Brown v Dream Homes SA Pty Ltd

In the case of Brown v Dream Homes SA Pty Ltd, the appellant, Brown, engaged the respondent, Dream Homes SA Pty Ltd, to conduct a pre-purchase property inspection of a house in Hope Valley. The respondent failed to identify and report a patched crack on an external wall, which was later determined to be caused by footing movement. Brown purchased the property in reliance on the pre-purchase report and later sold it at a profit. However, she brought proceedings against the respondent for damages, claiming breach of duties arising in tort and contract. The Magistrate found the respondent liable, but the Appeal Judge overturned this decision. Brown appealed to the Full Court.

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.