Delaporte v Tonner
[2017] WADC 100
•11 AUGUST 2017
DELAPORTE -v- TONNER [2017] WADC 100
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2017] WADC 100 | |
| Case No: | CIV:1077/2016 | 12 JUNE 2017 (FURTHER WRITTEN SUBMISSIONS FILED ON 31 JULY 2017 & 4 AUGUST 2017) | |
| Coram: | PARRY DCJ | 11/08/17 | |
| PERTH | |||
| 39 | Judgment Part: | 1 of 1 | |
| Result: | Judgment for plaintiff Counterclaim dismissed | ||
| PDF Version |
| Parties: | SHARON LOUISE DELAPORTE JOSEPH ANDREW TONNER LINDA JANE TONNER |
Catchwords: | Contract Sale of land Breach Renunciation or repudiation Whether purchasers repudiated contract Whether seller's acceptance of purchasers' repudiation of contract and termination of contract invalid because of failure to give notice under s 6 of Sale of Land Act 1970 (WA) Special condition of contract required purchasers to lease land for nine months until completion of sale Whether contract is a 'terms contract' under which purchasers are 'entitled to possession or occupation of the land before [they] becom[e] entitled to a conveyance or transfer of the land' within meaning of Sale of Land Act 1970 Whether seller has proved that she suffered loss and damage in amount claimed or at all Measure of damages Appropriate date for assessment of seller's loss |
Legislation: | Interpretation Act 1984 s 5 Sale of Land Act 1970 s 5, s 6, s 6(2) |
Case References: | C & P Syndicate Pty Ltd v Reddy [2013] NSWSC 643 DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; [1978] HCA 12 Hoffman v Kali [1985] 1 Qd R 253 Hooper v Oates [2013] EWCA Civ 91; [2014] Ch 287 Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623; [1989] HCA 23 Lords v von Thomann (No 2) [2014] WASC 320; (2014) 47 WAR 473 Ng v Filmlock Pty Ltd [2014] NSWCA 389; (2014) 88 NSWLR 146 Shevill v Builders Licensing Board (1982) 149 CLR 620; [1982] HCA 47 Victorian Economic Development Corporation v Clovervale Pty Ltd [1992] 1 VR 596 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
JOSEPH ANDREW TONNER
First defendant
LINDA JANE TONNER
Second defendant
Catchwords:
Contract - Sale of land - Breach - Renunciation or repudiation - Whether purchasers repudiated contract - Whether seller's acceptance of purchasers' repudiation of contract and termination of contract invalid because of failure to give notice under s 6 of Sale of Land Act 1970 (WA) - Special condition of contract required purchasers to lease land for nine months until completion of sale - Whether contract is a 'terms contract' under which purchasers are 'entitled to possession or occupation of the land before [they] becom[e] entitled to a conveyance or transfer of the land' within meaning of Sale of Land Act 1970 - Whether seller has proved that she suffered loss and damage in amount claimed or at all - Measure of damages - Appropriate date for assessment of seller's loss
Legislation:
Interpretation Act 1984 s 5
Sale of Land Act 1970 s 5, s 6, s 6(2)
Result:
Judgment for plaintiff
Counterclaim dismissed
Representation:
Counsel:
Plaintiff : Mr P G McGowan
First defendant : Mr C S Williams
Second defendant : Mr C S Williams
Solicitors:
Plaintiff : GV Lawyers
First defendant : Solomon Bros
Second defendant : Solomon Bros
Case(s) referred to in judgment(s):
C & P Syndicate Pty Ltd v Reddy [2013] NSWSC 643
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; [1978] HCA 12
Hoffman v Kali [1985] 1 Qd R 253
Hooper v Oates [2013] EWCA Civ 91; [2014] Ch 287
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61
Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623; [1989] HCA 23
Lords v von Thomann (No 2) [2014] WASC 320; (2014) 47 WAR 473
Ng v Filmlock Pty Ltd [2014] NSWCA 389; (2014) 88 NSWLR 146
Shevill v Builders Licensing Board (1982) 149 CLR 620; [1982] HCA 47
Victorian Economic Development Corporation v Clovervale Pty Ltd [1992] 1 VR 596
- PARRY DCJ:
Introduction
1 Mrs Sharon Delaporte seeks damages for breach of contract for the sale of the property at No 99A Ullapool Road, Mt Pleasant, Western Australia (property) to Mr Joseph Tonner and Mrs Linda Tonner. Mrs Delaporte contends that Mr and Mrs Tonner renounced (or, as it was historically termed, repudiated) the contract, and that she, through her solicitors, accepted the repudiation and terminated the contract, thereby giving rise to a right to seek damages.
2 The quantum of damages claimed by Mrs Delaporte is $409,863. This sum comprises the difference of $500,000 between the contract price ($3,100,000) and the price for which the property was ultimately sold to a third party ($2,600,000) some 19 months after the settlement of the sale of the property to Mr and Mrs Tonner was to have occurred, less the deposit forfeited under the contract ($100,000), and additional marketing costs of $9,863 incurred by Mrs Delaporte in seeking to re-sell the property in the interim.
3 Mr and Mrs Tonner deny that they repudiated the contract. They contend, by way of re-amended defence and counterclaim, that Mrs Delaporte repudiated the contract, and that they accepted her repudiation, thereby terminating the contract.
4 Mr and Mrs Tonner claim an order for the return of the deposit under the contract ($100,000) and damages of $5,231.40 for breach of contract by Mrs Delaporte. This sum comprises removal and relocation expenses incurred by Mr and Mrs Tonner when they left the property (having agreed to rent the property under a special condition of the contract from the date of the contract going unconditional up until the time of settlement) ($3,731.40) and the cost of cleaning the property ($1,500).
5 Alternatively, Mr and Mrs Tonner contend that if neither they nor Mrs Delaporte repudiated the contract, then the contract was mutually abandoned. If the contract was mutually abandoned, Mr and Mrs Tonner claim the return of the deposit under the contract ($100,000).
6 The following three principal issues arise for determination in this proceeding:
1. Whether Mr and Mrs Tonner repudiated the contract by an email from Mr Tonner to Mr Alan Bourke, Mrs Delaporte's real estate agent, sent at 2.35 pm on 24 February 2014.
2. If the answer to issue 1 is 'yes', whether Mrs Delaporte's acceptance of Mr and Mrs Tonner's repudiation of the contract and her termination of the contract by a letter from her solicitors, GV Lawyers, dated 26 February 2014 to Mr and Mrs Tonner is invalid, because of a failure to give prior notice to Mr and Mrs Tonner pursuant to s 6 of the Sale of Land Act 1970 (WA) (SL Act).
3. If the answer to issue 2 is 'no', whether Mrs Delaporte has proved that she suffered loss and damage as a result of Mr and Mrs Tonner's repudiation of the contract in the amount claimed or at all.
7 I will address each of these issues in turn after setting out the factual background.
8 For reasons set out below, in my view, Mr and Mrs Tonner repudiated the contract by the email from Mr Tonner to Mr Bourke on 24 February 2014, because the email, viewed objectively and in context, evinced an intention no longer to be bound by the contract.
9 Furthermore, in my view, for reasons set out below, Mrs Delaporte's acceptance of Mr and Mrs Tonner's repudiation of the contract and termination of the contract by her solicitor's letter was not invalid under s 6 of the SL Act, because the contract for the sale of the property was not a 'terms contract' within the meaning of that provision.
10 Finally, for reasons also set out below, Mrs Delaporte has proved that she has suffered loss and damage in the amount she claims. Although the general rule is that damages are to be assessed at the date when the cause of action arises, which in this case was when the purchasers’ repudiation was accepted by the seller and the contract was terminated, the general rule is departed from whenever it is necessary to provide adequate compensation. In this case, as Mrs Delaporte took all reasonable steps to re-sell the property, but was unable to do so for 19 months, her loss is represented and reflected by the difference between the two contract prices, less the deposit, and the consequential costs of re-marketing the property. Mrs Delaporte has therefore proved that she suffered loss and damage in the amount she claims as a result of the repudiation of the contract.
11 It follows that there should be judgment for Mrs Delaporte with damages assessed in the sum of $409,863.
Factual background
12 The essential facts are not in dispute. I make the following findings of fact based on the documentary evidence and the evidence of witnesses called by the parties.
13 On 1 May 2013, Mrs Delaporte as seller and Mr and Mrs Tonner as purchasers entered into a contract for the sale and purchase of the property for $3.1 million. Under the contract, a deposit of $100,000 was to be paid within 10 days and held on trust by Mrs Delaporte's real estate agent, Alan Bourke and Associates Pty Ltd trading as Bourkes. The contract stated that settlement was to be in nine months, that is, on 1 February 2014. The contract was conditional upon pest inspection and building reports to be obtained within two weeks.
14 The deposit of $100,000 was paid by Mr and Mrs Tonner to Bourkes. The contract became unconditional on 15 May 2013.
15 The contract incorporated the Joint Form of General Conditions for the Sale of Land (2011 General Conditions) published by the Law Society of Western Australia and the Real Estate Institute of Western Australia.
16 Clause 24 of the 2011 General Conditions concerns default. Clause 24.1 states, in part, as follows:
If the Buyer:
…
(b) repudiates the Contract,
the Seller has each right in clause 24.2, in addition to any other right or remedy of the Seller.
17 Among other rights conferred upon a seller on default or repudiation by a buyer, cl 24.2 states, in part, as follows:
If clause 24.1 applies, the Seller may:
…
(e) where the Buyer repudiates the Contract, terminate the Contract by Notice to the Buyer.
18 Clause 24.3 states, in part, as follows:
If the Seller terminates the Contract under clause … 24.2(e), the Seller may, subject to the further provisions of this clause, elect to exercise any one or more of the following.
(a) Forfeit the Deposit.
(b) Sue the Buyer for damages for default.
(c) Resell the Property.
19 The contract was also subject to three special conditions. Special condition 2 states as follows:
The purchasers agree to rent this property on a 9 month lease with options to renew at $2500 per week from the date of this contract going unconditional up until the time of settlement to be managed by Bourkes on behalf of the owners.
20 On 24 May 2013, Mrs Delaporte entered into a standard residential property lease with Mr and Mrs Tonner under which Mrs Delaporte leased the property to Mr and Mrs Tonner for a 9 month term, commencing on 1 June 2013 and expiring on 1 February 2014, for rent of $2,500 per week. The lease included the following special condition:
The Lease Agreement shall be terminated upon settlement of the property.
21 Mr and Mrs Tonner and their family moved into the property. They resided at the property until 21 March 2014.
22 On 1 February 2014, which was the date on which settlement of the contract was to occur, a meeting was held at the property attended by Mrs Delaporte and Mr and Mrs Tonner. The parties agreed to an extension of the settlement date to 28 February 2014 and also to an extension of the lease until that date. They amended and initialled the lease document to specify that it was to expire on 28 February 2014.
23 On 14 February 2014, Ms Nikki D'Agostino, a marketing and sales consultant with Bourkes, sent the following email to Mrs Delaporte:
Dear Sharon,
I've left a message with you advising I would follow up with email. I have received information from the buyer that they wish to proceed with the settlement, working toward the goal to settle on 28th Feb.
Alan indicated to me from a discussion you had that you would look to extend the penalty period to this date – can you please confirm that this is agreed?
The buyer said they will have further update from the bank mid next week.
Warmest regards,
Nikki D'Agostino
Marketing & Sales Consultant
Perth Strata Specialist Team
24 On 15 February 2014, Mrs Delaporte replied to Ms D'Agostino's email as follows:
Thanks Nikki
We will accept extending settlement time to the 28 Feb 2014 with the penalty interest applied, but no further extension after that date.
Regards
Sharp [sic]
25 Ms D'Agostino replied to Mrs Delaporte by email on the same day, stating 'I will advise accordingly and have update mid week'.
26 On 16 February 2014, Mrs Delaporte sent the following email to Ms D'Agostino:
Nikki,
Barry & I have discussed the situation regarding the settlement & extension of time. As we have agreed to extend to the 28th Feb we would request that the deposit be released to us immediately. We feel we have kept faith at all stages of the process & are now suffering huge financial ramifications due to the late settlement that the penalty interest does not cover. If we has [sic] declined to extend the settlement the deposit would have been awarded to us within a few days, thus alleviating the current pressure this delay has placed us under. The release of the deposit does not in any way change the position for the owners, as these funds have not been in their account for 9 months & in any case would be forfeited if they can not [sic] settle.
Regards
Sharon Delaporte
27 Later that day, Ms D'Agostino replied to Mrs Delaporte's email as follows:
Hi Sharon
Just confirming receipt of your email. I am awaiting response from the purchaser to have this arranged. I will be in touch once I have confirmation. Thanks
Warmest regards,
Nikki D'Agostino
Marketing & Sales Consultant
Perth Strata Specialist Team
28 By an undated letter which was received by Mr and Mrs Tonner on the morning of Friday, 21 February 2014, Ms Sandie Stewart from Bourkes Property Management Department wrote to Mr and Mrs Tonner as follows:
BOURKES
Sales / auctions / property management
272 Canning Highway
Como Western Australia 6152
PO Box 402 Como WA 6952
T 08 9474 2000 F 08 9474 2549
bourkes.com.au
- Andrew & Linda Tonner
99A Ullapool Road
MOUNT PLEASANT WA 6153
To Andrew & LInda [sic],
RE: 99A Ullapool Road MOUNT PLEASANT WA 6153
We regret to inform you the landlord has given instruction that the property must be vacated by FRIDAY 21st MARCH 2014.
According to our records, your rent is currently paid to 20/02/14, you are required to continue paying rent up until the day you vacate. Please be aware you cannot use your bond as the final month's rent.
We have enclosed our final inspection guide to assist you in ensuring a trouble free end to your tenancy with us. Please be aware that if the property is not left in a clean and tidy condition there can be a delay of up to 2 months in getting your bond refunded or we may have to deduct the costs of rectifying the property from the bond.
As you are no doubt aware, it is our obligation to re-let the property to another suitable tenant. We would greatly appreciate your co-operation by allowing scheduled access for prospective tenants to view the property. We will contact you at a later time to arrange this as required.
We understand it is not always possible to move out precisely on the specified date. We ask that should you find alternative accommodation and be able to move out sooner than the required date that you provide written notice to us of the intended date two weeks prior to moving out.
Please return all the keys and remotes to our office Monday – Friday 8.30am – 5.00pm with the key return form supplied. A final bond inspection will be carried out as soon as practical once keys are returned.
Kind regards,
Sandie Stewart
Property Management Department
29 In these reasons, I will refer to this letter as the 'notice to vacate'.
30 Enclosed with the notice to vacate was a document entitled 'Final Inspection Guide' which states that the information in the guide 'has been prepared to assist you when vacating the property you have been renting with Bourkes'. The Final Inspection Guide contains detailed information in relation to requirements for general cleaning, areas of special attention and other reminders. Also enclosed with the notice to vacate was a key return form.
31 At 12.08 pm on 21 February 2014, Mr Tonner sent the following email to Ms D'Agostino:
Subject: FW: 99 Ullapool
Hi Nikki, I have received a letter from Sandie at Bourke's asking me to vacate the house by 21/3/14 and I have replied to Sandie saying that we will accommodate their request, I Take this letter to mean that they are not wanting to settle on the property so I have informed my Financier and Account [sic] to stop what they are doing and not to waste any more resources on the subject, Linda and myself are disappointed that they have made this call after all the work yourself and the Tonners have put in to help the owners with their position after it was presented to us at that meeting on the 1/2/14 at the home, as we know it should not have had any Bering [sic] on us and the purchase of Ullapool but offered an idea that might have helped all concerned but as with all the discussion we have had over the last Ten months it always ends up one way. So we do expect our deposit to be returned in full to us with no delay From Bourke's trust account, at this point in time we would like to thank you on the professional manner you conduct yourself throughout this whole process even when the sellers [sic] partner (Barry) verbally attacked you in the driveway on the 1/2/14 after our meeting, Linda and myself both commented how improper that was on their behalf .. From this point forward we will start looking again…PS you know all the swings and rounder [sic] about there has been over the last two months , I was hopping [sic] to speak with you before sending this email…
Kind regards
Andrew Tonner
General Manager – Operations
32 At 2.40 pm on 21 February 2014, Ms D'Agostino replied to Mr Tonner's email as follows:
Thank you Andrew for your comments.
I am forwarding this email to Alan Bourke to attend to.
33 Later that day, Mr Bourke telephoned Mr Tonner. Mr Bourke was not called to give evidence. Mr Tonner gave brief evidence in cross-examination about the telephone conversation with Mr Bourke on 21 February 2014. Mr Tonner gave the following evidence (ts 59 – 60):
And what passed between you and Alan Bourke during the course of that telephone conversation? - - - It was a very short telephone conversation and he just said to me that it's what the owners want to do and it's their prerogative to do that.
Was there anything else that he said to you or you said to him during the course of that telephone conversation? - - - It was very short phone call of 15 to 20 seconds.
34 At 2.35 pm on Monday, 24 February 2014, Mr Tonner sent the following email to Mr Bourke:
Subject: FW:vacate letter
Hi Alan , Thank you for calling on Friday 21/2/14 to explain your understanding of the letter which your office sent , Our position stands in how it has been received and with what dialog we have had over many weeks through Nikki with the owners this is no different than any other agreement we come to , the (owner) [sic] agrees with all things discussed and then the (Partner) [sic] changes it all to suit his agenda and deals going on in the back ground [sic] that are not our concern no matter what. As mention [sic] to you on Fridays [sic] phone call that I had informed all my team working on this and discussed the letter received and early received emails/sms we were all of the same conclusion.. [sic] On Friday my wife has put in position all the items which Sandie Stewart had highlighted that needed to completed before handing the keys back and also has committed to a new Property to go to, While I spend a great deal of time working on Projects through out [sic] the country my family require a lot more certainty than this.. AS [sic] to the Deposit of $100.000 Placed in Bourke's trust account , I do expect it to be refunded in to [sic] our account with no delays. Alan I would like to say how Professional Nikki has been throughout this process even when the owners [sic] partner verbally attack her in the drive way [sic] of the home after a meeting that we hold [sic] on the 1/2/14 which was disappointing to see, so in closing we have excepted [sic] there [sic] decision and we move forward.
Kind regards
Andrew Tonner
General Manager - Operations
35 This email is pleaded and contended by Mrs Delaporte as the conduct by which Mr and Mrs Tonner evinced an intention no longer to be bound by the contract, and therefore repudiated the contract.
36 In contrast, Mr and Mrs Tonner plead and contend that the email on 24 February 2014 was in response to, and effected an acceptance of, a repudiation of the contract by Mrs Delaporte by the notice to vacate that Bourkes issued to them on 21 February 2014. Mr and Mrs Tonner plead and contend by counterclaim that the notice to vacate amounted to a repudiation of the contract, because it evinced an intention by Mrs Delaporte not to proceed with the contract, which they accepted by Mr Tonner's email on 24 February 2014.
37 At 3.21 pm on 24 February 2014, Mr Bourke replied to Mr Tonner's email sent to him at 2.35 pm that afternoon as follows:
Dear Andrew,
Its [sic] not that easy to believe that we just return the deposit and everyone goes on their way.
You committed to buy the home and the owners entertained a delay in proceedings to allow for a settlement at latest by the 28th of February.
They are fully entitled to seize the deposit and use all the default provisions in the General Conditions of sale.
Please think very seriously about this termination of the purchase and get legal advice before defaulting on the transaction.
The previous advice was a tenancy issue and has no bearing on your purchase of the home.
I can be contacted through out [sic] the day on the below numbers.
Regards
Alan Bourke
38 On 26 February 2014, GV Lawyers sent a letter by email to Mr and Mrs Tonner as follows:
Dear Sir/Madam
CONTRACT FOR SALE OF 30B BRIAN AVENUE [SIC], MT PLEASANT:
DELAPORTE TO TONNER – CERTIFICATE OF TITLE VOLUME 2584 FOLIO 414
We act for Sharon Louise Delaporte who is the registered proprietor of the above mentioned property and refer to the contract to sell the property to you dated 1 May 2013.
We also refer to your email to our client's selling agent, Alan Bourke, dated 24 February 2014 advising that you no longer intend to proceed to purchase the property from our client and demanding the return of the $100,000.00 deposit you have paid to the selling agent. We confirm that your email evinces your intention not to proceed with the contract and constitutes a repudiation of the contract. Our client accepts your repudiation of the contract, elects to terminate the contract pursuant to Clause 24.2(e) of the Joint Form of General Conditions for the Sale of Land and claims the forfeit of the deposit pursuant to clause 24.3(a) of the General Conditions and further damages for breach of contract.
Our client otherwise reserves all its rights at law and in equity in respect of the breach and termination of the contract.
Yours faithfully
GV LAWYERS
Luke Barker
39 On 28 February 2014, GV Lawyers sent a further letter by email to Mr and Mrs Tonner, stating that the subject line of their letter dated 26 February 2014 erroneously referred to the contract of sale dated 1 May 2013 between the parties as being for No 30B Brian Avenue, Mt Pleasant, rather than No 99A Ullapool Road, Mt Pleasant (although the certificate of title reference was correct). The letter then states as follows:
[F]or the purposes of clarification and to avoid any doubt we confirm that the correct address for the property the subject of the contract dated 1 May 2013 between you and our client is 99A Ullapool Road, Mt Pleasant.
Our client otherwise confirms and ratifies all other matters stated in our previous correspondence.
40 Mrs Delaporte relies on her solicitor's letter of 26 February 2014 as constituting acceptance on her behalf of Mr and Mrs Tonner's repudiation of the contract on 24 February 2014. Mrs Delaporte contends that, in consequence of her acceptance of Mr and Mrs Tonner's repudiation of the contract, the contract came to an end on 26 February 2014.
41 On 5 March 2014, Mrs Delaporte entered into an exclusive selling agency agreement for the sale of the property with Ace Realty (WA) Pty Ltd trading as Ace Realty. The selling agency agreement stated the 'listing price' as '$3.5m', that is $3.5 million. Mrs Delaporte gave evidence in cross-examination that this figure was determined on the basis of a discussion between herself and the agent. She gave evidence that:
That was the sale price that we were aiming for at the time.
… Or a figure that would be acceptable. (ts 19)
42 Mrs Delaporte also gave the following evidence in cross-examination:
Did you believe at that time that $3.5 million was a realistic price to expect from a sale of the property?---A figure of 3.5 or very close to it, yes.
Thank you. During the period March to July 2014 when Ace Realty were your agents, I understood you said in answer to a question my friend asked, that the property was being advertised by flyers, in the newspaper and on the Internet?---Mm hmm.
At what asking price was it advertised?---I don't recall specifically if there was a figure mentioned. I think on the Internet, on REWA, [sic] there would have been I would say 3.5 million. I wouldn't - to be perfectly honest I can't remember looking at the ad and remembering what the figure was but I would expect if we listed here 3.5 it would have been 3.5 and very often they put 'or ONO', or offers around that price. (ts 20)
43 The principal of Ace Realty, Mr Frank Sanchez, gave the following evidence as to how the $3.5 million listing price was arrived at:
That would've been arrived by gauging what the other properties had been selling for in the area, with sales evidence, and also other compatible – compatible properties in the area. (ts 28)
44 Both Mrs Delaporte and Mr Sanchez gave evidence that, during the exclusive agency agreement with Ace Realty from 5 March 2014 until 27 July 2014, Ace realty conducted an active advertising campaign consisting of onsite signage, use of marketing websites including realestate.com.au, and home opens 'almost every weekend' (Mrs Delaporte, ts 16) or 'pretty much every weekend' (Mr Sanchez, ts 28). Mrs Delaporte paid $3,000 to Ace Realty for the advertising campaign.
45 Mr and Mrs Delaporte lived at the property at the time and Mrs Delaporte made sure that it was absolutely spotless every weekend when it was open for inspection, that there were fresh flowers, and that there was coffee brewing, so that it would be attractive to potential purchasers.
46 However, no offer to purchase the property was received during the exclusive agency agreement with Ace Realty.
47 On 16 September 2014, Mrs Delaporte entered into an exclusive selling agency agreement for the sale of the property with the real estate agency trading as Acton Dalkeith. The 'listing price' stated on the selling agency agreement for the property was '$2,990,000 - $3,200,000 owner's instructions'. Ms Vivian Yap, who was the listing agent for the property with Acton Dalkeith, gave evidence that she wrote down the 'owner's instructions' on the selling agency agreement and that:
They wanted to actually achieve a price point of 2.99 - 3.2. (ts 25)
48 Mrs Delaporte gave evidence that the listing price of $2.99 million - $3.2 million:
… was derived from the amount of time that had gone by with no offers, thinking that the market had declined and therefore we needed to bring the price down. (ts 20)
49 Mrs Delaporte paid marketing charges and expenses of $6,443 to Acton Dalkeith.
50 Acton Dalkeith marketed the property with flyers, in the newspaper and on the internet. Acton Dalkeith conducted home opens at the property on both Saturdays and Sundays over the four weeks leading up to an auction. The auction was conducted on 1 or 2 November 2014. However, no bid was made.
51 After the auction, Acton Dalkeith continued to advertise the property in the newspaper and on the internet. Ms Yap gave evidence that 'certainly we had a lot of feedback anywhere around the mid 2's to 2.75 million' (ts 26), but 'no actual offer' (ts 26) was received at any time during the period when Acton Dalkeith held the exclusive agency agreement for the sale of the property between 16 September 2014 and 15 January 2015.
52 On 24 April 2015, Mrs Delaporte entered into an exclusive selling agency agreement for the sale of the property with Ms Colleen Gandini trading as Colleen Gandini Residential. The selling agency agreement stated the 'listing price' as 'HIGH $2m's'. Mrs Delaporte gave evidence that the listing price was determined as a result of a discussion between herself and Ms Gandini.
53 Ms Gandini was also called to give evidence and confirmed that the listing price was based on her recommendation. She explained that it was arrived at as follows:
Look, comparable properties, including the two very, very close by, so a property one house away and a property another house away had sold at a very similar time of one for 2.8 million and one for 3.2 million. So the - the property had been on the market for a little while and marketed by other agents, so that was - yeah, the - the agreement (indistinct). (ts 30)
54 Mrs Delaporte paid Ms Gandini marketing fees of $420. Ms Gandini advertised the property on all major websites and using signage. She also contacted the people who had been looking at other houses with her agency and opened the house for inspection every weekend and sometimes twice on a weekend.
55 Ms Gandini received an offer for the purchase of the property at $2.4 million. A counter offer at $2.75 million was made by Mrs Delaporte. Ultimately, on 7 October 2015, Mrs Delaporte accepted the price of $2.6 million for the sale of the property. The sale proceeded to settlement on 30 October 2015 and the property was transferred to the purchaser.
56 After giving notice to Mr and Mrs Tonner of her intention to commence this proceeding, Ms Delaporte filed a writ of summons with an indorsement of claim on 29 March 2016. As indicated earlier, Mrs Delaporte seeks damages of $409,863 from Mr and Mrs Tonner being the difference between the contract price and the sale price achieved in October 2015, less the deposit, and the additional marketing costs incurred between March 2014 and October 2015.
Issues for determination
57 As indicated earlier, the following three principal issues arise for determination in this proceeding:
1. Whether Mr and Mrs Tonner repudiated the contract by the email from Mr Tonner to Mr Bourke on 24 February 2014.
2. If the answer to issue 1 is 'yes', whether Mrs Delaporte's acceptance of Mr and Mrs Tonner's repudiation of the contract and her termination of the contract by the letter from her solicitors dated 26 February 2014 to Mr and Mrs Tonner is invalid, because of a failure to give prior notice to Mr and Mrs Tonner pursuant to s 6 of the SL Act.
3. If the answer to issue 2 is 'no', whether Mrs Delaporte has proved that she suffered loss and damage as a result of Mr and Mrs Tonner's repudiation of the contract in the amount claim or at all.
58 I will now address each of these issues in turn.
Did Mr and Mrs Tonner repudiate the contract by Mr Tonner's email on 24 February 2014?
59 The applicable principles in relation to renunciation (historically and in these reasons referred to as repudiation) of contract are not in dispute and have been expounded in a number of decisions of the High Court of Australia and intermediate appellate courts. It is sufficient for the purposes of these reasons to refer to passages from four decisions of the High Court.
60 In Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61, Gleeson CJ, Gummow, Heydon & Crennan JJ discussed the relevant meaning of the term 'repudiation' as referring to [44] (citations omitted):
… conduct which envinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party's obligations. It may be termed renunciation. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it. …
61 In Shevill v Builders Licensing Board (1982) 149 CLR 620; [1982] HCA 47, Wilson J referred to the significance of a finding of repudiation of contract and to the importance of making a determination as to whether a contract has been repudiated having regard to, and in the context of, all relevant circumstances (633) (citations omitted):
… Repudiation of a contract is a serious matter and is not to be lightly found or inferred … In considering it, one must look to all the circumstances of the case to see whether the conduct 'amounts to a renunciation, to an absolute refusal to perform the contract'. …
62 In Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623; [1989] HCA 23, Deane & Dawson JJ held that a determination as to whether conduct amounts to repudiation of contract is to be determined objectively (657 – 658) (citations omitted):
… [A]n allegation of repudiation of contract in a civil case does not involve an assertion that the alleged repudiator subjectively intended to repudiate his obligations. Thus, it is of little assistance in the present case to identify reasons why the lessor was unlikely to have subjectively desired to repudiate its agreement to grant a lease. An issue of repudiation turns upon objective acts and omissions and not upon uncommunicated intention. The question is what effect the lessor's conduct 'would be reasonably calculated to have upon a reasonable person' …
63 Finally, in this brief survey of principles, in DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; [1978] HCA 12, Stephen, Mason & Jacobs JJ discussed whether a contracting party who has misinterpreted the provisions of the contract can be found to have repudiated the contract (432):
… No doubt there are cases in which a party, by insisting on an incorrect interpretation of a contract, evinces an intention that he will not perform the contract according to its terms. But there are other cases in which a party, though asserting a wrong view of a contract because he believes it to be correct, is willing to perform the contract according to its tenor. He may be willing to recognize his heresy once the true doctrine is enunciated or he may be willing to accept an authoritative exposition of the correct interpretation. In either event an intention to repudiate the contract could not be attributed to him.
64 Mrs Delaporte submits that the email sent by Mr Tonner to Mr Bourke at 2.35 pm on 24 February 2014 constitutes conduct by Mr and Mrs Tonner such as to convey to a reasonable person, in the situation of Mrs Delaporte as the seller, renunciation of the contract, that is conduct evincing an intention by Mr and Mrs Tonner no longer to be bound by the contract and no longer to proceed to settlement of the sale and purchase of the property.
65 In contrast, Mr and Mrs Tonner submit that, for essentially four reasons I will address below, Mr Tonner's email was not conduct constituting repudiation of the contract by the purchasers.
66 In my view, viewed objectively and in context, the email sent by Mr Tonner at 2.35 pm on 24 February 2014 to Mr Bourke evinced a clear and unequivocal decision by Mr and Mrs Tonner not to proceed to settlement of the contract, and therefore constituted repudiation of the contract.
67 Mr Tonner stated in the email that his wife 'has committed to a new Property to go to', that he expected the deposit of $100,000 'to be refunded in to [sic] our account with no delays', and that 'in closing we have excepted [sic] there [sic] decision and we move forward'. The email was sent at the commencement of the week in which completion of the contract was to take place and after a four week extension of the completion date which was made at Mr and Mrs Tonner's request.
68 Viewed objectively, and in context, the conduct of Mr and Mrs Tonner in sending and in the terms of the email sent on 24 February 2014was such as to convey to a reasonable person, in the position of the other party to the contract, repudiation or disavowal of the contract as a whole, because it was clear that Mr and Mrs Tonner did not intend to proceed to settlement of the sale that week or at all.
69 As indicated earlier, Mr and Mrs Tonner submit that the email sent by Mr Tonner to Mr Bourke on 24 February 2014 was not conduct constituting repudiation of the contract for essentially four reasons. First, they submit that the email did not renounce or repudiate the contract, because the contract had already been repudiated by Mrs Delaporte, by Ms Stewart sending the notice to vacate to Mr and Mrs Tonner, which they received during the morning of 21 February 2014. This argument was put by Mr C S Williams, counsel for Mr and Mrs Tonner, as follows (ts 49 - 50):
Well, what it also shows to the layperson, again, who received it, could be this: 'Here is an owner and seller telling us to get out of the property three weeks after we should have become the owners of it' suggesting that there would not have been a settlement occurring in between.
And whether or not that was a correct reading of that notice is another question. But in our submission, it was one that was open to reasonable recipients in the position of the defendants.
70 This submission is incorrect. On its face, the notice to vacate was sent by the 'Property Management Department' of Bourkes (not property sales); it referred to instructions given by 'the landlord' (not 'the vendor'); it referred to the end of 'your tenancy with us' (not to the end of the contract for the sale and purchase of the property); and it referred to 'rent' and 'the bond' (not to 'price' or 'deposit'). The expression and terminology in the letter is solely in the language of leasing. There is absolutely no reference to the contract of sale and purchase of the property.
71 Furthermore, the first paragraph of the letter states that 'the property must be vacated by FRIDAY, 21st MARCH 2014', that is three weeks after the date of settlement. Plainly, if the contract for sale and purchase proceeded to settlement on 28 February 2014, as required by that contract, any requirement for Mr and Mrs Tonner to vacate the property after that date would fall away.
72 Contrary to Mr and Mrs Tonner's submission, the landlord's conduct in sending them the notice to vacate was not such as to convey to a reasonable person, in their situation, the vendor's repudiation of the contract of sale and purchase. A reasonable lay person in the position of Mr and Mrs Tonner would have appreciated that they were both tenants under a lease that (under a special condition of the lease) 'shall be terminated upon settlement of the property' and purchasers under a contract to purchase the property with the settlement date of the following Friday, that is three weeks before the nominated vacation date under the notice to vacate. The notice to vacate could not have conveyed to a reasonable lay person, in the position of Mr and Mrs Tonner, Mrs Delaporte's repudiation of the contract of sale and purchase of the property.
73 As indicated earlier, after receiving the notice to vacate, Mr Tonner emailed Ms D'Agostino at 12.08 pm on 21 February 2014. In the email, Mr Tonner said with reference to the notice to vacate 'I Take this letter to mean that they are not wanting to settle on the property so I have informed my Financier and Account [sic] to stop what they are doing and not to waste any more resources on the subject …'. However, as Mr P G McGowan, counsel for Mrs Delaporte, submitted (ts 75):
... nothing on the face of that document [the notice to vacate] could have invited that conclusion other than a desire to make it read that way for the defendants' own purpose.
74 Furthermore, as Mr McGowan also submitted (ts 75):
If there was a misunderstanding and if that's contended, as seems to be, then it's relevantly a matter to be looked at in context to see how the defendants behaved in a way which could be said to be consistent with that.
75 As indicated earlier, Ms D'Agostino replied to Mr Tonner's email which he sent at 12.08 pm on 21 February 2014, later that afternoon, saying 'I am forwarding this email to Alan Bourke to attend to'.
76 At the commencement of the email sent by Mr Tonner to Mr Bourke at 2.35 pm on 24 February 2014, Mr Tonner said 'Thank you for calling on Friday 21/2/14 to explain your understanding of the letter which your office sent'. As noted earlier, Mr Tonner gave brief evidence during cross-examination in relation to the telephone conversation he had with Mr Bourke on the afternoon of 21 February 2014 as follows (ts 59 - 60):
And what passed between you and Alan Bourke during the course of that telephone conversation? - - - It was a very short telephone conversation and he just said to me that it's what the owners want to do and it's their prerogative to do that.
Was there anything else that he said to you or you said to him during the course of that telephone conversation? - - - It was very short phone call of 15 to 20 seconds.
77 The words that Mr Tonner recalled Mr Bourke said to him during the telephone conversation ('he just said to me that it's what the owners want to do and it's their prerogative to do that') are equivocal and unclear. Mr Tonner did not give evidence that Mr Bourke said to him words to the effect that Mrs Delaporte would not be proceeding to settlement of the sale of the property.
78 Furthermore, as indicated earlier, Mr Bourke replied by email to the email from Mr Tonner sent at 2.35 pm on 24 February 2014. Mr Bourke's reply was sent at 3.21 pm that afternoon. In that email, Mr Bourke said 'The previous advice was a tenancy issue and has no bearing on your purchase of the home'. Although Mr Bourke's email was sent after the email from Mr Tonner which was the conduct constituting repudiation of the contract by himself and his wife, it is likely that Mr Bourke, who was the principal of the real estate agency, explained his understanding of the notice to vacate during his telephone conversation with Mr Tonner on the afternoon of 21 February 2014 in similar terms to what he wrote in his email to Mr Tonner on the afternoon of 24 February 2014, namely that it was 'a tenancy issue and has no bearing on your purchase of the home'.
79 Finally, in relation to Mr and Mrs Tonner's first argument on the issue of repudiation, Mr and Mrs Tonner plead in their defence that, by the notice to vacate, Mrs Delaporte 'purported to terminate the terms of the Contract (specifically the Special Condition [2]), which amounted to a repudiation of the Contract, which the Defendants accepted by the sending of the Email [dated 24 February 2014]'.
80 This point was not addressed in any of the submissions made on behalf of Mr and Mrs Tonner. In any case, it is misconceived and incorrect.
81 As indicated earlier, special condition 2 of the contract states as follows:
The purchasers agree to rent this property on a 9 month lease with options to renew at $2500 per week from the date of this contract going unconditional up until the time of settlement to be managed by Bourkes on behalf of the owners.
82 The express obligation under special condition 2 of the contract was on Mr and Mrs Tonner to rent the property on a nine month lease at $2,500 per week. They complied with that obligation when they entered into the standard residential property lease for the property on 24 May 2013. There was also an implied obligation under special condition 2 on Mrs Delaporte to grant this lease. She complied with that obligation when she entered into the standard residential property lease for the property on 24 May 2013.
83 As the parties had already complied with their obligations under special condition 2 of the contract, and as the date specified for vacation under the notice to vacate was three weeks after the date of settlement of the contract, the notice to vacate could not possibly be conduct conveying to a reasonable person, in the situation of Mr and Mrs Tonner, an intention on the part of Mrs Delaporte to terminate special condition 2 and to repudiate the contract.
84 Mr and Mrs Tonner's second submission is that the email sent by Mr Tonner to Mr Bourke at 2.35 pm on 24 February 2014, viewed objectively, did not evince an unwillingness on the part of Mr and Mrs Tonner to complete the contract, because the email 'is predicated on an understanding that [Mrs Delaporte] had already conveyed that she would not continue to perform the Contract'. Mr and Mrs Tonner submit that this is made clear by the closing words of Mr Tonner's email 'we have excepted [sic] there [sic] decision and we move forward' and by his words in the email he sent to Ms D'Agostino at 12.08 pm on 21 February 2014 'I Take this letter to mean that they are not wanting to settle on the property'. Mr Williams submitted on behalf of Mr and Mrs Tonner that (ts 68):
The understanding of Mr Tonner as conveyed by the two emails is not outside the bounds of a reasonable reaction to that notice [the notice to vacate] by somebody in his position.
85 I do not accept the submission that such an understanding was 'not outside the bounds of a reasonable reaction to that notice by somebody in his position'. As discussed earlier, on its face, the notice to terminate plainly related only to termination of the lease, not to termination of the contract. Furthermore, as discussed earlier, it is likely that Mr Bourke conveyed a consistent understanding of the notice to vacate when he telephoned Mr Tonner on the afternoon of 21 February 2014 as he stated in his email to Mr Tonner on the afternoon of 24 February 2014, namely 'The previous advice was a tenancy issue and has no bearing on your purchase of the home'.
86 Mr Williams also submitted on behalf of Mr and Mrs Tonner that, whether or not Mr Tonner's understanding and interpretation of Mrs Delaporte's position was misconceived, his email of 24 February 2014 was simply 'his response to a perceived decision [by] [Mrs Delaporte] to not proceed' and, therefore, could not evince an intention no longer to comply with the terms of the contract. Mr Williams submitted that the 'fundamentally responsive nature of the [e]mail precludes it constituting a repudiation'.
87 However, it appears from Mr Tonner's email of 24 February 2014 that it was not simply responsive to the notice to vacate. After thanking Mr Bourke for calling him 'to explain your understanding of the letter which your office sent', Mr Tonner said that:
Our position stands in how it has been received and with what dialog we've had over many weeks through Nikki with the owners this is no different than any other agreement we come to , the (owner) [sic] agrees with all things discussed and then the (Partner) [sic] changes it all to suit his agenda and deals going on in the back ground [sic] that are not our concern no matter what.
88 It is clear from Mr Tonner's email that, whatever view he and his wife then had in relation to the notice to vacate, their decision to 'move forward' was based on issues of concern that they perceived 'over many weeks'. Mr Tonner clearly expressed dissatisfaction and frustration with conduct he attributed to Mrs Delaporte or her partner over a period of weeks. However, as discussed earlier, viewed objectively and in context, his email of 24 February 2014 clearly evinced an unwillingness to proceed to settlement of the contract and was not merely a response to a perceived decision by Mrs Delaporte not to proceed to settlement of the contract.
89 Thirdly, Mr and Mrs Tonner submit that the email of 24 February 2014 'did not amount to a repudiation because [Mrs Delaporte] failed to make clear that she was not refusing to perform and thereafter provide an opportunity for the defendants to "reconsider [their] position in light of an assertion of the correct interpretation [of the preceding communications]" ' (adapting the words of the joint judgment of the High Court in DTR Nominees Pty Ltd v Mona Homes Pty Ltd (432) set out earlier in these reasons).
90 However, on the assumption that Mr and Mrs Tonner misinterpreted Mrs Delaporte's position and somehow thought that the notice to vacate indicated an unwillingness on her part to settle on the sale and purchase of the property, on behalf of Mrs Delaporte Mr Bourke made it clear to Mr and Mrs Tonner that that was not the case. As I found earlier, it is likely that, during the telephone conversation that he had with Mr Tonner on the afternoon of 21 February 2014, Mr Bourke conveyed the same understanding of the notice to vacate as he stated in his email sent on 24 February 2014 in which he said that 'The previous advice was a tenancy issue and has no bearing on your purchase of the home'.
91 Furthermore, it is clear from Mr Bourke's email of 24 February 2014 that he, on behalf of Mrs Delaporte, did provide an opportunity to Mr and Mrs Tonner to 'reconsider [their] position in light of an assertion of the correct interpretation [of the preceding communications]', because he told Mr and Mrs Tonner in his email on 24 February 2014 'Please think very seriously about this termination of the purchase and get legal advice before defaulting on the transaction'. Mr and Mrs Tonner therefore had an opportunity to 'recognise [their] heresy' (DTR Nominees Pty Ltd v Mona Homes Pty Ltd (432)) (assuming that they did misunderstand) before their repudiation was accepted on 26 February 2014.
92 Finally, Mr and Mrs Tonner submit that there is no evidence to support an inference that Mr Tonner was acting with the authority of Mrs Tonner when he sent the email on 24 February 2014 to Mr Bourke.
93 However, in my view, it is more probable than not that Mr Tonner sent the email on 24 February 2014 on behalf of both himself and his wife. This inference arises from the language of the email and from subsequent inaction by Mrs Tonner.
94 In the letter, Mr Tonner refers to 'Our position', 'our concern' and 'we' on a number of occasions, plainly referring to himself and his wife as the purchasers under the contract. Mr Tonner's use of the word 'we', in clear reference to both of the purchasers, can be compared and contrasted with his use of the word 'I' when clearly talking only about himself, for example, when referring to his telephone conversation with Mr Bourke and when referring to his own work commitments.
95 Furthermore, there is no evidence of any response by Mr or Mrs Tonner to the letter from GV Lawyers dated 26 February 2014 addressed to both of them in which the solicitors referred to:
… your email to our client's selling agent, Alan Bourke, dated 24 February 2014 advising that you no longer intend to proceed to purchase the property from our client and demanding the return of the $100,000.00 deposit you have paid to the selling agent.
96 The letter from GV Lawyers also states that 'your email evinces your intention not to proceed with the contract and constitutes a repudiation of the contract' which '[o]ur client accepts'.
97 As the letter from GV Lawyers was addressed to both Mr and Mrs Tonner, it would be reasonable to expect that, if the email dated 24 February 2014 referred to in the letter was not in fact sent by Mr Tonner with his wife's authority and on her behalf, then she would have said so in response to the assertions that the email advised that the purchasers no longer intended to proceed to purchase the property and that it evinced their intention not to proceed with the contract and constituted repudiation of it.
Was Mrs Delaporte's acceptance of Mr and Mrs Tonner's repudiation of the contract invalid because of failure to give notice under s 6 of the SL Act?
98 Mr and Mrs Tonner contend, alternatively, that if they repudiated the contract by Mr Tonner's email on 24 February 2014, then the acceptance of that repudiation by Mrs Delaporte's solicitors on 26 February 2014 was invalid, because Mrs Delaporte failed to give prior notice to them as required by s 6(1) of the SL Act.
99 Section 6 of the SL Act states as follows:
(1) Notwithstanding any stipulation to the contrary, a terms contract shall not be determined or rescinded on account of a breach by the purchaser of any term of the contract unless and until the vendor has served on the purchaser a notice in writing specifying the breach complained of and requiring the purchaser to remedy the breach within the time mentioned in subsection (2) and the purchaser has failed to do so.
(2) The time referred to in subsection (1) within which the purchaser is required to remedy a breach is -
(a) where the breach consists of a failure to pay a sum of money - a date stipulated by the vendor being a date not less than 28 days from the date of service of the notice; and
(b) in any other case - a reasonable time from the date of service of the notice.
terms contract means an executory contract for the sale and purchase of land under which the purchaser is -
…
(b) entitled to possession or occupation of the land before he becomes entitled to a conveyance or transfer of the land, …
101 Section 5 of the Interpretation Act 1984 (WA) states that in every written law:
under, in relation to a written law or a provision of a written law, includes "by", "in accordance with", "pursuant to" and "by virtue of"; …
102 Mr and Mrs Tonner submit that the acceptance of repudiation was invalid under s 6 of the SL Act, because a repudiation (or anticipatory breach) falls within the scope of the expression 'breach by the purchaser of any term of the contract' under s 6(1) of the SL Act.
103 It is common ground that Mrs Delaporte did not serve on Mr and Mrs Tonner 'a notice in writing specifying the breach complained of and requiring the purchaser to remedy the breach within the time mentioned in [s 6(2) of the SL Act]' (s 6(1) of the SL Act) before she accepted their repudiation of the contract.
104 However, as Mrs Delaporte submits, s 6(1) of the SL Act only applies where the contract that is determined or rescinded on account of a breach by the purchaser of any term of the contract is a 'terms contract' within the meaning of that provision. Further, as Mrs Delaporte submits, the contract in this case is not a 'terms contract' within the meaning of that expression as defined in s 5 of the SL Act.
105 The contract for the sale and purchase of the property is certainly 'an executory contract for the sale and purchase of land'. However, as Mrs Delaporte submits, it is not a contract under which the purchaser is 'entitled to possession or occupation of the land before he [or she] becomes entitled to a conveyance or transfer of the land'.
106 As indicated earlier, special condition 2 of the contract states as follows:
The purchasers agree to rent this property on a 9 month lease with options to renew at $2500 per week from the date of this contract going unconditional up until the time of settlement to be managed by Bourkes on behalf of the owners.
107 To give effect to this special condition, the parties then entered into a standard residential property lease on 24 May 2013, specifying a fixed term of nine months, commencing on 1 June 2013.
108 Contrary to Mr and Mrs Tonner's submission, they were not entitled to possession or occupation of the land before they became entitled to a conveyance or transfer of the land by, in accordance with, pursuant to, or by virtue of, special condition 2 of the contract. The contract for the sale of the property did not confer an entitlement to possession or occupation of the land before transfer. Rather, special condition 2 expressly required the purchases to lease the property (and implicitly required the seller to grant a lease of the property) from the date of the contract becoming unconditional up until the time of settlement. The parties' obligations under special condition 2 of the contract were satisfied by their entry into the standard residential property lease for the property 24 days after the contract was entered into.
109 Therefore, Mr and Mrs Tonner's entitlement to possession or occupation of the property was not under, that is, by, in accordance with, pursuant to, or by virtue of, the contract for the sale and purchase of the property, but rather by, in accordance with, pursuant to and by virtue of the separate, and stand alone, lease agreement entered into over three weeks after the contract for sale and purchase of the property was made.
110 Consequently, the contract was not relevantly a 'terms contract' and Mrs Delaporte was therefore not required to give notice to Mr and Mrs Tonner specifying the breach complained of and requiring them to remedy the breach, within the time nominated in s 6(2) of the SL Act.
111 Mrs Delaporte's acceptance of Mr and Mrs Tonner's repudiation of the contract was not invalid because of a failure to give notice under s 6 of the SL Act, as no such requirement was applicable in this case. The contract was validly terminated by the seller.
Has Mrs Delaporte proved that she suffered loss and damage as a result of Mr and Mrs Tonner's repudiation of the contract?
112 Mr and Mrs Tonner submit that if (as I have found) they repudiated the contract and if (as I have also found) Mrs Delaporte validly terminated the contract, then Mrs Delporte 'cannot prove any entitlement to monetary damages'. This is because, Mr and Mrs Tonner submit, Mrs Delaporte did not call expert valuation evidence to establish the market value of the property as at the date of termination of the contract (26 February 2014) and because the re-sale of the property in October 2015 for $2.6 million was so remote in time from 26 February 2014 that it cannot safely be relied upon as evidence of market value of the property as at that date (at least without expert valuation evidence as to any factors affecting market value in the interim). Mr and Mrs Tonner submit that the 'consequence of this evidentiary lacuna is that no loss or damage can be proved by [Mrs Delaporte]'.
113 Mrs Delaporte submits that she has proved, on the balance of probabilities, that she has suffered loss and damage as a result of Mr and Mrs Tonner's repudiation of the contract in the amount that she claims. She submits that, in the circumstances of this case, expert valuation evidence is not required and that she does not contend that the price she obtained on re-sale in October 2015 represents or reflects market value of the property in February 2014. Rather, Mrs Delaporte submits that the correct measure of her loss and damage occasioned by Mr and Mrs Tonner's repudiation of the contract is the difference between the contract price and the amount she ultimately received on re-sale (less the deposit that was forfeited) and the costs of seeking to re-sell the property.
114 She submits that she instructed and relied on three experienced real estate agents, Mr Sanchez, Ms Yap and Ms Gandini, when setting the listing price in each of the three instances, and that the attempts that were made to effect a sale were not the subject of any criticism or challenge (ts 77). She submits that the efforts that she put in through those agents to effect a re-sale were 'persistent and unrelenting', although they did not produce a result until October 2015 (ts 77).
115 Mrs Delaporte's case was summarised by Mr McGowan in his closing address as follows:
… we've gone back into the market, we've resold it. There's no challenge as to the steps that were taken or the propriety of the agents that were engaged, or the efforts that they undertook.
The result speaks for itself; that is, we have endeavoured to mitigate our loss and the best it could be sold for in those circumstances is $2.6 million. And as a result, not only is the pathway open, so is the result in circumstances like this where there is no real contest. (ts 78)
116 Mrs Delaporte submits, in effect, that the sum of $409,863 is the amount that is necessary to place her into the same position, as far as money can do, as if the contract had been performed, because this is the sum that is required to give her the contract price that Mr and Mrs Tonner agreed to and the expenses she had to incur in order to re-sell the property.
117 In reply, Mr and Mrs Tonner submit that, rather than simply seeking to mitigate her position, Mrs Delaporte 'sought to make a very substantial windfall gain' (ts 82) when she initially re-marketed the property for $3.5 million, which was $400,000 more than the contract price with Mr and Mrs Tonner, while also keeping the deposit of $100,000.
118 Mr and Mrs Tonner's position was summarised by Mr Williams as follows:
And what we will never know, your Honour, because there has been no valuation evidence called by the plaintiff whose duty it was to call it, is whether that three and a half million dollars represented genuine market value at the time, or whether the plaintiff was seeking a windfall gain that was beyond what the market could bear.
And if the latter, the reason why the plaintiff ultimately crystallised a price, some 18 months later, which was less than the contract price it is down to her conduct in seeking a price that was above the market. And it wouldn't be a surprising result to anybody if a plaintiff doesn't just seek to mitigate loss but seeks a windfall gain, finds out it's not there and ultimately suffers a loss and has to bear that loss herself. (ts 82)
119 As Beech J held in Lords v von Thomann(No 2) [2014] WASC 320; (2014) 47 WAR 473, a case in which, like the present case, the sellers sought damages for breach of contract for the sale of land, after accepting the purchasers' repudiation and terminating the contract, [149] (citations omitted):
The object of an award of damages for breach of contract is well known. Where an innocent party sustains a loss by reason of a breach of contract, damages are awarded to that party so that it is placed in the same position, as far as money can do, as if the contract had been performed.
120 As Professor J W Carter states in Carter's Breach of Contract (LexisNexis Butterworths, 2011) [13-04] (citations omitted):
[A] conventional measure for loss of bargain damages [is] the difference between the contract price and the market (or current) price of the subject matter of the contract [an illustration of which is:]
…
• on termination of a contract for the sale of land, the difference between the market price and the contract price of the land; …
Where the law recognises a prima facie or conventional measure, applicable on the basis of an available market, the onus is on the plaintiff to establish the relevant market price.
- (See also McGregor on Damages (Sweet & Maxwell Thomson Reuters, 19th ed, 2014) [22-034] and P N Wikramanayake Voumard The Sale of Land (Thomson Reuters, 6th ed, loose leaf) [12.240]).
121 The cases cited by Professor Carter in support of the proposition that the conventional measure for loss of bargain damages, on termination of a contract for the sale of land, is the difference between the market price and the contract price of the land are Victorian Economic Development Corporation v Clovervale Pty Ltd[1992] 1 VR 596, 604 (on termination by the seller following repudiation by the purchaser) andHoffman v Kali [1985] 1 Qd R 253 (on termination by the purchaser following repudiation by the seller). In Victorian Economic Development Corporation v Cloverdale Pty Ltd, Tadgell J held as follows (604) (citations omitted):
The fundamental object of an assessment of damages at common law for breach of contract is to place the injured party, so far as money can do it, in the same situation with respect to damages as if the contract had been performed … An assessment of unliquidated damages for breach of a contract for the sale of land that has been determined in the present circumstances will ordinarily involve (but will not be confined to) an ascertainment of the difference between the contract price and the value of the subject land at the date of the determination of the contract. Such an ascertainment will be made whether or not the subject land has been resold; but the price of any resale may, of course, have a bearing on the assessment of value at the date of determination of the contract.
122 Therefore, the conventional measure for loss of bargain damages on termination of a contract for the sale of land is the difference between the contract price and the market price or value of the land at the date of termination of the contract (the date on which the cause of action arises). However, as a recent decision of the Supreme Court of Western Australia and a recent decision of the English Court of Appeal indicate, 'this is not an inflexible rule' (Lords v von Thomann(No 2) [150]).
123 Lords v von Thomann(No 2) involved an action by the sellers against the buyers for breach of contract for the sale of land. The sellers sought damages in the sum of $830,000, which was the difference between the contract price of $1.785 million and the re-sale price of $955,000 ultimately obtained by the sellers some two and a half years after the sellers accepted the purchasers' repudiation and terminated the contract.
124 Following the termination of the contract, the sellers re-marketed the land with a reserve price at auction of $1.6 million. The only bid that was made at the auction was a vendor bid of $1.5 million. The land was passed in. It was then advertised for $1.667 million.
125 The sellers entered into selling agency agreements with three difference real estate agents over the following two and a half year period. The asking price was reduced to $1.495 million, then to $1.295 million, then to $1.195 million, and then to $1.175 million, without the sellers receiving any offers for the purchase of the land.
126 Although the sellers' primary claim for damages was on the basis of the difference between the contract and re-sale prices, they alternatively claimed damages on the basis of the conventional measure of damages, namely, the difference between the contract price and the market value of the land at the date of termination of the contract. It was an agreed fact that the value of the land at the date of termination of the contract was $1.4 million. On the conventional measure for loss of bargain damages, the sellers' loss was $385,000, whereas the difference between the contract price and the re-sale price was $830,000.
127 In Lords v von Thomann(No 2), Beech J held as follows in relation to the date of assessment of damages for breach of contract for the sale of land [150] – [165] (citations omitted):
150 The general rule is that damages are to be assessed at the date when the cause of action arises. But this is not an inflexible rule. Damages will be assessed at a different date if that is necessary to ensure just and adequate compensation. Thus, the date of assessment 'rule' is subject to the compensation principle; the date of assessment must be fixed so as to give effect to the compensation principle.
…
155 In any sphere of damages, care must be taken to avoid 'treating rules which constitute useful guidance in the ascertainment of damages as rigid rules of universal application, instead of treating them as prima facie rules which may be displaced or modified whenever it is necessary to do so in order to achieve a result which provides reasonable compensation for a breach of contract without imposing a liability upon the other party exceeding that which he could fairly be regarded as having contemplated and been willing to accept'.
…
161 The general rule, that damages are assessed at the date of breach or termination, must be departed from whenever it is necessary to provide adequate compensation. Apart from that, it is not possible to state, in a definitive and comprehensive way, the circumstances in which it will be appropriate to depart from the date of breach in assessing damages. A number of examples have been given in the cases.
…
165 There are indications in some cases that if a seller demonstrates that it took all reasonable steps to sell the property and was unable to do so, for a substantial period, or at all, this may justify departure from the general rule.
128 One of the cases discussed and followed by Beech J in Lords v von Thomann(No 2) is the decision of the English Court of Appeal in Hooper v Oates [2013] EWCA Civ 91; [2014] Ch 287. Beech J helpfully summarised the facts and set out the ratio in Hooper v Oates as follows [168] – [170]:
168 The English Court of Appeal has recently said that if the buyer under a contract of sale of land defaults, and the seller attempts to resell and, notwithstanding the seller's reasonable endeavours, the resale process takes years, the seller is generally entitled to damages assessed as the difference between the two contract prices. In Hooper v Oates the plaintiffs agreed to sell their property to the defendant. The defendant buyer defaulted and the sellers terminated in July 2008. The sellers then proceeded to attempt to resell the property over the course of the next three years, apart from a period of six months when they leased the property to a tenant. In the middle of 2011 the sellers gave up on their attempts to resell and moved back into the property. By then, the value of the property had fallen substantially. The Court of Appeal held that damages were correctly assessed by reference of the difference between the contract price and the value of the property at the date when they ended their efforts to resell and returned to the property. [40]
169 In the course of his judgment, Lloyd LJ (with whom Leveson and Toulson LJJ agreed) said that specific rules such as the breach date rule are individual examples of how the general principle in Robinson v Harman [(1848) 154 All ER 363] is to be carried into effect of putting the innocent party in the same position as it would have been if the party in breach had performed. That reflects the accepted position in Australia. He also observed that, unlike some commodities or securities, land cannot be immediately realised, and how long is required will depend in part on economic circumstances [34].
170 Lloyd LJ expressed the general position when a disappointed seller attempts to resell, as follows:
'If he [the seller] resells, the buyer may be able to show that, in so doing, the seller failed to take reasonable steps to mitigate his loss, for example by taking too long, or failing to follow proper professional advice, or in some other way. Absent any feature of that kind, the eventual resale price is likely to be the figure to be set against the contract price for assessment of the damages, not because it represents the market value at the date of the breach, but because it shows what loss the seller has suffered, uncomplicated by issues of remoteness or failure to mitigate. If the property market has declined during that time, it is of no avail for the defaulting buyer to say that this should not be laid at his door. If he had completed the contract, he would have suffered that decline in value, so this is part of the loss for which the seller needs to be compensated.' [38]
In my opinion, both principle and this review of the authorities support the proposition that where a buyer of land defaults and the seller terminates and puts the property on the market, if, despite the seller taking all reasonable steps to sell, no resale is effected until a substantial period later, even years, the seller's loss will generally be represented and reflected by the difference between the two contract prices.
130 His Honour then determined the question of how damages should be assessed in the case before him as follows [177] – [180]:
177 In my view, for the reasons that follow, to assess the Sellers' loss by reference to the difference between the Contract price and the market value in August 2008 would not achieve the basic object of compensation for breach of contract - to put the Sellers in the position as if the Contract had been performed. The Sellers' loss in this case is the difference between the purchase prices under the two contracts.
178 But for the Buyers' breach, the Sellers would have realised the Property in August 2008 and received the Contract price. Instead, they received the sum of $955,000 in March 2012. The Sellers kept the Property on the market at all times from August 2008 until it was eventually sold in February 2011. They attempted to realise the Property, but were unable to do so until the sale in 2011.
179 I am satisfied that the Sellers made all reasonable efforts to sell the Property. The Property was marketed thoroughly and regularly throughout the period in question. The Sellers did not refuse any offer for the Property - none was received until February 2011. Over time, the Sellers dropped their asking price.
180 In hindsight, the Sellers advertised the Property during the first 12 months of the reselling period, from August 2008 to August 2009, at a price that was distinctly above the market value of the Property. It is an agreed fact that the market value in August 2008 was $1.4 million, and on 20 February 2009 and 26 August 2009 it was $1.3 million. However, advertising an asking price that is above the market price is not, in itself, unreasonable. A seller, acting reasonably, may wish to leave room to negotiate. Further, and in any event, market value is a matter on which minds can and often do differ. It may be inferred that the Sellers were acting on the advice of their agents in fixing an asking price.
131 Beech J's decision and reasoning in Lords v von Thomann(No 2) is not binding on me, because it was a decision made in the general division of the Supreme Court of Western Australia and not a decision of the Court of Appeal of this State. However, it is highly persuasive, recent, Western Australian authority to the effect that, if (as I find below occurred in this case) the seller has made all reasonable efforts to re-sell the property following acceptance of the buyer's repudiation and termination of the contract, but is unable to re-sell the property for a substantial period of time, 'the seller's loss will generally be represented and reflected by the difference between the two contract prices' [172].
132 I also note that Professor Peter Butt has endorsed the reasoning in Hooper v Oates in a note in the Australian Law Journal (2015) 89 ALJ 11, 16:
The logic of the decision seems, with respect, compelling. Had the purchaser completed, the vendors would have had the benefit of the full contract price. The falling market after that breach had deprived them of that price. They had done all they could have done to mitigate their loss, but had not been able to resell. They should be entitled to the difference between the contract price and the value at the time they gave up efforts to resell. Only by that measure could they be placed into the same position, so far as money can do it, as they would have occupied had the contract been performed.
133 However, in Ng v Filmlock Pty Ltd [2014] NSWCA 389; (2014) 88 NSWLR 146, a decision published about two months after Lords v von Thomann (No 2),the New South Wales Court of Appeal endorsed the conventional measure of a seller's damages (the difference, if any, between the contract price and the market value of the land at the time when the contract was terminated) and declined to follow Hooper v Oates.
134 Ng v Filmlock Pty Ltd concerned a case in which a seller accepted the purchaser's repudiation of a contract for the sale of land and terminated the contract. The seller re-sold the land to a third party 13 months later in a falling market. The seller claimed damages on the basis of the difference between the contract price and net re-sale price for the land. There was no evidence as to the value of the land when the contract was terminated.
135 The trial judge awarded damages on the basis sought by the seller. The Court of Appeal (Emmet JA, Gleeson JA & Tobias AJA agreeing) held that '[t]he general rule is that damages for breach of a contract for sale of land are assessed as at the date of the breach of contract' (or, as Gleeson JA observed, 'more accurately … the date at which the contract is terminated for breach' [44]) and that this question 'is usually addressed by comparing the contract price with the value of the relevant land at the time of [the] [p]urchaser's breach' [14]. The Court of Appeal held that the trial judge erred, because there was no evidence as to the market value of the land as at the date of termination of the contract.
136 However, while the Court of Appeal declined to follow Hooper v Oates, Emmet JA said that it was 'not necessary to express a final view as to whether there may be circumstances in which it is appropriate to depart from the general rule' [27] as to the date at which damages for breach of contract are assessed. Gleeson JA (Tobias AJA agreeing [60]) went further and said [49]:
[I]t is unnecessary to express any view on whether the approach in Hooper v Oates (which was recently referred to with approval by Beech J in Lords v von Thomann (No 2) [2014] WASC 320; 47 WAR 473 at [168] – [170]) is consistent with authority in Australia, or whether the same result might have been reached in Australia on similar facts but by slightly different reasoning …
137 Mr and Mrs Tonner submit that 'the weight of authority' is in favour of rejecting Beech J's decision and reasoning in Lords v von Thomann (No 2) that the general rule or conventional measure for loss of bargain damages for termination of a contract for sale of land is displaced where the seller has made all reasonable efforts to re-sell the property, but it is unable to do so for a substantial period of time. In addition to Ng v Filmlock Pty Ltd, Mr and Mrs Tonner refer to the decision of Lindsay J in C & P Syndicate Pty Ltd v Reddy [2013] NSWSC 643 in which, after referring to the conventional measure for loss of bargain damages, his Honour said that [192] '[t]he fact that the plaintiff proceeded, with due diligence but delay, to effect a resale of the property in a falling market does not, of itself, displace the "usual" measure of a vendor's damages'.
138 In my view, the decision and reasoning of Beech J in Lords v von Thomann(No 2) should be followed and applied in this case. This is because Lords v von Thomann (No 2) is a recent decision of the Western Australian Supreme Court which is on point and, with respect, it reflects and achieves the fundamental object of an award of damages for breach of contract, namely, to put the innocent party, in this case the seller, as far as money can do, into the same position as if the contract with the purchasers had been performed.
139 Furthermore, although in Ng v Filmlock Pty Ltd, the New South Wales Court of Appeal declined to follow Hooper v Oates, Gleeson JA [49] (Tobias AJA agreeing [60]), noting the then very recent decision of Beech J in Lords v von Thomann(No 2), said that it was 'unnecessary to express any view on whether the approach in Hooper v Oates … is consistent with authority in Australia, or whether the same result might have been reached in Australia on similar facts but by slightly different reasoning …'. I also note that the judgment in Lords v von Thomann(No 2) was delivered on 12 September 2014, and was therefore not available when the appeal in Ng v Filmlock Pty Ltd was argued and judgment reserved in that matter on 25 August 2014.
140 The 'weight of authority' is not in favour of rejecting Beech J's decision and reasoning in Lords v von Thomann (No 2). C & P Syndicate Pty Ltd v Reddy was decided before Lords v von Thomann (No 2) and although Hooper v Oates was decided on 20 February 2013, before C & P Syndicate Pty Ltd v Reddy was heard (on 9 and 10 April 2013) and decided (on 27 May 2013), Hooper v Oates was not referred to in that judgment. Furthermore, although in C & P Syndicate Pty Ltd v Reddy Lindsay J determined that [193] 'the difference between contract price and market value at the time the bargain was lost provides an objective, fair measure of the damages to be awarded to the plaintiff in this case', his Honour acknowledged immediately before:
… that each case must be decided on its own facts, and that the Court's task is governed by the abstract object of the exercise to be undertaken (in the award of monetary compensation) …
141 As Mrs Delaporte submits, the decision of the New South Wales Court of Appeal in Ng v Filmlock Pty Ltd 'in no way cuts across, undermines or weakens the approach taken by Justice Beech, the rationale for doing so and the determination that was arrived at'. Rather, it is reflective of the fact that the circumstances of each case must be carefully considered in determining whether the application of the general rule or usual measure for loss of bargain damages achieves the compensation principle in the circumstances and whether, as a result, 'departure from the general rule is necessary in order to give adequate compensation to the [s]ellers' (Lords v von Thomann(No 2) [5]).
142 In my view, Mrs Delaporte took all reasonable steps to re-sell the property after the contract was terminated. In particular, in my view, she acted reasonably in initially re-marketing the property at $3.5 million or offers around that price. Although this figure was $400,000 more than the contract price with Mr and Mrs Tonner, I accept Mrs Delaporte's evidence, which was not questioned or contradicted, that this figure was determined on the basis of a discussion between herself and Mr Sanchez. I accept Mr Sanchez's evidence, which was not questioned or contradicted, that the listing price was determined on the basis of sales evidence of other 'compatible' (comparable) properties in the area (ts 28).
143 It was reasonable, in the circumstances, for Mrs Delaporte to be 'aiming for' a re-sale at $3.5 million or for her to regard that figure as 'acceptable' (ts 19), when she re-marketed the property in March 2014. That figure was based on advice from the principal of the real estate agency, Mr Sanchez. As Beech J observed in Lords v von Thomann(No 2) [180] 'market value is a matter on which minds can and often do differ'.
144 Furthermore, as Beech J held in Lords v von Thomann(No 2) [180], with the benefit of hindsight, 'advertising an asking price that is above the market price is not, in itself, unreasonable'. As his Honour reasoned, '[a] seller, acting reasonably may wish to leave room to negotiate' and further, and in any event, as noted immediately above, 'market value is a matter on which minds can and often do differ'.
145 In Lords v von Thomann (No 2), although the sellers advertised the land at a price less than the contract price, it was in fact $267,000 (or 19.1%) above the market value at the time. In the present case, Mrs Delaporte advertised the property at $400,000 (or 12.9%) above the contract price. However, she did so on the basis of advice from her real estate agent and, in my view, therefore, she acted reasonably. Contrary to Mr and Mrs Tonner's submission, Mrs Delaporte was not 'seeking a windfall gain' (ts 82), but rather was asking for the price that her real estate agent had told her sales evidence of other properties in the area indicated could be obtained.
146 Furthermore, the fact that Mrs Delaporte ultimately accepted an offer of $2.6 million, which was up to $400,000 less than the 'listing price' of 'HIGH $2 m's' at the time, indicates that a potential purchaser of the property would not have been inhibited from making an offer below the 'listing price' and indicates that Mrs Delaporte was willing to accept an offer below the 'listing price' once an offer was finally received.
147 Realising that the market had declined, when Mrs Delaporte entered into the second selling agency agreement, six and a half months after she entered into the first, Mrs Delaporte reduced the 'listing price' from $3.5 million to $2.99 million - $3.2 million. When she entered into the third selling agency agreement about seven months later, Mrs Delaporte further reduced the 'listing price' to 'HIGH $2 m's'.
148 When, ultimately, Ms Gandini presented the first offer received for the purchase of the property at $2.4 million on October 2015, Mrs Delaporte counter-offered at $2.75 million and ultimately accepted the price of $2.6 million for the property.
149 In my view, Mrs Delaporte's conduct in the re-marketing of the property, which was at all times based on advice of her respective real estate agents, was reasonable and responsive to the circumstances. I accept the submission made on her behalf that the efforts to effect a re-sale throughout the period from March 2014 to October 2015 were 'persistent and unrelenting' (ts 77). The property was marketed regularly and appropriately. When, finally, an offer was received in October 2015, Mrs Delaporte acted reasonably in making a counter offer and in ultimately accepting a price less than the listing price of 'HIGH $2 m's' at the time.
150 Although Mrs Delaporte took all reasonable steps to re-sell the property, she was unable to do so for a substantial period of time. In my view, as in Lords v von Thomann(No 2), this justifies a departure from the conventional measure (or 'the general rule': Lords v von Thomann(No 2) [150], [165]) that loss of bargain damages are to be determined on the basis of the difference between the contract price and the market value of the property at the date of termination of the contract. In my view, as in Lords v von Thomann(No 2), the compensation principle requires that damages be assessed on the basis of the difference between the contract price and the re-sale price achieved in October 2015. In the circumstances of this case, this is necessary to achieve the object of an award of damages for breach of contract for the sale of land, namely, an amount of damages that places Mrs Delaporte in the same position, as far as money can do, as if Mr and Mrs Tonner had performed and settled on the contract.
151 In my view, in the circumstances of this case, just and adequate compensation to Mrs Delaporte for breach of contract by Mr and Mrs Tonner requires that the date of assessment of damages be the date on which the property was ultimately re-sold following reasonable efforts to re-sell the property in the interim. Assessed at that date, the loss sustained by Mrs Delaporte as a result of the breach of contract is the $500,000 difference between the contract price and the re-sale price, less the deposit of $100,000 forfeited under the contract, and the additional marketing costs of $9,863.
152 Mrs Delaporte has therefore proved that she suffered loss and damage as a result of Mr and Mrs Tonner's repudiation of the contract in the amount of $409,863.
Conclusion
153 It follows that Mrs Delaporte's action for damages for breach of contract against Mr and Mrs Tonner is successful. She is entitled to damages for breach of contract in the amount of $409,863. She is also entitled to retain the deposit of $100,000 in accordance with cl 24.3(a) of the 2011 General Conditions which form part of the contract.
154 Mr and Mrs Tonner's counterclaim is dismissed.
10
2