Kalfus v Middleton

[1999] NSWSC 577

CITATION:	Kalfus v Middleton [1999] NSWSC 577
CURRENT JURISDICTION:	Common Law
FILE NUMBER(S):	012978/98
HEARING DATE(S):	25 May 1999
JUDGMENT DATE:	11 June 1999
PARTIES :	Marcel Kalfus t/as Marcel Kalfus & Co. v Sydney Middleton
JUDGMENT OF:	Bell J at 1

LOWER COURT JURISDICTION:	Local Court
LOWER COURT FILE NUMBER(S) :	3703/95
LOWER COURT JUDICIAL OFFICER:	Morahan LCM

COUNSEL :	Appellant: Mr. G. Sirtes Respondent: Mr. R. Freeman
SOLICITORS:	Appellant: Mallesons Stephen Jaques Respondent: Brock Partners
CATCHWORDS:	Local Court - Stated Case - (Local Courts (Civil Claims) Act 1970 (NSW) s 69(2); Strata Titles - common property; Negligence - proceedings inappropriately commenced on advice of solicitors
ACTS CITED:	Local Courts (Civil Claims) Act 1970 Strata Titles Act 1973
CASES CITED:	Burcchard v Holroyd Municipal Council & Ors. (unreported, NSWSC, 16/1/84) Soulemezis v Dudley (Holdings) P/L (1987) 10 NSWLR 247 Glover v McDougall (1976) 2 NSWLR 359
DECISION:	See para. 23

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

BELL J

Friday, 11 June 1999

012978/98 - MARCEL KALFUS t/as MARCEL KALFUS & CO. v SYDNEY MIDDLETON

JUDGMENT

1 HER HONOUR: This is a case stated by Mr Morahan, Magistrate, pursuant to s.69(2) of the Local Courts (Civil Claims) Act 1970. Before the Local Court the respondent to the present proceedings, Sydney Middleton, sued the appellant, Marcel Kalfus t/as Marcel Kalfus & Co., for damages for negligence. The Magistrate ordered the appellant to pay to the respondent the sum of $10,899.00 by way of damages.

2    The facts as determined by the Magistrate are as follows:

(1) The respondent, Sydney Middleton, is a former client of the appellant, Marcel Kalfus. The respondent resides at and is owner of strata title unit No. 5 situated at 39 Bundarra Road, Bellevue Hill (hereinafter called “unit No. 5”). The appellant is a solicitor practising as a sole practitioner in Darling Point, New South Wales, under the style “Marcel Kalfus & Co”.

(2) On or about 12th June 1989, Mr Mann, the owner of unit No. 3 at 39 Bundarra Road, Bellevue Hill, carried out building works (hereinafter called “the building works”) which were not approved by the body corporate of the strata title units (hereinafter called “the body corporate”). Unit No. 3 was situated directly below unit No. 5. As a result of the building works carried out by Mr Mann, substantial structural and internal damage was caused to unit No. 5 (hereinafter called “the damage to unit No. 5”).

(3) On or about 4th June 1990, the body corporate issued a Statement of Liquidated Claim in the Local Court of New South Wales at the Downing Centre, Sydney against the respondent for unpaid levies alleged to be owed by the respondent totalling $4,988.71 (hereinafter called “the Local Court proceedings”).

(4) On or about 8th November 1990, the respondent attended the appellant’s office to instruct him to defend the Local Court proceedings. He also instructed the appellant to sue for the damage to unit No. 5 which he said was caused by the building works. The respondent informed the appellant that one of the reasons levies were unpaid was because of the damage to unit No. 5. Mr. Julius Mayer (“Mr Mayer”) who was an employed solicitor with the appellant was assigned to and acted for the respondent in both matters.

(5) On receipt of instructions from the respondent, Mr Mayer immediately consulted with counsel, Mr. Gary McGrath. Mr McGrath advised the respondent that the respondent’s claim for damage to unit No. 5 could be set-off against the claim against the respondent in the Local Court proceedings in a cross-claim. In accordance with Mr McGrath’s advice and on the respondent’s instructions, the appellant prepared a Defence and a Cross-Claim to the Local Court proceedings to be filed in the Local Court. The respondent’s claim in the Local Court (hereinafter called “the cross-claim”) sought damages against both the body corporate and Mr Mann for the damage to unit No. 5. When the appellant attempted to file the Cross-Claim it was rejected by the Local Court Registry as the quantum of the claim in the Cross-Claim exceeded the jurisdiction of the Local Court.

(6) On 28th February 1991, the appellant issued proceedings in the District Court of New South Wales against the body corporate and Mr Mann for the same claim as in the Cross-Claim (hereinafter called “the District Court proceedings”).

(7) At the same time, the appellant filed a Notice of Motion in the District Court seeking to transfer the Local Court proceedings for unpaid levies to the District Court and for the body corporate’s claim for unpaid levies against the respondent to be dealt with and heard together with the District Court proceedings. In about August 1991, the appellant ceased acting for the respondent in the District Court proceedings and the Local Court proceedings. At the time the appellant ceased to act for the respondent, the motion to transfer the Local Court proceedings had not been dealt with by the District Court.

(8) In about September 1991, the respondent instructed the firm Watson Davey to take over conduct of the matters and to act on his behalf. On 5th October 1991, Mr Mann joined his architect and builders involved in the building works as third parties in the District Court proceedings. Some time prior to December 1993, Watson Davey ceased acting for the respondent when the respondent refused to pay their fees.

(9) On 13th December 1993, the respondent appeared before his Honour Judge Phelan in the District Court proceedings unrepresented. He was directed by his Honour to serve an Amended Statement of Claim by 17th January 1994. The District Court proceedings were then adjourned for further directions on 11th March 1994.

(10) The respondent himself prepared an Amended Statement of Claim in the District Court proceedings and on or before 17th January 1994 filed it in the District Court Registry but did not serve it. The Amended Statement of Claim filed by the respondent only named the body corporate as a defendant in the action but did not name the other existing defendant, Mr Mann, nor the third parties joined by Mr Mann.

(11) The respondent again appeared before his Honour Judge Phelan in the District Court proceedings unrepresented on 11th March 1994. His Honour noted that the Amended Statement of Claim filed by the respondent omitted naming Mr Mann as a defendant in the action and drew the respondent’s attention to the omission. The respondent affirmed his intention to discontinue the action against Mr Mann. As a result, court orders were sought against him by Mr Mann and the third parties. Judge Phelan made an order for the respondent to pay the costs of Mr Mann and a Bullock order for the respondent to pay the costs of the third parties joined in the proceedings by Mr Mann.

(12) The total costs ordered to be paid pursuant to the order of Judge Phelan on 11th March 1994 were taxed and amounted to $21,798.48. These costs comprised the damages sought by the respondent against the appellant in this action. After the respondent discontinued the District Court proceedings against Mr Mann, the body corporate, as the remaining defendant in the District Court proceedings, joined Mr Mann as a third party and, in turn, Mr Mann again joined his builder and architect as fourth parties in the District Court proceedings.

(13) The District Court proceedings settled in November 1995.

3    Annexed to the Stated Case were the transcript of the proceedings together with his Worship’s Judgment and a number of the exhibits.

4    The Magistrate determined:

1. As the body corporate was the owner of the structural wall it was the body corporate which had suffered damage and not the respondent. The appellant should therefore not have initiated proceedings on the respondent’s behalf as it did in the District Court.

2. The respondent should not have amended the Statement of Claim as he did and discontinue the action against Mr Mann without first obtaining legal advice or obtaining representation in the District Court before his Honour Judge Phelan.

3. The appellant was partly responsible for the respondent’s loss and the respondent was partly responsible for his own loss. They were more or less equally responsible for the cost orders made against the respondent.

5    The appellant contends that the Magistrate’s determination was erroneous in point of law upon the following grounds:

“(a) That I was in error in law in holding that the appellant should not have commenced proceedings on behalf of the respondent when I had found that the damage to unit 5 was both structural and internal; and that the damage to unit 5 was not limited to common property within the meaning of the Strata Titles Act 1973.

(b) That I was in error in law in holding that the appellant should not have commenced proceedings on behalf of the respondent when there was no evidence which could support the conclusion that the walls were structural walls or that the damage to unit 5 was limited to structural damage or that the damage to units was limited to common property within the meaning of the Strata Titles Act 1973.

(c) That I was in error in law in holding that the commencement of the District Court proceedings by the appellant exposed the respondent to a risk that his proceedings would be struck out when there was no such risk or no evidence that there was such a risk.

(d) That I was in error in law in failing to take into account the fact that at no time did any of the parties seek to strike out the respondent’s claim in the District Court proceedings or to seek costs against the respondent by reason that the action had been commenced against Mr Mann in the District Court.

(e) That I was in error in law in holding that the appellant was responsible for any of the loss in circumstances where I had already found it was the respondent’s decision to discontinue the District Court proceedings of his own volition.

(f) That I was in error in law in holding that the appellant was responsible for any of the loss in circumstances where I failed to advert to the fact that the respondent’s own counsel advised against the course which the respondent then took.

(g) That I was in error in law in holding that the appellant was fifty percent responsible in circumstances where I had already found that the effective cause of the loss was the respondent’s own actions.

(h) That I was in error in law in holding that the appellant was fifty percent responsible in circumstances where I failed to advert to the fact that the respondent’s own counsel advised against the very course which the respondent then took.

(i) That I was in error in law in failing to award the appellant its costs of the proceedings in the Local Court.”

6    Mr Sirtes appeared for the appellant in the proceedings before me. He indicated that the principal ground of challenge to the Magistrate’s determination was contention (b), namely, that there was no evidence which could support the Magistrate’s conclusion that the walls were structural walls or that the damage to unit 5 was limited to structural damage.

7    It will be noted that, among the facts found by the Magistrate, was that “substantial structural and internal damage was caused to unit No. 5” (paragraph 2.2). It was the appellant’s submission that this factual finding could not sit with the Magistrate’s determination that “it was the body corporate which has suffered damage and not the respondent” (paragraph 4.1). This matter is the subject of contention (a).

8    In the proceedings before me it was contended that the evidence before the Magistrate led on behalf of the respondent was deficient in that it did not identify with precision the damage to unit 5. In that respect it was submitted that one could not exclude that some of the damage the subject of the respondent’s original claim in the District Court proceedings was to property forming part of the respondent’s lot as distinct from the common property. The appellant sought to call in aid the suggested inconsistency referred to in paragraph 7 above.

9    The Statement of Claim drafted by the appellant in the proceedings initiated in the District Court was in evidence before the Magistrate. I pause to note that Mr Sirtes drew attention to the circumstance that the Statement of Claim as amended, being the pleading which was before Phelan DCJ as at 11th March 1994 when the order for costs was made, was not tendered. In my view nothing turns on this. In the Statement of Claim, as drafted by the appellant, the following particulars of damage are pleaded:

(a) Lounge room: adjoining bedroom:

(i) the internal walls show cracking
(ii) there is continuing stress and tension in internal walls due to undermining of lateral support
(iii) the internal walls are unstable and load-bearing capacity reduced.


(b) Bathroom:

(i) the walls surrounding the door jamb shows cracking, and deformation
(ii) the tiling demonstrates measurable separation between walls and floor
(iii) the bathroom floor has subsided, and there are continuing lateral stresses.

(c) Generally:

(i) the load-bearing and lateral supports of home unit lot 5 in strata plan 22669 have been undermined.

10    It may be appropriate to note something of the way in which the proceedings developed before the Magistrate. On that occasion the appellant was represented by Mr Perram. No issue appears to have been taken as to whether the damage was to the common property. The focus of Mr Perram’s submissions was directed to issues of causation. The transcript of proceedings on 18th December 1995 records Mr Freeman, who appeared for the respondent, stating:

“There’s been no evidence called to rebut any of the evidence given by my client regarding the walls and the fact that they represent common walls. And I understand from my friend that he conceded that they were common walls from the outset.”

Mr Perram did not take issue with that assertion in reply.

11    When one has regard to how the matter was conducted before the Magistrate any apparent contradiction between the factual finding that internal damage, in addition to structural damage, was caused to unit No. 5 and the finding that it was the body corporate which had suffered damage and not the respondent loses the significance for which the appellant now contends. Internal walls may form part of the common property or they may form part of a lot. In Burcchard v Holroyd Municipal Council & Ors. (unreported, NSWSC, 16th January 1984) Roden J held that the internal walls in that case were not part of the common property. Mr Freeman submitted before the Magistrate that the evidence as to the structure of the walls in the present case (structural cavity walls containing air ducts) distinguished it from Burcchard. There was no submission to the contrary. The status of internal walls may depend upon whether they correspond with a heavy “base” line drawn on the floor plan, (Strata Title Management Practice In New South Wales, Bugden, 6th Ed. CCH para 207) or whether they enclose pipes, wires, cables or ducts not for the exclusive use of one lot; s.5 of the Strata Titles Act 1973 (the proceedings took place prior to the renaming of this Act as the Strata Titles (Freehold Development) Act 1973).
12    The Statement of Liquidated Claim by which the respondent commenced proceedings in the Local Court against the appellant pleaded:

“On or about 12 June, 1989 illegal and improper building works carried out in a unit below the plaintiff’s caused substantial structural and internal damage to the plaintiff’s unit. The plaintiff suffered loss and damage.”

13    The Magistrate’s formulation “substantial structural and internal damage” may have been taken from the pleading. It was at all times the respondent’s case before the Magistrate that the damage was to common property. There is nothing in the formulation “substantial structural and internal damage” from which I would conclude that the Magistrate found damage occasioned to the respondent’s unit was to other than the common property. Nothing in the particulars contained in the Statement of Claim (paragraph 9 above) identifies damage to property which on its face falls outside common property. The reference to “internal walls” is not to be viewed as exclusive of common property.

14    It was Mr Sirtes’ contention that in the absence of the respondent identifying with precision every item of damage alleged he should not have succeeded before the Magistrate on the locus issue; “If there was one crack in one wall which was not common property that was enough locus standi”.

15 I am asked to determine whether there was any evidence to support the factual finding set out in paragraph 2.2. To this end I may have regard to the depositions; Glover v McDougall (1976) 2 NSWLR 359 at 361.

An error of fact finding will not be elevated to an error of law, if based on evidence open to the Magistrate; Soulemezis v Dudley (Holdings) P/L (1987) 10 NSWLR 247.

16    The respondent gave evidence before the Magistrate. He was qualified as a person who had been engaged in the building industry for a period of twenty years (t’cpt 29/11/95 p.14 & Ex 7). He described the general structure of the block of units. The building comprised three storeys; two above ground level and one below. The walls were bedded on foundation beds in the ground and common floor joists and bearers were let into the walls so they could support both the flooring on top and the ceiling underneath (t’cpt 29/11/95 p.14). If the walls were not holding up the floor nothing would support it (t’cpt 29/11/95 p.14). A copy of the floor plan of unit No 3 (the unit the subject of the renovations carried out by Mr Mann) was tendered in the course of the respondent’s examination in chief. The respondent stated that unit 3 was directly below unit 5 and that unit 1 was proportionally below unit 3 (t’cpt 29/11/95 p.15). Brick walls come from the foundations of the building up to the roof. Those walls are brick cavity walls with an air duct in the centre (t’cpt 29/11/95 p.15). The bathroom walls are cavity walls. They travel up through unit 3 to unit 5 (t’cpt 29/11/95 p.15). All the plumbing and services to the respondent’s bathroom are contained in the cavity wall (t’cpt 29/11/95 p.16).
17    The respondent next identified a floor plan of unit 3 which depicted the building works proposed by Mr Mann (Ex 3). The internal wall between the family room and the dining room is of double brick cavity construction (t’cpt 29/11/95 p.16). That wall was depicted on Ex 3 as a double line of the same thickness as the double lines showing the external walls. The wall between the dining and living rooms is of double brick cavity construction (t’cpt 29/11/95 p.16). Ex 3 also shows the bathroom walls earlier referred to by the respondent as cavity walls (t’cpt 29/11/95 p.16). Ex 3 shows the alteration to the location of one of the bathroom walls. This was the wall which divided the bathroom from the living room (t’cpt 29/11/95 p.16). The walls between bedroom 1 and the courtyard and from the kitchen to the courtyard (as shown on Ex 3) were partly demolished (t’cpt 29/11/95 p.17). The walls to the respondent’s unit were directly above those walls (t’cpt 29/11/95 p.17).

18    Mr Sirtes contended that the respondent had not in terms identified the damage to his unit. In this respect the submission was advanced that the tender of the floor plans of unit 3 showing the original plan and the alterations to that unit did not assist in determining whether the damage occasioned to unit 5 was as to the common property. The evidence was that unit 5 was located directly above unit 3 and that the walls of unit 5 were directly above the walls of unit 3. The damage pleaded was damage to walls, subsidence of the bathroom floor and undermining of load-bearing and lateral supports. In my view it was open to the Magistrate to conclude in the light of the evidence as to the floor plan of Unit 3 (the walls depicted thereon being identical to those in Unit 5), the evidence as to the structure of the block and the alterations to the walls in Unit 3 that the damage pleaded in the Statement of Claim in the District Court proceedings was damage occasioned to the common property.

19    As noted above, the contention that was to the fore in the submissions advanced before me by Mr Sirtes was contention (b). Contention (a) I have already dealt with in paragraph 12. I do not find there was an inconsistency (putting to one side the question of whether an inconsistency in factual findings would in any event amount to an error of law; Soulemezis). Mr Sirtes advanced no submissions relating to contention (c) and, indeed, foreshadowed that he may abandon it. In the ultimate analysis he did not formally do so. Given that I am of the view that there was evidence to support the Magistrate’s finding that it was the body corporate which had suffered damage and not the respondent, I consider there was no error in law in the Magistrate holding that the commencement of the District Court proceedings exposed the respondent to a risk that his proceedings would be struck out.

20    Paragraphs (d) to (f) raise issues of causation. Mr Sirtes frankly conceded that if I was of the view that the Magistrate did not err in relation to contention (b) it would flow that the appellant had difficulties with the causation challenge. The only issue of causation upon which Mr Sirtes advanced submissions was contention (e). On their face neither contentions (d) nor (f) have merit and that was recognised in the way the matter was argued.

21    Ground (e) relies on the circumstance that it was the respondent’s decision to discontinue the District Court proceedings. This it was submitted was the immediate cause of the order for costs made against him. The Magistrate found that the proceedings ought not to have been commenced against Mr Mann in the first place. The proceedings were commenced on the advice of the appellant. From these facts he found the respondent had made out his case in negligence against the appellant and rejected the view that the discontinuance by the respondent was a novus actus interveniens breaking the chain of causation such as to relieve the appellant from liability for the damage suffered. The finding of novus actus interveniens is a question of fact and degree. In my view it was open to the Magistrate to find as he did.
22    Given my view that the Magistrate did not err in law in determining that the appellant should not have initiated proceedings on the respondent’s behalf in the District Court, I see little to commend contentions (g) and (h). In written submissions it is contended on the appellant’s behalf that the respondent “had the burden of proving that had the pleading not been filed against what he contended was the wrong party he would never have suffered an order for costs” and that the respondent “had to bring evidence that the costs order, or any costs order, was an inevitability”. I do not accept these propositions. The Magistrate found that the proceedings ought not to have been commenced. Commencing proceedings without standing so to do exposes a plaintiff to the risk of an order for costs against him or her. That risk eventuated in the present case. As Mr Sirtes conceded in the course of oral argument, once it was accepted that Mr Mann ought not to have been joined in these proceedings, it might be thought fortunate from the appellant’s point of view that the Magistrate apportioned the damages to be paid at 50% of the costs order.
23    I would answer the contentions raised by the stated case by holding that the Magistrate’s determination was not erroneous in law.

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Last Modified: 06/11/1999