Ng & Anor v Filmlock Pty Ltd & Ors  NSWCA
This decision by the New South Wales Court of Appeal discusses
the proper measure of a vendor's damages under a contract for
the sale of land where the purchaser repudiates the contract and
the vendor later re-sells the property.
On 21 November 2005, the Appellants (purchaser)
entered into an option deed with the Respondents (vendor), under
which they were granted an option to purchase a property owned by
the Respondents. On 13 August 2007, the purchaser exercised the
option, and the purchaser and the vendor entered into a contract
with respect to the property for a purchase price of
On 14 April 2008, the vendor served a notice to complete on the
purchaser, which required the purchaser to complete the contract by
2 May 2008. The purchaser did not complete by 2 May 2008 and so, on
5 May 2008, the vendor terminated the contract on the basis of the
purchaser's repudiation. Approximately 13 months later, the
vendor re-sold the property for $3,100,000. The vendor then
commenced Court proceedings against the purchaser (and guarantors)
claiming damages by reason of the purchaser's failure to
complete the contract.
The contract provided that, in the event of termination, the
vendor could sue for damages calculated by one of two methods:
if the property was resold within 12 months of the date of
termination, the vendor could sue to recover the deficiency on
resale and the reasonable costs and expenses arising out of the
purchaser's non-compliance with the contract; or
otherwise, the vendor could sue to recover damages for breach
At first instance, the Supreme Court of New South Wales found
that the measure of the vendor's loss was the difference
between the purchase price payable under the contract ($7,210,000)
and the net amount received when the property was resold
($3,100,000) plus interest until the date of judgment.
The purchaser appealed the decision at first instance and argued
that the vendor was only entitled to damages calculated as the
difference between the price payable under the contract
($7,210,000) and the true value of the property as at the date
the contract was terminated (5 May 2008) and not when it was
resold some 13 months later.
The New South Wales Court of Appeal held that the Supreme Court
at first instance had erred by assessing damages by reference to
the resale price. The Court also held that, as the property was
resold later than 12 months after the contract was terminated, the
contract did not permit the vendor's damages to be assessed in
The Court of Appeal confirmed the general rule that damages for
breach of a contract for sale of land are assessed as at the date
of breach of the contract, which is usually addressed by comparing
the contract price with the value of the land at the time of the
purchaser's breach. It was also said that just because a sale
of land might take longer than the sale of other types of assets,
that does not of itself justify a departure from the general rule.
Accordingly, the critical date was the date when the bargain was
lost, in this case, the date when the vendor exercised its right to
terminate the contract for breach on 5 May 2008.
Gleeson JA, in obiter, commented that the general rule
"is not inflexible" and that the "the
general rule will yield if 'in particular circumstances, some
other date is necessary to provide adequate
The Court of Appeal allowed the appeal, set aside the orders at
first instance and, as there was no evidence as to the value of the
property as at the date of termination, remitted the matter to the
Supreme Court of New South Wales for the purpose of the parties
adducing evidence as to this and then recalculating the damages to
which the vendor is entitled.
Recently, the Queensland Court of Appeal cited this decision
with approval in Baguley v Lifestyle Homes Mackay Pty Ltd
 QCA 75.
Vendors and agents should therefore be aware that, subject to
the specific provisions of the contract, where a contract is
terminated by reason of the purchaser's repudiation, the usual
amount of the vendor's damages will be the difference between
the contract price and the value of the property at the time of the
breach, unless the particular circumstances of the case require
that a departure from that rule is necessary to provide adequate
compensation for the breach. The onus will fall on the party
claiming a departure from the general rule to prove that such a
departure is necessary.
Warranties can be risk-shifting mechanisms when the party giving the warranty is not the party at fault for the defect.
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