified in the offer. If it was not, the Second Assignment was ineffective and HPM could not have validly obtained the benefit of Mr Thomas’ debt. The primary Judge found that the written offer of 28 May 1998 had been accepted by Mr Moody, a director of TPL, in a telephone conversation the following day between Mr Andrew Purcell (“Mr Purcell”), a director of both TROM and TPL and Mr Moody. His Honour accepted Mr Purcell’s evidence to this effect notwithstanding that it was strongly challenged in cross-examination. Mr Moody did not give evidence at the trial.
Mr Thomas proposes to adduce evidence from Mr Moody denying that he had accepted TROM’s offer in the manner claimed by Mr Purcell or at all. Mr Moody swore an affidavit to that effect in relation to separate District Court proceedings between HPM and other participants in the Project. He swore the affidavit, oddly enough, on 12 October 2006 (that is, while the trial in the current proceedings was actually under way). According to an affidavit from Mr Thomas’ solicitor, Mr Moody has indicated that he is willing to give evidence in Mr Thomas’ appeal to the same affect as in the affidavit. Mr Einfeld QC, who appeared with Mr Stephenson for Mr Thomas, argues that “special grounds” exist to justify receiving the evidence, not least because it relates to a central issue and obviously has the potential, if accepted, to affect the outcome of the proceedings against Mr Thomas.
There are therefore four separate (albeit related) general matters for this Court to consider:
(i)           whether Mr Thomas should be granted leave to appeal;
(ii)          if so, whether the appeal should be allowed;
(iii)in any event, whether the Court (or the District Court) should receive the further evidence proposed to be adduced on behalf of Mr Thomas; and
(iv)         if Mr Thomas’ appeal is allowed, whether the applications for leave to appeal against the costs orders should be granted and the appeals allowed.
MR THOMAS’ CONTENTIONS
Mr Thomas advances a number of arguments in support of his application for leave to appeal and his foreshadowed appeal. The arguments can be summarised as follows:
1.HPM failed to establish at the trial that the amount of $24,050.00 to be advanced by Treetop Finance to Mr Thomas had in fact been advanced as contemplated in the Deed of Loan. Accordingly, HPM was not entitled to claim the debt said to be due by Mr Thomas.
2. The Second Assignment was ineffective in equity because:
(a)HPM had not established that the offer by TROM to TPL had been orally accepted by Mr Moody on behalf of TPL, as Mr Purcell claimed (this is the issue to which Mr Moody’s evidence is said to be relevant);
(b)TPL provided no consideration for the assignment of the debts, including that owed by Mr Thomas (“the Debt”);
(c)TROM’s offer to assign the debts to TPL had not identified the Debt as one of the assets to be assigned;
(d)in any event, the Second Assignment did not effect an immediate and unconditional assignment of TROM’s assets to TPL, as required by the authorities relating to equitable assignments.
3.The primary Judge should have held that the subsequent assignments were invalid because of the failure of the Second Assignment and because they, too, did not effect an immediate and unconditional assignment.
I shall address each of these arguments and then consider Mr Thomas’ application to this Court to receive further evidence.
BACKGROUND FACTS
TROM was established to develop and operate horticultural and viticultural projects. Mr Purcell was the managing director of TROM from 1988 until 1999, when the company was placed in liquidation.
In April 1991, TROM issued a prospectus for the Project, said to be a tax effective scheme for the establishment and operation of an orchard. The Project was constituted by an Investment Deed (“the Project Deed”) between TROM as manager, a trustee and persons who became parties to “Project Agreements” as “Growers”. In order for an investor to become a Grower he or she had to sign an “Application” authorising the trustee to enter the Project Agreements. The cost to each Grower was $12,025 per allotment.
The Prospectus offered investors the opportunity to borrow funds to finance their purchase of allotments. One alternative was for the investor to apply to Treetop Finance, of which Mr Purcell was also the managing director, for the necessary finance.
On or about 21 June 1991, Mr Thomas applied for two allotments. The Application was accepted by TROM and on or about 30 June 1991 the trustee entered into the Project Agreements on Mr Thomas’ behalf. TROM was a party to the Project Agreements, the effect of which (among other things) was that Mr Thomas became the licensee over two allotments for the purpose of growing and harvesting fruit trees.
Mr Thomas also applied to Treetop Finance on 21 June 1991 for a loan to finance his subscription for two lots. The application was duly accepted by Treetop Finance.
On about 30 June 1991, Mr Thomas, as borrower, entered into a Deed of Loan with Treetop Finance, as lender. Under the Deed of Loan, Treetop Finance lent Mr Thomas the sum of $24,050 to acquire his interest in two allotments and Mr Thomas directed Treetop Finance to pay that sum to the trustee for the purposes of Mr Thomas’ Application to TROM. The trustee was then to apply the sum in discharge of Mr Thomas’ obligations under the Project Agreements.
On 1 January 1992, Treetop Finance (by now called Tumut River Orchard Finance Pty Ltd) entered into an agreement to transfer loans to TROM. The loans assigned under this agreement included Treetop Finance’s loan to Mr Thomas. Notice of assignment of Mr Thomas’ loan was given to him on 22 February 1995.
By 1998, TROM was in breach of its dealer’s licence and, as the primary Judge found, assignment of TROM’s book debts was necessary to prevent the Project becoming at risk. By a document executed under seal bearing date 28 May 1998, TPL agreed to perform the role of Manager under the Project Deed in place of TROM, which agreed to retire as Manager. TROM agreed to pay TPL $18 million for its agreement to perform the functions of the Manager (“the 28 May Deed”).
On the same day, Mr Purcell signed two other documents on behalf of TROM. One was headed “Offer to Transfer Loans to Settle Debt” and was directed to TPL. This document was described as “Exhibit G” in argument in this Court. The second was headed “Offer to Transfer Loans, Cash and Equipment to Settle Debt” and was also directed to TPL. The second document was referred in argument as “Exhibit C”. The primary Judge found that Exhibit C constituted the offer by TROM to assign debts, including the debt due by Mr Thomas, to TPL. I refer to the offer made in Exhibit C as the “Second Assignment Offer”.
The Second Assignment Offer relevantly contained the following Provisions:
“TO:      Treetop Projects Limited
…
1.            [TROM],
(a)acknowledges it owes you $18,000,000 as set out in the schedule for your agreement to take over its obligations as Manager of the projects described in the following deeds”
I              Tumut River Orchard Project Deed (as amended)
31 December 1990
…
(b)offers to transfer loans (agreed value of $15,327,081), cash ($1,172,919) and equipment (freehold: $500,000, leased or on hire purchase; $1,000,000) to you, details of which are set out in Annexure “A” hereto (“the Loans, Cash and Equipment”), in full satisfaction of that debt.
2.    This offer may only be accepted orally. It lapses if not accepted by 31 July 1998.
3.    Title to the Loans (Cash and Equipment) will vest in you on such acceptance.
4.   On request TROM will do all things necessary, at the cost of TPL, to transfer the Loans into your name and Cash and Equipment into your possession, but subject to any agreement which may exist from time to time between us in relation to the management of loans.
5.   Unless you otherwise request, TROM will retain possession of all loan documents on your behalf. If you do otherwise request TROM must transfer all loan documents to you.
6.                  …
7.   TROM hereby offers to assign the benefit of all land, improvements and licenses necessary for the conduct of the projects to TPL to use as TPL sees fit.
8.                  By accepting this offer you will:
(a)          …
(b)          …
(c)become entitled to all interest payments and all principal repayments on the Loans, subject to the terms of any management agreement between us.
(d)           …” (Emphasis added.)
For reasons that I summarise later, his Honour found that TPL had accepted the Second Assignment Offer on 29 May 1998 or, alternatively, on 10 July 1998. It appears that Mr Thomas may have been given written notice of the Second Assignment in August 1998, although the evidence is unclear on that point. In any event, Mr Thomas received written notice of the assignment in September 2001. The notice identified the date of the Second Assignment as 29 May 1998.
On 15 March 2000, TPL entered into an agreement with Merilbah to assign various assets to Merilbah, including Mr Thomas’ loan. Notice of the assignment to Merilbah was given to Mr Thomas.
On 31 August 2001, Merilbah entered into an agreement with HPM to assign various assets, including Mr Thomas’ loan, to HPM. Notice of that assignment was also given to Mr Thomas.
THE ISSUES
Was the advance made?
Mr Einfeld submitted that his Honour erred in finding that HPM had proved that Treetop Finance had advanced funds to Mr Thomas in accordance with the terms of the Deed of Loan. The submission was not easy to follow. It appeared to rest on the proposition that Treetop Finance, during the period of several months ending on 30 June 1991, remitted a bulk payment to the trustee in respect of 210 allotments. The documentation was said to show that 213 allotments were subscribed for during the same period. It was said to follow that HPM could not establish that the advance referable to Mr Thomas’ two allotments had been included in the bulk payment for the 210 lots. HPM had not excluded the possibility that the bulk payment related to allotments other than the two for which Mr Thomas had subscribed.
Mr Einfeld did not explain why, if this was the state of the evidence, HPM had not demonstrated, on the balance of probabilities, that the payments made by Treetop Finance to the trustee included amounts referable to Mr Thomas’ two allotments. If any given allotment (out of the 213) had an equal chance of being one of the three lots for which no payment was made, it might be thought that the chances that either of Mr Thomas’ lots was not the subject of the bulk payment were substantially less than one in two.
Be that as it may, the primary Judge found that a letter dated 17 October 1991 from the auditors of the Project to the trustee supported the conclusion that the 210 lots that were the subject of advances by Treetop Finance included Mr Thomas’ two allotments. The letter specified three allotments which the Manager (TROM) had previously identified as pre-30 June 1991 sales, but which had subsequently been confirmed as post-30 June sales. The letter indicated that a “full reconciliation” of payments had taken place. None of the three allotments identified by the auditor was an allotment acquired by Mr Thomas.

This material amply justified his Honour’s finding. Moreover, as his Honour pointed out, there was other documentary evidence showing that the trustee was satisfied that it had received payment in respect of all allotments allocated, including Mr Thomas’ allotments.
Mr Einfeld argued that the numbers allocated to each allotment supported the contention that Mr Thomas’ allotments were not included in the bulk payment, notwithstanding the evidence to which the primary Judge referred. There is no substance to this argument.
Effectiveness of the Second Assignment
Acceptance of the Second Assignment Offer
Exhibit C, which comprised the Second Assignment Offer, provided that the offer could only be accepted orally and would lapse if not accepted by 31 July 1998. The purpose of this provision was apparently to allow an assignment agreement to be concluded without attracting the stamp duty payable on written agreements.
In his affidavit Mr Purcell swore that:

“On 29 May 1998, in my capacity as Managing Director of TROM, I had a telephone conversation with Mr Richard Moody whereby he verbally accepted the offer from TROM on behalf of [TPL] in his capacity as a Director of [TPL]. At the time of the telephone conversation, I was in Tumut and Mr Moody was in Sydney. During this telephone conversation Mr Moody said words to the effect of:

‘I hereby accept on behalf of Treetop Projects Limited the “Offer to Transfer Loans, Cash and Equipment to Settle Debt” from Tumut River Orchard Management Limited dated 28 May 1998.’

Mr Purcell also gave evidence that he attended a meeting of the board of TPL on 10 July 1998. A document purporting to be a minute of that meeting was in evidence. It is as follows:
“MINUTES OF THE BOARD OF DIRECTORS MEETING OF TREETOP LIMITED – 10 July 1998
9 pm, 3 Sera Street, Lane Cove
PRESENT: Andrew Purcell
Richard Moody
John Purcell (representing Tumut River Orchard Management Limited)
Richard Moody further confirmed the acceptance by Treetop of the 28 May 1998 offer and of the 1 July 1998 offer to settle debt during this meeting with the following words, in the presence of John Purcell, saying:
‘I hereby accept on behalf of Treetop Projects Limited, the Offers to Transfer Loans, Cash, land, materials, leases and equipment to settle debt from Tumut River Orchard Management Limited, dated 28 May 1998 and 1 July 1998.’
Andrew Purcell also repeated the words.
There being no further business the meeting closed at 9.30 pm.”
The minute bears Mr Purcell’s signature as Chairman. Mr John Purcell who is recorded as being present, is Mr Purcell’s brother and was a director of TROM in 1998.
Mr Thomas’ pleaded defence did not raise any issue concerning TPL’s acceptance of the Second Assignment Offer. However, Mr Einfeld, in his cross-examination, challenged Mr Purcell’s evidence relating to the telephone conversation of 29 May 1998. The cross-examination also suggested that the minute of the meeting of 10 July 1998 was fabricated and that no such meeting had ever taken place.
The primary Judge rejected the challenge to Mr Purcell’s evidence. His Honour accepted that the absence of any record of the acceptance of 29 May 1998 and the delay between the acceptance and the meeting of 10 July 1998 induced “some doubt” about whether either event had taken place. However, the form of the minute was not inconsistent with an earlier acceptance (I “further confirmed” that acceptance) and it would have been an easy matter to have fabricated a note of the oral acceptance of 29 May 1998, rather than prepare a minute of a meeting held some six weeks later.
The primary Judge also pointed to objective factors supporting Mr Purcell’s evidence:
·the principals of TROM and TPL wanted the assignment to occur;
·it was only a question of documenting the acceptance without incurring stamp duty;
·Mr John Purcell’s presence at the 10 July meeting was linked to TROM’s role as offeror;
·Mr Purcell controlled both TROM and TPL and the failure to assign would have left the Project in jeopardy; and
·Mr Purcell had given uncontradicted evidence that the minute had been annexed to an affidavit he had sworn in 2000, suggesting that the minute had been in existence for many years prior to the hearing.
The primary Judge found that Mr Purcell:
“came across as a cautious and careful witness who was for the most part prepared to make concessions where appropriate.”
His Honour did not think that the cross-examination justified a conclusion that Mr Purcell was lying and he accepted Mr Purcell’s evidence as “truthful, it not having been contradicted by any other witness”. In particular, his Honour accepted the evidence of the oral acceptance and the meeting of 10 July 1998.
For these reasons the primary Judge concluded that the Second Assignment Offer was accepted orally on behalf of TPL on 29 May 1998. Alternatively, the offer had been accepted at the meeting of TPL held on 10 July 1998. Acceptance on either date satisfied the terms of the Second Assignment Offer.
Mr Einfeld recognised that he faced a formidable task to persuade this Court to overturn the credit based finding made by the primary Judge. Nonetheless he submitted that the primary Judge’s finding was “glaringly improbable” and should be set aside.
Mr Einfeld submitted that Mr Purcell’s evidence of the language used in the telephone conversation of 29 May 1998 was implausible and that the absence of any written record of the purported acceptance added to the implausibility of his evidence. Moreover, Mr Purcell’s explanation for holding a business meeting at 9 pm on 10 July in his sister’s home in Sydney “defied commonsense” and it was inexplicable why Mr Purcell did not invite the third director of TPL (a Mr Howson) to the meeting.
It must be said that Mr Einfeld’s submission was an optimistic one. Mr Purcell’s sworn evidence as to the oral acceptance of 29 May 1998 and the meeting of 10 July 1998 was supported by a number of objective circumstances identified by the primary Judge, not least the obvious importance of TPL orally accepting the Second Assignment Offer within the time specified in the offer itself and the absence of any commercial reason why that acceptance would not have taken place. The minute of the 10 July 1998 meeting, as his Honour noted, spoke of “further” confirming the acceptance by TPL of the Second Assignment Offer. That minute had been in existence for many years, since it had been annexed to an affidavit sworn in 2000. In addition, although the primary Judge did not refer to it, the notice of assignment given to Mr Thomas in September 2001 identified the date of the assignment as 29 May 1998.
The matters identified by Mr Einfeld do no more than indicate a basis for doubt as to the veracity of Mr Purcell’s evidence. The primary Judge recognised as much but, having observed Mr Purcell in the witness box, found that his evidence was given truthfully and indeed carefully. The specific matters relied on by Mr Einfeld were put to Mr Purcell and his Honour regarded his responses as convincing.
Mr Einfeld’s criticisms of Mr Purcell’s evidence fall well short of establishing that his Honour’s findings were glaringly improbable. The attack on those findings must be rejected.
Was there consideration for HPM’s promise?
It will be recalled that cl 1(a) of the Second Assignment Offer contained an acknowledgement by TROM (the assignor) that it owed TPL (the assignee) $18 million “as set out in the schedule” for its agreement to take over as Manager of the Project and other undertakings. By cl 1(b), TROM offered to transfer loans and other assets having an agreed value of $18 million in satisfaction of that debt.
Mr Einfeld advanced two arguments to support the submission that TPL had provided no consideration for the assignment of TROM’s book debts. The first was that, although satisfaction of a pre-existing debt can constitute good consideration in equity for an assignment of a debt (Norman v Federal Commissioner of Taxation [1963] HCA 21; 109 CLR 9 at 31 per Windeyer J), in this case there was in truth no antecedent debt due by TPL to TROM. Secondly, even if there were a debt, there had never been an intention by TPL to enforce it and it is no consideration to refrain from a course of action which it was not intended bona fide to pursue: Cook v Wright (1861) 1 B & S 559 at 569; 121 ER 822 at 826 per curiam (a case involving the compromise of a claim). According to Mr Einfeld, TPL did not intend to enforce the debt due to it by TROM.
The first argument depends upon the proposition that cl 1(a) of the Second Assignment Offer referred to a debt of $18 million “as set out in the schedule” and there was no schedule or at least no debt referred to in the schedule. However, his Honour treated the acknowledgement in cl 1(a) as intended to refer to the indebtedness in precisely the same sum created by the 28 May Deed. That conclusion is clearly correct.
Mr Einfeld attempted to overcome this difficulty by contending that there was no evidence that the 28 May Deed was executed before TROM signed the Second Assignment Offer on the same day (28 May 1998). On their face, however, the documents indicate that, in all probability, the 28 May Deed creating the debt of $18 million was executed before the signing of the Second Assignment Offer which, after all, acknowledged the existence of that debt. In any event, the operative date was not 28 May 1998. This was the date when the Second Assignment Offer was signed. The operative date was 29 May 1998, when the Second Assignment Offer was accepted. On any view, acceptance of the Second Assignment Offer occurred after the 28 May deed was executed.
Mr Einfeld did not suggest that the 28 May Deed creating the debt of $18 million was a sham. That being so, TROM became indebted to TPL in the sum of $18 million immediately upon its execution. It may be, as Mr Einfeld submitted, that TROM was not in a position to pay $18 million in cash to TPL. But that is not to the point. TROM agreed, once the Second Assignment Offer was accepted, to transfer assets to TPL in full satisfaction of its obligation to pay TPL the sum of $18 million.
There is no substance to either of the arguments and they must be rejected.
Was the Thomas debt assigned?
At the trial, Mr Thomas argued that Exhibit G, rather than Exhibit C, constituted the correct version of the offer to assign TROM’s book debts to TPL. The significance of this submission was that the Second Assignment Offer (Exhibit C) specifically identified Mr Thomas’ debt in a schedule as part of the loan book to be assigned. Exhibit G contained no such schedule. Accordingly, so it was argued, Exhibit G did not include Mr Thomas’ debt in the debts assigned to TPL and thus HPM never acquired the benefit of the debt. The primary Judge, however, found that the offer accepted by TPL was that contained in the Second Assignment Offer, not that contained in Exhibit G.
Mr Einfeld challenged his Honour’s finding, principally on the basis that Mr Purcell had sworn an affidavit in May 2000 in other Supreme Court proceedings annexing Exhibit G rather than Exhibit C as the relevant offer. Mr Einfeld submitted that Mr Purcell’s evidence that he had made a “mistake” in doing so was unconvincing because he had provided no satisfactory explanation as to how the mistake had come about. In fact, Mr Purcell provided a plausible explanation in his evidence, namely, that he had annexed the only copy of the “offer” in his possession at the time, and had assumed that it was the version that had finally been executed. Clearly his Honour accepted that explanation as he was entitled to do.
In any event, there are objective indications that the Second Assignment Offer was intended to be the operative offer and was intended to supplant Exhibit G. Exhibit G appears to be an earlier version of the offer (albeit a version Mr Purcell had signed). Exhibit G, for example, has handwritten additions and deletions that are incorporated in re-engrossed form in Exhibit C, suggesting that the latter was the later version. Exhibit C also has a wider operation, in that it assigns not only book debts, but cash and equipment. Given TROM’s difficulties with its dealer’s licence, it obviously made sense for the operative offer to provide (if accepted) not only for an assignment of TROM’s book debts, but of all other assets, specifically cash and equipment.
The primary Judge’s finding was not contrary to the evidence. The challenge to it must fail.
Was there an immediate and unconditional assignment?
The starting point for this submission was that an assignment in equity of a chose in action, such as a debt, cannot be effective unless the assignor expresses an intention to “make, then and there, a complete disposition and transfer”: Norman v Federal Commissioner of Taxation at 28 per Windeyer J. However, this and the other authorities cited by Mr Einfeld concerned purported gifts of choses in action, not agreements to assign choses in action for an expressed consideration.
In any event, the submission rested on a misconception. It was said that cl 2 of the Second Assignment Offer showed that the assignment could not take effect until oral acceptance of the offer. The offer therefore did not effect an immediate disposition of TROM’s assets, including its book debts.
But it was not the Second Assignment as such that was the relevant transaction. It was the agreement that came into effect upon oral acceptance of the Second Assignment Offer. Clause 2 did not prevent the immediate transfer in equity of TROM’s title to the choses in action once the offer was accepted. Indeed, cl 3 expressly provided that title to the loans (an other assets) “will vest in [TPL] upon [its] acceptance” of the offer.
Clause 4 of the agreement constituted by TPL’s acceptance of the Second Assignment Offer does not alter this conclusion as it is merely a machinery provision. Clause 8(a), which concerns entitlement to interest and principle, does not detract from cl 3, since it is concerned only with the rights and duties of TROM and TPL as between themselves. It is not concerned with their rights as against third parties such as Mr Thomas.
THE APPLICATION TO ADDUCE FURTHER EVIDENCE
As I have noted, Mr Thomas’ application to adduce further evidence was made pursuant to s 75A of the Supreme Court Act 1970 (NSW). Subject to certain irrelevant exceptions, s 75A applies to an appeal to the Court and to an appeal in proceedings in the Court: s 75A(1). Section 75A(5) provides that an appeal to the Court of Appeal is by way of rehearing. The provisions most pertinent to the application are subsections (7) and (8) which provide as follows:
“(7) The Court may receive further evidence.
(8)Notwithstanding subsection (7), where the appeal is from a judgment after a trial hearing on the merits, the Court shall not receive further evidence except on special grounds”.
Section 75A(9) states that s 75A(8) does not apply to evidence concerning matters occurring after trial or hearing.
The application is apparently made on the basis that the evidence is to be adduced in support of Mr Thomas’ substantive appeal. The assumption underlying the application appears to be that this Court will grant leave to appeal and, at that point, should receive the proffered evidence pursuant to the power conferred by s 75A(7) of the Supreme Court Act.
The evidence Mr Thomas wishes to adduce is in the form of an affidavit sworn by Mr Moody in separate proceedings brought by HPM against other participants in the Project. That affidavit does not appear to have been filed in the other proceedings which, the Court was told, have not yet been heard by the District Court. Nor is there anything to indicate that the affidavit was ever served on HPM’s solicitors (except in the context of the present application). There is therefore nothing to indicate that those solicitors became aware of the existence of Mr Moody’s affidavit during the trial in the present proceedings.
In his affidavit, Mr Moody deposes that he was a director of TPL between May and July 1998. He says that until swearing his affidavit he had never seen the Second Assignment Offer and that he
“certainly did not ever accept orally or otherwise the offer made therein, either by the date referred to in clause 2 of the document (namely 31 July 1998) nor at any other time.”
Mr Moody also swears that the meeting of 10 July 1998, referred to in the minute signed by Mr Purcell recording Mr Moody’s presence never took place. According to Mr Moody, no meeting answering the description of the one in the minutes ever occurred. This affidavit directly contradicts the evidence of Mr Purcell which the primary Judge accepted. If Mr Moody’s evidence were to be accepted, HPM’s claim against Mr Thomas would fail since the Second Assignment Offer would not have been accepted by TPL and the Second Assignment would not have been validly effected. Mr Thomas’ debt could not have been validly assigned to HPM.
Mr Einfeld did not suggest that this Court hear evidence from Mr Moody himself before determining the motion. Such a course has been followed in other cases as a means of assessing whether the proffered evidence can be regarded as credible: cf Nyerlucz v Dei Rocini (Court of Appeal, 8 September 1995). Mr Einfeld was content to rely on the unfiled affidavit sworn by Mr Moody and the evidence from Mr Thomas’ solicitor that Mr Moody had indicated that he was prepared to give the evidence in these proceedings.
Mr Einfeld did not suggest that this Court should attempt itself to resolve any conflict between Mr Moody’s evidence and that of Mr Purcell. He submitted that in the ordinary course it would be appropriate for the Court to remit to the primary Judge the issue of whether the Second Assignment Offer was accepted by or on behalf of TPL. His Honour would hear evidence from Mr Moody and, presumably, any additional evidence from Mr Purcell (and perhaps others) in response and make the necessary factual determination.
The procedural question is complicated by the fact that the primary Judge, after the date he gave judgment in the proceedings, was appointed to the Supreme Court. In these circumstances, Mr Einfeld suggested that the best course may be to transfer the matter to the Supreme Court pursuant to s 140 of the Civil Procedure Act 2005 (NSW), so that the primary Judge can deal with the matter and the parties can avoid the need, in effect, to start afresh in the District Court on the issue.
Mr Fagan read an affidavit on behalf of HPM in opposition to Mr Thomas’ application to adduce further evidence. The affidavit annexed a substantial volume of documentation relating to Mr Moody, in particular to charges brought against him in 2004 for making a false statement to obtain a passport (Passports Act 1938 (Cth) s 10(1)(a)) and for attempting, as an undischarged bankrupt, to leave Australia without the approval of his trustee (Bankruptcy Act 1966 (Cth) s 272(1)(c). Mr Einfeld objected to some of this material, primarily on the ground of relevance but also on the basis that the opinions given in the various medical certificates were not shown to be based on specialised knowledge.
Mr Fagan made it clear that the material was not tendered to prove the truth of the medical opinions, but the fact that they had been given at various times, most significantly in support of Mr Moody’s application to have the charges against him dismissed under s 20BQ of the Crimes Act 1914 (Cth) on the grounds of mental illness. It should be noted that Mr Einfeld did not object to the tender of the written application made to the Local Court in August 2006 on Mr Moody’s behalf, pursuant to s 20BQ of the Crimes Act. That application refers in some detail to Mr Moody’s conduct and the nature of his illness. It is of some significance that the application was made less than two months before Mr Moody swore the affidavit on which Mr Thomas wishes to rely in his appeal.

In my opinion, the evidence tendered by Mr Fagan is admissible on the basis put by him. The fact that the charges against Mr Moody were dismissed, on his application, on the ground of mental illness is relevant to the issue of whether the proffered evidence in this case is likely to be reliable. Similarly, the medical certificates provided in support of that application are relevant because they show that medical practitioners were prepared to support Mr Moody’s application. It is the fact that the medical practitioners expressed the opinions they did, rather than the accuracy or truth of the opinions expressed, that is material for present purposes.
Mr Moody’s successful application for the charges to be dismissed on the ground of mental illness does not demonstrate that any evidence he gives in these proceedings will necessarily be unreliable. Nor does the nature of the illness described in Mr Moody’s application to the Local Court and supported by the medical certificates necessarily demonstrate that his evidence will be unreliable. The material does indicate, however, that there is a basis for challenging the reliability of Mr Moody’s recollection of events that occurred in 1998, some eight years prior to the swearing of his affidavit. Similarly, the fact that Mr Moody admitted the conduct constituting the offences with which he was charged will provide further grounds for challenging the reliability of any evidence adduced from him in the present proceedings.
Until the decision of the High Court in CDJ v VAJ [1998] HCA 67; 197 CLR 172, the general rule in New South Wales was that on an appeal brought from a judgment following a trial without a jury, three conditions had to be satisfied before further evidence could be admitted on the appeal. These were set out in Akins v National Australia Bank (1994) 34 NSWLR 155 at 160 per Clarke JA (with whom Sheller and Powell JJA agreed):
“(1)        It must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial;
(2)          The evidence must be such that there must be a high degree of probability that there would be a different verdict;
(3)          The evidence must be credible”.
These requirements were largely derived from the judgment of the High Court in Wollongong Corporation v Cowan [1955] HCA 16; 93 CLR 435. However Clarke JA recognised in Akins that it was not possible to formulate a test, which could be applied in every case to determine whether “special grounds” exist.
In CDJ v VAJ, the High Court held that the power conferred on the Full Court of the Family Court by s 93A(2) of the Family Law Act 1975 (Cth) to receive further evidence on appeal was not to be limited by reference to the common law principles articulated in Wollongong Corporation. The joint judgment of McHugh, Gummow and Callinan JJ stated (at [97]) that the principles laid down in Wollongong Corporation and similar cases were to be understood by reference to the procedures of the common law courts. They were not to be regarded as authoritative in relation to the admissibility of further evidence pursuant to statutory powers. The scope of those powers was to be determined as a matter of statutory construction.
The language of s 93A(2) of the Family Law Act is not identical to that of s 75A(7) and (8). In particular, as the joint judgment in CDJ v VAJ noted (at [107]), s 93A(2) contains no requirement that “special grounds” be established before the evidence can be adduced on appeal. Nonetheless, in Nolan v Marson Transport Pty Ltd [2001] NSWCA 346; 53 NSWLR 116 Heydon JA (with whom Mason P and Young CJ In Eq agreed) observed that the reasoning in CDJ v VAJ may require reconsideration of the principles stated in Akins. Heydon JA concluded that Akins continues to be authoritative unless overruled, but noted that even if the three tests stated in Akins are not satisfied, a question remains: “is it just to admit the further evidence in this case?” (at [15]).
In Aztech Science Pty Ltd v Atlanta Aerospace(Woy Woy) Pty Ltd [2005] NSWCA 319, Basten JA referred to the authorities relating to the construction of s 75A(7) and (8), including Minister for Immigration and Multicultural Affairs v Jia Legeng [2001] HCA 17; 205 CLR 507, which followed CDJ v VAJ in relation to the powers conferred on the Federal Court by s 27 of the Federal Court of Australia Act 1976 (Cth). (Section 27 is in similar terms to s 93A(2) of the Family Law Act.) His Honour stressed that care must be taken not to import authorities concerned with appeals from jury verdicts, such as Wollongong Corporation, into appeals from judgments given by a judge sitting alone. Basten JA also cited, with apparent approval, a passage from the judgment of Moffitt P in Tamas v Streimer (Court of Appeal, 10 July 1981, unreported) (at [105]), observing that in the context of a rehearing:
“it may be far less disruptive of the finality of litigation to receive fresh evidence in relation to part of the case, than to ‘receive’ fresh evidence so the whole case is retried, with the possible consequence, as often occurs, that the factual issues are different and the evidence is called afresh and is different”.
In my opinion, the first of the three conditions identified in Akins is not satisfied in the present case. The evidence shows that the affidavit of Mr Purcell filed in the present proceedings on behalf of HPM was served on Mr Thomas’ solicitors on 21 September 2004, some two years before the trial. That affidavit made it apparent that Mr Moody’s evidence was potentially important on a critical issue in the case, namely whether the Second Assignment Offer had ever been accepted. It would not necessarily have been a simple matter to track down Mr Moody, but there is little doubt that he could have been located with the exercise of reasonable diligence. For example, residential addresses and telephone numbers for Mr Moody were shown in the “White Pages” for 2004, 2005 and 2006. While Mr Moody apparently led a somewhat peripatetic existence, other avenues of inquiry were available that, if pursued, would have been likely to locate him.
Mr Thomas’ solicitor swore an affidavit in support of the motion to adduce further evidence in which he very frankly admitted that he had made no efforts to locate Mr Moody because he assumed that Mr Moody would be in the same camp as Mr Purcell. That assumption is perhaps understandable. Nonetheless, some eight years had passed since the relevant events and alignments frequently change over time. If there were doubts about whether the Second Assignment Offer had been validly accepted, it was reasonable to expect some inquiries to be made, first to locate Mr Moody and, secondly, to determine whether he would be prepared to give evidence favourable to Mr Thomas. In short, the evidence now sought to be adduced could have been obtained by the exercise of reasonable diligence.
The failure of Mr Thomas’ solicitor to use reasonable diligence to obtain Mr Moody’s evidence is not fatal to Mr Thomas’ application to adduce that evidence. There is no doubt, as Mr Einfeld emphasised, that the issue to which Mr Moody’s evidence relates is critical to the outcome of the case. If Mr Moody’s evidence were to be accepted, HPM’s claims must fail.
If evidence sought to be adduced on an appeal is incontrovertible, or at least can be verified or falsified with very little difficulty, there may be good reasons to admit the evidence notwithstanding that not all the criteria identified in Akins have been satisfied. The difficulty here, however, is that, for the reasons I have given, there are grounds to doubt the reliability of Mr Moody’s evidence and it is clear that the evidence will be strenuously challenged.
I reiterate that none of this means that the evidence proposed to be given by Mr Moody in these proceedings would not be accepted. It does mean, however, that the direct conflict between Mr Moody’s proposed evidence and the evidence already given by Mr Purcell would have to be resolved at a new hearing. On the assumption that any such hearing would be conducted by the primary Judge, there would still need to be, in substance, a retrial of a critical factual issue resolved in HPM’s favour at the trial, namely whether Mr Moody accepted, on behalf of TPL, the Second Assignment Offer. The primary Judge would no doubt take into account the evidence already given by Mr Purcell. Nonetheless, it is likely that HPM would wish to call further evidence to contradict Mr Moody’s claims and that the primary Judge would have to evaluate the totality of the evidence.
In assessing whether there are special grounds to receive further evidence, it is relevant that Mr Thomas had the opportunity to test Mr Purcell’s account notwithstanding the absence of any pleading putting the acceptance of the Second Assignment Offer in issue. The primary Judge accepted Mr Purcell’s evidence. In part this was based on his assessment of Mr Purcell as a “careful and cautious witness”. In addition, his Honour pointed to objective matters to which I have already referred, that supported Mr Purcell’s evidence that the Second Assignment Offer had been accepted. It is true that the primary Judge accepted Mr Purcell’s evidence “as truthful, it not having been contradicted by any other witness”. However, I do not interpret this comment as a reservation about his Honour’s acceptance of Mr Purcell’s evidence, but merely a statement of fact that there was no countervailing evidence.
In my opinion, while the evidence proposed to be adduced cannot be discounted as necessarily unreliable, there are grounds for thinking that it may not be reliable. The conflict of evidence can only be resolved by a further hearing. Mr Thomas had the opportunity to seek out before the trial the evidence that he now wishes to adduce, but did not avail himself of that opportunity. The case has already occupied substantial court time (recognising the seven day hearing at trial included the two claims that were dismissed). It involves a claim for only a modest sum although, as is often the case, the costs of the proceedings probably exceed the amount in dispute. In those circumstances I think that the interests of ensuring the finality of litigation outweigh the benefits of permitting the proffered evidence to be received.
Mr Einfeld referred to Nyerlucz v Dei Rocini in support of Mr Thomas’ application. In that case a majority of the Court of appeal (Mahoney AP and Clarke JA; Meagher JA dissenting) granted leave to an appellant/defendant in a personal injuries case to adduce further evidence as to the nature of the respondent/plaintiff’s injuries. The evidence was to be given by the plaintiff’s next-door neighbours and was to the effect that the plaintiff was much less incapacitated than he had made out at the trial. The evidence would have been available at the trial had the defendant made inquiries of the neighbours. Those inquiries were not made because the defendant was concerned not to alert the plaintiff that he was under surveillance.
Mahoney AP accepted that the evidence could have been obtained by the defendant before the trial. However, he was not satisfied that the defendant had acted unreasonably in not interviewing the next-door neighbours as there was a risk that the plaintiff would have been told that he was under investigation. Mahoney AP was satisfied, after hearing oral evidence from one of the neighbours, that their evidence was credible and had the relevant likelihood of producing a different outcome in the proceedings. In these circumstances he concluded that the defendant had made out special grounds for receiving the further evidence.
Clarke JA acknowledged that it was only in a rare case that special grounds would be found if the three criteria (that is, those laid down in Akins) were not satisfied. However, he considered that special grounds existed because the defendant had provided a reasonable explanation for its failure to satisfy the reasonable diligence test and the evidence of the neighbours had a strong tendency to establish that the plaintiff had manufactured a false case.
As the majority in Nyerlucz v Dei Rocini emphasised, each case must depend on its own circumstances. In the present case, there were no legitimate forensic reasons for Mr Thomas’ solicitor not to make inquiries about Mr Moody’s whereabouts and likely evidence. He simply assumed that Mr Moody was in the other “camp”, notwithstanding the passage of eight years since the relevant events and the noteworthy absence of an affidavit from Mr Moody in HPM’s case. In Nyerlucz v Dei Rocini, the Court had the benefit of oral evidence from one of the neighbours (the other was not cross-examined) and formed a view that the evidence appeared to be reliable. Mr Moody’s account in his affidavit has not been tested and there are grounds for challenging its reliability.
In my opinion, Mr Thomas has not made out special grounds for receiving the further evidence. His application should be dismissed.
ORDERS
Although I have addressed the substantive arguments put on behalf of Mr Thomas, I think it appropriate that his application for leave to appeal be dismissed. Mr Thomas has not shown that the judgment of the primary Judge is attended by serious doubt.
For the reasons I have given Mr Thomas’ application that the Court receive further evidence should also be refused.
Since leave to appeal is refused, there is no occasion to consider the applications by Chandelle and Mr Hobson for leave to appeal from the costs orders made by the primary Judge or the applications to extend time to file the leave applications. The applications to extend time should be dismissed.
I therefore propose the following orders:
1.Mr Thomas’ summons filed on 28 March 2007, seeking leave to appeal from the decision of the primary Judge, be dismissed.
2.Mr Thomas pay HPM’s costs of the application for leave to appeal referred to in Order 1.
3.Mr Thomas’ summons filed on 1 October 2008, seeking an order that the Court receive further evidence, be dismissed.
4.Mr Thomas pay HPM’s costs of the summons referred to in Order 3.
5.Mr Hobson’s amended summons filed on 24 October 2008, seeking an order extending the time for the filing and serving of a summons seeking leave to appeal, be dismissed, with costs.
6.Chandelle’s summons filed on 13 April 2007, seeking an order extending the time for the filing and serving of a summons seeking leave to appeal, be dismissed, with costs.

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LAST UPDATED:
20 November 2008