Berry v Kanakis

[2002] NSWCA 68

Reported Decision: (2002) NSW ConvR 56-022

New South Wales

Court of Appeal

CITATION:	Berry v Kanakis & Ors [2002] NSWCA 68
FILE NUMBER(S):	CA 40255/01
HEARING DATE(S):	6 and 7 February 2002
JUDGMENT DATE:	18 March 2002
PARTIES :	Terry Berry - Appellant Lucas Jupiter Kanakis & Ors (trading as Diamond Peisah & Co) - Respondents
JUDGMENT OF:	Meagher JA at 1; Giles JA at 2; Ipp AJA at 48

LOWER COURT JURISDICTION :	District Court
LOWER COURT FILE NUMBER(S) :	DC 5200/99
LOWER COURT JUDICIAL OFFICER :	Gibb DCJ

COUNSEL:	P Biscoe QC & M Zammett - Appellant J Simpkins SC & S Kerr - Respondents
SOLICITORS:	Woods & Day - Appellant Collin Biggers & Paisley - Respondents
CATCHWORDS:	NEGLIGENCE - causation - solicitors acting for purchaser of house - failed to advise client to obtain a building report - whether client relied on solicitors in that respect - whether client would have proceeded without building report even if so advised - trial judge found she did not rely and would have proceeded - question of fact - no error shown. ND.
CASES CITED:	Bell v Thompson (1934) 34 SR (NSW) 431; Carr v Baker (1936) 36 SR (NSW) 301; Colfield v Waterloo Case Co Ltd (1924) 34 CLR 363; Gould v Vaggellas (1985) 157 CLR 215; Huntsman Chemical Company Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242; Jones v Dunkel (1959) 101 CLR 298; Rosenberg v Percival (2001) 178 ALR 577.
DECISION:	Appeal dismissed with costs.

CA 40255/01
DC 5200/99
MEAGHER JA
GILES JA
IPP AJA


Monday 18 March 2002

BERRY v KANAKIS & ORS

Judgment

1 MEAGHER JA: I agree with Giles JA.

2 GILES JA: In March-April 1996 the respondents acted as the appellant’s solicitors on the purchase of a house at 80 Chaleyer Street, Rose Bay (“the property”). In February 1998 a termite infestation at the property was discovered. The termites had not been present in March-April 1996, but the appellant was advised that inadequate termite shielding, inadequate ventilation and dirt and rubbish left beneath the house had contributed to termite entry. Later in 1998 the appellant had the house inspected by a building consultant, who reported on a number of defects and made recommendations for rectification. Another building report by an architect in mid-1999 identified more extensive defects.

3 In proceedings brought in the District Court in 1999 the appellant alleged against the respondents breach of contract and breach of duty of care in acting on the purchase of the property. (Other allegations were directed to breach of contract and breach of duty of care in prosecuting the appellant’s rights against the vendor of the property, and there were further allegations apparently intended to invoke the Fair Trading Act 1987. By the time of the appeal only the common law claims in relation to the purchase of the property were in question.) The appellant alleged that as a result of the breach of contract and breach of duty of care she had suffered loss and damage, described in the amended statement of claim as loss of value of the property, out of pocket expenses in respect of rectification of the property, and stress and anxiety.

4 The breach of contract and breach of duty of care were particularised in the amended statement of claim in paragraphs (a) to (h). For various reasons particulars (a), (b), (d) and (f) were found against the appellant, and they were not revived on appeal: it is unnecessary to consider the reasoning by which they did not avail the appellant.

5 The remaining particulars were that the respondents -

“(c) Failed to obtain building report.
…
(e) Failed to advise the plaintiff of the need for obtaining reports.
…
(g) Failed to warn the Plaintiff of possible risks associated with the purchase and how they could be avoided.

(h) Exposed the Plaintiff to risk which could have been avoided with due care.”
The “reports” in particular (e) were the building report in particular (c) and a pest inspection report in particular (d). In the appeal only obtaining a building report was taken up.

6 The trial judge considered that, in the manner the appellant’s case had been conducted, particulars (g) and (h) added nothing to particulars (c) and (e). That is a matter to which I will return. The respondents did not obtain a building report, and conceded failure to advise the appellant to obtain a building report. Failure to obtain a building report was subsumed within failure to advise the appellant to obtain a building report, no doubt because the expert evidence called by the appellant spoke of advice to obtain rather than obtaining: that is, the respondents’ duties did not require that they obtain a report without reference to the appellant and her instructions to obtain it. As to advice to obtain a building report, the trial judge found that the appellant did not rely on the respondents, in effect that she would not have obtained a building report if advised to do so and would have purchased the property even if she had been advised to obtain a building report.

7 The trial judge considered that, in the way the appellant’s case had been conducted, the loss and damage claimed (other than for stress and anxiety) was the difference between the value of the property without the defects which would have been identified in a building report in early March 1996 and its value with the defects. In her opinion, in any event the evidence did not satisfactorily establish what defects would have been identified in a building report in early March 1996, and hence the evidence did not satisfactorily establish the appellant’s loss or damage in this respect.

8 The appellant’s claim against the respondents accordingly failed, and she was ordered to pay their costs. In the appeal the appellant sought to rely on breach of contract and breach of duty going beyond advice to obtain a building report; to challenge the threshold finding to the effect that the appellant would not have obtained a building report if advised to do so and would have purchased the property even if she had been advised to obtain a building report; and to challenge the further opinion as to proof of loss or damage. It is sufficient to dispose of the appeal that, for the reasons which follow, I do not think that it is open to the appellant to go beyond advice to obtain a building report and I do not think that the threshold finding should be disturbed. It is not necessary to go into proof of loss or damage.

Going beyond advice to obtain a building report

9 As I have said, failure to advise the appellant to obtain a building report was conceded, and a building report was not obtained. It was submitted on appeal that the appellant’s case at the trial had included, within particulars (g) and (h), failure to advise the appellant that the contract for purchase should include provisions by which the vendor would remedy any defects in the property.

10 The vendor to the appellant had undertaken renovations to the property, indeed the renovations were not complete when the contracts were exchanged. The appellant’s submission was supported to the extent that the expert evidence of Mr Peter Cornelius included that, in such circumstances, “instructions would commonly be obtained with a view to including in the contract either a warranty or a condition that the renovation had been carried out in accordance with approved plans and specifications and provisions setting up a procedure for defects to be remedied”. Immediately after setting out the particulars the trial judge referred to this part of Mr Cornelius’ evidence. Why should she have done so, asked the appellant, if failure to include appropriate provisions in the contract was not a matter for consideration in the proceedings?

11 But the trial judge immediately said, “No complaint is made about the terms of the contract … “. The answer to the appellant’s rhetorical question is that the trial judge referred to this part of Mr Cornelius’ evidence to make the point that the appellant’s case did not take it up by complaining of failure to do that which Mr Cornelius said would commonly be done.

12 More specifically in relation to particulars (g) and (h), in the course of considering the particulars of negligence the trial judge said -

“ Failure to warn of risks and exposure of Ms Berry to risk (particulars 6(f + g) [sic: (g + h)]
The plaintiff did not identify the risks of which Ms Berry should have been warned or to which she was exposed save to the extent of the earlier mentioned particulars, on which the plaintiff’s case was focused from the outset.
Nor did the plaintiff in submissions or evidence articulate complaint about the contractual terms – or the lack of any particular contractual terms or special conditions. In submissions, the plaintiff’s counsel implied that complaint could be levelled at the failure to defer completion. But the terms of the defendant solicitor’s letter of 16 April 1996 (see below above) make it clear that the plaintiff required completion to be effected prematurely despite the solicitor’s advice that prudence dictated a deferral of the settlement.
The defendant submitted by way construction of the particulars of negligence 6(g) and 6(h):
‘Query what ‘G’ actually means. Presumably, having regard to the preceding particulars, ‘G’ means the result of A through F or at least those which can stand so the result of B, C and E and I’ll come back to that. H, we assume is something which follows from them as sort of res ipsa loquitur type point. Query what it actually means, it’s ambiguous but it must fall into a ‘G’ type category.’
To this the plaintiff’s counsel replied:
‘Now, your Honour specifically in paragraph 6(g) and (h) of the statement of claim there is the pleading of negligence of failure to warn the plaintiff of possible risks associated with the purchase and how they should be avoided exposed the plaintiff to risks which could’ve been avoided with due care. Now, one of the matters that falls under both those headings is she should have been told that reports should have been obtained.’
I construe particulars 6(g) and (h) as a re-iteration of particulars 6(b) to (d), or to be construed as referring to the risks identified in those paragraphs. The plaintiff’s counsel did not proffer any alternative construction.
My findings in respect of those specific particulars of negligence (6(b) to (d)) are thus determinative of my finding in respect of these allegations in particulars 6(g) and (h).”

13 Regard to the conduct of the appellant’s case amply confirms what the trial judge said. In the passages which follow Mr Colquhoun is counsel for the appellant, Mr Kerr is counsel for the respondents, and Mr Harris is counsel for a cross-defendant.

14 First, in opening Mr Colquhoun is recorded as saying -

“COLQUHOUN: It’s just an historical fact, your Honour. Now, your Honour, we’ve got the solicitor did not advise the plaintiff to obtain names of four items, there’s no dispute about that, that’s conceded in request for particulars and I’ll be tendering those as one of the requests and the reply.”
The reference to failure to advise to “obtain names of four items” is not easy to understand, and the transcript must be corrupt. Mr Colquhoun later tendered a letter requesting particulars and a reply, referring to them as a request and reply “along the lines I’ve opened to your Honour about”. These became Exhibit N.

15 The request was from the appellant’s solicitors to the respondent’s solicitors, and was expressly not so much a request for particulars as a series of inquiries by way of informal interrogatories. Amongst other answers, in the reply there were the concessions -

(a) that the respondents could not recall advising the appellant as to searches and inquiries to be made;

(b) that the vendor did not provide answers to requisitions before settlement;

(c) that the respondents could not recall giving advice as to the advisability of obtaining a pest inspection report;

(d) that the respondents could not recall providing any advice as to the advisability of obtaining a building report;

(e) that a building certificate was not obtained;

(f) that the respondents considered that it was relevant to ascertain whether the builder was licensed.

16 There was neither a request nor a concession in relation to advice as to the terms of the contract, and Mr Colquhoun did not in his opening refer to breach of contract or breach of duty of care beyond his reference to failure to “obtain names of four items” and the accompanying reference to the letter requesting particulars and the reply.

17 When the appellant gave her evidence in chief the only time she touched on what the respondents failed to do was when Mr Colquhoun said that he was “on to my final topic” and her evidence concluded -

“Q. You are aware, are you not, and it’s in exhibit N, that’s the particulars answered and you have had discussions, haven’t you, that the solicitors did not obtain or advise you to obtain a pre-purchased [sic] building report?
HARRIS: I object. I can’t understand the question.
HER HONOUR: That’s conceded, isn’t it?
HER HONOUR: Still an issue, Mr Kerr?
KERR: No.
HER HONOUR: Well I think as far as you are concerned, Mr Harris, it’s a bit neither here nor there at that point.
HARRIS: I’m sorry, I objected because I couldn’t understand what the question was, your Honour.
HER HONOUR: I think we start on the basis that it’s conceded by the defendant that advise [sic] was not rendered in respect of (a) building report, (b) pest report and it’s also conceded that none was obtained.
HARRIS: Yes.
HER HONOUR: Do we need to take it past that?
COLQUHOUN: Q. Probably not, your Honour, I just wanted to say that they ever [sic] the topic of conversation between yourself and the defendants prior to the purchase?
A. No.
COLQUHOUN: Thank you. That’s the evidence in chief, your Honour.
HER HONOUR: Q. So neither the pest report nor the building report was the topic of conversation between you and – Kanakis and Diamond before the purchase, correct or not correct?
A. Correct, it was not the topic.”

18 From this the trial judge and opposing counsel would have been entitled to conclude that the appellant’s case on advice was confined to advice concerning a building report and a pest report.

19 When it came to submissions Mr Colquhoun referred to Mr Cornelius’ evidence, and the transcript records -

“COLQUHOUN: … His experience extends to exclusively the general area of general business law and conveyancing and he’s acted for both vendors and purchasers. He goes on to state what is common practice and what is approved practice and one of the matters that he advised that is important for solicitors to undertake was to advise on pre-inspection building reports, pest reports, obtain certificates and ask for requisitions.
KERR: Can I assist my learned friend just by saying this: we don’t deny that a prudent course of action was to advise that reports be obtained. We don’t deny that answers to requisitions should be obtained. If that assists my learned friend.
COLQUHOUN: Does my friend mean that that’s causative of some damage to the plaintiff.?
HER HONOUR: I don’t think he made that concession. I think he merely made a concession as to that which should be done.
COLQUHOUN: Well in any event I’d like to take your Honour to exhibit N because it’s fairly poignant in these answers to requisitions. That should be a letter of 14 October ’99 to Collins Biggers and Paisley and a reply of 15 November 1999. Your Honour, in the reply, this was where the second page was missing earlier on. It was a three page reply. Your Honour, the first question is to do with whether or not the solicitor who acted on Mrs Berry’s purchase advised as to what should be done and the answer was the defendants cannot recall.
Now your Honour has heard, just interrupting there, Mrs Berry’s evidence about conversations with her solicitors. I’ll take your Honour to that shortly, if not this afternoon, tomorrow morning. But the fact is this, as your Honour is aware no-one has been called at all on behalf of the defendants. We haven’t heard from the cross-defendants either and as your Honour is aware your Honour can take certain notice of that fact. So we have the plaintiff who have been put through rigorous cross-examination, being questioned on some matters and not on others.
It’s natural to draw from the fact that Mrs Berry paid for the solicitor’s retainer and whilst, your Honour, it doesn’t matter whether it’s $10 or $100,000 there is a duty but it was in the vicinity of $4500 I think, the conveyancing fees. That’s your Honour, set out in another exhibit. I think that’s probably exhibit M.
HER HONOUR: Total bill $5068.
COLQUHOUN: Yes, so it was quite a lot of money.
HER HONOUR: No, that includes stamp duty and various other things.
COLQUHOUN: The stamp duty --
HER HONOUR: The costs are $3900.
COLQUHOUN: That’s on that, your Honour, yes, that’s right. And there was a further $850 charged, on the front page, your Honour, of the account dated 12 June 1996.
HER HONOUR: I think that’s all totalled.
COLQUHOUN: I see, yes. Well they charged in relation to that as well. So that’s the total.
HER HONOUR: The bill rendered is about, say $3900.
COLQUHOUN: Yes, that’s right. Now, your Honour, there’s a lot of money paid for the conveyancing and one would expect a high degree of skill in relation to that and that wasn’t given. Question three, your Honour, in the request for particulars in exhibit N: did the defender [sic] provide answers to requisitions before settlement for the property, and the answer is no. Earlier is a question: when were questions asked, that’s requisitions sought in five, and the answer was on 6 March 1996. Was a pest inspection sought, seven, and the answer is no. Was the plaintiff advised as to the advisability of obtaining a pest report, he cannot recall at this stage if one was not obtained, he said because it’s a new house. Well, that’s not a good reason, your Honour. A building certificate was obtained, one would expect that would need to be the case.
What this does show, your Honour, is that on the evidence of Mr Cornelius, that the basis as to those reports should be given to purchasers, and is the sort of thing that solicitors would understand, that they are being relied upon to give that advice, because that is common practice. That’s what solicitors are being paid fro, that’s why people go to solicitors to have this conveyancing work carried out and go to solicitors rather than conveyancers for the retention [sic] that is given, and for the comfort and satisfaction that is given to people.”

20 Mr Colquhoun went on to put submissions in relation to reliance. He did not put submissions more widely in relation to breach of contract and breach of duty of care. Again, the appellant’s advice case was confined to advice concerning a building report and a pest report. Nothing was said about advice as to the terms of the contract, even when Mr Cornelius’ evidence was invoked.

21 Mr Kerr restricted his submissions to particulars (a) to (f). At one point he said, and this was in part taken up by the trial judge in the passage earlier set out -

“Query what ‘G’ actually means. Presumably, having regard to the preceding particulars, ‘G’ means the result of A through F or at least those which can stand so the result of B, C and E and I’ll come back to that. H, we assume is something which follows from them as sort of res ipsa loquitur type point. Query what it actually means, it’s ambiguous but it must fall into a ‘G’ type category. The contract claim is asserted in paragraph 7 and I do no more than say that. Those paragraphs which follow add nothing to what I’ve said, your Honour.”

22 Mr Kerr later said -

“Your Honour, to look at paragraph 6, in our submission, the plaintiff needs to establish, assuming that the solicitors should have provided the advice and I start on that basis. The solicitors should have advised, Mr Cornelius says that; that a building report and a pest report be obtained. The others I can ignore because that’s the basis upon which I ignore them.”

23 In his submissions in reply Mr Colquhoun did not take issue with this. The trial judge took up what Mr Colquhoun said in the passage earlier set out, and I repeat it -

“Now, your Honour, specifically in paragraph 6(g) and (h) of the statement of claim there is the pleading of negligence of failure to warn the plaintiff of possible risks associated with the purchase and how they should be avoided exposed the plaintiff to risks which could’ve been avoided with due care. Now, one of the matters that falls under both those headings is she should have been told that reports should be obtained.”

24 I have gone into this in some detail, because the appellant devoted some time in the appeal to absence of consideration by the trial judge of failure to advise the appellant that the contract for purchase should include provisions for remedying any defects in the property. It is quite clear, in my opinion, that the appellant’s case at the trial did not extend to a case of such a failure to advise.

25 That is confirmed, if confirmation be necessary, by regard to other aspects of a case of such a failure to advise. Assuming that the court was satisfied that the appellant would have instructed the respondents to have appropriate provisions included in the contract for purchase, much more would have been needed. Possible provisions could range widely in their scope. What provision or provisions could or would have been proposed to the vendor? The vendor may have rejected any provision, or been agreeable only to a very limited provision. What would or might have happened? If a provision or provisions were agreed, the appellant had lost the chance of having the defects falling within the provision remedied by the vendor. What was the vendor’s financial position, what would the cost of remedying the defects have been, and what was the value of the chance? With one possible exception, not one of these matters was addressed in the evidence called by the appellant. The possible exception was evidence of the cost of remedying defects, but that evidence was proffered for the different purpose of establishing the value of the property with defects, and could not without more be taken up in proof of loss or damage by reason of failure to include in the contract for purchase provisions for remedying any defects in the property.

26 In my opinion the appellant can not on appeal maintain a case of breach of contract and breach of duty of care through failure to advise the appellant that the contract for purchase should include provisions by which the vendor would remedy any defects in the property. It may be added that, even if such a case had been open to her, in the circumstances I have recounted the evidence called by the appellant fell short of establishing loss caused by such a breach.

Purchase of the property if advice to obtain a building report had been given

27 The trial judge considered that the appellant had not established what defects would have been detected by a building inspection (or pest inspection) on 4 or 5 March 1996, or the cost of remedying those defects. Assuming identification of defects the cost of remedying which would have been of the order of $36,000 or $50,000, they being two figures thrown up in the evidence, she considered that the appellant would nonetheless have purchased the property for the price she in fact paid. She rejected entirely the evidence on which the appellant relied to establish a much higher cost of remedying defects as part of establishing the value of the property with defects.

28 The appellant challenged in the appeal the trial judge’s conclusions as to defects and cost of remedying defects, and there was some force in the challenges. But there was an anterior question. Would the appellant have obtained a building report if advised by the respondents that she should do so, and would she have purchased the property even if she had been advised to obtain a building report? As I have already said, the trial judge effectively answered this against the appellant.

29 In early 1996 the appellant had been very interested in purchasing a house at 774 New South Head Road, Rose Bay. She had made an offer at the asking price. In circumstances dealt with in more detail a little later in these reasons, she had reluctantly withdrawn from the purchase. Almost immediately she saw the property. The house was divided into two apartments, and the vendor was still finishing the renovations.

30 The appellant first saw the property on Saturday 2 March 1996. She spent an hour going through it, when it was open for inspection. She discussed with the vendor making some alterations, principally re-opening a connection between the two apartments and removing two walls to enlarge a bedroom and create a new bedroom.

31 The appellant returned to the property later on the same day, when it was not open for inspection. She climbed over a gate in the fence at least 1.5 metres high in order to get in. She made an offer to the vendor’s agent.

32 On Sunday 3 March 1996 morning the appellant telephoned Mr Diamond of the respondents, with whom she had had some dealings in connection with 774 New South Head Road, Rose Bay, and told him she wanted to buy the property. On Monday 4 March 1996 the price of $1,000,000 was agreed, $550,000 for one apartment and $450,000 for the other, and the appellant paid a deposit of $100,000 to the vendor’s agent. The vendor’s solicitor sent contracts to the respondents on 5 March 1996, the appellant signed them at her shop, and the contracts were exchanged on the same day. The appellant engaged the vendor to have the alterations done, it seems on a do and charge basis.

33 It is plain that the appellant was taken by the property and most anxious to have it. That provides significant background against which the appellant’s hypothetical conduct must be assessed.

34 It is then necessary, I think, to set out in full two lengthy passages from the trial judge’s reasons. The first appears under the heading “Ms Berry’s credibility”. The second appears under the heading “Reliance”.

35 The first passage is -

“The plaintiff’s case ultimately rests in large part on her evidence alone. That evidence is less than reliable. Her testimony about her reliance upon her solicitors in respect of the title issue was significantly less than frank; and, in some respects, simply untrue. The same problem was apparent in her testimony about the circumstances in which she came to leave the premises.
In her evidence in chief Ms Berry conveyed the clear impression that she had left her upstairs apartment (lot 1) at Chaleyer Street premises in August 1999 because of the problems with the building and her consequential distress. She also implied that her distress had impaired her ability to attend her work in Double Bay, although she made no claim for loss of income:

‘Q. As a result of the activity Mrs Berry, that took place in the property after you’d bought it and as set out in the chronology, during that time, what effect if any has that had on you?
A. It’s very emotional. It’s been very upsetting. I’ve left my place of business and gone to live in the country. I’m very very stressed if I go anywhere near Rose Bay. It’s separated my children from me and I mean, I know they are 25 and 27 but we don’t have a home as such any more, everyone has their own place and the whole thing has been very very traumatic and very upsetting. I don’t work any more. I don’t go to Double Bay any more , I work six days a week very happily for 30 years – [emphasis added]

…

A. I go to work, I don’t do any buying for the shop any more. I don’t concentrate. I don’t focus on things like I used to. I do go to the shop in Double Bay maybe one or two days a week but only for the last three weeks since I’ve been really convinced that this was coming hopefully to an end and I’ve tried to make myself go back to work, its had a terrible effect on me.’


That is less than a frank statement of the position. It emerged in cross-examination that Ms Berry commenced a personal relationship with her now de facto partner Mr Lindsay in May 1999. In August 1999, Ms Berry left 80 Chaleyer Street to take up residence with Mr Lindsay in Burradoo and leased out her upstairs apartment (to the USA Government). In April 2000, she opened a new outlet for her business in Bowral, in the Southern Highlands, near where she now lives and where her partner pursues his established business. She remains responsible for that outlet.

The cross-defendant relied upon the contrast between her evidence about this and her evidence in cross-examination to make the following submission, which I accept -

‘… it is quite obvious from the answers in cross-examination this lady moved to Bowral to commence or to live with her de facto husband and it was quite misleading to say that the problems with the house had caused her family to disintegrate. She’d left the children and gone to live with the de facto and the evidence that she gave [see above] … was not an error nor was it an exaggeration, it was a lie … ‘

The same lack of truth and frankness characterised Ms Berry’s testimony about her reliance upon her solicitors. I have noted earlier her testimony about the solicitor’s advice about title complexities. In cross-examination she was asked further about this.

‘Q. During the time you retained Diamond Peisah to act on your behalf in relation to the Chaleyer Street purchase, just concentrate on that time, did you always accept the advice they gave you, and ma’am to assist you, that requires a yes, a no or an I can’t remember but nothing else?
A. Yes.

Q. You always accepted their advice, correct? Is that what you are saying to her Honour?
A. To the best of my memory I did.

Q. You know don’t you, that just prior to settlement on 18 April Diamond Peisah advised you not to complete the purchase, not to settle until the strata plan had been registered and therefore, the title deed produced, you recall that, don’t you?
A. I do.

Q. Their strong advice to you by phone was that you not complete until that occur, you recall that too, don’t you?
A. No, I do not.

Q. You recall them writing to you on 16 April 1996 and confirming that advice, don’t you?
A. No, I do not.

Q. You recall saying to them that you weren’t prepared to do that, you wanted to complete immediately so that you could move from your daughter’s property into the property at 18 Chevalier Street, correct?
A. This was 16 April?

Q. Why do you choose that date?
A. Because you just said it, it was a question you just read out 16 April, they wrote to me on 16 April is what you said and I’m just trying to get my head around that date.

Q. Do you recall that letter?
A. No but I recall a lot of arguing with the builder at that time. He wanted the keys back.

…

Q. … you had been given the keys before 16 April, hadn’t you?
A. I believe I had, yes.

Q. And your solicitors were engaged in correspondence with Willis & Bowery [sic], the solicitors for Mr Wales, is that a yes?
A. Yes.

Q. And they had proposed, they being your solicitors, that settlement only occur when the strata plan was registered and the title deeds produced, and Willis & Bowery [sic] said, “If that’s the case, we want the keys back until completion takes place”, correct?
A. Correct.

Q. And you remember Diamond Peisah telling you that and you said, “That is unacceptable. I want to stay, I want to move into the property”, correct?
A. Not those words, no.

Q. Have a look at the letter of 16 April, just read it to yourself. Have your read that letter?
A. Yes, I have.

Q. You received that letter, didn’t you?
A. I received that letter, yes, but sometime after that date, I don’t know whether it was faxed to me or not but I have re-read it since I’ve had a copy of the entire file so I’m familiar with it.

Q. You recall, don’t you, Diamond Peisah talking to you about the contents of that letter during that period, correct?
A. I do.

Q. And you recall that you didn’t accept their advice. In fact you told them you wanted to complete and you told them to withhold some money, namely $50,000, until the strata plan was registered, correct?
A. No, not correct.

Q. Did they suggest the $50,000, did they?
A. Yes.

Q. You asked them to withhold some money?
A. No. I said, “Is there any way around it” because at that stage they wanted the keys back.

Q. So, after you had told them that you didn’t agree to waiting until the strata plan was prepared, you asked them if there was any other way and they said to you, did they, “You can try and withhold some money”, correct?
A. Can I tell you what I believe I said to them.

Q. Is that correct or not?
A. No, it’s not correct in the way that you’re saying.’


I do not find Ms Berry to be a reliable witness. She lacked frankness, and in some respects I found her to be less than truthful. I do not accept her evidence where a contrary construction arises from contemporaneous documents.”

36 The second passage is -

“Ms Berry did not have the benefit of the advice that should have been provided. But in the circumstances would such advice have been otiose: a mere statement of that which Ms Berry knew, had taken into account, and had formed her own views upon: and upon which she did not wish to hear from her solicitors? That is what I find was the reality.

Ms Berry did not rely upon the defendant solicitors in any relevant respects. Putting to one side the lack of evidence as to proper quantification of loss or damage (if any), there is, as the defendant submitted at the outset, a significant issue as to the need for the advice and the plaintiff’s reliance – or lack of reliance – upon the defendant solicitors. I find no relevant reliance at any material time.

Ms Berry was fully cognisant of the need for a building report – whether it be styled that or something else. She had engaged her own architect in respect of her previous aborted purchase only month’s [sic] prior. She was familiar with the hazards accompanying the purchase of report [sic]. She wanted this property, and she was determined to purchase it in the shortest possible time. She was not reliant upon her solicitors to state the obvious to her.

Ms Burns [sic] has been buying and selling residential property for many years, and is one of the owners of a very successful retail business that has leased premises in various places, and operated in those various premises. She has been responsible for some of those negotiations. She (and her former husband) first bought land in 1967, and the [sic] built a house on that land. She has since purchased (and sold) homes in Pymble, Turramurra, Wahroonga, Paddington (in Paddington St and Hargrave St), Fiji, and Queens Park. She had been involved in extensive negotiations over the purchase of a property at 774 New South Head Road in Rose Bay before she purchased the Chaleyer St properties. Since then she has purchased property in Burradoo with her new partner Mr Lindsay.

Ms Berry was a rather more sophisticated and experienced purchaser of property than the average. That does not reduce the scope of the defendant solicitors’ duty to her. But it does militate against her reliance upon her solicitors – if she in fact did so.

There were extensive negotiations over the property at 774 New South Head Road. In examination in chief Ms Berry sought to present 774 New South Head Road as a property purchase from which she walked away after being advised by her solicitors that the property was ‘fraught with danger’.


Well, for nine weeks, approximately nine weeks prior to buying, looking at Challier [sic] Street, Rose Bay, I had been very interested in a property at 774, I think the address was 774 New South Head Road, Rose Bay, and I tried, I’d offered the full price that was being asked for the property and again had asked Diamond Peisah to act for me but on their advice it appeared the property was fraught with danger and had work done that had not been approved by council and at one stage Michael Diamond actually went to the property itself.

…

… He told me he would advise me against buying it and that he knew, he understood all my emotional reasons for wanting to but felt the property was fraught with danger and went on to tell me about certain things that he knew about the house like it had been on the market for a long time and the vendor was a strange lady, she was a psychiatrist, and she was quite strange and the words he used were, fraught with danger.

Q. Following that conversation what did you do concerning the proposed purchase of that property. 774 New South Head Road?
A. I said that I loved the location, that I would really like to investigate what problems there were at council and whether or not it was internal that could be corrected with an architect because I was going to turn it into three apartments, or was it structural.

Q. Anyway subsequently in relation to 774 New South Head Road did you have further conversations with Mr Diamond?
A. No.

Q. Did you have further conversations with Mr Kanakis?
A. Yes, I did.

Q. And following those conversations with Mr Kanakis what did you do if anything in relation to the proposed purchase of 774 New South Head Road?
A. Walked away from it reluctantly.

A different picture emerged in cross-examination.


Q. The property at 774 New South Head Road, Rose Bay, owned by a doctor was a property in which you were most interested in [sic], correct?

A. Yes.

Q. It was a property which had been divided up in some ad hoc way by the doctor, correct?

A. Yes, we didn’t know who’d done it all but it had been split up. It was a home that had been tentatively split up into three.

Q. And the workmanship in that property you would describe, wouldn’t you, in part as shoddy, correct?

A. Correct.
Q. You retained yourself the services of an architect to advise you in relation to what you might be able to do in relation to that property --
A. I did.
Q. --- didn’t you?
A. Yes.
Q. You had discussions with that architect both on site at 774 New South Head Road and off site in relation to the manner in which that property had been constructed, correct?
A. I can’t recall discussing the manner in which it had been built, this is filled in, the inside, but I can remember discussing with him what I would do with it, what I would like to do with it.
Q. Before the architect had been retained by you, you had made an estimate based on your knowledge of purchasing houses of how much you thought it might cost you do to it up, correct?
A. I don’t recall that.
Q. You had estimated to yourself that it would cost in the order of $400,000 to $500,000 to put that property into a condition that you would be happy with to have it as your primary family residence?
A. I don’t recall that.
Q. What estimate did you place on it?
A. I didn’t, that’s why I asked the architect to come and have a look at it.
Q. Should her Honour understand that answer to be as follows, you looked at the property, were not in a position to determine yourself its condition and what needed to be done, so you retained the services of an architect to obtain that architect’s professional advice, correct?
A. Correct.
Q. That was something that you did in early 1996, correct?
A. Yes.
Q. Your discussions with the architect in relation to Dr Ward’s property continued up until you went to New York I think on 29 January 1996?

A. Correct.
…
Q. Right, let’s come back to that. You told her Honour before that the reason 774 didn’t proceed was because Mr Diamond had given you advice relating to the building and structural problems in that home. That was your answer wasn’t it?
A. That had not been approved by council.
Q. Yes. Is that a yes?
A. Yes.
…
Q. You were very apprehensive about purchasing that property as a result of the conduct of certain of the real estate agents, correct?
A. I can remember the price jumping up from what I was offered it, so we didn’t like that.
Q. You just – so that I am being fair to you, you had been advised of a price and you were happy to pay that price and then the price jumped, correct?
A. That’s right.
Q. It went up to $1.3 million from around 1.15?
A. A million and fifty it was.
Q. A million and fifty. And you formed the view that Mr Billy Bridges, the Double Bay estate agent, was playing off both sides in relation to the negotiations, correct?
A. I wasn’t dealing with Billy Bridges.
Q. You were dealing with his office, weren’t you?
A. Marcia Roche --
Q. You were dealing with his office weren’t you. W. Bridges and Co or whatever his firm is called?
A. Marcia Roche. There were several agents showing people. I just know who I was dealing with.
Q. And you were concerned about the discussions between the various agents in relation to price, weren’t you?
A. The price was jumping around, yes.
Q. And you were also concerned about the things that the architect retained by you had told you in relation to the property, weren’t you?
A. Well he had been to council.
A. Is the answer yes?
A. Yes.
Q. So that by the time the 2nd and 3rd March had come around, where were you living. Were you living in Rawson Street, Queens Park or had you moved in with your daughter, Charlotte?
A. Charlotte was living in Katoomba. I was living in her two bedroom apartment.
…
A. A far cry from the premises that you were used to living in, correct?
A. A far cry from, but very nice just the same.
By the end of her negotiations in respect of 774 New South Head Road, Ms Burns [sic] was fully cognisant of the need to assess the structural aspects of a property purchase, and of the problems inherent in the lack of Council approval. Ms Berry did not rely upon the defendant solicitors to be told this in March 1996.
As discussed earlier, Ms Berry did testify that she had told her solicitor that she relied upon him in respect of the complications introduced by strata title. As discussed earlier, I do not accept that evidence, and it cast an adverse implication upon Ms Berry’s credit. It is contradicted by Diamond Peisah & Co’s letter of 16 April 1996 and Ms Berry’s admission that she had been advised not to complete when she did.
The defendant [sic] submissions in this respect were cogent:
The plaintiff’s case in relation to the first cause of action … stands or falls on 6 in my respectful submission. If … she doesn’t get up on 6, she doesn’t get up at all … Your Honour has no evidence of that [reliance] whatsoever. Reliance is an important issue in this case, that was made clear by me on the first day. There is no reliance evidence. My learned friend made some submissions on it. …
There is indeed no evidence of any reliance.
The cross-defendant put the point simply:
… you can’t draw any inferences that she would have acted in any particular way when one has reference to her credit in the evidence on these proceedings. To draw an inference of reliance your Honour would have to be prepared to accept that if it had been put to her in the witness box she would have said yes, I was relying on the solicitors. But, your Honour, her evidence was unsatisfactory on a number of bases.
It does not seem to be appropriate to infer that which is of the essence of the plaintiff’s case. Ms Berry was represented by competent counsel, but she did not testified [sic] to this effect (footnote 4). On one view at least, it would be contrary to the inference that flows from the inference that flows from [sic] Ms Berry’s not having given such evidence when she testified (footnote 5).
I note in this respect the defendants’ counsel’s submission that:
should infer from the fact that she’s happy to have this man do work for her on the house that he has just completed. … She’s happy to enter into an agreement with him because she likes the way the house is being built, to do certain works.
We would say, that in those circumstances, there must be reliance evidence. There must also be evidence that she should would [sic] have accepted the advice to have another builder to come into her property which is still almost under construction by someone who she is happy to have work done for her and do a report on it. Covering over that of course, is the fact that the solicitors know that she’s had an architect on the previous job. She’s been on the 774. She’s been on that site with that architect. She’s relied on him to some extent, of course. Your Honour needs to put all of that together and the result of all of that is in my respectful submission, your Honour can’t infer that she would have accepted the advice and your Honour can’t infer that she would have done something – query what that is because that is yet another piece of evidence that’s lacking in this case, had she received a report no matter what it said.
I do not infer that Ms Berry relied upon the defendant solicitors in any relevant respect. I found the only testimony that she gave in this respect to be untruthful. I find no relevant reliance.” (footnotes noted but omitted)

37 The appellant submitted that so far as the trial judge took an adverse view of her credibility the basis exposed for her view was unsound.

38 As to the circumstances in which the appellant came to leave the property, it was said that the trial judge overlooked that the appellant had spent some time living on her boat before she went to Burradoo: thus, it was said, the state of the property could properly be seen as upsetting and destabilising. I do not think that met the trial judge’s point, which was that the appellant attributed her going to live in the country and associated hardships to the state of the property when the true occasion for that change in her life was her association with her new partner.

39 As to the respondent’s advice about title complexities, it was said that in truth the appellant had relied on the respondents. The respondent’s letter of 16 April 1996 referred to the advice to settle only after registration of the strata plan, said that it had been discussed with the appellant, and included “We note however that there is an urgency with respect to settlement of this matter this week and after due discussion with you we have prepared a counter proposal to the Vendor’s solicitors ….”. It was said that the appellant had relied on the respondents in that she had not instructed them to proceed to settlement regardless of their advice, but had asked for a way around the problem of settlement prior to registration of the strata plan. Nonetheless, it is evident that the appellant wanted to proceed to settlement immediately, and to take a course less than the preferred course advised by the respondents – indeed, it is difficult to see that withholding $50,000 was a real safeguard against title difficulties. The trial judge was entitled to see inconsistency between always accepting the respondent’s advice and what occurred in that instance.

40 The appellant then submitted that so far as the trial judge regarded the appellant as a person with independent appreciation of the need for a building report there was an inadequate basis for that view. Particularly in relation to the purchase of 774 New South Head Road, Rose Bay, it was said, there was a difference between obtaining architectural advice on the feasibility and cost of putting the house into a condition suitable for a family residence and obtaining a building report upon the soundness of a house. Again, I do not think that met the trial judge’s point. The appellant obtained expert advice when necessary, without advice from the respondents or anyone else. The expert advice included checking for council approval. It was the result of the advice, plus concern about the price variation, which influenced the appellant, and not solely that the respondents advised against the purchase. And the appellant’s independent action at this time, when taken with her experience in property transactions and business success, led to her being a person who was familiar with the desirability of a building report and attuned to obtaining expert advice of her own initiative. So the trial judge reasoned, and the evidence entitled her to do so.

41 In these circumstances there was particular significance in the absence of evidence from the appellant to the effect that, if the respondents had advised her to obtain a building report, she would have followed that advice and would not have purchased the property without a building report. (A further question would remain, that is, what would the building report have said and what would the appellant have done in the light of what it said, but that need not be addressed.) The trial judge was not prepared to infer, in the absence of the appellant’s evidence to this effect, that the appellant would have followed advice to obtain a report if it had been given. The appellant submitted, referring to Rosenberg v Percival (2001) 178 ALR 577 at 582, that the trial judge had erroneously declined to infer from the objective facts what the appellant would have done.

42 Footnote 4 as noted in the second passage from the trial judge’s reasons set out above cited Carr v Baker (1936) 36 SR (NSW) 301 per Jordan CJ at 306; Colfield v Waterloo Case Co Ltd (1924) 34 CLR 363 per Isaacs J at 374-377; and Bell v Thompson (1934) 34 SR (NSW) 431 per Jordan CJ at 436, with the extract, “It is not enough that the evidence affords material for conjecturing that the fact may exist, unless it furnishes data from which an inference can reasonably be drawn that it does exist”. Footnote 5 cited Jones v Dunkel (1959) 101 CLR 298. I do not think the trial judge took an erroneous approach to her fact-finding in this respect. The trial judge was conscious that her inquiry required regard to matters other than direct evidence from the appellant of what she would have done; that was why the trial judge referred to (for example) the appellant’s experience in property dealings. It was not essential that there be direct evidence from the appellant, see Gould v Vaggellas (1985) 157 CLR 215 at 236 and Huntsman Chemical Company Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242 at 244, 250, 263-9, but the trial judge did not say that it was. As part of ordinary reasoning when the appellant was experienced in property dealings and had been greatly attracted to the property and moved to purchase it in haste, the absence of direct evidence that she would have been held back by advice to obtain a building report enabled the conclusion that the objective evidence did not warrant the inference that she would have followed the advice to be more comfortably drawn. That, in my view, is how the trial judge reasoned, and there was no error.

43 In my opinion, it was open to the trial judge to find that the appellant did not relevantly rely on the respondents, meaning that advice to obtain a building report would have been otiose and the appellant would have gone ahead anyway. I am not persuaded that the finding was infected by error and should be overturned. The threshold finding remains, and is fatal to causation of loss or damage.

Nominal damages?

44 The respondents did not advise the appellant to obtain a building report. So far as the appellant relied on breach of contract, she submitted that a complete cause of action had been made out and she was entitled to nominal damages even if the advice would not have been followed.

45 I will assume that the failure to advise the appellant to obtain a building report was a breach of contract. The trial judge was not asked to award nominal damages, nor did the appellant submit at the trial that costs would be affected by a holding in her favour on breach of contract. On appeal it was accepted, I think, that there was no point in a verdict and judgment for nominal damages for its own sake, but it was said that establishing breach of contract was material to costs and that it should bring a disposition of costs at least in part adverse to the respondents.

46 I doubt that the grounds of appeal extended to this, and when the trial judge had not been asked to exercise her discretion as to costs having regard to an established breach of contract I doubt that it was open to the appellant to ask this Court to re-exercise the discretion. It does not matter. The failure to advise the appellant to obtain a building report was effectively conceded in the reply to the request for particulars, and was clearly conceded at the trial. The appellant sought to establish breach of contract and of duty of care in other respects, and substantive loss or damage. She was unsuccessful. I see no reason why the order that she pay the respondent’s costs should not stand.

Orders

47 I propose that the appeal be dismissed with costs.

48 IPP AJA: I agree with Giles JA.

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