Stals v Zhu

[2018] NSWDC 343

District Court

New South Wales

Medium Neutral Citation:	Stals v Zhu [2018] NSWDC 343
Hearing dates:	25 September 2018
Date of orders:	25 September 2018
Decision date:	25 September 2018
Jurisdiction:	Civil
Before:	Gibson DCJ
Decision:	(1) Defendant called outside Court 13A three times at 10:47am – No appearance. (2) Judgment for the plaintiff for $367,634.36. (3) The defendant is to pay the plaintiff’s costs of and incidental of the assessment of damages. (4) Exhibits retained for 28 days. (5) The plaintiff is to notify the defendant of these orders within 7 days of the entry of these orders onto JusticeLink.
Catchwords:	CONTRACT – plaintiff and defendant enter into contract for sale of real estate – defendant pays first but not second instalment of the deposit – plaintiff terminates contract and seeks compensation for shortfall in sale of property and “styling” expenses – no issue of principle
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW), r 29.7
Cases Cited:	Buchanan v Dunstan [2007] NSWSC 248 Jampco Pty Ltd v Cameron (No 2) [1985] 3 NSWLR 391 Satz v ACN 069 808 957 Pty Ltd [2010] NSWSC 365
Category:	Procedural and other rulings
Parties:	Plaintiff: Gillian Stals Defendant: Olga Zhu
Representation:	Counsel: Plaintiff: Mr D Hughes Defendant: No appearance   Solicitors: Plaintiff: Saville Partners Pty Ltd Defendant: No appearance
File Number(s):	2017/340596
Publication restriction:	None

Judgment

1. The plaintiff by statement of claim filed on 10 November 2017 brought proceedings in relation to a contract to sell property in Bellevue Hill for the sum of $5.55 million for which the deposit was to be paid in two instalments of $277,500 representing 10% of the purchase price. The first of these was paid but the second was not.

2. As is set out in more detail in my judgment below, the plaintiff’s entitlement after termination to keep and recover the deposit and to sue the defendant to recover any additional losses is of a standard contractual kind found in contract for sale of land in New South Wales.

3. The plaintiff has already had default judgement entered for the sum of $297,166.48. The application before me, which is brought by way of notice of motion filed on 8 August 2018, is for the assessment of unliquidated damages. It is supported by expert evidence as to valuation, set out in the affidavit of Constantine Dean Galanos sworn 18 September 2018, as well as by an affidavit sworn by the plaintiff annexing all of the relevant documentation.

4. The first issue to note is that the defendant is not represented in Court. The defendant was called outside Judge Letherbarrow SC's court but failed to appear. I note that the defendant was called outside this Court three times outside the Court at 10:47am and that there is still no appearance on her behalf.

5. Conformably with the principles of law set out in r 29.7 Uniform Civil Procedure Rules 2005 (NSW) and the principles explained by Barrett J in Satz v ACN 069 808 957 Pty Ltd [2010] NSWSC 365, I have satisfied myself by examination of the two affidavits of service (exhibits A and B) that the defendant is aware of these proceedings being before the Court today and has been served with all of the relevant evidence. The affidavits of service of Justin Veitch sworn on 20 September 2018 and 7 December 2017 set out to my satisfaction that the defendant is aware of these proceedings being listed for hearing today and of the evidence which will be led.

6. I shall first set out the relevant factual background. As noted above, the plaintiff was the vendor and the defendant was the purchaser for the property at Bellevue Hill for $5.55 million and the deposit of 10% was not paid in full in that the first instalment was paid, but the second was not. This amounted to a fundamental breach of the terms of the contract for sale and the plaintiff was entitled to terminate the contract.

7. On the 29 August 2017, as was her right, the plaintiff formally terminated the contract (see the exhibit to her affidavit behind tab 3). The notice of termination was served by her solicitors upon the solicitors for the defendant acting in relation to the transaction. After proceedings were commenced, this Court made an order for liquidated damages in the sum of $297,166.48 on 29 August 2018 being for the balance of the deposit, interest at the court rate and costs.

8. The plaintiff has recovered the liquidated sum of damages under the contract. The issue before me is, as is set out in the notice of motion, the issue of the unliquidated claims made in relation to the balance of the plaintiff’s loss.

9. Those losses arise as follows. On 18 May 2018 the plaintiff entered a new contract to sell the property for $4.8 million as opposed to $5.55 million (see tab 8 of exhibit D). That sale occurred following a marketing campaign which commenced in September 2018, the documents for which are set out at paragraphs 14-18 of the affidavit of the plaintiff. The relevant clause of the contract for sale between the plaintiff and defendant is set out at tab 2 of exhibit D.

10. The contract for sale was entered into on 18 May 2018. That was less than 12 months after the termination on 29 August 2017, and I note that the marketing campaign in fact commenced next month, namely September 2017.

11. I am satisfied that the property was resold in a manner sufficiently speedy to enliven the entitlement to damages under clause 9.3.1, and I note in the very helpful submissions provided by Mr Hughes of counsel that he has referred to the principle set out in Buchanan v Dunstan [2007] NSWSC 248.

12. There are two limbs of recovery under clause 9.3.1. The first is the deficiency on resale which is the simple deduction of the sale price of $4.8 million from the original sale price of $5.55 million, namely $750,000. Giving credit for the deposit of $555,000 dollars and accounting for the cost of the first sale of $1,998.85 (exhibit D tab 11) this deficiency is $19,300.15.

13. Secondly the plaintiff is entitled to claim the following costs and expenses arising outing of the defendant’s noncompliance with the contract and resale. These were as follows:

1. Legal advice re-termination $866.25;

2. Marketing costs for the re-sale $4,038;

3. Furniture hire fees for the styling of the property for resale: $16,356;

4. Gardening to prepare the property for resale $2,541;

5. Painting, carpentry and handyman changes to prepare the property for resale $2,953;

6. Pressure cleaning and window washing charges to prepare the property for sale $1,200;

7. Electrical work and repair to prepare the property for re-sale $1,518.76;

8. Plumbing repair to prepare the property for re-sale $271.70;

9. Property management fees $4,993.59;

10. Insurance premium since 15 June 2018 $874.20;

11. Valuation report $4,565;

12. Mortgage interest $1,224,027.77;

13. Utilities from 9 November 2017 $36,488 (this being the date of contemplated completion on the original contract. This includes electricity, gas, water and council rates)

14. The total for these items is $167,569.97.

15. As Mr Galanos explains in his helpful affidavit in support, these are the kinds of fees which are necessary for the sale of real estate, particularly at what might be called “the high end of the market”, where a great deal of emphasis is placed on the visual presentation of the property. As can be seen from the photographs taken of this luxury home, the use of what is called “styling” is an important part of the saleability of the property.

16. When added together, these two sums come to $360,571.12. To that sum must be added interest calculated for the 130 days to date since the date of resale, namely 18 May 2018. I note that Mr Hughes, in his helpful submissions, has referred me to Jampco Pty Ltd v Cameron (No 2) [1985] 3 NSWLR 391 at 395 as to the relevant principles for determination of the loss. At 5.5% taking into account the number of days this adds up to $7,063. The total claimed is $367,643.36 inclusive of interest up to today.

17. In addition, an order is sought in relation to the payment of legal costs.

Orders

18. I am satisfied that the plaintiff has made out entitlement to all these sums, and accordingly the orders I make are as follows:

1. Defendant called outside Court 13A three times at 10:47am – No appearance.

2. Judgment for the plaintiff for $367,634.36.

3. The defendant is to pay the plaintiff’s costs of and incidental of the assessment of damages.

4. Exhibits retained for 28 days.

5. The plaintiff is to notify the defendant of these orders within 7 days of the entry of these orders onto JusticeLink.

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Decision last updated: 30 November 2018