Singh v Lugondela

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

PROPERTY LIST

S CI 2017 05019

RAGHBIR SINGH	Plaintiff
v
BORA FRANCINE KAHEBWA LUGONDELA (by litigation guardian, Tim Robinson)	First Defendant
REGISTRAR OF TITLES	Second Defendant

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JUDGE:	Derham AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	4 August 2020
DATE OF JUDGMENT:	31 August 2020
CASE MAY BE CITED AS:	Singh v Lugondela
MEDIUM NEUTRAL CITATION:	[2020] VSC 544 (revised 2 December 2020, 21 October 2021)

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DAMAGES – Breach of contract for the sale of land – Whether rule in Bain v Fothergill applicable – Whether damages to be measured at time of breach or at a later time – Johnson v Perez (1988) 166 CLR 351; Noske McGinnis (1932) 47 CLR 563; Wroth v Tyler [1974] Ch 30; Holmark Construction Company Pty Ltd v Tsoukaris (1986) 4 BPR 9131; Vouzas v Bleake House Pty Ltd [2012] VSC 534.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr K E W Mihaly	Vernon Da Gama & Associates
For the First Defendant	Ms A Hando	Russell Kennedy
For the Second Defendant	No appearance
For the Third Parties	Mr C Smith	BN Law Limited trading as Barry.Nilsson

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Summary of conclusions.................................................................................................................. 2

Factual Background........................................................................................................................... 2

The Contract................................................................................................................................... 2
Plaintiff’s attempts to complete the Contract............................................................................ 4

Procedural history.............................................................................................................................. 8

Pleadings........................................................................................................................................ 8
Delays............................................................................................................................................ 10

Plaintiff’s evidence and submissions.......................................................................................... 15

Additional costs........................................................................................................................... 16
Lost value..................................................................................................................................... 16
Loss of amenity............................................................................................................................ 17

Defendant’s evidence and submissions...................................................................................... 18

Third parties evidence and submissions..................................................................................... 22

Plaintiff submissions in response................................................................................................ 25

Consideration.................................................................................................................................... 28

Does the rule in Bain v Fothergill apply?.................................................................................. 28
What damages are recoverable?............................................................................................... 33
What is the date of the breach?................................................................................................. 35
What is the date of the assessment of lost value?................................................................... 36
What is the lost value?................................................................................................................ 41
Additional costs........................................................................................................................... 44
Rent...................................................................................................................................... 44
Finance costs....................................................................................................................... 45
Legal costs thrown away.................................................................................................. 46

Loss of amenity............................................................................................................................ 47

Conclusion......................................................................................................................................... 47

HIS HONOUR:

Introduction

The plaintiff seeks an assessment of his damages pursuant to order 51 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules). The plaintiff was the purchaser under a contract of sale under which the first defendant (I will call her the defendant)[1] agreed to sell to the plaintiff the property at 71 Damask Drive, Tarneit, Victoria (Property). On 12 April 2019 Judgment was entered for the plaintiff against the defendant for damages for breach of contract in a sum to be assessed.
[1]Early in the proceeding the Registrar of Titles informed the Court he did not intend to appear and later he was dismissed from the proceeding, although the title of the proceeding remained as it is.

The defendant has brought third party proceedings against Hillside Property Conveyancing Pty Ltd (Hillside) who acted for her in the conveyancing transaction, and Zlata Dizdarevic, a director of Hillside and a registered conveyancer. The claims arise from alleged breaches of a duty of care, and misleading or deceptive conduct engaged in trade or commerce, by Hillside and Dizdarevic advising the defendant she could sell the Property although she was not the registered proprietor.

For the purposes of the assessment of damages, the plaintiff relies primarily upon the affidavit of Douglas Biggs, valuer, sworn 24 May 2019 (plaintiff’s valuation) and the affidavit of the plaintiff made on 30 May 2019 (second Singh affidavit). In addition, the plaintiff, defendant and third parties referred to matters the subject of evidence given by Mr Gavin Da Gama, the solicitor for the plaintiff, in his affidavits made 30 May 2018 (first Da Gama affidavit), 31 July 2018 (second Da Gama affidavit) and 22 November 2018 (third Da Gama affidavit). The defendant relies on her affidavit made on 20 July 2018 (Lugondela affidavit). The third parties rely upon the valuation evidence of Aaron Campbell, a Certified Practising Valuer, of Australian Valuation & Advisory Group Pty Ltd, dated 11 November 2019 and 11 March 2020 (third party valuations) as well as an earlier affidavit of the plaintiff made on 30 May 2018 in support of his application for summary judgment (first Singh affidavit).

Summary of conclusions

There were many issues and sub-issues raised by the parties’ submissions. In summary, for the reasons which follow, not all of them need to be determined. It is sufficient to say in summary that:

(a) The first question was whether the rule in Bain v Fothergill[2] applied. In this case, the reason that the defendant was not able to complete the contract of sale was her inability to compel the mortgagee to discharge the mortgage. That is not a defect in title within the meaning of the rule in Bain v Fothergill.

(b) The next major question was when the plaintiff’s damages should be assessed. I have concluded that, properly advised, the plaintiff should have proceeded for damages for breach, instead of continuing to press for specific performance, much earlier than he did. He should have done so a reasonable time after being informed that the mortgagee would not discharge the mortgage without authority from the registered proprietor, Mwamba Kande.

(c) The plaintiff will be allowed damages comprising $24,870.88 for lost value, $1,500 for additional finance costs and $5000 for legal costs thrown away, making a total of $31,370.88, plus interest pursuant to s 60 of the Supreme Court Act 1986 (Vic).

[2](1874) LR 7 HL 158 (Bain v Fothergill).

Factual Background
The Contract

By contract of sale dated 18 March 2017 (Contract) the plaintiff agreed to buy and the defendant agreed to sell the Property. The purchase price for the Property was $473,000 payable by a deposit of 5% ($23,650), which was paid, with the residue ($449,350 plus or minus adjustments) payable at settlement on 18 April 2017. The Contract was in the standard form prescribed by the Estate Agents (Contracts) Regulations 2008 (Vic).

The registered proprietor of the Property at the date of the Contract and at all relevant times thereafter was Mwamba Kande, the ex-husband of the defendant. A mortgage of the Property by Mwamba Kande to the Australia and New Zealand Banking Group Ltd (ANZ Bank) was registered on the title. The defendant believed she was able to sell the Property on the basis of the advice and representation made to her by the third parties. On a date prior to the date of the Contract, Mwamba Kande signed a transfer of land, probably ‘in blank’. The defendant gave evidence that the real estate agent who assisted her to purchase the Property, Ms Sheree Becker, informed her that she was not on the title of the Property or a party to the mortgage. She said that she could arrange to transfer the Property into her name. Ms Becker gave her several documents, including a Transfer of Land document, which her ex-husband had already signed. She signed the Transfer of Land as transferee and gave it to Ms Becker believing that she would take care of lodging it.[3]
[3]Lugondela affidavit [20].

The Contract referred to the Vendors’ Statement given under s 32 of the Sale of land Act 1962 (Vic). That Statement attached, amongst other things, a title search which showed the registered proprietor as Mwamba Kande and the mortgagee as the ANZ Bank, a copy transfer of land from him to the plaintiff (the consideration for which was stated to be ‘natural love and affection’) and a caveat lodged by Again Investments Pty Ltd (the sole director and secretary of which was Sheree Becker) claiming a charge pursuant to an agreement with Mwamba Kande dated 21 October 2014. By General Condition 2.3 the vendor warranted that she has, or by the due date for settlement will have, the right to sell the land and at settlement will be the holder of an unencumbered estate in fee simple in the land.

By General Condition 16 of the Contract, time was made ‘of the essence’ of the Contract. General Condition 27 provided that a party is not entitled to exercise any rights arising from the other party’s default until the other party is given and fails to comply with a written default notice, and sets out what the notice must provide. It must state that it is the offended party’s intention to exercise the rights arising from the default unless, within 14 days of the notice being given the default is remedied and the reasonable costs incurred are paid. General Condition 28 deals with the consequences of non-compliance with the default notice, but where the notice is given by the purchaser it only covers the situation where the notice ends the Contract, and does not deal with the current circumstances where the notice threatens a suit for specific performance, as to which see below ([10(j)]).

The defendant failed to complete the Contract on the settlement date specified in the Contract. The reasons for this failure to settle then, and later, need to be set out at some length so as to determine whether, as the defendant and third parties contend, it was a result of an inability of the defendant to transfer good title (so that the rule in Bain v Fothergill[4] applies).
[4](1874) LR 7 HL 158.

Plaintiff’s attempts to complete the Contract

The plaintiff initially engaged Joshi Lawyers of Point Cook (Joshi) to act for him in the purchase of the Property. The defendant had engaged Hillside as her conveyancer. The plaintiff’s present solicitors, Vernon Da Gama and Associates (Da Gama) were engaged on 28 June 2019, taking over from Joshi. Da Gama sought Joshi’s file on 3 July 2017. It was not obtained until 29 November 2017 and then it was what Mr Gavin Da Gama described as a limited copy of the file.[5] That file revealed that:[6]
[5]First Da Gama affidavit, [6].
[6]Ibid and the exhibits referred to in that paragraph.

(a) On 13 April 2017, Joshi forwarded a statement of adjustments and settlement statement to Hillside, and sought to confirm settlement arrangements to take place on 18 April 2017.

(b) On 13 April 2017, Hillside responded to Joshi by email advising that the defendant was having issues in removing caveats lodged on the Property and, by implication, the settlement would be unlikely to occur on 18 April 2017. The email went on:

However if your client is desperate to move in, we can contact our client as to ask to grant the access to the property to your client under the licence agreement with the modest rent. Have in mind our client is still paying the mortgage. She will not be able to grant the access to the property without the rent being paid by your client. (sic)

(c) On 26 April 2017, Joshi responded to Hillside’s email saying, in relation to the offer of the plaintiff entering into occupation as a licensee, that ‘Our client does not wish to move in and has bought the property for investment purposes’, and requested an update in relation to the settlement date.

(d) On 16 June 2017, Joshi emailed Hillside noting that it was two months since the original settlement date was cancelled and asking that they ‘urgently confirm the status of caveat withdrawal’. That day, Hillside responded to Joshi advising that the defendant was ‘trying to sort out the caveat’s issue by herself.’ Hillside also advised that the defendant ‘is not willing to finalize this matter any time soon’ and that they ‘cannot be certain how long will it take for our client to give us clear instructions in relation to the settlement’.

(e) On 7 July 2017, Mr Da Gama sent a letter to Hillside informing them that his firm now acted for the plaintiff, confirming the plaintiff was ready, willing and able to settle the purchase and requesting a settlement date be scheduled no later than 25 July 2017. Proceedings for specific performance of the Contract were threatened.[7]
[7]First Da Gama affidavit, [7].

(f) On 18 July 2017, Mr Da Gama received an email from Tess Matthews from West Justice (the Western Community Legal Centre) enclosing a client authority form signed by the defendant, who stated that she was assisting the defendant ‘to understand her legal position in relation to the proposed settlement and sale of 71 Damask Drive’ and sought copies of correspondence sent by Da Gama to Hillside. The email explained that they were not assisting the defendant as conveyancers, or with the conveyance and were not associated with Hillside.[8] In response to this request, Mr Da Gama sent to West Justice a copy of his letter sent to Hillside on 7 July 2017, to which he had received no response.[9]
[8]First Da Gama affidavit, [8].
[9]First Da Gama affidavit, [9].

(g) On 24 July 2017, following a telephone discussions with Tess Matthews of West Justice, Mr Da Gama received an email from Tess Matthews, the material parts of which stated:

I refer to our telephone conversation a moment ago and confirm that we propose to advise Bora Kahebwa (sic) on her legal rights and liabilities in relation to the above property.
We confirm that we do not act for Ms Kahebwa in relation to the conveyance of the property. We understand that our client is represented by Hillside Conveyancing in relation to the conveyance.
We confirm that we have been asked to assist this client by a number of parties, including ANZ, who currently hold a mortgage over the property.
The legal issues in relation to this property are complex, and we have only recently received instructions to provide advice. We hope to be able to clarify a number of legal questions for our client within the next two weeks.
Advice in relation to one of the caveats on the property is particularly complicated, and will require discussion with a number of other parties.
To allow us to provide full advice to our client, we seek that no proceeding be initiated against our client until 8 August 2017.

(h) On 25 July 2017, Mr Da Gama sent an email to Tess Matthews confirming that he had been instructed by the plaintiff, as a matter of good faith, to allow the defendant until 8 August 2917 to seek appropriate legal advice. The email also stated that if the plaintiff does not receive a response by 8 August 2017, Da Gama anticipated instructions to commence action against the defendant.[10]
[10]First Da Gama affidavit, [11].

(i) On 8 August 2017, Mr Da Gama sent an email to Tess Matthews seeking a response as to whether she had received instructions from the defendant to progress the matter.[11] No response was received.[12]
[11]First Da Gama affidavit, [12].
[12]First Da Gama affidavit, [13].

(j) On 4 October 2017, Mr Da Gama sent a letter to Hillside and to the defendant, copied to Tess Matthews, enclosing by way of service a default notice under the Contract.[13] Having regard to the terms of the Contract, and the usual default notice leading to a rescission of the contract, the terms of the notice are important. It provided that the ‘Vendor has defaulted in the performance of the Vendor’s obligations under the contract by failing to effect settlement on the due date or at all’ and gave notice:
[13]First Da Gama affidavit, [14] and exhibit GDG-13. That exhibit did not include the Notice of Default. Before the hearing my chambers requested the solicitors to provide the Notice, which was done without objection from any party.

…that unless the default is remedied the Purchaser will seek to obtain an order from a court of competent jurisdiction seeking specific performance of the Contract or in the alternative compensation for his loss and damages.

(k) On that day, 4 October 2017, Mr Da Gama received an email from Hillside informing him that they no longer acted for the defendant and an email from West Justice advising that it was not assisting the defendant on an ongoing basis and did not have instructions to accept service.[14]
[14]First Da Gama affidavit, [16].

(l) The defendant failed to remedy the default within 14 days of the default notice.[15]
[15]First Da Gama affidavit, [17].

(m) On 10 November 2017, Da Gama received correspondence from Rigby Cooke Lawyers, who advised that they had been engaged by Justice Connect. They noted that a title search for the Property identifies Mwamba Kande, the former husband of the defendant, as the sole proprietor. The letter also noted that Ms Lugondela does not possess the relevant authority to deal with the Property, ‘a fact Ms Lugondela did not appreciate prior to the sale due to her limited English proficiency and poor legal comprehension.’ The letter set out that they had made enquiries with the registered mortgagee, the ANZ bank. The ANZ advised that it will not discharge the mortgage without an explicit authority from Mwamba Kande. Therefore, settlement could not proceed until ANZ receives such an authority. They had sought from Hillside a copy of the Contract of Sale and status of the deposit monies. They commented that:

…it would appear to us that the contract is frustrated and that, due to poor advice and possible unconscionable conduct of other parties involved, that Ms Lugondela did not have capacity to enter into the contract.
While we do not have any instructions in this regard, would your client be prepared to terminate the contract provided mutual indemnities are provided by both parties and, subject to what we discover from Hillside Conveyancing, that the deposit is returned to your client? [This was referred to in the defendant’s pleading as the ‘Offer’]

(n) The plaintiff did not respond to this letter other than to commence this proceeding on 11 December 2017, seeking specific performance of the Contract, alternatively damages for its breach, and consequential relief.

Procedural history
Pleadings

The writ is endorsed with a statement of claim. A defence was filed on 5 February 2018. So far as presently relevant these pleadings include the following:

(a) The plaintiff alleged and the defendant denied that she was entitled to be the registered proprietor of the Property. In this regard, I reiterate that the Vendor’s Statement given under s 32 of the Sale of Land Act 1962 (Vic) included a copy of a Transfer of Land from Mwamba Kande to the defendant apparently signed by both.

(b) The terms of the Contract were admitted and the fact that it was not settled on the due date or thereafter.

(c) The service of the default notice was admitted.

(d) The plaintiff alleged that the defendant has failed, refused and neglected to complete the Contract without reason and any proper basis. To that the defendant responded that since 30 October 2014 the registered sole proprietor of the Property has been Mwamba Kande, the defendant’s former husband, and otherwise denied the allegation.

(e) The plaintiff then sought an order for specific performance compelling the defendant to complete the Contract, to which, curiously, the defendant responded by denying the allegation and saying that the allegations are embarrassing and liable to be struck out.

(f) The plaintiff then alleged, further or in the alternative, that if the defendant is unable to complete the Contract, then the plaintiff is entitled to recover from the defendant his expenses, damages and loss of bargain suffered as a result of the defendant’s failure to effect settlement pursuant to the terms of the Contract. The defendant responded that on 10 November 2017, the defendant’s solicitors wrote to the plaintiff’s solicitors, offering to rescind the Contract and to return the deposit (Offer). The plaintiff did not respond to the Offer. By reason thereof the plaintiff had an opportunity to mitigate his expenses but failed to do so.

(g) The plaintiff’s prayer for relief made clear that specific performance of the Contract was sought and that damages for breach of the Contract was an alternative. It also claimed interest on the deposit and costs.

(h) The defendant pleaded further that the plaintiff is estopped from pursuing the relief sought as the only person capable of giving good title to the Property is Mwamba Kande and the plaintiff is only entitled to rescission of the Contract, which was previously offered by the defendant but not accepted.

(i) The defendant also raised two other pointless answers to the claim:

(i) a hopeless allegation that if the plaintiff suffered loss and damage as a result of any breach on the part of the defendant, that was caused by the acts or omissions of Hillside, a concurrent wrongdoer by virtue of Part IVAA of the Wrongs Act 1958 (Vic) (Wrongs Act) and that this proceeding constituted an ‘apportionable claim’; and

(ii) a claim supposedly against Hillside in negligence, amongst other grounds, and claimed that Hillside induced the defendant to execute the Contract and to proceed with the sale of the Property by reason of undue influence and/or unconscionable conduct.

The defendant’s third party notice against Hillside and its director makes a range of allegations in the context that the defendant could not read or write English, was separated from her husband, Mwamba Kande, in whose name the Property was registered, and did not possess or know the whereabouts of an original transfer of land of the Property signed by Mwamba Kande. It is not necessary to canvass the full warp and weft of the statement of claim endorsed on the third party notice or the defence. It is sufficient to note that:

(a) a part of the delay in the plaintiff entering judgment against the defendant and to assess his damages was a product of the necessity to permit the third parties the opportunity to be heard;

(b) the defendant has accepted liability to the plaintiff for damages for breach of the Contract, as noted in the orders dated 12 April 2019 referred to below; and

(c) the third parties deny liability to the defendant, and the resolution her claim against them is to be determined after an assessment of the quantum of her liability to the plaintiff.

Delays

The delays in the proceeding are remarkable. My analysis however shows that the delays were brought about by the parties, particularly the defendant. The following paragraphs set out the significant steps.

Directions for the conduct of the proceeding were first made on 16 March 2018. This included a reply to defence, requests for particulars, third party notices, discovery of documents and mediation.

On 31 May 2018 the plaintiff filed a summons seeking summary judgment for specific performance of the Contract, and in the alternative that judgment is entered for the plaintiff for damages to be assessed, presumably for breach of the Contract. This application was supported by the first Singh affidavit and the first Da Gama affidavit. Also, on this day, Rigby Cooke Lawyers, who had entered an appearance for the defendant, filed a notice of ceasing to act, giving as an address for service the address of Justice Connect.

On 15 June 2018, orders were made for the hearing of the summary judgment application on 10 August 2018 with direction for the filing of affidavits and submissions. The earlier orders for the filing of third party notices and a mediation were vacated.

On 4 July 2018 Russell Kennedy Lawyers, who replaced Rigby Cooke as solicitors for the defendant, issued subpoenas to the estate agent which acted in the sale for the defendant, to Hillside and to the ANZ Bank.

The application for summary judgment was heard on 10 August 2018 before Matthews JR. At the outset of the hearing, Mr Mihaly, who was Counsel for the plaintiff in that application (as he was before me) referred to the fact that by an email on 9 August 2018, the plaintiff informed the Court and the defendant that he withdrew his application for specific performance of the Contract on a summary basis and elected to proceed only for damages to be assessed for breach of the Contract.[16]
[16]Singh v Lugondela, S CI 2017 05019, transcript, 10 August 2018 (Transcript), 1.13 – 1.21.

When pressed on whether the plaintiff had made an election, however, Counsel said:

Well, I’ll say this on that point, if Your Honour is with my learned friend, and doesn’t order summary judgment today, in my submission, the election hasn’t crystallised.
But if Your Honour makes the order today for summary judgment for damages to be assessed, then, yes, at the moment of Your Honour’s judgment, the plaintiff will no longer be able to seek specific performance of the contract. So it crystallises at the date of the order, because until such time as the order is made, there’s been no – the election hasn’t taken effect.[17]

[17]Transcript, 3.17 – 4.8.

Counsel went on the explain the logic of the position, essentially on the basis that it is not until judgment that the election must be made. That was disputed by the defendant’s Counsel who submitted that once an election is made between inconsistent courses of conduct then the party is bound.[18] However, he submitted that it need not be determined that day, and it was not. In the course of the discussion Counsel for the plaintiff made clear, if it was not clear already, that the plaintiff sought damages for breach of contract and not damages in lieu of specific performance.[19] In the light of the submissions made as to the proper date for the assessment of damages, it is important to set out the exchange as to the basis of the damages sought:

HER HONOUR: Yes. Can I just ask a question at this point; just because it’s in the back of my mind, and it’ll just help me, in terms of putting that one to bed? The damages that are sought in this application by the plaintiff, are they damages for breach of contract?
MR MIHALY: Yes.
HER HONOUR: Or are they damages in lieu of specific performance?
MR MIHALY: They’re damages for breach of contract.

[18]Sargent v ASL Developments Ltd (1974) 131 CLR 634.

[19]Transcript, 4.23-26.

In the course of submissions Mr Mihaly for the plaintiff referred to written submissions filed (and an amended submission handed up on the day) and in summary said:

Inside the contract [of] sale was a title that acknowledge[d] that the first defendant was not the registered proprietor, but equally, there was a transfer and that was executed by both the registered proprietor and the vendor, which, in the ordinary course, would give the vendor the right to become registered, and thus to transfer the property.
And that’s in line with the standard conditions in a contract of sale that don’t actually require the vendor to be the registered proprietor at the date of contract, merely that they will have title at the date of settlement, and are capable of conveying title. And, of course, they give warranties to that effect as well. [20]
That’s, effectively, the core of the case. The first defendant acknowledges that the matter has [not] settled, and in fact, her entire opposition of the specific performance case when it was issued, was that she wasn’t capable of conveying good title. And of course, that’s the reason why she hasn’t, which necessarily means that there has been a breach of the contract. She has promised to convey good title; she now says that she’s unable to convey good title. That’s about as simple as it gets.[21]
There is a contract that is admitted. The terms of the contract are admitted. The non-settlement of the contract is admitted and the reason for the non-settlement – namely, that the first defendant cannot convey good title – is also admitted.[22]

[20]Transcript, 3:17-29.

[21]Transcript, 3:30 – T4:8.

[22]Transcript, 11:13-17. See also paragraph 16 of the defence.

Because a third party, as a matter of law, is entitled to be heard on the question of the liability of the defendant to the plaintiff,[23] the summary judgment application was adjourned to 1 November 2018 to enable the third parties to be joined and to participate in the further hearing of the summary judgment application. Orders were made requiring third party notices to be filed and served by 10 September 2018. They were not filed until 30 October 2018. That led to a further adjournment, by consent, from 1 November 2018 to 23 November 2018. The delay was because of health problems being suffered by the defendant, her need for a support worker and an interpreter and the unavailability of Counsel, who was, like the solicitors, acting pro bono. The hearing on 23 November 2018 was again adjourned. It is likely that this adjournment was brought about by either the solicitor for the third parties, or the subpoenaed estate agent, producing the original Transfer of Land signed by Mwamba Kande and the defendant. The application came before the Court again on 8 February 2019 and was again adjourned.
[23]Barclays Bank Ltd v Tom (1923) 1 KB 221.

In the meantime, on 20 February 2019, the third parties filed their defence. The matter came back before the Court on 22 March 2019 when, on the application of the solicitors for the defendant they were given leave to cease to act for her. It seems likely from the affidavit in support of that application that the defendant was in need of a litigation guardian, which came later.

The application finally came on for further hearing on 12 April 2019 and judgment was entered by Matthews JR for the plaintiff against the defendant for damages for breach of contract in a sum to be assessed. Matthews JR recorded in the order the history of the application for summary judgment, the election made by the plaintiff to seek damages for breach of the Contract and not specific performance, that Counsel for the defendant had acknowledged that the breach of contract claim was effectively admitted, that there was no reasonable prospect of defending a claim for damages for breach of contract and the adjournment to enable the joinder of the third parties.

The defendant was no longer represented at the hearing on 12 April 2019 and appeared in person. Due to her lack of familiarity with the Court’s processes and the English language, she had received some assistance from a lawyer to write a letter to the Court rather than make an oral submission. In that letter, the defendant said that she consented to judgment being entered with damages to be assessed, but requested at least 8 weeks before any assessment of damages to allow her time to obtain representation. The plaintiff no longer pressed for judgment in the form of an order for specific performance, but maintained his claim for damages for breach of contract and for summary judgment for damages to be assessed.

On 12 April 2019, the Court also made a declaration that the plaintiff was entitled to a return of his deposit, which was subsequently paid to him, dismissed the claim against the second defendant (Registrar of Titles) and made directions for access to the Property by the plaintiff’s valuer, for the filing of material (including a summons) for the assessment of damages and for a judicial mediation. The mediation was subsequently held – after much delay – and was unsuccessful.

The delays did not then end. On 23 July 2019, orders were made vacating the orders for the filing of affidavits and experts reports by the defendant, and for the holding a of a judicial mediation, because Justice Connect were attempting to find a litigation guardian for the defendant and needed a lengthy adjournment. On 13 September 2019, Mr Tim Robinson was appointed the defendant’s litigation guardian. Directions were then made for the filing of affidavits and experts reports for the purpose of the hearing of the assessment of damages, and a judicial mediation was ordered.

Further delays ensued. On 6 December 2019, the defendant sought an adjournment of the yet to be fixed hearing for the assessment of damages so that she could pursue Family Court proceedings against her ex-husband with the object of having the Property transferred to the defendant. The matter was adjourned to 31 January 2020. On that date, the dates for the filing by the parties of material for the assessment of damages were extended and the hearing was given a ‘not before date’. Nothing was done pursuant to that order and the proceeding returned to Court on 29 May 2020 when the dates for filing material were extended by consent. Pursuant to that order the assessment was fixed for hearing before me.

Plaintiff’s evidence and submissions

The plaintiff seeks the following heads of damages:

(a) costs incurred by reason of the failed purchase that would not have otherwise been incurred (additional costs);

(b) the loss in value on the Property (lost value); and

(c) the loss of amenity due to being deprived of the Property (loss of amenity).

The total damages claimed is $112,078.80[24] made up as follows:
[24]This figure is my calculation based on the final figures advanced by the plaintiff. However, the calculation by counsel for the plaintiff at the hearing resulted in a figure of $80,278.80.

(a) additional costs of $53,450 comprising $5,390 for legal costs, $1,500 for finance costs and $46,560 in rent;

(b) $33,628.80 for lost value; and

(c) $25,000 for lost amenity.

Additional costs

In relation to the additional costs, the plaintiff submitted that the plaintiff incurred expenses separate and additional to the costs that the plaintiff would have incurred to fund the contract of sale, had it settled as intended:

(a) $5,390.00 attempting to have the Contract settle after the defendant’s breach, made up of solicitors fees incurred in seeking to arrange settlement of the Contract and giving the default notice.

(b) $1,500.00 seeking finance to settle the contract of sale after the defendant’s failure to settle the Contract when due. This was paid in cash and the plaintiff was not given a receipt.

(c) $46,560.00 renting premises for his family, rather than residing in the Property. As at 18 April 2017, the plaintiff was living with his wife and daughter in a share house with 2 more people at 12 Tussock Road, Craigieburn, Victoria (Craigieburn Property). He did not have a written lease. The rent was $900 per month. He paid this sometimes in cash and sometimes by electronic transfer from his Savings Account. From 18 April 2017 to the date that he moved out of the Craigieburn Property, he paid $6,150.00 in rent. In or about late October 2017, the plaintiff and his wife and daughter travelled to India and returned to Australia in late January 2018. During this time, they lived with friends and family to save on rental costs. On or about 1 February 2018, the plaintiff and his family moved into a new rental house at 1/86 Kurung Drive, Kingspark, (Kingspark property). The rent under the lease was $1,347.00 per month. The plaintiff claims 30 months’ rent at $1,347 per month.

Lost value

In relation to the loss in value of the Property, the plaintiff claimed $112,000 to be adjusted by deducting the stamp duty payable and the costs of financing the purchase. The starting figure of $112,000 is calculated taking the midpoint of the plaintiff’s valuation as at 10 May 2019 of $595,000[25] and the third parties’ valuation as at 12 April 2019 of $575,000, giving a value of $585,000. This shows the lost value compared to the purchase price of $473,000 is $112,000. From this there is deducted stamp duty of $20,350 and interest on the loan to finance the purchase in the sum of $58,021.20, giving a net figure of 33,628.80.
[25]The date of inspection of the Property by the valuer.

Loss of amenity

The Singh affidavit reveals the different living conditions enjoyed by his family in rental properties, as compared to that offered by the Property. The Property has erected on it a four-bedroom house with two bathrooms, two living areas and a double garage. The land area is approximately 512 square metres. The house was fairly new and in very good condition. The Property was closer to the plaintiff’s work, had easier access to the train station (a five-minute drive to Tarneit train Station), was closer to medical centres, schools and libraries and walking distance to the Central Shopping Centre (one-minute drive). Further, the property is a ten-minute drive to the plaintiff’s place of worship being the Gurudwara Sahib Tarneit which he regularly attends on a fortnightly basis. The Craigieburn Property was shared with another family, lacked a garage and was more remote from places regularly attended by the plaintiff. The Kingspark Property was significantly smaller, on smaller land and was more remote from places regularly attended by the plaintiff.

While awaiting damages from the defendant, the plaintiff and his family have lived in reduced circumstances. Such a reduction is compensable.[26] A rationale for the compensation is that had the plaintiff found rental accommodation that was comparable to the Property, such that there was no loss in amenity, the rent paid by the plaintiff since the first defendant’s breach of contract would have been higher; in circumstances where the plaintiff’s claim for rent paid has decreased by reason of the loss of amenity, the plaintiff is entitled to compensation.
[26]Thomas v Powercor Australia Limited [2011] VSC 586, [2]; O’Sullivan v Great Wall Resources Pty Ltd [2008] NSWSC 1115, [12]; ACN 002 804 702 (formerly Brooks Building) v McDonald [2009] NSWSC 610, [111]

The quantification of the loss is imprecise, as there is no true monetary equivalence for lost amenity.[27] The plaintiff accepts that the compensation amount is not the difference between the rent that has been paid and the rent that would have been paid for a property with the same amenity as the Property. Taking into account other examples of compensation for lost amenity,[28] the value of the amenity lost by the plaintiff, living in less favourable circumstances for more than 3 years, ought be $25,000.
[27]Oldham v Lawson No 1 [1976] VR 654, 659.
[28]Michos v Botany Bay CC [2012] NSWSC 625, [153]-[157], and the cases there cited.

Defendant’s evidence and submissions

There was no dispute by the defendant as to the facts set out above that lead to the commencement of the proceeding.

Counsel for the defendant, Ms Hando, who appeared pro bono, relied on the rule in Bain v Forthergill,[29] adopting the arguments of the third parties. If the rule did not apply, submissions were made as set out below as to the measure of damages.
[29](1874) LR 7 HL 158.

Counsel for the defendant pointed out that it was not until the third party became a party to the proceeding that the original Transfer of Land signed by Mwamba Kande and the defendant was presented to counsel for the plaintiff and defendant at the directions hearing on 23 November 2018 (the Original Transfer). The presentation of the Original Transfer did not rectify the inability to give effect to the transfer. A number of issues remained, particularly the issue of obtaining a discharge of the mortgage. It became clear that proceedings would need to be issued in the Family Court of Australia to deal with the Property.

Counsel for the defendant maintained that the plaintiff formally elected to seek damages at the first hearing of the summary judgment application on 10 August 2018, or possibly the date of judgment on 12 April 2019. Counsel contended that the plaintiff was obliged to make the election within a reasonable time and submitted that from the date of the expiry of the default notice to the time of the election was well beyond what is reasonable in the circumstances. Further, it was submitted that the unreasonable delay in making the election contributed significantly to Mr Singh’s own loss.

In relation to the heads of damage claimed by the plaintiff, the defendant made the following submissions. First, in relation to the loss in value on the Property, the normal measure of damages for loss of bargain in cases of breach of contract for sale of land is the difference between the contract price and the market value of the land at the time of the breach.[30] The date of breach of the Contract was 18 April 2017, the date fixed for settlement, and that is the date to value the Property.[31] Alternatively, and at the very latest, the date of assessment should be the date of the offer to repay the deposit—10 November 2017. The plaintiff has not filed any expert evidence that states the specific value of the Property at 18 April 2017. However it can be assumed that the value of the Property did not increase drastically in those 31 days. This assumption is also supported by the valuation as at 18 March 2018 that shows a $63,000 increase in 12 months.[32] The plaintiff’s evidence of value is limited to a valuation as at 10 May 2019 ($595,000), a date wholly unconnected to any relevant events.[33] This date should not be used. The plaintiff has had chances to mitigate his own loss and mitigation is a significant consideration in determining the appropriate date of assessment.
[30]Bain v Forthergill (1874) LR 7 HL 158.
[31]Johnson v Perez (1988) 166 CLR 351 at 355–6.
[32]Third party valuations, 19 June 2020.
[33]Plaintiff’s valuation.

In relation to the loss occasioned by the need of the plaintiff to rent other premises, the evidence from the plaintiff’s email (see above at [10(c)]) showed that he did not intend to live in the Property and that it was to be an investment property.[34] This was supported by the absence of an express statement in his affidavit that he intended to live in the Property and, as well, the plaintiff’s calculation of stamp duty payable on the purchase was the duty applicable to a property not to be occupied by the plaintiff as his principal residence.[35] In any event, the plaintiff does not lead evidence as to why he could not purchase an alternative property and he fails to consider the costs of servicing a mortgage and property maintenance costs, etc., that he would incur if the settlement had taken place. If indeed settlement had occurred, the plaintiff would have paid $1,450.33 per month in interest only repayments.[36] Further, the plaintiff has not produced any rental agreement nor any receipts for the alleged rental payments.
[34]That email had not been referred to by the plaintiff in submissions and was not contradicted or explained after it was revealed.
[35]Second Singh affidavit [6].
[36]Third Singh affidavit, [5].

In relation to the claim for mortgage brokers fee, there is no evidence as to what services were provided, nor has any supporting documentary evidence been provided, such as a receipt, and no evidence is given why the loan approval he obtained for the Contract could not have been used to purchase an alternative property.

In relation to his solicitors costs of $5,390.00, these appear to include costs in relation to this proceeding.

There is no recoverable head of loss for loss of amenity in this case.[37] It is entirely a matter for the plaintiff to finding appropriate accommodations. He has not lead any evidence that shows he was unable to find such accommodation.
[37]Moore v Scenic Tours Pty Ltd [2020] HCA 17.

The plaintiff failed to mitigate his loss. A fair balance must be struck between the parties, so that the plaintiff is fairly compensated without unduly penalising the defendant. The doctrine of mitigation relieves the defendant to a proceeding from paying that portion of the loss over which the plaintiff had full control and should prudently have avoided. It was submitted that –

(a) the plaintiff’s attempts to mitigate must not be judged in hindsight. The law is satisfied if the party placed in a difficult situation, by reason of the breach of duty owed, has acted reasonably in the adoption of remedial measures, and they will not be held disentitled to recover the cost of such measures merely because the party in breach can suggest that other less burdensome measures might have been taken;[38]

(b) the plaintiff is not obliged to sacrifice or put at risk their own interests or reputation;[39]

(c) if the defendant’s wrong has locked the plaintiff onto the ‘horns of a dilemma’, one from which they cannot easily escape without great financial risk, then the plaintiff may reasonably incur loss in mitigation even if the loss incurred substantially exceeds the loss which would have been incurred if no mitigating steps had been attempted.[40]

[38]Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452.

[39]Sacher Investments Pty Ltd v Forma Stereo Consultants Pty Ltd [1976] 1 NSWLR 5; Metal Fabrications (Vic) Pty Ltd v Kelcey [1986] VR 507

[40]Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158.

If the plaintiff was operating as a reasonable and prudent man, the passing of the settlement date of 18 April 2017, the unanswered correspondence leading to the default notice and the receipt of the offer to return the deposit, at the very least, should have caused him to take steps to mitigate his loss. Despite the settlement failing to take place on 18 April 2017, the plaintiff failed to take any affirmative steps in the matter until serving the default notice on 4 October 2017. But the plaintiff has pressed this matter for 3 years. He has failed on a number of fronts to mitigate his own loss. It is unclear why. Tarneit, Victoria is an ever- growing area of Melbourne. It is unclear why the plaintiff didn’t just cut his losses – or at least try to negotiate – shortly after the Settlement Date or even when the Offer was made, and then proceed to purchase another property. In this case, a reasonable and prudent man would have negotiated an outcome in 2017. It would not be ‘fair compensation’ to assess damages any higher than the difference in value at either the Settlement Date or the Offer. He faced no dilemma.

Third parties evidence and submissions

The third parties contended that the rule in Bain v Fothergill[41] is applicable in this case. That rule forms part of the common law of Australia,[42] although it has been abrogated by statute in New South Wales, Queensland and the Northern Territory. The rule applies to a claim for damages by a purchaser where the vendor is unable to transfer good title, in which case the purchaser is limited to the return of their deposit, interest, and any expenses in investigating title.[43]
[41](1874) LR 7 HL 158.
[42]See also Noske v McGinnis (1931) 47 CLR 563 at 584 per Rich J, 588 per Starke J, 591 per Dixon J, 594 per Evatt J.
[43]Halsbury’s Laws of Australia (online) at [110-11380] and the cases summarised there.

The defendant did not have title to the Property, and was unable to compel an assignment of the title from her ex-husband in order to perfect title.[44] It follows that the plaintiff is restricted to a claim for return of his deposit, his conveyancing costs (if he is able to prove those costs properly) plus interest (subject to issues of mitigation).
[44]Lugondela affidavit, [23].

In the event that the Court were to find that the plaintiff’s damages are not limited by the rule in Bain v Fothergill, the third parties submitted:

(a) the general rule is that damages for breach of contract are assessed as at the date of breach.[45] That date was the date of settlement, 18 April 2017. It is for the plaintiff to establish that a date other than the date of breach is required for the assessment of damages.[46] The facts of this proceeding do not give rise to any good reason for a different date for assessment of loss;
[45]Johnson v Perez (1988) 166 CLR 351 at 355-6 per Mason CJ, at 367 per Wilson, Toohey and Gaudron JJ.
[46]Broughton v B & B Group Investments Pty Ltd [2017] VSCA 227, [157].

(b) the plaintiff has not led evidence to prove that the Property was worth more than the purchase price of $473,000 as at 18 April 2017. The fact that the Property was purchased at auction only one month before demonstrates the low likelihood that the Property was worth more than $473,000 as at the date of breach. Stamp duty of $23,450 would have been payable,[47] so that the evidence would need to establish that the Property was worth more than $496,450 as at 18 March 2017 for any expectation loss to be proven;
[47]Second Singh affidavit [6].

(c) if the submissions in paragraph (a) and (b) are accepted, issues of mitigation of loss largely do not arise because no damages can be established other than a claim to the return of the deposit. If, on the other hand, the Court were to decide those issues in favour of the plaintiff, the issue of mitigation of loss arises in respect of the heads of loss claimed by the plaintiff;

(d) in relation to the claim for rental, the third parties refer to the material relied on by the defendant to contend that the Property was purchased as an investment property. They say, in any event that rental expenses are not a recoverable head of loss, there is no authority supporting such a proposition and there are a number of issues of remoteness, causation and quantum that arise:

(iii) the plaintiff could have purchased an alternative property in which to reside, thereby avoiding the need to pay rent. The plaintiff does not lead evidence to establish that he was unable to obtain a mortgage for an amount sufficient to have covered the (temporarily) unavailable deposit of $23,650 and thereby purchased an equivalent property.

(iv) the amount of rent incurred by a plaintiff in the position of the plaintiff has no sufficiently direct correlation to the relevant breach – a plaintiff might rent a cheap or an expensive property, or they might alternatively obtain rent-free accommodation (as the plaintiff in fact did for a period of time[48]).
[48]Second Singh affidavit [10].

(v) the plaintiff would need to allow for the costs of his counterfactual, which would include: the costs of servicing the mortgage; a reasonable allowance for the benefit of the use of funds not expended; and costs for the reasonable maintenance of the Property. The only evidence adduced by the plaintiff is as to the initial 12-month period of the mortgage, which was $1,450.33 per month (interest-only)[49] and even that reduced amount exceeded the plaintiff’s claimed rental expenses. The plaintiff had available funds of $70,950 which were required to complete settlement of the Property ($473,000 – loan of $378,400[50] – deposit of $23,650). Those funds could have been invested for the relevant time, and that income would need to be brought to account. The plaintiff has not, for example, led any evidence as to available term deposit interest rates. The Plaintiff has not led any evidence as to the average repair and maintenance expenses that would reasonably have been incurred for the Property over the relevant time period, which would also need to be brought to account (which rent paid to a landlord covers).
[49]Second Singh affidavit [5].
[50]Second Singh affidavit exhibit RS-14.

(e) the plaintiff claims the amount of $1,500 for seeking finance after the first breach of contract.[51] There is no evidence as to what services were provided, no receipt, no documentary support to prove that any amount was paid, and no evidence as to how this amount was calculated;

(f) the additional settlement costs totalling $5,390.00 paid by the plaintiff to his solicitors appear to relate to advice provided and steps taken to pursue this proceeding,[52] and so should therefore form part of any claim for costs by the plaintiff rather than damages; and

(g) the third parties dispute that loss of amenity is a recoverable head of loss for breach of a contract of sale of land and say, in any event, that it was a matter for the plaintiff to select an appropriate location to rent, and he has not put on evidence to show that he was unable to do so, and nor has he put on evidence that would enable the quantification of any such claim.

[51]Second Singh affidavit [14].

[52]Second Singh affidavit [12].

Plaintiff submissions in response

In summary, the plaintiff’s response to the defendant’s and third parties’ submissions was as follows:

(a) The rule in Bain v Fothergill is not applicable because the defendant’s inability to settle arises from the failure to obtain the consent of mortgagee,[53] or, by analogy, caveators. Although the defendant did not have the original title to the property, the third party did, such that the first defendant was still able to convey title. The failure to complete the purchase was therefore not because of a defect in title so as to bring on the application of the rule in Bain v Fothergill.[54]
[53]Bailey v Woondella Pty Ltd [2012] VSC 396, [73]
[54]Lugondela affidavit, [22].

(b) It was incumbent on the defendant to plead the rule in Bain v Fothergill, or at least to plead the plaintiff is not entitled to recover damages for loss of bargain, and that was not done. It was raised in the third parties’ written submissions filed on 21 July 2020 and in the defendant’s oral submissions. The orders of the court required the plaintiff’s evidence to have been filed in 2019 and the opportunity to put on further evidence on the question of why settlement failed was not available to the plaintiff. Further the burden of establishing that the contract failed to complete because of a defect in title rests on the defendant and third parties and they have not satisfied that burden. In fact, the Court can be satisfied that the reason why the Contract did not settle was because of something other than a defect in title.

(c) It is common ground that a component of the plaintiff’s loss is the difference between the value of the Property at some point (the defendant and third parties say that date is the date of breach of Contract) and the purchase price under the Contract. The plaintiff maintains that where damages are awarded in lieu of specific performance the value of the property which is the subject-matter of the contract is assessed at the date of judgement.[55]
[55]Relying on the obiter dicta of Dawson J in Johnson v Perez (1988) 16 CLR 351, 387, and the decision of Wroth v Tyler [1974] Ch 30, which is still good law: Powercell Pty Ltd v Grasso & Ors [1999] NSWSC 1190, [23]; Cadoks Pty Ltd v Wallace Westley & Vigar Pty Ltd (2000) 2 VR 569, [274]; Vouzas & Anor v Bleake House Pty Ltd & Anor [2013] VSC 534, [217]-[218]; North East Solution Pty Ltd v Masters Home Improvement Australia Pty Ltd [2016] VSC 1, [374]; Tamanna v Zattere (2017) 18 BPR 37-139, [159]; El Ali v Tritton (2019) 19 BPR 39-447, [43]

(d) The date of judgment is the correct date to assess the difference in value because until then the plaintiff had not irrevocably elected to terminate the Contract and claim damages. At both the intended date of settlement and at the date of the defendant’s offer, the plaintiff had not suffered a loss in value because the Contract remained on foot - confirmed by the plaintiff’s suit for specific performance.[56]
[56]Galafassi v Kelly [2014] NSWCA 190, [77]

(e) The contention that the plaintiff ought to have mitigated his loss by rescinding the contract at an earlier stage is to deny the plaintiff’s right to specific performance. The alleged failure to negotiate after the Offer involves an impermissible hypothetical. It was the conduct of the defendant (about which no criticism is made) that led to the delay in judgment being entered. As early as March 2018 the defendant sought to avoid judgment being entered against her by reason of her claim against the third parties. On 10 August 2018, the plaintiff sought to elect for damages in lieu of specific performance and again the entry of judgment was delayed to allow the conduct of the third party procedure. After judgment was entered, the assessment of damages was delayed to enable a litigation guardian to be appointed for the defendant and to pursue Family Court proceedings.

(f) The absence of documentary proof of some expenditure claimed as damages suffered needs to be assessed against the failure of the defendant and third parties to seek discovery of documents or to require the plaintiff to attend for cross-examination. The plaintiff’s evidence as to amounts expended and the expense to which they relate remain the sole evidence before the Court and thus satisfy the plaintiff’s burden of proof.

(g) All of the losses claimed are reasonably foreseeable and are not too remote.

(h) The third parties’ observation about the possible variation in the quality of the rental property is appropriate but has already been taken into account by the level of the rental paid.

(i) The claim for a loss of amenity. It is not compensation for disappointment or distress,[57] which it is accepted is not compensable. It is compensation for the difference in quality of the Property and the rented property.[58]
[57]As considered in Moore v Scenic Tours Pty Ltd (2020) 94 ALJR 481
[58]D Galambos & Sons Pty Ltd v McIntyre (1974) 5 ACTR 10, 14; Baltic Shipping Co v Dillon (1993) 176 CLR 344, 362-363; Nolan v MBF Investments Pty Ltd [2009] VSC 457, [14] (the judgment at first instance); Stone v Chappel (2017) 128 SASR 165, [86]-[89]

(j) the other parties’ submissions that the plaintiff could have purchased a different property takes the assessment no further, because, first, if the hypothetical purchase of an alternative property would have decreased the plaintiff’s loss, it was an act in mitigation for which the other parties’ bear the burden of proof (and of which they have not satisfied); Second, if the hypothetical purchase of an alternative property would have increased the plaintiff’s loss, the plaintiff’s failure to claim that increase is for the benefit of the other parties; and, third, the full assessment of the plaintiff’s loss taking into account such a hypothetical purchase would equal the same amount, once the amenity of the hypothetical property was taken into account.

(k) That part of the additional costs that comprise legal fees do not include litigation costs nor conveyancing expenses. The finance costs claimed were incurred in an attempt to settle the Contract and does not include mortgage brokerage fees that were always to be incurred.

(l) The plaintiff seeks interest on any damages pursuant to s 60 of the Supreme Court Act 1986 (Vic), to be calculated when the damages are assessed.

Consideration
Does the rule in Bain v Fothergill apply?

Where, on a contract for the sale of land, the vendor, in the absence of any fraud and any expressed stipulation, is unable to make a good title the purchaser is not entitled to recover damages for the loss of the bargain.[59] What can be recovered under the rule is the expenses he has incurred in investigating the title and repayment of the deposit where he has paid one.[60]
[59]Bain v Fothergill (1874) LR 7 HL 158, 201 (Lord Chelmsford).
[60]Bain v Fothergill (1874) LR 7 HL 158.

Bain v Fothergill confirmed, but is not the source of, the rule. It was laid down in a case decided about 100 years earlier, Flureau v Thornhill[61] which qualified the rule of the Common Law that where a party sustains a loss by reason of a breach of contract he is, so far as money can do it, to be placed in the same situation with respect to damages as if the contract had been performed.[62] The original rationale was the uncertainty and difficulty involved in establishing good title to land in England.[63] It was adopted in Australia and applied both to general law land and to land held under the Torrens system, in this state land registered under the Transfer of Land Act 1958 (Vic), notwithstanding that title under that system is title by registration.[64] Moreover, its application to registered land in Victoria was not questioned by the High Court in Noske v McGinnis[65] although it was distinguished on the facts on grounds that included that the rule applies only to title defects and not to matters of ‘conveyancing’; so that the rule does not apply where the vendor is at fault, in the sense of having refrained from taking proper steps to secure a good title, a matter to which I will return.
[61](1776) 2 W Bl 1078; (1775) 96 ER 635.
[62]Robinson v Harman 1 Ex. 855; cited in Bain v Fothergill (1874) LR 7 HL 158, 201 (Lord Chelmsford).
[63]Engel v. Fitch, (1869) L.R. 4 Q.B. 659, 666; Godfrey Constructions Pty Ltd v Kanangra Park Pty Ltd (1972) 128 CLR 529, 548 (Stephen J); Wroth v Tyler (1974) Ch 30, 56 (Megarry J) (Wroth v Tyler); See also Pollock B in Bain v Fothergill, 173. It was also explained as arising from an implied condition that ‘when a person contracts to sell real property there is an implied understanding that if he fails to make a good title the only damages recoverable are the expenses which the vendor may be put to in investigating the title’ (Lord Denman in Bain v Fothergill, 177; see also Piggott B at 194).
[64]Ross v Robinson (1886) 12 VLR 764, 773; Powys v Brown (1924) 25 SR (NSW) 65, 74; Boardman v McGrath [1925] QWN 14; Noske v McGinnis (1932) 47 CLR 563; Halsbury’s Laws of Australia (on line) [110-11380].
[65](1932) 47 CLR 563, although the point does not appear to have been argued.

As the third parties pointed out, the rule has been abolished by legislation in Queensland and the Northern Territory in relation to registered land, totally abrogated in New South Wales[66] and is otherwise subject to a number of exceptions and restrictions.[67] In Western Australia in Government Employees Superannuation Board v Martin[68] Ipp J concluded, after a detailed analysis, that the rule should not be followed in that State.
[66]Property Law Act 1974 (QLD) s 68; Law of Property Act 2000 (NT) s 70; Conveyancing Act 1919 (NSW) s 54B(1). The Law Reform Commission of Victoria (Sale of Land, Report No 20, 1989) has also recommended its abolition.
[67]Halsbury’s Laws of Australia (on line) [110-11380].
[68](1997) 19 WAR 224, 254.

In Noske v McGinnis[69] a vendor of land in Victoria could not rely on the rule to rescind a contract of sale of land based on his inability to remove a caveat purportedly lodged by his wife claiming an equitable interest in the land. Dixon J (as he then was) said of the rule:

The appellant, however, insists that the contract remained unperformed because of his difficulty in making a good title to the hotel and that the reason of the rule in Flureau v. Thornhill (1) and Bain v. Fothergill (2) applies. However this may be, the circumstances in which he renounced the contract do not bring him within the rule. If in fact his wife had no interest in the hotel, he is simply in the position of one who, being able to carry out his contract, refuses to do so. If, on the other hand, knowing that his wife had an equitable interest, he made the contract relying upon his ability to obtain her consent or acquiescence, it is clear that upon the evidence the learned Judge was at least entitled to conclude that he had made no honest effort to carry the contract through. His own reliance, when he made the contract, upon his wife’s subsequently giving her concurrence would place upon him the burden of showing why it was that his anticipations were unfulfilled, and of establishing that he himself had done what he could to carry through the transaction in the manner he hoped to do when he entered upon it. There is every reason to suspect that he at least welcomed his wife’s intervention, and he has failed to establish that he took any steps to secure her concurrence, or to prevent the lodgment or to obtain the removal of the caveat. In these circumstances, I think the learned Judge was right in giving damages for the loss of the bargain. (footnotes omitted)[70]

[69](1932) 47 CLR 563.

[70]See also 583 – 584 (Rich J), 588 - 589 (Starke J), 594- 595 (Evatt J).

Noske v McGinnis is thus Australian authority for the distinction between title defects and matters of conveyancing.[71] Amongst matters of conveyancing, as distinct from title, is the situation where the vendor is unable to compel the mortgagor to discharge its mortgage, as Rich J pointed out in Noske v McGinnis:[72]

[If]… it is a case merely of inability to convey, the question of conduct is immaterial, and the vendor is liable for non-fulfilment of contract, wholly irrespective of misconduct. The question, indeed, seems to me to be covered by the following passage in the judgment of Lord Hatherley in Bain v. Fothergill (1), namely, ‘The vendor in that case’-Engell v Fitch (2)-’was bound by his contract, as every vendor is bound by his contract, to do all that he could to complete the conveyance. Whenever it is a matter of conveyancing, and not a matter of title, it is a duty of the vendor to do everything that he is enabled to do by force of his own interest, and also by force of the interest of others whom he can compel to concur in the conveyance.’

[71]The distinction was also made in Bain v Fothergill itself: see Lord Hatherly at 209, referred to also in the quote below from the judgment of Rich J.

[72](1932) 47 CLR 563, 583-4.

In Holmark Construction Company Pty Ltd v Tsoukaris[73] the plaintiff entered into a contract of sale to purchase from the defendants a parcel of land which was mortgaged. The defendant (vendor) contracted to sell it unencumbered. The land was subject to a mortgage. The defendant had entered into a deed with the mortgagee, arising from an earlier default, under which its security remained enforceable and pursuant to which the mortgagee was entitled to exercise its power of sale and thus to refuse its consent to the sale and to the discharge of its mortgage. The vendor declined to proceed with the contract. The plaintiff claimed damages, including damages for loss of bargain. The vendor sought to apply the rule in Bain v Fothergill to limit the damages. Needham J distinguished Bain v Fothergill holding that the vendor’s inability to compel the mortgagee to discharge the mortgage or to consent to the sale was not a defect in title within the meaning of the rule.[74] Holmark went on appeal, but the appeal did not consider Needham J’s ruling as to the applicability of the rule in Bain v Fothergill,[75] save that Priestley JA commented:

The vendors relied on the rule in Bain v Fothergill … to support the submission that they should be liable only for the plaintiff’s expenses of the conveyance; Needham J rejected this, and the submission was abandoned in this court. The circumstances in which the rule in Bain v Fothergill has any chance of being followed under modern conveyancing conditions of Torrens Title land in Australia seem to be nearing vanishing point.

[73](1986) 4 BPR 9131 (Holmark).

[74]Bailey vWoondella Pty Ltd [2012] VSC 396, [73].

[75]Holmark Construction Company Pty Limited v Tsoukaris, unreported, Supreme Court of NSW Court of Appeal, Priestly, McHugh and Clarke JJA, 6 May 1988; BC8801975; [1988] ANZ ConvR 669.

In Bailey v Woondella Pty Ltd,[76] Judd J referred to the judgment of Needham J with approval.
[76][2012] VSC 396

In relation to the ability of the defendant to procure a transfer of the Property to the plaintiff, the admitted evidence and the pleadings of the defendant are at odds. The facts show that it was likely that the defendant had available to her, through her agent, Hillside, the original signed transfer of land from Mwamba Kande. The defendant expressly proceeded on the understanding that the agent, Sheree Becker, was to lodge the transfer signed by Mwamba Kande and her.

The defendant pleaded, however, that she was unable to transfer the land, in that she denied she was entitled to be registered proprietor of the Property and later pleaded that the only person capable of giving good title to the Property is Mwamba Kande. This pleading may, however, be seen as calculated to limit the plaintiff’s claim to the relief available where the vendor cannot make good title. Whether that is so or not, the Court must look to the facts. The facts are not well established, but no objection was taken to the plaintiff’s evidence that:

In about February 2015 Ms Becker informed me that I was not on the title of the Property or a party to the mortgage. She said that she could arrange to transfer the Property into my name. She gave me several documents including a Transfer of Land document, which my ex-husband had already signed. I signed the Transfer of Land document and gave it to Ms Becker believing that she would take care of lodging it.
I put my trust in Ms Becker because I cannot read or write in English and because she had assisted me as a real estate agent with the purchase of the Property.
However, I now understand that Ms Becker is facing criminal charges in the Magistrates’ Court for a series of property related fraudulent transactions. I also have learnt that Ms Becker did not lodge the Transfer of Land. I believe this is because the Bank had advised her that it would not consent to the transfer of the mortgage from my ex-husband to me.[77]

[77]Lugondela affidavit, [20]-[22].

There is also other evidence that suggests it was the refusal of the mortgagee to discharge its mortgage and produce the certificate of title without the involvement of the Mwamba Kande. It is the correspondence from Rigby Cooke, Lawyers, when acting for the defendant (see above at [10(m)]), where they said they had made enquiries with the registered mortgagee, the ANZ bank. The ANZ Bank advised that it will not discharge the mortgage without an explicit authority from Mwamba Kande. Therefore, settlement could not proceed until ANZ receives such an authority.

The evidence of the defendant is a statement of belief based on what she has been told. That is, of course, hearsay evidence, as is the statement of Rigby Cooke. Although the evidence was admitted without objection, it needs to be assessed having regard to its provenance and whether, in the circumstances, it is likely to be true. The source of the defendant’s understanding and belief is not disclosed, but it is likely to have been from her lawyers at the time, Russell Kennedy, lawyers. The source of Rigby Cooke’s statement is disclosed to be the ANZ Bank. The circumstances show this evidence to be highly likely to be true.

It is not uncommon in sales of land in Australia that a person who has a right to take a transfer of the land in question may sell that land if, at settlement, the person is able to procure the production of the certificate of title[78] or at least there is an order to register from the person entitled to the certificate of title. The person may have purchased the land under an uncompleted contract of sale and on‑sold the land with a common settlement date, or as here may have a transfer for valuable consideration (in this case ‘natural love and affection’). Provided the transferee has custody or control of the transfer, can procure the production of the certificate of title and can satisfy the stamp duty requirements, the person is in a position to complete the sale so long as any mortgage or caveat can be discharged or removed.
[78]Previously the duplicate certificate of title.

That this may occur is contemplated by the General Conditions in the Contract to which I have referred, namely General Condition 2.3 where the vendor warranted that she has, or by the due date for settlement will have, the right to sell the land and at settlement will be the holder of an unencumbered estate in fee simple in the land.

The inability of the defendant to procure the discharge of the mortgage and production of the certificate of title can therefore be concluded to be the major factor, together with the difficulty of securing the removal of the caveat, that prevented the defendant completing the Contract.[79] I have previously referred to the decisions in Noske, Holmark and Bailey vWoondella Pty Ltd which compel me to find that the defendant’s inability to compel the mortgagee to discharge the mortgage is not a defect in title within the meaning of the rule in Bain v Fothergill.
[79]The correspondence between Joshi and Hillside referred to above suggests there were two caveats, on lodged by an estate agent. The title search in evidence reveals only one, the caveat lodged by Again Investments Pty Ltd.

In light of this conclusion it is not necessary for me decide whether it was necessary for the defendant or third parties to plead that the plaintiff had no entitlement to damages for loss of bargain, although I venture to suggest that the pleading by the defendant that the only person capable of giving good title to the Property was Mwamba Kande and the plaintiff was only entitled to rescission of the Contract was sufficient in the circumstances.

What damages are recoverable?

The plaintiff is entitled, therefore, to damages for loss of bargain. That is he is, so far as money can do it, to be placed in the same situation with respect to damages, as if the contract had been performed.[80] The practical operation of the ruling principle may vary depending on the commercial context; but the principle is always applied with a view to assuring to the purchaser the monetary value of faithful performance by the vendor of the bargain.[81]
[80]Robinson v Harman, (1848) 1 Exch 850 at 855; 154 ER 363 at 365 (Parke B); Wenham v Ella (1972) 127 CLR 454, 471 (Gibbs J); Clark v Macourt, (2013) 253 CLR 1 [109]-[110] (Keane J, Hayne, Crennan and Bell JJ agreeing).
[81]Bellgrove v Eldridge, (1954) 90 CLR 613, 617-618 (Dixon CJ, Webb and Taylor JJ).

The conventional date for assessment of those damages is at the date of breach of contract.[82] The usual date for the assessment of damages for a purchaser’s breach of a contract for the sale of land is the date the contract was terminated for that breach.[83]
[82]Johnson v Perez (1988) 166 CLR 351.
[83]Victorian Economic Development Corporation v Cloverdale [1992] 1 VR 596, 604 (Tadgell J); Vouzas v Bleake House Pty Ltd [2013] VSC 534, [212].

Johnson v Perez was a case in which solicitors were sued for damages for professional negligence and breach of contract, the solicitors not having prosecuted the plaintiff’s actions for damages for personal injuries diligently. His actions were dismissed for want of prosecution. All Justices agreed that the general rule was that damages for tort or for breach of contract were assessed at the date of the breach but that in each case the courts had to work out a solution best adapted to giving the wronged party that amount in damages which will mostly fairly compensate that party for the wrong suffered. A plaintiff who has suffered damage as a result of a defendant’s tort or breach of contract is entitled to such a sum as will, as far as possible, put him in the same position as he would have been in but for the tort or breach of contract.[84]
[84]See Powercell Pty Ltd v Grasso [19199] NSWSC 1190, [21].

In Johnson v Perez, Mason CJ, after referring to the guiding principle in the assessment of damages being compensatory, stated the general principle in this way:

There is a general rule that damages for torts or breach of contract are assessed as at the date of breach or when the cause of action arises. But this rule is not universal; it must give way in particular cases to solutions best adapted to giving an injured plaintiff that amount in damages which will most fairly compensate him for the wrong he has suffered….
The general rule that damages are assessed as at the date of breach or when the cause of action arose has been applied more uniformly in contract than in tort and for good reason. But even in contract cases courts depart from the general rule whenever it is necessary to do so in the interests of justice. …(citations omitted)[85]
As I noted earlier, the choice of an early date for assessment leaves the injured party exposed to the deleterious effects of inflation. True it is that legal interest may be awarded from the date of breach, but this is often too low to remedy the effects of inflation and the loss of the use of the money …However, the preference for an early date is motivated… by concerns about mitigation. This requirement of mitigation can in turn be explained in part by notions of fairness to the party at fault. Once the injured party learns of the breach, he can minimise the loss for which the other will be required to compensate by immediately purchasing a replacement.[86] (citations omitted)

[85]Johnson v Perez (1988) 166 CLR 351 at 355-356.

[86]Ibid, 357.

Mason CJ embarked upon a review of a number of areas of the law and cases and remarked:

As the cases to which I have referred reveal, the principles governing the assessment of damages do not permit the application of rigid rules based on categories of actions. Instead the injured party’s intentions must be considered in the light of the underlying principles in order to do justice between the parties. Where mitigation is possible an early date for assessment may be appropriate.[87]

[87]Ibid, 360.

The reasoning of the plurality (Wilson, Toohey and Gaudron JJ) was to similar effect. They said:

As a general rule, ‘damages for tort or for breach of contract are assessed as at the date of the breach’ (Lord Wilberforce in Miliangos v. Frank (Textiles) Ltd. (1976) AC 443, at p 468). The rule will yield if, in the particular circumstances, some other date is necessary to provide adequate compensation…(citations omitted)[88]

[88]Ibid, 367.

The analyses undertaken by Mason CJ in Johnson v Perez shows that the choice of an early date for the assessment of damages may be explained by reference to the principle that the wronged party is expected to mitigate loss. That is, upon learning of the breach the purchaser of land may seek to minimise loss by purchasing a replacement asset. But if the plaintiff is unable to mitigate loss at or near the date of the breach, then to achieve fairness to both parties the court may choose the date when it becomes reasonable to do so as the date of assessment of damages.[89]
[89]Vouzas v Bleake House Pty Ltd [2013] VSC 351, [215].

What is the date of the breach?

It was common ground that the normal rule is that the general damages to which a purchaser is entitled for breach of a contract for the sale of land are basically measured by the difference between the contract price and the market price of the land at the date of the breach, normally the date fixed for completion,[90] or when the contract is terminated for breach.[91]
[90]Wroth v Tyler, (1974) Ch 30, 56.
[91]Victorian Economic Development Corporation v Cloverdale [1992] 1 VR 596, 604 (Tadgell J); Vouzas v Bleake House Pty Ltd [2013] VSC 534, [212].

The question is - when was the date of breach. The defendant and the third parties look to the date for completion as the relevant date, 18 April 2017. But that submission overlooks a matter that is inherent in the circumstances. Time was ‘of the essence’ of the Contract. When the Contract failed to settle on that due date, and the plaintiff continued to press for settlement, giving time for the defendant to do so, the plaintiff by his conduct waived the requirement that time be of the essence.[92] The time ceased to be of the essence of the Contract until it was made of the essence again by the giving of the default notice on 4 October 2017. Even though that notice was not of the kind to bring the Contract to an end, as contemplated by General Condition 28, it required the default to be remedied within 14 days of the notice, failing which the plaintiff ‘will seek to obtain an order from a court of competent jurisdiction seeking specific performance of the Contract or in the alternative compensation for his loss and damages.’ Such a notice is capable of making time again of the essence of the Contract and of fixing a new time for performance.[93] The failure then to complete, or settle, the Contract is the date of breach, 15 October 2017. That is also when the cause of action arose.
[92]Poort v Development Underwriting Victoria Pty Ltd, (No 2) [1977] VR 454, 461.
[93]Thornton v. Bassett, [1975) VR 407, 427; Poort v Development Underwriting Victoria Pty Ltd, (No 2) [1977] VR 454, 461.

What is the date of the assessment of lost value?

But in this case, by commencing this proceeding for specific performance, the plaintiff necessarily is saying that the Contract remains on foot.[94] Right up to the time of the election on 10 August 2018 not to pursue specific performance but claim damages– or right up to the time of judgment if the plaintiff’s submissions are correct – the plaintiff affirmed the Contract, keeping it on foot, without having elected to determine it for breach.[95] In light of the contract remaining on foot until at least 10 August 2018, what then is the correct date for the assessment of the plaintiff’s loss of bargain?
[94]Bosaid v Andry [1963] VR 465, 484-486 (Sholl J).
[95]Bosaid v Andry [1963] VR 465, 484-486 (Sholl J).

The plaintiff relies on the observations of Dawson J in Johnson v Perez where he considered the cases where the appropriate time was not, or may not be, the date of breach:

Another category is where damages are awarded in lieu of specific performance and the value of the property which is the subject-matter of the contract is assessed at the date of judgment: see Wroth v. Tyler (1974) Ch 30. Again, departure occurs where a plaintiff does not move immediately to carry out repairs or to mitigate his loss, but it is not unreasonable for him to delay doing so. In such cases, damages may be assessed at an appropriate date later than that of the wrong: see Dodd Properties Ltd. v. Canterbury City Council; County Personnel Ltd. v. Alan R. Pulver & Co. (1987) 1 WLR 916; 1 All ER 289.

The logic of the assessment at the date of judgment, in the case of damages in lieu of specific performance, according to Wroth v Tyler,[96] is that s 2 of Lord Cairns Act 1858[97] empowered the Court to award damages which would put the plaintiff into as good a position as if the contract had been performed, even though to do so would mean awarding damages assessed by reference to a period subsequent to the date of breach.[98] A closer examination of the reasons reveals two matters. First, that the terms of s 2 of Lord Cairns Act expressly gave a discretion to the court as to damages and extended the field of damages.[99] Second, the section is speaking of the time when the court is making its decision to award damages in substitution for specific performance, so that is the moment that damages must be a substitute.[100] In conclusion on the issue, Megarry J said:

There seems to me to be adequate authority for the view that damages under Lord Cairns’ Act may be awarded in cases in which there is no claim at all at law, and also that the quantum of damages is not limited by the rules at law. No doubt in exercising the jurisdiction conferred by the Act a court with equitable jurisdiction will remember that equity follows the law, and will in general apply the common law rules for the assessment of damages; but this is subject to the overriding statutory requirement that damages shall be ‘in substitution for’ the injunction or specific performance. In the words of Cardozo C.J., ‘Equity follows the law, but not slavishly nor always’: Graf v. Hope Building Corporation (1930) 254 N.Y. 1, 9. Obedience to statute, whether in its precise words or in its spirit, is an excellent and compelling reason for not following the law.[101]

[96](1974) Ch 30.

[97]Chancery Amendment Act 1858 (21 & 22 Viet. c. 270).

[98]Wroth v Tyler, (1974) Ch 30, headnote.

[99]Lord Cairns Act has been repealed and replaced, so far as Victoria is concerned, by s 38 of the Supreme Court Act 1986, which does not pick up the precise wording of the original provision. Nevertheless the authorities show that the Victorian equivalent would be construed in the same way as the original: Leeds Industrial Co-operative Society Ltd. v. Slack [1924] A.C. 851; Wroth v Tyler, 57-58.

[100]Wroth v Tyler, 58.

[101]Ibid, 60. In Vouzas v Bleake House Pty Ltd [2013] VSC 534, [218], Macaulay J did not construe Megarry J’s reasoning as limited to damages in lieu of specific performance.

Clearly, this is not a case where the plaintiff claims damages in lieu of specific performance. Counsel for the plaintiff expressly disavowed such a claim to the Court, as referred to above ([20]). But that is not the end of the matter. Because the plaintiff continued to press for specific performance right up to 10 August 2018 (at least), this may be a case where the Court should depart from the general rule in the interests of justice. It is not until the election was made to pursue damages for breach of the Contract that the Contract ceased to be on foot.[102]
[102]Bosaid v Andry [1963] VR 465, 484-486 (Sholl J). The analysis by Sholl J relates to the situation where specific performance becomes impossible and the plaintiff seeks damages in lieu under Lord Cairns Act 1858 (21 & 22 Viet. c. 270), See now s 38 of the Supreme Court Act 1986 (Vic).

In Powercell Pty Ltd v Grasso,[103] Smart AJ considered the assessment of damages of a Magistrate for the purposes of an extension of time to appeal. In the course of his reasons he referred to the observations of Dawson J in Johnson v Perez referred to above ([76]) and to Wroth v Tyler[104] upon which Dawson J relied. He referred[105] to the observations of Oliver J in Radford v. De Froberville:[106]

… Wroth v. Tyler establishes that, at least where damages are awarded in lieu of specific performance, an appropriate date of assessment may be the date of judgment, but if the function of an award is to put the plaintiff in as good a position as if the contract had been performed, I do not see why, in principle the same should not equally apply in an appropriate case of a breach of contract which cannot be specifically performed. The practical difference no doubt in most cases lies in the duty to mitigate … (emphasis added)

[103][1999] NSWSC 1190 (Powercell).

[104](1974) Ch 30.

[105][1999] NSWSC 1190, ]24].

[106][1977] 1 WLR 1262, 1286.

In Powercell, Smart AJ noted that in both Wroth v. Tyler and Radford the court was conscious that if the defendant had not been in breach the plaintiff would have received land which had increased in value. Damages as a substitute for what the plaintiff was entitled to would have had to compensate him for that.[107]
[107][1999] NSWSC 1190, [24].

In Wroth v Tyler, inflation was running at a high rate and the value of the property increased substantially between the time of the breach and the time of the judgment. The decision in Radford is quite distinct and provides no precedential value,[108] save that it illustrates what Viscount Haldane LC said in British Westinghouse Electric and Manufacturing Co. Ltd v Underground Electric Railways Co. of London Ltd:[109]

In some of the cases there are expressions as to the principles governing the measure of general damages which at first sight seem difficult to harmonize. The apparent discrepancies are, however, mainly due to the varying nature of the particular questions submitted for decision. The quantum of damage is a question of fact, and the only guidance the law can give is to lay down general principles which afford at times but scanty assistance in dealing with particular cases.

[108]It concerned a breach of a covenant to build a dividing wall in land sold by the plaintiff to the defendant.

[109][1912] A.C. 673, 688.

The wisdom of this observation is illustrated by the analysis undertaken by Dawson J in Johnson v Perez[110] of the various reasons that loss may be assessed at a later point in time, where it is necessary to properly compensate a plaintiff, including:
[110]Johnson v Perez (1988) 166 CLR 351 at 386–8 (Dawson J).

(a) where the defendant owes money to a plaintiff payable in a foreign currency;[111]
[111]Ibid, 387.

(b) where damages are awarded in lieu of specific performance;[112]

(c) where the assessment of loss at a later point may enable the Court to take into account evidence relevant to the assessment of loss that has materialised since the date of the breach and facts that would have been mere speculation as at the date of breach, such as in personal injury and fatal accident cases;[113]

(d) where the loss does not crystallise until the assessment is made such as where compensation is for losses into the future as well as the past and there is no compelling reason to select one point in time rather than another along the continuum over which the damages extend, also in personal injury and fatal accident cases;[114]

[112]Ibid, 387.

[113]Ibid, 387-8.

[114]Ibid.

A compelling reason for selecting a particular time along a continuum of loss and damage is often the point at which the plaintiff is able to mitigate its losses.[115] This is particularly so where the delay between the cause of action arising and judgment can be met by an award of interest.[116]
[115]North East Solution Pty Ltd v Masters Home Improvement Australia Pty Ltd [2016] VSC 1, [374].
[116]Johnson v Perez (1988) 166 CLR 351, 388 (Dawson J).

The plaintiff was duty bound to take all reasonable steps to mitigate the loss and is debarred from claiming any part of the damage which is due to his neglect to take such steps. This does not impose on the plaintiff an obligation to take any step which a reasonable and prudent man would not ordinarily take in the course of his business.[117] The onus of proof of failure to mitigate rests on the defendant,[118] and the reasonableness or otherwise of the plaintiff’s actions following the damage depends on all the circumstances of each case and on the financial resources and ability of the individual plaintiff.[119]
[117]British Westinghouse Electric & Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673 (British Westinghouse Electric) at 689.
[118]Metal Fabrications (Vic) Pty Ltd v Kelcey [1986] VR 507.
[119]Clippens Oil Co Ltd v Edinburgh & District Water Trustees [1907] AC 291.

The plaintiff does not lead evidence to establish that he was unable to obtain a mortgage for an amount sufficient to have covered the (temporarily) unavailable deposit of $23,650 and thereby purchased an equivalent property. The plaintiff had available funds of $70,950 which were required to complete settlement of the Property ($473,000 – loan of $378,400 – deposit of $23,650). Those funds could have been deployed in the purchase of another property, particularly where there was an offer, albeit a conditional offer, of the return of the deposit in November 2017.

The continuum in this case extends from 15 October 2017 to 12 April 2019, quite a stretch. Where along that time-line was the plaintiff able to mitigate his loss? If it were reasonable for the plaintiff to continue to press for specific performance, notwithstanding the breach, up to 10 August 2018, or 12 April 2019, it might be said that the plaintiff’s damages should be assessed at one of those dates in order to fairly compensate him for the loss of his bargain. The question then arises, was the plaintiff entitled to conclude, properly advised, that there was a prospect of specific performance being ordered? That is, in the context of the early statements made by the defendant’s lawyers to the effect that the ANZ Bank would not discharge the mortgage and there were problems removing the caveat? I think the question answers itself. Properly advised, the plaintiff should have proceeded for damages for breach much earlier than he did, a reasonable time after Rigby Cooke’s letter of 10 November 2017 informing the plaintiff that the Bank would not discharge the mortgage without authority from Mwamba Kande, referred to above ([10(m)]). In my view it is appropriate to allow a month after that time as a reasonable time to obtain advice, carry out any further investigations and enquiries and make a decision. Indeed it was a little over a month later that the plaintiff commenced this proceeding (11 December 2017).

Thus, notwithstanding that the date of breach of the Contract was 15 October 2017, it is appropriate to calculate the plaintiff’s loss of value at a later date – being the time when the plaintiff should have elected to claim damages and proceeded to find another investment property so as to mitigate his loss and damage. This is because the general rule that damages is assessed at the date of breach of contract must give way in particular cases to solutions best adapted to giving the injured plaintiff the amount in damages which will most fairly compensate him for the wrong he has suffered and where the interests of justice call for it. In my view the appropriate time should be a month after the letter of 10 November 2017, that is 10 December 2017.

It is unnecessary therefore to determine precisely when the plaintiff elected between specific performance and damages for breach of the Contract. Nevertheless, I venture to suggest it was the date it was announced to the Court on 10 August 2018. It is generally acknowledged that a plaintiff may wait to the time of judgment before electing between inconsistent rights, providing the claims advanced do not involve advancing inconsistent facts. But here the plaintiff clearly elected, and then sought to reserve his rights. The election was made, and once made is irrevocable.[120]
[120]Sargent v ASL Developments (1974) 131 CLR 634, 646-7 (Stephen J).

What is the lost value?

The values attributed to the Property by the valuation evidence before the Court are:

(a) 18 March 2018 - $540,000;[121]
[121]Third party valuations.

(b) 10 August 2018 - $550,000;[122]
[122]Third party valuations.

(c) 12 April 2019 - $575,000;[123]
[123]Third party valuations.

(d) 10 May 2019 - $595,000;[124]

(e) 11 November 2019 – $570,000;[125] and

(f) 11 March 2020 - $600,000;[126]

[124]Plaintiff’s valuation.

[125]Third party valuations.

[126]Third party valuation.

Valuation evidence is, of course, opinion evidence and is necessarily imprecise and variable as between valuers. Usually it is assessed and evaluated by reference to the methodology employed and the identification of strengths and weaknesses. Apart from a passing criticism of the third party valuations by the plaintiff[127] there was no detailed analysis of the methodology adopted nor any cross-examination of the valuers. This is hardly surprising having regard to the level of the damages claimed compared with the costs likely to be expended undertaking such an analysis and cross-examination. Far too much has been expended already.
[127]That there is no justification or rationale in the third party valuations for the values adopted for the improvements on the property and that the dates of sale of the comparator properties bore inadequate connection to the date of judgment and that the market was volatile.

There is some volatility in the values arrived at by the third party valuations. First, if it is assumed that the sale price of $473,000 was the market price as at 18 March 2017, then between the date of contract and 18 March 2018, the increase in value was $67,000 (an increase of about 14.2% per annum). Second, between 18 March 2018 and 10 August 2018 the increase in value was $10,000 (an increase of about 1.9% over about 5 months, annualised at 4.6%). Third, between 10 August 2018 and 12 April 2019, the increase in value was $25,000 (an increase of 4.5% over about 8 months, annualised at 6.8%). Fourth, between 12 April 2019 and 11 November 2019, the value declined by $5,000 (a decline of 0.87% over 7 months, annualised at 1.5% decline). Fifth, between 11 November 2019 and 11 March 2020, the value increased by $30,000 (an increase of about 5.3% over 4 months, annualised at 15.9%).

The plaintiff’s valuation of $595,000 at 10 May 2019 is inexplicably an ‘outlier valuation’, in that it is $20,000 higher than the third party valuation under a month earlier (at 12 April 2019) of $575,000 and $25,000 higher than third party valuation 6 months later of $570,000. Moreover, it is remote from the date that I consider to be the date at which to assess the lost value to which the plaintiff is entitled as a result of the defendant’s breach of the Contract.

In the face of values at dates some distance from the date of breach (15 October 2017) and from the date by which in my view the plaintiff, properly advised and acting reasonably, should have elected to claim damages, 10 December 2017, doing the best that I can with the available opinion evidence, I consider that between the date of the Contract on 18 March 2017 and 10 December 2017, the Property is likely to have increased in value at about the same rate as it did between 18 March 2017 and 18 March 2018, that is by 14% per annum, making an increase in value of about $5,520 per month for 9 months, being $49,680. That is the figure I will adopt to calculate the lost value.

From the lost value of $49,680 must be deducted the stamp duty and the cost of the interest only mortgage that would have been spent to acquire the lost value for the period from 15 October 2017 to 10 December 2017, a period of a little less than 2 months (57 days) at the rate of $1,450.53 per calendar month (giving a figure for annual interest of $17,406.36, a daily rate of $47.6886, and a total for 57 days of $2,718.25). The stamp duty on the acquisition as calculated by the plaintiff was $23,450, being the rate applicable where there is no principal place of residence concession.

Because the plaintiff put his case on the basis that he intended to live in the Property, there was no evidence directed to the likely income to be generated by the renting of the Property and the costs involved. In the circumstances of the limited time between the date of breach and the date of assessment, the rental return, assuming the Property was rented within a short time after 15 October 2017, would have reduced the burden of the mortgage, but very likely have still resulted in the plaintiff recording a loss after allowing for a portion of the maintenance costs, rates and land tax. In the absence of evidence directed to the point, and doing the best I can, an allowance should be made for net income of about 50% of the mortgage costs, reducing the deduction for the cost of servicing the mortgage. The result is a ‘lost value’ of the net sum of $24,870.88 ($49,680 – $1,359.12 (approximately 50% of $2,718.25) = $48,320.88 – $23,450 = $24,870.88).

Additional costs

These costs are comprised of the costs of renting alternative accommodation, the costs of securing finance additional to that incurred initially to obtain the loan to settle the purchase and legal costs incurred in attempting to settle the Contract.

Rent

It will come as no surprise that in my view the evidence that the plaintiff purchased the Property as an investment and not as a place of living is compelling, even overwhelming. I have referred to it above at [10(c)] and [41].

There are four strands to the evidence. First, a statement made in an email on 26 April 2017 when the plaintiff’s lawyers at the time, Joshi, responded to Hillside’s offer for the plaintiff to enter into occupation as a licensee, saying, in relation to the offer, that ‘Our client does not wish to move in and has bought the property for investment purposes’. It is reasonable to conclude that the statement was made on instructions. Second, that there is no express evidence in the plaintiff’s affidavits that he and his family intended to live in the Property, despite a lot of evidence about the differences in quality between the Property and the places that were rented. Third, it was revealed in the course of submissions that the calculation of the stamp duty arrived at by the plaintiff was the stamp duty payable for an acquisition of an investment property, that is where the principal place of residence concession (PPR) was not available. Exhibit RS-15 to the second Singh affidavit shows that in using the State Revenue Office on-line calculator Da Gama had answered ‘no’ to the question ‘is it your principal place of residence?’. The duty payable if the PPR applied is and was $20,350. Fourth, the letter of offer from the ANZ Bank identifies the loan as for a residential investment property.[128]
[128]Exhibit RS-14 to the second Singh affidavit.

In the face of this evidence, there can be no recovery for the claimed rent, even if, contrary to the submissions advanced by the defendant and third parties, such expenditure is compensable.

Finance costs

The plaintiff gave evidence, and was not cross-examined, that after the purchase of the Property failed to settle in April 2017, in order to re-establish his already approved loan with the ANZ Bank (which had expired), or obtain a new loan (it is not clear):

On 18 May 2018, I engaged, Mr. Raj Middha of IntelliLend to assist me again to get a loan to settle the purchase. I was charged $1,500 for this work, which I again paid in cash and was not given a receipt.

The defendant and third parties were scornful of this evidence. On the negative side of the ledger:

(a) it is remarkable that a finance broker would demand cash and give no receipt, not once but twice; and

(b) there is no indication whether the plaintiff was successful in securing the loan approval or not, or even whether it went ahead. One would expect there to be documentation relating to the application for the loan, or a letter of offer of the new loan approval. But nothing is put forward. By contrast, in relation to the expense of $2,500 said also to have been paid in cash to Mr. Raj Middha to assist in obtaining the initial loan approval, there is a letter of offer from the ANZ Bank to Mr Middha dated 6 April 2017 for a loan to the plaintiff of $378,400 expiring on 28 April 2017.

On the positive side of the ledger:

(a) the plaintiff has affirmed his evidence and was not cross-examined. There is no evidence advanced against it – just arguments;

(b) it is common, particularly – but by no means only – in Victoria’s ethnic communities for many transactions to be conducted on a cash basis. It is, after all, legal tender; and

(c) the only reason not to accept the plaintiff’s evidence is the want of corroboration by documentary proofs, which might perhaps be described as corroborative detail.

With some hesitation, I accept that the plaintiff paid Mr Raj Middha a further $1,500 to assist him to get a loan to settle the purchase after his ANZ Bank’s loan offer had expired. It is likely that in order to prepare for a settlement after the expiry of the first loan offer the plaintiff needed to have available another loan offer in order to be in a position to settle the Contract after the default notice was given.

Legal costs thrown away

The plaintiff claims $5,390.00 attempting to have the Contract settle after the defendant’s breach, made up of solicitors fees incurred in seeking to arrange settlement of the Contract and giving the default notice. There are two tax invoices exhibited to the second Singh affidavit that support this claim. The invoices are not itemised, so only a general idea of the work done can be gathered from them. The invoices show that the costs include the costs of getting the file from the plaintiff’s previous solicitor, the costs of titles searches and lodging a caveat on the title to the property, dealing with the defendant’s conveyancer, Hillside, and with Justice Connect and Rigby Cooke (who represented the defendant) and some work liaising with Counsel connected to the commencement of this proceeding.

There is no doubt from the account of the work undertaken as referred to above ([10]), that the plaintiff’s solicitor was put to considerable work in attempting to settle the Contract. In the absence of detailed itemised bills it is not possible to do otherwise than take a broad brush to the assessment. Doing the best I can, I consider that only a minor part of the work undertaken is likely to relate to the costs recoverable in this proceeding, so I will allow $5,000 under this head of damages. Otherwise the charges for work done appear reasonable.

Loss of amenity

The Plaintiff claims a sum for loss of amenity arising from having to live in less salubrious rented premises whilst waiting to complete the purchase of the Property. The claim depends, in the first instance, on the efficacy of the proposition that the plaintiff purchased the Property to live in with his family. In the face of my conclusion, based on the evidence, that the plaintiff purchased the Property as an investment and not as a residence for him and his family, there can be no recovery for any loss of amenity, even if, contrary to the submissions advanced by the defendant and third parties, such a claim is maintainable as damages for breach of a contract for the sale of land.

Conclusion

For the reasons set out above, the plaintiff will be allowed damages as follows:

(a) $24,870.88 for lost value;

(b) $1,500 for additional finance costs; and

(c) $5000 for legal costs thrown away,

making a total of $31,370.88, plus interest pursuant to s 60 of the Supreme Court Act 1986 (Vic).

I will ask the parties to make submissions on the calculation of interest and as to the costs of the proceeding.

[2020] VSC 544

31 August 2020