Supreme Court of the NT|1994-09-19|Before: Kearney J

Brooks v Wyatt [1994] NTSC 90; 99 NTR 12 (19 September 1994)

COURT IN THE SUPREME COURT OF THE NORTHERN TERRITORY OF AUSTRALIA KEARNEY J CWDS Practice and procedure - counter-claim HRNG DARWIN #DATE 19:9:1994 Appearances not available ORDER Orders made JUDGE1 KEARNEY J The defendant sought leave on 18 March 1993 either to file a counterclaim or to amend his Defence so as to include the counterclaim. The plaintiffs opposed the application on numerous grounds: see pp4-5. If the application was refused the parties sought formal orders flowing from the judgment of 30 December 1992. I rule today on these matters. It is desirable first to set out the background against which the applications were made. THE BACKGROUND TO THE HEARING ON 18 MARCH 1993 2. In June 1991 the plaintiffs instituted this action seeking, inter alia, specific performance of a contract for the sale of Lot 267, Town of Tennant Creek. The defendant is the registered proprietor of that land; the plaintiffs currently 'hold over' as lessees, under a registered lease from the defendant. Clause 5.1 of the lease gave the plaintiffs an option to purchase the land, to be exercised before 4.00pm on 31 October 1991. The purchase price was to be agreed between the parties or, failing agreement, to be determined by a valuation arrived at by a licensed real estate valuer to be appointed by agreement between the parties. The plaintiffs purported to exercise the option. 3. Three issues were raised by the pleadings but, in the result, only two were "live" at the trial. The first was a factual issue as to whether or not the parties had agreed to appoint a Mr Weeks as the valuer to determine the purchase price pursuant to the option. The second only arose if the parties had not agreed to appoint Mr Weeks. 4. The action was tried on 21 and 22 December 1992; reasons for decision were delivered on 30 December 1992. In the course of those reasons I found (p24) that clause 5.1 of the lease created an option to purchase and held (p26) that the parties had agreed to the appointment of Mr Weeks as valuer. 5. I then concluded (at pp26-27):- "THE PLAINTIFFS VALIDLY AND EFFECTIVELY EXERCISED THEIR OPTION TO PURCHASE BY NOTICE DATED 23 JULY 1990. THEY ARE NOW ENTITLED TO AN ORDER THAT THE CONTRACT CONSTITUTED BY THE EXERCISE OF THAT OPTION, IN THE FORM OF THE CONTRACT IN ANNEXURE A TO THE LEASE, BE SPECIFICALLY PERFORMED AND CARRIED INTO EXECUTION. HOWEVER, I THINK THAT PRIOR TO MAKING ANY FORMAL ORDERS, I SHOULD ADJOURN FOR ONE WEEK TO ENABLE THE PARTIES TO THIS UNFORTUNATE LITIGATION TO HAVE FURTHER DISCUSSIONS AND TO AGREE, IF POSSIBLE, UPON DRAFT MINUTES OF ORDERS IN THE

LIGHT OF THIS JUDGMENT. In this connection I note in passing that the question whether the valuation of 24 July 1990 was correctly arrived at so as to constitute the fair and reasonable price which is the object of that provision in clause 5.1, was not agitated before me. It is far from self-evident that Mr Weeks was properly instructed by both parties as to what he was to take into account in his valuation: for example, was his valuation to have taken into account any business or local goodwill attached to the name "Wyatt Motors", or any other intangible business assets?" (emphasis mine) 6. The further hearing was ultimately adjourned until 18 March 1993. When it resumed the parties had not agreed on draft minutes of orders. On that day, Mr Tippett of counsel for the defendant orally sought the relief at pp3-4, before addressing the question of the orders which should flow from the judgment of 30 December 1992. I turn first to his application. THE APPLICATION: THE DEFENDANT'S SUBMISSIONS 7. Mr Tippett submitted that the defendant should now be given leave to: (1) file and serve a counterclaim raising the issues:

(i) whether it is implied in clause 5(1) of the lease that the valuation be fair and reasonable; and (ii) whether the valuation by Mr Weeks was not fair and reasonable; or (2) amend his Defence under r36.01, to plead that counterclaim with the Defence. 8. Mr Tippett's submissions in support were as follows. A counterclaim may be filed and served at any time until judgment is formally entered. The factors that the Court usually takes into account when considering the grant of leave to amend pleadings, apply here. The question is whether the prejudice suffered by the plaintiff if the application were granted, can be remedied by an appropriate costs order. Even if it cannot, the Court still has a discretion, in the particular circumstances of the case, to grant the relief sought. 9. Implicit in Mr Tippett's submissions is the contention that it should be found that the plaintiffs would suffer a "significant difficulty" if leave were granted, before the Court should properly refuse to grant leave. 10. In support, he relied on Shanks and Co. Pty Ltd v Hohne [1963] VicRp 31; (1963) VR 198 at 200, CSI International Co Ltd v Archway Personnel (Middle East) Ltd (1980) 3 All E R 215 at 220, Clough and Rogers v Frog (1974) 4 ALR 615 at 618 and Creedon v Measey Investments Pty Ltd (1990) 60 NTR 19. THE APPLICATION: THE PLAINTIFFS' SUBMISSIONS 11. Mr Waters of counsel for the plaintiffs submitted that leave should be refused, for the following reasons: (i) The defendant had not given any explanation for the lateness of his application. The issues raised in the proposed counterclaim/amended Defence were apparent from the commencement of the trial, simply by reading the option clause, yet no attempt was made to challenge Mr Weeks' valuation until 18 March 1993, after the defendant had lost

at trial on the issues joined; (ii) The defendant had failed to give any indication of the quality or weight of the evidence he proposed to adduce, to establish that the valuation was not fair and reasonable; (iii) The defendant was estopped from relying on the counterclaim/amended Defence; (iv) The defendant had the alternative remedy of pursuing Mr Weeks in an action for professional negligence, on the basis that his valuation was unfair and unreasonable; and (v) If the application was granted, the plaintiffs might have to join Mr Weeks in the action, a course which would increase the complexity of the issues. 12. Mr Waters further submitted that any grant of leave should be on condition that the question of the construction of clause 5.1 raised by par4 of the proposed counterclaim (see p17), should be dealt with separately as a preliminary issue. See r47.04(a) and Allen v Gulf Oil Ltd [1980] UKHL 9; (1981) AC 1001 at 1010, Gardiner v Henderson and Lamey (1988) 1 Qd. R 125 at 132, Rajski v Carson and Others (1988) 15 NSWLR 84 at 85; and cf the warning by Lord Scarman in Tilling v Whiteman (1979) 1 All E R 737 at 744 that:- "... preliminary points of law are often treacherous short cuts. Their price can be hope, delay, anxiety and expense". THE APPLICATION: THE DEFENDANT'S SUBMISSIONS IN REPLY 13. Mr Tippett submitted that the authorities he had cited (see p4) clearly established that the question to be resolved on the application is whether the plaintiffs would be prejudiced by the granting of the relief sought, in a manner which could not be overcome by an appropriate order for costs. That is, the question was one of "justice and prejudice". 14. He observed that Mr Waters had conceded that the plaintiffs would not suffer "irreparable prejudice" if the application were granted. Further, many of the reasons relied on by Mr Waters (see pp4-5) to support his submission that leave should not be granted, were not relevant to the question to be resolved (above). In support he relied on Clough and Rogers v Frog (supra). 15. He agreed that the question of the construction of clause 5.1 could be dealt with as a preliminary issue. However, he submitted that both issues sought to be raised (that is, the construction of clause 5.1 and the question whether the valuation was fair and reasonable) could in fact be dealt with "in entirety" in "a day". CONCLUSIONS ON THE DEFENDANT'S APPLICATION OF 18 MARCH 1993 GENERAL 16. The Supreme Court Rules (herein "the Rules") do not set out explicitly when a defendant may file and serve a counterclaim. Rule 10.02 of the Rules provides, as far as relevant, as follows:- "(1) A defendant who has a claim against the plaintiff may counterclaim IN THE PROCEEDING ... (3) A defendant who counterclaims SHALL PLEAD HIS DEFENCE AND THE COUNTERCLAIM IN ONE DOCUMENT CALLED A DEFENCE AND COUNTERCLAIM". (emphasis mine) 17. However, r14.04 provides for the service of a Defence, and hence of an accompanying counterclaim pursuant to r10.02(3). Time may be extended under r3.02(1). 18. Shanks and Co. Pty Ltd v Hohne (supra), was concerned with O21 r16 of the former Rules of the Supreme Court (Vic.), which provided that a counterclaim could still be heard even though the plaintiff's action had been stayed, discontinued or dismissed. The plaintiff had entered judgment for default of Defence. The defendant subsequently delivered his Defence and counterclaim, and later entered default judgment on the counterclaim. Sholl J said at p200:- "... O.xxi, r16 appears to me itself to recognize that if the plaintiff's claim has passed into judgment before any counterclaim is set up, no counterclaim can be set up thereafter." 19. In CSI International Co Ltd v Archway Personnel (Middle East Ltd (supra) the defendant served a counterclaim and Defence after it had satisfied the judgment entered against it. The Court of Appeal appeared to treat the time within which a counterclaim may be set up, as extending until judgment is satisfied. Roskill LJ said at p221:- "But I rest my decision on this simple point: where a counterclaim, even if it has previously been raised, has not been the subject of a summons for directions, or, when required, of a former pleading before the time when the plaintiff has received full satisfaction of the judgment which he has obtained against the defendant, I DO NOT THINK

THERE IS STILL EXTANT ANY ACTION BY THE PLAINTIFF IN WHICH THE DEFENDANT COULD PROPERLY COUNTERCLAIM AGAINST HIM. THE ACTION HAS, FOR ALL PRACTICAL PURPOSES, COME TO AN END WHEN SATISFACTION OF THE JUDGMENT HAS BEEN OBTAINED." (emphasis mine) 20. I respectfully agree with that view; cf. Gilbertson v The State of South Australia (1976) 5 SASR 66 at 158-159, per Zelling J. 21. There is power to dispense with the Rules, under r2.04; but an applicant must show good reasons - see J-Corp Pty Ltd v Ingram (1988) NTJ 328 at 335, and the observations of Angel J in Tchia v Rogerson (1992) NTJ 1666 at 1678-1679. 22. Order 36 provides for the amendment of pleadings. See the considerations mentioned by O'Leary J in Northern Territory Fuels Pty Ltd v Hart (1985) NTJ 1 at 13-16, where the application to amend was made during the course of the trial. On any application to amend there must also be kept in mind the public policy of 'interest reipublicae ut sit finis litium'. 23. Clearly, the Court had not on 30 December 1992 disposed of the issues before it in the sense of making orders binding on the parties in respect of their legal rights (see p3); as Mr Waters rightly put it, "Your Honour is (not) functus officio in terms of this matter". Consequently, the defendant could be granted leave to file and serve his counterclaim subject to:- (1) complying with the requirement of r10.02(3); and (2) the considerations that flow from that requirement (see pp10-14). 24. Rule 10.02(3) (see p7) requires the defendant to plead his counterclaim with his Defence. It follows, in my opinion, notwithstanding r2.04 of the Rules, that the defendant's application should be entertained only on his alternative basis of leave to add to his Defence by including the counterclaim. Accordingly, I refuse leave to file and serve a counterclaim alone. I turn to consider the alternative application for leave under r36.01 to add to the Defence by pleading the counterclaim set out at pp3-4. THE APPLICATION TO ADD TO THE DEFENCE, BY PLEADING THE COUNTERCLAIM 25. The defendant's counterclaim first arose on 24 July 1990, the date of Mr Weeks' valuation. This application was made on 18 March 1993 (approximately 2 years and 8 months after time commenced to run for limitation purposes); the counterclaim was therefore within the relevant limitation period under s12 of the Limitation Act. 26. Rules 36.01(1) and (2) provide as follows:- "(1) For the purpose of determining the real question in controversy between the parties to a proceeding or of correcting a defect or error in a proceeding or of avoiding multiplicity of proceedings, THE COURT MAY AT ANY STAGE ORDER THAT A DOCUMENT IN THE PROCEEDING BE AMENDED OR THAT A PARTY HAVE LEAVE TO AMEND A DOCUMENT IN THE PROCEEDING. (2) In this Order "DOCUMENT" INCLUDES originating process, an endorsement of claim on originating process AND A PLEADING". (emphasis mine) 27. By this Rule the Court has broad discretionary power to allow amendments such as that sought; see Creedon v Measey Investments Pty Ltd (supra). 28. In Clough and Rogers v Frog (supra) the High Court considered a provision similar in substance to r36.01. The Full Court set out at p619 the principle which a Court must observe when exercising the discretion to amend pleadings:- "The principle according to which this power is to be exercised was stated by Bowen LJ in Cropper v Smith (1884) 26 Ch D 700 at 710-11: ". . . the object of courts is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases . . . I KNOW OF NO KIND OF ERROR OR MISTAKE WHICH, IF NOT FRAUDULENT OR INTENDED TO OVERREACH, THE COURT OUGHT NOT TO CORRECT, IF IT CAN BE DONE WITHOUT INJUSTICE TO THE OTHER PARTY. . . as soon as it appears that the way in which a party has framed his case will not lead to a decision of the real matter in controversy, IT IS AS MUCH A MATTER OF RIGHT ON HIS PART TO HAVE IT CORRECTED, IF IT CAN BE DONE WITHOUT INJUSTICE, AS ANYTHING ELSE IN THE CASE IS A MATTER OF RIGHT." ... the amendments sought should have been allowed unless it appeared that injustice would thereby have been occasioned to the respondent, THERE BEING NOTHING TO SUGGEST FRAUD OR IMPROPER CONCEALMENT OF THE DEFENCE ON THE PART OF THE APPELLANTS. With the exception of the suggestion of prejudice arising in respect of the loss of the possible claim against the nominal defendant, THE MATTERS RELIED UPON BY THE RESPONDENT IN OPPOSITION TO THE AMENDMENT SOUGHT GO AT THE MOST TO DELAY AND IRREGULARITY ONLY, MATTERS WHICH ARE RELEVANT TO COSTS BUT DO NOT CONSTITUTE INJUSTICE TO THE RESPONDENT IN THE SENSE IN WHICH THAT EXPRESSION IS USED." (emphasis mine) 29. I consider that the High Court was not here saying that an order for costs is a panacea for prejudice. Their Honours' views are consistent with those expressed by Lord Griffiths in Ketteman v Hansel Properties Ltd (1988) 1 All ER 38 at 62 (see p13). 30. In Tchia v Rogerson (supra), Angel J said at pp1678-1679:- "I remind myself that procedure is not an end in itself, but a means to an end, which is the attainment of justice and that ... the relation of rules of practice to the work of justice is intended to be that of handmaid rather than mistress ...". 31. In Northern Territory Fuels Pty Ltd v Hart (supra), O'Leary J had to consider whether the defendant should be allowed to amend his Defence after the trial had commenced. His Honour said at pp12-14:- "The principles according to which the court should act in deciding whether or not to allow an amendment to pleadings have been discussed in many decided cases. In Horton v Jones and Ors (No.2) [1939] NSWStRp 35; (1939) 39 SR (NSW) 305, Jordan CJ expressed them in these words (at 309): "IT IS NOW A COMMONPLACE THAT IF A PARTY TO LEGAL PROCEEDINGS ESTABLISHES TO THE SATISFACTION OF THE COURT THAT HE IS GENUINELY DESIROUS OF AMENDING HIS PLEADINGS for the purpose of modifying or otherwise altering some existing claim or defence, or of introducing a new ground of claim or a new matter of defence, HE SHOULD BE PERMITTED TO DO SO, subject to the imposition of such terms as may be proper, unless the proposed amendment is so obviously futile that it would be struck out if it appeared in an original pleading, or UNLESS IT IS ONE THAT IT WOULD BE IMPOSSIBLE TO ALLOW UPON ANY TERMS WITHOUT CAUSING SUBSTANTIAL INJUSTICE TO ANOTHER PARTY TO THE PROCEEDINGS. THE QUESTION WHETHER AN AMENDMENT WOULD CAUSE SUBSTANTIAL INJUSTICE MUST, OF COURSE, DEPEND UPON THE CIRCUMSTANCES OF THE PARTICULAR CASE. Thus, an application to add a new ground of claim stands on a very different footing when made a considerable time before the trial, so that the defendant will have ample time to meet it if it is allowed, than if made during the course of a trial of other claims which are different in kind." " (emphasis mine) 32. I interpose at this point to observe that an application to amend a pleading during a trial as in Northern Territory Fuels v Hart (supra) "stands on a very different footing" to one made after the trial of the issues pleaded has concluded and reasons for decision have been published. O'Leary J continued:- "The question whether or not I should allow the further amendments sought is one that had caused me no little concern. TWO MATTERS, IN PARTICULAR, CALL FOR CONSIDERATION: THE FIRST IS THE DEFENDANT'S GOOD FAITH IN SEEKING THE AMENDMENTS; THE SECOND, IS THE NATURE OF THE AMENDMENTS THEMSELVES. GOOD FAITH IN SEEKING TO AMEND PLEADINGS IS AN ESSENTIAL CONDITION FOR GIVING LEAVE TO AMEND. ... THE SECOND MATTER THAT HAS GIVEN ME SOME CONCERN IS THE NATURE OF THE AMENDMENTS THEMSELVES. Some of them, on their face, seem thin indeed; to be barely tenable, if they are tenable at all. For all that, though, and particularly since I have not heard argument on them, I DO NOT THINK I COULD SAY THAT THEY ARE "SO OBVIOUSLY FUTILE" THAT THEY WOULD BE STRUCK OUT IF THEY APPEARED IN THE ORIGINAL PLEADING. If, of course, it should turn out at the trial that any of the amendments sought are useless and such as ought never to have been asked for, that is a matter which clearly will be taken into account by me on the question of costs: see Litchfield v Dreyfus (1906) 1 KB 584 at 590. IN THE END, I THINK THAT, IF I CAN DO SO WITHOUT CAUSING SUBSTANTIAL INJUSTICE TO THE PLAINTIFF, I SHOULD ALLOW THE AMENDMENTS, IF ONLY FOR THE SAKE OF FINALLY DETERMINING THE QUESTIONS IN CONTROVERSY BETWEEN THE PARTIES, AND OF AVOIDING MULTIPLICITY OF PROCEEDINGS BETWEEN THEM. Obviously, leave must be on terms and the question that I must consider is what terms should I impose as conditions for allowing the amendments which will put the parties in the same position for the purposes of justice that they were in at the time the original defence was delivered." (emphasis mine) 33. Applying these observations, with which I respectfully agree, I should have regard to 3 factors in particular (see p14), in deciding whether to grant leave to amend. I note that these 3 factors are not the only relevant considerations. 34. In Ketteman v Hansel Properties Ltd (supra), it was held that there was no rule of practice that a new defence would invariably be allowed to be raised by amendment at the end of the trial, subject to the grant of an adjournment and the defendant paying costs thrown away. The question of amendment was in the judge's discretion, to be exercised according to the justice of the case. Lord Griffiths observed at 62:- "Whether an amendment should be granted is a matter for the discretion of the trial judge and he should be guided in the exercise of the discretion by his assessment of where justice lies. MANY AND DIVERSE FACTORS WILL BEAR ON THE EXERCISE OF THIS DISCRETION. I DO NOT THINK IT POSSIBLE TO ENUMERATE THEM ALL OR WISE TO ATTEMPT TO DO SO. BUT JUSTICE CANNOT ALWAYS BE MEASURED IN TERMS OF MONEY and in my view a judge is entitled to weigh in the balance the strain the litigation imposes on litigants, particularly if they are personal litigants rather than business corporations, the anxieties occasioned by facing new issues, the raising of false hopes, and the legitimate expectation that the trial will determine the issues one way or the other. FURTHERMORE, TO ALLOW AN AMENDMENT BEFORE A TRIAL BEGINS IS QUITE DIFFERENT FROM ALLOWING IT AT THE END OF THE TRIAL TO GIVE AN APPARENTLY UNSUCCESSFUL DEFENDANT AN OPPORTUNITY TO RENEW THE FIGHT ON AN ENTIRELY DIFFERENT DEFENCE. Another factor that a judge must weigh in the balance is the pressure on the courts caused by the great increase in litigation and the consequent necessity that, in the interests of the whole community, legal business should be conducted efficiently. We can no longer afford to show the same indulgence towards the negligent conduct of litigation as was perhaps possible in a more leisured age. There will be cases in which justice will be better served by allowing the consequences of the negligence of the lawyers to fall on their own heads rather than by allowing an amendment at a very late stage of the proceedings." (emphasis mine) 35. I respectfully agree with his Lordship's observations which, I think, express the modern approach; to similar effect are NAALAS v Michael Liddle, (unreported, Court of Appeal, 8 September 1994) at pp19-26, and the authorities therein cited. 36. The first factor for consideration is whether the defendant made this application in good faith. The second factor is whether the proposed amendments are "so obviously futile" that they would be struck out if they had been pleaded when the Defence was filed. The third factor is whether the amendments would cause the plaintiffs injustice that could not be corrected by an appropriate costs order. I now deal with these factors seriatim. GOOD FAITH OF THE DEFENDANT IN APPLYING TO AMEND 37. In NT Fuels Pty Ltd v Hart (supra) at p13 O'Leary J said that "good faith in seeking to amend pleadings is an essential condition for giving leave to amend". This is consistent with the High Court's approach in Clough and Rogers v Frog (supra); see p10. The question of good faith, as a matter of commonsense and convenience, is a threshold question to be answered before considering the substantive question of prejudice. In my opinion, an applicant for leave bears the onus of establishing that he does so in good faith, and of rebutting any allegation of mala fides. 38. In NT Fuels Pty Ltd v Hart (supra) O'Leary J considered three factors were relevant to ascertaining if the applicant had acted in good faith, viz: (a) The circumstances in which the application was made; (b) the conduct of the proceeding so far on behalf of the applicant; and

(c) the multiplicity of the defences now sought to be relied upon. 39. I respectfully agree with his Honour that these factors are relevant; they are not the only relevant factors. 40. I accept Mr Waters' submission that the defendant has failed to give any explanation as to why he sought to amend so late in the trial, and has also failed to indicate the quality or weight of the evidence he proposed to rely on to substantiate his counterclaim. 41. Mr Tippett submitted that those matters were irrelevant to the ultimate question of "justice and prejudice". I do not accept that submission; those matters, in my opinion, are clearly relevant to considerations of justice, which include the need for the defendant to show he made the application in good faith. In Clough and Rogers v Frog (supra) at p618 (see p10) the High Court cited with approval Bowen LJ in Cropper v Smith (supra), viz:- "I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party". 42. Later, at p618, after reviewing the proceedings, their Honours concluded that the amendments should have been allowed, in the absence of any apparent injustice, since there was "nothing to suggest fraud or improper concealment of the defence on the part of the appellants". 43. Clearly, matters that go to "suggest fraud or improper concealment of the defence" are relevant in determining the question of justice as between the parties: see NT Fuels Pty Ltd v Hart (supra) at pp12-17. The defendant's failures referred to at p15 create in my mind doubt as to his good faith in now seeking leave to amend. 44. The defendant failed to give an explanation of his conduct up to and including 18 March 1993 when the application was made. I accept Mr Waters' submission that the issues raised in the proposed counterclaim were clearly open to be raised at the outset of the trial, from a simple reading of the option clause. I observe that by the defendant's account at the trial, the amount of the valuation was in dispute in July 1990; see p21 of the transcript of 18 March 1993 and p17 of the reasons for decision of 30 December 1992. I also accept that the defendant made no attempt to challenge Mr Weeks' valuation in Court, until 18 March 1993. Ultimately, a forensic onus lay on the defendant to adduce evidence or advance an explanation which established the good faith of his application to amend. No such explanation or evidence was advanced or adduced, in support of the application. 45. Consequently, the defendant has failed to satisfy the forensic onus he bears. The plaintiffs have cast sufficient doubt on the defendant's good faith to persuade me to conclude, for present purposes, that his application has not been shown to have been made in good faith. 46. For this reason alone, I would refuse the amendments sought. 47. It is therefore strictly unnecessary to deal with the other two factors (see p14). However, lest I am wrong as to the matter of good faith, I now deal with them briefly. IS THE PROPOSED AMENDMENT "OBVIOUSLY FUTILE?" 48. The second factor requires consideration of the nature of the amendments: see NT Fuels Pty Ltd v Hart (supra) at pp13-14. 49. The defendant proposes to file a document entitled "Further amended defence and/or counterclaim". That document, inter alia, sets out the following particulars of the proposed counterclaim:- "4. BY CONSTRUCTION OF CLAUSE 5.1 IT WAS AN IMPLIED TERM FOR THE PROPER EXERCISE OF THE OPTION THAT THE SAID VALUATION ARRIVED AT BE FAIR AND REASONABLE. 5. In July of 1990 the plaintiffs with the purported agreement with (sic) the defendant appointed a Mr Weeks to value the said land. 6. In accordance with the plaintiffs' instructions Mr Weeks prepared a valuation in the sum of $45,000. 7. IN BREACH OF CLAUSE 5.1 AND THE SAID IMPLIED TERM THE PLAINTIFF PURPORTED TO EXERCISE THE OPTION TO PURCHASE. PARTICULARS OF BREACH (i) THE VALUATION OBTAINED WAS NOT FAIR AND REASONABLE. (ii) The valuation failed to give due weight to the value of the demised premises. (iii) The valuation failed to include a fair and reasonable valuation of all plant and equipment upon the land the subject of the lease. AND THE plaintiff (sic) claims (i) A DECLARATION THAT THE VALUATION WAS NOT FAIR AND REASONABLE. (II) ORDER THE (SIC, THAT) THE PARTIES APPOINT A LICENSED VALUER TO VALUE THE LAND THE SUBJECT OF THE LEASE IN ACCORDANCE WITH THE TERMS OF THE LEASE. (III) THAT ANY ORDER FOR SPECIFIC PERFORMANCE BE STAYED PENDING A FAIR AND REASONABLE VALUATION BEING OBTAINED." (emphasis mine) 50. In my opinion, the issues raised in this counterclaim cannot be said to be "so obviously futile" that they would be struck out if they appeared in the original pleading, particularly since they have not been argued. I turn to the third factor (p14). WHETHER THE AMENDMENT WOULD CAUSE THE PLAINTIFFS SUBSTANTIAL INJUSTICE 51. The third question is not simply whether the prejudice the plaintiffs would suffer, if the amendment were granted, would be overcome by an appropriate award of costs to the plaintiffs, as in NT Fuels Pty Ltd v Hart (supra) at pp14-17, (where the award was on an indemnity basis). 52. I have no doubt that if the amendment were allowed the plaintiffs would suffer considerable prejudice, particularly because of the lateness of the application. The defendant would have to apply for leave to adduce further evidence in respect of the issues he would now raise, and the plaintiffs would have to reply by calling further evidence. It may be necessary to adjourn the hearing, to resolve the discrete issue whether it is implied in clause 5.1 that the valuation must be fair and reasonable (see pp5-6). I accept Mr Waters' submission that if the application were allowed, the complexity of the issues would increase (see p5). I also bear in mind the matters bearing on the exercise of the discretion, referred to by Lord Griffiths in Ketteman (supra) (see p13), and by Martin CJ in NAALAS v Liddle (supra) at pp19-26. 53. In my opinion, these are matters which do not bear only on matters of delay and irregularity, which according to Clough and Rogers v Frog (supra), are "relevant to costs but do not constitute injustice to the respondent in the sense in which that expression is used". Consequently, I do not accept Mr Tippett's submission that the prejudice the plaintiffs would suffer can be remedied simply by an appropriate costs order, notwithstanding Mr Water's concession that the plaintiffs would not suffer "irreparable prejudice". Conclusions on the defendant's application of 18 March 1993 54. Not surprisingly, a Court is reluctant to give leave to amend pleadings late in a trial unless the grounds for doing so are very good and the application is strongly justified. In general, and particularly when the amendments could result in a party being faced with a substantial new case, as here, leave will not be granted after the whole of the evidence is in; see Edevain v Cohen (1889) 41 Ch. D. 563 at 567, Soar v National Coal Board (1965) 1 WLR 886 at 890 per Lord Denning MR, and Loutfi v C. Czarnikow, Ltd (1952) 2 All ER 823. In light of the findings made at pp14-17 on factor (i), and at pp18-19 on factor (iii), including the considerations in Ketteman (supra) (see p13), I refuse the defendant's application of 18 March 1993. The defendant has failed to show that he made the application in good faith; and in the circumstances of the case, an award of costs is not adequate to overcome the injustice which would be caused to the plaintiffs, if the amendments were allowed. 55. I turn next to the question of the appropriate orders which should be made flowing from the reasons for decision delivered on 30 December 1992. THE PLAINTIFF'S SUBMISSIONS ON THE ORDERS WHICH SHOULD BE MADE 56. Prior to making submissions, Mr Waters handed up a copy of the orders proposed by the plaintiffs; they were not agreed to by the defendant, although there was some common ground (see p35). The orders the plaintiffs seek are:- "1. The orders of Martin J made 11 March 1992 be discharged. 2. That the defendant within 7 days of a Memorandum of Transfer of his interest in Lot 267 Town of Tennant Creek being submitted to him or to his nominated solicitors by the plaintiffs or their solicitors do execute the same in favour of the plaintiffs and return the same to be held in escrow by the plaintiffs' solicitors for stamping.

That the defendant or his representative do attend within 21 days hereof at the Lands Title Office, Darwin, Northern Territory at a date and time nominated by the plaintiffs to lodge the Certificate of Title for Lot 267 Town of Tennant Creek, (Registration Book Vol 48 Folio 160) clear of all encumbrances for registration with the stamped Memorandum of Transfer. 4. The plaintiffs shall upon such lodgement for registration tender by bank cheque to the defendant or his representative an amount of $12,562.56 made up as follows: Purchase price determined by the valuer $45,000.00 Less: 50% of valuation fee jointly incurred $475.00 Pursuant to Clause 5.8 of the Lease and Option Agreement 50% of rental paid by plaintiffs for period 1.12.88 to 23.7.90 $17,067.40 Damages (sustained by plaintiffs): Rental paid by plaintiffs to defendant 23.7.90 to 31.10.91 $24,732.00 Plus notional interest on monies paid by way of rental proposed by plaintiffs at 4% pa $789.28 pa (sic) $ 1,257.70 (sic) $25,989.60 (sic)

$43,532.00 (sic) $1,468.00 (sic) Add: Allowance for interest which would have been paid by the plaintiffs on (monies borrowed to pay) notional purchase price, between 23.8.90 and 1.5.93 continuing until settlement (proposed by plaintiff @ 15% pa) $11,094.56 TOTAL $12,562.56 (sic) (7) That should the plaintiffs costs be taxed prior to the settlement completed in order 3 hereof, such plaintiffs' costs shall be deducted from the sum payable to the defendant. (8) Should taxation of the plaintiffs costs if not agreed have not occurred as at the date of settlement contemplated in order 3 the payment of the consideration to the defendant be stayed pending the issue of the Certificate of Taxation and the plaintiffs shall be entitled to deduct from the sum payable upon settlement the amount of their taxed costs. Should the defendant fail or refuse to give effect to orders 1, 2 and 3 hereof the Master of this Court, at the request of the plaintiff or his solicitors shall: (1) execute on presentation to him a Memorandum of Transfer of the aforesaid land in the plaintiff's favour and the same shall serve as sufficient to give effect to the transfer of the land; (2) be appointed as the defendant's attorney for the purpose of securing the Certificate of Title and to process the discharge of any mortgages as may be registered against the title." 57. In support of those proposed orders Mr Waters submitted, in essence, that pars1-3 simply flowed as consequences from the findings of 30 December 1992, that the option had been validly exercised by the plaintiffs on 23 July 1990, that the defendant had accepted that, and that both parties had agreed to the appointment of Mr Weeks as the valuer. 58. Mr Waters explained the basis of the amounts sums at p21 said to result in an amount of $12,562.56 due to be paid to the defendant, assuming completion on 1 May 1993. First, it was submitted that the valuation fee of $950 had been paid by the plaintiffs, who should therefore recover one-half, $475.00, from the defendant as both parties were responsible for the appointment of Mr Weeks. Accordingly, that amount should be offset against the purchase price. 59. Second, pursuant to clause 5.8 of the lease Agreement, 50% of the rental paid by the plaintiffs to the defendant for the period 1 December 1988 to 23 July 1990 should be offset against the purchase price; the relevant amount is $17,067.40. That is common ground. 60. The third matter, the amounts under "Damages" and "Add" on p21, arose in the following way. During the trial the plaintiffs had not pressed their claim for damages for breach of contract. However, Mr Waters informed me that they now wished to press that claim, particularly as there was already sufficient evidence before the Court to establish it, while, in his submission, pressing it now would not prejudice the defendant. His explanation for the amounts was as follows. 61. Had the defendant not breached the agreement for purchase in the lease, the plaintiffs would have been entitled to complete the purchase of the premises, in accordance with that agreement, by paying the balance purchase price due, 30 days after the date of exercising their option (that is, by 23 August 1990). The evidence established that the plaintiffs had paid rent for the premises from 23 July 1990 to 31 October 1991, amounting to $24,732.00. This amount should now be credited to the plaintiffs, as damages, by being offset against the purchase price. In addition, account should be taken of the fact that the defendant had had the use of the $24,732.00, which had been paid to him by instalments over that 14-15 month period; accordingly, a notional interest component thereon, at 4% per annum for that period, should also be credited to the plaintiffs as part of the damages they have suffered. Hence the sum of $1257.70 at p21. 62. The sum of $11,094.56 on p21 comes about as follows. If the contract had then been completed on 23 August 1990, the plaintiffs would have had to pay the balance then due under the contract. Completion did not occur on that date; the plaintiffs did not pay over that sum to the defendant. That non-payment is a benefit which has meanwhile been accruing to the plaintiffs; it must be taken into account in calculating the amount now due to the defendant, who has been out-of-pocket to that extent since 23 August 1990. The calculation of the amount in question involves taking the purchase price of $45,000, and subtracting the agreed sum of $17,067 pursuant to clause 5.8. This leaves $27,933 which represents the amount of money the plaintiffs would have had to pay as the balance purchase money to the defendant, to complete the purchase 23 August 1990. Applying a rate of interest of 15% per annum to that sum, (which the plaintiffs would have had to borrow) from 23 August 1990 to 1 May 1993, yields the sum of $11,094.56 as the amount to be allowed to the defendant to compensate him for not having been paid $27,933 on 23 August 1990. I observe that the interest on $27,933 would continue to run at 15% from 1 May 1993 until actual settlement, and that this calculation seems to be on a simple interest basis. 63. Taking into account these calculations, Mr Waters submitted that the amount due to the defendant, assuming completion on 1 May 1993, was $12,562.56; see p21. 64. Mr Waters also submitted (see items 7 and 8 on pp21 and 22) that the plaintiff's costs if not agreed should be taxed, and the amount of those costs should be deducted from the sum of $12,562.56. I should say immediately that I see no basis for an order in terms of par(8) on p21. THE DEFENDANT'S SUBMISSIONS ON THE ORDERS WHICH SHOULD BE MADE 65. The defendant made submissions in response to the plaintiffs' proposed orders at pp20-22. Mr Tippett said on 18 March 1993:- "If Your Honour wishes, BASED UPON THESE SUBMISSIONS (set out at transcript pp15-18), I could prepare a schedule ... that sets out my argument ...". (emphasis mine) 66. This undertaking was complied with on 14 April 1993. However, I note that the oral submissions and the document of 14 April 1993 differ in certain respects. I set out first the relevant parts of the document of 14 April 1993 and then those parts of Mr Tippett's oral submissions not reproduced therein. "Defendant's response to orders sought by the plaintiffs ...

50% of valuation fee $475.00 The clear evidence is that Mr Brooks undertook to meet the cost of the valuation. It is submitted, therefore, that that amount should not be paid by the defendant." "2. Rental paid 23.7.80 (sic, 23.7.90) (date of exercise of option) and 31.10.91 (date of stay granted by Asche CJ) (Note: the stay was on 29.10.91; the lease expired 31.10.91) During that period the plaintiffs had the use of the premises which allowed the business to turn a clear profit of $24,000 to $25,000 per year. Mr Brooks gave evidence that he needed bank finance to cover the purchase of the property. He would have been paying off

a mortgage in any event. It is not possible to say precisely what the weekly payment would have been to meet the mortgage. Mr Wyatt continued to pay off the bank loan he had taken out to purchase the property in the same period. Mr Brooks did not suffer any damage. It was not put that he would have paid substantially less or even just less than $400 per week if he had been able to take out the mortgage to purchase the property as of 23 July 1990. 3. The period 31.10.91 (the date the lease expired) to the date of judgment, 30 January 1993 (sic, 30 December 1992) During this period Mr Wyatt maintained the mortgage over the property. Mr Brooks profited in his business that operated by virtue of his use of he premises that Mr Wyatt maintained by keeping up his mortgage payments. Again Mr Brooks has had the entire benefit of monies that he would have been required to pay the mortgagor and Mr Wyatt. It is submitted that, as Mr Wyatt has maintained the mortgage over the property and is entirely out of pocket for rental, he should receive the rental he was entitled to for the period (31 October 1991 to 30 January 1993 (sic, 30 December 1992), a period of 426 days or 60.8 weeks at $400 per week) which sum amounts to $17,040." 67. I interpose that on 18 March 1993 Mr Tippett had submitted that the affidavit evidence and Mr Brooks' evidence show that the agreed rental was $400 per week. "Thus the sum of $17,067.40 that the plaintiffs are entitled to by virtue of clause 5.8 is cancelled out by the sum of $17,040 that the defendant is entitled to for the period 31.10.91 to 30.12.93 (sic, 30.12.92). 4. ALLOWANCE FOR INTEREST WHICH WOULD HAVE BEEN PAID BY the plaintiffs "natural" (sic, notional) purchase price between 23/8/90 and 1/5/93 at 15%. Upon the defendant's presentation of the figures set out herein, if accepted, such a hypothetical sum would not have

been paid by the plaintiffs. If the plaintiffs' analysis of the damages flowing to them is adopted then the defendant should have the benefit of this amount. 5. On the defendant's case the following figures by way of damage should apply: Purchase price $45,000.00 Less 50% of rental paid between 1/12/88 and 23/7/90 pursuant to clause 5.8 of lease $17,067.40 Plaintiffs to pay $27,932.60 But add on $17,040 being rent for period 31/10/90 (sic, 31/10/91) to 30/12/93 (sic, 30/12/92) $17,040.00 Purchase price $44,972.60 Thus the plaintiffs should be ordered to pay the defendant the sum of $44,972.60 and the defendant should be ordered to execute a memorandum of transfer favourable to the plaintiff. ... The plaintiffs have not shown any loss but rather a profit

at the expense of the defendant." 68. Mr Tippett had made two other submissions on 18 March 1993. 69. First, he submitted that the notional interest of $1,257.70 (see p21) due to the plaintiffs would be offset by the interest which would have been payable by the plaintiffs to a bank for monies borrowed pursuant to their mortgage over the premises. 70. Second, he submitted that the period 23 July 1990 to 23 April 1991 was a period in which the plaintiffs had failed to mitigate their damages and it should not be included in any computation thereof. This was because from the time the plaintiffs exercised the option (23 July 1990) they were obliged to mitigate their damages, but did not do so until 23 April 1991 when their solicitors' letter and contract were delivered to the defendant stating that they believed that the option had been exercised. The plaintiffs' submission in reply, on the orders which should be made 71. Mr Waters submitted that "since this claim in part relates - that is apart from the specific performance elements of it - to a claim in damages, the principles are that the person successful should be, so far as possible, put in the same position as he would have been if the breach had not occurred." 72. In general, his submission accorded with what was said in Madden v Kevereski (1983) 1 NSWLR 305, that the power to award equitable damages "is a power to enable the Court to do complete justice so far as equity considers it ought to be done", bearing in mind that an order for specific performance is to be made. 73. On this basis, Mr Waters' submissions were as follows. Since the contract ought to have become operative on 23 July 1990, the defendant could not "resurrect a rental claim" thereafter or rely on the fact that the plaintiff had made a profit after that date. The damages the plaintiffs suffered began to run from 23 July 1990, not May 1991. There was a mutual obligation on the parties to comply with the option agreement in the lease. In the circumstances of the case the plaintiffs' explanation of their delay from 23 August 1990 to 23 April 1991 was fairly plausible, whereas the evidence supported the view that the defendant did not intend at any time to discharge his obligations. 74. As to interest on the sum of $27,933, Mr Waters submitted that the 15% rate suggested, resulting in an off-setting amount of $11,094.56 to 1 May 1993 (see pp21 and 24) was a generous rate; and this suggested approach was the appropriate way in which to make appropriate adjustments, rather than by resurrecting "an imaginary claim for rent" after 31 October 1992. THE ORDERS WHICH SHOULD BE MADE 75. I first set out broadly the matters that are common ground. 76. Since the plaintiffs have been found to be entitled to an order for specific performance, both parties approached the devising of appropriate orders on that basis. 77. It was also common ground that - (1) the purchase price, as determined by the valuer Mr Weeks, was $45,000; and (2) pursuant to clause 5.8 of the lease agreement there should, in effect, be a reduction of $17,067.40 in the purchase price. 78. From this point the parties diverged considerably in what they considered to be the appropriate orders. The plaintiffs' approach was that the defendant should complete the contract by transfer, while the plaintiffs should pay him the sum of $12,562.56, being the balance purchase money when account was taken of certain credits due to and damages sustained by the plaintiffs, and counterbalancing credits due to the defendant. The defendant's approach was that the defendant should complete the contract, but the plaintiffs should pay the defendant the sum of $44,972.60 as balance purchase money, when account was taken of certain credits and damages. THE COURT'S POWER TO ORDER DAMAGES IN ADDITION TO SPECIFIC PERFORMANCE 79. Both parties' submissions assume that the Court has power to order specific performance and award damages in addition in a way which alters the purchase price. It is necessary first to consider whether the Court has that power. 80. The learned authors of Greig and Davis 'The Law of Contract' (1987 ed.) at pp1499-1500, doubt whether this Court has power to award damages when ordering specific performance. However, s62 of the Supreme Court Act 1979 provides as far as relevant:- "Where a plaintiff claims to be entitled to an equitable ... right, ..., or to relief founded upon a legal right that could in England immediately before the commencement of the Judicature Act only have been given by a Court of Equity, THE COURT SHALL GIVE THE PLAINTIFF THE SAME RELIEF AS OUGHT THEN TO HAVE BEEN GIVEN BY THE ENGLISH COURT OF CHANCERY IN A PROCEEDING FOR THE LIKE PURPOSE". (emphasis mine) 81. Section 62 defines the ambit of the Court's power in a referential way. An assessment must accordingly be made of the power of the Court of Chancery in England to award damages, prior to the Judicature Act of 1873. 82. In King v Poggioli [1923] HCA 11; (1922-23) 32 CLR 222 Starke J considered the inherent power of the Court of Chancery to award damages, at pp246-247:- "There was a time, apparently, when the Court of Chancery would have disclaimed the power to award such damages and would have remitted the parties to their rights at law (Todd v Gee (1810) 17 ves; 273; Jenkins v Parkinson (1833) 2 Myl. and K., 5.; Story's Equity Jurisprudence, 2nd Eng. ed., pp532 et seq.; Fry on Specific Performance, 6th ed., p600; White and Tudor's Leading Cases in Equity, 8th ed., Vol. II p452). Later, the jurisdiction was asserted in cases in which damages were sought as INCIDENTAL AND ANCILLARY to relief by way of specific performance (cf Newham v May (1824) 13 Price, 749; Phelps v Prothero (1855) 7 DeG. M.and G., 722)." (emphasis mine) 83. I consider that the damages sought by the present parties are properly characterized as "incidental and ancillary to relief by way of specific performance"; accordingly, the Court has power to award equitable damages in this case. 84. I note that in any event s2 of the Chancery Amendment Act 1858 (21 and 22 Vict. c27), commonly known as "Lord Cairns' Act", empowered the Court of Chancery to award damages in addition to or in substitution for a decree of specific performance; accordingly, the Court was so empowered "immediately before the commencement of the Judicature Act" in 1873. Although Lord Cairns' Act was subsequently repealed by s3 of the Statute Law Revision and Civil Procedure Act 1883 (46 and 47 Vict. c49), the substantive effect of s2 of the 1858 Act was preserved by the savings provision, s5(b); see Leeds Industrial Co-operative Society Ltd v Slack (1924) AC 851 at 861-863. 85. In my opinion, it is clear that "immediately before the commencement of the Judicature Act" of 1873, the Court of Chancery had power when ordering specific performance to award damages in an appropriate case, in addition; whether the source of that power was inherent or the 1858 Act is irrelevant. 86. It follows, in my opinion, that s62 of the Supreme Court Act empowers this Court to grant specific performance and in addition to award damages in an appropriate case. It would be preferable to have in the Supreme Court Act a provision similar to s68 of the Supreme Court Act (NSW), or the corresponding provisions in the other States, which follow Lord Cairns' Act and spell out the power expressly and in crystal clear terms. As to when it is appropriate to exercise the power to award equitable damages, guidance may be obtained from the following cases on s68 of the Supreme Court Act (NSW). 87. In Millstream Pty Ltd v Schultz (1980) 1 NSWLR 547 at 552, McLelland J said:- "It is established that s68(b) ... confers a power to award damages ONLY WHERE, AT THE TIME OF THE COMMENCEMENT OF THE PROCEEDINGS, THE FACTS WERE SUCH THAT THE COURT COULD THEN PROPERLY HAVE ORDERED SPECIFIC PERFORMANCE: see Ferguson v Wilson (1866) 2 Ch. App. 77; J.C. Williamson Ltd v Lukey and Mulholland [1931] HCA 15; (1931) 45 CLR 282 at 294, 295, 306, 312 and ASA Constructions Pty Ltd v Iwanov (1975) 1 NSWLR 512, subject, perhaps, only to discretionary defences: see Summers v Cocks [1927] HCA 46; (1927) 40 CLR 321 and cf Boyns v Lackey (1958) SR (NSW) 395; 75 WN 451." (emphasis mine) 88. In Madden v Kevereski (supra), Helsham CJ in Equity said at pp306-7:- "In my view the law in this area is in such a mess that it is time some court gave an authoritative decision about s68. I take the view that the damages which the court has power to award under s68 have nothing to do with common law damages. Since the Supreme Court Act, the court sitting in the Equity Division has power to award damages for breach of

contract quite independently of s68. In a case such as the present where the plaintiff has not accepted the repudiation of the contract by the defendant, has kept the contract on foot and wants to enforce it, it would be quite artificial, and wrong, to treat him as if he had, for the purpose of assessing damages or anything else. In fact, of course, if he had accepted the repudiation of the contract by the defendant and rescinded, he would have no redress under s68 at all. That section only applies, in my opinion, where a plaintiff has made out a case for equitable relief by way of injunction or specific performance, and has either got it, or for some equitable or discretionary reason, been refused it. The section, in simple terms, makes this clear. IF A PLAINTIFF DOES NOT MAKE OUT AN EQUITY FOR RELIEF BY WAY OF INJUNCTION OR SPECIFIC PERFORMANCE, HE MUST FALL BACK ON HIS COMMON LAW RIGHTS, IF ANY. SECTION 68 DOES NOT PROVIDE ANY REMEDY IN SUCH A SITUATION. IF HE DOES MAKE OUT AN EQUITY FOR SUCH RELIEF, THEN HE MAY OR MAY NOT GET IT. BUT WHETHER HE DOES OR DOES NOT, THE COURT CAN, BY MEANS OF THE SECTION,

ATTEMPT TO DO JUSTICE OTHERWISE. THE DAMAGES WHICH THE COURT MAY AWARD UNDER S68 ARE SUI GENERIS; THE POWER TO AWARD THEM IS A POWER TO ENABLE THE COURT TO DO COMPLETE JUSTICE SO FAR AS EQUITY CONSIDERS IT OUGHT TO BE DONE, BY SUPPLEMENTING WITH MONEY THE EQUITABLE REMEDY, OR ATTEMPTING WITH MONEY TO SUBSTITUTE A REMEDY. THE SECTION IS SIMPLY NOT AVAILABLE WHEN DAMAGES, IN THE COMMON LAW SENSE, ARE AN ADEQUATE REMEDY, OR WHEN A PLAINTIFF HAS TO RELY ON A COMMON LAW RIGHT TO DAMAGES FOR BREACH OF CONTRACT." (emphasis mine) 89. I respectfully agree with both these observations and apply them in the present case. Section 62 requires that first it must be decided whether an order for specific performance should be made; if it is, then it is to be decided whether "in addition" an ancillary award of damages should be made "to do complete justice so far as equity considers it ought to be done". The mechanics and form of exercising the power are not unimportant. 90. As a matter of mechanics and form, I doubt whether I can first reduce the purchase price (by assessing and deducting damages from the agreed purchase price) and then order specific performance in those terms, even though in practical terms whichever approach is adopted the end result should be the same. I consider I should first order specific performance on the basis of the assessed purchase price ($45,000) less any agreed reductions such as clause 5.8 ($17,067.40); then I should consider whether an award of damages should be made. CONCLUSIONS ON THE SUBMISSIONS 91. I now turn to the parties' submissions. 92. I accept Mr Waters' submission that this Court should place "so far as possible, (the parties) in the same position as they would have been if the breach had not occurred." On that basis, I consider that any damages must be assessed from the date one month after the date on which the option clause was validly exercised (23 July 1990) when completion was to be effected; see Clause 3.1 to Schedule A to the lease. On 23 July 1990, both parties incurred obligations pursuant to their contract. 93. I also accept Mr Waters' submission that during the period 23 August 1990 to 23 April 1991 the plaintiffs had not failed to mitigate their losses. The onus lies on the defendant to establish such failure: see Metal Fabrications (Vic) Pty Ltd v Kelcey [1986] VicRp 52; (1986) VR 507 and Sacher Investments Pty Ltd v Forum Stereo Consultants Pty Ltd (1976) 1 NSWLR 5 at 9, per Yeldham J. I consider that the evidence supports the plaintiffs' submission that during that period the course of action the plaintiff undertook was reasonable in the circumstances. The defendant has failed to discharge the onus cast on him to show it was not. Accordingly, I do not accept Mr Tippett's submission that 23 April 1991 was the appropriate date from which any damages should run; the appropriate date was 23 August 1990. 94. Mr Tippett's submissions found on the premise that equity should not recognize 23 July 1990 as the date on which the contract came into effect. This is also reflected in his submission (p26) that the plaintiffs must account for rent not paid during the period 31 October 1991 to 30 December 1993 (sic, 30 December 1992) when they were occupying the premises without paying rent and making profits (see p25). 95. Equity treats as done that which ought to have been done. In this case the defendant is properly treated as a trustee of the land after the contract came into effect on 23 July 1990; his duty as from that date was to fulfil his obligations under the contract. 96. The Court has power "to do complete justice so far as equity considers it ought to be done". On that basis, damages should be awarded, in addition to specific performance, so as now to put the plaintiffs in the position, so far as possible, in which they would have been had the contract brought about by the exercise of the option on 23 July 1990 been fulfilled. On that approach the edifice created by Mr Tippett's submissions lacks foundation. 97. Against that background I now deal with the parties' submissions, to ascertain the appropriate orders, including deductions and/or credits inter se the parties. I proceed on an item-by-item basis, for simplicity. THE VALUATION FEE 98. The plaintiffs clearly accepted responsibility for the payment of this fee, notwithstanding that the parties were jointly responsible for appointing the valuer, under clause 5.1; see pp3, 10 and 25-26 of the reasons for decision of 30 December 1992. 99. Accordingly, I reject Mr Waters' submission in respect of this item. CLAUSE 5.8 100. It is common ground that, pursuant to clause 5.8 of the contract, $17,067.40 is to be deducted from the purchase price. DAMAGES: RENTAL PAID, 23 AUGUST 1990 - 31 OCTOBER 1991, PLUS NOTIONAL INTEREST 101. Since 23 July 1990 is the date on which the option was validly exercised, the consequence, is that as from the contract date of completion, 23 August 1990, the plaintiffs were not bound to pay any further rent; that is, as Mr Waters put it, the defendant "cannot resurrect a rental claim" thereafter. However, on 23 August 1990 the plaintiffs would have had to borrow money to pay the defendant the balance of the purchase price (that is, $27,932.60, being the purchase price of $45,000 less the clause 5.8 amount of $17,067.40). 102. I do not accept Mr Tippett's submission (p25) that the plaintiffs' earned profits should be offset against rental payments for the same period, 23 July 1990 - 31 October 1991. Nor do I accept that rent should be treated as payable for the period 31 October 1991 to 30 December 1992; see p26. Equity treats the contract as having properly been completed on 23 August 1990. 103. On this basis, I consider that the plaintiffs are able to recover as damages the sum of $23,132.00 ($24,732 - 4 weeks rental, $1600) for the period 23 August 1990 - 31 October 1991. I accept that notional interest on that amount should be allowed. I consider that the plaintiff's suggested rate of 4%, given that the rental payments gradually accrued to the defendant, is very fair, and appropriate. I allow the sum of $1103.20 (being interest at 4% on $23,132 for 62 weeks). DAMAGES: SET-OFF FOR TIME DEFENDANT WAS NOT PAID THE PURCHASE MONEY 104. I accept Mr Tippett's alternate submission in par4 of the defendant's document (see p26); I have accepted the plaintiffs' general approach to the assessment of damages. Applying the rate of 15% per annum to the balance purchase money which would have been payable on 23 August 1990 of $27,932.60, for the period from 23 August 1990 to 23 August 1994, the sum to compensate the defendant for being out-of-pocket of that sum for that period, calculated on annual rests, is $11,074. This notional interest runs at $20.14 per day from 23 August 1994, until completion. 105. Drawing these elements together in tabular form, the following emerges: 1. Purchase price as determined by the valuer Mr Weeks: $45,000.00 Deduct agreed Clause 5.8 provision: $17,067.40 Due to defendant on 23 August 1990; to complete the purchase $27,932.60 2. Deduct: rent paid to the defendant for the period 23 August 1990 to 31 October 1991 $23,132.00 notional interest component thereon, at 4% $ 1,103.20 $24,235.20

$3,697.40 Add: allowance for interest on $27,932.60 from 23 August 1990 to 23 August 1994, at 15% p.a. calculated on annual rests: $11,074.00 Balance due to defendant at 23 August 1994: $14,771.40 Note: notional interest accrues to the defendant at $20.14 per day from 23 August 1994, until completion. ORDERS 106. In accordance with the foregoing, I now make the following orders:- (1) The orders of Martin J made on 11 March 1992 are discharged. (2) The defendant within 7 days of a Memorandum of Transfer of his interest as registered proprietor of Lot 267 Town of Tennant Creek being submitted to him or to his nominated solicitors by the plaintiffs or their solicitors, will execute that document as transferor and return it to the plaintiffs' solicitors to be held by them in escrow, for stamping. (3) The defendant or his representative within 21 days of returning the Transfer in accordance with order (2) above, will attend at the Land Titles Section of the Registrar-General's Office in Darwin, at a date and time nominated by the plaintiffs or their solicitors, and will there and then lodge the Certificate of Title for Lot 267 Town of Tennant Creek, (registration book Vol 48 Folio 160) clear of all encumbrances, for registration of the stamped Memorandum of Transfer. (4) The plaintiffs or their solicitors shall upon such lodgement of the Certificate of Title aforesaid for registration, tender by bank cheque to the defendant, or his representative there present, an amount of $27,932.60.

(5) The defendant or his representative there present, shall thereupon tender by bank cheque to the plaintiffs or their solicitors, an amount consisting of $13,161.20 plus a sum calculated at the rate of $20.14 per day from 23 August 1994 to the date of settlement. (6) That should the plaintiffs' costs be taxed or agreed prior to the date of settlement in order (3) above, the amount of those plaintiffs' costs shall be added to the sum payable to the plaintiffs by the defendant in order (5) above. (7) Should the defendant fail or refuse to give effect to orders (1), (2) and (3) hereof the Master of this Court, at the request of the plaintiffs or their solicitors shall: (a) execute on presentation to him a Memorandum of Transfer of the aforesaid land in the plaintiffs' favour and the same shall serve as sufficient to give effect to the transfer of the land; (b) be appointed as the defendant's attorney for the purpose of securing the Certificate of Title and to process the discharge of any mortgages as may be registered against the title.

Supreme Court Act 1979

Chancery Amendment Act 1858

Statute Law Revision and Civil Procedure Act 1883

Supreme Court Act 1979

Chancery Amendment Act 1858

Statute Law Revision and Civil Procedure Act 1883

Brooks v Wyatt [1994] NTSC 90; 99 NTR 12

At a glance

Court

Decision date

Before

Source

Judgment (16 paragraphs)

Brooks v Wyatt [1994] NTSC 90; 99 NTR 12 (19 September 1994)

Parties

Legislation Cited (6)

Cases Cited (9)