Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Lahoud & Anor v Lahoud & Ors (No 2) [2012] NSWCA 55
• Hearing dates: On the Papers
• Decision date: 28 March 2012
• Before: Handley AJA at 1, Sackville AJA at 38

Decision

(1)Notice of motion of 19 December 2011 as amended dismissed;

(2)The Victor Lahoud interests are to pay the costs of the Joseph Lahoud interests of the motion.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: PRACTICE - judgments and orders - variation - reopening.; RES JUDICATA - cause of action estoppel order for specific performance - but not damages - later claim for damages barred.
• Legislation Cited: Civil Procedure Act, s 100; Supreme Court Act, s 68(b)
• Cases Cited: CG Maloney Pty Ltd v Noon [2011] NSWCA 397; Coulton v Holcombe [1986] HCA 33, 162 CLR 1; Dillon v Macdonald (1902) 21 NZLR 375; Henderson v Henderson (1843) 3 Hare 100; National Coal Board v Galley [1958] 1 WLR 16 CA, 26; Neylan v Dickens [1987] 1 NZLR 402; Rangayya Goundan v Nanjappa Rao (1901) LR 28 Ind App 221; Serrao v Noel (1885) 15 QBD 549 CA; University of Wollongong v Metwally [No 2] [1985] HCA 28, 59 ALJR 481
• Category: Consequential orders
• Parties: 1st Applicant - Victor Lahoud; 2nd Applicant - Castle Constructions Pty Ltd; 3rd Applicant - Solidare Pty Ltd; 1st Respondent- Joseph Lahoud; 2nd Respondent - Joseph Lahoud & Associates Pty Ltd
• Representation: 1st, 2nd & 3rd Applicants - McLachlan Thorpe Partners; 1st & 2nd Respondents - Varekers Lawyers
• File Number(s): 2007/255809

Decision under appeal

• Citation: [2010] NSWSC 1297
• Date of Decision: 2010-12-14 00:00:00
• Before: Ward J
• File Number(s): 2007/255809

HEADNOTE

[This headnote is not to be read as part of the judgment]

In 2009 the Victor Lahoud interests obtained orders for specific performance of the agreed procedure in a Deed of Settlement for the audit of the profits of the joint-venture with the Joseph Lahoud interests which should have been implemented in 2007. The audit, which was completed in 2010, entitled the Victor Lahoud interests to a substantial refund of the moneys paid in 2001 under the settlement of other proceedings. The primary Judge ordered pre-judgment interest under s 100 of the Civil Procedure Act from the commencement of the specific performance proceedings in 2007. On 19 December 2011 this Court held in Lahoud v Lahoud [2011] NSWCA 405 that the cause of action for the recovery of the overpayment did not accrue until the audit was completed in 2010 and pre-judgment interest could only be awarded from that date.

The Victor Lahoud interests applied to re-open the orders of 19 December to add a claim for damages for breach of the agreed audit procedure which had delayed the issue of the audit certificate and for that claim to be remitted for trial in the Equity Division. Held: The motion should be dismissed for discretionary and substantive reasons; (1) It was far too late to reopen the trial of the specific performance proceedings decided in 2009; (2) The orders for specific performance created a cause of action estoppel which barred any claim to damages; (3) Any remedy for damages had merged in the orders for specific performance and had been extinguished.

Judgment

1 HANDLEY AJA: This is the latest round in the saga of litigation between two brothers and associated entities which began in 1999. The Court as presently constituted, together with Giles JA, gave judgment on 19 December 2011 allowing in part an appeal by the Joseph Lahoud interests from the award of pre-judgment interest by Ward J in her judgment of 14 December 2010. The appeal was otherwise dismissed as was the cross appeal by the Victor Lahoud interests.

2 On 22 December the Victor Lahoud interests applied by notice of motion under UCPR Pt 36 r 36.16(3A) to add to those orders an order remitting to Ward J their "claim" for damages for breach of the Deed of Settlement of 5 February 2007 (the Deed).

3 The Victor Lahoud interests wish to make this claim because this Court held that their cause of action to recover the moneys overpaid under the Terms of Settlement of 6 February 2001 did not arise until the auditor's report on 25 August 2010.

4 Under s 100 of the Civil Procedure Act pre-judgment interest can only be ordered from the date the cause of action arose. Ward J ordered pre-judgment interest from 11 July 2007 when the Victor Lahoud interests commenced specific performance proceedings to require the Joseph Lahoud interests to comply with the audit procedure in the Deed. This Court substituted an order for pre-judgment interest from 25 August 2010.

5 Sackville AJA had pointed out during argument that persons in the position of the Victor Lahoud interests would have a remedy in damages if a party repudiated or obstructed a contractual procedure for the ascertainment of a debt. The point was acknowledged in [46] of my reasons for judgment.

6 The notice of motion was amended on 3 February to limit the claim to damages equal to the loss of interest caused by the breaches of the Deed.

7 The Registrar directed that the matter proceed on affidavit evidence with written submissions to enable the Court to deal with the application on the papers. The parties consented to the motion being dealt with by Sackville AJA and myself following the retirement of Giles JA.

8 The Deed was executed by the Victor Lahoud interests under the compulsion of orders for specific performance of the Terms of Settlement affirmed by this Court on 30 June 2006. Under those terms the Victor Lahoud interests paid the Joseph Lahoud interests $570,000 in February 2001 to cover the latter's estimated share of the profits of a joint venture between the brothers.

9 On 7 February 2007 the Victor Lahoud interests exercised their right under the Deed to have an audit of the figures on which the payment of $570,000 to the Joseph Lahoud interests had been based. The Joseph Lahoud interests declined to co-operate and the audit could not proceed.

10 On 11 July 2007 the Victor Lahoud interests commenced proceedings for specific performance of the provisions of the Deed which provided for the audit.

11 Prayers 1 and 2 in the statement of claim sought declarations and orders for specific performance. Prayer 3 sought in the alternative damages for breach of the Deed. Further or other orders were sought in prayer 8. Although the claim to damages was framed in the alternative the Victor Lahoud interests were not required to elect and damages could have been claimed and awarded in addition to specific performance.

12 Paragraph 22 alleged breaches by the Joseph Lahoud defendants "of the express and implied terms of the Deed ... governing the process of audit".

13 Paragraph 23 alleged that the profit, when audited, would entitle the Victor Lahoud interests to repayment of all or part of the $570,000 paid under the Terms of Settlement, and that the failure by Joseph Lahoud to repay that sum "represents the loss or damage arising from the breach of contract".

14 Thus the claim which the Victor Lahoud interests now seek to have remitted to Ward J was covered by the claim for damages in the statement of claim. However, as Ward J recorded [2009] NSWSC 623 [303] during the hearing the questions for determination in those proceedings were narrowed by agreement to three, and [452] declarations and orders were made in accordance with her answers to those questions. The claim for damages was abandoned when that agreement was made, or when the case went to judgment without other issues being introduced by amendment.

15 On 31 July 2009 Ward J ordered the Joseph Lahoud interests to perform their obligations relating to the audit [2009] NSWSC 623. Disputes continued and further orders were made on 12 November 2009.

16 The auditor was appointed on 11 December 2009 and reported to the parties on 24 August 2010. His report gave rise to further disputes resolved by orders of Ward J on 10 and 25 November and on 14 December 2010 she made her order for pre-judgment interest.

17 The notice of cross appeal by the Victor Lahoud interests did not include any claim for damages, and no such claim was advanced during the hearing before this Court.

18 On 21 July 2009, when Ward J made declarations and ordered specific performance she would have had power, if the claim for damages had been pressed, to order an enquiry as to damages.

19 Section 68(b) of the Supreme Court Act, the current embodiment in this State of Lord Cairns Act, enables the Supreme Court, when ordering specific performance, to "award damages to the party injured ... in addition to ... specific performance."

20 Since the fusion of law and equity in 1972 the Supreme Court can award common law damages for delay caused by a breach of contract when ordering specific performance of obligations under the contract.

21 The Victor Lahoud interests submit that damages for delay in the audit process leading to the loss of interest could not have been ascertained until the auditor made his report on 25 August 2010. This is not an answer. If Ward J had awarded damages she was not bound to assess them immediately. She could have directed an enquiry before herself or an Associate Justice to take place after the audit was completed.

22 UCPR Pt 30 r 30.3(1) provides:

"If damages are to be assessed in respect of:

(a)a continuing cause of action, or

(b)...

(c)...

the damages are to be assessed up to the time of assessment, including damages for breaches occurring after the commencement of the proceedings."

23 The repudiation by the Joseph Lahoud interests of their obligations under the Deed was not accepted by the Victor Lahoud interests and the obligations of the Joseph Lahoud parties continued. Their repudiation and breaches also continued until specific performance was ordered. The case therefore would have been within the rule: National Coal Board v Galley [1958] 1 WLR 16 CA, 26. If an enquiry as to damages had taken place after the audit was completed damages under s 68 of the Supreme Court Act or at common law could have been awarded down to the date of assessment.

24 In these circumstances there are both discretionary and substantive reasons for refusing the orders sought in the notice of motion. Ward J's orders of 31 July 2009 finally determined the rights of the parties in those proceedings although they might have to be, and in the result were, worked out by supplementary orders before and after the audit.

25 The notice of motion would require the trial which took place before Ward J in April 2009 to be reopened. If the claim for damages in the nature of interest is truly a new cause of action the Victor Lahoud interests would need leave to amend their statement of claim. If, as I have concluded, no amendment is required the motion seeks to revive a pleaded claim which was abandoned at the trial.

26 In Coulton v Holcombe [1986] HCA 33, 162 CLR 1, 7 the plurality said:

"It is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. If it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish. The powers of an appellate court with respect of amendment are ordinarily to be exercised within the general framework of the issues so determined and not otherwise."

27 The plurality quoted with approval (at p 8) the statement of six Justices in University of Wollongong v Metwally [No 2] [1985] HCA 28, 59 ALJR 481, 483:

"It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so."

28 Coulton v Holcombe involved an attempt to raise new issues in the appellate court requiring amendments to the pleadings and further evidence. The difficulties are increased where the new claim, made after the appeal has been determined, would involve a new trial on new issues. The notice of motion must be dismissed on discretionary grounds.

29 It must also be dismissed on substantive grounds. In Henderson v Henderson (1843) 3 Hare 100, 114-115 [67 ER 313, 319] Wigram VC said:

"... where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time."

30 The repudiation and continuing breaches by the Joseph Lahoud interests gave rise to an equitable cause of action for specific performance and damages, and a common law cause of action for damages. The House of Lords held in The Indian Grace [1993] AC 410 that where the same facts give rise to more than one breach of the same contract there is only one cause of action. Although there were new breaches and new causes of action every day until final orders were made on 31 July 2009 damages for all of those breaches could have been recovered in the specific performance proceedings.

31 The case is therefore within the Henderson principles and the claim is barred by a cause of action estoppel. It is also barred by its merger in the 31 July 2009 judgment. All remedies and all relief must be claimed in the first action because the cause of action will no longer be available after it merges in the judgment and is extinguished.

32 In Serrao v Noel (1885) 15 QBD 549 CA the plaintiff obtained a final injunction for delivery up of share certificates. His second action to recover damages for their detention was summarily dismissed because past and prospective damages could have been recovered in the first action.

33 Two decisions of the New Zealand Court of Appeal are directly in point. In Dillon v Macdonald (1902) 21 NZLR 375 the purchaser's action for specific performance failed on discretionary grounds. His second action for common law damages was summarily dismissed. In Neylan v Dickens [1987] 1 NZLR 402 the purchaser having obtained specific performance then sued to recover damages for delay. The second action was summarily dismissed.

34 The decisions in Rangayya Goundan v Nanjappa Rao (1901) LR 28 Ind App 221 and CG Maloney Pty Ltd v Noon [2011] NSWCA 397 especially at [160]-[162] provide further support for the existence of a cause of action estoppel and dismissal of the motion.

35 Counsel for the Victor Lahoud interests relied on the statement of Sackville AJA during argument in the principal proceedings that persons in the position of the Victor Lahoud interests "would have" a remedy in damages, and my adoption of that statement in [46] of my reasons.

36 These statements did no more than recognise the existence of a potential remedy in damages for delayed performance in breach of contract. They were not intended as, and could not fairly be understood as, statements that that remedy was still available at that late stage in the case.

37 The following orders are made:

(1)Notice of motion of 19 December 2011 as amended dismissed;

(2)The Victor Lahoud interests are to pay the costs of the Joseph Lahoud interests of the motion.

38 SACKVILLE AJA: I agree with Handley AJA.

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Decision last updated: 28 March 2012