Lucke v Doble and Doble (Formerly Kaminszky) - [2012] SADC 100

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
LUCKE v DOBLE AND DOBLE (FORMERLY KAMINSZKY)
[2012] SADC 100
Judgment of Her Honour Judge Davey
7 August 2012
INTEREST - RECOVERABILITY OF INTEREST - AWARD OF INTEREST AS DAMAGES
The third and fourth defendants have made a claim for damages in the form of interest as a consequential order arising from the delay in execution of the Deed of Settlement. The plaintiff argues that there should be no interest payable arising out of the delay.
Held: The third and fourth defendants did suffer loss and are entitled to damages calculated as interest in the amount of $24,825.05.
District Court Act 1991 s 36; Supreme Court Act 1970 (NSW) s 68, referred to.
Vanmeld Pty Ltd & Ors v Cussen & Ors (1994) 121 ALR 619; Madden v Kevereski (1983) 1 NSWLR 305, considered.

LUCKE v DOBLE AND DOBLE (FORMERLY KAMINSZKY)
[2012] SADC 100
Introduction

This matter concerns a claim for damages (calculated by reference to interest payments) by the third and fourth defendants which is said to arise as a consequence of my declaration made on 31 March 2011 that the Deed proposed by the plaintiff and signed by the defendants was a binding agreement upon the plaintiff. The consequential order sought for damages by the third and fourth defendants was for delay in the settlement and was disputed by the plaintiff who argued that in the circumstances of this matter, no damages arising out of the delay to the enforcement of the agreement should be ordered.
History of the matter
In March 2011 I heard the trial of whether there was an enforceable agreement, a binding contract, arising from an alleged settlement between the plaintiff and four defendants as to earlier proceedings. Those earlier proceedings were in relation to a dispute about real property. On 18 October 2010 the parties informed the court that they had “settled the matter”. The court was later informed that there was a dispute as to the alleged settlement and there was a subsequent trial heard before me as to whether there was an enforceable agreement arising from that settlement.
The original claim by the plaintiff concerned land at 22 Wingfield Street, Clovelly Park. The plaintiff and the first defendant had earlier been in a de facto relationship and became estranged. Their original intention was to develop the property. After the relationship broke down there were endeavours to resolve the issues between them by means of a settlement. The dispute was not resolved and subsequently the third and fourth defendants acquired (or so they argued) an interest in the land. My earlier judgment[1] provides a summary of the issues in dispute between the parties in respect of the property. The dispute before me was as to whether there was a binding agreement to settle the dispute between the parties. At the conclusion of the trial of that matter, I declared that the parties, by their solicitors, reached a binding agreement and agreed the terms of a Deed of Settlement provided by the plaintiff’s solicitors, Corsers Lawyers, on 1 November 2010.
[1] Lucke v Cleary & Ors [2011] SADC 41
The plaintiff subsequently appealed my decision and the judgment dismissing that appeal was delivered by the Full Court on 26 October 2011.[2] I have already dealt with the issue of costs arising from the trial before me.[3] The issue now before me is a claimed consequential order for interest paid by the third and fourth defendants which is said to arise because of the delay in the settlement, that is, the delay between the time when settlement was to have taken place on 17 December 2010 and when it in fact occurred on 7 December 2011 (subsequent to the judgment of the Full Court).
[2] Lucke v Cleary & Ors [2011] SASCFC 118
[3] Lucke v Cleary & Ors No 2 [2011] SADC 136
The matter now before me
During the hearing on the damages claim, the third and fourth defendants filed affidavits and called oral evidence from the defendants, Cameron Doble and Victoria Doble (formerly known as Kaminszky). It was apparent that Mr Doble was the principal decision maker between the third and fourth defendants. Mrs Doble’s evidence is of little assistance other than broadly confirming Mr Doble’s position.
Mr and Mrs Doble gave evidence that they purchased a half share in the property after the relationship between Ms Cleary and her de facto partner, Mr Lucke, broke down. The original plan was that the Dobles were to pay Ms Cleary the sum of $120,000 for a half share in the property which the three of them would then develop. That development included demolition of the existing house on the property and a hoped-for subdivision and development. That did not occur because Mr Lucke placed a caveat on the property and claimed an interest in the property arising from the relationship with Ms Cleary; it was that dispute which was at the heart of the original proceedings. That dispute was the subject of settlement negotiations which resulted in (what I found to be) a binding agreement. Because of the delay in the hearing of the proceedings and consequent appeal, settlement was delayed for 50 weeks. The third and fourth defendants claim that they have suffered loss by way of interest paid notwithstanding that their intentions with respect to the property have now changed.
Both Mr and Mrs Doble explained that whilst they originally intended to demolish the property and develop the site, the delay and changes in the world and Australian economy have meant that they have postponed that decision and it is now their intention to refurbish the property, rent it out and ultimately re-sell the property. Whatever precise future arrangement occurs, it is their uncontested position that the arrangements with respect to the property were and are commercial.
During the nearly 12 months of delay before finalisation of the settlement, the third and fourth defendants did not have use of the property; the plaintiff retained possession. The third and fourth defendants were also delayed with respect to any other commercial dealing with the property.
The plaintiff says that there is no entitlement to damages by way of interest because the third and fourth defendants were continuing with payments during the 12 months which they would have been required to make irrespective of the timing of the settlement. The plaintiff says that there can be no proper claim for loss of use of the property because there was no evidence to show any loss occasioned by the third and fourth defendants in that regard. The plaintiff points to the settlement payments actually made by the third and fourth defendants when execution and settlement was finally completed in December 2011. Apart from some minor differences, the plaintiff argues that the monies disbursed and paid by the third and fourth defendants were precisely those which were to be paid if settlement had occurred in December 2010.
On behalf of the third and fourth defendants it was agreed that there was no dispute about the nature and amount of the payments made when settlement was finally achieved. Nonetheless, the third and fourth defendants claim that there is loss which damages equate to the interest payments which they continued to pay the second defendant (Adelaide Bank Limited from 17 December 2010 until 7 December 2011. There was a delay of about 50 weeks and the sole cause of the delay was the plaintiff’s conduct in refusing to execute the Deed.
In respect of the plaintiff’s submission that the third and fourth defendants were to receive contribution from the first defendant, the third and fourth defendants point to clause 2.11 in the Deed of Settlement and Release which was found to be a binding agreement.[4] Clause 2.11 provides:
2.11Prior to the Settlement the Dobles will be responsible for any payments due in respect of the First Loan and Second Loan as well as any insurance with respect to the Property.
[4] Exhibit D1, p177
The third and fourth defendants say that that clause is a complete answer to that submission made by the plaintiff. It was argued that whether Ms Cleary (the first defendant) received some or all of her money under the original arrangement is irrelevant because the original arrangement was to be a joint venture to develop the property; all of that was overtaken by the compromise of all of the parties’ claims. Subsequently there was a delay before the ultimate settlement could occur because of the conduct of the plaintiff.
The plaintiff disputes the claim for interest by way of damages in entirety. However the plaintiff does not dispute the quantum or calculation of interest made by the third and fourth defendants. The plaintiff argues that there is no causal connection between the payment of interest that has been made by the third and fourth defendants and any detriment to those defendants.
The third and fourth defendants argued that there was loss on their behalf by reason of the 50 week delay during which there has been a change in the nature of the commercial use but that there were none of the offsetting factors that might apply such as a change in interest rate or increase in value.
The third and fourth defendants acknowledge that they have continued to make the payments by way of interest and would have made payments in any event but say that during that period they have not had use of the property and they have been precluded from starting the development some 50 weeks earlier and that they have incurred a cost, namely interest that they shouldn’t have had to incur. I also observe that they have been precluded from disposing of the property.
The third and fourth defendants rely on s 36 of the District Court Act 1991. They also rely on the discussion with respect to the power to award damages in such circumstances in Vanmeld Pty Ltd & Ors v Cussen & Ors.[5] That case concerned s 68 of the Supreme Court Act 1970 (NSW) which is similar in terms to that of s 36 of the District Court Act 1991. The Federal Court followed Helsham CJ in Eq in Madden v Kevereski.[6]In that case it was observed:
The damages which the court may award under s 68 are sui generis; the power to award them is a power to enable the court to do complete justice so far as equity considers it ought to be done, by supplementing with money the equitable remedy, or attempting with money to substitute a remedy.
[5] (1994) 121 ALR 619, and particularly at 621
[6] (1983) 1 NSWLR 305 at 307
In this case there is no suggestion that the third and fourth defendants are in any way blameworthy. The plaintiff has never provided any explanation at all as to why he failed to execute and settle upon the Deed in 2010.
The plaintiff argues that there is no evidence at all before me as to the value of the loss of use of the property during the 50 weeks nor value of the delay in development of the property. I do not agree. There was undoubted loss and the fact that it would be uncommercial (in the context of this matter) to obtain expert opinions as to the value of the loss of use and loss arising from the delayed development is not an answer to the claim. In my view a fair approach to quantifying the loss, because the third and fourth defendants were delayed in dealing with or developing the property, and suffered loss of rental/use is to have regard to the interest and bank fees payable on both loans payable to the second defendant.
I find that in consequence of my declaration of 31 March 2011 the third and fourth defendants are entitled to damages calculated as interest in the amount of $24,825.05.