Coyne v Calabro (No. 5) - [2010] NSWSC 694

No judgment structure available for this case.

CITATION: Coyne v Calabro (No. 5) [2010] NSWSC 694

HEARING DATE(S): 9-12 November 2009; 17 November 2009; 8 December 2009

JUDGMENT DATE :
29 June 2010

JURISDICTION: Equity

JUDGMENT OF: White J

DECISION: Direct counsel for the plaintiffs and Malouf Real Estate bring in short minutes of order in accordance with these reasons.

CATCHWORDS: CONTRACT – vendor and purchaser dispute – whether contract validly terminated by either party – where purchaser alleged misrepresentation or misleading or deceptive conduct by vendor to induce entry into contract – no misrepresentation or misleading or deceptive conduct established – purchaser not entitled to rescind contract - CONTRACT – where contract contained special condition for completion to be conditional on development approval – construction of contract to determine time for completion – whether vendor entitled to serve notice to complete and terminate contract – determination of damages recoverable for breach of contract - CONTRACT – where real agent joined as cross-defendant to cross-claim by purchaser – whether agent entitled to be indemnified by vendor for costs of proceedings – whether agent claimed costs arising from proper performance of powers, duties or authorities

LEGISLATION CITED: Conveyancing Act 1919 (NSW)
Fair Trading Act 1987 (NSW)
Trade Practices Act 1974 (Cth)
Cheques Act 1986 (Cth)
Civil Procedure Act 2005 (NSW)

CATEGORY: Principal judgment

CASES CITED: Watson v Foxman (1995) 49 NSWLR 315
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No. 2) (1989) 40 FCR 76
O’Brien v Smolonogov (1983) 53 ALR 107
Havyn Pty Ltd v Webster [2005] NSWCA 182
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423
Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 27 NSWLR 326
Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245

PARTIES: 1st Plaintiff: Terrence Michael Coyne
2nd Plaintiff: Anne Patricia Coyne
1st Defendant: Grazia Rita Calabro
2nd Defendant: Frank Calabro Pty Ltd
Cross-defendant: Malouf Real Estate Pty Limited

FILE NUMBER(S): SC 2008/278742

COUNSEL: Plaintiffs: M Ashhurst SC with P Barham
Defendants: J M Ireland QC with J S Cooke
Cross-Defendant: M Einfeld QC with A Lo Surdo

SOLICITORS: Plaintiffs: Comino Prassas
Defendants: Pikes Lawyers
Cross-Defendant: Lander & Rogers

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WHITE J

Tuesday, 29 June 2010

2008/278742 Terrence Michael Coyne & 1 Or v Grazia Rita Calabro & 1 Or (No. 5)

JUDGMENT

1 HIS HONOUR: This is a vendor and purchaser dispute. On 6 May 2008 the plaintiffs (Mr and Mrs Coyne) agreed to sell to the first defendant (Mrs Calabro) a property in Gilliver Avenue, Vaucluse for $6,455,000. The contract was not completed. Both parties claim to have terminated or rescinded it. Mrs Calabro’s husband acted for her on the transaction. Mrs Calabro contends that he was induced to cause her to enter into the contract by misrepresentations made by the agents acting for the vendors. She also contends that Mr and Mrs Coyne repudiated the contract by issuing a notice to complete when they were not entitled to do so. She claims to have accepted that repudiation. She seeks the return of the deposit. For their part the vendors contend that Mrs Calabro repudiated the contract. They also say that they terminated the contract after time for completion was made essential and she failed to complete. They claim damages.

2 Mrs Calabro has filed a cross-claim against one of the real estate agents involved in the sale, Malouf Real Estate Pty Ltd (“Malouf Real Estate”). She claims an indemnity in respect of damages she may be liable to pay the plaintiffs. Malouf Real Estate has filed a cross-claim against the vendors for indemnity against the cross-claim filed by Mrs Calabro. It also seeks an indemnity from the vendors for its costs. If it is found that the contract was not completed due to the vendors’ default, or was abandoned, Malouf Real Estate seeks commission.

Background

3 The subject property is located in Gilliver Avenue, Vaucluse. On 28 May 2007, Mr and Mrs Coyne purchased an adjoining property in Vaucluse Road, Vaucluse for $4 million. In about September 2007 the owner of the subject property in Gilliver Avenue died. Mr and Mrs Coyne exchanged contracts to purchase that property on 10 December 2007 for $4,500,000. The sale of the property was not advertised. It was sold for less than its market value. In February 2008 a real estate agent, a Mr Walter Antonelli, approached Mr Coyne with an informal offer for the purchase of the property on behalf of an Asian buyer for $6.25 million.

4 The purchase of the property by Mr and Mrs Coyne was completed on about 29 February 2008. On 18 March 2008, Mr Coyne arranged for his solicitor, Mr Comino, to prepare draft contracts with a view to the property being put on the market. On 2 April 2008 he instructed Mr Bill Malouf, a real estate agent with LJ Hooker at Double Bay, to advertise the property for sale. Steps had already been taken to apply to the Woollahra Council for approval for the demolition of the existing house on the site and the construction of a new three-storey dwelling. The development application was lodged by a firm or company called Farrell Coyne Projects in which Mr Coyne and a Mr Farrell were partners or shareholders. It was in the business of managing building projects. The evidence did not establish the nature of the legal entity that carried on business under the name Farrell Coyne or Farrell Coyne Projects, but it is not important. Mr Farrell and Mr Coyne had made an oral arrangement in December 2007 for Mr Farrell to provide funds to assist with the purchase of the property on the basis that they would share the profits or losses of the “project” equally. They agreed that they would use Farrell Coyne Projects as a project manager to manage the application for development approval and any subsequent appeal to the Land and Environment Court. The costs of the development application and subsequent appeal were borne initially by Farrell Coyne. It in turn invoiced Mr and Mrs Coyne for those costs. Mr Coyne gave evidence that he and his wife were in the position of clients of Farrell Coyne, except that no margin was added for the services provided by it.

5 Mr and Mrs Coyne had obtained development approval for the construction of a new house on the adjoining property in Vaucluse Road. They moved into the property in Gilliver Avenue.

6 On 4 April 2008, Mr and Mrs Coyne entered into an Agency Agreement with Malouf Real Estate trading as LJ Hooker Double Bay for the sale of the property in Gilliver Avenue. Mr Bill Malouf is the director of Malouf Real Estate who acted on the sale. Mr Blaise Griffin of Ray White Double Bay also acted as a selling agent in conjunction with Mr Malouf. The agent’s opinion as to the current estimated selling price for the property was set out in the Agency Agreement as being within the range of $6-$7 million.

7 The Agency Agreement included the following terms:

Agent’s Remuneration

5. i The Agent shall be entitled to a fee of 2.2% (GST incl.) if during the Exclusive Agency Period the Property is sold either:

(a) by the Agent; (b) by any other agent; or (c) by the Principal.

ii The Agent shall also be entitled to a fee at the agreed amount if at any time following the expiration of the Exclusive Agency Period the Principal enters into a Contract for the Sale of the Property to a purchaser effectively introduced to the Principal or the Property during the Exclusive Agency Period by the Agent, by any other agent or by the Principal.

iii The Agent shall be entitled to a fee at the agreed amount if during the Continuing Agency Period the Agent effectively introduce to the Principal or the Property a purchaser who subsequently enters into a binding contract.

iv The Agent’s fee is calculated on the selling price. If the sale is subject to GST then the Agent’s fee is calculated on the GST inclusive selling price.

v The Agent’s remuneration in the event of a sale at the Agent’s estimate of selling price would equate to $154,000 = 2.2% of $7,000,000 (GST incl.)

...

Principal’s Fee Obligation

10. The fee to which the Agent is entitled shall be due and payable on completion of the sale or upon demand if the sale is not completed owing to the default of the Principal after the parties have entered into a binding contract or if after the making of the contract the Principal and the purchaser mutually agree not to proceed with the contract.

...

Agents Indemnity and Liability

20. The Principal will hold and keep indemnified the Agent against all actions, suits, proceedings, claims, demands, costs and expenses whatsoever which may be taken or made against the Agent in the course of or arising out of the proper performance or exercise of any of the powers, duties or authorities of the Agent under this agreement.

8 Mr Malouf recommended that the property be marketed for sale by “expressions of interest”. The property was not listed for sale by auction. Nor was it offered for sale at a particular price. Potential purchasers were invited to express their interest in the property. Mr Malouf said that this was a procedure for stimulating competitive bidding by private negotiations with prospective purchasers. Mr Malouf described the procedure as follows:

An expression of interest ordinarily involves nothing more than a prospective purchaser making a written offer to purchase a property which may provide the basis for negotiating a sale. However, where there are competitive offers made for the purchase of a property at the same or similar level of interest, it is my usual practice to close out the offers by suggesting to the prospective purchasers that they attend my office on a nominated date and time, accompanied by a signed standard contract for sale of land together with a cheque for the deposit and a certificate under section 66W of the Conveyancing Act 1919 (NSW). The various offers are then disclosed simultaneously to the vendor and to the other purchasers. The highest bidder and on the best terms acceptable to a vendor then immediately exchanges with the vendor. This procedure has the benefit of ensuring that one prospective purchaser is not gazumped by another.

9 Mr Comino prepared a draft contract for sale which was provided to the agents and made available to prospective purchasers. It contained a special condition 29 that provided that completion was to take place ten weeks from the date of the contract, or on the receipt of notice of determination from the Woollahra Municipal Council approving the development application, whichever was the later.

10 The sale of the property was advertised in the local newspaper, the Wentworth Courier. It was advertised under a heading which included the statement “A Versatile Prospect with 3 Options 800sqm + Dual Street Frontage”. The property was marketed on the basis that settlement was conditional upon DA approval. The three options held out to potential purchasers were first, that the property be purchased with DA approval with the purchaser to arrange his or her own builder; secondly, that the purchaser hold the land with the option of undertaking a development at a later time; and thirdly, that the purchaser purchase the site and enter into a building contract with the vendor to build the approved home. Mr Coyne contemplated that if a purchaser wished to pursue the third option, Farrell Coyne Projects would undertake construction on an arm’s-length building contract.

11 The relevance of the involvement of Farrell Coyne Projects, and the marketing of the property with a view to a potential buyer entering into a building contract “organised by the vendor”, is that in so marketing and selling the property the vendors arguably were engaged “in trade or commerce” within the meaning of s 42 of the Fair Trading Act 1987 (NSW).

12 On 30 April 2008 Mr Malouf received an email from a Mr and Mrs Mulham advising that “subject to satisfactory inspections and solicitors [sic] review of contracts, we make an offer of 6.25m, With a 10% deposit and settlement subject to DA approval estimated at 4-5 months.” Mr Malouf conveyed this offer to Mr Coyne. Two days later, on Friday 2 May 2008, Mr Coyne instructed Mr Malouf to forward the details of the offer to his solicitor, Mr Comino, with the terms to include a ten percent deposit and that settlement be the later of 30 August 2008 or approval of the development application. Mr Coyne said that the vendors were anticipating an exchange of contracts “today, Saturday or Monday”.

13 The property was open for inspection on Thursday, 1 May 2008 and on Saturday, 3 May 2008. On Thursday 1 May 2008, Mr and Mrs Calabro inspected the property.

14 In her defence, Mrs Calabro pleaded that on Thursday, 1 May 2008 the plaintiffs’ agent, Mr Griffin, represented to her and to Mr Calabro that the plaintiffs had owned and occupied the subject property for some time. She pleaded that contrary to that representation the plaintiffs had not owned or resided in the property for any significant period of time and claims to have validly rescinded the contract on the ground of misrepresentation. In final submissions the defendant did not press that claim in so far as it was based upon this alleged misrepresentation. Nothing to the effect alleged was said expressly. Mr Calabro said that he drew the inference that the plaintiffs had owned and resided in the property for some time from things said by Mr Griffin and by Mrs Coyne about the plaintiffs’ daughter having attended a local school. There was no substance to the defendant’s contention that those statements gave rise to any implied misrepresentation.

15 Mrs Calabro also pleaded that on Thursday, 1 May 2008 Mr Malouf represented to her that the property compared favourably in value with a number of recent sales nearby at prices above $6 million. The allegation was denied. Mrs Calabro did not give evidence. If Mr Malouf did express that opinion to Mrs Calabro, it was an opinion that he genuinely held. There was no evidence that there was not a reasonable basis for the opinion. In final submissions the claim was not pressed.

16 Mr Calabro deposed that during the course of inspection of the property on 1 May 2008 Mr Griffin said to him words to the effect that “The parties with the offer on the table are Bill’s buyers [referring to Mr Malouf]. Although the vendors wanted a settlement in mid-July, Bill’s purchasers have negotiated a settlement on 31 August 2008. I cannot see that there will be a problem with that date also applying to you should you be interested in making an offer.” Mr Griffin does not recall making that statement. I accept Mr Calabro’s evidence that Mr Griffin said words to that effect.

17 Mr Calabro requested a copy of the draft contract which was sent to him that afternoon. The draft contract provided that completion would take place within ten weeks from the date of the contract or on receipt of notice of determination from Woollahra Municipal Council approving the development application, whichever was the later.

18 Mr Calabro attended at a further inspection of the property on Saturday, 3 May 2008. He met both agents. Mr Malouf did not have a good recollection of the meeting. At the inspections on 1 and 3 May, Mr Griffin told Mr Calabro that the vendors were chasing in excess of $7 million but the market was dictating something above $6 million. Mr Calabro said that Mr Griffin told him that the agents had convinced the vendors to bring the asking price down to $6.5 million. Mr Calabro was made aware that another party had made an offer and that exchange with the other party was imminent. According to Mr Calabro Mr Griffin had earlier told him that an offer close to $6.4 million or $6.45 million would be enough “to get the prize”. Mr Calabro deposed to a conversation with Mr Malouf in which Mr Calabro referred to other properties in Vaucluse in terms which implied that a price of $6.5 million for the subject property was high and Mr Malouf said that he knew of at least half a dozen comparable sales supporting the asking price.

19 Mr Griffin deposed that after the inspection of 3 May 2008 he told Mr Calabro that if Mr Calabro wanted the property he would need to get as close to $6.5 million as he could.

20 On the morning of Monday, 5 May 2008 Mr Calabro told Mr Malouf that he was interested in purchasing the property at a price of $6.15 million. Mr Malouf told him that there was already an offer from another party for $6.25 million. Mr Calabro asked whether he could secure the property by increasing his offer to $6.26 million. Mr Malouf said “You know the owner wants $6.5 million. His original expectations were in the range of up to $7 million and $6.5 million would own the property. You’ll need to put in an offer close to that.”

21 There is no doubt that words to that effect were exchanged between Mr Calabro and Mr Malouf on 5 May, although there was disagreement as to whether the discussion took place in a telephone conversation on the morning of Monday, 5 May or, as Mr Calabro said, in the afternoon at Mr Calabro’s house at Queens Park. Nothing turns on that question.

22 Mr Calabro deposed that in the telephone conversation on the morning of 5 May 2008 and before he made an offer of $6.15 million, he had a telephone conversation with Mr Malouf to the following effect:

AC:

BM:

AC

BM:

23 Mr Calabro also deposed that at the meeting at his home on the afternoon of 5 May 2008 he said to Mr Malouf:

I know I have asked you about a six month settlement period before but it would really help. I do not want to market this home before I construct a roof terrace which is the subject of a Land and Environment Court case for which I expect to get a decision soon. Are you sure the vendors will not agree?

24 He deposed that Mr Malouf replied:

I have already been down that road with the other parties, David and Clare Mulham. The vendors will not even consider a longer settlement date. In any case, Tony, not to be rude, but a roof terrace in this location would be immaterial to the value of the home.

25 Mr Malouf’s recollection of the conversation about changing the settlement date was that Mr Calabro said words to the effect:

Can we push the date out because we want to build a roof terrace and undertake some renovations before we market this property?

The vendors prefer a settlement date of 31 August 2008.

26 For reasons which appear below, these conversations concerning the settlement date assumed great significance in the way the defendant’s case was ultimately put. I do not consider that the precise terms of the conversation is of any real significance. But given the frailty of human memory and the influences on memory of a party’s perception of where his interests in the case lie (Watson v Foxman (1995) 49 NSWLR 315 at 319) I am not satisfied that Mr Malouf told Mr Calabro that he had been down that road with the other parties and the vendors would not even consider a longer settlement date, rather than saying that the vendors would prefer a settlement date of 31 August 2008. The Mulhams had asked for a four to five month settlement date and the vendors had agreed to four months.

27 Mr Malouf deposed that after having discussed with Mr Calabro the kind of price the vendor was looking for and having inadvertently disclosed the offer of $6.25 million of the other party, there was a conversation to the following effect:

Mr Calabro:

[Mr Malouf]: I wouldn’t do that.

Mr Calabro:

[Mr Malouf]: My normal practice when I have two purchasers at similar money is for them to fill in the contract at the maximum price they are prepared to secure the property for and attend my office with a signed contract in a sealed envelope with a signed section 66 certificate and a cheque for 10% of the purchase price. The envelopes are opened at the same time with the vendors and their solicitors present. The contract with the highest sale price and the most favourable settlement terms that suit the vendor is exchanged immediately and no other counter-offers are accepted. That gives both parties equal opportunity to buy the property at the maximum price they are willing to pay and at terms that suit them and the agent cannot be accused of disclosing the other parties’ offers to give them an unfair advantage on buying the property. I suggest we do this at 3:00pm tomorrow. To be fair, I will tell the other party that I have disclosed their offer.”

Mr Calabro:

28 I accept that evidence. Mr Calabro gave evidence to the same effect.

29 The solicitor acting for the plaintiffs was Mr John Comino of Comino Prassas. The solicitor acting for Mr Calabro was Mr Michael Hewett of Pike, Pike & Fenwick Lawyers. On 5 May 2008 at 12.50pm Mr Hewett sent a fax to Mr Comino as follows:

Dear John

Before I speak with the agent, would you please advise me if your client will accept the following for completion:

’29 Completion of the within contract shall take place on the later of 31 August 2008 and receipt of notice of determination from Woollahra Municipal Council approving DA 151/2008.

If the vendor does not notify the purchaser of receipt of a notice of determination from Woollahra Municipal Council approving DA 151/2008 within 30 days of 31 August 2008, the purchaser must complete within 14 days of 31 August 2008.’

This condition will cover the event of Council failing to issue a notice of determination or refusing the DA.

Regards

Michael Hewett

30 On 6 May 2008 Mr Comino advised Mr Hewett that his clients were happy with the proposed clause. A new clause 11(a) in those terms was prepared and inserted by Mr Hewett in the special conditions of the contract to be signed by Mrs Calabro.

31 Mr Hewett also said that his client wanted to delete the provision in the draft contract in relation to adjusting land tax. Mr Comino subsequently advised Mr Hewett that that amendment would also be acceptable.

32 Mr Calabro arranged for his wife to sign two contracts prior to the meeting at the offices of Mr Malouf convened to be held on the afternoon of 6 May. One contract was for a purchase price of $6.275 million and the other for a purchase price of $6.455 million. The contracts signed by Mrs Calabro included two amendments from the draft contracts provided by the agent. One was the amendment to the term providing for the date for completion to incorporate the request made by Mr Hewett on 5 May. The other was to provide that land tax was not adjustable.

33 Mr Calabro (but not Mrs Calabro) and Mr Hewett attended at Mr Malouf’s office at 3pm on 6 May 2008. They took seats in the boardroom. Mr Griffin was also present. Shortly afterwards, Mr and Mrs Coyne and Mr Comino arrived. They were seated in Mr Malouf’s office. Mr Mulham, the other interested purchaser, had not arrived. Whilst Mr Calabro and Mr Hewett were waiting in Mr Malouf’s office, Mr Malouf told them that “The other purchaser is waiting while his solicitor faxes to him the contract with amendments the solicitor required to be made”. Mr Calabro understood that the process was delayed while the other purchaser conveyed amendments to the contract. Neither Mr Calabro nor Mr Hewett asked to see the amendments that the other party required. They asked no questions about the terms the other party proposed.

34 About ten or 15 minutes later Mr Mulham arrived at reception. He said to Mr Malouf words to the effect:

Mr Mulham: Sorry I’m late. I’ve been sorting out some special conditions with my lawyers. We want an 8 month settlement instead of 4 months. My lawyers are going to fax something here for the vendors to consider.

[Mr Malouf]: Have you otherwise got everything we need?

Mr Mulham: It’s all here except for the cheque. Call me if my offer is successful and I’ll walk the cheque around to you.

35 Mr Malouf did not object to Mr Mulham’s not having a cheque. He was well acquainted with Mr Mulham and was confident that he had the capacity to pay the deposit and would provide the deposit cheque at short notice if the contracts were exchanged. Mr Comino and Mr Coyne read the special conditions prepared by Mr Mulham’s solicitor. The proposed additional special conditions in the Mulham contract included a term that completion was conditional upon the development application being approved on terms reasonably acceptable to the purchaser within nine months. A further term was that the purchaser might extend that period by up to six months if the conditions in the purchaser’s opinion were unreasonable and the purchaser wished to appeal or negotiate the issue with the council. A further proposed term was that completion occur eight months after the determination of the development application by the council.

36 Mr Coyne gave the following evidence in cross-examination:

“ Q. Did you say to Mr Comino that you would accept those conditions?
A. No.

Q. That was because you were concerned at the length of the period for completion?
A. Definitely.

Q. Because nine months for the DA and eight months further for completion was a potential 17 months for settlement?
A. Yes.

Q. That was unacceptable to you?
A. We hadn't seen the price at that stage, I would have had to take a layered approach to analyse the offer.

Q. Certainly you knew this was coming from the Mulhams?
A. Yes.

Q. Now an offer no longer, as they had said, on Wednesday 30 August or DA, but now potentially 17 months for settlement?
A. I assumed they had structured it to increase the purchase price.

Q. I drew your attention to clause 41?
A. Yes.

Q. There was there a top up provision on the deposit?
A. Yes.

Q. You were not going to sanction an exchange on those completion terms without further consideration, were you?
A. Not until I had seen the offer. This wasn't the offer, this was just special conditions.

Q. But it heavily affected the economics of an offer, didn't it?
A. Not if the purchase price was $10 million.

Q. If it was $6.25 million, as had been offered the previous week, it affected it?

A. We wouldn't have to go to that level of analysis. The first thing we would have looked at was price, and seen if they were on similar terms, and then do an adjustment for any of those special conditions.

37 Counsel for the defendants submitted that by his conduct Mr Malouf represented to Mr Calabro that the only determinative factor for the vendors in the process whereby each potential purchaser was asked to make his or her best offer, was price. Counsel submitted that the extended settlement period contained in the special conditions proposed by Mr Mulham were unacceptable to the vendors and therefore the Mulhams’ offer was never really “in play”. It was, counsel submitted, a “form of deception or stalking horse” used to induce Mr Calabro to participate in the process. Counsel submitted that Mr Coyne’s evidence that the terms of the completion proposed by Mr Mulham would not have heavily affected the economics of the offer if the purchase price were $10 million demonstrated that in reality, when Mr Coyne and his solicitor saw the special conditions proposed by Mr Mulham, they must have known that there would be no potentially competitive offer made by Mr Mulham because it would be fanciful to expect an offer at that price.

38 I do not accept this submission. It does not fairly reflect Mr Coyne’s evidence. Mr Coyne’s position was that he would analyse the Mulhams’ offer and the offer expected to come from Mr Calabro by looking at the price of each and, if they were on similar terms, making adjustments for special conditions. Mr Coyne referred to a purchase price of $10 million as illustration, and only as illustration, of the fact that the price and special conditions offered by a potential purchaser had to be weighed together.

39 The price shown on the contract delivered by Mr Mulham was not disclosed to Mr or Mrs Coyne, Mr Comino or Mr Malouf at the time the special conditions were reviewed. Mr Malouf left the front page of the contract in the envelope in which it was received and gave it to his assistant, Ms Clark. After Mr Comino and Mr Coyne had reviewed the special conditions of the Mulham contract Mr Malouf placed them back in the envelope. Mr and Mrs Coyne, Mr Comino and Mr Malouf joined Mr Calabro, Mr Hewett and Mr Griffin in the boardroom. Mr Malouf or Ms Clark removed the Mulham contract from the envelope and placed it in front of Mr Comino. Mr Hewett opened an envelope and handed the contract it contained to Mr Comino. The contract Mr Hewett was instructed to hand over was that signed by Mrs Calabro for a purchase price of $6.455 million. Mr Comino turned over each of the offers. He announced that Mrs Calabro was the successful offeror. Mr Calabro was able to see the front page of the Mulham contract and saw that the figure on it was $6.25 million. He realised that the Mulhams had not increased their offer. There was some general congratulatory discussion and Mr Hewett and Mr Comino moved to the side and went through the process for an exchange of contracts. After the contracts were checked they were exchanged. Mr Calabro provided a cheque for the deposit drawn by the second defendant, Frank Calabro Pty Limited.

40 Mr Calabro said that he would not have participated in what he called a “private auction” as suggested by Mr Malouf if he had not believed that the Mulhams’ offer included a settlement date of 31 August 2008 subject to council approval. The defendants say that because Mr Malouf had previously told Mr Calabro that a conditional settlement date of 31 August 2008 was the only date acceptable to the vendors, and because Mr Griffin had told Mr Calabro that the purchasers introduced by Mr Malouf had negotiated a settlement on 31 August 2008, Mr Calabro, who was handling the transaction for his wife, believed that both offers would have to be made on terms that provided for settlement on 31 August 2008 if development approval had then been obtained. It was not until documents were produced on subpoena by the solicitors for Mr and Mrs Mulham that Mr Calabro learned of the terms of the special conditions proposed by Mr and Mrs Mulham.

41 At about 5.00 pm on 6 May, a little over an hour after exchange, Mr Malouf telephoned Mr Calabro and congratulated him on the purchase. In the course of that conversation Mr Calabro said words to the effect:

Did you know that the other purchaser would not be increasing his offer?

42 Mr Malouf denied any such knowledge and said he did not know what the Mulhams’ offer was going to be. Mr Calabro then said “He didn’t even have a deposit cheque.” Mr Malouf said that that was correct and added “He did not have a cheque. He is just down the street and promised to bring a cheque straight around if he was successful and that was acceptable to me.”

43 It was put to Mr Calabro in cross-examination that he had observed at the meeting that no deposit cheque had been provided by Mr Mulham and it was for that reason that he said to Mr Malouf “He didn’t even have a deposit cheque.” Mr Calabro denied any such observation. He denied knowing that Mr Mulham had not provided a cheque for the deposit prior to this being confirmed by Mr Malouf. He said that his statement that no cheque for the deposit had been provided was more in the nature of a question. In cross-examination he said that it was just on a whim that he said “He didn’t even have a deposit cheque.” This evidence was challenged partly on the ground that in the defendant’s outline of submission made before the hearing counsel had said that Mr Calabro had made the statement to Mr Malouf “on a whim (not knowing whether or not the Mulhams had in fact provided the deposit cheque)”. I draw no inference adverse to Mr Calabro that in his evidence he used the same word that counsel had used in submissions. That is entirely consistent with his having said the same thing in discussions with counsel.

44 Mr Malouf did not say at the meeting on 6 May that the Mulhams had not provided a deposit cheque. It is possible that Mr Calabro noticed the absence of such a cheque when documents were taken out of the envelope but unless he went through each page of the contract to satisfy himself that no cheque had slipped into the contract, he would not be in a position to know whether the Mulhams had provided a cheque for the deposit or not. He did not go through the Mulham contract. He only observed the front page of it. I accept Mr Calabro’s evidence that at the meeting on 6 May he did not know that the Mulhams had not provided a cheque for the deposit.

45 I also accept Mr Malouf’s evidence that Mr Mulham said that if he and his wife were the successful bidder he would immediately provide a cheque for the deposit. There is no reason to doubt Mr Malouf’s evidence that Mr Mulham’s office was very close to his office and as a result of his previous dealings with Mr Mulham he was confident that Mr Mulham had the capacity to pay the deposit and could provide the deposit cheque at short notice.

46 Overnight Mr Calabro formed the view that his wife had agreed to pay $180,000 too much for the property. On the morning of 7 May Mr Calabro sent an email to Mr Malouf stating:

The failure of a counter bidder to arrive at 3pm with a meaningful offer created a situation where I was effectively bidding against myself. This is not acceptable and accordingly I regret to inform you I do not intend proceeding with the transaction.

47 On the same day he placed a “stop payment” on the deposit cheque. The National Australia Bank refused payment of the cheque on 8 May 2008.

48 On 8 May 2008 Mr Calabro prepared and sent an email in his wife’s name to Mr Malouf which stated, inter alia:

“ On 6 ^th May at 3pm my husband attended the LJ Hooker office as my agent on the understanding that the apposing [sic] bidder was a willing participant in a single-bid-auction process and would be in the same room with a sealed envelope containing a completed contract (naturally at an amount greater than $6.25m) and an attached deposit cheque of 10%.

... I understand that the counter bidder was not present in the room and had no intention of meaningful participating

in a single-bid-auction. I also understand he did not attach a 10% cheque to the contract.

49 This was put forward as justification for stopping the cheque and purportedly cancelling the transaction.

50 On 9 May 2008 Mr Comino wrote to Mr Hewett and referred to the fact that the cheque for the deposit had been stopped. Mr Comino said that the purchaser had repudiated the contract and unless a bank cheque were received that day replacing the dishonoured cheque, the vendors would proceed to issue a notice of termination and seek to enforce such other rights as were available to them. Mr Comino demanded a bank cheque in replacement of the dishonoured cheque. Mr Hewett asked for an extension of time for the provision of a replacement deposit cheque until 5.00 pm on Monday 12 May. The plaintiffs insisted upon a replacement deposit cheque by 5.00 pm on Friday 9 May but were prepared to accept a personal cheque. Mr Malouf sent Mr Calabro a letter advising that the agents would agree to a “rebate” of $55,000 of their commission upon settlement of the purchase of the property by Mr Calabro. Mr Calabro supplied a further cheque for $645,500 drawn on Frank Calabro Pty Ltd. This cheque was received by Mr Comino at approximately 4.50 pm. Mr Calabro gave evidence that he believed the vendor still required a bank cheque by noon on Monday 12 May and that he had until that time to negotiate a new contract which at the very least would incorporate the $55,000 rebate offered by the agents and which would also secure a later date for completion. He did not foresee that the cheque provided that day could be presented to the bank before 9.30 am on Monday 12 May. In fact it was deposited on the Friday afternoon. Not surprisingly Mr Comino requested a special clearance. It is admitted on the pleadings that on 9 May the National Australia Bank refused payment of the second cheque.

51 Also on 9 May 2008 Mr Comino received from Mr Hewett requisitions on title. These were sent under cover of a letter dated 7 May 2008 through the DX.

52 Late on 13 May 2008 Mr Calabro sent by facsimile to Mr Comino a document signed by his wife stating that the cooling-off period was being used to rescind the contract for the purchase of the property. The contract had contained a certificate under s 66W of the Conveyancing Act 1919 (NSW) signed by Mr Hewett as a result of which there was no cooling-off period (s 66T(a)).

53 On 14 May 2008 Mr Hewett advised that Mrs Calabro was prepared to enter into a fresh contract if the completion date were extended to 30 November 2008 and the purchase price reduced by $55,000. On 14 May Mr Malouf advised Mr Calabro that as he had cancelled the second deposit cheque the offer previously made to him by the agents to rebate part of their commission upon settlement was withdrawn.

54 Mr Calabro admitted in his affidavit that he did not intend to meet payment on the second deposit cheque unless he was able to negotiate what he called a fairer contract before noon on 12 May.

55 On 16 May 2008 the plaintiffs commenced proceedings for specific performance.

56 On 23 June 2008 the Woollahra Municipal Council refused its consent to the proposed development of the property. The plaintiffs retained Mr Green of Pikes Lawyers (as Pike Pike & Fenwick had become, that is, Mr Hewett’s firm) to act on their behalf in an appeal to the Land and Environment Court.

57 On 15 August 2008 Mr Comino received a third deposit cheque drawn on Frank Calabro Pty Ltd in the sum of $645,500. This cheque was cleared. Mr Comino wrote to Mr Hewett as follows:

Payment of the deposit indicates an intention on behalf of the first defendant to proceed with the contract which is the subject of the proceedings. Would you please confirm in writing that that is your client’s position. If that is not your client’s position, would you please indicate precisely what is your client’s position in light of the payment of the deposit received today.

58 On 20 August 2008 Mr Hewett replied as follows:

We refer to your letter of the 15

^th

instant and advise our client is willing and able to perform the contract in accordance with its terms.

We are holding $15,000.00 in trust for interest which would have accrued if the first deposit cheque had been met on presentation. If you provide details of what this amount would have been, we will provide a cheque for depositing in your trust account.

Our client will pay the bank charges immediately the amount is advised.

Would you also please provide us with an assessment of your costs in relation to the litigation with a view to our client paying your costs.

59 This was a clear affirmation of the contract. However, at this time Mr Calabro, and I infer Mrs Calabro, did not know of the terms of the special conditions that Mr Mulham had inserted in his proposed contract. However, they did then know that when Mr Mulham provided his contract on 6 May he had not included a cheque for the deposit.

60 Mr Calabro applied for a loan in order to complete the purchase. On 11 September 2008 he was informed by his bank that its valuation of the property only came in at $5 million. He asked for and was provided with a copy of the valuation which was made by a Mr Jason Field. As a result of reading the valuation he learned that the plaintiffs had purchased the property only on 29 February 2008 for $4,500,000. Mr Field commented that that sale was considered “favourable to the purchaser at the time.” It was not until Mr Calabro inspected documents produced by David Lander Stewart Lawyers (who acted for Mr and Mrs Mulham) on subpoena on 29 September 2008 that Mr Calabro learned of the special conditions which Mr and Mrs Mulham had inserted in their proposed contract.

61 Meanwhile, following the letter from Mr Hewett of 20 August 2008 Mr Comino wrote to Mr Hewett on 2 September 2008 stating that the purchaser was in breach of clause 4 of the contract in not having submitted the transfer by 1 September 2008.

62 On 3 September 2008 Mr Comino and Mr Hewett exchanged correspondence in relation to their respective interpretation of special condition 29 of the contract. Special condition 29 was in the terms requested by Mr Hewett on 5 May 2008 (see para [29] above). Mr Hewett asserted that the second paragraph of special condition 29 was no longer applicable. He said that special condition 29 would have applied if the vendors, having received development consent during the period 30 days prior to 31 August 2008, failed to notify the purchaser so as to enable her a reasonable time to effect completion. Mr Hewett asserted that the contract was conditional upon the vendors’ obtaining development consent within a reasonable time. He noted that he had been informed that the vendors did not receive development consent by 31 August and sought a response to his inquiry as to the progress in that regard.

63 Mr Comino asserted that special condition 29 required completion to take place within 14 days of 31 August 2008. As 14 September was a Sunday, Mr Comino stated that completion was required by the next business day, 15 September 2008. In response to Mr Hewett’s contention that the second paragraph of special condition 29 only applied if the vendors had received development consent during the period 30 days before 31 August 2008 but failed to notify the purchaser of that fact, Mr Comino referred to Mr Hewett’s letter of 5 May in which he advised that the proposed condition would cover the event of the council’s failing to issue a notice of determination or refusing development approval.

64 On 8 September 2008 Mr Comino wrote to Mr Hewett advising that he had booked the matter for settlement on 15 September and giving a place and time for settlement. He asked to be provided with settlement figures. None was received. On 12 September 2008 Mr Comino prepared draft settlement figures and sent them to Mr Hewett for his approval. He gave directions as to payment. He asked Mr Hewett to submit a transfer as a matter of urgency and confirmed that settlement had been booked to take place on 15 September.

65 The vendors vacated the property in readiness for settlement. Mrs Calabro did not complete the purchase on 15 September.

66 On 16 September 2008 Mr Comino served a notice to complete. The notice stated:

TO: GRAZIA RITA CALABRO

Street,

NSW 2022

AND: her Solicitors

PIKES LAWYERS (Attention Mr Michael Hewett)

Level 3, 50 King Street, Sydney NSW 2000

DX 521 SYDNEY

WHEREAS:

A. By Contract for Sale dated 6 May 2008 you agreed to purchase and Terrence Michael Coyne and Anne Patricia Coyne of [x]

Road

NSW 2030 (‘the Vendors’) agreed to sell

Gilliver Avenue, Vaucluse (‘the property’) for the sum of $6,455,000.00.

B. You have paid a deposit of $645,500.00 to the Vendors’ Solicitor and agreed to pay the balance of purchase money and adjustments in cash on completion.

C. You have failed to serve on the Vendors the form of Transfer as required by clause 4.1 of the said Contract for Sale.

D. The Vendors are ready, willing and able to complete.

E. Despite numerous requests to do so you have failed to complete the purchase of the property and are in default.

As Solicitors for and on behalf of the Vendors WE GIVE YOU NOTICE:

1. You are required to deliver to this office on or before 5.00 pm on 26 September 2008 a form of Transfer for execution by the Vendors in preparation for completion and in this respect time is of the essence.

2. You are required to complete the purchase of the property at Espreon at 2.00 pm on 2 October 2008 and in this respect time is of the essence.

3. If you fail to comply with this notice the Vendors shall by notice in writing to you forfeit the deposit paid by you and terminate the Contract for Sale and then either sue you for breach of contract or re-sell the property and recover from you as liquidated damages, the deficiency (if any) arising on the resale and all expenses incidental to the resale or attempted resale and your default.

67 It may be observed that paragraph 3 stated that if the notice to complete were not complied with the vendors “shall” not “may” forfeit the deposit and terminate the contract.

68 Counsel for Mrs Calabro submits that she was not required to complete on 15 September 2008, although not for the reasons advanced by Mr Hewett in his letter of 3 September 2008. Counsel submitted that service of the notice to complete was a repudiation.

69 On 23 September 2008 Mr Hewett, on behalf of his client, served a notice rescinding the contract. Relevantly, the notice only stated that “the purchaser by her solicitors ... rescinds the contract for sale ... “. No ground for rescission was assigned either in the notice or in the covering letter. On 23 September 2008 Mr Comino asked Mr Hewett to provide the particulars of the grounds on which the purchaser claimed to be entitled to rescind. No particulars were given. The vendors continued to press for settlement on 2 October 2008 as stated in their notice to complete. There was no attendance for the purchaser at the time and place fixed for settlement by the vendors’ notice to complete. Later on 2 October 2008 Mr Comino served notice of termination of the contract by the vendors.

70 On 8 October 2008 the Land and Environment Court upheld the appeal from the council’s refusal to consent to the development application.

71 The plaintiffs forfeited the deposit. In October 2008 they relisted the property for sale by auction. The new auction date was 11 September 2008. Mr Coyne set a reserve of $6 million. The property was passed in at $5.2 million. Contracts for sale were eventually exchanged with a new purchaser on 8 June 2009 at a price of $4.9 million. The sale was completed on 10 August 2009. The market for expensive properties in Vaucluse fell sharply in the second half of 2008 and 2009 as Australia and the world faced a financial crisis. Mrs Calabro does not allege that the plaintiffs failed to take reasonable steps to mitigate their loss.

72 The plaintiffs claim interest against the second defendant (Frank Calabro Pty Ltd) arising from the dishonour of the cheques. Interest calculated in accordance with regulation 4 of the Cheques Regulations 1987 (Cth) is agreed to be $14,454. The plaintiff also claims damages against Mrs Calabro in the sum of $991,693.40. The only item of dispute in relation to the calculation of damages, which calculation includes expenses of resale, are costs incurred in relation to the appeal to the Land and Environment Court from the council’s initial failure and ultimate refusal to approve the development application. The plaintiffs contend that those costs were consequential loss arising from their attempts to mitigate their loss arising from Mrs Calabro’s breach of contract.

73 Mrs Calabro also submitted that because Mr Coyne had agreed to account to Mr Farrell for half of the profit obtained from the purchase of the property, the plaintiffs’ damages should be reduced by half.

74 In final submissions counsel for Mrs Calabro submitted that there were five operative misrepresentations as a result of which Mrs Calabro validly rescinded the contract based upon a contravention of s 42 of the Fair Trading Act 1987 or under the general law of misrepresentation. The same alleged misrepresentations are relied upon for the cross-claim brought by Mrs Calabro against the plaintiffs for relief in respect of an alleged contravention of s 42 of the Fair Trading Act. The same alleged misrepresentations are relied upon in Mrs Calabro’s cross-claim against Malouf Real Estate for alleged contravention of s 52 of the Trade Practices Act 1974 (Cth).

75 The first alleged misrepresentation relied on in final submissions was that Mr Malouf represented to Mr Calabro that the subject property was worth at least $6 million in that it compared favourably with recent sales of property in Vaucluse above $6 million. That allegation was ultimately not pressed.

76 The second alleged misrepresentation was that Mr Griffin and Mr Malouf represented to Mr Calabro and through him to Mrs Calabro that the settlement date offered by the Mulhams as part of the process engaged in on 6 May 2008 was a conditional settlement date of 31 August 2008, that being the only date acceptable to the vendors. Counsel for Mrs Calabro submitted that this representation became false and should have been corrected because the Mulhams did not include a conditional settlement date of 31 August 2008 in their proposed contract, but a much later date.

77 The alleged representation is said to have been made by reason of Mr Griffin’s statement to Mr Calabro at the first inspection of the property on 1 May 2008 that “Bill’s purchasers have negotiated a settlement on 31 August 2008”. That was true. The offer from Mrs Mulham of 30 April 2008 was for settlement to be subject to DA approval estimated at four to five months. In response to that proposal Mr Coyne had agreed to settlement being the later of 31 August 2008 or approval of the development application. The thrust of Mr Griffin’s statement was that he expected the vendors would agree to a settlement with the Calabros on 31 August 2008. They did so. Neither Mr Griffin nor Mr Malouf represented that that was the only date acceptable to the vendors.

78 The third alleged operative misrepresentation is alleged to have been made by Mr Malouf to Mr Calabro and was that in order to participate in the contest on 6 May 2008 the Mulhams and the Calabros would have to submit a contract with the price filled in, a cheque for the deposit and a s 66W certificate. Counsel for Mrs Calabro submitted that that representation became false and should have been corrected because the Mulhams were permitted by Mr Malouf to participate in the contest on 6 May without submitting a cheque for the deposit.

79 There was no misrepresentation when Mr Malouf described to Mr Calabro the documents, including a cheque for the deposit, that the vendors would require on 6 May for an exchange. The defendants’ case is that Mr Calabro should have been told at the meeting of 6 May 2008, before Mr Hewett handed over the envelope to Mr Comino, that the Mulhams had not included a cheque for the deposit with the signed contract they gave to Mr Malouf. I do not agree. There is nothing to indicate that had the Mulhams’ offer been the better offer, and had it been accepted by the vendors, that Mr Malouf could not immediately have effected an exchange. The Mulhams would have been obliged to pay the deposit forthwith. The deposit provides protection for the vendor and there was no reason that the vendor could not waive a requirement that the deposit be provided immediately on exchange. The basis of the defendants’ complaint appears to be that the absence of a cheque for the deposit would indicate the Mulhams had no real intention of making a competitive offer capable of giving rise to an immediate exchange of contracts. But that does not follow. As I have indicated earlier in these reasons, there is no reason to doubt Mr Malouf’s evidence that he had had prior dealings with the Mulhams and was confident that Mr Mulham would have provided a cheque for the deposit immediately had the Mulhams’ offer been successful.

80 I infer that had Mr Malouf disclosed to the meeting that Mr Mulham had not included a cheque for the deposit with his contract but had undertaken to provide the cheque immediately if his offer were successful, matters would have proceeded in the same way as they did. Even if Mr Calabro had objected at that point to participating in the “contest”, there is no reason to doubt that Mr Malouf could and would have arranged for Mr Mulham to provide the cheque before the offers were open.

81 In any event, Mrs Calabro elected to affirm the contract after she had full knowledge that the Mulhams had not provided a cheque for the deposit. Even if there were some misrepresentation through non-disclosure at the meeting on 6 May of the fact that the Mulhams had not provided a cheque for the deposit, that would not justify the defendant’s rescission as she had elected to affirm the contract. Nor would it provide a basis for her to have any claim for damages or other relief under the Fair Trading Act or the Trade Practices Act either against the vendors or Malouf Real Estate, as any such misleading conduct (if it were misleading - which it was not), would not have caused her loss (Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No. 2) (1989) 40 FCR 76 at 93).

82 The fourth alleged misrepresentation advanced by counsel for the defendants in final submissions was that Mr Malouf represented to Mr Calabro that as part of the 6 May 2008 process the only determinative factor for the Coynes would be the purchase price included in the respective contracts to be submitted by the Mulhams and the Calabros, that being the only material variable factor. Counsel for the defendants submitted that that representation was false because Mr Coyne had rejected the Mulhams’ offer before the contest on 6 May 2008 began because of the longer settlement date proposed by the Mulhams.

83 No such representation as alleged was made by Mr Malouf. Nor had Mr Coyne rejected the Mulhams’ offer before the contest on 6 May 2008 began. Nor did Mr Calabro place any reliance upon the alleged representation. To the contrary, he and Mr Hewett knew that the Mulhams had proposed different special conditions from those contained in the contract held by the real estate agents. Mr Calabro had himself proposed different special conditions.

84 Mr Malouf did not say, nor did he imply, that the only determinative factor for the Coynes would be the purchase price. The defendant does not point to any express representation to the effect alleged. The implication is said to arise from the words attributed to Mr Malouf in response to Mr Calabro’s request for a longer settlement date that he had already been down that road with the Mulhams and the vendors would not consider a longer settlement. I do not accept that Mr Malouf said those words. There was no evidence, and it was not suggested to Mr Malouf in cross-examination, that he had already been down that road with the Mulhams. To the contrary, the Mulhams’ offer of 30 April 2008 proposed a four or five-month settlement period, that is, to the end of August or the end of September. I do not think that Mr Malouf would have simply made up a statement that was not true. Nor do I accept, as indicated earlier in these reasons, that Mr Malouf said that the vendors would not consider a longer settlement period, as distinct from saying that the vendors would prefer a settlement date of 31 August.

85 Mr Calabro had no reasonable basis to assume that the changes to the special conditions proposed by the Mulhams did not include changes to the completion date. Nor did he have any basis to assume that any material changes to the special conditions proposed by the Mulhams would be disclosed to him before the offers were tabled and inspected. He had not disclosed his proposed changes to the Mulhams and did not ask to see the changes proposed by the Mulhams.

86 Nor had Mr Coyne rejected the proposed completion date contained in the special conditions in the proposed Mulham contract. He had not accepted the proposal, but that does not mean that he had rejected it. As Mr Coyne said in his evidence, it would be a question of weighing the effect of the proposed special conditions with the price. Neither the vendors nor their solicitor, nor the agents knew what price the Mulhams had included on their signed contract until the signed contracts were tabled and turned over.

87 The fifth alleged misrepresentation was that Mr Malouf represented to Mr Calabro that the Mulhams’ offer was “in play” in the course of the process that occurred in the boardroom on 6 May 2008 when in fact the Mulhams’ offer was not in play, but had already been rejected by the Coynes. But the Coynes had not already rejected the Mulhams’ offer. The Mulhams’ offer was “in play”.

88 The vendors and their agents did not misrepresent the position to Mr Calabro. There was no misleading conduct by silence. Mr Calabro did not have a reasonable basis to expect that the vendors would disclose to him the completion date proposed by the Mulhams before he was to table his wife’s contract.

89 Because I have concluded that the vendors did not engage in conduct that was misleading or deceptive or likely to mislead or deceive, it is unnecessary to decide whether or not the conduct alleged to have been misleading or deceptive was conduct in trade or commerce within the meaning of s 42 of the Fair Trading Act. Had it been necessary to decide the point, I would incline to the view that the Coynes offered the subject property for sale in the course of a business activity and in a business context (O’Brien v Smolonogov (1983) 53 ALR 107 at 111; Havyn Pty Ltd v Webster [2005] NSWCA 182 at [98]-[99]; (2005) 12 BPR 22,837). For the reasons set out at paras [4] and [10] above the purchase and proposed sale of the property was a business project of the business joint venture between the Coynes and Mr Farrell using Farrell Coyne Projects. This included buying the property for the purposes of resale, obtaining development approval for the demolition of the existing house and construction of a new dwelling, and offering the services of Farrell Coyne Projects to a prospective purchaser for the construction of the new dwelling. Profits or losses on the project were to be shared equally between the Coynes and Mr Farrell. Such conduct would be in trade or commerce.

90 It is not necessary to pursue this question further in the light of my conclusion that the vendors did not engage in misleading or deceptive conduct.

Validity of plaintiff’s termination

91 Standard condition 29 of the contract provided:

29 Conditional contract

29.1 This clause applies only if a provision says this contract or completion is conditional on an event.

29.2 If the time for the event to happen is not stated, the time is 42 days after the contract date.

29.3 If this contract says the provision is for the benefit of a

, then it benefits only that

.

29.4 If anything is necessary to make the event happen, each

must do whatever is reasonably necessary to cause the event to happen.

29.5 A

can rescind under this clause only if the

has substantially complied with clause 29.4.

29.6 If the event involves an approval and the approval is given subject to a condition that will substantially disadvantage a

who has the benefit of the provision, the

can

days after either

notice of the condition.

29.7 If the

can lawfully complete without the event happening -

29.7.1 if the event does not happen

the time for it to happen, a

who has the benefit of the provision can

7 days after the end of that time;

29.7.2 if the event involves an approval and an application for the approval is refused, a

who has the benefit of the provision can

7 days after either

notice of the refusal;

29.7.3 the completion date becomes the later of the completion date and 21 days after the earliest of -

either

notice of the event happening;

every

who has the benefit of the provision

notice waiving the provision;

the end of the time for the event to happen.

29.8 If the

cannot lawfully complete without the event happening -

29.8.1 if the event does not happen

the time for it to happen, either

can

;

29.8.2 if the event involves an approval and an application for the approval is refused, either

can

;

29.8.3 the completion date becomes the later of the completion date and 21 days after either

notice of the event happening.

29.9 A

cannot

under clauses 29.7 or 29.8 after the event happens.

92 The operation of standard condition 29 was affected by special condition 12.1(b) which provided:

12.

VARIATION OF A STANDARD FORM

The following standard clauses in the Contract for Sale are amended as follows:-

12.1 Clause 1 is amended as follows:

...

(b) by inserting the following definitions:

the amount referred to as ‘Price’ on the front page of this Contract and any other money payable by the Purchaser under this Contract (

).

the Completion Date

the office of the Vendor’s discharging mortgagee or any other place nominated by the Vendor’s Solicitor

93 As set out above, special condition 29 provided:

29 Completion of the within contract shall take place on the later of 31 August 2008 and receipt of notice of determination from Woollahra Municipal Council approving DA 151/2008.

If the vendor does not notify the purchaser of receipt of a notice of determination from Woollahra Municipal Council approving DA 151/2008 within 30 days of 31 August 2008, the purchaser must complete within 14 days of 31 August 2008.

94 Mrs Calabro pleaded that completion of the contract was conditional upon an event, namely receipt of determination from the Woollahra Municipal Council approving the development application. She alleged that in the events which occurred and having regard to the operation of special condition 29 and standard condition 29.7.3, the time for completion became 21 days after 31 August 2008, namely 21 September 2008. She alleged that the plaintiffs’ notice to complete given on 16 September 2008 was premature and invalid. She alleged that the plaintiffs were not entitled to stipulate 2 October 2008 as the date for completion and her notice of rescission of 23 September 2008 was an effective termination of the contract. Counsel for Mrs Calabro submitted that by serving the notice to complete the plaintiffs repudiated the contract and Mrs Calabro’s notice of rescission was an effective acceptance of that repudiation.

95 The first question is whether it is correct that Mrs Calabro was not required to complete by 16 September 2008.

96 Counsel for the defendants submitted in the alternative that special condition 29, on its proper construction, meant that if the vendor did not notify the purchaser of receipt of a notice of determination from the Woollahra Municipal Council approving the development application within 30 days after 31 August 2008, the purchaser was required to complete within 14 days after 30 September 2008, although curiously counsel also submitted that the time for completion on this construction was 30 September rather than 14 October 2008.

97 Special condition 17 provides that if there is any inconsistency between the standard printed clauses in the contract and the special conditions, the special conditions prevail. Counsel for the defendants submitted that there was no conflict between standard condition 29 and special condition 29. Standard condition 29 applied where completion was conditional on an event. It was submitted that under special condition 29 completion was conditional upon receipt of a determination from the council approving the development application. Standard condition 29.7.3 provided that if the parties could lawfully complete without receipt of that determination then the completion date became the later of the completion date and 21 days after the earliest of:

1. either party serving notice of the event happening;
2. every party who has the benefit of the provision serving notice waiving the provision;
3. the end of the time for the event to happen.

98 In my view, standard condition 29 was not engaged. The effect of the second sentence of special condition 29 was that completion of the contract was not conditional on receipt of notice of determination from the council approving the development application. If the council refused the development application, the second sentence of special condition 29 would inevitably be engaged because the vendor could not notify the purchaser of receipt of a notice approving the development application. The purchaser would be required to complete within the time specified by the second sentence of special condition 29, whatever that time might be on the proper construction of the condition.

99 There is a prima facie difficulty with the second sentence of special condition 29. If the opening part of the sentence refers to the vendors’ not giving the requisite notice to the purchaser within 30 days after 31 August 2008, then the balance of the clause cannot sensibly work unless one substitutes for the date 31 August 2008 the date of 30 September 2008. Unless such a substitution is made, the purchaser would not know whether she was required to complete by 14 September 2008 because it would be impossible to know whether the vendor might still give a notice of receipt of a determination from the council up to 30 September 2008.

100 The better construction is that advanced by the plaintiffs. That is, the second sentence of special condition 29 applies if notification is not given by the vendors of a notice of determination from the council approving the development application by 30 days prior to 31 August 2008. If no such notice is given by that time, then the purchaser must complete within 14 days of 31 August 2008. The second sentence qualifies the first sentence of special condition 29. However, the first sentence can be used to assist the construction of the second sentence. The second sentence does not mean that if no notice is given by the vendor by 1 August 2008 the purchaser must complete 14 days before 31 August 2008 as that would be inconsistent with the intention shown in the first sentence that completion was not required until at least 31 August 2008. Reading the two sentences together, the better view is that adopted by the vendors, namely, that where the vendors did not give notice by 1 August 2008 of having received a determination from the council approving the development application, the purchaser was required to complete within 14 days after 31 August 2008. Hence, the plaintiffs were entitled to give the notice to complete on 16 September 2008.

101 Counsel for Malouf Real Estate contended that the whole of clause 29 was void for uncertainty. I do not accept that submission. The fact that there is more than one possible construction of special condition 29 does not render it void for uncertainty.

102 Even had the plaintiffs not been entitled to issue the notice to complete when they did, it does not follow that they thereby repudiated the contract. This is not a case in which the plaintiffs adhered to their interpretation of the contract “willy nilly in the face of a clear enunciation of the true agreement” (DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 432; Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 27 NSWLR 326 at 358). At the time, Mr Hewett for Mrs Calabro advanced only one alternative interpretation of special condition 29. That alternative interpretation was not repeated in Mrs Calabro’s defence, nor her submissions. The interpretation advanced by Mr Hewett on 3 September 2008 was contrary to the explanation provided by him on 5 May 2008 as to the reason for requesting the special condition. Even if the construction of the clause advanced by the plaintiffs was not correct, the position taken by Mrs Calabro was also not correct. The plaintiffs did not evince an intention not to be bound by the contract because they put forward a construction of the contract which might ultimately be held not to be correct. Mrs Calabro did not attempt to persuade the plaintiffs that their construction of the contract was wrong or give them any opportunity to reconsider their position.

103 If the plaintiffs were not entitled to serve the notice to complete, the result would simply be that time for completion would not have been made essential. Counsel for the defendants argued that because the notice to complete said that the plaintiffs would terminate the contract if the notice to complete were not complied with, they thereby evinced the intention not to perform the contract on their part unless Mrs Calabro completed the contract by the time stipulated in the notice. That was a statement of the vendors’ then intention. That intention had not been put into effect when Mr Hewett served Mrs Calabro’s notice of rescission. For the reasons previously given, the plaintiffs’ statement of that intention was not a repudiation even if the construction of the contract they advanced was not correct.

104 Service of the notice of rescission was a repudiation of the contract by Mrs Calabro. The plaintiffs were entitled to terminate the contract then and there. They allowed Mrs Calabro the opportunity to complete in accordance with the notice to complete. Upon her failing to do so the plaintiffs were entitled to terminate the contract because time had become essential. If the plaintiffs had not been entitled to serve the notice to complete so that time had not become essential, they were still entitled to terminate the contract because of Mrs Calabro’s repudiation of it. On either basis the plaintiffs effectively brought the contract to an end and are entitled to damages for loss of bargain.

Calculation of plaintiffs’ damages

105 The plaintiffs claim damages of $998,920.30 made up as follows:

No	Item	Amount
1	Difference between the original sale price ($6.455 million) and ultimate sale price ($4.9 million)	$1,555,000.00 less deposit: $909,500
2	Land and Environment Court filing fee 7.5.08	$3,914.00
3	Fresh marketing campaign: LJ Hooker Double Bay (October/November 2008 campaign)	$13,173.10
4	Furniture removal as part of marketing campaign	$9,733.28
5	Installation of viewing platform as part of marketing campaign 17.10.08	$3,300.00
6	Signage as part of marketing campaign	$1,050.00
7	Cost of valuation from Pontons property and advisory & valuation services dated 17 October 2008 in relation to valuation for reserve	$5,500.00
8	Accommodation costs	$9,108.00
9	Design costs re appeal of council decision to Land and Environment Court: Graham Bakewell (items 4-5 on the bill)	$7,680.00
10	Design costs re appeal of council decision to Land and Environment Court: Graham Bakewell (2.3.09)	$938.30
11	Cost of appeal of council decision to Land and Environment Court: Pikes Lawyers (Sep/Oct 2008)	$48,854.68
12	Cost of appeal of council decision to Land and Environment Court: Willana	$3,025.00 $6,327.20 $9,352.20
13	Planning services in relation to Land and Environment Court appeal: Willana	$3,025.00
14	Planning services in relation to Land and Environment Court appeal: Willana: November 2008	$2,557.50
15	Conveyancing costs in relation to settled sale in 2009	$3,132.38
16	Marketing costs re 2009: LJ Hooker	$13,591.00
17	Selling Commission paid to L J Hooker Double Bay 10/8/09 ($80,850.00, but from which must be deducted commission not otherwise payable on sale to Calabro: $142,010)	($61,160.00)
18	Survey of pole heights	$891.00
19	Council rates $2474.08 per annum, pro rata 14.9.08-10.8.09 = 331/365 x 2474.08	$2,243.61
20	Raine & Horne Double Bay: advertising for second sale	$760.00
21	Raine & Horne Double Bay: advertising for second sale	$491.00
22	Raine & Horne Double Bay: advertising for second sale	$1,467.09
23	Raine & Horne Double Bay: advertising for second sale	$2,705.00
24	Signage as part of marketing campaign: Adpak	$375.00
25	Cleanup of property for sale	$75.00
26	Lawn mowing	$120.00
27	Photography prints	$96.58
28	Ourvision	$5,486.58
29	Banner (advertising/signage)	$440.00
30	Signage/advertising	$520.00
31	TOTAL	$998,920.30

106 In final submissions the plaintiffs accepted that the claim for damages should be reduced by $7,227 to the extent interest was recovered from the second defendant for dishonour of the first deposit cheque.

107 As noted earlier in these reasons the defendants argued that because Mr Coyne had agreed with Mr Farrell to share fifty per cent of any profit, only fifty per cent of the damages claimed could be allowed. That submission is without substance. The fact that the plaintiffs will have to account to Mr Farrell for a portion of the damages they receive does not affect their entitlement to damages.

108 The principal amounts in issue were the amounts claimed at items 2, 9, 10, 11, 12, 13 and 14 being costs incurred by the plaintiffs in pursuing an appeal to the Land and Environment Court. The filing fee was paid by cheque dated 7 May 2008. The appeal was filed on 19 May 2008. This was before the council had determined the development application. The appeal was filed on the basis that there had been a deemed refusal of the application. The costs in the Land and Environment Court were incurred whilst the contract was still on foot. The hearing had been completed before 2 October 2008. Mr Coyne gave evidence that the reason for pursuing the appeal was that “Mr Calabro’s actions through the early part of the contract gave us some concern about his willingness to [complete] and we thought it was in all parties’ best interests if we had a DA in the event we needed to have a subsequent sale”.

109 In final submissions the plaintiffs argued that the costs of the Land and Environment Court appeal were consequential losses arising from the plaintiffs’ attempts to mitigate their loss arising from Mrs Calabro’s breach of contract in not providing the deposit in accordance with standard condition 2. I do not accept that. The costs of the appeal were not caused by Mrs Calabro’s breach of contract in failing to pay the deposit, but by Mr Coyne’s apprehension that the contract would be repudiated. The breach in failing to pay the deposit was remedied by the provision of the third cheque for the deposit on 15 August 2008. It is clear that the plaintiffs continued to incur expenses in connection with the Land and Environment Court appeal after that day. At that point there was a breach, but it had been remedied.

110 Had the plaintiffs elected to bring the contract to an end for Mrs Calabro’s failure to pay the deposit, then it would be correct to say that the plaintiffs incurred the costs of the Land and Environment Court proceedings in an attempt to mitigate their loss so as to put themselves in the best position in order to market the property for further sale. Such costs would form part of damages for loss of bargain arising from termination of the contract. But damages for loss of bargain following a repudiation are only recoverable if the repudiation is accepted and the contract terminated (Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 260-261). As events proved the plaintiffs were correct in their assessment that Mrs Calabro might ultimately fail to complete. But they did not bring the contract to an end when the first two cheques for the deposit were not met. Rather, they insisted on the defendants continuing to perform the contract. The expenses they then incurred were not by way of mitigation of the effects of the only breach of contract which had then occurred. Nor did they arise from termination of the contract following Mrs Calabro’s repudiation of it.

111 Most of the expenses connected with the appeal to the Land and Environment Court were incurred before Mrs Calabro repudiated the contract on 23 September 2008. The costs incurred after that date were incurred in carrying through the appeal which the plaintiffs had determined to do prior to Mrs Calabro’s repudiation of the contract. In my view, the incurring of those costs was not caused by the defendant’s breach. Sums totalling $76,321.68 claimed in items 2, 9, 10, 11, 12, 13 and 14 are not recoverable.

112 The other item of damages in dispute was the sum of $3,132.38 for conveyancing costs on the 2009 sale claimed in item 15. There was no issue that the costs were incurred on the conveyance and were properly incurred. The defendant argued that those costs would have been incurred in any event had the contract with Mrs Calabro proceeded.

113 Clearly the costs incurred on the 2009 sale would not have been incurred had Mrs Calabro completed the purchase. The plaintiffs did not claim as part of their damages the legal costs they incurred on the sale to Mrs Calabro. The plaintiffs correctly took the view that the costs incurred in the attempted sale to Mrs Calabro were not recoverable as they would have been incurred had the purchase been completed. The costs incurred in the 2009 conveyance was an additional expense which would not have been incurred had Mrs Calabro performed her contract.

114 The plaintiffs are entitled to recover as damages the sums totalling $922,598.62 claimed in items 1, 3-8 and 15-30.

115 The plaintiffs made two claims for interest in respect of the dishonour of the first and second deposit cheques. Both cheques were drawn by the second defendant. It is admitted on the pleadings that cheque numbers 1046 and 1047 contained directions by the second defendant to the National Australia Bank to pay the sum of $645,500 to the plaintiffs’ solicitors, Comino Prassas, on behalf of the plaintiffs. The plaintiffs denied the claim to interest from 6 May 2008 until the third cheque was honoured on 20 August 2008 because the defendants say the plaintiffs were never entitled to the deposit. That submission was made on the basis that the defendants were entitled to avoid the contract for sale for misrepresentation. I have rejected that claim.

116 Section 76 of the Cheques Act 1986 (Cth) provides that where a cheque is dishonoured the holder may recover as damages from any person liable on the cheque the sum ordered to be paid by the cheque, and the amount of any interest that, in accordance with the regulations, is payable in respect of that sum.

117 Because the cheque was ultimately replaced by a cheque that was honoured, the plaintiffs do not claim from the second defendant the sum of $645,500 ordered to be paid by the cheque. The amount of interest calculated in accordance with the regulations is recoverable as liquidated damages pursuant to s 76(3). The parties agreed that the amount of interest calculated in accordance with the regulations from 7 May to 20 August 2008 was $14,454.

118 As noted earlier in these reasons, the plaintiffs accept that if these damages are recovered from the second defendant, her claim for damages against Mrs Calabro should be reduced by half of that sum, namely $7,227, to avoid double recovery. Had the contract been performed, the interest on the deposit would have been shared between the parties equally. If the judgment against the second defendant is satisfied, the plaintiffs must allow half of the sum recovered against their claim for damages against Mrs Calabro.

119 The plaintiffs also claim interest against Mrs Calabro in the sum of $18,569.17 being interest on the sum of $645,500 at the rate of ten per cent per annum for the period from 7 May to 20 August 2008. When the summons was filed on 16 May 2008 part of the relief sought was an order that Mrs Calabro pay the deposit of $645,500 due under the contract. The proceedings thus included a claim for the recovery of money and enlivened the power of the court to include interest in an amount for which judgment is given on the money then sought to be recovered. Such interest may be ordered even though the deposit was paid after the proceedings were commenced (Civil Procedure Act 2005 (NSW), s 100(2)). The rate of interest of ten per cent is based on the interest rates in schedule 5 to the Uniform Civil Procedure Rules.

120 I see no reason that the plaintiffs should not be entitled to recover interest under s 100 of the Civil Procedure Act, both on the damages to which they are entitled and on the amount of the deposit for the period from 7 May to 20 August 2008. They are not entitled to double recovery of interest on the deposit. They are entitled to the interest claimed of $14,454 from the second defendant and to interest of $18,569.17 from the first defendant. To the extent they recover those sums from either defendant, they are not entitled to recover from the other.

Other claims of Mrs Calabro

121 Mrs Calabro sought relief against forfeiture of the deposit. But the forfeited deposit is brought to account in assessing the difference between the original sale price and the ultimate sale price. If Mrs Calabro obtained relief against forfeiture of the deposit the damages would be increased by the amount of the deposit. She is not entitled to that relief.

122 Mrs Calabro’s cross-claim against the vendors and Malouf Real Estate will be dismissed. An issue in the hearing was the value of the subject property at 6 May 2008. This was an issue on Mrs Calabro’s cross-claim for damages against the vendors and Malouf Real Estate for misrepresentation and misleading and deceptive conduct if it were held that the claim was made out, but for some reason it did not justify rescission. The question of value also arose on Mrs Calabro’s claim against Malouf Real Estate if she failed against the vendors and it were held she was entitled to damages for the difference between the sale price and the value of the land at the time of purchase. As Mrs Calabro failed on these claims, the valuation questions do not arise. The valuation evidence was also relevant to the claim that Mr Malouf represented that the subject property was worth at least $6 million and compared favourably with recent sales in Vaucluse above $6 million. Ultimately that claim was not pressed.

123 In case I am wrong in my conclusions and the valuation evidence becomes relevant I will briefly state my conclusions in respect of it. Three valuers gave evidence: Mr Field of National property Valuers NSW Pty Ltd, Mr Sukkar of Landmark White and Mr Bird of Kohler Bird. Mr Field had valued the property for the National Australia Bank on 29 August 2008. He assessed its then current market value to be $5 million. On 14 November 2008 he prepared a retrospective valuation as at 6 May 2008. He valued the property as at 6 May 2008 also at $5 million. Mr Sukkar and Mr Bird both valued the property as at 6 May 2008 at $6.25 million. All were agreed that there was a serious decline in value for prestige properties in Vaucluse in 2008, although they differed as to the timing of the drop in the market.

124 Mr Bird had considerably more experience than either Mr Field or Mr Sukkar. All valuers used a direct comparison method in arriving at their figures. The variance between Mr Field on the one hand and Messrs Sukkar and Bird on the other is well outside normal parameters. The differences are largely due to the properties each valuer chose as relevant comparable sales and the adjustments made in respect of such sales. Mr Field also said that a key point of difference was that, according to him, the market peaked at the end of 2007, was falling at the beginning of 2008, then plateaued, before falling sharply after August 2008 in response to the global financial crisis. The evidence did not indicate statistically significant sales in the relevant market, i.e., prestige properties in Vaucluse or nearby areas, from which such trends could be precisely drawn. Evidence was led of the media sale prices of properties in the eastern suburbs over the relevant periods, but the figures did not provide a basis for extrapolating prices in the relevant market.

125 Having heard the three valuers in conclave, I consider that Mr Bird was not only the most experienced valuer, but his evidence is the most reliable. He said, and I accept, that comparable sales were showing very strong results well into 2008.

126 I prefer Mr Bird’s evidence to that of Mr Field. Mr Field was combative. His answers were not always responsive. Despite his protestations to the contrary, I consider that he was compromised by a perceived need to defend his valuation of August 2008. He was strikingly self-assured. He professed an exceptional memory. I found it difficult to accept his assertions that in 13 to 14 years of practice he had done some 10,000 valuations in the eastern suburbs, or his modified assertion that he had done or supervised 10,000 valuations. His curriculum vitae shows that for a substantial part of that time up to 1999 he was not valuing residential properties in the eastern suburbs. For the ten years up to 2009 valuing residential properties was one only of many aspects of his work. I thought Mr Field lacked impartiality.

127 Mr Field relied in part on the sale of the subject property in December 2007 to the vendors, but noted that the result was “considered favourable to the purchaser at the time”. Mr Bird observed that no agent was involved in the sale, it did not reflect true arm’s length market value, was below market value and was opportunistic compared to comparable sales in the same street and the immediate surrounds.

128 Mr Field referred to a property in Vaucluse Road which sold for $5.6 million in July 2008. I accept Mr Bird’s analysis of that property as being of lesser appeal to the market, being on a small, steep block with limited yard.

129 Mr Field relied on a sale of a property in Wentworth Road, Vaucluse in March 2008 for $5.35 million. I accept Mr Bird’s evidence, which was substantially confirmed by cross-examination of Mr Field, that despite a comparable prestige street location, the land had no views and was of significantly lower value.

130 Mr Field also relied on the next-door property purchased by the plaintiffs in March 2007 for $4 million. (The sale reflected land value only. The valuations of the subject property were also based on land value as it would be expected that any purchaser would demolish the existing building and rebuild.) The adjacent property was slightly larger than the subject property, but on an irregularly shaped block. It was not regarded as a relevant comparable sale by Mr Bird. He was not cross-examined on this. Cross-examination of Mr Field showed that there was only a limited harbour view from living areas of the building to be built on the adjacent property.

131 Mr Bird and Mr Sukkar provided evidence of comparable sales that supported their assessment of a market value for the subject property of $6.25 million.

132 An assessment of what sales are truly comparable and what adjustments shou+ld be made for timing, size of block, views, other aspects of position, and, where relevant, quality of the residence, involve subjective judgments. There was limited information on which to judge such comparisons. To a considerable degree, an assessment of each valuer’s subjective judgment depends on an assessment of his experience, impartiality and reliability. I consider that Mr Bird is to be preferred in these respects.

133 For these reasons, I consider that the market value of the subject property on 6 May 2008 was $6.25 million. This also accords with Mr Calabro’s evidence. He was a willing buyer. After the “contest” on 6 May 2008 he thought he had caused his wife to pay $180,000 too much for the property.

Cross-claim by Malouf Real Estate against the plaintiffs

134 Malouf Real Estate accepts that if the plaintiffs terminated the contract for sale of the property to Mrs Calabro, they are not entitled to commission. The only remaining question between Malouf Real Estate and the plaintiffs is its claim that the plaintiffs indemnify it in respect of its costs of the proceedings. That claim is made pursuant to clause 20 of the Agency Agreement set out at para [7] above. Malouf Real Estate was joined to the proceedings as a cross-defendant to a cross-claim brought by Mrs Calabro. The costs incurred by Malouf Real Estate in defending the claim brought by Mrs Calabro against it are costs against which it is entitled to be indemnified by the plaintiffs if the claim brought by Mrs Calabro was brought notwithstanding that Malouf Real Estate properly performed or exercised its powers, duties or authorities under the agreement. The plaintiffs submitted that Mrs Calabro’s claim against Malouf Real Estate arose from the procedures adopted on 6 May 2008 whereby both prospective purchasers would be invited to make their best offer with a view to the vendors exchanging contracts with the potential purchaser who made the better offer. The plaintiffs submitted that the making of those arrangements was not part of the “powers, duties or authorities of the Agent under [the] agreement.” If it were, the plaintiffs submitted that the claims against the Agent did not arise out of the proper performance of such powers, duties or authorities.

135 Clause 29 of the Agency Agreement contained an acknowledgment by the plaintiffs that they had been given a copy of a consumers guide entitled “Agency Agreements for the Sale of Residential Property”. Neither that guide nor a document entitled “Marketing Action Plan” described the kind of process for extracting the best offers of prospective buyers that Mr Malouf arranged for 6 May 2008. The consumers guide to Agency Agreements stated that the Agency Agreement must state the services the agent would provide for the vendors. Clause 7 of the Agency Agreement stated that the sale of the property was to be advertised or otherwise promoted. Neither the Agency Agreement nor the marketing action plan referred to the type of closed envelope process suggested by Mr Malouf to Mr Calabro.

136 However, clause 1 of the Agency Agreement stated that the plaintiffs gave the agent the exclusive selling rights to the property for a specified period in consideration of the agent promising to use its best endeavours to sell the subject property. The procedure arranged by Mr Malouf for 6 May 2008 was the fruit of his best endeavour to sell the subject property for the best obtainable price. In arranging the procedures carried out on 6 May 2008 Mr Malouf was making those best endeavours. He was exercising the powers, duties or authorities of Malouf Real Estate under the agreement.

137 The plaintiffs also submitted that he did not properly exercise those powers, duties or authorities. Counsel for the plaintiffs submitted that the reason the matter proceeded to litigation was because Mr Calabro formed the view that he should have been told that the Mulhams had not provided a cheque for the deposit. Counsel submitted that Mr Malouf had not properly performed the powers, duties or authorities of the Agent under the agreement because he had changed the rules halfway through the process by allowing the procedure to go ahead when Mr Mulham had not provided a cheque for the deposit. I do not accept that submission. For the reasons given above at para [79] Mr Malouf was not obliged to tell Mr Calabro that the Mulhams had not provided a cheque. Nor was the omission of that information the reason for the institution of these proceedings. To the contrary, Mr Calabro caused his wife to affirm the contract after Mr Malouf had confirmed that the Mulhams had not provided a cheque for the deposit. The reason for Mr Calabro causing his wife to continue to defend the proceedings was that he learned that Mr Field had valued the property at only $5 million, that the plaintiffs had purchased the property for only $4.5 million only months before they sold it, and he learned of the special conditions which the Mulhams had attached to their contract.

138 In my view, Mr Malouf acted properly in carrying out his duty to his client to achieve the best price for the property. In so doing Malouf Real Estate was sued by Mrs Calabro. It is entitled to an indemnity under clause 20 of the Agency Agreement from the plaintiffs against the costs and expenses it incurred in defending that claim. The primary liability for those costs will fall on Mrs Calabro. But the plaintiffs are nonetheless liable to indemnify Malouf Real Estate in respect of the costs it has incurred on the indemnity basis.

Conclusions and orders

139 For these reasons I conclude that the plaintiffs are entitled to damages against the first defendant for the sum of $922,598.62. There is a question as to the time from which interest on those damages should run. The loss was not crystallised until the sale of the property in 2009. A number of the costs were incurred before that time including costs incurred in the attempted sale of the property in late 2008. On the other hand, the plaintiffs remained entitled to occupation of the property until the completion of the sale in 2009. The first defendant did not contend that the plaintiffs’ damages should be reduced by the value of those rights of occupation. I conclude that interest should run on the sum of $909,500 (being the difference between the sale price to Mrs Calabro and the price achieved in 2009 less the deposit) from the time of completion of the sale in 2009. That reflects the fact that the plaintiff had the benefit of ownership of the property up to the completion of the sale in 2009. I have refused the claim for damages in items 2 and 9-14 of the schedule. Interest on the expenses in items 3-8 and 15-30 of the schedule of damages should run from the time those expenses were paid. Interest will be recoverable at the rates prescribed pursuant to schedule 5 to the Uniform Civil Procedure Rules.

140 In addition the plaintiffs are entitled to interest in the sum of $18,569.17 against the first defendant for the late payment of the deposit.

141 The plaintiffs are entitled to liquidated damages against the second defendant in the sum of $14,454 representing interest at the prescribed rates from 7 May to 20 August 2008 from the dishonour of the first cheque for the deposit. The plaintiffs are entitled to interest against the second defendant pursuant to s 100 of the Civil Procedure Act at the rates prescribed in Schedule 5 to the Uniform Civil Procedure Rules on the sum of $14,454 from 20 August 2008. To the extent the plaintiffs recover such damages and interest from the second defendant, their right to recover interest of $18,569.17 from the first defendant will abate. Likewise, the plaintiffs’ claim for damages against the first defendant will abate to the extent of 50 per cent of the amount recovered from the second defendant.

142 The first cross-claim of Mrs Calabro against the plaintiffs will be dismissed. The second cross-claim of Mrs Calabro against Malouf Real Estate will be dismissed. The third cross-claim of the plaintiffs against Malouf Real Estate will be dismissed. The fourth cross-claim of Malouf Real Estate against the plaintiffs will be dismissed to the extent it claims commission. But Malouf Real Estate is entitled to an order that the plaintiffs indemnify it against the costs and expenses incurred by it in defence of the second cross-claim. If that indemnity is fully satisfied the plaintiffs will be subrogated to the right of Malouf Real Estate to recover its costs from Mrs Calabro.

143 I will hear the parties on costs. Prima facie, and subject to any offers of compromise, the position on costs is as follows. The plaintiffs are entitled to their costs of the proceedings against the first defendant on the ordinary basis from Mrs Calabro, and are entitled to their costs of their claim against the second defendant from it. Mrs Calabro will be liable to pay the plaintiffs’ costs of the first cross-claim on the ordinary basis. Mrs Calabro will be liable to pay the costs of Malouf Real Estate of the second cross-claim on the ordinary basis. Malouf Real Estate will be entitled to its costs against the plaintiffs of the third cross-claim on the ordinary basis. Unless there is agreement, I will hear argument as to whether the plaintiffs should be indemnified by Mrs Calabro in respect of costs payable by the plaintiffs to Malouf Real Estate in respect of the third cross-claim. Malouf Real Estate will be entitled to its costs of the fourth cross-claim from the plaintiffs on the ordinary basis.

144 I direct that counsel for the plaintiffs and Malouf Real Estate bring in short minutes of order in accordance with these reasons at a time to be arranged. I will then hear any arguments on costs.

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Citations

Coyne v Calabro (No. 5) [2010] NSWSC 694

Most Recent Citation

Taylor v Crossman (No 2) [2012] FCAFC 11

Cases Citing This Decision

2

Coyne v Calabro (No. 7) [2010] NSWSC 846

Taylor v Crossman (No 2) [2012] FCAFC 11

Cases Cited

10

Statutory Material Cited

5

Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810

Watson v Foxman [1995] NSWCA 497

O'Neill, T.M. v Commonwealth Banking Corporation [1987] FCA 363

CITATION:	Coyne v Calabro (No. 5) [2010] NSWSC 694
HEARING DATE(S):	9-12 November 2009; 17 November 2009; 8 December 2009
JUDGMENT DATE :	29 June 2010
JURISDICTION:	Equity
JUDGMENT OF:	White J
DECISION:	Direct counsel for the plaintiffs and Malouf Real Estate bring in short minutes of order in accordance with these reasons.
CATCHWORDS:	CONTRACT – vendor and purchaser dispute – whether contract validly terminated by either party – where purchaser alleged misrepresentation or misleading or deceptive conduct by vendor to induce entry into contract – no misrepresentation or misleading or deceptive conduct established – purchaser not entitled to rescind contract - CONTRACT – where contract contained special condition for completion to be conditional on development approval – construction of contract to determine time for completion – whether vendor entitled to serve notice to complete and terminate contract – determination of damages recoverable for breach of contract - CONTRACT – where real agent joined as cross-defendant to cross-claim by purchaser – whether agent entitled to be indemnified by vendor for costs of proceedings – whether agent claimed costs arising from proper performance of powers, duties or authorities
LEGISLATION CITED:	Conveyancing Act 1919 (NSW) Fair Trading Act 1987 (NSW) Trade Practices Act 1974 (Cth) Cheques Act 1986 (Cth) Civil Procedure Act 2005 (NSW)
CATEGORY:	Principal judgment
CASES CITED:	Watson v Foxman (1995) 49 NSWLR 315 Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No. 2) (1989) 40 FCR 76 O’Brien v Smolonogov (1983) 53 ALR 107 Havyn Pty Ltd v Webster [2005] NSWCA 182 DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 27 NSWLR 326 Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245
PARTIES:	1st Plaintiff: Terrence Michael Coyne 2nd Plaintiff: Anne Patricia Coyne 1st Defendant: Grazia Rita Calabro 2nd Defendant: Frank Calabro Pty Ltd Cross-defendant: Malouf Real Estate Pty Limited
FILE NUMBER(S):	SC 2008/278742
COUNSEL:	Plaintiffs: M Ashhurst SC with P Barham Defendants: J M Ireland QC with J S Cooke Cross-Defendant: M Einfeld QC with A Lo Surdo
SOLICITORS:	Plaintiffs: Comino Prassas Defendants: Pikes Lawyers Cross-Defendant: Lander & Rogers