[1940] HCA 4
Rahme v Benjamin & Khoury Pty Ltd (2019) 100 NSWLR 550
[2019] NSWCA 211
United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1
[1985] HCA 49
University of Wollongong v Metwally (No 2) [1985] HCA 258
59 ALJR 481
Category: Principal judgment
Parties: Andrew Boyd French (Appellant
Source
Original judgment source is linked above.
Catchwords
[1940] HCA 4
Rahme v Benjamin & Khoury Pty Ltd (2019) 100 NSWLR 550[2019] NSWCA 211
United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1[1985] HCA 49
University of Wollongong v Metwally (No 2) [1985] HCA 25859 ALJR 481
Category: Principal judgment
Parties: Andrew Boyd French (AppellantFirst Cross-Respondent)
Christopher Bremner (RespondentCross-Appellant)
Judgment (9 paragraphs)
[1]
The application to adduce further evidence
The webinar contains material which would be arguably relevant to the causes of action based on partnership and breach of fiduciary duty which were at the forefront of Mr French's submissions. For the reasons given above, this appeal does not extend to those causes of action.
The webinar does not cast any doubt on the rejection of the three oral contracts (to be fair, I did not understand Mr French to contend that it did). It follows that it has not been shown to be relevant to the issues arising on appeal. I propose that the application to adduce it as further evidence on appeal be rejected.
[2]
Dr Bremner's cross-appeal
By notice of cross-appeal filed 29 November 2019, Dr Bremner raises four grounds of cross-appeal, two as against Mr French and two as against Ms Bakey. All four grounds may be reduced to a contention that the primary judge erred in concluding that the presumption of resulting trust in respect of the Corringle Beach Homestead registered in Ms Bakey's name, and the five properties in rural Victoria registered in Mr French's and Dr Bremner's names, had been rebutted.
There was no issue as to the applicable principles. They were recently restated in Foundas v Arambatzis [2020] NSWCA 47 at [47]-[51] by White JA, with the agreement of Bell P and Basten JA. Most pertinently for present purposes is what was said at [51]:
"The presumption of a resulting trust may be rebutted by evidence as to the parties' actual intentions, but does not yield to slight circumstances (Shepherd v Cartwright [1955] AC 431 at 445; Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 at 365; [1956] HCA 28; Brown v Brown (1993) 31 NSWLR 582 at 596). In principle, the presumption should be less strong where land is conveyed to the purchasers as tenants in common in defined shares. Nonetheless, the decision of this court in Ryan v Dries shows that the presumption of a resulting trust applies, whether the land is transferred to one party only, or to both parties as joint tenants, or to both parties as tenants in common."
Dr Bremner accepted that the fact that most of the properties had been conveyed to himself and Mr French as tenants in common told against the presumption. But his main point was that the evidence was insufficiently certain and concrete to displace the presumption. At its heart, Dr Bremner's submission was that "[t]he primary judge erred in concluding that the oral and documentary materials were sufficient to vest in Mr French and Ms Bakey an entitlement to any interest in those properties".
[3]
Ms Bakey's preliminary objection to the "cross-appeal"
Ms Bakey raised a preliminary point that the cross-appeal was out of time insofar as it sought to set aside the order made on 15 August 2019 dismissing the claim against her. On that day, Mr French's cross-claim was dismissed, and his notice of appeal was filed on 15 November 2019, within the time permitted by the rules (noting that a notice of intention to appeal had been served). Dr Bremner's cross-appeal was not filed until 29 November 2019. Insofar as the cross-appeal was against Mr French, it was within time (noting that a cross-appellant whose appeal is as of right has an additional 14 days to file a notice of cross-appeal after the filing of a notice of appeal: UCPR r 51.17(2)(b)). However, Ms Bakey was completely successful at first instance and strictly speaking, Dr Bremner needed to appeal, rather than to cross-appeal, against entry of judgment in her favour, for which purpose time expired on 16 November 2019.
Ms Bakey's point is sound, but it does not determine the outcome. There is power to extend the time for bringing an appeal. There is an overwhelming case for doing so, in a case such as the present, where what is required is a 13 day extension, in a period of time throughout which Ms Bakey was on notice that a cross-appeal might be filed in relation to five of the six properties in question against Mr French. It was not suggested that any material prejudice was incurred by the fortnight's delay, or that she had changed her position in some way in reliance on the expiration of the time for an appeal in the 13 days before the cross-appeal was filed, during which time Mr French was at risk of a cross-appeal as of right. After the application was made, the Court indicated that the cross-appeal against Ms Bakey would be resolved on its merits.
[4]
The merits of the cross-appeal against Ms Bakey - Lot 551 Corringle Road
Lot 551, which was known as the "Homestead" parcel, was purchased by Mr Bremner using funds from Ward's trust account. It was placed in Ms Bakey's name.
The primary judged addressed this at [465]:
"In this case, there is the direct evidence of Mr French and Ms Bakey that Dr Bremner expressly wanted for the Corringle Beach Homestead parcel to be registered in Ms Bakey's name, essentially as a gift to her. That evidence may be self-serving but Dr Bremner could have tried to contradict it and he has not. His counsel did not even mount a challenge to it."
The evidence to which his Honour referred was at paragraph 34 of Ms Bakey's affidavit of 27 June 2016:
"I recall a telephone conversation with Bremner in which he said to me words to the following effect 'Because all the businesses and other properties are in Andrew's name it would be a lot safer for this property to be put in your name only. That will give you and the kids security'. This property settled near my birthday after Bremner had paid the balance of the purchase price. Bremner telephoned me to tell me about this. He told me that he had arranged with Ward's solicitors that this property would be registered in my name. I specifically recall words to the effect 'What a great birthday present for you'. I agreed and thanked him. There was never any discussion between myself and Bremner regarding my holding this property in trust for him."
It was common ground on the appeal that, as his Honour recorded at [313], Ms Bakey was not asked about that conversation in cross-examination.
Dr Bremner submitted that the evidence adduced by Ms Bakey and Mr French supporting a gift of the Homestead parcel to Ms Bakey was "extremely scant". In Dr Bremner's submission, the evidence of any conversation to the effect that the property was a birthday present related to events that took place many years previously, was unsupported by any contemporaneous record, was therefore subject to the caution which must be applied to distant recollections, had to be assessed in the context of the primary judge's finding that her evidence was questionable and to be treated with reserve, and was controverted by an email she had written in September 2011, in which she stated that Dr Bremner's purchase of the property was "not a gift" and was not "overly generous".
Dr Bremner submitted that that email constituted an "express and specific denial of gift", and told against Ms Bakey's and Mr French's characterisation of the property being purchased in her name as a gift to her beneficially. He submitted that instead the email, if anything, pointed to the conclusion that the purchase price was advanced by him by way of loan to be repaid when MGT became profitable. However, his own submission on the cross-appeal was that his funds "were not provided as a quid pro quo for anything, nor as a loan" and were "not a gift". He also called mistaken Ms Bakey's reliance on the name in which the Homestead parcel was registered, on the basis that "[i]t is in virtually every case (other, perhaps, than where fraud is alleged) that a resulting trust will not be registered partly, or at all, in that contributor's name".
In answer to Ms Bakey's submissions relating to his failure to give evidence at trial, Dr Bremner noted that as his contribution to the purchase price was not in issue, Ms Bakey bore the burden of disproving the presumption of resulting trust that therefore arose, and that the evidence she and Mr French adduced did not reach the requisite level of establishing a definite intention to endow Ms Bakey with the full beneficial interest in the property. In those circumstances, it was said, there was no need for Dr Bremner to give evidence, as the presumption had not been displaced even on Ms Bakey's and Mr French's own case.
Dr Bremner's submission on the cross-appeal, in so far as it related to the Homestead parcel, was encapsulated in writing as follows:
"Overwhelmingly, the evidence adduced to rebut the presumed resulting trust arising from payment of the purchase price did not suffice to shift the presumption. It was, at best, unclear, tenuous and unsatisfactory. Taken as a whole, the evidence tendered by Ms Bakey and Mr French was internally inconsistent and unreliable. The presumption arising from Dr Bremner's payment is not to be lightly displaced and the evidence fell very much short of the level required to displace it."
At its core, Ms Bakey's submission in response to the cross-appeal was as follows:
"The evidence before the court overwhelmingly shows that Dr Bremner knew what the deal was at the time between the parties regarding the properties and this was reflected in the way that the properties were subsequently registered.
… There was never any discussion between the parties regarding holding the properties on trust for Dr Bremner. Why would they do that? They would not put their heart and soul into a place to give it back to Dr Bremner later. In the last 13 years, Dr Bremner has been to the property only 3 times. Ms Bakey and Mr French have looked after their own properties and the properties of Dr Bremner for all this time."
There was no evidence from Dr Bremner disputing that he told Ms Bakey that placing the property in her name would give "you and the kids security". There was no dispute that he had said "What a great birthday present for you".
There was a great deal of other documentary evidence supporting an intention to rebut the presumed resulting trust that arises when a person who pays for property puts it in the name of another.
But what has already been said is amply sufficient to resolve the cross-appeal against Ms Bakey. It must be borne in mind that the primary judge had the advantage of seeing Mr French and Ms Bakey give evidence, the former over some three days. The finding that there was an intention for Ms Bakey to have beneficial as well as legal ownership of the Homestead parcel was a finding of fact, in respect of which this Court should give deference to the primary judge.
In light of the absence of any challenge to Ms Bakey's sworn evidence of what Dr Bremner had told her when the Homestead parcel was acquired, Mr Einfeld maintained that the conversation could be understood only as a reference to the legal title of the Homestead parcel, as opposed to its beneficial ownership. I cannot agree. If it were to be understood that way, the statement would be nonsensical. How would bare legal title give Ms Bakey and the kids "security"? How would it be a "great birthday present"? In any event, that is at best a strained meaning to give to the language used.
As mentioned above, Mr Einfeld also pointed to an email from Ms Bakey. At first he said it was an admission by her. He pointed to her email dated 4 September 2011 in which she said, "It was not a gift, you were not being overly generous".
But that submission takes words out of context. It is not clear that Ms Bakey was referring to the Homestead parcel at all, and even if she were, her point was that there had been a loan of funds rather than a gift. The passage in its context is as follows:
"We have made you a considerable amount of money with the property purchases that you got involved in with us. We had all those blocks at corringle on a delayed Settlement before you even got involved with them. You have always been the one to jump on our bandwagon. When Andrew showed you the picture of corringle, you wanted to be a part of it. You know what the deals were with yourself and Andrew. You lent the money to buy the land and Andrew will pay you back the money lent when MGT is at a more profitable stage. You trusted in MGT back then or you would not have lent the money. It was not a gift, you were not being overly generous. It was a well executed plan of attack. You have been making money all along with astute land purchases introduced by Andrew and always stood to get your money back. Stop patting yourself on the back and making yourself out to be someone that you are not. It is a two edged sword with you Chris and you keep changing the rules and turning greedy like a spoilt brat and wanting to take it all back for yourself. We are the ones that have done all the hard work. We were the ones that have spent all\ the hours in the car travelling between NSW and Vic to keep the whole show rolling. Don't you dare claim that it is all yours because you lent us the money. Stop it right now!!
That you own everything is an absolute insult. You lent us the money to buy it. You and Andrew had a deal regarding the land and other things, that is between you both and you are the one that is reneging on all deals. That is your agreements with us and your agreements with MGT."
It will be seen that (a) the words "It was not a gift" were written in the context of contrasting the position with a loan, and (b) when Ms Bakey turned to referring to the properties, she unequivocally denied that they were owned by Dr Bremner.
The cross-claim against Mr Bakey is close to hopeless, if it is not indeed hopeless. For that reason, no basis has been established for even the short extension of time that Dr Bremner requires. Without the extension of time, the cross-appeal is incompetent, and should be dismissed on that basis.
Ms Bakey is a litigant in person, and the ordinary costs order which I propose should provide a complete indemnity to her for disbursements she has incurred in responding to the cross-appeal. In the absence of any evidence of her incurring legal expenses, the issue of whether Dr Bremner should pay Ms Bakey's costs on an indemnity basis does not arise.
[5]
The cross-appeal against Mr French
Dr Bremner's written submissions made the point that proof of registration of a property in a name different from the person providing the purchase price constitutes the starting point of the analysis as to ownership of the property, rather than the end point. It followed, in his submission, that in view of his provision of the bulk of the purchase price for the properties registered in his and Mr French's names, it was for Ms Bakey and Mr French to demonstrate that the presumption of resulting trust had been rebutted on the evidence.
[6]
Lot 550
Lot 550 adjacent to the Homestead parcel must be addressed discretely, in view of the primary judge's conclusion that the existence of an express declaration of trust over this property was "flatly inconsistent" with Dr Bremner's claim of a resulting trust in his favour. Dr Bremner submitted in writing that no such declaration of trust was in evidence, and stated that the primary judge's inference of such a declaration of trust "appears to have arisen from the solicitors' letter of 29 September 2008".
In oral submissions, Mr Einfeld came close to acknowledging that Dr Bremner's claim was especially weak in relation to lot 550.
It may be inferred from the documents that there were in fact two transfers of lot 550: first to Mr French in his own name, and then by Mr French into his and Dr Bremner's names as co-owners. The evidence discloses that the second transfer did not attract ad valorem stamp duty, on the basis that there was an existing trust in favour of Mr French and Dr Bremner. This is, as the trial judge emphasised by his words "flatly inconsistent", powerful evidence that in fact Mr French did not hold lot 550 on a presumed resulting trust wholly in favour of Dr Bremner. Dr Bremner personally signed the second transfer, which is dated 16 February 2009, and which stated that the consideration for the transfer was "entitled in equity".
[7]
The other four properties registered in the names of Mr French and Dr Bremner
The other properties registered in Mr French's and Dr Bremner's joint names were not the subject of any formal declaration of trust. Dr Bremner submitted in writing that the primary judge erred in accepting evidence from Mr French, said to be reinforced by contemporaneous documents, of an agreement to acquire the properties "on a 50/50 basis". Essentially, Dr Bremner's submission was that the oral discussions and written communications between the two men were directed solely to the question of registration, not to the ultimate beneficial ownership of the properties. In this respect, Dr Bremner noted the references in Mr French's affidavit of 27 June 2016 in which he gave evidence that the two men intended that the properties "be registered in our joint names - 50-50".
Mr French for his part placed reliance on contemporaneous emails, including one from Mr French to Dr Bremner on 6 May 2008 in which Mr French wrote "I have offered you half … when you said we would go 50/50 in all the land that I found", and one from Dr Bremner to a third party dated 11 January 2011, in which Dr Bremner wrote "my original agreement with French is 50 50".
There was also Dr Bremner's email of 12 January 2011, parts of which have been reproduced above, referring to "we invested in buying a number of farms together some in partnership some individually". The email continued "Without me [it is] likely you would have lost your farm, magnet business and your father his home, instead you have a portfolio of valuable properties".
Dr Bremner in reply submitted that Mr French's assertions of fact were not referable to any evidence before the court below. Specifically, in relation to the contemporaneous emails relied on by Mr French, Dr Bremner submitted they do not rise any higher than the evidence of conversations between the two men at around the same period, which, he submits, were directed to issues of registered title, not beneficial ownership. Further, Dr Bremner pointed to other emails said to be inconsistent with Mr French's enjoying beneficial interest in the properties, including an email from Mr French to Dr Bremner of 23 December 2009, in which Mr French wrote "I suppose Iam [sic] not 50/50 anyway".
Altogether, Dr Bremner submitted that the evidence as to the ownership of the rural properties registered in the two men's joint names was "confused, disjointed and nebulous" and did not rise to the requisite level of a "definite and clear intention to confer on Mr French a 50% interest in valuable properties for which he paid no consideration".
I am unable to accept Dr Bremner's submission. There is the fact that the properties were placed in the men's joint names. There is the testimonial evidence of Mr French and Ms Bakey. There are relatively contemporaneous documents supportive of Mr French having a beneficial interest, rather than a mere legal title, to the properties. And there is the fact that Dr Bremner chose not to give evidence to the contrary. No basis has been made out to interfere with the factual findings made by the primary judge.
For completeness I note that Ms Bakey and Mr French each also filed a notice of contention, on 10 and 13 December 2019 respectively. It is not necessary to summarise either document, in light of the outcome of Dr Bremner's cross-appeal.
[8]
Orders
For those reasons, I propose that Mr French be granted leave to amend his notice of appeal in respect of the award of interest. The appeal should be allowed in part in relation to the award of interest but otherwise dismissed. The cross appeal should be dismissed. The balance of Mr French's notice of motion dated 30 October 2020 (which sought to adduce into evidence the webinar) must be dismissed.
The ordinary rule in civil litigation is for costs to follow the event. Applying that course, Mr French would pay Dr Bremner's costs of the appeal, and Dr Bremner would pay Mr French's and Ms Bakey's costs of his cross-appeal. However, I think there is reason to depart from that course in the present case.
Ms Bakey was wholly successful. She is entitled to a costs order in her favour. In relation to Mr French and Dr Bremner, bearing in mind that each man failed in this Court, save in relation to the calculation of interest which was not the subject of any written submissions and did not appreciably extend the length of the hearing and so may be disregarded for the purposes of the exercise of the costs discretion, I think the appropriate order is that there be no order as to costs, with the intention that each man bear his own costs. That reflects the overall outcome, and spares the parties the possibility of further disputation as to the assessment of costs.
Separate from the above is Mr French's motion of 30 October 2020. Those costs were discrete. The costs of that motion should follow the event.
Finally, the orders made by the primary judge appointed trustees for sale of the properties co-owned by Mr French, for the purpose of satisfying the judgment debt. The dismissal of Mr French's appeal carries with it the consequence that those orders remain in place. However, the orders only authorised the trustees to sell the properties within a 12 month period, which time has expired.
So far as I can see, there is nothing stopping Dr Bremner seeking an extension of that period, if the appointment of trustees for sale remains necessary. It would be in both Dr Bremner's and Mr French's interests to avoid the costs of such a renewed appointment.
I propose the following orders:
Grant leave to Mr French to amend his notice of appeal to challenge the award of interest.
Dispense with the filing of an amended notice of appeal.
Allow Mr French's appeal in part and set aside order 1 of the orders made on 31 October 2019, but otherwise dismiss the appeal.
Direct the parties to supply agreed calculations, or in the absence of agreement, calculations for which each contends, of the amount of interest at 5% upon the amounts totalling $3,148,718 lent by Dr Bremner, within 28 days of today, noting that this Court proposes to enter judgment against Mr French on Dr Bremner's cross-appeal in the amount of $3,148,718 plus interest at the rate of 5%.
As against Ms Bakey, refuse leave to extend time within which to bring an appeal against the dismissal of the proceedings brought by Dr Bremner against her, and dismiss the cross-appeal insofar as it is brought against her as incompetent.
Order Dr Bremner to pay Ms Bakey's costs of the cross-appeal.
As against Mr French, dismiss Dr Bremner's cross-appeal.
Dismiss the balance of Mr French's notice of motion filed 30 October 2020.
Mr French to pay Dr Bremner's costs of his notice of motion filed 30 October 2020 to adduce further evidence on appeal.
Subject to orders 6 and 9, there be no order as to the costs of the appeal and cross-appeal, with the intention that Mr French and Dr Bremner bear their costs of the appeal and cross-appeal.
WHITE JA: I agree with Leeming JA.
[9]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 18 December 2020
McDermott v Black (1940) 63 CLR 161; [1940] HCA 4
Rahme v Benjamin & Khoury Pty Ltd (2019) 100 NSWLR 550; [2019] NSWCA 211
United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1; [1985] HCA 49
University of Wollongong v Metwally (No 2) [1985] HCA 258; 59 ALJR 481
Category: Principal judgment
Parties: Andrew Boyd French (Appellant; First Cross-Respondent)
Christopher Bremner (Respondent; Cross-Appellant)
Gabrielle June Bakey (Second Cross-respondent)
Representation: Counsel:
Mr French and Ms Bakey, self-represented
M Einfeld QC, A Harding SC (Respondent; Cross-Appellant)
Solicitors:
Johnson Winter & Slattery (Respondent; Cross-Appellant)
File Number(s): 2019/285092
Publication restriction: Nil
Decision under appeal Court or tribunal: Supreme Court of New South Wales
Jurisdiction: Equity
Citation: [2019] NSWSC 1033
Date of Decision: 15 August 2019
Before: Parker J
File Number(s): 2014/101136
Reasons of the primary judge in relation to Dr Bremner's cross-claim
The primary judge found that $3,148,718 was provided by Dr Bremner to Mr French or to associated third parties by way of loan, and that this amount was repayable by Mr French and outstanding: at [456]. His Honour gave judgment in Dr Bremner's favour in that amount but added interest of $2,641,945 calculated at the rates in accordance with s 100 of the Civil Procedure Act 2005 (NSW). The calculation of interest was the subject of an application made by Mr French during the hearing to expand the notice of appeal.
In relation to Dr Bremner's claims that the Victorian properties were held on resulting trust in his favour, the primary judge found at [467] that the presumption of a resulting trust arising from Dr Bremner's provision of the bulk of the purchase money had been rebutted, having regard to the principles in Calverley v Green (1984) 155 CLR 242; [1984] HCA 81. This was in light of the following considerations:
1. a local Victorian firm of solicitors, Wards, acted for Mr French, and not solely for Dr Bremner in respect of the purchase;
2. Mr French paid the deposit, and the registration of the transfers of at least some of the properties was apparently done on his instructions;
3. one of the properties, "Lot 550", was registered in Mr French's name, but subject to an express trust for himself and Dr Bremner as tenants in common in equal shares (there was secondary evidence of a written declaration of trust);
4. Dr Bremner had not given any direct evidence of his intentions in relation to the properties, and had not sought to obtain any evidence from Wards on the question, whereas Mr French and Ms Bakey had given direct, uncontradicted evidence that Dr Bremner wanted the Corringle Beach Homestead to be registered in Ms Bakey's name "essentially as a gift to her"; and
5. Mr French had given evidence, supported by contemporaneous documents containing admissions by Dr Bremner, that the pair intended to acquire the rural Victorian properties on a 50/50 basis.
In view of the failure of Dr Bremner's resulting trust claim, and noting the disagreement between the parties, his Honour concluded that Dr Bremner was entitled to an order for the appointment of trustees for sale: at [473].
Mr French's appeal
In view of the quantum in issue, Mr French's appeal is as of right. By notice of appeal filed on 15 November 2019, Mr French raises nine grounds of appeal, although they were not addressed discretely in his written submissions.
By notice of motion filed on 30 October 2020, a little over a month before the appeal was heard, Mr French sought leave for additional evidence, contained in numerous annexures to an affidavit made by him on the previous day, to be received on appeal. The Court of Appeal stood over one aspect of that application to the hearing of the appeal (this concerned a webinar dated 6 September 2020) in circumstances described in French v Bremner [2020] NSWCA 299 at [10]. The balance of the application was dismissed.
On the second day of the appeal, Mr French provided a document identifying what he sought to obtain from the webinar. The Court advised that it would rule on the application at the same time as it delivered judgment on the appeal.
Resolution of the appeal
Precisely why the litigation at first instance took the course it did is neither clear on the face of the appeal books nor relevant to the issues which arise. Mr French was represented by solicitors and senior counsel. The record reveals that important forensic decisions were made during the litigation, including as to which causes of action were or were not chosen to be advanced at trial. Mr French is bound by the way his trial was conducted. His appeal is by way of rehearing, but it is a rehearing of what took place at first instance, rather than some different trial raising different issues or different causes of action. As was said by Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ in University of Wollongong v Metwally (No 2) [1985] HCA 258; 59 ALJR 481 at 483:
"It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so."
Mr French complained that he and Dr Bremner had been partners, and that on that basis there should have been judgment in his favour.
I can see why Mr French makes that complaint. Equitable obligations may attach to joint venturers or partners who embark upon their joint enterprise prior to finalising the contract which founds their relationship: United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1; [1985] HCA 49; see by way of recent example Rahme v Benjamin & Khoury Pty Ltd (2019) 100 NSWLR 550; [2019] NSWCA 211 at [91]-[97].
However, that was not the case which was run at trial. What is more, any such case was explicitly disavowed.
Relatively early in the trial, in response to an objection to Mr French's affidavit, the trial judge questioned whether the material subject to the objection would go to equitable causes of action and equitable compensation or an account of profits. Mr Einfeld QC, who appeared for Dr Bremner at first instance and in this Court, responded that such causes of action had not been pleaded. The primary judge suggested to senior counsel then appearing for Mr French that he review his pleadings overnight to see whether the relevant facts had been pleaded in relation to, inter alia, the equitable claims and whether a reformulation was required. Counsel took up that suggestion.
Early on the following day, counsel for Mr French provided a partially incomplete amended pleading raising equitable causes of action and associated relief. The primary judge stated that when he raised the issue of equitable relief the previous day, he had forgotten that no such case was pleaded and indicated that he had not contemplated a complete revision to the pleadings to raise equitable causes of action. Mr Einfeld foreshadowed that if an application to amend were made, defences based on laches, acquiescence and unclean hands would be pleaded in response.
Interest on the judgment debt
The solicitors who had retained senior counsel who had appeared for Mr French at trial had ceased to act by October 2019 when his Honour came to make substantive orders in favour of Dr Bremner, as was recorded in French v Bremner (No 2) [2019] NSWSC 1504 at [2]. The judgment went on to deal with the money judgment ordered at [5]:
"The first aspect of the orders requiring mention is the calculation of interest on the judgment for approximately $3.15 million which Dr Bremner obtained on his cross-claim (see my judgment at [475(1)]). The interest calculations were given to Mr French before the hearing and he has raised no objection to them. Accordingly, I will award prejudgment interest pursuant to the Civil Procedure Act 2005, s 100 in the sum of $2,641,945."
Dr Bremner had, in his cross-claim, sought pre-judgment interest at the rate of 5% or alternatively pursuant to s 100 of the Civil Procedure Act. There are references in the evidence adduced at trial to Dr Bremner being entitled to interest at 5%. For example, Exhibit 7 was a document describing the history and background of MGT, including under the heading "Financing to date" this paragraph:
"Christopher Bremner is a person who has loaned Andrew a large sum of money on a hand shake. This money has no time to be paid back and it is loaned at 5% interest. It may be converted to stock at a later date if and when the accountants think it is wise too [sic]."
The document appears to have been attached to an email sent by Mr French to Mr Iliuta and copied to Dr Bremner dated 19 August 2010. A PricewaterhouseCoopers file note made shortly thereafter, dated 24 August 2010, appears to record Mr French referring to a debt of $3.5m with interest at "potentially 5%".
That evidence was consistent with other references to an interest rate of 5% present in the evidence. In an email sent to Dr Bremner on 23 December 2009, Mr French said "I thought it was our money and I was paying you back at 5% as agreed and that all Gabi's and my hard work was making you money". Emails sent in January 2011 also disclose reference to an interest rate of 5%. Mr French's email to Dr Bremner dated 11 January 2011 stated that "Our original agreement was as a loan at 5% interest all on a handshake", while another email of the same date, sent by Mr French to Mr Iliuta and copied to Dr Bremner, stated that "The original deal was as a loan 5% interest with no shares".
Section 100(3)(b) of the Civil Procedure Act curtails the scope of the power conferred on the Court to order pre-judgment interest. It provides that the section "does not authorise the giving of interest on a debt in respect of any period for which interest is payable as of right, whether by virtue of an agreement or otherwise". No finding was made by the primary judge, which is understandable given the way the issue arose. However, this Court may make further findings of fact in the course of resolving an appeal. The evidence powerfully supports a finding that the money lent by Dr Bremner to Mr French attracted interest at the rate of 5% per annum. That appears on the face of Dr Bremner's cross-claim, and in the contemporaneous documents reproduced above.
The matter was thereafter left to rest for some seven days. During that time, Mr French and Ms Bakey were cross-examined, the former over some three days. Towards the conclusion of the trial, the potential amendment of the pleadings to raise the equitable causes of action was revisited and deferred to the following Monday. Mr Einfeld again foreshadowed an objection. On that morning, the proposed application to amend was abandoned.
Since ultimately no application was made, it is difficult to predict whether it would have been granted and, if so, on what terms (including as to an adjournment at Mr French's expense). For the benefit of Mr French, I should make it plain that so far as I can see it would have been difficult to prevent Dr Bremner from advancing a discretionary defence based, at the least, upon delay, if there were a proper basis for contending that in the years since their business relationship broke down, Mr French knew or ought to have known that Dr Bremner had been attempting to exploit the invention. Damages at common law for breach of contract are available as of right. However, insofar as Mr French might have sought equitable compensation or an account of profits for breach of a fiduciary duty, then Mr Bremner would have been entitled to rely on equitable defences which were unavailable against a contractual claim. Another way of explaining the point is that a plaintiff seeking damages for breach of contract may wait for 5 years and 11 months before bringing a claim at common law. However, if the same events give rise to a claim for breach of fiduciary duty, then the plaintiff may well have to explain an extensive delay, and equitable relief may be denied altogether or reduced.
I can also see difficulties in relying on a defence of unclean hands, although on the face of the materials in the appeal books, it is not clear what the gravamen of that defence would be. The impropriety on which the defence is founded must have an immediate and necessary relation to the equitable claim: see Carantinos v Magafas [2008] NSWCA 304 at [58]-[59].
What is entirely unclear is why no claim in partnership or based on breach of fiduciary duty had been made against Dr Bremner in the years prior to the trial in 2019.
A further aspect of the way in which choices were made at trial concerns the handwritten memorandum of September 2009 (of which Mr French later complained that he was drunk when he signed it). That document was particularised in support of the "joint venture agreement" in Mr French's further amended cross-claim (paragraph 13(h)). However, in the second further amended cross-claim, which was the iteration of the pleading which went to trial, that particular was deleted. This was raised during the hearing and Mr French stated that he did not know why it had been struck through. I accept Mr French's response. However, it is another indication of the way in which Mr French is seeking on appeal to advance a claim which was disavowed at a trial where he was represented by senior counsel.
It is apparent that forensic decisions have been made based on the case that was in fact advanced. Those decisions will have included the way in which Mr French was cross-examined, and the decision not to call Dr Bremner. It is a very clear case where Mr French's appeal must be confined to the causes of action he litigated at trial.
That deals with the main submission advanced by Mr French. No direct challenge was made to the factual findings of the primary judge, rejecting each of the three oral contracts alleged. It is difficult to see how any challenge could be made, given the "considerable caution" with which the primary judge's treated Mr French's evidence.
Insofar as Mr French sought, in both his written and oral submissions, to rely on part performance and accord and satisfaction, it is sufficient to say that neither doctrine casts any doubt on the factual conclusion that there were no oral contracts as alleged by him.
Because Dr Bremner was entitled to interest at the rate of 5%, s 100 did not authorise the award of interest at Court rates: see Agusta Pty Ltd v Official Trustee in Bankruptcy as Trustee of Estates of Gustavo Ferella and Angelo Ferella [2009] NSWCA 129 at [39]-[44]; Bull v Lee (No 2) [2009] NSWCA 362 at [28]-[29]; Despot v Registrar-General of NSW (No 2) [2013] NSWCA 332 at [4].
There is nothing to suggest that this was drawn to the attention of the primary judge. In circumstances where Dr Bremner's lawyers were dealing with an unrepresented litigant, and where the order made by the primary judge on its face discloses an error of law, that error should be cured by this Court in the course of hearing and determining the appeal.
Dr Bremner opposed Mr French's oral application to amend his notice of appeal to challenge the award of interest. But the issue was raised on the pleadings below and ought to have been brought to the primary judge's attention by Dr Bremner's lawyers.
The need for filing an amended notice of appeal can be dispensed with.
Mr French should have leave to challenge the award of interest at the rates prescribed by s 100 of the Civil Procedure Act.
It is not clear to me that the materials in the appeal books permit the calculation of interest. The directions I propose will permit the parties to be heard as to this.