New South Wales Supreme Court CITATION : O'Sullivan v Great Wall Resources Pty Limited [2008] NSWSC 1115 HEARING DATE(S) : 19 May 2008 JUDGMENT OF : McLaughlin AsJ EX TEMPORE JUDGMENT DATE : 19 May 2008 1. Upon inquiry I assess the damages to which the plaintiffs are entitled from the defendant in the amount of $89,487.54, together with interest upon the sum of $51,757.54 (being part of the foregoing amount) from 22 December 2006 and interest upon the sum of $37,730 (being the balance of the foregoing amount) from 19 January 2007. DECISION : 2. I order that the defendant pay the costs of the plaintiffs of the inquiry as to damages. 3. Upon the application of the defendant, which is not opposed by the plaintiffs, I order that there be a stay of execution up to and including 16 June 2008 upon the judgment consequent upon order (1) hereof. CATCHWORDS : DAMAGES - inquiry as to amount - specific performance of contract - breach by defendant Stephen O'Sullivan (First Plaintiff) PARTIES : Norella O'Sullivan (Second Plaintiff) Great Wall Resources (Defendant) FILE NUMBER(S) : SC 1314 of 2006 COUNSEL : Mr T. Barrett (Plaintiff) Mr R. Wilson (Defendant) SOLICITORS : Russell McLelland Brown (Plaintiff) Daly Lawyers (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION ASSOCIATE JUSTICE McLAUGHLIN Monday, 19 May 2008 1314 of 2006 STEPHEN O'SULLIVAN and ANOR – v – GREAT WALL RESOURCES PTY LIMITED JUDGMENT 1 HIS HONOUR: On 24 November 2006 Palmer J delivered his reasons for judgment in the substantive proceedings in this matter. Those were proceedings for specific performance brought by the plaintiffs, Stephen O'Sullivan and Norella O'Sullivan, against the defendant, Great Wall Resources Pty Limited. The plaintiffs were the purchasers and the defendant was the vendor of certain land at Yallah on the south coast of New South Wales. 2 His Honour found for the plaintiffs and ordered that there be specific performance, and further that there be an inquiry as to damages. His Honour's order was entered on the same date, 24 November 2006. That order included the following, 4. An order that an inquiry be held as to the amount of damages which the plaintiffs have sustained by reason of the defendant's refusal to perform the said contract. 6. An order that an inquiry be held as to the amount of damages which the plaintiffs have sustained by reason of the defendant's said breach of the said contract. 3 The breach referred to in order 6 was a breach of the contract in failing to extinguish a certain right of way insofar as it affected the subject property. His Honour by order 5 made a declaration that the defendant, in failing to extinguish the right of way, had breached the contract and was liable to pay to the plaintiffs damages in respect of that breach. 4 It is consequent upon the orders made by Palmer J in respect to an inquiry as to damages that the matter has come on for hearing before me this day. There has been placed before me evidence of the first plaintiff, Stephen O'Sullivan, and evidence of Hugo Zweep, a valuer, on behalf of the plaintiffs. Each of those witnesses has been cross-examined on behalf of the defendant. 5 Although an attempt was made on behalf of the defendant to rely upon the affidavit of Adrian Kevin Daley, the solicitor for the defendant, sworn 30 April 2008, the reading of that affidavit was objected to by the plaintiffs. After hearing argument I did not allow that affidavit to be read. I also indicated that, in any event, certain specific parts of that affidavit would be rejected even if the affidavit were to be read. Accordingly, there was no evidence before the Court on behalf of the defendant in respect to the present inquiry. 6 The matter was on 7 March 2008 specially fixed to be heard before me this day, 19 May 2008. At the time when that hearing date was appointed I directed that each party file and serve a written outline of submissions on or before 12 May 2008. I have had the benefit of receiving a written outline of submissions on behalf of the plaintiffs. However no written outline of submissions has been received from the defendant. That may be due, at least in part, first to the fact that the defendant appears in recent times to have changed its legal representation and that Counsel who has presently appeared for the defendant came into the matter only at the end of last week. 7 Second, it also emerges from the Court file that on 12 May 2008, that being last Monday, precisely one week ago, an application was made on behalf of the defendant for an adjournment of today's hearing. Somewhat curiously, that application was made not to myself but to the Chief Judge in Equity. That application was unsuccessful and was refused. The Chief Judge made an order in respect to the defendant paying the costs of that application. Also somewhat curiously, neither of the parties saw fit to inform me that such an application was pending. At all events, the application was unsuccessful and the matter came on for hearing before me this day. 8 As I have already recorded, each of Mr Zweep, the valuer, and Mr Stephen O'Sullivan, the first plaintiff, was cross-examined on behalf of the defendant. I did not consider that the cross-examination in any way reduced or qualified the affidavit evidence given by each of those witnesses. 9 The plaintiffs claim damages of the following nature arising from the breaches by the defendant in failing to complete the contract and in failing to extinguish the right of way which affects the subject land: (a) Additional legal costs, being the difference between what the transaction would have cost them had it proceeded to settlement in the usual course and what it in fact cost them - $1,255.74. (b) Additional expenses of building approval as a consequence of changed administrative requirements - $5,251.80. (c) Additional building costs, being the difference between what the transaction would have cost them had it proceeded to settlement in the usual course and what it will in fact cost them - $37,730. (d) Clean up cost for the land having become overgrown - $250. 10 Evidence was presented by Mr O'Sullivan in support of each of the foregoing components. I accept that evidence. As I have already indicated, I did not consider that the cross-examination of Mr O'Sullivan in any way affected or reduced his evidence in that regard. 11 The plaintiffs also claim the difference in the value of the subject land being affected by the right of way and the value of the subject land not being affected by the right of way. Evidence in that regard was given by Mr Zweep. It was his evidence that the subject land had a value at both 29 December 2005 and 22 December 2006, those being the two significant dates, of $480,000 if it was not affected by the right of way and $435,000 if it was affected by the right of way. That is, a difference of $45,000. 12 Mr Zweep in his evidence had referred to what he described as the loss of amenity resulting from the existence of the right of way, and had ascribed to that component a value of $5,000 in his calculations of the valuation of the land. It was submitted on behalf of the defendant that that loss of amenity should not be taken into consideration in the valuation of the land as affected by the right of way. However, despite the cross-examination of Mr O'Sullivan concerning such matters as fencing of the land, I am satisfied by the evidence of Mr Zweep that this modest factor for loss of amenity should be included. I accept in its entirety Mr Zweep's valuation reports, with the consequence that the difference in the value of the subject land as affected by the right of way and the value of that land if it were not affected by the right of way is $45,000. 13 So far as the entitlement of a party in the position of the plaintiffs to damages consequent upon the delay in the defendant completing the contract, I am satisfied that the various legal authorities referred to in the written outline presented by Counsel for the plaintiffs are applicable in the circumstances of the instant case. It follows therefore that upon inquiry the plaintiffs will be entitled to damages in a total amount of $89,487.54. 14 The question has now arisen whether the foregoing amounts to which I have held the plaintiffs to be entitled should bear interest and, if so, from what dates. It has been submitted on behalf of the defendant that it is not appropriate that the difference in the cost price of the building works should bear interest from 18 November 2006, since the second quotation is dated 19 April 2007, and thus that the difference can be treated as having accrued in its entirety only on that later date. 15 It has been suggested on behalf of the plaintiffs that the difference in the cost of building work between the two dates is a difference which has accrued between 18 November 2006 and 19 April 2007 and that in those circumstances it is appropriate that, for the purposes of awarding interest the Court should adopt a date in the mid-point between those two dates. Counsel for the plaintiffs has suggested 19 January 2007. 16 I am in agreement with the foregoing submissions of Counsel for the plaintiffs concerning interest in respect to the increase in the cost of the building works. Accordingly, I will make an order that that increase should bear interest from 19 January 2007 until today. The other items in respect to which the plaintiffs are entitled to damages have already been paid by them, and accordingly will bear interest from the earlier date, 18 November 2006. It will be appreciated that the order for damages will take effect as a judgment of the Court and will thereupon bear interest at the normal Court rates for judgments from today until such judgment is satisfied. [Defendant seeks a stay of execution upon the judgment.] 17 Subject to any correction of any arithmetical miscalculations or errors, I make the following orders: 1. Upon inquiry I assess the damages to which the plaintiffs are entitled from the defendant in the amount of $89,487.54, together with interest upon the sum of $51,757.54 (being part of the foregoing amount) from 22 December 2006 and interest upon the sum of $37,730 (being the balance of the foregoing amount) from 19 January 2007. 2. I order that the defendant pay the costs of the plaintiffs of the inquiry as to damages. 3. Upon the application of the defendant, which is not opposed by the plaintiffs, I order that there be a stay of execution up to and including 16 June 2008 upon the judgment consequent upon order (1) hereof. ********** 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. 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