Court of Appeal
Supreme Court
New South Wales
Medium Neutral Citation: Edwin Davey Pty Ltd v Boulos Holdings Pty Ltd [2022] NSWCA 65 Hearing dates: 15 February 2022 Date of orders: 26 April 2022 Decision date: 26 April 2022 Before: Macfarlan JA at [1]
Gleeson JA at [2]
Simpson AJA at [124]Decision: (1) Appeal allowed.
(2) Set aside order 2 made by the primary judge on 16 June 2021 and order 3 made on 1 July 2021, and in lieu order that:
(a) declare that the cross-claimant is entitled to judgment against the cross-defendant in the sum of $500,000 plus interest from 10 July 2013 to 16 June 2021 pursuant to s 100 of the Civil Procedure Act 2005 (NSW);
(b) declare that there be a setoff of the plaintiff’s and cross-claimant’s respective entitlements against each other, to be calculated as at 16 June 2021;
(c) the amount of the judgment in favour of the plaintiff in order 1 on 1 July 2021 be varied such that judgment be entered for the balance only owing by the defendant to the plaintiff as at 16 June 2021, taking into account the declaration in (a) above, such judgment to take effect on 16 June 2021;
(d) the defendant to pay the plaintiff’s costs of its claim;
(e) the plaintiff to pay the defendant’s costs of its cross-claim.
(3) Respondent to pay the appellant’s costs of the appeal.
(4) Order that the sum of $45,000 paid into court by the appellant as security for costs pursuant to orders made on 9 August 2021, together with any interest thereon, be paid out of court to the appellant.
(5) Order that the sum of $45,787.80 paid into court by the appellant on 21 September 2021, together with any interest thereon, be paid out of court to the respondent.
(6) Direct the parties to submit agreed orders to reflect the outcome of the appeal with respect to the judgment for the balance only owing by the defendant to the plaintiff within 7 days.
Catchwords: CONTRACT – breach of contract – land sale contract – nature of breach – failure to complete by fixed date – where time not of the essence – whether failure to complete on time a continuing breach – substantive and temporal nature of obligation to complete
CONTRACT – remedies – damages – causation – where delay in completion – claim for consequential loss – expenditure incurred in mitigating action – interplay between causation and mitigation – whether causative link between breach and action to mitigate loss – where purchaser agreed to pay mortgagee up to $500,000 if shortfall on recovery of mortgagee’s loan from second security
CONTRACT – remedies – damages – mitigation of loss – vendor unable to obtain discharge of mortgage – expenditure incurred by purchaser to obtain discharge of mortgage – whether reasonable action to mitigate loss – where available alternatives would have exposed purchaser to potentially greater loss
CONTRACT – remedies – damages – remoteness – whether…
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- Case
- [2022] NSWCA 65
- Decision Date
CaseChat Overview and Summary
The legal issues before the Court of Appeal included whether the vendor's failure to complete the sale on the fixed date constituted a continuing breach of contract, and if so, whether the purchaser's subsequent expenditure to obtain the discharge of the mortgage was a reasonable and foreseeable consequence of that breach, thereby entitling the purchaser to damages. The court also had to determine the interplay between the principles of causation and mitigation in assessing the purchaser's claim for consequential loss.
The Court of Appeal reasoned that the vendor's obligation to complete the sale was a substantive obligation, and the failure to do so on the fixed date, even where time was not of the essence, constituted a continuing breach. The court found that the purchaser's action in paying $500,000 to the vendor's mortgagee to secure the discharge of the mortgage was a reasonable step taken to mitigate its loss, as the available alternatives would have exposed the purchaser to potentially greater financial detriment. This expenditure was considered to be within the contemplation of the parties as a foreseeable consequence of the vendor's inability to procure the discharge of the mortgage, which was a necessary step for completion.
The appeal was allowed, and the orders of the primary judge were set aside. The Court of Appeal declared that the cross-claimant (purchaser) was entitled to judgment against the cross-defendant (vendor) for $500,000 plus interest. The court also ordered a set-off of the parties' respective entitlements and varied the judgment in favour of the plaintiff (vendor) to reflect the balance owing after accounting for the purchaser's entitlement. The court also made orders regarding the costs of the claim, cross-claim, and appeal, and directed the payment out of court of security for costs.
Orders
Orders of the court
(1) Appeal allowed.
(2) Set aside order 2 made by the primary judge on 16 June 2021 and order 3 made on 1 July 2021, and in lieu order that:
(a) declare that the cross-claimant is entitled to judgment against the cross-defendant in the sum of $500,000 plus interest from 10 July 2013 to 16 June 2021 pursuant to s 100 of the Civil Procedure Act 2005 (NSW);
(b) declare that there be a setoff of the plaintiff’s and cross-claimant’s respective entitlements against each other, to be calculated as at 16 June 2021;
(c) the amount of the judgment in favour of the plaintiff in order 1 on 1 July 2021 be varied such that judgment be entered for the balance only owing by the defendant to the plaintiff as at 16 June 2021, taking into account the declaration in (a) above, such judgment to take effect on 16 June 2021;
(d) the defendant to pay the plaintiff’s costs of its claim;
(e) the plaintiff to pay the defendant’s costs of its cross-claim.
(3) Respondent to pay the appellant’s costs of the appeal.
(4) Order that the sum of $45,000 paid into court by the appellant as security for costs pursuant to orders made on 9 August 2021, together with any interest thereon, be paid out of court to the appellant.
(5) Order that the sum of $45,787.80 paid into court by the appellant on 21 September 2021, together with any interest thereon, be paid out of court to the respondent.
(6) Direct the parties to submit agreed orders to reflect the outcome of the appeal with respect to the judgment for the balance only owing by the defendant to the plaintiff within 7 days.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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