Kumar v Sydney Western Realty Pty Ltd (No. 2) - [2021] NSWDC 446

District Court

New South Wales

Medium Neutral Citation: Kumar v Sydney Western Realty Pty Ltd & Anor (No. 2) [2021] NSWDC 446
Hearing dates: 2 – 5 August 2021
Date of orders: 31 August 2021
Decision date: 31 August 2021
Jurisdiction: Civil
Before: Abadee DCJ
Decision:
See paragraphs 265 – 268

Catchwords:
TRADE AND COMMERCE – misleading or deceptive conduct – advertisement by vendor’s agent for sale of residential property – advertisement refers to expected dual income stream from two buildings on property acquired under contract for sale, one of those buildings being a granny flat – doubt about the legality of use of building as a granny flat – whether the agent was aware of such doubt – whether opinion on rental misleading or deceptive for absence of qualification – whether vendor’s agent acted as a mere conduit – whether test for causation on statutory action the same as the test under common law
TORT – professional negligence – conveyancing – omission by solicitor to advise purchaser that granny flat lacked necessary development consent from local council – content of duty of care – identification of risk of harm – whether solicitor failed to take reasonable precautions by omitting to advise client of ramifications of notice from local council that granny flat not habitable – whether factual causation – whether evidentiary onus upon solicitor to establish information could not have been obtained from local council
DAMAGES – contributory negligence – apportionment
EVIDENCE – whether Jones v Dunkel adverse inference should be drawn from failure of first defendant to call former employee as witness

Legislation Cited:
Competition and Consumer Act 2010 (Cth) ss 87CB, 139B, Sch 2 — Australian Consumer Law ss 5D, 18, 20, 21, 22, 236
Civil Liability Act 2002 (NSW) ss 5B, 5D, 5E, 5O, 34

Cases Cited:
Allianz Australia Insurance Ltd v GSF Australia Pty Ltd (2005) 221 CLR 568
Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112
Australian Executor Trustees (SA) Ltd v Kerr [2021] NSWCA 5
Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345
Blatch v Archer (1774) 98 ER 969
Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592
Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304
Campomar v Nike International (2000) 202 CLR 45
Cape Byron Power I Pty Ltd v HSB Engineering Insurance Ltd [2017] NSWSC 1081
Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd [2018] NSWCA 213
Clayton v Bant (2020) 385 ALR 41
Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd [2014] NSWCA 158
Earle v Castlemaine District Hospital [1974] VR 722
Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 39 NSWLR 601
Fink v Fink (1946) 74 CLR 127
Fox v Everingham (1983) 76 FLR 170
Gates v City Mutual Life Assurance Society (1986) 160 CLR 1
Gould v Vaggelas (1985) 157 CLR 215
Henville v Walker (2001) 206 CLR 459
HTW Valuers (Central Qld) v Astonland Pty Ltd (2004) 217 CLR 640
Hyder v McGrath Sales Pty Ltd [2018] NSWCA 223
Ireland v WG Riverview Pty Ltd [2019] NSWCA 307
Johnson v Perez (1988) 166 CLR 351
Jones v Dunkel (1959) 101 CLR 298
Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361
Kumar v Sydney Realty Pty Ltd & Anor [2021] NSWDC 430
Kyriacou v Kogarah Municipal Council (1995) 88 LGERA 110
March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506
Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494
Matar v Jones [2011] NSWCA 304
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357
Morris v Duke-Cohan & Co (1975) 119 S J 826
Morvatjou v Moradkhani [2013] NSWCA 157
Neal v Ambulance Service (NSW) [2008] NSWCA 346
Payne v Parker [1976] 1 NSWLR 191
Provident Capital Ltd v Papa (2013) 84 NSWLR 231
RMS v Grant [2015] NSWCA 138
Russo v Aiello (2003) 215 CLR 643
Sainsbury's Supermarkets Ltd v MasterCard Incorporated [2020] 4 All ER 807
Selig v Wealthsure (2015) 255 CLR 661
Springfield v Duncombe [2017] NSWCA 137
State of NSW v Moss (2000) 54 NSWLR 536
Sykes v Midland Bank Executor and Trustee Co Ltd [1971] 1 QB 113
Tabet v Gett (2010) 240 CLR 537
Todorovic v Waller (1981) 150 CLR 402
Travel Compensation Fund v Tambree (2005) 224 CLR 627
Wallace v Kam (2013) 250 CLR 375
Wyong Shire Council v Shirt (1980) 146 CLR 40

Texts Cited:
J D Heydon, Cross on Evidence (Lexis Nexis, online version)
Jackson & Powell on Professional Liability (8th ed, 2017, Sweet & Maxwell)
S Walmsley, A Abadee, B Zipser & G Sirtes, Professional Liability in Australia (3rd ed, 2016, Lawbook Co)

Category: Principal judgment
Parties: Ms D Kumar (plaintiff)
Sydney Western Realty Pty Ltd (first defendant)
Mr A Singh (second defendant)
Representation:
Counsel:
Mr R O’Neill for the plaintiff
Mr M Klooster for the first defendant
Mr M Hutchings for the second defendant
Solicitors:
Keen Lawyers for the plaintiff
Clyde & Co for the first defendant
Gilchrist Connell for the second defendant

File Number(s): 2020/00062493
Publication restriction: Nil

Judgment

BACKGROUND

On 26 May 2019 the plaintiff purchased a residential property in Toongabbie (the ‘Property’) for the sum of $720,000 as an investment. The property comprised a main house and a granny flat. However, unbeknownst to her at the time that the sale was completed, Council approval had never been obtained for the granny flat.
By this proceeding, commenced on 25 February 2020, the plaintiff sues the first defendant, the vendor’s real estate agent, with the trading name Century 21 Eternity (the ‘Agent’) and the second defendant, the plaintiff’s lawyer (the ‘Lawyer’), in respect to the purchase of the property, in damages. The plaintiff holds the Agent and the Lawyer responsible for loss and damage arising from the order by Blacktown Council requiring the granny flat to be reinstated as a garage. Those rectification works have not yet proceeded.
As against the Agent, the plaintiff pleads three causes of action: misleading or deceptive conduct, unconscionable conduct, and negligence.
As against the Lawyer, the plaintiff pleads an action in professional negligence, in tort. There was no plea of breach of retainer.
The plaintiff does not distinguish the defendants’ respective positions in terms of the loss or damage sustained to her arising from her respective actions against them. In her claim for damages, she identifies, as heads of loss: the diminution in the value of her property, in comparison to the price she paid ($100,000), the cost of rectifying the works to restore it to a garage ($15,675), the fine she paid to Blacktown City Council ($1,500), stamp duty imposed on the price that she paid, which would not have been paid had the property been bought at its true value (ie with an uninhabitable garage) ($14,690) and also a claim for lost rent from December 2020 to the hearing, and into the future.
It is common ground that the search, or searches necessary to ascertain that Council approval was not in place for the habitable use of the garage was, or were, not undertaken. One important question in this case is who was responsible for that position.
Both the Agent and the Lawyer plead a defence of contributory negligence. Both of them say that the plaintiff executed the contract for purchase without legal advice and without making her own inquiry as to the status of the granny flat. Both the Agent and the Lawyer also rely upon proportionate liability, citing each other as a ‘concurrent wrongdoer’ in the respective claims brought against them, for the purpose of reducing any responsibility each defendant has for loss sustained by reason of its misleading or deceptive conduct (in the case of the Agent) or negligence (in the case of the Lawyer).

FACTS

Uncontroversial facts

The following facts were not seriously disputed.
In May 2019, Ms Shaktika Singh (being no relation to the Lawyer, Mr Singh) was the sole director of the Agent. She affirmed an affidavit (22 April 2021). One of the agents within the firm was Mr Robin Dandyan. It appears that in May 2019 Mr Dandyan was approached to sell the Property by the vendor, Ms Lilian Joy Akinyi Owino, as a deceased estate. The agent was informed that the property consisted of a main house and granny flat and that the administrator of the deceased’s estate lived in the granny flat and had rented out the main house for more than $440 a week. Ms Owino believed that the granny flat could be rented out for about $440.
Ms Singh and Mr Dandyan inspected the property and found that the main house was rented out to a woman and that Ms Owino was occupying the granny flat. The Agent appraised the property and estimated that the price was between $700,000 and $740,000. Ms Owino engaged the Agent to sell the property and advised her to consult a solicitor or conveyancer to prepare the sale contract. Mr Dandyan was selected to be the agent for the sale.
On 6 May 2019, the Agent signed an exclusive agency agreement to market and sell the property within a price range of $700,000 to $740,000. On 13 May 2019, the exclusive agency period commenced.
On 14 May 2019, the Agent received a copy of the contract for sale from the vendor’s solicitors, Kerrisons Legal Services, a firm in Camden Park. The version of the contract annexed to Ms Singh’s affidavit contained a Notice from Blacktown City Council (21 August 2013) which incorporated “Advisory Notes”, in Part 7, clause 7.1.4, the statement:

“The garage is not permitted for habitable uses as the slab floor level has insufficient freeboard protection against flooding.”

Ms Singh said, under cross-examination, that she had no ‘practice’ to read contracts. In her affidavit, she said that the contract was given to Mr Dandyan, who was responsible for the sale to place it in the file. Under cross-examination, she said that it was the practice of the responsible sale agent to read the contract (T 133.22).
By 14 May 2019, the Agent received the marketing contract.
The marketing contract contained a number of special conditions and a development consent issued by Blacktown City Council on 21 August 2013, permitting alteration and additions to the main house, which also contained the Council notice from 21 August 2013 which I have referred to. The most relevant one was Special Condition 52, which contained a cross-reference to the Council’s determination.
By 22 May 2019, an advertisement of the property on Real.Estate.com, which Robin Dandyan prepared, advertised the property as being a house (potentially providing rent of $440pw to $460pw) and a granny flat (potentially providing rent of $400pw to $420pw) and the advertisement referred to “this fantastic opportunity for an astute investor to secure a dual income property investment”.
Ms Singh said in cross-examination that it was the Agent’s practice to merely act as a conduit for the vendor. She said she had not made any inquiries about estimated rental, including that which had been paid to the vendor of the subject property (embracing both the house and the granny flat). Thus, in relation to the advertisement, she said that the Agent had no practice to assess – independently of what the vendor client had informed it – of the accuracy of the information contained therein; other than by conducting its own inspection of the Property. Nevertheless, Ms Singh indicated her belief that Mr Dandyan would ‘cross-check’ that information (T 138.18). She added that there was no record in her firm’s file about any note of the results of any such ‘cross-check’. She also said that there was no practice to enquire of the local council the suitability of a property (or part thereof) for approval. Generally, however, she said that after passing on information to a prospective purchaser’s solicitor, she would have expected the purchaser’s solicitor to conduct such due diligence.
On 22 May 2019, and following the plaintiff’s request, Robin Dandyan emailed to the plaintiff a full copy of the contract (including the development consent). A covering email stated a potential rental yield of approximately $850 per week. Ms Kumar said that she had “flipped through” its contents, though she said she did not recall observing the special conditions, the development consent or an architect’s drawing.
On 23 May 2019, the plaintiff inspected the Property with the Agent and her mother. The main house and granny flat were observed as being occupied. The occupant of the granny flat was Ms Owino. At the point when she inspected the granny flat, it was obvious to the plaintiff that it had once been a garage. That day, the plaintiff made an offer of $720,000.
On 25 May 2019 (Saturday), the plaintiff decided to purchase the Property after speaking with the Agent at about 4pm. The vendor accepted the plaintiff’s offer to purchase for the sum of $720,000. She emailed (at 5:16pm) to Ms Caroline Tsau, of the conveyancing firm, Think Conveyancing, the contract she had received from the Agent. This was for the purpose of obtaining advice.
On 26 May 2019 (Sunday), the Agent effectuated the exchange of contracts, with a sale price of $720,000, and a scheduled completion period of four weeks, or Friday, 14 June 2019 (subject to cl 15). In the event, the Lawyer was able to negotiate an extension of the completion date to 1 July 2019. This reflected the circumstance that the plaintiff had not secured unconditional finance as early as she had hoped for. The contract provided a 5 day cooling off period and the plaintiff paid the deposit. By this stage, the development consent was not attached to the version of the contract signed by the vendor. Ms Kumar said that at the date of exchange, she had not heard back from Ms Tsau, nor had chased her for advice.
On 26 May 2019, the Agent introduced the plaintiff to the Lawyer. This occurred by telephone, with the Agent speaking to the Lawyer during which he put the plaintiff on the call. Following this introduction, Ms Kumar said that she looked to the Lawyer to provide legal advice about the contract, or any (legal) problems about the granny flat.
On 27 May 2019, the Agent emailed a full version of the contract (including the development consent) to the Lawyer.
On 27 May 2019, the Lawyer sent a letter to the plaintiff, a costs disclosure and general advice given to purchasers. These are important documents to the Lawyer’s defence. I will return to the content of these documents later in elaboration of the factual narrative.
On 27 May 2019, the Lawyer also corresponded with the vendor’s solicitors (Kerrisons Legal Services). Relevantly, the Lawyer raised, as one requisition, the following:

“9.   Have any renovations or structural improvements been conducted on the property?
(a)   If so, when were the works undertaken and what type of work was done
(b)   Does the vendors hold a building certificate and/or received the approval from relevant bodies such as Council or body corporate?
If recent renovations or structural improvements have been conducted on the property, kindly please forward us a copy of the home warranty insurance”.

The response that was ultimately received form the vendor’s solicitor (on 29 May 2019) was:

“Yes. Refer to contract in relation to building of granny flat. The Vendor understands that the granny flat was constructed by the deceased previous registered proprietor John Steven Linke, as an owner builder. Further details are not known.”

Also on 27 May 2019, the plaintiff obtained a rental appraisal from Ms Jennifer Benny, the property manager at the Agent’s office, who opined that the market rental value for the house and granny flat, combined, would be in the vicinity of approximately $850-880 pw.
On 28 May 2019, the plaintiff engaged the Agent to lease and manage the granny flat and main house.
On the same date, the plaintiff and Lawyer exchanged emails about the cost of organising pest and building inspections.
On 30 May 2019, the plaintiff obtained a pest inspection report and a separate building inspection report from Civil Building and Consultancy Pty Ltd (CBC). As recorded in Counsel for the Agent’s preliminary written submissions, the building inspection report contained the following statements:

“Garage has been converted into a habitable room. Inspector does not know if this has been Council approved” (p 40)
There was, thereafter (being the last page of a 55 page report) the following instruction:
“Where possible records of the appropriate local authority should be checked to determine or confirm:
…..
Whether council has issued a building certificate for the dwelling
Where appropriate, legal advice (eg from a solicitor) should be sought to explain title and ownership matters and to deal with matters concerning easements, covenants, restrictions, zoning certificates and all other law-related matters.”

At 5:50pm on 30 May 2019, the plaintiff sent the Lawyer the building and pest inspection reports. At 6:06pm, the plaintiff sent the Lawyer a follow up email, asking the Lawyer if he required anything further and indicated that she wanted to “discuss the findings of the building and inspection report ASAP please”.
On 31 May 2019, the plaintiff spoke with the Lawyer. The contents of this conversation were disputed.
By 12pm, 4 June 2019, the extended cooling off period expired and the plaintiff became bound to complete the contract.
On 11 June 2019, the Lawyer emailed to the plaintiff information in response to the plaintiff’s request for information (in her email of 8 June 2019) regarding the transfer of the warranty for construction defects in her name for the granny flat. The Lawyer’s response was to indicate the request for requisition (numbered 9) and the vendor’s solicitor’s reply to that requisition and stated that she was buying the property in its present condition.
On 18 June 2019, the plaintiff emailed the Lawyer requesting a copy of the tenancy agreement. On the same day, she was informed that there was no written tenancy agreement and, by separate email, that the current tenants had vacated the premises.
On 25 June 2019, the plaintiff received loan documentation from her financier and effected landlord insurance. The Agent located a tenant for the main house.
On 1 July 2019, the contract for purchase was completed.
On 3 July 2019, tenants to the main house moved in. Tenants to the granny flat moved in on 9 August 2019.
On 27 September 2019, the plaintiff received a letter from Blacktown City Council (dated 12 September 2019) attaching a Development Control Order.
On 5 January 2020, the tenant of the main house vacated. Another tenant moved in until that tenant vacated on or about 4 March 2021.
On 13 January 2020, the plaintiff received a $1,500 fine issued by the State’s revenue authority for development without development consent.
On 8 December 2020, the tenant of the granny flat moved out.
At no stage did the plaintiff obtain a building certificate from Blacktown City Council or otherwise make enquiries of it.

Disputed facts

Most of the factual disputes in the case concern the plaintiff’s claim against the Lawyer.

The plaintiff’s evidence

Ms Kumar swore an affidavit (26 March 2021). She is a product analyst. She was about 25 years of age at the time of the events the subject of this proceeding. Ms Kumar did not profess any prior experience as a property investor, nor was it suggested to her that she had such experience.
She deposed to being interested in a period of two years up to the middle of 2019 in purchasing a property which she could rent out in the short term, for 6 months, before occupying it.
In April 2019, she approached a conveyancing firm in Blacktown (Think Conveyancing) and asked it to represent her when she located a suitable property. In May 2019, she read the advertisement referred to. She was attracted to the idea of a granny flat, as this could generate additional rental income.
After the inspection that occurred on 23 May 2019, Ms Kumar deposed to Ms Dandyan saying to her words to the following effect:

“It will be very easy to find tenants for both the main house and the granny flat as this is a very busy main road within walking distance to Toongabbie train station and is also close to Parramatta. There’s a lot of interest in the property. I’m a close friend of the owner who has just lost her husband and I’m just helping her out.”

At or about the time that she signed the contract for purchase, on 26 May 2019 (Sunday), Ms Kumar deposed to Mr Dandyan asking her whether she had a conveyancer. Ms Kumar informed him that she intended to use Think Conveyancing, from whom she had received a quote and she informed him of the amount of the quote. Ms Kumar deposed to Mr Dandyan suggesting an alternative lawyer, who might charge at a lesser rate and Mr Dandyan making a call on his mobile phone. Ms Kumar heard on Mr Dandyan’s phone that this lawyer was Ajay Singh, and she deposed to hearing Mr Dandyan informing Mr Singh that she was purchasing the property as an investment property. After Mr Singh was put on to her, Ms Kumar deposed to informing him on the call that she was purchasing the property as an investment property and that the agent was helping her to source tenants, for both the main house and the granny flat. They then had an exchange on the amount of the quote that the conveyancer had supplied and the Lawyer provided his own quote. Amongst other things, Ms Kumar deposed to discussion about the Lawyer ensuring that there was a sufficient cooling off period in place to enable her to obtain finance. She also deposed to the Lawyer informing her that the Agent had already sent the contact to her and his telling her that he would ring her on Monday (27 May) after reading through it and getting a proposal form for her to sign.
After the conversation, Ms Kumar recalled paying the deposit, which triggered the commencement of the cooling off period. The contract was exchanged the following day. On its face, the contract specified that it was subject to a tenancy, although that was not specified. Improvements were listed on the front page as including a house, a garage and “other: granny flat”.
In cross-examination, the Plaintiff was asked why she wished to receive legal services from the Lawyer, rather than Think Conveyancing. The Plaintiff said that the Lawyer had referred to his good relationship with the Agent; that he would take care of her; and that he ‘knew’ the property. The plaintiff was challenged on this last part of her evidence, as it had not been a matter specifically identified in her affidavit. The plaintiff justified this omission by indicating that she did not consider it relevant at the time that she prepared her affidavit. When it was suggested to her, in effect, that she was emphasising or exaggerating Mr Singh’s reference to his knowledge of the property in an attempt to make him appear responsible, the plaintiff said that she placed no significance upon that statement (when she made her affidavit). She mentioned that there was also discussion about the cheaper rate that the Lawyer said he could charge; relative to Think Conveyancing.
On 27 May 2019, the Lawyer called her. She deposed to him saying that he had read through the contract and that “Everything looks like it’s standard”, her asking him whether a survey was needed and him informing her that this was not required. She deposed to asking him whether pest and building inspections were needed; and that his response was that it was not required but was “recommended”. She deposed to the Lawyer informing her that he could refer Ms Kumar to someone would could arrange such inspections.
That same day, another person from the Lawyer’s office (Dinusha Perera) sent an email attaching three documents, including a costs disclosure, a general advice and an initial letter.
The plaintiff was cross-examined on all three documents.

The letter of 27 May 2019

The letter from the Lawyer to the plaintiff, dated 27 May 2019 was explanatory of “the Conveyancing process” for purchasers of property like the plaintiff. Amongst other things, it was pointed out that “Post Exchange”, the Lawyer would send any requisitions to the vendor’s solicitors about title. The letter suggested that the plaintiff should also ensure that her finance was in order.
Under the sub-heading “What Happens Next” the following passage appeared:

“We ask that you please confirm if you want us to order the following^[1]:
1. This was written in red colouring, distinguishing it from the colouring of the main part of the content
Survey Report – A Survey Report confirms the boundaries of a property and provides a detailed sketch of the land….
A Building Certificate (not to be confused to a pre-purchase building inspection) – is a certificate issued by the Local Council, who, after attending the property to inspect the physical structures on the land, issues a certificate confirming that all improvements are satisfactory to the Council, or issues a work order (Notice) requiring work to be done to remedy any non-compliant structures.
Please note that the costs associated with obtaining a Survey Report and Building Report are in the vicinity of $1,000. Further, an application for a Building Certificate must be accompanied by an update to date Survey Report, which means purchasers cannot just apply for a Building Certificate only. (emphasis supplied)
Building & Pest inspection report – is also known as pre-purchase building inspection.
Is there an alternative to above report?^[2]
Not really, but you can take out Title Insurance. Title insurance is a specialised type of insurance available to purchasers, and covers a range of issues such as:
Building approval was never issued
Structures modified and no longer comply
……
The downside of Title Insurance is that it doesn’t cover ‘known risks’. For example, if the seller of property discloses in the Contract that there has been illegal building work, then Title Insurance may not cover those works and may only provide limited coverage.
Having said this, we are seeing an increasing number of clients take out Title Insurance as opposed to obtaining Survey Reports and Building Certificates, providing at least some form of coverage should a problem present itself at a later stage.

2. This line was also coloured red

The costs disclosure

As to the costs disclosure, the part of the document comprising the ‘standard costs disclosure’ identified, in a number of dot points, the work that the Lawyer would do for her consisted of carrying out, relevantly:

to take your instructions,
Review contract for the sale of Land
Making the necessary searches and enquiries of the relevant public authorities
…..
Please note the scope of the work covered by our retainer is confined to the conveyance of the property and not unusual additional work, for instance disputes or advice on tax issues. If the work on the matter exceeds the normal reasonable bounds there will be additional charges.

General advice to purchasers

In the document titled “General Advice to Purchasers” the following statements were made:

“We will seek to the transfer of ownership to you and make sure that you get a good title to the property. We will make or recommend all necessary enquiries about the property and generally advise you and look after your interests.” (emphasis supplied)
The following is a brief overview of points of interest. PLEASE READ CAREFULLY AND FEEL FREE TO CONTACT US IF YOU HAVE ANY QUESTION. …
Contract ….
In practice 10 days have passed by the time loan approvals are obtained, pest and building reports completed, contracts issued negotiated and signed and the parties are ready to exchange. During this time either party may change their mind.
…..
Pest and building reports
We will ensure that there are no adverse issues with the title to the property. You need to be sure that you are informed and happy with the condition and state of repair of the buildings.
……
Statutory warranties for residential property
Under the Conveyancing Act and the Home Building Act some protection is afforded to purchasers of residential property in relation to faulty buildings..
The warranty under the Conveyancing Act, amongst other things, provides a warranty that the building work was performed in a proper and workmanlike manner and in accordance with the plans and specifications, that all new materials supplied were good and suitable for the purpose for which they were used and were new and that the construction complied with the law, and the dwelling is reasonably fit for occupation…
Council matters
Zoning certificates are attached to all contracts. These disclose the uses that are permitted without consent, those permitted with consent and those prohibited ..
…
As a major shortcoming of the council certificate required to be attached to all contracts is the lack of information on approvals relating to the construction and use of the property. Not only does the construction of the buildings need approval but their use following construction also needs approval. If, as is usually the case, the vendor does not have a building .. certificate from council, then there is no way of knowing from the contract whether the buildings were built with approval and passed for occupation for their intended use. Inspection of the council file will normally provide the information that is necessary to assess the compliance of the building… (emphasis supplied)
……
Stamp duty
Stamp duty is payable on the transfer of land and is a significant expense when buying a property. By way of an example on a price of $720,000 the duty payable is approximately $27,910.00. However, if you are a first home buyer, there will be savings of $13,200 …
…
First Home – Buyers Assistance Scheme
The First Home Buyers Assistance scheme commenced from 1 July 2017.
The First Home Buyers Assistance scheme provides eligible purchasers with exemptions on transfer duty on new and existing homes valued up to $650,000 and concessions on duty for new and existing homes valued between $650,000 and $800,000.
(emphasis supplied)

Under cross-examination, the plaintiff confirmed that she read these documents, or at least the parts of the documents referred to above, to the best of her ability. When the proposition was put to her that there was nothing complex about the ‘General Advice’ document, the plaintiff answered that its “implications” were “not clear to me”, by which she meant the ramifications of its contents to her particular situation.
Mr Singh’s affidavit account of his informing Ms Kumar, on 27 May 2019, that to get a Building Certificate in order to obtain a fee and that there would likely be a delay in obtaining it was put to the plaintiff, but she disputed his account.
The plaintiff also accepted that after having paid a premium for landlords’ insurance and the earlier pest and building inspection reports, given the purchase price, and the maximum amount that she could obtain for finance to acquire the property, she depended upon her obtaining a concessional benefit under the First Home Owners scheme; and, that, even then, she had only a small sum $2,600 remaining.
Also, on 27 May 2019, Ms Kumar deposed to obtaining a rental appraisal from Mr Dandyan for the two dwellings: the house and the granny flat and was given an appraisal of $850 to $880 per week.
On 28 May 2019, she engaged the Agent to provide exclusive rights to lease and manage the two dwellings.

CBC’s Building inspection and pest inspection reports & discussion with Mr Singh on 30 May

On the same date there was an exchange about organising for the pest and building inspections to be carried out. The Lawyer referred her to CBC for this purpose.
She received both reports on 30 May 2019 (Annexure E to Ms Kumar’s affidavit). The pest report ran to 35 pages. The building inspection report ran to 55 pages. She deposed to asking the Lawyer whether he had read the building and inspection reports. After this, she recalled referring to the building and pest inspection reports and also recalled discussing with the Lawyer whether the purchase price might be negotiated downward to deal with the condition of the windows. She recalled the Lawyer telling her that he had read the reports and there were no major concerns, and, further, that it was too late to negotiate for the variation in the price.
At 5:50pm on 30 May 2019, the plaintiff emailed the Lawyer the reports and asked that she could discuss the reports with him. A follow up email was sent at 6:06pm. Mr Singh later gave evidence that he did not recall receiving these emails. He recalled that a telephone conversation with Ms Kumar had occurred between 4 and 5pm that day.
On 31 May 2019, Ms Kumar deposed to Shontel Singh, of the Lawyer’s office, advising her that the Lawyer had requested from the vendor’s solicitors an extension of the cooling off period, to 5:00pm on 3 June 2019. This was to enable the plaintiff time to obtain unconditional loan approval. At 4:42pm, the Lawyer emailed her indicating that the vendor had agreed to extend the cooling off period to 5:00pm, 3 June 2019. However, it is common ground that the Lawyer procured a further extension of the period to 12:00pm the next day.
Mr Singh’s account of his conversation with the plaintiff was put to her in cross-examination. She denied his account of informing her that the only way to work out the status of the granny flat was to seek a building certificate and that he sought her instructions to request getting a certificate, but she had not provided them. She accepted that, at this point, what was uppermost in her mind was ensuring that she had unconditional loan approval. She maintained that to the extent that she discussed the granny flat with the Lawyer at all, it was limited to discussion of the need to obtain rental income from it and that she wanted to get in a tenant as soon as possible. She also added that she had no discussion with Dinusha Perera, the Lawyer’s assistant, on obtaining a building certificate and the lawful occupation of the granny flat. It was Ms Perera who provided her with information about the concessional benefits on stamp duty for first home buyers.
On 3 June 2019, Ms Kumar spoke to Mr Tariq Sherzai, author of the pest and building inspection reports, but only essentially about the condition of the window sills.
On 4 June 2019, she paid the balance of the (5%) deposit to the Agent. The plaintiff accepted that by this time, she was aware of the architectural drawings and content of the development consent from August 2013; although she disputed having discussed them with her Lawyer. She said she did not understand what the drawings represented and had no real understanding of the content of the contract for sale, more generally, other than the covering page. By 12:00pm, the cooling off period had expired.
The next day, she received unconditional loan approval from her financier. She also received from the Lawyer’s office the ‘First Home Buyer concession Application and Purchaser Declaration’.
On 8 June 2019, the plaintiff sent an email to the Lawyer requesting the warranty for the construction defect to transfer to her name for the granny flat (and certificate of completion).
Ms Kumar deposed to reading (on 11 June 2019) the Lawyers’ requests for requisitions that had been made on 27 May 2019, including requisition 9, and the vendor’s solicitor’s response; whose respective terms I have indicated elsewhere and the content of the reply by the vendor’s solicitor. Ms Kumar deposed to no further explanation being supplied to her about the granny flat and that she was not made aware at that time of the implications of the vendor’s solicitor’s response. She complains that, as at 11 June, the Lawyer did not point out to her any issues concerning the granny flat and that she was not advised by him that she needed to make inquiries of Blacktown City Council nor that the garage was not approved as a granny flat.
It was put to Ms Kumar, but she disputed, that she had understood, when reading the requisition and reply by this date, that no building certificate had been obtained. She said that she interpreted the correspondence she had received on that date as signalling no cause for alarm. She accepted that when she informed the Office of the Legal Services Commissioner that she read this documentation on 8 July 2019, that date was erroneous.

Expert opinion evidence

The plaintiff adduced (without objection by Mr Singh) expert opinion evidence from Mr Roger Harkin, being a report dated 24 August 2020. Mr Harkin is a solicitor who practises in the Sydney CBD and has been a practitioner since he was admitted in 1986. He has been an accredited specialist in Property Law since 1997. He has substantial experience with in the ‘Property’ section of a range of law firms. His expertise was not challenged.
In his report, Mr Harkin noted that one of his instructions was that although Special Condition 52 referred to the document, neither the development approval (‘DA’) nor the plans were received by the Lawyer on 27 May 2019. That instruction was wrong: as will be indicated, Mr Singh’s affidavit evidence indicates that he did receive the DA.
At any rate, Mr Harkin opined that reasonable practice would have seen the Lawyer requesting a copy of the DA and the plans to ensure that the plaintiff was aware of their contents and was satisfied about them before the end of the cooling off period. Reasonably competent practice would have also been that the Lawyer would point out to the client any provisions in the contract which s/he should be aware adversely affecting the use of the property and to explain to the client that she should satisfy herself as to the contents of the contract before the end of the cooling off period. Reasonably competent practice would have seen the Lawyer advise the plaintiff of cl 7.1.4 of the DA.
Mr Harkin also noted that the front page of the contract noted the crossing of the box, that the purchase was subject to existing tenancies. He opined that reasonably competent practice would have seen the Lawyer ask for copies of the tenancy agreements.
Mr Harkin considered the requisition number 9 and the replies by the vendor’s solicitor. Mr Harkin opined that reasonably competent practice would have required the solicitor, before the end of the cooling off period, to relay its content to the client and have prompted the Lawyer to have another look at the contract for what it said about the ‘granny flat’ and instructions sought from the client prior to the expiry of the cooling off period.
Mr Harkin said that in circumstances where the improvement had been relatively recent and in the light of the reply from the vendor’s solicitor to requisition 9, common practice would have seen the Lawyer alert the client to that fact and to warn her that she may be purchasing a property which did not meet the requirements of Council’s approval. (emphasis supplied)
In summary, Mr Harkin considered that it would have been common practice for the Lawyer to have advised the plaintiff, prior to the end of the cooling off period, about the provisions of the contract regarding the DA and the plans, as referred to in the report, and the risk that she was taking if she proceeded with the purchase.
Mr Harkin was not required to attend for cross-examination.

The Lawyer’s evidence

Mr Ajay Singh is the principal of Redline Legal Pty Ltd, the Lawyer. He affirmed an affidavit of 24 May 2021. Mr Singh was admitted as a solicitor on 14 December 2014. He has practised predominantly in family law, civil law and property transactions. He founded Redline Legal Pty Ltd in 2017. Up to the middle of 2019, he mainly practised in property and conveyancing matters.

27 May 2019 conversation – the introduction

Mr Singh disputed several parts of the plaintiff’s account of her conversation with him on 27 May 2019 in the latter’s affidavit. He disputed the (implicit) suggestion that he was trying to undercut the price offered by Think Conveyancing. His recollection was that the plaintiff was only looking for a conveyancer and he had indicated to the plaintiff that his firm could supply that service. After she had informed him that she had already signed a contract, Mr Singh quoted fees of $900 plus any disbursements, such as building and pest inspections plus any compulsory searches, water rates, or council rates.

Mr Singh did not, however, dispute that he became introduced to the plaintiff through the Agent. He deposed in his affidavit that, during his first conversation with the plaintiff, the Agent (Robin Dandyan) said that the Agent had secured a 5 day cooling off period but that the plaintiff’s lawyer could always ask for an extension. He indicated that the firm’s clients had often been provided with the Lawyer’s contact details.
In this initial (telephone) conversation with the plaintiff, Mr Singh said that he asked her to email the contract under the apprehension that it had not yet been executed, so he could ‘go through it’ before she paid the deposit; but the plaintiff had said that she had already signed it.
Mr Singh deposed that he received the email from the Agent enclosing the contract on 27 May 2019. He disputed saying to the plaintiff that he had read the contract and that everything appeared as if it was standard. But he accepted, in cross-examination, that, consistently with his usual practice when acting for a purchaser, he read the contract. He said in his evidence that his practice was to look “at everything”. He also said that if he discovered something unusual, he would write to the client, give advice and provide options. His practice was such that he would do this before he corresponded with the vendor’s solicitor (T 143-144).
In his affidavit, Mr Singh attached an email from Robin Dandyan on 27 May 2019 (11:01) which email featured two attachments. The first was the contract. The contract incorporated, as a Special Condition (cl 52) two attachments, being a Notice of Determination of a Development Application of Blacktown City Council dated 21 August 2013 and Council approved plans.
One of the attachments to Mr Dandyan’s email was the Notice of Determination of Blacktown City Council of 21 August 2013 which, to repeat, contained the following statement:

“7.1.4 The garage is not permitted for habitable uses as the slab floor level has insufficient freeboard protection against flooding.”

He said that he read the Notice of Determination (and clause 7.1.4) on 27 May.

Mr Singh’s account of his explaining the contract – 27 May 2019

Mr Singh deposed that in a telephone conversation with the plaintiff which he says occurred on 27 May 2019, he informed her that “we” had gone through the contract, identified certain other matters (a missing sewer location diagram, the absence of an easement and a missing survey report) and also had some discussion about a survey. Then, more materially, Mr Singh deposed to the following discussion:

“Me:   There is a clause in the Contract that states that you are buying the property in its current state of repair. We strongly suggest that you obtain a Building and Pest report. Look, Dinusha will email you our costs disclosure today, and letter of advice which explains the conveyancing process. Please go through that letter and general advice and let us know what you want to do. It explains the Survey, Pest and Building Report
Plaintiff:   Thank you Ajay, I will go through the email, but I can only respond to your email tonight
Me:   Please, if you can because we only have 5 days cooling off period, so we need to act fast. I need your instructions in writing please.
Plaintiff:    I will email you tonight.”

Mr Singh accepted under cross-examination that there was no reference in his affidavit to any indication supplied by him, on 27 May 2019, about cl 7.1.4 and what it might mean, but he maintained that he did in fact discuss this with the plaintiff on that date. He also said that he spoke to the plaintiff about the content of the letter he was proposing to send to the vendor’s solicitor.
He was referred to a ‘file note/progress’ (Exhibit 2D2), a document which appeared to summarise all conversations that Mr Singh had with the plaintiff in connection with the conveyancing matter. In answer to a question from myself, Mr Singh agreed with the proposition that the Court could infer that matters that were material for the protection of the plaintiff’s interests which were the subject of communications between himself and the plaintiff would be expected to be referred to in this document (T 165.50). He said, more than once, that in it, he would record “important things”.
This file note is of sufficient general significance to warrant being set out:

FILE NOTE/PROGRESS
CLIENT NAME:    Dilasha Veshnavi KUMAR
ADDRESS:      …….
RE:   RE: KUMAR purchase from Owino as Administrator of the Estate of the Late John Steven Linke
PROPERTY: 75 Cornelia Road, TOONGABBIE NSW 2146 – Folio 4/1146635

Date

Description

Staff

27/5/19

Spoke to client-explained the Contract.

• Explained no easement

• Sewer diagram and missing location diagram

• Explained amendments seeking from O/S

• Explained the metal fence b/w the boundary

• Need for Building and pest inspection report

• Informed her to contact the consultant directly to explain the reports and payment terms

• Survey report is not included and we can make enquiries – client does not want us to do that.

• Explained that buying property in its current state. Needs to be satisfied with the condition now.

AS

27/5/19

Letter to O/S with request for amendments

AS

31/5/19

Spoke to client. She wants extension-cooling off period

AS

3/6/19

Spoke to client – reminded of exchange date and explained the process.

DP

11/6/19

Spoke to client regarding Granny flat. Explained the buying in its present status.

AS

24/6/19

Spoke to client – ok to release deposit

DP

26/6/19

Spoke to client about early access and insurance

AS

28/6/19

Spoke to client and discussed the funds required at settlement – as per settlement stat

AS

1/7/19

Spoke to client -raised issue regarding the condition of the house

AS

1/7/19

Order on agent sent

AS

Mr Singh asserted that the entry made in this document for 27 May 2019 encapsulated a reference to his speaking to the plaintiff about an issue with the garage, and what he was proposing to correspond with the vendor’s solicitor about it. Without wishing to interrupt the narrative, I interpolate here, that it is by no means obvious to me that this file note contains any reference to a discussion with the plaintiff on 27 May 2019 about the status of the garage, or a discussion about what, if any requisition might be made of the vendor’s solicitor about the status of the garage/granny flat.
Mr Singh was challenged as to whether he had summarised in writing to the plaintiff the content of his conversation with her that date. Mr Singh initially referred to the documentation comprising the costs disclosure, the general advice given to purchasers and ‘initial advice’ but ultimately accepted that, in none of those specific documents, was there reference to the content of his conversation with the plaintiff on 27 May.

The requisition to and reply from the vendor’s solicitor

Mr Singh deposed that on the same day, 27 May 2019, he sent off the requisition to the vendor’s solicitor. In doing so, he made no express reference to the content of cl 7.1.4 in the Notice of Determination (nor enclosed a copy of it); nor did he seek any amendment to the special condition 52. The reply was sent on 29 May 2019 and invited Mr Singh to read the contract. I asked Mr Singh whether he did so. Mr Singh said that he did read the contract, but indicated that this was only before the vendor’s solicitor made the suggestion ventured.
After 27 May 2019, Mr Singh arranged for both building and pest inspections. He says he saw the building inspection report on 30 May 2019, albeit that he had only glanced through it and spoke with the plaintiff about its contents between about 4 and 5pm on 30 May.

Discussion with the plaintiff about the Building and pest inspection reports

In his affidavit, Mr Singh deposed to the content of a conversation with the plaintiff on 30 May 2019. This was on the subject of the building and pest inspection report that had been obtained. He had accepted part of the plaintiff’s account of that conversation that occurred on 30 May. Mr Singh deposed to recommending to the plaintiff that she speak to Tariq (Sherzai) directly regarding both the reports as he would be the best person to explain. He deposed to the conversation continuing in the following terms:

“Plaintiff:   Oh really. Will he tell me everything?
Me:      Of course, yes, that’s what you engaged him for
Plaintiff:    Did you go through it?
Me:   Yes and notice that he has also has mentioned the conversion of the garage into the Granny flat and the council approval. You need to talk to him and discuss everything and I am happy to answer any questions you may have.
Plaintiff:    Thank you Ajay. I have Tariq’s number, I will call and discuss with him.”

Mr Singh accepted that this part of the conversation was not recorded in any file note.
Under cross-examination, Mr Singh was referred to the part of Mr Sherzai’s building report relating to the “Garage/Carport”, where the author of the report had stated:

“The garage has been converted into a habitable room. The inspector does not know if this has been Council approved.”

Mr Singh said that he understood Mr Sherzai to have indicated that he was not in a position to say whether the granny flat had been approved or not. Mr Singh accepted that he did not discuss with the plaintiff the implications of Mr Sherzai’s statement with the plaintiff on 30 May 2019.

Mr Singh’s account of a telephone conversation with the plaintiff on 31 May 2019

Mr Singh then deposed to his recollections of what was said in a telephone conversation with the plaintiff on 31 May 2019. He deposed to calling her on his mobile phone and having a conversation in the following terms:

“Me:   Dilasha, do you still want to proceed in absence of this approval of granny flat.
Plaintiff:   What option do I have?
Me:   The only way to find out if the Garage is to be approved to be converted to a granny flat is to order a building certificate and survey report. We have explained this in our initial letter to you.
Plaintiff:    Yes, I know. No, it’s okay it doesn’t matter don’t worry about those reports. I want an extension of the cooling off period so I can speak to Tariq regarding the building and pest inspection
Me:       Are you sure?
Plaintiff:   Yes, Ajay, thank you.”

Counsel for the plaintiff challenged the content of this conversation in its entirety, but Mr Singh adhered to it. He accepted that on this version of a conversation that day, no reference had been made to the conversation on the afternoon of 30 May; nor any inquiry by him of the plaintiff as to whether she had learned anything more about the garage, and its status, from Mr Sherzai.
Mr Singh accepted that its content was not the subject of any confirmatory written advice or communication with the plaintiff. His explanation for not confirming the exchange in writing was that he had received a verbal authority from her. He also accepted that in the general note (Exhibit 2D2), there was no additional record of the plaintiff’s instruction recorded.
Mr Singh deposed to preparing a typed note of that verbal authority, which he said was prepared on his computer ‘Notepad’. He explained that the note recorded only part of the conversation that he said he had with the plaintiff. The file note stated:

“File Note – 31/5/2019
Spoke to client – she does not want to order Building certificate and Survey report. Advised her that this is the only way to find out if the Garage was approved to be converted to Granny flat. She advised not to order those. It is okay it doesn’t matter. She wants extension of cooling off period so she can speak to Tariq regarding Building and Pest inspection
Ajaya”

Counsel for the plaintiff put it to Mr Singh that the note was not created on 31 May 2021, but only later. Mr Singh denied this proposition. Over the objection of Counsel for the plaintiff, leave was granted to Mr Singh to adduce evidence of a prior consistent statement, made by Mr Singh’s solicitor, on 15 September 2020 that he had created a note of a conversation with the plaintiff on that date^[3].
3. Leave was granted to Mr Singh to rely upon only part of Mr Haslam’s email on the issue of the creation of the file note, on terms that the evidence be limited only to his credit. Reasons for the ruling were published on the same date as the publication of these reasons and appear on Caselaw in Kumar v Sydney Realty Pty Ltd & Anor [2021] NSWDC 430 (31 August 2021).
It was suggested to Mr Singh that in lieu of suggesting that the plaintiff obtain a Building Report, he could have attended the Council to inspect its file in relation to the matter. Mr Singh explained that, to his understanding, even if he had done so, he would have been asked to apply for a certificate.
At 1:55pm on 31 May 2019, the plaintiff sent an email to Mr Singh. The main point of the email was to ask him to check with the vendor’s solicitor if the vendor had accepted her request for an extension of the cooling off period. More materially, however, the plaintiff indicated that “Re the building & pest report – I will liaise directly with the builder.”
Mr Singh disputed the plaintiff’s assertion that it was not until 11 June 2019 (when the Lawyer alluded to the vendor’s solicitor’s reply to requisition 9) that any explanation was given to her about the granny flat, and/or that at no stage did the Lawyer point out any issues or advise to her that the granny flat may not have been approved.
The notification of the requisition and reply from the vendor’s solicitor was made, by email, by the plaintiff. Mr Singh accepted that he spoke to the plaintiff before the email went out. There was no reference in that email to any earlier advice given to the plaintiff on the subject of the status of the garage/granny flat. When it was suggested that he did not speak to the plaintiff about the granny flat on 11 June, Mr Singh responded that he did. He accepted, however, that this was not referred to in his affidavit.
Mr Singh relied upon his accounts of telephone conversations on 27 and 30 May 2019, referred to above. (Curiously, in his affidavit, he did not also refer to his account of his conversation with the plaintiff on 31 May 2019).

CONSIDERATION OF THE PLAINTIFF’s CASE AGAINST THE AGENT

Case against the Agent

As indicated, by her pleading, the plaintiff brings three actions against the Agent: misleading or deceptive conduct, unconscionable conduct and negligence.
As to the two statutory actions, the plaintiff’s complaint is substantially the same: the Agent became aware from 14 May 2019, when it received the Notice of Determination of a DA from the vendor’s solicitors, that the granny flat was not permitted for habitable use. With that knowledge, it was misleading and unconscionable for it to continue to represent the garage area as a granny flat and, further, to continue to represent:

The purported granny flat had a potential rental return of $400 – 420 per week; and

It would be very easy to find tenants for the main house and the granny flat.

As to the action in negligence, the plaintiff alleges that the Agent was under a duty of care in making representations to her as to the capacity of the said garage area to be used as a granny flat and as to its rental capacity. She says that the risk of harm that she would suffer loss in the event that the granny flat was not approved as habitable was foreseeable (in the sense of being actually or constructively known) to it.
If not expressly pleaded in so many words, it is clear that the plaintiff alleges that the Agent did not take reasonable precautions to avoid the risk of harm by failing to advise her that the granny flat/garage was not habitable. As I read her pleading, it appeared that part of the case on the negligence action is that the Agent failed to advise her appropriately in the light of its knowledge of the content of the Notice of Determination.
In his closing submissions, Counsel for the plaintiff accepted that no matter how the action was framed, his client’s complaint, in substance, was that representations made in the advertisement were unqualified, when they should have been qualified as to avoid the risk of the plaintiff being misled or deceived.
Counsel for the plaintiff further accepted in closing oral argument, that the Court could proceed on the basis that the result of the claim of misleading or deceptive conduct would also be dispositive of the actions of unconscionable conduct and negligence (and, to the extent that it is different from the action in negligence, negligent misstatement)[4] . By her pleading of her complaint about unconscionable conduct, no reference was made to any general equitable doctrine of ‘unconscionable conduct’ or any or all of ss 20, 21 or 22 of the Australian Consumer Law (‘ACL’) and no particulars were, so far as was made known to the Court, furnished by the plaintiff as to what made the Agent’s conduct ‘unconscionable’. Further, in her closing written submissions, the plaintiff made no reference to a statutory action for unconscionable conduct. It is appropriate, in the circumstances, to treat that particular statutory action as being abandoned. I will therefore proceed to deal first with the action for misleading or deceptive conduct.
4. See Clayton v Bant (2020) 385 ALR 41; [2020] HCA 44 at [34] on the similarity between the action for statutory misleading or deceptive conduct and negligent misstatement.
No point is taken that the Agent’s conduct was not “in trade or commerce”.
Whether conduct is misleading or deceptive is to be determined by deciding whether the conduct, when viewed in all of the circumstances, could be characterised as misleading or deceptive. This is a question of fact, determined objectively. Thus, there is no fault element in proof of an action for misleading conduct. Further, and what makes the action even more attractive to a claimant in comparison to an action in negligence based upon a misrepresentation (or omission to disclose information), there is no requirement to prove any duty of care, nor the foreseeability of outcome[5] . Because of the objective nature of the inquiry, when characterising the advertisement, the question is not how the plaintiff interpreted it, but how a reasonable person in her position would have interpreted it; and, further, it matters not what the Agent’s state of mind was when engaging in the conduct.
5. Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 (“Miller”) per French CJ and Kiefel J at [5]; Selig v Wealthsure (2015) 255 CLR 661 at [20]
As I construe the plaintiff’s case, the Agent represented, or more accurately, opined, that the granny flat had rent potential between $400 to $420 per week that the purchase of the property as providing a fantastic opportunity for an investor to secure a dual income property investment. In substance, the Property, comprising both a house and a granny flat was promoted and marketed as providing a revenue stream, individually, from the house and, separately, the granny flat.
This, it was said, was misleading because of a combination of circumstances. Mr Dandyan was aware that a prospective purchaser interested in acquiring the property for investment purposes would be attracted to the advertisement and be induced to think that if the property was purchased, a dual income stream would be earned. But consistent with Ms Singh’s description of the usual practice of the agency to read contracts supplied by a vendor before passing them on to a prospective purchaser, Mr Dandyan probably read the contract and, probably also read cl 7.1.4 of the Council’s Notice of Determination. Although not himself a lawyer, as a real estate agent, having seen the reference, he would have understood that the provision cast doubt, at least at the date of the Council’s determination (24 August 2013) that the garage area could legally be used for any habitable purpose, let alone rented out to provide the owner with a potential income stream. With that knowledge, to avoid the plaintiff being misled, it was incumbent upon Mr Dandyan to indicate, in effect, that the Agent had information in its possession to suggest that there was doubt about the legality of the use of the granny flat for the purpose that the plaintiff desired and, that being so, she should obtain legal advice on the point.

Insofar as the plaintiff complains about a misrepresentation in the advertisement, it would be erroneous to simply commence inquiry with the representation itself. As the Court of Appeal determined in Ireland v WG Riverview Pty Ltd [2019] NSWCA 307 at [74], following a survey of relevant authorities, such as Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 and Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304, s 18 of the ACL requires consideration of the whole of the circumstances, including amongst other things, the nature of the parties, the character of the transaction and the contents of the document said to contain the misrepresentation. In Ireland, the Court of Appeal also drew a distinction, when the focus is upon the content of a documentary representation, between a statement of fact and a statement of opinion, or belief. In the latter case, it is usually understood that expressions of belief or opinion are not misleading or deceptive in the absence of reasonable grounds for the opinion.
As to the nature of the parties, the plaintiff, then aged in her mid-20s, was, as I have said, an intelligent and articulate woman; with strong analytical skills and also a confidence in her ability to make decisions. However, as a matter of fact, she had no prior experience of purchasing property generally, or, specifically, for investment purposes and she did not represent this to the Agent. There is nothing to suggest that the Agent had a contrary view of her absence of prior experience. The Agent was experienced in forming market appraisals about rental streams from properties in the Toongabbie area. This included not only market appraisals of a house, but also a property comprising a home and a granny flat.
The character of the transaction was the prospective sale of a residential property for investment purposes. The advertisement was not ‘pitched’ towards owner-occupiers, but rather to an ‘astute investor’, ie a particular subset of purchaser. The content of the advertisement was not addressed solely to any particular individual. That being so, it is appropriate to identify some criteria of a representative member of the class to whom the advertisement was directed^[6]. In my view, relevant criteria would include not only the practical certainty that the prospective purchaser would obtain legal advice about the contract, but also the likelihood that the hypothetical purchaser either had the benefit of financial advice or was sufficiently knowledgeable in financial matters to make their own decisions without it, about the prudence of making the investment. I consider that the Agent could reasonably consider that a reader of the advertisement, in those circumstances, would read the advertisement in its entirety, and rely upon it when deciding whether to make the form of the investment. I do not, however, consider that the plaintiff could reasonably have formed a view that the Agent was equipped to provide advice about the legality of the use of the granny flat, or the suitability of the property to meet the plaintiff’s financial circumstances; nor that the Agent could reasonably understand that an interested and prospective purchaser would expect the Agent to supply any such advice. On the plaintiff’s account, what I regard as the parties’ mutual expectations, were confirmed when she indicated to the Agent that she was proposing to speak to Think Conveyancing.
6. Campomar v Nike International (2000) 202 CLR 45 at [102]
As to the contents of the advertisement, the two matters to which I have referred are the marketing of an investment opportunity to secure a dual income property and the rent potential, specifically, for each of the main house and the granny flat. Both statements are, in my view, expressions of opinion about the prospects of purchasers obtaining a revenue stream; and not a statement of fact.
Much of what I have indicated, so far, points against the plaintiff. However, unusual or unexpected circumstances may arise in the course of a transaction which gives rise to an expectation of disclosure of a qualifying fact affecting a representation, lest someone be misled, in the sense explained by French CJ and Kiefel J in Miller at [23]:

“When a document contains a statement that is true, non-disclosure of an important qualifying fact will be misleading or deceptive if the recipient would be misled, absent such disclosure, into believing that the statement was complete. In some cases it might not be necessary to invoke non-disclosure at all where a statement which is literally true, but incomplete in some material respect, conveys a false representation that it is complete.”

Two matters present difficulty for the Agent. The first difficulty was the absence of an express disclaimer in the advertisement. In this regard, it was beside the point that, Ms Singh, the Agent, subjectively considered that her firm was a mere conduit for the vendor. It is one thing to suggest, as Counsel for the Agent argued, that a person in Ms Kumar’s position would expect that the vendor was the source of information. However, what was attractive to Ms Kumar was the estimate of rental in the advertisement, for both the main house and the granny flat. That was an opinion from an agent who expressly or implicitly professed the expertise to supply an opinion. The position is distinguishable from one of the authorities cited by the Agent, being Hyder v McGrath Sales Pty Ltd [2018] NSWCA 223, where what was misleading was a representation of fact (the availability of parking) and there was a disclaimer.
In conveying an opinion, the Agent was deploying its own expertise, doubtless informed by facts supplied by the vendor, but nevertheless remaining the Agent’s opinion. Although Ms Singh said that the vendor was the source of information, in my view, part of the opinion would also have been based upon the Agent’s understanding of rental returns for comparable properties within the Toongabbie area. Ms Singh herself deposed in her affidavit that it was not just what the vendor had told her and Mr Dandyan, that informed the rental appraisal, but their own viewing of the Property as well. In any event, nothing was done by the Agent to expressly convey to someone like the plaintiff that the Agent was merely passing on the vendor’s opinion. I consider that cases like Butcher, Hyder and Ireland v WG Interview, and what they say about the significance of disclaimers, are distinguishable from the circumstances of the present case.
I find that it is probable that Mr Dandyan read the contract and was aware of what was said about the use of the garage. I rely, in this regard, partly upon Ms Singh’s evidence about the practice of the sales agents in her firm to read the contracts supplied by the vendor (or the vendor’s solicitor) (T 133.19 – 133.21), even if there was no documentary record of his reading it (T 138.47). She also said that she expected that Mr Dandyan would have cross-checked the accuracy of the information (T 138.18). No evidence was elicited from Ms Singh in re-examination to suggest any circumstance she was aware of which might suggest that Mr Dandyan did not read the contract or cross-check the information imparted by the vendor. The Notice of the Council’s determination was a prominent part of the contract (being the subject of a special condition) and, from the point of view of the accuracy of the advertisement, what was most pertinent was what that determination had to say about the prohibited use of one of the two buildings which the advertisement represented could be exploited to obtain rental.
Though Ms Singh said Mr Dandyan was no longer employed by the Agent, no suggestion was advanced by the Agent that he was not available to give evidence, to disclaim having actually read it, or cross-checked information to assist with the rental appraisal or to suggest that what he read was limited. When weighing Ms Singh’s evidence of the practice of real estate agents within her firm to read contracts, the Court is entitled to take into account the Agent’s capacity to call him. If the Agent’s position was that Mr Dandyan read the contract, but not that particular part of it, the Agent was the party best able to adduce evidence of that position^[7]. It could not be expected that the plaintiff could have called him: she had no basis for knowing what he had read other than Mr Dandyan informing her of what he read. Ms Kumar was not asked about what Mr Dandyan had said to her on the topic of which parts of the contract Mr Dandyan had read by Counsel for the Agent. This reasoning is, in my view, consistent with the rule in Blatch v Archer^[8].
7. Russo v Aiello (2003) 215 CLR 643 per Gleeson CJ at [10]-[11], cited by Heydon J in his concurrence in Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345 at [258]
8. (1774) 98 ER 969
But a further way of looking at the matter is whether I can go further and draw the Jones v Dunkel^[9] inference that the Agent’s unexplained failure to call Mr Dandyan would not have assisted the Agent’s case. The Agent submitted that no such inference could be drawn whilst the plaintiff submitted that it should.
9. (1959) 101 CLR 298
In Payne v Parker [1976] 1 NSWLR 191, Glass JA (at 201-2) identified three conditions for the operation of the principle: (1) the missing witness would be expected to be called by one party rather than the other; (2) the witness’ evidence would have elucidated a particular matter; and (3) the witness’ absence is unexplained.
I am comfortably satisfied that the second and third conditions to the operation of the principle are satisfied. Mr Dandyan’s evidence would be expected to elucidate whether he read the contract and what part of it he read and whose content was appreciated by him; and his absence was unexplained. In the latter regard, the only evidence relevant was the statement in Ms Singh’s affidavit (affirmed on 22 April 2021), just short of two years after the material events in question, that Mr Dandyan was “no longer working for us”. That may be a statement of Mr Dandyan’s employment status, but it is not an explanation for his absence.
The real question is whether it would be expected that Mr Dandyan would be called by the Agent, rather than by Ms Kumar. As Glass JA elaborated in Payne v Parker, there are different ways of framing the question (citations omitted):

“..where it would be natural for one party to produce the witness … the witness would be expected to be available to one party rather than the other ..where the circumstances excuse one party from calling the witness, but require the other party to call (him) .. or where he might be regarded as in the camp of one party, so as to make it unrealistic for the other party to call him .. or where the witness’ knowledge may be regarded as the knowledge of one party rather than the other .. or where (his) absence should be regarded as adverse to the case of one party rather than the other ..”

Counsel for the Agent drew the Court’s attention to two authorities which indicated that just because a witness was a former employee of an employer (the latter being a party in litigation) did not, of itself, mean that the former employee was in the camp of the employer^[10]. (emphasis supplied) However, much depends on the circumstances. This includes, for example, where the absent witness stands in the structure or confidence of the employer and the passage of time between the event which the witness could have given evidence about and the exit of the witness from employment. More significantly, as was noted by both Glass JA in Payne v Parker and Gleeson JA in Doppstadt, with reference to the observations of Lush J in Earle v Castlemaine District Hospital [1974] VR 722 (“Earle”) at 734, is whether the knowledge of the absent witness is of the kind which an employee (present or former) would be unlikely to disclose to the opposing party: in this case, Ms Kumar.
10. Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd [2014] NSWCA 158 (“Doppstadt”) per Gleeson JA (Ward JA and Emmett JA agreeing) at [86]-[89]; Cape Byron Power I Pty Ltd v HSB Engineering Insurance Ltd [2017] NSWSC 1081 per Parker J at [58]
There was little inquiry of where Mr Dandyan stood in the Agent’s structure, but the period between the event and his exited departure (taking Ms Singh’s vague indication as the latest reference point – ie 22 April 2021) was not very significant. I consider that what is most material is the point raised by Lush J in Earle.
It could hardly be supposed that the information about whether Mr Dandyan read the contract and what parts of it he read and appreciated would likely be disclosed to Ms Kumar. To the contrary, I find that it would be highly unlikely that it would be disclosed to her. It would be unlikely since in the context of the potential application of the ACL, Mr Dandyan’s conduct was conduct engaged in on his personal behalf, but was also engaged by him on behalf of his employer. To the extent that he made a representation, or expressed an opinion, he did so on behalf of his employer and his employer would be jointly and severally liable with him for that conduct if it was found to be misleading^[11]. In other words, Mr Dandyan and the Agent had a common interest in the evidence. The question whether he had a reasonable basis for his opinion turned upon whether he had read information which might put his expression of opinion into question. It would hardly be supposed that he would answer any potential inquiry of Ms Kumar since in doing so, he could not only expose himself to personal liability; but also potentially, his (then) employer.
11. Competition and Consumer Act 2010 (Cth), s 139B
The plaintiff’s pleading (paragraph 31) clearly conveyed that an issue in this case was the Agent’s ‘awareness’ of the content of the Notice of Determination by Blacktown City Council. By its defence, the Agent admitted that it had received the Notice. That admission, however, did not amount to an admission of the Agent’s ‘awareness’ of its content. Aside from indicating that the practice in her firm was for agents to read contracts provided to them by the vendor’s solicitor, Ms Singh said that she had not read the contract. The only person, therefore who could meaningfully address the allegation that the Agent was aware of the contents of the contract was Mr Dandyan. In my view, in order to fully traverse the plaintiff’s allegation that the Agent was aware, the Agent, and its lawyers, would very likely have had sought out Mr Dandyan. Any information he gave to the Agent’s lawyers would have been privileged. The privilege would have been common to himself and the Agent^[12].
12. Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 39 NSWLR 601 at 608; also J D Heydon, Cross on Evidence (Lexis Nexis, online version) at [25265]
In the circumstances, I find that virtually all of the descriptions given by Glass JA to this material condition are satisfied. It was to be expected that Mr Dandyan would be called by the Agent rather than by Ms Kumar.
I infer that the uncalled evidence on whether Mr Dandyan read the contract and, more particularly, whether he read the contract, seen special condition 52 and would likely have observed the Notice of Determination and cl 7.1.4, would not have assisted the Agent’s case. Alternatively, I draw greater confidence from Ms Singh’s evidence about the reasonable practices of agents within her firm to read contracts, in inferring that Mr Dandyan read it, appreciated the import of the Council notice, given that he was in a position to cast light on whether that inference should be drawn^[13].
13. Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361 at [63]
I do not consider that the significance of an attached Notice of Determination from a local council would have been insignificant to a real estate agent, even if the agent was not a lawyer. As already indicated, the suggestion that one of the two buildings the subject of the opinion about rental might be subject to a prohibition upon use struck at the heart of the extent of the investment opportunity generally promoted in the advertisement; and the specific estimate for rental on the granny flat in particular.
That being so, in the way that the plaintiff ultimately put her case, it was not a complaint that the Agent did not provide legal advice, information or opinion. It was simply a complaint that it might have been expected that someone in Mr Dandyan’s position would, with his awareness that the plaintiff had seen the advertisement, and was apparently attracted to buying it on the faith of the opinion as to a dual income stream, and with his additional awareness of an issue about the use of the granny flat, should have qualified the opinion about the rental potential of the granny flat by saying that it depended upon the circumstance that the granny flat was legally habitable; a matter about which the plaintiff should seek legal advice about. Until that was ascertained, there was no reasonable basis for the unqualified expression of opinion about the rental income to be derived from the granny flat or the holding out that a prospective purchaser like the plaintiff might, upon purchase, acquire a ‘dual income’ stream.
This obligation was not relieved by the circumstance that Mr Dandyan and Ms Singh inspected the granny flat and saw that it was occupied by the vendor herself. The vendor had, apparently, a plain interest in the sale of the property and, unless pressed to do so, had no incentive to make such inquiry herself. Further, contrary to a submission advanced for the Agent, this was not a case of some sort of equivalence in information (or lack thereof) between the Agent and the prospective purchaser. Mr Dandyan had the information and it was the Agent who conveyed an unqualified opinion.
In my view, by failing to qualify the opinion in the advertisement in his communications with the plaintiff, Mr Dandyan, and the Agent, had no reasonable basis for expressing it in the unqualified way that it did. In this way the Agent engaged in misleading or deceptive conduct.
As indicated, it is not necessary to separately consider whether the Agent engaged in unconscionable conduct or was liable under the general law of negligence (or negligent misstatement).

Causation

Mr Klooster, Counsel for the Agent, submitted that the test of causation for an action for damages for misleading or deceptive conduct did not substantially differ from the statutory test for causation for an action for negligence under s 5D of the Civil Liability Act 2002 (NSW) (‘CL Act’). He also conceded that if, contrary to his primary submissions and as I have found, that the Agent engaged in misleading or deceptive conduct, ‘factual causation’ was made out[14] .
14. Evidence of what the plaintiff would have done if the qualification to the opinion was pointed out to her is admissible on this statutory count, even if it is inadmissible in common law by reason of s 5D(3)(b) of the CL Act: Australian Executor Trustees (SA) Ltd v Kerr [2021] NSWCA 5 per Gleeson JA (Leeming JA and Emmett AJA agreeing) at [290]. But it is well accepted that an inference of reliance may be drawn, without direct evidence from the claimant, having regard to the nature of the misleading or deceptive conduct: Gould v Vaggelas (1985) 157 CLR 215 at 236
Mr Klooster contended, however that, to the extent that the causation test for the contravention of s 18 of the ACL carries a ‘scope of liability’ or, to use a synonym, ‘legal’ test for causation, the plaintiff has not discharged it. This is because of the circumstance that both the Agent and the plaintiff mutually contemplated that the latter would receive legal advice and the Agent was entitled to expect that whoever that lawyer was would, in the exercise of reasonable care and skill, have ascertained the legal status of the granny flat in connection with whether habitable use was permissible. If the Lawyer did not exercise that care (a subject I will return to at length), then such voluntary, deliberate and unreasonable conduct served as a ‘break in the chain’ of causal connection between the Agent’s own misleading conduct and loss sustained by the client. If the Lawyer did exercise care, then the risk would have been identified to the client with the prospect that she would have had an informed opportunity to take steps to ascertain the position and determine that she was prepared to take the risk of relying upon occupation of an illegal structure to generate rental income.

CAUSATION

The test for causation for this claim for damages for professional negligence is in s 5D of the CL Act. As Counsel for Mr Singh emphasised, Ms Kumar bears the onus of proof on “any fact relevant to the issue of causation” (s 5E).
On the issue of factual causation, the critical question is a counterfactual: what would Ms Kumar have done if she had received the advice that she should have received, prior to becoming committed to the contract after the expiration of the cooling off period on 4 June 2019 – a past hypothetical. In terms of requirement of proof, Kiefel J (as her Honour then was; Hayne, Crennan and Bell JJ agreeing) said in Tabet v Gett (2010) 240 CLR 537 at [111] that:

“All that is necessary is that, according to the course of common experience, the more probable inference appearing from the evidence is that a defendant’s negligence caused the injury or harm. “More probable” means no more than that, upon the balance of probabilities, such an inference might reasonably be considered to have some greater degree of likelihood; it does not require certainty.”

In RMS v Grant [2015] NSWCA 138, Emmett JA (McColl JA agreeing, Basten JA not deciding) said at [180], said that:

“… the evidence should be such that it is more probable that it exists than it does not. A fact cannot be regarded as established unless its existence is at least a reasonable inference from some matter provided in evidence. It is not sufficient that there be some ground for conjecturing that the fact exists. There must be evidence affording ground for treating it as existing as a matter of inference, and not of conjecture. The existence of a fact may be inferred from other facts, when those facts make it reasonably probable that it exists. However, if they go no further than to show that it is possible that the fact may exist, the existence of the fact does not go beyond mere conjecture. If there is no piece of evidence that, taken at its highest, is more than equally consistent with the existence and with the non-existence of a fact, then it cannot be treated as established.”

By reason of s 5D(3)(b), Ms Kumar was prohibited from giving evidence on the question. In such circumstances, a court can only infer what a claimant would likely have done. In Neal v Ambulance Service (NSW) [2008] NSWCA 346, Basten JA (Tobias JA and Handley AJA agreeing) said at [40], that the Court could have regard to:

the plaintiff’s conduct at or about the relevant time;

evidence of the plaintiff as to how she might have felt about particular matters;

evidence of others in a position to assess the conduct of the plaintiff and his or her apparent feelings or motivations; and

other matters which might have influenced the plaintiff.

Counsel for Mr Singh submitted that the Court should find that the plaintiff was ‘hell-bent’ upon proceeding with the purchase; that she had been searching for an investment property for two years and had already been making inquiries of financiers and that she settled, in effect, upon this particular property. For Ms Kumar, it was an opportunity too good to pass up.
I reject that submission. Ms Kumar gave evidence in her affidavit as to her thoughts and attitudes towards this property. She deposed (paragraph 6) that what attracted her to the Property was the presence of not one, but two buildings, on the property. She was not challenged on that account, at least directly, by Counsel for either defendant. She thought it a ‘wonderful idea’ that the granny flat would generate extra income. She also deposed (paragraph 9) that her offer of the purchase price was tied to the expectation of the rental income she expected to receive from both the house and the granny flat. She was not challenged on that aspect of her evidence either. As I have found, she conveyed to Mr Singh that the purpose of the acquisition was an investment.
Cross-examination of Ms Kumar indicated that her finances were tight. Her interest was in obtaining a positively geared investment. There was no indication as how she could accomplish that for this property if the granny unit was not habitable. It became a requirement for her to obtain unconditional loan approval to demonstrate tenancy agreements of both the house and the granny flat.
But for the rental stream from occupancy of a habitable granny flat, the evidence suggests that she could not have obtained financial accommodation for the purchase price of $720,000 she was willing to pay for both buildings on the property. That would leave her with the alternative possibility of acquiring the property with only the main house and an added exposure of having to rectify an illegal building on a property where only the main house was fit for single use.
Ms Kumar said that she had been looking for an investment property for 2 years. Without the capacity to rely upon the habitable use and occupation of the granny flat, there was no suggestion by either of the defendants that the main house itself, without an habitable second building (and an added exposure to liability to rectify the granny flat) was so appealing that, had the plaintiff been advised of the true situation regarding the lawful use of the building, she would nonetheless have proceeded to become bound to acquire the property. There was no exploration when she was cross-examined, on the premise that only the main house could yield rental income, about how this property was so much more superior than any other property she had considered in the previous two years to indicate why she would be ‘hell-bent’ on going ahead with the purchase.
As an alternative submission, Counsel for Mr Singh argued that it was essential for the plaintiff to prove that there would have been enough time, within the period for completion, to have inquired of the Council what the true position with the status of the granny flat was; and, absent proof of that, she could not establish factual causation.
Counsel’s submission struck me as too literal a statement of the statutory test for causation. Section 5E speaks of the ‘persuasive’ onus of proof^[24]. It does not eliminate the possibility that an evidentiary onus may fall upon the defendant, in certain circumstances^[25]. Mr Singh did not depose in his affidavit that he anticipated any time constraint upon obtaining a building certificate from 27 May 2019 to 3 June 2019. There had been no pleaded allegation, as there probably should have been, to avoid surprise in the plaintiff, that at all times up to 3 June 2019, it would have been no use for Mr Singh to have made enquiry if that was what the duty required of him following the supply of proper advice.
24. Springfield v Duncombe [2017] NSWCA 137 per Adamson J at [69] (Basten JA and Emmett JA agreeing)
25. Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd [2018] NSWCA 213 per McColl AP (Macfarlan JA agreeing) at [289]
In any event, it takes the second defendant down a cul-de-sac. It might have supplied an answer where the breach was a failure to inquire of Council. But the breach of duty, as I have determined it to be, was the failure to advise. A reasonable solicitor in Mr Singh’s position, knowing, from 27 May 2019 that there was an issue with the granny flat, if he considered that there was an insufficiency in time to investigate the issue with Council, would have warned the plaintiff of that circumstance. As I have indicated, it was no part of Mr Singh’s case, and certainly not the subject of evidence from him, that he did not have enough time to ascertain the position from Council. There was nothing in any of the documents he provided to Ms Kumar on 27 May 2019 to indicate any shortness of time, in the circumstances in which Ms Kumar came to him, in receiving information from Blacktown City Council, should that have enabled him to properly advise her. He did not say, on 31 May 2019 or any later time, that without the information from Blacktown City Council, Ms Kumar was at risk of loss if she proceeded to bind herself to a contract where the lawful use of the property was confined to one, but not two of the buildings referred to in the contract.
There is also an element of artificiality. Mr Singh’s case was effectively that he assumed that she knew about the problem, or expected that she knew about it. If, as occurred, the plaintiff shut off the inquiry as of 31 May 2019, that was, as I have said, the result of his own negligence in properly advising her before and up to that instruction.
Factual causation is, accordingly made out against Mr Singh. That being so, it is unnecessary to consider s 5D(2).
Mr Hutchings, Counsel for Mr Singh, did not submit that if factual causation was established, then there would be any reason why the scope of liability element of the causation test would not also be established. In this regard, and as is usually, if not necessarily universally, the case, the scope of liability is co-extensive with the scope of the duty of care^[26]. For reasons previously indicated, in my consideration of the content of the duty, I am satisfied that this element of causation is also established.
26. Wallace v Kam (2013) 250 CLR 375 at [22]-[26]

DAMAGES

I referred in the Introduction to these reasons to the heads of loss claimed. The primary purpose of damages in tort is to place the client in the position that she would have been had the tort had not occurred^[27]. I accept (and Counsel for the plaintiff did not dispute) that a qualification to this is that the plaintiff must give credit to the defendant for benefits which might offset loss. In this case, this is the rent which the plaintiff received from the occupation of the granny flat. This has been shown to be (in net terms) $25,598.86.
27. Todorovic v Waller (1981) 150 CLR 402 (at 412) per Gibbs CJ and Wilson J; Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 at (11-12) per Mason J, Wilson J and Dawson J; Johnson v Perez (1988) 166 CLR 351 (at 355) per Mason CJ; Sainsbury's Supermarkets Ltd & Ors v MasterCard Incorporated [2020] 4 All ER 807 at [194]
I accept, as a general principle, that the primary measure of damages, where as a result of a solicitor’s negligence, property purchased is less valuable than was assumed by the client at the date of purchase, is the difference between the purchase price paid by the client and the real value of the property as at the date of purchase, in which subsequent events known to the court can be utilised to indicate the real value of property: see HTW Valuers (Central Qld) v Astonland Pty Ltd (2004) 217 CLR 640 at [36]; and also consequential loss.

Loss of value

In a valuation report prepared by the valuer firm Independent Property Valuations, following an inspection conducted on 17 March 2020, the main house was valued (on the basis of vacant possession, and on the assumption that the granny house was reconverted to a single garage with an adjacent storage area) as at 17 May 2019 in the sum of $620,000. This was to establish the main head of damage, representing the difference between the value of the property and the purchase price. This head of loss is $100,000. There was no valuation evidence to the contrary adduced by the defendants. I accept the evidence from the plaintiff’s valuer quantifying the loss of value of $100,000.
However, as the defendants suggest, against this loss the defendants should receive credit for the rental received during the period of occupation of the granny flat after the notice. Counsel for the second defendant quantified the sum as $25,598.86 and the plaintiff’s Counsel did not demur from that calculation. The loss under this head is $74,401.14.

Rectification works

The plaintiff relied upon a quote from Mr Khan, a licensed builder trading under the name Wishful Constructions and Maintenance, which I admitted (Exhibit F) over the objection of the second defendant. Mr Khan quoted a sum of $15,675 (incl of GST) to reinstate the granny flat into a garage conforming with the Council’s requirements.
Counsel for the second defendant, without (directly) cavilling with my ruling admitting the quote, attacked the weight of this evidence in multiple ways: there was no evidence tendered to indicate the information communicated to Mr Khan; the plaintiff gave evidence that she did not have in her possession the drawings that he relied upon; a call that Counsel for the second defendants made for architectural drawings relied upon by Mr Khan elicited a ‘nil’ response; and it was not apparent on the face of the quote whether Mr Khan inspected the property for himself. It would be ‘unfair’ to the defendants to make an award on this basis in the circumstances.
It accords with general principle to work from the basis that where a plaintiff can establish loss, but struggles to prove the extent of it, the Court should do the best that it can^[28]. Here the plaintiff has been furnished proof of a quote which has now lapsed and which is far from perfect in terms of proof.
28. Fink v Fink (1946) 74 CLR 127 at 143; State of NSW v Moss (2000) 54 NSWLR 536 at [72]
Nevertheless, as was implicit in my decision to admit Mr Khan’s quote, I reject the suggestion of unfairness raised by the second defendant (and apparently adopted by the first defendant). Mr Khan’s quote was served last year. The defendants had the opportunity, if they were inclined to do so, to put on evidence to meet it.
On its face, the quote refers to architectural drawings and Counsel for the second defendant made a call on the plaintiff to produce it during the trial and elicited a ‘nil’ response. That was hardly surprising in the circumstances in which the call was made. The call was made two years after the quote. Ms Kumar gave evidence at trial that she did not keep certain documents. There is no indication on the face of the quote whether Ms Kumar, or her solicitor, engaged Mr Khan to provide the quote. No compelling inference arises from the plaintiff’s response to the call that the documents were not produced.
If the defendants were serious about refuting its content, and having regard to their generally combative approach to most issues in this litigation, I expect that the requirement for production could have been made much earlier than it was. If the second defendant was serious about a complaint of ‘unfairness’, it would have been required to explain, by ordinary proof, why it did not respond to it when it had the opportunity to respond; rather than relying upon assertions made by its Counsel from the (nominal^[29]) Bar Table.
29. The entire hearing was conducted by audio-visual link.
It does not materially matter whether Mr Khan physically attended to inspect the property or relied upon drawings. Having regard to certain parts of the quote, where he refers, amongst other things, to the “IXL bathroom”, the kitchen splash back tiles, I am inclined to think that he would have observed these matters through personal inspection.
This being so, I accept the evidence. Allowance is made for $15,675 (incl GST).

Stamp duty

The plaintiff relied upon printouts emanating from the Office of State Revenue (Exhibit C) indicating that savings would have accrued, in relation to stamp duty, had the property been valued at the sum of $620,000, rather than the purchase price paid, of $720,000, being $14,690.
The defendants argue that these calculations are premised upon the plaintiff being eligible for the concessional benefit and the evidence at trial falsified that premise: she did not have a period of residency of not less than 6 months within the first 12 months from purchase. I accept that submission.
The submission does not, actually, work in the defendants’ favour; relative to what the plaintiff actually claimed for this head of loss. Having regard to the unchallenged evidence of value, the comparison is between the stamp duty that Ms Kumar paid on a purchase price ($720,000) without the concessional benefit ($27,990), and the stamp duty that she would have paid on the real value of property (being $620,000) at the date of purchase, again without any concessional benefit, which was shown to be nil.
The loss in paying additional stamp duty is therefore $27,990.

Council fine

The plaintiff was subjected to a $1,500 fine from the Blacktown City Council. The defendants accept this as a legitimate head of loss.

Loss of rent

Claims are also made for lost rent. The first is past rent. The second is for future rent. In both instances, the plaintiff adopts a rental figure of $390 per week. As to the claim for past rent, the plaintiff’s claim is for the period 8 December 2020 to 31 July 2021 (a period of 32 weeks), yielding a sum of $12,480.
At the level of principle, the defendants contend that the plaintiff would not be entitled to this head of loss, in addition to her claims for loss of value and rectification works, as that would put her in a position where she would receive a windfall, contrary to the compensatory principle for recovery of damages in tort (and for statutory misleading conduct).
I agree with the defendants’ submission. The plaintiff’s case is that had she been properly informed (by the Lawyer) and not misled (by the Agent) she would not have made this investment: a ‘no transaction’ case. She should not be compensated on the basis of her disappointed expectation, as to what she might have earned from rent, but for the loss to her stemming from her reliance upon the negligent conduct of the Lawyer and misleading or deceptive conduct of the Agent. It is generally the case, where the action for damages is based upon statutory misleading or deceptive conduct, relief is available on the tortious measure (of loss) rather than contractual measure (designed to protect an ‘expectation interest’), even if there is no hard and fast rule^[30]. At any rate, no persuasive argument was made as to why damages would be permissible on an expectation basis here. No allowance is made for this head of loss.
30. Gates v City Mutual Life Assurance Society (1986) 160 CLR 1; Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494
This leaves the plaintiff, by my calculations, subject to any deduction for contributory negligence, with damages for the provisional sum of $119,566.14. If my calculations are wrong, the parties have the opportunity to set out what they contend are the correct ones when short minutes are supplied after publication of these reasons.

CONTRIBUTORY NEGLIGENCE

Counsel for the second defendant submitted that the plaintiff failed to act reasonably to protect her interests by executing a contract before seeking legal advice, with a short period for completion and with only a five day cooling off period. He also submitted that she failed to protect her interests when, on 3 June 2019, she instructed Mr Singh not to apply for an extension of the cooling off period. The latter submission developed the matters referred to in the second defendant’s defence, which simply contained a cross-reference to the documents that were sent to the plaintiff on 27 May 2019 and the content of the conversation with Mr Singh on 31 May 2019.
I have already explained why the documentation of 27 May 2019 and the conversation which Mr Singh had with Ms Kumar on 31 May 2019 did not adequately fulfil Mr Singh’s advisory obligation towards her. That being so, I reject the proposition that any lack of responsiveness on the part of the plaintiff in reply to those communications represented a falling short of the standard of care expected of someone in her position. There is simply no evidence to suggest that with any greater time than that which was available, the content of Mr Singh’s advice to the plaintiff would have been any different to what it actually was.
This still, however, leaves the second defendant’s point about the plaintiff not having obtained legal advice before she signed the contract.
Counsel for the first defendant adopted the second defendant’s submissions. But the first defendant added in its pleading, that the plaintiff was negligent in failing to rescind when she knew, or ought to have known, that it was not habitable when she executed the contract. It was not established that the plaintiff actually knew of cl 7.1.4 in the notice when she executed the contract and Counsel for the first defendant did not explore in any developed way with Ms Kumar when she gave evidence circumstances which suggested that she should have discerned the point. Nevertheless, as I indicated when considering the plaintiff’s case on liability, the plaintiff did execute a contract in circumstances where the Agent was reasonably entitled to think that she would obtain legal advice.

Thus the main point for considering contributory negligence is to consider the significance of her not obtaining legal advice before executing the contract.
Counsel for the plaintiff did not defend his client’s conduct of failing to seek legal advice before executing the contract, in terms of the question of whether she did not look after her interests. His retort was simply that the particulars of contributory negligence which the defendants cited in their arguments had no causative effect.
I accept that a purchaser contemplating the purchase of a property for investment purposes would reasonably be expected to obtain legal advice before executing it. This applies as much as to the plaintiff’s reaction to the advertisement (which affects the first defendant) as it does to her conduct in proceeding with the contract after it was entered until she became bound (which affects the second defendant). The plaintiff’s failure to do so represented a falling short of the standard of care which a person in her position would have taken.
However, at the level of culpability, the plaintiff’s default does not take the second defendant very far. As I have said, there was no suggestion that Mr Singh ran out of time, as it were, to identify a problem and provide appropriate advice to Ms Kumar to respond to it. Mr Singh was, or should have been, on to the problem from 27 May 2019. He did not adduce evidence to indicate that a reasonably competent lawyer in his position would have regarded his predicament as unduly onerous. Any suggestion that he did not have much time is an expedient rationalisation after the event.
Further, in effect, because of the cooling off period, Mr Singh was in a similar position to a lawyer who was advising the plaintiff prior to her entering the transaction, since at the time that she obtained services from him, she still had the capacity to opt out: she was not bound to proceed with the transaction. In other words, her own lack of reasonable care was not very consequential.
In relation to the Agent’s culpability, as I have found, it is likely that Mr Dandyan knew about the clause and therefore the existence of a problem regarding the unqualified nature of the opinions in the advertisement. It was culpable for him, and the Agent more generally, to express an unqualified opinion than for the plaintiff to rely substantially upon it and proceed to execute the contract on the faith of it. Although neither Mr Dandyan nor the plaintiff were lawyers, I find that his experience with property transactions was far more extensive than hers and, further, that the issue about the use of a building would have registered more significantly to him than to her.
I consider it appropriate to reduce damages because of contributory negligence by 15%. This means that the plaintiff’s damages will, on my calculations, be $101,631.22.

APPORTIONMENT

There is no doubt that, given that the plaintiff claims damages for economic loss, her claims against both defendants are ‘apportionable’^[31].
31. s 34(1) of the CL Act; s 87CB of the Competition and Consumer Act 2010 (Cth)
Counsel for Mr Singh argues that the Agent’s role in generating loss was significant because it was its advertisement that contained the opinion about rental which induced the plaintiff to sign the contract.
Counsel for the Agent argues that the real cause of the plaintiff’s loss was the lack of proper legal advice that she received. It was not up to the Agent to provide it. He submitted that even within the relatively brief period from 22 May to 4 June 2019, the plaintiff’s dealings with Mr Singh were more extensive than her brief dealings with Mr Dandyan.
I agree. The problem in this case, as between Mr Singh and the Agent, boiled down to who was responsible for helping Ms Kumar to identify and appreciate the risk apparent on the face of the contract. This was overwhelmingly, Mr Singh’s responsibility. The agent’s responsibility was in inducing the plaintiff, albeit rashly, to proceed with the purchase; but because of the cooling off period, a reasonable solicitor had the opportunity to dispel the misleading effect of the opinion contained within the advertisement.
Notwithstanding the wording of s 87CB of the Competition and Consumer Act 2010 (Cth), arguably proportionate liability would not be available for the Agent to the extent that the claim for damages under s 236 of the ACL was for economic loss caused by conduct in contravention of any or all of ss 20, 21 or 22 of the ACL^[32]. However, as I indicated earlier, the plaintiff ultimately abandoned an action of unconscionable conduct.
32. Selig v Wealthsure (2015) 255 CLR 661
I apportion responsibility to the first defendant at 25% and the second defendant at the level of 75%, respectively.

ORDERS

In summary, I have:

found the first defendant and second defendant liable, respectively, for misleading or deceptive conduct and negligence;

assessed damages for the sum of $101,631.22 after taking into account contributory fault or contributory negligence; and

apportioned responsibility of the first defendant at 25% and the second defendant at 75%.

I order the plaintiff to bring in short minutes of order to reflect these reasons within 7 days. In that period, the plaintiff should consult with the defendants about appropriate orders to dispose of the proceeding (including, but not limited to costs).
In addition to the dispositive orders, it would be appropriate to direct the Judicial Registrar of the Court to refer these reasons to the Office of State Revenue.
Should there be disagreement about those orders, within that stipulated period, the parties should supply short submissions (not exceeding 3 pages, excluding any material attachments) to my Associate, by email and orders will be determined on the papers.

**********

Endnotes

Decision last updated: 31 August 2021

Medium Neutral Citation:	Kumar v Sydney Western Realty Pty Ltd & Anor (No. 2) [2021] NSWDC 446
Hearing dates:	2 – 5 August 2021
Date of orders:	31 August 2021
Decision date:	31 August 2021
Jurisdiction:	Civil
Before:	Abadee DCJ
Decision:	See paragraphs 265 – 268
Catchwords:	TRADE AND COMMERCE – misleading or deceptive conduct – advertisement by vendor’s agent for sale of residential property – advertisement refers to expected dual income stream from two buildings on property acquired under contract for sale, one of those buildings being a granny flat – doubt about the legality of use of building as a granny flat – whether the agent was aware of such doubt – whether opinion on rental misleading or deceptive for absence of qualification – whether vendor’s agent acted as a mere conduit – whether test for causation on statutory action the same as the test under common law TORT – professional negligence – conveyancing – omission by solicitor to advise purchaser that granny flat lacked necessary development consent from local council – content of duty of care – identification of risk of harm – whether solicitor failed to take reasonable precautions by omitting to advise client of ramifications of notice from local council that granny flat not habitable – whether factual causation – whether evidentiary onus upon solicitor to establish information could not have been obtained from local council DAMAGES – contributory negligence – apportionment EVIDENCE – whether Jones v Dunkel adverse inference should be drawn from failure of first defendant to call former employee as witness
Legislation Cited:	Competition and Consumer Act 2010 (Cth) ss 87CB, 139B, Sch 2 — Australian Consumer Law ss 5D, 18, 20, 21, 22, 236 Civil Liability Act 2002 (NSW) ss 5B, 5D, 5E, 5O, 34
Cases Cited:	Allianz Australia Insurance Ltd v GSF Australia Pty Ltd (2005) 221 CLR 568 Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112 Australian Executor Trustees (SA) Ltd v Kerr [2021] NSWCA 5 Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345 Blatch v Archer (1774) 98 ER 969 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 Campomar v Nike International (2000) 202 CLR 45 Cape Byron Power I Pty Ltd v HSB Engineering Insurance Ltd [2017] NSWSC 1081 Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd [2018] NSWCA 213 Clayton v Bant (2020) 385 ALR 41 Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd [2014] NSWCA 158 Earle v Castlemaine District Hospital [1974] VR 722 Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 39 NSWLR 601 Fink v Fink (1946) 74 CLR 127 Fox v Everingham (1983) 76 FLR 170 Gates v City Mutual Life Assurance Society (1986) 160 CLR 1 Gould v Vaggelas (1985) 157 CLR 215 Henville v Walker (2001) 206 CLR 459 HTW Valuers (Central Qld) v Astonland Pty Ltd (2004) 217 CLR 640 Hyder v McGrath Sales Pty Ltd [2018] NSWCA 223 Ireland v WG Riverview Pty Ltd [2019] NSWCA 307 Johnson v Perez (1988) 166 CLR 351 Jones v Dunkel (1959) 101 CLR 298 Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361 Kumar v Sydney Realty Pty Ltd & Anor [2021] NSWDC 430 Kyriacou v Kogarah Municipal Council (1995) 88 LGERA 110 March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506 Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 Matar v Jones [2011] NSWCA 304 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 Morris v Duke-Cohan & Co (1975) 119 S J 826 Morvatjou v Moradkhani [2013] NSWCA 157 Neal v Ambulance Service (NSW) [2008] NSWCA 346 Payne v Parker [1976] 1 NSWLR 191 Provident Capital Ltd v Papa (2013) 84 NSWLR 231 RMS v Grant [2015] NSWCA 138 Russo v Aiello (2003) 215 CLR 643 Sainsbury's Supermarkets Ltd v MasterCard Incorporated [2020] 4 All ER 807 Selig v Wealthsure (2015) 255 CLR 661 Springfield v Duncombe [2017] NSWCA 137 State of NSW v Moss (2000) 54 NSWLR 536 Sykes v Midland Bank Executor and Trustee Co Ltd [1971] 1 QB 113 Tabet v Gett (2010) 240 CLR 537 Todorovic v Waller (1981) 150 CLR 402 Travel Compensation Fund v Tambree (2005) 224 CLR 627 Wallace v Kam (2013) 250 CLR 375 Wyong Shire Council v Shirt (1980) 146 CLR 40
Texts Cited:	J D Heydon, Cross on Evidence (Lexis Nexis, online version) Jackson & Powell on Professional Liability (8th ed, 2017, Sweet & Maxwell) S Walmsley, A Abadee, B Zipser & G Sirtes, Professional Liability in Australia (3rd ed, 2016, Lawbook Co)
Category:	Principal judgment
Parties:	Ms D Kumar (plaintiff) Sydney Western Realty Pty Ltd (first defendant) Mr A Singh (second defendant)
Representation:	Counsel: Mr R O’Neill for the plaintiff Mr M Klooster for the first defendant Mr M Hutchings for the second defendant Solicitors: Keen Lawyers for the plaintiff Clyde & Co for the first defendant Gilchrist Connell for the second defendant
File Number(s):	2020/00062493
Publication restriction:	Nil

Date	Description	Staff
27/5/19	Spoke to client-explained the Contract. • Explained no easement • Sewer diagram and missing location diagram • Explained amendments seeking from O/S • Explained the metal fence b/w the boundary • Need for Building and pest inspection report • Informed her to contact the consultant directly to explain the reports and payment terms • Survey report is not included and we can make enquiries – client does not want us to do that. • Explained that buying property in its current state. Needs to be satisfied with the condition now.	AS
27/5/19	Letter to O/S with request for amendments	AS
31/5/19	Spoke to client. She wants extension-cooling off period	AS
3/6/19	Spoke to client – reminded of exchange date and explained the process.	DP
11/6/19	Spoke to client regarding Granny flat. Explained the buying in its present status.	AS
24/6/19	Spoke to client – ok to release deposit	DP
26/6/19	Spoke to client about early access and insurance	AS
28/6/19	Spoke to client and discussed the funds required at settlement – as per settlement stat	AS
1/7/19	Spoke to client -raised issue regarding the condition of the house	AS
1/7/19	Order on agent sent	AS