Great Wall Resources Pty Ltd v O'Sullivan & Anor

CATCHWORDS: APPEAL - leave to adduce fresh evidence - events occurring after date of trial - REAL PROPERTY - valuation of land - relevance of subsequent events

Campbell v Backoffice Investments Pty Limited [2008] NSWCA 95; (2008) 66 ACSR 59 Daandine Pastoral Co Pty Ltd v Commissioner of Taxation (1943) 7 The Valuer 299 CASES CITED: Doherty v Liverpool District Hospital (1991) 22 NSWLR 284 D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1 Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 236 CLR 272 Janet M Gilchrist & Ors v The Estate of the Late Sara Alexander Taylor [2004] NSWCA 476

TEXTS CITED: A Hyam, The Law Affecting Valuation of Land in Australia, 3rd ed (2004) The Federation Press

Great Wall Resources Pty Ltd (Appellant) PARTIES: Stephen O'Sullivan (First Respondent) Norella O'Sullivan (Second Respondent)

COUNSEL: R B Wilson (Appellant) T H Barrett (Respondents)

SOLICITORS: Daly Lawyers (Appellant) Russell McLelland Brown Lawyers (Respondents)

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40249/08 SC 1313/06

GILES JA IPP JA MACFARLAN JA

THURSDAY 4 JUNE 2009 GREAT WALL RESOURCES PTY LTD v O'SULLIVAN & ANOR Judgment 1 GILES JA: I agree with Macfarlan JA. 2 IPP JA: I agree with Macfarlan JA. 3 MACFARLAN JA: By a contract of sale dated 13 June 2003, the appellant agreed to sell to the respondents certain land situated at Yallah on the South Coast of New South Wales. The land was part of a larger parcel of land being subdivided by the appellant. By the contract, the appellant warranted that a right of way affecting the land would be extinguished. 4 In proceedings between the appellant and the owners of the land entitled to the benefit of the right of way, Young CJ in Eq made orders on 21 November 2005 which included the following: "1. That immediately upon the Defendant/Cross Claimant Registering an easement, in favour of the Plaintiff/Cross Defendant, in the form annexed and marked 'A' to the Third Further Amended Cross Claim, over the "Property" (being Lot 10 in Deposited Plan 262279) then the easement presently recorded as a notification on the title of the Property (by reason of dealing number A769744) be extinguished. … 6. Should the easement referred to in order 1 herein not be registered by the Defendant in favour of the Plaintiff by 24 December, 2005 then either party may apply to this Court to vary these orders forthwith." 5 In the events which occurred, 29 December 2005 became the contractually agreed date for settlement. After the appellant's failure to complete the contract of sale on that day, the respondents commenced the present proceedings. 6 On 24 November 2006, Palmer J made an order in the proceedings that the contract be specifically performed and made a declaration that in failing to extinguish the right of way referred to above, the appellant had breached the contract and was liable to pay damages in respect of that breach to the respondents. He also made the following orders: "4. An order that an inquiry be held as to the amount of damages which the Plaintiffs have sustained by reason of the Defendant's refusal to perform the said contract. … 6. An order that an inquiry be held as to the amount of damages which the Plaintiffs have sustained by reason of the Defendant's said breach of the said contract." 7 There is no evidence to suggest that by the time of the hearing before Palmer J (or indeed until recently) the appellant took any steps to extinguish the right of way in the manner contemplated by the orders of Young CJ in Eq. The appellant's position in fact appears to have been that it was unable, or at least unwilling, to remove the right of way because by letter of 24 March 2006 written on its behalf it asserted that title subject to the right of way was the only title it was "ready, willing and able" to transfer to the respondents. The proceedings before Palmer J appeared to proceed upon the basis that this continued to be the appellant's position. 8 In pursuance of the orders made by Palmer J, McLaughlin AsJ delivered a judgment on 19 May 2008 assessing the damages to which the respondents were entitled. The principal amount was $89,487.54 which became, when interest was added, $101,914.74. The present appeal is brought from that judgment. However, not all of the principal amount is the subject of challenge. The items challenged are $45,000, as to a difference in value of the subject land, and $37,730, as to additional building costs. Even with interest added, the amount in issue on the appeal is less than $100,000. As a result, leave to appeal is required under s 101(2)(r) Supreme Court Act 1970. 9 As leave has not been obtained, the purported appeal is incompetent and should be struck out. I add that the Notice of Appeal and Amended Notice of Appeal which were filed challenged the judgment of McLaughlin AsJ in general terms. The lack of specificity rendered those documents not in conformity with the Rules. The limited nature of the appellant's challenges became evident upon the filing of its written submissions. 10 The appellant did not seek leave to appeal until the appeal came on for hearing, despite the fact that the respondents filed a Notice of Motion on 8 September 2008 seeking to strike out the appeal as incompetent for want of leave. 11 The Court nevertheless heard full argument on the application for leave to appeal, on the appeal and on a Notice of Motion that was filed in the Appeal on 6 May 2009 by the appellant for leave to adduce fresh evidence. 12 It is convenient first to refer to the appellant's challenge in relation to the award of $37,330 plus interest in respect of additional building costs. After an initial assertion that there had been an arithmetical error was withdrawn, the complaint came down to one that the award was not supported by the two building quotations upon which it was based. One was dated 18 November 2006 and the other dated 19 April 2007. The contract was completed on 19 December 2006. It was submitted that the increase in costs could not be regarded as a loss suffered by the respondents resulting from the appellant failing to complete the contract. 13 I do not accept this submission. The delay in settlement was approximately 12 months (29 December 2005 to 19 December 2006). It was not unreasonable to take April 2007 as a date when the respondents would first have been in a position to build upon the land, being a few months after completion. Until completion, they could not have been certain of their control of the land. The most appropriate date to take for a comparison with April 2007 building costs would probably have been about April 2006, being about the same period after the date upon which the contract should have been settled. The fact that the respondents' evidence was instead directed to November 2006 may well have understated their loss but nevertheless was sufficient to show that there was an amount ($37,750) by which their building costs had risen as between a point of time at which they would have been able to proceed to build if the appellant had not been in breach and the point of time at which they were reasonably able to proceed to build after completion of the contract. 14 I turn then to the other challenge made to the award of damages. This item of $45,000 plus interest represented the difference between the value of the land if there had been no right of way on the title and the value of the land with the right of way. 15 At the hearing before McLaughlin AsJ, the appellant sought to read the affidavit of Adrian Daley of 30 April 2008. This referred to the orders of Young CJ in Eq and the fact (as it was thought to be) that the consent of a Mr and Mrs Le Serve was required in order to have the Land Titles Office effect the extinguishment of the right of way. The affidavit annexed a letter to the solicitors of Mr and Mrs Le Serve (who happened to be solicitors who also acted for the respondents) dated 15 April 2008, that is, a year earlier seeking the consent of Mr and Mrs Le Serve. The affidavit said that that consent to date "has not been forthcoming". It did not contain any information as to the likelihood of consent being forthcoming in the future. His Honour rejected the material parts of the affidavit saying: "I don't consider that this matter is relevant to the present inquiry that has been committed to me". 16 Counsel for the appellant then sought an adjournment to enable the appellant to take steps to register the extinguishment. A letter was handed to his Honour in the course of the application and subsequently returned by his Honour to the parties. As the parties were not able on the appeal to identify the letter with any certainty, the contents of the letter are not known to the Court. His Honour refused the application for adjournment. No reasons are recorded. The application apparently mirrored an application to vacate the hearing date made the previous week to Young CJ in Eq. The application had been refused by his Honour. We were not informed of his reasons. 17 In the course of the cross-examination of the land valuer called by the respondents, the following exchange occurred: "Q. In determining the valuation of the land affected by the easement, did you assume the easement would operate in future indefinitely? Was that one of your considerations? A. Yes. Q. I don't want you to answer this question if there is an objection and I don't wish to be discourteous in asking this question. If you had known that there had been an order of the Supreme Court in 2003 which ordered that in certain circumstances this easement affected lot 110 could be extinguished, would that be a relevant consideration in the carrying out of your valuation? OBJECTION. REJECTED."

18 In cross-examination, the first respondent agreed that he had been aware for some time of the orders made by Young CJ in Eq. Immediately prior to giving that evidence the following exchange occurred: "Q. … Whilst you put the removable fence there, you have assumed that in the future the easement on your title will be extinguished and removed, isn't that correct? A. Yes, I would hope so." 19 Soon thereafter, the following further exchange appeared in the cross-examination of the first respondent: "Q. Do you know Mr Leserve? I think I might have asked you that? A. He was the real estate agent we purchased the original land -- Q. Have you spoken to him about his proceedings against Great Wall Resources? OBJECTION. REJECTED." 20 Finally, counsel for the appellant sought to tender the judgment of Young CJ in Eq which led to the making by him of the orders of 21 November 2005. 21 The basis upon which the primary judge considered that the evidence in Mr Daley's affidavit (and presumably also the questions in cross-examination which were rejected and the judgment of Young CJ in Eq) was not relevant, is not clear. If his Honour took the view that the evidence was not relevant because his task was to assess damages as at the date upon which completion should have occurred and that subsequent events were not material to that assessment, I disagree with his view. As stated by Williams J sitting at first instance in the High Court in Daandine Pastoral Co Pty Ltd v Commissioner of Taxation (1943) 7 The Valuer 299 (quoted in A Hyam The Law affecting Valuation of Land in Australia, 3rd ed (2004) The Federation Press at 87 and referred to with approval in Campbell v Backoffice Investments Pty Limited [2008] NSWCA 95; (2008) 66 ACSR 59 at [479]): "Values must be calculated in the light of circumstances which existed on the material date … but subsequent events can be taken into account in order to determine the proper weight to attach to such circumstances …. The whole tendency of the Courts is to admit evidence of any events prior to the date of trial which throw any real light on the issues" (at 304) 22 In any event, the assessment did not necessarily have to occur as at the date of breach. Arguments were capable of being put that the assessment should be undertaken as at a later date (see for example Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 236 CLR 272 at [26]) 23 A possible alternate reason for his Honour's rejection of the evidence was a view that it did not meet the test in s 55(1) of the Evidence Act 1995 that it "rationally affect (directly or indirectly) the assessment" of the issue before him and was not therefore relevant. It is arguable that the affidavit of Mr Daley, when considered on its own, fell into this category. Whilst it indicated that orders for extinguishment of the right of way had been made, it also indicated that the consent of other persons was required in order for the extinguishment to proceed. However, it provided no information at all as to the likelihood of that consent being obtained. The fact that a year had passed since the consent had been sought and that the consent had not been forthcoming did not inspire confidence in the appellant being able to obtain the consent. 24 The contrary view is that the affidavit provided some foundation for the exploration in cross-examination of the first respondent of the likelihood of consent being obtained and, in cross-examination of the valuer, of the extent to which knowledge of a prospect of extinguishment of the right of way might have affected his views. It is not however clear that, when the affidavit was sought to be read, counsel foreshadowed the cross-examination which was likely to come, nor that when questions in cross-examination were subsequently rejected they were sought to be linked up with the rejected affidavit material. It would have been desirable for the appellant to reapply at that stage to read the affidavit of Mr Daley. 25 It is not necessary to reach a final view upon this issue of relevance as there are in my view a number of reasons why leave to appeal should not be granted. These are as follows:

(a) The challenge made in relation to the award of increased building cost was without merit. As a result, on any realistic basis, the amount in issue is at most $45,000 plus interest. This is a small amount in the context of the matters which come before this Court on a daily basis.

(b) This is not a case where this Court, if it took the view that the primary judge had erred in rejecting evidence, would be able to substitute its own decision as to the assessment of damages. It is not known what evidence the first respondent would have given as to the likelihood of consent being obtained and it is not known what evidence the valuer would have given as to the significance he would have attached to a prospect of the easement being extinguished. Thus, if this Court were to intervene, it would be necessary to order a new trial with attendant further delay and expense.

(c) Although it is not known what evidence would have been given by the first respondent and the valuer, there is a real prospect that the valuer would not have resiled from a significant part of his assessment of $45,000 as the difference in value. This consideration further diminishes the amount that can realistically be said to be in issue in the proceedings.

(d) If a new trial were to be ordered, not only the appellant but also the respondents would have to be given the opportunity to lead further evidence. Particularly if it were concluded that the assessment of loss should take place as at the date of the new trial, the possibility exists that the respondents could lead evidence of further loss which would wholly or partly offset any reduction in the damages the appellant might achieve by reason of admission of evidence of the prospect of extinguishment of the easement.

(e) Some three and a half years passed from the making by Young CJ in Eq of the orders on 21 November 2005 without the appellant obtaining extinguishment of the easement. The appellant did not lead any evidence which adequately explained this delay. The inference to be drawn from the evidence as it stands is that, as said earlier, the appellant was unable, or simply unwilling, to obtain extinguishment. Certainly, it does not suggest that it made any attempt to follow up the request for consent made more than a year ago to Mr and Mrs Le Serve. 26 The final matter to which reference needs to be made is the application by the appellant for leave to adduce fresh evidence on the appeal which would follow if leave were granted. That evidence is to the effect that the right of way was in fact extinguished on 19 February 2009. I do not consider that the existence of this evidence is a reason to grant leave to appeal and leave to adduce the evidence as fresh evidence on the appeal. 27 Section 75A(8) of the Supreme Court Act 1970 provides that where an appeal "is from a judgment after a trial or hearing on the merits, the Court shall not receive further evidence except on special grounds". This rule does not however apply to a case such as the present where evidence is sought to be led as to an event occurring after the date of judgment: Section 75A(9). In such a case the Court has a general discretion in relation to the admission of the evidence (Doherty v Liverpool District Hospital (1991) 22 NSWLR 284 at 294D). 28 Ordinarily an assessment of damages is a "once and for all" exercise. There are strong policy considerations favouring finality of litigation (see recently in another context D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1) which militate against fresh evidence being allowed which contradicts the basis upon which damages have been assessed. Decisions of this Court show that to obtain leave to adduce fresh evidence, it is not enough to say that evidence of a subsequent event would lead to a different assessment if damages were reassessed (see Doherty v Liverpool District Council and also Janet M Gilchrist & Ors v The Estate of the Late Sara Alexander Taylor [2004] NSWCA 476). 29 In Doherty, evidence was sought to be led on appeal of the death of the plaintiff a little over three months after the completion of proceedings at first instance in which a jury awarded him damages for personal injury. The Court of Appeal considered that the jury must have calculated his damages upon the basis that he had a substantial life expectancy (at 290B). Gleeson CJ (with whom Meagher JA and Handley JA agreed) expressed his reasons for declining to admit the evidence as follows: "In the present case the principle in favour of the finality of litigation is relevant, but not as weighty as it might be in other circumstances. After all, it was the plaintiff himself who appealed and who called in question the amount of the judgment, albeit in respects unrelated to the assessment of damages by the jury. What appears to me to be of more importance is the nature of the action, involving as it did the awarding once [and] for all of a lump sum based upon the facts known at the date of the trial, coupled with the circumstance that the relevant event which occurred following the trial was the realisation of a specific contingency (the untimely death of the plaintiff who was already in middle age) which the jury were specifically instructed to allow for and in respect of which they were told to make a discount from their assessment of damages" (at 296G-297A). 30 In the present case, the principle of finality of litigation is in my view a significant factor to be taken into account. It is not lessened in its importance in this case for any reasons analogous to those given by Gleeson CJ in Doherty. Indeed in my view it is heightened in this case by the unexplained time taken by the appellant to obtain the extinguishment of the easement (see [25(e)] above). Although the present case does not involve a claim for damages for personal injuries, the assessment undertaken by McLaughlin AsJ was a once and for all process, as was the case in Doherty. Whilst it cannot be said that the specific contingent event which has now occurred was taken into account at first instance, evidence was, as indicated above, sought to be led on that topic. I do not consider that it assists the appellant on its application to lead fresh evidence of the occurrence of the event to point to the fact that evidence which may have been relevant to the contingency occurring was rejected at first instance. Whether leave should be granted to appeal in relation to that rejection of evidence at first instance needs to be considered on its merits, which I have done earlier. What is relevant for the purpose of consideration of the admission of the fresh evidence on appeal is that the parties were alive at first instance to the issue and that it was sought to be agitated before the primary judge. 31 Taking these factors into account, my view is that the circumstances would not warrant the Court exercising its discretion to admit evidence of the extinguishment of the easement as fresh evidence if an appeal were on foot. It follows that I do not consider the application to admit the evidence to be a reason for granting leave to appeal. 32 I propose the following orders:

(b) The appellant's Notice of Motion filed on 6 May 2009 be dismissed.

(c) The appellant's application for leave to appeal be dismissed.

(d) The appellant pay the respondents' costs of the purported appeal, the Notice of Motion and of the application for leave to appeal.

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.