Halling v Stubing - [2011] SADC 167

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
HALLING & ANOR v STUBING & ANOR
[2011] SADC 167
Judgment of His Honour Judge Brebner
23 December 2011
CONTRACTS - PARTICULAR PARTIES - VENDOR AND PURCHASER - GUARANTEES CONTAINED IN CONTRACTS AND COLLATERAL PROMISES
CONTRACTS - PARTICULAR PARTIES - VENDOR AND PURCHASER - DISCLOSURE OF MATERIAL FACTS
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS
DAMAGES - MEASURE AND REMOTENESS OF DAMAGES IN ACTIONS FOR BREACH OF CONTRACT - PARTICULAR CONTRACTS
REAL PROPERTY - VALUATION OF LAND - METHODS OF VALUATION - COMPARABLE SALES - SALES OF COMPARABLE LAND
REAL PROPERTY - VALUATION OF LAND
Plaintiffs purchased real property from defendants. One defendant had built a number of walls on the property. The walls were a significant feature of the property. Walls were built without council approval. Defendants gave contractual warranty that to their knowledge no building work had been undertaken on the property without relevant approvals being granted. Sections of the walls collapsed after plaintiffs took possession. Plaintiffs sued on the warranty and in negligence. Whether warranty breached. Whether duty of care owed. Whether plaintiffs had proved loss.
Held: Action in contract upheld on construction of the warranty. Action in negligence dismissed. No duty of care owed. Plaintiffs proved diminution in value of the property. Hungerfords v Walker damages awarded.
Development Act 1993 ss4, 32-34, 108; Building Regulations 1993 s3, applied.
Scuteri v Wood (1987) 137 LSJS 7; Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; The Queen v Hillier (2007) 228 CLR 618; James v Great Western Railway Co [1930] All ER 830; Pegela Pty and Ors v National Mutual Life Association of Australia [2006] VSC 507; Bryan v Maloney (1995) 182 CLR 609; Woolcock Street Investments Pty Ltd v CDG Pty Ltd & Anor (2004) 216 CLR 515; Perre & Ors v Apand (1999) 198 CLR 180; Sullivan v Moody (2001) 207 CLR 562; Wyong Shire Council v Shirt (1980) 146 CLR 40; Crimmins V Stevedoring Industry Finance Committee (1999) 2000 CLR 1; Graham Barclay Oysters Pty Ltd v Ryan (2002) 111 CLR 540; Potts v Miller (1940) 64 CLR 282; Ted Brown Quarries v General Quarries (Gilston) (1977) 16 ALR 23; Voss Real Estate v Schreiner (1998) 70 SASR 545; Spencer v The Commonwealth (1906) 5 CLR 418, considered.

HALLING & ANOR v STUBING & ANOR
[2011] SADC 167

This is an action for damages for breach of a contractual warranty or, in the alternative, damages for negligence.
The plaintiffs, Mr Halling and Ms Morgan are domestic partners. The defendants, Mr and Mrs Stubing are a married couple.
In 2000 Mr and Mrs Stubing purchased a house on about nine acres of land at the township of Woodchester on the upper Fleurieu Peninsula. Mr Stubing built a number of walls on the property. He built all of these walls from stones which were lying about the property. The walls became a significant feature of the property as a whole. Some sections of the walls in fact required council consents and approvals before they could be built. Mr and Mrs Stubing did not obtain the necessary consents or approvals. They said that it was their belief that none were required.
In 2002 Mr and Mrs Stubing decided to sell the property. They engaged the services of a licensed land agent and the property was advertised for sale. Mr Halling and Ms Morgan inspected the property. After a period of entirely unremarkable negotiations, they purchased the property in early 2003 pursuant to the terms of a standard form contract signed by all parties. The contract contained a warranty given by Mr and Mrs Stubing that, to their knowledge, no building work had been carried out on the land without all necessary consents and approvals having been obtained. After the plaintiffs took possession of the property a number of sections of the walls eventually collapsed. Subsequent investigations revealed that those sections of the walls had been inadequately constructed. It is said that replacing the walls will cost a considerable amount of money.
Mr Halling and Ms Morgan claim that they have suffered economic loss in that the property was worth less than they paid for it because some sections of the walls were built without the necessary consents or approvals having been obtained and because these sections of the walls were inadequately constructed.
Mr Halling and Ms Morgan claim that Mr and Mrs Stubing are in breach of the warranty and that they were negligent in the construction of the walls. Mr Halling and Ms Morgan claim damages for diminution in the value of the property and interest. Mr and Mrs Stubing say in answer that they did not breach the warranty, that they did not owe any duty of care to the plaintiffs, that if they did, then they did not breach the terms of their duty and that, in any event, the plaintiffs cannot demonstrate that they have suffered any loss.
For the reasons which follow there will be judgment for the plaintiffs in the amount of $50,000 and Hungerfords v Walker interest on that amount.
Throughout these reasons I will use expressions such as “proved”, “satisfied” or “I find”. Whenever I use these expressions, or other similar expressions, I will always mean proof or findings on the balance of probabilities.
The land agent retained by Mr and Mrs Stubing to sell the property was originally joined as a defendant to the proceedings. The proceedings involving the agent ultimately resolved during the course of the trial and I made a number of orders by consent. It is not necessary to recite those orders for the purposes of these reasons.
Some of the facts are not in dispute and the outcome of the claims, both in contract and in negligence, distil down to the resolution of a number of discrete issues. The sequence of relevant events can conveniently be split into three phases, namely the construction phase, the sale and purchase phase and the subsequent events.
Construction
The property concerned consists of a house and associated outbuildings situated on some nine acres of land. The property is described as Lot 48 Callington Road, Woodchester. It is situated on, and faces, the main road between Strathalbyn and Callington at Woodchester, some 25 kilometres south east of Mt Barker. The property is within the Alexandrina Council district.
Mr and Mrs Stubing have been married for many years. Mr Stubing is a qualified electrician by trade. He holds no qualifications as a builder, stonemason or bricklayer. In about July 2000 Mr and Mrs Stubing purchased the property for $128,000. They were registered as joint tenants.
The house was described as a settler’s cottage which apparently dates back to the nineteenth century.
There were no walls or fences on the front alignment of the property when Mr and Mrs Subing took possession. Mr Stubing undertook what became extensive renovations and improvements to the property. Amongst other things, he re-mortered some of the stonework of the house, he replaced the veranda posts, he put iron on the roof, he paved the front yard, he placed some tanks at the rear of the house, he levelled and re-positioned the driveway and he installed edges on the driveway and part of the garden. Notwithstanding that his qualifications are confined to electrical work, he did all of this himself.
About a year after Mr and Mrs Stubing took possession, Mr Stubing decided to build some walls. He said that he intended the walls to be a feature of the property and to define the boundaries of certain sections of the property. At the time he made the initial decision to build the walls he had no definite plans about how many walls he would ultimately build.
Mr Stubing described how he went about building the walls. He said that his methodology was initially trial and error. He used other walls in the surrounding rural areas as his models. He consulted books. He dug out soil in an attempt to lay foundations but he struck bedrock some 100 millimetres below ground surface. He used the bedrock as a base for the walls. He collected the stones and rocks which were lying about the property and simply laid them on the bedrock. Initially he employed a single leaf form of construction without cavities and he did not use any bonding materials. He did not rely on any plans and he decided where he would build the walls as he went along. He said he was using his own initiative and that he did it all in his own way.
Mr Stubing said that he eventually changed his methodology after he had experienced problems with mice eating the packing he had placed between the rocks. He read about a method called stabilised dry stone wall which involved the use of a cement and water mix. He pulled down the walls which he had built by the single leaf method and re-built them using the cement and water mix. From then on he constructed the majority of the walls by the use of what he described as a “two leaf” method of construction which he had learnt about as a result of his researches at a library. This two leaf method of construction involved him building two parallel walls stabilised by cement a short distance apart and then filling the gap or cavity between each wall with rubble and other material and finally capping the top. He said that he laid the stones at the base of each wall so as to ensure maximum contact between the stones and the bedrock and that he compacted the filling within the cavities so as to ensure stability. He said that he had copied the capping from other walls in the vicinity. He said that the rubble and other material he used to fill the cavities was simply lying around the property and that he did not have any of it scientifically analysed because he did not see any need to do so.
Mr Stubing said that the construction of the walls proceeded on an intermittent basis.
Mr Stubing said that during the construction phase about two square metres of one “leaf” of a wall he had built to a height of approximately 1500 millimetres collapsed and that he rebuilt it using fill which he described as “basically concrete.” He said that he was satisfied with the repairs he had carried out and that he did not experience any other collapses to this wall.
Eventually Mr Stubing commenced constructing a boundary wall on the front, or main road, alignment of the property. This was the last wall that he built. He said that he built it in stages using the two leaf method and that he capped it with a thick layer of mortar and stones.
Mr Stubing said that he did not experience any difficulties in building the boundary wall and that he did not experience any collapses during its construction.
Mr Stubing said that construction of the walls occupied about two years of intermittent work and that he completed the project in about early 2002.
Mr Stubing said he thought that the two leaf method would produce walls which were “sound enough” however, he conceded that although this was his belief he was probably not qualified to make such a judgment because he was not a bricklayer or a civil engineer.
It will be more convenient to describe the nature, extent and configuration of the walls as a whole later in these reasons.
Mrs Stubing played no physical part in building the walls. She knew that her husband had no training or experience as a stonemason but she nonetheless raised no objection to him building the walls; or to him building them in the way that he did. She said that the initial collapse caused her to become concerned that he might not be building the walls properly. She said that she raised her concerns with him, but she could not remember the details of what she said however, she said that he told her that he was employing a different method after the collapse. She knew that her husband was building the walls without foundations. She said she was unconcerned about further collapses.
At all relevant times a Mr Klein-Boonshate and a Ms Chambers lived in the premises immediately to the east of the property. Mr Klein-Boonshate had a number of discussions with Mr Stubing about the walls and he made a number of observations of the project as it progressed.
Mr Klein-Boonshate has some limited experience in the building industry in that he has worked as a plasterer.
According to Mr Klein-Boonshate, Mr Stubing spoke to him about the walls before he commenced construction and asked him how he would go about building a wall. He said that he told Mr Stubing that if he built a stone wall to knee height and it fell over then he would not have built it properly. He said that he told Mr Stubing that it was his understanding that in the days before concrete and steel footings, it was the practise to dig down to firm ground and lay foundation stones. He said that Mr Stubing “asked whether I’d be okay about him building a stone wall between – the adjoining wall adjoining the properties, which ran for about a 150 m or was it 50 lengths. I suggested it would need about $300,000-$400,000 worth of steel and concrete footings to support it, being the ground that it was” (emphasis added). He said that the male defendant did not take this idea any further. He was not asked what he meant about the ground.
It may well be that Mr Klein-Boonshate meant to say $30,000 - $40,000 and that the amount he mentioned was a slip of the tongue. Fortunately, nothing turns on this.
Mr Stubing denied that these conversations had occurred. He said that the only discussions he had with Mr Klein-Boonshate around the time he began building the walls were of a general nature. He said there was no discussion about a boundary wall. He said that he had not asked Mr Klein-Boonshate how he would go about building a wall and that Mr Klien-Boonshate had not told him that footings costing of the order of $300,000 to $400,000 would be required. In this regard Mr Stubing said that Ms Chambers had some experience in building stone walls and that he would have valued her views more than Mr Klein-Boonshate’s however, and even though he said that she may have known more about building walls than he did, he said that he did not seek her advice.
Ms Chambers was not called by either party.
Mr Klein-Boonshate said that Mr Stubing eventually began building a low stone wall parallel to the boundary between the two properties. He said that a section of this wall collapsed and that Mr Stubing re-built it. He said that he was having some stone work built on his own premises at the time. He said that the stonemason who was working on his property was using a two leaf method of construction and he said that Mr Stubing adopted this method. Mr Stubing said that he chose the two leaf method independently of anything which might have been occurring on Mr Klein-Boonshate’s property.
Mr Klein-Boonshate continued to observe Mr Stubing’s progress. He said that Mr Stubing built a low wall parallel to their boundary. He said Mr Stubing joined a wall which was about six feet high and perpendicular to the boundary to this wall. He said that a section of one leaf of this higher wall eventually collapsed and that Mr Stubing rebuilt it. He said that he did not see Mr Stubing lay any foundations for these particular walls. He said that Mr Stubing then built an enclosed area.
Were development approvals required and were they obtained?
It is now convenient to summarise the relevant building regulations, the evidence of Mr and Mrs Stubing about their respective beliefs about whether or not any council consents or approvals were required to build the walls and the evidence about whether any council consents or approvals were ever granted.
There is no dispute that, at all relevant times, the construction of walls was a development for the purposes of the Development Act 1993 and that council approval to proceed with the construction of walls was required unless some aspect of the contemplated wall was exempt from this requirement: See s 4, 32 – 34, and 108. Schedule 3 of the Building Regulations 1993 excludes a number of activities from the ambit of a development for the purposes of the Act. Relevantly, Clause 4(e) of Schedule 3 excludes “a fence not exceeding two metres in height … other than “a masonry fence that exceeds (or would exceed) one metre in height ….”.
Accordingly, it follows that Mr and Mrs Stubing required council approval in order to build those sections of the walls which were intended to be in excess of one metre in height and approval was not required to build those sections of the walls which were intended to be one metre, or less, in height. Approval was also not required to build fences from other materials up to a height not exceeding two metres.
If a development which requires council approval is undertaken without the necessary approval having been sought and granted, then certain action can be taken by the council: See s 83.
Mr Stubing said that about the time when he first contemplated building the walls, he and his wife discussed the issue of council requirements. Under cross examination he said the he had in fact built some of the walls before they discussed the matter. Mrs Stubing said that the discussion took place after most of the walls had been built and when Mr Stubing was about to commence work on the front boundary wall. She later qualified this by saying that Mr Stubing had not completed all of the other walls when he raised the issue, and there is a considerable degree of uncertainty in her evidence about precisely when they discussed the matter.
Both Mr and Mrs Stubing say that after this discussion took place Mrs Stubing made enquiries with the council. Mr Stubing said that he asked his wife to make the enquiry on his behalf and that he had asked her to ask the council to send them the details of any council requirements “regarding their rulings, allowances in regard to building fences” (emphasis added). Under cross-examination he said that he appreciated that there was a significant difference between stone walls and other kinds of fencing, and when he was asked if he had instructed his wife to inform the council that the enquiry related specifically to stone walls, he said that he could not remember.
Mrs Stubing could not remember who came up with the idea to telephone the council. According to her, she telephoned the council at Mr Stubing’s request and asked for the council’s regulations regarding fencing to be sent to her via facsimile. She said that she was told that there was nothing available in writing and that she should speak to another council employee. She said that when she eventually spoke to this individual she asked him for written information about council requirements regarding fencing and she said that she was again told that there was nothing in writing and she said that she was told that fencing could be built to a height of two metres without a grant of approval. She said that as a result of this, she told Mr Stubing that the council did not have any written regulations, but that it was her understanding that they could erect fencing up to a height of two metres. It is necessarily implicit in her evidence that it was her belief that fences could be built up to a height of two metres without the need to obtain council approval and, as has been seen, this is in fact so.
Under cross-examination, Mrs Stubing altered her position and said that although her husband had asked her to enquire about fencing, she could not recall if she mentioned fences or fencing when she eventually spoke to a representative of the council, but she said that it was possible that she had. Also under cross-examination she was asked if she had told the person to whom she was speaking that her enquiry related to walls and not fences. She responded to this by saying that she could not remember the conversation.

Mr Stubing said that Mrs Stubing spoke to him after she had telephoned the council and informed him that she had been told that they “could build to two metres and council don’t need to know about it.” He said all of the walls he had built to this time were less than a metre in height in any event. Under cross-examination he said that he could not remember the precise words that his wife had used when she told him about this and he said that she did not tell him precisely what she had asked the representative of the council.
Mr Stubing said that he had a general understanding that council approval had to be obtained before any significant building work could be undertaken. He said that on the basis of what his wife had told him, he did not apply for approval to build the walls because he did not believe that approval was required.
Mr Stubing said that he did not measure the height of the walls as the project proceeded and that after his wife had told him about the two metre limit, he was able to confine himself to that limit by reference to his own height. He said that he knew that some of the walls he then built exceeded a metre in height. He said that he made no enquiries of his own of the council.
The current development assessment officer of the council searched the council records relating to the property. He found that there was no record of either of the plaintiffs having made any enquires of the council about the walls. He said that a record would have been made if either of them had made any such enquiries.
Mr Stubing built a number of sections of some of the walls to a height of over one metre. The aggregate length of these sections of the walls was some 80 metres. As set out in [36] approval was required to build these sections of the walls. The council development assessment officer said that approval to build these sections of the walls had never been granted. The sections of the walls which exceed a metre in height were thus built without the necessary approvals having been obtained. Whether Mr Stubing built those sections of the walls in the knowledge that council approval was in fact required is another matter altogether.
Sale and purchase
After Mr Stubing completed the walls, he turned his attention to the lawns and the gardens and to putting finishing touches on the property. He also said that he put in a 10 cm lawn edging strip at the base of the walls. About six months after the walls were completed, Mr and Mrs Stubing decided to sell the property for reasons which do not invite suspicion. On 30^th August 2002 they entered into a sales agency agreement with a land agent named Nitschke Real Estate (the agent). A salesperson named Mr Tonks went through the agency agreement with them before they signed it. According to Mrs Stubing, Mr Tonks did not ask them whether or not they had obtained council approval to erect the walls and that it was her belief that approvals had not been required in any event.
The property was then advertised. Eventually the agency agreement was assigned to another salesperson named Ms Parsons.
Eventually Mr Halling and Ms Morgan learned that the property was on the market. They inspected the property with Ms Parsons in early January 2003. This inspection occupied about an hour. Mr Halling and Ms Morgan breed German Sheppard dogs. They were attracted to the property because the walls and the enclosures provided them with potential utilitarian benefits in relation to their breeding activities. Mr Halling said that during the inspection, and with reference to the walls, he said “they look very strong and they have obviously been there for a hundred years”, or words to that effect, and that Ms Parsons then told him that the vendor had built the walls in the preceding 18 months, and that they were better than if they had been there for a hundred years, because “lots of mortar had been used” or, again, words to that effect. Ms Morgan said that Mr Halling made a comment about one of the walls and that Ms Parsons responded by saying that the particular wall had been built within the last 18 months and that cement had been used with the stones.
About a week later Mr Halling and Ms Morgan inspected the property again. On this occasion they were accompanied by Mr Halling’s parents and also Ms Parsons. The inspection occupied about an hour and a half. Afterwards Mr Halling and Ms Morgan told Ms Parsons that the property was suitable for their purposes and that they wished to commence negotiations with a view to purchasing it.
On 31^st January 2003, Mr Halling and Ms Morgan signed a standard form contract to purchase the property for $245,000. On 1^st February Mr and Mrs Stubing rejected this offer. A purchase price of $250,000 was ultimately agreed and incorporated in the contract. The contract was then signed by all parties. The signatures of the parties in fact appear on each page of the contract and the Schedule to the contract has been initialled by all parties.
Relevantly, the contract contains a warranty clause in these terms:
5.6 Warranties by the Vendor
The Vendor warrants, except as set out in the schedule;
5.6.1no notices, orders or charges have been issued or received in respect of the Land, any boundary fence or any road or footpath abutting the Land which have not been complied with;
5.6.2 that to the Vendor’s knowledge, no building work has been carried out on the Land without all necessary consents and approvals having been obtained.
5.6.3the Vendor is not aware, and gives no warranty, that any improvements on the Land encroach on any adjoining land or on any easement on the Land, nor that any improvements upon any adjoining land encroach upon the Land, nor is the Vendor aware that any fence, wall or party wall is not on the correct boundary or alignment of the Land.
Also relevantly, the Schedule to the contract contains a clause which directly relates to the warranty and which states:
N. Alterations, Repairs and Improvements erected without consent [Clause 5.6.2]
None known to vendor.
The heading to Clause N is part of the printed pro forma and the words ‘none known to vendor’ have been inserted in handwriting.
Mr Stubing said that he had read the contract before he signed it and, in particular; he said that he had read both Clause 5.6 of the contract and Clause N of the schedule. He said the words ‘none known to vendor’ appearing in Clause N were not in his handwriting. He said that to his knowledge no alterations, repairs or improvements had been erected on the property without approval and that he and Mrs Stubing had informed the agent of this. It is necessarily implicit in his evidence that he gave the warranty in Clause 5.6.2 of the contract and the assurance in Clause N of the Schedule, in good faith and in the belief that council approval had not been required for the construction of the walls. In this regard Mrs Stubing said that she read through the contract when the first offer was put, but that she did not read it word for word.
Mr Halling said that he had noticed Clause N and the reference to Clause 5.6.2 of the contract when he signed the contract for the purposes of making the initial offer and that he noticed it again later. It will be more convenient to deal with the significance which Mr Halling attached to warranty and the Schedule later in these reasons.
Ms Morgan said that she read the contract when she first signed it but that she did not read it again. She gave no evidence about her understanding of the warranty.
Subsequent events
A few days before settlement was due to take place, Mr Halling, Ms Morgan and Mr Halling’s parents conducted what Mr Halling described as a pre-settlement inspection of the property. The purpose of this was for Mr and Mrs Stubing to explain the plumbing and water supply systems. Ms Morgan said that while she and Mrs Stubing were on their own at some stage, Mrs Stubing told her how the walls had been built and that they were “very strong”. Mrs Stubing said that all she said to Ms Morgan was that passers-by would sometimes stop and take photographs of the walls, but she denied that she said that they had been well built.
Settlement occurred on 13^th March 2003 and Mr Halling and Ms Morgan took possession of the property the following day. The relevant collapses to the walls began to occur within a matter of months.
Were the walls structurally sound and what caused the collapses?
Determination of the interrelated questions of whether the walls were structurally sound and what caused the collapses involves consideration of the length, height and configuration of the walls and the number, nature and timing of the various collapses.
A plan of the layout of walls, incorporating their respective lengths and heights, was tendered, as were a number of photographs taken both before and after the various collapses occurred. The descriptions which follow are derived from the evidence of Mr Halling and Ms Morgan, along with the plan and the photographs. The plan is reproduced in order to assist in understanding the configuration of the walls and the extent of the various collapses.
Plan.
The total length of the walls was in excess of 120 metres. Various sections of the walls totalling 43.25 metres in length were built to a height of less than a metre. A section 1.5 metres long was built to a height of 1.4 metres. Sections totalling 34.8 metres in length were built to a height of 1.5 metres. Sections totalling 23.75 metres in length were built to a height of 1.55 metres. Sections totalling 20.55 metres were built to a height of 1.6 metres. Thus 80.6 metres, or some 66 percent, of the total length of the walls were built to a height of more than one metre. As mentioned, these sections of wall required council approval.
It is easiest to describe the layout and configuration of the walls beginning with the front boundary wall and working back. Given the collapses which have occurred, I will use the past tense even though it might not be apposite to the walls which remain standing.
As mentioned, the property faces north. Standing on the northern boundary looking south, the house itself is to the west of the midline of the property and there is a driveway to the east of the house.
There were a number of sections of wall along the frontage which combine together to form the front boundary wall. Moving from east to west, first there was a section of wall 1.5 metres high and 11.3 metres in length extending west from the eastern boundary. Next came a crescent shaped wall 1.55 metres in height and 3.9 metres in length extending from the first section of wall described and curving southwest towards the eastern side of the driveway (the eastern crescent wall). This aspect of the design was mirrored on the western side of the driveway where there was another crescent shaped wall of the same height and shape curving northwest back towards the frontage (the western crescent wall). Next was a section of wall 1.55 metres in height and 2.25 metres in length which extended west. Next again was another pair of crescent walls 1.55 metres in height and 2.6 metres in length built on either side of a pathway which led from the road to the house. A section of wall 1.55 metres in height and 8.5 metres in length then extended from the western most of these crescent walls to the western boundary. Each of these sections of the front boundary wall were joined or ended by pillars. A gate was eventually hung from the pillar at the western end of the eastern crescent wall abutting the driveway.
A wall was built at right angles to the eastern boundary some 26 metres south of the front boundary. This wall was 1.5 metres in height and 8.3 metres in length (the east wall). A pillar was built at its western end. Another wall was built from this pillar. This wall extended south at right angles to the east wall (the south wall). The section of the south wall abutting the pillar where the east wall and the south wall met was built to a height of 1.6 metres in height. This section was 1.85 metres in length. At the southern end a section of the south wall was built to a height of 1.4 metres. This section was 1.5 metres in length. The remaining 12.95 metres of the south wall between these two sections was built to a height of .7 metre.
Approximately 50 metres south of the front boundary wall, a five sided walled enclosure was built (the enclosure). Relevantly, a section of wall on the northeast of the enclosure was built on a northwest/southeast alignment (the eastern diagonal wall) and a section of wall on the northwest was built on a north east/south west alignment (the western diagonal wall). The two diagonal walls were joined by a wall on the northern alignment of the enclosure (the northern wall). At its southern end the eastern diagonal wall joined a wall which extended south and joined a wall which in turn extended west along the southern alignment of the enclosure (the southern wall). There was a gap between the western end of the southern wall and the south western end of the western diagonal wall. The walls forming the enclosure were built to different heights and pillars were constructed where some of sections of these walls joined each other. It will not be necessary to set out the heights of all of these walls.
The eastern diagonal wall was built to a height of 1.5 metres and it was 5.4 metres in length. There was a pillar where its northwest extremity joined the northern wall. The pillar was directly opposite the southern end of the south wall. A gate was swung on this pillar. Various sections at the ends of some of these walls to the enclosure, and along the lengths of the northern and southern walls were built to a height of 1.5 or 1.6 metres. The western diagonal wall was built to a height of 1.6 metres.
As can be seen, the walls were extensive. The photographs and the plan show that they were the dominant feature of the front section of the property. The photographs which were taken before the collapsing commenced show that the walls were attractive in appearance and that their construction would have considerably enhanced the overall aesthetics of the property. The front boundary wall was also of utilitarian value in that it provided a significant barrier at the front of the property. The enclosure was of obvious utilitarian value. The east and south walls were of potential utilitarian value in that they could be utilised to form two walls of a second enclosure. I am thus satisfied that the walls were a significant feature of the property as a whole.
The evidence from Mr Halling and Ms Morgan about precisely when each collapse occurred is at variance and a trifle vague in some respects.
In what must have been about May of 2003, a significant proportion of the northern leaf of the eastern diagonal wall collapsed overnight spilling stones and filling from the cavity onto the ground to the north east of the wall itself. There was no evidence about the actual dimension of the collapse, or about the volume of debris which was spilt, but it is plain from the photographs that the collapse was of significant proportions. The aesthetics of the wall were compromised by the collapse and as only one of its leaves remained, its utilitarian value was also compromised. In either 2006 or 2007 the southern leaf also collapsed thus destroying whatever utilitarian value the wall might have retained after the initial collapse. I will regard the demise of this wall as a single area of collapse.
At around the same time, and to use Ms Morgan’s words, the east wall began to “deteriorate quite rapidly”. In about September 2003 some two metres of the northern leaf of the wall collapsed at its eastern, or boundary, end spilling stones and filling onto the ground on the northern side of the wall. Again, there is no evidence about the volume of the debris, but again it is not insignificant. Either Mr Halling or Mr Klein-Boohshate then partially demolished the southern leaf of the wall in the area of the collapse in order to lower the height of the southern leaf to obviate the possibility of stones from the southern leaf collapsing into Mr Klein-Boonshates well which was immediately adjacent to the area of collapse. Again, the aesthetics of the wall were compromised and its utility was potentially compromised.
In about July of 2003, and again to use Ms Morgan’s word the pillar at the eastern end of the eastern crescent wall began to “deteriorate”. The post on which the front gate was hinged was attached to this pillar. Stones began to fall from the pillar and continued to do so. The pillar itself eventually collapsed in about September 2003 leaving some rocks and mortar attached to the top of the gate post where the post had been fixed to the wall. As a result, Mr Halling decided to dig permapine posts into the ground a short distance back from the pillars and to swing new gates from these posts. While he was digging the hole to accommodate the post adjacent to the collapsed pillar, “the whole inside fascia of that wall subsided just through the actions of digging that fence post hole”. The wall was 3.9 metres in length. Again, there is no evidence about the volume of collapsed debris, but it must have been significant. At some stage a section of the front, or northern, leaf of the wall immediately to the east of where the pillar once stood also collapsed and the stone capping has fallen from the top of almost the entire length of the wall. The aesthetics of the wall have been significantly compromised as have the original aesthetics of the gateway and gate itself, and the utility of the wall has plainly been compromised.
Sometime later, a significant proportion of the rear, or southern, leaf of the western crescent wall collapsed spilling debris, including the stone capping, onto the ground behind the wall. Again the volume of debris is not insignificant and, by reference to the photographs and the plan, almost the entire 3.9 metres length of the leaf appears to have collapsed. Again, the aesthetics of the wall have been significantly compromised and again the utility of this wall has plainly been compromised.
Eventually a significant section of the outer, or northern, leaf of the section of the front boundary wall which ran between the driveway and the pedestrian gate also collapsed. This collapse included part of the pillar at the western end of this section of wall where it joined the smaller, western, crescent wall which led to the pedestrian gate itself. Debris, again including some of the stone capping was spilt onto the ground on the northern side of the wall. The pedestrian gate became jammed as a result of this collapse. This wall was about 2.25 metres in length. Again, the aesthetics of the wall have been significantly compromised and its utility compromised.
Further problems arose at the rear of the property. The sequence of these events is not precisely clear.
A triangular section of the western, leaf of the higher section of the south wall collapsed near where that wall joins the east wall. Although the amount of debris spilt in this collapse is less than the other collapses mentioned so far, it is still nonetheless significant. The aesthetics of the wall have been significantly diminished, although not to the same extent as the boundary and crescent walls. Its utility may well have survived relatively intact.
Some minor problems also arose with respect to western diagonal wall of the five-sided enclosure. This section of the wall had been built to a height of 1.5 metres. At some stage some of the higher sections started to crumble and a few stones from the capping fell from the top. As a precautionary measure Mr Halling cut back some tree branches which were overhanging this section of wall. It appears that neither the aesthetics nor the utility of the wall have been compromised.

Some problems also eventually arose at the rear, or southern side of the five sided enclosure. In about early 2008 some rocks fell away from the western end of the southern wall. A section of wall in this area had been built to a height of 1.5metres extending east for a distance of 2.0 metres at which point it dropped in height to 0.8 metres and then extended further east at that height. At some stage a small section of the higher section of this wall collapsed at the point where the higher and lower sections meet. The collapse appears to be less than a metre in length. At some stage some rocks also became detached from the lower section of the wall a short distance to the east of this collapse. The aesthetics of the higher section of the wall have been compromised and its utility may also have suffered. It appears that neither the aesthetics nor the utility of the lower section have suffered to any great extent.
Finally, and in August 2009, a section of the northern, or front, leaf of the front boundary wall collapsed spilling debris on the ground to the north of the wall. By reference to the relevant photograph, this collapse appears to be about 2 metres in length at its widest point. This collapse compromised the overall appearance of the front boundary wall still further and must have had some effect on its utility.
In all there were eight areas where sections of wall can properly be said to have collapsed. For these purposes, I do not regard the problems which have emerged with the western diagonal wall, the eastern end of the southern wall or the lower section of the southern wall as collapses. Very approximately, the total length of the sections of wall which have collapsed is about 15 metres. This represents a little over 10 percent of the total length of the walls. These estimates may well be conservative.
It is plain from the photographs that the aesthetics of the entire length of the front boundary wall have been compromised to a very significant degree, if not completely ruined. Equally plainly, the utility of the wall has been compromised. It is equally plain from the photographs that the aesthetics of the east wall have been significantly compromised and that the aesthetics of the south wall have also been compromised to some extent. The utility of the east wall has also been compromised. I am not prepared to find that the utility of the south wall has been compromised. The aesthetics and utility of the eastern diagonal wall have been entirely destroyed. There seems to be very little interference with the aesthetics of the western diagonal wall and it utility does not appear to be compromised. There is some minor interference with the aesthetics and utility of the southern wall.
The cumulative effect of the collapses on the aesthetics and utility of the walls, particularly the front boundary wall, and of the property as a whole is plainly very significant.
As mentioned, the initial collapse occurred in about May 2003 and the ultimate collapse occurred in August 2009.
In order to establish that the walls were structurally unsound the plaintiffs called an appropriately qualified civil engineer named Goldfinch.
Mr Goldfinch inspected the property on two occasions and he prepared reports and a summary. The reports, the summary and some other documents were incorporated into a compendious report which was tendered without objection. The compendious report must, of course, be read in conjunction with Mr Goldfinch’s evidence.
Mr Goldfinch examined the front boundary wall on 23^rd September 2003. The pillar at the western end of the eastern crescent wall had partially collapsed by the time of his inspection.
Mr Goldfinch examined the section of the pillar where the collapse had occurred. He observed that the material which Mr Stubing had used to fill the cavity in the pillar did not appear to be bonded together by cement or other bonding material. He tapped several areas along the top of the front boundary wall. He said that the resultant noise suggested to him that the cavity between the leaves of the wall had not been filled to the full height of the wall, or that the filling had subsided under its own weight since construction. He said that he did not dissect any sections of wall. He said that he had observed cracking to the mortar which had been used to bond individual stones together in some areas. He said that this cracking was consistent with soil movement. He said that this led him to make a small excavation beneath a section of one of the walls which had been built to a height of 1.5 metres somewhere “deeper on the block”. By this he obviously meant the east wall, the south wall or one of the higher sections of the walls forming the enclosure. He said that this section of wall had a foundation of what he regarded as a “nominal” thickness of cement or lime mortar and that there did not appear to be any concrete footings.
Mr Goldfinch said that he then deemed it necessary to assess the soil conditions in the area in order to determine whether the foundation which he observed would be “conducive to moving and hence destabilising the wall”. He was provided with a soil report which had been prepared in relation to Mr Klein-Boonshate’s property (the soil report). Mr Goldfinch assumed that the soil report was accurate. On the basis of the report he assumed that the soil on Mr Klein-Boonshate’s property was a silty to clay-type soil which had the potential for “movement of 32.7mm on a seasonally adjusted basis.” He visually examined the soil in area he had excavated and found that it was consistent in appearance with the soil described in the soil report. He only examined the topsoil in other areas. He concluded that the two properties were proximate enough for him to assume the soil conditions to be the same. He then proceeded on the assumption that that soil on the subject property had similar potential to movement as the soil on Mr Klein-Boonshate’s property. He further assumed that Mr Stubing had used the same method of double leaf construction throughout. He also assumed that footings had possibly not been laid. On the basis of his observations and these assumptions, Mr Goldfinch concluded that the front boundary wall “is unstable because it has been constructed without a reinforced concrete footing of suitable proportions to accommodate a 33mm anticipated soil movement and because it has also been constructed without regard to adequate mortar jointing and bulk filling for the full height”.
Further collapses had occurred by the time Mr Goldfinch inspected the property for the second time on 1^st February 2005. In particular, the collapses to the northern leaf of the east wall, to the rear leaf of the eastern crescent wall and to the front boundary wall to the west of the western crescent wall had all occurred. Mr Goldfinch’s report is a little unclear as to whether the conclusion he reached on this occasion related to all of these additional areas of collapse or whether it was confined to the collapse to the east wall. In these circumstances I will proceed with caution and assume that his conclusion is confined to the east wall. He said:
“In my opinion the cause of this more recent partial wall collapse is possible ground movement destroying tenuous stone and mortar bonding along with the concomitant application of lateral pressure applied from within the wall cavity by the loose and cohesionless building debris used as cavity filling.”
Mr Goldfinch repeated his conclusions in his summary and he stated that, in his opinion, the walls were “structurally unsound”.
Under cross-examination Mr Goldfinch said that although problems could theoretically arise in relation to the walls which were less than one metre in height, he had no concerns for the structural stability of those sections of the walls and he did not regard them as a serious structural or public liability issue. He said that in expressing this opinion he had assumed that those sections of the walls had been built without footings. He also said that the structural integrity of if the sections which were in excess of one metre would be improved if those sections were lowered to a height of a metre or less.
It necessarily follows that his concerns for the structural integrity of the walls is primarily confined to those sections of the walls which exceed one metre in height. He was not challenged in this regard and there was no evidence to the contrary.
Mr Goldfinch was not asked whether his opinions were based on a combination of his observations and his assumptions or on any one particular aspect of either. Nor was he asked if any one feature assumed greater significance than anything else. As things transpired, it would have been helpful if he had been. However, it seems necessarily implicit in his reports, his summary and his evidence that he relied on the soil report and the opinion expressed in that report as to the potential degree of annual movement of the soil.
Mr Harms, counsel for the plaintiffs, sought to tender the soil report during re-examination of Mr Goldsmith. Mr Niarchos, counsel for the defendants, objected to the tender. Mr Harms attempted to justify the tender on the basis that Mr Goldfinch had been cross-examined on the report and had taken its contents into account in reaching his conclusions. Neither of these considerations provided a proper foundation for the proposed tender. The tender was rejected. Mr Niarchos’ objection should have put Mr Harms on notice that if he wanted to rely on the soil report, or on any aspect of the report on which Mr Goldfinch relied, then he was being put to strict proof: Scuteri v Wood (1987) 137 LSJS 7 at 9.
Strict proof was not forthcoming. Accordingly, Mr Niarchos submitted that in so far as Mr Goldfinch’s opinion about the structural integrity of the walls was based on any assumptions he made from the soil report, those opinions could not stand. The submission is well grounded in principle: Scuteri above, Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 at [64]-[72] Heydon J and must be accepted unless the assumptions which Mr Goldfinch derived from the soil report were otherwise proved by other means: Makita above at [64] Heydon J.
Mr Harms did not contend that the potential degree of movement in the soil had been otherwise proved. In reality he could not. The only other evidence about the quality of the soil was Mr Klein-Boonshate’s observation about “the soil being what it was.” Obviously the susceptibility of the soil to movement and the potential degree of any movement cannot be inferred from this evidence. The submission must be accepted and, in so far as Mr Goldfinch based his opinions on the soil report, his opinions fall away and must be discarded. However, Mr Goldfinch’s conclusions based on his application of his qualifications and experience to his own observations are still available to be considered.
Mr Harms did not submit otherwise. He eventually contented himself with submitting that the occurrence of the collapses inferentially proves that walls were in fact structurally unsound.
I took Mr Harms to be adopting Mr Goldfinch’s expression “structurally unsound”. Mr Goldfinch was not asked to provide a definition for that expression. For the purposes of Mr Harms’ submission, and in the context of the issues joined, I take “structurally unsound” to mean that the walls were constructed in a manner which was inadequate to enable them to withstand the pressures which would be exerted on them by the environment in which they were built thus rendering them prone to collapse. As will be seen, the expression “structurally unsound” has other significance.
Essentially, Mr Harms submits that the structural unsoundness of the walls is established by the process of circumstantial evidence and reasoning.
It is well settled that in cases of circumstantial evidence it is the combined force and effect of all of the circumstances established by the evidence which must be considered and that it is an error to consider the effect of each item of circumstantial evidence individually: The Queen v Hillier (2007) 228 CLR 618, and that it must be steadfastly borne in mind that one is concerned with proof and not conjecture: Jones v Great Western Railway Co [1930] All ER 830, Lord Macmillan at 842.
The question thus becomes one of whether the plaintiff has satisfied me that the only conclusion that is reasonably and rationally open from the circumstances established by the evidence, when considered and weighed together, is that it is more probable than not that the walls were, in the sense identified, structurally unsound.
The combination of circumstances established by the evidence which must be considered include:
·Mr Stubing is an amateur builder who did not seek expert advice.
·Eight collapses occurred over a period of almost six years.
·Other minor problems have been identified with some of the walls.
·The total length of the collapsed sections of wall amount to about 10 percent of the total length of the walls.
·Some of the collapses are of significant length.
·Mr Goldfinch observed areas of cracking which were consistent with soil movement.
·There is no evidence of extreme weather conditions, or other events, which might have caused walls which were otherwise sound to collapse.
Excluding the collapse on the southern wall, and leaving Mr Goldfinch’s opinion about the cracking aside, it is plain from the photographs that each collapse involves whole sections of the leaf of the wall concerned containing multiple stones falling to the ground. In some instances the sections are lengthy and many stones must have been involved. In each instance it is thus not as if a few stones had become dislodged and fallen from a leaf of a wall which remained otherwise intact, as might have occurred if, from time to time, Mr Stubing had used insufficient mortar to bond one or two stones to a wall which otherwise enjoyed the design capacity to withstand the relevant environmental pressures and which was otherwise adequately constructed.
Even excluding the opinions of Mr Goldfinch which can be taken into account, I am satisfied that it is more probable than not that the walls were not designed to an adequate standard or that they were not constructed to an adequate standard, or both. Putting it another way, I am satisfied that the nature and extent of the collapses are reflective of inherent flaws in the design or construction of the walls and that the collapses thus cannot be regarded as minor flaws of the kind that might occur if occasional mistakes were made in executing an adequate design which was for the most part executed to an appropriate standard. No other explanations have been suggested and none suggest themselves. I am thus satisfied that the walls were structurally unsound and that this unsoundness was the cause of the various collapses.
Mr Goldfinch’s opinion that the cracking was consistent with soil movement was not based on the soil report. His opinion in this regard suggests that there was in fact soil movement on the property and that the walls were structurally incapable of withstanding the pressures exerted by whatever degree to which the soil was moving.
Cost of repairs or demolition and diminution in value of the property
A qualified stonemason named Mr Mather gave evidence that the cost of demolishing the walls would be $6,850 and the cost of rebuilding them would be between about $40,000 and about $126,000, depending on the method of construction employed. A Certified Practising Valuer named Mr Bruce estimated the diminution in value of the property attributable to the walls having been built without council approval and to an inadequate standard would be $50,000. I will return to the evidence of Mr Mather and Mr Bruce later.
Was there more than one cause of action?
Strictly speaking there may be causes of action arising out of each collapse, making eight causes of action in all. However, the plaintiffs pleaded their case on the basis that each collapse resulted from the one cause and the entire case was fought on that basis. In any event, after the first method of construction which Mr Stubing employed had failed, he built all of walls employing the same method of construction throughout. The building of the walls was thus in reality the one continuing project and can properly be regarded as the one uniform and continuing course of conduct. Similarly, the sequence of collapses can be regarded a series of events of the same or similar character and it was not suggested that they did not have a common cause.
Were the defendants in breach of the warranty and did the warranty carry with it an assurance that the defendants had made reasonable enquiries?
It will be convenient to deal first with the claim on the warranty. For convenience I will, as I already have, use the words “approval”, or “approvals”, to cover both consents and approvals.
As set out at [35]-[36], the fact of the matter is that council approval had been required before those sections of the walls which exceeded one metre in height could be built and the relevant consents or approvals had not been sought and obtained before Mr Stubing built those sections of the walls.
Resolution of this aspect of the claim turns on the construction of the warranty when it is read in conjunction with the Schedule and in the light of the contract as a whole.
The warranty is not in absolute terms. It is qualified by the words “to the vendor’s knowledge” and the schedule is similarly qualified by the words “none known”. In this respect the warranty is to be contrasted to the warranty given by clause 5.6.1, which is in absolute terms, and that given by clause 5.6.3 which is heavily qualified by the vendor’s awareness.
As set out above, Mr Stubing said that he had read the warranty and the schedule and that as far as he knew no building work had been carried out on the property without any necessary council approvals having been sought and obtained. As also set out, Mrs Stubing said that she did not read the contract word for word, and she thought that approval to build the walls was not required in any event.
It is necessarily implicit in the evidence of both Mr and Mrs Stubing that they gave the warranty in good faith and in the belief that council approval had not been required to build the walls.
Mr Harms, submitted that on a proper construction of the warranty, the degree of knowledge that had to be attributed to Mr and Mrs Stubing before the warranty could be invoked was confined to knowledge on their parts that building work had been carried out on the property and that in all other respects the warranty was absolute and unqualified.
In other words, and in the context of the case itself, Mr Harms submitted that if Mr and Mrs Stubing knew that the walls had been built on the property and that if the sections of the walls which exceeded one metre in height had been built without the necessary council approvals being first sought and obtained, then they were in breach of the warranty and liable in damages accordingly, irrespective of whether or not either of them knew that council approval had been required and irrespective of whether they knew that the necessary approval had not been granted.
Mr Harms also submitted that to construe the warranty otherwise would render it nugatory and that it had to be given some work to do.
By implication, Mr Harms thus submitted that the warranty carried with it an assurance given by Mr and Mrs Stubing that they genuinely believed on reasonable grounds that the representation contained in the warranty and the schedule was in fact true.
Based on the evidence of Mr and Mrs Stubing and to the contrary, Mr Niarchos, submitted that the degree of knowledge to be attributed to Mr and Mrs Stubing, as vendors, before the warranty could be invoked extends to knowledge on their part of each of the matters itemised in the warranty and that the warranty could only be invoked if the defendants knew that that the walls had been built, knew that council approval was required for those sections of the walls which exceeded one metre in height and knew that those sections had been erected without the relevant approvals having been granted.

Mr Halling and Ms Morgan took out a bank loan in the amount of $268,000 secured by mortgage over the property in order to finance the purchase. Mr Halling said that the additional $18,000 over and above the purchase price was to cover incidental expenses. He said that they would have borrowed less if they had secured the property for $200,000 (that amount being the purchase price less the diminution in value). The plaintiffs thus claim that they have suffered loss additional to the diminution in value of the property in the form of interest paid on the amount over and above that which they would have borrowed but for the failure on the part of Mr and Mrs Stubing to comply with the conditions of the contract. They thus claim that they have suffered additional pecuniary loss as a result of the defendant’s breach and that they are entitled to compensation for that loss in accordance with the principle stated in Hungerfords v Walker (1989) 171 CLR 125.
The relevant bank statements itemising the repayments on the loan and the interest charged were tendered, as was the loan agreement itself. The loan agreement provided for a draw down facility and that the balance of Mr Halling’s savings account would be credited against the principal outstanding on the loan. Mr Halling said that if they had secured the property for $200,000, then he would have borrowed about $210,000 to $212,000. Mr Halling said that they made the required payments and that they utilised the draw down facility from time to time. Ms Morgan confirmed that if they had secured the property for less they would have borrowed the purchase price plus the incidentals.
The evidence of Mr Halling and Ms Morgan in these regards accords with the inherent probabilities of the situation and I am satisfied that if they had purchased the property for $200,000 they would have borrowed at least $50,000 less than they in fact did. They have thus incurred a borrowing loss as a result of Mr and Mrs Stubing’s breach, in the sense that as a direct consequence of the breach they have paid interest on money which they would not otherwise have borrowed but for the breach. Such a loss “should not be considered as being too remote when money is paid away or withheld”: Hungerfords at 146 Mason CJ and Wilson J.
Given that the diminution in value of the property is $50,000, Mr Halling and Ms Morgan would have borrowed at least $50,000 less then they in fact did if they had secured the property for $200,000. Mr Halling’s evidence about the amount they would have borrowed in this event is somewhat imprecise and I am not prepared to make any finding about the exact amount they would have borrowed to cover the incidentals. Accordingly, the extent of their loss in this regard will be assessed on the amount of $50,000.
Orders
The claim in contract is upheld. The claim in negligence is dismissed. There will be judgment for the plaintiffs for diminution in value of the property in the amount of $50,000 and for opportunity costs in the amount of compound interest on $50,000 since the day of settlement on the contract. the contract.
Interest and costs
The following paragraphs were added to these reasons after I had heard the parties on the questions of interest and costs.
After hearing from the parties on these issues I formally entered judgment for the plaintiffs in the amount of $86,879.76 and made a number of orders as to costs. My reasons for doing so were as follows.
It will be convenient to first deal with the question of costs.
Costs
Ordinarily costs follow the event. Exceptionally a successful party may be deprived of some or all of his costs because of his conduct in mounting or maintaining the proceedings.
Mr Niarchos submits that this is such a case. His submissions are conveniently set out in the outline of argument he filed and tendered on the questions of costs and interest.
Mr Niarchos submits that the defendants have been put to unwarranted expense and inconvenience because the plaintiffs initially foreshadowed and then pleaded a multiplicity of causes of action which they then ultimately abandoned. There is no doubt that the causes of action were whittled away as the proceedings unfolded. There is also no doubt that some delay which was caused by the plaintiffs has already been reflected in an order for costs which was made by a Master of the court. But in any event most of the causes of action which were ultimately abandoned had their origins in the warranty and the allegation of negligence. Refinement of the pleadings and the abandoning of causes of action during the interlocutory phase and then in the lead up to trial can be regarded as ordinary incidents of litigation and there is nothing which has happened here which takes the case so out of the ordinary that ought to be reflected in costs.
As I have mentioned, the plaintiffs originally issued proceedings against the land agent who had been retained by the defendants. Unsurprisingly this led to the filing of contribution notices. As I have also mentioned, these proceedings resolved during the course of the trial whereupon I made a number of orders by consent.
Mr Niarchos submitted that the conduct of the plaintiffs unreasonably obliged the defendants to hold the agent in the proceedings thus causing the defendants unnecessary inconvenience and expense. I do not agree. The plaintiffs informed the defendants in writing before trial that they were prepared to discontinue the proceedings against the agent and that they would not be “pursing any case against your clients based on any representations made by the agent …”. Plainly the letter provided the defendants with any protection that they might have needed and the plaintiffs thus should not be held responsible for the continuation of the contribution proceedings which then held the agent in the action.
However, and in all the circumstances it seemed to me to be appropriate to dismiss the plaintiff’s application that the first and second defendants pay the costs awarded against the plaintiffs in favour of the third defendant and that there be no order as to costs as between the plaintiffs and the first and second defendants on the contribution proceedings.
Interest
It is agreed between the plaintiffs and the first and second defendants that interest on the amount of $50,000 from the date of settlement, being 14^th March 2003 until 15^th December at the interest rates which prevailed from time to time amounts to $36,879.76.
Mr c submits that I should exercise the discretion conferred on me under s39 of the District Court Act 1992 to award a lesser amount for the reasons he sets out in his outline. Again I do not agree. Again there is nothing out of the ordinary in the way the plaintiffs conducted themselves. At [269]-[271] I awarded interest on the basis of the principle in Hungerfords v Walker. This order amounts to a final order on the question of pre-judgment interest and precludes the application of s39 of the District Court Act.
The orders I made were as follows:-
1.There will be judgment for the plaintiffs against the first and second defendants in the amount of $86,879.76.
2.The first and second defendants are to pay plaintiffs’ costs of the action including the costs of the argument on interest and costs. These costs are to be agreed or fixed by a Master of the Court.
3.The application that the first and second defendants pay the plaintiff’s costs of the third defendant will be dismissed.
4.The first and second defendants will pay the third defendants’ costs of the contribution proceedings.
5.There will be no order for costs as between the plaintiffs and the first and second defendants on the contribution proceedings.
6.His Honour will re-date original reasons as amended and signed by His Honour and will deliver them subject to qualification that the reasons for interest and costs will be added to those reasons and they will be republished in the new year.