Conclusion
53 For those reasons, in my opinion there should be no damages in respect of Unit 1. In respect of Unit 5, there should be damages amounting to thirty per cent of the damages actually awarded by the primary judge. The appeal in relation to the Bullock order on costs should be dismissed. Although the appeal has not been completely successful, the appeal has had substantial success, and in my opinion there are no significant severable costs; and for that reason, in my opinion, the Solicitor's success on the appeal is sufficient to justify an order that the Vendors pay the costs of the appeal.
54 Accordingly, I propose the following orders:
(1) Appeal allowed in part.
(2) Orders 2 and 3 made on 11 August 2008 set aside, and in lieu thereof judgment for the Vendors against the Solicitor in an amount of $55,500, and the Vendors are awarded interest calculated from 4 November 2005 to 31 July 2007 in the amount of $23,844, such orders to take effect as at 11 August 2008.
(3) Vendors to pay the Solicitor's costs of the appeal, and to have a certificate under the Suitors' Fund Act 1951 if otherwise eligible.
55 IPP JA: I agree with Hodgson JA.
56 SACKVILLE AJA: I agree with the orders proposed by Hodgson JA and with his Honour's reasons. However, I wish to add the following comments on the Vendors' loss of chance case in relation to Unit 5. In doing so, I adopt the abbreviations used by Hodgson JA in his judgment.
57 A difficulty arose in the present case because the Vendors apparently conducted the Second Cross-Claim at the first hearing on the basis that, if they succeeded in establishing a breach of duty by the Solicitor in relation to the preparation of the contract of sale for Unit 5, they would be entitled to damages for loss of their bargain. The assumption seems to have been that the damages for breach of duty would include the difference between the contract price for Unit 5 ($585,000) and the price ultimately realised by the Vendors ($400,000), that is a total of $185,000. The approach taken by the Vendors at the hearing would seem to explain his Honour's statement in the first judgment (at [45]) that he proposed to give judgment for the Vendors against the Solicitor "for damages with respect [to] the loss of bargain" and for any other damages that the Vendors could establish.
58 It is not entirely clear when the Vendors' claim for damages in respect of the Solicitor's negligence was first characterised by one or both of the parties as the loss of the commercial opportunity to enforce the contract for the sale of Unit 5 against the Purchaser, although some reference to a loss of chance was made during final submissions at the first hearing. In any event, his Honour was not invited at the first hearing to make specific findings of fact that would enable an assessment to be made of the value of the Vendors' lost opportunity. Neither party sought to adduce further evidence as to the value of the lost opportunity at the second hearing.
59 In the second judgment, the primary Judge described (at [9]) the Vendors' claim for damages by reason of the Solicitor's negligence in failing to ensure that the counterpart contracts of sale for Unit 5 were identical, as "probably … a claim for loss of chance to obtain completion by [the Purchaser] of the contract". However, he rejected the claim because "supervening events" showed that the Vendors had lost any entitlement to enforce the contract when they issued a notice to complete to the Purchaser without themselves being in a position to complete the contract. His Honour appears to have taken the view that the Vendors' chances of securing completion of the contract of sale were virtually nil and thus had no significant commercial value.
60 The difficulty with this analysis is that, in order to assess the value of the Vendors' loss of commercial opportunity, it is necessary to determine what would or might have occurred had the Solicitor not been negligent. On this hypothesis (the counter-factual), it must be assumed that the Solicitor ensured that the counterpart contracts for the sale of Unit 5 were identical and that the parties therefore entered into a valid contract for the sale of Unit 5. Had this occurred, it is by no means inevitable that the Vendors would have issued a notice to complete in circumstances where they were not entitled to do so. The Vendors apparently issued the notice to complete as a response to the Purchaser's assertion that she was not bound by any contract to purchase Unit 5 because the counterparts were not identical. If the contract had been valid in its inception, the Purchaser presumably would not have made the same assertion and the Vendors would not have had occasion to issue a notice to complete for this reason. Even if the Vendors did issue such a notice, they might have taken greater care to comply with their obligations under cl 50 of the contract (which required them to carry out certain works on Unit 5 prior to completion of the contract).
61 The prospect that the Vendors might have acted in precisely the same way in the counter-factual world, by issuing a notice to complete in circumstances where they were not entitled to do so, must be taken into account in determining whether the loss of commercial opportunity was of some value and, if so, in making an estimate of the value of that lost opportunity. The Vendors may have done so, for example, as an inappropriate response to a notice from the Purchaser purporting to rescind the contract for the sale of Unit 5 on the ground of the agent's misrepresentation. On the evidence before the primary Judge, however, there was no basis for concluding that, in the counter-factual world, there was virtually 100 per cent chance that the Vendors would have issued a notice to complete to the Purchaser in circumstances where they were not entitled to do so.
62 Assessing the value of the Vendors' loss of commercial opportunity presents difficulties because of the limited evidence directed to the question. Hodgson JA has listed the matters that must be taken into account, including the possibility that the Vendors may have issued an invalid notice to complete to the Purchaser, thereby entitling her to terminate the contract.
63 I agree with Hodgson JA that it was very probable that the Purchaser, even if no other ground were available, would have sought to avoid the contract of sale on the ground that the Vendors' agent had misrepresented the dimensions of the bedroom in the unit prior to the Purchaser signing the contract of sale. As his Honour found, not only did the agent make the misrepresentation, but the Purchaser was dissatisfied with the size of the bedroom in Unit 5 as constructed. Moreover, by the time the building was completed, the Purchaser believed, correctly, that the value of Unit 5 was considerably less than the price she had agreed to pay. She therefore had a substantial incentive to rely upon any grounds available to her to avoid the contract of sale.
64 The primary Judge did not find it necessary to examine in detail the nature of the relief available to the Purchaser by reason of the agent's misrepresentation. On his Honour's findings, however, there would seem to be a very strong basis for a claim by the Purchaser against the Vendors based on misleading or deceptive conduct in contravention of s 42(1) of the Fair Trading Act 1987 (NSW) ("FT Act") or on a false or misleading representation concerning the characteristics of land in contravention of s 45(1)(b) of the FT Act.
65 There is little doubt that the Vendors were engaged in trade or commerce for the purposes of s 42(1) and s 45(1)(b) of the FT Act. In the counter-factual world, in order to sheet home the agent's misrepresentation to the Vendors, the Purchaser would be able to invoke s 70(4) of the FT Act, which provides, among other things, that conduct engaged in on behalf of a person by an agent within the scope of the actual or apparent authority of the agent is deemed to have been engaged in also by the first-mentioned person. (There was no evidence in the present case to suggest that the agent was acting outside his actual or apparent authority.) The relief available to the Purchaser, assuming she could make out a contravention of s 42(1) or s 45(1)(b) of the FT Act, and that she could establish that she was likely to sustain loss or damage, would include an order declaring the contract of sale for Unit 5 void: ss 72(1), 72(5)(a).
66 The Vendors submitted that, in assessing the value of their lost commercial opportunity, the Court should take into account the chance that, in the counter-factual world, they would have been able to claim damages against the agent by reason of his misrepresentation. However, no evidence was adduced in the present case to suggest that the agent was doing anything other than conveying information provided to him by the Vendors or was otherwise acting in contravention of their instructions: cf Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592.
67 In the circumstances, I agree with Hodgson JA that a fair assessment of the value of the Vendors' lost commercial opportunity to secure completion of the contract of sale of Unit 5 is 30 per cent of the difference between the contract price and the actual sale price of Unit 5.
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