Ling v G & J Everett Family P/L - [2008] SADC 2

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
LING & ANOR v G & J EVERETT FAMILY P/L & ANOR
[2008] SADC 2
Judgment of His Honour Judge Clayton
18 January 2008
DAMAGES - PARTICULAR AWARDS OF GENERAL DAMAGES
ASSESSMENT OF DAMAGES
Plaintiffs contracted with first defendant for the supply and installation of a kitchen for a price of $183,953. Second defendant, a director and representative of first defendant, represented carcasses would be of marine ply and other components would be solid oak. Payment of $183,953 required to be made in advance. When delivered the carcasses and other components were found to be MDF. Plaintiffs rescinded contract. Judgment in default of appearance pursuant to Rule 234.
Declaration that contract rescinded.
Default judgment against first defendant for $183,953.
Default judgment against second defendant for damages to be assessed.
Damages assessed at $183,953.
Supreme Court & District Court Civil Rules 2006 r 229 & 234; Trade Practices Act 1974 Part V; Misrepresentation Act 1972 s 7; District Court Act 1991 s 39, referred to.

LING & ANOR v G & J EVERETT FAMILY P/L & ANOR
[2008] SADC 2

Mr and Mrs Ling contracted with G & J Everett Family Pty Ltd (trading as Clive Christian Australia) to have a kitchen installed in their home in the Adelaide Hills.
Clive Christian Furniture is a business based in England with showrooms in cities including London, New York, Paris, Beverly Hills and Moscow. It describes its products as “luxury hand-made furniture” which is made from “speciality timbers”, “using the finest natural materials from managed resources”.
The second defendant, Joanne Everett was a director of G & J Everett Family Pty Ltd and acted on behalf of the company in connection with the contract which is the subject of this action. The plaintiffs allege that she made representations upon which they relied when they placed an order for a Clive Christian kitchen for a cost of $183,953.
The alleged representations were that components would be made from solid oak and the carcasses would be constructed of marine ply finished with a birch veneer.
The plaintiffs were required to pay one half of the purchase price at the time they placed their order and the balance on completion of the manufacture of the furniture. On 22 August 2005 the plaintiffs transferred an amount of $91,977 to the first defendant and the remaining $91,975 was paid within a few days of the plaintiffs’ receipt of an email dated 19 January 2006.
With the exception of a marble bench top, the components for the assembly of the kitchen were delivered to the plaintiffs’ house in the middle of June 2006. When he examined some of the material Mr Ling discovered that components were not made from solid oak but from Medium Density Fibreboard. In addition, carcasses had been made from Medium Density Fibreboard rather than marine ply and the edges on glass were not bevelled.
Mr Ling raised the matter with Mrs Everett. She emailed Clive Christian in the United Kingdom on 15 June 2006. In the following weeks there were communications between the parties but the plaintiffs were unable to receive satisfaction and on 9 August 2006, by a letter from their solicitors, the plaintiffs rescinded the contract and demanded a refund of the sum of $183,953.
The rescission was not accepted by G & J Everett Family Pty Ltd, which has neither refunded the money paid to it nor collected the components. With the exception of the marble bench top, which was never supplied, the components for the kitchen remain in the possession of the plaintiffs.
The remedies sought by the plaintiffs in these proceedings are:
(a)A declaration that the plaintiffs have rescinded the contact and an order for repayment of the sum of $183,953;
(b)In the alternative an order pursuant to section 87 (2) of the Trade Practices Act declaring the contract be void and directing the company to refund the sum of $183,953 to the plaintiffs;
(c)In the alternative an order pursuant to subsection 36 (4) of the Act for the return or repayment of the whole of the sum of $183,953 paid by the plaintiffs to the company;
(d)Damages against both defendants for misrepresentation and misleading and deceptive conduct including damages for vexation and delay including damages pursuant to section 7 of the Misrepresentation Act 1972 and section 82 (1) of the Trade Practices Act 1974;
(e)Damages against both defendants for breach of contract;
(f)Interest;
(g)Costs.
The trial was listed for hearing on 14 January 2008. The defendants did not attend but on 11 January 2008 had lodged by facsimile with the District Court Registry an application seeking to have the hearing adjourned. I dismissed that application on 14 January 2008 for reasons which were delivered at the time. The plaintiff then proceeded in default of the defendants’ attendance at the trial.
Rule 234 of the Supreme and District Court Civil Rules 2006 provides that if, when an action is called for trial, the plaintiff attends but the defendant does not and the plaintiff would have been entitled to judgment if the defendant had failed to file a defence, the court may enter judgment for the plaintiff in default of the defendants’ attendance.
As against the first defendant the plaintiff seeks a declaration that the contract was rescinded and judgment for the sum of $183,953. That is a liquidated claim. By reason of rule 229 (1)(a), the plaintiff would have been entitled to judgment if the defendant had failed to file a defence. Accordingly, the court may now enter judgment for the plaintiff in default of the defendants’ attendance pursuant to rule 234.
So far as the second defendant is concerned the plaintiff would, if the defendant had not filed the defence, have been entitled to enter judgment in default of a defence against the second defendant for an amount to be assessed by reason of rule 229 (1)(b).
I indicated to counsel for the plaintiff that I would be prepared to enter a default judgment against the first defendant, make the declaration which was requested and enter judgment in default of a defence against the second defendant for an amount to be assessed.
The plaintiffs then proceeded with the assessment of damages. Evidence was given by Mr Ling.
The claim against the second defendant relies upon part V of the Trade Practices Act1974 and section 7 of the Misrepresentation Act 1972. Because judgment has been entered by default it is unnecessary for me to identify the precise factual basis for the liability of the second defendant.
Counsel submitted that Mrs Everett made false representations, the plaintiff relied on those representations in placing their order for the kitchen and by reason of the rescission of the contract the plaintiffs are out of pocket to the extent that they had made payments to G & J Everett Family Pty Ltd. Counsel further submitted that the plaintiffs have received no value for their payments to G & J Everett Family Pty Ltd and the payments represent the amount of their loss.
Section 82 of the Trade Practices Act1974 provides that a person who suffers loss or damage by conduct of another person that was done in contravention of part V, may recover the amount of the loss or damage against any person involved in the contravention. Section 75B provides that a reference to a person involved in a contravention of part V shall be read as a reference to a person who:
(a)     Has aided, abetted, counselled or procured the contravention;
(b)     Has induced, whether by threats or promises or otherwise, the contravention;
(c)Has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or
(d)     Has conspired with others to affect the contravention.
I accept the submission of the plaintiffs’ counsel that the amount of the loss for damage sustained is the sum that the plaintiffs were induced to pay pursuant to the contract. These payments were induced by conduct in breach of the Act, namely the representations of Mrs Everett. But for her conduct and contravention of the Act, the plaintiffs would not have made the payments. The plaintiffs now have no interest in the goods, which are the subject of the contract which has been rescinded. The plaintiffs’ financial position has been worsened at least by the amount of the payments which they made and for which they have received no value. The plaintiffs abandoned their claim for vexation.
I find that the sum of at least $183,953 is required to place the plaintiffs in the position they would have been in but for the conduct in breach of the Act.
Additionally, I find that the plaintiffs were induced to enter into the contract by misrepresentation made by Mrs Everett, who was acting for G & J Everett Family Pty Ltd, another party to the contract and by reason of section 7 of the Misrepresentation Act1972 Mrs Everett is liable to the plaintiffs for damages in tort in respect of the loss suffered by them as a result of the formation of the contract.
I assess damages against the defendant Joanne Everett in the sum of $183,953.
The plaintiffs’ claim that they rescinded the contract must be accepted because of the defendants default. The contract was rescinded on the basis of the misrepresentations made by Mrs Everett on behalf of G & J Everett Family Pty Ltd. In addition there was an implied condition that the components would comply with the description, that is that the carcass would be made from marine ply and other components would be made from solid oak. The plaintiffs are entitled to the declaration which is sought by default and it is unnecessary for me to descend to the evidence in support of the claim. The contract has been rescinded ab initio. G & J Everett Family Pty Ltd is therefore liable to make pecuniary restitution on the basis of a total failure of consideration.
The plaintiffs have claimed interest.
Exhibit P4.4 establishes that the first instalment was paid by the plaintiffs to G & J Everett Family Pty Ltd on 22 August 2005. Mr Ling said in evidence that the balance was paid in January 2006.
As against G & J Everett Family Pty Ltd I allow interest pursuant to section 39 of the District Court Act at the rate of 6.5% per annum on $91,977 from 22 August 2005 to 31 January 2006, and on the amount of $183,953 from 1 February 2006 to the date hereof. That is, interest is to run from the time when the monies were paid.
As against Joanne Everett, the plaintiff is entitled to interest pursuant to section 39 of the District Court Act at the rate of 6.5% per annum from 15 November 2006 when the proceedings were issued in the Magistrates Court.
In addition the plaintiffs should have their costs to be taxed or agreed.
There will be a declaration and judgment in terms of the minutes presented by the plaintiffs’ solicitors, namely:
1.The Plaintiffs rescinded the contract described in paragraph 4 of the amended statement of claim (‘the contract’) on 16 June 2006.
2.The Plaintiffs recover against the first Defendant by way of a refund of the amounts paid pursuant to the contract the sum of $183,953 together with interest pursuant to section 39 of the District Court Act at the rate of 6.5% per annum on $91,977 from 22 August 2005 to 31 January 2006 and on the amount of $183,953 from 1 February 2006 to the present date plus costs to be taxed or agreed.
3.The Plaintiffs recover against the second Defendant by way of damages pursuant to section 82 of the Trade Practices Act 1974 and for misrepresentation pursuant to section 7 of the Misrepresentation Act 1972 the sum of $183,953 together with interest pursuant to section 39 of the District Court Act at the rate of 6.5% per annum from 15 November 2006 plus costs to be taxed or agreed.