New South Wales Supreme Court CITATION : Maclean v Registrar-General [2003] NSWSC 904 HEARING DATE(S) : 19 August 2003 JUDGMENT DATE : 3 October 2003 JURISDICTION: Equity Division JUDGMENT OF : Windeyer J at 1 DECISION : Compensation order made. CATCHWORDS : REAL PROPERTY - claim under Torrens Assurance Fund - plaintiff purchased property in 1988 - resumption in effect from 1972 - when plaintiff purchased property no notation indicating resumption - plaintiff became aware of resumption after commencing a development of property - claim for wasted costs and additional costs LEGISLATION CITED : Real Property Act 1900, Part 14, CASES CITED : Registrar of Titles v Spencer (1909) 9 CLR 641 PARTIES : Janet Christine Maclean and Randross Investments Pty Limited (Plaintiffs) Registrar-General (Defendant) FILE NUMBER(S) : SC 4918 of 2001 COUNSEL : Mr T Hale, SC with him Mr J Kildea (Plaintiff) Mr I Wales, SC (Defendant) SOLICITORS : Ward Maxwell & Co (Plaintiff) K C Hall (Defendant) - 8 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION WINDEYER J FRIDAY 3 OCTOBER 2003 4918/01 MACLEAN & ANOR V REGISTRAR-GENERAL JUDGMENT 1 The Plaintiffs, Mrs Maclean and Randross Investments Pty Ltd ("Randross") commenced proceedings in this Court on 8 October 2001 by way of Statement of Claim. They seek compensation under Part 14 of the Real Property Act 1900 for loss and damage they say they suffered because a resumption in 1972 of part of the land in folio identifier C/363484, which is situated at 285 Boomerang Drive, Pacific Palms ("the Property"), was not recorded on the Register when Mrs Maclean became the registered proprietor in 1988. 2 The notice of land to be resumed by the Government for road widening was published in the Government Gazette in 1972. The Registrar-General for some unknown reason did not record the resumption on the register until 22 July 1997. The total resumed land was approximately 800 square metres, of which about 474 square metres was taken from the Property. To put things in perspective, the Property is approximately 6.2 hectares, or 62,000 square metres. 3 The Registrar-General admits that as a result of his act or omission the plaintiffs suffered loss, but disputes some of the items of damage claimed and as an overarching argument says that in fact as a result of the delays consequent upon ascertaining the existing of the resumption the plaintiffs, or at least Mrs Maclean, have benefited from higher selling prices. 4 Mrs Maclean decided to develop the property into a resort under community title and began to do so from about 1992 onwards. The development was to be known as "Blueys Retreat". Within the property there are effectively two portions. The northern portion of the land is zoned special conservation, and there were to be no dwellings erected on that part. The southern portion is where most if not all of the development was and is to occur. This development involved construction of 44 separate residences, tennis courts, a swimming pool, a wildlife dam, and a village green. There are also roads and other infrastructure on the property. Development consent was granted on 3 October 1996. The resumed land affected the southern portion of the Property. 5 The part to be played by Randross was not made clear by the evidence. Paragraph 8 of the statement of claim, which was admitted by the defence, stated that "after purchasing the subject land the plaintiff, in concert with the second plaintiff commenced a project for the development of the subject land". It was not claimed they were in partnership. Mrs Maclean formed two other companies, namely Retreat Developments Pty Ltd ("Retreat") and Blueys Properties Pty Ltd ("Blueys Properties") that have been involved at one time or another with the development and were used as vehicles to handle the income and expenditure of the project – (see transcript page 7). On 22 March 2001 Mrs MacLean granted to Blueys Properties Pty Ltd an option to purchase the property for $1,425,000.00 exercisable by 21 March 2004. At that stage she was aware of the resumption. By this time the development was under way with expenses having been incurred. 6 The resumption of land had the purpose of widening Boomerang Drive. This resumption caused a redesign of several aspects of the development, including moving the position of some of the houses, a redesign of some roads, and also of the village green and swimming pool. It is these redesigns and the expenditure they brought about which the Plaintiffs claim has resulted in loss and damage. No claim is made for the difference between the purchase price and the value of the land in fact transferred, which was land reduced in size due the resumption. 7 It is accepted that the basis for awarding damages is that the plaintiffs should be put in the same position, so far as money can do it, as if the wrongful act complained of had not been done: Registrar of Titles v Spencer (1909) 9 CLR 641 at 645. 8 I propose to deal first with the Registrar-General's claim there was no damage at all as the delay brought about a gain. The argument was that Mrs Maclean stands to gain approximately $7 million due to an increase in the price of the units between 1999 and the present day. According to the evidence, the combined asking price in November 1999 for the 44 units was $12,310,000.00. Currently, of the 44 units, 21 have been sold but as I understand it settlement has not yet taken place. The evidence is that the combined selling price of those 21 units is $8,232,500. The remaining unsold units have a combined current asking price of $11,406,000. This brings the total for the 44 units to $19,638,500. The defendant says that the difference between the 2003 total of $19,638,500 and the 1999 total of $12,310,000 means that Mrs Maclean will receive a benefit of $7,328,500. This defence was not made out. The 1999 prices were to be asking prices at that date. These were regularly revised upwards. They were not the asking prices when Mrs Maclean became aware of the registration. Secondly in March 2001 Mrs Maclean granted an option to Bluey's Properties to purchase the property. It will have to be exercised because 21 of the lots have been sold with Blueys Properties as vendor. The price at which the option can be exercised is $1,425,000.00. Thirdly, if it were relevant the cost of construction has increased substantially over the years as a result of inflation, and will be further increased by the impact of new bushfire regulations which impact on some of the units and require particular and more expensive standards of construction. 9 I now turn to the claims made by the Plaintiffs. The claims as to loss and damage are set out below: (a) Architect's fee for $ 9,465 redesign of concept plan (b) Landscape architect's $ 7,034 fees for redesign of swimming pool (c) Survey and Civil redesign fees $ 25,450 (d) Alteration to architectural model $ 3,240 (e) Civil contractor's costs for road change $ 17,867 (f) Marketing campaigns expenses wasted $ 121,406 (g) Design of new advertising schedules $ 881 (h) Legal expenses $ 851 (i) Mortgage interest $ 19,250 TOTAL $ 205,444 10 Before dealing with this in detail it is necessary to make two general observations. As I have said it is necessary to assume the option will be exercised as otherwise the contracts entered into could not be completed. Insofar as various expenses incurred as a result of the knowledge of the resumption were paid by the grantee of the option or another company associated with the plaintiffs it is not possible to find any loss by either of the plaintiffs. This is first because the price paid by the grantee obviously required the grantee to complete the construction and the grantee had knowledge of the resumption; and second because in the cases where the evidence established that payment was made by Blueys – or Retreat Developments there is no suggestion these companies are entitled to some refund from the plaintiffs. Mrs Maclean is an accountant. It was not suggested outgoings paid by a particular company were not liabilities of that company. The second matter of general concern is that each plaintiff must be a separate complainant. The damage cannot be joint damage. It is necessary for the plaintiff to prove which expenses claimed are applicable damage to which plaintiff. It is not for the court to guess. 11 I will deal with the items in turn. (a) Architectural Redesign. The figure of $9,465.00 is not disputed. It is claimed this redesign was required. The resumption necessitated changes in unit positioning and in village layout. The invoice was addressed to Mr and Mrs Maclean. Mrs Maclean said it was paid by Randross or Retreat Developments. Whichever company paid it treated it as a company expense. I cannot determine it was paid by Randross. The claim must fail. (b) Redesign of swimming pool - $7034.00. The evidence was that the account was addressed to Mr and Mrs Maclean and that it was paid by two cheques, the second being on an account of Bluey's Properties. Mrs Maclean did not know who paid the fee charged. The claim must fail. I point out there is no evidence the option price was affected by the assumed liabilities, nor any claim based on reduction in value. (c) Survey and civil redesign - $25,450.00. The work resulted from discovery of the resumption. It was paid by Blueys Properties. It was treated as an expense of that company. The claim fails. (d) Alteration to architectural model - $3,240.00. The work was a result of the resumption becoming known. The invoice was addressed to Randross. I accept this as damages of Randross. (e) Road changes – civil contractor - $17,867.00. I find these are additional costs required to the post completion units. The contracting principal was Bluey's Properties. Mrs Maclean said that company paid all accounts. The claim fails. (f) Marketing expenses - $121,406.00. This was for marketing expenses said to be thrown away. The invoices from Derek Keane Pty Limited are addressed to Randross and I accept that Randross is primarily liable for payment. There were some invoices, however, that were addressed to Mrs Maclean, but it was her evidence that all the invoices should have been addressed to Randross. The Registrar-General contended that these expenses would have been incurred in any event but I consider the question is whether the expense has been wasted. By the end of 1999 when the resumption was discovered, the plaintiffs had commenced and were committed to marketing the development. It was a campaign aimed at raising awareness and interest by using photographs, sketches, and preparation of newspaper advertisements. The discovery of the resumption meant that there was going to be a delay in construction, which in effect rendered the campaign of little or no use. In addition the brochures could not be used as they showed an inaccurate layout for units, pool and village agree. There are proceedings in the District Court against Randross, and in the alternative against Mrs Maclean, to recover the unpaid marketing expenses. In the circumstances I find that Randross was and still is liable for the expenses and has suffered loss and damage as a result of them being incurred. (g) Design of new advertising schedules $181.00. As with the sixth claim, the invoice is addressed to Randross and in my view the amount was a result of the delay caused by the discovery of the resumption. It was an expense necessary in light of the wasted marketing expenses outlined above. This was not challenged. I therefore find that Randross has suffered loss and damage with respect to this amount. (h) Legal expenses - $851.00. This is for searches, research and correspondence associated with the discovery of the resumption. The invoice for this amount is addressed to Randross. It is not suggested Randross was not liable nor that this was not a proper claim. (i) Additional mortgage interest - $19,250 - incurred as a result of the delay in construction caused by the discovery of the resumption. Mrs Maclean was liable under the mortgage. She paid $9,625.00. The second payment came from moneys advanced by the Registrar-General. I consider the claim established in full. 12 The result of this is that Randross has suffered damage in the sums of $3,240.00, $121,406, $881, and $851, making a total of $126,378.00. Mrs Maclean has proved a separate loss off $19,250.00. 13 The parties should attempt to agree upon interest. I will stand the matter over to a date to be fixed for final orders and any argument on costs. ********** Last Modified: 10/30/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.