Di Sisto v Skyworld [2006] NSWSC 1182

Reported Decision : (2007) NSW ConvR 56-169

New South Wales Supreme Court

CITATION : Di Sisto v Skyworld [2006] NSWSC 1182

HEARING DATE(S) : 27/06/06, 08/11/06

JUDGMENT DATE : 13 November 2006

JURISDICTION : Equity

JUDGMENT OF : Associate Justice Macready at 1

CATCHWORDS : Damages. Assessment of damages against solicitor who failed to make contracts for sale of real estate interdependent. Consideration of issues of causation.

PARTIES : Di Sisto & Ors v Skyworld Development Pty Ltd & Ors

FILE NUMBER(S) : SC 4654/03

COUNSEL : CM Harris for plaintiffs B McManus for 4th defendant

SOLICITORS : Willis & Bowing for plaintiffs Colin Biggers & Paisley for 4th defendant

- 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

Associate Justice Macready

Monday 13 November 2006

4654/03 Di Sisto & Ors v Skyworld Development Pty Ltd & Ors JUDGMENT 1 His Honour: The hearing of these proceedings follows a decision by His Honour Justice Palmer given on 22 July 2005. As a result of that decision the plaintiffs filed a notice of motion on 14 November 2005 seeking orders for assessment of damages. On 12 December 2005 His Honour ordered that the proceedings be referred to an Associate Justice of the Court for assessment of damages, if any, payable to the plaintiffs by the first and fourth defendants, Skyworld and Mr Timothy Heenan. 2 Skyworld is now in liquidation and accordingly, at this stage the plaintiffs do not move for damages against them. The second and third defendants, Stamfords Constructions and Mr William Jun Feng were not served and took no part in the proceedings. The fourth defendant, Mr Heenan, is a solicitor who acted for the plaintiffs in the conveyancing transactions which gave rise to the proceedings. His Honour found that the fourth defendant had breached his duty of care and retainer but indicated that it was not inevitable that damages would flow and that they would need to be assessed. 3 I turn to the history of the conveyancing transactions and His Honour's judgment as a result of the trial. The first and second plaintiffs (Mr and Mrs Di Sisto) owned two adjoining parcels of land at Marrickville. The first was 126A and 126B Livingstone Road, Marrickville, (commonly referred to in the evidence as 126 Livingstone Road). The second was 33 Petersham Road, Marrickville. The properties shared a common rear boundary. On 20 December 2002 two contracts were entered into for the sale of the properties to Skyworld. Mr Heenan acted for the plaintiffs on the conveyances. The combined purchase price for both properties was $2.1M with $1M being allocated to the Livingstone Road Property and $1.1M to the Petersham Road property. The extended settlement date was 31 July 2003. The need for two contracts arose because two family members owned one property and three family members owned the other. There was no clause in the contracts making them interdependent. 4 Unknown to the plaintiffs, Skyworld had been negotiating for some time to purchase the adjoining property at 124 Livingstone Road from another vendor. On 24 February 2003 it entered into a contract to purchase this property. In April 2003 Skyworld asked the plaintiffs to accept a substitute purchaser Stamford Construction Pty Limited (Stamfords) in relation to the sale of the Petersham Road property. The plaintiffs agreed and on 19 May 2003 there was a deed of recision of the contract for the purchase by Skyworld of 33 Petersham Road and Stamfords entered into a contract for purchase at the same price but with an additional $55,000 as a deposit. 5 When the time to complete both contracts arrived on 31 July 2003 Stamfords and William Jun Feng could not be contacted. On 4 August 2003 the plaintiffs issued a notice to complete the contract for 33 Petersham Road to Stamfords. There was no response to this notice to complete. Skyworld also issued a notice to complete, addressed to the plaintiffs, for the purchase of 126 Livingstone Road which the plaintiffs refused to complete without the simultaneous completion of the contract for 33 Petersham Road. 6 The plaintiffs commenced proceedings on 23 September 2003. In July 2005 His Honour found that the replacement of the purchaser for the Petersham Road property was a sham transaction to enable Skyworld to avoid liability for the purchase of the property. His Honour ordered Stamfords' contract be rescinded so that the position with the original two contracts entered into on 20 December 2002 remained, namely, that Skyworld was obliged to purchase both properties. 7 Skyworld sought specific performance of the contract for the sale of 126 Livingstone Road. However, on discretionary grounds, His Honour refused relief and stood the matter over generally to abide Skyworld's performance of its obligations under both contracts. In August 2005, after His Honour's judgment, the plaintiffs issued notices to complete to Skyworld in respect of both contracts. In due course when Skyworld did not complete they terminated the contracts. 8 On 5 October 2005 126 Livingstone Road was resold for $930,000. The sale was completed on 16 November 2005. On 26 October 2005 the Petersham Road property was resold for $650,000. Completion of that sale occurred on 8 December 2005 9 On 13 April 2006 Skyworld went into liquidation. Evidence from the liquidator indicates that it has no assets or means of tracing the assets, as the directors failed to lodge any statement of affairs. In these circumstances the liquidator does not seek to take further action. 10 The plaintiffs do not seek to proceed with the claim for damages against Skyworld for the obvious reason that, at this stage, there is no chance of recovery. The plaintiffs have asked that that part of the motion be stood over for one year to allow further investigations in the matter. This leaves the claim against Mr Heenan. The claim for damages against Mr Heenan is for the sum of $780,000. It includes loss incurred on resale, advertising costs and agent's commission on resale, legal costs on resale, interest on unpaid purchase price and additional Council rates. Credit is given for an amount of rent received for the properties. 11 After reaching his conclusions about the Deed of Recision and the contract with Stamfords for the sale of 33 Petersham Road, His Honour turned to the claim for damages against Mr Heenan. He addressed the subject in paragraphs 72 to 76 of his judgment in these terms: " Damages against Mr Heenan 72. Because the two contracts for sale to Skyworld are not interdependent, Skyworld may complete the contract for the purchase of No 126 but may fail to complete the contract for the purchase of No 33. If No 33 alone is placed on the market, it may not sell for as much as the contract price stipulated in the sale to Skyworld because No 33 has no development potential except as a site amalgamated with No 126. A successful action against Skyworld for damages for breach of contract may result in a judgment which is not fully satisfied. If Mr Heenan has been negligent in his conduct of the transactions on behalf of the Plaintiffs, will he be liable for the loss which the Plaintiffs may suffer thereby? 73. The negligence alleged against Mr Heenan is that: