Meriton Apartments Pty Limited v The Owners of Strata Plan No. 72381 - [2016] NSWSC 819 - NSWSC 2015 case summary — Zoe

NSWNSWSC

Meriton Apartments Pty Limited v The Owners of Strata Plan No. 72381

[2016] NSWSC 819

Supreme Court of NSW|2015-03-16|Before: Slattery J, Community Association DP

View original source

At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2015-03-16

Before

Slattery J, Community Association DP

Source

Original judgment source is linked above.

Judgment (19 paragraphs)

[1]

Background to this Second Judgment

There are issues outstanding and requiring the Court's determination both on Apartments' claim under the Caretaker Agreement and on Mid Rise's cross-claim for Apartments' alleged breach of fiduciary duty as a promoter. The parties also seek orders in relation to other aspects of the Court's judgment.
As to the issues on Apartments' claim under the Caretaker Agreement, in the principal judgment the Court found that Mid Rise and Apartments were bound by the full terms of the Caretaker Agreement as approved at Mid Rise's 11 October General Meeting. Mid Rise's allegations of breach of that agreement failed, except to a very limited extent which would not warrant Mid Rise terminating the agreement either under clause 5.3 of the Caretaker Agreement or at common law. But the Court found in the principal judgment that were there available grounds to terminate, that with respect to breaches concerning Mid Rise alone, that Mid Rise could have terminated the Caretaker Agreement without the need for the concurrence of Low Rise or Properties.
But the Court has also found in the principal judgment that by purporting to terminate the Caretaker Agreement in July 2012 that Mid Rise repudiated that agreement. Apartments sought specific performance of the Caretaker Agreement and continued to insist on its performance. But in the principal judgment the Court found that such performance was not possible without Mid Rise's co-operation which has since not been forthcoming. In the principal judgment the Court did not order specific performance of the Caretaker Agreement but held that Apartments is now limited to a claim for damages for loss of its bargain for the approximate 19 month period between July 2012 and the expiry of the term of the agreement in February 2014.
In the principal judgment the Court reserved for further consideration the assessment of any damages to which Apartments was entitled for the loss of its bargain by reason of Mid Rise's repudiation of the Caretaker Agreement in July 2012. In the principal judgment the Court gave the parties an opportunity to file and speak to further submissions on this issue but left open the question of whether or not Apartments could now seek damages for the loss of its bargain due to Mid Rise's repudiation.

[2]

The Course of the Expert Evidence on the Profitability of the Caretaker Agreement

The ultimate state of the expert evidence as to Apartments' profits under the Caretaker Agreement was not very satisfactory. But as a preliminary matter it is useful to state how the expert evidence emerged, as it is relevant to how the Court should determine the issues on this state of the evidence.
To support its cross-claim case at trial, Mid Rise first sought information about Apartments' profit on the Caretaker Agreement shortly before the hearing that was scheduled for October 2013. The resulting expert evidence that was filed in relation to the profitability of the Caretaker Agreement was governed by pre-trial directions, Rein J made to ensure that the matter was ready for hearing. The parties appeared before Rein J on 19 July 2013, approximately 3 months before the trial, on an application for review of a June 2013 decision of the Registrar in Equity disallowing Mid Rise's discovery application: Meriton Apartments Pty Ltd v Owners of the Strata Plan No. 72381 [2013] NSWSC 1037.
Mid Rise's discovery application was made to establish before trial what profits Apartments had earned as caretaker. Mid Rise's application sought to have Apartments detail the revenue and expenses that it had both received and incurred under the Caretaker Agreement since 2004. Rein J acknowledged (at [8]) this would "not be a simple task", because it would include not only direct costs paid out to sub-contractors but the cost of employees that Apartments employed full-time or part-time in World Tower and may include office overheads. The Registrar ordered limited discovery in Mid Rise's favour.
Apartments complained on the review before Rein J about the result and about the Registrar's reasons for decision. Although Rein J also acknowledged at [14] there had been no order for a separate hearing on liability and the taking of accounts, his Honour accepted that it was not in issue that the profitability of the Caretaker Agreement for Apartments was relevant, not only to the issue of the quantum of profits but also to the question of breach of fiduciary duty: at [14].
Rein J was skeptical about a timetable Mid Rise was proposing for evidence, relevant to an account of profits, a timetable that seemed to Rein J to be "at best highly optimistic and probably unrealistic": at [14]. Rein J decided that "the best course" would be for Apartments to put on detailed evidence from its accountant as to how much profit Apartments had made on the Caretaker Agreement: at [15]. After detailing how that affidavit evidence should be presented, his Honour concluded by saying the following (at [18]): "In my view this approach is one which has the most prospect of enabling the October hearing date to be maintained, although I accept that there may still be difficulty, and of placing the parties in a position to deal with the question of profit more speedily and cost effectively than if the defendant's expert was forced to trawl through extensive documents with no guidance as to Meriton's records and cost accounting. The approach which I have indicated does not preclude Mid Rise from seeking documents once it has had access to all of the material referred to by Meriton's accountant."
His Honour took the practical course of putting the parties in the best position that they could to efficiently advance the objective of a hearing of all issues if it were achievable. Rein J made orders requiring Apartments to adduce evidence of its profit under the Caretaker Agreement.
Justice Rein's order to Apartments was in the following terms: "Serve an affidavit on or before 30 August 2013 prepared by the First Plaintiff's in house accountant setting forth the amount of profit earned by the First Plaintiff under the Caretaker Agreement for the period 4 February 2004 to 30 June 2013, including supporting calculations, reasoning and documentation. The affidavit should also specifically indicate the expenses referable to the services performed under the Caretaker Agreement for the [Defendant], and should separate the direct expenses from fixed overheads".
In conformity with his Honour's orders Apartments served an affidavit of Bruce James Rayner of 30 August 2013 attempting to set out Apartments' calculation of its profit under the Caretaker Agreement. Pursuant to further Court orders Mid Rise served an expert report in reply from Michelle Jones dated 23 September 2013, criticising Mr Rayner's methodology. Finally, Apartments served an expert report of Mr Alex Bell of 4 October 2013 in response to Ms Jones' evidence, seeking to support Mr Rayner's profit calculations. The Court admitted Mr Bell's report over Mid Rise's objections. These experts were all cross-examined at the hearing.

[4]

Should Apartments' loss of profits claim be considered?

In its written and oral post judgment submissions, Apartments initially contended that the issue of what profit Apartments had foregone due to Mid Rise's repudiation on 13 July 2012 should be referred out to a referee. And Apartments nominated a very experienced Senior Counsel as referee for that purpose, Mr P.R. Callaghan SC.
But in the oral post judgment submissions on 26 May 2015 the Court raised with Mr Rudge SC whether a reference out at Apartments' request would now be fair in all the circumstances. The Court indicated that it was disinclined to allow reference out because Apartments had elected in the course of the main hearing to adduce evidence from and engage in cross-examination of all the accounting experts who put on evidence after inviting the Court to consider all the damages issues in the one hearing.
Apartments was taking an important strategic decision in urging the Court to this course. On Mid Rise's cross-claim alleging material non-disclosure in breach of fiduciary duty, Apartments wanted to confine Mid Rise to the existing state of the expert evidence. It was logical in pursuit of this objective that Apartments would urge upon the Court to have a single hearing for all the issues, including damages. The Court ultimately acceded to the course of allowing the expert accounting evidence to be called, partly because of Apartments' submissions, partly because of the overlap between some witnesses on liability and damages, and partly because Civil Procedure Act, s 56 compelled the conclusion in that the Court should not invite multiple hearings in a matter where the facts in issue went back to 2004.
Once the Court had embarked on this course and held Mid Rise to the then state of the evidence on its cross-claim, it would have been unfair, in my view, then to allow Apartments to have a second hearing on its principal claim for damages for breach of contract.
The issue was addressed in oral submissions at the end of the main hearing on 15 October 2013, although the transcript does not fully record the discussion at the end of that last day hearing, as it was only procedural discussion. The question then being discussed was whether there should be a separate hearing on the cross-claim for an account of profits. The Court agrees that the file note of Doyle Edwards Anderson on this issue which was tendered is accurate. It will be marked as an Exhibit in the proceedings (Exhibit 9). It records that the Court then said "Okay put on submissions about that issue and we will see what happens". The Court had not foreclosed the issue of a separate hearing on an account of profits at that stage. Whether there should be a separate hearing for an account of profits is no longer in issue, because of the findings the Court made in the principal judgment and reaffirmed in this judgment, that an account of profits is not one of the remedies available to Mid Rise.
The Court pointed out to the parties on 26 May 2015 that their written submissions had not really analysed the expert and other evidence underlying the calculation of Apartments' claim for loss of profit for the period between 13 July 2012 and 4 February 2014 (which for convenience in these reasons is also referred to as "the repudiation period). So that the Court could potentially deal with this issue it made directions for Apartments and Mid Rise to put on submissions on this subject. They did so in June 2015.
When those submissions went on, Mid Rise took the preliminary point that Apartments had not made a claim for damages for breach of contract in its Amended Statement of Claim but had only made a claim in debt for remuneration under the Caretaker Agreement for the period in question. It is that issue to which the Court now turns.
Mid Rise submits that Meriton has not made a claim for loss of profit for breach of the Caretaker Agreement. Mid Rise submits that Meriton has merely claimed the remuneration payable under the Caretaker Agreement as a debt, and was entitled to that fee in its entirety.
Mid Rise is certainly correct to say that the primary way that Apartments put its case was to seek the whole of its Caretaker Agreement remuneration for the repudiation period. But in my view, this claim is available on Apartments' pleadings. Its Amended Statement of Claim in prayer for relief 11 claimed "damages for breach of contract". This was in turn supported by pleading in the Amended Statement of Claim at [16] that the caretaker "will suffer loss or damage" consequent upon Mid Rise purporting to terminate the Caretaker Agreement on 13 July 2012: Amended Statement of Claim at [12], [13] and [14]. Apartments' particulars of loss and damage were certainly couched to reflect the principal way it had put its case to recover its share of the remuneration for the repudiation period. But that should be seen in context of the Statement of Claim at [15]: that Apartments had "affirmed the Caretaker Agreement" on 17 July 2012. In my view, this pleading allows this claim to be argued and to be propounded in the alternative to the principal claim which the Court has rejected.

[5]

Overview of the Expert Evidence

As Rein J's orders envisaged, Mr Rayner's affidavit of 30 August 2013 addressed the profitability of the Caretaker Agreement between the period 4 February 2004 and 30 June 2013. This partly overlapped with the repudiation period which ran from 13 July 2012 to 4 February 2014. But it overlapped at a point where there was slightly less contention about the expert evidence. Mid Rise mounted a heavy attack on the quality of Mr Rayner's evidence. Part of that attack was based on a lack of documentation available to Mr Rayner to undertake calculations, that he had more documentation available to him for the period July 2012 to June 2013 than he had for the earlier years. Both Mr Rayner and the Operations Manager for Apartments, Mr Tony Paskell explained that Apartments destroyed its documents after seven years. This is why there were fewer documents available to Mr Rayner for the earlier part of the period for his analysis.
The parties in their final submissions in June 2015 on loss of profits for the repudiation period focused upon the evidence in relation to that period. The wider issues joined between Mr Rayner, the Chief Financial Officer of the Meriton Group, called on behalf of Apartments and Ms Jones, the accounting expert called on behalf of Mid Rise, and Apartments' forensic accounting expert, Mr Alex Bell need only to be analysed to the extent they bear upon the assessment of damages during the repudiation period. And the parties covered this in their June 2015 submissions. But a short overview of the wider differences between these experts is useful.
Mr Rayner calculated that Apartments had received revenue in an amount of $3,576,175.85 excluding GST under the Caretaker Agreement between July 2006 and June 2013. He reported for this period because of a lack of documents before the 2007 financial year. He calculated that in his opinion Apartments had made a profit of $623,697.64 under the Caretaker Agreement during that period. He calculated there were five types of expenses incurred by Apartments pursuant to the Caretaker Agreement: wages, security services, cleaning services, rent and overheads. His evidence was that Apartments had paid total expenses in the amount of $2,952,478.21 under the Caretaker Agreement during July 2006 to June 2013. The difference between these revenue and expenses figures for the period was Apartments' profit of $623,697.64. Although invoices during the period seeking a greater sum had been issued, calculation was done on a cash received basis.
His affidavit then broke down his calculations and each of the categories for wages, security services, cleaning services, rent and overheads. The major expenses were cleaning, security and direct staff costs. Mr Rayner provided additional evidence about some of these. He included in overheads insurance, stationery, plant and equipment depreciation and administration costs in relation to the Caretaker Agreement.
Ms Michelle Jones, a chartered accountant with Gower Jones & Co, was asked to report on whether the expenses identified by Mr Rayner as attributable to Apartments could be validly claimed or not and whether the methodology he had adopted in calculating expenses was correct and what further information was required. Her report indicated that Mr Rayner had allocated costs to the Caretaker Agreement in respect of Mid Rise at a high level, which made it difficult for her to undertake independent verification of those costs. She concluded there was inadequate reasoning and supporting documentation to enable her to establish and verify whether: Apartments had actually incurred the costs that Mr Rayner attributed to the Caretaker Agreement, so as to show that Apartments was the entity within the Meriton Group that had been invoiced for the costs; that costs incurred by another company within the Meriton Group have been reallocated to Apartments so as to properly conclude that Apartments incurred that cost which Mr Rayner had attributed to the Caretaker Agreement for Mid Rise; and the costs Mr Rayner attributes to the Caretaker Agreement for Mid Rise are costs actually incurred by Apartments in respect of that agreement.
Ms Jones found difficulties in Mr Rayner's methodology and evidence in respect of each of the five categories of expense that he had claimed. With respect to wages, she found that gross weekly wages for 2013 had been extrapolated back to the 2007 - 2012 years, and that the calculation used base hours which were inconsistent with the Caretaker Agreement and on-costs were added when gross wages should have included such on-costs. In relation to security services, she found that generally the documents annexed to Mr Rayner's affidavit supported the security costs Mr Rayner attributed to the Caretaker Agreement and that they had been incurred but that they were anomalous in the 2013 financial year. But I interpolate that anomaly is not entirely surprising because that was the year of the termination. She found that Mr Rayner's cleaning costs and expenses, supported by the documents and annexed to Mr Rayner's affidavit, generally supported the cleaning costs attributed by him to the Caretaker Agreement, although the precise apportionment of those costs between Mid Rise and Low Rise she thought was questionable. Ms Jones was not satisfied that adequate documentation had been provided for the rental costs Mr Rayner attributed to the Caretaker Agreement or that it was a legally valid expense under the agreement. Ms Jones did not question Mr Rayner's assumption that as an accountant it was usual practice to include direct costs and overheads in the determination of net profit. But her criticism of his overhead allowance methodology was that it assumed the proportion of group overheads to group turnover was an accurate reflection of the overheads incurred under the Caretaker Agreement, which she thought was a questionable assumption.
Finally, Mr Bell's report generally supported Mr Rayner's position on each of the five categories of expenses. He did not consider Mr Rayner's approach with respect to wages to be inappropriate but merely a practical response to the information he had available. He supported Mr Rayner's work with respect to cleaning costs and rent. On overheads he thought Ms Jones was correct: that it would be preferable to use actual respective overheads incurred during each financial year but that otherwise Mr Rayner's overheads methodology was not inappropriate and his analysis of overheads had a reasonable basis.
The independent experts and Mr Rayner were all cross-examined. The Court found them to be credible (although Mr Rayner was not independent) and to be giving genuine opinions within their field of expertise. Their work and the parties' submissions assist in quantifying Apartments' claim for the loss of profits during the repudiation period.

[6]

Is Apartments' loss of profits claim made out?

Apartments calculated and claimed its loss of profits for the repudiation period inclusive of GST in the amount of $371,588.21 and exclusive of GST in the sum of $287,884.36. Mid Rise submitted that if the calculation was to be done that it should be exclusive of GST and should come to no more than $271,175.95. The experts on both sides accepted that the appropriate methodology was to ascertain the correct amount of remuneration foregone during the repudiation period and then deduct wages, security, cleaning and overhead expenses. There was an issue between them as to whether rent should be deducted. These issues are now dealt with in this section.
Should the calculations be done inclusive or exclusive of GST? Mid Rise persuasively submits that the calculations should be done exclusive of GST. The relevant principle is that GST is not payable on a damages award made by a Court in circumstances where the claimant is eligible to receive an input tax credit in respect of its expenses: Gagner Pty Ltd v Canturi Corporation Pty Ltd (2009) 236 FLR 401; [2009] NSWCA 413 at [147] - [151] (Campbell JA, Macfarlan JA and Sackville AJA agreeing).
It can be assumed that Apartments is eligible to receive an input tax credit in respect of its expenses the subject of these proceedings, given the nature of its business as disclosed in the evidence. In my view, the correct approach to the calculation is that it should be done on a GST exclusive basis.
These reasons now deal with each of the integers of the loss of profit calculation: remuneration foregone, wages, security, cleaning, rent and overheads.
Revenue foregone. The parties engaged experts, Mr James and Mr Bell to agree upon a common calculation of fees charged under the Caretaker Agreement. They agreed upon a joint calculation which became Exhibit E. The experts calculated the monthly caretaker fee for 1 July 2012 to 31 January 2013 as $54,069 and the monthly caretaker fee for 1 February 2013 to 30 June 2013 as $55,423. The appropriate starting point for calculation of lost revenue is this experts' agreement. It produces agreed remuneration for the July 2012 to January 2013 period of $378,483 and for 4 February 2013 to 4 February 2014 of $672,364.50, being a total of $1,050,847.50. From this the various expenses of wages, security, cleaning, rent and overhead should be deducted to reach the profit figure.
But Apartments wishes to include in the calculation an actual invoice issued for July 2012 and then to undertake the agreed calculation commencing on 1 August 2012. But mixing the two methodologies, in my view, is unsatisfactory and raises issues of overlap with Apartments' debt claim. I prefer Mid Rise's approach of using the experts' figure as a starting point.
The experts undertook something of a role reversal in the contest on Apartments' claim for loss of profits during the repudiation period. The expert evidence had originally been put on on all sides in relation to Mid Rise's breach of fiduciary duty claim, in which Mid Rise was alleging that Apartments was winning excessive profits on the Caretaker Agreement. But on Apartments' claim for damages for breach of contract it was far less in Mid Rise's interest to be challenging Apartments' expenses claims in a way which might conceivably increase Apartments' profit. This change in the contest somewhat reduced the force of Mid Rise's criticisms of Apartments' expert evidence.
Wages. On this issue Mid Rise agrees with Apartments' submissions that for the purposes of deducting wage and other related costs the criticisms levelled at Apartments by Mid Rise in the context of its claim for money relief arising out of the breach of fiduciary duty claim should be disregarded. Mid Rise says that it should be assumed against Apartments that its evidence about expenses is sufficient for the purposes of reducing the profit claim that it makes, even though Mid Rise submits that the evidence would be insufficient to reduce the amount of profit that Apartments would have to disgorge to Mid Rise, were Mid Rise to be successful on its claim for breach of fiduciary duty. Thus, there is no disagreement between the parties upon the correct wages figure for 19 months and four days, subject to one minor matter.
A rounding issue arises with the calculation of wage expenses. Mid Rise rounds the wages figure for 2014 to $135,000, which is the calculated amount of $131,640.21 for the 2013 financial year rounded up partly for the 2014 financial year, partly because of a slight underestimate in relation to Mr Walmsley.
But I accept Mid Rise's submission that the rounding that Apartments is proposing only takes account of possible error in Mr Rayner's calculations as compared with actual wage costs in 2014 and that a 2.5% CPI increase for the 2014 year to the wage costs for that year would be appropriate. I therefore prefer the Mid Rise base figure for calculation in that year of $138,375.
Security and Cleaning. There are minor differences between Apartments and Mid Rise with respect to these two items. But I accept Apartments' calculations as they well explain the difficulty of calculating these two categories of expense for 2013, the year of the termination. So the figures exclusive of GST for security for the 19 months and four days should be $265,090.06 and for cleaning $189,390.20.
Rent. Apartments argues that the caretaker was required under the Caretaker Agreement to operate from a caretaker's area on the premises and to maintain reception security services in the lobby area, and for that purpose, physical premises were required. These were the premises at level 10 of the World Tower building. Apartments says the same area was required to provide caretaker services to Low Rise and Properties, so that Apartments did not dispense with those premises upon the wrongful termination of the Caretaker Agreement. Apartments submits that they need not be taken into account on its profit calculation.
Mid Rise's answer to this argument is persuasive. Although Mr Rayner's calculations were to a degree arbitrary, rent was a real cost recorded in Apartments' accounts. Unless Apartments increased the charges for the reception area to the other two strata owners, Low Rise and Properties, it must have continued to bear this expense after Mid Rise ceased to use that area. In my view, this should be included as an expense.
Overheads. There can be no doubt that overheads were incurred with respect to the Caretaker Agreement. Ms Jones does not challenge this position. Most of the expense that comes within the overheads, as described by Mr Rayner, are legal requirements of Apartments' continuing operations. The only question is what percentage should be allowed. Mr Paskell says he budgeted for overheads between 5 and 10%. Apartments uses an assumption of 7.5% as the middle of Mr Paskell's range. Mid Rise contends for 10%, because of the uncertainties in Apartments' evidence.
But the Court can act on Mr Paskell's evidence and, in my view, the Apartments' figure of 7.5% of total remuneration is appropriate. Here that is 7.5% of $1,050,847.50, which is $78,813.56.
That then completes the ingredients of the calculation which can be more easily represented in the tabular form, as it is below. Item Calculation Amount (ex GST) Remuneration July 2012 to January 2013 Per expert evidence in Exhibit E - 7 months @ $54,069 p.m. $378,483.00 Remuneration February 2013 to 4 February 2014 Per expert evidence in Exhibit E - 12 months and 4 days @ $55,423 p.m. $665,076 p.a. $672,364.50 Less wages 19 months + 4 days @ $138,375 p.a. ($220,610.19) Less security 19 months + 4 days as per [51] ($265,090.06) Less cleaning 19 months + 4 days as per [51] ($189,390.20) Less rent 19 months + 4 days @ $9,358 p.a. ($14,441.10) Less overhead 7.5% of remuneration ($78,813.56) profit $282,502.39

[11]

Non-disclosure - profit on the Caretaker Agreement.

The starting point for consideration of material disclosure of profit is the Court's reasoning in the principal judgement at [447] - [452]. The appropriate test for material non- disclosure is that set out in Australian Breeders Co-operative Society Ltd v Jones (1997) 150 ALR 488 ("Jones"), as the Court discussed in the principal judgment at [450]. If the profit being realised by the fiduciary is within reasonable limits and is not such as to cast doubt on the viability of the venture, there would have been no undisclosed material fact and no inconsistency with the principal's implicit understanding that the fiduciary had no pre-existing information detrimental to the venture.
Although the onus of proof of disclosure of material facts clearly lies upon Apartments, it is still necessary for Mid Rise to show that there was something "material", which was even a candidate for disclosure to the beneficiary. To that extent Mid Rise needs at least to raise a case that the profit being realised was not within reasonable limits.
In my view, Mid Rise has failed to do that in this case. Apartments' submission is persuasive that any purchaser should have assumed that Apartments as caretaker was going to make a profit under the Caretaker Agreement. Mid Rise's contrary position, in my view, is not sustainable. Mid Rise says that whatever the profit margin was, whether it was only one dollar or 20% or 400%, it had to be disclosed. Mid Rise's submission is that Apartments had to calculate its exact profit and disclose it, whatever it might have been, together with the Caretaker Agreement.
But in my view, that is not what cases such as Jones and Fitzwood Pty Limited v Unique Goal Pty Ltd (in liquidation) (2001) 188 ALR 566 demand of promoters. Nor, in my view, is Community Association DP No 270180 v Arrow Asset Management Pty Ltd [2007] NSWSC 527 authority for the proposition that even one dollar's profit must be disclosed in all circumstances by the fiduciary to ensure that informed and voluntary consent by the beneficiary has occurred
The time for relevant disclosure is when the Caretaker Agreement is entered into; here being October 2004. Apartments did not know exactly what it was going to earn under the agreement at that stage. But I entirely accept Mr Paskell's evidence as to his profit calculations and their purpose at this time. He says, and I accept, he and his colleagues took the figures that were being paid for similar services in other buildings and included something for overheads for the support provided by central management of between 5 and 10% and then a further 20% for profit and risk. One of his team members then calculated the annual levies after he had done these figures. His perception at the time was, and I accept, that he intended to achieve a gross margin of 20% which reflected what he thought was "pretty standard within the industry".
In my view, it does not greatly matter what happened thereafter. Mid Rise points to higher margins having been actually earned and that Mr Ong has done investigations of other comparable market rates since 2004. But in my view, what is missing in Mid Rise's case is something to show that as at October 2004 the profit that Apartments knew it was going to earn on the Caretaker Agreement, once made, was not to be within reasonable limits.
In my view, Mid Rise has failed to establish this. The question of whether or not Mid Rise had an independent board does not arise and the Court need not consider the other issues subsequent to the question of breach of fiduciary duty.

[14]

The existing injunctive relief.

In light of the Court's reasons in the principal judgment Mid Rise applies: to discharge certain injunctive relief initially granted in February 2012; and to make permanent certain other injunctive relief granted in Mid Rise's favour in April 2013. Apartments takes issue with some of the changes that are sought to these orders.
On 23 February 2012 the Court made orders extending injunctions previously granted on 14 December 2011, 3 February 2012 and 17 February 2012. This injunctive relief related to the issue of security access cards. Order 2 of the orders made that day appears to be the order in issue. Order 1 merely records an undertaking which Mid Rise may wish to withdraw. Order 2 as made was that "other than cases of emergency, Mid Rise would provide not less than two days written notice to Apartments of any proposed work affecting the services, facilities, machinery, equipment or other thing is defined as the "World Tower Shared Facilities" in the Strata Management Statement that is Exhibit TPG - 2 to the affidavit of Tony Grant Paskell sworn 13 December 2011".
Mid Rise submits that this injunctive relief should now be discharged. It submits that in light of the Court's findings in the principal judgment and Meriton's abandonment of any case under the Strata Management Statement (principal judgment at [s]) there is no legal basis for this injunction to remain in force. In its final submissions, Apartments appears to address itself to the injunction Windeyer AJ granted on 3 April 2013 and does not appear to oppose the course Mid Rise suggests with respect to these orders.
In my view, the 23 February 2012 injunctive relief should now be discharged. In the Court's principal judgment (at [361]) the Court found that the existing injunctions could be dissolved on the basis that the term of the Caretaker Agreement had expired. The terms of the Strata Management Statement that exists with respect to the shared facilities in this building should be sufficient to regulate each of the Low Rise, Mid Rise and Properties access to the World Tower shared facilities. Moreover, there is no basis under the expired Caretaker Agreement to impose such continuing obligations on Mid Rise.
Mid Rise also seeks to make permanent the injunction Windeyer AJ granted on 3 April 2013. That order was to the effect that until the determination of the proceedings that Apartments "be restrained from interfering or tampering with, performing or participating in the performance of any work upon, doing any act that would affect or be in any way involved with any common property owned by the defendant (Mid Rise) in the building known as World Tower or procuring anyone else to engage in such conduct, without giving 48 hours prior written notice to the defendant (Mid Rise) of the work or act proposed to be done."
Apartments opposes making permanent the 3 April 2013 injunction. Apartments says that it has a continuing need and a continuing right of access to the common property for the limited purposes of dealing with the shared services, which affect the high-rise area of the building, for whom Apartments continues to be the caretaker and Low Rise. Apartments says that the correct response is to fashion an order that operates mutually, requiring each party to give two days' notice of access to all work on shared services.
Apartments then provided a form of proposed revised order. The substance of the revised order was to grant a restraint on each of Mid Rise and Apartments in carrying out work either affecting the World Tower shared facilities or the common property of Mid Rise, without giving two business days' notice in writing to the other party, or in case of emergency giving such notice as the nature of emergency permits.
In my view, the injunction should not be made permanent. The Caretaker Agreement has expired. Apartments has no contractual basis to attempt to enter Mid Rise's common property to carry out the work suggested by the proposed order. There was no suggestion made at the hearing on 26 May 2015, after the expiry of the Caretaker Agreement that there was any continuing threat by Apartments to enter the common property. The disputes and physical confrontations that led to this litigation seem now to be well in the past. Mr Chen, who was the author of much of the friction between Mid Rise and Apartments is no longer on Mid Rise's executive.
But most importantly it is desirable for these parties to regulate their mutual access to shared facilities in the World Tower building by reference to their obligations as defined in the "World Tower Shared Facilities" in the Strata Management Statement for the building. Having all the obligations with respect to shared facilities in the one place, to which the parties, all lot owners, and bodies corporate in the building have equal access, through the process of registration envisaged by The Freehold Act part 2B, improves communication, safety and security within the building. And if necessary the Statement can be modified as required under the mechanism the Freehold Act provides under s28U(1)(b): and see Italian Forum Ltd v Owners Strata Plan 60919 [2012] NSWSC 895 [58]-[60] per White J. It is undesirable to have side obligations created in orders of this character outside the Strata Management Statement so strictly necessary.
The orders made in these proceedings will reflect this decision, to discharge the orders and undertakings made on 23 February 2012 and 3 April 2013.

[15]

The Court's findings based on Exhibit E.

Apartments submits that the Court held in the principal judgment (at [206]) consistently with Apartments submission that the accounts between the parties were properly treated as "a running account" and therefore there was no limitation defence available to Mid Rise. Apartments says that in the language which the experts adopted in Exhibit E they referred the circumstances where the limitation issue could be ignored as Scenario A and that the experts used the word "disregarded" to describe Scenario B, a case in which a limitation defence did apply, so that no account could be taken of payments before 2006.
Apartments submits that the court having held that the pre-2006 payments were relevant and could be taken into account because they were contributed to a single balance that arose within the limitation period, the correct scenario is therefore Scenario A. Apartments says that the court has been somewhat misled by the experts' choice of the words "disregarded". And Apartments seeks to amend paragraph [215] of the reasons so that Scenario A, rather Scenario B is referred to and that the amount that Mid Rise is determined to have underpaid apartments is in accordance with Scenario A, which is $83,316 plus interest.
The structure of these various scenarios in Exhibit E is explained in the principal judgment at [212] to [216].
Mid Rise submits that the change which Apartments seeks to the principal judgment (at [205]) does not fall within the slip rule. Mid Rise points to established authority that the slip rule only apply where a mistake is accidental not where it is a matter about which a real difference of opinion might exist: Storey & Keers Pty Limited v Johnstone (1987) 9 NSWLR 446, 453 (per McHugh J)
And Mid Rise does not accept Apartments' characterization of the Court's decision on this issue. Mid Rise submits that the principal judgment at [215] is intended to express a decision that underpayments before May 2006 should be disregarded and in light of that conclusion it was appropriate for the Court to select Scenario B rather than Scenario A as Apartments now contends.
Mid Rise's submissions on this issue are persuasive. The issue is controversial. It does not in my view fall within the slip rule. The Court has reached a conclusion that Mid Rise owes Apartments $23,209 plus interest. In substance Apartments is attempting to construe the Court's reasons to produce a calculation based on Scenario A of Exhibit E rather than Scenario B, which the Court has expressly selected to reach the figure owed. If Apartments perceives error or contradiction in the court's reasoning on this issue, then it is a matter to be raised in the Court of Appeal and not for the application of the slip rule.
Mid Rise has provided its own calculation of the interest outcome if the sum of $23,209 on Scenario B is not altered in the judgment as the amount that the Court has found is due to Apartments from it. Apartments has not taken issue with the calculations, which taking into account all the payments made shows that Apartments owes Mid Rise $584. But it is unclear whether it fully agrees with this. The calculation may need to be updated in any event.
But in final post judgment submissions on 26 May 2015, Mr Rudge SC indicated that Apartments took the view that if Scenario B were the one which the Court continued to adopt that it was probably not worth the parties' time to dispute Mid Rise's interest calculations. He foreshadowed that the position Apartments would take is rather than arguing about the final interest calculation, that both parties should accept that no judgment should be given either way in respect of the debt due for remuneration under the Caretaker Agreement. In light of the Court's findings this seems a sensible course. But Mid Rise has not yet had an opportunity to respond to Mr Rudge SC's submissions. That should then be the subject of consultation before the matter comes back to Court.
The better course would appear to be to require the parties to consult as to whether in light of the Court's findings in this judgment they agree that neither party should have judgment on this issue.

[18]

Conclusions and orders

The Court has found that Apartments has made out its claim for loss of profits for Mid Rise's repudiation of the Caretaker Agreement. But Mid Rise has failed on its claim for breach of fiduciary duty against Apartments as a promoter.
Both parties have had some success on the issues decided in this second judgment. Both parties have indicated that they wish to be heard on the issue of costs. They should each be given the opportunity to consider these reasons and then put submissions on the question of costs, which is now the only issue outstanding, apart from minor questions concerning the calculation of interest.
In the result therefore the Court's declarations and orders will be as follows: 1. Declare that on about 11 October 2004 the parties validly entered into a Caretaker Agreement (as that phrase is used in the Strata Schemes Management Act) in the terms of an earlier agreement dated 4 February 2004, and that the terms of that agreement thereupon became binding on the parties. 2. Declare that the Defendant's notice dated 13 July 2012 purporting to terminate the Caretaker Agreement pursuant to clause 5.3(a) of that agreement was of no effect. 3. Declare that by creating and serving the notice dated 13 July 2012 on the first Plaintiff and by purporting to terminate the Caretaker Agreement, the Defendant repudiated the Caretaker Agreement. 4. Declare that in about July 2012 the Caretaker Agreement was terminated for breach, by reason of the Defendant's repudiation of the agreement and the Plaintiff's inability to continue to provide services thereunder without the cooperation of the Defendant. 5. Discharge order 2 of the orders made by the Court on 23 February 2012 and discharge order 1 of the orders made on 3 April 2013. 6. Grant leave to the defendant to withdraw the undertaking it gave, which is recorded in paragraph 1 of the orders made on 23 February 2012. 7. Direct the parties to exchange submissions in relation to costs and the final calculation of interest and forward copies to my Associate by Friday 22 July 2016 at 4.00pm. 8. Direct the parties to exchange submissions in reply in relation to costs and any final calculation of interest and forward copies to my Associate by Friday 5 August 2016 at 4.00pm. 9. Direct the parties to consult as to whether, in light of the Court's conclusion that the (Exhibit E) Scenario B amount of $23,209 should stand, and in light of the defendant's calculation of interest up on moneys paid under the Caretaker Agreement, neither party now seeks judgment for moneys due on that account. 10. List the proceedings for any short argument on costs at 9.30am on Thursday 18 August 2016, or at such other date as the parties agree and arrange through my associate or tipstaff.