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[2011] NSWSC 496
Supreme Court of NSW
2011-05-25
White J
Original judgment source is linked above.
Judgment 1HIS HONOUR : In my reasons for judgment ( Supercar International Holdings Limited v Sommers; Tinkler Group Holdings Pty Limited v Sommers [2011] NSWSC 336 at [287]) I set out the declarations and orders I proposed to make, but stood over the proceedings in case the parties had any submissions as to the appropriate form of those orders. Mr Hagon, the solicitor for Mr and Mrs Sommers, seeks some different orders from those proposed at para [287] of my reasons. 2The principal point in issue is whether I should enter judgment against Mr and Mrs Sommers in favour of TSCCF as set out as the proposed order 9 in para [287]. Mr Hagon refers to evidence given by Mr Sommers to which I referred at para [213]. In his oral evidence Mr Sommers said that the two Audi cars had been repossessed by the National Australia Bank. Mr Hagon submitted that this evidence was not challenged and that the market value of the vehicles would only be the appropriate measure of damages for conversion of the vehicles if the vehicles had remained in the possession of the defendants. He submitted that it should be assumed that TSCCF's liability to its financiers had been reduced by the amount realised by the financiers following repossession and presumed sale of the vehicles. 3It is true that Mr Sommers gave evidence in the course of cross-examination that both vehicles had been repossessed by the National Australia Bank (T202). He said that that was the reason they were not in his possession. In fact, according to the documentary evidence, only one of the two vehicles was on hire purchase with the National Australia Bank. The other was mortgaged to Volkswagen Financial Services Pty Ltd. I made no finding as to whether the vehicles had been repossessed. 4The defendants did not plead that the vehicles had been repossessed. If they were, and if their repossession was material to the measure of damages it was a material fact the defendants ought to have been pleaded. In his affidavits Mr Sommers did not say that the vehicles had been repossessed. In his opening submissions delivered before the hearing counsel for the defendants simply said: " The defendant denies he has converted the cars for his own use. Pursuant to clause 5.4 of Mr Sommers' agreement with TSCCF, he had the right to possession of the cars ." 5The plaintiffs gave no evidence as to the amounts owed to the National Australia Bank or Volkswagen Financial Services at or after the dates of conversion and detention. No questions were asked of any of the plaintiffs' witnesses as to the state of accounts between TSCCF and its financiers and whether it had been credited with any amounts as a result of repossession of the vehicles. In the cross-examination of Mr Sommers it was put to Mr Sommers that he had sold the vehicles himself. He denied that and said that they had been repossessed by the National Australia Bank, which may have been the fact in the case of one of the vehicles, but appears unlikely to have been the fact in the case of the other. During the hearing counsel for the plaintiffs tendered documents to establish the market value of the vehicles. In his closing submissions counsel for the plaintiffs relied upon the documents valuing the vehicles as at December 2009 as establishing the market value of the vehicles. Counsel for the defendants made no submissions about the appropriate measure of damages. As I noted in my reasons (at [215]) counsel did not dispute that the appropriate measure of damages was the fair market value of the vehicles at the time of conversion. The only submissions made were that pursuant to clause 5.4 of his agreement with TSCCF Mr Sommers had a right to possession of the cars, that his use of the cars was not to the exclusion of TSCCF, and that Mr Sommers " no longer has the vehicles as they have been returned to TSCCF at the time of service of the statement of claim ". There was no evidence to support that submission, but the submission is contrary to the defendants' present position that they are entitled to an inquiry as to the effect of repossession on the measure of damages. 6The order now sought is that the question of damages for conversion be referred to an associate judge for an inquiry into damages. No order was made before the hearing for separate trials on the questions of liability and damages. If the defendants intended to make a case that the true measure of damages was not the market value of the vehicles at the time of conversion but some other amount (possibly market value less the amount of reduction of debt following repossession and sale, or possibly the quantum of the debt owed by TSCCF to its financer as at the date of conversion reduced by any amount by which that debt was reduced on the sale of the vehicles by the financier) then that case should have been articulated before the hearing. There should have been evidence in the defendants' case in chief and there should have been submissions about it. Even on the present application I was not favoured with any reasoned submission or reference to authority as to a proper alternative basis for assessing the quantum of damages. It was not common ground that the vehicles had been repossessed. Counsel for TSCCF put to Mr Sommers that he had sold the vehicles himself. Mr Sommers denied this. The question had not been raised as an issue for decision. It would not be appropriate to make the order sought by the defendants for the referral of the question of damages to an associate judge without first having a further hearing to determine whether Mr Sommers' evidence that the two vehicles in question had been repossessed by the National Australia Bank should be accepted, and if so, to receive submissions as to the relevance of that to the measure of damages. The time for raising those issues was before and at the trial. 7The interests of justice do not require that the judgment be re-opened. The defendants had the opportunity at the trial to ventilate the issue now sought to be raised. It is only in exceptional circumstances that a court should permit a party to raise a new argument that he failed to put at the hearing when he had the opportunity to do so ( Metwally v University of Wollongong (No. 2) (1985) 59 ALJR 481 at 483; 60 ALR 68 at 71; Autodesk Inc v Dyason [No. 2] (1993) 176 CLR 300 at 301-302, 309-310). I do not agree to the alternative order proposed by Mr Hagon for the defendants that would see a continuation of the litigation. 8The defendants oppose an order that Mr Shaw be appointed as liquidator. Mr Hagon submitted that no consent to act as liquidator had been provided by Mr Shaw. That is not so. His consent is exhibit C (T27). Mr Hagon submitted that transactions occurred between TSCCF and SIH that would place Mr Shaw in a position of conflict when trying to admit proofs of debts between the companies. No doubt the affairs of the companies are intertwined. When Mr Shaw gave his consent to be appointed as liquidator of SIH, he was administrator of TSCCF. He certified that he was not aware of any conflict of interest or duty that would make it improper for him to act as liquidator of SIH. The mere fact that there were dealings between the two companies does not create a conflict. Prima facie it is desirable that the same person wind up the affairs of both companies as their affairs are intertwined. There is no material to suggest that there would be any real dispute about admission of proofs between the companies that would place the liquidator in a position of conflict. I see no reason not to appoint Mr Shaw. 9The only other substantive issue raised by the defendants (other than costs) relates to the provision of an undertaking as to damages. I was informed that the plaintiff (I am not sure which plaintiff, but I assume SIH) provided an undertaking as to damages in respect of what Mr Hagon called the " granting of the interim caveat " (sic) in respect of a property at Seaforth. He submitted that the defendants were required to pay the proceeds of sale of the property into court and if interest had not accrued on that amount, the plaintiffs would have suffered damage and SIH should be required to pay damages pursuant to an undertaking as to damages said to have been given. He sought an order referring "this question" to an associate judge. I was not favoured with any detail as to the date on which, or the proceeding in which, or by whom, the undertaking as to damages was given. If the position is as alluded to in Mr Hagon's submissions, then the defendants would be entitled to such an inquiry if they have suffered damage because I rejected SIH's claim to a proprietary interest in the defendants' property. 10I will give the defendants liberty to apply by motion on notice in whatever is the appropriate proceeding for an order assessing any damages to which they claim to be entitled pursuant to any undertaking as to damages given by any of the plaintiffs in connection with the lodgment of a caveat or any restraint on dealing with the proceeds of sale of the defendants' property. On the materials before me I could not make such an order.
Costs 11The remaining substantive issue concerns costs. The plaintiffs sought an order that each party pay its, his and her own costs. The defendants sought orders that they pay TSCCF's costs of proceedings 290294 of 2009, but that SIH and Mr Tinkler pay half of Mr Sommers' costs of proceedings 290294 of 2009 and that Tinkler Group Holdings Pty Limited pay Mr Sommers' costs of proceedings 291674 of 2009. 12The proceedings were heard together and the evidence in one was the evidence in the other. Both sides had a measure of success and failure. TSCCF succeeded on its claim for damages against Mr and Mrs Sommers. Mrs Sommers' cross-claim wholly failed. Mr Sommers' cross-claim succeeded in part. He was substantially, although not wholly successful on his claim for the balance of the price owing on the purchase by SIH of his shares in the subsidiaries. On the other hand, he failed, and SIH, TSC and TSCCF succeeded, on the issues concerning the validity of his service contracts. Mr Sommers also acknowledged at the hearing that he was liable to indemnify SIH in respect of its liability under the Yarramalong lease. He failed in his claims that Mr Tinkler, Tinkler Group, Mr Todd and Mr Dempsey pay amounts owing under the share purchase agreement. He failed in his claim for termination payments under the contracts for services and for further director's fees. Mr Sommers failed in his claim requiring Tinkler Group to purchase his shares in SIH. Tinkler Group failed to establish that it suffered damage as a result of the only conduct on the part of Mr Sommers I found to be misleading or deceptive. It was entitled only to nominal damages for breach of warranty. To that extent its claims substantially failed. However, it succeeded on its application for an order that SIH be wound up pursuant to s 233 of the Corporations Act 2001 (Cth). 13If I were to treat the claims of each of the parties individually, then TSCCF would be entitled to its costs of the proceedings. It succeeded on its claim for damages against Mr and Mrs Sommers and succeeded on its claim for declarations as to the invalidity of the service agreement. If I were to treat the claims between Mr Sommers and SIH as a separate proceeding, and the claims between Tinkler Group Holdings and Mr Sommers as a separate proceeding, I would not accept that the appropriate costs order was that SIH pay half of Mr Sommers' costs and that Tinkler Group Holdings pay his costs. To the contrary, having regard to the different matters upon which SIH, Tinkler Group and Mr Sommers succeeded, I think the appropriate order would be that there be no order as to costs as between Mr Sommers and Tinkler Group, and that Mr Sommers should be entitled to only 25 per cent of his costs against SIH. 14This is because Mr Sommers had only partial success on his claim against SIH for the balance of the moneys owing under the share purchase agreement. SIH succeeded on its claim for declarations as to the invalidity of the service agreement. SIH obtained an order for indemnity in respect of the Yarramalong lease. Mr Sommers failed on his claim (to which SIH was a party) for relief under s 233 of the Corporations Act . 15I do not consider it just to order Tinkler Group to pay Mr Sommers' costs of the claims between those parties. Whilst Tinkler Group obtained only nominal damages for its claims against Mr Sommers, it succeeded on its claim that SIH be wound up. It successfully resisted the claims that it indemnify Mr Sommers in respect of moneys payable to him by SIH and successfully resisted an order for the compulsory purchase of his shares in SIH. Considering the matter as between those parties alone, I think the appropriate order would be that each pay its and his own costs. 16Mrs Sommers would prima facie be liable to pay the costs of her cross-claim. 17However, there was a single controversy. All claims were heard together. The evidence and the issues were interwoven. I think it is appropriate to look at the matter in the broad. Counsel for TSCCF and the other plaintiffs do not seek an order for costs against Mrs Sommers, and TSCCF does not seek costs. In my view the appropriate order is that each party pay its, his and her own costs. 18For these reasons I make the following declarations and orders: In proceeding 2009/290294:
Other order 19I do not know what is the proceeding in which liberty should be given to the defendants to seek to enforce an undertaking as to damages I was told had been given by the plaintiffs in relation to a caveat or orders concerning the defendants' property at Seaforth. I give liberty to the defendants to file a notice of motion in the appropriate proceeding for an order that there be referred to an associate judge the assessment of damages, if any, to which the defendants may be entitled pursuant to any undertaking as to damages given by any of the above plaintiffs in connection with the lodgment or maintenance of a caveat over property of the defendants at Seaforth, or in relation to any order restraining the defendants from dealing with or requiring the defendants to pay into court, the proceeds of sale of the defendants' property. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 31 May 2011