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Baguley v Lifestyle Homes Mackay Pty Ltd

 

[2015] QCA 75

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

Baguley v Lifestyle Homes Mackay Pty Ltd [2015] QCA 75

PARTIES:

GEOFFREY ROBERT BAGULEY
(first applicant)
JULIE MAREE BAGULEY
(second applicant)
v
LIFESTYLE HOMES MACKAY PTY LTD
ACN 115 809 326
(respondent)

FILE NO/S:

Appeal No 7276 of 2014

DC No 68 of 2011

DIVISION:

Court of Appeal

PROCEEDING:

Application for Extension of Time/General Civil Appeal

ORIGINATING COURT:

District Court at Mackay

DELIVERED ON:

1 May 2015

DELIVERED AT:

Brisbane

HEARING DATE:

9 March 2015

JUDGES:

Margaret McMurdo P and Gotterson JA and Douglas J

Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDER:

1. Application for extension of time refused.

2. Applicants to pay the respondent’s costs of the application on the standard basis.

CATCHWORDS:

APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – EXCESSIVE OR INADEQUATE DAMAGES – DAMAGES INADEQUATE – where the applicants sold property to the respondent who failed to settle on the due date – where judgment was entered for the applicants – where damages were assessed at a later hearing of the District Court – where the learned primary judge applied the general rule from Johnson v Perez in the calculation of damages, whereby, damages were calculated at the date of breach – where the applicants sought a departure from the general rule, namely, that damages should be assessed at the date of resale – where the applicants made a deliberate decision not to appeal in time – whether the application for an extension of time to apply for leave to appeal under s 118(3) of the District Court of Queensland Act 1967 should be granted

District Court of Queensland Act 1967 (Qld), s 118(2), s 118(3)

Integrated Planning Act 1997 (Qld), s 3.5.21(1)

Supreme Court Act 1995 (Qld), s 47

Uniform Civil Procedure Rules 1999 (Qld), r 748

Beil v Mansell (No 1) [2006] 2 Qd R 199; [2006] QCA 173, cited

Clark v Macourt (2013) 88 ALJR 190; (2014) 304 ALR 220; [2013] HCA 56, cited

Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344; [1984] FCA 176, cited

Johnson v Perez (1988) 166 CLR 351; [1988] HCA 64, applied

Ng v Filmlock Pty Ltd [2014] NSWCA 389, considered

Queensland Trustees Ltd v Fawckner [1964] Qd R 153, cited

Riggall & Anor v Thompson [2010] QCA 144, cited

Spencer & Anor v Hutson & Ors [2007] QCA 178, considered

COUNSEL:

A C Barlow for the applicants

M T de Waard for the respondent

SOLICITORS:

BC & A Solicitors for the applicants

Taylors Solicitors for the respondent

[1] MARGARET McMURDO P:  I agree with Gotterson JA’s reasons for refusing this application for an extension of time to apply for leave to appeal, with costs.

[2] GOTTERSON JA:  By contract in writing dated 6 August 2010 Geoffrey Robert Baguley and Julie Maree Baguley (the “applicants”) sold a residential property at 30 Byron Street, Mackay (the “property”) to Lifestyle Homes Mackay Pty Ltd (the “respondent”) for $400,000.00.[1]  The contractual date for settlement was 15 October 2010.[2]  The respondent failed to settle on the due date.

[3] On 2 August 2011, the applicants, as plaintiffs, commenced proceedings by way of Claim in the District Court at Mackay against the respondent as defendant.[3]  The relief claimed in the Statement of Claim[4] was damages for breach of contract, interest and costs.

[4] On 9 July 2012, a judge of the District Court ordered[5] that judgment be entered for the plaintiff applicants with damages to be assessed.  A hearing for the purposes of the assessment of damages was held at Mackay on 13 November 2013.

[5] The property was ultimately resold by the applicants on 17 October 2012 for $300,000.00, with settlement on 15 January 2013.[6]  At the assessment hearing, the applicants submitted that damages should be assessed by reference to the value of the property at 17 October 2012, the date of resale.  On that basis they quantified the loss of bargain component of their damages at $100,000.00 being the sale price of $400,000.00 less the resale price of $300,000.00.  The respondent, however, submitted that the applicants were entitled to damages assessed for that component by reference to the value of the property at 15 October 2010, the date of its breach of contract.

[6] On 3 April 2014 the learned primary judge delivered reasons for judgment and made an order that judgment be entered for the applicants against the respondent in the sum of $88,982.00 with interest pursuant to section 47 of the Supreme Court Act 1995 at the prescribed rates from 15 October 2010 to the date of judgment.  The parties were to provide further argument on costs.  It is convenient to refer to this as the substantive decision.

[7] The two components of the judgment sum are:

Loss of bargain:$49,000.00

Loan interest between 1 November 2010 and 21 August 2012:$39,982.00

The sum of $49,000.00 is the difference between the contract price of $400,000.00 and the value, as found by the learned primary judge, of the property at the date of breach, $350,000.00, less the deposit of $1,000.00 which the respondent had paid.  His Honour had accepted the respondent's submission as to the basis of assessment of the loss of bargain.

[8] On 20 May 2014 the applicants filed written submissions on costs.[7]  The respondent reciprocated on 6 June 2014.[8]  On 4 July 2014, his Honour published reasons for decision (“costs decision”)[9]  in which he ordered that the respondent pay 30 per cent of the applicants’ costs to be assessed on the standard basis at the applicable Magistrates Court scale.

Need for extension of time and leave to appeal

[9] Rule 748 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”) provides as follows:

“A notice of appeal must, unless the Court of Appeal orders otherwise—

(a)be filed within 28 days after the date of the decision appealed from; and

(b)be served as soon as practicable on all other parties to the appeal.”

[10] The applicants did not lodge a notice of appeal within 28 days of the date of delivery of the substantive decision.  However, on 7 August 2014, some 127 days after that date, they filed an application for an order under r 748 extending time within which to appeal against that decision.[10]

[11] At the hearing of the application on 9 March 2015, the applicants accepted that as well as an extension of time, they also needed leave under section 118(3) of the District Court of Queensland Act 1967 in order to appeal the substantive decision.[11]  In those circumstances, the Court intimated that it would treat the application for an extension of time to appeal as an application for an extension of time to apply for leave to appeal under s 118(3).[12]

The proposed Notice of Appeal

[12] A proposed Notice of Appeal is exhibited to an affidavit of Mr C J Colwill, Solicitor, filed in support of the application.[13]  This document states that the judgment appealed is one dated 3 April 2014.  At the hearing of the application, counsel for the applicants explained that Grounds 6 to 9 inclusive in the document relate to the costs decision; that that decision was not the subject of the appeal for which an extension was sought; and that those grounds were not pursued.  In the course of argument it became apparent if they are successful in their appeal against the substantive decision, the applicants would apply at that point for leave to appeal the costs decision in order that a costs order conformable with the substituted decision on their damages claim could be made.[14]

[13] The grounds of appeal that remain, Grounds 2 to 5[15], all relate to the loss of bargain component of damages and, in particular, to the adoption by the learned primary judge of the value of the property at 15 October 2010 as the relevant value for the quantification of the loss.  On appeal, the applicants would seek a substitute damages award ($139,982.00) of which the loss of bargain component is $100,000.00.

The discretion under r 748

[14] The discretion conferred by r 748 is unfettered.  It must be exercised judicially.  Relevant considerations include the length of the delay, the adequacy of the explanation for the delay and the merits of the proposed appeal.[16]  Other such considerations can include whether a timely intimation of an intention to appeal was given, prejudice to the other side, potential disruption to established practice, and general considerations of fairness.[17]

[15] Mere lapse of time of itself, is not generally regarded as being determinative against a grant of an extension of time to appeal,[18]  nor is the lack of an adequate explanation for the delay.[19]  However, a deliberate decision not to file an appeal within time places a very significant hurdle in the path of an applicant for an extension of time to file it.  As a matter of principle, there is sound reason not to endorse as routinely acceptable, a course of conduct whereby a person who is dissatisfied with a decision and is minded to appeal it, may delay commitment to an appeal until other considerations that the person wishes to take into account have clarified.

[16] In Spencer v Hutson[20], Keane JA (with whom Williams and Jerrard JJA agreed) observed that where such a deliberate decision is made, “an extension of time to allow an appeal would only be granted where it was demonstrably necessary to prevent a substantial injustice.”[21]  I respectfully agree.  Inevitably, the quality of the merits of the proposed appeal will be influential in deciding whether an extension of time is required to prevent a substantial injustice.

[17] I mention at this point that the affidavit evidence filed for the application does not disclose any timely intimation of an intention to appeal by the applicants or establish any significant prejudice that the respondent would suffer if an extension of time were granted.  No disruption to established practice is suggested.  Consequently, at the hearing of the application, argument was focussed upon the length of the delay, the adequacy of the applicants’ explanation for it and the merits of the proposed appeal.

Period of delay and explanation for delay

[18] The period of delay of 127 days from the date of the expiry of the period prescribed by r 748 for filing a notice of appeal against the substantive decision and the date of filing of the application is not very long.  Significantly, it has not given rise to any prejudice to the respondent.  In my view, it weighs relatively lightly in the exercise of the discretion.  Of much greater weight is the applicants’ explanation for the delay.

[19] Mr G R Baguley swore an affidavit on 1 August 2014 in support of the application.[22]  In it, he explained the applicants’ failure to appeal in time in the following terms:

“6.I was under the impression that the costs decision would be handed down relatively quickly and wished to consider both decisions when deciding whether to appeal or not.  I was fairly certain that I wanted to appeal the decision of 3 April 2014 but wanted to see the outcome of the costs decision before making such a significant decision.

7.I also wanted to avoid the costs to Appeal if it [sic] all possible.”[23]

Mrs J M Baguley did not depose to an explanation for the delay.

[20] This evidence leads irresistibly to the conclusion that Mr Baguley at least, made a conscious decision not to appeal the substantive decision promptly after it was delivered.  He resolved to postpone filing a notice of appeal against that decision until the costs decision was delivered.  He must have known that the costs decision would not be delivered within 28 days of delivery of the substantive decision.  That is because the applicants’ written submissions on costs had not even been filed within the 28 day period.  To my mind, the decision not to appeal the substantive decision within the prescribed time is apt to be characterised as a deliberate decision of the kind of which Keane JA spoke in Spencer.

[21] Besides, the explanation given is itself contradictory having regard to the subject matter of the proposed appeal.  Had the postponement of filing a notice of appeal arisen from significance attached to the costs decision in deciding whether to appeal, it is curious that the costs decision is not also the subject of the proposed appeal.  In this respect, the explanation given is also inadequate.

[22] Notwithstanding its inadequacies, the explanation for the applicants’ delay does not, of itself, warrant a refusal of an extension of time.  However, the deliberate postponement of the filing of a notice of appeal does have the same impact that the comparable decision had in Spencer.  That is, the applicants must demonstrate the necessity for an extension of time in order to prevent a substantial injustice.  As noted, resolution of that issue involves a consideration of the merits of the proposed appeal.

The assessment at first instance of the loss of bargain component

[23] I have referred in broad terms as to the how the learned primary judge determined the loss of bargain component of damages.  That determination was made in a context where his Honour had first found that the applicants had elected to claim damages in accordance with the common law principles of the law of contract as envisaged by special condition 9.5 of the contract rather than liquidated damages pursuant to special condition 9.4 thereof.[24]

[24] His Honour applied as the general rule at common law, that damages for breach of contract are assessed at the date of breach, although that may be departed from where it is necessary properly to compensate the innocent party.  This is the rule affirmed by the High Court in Johnson v Perez.[25]

[25] His Honour was satisfied that the applicants made all reasonable efforts to sell the property between the date of breach and the effective resale in October 2012.[26]  However, he found that whereas the property had the benefit of an approval under the Commonwealth Government-sponsored National Rental Affordability Scheme (“NRAS”) at both the date of sale to the respondent and date of breach,[27] that approval had lapsed by the date of the effective resale.[28]  He also found that an NRAS approval can affect the value of property to which it attaches.

[26] The learned primary judge regarded his findings with respect to the NRAS approval including its effect on property value as justifying application of the general rule in favour of assessment of damages at the date of breach.  In applying the rule and rejecting the applicants’ submission that there ought to be a departure from it, his Honour said:

[43]Although the Plaintiffs had no obligation to maintain NRAS approval, a property initially sold with NRAS approval is no longer the same ‘product’ if subsequently sold without.  For damages to be assessed accurately one must compare two like products.  The difference between the original Contract with NRAS approval at $400,000.00 and the subsequent resale of the Property without NRAS approval at $300,000.00 does not assist in assessing the Plaintiffs’ actual loss.

[44]The date which best represents the Plaintiffs’ loss is the Date of Breach, that loss being the original contract price of $400,000.00 less the market value of the Property with NRAS approval assessed at the Date of Breach.  This accords with the general rule in Johnson v Perez, from which I cannot see cause to depart, notwithstanding the Plaintiffs’ reasonable efforts and inability to dispose of the Property before the Date of Resale.  (Citation omitted)

[45]The appropriate award of damages necessarily depends on the market value of the Property on the Date of Breach, and so it must be determined whose expert evidence as to market value to accept.

[27] His Honour considered expert valuation evidence before him.  He found that the market value of the property with NRAS approval at the date of breach was $350,000.00[29] that was the value he used to deduct from the contract price in order to quantify the loss of bargain component of damages.

Grounds of Appeal

[28] Grounds 2 to 5 in the proposed notice of appeal are as follows:-

“2.The learned Trial Judge erred:

(a)by failing to find:

(i)the Defendant’s (“Lifestyle Homes”) [respondent’s] failure to complete a contract of sale for property at 30 Byron Street, Mackay (“the property”), was the sole cause of:

A.the Plaintiffs’ (“Baguleys”) [applicants’] reselling the property on 17 October 2012;

B.the delay in the Baguleys reselling the property, namely the period 15 October 2010 to 17 October 2012;

C.the loss on resale, namely $100,000.00;

(ii)the Baguleys’ actual loss was the loss on resale, namely $100,000.00;

(iii)the date of assessment of the Baguleys’ reasonable damage was 17 October 2012.

3.In the circumstances set out in paragraph 2, the learned Trial Judge further erred:

(a)by finding that the Baguleys’ made all reasonable efforts to sell the property at a marketable price during the period 15 October 2010 to 17 October 2012, and then finding that the Plaintiffs’ loss was $50,000.00 and not $100,000.00;

(b)alternatively, by finding the date which best reflected the Baguleys’ loss was 15 October 2010, and not 17 October 2012.

4.The learned Trial Judge erred by finding:

(a)the National Rental Affordability Scheme (“NRAS”) was a relevant factor in determining the date of assessment of loss, namely 15 October 2010;

(b)the absence of an NRAS approval attaching to the property at the date of resale was a relevant factor in determining the Baguleys’ loss was $50,000.00 and not $100,000.00;

5.The learned Trial Judge erred:

(a)by finding that the question of whether or not an NRAS approval attached to the property at the time of resale was in issue between the parties in circumstances where that question and issue had not been addressed by either party in their pleadings, nor in their evidence, directly;

(b)by finding that the failure of an NRAS approval attaching to the property at the date of resale was, in effect, a failure to mitigate, where no such allegation or particular was pleaded;

(c)by finding that the Baguleys’ had properly mitigated their losses, and then finding that the failure of an NRAS approval attaching to the property at the time of resale, when no such allegation of failure to mitigate was raised by Lifestyle Homes.”

[29] Grounds 2 and 3 are interlinked and, to some extent, repetitive of the principal theme common to both, namely, that the learned primary judge erred in determining that 15 October 2010 was the appropriate date for assessment of damages, rather than 17 October 2012.  Ground 4 challenges the relevance of the NRAS approval to determination of the appropriate date.  Ground 5 advances a contention that the issue of whether or not an NRAS approval attached to the property did not properly arise for determination in the litigation.  This contention seeks to characterise the non-renewal of the NRAS approval as one of mitigation of damages.

[30] As preliminary matters, I note, first, that the applicants do not seek to challenge the applicability to contracts for sale of land of the general rule as stated in Johnson v Perez.  That it so applies finds support in the recent decision of the New South Wales Court of Appeal in Ng v Filmlock Pty Ltd.[30]

[31] Secondly, the applicants do not challenge his Honour’s finding that an NRAS approval affected the value of the property.  That is unsurprising given that the valuer called by each party at the assessment of damages hearing had given two valuations for the property at both 15 October 2010 and 17 October 2012, one on the basis that it was NRAS approved and the other on the basis that it was not.[31]

[32] Thirdly, the applicants do not challenge his Honour’s preference for the valuations given by Mr S C Braithwaite, the valuer called by the respondent.  This, too, is unsurprising in light of the concession by the valuer called by the applicants that his approach to valuation was apt to be influenced by the interests of the person who had commissioned the valuation and by an anomalous decrease of $20,000.00 between a valuation of the property carried out by him in May 2010 and another carried out by him of it in October 2010, despite his acknowledgement that sale prices in the area were increasing over that period.[32]

[33] In light of the prominent role that the absence of an NRAS approval at the date of the effective resale had in the learned primary judge’s adoption of the date of breach for assessment of damages, how Grounds 4 and 5 are decided will be highly influential in the consideration of Grounds 2 and 3.  It is therefore convenient to consider Grounds 4 and 5 first.

Ground 4

[34] As developed in submissions, this ground of appeal mounts an underlying challenge to the finding that there was no NRAS approval for the property at 17 October 2012.  It is submitted by the applicants that the finding ought not to have been made and that had it not been made, the rationale adopted by the learned primary judge in rejecting a departure from the general rule as to date of assessment of damages, would not have been available to him.

[35] His Honour was not assisted with documentary evidence which clearly and coherently demonstrated that an NRAS approval was granted for the property or, if it was granted, whether it was current at any given time thereafter.  He relied for the finding on both sworn statements by Mr S R Baguley and an inference drawn from a comparison of the special conditions in the contract with the respondent with those in subsequent contracts of sale of the property, including that for the effective re-sale.

[36] As to sworn statements by Mr Baguley, in his affidavit sworn on 26 April 2013, he said:

“The land had originally a National Rental Affordability Scheme approval attached to it, but this lapsed during the sale period and would have required re-application which was not guaranteed to be successful as the approval was withdrawn and reallocated.”[33]

In cross-examination, he gave evidence to similar effect when asked about this statement.  The cross-examination took the following course:

“MR de WAARD: ... But in your second affidavit at paragraph 5A you depose to letting the NRAS approval lapse during the sale period. Do you recall-- -?---I’d have to have a look at the affidavit.

We’ll get the affidavit for you. So that's the second affidavit of the witness. It should be, your Honour - it should be court document number 17.

HIS HONOUR: Here it is.

MR de WAARD: Sir, just if you could open that up to paragraph 5A and - - -?---5A, yeah, I just - I read it.

Okay. So in paragraph 5A you're deposing to the fact that - or you say the NRAS approval lapsed?---Yes.

During the sale period. It would have required re-application, which was not guaranteed to be successful as the approval was withdrawn and relocated – or re-allocated, rather. Is that still your evidence?---Yes.

So your evidence is that the NRAS approval lapsed?---Yes.

So when you resold the property in 2012 you say there was no NRAS approval on it?---Resold it in - or sold it this year.

Yes?---It sold January of this year.

Sorry, when you resold it in January of this year?---Yes.

There was no NRAS approval on it?---No.”[34]

[37] Turning to the contractual documentation, his Honour noted that special condition 5 of the contract with the respondent implied that an NRAS approval was current at the date of that contract.[35]  The contracts for two intervening sales which failed did not refer to an NRAS approval.  A third contract was conditional upon the purchaser concluding “satisfactory investigations” in relation to the property by a given date.  No reference was made in the contract to an NRAS approval.  However, the purchaser terminated because it was unable to satisfy itself by the date that there was a NRAS approval.  Lastly, the contract for the effective sale dated 17 October 2012 made no reference to an NRAS approval.  His Honour considered that the absence of a special condition comparable with special condition 5 from the contracts which followed that with the respondent, supported the evidence by Mr Baguley that by the date of the effective re-sale, the NRAS approval was not current.[36]

[38] In oral submissions, counsel for the appellant ventured that the learned primary judge ought not to have relied on Mr Baguley’s evidence that the NRAS approval had lapsed.  He proposed that other evidence before his Honour proved that the NRAS approval was current at 17 October 2012.  Consideration needs to be given to whether it was so proved.

[39] As noted, there was a paucity of evidence with respect to the grant and currency of the NRAS approval.  Each valuer appended to a valuation of the property, a notice of a decision made by the Mackay City Council on 16 July 2009.[37]  The decision approved an application to develop eight multi-dwelling units on the land comprised in the property.  The conditions of approval envisaged that the property would be subject to an Affordable Housing Management Plan for a period of 10 years from when residential use of the unit development commenced; and that a statutory covenant in favour of the council enforcing the management plan would be executed and registered.[38]  No evidence was given as to whether such covenant was ever executed or registered.

[40] The only other document of relevance to an NRAS approval in the evidential material at trial was an unexecuted NRAS Heads of Agreement.  This document also was appended to the valuers’ reports.[39]  The document is dated 7 September 2009, is under the letterhead of the Queensland Affordable Housing Consortium (“QAHC”) and is addressed to Baguley Developments Pty Ltd (“Baguley Developments”), a company associated with the applicants.  It is in the form of a letter.  It refers to the addressees’ Expression of Interest and to QAHC’s lodgement of “your project” under NRAS.  The document then notifies acceptance of the property under the NRAS.

[41] The document stated that, by signing and returning it to QAHC, the recipient, Baguley Developments, agreed to grant QAHC a head lease of the property on the conditions set out therein (which included a term of 10 years) and QAHC agreed to accept the grant of a head lease by Baguley Developments from the agreed lease commencement date.  There was provision for both QAHC and Baguley Developments to execute the document.  It may be inferred from Mr Baguley’s evidence that Baguley Developments did execute the document and return it to QAHC.  There is no evidence that a head lease was ever prepared or executed.

[42] The document also contained an acknowledgement by Baguley Developments that QAHC might terminate the heads of agreement by giving 14 days’ notice if the approved dwellings the subject of the project did not continue to comply with NRAS requirements or if the Commonwealth Government, at its discretion, withdrew approval of either the approved dwellings or Baguley Developments as an approved participant.

[43] Counsel for the applicants referred the court to the provisions of s 3.5.21(1) of the Integrated Planning Act 1997 (Qld) which, at the time of the approval of the development application, provided that such an approval would lapse if the first change of use under it had not happened within four years of the date when the approval took effect.  Although the approved development had not commenced by the date of the effective re-sale, it was submitted that the development approval was still current at that date and would have remained current until 16 July 2013 pursuant to those provisions.

[44] The applicants also submitted that it can be inferred from the requirement in the conditions of the development approval that the property be subject to an Affordable Housing Management Plan and that a covenant in favour of the council be executed and registered, that any NRAS approval of the property would remain current for so long as the development approval was current.  Hence, the NRAS approval must have been current at 17 October 2012.

[45] In my view, such an inference lacks a sound foundation.  The terms on which an NRAS approval is given are regulated by that scheme.  Those applicable to a particular NRAS approval are to be found in documents created for the purposes of the scheme.  Here, the heads of agreement document does not relate the currency of the NRAS approval for the property to the currency of a local government approval for development of the property.  Moreover, the terms of the development approval themselves did not purport to moderate the terms, including its currency, of the NRAS approval.[40]

[46] I am also of the view that, on the evidence on which the learned primary judge relied, it was open to him to find that there was no NRAS approval current for the property at 17 October 2012.  For these reasons, I would reject the challenge to that finding.  For the reasons given in relation to Grounds 2 and 3, I would also reject the proposition in this ground of appeal that the absence of an NRAS approval for the property at 17 October 2012 was irrelevant to the determination of the applicants’ damages.

[47] Accordingly, this ground of appeal cannot succeed.

Ground 5

[48] The factual issue of whether or not there was an NRAS approval for the property at 17 October 2012 clearly arose from the valuers’ reports.  As noted, each valuer gave separate valuations for the property at that date with and without an NRAS approval.  They also gave separate valuations for it at 15 October 2010 on these two separate bases.[41]  The valuations were available well before the hearing of the assessment of damages.  It was evident from the reports that this factual issue was relevant to the applicants’ damages claim.

[49] At the assessment of damages hearing, the issue was the subject of the cross-examination to which I have referred.  Further, it was canvassed as an issue to be resolved by the learned primary judge in written submissions given to him.[42]  His Honour regarded it as a matter on which the parties had joined issue.[43]

[50] It is true that in submissions to the learned primary judge, the respondent characterised a failure to re-new the NRAS approval as going to mitigation of damages.[44]  Whether that was pleaded by the respondent by way of mitigation of damages is, however, beside the point.  The absence of an NRAS approval, as distinct from a failure to renew it, had relevance to the identification of the attributes of the property relevant to its value and, on that account, had a potential role to play in determination of the appropriate date for assessment of damages.

[51] There is no merit to this ground of appeal in my view.

Grounds 2 and 3

[52] The error for which these grounds contend is that his Honour erred in adopting 15 October 2010 for assessment of damages, and not 17 October 2012.  Under the general rule as stated in Johnson v Perez, the date for assessment of damages is 15 October 2010 unless a departure from it is necessary properly to compensate the applicants.  The alleged error can be refined to one of failing to find that a departure was necessary in order to compensate the applicants properly.

[53] The persuasive onus lay upon the applicants to establish that such a departure was necessary.  That required them to prove factual circumstances which would justify a finding of necessity to depart from that date in order to compensate properly.

[54] The state in which the evidence was left amply warranted the finding that the NRAS approval had lapsed prior to 17 October 2012.  That finding necessarily meant that a significant attribute relevant to value, which the property had when the contract with the respondent was breached, it did not have when it was sold on 17 October 2012.  I agree with his Honour’s observation that what was sold to the respondent was not identical in a significant way with what was sold to the purchaser under the effective re-sale.  I agree also that this lack of identity and the underlying cause of it, are, on that account, relevant to the determination of the date of assessment of damages.  Moreover, they are formidable obstacles to a departure from the date of breach.

[55] In face of such an obstacle, it was for the applicants to establish a convincing case of necessity in order to compensate them properly.  They failed to do so in my view.  What might have been required to compensate the applicants properly involved a consideration of why and how the NRAS approval lapsed.  No evidence was adduced relevant to this.  Certainly, it was not suggested that the respondent had caused the approval to lapse.

[56] In oral submissions, counsel for the applicants made repeated reference to the finding that they had made all reasonable efforts to sell the property between the date of breach and the date of effective resale.  Counsel proposed that because they had done that, it followed that the later date was to be adopted.  That proposition, in effect, urges that the rule to be applied is that damages for breach of contract for sale of land are to be assessed at the date of resale provided that the seller has acted reasonably in reselling.  Such a rule is, in my view, irreconcilable with that stated in Johnson v Perez as applied to contracts for sale of land.

[57] I am unpersuaded that the applicants have made out the error for which they contend.  Neither of these grounds of appeal are established.

Disposition

[58] The task for the applicants is to prove that an extension of time is demonstrably necessary to prevent a substantial injustice.  Since none of the grounds on which they propose to appeal has prospects of success, the inevitable conclusion is that they have failed in that task.  It follows that the extension of time should be refused.

Orders

[59] I would propose the following orders:

1.Application for extension of time refused.

2.Applicants to pay the respondent’s costs of the application on the standard basis.

[60] DOUGLAS J:  I agree with the reasons of Gotterson JA and the orders proposed by his Honour.

Footnotes

[1] Affidavit of G R Baguley Sworn 13 June 2012; Exhibit GRB-1; AB80-85 also at AB1066-1073.

[2] Special Condition 4.

[3] AB1041-1042.

[4] AB1043-1047.

[5] AB1178-1179.

[6] Contract of Sale to Blackwater Venture Pty Ltd; AB92-105.

[7] AB1160-1164.

[8] AB1165-1177.

[9] AB1238-1248.

[10] AB1249-1251.

[11] Appeal Transcript (“AT”) 1-2 l31-1-5 l5. There was no appeal as of right because the amount for which the judgment was given is less than the Magistrates Court jurisdictional limit and the judgment did not relate to a claim for, or relating to, property of a value equal to or more than that limit: see s 118(2).

[12] AT 1-5 l1 3-5.

[13] Exhibit CJC-3; AB1306-1307 (incomplete).

[14] AT 1-5 l21 – 1-8 l4.

[15] There is no Ground 1.

[16] Beil v Mansell (No 1) [2006] QCA 173; [2006] 2 Qd R 199 per Muir J at [38]-[40].

[17] Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 at 348-9.

[18] Queensland Trustees Ltd v Fawckner [1964] Qd R 153 at 163.

[19] Ibid.

[20] [2007] QCA 178.

[21] At [31].

[22] AB 1252-1254. See also Applicants’ Submissions, paragraph 1.

[23] AB 1253.

[24] Reasons [14]. At one point during the hearing of the application, the applicants’ counsel intimated that his clients were entitled to damages pursuant to special condition 9.4: AT 1-9 ll30-31. Counsel was unable to identify evidence that proved that the time condition in special condition 9.4 had been satisfied: AT 1-21 ll5-26. Counsel then confirmed that the applicants relied on special condition 9.5, and not special condition 9.4: AT 1-21 ll28-43. That was consistent with paragraph 5 of the Second Amended Statement of Claim; AB1087.

[25] [1988] HCA 64; (1988) 166 CLR 351 per Mason CJ at 355-356; per Wilson, Toohey & Gaudron JJ at 369; per Deane J at 380; per Dawson J at 386. See also Riggall & anor v Thompson [2010] QCA 144 at [26] in which the general rule was applied to a breach of a contract of sale of a residential lot. The important end served by the general rule in favouring the date of breach was recently stated by Keane J in Clark Macourt [2013] HCA 56; (2014) 304 ALR 220 at [110], to be bringing finality and certainty to commercial dealings.

[26] Reasons [20].

[27] Reasons [21].

[28] Reasons [41]. Mr Baguley testified that he allowed the NRAS approval to lapse and did not apply for its renewal: AB14; Tr 1-14 ll9-28. See also Affidavit of G R Baguley sworn 26 April 2013, para 5(a): AB87.

[29] Reasons [56].

[30] [2014] NSWCA 389 per Emmett JA at [14], per Gleeson JA at [52].

[31] Valuation Report of R P Booth: AB730. Valuation Reports of S C Braithwaite: AB878, 950.

[32] Reasons [55].

[33] AB87; paragraph 5(a).

[34] AB14; Tr1-14 ll9-37. Consistently with this evidence, the valuer engaged by the applicants swore that he was advised by their solicitor that “the NRAS allocation had expired 30 June 2011”: Affidavit sworn 24 October 2013 paragraph 6: AB723.

[35] This special condition is rather elliptically expressed as: “The Buyer acknowledges that (the property) is dedicated to the approval of NRAS with a covenant of affordable housing …”. The special condition falls short of expressly stating that an approval had been given and was current, or that a covenant had been executed.

[36] Reasons [41], [42].

[37] AB793-812; 902-922.

[38] Conditions 1 and 2.

[39] AB814-820; 923-931.

[40] That is not to suggest that those terms might lawfully have done so under the Integrated Planning Act 1997.

[41] See fn 31.

[42] Respondent’s submissions, paragraph 101: AB1152.

[43] Reasons [24].

[44] Reasons [26].

Close

Editorial Notes

  • Published Case Name:

    Baguley v Lifestyle Homes Mackay Pty Ltd

  • Shortened Case Name:

    Baguley v Lifestyle Homes Mackay Pty Ltd

  • MNC:

    [2015] QCA 75

  • Court:

    QCA

  • Judge(s):

    McMurdo P, Gotterson JA, Douglas J

  • Date:

    01 May 2015

Litigation History

Event Citation or File Date Notes
Primary Judgment - - QDC
Appeal Determined (QCA) [2015] QCA 75 01 May 2015 -

Appeal Status

{solid} Appeal Determined (QCA)