O’Connor v O’Connor

1. [1]

   THE COURT: This appeal turns on its own facts and the course taken at trial. The primary judge promptly produced a judgment after a five day hearing which dismissed the plaintiffs’ claims based on an oral contract and dismissed the proceeding. However, his Honour went on to make tentative findings in the alternative (although there was an issue as to whether they were findings at all), and to suggest that there were “powerful considerations” that would have favoured the plaintiffs had their case been different, and were it not for repeated concessions that that different case was not pursued. For the most part, the concessions were made during the plaintiffs’ counsel’s final address.

2. [2]

   In this appeal, no challenge is made to the dismissal of the claim based on the oral contract alleged by the plaintiffs. However, it is said that the primary judge was wrong to regard the case as confined by a concession, wrong to have elicited a concession from counsel who then appeared for the plaintiffs which narrowed their case, and wrong not to have decided the case favourably to the plaintiffs on the basis his Honour indicated in the alternative. If necessary, it was said that this Court should permit any concession to be withdrawn.

3. [3]

   For the reasons which follow, we would dismiss the appeal.

Background

1. [4]

   The nature of the appeal means that most of the evidence need not be summarised, because there was no challenge to any of the findings of fact or the reasoning which was dispositive of the principal claims advanced by the plaintiffs. However, it will be necessary to address in some detail the pleaded case as filed and as amended during the hearing, and (especially) the concessions made by counsel.

2. [5]

   The defendant, Mr John Joseph O’Connor, founded Diona Pty Ltd in 1980 (Diona). Diona provided earth-moving services in the building and construction industry. At all material times, Diona had four ordinary shares, three of which were owned by John and one by his wife Margaret.

3. [6]

   The plaintiffs and appellants are Messrs Morgan Benedict O’Connor and Michael Stack. Morgan is John’s younger brother; Michael is unrelated. All three men immigrated to Australia from Ireland many years ago. Morgan and Michael worked for Diona, and Morgan was a director from 1993 to 2000.

4. [7]

   Following a series of conversations between the three men in 2004 or 2005, three things occurred:

   1. (1)

      Each of Morgan and Michael transferred $150,000 to Diona;

   2. (2)

      Morgan was reappointed as and Michael became a director of Diona;

   3. (3)

      Each of Morgan and Michael began to execute personal guarantees for Diona’s liabilities.

5. [8]

   None of the above was controversial. Diona’s general ledger included entries on 26 October 2005 and 13 December 2005 for the transfers of $150,000, described as “Shareholders Investment OCE” and “Injection of Funds Mike Stack” respectively. “OCE” is to be understood as a reference to OC Excavations Pty Ltd, a company of which Morgan has since 2002 been the sole director. There seems to have been some inconsistency in how Diona treated those funds, but nothing turns on this. ASIC records showed that Morgan and Michael became directors of Diona on 9 January 2006. Tendered at trial were a series of guarantees signed by Morgan and Michael. The total liabilities guaranteed by the men was said to be in excess of $15,000,000.

6. [9]

   What was controversial was the quid pro quo for the above. Morgan and Michael said that they were each promised a shareholding of 8.33% of Diona. John said that he promised to transfer to Morgan and Michael an 8.33% share in Diona’s “plant and equipment”, and that if after ten years the men were still working for Diona, he would “consider” making them full shareholders.

7. [10]

   No shares were ever issued to Morgan or Michael. From time to time various shareholder agreements were drafted and exchanged, but none was executed. Some attempted to grapple with the concept of an interest in the plant and equipment, including by a shareholders’ agreement and by converting preference shares. The details were summarised by the primary judge at [40]-[62] and need not be summarised here. The primary judge said at [45] of one draft that:

8. [11]

   Some years later, there was a falling out between the men, which the primary judge considered had been prompted in part by interventions by John’s son, David, who had (in around 2009) been appointed as General Manager and as a director. By members’ resolutions on 30 July 2013 and 1 August 2013, each of Morgan and Michael was removed as a director.

9. [12]

   In 2014, Michael commenced proceedings against Diona and John seeking among other things orders that Diona “issue a share certificate to [him] representing 1/12th or 8.33% of its share capital and that it record that interest in its share register”. By mid 2015, there were two other proceedings in the Supreme Court concerning the affairs of Diona and companies related to the three men. All three proceedings were compromised by an undated Deed of Settlement and Mutual Release found by the primary judge to have been entered on 29 July 2015. The Deed recited that “[Morgan] and [Michael] allege that they are each one twelfth equity shareholder in Diona” (Recital L). The settlement involved, inter alia, payments by Diona to Morgan and Michael of $1,380,000 and $1,680,000 representing a compromise of claims including their claims for shares in Diona. The deed included releases in standard terms.

10. [13]

    At around the same time as he was negotiating the settlement of the disputes with Morgan and Michael, John was engaging in negotiations with Calibre Group Ltd. A confidentiality agreement was provided in October 2014, following which there were discussions culminating in Calibre submitting a “Non-Binding Indicative Offer” in May 2015 and a “Revised Non-Binding Indicative Offer” on 31 July 2015. The former involved a price of $81,200,000, the latter a price of up to $90,000,000, subject to conditions upon which nothing turns for present purposes. A share sale agreement between John and Margaret and Calibre was executed on 29 October 2015. It was common ground that Morgan and Michael were not told of the negotiations with Calibre.

11. [14]

    In 2017 Morgan and Michael brought proceedings against John and Diona seeking preliminary discovery of John’s negotiations with Calibre. They failed at first instance but succeeded on appeal; we shall return below to one aspect of that litigation.

12. [15]

    In July 2019, Morgan and Michael sued John by Statement of Claim filed in the General List in the Equity Division of this Court. An order was made transferring the matter to the Commercial List in September 2019. The plaintiffs sought an inquiry to determine the amount of equitable compensation or alternatively an account of profits in respect of the sale of shares in Diona to Calibre. There were also claims for statutory unconscionability, and for a declaration that the release in cl 8 of the Deed of Settlement and Mutual Release was unenforceable, neither of which need be summarised, because no point was ultimately taken based on the releases in the deed, and statutory unconscionability played no part in the appeal.

13. [16]

    The statement of claim also sought a declaration that John owed Morgan and Michael a fiduciary duty to inform and keep them informed of any matter that substantially affect the value of the shares in Diona, up to and including the time of completion of the Deed of Settlement and Mutual Release.

14. [17]

    It is convenient to defer summarising the allegations in the statement of claim, which directly informed the exchanges between the plaintiffs’ counsel and the primary judge which are central to this appeal.

15. [18]

    On 4 March 2020, by consent, questions of liability were ordered to be heard separately and in advance of any questions of quantum.

Reasons of the primary judge

1. [19]

   It is convenient first to deal with the reasons given by the primary judge for dismissing the plaintiffs’ primary claim and explaining the alternative basis on which success might have been obtained, before turning to the way the trial proceeded.

2. [20]

   The plaintiffs’ primary case was an oral agreement involving an entitlement to shares in Diona in 2005. This was rejected by the primary judge, based on reasons informed by his assessment of Morgan’s and Michael’s demeanour. No challenge was made to that aspect of the decision in the grounds of appeal.

3. [21]

   The primary judge also rejected John’s claim that all that had been promised was an entitlement for him to consider making Morgan and Michael shareholders if they worked for his company for a decade, paid $150,000 and made themselves personally liable for its debts over that period. His Honour summarised this aspect of his reasoning at [23]-[24]:

4. [22]

   Paragraph [112] of his Honour’s judgment should also be noted. There, his Honour held that:

5. [23]

   It is best to reproduce the entirety of the alternative reasoning, which appears at [134]-[141] (there is a divergence between the paragraph numbering of the reasons authenticated by his Honour’s Associate and those published on CaseLaw after [66]; in what follows, references are to the paragraphing on CaseLaw):

6. [24]

   Three things may be noted about that passage.

7. [25]

   First, Dr Birch SC, who appeared for Michael and Morgan in this Court, accepted that it needed to be read in conjunction with [23]-[24] of the primary judgment extracted at [21] above. The language employed by the primary judge in those paragraphs, namely “highly likely that I would have” and “[s]o to have found” raises a real question as to whether his Honour’s observations in [134]-[141] amounted to what could in truth be described as “findings” as opposed to possible alternative findings.

8. [26]

   Secondly, the references by the primary judge to Brunninghausen are to Brunninghausen v Glavanics (1999) 46 NSWLR 538; [1999] NSWCA 199, in which this Court addressed the circumstances in which, contrary to the “rule” in Percival v Wright [1902] 2 Ch 421, a director may owe a fiduciary duty directly to a member, as opposed to a fiduciary duty to the director’s company. If, as the primary judge indicated, Morgan and Michael were not shareholders, but were entitled to become shareholders in the 2015, then his Honour was saying that the same considerations would lead to John owing fiduciary obligations to them when he was negotiating to sell the entirety of Diona’s shares to Calibre.

9. [27]

   The principles in Brunninghausen v Glavanics are familiar in disputes concerning businesses operated by small private companies. They were unquestionably familiar to the parties in this litigation, because of the 2017 proceedings seeking preliminary discovery mentioned above. Morgan and Michael’s application for preliminary discovery was refused at first instance: O’Connor v O’Connor [2017] NSWSC 1648, but an appeal was allowed and discovery ordered: O’Connor v O’Connor [2018] NSWCA 214.

10. [28]

    Both at first instance and on appeal in the applications for preliminary discovery, Morgan and Michael relied on Brunninghausen. The judge at first instance recorded at [19]:

11. [29]

    On appeal, this Court considered Brunninghausen v Glavanics at [42]-[54] and concluded at [55]:

12. [30]

    Mr DeBuse of counsel, who ran the trial before the primary judge from which this appeal was brought, also ran the unsuccessful application for preliminary discovery at first instance, and was led by senior counsel in the appeal.

13. [31]

    Thirdly, the reasoning at [136] that Morgan and Michael had “a clear and discernible interest in Diona” which extended to “the opportunity after ten years to become full shareholders” was inconsistent with John’s case that the oral agreement conferred a discretion upon John whether to make Morgan and Michael shareholders. By grounds 2, 3, 4 and 5 of his notice of contention, John challenged the finding of a contract in the terms found by the primary judge. He maintained that the judgment should be affirmed on the basis that Morgan and Michael had no entitlement to any shareholding, but merely enjoyed the prospect that John might “consider” making them full shareholders, with the consequence of there being no ongoing fiduciary obligation after they were removed as directors and ceased to work for Diona.

14. [32]

    The primary judge did not give full reasons for his alternative, tentative or possible conclusions. However, the reasoning which evidently informed them emerges clearly enough from an exchange in closing submissions with counsel appearing for John:

15. [33]

    It is ordinarily preferable for a judge not to make statements before the case is over to the effect that one party or the other is not believed. When language is used to that effect, it is usually implicit that the statement is made for the purpose of testing a submission and inviting counsel to address it. Indeed, in the present case, if that were not understood, his Honour made it clear by qualifying his position with the words “[a]t the moment” and inviting further submissions on the point (“You may want to address that …”), such that on a fair reading of the exchange as a whole his Honour was merely exposing his preliminary views on John’s credibility. Even so, it would have been preferable, especially in litigation which turned on a disputed oral agreement, for the difficulties confronting acceptance of John’s evidence to have been drawn to counsel’s attention without reference to his Honour not believing him (carrying with it the implication that his Honour had formed a concluded view at that stage).

16. [34]

    Grounds 2, 3, 4 and 5 of the notice of contention should be rejected for substantially the reasons stated by the primary judge in the exchange reproduced above, to which may be added the fact that the rejection of John’s case was a conclusion turning upon his assessment of John’s testimonial evidence, to which the strictures associated with Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 apply. In short, far from being glaringly improbable that there was an entitlement to shares after a decade’s service as directors, contribution of capital and provision of personal guarantees, it is decidedly improbable that the oral agreement struck by the three men imposed substantial obligations upon Morgan and Michael over a decade, but gave them no entitlement to become shareholders at the end of that period. That conclusion is contrary to the draft agreements and correspondence exchanged between the parties during the time all three men were directors of Diona which is summarised in the judgment at first instance, which by way of example included the concept of converting preference shares, inconsistently with John reserving to himself a discretion.

17. [35]

    Grounds 2, 3, 4 and 5 of the notice of contention are unavailable to sustain the judgment. We will make reference to ground 1 of the notice of contention later in these reasons. We turn now to the main issues on the appeal, which turn on the pleaded case and the course of the trial.

The pleaded case

1. [36]

   The Statement of Claim alleged an oral contract pursuant to which, in exchange for the $150,000 and entering into guarantees, John “would cause an agreed proportion of the capital of Diona to be issued or transferred to each of the plaintiffs”. There was an alternative pleading that John promised to “transfer to each of the plaintiffs an interest in the defendant’s shareholding in Diona equal to 1/12th or 8.33% interest in the capital of Diona at the time”. The plaintiffs also advanced a claim based on an estoppel by representation, upon which they had detrimentally relied, the result of which was expressed as follows:

2. [37]

   The pleading went on to identify the way in which the shareholding in Diona was held for the plaintiffs:

3. [38]

   The agreements, representations, estoppels and detrimental reliance were said to give rise to fiduciary duties thus:

4. [39]

   Nowhere in the pleaded case was a claim that Morgan and Michael were entitled to something less than the parcel of ordinary shares representing 8.33% of the issued share of Diona. Indeed, we did not regard this as being in issue on appeal. Rather, the gravamen of the appellants’ case was that the case as run permitted and indeed entitled the plaintiffs to judgment on the alternative basis indicated by his Honour at [133]-[140] of the primary judgment. It is to be borne in mind that ordinarily the pleadings will define the issue for determination, but that does not preclude the parties choosing to litigate additional issues. Much was sought to be made by the appellants of the decisions by John to engage on the merits with the alternative case, which was raised by the primary judge during the hearing.

The first four days of the trial

1. [40]

   Ultimately, the outcome of this appeal turns on what occurred on the fifth and final day of the trial. However, in order to address some of the submissions based on (a) the way in which the trial expanded beyond the issues identified in the pleadings, and (b) what was said to have been the erroneous “insisting” by the primary judge to obtain concessions from counsel for Morgan and Michael, it is necessary to address what had earlier occurred.

2. [41]

   The opening was informed by a 38 page document “Outline of Submissions for the Plaintiffs”. The point was made, strongly, that the pleaded defence contained a bare denial of the existence of an agreement, and thus the plaintiffs emphasised the improbability of Morgan and Michael doing all they had done without the benefit of any agreement whatsoever. Thus it was said:

3. [42]

   In addition to the cases based on the oral agreement and estoppel, pages 19-22 summarise “The Joint Venture”. The submission then stated:

4. [43]

   On the first day, during the plaintiffs’ opening, there was the following exchange:

5. [44]

   There was interruption on the AVL link, following which the transcript records:

6. [45]

   Mr DeBuse then said there were two ways in which he could win if he failed on contract. He referred to contract by estoppel, and to a submission that “this isn’t a case in which we have to say that we are shareholders that come within the Brunninghausen principle.”

7. [46]

   Relatively shortly thereafter, Mr DeBuse clarified what may have been put in the portion not recorded in the transcript. The primary judge returned to the non-contractual bases on which the plaintiffs were advancing a case and the following exchange ensued:

8. [47]

   The reference to “UDC” was to United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1; [1985] HCA 49, which holds that fiduciary obligations may exist between persons who have actually embarked on a joint venture although prior to their entering a partnership agreement. The reference to page 19 of the written submissions contained the submission reproduced above that the plaintiffs were suing, in the alternative, upon a joint venture. His Honour seems to have been correct to say that there had been no reference to a joint venture in the oral opening. However, that was express in the plaintiffs’ written opening submissions.

9. [48]

   In the course of objections, the point flagged in the plaintiffs’ submissions about the mere denial of the oral agreement became live. There was a further issue based on whether the defendant had sufficiently pleaded the release in the Deed. This led to senior counsel for John seeking and obtaining an adjournment for the purposes of amending his defence. Senior counsel for John then engaged with the mere denial of the oral agreement, bearing in mind that extensive evidence had been served of the terms of the oral agreement for which he contended. There was this exchange:

10. [49]

    The primary judge granted an adjournment, with a costs order in favour of the plaintiffs. The amended defence articulated the oral agreement, which provided merely that if the plaintiffs contributed $150,000 and contributed to the growth of the business over ten years, then their investment in Diona’s plant and equipment “may” convert to an 8.33% shareholding.

11. [50]

    The trial resumed on the second day on that basis. John did not take any point about the releases in the Deed; the result was that Morgan’s and Michael’s anticipatory pleadings setting aside the releases based on a allegations of misleading and deceptive conduct and statutory unconscionability did not arise. Each of Morgan, Michael, John and his son David gave evidence and was cross-examined.

12. [51]

    After three days of evidence, and immediately before an adjournment for the purposes of preparing written submissions, there was the following exchange:

13. [52]

    The day concluded as follows:

14. [53]

    Pausing there, the judge was indicating that he expected to hear from the parties when they made closing addresses two things:

    1. (1)

       From the plaintiffs, whether their case was confined to the pleaded oral agreement that they were entitled to 8.33% shareholdings in Diona, and in particular, whether it extended to an entitlement to something less than a full shareholding, but which nonetheless was an interest which would convert to a shareholding in 2016, which gave rise to a breach of fiduciary duty when the deal with Calibre was negotiated and executed.

    2. (2)

       From the defendant, whether if the plaintiffs sought to expand that case, whether it could be permitted. That would turn upon the pleaded case, and the way in which the trial had extended beyond the pleaded case.

The fifth day of the trial

1. [54]

   The hearing resumed on 9 August 2021, and the primary judge confirmed at the outset that he had received the plaintiffs’ outline of closing submissions. Those submissions did not repeat the claim based on a joint venture. They emphasised the all-or-nothing way in which the parties had approached the oral agreement, and stated:

2. [55]

   This was confirmed in oral submissions. On Monday 9 August 2021, submissions commenced at 10.15am and Mr DeBuse addressed, entirely uninterrupted, until the morning tea adjournment, and then for a period thereafter without interruption. This occupied pages 300-321 of the transcript. In the second half of that period of uninterrupted address, counsel returned to the questions raised by the primary judge on the previous Thursday afternoon:

3. [56]

   In the words emphasised above, counsel gave what could only be understood as a considered answer to the question posed 4 days earlier. Read in context, it is difficult to see how it was anything other than renouncing any claim other than one based on an entitlement to be 8.33% shareholders.

4. [57]

   It also cannot be said that the concession was extracted in any way as a result of an ill-considered answer to a question from the Bench. The answer was volunteered, after three days out of court, with ample opportunity for consideration and obtaining instructions. It was also entirely consistent with the closing written submission referred to at [54] above.

5. [58]

   There may have been good forensic reason for that choice. It must have been plain from the questions posed by the judge, and the response given by Mr Studdy that he would have a lot to say on the potential expansion of the case, that submissions based on that case would give rise to a dispute about the way the case had been run, the potential for the need for a late application to amend, with the possibility that it might be refused, and then, perhaps most significantly of all, the risk of creating a perception that the plaintiffs needed an amendment if they were to succeed. It may be that the plaintiffs had no desire for judgment to be reserved and for the judge to commence composing a judgment immediately after rejecting their amendment. It may be that the plaintiffs thought their best prospect for success was their anticipation (as it turns out, correct) that John’s evidence as to the terms of his agreement would not be accepted, and that in those circumstances, the judge would find in their favour on their pleaded case. Thus it is far from inconceivable that the plaintiffs made an understandable, rational forensic decision not to go down the path raised for their consideration by the trial judge.

6. [59]

   In any event, the appellants – part of whose appeal extends to an application to withdraw a concession made by experienced counsel – have adduced no evidence that the course taken by counsel was contrary to his instructions.

7. [60]

   As noted above, Mr DeBuse was permitted to complete his oral submissions without interruption. After some short exchanges concerning relief, the primary judge returned to the pleading and the various agreements alleged. His Honour said:

8. [61]

   In each of the four passages emphasised above, counsel confirmed the limited case being advanced by the plaintiffs. If those passages were considered in isolation, they might be open to a reading of an attempt by the judge to confine the plaintiffs’ case. They cannot, however, be read in isolation. It is also important to bear in mind that they followed (a) the judge having sought (and not obtained) clarity and precision as to the nature of the plaintiffs’ case in opening; (b) the judge exposing a possible alternative case on the previous Thursday and (c) the plaintiffs’ written and oral submissions explicitly renouncing any such case and confirming that there was “no middle ground” in terms of the diametrically opposed contentions of the parties as to the terms of the oral agreement, both of which the primary judge ultimately rejected.

9. [62]

   There followed this exchange:

10. [63]

    The concluding exchange exposed very squarely the possibility that a fiduciary duty might be owed by John to Morgan and Michael even if the oral agreement fell short of entitling the men to parcels of ordinary shares. It is possible that the judge was making it clear beyond argument that there was a potential case which could give rise to a fiduciary obligation and which fell short of an agreement giving an immediate and legal entitlement to ordinary shares, so that counsel could not be mistaken as to what was being renounced. Once again, counsel explained, consistently with his earlier written and oral submissions that “we do not have a case for some other rights”.

Grounds of appeal

1. [64]

   Ground 1 invites the appeal to be allowed based on the findings and reasoning at [134]-[141]. But that reasoning was unavailable in light of the concessions made on behalf of Morgan and Michael. It also presupposes that what was said by the primary judge amounted to “findings”. For reasons already noted, that is far from evident on a reading of the reasons for judgment as a whole.

2. [65]

   The role of a court is to decide the dispute presented to it. A concession may relieve the court from resolving that aspect of the dispute, because the effect of a concession is to remove one or more issues from the dispute.

3. [66]

   It is trite that “[t]he adversarial system of litigation operates upon the basis that a party is generally bound by the conduct of counsel”: Smits v Roach (2006) 227 CLR 423; [2006] HCA 36 at [46] and that “[e]xcept 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”: University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481 at 483; [1985] HCA 28.

4. [67]

   A concession as to a question of law does not bind the Court. For example, the parties may be agreed that a statute bears a particular meaning, or one of two meanings; in such a case the Court is not restricted to the meanings suggested by the parties. As was said in Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317; [2003] HCA 51 at [89], parties do not have the power, whether by concession or otherwise, to require a court not to apply the law. A recurring example is the agreement of parties that a court has jurisdiction. It is clear that the parties’ agreement does not relieve the court from determining for itself that its jurisdiction has been enlivened: see Minister for Local Government v Blue Mountains City Council (2018) 97 NSWLR 1132; [2018] NSWCA 133 at [51] and the authorities referred to there.

5. [68]

   But one question which is very largely left for the parties to formulate is the ambit of their own dispute. It is ordinarily for the plaintiff to identify one or more causes of action on which the plaintiff seeks relief, and it is ordinarily open to the plaintiff, at some later stage, to confine its claim, or indeed to abandon aspects of its claim. In the same way, a defendant may admit aspects of a plaintiff’s case. For example, not uncommonly, a defendant may admit liability to a claim, leaving only a contest as to quantum. In such circumstances, the court ordinarily has no role in determining whether the defendant was indeed liable while the concession is in place.

6. [69]

   When that occurs, the “real issues” in the proceedings – being the points in issue between the parties to which the obligations in s 56 of the Civil Procedure Act 2005 (NSW) apply – thereby shrink. Indeed, it is open to the plaintiff to renounce its claim altogether, and when the parties are agreed that litigation should be dismissed, then absent some additional requirement (such as leave in the case of a plaintiff under a disability, or in a representative proceeding) the Court will give effect to the concession.

7. [70]

   On the other hand, if the parties agree that their dispute does extend to a particular issue, then it is ordinarily not for the Court to interfere. As Hayne J put it in Fingleton v The Queen (2005) 227 CLR 166; [2005] HCA 34 at [196]:

8. [71]

   In the present case, one may pass over the less unequivocal statements in the plaintiffs’ opening. By the time of final address, the plaintiffs unequivocally renounced in both their written and oral submissions the possible alternative case formulated the previous Thursday afternoon for their consideration by the primary judge. While that concession remained in place, the primary judge was obliged to proceed on the basis that the plaintiffs’ claim was confined in that way. This Court is likewise bound when determining this appeal by way of rehearing. It was and is not open for the proceedings to be determined contrary to the plaintiffs’/appellants’ concession while that concession remains in place.

9. [72]

   Ground 1 is not made out.

10. [73]

    Ground 2 is the reason that much of the earlier exchanges at trial have been reproduced above. A deal of the oral address in this Court on appeal focussed upon the exchanges on the first and fourth days of the trial.

11. [74]

    We cannot agree that the concessions which matter were “insisted upon” or otherwise elicited in any improper way. It is true that there are passages in the exchanges during the opening of the trial, and at the conclusion of the fourth day, which may suggest that the primary judge was frustrated by what was perceived as the unhelpfulness of some of counsel’s answers. It is difficult to express a concluded view about that, because much may turn on the manner and tone with which the questions were asked. For example, depending on its tone, the statement at the end of the opening “let’s just get on with the case”, may or may not have conveyed a measure of dissatisfaction with the assistance the court was receiving. It is also true that there were some errors in what had been advanced by the judge. In particular, the statement on the second day that there had been no mention of a case based on a joint venture was correct if confined to the oral submissions, but disregarded the references to a joint venture in the written opening submissions. But one of the reasons for raising the point was to ensure that the judge fully understood the case being advanced. It is to be borne in mind that the judge was presented with a court book with more than 4000 pages, that the plaintiffs’ opening submissions were 157 paragraphs over 38 pages and that after a lengthy opening occupying around half of the first day, a case based on a joint venture had not been mentioned. The point of questions such as those posed by the judge was to cut through the mass of material and identify the real issues in the case, as well as to expose any misunderstandings his Honour may have had as to those issues, so that both parties could be heard. That was entirely proper and to be expected in commercial litigation conducted by experienced counsel in the Commercial List of this Court.

12. [75]

    But all of that may be put to one side. At the conclusion of that fourth day, a Thursday, after the evidence was complete, the judge made it quite plain that he was not asking for an immediate answer, that he appreciated that counsel had been preoccupied by cross-examination, but that he did expect a definitive answer to how the plaintiffs framed their case when the hearing resumed the following Monday. His Honour listened to the entirety of the plaintiffs’ final address, without interruption, for the first half of the Monday. It was during that address that the concessions were volunteered.

13. [76]

    This ground is not made out, once it is seen that the judge raised the issue squarely at the conclusion of the evidence on the Thursday afternoon, and the concession was volunteered by counsel in written and oral submissions the following Monday.

14. [77]

    The Court was entitled to be told, unequivocally, whether there was an alternative basis on which the plaintiffs advanced their claim. After a four day adjournment, the Court was told unequivocally that there was not. Both the primary judge and John were entitled to rely on that concession. That is dispositive of this ground.

15. [78]

    Ground 3 seeks to withdraw the concession. We do not accept, for the reasons given above, that it was “pressed from counsel”, or that counsel qualified it in any way. We have reproduced extensively the passages relied on by the appellants as qualifications. They do not detract from what was conceded, expressly and repeatedly, in the course of his closing submissions and then in the five passages emphasised above. Senior counsel for the appellants, Dr Birch, emphasised that the concession was made after the conclusion of the evidence. He was right to do so. It is a matter which goes to the exercise of the discretion to grant leave, because it reduces the scope for prejudice to the defendant.

16. [79]

    The principles were restated after a careful review of authorities, including appellate authorities rejecting a more liberal approach seen in some English decisions, by White J in SLE Worldwide v WGB [2005] NSWSC 816 at [56]-[57]:

17. [80]

    White J referred at [64]-[65] to what had been said by McPherson JA in Ridolfi v Rigato Farms Pty Ltd [2001] 2 Qd R 455; [2000] QCA 292 at [27] to the effect that ordinarily an explanation would be required of how an admission came to be made and why it should be withdrawn.

18. [81]

    In this appeal, the appellants have (understandably) placed great weight upon the alternative basis articulated by the primary judge at [134]-[141]. However, there is no evidence or explanation as to how the concession came to be made. The record establishes that the plaintiffs declined to advance the broader case articulated at the conclusion of the Thursday afternoon both in writing and orally on the following Monday. It is on the cards that explicit advice and instructions were given on the issue. This is exactly the thing which might be expected to have been the subject of a conference on the Thursday afternoon or the Friday. It may very well be that the written submissions were prepared as they were on the basis of express instructions. For the reasons outlined above, this may have been a deliberate forensic choice by the plaintiffs. None of this was the subject of any evidence. It follows that the ordinary position that an explanation should be given by way of evidence as to why an admission should be withdrawn, referred to by McPherson JA and White J, has not been made out.

19. [82]

    In any event, even if the concession were permitted to have been withdrawn, the appellants would need to have confronted the fact that they were not still involved in Diona ten years after the actual agreement as found by the primary judge in [23] of his reasons, supplemented by what he held at [112] which has been set out at [22] above. Because the potential alternative case was not pursued, the significance of the fact that Michael and Morgan ceased their involvement in Diona in 2014 which was less than 10 years after the oral agreement or agreements between them and John, as found by the primary judge, was not explored. On its face, that was a condition to any entitlement to a shareholding after 10 years and this was the issue which was raised by ground 1 of the notice of contention. Complex issues may have arisen in relation to the reasons why Michael and Morgan had ceased to be involved in Diona by the time of that key date. These matters were also not explored in the reasons for judgment and they did not arise on the pleaded case. This consideration provides a further reason why the concessions should not be permitted to be withdrawn.

20. [83]

    Leave should not be granted to withdraw the concessions. Ground 3 is not made out.

21. [84]

    Ground 4 is conclusionary, and falls with the preceding grounds.

Orders

1. [85]

   The result is that the appeal should be dismissed. But we would add that this appeal illustrates that ordinarily a court ought not express views on causes of action which have not been raised for determination. Doing so went beyond the function of resolving the controversy between the parties. Doing so was also potentially unfair to the respondent, who in light of the plaintiffs’ concession has had no opportunity to be heard against the findings and reasoning expressed, albeit tentatively, in the section of the judgment titled “Alternative basis”.

2. [86]

   There being no reason for costs not to follow the event, the appeal should be dismissed with costs.