Murphy and Anor v Overton Investments Pty Limited S138/2001 [2001] HCATrans 597 (20 November 2001)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S138 of 2001

B e t w e e n -

JOHN JAMES MURPHY and

DAPHNE MURPHY

Applicants

and

OVERTON INVESTMENTS PTY LIMITED

Respondent

Application for special leave to appeal

GLEESON CJ

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON TUESDAY, 20 NOVEMBER 2001, AT 9.30 AM

Copyright in the High Court of Australia

MR R.J. ELLICOTT, QC: Your Honours, I appear with MR G.A. MOORE for the applicant. (instructed by the Aged Care Rights Service Inc)

MR J.C. KELLY, SC: If your Honours please, I appear for the respondent with my learned friend, MR A.J. McINERNEY. (instructed by Gadens Lawyers)

GLEESON CJ: Yes, Mr Ellicott.

MR ELLICOTT: Your Honours, this is, I should point out, in the nature of a test case. I have to say "in the nature of a test case" because, although there were a lot of parties involved in this retirement village with similar issues, none of them is bound by the decision in the Murphy Case but, nevertheless, it is thought that a decision in this case will lend some assistance to the decision of quite a number of other cases. There has been a lot of litigation in the courts in New South Wales in relation to it and in the Federal Court.

Your Honours, this case really raises a fairly simple issue and that is: when does a contingent loss arise? Wardley's Case made it clear, of course, that if a loss is a contingent loss, then the loss or damage is not suffered until the contingency arises. That is a fairly simple proposition. The debate here is whether the applicant suffered any loss at the time they entered into the relevant transaction or whether they suffered loss at a later time when the respondent tried to recover all the relevant expenditure from running the retirement village.

GLEESON CJ: What was the nature of the loss?

MR ELLICOTT: The nature of the loss, your Honours, was that our clients had to pay additional contributions towards the maintenance of the village over and above those which they would have had to pay in their expectation based on the representations or the misleading conduct that was engaged in.

GLEESON CJ: Why is that a loss? Because it means that what they acquired was of a lesser value than they had believed it to be?

MR ELLICOTT: That is one way of expressing the loss; that what they ultimately acquired was a lease which was of lesser value than that which they thought they were getting. It was one that was much less affordable than they thought it was or it was one that had the potentiality for improvidence.

Another way of putting it would be that the loss is represented by the additional contributions that they had to make as a result of the misrepresentation. To put it another way, what they expected was that if what they believed was correct, then all they would expect to pay, they being old-aged pensioners with pensions that rose with the CPI, if the same item of expenditure were included, was the inflation on that expenditure.

GLEESON CJ: I got the impression - perhaps I am wrong - that the way they formulated the nature of their loss was affected by some limitation problems. Did those limitation problems apply to the negligent misstatement or estoppel ways of looking at the case?

MR ELLICOTT: Not really, your Honour, in any different way apart from the limitation period, but in each case the loss arose and their consciousness of the loss arose when the manager, the lessor, of the retirement village decided to recover the full expenditure of the village. It was only then that they became aware that they had suffered a loss and it was only then that the potentiality of the loss could be assessed because it was only then that those items of expenditure which it thought had been included in the original budget of 1992 were in fact claimed by Overton, the lessor or the manager of this retirement village.

GLEESON CJ: One other thing I am not clear about. Everybody seems to have agreed in the Full Court that the matter has to go back to a single judge to deal with the Contracts Review Act argument.

MR ELLICOTT: Yes, your Honour.

GLEESON CJ: Is the power of the court, if it applies the Contracts Review Act, wider than the powers that were exercised under the Trade Practices Act or under the rules of common law that Justice Gyles thought might apply? In other words, could the contract be re-formed?

MR ELLICOTT: Under the Contracts Review Act, yes. I must tell your Honours that that issue has been debated and reserved for judgment before Justice Emmett.

GLEESON CJ: It has been back to him already?

MR ELLICOTT: Yes, and he seized on it and proceeded with it and recently the matter was stood over for judgment.

GLEESON CJ: Then may that not render this moot?

MR ELLICOTT: Not in our submission, your Honour, for this reason, that surely you cannot review a contract until you know what it means and what are the implications of it. It would be grossly unfair to our clients to proceed with a decision on the review of a contract before the court or the court system had given its opinion and made decisions about the effect of the contract.

McHUGH J: But this decision will not affect the construction of the contract, will it? It is a different point altogether. The point you seek to raise arises outside the contract, so it cannot affect what is going to be done under the Contracts Review Act, can it?

MR ELLICOTT: But our clients are entitled to such damages as flow from the contract as it is presently constituted and as was entered into in the light of the representations that were made. The contract as reviewed may take into account, I suspect, what representations may have been made but it will not necessarily give our clients the relief that they are entitled to.

GLEESON CJ: Not necessarily, but it may. It would be a bit odd, would it not, for us to go ahead with an appeal in circumstances where the contract is currently being reviewed by a judge and possibly by a Court of Appeal?

MR ELLICOTT: Your Honour, it is a question of what matter is first in time and first in justice.

GLEESON CJ: What harm would your clients suffer if we adjourned this application to await the outcome of the proceedings before Justice Emmett?

MR ELLICOTT: Your Honours, there are 90-odd cases and I think they are all bound up with the decision on the Contracts Review Act. Of course, if your Honours refused leave because of the Contracts Review situation, that would be an injustice to our clients.

GLEESON CJ: No, I was not suggesting that.

MR ELLICOTT: If the matter was adjourned, then the only concern to our clients would be that it would be a question of delay, but I cannot stand too tall on that, your Honours, because these proceedings have been going on for some time.

McHUGH J: The remedies under the Contracts Review Act are far greater than any remedy that you could get for negligent misstatement or breach of section 52. The judge can re-form the contract. At least he could when I sat on the Court of Appeal. Under the Contracts Review Act you could do what you liked once you - - -

MR ELLICOTT: It gave you an administrative task, your Honour. That is all I can say about that. If your Honours were minded to adjourn it, I can see the sense of that, if I may say so with respect. On the other hand, I cannot plead any great harm to our clients other than that they can see what advantage they get out of it, if any, and they can - - -

GLEESON CJ: We will just see what Mr Kelly has to say about this. Mr Kelly, is the case, as I understand it, that everybody - I did not know what Mr Ellicott just said about the matter having gone back to Justice Emmett, but when I read the judgment in the Full Court I see that one thing they all agreed on was that there is an outstanding Contracts Review Act issue. That has been litigated, I gather?

MR KELLY: Yes, your Honour, and I learned this morning that there is some suggestion that his Honour may deliver judgment about Friday of this week. I should indicate to your Honours that one of the matters made the subject of complaint, if I may so describe it, is that the effect of the very contractual power which is here in question is sought to be reviewed. That is to say, there is a possibility if my learned friend's clients win that that subject matter will be taken away. If that success is enjoyed by my learned friend's clients, then, as I understand it, it would render any appeal moot.

GLEESON CJ: Why should we not stand this matter over to await the outcome of the proceedings before Justice Emmett under the Contracts Review Act and then either party can apply to have the matter restored to the list and can inform the Registrar of any considerations of urgency that ought to be taken into account in restoring it to the list.

MR KELLY: I can see no reason why that course should not be adopted, your Honour. This of course is my learned friend's application and we go where we are taken.

McHUGH J: It has the double advantage that if the applicant was dissatisfied with what Justice Emmett did, it would be open to this Court to deal with two special leave applications at once.

MR KELLY: Yes, your Honour, I am sure that would be helpful. These parties have been litigating in just about every jurisdiction during every year for almost the last decade, and any course which accelerates one's progress to finality would be in the interests of everyone, I am sure.

GLEESON CJ: We think we will take that course, Mr Ellicott.

MR ELLICOTT: If your Honour pleases.

McHUGH J: I am not encouraging you to make a special leave application direct if you are dissatisfied with Justice Emmett, but it is a possibility.

MR ELLICOTT: I understand that, your Honour. These parties have been in litigation for a long time and they are very aged people, many of them. Some of them are aged and some are very aged. Therefore, the sooner the whole litigation is dealt with, the better, your Honours.

GLEESON CJ: We will take that course. Mr Ellicott, just before we do, however, could I mention that if this matter does come back before us, I would be obliged if you would take a very critical look at the form of the draft notice of appeal which has something like 50 grounds in it.

MR ELLICOTT: If your Honour pleases.

McHUGH J: It is a real scatter-gun approach.

GLEESON CJ: I am sure you will be able to find appropriate words to tell somebody that a rapier is a more effective weapon than a blunderbuss.

MR ELLICOTT: Just to cut them down, your Honour.

GLEESON CJ: Because of the course that has been taken in relation to the Contracts Review Act aspect of this matter, the Court is of the view that the appropriate course for us to take at this stage is to stand this application out of the list with liberty to either party to restore it on seven days notice to the other party. Questions of costs will be reserved.

AT 9.44 AM THE MATTER WAS ADJOURNED