Grusauskas v Panourakis
[2025] VCC 649
•29 May 2025
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-23-03206
| DONNA LORRAINE GRUSAUSKAS | Plaintiff |
| v | |
| EMMANUEL PANOURAKIS | Defendant |
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JUDGE: | JUDICIAL REGISTRAR BENNETT | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 30 September 2024, 23 January 2025 and 18 March 2025 | |
DATE OF JUDGMENT: | 29 May 2025 | |
CASE MAY BE CITED AS: | Grusauskas v Panourakis | |
MEDIUM NEUTRAL CITATION: | [2025] VCC 649 | |
REASONS FOR JUDGMENT
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Subject:REAL PROPERTY – CONTRACTS – DAMAGES
Catchwords: Sale of residential property – failure by purchaser to complete – termination by vendor – assessment of damages and interest payable
Legislation Cited: Transfer of Land Act1958 (Vic), Seventh Schedule, Table A; Sale of Land (Amendment) Act 1982 (Vic), s 8; Estate Agents (Contracts) Regulations 2008 (Vic); Penalty Interest Rates Act 1983 (Vic); Supreme Court Act 1986 (Vic), s 58, s 60
Cases Cited:McGorlick v Palmer [2022] VCC 1229; Gayed v Yuan [2024] VSCA 85; Portbury Development Co Pty Ltd v Ottedin Investments Pty Ltd [2014] VSC 57; Portbury Development Co Pty Ltd v Ottedin Investments Pty Ltd [2012] VSC 490; Moffatt v Dillon [1999] 2 VR 480; Victorian Economic Development Corporation v Clovervale Pty Ltd [1992] 1 VR 596; McDonough v Harris Unreported, Supreme Court of Victoria, Balmford J, 3 July 1998 (BC9803028); Tymstock Pty Ltd v Patrick [2019] VCC 1092; Hadley v Baxendale (1854) 9 Ex 341; Ripani v Century Legend Pty Ltd (No 4) [2024] FCA 1211; Coleston v Carney [2019] VCC 177; Palasty v Parlby [2007] NSWCA 345; McLennan v Dannaoui [2024] VCC 1786; Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998) 192 CLR 603; J Renee Nominees Pty Ltd v Mastrogiannis [2013] VCC 1381; Hungerfords v Walker (1989) 171 CLR 125; Statewide Developments Pty Ltd v Higgins [2011] NSWCA 35; McLennan v Dannaoui [2024] VCC 1786; Carpenter v McGrath (1996) 40 NSWLR 39; Bill v Clarke [2015] VCC 1721; Jampco Pty Ltd v Cameron (No 2) (1986) NSW Conv R 55-275; Riggall v Thompson [2010] QCA 144
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T Egan | Hall & Wilcox |
| For the Defendant | Mr D Harrison (on 30 September 2024); the defendant thereafter appeared in person | T M Collins Law (until 17 December 2024) |
JUDICIAL REGISTRAR:
1Since 1999, the plaintiff, Ms Donna Grusauskas, had been the registered proprietor of the property contained in certificate of title volume 08083 folio 155 and known as 192 Beach Road, Sandringham (the “Property”). After deciding in 2021 that she and her husband, Mr Edward Grusauskas, would downsize for their retirement, Ms Grusauskas put the Property on the market.
2On 17 December 2021, the defendant, Mr Emmanuel Panourakis, entered into a contract with Ms Grusauskas pursuant to which he agreed to acquire the Property for $3,600,000.00 (the “Contract”). However, settlement of the Contract ultimately did not occur and the Contract was terminated on 13 May 2022 after Ms Grusauskas served a notice of default. None of this is in dispute in this proceeding. Mr Panourakis by his defence admits the existence, breach and termination of the Contract.
3The only issue for the Court’s determination is the amount which Ms Grusauskas is entitled to recover from Mr Panourakis as a result of his breach of the Contract.
A. Procedural history
4It is necessary first to say something of the procedural history of this matter.
5At the trial on 30 September 2024, the defendant was represented by solicitors and counsel, who had been retained in the week prior to trial. (The defendant had been self-represented prior to that time.) Having heard the plaintiff’s oral opening submissions, counsel for the defendant objected to the way in which the plaintiff’s case had been characterised in those submissions. The defendant contended that the statement of claim pleaded only a claim for liquidated damages founded on general condition (“GC”)[1] 35.4 of the Contract, whereas the plaintiff’s opening submissions had referred to a claim for common law damages in the alternative. I ruled against that objection and determined that the trial would continue on the basis that the plaintiff’s opening submissions were consistent with her statement of claim.
[1]The relevant general conditions are set out in section E.1 of these reasons.
6Upon delivery of my ruling, the defendant immediately made an application for the adjournment of the trial on the basis that he was not in a position to meet the alternative claim for common law damages. More specifically, the defendant submitted that he required time to engage an expert to opine on the quantum of the larger sums claimed by the plaintiff, in circumstances where such evidence would not have been required if the plaintiff’s claim had only been for liquidated damages (as the defendant had hitherto erroneously believed). Over the opposition of the plaintiff, I granted the adjournment and made orders for the filing of expert reports by the defendant and then the plaintiff.
7Ultimately, no expert reports were filed. The defendant’s solicitor informed me at a directions hearing on 17 December 2024 that the defendant had obtained an expert report but did not intend to rely upon it. Also at that hearing, the Court granted the application of the defendant’s solicitors for leave to cease acting. Accordingly, the defendant became self-represented again from that date.
8Before ceasing to act, the defendant’s solicitors filed written opening submissions on behalf of the defendant dated 17 December 2024. Although self-represented, the defendant also filed written closing submissions dated 7 March 2025. Those closing submissions were based substantially upon an earlier document prepared by counsel for the defendant. In the defendant’s oral closing submissions, he did not take the opportunity to speak to the written submissions, or to respond to the matters raised in the plaintiff’s written and oral closing submissions.
B. Witnesses
9Ms Grusauskas and Mr Grusauskas gave viva voce evidence, which was not extensive, in support of the plaintiff’s case. The defendant cross-examined Ms Grusauskas briefly in relation to certain issues, but there was no challenge to her overall credit. Mr Grusauskas was not cross-examined at all.
10Much of the evidence of both witnesses was of an uncontroversial nature. I will refer to some of that evidence later in the course of these reasons. Both witnesses appeared to me to be doing their best to respond honestly to the questions asked of them. I consider them to have been credible and truthful witnesses.
11The defendant did not himself give evidence, and called no other witnesses in support of his case.
C. Relevant facts
12The relevant facts are drawn primarily from the documents in the court book and, to a lesser degree, the pleadings and the oral evidence of the witnesses. There was little contest between the parties about the relevant facts. The principal areas of dispute in the proceeding concerned the recoverability at law of certain items of loss and damage claimed by the plaintiff.
13The matters set out in this section of the reasons constitute my findings of fact unless otherwise stated.
C.1 Sale of the Property and related events
14On 19 August 2021, Ms Grusauskas entered into an exclusive sale authority with Nick Johnstone Real Estate Pty Ltd (“Nick Johnstone RE”) pursuant to which she appointed that agency to sell the Property and agreed to pay a commission of 1.65 per cent (including GST) of the sale price.
15The Contract was entered into between Ms Grusauskas and Mr Panourakis on 17 December 2021 after an unsuccessful earlier auction. The Contract provided for a $200,000.00 deposit payable by 24 December 2021 and recorded that $50,000.00 of that deposit had already been paid. Accordingly, $3,400,000.00 was payable at settlement on 19 April 2022. The Contract recorded that Katherine Moorhouse-Perks was Ms Grusausakas’ legal practitioner or conveyancer. (Later documents indicate that Ms Effie Karas of KPA Conveyancing was the conveyancer for Mr Panourakis and his nominee.)
16There is no dispute that a total of $200,000.00 was paid as the deposit.
17On 25 January 2022, Ms Moorhouse-Perks sent an email to KPA Conveyancing asking that instructions be obtained for the release of the deposit to Ms Grusauskas “as my client needs to use the deposit funds to secure the purchase of her new home”. The email attached documentation contemplated by s 27 of the Sale of Land Act 1962 (Vic).
18Mr Panourakis nominated Mundial Arena Pty Ltd as a substitute purchaser of the Property on 10 February 2022.
19On 26 February 2022, Mr and Ms Grusauskas entered into a contract of sale (the “Rosebud Contract”) pursuant to which they agreed to acquire the property at 301 Waterfall Gully Road, Rosebud (the “Rosebud Property”) from the vendors, Robert Owen Hudson and Deirdre Hudson. The purchase price of the Rosebud Property was $1,867,000.00, of which a 5 per cent deposit ($93,350.00) was payable on the signing of the Rosebud Contract. The balance of $1,773,650.00 was due on the settlement date of 26 April 2022.
20On 28 February 2022, Ms Grusauskas paid the $93,350.00 deposit to the agent acting for the Hudsons. There was no challenge to the evidence adduced on behalf of the plaintiff that this sum was paid by Ms Grusauskas only and that Mr Grusauskas made no contribution toward the deposit.[2]
[2]T25, 30, 51.
21On 8 March 2022, Ms Moorhouse-Perks emailed KPA Conveyancing advising that “My client has now purchased her new home and would like to coordinate settlement of her new purchase with her sale. Settlement of her new purchase is due 26 April 2022”. The email asked whether settlement in respect of the Property could occur a week later than planned. Ms Karas of KPA Conveyancing responded later the same day confirming that her client was happy to accommodate Ms Grusauskas and that settlement would now occur on 26 April 2022.
22On 26 April 2022, the scheduled settlement day for both properties, Ms Karas emailed Ms Moorhouse-Perks at 10.01am stating that KPA Conveyancing had been advised that morning by their client “that his Lender is not in a position to settle today” and that “[w]e are just waiting for further instructions to confirm a date and time with your office”. Ms Moorhouse-Perks responded shortly thereafter by pointing out the potential serious financial consequences of the delay. By email to Ms Moorhouse-Perks later that day, Ms Karas advised that her client had said that “settlement would take place some time this week” and that he would advise Ms Karas on 27 April as to a “definite date for settlement”. Also on 26 April 2022, Ms Moorhouse-Perks sent an email to Bert Geraerts of Nick Johnstone RE, pointing out the financial consequences of the delay in settlement and asking him to impress upon the purchaser the need to settle swiftly.
23Ron Wilson Removals removed Ms Grusauskas’ household belongings from the Property on 26 April 2022, with a view to transporting them to the Rosebud Property on that date. When settlement on that date fell through, the belongings were instead transported to the removalist’s depot and placed into storage.[3]
[3]T28.
24By email dated 29 April 2022 to KPA Conveyancing, Ms Moorhouse-Perks served a notice of default on Mr Panourakis and his nominee (“Default Notice”). The Default Notice stated that it was given pursuant to GC 32, 33 and 34 of the Contract. It provided 14 days for the default to be remedied, failing which it stated that Ms Grusauskas intended to exercise her rights “and the Contract will immediately end in accordance with General Condition 35.4 of the Contract”.
25In response to a question from Ms Moorhouse-Perks at 3.36pm on Friday 29 April 2022, Ms Karas of KPA Conveyancing advised at 3.38pm that she had spoken to her client, that there had been nothing further from NAB (which, it appears, was the defendant’s lender), and that her client “has the broker pushing and provided further forms” and “is hoping for some type of update on Monday”.
26On 3 May 2022, Ms Karas emailed Ms Moorhouse-Perks stating: “Our client has advised that the NAB is responding to him today. Once they have contacted him I have requested that I be updated immediately so I can update your office”.
27On 4 May 2022, the Hudsons’ conveyancer, Vutthorn Fu of AB Morison Conveyancing, emailed Ms Moorhouse-Perks seeking an update. Ms Moorhouse-Perks responded on 6 May 2022 stating: “The purchaser of my client’s property has indicated they can settle the purchase at 12.00 noon on Wednesday 11 May 2022”. Later on 6 May 2022, Ms Moorhouse-Perks forwarded this email chain to Mr and Ms Grusauskas under cover of an email stating: “Firm day and time for settlement is Wednesday 11 May 2022 at 12.00 noon”.
28The foreshadowed firm settlement time of 12 noon on 11 May 2022 came and went. It appears from an email sent by Ms Moorhouse-Perks to Ms Karas at 6.13pm that day that Mr Panourakis had sought an additional 14 days within which to settle the transaction. Ms Moorhouse-Perks noted in that email that her client had not provided any instructions to grant an extension and that the Default Notice was due to expire on Friday 13 May 2022.
29On 13 May 2022, Mr Panourakis sent an email to Ms Karas, asking her to “tell the other side the following”. Six numbered points followed, in which Mr Panourakis stated, amongst other things, that he would not be able to settle the purchase that day, that he had been let down by his finance broker, and that he was “doing everything I can to settle the purchase”. He also stated that he was meeting with a potential investor that weekend and that, if the investor agreed, “I should have funds to complete the purchase next week”. He concluded by requesting a seven-day extension of time on the Default Notice.
30Later on 13 May 2022, Ms Karas forwarded Mr Panourakis’ email to Ms Moorhouse-Perks, stating: “Our client is aggressively trying to and is keen to settle this matter by the end of next week”. Ms Karas asked Ms Moorhouse-Perks to seek urgent instructions that Ms Grusauskas would “grant a 7 day grace period on the Default Notice to the 20th May, 2022”. Ms Moorhouse-Perks responded later that day that “The Vendor grants the Purchaser and the Nominee until 12.00 noon on Friday 20 May 2022 to comply with the Default Notice dated and served 29 April 2022” (emphasis in original). She also forwarded this email chain on to AB Morison Conveyancing several minutes later, asking: “Is settlement at 12.00 noon 20 May 2022 likely to cause any issues to your clients?”.
31Notwithstanding the abovementioned communications on 13 May 2022, the statement of claim pleads that “the Purchaser and Nominee failed to remedy their default by 13 May 2022, the date of expiry of the Notice of Default and thereby the Contract of Sale was terminated”. This allegation is admitted in the defence. Both parties’ submissions adopted a position consistent with the pleadings, namely, that the Contract terminated on 13 May 2022, and neither party suggested that the seven-day grace period was of any significance for present purposes. I will accordingly proceed upon that basis.
32Also on 13 May 2022, AB Morison Conveyancing served a notice of default on Mr and Ms Grusauskas (via Ms Moorhouse-Perks) in respect of the Rosebud Property. The notice stated that it expired on 27 May 2022.
33On 20 May 2022, the final day of the seven-day grace period, Ms Moorhouse-Perks sent an email to Ms Karas setting out the sums which the defendant needed to place into the PEXA Workspace that morning. However, settlement of the Property did not occur that day.
34On 23 May 2022 at 9.19am, Ms Karas emailed Ms Moorhouse-Perks, stating: “Our client has advised our office today that settlement will proceed on Wednesday the 25 May 2022”. However, in a further email to Ms Moorhouse-Perks at 9.37am, Ms Karas stated: “We have just further been advised that Valuation is being completed today and once this has been done we will have a definite settlement date”.
35On 26 May 2022, Ms Moorhouse-Perks asked Ms Karas by email: “Will this be settling tomorrow?”. Ms Karas responded about 10 minutes later: “Our client is doing everything possible to meet settlement for tomorrow. We will keep you updated once we have further instructions.”
36On Friday 27 May 2022 at 12.11pm, Ms Moorhouse-Perks emailed Ms Karas stating: “I confirm our conversation this morning in which you communicated that your clients would not be settling their purchase of [the Property] this morning but might be able to settle next week”. The email went on to identify certain elements of “the loss caused or about to be caused to my client (at 5.00pm)”, including amounts in respect of the failed purchase of the Rosebud Property.
37On 27 May 2022, the Rosebud Contract was terminated by the Hudsons as a consequence of the failure by Mr and Ms Grusauskas to settle that contract.
38Notwithstanding the numerous foreshadowed settlement dates referred to in the abovementioned communications, settlement of the sale of the Property to the defendant or his nominee ultimately never occurred.
C.2 Resale of the Property and compromise of the Hudsons’ claim
39On 17 June 2022, Ms Grusauskas entered into an exclusive auction authority with Nick Johnstone RE pursuant to which she reappointed that agency to resell the Property and agreed to pay marketing expenses of $5,372.00. No commission was payable in respect of the resale.
40The Property went to auction in July 2022 but no bids were received and it thereafter remained on the market.[4]
[4]T29.
41On 1 November 2022, Ms Grusauskas entered into a contract pursuant to which she agreed to sell the Property to Nihal Nanayakkara for a price of $2,900,000.00. A deposit of $580,000.00 was due by 22 November 2022 (of which $25,000.00 was recorded as having been paid), with the balance of $2,320,000.00 payable on the settlement date of 27 January 2023.
42Settlement of the resale occurred early, on 13 January 2023. Nick Johnstone RE invoiced Ms Grusauskas for the marketing expenses of $5,372.00 and deducted this sum from the deposit paid by the purchaser.
43On 20 December 2022, Mr and Ms Grusauskas, defined as “the Purchasers”, entered into a deed of settlement with the Hudsons, defined as “the Vendors” (“Settlement Deed”). After referring to the Rosebud Contract, the recitals of the Settlement Deed stated:
“D.By a Notice of Default dated 13 May 2022, the Vendors terminated the [Rosebud] Contract with effect from 27 May 2022.
E.Pursuant to the terms of the [Rosebud] Contract, the Purchasers are liable to pay the Vendors their loss arising from the termination of the [Rosebud] Contract.
F.The Vendors have claimed against the Purchasers losses arising from the termination of the [Rosebud] Contract in a total sum of $315,654.56 (‘the Claim’) including the balance of the deposit payable pursuant to the [Rosebud] Contract, losses arising from the costs of the Vendors’ resale of the [Rosebud] Property and the reduction in the price achieved upon resale.”
44Clause 2 of the Settlement Deed recorded that the Purchasers “agree to pay the sum of $199,365 (‘the Settlement Sum’) in full settlement of the Claim”. Clause 3 provided that this was to be paid by 4pm on 13 January 2023. Clauses 8 and 9 contained mutual releases. The unchallenged evidence of Mr and Ms Grusauskas,[5] which was supported by a telegraphic transfer document, was that the Settlement Sum was paid to the Hudsons by Ms Grusauskas only.
[5]T30, 51.
C.3 Letter of demand and commencement of this proceeding
45On 21 March 2023, Hall & Wilcox, the solicitors on the record for the plaintiff in this proceeding, sent a letter of demand to Mr Panourakis and Mundial Arena Pty Ltd. The letter briefly set out the background to the termination of the Contract and advised that Ms Grusauskas had incurred losses in the sum of $892,091.71 as a result of the termination. The letter attached a schedule of loss setting out the component parts of that sum. It concluded by demanding the payment of $892,091.71 within 14 days. That demand was not complied with.
46The plaintiff commenced this proceeding on 19 June 2023 by writ and statement of claim.
D. The plaintiff’s damages claim – overview
47Ms Grusauskas initially claimed a large number of different items of loss and damage. By the time of closing submissions, she had abandoned some of the relatively minor items. Ultimately, she claimed damages falling within 6 categories, plus interest thereon:
(a) Loss on resale of the Property: The plaintiff claimed $700,000.00 under GC 35.4(c)(ii) and alternatively as common law damages.
(b) Interest on the balance of the purchase price: The plaintiff claimed $19,002.74 under GC 33.
(c) Losses associated with the Rosebud Contract: The plaintiff claimed $292,715.00 as common law damages, comprising the forfeited deposit of $93,350.00 plus the $199,365.00 paid pursuant to the Settlement Deed.
(d) Mortgage interest: The plaintiff claimed $45,473.13 as “interest damages” referable to the interest payable on her mortgage between the due date for settlement under the Contract and the date of settlement of the resale of the Property.
(e) Resale advertising: The plaintiff claimed $5,372.00 under GC 35.4(c)(ii) and alternatively as common law damages.
(f) Legal costs: The plaintiff claimed $6,948.70 in respect of a number of invoices, some of which are claimed pursuant to GC 35.4(c)(ii) and alternatively as common law damages, and some of which are claimed only as common law damages.
48I will address each of the abovementioned categories in greater detail later in these reasons.
49It was not in dispute that the Default Notice was given by the plaintiff pursuant to GC 34 and that the Contract terminated on 13 May 2022 pursuant to GC 35. Accordingly, it was common ground that the $200,000.00 deposit paid by the defendant was forfeited pursuant to GC 35.4(a) and that the forfeiture of that sum had to be taken into account in assessing the plaintiff’s damages.
50There was a significant threshold issue between the parties as to the basis upon which the plaintiff was entitled to claim damages. As I have noted above, the plaintiff claimed a number of categories of damages as liquidated damages pursuant to GC 35.4(c)(ii) of the Contract. The defendant denied that she was entitled to do so, on the basis that GC 35.4(c)(ii) required her to commence the present proceeding within one year of the termination of the Contract on 13 May 2022 and she had not commenced the proceeding until 19 June 2023.
51If I accept the defendant’s position on this threshold issue, the plaintiff claims the amounts in question alternatively as common law damages. In respect of each of the amounts claimed by the plaintiff under GC 35.4(c)(ii), the defendant’s written submissions accepted that the amounts appeared to be claimable as common law damages. Accordingly, I raised with the plaintiff’s counsel whether the threshold issue would be academic if I accepted the plaintiff’s position that the measure of damages would be the same on each basis. I further raised whether, in those circumstances, it would be pragmatic and appropriate to take the approach of Judge Ryan in McGorlick v Palmer,[6] which I discuss in greater detail below, and simply award damages on the common law basis.[7] However, I was told by counsel that the threshold issue needed to be determined because its resolution would affect the basis on which interest would be calculated on the principal sum and, hence, the quantum of interest to be awarded.
[6][2022] VCC 1229.
[7]In McGorlick, although the defaulting purchaser took the point that the resale and commencement of proceedings had not occurred within the one-year period specified in a contractual provision analogous to GC 35.4(c)(ii), her Honour took the view that this was beside the point because the vendor would in any event have been entitled to common law damages in the same amount.
E. Threshold issue: Availability of a claim under GC 35.4(c)(ii)
E.1 Relevant general conditions and their predecessors
52The general conditions of the Contract are in the standard Real Estate Institute of Victoria/ Law Institute of Victoria form dated August 2019. The provisions of particular relevance to the present proceeding are those contained in GCs 32, 33, 34 and 35. GC 32, headed “BREACH”, provides:
“A party who breaches this contract must pay to the other party on demand:
(a)compensation for any reasonably foreseeable loss to the other party resulting from the breach; and
(b) any interest due under this contract as a result of the breach.”
53GC 33, headed “INTEREST”, provides:
“Interest at a rate of 2% per annum plus the rate for the time being fixed by section 2 of the Penalty Interest Rates Act 1983 is payable at settlement on any money owing under the contract during the period of default, without affecting any other rights of the offended party.”
54GC 34, headed “DEFAULT NOTICE”, provides:
“34.1A party is not entitled to exercise any rights arising from the other party’s default, other than the right to receive interest and the right to sue for money owing, until the other party is given and fails to comply with a written default notice.
34.2The default notice must:
(a)specify the particulars of the default; and
(b)state that it is the offended party’s intention to exercise the rights arising from the default unless, within 14 days of the notice being given –
(i)the default is remedied; and
(ii)the reasonable costs incurred as a result of the default and any interest payable are paid.”
55GC 35, headed “DEFAULT NOT REMEDIED”, provides:
“35.1All unpaid money under the contract becomes immediately payable to the vendor if the default has been made by the purchaser and is not remedied and the costs and interest are not paid.
35.2The contract immediately ends if:
(a)the default notice also states that unless the default is remedied and the reasonable costs and interest are paid, the contract will be ended in accordance with this general condition; and
(b)the default is not remedied and the reasonable costs and interest are not paid by the end of the period of the default notice.
35.3If the contract ends by a default notice given by the purchaser:
(a)the purchaser must be repaid any money paid under the contract and be paid any interest and reasonable costs payable under the contract; and
(b)all those amounts are a charge on the land until payment; and
(c)the purchaser may also recover any loss otherwise recoverable.
35.4 If the contract ends by a default notice given by the vendor:
(a)the deposit up to 10% of the price is forfeited to the vendor as the vendor’s absolute property, whether the deposit has been paid or not; and
(b)the vendor is entitled to possession of the property; and
(c)in addition to any other remedy, the vendor may within one year of the contract ending either:
(i)retain the property and sue for damages for breach of contract; or
(ii)resell the property in any manner and recover any deficiency in the price on the resale and any resulting expenses by way of liquidated damages; and
(d)the vendor may retain any part of the price paid until the vendor’s damages have been determined and may apply that money towards those damages; and
(e)any determination of the vendor’s damages must take into account the amount forfeited to the vendor.
35.5The ending of the contract does not affect the rights of the offended party as a consequence of the default.” (emphasis added)
56Central to the threshold issue is GC 35.4(c). The defendant contended that, in order to avail herself of GC 35.4(c)(ii), the plaintiff had to commence the present proceeding within the one-year period following the termination of the Contract on 13 May 2022. Whilst the resale of the Property occurred within one year of that date, the present proceeding was not commenced until 19 June 2023. Accordingly, contended the defendant, the plaintiff could not claim liquidated damages under GC 35.4(c)(ii).
57The plaintiff contended that the one-year period referred to in GC 35.4(c) applies only to the resale of the Property and not the commencement of the proceeding. It follows, she submitted, that the relevant legal proceeding to “recover” the price deficiency on resale and any resulting expenses can be commenced outside the one-year period.
58In considering these competing positions and the authorities to which the parties referred, it is relevant to note that various sets of standard form general conditions have been used over the years in Victoria in connection with the sale of residential real estate. For present purposes, the history commences with Table A of the Seventh Schedule to the Transfer of Land Act 1958 (Vic) (“Original Table A”). It is unnecessary to consider the precise content of Original Table A, as the conditions contained therein are not the subject of any of the authorities discussed below.
59As Voumard records,[8] Original Table A was substantially amended in 1982[9], and this amended form of Table A (“Amended Table A”) was incorporated in many forms of contract used in Victoria until the introduction of new standard conditions in the Estate Agents (Contracts) Regulations 2008 (Vic). Amended Table A relevantly provided, in clauses 5 and 6:
[8]Voumard: The Sale of Land (6th ed, 2009-), looseleaf, at page 12-4057.
[9]Section 8 of the Sale of Land (Amendment) Act 1982 (Vic) substituted a new Table A of the Seventh Schedule.
“5.Time shall be of the essence of this contract. However, if either party defaults under this contract the offended party shall not be entitled to exercise any of his rights arising out of the default other than his right to sue for money then owing until he has served the offender with a written notice specifying the default and his intention to exercise his rights unless the default is remedied and the proper legal costs occasioned by the default and any interest demanded are all paid within fourteen days of service of the notice and the offender fails to comply with the notice.
6 (1)Where the default has been made by the purchaser and is not remedied all monies unpaid under this contract shall become immediately payable and recoverable at the option of the vendor.
(2)If the notice also states that unless the default is remedied the contract will be rescinded pursuant to this condition then if the default is not so remedied the contract shall thereupon be rescinded.
(3)Where the contract is so rescinded and the notice is given by –
(a)the purchaser, he shall be repaid any money together with any interest and costs payable under this contract and these shall be a charge on the land until payment.
(b)the vendor, then an amount equal to one tenth of the price (‘the security’) shall be forfeited to the vendor as his absolute property and he may recover possession of the land and at his option may within one year of the date of rescission either –
(i)retain the land and sue for damages for breach of contract; or
(ii)resell the land in such manner as he sees fit and recover any deficiency in the price on the re-sale and any resulting expenses by way of liquidated damages.
In addition to the security the vendor may retain any part of the price paid to him pending the determination of damages and may apply that money in satisfaction or part satisfaction of those damages.”
60As I have noted above, Amended Table A was followed by the standard general conditions contained in the Estate Agents (Contracts) Regulations[10] (the “EA Conditions”). The EA Conditions contained general conditions numbered 25 to 28, which are in identical form to GC 32 to 35 of the Contract, save for the following differences:
(a) condition 26 of the EA Conditions does not contain the words “at settlement” which appear in GC 33; and
(b) conditions 27.1 and 27.2(b) of the EA Conditions refer to a notice being served, while GC 34.1 and 34.2(b) refer to a notice being given.
[10]Regulation 5 provided that, in the case of a contract of sale of real estate, the standard form of contract comprising Form 1 and Form 2 in the Schedule to the Regulations was prescribed for the purposes of s 53A of the Estate Agents Act 1980 (Vic). The general conditions are contained in Form 2.
61As Voumard also records,[11] the Estate Agents (Contracts) Regulations were revoked on 11 August 2018 and replaced in August 2019 by a new standard form of contract of sale published jointly by the Law Institute of Victoria and the Real Estate Institute of Victoria. The general conditions of that standard form contract appear in the Contract in the present case and are relevantly set out at paragraphs 52 to 55 above.
[11]Voumard: The Sale of Land (6th ed, 2009-), looseleaf, at page 12-4059.
E.2 The parties’ contentions
62I have set out the defendant’s position in paragraph 56 above. In support of that position, he relied principally upon the relatively recent decision of the Court of Appeal in Gayed v Yuan.[12] The contract in that case appears to have contained the EA Conditions and the relevant provision was condition 28.4, which is in identical terms to GC 35.4 of the Contract. The defendant relied upon the observation of Beach and Orr JJA in Gayed that “on its proper construction, general condition 28.4(c) does not limit a vendor to claiming losses incurred only within the 12 month period after the contract was terminated. The clause provided a time limit for taking proceedings in circumstances where the clause had operative effect”[13] (emphasis added). For convenience, I will refer to the second sentence of this passage as the “Second Sentence”.
[12][2024] VSCA 85. (Special leave was refused on 5 September 2024.)
[13][2024] VSCA 85 at [37].
63The defendant contended that the Second Sentence was in accordance with earlier decisions of the Supreme Court of Victoria, namely, Portbury Development Co Pty Ltd v Ottedin Investments Pty Ltd,[14] Portbury Development Pty Ltd v Ottedin Investments Pty Ltd,[15] and Moffatt v Dillon.[16]
[14][2014] VSC 57 at [470].
[15][2012] VSC 490 at [30].
[16][1999] 2 VR 480 at [60]-[66], [75], [96].
64The defendant further contended[17] that the words of GC 35.4(c)(ii) should be given their ordinary and plain meaning, namely, as imposing a cumulative obligation that the vendor both resell and recover any deficiency etc within one year.
[17]Defendant’s written opening submissions dated 17 December 2024.
65I have set out the plaintiff’s position in paragraph 57 above. She submitted that Gayed is not determinative, because the Second Sentence was mere obiter and is in any event ambiguous as to whether it was directed to the present issue. She further contended that her position is consistent with the weight of authority preceding Gayed, although she recognised that there is significant inconsistency and ambiguity in the authorities. She also contended that her position is the correct one based upon the proper construction of the Contract by reference to the applicable principles of construction.
E.3 Chronological discussion of authorities referred to by the parties
66The first authority referred to by the plaintiff is Victorian Economic Development Corporation v Clovervale Pty Ltd (“Clovervale”).[18]Relevantly, that case involved a contract for the sale of land which incorporated the conditions in Amended Table A. The relevant condition was clause 6(3)(b) (see paragraph 59 above), which broadly corresponds with GC 35.4(c).
[18][1992] 1 VR 596.
67The plaintiff submits that Tadgell J in that case “made inconsistent statements as to whether … an earlier version of GC 35.4(c)(ii) required proceedings to be brought within a year.” The first such statement is this:[19]
“In particular the vendor was not obliged, if it sued for damages, to sue within a year of the date of rescission on the footing that it retained the land (cl. 6(3)(b)(i)) or that it resold the land (cl. 6(3)(b)(ii)). The vendor was entitled to do either of these in accordance with the provisions of cl. 6(3)(b) if it chose, those provisions being for its benefit …”
[19][1992] 1 VR 596 at 603.27-.31.
68In the part of the reasons in which this statement appears, I understand Tadgell J to have been making the point that, whilst a vendor could choose to sue under clause 6(3)(b) if it wished to, a vendor seeking to recover damages is not obliged to proceed under clause 6(3)(b) and may instead choose to sue for common law damages for breach of contract – a right which is independent of the rights conferred by clause 6(3)(b). This occurred in the context of his Honour discussing whether the rights conferred on a vendor by clause 6(3)(b) excluded other remedies. I note that no issue appears to have been raised in Clovervale about compliance with the one-year time period referred to in clause 6(3)(b). Nonetheless, I accept that Tadgell J appears to have expressed the view that, if a vendor chooses to proceed under clauses 6(3)(b)(i) or 6(3)(b)(ii), the vendor is obliged to sue within a year of the date of rescission.
69The second statement referred to by the plaintiff is his Honour’s statement[20] that “[i]f it chose to proceed under cl. 6(3)(b)(ii) the vendor would have the right, reselling within a year of the rescission, to recover as liquidated damages any deficiency in the price on the resale, together with any expenses resulting from the resale” (emphasis in original). I understand the plaintiff to contend that this statement supports the view that the one-year time period only applies to the resale (and not also the commencement of proceedings), and is thus inconsistent with the first statement which I have set out in paragraph 67 above. I do not think that the second statement goes so far. Rather, it is simply silent as to whether the proceeding must be instituted within one year of termination. I therefore do not accept that it is inconsistent with, or detracts from, his Honour’s earlier statement that a vendor proceeding under clause 6(3)(b) is obliged to sue within a year of rescission.
[20][1992] 1 VR 596 at 603.45-.48.
70The next authority referred to by the plaintiff is McDonough v Harris.[21] The contract in that case also incorporated the general conditions of Amended Table A. McDonough involved a property sale which failed when the defendant vendor served notices of rescission on the plaintiff purchasers by reason of the purchasers’ inability to settle the transaction. The plaintiffs issued proceedings claiming the return of moneys paid under the contract of sale. The defendant counterclaimed for loss and damage.
[21]Unreported, Supreme Court of Victoria, Balmford J, 3 July 1998 (BC9803028).
71Relevantly for present purposes, after referring to clause 6 of Amended Table A, Balmford J stated:[22]
“…The defendant has not resold the property, and took no steps to sue for damages until filing a counterclaim in the plaintiffs’ action on 23 April 1997, almost two years after the rescission. [Counsel for the plaintiffs] submitted that, having not acted within one year, the defendant had forfeited any rights he had under that part of condition 6(3)(b).
The effect of the expression ‘may within one year of the date of rescission’ is explained by Tadgell J (as he then was) in Victorian Economic Development Corporation v Clovervale Pty Ltd [1992] 1 VR 596 at 602. That expression is not intended to limit the time within which an action for damages may be brought by the vendor, but rather to ensure that a loss on resale after one year from the date of rescission is not recoverable as liquidated damages against the purchaser. That is, the expression is relevant to subpara 6(3)(b)(ii), which has no application to these proceedings, but not to subpara 6(3)(b)(i). Thus I find that the Vendor has not forfeited his right to take action under condition 6(3)(b). As Tadgell J explains, the defendant had a right, independent of Table A, to sue for damages for breach of the contract. The advantage to him of proceeding under Table A was that he was entitled to retain ‘any part of the price paid to him’ on the basis there set out.”
[22]BC9803028 at 17-18.
72Her Honour went on to hold that certain sums claimed by the defendant constituted “damages” within the meaning of clause 6(3)(b).
73The plaintiff’s written submissions contended that Balmford J held that the reference to the one-year period in clause 6(3)(b) did not prevent the bringing of a claim for unliquidated damages under clause 6(3)(b)(i) more than a year after rescission. They further contended that, by the way in which her Honour expressed herself, Balmford J “indicated that the one-year period must apply only to the resale [under clause 6(3)(b)(ii)] and not the commencement of proceedings following a resale”.
74It appears to me that her Honour’s reference to page 602 of the decision of Tadgell J was perhaps intended to be a reference to page 603, which is the page containing the passages which I have set out at paragraphs 67 and 69 above. Insofar as Balmford J held that the one-year period did not apply to the commencement of proceedings for damages under clause 6(3)(b)(i), with respect to her Honour, it is not clear to me how the decision of Tadgell J can be said to lead to that conclusion. Rather, that conclusion seems to me to be contrary to what his Honour said in the passage set out in paragraph 67 above. It may be that, in stating “[t]hat expression is not intended to limit the time within which an action for damages may be brought by the vendor”, Balmford J was referring to an action for common law damages brought independently of clause 6(3)(b). Such a reading of that statement finds some support in the later sentence “As Tadgell J explains, the defendant had a right, independent of Table A, to sue for damages for breach of the contract”. That reading would also, in my respectful view, be consistent with what Tadgell J explained in Clovervale.
75Be that as it may, I accept that it is possible that, in stating that the reference to the one-year period was relevant to clause 6(3)(b)(ii) and not clause 6(3)(b)(i), and that that reference was not intended to limit the time within which an action for damages may be brought, her Honour could be understood as indicating that the one-year period applied only to the resale and not to the commencement of proceedings under clause 6(3)(b)(ii). I note, however, that it was unnecessary for her Honour to decide that question, given that the case before her did not concern clause 6(3)(b)(ii). Moreover, insofar as her Honour was expressing that view, it also appears, with respect, to be inconsistent with what Tadgell J stated in Clovervale in the passage set out in paragraph 67 above – notwithstanding that her Honour’s reasons were stated to have been based upon Clovervale. I also note that her Honour’s view that the expression “may within one year of the date of rescission” is “not intended to limit the time within which an action for damages may be brought by the vendor” seems to be irreconcilable with what the Court of Appeal later said in the Second Sentence in Gayed. As far as my researches indicate, McDonough has not been referred to in any subsequent decision in Victoria or elsewhere.
76The next case in the chronology is Moffett v Dillon,[23] which also involved a contract incorporating the general conditions contained in Amended Table A. The condition in issue in that case was clause 6(3)(b)(ii). The resale in Moffett occurred outside the one-year period referred to in clause 6(3)(b) and an issue arose as to whether the vendor’s damages had been assessed by the Senior Master pursuant to clause 6(3)(b)(ii), or for breach of contract independently of clause 6(3). Brooking JA (with whom Ormiston and Buchanan JJA agreed) said this, in a passage relied upon by both parties in the present case:[24]
“The effect of [clause 6(3)] was considered by Tadgell J in Victorian Economic Development Corporation v Clovervale Pty Ltd [1992] 1 VR 596. The option given by it to the vendor is by the terms of the clause to be exercised within one year of the date of rescission. Tadgell J was evidently of opinion that the clause required a vendor suing for damages pursuant to it to bring the action within a year of the date of rescission. It is at least clear that if the land is to be resold pursuant to the condition the resale must take place within that one year period.”
[23][1999] 2 VR 480.
[24][1999] 2 VR 480 at [60].
77The defendant submits that Moffett is consistent with his construction of GC 35.4(c) and the Second Sentence in Gayed. The plaintiff submits that the words “It is at least clear …” in the final sentence set out above “cast doubt” on the opinion of Tadgell J that clause 6(3) required a vendor to bring the action within the one-year period. She submits that those words would have been unnecessary if Brooking JA did not regard the opinion of Tadgell J with any reservation. I do not accept that this is necessarily so. The words “It is at least clear …” may have been a reflection of the fact that the issue before the Court in Moffett was the timing of the resale, and not the timing of the commencement of the proceeding. In any event, the Court of Appeal did not state that Tadgell J had erred and nor did it propose any different construction of clause 6(3)(b).
78The next case referred to by the plaintiff is the decision of Pagone J in Portbury Development Pty Ltd v Ottedin Investments Pty Ltd.[25] That case involved a contract incorporating the EA Conditions. Condition 28.4(c) of the contract in Portbury was in identical form to GC 35.4(c) of the Contract. Pagone J relevantly stated:[26]
“Clause 28.4 of the Contract of Sale permitted Portbury to resell the property within one year of the contract ending. The clause relevantly provided:
[His Honour then set out clause 28.4(c)]
[25][2012] VSC 490.
[26][2012] VSC 490 at [30].
Under this clause, therefore, Portbury had one year from the end of the contract by the default notice to resell the property and then recover any deficiency ‘by way of liquidated damages’.”
79The defendant submits that this passage is consistent with the Second Sentence in Gayed. The plaintiff submits that the first sentence set out above supports her position that the one-year time period applies only to the resale and not the commencement of proceedings. She submits that the words “and then” in the final sentence set out above similarly indicate that the one-year period applies only to the resale, or at least renders ambiguous what his Honour said in this paragraph.
80I do not consider Portbury to assist either party. On one reading, it supports the defendant’s position. On another reading, it supports the plaintiff’s position. Moreover, the one-year period (whether as to resale or commencement of proceedings) was not in issue in Portbury, meaning that care needs to be taken not to read too much into what was said by Pagone J in the paragraph set out above.
81The next authority referred to by the plaintiff is the similarly-named Portbury Development Co Pty Ltd v Ottedin Investments Pty Ltd,[27] which also involved a contract incorporating the EA Conditions. The plaintiff relies upon an observation made by Garde J that condition 28.4 (the predecessor of GC 35.4 of the Contract) “provides for the resale of the property ‘in any manner’ within one year of the contract ending, and for the vendor to recover ‘any deficiency in price on the resale’ and ‘any resulting expenses by way of liquidated damages’.”[28] I understand the plaintiff to rely upon the fact that his Honour in this passage draws a connection between the resale and the one-year period, but not between the recovery of any deficiency or expenses and the one-year period. Whilst I accept that his Honour’s observation could be read that way, I note again that the one-year period was not in issue in this case and care must therefore be taken not to read too much into the observation.
[27][2014] VSC 57.
[28][2014] VSC 57 at [154].
82Both parties also relied on the following further passage from the reasons of Garde J:[29]
“Portbury’s losses following the failure of Ottedin and Goldcare to complete amount in all to $3,144,498.49. According to Mr Facey who has very good reason to know, it is only in 2013 that englobo land values in the Pakenham area are starting to recover. The benefit of hindsight confirms the wisdom of Portbury’s decision to take the $2.1 million available from Parklea. The 18 months that it has taken for englobo land values in the Pakenham area to commence to recover is a longer period than the twelve months settlement terms originally agreed between Portbury and Ottedin in the sale contract and longer than the one year period referred to in general condition 28.4(c) as the duration of the right of resale.”
[29][2014] VSC 57 at [470].
83The plaintiff emphasises that his Honour in this passage discussed the one-year period in the context of the right of resale and not in the context of the commencement of proceedings. However, the focus of the abovementioned passage was the changing of land values and, accordingly, it is understandable that his Honour referred in that context to the permissible period for a resale. The question of the time for commencing proceedings was beside the point. I therefore repeat the warning which I have expressed above as to reading too much into statements made in different contexts.
84The defendant, in his opening submissions dated 17 December 2024, contends that Garde J “reasoned that the period envisaged by the contract to commence recovery of any deficiency in price is a period of one year”. However, based upon the emphasis applied by the author of those submissions to the text of his Honour’s reasons as set out in the submissions, it seems to me, with respect, that the author has misunderstood the final sentence of the passage which I have set out at paragraph 82 above. I therefore do not accept the defendant’s contention as to the significance of that passage.
85Accordingly, I do not consider the reasons of Garde J in Portbury to advance the position of either party.
86The next case referred to by the plaintiff was Tymstock Pty Ltd v Patrick,[30] which involved a contract containing the EA Conditions, with clause 27 modified to refer to a notice being given rather than served (see paragraph 60(b) above). The plaintiff relies upon the following passage from the reasons of Judge Woodward:[31]
“The consequences of the contract ending by a default notice served by the vendor are then spelt out in cl28.4, set out in full above. Importantly for the issues in this proceeding, cl28.4(c) provides that ‘in addition to any other remedy’, the vendor may within one year of the contract ending choose one of two options, namely:
·retain the property and sue for damages for breach of contract; or
·resell the property and ‘recover any deficiency in the price on the re-sale and any resulting expenses by way of liquidated damages’.”
[30][2019] VCC 1092.
[31][2019] VCC 1092 at [55].
87The plaintiff submits that, to make the choice referred to by his Honour, “it is sufficient for the vendor to have either sold or retained the property within the one-year period. It is unnecessary for the Plaintiff to commence proceedings”. I do not consider Tymstock to lead to that conclusion. The time for commencement of proceedings was not in issue in Tymstock and, again, care must be taken not to read too much into what his Honour said. Tymstock does not advance either party’s position in relation to the present issue, in respect of which I consider it to be equivocal.
88Finally, the plaintiff relied upon McGorlick v Palmer,[32] in which the plaintiff vendors and defendant purchaser signed heads of agreement, which they subsequently varied, relating to the sale of a farm property and business owned by the plaintiffs. The plaintiffs’ solicitor later sent the defendant a contract of sale of real estate and an asset sale agreement for her to sign and return. The defendant declined to do so. The plaintiffs contended in the proceeding that the defendant was contractually obliged to do so pursuant to the heads of agreement. The defendant disputed this. The plaintiffs sought damages caused by the defendant’s alleged breach in refusing to complete the purchase, including the loss incurred on the resale of the property at a lower price.
[32][2022] VCC 1229.
89The main issue for determination in McGorlick was whether the heads of agreement created an immediately binding contract for the sale of the farm and business. Judge Ryan held that the heads of agreement did not and that, accordingly, the defendant was not in breach when she declined to sign and return the formal contract documents proffered by the plaintiffs’ solicitor. The plaintiffs’ claim was therefore dismissed.
90The varied heads of agreement in McGorlick contained a term in similar form to GC 35.4, including a clause numbered 19(d) which was in identical terms to GC 35.4(c). Notwithstanding her conclusion that the heads of agreement did not create a binding contract of sale, Judge Ryan went on for completeness to consider whether the defendant had breached the heads of agreement (if they had been binding), whether the breach had been waived by the plaintiffs, and what was the extent of the plaintiffs’ loss or damage. It is her Honour’s discussion of the latter question which is relevant for present purposes.
91The defendant in McGorlick contended that the plaintiffs had no contractual right to claim damages because they had failed to resell within a year or to issue proceedings within a year.[33] In response, the plaintiffs contended that, even if the land had not been resold within a year, they still had common law rights, particularly given that clause 19(d) made it clear that the contractual remedies were in addition to any other remedies. In this context, Judge Ryan observed:[34] “The plaintiffs say the difference in price is recoverable from the defendant by way of liquidated damages. The same measure of damage would apply at common law, being the difference in the market value when the farm was resold.”
[33][2022] VCC 1229 at [96].
[34][2022] VCC 1229 at [99].
92Her Honour went on to consider the question of the market value of the farm, which she accepted in the circumstances was the same as the price achieved on resale. She then said this:[35]
“As to the question of the failure to resell within time, this point ultimately goes nowhere because even if the defendant was right and the property was not sold within 12 months, the plaintiffs still retained rights at common law to sue for breach of contract and claim damages. I am satisfied that the claim for damages was not precluded under contract or at common law and that the amount claimed under this head is reasonable in all the circumstances”.
[35][2022] VCC 1229 at [102].
93The plaintiff submits in relation to the reasons set out above: “Judge Ryan found that she did not need to determine whether the resale had occurred within one year (not mentioning and therefore impliedly rejecting the submission that proceedings needed to have been issued within one year), finding the same measure of damages would apply at common law.” She goes on to submit that, of all the cases discussed above, McGorlick “appears to be the only decision in which the constructional issue was raised and determined, and it was resolved in favour of the Plaintiff’s construction”.
94I do not accept these submissions. I do not consider Judge Ryan to have expressed any view about the need to commence proceedings within one year. If the resale had not occurred within the one-year period, it was irrelevant whether the proceeding had been commenced within the one-year period; by virtue of the resale being outside that period, the vendor would have been unable to rely upon clause 19(d)(ii) in any event. Therefore, it was not surprising that her Honour referred to the question of whether the resale had occurred within a year, but not to the question of whether the proceeding had been commenced within a year. The absence of reference to the latter question does not have the significance which Ms Grusauskas seeks to ascribe to it. Moreover, the one-year period (whether as to resale or commencement of the proceeding) was academic in circumstances where the plaintiffs could recover common law damages in the same quantum as the liquidated damages contemplated by clause 19(d)(ii). Accordingly, I do not consider the constructional issue to have been addressed in McGorlick, let alone determined in favour of the construction propounded by Ms Grusauskas.
E.4 Gayed v Yuan
95The most recent case in the chronology is Gayed, which involved a claim by the applicant purchasers seeking to recover a deposit paid by them pursuant to a contract of sale. The contract was entered into in June 2019 and the purchasers paid a deposit of $319,000.00, comprising an initial payment of $10,000.00 made prior to the signing of the contract and the balance of $309,000.00 paid thereafter. However, they were unable to obtain the necessary finance to complete the purchase by the 6 December 2019 settlement date. The respondent vendor accordingly terminated the contract and leased the property out between February 2020 and July 2021 before reselling it in October 2021 for a higher price. Although the vendor derived rental income from leasing out the property, she also continued to pay interest on the mortgage and other expenses.
96The main issue at trial was whether the purchasers (as plaintiffs) were entitled to be repaid the $309,000.00, primarily pursuant to s 49(2) of the Property Law Act 1958 (Vic). One of the contentions advanced by the purchasers was that, rather than suffering a loss, the vendor had enjoyed a “windfall” and stood in a better position than if there had been no breach of contract. This contention was apparently based on the fact that the vendor had not only retained the deposit but also resold the property for a higher price. The primary judge rejected this contention, holding that even if there had been a windfall in the vendor’s favour, that factor alone was an insufficient basis for the Court to exercise the s 49(2) discretion in favour of the purchasers.
97The primary judge went on later in his reasons to make a number of “additional observations”. As part of the additional observations, his Honour rejected the notion that the vendor was better off as a result of the purchasers’ breach, noting amongst other things that the vendor suffered some financial loss because, in the financial years ending 30 June 2020 to 2022, the income from leasing out the property was less than the expenses incurred. Further, his Honour observed that, by the time of the resale, the vendor’s personal circumstances had changed, as a result of which she incurred a significant capital gains tax (“CGT”) liability on the resale which she would not have faced if the original sale to the purchasers had settled.[36]
[36]See [2024] VSCA 85 at [23].
98The purchasers’ claim was dismissed by the primary judge. The purchaser applied for leave to appeal on the basis of four proposed grounds of appeal, the first of which is relevant for present purposes. The Court of Appeal described[37] that ground as: “The judge erred in considering an issue of capital gains tax without giving the parties notice that the issue might form a part of his reasoning and/or without inviting the parties to make submissions on the issue”. The applicants contended that there had been a denial of procedural fairness by the primary judge in dealing with the CGT issue, because that issue had not been pleaded by the respondent and the applicants had been prevented from cross-examining and addressing the Court about that issue. In addition, the applicants submitted that the primary judge had made errors of fact and law in dealing with the CGT issue.
[37][2024] VSCA 85 at [4].
99The Court of Appeal held that there was no substance in the first proposed ground of appeal. There had been no denial of procedural fairness in the judge’s consideration of the CGT issue and the applicants had not been denied the opportunity to cross-examine and address the Court.[38] Their Honours then stated that “[w]hat we have said above is sufficient to dispose of proposed ground 1”, but went on to say that “for completeness, we will briefly address the other submissions made by the applicants under cover of proposed ground 1”.[39]
[38][2024] VSCA 85 at [28]-[29].
[39][2024] VSCA 85 at [30], [32].
100In addressing the applicants’ other submissions, Beach and Orr JJA made a number of points. The final point, which is of particular relevance for present purposes, concerned a submission founded on condition 28.4. The applicants contended that the primary judge had erred in considering losses suffered by the respondent three years after the termination of the contract, when the contract “explicitly limited the consideration of losses to one year post-termination”. In rejecting this contention, the Court of Appeal said:[40]
“The applicants relied on the words ‘within one year’ in general condition 28.4(c) in support of their submission that the respondent could only claim losses incurred during the period of 12 months after the termination of the contract. The applicants’ submissions cannot be accepted for at least three reasons:
(1)First, the contract did not end by a default notice given by the respondent. It ended by the respondent accepting the applicants’ repudiation. No default notice was given by the respondent … and general condition 28.4(c) only operates if the contract has been brought to an end by the giving of a default notice by the vendor (respondent).
(2)Secondly, on its proper construction, general condition 28.4(c) does not limit a vendor to claiming losses incurred only within the 12 month period after the contract was terminated. The clause provided a time limit for taking proceedings in circumstances where the clause had operative effect.
(3)Thirdly, the respondent did not sue or purport to sue the applicants for damages for breach of contract, and there was thus no breach of any 12 month time limit contained in general condition 28.4(c) in any event.” (emphasis added)
[40][2024] VSCA 85 at [37].
101After going on to reject the other three proposed grounds of appeal, Beach and Orr JJA ultimately refused the application for leave to appeal.
102As to the Second Sentence, the plaintiff submitted that the Court of Appeal’s reference to the commencement of proceedings within one year was “a passing comment made in mere obiter”. She further submitted that the Second Sentence should be regarded as “mere dicta”, rather than considered analysis on a fully argued point, and accordingly given less weight.[41] The plaintiff also emphasised that the applicants’ reliance upon condition 28.4 in Gayed had been completely misconceived. Relatedly, the plaintiff noted that there was no consideration by the Court of the preceding authorities on the issue the subject of the present proceeding. I accept these submissions.
[41]The plaintiff referred in this regard to Massoud v Nationwide News Pty Ltd (2022) 109 NSWLR 468 at [40].
103The plaintiff also submitted that it was clear from the first sentence of sub-paragraph (2) of paragraph 37 of the Court of Appeal’s reasons that the Court was considering condition 28.4(c)(i), rather than the relationship between the time limit in the chapeau of condition 28.4(c) and the two components of condition 28.4(c)(ii) (that is, the resale of the property and the recovery of any price deficiency on resale). This was also said to be clear from sub-paragraph (3) of the reasons. I note, however, that the plaintiff also submitted elsewhere that it was unclear whether the Court of Appeal’s reasons were directed only to condition 28.4(c)(i) or also to condition 28.4(c)(ii). In my view, it is not possible to express a conclusion definitively either way. That said, the Second Sentence suggests, when read on its face, that the Court of Appeal was referring to condition 28.4(c) in its entirety.
E.5 Conclusion regarding the threshold issue
104Notwithstanding what I have said in paragraphs 102 and 103 above, the Second Sentence in Gayed must still be given a degree of weight. It is, after all, an expression of the unanimous view of two members of the Court of Appeal as to the operation of a condition identical to GC 35.4(c). Furthermore, it is clear from reading the relevant paragraph of Gayed that their Honours turned their minds to the role played by the reference to the one-year period in condition 28.4(c). That role, in their Honours’ opinion, is contrary to what is contended for by the plaintiff and consistent with what is contended for by the defendant.
105Furthermore, the Second Sentence is consistent with the opinion expressed by Tadgell J in Clovervale, and with what the Court of Appeal in Moffett understood Tadgell J to have opined. As I have observed above, none of the judges in Moffett held that Tadgell J was incorrect, or espoused a contrary opinion as to the meaning of the relevant condition.
106Clovervale is one of the only cases cited in which there has been any detailed discussion of the conditions in question. Another such case was McDonough. Given what I have said earlier in these reasons about McDonough (including its apparent inconsistency with the Second Sentence and with Clovervale (and therefore with Moffett)), I respectfully consider it neither necessary nor appropriate for me to follow McDonough in the present case.
107For the reasons which I have given earlier, the other authorities cited by the parties do not in my view assist in the resolution of the present issue.
108Accordingly, in summary, I consider the position to be as follows. The defendant’s construction of GC 35.4(c) is consistent with the position expressed in a very recent decision of the Court of Appeal, albeit by way of obiter, in respect of an identical contractual provision. It is also consistent with the opinion expressed by a single judge of the Supreme Court as to the effect of the reference to the one-year period in an analogous standard contractual condition. That opinion has in turn been referred to, and not departed from, by three members of the Court of Appeal. I therefore do not consider it appropriate for me, sitting as a Judicial Registrar of the County Court, to depart from the position expressed in those authorities or to approach the question afresh based on general principles of contractual construction.
109In conclusion, therefore, I accept the defendant’s submission that the plaintiff is precluded from recovering liquidated damages under GC 35.4(c)(ii) because of her failure to commence proceedings within one year of the termination of the Contract on 13 May 2022. That said, the practical consequence of this conclusion in the present case is limited, as will be seen below.
F. General principles re damages
110A number of the plaintiff’s losses were claimed as common law damages or pursuant to GC 32 for breach of contract. The losses were claimed on that basis either because they were of a kind falling outside GC 35.4(c)(ii), or as an alternative if the plaintiff’s primary claim founded on GC 35.4(c) failed because of the threshold point which I have discussed above. The defendant did not contend that common law damages for breach of contract were unavailable in principle.[42] Moreover, it is well-settled that GC 35.4(c) and its predecessors are enabling clauses introduced for the benefit of the vendor, which do not restrict the rights or remedies available to the vendor on the basis of general principles apart from and outside of the clause.[43]
[42]Cf Tymstock Pty Ltd v Patrick [2019] VCC 1092 at [57]-[62].
[43]See eg Berry v Mahony [1933] VR 314 at 321, 324; Victorian Economic Development Corporation v Clovervale Pty Ltd [1992] 1 VR 596 at 602-603.
111Neither party contended that any different result would be reached on the basis of the common law as opposed to GC 32 and, for simplicity, I will proceed upon the former basis. That is to say, where the plaintiff has advanced claims for common law damages or compensation under GC 32, I will treat these as claims for common law damages.
112The general principles applicable to the assessment of common law damages for breach of contract are not in doubt. Where a party sustains loss by reason of a breach of contract, that party “is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed”.[44] Once a defendant is shown to have breached a contract, it must be considered whether the loss being claimed was caused by the breach.[45] Causation in this sense involves a question of fact, ultimately to be resolved by common sense principles.[46] If causation is not established, the plaintiff will not be able to recover from the defendant.
[44]Robinson v Harman (1848) 1 Ex 850 at 855. See also eg Statewide Developments Pty Ltd v Higgins [2011] NSWCA 35 at [57].
[45]See eg Statewide Developments Pty Ltd v Higgins [2011] NSWCA 35 at [60].
[46]See eg Statewide Developments Pty Ltd v Higgins [2011] NSWCA 35 at [58].
113Relatedly, the plaintiff will not be able to recover the loss in question if the damage caused by the breach is too remote. It is in this context that the familiar two-limb principle in Hadley v Baxendale[47] is applicable. As the High Court has confirmed more recently:[48]
“That test starts with the facts of the breach of contract that occurred and asks whether, assessed at the date of the contract, it could be said that the damage from that breach arose “according to the usual course of things” or whether the damage could “reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it".
[47](1854) 9 Ex 341 at 354.
[48]Elisha v Vision Australia Limited [2024] HCA 50 at [61].
G. Losses claimed by the plaintiff
114I will turn now to each of the separate items or categories of loss claimed by the plaintiff.
G.1 Loss on resale
115The plaintiff claims the loss she incurred on the resale of the Property, being the $700,000.00 difference between the $3,600,000.00 purchase price agreed with Mr Panourakis under the Contract and the $2,900,000.00 agreed with the subsequent purchaser, Nihal Nanayakkara, in November 2022.
116The plaintiff’s primary position is that this amount is recoverable as liquidated damages under GC 35.4(c)(ii). For the reasons discussed in section E above, I do not consider such a claim to be open to the plaintiff.
117In the alternative, the plaintiff claims the $700,000.00 as general damages or pursuant to GC 32. The defendant accepts in his written closing submissions that, as a general principle, a shortfall upon resale may be recoverable at common law. The defendant’s written submissions do not specify any reason why the plaintiff should not be able to recover the shortfall of $700,000.00 in this case at common law. Nor did Mr Panourakis advance any such contention in his oral closing submissions when I invited him to elaborate on this aspect of his written submissions.
118I accept that the $700,000.00 loss on resale is recoverable by the plaintiff as common law damages. As the plaintiff submits, by reference to Clovervale,[49] a vendor’s damages for non-completion by a purchaser are generally to be measured as the difference between the contract price and the market value of the property as at the date of termination. I accept that the resale price in the present case is an appropriate proxy for the market value of the Property as at the date of termination, for the reasons identified by the plaintiff in her written submissions, namely:
(a) The Property was promptly marketed and advertised for resale in accordance with the advice of the plaintiff’s real estate agent. The plaintiff’s decision to accept the $2.9 million resale price was based on advice from her solicitors and real estate agent. The plaintiff also accepted that offer because it was the only offer that had been received and attempts had already been made, unsuccessfully, to elicit a higher price from the purchaser.[50]
(b) Although the defendant successfully obtained a mid-trial adjournment to enable him to obtain an expert report regarding the market value of the Property, he ultimately tendered no such report. Accordingly, the Court can infer that any such evidence would not have assisted the defendant’s case.
(c) The Property was resold again in December 2024 for $3.15 million,[51] a price which does not differ greatly from the $2.9 million price paid in November 2022, particularly when the effluxion of time is taken into account.
[49][1992] 1 VR 596 at 604.
[50]T28-29, 34, 45-47.
[51]T43-44.
119I also note that the use of the resale price as a proxy for market value is consistent with the approach taken by Neskovcin J in Ripani v Century Legend Pty Ltd (No 4)[52], by Judge Ryan in McGorlick,[53] by Tran JR in Coleston v Carney,[54] and by the NSW Court of Appeal in Palasty v Parlby.[55]
[52][2024] FCA 1211 at [292]-[295].
[53][2022] VCC 1229 at [94]-[102].
[54][2019] VCC 177 at [20] (fn 2).
[55][2007] NSWCA 345 at [7]-[12].
120Accordingly, I find that the plaintiff is entitled to the loss on resale in the sum of $700,000.00 as common law damages. I note for completeness that this is the same amount as the plaintiff would have been entitled to recover as liquidated damages pursuant to GC 35.4(c)(ii) if this proceeding had been commenced within one year of the termination of the Contract.
G.2 Interest on the balance of the purchase price
121The plaintiff claims interest on the unpaid balance of the purchase price from the day after settlement was due until the date of termination of the Contract. This claim is made pursuant to GC 33.
122The balance of the purchase price was $3,400,000.00. The relevant interest rate prescribed by the Contract is 2 per cent above the rate fixed pursuant to the Penalty Interest Rates Act 1983 (Vic), which was 10 per cent at the relevant time. Accordingly, the rate for the calculation of interest is 12 per cent. The time period in question is relatively short, from 27 April 2022 until 13 May 2022.
123The interest is calculated by the plaintiff as $19,002.74. The defendant took no issue with the calculation of this amount.
124I did not understand the defendant to contest the plaintiff’s entitlement to this amount. His written closing submissions simply state: “This appears to be recoverable”. I gave the defendant the opportunity during oral closing submissions to explain whether he opposed any heads of loss in respect of which his written closing submissions contained such a statement. He declined that opportunity.[56]
[56]T56-58.
125The plaintiff’s claim to interest under GC 33 for the period between settlement and termination is supported by Tymstock[57] and the recent decision of Judge Wise in McLennan v Dannaoui.[58]
[57][2019] VCC 1092 at [97], [114], [117].
[58][2024] VCC 1786 at [13], [21]-[74] (see in particular at [25]).
126Accordingly, I find that the plaintiff is entitled to interest on the unpaid purchase price for the period from 27 April 2022 until 13 May 2022, pursuant to GC 33, in the sum of $19,002.74.
G.3 Losses associated with the linked sale
127The plaintiff claims losses arising from her inability to complete the acquisition of the Rosebud Property. The amounts claimed comprise the forfeited deposit ($93,350.00), plus the amount paid pursuant to the Settlement Deed ($199,365.00). These amounts are claimed as common law damages or pursuant to GC 32.
128The plaintiff submits that, as a result of the defendant’s default, she and her husband were unable to settle the purchase of the Rosebud Property. Consequently, the $93,350.00 deposit was forfeited and the Hudsons’ claim was settled for a further $199,365.00. I will deal with these two amounts separately, beginning with the $199,365.00 settlement sum.
G.3.1 Settlement sum
129The plaintiff submits that, “given that [she] obtained legal advice, and acted in accordance with that legal advice to avoid incurring (and being exposed to being liable for) further legal costs in a dispute with the vendors of the Rosebud Property, the payment of $199,365.00 is also loss that was caused by the Defendant’s breach”. In support of this submission, the plaintiff cites the following evidence:
(a) First, an invoice from Ms Moorhouse-Perks, the narration of which states:
“To my professional fees in perusing Letter of Demand 11 November 2022 from White Cleland, advising that the vendors of 301 Waterfall Gully Road had quantified their claim at $315,654.56; liaising with you and with White Cleland, perusing without prejudice offer of 14 December 2022, perusing draft Terms of Settlement sent by White Cleland, discussing same with you, accepting offer of 14 Dec 2022 after your instructions to do so”.
(b) Secondly, an invoice from Mr Gary Riordan, a solicitor retained by the plaintiff, dated 28 January 2023 and headed “Breach of contract claim”. The narration reads: “Provision of legal advice in respect to the default and then claim for economic loss arising from the breach of contract by the former purchaser of the contract for the sale of 192 beach Road Sandringham.” The header of the invoice describes Mr Riordan as a “Financial Services Lawyer”.
(c) Thirdly, the following evidence given by Ms Grusauskas in chief:[59]
[78](1989) 171 CLR 125.
[79][2007] NSWCA 345.
157Palasty was a case, like the present, in which the purchaser failed to complete a contract for the sale of land and the vendor consequently terminated the contract. The Court of Appeal upheld the vendor’s claim for interest damages for the delayed receipt of the balance of the purchase money up to the date of completion of the resale contract. For reasons which are not readily apparent, the interest damages in Palasty were not calculated by reference to the actual interest expenses incurred by the vendor, but by taking the outstanding purchase price balance and applying the rates of interest set out in Schedule 5 to the Uniform Civil Procedure Rules 2005 (NSW).[80]
[80]See [2007] NSWCA 345 at [35]-[38].
158In Palasty, after referring to Hungerfords v Walker, Mason P observed[81] that “[i]nterest damages are now recoverable in a proper case”. His Honour went on:[82]
“Hadley v Baxendale principles still apply with regard to this as with any other component of a contract damages award.
In the instant case the contract was designed, from the vendor’s point of view, to convert the property into cash needed for acquiring an alternative home. While this was known to both parties the vendor’s loss in the timely receipt of the purchase moneys really fell within the first limb of Hadley v Baxendale. It was a demonstrable loss incurred directly in consequence of the purchaser’s failure to complete on the due date. Instead of getting the entire sale value of the property by that date, the vendor, having elected to terminate, was obliged to set about reselling the property in order to get its anticipated cash value. …
The primary judge was therefore correct in awarding interest damages for the delayed receipt of the balance of the purchase money between the date of termination and the date when the relevant loss came to an end with completion of the resale contract. Interest damages spanning this full period depended upon the vendor showing, as he did, that he acted diligently in his efforts to resell.
It would be anomalous if the vendor could not recover damages in the nature of interest from the defaulting purchaser for the delayed receipt of the balance of the purchase price. It has long been established that a purchaser can recover damages for loss of the net rents and profits due to delayed performance by the vendor. …”
[81][2007] NSWCA 345 at [51].
[82][2007] NSWCA 345 at [52]-[55].
159Palasty was referred to by the NSW Court of Appeal in Statewide Developments Pty Ltd v Higgins,[83] in which the vendor claimed damages including interest that it continued to pay on finance obtained to complete the development in which the subject property was situated. The Court of Appeal in Statewide appears to have accepted that Palasty would, as a matter of principle, have permitted recovery of the interest expense claimed by the vendor in Statewide.[84] However, the Court ultimately concluded that the evidence was insufficient to found a conclusion that the interest expense had been caused by the purchaser’s breach of contract.[85] Rather, the vendor had retained the property for a period of several years between the date of the breach and the date of the trial and had not demonstrated that its failure to sell the property promptly was due to the purchaser’s breach as opposed to decisions made by the vendor. The Court noted that this question of causation had not been an issue in Palasty because the vendor in that case had promptly put the house back on the market after termination of the initial contract.[86]
[83][2011] NSWCA 35.
[84][2011] NSWCA 35 at [61]-[63].
[85][2011] NSWCA 35 at [69]-[73].
[86][2011] NSWCA 35 at [63].
160In McLennan v Dannaoui,[87] the plaintiff vendors sought, amongst other things, interest on the sale proceeds between the date on which the first contract was rescinded for the defendant’s breach and the date on which the resale contract settled. Judge Wise observed[88] that this was in substance a claim for interest under Hungerfords v Walker. His Honour went on:[89] “In such cases damages are claimed for the loss of use of money that should have been paid to the plaintiff at an earlier date. Sometimes it may be based on the fact that the plaintiff had a loan which it can demonstrate would have been paid down, thus saving it the contractual interest it had to pay”. However, in McLennan, there was no evidence of any such loan, or indeed any use to which the moneys in question would have been put, and accordingly the Hungerfords claim failed for want of evidence.
[87][2024] VCC 1786.
[88][2024] VCC 1786 at [97].
[89][2024] VCC 1786 at [98].
161In the present case, unlike McLennan, there was evidence of the plaintiff’s mortgage account and the interest which she incurred thereon during the relevant period. Furthermore, Ms Grusauskas gave the following unchallenged evidence in chief:[90]
“Had the sale settled on 26 April [2022], what would you have done with the sale proceeds?---I would’ve paid the loan out.
And what happened because you didn’t pay the loan out?---I incurred interest.
And is that interest recorded in these statements here?---Yes, it is.
And did you ultimately pay off these loans?---Sorry, can you repeat that?
Did you end up paying off these loans subsequently?---Yes, I did, yes.
Approximately when did that occur?---13 January 2023.”
[90]T37.
162I also note that in the present case, unlike Statewide, there was no suggestion that the plaintiff had not acted promptly to resell the Property. Nor could there have been. The defendant was still foreshadowing the potential settlement of the purchase as at late May 2022. Ms Grusauskas appointed Nick Johnstone RE to re-market the Property on 17 June 2022, whereafter the Property remained on the market until its eventual resale in November 2022.
163The defendant opposed this claim on a number of grounds. First, he contended that it is not a claim which is compensable at law, citing Carpenter v McGrath[91] and Bill v Clarke.[92]The plaintiff submitted that those cases are distinguishable on the basis that the vendor in each of them, unlike Ms Grusauskas, had elected to retain permanently, and not resell, the property in question, and this election was critical to the outcome of those cases. I accept the plaintiff’s submission. In each of those cases, the Court concluded that the mortgage interest could not be awarded to the vendors because, having chosen to retain the property, the vendors were exposed to the ongoing interest payments as a result of their own choice, rather than as a result of any breach by the purchaser. The disallowance of the interest claim in Statewide occurred for similar reasons.[93]
[91](1996) 40 NSWLR 39 at 44, 72-73.
[92][2015] VCC 1721 at [182]-[188].
[93]See [2011] NSWCA 35 at [71]-[72].
164The second ground of the defendant’s opposition is that the loss does not flow from the breach. The defendant’s written submissions do not elaborate on why this is said to be so. It is also unclear whether the submission is based upon an alleged absence of causation or upon remoteness. Insofar as the submission is based upon the former, I do not accept it. If the defendant had not breached the Contract, the sale would have settled and the plaintiff would have received the full purchase moneys on the settlement date. As I have recorded above, the plaintiff’s evidence was that she would have used those moneys to pay off the mortgage but, because she did not receive those moneys, she could not do so until the resale settled. Consequently, she incurred interest on the outstanding mortgage balance in the meantime. Further, like the vendor in Palasty and unlike the vendor in Statewide, the plaintiff promptly put the Property back on the market following the failed sale. Accordingly, I do not accept that the plaintiff’s incurring of the interest expense was not caused by the defendant’s breach. Insofar as the submission is based upon remoteness, it is inconsistent with the observation of Mason P in Palasty that the vendor’s loss in the timely receipt of the purchase moneys fell within the first limb of Hadley v Baxendale (see paragraph 158 above).
165The third ground of the defendant’s opposition is that it is not known whether the debit balance of the mortgage account relates to the Property. I accept the plaintiff’s submission that this is not relevant. I have already explained how it is that the defendant’s failure to settle the purchase of the Property resulted in the plaintiff incurring interest expense which, in the absence of the defendant’s failure, would not have been incurred.
166The fourth and final ground of the plaintiff’s opposition is that “the plaintiff appears to have access to other funds but has not used this to reduce or offset any interest”. No evidence was cited in support of this submission. Nor did the defendant identify, even in general terms, what was said to be the source of the “other funds” or why or how it was said that the plaintiff had access to those funds. There is no substance in this ground.
167For the reasons discussed above, and particularly having regard to Palasty, I am satisfied that it is appropriate to award the plaintiff interest damages quantified by reference to the interest which accrued on her mortgage during the relevant period.
168As to the relevant period, I have concluded in section G.2 of these reasons that the plaintiff is entitled to interest under GC 33 on the unpaid purchase price between the day after settlement was due (27 April 2022) and the day of termination of the Contract (13 May 2022), in the sum of $19,002.74. Under the current head of loss, the plaintiff in substance claims interest between 26 April 2022 and 13 January 2023 on that part of the unpaid purchase price which she would have applied to pay down her mortgage. In order to avoid double recovery, I consider it appropriate to award the mortgage interest incurred from 14 May 2022 (rather than the earlier date of 26 April 2022) until 13 January 2023. Put another way, the plaintiff is entitled to the amount of $45,473.13 which she claims, less the mortgage interest referable to the period between 26 April 2022 and 13 May 2022. My calculation, based on the Bank of Melbourne statements which were in evidence, is that the mortgage interest referable to that period totals $2,250.09, meaning that the plaintiff is entitled to $43,223.04. However, I am prepared to give the parties the opportunity to verify this figure before any final orders are made.
169For completeness, I accept that it is unnecessary and inappropriate to set off against the abovementioned interest sum any amount to reflect the time during which the plaintiff went into reoccupation of the Property. That reoccupation did not occur for some time after the failed settlement date of 26 April 2022, because of the ongoing possibility that the sale to the defendant might settle at a later date. In the meantime, the plaintiff and her husband stayed with friends and family members.[94] When the plaintiff moved back into the Property, it was the subject of a marketing process from 17 June 2022 until its resale in November 2022, with open for inspections occurring over a number of months.[95] Further, the plaintiff’s household belongings had been packed up and taken away by removalists on the intended linked settlement date of 26 April 2022, and not all of them were unpacked after the removalists returned them to the Property, because the Property was back on the market.[96] The plaintiff’s reoccupation in those circumstances was in my view an occupation of the “precarious” kind referred to by Young J in Jampco Pty Ltd v Cameron (No 2)[97].
[94]T27-28.
[95]T28-29.
[96]T28, 36.
[97](1986) NSW Conv R 55-275 at 56,585. See also Palasty [2007] NSWCA 345 at [59]-[61].
170Accordingly, I find that the plaintiff is entitled to interest damages reflecting the interest accrued on her mortgage between 14 May 2022 and 13 January 2023, being the sum of $43,223.04 – subject to the parties’ verification of my calculation referred to in paragraph 168 above.
G.5 Costs of advertising on resale
171The plaintiff claims the advertising expenses incurred in relation to the resale of the Property. She contends that these are claimable either under GC 35.4(c)(ii) as “resulting expenses”, or alternatively as general damages.
172For the reasons which I have given earlier in relation to the threshold issue, the plaintiff is unable to claim the advertising expenses under GC 35.4(c)(ii).
173However, I accept the plaintiff’s alternative contention, based upon Riggall v Thompson,[98] that those expenses are recoverable as common law damages. Further, the defendant states in his written submissions in respect of the advertising expenses: “This appears to be recoverable at common law”.[99]
[98][2010] QCA 144 at [21]-[22] and [27]-[28].
[99]The defendant cites Sedrak v Starr (No 2) [2009] NSWSC 1178 at [77], which concerns recoverability of agent’s commission on a resale.
174Accordingly, I find that the plaintiff is entitled to recover $5,372.00 as general damages in respect of advertising costs on the resale of the Property.
G.6 Legal costs
175The plaintiff claims total legal costs of $6,948.70, comprising the following four component amounts:
(a) legal costs of $2,360.90 payable to Ms Moorhouse-Perks in respect of the resale;
(b) legal costs of $352.80 payable to Ms Moorhouse-Perks in respect of the Default Notice;
(c) legal costs of $2,035.00 payable to Mr Riordan for “advice in respect of the default and claim for economic loss arising from the breach of contract by the defendant”;
(d) legal costs of $2,200.00 payable to Hall & Wilcox in respect of “the preparation of a letter of demand to the defendant”.
176The plaintiff’s submissions state that she claims these four sums as common law damages in accordance with Riggall or, to the extent that they relate to the resale, as “resulting expenses” under GC 35.4(c)(ii). Because of my conclusion in relation to the threshold issue, all four sums fall to be considered on the basis that they are claimed as common law damages.
177As to the first component amount, the legal costs in question relate to the resale. The costs are evidenced by a tax invoice from Ms Moorhouse-Perks dated 13 January 2023.
178I consider these costs to be recoverable as common law damages, based on Riggall.[100]I further note that the defendant accepts in his written submissions that the $2,360.90 appears to be recoverable on that basis.
[100][2010] QCA 144 at [27]-[28].
179As to the second component amount, the legal costs in question concern the defendant’s breach of the Contract. The costs are evidenced by a tax invoice from Ms Moorhouse-Perks dated 13 January 2023. The defendant accepts in his written submissions that the $352.80 appears to be recoverable at common law. I am satisfied these costs are recoverable as common law damages based upon Riggall.[101]
[101][2010] QCA 144 at [20].
180The third component amount is evidenced by the invoice from Mr Riordan, which I have described in more detail at paragraph 129(b) above.
181The plaintiff submits that these costs arise out of the defendant’s breach, are foreseeable under the first limb of Hadley v Baxendale, and are recoverable consistent with Riggall.[102]
[102][2010] QCA 144 at [20].
182The defendant contends that these costs are not a loss flowing from the defendant’s breach. He says that the date of the invoice, 28 January 2023, is well after the signing of the Rosebud Contract on 26 February 2022 and well after the execution of the Settlement Deed on 20 December 2022. He contends that, having regard to the timing, the advice appears to have been provided after the resale of the Property in November 2022. However, this latter contention does not appear to be consistent with the evidence. Ms Grusauskas gave evidence during re-examination[103] that, in making the decision to accept or reject the offers which she received on the resale of the Property, she took advice from persons including Mr Riordan. It is not apparent how the defendant’s position is advanced by his other contentions regarding the date of the invoice.
[103]T47.
183The defendant also submits that there is no evidence about the content of the advice and that the Court cannot conclude that the advice is sufficiently referable to any breach of the Contract. I do not accept this submission. Whilst the advice itself was not in evidence, the narration – which I have set out in paragraph 129(b) above – makes it clear that the subject matter of the advice was the defendant’s breach of the Contract.
184The defendant further submits that, taken to its logical conclusion, acceptance of Mr Riordan’s fees as part of the plaintiff’s loss and damage would mean that all of the plaintiff’s legal costs associated with the present proceeding would fall into the same category. I do not accept that this is so. The invoice is dated January 2023 and, based on Ms Grusauskas’ evidence, relates to advice that was provided at least in part prior to the entry into the resale contract on 1 November 2022. It may be that the advice of Mr Riordan ultimately influenced the plaintiff to commence the present proceeding, but I do not consider that Mr Riordan’s invoice would form part of the plaintiff’s costs of this proceeding. As the plaintiff points out in her reply submissions, Mr Riordan’s invoice significantly pre-dates the commencement of this proceeding on 19 June 2023. His fees do not strike me as being “costs of … preparatory steps … shown to be reasonably connected with the proceeding”,[104] so as to bring those fees within the costs of this proceeding which might ultimately be awarded in favour of the plaintiff.
[104]See Fifteenth Eestin Nominees Pty Ltd v Rosenberg (No 2) [2009] VSCA 178 at [9], citing Re Hudson (1986) 11 FCR 141 at 143-144.
185I accept the plaintiff’s position that Mr Riordan’s fees are legal costs arising out of the defendant’s breach and fall within the first limb of Hadley v Baxendale. The plaintiff was placed in a difficult position as a result of the defendant’s breach. It is unsurprising that a vendor in her position, consequent upon such a breach, would seek legal advice as to the rights of which she might avail herself and as to her position in relation to the resale of the Property which the defendant had originally contracted to purchase. Accordingly, I would allow the plaintiff’s claim for Mr Riordan’s fees of $2,035.00.
186The fourth component amount is evidenced by an invoice from Hall & Wilcox dated 31 March 2023. The plaintiff claims this amount on the same legal basis as Mr Riordan’s fees.
187The subject line of the Hall & Wilcox invoice is “Dispute regarding 192 Beach Road Sandringham”. The invoice attaches a more detailed schedule identifying that the work in question was carried out on various dates between 10 February and 21 March 2023. Details of the work and the person performing it on each date are also set out in the schedule.
188The defendant makes the same submissions in respect of these costs as he did in respect of Mr Riordan’s fees. He adds that the Hall & Wilcox fees concern the preparation of the plaintiff’s pre-action letter of demand, and notes that that letter is pleaded in paragraph 10 of the statement of claim. He contends that the letter was prepared solely for the purpose of this proceeding.
189Whilst I considered the costs of Mr Riordan’s advice to be separate from the costs of this proceeding, it seems to me that the Hall & Wilcox fees fall on the other side of the line. Unlike Mr Riordan, Hall & Wilcox are the solicitors on the record for the plaintiff in this proceeding. Further, as the defendant points out, the letter of demand appears to have been a precursor to the filing of the statement of claim, in which that letter is expressly pleaded. The letter of demand, and the Hall & Wilcox invoice, are also temporally closer to the commencement of the proceeding than Mr Riordan’s advice and invoice.
190Further, a number of the entries in the schedule to the Hall & Wilcox invoice refer to work which would likely overlap with work required for the purposes of the present proceeding – for example, the carrying out of conflict searches, the drafting of an engagement agreement, the collation of supporting documentation, and the preparation of a schedule of loss. I also note in this context that, as well as appearing as an attachment to the letter of demand, the schedule of loss appears, in a very slightly modified form, as an attachment to the statement of claim.
191I further consider it relevant that, when asked in examination in chief what the Hall & Wilcox invoice related to, Ms Grusauskas responded:[105] “This was when I approached Hall & Wilcox to commence legal proceedings to try and get some funds back”.
[105]T34.
192In Coleston,[106] Tran JR considered it appropriate that costs of the proceeding, from the commencement of preparation for the proceeding onwards, be considered separately as the costs of the proceeding rather than as a head of damages. This is consistent with the longstanding principle that a successful plaintiff cannot recover their costs of legal proceedings from a defendant as damages.[107]
[106][2019] VCC 177 at [25]-[26].
[107]See, generally, Dal Pont, Law of Costs, 5th ed (2021), at [7.21].
193Accordingly, I do not consider the plaintiff to be entitled to damages reflecting the costs the subject of the Hall & Wilcox invoice. It seems to me that those costs more properly form part of the plaintiff’s costs of this proceeding.
194The net result of the discussion above is that I would award the plaintiff the following amounts as common law damages:
(a) $2,360.90 in respect of legal costs payable to Ms Moorhouse-Perks;
(b) $352.80 in respect of legal costs payable to Ms Moorhouse-Perks; and
(c) $2,035.00 in respect of legal costs payable to Mr Riordan.
G.7 Credit for deposit forfeited
195It was not in dispute that the sum of $200,000.00, being the forfeited deposit, should be deducted from the amount which would otherwise be awarded to the plaintiff.
G.8 Interest
196Finally, the plaintiff claims interest on any amounts found to be owing. By way of summary, the amounts to which I have found the plaintiff entitled are:
(a) $510,120.70 as common law damages, comprising:
(i)$700,000.00 in respect of the loss on resale of the Property;
(ii)$5,372.00 in respect of advertising costs of the resale;
(iii)$4,748.70 in respect of legal costs;
(iv)the deduction of the $200,000 forfeited deposit.
(b) $19,002.74 in interest on the unpaid purchase price for the period 27 April 2022 to 13 May 2022, pursuant to GC 33.
(c) $43,223.04[108] in interest damages reflecting the interest on the plaintiff’s mortgage between 14 May 2022 and 13 January 2023.
[108]Subject to the parties’ verification of my calculations, as I have indicated above.
197The plaintiff claims interest under s 60 of the Supreme Court Act 1986 (Vic) from the date of commencement of the proceeding to the date of judgment on amounts awarded as common law damages. I accept that the plaintiff is entitled to interest on the abovementioned sum of $510,120.70, calculated at the rate of 10 per cent per annum,[109] from 19 June 2023 to the date on which the Court makes orders reflecting these reasons.
[109]The rate fixed under s 2 of the Penalty Interest Rates Act 1983 (Vic) during the relevant period.
198The plaintiff claims interest on the $19,002.74 referred to in paragraph 196(b) above, pursuant to GC 33. She submits, based upon Tymstock,[110] that interest on that amount is payable pursuant to GC 33 from the date of termination of the Contract to the date of judgment. I accept that such an award of interest was made by Judge Woodward in Tymstock in favour of the wronged vendor.[111] However, as I have observed in paragraph 60(a) above, the equivalent of GC 33 under consideration in Tymstock (condition 26) did not contain the words “at settlement” which appear in GC 33. Accordingly, it becomes necessary to consider whether the presence of those words in GC 33 alters the position.
[110][2019] VCC 1092 at [117].
[111][2019] VCC 1092 at [115]-[117].
199In McLennan, Judge Wise considered the defaulting purchaser’s submission that the presence of the words “at settlement” in GC 33 meant that interest on the unpaid purchase price would only be payable pursuant to GC 33 in the event that settlement actually occurred. His Honour rejected that submission, holding that GC 33 entitled the vendors to interest on the unpaid purchase price from the date on which settlement was due until the date on which the contract ultimately ended pursuant to the rescission notice served by the vendors. (As I have stated in section G.2 of these reasons, I consider Ms Grusauskas to be entitled to such an award of interest.) That entitlement was not affected by the fact that settlement did not actually occur. His Honour’s conclusion was therefore consistent with the conclusion reached by Judge Woodward in Tymstock, in which the corresponding condition did not contain the words “at settlement”. Judge Wise summarised the position as follows:[112]
“For the following reasons I would construe GC33 as imposing on a defaulting purchaser an independent obligation to pay interest to the vendor during the period commencing on the default – in this case the missed contractual settlement date – and ending on the termination of the contract 14 days after service of the notice of rescission.”
[112][2024] VCC 1786 at [25].
200Unlike Ms Grusauskas, it does not appear that the vendors in McLennan sought interest under GC 33 on the interest which had accrued on the purchase price between the contractual settlement date and the date on which the contract ended. Accordingly, the present issue did not fall for determination in McLennan. However, I consider it relevant for present purposes that Judge Wise expressed the following view in relation to the words “payable at settlement”:[113]
“It is my view that those words serve to identify the time at which the interest that accrues during the period of default must be paid. It specifies that the payment of interest must be made on the delayed date for settlement and not before that date or after it. They serve to defer the obligation to pay interest which accrues ‘during the period of default’ to the settlement date, absent some other event which might bring forward that obligation to pay”.
[113][2024] VCC 1786 at [36].
201Having regard to this passage, and indeed the words of GC 33 itself, I do not consider GC 33 to confer upon the plaintiff an entitlement to interest on the $19,002.74 between the date of termination of the Contract and the date of judgment. I am unable to see how a condition entitling the offended party to be paid a sum of interest on the settlement date (regardless of whether or not settlement actually occurs) can entitle that party to be paid interest which accrues after that date and, indeed, after the Contract has ended. That is to say, I consider the presence of the words “at settlement” in GC 33 to lead to a different result in the present case in relation to “interest on interest”, than was reached in Tymstock in the absence of those words in the relevant condition.
202In the alternative, the plaintiff claims interest under the Supreme Court Act. In Tymstock,[114] Judge Woodward held that interest on the unpaid balance of the purchase price between the missed contractual settlement date and the date of termination was a sum certain that became money owing under the contract on and from the date on which the contract ended. Based upon his Honour’s discussion of the nature of that sum, I am satisfied that it is appropriate to award interest on the $19,002.74 pursuant to s 58 of the Supreme Court Act from 13 May 2022 until the date of judgment. As with interest under s 60 (see paragraph 197 above) the relevant interest rate for the purposes of s 58 is 10 per cent per annum.
[114][2019] VCC 1092 at [115]-[117].
203As to the $43,223.04 referred to in paragraph 196(c) above, no submissions were made in relation to interest on that sum. I do not say that by way of criticism; the plaintiff claimed various items of loss on various alternative bases and it would not have been efficient or sensible to address the question of interest in relation to all possible outcomes. Insofar as the plaintiff may seek to claim interest on that sum, I propose that the parties attempt to reach agreement on that issue and, if they cannot, I will invite them to make brief submissions on the issue so that I can determine it.
Conclusion
204I have set out in paragraph 196 above the amounts which I have found the defendant liable to pay to the plaintiff. I have also set out in paragraphs 197 and 202 above the relevant parameters for the calculation of interest on those amounts. The only potential outstanding matters are the parties’ verification of my calculation of the $43,223.04 referred to in paragraph 196(c) above, and the question of interest on that amount as explained in paragraph 203 above.
205I also propose to order that the defendant pay the plaintiff’s costs of and incidental to the proceeding (including reserved costs) on the standard basis, unless the parties bring to my attention any matters which suggest that a different costs order would be appropriate.
206The parties are directed to provide my associate, within 14 days of the delivery of these reasons, an agreed draft order disposing of the proceeding consistent with these reasons or, if agreement cannot be reached, their competing draft orders. Depending upon what is received from the parties, I will then consider the necessary next steps to finalise the matter, including whether any further submissions are required.
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Certificate
I certify that these 61 pages are a true copy of the judgment of Judicial Registrar Bennett delivered on 29 May 2025.
Dated: 29 May 2025
Tae Fabricato
Associate to Judicial Registrar Bennett
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