By a judgment given on 26 March 2019 I determined that the plaintiff was entitled to judgment in this matter, and directed that the plaintiff bring in short minutes to quantify the judgment: Botany Bay Apartments Pty Ltd v Badolato [2019] NSWSC 296. I also indicated that there seemed to me to be a potential issue about the applicability of r 42.34 Uniform Civil Procedure Rules 2005 (NSW). I directed that the parties lodge written submissions concerning both quantum and costs, having regard also to the fact that ordinarily interest would be payable on any judgment for the outstanding deposits. Those submissions were lodged in accordance with the directions I made.
The plaintiff seeks an order that the defendant pay damages in the sum of $185,250.00 being the balance of the deposits due. Interest is claimed up until today at Court rates amounting to $10,404.00.
I do not consider it appropriate to characterise the judgment as one for damages. What was claimed, correctly, in the statement of claim was for judgment in a liquidated sum representing the balance of the deposits. The claim was always one for a liquidated amount. The balance of the deposits is claimed under the contracts that were made. There is no need to resort to a claim for damages for breach of contract.
In relation to costs, r 42.34 relevantly provides:
42.34 Costs order not to be made in proceedings in Supreme Court unless Court satisfied proceedings in appropriate court
(1) This rule applies if:
(a) in proceedings in the Supreme Court, other than defamation proceedings, a plaintiff has obtained a judgment against the defendant or, if more than one defendant, against all the defendants, in an amount of less than $500,000, and
(b) the plaintiff would, apart from this rule, be entitled to an order for costs against the defendant or defendants.
(2) An order for costs may be made, but will not ordinarily be made, unless the Supreme Court is satisfied that:
(a) for proceedings that could have been commenced in the District Court - the commencement and continuation of the proceedings in the Supreme Court, rather than the District Court, was warranted, …
The plaintiff submitted that the proceedings were commenced in this Court due to its concern that the breadth of the language of s 48(2) of the District Court Act 1973 (NSW) might oust the jurisdiction of the District Court, assuming jurisdiction was otherwise conferred by virtue of s 44 of that Act.
Section 44(1) of the District Court Act relevantly provides:
44 Actions
(1) Subject to this Act, the Court has jurisdiction to hear and dispose of the following actions:
(a) any action of a kind:
(i) which, if brought in the Supreme Court, would be assigned to the Common Law Division of that Court, and
(ii) in which the amount (if any) claimed does not exceed the Court's jurisdictional limit, whether on a balance of account or after an admitted set-off or otherwise,
other than an action referred to in paragraph (d) or (e), …
Paragraphs (d) and (e) are not relevant.
The jurisdictional limit of the District Court is defined in s 4(1) as meaning $750,000.
Section 48 of the District Court Act relevantly provides:
48 Miscellaneous limitations on jurisdiction
(1) …
(2) Subject to subsection (3), the Court shall not have jurisdiction in an action in which title to land the value of which is more than the Court's jurisdictional limit is in question.
(3) If the title to land the value of which is more than the Court's jurisdictional limit incidentally comes in question in an action, the Court shall have power to decide the claim which it is the immediate object of the action to enforce, but the judgment of the Court shall not be evidence of title between the parties or their privies in other proceedings in the Court or in any proceedings in any other court.
The plaintiff submitted, in the alternative, that even if the proceedings should have been commenced in the District Court they would need to have been transferred to this Court once the defence under s 55(2A) of the Conveyancing Act 1919 (NSW) was raised. That was because the subsection gives power to "the court" to order the return of the deposit, and "court" is defined in s 7(1) of the Conveyancing Act to mean the Supreme Court.
The defendant submitted that the matter could have been decided in the District Court. He submitted that when the proceedings commenced and the summary judgment application was heard by Fagan J, the only substantive defence was one of misrepresentation. He submitted that if the District Court decided that misrepresentation had not been established, there would have been no need for the District Court to consider the issue under s 55(2A).
The defendant further submitted that consideration should be given to the fact that development has still not even commenced, and to the the vulnerable position and extenuating circumstances he found himself in having to deal with the purchase of off the plan properties for which the floor plans were undergoing change.
One area of uncertainty is found in s 44(1)(a)(i) of the District Court Act. Although the present proceedings were commenced in the Common Law Division of this Court, they could equally have been commenced in the Equity Division. This is not a case where the proceedings were required to be allocated to a specific division by reason of being proceedings that arose under a statute specified in the Supreme Court Act or Rules. It was open to the plaintiff to select the division in which the proceedings were commenced.
It should also be noted that the jurisdiction must be determined at 2 February 1998, the date on which the words "assigned to the Common Law Division" were imported into the District Court Act even if the Supreme Court Rules 1970 (NSW) were subsequently amended to assign that class of cases to the Equity Division: Forsyth v Deputy Commissioner of Taxation (2007) 231 CLR 531; [2007] HCA 8; New South Wales Land and Housing Corporation v Quinn [2016] NSWCA 338 at [20].
There seems to me also to be some uncertainty about whether in the present case the proceedings were an action in which title to land was in question. There can be no doubt that a contract for sale was entered into but the deposit under the contract was not paid by the due date. The defendant did not suggest that he was entitled to the properties, only that he should not have to pay the deposit under the contracts. In that sense, there was no dispute about title. The decision in Wilde v Anstee (No.2) [1999] NSWSC 819 at [20]-[23] provides some support for the notion that s 48 would not have excluded jurisdiction from the District Court, if it otherwise had it under s 44.
It is not necessary to come to a final view about those matters because from the time that the defendant filed his amended defence raising s 55(2A) of the Conveyancing Act, the proceedings would need to have been transferred to this Court. While that does not justify incorrectly commencing the proceedings in this Court, it is a relevant consideration concerning whether the plaintiff should have its costs. Even where r 42.34 is engaged, the Court retains a general discretion as to costs: Gladio Pty Ltd v Buckworth (No 2) [2015] NSWSC 1462 at [24].
Two matters cause me to think that the plaintiff should not be deprived of its costs by reason of the rule. The first is that the defendant at no stage objected to the proceedings being commenced and maintained in this Court, nor did the defendant seek to have them removed to the District Court. Indeed, the provisions of r 42.34 were raised by me and not by the defendant.
Secondly, as I have said, it would have been necessary for the proceedings to be transferred to this Court because of a defence raised by the defendant subsequent to the summary judgment application. Despite the defendant's submission that if the District Court decided there was no misrepresentation, s 55(2A) would not need to have been raised, the defendant raised that defence based on that section in this Court. There is no reason to think that he would not have done so if the proceedings had been commenced in the District Court. If the defence had been raised in the District Court, unless it was withdrawn, the District Court would have declined to hear the matter on the basis that it had no jurisdiction for part of the claim.
Whilst recognising that r 42.34 is directed to ensuring that this Court is not burdened with litigation which can be adequately dealt with elsewhere, I do not consider that the defendant has been disadvantaged by the proceedings having been commenced in this Court, particularly when they would have had to be transferred here as soon as he raised the defence under s 55(2A).
The two additional reasons put forward by the defendant in opposition to the making of a costs order are not relevant for the consideration of costs. The fact that the development may not have commenced (if that is the case, and I have no evidence to that effect) is completely irrelevant to the issue of costs on a claim for the deposits. The matter of the defendant's alleged vulnerability was dealt with adversely to the defendant in the principal judgment.
In my opinion, the plaintiff is entitled to its costs of the proceedings on the ordinary basis.
The defendant submits that interest should not be charged on the balance of the deposits. He submitted that the plaintiff had agreed, as part of an arrangement for the alteration of the units during the cooling-off period, that interest would not be payable on any deposit. However, on the day the defendant was required to pay the deposits they were not paid, and in that way the defendant came to be in breach of the contracts. Any arrangement for the non-payment of interest to that point was avoided by the defendant's failure to pay the deposits.
The defendant further submits that because the development has not commenced it is not fair or just that he should be required to pay interest on the deposits. General concepts of fairness and justice are not relevant to a determination of the matter. If the deposits were payable pursuant to the contracts entered into by the defendant and were not paid, the plaintiff is entitled to judgment for those sums.
Section 100 of the Civil Procedure Act 2005 (NSW) enables the court to award interest on any judgment sum. The general basis for doing so is that the party entitled to the judgment sum has been deprived of those funds for the period of the non-payment. In the ordinary course, a party would be in the position where interest could be earned on any moneys paid. The plaintiff was entitled to be paid the balance of the deposits on 29 March 2018. It has been deprived of those funds from that time to date. No proper basis is shown for not awarding interest in the present case.
Accordingly, I make the following orders:
Judgment for the plaintiff in the sum of $195,654.00.
The defendant is to pay to the plaintiff's costs of the proceedings.
[2]
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Decision last updated: 03 May 2019