PRECISION FABRICATION PTY LTD v.	ROADCON PTY LTD

Supreme Court of the Northern Territory of Australia Mildren J.
8, 9, 12, 13, 14, 15 July and 12 August 1991 at Darwin

DAMAGES - Breach of contract - agreement for sale and purchase of land defendant as registered  mortgagee invalidly exercising power of sale - defendant unable to make title - whether loss of bargain damages recoverable precluded by rule in Bain v. Fothergill - quantum of damage
- Damages $72,800 Interest $33,112.80

Statutes:
Real Property Act s.132
Supreme Court Act s.84
Taxation (Administration) Act s.56A(l)

Cases:
A.S.A.	Constructions	Pty	Ltd	v.	Iwanov	&	Ors	(1975)	1
N.S.W.L.R. 512; (1988) N.S.W. Conv.R. s59-397
A.V.G. Management	Science Ltd  v. Barwell Developments	Ltd (1979) 92 D.L.R. (3d) 289
Bain v. Fothergill [1874] L.R. 7 H.L. 158; [1874-80] All
E.R. Rep. 83
Day v. Singleton [1899] 2 Ch. 320
Engell v. Fitch (1869) L.R. 4 Q.B. 659
Flureau v. Thornhill [1776] 2 Black.W.; 96 E.R. 635
Forsyth v. Blundell (1972-3) 129 C.L.R. 477
Hensley v. Reschke (1914) 18 C.L.R. 452
Hopkins v. Grazebrook [1826] 6 B&C 31; 108 E.R. 364
Jones v. South  British Insurance	Co Ltd (1984) 54 A.L.R. 408
Malhotra v. Choudhury [1980] 1 Ch. 52
Neske v. McGuinnis (1932) 47 C.L.R. 563
Sharneyford Supplies Ltd v. Edge [1987] 1 All E.R. 588 Spencer v. Commonwealth of Australia (1907) 5 C.L.R. 418
West v. Read (1913) 13 S.R. (NSW) 575
Wroth v. Tyler [1974] 1 Ch. 30

Counsel for the Plaintiff Solicitor for the Plaintiff

Counsel for the Defendant Solicitor for the Defendant

J.B. Waters
David Francis & Assoc.
J. McCormack Ward Keller

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY OF AUSTRALIA
AT DARWIN

No. 578 of 1988
(8817096)

BETWEEN:
PRECISION FABRICATION PTY LTD
Plaintiff

AND:
ROADCON PTY LTD
Defendant

CORAM:	MILDREN J

REASONS FOR JUDGMENT
(Delivered 12 August 1991)
This is an action for damages for breach of contract. The Plaintiff entered into an agreement in writing dated  3 March 1987 with the Defendant to purchase from  the Defendant Portion 1685 McKinnon Road, Pine Lands Estate, Berrimah, Darwin in the Northern Territory for the sum of
$87,200. The registered proprietor of the land was City Building Contractors (Hiring) Pty Limited (hereinafter called "City Building"), the principal director  of which was a Mr Cilli. The Defendant was the registered mortgagee of the land and purported to enter into the contract  of sale with the Plaintiff pursuant to its power of sale under the mortgage and under the provisions of the Real Property Act. The Defendant's solicitor was Mr Peter McQueen. Completion of the contract was due to take place within 30 days of 3 March 1987, i.e. by 2 April 1987.

The Plaintiff's solicitors were Messrs Mildren Silvester & Partners. The solicitor handling the matter on behalf  of the Plaintiff was Mr David Francis. For reasons which it is not necessary to canvass, settlement was not achieved by 2 April 1987. On 6 April, Mr Cilli spoke to Mr McQueen on the telephone. Mr McQueen told Mr Cilli that the property had been sold and advised him to contact a solicitor. Subsequently on 7 April Mr McQueen spoke to a Mr Selvey, a solicitor from the firm of Sneddon Hall  &  Gallop  in Canberra who was acting for Mr Cilli, and Mr McQueen agreed to delay settlement for 24 hours until 8 April. On 8 April Mr Francis received a telephone call from Mr Selvey, who informed Mr Francis that his client would be seeking to abort the sale and to obtain possession of the property.

Settlement was due to take place on that date but was put off until 9 April. On that day City Building lodged  a caveat over the title. By that time settlement had not been effected and as a result could not be effected until the caveat was removed. Thereafter the Defendant made efforts  to have the caveat removed. On 23 April 1987 it took out an application for this purpose. On 7 May 1987 City Building also took out proceedings seeking a declaration that the exercise of the power of sale by the Defendant was invalid, an order that the sale be set aside and various other relief. City Building also applied for an interlocutory injunction pending the resolution of its action.

city Building's application for interlocutory relief together with the Defendant's application  for the removal of the caveat were heard together before Asche J. (as he then was) on 10 and 11 June 1987. His Honour refused to grant an interlocutory injunction to City Building and ordered that its caveat be removed.

However, in the meantime city Building had, on 28 May 1987, lodged a further caveat. After judgment was delivered by Asche J., Mr McQueen attempted to persuade the Registrar­ General to remove both caveats on the strength of the order made by Asche J., but the caveats remained on the title.

Further efforts were made by the parties to settle the sale in late June of 1987, but these were unsuccessful. On 2  July 1987 City Building made an application for leave to appeal   against   the  decision   of Asche  J.	and that application was heard by the Court of Appeal on 18 August 1987. Judgment was delivered by,that court on 2 September 1987. The Court of Appeal unanimously allowed  the appeal. It is not necessary to canvass the reasons why. What is significant is that both Asche J. and the Court of Appeal found that no effective notice as required by s.132 of the Real Property Act had been given enabling Roadcon to exercise its power of sale.

Subsequent to the handing down of the decision by the Court of Appeal, both the Defendant and the Plaintiff changed

their solicitors. In the meantime Mr Francis had left the firm of Messrs Mildren Silvester &  Partners to establish  his own practice and the matter was taken over by another practitioner of that firm until November of 1987 when he again took this matter over. Messrs Ward Keller, who then acted for the Defendant, subsequently advised Mr Francis that fresh notices pursuant to s.132 of the Real Property Act had been given by the Defendant to City Building. On 23 December 1987 Mr Francis received a copy of a  notice of sale by the Defendant and around that time was advised that the property had been re-advertised for auction on 23 January 1988. The property, however, did not proceed to auction as shortly prior to that City Building redeemed the mortgage. In the meantime the deposit monies paid by the Plaintiff to the Defendant pursuant to the Contract of Sale were refunded to the Plaintiff by the land  agents concerned, Darwin Land Services Pty Ltd, on  the instructions of Messrs Ward Keller. This occurred on 15 December 1987.

In these circumstances there is no doubt that the Defendant was in breach of its contract with the Plaintiff; indeed counsel for the Defendant conceded as much. The real issue

between	the parties		is Plaintiff	is	able	to

the quantum	of	damages which	the recover.	The		Plaintiff	seeks		to

recover damages for loss of bargain, being the difference between the true value of the land as at the date of the contract and the contract price of $87,200 which it had

agreed	to			pay for		the		land	pursuant	to	the		contract.	In addition,		the Plaintiff			seeks		to	recover		the			conveyancing and  legal		costs  which	it		in		fact		expended		less	the costs which it		ought to	have  expended had the			Defendant been able to	settle		the conveyance		in	April			of		1987.		The Plaintiff also seeks interest  pursuant  to  the  Supreme  Court  Act.  On the other hand, the Defendant's submission is  that  the Plaintiff is precluded by the rule  in  Bain  v.  Fothergill [1874] L.R.  7  H.L  158  from  recovering  loss  of  bargain damages  and  is  limited  to  receiving  the   return   of   its deposit, interest on the deposit monies and legal costs expended   for    investigating   the  title.   ThePlaintiff    did  not submit that the  rule  in  Bain  v.  Fothergill  no  longer applied  in  the  Northern  Territory;   nor  was  it   submitted that the rule had no application under the  Torrens  title system. The Plaintiff's submission was that the Defendant was unable to bring  itself  within  the  four  corners  of  the  rule because the Defendant was unable to show  that it  could not make title dueto anabsence of default on its part.

The rule was originally laid down  in  1776  in  the  case  of Flureau  v.  Thornhill  [1776]  2   Black.W.   1078;  96  E.R.   635. De Grey  c. J.  ,  with  whom  Gould  J.  agreed,  said,  in  a  very brief judgment:
"Upon a  contract  for a  purchase,  if  the  title proves bad, and  the  vendor  is  (without  fraud) incapable of  making  a  good  one,  I  do  not  think  that the purchaser can  be  entitled  to  any damages for the fancied goodness of the bargain, which he supposes he has lost."

Blackstone J. said:

"These contracts are merely upon condition, frequently expressed, but always implied,  that the vendor has a good title. If he has not, the return of the deposit, with interest and costs is all that can be expected."

In 1826 the Court of Kings Bench, on appeal, then grafted what was said to be an exception onto the rule in the case of Hopkins v. Grazebrook [1826] 6 B&C 31; 108 E.R. 364. In that case the defendant possessed at best only an equitable title and was aware that he might never obtain the full legal title to the property. When he was unable to convey the legal title the defendant vendor refused to recompense the purchaser for the value of the bargain. The court distinguished Flureau v. Thornhill and allowed substantial damages for the plaintiff's loss of bargain on the ground that the earlier case only applied to cases where the  vendor possessed a legal title, however imperfect.

A further exception to the rule was also established in Engell v. Fitch (1869) L.R. 4 Q.B. 659. In that case the defendant sold the leasehold of two houses to the plaintiff under a mortgagee's power of sale, with vacant  possession to be given on completion. The mortgagor claimed that the power of sale had been incorrectly exercised and refused to leave so that the defendant failed to complete the sale rather than incur the cost of ejecting him. The court awarded the plaintiff damages for loss of profit on a re­ sale because the defendant's failure to convey was not the

result of any inability to make out a good title.

In 1874 the question as to whether the rule in Flureau v. Thornhill was correctly decided was considered by the House of Lords in Bain v. Fothergill (1874-5) L.R. 7 H.L. 158; [1874-80] All E.R. Rep. 83. The defendants in that case had undertaken to purchase the lease of a mining royalty, subject to a condition that the lessor's consent was required for any transfer of the lease. The lessor did not consent to the purchase; so it remained uncompleted. The defendants then contracted to sell their interest to the plaintiffs without informing them of the condition or seeking to obtain the lessor's consent to the transfer. The defendants later found that the lessors refused to consent to the transfer of the lease to them unless the defendant sold it to another party. After trying unsuccessfully to obtain the lessors' cons·ent to the sale, the defendants sold their interest to a third party and purported to terminate the contract with the plaintiffs. The plaintiffs then sought to recover damages for loss of bargain on the ground that the case was governed by the exceptions to the rule, since the defendants had contracted to sell property which they knew they did not own, although admittedly there

was no fraud.
v.	Thornhill

The question of whether the rule in Flureau
was	good	law	and	should	apply	in	the

circumstances of the case was taken to the House of Lords which summoned the judges to give their opinions. Five judges thought that the case fell squarely within the rule.

It is interesting to note that one question which the House asked the judges to consider was expressed as follows:
"Whether, upon a contract for the sale of real estate, where the vendor, without his default, is unable to make a good title, the purchaser is by law entitled to recover damages for the loss of his bargain?" (See (1874-75) L.R. 7 H.L. at 170. The emphasis is mine).

The case was decided by the judgment of two Law Lords after considering the judges' opinions, Lord Colonsay having died before judgment was delivered. Lord Chelmsford expressly overruled Hopkins v. Grazebrook holding that:
11	the rule as to the limits within which damages may be recovered upon the breach of a contract for the sale of a real estate must be taken to be without exception. If a person enters into a contract for the sale of a real estate knowing that he has no title to it, nor any means of acquiring it, the purchaser cannot recover damages beyond expenses he has incurred by an action for the breach of the contract;  he can only obtain other damages by an action for deceit." (p.207).

This formulation appeared to go beyond the original statement of the rule in Flureau v. Thornhill  since  it would seem to limit damages for breach of contract even in cases of actual fraud.

Lord	Hatherley,	however,		seemed	to	accept		the	rule	in Flureau	v.	Thornhill	as	well	as		the		case	of	Engell	v. Fitch:
"Whenever it is a matter of conveyancing, and not a matter of title, it is the duty of the vendor  to do everything that he is enabled to do by  force of his own interest, and also by force of the interest of others whom he can compel to

concur in the conveyance." (p.209).

However, by 1899 the Court of Appeal had laid down a number of limitations on the statement of the rule by Lord Chelmsford. In Day v. Singleton [1899] 2 Ch. 320 Lindley
M.R. and Rigby L.J. distinguished Bain v. Fothergill on the following basis:
"There the vendors did all they could to obtain the lessors' consent to the assignment, and they failed to obtain it. The first question submitted to the judges shows that what was being  considered was the rule as to damages on the sale of real estate were a vendor without his default is unable to make a good title. Lord Chelmsford's speech is addressed to that question; and his observation on fraud are part of his comment on Hopkins v. Grazebrook which had decided that the exceptional rule laid down in Flureau v.  Thornhill did not apply where the vendor  knew that he had not a  good  title,  although  he  believed he could get one, and had in fact an equitable title. Neither Lord Chelmsford's speech nor Lord Hatherley's is an authority for the application of that exceptional rule to the case of a vendor who can make a good title but will not, or will not do what he can do and ought to  do in order to obtain one. Such a case is, however, covered by Engell v. Fitch, which was to a certain extent based on Hopkins v. Grazebrook, and was much commented on in, but not overruled by, Bain v. Fothergill." (pp.328-329). (The emphasis is mine).

As early as 1914 the High Court in Hensley v.  Reschke (1914) 18 C.L.R. 452 at 464 appeared to accept this distinction. By 1932 the distinction had been  well accepted: see Noske v. McGuinnis (1932) 47 C.L.R. 563 at 583-4 per Rich J.; 588-9 per Starke J.; and  591 per Dixon J.

Recent English authorities  such  as  Malhotra  v.  Choudhury [1980]  1  C.H.  52  and  Sharneyford  Supplies  Ltd  v.   Edge  [1987] 1 All E.R. 588 have applied the distinction. In the latter case Balcombe L.J. said at 596:
"Fortunately,			Day v.	Singleton	is	a  decision		of the	Court		of		Appeal which	is		binding	on us,		and has		recently			been		followed			and  applied		by this court	in  Malhotra  v.	Choudhury.		That	was a	case where one of	two joint owners	(who  happened  to		be husband  and wife)	had entered into  a  contract  for the	sale	of a house.		When		sued			on his	contract the husband claimed that  he was unable  to  make title because his co-owner, his wife,  would  not agree    to     the     sale.    The  Court     of     Appeal ( Stephenson and Cumming-Bruce L. J. J.) held  that, where a vendor of  real  property  sought  to  limit his  liability  for  breach  of  contract  under  the rule in Bain v. Fothergill, he-had a duty to  show that  he  had used  his  best  endeavours  to  fulfil his  contractual  obligations,  the  onus  being   on him, both in the case of a defect of title andof conveyance. Since the defendant had given no evidence of an attempt by himself to  obtain  his wife's consent for sale, he had not discharged
the  burden of  proof	on him,	even though there was
evidence		that		the  wife	would			not		agree		to	the sale. Again counsel for the third party sought to distinguish				that			case		on	its	facts,				which undoubtedly			suggested	actual		bad   faith,			almost amounting			to			collusion,			on		the		part	of	the vendor.	However,		this		court				followed	Day		v. Singleton				and	Stephenson L.J., while not suggesting that anything less than  lack  of  good faith would  exclude  the  rule  in  Bain  v. Fothergill, held that unwillingness to use best endeavours to carry out  a  contractual  promise  is bad faith for this purpose ... " (The  emphasis  is mine) .

Applying those principles to the  facts  of  this  case,  the issue is whether the Defendant has  shown  that  it  has in  fact used its best endeavours to fulfil its contractual obligations whether or not one regards the inability of the Defendant to settle the matter as being due to a  defect  of title or a mere matter of conveyancing. In my opinion the

Defendant has been unable to discharge this burden. Regardless of what may have been the position prior to the decision of the Court of Appeal, once that judgment was delivered on 2 September 1987 it was abundantly clear that, the Defendant not having properly exercised its power of sale, it could not complete with the Plaintiff until  it did. It is true that in this case Mr McQueen did receive instructions from the Defendant to issue a further  notice of demand and Mr McQueen gave evidence that he prepared and sent out such a notice for service on 20 October 1987. Shortly thereafter, Mr McQueen ceased to act in the matter and transferred his file to Messrs Ward Keller. It was not suggested that the notice (which became Ext. D26) sent out by Mr McQueen on 20 October 1987 was invalid or improperly served; indeed, there was no evidence before me that that notice was served at all. Nor was there any explanation as to why, in December of 1987, the Defendant's solicitors arranged for the property to be re-auctioned. It was not suggested by either party that the original sale was liable to be restrained on the basis that the property had been sold for a price so far below its true value as to be not a bona fide exercise by the Defendant of its power of sale:
c.f. Forsyth v. Blundell (1972-3) 129 C.L.R. 477. There was
a suggestion in the evidence of Mr Francis that the Defendant's new solicitors, Messrs Ward Keller, had decided to serve a further notice under s.132 of the Real Property Act. There is no evidence before me that Messrs Ward Keller in fact served  fresh notices,  but there is evidence  that

the monies were not paid by City Building until sometime in late December 1987 or January of 1988. If the notice prepared by Mr McQueen on 20 October 1987 was effective there is no evidence that city Building would have then had the funds available to have redeemed the mortgage and no reason appears on the evidence why the Defendant could not have settled with the Plaintiff, having perfected  its title, by early November of 1987, and no explanation was proffered as to why a further delay, including arrangements for a further auction, was thought necessary. Even making allowance for that fact that there had been a change of solicitors involved, I cannot think that the Defendant has shown that it had done everything which it reasonably could have done to have perfected its title and settle with the Plaintiff.

The situation resembles that in Sharneyford Supplies Ltd v. Edge. In that case the solicitor for Mr Edge, whose actions or omissions for this purpose were attributed to the defendant, failed to take any steps to terminate  the tenancy either at common law or under the provisions of the Landlord and Tenant Act of 1954. Balcombe L.J. held that in those circumstances it was impossible to say that the defendant had done all that he reasonably could do to try and remove the defect on his title and acquire vacant possession of the farm. It had been submitted that the notices would have been to have no avail since a notice of no less than six months was necessary and that any such

notice would necessarily have expired long after the date fixed for completion and, further, that there was no likelihood that the defendant could have successfully resisted an application for a new tenancy. However,  Balcombe L.J. held that it was by means certain that the tenants, if served with formal notice to terminate the tenancy, would have sought to resist giving up possession. As he observed:
"But in any event that argument is similar  to that which was rejected in both Day v. Singleton and Malhotra v. Choudhury: that it matters not that the attempt to clear the title might have failed: it must at least have been tried." (p.597).

If I am wrong in this conclusion it seems to me that the Defendant is not entitled to the benefit of the rule  in Bain v. Fothergill for another reason. As the previous discussion of the rule has made clear, the rule  only applies when the defect in the defendant's title is without any fault on its part. In this case the original cause of the problem was an invalid notice under s.132 of the Real Property Act. The fault for this lay with Mr McQueen, the solicitor for the Defendant, who drafted the original demand. Mr McQueen was the Defendant's agent in preparing the notice and consequently his acts were those of the Defendant.

Mr McCormack, for the Defendant, relied  upon the decision of the Full Court in West v. Read (1913) 13 S.R.(NSW) 575  as authority for the proposition that where a mortgagee

invalidly exercises its power of sale and as a consequence is in breach of its contract with the plaintiff with whom it had entered into a contract of sale, that situation fell within the rule of Bain v. Fothergill. In that case the mortgagee had failed to prove service of the necessary statutory notice of default upon the mortgagor. There was no suggestion that there was any bad faith and the court unanimously held (Cullen C.J., Pring and Gordon JJ.) that there being none of the "exceptional considerations which take the matter out of the established rule, the case, so far as damages are concerned, would be governed by the authorities, beginning with Flureau v. Thornhill and Bain
v. Fothergill," (per Cullen C.J. at 580). However, in my opinion that case is not good law and should not be followed.

In Wroth  v.	Tyler [1974] 1 Ch. 30 Megarry J. said at 56:
" the basis of the rule is that of the contract having been made against a background of the uncertainty of titles to land in England: see, for example, Bain v. Fothergill L.R. 7 H.L. 158, 210 per Lord Hatherley. In Engell v. Fitch
L.R. 4 Q.B. 659, 666 Kelly C.B. said  that the rule was:
"founded entirely on the  difficulty that a vendor often finds in making a title to real estate, not from any default on his part, but from his ignorance of the strict legal state of his title."

As I have indicated, a rule laid down for defects in title which lay concealed in title deeds which were often, in the phrase attributed to Lord Westbury, "difficult to read, disgusting  to touch, and impossible to understand," seems singularly inapposite to a modern statute upon registered land, with its aseptic certainty and clarity of title.

Furthermore, the rule is anomalous, and, as was shown by the Court of Appeal in In re Crompton [1945] Ch. 123, 139, 140 (in an  entirely different field), where the court encounters an anomalous rule, it is in general best to confine the anomaly to analogous cases."

The anomalous nature of the rule and the limits which ought to  be placed  on  it were commented  upon also  by Balcombe
L.J. in Sharneyford  Supplies Ltd v. Edge [1987] 1 All E.R.
588 at 594-595 where his Lordship noted that the rule  served no useful purpose anywhere within England or Wales and that now that registered title to land is the general rule the rationale for the rule is no longer valid, if indeed it ever was. His Lordship also pointed out that the rule has been almost universally condemned and suggested that it should be repealed, a view which he noted  was shared by the Law Commission in its working paper No.98. Similar views were echoed by Kerr L.J. at 599-600 and by Parker L.J. at 600. Indeed, the New South Wales Law Reform Commission in its report 'Damages For Vendor's Inability To Convey Good Title: The Rule In Bain v. Fothergill'  (L.R.C.
64 1990) recommended to the Attorney-General that the rule be abolished. The rule has been abolished in Queensland following examination by the Queensland Law Reform Commission in 1973 at least so far as Torrens title system land is concerned (see Property Law Act 1974 s.68), and the Law Reform Commission of Victoria also recommended that the rule be abolished: Law Reform Commission of Victoria 'Sale of Land,' Report No.20 1989 at 18-19. In Canada the Supreme Court of Canada in A.V.G. Management Science Ltd v. Barwell

Developments Ltd et al  (1979) 92 D.L.R.(3d)  289  held that the rule no longer applied in those Provinces having a Torrens or similar system of title registration. Laskin C.J.C., who delivered the judgment of Court, said further, at 296:
"	I also share the view of Megarry J. in Wroth
v. Tyler that the anomalous character of the rule is a good reason for a strict limitation of its scope."

Recent Australian authority has also given the rule a limited scope. In A.S .A. Constructions Pty Ltd v. Iwanov

and	others	(1975) 1 N.S.W.L.R.	512,
516:

Needham	J. said at

"I do not accept the submission that the rule in Bain	v.		Fothergill	applies here. The reason why Iwanov	cannot	perform the contract with Hayllar is that they, apparently recklessly, entered into two separate engagements to sell the one property and	that		Hallyar's		contract	was		second	in priority. I do not think the rule, based upon the vendor's		inability,			without	his		own		fault,	to show a good title,		applies to case where he is the author of his own misfortunes: c.f. Wroth v. Tyler  and the cases there mentioned	esp. Day v. Singleton. 11

On appeal to the Court of Appeal, (1988) N.S.W. Conv.R s.59-397 at 57, 679-80 Priestley J.A., with whom McHugh and Clarke J.J.A. agreed, observed:
"The circumstances in which the rule in Bain v. Fothergill has any chance of being followed under modern conveyancing conditions of Torrens title land in Australia seems to be near vanishing point."

In the instant case it is impossible, in my opinion, to say that the position which the Defendant found itself in was the fault of anybody else other than itself. Accordingly, I hold that the Plaintiff is entitled to damages for loss of bargain.

I turn now to the assessment of damages. No argument was addressed to me as to the proper date for assessing damages in this case. I assume that the general rule applies,  namely that damages are to be assessed from the date of

breach. However, The	Plaintiff's

in the case

end, nothing	much turns on this. is	that	the	land	was	worth

considerably more than it had agreed to pay for it. I heard evidence from three valuers, two called by the Plaintiff  and one called by the Defendant. Each of the valuers were agreed that the property was sold for considerably less  than what it was worth. There· is further common ground between the valuers in that each were of the opinion that the property's value remained the same throughout the whole of 1987 and had not changed since then. The difference between the Plaintiff's valuers and the Defendant's valuer is that the Plaintiff's valuers valued the property at
$160,000 whereas the Defendant's valuer values the property at $127,000.

There was no significant difference in the approach made by each of the valuers. Each valuer attempted to arrive at a valuation having regard to comparative sales information.

Each valuer approached his task having regard to the principle in Spencer v. The Commonwealth of Australia (1907) 5 C.L.R. 418 at 432:
"What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?"

Mr Mooney, who has been practising as a valuer since 1962, and, except for 2 years whilst in Brisbane, as a valuer in the Northern Territory since 1968, estimated  the property to have a land value of just under $8/m2 allowing an amount of approximately $8,000 for the improvements. Mr Tosh thought that the only improvement worth anything was the fencing, and he arrived at a valuation of the land at $8/m2 • Mr Tosh has been practising as a valuer since 1969 and has been practising in Darwin for the last 11 years. Mr Gore, the valuer called on behalf of the Defendant, has been practising as a valuer since July 1984 and has been engaged in the Northern Territory as a valuer since March of 1987. He arrived at a value of $6.50/m2 • His approach to the valuation exercise was to include the value of the improvements, namely the fencing, in his per m2 comparative sales. The main difference that I could discern which seems to have accounted for Mr Gore's valuation being lower than that of either Mr Mooney or Mr Tosh is the significance attached by Mr Gore to the poor access to the block, particularly as it was known in 1987 that the Northern Territory proposed to acquire portion of the block for the purposes of a road which would leave, as a result of that

acquisition, the block with no legal frontage to a made road. In the view of Mr Gore, this would have "a huge impact" on a purchaser who may wish to develop the block. For example, a purchaser wishing to develop the site might have to consider the cost of putting in an internal sealed access road over land which he knew was ultimately to be acquired by the Government in order to temporarily obtain access to McKinnon Road from the present  frontage. Secondly, Mr Gore emphasised that because of the location and size of the block, the main potential buyers were  likely to be transport companies or oil companies and that the existing access was cramped for dual access. Neither Mr Tosh nor Mr Mooney considered that either of these matters were particularly disadvantageous. Mr Mooney pointed out that the future road was only a proposed road and that it might never be built, and that in the meantime after acquisition, in a practical sense, the owner had the use of the land to be acquired. Mr Tosh said that he did not  regard the matter as being important. If indeed the land to be acquired ultimately was developed as a road at some future time, then of course the land would have had much greater access to a made road. As to the existing  access, it being 24m in width, it seems to me on the evidence that this is more than wide enough to accommodate dual access to a purchaser such as a transport company or an oil company. On the whole, I prefer the evidence of Mr Mooney and Mr  Tosh to that of Mr Gore. They are more experienced valuers than Mr Gore and have had more experience in valuing

Northern Territory land than he has. I accept the evidence of Mr Tosh that he had not seen or been made aware of Mr Mooney's valuation before he made his own valuation. I  think it is significant that both of the  Plaintiff's valuers arrived at the same valuation. Neither  Mr Mooney nor Mr Tosh were shaken in cross-examination. I find that the true value of the land in 1987 was $160,000.  I therefore find that the Plaintiff is entitled to recover loss  of  bargain  damages,  being  the  difference between
$160,000  and the amount of $87,200 for which the Plaintiff
had agreed to purchase the land, namely the sum of $72,800.

In addition it seems to me that the Plaintiff  is entitled to	recover	the	difference	between	the	amount	which	it

expended	on attempting		to

conveyancing finalise	the

and	solicitors' contract	of	sale

costs	in
which	it

entered into with the Defendant, and the amount it would have had to have paid had the conveyance gone through without any difficulty. Mr Francis' evidence was that, had the matter proceeded without difficulty, it is likely that Mildren Silvester & Partners would have charged  the scale fee recommended by the Law Society of the  Northern Territory which was approximately $900. In fact Mildren Silvester & Partners charged  a total of $4,264.47  due to the difficulties occasioned by the inability of the Defendant to settle. Of this sum, the amount of some $672 was performed by Mr Francis' successor. Mr Francis was unable to comment on the appropriateness of that work; nor

could he accurately assess the value of it. No other evidence was called to prove its value or the appropriateness of any work done by his successor. It was not suggested by Mr McCormack that any of the fees charged by Mildren Silvester & Partners, apart from  the  fees charged by Mr Smith, were unreasonable or that  there was any basis upon which I should not make a proper allowance for them. There is evidence that Mr Smith did make some telephone attendances with the Defendant's solicitors and also wrote a few letters, and I think I should make some allowance for them. Accordingly, it seems to me that I should allow an amount of approximately $3,700 less an amount of $900 that would have been expended in any event had the bargain been completed and, accordingly, I  allow the sum of $2,800 damages on account of the legal expenses incurred.

In addition the Plaintiff has expended $2,180 on stamp duty on  the transfer  and  $20  on  lodgment  fees,  a  total of
$2,200. The Plaintiff has not attempted to obtain a refund of stamp duty. If the sale had gone ahead these sums would have been necessary expenses which the Plaintiff would have had to have incurred. The only question is, if the  Plaintiff is now able to recover those expenses  by obtaining a refund, the value of the refund, less the cost of obtaining it, should be deducted from the loss of  bargain damages. Having regard to s.56A(l) of the Taxation (Administration) Act  it seems to me that the  Plaintiff  is

not entitled in this case to apply to the Commissioner  for a refund of duty. A refund is possible only where the contract had been "afterwards rescinded, cancelled or annulled." That is not what occurred here. The contract was in this case repudiated, but there was no effort made on  the part of the Defendant to rescind it. That being so, I  do not think I should make any deduction from the damages for the stamp duty or lodgment fees.

As to the deposit, the evidence before me is that this was repaid in full. In my opinion, the Plaintiff is not entitled, in the circumstances where it seeks to recover loss of bargain damages, to interest on the deposit. If the bargain had gone ahead, the Plaintiff would have had to  have expended $87,200 which would have included the deposit monies, and would not have recouped those monies. On the other hand, the Plaintiff is entitled to interest on the loss of bargain damages pursuant to s.84 of the Supreme
Court	Act	from	the date when	the cause	of	action	arose
until the date of judgment, and as well to interest on the additional legal costs incurred. It appears probable that those costs were paid in early November 1987. The exact  date of the breach is a little difficult to determine on  the evidence before me, but it seems that the contract was repudiated on about 15 December 1987 when the deposit was returned and accordingly I propose to calculate the  interest on the costs and on the loss of bargain damages as from  that  date.  No  evidence  was  called  as to  what an

appropriate commercial rate of interest would be. The Defendant submitted that the appropriate rate of interest should be 12%, presumably in accordance with the judgment in the Federal  Court in Jones  v.  South  British   Insurance  Co. Ltd (1984) 54 A.L.R. 408. Mr Waters did not submit otherwise, and although there have been some fluctuations in interest rates since 1984 I consider that a rate of 12% is reasonable.

Accordingly, there will be judgment for the Plaintiff for the sum of $108712.80 made up as follows:

Damages for loss of bargain
Additional costs expended

Interest thereon from 15/12/87 to date of judgment at 12%

$ 72,800
$	2,800
$ 75,600

$ 33,112.80

$108,712.80