Tawanui Developments Limited v Harnett HC Palmerston North CIV 2008-454-949
[2010] NZHC 1535
•20 August 2010
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
CIV-2008-454-949
BETWEEN TAWANUI DEVELOPMENTS LIMITED Plaintiff
ANDD M HARNETT AND J C MALCOLM Frist Defendants
ANDD M HARNETT Second Defendant
BETWEEN TAWANUI DEVELOPMENTS LIMITED Plaintiff
CIV-2009-454-627
IN THE MATTER of the Insolvency Act 2008
AND
IN THE MATTER of the bankruptcy of Dean Michael Harnett
BETWEEN DEAN MICHAEL HARNETT Judgment Debtor
ANDTAWANUI DEVELOPMENTS LIMITED Judgment Creditor
Hearing: 12 August 2010
Appearances: A.N. Isac - Counsel for Plaintiff
D.M. Harnett the second defendant in person
Judgment: 20 August 2010 at 2.30 pm
JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL
This judgment was delivered by me
on 20 August 2010
at 2.30 pm pursuant to r 11.5 of the High Court Rules.
Solicitors: Fitzherbert Rowe, Solicitors, Private Bag 11016, Palmerston North
TAWANUI DEVELOPMENTS LIMITED V D M HARNETT AND J C MALCOLM AND ANOR HC PMN CIV-2008-454-949 20 August 2010
Introduction
[1] On 5 May 2009, the plaintiff was granted an order for specific performance against the first defendants as trustees of the Poutama Family Trust (“the Trust”) as purchasers, and the second defendant (“Mr Harnett”) personally as guarantor, under an Agreement for Sale and Purchase dated 29 January 2008 (“the Agreement”) relating to a 2.8144 farmlet in a subdivision at Cemetery Road, Sanson (“the property”). On 17 June 2010, this Court vacated the order for specific performance and made an order for cancellation of the Agreement.
[2] The only issue that remains to be determined is an application by the plaintiff for damages and costs consequent upon the cancellation of the Agreement. The application is opposed by Mr Harnett.
Background
[3] On 29 January 2008, the parties entered into the Agreement by which the plaintiff agreed to sell, and the first defendants agreed to purchase, the farmlet property in the plaintiff’s proposed subdivision development. The property was described as Lot 7. The Agreement provided for a sale price of $205,000.00, including a deposit to be paid of $5,000. On 28 October 2008, Mr Harnett, on behalf of the defendants, purported to cancel the Agreement on the grounds that he contended the property was not safe for human use due to contamination.
[4] The plaintiff applied for summary judgment seeking specific performance. The application was successful and, as I have noted above, on 5 May 2009, this Court made an order for specific performance of the Agreement against the first defendants and the second defendant. In addition costs were awarded to the plaintiff on a Category 2B basis. As part of the order for specific performance, the defendants were also to pay penalty interest at 16 per cent from 24 October 2008. The total amount payable at the operative time was $235,283.40. The defendants, however, have failed to comply with these orders.
[5] Subsequently, the plaintiff applied for a writ of sequestration, asking that a sequestrator be appointed and authorised to enter and take possession of land and chattels of the Trust and Mr Harnett personally. After hearing that application, in his judgment dated
13 October 2009, Ronald Young J expressed the view that there had been “wilful or reckless non-compliance by Mr Harnett and the Trust with the Court’s order”, and at [7] that:
It is clear that the Trust has significant property valued at somewhere over $2 million. Mr Harnett’s explanations as to why he has been unable to sell any land to pay the plaintiff or why he has been unable to raise finance, are not credible. Mr Harnett has often suggested since May 2009 that Trust properties are about to sell or the Trust is about to obtain a loan, neither has eventuated. More than five months have now passed since the making of the order by the Associate Judge without any substantial progress toward settlement.
[6] The Judge concluded, however, that the Court did not have jurisdiction to make a sequestration order, and the application was accordingly declined.
[7] Following what appeared to be the defendants’ continued refusal to specifically perform the Agreement, the plaintiff initiated a sale order process against the defendants. The total amount that was then required to specifically perform the Agreement was approximately $260,000.00. The plaintiff sold a number of the defendants’ properties through the Registrar of the Court. The final sale was completed on 28 May 2010. Although the properties were advertised and marketed, the best price for which they could be sold was well under their respective government valuations. As a result of this, the remaining funds from the sale process were insufficient to cover the sum needed for specific performance of the Agreement.
[8] Consequently, the plaintiff applied for dissolution of the order for specific performance, an order for cancellation of the Agreement, and an award of damages. The plaintiff also sought increased costs. The application was made on the grounds that the defendants were previously unwilling, and were now unable, to specifically perform the Agreement. Although Mr Harnett did not file any opposition to these applications, it became clear at a hearing on 17 June 2010 that he did oppose the claims for damages and costs. He did not, however, oppose the orders dissolving the earlier order for specific performance and cancelling the Agreement.
[9] It also became apparent at that time that Mr Harnett might not have had sufficient notice of the quantification issues that were raised in the plaintiff’s claim for damages. In addition, the Court noted that the plaintiff had not established a sufficient evidential basis for the claim for increased costs, as there was no evidence establishing the extra work associated with Mr Harnett’s failure to comply with the order for specific performance. On that basis, on 17 June 2010 the application was granted to the extent that it was unopposed, but was adjourned with respect to the claim for damages and costs to allow the plaintiff to make amendments to its applications, and to give Mr Harnett an opportunity to file any opposition.
[10] The plaintiff then filed an amended application on 22 June 2010, seeking damages and indemnity costs. On 10 August 2010, only two days before the present hearing, Mr Harnett filed an affidavit with supporting material. Mr Isac, who appeared for the plaintiff, initially objected to the affidavit being read, but finally accepted that the hearing could go ahead on the basis that I took into account the affidavit.
[11] It appears now that Mr Harnett is currently insolvent and that the only available funds for judgment are those held by the Registrar, following the sale process of the defendants’ properties. These funds amount to about $102,000.00.
Damages
[12] The plaintiff now seeks damages on the basis that the current market value of the property is substantially less than the price payable by the defendants under the Agreement, and that the defendants are liable to pay late payment interest in accordance with the Agreement. Mr Harnett’s position is that there should be no award of damages or costs made in favour of the plaintiff. After cancelling a contract a vendor, like the plaintiff here, may decide to keep the property and sue the purchaser for damages for breach of contract. The right to do so is recognised by ss
8.4 and 9 Contractual Remedies Act 1979. The purpose of contract damages is to put the injured party in the position he or she would have been in if the contract had been performed – Civil Remedies in New Zealand – Blanchard & Ors para 1.6.2.
[13] In essence, the plaintiff here proposes that there are two possible means of quantifying its losses here. The first option is based on the difference between the sale price value agreed in the Agreement (presumably after taking into account the
$5,000.00 forfeited deposit) and the current forced sale value of the property, which it says amounts to $72,000.00. The second option assesses the difference in net agreed value as against the current market value “as is”, which is said to be
$40,000.00. The plaintiff’s calculations are based on an affidavit dated 15 June 2010 by Mr Stephen Antony Jones, who is a registered valuer. In that affidavit and in his accompanying valuation report dated 11 June 2010, Mr Jones assesses the total market value of the property “as is” at $160,000.00 and on a forced sale value at $128,000.00.
[14] Both options, as submitted by the plaintiff, must necessarily include “legal and professional costs associated with pre-proceeding default under the Agreement” and late payment interest between 24 October 2008 and 17 June 2010. In addition, the second option provides for late payment interest from 17 June 2010 for a reasonable sale period of six months and for further commission and advertising costs. On the plaintiff’s calculations, option 1 amounts to a claim for $136,801.85, while option 2 results in a slightly lower figure of $128,401.85. Each option as I have noted includes a claim for legal and professional costs associated with pre- proceedings default under the Agreement of $12,111.66 and late payment interest from 24 October 2008 to 17 June 2010 of $52,690.19. In addition, option 2 includes further late payment interest from 17 June 2010 for the sale period of 6 months amounting to $16,000.00 and further commission on re-sale and advertising costs of
$7,600.00.
[15] In response, Mr Harnett submits that the plaintiff’s valuation figures are excessively low, and that the plaintiff should not be awarded damages because it has received the property back and is free to sell it. He has produced a registered valuation of the property from Blackmore & Associates Limited dated 14 September
2009 which states specifically that it was obtained “to ascertain market value for mortgage purposes”. This valuation assesses the value of the property as $225,000. Mr Harnett also refers to the present government valuation of the property which is apparently $232,000.
[16] In reply to Mr Harnett’s submission, at the hearing Mr Isac for the plaintiff passed up to the Court government valuation certificates for the adjoining Lots 6 and
8 in the plaintiff’s subdivision. These showed values of $267,000.00 and
$245,000.00 respectively. In addition, he provided copies of Agreements for Sale and Purchase for Lot 8 dated 25 March 2009 at a total price of $168,000.00 and for Lot 6 dated 9 July 2010 at a total price of $170,000.00. He noted that these properties were significantly larger in area than Lot 7 (Lot 6 being 4.3766 hectares and Lot 8 being 3.4652 hectares, whereas Lot 7 finally contained only 2.8060 hectares) Lot 7 being the property that the defendants agreed to buy. He contended that these sale agreements supported the valuation assessments of Mr Jones which the plaintiff had obtained, and clearly cast substantial doubt on the Blackmore & Associates Limited valuation which assessed “market value for mortgage purposes” some nine months before Mr Jones’ valuation.
[17] Mr Harnett submitted in response that Lot 7 also had certain improvements, including a house, implement shed and pump shed. However, the government valuation for Lot 7 assesses these improvements at a value of only $2,000, and even on the Blackmore & Associates Limited valuation, they were assessed at a value of only $10,000.00.
[18] If a party as here fails to comply with an order for specific performance, the Court may cancel the sale Agreement and order damages instead. In my view, the plaintiff here clearly has an expectation interest, and is entitled to compensation for loss of the bargain: see Newmans Tours Ltd v Ranier Investments Ltd [1992] 2
NZLR 68 at 86. The object must be to restore the plaintiff to the position it would have occupied had the Agreement been performed in accordance with its terms.
[19] The date for assessment of damages is usually to be the time when the contract in question was broken. In appropriate circumstances, however, damages may be assessed at the date when the contract is cancelled, or at the date of hearing: see Stirling v Poulgrain [1980] 2 NZLR 402 at 420. This approach is commonly adopted in cases involving agreements for sale and purchase where damages are granted following a decree of specific performance: see Gitmans v Alexander HC Auckland CIV-2001-404-1937, 9 December 2003 at [71]. On this, before me Mr
Isac also referred to the decision of Woodhouse J in Takapuna Village Ltd v Shabani
HC Auckland CIV-2008-404-5602, 24 March 2009.
[20] In all the circumstances prevailing here, I am satisfied that in part the second option proposed by the plaintiff noted at [13] above would lead to a fair and equitable result. The valuation evidence relied on by the plaintiff is that of a registered valuer and is reasonably current as opposed to that provided by Mr Harnett. This estimated market value is further confirmed by the sale price of the two neighbouring properties. I conclude that the plaintiff is entitled, therefore, to the difference of $40,000.00 between the agreed value for the property of $200,000.00 (after taking into account the $5,000.00 forfeited deposit) and the current market value of $160,000. An order to include this amount will follow.
[21] Although before me neither the plaintiff nor the defendants referred to this in their submissions, cl 9.4(3) of the Agreement provides that the plaintiff, as vendor, may claim:
... all damages claimable at common law or in equity and shall also include (but shall not be limited to) any loss incurred by the vendor on any bona fide resale contracted within one year from the date by which the purchaser should have settled in compliance with the settlement notice
[22] The clause further provides that the amount of that loss may include:
(a) interest on the unpaid portion of the purchase price at the interest rate for late settlement from the settlement date to the settlement of such resale;
(b) all costs and expenses reasonably incurred in any resale or attempted resale; and
(c) all outgoings (other than interest) on or maintenance expenses in respect of the property from the settlement date to the settlement of such resale.
[23] No such resale has occurred here. Despite this, as I have noted above, in my view the plaintiff is entitled to damages pursuant to ss 9 and 10 of the Contractual Remedies Act 1979 for the difference in value between the agreed purchase price and the current market value of the property. And I am satisfied here that the plaintiff did not act unreasonably in its attempts to obtain specific performance of the Agreement and should not be penalised for the delay that was ultimately caused by the defendants’ resistance to the order. It needs also to be noted that cl 9.4(3) of the
Agreement expressly states that the remedies it provides are not exclusive and that any other rights or remedies available at law or in equity are preserved.
[24] The plaintiff also claims that it is entitled to late payment interest at 16% p.a. between 24 October 2008 and 17 June 2010, which would amount to $52,690.19, and from 17 June 2010 for a “reasonable period of six months”. In passing it should be noted that cl 9.4(3)(a) of the Agreement does not seem to be applicable here, given that the plaintiff failed to resell the property within one year from the date by which the defendant should have settled. But, as noted above, cl 9.4(3) does make clear generally, that damages claimable by a vendor on a purchaser’s default shall include all damages claimable at common law or in equity and is not to be limited to any loss incurred by a vendor on a one year resale.
[25] Thus, the plaintiff’s ability to claim interest as damages on the unpaid purchase price here, either in reliance on the Agreement or otherwise, although not entirely certain, in my view does remain. In a recent decision on this, Clarkson v Whangamata Metal Supplies Ltd [2008] 3 NZLR 31 at 36, the Court of Appeal noted that a claim for interest as damages in contract comes under the ordinary rules as to remoteness of damages from Hadley v Baxendale (1854) 9 Exch 341. The two possible limbs are (1) loss reasonably considered to arise naturally from the breach of contract and (2) loss that could reasonably be supposed to have been in the specific contemplation of the parties when they contracted. The Court agreed with the decision in Sempra Metals Ltd v Inland Revenue Commissioners [2007] 3 WLR
354, where the House of Lords considered that interest was recoverable under both limbs. The Court also noted the statement in Hungerfords v Walker (1989) 171 CLR 125 that interest as damages is:
[A]n actual award of damages which represents compensation for a wrongfully created loss of the use of money and which is assessed wholly or partly by reference to the interest which would have been earned by safe investment of the money or which was in fact paid upon borrowings which otherwise would have been unnecessary or retired.
[26] Here, at worst the plaintiff needs to show that loss of interest at the default rate was within the parties’ reasonable contemplation under the Agreement. In my view, the plaintiff has not quite done this. The Agreement itself does stipulate the
default interest rate at 16 per cent (altered from 14 per cent originally and specifically initialled by Mr Harnett and on behalf of the vendor). And default interest at the 16 per cent interest rate for late settlement in the Agreement was clearly to be paid by the vendor under cl 9.5(2) in the event of default by that party. Also, as I have noted above at para [24] under the Agreement the plaintiff as vendor would only be entitled to 16 per cent default interest if it had resold the property within 1 year which it did not do. The plaintiff is therefore entitled to interest here but not at 16 per cent per annum. It should be at a reasonable commercial rate at the time which represents the interest the plaintiff would have achieved had the defendant completed settlement. I assess this at 8% p.a.
[27] Interest by way of damages is therefore payable to the plaintiff at 8% p.a. as follows:
(a) From 4 October 2008 to 17 June 2010 amounting to: $26,345.09
(b)
From 17 June 2010 to the date of this judgment
20 August 2010 amounting to
$ 2,761.64
Total =
$29,106.73
An order to include this interest amount will follow.
[28] One further matter needs to be mentioned. There is no specific provision in the Agreement (other than cl 9.4(3)(a) which does not apply here) authorising late payment default interest post-judgment. An award of contractual default interest from 19 August 2010 is therefore inappropriate here – see Nottingham v RSL (in liq) (1998) 12 PRNZ 625, Westpac v Wright High Court Auckland, CIV-2010-404-1023,
11 August 2010, AJ Bell, and FM Custodians v Patullo High Court, Christchurch, CIV-2010-409-684, 4 June 2010, AJ Osborne. Interest, however, in subsequent proceedings may well run at the prescribed rate on the plaintiff’s damages in terms of s 87 Judicature Act 1908.
[29] Next, the plaintiff seeks $12,111.66 for “legal and professional costs” associated with the defendants’ default under the Agreement prior to the bringing of proceedings. I note here that this latter amount does not appear to include any costs
already awarded on summary judgment. Here, there may well be some doubt on the authorities whether or not legal costs relating to enforcement of the Agreement may be recoverable as consequential loss or wasted expenditure. They are “losses flowing from the steps taken to force [the defendant] to remedy the breach, rather than from the breach itself”: Pegasus Group Ltd v QBE Insurance (International) Ltd HC Auckland CIV-2006-404-6941, 1 December 2009 at [234]. In that case, Winkelmann J referred to the decision in Herbison v Papakura Video Ltd (No 2) [1987] 2 NZLR
720, where Henry J said at 735:
The claim is not really one for wasted expenses in the sense sometimes used as a head of damage, as these are not expenses rendered futile by the breach. (McGregor on Damages (14th ed, 1980) § 42). Neither do they come under the head of recovery relating to expenses caused by breach, although of course they could generally be so described. They are expenses incurred in the course of the purchaser enforcing an entitlement to damages as against the vendor, and do not form part of the compensatable loss as a head of damage. To hold otherwise would make solicitor/client costs recoverable as damages for breach of contract as a matter of principle (being a natural consequence reasonably expected to flow from the breach). Such is not the law as I understand it. This head of claim therefore fails.
[30] The plaintiff’s $12,111.66 claim appears to be based on an affidavit dated 12
February 2010 by David Leslie Colville, a director of the plaintiff. He deposes that the sum includes legal fees incurred by the plaintiff from their conveyancing solicitor for attempts to complete settlement up to the point of summary judgment. An invoice is attached and describes the costs incurred as “legal costs of and incidental to all work completed from February 2008 including all dealings with respect to Agreement for Sale and Purchase and anticipated settlement; all extensive dealings re dispute and all incidentals”. To the extent that these costs include legal and conveyancing costs for endeavouring to complete the purchase, in my view, they would be recoverable as reliance damages (or wasted expenditure), as they would be expenses rendered futile by the breach.
[31] Mr Colville’s uncontested claims in this affidavit confirm that:
The amount of time that Mr Roche (the plaintiff’s conveyancing solicitor) was forced to spend on the matter is a direct result of the delay tactics and dishonest behaviour of Mr Harnett as is evident on the summary judgment papers.
[32] The defendants do not in any cogent way dispute any of this $12,111.66 claim. I accept on the evidence before the Court that these are costs which result
directly from the defendants’ default here and that there is no element of “double dipping” by the plaintiff given the loss of bargain damages awarded above. For these and the reasons outlined at [30] and [31] above, I am satisfied that judgment should also be entered for those costs totalling $12,111.66. An order to this effect is to follow.
[33] I turn now to the claim in option 2 for $7,600.00 “further commission” on resale and “advertising costs”. Although, it is clear these costs as yet have not been incurred, in that the plaintiff still retains the property and might choose to retain it in the future, in my view these costs are properly claimed here as part and parcel of the plaintiff’s loss of bargain damages – that is they represent a genuine expense or loss it will incur on resale.
[34] That said, I accept the plaintiff’s claim for judgment for this $7,600.00, a claim which was also effectively unopposed in any real way by the defendants.
Costs
[35] The plaintiff applies for indemnity costs here in reliance on rr 14.1 to 14.6 of the High Court Rules. It seeks indemnity costs of $18,608.40 for enforcement of the order for specific performance since May 2009, and indemnity costs of $16,575 – or as an alternative, Category 2B costs - on the applications for discharge of the order for specific performance and for costs. In response, Mr Harnett submits that no order for costs should be made.
[36] The situations in which indemnity costs may be awarded are outlined in r
14.6 of the High Court Rules, which provides as follows:
14.6 Increased costs and indemnity costs
...
(4) The court may order a party to pay indemnity costs if—
(a) the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or
(b) the party has ignored or disobeyed an order or direction of the court or breached an undertaking given to the court or another party; or
(c) costs are payable from a fund, the party claiming costs is a necessary party to the proceeding affecting the fund, and the party claiming costs has acted reasonably in the proceeding; or
(d) the person in whose favour the order of costs is made was not a party to the proceeding and has acted reasonably in relation to it; or
(e) the party claiming costs is entitled to indemnity costs under a contract or deed; or
(f) some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.
[37] Claims for indemnity costs will only succeed in rare cases, “generally entailing breach of confidence or flagrant misconduct”: Prebble v Awatere Huata (No 2) [2005] 2 NZLR 467 at [6]. Accordingly, indemnity costs are not to be awarded in the case of mere unreasonableness, but require exceptionally and distinctly bad behaviour: Bradbury v Westpac Banking Corporation [2009] 3 NZLR
400 at [26] and [28].
[38] The plaintiff submits that both the pre- and post-judgment conduct of the defendants resulted in substantial cost and financial harm to the plaintiff. In particular, the plaintiff submits that the defendants have wilfully disobeyed the Court order for specific performance; that the defendants’ representations to the contrary delayed enforcement action and unnecessarily increased costs; and that the defendants were obstructive in relation to the subsequent enforcement proceeding by writ of sale, thereby reducing the sale prices achievable. The plaintiff also claims that the defendants have contributed unnecessarily to the time or expense of enforcement by failing to comply with the rules and directions of the Court.
[39] Mr Harnett, on the other hand, submits that the defendants tried very hard to secure a sale of the properties in order to comply with the order for specific performance. He says, for example, that the defendants employed two real estate companies to market the properties. He also complains that the properties were sold off below reserve prices by the plaintiff, which meant that there were insufficient funds for specific performance of the Agreement.
[40] Based on the evidence before me, I accept the plaintiff’s submission that the defendants’ non-compliance with the order for specific performance was entirely
improper. This was also the conclusion reached by Ronald Young J who, as I have noted at [5] above, described the defendants’ conduct as “wilful or reckless non- compliance”. It is clear that costs associated with the sale order process could have been avoided if the defendants had taken reasonable steps to sell or raise finance against the properties following the order for specific performance. Mr Harnett’s explanations for failing to comply with the order for specific performance to a certain extent in my view lack credibility.
[41] Mr Colville, the director of the plaintiff, states in his affidavit that, when the sale process was initiated, there appeared to be enough value in the defendants’ properties to enable specific performance to be completed “with a comfortable surplus”. He says that the properties were thoroughly advertised and marketed, but that there was a substantial drop in the property market, making it more difficult to obtain a price in accordance with government valuations in the context of an enforced sale process. It seems likely, therefore, that the defendants would have been able to complete the purchase of the property if they had been willing to sell their properties within a reasonable time following summary judgment, relying on funds from the sales and, if necessary, on additional mortgage finance. Instead, more than five months passed without any progress toward settlement, before the defendants finally resorted to enforcement procedures.
[42] In terms of the first category of costs sought here, the plaintiff’s costs are made up of $11,885.40 as “fees charged to date post-judgment”, and $6,723.00 of “work in progress” to be billed relating to the sale process. These figures do not include any costs for the bankruptcy or sequestration applications.
[43] Rule 17.25 of the High Court Rules provides that a judgment creditor is entitled to the costs and expenses with respect to and incidental to issuing and effecting an enforcement process, and may levy those costs and expenses from the judgment debtor. The term “enforcement process” includes an order for sale: r 17.3. Schedule 3 allocates half a day for a writ of sale on a 2B basis (see item 10.3). Mr Colville in his affidavit states that this allocation “presupposes that the Court’s Registrar prepares all the necessary documents and runs the process”, but here the plaintiff’s solicitors were required to prepare all enforcement documents and work
closely with the Court Registrar so that the sale of Mr Harnett’s properties could proceed.
[44] For all these reasons, I am satisfied that some indemnity costs are justified here. Having said that, however, limited evidence has been provided of the actual costs that are claimed here. In ACC v Robinson HC Whangarei AP38/02, 6
December 2002, the Court held that it needs to satisfy itself that costs are properly incurred in relation to the proceeding to which the costs award will relate, and that it should require an appropriate breakdown of costs (at [29]). Before me some evidence has been provided for the amount of $11,885.40 in the form of invoices attached to Mr Colville’s affidavit dated 12 February 2010. However, because these costs figures are not broken down, it is impossible to tell whether the figures claimed are correct, and what amount was in fact spent on the sale process as opposed to the sequestration or bankruptcy applications. There are no invoices, however, for the amount of $6,723.00. Mr Colville’s affidavit states that the Registrar holds
$31,723.37, which is due in commission fees and legal fees for the conveyancing of the properties. Associate Judge Abbott already raised this lack of an “evidential foundation” as an issue in his Minute dated 17 June 2010. In these circumstances, it is appropriate for further memoranda to be filed on this quantum issue. A direction to this effect will follow.
[45] The plaintiff’s application for costs in relation to the present application for damages and costs amounts to $16,575.00. This includes $8,915.00 for the costs application and $7,660.00 for the application to vacate the order for specific performance and to cancel the Agreement. There do not appear, however, to be any invoices to support these figures. I do not consider that indemnity or even increased costs are warranted with respect to these matters. Although the applications were ultimately made necessary by the defendants’ refusal to specifically perform the Agreement, I consider that this aspect of the defendants’ conduct has already been sufficiently addressed by the award of indemnity costs to be made as outlined at [44] above. An additional award of indemnity costs would effectively amount to “double punishment”, considering that the sale order process was, in the end, unsuccessful.
[46] And I find some difficulty with the plaintiff’s claim that the defendants were obstructive in relation to the enforcement proceeding. There is no hard evidence to support this allegation. On that basis, the plaintiff is entitled to Category 2B costs for its application to vacate the order for specific performance and order damages instead.
Conclusion
[47] For the reasons outlined above damages are now awarded to the plaintiff against the first and second defendants and orders for those damages and costs made as follows:
(a)Damages of $40,000.00 as set out at [20] above are awarded to the plaintiff;
(b)Damages by way of interest amounting to the sum of $29,106.23 calculated in accordance with [27] above are awarded to the plaintiff;
(c) Damages by way of interest amounting to $12,111.66 as set out at
[32] above are awarded to the plaintiff.
(d)Damages by way of commission and advertising costs of $7,600.00 as set out at [34] above are awarded to the plaintiff.
(e)Indemnity costs as outlined in [44] above are awarded to the plaintiff and are to be fixed by the Registrar or this Court in the manner noted at [48] following.
(f)Costs on the application to vacate the specific performance order and on this damages and costs application are awarded to the plaintiff calculated on a category 2B basis plus disbursements as fixed by the Registrar.
[48] On the question of the proper figure for indemnity costs sought by the plaintiff here and outlined at [44] and [47](e) above, directions are now made as follows:
(a)The plaintiff is by 3 September 2010 to file and serve a detailed memorandum and evidence as to the breakdown of these indemnity costs properly sought.
(b)The defendants are by 17 September 2010 to file and serve their reply memorandum.
(c) These memoranda are then to be referred to the Registrar or to the Court to fix the quantum of such indemnity costs to be paid by the defendants.
[49] The existing costs award of $9,508.40 to the plaintiff on the summary judgment remains in place.
‘Associate Judge D.I. Gendall’
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