Adams v Price
[2021] WADC 130
•22 DECEMBER 2021
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: ADAMS -v- PRICE [2021] WADC 130
CORAM: LEVY DCJ
HEARD: 17, 18 & 19 MARCH, 31 MAY & 6 AUGUST 2021
DELIVERED : 22 DECEMBER 2021
FILE NO/S: CIV 2390 of 2018
BETWEEN: DAVID NIGEL ADAMS
Plaintiff
AND
GERAINT LEWIS AND HAZEL JUNE PRICE
First Defendants
SIMON MILLS
Second Defendant
CENTURION REAL ESTATE PTY LTD
Third Defendant
SALLY ANNE KINNER
Fourth Defendant
Catchwords:
Trade practices - Misleading or deceptive conduct - Whether alleged misrepresentation made in the course of 'trade or commerce'
Tort - Whether alleged representation made - Whether first defendants liable for representation made by their agent - Whether misrepresentation false or made recklessly - Whether representation amounted to a negligent misstatement
Contract - Whether term of agreement precluded plaintiff from relying upon pre‑contractual misrepresentation allegedly made by first defendants
Evidence - Whether principle in Jones v Dunkel should be applied
Practice and procedure - Whether a default judgment made against one defendant in the proceedings can be relied upon by the plaintiff in proceedings against another defendant in the same proceedings - Whether plaintiff should be permitted to re-open his case after evidence completed
Damages - Assessment of damages
Legislation:
Building Act 2011 (WA), s 3, s 9
Building Regulations 2012 (WA)
Competition and Consumer Act 2010 (Cth), sch 2, s 18, s 84
District Court Rules 2005 (WA), r 47F(3) and r 47F(4)
Evidence Act 1906 (WA), s 79C
Local Government (Miscellaneous Provisions) Act 1960 (WA), s 374
Local Government Act 1995 (WA), s 9.38, s 9.39 and s 9.41
Rules of the Supreme Court 1971 (WA), O 20 r 14(1)
Result:
Plaintiff's claim dismissed
Representation:
Counsel:
| Plaintiff | : | Mr W G Vogt |
| First Defendants | : | Mr N van Hattem |
| Second Defendant | : | No appearance |
| Third Defendant | : | No appearance |
| Fourth Defendant | : | In person |
Solicitors:
| Plaintiff | : | Vogt Graham Lawyers |
| First Defendants | : | MGB Legal |
| Second Defendant | : | Not applicable |
| Third Defendant | : | Not applicable |
| Fourth Defendant | : | Not applicable |
Case(s) referred to in decision(s):
ABN Amro Bank NV v Bathurst Regional Council (2014) 224 FCR 1
AGC Industries Pty Ltd -v- Karara Mining Ltd [2019] WASC 140
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 258 ALR 14; (2009) 83 ALJR 951; (2009) 239 CLR 175
Argy v Blunts & Lane Cove Real Estate Pty Ltd [1990] FCA 51; (1990) 26 FCR 112
Banditt v The Queen [2005] HCA 80; (2005) 224 CLR 262
Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336
Brookfield Multiplex v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185
Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592
Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304
Capital Securities XV Pty Ltd (formerly known as Prime Capital Securities Pty Ltd) v Calleja [2018] NSWCA 26
Commercial Banking Co of Sydney Ltd v R H Brown & Co (1972) 126 CLR 337
Derry v Peek (1889) 14 App Cas 337
Derry v Peek (1889) 4 AC 337
Embleton Motor Co Pty Ltd v St Kilda Beach Taxi School and Staffing Pty Ltd [2014] WASCA 183
Gould v Vaggelas (1984) 157 CLR 236
Gramophone Co Ltd v Magazine Holder Co (1911) 48 SLR 1081; (1911) 28 RPC 221
Hedley Byrne & Co v Heller & Partners Ltd [1964] AC 465
James Hardie Industries NV v Australian Securities and Investments Commission [2010] NSWCA 332
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563
Magill v Magill [2006] HCA 51; (2006) 226 CLR 551
McKay v Commissioner of Main Roads [No 2] [2010] WASC 153
Mutual Life & Citizens' Assurance Co Ltd v Evatt (1968) 122 CLR 556
Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170
O'Meara v Dominican Fathers [2003] ACTCA 24
Osborne v Landpower Developments Pty Ltd (In Liq) [2003] WASCA 117
Pine River Pty Ltd v Scorda [2001] WASC 105
Potts v Miller (1940) CLR 282;
Sali v SPC Ltd [1993] HCA 47; (1993) 67 ALJR 841; (1993) 116 ALR 625
Scott v Baring [2018] WASC 361
Smith v New South Wales Bar Association [1992] HCA 36; (1992) 176 CLR 256
Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1
Termijtelen v Van Arkel [1974] 1 NSWLR 525
Walker v Boyle [1982] 1 WLR 495
Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514, 526).
Watson v Foxman (1995) 49 NSWLR 315
Whitaker v Paxad Pty Ltd [2009] WASC 47
Williams v Pisano [2015] NSWCA 177
LEVY DCJ:
Part 1: An overview of the case
This case relates to the sale of a house in Kalamunda, a suburb located in the hills of the outer eastern metropolitan area of Perth.
The house, situated at 41 Coral Road, Kalamunda (the Kalamunda Property), was owned by Geraint Lewis Price and Hazel June Price (first defendants).
Mr and Mrs Price engaged the services of Centurion Real Estate Pty Ltd (third defendant or 'Centurion') to sell the Kalamunda Property. Mr Simon Mills (second defendant) was the sales representative employed by Centurion to deal with the property on behalf of Mr and Mrs Price.
In early July 2012, Nigel Adams (the plaintiff) and his then partner, Sally Anne Kinner (fourth defendant), purchased the Kalamunda Property from Mr and Mrs Price. There is no dispute[1] that, at some stage prior to the sale of the property to Mr Adams and Ms Kinner, numerous 'improvements' were made to the Kalamunda Property.[2] This included improvements to, or the addition of:
[1] See First Defendants' Amended Statement of Defence, dated 17 October 2018, par 8.
[2] See pars 8 and 18 of the Second Re-Amended Statement of Claim, dated 18 March 2021.
•The master bedroom.
•The games room.
•The shed.
•The patio in front of the shed.
•The (outdoor) bar.
•The patio over the bar.
•The patio adjacent to the French doors.
•The (outdoor) spa.
•The rear patio (over the spa).
•The front veranda.
•The garage outbuilding.
•A carport.
Settlement of the sale of the Kalamunda Property was scheduled to occur on 3 July 2012. It was subject to the sale and settlement of another property in Carramar (the 'Carramar Property') owned by Mr Adams and Ms Kinner. In order to take possession of the Kalamunda Property one day prior to the scheduled date of settlement of the sale of the Carramar Property, Mr Adams and Ms Kinner entered into an agreement with Mr and Mrs Price to take early possession of the Kalamunda Property on 2 July 2012 ('Prior Possession Agreement').[3]
[3] Exhibit 10.
Mr Adams claims that he and Ms Kinner were induced to purchase the Kalamunda Property as a result of misrepresentations made to them to the effect that:
(a)all the improvements to the Kalamunda Property had the requisite approval from the Shire of Kalamunda; and
(b)there were no outstanding approvals on the Kalamunda Property.
Mr Adams alleges that the above representations were made first by the sales representative Mr Mills (the First Representation), and secondly by Mr and Mrs Price in a clause of the contract for sale of the property (the Second Representation).
Mr Adams claims that, apart from the garage outbuilding and carport, all of the other improvements were buildings or structures that required approval from the Shire of Kalamunda and did not have such approval at the time he was induced into purchasing the Kalamunda Property. He claims that the representations made by Mr Mills and Mr and Mrs Price were false.
Mr Adams claims that Mr and Mrs Price are liable for the Second Representation allegedly made by them, as well as being vicariously liable for the First Representation made by their authorised agent Mr Mills who was employed as a sales representative of Centurion at the relevant time.
The loss and damage claimed by the plaintiff comprises:
(a)the sum of $125,000, being the net loss arising from the difference between the purchase price of the property in July 2012 ($605,000) and its sale price in February 2020 ($480,000);
(b)interest payments on the mortgage; and
(c)various other costs associated with obtaining an expert's report, professional consultation costs, and other associated costs.
Mr and Mrs Price deny any liability to Mr Adams. They deny that:
(a)either the First Representation or Second Representation was made;
(b)if any representation was made (either the First or Second), that it was false;
(c)Mr Adams relied upon the representations; or
(d)Mr Adams suffered any loss, or if he did, that it was caused by any of the representations.
In addition, Mr and Mrs Price rely upon the Prior Possession Agreement which they claim had the effect of precluding Mr Adams from relying upon pre-contractual or contractual representations made before the Prior Possession Agreement came into effect.
Overview of the alleged representations and the claims brought against Mr and Mrs Price
As originally pleaded, Mr Adams relied upon both a common law claim of misrepresentation and a statutory claim of misleading or deceptive conduct pursuant to sch 2, s 18 of the Competition and Consumer Act 2010 (Cth) (commonly called the Australian Consumer Law (ACL)) in relation to both the First Representation and the Second Representation.
In order to prove a claim brought pursuant to s 18 of the ACL, it is necessary to prove that the relevant misleading or deceptive conduct occurred in 'trade or commerce'.[4] The claims originally brought against Mr and Mrs Price alleged that the sale of the property, albeit related to a residential property, was nonetheless in 'trade and commerce'.
[4] Section 18(1) ACL.
The issue of whether the alleged representations could properly be construed as having been made in 'trade or commerce' was raised by the court during the course of the trial. Ultimately, during oral closing submissions, counsel for Mr Adams abandoned the claims brought pursuant to s 18 of the ACL. The claims brought pursuant to s 18 of the ACL were in any event doomed to fail.
The fact that Mr and Mrs Price engaged a real estate agent and sales representative to sell the property did not give the sale of their home the necessary character of being in 'trade or commerce.'[5] This is despite the operation of s 84 of the Competition and Consumer Act 2010 (CCA).[6]
[5] Williams v Pisano [2015] NSWCA 177, Emmett JA [38] (with whom Bathurst CJ and McColl JA agreed).
[6] Section 84(4) of the Consumer Act provides that conduct engaged in on behalf of a person by an agent of the person within the scope of the actual or apparent authority of the agent is deemed to have been engaged in also by the first person, the principal.
Consequently, since Mr and Mrs Price were selling their own home, a residential property, the application of s 84(4) of the CCA did not impute to them the business of the agents (Mr Mills and Centurion),[7] even though the conduct of Mr Mills as their agent was deemed to have been conduct by them, and that the conduct of the agent (Mr Mills) was in trade or commerce.[8] Nor does it bring about the result that the deemed actions of Mr and Mrs Price (as principals) constituted conduct in 'trade or commerce'.[9]
[7] Argy v Blunts & Lane Cove Real Estate Pty Ltd [1990] FCA 51; (1990) 26 FCR 112, 30.
[8] Williams v Pisano [39]; Argy v Blunts & Lane Cove Real Estate Pty Ltd (130) - (131).
[9] Williams v Pisano [39].
Nonetheless, the issue of agency is still relevant in relation to the common law claims brought by Mr Adams and is discussed further below.
First Representation - an overview of the claim
On 24 February 2012, Mr Adams and Ms Kinner, by signing a contract for sale of land or strata title by offer and acceptance, made an offer to purchase the Kalamunda Property for the sum of $605,000. On 7 March 2012, Mr and Mrs Price accepted that offer by signing the contract that day (the Contract).[10]
[10] See Exhibit 8.
Prior to entering into the Contract, Mr Adams claims that he asked Mr Mills if the various additions or alterations that he believed had been made to the property had the necessary approval. In a telephone call between Mr Adams and Mr Mills, Mr Adams alleges that Mr Mills advised him that he had made enquiries with the Shire of Kalamunda and that there were no outstanding approvals. Mr Adams claims that the statement made by Mr Mills to him in this telephone call, namely that there were no outstanding approvals, was false. This allegedly constitutes the First Representation.
In relation to the First Representation, although it is claimed that it was made by Mr Mills, Mr Adams claims that Mr and Mrs Price are liable for the conduct of their authorised agents, Mr Mills and Centurion.
Having abandoned his claim for misleading or deceptive conduct pursuant to s 18 of the ACL, Mr Adams' claim remains (as pleaded)[11] that the statement made by Mr Mills to Mr Adams amounts to:
[11] Plaintiff's Re-Amended Statement of Claim dated 18 March 2021, par 21.
(a)A misrepresentation at common law, in that it was:
(i)false; or alternatively
(ii)made recklessly without any care as to whether it was true or false; or
(iii)misleading conduct or conduct likely to mislead or deceive.
(b)A negligent misstatement at common law.
Second Representation - an overview of the claim
The Second Representation is alleged to have been made by Mr Price and Mrs Price in the Contract for the sale of the Kalamunda Property, namely the clause of the contract for the sale of the property which stipulated that 'the Seller (Mr Price and Mrs Price) declares where required all structures have building approval'.[12]
[12] Exhibit 8 - Clause 9.
In relation to the Second Representation, having abandoned his claim pursuant to s 18 of the ACL, Mr Adams pleads[13] that it amounts to:
(a)A misrepresentation at common law, in that it was:
(i)false; or alternatively
(ii)made recklessly without any care as to whether it was true or false.
Overview of the issues to be determined
[13] Plaintiff's Re-Amended Statement of Claim dated 18 March 2021, par 22.
The primary issues can be broken down into two broad parts. The first part relates to whether the improvements had or required approval from the Shire of Kalamunda.
The second broad issue is whether the alleged relevant representation was made, and if so, whether it was false.
There are further issues that need to be considered in relation to each of the alleged representations.
The First Representation
In relation to the First Representation:
1.Was the First Representation made by Mr Mills?
2.If it was made, did it constitute a misrepresentation at common law, in that it was:
(a)false or recklessly made without any care as to whether it was true or false; or
(b)a negligent misrepresentation.
3.Was it relied upon by Mr Adams?
4.Are Mr and Mrs Price vicariously liable (on the basis that Mr Mills was acting as their agent)?
5.Did Mr Adams suffer loss or damage as a result of his reliance upon a representation?
6.Does the Prior Possession Agreement preclude Mr Adams from relying upon pre-contractual or contractual representations?
Second Representation
In relation to the Second Representation:
1.Was the Second Representation made by Mr and Mrs Price?
2.If it was made, did it constitute a misrepresentation at common law, in that it was false, or made recklessly without any care as to whether it was true or false.
3.Was it relied upon by Mr Adams?
4.Did Mr Adams suffer loss or damage as a result of his reliance upon a representation?
5.Does the Prior Possession Agreement preclude Mr Adams from relying upon pre-contractual or contractual representations?
The plaintiff's application to further amend the statement of claim
On 18 March 2021, the first day of the trial, before any evidence was adduced, counsel for Mr and Mrs Price submitted that Mr Adams (by his counsel) had filed written submissions that went beyond the pleaded statement of claim. Counsel for Mr and Mrs Price noted that although Mr Adams' submissions dated 18 March 2021 included a claim that Mr and Mrs Price had 'engaged in a deliberate omission of disclosure to [Mr Adams] and [Ms Kinner] of the fact that, on the property that they were purchasing, there were structures which both required approval from the Shire of Kalamunda, and, had been constructed without requisite approval',[14] Mr Adams' pleadings did not raise these issues. In particular, counsel for Mr and Mrs Price submitted that Mr Adams had not pleaded that:
(a)there were structures which required approval from the Shire of Kalamunda, or
(b)had been constructed without requisite approval.[15]
[14] See Plaintiff's Outline of Submissions and Opening dated 17 March 2021, par 9.
[15] See Plaintiff's Outline of Submissions and Opening dated 17 March 2021, par 9.
Consequently, on the second day of the trial, counsel for Mr Adams applied to amend the statement of claim in several ways,[16] including adding a further paragraph as follows:
[16] Application included adding pars 20A; 37(aa) and (bb); and 40(bb). Numerous parts of the statement of claim were also proposed to be deleted.
20A)At all material times the unapproved improvements:
a)were either 'buildings or structures':
b)required a grant of building approval pursuant to:
i)a permit issued under section 374 of the Local Government (Miscellaneous Provisions) Act 1960 (WA), prior to 2 April 2012; or
ii)a permit issued pursuant to Section 9 of the Building Act 2011 (WA) after 2 April 2012;
c)were constructed on the Property in circumstances where no approval to carry out the building works had been granted by the (then) Shire of Kalamunda prior to construction of the Unapproved Improvements.
PARTICULARS
The Plaintiff relies on Section 3 and 9 of the Building Act 2011 and Section 374 of the Local Government Miscellaneous Provisions Act and the relevant definitions therein.
The ruling on Mr Adams' application to amend the statement of claim was deferred in light of counsel for Mr and Mrs Price's submission that any decision to amend the pleadings prior to the completion of Mr Adams' evidence would cause prejudice to Mr and Mrs Price's case.[17] On the third day of the trial, after Mr Adams had completed his evidence, counsel for Mr and Mrs Price did not oppose the amendments which were made accordingly.[18]
[17] ts 108, Mr van Hattem, counsel for first defendants.
[18] ts, 211, Mr van Hattem, counsel for first defendants.
The application to amend the statement of claim, including both the timing of the application and the purpose of the amendment, is relevant to an issue that arose after the evidence had been completed. That issue is Mr Adams' application to re-open his case and either call further oral evidence and/or tender photographs. This issue is considered further at [175] - [223] below.
The default judgments against the second and third defendants
Mr Adams commenced proceedings against all the defendants (first, second, third and fourth defendants) by writ of summons with an indorsement of claim filed on 29 June 2018.
A statement of claim was subsequently filed on behalf of Mr Adams on 21 August 2018. The statement of claim was subsequently amended on numerous occasions, including on 19 March 2021 as discussed above.
Whilst the statement of claim brought by Mr Adams against all the defendants has always made claims of misrepresentation and negligent misstatements at common law, and a statutory claims pursuant to s 18 of the ACL, nonetheless some of the amendments to the statement of claim have been significant (see pars 18, 20, 20A, 37aa, 37bb, 40A, 40B, 40C which were subsequently added or amended, and the deletion of pars 40(a), (b) and (d) of the Statement of Claim). All the changes or amendments to the statement of claim occurred on or after 9 October 2018.
Relevantly, on 11 July 2018 a memorandum of appearance was filed on behalf of Mr and Mrs Price. No appearance was filed on behalf of either Mr Mills or Centurion.
Mr Adams subsequently sought and obtained default judgments against both Mr Mills and Centurion for want of an appearance. On 6 August 2018, judgment for want of an appearance was entered against Mr Mills, and on 23 August 2018 against Centurion. Both default judgments occurred before any amendment to the original statement of claim.
Mr Adams now submits that, as a consequence of the default judgments against Mr Mills and Centurion, the plaintiff is 'relieved from [sic] the obligations of proving the facts pleaded in the Statement of Claim, which alleged facts as against the Second and Third Defendant'.[19] This seems to suggest that the effect of the default judgments as against Mr Mills and Centurion is that the First Representation is now an incontrovertible fact.
[19] Plaintiff's Written Closing Submissions, dated 9 April 2021, par 45.3.
In support of this submission, counsel for Mr Adams relies upon O 20 r 14(1) of the Rules of the Supreme Court 1971 (WA) (RSC) and points to several authorities which he submits support this proposition. However, neither O 20 r 14 of the RSC, nor any of the relevant authorities relied upon by counsel for Mr Adams, supports the contention advanced.
It is not in dispute that, by their failure to enter an appearance and the consequent default judgments entered against them, Mr Mills and Centurion have foregone the opportunity to raise any defences or facts which contradict the matters pleaded in the writ of summons dated 29 June 2018. They are therefore taken to have admitted all matters in the writ of summons.[20] However, those deemed admissions of fact cannot operate against Mr and Mrs Price.[21]
[20] Embleton Motor Co Pty Ltd v St Kilda Beach Taxi School and Staffing Pty Ltd [2014] WASCA 183[43]; Scott v Baring [2018] WASC 361 [18] (Master Sanderson).
[21] See for example the analysis by Master Sanderson in Scott v Baring [18].
Order 20 r 14(1) makes clear that any allegation of fact made by a party in their pleading is 'deemed to be admitted by the opposite party unless it is traversed by that party' (emphasis added). It does not, and could not, mean that if there are multiple parties opposed to a plaintiff, the failure by one of those parties to traverse a pleaded fact binds all the other parties against whom the fact is pleaded. In this case, Mr and Mrs Price:
(a)filed an appearance on 11 July 2018, before the first statement of claim was filed; and
(b)filed a defence on 4 September 2018, relevantly denying that either the First Representation or Second Representation was made.
Mr and Mrs Price clearly traversed the pleaded facts.
Furthermore, the fact that Mr Mills and Centurion, by the default judgments, are deemed to have admitted the facts as against them, does not mean that the default judgments stand as admissions at large.[22]
[22] Embleton Motor Co Pty Ltd v St Kilda Beach Taxi School and Staffing Pty Ltd [44].
Finally, in any event, 'a court is not bound to act on admissions made by a party'.[23]
[23] Embleton Motor Co Pty Ltd v St Kilda Beach Taxi School and Staffing Pty Ltd [46]; Gramophone Co Ltd v Magazine Holder Co (1911) 48 SLR 1081; (1911) 28 RPC 221, 225; Termijtelen v Van Arkel [1974] 1 NSWLR 525.
In the context of this case, it would be contrary to principles of natural justice to find that the deemed admissions, as a result of the default judgments against Mr Mills and Centurion, meant that Mr Adams is now alleviated of the need to prove the First Representation and Second Representation in circumstances where Mr and Mrs Price have always denied them.
Ultimately, as noted by counsel for Mr Adams, Mr Adams' case does not stand or fall on the effect of the judgments made against Mr Mills and Centurion as Mr Adams gave evidence of the pleaded representations.[24]
The plaintiff's case (Mr Adams)
[24] Note: Ms Kinner, the fourth defendant, appeared in person at the start of the first day of the trial. Ms Kinner informed the court that she did not wish to take part in the proceedings and was excused by the court. Ms Kinner otherwise took no further part in the proceedings.
In mid to late January 2012, Mr Adams and Ms Kinner were in a de facto relationship. They lived together in the suburb of Lesmurdie. They were interested in purchasing a home in the Shire of Kalamunda.
Mr Adams found the Kalamunda Property listed for sale online via the Real Estate Institute of Western Australia's (REIWA) website. It was listed for sale at $705,000.
First inspection of the property in early February 2012
Mr Adams and Ms Kinner first attended and inspected the Kalamunda Property in early February 2012.[25] The initial inspection involved a 'walk through' of the entire house, including the outdoor patio area, albeit relatively briefly.
[25] ts 29, Adams.
Mr Adams met Mr Simon Mills on the first occasion he inspected the Kalamunda Property. Mr Mills was at that time showing people through the property. Mr Adams understood that Mr Mills was the real estate agent responsible for the sale of the property.[26] As they were leaving the property, Mr Mills asked him if he was interested in the property. Mr Adams told Mr Mills that he and Ms Kinner were interested in the property, but the asking price was too high. Mr Mills gave him his business card.[27]
[26] ts 30, Adams.
[27] ts 31, Adams.
Mr Adams and Ms Kinner were attracted to some of the property's features, particularly the outdoor entertaining area at the rear of the property, which included a bar and spa. Mr Adams also liked the size of the block, the general area and the peaceful surrounds of the property which occupied part of a cul-de-sac.[28]
Second inspection of the property - 24 February 2012
[28] ts 181, Adams.
Some days or weeks after their initial inspection of the Kalamunda Property, Mr Adams and Ms Kinner arranged to meet with Mr Mills at the property.
On 24 February 2012, Mr Adams and Ms Kinner met with Mr Mills at the Kalamunda Property. On this occasion, Mr Mills again introduced himself to both Mr Adams and Ms Kinner. He showed them through the property. On this occasion they did a more detailed inspection, lasting 30 - 40 minutes. This occurred sometime after lunchtime.[29] They viewed the entire inside of the house, including the master bedroom and ensuite, the lounge room, the kitchen, dining room, the three other bedrooms, the laundry, and games room. Mr Adams said that they spent 'quality time in each of the rooms.'[30] The ensuite to the master bedroom comprised a shower, toilet and a basin.[31]
[29] ts 179, Adams.
[30] ts 32, Adams.
[31] Exhibit 1, photographs of master bedroom and ensuite, photographs 8, 9, 10, 11, 12 and 13.
During the inspection on 24 February 2012, Mr Adams noted features of the house that caused him to believe that some of the rooms had been added to the house or altered. This included:
•The level from the hallway down to the master bedroom dropped by a considerable amount (approximately half a metre), which he found quite odd.
•In the master bedroom there were nine brick pillars built into the wall, which caused him to believe that it was originally the garage. Adjacent to those pillars were two French doors going out to the front.[32]
•The roof over the master bedroom was tilted. He noted that although it was quite high at one end, it fell away towards another side and was very low at one point.
•He also noted that the external walls to the outside of the bedroom comprised brick, but the rest of the walls on the inside were gyprock.
•The laundry and the second toilet seemed to be a 'little odd out of shape' and appeared as if it had been 'reconstructed' at some time.[33] He also noticed differences in the roof's height and materials indicating that there had been changes made.
•The master bedroom and games room were particularly different to the rest of the house, being on a different level.
•There appeared to have been a wall removed between the kitchen and the front lounge room.
[32] Exhibit 1, photo 14.
[33] ts 47, Adams.
During his evidence, Mr Adams also said that he formed the view that the house was originally a 'three by one', which later had an extra master bedroom and ensuite and a games-room added to the side of it. This evidence, like the views he had formed and set out at paragraph [55] above, is not admissible as to the truth as it amounts to unqualified expert opinion evidence. However, the evidence is generally admissible for another purpose, namely Mr Adams' state of mind at the time and why he asked relevant questions of Mr Mills at the time of these events. The relevant conversations between Mr Adams and Mr Mills are set out at [77] - [95] below.
The improvements to the property relied upon by the plaintiff
Mr Adams produced numerous photographs of the property, both inside and outside of the house. The photographs of the property comprised a mix of photographs taken during a second inspection conducted by him on 24 February 2012, as well as photographs taken in early 2017.[34]
[34] Exhibit 1 - Photographs 6, 8, 9, 10, 11, 12, 13 and 14 were all taken in 2017.
Mr Adams explained that after he and Ms Kinner purchased the Kalamunda Property, he carried out some alterations to the property. This included constructing a driveway at the property and some painting carried out in some of the rooms. The master bedroom and laundry were painted another colour. Otherwise, according to Mr Adams, the photographs essentially depicted the state of the property as it was at the point of purchase.
Apart from the description of the master bedroom and games area described at [55] - [56] above, Mr Adams also gave a detailed description of the various relevant parts of the property. This included:
•their location;
•the dimensions of various structures or buildings; and
•the relevant materials.
The rear patio (also referred to as the rear veranda) adjacent to the French doors at the rear of the house
This was located adjacent to the back of the house. It consisted of timber decking. It had a gas heater for the hot water system which was located at the rear of the patio. It had a Zincalume roof.
Mr Adams described its dimensions as:
•10 m in length;
•3.5 m wide; and
•1.9 m high.
Various photographs of the rear patio adjacent to the French doors were also tendered (see exhibit 2, photographs 16, 17, 20 and 21).
The outdoor bar and rear patio over it
Mr Adams described the patio over the outdoor bar area in the rear patio area at the back of the property as consisting of five pine poles supporting a Zincalume roof.
Mr Adams described its dimensions as:
•6 to 7 m in length;
•approximately 2.5 m in width;
•1.2 m in height.
Various photographs of the rear patio over the outdoor bar were also tendered (see exhibit 3, photographs 22, 24, 27, 28, 29, 30, 36, 37, 38 and 40, noting that photograph 17 of exhibit 2 also shows the bar area).
The outdoor spa and rear patio over it
Mr Adams described a six-person spa located in a gazeboed area at the rear of the property covered by a pitched roof. It was surrounded by timber decking and an entertaining area adjacent to the spa. The spa was connected to a natural gas heating system as well as being connected to a filter system. The spa, which was enclosed with timber decking, had a cover. According to Mr Adams, the dimensions of the spa were:
•2.5m x 2 m; and
•approximately 1 m high.
Mr Adams described the patio above the spa, which included six poles as:
•10 m in length;
•3 m wide;
•4 m in height.
Various photographs of the outdoor spa and patio over it were also tendered (see exhibit 4, photographs 18, 19, 39, and 41, noting that photographs 16, 20, 36, 37, 38 and 40 of exhibit 2 also show the spa area).
The back shed and carport (described as a patio in the pleadings) at rear of property
These two structures were in the far south-east corner of the block.
Mr Adams described the dimension of the shed as:
•about 6 m in length;
•6 m in width;
•2 m in height.
Mr Adams described the dimension of the carport as:
•6 m in length;
•6 m in width;
•2 - 3 m in height.
Various photographs of the back shed and carport were also tendered (see exhibit 5, photographs 3, 4, 5, 25 and 26, noting that photographs 22, 27 and 28 of exhibit 3 also show the back shed and carport).
Mr Adams also noted another garage and carport at front of the property.
The front veranda
Mr Adams described this area as having a white concrete-type floor.
A photograph of the area was also tendered (see exhibit 6).
Other parts of the property
Other parts of the property described by Mr Adams included a garage and carport at the front of the property. Neither of these improvements form part of the plaintiff's claim.
The plaintiff's conversations with Mr Mills on 24 February 2012
The plaintiff's account of the conversations - evidence-in-chief
At the time of the inspection on 24 February 2012, Mr Adams having formed the belief that parts of the house were additions to the original house,[35] in relation to the front master bedroom, the ensuite and the additional games room to the side of the house, asked Mr Mills, 'whether there was a council approval for the two (sic) additions to the house'.[36]
[35] ts 33, Adams.
[36] ts 33, Adams.
Mr Adams said that he raised the issue with Mr Mills, namely 'the variance and the levels between the original house and also the additions that were added to the house'.[37] According to Mr Adams, in response to his enquiry, Mr Mills informed him in the presence of Ms Kinner that 'the master bedroom, the ensuite, the walk-in-robe and the games room were all additions to the house'.[38] Mr Adams asked Mr Mills if 'there [were] any other areas that had been added to the property?'[39] Mr Mills said that 'he would get back to [Mr Adams] and let [him] know.'[40]
[37] ts 45, Adams.
[38] ts 45, Adams.
[39] ts 45, Adams.
[40] ts 46, Adams.
Mr Adams, having also formed the view that a wall had been removed between the kitchen and the front lounge room, asked Mr Mills: 'Has this room been renovated or moved?'[41] According to Mr Adams, Mr Mills could not provide an answer because, apparently, he did not know himself.
[41] ts 47, Adams.
At the carport at the front of the property, Mr Adams, Ms Kinner and Mr Mills had another conversation in relation to whether there were approvals for the 'additions that [Mr Adams believed he] could see'.[42] Mr Adams said he asked Mr Mills 'whether there was council approvals for some of the items that we looked through today, being the master bedroom, the games room and particularly the small patio at the back as all of these structures were on the same floor level'.[43] According to Mr Adams, in response, Mr Mills said 'that he was unsure of whether the approvals were in place for the additions to the house and that he would look into it with the Shire of Kalamunda and get back to us'.[44]
[42] ts 62, Adams.
[43] ts 62 Adams.
[44] ts 62 Adams.
Mr Adams was not prepared to pay the listed asking price of $705,000 for the property. He asked Mr Mills what the owners were prepared to accept as a reasonable offer. Mr Mills said, 'around the 650K mark'.[45]
Phone call from Mr Mills on 24 February 2012
[45] ts 63 Adams.
After leaving the property that day, approximately two hours later, Mr Adams received a telephone call from Mr Mills.
According to Mr Adams, Mr Mills said that 'he had spoken with the City of Kalamunda or Shire of Kalamunda … [r]egarding whether the additions to the house had council approval and … there were no outstanding approvals and all the approvals were in place'.[46] Whilst these may not have been the precise words, Mr Adams said that Mr Mills had said 'words to the effect'[47] of this.
[46] ts 64, Adams.
[47] ts 65, Adams.
At the prompting of his counsel, Mr Adams then restated that:[48]
Mr Mills contacted [him] and explained that he'd been in contact with the Shire of Kalamunda or the City of Kalamunda in regards to whether the additions to the property at 41 Coral Road had approvals and if there was any approvals that were outstanding or hadn't been completed. And the words from Simon Mills to the effect were all the approvals are in place for the property at 41 Coral Road.
[48] ts 64 - ts 65, Adams.
Mr Adams said that therefore, he 'believed that the information that Simon Mills has supplied [him] in regard to the additions to the house to be correct' and that 'the approvals were in place'. Mr Adams said that meant that there were 'no outstanding approvals or [any] unlawful structures [at] the property'.[49]
[49] ts 65, Adams.
Consequently, Mr Adams said that he believed and relied upon the information that Mr Mills, as the real estate agent, supplied [him] to be true and correct. This caused him to make the decision to put an offer on the property.[50]
[50] ts 66, Adams.
After briefly discussing the issue with Ms Kinner, Mr Adams called Mr Mills back and, relying upon the information that Mr Mills had provided about the approvals being in place, offered to purchase the property for $605,000.[51] The offer to purchase the property was made conditional upon Mr Adams and Ms Kinner selling another property they owned which was already on the market.
[51] ts 67 - ts 68, Adams.
Shortly after receiving the phone call from Mills on 24 February 2012, Mr Adams and Ms Kinner attended the offices of Centurion Real Estate where Mr Mills worked as an agent and signed a contract for sale of land in relation to the Kalamunda Property. They attended there at about 5.00 pm that day.[52] The amount offered by Mr Adams and Ms Kinner for the purchase of the property was $605,000.
[52] ts 180, Adams.
Mr Adams said that, but for his belief that all necessary approvals were in place, he 'wouldn't have purchased the property'.[53]
Mr Adams' evidence of the conversations with Mr Mills - cross‑examination
[53] ts 78, Adams.
In cross-examination, Mr Adams initially said he was absolutely sure about his recollection of conversations with Mr Mills.[54] He was asked to repeat what he had said to Mr Mills on 24 February 2012. Mr Adams said:[55]
I asked Mr Mills whether he had checked to see if the approvals were in place for the property.
[54] ts 179, Adams.
[55] ts 185, Adams.
Counsel for Mr and Mrs Price then put to him that what he had said in his evidence-in-chief was quite different, namely that: [56]
[y]esterday you said you asked whether there was council approval for some items, master bedroom, games room, and in particular - or particularly the small patio because they were all on the same floor level.
[56] ts 185 - ts 186, Adams.
Mr Adams accepted that was what he had said the day before and it was different to his subsequent evidence.[57] He said that his evidence given subsequently (evidence given on 18 March 2021) was correct, not what he had said the previous day in evidence-in-chief (given on 17 March 2021). He candidly accepted that it was difficult to recollect precisely a conversation with a real estate agent in regards to the approvals of the property given that it occurred 'nine years ago'.[58] Mr Adams readily conceded that he could not recall with precision what Mr Mills said to him. He said that it 'related to the approvals for the property.'[59] Mr Adams rejected the suggestion put to him by counsel for Mr and Mrs Price that what he might have said to Mr Mills was 'Are there any issues with approval?'.[60]
[57] ts 186, Adams.
[58] ts 186, Adams.
[59] ts 195, Adams.
[60] ts 195, Adams.
Mr Adams was also not sure where he was when he asked Mr Mills the questions, namely that it could have been on the telephone or at the property.[61] However, he was sure that it occurred on 24 February 2012.
[61] ts 186, Adams.
Mr Adams was also adamant that on 24 February 2012 he specifically asked Mr Mills if there were approvals for the games room, the master bedroom, ensuite and the small patio out the back.[62] Nothing else looked out of place to Mr Adams. Consequently, he did not ask about any of the other structures such as the bar and patio over it, spa, back veranda, shed and lean-to.[63]
[62] ts 196, Adams.
[63] ts 205, Adams.
Notably, the following exchange occurred during cross‑examination:[64]
[64] ts 200, Adams.
Mr Adams:At the time I was relying on that, the information that was given to me by Mr Mills was correct.
Mr van Hattem: What information was that?
Mr Adams:About the approvals for the house.
Mr van Hattem: I'm going to ask you a third time now. What did he say?
Mr Adams:Mr Mills informed me that he'd been in contact with the Shire of Kalamunda, City of Kalamunda, Shire of Kalamunda.
Mr van Hattem: Not sure
Mr Adams:It was - it was probably the Shire of Kalamunda back then.
Mr van Hattem: But you can't say
Mr Adams:Well, it was the Shire of Kalamunda.
Mr van Hattem: But you can't say what he said.
Mr Adams:Mr Mills informed me that he had spoken to the City of - or the Shire of Kalamunda which it was at that stage before it become a city. So he had spoken to them in regards to if there was any outstanding approvals required for the property.
Mr van Hattem: And so if there's no application there's no approval, is that right?
Mr Adams:That would be correct, yeah.
Mr van Hattem: All right. So if you're told there's no outstanding applications that could mean all sorts of things, couldn't it?
Mr Adams:You could decipher them in a couple of ways, yes.
Mr van Hattem: You could
Mr Adams:Yes.
Second Representation - Contract for sale of the property - cl 9
Prior to buying the Property, Mr Adams had previously bought and sold a few other properties in Western Australia. He was familiar with the usual terms of sale.[65] The Contract included cl 9, which reads as follows:
Unless stated on the offer and acceptance the seller declares that where required all structures have building approval.
[65] ts 117 - ts 118, Adams.
There is no dispute that the contract contained cl 9 in those terms. Nor is there any dispute that Mr and Mrs Price accepted Mr Adams' offer to purchase the property and signed the contract on 7 March 2012.
Mr Adams said that he was familiar with cl 9 at the time of buying the property.[66] He said he was experienced in buying and selling properties in Western Australia.[67]
[66] ts 171 - ts 172, Adams.
[67] ts 178, Adams.
Mr Adams said that at the time of signing the contract on 24 February 2012, he noted cl 9 of the contract.[68] On 7 March 2012, he read cl 9 again.
[68] ts 75, Adams.
Mr Adams said that at the time of reading cl 9 of the Contract, he believed that its effect was that the Mr and Mrs Price had given correct information in regard to all structures on the property, namely that they were approved.
Mr Adams again contacted Mr Mills on 27 February 2012 to find out whether his offer had been accepted by the owners. Mr Mills advised him that he had not yet received an answer from the owners.
On either 29 February 2012, or 1 or 2 March 2012, Mr Adams again telephoned Mr Mills. Mr Mills advised him that his offer of $605,000 had been accepted by the owners of the property. Mr Mills also told him that he and Ms Kinner would need to attend the offices of Centurion to complete the necessary paperwork.
On 3 March 2012, Mr Adams telephoned Mr Mills to enquire whether everything was still proceeding. Mr Mills said everything was going ahead as planned.
On the afternoon of 7 March 2012, Mr Mills contacted Mr Adams and advised him that Mr and Mrs Price had signed the contract. At that stage the sale was still conditional upon Mr Adams and Ms Kinner selling the Carramar Property. Settlement of the sale of the Carramar Property was due to occur on 1 July 2012.
On 7 March 2012, Mr Adams received a copy of the Contract signed by Mr and Mrs Price via email. As already noted at [99] above, Mr Adams again read the Contract that day. He said that when reading the Contract he specifically noted cl 9 and understood what it said.[69]
[69] ts 74 - ts 75, Adams.
Mr Adams and Ms Kinner took out a loan from the Commonwealth Bank to pay the sum of $605,000 for the purchase of the Kalamunda Property. There was also stamp duty on the property in the sum of $22,752.50.
Agreement to take early possession of the property before settlement
Settlement of the Kalamunda Property was due to occur on 3 July 2012. Due to a delay in settlement of the Carramar Property, Mr Adams found himself in a predicament and needed to move into the Kalamunda Property earlier. Mr Adams signed the Prior Possession Agreement on 2 July 2012 in order to get possession of the Kalamunda Property a day earlier.[70]
[70] ts 177, Adams.
The question of whether the Prior Possession Agreement defeats the plaintiff's claim against the first defendants is considered at [283] ‑ [294] below.
The 'discovery' by Mr Adams that there were 'unapproved structures' on Property
Between 2012 - 2016 Mr Adams was happy at the property.[71]
[71] ts 182, Adams.
In about June or July 2017, Mr Adams and Ms Kinner separated and decided to sell the Kalamunda Property. They contacted a real estate agent, Geofrey Matthew Irvin of Harcourts, Kalamunda to sell the property.
Mr Irvin was called as a witness on behalf of Mr Adams. Mr Irvin, prior to his retirement, was a real estate agent employed by Harcourts, Kalamunda. He worked as real estate sales representative from 2000 until 2019, most of that time employed by Harcourts, Kalamunda.
Counsel for Mr and Mrs Price objected to Mr Irvin giving evidence about his experience, or in relation to legislative conditions or codes of conduct governing real estate agents, on the basis that it would amount to expert evidence. As already noted, Mr Adams expressly disavowed reliance upon any expert evidence in the proceedings[72] and, in any event, did not give proper notice of expert evidence.
[72] ts 236, Mr Vogt, counsel for the plaintiff.
Consequently, Mr Irvin's experience as a real estate agent, including his evidence that he had sold somewhere between 400 to 500 properties over his career,[73] or the legislation and practices that governed his role as a real estate agent, or the practices employed by Harcourts in order to comply with legislation or codes of conduct, have no relevance to the issues in this matter.
[73] ts 215, Irvin.
In around July or August 2017, Mr Irvin inspected the Kalamunda Property. Mr Irvin undertook an assessment of the property which he estimated took 'possibly an hour'.[74]
[74] ts 218, Irvin.
During Mr Irvin's inspection of the Kalamunda Property he noticed that:[75]
•'There was what appeared to [him] at the time to be a garage [that] had been converted to a bedroom', which was now the master bedroom.
•The ensuite also 'appeared to [him] to be added on' to what appeared to have been the garage originally.
•'a quite a large games room had appeared to [him] again to be added on'.
[75] ts 218, Irvin.
Mr Irvin also inspected the outdoor structures at the Kalamunda Property, including the bar area and patio spa area and patio, garage or shed at the back, a carport and front veranda adjacent to some French doors.
It was necessary to tidy up the property to ready it for sale. Mr Adams paid Harcourts $1,000 for maintenance, including trimming of trees at the property. Mr Adams accepted that the Kalamunda Property, when originally purchased, was in reasonably good condition, but when it came to be sold it needed some 'TLC' and was marketed that way.[76] He was not living there and it required some maintenance to be done.
[76] ts 183, Adams.
Once Mr Adams and Ms Kinner had executed an agency agreement with Harcourts, Mr Irvin attended the offices of the Shire of Kalamunda to check that the outbuildings and other structures at the Kalamunda Property had been approved.[77] At the offices of the Shire of Kalamunda, he spoke to Mr Lane Morris. Mr Irvin made enquiries with Mr Morris about buildings and structures at the Kalamunda Property. Mr Morris showed him information on a computer that indicated that the only items that were listed as having been approved by the Shire of Kalamunda were a garage and a carport. None of the other items had approval from the Shire.[78]
[77] ts 221, Irvin.
[78] ts 227, Irvin.
Consequently, by that stage Mr Irvin believed that a lot of the structures on the property did not have approval from the Shire of Kalamunda. Mr Irvin believed that this was relevant to the sale of the property. He immediately reported what he had discovered to Mr Adams.
According to Mr Irvin, he went through the relevant items with Mr Adams, namely:
•The barbecue area and the shed over the top.
•The spa and the roof over that.
•Back veranda.
•Additions of the master bedroom.
•The ensuite.
•Family room or games room behind.
Mr Irvin's evidence was consistent with that of Mr Adams. In his evidence, Mr Adams said that he was informed by Mr Irvin that his enquiries with the City of Kalamunda revealed that 'the only proportion [sic] of the house or the property at 41 Coral Road that had council approval was the garage at the front of the house'.[79] (See the evidence of Geofrey Matthew Irvin set out at [118] - [120] above.)
[79] ts 93, Adams.
Mr Irvin said that he was not prepared to put the Kalamunda Property on the market until he received further direction from Mr Adams in relation to what was to be done with respect to what he believed to be unapproved items. He then assisted Mr Adams to find an engineer who could inspect the building.
Mr Adams said that created a predicament for him. He had to choose between '[going] down the path of rectifying and bringing the unapproved structures back to a standing of the Building Code and the Australian Standards'[80] or simply to sell the house as it was.
[80] ts 93, Adams.
By 'rectify' he meant getting a 'structural engineer to look at the premises to give [them] guidance on what needs to be rectified to bring it back to the Building Code and Australian Standards'.[81]
[81] ts 94, Adams.
Mr Adams said he effectively had two options at that point. One was to disclose the unapproved structures as part of the sale of the house. The other was to seek professional opinions and engineering reports on the possibility of getting retrospective approval for the items at Coral Road.[82]
[82] ts 119, Adams.
The property was initially listed for sale at $600,000 but there was little interest at that price given that interested parties were informed that there were unapproved items on the property.
Mr Adams withdrew the property from the market and engaged a structural engineer, Bruce Pittard, to provide an opinion about the Kalamunda Property. Ultimately, he obtained and paid for a report from Mr Pittard. He then obtained a further report and spoke to a builder about its contents. He was provided with a 'a detailed quotation of what it would cost to bring the unapproved structures up to the council approval but also meeting the BAL rating, the bushfire levies rating that was rated for the property at Coral Road'.[83]
[83] ts 129, Adams.
It should be noted that counsel for Mr and Mrs Price initially objected to any evidence relating to these reports on the basis of relevance. Although counsel for Mr Adams expressly disavowed reliance upon any expert evidence and did not seek to prove that any of allegedly unapproved structures required rectification, nonetheless, he submitted that they were relevant for two reasons. First, it was submitted that it went to the issue of damages. It was submitted that it was reasonable for Mr Adams, in the circumstances, to seek advice and obtain reports given what he had been told by Mr Irvin about the lack of approvals at the property. Secondly, based upon what he was told about the likely costs associated with rectifying any defects, it was reasonable for Mr Adams to sell the property at a reduced price. Mr Adams did not seek to either tender the reports or adduce evidence of their contents.[84]
[84] ts 130, counsel for Mr Adams' submissions.
Ultimately, counsel for Mr and Mrs Price withdrew the objection and submitted that the evidence was simply a question of weight for the court.
The evidence could not in this case, prove either that the structures were unapproved or required rectification. The only relevance of the evidence is the effect that the information had on Mr Adams' state of mind and whether it was ultimately reasonable for him to sell the Kalamunda Property for the price he did.
The cost of the reports obtained by Mr Adams were as follows:
•Airey Taylor report - $3,740 (Exhibit 26).
•Bushfire Perth Pty Ltd - $350 (Exhibit 27).
•Valuations WA Pty Ltd - $495 (Exhibit 28).
Due to the anticipated costs associated with rectifying all issues, Mr Adams and Ms Kinner decided to remarket the Kalamunda Property in August 2019. They then engaged Lou Giumelli from Harcourts Real Estate, Kalamunda. Mr Adams said, based upon what he was told about the unapproved structures, the house was placed on the market at a lower value due to the unapproved structures being disclosed as part of the sale of the Kalamunda Property. Mr Giumelli's recommendation of what price the property should be marketed for was based upon the belief that numerous structures at the Kalamunda Property did not have the required Shire approval.
The sale of the property in 2017
Ultimately, in January 2020 Mr Adams and Ms Kinner sold the Kalamunda Property. For the purposes of sale, they disclosed that the following structures on the property did not have council approval. Those structures were:[85]
•The games room.
•The master bedroom.
•Ensuite to the master bedroom.
•The front veranda.
•The back veranda.
•The spa area.
•The lean-to to the shed.
•The bar area.
[85] ts 150, Adams.
The Kalamunda Property, which settled in February 2020, was sold to Jamee Lin Murdoch and Terrence Stanley Murdoch for $480,000.[86]
[86] Exhibit 13, copy of the Contract for Sale of Land or Strata Title by Offer and Acceptance relating to the sale of 41 Coral Road, Kalamunda by David Nigel Adams and Sally Anne Kinner to Mr and Mrs Murdoch.
Duncan Wilson
Duncan Wilson, the principal building surveyor for the City of Kalamunda, was called as a witness on behalf of Mr Adams.
It is of note that during Mr Wilson's evidence, counsel for Mr and Mrs Price objected to parts of his evidence on several grounds. First, it was submitted that much of Mr Wilson's evidence fell into the category of 'expert opinion evidence.' Secondly, Mr Wilson did not explain the factual basis upon which he relied to express his opinions.
Thirdly, Mr Adams had expressly disavowed reliance upon any expert evidence as part of his case, thus where he essentially purported to give expert evidence, it should be excluded.
At the time that the issue of the relevance of parts of Mr Wilson's evidence was first raised, namely on 19 March 2021, counsel for Mr Adams submitted that Mr Wilson was not being called as an expert witness. Indeed, Mr Adams' position was that there was no matter required to be proved by him that required expert opinion evidence.[87] Rather, it was submitted that Mr Wilson's evidence was 'lay evidence'[88] and was relevant for two purposes. First, whether any relevant structures at the property, as a matter of fact, had the requisite approval. Secondly, whether any of the relevant structures at the property, as a matter of fact, required approval from the Shire of Kalamunda.[89] Counsel for Mr Adams submitted that Mr Wilson, as an employee of the City of Kalamunda, was simply going to give lay evidence of whether or not the relevant structures fell 'within the shire requirement and definition of structure'.[90] Notably, the relevance of Mr Wilson's evidence, including whether he should be called as an expert, was reventilated later in the trial in the context of whether Mr Adams should be permitted to adduce other documentary evidence. This issue is further considered at [ 175] - [223] below.
[87] ts 236, Mr Vogt, counsel for the plaintiff.
[88] ts 238, Mr Vogt, counsel for the plaintiff.
[89] ts 239, Mr Vogt, counsel for the plaintiff.
[90] ts 239, Mr Vogt, counsel for the plaintiff.
It is necessary to consider Mr Wilson's evidence to determine whether the nature of his evidence, or any part of it, falls into the category of expert evidence and, if it is, whether it is should nonetheless be admitted for that purpose. Mr Wilson, in giving his evidence, also produced various records held by the City of Kalamunda in relation to the Kalamunda Property. No issue is taken in relation to his ability to produce those records. Ultimately those documents became exhibits in the trial (exhibits 20 to 25, and are discussed below).
Mr Wilson commenced his employment with the City of Kalamunda on 17 October 1983 as a Level 2 Building Inspector. In his role as the principal building surveyor for the City of Kalamunda, he relied upon key pieces of legislation to determine what structures required building approval. Prior to 2 April 2012, the period during which Mr Adams claims the alleged structures were built, he relied upon the Local Government (Miscellaneous Provisions) Act 1960 (WA) (LGMPA), specifically s 374.[91] Subsequently, the relevant legislation and regulations that applied were the Building Act 2011 (WA) (Building Act) and Building Regulations 2012 (WA) (Building Regulations).
[91] ts 243, Wilson.
Section 374 of the LGMPA, which required plans to build to be approved by local government, relevantly read as follows:
(1)No person shall -
(a)lay out for building, or commence or proceed with a building on, land in a district; or
(b)in respect of the structure of a building already erected on land in a district, amend, alter, extend, or enlarge, or commence or proceed with the amendment, alteration, extension or enlargement of the structure of the building
until he has caused to be submitted to the local government and the local government has approved by the issue to the person of a building licence in the prescribed form and on payment of the prescribed fee, a copy of the specifications of, and a plan showing clearly, the building or buildings proposed to be built, or the amendment, alteration, extension or enlargement of the existing buildings, as the case may be, and the position of the privies and drains and unless he complies with the conditions, ifany, that are specified in the licence.
Penalty: Maximum penalty of $5 000 and in addition a maximum daily penalty of $100 for each day during which the offence continues; minimum penalty of $200 and in addition a minimum daily penalty of $20 for each day during which the offence continues.
(1a)A building licence referred to in subsection (1) may be issued subject to such conditions as are specified in it including any condition limiting the time within which the licence is valid.
(1b)The authority to approve or refuse to approve plans and specifications submitted under this section may be delegated by a local government to a person appointed to the office of building surveyor, but where a plan and specifications so submitted conform to -
(a)all local laws in force in the relevant district or part of a district in respect of building matters, and the local government's pre‑determined policy in respect of building matters; and
(b)all local laws and schemes in force in the relevant district or part of a district in respect of town and regional planning matters, and the local government's pre‑determined policy in respect of town and regional planning matters,
the building surveyor shall not refuse to approve that plan or those specifications without first obtaining the consent of the local government.
A number of things should be noted in relation to s 374 of the LGMPA. They include:
1.no building, or change to an already existing building by way of alteration, extension or enlargement of the structure of such building was permitted without the approval of, and issuance of a licence by a local government authority; and
2.the authority to approve or refuse to approve plans and specifications for the building, alteration or change to an existing building under this section may be delegated by a local government to a person appointed to the office of building surveyor; and
3.notwithstanding that a plan and specifications for any building, change, alteration or extensions to an existing structure conformed to relevant laws and schemes, a building surveyor could nonetheless, with the approval of the local government, refuse to approve a plan or specifications.
Mr Wilson also noted that, pursuant to s 374, the term 'structure' was not defined. Mr Wilson said he effectively applied the ordinary dictionary definition to the word 'structure'. In the opinion of Mr Wilson, the word 'structure' meant '… a collection of materials which have been put together to form … a structure or … a building, something which you can use'.[92]
[92] ts 245, Wilson.
Likewise, for the purposes of applying s 374, Mr Wilson said that a 'building is a structure. Generally speaking a building will have sides', although 'a building could also have no sides.'[93]
[93] ts 245, Wilson.
Mr Wilson also said that as at 7 March 2012, any structure on rateable land within the Shire of Kalamunda required building approval unless exempted by sch 4 of the Building Regulations.[94]
[94] ts 245, Wilson.
It is of note that s 374 of the LGMPA was repealed following the introduction of the Building Act. The effective date of repeal was 2 April 2012.[95] The Building Act did not apply until 2 April 2012. Thus, Mr Wilson's reference to the application of Building Regulations as of 7 March 2012 was wrong.
[95] Building Act s 153.
Mr Wilson said that, following the introduction of the Building Act and Building Regulations, 'all structures unless exempted by schedule 4 of the Building Regulations required a building approval'.[96]
[96] ts 245, Wilson.
Mr Wilson said that:[97]
[d]epending on the nature of that structure and whether or not that structure was exempted via schedule 4 then a building would be approved or would - would be exempt or the like. An example of an exempted structure would be a shed of 10 square metres or less or a pergola, which is a timber battened and/or shade clothed structure up to 20 square metres they're exempted. Patios and those sorts of things are not.
[97] ts 245, Wilson.
Mr Wilson confirmed that his knowledge and belief as to whether a structure was exempt came from the Building Regulations which currently applied.[98]
[98] ts 245, Wilson.
Section 9 of the Building Act replaced s 374 of LGMPA. Section 9 relevantly sets out the following:
A person must not do building work unless -
(a)a building permit is in effect for the building work; or
(b)a building permit is not required for the building work under Part 5 or regulations or an order mentioned in Part 5 Division 1; or
(c)the work is done in accordance with a building order; or
(d)the work is done in the course of taking action under section 118(2).
Section 3 of the Building Act defines a number of relevant terms, including the following:
'building work' is defined to mean:
(a)the construction, erection, assembly or placement of a building or an incidental structure; or
(b)the renovation, alteration, extension, improvement or repair of a building or an incidental structure; or
(c)the assembly, reassembly or securing of a relocated building or a relocated incidental structure; or
(d)the changing of ground levels of land for the purposes of work of a kind mentioned in paragraph (a), (b) or (c) to an extent that could adversely affect land beyond its boundaries; or
(e)site work on any land for the purposes of, or required because of, work of a kind mentioned in - (i) paragraph (a), (b), (c) or (d); or (ii) paragraph (a) or (b) of the definition of demolition work; or
(f)other prescribed work, but does not include work of a kind prescribed for the purposes of this definition as not being building work;
'demolition work' means -
(a)the demolition, dismantling or removal of a building or an incidental structure; or
(b)the changing of ground levels for the purposes of work of a kind mentioned in paragraph (a) to an extent that could adversely affect land owned by a person other than an owner of the land on which the building or incidental structure that is the subject of the demolition work is located; or
(c)other prescribed work,
but does not include work of a kind prescribed for the purposes of this definition as not being demolition work;
'incidental structure' means a structure attached to or incidental to a building and includes -
(a)a chimney, mast, swimming pool, fence, free-standing wall, retaining wall or permanent protection structure; and
(b)a part of a structure
Like the LGMPA, the word 'structure' is not defined by the Building Act. Consequently, unless exempt pursuant to a specific provision of the Building Act or the Building Regulations, building works are prohibited to be undertaken without a permit.
During Mr Wilson's evidence, counsel for Mr Adams asked him whether, with reference to the Building Regulations and the Shire of Kalamunda's records, he could say whether the structures that were present at the property before 7 March 2012 required council approval? Mr Wilson said the answer to that question depended 'on the nature of that structure and whether or not that structure was exempted via sch 4 [of the Building Regulations 2012 (WA)]'.[99] He gave examples of structures that were exempt such as 'a shed of 10 square metres or less or a pergola, which is a timber battened and/or shade clothed structure up to 20 square metres.' He said that '[p]atios and those sorts of things are not'.[100]
[99] ts 245, Wilson.
[100] ts 245, Wilson.
Counsel for Mr and Mrs Price objected to this evidence on the basis that, if Mr Wilson was not giving expert opinion evidence, then his answer would be an attempt to usurp the court's role as the trier of fact.
Mr Wilson said that from the City of Kalamunda's perspective, the difference between a 'pergola' and a patio depended on the roof structure. In his opinion, a 'pergola is a timber battened and/or shade clothed structure and a patio has an impervious roof'.[101]
[101] ts 248, Wilson.
Mr Wilson said that if a person came to him at the City of Kalamunda and asked him if they required building approval to a patio, the answer was 'yes'.[102]
[102] ts 250, Wilson.
Mr Wilson went on to explain that, before 2012, applications for a building licence or a building permit before the commencement of any development required plans to be submitted in the prescribed manner as dictated in the Building Regulations. Depending on the nature of the intended works, the plans could be simple homeowner drawn plans, up to complex architectural or engineering plans.
Again, if Mr Wilson's use of the term 'Building Regulations' applying before 2012 was a reference to the Building Regulations, then he was clearly wrong about its application since they only came into effect on 2 April 2012. If he meant some other building regulations, it is not clear what he was referring to.
Mr Adams, through Mr Wilson the principal building surveyor for the City of Kalamunda, produced relevant historical records relating to the Kalamunda Property.[103] (The relevant documents are discussed below.) This included documents kept by the Shire/City of Kalamunda's data system records (called 'Synergy') which showed information relating to any approvals applied for with the Shire/City of Kalamunda. The information included 'the application number, the date it was approved, and a description of the works undertaken'.[104] Mr Wilson spoke to the various documents which are discussed below.
[103] ts 253 - ts 263, Wilson; Exhibits 20 - 25.
[104] ts 254, Wilson.
Mr Adams submits that there was no record of any other structure or addition being approved at the Kalamunda Property.
There is no issue that Mr Wilson's production of various records held by the Shire of Kalamunda relevant to the Kalamunda Property, or his evidence of what the records, on their face disclosed, was relevant and admissible. His evidence that the Shire of Kalamunda determined whether structures required approval, and whether the Shire of Kalamunda granted approval amounted to matters of fact. That evidence needs to be contrasted to those aspects of his evidence which either purported to interpret the law or provide expert opinion evidence. None of Mr Wilson's evidence beyond the limited purposes just identified was admissible as to the issues in this case. Where he gave opinions as to: what the term 'structure' meant; whether something was a 'structure;' or whether it was a structure that required approval from the Shire of Kalamunda, that evidence amounted to opinions of law or was otherwise expert opinion evidence. In circumstances where Mr Adams did not give any notice of expert evidence, and in any event expressly disavowed any reliance upon expert evidence, it would be unfair and prejudicial to Mr and Mrs Price to admit that evidence.
The 'structures'
Critical to Mr Adams' case is whether certain 'improvements' to the Kalamunda Property were 'structures' that had approval, or required approval, from the Shire of Kalamunda at the time of the alleged representations. As already noted, the improvements relied upon by the plaintiff are:
•The master bedroom.
•The games room.
•The shed.
•The patio in front of the shed.
•The (outdoor) bar.
•The patio over the bar.
•The patio adjacent to the French doors.
•The (outdoor) spa.
•The rear patio (over the spa).
•The front veranda.
Immediately after counsel for Adams' opening address, Mr and Mrs Price, through their counsel, pointed out that Mr Adams had not sought leave to adduce expert evidence in the trial. Counsel for Mr and Mrs Price also submitted that Mr Adams, as the plaintiff, was required to prove a number of things, including that:[105]
•the relevant improvements were 'structures';
•they were structures that required approval; and
•there was no approval for the structures.
[105] ts 12, Mr van Hattem.
Furthermore, by implication, it would also be necessary to prove that at the time of the representations, Mr and Mrs Price (as first defendants) and/or Mr Mills (as second defendant) knew or were reckless as to whether the improvements had the necessary approval.
As already noted earlier in these reasons, counsel for Mr and Mrs Price submitted that, so far as these issues were concerned, although Mr Adams' submissions dated 18 March 2021 averted to these matters, namely by his counsel's written outline of opening submissions it was asserted that Mr and Mrs Price had 'engaged in a deliberate omission of disclosure to [Mr Adams] the Plaintiff and the Fourth Defendant [Ms Kinner] of the fact that, on the property that they were purchasing, there were structures which both required approval from the Shire of Kalamunda, and, had been constructed without requisite approval',[106] Mr Adams' pleadings were deficient on the issue.
[106] See 'Plaintiff's Outline of Submissions and Opening' dated 17 March 2021.
Counsel for Mr Adams subsequently sought, and was granted, leave to amend the pleadings to remedy the deficiency.[107]
[107] See Minute of First Re-Amended Statement of Claim, dated 18 March 2021.
If the structures were added or improved at a time when Mr and Mrs Price had possession of the property, then it may more readily be inferred that they had the requisite knowledge at the time the representations were allegedly made. If Mr Adams fails to prove either that the structures were added by Mr and Mrs Price knowing that they required approval, or were aware of the need for the necessary approvals at a time when they made or were responsible for the alleged representations, then his claim must necessarily fail.
History of building approvals at the property
Printout from the City of Kalamunda relating to approvals and applications for 41 Coral Road (exhibit 20)
The document contained the following information (as it appears in the document):
| Applic. No. | Application date | Description | Licence Print Date | Applicants Address | Assess No | Decision |
| 79801282 | 21/02/1980 | RES | 03/12/1980 | A16996 | A | |
| 94950496 | 11/11/1994 | GARAGE OUTBUILDING | 17/11/1994 | 41 CORAL ROAD KALAMUNDA 6076 | A16996 | A |
| 95960571 | 12/08/1995 | CANCELLED - SWIMMING POOL | 21/12/1995 | 41 CORAL ROAD KALAMUNDA 6076 | A16996 | C |
| 97980825 | 04/02/1998 | C/PORT ADD. TO RESIDENCE | 05/06/1998 | 41 CORAL ROAD KALAMUNDA 6076 | A16996 | A |
Plan of proposed residence on Lot 64 Coral Road, Kalamunda (exhibit 21)
The plan of the proposed residence was on its face prepared for a 'Mr and Mrs Rimmer'. It was approved by the Shire Building Surveyor for the Shire of Kalamunda and is dated '12 ‑ 3 ‑ 1980' (although exhibit 20 has a 'Licence Print Date' of '03/12/1980'). The plans provide for a home comprising: four bedrooms; kitchen; dining room; lounge; one bathroom with toilet and shower; and a driveway leading to a carport at the front left of the property (as you look at it from the road).
Plans for proposed 'Garrison Garage' (exhibit 22)
The plan for a proposed garage at the rear of the property was approved by Mr Wilson, principal building surveyor for the Shire of Kalamunda on '17-11-1994'.
Plans for above ground pool (exhibit 23)
On 21 December 1995, the Shire of Kalamunda approved plans for an above ground pool submitted on behalf of the owners 'Grant Price & H'. On its face, the document includes 'date received 11/11/94'. It is of note that the City of Kalamunda records (exhibit 20) have an application date of 12/08/1995 and 'Licence Print Date' of '12/12/1995'.
Plans for carport (exhibit 24)
Plans for a carport (at the front left-hand side of the property) were approved by the Shire of Kalamunda for the owner 'G Price' on 6 May 1998. Notably, the City of Kalamunda's records (exhibit 20) bear, perhaps, a different date of '5/6/1998'.
Letter from G B Allen, Manager of Building Services, Shire of Kalamunda to G & H Price dated 2 December 2002 (exhibit 25)
This letter, addressed to 'G & H Price' from G B Allen, Manager of Building Services, Shire of Kalamunda, on its face, acknowledges the receipt of plans relating to a 'water closet' built at the property without the Shire's approval. It also informs the recipients of the status of the alteration and that the Shire's records would now reflect the improvements to the property. The letter notes the following:[108]
•The Shire 'can now acknowledge these building works'.
•The letter does not indicate 'the structural adequacy of the structure'.
•'[t]he Local Government (Miscellaneous Provisions) Act [did] not provide any mechanism for local authorities to issue retrospective building approvals even if the construction standard [was] in compliance with recognised building practices, the Building Codes of Australia and relevant Australian Standards'.
•The Shire had decided not to commence any action against them for 'commencing building works without first obtaining a Building Licence'.
[108] See exhibit 25.
According to Mr Wilson, the Shire of Kalamunda did not have any other record of any application or approval relating to the Kalamunda Property.
Mr Wilson and the 'aerial photographs'
On 19 March 2021, during the evidence of Mr Wilson on the second day of the trial, counsel for Mr Adams sought to introduce into evidence a series of aerial photographs purportedly taken of the Kalamunda Property at various dates relevant to the proceedings. According to counsel for Mr Adams, the photographs were the product of Google image aerial photography[109] ('aerial photographs'). Mr Wilson informed the court that the aerial photographs had been printed by him that morning before coming to court.[110]
[109] ts 267, Mr Vogt.
[110] ts 268, Wilson.
The purpose of introducing the photographs was apparently to demonstrate, by reference to the dates of the photographs, when the structures on the property came into existence. It is of note that the aerial photographs were not disclosed to counsel for Mr and Mrs Price until the second day of the trial. By that stage, as has already been noted at [163] – [166] above, counsel for Mr Adams had been put on notice by counsel for Mr and Mrs Price that it was their submission that there was not only a deficiency in the plaintiff's pleadings, but that he was required to prove the relevant improvements were 'structures'; and they were structures that required approval; and there was no approval for the structures. This obviously required proof of when the structures came into existence.
Counsel for Mr and Mrs Price objected to the tender of the aerial photographs, or any reliance upon them by Mr Adams, on the basis that the aerial photographs had not been disclosed prior to the hearing and any reliance upon them called for expert evidence as to how and when they were taken.[111] The aerial photographs had not been created by Mr Wilson. He had simply reproduced them.
[111] ts 268.
At the time that they were first sought to be tendered, counsel for Mr Adams advised the court that the purpose of relying upon the aerial photographs was to establish that there was no record held by the Shire of any relevant application or approvals for the structures, and to establish 'whether the Miscellaneous Provisions Act [sic] or the Building Regulations or Act' applied to the structures at the relevant time.[112] It is difficult to see how the photographs were relevant to determining what legislation applied at the relevant time since that is a question determined by the date the legislation came into force. In any event, as already noted, the relevant legislation was s 374 of the LGMPA.
[112] ts 267, Mr Vogt.
Counsel for Mr Adams submitted that Mr Wilson was not giving evidence as an expert. Rather, the evidence was to be adduced through him as the proper officer of the Shire of Kalamunda. However, as ultimately became clear, counsel for Mr Adams was seeking to lead a history of the property through Mr Wilson and the aerial photographs, including when the various structures came into existence.[113] At all times during the hearing that day, counsel for Mr Adams expressly disavowed any reliance upon Mr Wilson as an expert witness. Indeed, counsel for Mr Adams disavowed reliance upon any expert evidence.
[113] See ts 324, Mr Vogt's closing submissions, 31 May 2021.
Relevantly, after the issue of the aerial photographs was first raised, the following exchange occurred with counsel:[114]
Mr van Hattem: So I do have an issue with that, your Honour, because it seems that post the date of subpoena and post the date of me raising an issue there must have been some communication between the solicitors and the witness in relation to some additional evidence that needed to be produced and it was produced this morning. And what's more it'll be my submission I think that it's likely that the production of these photographs required some expertise.
Levy DCJ:Well, leave that aside I'm trying to get to what this relates to, that's what I'm trying to get to. Because if it's simply relating to the issue that we did not have any applications or approvals relating to this item, that's one thing, and that may be relevant and admissible. But if it goes beyond that I'm just struggling to see how it's not expert evidence.
Mr van Hattem: Yes, your Honour.
Levy DCJ:Or if it isn't expert evidence why I need the evidence at all, if it's a matter of law, that structures, improvements, additions pursuant to 374 of the Local Government's Miscellaneous Act required permits and applications. Then it's a matter for me to determine whether, in fact, these items did or did not require applications or approvals or permits.
Mr van Hattem: Yes, your Honour.
Levy DCJ:Doesn't that follow logically, Mr Vogt?
Mr Vogt:Yes, it does, sir.
[114] ts 268.
Was the First Representation made by Mr Mills on 24 February 2012? If it was made, was it false?
As noted above, in relation to the First Representation, Mr Adams claims that it was made by Mr Mills in the course of discussions he had with him about improvements or alterations that had been made to the Kalamunda Property and whether the improvements had approval.
At times in his evidence, Mr Adams reverted to the use of the phrase 'to the effect' or 'to that effect' with reference to what was said in conversation with Mr Mills.[149] Mr Adams conceded the passage of time, approximately nine years between the event and the giving of his evidence, had reduced his ability to remember conversations with absolute precision. He conceded that in recalling the conversations he may had made mistakes.[150] In his answers, when he used the phrase 'words to that effect', it was because he was unable to recall the precise words used.[151]
[149]See for example ts 65, Mr Adams.
[150] ts 170, Adams.
[151] ts 170, Adams.
Mr Adams also accepted that the original asking price for the property was $675,000, not $705,000 as he had initially said in evidence‑in‑chief.[152]
[152] ts 190, Adams.
Generally speaking, Mr Adams was an honest witness. He was genuinely doing his best to recall the detail of the conversations he had with Mr Mills. Like most witnesses, in circumstances where the precise words were not recorded in any way, he had some difficulty remembering with precision the words spoken during the conversations with Mr Mills on 24 February 2012. Consequently, a real issue arises as to his reliability with respect to what was said by Mr Mills on 24 February 2012.
Many of the questions asked of Mr Adams in cross-examination were directed to what he had said to Mr Mills, and where he was when the conversation occurred. However, it is important to note that Mr Adams does not rely upon the conversations at the house to prove the First Representation. Mr Adams relies upon what he claims he was told by Mr Mills in a later telephone call on 24 February 2012. The relevant representation is set out in the statement of claim as follows:
10)On or about 26 (sic) February 2012 the First Defendants by their agent duly authorised, the Second Defendant, represented to the Plaintiff and the Fourth Defendant that all improvements at the Property had been approved by the City of Kalamunda (the First Representation).
Particulars
(a)The First Representation was made during a telephone conversation between the Second Defendant and the Plaintiff and the Fourth Defendant following the Plaintiff's enquiry made to the Second Defendant during the inspection of the Property on 24 February 2012.
So far as this representation is concerned, Mr Adams' evidence‑in‑chief as to what he was told by Mr Mills in the telephone conversation on 24 February 2012 is set out at [82] - [95] above.
In evidence‑in‑chief, Mr Adams said that he was told by Mr Mills that:[153]
… there were no outstanding approvals and all the approvals were in place.
[153] ts 64, Adams.
This is to be contrasted to his evidence in cross-examination as follows:[154]
Mr Adams:Mr Mills informed me that he had spoken to the City of - or the Shire of Kalamunda which it was at that stage before it become a city. So he had spoken to them in regards to if there was any outstanding approvals required for the property.
Mr van Hattem: And so if there's no application there's no approval, is that right
Mr Adams:That would be correct, yeah.
Mr van Hattem: All right. So if you're told there's no outstanding applications that could mean all sorts of things, couldn't it
Mr Adams:You could decipher them in a couple of ways, yes.
[154] ts 200, Adams.
Mr Adams took what he had been told by Mr Mills to mean that there were no outstanding approvals.[155]
Jones v Dunkel - the failure of the first defendants to call Mr Mills. Can an adverse inference be drawn against them?
[155] ts 200, Adams.
Before coming to any conclusions in relation to the First Representation, it is necessary to consider the submission advanced on behalf of Mr Adams that an adverse inference should be drawn against Mr and Mrs Price as a consequence of their failure to call Mr Mills as a witness in these proceedings.
The 'rule' arising from Jones v Dunkel,[156] is that, where a party fails to call a witness , an inference may be drawn in favour of the other party.
[156] Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298.
In O'Meara v Dominican Fathers,[157] Gyles and Weinberg JJ at [69] noted a number of relevant propositions in relation to the 'rule' in Jones v Dunkel:
•The unexplained failure by a party to call witnesses may, in appropriate circumstances, lead to an inference that those witnesses would not have assisted that party's case: O'Donnell v Reichard [1975] VicRp 89; [1975] VR 916 at 929;
•the rule permits an inference that the uncalled witnesses would not have helped the party who failed to call them, and entitles the trier of fact to take that into account in deciding whether to accept any particular evidence which relates to a matter on which those witnesses could have spoken;
•in particular, the rule entitles the trier of fact the more readily to draw the inference fairly able to be drawn from the other evidence by reason of the opponent being able to prove the contrary had the party chosen to call evidence. However, the rule does not permit an inference that the uncalled witnesses would in fact have been damaging to the party not calling them. In other words, the rule cannot be employed to fill gaps in the evidence, or to convert conjecture and suspicion into evidence.
•the rule only applies where a party is 'required to explain or contradict' something: Jones v Dunkel at 321. What a party is required to explain or contradict depends on the issues raised by the pleadings, and by the course of evidence in the case. If a party bearing the burden of proof on an issue has called no evidence to support that party's claim, the opponent is not required to answer.
[157] O'Meara v Dominican Fathers [2003] ACTCA 24.
Counsel for Mr Adams initially raised the issue in the context of the effect of the default judgments obtained against the second and third defendants. That issue has already been dealt with at [34] - [46] above. In circumstances where it was said that the default judgments were conclusive proof of the matters raised against the second and third defendants, and therefore were matters that amounted to incontrovertible facts in these proceedings, on that analysis, it is difficult to understand counsel for Mr Adams' submission that Mr and Mrs Price should have called Mr Mills in these proceedings. Had he been called, on the analysis argued for by counsel for Adams, he would have been estopped from saying anything that might undermine the effect of the default judgments.
In any event, so far as the claims for fraudulent, reckless or negligent misrepresentation are concerned, at best, the rule in Jones v Dunkel could only lead the court to more readily accept the evidence of Mr Adams and the inferences that are available to be drawn from other evidence in the case. There is no need in this case for Mr and Mrs Price to explain or contradict any of the evidence relied upon by Mr Adams.
For the reasons set out below, irrespective of the 'rule', I find that Mr Adams is generally a credible witness. There is no need to apply the rule in Jones v Dunkel in this case.
Conclusions with respect to whether the First Representation was made by Mr Mills on 24 February 2012 and whether it was false?
I am satisfied to the requisite standard that what Mr Mills told Mr Adams in the telephone conversation on 24 February 2012 was that he had spoken with someone at the Shire or City of Kalamunda who had told him that there were no outstanding applications or approvals relating to the Kalamunda Property. On the evidence before me, including the evidence of Mr Duncan Wilson, the principal building surveyor for the City of Kalamunda who was called to produce relevant historical records relating to the Kalamunda Property,[158] and the records tendered by Mr Adams, strictly speaking, that was true. Whilst the relevant improvements, or at least some of them, may not have been built with the requisite approval, there were no outstanding applications or approvals relating to the Kalamunda Property as at 24 February 2012.
[158] ts 253 - ts 263, Wilson; Exhibits 20 - 25.
However, given Mr Adams' evidence-in-chief and cross‑examination in relation to what he was told, and that what he understood Mr Mills to mean was that there were no outstanding approvals (particularly the evidence set out at [249] – [251]), I cannot be satisfied to the requisite standard that Mr Mills said that 'all improvements at the property had been approved by the City of Kalamunda' or had said words to that effect.
Whatever Mr Adams understood was meant by the statement that there were no outstanding approvals, there is a distinction between that and the conclusion, as pleaded by Mr Adams, that meant 'all improvements at the Property had been approved by the City of Kalamunda' (emphasis added).[159]
[159] Plaintiff's statement of claim, par 10.
As already noted above, for Mr Adams to succeed on the basis that the representation was fraudulently made by Mr Mills, namely that it was false or made recklessly without any care whether it was true or false,[160] Mr Adams needs to prove not only that the representation was untrue, but also that at the time the representation was made Mr Mills (and therefore Mr and Mrs Price vicariously) knew it to be false or untrue or was recklessly careless as to whether it was true or false.[161]
[160] Derry v Peek (1889) 4 AC 337.
[161] Derry v Peek.
I am conscious of the gravity of the allegations made. In order to make a finding of fraudulent misrepresentation against Mr and Mrs Price (albeit vicariously), Mr Adams would have to satisfy me to the requisite standard that Mr Mills, as Mr and Mrs Price's agent, had either no honest belief in the truth of the First Representation in the sense in which he intended it to be understood, or no reasonable grounds for believing the relevant statement to be true. The consideration of these issues requires an objective assessment of what Mr Mills' subjective state of mind was at the time.
Conclusion - First Representation - fraudulent or reckless misrepresentation
For the reasons already articulated above, this aspect of the claim must fail for two reasons. First, I am not satisfied that what was said by Mr Mills was false or untrue. In fact, I am satisfied that what Mr Mills said to Mr Adams was literally true. Secondly, even if it was false or untrue, there is no evidence that Mr Mills knew it to be false or untrue or was recklessly careless as to whether it was true or false.[162]
[162] Derry v Peek.
Whilst on its face the statement made by Mr Mills that 'there were no outstanding applications or approvals relating to the property' was true, the question to be further considered is whether it nonetheless amounts to a negligent misrepresentation.
First Representation - Negligent misstatement
Legal principles
I have already noted that the issue of agency has been admitted by Mr and Mrs Price.
In relation to the alternative claim that the First Representation amounts to a negligent misstatement, it is not sufficient for the plaintiff to merely establish that the representation was false. The plaintiff must also prove to the requisite standard that the misrepresentation was made negligently.
In this case, for Mr Adams to succeed in a claim for negligent misstatement, he must also prove to the requisite standard that:
(a)The representation was made by Mr and Mrs price (alleged to have been made through their agent Mr Mills).
(b)That a relevant duty of care was owed to him by Mr and Mrs Price (by their agent) at the time of the making the representation by Mr Mills. If no duty of care exists, then Mr Adams would fail to make good a claim in negligent misstatement negligence.[163]
(c)That the representation was made in serious circumstances,[164] with an intention that it would be relied upon and that the maker of the representation (Mr Mills) was aware, or ought reasonably be aware that the recipient (Mr Adams) would rely upon the information or advice.[165]
(d)That Mr Adams relied upon the representation. That is, the representation must have had a causative effect upon his decision-making process (in this case to purchase the property).
[163] Brookfield Multiplex v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185 [19].
[164] Hedley Byrne & Co v Heller & Partners Ltd [1964] AC 465.
[165] Mutual Life & Citizens' Assurance Co Ltd v Evatt (1968) 122 CLR 556, 571 (Barwick CJ).
Whilst 'reliance' is the test for determining whether the relationship between parties calls a duty of care into existence, the test is whether there is reasonable reliance, rather than actual reliance. Barwick CJ in Mutual Life & Citizens' Assurance Co Ltd noted:[166]
… the circumstances must be such that it is reasonable in all the circumstances for the recipient to seek, or to accept, and to rely upon the utterance of the speaker. The nature of the subject matter, the occasion of the interchange, and the identity and relative position of the parties as regards knowledge actual or potential and relevant capacity to form or exercise judgment will all be included in the factors which will determine the reasonableness of the acceptance of, and of the reliance by the recipient upon, the words of the speaker.
[166] Mutual Life & Citizens' Assurance Co Ltd (571) (Barwick CJ).
Gaudron J, in Tepko Pty Ltd v Water Board,[167] in discussing negligent misstatement, noted that:
… 'the circumstances which attract a duty of care have been identified as 'known reliance (or dependence) or the assumption of responsibility or a combination of the two.' In that context, the word 'known' includes circumstances in which reliance or dependence ought to be known. Moreover, it is not essential that the person making the statement know the precise use to which the information will be put, so long as he or she knows or ought to know that it will be used for a serious purpose.
[167] Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1 [74].
Thus, the question of whether a duty of care existed between Mr Adams and Mr and Mrs Price (through their agent Mr Mills) needs to be considered in light of the relationship between the parties. The circumstances must be such that it is reasonable in all the circumstances for the recipient of the representation to rely upon it.[168]
[168] In ABN Amro Bank NV v Bathurst Regional Council (2014) 224 FCR 1 [573] - [575] (Jacobson, Gilmour & Gordon JJ).
Conclusion - First Representation - Negligent Misrepresentation
So far as the First Representation is concerned, whilst I am not satisfied that Mr Mills specifically represented that 'that all improvements at the Property had been approved by the City of Kalamunda,' (as pleaded by Mr Adams) it is necessary to consider whether the words to the effect that 'there were no outstanding applications or approvals relating to the property' impliedly represented that all improvements at the Kalamunda Property had actually been approved by the City of Kalamunda. Even if they did impliedly have that meaning, that would not be sufficient in itself. As already noted, Mr Adams would also have to prove both that Mr Mills intended to convey that meaning by the words he used, and that he was aware, or ought reasonably be aware that Mr Adams would rely upon that statement.
In the circumstances where the statement made by Mr Mills was in his capacity of a real estate agent conveying information relevant to the purchase of a property, I am satisfied that a duty of care was owed by Mr Mills, and therefore by Mr and Mrs Price, to Mr Adams. I find that Mr Mills had a duty to Mr Adams to exercise reasonable care in making a statement about whether there were any outstanding approvals on the Kalamunda Property.
Furthermore, I am also satisfied that Mr Adams relied upon what he was told by Mr Mills in making his decision to purchase the Kalamunda Property.
As to the issue of whether the words spoken by Mr Mills objectively conveyed the meaning that all improvements at the Kalamunda Property had actually been approved by the City of Kalamunda, and that Mr Mills intended to convey such a meaning, it is of note that Mr Adams readily acknowledged that the words spoken by Mills could be construed in a number of ways. Mr Adams also conceded that he did not make any further enquiries himself.[169] He simply understood 'the words from [Mr] Mills to the effect were all the approvals are in place for the property at 41 Coral Road'.[170]
[169] ts 201, Adams.
[170] ts 64 - ts 65, Adams.
On its face, that part of Mr Adams' evidence that I do accept, namely that he was told by Mr Mills that there were no outstanding approvals on the Kalamunda Property, in any event only goes to prove that the representation was made. It does not of itself prove either that what was said was false, or that Mr Mills actually spoke to anyone at the Shire of Kalamunda, and if he did, what was said to him. None of Mr Adams' evidence as to what he was told by others in conversations, namely what Mr Mills said to him (set out at [77] – [95], and [101] ‑ [104]); or what Mr Irvin told him (see [121]); or what he was told by Mr Giumelli (see [132]) was admissible to prove the truth of what they said.
On Mr Adams' evidence, in the absence of any other surrounding information, the representation made by Mr Mills does not lead to a conclusion that Mr Mills intended to convey the meaning that all improvements at the Kalamunda Property had actually been approved by the City of Kalamunda, or that he was aware, or ought reasonably be aware that Mr Adams would rely upon the statement in the manner that Mr Adams apparently did.
In the circumstances, Mr Adams has failed to prove that the representation amounts to a negligent misstatement or misrepresentation.
Second Representation - false or reckless misrepresentation
At the heart of Mr Adams' claim relating to the Second Representation is cl 9 of the Contract for the Sale of Land or Strata Title by Offer and Acceptance relating to the purchase of the Kalamunda Property by Mr Adams and Ms Kinner (exhibit 8).
There is no dispute that the Second Representation was made. The plain ordinary meaning of the words set out in cl 9 of the contract amounted to a representation made by Mr and Mrs Price to Mr Adams that 'where required all structures [had] building approval [at the property]'.[171]
[171] Exhibit 8, cl 9.
However, Mr Adams' claim with respect to the Second Representation fails for two reasons. First, whilst there was no evidence that the various structures or improvements had the requisite approval, and therefore, on its face the Second Representation was false, I am not satisfied on the balance of probabilities that Mr Adams has proved the Second Representation. This conclusion must flow from the finding that Mr Adams has failed to prove when the various improvements or structures came into existence at the Kalamunda Property. In the absence of proof of that, it could not be inferred on the balance of probabilities that, when the Second Representation was made by Mr and Mrs Price, they knew it to be false or untrue or were recklessly careless as to whether it was true or false.[172]
[172] Derry v Peek.
Secondly, I am not satisfied that Mr Adams relied upon the Second Representation as an inducement to enter the contract.
The contract, of which cl 9 is a part, is a standard form contract approved and copyrighted by the Real Estate Institute of Western Australia.[173] Whilst cl 9 of the contract clearly existed at the time that Mr Adams offered to purchase the property for $605,000 on 24 February 2012, the Contract, and therefore the representation made in it at cl 9, had not been signed by Mr and Mrs Price. They did not sign the Contract until 7 March 2012. In circumstances where Mr Adams made the offer and signed the Contract some 11 days earlier, it cannot be said that that he was induced into entering the contract when the representation was not assented to until after he had made the offer and signed the Contract. There is no evidence that Mr and Mrs Price saw the Contract, and therefore cl 9, until after Mr Adams had made the offer and signed the Contract. No issue of agency has been raised by Mr Adams in relation to the Second Representation.
[173] See Exhibit 8, page 1.
The Prior Possession Agreement
Mr Adams has failed to prove either the First or the Second Representation. Therefore, strictly speaking, it is not necessary to consider the argument advanced on behalf of Mr and Mrs Price that the effect of the Prior Possession Agreement is that Mr Adams is estopped from relying upon any pre-contractual or contractual representation made by the first defendants.[174] However, for the sake of completeness, I will consider the issue.
[174] See First Defendants' Closing Submissions, dated 23 April 2021, pars 22 - 26.
Mr Adams ultimately took possession of the Kalamunda Property on 2 July 2012. However, given that the Carramar Property had not settled on 1 July 2012 as anticipated, Mr and Adams and Ms Kinner entered into the Prior Possession Agreement. Both Mr Adams and Ms Kinner signed the Prior Possession Agreement.
Mr Adams said he read the agreement before signing it.[175]
[175] ts 175, Adams.
The Prior Possession Agreement (exhibit 10) included cl 4, which Mr Adams read at the time of signing it.[176] Clause 4 reads as follows:
At Possession Date the Buyer accepts the Property on an 'as is' basis and will not be entitled to rely on any pre-contractual or contractual representation made by the Seller or the Seller Agent and will make no claim against the Seller or the Seller Agent for any repairs, defects, errors, or omissions in respect of the condition or character of the Property or for any Loss incurred in respect of the Property on and from the Possession Date.
[176] ts 80, Adams.
In evidence-in-chief, Mr Adams said that he read the Prior Possession Agreement, including cl 4, at the time of signing it. He said that he understood the effect of cl 4 to mean that, if at the time he took possession of the Kalamunda Property pursuant to the Prior Possession Agreement a particular item of property was not in working order, he could not later take any action as a result of that defect.[177]
[177] ts 80, Adams.
Later, in cross-examination, Mr Adams said that he understood that the sole purpose of the Prior Possession Agreement was that he was accepting the property 'as is' at the time of taking early possession.[178] He accepted that he needed to sign the agreement before taking possession.[179]
[178] ts 172, Adams.
[179] ts 203, Adams.
In cross-examination, Mr Adams initially said that it was his understanding that the Prior Possession Agreement did not vary the Contract.[180] However, after cl 1 of the Prior Possession Agreement was pointed out to him, he accepted that it stipulated that this 'Agreement varied the Contract'.[181] He understood that to mean that there was a 'possibility' that 'there may be a variance in the contract' but did not think that it meant it necessarily did vary the contract.[182] The clause was not explained to him by anyone,[183] nor did he seek legal advice as to its meaning.[184] Settlement of the Kalamunda Property was due to occur on 3 July 2012. Due to the delay in settlement of the Carramar Property, Mr Adams found himself in a predicament and needed to move into the Kalamunda Property earlier. Mr Adams signed the Prior Possession Agreement on 2 July 2012 to get possession of the Kalamunda Property a day earlier.[185]
[180] ts 174, Adams.
[181] Exhibit 10, cl 1.
[182] ts 175, Adams.
[183] ts 174, Adams.
[184] ts 177, Adams.
[185] ts 177, Adams.
Legal principles - exemption clauses
An exemption clause may, in certain circumstances, have the effect of preventing liability from arising 'where the representee signs an agreement that states he or she has not relied on any representation made'.[186]
[186] See Law of Contract, Cheshire & Fifoot, 111th ed, 11.73, referencing Walker v Boyle [1982] 1 WLR 495.
Clauses such as cl 4 of the Prior Possession Agreement cannot protect the representor if the misrepresentation was made fraudulently.[187]
[187] Commercial Banking Co of Sydney Ltd v R H Brown & Co (1972) 126 CLR 337, 344 (Menzies J).
In other circumstances, it may be necessary to consider the circumstances in which the exemption clause was created, including its purpose. In other words, was it intended by the parties to be understood as exempting a party to the agreement from complete liability? This requires a consideration of the intention of the parties to the agreement.
Does the Prior Possession Agreement preclude the plaintiff from relying upon the First and Second Representations?
Clearly, had I found that either of the representations amounted a fraudulent representation, the Prior Possession Agreement could not exempt Mr and Mrs Price from liability.
The purpose of the Prior Possession Agreement was to facilitate Mr Adams and Ms Kinner's possession of the Kalamunda Property a day earlier than anticipated. It was not intended by the parties to have the effect of varying the contract to the extent that any or all pre‑contractual or contractual representations could not subsequently be relied upon where there was a substantial defect in the contractual process itself.
Damages Claimed by the plaintiff (Mr Adams)
Notwithstanding I have found that Mr Adams has not made out any of the claims brought against Mr and Mrs Price, I will consider the issue of damages.
In addition to interest and costs, Mr Adams claims the following damages:
1.The sum of $125,000 being the difference between the purchase price paid by Mr Adams and Ms Kinner for the Kalamunda Property and the proceeds of the sale of it in February 2020.
2.Mortgage interest repayments for the time period between when Mr Adams first put steps in place to sell the Kalamunda Property until settlement of the sale in March 2020,[188] totalling $116,322.60 (Exhibits 16.1 and 16.2).
[188] See Plaintiff's Amended Particulars of Damages for entry for Trial, dated 17 March 2021.
3.The costs of expert reports and professional consultation costs, being:
•Airey Taylor report - $3,740 (Exhibit 26).
•Bushfire Perth Pty Ltd - $350 (Exhibit 27).
•Valuations WA Pty Ltd - $495 (Exhibit 28).
4.Stamp duty paid on the transfer of the Kalamunda Property upon its purchase in 2012 - $22,752.50 (Exhibit 9).
5.The cost of insuring the Kalamunda Property for the period 2018 to 2019 (Exhibit 15).
6.The rates payable in the period between 2017 - 2020 - $5,378.91 (Exhibit 14).[189]
Calculation of Damages
[189] Note: The insurance premium for 2018/2019 is for the amount of $971 in relation for cover of a 'building'. The insurance premium for 2019/2020 is in the sum of $1574.40 but relates to 'building' and 'contents.' Thus the amount of $971 was been applied for both years.
Had Mr Adams succeeded in his claim that he suffered prejudice or disadvantage as a consequence of his reliance upon any misrepresentation made to him by Mr and Mrs Price (either directly or via their agent Mr Mills) which induced him to purchase the Kalamunda Property, he would have been entitled to be compensated as to the actual damage he suffered, or a sum representing such damage.[190]
[190] Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514, 526.
Ordinarily, where there is a claim for a capital loss on an asset caused as a result of a misrepresentation, the common or usual measure of damages will be the difference between the purchase price and the true value of the asset at the date of its subsequent sale. This is commonly called the 'rule in Potts v Miller.'[191] What is required to be proved is real or actual damage suffered.
[191] Potts v Miller (1940) CLR 282; Whitaker v Paxad Pty Ltd[2009] WASC 47 [111] (Blaxell J).
In addition to capital loss, damages may also be recoverable for 'wasted expenditure such as stamp duties and other transaction costs paid in acquiring land under the inducement.'[192]
[192] Whitaker v Paxad Pty Ltd [111] (Blaxell J); Pine River Pty Ltd v Scorda [2001] WASC 105 [111] ‑ [112].
In this case however, there is no evidence of the true value of the Kalamunda Property at the time Mr Adams sold it to Mr and Mrs Murdoch for $480,000 in February 2020. No evidence was produced by Mr Adams of any valuation of the property. Nor did Mr Adams seek to prove that any of the alleged unapproved structures at the Kalamunda Property required rectification, and if they did, any costs associated with that process.
Counsel for Mr Adams submitted that the proper measure of damages in this case did not require any assessment of the true value of the property at sale. Rather, he submitted that damages should be calculated on the difference between the purchase price of the property and the net proceeds from the sale of the property, no matter what the true market value or true value of the Kalamunda Property was. Counsel for Mr Adams cited the decision of Blaxell J in Whitaker v Paxad[193] as authority for this proposition.
[193] Whitaker v Paxad [47] (Blaxell J).
The decision of Blaxell J in Whitaker v Paxad however, is not authority for the proposition relied upon by counsel for Mr Adams. First, in Whitaker v Paxad, there was expert evidence of the value of the property in question. Secondly, in arriving at a proper measure of the actual loss suffered by the plaintiff in that case, Blaxell J reduced the assessment of that head of damages by calculating the damage on the basis of the difference between the price paid by the plaintiff and the price they obtained on resale. Had the 'rule' in Potts v Miller been applied in Whitaker v Paxad, the plaintiff would have received more than the actual loss suffered. It is for that reason Blaxell J adopted the approach he did.
However, in circumstances where Mr and Mrs Price have not sought to lead evidence to prove the true value of the Kalamunda Property at the time Mr Adams sold it to Mr and Mrs Murdoch in February 2020, or otherwise contradict the sum of $480,000 paid for the Kalamunda Property, the court is simply left with the fact that it was sold for $480,000. Consequently, there is nothing to suggest that amount was not the true value of the property. That figure will be used in assessing the actual loss suffered by Mr Adams for this head of his claim, namely the amount of $125,000.00.
I am also satisfied that Mr Adams was reasonably entitled to seek advice and obtain reports as a consequence of the information relayed to him by Mr Irvin, namely that there was no record of any approval from the Shire of Kalamunda in relation to the various improvements relied upon by Mr Adams in his claim. These are the costs of obtaining various reports (Airey Taylor report - $3,740; Bushfire Perth Pty Ltd - $350; Valuations WA Pty Ltd - $495) totalling $4,585.00.
In addition, Mr Adams would have been entitled to other costs thrown away, being:
•Stamp duty on the transfer of the Kalamunda Property - $22,752.50.
•Money paid to Harcourts for advertising and associated costs - $3,000.
•Money paid to Harcourts for maintenance on the property - $1,000.
•Rates payable on the Kalamunda Property in the period between 2017 - 2019 - $5,378.91.[194]
•The interest paid on the loans associated with the purchase of the Kalamunda Property - $116,322.60.
•Insurance on the property for 2018 – 2020 - $1,942.00.[195]
The total amount of damages that Mr Adams would have been entitled to is $279,981.01, plus interest.
Conclusion and orders
[194] See Plaintiff's Amended Particulars of Damages for Entry for Trial, 17 March 2021.
[195] Note: The insurance premium for 2018/2019 is in the amount of $971 for coverage of the ‘building'. The insurance premium for 2019/2020 is in the sum of $1574.40 but relates to 'building' and 'contents.' Thus, the amount of $971 was been applied for both years.
Mr Adams' claims are dismissed. I will hear the parties in relation to costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
DF
Associate to Judge Levy
21 DECEMBER 2021
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