Fernando v Commonweath [2014] FCAFC 181, 231 FCR 251; Community and Public Sector Union v Telstra Corporation Limited (No 2) [2001] FCA 479, 112 FCR 324; Harvard Nominees Pty Ltd v Tiller [2022] FCA 105, 403 ALR 498; Barfly's Nominees Pty Ltd v Kliger Partners (a firm) [2020] VSC 277; Spotlight Pty Ltd v NCON Australia Limited [2012] VSCA 232, 46 VR 1; Ezra Abrahams Pty Ltd v Milburn [2017] VSCA 355; Goldsmith v Sandilands [2002] HCA 31, 190 ALR 370, referred to.

Judgment Number: [2022] TASSC 66

1. This application concerns a dispute as to the re-assessment of damages payable by the defendant to the plaintiff. The re-assessment has been ordered as a result of a successful appeal to the Full Court. The original assessment of damages was based in part on predictions as to future cashflows, and on an assumption that tax rates would not change. The plaintiff contends that, in undertaking a re-assessment, I should take into account actual cashflows to which the predictions related, and changes that have occurred in relation to tax rates, as well as admitting evidence from a new expert witness involving significant changes to the calculations of the plaintiff's losses. The defendant contends that the original calculations should be adjusted to allow for two errors identified by the Full Court, without taking into account new developments in relation to cashflows and tax rates, and without otherwise revising the calculations.

1. The parties are both land development companies. In 2004 they owned adjacent parcels of land at Kings Meadows on the outskirts of Launceston. The plaintiff, RV Pty Ltd, undertook a large residential subdivision on its land. The defendant, Connector Park Pty Ltd, undertook a commercial and light industrial subdivision on its adjoining land. The two companies entered into a contract in 2004. The contract obliged the defendant to complete the construction of a roadway through its land to the plaintiff's land. In breach of that contract, the defendant failed to construct the roadway by a date required by the contract. The plaintiff sued for specific performance and damages. During 2008 Tennent J made an order for specific performance requiring the construction of the roadway, and the defendant completed its construction.
2. On 5 April 2017 I assessed the plaintiff's damages in the sum of $2,520,000. I ordered that judgment be entered for the plaintiff against the defendant for that sum, and for the defendant against the plaintiff for $440,000 on a counterclaim: RV Pty Ltd v Connector Park Pty Ltd (No 2) [2017] TASSC 22. I assessed the plaintiff's damages on the basis that it had suffered losses as a result of delays in the development of its subdivision resulting from the delay in the construction of the roadway. I accepted the evidence of an expert witness called by the plaintiff, Mr Rands, as to the calculation of losses using discounted cashflow methodology.
3. The defendant appealed, and was successful. The Full Court set aside the award of $2,520,000 and remitted the matter of assessment of damages to me for further hearing and determination: Connector Park Pty Ltd v RV Pty Ltd [2018] TASFC 13. It did so on the basis that I had made two errors in the assessment of the plaintiff's damages.
4. The Full Court concluded that there was an error in nature of "double dipping". The evidence established that, because of the delay in the development of the plaintiff's subdivision caused by the delay in the construction of the road, a decision was made to use the subdivision land as security for a loan from the Commonwealth Bank. In respect of interest incurred on that loan, Mr Rands added $288,349 to the investment return that he assessed could have been achieved if the net positive cashflow had been achieved 3½ years earlier. His calculations also took into account the fact that the plaintiff lost the opportunity to invest that net positive cashflow. The Full Court concluded, at [251]:

" ... Mr Rands should have made allowance for the outflow of funds to meet ongoing development expenses. The amount of that outflow is reasonably assessed as the amount borrowed from the Commonwealth Bank. The trial judge was in error in not making allowance for the outflow of funds and in accepting the assessment by Mr Rands which failed to take into account the outflow of funds which would have occurred to meet ongoing expenses rather than borrowing from the Commonwealth Bank."

1. The 2004 contract required the plaintiff to pay the defendant $800,000 plus GST in three instalments. The second and third instalments, totalling $440,000 inclusive of GST, were not paid. The defendant counterclaimed that sum, but made no claim for interest. As I have said, I awarded $440,000 on the counterclaim. Mr Rands did not take into account the plaintiff's liability to pay the amounts totalling $440,000 in his cashflow calculations relating to the "no breach" scenario. The Full Court held, at [262], that he should have taken those liabilities into account, and that the figures for cash available for investment should have been reduced accordingly.
2. The Full Court summarised its conclusions as follows, at [263]:

"For the reasons discussed, in his assessment of the net positive cashflow that would have been available for investment if it had been received 3½ years earlier, Mr Rands should have made the following allowances:

• The amount borrowed from the Commonwealth Bank would have been used to pay ongoing development costs and would not have been available for investment.
• The plaintiff would have been obliged to pay $440,000 to the defendant thereby reducing the amount available for investment by $440,000."

1. The Full Court's order for re-assessment was in the following terms:

"The matter of assessment of damages is remitted for further hearing and determination by the trial judge in accordance with these reasons and, in particular, in accordance with pars [243]-[266]."

1. I conducted the hearing relating to the first assessment of damages in May 2016. Mr Rands based his calculations on figures compiled by the plaintiff's finance manager, Mr Blackwood. Mr Blackwood used actual cashflow figures up to about May 2014, and predictions as to net cashflows from then until the sale of the last lots in the subdivision. He predicted that the last lots would be sold in the 2028 financial year. The last lots have now been sold, and actual cashflow figures for the period since May 2014 are now available. The plaintiff contends that I should take the actual figures into account in re-assessing its damages. It wishes to lead evidence that all lots in the subdivision have now been sold, and that all purchase money has been paid, except in relation to one lot.
2. Mr Blackwood's calculations in relation to 2014 and subsequent years were based, amongst other things, on an assumption that the plaintiff's profits would continue to be subject to a tax rate of 30%. In fact the relevant tax rate has been reduced three times, down to 25% for the year ending 30 June 2022. The plaintiff contends that the reductions in the relevant tax rate should be taken into account in the re-assessment of damages.
3. Mr Rands took income tax into account in two ways. First, in calculating after tax cashflows, he took into account the payments that the plaintiff made, or would have been liable to make, in respect of income tax. Secondly, after calculating figures representing the plaintiff's net losses, he "grossed up" those figures to allow for the fact that the award of damages would be subject to income tax. Any reduction in tax rates would obviously have an impact at both stages of any revised calculations.
4. Mr Blackwood has updated his calculations to allow for actual cashflows. The plaintiff has engaged another accountant, Joseph Box, to give expert evidence. He has provided two reports based on Mr Blackwood's new figures and the actual tax rates.
5. The defendant contends that the actual cashflow figures and actual tax rates should not be taken into account in the re-assessment. Essentially it contends that the calculations presented at the hearing in April 2016 should be adjusted only to eliminate the double dipping identified by the Full Court and to allow for the plaintiff's liabilities to pay the instalments totalling $440,000. In other words it contends that I should simply replace Mr Rands' calculations from the original hearing with the calculations that he would have undertaken before that hearing if he had made allowances for the two matters identified by the Full Court at [263].
6. For the purpose of establishing the scope of the re-assessment, the plaintiff has made an interlocutory application seeking leave to amend its particulars of damage to accord with the figures provided by Mr Blackwood and Mr Box, and for leave to adduce evidence from them and possibly others, including Mr Box's reports and Mr Blackwood's new figures. That application is opposed.

1. The Full Court did not order a hearing de novo of the assessment of damages. Its order provided for "further hearing and determination". The assessment of damages was based on expert evidence from Mr Rands. Re-assessment in accordance with the Full Court's reasons, as ordered by the Full Court, will therefore necessarily involve additional expert evidence as to the calculation of the plaintiff's loss. The Full Court did not make any orders or give any directions as to the extent to which additional evidence was to be permitted. In particular, it said nothing as to whether or not any evidence was to be admitted as to sales and other financial transactions occurring after the original assessment of damages, or after the period ending in about May 2014 in respect of which Mr Blackwood used actual figures in his original calculations.
2. The defendant contends that in substance the Full Court ordered a resumption of the original hearing, and that the plaintiff is seeking to re-open its case to adduce evidence of events and transactions occurring after about May 2014. There are a series of cases that support that analysis.
3. In Community and Public Sector Union v Telstra Corporation Ltd (No2) [2001] FCA 479, 112 FCR 324, the Full Court of the Federal Court had allowed an appeal, set aside an order made at first instance, and remitted the matter to the primary judge, to be determined in accordance with its reasons for judgment. The primary judge, Finkelstein J, concluded at [15] that a further hearing "would be just that, namely a continuation of a trial that has already begun, though interrupted by a final order which has been set aside". At [17] he concluded that the further hearing was to be "conducted on the basis that it is a continuation of the first trial, where the parties can only mend their hand or change course in accordance with well-known rules". He followed an earlier decision of Einfeld J in Marks v GIO Australia Holdings Ltd [1999] FCA 1010.
4. The Full Court of the Federal Court took the same view in Fernando v Commonwealth [2014] FCAFC 181, 231 FCR 251. The appellant in that case had held a permanent residency visa, but that visa was cancelled and he was detained. The officer who cancelled his visa had not formed the state of mind required by the relevant legislative provision. The decision to cancel his visa was therefore quashed, and he was released from detention. He sued the Commonwealth for damages of false imprisonment. A judge awarded substantial damages to him. There was an appeal to the Full Court. The Full Court found that the primary judge had erred in one respect, and remitted the matter to him for re-assessment. When the matter came before the primary judge again, the Commonwealth argued for the first time that the appellant was entitled only to nominal damages because he could and would have been lawfully detained if he had not been falsely imprisoned. The primary judge entertained that submission and awarded nominal damages. The appellant appealed again. One of his contentions was that it had not been open to the primary judge to entertain the submission as to nominal damages. Besanko and Robertson JJ, with whom Barker J agreed, referred to the judgment of Finkelstein J in Community and Public Sector Union v Telstra Corporation Limited (No 2) (above) and concluded, at [53], that the approach taken by Finkelstein J was correct.
5. The applicable principles were considered by Jackson J in Harvard Nominees Pty Ltd v Tiller [2022] FCA 105, 403 ALR 498. The applicants in that case had contended that certain leases were voidable as a result of misleading and deceptive conduct, and that they should be awarded damages. His Honour originally dismissed their application, but an appeal to the Full Court succeeded, and the matter was remitted to him to determine what, if any, relief should be granted. His Honour reviewed the authorities. At [47] he referred to "the character of the remitter hearing as a continuation of the previous trial" and said:

"... the primary court, on remitter, cannot go outside the scope of what is remitted, or reconsider any of its previous findings that have not been disturbed by the appellate court, unless it determines in accordance with ordinary principles that it is in the interests of the administration of justice to give leave to reopen."

1. That analysis is supported by observations made by the High Court in Murphy v Overton Investments Pty Ltd [2004] HCA 3, 216 CLR 388 at [75]- [76], by observations made by Whitlam, Emmett and Hely JJ in McCarthy v McIntyre [2000] FCA 1250 at [30], and by the decision of Kenny J in Federal Commissioner of Taxation v Pratt Holdings Pty Ltd [2005] FCA 1247, 225 ALR 226 at [8].
2. Those authorities all concern orders made under s 28(1) of the Federal Court Act 1976 (Cth), but there is no reason to distinguish them. They are plainly correct and should be followed by this Court.
3. The defendant does not contend that I should absolutely prohibit the plaintiff from adducing further evidence. It clearly accepts that the plaintiff should be permitted to adduce evidence of revised calculations that take into account the Commonwealth Bank loan and the liability to pay instalments totalling $440,000 in accordance with the order of the Full Court. However it contends in substance that I should not give leave for the plaintiff to adduce evidence of new financial data and calculations based on new financial data, and should not permit the plaintiff to rely on new calculations by Mr Box using different variables from those adopted by Mr Rands.

1. In Barfly's Nominees Pty Ltd v Kliger Partners (a firm) [2020] VSC 277 at [33], Macaulay J listed a number of factors relevant to the exercise of the discretion to permit further evidence to be adduced at a remitter hearing. Apart from factors based on Victorian legislative provisions, that list included the following:

" the directions given by the Court of Appeal ... ;

• the nature of the matter which has been remitted and the manner in which the task of determining the remitted matter is to be undertaken;
• the public interest in the finality of litigation;
• fairness to all parties, including a fair opportunity to be heard and to present evidence to the Court on the issues which need to be decided, tempered by the values of timeliness, efficiency and cost effectiveness in resolving the issues in dispute;
• the extent to which the new evidence may expand the dimension of the dispute; and
• the opportunities which the applicant party has had to adduce the evidence in the past and its reasons for not having done so."

1. The plaintiff's contentions as to the discretion to re-open can be summarised as follows:
   • The effect of the Full Court's order has been to open up the issue of the proper measure of the plaintiff's loss.
   • It would be fair to both parties to permit them to adduce evidence as to the actual cashflows of the plaintiff in relation to its subdivision instead of relying upon the less precise predicted figures upon which the original assessment proceeded.
   • Confining the re-assessment to the original data, including the data as to tax rates, would be unfair and artificial.
   • The new cashflow evidence, or at least the bulk of it, was not available to the plaintiff at the time of the original assessment.
   • As a matter of principle, "where precise evidence is available, the court should have it": Biggin v Permanite [1951] 1 KB 422 at 438.
   • As a general rule, "courts should act upon the least speculative and most current admissible evidence available": Golden Eagle International Trading Pty Ltd v Zhang [2007] HCA 15, 229 CLR 498 per Gummow, Callinan and Crennan JJ at [4].
2. The defendant's contentions as to the scope of the re-opening can be summarised as follows:
   • It was not the intention of the Full Court to fully open up the issue of the assessment of the plaintiff's damages.
   • At the original assessment the plaintiff chose to rely on predictions and estimates of cashflows as from about May 2014, and chose not to rely on actual cashflow data between that time and the hearing. It should not be allowed to resile from that choice.
   • The plaintiff is seeking to put its case on a different basis by using actual cashflow data, applying a different discount rate, and calculating its loss in terms of 2017 dollars instead of 2005 dollars as was done by Mr Rands.
   • A wide re-opening would be inconsistent with the goal of finality in litigation, and would result in substantial costs and delays.
3. When a party applies to re-open its case, the overriding principle governing the exercise of the court's discretion is that it must determine "whether, taken as a whole, the justice of the case favours the grant of leave to re-open": Spotlight Pty Ltd v NCON Australia Limited [2012] VSCA 232, 46 VR 1 at [26]; Ezra Abrahams Pty Ltd v Milburn [2017] VSCA 355 at [46]. That principle was explained by Kirby J in Goldsmith v Sandilands [2002] HCA 31, 190 ALR 370 as follows, at [58]-[59]:

"[58] The guiding principle for the grant or refusal of leave to call evidence in response to the evidence of another party, where this is sought by a party, is, ultimately, what the justice of the case - including procedural fairness - requires. That principle should not become unduly entangled in precedents or procedural rules.

[59] Whilst efficiency and economy in the conduct of civil trials are important requirements of the contemporary trial process, those objectives are valid only as they contribute to just outcomes. Once the trial process is under way, rigidity should be avoided, certainly at a time before the evidence has been closed and before the decision foreshadowed or announced." (Footnote omitted.)

1. This is a case in which the trial process will again get under way. The question for me is the extent to which, taken as a whole, the justice of the case favours permitting the plaintiff to re-open.
2. Mr Blackwood completed his calculations of actual and predicted cashflows in May 2014. Mr Rands completed his report using those calculations in September 2014. Neither Mr Blackwood's figures nor those of Mr Rands were updated before the hearing in May 2016. There was evidence at that hearing to the effect that the actual sales since May 2014 had exceeded Mr Blackwood's estimates. However, without evidence as to how actual outgoings compared with predicted outgoings during the same period, there was no basis for treating the better sales figures as a factor weighing in favour of the plaintiff on the assessment of damages.
3. Stage 1 of the plaintiff's subdivision was not affected by the defendant's breach of contract. However, as a result of that breach, no lots were sold in any other stages until the 2011 financial year. At the time of the hearing it was anticipated that the last lot in the subdivision would be sold in the 2028 financial year. At the time of the hearing, the plaintiff's decision not to update its figures to take account of actual cashflows related to transactions over about two years when sales of the affected lots were expected to be spread over 18 years. I therefore see very little merit in the defendant's reliance on the plaintiff's failure to update its figures in 2016.
4. It seems likely that any recalculation of the plaintiff's damages based on actual cashflow data will make a substantial difference to the assessment. A dollar in 2022 is worth far more to the plaintiff than a dollar in 2028. It therefore seems likely that Mr Blackwood's predictions in 2014 were so conservative or pessimistic as to have resulted in a substantial underestimate of the plaintiff's damages. Subject to other factors, I think a court should more readily grant leave to re-open when the grant of leave is likely to make a substantial difference to the outcome of the proceedings rather than a small one. Subject to other factors, that is simply just.
5. Since the hearing of the appeal the plaintiff has engaged new solicitors, new counsel, and a new expert witness to replace Mr Rands. The plaintiff's original solicitor/counsel ceased to practise. Similarly, the defendant engaged new solicitors and new counsel after the trial, and has engaged a new expert witness, Ms Kaye.
6. Mr Rands discounted the estimated value of the plaintiff's investment losses to allow for the time value of money and the risk that the future cashflows would not occur as projected. He gave evidence that 22% and 30% represented the upper and lower limits of the range of appropriate discount percentages having regard to all the circumstances. He undertook calculations based on those percentages. Mr Box has opined that Mr Rands' discount rates were too high, and that an appropriate after tax discount rate would be 14%.
7. I assessed damages in 2017 on the basis that Mr Rands' calculations produced estimates of the amount required to compensate the plaintiff for its losses as at September 2014. On the basis of Mr Rands' calculations, I concluded that a payment of $2.2 million in September 2014 would have compensated the plaintiff appropriately, calculated interest on that sum to the date of judgment in accordance with Hungerfords v Walker [1989] HCA 8; (1989) 171 CLR 125, and gave judgment accordingly. Mr Box has opined that Mr Rands' calculations provided an estimate of the amount required to compensate the plaintiff as at 1 July 2004, not September 2014. If that is correct, my original assessment of damages was extremely inadequate. However at the time of the appeal to the Full Court, the plaintiff did not contend that there had been any error of the type now asserted by Mr Box. I note that the plaintiff's particulars of its claim for damages, filed on 17 April 2015, treated Mr Rands' calculations as producing estimates of appropriate compensation as at September 2014, and claimed Hungerfords v Walker interest from September 2014 to the entry of judgment, and not in respect of any earlier period.
8. In the plaintiff's proposed amended particulars, its primary claim is for $4,422,000 representing discounted losses as at 5 April 2017, plus Hungerfords v Walker interest for the period from then until judgment. That is based on a calculation by Mr Box which produced a figure of $3,349,792 in "2005 dollars", adjusted on the assumption of consumer price index increases of 2.2% per annum. In the alternative, the plaintiff is seeking to claim $2,964,521 plus interest based on Mr Rands' original calculation, with adjustments. On that basis Mr Box calculated a figure of $2,245,694 in "2005 dollars", and adjusted that figure to allow for CPI increases of 2.2% to produce a figure as at 5 April 2017.
9. If it is correct that Mr Rands estimated the amount required to compensate the plaintiff as at 1 July 2004, not September 2014, then this case has some similarity to Fernando v Commonwealth (above). That was a case in which the defendant had overlooked the availability of a very powerful argument at first instance and on appeal, but was permitted to advance that argument on remitter. If Mr Box is correct, the original assessment proceeded on the basis of a mistake which would probably have made a difference of over $1 million to the amount awarded, and that mistake was not noticed until after the appeal had been determined and the matter remitted.
10. At the hearing in 2016, the only calculations provided to me were those of Mr Rands. For reasons that I need not explain, the defendant's then expert witness had not been able to complete his own set of calculations. That position has now changed. If I grant the plaintiff leave to re-open as sought, it would be open to both parties to rely on calculations that adopt figures other than those used by Mr Rands for variables such as discount rates.
11. Mr Box and Ms Kaye have both revised Mr Rands' calculations to make the adjustments required by the Full Court without taking into account new data. In some respects their approaches have been different. If I accede to the defendant's submissions as to the scope of the re-opening, the re-assessment will be a relatively simple matter, and should be able to be disposed of without much further preparation or delay.
12. If I accede to the plaintiff's submissions, a great deal more work will have to be done. As I understand it, there has been no discovery or inspection of financial records relating to the actual cashflows since May 2014. Questions are likely to arise as to figures for work in progress from time to time, the distribution of expenditure between stages in the subdivision, the proportion of the cost of land attributed to the lots in each stage, the proportion of development costs attributed to the lots sold in each stage in each financial year, costs incurred but not attributed to particular stages as at the end of each financial year, and so forth. Ms Kaye has estimated that it might take periods totalling up to 18 weeks for her and her team to provide a further report addressing matters newly raised by Mr Blackwood and Mr Box, after the receipt of the necessary documentation.
13. It is now four years since the Full Court allowed the appeal and remitted this matter to me. It is nearly 17 years since the plaintiff commenced the action. The tempo of the proceedings has not accelerated in the last four years. A mediation was ordered on 7 March 2019. The parties took time to prepare for that mediation. Mr Rands provided reports in April 2019 and July 2019. Ms Kaye provided a report in March 2020. The plaintiff's previous solicitor briefed Mr Box to provide his first report by letter dated 7 October 2020. That report was provided during February 2021. Mr Blackwood prepared a spreadsheet detailing actual cashflows in December 2021 and updated it in June 2022. Mr Box provided a second report in April 2022. Ms Kaye provided a final report in October 2022. I am not sure when the mediation was conducted, but it was inconclusive. Obviously this matter has moved very slowly because of its complexity. I do not think either party should be regarded as primarily responsible for the delay.
14. Counsel for the plaintiff referred me to some comments made by the Victorian Court of Appeal in Spotlight Pty Ltd v NCON Australia Limited (above) at [17]:

"There are good reasons why the circumstances must be exceptional before a court may allow a case, having been closed and judgment reserved, to be reopened. The need for finality in litigation is one. It is no answer to this point to say that the further evidence sought to be adduced by the respondent in this case is confined to the quantum of damages. Were applications to reopen to be allowed almost as of course, such applications would be regularly made. That would add enormously to inefficiencies in the administration of justice, even if the reopened hearing was strictly confined. The discipline which ought to attend the conduct of litigation by highly competent litigators would also inevitably decline." (Footnote omitted.)

1. This is an exceptional case. It is a case where there must be a re-opening. Complicated expert evidence will have to be given by at least two accountants. A strictly confined hearing, as proposed by the defendant, would promote finality in litigation and the efficient disposition of the Court's business. However there is an unacceptable risk that the plaintiff would suffer a gross injustice if the re-opened hearing were so strictly confined. In my view the justice of this case requires the plaintiff to be permitted to rely on actual cashflow evidence for the period since May 2014, to rely on the changes to the applicable tax rate since the original assessment, and to rely on whatever discounted cashflow calculations its expert considers appropriate, just as the defendant should be permitted to rely on any calculations that its expert considers appropriate.
2. For these reasons, I make orders in the terms of paragraphs 1, 2(a) and 2(b) of the plaintiff's interlocutory application dated 7 October 2022. I will hear counsel as to any consequential orders.