Gullaci & Gullaci v Borromeo

[2007] SASC 70

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

GULLACI & GULLACI v BORROMEO

[2007] SASC 70

Judgment of The Honourable Justice Duggan

5 March 2007

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH - REPUDIATION AND NON-PERFORMANCE - REPUDIATION - GENERAL PRINCIPLES

DAMAGES - MEASURE AND REMOTENESS OF DAMAGES IN ACTIONS FOR BREACH OF CONTRACT - REMOTENESS - LOSS OF PROFITS

Agreement for joint venture to develop land - repudiation of contract by defendant - damages sought for expenses incurred and loss of opportunity to share in profit - no appearance by defendant - judgment entered for plaintiffs for damages to be assessed pursuant to Supreme Court Rules 1987 r 23.01 and r 75.04 - damages awarded.

Supreme Court Rules 1987 r 23.01, r 75.14, referred to.

GULLACI & GULLACI v BORROMEO
[2007] SASC 70

Civil

1. DUGGAN J.         The defendant is the registered proprietor of a parcel of land situated at Two Wells.  A house is erected on a section of the land which comprises approximately 5,000 square metres.  The remainder of the parcel (“the vacant land”) comprises approximately 6.31 hectares.

2. The plaintiffs seek damages for breach of a contract entered into between Mr Gullaci on behalf of the plaintiffs and the defendant.  According to the statement of claim, the defendant agreed to sell a half interest in the vacant land to the plaintiffs for the sum of $50,000.  It was further agreed that the plaintiffs and the defendant would subdivide the land into housing allotments and then sell the individual allotments, the profit to be divided equally between the plaintiffs on the one hand and the defendant on the other.

3. According to the statement of claim, the plaintiffs incurred expense in preliminary work on the proposed development.  However, the defendant then purported to repudiate the agreement.  The plaintiffs’ claim for damages is based on the plaintiffs’ expenditure on the project and their loss of the opportunity to share in the profits which would have resulted from the development.

4. The defendant filed a defence on 12 January 2006 and the plaintiffs filed a reply on 3 March 2006.  The matter was then set down for trial to commence on Monday 5 February 2007.

5. Originally, the defendant was represented by solicitors.  However, upon application by the solicitors, the court made an order on 29 January 2007 declaring that the solicitors had ceased to be the solicitors for the defendant.

6. It became apparent to the plaintiffs’ solicitors prior to the commencement date of the trial that the defendant was not going to attend the trial. The defendant was advised that the plaintiffs proposed to apply for judgment to be entered in their favour pursuant to SCR 75.14 of the Supreme Court Rules 1987. SCR 75.14(1) provides as follows:

   If, when an action is called on for trial, the plaintiff appears and the defendant does not appear, then the plaintiff, in all cases in which he, she or it would have been entitled to final judgment for the whole or any part of their claim had default been made in filing a notice of address for service, shall be entitled to judgment for the whole or such part of their claim, and in other cases may prove their claim so far as the burden of proof lies upon them.

7. SCR 23.01 outlines the remedies available to a plaintiff where a defendant fails to file a notice of address for service within the prescribed time.  In so far as it is relevant, SCR 23.01(b) provides:

   Where a defendant fails to file his notice of address for service within the prescribed time and:

   . . . . . .

   (b)the relief or portion of the relief claimed is for pecuniary damages, or for detention of goods with or without a claim for pecuniary damages, the plaintiff may enter interlocutory judgment for assessment of his claim for damages or detention.  The assessment shall be made by a Master, unless the Court otherwise directs.

8. The defendant did not appear when the matter was called on for trial and, on the application of counsel for the plaintiffs, I entered judgment for the plaintiffs for damages to be assessed.

9. The plaintiffs then called evidence in support of their claim for damages.

10. The first plaintiff, Mr Gullaci, gave evidence.  I have no reason to doubt the truth and accuracy of his evidence.  He said that he paid $50,000 to the defendant for the plaintiffs’ interest in the land.  Then, on 20 July 2003, the defendant granted an enduring Power of Attorney to the plaintiffs to attend to matters relating to the proposed sale of the land.

11. The plaintiffs then engaged the services of Veska & Lohmeyer Pty Ltd, licensed surveyors, to prepare a plan for the sub-division of the land.  The plaintiffs paid accounts totalling $6,886.46 for these services.  They paid a further amount of $903.00 for development application fees and $1,496.00 for engineering fees.  $1,851.20 was paid to an accountant engaged by the plaintiffs and the defendant to give financial advice in relation to the proposed development.  The total outlay, including the amount paid for the plaintiffs’ half share of the land, was $61,136.66.

12. There is a further claim for loss of profits.  Mr Guerrera, a licensed surveyor was called to give evidence on this issue.  Mr Guerrera, is a director of Structural Civil Engineering Australia.  He has extensive experience in advising on land divisions and the costs and profits associated with them.  He was able to derive considerable assistance in the valuation of allotments in the area by reference to an adjoining sub-division which has been developed recently.

13. Mr Guerrera made his assessment based on the plan which had been prepared and which provided for the creation of 40 housing allotments.

14. After taking into account the estimated total return from the sales of the allotments and deducting the expenditure required for the development, he estimated that the project would return a net profit of $1,215,000.00.  Written reports setting out the method of valuation used by him and the relevant calculations were tendered.

15. I accept Mr Guerrera’s evidence and the opinions which he has expressed.  In my view he has arrived at a fair and accurate assessment of the potential return from the project.  I assess the plaintiffs’ loss of profit at one-half of the total estimated profit.

16. The plaintiffs are entitled to an award of damages calculated as follows:

Expenses incurred on project including purchase of share of land	17             $ 61,136.66
Loss of profit	18             $607,500.00
TOTAL	19             $668,636.66

1. There will be judgment for the plaintiffs against the defendant in the sum of $668,636.66.