Brown v Dream Homes SA Pty Ltd - [2008] SASC 295

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
BROWN v DREAM HOMES SA PTY LTD
[2008] SASC 295
Judgment of The Full Court
(The Honourable Chief Justice Doyle, The Honourable Justice Layton and The Honourable Justice Kourakis)
4 November 2008
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - IMPLIED TERMS
TORTS - NEGLIGENCE - MISCELLANEOUS FORMS OF NEGLIGENT CONDUCT
Appellant engaged respondent to conduct a pre-purchase property inspection - respondent erroneously concluded that a patched crack on an external wall was not caused by footing movement - report did not record the existence of the patched crack - respondent correctly reported that house was structurally sound - appellant purchased property in reliance on pre-purchase report - appellant sold house 18 months after purchase - appellant brought proceedings against respondent in Magistrates Court claiming damages for breach of duties arising in tort and contract - Magistrate found that respondent was liable and that appellant would have cooled off from purchase if no breach of duty - Appeal Judge overturned findings of liability - appellant appealed to the Full Court.
Held (Doyle CJ and Kourakis J): It was an implied term of the contract that the respondent would exercise reasonable care and skill to identify and report on any defects that were likely to affect the appellant's decision to purchase the house - the respondent breached that term - the respondent should have reported the existence of the patched crack - the respondent did not have the relevant expertise to provide an unqualified opinion as to structural soundness - the respondent should have recommended an engineer's report - the finding that the appellant would have cooled off but for the breach should not have been overturned on appeal - the appellant would have purchased another house had she exercised her right to cool off - appeal allowed.
Per (Layton J dissent): the respondent had the relevant expertise to express an opinion on structural soundness - the respondent was in error but not negligent in failing to identify the patched crack as a sign of footing movement - the Appeal Judge was correct in determining that the appellant would not have cooled off if an engineer's report was recommended.

DAMAGES - MEASURE AND REMOTENESS OF DAMAGES IN ACTIONS FOR BREACH OF CONTRACT - PARTICULAR CONTRACTS
Whether assessment of damages should take into account amount obtained by appellant upon re-sale of property – application by appellant to reopen case as to damages and introduce fresh evidence regarding property price increases.
Held (Doyle CJ, Layton and Kourakis JJ): Correct measure of damages is to put the appellant in the position she would have occupied had she not purchased the property – amount received by appellant on re-sale of property is to be brought into account in damages assessment.
Held (Doyle CJ and Kourakis J, Layton J dissenting): Appellant’s application to adduce new evidence as to damages remitted to Appeal Judge for determination.
Development Act 1993 (SA) s 4; Development Regulations 1993 (SA) reg 75(5), reg 85 and reg 88(2); Land and Business (Sale and Conveyancing) Act 1994 (SA) s 5, referred to.
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; Astley v Austrust Ltd (1999) 197 CLR 1; L Shaddock & Associates Proprietary Limited and Another v The Council of the City of Paramatta [No 1] (1980-1981) 150 CLR 225; Monarch Steamship Co Limited v Karlshamns Oljefabriker (A/B) [1949] AC 196; Hadley and Another v Baxendale and others (1854) 9 Exch 341; Gates v City Mutual Life Assurance Society Limited (1986) 160 CLR 1; Livingston v Railway Coal Co (1880) 5 App Cas. 25; Smith New Court Securities Ltd v Scimgeour Vickers (Asset Management) Ltd [1997] AC 254, applied.
Manwelland v Dames & Moore Pty Ltd (2001) ATPR 41.845, distinguished.
Hussey v Eels [1990] 2 QB 227; Tay v Koh [1998] 980290; Jamal v Moolla Dawood, Sons & Co [1916] 1 AC 175; British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673; Prima Vera v Allied Dunbar Assurance PLC [2003] PNLR 376, discussed.
Brown v Dream Homes SA Pty Ltd [2007] SASC 443; Marks v GIO Holdings Limited (1998) 196 CLR 494; HTW Valuers (Central) Qld Pty Ltd v Astonland Pty Ltd (2004) 211 ALR 79; Gardner v March and Parsons [1997] 1 WLR 489; Carosella v Ginos (1981) 271 ASR 515; Brian Geaney Pty Ltd v Close Constructions Pty Ltd [2003] Aust Torts Reports 81-719; Read v Nerey Nominees Pty Ltd [1979] VR 47; Doyle v Olby (Ironmongers) Ltd (1969) 2 QB 158; Blue Circle Industries v Ministry of Defence [1999] Ch 289; CDJ v VAJ (1998) 197 CLR 172; Lewis v Holder [2003] SASC 266; (2003) 23 LSJS 481; Goninan & Co Pty Ltd v Direct Engineering Services Pty Ltd (2007) 33 WAR 182; Pradhan v Eastside Day Surgery Pty Ltd [1999] SASC 256; Collex Waste Management Pty Ltd v City of Enfield (No 2) [2000] SASC 140, considered.

BROWN v DREAM HOMES SA PTY LTD
[2008] SASC 295
Full Court: Doyle CJ, Layton and Kourakis JJ

DOYLE CJ: I have had the opportunity to consider the reasons prepared by Layton J and by Kourakis J.
The differences between their respective approaches to the issues of fact that arise in this case reflect the fact that on most such issues a reasonable argument can be and has been advanced on either side of the case. The correct approach to the assessment of damages in this case has proved difficult. As the matter has gone on appeal to a single Judge and then to the Full Court, closer scrutiny of the basis of the claim for damages, and some reshaping or clarification of the plaintiff’s case, has given rise to new issues and new arguments.
I propose to indicate my decision as briefly as I can, mainly by reference to the reasons given by other members of the Court.
I agree with Kourakis J that the Magistrate was correct in deciding that the defendant was in breach of its contract with Ms Brown. In my respectful opinion, the single Judge erred in reversing that finding by the Magistrate. I agree with the reasons given by Kourakis J for so deciding.
In brief, in the exercise of reasonable care and skill, Mr Duckworth, through whom the defendant acted, should have realised that the patched crack (to adopt the term used by Kourakis J) indicated the repair of significant cracking that might have been the result of movement of the footings of the house in question. Mr Duckworth should have drawn Ms Brown’s attention to the presence of the patched crack, and to the possibility that it was attributable to movement of the footings. Mr Duckworth should have informed Ms Brown that a qualified engineer would have to make an assessment of the patched crack to determine whether it was due to movement of the footings, or to some other cause. I agree that the defendant was not in breach of its contract with Ms Brown as a result of Mr Duckworth informing Ms Brown that, in his opinion, the house was structurally sound. However, as I have indicated, that opinion should have been qualified by a rider that an engineer’s report was required if Ms Brown wished to know if the patched crack was attributable to movement of the footings, a matter which could affect the structural soundness of the house.
I agree with Kourakis J that, on the evidence, it was open to the Magistrate to find that if Mr Duckworth had given Ms Brown the information that he should have given her, she would have exercised her right to “cool off”, and would not have proceeded with the purchase.
I acknowledge the force of the contrary arguments advanced by the single Judge and by Layton J on this latter point. But in my opinion it cannot be said that the Magistrate erred in making the finding that he made.
I agree with the conclusion by Kourakis J that Ms Brown acted reasonably in selling the house. This is a matter on which my mind has wavered, but in the end I agree with Kourakis J.
I also agree with the conclusion by Kourakis J that a finding can and should be made that had Ms Brown exercised her right to “cool off”, she would have bought another house at about the same price and at about the same time. There is not much evidence on the point, but as Kourakis J points out, the very fact that Ms Brown bought the property in question indicates that, at this time, she intended to acquire a residential property in Adelaide.
On the basis of those findings, and on the basis that I agree generally with the conclusions of Kourakis J on the question of liability and on questions of fact, I turn to the issue of damages.
There is no dispute about the general rule applicable to the assessment of damages for breach of contract in a case like this. It has not been argued that in the present case there is any difference between the approach to be taken in contract or in negligence, were the plaintiff’s claim to be framed that way.
In Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 80 Mason CJ and Dawson J said:
The general rule at common law, as stated by Parke B in Robinson v Harman (1848) 1 Ex 850, at p 855, is "that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed". This statement of principle has been accepted and applied in Australia.
Footnote omitted
Their Honours went on to refer to a case like the case now before the Court. They said at 81-82:
A further example of the application of Robinson v Harman which will result in a plaintiff being entitled to claim damages for wasted expenditure is in a contract for services such as that between a solicitor and a client. Where a solicitor has breached his or her contractual duty of care, the measure of damages to which a client will be entitled will be such an amount as would put the client in the position he or she would have been in had the contract of retainer been performed without negligence. In cases where, had non-negligent advice been given, the client would not have entered into a subsequent transaction, for example a purchase of real property, then, in conformity with Robinson v Harman, the client will be entitled to recover as damages expenditure wasted on account of the negligent advice, less anything subsequently recovered and given reasonable acts of mitigation. The amount of wasted expenditure will be the appropriate measure of damages in such a situation because, it having been established that the client would not have entered into the subsequent contract if proper advice had been given, it is not sensible to speak of loss of profits. Hayes v Dodd is a useful illustration of the statement that the expressions "expectation damages", "damages for loss of profits", "reliance damages" and "damages for wasted expenditure" are simply manifestations of the central principle enunciated in Robinson v Harman rather than discrete and truly alternative measures of damages which a party not in breach may elect to claim.
The corollary of the principle in Robinson v Harman is that a plaintiff is not entitled, by the award of damages upon breach, to be placed in a superior position to that which he or she would have been in had the contract been performed. …
Footnotes omitted
The same general rule was applied by Brennan J at 98, by Deane J at 116, by Toohey J at 134-135, by Gaudron J at 148, and by McHugh J at 161.
In the present case, on the findings that were made and that should have been made, the assessment of damages is to be approached on the basis that if Mr Duckworth had not caused the defendant to breach its contract with Ms Brown, she would not have purchased the house in question. She would not have paid the price required to purchase the house, and would not have incurred the expenses involved in the purchase. Ms Brown was dissatisfied with the house, having bought a house that, but for the breach of contract, she would not have bought. The costs incurred in selling the house would not have been incurred, but for the breach of contract.
It also needs to be borne in mind that Ms Brown did not establish that the value of the house at the time she bought it was less than the amount she paid for it. A claim on the basis that the house was worth less than Ms Brown paid was abandoned at trial and not revived. This is not a case in which Ms Brown based her claim on the difference between the price paid for the house and its true value. Her claim is for the costs incurred in buying and then selling the house.
As it happens, although by different routes, both Layton J and Kourakis J reach the conclusion that in assessing the damages to be paid to Ms Brown, the amount received on the sale of the house is to be brought to account. I agree with that conclusion. As the costs incurred in selling the house are part of the claim, it seems odd to exclude the amount received on the sale.
In my opinion, that conclusion is supported by the reasons of Mason CJ and Dawson J set out above. It cannot be said that the price realised on the sale of the house was attributable to any redevelopment of the property, or any substantial change in the property, by Ms Brown. I do not consider that this is a case in which the benefits flowing from an act done pursuant to a duty to mitigate loss are to be brought to account. Nor do I find the concept of “continuous dealing” to be of any assistance in this case. The principle that the plaintiff should not be placed in a superior position to that which she would have been in had the contract been performed provides an answer to this case. As a matter of fact, I am unable to identify any basis upon which it should be found that the proceeds of sale should not be brought to account. I emphasise that this is not a case in which the plaintiff has based her claim on the difference between the price paid for the house, and the value of the house. There is no evidence that the house was worth anything less than Ms Brown paid. Her claim is for the costs thrown away or wasted on the transaction. In the context of a claim of that kind, I consider that the results of undoing or reversing the transaction are to be brought to account, either by way of diminution of the claim or by way of addition to the claim. I do not find it necessary to consider the wider issues canvassed by Layton J and Kourakis J.
Moreover, as I have already mentioned, both Layton J and Kourakis J ultimately reach the same conclusion on the approach taken to the assessment of damages, subject to one further point.
The remaining issue is whether the case should be remitted to the single Judge to permit Ms Brown to renew her application to call further evidence. As I understand it, she wants to lead evidence to prove that between the time of the purchase of the house, and the time of its resale, the value or market price of the house, and of houses of the same kind (I pass by the question of how the kind of house is to be identified) rose by an amount that can be established. Building on this she wishes to argue that the Court should find that because of the commitment involved in acquiring the house in question, she was not in a position to acquire a replacement home until she had sold the house in question. By then, she argues, she was at a disadvantage because the price and value of an equivalent home had risen with the general rise in market prices for housing. On this basis she argues that the amount credited against her claim, on account of the proceeds of sale of the house, should be reduced by the amount by which the market price of equivalent houses had risen over the relevant period.
In effect, Ms Brown wishes to prove the facts necessary to establish a claim that includes, as one element, the gain that she would have made by entering into another transaction (the purchase of a similar house). She argues that the defendant’s breach of contract deprived her of the opportunity to do so, because her money was tied up in the house in question.
Layton J, for the reasons that she gives, would not remit Ms Brown’s application to the single Judge, and would refuse permission to Ms Brown to call the further evidence. Her conclusion is that this further evidence would amount to a substantial reopening of the case, resulting in evidence being given on each side, and would amount to allowing Ms Brown to present a new case.
Kourakis J would remit the matter to the single Judge, indicating that in his opinion the further evidence does not change the nature of Ms Brown’s claim, but goes only to one aspect of the quantification of her loss.
I agree with Layton J that to support this aspect of Ms Brown’s claim, it may be necessary for Ms Brown to give further evidence. It might be necessary for her to give evidence that she acted reasonably in not selling the house until she did sell it, and that she could not have sold the house sooner than she did. The fact that she has not acquired a replacement house might also be relevant, and might be a matter on which she will need to give evidence to support the claim. One cannot say at this stage whether or not the valuation evidence will prove contentious, and whether or not the defendant will wish to call answering evidence.
The claim that Ms Brown now wishes to advance is one that should have been identified and advanced from the outset. It was not identified, or at least not adequately identified, before the Magistrate, and was promoted for the first time before the single Judge. The explanation for the failure to promote this aspect of the claim before the Magistrate is likely to be that given by Kourakis J. That is, that the difficulties inherent in the correct approach to the assessment of loss, reflected by the differing views expressed in differing judgments in this case, meant that Ms Brown’s representatives failed to identify this claim and failed to advance this aspect of her case when it should have been advanced. It is also true, as Kourakis J says, that the defendant can be compensated in costs for costs thrown away as a result of the damages claim being reopened. But against that, a judge ruling on the application to be made by Ms Brown would have to bear in mind the need for finality, and the need for litigants to have reasonable confidence that once their case has been heard and decided, the case will not be reopened to enable one party to litigate issues that could have been raised earlier but were not raised.
This review of the relevant considerations persuades me that Ms Brown’s application to reopen her case should be remitted to the single Judge. To some extent, I have had to speculate about what is involved in the reopening of the claim for damages. The application for permission to do so can be decided satisfactorily only with a full understanding of the case now to be put, and with an appreciation of what that involves by way of evidence on either side. On what I know, the matter appears to be finely balanced. I express no view on the question of whether the application should be granted.
Orders
Accordingly, I would order as follows.
I would allow the appeal. I would set aside the order of the single Judge dismissing the appeal to him. I would remit the matter to the single Judge for further consideration of the application by Ms Brown to reopen her case on damages. I would reserve the question of the costs of the appeal.
It is appropriate to indicate that if the single Judge refuses permission to Ms Brown to reopen her case on damages, then the proper order to be made by the single Judge will be an order dismissing Ms Brown’s appeal against the decision by the Magistrate. If the further evidence is admitted, it remains to be seen whether that evidence will lead to an award of damages in favour of Ms Brown. If it does, the single Judge should allow the appeal to him, and order that a judgment be substituted in favour of Ms Brown for the appropriate amount.

The question of the costs of the appeal to this Court should be reserved. If Ms Brown fails ultimately, it is likely that the appropriate order as to costs will be that she pay the respondent’s costs of the appeal. Even if she ultimately succeeds before the single Judge, there will remain for consideration the question of whether she should bear the costs of the appeal because, but for her application to reopen her case on damages, the appeal would have been dismissed.
LAYTON J: This is an appeal by leave from a decision of a single judge of this Court in respect of a decision of a Magistrate. The action is a claim for damages made by the appellant (previously the plaintiff) against the respondent (then defendant), in respect of a building inspection report provided by the respondent to the appellant during the cooling off period prior to the purchase of a residential house. The proprietor of the respondent company, Mr Duckworth, performed the inspection and provided the report in issue (“the Duckworth report”).[1] Mr Duckworth is a building inspector.
[1] Exhibit P3 at AB 383-391.
The appellant claimed that the inspection and report performed by Mr Duckworth was negligent and in breach of contract, and further, that the report contained misrepresentations that amounted to misleading and deceptive conduct. The Magistrate found that the respondent was liable in negligence, but dismissed the appellant’s claim for damages.
On appeal, the Judge found that the respondent was not liable for breach of duty and that the appellant had failed to establish either breach of contract or breach of the legislative provisions regarding misrepresentation and false and misleading conduct. The Judge also made a finding that if liability had been established, he would have assessed damages in the amount of $27,313.81.[2]
[2] I note that the amounts set out by the Judge in Brown v Dream Homes SA Pty Ltd [2007] SASC 443 at [73] do not add up to $27,313.81 but instead add up to $27,350.33. Both parties, however, have endorsed the lesser amount in the Notice of Appeal and Notice of Alternative Contention as the appropriate amount of damages to be awarded.
The appellant now appeals against the decision of the Judge on liability and the respondent has filed a Notice of Alternative Contention in relation to the finding by the Judge that, if liability had been proved, the appellant had suffered loss or damage.
Background
On 25 May 2003 the appellant and her partner inspected a property at 16 Mataro Road, Hope Valley, (“the house property”) and on that same day made an offer to purchase it for $180,000. That offer was rejected and the following day the appellant increased the offer to $195,000. This increased offer was accepted. A contract for the sale and purchase of the house property was signed on 26 May 2003. The contract was subject to a “cooling off” period, which expired on 28 May 2003.[3]
[3] In accordance with s 5 Land and Business (Sale and Conveyancing) Act 1994 (SA).
The appellant wished to obtain a building inspection report prior to the expiration of the cooling off period. The agent recommended Mr Duckworth. Mr Duckworth undertook his inspection of the house property, including a roof inspection, over a period of 1¾ hours in the afternoon of 28 May 2003.[4] Whilst performing the inspection, Mr Duckworth progressively wrote up the nine-page Duckworth report. The Duckworth report was then provided to the appellant and her partner at the conclusion of the inspection. At that time Mr Duckworth spoke with the appellant and drew her attention to the final page of the report (page nine) entitled “Part 3 - SUMMARY”. I set out the relevant extract below.
[4]    T 164.34 at AB 194.
3.1     Matters requiring urgent attention
1.    Remove rear garden bed & replace with path/pavers.
2.    Get full white ant treatment done.
3.    Refix front eave back into position.
4.    Clean the gutters out.
5.    Get Origin Energy to test for gas leaks.
6.    Replace rear verandah gutter.
7.    Service and adjust internal doors.
8.    Fit approved type smoke detector.
3.1     [sic] General
House is structurally sound.
Mr Duckworth agreed that during his discussion with the appellant and her partner he verbally confirmed his assessment that the house property was “structurally sound”.
The appellant, after only reading page nine of the report, telephoned the agent and advised that she did not wish to exercise her cooling off rights. The purchase and sale of the house property was settled on 26 June 2003.
The appellant and her partner moved into the house property on 27 June 2003. After they took possession, the appellant observed that certain windows jammed and some of the window locks did not work. She also noted cracking in a number of areas, including a repaired crack to the exterior of the western wall of the master bedroom near the front door of the house property. This repaired crack was the major focus of the appeal and I will therefore further describe it at this point.
The repaired crack was on the top portion of the external western wall and was originally approximately 10 mm in width.[5] It stepped down diagonally following the perpendicular and horizontal mortar lines of the bricks from ceiling height through nine courses of bricks to the southern edge of the window.[6] I will refer to this crack hereafter as “the repaired crack”.
[5] Exhibit D6 at AB 615.
[6] Exhibit P1 at AB 352 and Exhibit D3 (No 19) at AB 595.
The appellant engaged Mr Hignett, an architect from Plan Build Complete Planning and Building Service, to conduct an inspection of the house property. Mr Hignett provided a brief handwritten two-page report (“the Hignett report”) on 22 August 2003.[7] The appellant instructed Mr Hignett to report, inter alia, on the non-opening windows and frontage wall cracks (including the repaired crack). Mr Hignett concluded that the “building exhibits movement across the frontage” and that the frontage damage was due to “inadequate site drainage resulting in footing movement”.[8] He made recommendations as to the repairs required to rectify the damage.
[7] Exhibit P5 at AB 408-409.
[8] Exhibit P5 at AB 408.
The appellant sought legal advice and those solicitors engaged Mr Jankovic, a building inspector, to simulate a pre-purchase inspection of the house property and prepare a pre-purchase inspection report. This report was completed on 20 January 2004 (“the Jankovic report”).[9] In brief, Mr Jankovic expressed the view that the “building is in poor condition and requires maintenance to almost all of the building elements” and that “the building needs lots of work [and that] prior to the work the causes of the severe cracking which has occurred requires to be assessed by a structural engineer and a rectification specification drawn up”.[10]
[9] Exhibit P4 at AB 392-406.
[10] Exhibit P4 at AB 404.
On 19 August 2004 the solicitors for the appellant sent a letter to the respondent identifying a number of the defects detailed in the Jankovic report.[11] It was alleged that the respondent was in breach of contract and negligent for failing to identify present and future problems with the house property; failing to properly identify the structural condition and stability of the house property; and failing to identify the costs that would likely be incurred as a result of rectifying the problems. It was alleged that the respondent had failed to achieve the standard required of a building inspector and as a consequence the appellant had suffered loss and damage as detailed in the letter.
[11] Exhibit P21 at AB 575-583.
A Statement of Claim and Defence were filed in the District Court on 10 November 2004 and 21 December 2004 respectively. On 2 May 2005 the respondent sought an engineering report from Mr Goldfinch. This report was completed on 8 June 2005 (“the Goldfinch report”).[12] In brief, Mr Goldfinch concluded that the house property was structurally sound. He also noted that the repaired crack indicated a past history of movement due to footing settlement. In Mr Goldfinch’s view, the footing settlement was a result of shrinking clay layers, and not due to any drainage problems.[13] Subsequently, an Amended Statement of Claim and Amended Defence were filed in the Magistrates’ Court and the matter proceeded to trial.
[12] Exhibit D6 at AB 312-624.
[13] This view was contrary to the opinion of Mr Hignett.
Magistrate’s decision
The primary findings and conclusion of the Magistrate in his detailed reasons included the following:
·Mr Duckworth is vastly experienced, conscientious, knowledgeable and honest. The Duckworth report was thorough and well-balanced.[14]
·The conclusion by Mr Duckworth that the building was “structurally sound” was more than likely correct. This was confirmed by Mr Goldfinch and Mr Jankovic did not express an opinion.[15]
·The Hignett report was superficial and caused unnecessary concern to the appellant.[16]
·The Jankovic report was overly critical of the house property.[17]
·The Duckworth report failed to identify “movement in the house”.[18]
·The respondent should have identified signs of movement in the house property, and recommended an engineering report.[19]
·The respondent’s failure to report the signs of movement and to recommend an engineering inspection was a breach of duty of care.[20]
·If the appellant had been informed of any signs of movement in the house property, and the respondent had recommended an engineering report, the appellant would have exercised her right to cool-off.[21]
·The appellant had suffered no loss as there was a profit on the re-sale of the house property, which should be set-off against the claim for damages for $29,924.80.[22] Therefore no damages had been proved.
[14] Brown v Dream Homes SA Pty Ltd, Judgment of Mr J G Fahey SM, 1 June 2007 [24].
[15] Ibid [22].
[16] Ibid [22] and [26].
[17] Ibid [26].
[18] Ibid [27].
[19] Ibid.
[20] Ibid.
[21] Ibid.
[22] Ibid [31].
Appellate Judge’s decision
The Judge made the following findings:
·It was within the competence of Mr Duckworth to express an opinion about structural soundness of the house property.[23]
·The house property was “structurally sound” as found by the Magistrate.[24]
·Contrary to the finding by the Magistrate, Mr Duckworth had recognised there was some movement in the house property but did not consider it to be significant.[25]
·As the building was structurally sound, it was not negligent of the respondent to not recommend an engineer’s report.[26]
·The fact that a building exhibits some cracks and movement does not require a building inspector to automatically recommend an engineer’s report.[27]
·The appellant was primarily concerned with whether the building was structurally sound.[28] The evidence of the appellant that she would have cooled-off if an engineer’s report had been recommended was an afterthought.[29]
·The respondent was neither negligent, nor in breach of duty of care.[30]
·If liability had been found, the application by the Magistrate of the case of Manwelland Pty Ltd v Dames and Moore Pty Ltd[31] was incorrect and the appellant’s damages had been proved at $27,313.81.[32]
[23] Brown v Dream Homes SA Pty Ltd [2007] SASC 443 [51], [52] and [57].
[24] Ibid [41] and [49].
[25] Ibid [51].
[26] Ibid [49].
[27] Ibid [51].
[28] Ibid [49].
[29] Ibid [64]-[66].
[30] Ibid [57].
[31] (2001) ATPR 41-845.
[32] Brown v Dream Homes SA Pty Ltd [2007] SASC 443 [93]-[94].
Issues on appeal
The appellant alleged five major errors in respect of the findings of the Judge that there was no liability of the respondent in tort or contract.
·The Judge erred in finding that the Duckworth report reported the relevant signs of movement in the house property. In particular, the Duckworth report did not refer to the repaired crack.
·The Judge failed to have proper regard to the alleged concessions made by Mr Duckworth that he should have made reference to the repaired crack in the report; he should have noted this as a sign of movement of the house property; and he should have recommended the appellant obtain an engineer’s report.
·The Judge should have found that the respondent did not have the relevant expertise to express an opinion on whether the building was structurally sound.
·The Judge erred in finding that because the house property was in fact structurally sound, this meant that the respondent had discharged its duty of care. The Judge should have found that Mr Duckworth ought to have recommended an engineering report.
·The Judge was wrong in rejecting the evidence of the appellant that she would have cooled-off if the respondent had informed her of the signs of movement in the house property (namely the repaired crack) and had recommended an engineering report.
Did the Duckworth report record the relevant signs of movement?
The evidence of Mr Duckworth was that he saw a repaired area of brickwork[33] (being the repaired crack) and noted that the patching did not look very professional.[34] The position of the repaired crack was recorded on a copy of the house property plan provided to him by the agent.[35] Mr Duckworth’s observations regarding the patched area did not form part of the Duckworth report.[36]
[33] T 173.22-173.28 at AB 203.
[34] T 175.17-175.20 at AB 204.
[35] Exhibit D4 at AB 604-606.
[36] Exhibit P3 at AB 382-391 and T 177.6-177.11 at AB 207.
The preamble to the Duckworth report states:[37]
[37] Exhibit P3 at AB 385.
MOVEMENT
The extent of movement in the building depends on the type and adequacy of the footing system, articulation and control joints used, the moisture content of the soil surrounding the structure and close proximity of trees. Good site management including stormwater disposal, drainage and managing the water requirements of trees and placement of paths around the house will assist in reducing movement and cracking.
The Duckworth report at page five[38] under the heading “CLASSIFICATION OF DAMAGE WITH REFERENCE TO WALLS” and under the sub-heading “Description of typical damage and required repair” refers to cracking of masonry walls and lists one “negligible” hairline crack in category 0 of less than 0.1 mm and eleven “very slight” fine cracks in category 1 being less than 1 mm width. There is no reference to any crack in categories 2, 3 or 4. Category 2 is less than 5 mm, category 3 is 5 mm to 15 mm and category 4 is 15 mm to 25 mm depending on the number of cracks. There is also a statement that the masonry “is in good condition for its age”. There is a reference to “minor movement and settlement” which Mr Duckworth considered “normal” and, finally, a suggestion for the appellant to refix “eaves linings” into position because “minor facia movement [had] caused the front eaves to drop and sag”.[39]
[38] Exhibit P3 at AB 387.
[39] Exhibit P3 at AB 387.
The evidence of Mr Duckworth was that he did not characterise the patched area of brickwork to be a “crack” due to movement because in his assessment it was a displaced section of brick panelling caused by the earlier replacement of the verandah or pergola.[40] He did not consider this repaired displaced section to be significant for the following reasons: it was not in a load supporting wall;[41] it did not extend under the window to the footings, unlike the 12 negligible to slight movement cracks mentioned in his report;[42] there had been no further cracking of the patching;[43] and it was not assessed by him as being moderate or severe.[44] Therefore, in his view, this was not a matter that needed to be mentioned in his report.[45]
[40] T 176.6-176.14 at AB 206, T 177.14-177.24 at AB 207, and T 232.34-233.18 at AB 263-264.
[41] T 177.28-177.31 at AB 207.
[42] T 177.14-177.24 at AB 207, and T 232.34-233.18 at AB 263-264.
[43] T 174.30-174.33 at AB 204.
[44] T 233.35-234.1 at AB 264-265.
[45] T 229.33-229.37 at AB 260.
The criticised passages of the Judge’s reasoning were as follows:[46]
The Magistrate concluded that the defendant’s failure to report the signs of movement and to recommend an engineer’s inspection was a breach of his duty of care. In my view, the conclusion is not supported by the evidence. In my opinion, the Magistrate was wrong in concluding that Mr Duckworth conceded that he should have recognised signs of movement and should have recommended an inspection by an engineer.
Mr Duckworth did recognise some movement. He did not consider it to be significant. He concluded the construction was structurally sound and there was no requirement to investigate further. The fact that a building has cracks and, therefore, there has been movement does not require an inspector to recommend an engineer’s report. Mr Duckworth had years of experience. It was a matter for his judgment. He provided a thorough, well-prepared report. It does not follow that, because cracking was observed, therefore there must be an engineer’s report. Mr Duckworth was correct in his assessment that the building was structurally sound. In so forming his opinion, he fulfilled his duty to exercise reasonable care and skill.
[46] Brown v Dream Homes SA Pty Ltd [2007] SASC 443 [50]-[51].
In my view, the Judge correctly summarised the evidence of Mr Duckworth. Mr Duckworth had recognised “some movement” of the house property and referred to it in his report but he did not specifically refer to the repaired crack in his report as being a sign of movement, for the reasons which he provided. There is still the issue of what flows from the absence of reference to the repaired crack in the Duckworth report and I discuss this later in these reasons.
The alleged concessions
It was submitted by the appellant that Mr Duckworth, when giving evidence, had made a series of concessions. Namely, that Mr Duckworth conceded he should have made reference in his report to the repaired crack; he should have noted this as being associated with movement of the house property; and he should have recommended that the appellant obtain an engineer’s report. It was submitted that unlike the Magistrate, the Judge failed to have proper regard to these concessions in his decision and reasons.
The three passages of evidence relied on by the appellant are:
Firstly:
Q.So Mr Goldfinch as an engineer says looking at this house and looking at all of those elements my conclusion is there has been a past history of movement and cracking. Obviously you accept his opinion because you have put it forward.
A.    Yes.
Q.Don’t you accept that as a consultant in a preinspection report, having observed all of the things that he refers to there, except the sill movement, that it was an appropriate thing for you to do to refer this issue to someone like Mr Goldfinch to give advice to Ms Brown.
A.    No.
Q.    Why not.
A.Because I didn’t see the cracks, the crack as particularly severe warranting an opinion of an engineer.[47]
[47] T 248.13-248.28 at AB 279.
Secondly:
Q.You appreciate, don’t you, that both Mr Jankovic and Mr Goldfinch estimate that the size of the cracks before repair was 10 mm.
A.I’m not sure what Mr Jankovic’s measurement was but I was aware of Mr Goldfinch’s inspection.
Q.Would it be fair to say that at the time that you looked at the dislodged panel of brickwork that you didn’t give any consideration to the size of the crack that may have existed at that point before repair.
A.Are you talking about my initial inspection?
Q.Yes.
A.That is correct.
Q.Mr Goldfinch says that the repaired crack is an indicator of movement relating to the settlement of the foundations, you have seen that in his report.
A.Settlement of the footings or –
Q.Sorry, settlement of the footings.
A.Yes.
Q.So do you accept then that your report was wrong in not identifying that issue to Ms Brown.
A.I accept that now but I didn’t at the time of my original inspection. I think that I have never admitted to the court or his Honour that I thought that was a crack that was caused by movement in the footings or other structures in the house. I never have admitted it.
Q.But having the benefit of Mr Goldfinch’s expert assessment of the property and the conclusion that he reaches you now understand, and you did when you read Mr Goldfinch’s report, that the crack was an indicator of settlement of the footings.
A.Yes, I do now, yes.
Q.The reason that you didn’t mention this in your report was that you were under the impression that it wasn’t a result of the movement.
A.Movement in the footings.
Q.Yes.
A.Yes, that’s correct.
Q.I assume if you had thought that it had occurred as a result of movement in the footings you would have mentioned it in your report.
A.Yes, that’s correct.[48]
[48] T 266.26-267.28 at AB 297-298.

Thirdly:
Q.I understand that but Mr Goldfinch, and he will no doubt tell his Honour about it tomorrow, is putting forward a hypothesis. All I am asking you is that within your field of expertise as a building consultant is that the sort of hypothesis that you would be comfortable about drawing or is it a matter that you would leave to the engineers.
A.If I thought the magnitude of movement and cracking I would refer it through to an engineer, yes.
Q.You wouldn’t be comfortable about drawing a hypotheses like that, you would leave that to an engineer to make an assessment about, wouldn’t you.
A.Yes.[49]
[49] T 247.13-247.25 at AB 278.
In the third of these passages the questions directed to Mr Duckworth, taken in context, are not referring to cracking due to movement, but cracking due to dissimilar material being constructed side by side.[50] The concession made by Mr Duckworth was in this respect. But having noted that difference, I also note that Mr Duckworth’s response is consistent with the approach that he took generally as to when he considered it necessary to refer certain matters to an engineer. This aspect was consistent with his approach to movement cracking.
[50] T 247-248 at AB 278-279.
As to the first portion of Mr Duckworth’s evidence set out above, this is consistent with the view which he had expressed a number of times throughout his evidence. Namely, that in his judgment, the repaired crack was not significant and it was not related to movement. It is only after the event and after having seen the Goldfinch report that he agreed that it was a crack related to footing movement. This is therefore retrospective reasoning with insight. The concession which he made was limited to the fact that if he had formed the view that it was due to movement, then it would have been appropriate to have suggested that the appellant obtain an engineer’s report. This did not happen.
There was no error by the Judge in concluding as follows.[51]
The Magistrate observed that Mr Duckworth conceded in his evidence, in retrospect, that he should have recognised the signs of movement. He should have reported this and he should have recommended an inspection by an engineer.
It is true that Mr Duckworth, at one point, accepted that the report was “wrong” in not identifying the cause of the cracking he observed as being settlement of the footings. However, that concession must be taken in light of his repeated assertions that he had not recommended an engineer’s report because he did not consider the cracking he observed to be abnormal in a house of the age.
[References omitted]
[51] Brown v Dream Homes SA Pty Ltd [2007] SASC 443 [30]-[31].
Did Mr Duckworth have the relevant expertise?
The appellant submitted that the Judge erred in finding that Mr Duckworth had the relevant expertise to give an opinion on the structural soundness of the house property. The Judge found:[52]
The Magistrate concluded that Mr Duckworth was wrong to express an opinion about matters which were outside the scope of the relevant Australian Standard, and was wrong to express an opinion about something which was beyond the level of his competence. It is not clear in the Magistrates [sic] reasons which matters he considered to be outside the scope of Mr Duckworth’s competence. Mr Duckworth had many years of experience in the building industry. He was well qualified to make assessments about the structural soundness of a building. He was also well qualified to observe and report upon deficiencies in a building and work that may be required to remedy those deficiencies. He did no more than report upon matters which were well within his competence and expertise.
[52] Ibid [52].
The relevance of this submission to the appeal is the appellant’s allegation that Mr Duckworth should not have stated on page nine of his report that the house property was structurally sound, and that to do so was a breach of his contract and a breach of his duty of care to the appellant.
The respondent provided the Duckworth report in accordance with Australian Standard AS4349.1-1995 (“Australian Standard”). This is specifically articulated in the Duckworth report.[53]
[53] Exhibit P3 at AB 383.
The relevant paragraphs of the Australian Standard are as follows:[54]
[54] Exhibit P16 at AB 545 to 555.
1.4     DEFINITIONS    For the purpose of this Standard, the definitions below apply.
1.4.1 Consultant – person, partnership or company qualified and experienced to undertake property inspections.
NOTE: This may include, for example, a licensed or registered builder, engineer, building consultant and architect.
…
1.4.3 Minor fault or defect – a matter which, in view of the age, type or condition of the residential building, does not require substantial repairs or urgent attention and rectification.
1.4.4 Pre-purchase property inspection – a visual inspection of a residential building carried out in accordance with Clause 2.3.
…
2.3     THE STANDARD PROPERTY INSPECTION
…
2.3.2 The exterior of the building The consultant should inspect and assess the general condition of the following parts of the building exterior for defects:
(a)     Masonry walls   For example –
…
(iii)    cracking
…
(v)     differential or rotational movement;
…
3.3     THE STANDARD PROPERTY REPORT   A building report should not be seen as an all-encompassing report dealing with a building from every aspect. Rather it should be seen as a reasonable attempt to identify any significant defects visible at the time of the inspection. Whether or not a defect should be regarded as significant, depends to a large extent upon the age and type of building being inspected.
It is unrealistic for the consultant to comment on minor defects and imperfections in the standard property report, although this may be required for a special-purpose property report (see Section 4).
A standard property report provided by the consultant should include the following:
…
(e)A summary which includes an opinion as to the overall condition of the residential dwelling in the context of its age, type and general expectations of similar properties.
(f)A list of any significant matters which requires attention or rectification.
(g)If necessary, a recommendation that a further inspection or assessment be carried out by a suitably accredited specialist, e.g. pest inspector, electrical authority, water authority, structural engineer, geotechnical engineer, surveyor or solicitor.
The summary is possibly the most important part of the report. The important points should be extracted from the body of the report to provide the reader with a brief summary of the major faults found in the building. The summary should also put the overall condition of the building in the context of the average condition of similar buildings of approximately the same age.
3.4     LIMITATIONS AND CONDITIONS
3.4.1 Limitations The standard property report should not contain any assessment or an opinion in relation to –
…
(c)     a matter which is not within the consultant’s expertise; or
…
3.4.2 Conditions A standard property report may be conditional upon or conditional in relation to –
…
(c)     the specific areas of ‘expertise’ of the consultant specified in the report;
The curriculum vitae of Mr Duckworth was tendered[55] and he also gave evidence of his expertise. The combination of this evidence established that he had been in the building industry since he obtained his building licence in 1988. He then became a building supervisor with Hickinbotham Homes and the following year became a construction manager of Homestead Homes (“Homestead”), responsible for the construction of nearly 1000 houses a year with 13 building supervisors under his control. In 1993 he left the employ of Homestead and set up his own building company. He has continued to work in his own company building homes since that time. Mr Duckworth stated that he often undertakes pre-purchase inspection reports in the course of his work, and estimated that in 2002 alone he performed in excess of 580 house inspections including a number of special purpose inspections. He has given expert evidence in court. He has also served in membership in respect of a number of Australian Standards committees.
[55] Exhibit D8 at AB 630-636.
The appellant relies on two passages of evidence given by Mr Goldfinch, together with the alleged concessions made by Mr Duckworth discussed earlier in my reasons.
The first passage of evidence is:[56]
Q.If you go to para.1.4 of your report, you see you indicate to the reader the basis upon which you express your opinions in your report. I assume that it is your view as a structural engineer that the nature of the opinions expressed in your report are opinions that would only be able to be expressed by a person with structural engineering training.
A.That’s correct, or more particularly a mixture of structural and geotechnical engineering. Soils engineering.
Q.A reasonably specialised area of structural engineering.
A.Yes.
[56] T 305.2-305.13 at AB 341.
In my view, the questions and answers set out above give no more than what are self-evident answers. When Mr Goldfinch expressed his views as to structural soundness, he expressed these views as a person with structural engineering and geotechnical expertise. Quite correctly, they are both specialised areas. That passage does not reasonably suggest that Mr Goldfinch is thereby excluding that Mr Duckworth also has expertise to express an opinion on whether a house is structurally sound. The second passage relied on by the appellant is:[57]
[57] T 308.1-308.25 at AB 344.
Q.To enable you to answer the question that was put to you as to whether this particular dwelling is structurally sound.
A.Yes.
Q.That description of the term is a description that is found within your industry and understood within your industry to have the meaning in the way that you have described it.
A.Yes.
Q.Would you accept the proposition that whilst it might have that meaning within your industry it wouldn’t necessarily be appreciated by the general public in the terms which you have expressed it.
A.I accept that, yes.
Q.Do you agree with this proposition, that in a dwelling which exhibited the matters that you observed at the time of your inspection that an assessment of the structural soundness of that dwelling was a matter that would be properly left to a structural engineer.
A.Yes, I do and I don’t answer that just on a commercial basis, but the fact that province of geotechnical engineering is a specialised field and so is the structural interaction between the footing system of a house and its foundation, particularly in the State of South Australia.
For Mr Goldfinch to express the view that an assessment of the structural soundness of the dwelling was a matter that “would be properly left to a structural engineer” does not exclude Mr Duckworth as having relevant expertise to express an opinion on structural soundness. It does no more than express Mr Goldfinch’s view that assessment of whether this particular dwelling was structurally sound was properly a matter for assessment by a structural engineer. It does not express the view that this opinion should only be the province of a structural engineer. In his view, an assessment by a structural engineer was warranted because the repaired crack was caused by footing movement.
The Australian Standard expressly recognises that a number of differently qualified persons may qualify as a consultant for the purposes of providing a report. It also acknowledges that expertise will necessarily vary and that the consultant should not provide an opinion which is beyond that expertise. The matters which are required to be assessed by all consultants calls not only for a description of features such as crack size, damage, salt damp, defective fixtures etc., but also an assessment of the significance, importance and seriousness of such features noted on inspection, having regard to the age and type of building.[58] Many, if not most, of the matters to be included in the report relate in one way or another to structural soundness. The requirement to provide a summary of matters which require attention and an opinion “as to the overall condition of the residential dwelling in the context of age, type and general expectations of similar properties” illustrates that it is appropriate, indeed expected, that a consultant make an overall assessment as to the structural soundness of a property if that consultant has the relevant experience to do so.
[58] Note in particular paragraphs 1.4.3 and 3.3 of the Australian Standard.
In my view, it was appropriate and within the expertise of Mr Duckworth, by reason of his considerable building experience, to express his opinion as to whether the house property was structurally sound. This is not to say that other experts would not give an added dimension to the assessment of structural soundness depending on their particular expertise, such as an architect, an engineer or geotechnical expert. It is also common for there to be differences of assessment between experts, as noted by Mr Goldfinch in his report.[59] Whilst an additional assessment by a consultant from another area of expertise would be reassuring to a purchaser, at the same time it may tend to detract from the effectiveness of pre-purchase reports, which are frequently done within a limited cooling off time. If a building inspector, with the knowledge and expertise of Mr Duckworth, is unable to express an opinion on structural soundness, it would render such pre-purchase reports to be commercially unviable. It would tend to encourage an over-cautious approach with reports being expressed as conditional upon obtaining a further assessment by another expert. Such an over-cautious approach would not ultimately benefit the consumer and instead lead to delay and added expense. The application of the Australian Standard necessarily requires a judgment call to be made by a consultant, having regard to that person’s knowledge and expertise and what is observed, of whether the situation calls for assessment by a person with a more specialised or broader expertise than that held by the consultant.
[59] Exhibit D6 at AB 620-621.
In short, I do not consider that it was beyond Mr Duckworth’s expertise to express an opinion on structural soundness. The learned Judge was not in error.
Should an engineer’s report have been recommended?
The appellant submits that the Judge was in error in concluding:[60]
… Mr Duckworth was correct. It [the house property] was structurally sound. Consequently, following from the summary of the plaintiff’s case I have set out above, it cannot be said that the defendant was negligent in failing to recommend an engineer’s report, as the condition of the house was not such as to necessitate such a recommendation.
[60] Brown v Dream Homes SA Pty Ltd [2007] SASC 443 [49].
This conclusion was reached on the basis of acceptance that the appellant was primarily concerned with whether the building was structurally sound,[61] and that the appellant had relied on that assessment and the matters referred to on page nine without reading any other part of the Duckworth report.[62] His Honour therefore reasoned that because the building was reported as structurally sound (and it was), there was no requirement for the respondent to recommend an engineer’s report. Hence, no negligence.
[61] Ibid [48]-[49].
[62] Ibid [48].
The appellant challenges this reasoning on the basis that simply because Mr Goldfinch two years later confirmed that the house property was structurally sound, this did not absolve the respondent from being negligent and in breach of contract by failing to recommend that an engineer’s report be obtained at the time of Mr Duckworth’s inspection. The assessment and report of Mr Goldfinch had been done after a large tree had been removed which, in the view of Mr Goldfinch, was a contributor to the volumetric shrinkage of the soil that had lead to the footing movement.[63] Further, Mr Goldfinch had relied on the fact that, over the two year period, the repaired crack had not re-opened.[64] Whilst these factors undoubtedly reinforced the opinion expressed by Mr Goldfinch, they were not the only factors on which he relied for his opinion. In both his report and in evidence he referred to the slight to very slight cracking which existed in other parts of the house property. He concluded that the house property was structurally sound not only at the time when he did his assessment but also at the time when Mr Duckworth did his assessment two years earlier.[65] The tree was still there at that time. The later removal of the tree had simply arrested the movement and cracking.[66]
[63] Exhibit D6 at AB 622-623
[64] T 306.4-306.14 at AB 342.
[65] Exhibit D6 at AB 623.
[66] Exhibit D6 at AB 623.
There is a further limb of the appellant’s submission on this point, namely that the very existence of the repaired crack warranted a recommendation by Mr Duckworth that an engineering report be obtained. This argument fails because Mr Duckworth did not consider the repaired crack to be significant and did not consider that the repaired crack was due to movement of the footings. Hence an engineering report was not called for. The fact that he was wrong in his assessment that the repaired crack was not due to movement, does not of itself lead to proof of breach. There was no evidence as to whether a reasonable building inspector in his circumstances should have identified that the repaired crack was due to footing movement. Mr Duckworth gave reasons to explain why he reached a different conclusion. There was not sufficient evidence to prove either negligence or breach of duty based simply on his error. A mere assertion from the bar table that the error revealed a breach does not make out a case.
I therefore reject the appellant’s argument on this point. The Judge was not in error in concluding that the respondent was not liable either in negligence or breach of contract for failing to recommend to the appellant that an engineer’s report be obtained.
An additional matter raised on appeal was whether the failure by Mr Duckworth to refer to the repaired crack in his report, and to draw it to the attention of the appellant to allow her to consider his opinion, was in breach of a contractual duty.
Again, this matter turns on the judgment made by Mr Duckworth. It was not in his view a “crack” due to movement. Further, even if the repair had been referred to in his report, it would have been set out on page five,[67] which was not read by the appellant. It was not a matter which fell to be described on the page nine summary as a matter requiring urgent attention, or even “General” as this is confined to an overall assessment. Finally, the existence of the repaired crack did not alter the structural soundness of the house property. Instead, it was overtly an appearance or cosmetic issue.[68]
[67] T 293.27-294.3 at AB 327-325.
[68] T 266.2-266.21 at AB 0297 and Exhibit D6 at AB 621.
The photographs in Exhibit P1 of the repaired crack show a tall pot plant partially obscuring it.[69] Whether this pot plant was there at the time of inspection does not, in my view, alter whether there was any breach by Mr Duckworth in not drawing the attention of the appellant to its existence. The assessment of its relevance to Mr Duckworth is unchanged.
[69] Exhibit P1 at AB 352.
Would the appellant have cooled-off if an engineer’s report had been suggested?
The appellant submitted that the Judge was wrong in failing to find that the appellant would have cooled-off if the respondent had recommended that she obtain an engineer’s report. This argument presupposes that the respondent should have made a recommendation that an engineer’s report be obtained, which the Judge rejected. However, if that conclusion was wrong, the respondent submits that the appellant’s claim would also fail because the Judge was correct in concluding that reliance on this as a basis for cooling off was an afterthought.

The appellant’s initial letter of claim[70] alleges that the appellant relied on the report, and the respondent’s verbal assertion that the house property was structurally sound, when determining whether to exercise her right to cool-off.[71] The letter then goes on to list a number of building defects identified by Mr Hignett and Mr Jankovic in their respective reports, including Mr Jankovic’s assertion of the need for an engineer’s assessment. At page five of the letter the claim is expanded:[72]
Had you identified these matters in your pre purchase inspection report our client instructs us that she would not have purchased the property. (Emphasis added).
[70] Exhibit P21 at AB 575-583.
[71] Exhibit P21 at AB 579.
[72] Exhibit P21 at AB 580.
It is important to note that the recommendation for an engineer’s report was one of a number of matters identified by Mr Hignett and Mr Jankovic. At this point it is clear that the key issue for the appellant was structural soundness and the cost of fixing the defects, not whether an engineer’s report should have been recommended.
The initial Statement of Claim[73] delineates twelve problems with the house property. All except one refer to structural defects. The remainder refer to the need for an assessment by an engineer. Paragraphs 13 and 14 set out the particulars of the breach of contract and breach of duty of care. The paragraphs refer to the alleged failure of the respondent to inspect and report on the structural adequacy of the house property in accordance with the respondent’s contract with the appellant and the respondent’s duty of care. Paragraphs 13 and 14 contain no reference to an engineer’s report.
[73] Statement of Claim dated 10 November 2004 at AB 1-6.
Paragraphs 10 and 11 allege that:
…
10.By the provision of that report, the Defendant represented to the Plaintiff that the property was structurally sound.
10.[sic] Acting on the faith and truth of the inspection and report, and in reliance thereon, the Plaintiff elected to proceed with the contract to purchase the home and on 20 June 2003 purchased the home.
…
The clear emphasis of the pleadings is structural defects and the reliance on the Duckworth report. The appellant does not plead that she would have cooled-off merely if the respondent had recommended an engineer’s report. The appellant was in possession of the Jankovic report and therefore was aware of his recommendation for an engineer’s report to be obtained, but this was not pleaded as a critical matter of reliance in the initial Statement of Claim.
These documents demonstrate that the appellant’s claim was initially reliant on the specific opinion of the respondent that the building was structurally sound and that was what persuaded her to waive the cooling-off rights. The respondent’s opinion, was, in fact, correct.
The Amended Statement of Claim filed on 7 December 2005, after the appellant had been provided with the Goldfinch report, overtly took a different approach. Paragraph 10 was substantially amended and included at subparagraph 10.8 an assertion that the respondent had represented to the appellant that there was no need for the house property to be assessed by a structural engineer. Paragraph 11 remained the same, asserting that the appellant relied on the truth of the inspection and report when electing to proceed with the house property purchase.
Paragraphs 13 and 14, being the particulars of the alleged breach of contract and breach of duty, were expanded to include assertions that the respondent failed to carry out the inspection and report in accordance with the Australian Standard, namely that Mr Duckworth was not qualified to pronounce on structural soundness and that he should have recommended an engineer to further assess the house property.
No amendment to the Statement of Claim contained any direct assertion that the appellant would have exercised her cooling off rights had the respondent only recommended that an engineer’s report be obtained. Therefore, it appears that the first mention of this assertion was at trial.
The appellant’s evidence at trial confirmed that the issue of structural soundness was the “main thing” that concerned her when deciding whether to exercise her cooling off rights.[74] During her evidence the appellant expressed that she was “relieved”[75] and “happy”[76] that Mr Duckworth concluded that the house property was structurally sound.
[74] T 36.1-36.3 at AB 61.
[75] T 9.15-9.20 at AB 33.
[76] T 35.37-35.38 at AB 60.
The point regarding an engineer’s opinion arose when the appellant was asked whether the Jankovic report would have caused her to cool-off if that report had been provided to her on 28 May 2003.[77] The appellant stated that she would have cooled-off because a number of matters raised by the Jankovic report concerned her, including the need for a further electrical inspection; the identification of “severe cracking” in the house property; and the recommendation that an engineer’s opinion be obtained.[78] The appellant did not at any point state that the recommendation to obtain an engineer’s report by itself would have caused her to cool-off. The context of this hindsight was always expressed as a consequence of the totality of matters raised by the Jankovic report, and not solely the need for an engineer’s opinion.[79] In my view, it is clear from the appellant’s evidence that she would have cooled-off if she had received the Jankovic report, because the report itself casts a negative perception of the property whilst also casting doubt on the structural soundness of the property, and not because the report recommended that an engineer’s report be obtained. It is this secondary argument, however, that has been pursued throughout the appeal process.
[77] T 10.38-T 11.28 at AB 34-35.
[78] T 11.10-11.22 at AB 35.
[79] T66-67 at AB 91-92.
In short, I consider the Judge was correct when he concluded that the appellant was primarily concerned with whether the house property was structurally sound,[80] and that the complaint that the appellant would have cooled-off had the respondent recommended an engineer’s report was “an after-thought”.[81]
[80] Brown v Dream Homes SA Pty Ltd [2007] SASC 443 [49].
[81] Ibid [66].
Damages
I turn now to consider the Notice of Alternative Contention challenging the finding of the Judge that if liability had been found then the appellant suffered loss in the amount of $27,313.81. This was based on a hypothesis that but for the negligence or breach of duty of the respondent, she would have cooled-off and not purchased the house property.
The appellant in the initial Statement of Claim sought “$30,000 loss upon re-sale of property”, together with the costs of purchase, re-sale and moving in.[82] This was a claim based on a diminution in value of the house property using a report by Mr Darcy Bruce, of 6 July 2004 (“the Bruce valuation”).[83]
[82] Statement of Claim dated 10 November 2004 [17] at AB 5-6.
[83] Exhibit P7 at AB 412-422.
Subsequently, the appellant sold the house property to the respondent and the respondent’s associate in December 2004 for the sum of $225,000. Settlement occurred on 28 February 2005.
The appellant amended her Statement of Claim on 7 December 2005 by deleting the claim for $30,000, leaving only a claim for consequential costs in the amount of $29,924.90.[84] The amount claimed for consequential costs was further reduced at trial to $27,313.81 because by that stage the actual costs of re-sale had been established.[85]
[84] I note that an addition of the consequential loss amounts set out in the Statement of Claim dated 7 December 2005 at paragraph 17 does not result in a total of $29,924.90. This issue is irrelevant however, as the amount claimed was further amended at trial.
[85] Brown v Dream Homes SA Pty Ltd [2007] SASC 443 [73].
At the trial, counsel for the respondent objected to the tender of the Bruce valuation on the basis of irrelevance.[86] One argument put was that the Bruce valuation considered the value of the property in its current state as at 6 July 2004 and not as at the date of purchase in May 2003.
[86] T 14.35 at AB 38.
The appellant pursued the tender of the Bruce valuation on a limited basis, namely as to the costs of engaging an expert and the later sale of the house property after the valuation given by Mr Bruce.[87] The Bruce valuation was marked for identification.[88] There was some limited cross-examination by the respondent of the appellant regarding the re-sale price.[89] At the completion of the appellant’s evidence counsel sought to again tender the report, which was received into evidence without limitation.[90] Mr Bruce was not required to give evidence and therefore the respondent was not given an opportunity to cross-examine him on his valuation.
[87] T 14.29-14.34 at AB 38.
[88] T 14.37 at AB 38.
[89] T 61.1-61.15 at AB 86.
[90] T 77.22 at AB 102.
The Magistrate when reaching his decision as to loss and damage made no reference to the Bruce valuation and did not rely on it. The Magistrate held that the appellant suffered no loss because the consequential costs incurred by the appellant were entirely covered by the profit made on the re-sale of the property.[91] The Magistrate relied on the decision of Manwelland Pty Ltd v Dames and Moore Pty Ltd[92] (“Manwelland”) and concluded that the consequential costs incurred by the appellant must be set-off against the profit made on the re-sale.
[91] Brown v Dream Homes SA Pty Ltd, Judgment of Mr J G Fahey SM, 1 June 2007 [31].
[92] (2001) ATPR 41-845.
The appellant filed her Notice of Appeal on 3 September 2007. After the Notice of Appeal was filed, the appellant filed an affidavit sworn by Darcy Bruce on 30 October 2007 and sought to tender that affidavit pursuant to Supreme Court Rules 2006 R 292(3)(a) at the hearing of the appeal before the Judge. In essence, the content of that affidavit referred to an alleged percentage increase in value in houses built in the 1960s in the suburb of Hope Valley of some 61.1 per cent between 26 May 2003 and December 2004. The appellant did not seek any additional damages by reason of that evidence, but instead sought to maintain that the damages sought at trial, namely $27,313.81, were appropriate. However, the means whereby that figure would be regarded as appropriate was using a different method of calculation.
At the hearing before the Judge, the respondent opposed the admission of fresh evidence. The argument of the respondent was that the admission of this fresh evidence would open up a new issue requiring new pleadings, the consideration of further expert reports, the calling of evidence of such experts, and the recall of the appellant and her partner to give further evidence. It was further submitted that the fresh evidence sought to be adduced appeared to be based on a claim for damages for loss of opportunity, which of course had differed from the assessment process previously pleaded.
The Judge concluded that contrary to the conclusion of the Magistrate, the Manwelland case was distinguishable and had no application to the facts of the case. In his view, the case was distinguishable on the basis that the re-sale of the house property by the appellant to the respondent was not part of the transaction when purchasing the property. There was no reference in the Judge’s reasons to the application for fresh evidence and no apparent reliance on the fresh evidence of Mr Bruce.
On appeal before this Court, the following issues emerged as pivotal in determining the Notice of Alternative Contention as to damages. First, what is the correct legal approach to the assessment of damages in the circumstances of this case. Second, how did these principles apply to the evidence before the Court. Third, the application for further evidence.
Correct legal approach to assessment of damages
The appellant in this case sued both in contract and tort. The High Court in Astley v Austrust Ltd[93] recognised that there may be concurrent liability in contract and tort in respect of breach of professional duty and that a party may be entitled to take advantage of the remedy which is most advantageous.[94]
[93] (1999) 197 CLR 1.
[94] See also discussion in GHL Friedmann ‘The Interaction of Tort and Contract’ (1977) 93 Law Quarterly Review 422.
In matters of assessment of damages, there may be differences in relation to the measure of damages for breach depending on whether it is assessed as a breach of contract or a tortious breach.[95] These differences are generally matters concerned with the kinds of loss that may be claimed, rather than a difference as to the approach. There is a common approach to the assessment of compensatory damages for both types of breach, namely that ‘the claimant is entitled to be put into the same position, as far as money can do it, as he would have been in had the wrong not been committed’, or in the case of contract, ‘as if the contract had not been broken’.[96]
[95] See discussion Marks v GIO Holdings Limited (1998) 196 CLR 494, Gaudron J 502- 503; McHugh. Hayne and Callinan JJ 514-516.
[96] McGregor on Damages (17th edition) at 19-003 and generally 19-001 to 19-011.
This same approach was also expressed by the High Court in the case of Shaddock and Associates Pty Ltd v Parramatta City Council[97] (“Shaddock”) in the context of damages for negligent misrepresentation. As Gibbs CJ stated, the over-arching principle is that “[t]he appellants are entitled to be put, so far as money can do, in the same position as if they had not made the purchase”.[98]
[97] (1980-1981) 150 CLR 225.
[98] Shaddock and Associates Pty Ltd v Parramatta City Council (1980-1981) 150 CLR 225, 237.
The general proposition is that the test for assessment of damages for breach of a contractual duty of care is the same as the test for assessment of damages for a breach of duty of care and, further, the same as damages suffered as a consequence of statutory misrepresentation. The case of Manwelland at paragraphs [10]-[11] and its references, reaffirm that general position.
The basic measure of damages in a case involving a purchase of a property at an over-value is the difference between the purchase price and the value of the property at the date of acquisition. In other words, the diminution in value of the property. There is also recognition that events which occur after that date may also be taken into account, provided they are sufficiently related to the breach.[99]
[99] HTW Valuers (Central) Qld Pty Ltd v Astonland Pty Ltd (2004) 211 ALR 79.
The High Court in Shaddock was considering a case in which the appellants had purchased land for redevelopment on an incorrect belief that the land was not subject to any road-widening proposals. The trial Judge held that the appellants would have not purchased the property if they were aware that the Council had approved the proposal. The assessment of damages by the trial Judge included the difference between the price paid by the appellants for the land and its actual value, as well as consequential damages taking into account council rates, water rates, stamp duty and insurance. This was disputed on appeal by the respondent who submitted that the appellants would have been bound to incur these amounts if the land had not been subject to road-widening proposals.
The High Court held that the taxes, stamp duty and other consequential costs would not have been incurred if the purchase had not been made and that the appellants were entitled to receive these amounts in damages.[100] Thus, given that it was accepted by the parties that the appellants would not have purchased the land if it had been aware of the proposals, the appellants’ loss included not merely the diminution in value of the land, but also the expenses which would not have been incurred had the respondent not been negligent.[101]
[100] Shaddock and Associates Pty Ltd v Parramatta City Council (1980-1981) 150 CLR 225, 237.
[101] Ibid 255.
Applying those basic principles in this case would support a proposition that if the appellant had retained the property, she would be entitled to a loss calculated on the diminution in value of the land, together with consequential costs. However, this begs the question of what is the loss sustained if instead of a person retaining the property, it was subsequently sold at a greater amount than that paid for the property two years earlier. This issue was not the subject of consideration by the High Court in Shaddock, but it did arise in Manwelland before the Queensland Supreme Court of Appeal. The leading judgment was given by McPherson JA.
The appellant in Manwelland purchased a parcel of land knowing that it was contaminated and had restrictions on its use. The appellant saw the property as having development potential after it was cleaned up. It initially acquired an option to buy the land for $810,000, subject to departmental approval for the use of the land. Prior to the date of the exercise of the option, the appellant investigated the cost of cleaning up the land and employed the respondent to report on the methods and costs of decontamination. Relying on the respondent’s advice, the appellant proceeded with the purchase. The report of the respondent as to the quantum of costs was incorrect. The respondent advised the appellant that decontamination would be achieved for between $25,000 and $300,000, whereas it was at a much higher cost, between $500,000 and $963,500. The appellant later re-sold a part of the land which it had decontaminated and developed. The appellant brought an action against the respondent for misleading and deceptive conduct under the Trade Practices Act 1974 (Cth). The issue that arose was whether the proceeds of the re-sale of part of the land should be taken into account in assessing damages.
The trial Judge took into account the proceeds of the re-sale, less the expense of bringing it into that saleable position. After this deduction, together with a further deduction for costs that were incurred prior to the option being exercised, the Judge awarded the appellant damages of $10,000, rather than the $510,000 sought.
On appeal, the appellant argued that it should not be obliged to have the benefits it accrued as a result of its decision to develop and dispose of a portion of the land taken into account. The Court of Appeal disagreed. The Court of Appeal concluded that account should be taken of the proceeds of the re-sale. In reaching this conclusion, McPherson JA indicated that the English decision of Hussey v Eels[102] (“Hussey”), which did not take account of profit made on a re‑sale, was not in his view sound law and that the weight of authority in Australia favoured the view that damages were to be determined by ascertaining the net loss sustained as a result of acting on the inducement.[103]
[102] [1990] 2 QB 227.
[103] Manwelland Pty Ltd v Dames and Moore Pty Ltd (2001) ATPR 41-845, [19].
I now interpolate to discuss the case of Hussey, which also was a case of negligent misrepresentation. The representation was that the house being sold to the plaintiffs had not been the subject of subsidence. This representation was wrong, and the repairs required were costly. The plaintiffs decided that the best course was for them to demolish the house and apply for planning permission to erect two houses in its place. They did this and sold the property, with the benefit of planning permission having been obtained, for a profit. The Court of Appeal decided that the profit on the re-sale of the defective property was not to be taken into account in the assessment of damages for the misrepresentation, because the re-sale was not part of a “continuous transaction commencing with the original purchase of the property”. The Hussey case gave rise to other cases which followed the principle that profit on a re-sale was only required to be taken into account if this was part of a “continuous transaction”, and not an “independent or disconnected transaction”.[104]
[104] For example, Gardner v Marsh and Parsons [1997] 1 WLR 489. However, later English decisions as discussed in McGregor on Damages (17^th edition) at 7-121 to 7-127, have taken a different approach.

Viscount Haldane in Westinghouse most succinctly put the proposition in the following way:
But when in the course of his business [the injured party] has taken action arising out of the transaction, which action has diminished his loss, the effect in actual diminution of the loss he has suffered may be taken into account even though there was no duty on him to act.[186]
[186] Westinghouse Electric and Manufacturing Co. Ltd v Underground Electric Railways Co. of London Ltd. [1912] AC 673 at 689.
Viscount Haldane limited the principle to what he described as a “continuous dealing” and not “independent and disconnected transactions” that were “res inter alios acta”.[187]
[187] Westinghouse Electric and Manufacturing Co. Ltd v Underground Electric Railways Co. of London Ltd. [1912] AC 673 at 691 - 2.
Viscount Haldane’s approach is readily understandable given the particular facts in Westinghouse. Westinghouse did not concern the purchase of a marketable commodity at a price higher than its market value because of a misrepresentation. The goods purchased in Westinghouse were electric generators in a railway. They did not meet the warranted specifications that were necessary for the proper operation of the railway, but may nonetheless have been worth their purchase price. The replacement generators that were bought at a greater cost by the railway operator would also have reduced its general operating cost beyond the reduction that the Westinghouse generators would have achieved. The House of Lords held that the cost of purchasing the replacement generators should be offset by the benefit of the reduced operating costs.
With respect, although the approach taken in Westinghouse is designed on the facts of that case, to avoid overcompensation it hardly seems adapted to the facts in Hussey where what was purchased was a marketable commodity and not machinery for use in an ongoing enterprise. Fortunately for the plaintiffs in Hussey although Mustill LJ applied that test he found that on the facts the sale of the land was not part of a continuous transaction commencing with the purchase of the bungalow. Mustill LJ reasoned as follows:
Ultimately as with so many disputes about damages, the issue is primarily one of fact. Did the negligence which caused the damage also cause the profit – if profit there was? I do not think so. It is true that in one sense there was a causal link between the inducement of the purchase by misrepresentation and the sale two and a half years later, for the sale represented a choice of one of the options with which the plaintiffs had been presented by the defendants' wrongful act. But only in that sense. To my mind the reality of the situation is that the plaintiffs bought the house to live in, and did live in it for a substantial period. It was only after two years that the possibility of selling the land and moving elsewhere was explored, and six months later still that this possibility came to fruition. It seems to me that when the plaintiffs unlocked the development value of their land they did so for their own benefit, and not as part of a continuous transaction of which the purchase of land and bungalow was the inception.[188]
[188] Hussey v Eels [1990] 2 QB 227 at 241B-D.
It might be observed that the concept of unlocking the development value of the land for the plaintiff’s own benefit appears to apply, in another guise, the crystalised loss rule that was applied in Jamal.
The judgment of Mustill LJ in Hussey has been criticised.[189] However the criticism has not been so much of the result in Hussey as of the potential for confusion and the resulting risk of over or under compensation that is presented by the continuous transaction test.
[189] McGregor on Damages 17^th Ed (7-119, 7-120); Manwelland v Dames & Moore Pty Ltd (2001) ATPR 43,464 per McPherson JA; Gardner v March and Parsons [1997] 1 WLR 489 at 510.
Apart from the criticism made by McPherson JA of the failure to factor in the development value of the site[190] the result in Hussey appears to be reasonable. Indeed it is the very result that the crystallised loss rule would yield. It is that rule that is more likely, on the facts in Hussey, to achieve the object of restoring the injured party to the position he or she would have been in if the wrong had not been committed.[191] The importance of the distinction between the purchase of land to be used as a residence and not as plant and equipment to be used in the course of a productive enterprise was remarked upon in a subsequent English decision.[192] The facts in Hussey are not that different to cases like Jamal. Indeed despite their criticism of the decision in Hussey the editors of McGregor[193] support the decision in Blue Circle Industries v Ministry of Defence[194] where the Court of Appeal did not offset the profit made by the plaintiff when it sold land in a rising market some years after its value was adversely affected by contamination from nuclear activity. The editors of McGregor also accept as correct the decision in Prima Vera v Allied Dunbar Assurance PLC[195] where, in a claim for loss caused by negligent financial advice, the Court of Appeal did not take into account in reduction of that loss the subsequent long term recovery in value of the financial product that had been adversely affected by the negligent advice.
[190] Manwelland v Dames & Moore Pty Ltd (2001) ATPR 45,464.
[191] Livingston v Railway Coal Co (1880) 5 App Cas. 25, 39; Doyle v Olby (Ironmongers) Ltd (1969) 2 QB 158.
[192] Gardner v Marsh and Parsons [1997] 1 WLR 489 at 506 per Peter Gibson LJ.
[193] McGregor on Damages 17^th Ed (7-121, 7-127).
[194] [1999] Ch. 289.
[195] [2003] PNLR 376.
This question was also considered in Western Australia in Tay v Koh.[196]The claim in Tay was for loss caused by a misrepresentation on which the plaintiff relied in purchasing a development site. The plaintiff had paid $185,000 more than the market value of the property on the strength of advice that a particularly profitable form of development could be undertaken on the land. Planning approval for that development could not be obtained but another development was approved and undertaken. The defendant contended that, for that reason, the plaintiff could not claim the difference in value as at the date of purchase. That submission was rejected at trial and on appeal.[197] The Supreme Court of Western Australia held that the alternative development that was undertaken was so different that there was not one continuous transaction. It held, applying Hussey, that the profit should not be taken into account. The Queensland Court of Appeal in Manwelland reached the opposite conclusion; namely that there was a continuous transaction in a case where the change in the development seems to have been as substantial as the change in Tay. The continuous transaction test posed in Hussey is disconnected from any of the common law concepts governing compensatory damages. It obviously has the potential to yield different results depending on fine factual distinctions that in itself suggests that the crystallised loss approach may be preferable.
[196] [1998] 986290.
[197] Tay v Koh [1998] 980290 at 8, 13.
It is not necessary in this case to finally resolve these differences.[198] The cases that have been referred to by the parties and the courts below are not directly applicable because they do not deal with a claim such as that made by Ms Brown for the loss of the transaction costs. However my survey of the authorities has not disclosed any reason to depart from the approach that I first suggested. That approach appears to conform to the basal principle that the wronged party should be restored to the position he or she would have occupied but for the wrong.
[198] It may have been necessary to do so if I were not satisfied that Ms Brown would have purchased a similar house if she had cooled off.
Should the matter be remitted to the Appeal Judge?
The position reached so far is that the appellant has established that she has lost the transaction costs as a result of the respondent’s breach of contract. Despite that loss Ms Brown appears to be no worse off because of the capital appreciation that was realised on the sale of the Mataro Road house. Ms Brown contends that the appearance is illusory because evidence that she did not adduce at trial, but that she asked the Appeal Judge to receive, shows that there has been a general increase in the housing market that she would have entered but for the respondent’s breach. The Appeal Judge did not rule on that application because he held that the profit on resale should not be offset against the transaction costs. Accordingly the remaining issue for this court is whether the application to adduce further evidence enjoys sufficient prospects of success to justify remitting the matter to the Appeal Judge where the application can be more conveniently dealt with.
It is of some importance that, despite the concession to the contrary made by Ms Brown’s counsel before the Appeal Judge,[199] there was some evidence of a rise in the house market over the period between the purchase by Ms Brown of the Mataro Road house and its sale. First Ms Brown herself was asked in cross-examination why she had not bought another property after selling the Mataro Road house. Ms Brown answered that she had less of a deposit because of the transaction fees. She was further pressed by counsel for Mr Duckworth in this way:
QYou had also received another $30,000. [referring to the realisation of the capital appreciation on the Mataro Road house].
ATo buy a similar property we would be paying the same as what we had sold the house for so we weren’t any better off.[200]
[199] Appeal Transcript 15.33.
[200] Magistrates Court proceedings transcript p 58 - 9.
That answer was not challenged nor was any contrary evidence called.
An inference that the market was rising can also be drawn from the sales used as comparators in the report of Mr Bruce. The respondent objects that Mr Bruce’s report was received for a limited purpose. The report was first tendered, not as proof of the valuation but because it was “relevant to the ultimate sale of the property and to the defendant at that price”.[201] Counsel for Mr Duckworth objected and the report was, at that time, only marked for identification. However counsel for Mr Duckworth then cross-examined Ms Brown about why she had sold the house. It was put to her that she had sold it because she “wanted to establish that [she was] going to lose money” in the process and would then be able to claim the difference against Mr Duckworth. Ms Brown replied that she had sold the house because she and her partner “became more discontented with it”. Counsel then asked Ms Brown what price she had put the house on the market for. Presumably that question was meant to further the earlier allegation that Ms Brown initially thought and hoped that she would make a loss. Ms Brown answered that she put the house on the market at a price of $239,000 on the advice of her land agent. That answer was then further challenged by the cross examiner by putting to Ms Brown that if that was so she had chosen to put it on the market at a significantly higher price than the valuation of Mr Bruce. Ms Brown maintained her previous answer to the effect that she had put the Mataro Road house on the market at a higher price than the value placed on it by Mr Bruce because of the agent’s advice and did not concede that she had expected to make a loss because of what she knew of Mr Bruce’s valuation.
[201] Magistrates Court proceedings transcript p 14.
The extent and purpose of the cross-examination entitled Ms Brown’s counsel to insist on the admission of the report of Mr Bruce so that the credibility of Ms Brown’s evidence about her true purpose for putting the house on the market could be properly assessed. That assessment required a consideration of the entirety of Mr Bruce’s report.
At the close of cross-examination counsel for Ms Brown again tendered Mr Bruce’s report and it was received into evidence. It is important to appreciate that at that point the report was not admitted pursuant to a ruling that the Magistrate had reserved following the earlier attempt to tender the report for a limited purpose. There was a second tender of the report after the cross-examination to which I have referred. On the occasion of the second tender no objection was made. The only objective reason for that the tender, and the absence of objection, that appears on the face of the transcript is the very cross-examination to which I have referred.
It is difficult to accept that in those circumstances the report was tendered by counsel for Ms Brown on the same limited basis on which, earlier, he had been unsuccessful. If it had been tendered on the same basis presumably it would have attracted the same objection but no such objection is recorded in the transcript. Perhaps even more importantly, the transcript records that the report was admitted without reference to any limitation or qualification. The unqualified admission of the report is not surprising given the nature of the cross-examination. Whatever the subjective intention of the cross examiner might have been, an objective reading of the transcript shows that the report, and in particular its valuation of the Mataro Road house, was used to challenge Ms Brown’s assertion that she had put the house on the market on the basis of advice that it would fetch $239,000 and not because she believed that she would make a loss on the property that she would then be able to claim against the respondent. The unqualified receipt of the report is explicable on that basis.
Although I am satisfied for the reasons just given that there was some evidence that the housing market rose in the relevant period I accept that the weight of that evidence is quite limited. In any event the position remains that the appellant applied to adduce further evidence before the Appeal Judge. The evidence was in the form of a further report from Mr Bruce to the effect that there had been a general rise in the housing market of the same order as the increase in the Mataro Road house in the relevant period. The application was opposed on the ground that the matter could have been dealt with in the Magistrates Court and because the pleadings would have to be amended. The respondent submitted to the Appeal Judge that if the appellant’s further evidence was received the respondent would need time to consider whether to call expert evidence itself, that the evidence of experts may need to be given orally and that it may be necessary to recall the appellant.
I commence my discussion of this topic by observing that the Rules of this court are not limited to the admission of fresh evidence but allow this court to receive further evidence.[202] There is no reason to limit that power by reference to the common law rules for the admission of fresh evidence on a motion for a new trial.[203]
[202] 6R 292(3).
[203] CDJ v VAJ (1998) 197 CLR 172; Lewis v Holder [2003] SASC 266 and on appeal at (2003) 231 LSJS 431; Goninan & Co Pty Ltd v Direct Engineering Services Pty Ltd (2007) 33 WAR 182.
The fact that the damage was not pleaded is not, to my mind, a matter of great weight in this case. The proceedings were brought in the Magistrates Court. Damages are rarely pleaded with great detail in any court. The respondent itself did not plead that the capital appreciation on the sale of the Mataro Road house by Ms Brown should be offset against the transaction costs. It can hardly be said that it was obvious that the respondent would put that case, the Appeal Judge having ruled below that the law is that the profit or resale could not be set off. Yet no one would suggest that the respondent should have been precluded from putting that position. The conceptual difficulties that beset the assessment of damages in a case like this is illustrated by the different conclusions expressed on the question as this matter has wound its way up the judicial hierarchy and in the different decisions of courts in Australia and England on related questions. The mistake made by Ms Brown’s lawyers in this difficult area does not appear to have been tactical and is not a sufficient reason to deny her application to adduce further evidence.[204]
[204] Pradhan v Eastside Day Surgery Pty Ltd [1999] SASC 256.
In deciding this issue the consideration of paramount importance is the ultimate effect on the interests of both parties of allowing or refusing the appellant’s application. If the appellant is given an opportunity to adduce the evidence now the prejudice to the respondent caused by her failure to adduce the evidence at trial can be met by an order for costs. If the appellant is denied the opportunity, the contractual wrong that I have found she has suffered will forever remain without a remedy. Subject to the question of whether taking the further evidence is practicable and manageable, there is therefore a strong argument that the interests of justice favour the grant of leave.
There are limits to the relief that an appeal court can give where a failure to call evidence at trial may be the cause of injustice. The power of an appeal court to receive further evidence should not be seen as providing parties with a second opportunity to make their case. The trial is not a practice run.[205] The hearing of further evidence disrupts the orderly and expeditious disposition of appeals and if the matter is remitted to the trial court it causes delays in the hearing of other matters in the trial list.
[205] Goninan & Co Pty Ltd v Direct Engineering Services Pty Ltd (2007) 33 WAR 182; Collex Waste Management Pty Ltd v City of Enfield (No 2) [2000] SASC 140.
I accept that if the evidence tendered by the appellant is received the respondent may also tender further evidence on the issue. However the expert evidence tendered by the appellant is consistent with such evidence as there is in the materials that the housing market rose in the relevant time. It is I think permissible, for the limited purpose of deciding whether this question should be remitted, to have regard to the possibility that there may not be much dispute about this evidence because it is, after all, consistent with such other evidence as there is in the case. Moreover, and again for the limited purpose to which I have referred, it would be more than a little unreal for this court to ignore the notorious fact that there has been a significant increase in house prices in and around Adelaide. There is enough in all of that to satisfy me that there is a reasonable possibility that the experts might agree on what has been a general percentage rise in real estate in the north eastern suburbs or at the very least, if there is some difference between them, that it will be of narrow compass. Equally there is good reason to think that there should not be a substantial dispute about whether the Mataro Road house was purchased at its real value by Ms Brown and then later by Mr Duckworth and his joint venturer. True it is that the property had potential as a development site, but that is but one factor to be taken into account in its valuation. The fact remains that on both occasions the Mataro Road house was properly marketed and bought by purchasers who were at arms length from the vendors. In those circumstances it would again be very surprising if any dispute between Mr Bruce and any expert procured by the respondent were extensive.
In my view the further evidence the appellant seeks to adduce does not change the nature of her claim. At the hearing before the Magistrates Court she sought an award in the amount of the transaction costs so that she would be placed in the position she would have been in had she cooled off. In effect her claim remains the same. The appellant tenders the further evidence of a general rise in the market by way of response to the respondent’s position that the profit on the sale of the Mataro Road house should be offset against the transaction costs to avoid overcompensation. The evidence Ms Brown now wishes to lead in response merely elaborates on the response she gave to the cross-examiner at trial, namely that to “buy a similar property we would be paying as much as we sold the house for”.[206]
[206] Magistrates Court proceedings transcript p 58 - 9.

For these reasons I have reached the conclusion that there are sufficient prospects that a balancing of the relevant considerations to which I have referred may result in an order favourable to the appellant to remit the matter to a judge of this court to determine whether further evidence should be received on the issue of damages and the rise in the housing market in particular.
Orders
I join in the orders proposed by Doyle CJ.