Supreme Court of WA|2000-04-14|Before: Wheeler J

Carroll v Azolia Pty Ltd [2000] WASC 95 (14 April 2000)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : CARROLL -v- AZOLIA PTY LTD [2000] WASC 95

Assessment of damages for wrongful lodgment of caveat

Damages awarded to the plaintiff including $3000 for stress and loss of amenities

Amann Aviation Pty Ltd v Commonwealth [1990] FCA 55; (1990) 22 FCR 527

Endihill Pty Ltd v Grasso Searles & Romano [1993] 2 Qd R 136

Enzed Holdings Ltd v Wynthea Pty Ltd [1984] FCA 373; (1984) 57 ALR 167

March v E & M H Stamare Pty Ltd (1990-1991) 171 CLR 507

Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332

Shepherd v Noyes Bros Pty Ltd (1985) ATPR 40-588

Sutherland Shire Council v Heyman [1985] HCA 41; (1985) 157 CLR 424

Thompson v Goold & Co (1910) AC 409

1 MASTER BREDMEYER: I am asked to assess damages.

Since concluding argument herein I permitted further evidence to be produced by affidavits. The plaintiff purchased 364 High Street East Fremantle in 1992. The defendant was the owner of the adjoining land, 366 High Street. The defendant is a company controlled by Mr Alan George Smith.

2 The plaintiff purchased 364 High Street with an old two bedroom wooden house with an iron roof on the land. She planned to sub-divide the land and build a new residence at the rear of the old one. She planned to live in the new residence and sell off the front part of the land with the old house on it. She applied for sub-division of the land and she built a new residence on the rear of the property which was completed in November 1994. In so doing, she fell out with Mr Smith next door. His property is lower than hers and he complained that sand from her property was falling onto his property and demanded that she build an adequate retaining wall. After a lot of correspondence she built a retaining wall which he considered inadequate. The dispute remained. On 13 January 1995 he lodged a caveat against her property. It was an absolute caveat and it claimed "an equitable claim upon the land by way of an easement of support". The plaintiff brought this action to remove the caveat. The case was heard by Wheeler J on 15 December 1997 and resulted in published reasons: Carroll v Azolia Pty Ltd, unreported; SCt of WA; Library No 980004; 19 January 1998. The trial Judge found that the caveat had been lodged without any foundation. She said at page 10 of those reasons:

"It does appear, however, and the defendant appears to accept in his affidavit that he has at all times been motivated by desire to have the plaintiff construct at her cost a retaining wall and fence which would satisfy him. To this end, I conclude, he has prepared to use the lodging of a caveat which is without any legal foundation as one part of his strategy."

The learned Judge also said on the same page that the defendant had no reasonable cause for lodging the caveat and that this action has been continued by the defendant in circumstances where, properly advised, he should have known that he had no chance of success. On 22 April 1998 the defendant was ordered to remove the caveat from the title, to pay compensation to the plaintiff under s 140 of the Transfer of Land Act 1893 (WA), such compensation to be assessed by a Master, and to pay indemnity costs to the plaintiff.

3 Section 140 of the Transfer of Land Act 1893 (WA) provides:

"Compensation for lodging caveat without reasonable cause

140. Any person lodging any caveat with the Registrar either against bringing land under this Act or otherwise without reasonable cause shall be liable to make to any person who may have sustained damage thereby such compensation as a judge on a summons in chambers shall deem just and order."

4 There are not many cases on s 140. The researches of counsel have only been able to find two: Ceda Nominees Pty Ltd v Registrar of Titles & Anor, unreported, SCt of WA; Library No 4474; 16 April 1982, an oral decision of Olney J, and Kirwanon Pty Ltd v Cabassi & Ors, unreported, SCt of WA; Library No 970502; 3 October 1997, a decision of Templeman J. In each case the judge awarded compensation for the extra interest incurred by the plaintiff due to the defendant's caveat lodged without reasonable cause. In Kirwanon at 9 Templeman J adopted the following passage from a joint judgment of five Judges of the High Court in Baines v Bendall [1991] HCA 15; (1991) 172 CLR 60 at 63:

" 'The settled principle governing the assessment of compensatory damages, whether in actions of tort or contract, is that the injured party should receive compensation in a sum which so far as money can do, will put that party in the same positions as he or she would have been in if the contract had been performed or the tort had not been committed: ... Compensation is the cardinal concept. It is the "one principle that is absolutely firm and which must control all else": ...' "

I adopt that quotation as apposite to this jurisdiction.

5 In Kirwanon (supra) Templeman J deducted from the compensation awarded (which included interest, shire rates, insurance and legal fees paid) a deposit of $35,000 paid by the defendant and forfeited to the plaintiff. The Judge said at 10 that to ignore the forfeiture of that deposit would result in a windfall to the plaintiff and an injustice to the defendant.

6 The plaintiff's counsel has asked, inter alia, for general damages being damages which are not capable of precise proof and calculation but which could be expected to result in the normal course of things from a particular type of conduct. These damages may be awarded even though a claimant does not produce evidence of particular loss from a particular transaction: Prince Manufacturing Inc v ABAC Corporation Australia Pty Ltd (1985) 4 FCR 188 at 294. I do not consider I am entitled to award general damages in this case and I do not consider Prince really supports that proposition. In Prince the plaintiff was the American manufacturer of "Prince Pro" tennis racquets, "Prince" being a registered trade mark. The plaintiff sold these racquets to retailers at a wholesale price of $115.20 each. The defendant bought 100 fake Prince Pro racquets from Taiwan from a man who later disappeared, for $5000 cash. There was no paperwork relating to this sale. The defendant advertised these racquets widely and sold them at $118 each. Eighty racquets were sold and twenty seized by the plaintiff following a court order.

7 The plaintiff wanted damages under s 82 of the Trade Practices Act for loss of profits. The plaintiff was not able to show any decline in its Australian turnover as a result of the defendant's sales. At 294 the trial Judge Beaumont J said:

"In the absence of any specific case being made for special damages, the applicants must be confined to a case for general damages. In my opinion an appropriate compensatory amount in all the circumstances is the sum of $5000."

I know that sum was said to be general damages and not special damages, nevertheless the sum seems a rough estimate of the profit the defendant made on the sale of 80 racquets.

8 Here I have evidence of compensatory loss, of extra interest paid, extra rates and taxes, legal bills etc and I do not consider that I am allowed to award a sum for general damages.

9 After the orders made by Wheeler J on 22 April 1998 it took some months for the plaintiff to have the caveat removed and a further 14 months have elapsed before this hearing was mounted. The plaintiff borrowed from BankWest to build the new residence and says that, because of the defendant's caveat, she was unable to sell the front portion of the land and reduce her loan by the sale price. The interest rate on her housing loan fluctuated from time to time. She thus claims the extra interest she paid on her housing loan because of the caveat between 19 January 1995, when the caveat was lodged, and 22 April 1998 when the orders were made. She does not claim this interest beyond that date. She has had an accountant, Ms Dunn, calculate the extra interest she paid over this period. The sum comes to $44,128.26.

10 In July 1996 the plaintiff borrowed a further $26,000 and she says in her affidavit of 19 February 1999 that she used this to pay costs and expenses incurred as a result of the defendant's caveat. In her affidavit of 9 April 1999 she says she spent $16,000 of her further borrowings in payment of legal fees to Frichot & Frichot and to her present solicitors. The discrepancy in the figures has not been explained. I will accept the lower figure.

11 The plaintiff should be compensated for the extra interest incurred by her as a result of the improper lodging of the caveat. But I cannot agree with Ms Dunn's figures. Firstly, the plaintiff has not satisfied me that the caveat prevented the house from being sold as at 19 January 1995 and hence I do not consider the interest should run from that date. In order to sell the house it was necessary to have a separate strata title for that portion of land. I note that the strata title plan showing the sub-division was lodged on 22 July 1995 and examined on 2 August 1995. An application for new titles was lodged with the Department of Land Administration on 23 November 1995. Had the caveat not been lodged on the land I consider that the strata title would have issued shortly thereafter, say in December 1995. I consider that the caveat prevented the sale of the property to Mr and Mrs Williams. They contracted to purchase the property for $140,000 and were due to settle on 18 December 1995. They reneged on the sale because of the caveat. I consider the interest calculation should run from 18 December 1995 to 22 April 1998. I accept the plaintiff's evidence that she had to borrow a further $16,000 on 30 July 1996 to pay legal fees incurred by her as a result of the defendant's caveat.

12 The defendant says that a sale at $140,000 would have netted about $135,000 after deduction of the real estate agent's fees and settlement fees. I accept that argument and that estimate. I note that the sale was arranged through a real estate agent acting for the plaintiff.

13 The defendant says that rent payments received by the plaintiff for the lease of the subject house should be offset from the interest payments and that this should be done monthly. The rent received in the relevant period was $150 per week with some breaks. I agree partly with that submission. Rents received should be deducted from the plaintiff's claim for damages as that was a benefit she received as a result of the caveat. But, in this case, I do not agree that the rents should be deducted monthly from the interest payments. I accept the plaintiff's evidence that she had little spare money at the time and was unable to pay the rents received towards making additional repayments to her bank. The plaintiff was a school teacher earning $1,089 per fortnight net from her salary, plus receiving rents of $300 per fortnight. She was required to make mortgage payments of $720 per fortnight leaving a balance of $669 per fortnight to meet her living and other expenses. She had legal bills to pay as a result of her dispute with the defendant. She was not able to apply the rents towards reducing her interest payments. The rents are an offsetting sum but I do not regard it fair to offset them from the interest payments on a monthly basis as the defendant contends.

14 I consider the plaintiff should be compensated for the interest charged by BankWest on $135,000 from 18 December 1995 to 29 July 1996 and on $151,000 from 30 July 1996 to 22 April 1998. This totals $28,755.22. I have set out the calculations in schedule 1.

15 The rents received as a result of the caveat should, I consider, date from 18 December 1995. According to the plaintiff the rents received were:

8 February 1996 to 26 July 1997 at $150 per week = $10,750

18 August 1997 to February 1998 at $150 per week = $4,250

The defendant has complained that there is no evidence from the plaintiff as to why the property was not rented out for the whole of the relevant period and, if it was not, no evidence of what steps were taken to find a tenant. I am willing to find that the plaintiff's evidence, so far as it goes, is truthful. It may be that she was unable to find a tenant after the failed sale to Mr and Mrs Williams until 8 February 1996 and it may be that between 26 July 1997 and 18 August 1997 the property was in between tenants. However, there is no evidence as to why the property was not let, or of her attempts to let it, between 1 March 1998 and 22 April 1998. I will therefore allow a further 8 weeks at a $150 per week notional rent for this period, total $1200. The total I allow for offsetting rent is $16,200.

16 The plaintiff has claimed various sums for rates and taxes paid on the property and I think they should be allowed so far as they relate to the period 12 December 1995 to 22 April 1998. I have where necessary apportioned the rates and have set them out in schedule 2 to this judgment. They total $2712.25.

17 The plaintiff has claimed other expenses, chiefly to do with the house and I have allowed most of these. The details are set out in schedule 3. They total $2488.55.

18 The plaintiff has also claimed a sum to be fixed by the Court for stress and loss of amenities. I have read the plaintiff's affidavits filed on this application and her earlier affidavit of 7 January 1997 and I have no doubt that the defendant's caveat, and the added financial burden of paying interest and legal bills, caused her much emotional distress. It did not cause her to have time off work. The medical certificates and the note from the doctor do not support that. The doctor's note states "work-related stress". Nevertheless I consider she suffered real stress and that is compensable. See Stiner v Magic Carpet Tours Pty Ltd (1984) ATPR 40-490 and Zoneff v Elcom Credit Union Ltd (1990) ATPR 41-058. This type of compensation when awarded is always modest. I will allow $3000 for this claim.

19 The plaintiff has also claimed damages for lost time. She says she has spent a considerable time attending solicitors and assisting solicitors in the preparation of her application to remove the caveat. She has set out details of that in a schedule DAC1 to her affidavit of 14 June 1999. She claims $8395 under this heading representing approximately 420 hours at $20 per hour which is her hourly rate of pay as a school teacher. I have no doubt that the plaintiff has expended considerable time in consulting lawyers and other professionals and in preparation of letters to the defendant - in an effort to remove the caveat. Nevertheless, I propose to disallow this claim. I do not think this head of damages is permitted on the authorities, and I am not willing to make new law in this area.

20 The plaintiff also claims $1200.01 for legal fees incurred by her to Frichot & Frichot, her previous lawyers, which were not allowed in taxation of her costs in the action heard by Wheeler J. These disbursements were taxed off that bill of costs because they were incurred in a related action CIV 1030 of 1996 in which Azolia Pty Ltd was the plaintiff and Ms Carroll was the defendant. That was an action by the defendant to extend the operation of the caveat. That action was ultimately dismissed by an order of Wheeler J on 22 April 1998. The costs order she made was as follows:

"2. The plaintiff [Azolia Pty Ltd] pay all the costs incurred by the defendant [Ms Carroll], including any reserve costs, except insofar as they are of an unreasonable amount or have been unreasonably incurred so that, subject to the above exceptions, the defendant be completely indemnified by the plaintiff for her costs in respect of the within originating summons."

21 I consider that the sum of $1200.01 paid to Frichot & Frichot for legal costs was not unreasonably incurred and is damage which reasonably flows from the defendant's wrongful lodgment of the caveat, and I propose to allow it.

22 The defendant has claimed that as against the damages awarded to the plaintiff, there should be an offsetting sum for the increase in the capital value of the property due to inflation since the lodgment of the caveat. I agree with that submission. To ignore inflation would be to give a windfall to the plaintiff and be unjust to the defendant.

23 The defendant led evidence of valuations of the property in an affidavit of Mr Antonio Bonovita, a valuer, sworn 16 June 1999. I thought those valuations were inadmissible under principles established by the Full Court in Pownall & Ors v Conlan Management Pty Ltd & Anor (1995) 12 WAR 370. Mr Bonovita provided further valuations in an affidavit sworn 21 July 1999 and another valuer, Mr Hall, provided valuations in an affidavit of the same date. I consider those later valuations are admissible. Mr Bonovita valued the front strata title property, 364A High Street, with the weatherboard and iron roof house on it, at $160,000 as at 22 April 1998. Mr Hall valued the property at $155,000 as at 30 January 1998, which is reasonably consistent with Mr Bonovita's figure of $160,000 as at 22 April 1998. Mr Hall valued the property at $175,000 as at 21 April 1999.

24 The plaintiff produced a valuation of Mr Colson that the house was worth $145,000 in April 1998. However, better evidence of value comes from the fact that the house was sold on 19 June 1999 for $159,000 and settlement occurred on 4 August 1999. The plaintiff paid $4794.75 for real estate agent's fees on the sale. The valuers did not have the benefit of this sale when they made their valuations.

25 A previous sale to Mr and Mrs Williams at $140,000 was due to settle on 18 December 1995, but fell over due to the obstacle of the defendant's caveat. That sale is strong evidence of the value of the property as at that date and I accept it as such. The sale at $159,000 settled on 4 August 1999 is strong evidence of value as at that date, which I also accept. I think it reasonable to assume a steady inflation from $140,000 to $159,000 over that 44 month period. In doing so, I consider the value of the property was $152,090 as at 22 April 1998. So the deduction for inflation over that period is $12,090.

26 The plaintiff says that the delayed sale due to the caveat means that she is liable for additional capital gains tax and that should reduce the deduction for inflation. I agree with that argument. Her accountant, Mr Alan Thompson, has calculated the extra capital gains tax payable in a letter dated 17 September 1999 attached to the plaintiff's affidavit of the same date. Mr Steven Douglas, a registered tax agent engaged by the defendant, has produced other calculations of the capital gains tax liability in an affidavit sworn 18 November 1999. Both accountants have made calculations on assumptions which differ from the ones which I have made in this judgment. I consider it necessary for me to make my own estimate of the capital gains tax payable.

27 I consider the relevant capital gains tax is that payable on the increase of $12,090 in the value of the property between 18 December 1995 and 22 April 1998, a period of 855 days, due to the caveat. The tax will be paid at the plaintiff's marginal tax rate. I have made no deduction for sale expenses such as real estate commission as the sale did not occur in the period between December 1995 and April 1998. She will get a deduction for that later. There needs to be a deduction from the capital gain for the indexation factor, based on the CPI. Based on figures found at p 9 of Mr Douglas' affidavit, the indexation factor for this period is 121 divided by 118.5 = 1.02% per annum.

Less indexation factor 1.02% pa x 855 days = 288.87

Tax at 34% + 1.5% Medicare levy on $11,801.13 $ 4,189.40

29 The plaintiff claims the cost of $1550 incurred in restumping the house in November 1998. That falls outside the period between December 1998 and April 1998 and is not claimable.

18 December 1995 to 29 July 1996 = 225 days at 10.50% pa $8,738.01

30 July 1996 to 29 August 1996 = 29 days at 10.50% pa $1,259.71

30 August 1996 to 30 August 1997 = 365 days at 7.75% pa $11,702.50

1 September 1997 to 29 October 1997 = 59 days at 7.95% pa $1,940.45

30 October 1997 to 31 January 1998 = 94 days at 7.45% pa $2,897.13

1 February 1998 to 22 April 1998 = 80 days at 6.7% est. pa $2,217.42

Land Tax 1997 - 1998 ($334.30) 1 July 1997 to 22 April 1998 - 295 days $270.18

1995 - 1996 ($430.00) 18 December 1995 to 30 June 1996 - 196 days $230.90

1997 - 1998 ($481.44) 1 July 1997 to 22 April 1998 = 295 days $389.10

1995 - 1996 ($421.40) 18 December 1995 to 30 June 1996 - 196 days $226.28

1997 - 1998 ($436.55) 1 July 1997 to 22 April 1998 - 295 days $352.82

(a) Westate Pest Control - 15 December 1995* $80.00

This related to bee treatment. Probably incurred for the sale

to Williams but necessary nevertheless to let out the house

Said to be advertising expenses on the sale of property - not

allowed. I do not consider it reasonable to advertise the property

for sale before sub-division had been granted or was imminent.

I propose to allow these three charges as reasonably related to the caveat and meeting the defendant's objections to get it removed.

21 May 1998 - not allowed - expenses incurred after 22 April 1998

_____________________________

*Allowed on basis that but for the defendant's caveat the house could have been sold on 18 December 1995 and these expenses would not have been incurred.

Carroll v Azolia Pty Ltd [2000] WASC 95

At a glance

Court

Decision date

Before

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Judgment (79 paragraphs)

Carroll v Azolia Pty Ltd [2000] WASC 95 (14 April 2000)

Parties

Legislation Cited (1)

Cases Cited (8)