Australia Sunrise Development Pty Ltd v Zhang - [2021] QDC 225

DISTRICT COURT OF QUEENSLAND

CITATION:

Australia Sunrise Development Pty Ltd v Zhang [2021] QDC 225

PARTIES:

AUSTRALIA SUNRISE DEVELOPMENT PTY LTD ACN 168 603 110

(Applicant)

v

JIAHE ZHANG

(Respondent)

FILE NO:

1909/20

DIVISION:

Civil

PROCEEDING:

Trial

ORIGINATING COURT:

District Court, Brisbane

DELIVERED ON:

16 September 2021

DELIVERED AT:

District Court, Maroochydore

HEARING DATE:

17 August 2021

JUDGE:

Byrne QC DCJ

ORDERS:

1.   In respect of the contract of sale entered into by the applicant and the respondent on 22 October 2015 (Lot 1604), damages are assessed in the sum of $167,860.06, including interest to the date of judgment.

2.   In respect of the contract of sale entered into by the applicant and the respondent on 4 November 2015 (Lot 1906), damages are assessed in the sum of $95,734.80, including interest to the date of judgment.

3.   The respondent pay the applicant’s costs of the proceeding, including all reserved costs.

CATCHWORDS:

REAL PROPERTY – TERMINATION AFTER BREACH OF CONTRACT – DAMAGES – ASSESSMENT OF DAMAGES – where the respondent entered into two “off the plan” contracts for sale of residential lots with the applicant – where the respondent paid a deposit on the purchase price for each lot under the contracts – where the respondent breached each contract by failing to attend settlement and not paying the balance of the purchase price under each contract – where the applicant elected to affirm the contracts – where the respondent communicated an express repudiation of the contracts in response to the applicant’s election to affirm – where in reliance on the respondent’s repudiation and continued breach, the applicant terminated the contracts – where neither of the lots the subject of the contracts have been resold – where the applicant claims damages for the loss of sale value on the lots and the holdings costs associated with continued ownership of the lots after termination – whether the damages claimed by the applicant accurately reflect the position it would have been in had the contracts been performed

CONTRACT LAW – ENTITLEMENT TO INTEREST – DAMAGES – ASSESSMENT OF DAMAGES – where the applicant claims interest on the settlement sums payable under the contracts from settlement date until the date of termination at the contractually prescribed rate – where the applicant claims interest on the damages accrued in respect of each lot from the date of termination to the date of judgment at the contractually prescribed rate –– whether the applicant is entitled to interest on the unpaid settlement sums at the contractually agreed rate – whether the applicant is entitled to interest on the damages accrued in respect of each contract from the termination date until judgment date at the contractually agreed rate – whether the applicant is entitled to interest on the unpaid judgment sums at the contractually prescribed rate as opposed to the rate prescribed by the Court

LEGISLATION:

Uniform Civil Procedure Rules 1999 (Qld)

CASES:

Australia Sunrise Development Pty Ltd v Shi, Brisbane District Court No 1845 of 2020, 30 April…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] QDC 225
Decision Date: 16 September 2021

CaseChat Overview and Summary

Australia Sunrise Development Pty Ltd (the applicant) brought an action against Zhang (the respondent) in the Supreme Court of Queensland, seeking damages for breach of two contracts for the sale of residential lots. The respondent had entered into two "off the plan" contracts with the applicant, paying deposits but failing to complete the purchase. The applicant affirmed the contracts but the respondent repudiated them, leading to the applicant terminating the contracts. The lots remained unsold. The applicant sought damages for the loss of sale value and holding costs. The legal issues included whether the damages claimed accurately reflected the applicant's position had the contracts been performed, and whether the applicant was entitled to interest on unpaid sums.

The Court found that the applicant was entitled to damages for the loss of sale value, calculated as the difference between the contracted price and the market value of the lots at the date of termination. The applicant was also entitled to holding costs incurred as a result of termination. Regarding interest, the Court held that the applicant was entitled to pre-judgment interest at the contractual rate, but post-judgment interest should accrue at the prescribed rate. This was based on the principle that contractual terms providing for a higher rate of interest merge in any judgment unless the contract specifically provides otherwise. The Court reasoned that the contractual clause in question did not expressly include a post-judgment period, and allowing a higher rate post-judgment would result in compounding interest, which the Court deemed unfair.

Damages were assessed for each lot, incorporating interest up to the date of judgment. The Court ordered the respondent to pay the applicant's costs of the proceeding, including reserved costs. This decision reflects the Court's consideration of the principles of contract law and the specific terms of the contracts in assessing the applicant's entitlement to damages and interest.

Orders

Orders of the court

1. In respect of the contract of sale entered into by the applicant and the respondent on 22 October 2015 (Lot 1604), damages are assessed in the sum of $167,860.06, including interest to the date of judgment.

2. In respect of the contract of sale entered into by the applicant and the respondent on 4 November 2015 (Lot 1906), damages are assessed in the sum of $95,734.80, including interest to the date of judgment.

3. The respondent pay the applicant’s costs of the proceeding, including all reserved costs.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The pre-judgment interest period is 343 days.[33] I assess this component of the interest claimed as follows:Lot 1604: $100,232.62 x 15% x 343/365 = $14,128.68.Lot 1906: $37,512.82 x 15% x 343/365 = $5,287.76. [33]8 October 2020 to 16 September 2021.The post-judgment period. The applicant seeks interest on the judgment sum at the rate of 15% per annum, contending that such an approach is permitted by section 59(3) of the Civil Proceedings Act 2011 as a rate of interest otherwise ordered by the Court, and further contending that, although a discretion is vested in the Court as to whether any other rate of interest should be ordered, “the court ought honour the bargain struck by the parties”. Clause 15.6 is worded in a way that the period it contemplates may include a period post-judgment, but it does not expressly include that period. In Clambake Pty Ltd v Tipperary Projects Pty Ltd (No 7)[34] EM Heenan J considered the exercise of what was essentially the same discretion under the Western Australian legislation. His Honour noted that contractual terms which provided for a higher rate of judgment on moneys owing merged in any judgment given in the action unless the contract specifically provided that any judgment should carry interest at the higher rate until payment is made in full “and that this should form part of the judgment”. The current clause does not, in my view, contain sufficient specificity to justify interest being awarded at the higher rate after the time of the judgment, and thereby avoid the doctrine of merger.[34][2009] WASC 390, [105]-[110]. I have reached this conclusion with some caution noting that my approach differs from that of Daubney J in South Sky Investments Pty Ltd v Luppi[35]. However I do note that his Honour was not apparently required to consider the issues raised in Clambake. I also note on the other hand that in Orchid Avenue Pty Ltd v Parniczky[36] Burns J declined to order interest post-judgment at the higher rate, although again he was not apparently asked to consider the issues raised by EM Heenan J.[35]supra.[36]supra. There is a further matter which, in my view, is relevant but was not considered in Clambake, although it was raised in argument. If interest at the higher rate – which is quite a high rate in today’s economic environment – were allowed on the total award in the judgment, the applicant would be receiving an entitlement to effectively compounding interest. That is, 15% interest would be accruing on all of the judgment, including the significant portions at which interest had already been assessed at 15%. True it is that the prescribed amount would also have this compounding effect, but the lesser rate alleviates at least some of that unfairness, which is in any event allowed for by legislation as the usual position. Interest post-judgment should accrue at the prescribed rate.Calculations Damages are assessed as follows:Lot 1604: Damages $100,232.62Plus interest to date of termination $ 53,498.76 Plus interest from termination dateto the date of judgment $ 14,128.68Total Damages including interest to date of judgment $167,860.06

Ratio Decidendi

Legal Principle Established

I am satisfied that the respondent has been afforded sufficient and appropriate opportunity to be heard on the assessment hearing, but has elected not to do so. The consequence is that the assessment must occur on the basis of the applicant’s unchallenged evidence. Consideration The principle governing an award of damages for breach of contract was enunciated by Parke B in Robinson v Harman[10] in the following terms: “Where a party sustains a loss by reason of breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.” [10]Robinson v Harman (1848) 1 Ex 850; at 855; 154 ER 363; at 365. In light of clause 15.5 of both contracts, the applicant correctly contends that damages “are to be assessed in accordance with the common law and as provided for under the contracts.”[11] Clear words are required to rebut the presumption that a contracting party does not intend to abandon any remedies for a breach of contract arising by operation of law,[12] and there has been no express rebuttal of the presumption by the applicant. I am therefore satisfied the applicant is entitled to all its rights arising out of the breach both at law and under the contract for the purposes of this assessment. [11]Applicant’s outline paragraph 13.[12]Castlemaine Tooheys Ltd v Carlton United Breweries Ltd (1987) 10 NSWLR 468 at 487 per Hope JA; Riggall & Anor v Thompson [2010] QCA 144, [9]-[13]. Loss of Sale Value and Resale Expenses The damages sought is the amount of the full contract price less the amount at which a resale has or could be made, after allowance for other costs reasonably and justifiably incurred. Those costs can include holding costs which will include body corporate fees and other costs associated with continuing ownership, incurred as a result of termination.[13] [13]Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64, per Mason CJ at [25]; Riggall & Anor v Thompson, supra at [25], [39]. Although a matter for my discretion, I consider the appropriate point in time for the purposes of the loss of sale calculations are from the date of termination of the contract,[14] namely 7 October 2020. This is consistent with the applicant’s submissions. Holding costs are payable to the date of assessment of damages, but not beyond.[15][14]Johnson v Agnew [1980] AC 367, 400-401.[15]South Sky Investments Pty Ltd v Luppi [2012] QSC 27, [24].Loss of sale value The uncontested and updated expert evidence is that the market value of Lot 1604 as at 7 October 2020 (i.e. the date of termination of the contract by the applicant) was $510,000[16] and the market value of Lot 1906 as at the same date was $570,000. [17] The same valuations apply as at 8 July 2021.[18][16]Affidavit of Sicheng Gai sworn 12 July 2021, attachment SG3 page 54.[17]Affidavit of Sicheng Gai sworn 12 July 2021, attachment SG3 page 41.[18]ibid.Allowing for the deposits received, this component of the damages is calculated as follows:Lot 1604: Contracted price $659,000.00Less deposit received $ 65,900.00 Less current market value $510,000.00Total $ 83,100.00Lot 1906: Contracted price $652,000.00Less deposit received $ 65,200.00 Less current market value $570,000.00Total $ 16,800.00

CITATION:	Australia Sunrise Development Pty Ltd v Zhang [2021] QDC 225
PARTIES:	AUSTRALIA SUNRISE DEVELOPMENT PTY LTD ACN 168 603 110 (Applicant) v JIAHE ZHANG (Respondent)
FILE NO:	1909/20
DIVISION:	Civil
PROCEEDING:	Trial
ORIGINATING COURT:	District Court, Brisbane
DELIVERED ON:	16 September 2021
DELIVERED AT:	District Court, Maroochydore
HEARING DATE:	17 August 2021
JUDGE:	Byrne QC DCJ
ORDERS:	1. In respect of the contract of sale entered into by the applicant and the respondent on 22 October 2015 (Lot 1604), damages are assessed in the sum of $167,860.06, including interest to the date of judgment. 2. In respect of the contract of sale entered into by the applicant and the respondent on 4 November 2015 (Lot 1906), damages are assessed in the sum of $95,734.80, including interest to the date of judgment. 3. The respondent pay the applicant’s costs of the proceeding, including all reserved costs.
CATCHWORDS:	REAL PROPERTY – TERMINATION AFTER BREACH OF CONTRACT – DAMAGES – ASSESSMENT OF DAMAGES – where the respondent entered into two “off the plan” contracts for sale of residential lots with the applicant – where the respondent paid a deposit on the purchase price for each lot under the contracts – where the respondent breached each contract by failing to attend settlement and not paying the balance of the purchase price under each contract – where the applicant elected to affirm the contracts – where the respondent communicated an express repudiation of the contracts in response to the applicant’s election to affirm – where in reliance on the respondent’s repudiation and continued breach, the applicant terminated the contracts – where neither of the lots the subject of the contracts have been resold – where the applicant claims damages for the loss of sale value on the lots and the holdings costs associated with continued ownership of the lots after termination – whether the damages claimed by the applicant accurately reflect the position it would have been in had the contracts been performed CONTRACT LAW – ENTITLEMENT TO INTEREST – DAMAGES – ASSESSMENT OF DAMAGES – where the applicant claims interest on the settlement sums payable under the contracts from settlement date until the date of termination at the contractually prescribed rate – where the applicant claims interest on the damages accrued in respect of each lot from the date of termination to the date of judgment at the contractually prescribed rate –– whether the applicant is entitled to interest on the unpaid settlement sums at the contractually agreed rate – whether the applicant is entitled to interest on the damages accrued in respect of each contract from the termination date until judgment date at the contractually agreed rate – whether the applicant is entitled to interest on the unpaid judgment sums at the contractually prescribed rate as opposed to the rate prescribed by the Court
LEGISLATION:	Uniform Civil Procedure Rules 1999 (Qld)
CASES:	Australia Sunrise Development Pty Ltd v Shi, Brisbane District Court No 1845 of 2020, 30 April…