Wedgewood Road Hallam No 1 v Diamond
[2013] VSC 447
•23 AUGUST 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
S CI 2010 1201
| WEDGEWOOD ROAD HALLAM NO 1 PTY LTD (ACN 127 649 405) | Plaintiff and defendant by counterclaim |
| v | |
| GARY JOHN DIAMOND | Defendant and plaintiff by counterclaim |
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JUDGE: | BELL J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 6 and 11 DECEMBER 2012 | |
DATE OF JUDGMENT: | 23 AUGUST 2013 | |
CASE MAY BE CITED AS: | WEDGEWOOD ROAD HALLAM No 1 v DIAMOND | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 447 | |
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TRADE AND COMMERCE – contract for sale of lot 9 in proposed plan of subdivision of land – seller made oral pre-contractual promise that level of lot would be very close to buyer’s adjoining land – formal contract conferred power on seller to amend plan of subdivision, subject to notice to buyers and their right to rescind – among other things, level of lots on plan amended on notice to all buyers – buyer of lot 9 did not exercise right to rescind – that buyer failed to settle contract and pay balance of purchase price – whether seller entitled to rescind contract and obtain damages for breach – whether buyer induced by promise to enter contract– whether mere non-performance of pre-contractual promise can constitute misleading or deceptive conduct – whether seller intended to perform promise and had reasonable grounds for making it – whether seller’s conduct misleading or deceptive in totality of circumstances – ‘misleading or deceptive’ – Trade Practices Act 1974 (Cth) s 52, Fair Trading Act 1999 (Vic) s 9.
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APPEARANCES: | Counsel | Solicitors |
| For the plaintiff | Mr Marc Bevan-John | Taylor Splatt & Partners |
| For the defendant | Mr Anthony Schlicht | Koroneos Lawyers |
HIS HONOUR:
Introduction
By contract of sale dated 20 March 2008, Wedgewood Road Hallam (No 1) Pty Ltd sold to Gary Diamond the land known as lot 9 on proposed plan of subdivision PS612556N for $1,255,100. That amount was payable by a deposit of $125,510, which was paid. The balance was payable within 14 days of notice of registration of the plan of subdivision, which Mr Diamond failed to pay after notice of that registration. By notice dated 24 November 2009, Wedgewood Road exercised its contractual right to rescind the contract.
Wedgewood Road now sues Mr Diamond in this court for damages in the sum of $214,417.51, being the losses allegedly suffered by reason of Mr Diamond’s failure to settle the contract. Mr Diamond admits the failure to pay the balance of purchase price outstanding but disputes Wedgewood Road’s entitlement to rescind. He contends that he was induced to enter into the contract by a misrepresentation in relation to the level of the land, which Wedgwood Road failed to perform, and that the company had thereby engaged in misleading and deceptive conduct contrary to s 52 of the Trade Practices Act 1974 (Cth) (and s 9 of the Fair Trading Act 1999 (Vic)). By counterclaim, he seeks an order for return of the deposit.
Pre-contractual negotiations before sale of lot 9
Mr Diamond operated a warehouse for the products of his business, Pets Paradise, in Hallam. Behind that warehouse was a decommissioned quarry which Wedgewood Road was developing and subdividing for light industrial purposes. In November 2007, Wedgewood Road approached Mr Diamond about selling lot 9, which was to adjoin the warehouse.
Mr Diamond saw an opportunity to buy lot 9 for the physical extension of his warehousing operations. However, lot 9 was then significantly higher in elevation than the land on which the warehouse was situated, making it impossible to conduct warehousing activities on the two properties as a single unit. Recognising that difficulty, Wedgewood Road (through its representative, Simon Lowe) told Mr Diamond (through his representative, Colin McDonald) that the final level of lot 9 would be close to that of the warehouse land and the levels would be tweaked to achieve that level if required. That representation was of importance to Mr Diamond when he entered the contact of sale. His evidence, which I accept, was that he would not have entered the contract without that assurance.
The contract did not specify a condition reflecting this representation. From Mr Diamond’s point of view, it did not need to. The same purpose was achieved by the description of the land by reference to lot 9 on ‘proposed Plan of Subdivision PS612556N’. That plan specified that the elevation of lot 9 at the boundary with Mr Diamond’s land would be 21 (meaning 21.00) metres from the datum, ie, the same.
As is usual with a standard form contract for the sale of land to be subdivided, the contract contained a number of provisions facilitating the development of the property. The most important of these for the purposes of the present case was cl 15, which (among other things) provided that the vendor could amend the plan of subdivision on notice to the purchaser. The clause gave to the purchaser the right to rescind the contract within 14 days of receiving that notice.
Although Mr Diamond is a very experienced person of business and has bought and sold many properties, he is not a property developer and was not experienced with buying land under subdivision. At all times he was relying on the advice of his in-house lawyer. When he entered into the contract to buy lot 9, the potential significance of cl 15 was not brought to his attention. Other clauses were the subject of negotiation but not that one.
Wedgewood Road amends levels in plan of subdivision
It so happened that Wedgewood Road exercised the contractual right to amend the plan of subdivision. In order to improve the drainage and layout of the entire development and meet certain engineering requirements of the responsible authority, Wedgewood Road amended the plan of subdivision. Among other things, the new plan specified that the elevation of lot 9 at the boundary with the warehouse land would be 22.75 metres, not 21.00 metres. Notice of that amendment was given by the solicitors for Wedgewood Road to Mr Diamond by letter dated 21 January 2009, attaching the amended plans.
When Wedgewood Road served the notice of amendment under cl 15, the change to the levels was not brought to Mr Diamond’s attention by his in-house lawyer. He did not consider exercising and did not exercise his right of rescission. He only realised that there was a problem when, as earthworks were being undertaken in 2009, lot 9 was being made higher rather than level with the warehouse land.
Gary Diamond complains and Wedgewood Road responds
On behalf of Mr Diamond, complaints were made to Wedgewood Road about the level of lot 9. Accepting that it had represented that the elevations of the two properties would be the same, Wedgewood Road adopted a new plan of works. Although the evidence is unclear about whether a further amended plan of subdivision was registered, the fact is that the elevation of lot 9 was reduced by about 1 metre. Some 4,500 cubic metres of earth were removed in so doing. The final elevation of lot 9 is not exactly level with the warehouse property. The difference in elevation varies with the relative slope of the two properties and is affected by the presence of a drainage embankment across the boundary on the side of the warehouse land. The difference in elevation, overall, is approximately 300 millimetres.
Taking these works into account, Wedgewood Road considered then, as it considers now, that the final elevation of lot 9 matched well with that of the warehouse land. That may be right, but I need not reach a concluded view on this question. When the works were completed in the second half of 2009, no complaint was made by Mr Diamond that the final level of lot 9 was not the same as that land.
Gary Diamond fails to complete settlement of contract
As we have seen, the contract required settlement and payment of the balance of the purchase price to occur within 14 days of the purchaser being notified of the registration of the plan of subdivision with the Land Titles Office. Wedgewood Road (through its solicitors) so notified Mr Diamond by letter dated 19 October 2009, making settlement due on or before 2 November 2009.
On Mr Diamond’s evidence, by that time, the Global Financial Crisis was underway and had hit him hard. He was experiencing extreme difficulty in obtaining funds for the completion of the transaction. Through his in-house lawyer, he sought a 28 day extension of the time for the settlement. Wedgewood Road granted an extension of 21 days, but no longer. On 23 November 2009, Mr Diamond’s in-house lawyer advised the solicitors for Wedgewood Road that he was ‘not in a position to complete settlement at this stage’ and was ‘awaiting further advice from a finance provider’. Certain confirmations were sought from Wedgewood Road, which were given.
In the result, Mr Diamond did not settle on the due date and, by notice dated 24 November 2009, Wedgewood Road gave notice of rescission of the contract. The notice gave Mr Diamond 14 days to remedy the default, which he did not do. In mid-December, Mr Diamond’s in-house lawyer advised that he was unable to complete the purchase of the land and that Wedgewood Road should ‘relist the land for sale in order to mitigate any losses’.
The communications with the solicitors for Wedgewood Road over the settlement and rescission of the contract were carried out on behalf of Mr Diamond by his in-house lawyer. The reason given for Mr Diamond being unable to settle the contract was his inability to raise finance. No mention was made of the level of lot 9. No complaint was made that lot 9 was not level with the warehouse land. In his evidence, Mr Diamond put that down to a change in his in-house lawyer at the time. The former lawyer appreciated the importance of the level issue but apparently had not informed his replacement.
Due to the state of the market then and since, lot 9 has not been sold. Mr Diamond has not criticised Wedgewood Road for that. The agreed valuation is $1,000,000.
Gary Diamond’s defence
Mr Diamond contends that he is not liable to pay damages to Wedgewood Road, and seeks return of the deposit, because the company had committed a fundamental breach of the contract and engaged in misleading and deceptive conduct.
In the pleaded defences counterclaims which were pressed at trial, Mr Diamond contends that he was not required to rectify the default specified in the notice of rescission because Wedgewood Road had not ensured that the ground level of lot 9 was the same as the warehouse land, as had been represented and agreed. It was contended that Mr Lowe (and another person not called as a witness) had represented to Mr Diamond that the ground level of lot 9 would be the same as the warehouse land. That representation was false, misleading and deceptive because lot 9 was not so level. It was also contended that the representation was made without reasonable grounds.
In final submissions, counsel relied on the evidence of Mr Diamond that he would not have entered into the contract but for the representation that lot 9 would be level with the warehouse land. It was not necessary for the contract to contain a specific clause referring to that promise because the plans in the section 32 statement, which were part of the contract, specified a level of 21 (meaning 21.00) metres for lot 9, being the same as that land. In counsel’s submission, the representation was false and misleading because the final level of lot 9 was not the same as that land. In making the promise as to level and failing to perform that promise, Wedgewood Road had both committed a fundamental breach of the contract and engaged in misleading and deceptive conduct.
It is very clear that Wedgewood Road has not committed a fundamental breach of the contract. It has exercised its contractual rights and observed its contractual responsibilities. I reject Mr Diamond’s submissions in this regard. The real question is whether Wedgewood Road engaged in misleading and deceptive conduct.
Representation made by Wedgewood Road
It is well precisely to identify the representation which was made by Wedgewood Road. The evidence establishes that it did make a pre-contractual representation as to the level of lot 9.
On the evidence of Mr McDonald, the representation was made orally at a meeting in November 2007 between him and Mr Lowe. The representation which was made by Mr Lowe was that the level of the new property would be ‘exactly the same as the … Pets Paradise property’. Mr McDonald deposed that he had explained to Mr Lowe in the meeting that this was necessary so that Pets Paradise could run its specialised reach trucks, which were very low and required level ground, and other machinery between the two properties. In an email to Mr Diamond on 12 November 2007, Mr McDonald referred to this meeting and noted: ‘Level of land will be very close to what we have at the moment, no major increases to ground levels & they would tweek [sic] to suit current level if required’.
In his evidence, Mr Lowe agreed with the account given by Mr McDonald in this email. He said the need for Pets Paradise to operate its forklifts and other machinery between the two properties was discussed. He told Mr Lowe that this would not be a problem. He said he could not recall discussing the detail of the types of forklifts which would be used and, in particular, was not aware that Pets Paradise used reach trucks.
There is a difference in emphasis between the two witnesses about what was represented. According to Mr McDonald, the representation was that the level of lot 9 would be the same as the warehouse property, although his email said that the level would be ‘very close’. According to Mr Lowe, the representation was that the levels would be very close and enable Mr Diamond to run machinery (such as forklifts) between the two properties. Taking the email into account, I prefer Mr Lowe’s evidence.
Was representation itself misleading and deceptive conduct?
The High Court of Australia has not yet finally determined whether, and in what circumstances, a pre-contractual statement of a promissory nature which was not performed constitutes misleading and deceptive conduct. However, reflecting the previous law of misrepresentation,[1] the great preponderance of authority is that the mere breach of a promise of future conduct cannot amount to misleading and deceptive conduct.[2] That principle was stated by Lockhart J in Bill Acceptance Corporation Ltd v GWA Ltd,[3] which concerned the non-payment of a procuration fee. His Honour held:
The mere fact that representations as to future conduct or events do not come to pass does not make them misleading or deceptive notwithstanding that the applicant has relied on them and has altered his position on the faith of them. In this case, the lone fact that the agreed procuration fee was not paid did not transmute the conduct of the respondent from conduct that was not, to conduct that was, misleading or deceptive. That conduct, namely the relevant representations or statements retained the same character throughout. The only variable was that the agreed fee was not paid. That was the cause of the applicant’s loss or damage, if any.[4]
[1]See for example The Civil Service Co-Operative Society of Victoria Limited v Blyth (1914) 17 CLR 601, 607 (Griffith CJ), 609 (Barton J); Bisset v Wilkinson [1927] AC 177, 182 (Privy Council) (‘Bisset’).
[2]Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217, 239 (Ormiston J) (‘Futuretronics’); Serrata Investments Pty Ltd v Rajane Pty Ltd (1991) 6 WAR 419, 434 (Owen J); Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682 (24 June 2009) [10.6] (Gordon J) (‘Dukemaster‘); Consolo Ltd v Bennett [2012] FACFC 120 (31 August 2012) [36] (Keane CJ, McKerracher and Katzmann JJ); further authorities are collected in Texxon Pty Ltd v Austexx Corporation Pty Ltd [2013] VSC 327 (20 June 2013) [84] (Davies J).
[3](1983) 78 FLR 171.
[4]Ibid 179.
Applying this principle to the present case, the representation made by Wedgewood Road was that the level of lot 9 would be very close to that of Mr Diamond’s adjoining land. His complaint is that, when developed, it was not. That is a complaint that the promise was not performed. On the current state of the law, that fact does not itself transmute the initial representation from one that was not, into one that was, misleading and deceptive. Mr Diamond’s defence on this ground must therefore fail. I will, however, consider his case under two alternative formulations.
Were there reasonable grounds for representation?
We have just seen that the current state of the law is that a promise of future conduct is not rendered misleading and deceptive by its mere non-performance. But, equally consistently with the previous law of misrepresentation,[5] it is also established that such a promise may carry the implication that the maker honestly intends to perform it and has reasonable grounds for making it. Therefore, it may be misleading and deceptive conduct to make such a promise without that intention or those grounds.[6] That principle was stated by Bowen CJ and Lockhart and Fitzgerald JJ in Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd[7] as follows:
Many statements, for example, promises, predictions and opinions, do involve the state of mind of the maker of the statement at the time when the statement is made. … A statement which involves the state of mind of the maker ordinarily conveys the meaning (expressly or by implication) that the maker of the statement had a particular state of mind when the statement was made and, commonly at least, that there was a basis for that state of mind. If the meaning contained in or conveyed by the statement is false in that or in any other respect, the making of the statement will have contravened s 52(1) …[8]
[5]See for example Bisset [1927] AC 177, 182 (Privy Council); Jones v Dumbrell [1981] VR 199, 202 (Smith J).
[6]Futuretronics [1992] 2 VR 217, 239 (Ormiston J); Dukemaster [2009] FCA 682 (24 June 2009) [10.7] (Gordon J); Coles Supermarkets Australia Pty Ltd v FKP Limited [2008] FCA 1915 (18 December 2008) [68]-[70] (Gordon J).
[7](1984) 2 FCR 82.
[8]Ibid 88.
Section 51A(1) of the Trade Practice Act, on which Mr Diamond relied in his defence and counterclaim, reflects this principle. It makes misleading and deceptive a representation with respect to a future matter (including the doing of an act) which was made without reasonable grounds. Section 51A(2) provides that the representation is deemed to be have been made without reasonable grounds unless evidence is produced to the contrary. In applying these provisions, whether the grounds are reasonable is to be determined objectively and whether the grounds were actually the basis of the representation is to be determined subjectively.[9]
[9]Unisys Australia Ltd v RACV Insurance Ltd [2004] VSCA 81 (14 May 2004) [75] (Phillips JA, Ormiston and Batt JJA agreeing).
I find on the evidence that the representation that the level of lot 9 would be very close to the warehouse land implicitly represented that Wedgewood Road honestly intended to perform the promise and had reasonable grounds for thinking that the promise could and would be performed. That finding is demanded by the subject matter of the representation and the commercial context of the pre-contractual discussions in which it was made.
It was not suggested to Mr Lowe in cross-examination that he did not honestly believe in the truth of the representation, or was reckless or careless as to its truth, when it was made to Mr McDonald. Nor was it suggested to Mr Lowe that he (or Wedgewood Road) had no reasonable grounds for making the representation at the time.
On the evidence, it is clear that, when Wedgewood Road made the representation, it did in fact honestly intend to perform the promise and had reasonable grounds for thinking that it could and would do so. The plans which formed part of the contract were prepared on the basis that the level of lot 9 would be very close to the warehouse land, which demonstrates the company’s honest intention. That the development was controlled by Wedgewood Road demonstrates that it had the capacity to perform the promise and therefore had reasonable grounds for making the representation. Mr Diamond’s defence on this ground must also fail.
Did Wedgwood Road engage in misleading and deceptive conduct, in totality?
While the current state of the law is against it, there is, in my view, much to be said for the proposition that, under s 52, the issue with non-performed promises as to future conduct is not whether the promise should be treated, consistently with the previous law governing pre-contractual misrepresentation, as a representation which was not misleading and deceptive at the time when it was made. Rather, the issue is whether, under the modern legislation governing trade and commerce, the respondent has engaged in misleading and deceptive conduct when the promise is considered in the totality of the relevant facts and circumstances.
A credible case for that kind of approach has been made by leading scholars[10] and it is consistent with some of the early authorities on the application of s 52.[11] The strength of this case is enhanced by the emphasis which has been place by authorities of high standing on the need to apply misleading and deceptive conduct as a new statutory norm of trade and commerce without importing inappropriate limitations derived from the pre-existing law.[12] The need to ‘examine the relevant course of conduct as a whole’ has also been emphasised.[13]
[10]DW Greig and JLR Davis, The Law of Contract (The Law Book Company Limited, 1987) 811-15; NC Seddon, RA Bigwood and MP Ellinghaus, Cheshire and Fifoot: Law of Contract (Lexis Nexis Butterworths, 10th Australian ed, 2012) 618-22 [11.118].
[11]See Brown v Jam Factory Pty Ltd (1981) 53 FLR 340. 349 (Fox J) (‘Brown’); Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd (1981) 36 ALR 23, 48-9 (Northrop J); Holt v Biroka Pty Ltd (1988) 13 NSWLR 629, 636 (Kearney J); cf Wheeler Grace and Pierucci Pty Ltd v Wright (1989) 16 IPR 189, 201-2 (Lee J) and Bowler v Hilda Pty Ltd (1981) 80 FCR 191, 205-6 (Heerey J); see also Hunt Contracting Co Pty Ltd v Roebuck Resources NL (1992) 110 ALR 183, 189 (French J).
[12]See for example Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470, 503-4 (Lockhart and Gummow JJ); Brown (1981) 53 FLR 340, 348-9 (Fox J).
[13]Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592, 625 [109] (McHugh J), cited with approval Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304, 341 [102] (Gummow, Hayne, Heydon and Keifel JJ); see also Arbest Pty Ltd v State Bank of New South Wales Ltd (1996) ATPR 41,963, 41,975 (Kirby ACJ).
If such were the law, the first task would surely be the characterisation of the conduct as a whole which is said to be misleading and deceptive. The importance of this task was stressed, by reference to the authorities, by French CJ in Campbell v Backoffice Investments Pty Ltd.[14] His Honour described the task thus:[15]
Characterisation is a task that generally requires consideration of whether the impugned conduct viewed as a whole has a tendency to lead a person into error.[16] … [I]t involves consideration of a notional cause and effect relationship between the conduct and the state of mind of the relevant person … The test is necessarily objective.[17]
[14](2009) 238 CLR 304.
[15]Ibid 319 [25].
[16]Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, 198-9 (Gibbs CJ); see Colin Lockhart, The Law of Misleading or Deceptive Conduct (LexisNexis Butterworths, 2nd ed, 2003) 60-1 [3.2]-[3.3] and authorities cited therein.
[17]Consistently with the words ‘likely to mislead or deceive’ which indicate that it is unnecessary to show that any person was actually misled or deceived - Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, 198.
In some cases involving the non-performance of pre-contractual promises, the relevant facts and circumstances may occur over a long period of time. That in itself may indicate that the applicant was not led into error by the representation or had not relied on the representation or that the representation was not the cause of the alleged loss.
In the present case, the relevant facts occurred within a relatively confined period of time. The representation as to the level of lot 9 was made in pre-contractual negotiations in November 2007, the contract was entered into in March 2008, Wedgewood Road gave notice of amendment of the plan of subdivision in January 2009, Mr Diamond complained about the height of lot 9 in mid-2009, the level was reduced shortly afterwards and, following Mr Diamond’s failure to settle the contract and pay the balance of the purchase price, the contact was rescinded in November 2009.
Although counsel for Mr Diamond did not cast his submissions in precisely these terms, his submissions really were that, in all of those circumstances, Wedgewood Road’s conduct was misleading and deceptive. The company led Mr Diamond into error by assuring him in the pre-contractual negotiations that the level of lot 9 would be very close to the warehouse land. He relied on that assurance when entering into the contract. Wedgewood Road did not keep to the assurance in that (in Mr Diamond’s submission) it failed to provide lot 9 in that physical state. That made the conduct of Wedgwood Road misleading and deceptive.
I reject this characterisation of the facts and circumstances. While Wedgewood Road did make the representation alleged in the pre-contractual discussions, it is neither fair nor sensible to characterise its conduct without reference to the terms of the contract and the other facts and circumstances. I accept that Mr Diamond subjectively believed that the assurance as to the level of lot 9 did not need any contractual support. But the test of whether Wedgewood Road engaged in misleading and deceptive conduct is objective. I must decide how a reasonable person in the position of the parties would have understood Wedgwood Road’s representation in the light of cl 15 and the whole of its conduct. In my view, he or she would have appreciated from the subject matter of the contract and the commercial context that the representation as to level was subject to the discretion conferred on Wedgewood Road by cl 15 to change the level by amending the plan of subdivision. Wedgewood Road made the representation as to the level of lot 9 honestly intending to perform it but, quite understandably, retained a contractual right of amendment, which it negotiated in an open and transparent manner not long after the initial representation was made. There was nothing misleading or deceptive about the way in which Wedgwood Road negotiated the contract. Mr Diamond was an experienced business person and legally represented in those negotiations. In the proper characterisation of the relevant conduct, the representation as to level and the negotiation of the contract, as well as the contract terms, have to be considered together as part of a totality of circumstances. So characterised, the company did not engage in misleading and deceptive conduct.
I take into account that Wedgwood Road responded to Mr Diamond’s complaint that the level of lot 9, when initially developed, was too high. It reduced the level, which involved substantial earth works. That action on the part of the company was voluntary. It was done in commercial good faith and not in pursuance of any legal obligation or in the avoidance of any legal liability. The company was quite entitled to increase the level of the lot by exercising its contractual right to amend the plan of subdivision, just as Mr Diamond would have been entitled to exercise his contractual right of rescission if he been so advised. On the whole of the evidence, the actions which Wedgwood Road took to address Mr Diamond’s complaints did not constitute admissions of wrongdoing.
On this ground, also, Mr Diamond’s defence must fail. It is for this reason that it is unnecessary to determine whether the promise in the representation was, in fact, not performed. There will be judgment for Wedgwood Road on its claim. Mr Diamond’s counterclaim for return of the deposit will be dismissed. It remains to determine the extent the loss suffered by Wedgewood Road as a result of Mr Diamond’s breach of the contract.
Damages
Wedgwood Road claims as damages the amount which it has lost by reason of Mr Diamond’s failure to settle the contract and pay the balance of the purchase price. The original sale price was $1,255,100. The agreed valuation is $1,000,000. The deposit paid was $125,510. Taking into account the agreed valuation, Wedgwood Road’s loss on the sale is $129,590. Mr Diamond conceded this amount as damages and I allow this item.
The company claimed as damages the fee of $2,500 which was paid to the valuer for the valuation of the property for the purposes of this legal proceeding. I uphold the submission made for Mr Diamond that the fee is a legal cost which was incurred in the litigation. It should be recovered on that basis, not as damages.
The company claimed as damages the legal costs of the notice of rescission, being $360. Mr Diamond conceded this amount as damages and I allow it as such. I reject his submission that the GST payable by Wedgwood Road on this sum, being $36, is not damages. The full amount recoverable as damages under this item is $396.
The company claimed certain interest under the Penalty Interest Rates Act 1983 (Vic) for a 14 day period. This was conceded by Mr Diamond as damages and I will so order, once the amount is calculated.
The company claimed the amount of $25,102 which it paid by way of commission to its selling agent in respect of the sale of the property. I uphold the submission made for Mr Diamond that this amount would have been payable as an ordinary cost of sale in any event and is not recoverable as damages flowing from his breach.
The company sought interest on the judgment under the Supreme Court Act 1986 (Vic) and it is so payable as part of the judgment once calculated.
There will be judgment for Wedgwood Road against Mr Diamond in the amount of $129,986, plus the certain agreed interest I mentioned under the Penalty Interest Rates Act in an amount to be calculated and interest on the judgment under the Supreme Court Act in an amount to be calculated. The parties should confer on the final amount to be ordered in the judgment and send minutes of consent orders to the court. I will determine any disputes.
Conclusion
Wedgwood Road has established that it has suffered damage as a result of Mr Diamond’s breach of contract. Mr Diamond has failed to establish that he has suffered loss as a result of misleading and deceptive conduct on the part of Wedgwood Road. There will be judgment accordingly for Wedgwood Road. Mr Diamond’s counterclaim will be dismissed.
Costs should follow the event and will be awarded to Wedgwood Road.
Minutes of orders are to be provided to the court reflecting this judgment within 14 days. I will then issue final orders.
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