Murphy v MITANOVSKI - [2012] SASC 158

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
MURPHY v MITANOVSKI
[2012] SASC 158
Judgment of The Honourable Justice White
13 September 2012
MAGISTRATES - APPEALS AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT
CONVEYANCING - BREACH OF CONTRACT FOR SALE AND REMEDIES - VENDOR'S REMEDIES - DAMAGES
DAMAGES - GENERAL PRINCIPLES - MITIGATION OF DAMAGES - PLAINTIFF'S DUTY TO MITIGATE
Magistrate dismissed appellant's claim for damages for breach of contract - appellant contracted to sell her property to the respondents for $782,000 - respondents failed to settle - appellant terminated contract and retained the $10,000 deposit - respondents renewed their offer to buy for original purchase price - appellant refused offer and later sold property at auction for $750,000 - appellant sought to recover difference and other costs incurred - appeal against Magistrate's dismissal.
Whether appellant proved that her loss was the difference between the contract price and the auction price - whether appellant failed to mitigate her loss by refusing respondents' renewed offer - whether Magistrate erred in reversing onus of proof - whether appellant entitled to recover costs of bridging finance - whether any entitlement to damages of the appellant exceeds the retained deposit.
Held: appeal dismissed - appellant proved that her loss was the difference between the contract price and the auction price - appellant did not fail to mitigate her loss by failing to accept the respondents' renewed offer at the time it was made - Magistrate erred in reversing the onus of proof for mitigation - appellant failed to mitigate her loss when one month later she decided to sell by auction without enquiring whether the respondents were still willing to pay $782,000 - appellant's entitlement to damages does not exceed the amount of the retained deposit.
Carpenter v McGrath (1996) 40 NSWLR 39; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; Electricity Trust of South Australia v O'Leary (1986) 42 SASR 26; Hadley v Baxendale (1854) 9 Ex 341; Ideal Phonograph Co v Shapiro (1920) 58 DLR 302; Johnson v Perez (1988) 166 CLR 351; Payzu Ltd v Saunders [1919] 2 KB 581; Statewide Developments Pty Ltd v Higgins [2011] NSWCA 35; Watts v Rake (1960) 108 CLR 158; Wenham v Ella (1972) 127 CLR 454, considered.

MURPHY v MITANOVSKI
[2012] SASC 158
Magistrates Appeal

WHITE J. On 14 February 2010 the appellant agreed to sell her home at Glenelg East to the respondents for $782,000. However, the respondents failed to settle on the contract. Subsequently, the appellant served a notice of termination on the respondents and retained their deposit of $10,000.
In October 2010 the appellant again advertised the home for sale and sold it at auction on 20 November 2010 for $750,000.
In the proceedings in the Magistrates Court the appellant sought to recover the difference of $32,000 together with the costs involved in the resale and the costs of the bridging finance which she had taken out…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Murphy v MITANOVSKI

Details

AGLC: Murphy v MITANOVSKI [2012] SASC 158
Case: [2012] SASC 158
Decision Date: 13 September 2012

CaseChat Overview and Summary

The appellant, Mrs. Murphy, contracted to sell her property to the respondents for $782,000, but the respondents failed to settle. The appellant terminated the contract and retained the $10,000 deposit. The respondents later renewed their offer to purchase the property for the original price, but the appellant refused the offer and sold the property at auction for $750,000. The appellant sought to recover the difference and other costs incurred but the Magistrate dismissed the claim. The appellant appealed the dismissal.

The issues for determination were whether the appellant proved that her loss was the difference between the contract price and the auction price, whether she failed to mitigate her loss by refusing the respondents' renewed offer, whether the Magistrate erred in reversing the onus of proof, whether the appellant was entitled to recover the costs of bridging finance, and whether any entitlement to damages exceeded the retained deposit. The appeal was dismissed. The appellant proved that her loss was the difference between the contract price and the auction price. However, the appellant did not fail to mitigate her loss by failing to accept the respondents' renewed offer at the time it was made. The Magistrate erred in reversing the onus of proof for mitigation. The appellant failed to mitigate her loss when she decided to sell by auction without enquiring whether the respondents were still willing to pay $782,000. The appellant's entitlement to damages did not exceed the amount of the retained deposit.

The court held that the appellant proved that her loss was the difference between the contract price and the auction price. The court also held that the appellant did not fail to mitigate her loss by failing to accept the respondents' renewed offer at the time it was made. However, the court held that the Magistrate erred in reversing the onus of proof for mitigation. The appellant failed to mitigate her loss when she decided to sell by auction without enquiring whether the respondents were still willing to pay $782,000. The court held that the appellant's entitlement to damages did not exceed the amount of the retained deposit. Therefore, the appeal was dismissed.

Orders

Orders of the court

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Background

Background to the litigation

A Magistrate dismissed her claim entirely. The appellant appeals against that dismissal.Background As already noted, on 14 February 2010 the appellant contracted to sell her family home to the respondents for $782,000. They agreed upon a long settlement, with completion not due until 2 July 2010. Unfortunately, the respondents did not settle at that time, being apparently unable to do so. In anticipation of settlement proceeding on 2 July 2012, the appellant entered into a contract to buy a replacement property. Settlement on that contract was also due on 2 July 2010. When the respondents did not settle, the appellant took out bridging finance so as to be able to complete her own contract on 30 July 2010. She incurred costs in doing so. The appellant served a notice requiring the respondents to complete the contract on 20 July 2010 and again on 30 July 2010, but on each occasion the respondents failed to do so. Subsequently, on 27 August 2010, the appellant gave notice of termination of the contract and retained the deposit of $10,000. At about the same time, the appellant let her home to some tenants, and there was other evidence that the appellant had withdrawn the property from the market. Some two months later, the appellant advertised the property again with a different agent. An auction was held on 20 November 2010. The appellant sold her property at that auction to a different purchaser for $750,000 with settlement occurring on 17 December 2010. The Magistrate dismissed the appellant’s claim for the difference between the two sale prices. The Magistrate held that the appellant had not established that she had suffered any loss, or at least a loss exceeding the amount of the retained deposit of $10,000. The Magistrate also made other findings which suggested that he considered that the appellant had acted unreasonably in not accepting an offer made by the respondents on 22 September 2010 to purchase the home for $782,000 provided that credit was given to them for the previous deposit of $10,000 and with settlement to occur on 12 November 2010.[1] The Magistrate’s conclusions appear in the following passages:[31]… I accept Mr Lazarevich’s general submissions … that the evidence given by Mrs Murphy is insufficient to make findings and in the absence of expert evidence the plaintiff has failed to prove that the market value at the date of the breach was less than the contract price.…[37]I accept Mr Lazarevich’s submission that there is insufficient evidence to establish the loss. The offer should have been accepted. In my view the plaintiff was poorly advised and probably poorly represented. She should have been made aware that she could accept the plaintiff’s offer but reserve her position as to costs in the interim.[38]I accept Mr Lazarevich’s submission that the plaintiff had failed to establish that she acted reasonably in failing to accept the offer of $782,000 made on 22 September 2010. I accept Mr Lazarevich’s submission that although the plaintiff theoretically has an entitlement to damages for the losses sustained in having to again place the property on the market, the evidence before the Court is insufficient to substantiate that any loss by failure to settle would exceed $10,000 – being the amount of the deposit retained.Aspects of these passages suggest that the Magistrate considered that, after making allowance for the retained deposit, the appellant had not established any loss at all. Other aspects suggest that the Magistrate considered that the appellant had failed to take reasonable steps to mitigate any loss which she had sustained. Although the Magistrate did not express it in these terms, his conclusion concerning mitigation appears to be an alternative finding, ie, a finding that even if the appellant did suffer some loss, she was disentitled from recovering damages by reason of her failure to mitigate.[1] This offer was first made orally on 21 September 2010 and was confirmed in writing on 22 September.Issues on the Appeal

Evidence

Evidence Before The Court

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Decision

Reasons for decision

WHITE J

The appellant’s claim for the bridging finance costs gave rise to a number of issues, including whether the prospect that such costs may be incurred was within the reasonable contemplation of the parties at the time the contract was made, and as to the effect of the appellant’s election on termination of the contract to retain the property for the time being. However, it is not necessary to consider the submissions about these matters in any detail. On any view, the amount which the appellant may recover for bridging finance costs and for interest does not exceed the sum of $10,000, being the amount of the retained deposit. It follows that the Magistrate was correct in dismissing the appellant’s claims for these amounts.Conclusion For the reasons given above, the appeal is dismissed.

Ratio Decidendi

Legal Principle Established

Established by: WHITE J

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