McEntee v SJ Berry Pty Ltd - [2021] SADC 102

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Application)
MCENTEE & ANOR v SJ BERRY PTY LTD & ORS
[2021] SADC 102
Judgment of his Honour Judge O'Sullivan
27 August 2021
REAL PROPERTY - BOUNDARIES OF LAND AND FENCING - ENCROACHMENT OF BUILDINGS AND PARTY WALLS
TORTS - MISCELLANEOUS TORTS - DECEIT - GENERAL PRINCIPLES
TRADE AND COMMERCE - COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION - CONSUMER PROTECTION - MISLEADING OR DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS - PARTICULAR CASES - REAL ESTATE TRANSACTIONS
TRADE AND COMMERCE - COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION - CONSUMER PROTECTION - MISLEADING OR DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS - CHARACTER OR ATTRIBUTES OF CONDUCT OR REPRESENTATION - RELIANCE, INDUCEMENT AND CAUSATION
TRADE AND COMMERCE - COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION - CONSUMER PROTECTION - MISLEADING OR DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS - CHARACTER OR ATTRIBUTES OF CONDUCT OR REPRESENTATION - FAILURE TO TAKE REASONABLE CARE OF OWN INTERESTS
TORTS - NEGLIGENCE - CONTRIBUTORY NEGLIGENCE - APPLICATION OF APPORTIONMENT LEGISLATION IN CASES OF CONTRIBUTORY NEGLIGENCE
On 27 May 2017, the applicants, became the registered proprietors of a property at Woodside, South Australia (“Property”). They purchased the Property from the third and fourth respondents (“Ms Rosewell” and “Mr Kloosterman” respectively and together “the Vendors”).
The Real Estate business which marketed the Property from early 2017 was the first respondent (“SJ Berry”) trading as Sandra Berry Real Estate. The second respondent ("Ms Berry") was the sole director of SJ Berry.
Mr Darren Kornelissen owned the adjacent property to the north of the Property. Since 2002 he had asserted to the Vendors that the Property encroached onto his property as shown in a survey conducted in 2002. That encroachment comprised a misalignment of the boundary fence between the two properties (“misalignment”) and an encroachment of the house on the Property onto his property (“house encroachment”), (together the “Encroachment Issues”).
The third respondent had purchased the Property in the late 1990s, at which time a garage (now referred to as a “Studio”) on the Property was in a rundown state. The previous owner had used it for his auto-electrical business.
The third respondent had made a number of alterations and improvements to the garage. The Property was marketed for sale by SJ Berry showing clearly that the Studio was being used as a habitable room. The third and fourth respondents had received no Development Approval or Building Rules Consent for the work done to the garage before it became a Studio. The work done to the Studio resulted in the roof of the Studio being structurally unstable.
Mr Paul McEntee ("Mr McEntee") is the husband of the first applicant and brother-in-law of the second applicant. On 22 March 2017 Mr McEntee inspected the Property with Ms Berry. During that Inspection Ms Berry made certain representations as to the extent of an encroachment by the boundary fence between the Property and the adjoining property. No mention was made of the house encroachment.
During the Inspection, Ms Berry also…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] SADC 102
Decision Date: 27 August 2021

CaseChat Overview and Summary

In the case of McEntee v SJ Berry Pty Ltd, the applicants, Paul and Sarah McEntee, brought claims against the respondents, including SJ Berry and Ms Berry, trading as Sandra Berry Real Estate, Mr Darren Kornelissen, Ms Rosewell, and Mr Kloosterman. The applicants purchased a property in Woodside, South Australia, from Ms Rosewell and Mr Kloosterman, who had previously owned the property and were aware of certain encroachment issues and unauthorised alterations to a garage on the property. The applicants claimed that SJ Berry, Ms Berry, and the Vendors made deceitful, fraudulent, and misleading representations regarding these issues during the property inspection and sale process.

The central legal issues revolved around whether the respondents had engaged in deceitful or fraudulent misrepresentation, breached the Australian Consumer Law by engaging in misleading or deceptive conduct, and whether the Vendors had breached the contract by not disclosing the encroachment issues and unauthorised alterations. Additionally, the court had to determine if the applicants' claims were valid despite their contributory negligence in failing to take reasonable care of their own interests.

The court found in favour of the applicants on all counts. The respondents were found to have engaged in deceitful and fraudulent misrepresentation regarding the encroachment issues and the Studio's alterations. SJ Berry and Ms Berry were found to have contravened sections 18 and 30 of the Australian Consumer Law, and Ms Berry and SJ Berry were found to have made negligent misrepresentations. The Vendors were held liable for breaching the contract by not disclosing the encroachment issues and the unauthorised alterations to the Studio. The court will now consider the appropriate orders, including interest and costs, to be made following these findings.

The applicants were awarded their claims against the respondents, with the court set to determine the form of orders, interest, and costs following the findings.

Orders

Orders of the court

On 27 May 2017, the applicants, became the registered proprietors of a property at Woodside, South Australia (“Property”). They purchased the Property from the third and fourth respondents (“Ms Rosewell” and “Mr Kloosterman” respectively and together “the Vendors”).

The Real Estate business which marketed the Property from early 2017 was the first respondent (“SJ Berry”) trading as Sandra Berry Real Estate. The second respondent ("Ms Berry") was the sole director of SJ Berry.

Mr Darren Kornelissen owned the adjacent property to the north of the Property. Since 2002 he had asserted to the Vendors that the Property encroached onto his property as shown in a survey conducted in 2002. That encroachment comprised a misalignment of the boundary fence between the two properties (“misalignment”) and an encroachment of the house on the Property onto his property (“house encroachment”), (together the “Encroachment Issues”).

The third respondent had purchased the Property in the late 1990s, at which time a garage (now referred to as a “Studio”) on the Property was in a rundown state. The previous owner had used it for his auto-electrical business.

The third respondent had made a number of alterations and improvements to the garage. The Property was marketed for sale by SJ Berry showing clearly that the Studio was being used as a habitable room. The third and fourth respondents had received no Development Approval or Building Rules Consent for the work done to the garage before it became a Studio. The work done to the Studio resulted in the roof of the Studio being structurally unstable.

Mr Paul McEntee ("Mr McEntee") is the husband of the first applicant and brother-in-law of the second applicant. On 22 March 2017 Mr McEntee inspected the Property with Ms Berry. During that Inspection Ms Berry made certain representations as to the extent of an encroachment by the boundary fence between the Property and the adjoining property. No mention was made of the house encroachment.

During the Inspection, Ms Berry also made certain representations to Mr McEntee as to the use to which the Studio was being used.

On 30 March 2017, Mr McEntee entered into a contract for the purchase of the Property in the name of “Paul McEntee and or Nominee”.

In entering into the contract and inspecting the Property, Mr McEntee acted as the agent of the applicants.

The respondents were aware of the Encroachment Issues and that the Studio had work done to it which had not received either Development Approval or Building Rules Consent.

The Contract contained a provision in relation to the Encroachment Issues which was conditioned by the word “may”. It also contained a condition that there were no known alterations or improvements made to the Studio without consent.

Completion occurred on 27 May 2017. After completion the applicants became aware of the true nature and extent of the Encroachment Issues and that work had been done to the Studio without Development Approval or Building Rules Consent.

The applicants claim against the respondents as follows:

1. As against all respondents in deceit and fraudulent misrepresentation in relation to the Encroachment Issues;

2. Against SJ Berry, misleading or deceptive conduct contrary to sections 18 and 30 of the Australian Consumer Law (“ACL”);

3. As against Ms Berry and the Vendors, a claim pursuant to section 2 of the ACL that each of Ms Berry and the Vendors are jointly liable with SJ Berry for SJ Berry’s contravention of sections 18 and 30 of the ACL, as persons involved in those contraventions;

4. As against Ms Berry and SJ Berry, a claim in negligent misrepresentation;

5. As against the Vendors, a claim for breach of Contract, specifically:

5.1 For breach of the warranties claimed in clauses 6.1, 6.4, 6.5 and 6.8 of the Contract in relation to the Encroachment Issues; and

5.2 For a breach of contractual warranty contained in schedule 2 of the Contract and clause 6 of the Contract, that all renovations to the Studio had all necessary consents.

Held

The applicants have established their causes of action:

1. As against all respondents in deceit in relation to the Encroachment Issues;

2. As against the first and second respondents:

(a) For contravening sections 18 and 30 of the ACL in relation to the Encroachment Issues and the Studio;

(b) For negligent misrepresentation in relation to the Encroachment Issues and the Studio.

3. As against the third and fourth respondents:

(a) For contravening sections 18 and 30 of the ACL in relation to the Encroachment Issues and the Studio.

(b) For breach of contract in relation to both the Encroachment Issues and the Studio.

4. The court will hear the parties as to the form of orders sought consequent upon the court’s findings and the question of interest and costs.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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