Comlin Holdings Pty Ltd v Metlej Developments Pty Ltd - [2019] NSWCA 73 - NSWCA 2019 case summary — Zoe

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Comlin Holdings Pty Ltd v Metlej Developments Pty Ltd

[2019] NSWCA 73

Court of Appeal (NSW)|2019-03-19|Before: Basten JA, Meagher JA, Parker J

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At a glance

Source facts

Court

Court of Appeal (NSW)

Decision date

2019-03-19

Before

Basten JA, Meagher JA, Parker J

Catchwords

[1998] HCA 67 Comlin Holdings Pty Ltd v Metlej Developments Pty Ltd [2018] NSWSC 761 Coulton v Holcombe (1986) 162 CLR 1
[1986] HCA 33 Giannarelli v Wraith (1988) 165 CLR 543
[1988] HCA 52 Hampson v Hampson [2010] NSWCA 359
5 ASTLR 116 Nudd v The Queen (2006) 80 ALJR 614

Source

Original judgment source is linked above.

Catchwords

[1998] HCA 67 Comlin Holdings Pty Ltd v Metlej Developments Pty Ltd [2018] NSWSC 761 Coulton v Holcombe (1986) 162 CLR 1[1986] HCA 33 Giannarelli v Wraith (1988) 165 CLR 543[1988] HCA 52 Hampson v Hampson [2010] NSWCA 3595 ASTLR 116 Nudd v The Queen (2006) 80 ALJR 614[2001] HCA 46 Tjiong v Tjiong [2012] NSWCA 201 University of Wollongong v Metwally [No 2] (1985) 59 ALJR 481[1985] HCA 28 Western Australia v Ward (2002) 213 CLR 1

Judgment (15 paragraphs)

[1]

Introduction This appeal concerns a claim by the appellant, Comlin Holdings Pty Ltd (Comlin), that it was entitled to a one fifth share in the development of a property situated at South Terrace, Bankstown, New South Wales (the Bankstown Property). Comlin is controlled by Mr Antonios Bassil (known as Tony Bassil). The Bankstown Property was purchased at auction in 2001 by the four respondents, two of which were Metlej Developments Pty Ltd (Metlej), Nova Scotia Developments Pty Ltd (Nova Scotia), Mr Youssef Metlej (also known as Joe Metlej), who died in December 2012, controlled Metlej during his lifetime. Mr Wadih Metlej (known as William Metlej) and Mr Joseph Metlej, who are sons of Youssef Metlej, controlled Nova Scotia. The other two respondents are Kayrouz Constructions Pty Ltd (Kayrouz) and LADS Development Pty Ltd (LADS). Mr Toufic Kayrouz (also known as Terry Kayrouz) controlled Kayrouz and Mr Lichha Kayrouz controlled LADS. The four respondents (together the Venture Group) are members of a partnership that was established in 1997 or 1998 for the purpose of carrying out a development on land at Marrickville.

Following their purchase of the Bankstown Property, the Venture Group developed it into a residential complex consisting of three towers with approximately 240 residential units. The Bankstown Property is said to be worth at least $100 million. Following completion of the development, the Venture Group have let out the units in the development.
In proceedings brought against the Venture Group in the Equity Division in 2014, Comlin alleged that, at the time of the auction in 2001, an oral agreement was made between itself, on the one hand, and the Venture Group, on the other, to the effect that, although the successful bidder at the 2001 auction was Tony Bassil, the Venture Group would purchase the Bankstown Property on the basis that Comlin would be entitled to a one fifth share in its development. The Venture Group denied that any such agreement was made. They also relied on provisions of the Limitation Act 1969 (NSW) (the Limitation Act) and, to the extent that Comlin relied on equitable causes of action not covered by the Limitation Act, they contended that the Limitation Act applied by analogy. Finally, the Venture Group also relied on defences of laches and abandonment.
For reasons published on 28 May 2018, after a four day hearing in November 2017, a judge of the Equity Division (the primary judge) dismissed Comlin's claim. The primary judge concluded that Comlin's claim was barred by the Limitation Act and was independently barred by the defences of laches and abandonment. Further, his Honour concluded that Comlin's evidence was insufficient to establish the agreement on which it sued such that, if its claim were not otherwise barred, it would fail on the facts.
By notice of appeal filed on 24 August 2018, Comlin appeals from the orders made by the primary judge, notice of intention to appeal having been filed on 15 June 2018. Comlin has an appeal as of right under s 101 of the Supreme Court Act 1970 (NSW) (the Supreme Court Act).
By notice of motion filed on 3 October 2018 (the s 75A Application), Comlin applied for an order that the Court receive further evidence on the hearing of the appeal. The further evidence that Comlin sought to adduce consists of four affidavits (together the Further Evidence). Two of the affidavits were sworn on 16 August 2018 and 1 March 2019 respectively by Ms Betty Bassil, who is Tony Bassil's wife, Youssef Metlej's daughter and William and Joseph Metlej's sister. The other two affidavits were sworn on 13 September 2018 and 5 March 2019 respectively by Mr Michael Abdul-Karim. By notice of motion filed on 4 February 2019 (the Concurrent Hearing Application), Comlin sought an order that the 75A Application be heard concurrently with the appeal.
On 19 March 2019, after hearing oral argument and considering written submissions on behalf of all parties, the Court ordered that both applications be dismissed and that Comlin pay the respondents' costs of the applications. The Court reserved its reasons for making those orders. The reasons for those orders now follow.

[2]

Findings of the Primary Judge

Before describing the Further Evidence in more detail, it is desirable to say something more about evidence before the primary judge and the principal findings made by his Honour. The critical factual issue before his Honour was what happened during and immediately after the auction of the Bankstown Property that took place on 13 September 2001. The auction was attended by Tony Bassil, Youssef Metlej, Terry Kayrouz and Dan Kayrouz (known as Donny Kayrouz). Donny Kayrouz is the son of Lichha Kayrouz.
Tony Bassil gave evidence on behalf of Comlin. Comlin also adduced evidence from Mr Albert Chahine and Mr Raymond Boumoussa.
Tony Bassil's evidence at trial was that, in about March or April 2001, he proposed to Youssef Metlej that they buy the Bankstown Property together and develop it. He said that Youssef Metlej responded that he was interested because he. Terry Kayrouz and William Metlej were looking for sites for another development. Tony Bassil said that, on the day before the proposed auction, he spoke to Youssef Metlej and reminded him that the auction was taking place on the following day. He said that Youssef Metlej told him that he would be there with Terry Kayrouz and that "we" would buy the property together. Tony Bassil told Youssef Metlej that he would be there with his cheque book to pay the deposit and Youssef Metlej replied that that was "good".
Tony Bassil said that he took a cheque book with him to the auction and, at the auction, sat behind Youssef Metlej and Terry Kayrouz, who were sitting together. He said that he made the winning bid of $6.6 million, after which he went into the signing room with representatives of the vendor, where he was presented with a contract. He asserted that he filled out the contract, with Comlin as the purchaser, and signed it, but that, as he was taking out the cheque to pay the deposit, Youssef Metlej and Terry Kayrouz, and probably Donny Kayrouz, came into the signing room.
Tony Bassil asserted that statements were then made to the effect that the Venture Group wanted to buy the Bankstown Property and that he replied that he had bought it and that, if they wanted it, he would be one of their partners. He asserted that Youssef Metlej said that they would make him a partner, which he understood meant he would be entitled to one fifth of the profit. He said that he then asked for a copy of the contract and the agent gave him a copy of the first page of the contract. He said that, after he received that copy, he left the signing room. The principals of the Venture Group remained, waiting for William Kayrouz to arrive to sign the contract.
The Venture Group completed the purchase of the Bankstown Property and proceeded with the development. Comlin made no contribution to the costs of development. After the development was completed in about 2005, Tony Bassil had a conversation with Youssef Metlej, he asked Youssef Metlej when he would get his share and Youssef Metlej replied that, if they sold the Bankstown Property, then they would pay too much tax and that they needed to continue with other projects. Youssef Metlej said that it was best to rent out the units and "pay down the mortgage".
Tony Bassil also gave evidence that, in early 2013, after Youssef Metlej died, he rang William Metlej and asked where his share in the Bankstown Property was. He said that he was told by William Metlej that he would ask Terry Kayrouz.
In May 2013, Mr John McEnroe, a solicitor, wrote to Alphonse & Associates, who were acting for the executors of Youssef Metlej's estate. That letter was the first intimation of a claim by Comlin to be entitled to an interest in the development of the Bankstown Property. The letter asserted that Youssef Metlej had agreed with Comlin that Comlin had an interest in the Bankstown Property and that Youssef Metlej assured Comlin that he would protect and hold safe Comlin's interest in the Bankstown Property. Alphonse & Associates replied a few days later denying the claim and asking for any evidence regarding the claim. There appears to have been no response from John McEnroe to that denial.
Tony Bassil also said that, in late 2013, he raised with William Metlej again the issue of Comlin's interest in the Bankstown property. William Metlej told him that Terry Kayrouz had said that they were not going to pay Tony Bassil anything because he did not pay any money towards the development.
In a letter of demand, written in April 2014 by Swaab Attorneys, the solicitors for Comlin in the proceedings in the Equity Division, a partnership or joint venture was alleged in writing for the first time. The letter of April 2014 contained a detailed account of events allegedly surrounding, and at, the auction. However, the primary judge considered that there were significant discrepancies between the letter and the account given in Tony Bassil's evidence in chief.
The primary judge considered that the most important documentary evidence relied on by Comlin was Tony Bassil's 2001 diary, which contained records of numerous meetings and conversations relating to his business affairs, including various entries referring to the Bankstown Property. His Honour observed that the diary contained a number of entries for March and April 2001, referring to Tony Bassil's attempts to obtain payment for amounts allegedly due to Highrise Concrete Contractors (Aust) Pty Ltd (Highrise), a company connected with him, for concrete supplied by Highrise in connection with a development by the Venture Group. However, his Honour found that none of the discussions that Tony Bassil alleged he had with Youssef Metlej was supported by any diary note and that no diary note mentioned Tony Bassil as a purchaser of the Bankstown Property. Rather, the diary entries from March and April 2001 recorded only discussions about getting paid for the work that he had done. While a substantial sum of $200,000 was owed to Highrise, his Honour considered that it was farfetched to suppose that Tony Bassil would seriously have contemplated making the sort of financial commitment necessary to become a part owner of the Bankstown Property in order to recoup that money, at least until it was clear that there was no alternative. To the extent that Tony Bassil's evidence suggested that he had, the primary judge did not accept the assertion.

[3]

Findings as to the Alleged Agreement

On the other hand, Tony Bassil's diary entries from 2 August 2001 onwards recorded offers by Youssef Metlej to involve Tony Bassil in the purchase of the Bankstown Property. They also recorded Tony Bassil being involved in discussions with Mr Chahine, planning to take his cheque book to the auction and placing the successful bid of $6.6 million. Most significantly, the primary judge said, an entry on 13 September 2001 recorded Tony Bassil making an agreement, apparently with Youssef Metlej, to be a "silent partner" and receive a one-fifth share of the profits from the Bankstown Property. His Honour accepted that the diary notes showed that Tony Bassil was prepared to go into business in relation to the Bankstown Property, because he offered to do so, on a number of occasions. However, his Honour considered that there were five important difficulties with, or shortcomings in, Comlin's case.
The first difficulty was the lack of commercial logic in the alleged arrangement. His Honour found that the principals of the Venture Group were experienced and capable businessmen, who, between them, had the resources and the skills needed to undertake a large scale property development of the type in question. They did not need Tony Bassil's help to buy the Bankstown Property or to carry out the proposed development. His Honour considered that, if the agreement alleged by Comlin had been made, Comlin would have been required to contribute its share of the purchase price and development costs. His Honour did not consider that the experienced and tough minded principals of the Venture Group would have allowed Comlin to share in profits without contributing to the costs.
The second difficulty referred to by the primary judge was that, according to the diary notes, the agreement under which he was to be a "silent partner" was made after he had already surrendered his interest as highest bidder at the auction. Tony Bassil's entry of 13 September 2001 recorded that he said "Good luck you can have it" and "walked away" before the contract was signed.
The third difficulty referred to by the primary judge was the lack of evidence of any agreement with the principals of the Venture Group, apart from Youssef Metlej. His Honour observed that, if he were to accept Comlin's case, he would have to reject the evidence of Terry Kayrouz that he and Donny Kayrouz sat separately and the evidence of both Terry Kayrouz and Donny Kayrouz that nothing unusual happened at the auction. His Honour considered that the evidence of Terry Kayrouz and Donny Kayrouz was not inconsistent with Tony Bassil's diary note and that, even if Tony Bassil made the winning bid, he may have done so under some prior arrangement with Youssef Metlej that allowed Youssef Metlej to take the benefit of the bid if he wished. Alternatively, if there was no prior arrangement, Tony Bassil may have been prevailed upon to give up the benefit of the bid and to "walk away" without Donny and Terry Kayrouz realising what had happened. His Honour considered that the diary note did not establish that the exchange with Youssef Metlej, in which Tony Bassil surrendered the winning bid, happened in the signing room while Donny and Terry Kayrouz were present. The diary note did not refer to them at all. His Honour considered that the wording attributed to Youssef Metlej, "I want it", suggested that Youssef Metlej alone persuaded Tony Bassil.
The fourth difficulty referred to by the primary judge was the lack of objective evidence that Comlin was ever recognised as a partner in the development. While Tony Bassil's diary note of 13 September 2001 recorded an agreement that he would be a "silent partner", that term denoted a person who is a partner in the partnership but whose participation is not revealed to those with whom the partnership is dealing. His Honour considered that such a partner would, in the absence of specific provisions to the contrary, be fully responsible with the other partners for contributing to the partnership's expenses and financing its activities. The evidence, however, showed that Comlin never did that and was never asked to do so.
The fifth difficulty referred to by the primary judge was Tony Bassil's own subsequent conduct. If an agreement had been made that Comlin was to receive one fifth of the profits from the development, the time when its entitlement accrued would have been at the time of completion of the development. However, it was not until eight years or so later, in May 2013, six months after Youssef Metlej had died, that any formal claim was made. His Honour also considered that the form of Mr McEnroe's letter of demand in May 2013 was inconsistent with the case propounded in the proceedings, based on the diary notes. The letter did not mention the auction at all and referred to the assurances allegedly given by Youssef Metlej as having begun in 2002, not 2001.
The primary judge concluded that the difficulties in Comlin's case thus identified were not made good by the evidence adduced by Comlin. His Honour considered that a sensible commercial explanation for Comlin emerging with a one fifth share of the Bankstown Property needed to address two questions. The first was why the Venture Group principals did not themselves purchase the Bankstown Property. The second was why, having allowed Tony Bassil to win the bidding, they suddenly felt the need to acquire the property from him on his terms. Tony Bassil answered the first question by saying that the Venture Group simply stopped bidding. His answer to the second question was that Youssef Metlej changed his mind because of a telephone call from William Metlej telling him that they had made too much profit on "the Marrickville job". His Honour did not consider that either of those explanations was directly supported by Tony Bassil's note of 13 September 2001. He did not consider that either of the explanations carried any conviction.
Overall, the primary judge was not satisfied that Tony Bassil's affidavit account of the purchase of the Bankstown Property was reliable. His Honour did not consider that any independent weight should be placed on Tony Bassil's affidavit account or his oral evidence. His Honour considered that it was probably based on a reconstruction that was, at least in some respects, inaccurate. While other parts of it may be accurate, his Honour had no way of assessing which parts they were.
The primary judge did not consider that the evidence given by Mr Chahine was enough to establish that Tony Bassil was himself one of the prospective purchasers. His Honour did not consider that Mr Chahine's evidence of Tony Bassil's involvements in discussions that took place in May and June 2001 was sufficient to establish that, at that time, Tony Bassil would be a partner in the proposed purchase. His Honour considered that Mr Boumoussa's evidence was of even less assistance in resolving the issues.

[4]

Findings about Betty Bassil

For the purposes of the present application, the critical aspect of the reasons of the primary judge was his Honour's observation concerning the absence of evidence from Betty Bassil. Comlin has a paid up capital of $100, having been incorporated as a shelf company in 1998. Two weeks later, Tony Bassil and Betty Bassil were appointed as directors and Betty Bassil was appointed as secretary. Betty Bassil remained a director and secretary of Comlin until 2007 when she was replaced by Joseph Bassil, the son of Tony Bassil and Betty Bassil. Tony Bassil formerly owned 50 of Comlin's issued shares and Betty Bassil owned the other 50 shares. His Honour observed that it is not unusual for a proprietary company to be owned by a couple, with both of them being directors, but for one of the spouses to run the company with the passive consent of the other. His Honour considered that it was possible that that was the case with Comlin and that Betty Bassil's directorship and share ownership were purely passive.
However, the primary judge found there was nothing to show that Betty Bassil was a merely nominal participant in the affairs of Comlin and observed that there was no evidence about Comlin's corporate governance at all. His Honour considered that, even if Betty Bassil had not been an active director and shareholder of Comlin, it might have been expected that Tony Bassil would have told her about his interest in the development of the Bankstown Property. Indeed, Tony Bassil said in the course of cross-examination that he had done so. His Honour observed further that it must have been clear in advance of the hearing that the Venture Group would suggest, as they did, that Comlin's claim was a recently invented one. His Honour therefore considered that it was "somewhat surprising" for Comlin to have called Mr Boumoussa but not to have called Betty Bassil to give evidence that, if it had existed, would have been far more compelling and immediate. His Honour considered that the failure to call Betty Bassil weakened Comlin's case.

[5]

The Further Evidence

In support of the s 75A Application, Comlin relied on an affidavit sworn on 3 October 2018 by Mr Peter McKell, a solicitor, and an affidavit sworn on 1 March 2019 by Tony Bassil. Much of Mr McKell's affidavit was admitted only as submission. In his affidavit, Mr McKell referred particularly to the observation made by the primary judge that no evidence had been led from Betty Bassil and asserted that the special grounds upon which the Further Evidence should be received by this Court were as follows:

Betty Bassil had relevant evidence to give at the trial, which evidence, to a limited extent, supported the existence of the agreement alleged between Comlin and the Venture Group;
The then solicitor for Comlin, Mr Terry Sperber of Swaab Attorneys, was informed of that evidence and its relevance, but wrongly, in Mr McKell's opinion, decided not to lead the evidence; and
Mr Abdul-Karim had relevant evidence to give, which supported the case of the existence of the agreement alleged and Mr Sperber was informed of the proposed evidence and its relevance but, in error, in Mr McKell's opinion, decided not to lead the evidence. Mr McKell said that he had been informed that Comlin wished to adduce evidence from Mr Abdul-Karim but that, for some reason known only to Mr Sperber, to whom Mr McKell has never spoken, Mr Abdul-Karim was not called.

In his affidavit of 1 March 2019, Tony Bassil said that, during the preparation for the hearing of the Equity Proceedings, he said to Mr Sperber at Mr Sperber's office and also at counsel's chambers, "on many occasions" prior to 9 October 2017, words to the effect: "I want to use in the case the evidence of my wife and Mr Abdul-Karim in the hearing. The judge should hear it. It is important." Tony Bassil also asserted in his affidavit that he said to Mr Sperber "in the presence of my barrister": "I want you to use my wife's evidence and Michael Abdul-Karim's evidence but you seem to be ignoring that evidence." He asserted that Mr Sperber replied: "Your barrister says there is conflict with your wife giving evidence and Michael Abdul-Karim has been removed from the roll of barristers". Tony Bassil said that he understood by using the word "conflict" Mr Sperber was referring to Betty Bassil being a relative. The affidavit then said: "My barrister agreed with Mr Sperber". And he replied to the effect: "So what. Their evidence is important I believe."
Tony Bassil said in his affidavit that he did not accept the reasons given to him by his legal advisors and told his son, Joseph, to prepare a letter to send to Mr Sperber. He annexed to his affidavit a copy of a letter dated 9 October 2017 on the letterhead of Sayde Developments Pty Ltd said to have been sent to Mr Sperber. He said that Sayde Developments Pty Ltd was one of his companies and that his son who typed the letter and signed it on his behalf, used the incorrect letterhead. The letter was in the following terms: "Further to our meeting at your office today Monday 09.10.2017 where I also brought Joe Bassil along with me, I again repeated we should use the evidence of my wife Mrs Betty Bassil and Mr Michael Abdul-Karim. I confirm your advice not to include the evidence of Mrs Betty Bassil nor Mr Michael Abdul-Karim for the following reasons:

Mrs Betty Bassil: conflict of interest.
Mr Michael Abdul-Karim: due to him being previously struck off as a legal practitioner. I still hold the position that we should use their evidence as part of our case."

Directions for the preparation for the trial were given some considerable time before the date fixed for hearing. On 14 August 2015, Comlin was directed to serve its evidence by 17 August 2015 and a direction was given that Comlin would not be able to serve any further evidence-in-chief without first obtaining leave of the Court. The respondents were directed to serve their evidence by 19 October 2015. On 21 October 2015, they were directed to serve their evidence by 9 November 2015 and on 12 November 2015, they were directed to serve their evidence by 4 December 2015. On 10 December 2015, Comlin was directed to file its evidence in reply on or before 29 January 2016. Thus, the affidavit evidence-in-chief was to be complete by 29 January 2016. No explanation was offered as to why the question of evidence by Betty Bassil and Mr Abdul-Karim was not raised much earlier than four weeks before the trial was due to begin, in circumstances where the evidence was to be complete some 20 months previously.
Neither Mr McKell nor Tony Bassil, in their respective affidavits, identified with any specificity "the evidence" that Betty Bassil or Mr Abdul-Karim might have been able to give at the trial, which was the subject of the alleged discussions. In that regard, it is not insignificant that, in the course of cross-examination of Tony Bassil before the primary judge on 13 November 2017, the following exchange occurred: "Q: May we take it that you would say that the one person who you did tell about this arrangement from time to time was your wife Betty? A: Yes. Q: Is she still alive and well and your wife? A: Yes. Q: But she is not coming to give evidence to support your version of events is she? A: No. Q: That's because you are making this up aren't you? A: No. Q: The truth is you have never mentioned this arrangement to anyone including your wife Betty prior to your father-in-law dying, correct? A: If that's what you believe, that's what you believe, but the truth is I did mention it to her. Q: You did mention to her? A: Of course I did. Q: Why aren't you calling her to say that? A: I don't know, ask my solicitor maybe, I don't know why. Q: She'll come along if they ask her will she? A: I don't know. His Honour: You said ask your solicitor and I understand that to mean I rely on my solicitor's advice. [Counsel for the first and second respondents]: Q: In any event you say that she could confirm this arrangement because of course you told her about it? A: -- Q. At the time? A: All the time." There was no re-examination of Tony Bassil. If at the hearing he believed that his legal team were neglecting to act in accordance with his instructions, as is now asserted, it is curious that there was no response to the remark made by the primary judge and that there was no re-examination of him.

[7]

Mr Abdul-Karim's Evidence

The affidavit of Mr Abdul-Karim asserts that, on 13 September 2001, Tony Bassil called him and they had a conversation to the following effect: Tony Bassil: I was the successful bidder on the fall of the auctioneer hammer and purchased the South Terrace Bankstown property in the name of my company, Comlin Holdings, and after I started filling details of the front page of the contract, at the auctioneer office my father-in-law, Youssef Metlej, followed me, and assured me that my company's interest in the development will be protected and I will be a silent partner, with his son, William and their two partners in the Marrickville development, where they made a big profit. Mr Abdul-Karim: Congratulations. Sorry I could not attend the auction, I had a conference with a farmer who had come with his wife all the way from Armidale and is having serious problems; his bank had commercial foreclosure proceedings, and I'm settling their defence.
Mr Abdul-Karim also asserts in his affidavit that, within a matter of two or three months after the auction, he understood from Tony Bassil and also from Youssef Metlej that Youssef Metlej and his partners were contemplating submitting new plans to increase the number of units and add commercial outlets to the development of the Bankstown Property. He says that he regularly saw Tony Bassil prior to and after the auction and that Youssef Metlej was often present on those occasions. He asserts that, on several occasions after the auction, Youssef Metlej spoke to Tony Bassil about architect plans to increase the number of units and referred to various issues to do with trades involved in the development. He says that, on one occasion, Youssef Metlej told Tony Bassil about installation of the lifts, the new technology involved and also told him about the number of locks on the doors they had to purchase, the advances made for locks and security and the likely dates when they would start another wing and the expected completion date.
Mr Abdul-Karim also asserts, in his affidavit, that he attended with Tony Bassil on three or four occasions with Mr Sperber and that, on one of those occasions, he said to Mr Sperber words to the effect: "I consider myself to be a crucial witness in this matter; at the time I was practising as a barrister and was present at crucial meetings before the auction of the South Terrace property. Further, I was planning to attend the auction but could not. I was at Tony Bassil's home on a number of occasions when the late Youssef Metlej spoke to Tony about the development and on one of those occasions there was a specific discussion whether the completed units would be retained or sold." Mr Abdul-Karim asserts that he had no doubt that Youssef Metlej, being the most senior person in the partnership with the other developers, was speaking on behalf of the partnership. Mr Abdul-Karim also asserts that, at all times after Tony Bassil instructed Mr Sperber to commence legal proceedings, Mr Sperber was aware that prior to, on the day and subsequent to, the auction, he, Mr Abdul-Karim, had intimate and important knowledge of matters and discussions between Tony Bassil and Youssef Metlej relevant to the development of the Bankstown Property.

[8]

The Concurrent Hearing Application

The s 75A Application was returnable on 15 October 2018, when the Registrar directed the respondents to file and serve any evidence in response to it no later than 5 November 2018. At a further directions hearing before the Registrar on 30 January 2019, counsel for Metlej and Nova Scotia indicated that, if the s 75A Application succeeded, Metlej and Nova Scotia would wish to cross-examine Betty Bassil and Mr Abdul-Karim and would wish to put on their own further evidence in response. Counsel contended that the question of whether the Further Evidence was to be received would have an effect on the way the substantive appeal would be run and that the appeal should not be fixed for hearing until the outcome of the s 75A Application was known.
On 7 February 2019, Basten JA fixed the s 75A Application for hearing on 19 March 2019 by a panel of three judges of appeal. At that stage, no date had been fixed for the hearing of the substantive appeal. Arrangements were subsequently made by the President for the same panel to hear the appeal.
However, Comlin contended that the hearing of the s 75A Application should be adjourned to be heard concurrently with the substantive appeal and that there was no proper basis for hearing it in advance of the hearing of the substantive appeal. Counsel for Comlin pointed out that no application had been made under s 192A of the Evidence Act 1995 (NSW). Section 192A relevantly provides that, where a question arises in any proceedings, being the admissibility or use of evidence proposed to be adduced or the operation of the provision of the Evidence Act or another law in relation to evidence proposed to be adduced, the court may, if it considers it to be appropriate to do so, give a ruling or make a finding in relation to the question before the evidence is adduced in the proceedings. Such a power may be of considerable benefit in proceedings at first instance, particularly where the tribunal of fact is a jury. It is difficult to see how the provision has any application in the present circumstances.
That is to say, there is no question about the admissibility or use of evidence proposed to be adduced or about the operation of any law. Rather, the question is whether Comlin can demonstrate special grounds for this Court to receive further evidence. If special grounds were established and the Court decided to receive the Further Evidence, s 192A may have application if there were a question about the admissibility or use of the Further Evidence. Otherwise, the provision is irrelevant.
Comlin asserts that the respondents were seeking a tactical advantage by insisting on an advance ruling on the Further Evidence. It asserted that, unless the application under s 75A was heard concurrently with the substantive appeal, possible procedural unfairness to Comlin may follow, since both the relevance and admissibility of the Further Evidence may depend upon other evidence yet to be considered, which may be adduced by the respondents. It asserted that it was not appropriate to determine the admissibility of evidence in a vacuum in circumstances where the respondents had flagged their intention to cross-examine and adduce evidence in response.
Comlin contended that the question of receipt of the Further Evidence should be deferred until the respondents had filed any evidence on which they wished to rely in response to the Further Evidence. Such a course could, however, have entailed unnecessary costs and time for the respondents in preparing evidence in response in anticipation of the Court receiving the Further Evidence. Such a course ignores the language of s 75A. That is to say, the question is whether special grounds have been demonstrated for the Court to receive the Further Evidence in the first place. If the Court is not satisfied that special grounds have been established, that is the end of the matter. On the other hand, if the Court is satisfied that special grounds have been established, it is then appropriate to consider any directions necessary for the respondents to adduce further evidence in response.
The practical course, as directed by Basten JA, was that the question of the receipt of the Further Evidence be determined in advance of the hearing of the substantive appeal. There was no reason for the Court to depart from the procedure directed by Basten JA. Accordingly, the Court proceeded with the hearing of the s 75A Application.

[9]

The s 75A Application

Section 75A of the Supreme Court Act applies to an appeal to the court and to an appeal in proceedings in the court. Under s 75A(5), where the decision or other matter under appeal has been given after a hearing, the appeal is to be by way of re-hearing. The court has the powers and duties of the court from whom the appeal is brought, including powers and duties concerning the drawing of inferences and the making of findings of fact. Under s 75A(10), the court may make any finding or assessment, give any judgment, make any order or give any direction that ought to have been given or made or that the nature of the case requires. Section 75A(7) provides that the court may receive further evidence. However, under s 75A(8), where the appeal is from a judgment after a trial or hearing on the merits, the court is not to receive further evidence except on special grounds.
It is not possible to formulate a test that should be applied in every case to determine whether or not special grounds exist. However, it is well accepted that, at least in ordinary circumstances, three conditions must be met before further evidence can be admitted [18] . Those conditions are as follows:

the evidence could not have been obtained with reasonable diligence for use at the trial;
there must be a high degree of probability that, with the further evidence, there would be a different verdict; and
the evidence must be credible.

Those conditions are not exhaustive and there may be circumstances in which the court might find that special grounds are established even where there is a failure to satisfy all three conditions. On the other hand, it is not automatic that, where special grounds are established, the court will necessarily exercise the power conferred by s 75A(7). By reason of employment of the word "may", the court has a separate residual discretion under s 75A(7).
Section 75A should not be construed in a way that would have the practical effect of obliterating the distinction between original and appellate jurisdiction. That follows from the express requirement for special grounds in s 75A(8). The availability of further evidence relevant to an issue in an appeal should not be treated as equivalent to a ground of appeal, proof of which prima facie entitles the appellant to a new trial. The power to admit further evidence exists to serve the demands of justice, and where the admission of evidence would require a new trial, justice will not be served unless the appellate court is satisfied that there is a high probability that the further evidence would have produced a different result if it had been available at the trial. Without that condition being satisfied, it could seldom be in the interests of justice to deprive a respondent of the benefit of the orders made by a trial judge [19] .
It may be that an appellate court will readily admit further evidence that is not in dispute and that the appellate court is able to evaluate and take into account in considering the appeal without the necessity to have the proceedings reheard. Further evidence of that kind may well be admitted if it relates to events occurring after the trial. In the case of undisputed evidence that an appellate court can evaluate as part of the evidence in the appeal, the discretion to admit the evidence may be properly exercised without considering the effect that it might have had on the decision of the trial judge. In that context, the likely effect of the further evidence on the appellate court's view of the evidence before the trial judge is an important consideration. Where there is no need for a new trial or extensive taking of evidence, other discretionary factors such as the availability of the evidence at the trial and the need for finality of litigation are likely to be more relevant in the exercise of the discretion than the effect that the evidence would have had at the trial [20] .
Even if special grounds are made out, there may well be discretionary reasons for not admitting further evidence. For example, if the evidence is of such a nature that it would be impossible for the appellate court to weigh its significance against that of other evidence in the case, that would be a compelling reason for exercising the discretion against permitting further evidence. Where cross-examination of at least some of the deponents of affidavits adduced by way of further evidence would be required, the only practical way of inserting the evidence into the fabric of the evidence already given would be to remit the matter to the trial judge. Where that is impracticable, that is a good reason for refusing to exercise the discretion [21] .
In this context, the Court must have regard to s 56 of the Civil Procedure Act 2005 (NSW), the overriding purpose of which, and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. The court must seek to give effect to that overriding purpose when it exercises any power given to it by that Act or by rules of court and when it interprets any provision of that Act or of any such rule.

[10]

Policy Considerations

Before dealing with the three conditions outlined above, it is desirable to address policy considerations that may bear on the present application. Comlin was represented by competent legal advisers and the respondents were entitled to assume that those advisers acted in accordance with their instructions. In that regard, there are sound public policy reasons for not facilitating the re-agitation of issues that have been resolved by judicial decision, on the basis of decisions made by those legal representatives.
In ordinary circumstances, the actions and inactions of an agent acting within the scope of the agent's authority will be attributed to the agent's principal. There is no reason why that principle should not apply in the context of an application under s 75A. Thus, when deciding whether a litigant has exercised reasonable diligence for the purposes of an application under s 75A, there will be attributed to the applicant the actions and inactions of the applicant's legal representatives. For example, if a party's counsel decides not to read a particular affidavit, the party will not normally be able to establish special grounds for that affidavit to be received on appeal, even if the party exercised reasonable diligence to ensure that the affidavit was in the brief to counsel and, therefore, was a matter outside the hands of the party, acting personally. More significantly, the failure of a legal representative to obtain evidence at all, where reasonable diligence on the part of that legal representative could have obtained it, will likely lead to the same conclusion. Even where a party instructs a solicitor about the existence of a potential witness or witnesses and the solicitor inexplicably fails to act on those instructions, that inaction on the part of the solicitor will ordinarily be attributed to the party. [22]
The principles of advocates' immunity also have significance in the present context. While an advocate owes a duty to the client, the duty to the client is subject to the overriding duty to the court. The advocate's duty to the court epitomises the fact that the course of litigation depends on the exercise of an independent discretion or judgment in the conduct and management of the case in which the advocate must have an eye, not only to the client's success, but also to the speedy and efficient administration of justice. In selecting and limiting the number of witnesses to be called, in deciding what questions would be asked in cross-examination, what topics would be covered in address and what points of law will be raised, the advocate exercises an independent judgment so that the time of the court is not taken up unnecessarily, notwithstanding the client may wish to chase every rabbit down its burrow. The administration of justice depends on the faithful exercise by advocates of that independent judgment in the conduct and management of a case [23] .
Exposure of an advocate to liability for negligence in court would unquestionably encourage litigation by unsuccessful litigants anxious to demonstrate that, but for the negligence of the advocate, the client would have obtained a more favourable outcome in the initial proceedings. That would be the central issue for decision in collateral litigation of that kind. If the plaintiff were to succeed, the resolution of that issue by a different court on materials that might well differ from those presented in the initial proceedings, by reason of lapse of time or other reasons, would undermine the status of the initial decision. An appeal against the initial decision might fail, with the result that, despite its correctness, the status of the initial decision could be tarnished by the outcome of the collateral proceedings [24] . Such policy factors justify caution before a conclusion is reached that a legal representative's conduct during the course of litigation is not attributable to the client.
Clearly enough, Comlin would have no cause of action against its former legal advisers in the present circumstances. Such a cause of action would, for the reasons briefly outlined above, be contrary to public policy. However, the same principles of public policy apply to prohibit the collateral impugning, on appeal, of the conduct of legal representatives at trial. Parties to litigation must be entitled to rely on the principle that their opponents are bound by the conduct of their legal representatives. It would be an extraordinary result if, having stood by without complaint either to the primary judge or to its opponents, while decisions were made on its behalf by its legal representatives, a party could, on appeal, impugn the decisions made by its legal representatives.

[11]

Reasonable Diligence

Comlin accepted that the Further Evidence was available prior to the hearing before the primary judge. However, it said, special grounds were established because the then legal representatives of Comlin, having been instructed "to use the evidence in question", did not do so. Comlin asserted that there was "a complete disconnect" between it and its legal team. It asserted that the letter of 9 October 2017 spelt out the concerns of Tony Bassil, as Comlin's managing director, which proved completely valid, in that the primary judge and Comlin were ad idem on the significance and importance of "the evidence in question". Counsel for Comlin contended that its former legal representatives refused to adduce "the evidence" that its managing director had directed them to adduce. Alternatively, he argued, the legal representatives misunderstood Comlin's instructions.
As indicated above, a very significant difficulty for Comlin with those contentions is the complete absence of any specificity as to "the evidence in question" referred to by counsel for Comlin and "the evidence of Mrs Betty Bassil and Mr Michael Abdul-Karim", as referred to in the letter of 9 October 2017. It is clear that neither of the prospective witnesses was consulted prior to the trial as to the evidence that they might give. Indeed, in cross-examination, Tony Bassil could not confirm that Betty Bassil would even be prepared to give evidence if asked.
An equally significant difficulty for Comlin's contention is the principle that, in the conduct of litigation, the actions and inactions of a party's legal representatives are attributed to that party. As between, Comlin and the respondents, the actions of Comlin's legal representatives must be regarded as binding on Comlin. If Comlin was dissatisfied with the action or lack of action on the part of its legal representatives, it could have terminated their retainer and retained alternative legal representatives. Tony Bassil asserts that he did not do so because the commencement of the trial was imminent. In fact, the letter of 9 October 2017 was written at least four weeks before the commencement of the trial. Comlin must be taken to have elected to accept the advice apparently tendered, notwithstanding that, according to Tony Bassil, it was unhappy with that advice.
In that regard, it is highly significant that no attempt was made by the present legal representatives of Comlin to inquire of the former legal representatives, solicitors and senior and junior counsel of considerable experience and standing, as to the advice that was given and why that advice was given. There was no evidence to suggest any antagonism between Comlin and its former legal representatives and nothing to suggest that the former legal representatives would not have co-operated in providing information as to the advice given and the reasons for deciding not to adduce evidence from Betty Bassil and Mr Abdul-Karim. Counsel for Comlin, in the course of the hearing of the s 75A Application, suggested that it might have been appropriate for the respondents to approach the former legal representatives. That suggestion must be rejected. Clearly, the Further Evidence was available at the trial.

[12]

Different Result

It should be noted that no attempt was made on behalf of Comlin to demonstrate the strength of the grounds of its appeal. That is to say, ordinarily special grounds will not be established unless it can be demonstrated that there is a high degree of probability that, with the further evidence, there would have been a different result.
The primary judge concluded that, whether or not there was an agreement that would amount to a partnership or joint venture, Comlin's claim was barred by the Limitation Act and was also independently barred by the defences of laches and abandonment. For there to be a different result on appeal, it would be necessary for Comlin to persuade this Court that the primary judge erred in concluding that Comlin's claim was barred by the Limitation Act and by the defences of laches and abandonment. While the notice of appeal asserts, in grounds 5, 6 and 7, that the primary judge erred in holding that Comlin's claim was barred by the Limitation Act by laches and by abandonment, there is no hint in the notice of appeal, and no attempt was made in the course of the hearing of the s 75A Application to specify the nature of the error made by the primary judge in reaching those conclusions.
The Further Evidence goes only to the question of whether or not there was evidence to support a finding that an agreement was made at about the time of the auction in 2001. However, it is difficult to see that the receipt of the Further Evidence would highly probably bring about a different result as to that question. No part of the Further Evidence involved first hand observation of any discussion that could lead to a binding agreement between Comlin, on the one hand, and the Venture Group on the other, as to a partnership or joint venture in relation to the Bankstown Property.
In addition, a question left undecided by the primary judge concerned the authority of Youssef Metlej to make an agreement with Comlin that was binding on Kayrouz and LADS. Even if the Further Evidence were to be received, it would still be necessary for Comlin to demonstrate that a finding should be made that any agreement made between Tony Bassil and Youssef Metlej was binding on Kayrouz and LADS. No submissions were advanced on behalf of Comlin in relation to that question, notwithstanding that it was raised specifically by counsel for Kayrouz and LADS.

Comlin Holdings Pty Ltd v Metlej Developments Pty Ltd

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