Edwin Davey Pty Ltd v Boulos Holdings Pty Ltd

In *Edwin Davey Pty Ltd v Boulos Holdings Pty Ltd*, the New South Wales Court of Appeal considered a dispute arising from a contract for the sale of land. The core of the disagreement concerned the consequences of the vendor's failure to complete the sale by the agreed date, particularly in circumstances where time was not of the essence. The purchaser sought to recover damages, including expenditure incurred in mitigating its loss, which involved paying a portion of the vendor's mortgagee's loan to secure a discharge of the mortgage.

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.