RUMMERY v DORSMAN [1996] NSWCA 582

RUMMERY v DORSMAN

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

GLEESON CJ, MEAGHER and SHELLER, JJA 3 October 1995, 21 February 1996

DAMAGES — assessment of- whether Master has power to award costs and interest — appropriate formula — HELD: Power of Master comprises ability to order costs and interest Pt60 r1A. Schedule D Pt3 Supreme Court Rules. Damages to be assessed as at date of judgment not contract of sale.

The first respondents, Mr and Mrs Dorsman, leased the Federal Hotel at Alstonville from the second respondent, Dr Castagna, in 1986. The term of the lease was to expire on 23 May 1993. CL39 of the lease required the lessor, if he wished to sell the freehold of the hotel to a prospective purchaser, first to make a written offer of sale to the lessees. The offer was to stand for twenty-one days or until such time as the lessees gave written notice that they did not wish to accept it.

On 15 January 1988 the appellant solicitors, Mr and Mrs Rummery, purported to make such an offer on behalf of Dr Castagna advising that he had a purchaser for the freehold of the hotel, subject to the lease, at a price of $620,000. On 25 January they purported to withdraw the offer. The first respondents claimed that the offer was irrevocable and in a letter dated 3 February 1988 accepted it.

The first respondents brought an action in the Equity Division for specific performance of the contract of sale. Waddell CJ in Equity held that the offer was in terms irrevocable and that although a claim against the second respondent failed for want of authority the first respondents were entitled to succeed against the appellants for breach of warranty of authority. The matter was referred to a Master to assess damages. Waddell CJ in Eq indicated that damages for breach of warranty of authority should be measured by reference to the value of the hotel as at the date of judgment in the proceedings.