Longmuir v KONSTANTOPOULOS
[2014] FCCA 162
•7 February 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LONGMUIR & ANOR v KONSTANTOPOULOS | [2014] FCCA 162 |
| Catchwords: TRADE AND COMMERCE – Competition, fair trading and consumer protection legislation – procedure – jurisdiction. TRADE AND COMMERCE – Competition, fair trading and consumer protection legislation – consumer protection – misleading or deceptive conduct or false representations – particular cases – contract – summary judgment. |
| Legislation: Building Act 1993 (Vic), ss.16(1), 137B, 137C Sale of Land Act 1962 (Vic), s.32 |
| Australian Motor Finance Ltd (Receivers and Managers appointed) v Angeleri (No.3) [2010] FCA 1431 Deckers Outdoor Corporation Inc v Farley (No 2) [2009] FCA 256; (2009) 176 FCR 33; [2009] AIPC 92-340 Gray v Sirtex Medical Ltd [2011] FCAFC 40; (2011) 193 FCR 1; (2011) 276 ALR 267 Hammond & Co v Bussey (1888) 20 QBD 79 Johnson Tiles Pty Ltd (ACN 004 576 103) v Esso Australia Ltd [2000] FCA 1572; (2000) 104 FCR 564; [2001] ATPR 41-794 Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; 162 CLR 221; (1987) 69 ALR 577; 61 ALJR 151 Webster & Anor v Lampard [1993] HCA 57; (1993) 177 CLR 598; (1993) 116 ALR 545; (1993) 67 ALJR 886; [1993] Aust Torts Reports 62,435 |
| First Applicant: | TROY STEVEN LONGMUIR |
| Second Applicant: | KRISTY FLETCHER |
| Respondent: | HELEN KONSTANTOPOULOS |
| File Number: | MLG 1150 of 2013 |
| Judgment of: | Judge Riethmuller |
| Hearing date: | 20 December 2013 |
| Date of Last Submission: | 20 December 2013 |
| Delivered at: | Melbourne |
| Delivered on: | 7 February 2014 |
REPRESENTATION
| Counsel for the Applicants: | Mr McKay |
| Solicitors for the Applicants: | Armstrong Lawyers Pty Ltd |
| Counsel for the Respondent: | Ms Konstantinou |
| Solicitors for the Respondent: | Noble House Lawyers |
ORDERS
Summary judgment be entered for the Applicants on the claim in the sum of $21,984.11.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1150 of 2013
| TROY STEVEN LONGMUIR |
First Applicant
| KRISTY FLETCHER |
Second Applicant
And
| HELEN KONSTANTOPOULOS |
Respondent
REASONS FOR JUDGMENT
On 10 March 2011, the first applicant entered into a contract with the respondent to purchase a 3 bedroom home at Bentleigh East for $640,000. The residence was one of two residences on the property, which was to be subdivided in accordance with a proposed plan of subdivision.
In April 2011, the applicant nominated himself and the second applicant as the joint purchasers under the contract. In late May, the proposed plan of subdivision was registered, subdividing the property into two lots, one containing each of the residences on the property, and enabling the transfer of one lot to the applicants. On 9 June 2011, the applicants completed the contract by paying the respondent the purchase moneys owing and were registered as the joint proprietors of the property on 22 June 2011.
The contract was in the usual form as recommended by the Real Estate Institute of Victoria. Pursuant to s.32 of the Sale of Land Act 1962 (Vic), the vendor under a contract for the sale of land must provide to the purchaser, before the purchaser signs the contract, a statement signed by the vendor, which, inter alia, includes particulars of any notice, order, declaration, report or recommendation of a public authority or a government department or approved proposal affecting the land (see s.32(2)(e)).
A statement pursuant to s.32 was provided by the respondent to the applicant, which contained a specific representation with respect to building approvals in the following terms:
4. BUILDING APPROVALS, OWNER-BUILDER INSURANCE AND OTHER INSURANCE
Particulars of any building permit issued in the past seven years under the Building Act 1993 (required only where the property includes a residence) –
* are contained in the attached certificate* are as follows –
NIL
This statement was signed by the respondent on 7 March 2011 and received by the applicant on the same date.
This part of the s.32 statement was false. On 24 February 2005, the respondent and her then husband had obtained a building permit for domestic building works on the property. This permit named them as builders. An extension of the commencement date of the building permit was granted to 8 February 2008, and thereafter works were carried out at the premises. Ultimately, an occupancy permit was issued with respect to the works on 10 February 2011.
It transpired that the building works which were carried out did not conform to the planning permit, which required that the dwelling ultimately purchased by the applicants have two bedrooms and a garage. Rather than constructing a garage, that part of the building was constructed as a third residential bedroom contrary to the permit and the drawings.
It is an offence under the Planning and Environment Act 1987 (Vic) (see s.126) and the Building Act 1993 (Vic) (see s.16(1)) to carry out works in contravention of a planning permit or building permit. The local authority is empowered to take action to force the removal of any contravening structure pursuant to the respective legislation.
On 5 August 2011, the council wrote to the applicants, demanding that they take remedial action within 28 days to ensure that the works complied with the planning permit. To do so would have required the applicants to convert a bedroom into a garage.
As a result, the applicant engaged a solicitor, draftsman and planning expert to procure an amendment to the planning permit, if possible. An amendment was ultimately obtained so as to avoid having to alter the residence. However, to obtain such an amendment, the applicants incurred a number of expenses:
Solicitor’s costs
$10,832.56
Counsel’s fees
$600.00
Draftsman’s fees
$2520.00
Planning consultant’s fees
$8031.55
TOTAL
$21,984.11
These figures are set out in para.49 of the Applicant’s affidavit (less the unbilled costs as these appear to be part of the litigation expenses: see para.55).
The amended planning permit was issued by the council on 22 March 2013.
Whilst the applicants made a demand upon the respondent, no agreement had been reached between them and, as a result, the applicants issued proceedings.
The respondent admitted almost the entirety of the allegations in the statement of claim. With respect to a number of paragraphs, the respondent either “does not admit the allegations”, or says:
Subject to the production of evidence, she denies the allegations.
The respondent appeared, in her defence, to deny the breach of the building regulations on the basis that a certificate of occupancy had been issued, and alleged contributory negligence on the part of the purchasers for failing to investigate whether or not any planning permits had issued with respect to the property despite the failure of the respondent to identify any planning permits in the s.32 statement.
Although, at para.12 of the defence, the respondent says:
12. She denies the allegations contained in paragraph 12 and says that all works were performed in accordance with applicable building regulations. Further she refers to and relies on paragraph 8 above.
Not surprisingly, this led to the applicants bringing a summary judgment application as the evidence of failure to comply with the relevant planning permits appears to be overwhelming.
On the summary judgment application, the written submissions of the respondent relied entirely upon an argument that the Federal Circuit Court of Australia did not have jurisdiction to deal with this matter.
Jurisdiction of the Federal Circuit Court
The applicants argue that the Federal Circuit Court has jurisdiction on the basis of their claim pursuant to the Competition and Consumer Act 2010 (Cth) on the basis that the respondent engaged in conducting trade or commerce that was misleading or deceptive in contravention of s.18 of sch.1 (formerly s.52 of the Trade Practices Act).
The respondent argues that as she is not a corporation, the provision of the Act does not apply to her.
The jurisdictional issues arise as a result of the limitations upon Commonwealth Parliament under the Constitution with respect to the areas in which it may legislate. There is no question that the Commonwealth Government has power with respect to corporations, and therefore the provision applies to conduct carried out by corporations.
Less well known is the effect of s.6 of the Competition and Consumer Law 2010 which extends to the operation of the Act to natural persons in circumstances where post or telecommunications has been utilised in the conduct concerned (relying upon the Commonwealth Parliament’s Constitutional powers with respect to post and telecommunication). Whilst not specifically pleaded, the applicant in an affidavit, set out that he received the s.32 statement by email from the vendor’s agent, which is a corporation. Thus, in this case, the conduct concerned was engaged in, at least in part, by a corporation. More importantly, the conduct was facilitated by the use of the telecommunications system (by sending the s.32 statement by email). In the circumstances, it appears to me that there is no question that this case falls within the ambit of the Australian Consumer Law to the extent that the conduct was engaged in by the respondent in trade and commerce.
Whether or not the conduct itself was, in fact, in trade and commerce is a more difficult question. The evidence upon this is more limited. The respondent only makes a bare denial to the relevant part of the statement of claim.
Clearly the sale by an ordinary householder of their home so as to purchase an alternative home would be unlikely to fall within the meaning of “trade and commerce”. However, one-off transactions can fall within the meaning of “trade and commerce” depending on the nature of the transaction. It is certainly arguable that the carrying out of building works so as to subdivide a property and sell one of the residences thereby is within the ambit of trade and commerce. I am satisfied that this is a real claim.
Ultimately, the matter may depend upon the precise nature of the evidence; however, the applicants certainly have a prima facie case. As a result, I am satisfied that the Federal Circuit Court of Australia has jurisdiction with respect to the claim to the extent that it arises under the Competition and Consumer Law 2010.
It is well accepted that the Court has accrued jurisdiction with respect to common law and statutory claims arising out of the same transaction as the Competition and Consumer Law claim. In this case, there is only one relevant transaction, the sale of the land. The fact that the Federal claim may ultimately fail does not mean that the Court does not have accrued jurisdiction with respect to the common law and statutory claims that arise out of the same transaction: see Johnson Tiles Pty Ltd (ACN 004 576 103) v Esso Australia Ltd [2000] FCA 1572; (2000) 104 FCR 564; [2001] ATPR 41-794.
In the circumstances, I am satisfied that this Court has jurisdiction to deal with this matter and, therefore, the summary judgment application.
Summary Judgment Application
Summary judgment applications are to be determined in accordance with s.17A of the Federal Circuit Court of Australia Act 1999 which provides:
17ASummary judgment
(1) The Federal Circuit Court of Australia may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is prosecuting the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.
(2) The Federal Circuit Court of Australia may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is defending the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
(3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:
(a) hopeless; or
(b) bound to fail;
for it to have no reasonable prospect of success.
(4) This section does not limit any powers that the Federal Circuit Court of Australia has apart from this section.
In this case, there is nothing in the material to indicate any prospect of success on the part of the respondent, with respect to the claim for a breach of warranty. The first applicant has sworn an affidavit saying that he does not believe there is an arguable defence (at para.54 of his affidavit filed 13 November 2013).
Traditionally, summary judgment would be given with damages to be assessed or in the amount of the claim if the claim was for a debt or liquidated amount. In some types of cases, such as a claim for personal injuries, there would almost always need to be a hearing to assess the amount of damages. In other cases, even a claim that does not fall within the meaning of “debt or liquidated” demand may be sufficiently certain to enable the Court to be satisfied to the required standard as set out in s.17A (see for example Australian Motor Finance Ltd (Receivers and Managers appointed) v Angeleri (No.3) [2010] FCA 1431, where summary judgment for damages for breach of the corporations law was entered for over $4.8 million). In this regard it must be recognised that references to debts and liquidated demands flowed from the now archaic common law forms of actions.
A useful summary of the law with respect to s.31A of the Federal Court of Australia Act 1976, which is in the same vein as s.17A of the Federal Circuit Court of Australia Act 1999, is set out by Tracey J in Deckers Outdoor Corporation Inc v Farley (No 2) [2009] FCA 256; (2009) 176 FCR 33; [2009] AIPC 92-340 at paras.11-12, as follows:
SECTION 31A OF THE FEDERAL COURT ACT
[11] Section 31A of the Federal Court Act was introduced to extend “the power of the court to deal with unmeritorious matters by broadening the grounds on which federal courts can summarily dispose of unsustainable cases”: see Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd (2008) 167 FCR 372 at 406 [124] (per Gordon J) (quoting from the Second Reading Speech of the Minister on the Migration Litigation Reform Bill 2005 (Cth)). The section empowers the Court to give summary judgement in favour of an applicant if it is satisfied that the respondent “has no reasonable prospect of successfully defending the proceeding or [a] part of the proceeding”: see s 31A(1)(b). A defence may have no reasonable prospect of success notwithstanding that it is not “hopeless” and not “bound to fail”: see s 31A(3).
[12] Plainly, s 31A was, as Lindgren J held in White Industries Aust Ltd v Commissioner of Taxation (2007) 160 FCR 298 at 310 [54], designed “to lower the bar for obtaining summary judgment” from the level that had been fixed by the High Court in Dey v Victorian Railways Commissioners (1949)78 CLR 62 at 91-2 and General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 128-130. Although the standard which must be met by an applicant who seeks summary judgment under the Federal Court Act has been expressed in a variety of different ways, where, as here, an application is made under s 31A, the Court is required to give close attention to the statutory language and to apply that test to the exclusion of all others. As Kenny J said in PZ Cussons (International) Ltd v Rosa Dora Imports Pty Ltd (2007) 74 IPR 372; [2007] FCA 1642 at [13]:
“The key is to address the statutory question. That is, under s 31A, in order to grant summary judgment, I must be satisfied that the respondents have no reasonable prospects of success in defending the infringement claim. As s 31A(3) makes clear, this does not mean that I must be satisfied that their defence is hopeless or bound to fail.”
On the summary judgment application, the respondent opposes judgment on the Consumer Protection claim on the basis not only of a claim of contributory negligence on the part of the applicants, for failing to search in order to verify whether or not the representations made in the s.32 statement were false, but also on the basis of whether or not the applicants in fact relied upon the s.32 statement. In circumstances where reliance is at issue, it will often be difficult to give a summary judgment on the claim pursuant to the Competition and Consumer Law for the reasons explained by the High Court in Webster & Anor v Lampard [1993] HCA 57; (1993) 177 CLR 598; (1993) 116 ALR 545; (1993) 67 ALJR 886; [1993] Aust Torts Reports 62,435 (albeit in a different statutory context). As there is an alternative basis for granting summary judgment, I do not need to deal with this issue here.
The negligence argument I find difficult to understand as the respondent is effectively arguing that the applicants were negligent in believing her. It would be a bizarre outcome that would seriously undermine efficient economic activity, if every consumer as a contracting party had to assume that the other party was not being truthful and then make independent enquiry or suffer a reduction of damages for negligence. Ultimately, I do not need to deal with this issue here.
The claim is also pleaded on the basis that the respondent is in breach of a warranty implied into the contract by statute. Pursuant to ss.137B and 137C of the Building Act 1993 (Vic), the statute states that in every contract which relates to the sale of a home (to which these provisions apply):
(c) The vendor warrants that the domestic building work was carried out in accordance with all laws and legal requirements, including, without limiting the generality of this warranty, this Act and the regulations.
This is a property to which s.137B applies, as that section applies to a person who constructs a building, and in this case the respondent and her husband were the “owner-builders” as shown on the planning permit.
On the affidavit material filed by the applicants, there is an overwhelming case that the warranty was breached in that the relevant planning permissions were not complied with.
As a result of the breach of warranty, the applicants are entitled to damages for breach of contract. The appropriate measure of those damages is the real question in this case. It was not argued that damages should be assessed otherwise than by reference to the reasonable costs to obtain the appropriate permits in order to regularise the building work. It was not argued that the expenses incurred with respect to the draftsman or town planning experts were unreasonable. It was argued that the expenses incurred with the solicitor were unreasonable.
It is difficult to see that a brief to counsel which resulted in a $600 fee for an advice from counsel on the matter could be considered an unreasonable fee. With respect to the solicitor’s fees, the applicant annexed copies of the itemised invoices from his lawyers running to some 23 pages.
During argument, counsel for the respondent was unable to identify any fee or charge that she argued was inappropriate or excessive or unreasonable. At best, her argument was a general one that, on her case, ordinarily a solicitor’s account will be reduced on taxation.
This argument suffers from a number of difficulties. First, the account in this matter is not an account for litigation expenses, nor would it be assessed upon a party and party scale by way of taxation. The measure of damages in these circumstances is the reasonable expenses incurred by the applicant in rectifying the property as a result of the breach. Secondly, whilst the expenses are described in significant detail in the material, counsel was not able to articulate any argument with respect to any particular part of the expenses, nor provide what the respondent would say were reasonable expenses for the work carried out.
On the summary judgment application, the respondent filed an affidavit by herself and one by her solicitor. The solicitor’s affidavit sets out that his practice is varied, ranging from property law matters and conveyancing to commercial law matters and that he has been a practicing lawyer for five years, and importantly that much of his work involves conveyancing and property law transactions. He does not address the question of the reasonableness of the solicitor’s costs for the rectification work at all in his affidavit.
The respondent in her affidavit simply states:
20. I do not accept the loss and damage claimed by the Applicants. The Applicants are arguably entitled to their out of pocket expenses incurred for amending the Planning Permit but I am advised by my current solicitor and believe, that the legal costs claimed are either (i) excessive; or (ii) not claimable.
In this case, there is no doubt that the applicants, who are ordinary householders, engaged the solicitors to attempt to rectify the planning problem. This fulfilled their obligation to mitigate their loss. They have paid most of the fees (see the first applicant’s affidavit filed 13 November 2013, at para.50) and there is nothing to indicate that they have any reason to refuse to pay the balance now owing (see para.49 of the first applicant’s affidavit filed 13 November 2013). They are entitled to recover their reasonable expenses caused by the breach. It is not argued that engaging the solicitor was unreasonable, just the amount of the account. Had the solicitors sued the applicants for their fees, the fees would have been considered a liquidated sum between the applicants and the solicitor: see Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; 162 CLR 221; (1987) 69 ALR 577; 61 ALJR 151.
In this case nothing has been raised to show why it is arguable that the costs incurred by the applicants using appropriate professionals are not reasonable expenses on their part. The test for assessing damages in these circumstances does not require an assessment of costs on a scale used in litigation where a court orders costs (as will apply to those costs incurred with the solicitors for these proceedings, as distinct from the costs of rectifying the planning permit).
The cases are quite clear that the fees for a solicitor doing work that is not representing a client in the current action are claimable as damages: see Hammond & Co v Bussey (1888) 20 QBD 79, which was applied in Gray v Sirtex Medical Ltd [2011] FCAFC 40; (2011) 193 FCR 1; (2011) 276 ALR 267. In this regard the affidavit of the first applicant including costs incurred in this litigation (see paras.55-59 of the first applicant’s affidavit filed 13 November 2013) as damages overstates the claim. The costs of this litigation are properly considered in a costs application in these proceedings, not as part of the applicants’ damages.
The only real argument in the circumstances is that the amount is unreasonable. There is no evidentiary basis for that. There is no particularity to the argument, despite the detail of the accounts (although not in the detail of a bill in taxable form, far more than just a lump sum amount). The respondent has gone no further than make a generalised complaint assuming that these are costs that could be taxed on a court scale.
I am ultimately persuaded that there are not reasonable prospects of the respondent successfully defending the proceedings, on the material before me.
On the evidence, the damages suffered are as set out at para.9 herein.
I therefore give summary judgment in the sum of $21,984.11. I will hear argument on the question of costs.
I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of Judge Riethmuller
Associate:
Date: 7 February 2014
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