Basheer & De Conno Pty Ltd v Corani - [2005] SASC 291

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
BASHEER & DE CONNO PTY LTD v CORANI & ANOR
Judgment of The Full Court
(The Honourable Justice Bleby, The Honourable Justice Vanstone and The Honourable Justice Anderson)
3 August 2005
CONVEYANCING - RELATIONSHIP OF VENDOR AND PURCHASER - MATTERS ARISING BETWEEN CONTRACT AND CONVEYANCE - DESCRIPTION, MISDESCRIPTION AND COMPENSATION FOR "ERROR OR MISDESCRIPTION" - ``ERROR OR MISDESCRIPTION'' - DEFICIENCY IN OR EXCESS OF AREA
TRADE AND COMMERCE - TRADE PRACTICES AND RELATED MATTERS - CONSUMER PROTECTION - MISLEADING, DECEPTIVE OR UNCONSCIONABLE CONDUCT - CHARACTER AND ATTRIBUTES OF CONDUCT - REPRESENTATIONS
REAL PROPERTY - VALUATION OF LAND - METHODS OF VALUATION - COMPARABLE SALES - SALES OF COMPARABLE LAND
Appeal from a decision of a District Court Judge awarding damages of $29,204 plus interest to the respondents - respondents purchased land at auction - appellant acted as agent of the vendors - brochure produced by the appellant and distributed before the auction misdescribed the land as approximately 2,469 sqm - land in fact only 2,300 sqm - whether misrepresentation relied on by respondents - whether misrepresentation resulted in any loss - what was the true value of the land - effect of valuation evidence - whether evidence of underbid relevant - Held: true value of land, despite the misdescription, was the amount paid for it at auction - evidence of underbid relevant - no loss on the part of the respondents - appeal allowed.
Trade Practices Act 1974 (Cth) s52, s92; Fair Trading Act 1987, referred to.
Spencer v The Commonwealth (1907) 5 CLR 418, applied.
Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494; McDonald v Deputy of Federal Commissioner of Land Tax for NSW (1915) 20 CLR 231; Gregory v Federal Commissioner of Taxation (1971) 123 CLR 547; Butcher v Lachlan Elder Realty Pty Ltd (2004) 212 ALR 357; MacCormick v Nowland [1988] ATPR 40-852, discussed.
Commonwealth v Arklay (1953) 87 CLR 159; Electricity Trust of South Australia v O'Leary (1986) 42 SASR 26; Chaney v Maclow [1929] 1 Ch 461; Phillips v Buttler [1945] 1 Ch 358; Venuti v Toop Real Estate Group Pty Ltd [2004] SASC 169; Henjo Investments Pty Ltd v Collins Marrackville Pty Ltd (1988) 39 FCR 546, considered.

BASHEER & DE CONNO PTY LTD v CORANI & ANOR
[2005] SASC 291
Full Court: Bleby, Vanstone and Anderson JJ

BLEBY J I agree with the orders proposed by Anderson J. I agree in substance with his reasons and have nothing to add.
VANSTONE J I agree that the appeal should be allowed and with the reasons given by Anderson J.
ANDERSON J This is an appeal from a decision of a Judge of the District Court given on 5 November 2004. The appellant is a corporation registered as a land agent. It represented the vendors of land situated at North East Road, Collinswood (“the land”). This land was offered for sale at an auction on 27 May…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Basheer & De Conno Pty Ltd v Corani

Details

AGLC: Basheer & De Conno Pty Ltd v Corani [2005] SASC 291
Case: [2005] SASC 291
Decision Date: 3 August 2005

CaseChat Overview and Summary

Basheer & De Conno Pty Ltd v Corani involved a dispute between a vendor and purchasers of land, with an appeal from a District Court decision awarding the respondents damages for a misdescription of the land's area. The misdescription, which was acknowledged by the appellant, resulted in the respondents being led to believe the land was approximately 2,469 square metres, when it was actually 2,300 square metres. The primary issues before the court were whether the respondents had relied on the misdescription, whether any loss resulted from it, and the true value of the land. The court also had to consider the relevance of the evidence regarding the underbid and the impact of the misdescription on the respondents' decision-making.

The court found that while the respondents had relied on the misdescription, there was no evidence that the misdescription caused any loss. The value of the land, despite the misdescription, was established by the auction price. The court emphasised that the misdescription did not influence the respondents' decision to bid, as they had a comprehensive understanding of the property market and auction processes. Furthermore, the evidence suggested that the value of the land was determined by the amount paid at auction, and there was no loss since the respondents paid what the land was worth at the time of the auction. The court concluded that the respondents had not suffered any loss as a result of the misdescription.

The appeal was allowed, and the original judgment was set aside. The court's decision hinged on the principle that the value of the land was determined by the auction price, and there was no evidence of reliance on the misdescription causing any loss. The court's reasoning focused on the respondents' expertise in the property market and their decision-making process, which was independent of the misdescription. As a result, the respondents were not entitled to the damages awarded by the District Court.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

In this appeal, the appellant conceded that the statement in the brochure regarding the size of the land was a misrepresentation. It was not suggested that the addition of the word “approximately” to the estimate of area could neutralise an error of this magnitude. It was argued, however, that the misrepresentation was not relied on by the respondents and was not causative of the respondents’ loss and I deal with that argument later in these reasons. The main argument in this court was that there was no loss because the value of the land was established by the auction process. The Valuation Evidence The only valuation evidence was called by the respondents from a Mr Eyre. His evidence was discussed by the learned trial Judge at [57] where his Honour said:His opinion and methodology were the subject of considerable challenge but no other expert view was arraigned against him. His Honour again referred to that evidence at [94] where he said:At the outset I accept the valuation evidence of Mr Eyre. There was no evidence to the contrary. I do not accept that he effectively abdicated his view in the course of cross-examination or that his opinion was wholly untenable. In summary, it was his opinion that the land and improvements thereon were worth less than that paid by the plaintiffs by $27,885. So together with the fees of $1,319 is that the measure of damages which are recoverable? Mr Trim QC for the appellant criticised the last passage referred to because he contended that Mr Eyre admitted in cross-examination that the value of the land was the amount of the successful bid. He was asked in cross-examination to assume the actual sequence of events which occurred at the auction including the previous bid by a genuine bidder for $512,000. He was then asked this question:On that basis, I would suggest to you that the most reliable indicators that you would have to make your commonsense appraisal of the value of this land as a whole would be what was in fact bid and paid for at auction at arm’s length, do you agree.My Eyre answered “Yes”. He was asked again in cross-examination:If that is what is to be paid for whatever is there, however it was described in an auction brochure, surely the value of the land and improvements that was transferred was $513,000 or at least $512,000.Again, Mr Eyre answered “Yes”. The learned trial Judge found that the first respondent relied on the misrepresentation as to area. However, that does not translate necessarily into an assumption that therefore 169 sqm less meant that there was a loss of value. There was no evidence that prior to bidding he had any particular proposals for the land such that 169 sqm made any difference to the proposals. There was a lease for another three years over part of the land in any event. Mr Eyre, in cross-examination, conceded that there may be situations in which the loss of such an area is critical, but in this particular instance he had no evidence one way or the other as to whether it was a critical factor. That meant that his valuation exercise was therefore an arithmetical calculation of multiplying 169 sqm by whatever amount he considered was the appropriate square metre value for that piece of land.

Decision

Reasons for decision

BLEBY J VANSTONE J ANDERSON J

In addition, as part of the background, the first respondent had been involved in the building industry running his own business for many years. Building work carried out by his business included houses, units, flats, shops, warehouses, commercial buildings and a club. He was also registered as a land salesman and was involved in the sale of some of the properties he constructed. It is fair to say that he had a good working knowledge of the way in which sales and auctions were conducted. He did not make any measurements or check any measurements before the auction and had no specific plans for the use of the land and had made no enquiries about its use of the Council before the auction. He had the precise dimensions of the land from the Certificates of Title.The Judgment Appealed From In the District Court the learned trial Judge dealt with arguments involving the interpretation of ss52 and 82 of the Trade Practices Act 1974 (Cth) and associated claims under the Fair Trading Act 1987. Those arguments, dealt with extensively by the learned trial Judge, are not in issue in this appeal. His Honour dealt with each of the elements required to establish a breach of the respective Acts and the grounds of appeal did not pursue the analysis of the Act made by his Honour. Arguments on Appeal In this appeal, the appellant conceded that the statement in the brochure regarding the size of the land was a misrepresentation. It was not suggested that the addition of the word “approximately” to the estimate of area could neutralise an error of this magnitude. It was argued, however, that the misrepresentation was not relied on by the respondents and was not causative of the respondents’ loss and I deal with that argument later in these reasons. The main argument in this court was that there was no loss because the value of the land was established by the auction process. The Valuation Evidence The only valuation evidence was called by the respondents from a Mr Eyre. His evidence was discussed by the learned trial Judge at [57] where his Honour said:His opinion and methodology were the subject of considerable challenge but no other expert view was arraigned against him. His Honour again referred to that evidence at [94] where he said:At the outset I accept the valuation evidence of Mr Eyre. There was no evidence to the contrary. I do not accept that he effectively abdicated his view in the course of cross-examination or that his opinion was wholly untenable. In summary, it was his opinion that the land and improvements thereon were worth less than that paid by the plaintiffs by $27,885. So together with the fees of $1,319 is that the measure of damages which are recoverable? Mr Trim QC for the appellant criticised the last passage referred to because he contended that Mr Eyre admitted in cross-examination that the value of the land was the amount of the successful bid. He was asked in cross-examination to assume the actual sequence of events which occurred at the auction including the previous bid by a genuine bidder for $512,000. He was then asked this question:On that basis, I would suggest to you that the most reliable indicators that you would have to make your commonsense appraisal of the value of this land as a whole would be what was in fact bid and paid for at auction at arm’s length, do you agree.My Eyre answered “Yes”. He was asked again in cross-examination:If that is what is to be paid for whatever is there, however it was described in an auction brochure, surely the value of the land and improvements that was transferred was $513,000 or at least $512,000.Again, Mr Eyre answered “Yes”.

Ratio Decidendi

Legal Principle Established

Established by: BLEBY J, VANSTONE J, ANDERSON J

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