Tonkin v Heilongjiang Feng Ao Agricultural & Animal Husbandry Group Co Pty Ltd [No 2] - [2015] WASC 460

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: TONKIN -v- HEILONGJIANG FENG AO AGRICULTURAL & ANIMAL HUSBANDRY GROUP CO PTY LTD [No 2] [2015] WASC 460

CORAM: MASTER SANDERSON

HEARD: 9 NOVEMBER 2015

DELIVERED : 9 NOVEMBER 2015

PUBLISHED : 1 DECEMBER 2015

FILE NO/S: CIV 2352 of 2013

BETWEEN: IAN JAMES TONKIN
CAROLYN ANNE TONKIN
Plaintiffs
AND
HEILONGJIANG FENG AO AGRICULTURAL & ANIMAL HUSBANDRY GROUP CO PTY LTD
Defendant

Catchwords:

Practice and procedure - Further order to be made after trial - Turns on own facts

Legislation:

Nil

Result:

Order made

Category: B

Representation:

Counsel:

Plaintiffs: Mr P A Kyle
Defendant: Mr J Thomson SC & Ms C Sluiter

Solicitors:

Plaintiffs: Kyle & Company
Defendant: Allion Legal

Case(s) referred to in judgment(s):

Tonkin v Heilongjiang Feng AO Agricultural & Animal Husbandry Group Co Pty Ltd [2015] WASC 378

MASTER SANDERSON: After publication of reasons in this matter[1] the parties entered into negotiations largely directed at the way in which the order for specific performance was to be implemented. Happily a regime for settlement of the sale and purchase of the plaintiffs' farm was agreed. Some minor adjustments to what was proposed by each party were required, but those adjustments were resolved during the course of the hearing. That left four matters which could not be agreed between the parties and which were the subject of further submissions.
[1] Tonkin v Heilongjiang Feng AO Agricultural & Animal Husbandry Group Co Pty Ltd [2015] WASC 378.
The first of these issues had to do with occupation of the homestead. Annexure B to the contract contained relevantly the following provision:
The Buyers allow the Seller to reside in the homestead and have use of the workshop shed on Roe Location 2317 for a period of ONE year from the settlement date of this contract.
It was the plaintiffs position they were entitled to occupy the homestead for a period of one year from 20 November 2015 (that being the date on which the parties agreed to settle the transaction). It was the plaintiffs position this was consistent with the intent of the original contract.
It was the defendant's position it was intended the property would settle in 2012 and the plaintiffs right of occupancy of the homestead would expire in March 2013. That period had long since passed and now there was no warrant to provide a further 12 months right of occupancy to the plaintiffs under the terms of the contract.
There is an obvious difficulty in settling upon what is the proper approach to the contractual provision. When the parties signed the contract each anticipated settlement would take place consistent with the terms of the agreement. There was no evidence at trial to suggest either the plaintiffs or the defendant expected any significant delay in settling the transaction. There is nothing in the contract documents which bears upon the question of how this provision is to be interpreted if there is a lengthy delay in settlement.
What did emerge from the evidence was that the plaintiffs wished to remain in occupation of the homestead to give them a chance to continue their children's education before moving to another property. It is perhaps reasonable to assume that is still the position. But whatever be the case it is a matter of interpreting the provisions of the contract.
On balance I was satisfied it was incumbent upon the plaintiffs to deliver up possession of the whole of the farm post‑settlement. The parties had agreed while settlement was to take place in November 2015 possession of the farm would not be given until 1 March 2016. It seemed to me in all the circumstances the best course was to put an end to the relationship between the plaintiffs and the defendant and that delivery of possession of the entire farm was consistent with the changed circumstances which now applied. Accordingly I declined to include in the order a provision to the effect the plaintiffs were entitled to remain in the homestead until November 2016.
The second issue had to do with the interest calculation. In my reasons I set off an amount of some $660,000 against interest payments which I found the defendant was liable to make to the plaintiffs. Counsel for the plaintiffs effectively sought to have me reconsider this aspect of the decision. The argument was that the plaintiffs by accident, and without fault on their part, had not been heard on this issue. Counsel's submissions can be summarised as follows.
The defendant originally pleaded in par 10(c) of its defence, that Vicstock Grain Pty Ltd (Vicstock Grain), as agent for the defendant, paid to the plaintiffs $660,000 and in its counterclaim alleged that pursuant to cl 24.17 of the 2011 General Conditions the plaintiffs were obliged to repay that sum to the defendant.
By a minute of proposed further re‑amended defence and counterclaim dated 14 April 2015 (pars 13 ‑ 17), the defendant sought to plead that Vicstock Grain for and on behalf of the defendant paid the $660,000 to the plaintiffs and the plaintiffs were obliged by cl 24.16 of the 2011 General Conditions to repay that sum to the defendant. The defendant further claimed it had suffered damage in the amount specified by the plaintiffs failure to comply with the defendant's default notice. Alternatively, the defendant sought to plead that there was an agreement between Vicstock Grain and the plaintiffs for repayment of $660,000 (par 18). At the same time the defendant sought leave to have Vicstock Grain joined as a second defendant so that it could claim repayment of the $660,000.
By a substituted minute of proposed further re‑amended defence and counterclaim dated 30 April 2015 the defendant withdrew its proposed pleaded and counterclaim in respect of the $660,000 and its application to have Vicstock Grain joined as a defendant. As a result of that amendment for which leave was given there was no claim for payment of the $660,000 and the only plea relevant to that sum was the allegation that 'Vicstock Grain Pty Ltd, (a company associated with the interests of the defendant), paid to the Plaintiffs the sum of $660,000 pending' (par 10(c)).
By email dated 28 April 2015 from the defendant's solicitors to the plaintiffs' solicitors the defendant explained the reason for its change of heart. The email is in the following terms:
It is HFA's desire, with the commencement of trial now less than 3 weeks away, to focus on the main issues between the parties that arise by reason of these proceedings. Those issues are:
(a)Whether there has been valid termination of the Contract;
(b)Whether there ought to be specific performance of the Contract; and
(c)Damages.
In the circumstances, we have been instructed:
(a) to discontinue the claim by HFA for repayment of the $660,000 cropping pre-payment; and
(b) not to pursue the application to join Vicstock Grain as a Second Plaintiff to the Counterclaim in these proceedings.
Accordingly, we will file in the next day or two, a supplementary Affidavit sworn by me with revised Minutes of the Defendant's pleading striking out HFA's pleadings with respect to its present claim for repayment of the $660,000. We do not believe that these amendments ought cause your clients any prejudice as they will remove an issue in contention between them and allow the parties to focus on the issues set out above (par 8).
As a result of the amendments to the defence and counterclaim and the email referred to above the plaintiffs took the view that the defendant no longer sought repayment of the $660,000 or any credit for that sum in any assessment of damages or other monies owing by the defendant to the plaintiffs. Neither the plaintiffs nor the defendant made any reference to the $660,000 in their respective opening submissions, written closing submissions or oral submissions. Insofar as the defendant's made any reference to the $660,000 that was to be found in pars 26 ‑ 35 of their closing submissions which dealt with the validity of the defendant's default notice.
It was counsel's submission in all the circumstances the plaintiffs had not had the opportunity to be heard on this question, that the issue required reconsideration and the deduction from the interest payments of an amount of $660,000 ought not apply.
I declined to accept the further evidence tendered on behalf of the plaintiffs (there was no formal application by counsel to tender the evidence and it was not supported by an affidavit). My reasons for doing so were as follows. When considering the plaintiffs' claim I gave careful consideration to the interplay between the contractual entitlement to interest and the plaintiffs' claim for loss and damage sustained as a consequence of the delayed settlement. The way in which the plaintiffs had put their claim was they were entitled to interest and they were entitled to damages. The case was not run on the basis the plaintiffs were entitled to interest up until the date they issued proceedings and damages thereafter. Nonetheless it seems proper to deal with the plaintiffs' claim on the basis of what the contract actually said. As part of that balancing exercise I then took into account the $660,000. There was no dispute between the parties as to payment of that sum and there was no dispute between the parties as to why it had been paid - it was in effect a recognition by the defendant that the delay in settlement was causing hardship to the plaintiffs. That being so as a matter of practical reality the payment of the $660,000 had to be recognised and offset against the interest. After all the interest payable under the contract is expressed to be a genuine pre‑estimate of the damage suffered by the plaintiffs. If that is so and there has been a payment made to offset that damage then the payment ought be brought to account.
It is the case I was not aware of the terms of the correspondence passing between the parties. Nonetheless I gave the matter careful consideration and reached a view. It seemed to me that was the proper approach and I was therefore not prepared to reopen the question for further argument.
The two remaining questions were first an assessment of damages for the 2015 season. In my reasons I anticipated the plaintiffs having the opportunity to present a claim for loss once the 2015 season was over and the returns were in. It was the defendant's position the matter should be brought to a conclusion and no further claim for damages ought be entertained. Counsel's argument was consistent with the argument to do with the homestead - there ought to be finalisation in litigation and the matter ought be brought to an end. In my view, unfortunate though it is to have the matter continue on, the better course is to allow the plaintiffs to make a claim for further damages should they wish to do so. It is very difficult to see how at the time of trial the plaintiffs could have formulated a claim for the 2015 season. There are just too many variables. But there is also no doubt the uncertainty occasioned by the defendant's failure to settle which was at the heart of the plaintiffs' claim for damages remained live and was a factor in the way the plaintiffs approached the 2015 season. I therefore reserved the right to the plaintiffs to formulate a claim for damages.
Finally, there was a question of costs. The plaintiffs foreshadowed the possibility of a special costs order The defendant submitted full costs should not be awarded because they were successful on some issues. In the end with the concurrence of the parties I adjourned the question of costs for further consideration. Doubtless submissions will be made in due course and further consideration can be given to the appropriate order.