Bertorello v Eden Apartments Pty Ltd
[2010] WASC 80
•29 APRIL 2010
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: BERTORELLO -v- EDEN APARTMENTS PTY LTD [2010] WASC 80
CORAM: BEECH J
HEARD: 21 APRIL 2010
DELIVERED : 21 APRIL 2010
PUBLISHED : 29 APRIL 2010
FILE NO/S: CIV 1430 of 2008
BETWEEN: CLAUDIA BERTORELLO
Plaintiff
AND
EDEN APARTMENTS PTY LTD
First DefendantCLARK GRAY
Second DefendantREGISTRAR OF TITLES
Third Defendant
Catchwords:
Contract - Damages - Assessment of damages - Turns on own facts
Legislation:
Nil
Result:
Damages assessed at $877,091.35
Category: B
Representation:
Counsel:
Plaintiff: Mr P J Mugliston
First Defendant : Mr R G S Harrison
Second Defendant : No appearance
Third Defendant : No appearance
Solicitors:
Plaintiff: Brook & Co
First Defendant : Tottle Partners
Second Defendant : No appearance
Third Defendant : No appearance
Case(s) referred to in judgment(s):
Madden v Kevereski [1983] 1 NSWLR 305
Mills v Ruthol Pty Ltd (2004) 61 NSWLR 1
Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 236 CLR 272
BEECH J:
Introduction
On 21 April 2010 I heard an assessment of damages for breach of a contract for sale of land. I awarded damages in the sum of $877,091.35 with interest under s 32 of the Supreme Court Act1935 (WA). I said I would provide reasons later. These are my reasons.
Procedural history
On 24 April 2008 the plaintiff (Ms Bertorello) issued a writ of summons seeking specific performance of a contract between her and the first defendant (Eden), or damages in lieu.
On 3 June 2008 an amended written statement of claim was filed, seeking the same relief.
The statement of claim includes the following:
(a)on 27 April 2005 Ms Bertorello and Eden entered into a contract of sale of Lot 16 of the Eden Apartments at 73 Mill Point Road, South Perth (the Property) for a consideration of $3.2 million;
(b)it was a term of the contract that a deposit of $320,000 be paid within 45 days of acceptance;
(c)the contract was varied in writing on 27 April 2005 to provide that:
(i)in the event Ms Bertorello was unable to provide the 10% deposit within 45 days Eden agreed that she may provide a cash or bank guarantee deposit of 5% within 60 days from the date of acceptance; and
(ii)Eden agreed to give Ms Bertorello a discount of $600,000 from the purchase price, making the purchase price $2.6 million;
(d)Ms Bertorello paid a deposit of $160,000;
(e)the contract was varied by a deed of loan agreement dated 1 November 2006 by which the balance of the purchase price was reduced to $1.69 million in consideration of Ms Bertorello agreeing to advance to Eden the sum of $800,000 by way of loan;
(f)the deed of 1 November 2006 superseded earlier agreements;
(g)pursuant to the loan agreement of 1 November 2006 Eden was to complete specified upgrades to the property and repay Ms Bertorello the sum of $548,524, which occurred;
(h)on 22 October 2007 Ms Bertorello's settlement agent advised Eden's agent that Ms Bertorello was ready, willing and able to settle; and
(i)Ms Bertorello claims specific performance of the agreement and damages.
By chamber summons dated 31 July 2008 Ms Bertorello sought summary judgment on her claim for specific performance.
In response to that application, Eden filed some affidavit evidence and submissions. The substance of Eden's evidence and submissions was to defend the claim for the remedy of specific performance on the ground of impossibility. However, Eden's evidence and submissions did not give rise to any defence to Ms Bertorello's claim to enforce the contract as varied. In other words, the defence went only to the question of remedy.
At the hearing on 26 September 2008 counsel for Eden confirmed that there was, by then, no issue as to the legal enforceability of the contract. The only issue was whether specific performance should be granted or whether the plaintiff should be confined to damages.
On 26 September 2008 Ms Bertorello elected not to pursue the summary judgment application but to program the matter to an early trial date on the question of whether specific performance should be granted.
At a directions hearing on 18 November 2008 counsel for Ms Bertorello stated that she abandoned the claim for specific performance and sought damages.
On 2 December 2008 judgment was entered for Ms Bertorello against Eden for damages in lieu of specific performance, such damages to be assessed.
At the directions hearing on 2 December 2008, programming orders were made for the exchange of evidence by the end of January 2009 and for a hearing in February or March 2009.
For reasons not necessary to detail, the plaintiff sought adjournments of the matter at or prior to directions hearings in February 2009, June 2009 and October 2009.
The evidence
The facts are not in dispute. Ms Bertorello relies on her affidavit of 30 March 2010. Eden has not filed any evidence and did not cross‑examine Ms Bertorello.
The following emerges from Ms Bertorello's affidavit.
On 27 April 2005 she entered a contract to purchase the Property for $3.2 million. On the same day she entered into an agreement to vary the contract so as to reduce the purchase price to $2.6 million and to vary the terms in relation to the deposit in the manner pleaded in the statement of claim.
She paid a deposit of $160,000.
Two further variation agreements were entered into, one on 15 December 2005 and the other in June 2006. It is not necessary to detail the terms of the variation agreements. That is because it is common cause that the effect of the parties' various agreements was that, ultimately, the purchase price was $1.85 million, of which $160,000 had already been paid as the deposit.
Ms Bertorello annexes a report of Mr Matthew Garmony, a valuer, who expresses the opinion that the Property was worth $2.65 million as at 1 October 2007. No objection is taken by Eden to the hearsay form of this evidence. To the contrary, Eden agreed the amount of one head of damages on the basis of Mr Garmony's valuation.
Ms Bertorello says in her affidavit that on or about 11 November 2006 she paid to Eden an additional sum of $251,476 for upgrades to the apartment. Part of her damages claim is for that sum.
The deposit of $160,000 was repaid to her on or about 20 December 2008, without any interest. Another part of her damages claim is for interest on the deposit.
The plaintiff's claim
The plaintiff claims damages under five heads described as:
(a)loss of increase in value of property;
(b)costs of upgrades to the apartment;
(c)default interest;
(d)interest on stamp duty; and
(e)interest on the deposit.
She also claims interest under s 32 of the Supreme Court Act.
I deal with each in turn.
Loss of increase in value
This head of damage is agreed in the sum of $800,000.
Ms Bertorello relies upon valuation evidence that the property was worth $2.65 million in October 2007 when she was ready, willing and able to settle. She claims the difference between that sum and the purchase price, as ultimately varied, of $1.85 million. As I have mentioned, Eden does not object to the hearsay evidence of value.
Arguably, at least, the question of the value of the property might be determined at the date of judgment, namely 2 December 2008. See, in this regard, the discussion in Meagher, Gummow and Lehane's Equity: Doctrines & Remedies (4th ed, 2002) [23-070], Young PW, Croft C and Smith ML, On Equity (2009) [16.1090] and Spry ICF, The Principles of Equitable Remedies (8th ed, 2010) 646 – 649. See also Mills v Ruthol Pty Ltd (2004) 61 NSWLR 1 [67]; Madden v Kevereski [1983] 1 NSWLR 305.
However, Ms Bertorello did not put forward evidence about the value of the property at the date of judgment. Eden did not object to evidence of value at the earlier point in time. To the contrary, Eden agrees that this head of damages should be assessed in the sum of $800,000. Accordingly, I assessed this head in the sum of $800,000.
Cost of upgrades
Next, Ms Bertorello claims moneys she provided to Eden for upgrades to the apartment.
The object of contract damages is to put the innocent party in the position that she would have been, so far as money can do, if the contract had been performed: Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 236 CLR 272 [13]. Damages in substitution for specific performance have a corresponding object. Had the contract been performed, Ms Bertorello would not have recovered the moneys she paid for upgrades to the apartment. Rather, she would have obtained the apartment. That is reflected in the first head of damage. For those reasons, this head of damage is not recoverable. It is not a loss caused by Eden's non‑performance of the contract.
Counsel for Ms Bertorello relied upon the letter of 24 April 2008 from Eden's solicitors to Ms Bertorello's solicitors. Counsel submitted that that letter contained an 'important admission' in stating that Eden would repay to Ms Bertorello the sum of $251,476 in respect of upgrades to the apartment. I do not accept that submission. The letter of 24 April 2008 purported to rescind the contract and foreshadowed the repayment of money in light of that purported rescission. The rescission was ineffectual. By this action and the judgment in her favour, Ms Bertorello is enforcing the contract.
Default interest
Ms Bertorello claims an amount of $77,091.35 as default interest. This sum was said to be calculated as 9% on the balance of the purchase price from 22 October 2007 until 24 April 2008, when the writ was issued. On the material before me, the basis of this claim was not clear to me. Nevertheless, at the hearing of the assessment of the damages counsel for Eden confirmed that Eden agreed that damages in this amount should be awarded. Counsel explained that he accepted that the interest was claimable when regard was had to relevant terms of the General Conditions of the Contract. (The general conditions are not in evidence before me.)
On the basis of Eden's agreement, I awarded damages under this head in the amount claimed.
Interest on stamp duty
On 8 June 2007 Ms Bertorello paid stamp duty of $166,500. (A penalty was also paid. However, Ms Bertorello accepts that she has no claim in relation to the penalty.)
On 24 December 2008 Ms Bertorello received a refund of the stamp duty. She claims interest in an amount of $15,436.60 on the stamp duty.
Counsel submits that Ms Bertorello lost the use of the stamp duty moneys in the period from June 2007 until December 2008. I do not accept that the loss of the use of the stamp duty moneys was caused by Eden's non‑performance of the contract. If the contract had been performed, the stamp duty would never have been refunded. In those circumstances, Ms Bertorello would not have had the use of the stamp duty moneys at any time after 8 June 2007, when she paid those moneys.
Counsel for Ms Bertorello sought to answer this analysis by submitting that Ms Bertorello would, in effect, have got the benefit of the stamp duty by the transfer of the property at settlement. In my opinion, that does not justify an award of damages in respect of interest on the stamp duty. Had the contract been performed, Ms Bertorello would not have got the stamp duty back. Insofar as she would have obtained the property at settlement, the value of the property is reflected in the damages awarded under the first head of damages.
For these reasons, I did not award any damages under this head.
Interest on the deposit
As I have said, the contract in its varied form provided for payment of a deposit of $160,000. Ms Bertorello paid that sum on 27 April 2005. The deposit of $160,000 was repaid to Ms Bertorello on 20 December 2008 without any interest.
Clause 5 of the special conditions of the contract related to the investment of the deposit. It was in the following terms:
5.1The Buyer hereby authorises the Deposit Holder to lodge the Deposit with a Deposit Financial Institution nominated by the Seller Agent on interest bearing deposit in the name of the Deposit Holder pending Settlement and all interest (less any taxes and government and bank charges) will vest in the Buyer except in the case of termination, repudiation, rescission or the Contract failing to become unconditional, where interest will follow the Deposit.
5.2The Buyer shall indemnify the Deposit Holder in respect of any loss resulting from the investment of the Deposit due to the default of the institution holding the Deposit.
Counsel for Ms Bertorello submitted that:
(1)under cl 5, interest earned accrued to the benefit of Ms Bertorello;
(2)had the contract been performed, interest earned on the deposit would have been able to be credited by Ms Bertorello toward the purchase price; and
(3)accordingly, Eden's failure to settle on the contract caused Ms Bertorello to lose the interest on the deposit.
I accept the premises for this argument, namely the first and second propositions, but I do not accept that the third proposition flows from those premises. Nor do I accept the third proposition generally.
Counsel submitted that the loss was suffered in consequence of being in this contract and which would not have otherwise been suffered. That might mean the loss was caused by entering into the contract, but it does not mean the loss was caused by Eden's breach of contract.
Clause 5 imposed an obligation upon the Deposit Holder (who was defined in the contract to be Burgess Rawson). It did not impose any obligation upon Eden as the seller.
Further, there is no evidence as to whether the Deposit Holder did or did not lodge the deposit in an interest bearing account. If interest was earned, the interest should have been repaid by the Deposit Holder to Ms Bertorello, and Ms Bertorello may have cause for complaint against the Deposit Holder. If interest was not earned, again Ms Bertorello may have cause for complaint against the Deposit Holder. The position in those respects is not affected by whether the contract was or was not performed by Eden.
For those reasons, I am not persuaded that any loss of interest on the deposit can be said to have been caused by Eden's breach in failing to settle on the contract. Consequently, I would not allow the claim for interest on the deposit.
Interest under the Supreme Court Act
In her written submissions, Ms Bertorello claimed interest under the Supreme Court Act on the sum of $1.69 million, being the balance of the purchase price due to be paid at settlement. In the course of argument, counsel for Ms Bertorello did not press the claim in that form nor, in my opinion, could he have done so. Interest under s 32 of the Supreme Court Act is awarded on damages. There is no basis to award interest under this section on the outstanding balance of the purchase price in circumstances where that balance will not be paid.
Counsel for Eden correctly conceded that interest under s 32 of the Supreme Court Act should be allowed on the damages awarded to Ms Bertorello.
Conclusion
For the reasons I have given, I came to the following conclusions on the heads of damage claimed by Ms Bertorello:
(1)damages for loss of increase in the value of the property: $800,000 as agreed;
(2)costs of upgrades to the apartment: no damages recoverable;
(3)default interest: $77,091.35 as agreed;
(4)interest on stamp duty: no damages awarded;
(5)interest on the deposit: no damages awarded; and
(6)interest under s 32 of the Supreme Court Act on the damages of $877,091.35.
For those reasons, I assessed damages at $877,091.35 and awarded interest at 6% on that sum from 24 April 2008 (the date of the writ) until 21 April 2010 (the date of judgment).
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