Thomson v Golden Destiny Investments Pty Ltd (No 3)

This is an application by two of the plaintiffs in these proceedings, Mr and Mrs Alonso, for compensation against the third defendant, New Galaxy Investments Pty Ltd (“NGI”) pursuant to s 74P of the Real Property Act 1900 (NSW).

On 23 April 2014 the plaintiffs, including Mr and Mrs Alonso, exchanged contracts with the first defendant, Golden Destiny Investments Pty Ltd (“GDI”) to sell six adjoining properties at Turramurra on terms that:

Of the $8 million, $6 million was paid by NGI, allegedly in anticipation that GDI would novate to NGI the six sale contracts pursuant to an agreement described as the “Short Form Deed”.

On 18 July 2014, relying on its rights under the Short Form Deed, NGI lodged caveats over the title of the Turramurra properties, including that owned by Mr and Mrs Alonso. The caveats remained on the title on the scheduled completion date of 22 July 2014, and settlement of the sale did not proceed.

On 4 August 2014 the vendors, including Mr and Mrs Alonso, commenced proceedings in this Court seeking removal of the caveats.

Those proceedings were heard by Sackar J over some 12 hearing days in March and May 2015.

Sackar J delivered judgment on 21 August 2015: Thomson v Golden Destiny Investments Pty Ltd [2015] NSWSC 1176.

At [15] of that judgment, Sackar J stated:

NGI removed the caveats from the titles of the relevant properties, including that of Mr and Mrs Alonso, on 15 May 2015.

So far as concerns the caveats, Sackar J concluded:

On 22 May 2015 Sackar J ordered that the $6 million (referred to at [3] above) be paid into Court. That sum remains in Court.

On 3 July 2015 the sales were completed and Mr and Mrs Alonso received the sum of $1,076,659.75 (in addition to the sum that they had received on the exchange of contracts).

On 20 November 2015, Sackar J made an order pursuant to s 82 of the Civil Procedure Act 2005 (NSW) that NGI make an “interim payment of damages” to the plaintiffs pursuant to s 74P of the Real Property Act in the sum of $796,026.41.

Of that amount, $96,911.30 was attributable to Mr and Mrs Alonso’s then claim for damages which, for the most part, comprised a claim for “rent” in the order of $39,312 and “interest on balance” in the sum of $27,965 (together with minor amounts for electricity, water and insurance costs).

Also on 20 November 2015, Sackar J stayed the order at [13] pending NGI’s appeal against Sackar J’s decision.

Mr and Mrs Alonso now seek compensation under s 74P of the Real Property Act upon a basis which was described by Mr Sirtes SC, who appeared with Mr Bilinsky for Mr and Mrs Alonso, in opening written submissions as:

In closing submissions, Mr Sirtes made clear that the case sought to be advanced on behalf of Mr and Mrs Alonso was one of loss of a chance or opportunity to purchase identified properties. That was consistent with his opening written submissions as follows:

Mr Sirtes also submitted:

Section 74P(1) of the Real Property Act is in the following terms:

Mr Einfeld QC, who appeared with Mr Krochmalik for NGI, accepted that the effect of Sackar J’s findings was that NGI was liable to pay Mr and Mrs Alonso such pecuniary loss as they could demonstrate was “attributable” to the lodgement by NGI of the caveat on the property on 18 July 2014.

The test under s 74P that loss be “attributable” to the lodgement of the caveat without reasonable cause has been said to be less exacting than a test of causation.

Thus, in Lee v Ross (No 2) [2003] NSWSC 507 Palmer J said:

For myself, I do not see very much (if any) difference between the notion that loss is “caused by” an event on the one hand and the notion that a loss is “attributable” to an event on the other.

Indeed, the Concise Oxford Dictionary (2011, Oxford University Press) defines “attribute something to” an event as meaning “regard something as belonging to or being caused by” that event.

My attention was not drawn to any other case under s 74P in which compensation was sought or obtained for pecuniary loss “attributable” to a loss of a chance or opportunity.

In my opinion, notwithstanding Palmer J’s remarks in Lee v Ross, and the use of the word “attributable” in s 74P, a party seeking compensation under s 74P for the loss of a chance to acquire an alternate property, must satisfy the usual requirements for demonstrating that the impugned conduct (lodgement of a caveat without reasonable cause) has caused the loss of opportunity contended for. I regard that as being no different, as a practical matter, to showing that the loss of opportunity is “attributable” to the presence on title of the impugned caveat.

Mr Alonso swore two short affidavits in support of Mr and Mrs Alonso’s claim for compensation under s 74P.

Relevantly, Mr Alonso’s first affidavit was in the following terms:

In his second affidavit Mr Alonso deposed to the fact that, as at July 2014 he and Mrs Alonso had something in the order of $1.1 million available to contribute to the purchase of a property. Of that sum, some $600,000 represented that part of the purchase price (beyond the deposit) that had been made available to Mr and Mrs Alonso and which Mr and Mrs Alonso regarded as being potentially liable to be repaid in the event that the conveyancing transaction went awry.

In his second affidavit, Mr Alonso also said:

It is common ground that I should approach Mr and Mrs Alonso’s claim for compensation upon the basis that, but for the lodgement by NGI of the 18 July 2014 caveat, the sales of the Turramurra properties (including that of Mr and Mrs Alonso) would have completed on or about 22 July 2014.

I am satisfied, on the evidence, that in the event settlement had occurred, Mr and Mrs Alonso would have “been in the market” to purchase a property in the Collaroy area and had something in the order of $2.125 million available with which to purchase a property in the Collaroy area.

As I have set out above, Mr Alonso’s affidavit evidence was that he and Mrs Alonso had identified five properties “that we would have purchased”.

Two of those properties were sold in May 2014 and thus would not have been available for purchase by Mr and Mrs Alonso after 22 July 2014.

As to the other three properties:

Mr Alonso said that he understood that each of those properties was sold at auction.

Bound up in Mr and Mrs Alonso’s case that they “would have” purchased one of these properties are several propositions. The first is that they “would have” attended the auctions of one or more of these properties (with $2.125 million available to spend). The second is that they “would have” sought to make bids at one or more of the auctions. The third is that at one of the auctions (not identified) they “would have” been the successful bidders.

In my opinion, in the light of the authorities, the correct analysis of these propositions requires consideration of two questions.

First, did the lodgement of the caveats by NGI cause Mr and Mrs Alonso to lose the opportunity to attend and bid at the auctions of all or any of the three properties referred to at [35]?

Second, what is the value of that lost opportunity (or those lost opportunities)?

As to the first question, in Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 Brennan J stated (at 362 and 368):

Mr Sirtes pointed to the fact that the evidence established that Mr and Mrs Alonso:

In these circumstances, and although Mr Alonso did not say so in terms, I am prepared to infer that, had the sale of Turramurra settled in July 2014 he (and Mrs Alonso) would, in all probability, have “taken the opportunity” to attend and bid at one or more of the auctions.

They have been denied that opportunity by reason of the caveat.

As to the value of that lost opportunity, the plurality in Sellars (Mason CJ and Dawson, Toohey and Gaudron JJ) said at 355:

Brennan J said (at 364):

I have given Mr and Mrs Alonso’s case careful consideration. No one could fail to have sympathy for their plight. However, I am unable to come to any conclusion as to the value of the opportunity they have lost, nor even as to whether the lost opportunity has any value. I simply cannot say what probably, or even possibly, may have been the outcome of any of the three auctions had Mr and Mrs Alonso attended them.

There is no evidence before me of the precise nature of those properties, the differences between them, the particular attributes that attracted Mr and Mrs Alonso’s interest, the marketing campaign undertaken in relation to them, the number of persons bidding at each auction, or the manner in which the bidding proceeded.

The earliest auction was that for 37 Lincoln Avenue (on 13 September 2014). It sold for $45,000 less than Mr and Mrs Alonso would have had available. I can only speculate as to what would have happened if Mr and Mrs Alonso were also bidding for that property.

The second auction was for 3 Eastbank Avenue (on 27 October 2014). That property sold for an amount equal to the amount Mr and Mrs Alonso had available to spend. I can only speculate as to what effect Mr and Mrs Alonso’s presence as active bidders would have had on the price at which the property would have sold at auction.

The third auction was for 18 Alexander Street (on 2 November 2014). That property sold for $190,000 less than Mr and Mrs Alonso would have had available. But, again, I can only speculate as to what would have happened if Mr and Mrs Alonso had joined the bidding; let alone how long Mr and Mrs Alonso would have continued bidding. According to Mr and Mrs Alonso’s expert valuer, Mr Thomas Webster, this property was in “original condition” and, unlike 37 Lincoln Avenue, has no views and unlike 3 Eastbank Avenue, has no pool. There may be other differences not revealed on the evidence. The sale price suggests this property was less attractive than the other two. There is no evidence from Mr and Mrs Alonso about this.

As Mr Sirtes accepted in final submissions, Mr Alonso’s evidence that he and Mrs Alonso “would have purchased” one of the three nominated properties had they had the funds was in truth aspirational and amounted to no more than a statement that they would have wished to, and would have sought to have done so.

As sympathetic as I am to the position Mr and Mrs Alonso have found themselves in as a result of the nightmare that has resulted from their decision to enter the contracts of 23 April 2014, I am not able to accept their case that they have lost an opportunity which has given rise to a pecuniary loss attributable to NGI’s caveat.

This application should be dismissed.

In those circumstances, it is not necessary for me to address the criticisms offered by Mr Einfeld of Mr Webster’s valuation report.