Sandich v Branov
[2019] VCC 2190
•28 November 2019
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
CI-18-02555
| CARMELLE SANDICH | Plaintiff |
| v | |
| PHILLIP BRANOV | Defendant |
| (by original proceeding) AND BETWEEN PHILLIP BRANOV V CARMELLE SANDICH AND STEVEN SANDICH (by counterclaim) | Plaintiff by Counterclaim Defendants by Counterclaim |
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JUDGE: | HIS HONOUR JUDGE MURPHY | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 20 November, 21 November, 22 November & 25 November 2019 | |
DATE OF JUDGMENT: | 28 November 2019 | |
CASE MAY BE CITED AS: | Sandich v Branov | |
MEDIUM NEUTRAL CITATION: | [2019] VCC 2190 | |
EX TEMPORE REASONS FOR JUDGMENT
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Subject: REAL PROPERTY – CAVEAT - COMPENSATION
Catchwords: characterisation of a payment – whether the payment was a debt or loan – whether a gift for alleged past debts – whether a loan to develop a new property starkly differing accounts - oral evidence - history of familial disputes - improper lodging of a caveat – loss of opportunity – demeanour of witnesses – shifting evidentiary position – moral obligation from past business dealings - implied contractual terms
Legislation Cited: Transfer of Land Act 1958 (Vic) s118 - Penalty Interest Rates Act 1983
Cases Cited: BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR - 266 - The Owners of No.7 Steam and Pump Dredger v The Owners of the SS Greta [1897] AC 596
Judgment: Refer to [169]
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S. Buchanan | Lennon Lawyers |
| For the Defendant | Mr R. Greenberger | Davis Zucco Lawyers |
HIS HONOUR:
1 These proceedings arise out the lodgement of a caveat by Mr Branov on the title of a property in the name of Ms Sandich and its subsequent withdrawal. As a result of the lodging of the caveat, a financier, who was prepared to advance further moneys on the security of the title, refused to proceed. As a result, Ms Sandich was delayed in the completion of a building development on her property. She sought compensation for her losses under section 118 of the Transfer of Land Act 1958.
2 After the caveat was lifted, the proceeding was transferred to this Court. Mr Branov filed a defence and counter-claim to the compensation claim, asserting that he had loaned Mr and Ms Sandich the sum of $100,000.
3 The issues in the proceeding in logical order were, first, whether Mr Branov had in fact loaned $100,000 to either, or both of, Mr and Ms Sandich, and, if so, whether interest was payable on it.
4 The position of Mr and Ms Sandich was that Mr Branov had gifted $100,000 to Mr Sandich.
5 The next issue to be determined was, regardless of whether Mr and Ms Sandich, or one or other of them, was indebted to Mr Branov, what damage had been suffered as a result of the lodging of the caveat on the property of Ms Sandich.
Background to the dispute: family relationships, an employment relationship and a property development.
6 There are familial relationships between the principal parties in this matter. Mr Branov, who is about 10 years older than Mr Sandich, was formerly married to Sofia, the sister of Mr Sandich. Therefore, Mr Sandich was the brother-in-law of Mr Branov.
7 After Mr and Ms Sandich married, they stayed for a period with Mr Branov and his former wife Sofia, a witness in these proceedings. Another witness is Mr Tomaskovic, who is married to another sister of Mr Sandich, Maria.
8 There was evidence given that, when Mr Sandich was aged 17, he commenced working with Mr Branov in his business. The evidence was that he ceased working for him when a proposal that had been made by Mr Branov to Mr Sandich did not seem to eventuate. The proposal was that once he, Mr Branov, had secured himself financially, he would look to reward Mr Sandich if he put effort into his job. Nothing really came of that and Mr Sandich chose to move on. He went to work for his father, learning to be a painter and decorator for a period of about 10 months.
9 Thereafter, Mr Branov called him and said he wanted to make some sort of offer to him. Mr Branov said to Mr Sandich that he was finding it very difficult to run the business without his assistance, and he asked to come and, in return for his support once he was financially secure, he would offer him 15 per cent of the business as a reward. This occurred towards the end of 1993.
10 At that point, Mr Branov had been married to Mr Sandich's sister for about 10 years. Mr Sandich returned to work for Mr Branov. He was receiving an amount of money at the end of each week and in relation to profits, 'It was agreed that Phillip would look after them and take of it after that[1]'. Mr Sandich never received any share of the profits and he stated, 'Phillip was putting them aside for us and accumulating them, so I thought … that’s told me he was doing.[2]’ Mr Sandich said he asked Mr Branov a couple of times for his share of the profit and he was told, 'They're not there[3]'.
[1] Transcript (T) 91.28-29
[2] T 93.6-9
[3] T 90.20
11 After four or five months, he asked Mr Branov again and was told there was $50,000 that had been accumulated.[4] Mr Sandich stated that his response was, 'That sounds incredibly wrong[5]'. He asked him to reconsider the figures. He told Mr Branov that the business was making $100,000 profit per year and that what Mr Branov was telling him was that the company was making less than when he first worked for them.
[4] T 92.2
[5] T 92.4
12 After two or three weeks, Mr Branov came back and said there was only $15,000 left. He then asserted to Mr Branov, 'You stole my money. Could you please give me my money?[6]' Mr Branov said, 'No', and he left. He said he would bring it up subsequently but did not speak to him for quite a few years after that.
[6] T93.31- 94.5
13 Mr Sandich stated he next spoke to Mr Branov on his 25th birthday, saying to him, 'You will forever owe me that money till you pay me back[7]'. Mr Branov did not respond and just left. Mr Branov's account of the employment relationship was that he did employ Mr Sandich for about three and a half years. Mr Sandich had resided with Mr Branov and his wife for at least or possibly three years. He was helping him out and he was training him in the sales.
[7] T 94
14 Mr Branov stated that Mr Sandich was not interested in the business and he would speak to him on many occasions because he had caused problems. At no stage did he say that there was a discussion regarding an incentive.
15 At one stage he said to him, 'I put to him that if he showed enthusiasm that maybe we can look into creating some sort of – like some sort of incentive program where he can obtain a share of the business.[8]’ Mr Sandich's motivational performance did not progress from there. That was at about 1996.
[8] T 156.26
16 Mr Sandich's employment was terminated after Mr Sandich was hooning around with the company ute and damaged it. Mr Branov said that Mr Sandich was just sort of upset when he left and did not make any claims on him at that point in time.[9]
[9] T 157.19
17 Some years later, Mr Sandich married Ms Sandich and they stayed with Mr Branov and his wife for a period of time. The parties were on good terms and there were no grievances.
18 It was common ground in this proceeding that, in August 2005, Ms Sandich purchased a property at 14 Cuthbert Road, Reservoir. It was the family home of Mr and Ms Sandich and their son born subsequently.
The conflicting accounts as to the receipt of a cheque for $100,000 by Ms Sandich.
19 At the heart of this proceeding is the characterisation of a payment of $100,000 by Mr Branov to Ms Sandich on 5 August 2014. There are starkly conflicting accounts between Mr and Ms Sandich and Mr Branov as to how the money is to be characterised, with Mr and Ms Sandich asserting that the $100,000 was a gift by Mr Branov to Mr Sandich. Mr Branov's account, on the other hand, was that this was a loan of $100,000 by him to Mr and Ms Sandich to assist in the development of a second dwelling on the property.
Evidence of the Sandich’s
20 Mr Sandich's account is that after he recommenced working with Mr Branov he was in a retainer-type situation and would occasionally receive some profits. Everything seemed to be going well but he never saw his 15 per cent of the business. He was merely receiving a wage. He was told by Mr Branov that the profits were being put aside and accumulated. When they got to a substantial enough level , he would pay him. Mr Sandich never saw the profits, and he left.
21 At that point, he asked for his share of the profits and he was told that they were not there. He again asked Mr Branov, and he said there was $50,000 there that we had accumulated. Mr Sandich said, 'That sounds incredibly wrong', and asked him to check it again. This was about five months Mr Sandich recommenced with Mr Branov.
22 There was only he and Mr Branov working in the business. Mr Branov came back and said there was only $15,000 left. Mr Sandich then put to Mr Branov that he stole his money, stating, 'Can you please give me my money?' Mr Branov refused to do so and left.
23 For some years after that, Mr Sandich refused to speak to Mr Branov but, on his 25th birthday, he said to Mr Branov, 'You will forever owe me the money till you pay me back'. Mr Branov did not respond. Sometime thereafter, he began the relationship with Ms Sandich. He did not want to bring her into a turbulent situation and wanted to be a happy family.
24 Later, Mr Branov was having issues in his marriage and he was concerned that, if they separated, he would lose a great proportion of his wealth. This was in approximately 2012 or 2013. It was at that point that Mr Sandich said to Mr Branov that he could provide him with an ear but he would not feel sorry for him if he was going to lose money through divorce.
25 He asserts Mr Branov had stolen his money and he had nothing. He said he was not sympathetic towards Mr Branov. Mr Branov did not respond.
26 Subsequently, there was a discussion at Mr Sanidich's father's place, where Mr Sandich stated that he was 'unsympathetic to your cause regarding your financial situation because of what you done to me. I did not deserve that and you should never have done it.[10]’
[10] T 96.10
27 Mr Branov apologised and said. 'I should never have done that to you.[11]’ He then said to Mr Branov, 'Now, surely you should return my money'. Mr Branov said, 'No', and walked out.[12] He did not speak to Mr Branov for a year or so. He then heard that Mr Branov was in a dark place and established contact with him again. They would catch up regularly for coffee or dinner, mainly at Mr Sandich’s house.
[11] T 96.12
[12] T 96.17
28 In discussions during these meetings, Mr Sandich raised with Mr Branov the issue if Mr Branov providing him with the money. Mr Branov would raise the issues of his divorce. Mr Sandich would then say, 'Return my money for once and for all.[13]’ He then said his work was very patchy and, 'I've accumulated some debts in my lifestyle and finding it hard to keep up. Why don't you just return my money?[14]' They had a few conversations around that issue and he said if I could support him and be there for him, and I agreed and said, 'Yes.[15]'
[13] T 97.8
[14] Ibid
[15] T 97.16
29 There were further discussions that Mr Branov said. 'Why don't I just lend you the money rather than give it to you?' Mr Sandich replied that, 'I may accept that but you also need to consider your obligation to me.[16]’ The figure that was discussed was $100,000.[17]
[16] T 97.22
[17] T 97.26
30 This was calculated by Mr Sandich 'roughly accumulated back approximately 20 years ago, would be that in current days' climate be worth that much.[18]' After that, Mr Branov instructed a solicitor to have some terms and conditions drawn up regarding a loan. Nothing was set in stone.
[18] T 97.28-31
31 Mr Branov had seen Mr Sandich a couple of times in the next couple of weeks and Mr Sandich said he had debtors knocking and he needed to take care of some bills, telling Mr Branov, 'Can you look to getting the money to me sooner rather than later?[19]' Mr Branov said he will call him in the next few days and the he keeps his chequebook at work. Mr Sandich then said that Ms Sandich had RDOs on Monday and it would be convenient for her to meet Mr Branov as he cannot get there.
[19] T98.12
32 When asked as to whether it was a gift or a loan, he said after Ms Sandich collected the cheque and told him that she had banked it, he asked her whether Mr Branov had asked her to sign documents and she said, 'No[20]'. He denied that the money had been provided by Mr Branov for a second dwelling at Cuthbert Road.
[20] T 99.30
33 The account of Ms Sandich was that she was aware of discussions between her husband and Mr Branov. Mr Branov would come to her house and have chats that she said she had little involvement in. She said there were talks about moneys between Steve and Phillip due to their business relationship. It was an ongoing conversation. She noted that they were discussing a figure and that Mr Sandich had come up with $100,000 and it was initially going to be a loan from Mr Branov.
34 She also had a conversation with Mr Branov's lawyer at the time regarding it being a loan. However, it ceased being a loan and turned into a gift the day she went to pick up the cheque.[21]
[21] T 46.15
35 The account of Mr Branov was that he accepted that he employed Mr Sandich. There was some discussion about looking into creating some sort of incentive but Mr Sandich did not improve. He did return to work and there was finally an incident regarding the ute and Mr Sandich left his employment. He made no claims at that point in time. Thereafter, he married Ms Sandich. They resided with Mr Branov and his wife and they were on good terms.
36 In relation to the cheque for the $100,000, his account was that Mr and Ms Sandich called him over for dinner one night and explained that they wanted to build a residence at the back of the house, and a carport and a garage and asked if they could borrow $100,000 from him rather than borrowing it from the banks because the banks might put them under a bit of pressure. [22]
[22] T 181.8
37 They said, 'Look, you will be flexible'. He then said he was happy to help them out. If the loan was just for 12 months, he would not charge interest but after that he would charge interest. They did not dispute that and were actually quite happy.
38 He was also told by Mr Sandich that once he sells the back dwelling the moneys owing will be repaid. He suggested to them that it would be possible to refinance the whole property and rent the dwelling out. Mr Sandich said that they will decide that when the time comes. They were both together in these conversations, that is Mr Sandich and Ms Sandich.
39 Mr Branov indicated that he was having marital difficulties at the time. His own wife was not present and Mr Sandich told him not to tell his wife Sofia about it. He also noted that they were supportive of him during the issues with his wife. He was definite that the $100,000 was never a gift. It was always a loan. [23]
[23] T 160.28-29
40 He contacted a solicitor and told him he would be lending $100,000 to Mr and Ms Sandich for the building development and to get them to give him a call and he would write up the conditions. He ascertained that there had been a discussion between the solicitor and Ms Sandich but he did not know exactly the communications. He spoke to Ms Sandich a few times, who said she was having trouble contacting the solicitor.
41 In the end, he provided the cheque for $100,000 without any document being signed. He said that Ms Sandich had pressured him as he needed the money to get things done quickly and could he get the money sooner.
42 He felt a bit under pressure but did not want to have Mr Sandich under pressure, so he wrote the cheque and gave it to Ms Sandich.[24] He cannot recall who told him to put it in the name of Ms Sandich. She came to collect it. As far as he was concerned, the transaction was to 'lend them this money for the purpose of developing the back property.[25]’
[24] T 162.1
[25] T 162.25
43 When Ms Sandich picked up the cheque, there was no discussion that it was not a loan. No loan agreement was subsequently entered into. He kept pressing Ms Sandich to contact his solicitor, but she kept saying she couldn't get in contact with him and he did not take the matter any further.
44 The question of the loan was raised by his own wife at one stage after she saw a message on his phone. His own wife was quite upset and he said to her, 'Look, I'm lending it to your brother. He's building another house and it's going to come back'. He never said it was a gift. He also never said he was paying it because Mr Sandich was indebted to him.[26]
Subsequent events
[26] T 163.25-T 164.3
45 Mr Branov gave evidence that he was aware that there were delays in getting the building works commenced due to permits. Subsequently, on 11 November 2015, Ms Sandich signed a building contract. Although 12 months elapsed, he did not seek to have the loan repaid as he was aware that the building had not commenced.
Subsequent events regarding the caveat
46 It was common ground that in November 2016, solicitors for Mr Branov forwarded a letter of demand to Ms Sandich seeking a return of the $100,000. Subsequently, solicitors acting on behalf of Mr Branov lodged a caveat on the title of the property asserting an interest as chargee.
47 Shortly prior to the service of the letter of demand for the return of the $100,000, work on the building had stalled as Ms Sandich was unable to make the fixing progress payment. She was then seeking to refinance the property by borrowing a further $93,000 through a mortgage broker or financier.
48 Her evidence was this loan had been approved by the broker in early February 2017 but the bank refused to settle the loan because a caveat had been lodged on the property. Ms Sandich subsequently took proceedings to have the caveat lifted, which ultimately occurred on 7 October 2017. Mr Branov accepts that the caveat was wrongly lodged.
49 In these proceedings, Ms Sandich seeks compensation for the lodging of the caveat while Mr Branov, by counter-claim, seeks to recover the $100,000 advanced in August 2014 and interest.
Resolving the conflicting accounts as to the $100,000 payment
50 As submitted in closing addresses, there was starkly conflicting evidence as to the circumstances of the payment of the $100,000 and its characterisation. In circumstances where there is conflicting oral evidence as to a transaction, the Court looks for supporting material for one side or the other.
51 Counsel for Mr Branov referred to email exchanges between Ms Sandich and Mr Branov's solicitor on 23 July 2014as supporting Mr Branov's account that this was a loan to Mr and Ms Sandich. The email reads:
Carmelle Sandich
Wed 23/07/2014 12:04PM
Sent Items
To: Michael Canzoneri
Hi Michael,
Sure here is the details again:
1. Full names of all the parties:
Steven Sandich and Carmelle Sandich
2. Full addresses of all the parties:
14 Cuthbert Rd Reservoir 3073
3. Loan Amount:
$100,000
4. Payment terms; and
Lump sum to be paid within 18 months
5. Any other things you and Phillip have discussed that you would like included in the Agreement.
NO[27]
[27] Court Book (CB) 25
52 Item 4 reads: 'Payment terms and lump sum to be paid within 18 months'. An earlier version of that same email at 11.15 am, in regard to item 4, reads: 'Lump sum to be paid within 24 months'.[28]
[28] CB 26
53 Ms Sandich's account of the transaction between her husband and Mr Branov was that, essentially, she was purely an administrator and the loan referred to in the email did not eventuate and that Mr Sandich told her:
Question: 'What happened in terms of the loan?'
Answer: 'It never came to fruition. It ceased to exist. This was it. It was all I knew about it.
'I was purely the administrator here and just, um, nothing happened, and then Steve said,
"It's nil. It's no longer a loan. Phil's going to finally, you know, give me back – through the business arrangement, give me back my money. He's going to give it to us as a gift", and I went there and picked up the cheque'.[29]
[29] T47.21-28
54 As far as she was concerned, she first heard that the money was a loan when she received a letter of demand on 10 November 2016. It was at that time she went to see Dellios West Lawyers.
55 Under cross-examination, she conceded in her discussions with Mr Canzoneri that there were looks of it being a loan, but she maintained that the letter from the solicitors, from Dellios West, was correct in that she was not involved in the conversation between Mr Branov and her husband.
56 She was strongly cross-examined as to her involvement before the handing over of the cheque. The matters were between Mr Sandich and Mr Branov because Mr Branov owed her husband moneys. Ms Sandich did not have the full details but she was aware of the alleged share of the profits and an ongoing saga.
57 Her explanation for the contents of the email was that she was putting it together to get the ball rolling and trying to work out some terms at that point when it was a loan. She had decided herself, without reference to her husband, that she was prepared to shorten the duration of the loan from 24 months to 18 months.
Question: 'So I want to suggest to you hadn't spoken to your husband but you had yourself decided that you were prepared to shorten the duration of the loan from 24 months to 18 months. Is that so?' 'Correct'. '
So this was not just a situation of some transaction between Steven, your husband, and Mr Branov. You were yourself involved in the process of negotiating the terms of this loan, weren't you?'
Answer: 'At this stage, yes.[30]’
[30] She conceded that at T54.19-26
58 Mas Sandich’s explanation as to why she picked up the cheque was that she was available on that that day to pick it up. It was easier for the cheque to be put in her name, to bank the cheque and then transfer the money to her husband.
59 Mr Sandich gave evidence that he was not sure whether the $100,000 was going to be a loan or a gift before the cheque was actually handed over. He did not recall any discussion about payment of interest if the loan was not to be repaid within 12 months.
60 The first time Mr Sandich was told that the money was to be returned was a few months after receiving the money, when he had a discussion with Mr Branov about providing affidavits in support of his family law issues. Mr Sandich declined to do that but would be there if Mr Branov needed comfort. It was at this point Mr Branov said, 'I want my money back'. Mr Sandich responded, 'What are you talking about? That money is mine'.
61 To the best of his memory, the next time there was any suggestion by Mr Branov that he wanted the money back was when there was a caveat on the property. He then went to obtain legal advice.
Events as to lifting the caveat
62 After the financier declined the refinancing, Mr and Ms Sandich sought to have the caveat lifted and went and attended the office of Dellios West Solicitors in Fairfield. In evidence was a letter to the solicitors for Mr Branov dated 9 March 2017 which reads:
Dear Madam,
Re: CARMELLE SANDICH v PHILLIP BRANOV
Caveat No AN3293018We refer to our open letter of even date
Our instructions are that Steven Sandich borrowed $100,000 from his relation by marriage Phillip Branov in August 2014. Steven intended to use that money to ameliorate other debts of his.
Carmelle was not involved in that arrangement in any way.
However subsequently she received some benefit of the $100,000 borrowed by Steven which she spent personally.
Despite her denial of liability and only to avoid the cost and inconvenience of litigation, if the caveat is withdrawn forthwith, she is prepared to waive her rights to damages against Phillip and pay him in full and final settlement of all claims between Carmelle and Phillip the sum of $100,000 within 6 months or 7 days after the settlement of her proposed sale of one of the dwellings on the land (whichever is later).[31]
[31] CB 34
63 Under cross-examination, Ms Sandich maintained that she had been let down by the solicitors and was given really bad advice. She told the court that they made it feel like 'we had no leg to stand on.[32]’ She was very confused by all of this. She then retained new solicitors.
[32] T 85.12
64 Mr Sandich gave evidence that he told the solicitors of the situation and that Mr Branov 'returned my money which was $100,000'. Mr Sanidch told her that he had gifted it to him but the trainee lawyer stated that there was no way the Judge will believe that it was a gift.[33]
[33] T 102.16
65 Both of Mr and Ms Sandich were frustrated. That was when they were advised that 'Mr Branov has you over a barrel. The only way out for you is to repay him.[34]’ He denied that he had given the instructions as set out in the letter.[35] The suggestion about returning the money was made after advice from solicitors.
[34] T 102.29
[35] At CB34
66 In a subsequent letter from Ms Sandich's current solicitors dated 29 June 2017 to Mr Branov's solicitor, the letter stated:
Dear Madam,
…
We Act for Mrs Carmelle Sandich.
…
We are instructed as follows:
In our about July 2014 your client made available to our client the sum of $100,000 by way of repayment of loan from your client to Mr Steven Sandich our clients husband.
The provision of $100,000 was between your client and our clients husband, in any event or further in the alternative, no security was provided or requested for the $100,000.[36]
[36] Ibid 39
Other evidence as to the transaction
67 Evidence was led from Sofia Sandich. She had been married to Mr Branov until September 2016. She recalls that in mid-2014 seeing an SMS referring to Mr Branov 'providing my brother Steve with $100,000.[37]’ At that time there were marital problems between her and Mr Branov. She asked him why he was giving Steven $100,000.
[37] T 147.21-22
68 He said, 'It is part of a gift and I owe him money … it's not your business.[38]’ She said that he said he was 'gifting' him $100,000. She agreed she had been in a protracted matrimonial dispute with Mr Branov. She did not accept that the use of the term 'gifting' was strange.
[38] T147.2-5
Evidence of Mr Tomaskovic
69 Mr Tomaskovic is married to the sister of Mr Sandich. He knows Sofia Sandich. He established a friendship with Mr Branov. Approximately 14 years ago, there was an incident where the relationship soured with Mr Branov. He was not in contact with Mr Branov for over 10 years.
70 Five years ago, he re-established contact with Mr Branov. Mr Branov came around to his place. He told Mr Tomaskovic about the issue with Mr and Ms Sandich and, in particular, Mr Sandich not repaying the $100,000. Mr Tomaskovic then confronted Mr Sandich about the matter and Mr Sandich said to him 'he borrowed it and that what he did is wrong and he needs to give it back.[39]’
[39] T 249.7
71 Subsequently, Mr Sandich came to see him again and asked him to do him a favour. He referred to the fact that Mr Branov had put a caveat on the house and he wanted it removed. Mr Sandich asked for Mr Tomaskovic to speak to Mr Branov. Some months later, Mr Sandich returned and advised Mr Tomaskovic that the caveat lodged by Mr Branov was illegal and that he was going to sue Mr Branov.
72 It was on the fourth visit where Mr Tomaskovic was told that Mr Branov's lawyer had made an error and that the money given was no longer a loan, it was now a gift. Mr Tomaskovic asked why the 180-degree turn.[40] He was told that Mr Sandich had been given advice by his lawyers to say it was a loan and now he had advice to say it was a gift. He identified this fourth meeting as having occurred on 15 October 2017 referring to there is a CCTV photo.[41]
[40] T 251.26
[41] CB 386
73 In what Mr Tomaskovic believed was the third meeting, he stated that Mr Sandich had raised with him his belief that Mr Branov should owe him some form of payment from the time he when he was working with Mr Branov and it would come to $100,000, and Mr Sandich believed he is morally entitled to it.
74 There was a final meeting between Mr Sandich and Mr Tomaskovic. Mr Sandich had told Mr Tomaskovic to tell the lawyers that he had legal advice to say it was a loan.[42] He was strongly cross-examined but maintained his account of the conversation.[43]
[42] T 255.2
[43] T 260.19-21
75 Mr Sandich was cross-examined about the meetings and denied telling him about the loan but admitted telling him he wanted the caveat lifted. He maintained that crucial pieces of Mr Tomaskovic's evidence were inaccurate.
Assessment
76 In his closing address, counsel for Mr and Ms Sandich argued that the Court should reject the account of Mr Branov as to the 5 August transaction. It was submitted the Court should accept that there were discussions between Mr Branov and Mr Sandich concerning a historical dispute and earlier business dealings prior to when the money was given. It was submitted that Mr Sandich's evidence was that it was several discussions and the Court needs to determine which of the witnesses were truthful in respect of the transaction itself.
77 He invited the Court to accept Mr Sandich's evidence, which is that when he had a discussion with Mr Branov to collect the money, Mr Branov should not get Ms Sandich to sign anything as he would be giving him the money as a gift. Mr Branov said he would think about it and then, when the cheque was handed to Ms Sandich, nothing was required to be signed.
78 Counsel submitted that the Court should accept that there was no discussion about the proposal to build a unit because there were no quotes obtained from the builder until September 2015. The suggestion that they sought the funds for the building from Mr Branov does not have a ring of truth because Ms Sandich subsequently went to a bank via a broker to get the money. The money sought from Mr Branov was not enough to build the property and, in any event, the building works did not commence until a lot later.
79 Mr Branov's evidence was also challenged on the basis that the cross-examination of Mr Branov was that there was only one conversation about a loan. Yet, under cross-examination, Mr Branov's version changed and that there were multiple conversations between him and Ms Sandich as well as with a lawyer.
80 Further, the issue of interest only emerged during in cross-examination. It was not referred to in the pleadings or in Mr Branov’s evidence-in-chief. It was only in the course of course of cross-examination that he gave evidence that his lawyer actually suggested a rate of interest.
81 Counsel further submitted that in the counter-claim as originally pleaded, it was the conversation concerning the $100,000 was referred to as a conversation only between Mr Sandich and Mr Branov, whereas subsequently it was amended to include Ms Sandich as being involved.
82 Moreover, during his evidence-in-chief, Mr Branov referred exclusively to conversations with Mr Sandich rather than the two of them. It was put to the Court that this supports the evidence of Ms Sandich that she was not involved in the discussions between Mr Branov and Mr Sandich, and that there was no joint loan to the two of them.
83 Next, counsel referred to the actual handing over of the cheque and nothing was said at the time that it was to be by way of a loan. Mr Branov's failure to discuss the provision of the funds being by way of a loan at the time is consistent with them not being by way of a loan but, rather, by way of a gift. This would be in accordance with the earlier conversation with Mr Sandich that Ms Sandich was not to sign anything, with Mr Branov deciding, while there may have been earlier discussions about a loan, to make the transaction a gift.
84 Next, it was submitted that the lack of any documentation being signed is consistent with the transfer being a gift. It was put that the Court should reject Mr Branov's explanation as to why he had not followed the matter up with Ms Sandich, his evidence being that he gave priority to his deteriorating matrimonial situation.
85 The Court should find that there was a historical rift between the two of them and so, contrary to the submission of Mr Branov, there would not be any thank you profit at the time. This was in response to a submission that, if Mr Sandich was receiving a gift of $100,000, then, in the normal course, one would have expected some acknowledgement and thanks.
86 It was submitted that the lack of any documentation was consistent with Mr Branov's evidence that he knew the importance of documenting important matters. It was further not put to Ms Sandich that she was having trouble, or not contacting the solicitor in relation to documentation, and the solicitor in question was not called to give evidence.
87 It was also submitted that the fact that the cheque was paid to Ms Sandich does not take the matter any further, when the account by Mr Branov was that it was a loan to both of them. This applies particularly when the property was in her own name. The cheque butt was not produced and so could not advance the case one way or the other.
88 In relation to the letters from the solicitors, counsel submitted that both Ms Sandich and Mr Sandich gave explanations as to how the solicitor's letters came to be written. Mr Sandich was effectively told he had been put over a barrel. He was told he had to concede that the money was advanced by way of loan.
89 Ms Sandich gave evidence she had received very poor advice and that was how the letters came to be written. Letters written on a without prejudice basis should not be as heavily scrutinised as otherwise. The letter from the current solicitors in the matter showed sloppy drafting.
90 It was not suggested that there was a loan advanced by Mr Branov but it was a moral obligation between the two of them arising out of past business dealings. Mr Buchanan submitted that the solicitors for Mr Branov could be similarly critiqued because they were seeking to push responsibility to both Mr and Ms Sandich when the original letter of demand only went to Ms Sandich and the caveat was lodged on Mr Branov's instructions when there was no basis to do so.
91 Counsel invited the court to accept the evidence of Sofia as supporting the evidence of Mr Sandich that the funds were advanced by way of gift. He accepted that although she had been involved in a matrimonial dispute with Mr Branov, the Court should not determine that her evidence is necessarily untrue.
92 Counsel for Mr and Ms Sandich also invited the Court to give little weight to the evidence of Mr Tomaskovic as he obtained his original information from Mr Branov and was in his court right from the start. Further, at the time that Mr Sandich told Mr Tomaskovic that he owed the money, he had received legal advice to this effect and so this does not advance the case.
Mr Branov's response is persuasive
93 In a strongly contested case such as this, the Court looks to the inherent probabilities as a matter of human experience and supporting evidence that favours one side or the other. The account of Mr Sandich is that, on 5 August, Mr Branov gifted him the sum of $100,000 as distinct from loaning that amount to Mr Sandich and Ms Sandich to assist in a property development. This requires a court to go back to the original relationship between Mr Branov and Mr Sandich some 20 years earlier.
94 Mr Sandich's position was that when he was working for Mr Branov, Mr Branov had effectively misled him as to his getting a share of the profit of the business or a profit share and that led him to leave the business. At the time the business was that of Mr Branov, who was about 10 years older than him.
95 Thereafter, the evidence was that Mr Sandich actually lived at one stage with Mr Branov and his wife. It appears there were cordial relations. Yet the account of Mr Sandich was that, on an occasion subsequently, he raised this alleged entitlement with Mr Branov and he subsequently accepted the fact that he did owe Mr Sandich something from their past relationship.
96 If that in fact was the case, it is inherently unlikely that Mr Branov would propose to lend some historical entitlement to Mr Sandich rather than pay it outright. That is where the emails of 23 July 2014 are relevant.[44] They expressly consider a loan of $100,000 to Mr and Ms Sandich.
[44] Refer CB 25
97 The account of Mr and Ms Sandich requires Mr Branov to effectively change his mind in the period between 23 July and 5 August 2014 and provide the money by way of an outright gift. Mr Branov at all times denies that. Mr Sandich's own evidence as to how the cheque that was ultimately received became a gift had an air of uncertainty. It was premised on whether or not Mr Branov required Ms Sandich to sign any document when she received the cheque.
98 It is inherently unlikely, in relation to a transfer of a sum of that magnitude, that its characterisation should depend on whether or not the recipient, who is not to be the ultimate beneficiary, did or did not sign a document, particularly where the earlier email of 23 July refers to a loan.
99 Mr Branov denied the assertion by Mr Sandich in relation to the actual delivery of the cheque and rather said that after the original discussions Mr Sandich had contacted him and sought to expedite the loan process. There was also a conflict as to whether Ms Sandich actually had an RDO on the relevant date, which also sheds doubt on Mr Sandich's account.[45]
[45] T 119.20-31
100 The failure of Mr Sandich or Ms Sandich to explain in any detail what the $100,000 was to be used for in the event that it was a gift is a significant matter. Within family relations, it is often the case that moneys are provided. Usually, however, for an amount this size, it is likely that there was some substantive proposal that would be put forward.
101 This is consistent with the evidence of Mr Branov that the context of the original discussion for the money was the proposed development of a unit on the property. That would also explain why there was reference in the email of the 23rd of the loan being to both parties as well as who would both benefit from the transaction and to the loan being paid back within 24 months or 18 months, which would allow time to develop the property.
102 There was no evidence led as to any other way by which Ms Sandich and Mr Sandich would be in a position to repay a loan of that size within that period.
Assessment of the evidence of Mr Sandich and Ms Sandich
103 Mr Sandich was the subject of searching cross-examination and I found his responses generally unsatisfactory. Many of his answers were given with, 'I don't recall correctly', and, 'That would be incorrect', and, 'That's inaccurate', without any elaboration.
104 He was unable to recall anything in great detail of his conversation with Mr Tomaskovic and, in particular, he denied the conversation where it was put to him that he told Mr Tomaskovic the basis upon which he was owed the $100,000 by Mr Branov, and also the conversation where Mr Tomaskovic said that his position had changed from a loan to a gift. He did provide some detail, wherein he said he had told Mr Tomaskovic that Mr Branov had him over a barrel, now claiming that the money he had given him was a loan and he was in trouble.
105 Further, he admitted he had told him that he had received legal advice. The insistent reference to legal advice as to whether it was a loan or a gift is significant in that it seeks to shift responsibility for the admission contained in the 9 March 2017 letter from the solicitors as distinct from being a truthful statement by him. On one view, it could be seen, to use an analogy from the criminal law, as being consciousness of guilt or an admission against interest.
106 His explanation for the contents of the letter of the Dellios West, wherein the solicitor stated that it was a loan was unsatisfactory. It is inherently unlikely that a firm of solicitors would write a letter other than on instructions, particularly where the clients had seen the firm's principal. His denial that the aim of the letter by the solicitors was seeking to shift liability for the loan from him in order to shied Ms Sandich, in whose name the property was, was unconvincing.
107 Similarly, Ms Sandich's account as to being the subject of incompetent legal advice from the first solicitors and being it being dealt with by a junior solicitor was unconvincing. The fee memorandum indicates that both parties attended and they were seen by the principal of the firm, Mr Dellios.
108 Mr Sandich was unable to explain the incorrect assertion that he had lent $100,000 to Mr Branov as asserted in the letter by the second firm of solicitors.
109 This shifting of position by Mr Sandich and Ms Sandich from a gift of $100,000, as asserted in the original evidence, to an acknowledgement that it was a loan from Mr Branov to Mr Sandich in the letter of 9 March 2017[46], to an assertion in the letter of 29 June 2017 that Mr Branov had 'made available to our client the sum of $100,000 by way of repayment of a loan from your client to Seven Sandich, our client's husband[47]' is very damaging to the credibility of the account of Mr and Ms Sandich.
[46] CB 34
[47] Ibid 39
110 The shifting of position somewhat mirrors the account by Mr Tomaskovic, which was that Mr Sandich had first admitted the transaction was a loan and then subsequently said it was a gift after referring to a long past business deal. The whole narrative must also be considered in the light of the 23 July email which states that the transaction is for a loan to both parties.
111 In his closing address, counsel for Mr Branov submitted that the account of Mr and Ms Sandich was inherently implausible. It was implausible that Mr Branov would gift $100,000 to Mr Sandich based on some long past business arrangement dating back to when Mr Sandich was a young man just starting out.
112 It was also implausible that there was no thank you. It was implausible that Mr Branov would account to Mr Sandich after such a long delay. The explanations proffered as to why solicitors would incorrectly relate instructions were unsatisfactory.
113 The 23 July email indicated that there had been discussions about a loan and Ms Sandich conceded that she was involved in negotiating the loan at that point. That indicated that both of them were to be the borrowers. Her admission that she was involved in negotiating the loan terms at that point lies uneasily with her earlier statement that she had effectively been a messenger.[48]
[48] Refer to T 54.23-26
114 It is also consistent with her active involvement, subsequently with the builder in relation to obtaining finance and in the building project itself. It was submitted that Mr and Ms Sandich had subsequently sought to shield Ms Sandich from any loan because the property was in her name.
115 Mr and Ms Sandich had a reason to seek to borrow the money which was to assist in the development of the unit. The evidence of Mr Tomaskovic that Mr Sandich had told him that there had in fact been a loan given, and Mr Sandich's position, which evolved to it being a gift after the initial statements that it was a loan, was convincing.
116 Mr Tomaskovic’s evidence significantly damages the credit of Mr Sandich and supports the account of Mr Branov, and can be seen as a significant interest against interest. He appears a credible witness and there was nothing to indicate that he had a motive to favour one side or the other.
117 Having considered the competing accounts, I found the evidence of Mr Branov as to the August 2014 transaction preferable. It was supported by the details in the 23 July email. It is supported by the good relationship between the two families, which makes the assertion that he would provide a significant profit share to a young man of his own business after a short period of employment inherently unlikely. It is also inherently unlikely that where there was a good relationship between the parties that it would provide a basis for some accounting 20 years later.
118 The shifting of position by Mr Sandich as to whether it was a loan or a gift cannot be satisfactorily explained by saying it was as a result of legal advice and goes against the credit of both Mr and Ms Sandich. The evidence of Mr Tomaskovic, who I regard as a cogent witness, supports the account of Mr Branov. The evidence of Sofia, who had an obvious animus against Mr Branov does not carry a cogency that would lead me to doubt the evidence of Mr Branov.
119 For all those reasons, I find that Mr Branov did lend Mr and Ms Sandich the sum of $100,000 on 5 August 2014. In reaching my conclusion, I have also put into the mix of my consideration the demeanour of all the witnesses. Mr Branov and Mr Tomaskovic answered questions without equivocation and with an appearance of candour. In contrast, both Mr and Ms Sandich appeared evasive and equivocated as they sought to explain what, on its face, is an unlikely scenario.
120 I also accept Mr Branov's evidence that the loan was to be interest-free for the first 12 months and that it would carry interest after that time. I accept that no agreement was reached between the parties as to the rate of interest.
Interest claim on the loan by Mr Branov
121 Mr Branov sought interest at the penalty interest rate from 5 August 2015. The penalty interest rate under the Act[49] includes an element of penalty. This was resisted by counsel for Mr and Ms Sandich on the basis that, in this case, the loan was to be as an alternative to a bank loan.
[49]Penalty Interest Rates Act 1983 (Vic)
122 There is evidence as to what the bank lending rate was at that time based on the rate that Ms Sandich was intending to borrow had the caveat not been lodged, namely, 4.7 per cent. That amount would be for a secured loan. This loan was unsecured and, indeed, that was to be the basis upon which it was sought pursuant to the evidence of Mr Branov, although this was denied by Mr Sandich.
123 Overall, I prefer the evidence of Mr Branov that Mr and Ms Sandich sought a facility that would be flexible. In those circumstances, I regard it as appropriate to allow interest at the rate of two per cent above the 4.25 per cent that Ms Sandich was already paying on her second facility which financed the build. I will allow interest at the rate of 6.25 per cent on the loan from 5 August 2015 until the date of issue of the counter-claim and thereafter at the penalty interest rate.
Claim for compensation for lodging the caveat.
124 Turning to the claim by Ms Sandich for compensation following the lodging of the caveat against the title by Mr Branov, the main items of the claim as asserted by Ms Sandich were interest claims against her by the builder for delay, additional administration costs charged by the builder prior to the resumption of work and loss of rental income due to the delayed completion of the construction. The caveat itself was not lifted until 17 October 2017.
When would the project have been completed?
125 It is first necessary to determine when, had the caveat not been lodged, the project would have been completed. From invoices in the court book, it appears that the original fixing stage invoice was 13 September 2016.[50] Ms Sandich replied by email of 15 September that it will be finalised by 20 October and went on: 'We understand that works will be placed on hold until payment is received.[51]’
[50] CB 400
[51] Ibid
126 On 17 October 2016, the spreadsheet was provided to Ms Sandich indicating the total amount due at that point was $69,411.31 plus GST. There was also the final 10 per cent payment of $24,616.13 to be paid in due course.[52]
[52] Ibid 404
127 Ms Sandich was then seeking a further loan from her financier to meet that payment and allow the works to recommence. It was this loan that was approved in early February 2017 that subsequently did not proceed because of the existence of the caveat.
128 On the evidence of Ms Sandich, funds would have been available with a 10-day turnaround after approval. Thereafter, when the caveat stopped the financing proceeding, the financier gave Ms Sandich three months' grace to seek to have the caveat lifted. It was not lifted, as I indicated, until 7 October 2017.
129 By letter forwarded in late October or early November 2017[53], the builder set out amounts which were outstanding at that stage, which was the final fixing payment due of $79,146.80.
[53] Ibid 387
130 In addition to that, there was a $6,000 administration charge which was raised in invoice number 0189 dated 20 December 2017[54]. In that letter, the builder also sets out the final payment due of $23,473.16. The builder indicates that he would not recommence until all the amounts were paid. Thereafter, the amounts outstanding were not paid.
[54] Ibid 405
131 Ms Sandich was able to pay $50,000 on 10 April 2018 and $29,146.80 on 29 June 2018 against the amounts outstanding. The builder then needed a further invoice dated 9 October 2018 for interest on the outstanding amounts in the sum of $3,469.61. Work did not recommence at that point although some minor stonework was undertaken in September 2018.
132 Ultimately, after Ms Sandich was able to satisfy the builder that she was in a position to finance the balance of the building cost, including proffering a letter from the ANZ Bank dated 23 November 2018[55], the builder agreed to recommence work. The project was ultimately completed in late March 2019.
[55] Ibid 473
Was the builder entitled to charge interest on late progress payments?
133 There are two issues here: first, whether the builder was contractually entitled to charge interest for the late progress payments and, second, over what period is the interest claim attributable to the invalidly lodged caveat?
134 In evidence, the builder indicated that he had not charged interest in the past. The contract provided for 10 per cent per annum on late payment of the progress payments. In the letter forwarded in late November[56], the builder indicated that he sought interest.
[56] Ibid 410
135 Further, in a subsequent invoice for the outstanding fixing payment, he made the further invoice for $3469.61 that was raised on 9 October on the late payment of the two partial payments. In addition to that, the builder had charged 10 per cent interest on the approximate $69,000 of the fixing payment that was overdue to raise it to $79,000, and then you add the $6,000 and you get to the $85,000 that was due.
136 I accept the submission of Ms Sandich's counsel that these interest payments do flow from the refusal of finance following the lodging of the caveat. I do not accept the submission of counsel for Mr Branov that the builder had no legal entitlement to charge interest. It was submitted that the contract was uncertain because clause 31 in the standard form HIA Contract[57] which referred to interest on late payments had not been signed by the parties as part of the contract.
[57] Ibid 338
137 Counsel for Ms Sandich, however, submitted that the Court could find that there was agreement between the parties that interest at the rate of 10 per cent per annum be allowed for late progress payments given that it is included in the schedule to the contract that was signed, this is at clause 8.
138 The contract itself provides for the payment of progress payments and sets them out. It also provides that it is a fixed price contract but may be altered as result of 'interest on overdue payments, refer to clause 31.[58]’
[58] HIA Contract CB 347
139 This is a case where, even if it could be said that the court could not construe from the document that the parties had agreed to 10 per cent interest on late progress payment, then, on the principles of BP Refinery (Westernport)[59], a term that interest would be payable pursuant to clause 31 of the HIA standard contract would have been agreed as an implied term to give efficacy to the agreement between the parties.
[59]BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266
140 I do not accept that it required rectification of the contract. I therefore reject the submission that the builder was not entitled to claim interest on the outstanding progress payments. In any event, there is a second basis as to why Ms Sandich would be entitled to recover from Mr Branov the interest payment she made to the builder as a consequence of the delays caused by the lodging of the caveat. This would be that it was a reasonable response by her in the circumstances in order to complete the building contract.
141 The builder had said he would not recommence the works until he was paid all outstanding payments and the invoices for the interest on the late payments, and the claim for the additional administration costs.
142 It was reasonable for Ms Sandich, in the position she was in, to pay the amount sought by the builder in order to complete the project. Mr Branov is not in a position, as the person who lodged the caveat without justification, to criticise Ms Sandich, who was seeking her losses by taking action to have the builder recommence the project.
Claim for the $6,000 administration costs
143 In relation to the claim for $6,000 for additional administration costs set out in invoice No.0189 dated 20 December 2017 and the letter sent in late November 2017[60], the builder gave evidence that, due to the delay, he had to source new trades and consider the state of the project before restarting the project.[61]
[60] CB 410
[61] T217.27
144 In addition, items that had been costed when the original contract had been entered back in September 2015 may now cost more. Had the delay been shorter, then he may not have raised the relevant invoice. He gave an explanation for the invoice, that it was on the basis of the additional costs due to the delay and the need to make arrangements to restart the project.
145 The project was ultimately substantially recommenced in late November 2018. That is 26 months after the project stalled in September 2016. Had the caveat not been lodged, the project would have recommenced in February 2017 when the funding was obtained. Thus, six months of the 26 months' delay cannot be attributed to that event. I propose a pro rata apportionment. Therefore, 20 of the 26 months ought be allowed against Mr Branov. That is 20/26ths of $6,000, which is the sum of $4,615.
Interest saved and interest costs not incurred
146 It was the case of Ms Sandich that, as a result of lodging the caveat and its subsequent withdrawal on 7 October, it took her a period from late February 2017 until late November 2018 to pay the funds to recommence the build.
147 The court raised with counsel whether Ms Sandich would be required to give credit for the amount of interest that she would have paid over that period under the facility that was rejected as a consequence of the caveat being lodged. Counsel conceded that such an allowance may be appropriate.
148 Counsel for Mr Branov, on the other hand, submitted that Mr Branov ought be entitled to require Ms Sandich to give credit for all of the interest liability that she would ultimately have incurred on the facility that she had applied for, and was approved, but which ultimately did not proceed.
149 He submitted that the amount that Ms Sandich would have been required to pay in interest which, on the loan application, involved 352 monthly payments at 4.48 per cent for five years and thereafter at 4.38 per cent over the 30-year loan term, should be the subject of credit in favour of Mr Branov. He submitted that the interest amounts would thus far exceed any damage suffered as a result of the lodging of the caveat.
Consideration
150 While I was initially attracted to the submission of Mr Branov and to the idea that Ms Sandich should give credit for interest that she did not incur over the period until the property was completed, I have reached the conclusion that no allowance either way should be made.
151 Compensation under s.118[62] is to be construed broadly. Damage incurred is not necessarily to be considered within the lens of a contractual framework. Rather, in my opinion, tortious principles ought apply and a party ought to be put back, as far as possible, in a position they would have been had the wrongful conduct not occurred.
[62]Transfer of Land Act 1958
152 The matter can also be looked at with the benefit of hindsight. Here, I am satisfied that the delay in completion of the project from a notional completion date of 1 June 2017 to 31 March 2019 is causally related to the conduct of Mr Branov in lodging the caveat. Thus, for that period, Ms Sandich has been unable to rent the property or, alternatively, has lost the use of the property.
153 The fact that Ms Sandich did not successfully pursue a loan extension with her financier after the February 2017 refusal is a choice that she made or was imposed upon her and it is not for Mr Branov to criticise her or to assert that he would be in a position to take the benefit or oblige her to give him credit for the interest expense she would have incurred under the refused facility.
154 The damage that Ms Sandich suffered by reason of the delayed completion of the project, being loss of rental that would have been obtained, additional interest to the builder and the proportional amount of administration costs remain regardless of how she ultimately financed the balance of the project. Effectively, she financed it from her own resources, or from her father, but it took until November 2018 for that to occur and for the builder to resume work on the project.
155 I, therefore, reject the submission on behalf of Mr Branov that credit should be given for notional interest under the finance facility not provided or any alternative facility not taken up.
Loss of rental calculation
156 The evidence was that a certificate of occupancy was issued by the council on 7 March 2019. Ms Sandich gave evidence they moved into the property soon after. The builder gave evidence that there was still two or three weeks' worth of work done as at the date of the certificate of occupancy.
157 It was common ground that Ms Sandich would have sought to rent out the property upon its completion. Having regard to the above evidence, I regard 1 April 2019 as the date when the property would have been available for rental.
When would the property have been completed had the caveat not been lodged?
158 The case of Ms Sandich is that although the building project had been stalled from around 2016, she had put in place action to obtain finance to pay for the fixing invoice and would be in a position to complete the project. The loan variation was formally approved on 3 February 2017[63].
[63] CB 356
159 Ms Sandich gave evidence that she expected to be in a position to settle the loan within two weeks, to allow the builder to recommence. The builder's evidence was that, as at February 2017, the project would have been finished in two and a half to three months[64]. On that basis, I find that the project would have been completed by around 1 June 2017.
[64] T 218.9
160 In reaching this conclusion, I have taken into account the evidence of the builder. His evidence was subject to some valid criticism due to its lack of specificity and the absence of the usual builders' diaries, and he gave evidence that although the works had been stalled for a short period at that time, the time to resume the works would have been much more truncated than when the works were ultimately resumed in October or November 2018 and concluded by late March 2019; thus, I accept the submissions of Ms Sandich on the point of the estimated time when the building would have been completed.
Loss of rental claim
161 Counsel for Ms Sandich sought loss of rental on the basis of the evidence of the valuer from when the property would have been completed until when it was actually completed. Based on the above findings in relation to when the property would have been completed had the caveat not been lodged to when the property was actually completed, I am satisfied that the appropriate period for the loss of rental claim is from 1 June 2017 to 31 March 2019.
162 Based on the annual rental set out in the evidence of the valuer, this equates to one year at $20,280 per annum and 10 months at $22,360 per annum, a total of $38,913.
163 Counsel for Mr Branov, relying on the evidence of the valuer, submitted that the rental claim should be discounted on the basis that council rates should have been allowed for, as well as other contingencies such as inability to obtain a tenant and repairs.
164 Counsel for Ms Sandich submitted that the appropriate method of calculation is to assess the loss on the basis of the loss of use of a profit-earning chattel or asset, such that the market rent that would have been paid for alternative use or accommodation is appropriate, and thus the submitted deductions should not be made. He relied on the case of The Owners of No.7 Steam and Pump Dredger v The Owners of the SS Greta[65].
[65]
165 I accept the submission of counsel for Ms Sandich on this point. The conduct in lodging the caveat has, as a consequence of the delay in completion of the project, kept Ms Sandich out of the use of a profit-earning asset. The appropriate measure of damages is, in the circumstances, the rental that the property would have earned on the open market as set out in the valuer's report. I do not accept that this measure of damages requires the allowances sought by Mr Branov.
The interest claimed by the builders
166 So before the builder would recommence the project, he required Ms Sandich to pay the outstanding invoices, including the fixing invoices, the invoices for the interest on the outstanding fixing payment, as well as an additional invoice of $6,000 for the additional administration costs.
167 She paid those invoices and satisfied the builders that she had sufficient funds to pay the final completion payment, and the builder recommenced the project in late October 2018. As I indicated, he concluded it in late March 2019.
168 Ms Sandich is entitled to recover from Mr Branov the two invoiced amounts of interest in the sum of $3,469.51 and the other amount of interest, which I have not quite got the figure.
169 On the claim by Ms Sandich, I will allow her the sums of $17,820 plus $38,913, which is $56,733, and interest at the penalty interest rate from the date of issuing the proceedings. On the claim by Mr Branov, it is interest at the figure I mentioned, of 6.25 per cent, from 5 August 2015 until the date of lodging of the counter-claim and thereafter at the rate fixed under the penalty interest rate. Costs to be taxed in default of agreement of both sides.
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