Burton v Jackman

[2014] WASC 146

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   BURTON -v- JACKMAN [2014] WASC 146

CORAM:   ACTING MASTER GETHING

HEARD:   20 MARCH 2014

DELIVERED          :   28 APRIL 2014

FILE NO/S:   CIV 2034 of 2013

BETWEEN:   DAVID KEITH BURTON

Plaintiff

AND

ROBERT COLIN JACKMAN
First Defendant

BARBARA MARGARET JACKMAN
Second Defendant

Catchwords:

Assessment of damages - Breach of contract

Legislation:

Nil

Result:

Damages assessed

Category:    B

Representation:

Counsel:

Plaintiff:     Mr J A Davies

First Defendant             :     No appearance

Second Defendant         :     No appearance

Solicitors:

Plaintiff:     Ward Keller Lawyers

First Defendant             :     No appearance

Second Defendant         :     No appearance

Case(s) referred to in judgment(s):

Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191

Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64

Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705

Robinson v Harman (1848) 1 Exch 850; (1848) 154 ER 363

Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 83 ALJR 390

Van Der Velde v Halloran [2011] WASCA 252

1. ACTING MASTER GETHING:  Robert Jackman and Barbara Jackman, the defendants, operated a business known as The Rare Coin Company.  This business was operated through a company ARCABI Pty Ltd.  In May 2011 David Burton, the plaintiff, entered into an agreement to purchase a 1813 Holey Dollar (Coin) through The Rare Coin Company.  The amount paid was $372,727.  Mr and Mrs Jackman represented to Mr Burton that at the expiration of two years from the date of sale, the value of the Coin would have appreciated so as to produce a return of 17% per annum compound interest on the purchase price.  It was also agreed that at expiration of two years from the date of purchase, Mr and Mrs Jackson and The Rare Coin Company would arrange a sale of the Coin or otherwise purchase the Coin back from Mr Burton for such an amount as to realise the represented profit.  This did not occur.  Mr Burton consequently commenced the present action in be Supreme Court seeking damages equivalent to the guaranteed return.

2. Neither Mr nor Mrs Jackman entered an appearance in the action.  Consequently on 22 October 2013, Justice McKechnie granted leave for Mr Burton to enter judgment default of appearance pursuant to Rules of the Supreme Court 1971 (WA) O 13 r 7 against both Mr Jackman and Mrs Jackman. His Honour further ordered that they pay damages to Mr Burton to be assessed by the Master on a date to be fixed. At a hearing before me on 4 February 2014, I ordered that the damages payable pursuant to the order of Justice McKechnie be assessed on 20 March 2014. I also made programming orders in relation to the filing and service of affidavits in relation to the hearing. On 20 February 2014 Master Sanderson varied the timetable for the filing and service of the affidavits.

3. Mr and Mrs Jackman were served with notice of the hearing, and Mr Jackman filed an affidavit on their behalf dated 4 March 2014.

4. Mr Burton relies on three affidavits.  The first is his affidavit sworn 8 November 2013.  The second is an affidavit of Gregory Phelps, sworn 4 March 2014.  Mr Phelps is a solicitor employed by Mr Burtons's lawyers.  The third is an affidavit of Andrew Crellin.  Mr Burton relies on a valuation of the Coin by Mr Crellin.  Mr Crellin's valuation was initially contained in a letter annexed to Mr Phelps' affidavit.  As the hearing to assess damages is in open court, this hearsay evidence is not admissible.  On the basis that I proposed to reserve by decision, I granted Mr Burton the opportunity to provide an affidavit of Mr Crellin annexing the letter containing his valuation first to address this issue.  That affidavit was filed on 17 April 2014.

5. Mr Burton claims damages on three bases:  damages for breach of the agreement to buy back the Coin, damages arising out of misleading and deceptive conduct in breach of AustralianConsumer Law (Cth) (ACL) s 18 and damages arising out of unconscionable conduct within the meaning of ACL s 21. At the hearing before me, counsel for Mr Burton accepted that it was sufficient for me to calculate damages on the basis of the breach of the agreement.

6. As a general rule, the innocent party suing for breach of contract is to be placed in the same position, so far as money can do it, as if the contract had been performed:  Robinson v Harman (1848) 1 Exch 850, 855; (1848) 154 ER 363, 365 (Parke B); Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 83 ALJR 390 [13] (French CJ, Gummow, Heydon, Crennan & Keifel JJ); Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64, 80 (Mason CJ & Dawson J); Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191[276] (Buss JA).  The assessment of these damages will ordinarily involve 'a comparison between the position in which the innocent party would have been if the breach of contract had not occurred and what, relevantly, represents the position in which the innocent party is in after the occurrence of the breach':  Australian Goldfields [276], referring to Amann Aviation.

7. Counsel for Mr Burton submitted that the correct way in which to calculate the amount of damages to which he is entitled is to assess the amount payable pursuant to the guaranteed return, and then deduct the value of the Coin which he retains possession of.  I agree that this approach is correct.

What is the appropriate measure of damages for failure to provide the guaranteed return?

1. Counsel for Mr Burton submitted that the correct starting figure to use is the agreed price of $410,000.  This is the amount of the 'Investment' described in the 'Authenticity Guarantee' annexed to Mr Burton's affidavit.  In the statement of claim, the figure of $410,000 is expressed to include GST.  Mr Burton subsequently paid only $372,727 for the Coin, this amount being $410,000 less GST.  It is thus evident that he did not pay any GST on the purchase of the Coin.  I was informed from the bar table that this may have been as the Coin was sourced from outside Australia.  In my view, the amount in fact paid by Mr Burton for the Coin is the appropriate baseline value from which to calculate the amount of the guarantee.

2. I assess the damages at $510,226 calculated as follows:

To year	Sum Carried Fwd	Interest at 17%	Total
2 June 2012	$372,727	$63,363.59	$436,090.59
2 June 2013	$436,090.59	$74,135.40	$510,226

1. Counsel for Mr Burton submitted that interest should be calculated at the rate of 17%.  However, there is no term to this effect pleaded in the statement of claim as being in the agreement.  Mr Burton has not satisfied me that he that it was a term of the agreement that the guaranteed rate of return of 17% would extend past the initial two year period.

2. I allow interest at the prescribed rate of 6% only to the date of judgement, 22 October 2013.  This amounts to $8,303 calculated as follows:

   $510,226 x 6% x 99/365 days = $8,303

What is the value of the Coin?

1. Mr Burton relies on a valuation of the Coin by Andrew Crellin.  Mr Crellin is the managing director of Sterling & Currency, a dealer in rare coins and banknotes.  Sterling & Currency specialises in Australian coins and paper money from settlement to the present day.  Mr Crellin is also the author of two published works on early Australian coins and banknotes.  Among other things, Mr Crellin has appraised the Perth Mint's archival collection and has twice been nominated to the position of President of the Australasian Numismatic Dealers Association, being the professional body representing individuals and businesses that deal in rare coins and banknotes throughout Australasia.  I accept him as a suitably qualified expert to value the Coin.

2. Mr Crellin describes the Coin as a:  'New South Wales 1813 Five Shillings / Holey Dollar good VF Noble‑Mira 1796/3 Ex Wills and Hagley collections'.  He ascribes a 'Total Market Value' to the Coin of $150,000 (including GST).  This amount is subject to what is described as 'standard commission' of 15%, being $22,500 (including GST).  The net sale process proceeds to Mr Burton following a sale in which the Total Market Value of $150,000 was achieved would be $127,500.  Mr Crellin also provides a 'Fair Wholesale Value' of $128,755 (including GST).  These values are supported by annexed evidence of recent sales.  The net sale proceeds are more or less equivalent to the Fair Wholesale Value.  Mr Burton submits that the average of the Total Market Value less commission and Fair Wholesale Value might reasonably adopted for the purposes of valuing the Coin.  On that basis the value of the Coin realisable to Mr Burton by sale in the current market conditions would equal $128,127.50, being the average of $127,500 and $128,755.

3. The first defendant, Mr Jackman, filed an affidavit outlining his views in relation to the assessment of damages.  The affidavit was sworn on 4 March 2014.  In the affidavit, he deposes that Mrs Jackman, the second defendant, authorised him to make the affidavit on her behalf as well.  The relevant portions of the affidavit are as follows:

   4.Due to the specialized nature of the numismatic market a quotation for the value of the Holey Dollar respectfully should be from noted authorities in this field of the market and not a single general dealer in numismatics.

   5.The two most qualified dealers to be able to value or sell the Holey Dollar in Australia are Belinda Downey of Coinworks - Hawksburn Melbourne an industry authority on Holey Dollars and Mr Paul Hannaford of International Auction Galleries Broadbeach Gold Coast an auctioneer specialising in the rarity market.

   6.No allowance has been made for the rarity of the Holey Dollar in comparison to general sales.

   7.The industry does not have a standard commission structure and varies from dealer to dealer from 0% selling fee to 15% plus GST or higher.

   8.The defendants have over 30 years' experience in the rare coin and banknote market dealing in the rarer and high quality items.

   9.We respectfully submit that a single valuation is not suitable to be relied upon by the court.

4. Mr Jackman did not place before the court a valuation from either Ms Downey or Mr Hannaford.  Neither has Mr Jackman placed before the court his estimate of the value of the Coin, based on his experience as set out in his affidavit.  Nor has he given evidence of any recent sales to support a different valuation.

5. I am not permitted to simply accept an expert opinion in the absence of a contradictory expert opinion, but must arrive at an independent assessment of the opinion and its value, and make any finding of fact on the evidence as a whole, on the balance of probabilities:  Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705, 732 ‑ 733, 745 (Heydon JA, with whom Priestley JA (707) & Powell JA (713) agreed). Mr Crellin was not cross‑examined on his opinion. However, I am not obliged to accept an expert opinion which is not the subject of cross‑examination if it is contradicted by a credible body of substantial evidence; if the expert opinion is so contradicted, then I must resolve the conflict in the evidence and give reasons for the preferred opinion: Van Der Velde v Halloran [2011] WASCA 252 [114] ‑ [117] (Judgment of the Court).

6. In the present case, Mr Jackman has not placed before the court anything resembling a credible body of substantial evidence to the effect that the Coin is undervalued.  Mr Crellin is appropriately qualified and has provided a valuation supported by evidence of recent sales.  I accept the evidence of Mr Crellin, and the approach suggested by Mr Burton, and value the Coin at $128,127.50,

What final orders are appropriate?

1. I assess the damages payable at $390,401.50, calculated as follows:

   Investment guarantee  $510,226

   Plus interest  $8,303

   $518,529

   Less the value of the Coin  $128,127.50

   Damages payable  $390,401.50

2. At the hearing on 20 February 2014, Master Sanderson invited counsel for Mr Burton to file a bill of costs so as to enable the costs payable in the action to be assessed with the damages.  A bill of costs was filed.  The bill of costs included the costs to the date of the freezing order.  However, those costs have to date been reserved.  I was not satisfied that Mr and Mrs Jackman had being given an opportunity to be heard in relation to the costs of the freezing order.  Further, the costs of the freezing order were not itemised by reference to the relevant scale items, but included in the general body of work undertaken.  Accordingly, I held over the finalisation of the costs until a hearing set down for 28 April 2014 at which make final orders in relation to the assessment.  This will include a hearing any submissions from Mr and Mrs Jackson as to the costs in relation to the freezing order.