Knezevic v Whittaker[2014] QDC 103

DISTRICT COURT OF QUEENSLAND

1. [1]
   Leo George Knezevic (“Leo Knezevic”), now deceased, and Denise Annette Whittaker (“Mrs Whittaker”), in exercise of a power of sale as joint mortgagees, sold a residential property. The plaintiff was the registered proprietor of the property, described as Lot 18 on RP 123875, County of Stanley, Parish of Capalaba, situated at 55 Greenfield Road, Capalaba (“the property”).

2. [2]
   The plaintiff Peter Knezevic is the son of Leo Knezevic who deceased on 23 May 2013. Mrs Whittaker, as the executor of his estate and by Order made in this court on 16 October 2013, was substituted as a party in lieu of leo Knezevic. Mrs Whittaker in her personal capacity and jointly with Leo Knezevic are hereinafter, (where appropriate, where reference is made to historical events) referred to as “the defendants”.

The claim

3. [3]
   The plaintiff’s claim was filed on 08 March 2012 and alleges that the sale of the property was at an undervalue, in breach of a duty at common law and a breach of statutory duty pursuant to s 85 of the Property Law Act 1974, by failing to take reasonable care to ensure that the property was sold at market value.

4. [4]
   The breach of duty of the defendants is alleged to be constituted by the following:

The pleadings

5. [5]
   In their defence the defendants have admitted the following:

6. [6]
   The defendants did not admit the market value of the property and denied any breach of duty. They raised the further defences of set-off, laches and estoppel or failure to mitigate.

The issues

7. [7]
   The issues for determination in the proceeding are:

The plaintiff’s case in abstract

8. [8]
   The plaintiff purchased the property subject to two mortgages. The defendants were the second mortgagees. They sold the property as mortgagees exercising a power of sale and the plaintiff asserts that it was sold at an under value.

9. [9]
   These events were the final chapter of a somewhat discordant family and business history. The defendants were directors of a family company called Belgold (Qld) Pty Ltd (“the company”). The company manufactured and marketed chemicals, adhesives and coatings. One of the issues in the proceeding is an allegation by the defendants that the plaintiff was also a director of the company. The company failed and went into liquidation. One of the reasons for the failure was a debt due and owing to the Australian Taxation Office. Payments had been made to reduce that debt within a period of time that gave rise to each of four legal proceedings that followed the liquidation.

10. [10]
    The first of those proceedings arose from the plaintiff having lodged a caveat when the contract of sale of the property had been entered into. The defendants brought an application to remove the caveat and Justice Chesterman ordered that the caveat be removed on 09 May 2006. The property was then able to be sold.

11. [11]
    The second is a proceeding (including an oral examination) brought by the Liquidator against the plaintiff alleging insolvent trading. That proceeding was subsequently discontinued.

12. [12]
    The third is a further proceeding, brought by the Liquidator against the Australian Taxation Office, alleging an unfair preference. The Australian Taxation Office joined each of the defendants as third parties. Subsequently the defendants agreed to a consent order to pay the sum of $63,533.50 (inclusive of costs) to the Australian Taxation Office. That sum was later reduced by the Australian Taxation Office to $43,173.02.

13. [13]
    The fourth is the subject proceeding.

The defendant’s case in abstract

14. [14]
    The defence alleges a set-off (in paragraph 4) on the basis that the plaintiff had been a director of the company, or otherwise a guarantor, and seeks to recover the payment made by Leo Knezevic and Mrs Whittaker to the Australian Taxation Office as representing the liability of one of three director’s in the greater sum originally claimed by the Liquidator (which the defendant’s allege only co-incidentally amounted to about one third more than the sum paid by them).

15. [15]
    The material particulars of the set-off pleaded by the defendants are that:

16. [16]
    The defence also alleged that the judgment of Justice Chesterman in May 2006 had put the plaintiff ‘on notice’, in the context that the contract of sale of the property was entered into about 12 March 2006 and his claim was filed shortly before the expiration of the limitation period six years later, and that the effluxion of time gave rise to a defence of laches.

17. [17]
    The plaintiff raised an issue of law in response, namely that the doctrine of lashes is an equitable concept and that the plaintiff’s claim involved a statutory cause of action, which is not amenable to an equitable remedy.

18. [18]
    In so far as the defence of laches is concerned, the defendants pleaded that the delay of the plaintiff in commencing his claim had lead them to believe and they so believed that he did not contemplate or intend to make the claim and acting on this belief the defendants had acted to their prejudice. That allegation is particularised simply to the effect that the passage of six years since the events relied on by the plaintiff meant that the defendants were not able to locate other witnesses to corroborate their version of events and that – at the time the defence was filed – the health and age of Leo Knezevic was such that it would be unreasonable to expect him to give evidence; that a substantial amount of the proceeds of the sale of the property that came to Leo Knezevic and Mrs Whittaker have been dispersed by a payment to the Australian Taxation Office in the sum of $43,173.02, an allocated pension of $220,000.00 and other expenditure of $55,000.00; that the books and records of the company were destroyed in early 2008 with the consent of the Australian Securities and Investment Commission; and that the real estate records of Mr Currie had similarly been destroyed or disposed of in 2011. The defence is that Leo Knezevic and Mrs Whittaker had changed their position and the plaintiff by reason of the delay had waived any right he may have had to seek relief against them.

19. [19]
    Finally, there is a defence alleging estoppel or failure to mitigate on the part of the plaintiff. The defendants in essence claim that in the reasons for decision in respect of the Caveat proceeding, Chesterman J said “there is some evidence that the price is too low for the property”; and that accordingly the plaintiff had not done what his Honour said (or at least implied) was open to him, namely to bring a proceeding - by way of injunction, or to make a claim to recover damages - and on that premise he had failed to mitigate any loss that he may suffered and was thereby estopped from making the claim.

The Amended Reply

20. [20]
    At the commencement of the hearing the plaintiff sought leave to file an Amended Reply. The defendants objected to such of those amendments that related to the set-off, in paragraph 4(x)(c) of the Amended Reply, namely (as underlined):

21. [21]
    The plaintiff pleaded that the defendants were not entitled to set-off as damages, the sum of $43,173.02.00 that they had paid to the Australian Taxation Office. He pleaded that the defendants had simply paid their portion (about two thirds of the claim) and therefore were not entitled to the contribution; and asserted that the plaintiff (in any event) had defences to the allegation of a set-off.

22. [22]
    Mr Horvath submitted that the defendants had pleaded conclusions of law in paragraph 4 of their defence - which alleged the set-off – by making allegations that the plaintiff by his actions had caused the failure of the company and created the obligation on the defendants to pay the settlement sum to the Australian Taxation Office; and submitted that the plaintiff had simply responded to that allegation in the Amended Reply, rather than making application for that part of the defence to be struck out and re-pleaded.

23. [23]
    Mr Somers submitted that the Amended Reply had raised for the first time a statutory defence, that the amendment was too late in time and that the defendants were prejudiced by the absence of relevant documents and the passage of time in being able to effectively respond to the assertion of the statutory defence.

24. [24]
    I gave leave to the plaintiff to file the Amended Reply, subject to the evidence adduced and further submissions made in the course of the hearing. My reasons will follow, infra.

Evidence: the plaintiff’s allegation of breach of duty

The plaintiff: Mr Peter Knezevic

25. [25]
    The plaintiff had purchased the property for $560,000.00 on 02 April 2003. He had borrowed, on a first mortgage, the initial purchase price of $260,000.00 from a financial institution, Permanent Custodians Limited (“PCL”), through Wizard Mortgage Corporation Limited (“Wizard”). He also received an advance of $300,000.00 from the defendants to complete the purchase, which by a special condition to the loan agreement with PCL/Wizard was characterised as a gift. Mr Thomas, solicitor, acted for the plaintiff in the purchase.

26. [26]
    The relevant Special Condition was:

“1. Please provide a letter from your parents confirming the $300,000 is non-refundable.”

27. [27]
    The defendants had signed a letter dated ‘March 30 2003’ addressed to Wizard, that stated:

“This letter is to confirm that Leo George Knezevic and Denise Whittakerare gifting to Peter Knezevic a (sic) the sum of $300,000 to purchase a property at 55-59 Greenfield Road, Capalaba.”

28. [28]
    The plaintiff said he believed the advance was a gift. Nevertheless, it was in fact a second mortgage over the property. Mrs Whittaker said in her evidence that the letter was given by the plaintiff to her and Leo Knezevic to sign. They had signed it notwithstanding that they knew the contents were incorrect.

29. [29]
    In so far as the sale of the property by the defendants is concerned, the plaintiff received a letter of demand dated 10 December 2005 from them in the sum of $300,000.00, to be paid within seven days.

30. [30]
    A Statutory Notice of exercise of power of sale dated 20 December 2005 was received by the plaintiff, followed by a letter from the defendant’s solicitor Mr Thomas, dated 07 March 2006, advising the auction date of 06 May 2006 and requiring vacant possession of the property.

31. [31]
    The contract of sale of the property was executed by the defendants (as mortgagees exercising power of sale) and the purchaser on 12 March 2006. The sale price was $655,000.00.

32. [32]
    The plaintiff filed a caveat over the property on 30 March 2006. A demand to remove the caveat was made by Woods Prince Lawyers on behalf of the defendants on 05 April 2006.

33. [33]
    Mr Tully made a valuation of the property on 05 May 2006.

34. [34]
    An application to remove the caveat was heard by Justice Chesterman on 09 May 2006 and his Honour made the order sought by the defendants. The plaintiff said he only became aware of his Honour’s reasons for the order very recently before this hearing commenced.

The defendants:  Mrs Whittaker

35. [35]
    Mrs Whittaker said that prior to the property being purchased, the plaintiff had been living in a house that he owned. He sold it and moved at his father’s suggestion into her house at Kuraby. She was at that time living in a house with Leo Knezevic at Raby Bay. She had owned the Kuraby house for many years, but subsequently decided to sell it to fund her and Leo Knezevic’s retirement.  However, she was persuaded by Leo Knezevic to make a loan of $300,000.00 towards the purchase of the property for the plaintiff to live in, he having sold his own house and having been required to vacate the Kuraby house. 

36. [36]
    Subsequently, when the company was in financial difficulties the defendants informed the plaintiff that they wanted the loan repaid. They retained Mr Thomas as their solicitor.

37. [37]
    She said that Leo Knezevic engaged real estate agent Mr Curry to list the property. Leo Knezevic spoke to and made all of the arrangements with, Mr Curry. An auction was arranged some two months ahead of the date of the letter that Mr Thomas sent to the plaintiff requiring vacant possession. She understood that a ‘buyer’ had approached Leo Knezevic or both of them and that the buyer inspected the property. Neither of the defendants knew anything about the ‘buyer’.

38. [38]
    A contract was prepared (but not by Mr Thomas). They accepted it before an auction took place. No valuation was obtained from a valuer. Mr Curry told them that the contract price was a good price. They relied on his advice. She considered her duty to get a fair price for the property was discharged by getting a real estate agent’s opinion on the value of the property.

39. [39]
    She had no particular concerns about the letter discussing the contract that Mr Thomas subsequently sent to her and Leo Knezevic. The letter did not change her mind and she had not taken up any of the options suggested in the letter.

The solicitor: Mr Thomas

40. [40]
    Mr Thomas had been retained to act for the Liquidators and gave some evidence in relation to the sale of the property. The letter dated 7 March 2006 that he wrote to the plaintiff, included the following passage:

“An auction of the property has been arranged to be effected at 2.00 p.m. on 6 May 2006 and accordingly you are requested to voluntarily vacate the premises forthwith such that vacant possession can be offered at auction.”

41. [41]
    He was also wrote a letter dated 13 March 2006 to the defendants and gave – quite properly - some specific advice about the statutory obligations of mortgagees exercising power of sale of properties, in the following terms:

“As mortgagees exercising power of sale you have statutory obligations to ensure that you do in fact sell the property for fair market value and you ought to have sufficient documentation to support the sale price compared with market appraisal to avoid any subsequent allegations against you by Peter Knezevic for breach of statutory duty.  Obviously if a property goes to auction, and provided advertising has been reasonable then it minimises the risk of having a disgruntled mortgagor making allegations of impropriety against mortgagees. 

We note of course that you executed the Contract without prior reference to us and that we have now ascertained from the selling agent that the usual clauses inserted in the Contract for the protection of mortgagees exercising power of sale are not included therein.  Usual provisions would be to the effect that if the mortgaged debt was satisfied or the mortgagor (Peter Knezevic) was able to obtain an injunction to restrain you from proceeding with the sale, you could then avoid being in breach of contract by either terminating the Contract or extending it until those issues were resolved.”

42. [42]
    He said that he represented the defendants in the liquidation proceedings and also represented them in the sale of the property. He was surprised that a contract had been made without reference to him. He recalled that Mrs Whittaker may have contacted him to say that the offer the subject of the contract had been accepted on the recommendation of the real estate agent.

43. [43]
    When he had sent a tax invoice account to the defendants on 15 May 2006, he had stated the following:

“… to acting initially for you as the mortgagee exercising power of sale and advices to you in relation to the need to obtain market value of the house to avoid any later suggestion by the mortgagor that you have sold the property for less than market value particularly in circumstances where you elected to proceed with the sale by private treaty prior to proceeding with the auction as discussed with your selling agent …” (my underlining).

The property valuers: Mr Tully and Mr Aboud

44. [44]
    Valuation evidence was adduced by both parties. Mr Tully, for the plaintiff had prepared a valuation report dated 05 May 2006 for one of the other proceedings. He used a sales or direct comparison method and utilised the ‘summation exercise’ as a ‘check’.

45. [45]
    The valuation report in its first version contained an error, which was explained essentially as being an oversight, or glitch. Mr Tully had written in the report:

“Recent vacant and improved sales evidence from the surrounding rural residential localities of Capalaba and Sheldon has been considered”,

and concludes:

“Based on the most recent and comparable sales evidence available to us we are of the opinion the current market value of the subject property, as at the date of our inspection, lies within the range of between $750,000 and $800,000.”

46. [46]
    Mr Tully then did the summation exercise and assessed the current fair market value of the property at $785,000.

47. [47]
    The error in the report arises from an incorrect figure being applied to “Other improvements” and a mathematical error in arriving at the total of the valuation (a sum of $170,000.00). In a subsequent copy of the valuation report, Mr Tully corrected both errors as follows:

48. [48]
    Nevertheless, an error in addition of those sums (which is now obvious) continued.

49. [49]
    The property (an area of 2.05ha) had a flood plain and whilst Mr Tully thought it enhanced the property in general terms, he thought it would have detracted from any subdivisional potential. Hence he assessed the value on the basis of it being a single area. In cross-examination he maintained the validity of his sales comparisons and distinguished those used by the other valuer Mr Aboud, primarily on the basis of locality, as between Capalaba (which he considered more attractive and with better soils) and Sheldon (on the other side of Mount Cotton Road, which separates the two localities).

50. [50]
    When he inspected the property on 05 May 2006 he found it very well presented and neat and tidy. He agreed that if the property in fact had been neglected, and on that assumption, it would have an adverse affect on valuation and in that context it might cost $10,000.00 to rehabilitate the property, on the basis that was unkempt and required mowing, tidying up and clearing of rubbish.

51. [51]
    The valuer retained by the defendants was Mr Aboud. He conducted a kerbside valuation recently and prior to the date of hearing of this proceeding. He conceded that it would have been better to have had access to the property. He had adopted the added value of improvements from Mr Tully’s report, as that generally accorded (within $5,000) with his own analysis. He said he had a hindsight appreciation of sales that had occurred close to the date of Mr Tully’s valuation in 2006.

52. [52]
    He considered the two localities of Capalaba and Sheldon to be similar rural and residential environments. He also used direct sales data and also did the summation exercise, which he described as an analysis of the added value of improvements, the difference being the depreciation rate. He considered that a valuation for the purpose of a mortgagee sale was essentially the same process as a valuation for the purpose of a court proceeding.

53. [53]
    The contract of sale of the property was dated 12 March 2006. He considered that the contract price of $655,000.00 was below market value. He said that based on sales evidence it could not be described, as Mr Curry had done, as “top dollar”. However, he said it was a good price because his valuation was $695,000.00.

54. [54]
    Before embarking on his kerbside valuation (he did not have access to the property) he spoke with Mr Curry by telephone and took notes of his conversation. Six relevant points were noted as arising from that conversation, namely:

• “The subject property was offered for sale by public auction.
• The property was contracted for sale post the date of the auction.
• The property was vacant at the time of marketing.
• The property was presented to a below-average standard.
• The property’s condition hindered the proper marketing of the property.
• There were multiple interested parties for the property.”

55. [55]
    Mr Aboud’s kerbside inspection was conducted on 29 October 2013. The “as at date” of valuation was 12 March 2006. The date of the conversation with Mr Curry was after he was instructed to prepare a valuation report and, at least inferentially, before his kerbside inspection. Mr Aboud said the questions asked of Mr Curry were standard questions for real estate agents. In summary, Mr Aboud said that Mr Curry told him that the property went to auction, was sold after the auction, was vacant and that there were other parties opposed to the purchaser who were interested in the property. He was told there was a lot of interest for the property. Mr Aboud said that if the property had never gone to auction and had been sold prior to auction, that would be different to what he had been told by Mr Curry.

56. [56]
    He said there was limited sales evidence and there were two properties used by both he and Mr Tully in the sales comparisons. If the property had been untidy in March 2006, it might have made a difference in valuation, based on the rehabilitation cost of say $10,000.00, give or take.

57. [57]
    Mr Aboud said he had hindsight appreciation of sales made close to the date of Mr Tully’s valuation in 2006. He would have liked “to have been there at the time so I can feel the market a bit … acknowledge the market at the time. But in hindsight, sometimes retrospective valuations are a little bit more straight forward.” He also referred to the feel for market conditions in the following terms:

The real estate agent: Mr Curry

58. [58]
    Mr Curry recalled meeting the defendants at the property. He said the driveway was quite overgrown and one had to drive through a creek area to get to the house. He chatted to them out the front of the house but was not able to go through it. He had told them it was detrimental to the sale if the property wasn’t cleaned up. The property wasn’t ready for sale in his view at that time. He accepted the retainer to market the property and provided to the defendants a full marketing programme based on an auction. He said he was very active in the market at that time and sold probably the majority of acreage properties in that area. He could not recall the date set for the auction but it would have been at least six weeks beyond when he had his first meeting with his clients. He no longer had relevant records and did not have the file of this particular sale. He said he had a recollection of opening the property up on a weekly basis and recalled actually having an auction at the property:

“…I believe I actually – I can remember standing on the verandah. I remember the house quite distinctly, and I can remember standing on the verandah and the auctioneer was actually out in the yard.  I can’t recall who the auctioneer was, but there was a crowd of people there, probably 15 to 20 people there, and in my recollection, the property passed in. That’s why I’m a bit surprised that it was actually put down for an auction later.”

59. [59]
    When asked what would then follow, if he believed there had been an auction, he said that generally the property would have been left on the market with or without a price so that he could introduce offers on the property. He believed that was what happened. He believed that his clients would have asked him to do an appraisal or value of the property, which would provide a price range based on current market analysis. He thought that the price that was achieved in the sale “would have been quite reasonable”. He says he discussed the state of the property with a couple of potential buyers. He believed that he:

“… probably would have recommended the price based on what the property had sold for previously and what I had sold other properties around the area for. That’s generally a normal conversation that we would have.”

60. [60]
    He said he did not have any concerns that the property was being sold at a gross undervalue to what it was worth.

61. [61]
    Mr Curry agreed that his charge for the whole transaction, according to a letter from his business to the defendants dated 13 March 2006 was $5,000.00, plus GST. He had agreed that on the basis of the sale price for this property in 2006 his REIQ commission should have been about $16,000.00 and he would have charged the REIQ commission for the sale, advertising and cost of the auction. He said the charge of $5,000.00 “seemed like quite a big discount” but then went on to say that there must have been another invoice for those other sums.

62. [62]
    Mr Curry denied that the property had been sold at an under-value. He asserted that it had in fact gone to auction but had been passed in. He believed that the price obtained was “top dollar” and denied that the photographs in Mr Tully’s valuation report, showing the property to be in a neat and tidy condition, were indicative of how the property appeared when he inspected it. He denied that he had sold the property to ‘the first buyer who came along’.

Discussion

63. [63]
    The property was sold for $655,000.00 on 12 March 2006. The property was subsequently sold by those purchasers on 27 February 2008 for $950,000.00.

64. [64]
    Section 85(1) of the Property Law Act 1974 provides as follows:

65. [65]
    That provision is expressed as at 6^th February 2006, which pre-dates the exercise of the power of sale by the mortgagee and the sale and purchase of the property. 

66. [66]
    In Commercial and General Acceptance Limited v Nixon [1983] 152 CLR 491, Gibbs CJ and Mason J held that where a mortgagee had engaged a reputable, competent agent to conduct the sale of a property but there was a deficiency in the sale price resulting from the negligence of the agent, the mortgagee nonetheless was liable to the mortgagor for damages equivalent to the deficiency in price.  The statutory duty to take reasonable care was not satisfied by simply choosing a competent agent but extended to the making of such arrangements as would ensure that the property was properly advertised:

67. [67]
    Brennan J referred to the common law duty to exercise the power of sale in good faith or, in other words to take reasonable precautions to obtain a proper price for the property. His Honour wrote at 522 and 523 that the High Court

“accepts that a duty to take reasonable precautions to obtain a proper price imposes a more onerous duty upon a mortgagee than a duty to act in good faith, the duty to act in good faith requiring the mortgagee to act without fraud and without wilfully or recklessly sacrificing the interests of the mortgagor and stopping short of exposing the mortgagee to liability for mere negligence or carelessness.”

68. [68]
    Salmon LJ had written in Cuckmere Brick Co v Mutual Finance Ltd [1971] 1 Ch 949, at 966 that “‘proper price’ is perhaps a little nebulous and ‘the best price’ may suggest an exceptionally high price. That is why I prefer to call it ‘the true market value’.”

69. [69]
    Brennan J in Nixon wrote that “it follows that the statutory duty, which appears to reflect some of their Lordships’ language in Cuckmere Brick, is more onerous than a duty to act in good faith.”

70. [70]
    His Honour continued at 524, writing:

“I would therefore construe s. 85(1) as imposing upon the mortgagee a duty to do what ought reasonably to be done to ensure a sale at market value, though he is at liberty to perform the duty by the hands of others.  If an omission is made in doing what ought reasonably to be done to ensure a sale at market value, the duty is not performed, and it is immaterial that the omission was made by another upon whom the mortgagee relied to do it.”

71. [71]
    In Sablebrook Pty Ltd v Credit Union Australia Ltd [2008] QSC 242 Applegarth J wrote at [33] that “the statutory duty should not be replaced by a series of rules drawn from cases, including old cases decided under the general law in the context of a mortgagee’s obligation to act in good faith. As Connolly J stated at first instance in Nixon v Commercial & General Acceptance Ltd ‘it is not possible to lay down hard and fast rules about valuations in this area’.” 

72. [72]
    His Honour did express the view that there was some difference of opinion about whether the general law of obligation to act in good faith is subsumed by the statutory duty. His Honour referred to Cameron v Brisbane Fleet Sales Pty Ltd  [2002] 1 Qd R 463 at 470 [37] cf Benzlaw & Associates Pty Ltd v Medi-Aid Centre Foundation Ltd [2007] QSC 233 at [143]. 

73. [73]
    His Honour referred at [34] to “Commentary based upon Nixon v Commercial & General Acceptance Ltd (per Connolly J at first instance unreported, Supreme Court of Queensland, No 343 of 1970”; and to Duncan & Vann Property Law In Practice at [7.2070], wherein the authors stated:

“… it is prudent for a mortgagee to obtain a written professional valuation of the property before sale … Failure to obtain a valuation will not however automatically constitute a breach of section 85.”

74. [74]
    Applegarth J at [44] agreed with that commentary. His Honour wrote at [39]:

“The statutory duty imposed by s 85(1) does not in its terms require the property to be put on the market.  Circumstances might be imagined in which the statutory duty is performed without placing the property on the market. For instance, an exuberant prospective purchaser may be prepared to pay far in excess of what a reliable current valuation in other evidence indicates is the market value of the property.  In such a case, reasonable care may compel a mortgagee exercising a power of sale to promptly accept the offer before it is withdrawn. The fact that in such a situation the statutory duty may be performed without taking the property to the market by advertising it and listing it with real estate agents simply illustrates that each case must be determined on its own facts.”

75. [75]
    His Honour wrote at [56], that Nixon “… concerned sale of property by auction, and serves to illustrate that a failure to adequately advertise generally will constitute a breach of the duty found in s 85(1)”.

76. [76]
    Brennan J in Nixon observed, at 524, that:

“The duty, to be performed in the exercise of a power of sale, extends to the steps to be taken to attract potential buyers to the property, the negotiations for sale, and the settling of the terms of the sale.”

77. [77]
    Applegarth J in Sablebrook wrote, at [129] that:

“a major valuation issue is the appropriate use of sales evidence. A valuer is not engaged in the process of making mathematical adjustments to values deduced from each of the sales that provide comparable sales. The process involves an exercise of professional judgment in which the subject property is compared with a number of comparable sales.”

Conclusion

78. [78]
    I accept the evidence of the plaintiff, Mr Tully and Mr Thomas. I do not accept the evidence of Mrs Whittaker, where it is in conflict with the plaintiff or Mr Thomas, and I reject the evidence of Mr Curry. I preferred Mr Tully’s evidence to that of Mr Aboud.

79. [79]
    The evidence of the plaintiff was consistent with other evidence about the issue of sale at undervalue than was that of Mrs Whittaker. I found her evidence unsatisfactory, even allowing for the fact the Leo Knezevic had deceased and the company records had been destroyed. That finding should not be inferred as a finding that she was untruthful. Indeed, she made a number of frank statements that were against interest, in respect of her and Leo Knezevic’s dealings with Mr Curry in particular and others contrary to their case as pleaded, even though she may not have realised this at the time. Those statements undermined the thrust of the defendant’s case.

80. [80]
    The evidence of Mr Thomas was reasoned and was that of a professional and competent solicitor.

81. [81]
    Mr Curry’s evidence was unsatisfactory, even allowing for the fact that his records had been destroyed. I do not accept that an auction had taken place before the private sale had been negotiated and executed. His assertion about that is contrary to other evidence about the arrangements for the auction, particularly that of Mr Thomas. If there was any doubt about this, the evidence of the fee charged by him is conclusive and against his credibility as a witness. To the extent that he asserts, speculatively in my view, that there may have been another document or invoice for the balance of any fees I reject as being risible. If Mr Curry had conducted the sale after a failed auction and achieved ‘top dollar’ for the price, he would have charged the normal fee. The document that shows an agents fee far less than would have been customary and proper does not on its face permit of the existence of another fee contained in some other document. I reject his assertion that the fee may have demonstrated a discount. There is no evidence that would support a credible reason for a discount to be applied.

82. [82]
    Mrs Whittaker said that she and Mr Knezevic relied on Mr Curry’s advice. They should not have done so. The proper advice was ready for the asking of their solicitor Mr Thomas. They chose not to consult him and in my view there is a reasonable inference that may be drawn, to this effect: they chose not to do so because a sale at a proper price was the least of their considerations. They wanted a quick sale and that is what Mr Curry did for them. I draw that inference.

83. [83]
    The property should have been marketed in the customary way for auction so that the market could set the price. There should have been a proper valuation of the property. Mr Curry’s view of what was ‘top dollar’ or, as Mrs Whittaker said, a ‘good price’ was insufficient. The contract should have had provisions protecting the defendants as sellers, as Mr Thomas carefully set out in his correspondence, none of which appears to have been relevantly responded to by the defendants.

84. [84]
    I accept the evidence of Mr Tully as to valuation. That finding is not a reflection upon the professional standing of Mr Aboud. Quite to the contrary, he was at a distinct disadvantage: his valuation was a kerbside valuation and conducted some six years after the sale. He frankly conceded, in answers to questions from me, that disadvantage. I accept that Mr Tully’s report still has a calculation error, even after his correction of it, but that error does not affect the efficacy of the valuation.

85. [85]
    If there was any doubt about the value of the property, such doubt could be judged against the price achieved by the buyers of the property two years after the subject sale and purchase where the sale price then was about $185,000.00 more than the subject sale price, even taking into account changing market and economic conditions.

86. [86]
    I accept the comparable sales evidence relied on by Mr Tully. Mr Aboud expressed some different views but I think Mr Tully was better placed to appreciate the market and to assess the comparable properties for the purpose of valuation.

87. [87]
    I accept Mr Tully’s valuation on its face as a true representation of the proper price that could have been achieved at auction.

88. [88]
    In my view the property was sold at an undervalued price. The plaintiff, prima facie and subject to my resolving the matters referred to in the defence of the defendants, has made out his case as pleaded.

89. [89]
    Mr Knezevic said he had never been a director of the company. In the period July 2003 to March 2004 Leo Knezevic was still the chemist and director in the company, although he had been working part time from about 2002-2003. Mrs Whittaker was a director and managed the office. She had ceased working full time from about mid-2001. The plaintiff was head of sales and quality assurance, but at times was described as manager. Company matters were still discussed with Leo Knezevic and Mrs Whittaker.

90. [90]
    The plaintiff was paid a salary. Leo Knezevic and Mrs Whittaker made drawings and weekly mortgage payments, but there was no reduction of those payments even though their participation had reduced. On one occasion he had signed a repayment schedule demanded by the Australian Taxation Office. He had consulted Mr Thomas and acting on his advice had done so because the two directors were away and the Australian Taxation Office was insisting on receiving the signed document forthwith.

91. [91]
    The plaintiff described his function as managing staff, not running the company. He was aware of sales figures but, at least by implication, not much else in the financial sense.

92. [92]
    There had been meetings with the company accountant who had advised that drawings had to be ceased. Mrs Whittaker told him that “assets outweigh liabilities” and that the company was solvent. She had said, in the relevant 2004 financial year, that she would see the company go down before she and Mr Knezevic ceased withdrawing money.

93. [93]
    The liquidator made a claim against him for insolvent trading and he defended it on the basis that he was never a director of the company and that he had reasonable grounds to expect that the company was and would remain solvent even if it incurred further debts, on the advice of the directors. The claim was settled upon the liquidator discontinuing the proceeding and each party paying their own costs. It was a commercial settlement on the part of the liquidator, on the grounds of cost, lack of assets of the plaintiff and the usual risks of litigation.

94. [94]
    The plaintiff was not aware of any of the correspondence between the Australian Taxation Office and Leo Knezevic and Mrs Whittaker, nor of any payment by them to the Australian Taxation Office.

95. [95]
    He was cross-examined about an oral examination proceeding, primarily as a matter going to his credit - based on statements he had made in that proceeding, in an email to the liquidator and in an affidavit - about this level of debt in the property. At the time of writing the email he said he had nil equity in the property, that equity being subsumed by the existence of two mortgages.

96. [96]
    He said that the second mortgage had been pleaded and admitted. Hence there was no issue about the characterisation of the $300,000.00 debt in this proceeding - it was a second mortgage, not a gift despite reference to that sum in the special condition of the agreement with Wizard being a “gift”.

97. [97]
    He said that he understood that the sum of $300,000.00 originally claimed by him was simply the difference between the valuations, before the correction to the valuation was made by Mr Tully.             

The defendant:  Mrs Whittaker

98. [98]
    Mrs Whittaker said that the plaintiff was “running the company” in the few years prior to 2006. She said that she and Leo Knezevic had stepped back from the business to retire. When the company got into financial difficulty they had to sell their Raby Bay house. The Australian Taxation Office was seeking payment of outstanding tax assessments and the $300,000.00 loan to the plaintiff for the purchase of the property was called in. 

99. [99]
    She denied that she ever told the plaintiff that she would rather see the company collapse (or ‘go down’) than lose the right to continue to draw money from it. Money was needed to pay the company loans from the bank that were secured on the defendants’ house.

100. [100]
     She initially said that during the three years prior to liquidation of the company she was “doing the accounts”, but then said that this was not the case “when Peter took over”. She said she only had dealings with the accountant once a year when the annual figures were being done. She and Leo Knezevic never signed cheques. She had concluded that the company was solvent after looking at the accounts. She had no idea of the company’s insolvency before the liquidation occurred. 

101. [101]
     She said that in the twelve months prior to the accountant’s involvement in the liquidation of the company, she only obtained information about company finances from the plaintiff. She believed she was carrying out her directors responsibilities. She maintained contact with the business until it was wound up and she had been in charge of the accounts until Ms Millman began work in the office. She trained, supervised and directed her up until the time of liquidation.

102. [102]
     She and Leo Knezevic made the same drawings from the company even though their attendance at the business had diminished. She had declined to reduce drawings because of the company loans secured on their house. She also said “well, how was one supposed to live if it was Leo’s company?”. She maintained that they were entitled to the drawings because they were directors, whether they did anything for the company or not. 

103. [103]
     She did not have dealings with the Australian Taxation Office. She believed there was a tax problem in the 12 months before the liquidation. In cross-examination Mr Horvath referred to the Worrells Investigation Report and the net operating profit in 2000, when the defendants’ were controlling the company. In that year there was a loss of $131,921.00. The Liquidator’s Report concluded that:

• The company’s sales decreased significantly from the 1999 position of $1,618,260 to $1,367,038 in 2000 then more so to $977,556 in 2001. This represents a decrease in turn over of 40%.
• While sales dropped 40% over these two years, expenses decreased by only 24%.
• The resulting decrease in sales resulted in losses being incurred for both the 2000 and 2001 years.
• The result of the decrease in sales was that the company had a negative net asset position (total liabilities exceeding total assets) of $52,718 in 2000 and $172,669 in 2001.
• The drop in sales in the 2000 year was also a corresponding factor in the deficiency of working capital [overdraft facility] (current assets less current liabilities) which arose in the 2000 year.
• While sales in the 2002 and 2003 year were greater than the sales in the 2001, the effect was not a return to profitability, but rather a continuation of a decline in both net assets and working capital.”

104. [104]
     In cross-examination Mrs Whittaker agreed with those conclusions.

105. [105]
     Mrs Whittaker also agreed that she was “pretty much the only person [the accountant, Mrs Russell] spoke to at the company”, although she didn’t know if that was so after she stopped attending at the factory.  She agreed that she was told the company was in trouble, but did “probably nothing” about it. Only she and Leo Knezevic had the power to borrow money. 

106. [106]
     She said she had read a letter from Mr Thomas dated 3 October 2005, that reported on the oral examination of the plaintiff that took place in the Magistrates Court.  She agreed that the defendants had ‘notice’ by the letter that the Liquidator might have an interest in both of them.  She knew the Liquidator had sued the Australian Taxation Office and each of them; that a consent order was made whereby they were to indemnify the Australian Taxation Office in respect of its payment of $63,533.50 (inclusive of costs) to the Liquidator; that they had told Mr Thomas to accept the offer, subject to having three months to pay; that Mr Thomas had written to the Australian Taxation Office requesting three months to pay and foreshadowed commencing recovery proceedings against the plaintiff and that the Australian Taxation Office agreed to the three month proposal and reduced the indemnity sum to $43,173.02 (inclusive of costs).

Mrs Russell

107. [107]
     Mrs Russell was an accountant - in an independent firm of accountants - and worked on tax returns and financial accounts for the company. She said that the defendants were the directors of the company. There were only two directors. She had met the plaintiff occasionally. She never had cause to call him or talk to him on the phone about any matter while she was doing the accounting work. She thought that he was a salesman.

108. [108]
     She did not have much to do with Leo Knezevic. She spoke to Mrs Whittaker most of the time and Mrs Whittaker dealt with any enquiries.

109. [109]
     She described the company’s financial affairs as follows: cash flow was tight and the company was not making any money for the couple of years prior to 2003. Ms Gunns was brought in to prepare a cash flow budget and assist with administration work.

110. [110]
     Mrs Russell recalled discussing with the directors the need to limit drawings by them and by the plaintiff. The directors knew the company was not going well. The issue of its solvency was raised with them and they agreed that they had to try and turn things around. However, the company went into liquidation in about July 2003.

Ms Millman

111. [111]
     Ms Millman worked for the company from 2000 until it went into liquidation. She is the partner of the plaintiff. She described the plaintiff as the manager and sales representative. He worked in production in the factory and did the quality assurance. Leo Knezevic was the chief chemist and Mrs Whittaker was the office manager and a director. All three of them were full time employees in 2000. She said that Mrs Whittaker stopped coming into work in about 2001 and Leo Knezevic began to work thereafter in a part time capacity. The directors received drawings and home loans from the company. She was in charge of the accounts, the plaintiff and her hired and fired staff and the defendants and the plaintiff gave directions as to which creditors were to be paid and when.

112. [112]
     She described preparing BAS statements and lodging them, but they were not able to be paid by the company in its last nine months of business. She said there was a payment plan with the Australian Taxation Office initially, which was scrapped when funds were not available to pay on one occasion and a new plan was sent to the company. The directors were absent at that time and she said the Australian Taxation Office required someone to sign the new plan or the company would be wound up. The plaintiff had signed the document.

113. [113]
     She said that the cash flow was not good and that she had raised that matter with the directors on more than one occasion. The plaintiff told the defendants that they needed to stop taking money out of the company. They had declined to do so because they needed the money to fund their lifestyle. She said that such a conversation would have occurred in the nine months prior to the liquidation.

114. [114]
     She recalled a discussion with the directors about solvency. She said Mrs Whittaker maintained that the company was solvent because the assets outweighed the liabilities.

115. [115]
     She was aware that the company had borrowing facilities from the Commonwealth Bank and the company debt was secured over the Kurraby house property. She maintained that the defendants and the plaintiff wrote cheques for payments to creditors during the three years prior to the liquidation. Neither she nor the plaintiff had authority to borrow money on behalf of the company.

Discussion

116. [116]
     Section 588FGA of the Corporations Act 2001 gives the Australian Taxation Office the right to receive payment of amounts owed under taxation laws from directors of insolvent companies, where those payments have been made previously but had been rendered void because of the voidable transaction powers under the Corporations Act 2001; that is, where the payments are characterised as unfair preferences. Subsection (2) provides that each person who was a director of the company when the payment was made is liable to indemnify the Commissioner of Taxation in respect of any loss or damage resulting from the voiding of the payment

117. [117]
     Was the plaintiff a director? Mrs Whittaker agreed in cross-examination that “at no time, ever, was [the plaintiff] a director of the company”. She said he was the manager. Further, she said she did not blame anyone for the company’s failure. Those concessions are of some significance in the context of the defence of set-off.

118. [118]
     The defendant’s pleading asserts that the plaintiff was a ‘de facto’ director. The word “director” of a company means a person who is appointed to the position of a director or, subject to any contrary intention, a person who is not validly appointed as a director if the person acts in the position of a director.

119. [119]
     In respect to the expression “acts in the position of a director”, in section 588FFG of the Corporations Law, Phillip McMurdo J in International Cat Manufacturing Pty Ltd (in liq) & Anor v Roderick & Ors [2013] QSC 91, at [155] to [161] referred to some matters relevant to the definition of that phrase which he considered to be of particular relevance. Those matters may be summarised as follows:

• “The first is that ‘whether [the roles and functions performed] suffice in the circumstances to constitute the person a director for the Act’s purposes, will often be a question of degree having regard to ‘the nature of the functions or powers which are exercised and the extent of their exercise’.
• Next the question is one of substance and not simply of how the person has been nominated in, or by, the company.
• Care should be taken with the employment of a principle that to be a de facto director ‘one must be shown to have assumed to perform functions which only a de jure director or board can properly perform’. This shorthand description has the capacity to mislead by suggesting that the duties or functions that can only properly be performed by de jure directors, which are their sole responsibility, are capable of a priori enumeration.
• The requirement that a person make, or participate in making decisions that affect the whole, or a substantial part, of the business of the corporation does not mean that that person does so as one in ‘ultimate control’.
• That a company has an active director apart from the alleged ‘de facto director’, does not preclude a finding that the person in question was a director.
• ‘Perceptions of those dealing with the company that the person was a director can themselves be of some contextual evidentiary significance’, particularly where those perceptions were ‘independently formed’, reasonable in the circumstances and support the appearance that the person was acting ‘under cover of office’.”

120. [120]
     Mrs Whittaker’s evidence does not support the assertions made in the defence about the ‘director’ issue. She unequivocally resiled from the pleaded allegation that the plaintiff was a director of the company. She said that the plaintiff was the manager. There are documents that demonstrate that to be the case. She asserted that she and Leo Knezevic were the directors. She was adamant that only she and Leo Knezevic were directors. The evidence in my view demonstrates that this was palpably so.

121. [121]
     Mrs Whittaker answered many questions with the response “I don’t know”. I do not regard that response to arise from any absence of company records. Rather, it seems to me that this is indicative of her less than diligent attention to the detail of and her understanding about her role in the company’s affairs and her role as a director.

122. [122]
     Her evidence was at odds with that of the plaintiff, the accountant Mrs Russell and of Ms Millman in respect of Mrs Whittaker’s role in the company, the frequency of her contact with the accountant and her belief about the solvency of the company.

123. [123]
     I accept that Mrs Whittaker informed the plaintiff that the company was financially sound when she said to him that ‘assets outweighed liabilities’. I find that she and Leo Knezevic believed the company owed them a living regardless of its financial performance and that they continued to make drawings despite the request of the plaintiff and others not to do so and contrary to the sound advice of the accountant.

124. [124]
     Mrs Whittaker did not blame anyone for the failure of the company. That statement unequivocally includes the plaintiff. The assertions to the contrary in the defence pleadings therefore fail.

125. [125]
     The plaintiff was not a director of the company. He did a number of things as manager that might arguably open a debate as to whether he was a de facto director. He was one of several persons who hired and fired staff. He was involved in meetings about the financial performance of the company. He signed a debt agreement with the Australian Taxation Office. However, so far as the latter was concerned he did so, on legal advice and in the absence of the defendants, in circumstances that required immediate action. I do not think that action indicated that he was a director at all. I do not think that there is evidence that establishes any of the indicia of a de facto director, including any of the matters referred to by Justice Philip McMurdo in International Cat Marketing (supra).

126. [126]
     I accept the evidence of the plaintiff, Mrs Russell, Mr Thomas and Ms Millman in respect to the issue of directorship. I do not accept the evidence of Mrs Whittaker where her evidence is in conflict with their evidence, on this issue.

127. [127]
     Insofar as the payment to the Australian Taxation Office is concerned, I make the following observations.

128. [128]
     In McLean v Discount and Finance Ltd (1939) 64 CLR 312, Latham CJ wrote, at page 328:

“A creditor to whom guarantees have been given may compel any surety to pay according to his contract. He is not bound to take any steps to distribute the burden among the sureties. Thus a surety who is guaranteed the whole of the debt may be compelled to pay the whole debt even though there are other sureties. But as between co-sureties the rule is ‘equality of burden and benefit’. A surety who has paid more than his share of the debt as between himself and his co-sureties is entitled to compel them to contribute in proportion to the respective liabilities.”

129. [129]
     The payment made by the defendants to the Australian Taxation Office represented about two-thirds of the sum originally claimed against them. In my view the sum paid by them was their share of the taxation debt. The other approximate one-third was not pursued by the claimant. Whether it may have represented a one-third payable by the plaintiff is a moot point but the fact is that the Australian Taxation Office did not pursue the plaintiff to the point of recovery of that sum from him. I find that the plaintiff was under no legal obligation to contribute to the payment of the debt.

Conclusion

130. [130]
     I find that there is no basis on the evidence for a set-off. The defendant has failed to demonstrate that any set-off existed or should be allowed. The defence fails on this point.

2. (b)
   (i) Laches

131. [131]
     The expression “laches” is defined (in Butterworth’s Concise Australian Legal Dictionary) as “unreasonable delay or negligence in issuing proceedings”. It is an equitable doctrine. It was described by the Privy Council in Lindsay Petroleum Co v Hird (1874) 5 PC 221, at 239-240 in the following terms:

“… whether the plaintiff has, by his inaction and standing by, placed the defendant or a third party in a situation in which it would be inequitable and unreasonable to place him if the remedy were afterwards to be asserted.”

132. [132]
     A court may, in its discretion refuse to grant equitable relief if it believes that the plaintiff was unduly dilatory in instituting legal proceedings. A determination as to whether delay is a relevant ground for relief in a claim involves a balancing of competing equities and considerations of reasonableness of conduct or injustice or unfair prejudice. Her Honour Justice Margaret Wilson discussed the authorities in Gillespie & Ors v Gillespie [2013] QCA 99, at [79] to [84]. At [80] her Honour wrote:

133. [133]
     With respect to “delay with acquiescence”, the learned authors wrote that the word ‘acquiescence’ does not mean abstaining from interference whilst one’s rights are being violated, but that its meaning in the context of laches is ones behaviour in refraining from seeking redress once he knows his rights have been violated.

134. [134]
     Her Honour also referred to Lord Neuberger’s view in Fisher v Brooker [2009] 1 WLR 1764, at 1781, that “Although I would not suggest that it is an immutable requirement, some sort of detrimental reliance is usually an essential ingredient of laches ….” With respect, I agree.

Discussion

135. [135]
     The plaintiff said he did not commence this proceeding until near the end of the limitation period because he did not want to sue his father, but did so after he had been advised of the imminence of the expiration of the limitation period.

136. [136]
     The defendants alleged that they have been prejudiced, in effect, by being induced by the delay to believe that the plaintiff would not commence any proceeding; that witnesses were not able to be located; that Leo Knezevic’s health had deteriorated; that the net proceeds of the sale of the property had been dispersed; and that the company records had been destroyed, as had the real estate agent’s records.

137. [137]
     However, there is no evidence that the fact that the plaintiff did not commence legal proceedings until shortly before the expiration of the limitation period has had the effect asserted by the defendants. I accept the evidence of the plaintiff as to why he waited and did not commence proceedings until the date he did so. He was entitled to do that and I do not think he was at all unreasonable. I do not accept that Mrs Whittaker was induced to belief that proceedings would not be commenced. Indeed, I doubt on her evidence that she turned her mind to that. I have already referred to the destruction of the records of the company and that I do not think it is relevant, in effect. I have the same view with respect to the destruction of Mr Curry’s records. He claimed to have a clear recollection of the property, what occurred in his involvement with it and he did not show any disadvantage from lack of access to documents, even though I have rejected his evidence for the reasons previously stated. The distribution of the proceeds of the sale of the property is a normal incidence of the receipt of such proceeds and a matter entirely for the defendants. The sale was a necessity according to Mrs Whittaker’s evidence and the distribution at the time it occurred clearly was also. The death of Leo Knezevic may have disadvantaged the defendants. However, I do not consider that an application of the doctrine of laches is triggered by this. I have already referred to how Mrs Whittaker dealt with the evidence generally and to her frank concessions against interest.

138. [138]
     I do not consider that the defendants have suffered prejudice as alleged or at all. In any event, I do not think that any so-called delay is relevant to the circumstances here. The defendants bear the onus of proof. They have not discharged that onus. I do not consider that the plaintiff’s claim is defeated by laches.

2. (b)
    (ii) The Statutory Defence pleaded by the plaintiff

139. [139]
     In the light of my findings and determination of the issues, I do not need to determine the issue of a statutory defence.

(c) Estoppel - Failure to mitigate

140. [140]
     In Knott Investments Pty Ltd & Ors v Fulcher & Ors [2013] QCA 67, Muir JA, in reference to a duty to mitigate loss, and cited at [29] a passage from Sotiros Shipping Inc and Aeco Maritime SA v Sameiet Solholt (The Solholt) [1983] 1 Lloyd’s Rep 605 at 608.

“A plaintiff is under no duty to mitigate his loss, despite the habitual use by lawyers of the phrase ‘duty to mitigate’ he is completely free to act as he judges to be in his best interests. On the other hand, a defendant is not liable for all loss suffered by the plaintiff in consequence of his so acting.  A defendant is only liable for such part of the plaintiff’s loss as is properly to be regarded as caused by the defendants’ breach of duty.  As Viscount Haldane, LC put it in British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673, at p 689:

‘The fundamental basis is thus compensation for pecuniary loss naturally flowing from the breach; but this first principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps.’”

Discussion

141. [141]
     What Chesterman J said in his decision on the caveat proceeding was obiter dicta. It was not unreasonable for the plaintiff to not immediately act on the statement in his Honour’s decision, even if he had turned his mind to it, In any event, the plaintiff did not commence proceedings for the reasons I have referred to and which I have accepted as being his right and as being reasonable.

142. [142]
     There was no delay in asserting his legal rights by commencing proceedings at an earlier time, or otherwise, by the plaintiff. There is nothing that gives rise to the application of the doctrine of estoppel. Nor is there a failure to mitigate his damages, by the plaintiff.

143. [143]
     The defendants, on my findings, acted unreasonably and breached their duty as mortgagees exercising a power of sale, to the detriment of the plaintiff. The onus of proof is on the defendants and it has not been discharged. The defence fails.

Reasons for leave to file the Amended Reply

144. [144]
     The amendments were a proper and, in the circumstances, a practical response - in the context of Mr Horvath’s application for leave to file the Amended Reply - to the defendant’s pleading. I do not consider that the defendants were or indeed have been, prejudiced by my giving leave.

Disposition

145. [145]
     The plaintiff is entitled to judgment for the difference between the amended valuation and the sale price ($770,000.00 less $655,000.00 = $115,000.00), without any deduction or variation. I accept that the property was in a well kept condition that does not justify any reduction in the valuation of Mr Tully. I reject the evidence of Mr Curry where it is to the contrary. Interest is calculated on the customary basis. My findings about there being no delay attributable to the plaintiff relate to the damages. However, I invite submissions from the parties about the period over which interest on damages might be calculated.

Costs

146. [146]
     There is no reason why the general rule that costs follow the event should not apply.