Endihill Pty Ltd v Grasso Searles & Romano & Anor [1992] QSC 78

TRA.NSCRIPT OF PROCEEDINGS / J. :5c 9d._jo 7 <P State Rep:ming Bureau, 4th Floor, The Law Courts, George Street, BRISBANe. 0. 40QQ Tel. (07) 227.4360 (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) . .' ., SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION de JERSEY J No 1768 of 1990 ENDIHILL PTY LTD and GRASSO SEARLES & ROMANO and CLARKE & KANN BRISBANE .. DATE 26/2/92 JUDGMENT .. 1 Plaintiff First Defendant Second Defendant -- 1 of 6 -- 10 260292 HIS HONOUR: I have to determine the amount of the damages to which the plaintiff is entitled in consequence of the negligence and breach of contract of the first defendant as the plaintiff's solicitors. The plaintiff had a contract dated 7th January, 1986 to purchase land at Shaw Road from Brisbane Properties Pty Ltd for $340,000. That contract did not settle, litigation ensued, and the litigation was settled in December, 1989 with the plaintiff then paying $445,000 for the land. The first defendant admits that the first contract did not settle as a result of its negligence 10 20 20 30 40 50 60 or breach of contract as the plaintiff's solicitors. There is no need for me to go into the basis of that default. It suffices-to-record tl1e first defendant's admission of para. 18 of the amended statement of claim in which the plaintiff particulariq~d the first defendant's alleged negligence and breach of contract. Certain items of the claim were admitted by the first defendant in the course of the hearing. The first defendant admitted liability to the plaintiff for $84,642.59, the cost of the litigation (para. 36(b) amended statement of claim), and interest on that in the amount of $31,300. The first defendant admitted liability for $12,234.24, the cost of the amalgamation of parcels of the land and compliance with re-zoning requirements (para. 36(ca) amended statement of claim) and interest on that of $1,621.93. Those agreed amounts total $129,798.76. The other two items of the claim were disputed. The first is a sum of $105,000, being the difference between the Govt. Printer. Old. 2 30 40 50 60 -- 2 of 6 -- 260292 original contract price of $340,000 under the contract of 7th January, 1986, and the $445,000 paid following the settlement in December, 1989. As to that, I say at once that the higher price paid in December, 1989 was reasonable in view of the uncontradicted valuation evidence in ex. 41. I 10 10 20 30 40 50 60 Mr Bell, who appeared for the first defendant, agreed that if that sum were allowed, interest of $29,058.65 should also be allowed in respect of it. The second disputed claim is the increased cost of constructing the commercial building always intended for the land, as between June, 1986 as originally planned, and January, 1992 when construction eventually commenced. There was a point of conflict between two quantity surveyors who gave evidence about this subject. The plaintiff called Mr Partenan and the first defendant called Mr Kilpatrick. I preferred Mr Kilpatrick's view that utilising the Queensland Government Building Price Index would be more accurate for the reasons summarised in his report, ex. 47, and on which he elaborated in his convincing oral evidence. I preferred his evidence on these matters to that given by Mr Partenan. On the basis of Mr Kilpatrick's evidence, I therefore find that the difference between the January, 1992 and the June, 1986 costs amounts to $83,000. No question of interest arises in respect of that amount. These additional amounts claimed, which are in dispute, total, including interest, the sum of $217,058.65. On the face of things, the plaintiff should recover those Govt. Printer, Old. 3 20 30 40 50 60 -- 3 of 6 -- 10 20 30 40 260292 additional amounts. Mr Bell submitted, however, that they should not be allowed, for two reasons. First, he submitted that because, as he contended on the evidence of the economist Dr Layton, the increase in the purchase price and cost of building occurred at a rate no more than the diminution in the value of money, the plaintiff, because of inflation, should be regarded as having suffered no loss. Asserting that there was no change in the "true cost", Mr Bell referred to Egan v. State Transport (1982) 31 SASR 481, 528, Johnson v. Perez (1988-9) 166 CLR 351, 374 and other cases. The issue in Egan and those other cases was not this issue. The cases to which Mr Chesterman referred - Simpson v. Grove Tompkins & eo 126 Sol. Jo. 347 and Stinchcombe & Cooper Ltd v. Addison Cooper Jesson & Co (1971) Sol. Jo. 368 - do not deal with it either. In my opinion the plaintiff has here proved that it suffered loss simply because it had to pay out more for the land and for the construction than it would have had to pay had its solicitors properly carried out the retainer. But a type of balancing exercise iB necessary, and I will return to that shortly. Mr Bell's second reason for seeking to exclude this loss was that it was overtopped by other fortuitous savings. I accepted the evidence of Mr Cavallucci. The plaintiff was 10 20 30 50 50 to borrow $300,000 from the National Bank to pay for the land in March 1986 (p.36 transcript). By December, 1989, when the plaintiff ended .up purchasing the land, it was able to use the proceeds of sale of Hill End units which it had sold in 1988, ·and did not have to borrow to pay for the Shaw 60 60 Govt. Printer, Old. 4 '' -- 4 of 6 -- 10 2'60292 Road land (pp. 35-6 transcript). Mr Bell contended that because of the delay, the plaintiff had not had to pay out interest on borrowed money and that that benefit should be brought to account in favour of the first defendant, set off against the increase in land price and building costs. I accept that submission. A balancing exercising is necessary to determine the extent to which the plaintiff is worse off (cf. Gates v. City Mutual (1985-6) 160 CLR 1, 12-13), and that saving should be brought to account in 10 20 20 favour of the first defendant. It is however difficult to determine how much should be deducted. As Mr Chesterman for the plaintiff pointed out, for how long would the loan have been maintained? There is no direct evidence on the point. That is a result, however, of the way the plaintiff's claim 30 30 40 50 60 was framed. The plaintiff's case ignored the need for this balancing exercise, assuming that mere proof of the difference in costs was enough. In consequence, evidence bearing on one aspect which could benefit the first defendant is sparse, and on another which could benefit the plaintiff entirely lacking. But from the evidence I do have, I think it reasonable to infer that the plaintiff would have maintained a loan of $300,000 until 1988 when the Hill End property was sold. I am prepared to adopt what Mr Bell described as a "conservative" rate of 15 per cent per annum, which finds sufficient support in the evidence. Doing the.best I can on sparse evidence, I consider I should allow for two years' interest and that amounts to $90,000. That is a saving Govt. Printer, Old. 5 40 50 60 -- 5 of 6 -- 10 260292 which must be set-off against the plaintiff's loss as part of the balancing exercise to determine the extent to which it is worse off. Mr Chesterman submitted that such a course would be inappropriate, because of, for example, the possibility that the development would have yielded substantial profits by way of rentals or in the event of a sale, profits denied to the plaintiff because of the delay. On the evidence before me, however, I could only speculate about those 10 20 20 30 40 50 possibilities. The plaintiff bore the onus of establishing the strength of any such possibility. There is no evidence from which I could safely draw any inference about it. Nothing therefore should be brought to account in the plaintiff's favour in that regard. I calculate the amount of the judgment by adding together the sums of $129,798.76 and $217,058.65, and then subtracting $90,000. There will be judgment for the plaintiff against the first defendant for $256,857.41 and costs including any reserved costs to be taxed. _____60--r---------------------------------------------------------------------~ Govt. Printer. 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