IN THE SUPREME COURT OF SOUTH AUSTRALIA
PRIOR, J
Tort - miscellaneous torts - other economic torts - injurious falsehood
Defamation - privilege - qualified privilege
Torts - negligence - essentials of action for negligence - duty of care - relationship of proximity
Constitutional law - liabilities of the crown - misfeasance in public office
Professions and trades - builders
South Australia - building contracts
Statutes - Acts of Parliament
Statutory powers and duties - construction - proper supervision - acting negligently or unfairly - claim for damages alleged defamatory statements, injurious falsehood, misfeasance in public office and negligence - disciplinary proceedings instituted against licensed builder - copies of Complaint given to the media - publicity given to proceedings before hearing. - Held: Defendant not liable in defamation - defendant disclosed nothing more than allegations made against the builder - any defamatory statements in media reports not natural and probable consequence of mere disclosure of allegations - qualified privilege attached to reports - Complaint referred to in proceedings was available to media - no injurious falsehood - no statements published by defendant nor was malice proved to make good claim of injurious falsehood - no misfeasance in public office - the defendant's investigation was an honest attempt by public officers to perform their duties; it was done in the exercise of statutory powers without malice, knowledge or reckless indifference - the plaintiff owed no duty of care to the defendant because there was no relationship of proximity between the parties - the plaintiff failed to exercise proper supervision and acted negligently or unfairly in the course of carrying on the business of a builder - proper cause for disciplinary action - the plaintiff also engaged in an unfair practice by inducing purchasers to enter into a fixed price building contract and subsequently charging them with variation charges which were reasonably foreseeable to the plaintiff at the time the contract was made - plaintiff's claims dismissed. Commercial Tribunal Act, 1982 ss15,19; Builders LicensingAct, 1986ss14,18,19,27; Fair Trading Act, 1987s8; Trade Practices Act, 1974 (Cwth) ; Commercial Tribunal Regulations, 1987 , referred to. Mirror Newspapers Ltd v Harrison (1982) 149 CLR 293; Speight v Gosnay [1891] 60 LJQB
231; Sergi v Australian Broadcasting Comission [1983] 2 NSWLR 669; Cunningham v The Scotsman Publications Ltd 1987 SLTR 698; Lucas and Son (Nelson Mail) v O'Brien [1978] 2 NZLR 289; Gazette Printing Co v Shallow (1909) 41 SCR 339; Joyce v Motor Surveys Ltd [1948] 1 Ch 252; Halsey v Brotherhood 1881 19 Ch D
386; Northern Territory v Mengel (1996) 185 CLR 307; Wiseman v Borneman [1971] AC 297; Sutherland Shire Council v Heyman (1985) 157 CLR 424; Gala v Preston
(1991) 172 CLR 243; Elguzouli-Daf v Commissioner of Police [1995] QB 335; Hillman v Black (1996) 67 SASR 490; Jameson v Simon [1899] 1 F(Ct of Sess) 1211; Florida Hotels Pty Ltd v Mayo (1965) 113 CLR 588; Paterson v Commissioner for Consumer Affairs (1988) 148 LSJS 275, applied. Lange v Australian Broadcasting Corporation (1997) 145 ALR 96; (1997) 71 ALJR 818, distinguished. Parkes v Prescott [1869] LR 4 Ex 169; Secretary of State for the Home Department v Harman [1983] 1 AC 280; Kimber v The Press Association Ltd [1893] 1 QB 65; Allbutt v The General Council of Medical Education and Registration [1889] 23 QBD 400; Minister for Immigration v Teoh (1995) 183 CLR
273; Westham Dredging v Woodside (1982) 46 ALR 287, considered.
ADELAIDE, 3 March - 30 July 1997 (hearing), 15 September 1997 (decision)
#DATE 15:9:1997
#ADD 22:9:1997
Appearances:
Plaintiff :
Counsel: Mr K R Mccarthy QC, Mr D J Meyer
Solicitors: Lynch & Myer
Defendant
Counsel: Mr P A Cuthbertson
Solicitors: Crown Solicitor (SA)
Order: plaintiff's claims dismissed.
PRIOR J
During times relevant to these proceedings, the plaintiff (Homestead) was a licensed builder, subject to the provisions of the Builders Licensing Act1986.
In May 1993, a Complaint made by an officer of the Department of Public and Consumer Affairs was lodged in the Commercial Tribunal. It set out matters alleged to constitute grounds for disciplinary action against Homestead. By subs(l) of s19 of the Act, the Tribunal is authorised to hold an inquiry for the purpose of determining whether proper cause exists for disciplinary action against a licensed builder. The Complaint first referred to five houses built by Homestead in 1990 and 1991. Particulars were given with respect to each house. In each case it was alleged that Homestead had failed to ensure that building work performed in pursuance of its licence was properly supervised (s19(11)(c)(vii)). Within the Complaint, particular defects were said to be, or have been present in each house. In the alternative, Homestead was said to have acted negligently (s19(11)(b)(ii)). It was also alleged that the company had been guilty of conduct that constituted a breach of warranty provisions contained in s27(2)(a) of the Act in that it failed to perform building work in a proper and workmanlike manner and in accordance with agreed plans and specifications. Section 19(11)(a) was cited with respect to that allegation. When a substituted Complaint was filed in the Tribunal in September 1993, it was then alleged that Homestead had acted unfairly, citing s19(11)(b)(ii) with breaches of s27(2)(a) being alleged in particulars given with respect to those amended allegations. Those particulars were almost, if not the same as the particulars given with respect to preceding allegations of breaches of s19(11)(c)(vii) and (b)(ii). With respect to three of the five houses, there were further allegations of acting unfairly with respect to variation charges, overcharging and charging for work not done. Those allegations were in both the first and the substituted Complaint. At the very end of each Complaint, it was said that the company had been guilty of conduct constituting a breach of the Act, the particulars there claiming that the company had on three occasions failed to notify the Registrar of the Commercial Tribunal about the cessation of employment of building work supervisors. A failure to notify is a summary offence. All other matters complained of are not offences against the Act.
The Tribunal decided to hold an inquiry. Homestead was given notice of the inquiry (s19(5)). Directions Hearings occurred. A date for hearing of the Complaint was fixed at a Directions Hearing on 8 October 1993. Homestead's solicitors were warned about press interest in the case on the eve of a Directions Hearing on 9 July. However, apart from possible references to Homestead in cause lists, no publicity about the proceedings occurred until the Directions Hearing on 8 October 1993. Lisa Brett, a reporter from the Australian Broadcasting Corporation (ABC) saw a reference to Homestead in the Cause List published in The Advertiser newspaper that day. Having seen Homestead's name, Ms Brett telephoned Mr Prentice, the Media Liaison Officer for the Department of Public and Consumer Affairs. She said the purpose of her call was to check that the time in the paper was in fact the time the hearing would go ahead. She also said she may have asked what was likely to occur in the Directions Hearing and that Prentice told her, "Not a lot, it's only a Directions Hearing". Brett's evidence was that she thought she then asked if there was a copy of the Complaint to which she could have access. She said that Prentice told her that a Complaint had been lodged before the Tribunal. Brett "decided to go down ... and see ... the Registrar of the Tribunal, to get a copy of the Complaint". Brett said that the Registrar went away, returning after about 15 minutes and telling her that she could have a copy of the Complaint and that Mr Prentice would arrange it for her. Brett went to Prentice. Prentice gave her a document. It was a Complaint against Homestead, but not in the exact form as it was then before the Tribunal. It referred to s19(1)(a) and breaches of s27(2)(a) of the Builders Licensing Act. The Complaint then before the Tribunal referred to s19(11)(b)(ii) in five allegations that Homestead had acted unfairly by breaching warranty provisions contained in s27(2)(a). No specific reference was made to those allegations in the ABC report of the proceedings before the Tribunal. The report was on the ABC's television news service that evening.
A newspaper article appeared in The Advertiser on Tuesday, 12 October 1993, after Prentice received a request for a copy of the Complaint on 11 October. His evidence is that he faxed a copy of what he believed to be the Complaint lodged in the Tribunal to an Advertiser reporter that day. The newspaper report referred to "complaints of poor workmanship and unfair practices". On the evidence, I find that the documents given to Brett and sent to The Advertiser were, for all practical and relevant purposes, copies of the Complaint lodged in the Tribunal. They corresponded with the substance of the Complaint then before the Tribunal even if they were not both exactly the same as what was filed.
Causes of Action Pursued
In these proceedings Homestead complains that the State has caused it substantial loss by defamatory statements, injurious falsehood, misfeasance in public office and negligence. It seeks to recover substantial damages, claiming it has suffered losses as a result of the wrongful acts of officers of the Department of Public and Consumer Affairs. It is Homestead's case that publication of the Complaint was part of an unjustified and malicious campaign against it. Homestead says that far from being at fault, its obligations under each of the contracts relating to the five houses referred to in the Complaint were discharged. The State says that the allegations made in the Complaint are true. Malice is denied. So too, injurious falsehood and any liability in negligence. As for the alleged misfeasance in public office, the State says none occurred.
Defamation
At the outset of the trial, counsel for the State submitted that, with respect to the claim for damages for defamation, there was no cause disclosed on the pleadings or available at law. I declined to rule on the matter then. Amendments to the Statement of Claim were allowed. Even with those amendments, the defendant says that it is not open to impute defamatory statements from any of the publications. If it is, that is not something for which the State is responsible.
Reliance was placed upon Mirror Newspapers Limited v Harrison . In that case the High Court held that a newspaper report which does no more than state that a person has been arrested and charged with a criminal offence is not capable of bearing the imputation that that person is guilty, or probably guilty of that offence.
Homestead's case is that the State is liable for the publications made and that the Complaint lodged with the Tribunal was one asserting, as a fact, lack of supervision or negligence, carrying out defective work and overcharging. Homestead says that the reports made on the television and in the newspaper are defamatory. Thirteen imputations arising from the four publications are pleaded.
In the television report the news reader referred to pleas of not guilty to allegations of negligence, defective work and overcharging. In the entire report there was no specific reference to allegations of acting unfairly or the alleged breaches of s18. The news reader reported the appearance of Homestead in the Commercial Tribunal in relation to proceedings brought by the Department of Public and Consumer Affairs. Pictures then appeared on screen. They were of Homestead's offices, a reference to the Commercial Tribunal and the Department in a directory at 50 Grenfell Street, and pictures of the front of one of the five houses. As these pictures were screened, it was said that the allegations related to five homes in the northern, north-eastern and southern suburbs and that the Department of Public and Consumer Affairs claimed that since 1989 Homestead had failed to ensure that building work was properly supervised and that failure resulted in numerous defects. It was also said that the Department alleged "Homestead was negligent and overcharged, in some cases charging for work not done".
At the end of this part of the report, a picture was shown of a hand sliding a yellow marker into a gap between a brick wall and an eaves lining. The pictures then ceased. A reporter's voice continued whilst roll-on graphics listed more than fifty items identifiable with allegations in the Complaint. As this scrolling occurred the reporter said:
"About half the alleged defects are structural, the remainder fail to comply with various building standards. Some of the more serious claims include a twisted carport beam ... 30mm wide mortar joints ... a wavy roof and walls not being straight."
The graphics then ended. Pictures of the interior of one of the houses appeared.
The voice of the reporter was heard to say:
"In one home at Woodcroft Heights it's alleged sap was found dripping on the carpet. In relation to the same house it's alleged Homestead charged the purchasers $350 for site preparation which didn't occur and to which Homestead was not entitled."
There then followed photographs of two directors of Homestead and the comment that neither of them appeared in the Tribunal that day. The report concluded by stating that one of the directors was "Executive Of The Year" in 1991, that the company had won several awards and that the matter was adjourned for hearing on 15 November. At the end of the news item, further photographs of Homestead's offices appeared.
As already noticed, the ABC report did not make specific reference to the paragraphs in the Complaint which originally complained of conduct said to constitute a breach of s27(2)(a) nor to an allegation of acting unfairly by reference to the breach of warranty provisions contained in that section. The reference to overcharging and, in some cases, charging for work not done, purported to be a summary of allegations in other paragraphs which first alleged that the builder acted fraudulently or unfairly and referred to s19(11)(b)(ii) of the Act. "Fraudulently or" was deleted from the Complaint in a Directions Hearing held before 8 October 1993. References to "fraudulently" and "fraudulent" were lined out in the copy of the Complaint given to Ms Brett. Brett says she recalled being told of any reference to "fraud" having been deleted from the Complaint. She also believed reference was made to that by the Chairman when she attended the Directions Hearing, after going to Prentice for a copy of the Complaint. I accept Brett's version of events, including her clear statement that she did not read what she was given by Prentice until after she had attended the hearing and returned to the ABC's Adelaide offices. It should be noted that Brett sought legal advice from the Sydney office of the ABC, talked to a prominent Adelaide architect to have his view of the seriousness of the allegations, checked with Prentice as to whether pleas of not guilty had been entered and said she sought to introduce balance to the story by the closing remarks in the report.
There is no reference in the Complaint to structural defects as such. Ms Brett admitted that the reference to structural defects and a failure to comply with various building standards were the result of her understanding of the Complaint, or that of the producer and the director of the ABC News that night. It is said that more than half of the particular defects contained in the Complaint could not be structural defects on any view of the proper meaning of such a phrase. It is not entirely inaccurate to say that about half the alleged defects could be structural. I refer to the evidence of Mr Short about this. I accept what he says in answer to the suggestions put to him by counsel for Homestead. However, the fact is that the Complaint itself made no allegation of that kind. If the statement is inaccurate and defamatory it could not properly attract a liability in the present defendant in accordance with the rule in Speight v Gosnay . Besides that, no Complaint about that statement is made in the thirteen imputations pleaded.
The headline to the newspaper report was "Homes giant faces building charges". The report said that Homestead faced "several charges following complaints of poor workmanship and unfair practices". There was reference to the charges being defended and the consequence of being found guilty involving possible reprimand, fine, loss of a building licence or, all three. The report then said:
"The charges, which result from a long investigation by the Department of Consumer Affairs, allege failure to properly supervise building work (or alternatively acting negligently); failure to perform building work in a proper and workmanlike manner; and engaging in unfair practices."
The report then stated that Homestead would appear before the Tribunal next month and that it had "indicated it will defend the charges". The report continued:
"The hearing is expected to last three weeks.
The charges arise from complaints by the owners of five houses built by Homestead in 1990 and 1991.
They allege a total of 48 building faults were found over the five houses; two complainants allegedly were unfairly overcharged for footing works; and one complainant allegedly was unfairly charged for site preparation work not carried out and for delaying construction after complaining that work on the footings slab was of poor quality.
The building faults alleged to have been found include a twisted carport beam, eaves line not level, chipped bricks, insufficient rivets in fascia, incorrect butt joints, incorrect roof framing, architraves out of alignment, cornices not level, carport wall not level, wavy roof and hotwater system not fixed to wall.
It is also alleged that a retaining wall was incorrectly sited (8m from where it was supposed to be), exposed rafters rotated and twisted, eaves lining inadequately fixed, and handover dates not met (one purchaser allegedly did not get possession until 12 months after the building contract was signed).
Also alleged were: door frames out of square, improper ties used in retaining wall, noggins in timber cut short and held in place by nails, walls not straight, doors not closing properly, shower floor construction inadequate, peeling of the coating applied to roof tiles, carport trusses not tied, site levels not in accordance with plans, front bay window two courses lower than other windows, faults with load-bearing timbers, loose brick wall and leaking gutter and downpipe.
The charges and associated complaints cover 18 typewritten A4 pages. The hearing is scheduled to begin on November 15."
Neither report referred to the allegation that the company had committed three offences against s18(8) of the Act. References to charges in the report were references to allegations of conduct constituting a breach or breaches of the Act that are not offences against the Act.
The ABC and The Advertiser are not defendants to these proceedings.
The State is sued in reliance upon the rule in Speight v Gosnay . The original publisher of a libel is liable for an explicit or implied authority to repeat the original publication, or where that person intends the matter to be published, or where the republication is the natural and probable consequence of the original defamation .
In the pleadings, it is alleged that a copy of the Complaint was supplied to Ms Brett by an officer or officers of the Department for the purpose of having the ABC publicise the allegations made in the Complaint and in the knowledge that the same would be, or was very likely to be used and broadcast by the ABC. The evidence of Ms Brett, Mr Prentice and Mr Milograd, a departmental legal officer present when Prentice met Brett, establishes quite clearly that Ms Brett sought a copy of the Complaint after she had seen a reference to Homestead in The Advertiser Cause List on 8 October 1993. She sought the information. It was not at the instance of the Department that a copy of the Complaint was ultimately given to her. I also accept the evidence from these persons as establishing that Ms Brett was not procured and encouraged to attend the Directions Hearing or procured and encouraged to produce and publish the news item screened by the ABC on 8 October 1993. The allegations to that effect in the Statement of Claim are unfounded. I also reject the allegation made in the Statement of Claim that the Department's officers provided Ms Brett with a copy of the Complaint in order to publicise the allegations in the Complaint, intending that through the broadcast of the allegations on television members of the public would cease to deal with Homestead and its business would be damaged.
As for the allegations made with respect to publication of the Complaint to a reporter from The Advertiser, there is no evidence to support the allegation that officers of the Department published to him further material which had not been published by the ABC. Nor can I properly infer on the evidence that material published by The Advertiser was obtained from the ABC. Again, if it was, and was defamatory, the defendant's liability for that is not made out.
It was submitted that it was inappropriate to speak of "charges" or "pleas of not guilty" when the fact was that, apart from the offences charged but not referred to in either report, the matters of complaint were matters which, if made out, only constituted grounds for disciplinary action and not proof of the commission of any offence. Against the many occasions in the course of the trial when counsel themselves referred to charges contained in the Complaint, one must acknowledge that the ordinary meaning of "charge" is not confined to charges with respect to offences and that such a description is apt to refer to disciplinary proceedings and particular allegations made in a document lodged in the Tribunal and described in s19 of the Act as a complaint. Similarly, although objection was taken to the reference to "pleas of not guilty", that was not an inappropriate description of the consequence resulting from the clear indication to the Tribunal, in the course of its Directions Hearings, that the allegations in the Complaint were disputed, the complainant was to be put to proof and that Homestead denied any breach of provisions of the Builders Licensing Act.
On the facts proved before me, I find the disclosure of the terms or substance of the Complaint to the ABC and The Advertiser nothing more than the disclosure of the particular allegations made against Homestead which the complainant sought to prove in disciplinary proceedings before a lawfully constituted Tribunal. To disclose such a document and nothing more does not impute guilt or probable guilt of what is alleged in such a document . It follows that the wider imputations alleged in the Statement of Claim with respect to the publications to the ABC and The Advertiser are not made out either. The only issue arising with respect to disclosure to the media is whether or not it was true that the allegations contained in the documents delivered were then before the Tribunal. They were. On that basis, there is no other issue to be tried with respect to the publications by Prentice to Brett and The Advertiser . Equally, it is my view that the reports themselves, made by the ABC and The Advertiser, are mere reports of the fact of proceedings before the Tribunal. It is more arguable that The Advertiser is capable of supporting the further imputation that reasonable grounds existed for suspecting misconduct or the imputation that the charges were well-founded. I reject those arguments. If I be wrong about that, then it seems to me that the rule in Speight v Gosnay does not attach liability to the defendant. It is not a natural and probable consequence of a disclosure of nothing more than the terms or substance of the Complaint then before the Tribunal that a newspaper would do more than merely report the fact of proceedings and correctly particularise the charges disclosed.
If either media report was open to any imputation of misconduct the evidence makes good the substance of the charges referred to in those reports. That apart, I think those two reports attract the defence of qualified privilege just as the publications by Prentice to the media do.
Ms Brett was not cross-examined about her evidence that she understood that she could publish details of allegations and any other material contained in a Complaint or read out in court, unless otherwise instructed by the Chairman of the Tribunal or if there was a suppression order. In the pleadings it is admitted that on 8 October 1993, the Commercial Tribunal had in place a practice that Complaints filed in its registry were not available for inspection by any person, other than the parties, without the permission of the Chairman of the Tribunal. The defence asserts that this practice was not formal, or in the nature of a written policy and that the Commercial Tribunal now has a practice of allowing interested parties to view or copy documents at their own cost in accordance with Practice Directions of the Supreme Court.
Evidence before the Court, particularly that of the Chairman of the Tribunal, makes plain that the action taken by Ms Brett would have resulted in the Chairman permitting her to see a copy of the Complaint and that the steps taken by Ms Brett to procure a copy of the Complaint were entirely consistent with the so-called practice existing at that time. Ms Brett went to the Registrar. Whether the Registrar consulted with the Chairman of the Tribunal or not, there was nothing exceptional about the Homestead file. The reporter would have been given permission to have access to a copy of the Complaint. In my view, the disclosure of the terms or substance of the Complaint to Ms Brett and The Advertiser was lawful. In fact, the Complaint was a public document, available to the public from the time when the proceedings against Homestead were in public, at Directions Hearings, when reference to the terms of the Complaint was necessary to understand what was going on in a Tribunal open to the public.
It is a commonly held view that the common law privilege attaching to fair and accurate reports of judicial and quasi-judicial proceedings does not extend to documents forming part of the record of the case . That general principle has been the subject of close review in many cases. I think that no statutory authority is required to permit publication of the contents of an originating process if the proceedings the subject of a report are not readily understandable without reference to such an item. The evidence in this case is that it was not the practice to ever have the Complaint read out at any sitting of the Tribunal where the respondent was represented by counsel. Also, it was the evidence that the media was invariably allowed to have access to a Complaint when it wished to report some aspect of the proceedings, whether those proceedings were interlocutory and Directions Hearings, the hearing of the matter of Complaint itself or the Tribunal' s actual determination after an inquiry had been held.
In Cunningham v The Scotsman Publications Ltd , Lord Clyde said:
"The basis for the qualified privilege in reporting is to be found essentially in the principle that in general the proceedings of a court are open to public knowledge and public scrutiny... . It is evident that for public confidence in the administration of justice to be maintained the public must be able to see and hear the proceedings for themselves. They must be able to attend a court and see and hear what goes on. But their attendance will be of little point if the proceedings are so conducted that the communications made in open court between counsel and the judge are not disclosed. The substance of the matter discussed in the proceedings may be of such complexity or technicality as to be beyond the ready understanding of every particular visitor, but if the public are to be informed of the proceedings, the proceedings ought to be intelligible. If justice is to be seen to be done what is done must be open to inspection. The public must have at least the opportunity of understanding what is going on and if they do not have the opportunity I do not consider that the hearing is a public one. If the hearing is a public hearing then it does not seem to me that that characteristic is destroyed simply because for perfectly proper reasons of convenience a document is referred to and not read out in full. Where a document has been incorporated into what counsel has said, the proceedings cannot be said to be open to the public unless the terms of the document can be seen by the public.
Of course there must be exceptions to the general rule and these exceptions may also be found to be justified by other considerations of public interest and public policy in the administration of justice. Cases occur and circumstances may arise where it is proper for the doors of the court to be closed. Of course too there are practical considerations which, in the proper control and management of the court's business necessarily impose some restraint on the understanding of the bystander. It would not be practicable to circulate copies of documents referred to in open court around the public benches. But these considerations should not detract from the general principle of openness in judicial proceedings. As I have already noted so great is the danger of secrecy regarded that it is considered preferable to secure publicity albeit at the cost of private hardship. Furthermore, there is a clear advantage in enabling the public to know with certainty and accuracy what has passed in court rather than leaving them to rely on rumour or speculation and the reporting of proceedings may be found to be unfair or misleading if access to pleadings which have been founded upon in open court is not allowed. In order to make a realistic application of the principle to the circumstances of the present case, I cannot restrict the availability of the privilege to a report of what is actually read out in court. The test in my view is not what is actually read out - although all that is read out is published - but what is in the presentation of the case intended to be published and so put in the same position as if it had been read out. If it is referred to and founded upon before the court with a view to advancing the submission which is being made, it is to be taken as published. I find support for the views which I have expressed in the cases to which I have referred, and in the Scottish cases in particular those of Richardson and Harper ."
Lord Clyde referred to Lucas and Son (Nelson Mail) v O'Brien , in which there is a very clear summary of the common law privilege, commencing at 298. Lord Clyde quoted a passage appearing at 300 of the New Zealand Report, which comes from Gazette Printing Co v Shallow (1909) 41 SCR 339 at 359-360.
"The publicity of proceedings involving the conduct of a judicial authority serves the important purposes of impressing those concerned in the administration of justice with a sense of public responsibility, and of affording every member of the community an opportunity of observing for himself the mode in which the business of the public tribunals is carried on; but no such object would appear to be generally served by applying the privilege to the publication of preliminary statements of claims and defence relating only to private transactions; formulated by the parties themselves; in respect of which no judicial action has been taken, and upon which judicial action may never be invoked. It is only when such preliminary statements or the claims or defences embodied in them form the basis or the subject of some hearing before, or some action by, a Court or a judicial officer, that their contents can become the object of any real public concern as touching the public administration of justice."
In my judgment, that statement also acknowledges the justification for adopting the view preferred by Lord Clyde and permitting a plea of qualified privilege to apply in this case to the publication of the contents of the Complaint. It had been referred to and acted upon in Directions Hearings on and before 8 October. It needed to be referred to in order to understand what was for hearing the following month. Any published libel in this case attracts the defence of qualified privilege. That defence is available provided it be a fair and accurate report of proceedings before the Tribunal published without malice . The evidence fails to establish any malice in Ms Brett, The Advertiser, Mr Prentice, Mr Milograd or any other person for whom the State might be answerable in law. In my view, they all acted in good faith believing that there was no legal impediment to disclosure of the fact of proceedings and the terms or substance of the Complaint before the Tribunal.
The Complaint was published in these proceedings upon the first appearance of Homestead's solicitors after the determination of the Tribunal to conduct an inquiry on the Complaint lodged with it. From that time on, a proper understanding of the proceedings before a public tribunal called for an incorporation of the Complaint into the public hearings which followed. The defence of qualified privilege avails the ABC, The Advertiser and the defendant, should the correct view be that the reports published, or either of them, were defamatory of Homestead and that any defamatory publication was a natural and probable consequence of the mere disclosure of the terms or substance of the Complaint to the ABC and The Advertiser.
On the view I take of the claim to qualified privilege it is not necessary to rely upon the recent decision of the High Court in Lange v Australian Broadcasting Corporation . It seems to me that the submission put on behalf of Homestead is correct and that the privilege there discussed attaches to communications concerning government and political matters, not to allegations made about a licensed builder.
Injurious Falsehood
The tort of injurious falsehood consists of the publication of false statements concerning a plaintiff calculated to induce others not to deal with it. The only evidence of publication by the defendant is that by Prentice to Brett and a reporter from The Advertiser. In injurious falsehood, unlike that in defamation, the falsity of any statement is not presumed. It must be affirmatively established by the plaintiff. Also, a plaintiff has to prove malice. In this case, I cannot identify the publication of statements in the mere disclosure of the allegations made against Homestead to representatives of the media. On that basis, an essential ingredient of the tort is lacking. That apart, malice with respect to any relevant false statement is not made out. In various authorities it has been said that something is maliciously published if there is a wilful and intentional doing of damage without just occasion or excuse . Something is done maliciously if done with some indirect object or dishonest or improper motive . In Halsey v Brotherhood , Lord Coleridge LCJ pointed out that to succeed in a claim for injurious falsehood a plaintiff not only had to prove untruth and damage from that untruth, but express malice proved by "want of bona fides or the presence of mala fides". I reject the submissions put as to evidence of bad faith or want of good faith, be it in Prentice alone or in any other officer of the Department. In my view, the evidence does not establish any want of good faith or presence of bad faith against any officer of the Department of Public and Consumer Affairs. Prentice was not malicious. I think the defendant's submission is correct that his lack of bona fides or mala fides alone is relevant to the claim in injurious falsehood. If that of others be relevant, malice in them is not made out. I will deal with particular allegations of malice when considering the claim for damages based upon an allegation of misfeasance in public office. For the present, suffice to say that I find that the principal persons involved in the laying of the Complaint (Cinco, Milograd and Jarvis) acted without malice even if it be said against either Cinco or Milograd in particular that in seeking to do their best they failed in some respects. But that does not establish malice for this tort or any other. The Department's purpose in commencing the proceedings is said to be relevant to the issue of malice. If it is, I repeat that I find no malice established against any officer of the Department. I am satisfied that all officers involved were making an honest attempt to perform the functions of their respective offices. The Department's purpose in commencing the proceedings was to enforce the law as it believed it to be.
Misfeasance in Public Office
"Misfeasance in public office consists of a purported exercise of some power or authority by a public officer otherwise than in an honest attempt to perform the functions of his or her office whereby loss is caused to a plaintiff. Malice, knowledge and reckless indifference are states of mind that stamp on a purported but invalid exercise of power the character of abuse of or misfeasance in public office. If the impugned conduct then causes injury, the cause of action is complete."
It is also relevant to notice what this tort is not concerned with. It is not
concerned with the imposition of duties of care.
"It is concerned with conduct which is properly to be characterised as an abuse of office and with the results of that conduct. Causation of damage is relevant; foreseeability of damage is not."
Earlier in his reasons, Brennan J said:
"There can be no tortious liability for an act or omission which is done or made in valid exercise of a power. A valid exercise of power by a public officer may inflict on another an unintended but unforeseeable loss - or even an intended loss - but, if the exercise of the power is valid, the other's loss is authorised by the law creating the power. In that case, the conduct of the public officer does not infringe an interest which the common law protects. However, a purported exercise of power is not necessarily wrongful because it is ultra vires. The history of the tort shows that a public officer whose action has caused loss and who has acted without power is not liable for the loss merely by reason of an error in appreciating the power available. Something further is required to render wrongful an act done in purported exercise of power when the act is ultra vires."
Brennan J said that the further requirement related to the state of mind of the public officer when the relevant act was done or the omission was made. That mental element is satisfied either by malice, in the sense of an intention to injure, or by knowledge that there is no power to engage in conduct which is calculated to produce injury. These states of mind are inconsistent with an honest attempt by a public officer to perform the functions of the office. Another state of mind inconsistent with that attempt is reckless indifference as to the availability of power to support the impugned conduct and as to the injury which the impugned conduct is calculated to produce.
"It is the absence of an honest attempt to perform the functions of the office that constitutes the abuse of the office."
The plaintiff particularised its allegations of misfeasance in public office by referring to the fact that particular officers in the Department involved in the investigation which gave rise to the issuing of the Complaint, as well as those officers involved in the preparation of the Complaint, were aware that any allegations incorporated in a complaint made to the Tribunal "were likely to be made public and as such would cause financial harm to the plaintiffs". Awareness that financial harm may result from publicity given to the fact of proceedings before the Tribunal cannot found a liability in misfeasance. Conduct properly characterised as an abuse of office must needs be identified. The statutory scheme contemplates a complaint alleging cause for disciplinary action. The exercise of the power to complain cannot be fettered by a foreseeable consequence of the exercise of the power.
A further particular was that by failing to make further inquiries in relation to explanations given on Homestead's behalf at an interview held on 2 July 1992 and by a letter from Homestead's solicitors of 6 July 1992, three named officers in the Department, Rabone, Beattie and Milograd, "were recklessly indifferent as to whether the answers already given by (Homestead) to the complaints made by ... the (five) building owners were accurate or exculpatory". It was also alleged that these named officers "were recklessly indifferent as to whether (Homestead or anyone else) could provide accurate and exculpatory answers to other complaints about which (Homestead) had not been made aware". It was also said that the Complaint contained many allegations against Homestead which caused financial harm to it.
The evidence establishes that at the end of 1991 Bruno Cinco, an Investigations Officer in the Department, was assigned to investigate whether there was cause for disciplinary action against Homestead. Rabone says that he received instructions from Mr Beattie, the Group Manager in the Office of Fair Trading to start an investigation to see if there was a course of conduct constituting grounds for disciplinary action against Homestead. These instructions were against an historical background in which the number of complaints and delays in resolution of complaints involving Homestead were of significance and concern to the Department. In 1990, the Department received complaints about a number of different builders, including Homestead and one of its competitors, Fairmont Homes. Rabone's evidence was that initially the number of complaints against Homestead were very few, certainly before 1989 when a change was noticed. Representations were made to Homestead about the number of complaints and the company's response to them. Rabone said he spoke to Mr Day (one of Homestead's Directors), on two occasions around October 1990, when similar contact was made to a representative of Fairmont Homes with respect to the level of complaints against it. Rabone's evidence was that when he spoke to Mr Day, Day complained about random inspections conducted by one of the inspectors from the Office. Rabone agreed to attend a meeting with Homestead's staff where that inspector would discuss his activities and consider the response of Homestead's staff. It seems that there was then some improvement in Homestead's response to what the Department saw as reasonable complaints by home owners. Nevertheless, as correspondence from the Commissioner to Homestead's solicitors in September 1992 made plain, the fact was that within twelve months Mr Beattie and another officer, Mr Lowe, met with representatives of Homestead to again pursue what the Department saw as the large volume of complaints against Homestead and the Department's concern about the length of time taken by Homestead to satisfactorily resolve complaints. The Department was frustrated by what it saw as Homestead's inappropriate response to complaints. Beattie decided that some investigations should ensue to see whether or not there was cause for disciplinary action being taken against Homestead. Consultation had failed. Something else had to be done to carry into effect the Department's view of what was required of a licensed builder. The legislative scheme of the Builders Licensing Act and the Fair Trading Act 1987 identifies a power and a duty to proceed to enforce the law by the exercise of the powers to investigate and pursue disciplinary action if appropriate. Section 8 of the Fair Trading Act specifies the functions of the Commissioner of Consumer Affairs. They include attempting to resolve by conciliation disputes between consumers and traders, and enforcing the requirements of legislation "by the prosecution of offences and other appropriate action": s8(1)(d) and (h). In my view, the investigation and making of the Complaint against Homestead were acts done in valid exercise of powers and functions invested in the Commissioner and her staff. Upon that basis, no liability in misfeasance in public office is made out.
Cinco commenced work on his assignment in early 1992. By May, he had prepared a report with respect to ten houses. Nine of these houses were the subject of complaints to the Office of Fair Trading in 1991. The complaints had been resolved by Redress officers. The files were closed. Cinco had selected some 30 Redress files and reduced them by half by identifying those which had the greatest amount of information within them. He considered there was sufficient detail in those files to warrant his investigation. He contacted consumers seeking statements from them. Some declined. He proceeded with nine of the files and, at Beattie's suggestion, made contact with another home owner named Glasson. Glasson had been in contact with the Office with respect to some problems with Homestead. Cinco gathered information about Glasson's house. It became the tenth house in Cinco's report.
Cinco made a tape recording of what the ten Homestead home owners had to say before personally typing up his summary of what was said to him and inviting the home owners to sign the statements. Cinco then reported to Rabone that, in his opinion, there was proper cause for disciplinary action against Homestead. He referred to s19(11)(b)(i), (b)(ii), (c)(vii) and other sections of the Builders Licensing Act.
Rabone recommended the report go to the Department's Legal Officer to consider. In a memorandum to Beattie, Rabone expressed the opinion that Cinco's report contained the necessary evidence for successful disciplinary action. By the middle of June, Cinco was advised by the Legal Officer, Mr Milograd, that he should interview Homestead before the matter proceeded any further. Cinco arranged to do this, preparing questions in relation to the matters referred to in his report. This interview occurred on 2 July 1992. After this, Cinco sought to have some experts consider matters relating to some of the homes referred to in the report. That was done. Milograd drafted a Complaint with respect to the ten houses. It was revised with the assistance of another Legal Officer, Ms Errington. A Complaint with respect to but five houses was signed by Mr Jarvis on 30 April 1993. The evidence makes plain that the decision to complain with respect to five houses was in an effort to simplify things and because of the Department's wish to have any finding of cause for disciplinary action attract no more than a fine or reprimand. The penalties contemplated at that time were very different from those referred to in Cinco's report; evidence, again, of the lack of bad faith in those involved in the pursuit of the proceedings in the Tribunal.
Cinco gave evidence of contact with Mr Day. I accept and prefer his version of events, so far as there is any variation between what he says and what Mr Day says. Day knew that Cinco believed the company may have breached provisions of the Builders Licensing Act before Day attended the interview. He had been given the names of the ten home owners and told that he should prepare whatever information he had in relation to those ten houses before the interview. On the day of the interview, Day advised Cinco that he would be attending the interview and bringing with him another director, Mr John Smith, and Homestead's Construction Managers, Mr Sheer and Mr Duckworth. When the interview took place, two other officers from the Office of Fair Trading were present, Mr Newell and Mr Kittel. The interview took almost five hours.
On 6 July 1992 a letter was sent to the Commissioner of Consumer Affairs by Homestead's solicitors. It complained about the manner in which the interview had come about and was conducted. In that letter, it was complained that Cinco "brought to his questioning an apparent pre-judgment of the issues and an inquisitorial attitude". In evidence, Mr Day said that Cinco was aggressive in his questions. The playing of the tape recording made of the interview did not convey that impression to me. In re-examination, Day sought to assert that there were occasions in the course of the interview when words used by Cinco were accompanied by a sneer. He also claimed that Cinco was dismissive and derisive, giving Day the impression that Cinco was biased against the company. Day claimed that it was obvious to him that Cinco was not interested in the answers given against the failure to pursue things with him after the interview. Day also said that Cinco reflected disappointment in some of the answers, Day claiming that Cinco had not stumped the company on anything. I do not accept what Day says about the circumstances of the interview or the attitude of Cinco. Day's allegations were not supported by any evidence from Messrs Smith, Duckworth or Sheer. In my view, Cinco's behaviour at the interview was appropriate, not aggressive. He had to be inquisitorial. I think Day and those with him were somewhat indignant because of the convictions they held that they had done no wrong. Day conveyed quite clearly that the company always tried to do the right thing and could not understand why anyone should be making a complaint against it, let alone have the complaint pursued in the manner in which it was being pursued by Cinco at the interview. I reject the allegations of impropriety made against Cinco. Cinco was not dismissive, derisive or biased. Equally, I do not accept that in anything said by Cinco he was reflecting disappointment in some of the answers because he had not stumped the company on anything.
In my view, Cinco was doing his job at the interview, not prejudging the matter, but inviting the company to respond to allegations which he was required to investigate. True it is that Cinco did not put all of the allegations made against the company that were identified in his report. The interview took a long time as it was. Some of the answers given in the course of the interview may well have diverted Cinco from the questions he had prepared. Plainly, Cinco disputes any lack of care or attention, or reckless indifference in him about what Homestead's answers were to any of the allegations he put. I do not find Cinco at all reckless or indifferent to the answers given to his questions, even if his inexperience in building matters resulted in his being unable to pursue matters completely against the expertise Homestead had representing it at the interview.
I think the truth is that Cinco asked enough to be satisfied that Homestead saw the allegations against it as unjustified and not warranting any investigation. Against that, Cinco had material from the files and from his discussions with home owners that he accepted as true. It was not for him to decide who was right or who was wrong, nor was there much point in giving chapter and verse in the interview, or after it against Homestead's differing opinions.
It was for the legal officer to assess what should be done in light of the material then available to him from Cinco's report and that interview. At the conclusion of the interview nothing could have been plainer than that Homestead maintained that it was free from fault. Against that, Cinco had no cause to disbelieve a contrary case, supported by statements obtained and material reviewed by him. I agree with the submission put on behalf of the defendant that whilst Cinco lacked experience with respect to building matters his approach to his task was conscientious. I think he was earnest, sincere, courteous and frank. I reject the submissions made that things said by Cinco at the interview indicate a lack of proper attention to duty. I reject the submission that Cinco was not really trying to ascertain if and what explanation Homestead had to the allegations made in the statements of home buyers. I reject the submissions that Cinco was not interested in anybody else's views and that there was not going to be a debate between him and Homestead. To the extent that Cinco spoke of getting in touch with Homestead if he needed further information, the fact that he did not does not support any allegation of misfeasance against him. The battle lines were drawn. Subject to Milograd's views the matter was for the Tribunal to consider. There was nothing to prevent Homestead from adducing further material of its own accord.
Homestead says that it was never given a proper opportunity to respond to the allegations before the Complaint was lodged in the Tribunal. Reliance was placed upon Minister For Immigration v Teoh to assert that misfeasance was made out by Cinco's inadequate disclosure of the Department's complaints against Homestead. It was submitted that normal procedure required all allegations be put to Homestead before any Complaint could properly be laid. It was said that Cinco, Milograd and other persons within the Department knew of an obligation to afford natural justice to Homestead, "but that they were not really interested in anybody else's views or in any debate. They directed the Complaint be issued in any event without giving procedural fairness". On this basis it is said that an invalid, unauthorised act beyond power has been established to make good the claim of misfeasance in public office.
In my view, this argument is misconceived. There was no denial of procedural fairness. More than the law requires occurred with Cinco's disclosures to Day and in the interview itself. Procedural fairness availed Homestead in the proceedings before the Tribunal, not before. As Lord Reid pointed out in Wiseman v Borneman , justice does not require that a public officer who has to decide whether there is a prima facie case for prosecution or other proceedings must first seek the comments of the accused or the defendant on the material before him. There is nothing unjust in reaching such a decision in the absence of the other party. Milograd chose to have Cinco put the allegations to Homestead. There was no duty to disclose the entirety of the allegations nor can Homestead identify any legitimate expectation of the kind dealt with in Teoh as applicable to the process pursued by the Department.
I find no abuse of power by any officer of the Department. There was no actual ill-will towards Homestead nor any improper purpose in the institution and pursuit of the investigation. None either in the laying of the Complaint and in the course of proceedings before the Tribunal itself. No officer recklessly disregarded the means of ascertaining the extent of his or her power. Indeed, no act has been identified as one any public officer knew was beyond power and involved a foreseeable risk of harm . All officers were making an "honest attempt to perform the functions of their office" . The claim in misfeasance in public office fails.
Homestead sought to prove actual ill-will towards it. Some of those matters have already been dealt with. Further allegations in par24 of the Statement of Claim included an allegation of things said at a football match at the end of July, 1992. At the end of the trial, counsel for Homestead conceded that things then said on that occasion could not be used against the defendant. The version of events deposed to by Russo and Cinco is accepted. I use it in making adverse credibility findings against Mr Jankovic. I decline to accept Jankovic's evidence of a conversation between him and Beattie, in which Jankovic claims that Beattie said the Department "was going to get the bastards". Beattie denied having said such a thing to Jankovic and that it was a reference to Homestead. I accept Beattie's denial.
Another matter going to Jankovic's credibility arises out of a recording made of a conversation between him and Cinco on 29 September 1992. It seems to me that, on that occasion, Jankovic was concerned that he himself had participated in making adverse comments against officers of the Department of Public and Consumer Affairs and that his continuing good relations with them might be affected. I also use that conversation as support for my view that Cinco was not at all malicious towards Homestead. Any information conveyed to him about Homestead was conscientiously and objectively assessed by him in the course of an honest attempt to do his job.
Mr Day gave evidence that he had a discussion with Beattie in August 1992, when Beattie told Day that the Office of Fair Trading was about to get some "runs on the board", to make it look good for the Department. Beattie denied saying that. I accept his denial and his evidence that, on the occasion deposed to by Mr Day, Day questioned Beattie about the reputation of Homestead "as far as the Office of Fair Trading was concerned". Beattie said that he told Day that the Office was receiving too many complaints about Homestead and that Day seemed surprised at that. I accept that evidence and that Beattie sent Day a print-out from the Department's computer detailing the complaints that the Office of Fair Trading had received about the company.
"Runs on the board" was a phrase well-known to many within the Office of Fair Trading. It seems that it passed almost into folk lore there because of its persistent use by Mr Glen Weir. He was appointed Director of the Office of Fair Trading in January 1989, with his deputy, Mr Webb, becoming Acting Director of the office at the end of June 1992, when Weir was reassigned to project work for the Commissioner. I accept Beattie's evidence that "runs on the board" was a phrase used within the office to ridicule Weir. I do not accept the suggestion made in the course of this trial that "runs on the board" had any sinister or malicious meaning with respect to Homestead.
Homestead called evidence from Mr Dawson, a Redress Officer in the Department. He spoke of talk in the office of putting some of Adelaide's largest builders up for disciplinary action around about 1991 and 1992 to get some "runs on the board". He deposed to there being a whiteboard in the office of Mr Rabone which had written on it "runs on the board" with the names of companies, including Homestead, on the board. Dawson's evidence was that whilst the whiteboard had this heading and Homestead's name on it, Rabone made comments to the effect that the Department had enough evidence to warrant disciplinary action. Dawson also said that, in normal conversation, Beattie told him that the officers were going to get "runs on the board" against some of Adelaide's largest builders. Dawson acknowledged that "runs on the board" was a phrase frequently used by Weir and that it was a bit of a joke amongst other officers that Weir spoke of "runs on the board" so often about so many things. Dawson's evidence was that whilst he knew Weir to speak of "runs on the board", he was never at a meeting where disciplinary action was discussed and possibly those words used, because he was not in the Compliance Section of the Office of Fair Trading.
Rabone's evidence was that Dawson was an acting team leader for the Redress Section from about 1992. That would have Dawson in closer contact with Beattie and Rabone. Accepting what Rabone says about that, I am not prepared to reject his emphatic denial of ever having had "runs on the board" on his whiteboard. Rabone said that it was not a phrase that he would use because he thought it was child-like. I am not prepared to reject Rabone's denial about that. It was emphatic and convincing.
Dawson's evidence could be said to have had some support from answers given by Ms Errington and Milograd. In cross-examination, Errington agreed that from time to time she had seen "runs on the board" written on Rabone's whiteboard. However, she could not recall seeing Homestead's name underneath, beside or near it. Milograd acknowledged "a vague recollection" of seeing whiteboards with the expression "runs on the board" on them and Homestead's name under it. If he had seen a whiteboard with "runs on the board" written on it, he said it would be the whiteboard in Rabone's office. Milograd also said that he believed Homestead's name may have appeared under that expression on the whiteboard in Rabone's office. Milograd's recollection of many things was less than specific. A vague recollection of seeing whiteboards with "runs on the board" written on them may be accepted as establishing that that phrase appeared on some whiteboards in the Office of Fair Trading. That may have included Rabone's whiteboard but, in my view, not with Rabone's knowledge. It seems to me that the continuing tilt at Weir's use of the phrase may have resulted in it being written on whiteboards, perhaps for a brief period of time and not in any way permanently identifying Homestead with that phrase. I think that view is consistent with Errington's answers. However, if I be wrong about this, the mere fact that Homestead's name may have appeared on Rabone's whiteboard at the same time as "runs on the board" would not establish malice as much as it would be consistent with the fact that proceedings were, or were to be issued for good cause in the minds of those involved in that process.
I do not accept Dawson's evidence as establishing any improper motives or malice in any officer involved in the work of the Office of Fair Trading or the Compliance Section in particular. To accept that people may have used the phrase "runs on the board" within Dawson's hearing does not persuade me that it was said in any context other than a tilt at Weir's use of that phrase, particularly having regard to the responses of the various witnesses to the suggestion that the phrase was used in connection with Homestead and on Rabone's whiteboard. Accepting Rabone's denials, I find that "runs on the board" was never seen by Rabone on his whiteboard, even if it be the fact that it was put upon it by someone else and seen by others. I do not accept the evidence of Errington and Milograd as positively supporting Dawson's evidence that "runs on the board" appeared on Rabone's whiteboard when Homestead's name was underneath, beside or near it. Whilst Milograd's evidence established the undisputed fact that Homestead's name was on Rabone's board, Errington's evidence does not associate Homestead's name with "runs on the board" at all. The evidence of other officers does not identify "runs on the board" with Homestead on any whiteboard. I do not accept Dawson's evidence as establishing that both "runs on the board" and Homestead's name were on Rabone's whiteboard for any period of time when Rabone would have seen it or that Rabone was involved in identifying Homestead with "runs on the board" at all. Even if it be the fact that "runs on the board" appeared on any whiteboard, with Homestead's name under it, I cannot accept that as evidence establishing malice. None of the evidence about "runs on the board" establishes mala fides or the lack of bona fides in anyone. Nor does it prove that the Department had a motive "seeking to boost its value and relevance and its reputation by getting a big scalp with attendant favourable publicity by launching a prosecution against Homestead". I reject that submission and the submission that the Department's motive was to get Homestead in some improper way.
A further submission was that the institution of these unwarranted proceedings was to achieve a departmental objective of changing the Housing Industry Association's standard form contract in relation to clauses on the cost of footings. I do not agree with the assertion that the proceedings were unwarranted. With respect to three of the houses referred to in the Complaint, there were charges of acting unfairly that did relate to the acknowledged preference by Homestead to have a contract signed for the construction of a house without a footings report so that a variation to the contract price was often necessary once such a report had been obtained. That practice was not one seen as fair by the Department or by some consumers. There was an issue to be tried about that. It was proper to take it to the Tribunal.
Negligence
The final cause of action relied upon by Homestead was negligence. It is said that the defendant was under a duty of care not to proceed with unfounded or incorrect allegations knowing that disciplinary proceedings against Homestead, pursuant to the Builders Licensing Act, would result in great financial loss to it. It is claimed that the defendant was in breach of that duty of care in a number of ways:
1. Failing properly to fully investigate complaints or allegations against Homestead.
2. Failing to avail itself of the opportunity given to it of obtaining full information concerning complaints or allegations against Homestead.
3. Making no effort or insufficient effort to ascertain if particular allegations set out in specified paragraphs of the Complaint were accurate.
4. Failing to properly investigate the cost of laying footings and reasons for delays in the commencement of building works before alleging unfairness against Homestead.
I am unable to find a relationship of proximity between the Office of Fair Trading and this licensed builder. To acknowledge such a duty of care as that alleged in favour of Homestead would be unfair and unreasonable. It would create risks of a conflict of interest and duty upon those seeking to carry into effect the protective and regulatory measures contained in the FairTrading Act and the Builders Licensing Act and impede the effective administration of those Acts. It is incompatible with the functions of the Commissioner to have a duty of care owed to a licensed builder . The risk of harm from the pursuit of disciplinary action cannot fetter the discharge of the functions imposed upon the Commissioner in s8 of the Fair Trading Act. The denial of such a duty does not leave the builder without any remedy. Section 15(6)(b) of the Commercial Tribunal Act 1982 is of particular significance in confirming the absence of a duty. It empowers the Tribunal to order compensation to be paid for "embarrassment, inconvenience and expense" incurred from proceedings taken "frivolously, vexatiously or for an improper purpose".
If, contrary to the view I have expressed, there was a duty of care owed by the defendant to Homestead, there has been no breach of any such duty. The evidence does not establish a failure to conform to a required standard of care. The conduct of the State's officers did not fall below the standard demanded for the protection of Homestead against unreasonable risk of harm. In fact, the allegations were not unfounded or patently incorrect. The investigation was pursued to the point where sufficient care had been taken to avoid unfounded or false accusations. There were issues properly taken to the Tribunal even if some were to fail.
The Charges
The Complaint was in the form prescribed by the Commercial Tribunal Regulations, 1987. Schedule 5 required that relevant matters be set out in full. Milograd took note of what Errington told him of the Chairman's preference for full particulars and narrated facts in conjunction with particular items of complaint. That and charges expressed in the alternative saw the Complaint run to nineteen pages.
The State says that the evidence available at the time of the making of the complaints and that proved in these proceedings establishes cause for disciplinary action. In particular, the State says that with respect to each of the five houses the evidence establishes that Homestead has failed to ensure that building work performed in pursuance of its licence was properly supervised and that Homestead has acted negligently and unfairly.
Proper Supervision
Section 14(1)(b) of the Builders Licensing Act states that a licensee "must ensure ... that building work ... performed in pursuance of the licence is properly supervised by a registered building work supervisor". "Building work" and "perform" are referred to in the interpretation section of the Act. "Building work" is defined to mean a number of things including, the whole or part of the work of constructing, erecting, under-pinning, altering, repairing, improving, adding to or demolishing a building. The defendant submitted that this obligation of proper supervision extended to any repair of defective building work. Reliance was also placed upon the fact that "perform" includes causing building work to be performed, or organising or arranging for the performance of building work. Submissions made on behalf of Homestead began with the proposition that proper supervision means such supervision as is reasonably necessary during the course of construction of a house to ensure that at the date of completion, construction has been carried out adopting accepted building practices and applicable standards. Thus the State sought to maintain the obligation to supervise to periods long after completion of a house. On the other hand, Homestead submitted that the obligation to ensure building work was properly supervised was discharged if faults were detected and a programme of rectification were put in place and carried out "commensurate with and taking account of the volume builder's other obligations".
Difficult though a precise definition may be, neither side seems to have correctly identified that which Parliament has demanded. It was said that a practical interpretation of the imperative language of s14 was required. Accepting that, none of the propositions advanced seems patently correct.
Early authority, with respect to building supervision by an architect employed to plan and supervise the building of a house, made plain that the duty of supervision was not fulfilled "merely by making occasional visits to the building and getting any parts of the work set right which (the architect) happen(ed) to observe on such visits". The architect's duty was said to be "to give such supervision as will reasonably enable him to certify that the work of the contractors has been executed according to contract" .
In Jameson v Simon, the failure complained of was that the architect had not seen that the bottoming for a cement floor was composed of proper materials, in consequence of which dry rot broke out in the wood work. The Lord Justice-Clerk acknowledged that there were many things which an architect could not be expected to observe while they were being done, "minute matters that nothing but daily or even hourly watching could keep a check upon". However, for such a substantial and important matter as the bottoming of a cement floor of considerable area, His Lordship said that he could not hold the architect not chargeable with negligence if he failed before the bottoming was hid from view by the cement "to make sure that unsuitable rubbish of a kind that will rot when covered up with wet cement has not been thrown in in quantities as bottoming contrary to the specifications" . Acknowledging that supervision could not extend to a continuing presence by the supervisor at every stage of the work, His Lordship insisted that the architect should "undoubtedly see the principal parts of the work before they are hid from view". The Lord Moncreiff referred to the architect not inspecting the work but trusting it to experienced contractors and said that he did not wish to be understood as meaning that an architect was to be held responsible for all defective work which may be covered up during his absence. His observation was that not even a clerk of works could be expected to detect everything of that kind . Nevertheless, His Lordship's view was that when one contractor had to follow another and when the work done was about to be:
"covered up so that it could not thereafter be inspected, the architect should, under the duty of supervision which he had undertaken, have ascertained, either by personal inspection or through an assistant, whether the bottoming had been done according to specification and that in failing to do so he did not use reasonable care in the discharge of his duty."
A similar view prevailed in the High Court in Florida Hotels Pty Ltd v Mayo . Architects were held to be in breach of their obligation to supervise building work with due skill and care. To discharge that obligation the architects were:
"... bound to take reasonable steps to ensure that they inspected the form work and the placed reinforcement before concrete was poured and the work covered up. They do not satisfy this by relying on the workmen whose work they were employed to supervise: in particular they were not entitled to assume from past satisfactory performances of the foreman that they would be notified of the readiness of the work for inspection and of the time for the pouring of the concrete. They were not engaged to supervise only such work as could be seen on the particular days of their routine inspection, or to attend to supervise only when advised that an occasion for supervision had arisen or was about to arise. They owed a duty to keep themselves informed of the progress of the work. They were bound ... at least to have made reasonable arrangements of a reliable nature to be kept informed of the general progress of the work and, in particular to be notified of the readiness of form work and the placement of reinforcement for the pouring of concrete; these arrangements ought to have included clear and express instructions to the foreman that work of the kind in question must not be covered up till the respondents had inspected it or, at the very least, had an adequate opportunity for its inspection."
In that case, evidence was led as to the ordinary practice of architects. Windeyer J observed that it was for the court to decide whether or not, in the circumstances, there was a lack of reasonable care. His Honour also said it would be wrong to make any pronouncements " which could be construed as defining reasonable care in terms of rigid requirements". He then went on to insist that the pouring of concrete was an important phase in the construction of any building and that with respect to this the architect was negligent . Windeyer J's view was that the architect's negligence did not lie in some specific act or omission but in cumulative conduct, the consequence of which was that concrete was poured upon reinforcing mesh wrongly laid, the architect making no reasonably reliable arrangement that he should be told when the concrete for the aprons was to be poured and giving no direction that this must await his inspection and approval of the reinforcing material.
I refrain from being too specific as to what is involved in ensuring building work is properly supervised. Plainly the duty imposed by Parliament on licensed builders is demanding. It calls for more than occasional visits and assuming "that all is right which (is) not observe(d) to be wrong" . In my view, a builder does not discharge the obligations imposed by s14 unless the builder sees that the work is duly and properly executed. The obligation is dynamic, not static; sooner rather than later; pro-active, not reactive. The obligation is not discharged by waiting until completion of building work and seeing what can then be identified as faulty or requiring attention. The language of s14 is imperative. It seems to me to demand more than the decisions quoted called for, certainly no less. The obligation to ensure building work is properly supervised calls for presence when major structural events occur and appropriate checks in the course of construction to ensure that what proper supervision should achieve actually occurs; the construction of a house in a proper and workmanlike manner, free from faults that can be avoided by proper care and skill on the part of workers and by proper supervision of those workers by supervisors present when major work is done and checking as work proceeds to see that all work is properly done. The obligation cannot be discharged by allowing things to be concealed before checking. Yet that occurred. It cannot be discharged by waiting for hand-over and spotting things then, or having the home owner identify faults then or during a maintenance period.
More is required than the evidence established in each of the five houses. It can be acknowledged that some of the items particularised in the Complaint by themselves may not have established a lack of proper supervision. As counsel for the State put it, circumstantial evidence of building faults taken together may establish a lack of proper supervision. I reject the construction advanced by the plaintiff. In particular, I cannot accept the submission that a lesser obligation arises if a builder is a volume builder building cheaply. Section 14 cannot be interpreted differently depending upon the value of the property concerned. Indeed, the section could be a reaction to an attitude of less concern for individual houses and individual purchasers than for the production of a large number of houses at lower prices. That attitude accepts that things go wrong but sees a good overall result as justification for not accepting as reasonable individual complaints. Mr John Smith's evidence reflected such an attitude. It fails to accept that in imposing obligations and standards upon builders Parliament has had regard to the reasonable expectations of individuals, particularly those committing themselves to what is often the most expensive outlay of a lifetime.
The evidence made good the allegation against Homestead of failing to ensure that building work was properly supervised in all five cases. Supervision was absent at critical stages and inadequate at others.
Acting Negligently Or Unfairly?
By s19(11)(b)(ii) of the Builders Licensing Act, there shall be proper cause for disciplinary action if a licensed builder has, in the course of carrying on the business of a builder, acted "negligently, fraudulently or unfairly". In charges expressed in the alternative to those alleging lack of proper supervision,
Homestead was said to have acted negligently in that it owed a duty of care to the particular home owner which was breached by conduct then particularised. The particulars included the particulars given with respect to the allegation of a failure to properly supervise. A similar process appeared in the third charge of acting unfairly, although with respect to some particular counts the particulars were not exactly the same as in the other two.
A similar provision to s19(11)(b)(ii) was considered by Cox J in Paterson v Commissioner for Consumer Affairs . In that case, a land valuer was the subject of a complaint alleging cause for disciplinary action. Cox J held that the word "negligently" was used "in its every day sense of carelessly or neglectfully having in mind the care and skill and diligence that a valuer might fairly be expected to use in the circumstances" . His Honour saw there to be no need to qualify the interpretation of negligently by reference to other branches of the law. I respectfully agree with that approach. The language used in the particulars spoke of a breach of a duty of care. The essence of the alternative charge of acting negligently was that certain defects in a particular house resulted from the carelessness or neglect of the builder. Those defects could be caused by a lack of supervision. However, a charge of failing to properly supervise might be made out even though defects did not result from a failure to supervise. The risk of defects occurring suffices to make lack of proper supervision a distinct obligation. Charges of these two kinds need not be in the alternative.
A further question is what is meant by the use of the word "unfairly" in the same provision in s19. The defendant's submissions included a submission that acting unfairly meant engaging in misleading or deceptive conduct. Reliance was placed upon Westham Dredging v Woodside . That case was concerned with provisions in the Trade Practices Act, 1974 (Cwth). Similar provisions appear in Division II of Part X of the Fair Trading Act. There are also provisions within that Act which forbid a person from engaging in conduct that is, in all the circumstances, unconscionable. In its every day sense, "unfairly" means inequitably, taking advantage of, or failing to be fair. That language would suffice to permit a complaint to be made about non-structural defects in a particular house if a distinction sought to be made between structural and non-structural defects were correct. I do not think that distinction is correct. That apart, I think the word "unfairly" is used to permit disciplinary action if a builder has taken advantage of a purchaser, or failed to be fair to a purchaser in the particular circumstances of a case.
The charges of acting unfairly so far referred to were intended as alternatives to the first two charges with respect to each house. With respect to three of the houses, there is a further allegation of acting unfairly with respect to footings and other matters. The proper interpretation of s19(11)(b)(ii) permits the Tribunal to consider not the letter of the law but particular conduct complained of to determine whether or not that conduct should be condemned by it as unfair, in the sense of acting inequitably or taking advantage of someone. The same conduct could constitute acting negligently. A single finding in the alternative of acting negligently or unfairly would not be objectionable nor, in a particular case, a finding of acting negligently and unfairly.
With respect to the charge of acting negligently, I am not persuaded that the first two items, mentioned in par5.2 of the Complaint would necessarily constitute acting carelessly or neglectfully. However, the Barnetts' evidence about the sliding door not being repaired for some eleven months is a clear breach of s19(11)(b)(ii). I also think that the delay with respect to obtaining both building and planning approvals made good this charge as well. So too, the failure to commence construction within two weeks of council approvals. As to the allegation with respect to the charge of acting unfairly in that door frames were out of square, I accept the evidence of Barnett and Short about this. It seems that, in that respect, Homestead had failed to perform building work in a proper and workmanlike manner and, with respect to those door frames, had acted negligently or unfairly.
The Third House
Mr and Mrs Mitchell signed a contract for the construction of their house at Paralowie in March 1990. There was a negotiation about the contract price. It was reduced from some $59000 to $54000. It was the evidence from both Mr and Mrs Mitchell that they told Homestead's sale staff that they did not want any additional costs because they only had a certain amount of money. However, Mr Mitchell acknowledged that Brian Bellinger told him that if there were problems with the soil, or various things like that, there might be some additions. Mr Mitchell said that he dealt with Bellinger's wife, Sue, as well and insisted that he told them both that he and his wife only had a certain amount of money and that they did not want any variations or extra hidden costs, or anything like that. In June 1990, the Mitchells received a variation, seeking $3250 extra against an engineer's soil report and footing design. Mr Mitchell said that he and his wife were shocked. They did not expect to have a variation to begin with because they had already built a house in the area of the Kingswood Crescent, Paralowie house and that they knew what the soil was like. Mr Mitchell had the assistance of his father, who professed some knowledge of building construction. Mr Mitchell (Snr) had contracted with Homestead to build a house at Kapunda. The Mitchells saw John Smith at Homestead on 20 June. David Mitchell's evidence was that his father put to Mr Smith that with any house some cutting has to occur and that the ordinary cutting should be "involved in the price of the building" of the house. A price was finally concluded in a variation dated 10 July 1990, reducing the sum of $3250 down to $1970.
Mrs Mitchell said she made daily inspections of the house during construction. David was at work. His visits to the site during construction were therefore less. However, he deposed to an occasion during the construction of the timber framing for the house when he noticed that noggins were not touching the uprights in the timber frame. His evidence was that roughly 50 per cent of the noggins were not touching. He estimated the gaps to vary from 1mm, or 1/2mm to 10mm. In cross-examination, Mitchell acknowledged that apart from one or two noggins with a 10mm gap, the vast majority may have been within _mm, or 1mm of the uprights. Mr Mitchell (Snr) spoke of 25-50 per cent of noggins falling short of the studs, with gaps between 1mm and half-an-inch.
The Mitchell evidence may lack of particularity, but the evidence of the supervisor, Byrne, was not at all convincing. He spoke of his practice, or rather the expectation of him as a supervisor, to assert that things would have been done properly. He had no particular recollection of noggins at the Mitchell house. I accept that Byrne was far from attentive to difficulties raised with him during the course of construction. I find that Byrne was told about noggins during construction at the house by Mr Mitchell (Snr). I agree with the submissions put on behalf of the defendant that the state of the evidence was such as to warrant an adverse inference against Homestead as to noggins being cut short and not attended to before linings were fixed.
I interpret the Mitchell evidence as establishing that matters appearing after Mr and Mrs Mitchell entered into possession of their Paralowie house got little or no response from Homestead until the matter was taken up with the Office of Fair Trading. This resulted in things being attended to as late as March 1994. I accept the evidence of Mr Mitchell (Snr) as supporting what the Mitchells said, both with respect to footings and other things wrong with their house. Objectively, a letter signed by both Mr Mitchell (Snr) and his son, dated 3 November 1990, appears odd. It praises workmanship, yet with respect to the son's house, there are complaints. I accept the explanation given by Mr Mitchell (Snr) for that letter and do not find it a cause for doubting the general credibility of what the three Mitchells had to say in evidence.
I accept that the Mitchells did not complete a maintenance report at the end of three months after they went into possession in December 1990. Nevertheless, I accept their evidence as establishing that there were a number of things not right with the house. Homestead was informed of their complaints. It was less than responsive to them until intervention by the Department.
In particular, Mr Mitchell gave evidence that after he moved in he noticed a bow in the passage wall, leading from the front of the house to the rear bedrooms. He also spoke of difficulties with doors leading into the third and fourth bedrooms, as well as from the family room into the laundry. I reject the suggestion put in cross-examination that carpets could have been an explanation for trouble with doors closing. As to a sliding door from the family room leading to the outside area under the carport, Mr Mitchell says there was always a gap in the top of the sliding door apparent from when they moved in. Mrs Mitchell said that Homestead saw that as something for them to pursue with the supplier of the door. The effect of Mrs Mitchell's evidence was that she saw it as part of Homestead's responsibilities to respond to matters as she drew attention to them. I accept the evidence of the Mitchells as establishing that they were not slow to complain to Homestead about the state of the Paralowie house and that Homestead was far from swift to respond.
Overall, my impression is that Byrne was less than responsible in his duties as a supervisor, both of the Mitchell house and of the Miotto house. The defects observed by the Mitchells, after moving in, would not have fallen for them to discover had Byrne's supervision been greater and proper.
In my view, the evidence establishes cause for disciplinary action against Homestead. The seven items of complaint particularised in par7.5 of P61 are proved and establish lack of proper supervision. Paragraph 7.7 contains a specific allegation of things being pointed out to Byrne just before Christmas 1990. The evidence of the Mitchells was not as specific as par7.7. They did not speak of a particular complaint to Byrne after handover at all when giving their evidence. When this matter was put to Byrne in the course of his evidence, his response was that he did not recall defects being brought to his attention either at handover or after that and before Christmas 1990. I find that the Mitchells did well and truly complain to Byrne, as soon as they noticed things wrong with their house.
Most of the defects identified in the Complaint may not seem serious of themselves. The noggins were the most serious defect. If but one or two of the matters particularised were all that was wrong with the Mitchell house one would hardly regard that as warranting a complaint and the seeking of disciplinary action. However, there was an accumulation of things with the Mitchells' house, as with others, that plainly established a lack of proper supervision and acting negligently or unfairly in the manner already explained. I refer to and accept the various other items identified by Mr Short as further evidence of Homestead's failures with respect to this house.
Mr Short was less than critical about the passageway wall not being straight. In my view that does not excuse what was, again, a defect in the house that could and should have been avoided by appropriate action taken by the supervisor in the course of its construction. It is equally plain that in permitting a wall to be erected as it was, Homestead had acted negligently and unfairly. I agree with the submission put that the lack of straightness in the wall was more due to a problem observed in the framing. However, even if it was not, I use some of Short's answers to confirm the fact that the wall was not built in a proper and workmanlike manner if, by the use of an exangle, it created a curve where the ordinary purchaser of a home would expect to find and have a straight wall; particularly if the home owner was contemplating the use of floor coverings that would emphasise a noticeable bow or curve in a wall. Homestead's submission was that the evidence identified normal trade practice being used and, upon that basis, asserted that there was no lack of supervision or other failure by Homestead. I do not agree. Normal trade practice may not be good enough in a particular case. Here, I do not think it was.
The complaint with respect to doors not closing and the front door not catching is consistent with those things resulting from a failure to build the house in a proper and workmanlike manner if those faults could have been avoided by proper supervision. The Mitchells identified these faults some time after they had moved in. Short's evidence supports an inference that at least some defects were in existence at hand-over and should have been corrected then. In particular, he was critical of the laundry door. I take him to be correct about that, even if Homestead has the generous benefit of the doubt with respect to the other doors. Even if door defects were not due to any failure by Homestead, the other matters were well made out. Other defects referred to by Short, taken together, make up a persuasive circumstantial case for adverse findings against the builder on the first three matters of complaint with respect to this house. I find the charges of improper supervision and acting negligently or unfairly warranted and proved.
The Fourth House
Mr and Mrs Miotto contracted with Homestead for the building of a house at Jaycee Street, Modbury North. The contract was signed in February 1991. Construction commenced in March, with the Miottos getting keys at the end of July 1991. They moved in during August. The Miottos were most concerned when they received a Variation, seeking $8630 for site preparation and footings. In the Complaint it is alleged that the sum should have totalled not more than $5594.60.
In evidence, Mr and Mrs Miotto deposed to a conversation held with a sales consultant before the contract was signed. In that conversation, Mrs Miotto alleged that the sales consultant, one Joe Chiuchiolo, told her that an additional sum of up to $3500 might be required. Upon receipt of the account in excess of $8600, the Miottos informed Homestead that this was too much. They made a request for conciliation by the Office of Fair Trading. Mr Trevor Smith, a Redress Officer, took details of their concerns on 21 March 1991. The Miottos also sought the assistance of their son Ossie, who is employed in the building industry. In April 1991, a Variation was agreed to which reduced the amount to $8220. On this Variation the Miottos reserved the right to have the Office of Fair Trading investigate the charges. A further negotiation resulted in a credit of $800 ultimately being passed by Homestead and accepted by the Miottos on 15 July 1991. The Miottos were of the view that the site had been prepared by them and that the charges proposed were therefore exorbitant. The son's evidence was convincing and compelling about the site preparation carried out by the Miottos. Accepting that, the charges were unfair. Ossie Miotto cut the half of the block that was too high and filled the other half. The side of the block filled was properly compacted. The block was levelled. All that Homestead did was remove vegetation. I also accept Ossie's evidence that he filled his parents' block past the boundary line on the eastern side of their property. I do not accept what Mr John Smith says about the site preparation and costings against things said by the Miottos. Nor do I accept anything from Mr Smith inconsistent with what Mr Short said about the Miotto site preparation and costings.
When the house was the subject of a Certificate of Practical Completion, in July 1991, there were two items mentioned in the Certificate as requiring attention. However, Mrs Miotto said that a number of items were then less than satisfactory. There was reference to other matters in a handover check list dated the same day as the Certificate. Then, on 19 September 1991, the Miottos delivered a list of further matters requiring attention to Homestead. Within that list there was reference to the family room sliding door not sliding properly, as well as matters requiring attention in the lounge, laundry, toilet and bedrooms. A reference was made to the absence of door stops on any of the doors and a gutter at the rear of the carport leaking very badly, with downpipes all being too short. These and other matters were referred to in a maintenance report dated 24 October 1991, two days short of the maintenance expiry date.
In 1992, the Miottos made a further complaint to the Office of Fair Trading. This request was dealt with by Mr Smith, after it was referred to him at the end of March. However, it is plain that even before then the Miottos complaints were drawn to the attention of the Compliance Section of that Department. Mr Cinco took a statement from the Miottos. It was signed by Mrs Miotto on 18 March 1992. In that statement there are particulars given with respect to doors that obviously found the first two particulars in par11.5 of the Complaint. Mrs Miotto insisted that the door problems were far from attended to satisfactorily, certainly not promptly. Evidence from Mr Smith and Mr Short supports the Complaint being laid in the form that it was, given their own observations and the statement taken from the Miottos by Mr Cinco.
A third particular in par11 referred to a coating applied to roof tiles peeling. Mr Sheer took this up with the tile supplier earlier in March. The responses of the supplier were not acceptable to the Miottos. They pursued proceedings before the Commercial Tribunal with respect to that and a complaint about water hammer. The proceedings were ultimately resolved before the Tribunal in July 1993, when terms of settlement were noted. However, rectification or attempted rectification of the water hammer problem was not attended to very rapidly after that. It was pursued and ultimately rectified, in Homestead's eyes, by March of 1994.
I accept the submissions put for Homestead that the third particular in par11.5 of the Complaint is not made out. The fact that coating applied to the roof tiles peeled is correct. That that was due to a lack of supervision by Homestead is not.
Matters could have been referred to in par11.5 which were not. Both Mr and Mrs Miotto gave evidence about an electrician installing light switches in a door frame. I accept their evidence about this. That episode could have been particularised in the allegation of inadequate supervision. Byrne said he was unaware of any complaint that related to the incorrect installation of light switches in a door frame. Plainly, he is in error about this, establishing again his poor supervision of the Miotto house. There is a more serious case of improper supervision well established by the evidence of the Miottos and Mr Trevor Smith of the Office of Fair Trading. The Miottos noticed a crack in the ceiling in 1992. A beam was brought in and installed. Mr Miotto's evidence was that he assisted in removing tiles and placing the beam there, at the end of January 1993. The beam would not have been installed at all but for the complaint of the Miottos and the pursuit of it, on their behalf, by Mr Smith. Sheer denied that he knew anything about that work being performed between the kitchen and the family room area. Plainly he is wrong about that. Indeed, there is evidence that Sheer wrote a letter to the Department of Public and Consumer Affairs, dated 19 January 1993, in which he acknowledged inspection of the kitchen/family room square arch and advised the Department that a strutting beam would be installed on 26 January 1993, with a minor crack being repaired at that time. The fact is that both Byrne and Sheer were reluctant to admit fault in anything that they, or other persons working for Homestead, did. The evidence about this particular defect is, as Smith asserted, evidence of a failure by Homestead to construct the roof in a proper and workmanlike manner. The beam was needed to rectify a structural defect in the house. It should have been detected in the course of its construction by a supervisor properly doing his job. There was a lack of proper supervision in the course of construction of the house. Homestead also acted negligently or unfairly in that a beam should have been specified in the house plans from the start and installed in the archway between the kitchen and living area of the Miotto home.
A second request by the Miottos was referred to Smith of the Office of Fair Trading at the end of March 1992. The Miottos complained of faulty building work in relation to six items including the water hammer problem. The others were complaints of faulty doors and frames, guttering being too short, the carport ceiling falling down and roof downpipes being too short. The roof tiles were also referred to. Smith says that he was asked by Cinco to indicate whether, in his view, the faulty building work, investigated by him, could be indicative of poor workmanship and a lack of supervision. Smith's opinion being given may explain the form of the complaint pursued before the Tribunal. However, Smith's opinions support and establish a complaint of lack of supervision or acting negligently or unfairly against Homestead with respect to the inadequate fixing of the carport and the carport fascia being out of level. Smith's evidence was to the effect that remedial action taken by Homestead about the carport was slow and less than satisfactory. It did not correct the carport beam or the fascia. Smith was of the opinion that there were grounds for identifying against Homestead a complaint of failing to properly supervise building work. He relied upon the defects in certain doors in the house and the frames to those doors; the crack in the ceiling; the absent beam and water staying in the carport gutter against the lack of levels in the carport beam and fascia. I agree with Smith's opinion. Mr Short's opinion with respect to the bedroom 2 door also supports proof of the allegation in the Complaint with respect to supervision and doors.
The three matters referred to in par11.5 of the Complaint are also in the alternative allegation in par12.2, of acting negligently, but only the first two particulars are repeated and relied upon to found a separate count alleging that Homestead acted unfairly. The evidence makes good the charges laid in pars11, 12, and 13 of the Complaint.
The Fifth House
On 29 December 1989, Mr and Mrs Glasson signed a contract for the construction of a house at Woodcroft in the southern suburbs. On that same day, they signed a preliminary works request for the drawing up of plans. Mr Glasson said he was told that if he and his wife paid $1500 as an up-front fee they could jump the queue in the planning stages for the house. The Glassons paid $1500 in total by two works requests. One was on 29 December 1989 for $150. The second was on 25 February 1990 for $1350. Mr Glasson did not think much of what seems to have been a practice by Homestead. The Glassons did not seek or obtain an authority sticker necessary for any queue jumping.
On 29 March 1990 the Glassons signed a variation authorising the payment of some $3090 for cutting and filling the house site. Work began on site in May 1990. Glasson claimed that the site was not cut and filled in accordance with the engineer's report. The block was simply scraped and not cut to the engineer's specifications. Instead, quarry rubble was brought in. Glasson took measurements and concluded the fill had been put on top and that no cut and fill had been made. Glasson used a laser level to confirm what took place. A recent check was conducted by Mr Burns. There is an error in the vicinity of 220mm in the height of the slab compared with design height. That error is, in my view, due to a lack of proper supervision.
Mr Glasson was also troubled by what happened with the laying of the slab. Concrete was poured on Friday, 1 June. It rained over the weekend. The slab was heavily pitted, levels were out and seriously so. No-one from Homestead was there. They should have been. They should also have taken remedial action against Glasson's immediate complaints. The first and second particulars in par15.5 of the Complaint are well made out. Homestead's failure with respect to supervision on these two matters was very serious. These breaches alone warrant the Complaint laid against Homestead. Sadly there was more. Foundation pegs were driven into the slab penetrating the fortecon and termite layers. There were faults with load-bearing timbers. The front bay window was constructed two courses lower than other windows and quite contrary to the plan. There were twisted and warped exposed timber beams. Carport trusses were not tied. Door frames were out of square. Four other matters were particularised in par15.5 of the Complaint. They were not as serious as those just summarised. They were properly included in three paragraphs of the Complaint, as many other items could have been. Some may not have made good the improper supervision charge but only the alternative of acting negligently or unfairly . Lack of attention to detail was well established by the evidence.
In par15.5 of the Complaint it was said that the defects were still present in the house. The allegation made with respect to the other four houses was that the defects either still were, or had been, present in the house. I accept Milograd's explanation that this was an oversight by him and that he intended to have the same allegation in this paragraph as had appeared in pars1.5, 4.5, 7.5 and 11.5 of the Complaint. It was not disputed that some defects complained of had been attended to before the first Complaint was lodged.
The evidence with respect to the Glasson house took a very long time. Mr Glasson was in the box for many days. His credibility was attacked by witnesses and Homestead's counsel. I make a positive, favourable credibility finding in favour of Mr Glasson. Regretfully, I cannot do the same for either Mr Duckworth or Mr Dietmeyer, the Construction Manager and Supervisor, who had much to do with Mr Glasson. I think the defendant is correct in the submission made that Mr Duckworth sought to deceive Glasson into thinking there was no substantial error made with respect to the cutting and filling. The slab was not just out by 16mm as Duckworth asserted. I accept Glasson's various explanations for apparent praise in correspondence against on-going dissatisfaction felt by him with respect to the construction of his house. I find each and every allegation made in the twelve sub-paragraphs to par15.5 well and truly established. That evidence makes good charges of failing to ensure building work was properly supervised and acting negligently and unfairly.
Paragraphs16 and 18 of the Complaint were the paragraphs charging that the builder acted negligently or unfairly. In pars16.2 and 18.2 there were two further particulars after the twelve also cited in par15.5. I find those particulars well established by the evidence. Homestead failed to carry out repairs as agreed. Tardiness in the performance of necessary repairs was made out here as in other cases. Misleading and inaccurate information was provided in relation to the site work and slab faults.
The third charge in this case was a charge in par17 of acting unfairly by inducing the Glassons to enter into a fixed price building contract and subsequently charging them with variation charges reasonably foreseeable to Homestead at the time of entering into the building contract. Also, in that charge it was complained that the Glassons incurred penalties for delays attributed to Homestead and that Homestead charged the Glassons for site preparation which did not occur. I deal with this later in conjunction with similar charges in pars10 and 14 of the Complaint.
I do not intend to deal with chapter and verse about the Glasson house. Serious breaches of Homestead's obligations were established. They justified the disciplinary action instituted, whatever else may be said about the other four houses.
The twelve matters first particularised in par15.5 of the Complaint were followed with a narrative, not quite as long as in the case of the Barnetts. Much time was taken in the pursuit of each and every detail that was there particularised. Again, the drafting of the sixteen sub-paragraphs and Milograd's explanations for them cannot detract from the evidence making good the substance of what was there narrated, even if some criticism might be made of particular language chosen by Milograd. I accept the substance of what Mr Glasson had to say. Matters of detail, emphasised by Homestead's counsel, do not destroy the sad and sorry fact that too many things went wrong with this house. Nothing in these paragraphs serves to identify or establish malice, lack of good faith or any recklessness in Cinco or Milograd in particular.
Homestead's staff were found out by a purchaser very interested in the construction of his house. Mr Glasson was more attentive to detail and the recording of events than the purchasers of the other four houses were. I accept the evidence of Mr Short as supporting the substance of Glasson's complaints as well as establishing other faults. Glasson's evidence on some of Homestead's major failings was supported by other evidence. In particular, I refer to and accept that of the Robertsons and Mr Burns with respect to termite treatment and site levels.
I accept Glasson's evidence as establishing that, far too often, Duckworth promised things, then wrote or did things differently. I accept Glasson's evidence about the state of his house when Homestead sought a Certificate of Practical Completion on 28 September 1990. I also accept his explanation about the continuing reference then to things requiring attention, whatever be the proper view about information in the hand-over check list. I accept Glasson's evidence as establishing that on hand-over the Glassons were not willing to sign the Certificate of Practical Completion because of things outstanding.
That leaves, for separate discussion, the three charges in pars 10, 14 and 17 of the Complaint with respect to footing variations and charges. After that, par18.
Footings Variation Charges
In the case of the Mitchell, Miotto and Glasson houses, a further charge of acting unfairly had a common complaint that Homestead had engaged in an unfair practice by inducing these purchasers "to enter into a fixed price building contract and subsequently charge them with variation charges which were reasonably foreseeable to (Homestead) at the time of entering into the ... building contract".
In the Mitchells' case that allegation was preceded by the allegation that Homestead submitted an excessive claim, totalling $3320 in respect of construction footings variations when the correct amount should have totalled not more than $727.39. In the Miottos' case, the other allegation with respect to this charge of acting unfairly was that Homestead submitted to the Miottos "an excessive claim totalling $8630 in respect of site preparation and footings variations. The correct amount should have totalled not more than $5594.60". In the Glassons' case, the additional allegations were that the Glassons incurred a $646 penalty for delays attributed to them and were charged $350 for site preparation which did not occur and to which Homestead was not entitled.
In each case, the contract signed by the parties was in a form prepared by the Housing Industry Association for the exclusive use of its members. By that contract, it was expressly agreed between the parties that footings had been costed on one of two bases. The first was where no engineer's construction footing report had been obtained and provided to the builder before the date of the contract, the other when that had occurred. In the first situation, the footings quoted were "to be suitable for stable soils and a level site requiring no fill (except normal under-footing fill) and of sizes specified in the schedule". If variations were required before the commencement of footing construction the variation was treated as a "builder proposed variation", the builder giving the house purchaser written notice of the variation and specifying the increase or decrease to the contract price. In the case of these home owners, the schedule for their contracts stated the same footing dimensions for their houses, no engineer's footing report having been provided at the time of the contract.
The unfairness sought to be identified before the Tribunal was the practice pursued by Homestead and other builders of having home purchasers accept the contract in the form so far summarised, without a real appreciation of the fact that the footings charges would be an additional amount above what the purchasers thought was the total price they were paying for the house they had agreed to buy. Evidence from Mr Beattie, in particular, was that the Office of Fair Trading was troubled by this particular clause in the Housing Industry Association Standard Form Contract. It was the Department's view that project home builders should not be selling houses on the basis of a contract that listed footings as standard for a flat level site when the builders well knew that the actual footings cost would always require a variation and rarely result in a purchaser having to pay less than the contract price concluded by reference to footings costs suitable for stable soils and a level site requiring no fill. Discussions had occurred between the Office of Fair Trading and the Housing Industry Association in September 1991. A meeting occurred on 30 September 1991 with a sub-committee of the Housing Industry Association. This meeting was initiated at Mr Beattie's request, with the sub-committee accepting that a problem existed and that a solution needed to be found. The Office of Fair Trading's solution was not entirely acceptable to the Association. The sub-committee had undertaken to consider the proposed solution further and examine others.
The evidence establishes that in the case of these three houses, the purchasers inquired about the contract price and possible changes to it. Assurances had been given by the builder's sale's representative about variations as well. The outcome of these discussions appeared to be that the owners were left with the belief that even if there were increases on the price stated in the schedule to the contract, those increases would not be as great as they proved to be. The evidence established a re-negotiation of variation costs. It is plain that agreements to the variation were still not what the purchasers thought was appropriate or fair. That being so, it seems to me that it was proper to have the Tribunal determine whether or not the practice of Homestead and other builders was unfair, particularly in conjunction with the further allegations in the case of these three contracts.
In the Mitchells' case, the charge for construction footings proposed in a variation of 7 June 1990 was $3250. The Mitchells believed this sum was excessive. They spoke with Mr Smith. He agreed to reduce the variations on the two Mitchell houses, the reduction for David Mitchell being $1970. The Mitchells were not satisfied with this. They sought advice from the Master Builders' Association. A building consultant gave an opinion that the variation should be no more than $726.17. This building consultant was unable to give evidence in the trial because of ill health. The Department was entitled to act upon his report in preparing the Complaint. The fact that Mr Short was asked to prepare his estimate and arrived at a different figure, much closer to that of Mr Smith, is nothing to the point. I do not agree that Cinco and Milograd should be criticised for adhering to that figure in the Complaint. The fact that they did does not make out any lack of bona fides in either of them.
Mr Smith's calculations involved mark-ups being made by Homestead with a higher profit margin than applied to other activities. The Tribunal would be entitled to take into account that this practice was an incentive to adopt the course of pricing on standard footings. I agree with the submission that even with the amendments agreed to by Mr Smith, on Short's approach Homestead was still charging far too much for what was done. I think this further charge of acting unfairly with respect to variations was made out in the case of the Mitchells against the evidence that Bellinger was specifically asked about hidden costs, he telling the Mitchells that there should be no extra costs but that if there were, they would be of the order of $1200-$1500. The representation made was that Homestead knew the soils in the State, so that any extra costs for footings would be minimal. The evidence established a representation or inducement made to the Mitchells that any charge for footings would not be in excess of that amount. The $2850 ultimately charged is almost twice that amount. The charge of unfairness is proved.
As for the Miottos' variation, a summary of the facts appears earlier in these reasons. The allegation of an excessive claim being made is well established. I reject the calculations advanced on behalf of Homestead and prefer the evidence of the Miottos and Mr Short. The particular facts established in the case of the Miottos make good the complaint of an unfair practice with respect to the kind of contract entered into. It matters not that Milograd, as a lawyer, should not have spoken of a fixed price contract. He explained what he meant. It is plain that the Miottos felt pressed into signing the variation against their concern that building would not commence. I find that Homestead was told that the Miottos could not afford to pay more than $4000 for any variation. The evidence establishes that a sales person advised the Miottos that the maximum they would pay for footings was an extra $2000-$3000. It is clearly unfair to tell someone that a maximum additional charge will be of that order and then seek to charge an additional $8630. This case is a very strong one demonstrating how unfair the practice pursued by Homestead can be.
As for the Glassons, the evidence does establish that they incurred a further 1 per cent charge as a result of a delay beyond their control. I accept Glasson's evidence that he discussed the 1 per cent condition in cl29 of the contract before signing it, to be assured by an officer of Homestead that it would not come into effect. Nonetheless, the Glassons were charged $646 for delays not their fault. I find Glasson's evidence, uncontradicted as it was, credible. He was assured that the 1 per cent clause would not come into effect. It did. That made out this charge of acting unfairly, particularly as the delay was caused by Homestead. So too with respect to the $350 charge for site preparation. Unfairness seems to me to have been proved since the charge was excessive as the only work actually done on the Glassons' site was that appropriate for a standard cut for a standard slab.
The charge of acting unfairly is made out in the Glassons' case without much reliance upon the complaint common to other acting unfairly charges for the Mitchells and the Miottos. Nevertheless, it was not inappropriate to link the particular circumstances of these three cases with a common complaint of unfairness by reference to the practices adopted by Homestead with respect to footings variations.
The evidence satisfies me that Homestead was using the advantage to it of signing up a purchaser, often anxious about price, without properly alerting the purchaser to the reality of footings charges that would mean that the true contract price was more than the amount identified in the contract, that price most likely being varied upwards, in many cases, certainly in the case of the three houses bought by the Mitchells, the Miottos and the Glassons. I think there is much in the argument put that the advantages to the builder, of which Mr John Smith freely spoke, do generate unfairness at large against purchasers given the evidence that the variations proposed attracted a 25 per cent mark-up, whereas 10 per cent was the usual profit margin for other variations. The general complaint seems well justified and open to condemnation as unfair, particularly if further circumstances are established. They were established in these three cases.
The Failure To Notify Charges
The Complaint alleged three breaches of s18(8) of the Builders LicensingAct in the last paragraph of the Complaint. No reference was made to these charges in any re-publication of the Complaint. Little was put about it in the course of final submissions. I find that Cinco and Milograd had material before them sufficient to justify these allegations. I am less than confident about acting upon Duckworth's evidence about this matter at all. The evidence of Ms Jarmyn makes plain that the notifications Duckworth said he sent were not received. This is not the only case where correspondence has gone astray. Mr Glasson can vouch for that. Whilst it is unnecessary to make any concluded decision about this matter of complaint, I make a positive finding in favour of Cinco and Milograd that there was no recklessness, bad faith or absence of good faith in either of them with respect to the investigation of this topic and the inclusion of these allegations in the Complaint.
The plaintiff's claims are dismissed.
- AGLC
- Homestead Award Winning Homes Pty Ltd v State of South Australia No. Scgrg-93-1981 Judgment No. 6322 Number of Pages 36 Tort Defamation Constitutional Law Professions and Trades [1997] SASC 6322
- Case
- [1997] SASC 6322
- Decision Date
CaseChat Overview and Summary
The court considered the claims in turn. First, the court held that the State was not liable for defamation as the disclosure of the allegations in the Complaint to the media did not impute guilt or probable guilt of the alleged wrongdoing. The court also found that the reports published by the media were fair and accurate and attracted the defence of qualified privilege. Second, the court dismissed the claim of injurious falsehood, finding that the evidence did not establish the publication of false statements with malice. Third, the court found that the investigation and Complaint were an honest attempt by public officers to perform their duties, without malice, knowledge, or reckless indifference. Fourth, the court held that there was no relationship of proximity between Homestead and the Office of Fair Trading to establish a duty of care. Finally, the court found that Homestead failed to properly supervise building work in all five cases, acted negligently or unfairly in some cases, and engaged in unfair practices by inducing purchasers to enter into fixed price building contracts and subsequently charging them with variation charges that were reasonably foreseeable.
The court dismissed all of Homestead's claims against the State.
Orders
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Background
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Evidence
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