Brown v Dream Homes SA Pty Ltd - [2007] SASC 443

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
BROWN v DREAM HOMES SA PTY LTD
[2007] SASC 443
Judgment of The Honourable Justice Sulan
17 December 2007
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH - PERFORMANCE
TORTS - NEGLIGENCE - MISCELLANEOUS FORMS OF NEGLIGENT CONDUCT
DAMAGES - GENERAL PRINCIPLES - GENERAL AND SPECIAL DAMAGES
Defendant prepared pre-purchase report relating to a residential building - plaintiff elected not to cool off in reliance upon the report - report identified several items that needed to be fixed, but concluded that the building was structurally sound - plaintiff later found problems with the building - plaintiff's solicitors commissioned further report which recommended obtaining an engineer's report on the structural soundness of the building - plaintiff claimed, inter alia, that by failing to recommend an engineer's report in the pre-purchase report the defendant was in breach of duties arising from tort, contract and legislation - engineer's report indicated building was structurally sound - Magistrate found that defendant had acted in breach of duty but found that no loss was caused to plaintiff - plaintiff appealed - defendant filed notice of contention on question of breach - held, allowing both appeal and notice of contention, defendant prepared report in exercise of skill and judgment - nothing about building necessitated the recommendation of an engineer's report - nevertheless, Magistrate erred in determining damages - if liability had been established, plaintiff would have been entitled to costs associated with and referable to purchase.
Fair Trading Act 1987 (SA); Land and Business (Sale and Conveyancing) Act 1994 (SA) s 5; Misrepresentation Act 1972 (SA), referred to.
Hussey v Eels [1990] 2 QB 227; Shaddock & Associates Pty Ltd v Paramatta City Council (1980-1981) 150 CLR 225; Tay v Koh (Unreported, Supreme Court of Western Australia, Full Court, Malcolm CJ, Walsh and Ipp JJ, 28 May 1998), applied.
Manwelland Pty Ltd v Dames & Moore Pty Ltd (2001) ATPR 41-845, distinguished.

BROWN v DREAM HOMES SA PTY LTD
[2007] SASC 443
Magistrates Appeal

SULAN J: This appeal is from a decision of a Magistrate, who dismissed the appellant’s claim for damages. The appellant, Ms Marian Brown, to whom I shall refer as “the plaintiff”, commenced proceedings in the District Court against the respondent, Dream Homes Pty Ltd, which I shall refer to as “the defendant”, seeking damages for breach of contract, negligence, misrepresentation pursuant to the Misrepresentation Act 1972 and misleading and deceptive conduct, pursuant to the Fair Trading Act 1987. Shortly stated, the issues arising at trial, and in this appeal, were first, whether the pre-purchase report provided by the respondent to Ms Brown as a prospective purchaser of a residential property, was adequate, having regard to principles of tort and contract and relevant legislative provisions, and secondly, the quantum of damages owed if the report were not adequate. The original claim was for $59,924.80. After commencing the proceedings, the plaintiff reduced her claim to $29,924.80. The action…

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [2007] SASC 443
Decision Date: 17 December 2007

CaseChat Overview and Summary

The case of Brown v Dream Homes SA Pty Ltd involved the plaintiff, Ms Brown, who sought damages against Dream Homes SA Pty Ltd for their alleged failure to recommend an engineer's report in a pre-purchase report on a residential building. The plaintiff argued that the defendant breached their duties under tort, contract, and legislation by not recommending an engineer's report in the pre-purchase report, which ultimately led to her purchasing a property with undisclosed structural issues. The defendant filed a notice of contention, contesting the breach of duty. The case was heard and determined by the court.

The primary legal issues in this case were whether the defendant breached any duties owed to the plaintiff by not recommending an engineer's report in the pre-purchase report, and whether the plaintiff suffered any loss or damage as a result of the alleged breach. The court had to consider the terms of the pre-purchase report, the condition of the building, and the applicability of any statutory or common law duties owed by the defendant to the plaintiff.

The court found that the defendant did not breach any duty owed to the plaintiff by not recommending an engineer's report in the pre-purchase report. The court held that nothing about the building necessitated such a recommendation. However, the court did find that the Magistrate erred in determining damages, stating that if liability had been established, the plaintiff would have been entitled to costs associated with and referable to the purchase. The appeal was dismissed, and the notice of contention was upheld.

The court ordered that the appeal be dismissed and the decision of the Magistrate be set aside. The defendant was not found liable for any breach of duty, and the plaintiff's claim for damages was rejected. The court did not award any costs to either party.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

The defendant’s case was that the plaintiff’s claim that she would not have purchased the house had she been advised to obtain a report from an engineer was a recent invention. Counsel for the defendant pointed to the fact that in the letter from the plaintiff’s solicitor, the plaintiff was interested in the structural condition of the property. There was no reference to an engineer’s report, nor to the claim that a recommendation to obtain an engineer’s report would have led the plaintiff to cool off. That claim was first made in the Magistrates Court. Counsel contended the claim was only made after receipt of the Jankovic report. The defendant contends that the plaintiff failed to prove the house was not structurally sound. Evidence relating to structural soundness and need for engineer’s report During cross-examination, the plaintiff accepted that, prior to indicating to the agent that she did not intend to cool off, she had only read the summary page of the Duckworth report. She discussed the summary with Mr Duckworth. She accepted that she had had time to read the detailed report before she told the agent she was not intending to cool off. The plaintiff was asked:[7][7] T 35-6.Q.And say ‘Can I have some extra time I need to read this report.’A.I was happy with the fact that Mr Duckworth said it was structurally sound.Q.So it didn’t really matter what else was in the report provided that it was structurally sound.A.It was structurally sound was the main thing for me.Q.In all of these other matters that you have referred to earlier today, the electrical things and all the rest of it on their own wouldn’t have caused you to cool-off.A.Yes, they would.Q.You didn’t ask Mr Duckworth to check the electrical things.A.No, I didn’t.Q.You didn’t even know whether he was qualified to do so.A.That’s right.Q.You didn’t ask Mr Jankovic, did you, to check the electrical installations.A.I didn’t speak to Mr Jankovic.Q.And you don’t know whether he’s ever been electrically qualified.A.I don’t believe he is. His report said that the electrics needed checking.Q.If in fact the only matter which you were concerned about in relation to the report of Mr Duckworth was the structural soundness of the building then can I suggest to you it wasn’t necessary for you to go beyond p.9 because on p.9 Mr Duckworth said the house is structurally sound.A.Yes.Q.He then went further and told you that verbally because you specifically asked him about that.A.Yes.Q.If you had been concerned about any of the other matters on p.9 under the heading ‘Summary’ presumably you would have cooled-off.A.Yes.Q.It may be confusing I will put it to you again. The matters listed from one to eight presumably, I suggest, did not concern you to the extent that you wouldn’t have cooled-off because of them.A.That’s right. In my view, the plaintiff’s contention that the critical issue was the failure of the defendant to recommend an engineer’s report, rather than the structural soundness of the building, is misplaced. A failure to recommend an engineer’s report could only constitute a breach of duty if such a recommendation was appropriate, having regard to the condition of the house at the time of inspection. The plaintiff’s case may, therefore, be expressed in simple terms as being that there was some aspect of the structural condition of the building at the time of inspection which created a duty on the part of the defendant to recommend an engineer’s report.The Duckworth report

Decision

Reasons for decision

If, therefore, I am incorrect in upholding the defendant’s notice of contention, then I conclude that the plaintiff’s damages have been proved in the sum of $27,313.81.Conclusion For the reasons expressed, I uphold the alternative contentions of the defendant. I disagree with the Magistrate’s finding that the defendant was liable for breach of duty. It follows from my reasons that the plaintiff has failed to establish a breach of contract or of duties imposed by legislative provisions, as pleaded. The appeal is therefore dismissed.

Ratio Decidendi

Legal Principle Established

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