Baiyai Pty Ltd v Guy

Baiyai Pty Ltd (the appellant) appealed to the Court of Appeal of New South Wales against a judgment of the District Court which had awarded damages to Guy (the first plaintiff, a respondent and cross-appellant). The dispute arose from a contract for the sale of land where the vendor, Baiyai Pty Ltd, was found to be unwilling and unable to complete the sale. Guy sought to recover the purchase price.

The Court of Appeal was required to determine whether the District Court had erred in its assessment of damages, specifically concerning the valuation of the land and the principle of failure to mitigate loss. A key issue was whether an offer made by a subsequent intending purchaser was admissible and relevant to determining the market value of the land at the time of the vendor's breach.

The Court of Appeal held that the District Court had erred in its valuation of the land. It found that the offer from the subsequent purchaser was admissible and relevant evidence of the land's market value. The Court applied the principle that a vendor who is unwilling and unable to perform a contract for the sale of land is not entitled to recover the full purchase price. Instead, the vendor is entitled to the difference between the contract price and the market value of the land at the time of the breach, less any expenses incurred. The Court also considered the principle of mitigation, noting that the purchaser had taken reasonable steps to mitigate their loss.

The appeal was allowed in part, and the District Court's judgment was set aside except as to costs. A substituted judgment was entered in favour of Guy against Baiyai Pty Ltd for $198,990, inclusive of pre-judgment interest from 8 August 2007. The cross-appeal was dismissed, and the parties were ordered to share the costs of the appeal and cross-appeal.