Kerrell-Vaughan v Ravenscroft [No 2]
[2021] WADC 71
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: KERRELL-VAUGHAN -v- RAVENSCROFT [No 2] [2021] WADC 71
CORAM: WHITBY DCJ
HEARD: 23 JUNE 2021
DELIVERED : 8 JULY 2021
FILE NO/S: CIV 2770 of 2020
BETWEEN: GUY WILLIAM KERRELL-VAUGHAN
First Plaintiff
FIONA JANE KERRELL-VAUGHAN
Second Plaintiff
AND
PETER EDWARD RAVENSCROFT
First Defendant
PENELOPE ISOBEL RAVENSCROFT
Second Defendant
Catchwords:
Appeal from registrar - Plaintiffs' application for summary judgment for quantified amount - Order 14 of the Rules of the Supreme Court 1971 (WA) - Contract for the sale of land - Defendants failed to settle - Shortfall upon sale - 12 months before contract terminated - Ordinary measure of damages - Whether plaintiffs failed to mitigate loss
Legislation:
District Court Rules 2005 (WA)
Rules of the Supreme Court 1971 (WA)
Supreme Court Act 1935 (WA)
Result:
Appeal allowed
Judgment for the plaintiff for a quantified amount
Representation:
Counsel:
| First Plaintiff | : | Mr T O Coyle |
| Second Plaintiff | : | Mr T O Coyle |
| First Defendant | : | In person |
| Second Defendant | : | In person |
Solicitors:
| First Plaintiff | : | Peter May Commercial Lawyer |
| Second Plaintiff | : | Peter May Commercial Lawyer |
| First Defendant | : | Not applicable |
| Second Defendant | : | Not applicable |
Case(s) referred to in decision(s):
Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552
Ansearch Ltd v Wavtech Pty Ltd [2006] WASC 184
Blythe v The State of Western Australia [2008] WASCA 10
Cheney v Moore [2020] WASC 227
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Gel Custodians Pty Ltd v Dewar [2014] WASC 177
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Gerrard v Wang [2015] WASC 173
Hazart Pty Ltd v Rademaker (1993) 11 WAR 26
Kezic v St John of God Health Care Inc [2015] WASCA 220
Miles v Bull [1969] 1 QB 258
Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109
Newmarket Corporation Pty Ltd v Kee-Vee Properties Pty Ltd [2003] WASC 157
Webster v Lampard (1993) 177 CLR 598
Wedge v Service Finance Corp Ltd in its capacity as responsible entity for the Countrywide Select Mortgage Income Trust [2002] WASCA 54
Westpac Banking Corporation v Anderson [2017] WASC 106
WHITBY DCJ:
This is an appeal from a decision of Registrar Kingsley on 23 April 2021 dismissing the plaintiffs' application for summary judgment in relation to quantum of damages pursuant to O 14 of the Rules of the Supreme Court 1971 (WA) (RSC). This appeal is made pursuant to r 15 of the District Court Rules 2005 (WA) (DCR). As I propose to allow the appeal and order summary judgment for a quantified amount, I make it clear at the outset that the material before me was more expansive than the material that was before the learned registrar.
Overview
The plaintiffs owned 5 Redwood Close in West Busselton (Property). On 8 June 2018, the plaintiffs and the defendants entered into a written contract (Contract) for the sale of the Property for $840,000 (Purchase Price).
The defendants were supposed to settle on the Property by 14 September 2018. They did not complete settlement by that date or at all.
The Property remained on the market for sale. However, the plaintiffs did not terminate the contract with the defendants until 5 February 2020.
The plaintiffs eventually sold the Property to alternative purchasers on 7 February 2020 for $750,000 (Resale Purchase Price).
The plaintiffs commenced these proceedings claiming loss and damage for the shortfall in the price of sale of the Property, together with holding costs, interest and legal costs.
The plaintiffs applied for summary judgment on the basis that the defendants had no reasonable defence to the claim.
The defendants opposed the application for summary judgment on the basis that the plaintiffs received a lower price for the Property because the plaintiffs failed to maintain the Property.
Registrar Kingsley made orders for judgment on liability but gave the defendants leave to defend on the issue of the quantum of damages. The learned registrar found that the defendants may have an arguable defence to the amount of damage suffered by the plaintiffs because the plaintiffs, in not terminating the Contract in a more timely fashion, failed to mitigate their damage.
The plaintiffs now appeal against the decision of the learned registrar to give leave to the defendants to defend on the issue of the quantum of damages.
For the reasons that follow, I will allow the appeal and make orders for judgment for the plaintiffs for a quantified amount.
Issues for determination
The defendants have not cross-appealed against the decision of the registrar to grant summary judgment on the issue of liability. Therefore, I am only required to determine whether the plaintiffs should be granted summary judgment on the issue of the quantum of damages.
The issues for determination are:
1.Have the plaintiffs established a prime facie entitlement to judgment for a quantified amount?
2.Do the defendants have an arguable defence to the quantified amount claimed by the plaintiffs?
3.Is there 'some other reason' for there to be a trial of the issue of the quantum of damages?
The application for summary judgment
On 29 July 2020, the plaintiffs commenced these proceedings claiming damages. The plaintiffs plead, at par 14 of the statement of claim dated 29 July 2020, the following particulars of loss and damage:
(a)the difference in the sale price of the Property, being the difference between the Resale Purchase Price and the Purchase Price;
(b)holding costs of the Property between the date prescribed for settlement, being 14 September 2018, and the date of the settlement of the resale, being 7 February 2020;
(c)Interest on the Purchase Price under the Contract between 14 September 2018 and 7 February 2020;
(d)Interest on the shortfall between the Purchase Price and the Resale Purchase Price on 7 February 2020, until judgment;
(e)Costs of default, pursuant to the Contract;
(f)Interest on the holding cost and the default costs, from the date they were incurred, until judgment.
On 23 April 2021, Registrar Kingsley, on the plaintiffs' application pursuant to O 14 of the RSC dated 12 October 2020, made the following orders:
1.There be leave to bring the application.
2.There be judgment for the plaintiffs on the issue of liability.
3.There be leave to defend on the issue of quantum.
4.Costs of the application reserved.
By notice of appeal dated 3 May 2021, the plaintiffs appeal the decision of the registrar to grant leave to the defendants to defend on the issue of quantum. The final orders that the plaintiffs seek on this appeal are:
1.Leave be granted to the plaintiffs to bring the application out of time.
2.There be judgment for the plaintiffs in the sum of $217,281.43.
3.The defendants pay the plaintiffs' costs of the appeal, costs of the application (including costs reserved) and costs thrown away, in any event.
Legal principles applicable to the appeal
Rule 15(6) of the DCR provides that an appeal from a registrar 'is to be by way of a new hearing of the matter that was before the registrar'.
A new hearing means that the judge hearing the appeal must treat the application as if it was before the court for the first time: Kezic v St John of God Health Care Inc [2015] WASCA 220 [42].
The plaintiffs, as the party who has appealed, are not required to show that the registrar made an error in the decision the subject of the appeal: Cheney v Moore [2020] WASC 227 [9].
The court may rely upon additional evidence on the hearing of an appeal by way of a new hearing, subject to the court having a discretion to exclude such evidence: Hazart Pty Ltd v Rademaker (1993) 11 WAR 26, 28.
In essence, I am required to determine the plaintiffs' application for summary judgment for a quantified amount afresh, having regard to all the evidence that was before the learned registrar, together with any additional evidence relied upon by the parties on the appeal.
Legal principles applicable to the application for summary judgment
Order 14 r 1 of the RSC provides that a plaintiff 'may, on the ground that that defendant has no defence to a claim included in the writ', apply for judgment against the defendant. Order 14 r 2 of the RSC provides that an application for summary judgment must be supported by an affidavit verifying the facts on which a plaintiff's claim is based and stating, that in the deponent's belief, there is no defence to the claim.
The legal principles governing the power to order summary judgment are uncontroversial. Summary judgment should be exercised with great care and will not be exercised unless it is clear that there is no real question to be tried: Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87, 99.
The onus is on a plaintiff to persuade the court that it is an appropriate case to award summary judgment: Gel Custodians Pty Ltd v Dewar [2014] WASC 177.
Once a plaintiff has established a prima facie right to judgment, the onus is on the defendant to satisfy the court why judgment should not be given: Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109, 110. The defendant does not have to show a defence on the balance of probabilities, only to show cause as to why there is an arguable defence: Westpac Banking Corporation v Anderson [2017] WASC 106.
The court should not dispose of an action summarily where there is a conflict on the facts. Summary judgment must only be granted where the court has a high degree of certainty of the outcome of the proceedings if they went to a trial: Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57]. Summary judgment is appropriate where the defence is so obviously untenable that it cannot possibly succeed or where it would be manifest that to allow the defence to stand would involve useless expense: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, 129.
In determining whether there is an issue in dispute which ought to be tried, the version of facts put forward by the defendant should be accepted, assuming they are not inherently incredible: Webster v Lampard (1993) 177 CLR 598. The court is not bound to accept uncritically as raising a dispute of fact calling for further investigation every statement in an affidavit, however equivocal, lacking in precision or inconsistent with contemporary documents: Ansearch Ltd v Wavtech Pty Ltd [2006] WASC 184 [28].
Evidence
Affidavits
The plaintiffs seek to rely upon the following affidavits:
(a)Affidavit of Kayrene Rae Parker affirmed on 12 October 2020 (Parker Affidavit);
(b)Affidavit of Guy William Kerrell‑Vaughan affirmed 12 October 2020 (First Kerrell‑Vaughan Affidavit);
(c)Supplementary Affidavit of Guy William Kerrell‑Vaughan affirmed 10 February 2021 (Second Kerrell‑Vaughan Affidavit);
(d)Second Supplementary Affidavit of Guy Kerrell‑Vaughan affirmed 24 May 2021 (Third Kerrell‑Vaughan Affidavit); and
(e)Third Supplementary Affidavit of Guy Kerrell‑Vaughan affirmed 16 June 2021 (Fourth Kerrell‑Vaughan Affidavit).
There were no objections to the plaintiffs' affidavits. They are taken as read.
The defendants seek to rely upon the following affidavits:
(a)Affidavit of Peter Ravenscroft sworn 14 October 2020 and identical affidavit of Penelope Ravenscroft sworn 14 October 2020 (First Ravenscroft Affidavits);
(b)Supplementary affidavit of Peter Ravenscroft sworn on 24 February 2021 and identical affidavit of Penelope Ravenscroft sworn 26 February 2021 (Second Ravenscroft Affidavits); and
(c)Affidavit of Peter Ravenscroft affirmed 5 June 2021 and identical affidavit of Penelope Ravenscroft sworn 5 June 2021 (Third Ravenscroft Affidavits).
Objections to defendants' evidence
The plaintiffs objected to parts of the affidavit evidence of the defendants. It is appropriate that I rule upon the objections before determining the application.
To the extent that the objections go to relevance, the objections are dismissed. I will consider whether or not that evidence is sufficient to satisfy me of the requisite issues.
The plaintiffs' remaining objections go to the Third Ravenscroft Affidavits. I will outline each paragraph of these affidavits to which objection is taken, and the basis upon which the objection is made:
(a)Paragraph 2, the second sentence which states:
We have spoken to interested buyers and neighbours who viewed the property after Sep 2018, and they said that the property had visually deteriorated from the time that we failed to settle on the property in Sep 2018.
is objected to on the basis that it is unsourced hearsay, is imprecise and vague.
(b)Paragraph 3, the third sentence which states:
We think that in order to mitigate potential loss, the plaintiff should have listed the property at approximately $840,000, as this was the amount the plaintiff had accepted from us.
is objected to on the basis that it is an unsupported expression of expert opinion.
(c)Paragraph 4 which states:
In response to paragraph 11.
In the Annexure 'GKV13', the estate agent Karen Kemp states that the market at the time was 'stone cold'. A 'stone cold' or slow market indicates that there are less buyers than usual, and that sales have subsequently lessened. A stone cold market does not mean, however, that property values have necessarily dropped.
Records show that between January 2019 and January 2020 the median value of properties in West Busselton increased by 1.9%. This was the time period in which the Plaintiff's estate agent was selling the property.
See attached Core Logic Property Profile Report for 5 Redwood Close.
is objected to on the basis that it is an unsupported expression of expert opinion. In addition, the Core Logic Property Profile Report (Core Logic report) referred to in par 4 and annexed to the Third Ravenscroft Affidavits is objected to on the basis that it is inadmissible because it is only an extract of the report and the report purports to provide an estimated value for the property as at 3 May 2021 (which is an irrelevant date).
(d)Paragraph 5 which states:
In response to paragraph 12.
The plaintiff mentions the property at 33 Kalgaritch Avenue, and its sale price of $580,000. This is not a comparable property to the property at 5 Redwood Close. This property is on the main thoroughfare in the subdivision, it is a much smaller and more dated house, does not have air conditioning or a swimming pool, and was listed at the beginning of its sale campaign at a lower price ($699‑$739,000) than the property at 5 Redwood.
During the same period in the cul-de-sac directly behind 5 Redwood Close, also a quiet cul‑de‑sac, there was a more comparable property at 5 Ringtail Retreat. This house was similar in location, land size (both approx. 2000m2), gardens and property presentation.
Even though 5 Ringtail Retreat did not have a pool and the house was smaller than 5 Redwood, this house sold for $855,000 in early 2020. We believe that this sale amount is closer to the amount that 5 Redwood Close could have fetched ($840,000).
is objected to on the basis that it is unsourced hearsay and an unsupported expression of expert opinion.
(e)Paragraph 6 which states:
In response to paragraph 13.
The Plaintiff states that the absence of an earlier termination had no impact whatsoever upon the listing and subsequent sale of the subject property.
We believe that by not accepting the defendant's offer to rent and pay penalty interest (an amount which would have covered all of the Plaintiff's ongoing costs with surplus) it resulted in and increased financial pressure for a sale as the Plaintiff's costs were mounting.
We also believe that by keeping the contract on foot and driving down the price of the property through a) a lack of maintenance and care b) keeping the property vacant and c) launching a sales campaign of 'offers from $750,000' which was $90,000 less than our accepted offer, the plaintiff has failed to make every effort to mitigate his costs. We also were told by a friend who viewed the property that the sales agent had told them to 'make a low‑ball offer, the owner will accept anything'.
We believe that it was the plaintiff's intention from the outset to sell the property at a lower price, without a real effort to mitigate losses during the subsequent campaign, and then sue us for the difference in price.
is objected to on the basis that it is inadmissible because it is an unqualified statement of opinion, speculative and unsourced hearsay.
Legal principles – admissibility of affidavit evidence
Order 14(2) of the RSC provides that an affidavit in support of an application for summary judgment 'may contain statements of information and belief with the sources and grounds thereof' (emphasis added).
Order 37 r 6(3A) of the RSC also provides that '[a]n affidavit containing statements of information or belief must set out the sources or grounds of that information or belief unless' certain exceptions apply (emphasis added) (none of the exceptions are relevant to this appeal).
Where statements of information and belief are contained in an affidavit, the deponent should clearly indicate the source of that information or belief and that the deponent believes it to be true: Blythe v The State of Western Australia [2008] WASCA 10 [43].
Determination
The defendants are self‑represented. They are entitled to some leniency when it comes to complying with the court rules. It is appropriate that I assess the evidence sought to be adduced by the defendants with some flexibility. This flexibility must be balanced against the rights of the plaintiffs to have a fair hearing and be afforded procedural fairness.
Having regard to these considerations and the rules of evidence outlined, I uphold each of the plaintiffs' objections to the paragraphs of the Third Ravenscroft Affidavits. The evidence sought to be adduced in those paragraphs either:
(a)does not state who said certain things about the state of the Property to the plaintiffs, nor whether the plaintiffs believe that information to be true;
(b)makes statements in the form of expert opinion when the plaintiffs have not established that either of them are qualified to give such an opinion;
(c)refers to evidence, that is the Core Logic report, which is incomplete and relates to a point in time that is not relevant; and/or
(d)make statements that are speculative.
It would be prejudicial to the plaintiffs to allow these paragraphs to be adduced as evidence. Even where a party is self‑represented, the court must ensure that the principles underlying the rules of evidence are observed; to do otherwise would simply allow a party to depose in an affidavit to facts without any basis being established for doing so. The other party would be deprived of the opportunity to challenge that evidence.
In summary, I strike out par 2 (second sentence), par 3 (third sentence) and the entirety of pars 4, 5 and 6 of the Third Ravenscroft Affidavits.
I read the remainder of the Third Ravenscroft Affidavits and the additional affidavits sought to be relied upon by the defendants.
Facts not in issue
The Contract comprised of:
(a)a written contract dated 8 June 2018;
(b)a variation of the contract dated 16 August 2018; and
(c)the 2011 Joint Form of General Conditions for the Sale of Land published by the Law Society of Western Australia and the Real Estate Institute of Western Australia (General Conditions).
On 11 July 2018, the defendants paid the plaintiffs a deposit of $1,000 pursuant to the Contract.
The Contract was conditional upon the defendants obtaining finance approval on or before 30 days from acceptance of the Contract. The plaintiffs and the defendants agreed to extend the date for finance approval to 20 July 2018.
On 24 July 2018, the defendants waived the requirement for finance approval. The Contract was then unconditional.
The Contract required settlement of the Property on or before 14 September 2018.
The defendants did not settle the Contract by 14 September 2018.
On 4 October 2018, the plaintiffs issued a notice of default (Default Notice) to the defendants requiring the defendants to remedy the default by settling on the Property within 10 business days of the date of service of the Default Notice. The defendants did not settle on the Property within the time specified in the Default Notice.
On 17 December 2019, the plaintiffs entered into a further contract for sale of the Property with alternative purchasers, conditional upon termination of the Contract.
On 5 February 2020 the plaintiffs issued a notice of termination of the Contract to the defendants. The plaintiffs forfeited the deposit of $1,000 paid by the defendants and elected to resell the Property.
On 7 February 2020, the plaintiffs resold the Property to alternative purchasers for the Resale Purchase Price.
Have the plaintiffs established a prime facie entitlement to judgment for a quantified amount?
The plaintiffs are seeking an order for summary judgment for the quantified amount of $217,941.22 as at 23 June 2021.
The quantified amount claimed by the plaintiffs is calculated as follows:
$840,000 (Purchase Price) less $750,000 (Resale Price) less $1,000 (Deposit) (Shortfall Amount) $ 89,000.00 Interest on the Purchase Price less Deposit ie $839,000 from 14/09/2018 - 6/02/2020 at 9% per annum, being 511 days at $206.87 per day $105,710.57 Interest on the Shortfall Amount from 7/02/2020 -28/07/2020 at 9% per annum, being 173 days at $21.94 per day $ 3,795.62 Interest on the Shortfall Amount from 29/07/2020 at 6% per annum until 23/06/21, being 329 days at $14.63 per day $ 4,813.27 Legal charges $ 3,063.00 Interest on the legal charges from the dates of payment to 23/06/2021 at 6% per annum:
1 Interest on $570 from 24/01/19 - 23/06/21, being 881 days at $0.14 per day - $123.34
2 Interest on $1,038 from 3/12/18 - 23/06/21, being 914 days at $0.25 per day - $228.50
3 Interest on $405.14 from 28/03/19 - 23/06/21, being 818 days at $0.10 per day - $81.80
4 Interest on $1,051.05 from 10/10/21 - 23/06/21, being 617 days at $0.25 per day - $154.25
Costs of holding the land incurred between 14/09/2018 - 07/02/2020 (Holding Costs) $ 10,179.29 Interest on Holding Costs from 7/02/20 - 23/06/2021 at 6% per annum, being 329 days at $1.67 per day $ 791.58 Total $217,941.22
Shortfall Amount
The quantum of the Shortfall Amount is not in issue.[1] The Shortfall Amount is claimed by the plaintiffs either:
[1] Statement of claim, pars 4, 5 and 13; Defence, pars 4, 5 and 13.
(a)pursuant to cl 24.6 of the General Conditions:
24.6Resale within 12 months
If:
(a)Settlement of the resale of the Property occurs within 12 months after the Seller terminates the Contract; and
(b)after taking into account the costs and expenses of the resale and the amount of the Deposit which has been forfeited,
the amount held by the Seller:
(c)is less than the Purchase Price, the Buyer must pay to the Seller, as liquidated damages, the difference between the amount held by the Seller and the Purchase Price; or
(d)exceeds the Purchase Price, the excess belongs to the Seller.
and/or
(b)pursuant to the ordinary measure of contractual damages.
Interest on Purchase Price less the Deposit
The interest on the Purchase Price less the Deposit is calculated from 14 September 2018, the date settlement of the Property was to occur under the Contract, until 6 February 2020, being the date prior to the date settlement of the Property did occur with the alternative purchasers, at a rate of 9% per annum. This interest is claimed by the plaintiffs pursuant to cl 4.1, 4.3 and 26 of the General Conditions:
4.1 Buyer Delay
(a)If for any reason not attributable to the Seller, Settlement is not completed within 3 Business Days after the Settlement Date, the Buyer must pay to the Seller at Settlement interest on:
(1)the balance of the Purchase Price; and
(2)any other money payable at Settlement.
4.3 Interest or compensation
Interest payable under clause 4.1 and compensation allowable under clause 4.2 is to be calculated:
(a)at the Prescribed Rate; and
(b)from and including the Settlement Date to but excluding the date on which Settlement occurs,
and will be treated as being in full satisfaction of any claim the Party claiming interest or compensation has against the other Party as a result of the delay in Settlement.
26 Definition and interpretation
Prescribed Rate means 9% per annum calculated on a daily basis.
Interest on Shortfall Amount from 7 February 2020 - 28 July 2020
The interest on the Shortfall Amount is calculated from 7 February 2020, being the date of settlement to the alternative purchasers, to 28 July 2020, being the date prior to the date these proceedings were commenced, at 9% per annum. This interest is claimed by the plaintiffs pursuant to cl 4.1, cl 4.3 and cl 26 of the General Conditions. The cut‑off date for this interest arises from cl 4.7 of the General Conditions:
4.7 Restriction on right in case of court proceeding
(a)The right of a Party under this clause to interest or compensation will cease as at and with effect from and including the date on which court proceedings are instituted by a Party for:
(1)specific performance of the Contract; or
(2)a declaration that the Contract:
(A)has been terminated;
(B)remains valid and enforceable; or
(3)any other order or declaration to the same or similar effect to an order or declaration as specified in subclause (1) or (2); or
(4)other relief based on the Contract having been terminated. …
Interest on Shortfall Amount from date of commencement of proceedings
The interest on the Shortfall Amount from 29 July 2020, being the date of commencement of these proceedings, at 6% per annum until 23 June 2021 pursuant to s 32 of the Supreme Court Act1935 (WA) (SCA).
Legal charges
The plaintiff claims costs associated with the defendants' default under the Contract, being the following legal fees:[2]
(a)Peter May Commercial Lawyer Invoice 6693 for $1,038.80 - paid 3 December 2018;
(b)Peter May Commercial Lawyer Invoice 6646 for $570 - paid 24 January 2019;
(c)Peter May Commercial Lawyer Invoice 6853 for $403.15 - paid 28 March 2019; and
(d)Peter May Commercial Lawyer Invoice 7070 for $1,051.05 - paid 14 October 2019:
[2] First Kerrell-Vaughan Affidavit, par 18, Annexure 'GKV10'.
The legal costs are claimed pursuant to cl 24.17 of the General Conditions:
24.17 Legal costs on termination
Where the Termination Party terminates the Contract as a result of:
(a)the default of; or
(b)the repudiation by,
the Terminated Party, the Terminated Party must pay to the Termination Party all legal costs incurred by the Termination Party in respect to the termination of the Contract arising from the default of the Terminated Party or the repudiation of the Contract by the Terminated Party.
Interest on legal charges
The interest on the legal charges are claimed from the date each invoice was paid until 23 June 2021 at the rate of 6% per annum, pursuant to s 32 of the SCA.
Holding costs
The defendants claim the costs of holding (Holding Costs) the Property between 14 September 2018 and 7 February 2020 being:[3]
(a)Synergy: $1,676.98;
(b)City of Busselton rates: $3,705.99;
(c)Land Tax: $464.85; and
(d)Busselton Water rates: $4,330.47.
Interest on holding costs
[3] First Kerrell‑Vaughan Affidavit, par 16; Second Kerrell‑Vaughan Affidavit, Annexure 'GKV11'.
The interest on the holding costs is claimed from 7 February 2020 - 23 June 2021 at the rate of 6% per annum pursuant to s 32 of the SCA.
Prima face case for quantified amount
The First Kerrell‑Vaughan Affidavit, pars 20 and 21, deposes to the belief that the defendants have no defence to the plaintiffs' claim, both as to liability and as to quantum.
I am satisfied that the plaintiffs have established a prima facie case that, as at 23 June 2021, they are entitled to damages in the amount of $217,941.22.
Do the defendants have an arguable defence to the quantified amount claimed by the plaintiffs?
Given that the plaintiffs have established a prima facie right to judgment for a quantified amount, the onus is on the defendants to satisfy the court why judgment should not be given.
Defendants' position
The defendants rely upon their defence filed 13 October 2020, their affidavits (other than the portions I have struck out) and their outline of submissions filed 16 June 2021 in support of their contention that judgment for a quantified amount should not be ordered.
In summary, the defendants say they have an arguable defence because the plaintiffs failed to mitigate their losses by:
(a)refusing to accept the defendants' offer to rent the property and pay penalty interest pending the defendants being able to settle on the Contract;
(b)failing to adequately maintain the Property which caused a reduced Resale Purchase Price;
(c)failing to instruct the plaintiffs' agents to advertise the Property for sale for a price similar to the Contract Price; and
(d)failing to terminate the Contract after the plaintiffs first became entitled to terminate.
The defendants submitted, at the hearing, they did not adduce expert evidence in support of their defence because they were advised by a registrar of the court not to do so until after this appeal was determined. I am not in a position to confirm whether or not they received this direction. However, I am not required to. In order to establish an arguable defence, the defendants do not require expert evidence.
Plaintiffs' position
The plaintiffs say that, pursuant to cl 24.6 of the General Conditions, damages are for a liquidated amount and they are not required to mitigate their damage.
The plaintiffs say that, even if there is an issue to be tried in relation to the entitlement to damages pursuant to the Contract, they are entitled to the ordinary measure of damages, such damages to be assessed at the time the Contract was lost. The plaintiffs say the Contract was lost on 7 February 2020, the date they eventually sold the Property.
The plaintiffs say there is no credible evidence to support the defendants' contentions that the plaintiffs failed to mitigate their damage. The plaintiffs say the converse is true - there is substantial evidence to establish that the plaintiff acted reasonably in mitigating their damage.
The plaintiffs also say that the defendants have not established an arguable defence on the basis that the time taken to terminate the Contract resulted in any additional damage to the defendants.
The first plaintiff deposes that:
(a)the Property was listed for sale with Professional South West in Busselton (Agent) during the period from 7 December 2018 until its sale to the alternative purchasers in December 2019;[4]
(b)during this period the Property was maintained inside and out and no complaint was received from the listing agent about the presentation of the property;[5]
(c)the lawns on the Property had dry patches in late 2018 and early 2019 due to the reticulation having no power supply. The plaintiffs re‑established the power supply in early 2019 and set about trying to recover the dry patches on the lawn;[6]
(d)the plaintiffs attended the Property regularly over the period from September 2018 until February 2020 to maintain the Property;[7]
(e)the plaintiffs received recommendations as to the listings price and manner of sale of the Property from the Agent and followed those recommendations;[8] and
(f)because the Property remained on the market for sale for the entire period of 7 December 2018 until its sale to the alternative purchasers in December 2019, the election not to terminate the Contract earlier than 5 February 2020 did not have any impact upon the listing price or Resale Purchase Price of the Property.[9]
Determination
[4] Second Kerrell-Vaughan Affidavit, par 6.
[5] Second Kerrell-Vaughan Affidavit, par 6.
[6] Third Kerrell-Vaughan Affidavit, par 8.
[7] Third Kerrell-Vaughan Affidavit, par 9.
[8] Third Kerrell-Vaughan Affidavit, par 10 ‑ par 12, annexure 'GKV13'.
[9] Third Kerrell-Vaughan Affidavit, par 13.
The plaintiffs were under no legal obligation to rent the property to the defendants. The defendants' submissions regarding the plaintiffs' failure to accept the defendants' offer to rent the property and pay penalty interest are irrelevant and cannot give rise to an arguable defence.
I am of the view that there is an issue to be tried in relation to whether liquidated damages can be claimed by the plaintiffs pursuant to the Contract, in circumstances where over 12 months elapsed between the date of the Default Notice and the date of termination of the Contract.
However, the defendants say they are entitled to the ordinary measure of damages in any event. The issue is whether the defendants have an arguable defence to the plaintiffs' claim for damages to be assessed in the ordinary way.
The defence asserts, in essence, that the plaintiffs failed to mitigate their damage.
In Newmarket Corporation Pty Ltd v Kee-Vee Properties Pty Ltd [2003] WASC 157 (Newmarket), McClure J set out a number of principles relating to the mitigation of loss:
170Damages cannot be recovered for any loss which could have been prevented by reasonable mitigating action by the injured party. The party in breach has the onus of establishing the failure to mitigate.
171There seems to be no reason in principle why a failure to terminate a contract at law for breach may not amount to a failure to mitigate if the continued operation of the contract would lead to further loss.
172However, an injured party is only obliged to take such steps as are reasonable and need not resort to measures that are costly, complex or extravagant as where the expenditure in mitigation would exceed the loss. A plaintiff is not obliged to act otherwise in the ordinary course of business and the standard is not a high one because the defendant is the wrongdoer.
(citations omitted) (emphasis added)
By their defence, the defendants plead, at par 10:
As the months went by, we drove past the property a number of times (throughout 2018/2019) and the appearance of the house had declined.
We noticed many weeds, dead patches in the lawns and grass growing in the gutters. …
We believe that a furnished, visually staged and well‑maintained house is easier to sell and attracts a higher offer and sale.
There is no admissible evidence in support of this plea. Even accepting this plea at its highest, it does not provide an arguable defence to the effect that these factors had a negative impact on the ability of the defendants to sell the Property. The plaintiffs had the Property available for sale from December 2018 to December 2019 and engaged the services of the Agent. As set out in Newmarket, the plaintiffs were not required to resort to costly measures to resell the Property, such as furnishing and staging, and the continued operation of the Contract did not lead to further loss as the plaintiffs were attempting to sell the Property.
I find that the plaintiffs did not fail to mitigate their loss. The delay in terminating the Contract did not lead to further loss. The defendants have not satisfied me that they have any reasonable defence to the plaintiffs' claim for damages in the ordinary measure, that is an amount which would put the plaintiffs back in the position they would have been had the Contract been performed.
This gives rise to the issue as to the date at which the damages are to be assessed. In Gerrard v Wang [2015] WASC 173 (Gerrard), Martin CJ considered this issue. The Gerrards entered into a contract for the sale of land with Ms Wang. Ms Wang failed to complete the contract. The Gerrards sold the land to another purchaser for $840,000 less than the original contract price. The relevant dates in Gerrard were: settlement was due to occur on 10 September 2000, a notice of default was served on 20 September 2002, the notice of termination was served on 4 October 2002 and the land was resold on 26 June 2003.
In Gerrard, Martin CJ made the following observations in relation to the assessment of damages:
26Clause 19 of the General Conditions [equivalent to clause 24.1] provides that in the event the contract is terminated by reason of the purchaser's failure to perform after service of notice of default in accordance with the procedures stipulated in the General Conditions, if the vendor resells the Property and the resale is settled within 12 months following the date of termination, 'any deficiency arising from that re‑sale and all expenses incurred by the Vendor … arising from that re‑sale are recoverable by the Vendor from the Purchaser as liquidated damages'.
27As I have noted, Mr and Ms Gerrard entered into a contract to resell the Property on 26 June 2003 for a price which is $840,000 less than the price which Ms Wang was obligated to pay. However, no evidence was adduced of the date on which that resale was actually settled, and the contract of resale specifies the time for settlement as 'on or before 31 December 2004'. Accordingly, Mr and Ms Gerrard have not made out their claim to liquidated damages under cl 19 of the General Conditions.
28Instead, Mr and Ms Gerrard are entitled to the ordinary measure of contractual damages, which, in essence, entitles them to the sum required to put them in the position they would have been if the contract had been performed. Where a vendor elects to terminate a contract for the sale of land by reason of the purchaser's breach or repudiation, the ordinary measure of damages will be the difference between the purchase price and the market value of the land at the time of the breach or repudiation. However, this is not an absolute rule, and in a situation such as the present where the innocent party to a contract of sale continues to attempt to have the contract completed before ultimately terminating it, the date on which the contract is lost is the appropriate date for assessing damages.
(emphasis added)
The plaintiffs attempted to sell the Property prior to terminating the Contract. The defendants did not dispute, in any of their affidavits, that the Property was on the market with the Agent from December 2018 to December 2019. I am satisfied that the date the Contract was lost, that is the date the Property was eventually sold by the plaintiffs being 7 February 2020, is the appropriate date for assessing the damages.
On 7 February 2020, the Property sold for $750,000. The damage suffered by the plaintiffs is the Shortfall Amount ($89,000). The defendants have not demonstrated that they have any arguable defence to the Shortfall Amount claimed by the plaintiffs.
In relation to the other amounts claimed:
1.Interest on the Purchase Price less the deposit from 14 September 2018 - 7 February 2020 at 9% per annum pursuant to the Contract: I find that there is an issue to be tried in relation to the amount of 9% per annum on the basis that the failure to terminate the Contract when the plaintiffs first became entitled to has resulted in interest being charged at a higher rate than the plaintiffs would be entitled to otherwise, that is 6% per annum. The plaintiffs are entitled to summary judgment for interest on the Purchase Price less the deposit at the rate of 6% per annum. If the plaintiffs wish to pursue interest at the rate of 9% per annum, then the defendants have leave to defend that claim.
2.Interest on the Shortfall Amount from 7/2/2020 - 28/7/2020 at the rate of 9% per annum pursuant to the Contract: I make the same observations in relation to this head of damage as I did in the previous subparagraph. The plaintiffs are entitled to summary judgment at the rate of 6% per annum.
3.Interest on the Shortfall Amount from date of commencement of proceedings until date of judgment at the rate of 6% per annum: I find the plaintiffs are entitled to summary judgment for this quantified amount.
4.Legal charges: I find that the plaintiffs are only entitled to summary judgment for the first of the plaintiffs' legal fees, that is the invoice dated 3 December 2018 in the amount of $1,038.80. There is an issue to be tried in relation to whether a delay in termination of the Contract caused the plaintiffs to incur legal fees they would not have incurred if they terminated the Contract when they were first entitled.
5.Interest on legal charges: the plaintiffs are entitled to summary judgment on legal charges in the amount of $1,038.80 from 3 December 2018 at a rate of 6% per annum.
6.Holding costs: the plaintiffs are entitled to holding costs in the amount claimed. The plaintiffs are entitled to the ordinary measure of damages, that is an amount which puts them in the position they would have been had the Contract been performed - if the Contract had of settled on 14 September 2018 the plaintiffs would have not have incurred the holding costs.
7.Interest on holding costs: the plaintiffs are entitled to summary judgment for interest on holding costs from the date each cost was incurred at the rate of 6% per annum.
Is there 'some other reason' for there to be a trial of the issue of the quantum of damages?
In Miles v Bull [1969] 1 QB 258, 265 - 266, Megarry J said with reference to the phrase 'some other reason':
… If the defendant cannot point to a specific issue which ought to be tried but nevertheless satisfies the court that there are circumstances that ought to be investigated, then I think that those concluding words are invoked. There are cases when the plaintiff ought to be put to strict proof of his claim, and exposed to the full investigation possible at a trial; and in such cases it would, in my judgment, be wrong to enter summary judgment for the plaintiff. …
In Wedge v Service Finance Corp Ltd in its capacity as responsible entity for the Countrywide Select Mortgage Income Trust [2002] WASCA 54 [24], Wallwork J gave examples of where 'some other reason' may be invoked:
…
'The words are invoked if the defendant cannot point to a specific issue which ought to be tried, but nevertheless satisfies the Court that there are circumstances that ought to be investigated: ibid The Court can give leave to defend for a reason other than that there is a question to be tried … It is not difficult to think of other circumstances where it might be reasonable to give leave to defend although no defence is shown, eg if the defendant was unable to get in touch with some material witness who might be able to provide him with material for defence; or if a claim were of a highly complicated or technical nature which could only properly be understood if oral evidence were given; or if the plaintiff's case tended to show that he had acted harshly and unconscionably and it was thought desirable that if he was to get judgment at all, it should be in the full light of publicity.'
The defendants' overall opposition to the quantified amount sought by the plaintiffs is that the plaintiffs did not get the best price for the Property either because they did not maintain the Property or because they did not advertise it for sale appropriately. Neither of these grounds of opposition constitute 'some other reason' for there to be a trial of the issue of the quantum of damages. Nor have the plaintiffs acted in a manner that gives rise to some other reason why judgment should not be entered.
Summary and final orders
The plaintiffs have established a prima facie right to judgment for a quantified amount.
The onus is on the defendants to satisfy the court that a judgment for a quantified amount should not be ordered. They have not done so. There is no other reason why judgment should not be entered.
I find, with a high degree of certainty, that if the issue of the plaintiffs' quantum of damages went to trial, the outcome would be for a liquidated amount to be awarded to the plaintiffs. The defence is so obviously untenable that it cannot possibly succeed and to allow the defence to stand would involve useless expense.
I grant the plaintiffs' appeal and make orders for judgment in favour of the plaintiffs for a quantified amount. The plaintiffs should provide the court and the defendants with an updated schedule calculating the quantified amount to reflect these reasons.
The usual order, pursuant to O 66 r 1 of the RSC is that the successful party receive its costs. The plaintiffs, having been successful on the appeal, would ordinarily be entitled to the costs of the appeal and of the action. I will hear from the defendants in the event that they seek alternative orders as to costs of the appeal.
In my view, the following orders are appropriate:
1.The plaintiffs have leave to apply for summary judgment out of time.
2.There be judgment for the plaintiffs in the sum of (to be determined to reflect these reasons).
3.The defendants pay the plaintiffs' costs of the appeal, costs of the application and costs of the action (including costs reserved) to be taxed if not agreed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
CB
Associate to her Honour Judge Whitby
7 JULY 2021
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