Powlett v Archibald
[2015] VCC 497
•12 June 2015
| IN THE COUNTY COURT OF VICTORIA | Revised Not Restricted |
AT MELBOURNE
COMMERCIAL DIVISION
GENERAL LIST
Case No. CI-13-03145
| RACHAEL POWLETT | Plaintiff |
| v. | |
| KEVIN ARCHIBALD & ANOR | Defendants |
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JUDGE: | His Honour Judge Anderson | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 23-27 February and 2 March 2015 | |
DATE OF JUDGMENT: | 12 June 2015 | |
CASE MAY BE CITED AS: | Powlett v. Archibald & Anor | |
MEDIUM NEUTRAL CITATION: | [2015] VCC 497 | |
REASONS FOR JUDGMENT
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Catchwords: Contract – Agreements to relocate two houses – Houses to be renovated and used as holiday accommodation – Whether one contract fully performed – Whether second contract frustrated – Calculation of damages for breach of contract.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | in person | |
| For the First Defendant | in person (by leave, assisted by Mr Peter Weis) | |
HIS HONOUR:
1Rachael Powlett had, since 2007, been operating a successful commercial holiday cottage at Daylesford. The timber cottage had earlier been “relocated” from another site. In 2011, Ms Powlett was looking at options to expand her business.
2Kevin Archibald and Peter Weis worked together relocating houses. Mr Weis usually acted as their spokesperson. In about April 2011, they advertised a 3 bedroom farmhouse at St Arnaud for sale in the Trading Post. In April 2011, Ms Powlett signed 3 written contracts for the sale, transportation and restumping of the house at her Daylesford property for a total cost of $77,000.
3Later, on 19 August 2011, Ms Powlett entered into replacement agreements for the St Arnaud property and agreements in relation to another house to be relocated from Niddrie to her Daylesford property. She signed the further written contracts and agreed to pay a total of $55,000 for the Niddrie house.
4Pursuant to the agreements, Mr Archibald was to be responsible for the sale and transportation of both houses. Mr Weis was responsible under the contracts for the restumping of the houses.
5Ms Powlett claimed to have paid sums totalling $130,950 to Mr Archibald and Mr Weis. On about 5 December 2011, the Niddrie house was delivered to a property in Daylesford where it was to be “stored”. The house remained there until about mid February 2015 when it was moved, on Ms Powlett’s instructions, to her property. The house is currently being restored.
6The St Arnaud house was never owned by Mr Archibald or Mr Weis. It has not been moved to Ms Powlett’s property. The house was sold by its owner, in 2012, to an unrelated third party and was not available to be moved to Daylesford.
7Ms Powlett makes claims in the proceeding on three bases; contract, for misleading and deceptive conduct and for negligent misstatement. The loss and damages she claims include:
a.the return of the payments made to the defendants;
b.the interest she paid on borrowings to finance the relocation of the houses;
c.monies spent by Ms Powlett “in reliance upon the delivery of the houses”;
d.the cost of restoring the Niddrie house to the condition it would have been in, if it had been delivered in accordance with the contractual requirements;
e.loss of “income and opportunity”, if the houses had been able to be used as holiday accommodation;
f.damages and compensation for “distress, anxiety and depression”;
g.payment of the legal costs of an earlier trial.
8By reason of the poor health of Mr Archibald, the trial involving the two defendants was split. The trial of the proceeding between Ms Powlett and Mr Weis was heard by His Honour Judge McNamara in February 2014. Judge McNamara found that there had been a total failure of consideration in respect of the St Arnaud house restumping contract and, as a consequence, Mr Weis should repay the monies Ms Powlett had paid in respect of that contract. Judge McNamara calculated this sum as $3,179 and entered judgment for $3,950.84, which included $771.84 interest. The claims against Mr Weis based on misleading and deceptive conduct and negligent misstatement were dismissed.
9In the trial before me of the proceeding between Ms Powlett and Mr Archibald, both parties represented themselves although I allowed Mr Archibald to be assisted, at the bar table, by Mr Weis.
10Mr Archibald filed a defence dated 14 November 2014. In relation to the St Arnaud house, Mr Archibald stated in his defence that:
a.$47,200 was paid to him for the sale and transportation of the house;
b.the sale and transportation contracts “became impossible to perform and as a consequence the contracts were frustrated”;
c.pursuant to the sale and transportation contracts, he admitted that he was “indebted to the plaintiff for monies had and received” of $47,200 and for statutory interest on that sum since the issue of the writ on 18 June 2013.
11In relation to the claims in respect of the Niddrie house, Mr Archibald pleaded in the defence that:
a.the total consideration of $55,000 was fully paid;
b.the contracts of sale and transportation were “fully performed by delivery into storage at the plaintiff’s request who upon delivery accepted the condition of the building and made final payment. Delivery was to the plaintiff’s benefit in that permits were not in place, site and access were difficult and the plaintiff desired to place another building on the site prior to this one”.
c.property in the Niddrie house had passed to the plaintiff.
12Mr Archibald otherwise denied Ms Powlett’s allegations and described as “imaginary and fictitious”, the claim for “lost net profit in respect of both dwellings on the grounds that this loss or damage was not foreseeable as there was never and is not now any prospect that either house could ever have been occupied as the appropriate permits if they were ever in place have been allowed to lapse, the owners builders security deposit has been reclaimed, one house does not even exist, neither have occupation certificates”.
13The issues for determination in the proceeding are as follows:
1. In relation to the St Arnaud house:
a. did Mr Archibald breach the sale or transportation contracts;
b. alternatively, did the sale and transportation contracts become impossible to perform and, as a consequence, were the contracts frustrated?
2. In relation to the Niddrie house:
a. did Mr Archibald breach the transportation contract;
b. was the contract for the transportation of the house fully performed by the delivery of the house into storage;
c. alternatively, did Ms Powlett prevent the contracts being performed by Mr Archibald, by her failure to complete her obligations under the contracts?
3. Did Ms Powlett suffer loss and damage as a consequence of the breach or breaches and, if so, in what sum should the damages be quantified?
4. Should Ms Powlett succeed in her claims based on misleading and deceptive conduct and/or negligent misstatement, and if so, to what relief is she entitled?
Background
14On 14 April 2011, Ms Powlett saw an advertisement in the Trading Post for a relocatable house. She responded to the advertisement and was later telephoned by Mr Weis. On 15 April 2011, Mr Weis sent Ms Powlett an email which attached photographs of the house at St Arnaud and a package of agreements comprising three separate contracts for the sale of the house, the transportation of the house and for the restumping of the house on Ms Powlett’s property. The contractor in respect of the first two contracts was Mr Archibald, and for the restumping contract was Mr Weis.
15Ms Powlett travelled to St Arnaud to inspect the house. At a subsequent meeting at her property, she met Mr Archibald and Mr Weis. Over the next few days she made payments of $500, $1,500, $23,000, $13,000 and $5,000. Mr Weis informed Ms Powlett that he and Mr Archibald would start work on the St Arnaud house on 12 May 2011. Ms Powlett took steps to obtain a planning permit and a building permit for the house, to raise finance and for the subdivision of her property at Daylesford.
16On about 4 August 2011, Ms Powlett had discussions with Mr Archibald and Mr Weis about the purchase of a further relocatable house to be moved from a site in Niddrie. A three lot plan of subdivision of the Daylesford property was necessary to accommodate the further dwelling.
17On 27 August 2011, Mr Weis emailed to Ms Powlett a package of agreements relating to both the St Arnaud and Niddrie houses. Both sets of agreements were executed by Ms Powlett. It will be necessary later to examine each of these documents in detail as they set out the responsibilities of the parties.
18Over the following months, Ms Powlett:
a.raised finance for the completion of the projects;
b.continued to make payments to Mr Archibald;
c.proceeded with the proposed subdivision of her property;
d.took the steps necessary to obtain planning and building permits, although a delay occurred for a period when a promise by Mr Weis to accept responsibility for obtaining building permits was not fulfilled.
19In the meantime, no work was carried out in relation to the St Arnaud or Niddrie houses by Mr Archibald or Mr Weis. Although the contractual documents placed the responsibility for permits on Ms Powlett, in about November 2011, Mr Weis agreed that he would obtain the building permits. Thereafter, Ms Powlett began to provide relevant documents to Mr Weis. It became apparent on about 20 February 2012, that Mr Weis had not taken any steps to obtain building permits for either house.
20Ms Powlett then resumed the responsibility for obtaining the permits. This involved her carrying out the following steps:
a.liaising with an energy rating consultant, Mr Justin Giannikos;
b.speaking with the building surveyor, Mr Allen King and providing copies of documents to him;
c.seeking to obtain critical documents from Mr Weis that only he could provide.
21On 5 December 2011, Mr Weis and Mr Archibald delivered the Niddrie house to a property in Daylesford owned by Mr Edward Comelli. The house could not be delivered to Ms Powlett’s property because the St Arnaud house needed to be first placed on the property. Ms Powlett said that she was told by Mr Weis that the St Arnaud house would arrive at her Daylesford property in a few days but that the Niddrie house would need to be stored for a limited time.
22In late April 2012, Mr Weis told Ms Powlett that the St Arnaud house was no longer available. This matter was clarified by evidence from the owner of the St Arnaud house, Mr Patton, and in due course I shall make a more detailed examination of that evidence. It is apparent that, until April 2012, Mr Weis and Mr Archibald had neglected to inform Ms Powlett that they had done no work on the St Arnaud house and had not contractually secured the purchase of the St Arnaud house.
23On 30 March 2012, Mr Weis emailed Ms Powlett proposing that an alternative house be substituted for the St Arnaud house and located on the front of her allotment at Daylesford. Mr Weis said that the substitute house would cost $100,000 and he requested payment of the difference between this sum and the price of the St Arnaud house. Ms Powlett did not agree.
24In April 2012, when Mr Weis informed her that the St Arnaud house was no longer available, Ms Powlett asked for a refund of the moneys she had paid. Mr Weis told her that he and Mr Archibald had no money available to make a refund and they could only do so if Ms Powlett assisted them to sell more relocatable homes.
25On 14 May 2012, Mr Weis informed Ms Powlett that, the owner of the St Arnaud house “had had a change of heart”, and suggested there was a possibility the house would still be delivered to her property. In the meantime, Ms Powlett had continued with her preparations for the arrival of the Niddrie house. At the beginning of June 2012, Mr Weis informed her the arrival of that house was imminent.
26In about August 2012, Ms Powlett discovered the location of the Niddrie house. She inspected the house at Mr Comelli’s land in Daylesford and found that the house was “in a very bad state, having not been properly covered for over 4 months”.
27On 17 January 2013, Mr Weis by email indicated that in preparation for the delivery of the Niddrie house, Ms Powlett should arrange for the grass to be cut on her property. The Niddrie house was not delivered and Ms Powlett commenced this proceeding by a writ issued by solicitors on her behalf on 20 June 2013.
28At the trial of the proceeding involving Mr Weis before His Honour Judge Macnamara in February 2014, Mr Patton, the former owner of the St Arnaud house, gave evidence that the house had been sold by him to another buyer who had removed it from Mr Patton’s farm. At the time of that trial, the Niddrie house remained on the industrial land owned by Mr Comelli in Daylesford.
29Ms Powlett engaged contractors in February 2015 who moved the Niddrie house from Mr Comelli’s land to her property in Daylesford. Work then commenced on restoring the house.
30In the meantime, in order to pay for her outstanding debts, Ms Powlett:
a.sold the allotment in Daylesford which contained the original holiday cottage;
b.sold the house where she lived in St Kilda to meet the remainder of her debts and to allow for her to arrange the removal of the Niddrie house and its restoration.
Analysis of the written agreements
31The contract packages for the two houses, comprised for each house, five documents prepared by Mr Archibald and Mr Weis, as follows:
a.an “Information sheet”;
b.“Agreement 1”, being an “agreement to sell house for removal” (the “sale agreement”);
c.““Agreement 2”, being an “agreement to transport a house”; (the “transportation agreement”);
d.“Agreement 3”, being an “agreement to restump a house and associated works” (the “restumping agreement”);
e.a schedule of payments.
32Ms Powlett returned signed copies of the contract package in relation to the St Arnaud house, soon after she received the documents on 5 April 2011, and in an amended form on 29 April 2011. Two further packages for both houses are in evidence and dated 19 August 2011. These later packages [“the replacement contracts”] were accepted by the parties as the contractual arrangements between them.
33In the sale agreement, Ms Powlett is named as “the purchaser” and Mr Archibald as “the seller”. In the transportation agreement, Ms Powlett is named as “the purchaser” and Mr Archibald as “the transporter”. In the restumping agreement, Ms Powlett is named as “the owners” and Mr Weis as “the contractor”.
34The contract package appears to have been originally drafted in contemplation that separate contractors may carry out the task as “seller”, “transporter” and under the restumping contract. Therefore, some allowance needs to be made when reading the sale and transportation agreements, as Mr Archibald undertook responsibilities under both contracts.
35In relation to the sale agreement for the St Arnaud property,
a.the house was identified as “presently situated at O’Donnells Road, St Arnaud”;
b.had certain inclusions such as “plan and elevations” and “a building surveyor’s report… (if required by the relevant building surveyor)”;
c.the “full selling price” was $35,000 (plus GST), which was to be paid in 4 instalments (each plus GST) at specified times, as follows:
i.$15,000 on the signing of the agreement;
ii.$10,000, “upon the seller providing the purchasers with the plans of the house”;
iii.$5,000, “upon commencement of any removal works”;
iv.$5,000, “upon the house sections arriving at the purchaser’s property”;
d.it was provided that, “The purchaser will attend to their own removal of the house and further will remove the house within 30 days of the purchaser being granted vacant possession on such later date as is mutually agreed to between the two parties”.
36In relation to the transportation agreement for the St Arnaud property,
a.“the transporter or his nominees” agrees to “transport the house from its present location at O’Donnells Road, St Arnaud in several pieces to the purchaser’s property at Daylesford”;
b.the price was $30,500 (plus GST) and was to be paid in 5 instalments (each plus GST), as follows:
i.$500 on the signing of the agreement;
ii.$5,000 on 29 April 2011;
iii.$10,000 “upon the transporter commencing the work on site”;
iv.$10,000, by 2 payments of $5,000 “upon each load arriving at the purchaser’s property”;
v.$5,000 “on the house sections being stumped by the purchaser’s contractor”;
c.the transporter would engage a registered builder (at the transporter’s cost) “in order to obtain any necessary permits and carry out works required to legally remove the house from its site”;
d.had certain exclusions such as “roof claddings”, “rotted timbers” and “internal plaster”;
e.contained inclusions such as permits for transportation and “tarpaulins for transportation” which were the transporter’s responsibility, although from 14 days “after the house has been stumped and the roof structure re-erected”, it was the purchaser’s responsibility to meet “the cost of supplying suitable tarpaulins to cover the house”;
f.contained a provision that, “the transporters will commence works within 7 days of being notified by the purchaser of obtaining vacant possession of the house provided that a permit to remove the house has been granted”;
g.provided that, “the transporter will complete all works associated with the transportation not later than 3 months from commencement of works”;
h.listed the responsibilities of the purchaser, including “making the payments”, “obtaining all permits to relocate the house to the purchaser’s property” and provide “access to the purchaser’s property”.
37In relation to the restumping agreement for the St Arnaud house, the agreement recited that the “owners are in possession of a house for removal and have arranged for its transportation to their property at Daylesford”. The contractor was to carry out “stumping and joining the house”. The owner was to “obtain necessary building permits”, provide “a clear site” and pay $4,500 (plus GST) “on completion of works”.
38The information sheet in relation to the St Arnaud property noted that:
a.the sheet “must be read in conjunction with the accompanying three agreements”;
b.the purchasing party “will need to obtain their own permit in order to relocate the house to their property”;
c.Mr Archibald and Mr Weis took “no responsibility whatsoever in regards to you obtaining the said permit to relocate the house to your property”;
d.Mr Archibald and Mr Weis took “no responsibility for the accuracy or otherwise of any information supplied to the purchasers whether verbal, written or implied including any plans”.
39The total payments to be made for the St Arnaud house were:
a.sale - $35,000 + $3,500 GST= $38,500
b.transportation - $30,500 + $3,050 GST= $33,550
c.restumping - $4,500 + $450 GST= $4,950
total $77,000
40The contractual documents for the Niddrie house were similar to the St Arnaud house. The total payments to be made for the Niddrie house were:
a.sale - $20,000 + $2,000 GST= $22,000
b.transportation - $25,500 + $2,550 GST= $28,050
c.restumping - $4,500 + $495 GST= $4,950
total $55,000
Conduct of the trial
41The only witnesses who gave evidence at the trial were called by Ms Powlett. They were herself, Mr Anthony Patton, Mr Edward Comelli and Mr Allen King. Mr Archibald chose not to give evidence himself or to call any witnesses, including Mr Weis. Substantial documentary evidence was tendered by the parties; mainly by Ms Powlett.
42Ms Powlett and her witnesses were cross examined by Mr Archibald. They were cooperative and responsive and their evidence was generally supported by the contemporaneous documents. In my view, there was no basis to reject the evidence of Ms Powlett, or the other witnesses she called, particularly in the absence of any contrary evidence.
43At a directions hearing shortly prior to the commencement of the trial, I had discussed with Ms Powlett and Mr Archibald the status of the reasons for decision of His Honour Judge Macnamara in the earlier trial of the proceeding between Ms Powlett and Mr Weis. I informed the parties that, in the absence of agreement between them, it would be necessary for me to rehear the evidence, and that I would not be bound by the conclusions reached by Judge Macnamara as they applied to Mr Archibald.
44The trial before me proceeded on this basis, although the parties did agree to admit the evidence given by Mr Giannikos at the earlier trial without him needing to again attend court and for many documents to be admitted in evidence without formal proof.
Were the contracts for the St Arnaud House “frustrated”?
45Mr Archibald in his defence alleged that the contracts for the St Arnaud house “became impossible to perform”. He admitted that he is liable to repay to Ms Powlett the amount she paid for the St Arnaud house together with interest.
46In his written final submissions, Mr Archibald stated that he is liable to repay these monies to Ms Powlett because he was “unable to provide any consideration”. Mr Archibald did not suggest any circumstances which gave rise to the contracts having been “frustrated”. He further submitted that in respect of the “expenses” claimed by Ms Powlett, that these had not been “proven to the required standard or burden of proof”.
47Mr Patton gave evidence that in April 2010 Mr Archibald had responded to an advertisement for the sale of the St Arnaud house as a removable structure. The house had a sale price of $12,000. Mr Patton denied that he had ever had a contract, or even a “gentleman’s agreement”, with Mr Archibald in relation to the house. There had been only intermittent contact between them over the “next couple of years”.
48No work was done on the house by Mr Archibald or Mr Weis, and Mr Patton was not aware that Ms Powlett had an interest in the house. In about May 2012, Mr Patton sold the St Arnaud house to a third party who was “genuinely interested” in purchasing it. Mr Patton said that Mr Archibald “had had two years to do something”.
49During the period of two years after April 2010, Mr Archibald had not purchased the St Arnaud house. He continued to represent to Ms Powlett that the house was his to deliver at an appropriate time. Mr Archibald, in an email dated 30 March 2012, tried to persuade Ms Powlett to substitute another house for the St Arnaud house because, as he said, “You worry me. I do not believe you have the money nor will you be able to raise it to satisfy your wants. I believe I have a solution”.
50It is clear, however, that at this time Mr Archibald and Mr Weis knew there were difficulties obtaining the St Arnaud house. Notwithstanding, Mr Archibald did not provide this information to Ms Powlett so that she might make an informed decision. Ms Powlett responded to Mr Archibald on 1 April 2012 that, “Even just having St Arnaud on there by now would have meant I could apply to the Commonwealth Bank to increase the loan amount on that block”.
51In my view, the sale and transportation contracts for the St Arnaud house must be read together. Ms Powlett’s obligation under the sale contract to attend to the removal of the house must be interpreted in the light of the obligations accepted by Mr Archibald under the transportation contract to transport the house from St Arnaud to Ms Powlett’s property at Daylesford.
52Mr Archibald does not suggest that any action by Ms Powlett prevented him from carrying out his contractual obligations. As Mr Patton said, Mr Archibald “had had two years to do something” to secure the St Arnaud house.
53Between 16 and 19 April 2011, Mr Archibald admits he received a total of $25,000 from Ms Powlett for the St Arnaud house. I accept Ms Powlett’s evidence that she had also paid Mr Archibald further sums totalling $18,000 by 29 April 2011. There is no reason why Mr Archibald should not have secured the St Arnaud house by a binding contract with Mr Patton prior to the end of April 2011. In fact, the St Arnaud house was available for purchase by Mr Archibald for about another 12 months. By that stage, Ms Powlett had made further payments in respect of the St Arnaud house.
54In Scanlan's New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169, Latham CJ at 191-2 said, “the general rule is ... that a man who makes a promise is bound to perform it or to pay damages if he fails to do so, and that he cannot excuse himself by relying upon circumstances dehors [outside the scope of] the contract for the purpose of showing that he did not mean what he clearly said, or that he should be excused from performance because the contract did not work out in the manner expected by one or even by both of the parties”.
55In my view, Mr Archibald did not establish that there were events which had so altered the situation of the parties as to amount to a frustration of the contracts with Ms Powlett.
Circumstances in which the Niddrie house was delivered into “storage”
56On 5 December 2011, the Niddrie house was delivered to Mr Comelli’s property in Daylesford where it remained for over three years. It is important to examine the circumstances in which the house came to be delivered to that property and why it was not delivered, either then or later, to Ms Powlett’s property.
57Initially, Ms Powlett’s plan was to put the St Arnaud house at the front of her Daylesford property. In July 2011, when Mr Weis informed Ms Powlett about the Niddrie house, they discussed placing the St Arnaud house at the rear of the property and the Niddrie house at the front. To complete this plan would require:
a.a subdivision of the property into 3 allotments;
b.planning and building permits for each of the houses;
c.the St Arnaud house to be placed on the property before the Niddrie house;
d.borrowing further funds for the second house.
58Mr Comelli gave evidence that he is the owner of an industrial estate in Daylesford. On 5 December 2011, he was telephoned by the proprietor of one of the businesses on the estate. He was told that there was a house on a truck and the removalists were hoping to leave it on the estate. Mr Comelli drove to his property and spoke with Mr Archibald and Mr Weis. He had had no previous contact with them.
59They said they had to deliver the house to a property in Daylesford but they had been unable to get access, or that the “ground was not right”. They wanted to leave it on Mr Comelli’s estate for a few weeks. They told Mr Comelli “that the house would be gone within six to eight weeks”. Mr Comelli agreed, provided he was paid $100 cash for each week the house remained on his property. On that day, Mr Archibald and Mr Weis paid $400 cash in advance and the house was unloaded onto the property.
60Mr Comelli did not hear from Mr Archibald and Mr Weis until he telephoned them in about early February 2012. Mr Comelli told them that he needed the house to be shifted. Mr Archibald and Mr Weis attended his property at Daylesford and told him that they could not take the house to the intended destination and asked whether it could be put somewhere else on Mr Comelli’s property. On 3 February 2012, the house was shifted approximately 80 metres and Mr Archibald and Mr Weis paid a further sum of $400 in cash. Apart from the two payments of $400, no further moneys were paid by Mr Archibald or Mr Weis to Mr Comelli.
61Mr Comelli said that when the house arrived on his property, it “was in reasonable condition”. The house remained on the property, as Mr Comelli said, “collapsing” and “falling to pieces”. Mr Comelli said that he had had several subsequent conversations with Mr Weis and Mr Archibald, asking them to remove the house. On 22 February 2014, he sent a letter to Mr Archibald and Mr Weis advising that to 20 February 2014, 115 weeks’ storage charges were owing which, less the $800 paid, amounted to $10,700. Mr Comelli said he had tried to find out whose house it was that was stored on his property, as the plaster and tin was falling off the house. Initially the house had tarpaulins on it but for the last two years it had no covering.
62In about August 2014, Mr Weis telephoned and told Mr Comelli, “it is all sorted, we will come and shift the house”. This did not happen. Recently, Ms Powlett paid Mr Comelli the sum of $2,500 and he permitted the removal of the house. Mr Comelli had had no contact with Ms Powlett during the first 12 months or so after the house was placed on his property.
63Ms Powlett gave evidence that until about August 2012, she did not know where the Niddrie house had been “stored” and only knew that it was located on industrial land in Daylesford. The building permit for the Niddrie house was issued on 18 June 2012. She repeatedly attempted to arrange for Mr Weis and Mr Archibald to deliver the house to her property. Appointments were made and dates for the delivery were set but nothing happened. Mr Weis told Ms Powlett that the wet weather was a factor. Over the following months, Ms Powlett pressed Mr Weis and Mr Archibald for the delivery of the Niddrie house and for a refund of the moneys she had paid in respect of the St Arnaud house. On many occasions, Mr Weis and Mr Archibald were difficult to contact and would not return her phone calls.
64Ms Powlett had expected that by mid-2012, the two houses would have been relocated on her property, renovated and be available for letting as holiday accommodation. She said that the first time she met Mr Weis and Mr Archibald she had told them of her plans for using a renovated relocatable house as holiday accommodation and had showed them what she had achieved with the existing cottage on the property. Ms Powlett had been interviewed for a magazine article in 2011. The article was published in April 2012. In the article, Ms Powlett had outlined her plans for the two houses to be relocated on her property by Mr Archibald and Mr Weis.
65As a result of the failure by Mr Archibald and Mr Weis to deliver the houses to her property, Ms Powlett experienced difficulty making loan repayments to the bank, to her mother and to her ex-partner, from all of whom she had borrowed money. She took employment as a painter on a building site for six months and in December 2012 sought hardship relief in respect of her bank loan.
66Ms Powlett discovered the whereabouts of the Niddrie house in about August 2012. She took photographs of the house at that time which showed that it was deteriorating. By the time of the first trial in February 2014, the Niddire house was said to be “in a ruinous state” and it was clear at that time that in order to restore the house, substantial further work would be required. This work would not have been necessary if the house had been relocated to Ms Powlett’s property when she might reasonably have anticipated from Mr Weis and Mr Archibald’s promises that it would have been.
Whether Ms Powlett prevented Mr Archibald’s performance of his contractual obligations
67Borrowing funds for the St Arnaud and Niddrie houses: Ms Powlett obtained a loan from the Adelaide Bank on 17 October 2011. She notified Mr Weis a week later that she had the loan. Ms Powlett also arranged, what were intended to be, short-term borrowings including from her mother and her former partner. It was not suggested that the time taken to obtain the loans was a cause of any material delay in the transportation of the houses to Ms Powlett’s property at Daylesford.
68Payments made to Mr Archibald: Ms Powlett claimed that she had made the following payments to Mr Archibald:
Date Amount Total 16 April 2011 $500 18 April 2011 $1,500 19 April 2011 $2,000 19 April 2011 $23,000 19 April 2011 $13,000 29 April 2011 $5,000 19 August 2011 $15,000 16 September 2011 $1,500 9 November 2011 $20,000 9 November 2011 $25,000 5 December 2011 $15,000 15 January 2012 $7,450 26 April 2012 $2,000 $130,950
69The only payments disputed by Mr Archibald were the payment of $13,000 on 19 April 2011 and the payment of $15,000 on 19 August 2011. In respect of all other payments, Ms Powlett produced bank statements showing a transfer on that day of the relevant amount, or the withdrawal of cash sufficient to make the payment.
70Ms Powlett relied upon the notations made in each of the contract packages as evidence for the two disputed payments. In the contract package relating to the St Arnaud house, it is recorded that the following were, “payments made”:
1 Deposit $500 16/4/2011 2 Payment $1,500 18/4/2011 3 Payment $13,000 19/4/2011
In the contract for the Niddrie house, amongst the “payments received”, it is noted:
1 Deposit $15,000 Received 19/8/2011
71In the absence of any evidence explaining that the notations of payments received in the contractual packages were made in error, I accept that those payments were made by Ms Powlett and received by Mr Archibald. In the circumstances, there is no basis for suggesting that Ms Powlett had not made all appropriate payments required of her pursuant to her contractual obligations. Further, there is no basis for suggesting that the failure to deliver the Niddrie or St Arnaud houses to Ms Powlett’s property could be attributed to any failure by her to make the payments due under the contracts.
72The total payments to Mr Archibald (including GST) in respect of the St Arnaud house and Niddrie house were $130,950. At various stages during the projects, Mr Weis asked for money at times when Ms Powlett considered that she had made all payments required by the contracts. On occasions, Mr Weis sought to clarify the payments which Ms Powlett had made. In the absence of any oral evidence from Mr Archibald and Mr Weis about this issue, I am satisfied that, at all times, Ms Powlett made the payments she was required to make to Mr Archibald under the contracts.
73Obtaining Permits: There was some dispute as to whether the Niddrie house could be delivered to Ms Powlett’s property in the absence of a building permit or planning permit. The relevant dates are as follows:
a.November 2011 – planning permit issued for the Niddrie house;
b.January 2012 – planning permit issued for the St Arnaud house;
c.18 June 2012 – building permit issued for the Niddrie house;
d.no building permit was issued for the St Arnaud house.
74Mr Allen King is a building inspector. He gave evidence that he had had earlier dealings with Mr Weis but not Mr Archibald. He knew that Weis did work as a house relocator and had obtained building permits through him. In November 2011, Mr Weis told Mr King that there were a couple of jobs coming through, including Ms Powlett’s.
75Ms Powlett contacted Mr King in January 2012 and asked him if anything had been done about her permit. Mr King told her that nothing had been forwarded to him by Mr Weis. In late February or early March 2012, Mr King told Ms Powlett which documents she would require for a building permit. “Fairly quickly after that”, Ms Powlett had provided those documents which Mr King checked for completion.
76In mid-March 2012, Mr King told Ms Powlett that she needed full plans including a stump plan. This was usually provided by the builder. Ms Powlett obtained the stump plan from Mr Weis in about late May 2012. The stump plan was supplied to Mr King by the end of May. Until the stump plan was supplied and builder’s warranty insurance was in place, Mr King could not issue a building permit.
77In mid-May 2012, Mr King carried out a building report for the building permit application. The report is dated 28 May 2012. The building permit was granted on 18 June 2012. To obtain the building permit, Ms Powlett paid fees of $1,200 together with a $5,000 deposit to the Building Commission for builders warranty insurance.
Did Mr Archibald breach the Niddrie house contracts?
78When Mr Archibald and Mr Weis placed the Niddrie house on Mr Comelli’s land, they told Ms Powlett that the house was being “temporarily stored”. Mr Archibald claimed that the Niddrie house could not be delivered to Ms Powlett’s property until the planning permit for the St. Arnaud house was granted and the St Arnaud house was moved to the rear of the block.
79However, at that stage, Ms Powlett believed that the planning permit for the St Arnaud house would shortly be granted (it was granted on 3 January 2012) and that Mr Weis was obtaining the building permits for both houses. What Mr Weis and Mr Archibald did not tell Ms Powlett was that they had not secured the St Arnaud house and had therefore taken no steps to prepare it for removal to Daylesford. At Mr Weis’ request, Ms Powlett paid a further $15,000 to Mr Archibald on 5 December 2011 and $7,450 on 14 January 2012.
80Ms Powlett had difficulty contacting Mr Weis and Mr Archibald in January and February 2012. On 20 February 2012, Mr Weis told her that he had not started the process of obtaining building permits for the houses. Ms Powlett immediately applied herself to this task, contacting the building surveyor Mr King and other necessary persons and authorities.
81The building permit was granted for the Niddrie house on 18 June 2012. This followed significant delays in the provision of information by Mr Weis. Ms Powlett’s contact with Mr Weis and Mr Archibald was characterised by:
a.requests for further payments;
b.refusal to clarify why further payments were required;
c.failure to provide accurate information about critical matters relating to the houses;
d.making promises about the future delivery of the houses which could not possibly be met.
82In these circumstances, Ms Powlett did what she could to progress matters, including obtaining the necessary permits. She was never in a position, however, to make an informed judgment as to what was likely to happen until it became apparent in about May 2012 that the St Arnaud house would not be available.
83Mr Weis and Mr Archibald continued to make promises that the Niddrie property would be delivered. These promises also proved illusory and it became apparent to Ms Powlett that Mr Archibald was not going to perform his contracts.
84Over many months, Ms Powlett sought performance of the contracts relating to the Niddrie house or the return of the money she has paid. In response she was either ignored or received further promises.
85Mr Archibald had apparently secured the Niddrie house and when required to remove it by the vendor, transported the house to Niddrie. The “storage” of the house on Mr Comelli’s property was his decision. He failed, however:
a.to provide any accurate information to Ms Powlett either about the availability of the St Arnaud house or the location of the Niddrie house;
b.to make any arrangements to transfer the Niddrie house to Ms Powlett’s property, particularly after the building permit was obtained in June 2012.
86In about August 2012, Ms Powlett discovered where the Niddrie house was located. She visited Ms Comelli’s property and took photographs of its condition. Because of her financial position and the promises made by Mr Weis and Mr Archibald, Ms Powlett was not able to do anything about the Niddrie house herself, until she realised her remaining assets including the other Daylesford property and her St Kilda house.
87In the circumstances, I consider that the evidence establishes a breach of Mr Archibald’s obligations under the contract for the transportation of the Niddrie house.
Damages for breach of the St Arnaud and Niddrie house contracts
88In respect of the contracts, Ms Powlett claims:
a.the repayment of the monies paid to Mr Archibald;
b.the interest paid on borrowings to finance the relocation of both houses;
c.money spent by her “in reliance upon the delivery of the houses”;
d.the cost of restoring the Niddrie house;
e.loss of “income and opportunity”, if the houses had been able to be used as holiday accommodation when they were promised;
f.damages and compensation for “distress, anxiety and depression”;
g.payment of the legal costs of the earlier trial.
89The relevant legal principle to be applied in assessing damages for breach of contract is that, generally, damages are to be awarded so that, as far as money can do so, the injured party is to be placed in the same position as if the contract had been fully performed.
90In the present case, if Mr Archibald had performed his contractual obligations, the St Arnaud and Niddrie houses would have been delivered to Ms Powlett’s Daylesford property. There is no reason to suggest that the houses would not have been renovated as intended and used as holiday cottages for commercial rental.
Assessment of Ms Powlett’s damages
91Ordinarily, damages are awarded so as to place a successful plaintiff in the same position, as if the contract had been performed. However, a plaintiff is not entitled to be placed in a better position. In the present case, it is important to analyse the claims made by Ms Powlett to ensure that she is adequately compensated, but does not recover more than that to which she is entitled.
92Ms Powlett’s expectations from the contracts with Mr Archibald was that the St Arnaud and Niddrie houses would be placed on her property and, after they were renovated, would be let as holiday accommodation.
93This would have involved Ms Powlett:
a.paying Mr Archibald and Mr Weis pursuant to the purchase, transportation and restumping contracts;
b.paying the costs associated with obtaining planning and building permits, interest on certain borrowings and renovating the houses;
c.increasing her assets by the capital improvements to her Daylesford property;
d.receiving income from the use of the renovated houses as holiday accommodation.
94Ms Powlett has claimed in the proceeding the sums she paid to Mr Archibald and Mr Weis and the costs of the projects. Ms Powlett would have expected to have met all or many of these costs, if Mr Archibald had performed his obligations. Ms Powlett has claimed her lost income. She has not, however, attempted to quantify the increased value her property would have had, if the project has been completed.
95There are some costs which Ms Powlett has incurred which she would not have been required to pay, if Mr Archibald had completed the contracts. In general terms, these costs include:
a.the cost of restoring the Niddrie house as a result on the deterioration arising from the period when it was stored at Mr Comelli’s property;
b.additional costs resulting, for example, from the duplication of tasks or the extended time over which borrowings were required;
c.losses incurred which resulted from the realisation of assets, necessitated by the delays in the project.
96However, it is important that Ms Powlett’s damages do not include payments that she would have needed to make in order for her expectations under the contracts to be fulfilled. Certain payments Ms Powlett made may, however, be recoverable if the payments were only made by her in reliance upon Mr Archibald performing his obligations.
97The appropriate quantification of Ms Powlett’s entitlement, if successful with her contractual claims, was not a matter of which Ms Powlett, or indeed the Court, was fully aware during the running of the trial. Further, Mr Archibald was required, during the trial, to make decisions as to whether certain of Ms Powlett’s witnesses needed to attend to give oral evidence and whether documentary evidence would be admitted without objection and without the person preparing the document giving oral evidence. In the circumstances, careful scrutiny of the evidence presented must be undertaken.
98Mr King inspected the house at Mr Comelli’s Daylesford property in 2012. There were tarpaulins or plastic covering on the roof, although they were split down the middle and the western walls and the passageway were not covered. He thought it was in fair condition, but worth resurrecting. Mr King confirmed that at Christmas of 2014, the house was still there although fairly weathered. Mr King saw the house again in February 2014, although he did not look inside. He said the “frame and weatherboards looked all right, although the plaster was not good”. I must have regard to Mr King’s evidence of his observations at these inspections and his evidence of the likely cost of certain works, based on his experience, in assessing the quantum of damages claimed by Ms Powlett.
99The Niddrie house contracts were partly performed by Mr Archibald, and Ms Powlett has arranged to complete the project. In these circumstances, I consider that Ms Powlett should not recover the amounts she paid Mr Archibald, or the costs that were originally contemplated as part of the project. She should, however, recover all additional or duplicated costs, including the additional costs of renovating the house resulting from the deteriorating condition during storage at Mr Comelli’s. She should recover lost income from her inability to use the renovated houses as holiday accommodation.
100The St Arnaud house contracts were not performed at all by Mr Archibald. Ms Powlett has not attempted to quantify the loss of any expected capital improvement to her Daylesford property. I consider that Ms Powlett’s damages should not include the payments made to Mr Archibald. However, the damages should include certain of the expenses Ms Powlett has incurred on the project arising from further work and the delays which would not have been reasonably anticipated if the contract had been performed. These would include the cost of unnecessary borrowings. I would also allow damages for Ms Powlett’s distress, anxiety and depression.
1011. Repayment of monies paid: Mr Archibald asserts that it is appropriate to order that he repay $47,200 plus interest, but only in respect of the St Arnaud house contract. Ms Powlett claims that the total amount she paid to Mr Archibald in respect of both houses was $130,950. I consider, however, that if damages are to be assessed on the basis of what she has lost as a result of Mr Archibald not performing his obligations, that the damages cannot include amounts that Ms Powlett would have needed to pay to be in that position.
1022. Interest on borrowings: Ms Powlett claims that she paid additional interest charges of $53,057.22 as a result of Mr Archibald’s breaches of the contracts relating to the two houses. The additional interest charges included:
Amount Description a. $19,342.00 Interest on $128,950.00 b. $18,771.62 Interest on Adelaide Bank loan c.
$5,200.00 Interest on Vicky Powlett loan $1,500.00 Interest on additional loan Vicky Powlett d. $6,900.00 Interest on David Strong loan e. $451.50 Interest on total disbursements f. $892.10 Interest on RHG additional loan of $17,842.82 $53,057.22 Total
103a. Further loss of use of funds: Ms Powlett claims the sum of $19,342 as the interest foregone, as a result of paying sums totalling $128,950 (actually $130,950) to Mr Archibald. Ms Powlett said that she had calculated the amount claimed by applying an interest rate of 6 to 7 per cent per annum, which was the applicable rate for her house loan. As those sums would have been payable in any event, I do not consider that it is appropriate to allow this item of damages.
104b. Interest on Adelaide Bank Loan: Ms Powlett claims $18,771.62 interest on the loans she obtained from the Adelaide Bank specifically to purchase the two houses and to fund the costs of the subdivision and other matters related to the development. It is likely that Ms Powlett would have borrowed this money in any event, although if the contracts had been performed, the bank loan would have been repaid earlier. I will allow 40% of $18,771.62, or $7,508.64.
105c. Interest on loan from Mrs Vicky Powlett: The sum of $6,700 is claimed as interest on loans totalling $35,000 obtained from her mother Vicky Powlett. When Ms Powlett borrowed the money, she agreed in an email to her mother dated 18 April 2011, to pay interest of 6.5% per annum. A bank statement shows that $23,000 was transferred on 19 April 2011. Ms Powlett repaid the loan to her mother, together with interest as follows:
9/5/14 $1,500
13/5/14 $500
31/5/14 $5,000
17/6/14 $2,000
22/7/14 $600
21/1/15 $500
24/2/15 $2,000
26/2/15 $2,000
27/2/15 $25,000 $39,100
106The evidence supports a finding that additional sums were paid to Ms Powlett’s mother, totalling $4,100. That sum will be allowed as to 80%. It is likely that Ms Powlett would not have needed the second advance and that she would have repaid the first loan within a much shorter period, if Mr Archibald had performed the contracts. I will allow $3,280.
107d. Interest on loan from Mr David Strong: The sum of $6,900 is claimed as interest on the loan from Mr David Strong. There is evidence that Ms Powlett borrowed $23,000 from her former partner Mr Strong on 16 August 2011. It was intended that Ms Powlett would pay 12% per annum interest, and that the loan would be for a period of 8 weeks. She made payments of $13,300 and $5,000 on 1 July 2014 and a payment of $8,100 on 25 February 2015 (totalling $26,400). She claims interest of $6,900 paid on a loan which would not have been necessary if Mr Archibald had not breached the contracts. Based on the figures established by the evidence, I would allow $3,060, being the sum of $3,400 less an allowance of 10% for what Ms Powlett might reasonably have expected the interest to have been for the short-term borrowing.
108e. $751 interest on disbursements: The make-up of this sum is unclear. Interest on disbursements which have been properly allowed will be dealt with by an order for interest on the judgment sum.
109f. $892.10 interest on RHG additional loan of $17,842.82: $50,074 is the difference between Ms Powlett’s home loan when she met Mr Archibald, of $516,251, and the amount of $566,325 paid out to RHG Mortgage Corporation Ltd at the settlement of the sale of the St Kilda property in February 2015. These arrears accumulated as a result of Ms Powlett’s inability to meet mortgage payments for a period of two years prior to the sale of the house. The sum of $50,074 included “arrears and deferral of repayments” totalling $17,842.82 prior to February 2013. This sum was included in the revised loan amount notified by RHG Mortgage Corporation Ltd on 13 February 2013.
110I consider I should allow the sum of $892.10 for the additional interest resulting from the increased borrowing by Ms Powlett from RHG caused by Mr Archibald’s failure to carry out his contractual obligations.
111In the circumstances, I consider that the claims should be allowed in part, as follows:
a.Interest on payments to Mr Archibald NIL
b.Adelaide Bank interest $7,508.64
c.Interest on Mrs V Powlett’s loan $3,280.00
d.Interest on Mr Strong’s loan $3,060.00
e.Interest on disbursements NIL
f.RHG home loan interest $892.10 $14,740.74
1123. Moneys spent in reliance upon performance: Ms Powlett claims that she is entitled to claim as damages the following amounts as a consequence of Mr Archibald’s failure to perform the contracts for the St Arnaud house:
Cost Description Evidence $604 Planning permit (Hepburn Shire Council) Ex P39 & P58 $495 Soil test (Provincial Geotechnical Pty Ltd) Ex P19 & P43 $945 Lawn mowing (Alan Seidler Slashing) 3 payments totalling $745 ($405 on 5/12/11, $190 on 26/1/12, $150 on 7/2/12 and $200 on 30/5/12). These were in addition to a payment of $405 on 19/11/11. Ex P32 & P37 $4,800 Rental to store building materials for houses (Central Highlands Self Storage) 24/1/12 to September 2014 (32 months at $165 per month = $5,280) P52 $875 Architect’s fees (hAArk design) P61 $330 Energy rating (MC² Architects and Energy Consultants) P42
113In my view, Ms Powlett should recover the costs of additional lawn mowing ($745) and rental to store building materials ($4,800), totalling $5,545. The other costs would have been incurred in any event to complete the project.
1144. Cost of restoring the Niddrie house: These costs were claimed by Ms Powlett as having been incurred as a consequence of the deterioration caused by the storage of the house at Mr Comelli’s property:
Cost Description Evidence a. $2,500 Storage fees paid to Mr Comelli Mr Comelli b. $20,000 Cost of moving the house from Mr Comelli’s property to Ms Powlett’s property and restumping the house Ex P53 & P69 c. $24,253 To repair the house to its former condition (Spa Country Builders) Ex P54 $7,977 To re-erect the roof using old timbers and trusses (Spa Country Builders) Ex P70 & P73 $21,560 Re-plaster entire house (Terry Santurini) Ex P55 $4,000 Re-paint house ($25-$30 ph plus materials) Ms Powlett $3,300 Clean up, remove plaster (including $450 for mini skip, $800 labour – 2 days for 2 persons, $8,000 for a further mini skip and one week’s work by Spa Country Builders) Ms Powlett
115a. Storage fees $2,500: The additional costs of restoring the Niddrie house after it was “stored” at Mr Comelli’s property, will include the storage fees of $2,500 paid by Ms Powlett to Mr Comelli.
116b. Removal and restumping of the house $20,000: Kilmore House Removers gave a quotation on 26 February 2014 to “lift, relocate, restump, rejoin and reframe the roof with existing materials the weatherboard house from its present site at Daylesford to a new fairly level site 500 metres distance in Daylesford” for a price of $22,000.
117There is evidence in a bank statement from the Bendigo Bank that Ms Powlett made withdrawals of cash totalling $21,000 on 2, 4 and 25 February 2015. She said that $20,000 of this sum was paid to a house removalist to move the Niddrie house from Mr Comelli’s property to her own property and to restump the house.
118I consider that, in the absence of any evidence to the contrary, and comparing the amount claimed with the figures agreed by the parties in the Niddrie house contracts, that the sum of $20,000 should be allowed as part of Ms Powlett’s damages.
119c. Repair of the house $24,253: A quotation from Spa Country Builders dated 17 February 2014 is in evidence. The quotation is for the cost of new skirting boards and architraves ($8,480), removal and replacement of weatherboards and bracing walls ($10,260 plus the price of weatherboards), replacement of bearers ($4,313) and removal of plasterboards and insulation ($1,200).
120Spa Country Builders quoted on 2 February 2015 for works including “removal of old ceiling joists (many now missing), site measure for truss company, install trusses as per plans, rubbish removal, skip hire, inspections fees, all fixings and associated hardware” at a total cost of $8,456.The builder soon after performed works to the roof, ceiling, windows, plaster removal, wall frames and other clean-up work at a total cost of $7,976.93, which it invoiced on 26 February 2015.
121This work, at least in part, would have been required if Mr Archibald had performed the contracts. This also applies to the quotation by Mr Terry Sariturini in an email dated 4 December 2013 to re-plaster the house for a total cost of $21,560.
122In this regard, it is necessary to consider the following evidence:
a.The condition of the house when it was delivered to Mr Comelli’s property in December 2011 and its condition when Ms Powlett became aware of the location of the house in about August 2012.
b.Although Ms Powlett became aware in about August 2012 that the Niddrie house was stored at Mr Comelli’s property, she was not able to arrange for its delivery to her own property until early 2015.
c.In the meantime, Mr Weis had continued, at least until February 2014, to make promises that he and Mr Archibald would deliver the house to Ms Powlett’s property at Daylesford. In February 2014, Ms Powlett obtained the necessary quotations for the cost of moving and restoring the house.
d.Ms Powlett’s finances did not permit her to undertake the work of moving the house to her own property until she had sold both her other property in Daylesford and her home in St Kilda.
123Ms Powlett also claims $4,000 to repaint the house and $3,300 to clean up and remove plaster, including the cost of skip hire. Apart from Ms Powlett’s oral evidence, there was little else to assist with the task of determining what further works were necessary as a result of the deterioration to the Niddrie house during the period of storage.
124It is difficult to assess the extent of the deterioration which resulted from Mr Archibald effectively abandoning the Niddrie house after it was delivered to Mr Comelli’s property. Ms Powlett became aware of the location of the house in about August 2012. It must have been apparent at some stage that the house was inadequately protected and would deteriorate. In these circumstances, Ms Powlett would ordinarily have been required to take steps herself, at least to have the house securely covered until it could be moved.
125However, the house had been “stored” by Mr Archibald, and he was incurring storage charges to Mr Comelli. Mr Weis continued to make promises in relation to the Niddrie house being shifted until February 2014. In fact, in an email dated about 20 February 2014, Mr Weis suggested that Ms Powlett’s “actions in contacting [Mr Comelli and others] are designed to be obstructive to Keven Archibald’s attempt to comply with your request to relocate the [Niddrie] house on you property”. It is difficult, in these circumstances, to have reasonably expected Ms Powlett to have done anything much until after February 2014.
126Mr King considered that the condition of the bearers and joists was as a result of weathering. The structural condition of the house was much the same at the two inspections. He expected that the weathering was as a result of the age of the building. Mr King had been a builder working on-site for 20 years, and as a registered builder for 10 years. In his opinion, the replastering of a house the size of the Niddrie house would cost about $8,000 to $10,000. To clean up and straighten the house would take about three days and cost $1,500. Mr King said that the bearers and joists were “par for the course”. The wall linings and, doorways may be cracked and require rectification.
127Ordinarily, there would be no reason to change the roof, although it would be “fairly normal to redo the roof” as the timber may be older and likely to split. Tying the roof structure to the walls was not an expensive process. Most people leave the ceiling structure and repatch the roof, as the existing hangers and joists might get in the way of roof trusses. A house on stands may sag, although if the timbers in the house are old and dry, they should not move as they would be seasoned and the additional moisture would not affect them. Mr King said that to rebuild a roof would require two people at $50 per hour for about 10 days, together with the cost of the new timbers.
128The quotations for the restoration works to be undertaken at Ms Powlett’s direction were admitted without the persons preparing the documents being required to give evidence. In these circumstances, the evidence of Mr King is significant, although not determinative. I am satisfied that Ms Powlett intends to have the quoted works performed and to pay the quoted prices.
129The sums claimed represent the costs that will be incurred by Ms Powlett in restoring the house, although not necessarily the cost she is required to pay as a result of the deterioration of the Niddrie house. The costs Ms Powlett is entitled to recover are to repair the additional damage which was occurring to the house until such time as it might reasonably have been expected, in the circumstances, that Ms Powlett would have either moved the house to her property and started renovating or should have better protected the house. No allowance should be made for the costs Ms Powlett would have incurred in any event, if Mr Archibald had completed his obligations under the contracts.
130Ms Powlett has deducted the sum of $60,000 as representing the “cost of renovations” to the Niddrie house, in calculating her claim for “loss of income and opportunity”. I have, however, made an appropriate adjustment in calculating the damages for the “cost of restoring the Niddrie house”.
131I consider that it is appropriate that I should allow to the plaintiff for these matters, damages of $39,000 made up as follows:
Storage fee $2,500 Cost of removal $20,000 Cost of repairs as a result of deterioration including: · new skirtings etc nil · weatherboards nil · bearers nil · remove plasterboard etc $500 · re-erect roof $4,000 · replaster house $10,000 · repaint house $500 · clean up $1,500 $16,500 $39,000
1325. Loss of income and opportunity: Ms Powlett claimed that, if Mr Archibald had performed his contractual obligations, she would have earned income from the houses being used as holiday accommodation.
133Ms Powlett said that her expectation was that both of the houses would have been delivered to her property in Daylesford, renovated and ready to rent out as holiday accommodation by April 2012. She had allowed the total sum of $60,000 to renovate the two houses. On this basis, she claimed the following sums as the net loss of rental income that she had expected to receive from the houses for the period April 2012, as follows:
St Arnaud house $47,080 Niddrie house $130,686 $177,746 less cost of renovations $60,000 $117,746
134Ms Powlett also claimed that as a result of having to sell her property at 60 Greville Street, which she had been letting for holiday accommodation, in order to meet the financial commitments arising from Mr Archibald’s conduct, she had lost income from that property of approximately $40,000.
135Ms Powlett calculated the claim of lost income in respect of the houses as follows:
a.St Arnaud house $47,080
$300 per week for 22 months = $33,600 less rates ($1,900) and waste removal ($220) not paid = $2,120 at February 2014 $31,480 add losses at February 2015 $15,600 $47,080
b.Niddrie house $130,686
$1,000 per week for 22 months = $96,000 less rates ($1,900) waste ($220) recycle ($264) garbage ($198) sundries ($7,680) storage 2 fees ($3,052) elec/gas/water ($4,000) = $17,314 at February 2014
$78,686
add losses at February 2015 $52,000 $130,686
136Inherent in these calculations are the following assumptions:
a.the starting point of the period of 22 months, prior to February 2014, would be April 2012;
b.the St Arnaud house would have returned $350 per week rental holiday accommodation continuously from April 2012;
c.the Niddrie house would have returned $1,000 per week rental as holiday accommodation continuously from April 2012;
d.Ms Powlett would have been required to pay certain expenses which would need to be deducted before determining the income she has lost from the houses having been unavailable for rental as holiday accommodation;
e.The additional expenses claimed in respect of the Niddrie house are apparently expenses relating to both houses and no further allowances need to be made for the St Arnaud house.
f.It is unclear whether these expenses have also been deducted in respect of the year to February 2015;
137In about 2013 Ms Powlett sold the property at 60 Greville Street Daylesford. The booking report for the rental of the cottage on that property for the period 30 June 2009 to 1 July 2013 is in evidence, both to support the claim for lost rental for the Greville Street property and as the basis for calculating the lost rental that would have been earned with the St Arnaud and Niddrie houses. There is also an “appraisal letter” dated 13 October 2011 from Hocking Stuart Pty Ltd real estate agents estimating that a weekly rental on the property at 60 Greville Street Daylesford, “in the vicinity of $340.00 would be achievable”.
138The records show that the following rental was earned from the cottage:
1 July 2009 to 30 June 2010 $45,857.50 1 July 2010 to 30 June 2011 $54,001.00 1 July 2011 to 30 June 2012 $48,151.00 1 July 2012 to 30 June 2013 $50,024.00 $198,033.50 Average yearly earnings $49,508.40
139In my view it would be appropriate to use the figure of approximately $49,500 or almost $1,000 per week as the likely rental the Niddrie house (as similar accommodation) would have been let for, if used as holiday accommodation. The estimate of about $340 per week by the local real estate agents in October 2011 would not be an inappropriate basis to calculate the lost income for the St Arnaud cottage.
140The claimed letting period from April 2012 also seems appropriate. I will accept Ms Powlett’s figures for the expenses she has referred to. I consider, however, that some allowance should be made for the other costs which would ordinarily be expected to be involved in letting holiday accommodation including advertising, booking fees, maintenance etc. Also, it is appropriate to allow a further discount for exigencies, including the possibility that the letting of the cottages would take a period of time before the level of occupation of the existing cottage was reached.
141Accordingly, I propose to allow the sums claimed of $177,746 for the two houses and $40,000 for the Greville Street property, but to reduce the total of $217,746 by 40% to $130,647.60.
1426. Distress, anxiety and depression: Ms Powlett claims $200,000 damages for the “undue stress and humiliation and immeasurable pain and suffering” caused by Mr Archibald’s actions. She said that his actions resulted in “ongoing health issues due to stress and not being able to work at my business, pay bills, meet repayments both to banks and family and falling into a suicidal state” when forced to sell her home.
143Ms Powlett had a clear vision of what she wanted. It is apparent from photographs of the existing cottage in Daylesford, at the time it was moved and in 2011, that the cottage was high quality accommodation. It had been tastefully restored, decorated and the surroundings landscaped. Ms Powlett shared her dream with Mr Archibald and Mr Weis. They knew precisely what she wanted to achieve and the capacity she had to fulfil her goals.
144During 2011 and 2012, Ms Powlett did all she could to advance the project. Mr Archibald and Mr Weis did very little, apart from delivering the Niddrie house to Mr Comelli’s property in Daylesford, and to demand money even when it was not due, to deliberately mislead Ms Powlett and to avoid her when she became increasingly desperate for action from them.
145In the meantime, she was subjected to increasing pressure, both financially and emotionally. The emails between Ms Powlett and her mother detailing the deterioration of their relationship are an example of the “fallout” from the failure by Mr Archibald to perform his contractual responsibilities.
146Contractual arrangements relating to the pursuit of accommodation and business plans, which are bound up with an individual’s personal hopes for their future life, are likely to result in the sort of distress and anxiety which Mr Archibald’s actions have caused for Ms Powlett.
147The Court has limited scope, on the authorities, to compensate a person in this situation. Nevertheless, although Ms Powlett’s claim is not in negligence for personal injury and is not supported by medical evidence, the Court in appropriate circumstances can award modest compensation where a person suffers distress and anxiety as a consequence of a party’s breach of their contractual obligations.
148Accordingly, I propose to include the sum of $30,000 as part of Ms Powlett’s damages, for the distress, anxiety and depression resulting from Mr Archibald’s breaches of the contracts.
1497. Legal costs: His Honour Judge McNamara ordered Mr Weis to pay costs of $6,026.25 in the earlier trial. Mr Weis has not paid those costs and Ms Powlett claims that sum from Mr Archibald. I will deal with that matter when considering the appropriate costs order to make.
Claim for misleading and deceptive conduct
150Ms Powlett alleged that Mr Archibald made three representations which were made “without belief in their truth,” or were made “recklessly”, as follows:
a.the representation in the Trading Post advertisement that the defendants “could provide houses and relocate same to new blocks of land”;
b.the statement by Mr Weis on Mr Archibald’s behalf that, “we’ve got this house in St Arnaud…if you want it you will have to put a deposit on it”;
c.a later statement by Mr Weis on Mr Archibald’s behalf that, “they had a second house located at 4 Gillies Street, Niddrie which they would sell, transport and restump on the plaintiff’s property”.
151The allegations were included in the Statement of Claim, apparently prepared by Ms Powlett’s former lawyers. The pleading relied upon the Australian Consumer Law. The representations were in respect of “future” matters and accordingly the representations are taken to be misleading unless Mr Archibald satisfies the onus upon him of proving that he had reasonable grounds for making the representations.
152In his judgment in the proceeding as between Ms Powlett and Mr Weis, Judge Macnamara examined the same representations as they applied to Mr Weis. Judge Macnamara referred to the fact that, “as between Mr Archibald and Mr Weis, Mr Weis agreed that he was at all times the point of communication with Ms Powlett”. There is nothing in the present case against Mr Archibald which should lead me to reach a different conclusion. Judge Macnamara considered that in relation to the representations that, at the times each of the statements were made, “there clearly were reasonable grounds for making the statement”, and accordingly they did not amount to misleading or deceptive conduct.
153I respectfully agree with the analysis made by Judge Macnamara and consider that it equally applies to Mr Archibald. I have little doubt that much of the conduct of Mr Archibald was reprehensible. However, the specific representations relied upon to found an action in misleading and deceptive conduct are narrow in their scope, and ultimately cannot be substantiated.
154Although Ms Powlett was unrepresented, it was not appropriate for the Court to assist her in this regard, for example, by suggesting that she might review this part of the pleadings. Judge Macnamara clearly stated his conclusions on this cause of action in relation to Mr Weis. Ms Powlett did not seek to amend her claim against Mr Archibald. During the trial, Mr Archibald chose not to call any oral evidence. In my view, the claims must fail if they cannot be supported by the evidence called by Ms Powlett and the inferences that naturally flow from that evidence.
Claim for negligent misstatement
155Similarly, I consider that there is no basis for the pleaded claims based on the torts of fraudulent misrepresentation and negligent misstatement. For the reasons stated in relation to the claims of misleading and deceptive conduct, I respectfully adopt the reasoning and conclusions of Judge Macnamara.
Orders
156The appropriate order is that there be judgment for the plaintiff against the first defendant that the first defendant pay the plaintiff $219,933.34 calculated as follows:
a.
b.
c.
d.
e.
Interest on borrowings
Additional or duplicated expenses
Restoring deterioration to the Niddrie house
Loss of income and opportunity
Distress, anxiety and depression
Total
$14,740.74
$5,545.00
$39,000.00
$130,647.60
$30,000
$219,933.34
157I propose to allow interest pursuant to statute on the sum of $175,192.60, being all the above items save for interest on borrowings and damages for distress anxiety and depression, from the date of the Writ on 20 June 2013. Arguably, some items of recovery might carry interest from an earlier date. Other sums, including the lost income from the renovated Niddrie house, might be referable, in part, to a period after the Writ was issued. I consider, however, that the calculation of interest, as I have proposed, will best do justice between the parties.
158Ms Powlett is accordingly entitled to judgment for the plaintiff against the first defendant that the first defendant pay to the plaintiff the sum of $219,933.34, together with interest pursuant to statute to the date judgment is entered.
159I will hear further from the parties before making formal orders including for costs.
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Certificate
I certify that these 33 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 12 June 2015.
Dated: 12 June 2015
Olivia Bramwell
Associate to His Honour Judge Anderson
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