Northside Consultants Pty Ltd v Swanton - [2005] WASC 178

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: NORTHSIDE CONSULTANTS PTY LTD -v- SWANTON & ANOR [2005] WASC 178

CORAM: MASTER NEWNES

HEARD: 21 JULY 2005

DELIVERED : 23 AUGUST 2005

FILE NO/S: CIV 1715 of 2003

BETWEEN: NORTHSIDE CONSULTANTS PTY LTD
Plaintiff
AND
DONALD GLEN SWANTON
BEVERLEY ANN SWANTON
Defendants
ROSEWAY PTY LTD
Third Party

Catchwords:

Practice and procedure - Extension of operation of caveat - Undertaking as to damages - Subsequent application by defendant to discharge order for extension of caveat unless plaintiff provides security for undertaking - No change in circumstances - Damages of nature claimed by defendant not likely to be recoverable - Turns on own facts

Legislation:

Transfer of Land Act, s 138B

Result:

Application for security dismissed

Category: B

Representation:

Counsel:

Plaintiff:     Mr K C B Staffa
Defendants:     Ms W F Buckley
Third Party                   :     No appearance

Solicitors:

Plaintiff:     Staffa Lawyers
Defendants:     Hager & Partners
Third Party                   :     No appearance

Case(s) referred to in judgment(s):

Air Express Ltd v Ansett Transport (Operation) Pty Ltd (1981) 146 CLR 249
Hungerfords v Walker (1990) 171 CLR 125

Case(s) also cited:

Kirwanon Pty Ltd v Cabassi, unreported; SCt of WA (Templeman J); Library No 970502; 3 October 1997

MASTER NEWNES: I have before me an application by the defendants for an order, in effect, that unless the plaintiff provide security for its undertaking as to damages, the order made on 25 June 2004 extending the operation of a caveat over the defendants' land be discharged. The defendants say that security should be provided as a condition of the continuation of the operation of the caveat as the assets of the plaintiff are plainly inadequate to meet the damages for which the plaintiff will be liable if its claim to an interest in the land ultimately fails at trial.
The circumstances giving rise to this matter are relatively straightforward. The defendants are the owner of a property in Mindarie (the "Mindarie property"), which had been their residence. On 27 May 2003, they entered into a contract to sell the Mindarie property to the plaintiff, as trustee for the Lewis Investment Trust (the "Trust"), for the sum of $840,000. The sum of $10,000 was paid as a deposit by the plaintiff. The contract was conditional on the plaintiff selling its own property by 27 July 2003. The contract contained what is commonly known as a "48‑hour clause"; that is, the parties agreed that if the defendants received another acceptable offer for the Mindarie property before the condition to which the plaintiff's contract was subject had been satisfied, they could serve notice on the plaintiff of their intention to accept the new offer unless within two business days the plaintiff waived the condition. If the plaintiff did not waive the condition the contract was at an end.
On 10 June 2003, the defendants gave notice to the plaintiff that they had received another offer for the Mindarie property which they wished to accept and they required…

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 Northside Consultants Pty Ltd v Swanton

Details

AGLC: Northside Consultants Pty Ltd v Swanton [2005] WASC 178
Case: [2005] WASC 178
Decision Date: 23 AUGUST 2005

CaseChat Overview and Summary

In the case of Northside Consultants Pty Ltd v Swanton, the plaintiff, Northside Consultants, sought an extension of the operation of a caveat over a property owned by the defendants, Swanton. The defendants opposed the extension but later applied to discharge the order for the extension unless the plaintiff provided security for its undertaking as to damages. The legal issues that the court had to decide included whether the ordinary contractual principles relating to damages applied to the undertaking as to damages, and whether the defendants had provided sufficient evidence to justify the requirement of security for the undertaking.

The court found that there was no reason why a different conclusion would be reached in respect of an undertaking as to damages, and that the question of foreseeability was to be judged as at the time the order was made. The court also found that the defendants had not provided sufficient evidence to justify the requirement of security for the undertaking, as the damages claimed by the defendants were not likely to be recoverable and did not turn on their own facts. The court held that the defendants' affidavit did not provide sufficient evidence to justify the requirement of security for the undertaking, and that the defendants had not shown that the plaintiff was unable to make good its undertaking as to damages if called upon to do so.

The court dismissed the defendants' application to discharge the order for the extension of the caveat unless the plaintiff provided security for its undertaking as to damages. The court held that the defendants had not provided sufficient evidence to justify the requirement of security for the undertaking, and that the damages claimed by the defendants were not likely to be recoverable and did not turn on their own facts. The court also held that the defendants' affidavit did not provide sufficient evidence to justify the requirement of security for the undertaking, and that the defendants had not shown that the plaintiff was unable to make good its undertaking as to damages if called upon to do so. The court found in favour of the plaintiff and dismissed the defendants' application.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Whether, and to what extent, ordinary contractual principles relating to damages are applicable to an undertaking as to damages is a matter on which there was some difference of opinion in Air Express Ltd v Ansett Transport (Operation) Pty Ltd (supra) - see Aickin J at 267, Barwick CJ at 310, Gibbs J at 312, Stephen J at 318 ‑ 320 and Mason J (albeit in dissent on other grounds) at 323 – but I do not consider there is any reason why a different conclusion would be reached in respect of an undertaking as to damages, the question of foreseeability being judged as at the time the order was made. At the time the order of 25 June 2004 was made extending the operation of the caveat, and at the time orders as to the undertaking were made on 30 July 2004, the defendants relied on an affidavit of Mr Swanton, sworn 18 May 2004. In that affidavit, Mr Swanton says he is a retired petroleum engineer whose income is derived from investments, particularly from trading on the share market. Mr Swanton says the second-named defendant does not earn any income and has not been in the workforce for more than 20 years. Mr Swanton says the defendants borrowed $570,000 to purchase the Mindarie property and construct the house on it. That loan is still outstanding, although the defendants do not now occupy the property and it is not let. Mr Swanton says that had the property been sold under the Arslanoski contract, the defendants would have received a net sum of approximately $300,000, which they needed to invest to earn income to support themselves. Mr Swanton says in the affidavit that the defendants are concerned the plaintiff has not shown it has the financial resources to make good its undertaking as to damages if, after trial, it is called upon to do so. Mr Swanton goes on to say that the defendants "estimate that their losses arising from the inability to sell the property under the Arslanoski contract would include" the sum of $45,000, being the difference between the purchase price under the plaintiff's contract and that under the Arslanoski contract, holding costs for the property, holding costs for the mortgage, and "opportunity losses due to inability [sic] to use the proceeds of sale of the property for investment and other purposes". Mr Swanton says that "at this point in time, the defendants are unable to quantify the losses [in respect of the holding costs of the property and mortgage, and the opportunity losses] with any precision but estimate that they would be in the vicinity of or exceed $100,000". Mr Swanton says he has been informed by the defendants' solicitor that the defendants will incur legal coats in the vicinity of $70,000, and possibly more, in the action. Mr Swanton refers in his affidavit to title searches which had disclosed a property in the name of the plaintiff and another property in the name of Mr and Mrs Lewis, the directors of the plaintiff. He says that the defendants would accept, by way of security for the plaintiff's undertaking as to damages, caveats over the above properties "provided they have sufficient equity to cover our estimates of potential damages and legal costs if we successfully defend the plaintiff's claim".