Tin-Tagel Majikk Pty Ltd v Hockey

1. [1]

   KIRK JA: I agree with Price AJA.

2. [2]

   ADAMSON JA: I agree with Price AJA.

3. [3]

   PRICE AJA: The appellants, Tin-Tagel Majikk Pty Ltd, Kenneth Roy Folley, Kathryn Mary Folley and Majikk Pty Ltd (“Majikk”) (collectively referred to as “the Folleys”) appeal against orders made against them by Walton J (“the primary judge”) on 3 July 2025 in favour of the respondents, Wayne Craig Hockey, Susan Noelene Eastway, Ashleigh Jane Eastway, David Richard Eastway and Courtney Louise Eastway (collectively referred to as “the Hockeys”). The primary judge had published reasons on 10 June 2025.

4. [4]

   The events giving rise to this appeal stem from a Share Sale Agreement (“the Agreement”) dated 17 May 2018 between the Folleys and the Hockeys pursuant to which the Folleys were to purchase the Hockeys’ shares in Danc Pty Ltd (ACN 079 357 869) (“Danc”) for the amount of $2.3 million. Danc operated the real estate business known as Ray White Bateau Bay. The Agreement under cl 6.6(e) contemplated the provision of vendor finance in the sum of $690,000 (“the vendor finance”), provided by the Hockeys to the Folleys secured by way of a second mortgage registered over the Folleys’ property in Turramurra and required to be discharged within 2 years following completion. At that time, the Folleys’ solicitors were Jemmeson Fisher.

5. [5]

   Macquarie Bank Ltd (“Macquarie Bank”) was not only the Hockeys’ bank, but also the Folleys’ bank. Prior to the sale of the Hockeys’ shares in Danc to the Folleys, Macquarie Bank had a charge over Danc’s assets which secured Danc’s and the Hockeys’ indebtedness to Macquarie Bank (“the Charge”).

6. [6]

   In order to enable the Folleys to complete the Agreement, Macquarie Bank agreed to loan to Danc $1.61 million (“the Finance Agreement”) which was to be secured by a registered first ranking security over Danc’s assets and undertakings, a deed of priority, guarantees by the Folleys and a registered mortgage over the property in Turramurra. The duration of the loan was 2 years.

7. [7]

   On 1 June 2018, the Completion Date of the Agreement, the Hockeys paid out the Macquarie Bank loan. However, as they failed to deliver an executed release of the loan on settlement in accordance with cl 3.2(g) of the Agreement, the Charge granted by Danc to Macquarie Bank remained on the Personal Property Securities Register (“PPSR”).

8. [8]

   Accordingly, after settlement of the Agreement, Macquarie Bank retained the benefit of the existing registered charge granted by Danc, which then secured the amount advanced to Danc under the Finance Agreement.

9. [9]

   The genesis of the dispute between the Folleys and the Hockeys is the Hockeys’ failure to remove the Charge from the PPSR on completion.

10. [10]

    The Folleys failed to repay the vendor finance advanced by the Hockeys, which was due on 1 June 2020.

11. [11]

    Subsequently, in October 2023 and on 2 April 2024, Danc defaulted under the Finance Agreement and on 2 April 2024 Macquarie Bank appointed receivers to Danc under the Charge. The Folleys contend that the Hockeys’ failure to discharge the Charge ultimately led to Danc being placed into receivership.

12. [12]

    It should be noted immediately that the Folleys’ position involves significant artifice. Macquarie Bank had previously loaned money to Danc, for the benefit of the Hockeys, and that loan was discharged in full upon completion of the Agreement for the transfer of the business to the Folleys. Simultaneously, Macquarie Bank was loaning money to Danc for the benefit of the Folleys. It was the failure of the Folleys to repay that loan, made for their benefit, which led to receivers being appointed to Danc by Macquarie Bank. Their core complaint is that the Hockeys had not organised for the Charge held by Macquarie Bank to be discharged on completion of the Agreement, as had been promised. Yet the Finance Agreement the Folleys had entered with Macquarie Bank provided for it to have a registered first ranking security over the assets and undertakings of Danc. If the previous charge had been removed then Macquarie Bank was entitled to have a new charge registered. In these circumstances, it may be thought unsurprising that the parties did not go through the formalities of taking those steps. That they did not do so does not form a promising foundation for the Folleys seeking to avoid complying with their separate obligation to repay the vendor finance provided by the Hockeys.

The proceedings in the Court below

1. [13]

   On 28 May 2020, the Folleys commenced proceedings in the Supreme Court (“the Court below”) against the Hockeys. The Hockeys filed a cross-claim seeking repayment of the vendor finance and the balance of a retention amount.

2. [14]

   The Folleys were granted leave to file a second further amended statement of claim (“the 2FASOC”) shortly before the hearing before the primary judge which commenced in the Court below on 12 August 2024.

3. [15]

   One of the Folleys’ claims was that the Hockeys failed to comply with the conditions precedent under cl 3 of the Agreement (“the Conditions Precedent”) and breached the warranties under the Agreement by not disclosing or causing to be discharged the Charge over Danc held by Macquarie Bank.

4. [16]

   The primary judge dismissed the Folleys’ claim on 10 June 2025 and determined that the Hockeys had been successful in their cross-claim in the sum of $631,657.29 plus interest and for the balance of the retention amount in the sum of $54,915.36 plus interest: Tin-Tagel Majikk Pty Ltd v Hockey [2025] NSWSC 578 (“PJ” or “primary judgment”). On 11 September 2025, the primary judge ordered that the interest payable by the Folleys on the vendor finance amounted to $265,914.23 with interest on the retention amount being $444.81. The Folleys were ordered to pay the Hockeys’ costs on an ordinary basis: Tin-Tagel Majikk Pty Ltd v Hockey (No 2) [2025] NSWSC 1031.

5. [17]

   During the hearing in the Court below, the lawyers for the parties identified the issues in dispute and provided to the primary judge a Joint Summary of Factual Background and an Agreed Statement of Issues (“the ASOI”). Nineteen issues were agreed as to the statement of claim and two issues were agreed as to the cross-claim. In closing submissions, both parties adopted the ASOI and addressed each of the agreed issues. The primary judge structured his judgment in accordance with the ASOI, considering each of the agreed issues and giving reasons for the decision he reached in respect of each issue. Where relevant, the issues in the ASOI which are germane to particular grounds of appeal will be identified when that ground is addressed.

The Appeal

1. [18]

   The Folleys were legally represented during the hearing in the Court below. They have been self-represented since their solicitors filed a notice of ceasing to act on 28 January 2026. At the hearing in this Court, Mr Folley made oral submissions on behalf of the appellants. Mr Katekar SC with Ms Hall appeared as counsel for the Hockeys.

2. [19]

   The Folleys’ notice of appeal filed on 9 September 2025 identifies nine grounds of appeal.

3. [20]

   In Ground 1, the Folleys rely on the primary judge’s finding at PJ[403]-[404], that the Hockeys failed to comply with cl 3.2(g) of the Agreement but challenge his Honour’s findings at PJ[416]-[420] that the Conditions Precedent were waived by proceeding to completion. Grounds 2 to 6 challenge the primary judge’s findings that the Folleys were aware of the existence of both the Charge and the PPSR registration and were imputed with knowledge of their solicitors being their agents at PJ[428]-[434]. Ground 7 challenges the primary judge’s finding at PJ[436] that the Folleys had abandoned their claim that the Hockeys had not properly complied with their obligations under cl 3.4(b) of the Agreement. Ground 8 challenges the primary judge’s findings at PJ[444(3)], [493] and [496] that the Folleys had elected to affirm the Agreement and at PJ[495]-[496] that they were aware of the Charge and the PPSR registration when they decided to proceed to completion and the relief sought was not available. Ground 9 contends that the primary judge erred in failing to order partial rescission of the Agreement so as to remove the obligation of the Folleys to repay the vendor finance to the Hockeys in accordance with cl 6.6(e) of the Agreement.

The motion for leave to rely upon “fresh and further” evidence and for leave to file an amended notice of appeal

1. [21]

   By notice of motion filed on 3 March 2026, the Folleys sought to rely on “fresh and further evidence” referred to and annexed to the affidavit of Kenneth Roy Folley sworn on 6 March 2026 and also sought to add five further grounds of appeal (proposed grounds 10-14). It is convenient to address the motion before proceeding to consider the appeal.

2. [22]

   In his affidavit, Mr Folley referred to five exhibits being the evidence sought to be adduced on appeal:

   1. (1)

      Category 1: Ex KRF-1, at par 18, a bundle of email correspondence dated 1 June 2018, being the Completion Date, between Ms Savina Yang of Jemmeson Fisher (the Folleys’ solicitors at the time) and Mr Warren Richardson of Richardson Legal (the Hockeys’ solicitors at the time), together with the settlement adjustment sheet;

   2. (2)

      Category 2: Ex KRF-2, at par 21, a file note by Ms Yang recording a telephone conversation with Mr Richardson on or around 1 June 2018. In relation to the PPSR registration, the file note records “PPSR: he thinks there is only one remaining, which is the one for the photocopier which will stay with the company”;

   3. (3)

      Category 3: Ex KRF-3, at par 23, which contains metadata from an email on 6 June 2018 from Richardson Legal to Jemmeson Fisher stating “[y]ou replied to this message on 6/06/2018 5:14PM”;

   4. (4)

      Category 4: Ex KRF-4, at par 26, which is entitled “Jemmeson Fisher’s acknowledgement of incomplete production” and is described as correspondence between the Folleys and the Managing Director of Jemmeson Fisher, Greg Jemmeson, in January 2026; and

   5. (5)

      Category 5: Ex KRF-5, at par 27, which were emails between 20 April to 25 April 2021 from a solicitor at Owen Hodge Lawyers, Leigh Adams, attaching the draft affidavits of both Mr and Mrs Folley, and stated by Mr Folley to demonstrate that “both [Mr and Mrs Folley’s] affidavits were drafted by Owen Hodge Lawyers from materials separately provided by [them]”.

3. [23]

   For convenience, I will refer to the above documents using the exhibit references.

4. [24]

   In his affidavit, Mr Folley refers at par 13 to “repeated sustained attempts to obtain the complete Jemmeson Fisher client file over more than seven years”. Mr Folley sets out a chronology of those attempts which commenced with the first formal request being made to Jemmeson Fisher for the client file which was followed up by the Folleys’ former solicitors in April 2019, 19 March 2020, 3 September 2020 and 1 October 2020, by writing to Jemmeson Fisher requesting the file.

5. [25]

   Mr Folley states at par 13(e) that on 5 July 2024, the Hockeys issued a subpoena to Jemmeson Fisher (“the JF Subpoena”) which sought the production of:

6. [26]

   Mr Folley states at par 13(f) that the Folleys issued a notice to produce to the Hockeys on 25 July 2024 seeking production of “any and all documents or other forms of communication ... passing between the solicitors for [the Hockeys] (Richardson Legal) and the solicitors for [the Folleys] (Jemmeson Fisher) in the period from 1 May 2018 to 31 December 2018”. Mr Folley states that the Hockeys did not produce any documents in response to their notice to produce.

7. [27]

   Mr Folley states at pars 13(g)-(h) that on 22 December 2025, a formal request was made to Jemmeson Fisher for the complete file following the primary judgment, to which in response on 16 January 2026 Jemmeson Fisher provided a “Dropbox link” which contained the “complete client file”. Mr Folley states at par 13(i) that between 16 January to 23 January 2026, the Folleys “identified gaps” and Jemmeson Fisher provided a further “Dropbox link” on 23 January 2026 containing additional documents. Mr Folley at par 14 deposes that Exs KRF-1, KRF-2 and KRF-3 were not produced to the Folleys until 16 January 2026. Mr Folley states at par 15 that the Folleys have not been provided with a copy of the entirety of the client file from Jemmeson Fisher. He further pointed out that the email metadata identified in Ex KRF-3 demonstrates “that at least one further email exists that has not been produced” and this “continuing incompleteness of production is documented in [Ex KRF-4]”.

8. [28]

   Mr Folley referred at par 18 to the Ex KRF-1 emails as being “directly material to claim 1 in the proceedings below, in relation to the company liability adjustments, as being adjusted post completion”. As to Ex KRF-2, in relation to the file note, Mr Folley states at par 22 that “[t]his file note is the most significant piece of fresh evidence in the appeal”. Mr Folley also referred to the primary judge’s findings on waiver at PJ[416], [433]-[434] and election at PJ[493]-[496].

9. [29]

   Mr Folley states at par 23 of his affidavit:

10. [30]

    As to Ex KRF-3, Mr Folley states in his affidavit at par 25 that the email establishes that Jemmeson Fisher sent a reply on 6 June 2018, five days after completion, during “live correspondence regarding PPSR discharge (see at [PJ[74]])”, with that reply having not been produced by Jemmeson Fisher. As to Ex KRF-4, Mr Folley states at par 26 that “[t]his post-trial correspondence demonstrates the incompleteness of Jemmeson Fisher’s subpoena compliance”.

11. [31]

    Exhibit KRF-5 was acknowledged by Mr Folley in his affidavit at par 28 to be emails which were in the Folleys’ possession at trial and did not constitute “fresh evidence in the strict sense”. These emails were relevant to the primary judge’s concern about the similarities between the affidavits: see, eg, at PJ[117]. Mr Folley sought leave to adduce this evidence on the ground of procedural fairness as an adverse inference was drawn by the primary judge against Mr and Mrs Folley without affording them an opportunity to explain it.

12. [32]

    Mr Folley also sought to tender an email dated 22 January 2026 from his former solicitor, Mr Ian Mark, of PBL Law Group to Mr and Mrs Folley which was marked as MFI 1.

13. [33]

    Before venturing further, it is convenient to first properly categorise the evidence that the Folleys seek to tender on the appeal for the purposes of s 75A of the Supreme Court Act 1970 (NSW) (“Supreme Court Act”).

14. [34]

    Section 75A of the Supreme Court Act relevantly provides:

15. [35]

    I will refer to Exs KRF-1, KRF-2, KRF-3 and KRF-5 as “further evidence”, because it is evidence concerning matters which existed at the time of the hearing in the Court below but were not adduced in that hearing: ss 75A(7) and (8) of the Supreme Court Act.

16. [36]

    I will refer to Ex KRF-4 and MFI 1, as “fresh evidence”, because it is evidence concerning matters which occurred after the hearing in the Court below and could not have been adduced at that hearing: s 75A(9) of the Supreme Court Act; see, eg, Tjiong v Tjiong [2012] NSWCA 201 at [165]-[176] (Meagher JA, Whealy and Barrett JJA agreeing) (“Tjiong”); Palermo Seafoods Pty Ltd v Lunapas Pty Ltd (No 3) [2015] NSWCA 359 at [10]-[11] (Leeming JA); Kramer v Stone (2023) 112 NSWLR 564; [2023] NSWCA 270 at [268] (Leeming JA, Kirk JA agreeing) (“Kramer”).

17. [37]

    The significance of making this distinction between “further evidence” and “fresh evidence” arises because s 75A(8) of the Supreme Court Act requires the Folleys to establish “special grounds” for this Court to exercise its discretion to admit further evidence, whereas that requirement does not apply to fresh evidence which falls within s 75A(9): Doherty v Liverpool District Hospital (1991) 22 NSWLR 284 at 294 (Gleeson CJ, Meagher and Handley JJA agreeing).

18. [38]

    The Folleys submitted that this Court has the power to receive further evidence on appeal where the interests of justice require it. The relevant considerations under ss 75A(7) and (8) of the Supreme Court Act include whether: (a) the evidence was not reasonably available at trial; (b) the evidence is credible; and (c) the evidence would likely have produced a different result. The Folleys submitted that the further evidence was not available despite the JF Subpoena and the notice to produce. The documents were only provided following the Dropbox links dated 16 January 2026 and 23 January 2026. The Folleys contended that where documents were unavailable due to the failure of a third party to comply with a compulsory process rather than any default by the party seeking to rely upon them, the requirement of non-availability was satisfied. The Folleys referred to the documents in Exs KRF-1 and KRF-2 as being contemporaneous and the automatic generation of the Ex KRF-3 metadata as supporting the credibility and the materiality of that evidence. The Folleys contended that the further evidence, in particular Ex KRF-2, destroys the foundations of the primary judge’s finding of actual and imputed knowledge of the Charge.

19. [39]

    In oral submissions, Mr Folley submitted that “a party cannot be expected to seek a document whose existence it does not know”: Tcpt, 16 March 2026, p 10(29-30). Mr Folley was referring to Ex KRF-2 which he said fills the “specific gap” of what Mr Richardson said to Ms Yang “at the moment of completion”. Mr Folley submitted that “[t]he probability of a different verdict if [Ex] KRF-2 is admitted is near certain”: Tcpt, 16 March 2026, p 10(37).

20. [40]

    The Hockeys opposed the Folleys’ application to adduce both the further evidence and fresh evidence. The Hockeys submitted that the further evidence could have been obtained by the Folleys for use at the hearing in the Court below had reasonable diligence been exercised. The Hockeys contended that the Folleys must have been aware of the potential relevance of the documents given they had made attempts more than 7 years ago to obtain the Jemmeson Fisher client file in as early as December 2018, with two different solicitors having subsequently been retained by the Folleys who sought to obtain that file in 2020.

21. [41]

    The Hockeys submitted that despite being aware of the potential relevance of these documents, the Folleys did not take advantage of the compulsory processes of the Court to compel their production by Jemmeson Fisher. It was the Hockeys who issued the JF Subpoena and the Folleys did not issue at any stage of the proceedings their own subpoena. The Hockeys pointed out that Exs KRF-2 and KRF-5 were identified as privileged documents and could not be produced in response to the JF Subpoena. Furthermore, Ex KRF-3 was not in existence when the JF Subpoena was filed.

22. [42]

    The Hockeys also submitted that as Exs KRF-1 and KRF-5 were not relevant to the existing grounds of appeal, they could only be relevant if the Folleys’ application to amend their grounds was granted. As to Ex KRF-2, the Hockeys contended that email was immaterial as they are contemporaneous email records regarding the same subject matter. As to Ex KRF-3, its only relevance appears to be that it is indicative of the Jemmeson Fisher production. In respect of Ex KRF-4, its sole relevance appears to be the Folleys’ attempts to obtain production and the correspondence does not inform the issues substantively in dispute. The Hockeys referred to s 75A(8) of the Supreme Court Act and submitted that the further evidence did not satisfy the conditions required to establish “special grounds”.

23. [43]

    Generally, there are three conditions that need to be established in order to satisfy the requirement of special grounds to admit further evidence under s 75A(8) of the Supreme Court Act: see, eg, Akins v National Australia Bank (1994) 34 NSWLR 155 at 160 (Clarke JA, Sheller and Powell JJA agreeing) (“Akins”); Kramer at [67] (Ward P, Leeming and Kirk JJA agreeing); Busa v South Eastern Sydney Local Health District t/as Sydney Eye Hospital [2026] NSWCA 4 at [75] (Free JA, Griffiths and Price AJJA agreeing). These three conditions are as follows:

    1. (1)

       the evidence could not have been obtained with reasonable diligence for use at the trial;

    2. (2)

       the evidence must be such that there must be a high degree of probability that there would be a different outcome; and

    3. (3)

       the evidence must be credible.

24. [44]

    In Searle v Commonwealth of Australia (2019) 100 NSWLR 55; [2019] NSWCA 127, Bell P (with whom Bathurst CJ and Basten JA agreed) considered Clarke JA’s passage in Akins and made the following observations at [174]:

25. [45]

    The observations of Mahoney JA in Radnedge v Government Insurance Office of New South Wales (1987) 9 NSWLR 235 at 251, emphasised that the relevance of the evidence sought to be adduced is not a determinative consideration:

26. [46]

    The Hockeys in their written submissions rely on a passage from the High Court’s decision in Commonwealth Bank of Australia v Quade (1991) 178 CLR 134 at 141-142 (Mason CJ, Deane, Dawson, Toohey and Gaudron JJ); [1991] HCA 61, to assert the stringency of the rule. However, as has been pointed out in a number of authorities most clearly, in Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116; [2001] NSWCA 346 at [14] (Heydon JA, Mason P and Young CJ in Eq agreeing), the scope of the discretionary power under s 75A(8) of the Supreme Court Act is not so restricted as to the three conditions enunciated in Akins and neither is it defined by reference to common law principles governing the admission of further evidence on a motion for a new trial: see, eg, Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64 at [135]-[136] (Campbell JA); Tjiong at [167] (Meagher JA, Whealy and Barrett JJA agreeing); Agripower Barraba Pty Ltd v Blomfield [2015] NSWCA 30; (2015) 317 ALR 202 at [68] (Sackville AJA, Bathurst CJ and Beazley P agreeing); see also CDJ v VAJ (No 1) (1998) 197 CLR 172; [1998] HCA 67 at [51], [52] (Gaudron J), [97], [107] (McHugh, Gummow and Callinan JJ). The circumstances of each case must be considered on their merits.

27. [47]

    Notwithstanding the Folleys’ contention of repeated efforts made over more than 7 years ago to obtain the Jemmeson Fisher client file, the unavailability of the further evidence at the hearing in the Court below resulted from the failure by the Folleys, who were legally represented, to issue a subpoena for production of the file to Jemmeson Fisher. As the Folleys were Jemmeson Fisher’s clients at the time, the Folleys were entitled to all documents on the file, including privileged documents, and were entitled to claim client legal privilege on any claim by the Hockeys for access to the documents produced.

28. [48]

    If Jemmeson Fisher had failed to comply with the subpoena or if the extent of that firm’s compliance had been an issue, the Folleys as the issuing party could have raised the matter with the primary judge and sought further orders. A failure to comply with a subpoena without lawful excuse may amount to contempt of court and wilful disobedience can be dealt with by the court: r 33.12 of the UCPR.

29. [49]

    Independently of dealing with non-compliance with a subpoena as a contempt, the court can compel compliance by an arrest warrant pursuant to s 97(2) of the Civil Procedure Act 2005 (NSW) (“CPA”). The issue of the JF Subpoena at the Hockeys’ request and the notice to produce served by the Folleys on the Hockeys does not justify the Folleys’ failure to issue a subpoena.

30. [50]

    If a subpoena had been issued at the request of the Folleys, there is no reason to doubt that the client file (which included the file note) would have been produced by Jemmeson Fisher.

31. [51]

    In these circumstances, the Folleys have failed to demonstrate that Exs KRF-1, KRF-2 and KRF-3 could not have been obtained with reasonable diligence for use at the hearing in the Court below: Hampson v Hampson [2010] NSWCA 359; (2010) 5 ASTLR 116 at [38] (Campbell JA, Giles JA and Handley AJA agreeing).

32. [52]

    Exhibit KRF-5 is relevant to proposed Ground 12 which raises a procedural fairness argument which arises from the adverse finding in relation to Mr and Mrs Folley’s credibility at PJ[118]. Recognising that the categories of special grounds are not closed for the purposes of s 75A(8) of the Supreme Court Act, this document should be admitted on the basis that it is tendered by the Folleys to determine whether the alleged failure to afford procedural fairness meant that they were deprived of the possibility of a different outcome: Whall v Stamp [2019] NSWCA 163 at [11] (Basten JA), [82] (Payne JA).

33. [53]

    A further point against the Folleys being permitted to rely upon the further evidence (except for Ex KRF-5) is that they have not established why they should not be bound by the conduct of the case by the lawyers representing them in the Court below and the forensic decisions made by them: Comlin Holdings Pty Ltd v Metlej Developments Pty Ltd (2019) 99 NSWLR 447; [2019] NSWCA 73 at [9]-[14] (Basten and Meagher JJA) and the authorities there cited; Dibb v Transport for New South Wales [2024] NSWCA 157 at [37]-[49] (Stern JA, Payne and Kirk JJA agreeing).

34. [54]

    There is no reasonable possibility that Exs KRF-1, KRF-2 and KRF-3 would have produced a different outcome in the Folleys’ favour. This is particularly so in the context of Ground 1, the central ground in the appeal, as these documents were created after the Agreement was entered into. Evidence of the parties’ post contractual conduct is not admissible as an aid to determine the construction of the contract (in this case, relevantly, cl 3.3 of the Agreement): Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57 at [35] (Gummow, Hayne and Kiefel JJ) (“Agricultural and Rural Finance”); Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407 at [318]-[322] (Campbell JA). The overriding purpose under s 56 of the CPA and the dictates of justice in this case point strongly to the motion to adduce further evidence being rejected except for Ex KRF-5.

35. [55]

    For the above reasons, I would refuse the Folleys leave to rely on Exs KRF-1, KRF-2 and KRF-3 but grant leave for Ex KRF-5 to be received as evidence on the appeal.

36. [56]

    As to the fresh evidence, while the Folleys are not required to establish special grounds to justify its reception (s 75A(9) of the Supreme Court Act), in this context “regard must be had to the nature of the proceedings and the general public interest in the finality of litigation”: Bartier Perry Pty Ltd v Paltos [2021] NSWCA 158 at [51] (Payne JA, White and McCallum JJA agreeing) and the authorities there cited. The sole relevance of Ex KRF-4 and MFI 1 is to the efforts that were made after the hearing in the Court below to obtain the Jemmeson Fisher file. This evidence neither assists the Folleys in any way in establishing their application to adduce fresh evidence nor adds anything material to the issues in this Court.

37. [57]

    Accordingly, I would refuse the Folleys leave to rely on any of the fresh evidence.

38. [58]

    In oral submissions, Mr Folley submitted that (Tcpt, 16 March 2026, p 12(45-50)):

39. [59]

    The Hockeys claimed that the amendments should not be allowed first because they raised points which had not been run at trial and which could have been addressed by evidence, and second because they had not had a proper chance to respond to them: Tcpt, 16 March 2026, pp 47-48. As to the former, such a complaint would equally have applied to the grounds if they had been included in the original notice of appeal. It was thus not a form of prejudice caused by the proposed amendments. As to the latter, the submission was somewhat surprising given that the Hockeys had already provided written submissions on those grounds prior to the hearing of the appeal. In any event, this Court then made orders permitting supplementary written submissions to be filed and served by the parties addressed to the proposed new grounds. Those orders cured any prejudice claimed by the Hockeys. In these circumstances, the interests of justice favour that leave be granted to the Folleys to file an amended notice of appeal which includes the proposed grounds and that this Court address the proposed grounds of appeal on their merits together with the original grounds of appeal.

Ground 1: construction of cl 3.3 of the Agreement

1. [60]

   The essence of the Folleys’ complaint in Ground 1 is that the primary judge erred in concluding (at PJ[416] and [419]) that by proceeding to completion without the Hockeys’ satisfaction of the conditions precedent under cl 3.2 of the Agreement, the Folleys must be taken to have waived their rights in respect of “the requirement that any unsatisfied conditions precedent be satisfied”. The Folleys contended that his Honour’s conclusion did not sit happily with his earlier findings “[h]aving correctly found that”:

2. [61]

   The Folleys suggested that the primary judge’s finding was “the catalyst” for the dismissal of their claim for a breach of contract. It was contended that his Honour erred in construing the phrase “proceeds to completion” in cl 3.3 as an “automatic, unconditional waiver of all unfulfilled conditions precedent”. The Folleys submitted that this construction ignores the second sentence of cl 3.3 which “preserves warranties, indemnities, and other obligations” and explicitly stated waiver may be “conditional if such conditions are stated expressly in writing”. The Folleys submitted that his Honour failed to reconcile the fact that cl 3.2(g) of the Agreement, “expressly contemplated satisfaction ‘on or after Completion’, which contradicts a construction where Completion itself acts as a total forfeiture of the right to demand that satisfaction”.

3. [62]

   The Folleys argued that the primary judge misapplied the applicable principles of waiver. The Folleys recognised that the doctrine of waiver is “a voluntary and intentional relinquishment of a known right”. The Folleys pointed to the primary judge inferring waiver from the “mere act of Completion”, without requiring evidence of an actual or unequivocal election to abandon the rights conferred by cl 3.2(g) of the Agreement. The Folleys referred to the “contemporaneous emails” of 31 May 2018 and 6 June 2018, and contended that those emails demonstrate an active insistence on discharge and are inconsistent with an intention to waive.

4. [63]

   The Folleys also submitted that there was an “impermissible inferential leap” by the primary judge concluding at PJ[419] that “the existence of alternative courses (such as agreeing on a later date or terminating) meant [the Folleys] must have intended to waive”. The Folleys contended that his Honour’s conclusion had improperly substituted “a judicial inference of intent for the evidence of actual intent required to establish a waiver or election”.

5. [64]

   The Folleys submitted that cl 3.3 must be read as a whole and a “commercially reasonable reader” would not have understood completion to be a trap that “irrevocably extinguishes negotiated protections where the seller and bank had represented that the encumbrance ‘would be discharged on settlement’”. It was further submitted that cl 3.2(g) was not a “binary condition precedent in the orthodox sense” but rather a mechanism which expressly permitted satisfaction after completion. The Folleys argued that the primary judge’s construction of the words “on or after” in cl 3.2(g) of the Agreement renders them meaningless and “produces an impermissible surplusage in commercial drafting”.

6. [65]

   When referring to materiality, the Folleys emphasised that the error was “outcome-determinative” as it eliminated the Folleys’ contractual right to withhold performance or terminate under cl 3.5. The Folleys contended that if the primary judge “had correctly found that no waiver occurred, [the Hockeys] would have remained in continuing breach” of cll 3.2(g) and 3.4(a). The Folleys’ contention was that this finding “would have entitled [the Folleys] to substantial damages for the subsequent appointment of receivers, which was the direct and foreseeable result of the Charge remaining undischarged”. The Folleys contended that in those circumstances the primary judge’s findings at PJ[416] and [419] should be set aside.

7. [66]

   The Hockeys submitted that the Folleys’ contention that the primary judge’s construction of cl 3.3 ignored and overlooked the second sentence of the clause was not correct. The Hockeys referred to his Honour’s consideration of that sentence at PJ[406(3)], [409] and [410]. It was contended that “the sentence has no work to do here because no other ‘warranty, indemnity or other obligation’ is in question, and Completion was not conditional”.

8. [67]

   Contrary to the Folleys’ contention that the primary judge’s construction ignores the express words of cl 3.2(g), the Hockeys submitted that his Honour did not ignore those words, whilst finding that cl 3.2(g) was “poorly drafted”, it permitted compliance in two ways described as the following: “first, by the delivery of an executed release; or second, by an undertaking that any relevant registration will be removed or transferred to [the Hockeys] on or after Completion (at PJ[394])”. The Hockeys argued that the Folleys’ reliance on the existence of that second possibility is misplaced as no such undertaking was given.

9. [68]

   As regards to the Folleys’ submission that the primary judge failed to apply the right test for waiver which requires “a voluntary and intentional relinquishment of a known right”, the Hockeys contended that this submission proceeds upon a mistaken premise, namely that the doctrine of waiver governed the question of whether the Folleys had waived cl 3.2(g). The Hockeys submitted that his Honour found that the Folleys’ waiver of cl 3.2(g) arose by operation of cl 3.3, by proceeding to unconditional completion without cl 3.2(g) having been satisfied, not as a result of waiver by operation of law derived from the Folleys’ conduct. It was submitted that the doctrine of waiver is not applicable as the present case involves a “pure” construction question.

10. [69]

    In response to the Folleys’ submission of an “impermissible inferential leap”, the Hockeys contended that the submission was premised upon the doctrine of waiver being engaged when it was not. The Hockeys submitted that no error has been shown in the primary judge’s construction of cl 3.3 and Ground 1 must fail, “with the corollary that the appeal as a whole cannot succeed”.

11. [70]

    It is convenient to set out below the clauses of the Agreement that are important to this ground.

12. [71]

    The focal point of this appeal is the construction of cl 3.3 of the Agreement which is in the following terms:

13. [72]

    Clause 3.3 is preceded by cll 3.1 and 3.2. Clause 3.1 provides:

14. [73]

    Clause 3.2 provided that completion was “subject to and conditional upon” the following:

15. [74]

    Clauses 3.5 provides:

16. [75]

    ASOI Issue 12 asked the following question:

17. [76]

    ASOI Issue 13 asked the following question:

18. [77]

    When the primary judge considered the question asked in ASOI Issue 12, his Honour found at PJ[388] that the proper construction of cl 3.2(a) “simply required that any loans to [Danc] be paid off in full” and the Hockeys had satisfied cl 3.2(a) by repaying Macquarie Bank in full on completion: at PJ[389].

19. [78]

    The primary judge found that the Hockeys had failed to comply with cl 3.2(g). His Honour stated at PJ[401] that the obligation on the Hockeys imposed by cl 3.2(g) “was to deliver to the Folleys either an executed release, or an undertaking (not an executed discharge authority)”. His Honour observed that nowhere on the executed discharge authority relied on by the Folleys was there any reference to the Charge: at PJ[402].

20. [79]

    When the primary judge came to consider ASOI Issue 13, his Honour summarised the submissions of both parties. The Hockeys’ principal submission was that even if the Hockeys did not comply with the conditions precedent set out in cl 3.2, on a proper construction of cl 3.3, the Folleys had waived compliance by proceeding to completion. The primary judge found that the proper construction of cl 3.3 was that for which the Hockeys contended. His Honour said at PJ[409]:

21. [80]

    The primary judge at PJ[410] did not accept the Folleys’ contention that the word “or” in cl 3.3 “should have a conjunctive effect, so as to require that a waiver is only valid where the purchaser agrees to the waiver in writing and proceeds to completion”. His Honour said at PJ [411]:

22. [81]

    His Honour went on to say at PJ[412]-[414]:

23. [82]

    At PJ[419] his Honour said:

24. [83]

    The principles that apply to the construction of commercial contracts are well-established: see, Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35] (French CJ, Hayne, Crennan and Kiefel JJ) (“Electricity Generation”); Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [46]-[52] (French CJ, Nettle and Gordon JJ) (“Mount Bruce”); Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 at [16] (Kiefel, Bell and Gordon JJ) (“Ecosse”); Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd (2023) 276 CLR 500; [2023] HCA 6 at [27] (Kiefel CJ, Gageler, Gordon, Gleeson and Jagot JJ).

25. [84]

    There was no dispute between the parties as to the principles of construction to be applied. It is apparent that the primary judge at PJ[148]-[151] applied the conventional principles of construction referring first to the statement of principle in Electricity Generation at [35] (French CJ, Hayne, Crennan and Kiefel JJ). His Honour after referring to numerous recent and well-known authorities as to construction summarised the relevant principles as follows at PJ[151]:

26. [85]

    In Electricity Generation, the plurality stated at [35] (French CJ, Hayne, Crennan and Kiefel JJ):

27. [86]

    Recently, the relevant principles of construction of commercial contracts were conveniently summarised by Meagher and Kirk JJA in J & P Marlow (No 2) Pty Ltd v Hayes & McCabe (2023) 112 NSWLR 29; [2023] NSWCA 117 at [89]-[90]:

28. [87]

    Although courts must strive to give commercial contracts “a commercial and business-like interpretation”, their ability to do so is constrained by the language used by the parties: Jireh International Pty Ltd t/as Gloria Jean’s Coffee v Western Exports Services Inc [2011] NSWCA 137 at [55] (Macfarlan JA, Young JA and Tobias AJA agreeing) (“Jireh”); Newey v Westpac Banking Corporation [2014] NSWCA 319 at [91] (Gleeson JA, Basten and Meagher JJA agreeing) (“Newey”). If, after considering the contract as a whole and the relevant surrounding circumstances known to both parties, the Court concludes that the language of a contract is unambiguous, then the Court must give effect to that language unless to do so would give the contract an absurd operation: Jireh at [55]; Newey at [91]; Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295 at [73]-[75] (Leeming JA, Gleeson and White JJA agreeing). It should also be borne in mind that courts “have no mandate to rewrite agreements, so as to depart from the language used by the parties, merely to give a provision an operation which, as it appears to the court, might make more commercial sense”: Miwa Pty Ltd v Siantan Properties Pte Ltd [2011] NSWCA 297; (2011) 15 BPR 29,545 at [18] (Basten JA, McColl and Campbell JJA agreeing); Willis Australia Ltd v AMP Capital Investors Ltd (2023) 113 NSWLR 1; [2023] NSWCA 158 at [53] (Ward P, Beech-Jones JA and Griffiths AJA); Zhong v Guan (2024) 116 NSWLR 258; [2024] NSWCA 300 at [35]-[38] (Kirk JA, Payne JA and Price AJA agreeing).

29. [88]

    It is well-known that a commercial contract must be read as a whole having regard to the words used in every clause, “so as to render them all harmonious one with another” and that courts should construe commercial contracts “fairly and broadly, without being too astute or subtle in finding defects”: Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109-110 (Gibbs J); [1973] HCA 36, citing Hillas & Co Ltd v Arcos Ltd [1932] All ER 494; (1932) 147 LT 503 at 514 (Lord Wright); see also Lepcanfin Pty Ltd v Lepfin Pty Ltd (2020) 102 NSWLR 627; [2020] NSWCA 155 at [78]-[94] (Bell P, Payne and McCallum JJA agreeing). Preference is given to a construction supplying a congruent operation to the various components of the whole and as to avoid it making commercial nonsense or even commercial inconvenience: Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 at [16] (Gleeson CJ, McHugh, Gummow and Kirby JJ); Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530; [2004] HCA 56 at [82] (Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ).

30. [89]

    The primary judge considered at PJ[409] the meaning of the word “may” and the context in which that word appeared. His Honour said that as the word “may” appears directly before the word “only”, the words “may only” are restrictive (not permissive), expressly “indicating that it is only in those circumstances specified that the conditions precedent can be waived”. Generally, the ordinary usage of the word “may” is permissive or facultative and not restrictive: see, Ward v Williams (1955) 92 CLR 496 at 505 (Dixon CJ, Webb, Fullagar, Kitto and Taylor JJ); [1955] HCA 4 (“Ward v Williams”); Re Coldham; Ex parte Brideson (1989) 166 CLR 338 at 347-348 (Wilson, Deane and Gaudron JJ); [1989] HCA 2. However, the correct construction of the word “may” depends not on its meaning but the particular context it is used: Ward v Williams at 505; Finance Facilities Pty Ltd v Federal Commissioner of Taxation (1971) 127 CLR 106 at 134 (Windeyer J, Barwick CJ agreeing); [1971] HCA 12; Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45; [2002] HCA 5 at [75] (Kirby J). As Gummow J observed in David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 at 276-277; [1995] HCA 43, the meaning of the words “may only” involved the imposition of a restrictive implication. There is no error in his Honour’s consideration of the words “may only” used in cl 3.3 being expressed in restrictive language, such that waiver of the conditions precedent is only in the circumstances specified under that clause.

31. [90]

    As the primary judge correctly observed at PJ[410], the ordinary meaning of the word “and” is conjunctive and the word “or” is disjunctive: see, Victims Compensation Fund Corporation v Brown [2003] HCA 54; (2003) 77 ALJR 1797 at [13], [15] (Heydon J, McHugh ACJ, Gummow, Kirby and Hayne JJ agreeing). Although as his Honour recognised, courts have in the appropriate circumstances displaced the prima facie ordinary meaning by reference to the context, such as where it is necessary to avoid an unintelligible or absurd result or the obvious meaning has a truly cumulative effect: Re The Licensing Ordinance (1968) 13 FLR 143 at 146-147 (Blackburn J), quoting R v Oakes [1959] 2 QB 350 at 356 (Lord Parker CJ); Director of Public Prosecutions (Nauru) v Fowler (1984) 154 CLR 627 at 630 (Gibbs CJ, Murphy, Wilson, Deane and Dawson JJ); [1984] HCA 48. Here, there is nothing emerging from the text or context to depart from the ordinary and natural meaning of “or” to be read disjunctively.

32. [91]

    A similar observation can be made in relation to the use of the words “waived”, “waive” and “waiver” under cl 3.3 of the Agreement. The meaning of those words should be construed according to its “natural and well-established meaning [as being] the immediately effective unilateral renunciation of a right”: Wollongong Coal Ltd v Gujarat NRE India Pty Ltd (2019) 100 NSWLR 432; [2019] NSWCA 135 at [92] (Leeming JA, Bathurst CJ and McCallum JA agreeing); Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 423 (Brennan J), 474 (Toohey J); [1990] HCA 39; Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2022) 277 CLR 445; [2022] HCA 38 at [28] (Kiefel CJ, Edelman, Steward and Gleeson JJ). In Agricultural and Rural Finance, the plurality considered the meaning of the word “waiver” and relevantly stated at [52] (Gummow, Hayne and Kiefel JJ, Heydon J agreeing):

33. [92]

    Accordingly, in considering the Agreement as a whole, a reasonable businessperson in the position of the parties would have understood cl 3.3 to mean that by proceeding to completion, the Folleys would not then be able to insist upon compliance with the conditions precedent in cl 3.2, even though a condition precedent may not have been satisfied. I am not persuaded that his Honour’s construction of cl 3.3 is incorrect. Ground 1 is not made out.

Ground 2: erroneous finding of actual or imputed knowledge of the Charge; Ground 3: factual errors regarding knowledge of the Charge; Ground 4: legal error in the imputation of solicitors’ knowledge; Ground 5: inconsistency regarding discharge demands

1. [93]

   Having dismissed Ground 1, Grounds 2 to 5 may be dealt with briefly. Grounds 2 to 4 challenge the primary judge’s findings that the Folleys knew about the Charge and the PPSR registration and that knowledge had been imputed to the Folleys from their solicitors. Ground 5 challenges the primary judge’s findings concerning waiver.

2. [94]

   Those challenged findings were made by his Honour in the alternative to his conclusion that the Hockeys’ failure to comply with cl 3.2(g) of the Agreement had been waived. The issue of the Folleys’ knowledge whether actual or constructive has little relevance as the primary judge did not err in the construction of cl 3.3. It is thus not strictly necessary to address these grounds. Nevertheless, it is appropriate to do so.

3. [95]

   Although I have rejected the Folleys’ application to adduce Ex KRF-2, which the Folleys state was their solicitor’s file note created on or around 1 June 2018. If the proposed exhibit had been admitted, it falls short of establishing that the knowledge of the Folleys’ solicitors should not be imputed to them.

4. [96]

   Ex KRF-2 is a file note which bears neither the date nor the time that it was made. The relevant notation, which states “PPSR: he thinks there is only one remaining which is the one for the photocopier which will stay with the company” (emphasis added), does not sit happily with the PPSR search emailed to the Hockeys’ solicitors on 31 May 2018 to which his Honour referred to at PJ[432]-[433]. The file note does not establish that the Folleys’ solicitor had no knowledge of the continued existence of the Charge. His Honour referred at PJ[439] to the omission of the Folleys’ solicitor not checking to confirm that the PPSR registration had been removed prior to completion.

5. [97]

   The findings made by the primary judge applied the well-known principles stated by Mason J in Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 658-659; [1974] HCA 40 (“Sargent”); see also Sargent at 649 (Stephen J); Ford Excavations Pty Ltd v Do Carmo [1981] 2 NSWLR 253 at 266-267 (Hutley JA). All the knowledge obtained by the Folleys’ solicitor in the course of carrying out the share sale of Danc under the Agreement is to be imputed to the Folleys, irrespective of whether it was communicated to them and “cannot be made to depend upon the diligence or lack of diligence exhibited by the solicitor”: Sargent at 659. There was no argument and neither is there anything to suggest fraud or impropriety or that the knowledge acquired by the solicitors was information outside the scope of their authority.

6. [98]

   Furthermore, the primary judge was entitled to find on the evidence that “the Folleys were, in fact, aware of the existence of both the Charge and the PPSR registration”: at PJ[425]-[427].

7. [99]

   The issue of waiver has already been considered in Ground 1.

8. [100]

   Grounds 2 to 5 are not made out.

Ground 6: failure to consider induced performance

1. [101]

   Shortly stated, the Folleys contended that the primary judge treated completion as a “choice” made by the Folleys to waive their rights and failed to consider that the choice was induced by the Hockeys’ representation that the Charge “would be discharged on settlement”. The Folleys’ submissions included arguments on the construction of cl 3.3 that have already been rejected.

2. [102]

   The difficulty with the Folleys’ argument is that in the Court below, no argument was advanced that the Folleys were induced to proceed to completion by representations made by the Hockeys. In accordance with the authorities discussed below at [145], this is a new point which if raised before the primary judge would have been the subject of evidence. The Folleys have not overcome the heavy burden of demonstrating that this new point if it had been raised in the Court below could not possibly have been met by evidence at trial. Furthermore, the Folleys also bore the burden of displacing imputed knowledge of the Charge. Ground 6 is not made out.

Ground 7: whether the Folleys’ claim under cl 3.4(b) was abandoned

1. [103]

   The Folleys contend that the primary judge erred in finding at PJ[436] that the Folleys had abandoned their pleaded claim that the Hockeys had breached cl 3.4(b) of the Agreement. The Folleys submitted that they had expressly relied on cl 3.4(b) in their written closing submissions.

2. [104]

   The Hockeys pointed out that the Folleys did not identify those parts of the Appeal Books where such references are to be found. Furthermore, the ASOI which was agreed between the parties, did not contain any issue raised about a breach of cl 3.4(b).

3. [105]

   For the following reasons, the primary judge was correct to regard the Folleys as having abandoned this point.

4. [106]

   In the 2FASOC, the Folleys pleaded at par 19 that the Hockeys had breached their obligations, inter alia, pursuant to cl 3.4(b) of the Agreement.

5. [107]

   Clause 3.4 is as follows:

6. [108]

   It is significant that none of the 19 issues agreed between the parties in the ASOI identified a claim for a breach of cl 3.4(b) and neither was it one of the agreed issues in dispute in the ASOI.

7. [109]

   The sole reference to cl 3.4(b) is evident at par 85 in the written closing submissions by the Folleys’ counsel in the Court below, Mr Philips, in the context of an argument concerning the construction of cl 3.3. Although acknowledging that the transcript is sometimes an imperfect record, I am unable to find any reference in the transcript to cl 3.4(b) in the closing addresses of counsel. It is unsurprising that the primary judge said at PJ[436]-[437]:

8. [110]

   The primary judge then discussed cl 3.4(b) at PJ[438]-[439] as an issue “to explain what else ought to have been done by the Hockeys to comply with cl 3.4(b) of the Agreement”.

9. [111]

   No error has been shown by the Folleys in his Honour’s consideration that cl 3.4(b) had been abandoned.

10. [112]

    Ground 7 is not made out.

Ground 8: alleged error in finding that the Folleys elected to affirm the Agreement

1. [113]

   Shortly stated, the Folleys contended that the primary judge erred in finding that they had sufficient knowledge of the breach by the Hockeys to constitute an election to affirm the Agreement. The Folleys submitted that by treating their solicitors’ imputed knowledge of the breach, his Honour substituted “a legal fiction of imputation for the necessary factual finding of a conscious and unequivocal election”. The Folleys argued that in absence of actual knowledge of the Charge as a matter of law they could not have made an election to affirm the Agreement.

2. [114]

   These arguments have been dealt with and rejected in the determination of Grounds 1 to 5. Accordingly, Ground 8 is not made out.

Ground 9: failure to order partial rescission

1. [115]

   The Folleys submitted that the primary judge erred in failing to order partial rescission of the Agreement so as to remove the Folleys’ obligation to pay to the Hockeys the sum of $690,000 identified in cl 6.6(e) of the Agreement.

2. [116]

   The Folleys identified this claim for relief as being part of their claims for misleading and deceptive conduct and breach of contract claim which his Honour declined holding that restitutio in integrum was impossible because Danc had since entered receivership.

3. [117]

   The Folleys submitted that the primary judge erred in law by treating the impossibility of perfect restoration as a complete bar to rescission and by failing to recognise that equity permits partial rescission where necessary to do practical justice. It was contended that the primary judge further erred by denying relief “on the basis of circumstances (receivership) that were themselves a consequence of [the Hockeys’] wrongdoing”. The Folleys stated that equity does not permit a party to rely upon the consequences of its own breach to defeat relief.

4. [118]

   A further submission was that practical justice required that the Folleys not be compelled to pay $690,000 to the Hockeys whose misleading conduct and failure to provide clear title precipitated the loss of the business in Danc and its subsequent receivership. The injustice was compounded by the monetary obligation being secured by way of a mortgage granted by Majikk.

5. [119]

   The Folleys submitted that this was a material error as by refusing partial rescission, the primary judge denied the Folleys the only remaining meaningful remedy for the Hockeys’ breaches and misleading conduct, leaving them burdened with a substantial debt notwithstanding the loss of the business and the primary judge’s adverse findings against the Hockeys.

6. [120]

   In written submissions in reply, the Folleys raised a complaint that the primary judge, having found that Mrs Hockey engaged in misleading and deceptive conduct, should have made an order for partial rescission under s 243 of the Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law (“the ACL”).

7. [121]

   The Hockeys contended that the Folleys’ submissions that the primary judge failed to consider the availability of partial rescission was not correct and referred to at PJ[483]-[485] and [492(1)-(3)].

8. [122]

   The Hockeys noted that no issue had been raised as to any of the issues of fact or law identified in those paragraphs of the primary judgment.

9. [123]

   As to the Folleys’ submission that the primary judge in finding restitutio in integrum was not possible because Danc had been placed into receivership, the Hockeys contended that was not the reason why his Honour found that “restitutio in integrum” was not possible. Rather, it was the broader context of “time that has elapsed” and the “substantially altered circumstances of the business”: at PJ[481].

10. [124]

    A further argument raised two matters that the Hockeys claimed were fatal to the Folleys’ submissions that the primary judge erred by denying relief on the basis that the circumstances of receivership were themselves a consequence of the Hockeys’ wrongdoing. The Hockeys submitted that no submission was advanced in the Court below to the effect that Danc’s receivership was the result of the Hockeys’ wrongdoing and that argument cannot be advanced now. Furthermore, that argument is doomed to fail as the Folleys’ default on the Finance Agreement that led to the appointment of receivers more than 5 years after completion cannot be attributed to the Hockeys.

11. [125]

    Although it is not entirely clear from the Folleys’ submissions, Ground 9 appears to embrace the primary judge’s findings on rescission which answered the questions posed in ASOI Issues 16 and 19.

12. [126]

    As to ASOI Issue 16, the thrust of the Folleys’ argument focuses on the primary judge’s application of the process of restitutio in integrum whereas the argument in ASOI Issue 19 concerns the availability of partial rescission pursuant to s 243 of the ACL.

13. [127]

    Before dealing with the Folleys’ submissions concerning partial rescission under Issue 16, the primary judge found at PJ[470]-[472] that the Folleys had failed to establish a breach of the Agreement and “as such, there is no basis to award damages, or any other form of relief sought”. However, “for completeness”, his Honour had regard to the Folleys’ submissions.

14. [128]

    The primary judge found at PJ[478] that, in this case, it was not possible for “the Court to achieve restitutio in integrum” as it was “not practically possible to put the parties back in the positions they were in prior to the Agreement”. Furthermore, given the time that had elapsed since the Agreement was entered into and the “substantially altered circumstances of the business which was bought and sold by the parties”, there was no way the parties “could be completely restored (or even substantially restored) to the position they were in prior to the Agreement”: at PJ[481].

15. [129]

    Contrary to the Folleys’ submissions at [117] above, the primary judge accepted at PJ[483] partial rescission may be made in equity and was aware of the relevant principles and differences between rescission at law and in equity having extensively referred to the judgment of Leeming JA (with whom Beazley P and Sackville AJA agreed) in Nadinic v Drinkwater (2017) 94 NSWLR 518; [2017] NSWCA 114 (“Nadinic”): at PJ[483], [487]-[488].

16. [130]

    The primary judge concluded at PJ[492] that the Folleys’ arguments were fundamentally flawed for the following reasons:

17. [131]

    It is plain that the primary judge gave careful consideration to partial rescission and applied the relevant legal principles. No error has been established.

18. [132]

    As to ASOI Issue 19, s 237 of the ACL is a discretionary power to make orders which will compensate for loss or prevent or reduce loss and the kinds of relief available under that section include under s 243(a)(ii) that “the whole or any part of a contract made between a person who has engaged in misleading or deceptive conduct and the injured person is void ab initio”: Jonval Builders Pty Ltd v Commissioner for Fair Trading (2020) 104 NSWLR 1; [2020] NSWCA 233 at [39]-[41] (Leeming JA, Bathurst CJ and Meagher JA agreeing) (“Jonval”); Cassaniti v Katavic (No 2) [2023] NSWCA 107 at [106] (Gleeson JA, Kirk and Adamson JJA agreeing).

19. [133]

    The primary judge’s consideration of the availability of partial rescission proceeded under statute pursuant to s 243 of the ACL from the finding at PJ[667] of misleading and deceptive conduct by Mrs Hockey in falsely stating to the Folleys that she intended to retire from the real estate industry pursuant to s 18 of the ACL. The focus on principles in equity by the Folleys to support an order for partial rescission under s 243 of the ACL “afford guidance for, but do not dictate, the exercise of the statutory discretion” and it is clear that his Honour was cognisant of that point from a reading of PJ[670]-[671]: Jonval at [35]; see also Nadinic at [23]-[33],[43]-[44], [138]-[142].

20. [134]

    As was stated by Allsop P (with whom Macfarlan JA and Sackville AJA agreed) in Awad v Twin Creeks Properties Pty Ltd [2012] NSWCA 200 at [43] “[w]hether or not to grant a form of rescission … is a question in the nature of a discretion to be approached by reference to the facts of the particular case, the policy and underpinning of [the ACL] and the evaluative assessment of what is the appropriate relief to compensate for, or to prevent the likely suffering of, loss or damage ‘by’ the conduct”. That includes, as the primary judge did at PJ[674], a consideration of any delay in seeking relief and the surrounding circumstances following the completion of the Agreement: see, Nadinic at [33], [43]-[44] referring to Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546. There is no error in the primary judge’s approach with respect to taking into account those considerations in the exercise of his discretion to refuse to order partial rescission.

21. [135]

    In Jonval at [42]-[46] it was made clear that s 237 of the ACL does not require the Folleys to quantify what the loss or damage or likely loss or damage is, although what is required is that the Folleys show that as a result of Mrs Hockey’s contravening conduct they have suffered, or will be likely to suffer, loss or damage.

22. [136]

    The primary judge stated at PJ[675] that in addition to the reasons set out at ASOI Issue 16, with respect to the “orders for partial rescission sought by [the Folleys] would not achieve practical justice between the parties”, his Honour noted “in the context of this claim, that there is no nexus between the misrepresentation made by Mrs Hockey (that she intended to retire), and the provisions sought to be set aside”. His Honour found that “the vendor finance provisions benefited the Folleys by deferring payment of the vendor finance amount for 2 years, so as to lower the Folleys’ upfront cost”.

23. [137]

    No error has been established in the primary judge’s findings.

24. [138]

    The Folleys’ argument on appeal that practical justice required them not to be compelled to pay $690,000 was premised on the basis that it was the Hockeys’ misleading and deceptive conduct and failure to provide a clear title that precipitated the loss of the business and its subsequent receivership. That argument does not appear to have been advanced in the Court below.

25. [139]

    Although no detailed argument about the issue of causation was advanced by either party, no causal connection between Mrs Hockey’s contravening conduct and the Folleys’ loss of their business in Danc as a result of the receivership was established: Zong v Wang [2022] NSWCA 80; (2022) 401 ALR 698 at [21] (Brereton JA, Leeming and White JJA agreeing).

26. [140]

    Danc went into receivership as a result of the Folleys’ failure to comply with the Finance Agreement. The same observation may be made about the Hockeys’ breach of cl 3.2(g) of the Agreement.

27. [141]

    Ground 9 is dismissed.

Ground 10: alleged error in making orders against Majikk

1. [142]

   Ground 10 alleges that the primary judge erred in making or affirming orders against Majikk, when his Honour found at PJ[6] that Majikk was not a party to the Agreement and its role was limited to providing security for the vendor finance under cl 6.6(e)(ii) of the Agreement, yet nevertheless treated Majikk as receiving a benefit under the Agreement at PJ[675].

2. [143]

   The Hockeys submitted that Ground 10 raises a new issue that would have required evidence in the Court below and was contrary to the case that the Folleys ran in the Court below that Majikk was a party to the Agreement. Mr Katekar relied on Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33 (“Coulton”).

3. [144]

   In written submissions in response to the Hockeys’ submissions, the Folleys submitted that proposed Ground 10 raises whether “a non-party mortgagor may be subjected to a personal money judgment absent privity or covenant”. The Folleys submitted that Majikk was not referred to or identified as a party to the Agreement. The Folleys submitted that the Agreement drew a distinction between vendors, purchasers and guarantors and imposed the vendor finance obligation under cl 6.6(e)(ii) on the purchaser but not Majikk. They submitted that Majikk’s role was confined to the provision of a mortgage over an identified property in favour of the Hockeys as security for the vendor finance. The Folleys also submitted that cl 6.6(e)(ii) requires procurement of security, not assumption of liability. The Folleys contended that the Hockeys’ reliance on the pleading history is misplaced and irrelevant. The Folleys submitted that “[t]he question is whether the Court had a juridical basis to enter a personal judgment … [p]leadings cannot supply such a foundation where none exists in law”.

4. [145]

   As a general rule, a party is bound by the conduct of its case in the court below and will ordinarily not be permitted to rely on new issues not raised below: Bird v DP (a pseudonym) [2024] HCA 41; (2024) 98 ALJR 1349 at [39] (Gageler CJ, Gordon, Edelman, Steward and Beech-Jones JJ) and the authorities there cited. While that rule “is not absolute”, it is well established that a new issue cannot be raised when there is a possibility that it could have been met by evidence at trial: see, eg, Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438 (Latham CJ, Williams and Fullagar JJ); [1950] HCA 35; O’Brien v Komesaroff (1982) 150 CLR 310 at 319 (Mason J); [1982] HCA 33; Coulton at 7-8 (Gibbs CJ, Wilson, Brennan and Dawson JJ); Water Board v Moustakas (1988) 180 CLR 491 at 497 (Mason CJ, Wilson, Brennan and Dawson JJ); [1988] HCA 12; Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 77 ALJR 1598 at [51]-[52] (Gleeson CJ, McHugh and Gummow JJ); Park v Brothers [2005] HCA 73; (2005) 80 ALJR 317 at [34] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ); see also University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 59 ALJR 481 at 483 (Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ).

5. [146]

   The Folleys bear a “heavy burden” of demonstrating that the new issues raised on appeal were of the kind recognised in the authorities that fell within the limited exceptions to the general rule, in particular where the hearing of the issues before the primary judge proceeded by way of a detailed ASOI: Lam v Liu [2025] NSWCA 254 at [36], [44]-[48] (Free JA, Bell CJ and Payne JA agreeing).

6. [147]

   In these circumstances, it is necessary to address the way in which the issue was dealt with, if at all, in the Court below.

7. [148]

   Clause 6.6(e)(ii)(D) of the Agreement provided that the balance of the vendor finance due under cl 6.6(e) shall be secured, relevantly:

8. [149]

   In par 23(b)(iv) of the 2FASOC, the Folleys alleged that Majikk “had entered into the Agreement” and that it had agreed, pursuant to cl 6.6(e) of the Agreement to provide the security. This allegation was made in the context of an allegation that the Folleys had done certain things in reliance on the Hockeys’ misleading or deceptive conduct. This paragraph was denied by the Hockeys in their amended defence.

9. [150]

   In the cross-claim, the Hockeys alleged at par 11, that:

10. [151]

    However, this allegation was made in circumstances where it was not alleged that Majikk was a party to the Agreement. Despite that, somewhat oddly, in par 22 of the cross-claim it was alleged that the Hockeys had suffered loss and damage “[b]y reason for the breaches of the Agreement by the first to fifth cross-defendants” – thus alleging that Majikk had breached an agreement to which it was not a party (Majikk being the fifth cross-defendant).

11. [152]

    In the Folleys’ defence to the cross-claim, the Folleys admitted in par 11 that the Agreement contained cl 6.6(e)(ii)(D) but repeated the matters pleaded in pars 7A-F which denied that cl 6.6(e)(ii)(D) was legally enforceable against Majikk for the same reasons as all the cross-defendants contended that the Agreement was not enforceable. The principal contention was that the Charge remained registered on the PPSR. The Folleys at no stage disputed that Majikk had provided the second mortgage in accordance with cl 6.6(e)(ii)(D). However, they did plead in response to par 22 that “no breaches of the Agreement are alleged” as against the second to fifth cross-defendants, that the cross-claimants could not have suffered any loss or damage as a result, and that they were therefore not entitled to any relief as claimed against them. It was not pleaded in terms that Majikk was not party to the Agreement but that probably was implied.

12. [153]

    The mortgage granted by Majikk was not in evidence in the Court below. Nor was it sought to be tendered in this Court. Nor was any issue about Majikk’s liability raised in the ASOI or the Folleys’ opening or closing submissions.

13. [154]

    The Hockeys argued that, had there been an issue as to Majikk’s liability to the Hockeys, it would have been raised in the Court below and could have been the subject of evidence or the subject of an amendment to allege that Majikk was liable under the mortgage which it had granted to the Hockeys to secure the Folleys’ debt.

14. [155]

    The question is a difficult one. While the question is one of construction of the Agreement, Majikk is bound by the way it conducted its case. If Majikk was not a party to the Agreement and the Hockeys sued only on the Agreement (rather than on the mortgage), the Hockeys did not have a right to judgment against Majikk because of the way their cross-claim had been pleaded. That Majikk was a party to the proceedings did not overcome the difficulty that the Hockeys were not entitled to relief against Majikk under the Agreement because Majikk was not a party to the Agreement. However, whilst these points were perhaps raised in the defence to the cross-claim, they were not pursued. If they had been, they would have been included in the ASOI and addressed in submissions. Further evidence might then have been adduced. Importantly, the Hockeys may well have also made an application to amend the cross-claim to add a claim against Majikk under the mortgage it had granted to them, which would have entitled them to the order which was in fact made by the primary judge.

15. [156]

    It is well-established that parties may “fight the case on issues chosen at the trial” as opposed to matters identified in the pleadings: Dare v Pulham (1982) 148 CLR 658 at 664 (Murphy, Wilson, Brennan, Deane and Dawson JJ); [1982] HCA 70. To a significant extent, that is what occurred here.

16. [157]

    There is a further matter to note. The first order made by the primary judge when delivering his reasons for judgment on 10 June 2025 was that the Hockeys were to file and serve short minutes for order reflecting the judgment within 21 days. The current issue was not addressed in the judgment, it not having been raised. The orders now complained of were made on 3 July 2025. No separate reasons for judgment were addressed to the making of those orders, and it can be inferred that they were made by consent. The Folleys thus passed up another potential opportunity to have argued that Majikk should not be subject to the orders sought under the cross-claim. That fact reinforces that the point was not in dispute below.

17. [158]

    In these circumstances the Hockeys are correct that it is not open to the Folleys to make this belated argument on appeal. Ground 10 must be rejected.

Ground 11: alleged error in finding that the Hockeys did not breach cl 6.6(b)(i) of the Agreement

1. [159]

   Ground 11 challenges the primary judge’s finding at PJ[156]-[173], that the Hockeys did not breach cl 6.6(b)(i) of the Agreement by the non-adjustment of the purchase price on completion for tax liabilities. The Folleys’ contention is that determination was made in the absence of Ex KRF-1 and on a materially incomplete evidentiary record and should be reconsidered on a complete evidentiary record.

2. [160]

   The Hockeys submitted that the further evidence would not result in a different outcome and Ground 11 must fail.

3. [161]

   Ground 11 depended upon the admission into evidence of Ex KRF-1 which has been rejected. In any event, the emails in that exhibit would not have produced a different outcome. ASOI Issue 1 asked the following question:

4. [162]

   None of the proposed emails were relevant to that issue. Ground 11 must fail.

Ground 12: alleged denial of procedural fairness in drawing inferences regarding the credibility of Mr and Mrs Folley

1. [163]

   Ground 12 challenges the primary judge’s adverse credibility findings at PJ[106]-[121] without affording either Mr or Mrs Folley an opportunity in cross-examination to respond to the specific inference drawn at PJ[118], that “Mr and Mrs Folley compared notes at the end of the meetings, or, in the absence of Mr Folley keeping his notes, he had recourse to Mrs Folley’s notes”. The Folleys submitted that the adverse inference of comparing notes was not raised in any pleading or in the ASOI and was drawn by the primary judge on his own motion. The Folleys contended that the rule in Browne v Dunn (1893) 6 R 67 (“Browne v Dunn”) required the inference to be put before it was drawn. The Folleys submitted that his Honour’s finding rested expressly on absent evidence (at PJ[119]) and submitted that Ex KRF-5 supplies that evidence. The Folleys submitted that the adverse credibility findings and its consequences for ASOI Issue 17 and the ACL claims should be set aside.

2. [164]

   The Folleys submitted that the Hockeys did not answer their case that the critical inference drawn at PJ[118] was not put to Mr and Mrs Folley in cross-examination contrary to Browne v Dunn and materially informed the primary judge’s credibility findings. They also submitted that the credibility findings were erroneous in circumstances where the primary judge’s assessment of Mrs Folley as evasive for not accepting she granted security on behalf of Danc was not reasonably open as Mrs Folley was not a director; only Danc could grant security and Mrs Folley acted only as a guarantor to the Finance Agreement.

3. [165]

   The Hockeys contended that proposed Ground 12 must fail. They submitted, first, that the credibility findings made by the primary judge were not confined to evidence of conversations but extended to Mrs Folley’s demeanour (at PJ[104]-[105]). Secondly, in any event, they submitted that even if the fresh evidence was allowed, that email itself shows the Folleys’ solicitors sent each of the draft affidavits to both Mr and Mrs Folley. The Hockeys submitted that served to reinforce the correctness of the primary judge’s findings.

4. [166]

   The Folleys contend that the primary judge erred in drawing adverse credibility findings against the Folleys (at PJ[106]-[121]) without affording either Mr or Mrs Folley an opportunity in cross-examination to respond to the specific inference drawn at PJ[118]. The primary judge said at PJ[118]:

5. [167]

   Contrary to the Folleys’ submissions, both Mr and Mrs Folley were cross-examined by Mr Katekar as to whether they had conversations or agreed what to say in their affidavits. Extensive submissions were made both orally and in writing by counsel about the credit findings that the primary judge might make concerning the evidence of Mr and Mrs Folley and Mr and Mrs Hockey.

6. [168]

   Both parties were given ample opportunity to be heard on the issue of the honesty and reliability of witnesses. There was no denial of procedural fairness. Ex KRF-5 does not assist the Folleys in their complaint about the primary judge’s adverse credit findings. On the contrary, these emails reveal that the Folleys’ solicitor sent a copy of Mr Folley’s draft affidavit to Mrs Folley and a copy of Mrs Folley’s draft affidavit to Mr Folley before each of them finalised their respective affidavits. That conduct – which is to be deplored – undermines the Folleys’ complaint on this ground. Mr Folley accepted as much in the following exchange in submissions (Tcpt, 16 March 2026, p 12(17-27)):

7. [169]

   In any event, the primary judge expressly referred to his “close observations” of “Mrs Folley, giving evidence combined with the illustrations provided by Mr Katekar SC” at PJ[104] before his Honour made adverse credit findings about Mrs Folley. In Lee v Lee (2019) 266 CLR 129; [2019] HCA 28, the plurality explained at [55] (Bell, Gageler, Nettle and Edelman JJ):

8. [170]

   In Fox v Percy (2003) 214 CLR 118; [2003] HCA 22, Gleeson CJ, Gummow and Kirby JJ observed at [23]:

9. [171]

   It is clear that the primary judge gave much consideration to the credit findings that he made. There is no reason why this Court should interfere with his Honour’s assessment of the credibility and reliability of Mr and Mrs Folley.

10. [172]

    It is also evident that the Folleys were on notice that the credibility of their evidence was in issue and that an adverse inference may be drawn. In these circumstances, there has not been a failure to comply with the rule in Browne v Dunn or a failure to accord procedural fairness to the Folleys: see, eg, Smith v Blanch (2025) 118 NSWLR 70; [2025] NSWCA 188 at [93]-[95] (Kirk, Stern and McHugh JJA).

11. [173]

    Ground 12 is not made out.

Ground 13: alleged error in the construction of the Charge

1. [174]

   Ground 13 complains that the primary judge erred, as a matter of contractual construction, in failing, having found that the Charge remained registered over the assets of Danc at completion (at PJ[403]), to give effect to cl 2.1(d) of the Agreement. The Folleys referred to the “relevant part” of cl 2.1(d) as being:

2. [175]

   The Folleys submitted that two independent grounds arise from this clause:

   1. (1)

      Breach of the covenant. The Folleys referred to the primary judge’s finding at PJ[403] that the Charge remained registered at completion and to Macquarie Bank appointing receivers in April 2024 purportedly under the Charge which was “conclusive proof that a security securing borrowing remained enforceable”. The Folleys pointed out that repayment to Macquarie Bank did not discharge the Charge which required formal release and PPSR removal. The Folleys submitted that “[t]he covenant was breached (on primacy of objective construction)”; and

   2. (2)

      The “super notwithstanding second sentence” of cl 2.1(d). The Folleys contended that the second sentence of cl 2.1(d) emphasised above was an “absolute shield” which must be given effect. The Folleys submitted that the primary judge erred “in making no finding and cl 2.1(d) as an independent cause of action despite it having been pleaded”.

3. [176]

   The Folleys referred to the two independent operative provisions and submitted that the Hockeys’ “suggestion that no breach arose because [the] debt was ‘paid out’ ignores the continuing security position, contractual structure, and the contractual definitions”. The Folleys contended that the argument by the Hockeys that the issue was “‘not run below’ supports remittal, not rejection … [t]he issue is one of construction and is not futile”.

4. [177]

   The Hockeys submitted that the Folleys did not run the argument in Ground 13 in the Court below. A breach of cl 2.1(d) did not form any part of their pleaded case, did not feature in the Folleys’ submissions and was not one of the agreed issues in the ASOI. The Hockeys further submitted there was no breach of cl 2.1(d) as Danc had no financial indebtedness at completion. The Hockeys pointed out that the only post-completion debt was the one the Folleys incurred for Danc themselves in order to complete the purchase.

5. [178]

   I accept the Hockeys’ submission that no argument was advanced before the primary judge that cl 2.1(d) of the Agreement had been breached. The asserted breach neither formed any part of the pleaded case, nor was the assertion included in the ASOI or in submissions.

6. [179]

   It is hardly surprising that the way the Folleys’ case was put below did not include the new point that the Folleys now wish to raise. Contrary to the Folleys’ argument, cl 2.1(d) was not breached by the Hockeys as the Charge was paid out by the Hockeys on settlement: see at PJ[68]. Danc’s sole post-completion debt was incurred by the Folleys pursuant to the Finance Agreement with Macquarie Bank.

7. [180]

   In accordance with cl 2.1(d) of the Agreement, on settlement Danc had “no financial indebtedness in the nature of borrowing whether on or off balance sheet”. What is submitted by the Folleys as a “super notwithstanding provision” has no effect as the covenant was not breached. Ground 13 ought not be entertained as it constitutes a significant departure from the way in which the Folleys put their case in the Court below.

Ground 14: alleged error in construction of cl 13.4 of Sch 4 to the Agreement

1. [181]

   Ground 14 alleges that the primary judge erred, as a matter of contractual construction, in failing, having found that the Charge remained registered at completion (at PJ[403]), to find a breach of warranty in cl 13.4 of Sch 4 to the Agreement, requiring any security interest over the management agreements to be released at completion. The Folleys submitted that the primary judge did not address cl 13.4 at ASOI Issue 15 (at PJ[446]-[470]), “confining his analysis to cl 2.2/Sch 4 share warranty … because he wrongly treated them as coextensive”. The Folleys submitted they are not coextensive; contending that a warranty about security interests over management agreements is distinct from a warranty about the shares. The Folleys contended that “clause 3.3 waiver defence is defeated by cl 3.3’s own second sentence preserving warranties, and by the principle that Completion day waiver of conditions precedent does not extinguish antecedent warranty rights”.

2. [182]

   The Folleys’ contention is that the primary judge erred, as a matter of construction, in failing, having found that the Charge remained registered at completion, to find a breach of warranty in cl 13.4 of Sch 4 to the Agreement. Clause 13.4 is as follows:

3. [183]

   The Folleys submitted that the correct construction preserves the warranty notwithstanding completion as the existence of the Charge at completion constituted a breach. The Folleys submitted that the “no loss” argument is irrelevant to breach; it is relevant only to remedy. They also submitted that “[t]he proposition that [the Folleys] would inevitably have consented to a fresh charge in identical terms is speculative, contested, and unsupported by any finding below”.

4. [184]

   The Hockeys submitted that the breach alleged in Ground 14 formed no part of the case below and should not be permitted on appeal. They submitted that had it been run in the Court below, it would have raised a “commercial inconvenience” construction question, the resolution of which would have called for evidence. The Hockeys also submitted that even if the cl 13.4 warranty was breached, the Folleys could not have suffered any loss.

5. [185]

   In response, the Folleys appear to suggest that this issue was raised before the primary judge when they contend that his Honour did not address cl 13.4 at ASOI Issue 15 but confined his analysis to cl 2.2 of Sch 4 to the Agreement. ASOI Issue 15 asked the following question:

6. [186]

   Clause 1.1 of the Agreement defines “warranties” to mean “the warranties provided by the Vendors set out in Schedule 4”.

7. [187]

   Clause 9.1 of the Agreement relevantly provides:

8. [188]

   The argument before the primary judge was confined to cll 2.2 of Sch 4 and 9.1 of the Agreement. The primary judge found at PJ[468]-[469] that Danc did not grant a security interest over its shares pursuant to the Charge and it followed that the Hockeys were not in breach of cl 9.1 of the Agreement as the warranty provided at cl 2.2 of Sch 4 was true and correct.

9. [189]

   As an examination of the conduct of the case before the primary judge reveals, the Folleys did not raise any argument concerning cl 13.4 of Sch 4. The Folleys’ contention in Ground 14 appears to be that the warranty provided by cl 13.4 was breached because the Charge was not released on completion. Had that argument been raised below, an argument would have been raised by the Hockeys concerning the operation of cl 3.3 which was at the heart of the dispute before the primary judge. The Hockeys’ submissions to this Court include the argument that “it is difficult to see how there can be a breach of this warranty [cl 13.4] when, by operation of cl 3.3, the release of the Charge on completion is the very thing that the Folleys waived by proceeding to completion without it”.

10. [190]

    The Hockeys further submitted that “the interaction of [cll 3.3 and 13.4] warranty would be incoherent unless the second sentence of cl 3.3 is confined to warranties which are not waived by the very act of Completion (as is the case here) … [t]hat is a ‘commercial inconvenience’ construction question, the resolution of which would have needed to have been the subject of evidence below, it cannot be raised now”.

11. [191]

    I accept this submission. Ground 14 ought not be entertained because of the way in which the Folleys conducted their case in the Court below.

12. [192]

    Having regard to the actual conduct of the proceedings, there is no doubt that proposed Grounds 10, 13 and 14 were not raised in the Court below and those proposed grounds are new issues raised by the Folleys for the first time on appeal.

Conclusion and Orders

1. [193]

   No submission was made that the general rule that costs ought follow the event ought not apply: r 42.1 of the UCPR.

2. [194]

   Accordingly, I propose the following orders:

   1. (1)

      Admit Ex KRF-5 as evidence on the appeal.

   2. (2)

      Grant leave to the appellants to amend the notice of appeal to include grounds 10-14.

   3. (3)

      Otherwise dismiss the appellants’ notice of motion filed on 3 March 2026.

   4. (4)

      Dismiss the appeal.

   5. (5)

      Order the appellants to pay the respondents’ costs.