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)…
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- Case
- [2008] SASC 295
- Decision Date
CaseChat Overview and Summary
The legal issues before the Full Court included whether the respondent breached an implied term of the contract to exercise reasonable care and skill in identifying and reporting on defects, and whether the respondent should have recommended an engineer's report. The court also considered the measure and remoteness of damages in actions for breach of contract, specifically whether the amount obtained by the appellant upon re-sale of the property should be taken into account in assessing damages.
The Full Court held that the respondent breached the implied term of the contract to exercise reasonable care and skill by failing to report the existence of the patched crack. The court found that the respondent did not have the relevant expertise to provide an unqualified opinion as to structural soundness and should have recommended an engineer's report. The court also held that the finding that the appellant would have cooled off from the purchase but for the breach should not have been overturned on appeal. The Full Court allowed the appeal and held that the respondent was liable.
Regarding damages, the Full Court held that the correct measure of damages is to put the appellant in the position she would have occupied had she not purchased the property. The amount received by the appellant on re-sale of the property is to be brought into account in assessing damages.
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