Supercar International Holdings Limited v Sommers; Tinkler Group Holdings Pty Limited v Sommers

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.