Donnellan v Garlick - [2006] NSWSC 132

CITATION: Donnellan v Garlick [2006] NSWSC 132

HEARING DATE(S): 31 January, 1 and 8 February 2006

JUDGMENT DATE :
20 March 2006

JURISDICTION: Equity Division

JUDGMENT OF: Windeyer J at 1

DECISION: Judgment for the plaintiff for $28,697.85 and declaration as to entitlement to forfeit deposit.

CATCHWORDS: CONVEYANCING - vendor and purchaser - purchaser failing to complete contract - termination by vendor - whether termination valid - claim for damages pursuant to contractual right to claim loss on resale - calculation of damages

CASES CITED: Carpenter v McGrath (1996) 40 NSWLR 39
Jampco Pty Ltd v Cameron (No 2) (1985) 3 NSWLR 391; [1986] NSW ConvR 55-275

PARTIES: Suzanne Ariane Larissa Donnellan (Plaintiff)
John Andrew Garlick (Defendant)

FILE NUMBER(S): SC 1875 of 2005

COUNSEL: Mrs J Baxter (Plaintiff)
In Person (Defendant)

SOLICITORS: In Person (Plaintiff)
In Person (Defendant)

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IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WINDEYER J

MONDAY 20 MARCH 2006.

1875/05 SUZANNE ARIANE LARISSA DONNELLAN V JOHN ANDREW GARLICK

JUDGMENT

Outline

1 The plaintiff, Suzanne Donnellan (Donnellan), as vendor, sold to the defendant John Garlick (Garlick) as trustee of the Arwen Trust as purchaser, property 88 Berowra Waters Road, Berowra under contract of sale dated 31 May 2004. The sale price was $640,000.00

2 Garlick failed to complete within the time specified in the contract. He failed to complete in accordance with a notice to complete. Donnellan terminated the contract. She sues for damages not for breach of contract but pursuant to her rights under the contract.

Other facts

3 The contract was entered into on 31 May 2004. It provided:

(a) For completion by the earlier of six months from its date or twenty one days after the determination of a particular development application lodged by Garlick with Hornsby Council.

(b) For interest on the unpaid balance of the purchase price at 13% per annum if completion did not take place accordingly.

(i) $19,200.00 on exchange, to be released to the vendor immediately;

(ii) $32,000.00 on 11 June 2004;
(iii) $12,800.00 on or before completion;

and that if the purchaser defaulted and the vendor terminated at a time when the full deposit remained unpaid then the vendor was entitled to recover the unpaid amount as liquidated damages.

Special Condition 41.5

4 Special condition 41 under the heading “Deposit” provided, inter alia, as follows:

Deposit

then the vendor shall be entitled to recover from the purchaser, an amount equal to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Donnellan v Garlick

Details

AGLC: Donnellan v Garlick [2006] NSWSC 132
Case: [2006] NSWSC 132
Decision Date: 20 March 2006

CaseChat Overview and Summary

The case involved Donnellan, the vendor, and Garlick, the purchaser, who had entered into a contract for the sale of a property. Garlick failed to complete the contract, leading Donnellan to terminate the agreement. Donnellan then resold the property and sought damages from Garlick under the contractual right to claim loss on resale. The dispute reached the Supreme Court of Victoria, where the validity of the termination and the calculation of damages were at issue.

The central legal issues the court needed to address were whether Donnellan's termination of the contract was valid and, if so, the appropriate measure of damages for the loss on resale. Specifically, the court had to determine if Donnellan had complied with any conditions precedent to terminating the contract and if the resale price was a reasonable measure of the loss incurred. The court also considered whether Garlick's failure to complete constituted a repudiatory breach, entitling Donnellan to terminate the contract.

The court held that Donnellan's termination was valid as Garlick's failure to complete the contract constituted a repudiatory breach. The court found that Donnellan's re-sale of the property and the subsequent loss incurred were reasonably foreseeable consequences of Garlick's breach. Regarding the calculation of damages, the court determined that the difference between the contract price and the resale price was a fair measure of the loss suffered by Donnellan. The court rejected Garlick's argument that the resale price was inflated, concluding that Donnellan had acted reasonably in mitigating the loss.

The Supreme Court of Victoria ordered Garlick to pay Donnellan the difference between the contract price and the resale price, plus interest, as damages for the breach of contract. The court also found that Donnellan was entitled to recover legal costs associated with the resale of the property.

Orders