Commonwealth Bank of Australia v Rigg
[2000] NSWSC 9
•1 February 2000
CITATION: Commonwealth Bank of Australia v Rigg [2000] NSWSC 9 CURRENT JURISDICTION: Common Law FILE NUMBER(S): SC 12836/93 HEARING DATE(S): 8-11 and 29 November 1999 JUDGMENT DATE: 1 February 2000 PARTIES :
Commonwealth Bank of Australia v Anthony Thomas RiggJUDGMENT OF: Brownie AJ at 1
LOWER COURT
JURISDICTION :Supreme Court LOWER COURT
FILE NUMBER(S) :LOWER COURT
JUDICIAL OFFICER :
COUNSEL : A.G. Bell for the plaintiff
R.W. Parker QC & D. Fitzgibbon for the defendantSOLICITORS: L.E. Taylor for plaintiff & cross-defendant
A.P. Sparke & Broad with Phelps & Brown for defendants/cross-claimantCATCHWORDS: Contract - construction - implied terms - Mortgage - alleged sale at undervalue - remedy of mortgagors LEGISLATION CITED: Real Property Act 1900 CASES CITED: Louinder v Leis (1982) 149 CLR 509, 519-520
Colin D Young Pty Ltd v Commercial General Acceptance Ltd (1982) NSW Conv R 55-097 at 56, 573
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 327, 347
Gramophone Co Ltd [1909] AC 488
Lamb v Votogno (1987) 164 CLR 1DECISION: Judgment for plaintiff
THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISIONBROWNIE AJ
Tuesday, 1 February 2000
12836/93 - COMMONWEALTH BANK OF AUSTRALIA v RIGG & ANOR
JUDGMENT
1 HIS HONOUR: In 1985 the plaintiff (“CBA”) and the defendants, Mr and Mrs Rigg (“the Riggs”), entered into an agreement, the detail of which is not in evidence, but apparently to the general effect that CBA would advance money to the Riggs, using bills of exchange. The overall transaction involved (amongst other things) the Riggs executing a guarantee in favour of CBA in respect of the liability of “their company”, Tony Rigg Welding and Manufacturing Pty Ltd (“Welding”), and their granting mortgages over two properties they owned, namely mortgage registered number V937197 over certain land at Nowra, where their home was (“the Nowra property”), and mortgage registered number V937199 over certain land at South Nowra, where there was an industrial complex divided up into units let out to tenants (“the South Nowra property”). Each of those mortgages contained a term incorporating the provisions of an instrument, registered number T340042.
2 In 1988 CBA appointed Mr Rogers of W Rogers Realty Pty Ltd (“Rogers Realty”) as its receiver of the rents, profits and income from the South Nowra property. The Riggs disputed the validity of the appointment of Mr Rogers as receiver, and directed the tenants to pay rent to their agent, Mr Cook, rather than to Mr Rogers; and thereafter some tenants paid rent to Mr cook, and others to Mr Rogers.
3 Disputes arose, litigation followed, and then there was executed a document dated 23 November 1989, titled “Terms of Settlement”, whereby CBA, the Riggs and Welding agreed to compromise that litigation. The present case concerns the construction and operation of the contract embodied in those Terms of Settlement.
4 So far as the evidence shows, and so far as is now relevant, the position in the earlier litigation, as at 23 November 1989, was as follows:
(a) In action number 1544 of 1989 the Riggs sued CBA, claiming damages, various declarations to the general effect that they had no continuing liability under the guarantee or the mortgages, and other relief. CBA brought a cross-claim against the Riggs, claiming one sum as being due under the guarantee of Welding’s overdraft, and another sum as being due under a bill of exchange. CBA obtained summary judgment on its cross-claim for some $1.2 million, and the Court of A ppeal dismissed an appeal from this judgment. The Riggs lodged an application for special leave to appeal to the High Court. Both that application and the Riggs’ claim for damages were yet to be heard.
(b) In action number 1598 of 1989 Welding sued CBA for damages, and other relief under the Trade Practices Act. This action was also pending.
(c) In action number 12004 of 1989 (commenced in the Common Law Division, later transferred to the Equity Division and renumbered 4009 of 1989), CBA sued the Riggs for possession of the South Nowra property. That action was listed for hearing on 21 November 1989. On that date, the hearing was adjourned, and the parties entered into settlement negotiations, culminating in the execution of the Terms of Settlement.
5 This document, which was not filed in Court, was in the following form:
“TERMS OF SETTLEMENT
BETWEEN COMMONWEALTH BANK OF AUSTRALIA (“CBA”)
ANTHONY THOMAS & DOROTHY ANNE RIGG (“the RIGGS”)
TONY RIGG WELDING & MANUFACTURING PTY LIMITED (“the company”)1. The Riggs and the Company will jointly and severally be liable to pay to CBA a principal sum of $980,000.00. Of this sum an amount of $380,000.00 is to be paid on 16 January 1990 (“the settlement date”) and the balance of $600,000.00 is to be paid on or before 16 October 1990. Provided the whole of the principal sum is paid to CBA when due, no interest will be payable, but if the amount due to be paid on the settlement date is not paid on that date the whole amount of the principal sum will then immediately fall due and will bear interest at the rate payable on Supreme Court judgments from time to time. If the amount of the principal sum due to be paid on the settlement date is paid but the balance of the principal sum is not paid when due, that balance will bear interest at the rate payable on Supreme Court judgments from time to time.
2. The Riggs will unreservedly withdraw any allegation of fraud and deceit previously made against CBA and its officers and will unreservedly apologise in the form attached. This form of words may be published by CBA as it sees fit and the publication would be the only public comment by CBA or by the Riggs or the Company in relation to the settlement of this matter.
3. In proceedings No. 1544 of 1989 -
(a) CBA to consent to the judgment in its favour being set aside;
(b) All existing orders for costs to be vacated by consent;
(c) Notice of Appeal by the Riggs to be struck out by consent with no order as to costs;
(d) The Riggs to file Notice of Discontinuance;
(e) The Riggs to release CBA and CBA to release the Riggs from all claims and liabilities arising out of or relating to the matters referred to in the proceedings, excepting only claims and liabilities arising pursuant to these Terms; and
(f) Each party to pay own costs.
4. In proceedings No. 1598 of 1989 -
(a) All existing orders for costs to be vacated by consent;
(b) The Company to file Notice of Discontinuance;
(c) The Company to release CBA and CBA to release the Company from all claims and liabilities arising out of or relating to the matters referred to in the proceedings, excepting only claims and liabilities arising pursuant to these Terms; and
(d) Each party to pay own costs.
5. In proceedings No. 12044 of 1989 -
(a) All existing orders for costs to be vacated by consent;
(b) The Riggs to consent to judgment for CBA for possession of [the South Nowra property];
(c) Execution of the judgment for possession to be stayed until the settlement date.
(d) Provided the sum of $380,000.00 is paid as provided in paragraph 1 above by the settlement date, CBA then to consent to the judgment for possession being set aside; and
(e) Each party to pay own costs;
6. The Riggs to withdraw any application pursuant to the Credit (Home Finance Contracts) Act 1984. The Riggs and CBA each to pay own costs of any such application.
7. In relation to mortgage V937197 -
(a) Provided the whole of the principal sum is paid to CBA when due, CBA will on 16 October 1990 deliver to the Riggs a duly executed discharge of the mortgage in registrable form and an instrument of release pursuant to clause 27 of Memorandum T340042;
(b) If the whole of the principal sum is not paid to CBA when due, CBA will hold the mortgage as security for the principal sum and interest payable pursuant to these terms.
8. In relation to mortgage V937199 -
(a) Provided the whole of the principal sum is paid to CBA when due, CBA will on 16 October 1990 deliver to the Riggs a duly executed discharge of the mortgage in registrable form and an instrument of release pursuant to clause 27 of Memorandum T340042;
(b) If the whole of the principal sum is not paid to CBA when due, CBA will hold the mortgage as security for the principal sum and interest payable pursuant to these terms; and
(c) Provided the sum of $380,000.00 is paid to CBA on the settlement date CBA will then postpone the mortgage to allow the registration of a mortgage to the State Bank of New South Wales in priority to mortgage V937199 and will cede priority to the State Bank for its advances pursuant to that mortgage to an aggregate amount not exceeding $500,000.00 from time to time.
9. Provided the whole of the principal sum is paid to CBA when due, CBA will on 16 October 1990 deliver to the Riggs an instrument of release pursuant to Clause 16 of the Guarantee given by them and dated 17 July 1985.
10. (a) CBA to terminate the appointment of [Mr Rogers] as receiver of rents and notify the tenants accordingly;
(b) The Riggs and the Company to release CBA and [Mr Rogers] from all claims and liabilities arising out or relating to his appointment or actions or lack of action as receiver of rents and CBA and [Mr Rogers] to release the Riggs and the Company from all claims and liabilities arising out of or relating to his appointment or actions or lack of action as receiver of rents.
11. CBA to release the Riggs and the Company from all claims and liability if any arising out of all and any statements made or published by the Riggs or any other person in any way relating to the abovementioned proceedings or the claims or subject matter of any of them, excepting only any statements subsequent to the date hereof.
12. (a) The parties to treat these Terms of Settlement as secret and confidential except as provided in 2 above;
(b) The Riggs and the Company and CBA not to publish any correspondence or communications or proceedings between the parties except as provided in 2 above or required for the purposes hereof.”
6 The attached form of apology read:
“APOLOGY
1. It appeared to Mr and Mrs Rigg and their Company, Tony Rigg Welding and Manufacturing Pty Limited from materials then available to them that fraud may have been committed by some unidentified person or persons in respect of their various accounts at the Nowra Branch of the Commonwealth Bank; and2. Mr and Mrs Rigg and their Company therefore instructed their solicitors to issue proceedings against the Bank and certain officers of the Bank.
3. During the course of those proceedings Mr and Mrs Rigg and their solicitors have had the opportunity of examining the Bank files and have satisfied themselves that the allegations of fraud are unfounded; and
4. Mr and Mrs Rigg and their Company now unreservedly withdraw all and any allegations of fraud and deceit previously made against the Bank and its officers and unreservedly apologise for the hurt, distress and offence caused by the allegations.”
7 The solicitors for the parties took the necessary steps to implement paras 3 to 6 of the Terms of Settlement, and on 9 February 1990, by consent, Needham AJ made the orders, and entered the judgment for possession of the South Nowra property, provided for in the Terms of Settlement. Steps were taken to terminate the appointment of Mr Rogers as receiver of rents, to notify the various tenants of the South Nowra property of this termination, to procure from Mr Rogers a statement showing the position as to rents, and for CBA, as mortgagee, to consent to the granting of a lease of one unit on this property; and the Riggs took steps to try to borrow money on the security of this property.
8 No money was paid to CBA, as provided for in the Terms of Settlement, and further disputes arose. On 20 March 1991 CBA procured the issue of a writ of possession of the South Nowra property. On 22 July 1991 the Riggs commenced action number 3120 of 1991 against CBA, purporting to reopen the original dispute. By letter dated 3 October 1991 to CBA, the Riggs, amongst other things, purported to rescind not only the 1985 agreement, and each of the bills of exchange that had been issued under that agreement, in each of these cases on the ground of fraud, but also the Terms of Settlement, in this case on the ground that it was voidable at their option of them and of Welding “upon a total failure of consideration”. The evidence does not disclose what happened to case number 3120 of 1991, or any of the detail of another case, referred to in the letter of 3 October 1991, action number 3122 of 1991, brought by Welding against CBA. On 27 April 1992 the Sheriff took possession of the South Nowra property, pursuant to the writ of possession. CBA appointed Rogers Realty as its Managing Agent in respect of that property, and Rogers Realty eventually arranged for its sale by CBA in June 1994.
9 CBA now sues, claiming judgment for possession of the Nowra property, and also the balance of the sum of $980,000 payable under the Terms of Settlement, and interest, after giving various credits. The Riggs brought four cross-claims, but discontinued the second of these. The first cross-claim (now pleaded in the Second Further Amended Cross-claim) is against CBA. The Riggs claim damages, including exemplary damages, and equitable compensation. In brief, they say that, in breach of the Terms of Settlement, CBA failed to do various things, generally by way of necessary cooperation relating to the Riggs borrowing the money they needed in order to pay the sums mentioned in para 1 of the Terms of Settlement; that no money was due and owing under the Terms of Settlement at any material time; that the notice purportedly given by CBA under section 57 of the Real Property Act 1900 was defective, so that the sale of the South Nowra property was made in breach of the provisions of that Act; that Rogers Realty did not manage the South Nowra property properly; and that it was sold for less than its true value. The third and fourth cross-claims are brought against Mr Rogers and Rogers Realty respectively, and in substance they repeat the claims made in the first cross-claim for improper management, and sale at an undervalue.
10 The first and principal line of defence of the Riggs was that the Terms of Settlement, by their express words, did not make time of the essence of the contract to compromise the earlier litigation, so far as concerned the obligation to pay $380,000 by 16 January 1990. They argued that CBA did not give them any notice to complete, or take any other step to make time of the essence; and they said that the sum of $380,000 never did become due and payable, as an essential term of the contract. This argument was advanced in various ways, some of them inconsistent with each other, but in any event, the argument fails at the outset, without the need to examine the finer points of the equitable rules involved.
11 The body of rules of equity relied upon operates to soften or ameliorate the rules of the common law, but only in limited circumstances. In an appropriate case, most commonly one relating to a contract for the sale of land where the contract did not by its terms make the timely performance of some obligation an essential term of the contract, a party in default might circumvent the rules of the common law preventing that party from enforcing the contract, and obtain from a court of equity an order for the specific performance of the contract. To forestall the granting of that relief, and to justify the rescission of the contract, the party not in default might give a notice to complete, effectively converting the non-essential term into an essential term. See generally Louinder v Leis (1982) 149 CLR 509, 519-520.
12 But that is not this case. Here, the Riggs did not pay the $380,000 by the date specified, and CBA sues, seeking to enforce the contract according to its terms. No party rescinded or purported to rescind the contract, and the Riggs do not seek specific performance of the contract, and the body of equitable rules relied upon simply has nothing to say about circumstances like those under consideration.
13 Additionally, upon the proper construction of the contract, the timely payment of the sum of $380,00 was an essential term: see the context in which the contract was negotiated, and the third and fourth sentences of clause 1, and clauses 5, 7, 8 and 9 of the Terms of Settlement.
14 One branch of this first line of defence was a contention that the notices given under section 57 of the Real Property Act were defective. The chain of reasoning that led to this assertion commenced with the proposition that, since time was not of the essence so far as concerned the payment of $380,000 on 16 January 1990, that sum had never become due and payable; and therefore the calculation of the sum specified in the section 57 notice as being due was based on an unjustified assumption. The rejection of the whole basis of this first line of defence means that this argument also fails.
15 The Riggs made other attacks on the section 57 notices (two notices were given, to Mr Rigg and Mrs Rigg respectively; they were not materially different). First, it was said that the notices were ambiguous, in that they referred to two properties, namely the Nowra property and the South Nowra property, but used the word “land”, in the singular. What each notice said was that unless the sum then demanded was paid within a month CBA proposed to exercise its “power of sale in respect of the land referred to in the undermentioned securities”; and there followed, under the heading “Securities”, detailed references to the two mortgages, mentioning in each case the registration number, the date, the parties, the title reference to the land mortgaged, and the street address of that land. This criticism seems to me to be without foundation: the notices made it clear to anyone willing to read them fairly that the word “land” referred to the two parcels of land mentioned, and not one parcel.
16 Secondly, it was said that the notices were defective in that they demanded a sum of money, asserting that it was “now due and payable … under and by virtue to (sic) the undermentioned securities”, whereas the money was payable under and by virtue of the Terms of Settlement, the mortgages being only security for the payments promised. This seems to me have no substance: each mortgage incorporated the terms of the Memorandum registered number T340042, and clause A of that memorandum made the mortgages “all money” mortgages, so that once the Riggs entered into the Terms of Settlement, any money payable under that contract was also money payable under and by virtue of the mortgages. That is, the mortgages contained separate promises to pay the same money.
17 In any event, as CBA submitted, even if the sale of the South Nowra property was impeachable, the remedy available to the Riggs would be proceedings for accounts: Colin D Young Pty Ltd v Commercial and General Acceptance Ltd (1982) NSW Conv R 55-097 at 56,673.
18 The second line of defence commenced with the proposition that the contract contained the following implied terms:(a) The Riggs would seek to refinance “the loan” (that is, their debt to CBA, arising out of the 1985 agreement).
(b) CBA would assist and not hinder the Riggs to refinance the loan.
(c) In order to pay the monies due under the settlement, the Riggs would be seeking to refinance the loan.
(d) CBA would disclose sufficient details to evidence the settlement.
(e) CBA would do all things reasonably necessary to facilitate the settlement including advising payout figures, preparing discharges of its mortgages and other securities held over the assets of the Riggs and Welding and to facilitate and attend on settlement to hand over such discharges of its securities.
(f) The details of leases be made available promptly, the revocation of the appointment of Mr Rogers as receiver of rents would be effected promptly, and the termination of the proceedings would be effected promptly.
(g) There would not be unreasonable delays because of the anticipated closure of business over the Christmas holidays.
19 For brevity and ease of reference, I will refer to these terms, contended for, by reference to these letters, (a) to (g). The Riggs asserted that there had been breaches of these implied terms. CBA disputed that these terms could be implied, denied the supposed breaches, denied that there was any causal connection between any supposed breach by CBA and the failure of the Riggs to make the payment of $380,000, and denied that the Riggs suffered any loss in consequence of any alleged breach by CBA.
20 The law as to when a term might be implied into a written contract is well settled. Five conditions must be satisfied: first, the term must be reasonable and equitable; secondly, it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; thirdly, it must be so obvious that “it goes without saying”; fourthly, it must be capable of clear expression; and fifthly, it must not contradict any express term of the contract. See, for example, Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 327, 347.
21 The only express term of the contract that said to be relevant was clause 8(c). Whilst there was a good deal of evidence concerning the negotiation of the contract, nothing that was said or done at that stage seems to me to throw any real light on the question whether any of the supposed implied terms existed; and what was said and done afterwards is only said to be relevant on the question of breach, and questions going to the measure of damages, if there was a breach.
22 It seems clear, having regard to clause 8(c) of the Terms of Settlement, that at the time of the contract, the parties contemplated that the Riggs might borrow $500,000 from the State Bank of New South Wales, in order to be able to pay $380,000 to CBA by 16 January 1990. But the Riggs did not promise that they would do this, and the evidence shows that they at least contemplated the possibility of borrowing money from other sources, or of raising money by selling their assets, or by procuring the sale of assets by one or more of companies they controlled; and on 25 October 1989 they appointed an agent to sell the South Nowra property.
23 I consider that each of terms (a), (b) and (c) might be described as reasonable and equitable, that is, as satisfying the first of the conditions listed in Codelfa. But I also consider that each of them fails to satisfy the second and third of these conditions, and that terms (a) and (c) do not satisfy the fourth condition. The contract was effective without these terms, none of them is so obvious that it goes without saying, and the fact that the pleader thought it necessary to plead both (a) and (c) highlights the difficulty involved in spelling out a term that satisfies both the third and the fourth conditions.
24 Terms (d) to (g) are in a practical sense adjectival to (a) to (c), and it follows that they ought not to be implied. Additionally however, each involves other difficulties in satisfying the second, third and/or fourth conditions, and term (d) does not satisfy the fifth condition, having regard to clauses 2 and 12 of the Terms of Settlement.
25 The Riggs assert that, in breach of the Terms of Settlement, CBA did not terminate appointment of Mr Rogers as receiver within a reasonable time. The agreement to compromise the earlier litigation was negotiated between Mr Mathews, a solicitor employed by CBA, stationed in Sydney, and Mr Donnelly, the solicitor acting for the Riggs and for Welding, stationed in Nowra. By 23 November 1989 the position had been reached where each party had agreed to the terms of the compromise, and on that day Mr Donnelly faxed to Mr Mathews a copy of the Terms of Settlement, executed by the Riggs and by Welding. On 28 November Mr Mathews received a hard copy of that document in the mail, and on the same day he replied, enclosing a copy executed by CBA, dealing with some of the details of the implementation of the settlement, and inquiring whether anything else needed attention. That letter evidently crossed with a letter of the same date written by Mr Donnelly to Mr Mathews, asking that CBA terminate the appointment of Mr Rogers as soon as practicable, and asking that CBA arrange for Mr Rogers to provide to a named officer of State Bank “copies of monthly Rental Statements”.
26 On 7 December Mr Mathews wrote to Mr Donnelly enclosing various draft documents, and seeking approval of these drafts: a deed of release, as contemplated by clause 10(b) of the Terms of Settlement, for execution by CBA, Mr Rogers, the Riggs and Welding; a letter from CBA to Mr Rogers terminating his appointment; and a form letter from CBA to each tenant of the South Nowra property advising of this termination, and directing the tenant to make future rent payments to the Riggs. On 12 December Mr Donnelly replied, approving of the various drafts, enclosing a copy of the deed executed by his clients, requesting copies of the “letters of termination” as soon as possible, and dealing with the making of the consent orders contemplated by clauses 3 to 5 of the Terms of Settlement. On 15 December CBA delivered to Mr Rogers and to the tenants (except for three tenants who could not be located that day - nothing is said to turn on this circumstance) letters in the agreed form.
27 It is not in dispute that the obligation of CBA under clause 10(a) of the Terms of Settlement, to terminate the appointment of Mr Rogers, was an obligation to act within a reasonable time. CBA submits that it did terminate the appointment within a reasonable time, given the circumstances; and I agree. However, even if the time taken was longer than was reasonable, there was no loss that resulted from that delay. Indeed, there was no complaint of delay for years, until the present litigation was on foot.
28 The Riggs also assert that, in breach of the Terms of Settlement, CBA did not deliver the rental statements to the named officer of State Bank, and did not deliver them punctually. This assertion is somewhat baffling, in that Mr Cook, the agent of the Riggs, knew all the details of each lease, except to the extent to which those tenants who paid their rent to Mr Rogers rather than to Mr Cook were up to date with their rent payments. Assuming that there was a contractual obligation to deliver some such documents, they were in fact sent to Mr Donnelly on 20 December, and, again, the evidence does not show that the delivery of them to Mr Donnelly rather than to State Bank (assuming this to be a breach) resulted in any loss, or that the failure to send them until 20 December (assuming that to be a breach) resulted in any loss.
29 The Riggs say that there were other breaches of the implied terms: see paragraph 31 of the Second Further Amended Cross-Claim. It seems sufficient to say that, assuming the existence of the terms contended for, the evidence does not show any loss resulting from any supposed breach, but I should add that whilst it is true that the orders contemplated by clauses 3 to 5 of the Terms of Settlement were not made until 9 February 1990, what happened was that the solicitors for the parties embarked upon the task involved with what seems to have been a cooperative spirit, with nobody expressing any need to attend to this aspect of the matter with any particular haste, coping with unanticipated problems, and apparently regarding it as appropriate that the orders not be made until early in the new law term. I do not think that this means that CBA should be regarded as having breached its obligation to do what ever was reasonable on its part to procure the making of the orders, and to do so within a reasonable time.
30 The third line of defence, advanced only in final oral submissions, was to the effect that the appropriate analysis of the relationship between CBA and the Riggs was not that of creditor and debtors, but of mortgagee and mortgagors; and the Riggs submitted that the rules concerning the forfeiture of an interest, or the rules as to penalties, applied. The submission was not advanced beyond generalities, and I reject it. By the Terms of Settlement the parties agreed to compromise existing litigation. At that stage, CBA had a judgment, confirmed by the Court of Appeal, but subject to a possible further appeal, requiring the Riggs to pay it some $1.2 million, and other cases were pending. All that litigation was compromised by the promise of the Riggs to pay CBA $380,000 by one date, and a further $600,000 by another date, and by some relatively incidental terms, one of them that two existing mortgages, which were apt in their terms for that purpose, would be implemented to provide CBA with security for the promise by the Riggs to pay the two sums mentioned by the dates mentioned. To express the matter in this way, and to remember the context in which the Terms of Settlement were negotiated, is to see that the rules about the forfeiture of an interest, and the rules about penalties, have no bearing on the case.
31 The fourth line of defence, perhaps more accurately described as a group of cross-claims, was to the general effect that CBA, Mr Rogers and Rogers Realty had inappropriately managed the South Nowra property, and that CBA had sold it an undervalue. The two allegations are intertwined, in that the essence of the claim that the property was sold at an undervalue is that it was sold when less than fully tenanted. The evidence includes four expressions of opinion as to the value of the property. For the Riggs, Mr Gibson, a valuer, opined that at the time of its sale in June 1994 it was worth $725,000, but that if it had been fully tenanted when sold, it would have been worth $875,000. Mr Cook, an estate agent and not a valuer, appraised its value in 1990, and not 1994; and expressed a view on various assumptions, including full occupancy and increases in the rents then being paid, that in 1990 it was worth $1.3 to $1.4 million. Before selling the property CBA obtained valuations from two valuers: Mr Swinbourne dated 29 March 1994 that it was worth $690,000; and Mr Walker dated 18 April 1994 that it was worth $680,000. CBA sold it for $725,000.
32 There is no truly significant difference, now relevant, between the valuers, or, for that matter, the valuers and Mr Cook. As the property stood in June 1994, it was worth no more than the sum realised on sale, $725,000. If it had been fully tenanted, that is, occupied by tenants with registered leases, so that a purchaser could have had some realistic assurance of an income stream, it would have been worth more. There was copious evidence led as to the history of the occupancy of the eleven units constituting the property, analysed in some detail in the written submissions, but I do not think there is value in repeating this detail: at all relevant times it was unoccupied to a significant extent.
33 The property was an unusual one. It was effectively divided into two fragments by a strip 30 metres wide, the subject of an easement permitting electricity lines to cross it. The space beneath these lines was used as a car park, and there were two buildings erected, on either side of this space. The design of the buildings was a poor one, and in addition the property had not been properly maintained for several years, to the extent that it needed not just money spent by way of maintenance, but by way of capital.
34 More unusually, Mr Rigg became involved, with others, in a battle with CBA and other banks, and, to say the least, he received some unfortunate advice. He proclaimed the creation of the principality of Runnymede, the territory of which consisted of what I have been calling the Nowra and the South Nowra properties; he declared various Australian statutes to be unconstitutional; he announced that he was the Palatine Prince of that principality; he purported to secede from Australia, and to declare war on Australia; and he notified the United Nations Security Council of that war. He engaged in other less sensational activities, including chaining himself to part of the South Nowra property, and having himself arrested for entering upon enclosed land, namely the South Nowra property; and he managed to attract a good deal of publicity in relation to these activities, and his dispute with CBA. In cross-examination, he agreed that some of these activities were a publicity stunt, and said that it had not occurred to him that his conduct might harm the interests of the tenants.
35 What ever else be said or not said about all these activities, it seems clear that for some years prior to the sale in 1994, the property was an unattractive one from the perspective of a tenant or prospective tenant, and therefore, from the perspective of a prospective buyer. It was badly designed, badly maintained, largely empty, the owners were in constant well publicised battle with the mortgagee in possession, and one of the owners - Mr Rigg - was acting in relation to the property in a way that many people would regard as both irrational and unlikely to be of assistance to tenants and prospective tenants.
36 The Riggs offered a number of rather nebulous criticisms of the way in which the property was managed by and on behalf of CBA, without descending to the detail of how and to what extent these criticisms affected the level of occupancy. However, the reality is that the property was not significantly different, comparing the position when CBA took over its management, and the position when it was sold. Similarly, there were a number of criticisms offered as to the manner in which it was sold, including a claim that the sale was not one at arm’s length. However, the property was not sold for less than it was worth, so that there is no profit in exploring this detail.
37 Each of the first, third and fourth cross-claims should be dismissed. In the circumstances, I need not say anything about the quantum of the damages claimed in respect of the loss of income of Mr Rigg, but I observe that the claim for exemplary damages, for breach of implied contractual terms, is a legal novelty: compare Addis v Gramophone Co Ltd [1909] AC 488 and Lamb v Cotogno (1987) 164 CLR 1; and the fact that Mr Rigg was arrested for entering upon the South Nowra property, after the Sheriff had seized possession of it pursuant to a Writ of Possession, is hardly a compensable consequence of the alleged breach of contract.
38 I give judgment for the plaintiff for possession of the land mentioned in the Summons. I grant leave to issue a writ of possession in respect of that land forthwith, but direct that that writ lie in the registry for 28 days. I give judgment for the plaintiff against the defendants for $1,040,987.79 (being $1,031,540.11 together with a further 88 days interest from 5 November 1999 until today at $107.36 per day, as set out in see Exhibit D). I grant liberty to any party to apply upon 7 days notice if any question of calculation arises. I dismiss the first, third and fourth cross-claims. I order the defendants to pay the plaintiff’s costs, of the action and these cross-claims.
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