Robert Pryke Investments Pty Ltd v Blazai Pty Ltd

[2000] NSWCA 222

NEW SOUTH WALES COURT OF APPEAL

CITATION:     Robert Pryke Investments Pty Ltd v Blazai Pty Ltd [2000]  NSWCA 222

FILE NUMBER(S):
40406/99

HEARING DATE(S):           11 August 2000

JUDGMENT DATE:            18/08/2000

PARTIES:
Robert Pryke Investments Pty Ltd v Blazai Pty Ltd

JUDGMENT OF:      Priestley JA Handley JA Sheller JA   

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S):        DC 7506/96

LOWER COURT JUDICIAL OFFICER:     Goldring DCJ

COUNSEL:
Appellant - J.B. Whittle SC / P.P. O'Loughlin
Respondent - F.S. McAlary QC / B. Slowgrove

SOLICITORS:
Appellant - Baldwin, Oates & Tidbury
Respondent - Dennis & Company

CATCHWORDS:
Conveyancing Act ss66K, 66M
factual findings by trial judge

LEGISLATION CITED:
Conveyancing Act

DECISION:
Appeal dismissed. Costs orders varied.

JUDGMENT:

THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA     40406/99
  DC     7506/96

PRIESTLEY JA
  HANDLEY JA
  SHELLER JA

Friday, 18 August 2000

ROBERT PRYKE INVESTMENTS PTY LIMITED

v   BLAZAI PTY LIMITED

CONVEYANCING ACT - SECTIONS 66K, 66M.

The trial judge found that the plaintiff, purchaser of land, was entitled pursuant to s 66M to a reduction of the purchase price payable to the defendant vendor. The defendant’s appeal sought to contest (i) factual findings by the trial judge; (ii) whether the plaintiff had discharged its onus to show what the reduction should be; (iii) a costs order made by the trial judge.

Held: (i) no basis for changing the trial judge’s factual findings; (ii) there was sufficient material before the judge to discharge the plaintiff’s onus; (iii) the court would make a minor variation to the trial judge’s costs orders, but not of sufficient significance to affect the costs orders on the appeal which would otherwise have been made.

ORDERS

1.Appeal dismissed subject to the trial judge’s costs orders being set aside so that in their stead the following costs orders may be and are made:

Order that the defendant pay the plaintiff’s costs until 9 October 1997 on a party and party basis and that the defendant pay the plaintiff’s costs from 9 October 1997 on a solicitor and client basis, except for the costs thrown away as a result of the matter not being heard on 16 November 1998, such costs to be paid by the plaintiff to the defendant.

2.The appellant to bear the respondent’s costs of the appeal.

THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA     40406/99
  DC     7506/96

PRIESTLEY JA
  HANDLEY JA
  SHELLER JA

Friday, 18 August 2000

ROBERT PRYKE INVESTMENTS PTY LIMITED

v   BLAZAI PTY LIMITED

1. PRIESTLEY JA:  This appeal is against a judgment of Goldring DCJ which was delivered after six days of hearing and obliged the trial judge to consider a great many points. The notice of appeal contained seventeen grounds but when the appeal came on for hearing only four of these were pressed. In explaining and deciding these grounds it is necessary only to set out a small part of the matters that were considered by Goldring DCJ. The case this court needs to consider is a much smaller case than the one the trial judge had to decide.

2. The matters material to the appeal as it took shape in this court are the following, stated more or less in the form and order of allegations in the plaintiff’s (respondent’s) amended statement of claim which were either admitted or held by the trial judge to be proved. The respondent agreed to purchase and the defendant (appellant) agreed to sell land with improvements on it, including specified buildings. In accordance with s 66K of the Conveyancing Act 1919 the risk in respect of damage or loss to the land did not pass to the respondent until settlement. Pursuant to s 66M(4), if the premises were damaged and the purchase price not reduced upon completion, the plaintiff could recover the amount that the purchase price ought to have been reduced by in accordance with s 66M(1). After contracts had been exchanged for the sale and purchase of the land and before settlement of the sale and purchase, the appellant allowed the property to be damaged in that it failed to prevent the removal of a particular prefabricated building; (this allegation in the amended statement of claim was more than satisfied by the trial judge’s finding that the defendant had consented to the removal of the building). The sale and purchase were settled on 3 October 1996. Before settlement it was agreed between the respondent and the appellant that the settlement would be subject to reservation by the respondent of the respondent’s rights in respect of the building which had been removed. The respondent claimed compensation in the sum of $119,080 being the estimated cost of replacing the building. The respondent claimed further sums by way of damages.

3. Upon the foregoing facts the trial judge found that the respondent was entitled to an abatement of the purchase price pursuant to s 66M. He held against the respondent in regard to its other claims. Thus, the trial judge in the end had to assess, pursuant to s 66M, the amount by which the purchase price should have been reduced because of the removal of the building.

4. Section 66M is as follows:

   “Abatement of purchase price where land damaged

   (1)“Where land is damaged after the making of a contract for the sale of the land and before the risk in respect of the damage passes to the purchaser, the purchase price shall be reduced on completion of the sale by such amount as is just and equitable in the circumstances.

   (2)Subsection (1) applies whether or not the land concerned is substantially damaged.

   (3)Subsection (1) does not apply where the damage was caused by a wilful or negligent act or omission on the part of the purchaser.

   (4)If the purchase price is not reduced on completion of the sale of land as required by subsection (1), the amount by which the purchase price should have been reduced may be recovered by the purchaser from the vendor as a debt.”

5. The evidence before the trial judge concerning the amount which he should fix under s 66M(4) included a quotation by Mr K. Notley, Sales Consultant, for the installation of a new building to replace the one that had been removed. The trial judge, basing himself on this quotation and the fact that the building had been on the site for at least five years before it was removed, decided that a just and equitable reduction of the purchase price of the land, to compensate for the removal of the building, would be $106,524, less a discount of 20% to allow for the age of the building removed. The resultant figure was $85,219.20 to which the trial judge added a further $3,465.36 to take account of the cost of removal of rubbish. Interest was $22,996.04. The resultant judgment sum was $111,680.60.

6. When judgment was delivered the respondent sought indemnity costs. An offer pursuant to Pt 19A of the District Court Rules for the sum of $85,000 plus costs, dated 8 October 1997, had been served on that day. (The parties and the court proceeded on the basis that Pt 19A was still operative at relevant times. It was replaced about that time by Pt 39A, in similar but more explicit terms. Nothing turns on the difference.) Part 19A had the effect, in the circumstances, of entitling the respondent to solicitor and client costs from 8 October 1997, unless the court otherwise ordered. The trial judge thought he should order solicitor and client costs accordingly, and did so, subject to one matter. This arose from the fact that the case had been listed for hearing on 16 November 1998 before her Honour Judge English, but had then been adjourned. Judge English ordered the respondent to pay the appellant’s “indemnity costs of the proceedings to date, but not on the basis they be assessed and paid for forthwith”. Judge English of course had not been aware of the compromise offer that had been made.

7. Clearly however, Judge Goldring, when making orders for the overall costs of the proceedings, in the light of the offer of compromise and also of what had happened before Judge English, had power to consider whether he would leave her order for costs standing. In the end he ordered that the appellant pay the respondent’s costs from 9 October 1997 on a solicitor and client basis except for the costs thrown away as a result of the matter not being heard on 16 November 1998 and in respect of those costs made no order.

8. The grounds of appeal pressed and argued on behalf of the appellant when the appeal came on for hearing were:

   “4. Having accepted that the respondent bore the onus of proving the quantum of the abatement of any loss, his Honour erred in holding that the respondent had discharged this onus.

   5. His Honour erred in assessing that a just and equitable reduction of the purchase price was $85,219.20 (sic).”

   “16. His Honour erred in altering the costs order made by English DCJ on 16 November 1998.

   17. His Honour erred in awarding indemnity costs to the respondent as and from 8 November 1997.”

9. Grounds 4 and 5. The respondent did not dispute in this court that the trial judge had been right in holding that it had borne the onus of proving the amount it was claiming under s 66M(4). The only dispute before this court was whether the respondent had discharged the onus.

10. Before the trial judge there was evidence both about the description and state of the vanished building, immediately before it was taken by persons not identified at the trial. There was also evidence of the cost of a building of like size and character to replace it. Some of the evidence was to the effect that the vanished building had been in a dilapidated state; other evidence was that it was in excellent condition. The main witness who gave evidence that the condition of the building was poor was a witness of whom the judge had said that he had developed animosity against the principal of  the respondent and his evidence was unreliable. The witness who said that the building was in excellent condition was found by the trial judge to be reliable, independent and truthful. His evidence about the building was accepted.

11. Stated briefly, the theory of the appellant’s submission in support of ground 4, involved five steps: (a) the removed building was of some age; (b) the only costings that could be obtained related to a replacement building, which it seems on the evidence in the case, had to be new; (c) it therefore became necessary for some deduction for betterment to be made before a just and equitable reduction of the purchase price could be arrived at under s 66M(1). This idea of an allowance for betterment in such circumstances was based on Stephenson v State Bank of New South Wales Ltd (1996) 39 NSWLR 101. So far, the appellant’s submission is acceptable. The fourth step was that (d) the respondent, to discharge its onus of showing what the reduction amount should be, must, as part of its case, put evidence before the court from which the betterment figure could be assessed. Finally, it was submitted that (e), this was not done.

12. Assuming, without deciding, step (d) in the appellant’s favour, the appellant fails on the facts, in my view, as to step (e). The respondent, in putting evidence before the court of the nature and state of the building before it was taken away and of the cost of its replacement with a new building, put sufficient factual material before the court to enable the court to make its assessment of the s 66M(4) amount.

13. At this point, consideration of ground 4 overlaps with that of ground 5. I think ground 4 fails because there was enough material before the trial judge for him to decide what was a reasonable price for a replacement building and to make a reasonable estimate of the betterment allowance. Ground 5, as argued, amounted to saying that the trial judge should have assessed a larger betterment allowance. As to this, however, it seems to me that the trial judge’s 20% betterment approach was an evaluative assessment and that in arriving at it he had to make a judgment based on the evidence before him of the cost of a replacement building and the evidence before him of the state of repair of the removed building. The element of judgment in this evaluation is such that an appellate court would not interfere with the conclusion based on it unless it appeared that the trial judge had made some serious mistake in approach, calculation or result. In my opinion, nothing of that kind appears in the present case. In my view, ground 5 also fails.

14. Grounds 16 and 17. Subject only to the questions arising from the costs order made by her Honour Judge English on 16 November 1998, I cannot see any justification for this court interfering with the trial judge’s exercise of discretion in regard to costs. He appears to me quite clearly to have been trying to carry out the purpose that is evident from the terms of the costs rules in Pt 19A.

15. I have earlier mentioned that it seems to me that the trial judge had power to reconsider the order that had been made by English DCJ on 16 November 1998. The power to alter an interlocutory costs order earlier made in proceedings by a different judge should ordinarily be used very sparingly, particularly if the parties may have been relying to some extent on the existence of that earlier order in their subsequent approach to the case. Occasions for the use of the power will arise more frequently in cases such as the present when the judge who earlier exercised the power was (necessarily) not aware of earlier offers of compromise which might affect the overall costs position at the end of the proceedings. The judge at the stage of making an interlocutory order must apply the ordinary rules about costs. So far as I can see, the judge making the final costs orders may not often have reason to disturb such an earlier order, even in light of the still earlier compromise offer. Here, however, not only was there the earlier compromise offer which, as matters turned out, the appellant would have done well to accept, but the judge making the interlocutory order appears to have gone beyond the ordinary course in making a costs order which went further than dealing with the costs thrown away by the adjournment. As recorded, her order gave the appellant indemnity costs of the entire proceedings up to 16 November 1998. It is difficult to see any justification for this. The ordinary order would have been that the respondent pay the appellant all costs thrown away because of the matter not being commenced on the allotted first day of hearing, 16 November 1998.

16. The trial judge was right, in my opinion, in deciding to alter Judge English’s order, but he in turn departed from what I would regard as the norm, which would have been for him to replace her order with an order that the respondent pay the appellant the costs thrown away, not that each party be left to bear its own costs of the adjournment. It might nevertheless be debatable, however, whether that departure from the norm would be sufficient to justify this court in interfering with the trial judge’s exercise of discretion. This question was being debated, with the court showing some indication of moving to the view that the trial judge’s order should, in this respect alone, be changed, when counsel for the respondent sensibly said that the respondent would not oppose an alteration of the trial judge’s order to accord with the more usual order as I have expressed it above.

17. The result is that Grounds 16 and 17 both fail, subject to this court changing the trial judge’s costs order in the manner already indicated.

18. Conclusion:  The appeal should be dismissed subject to so much of the trial judge’s order for costs being set aside as is necessary to allow that order to be re-stated as follows:

    Order that the defendant pay the plaintiff’s costs until 9 October 1997 on a party and party basis and that the defendant pay the plaintiff’s costs from 9 October 1997 on a solicitor and client basis, except for the costs thrown away as a result of the matter not being heard on 16 November 1998, such costs to be paid by the plaintiff to the defendant.

19. The appellant’s very limited success in the appeal should not, in my opinion, be reflected by any favourable costs order in the appeal. In my view, the appellant should bear the respondent’s costs of the appeal.

20. I therefore propose the following orders:

    1.Appeal dismissed subject to the trial judge’s costs orders being set aside so that in their stead the following costs orders may be and are made:

    Order that the defendant pay the plaintiff’s costs until 9 October 1997 on a party and party basis and that the defendant pay the plaintiff’s costs from 9 October 1997 on a solicitor and client basis, except for the costs thrown away as a result of the matter not being heard on 16 November 1998, such costs to be paid by the plaintiff to the defendant.

    2.        The appellant to bear the respondent’s costs of the appeal.

21. HANDLEY JA:  I agree with Priestley JA.

22. SHELLER JA:  I agree with Priestley JA

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LAST UPDATED:    13/09/2000