Todd Hadley Pty Limited v Lake Maintenance (NSW) Pty Limited

The defendants, Todd Hadley Pty Ltd, Sean McGill Pty Ltd and Todd Hadley, come before the Court seeking orders by way of a notice of motion filed on 3 December 2019, seeking that the separate question ordered on 21 November 2019 in Todd Hadley Pty Limited v Lake Maintenance (NSW) Pty Limited [2019] NSWCA 262, pursuant to rule 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) (“the UCPR”), be removed into the Court of Appeal pursuant to rule 1.21(1)(a) of the UCPR.

The defendants are represented on the application by Mr McCulloch of Senior Counsel and the plaintiff is represented by Ms Thew.

Although the application is brought on behalf of the defendants, the plaintiff consents to the orders sought. The proceedings involve a claim by a mortgage lender against a valuer claiming damages for professional negligence and statutory breaches in connection with the provision of a valuation for mortgage lending purposes.

The defendants contend that the plaintiff's claims are statute-barred.

The defendants contend that the cause of action accrued when it became clear that the plaintiff could not recoup the amount advanced under the mortgage from a sale of the mortgaged property and that the recoverability of the moneys advanced from the borrower pursuant to a personal covenant in the mortgage was irrelevant to the question.

The proceedings have already been to the Court of Appeal, as is apparent from the orders sought. Orders were made in the Court of Appeal in Todd Hadley Pty Limited v Lake Maintenance (NSW) Pty Limited [2019] NSWCA 262 allowing an appeal setting aside earlier orders related to a separate question and ordering that pursuant to r 28.2 of the UCPR, the Court determine the following separate question:

The background to the orders made by the Court of Appeal is that at some stage, perhaps during the course of submissions, Mr McCulloch SC, who appeared for the defendants in the Court of Appeal, made appropriate concessions designed to ensure that the separate question could proceed only on a point of law. As Bell P stated at [40]:

It is notable that in the last sentence his Honour suggested that the hearing of the separate question would be a ripe candidate for removal into the Court of Appeal for determination under rule 1.21 of the UCPR. No doubt that is in part is what brings the parties to the Court today.

In [26] of his Honour's judgment, the President described the question as boiling down to whether or not in a mortgage transaction loss or damage occasioned by an allegedly negligent or misleading valuation arises from the inability to recoup moneys advanced pursuant to the mortgage from the mortgaged property or whether any cause of cause of action will only arise when it is ascertained or reasonably ascertainable that the moneys advanced cannot also be recouped from the borrower under the borrower's personal covenant due or implied into the mortgage or in loan documentation associated with the mortgage.

As submitted by Mr McCulloch SC, there may be some difference of judicial view as to the appropriate approach to this problem, and it is possible to review the principles which should be applied, as the Court of Appeal has, and come to different views.

However, again as identified by the President, the debate can be seen as one in relatively narrow compass. Plainly, the issue is of some importance to those involved in the industry and those involved in these types of matters. The question is whether the matter is suitable for removal to the Court of Appeal for determination of the separate question by the Court of Appeal without prior determination by this Court.

As set out in rule 1.21 of the UCPR, this Court may in relation to proceedings commenced in this Court make an order that the proceedings be removed into the Court of Appeal either if it makes an order under rule 28.2 for the decision of a question of law or, if having stated the question to be decided or determined, it is satisfied that special circumstances exist that render it desirable to make an order for their removal into Court of Appeal.

It might have been thought that it would be necessary for an applicant on such a motion to demonstrate special circumstances, but it is plain from a proper reading of the rule that, in particular having regard to the use of the disjunctive "or", it is only necessary that this Court make an order under rule 28.2 for the decision of a question of law. That has already occurred.

However, it is necessary that there be some limitation on the Court's ordinary decision-making process.

Adopting what was said in Stewart v Ronalds (2009) 76 NSWLR 99; [2009] NSWCA 277 and in Globe Church Incorporated v Allianz Australia Insurance Ltd [2018] NSWSC 1367 at [26]–[27] (“Globe Church Incorporated”), I consider that this case is an appropriate one to be removed to the Court of Appeal for determination of the separate question by the Court of Appeal.

I adopt what Davies J said in Globe Church Incorporated at [27], that is the existence of a conflict in legal authority in relation to determination of the separate question provides a sufficient basis to justify removal of the proceedings into the Court of Appeal. Whilst the question may be of narrow compass and only involve a question of law, having regard to the cases which have already been the subject of comment by the NSW Court of Appeal and the nature of the issue it seems to me that the separate question should be determined by the Court of Appeal.

In all the circumstances, I make the orders sought in the motion, that is that the separate question ordered by the Court of Appeal in Todd Hadley Pty Limited v Lake Maintenance (NSW) Pty Limited [2019] NSWCA 262 be removed into the Court of Appeal for determination by the Court of Appeal pursuant to r 1.21(1)(a) of the UCPR.

I order that costs be costs in the cause.