Mitchell v Valherie

Case [2005] SASC 350

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court)

MITCHELL & ANOR v VALHERIE

Judgment of The Full Court

(The Honourable Justice Sulan, The Honourable Justice White and The Honourable Justice Layton)

14 September 2005

SALE OF GOODS - SUBJECT MATTER - INTERPRETATION OF PARTICULAR EXPRESSIONS

DAMAGES - MEASURE AND REMOTENESS OF DAMAGES IN ACTIONS FOR BREACH OF CONTRACT

Appeal against a judgment of the District Court awarding damages of $53,409.70 to the purchaser of a house – vendors' agent made representations about the house - newspaper advertisement described the house as “Cosy-Immaculate” – brochure produced by the vendors’ agent at open inspection stated “Nothing to Spend - Perfect Presentation” – inspections subsequent to purchase revealed  inadequate foundations on reactive soil - structural damage requiring extensive repair – whether the agent's statements contained representations of fact - whether promotional puffery or opinion – whether the content of the representations constituted a material misrepresentation - whether there was admissible evidence of the existence of the alleged defects at the time that the statements were made - whether the doctrine of caveat emptor applied - whether respondents relied upon representations - whether error in the assessment of damages.

Cross-appeal by the respondent - whether trial judge erred in assessment of damages, particularly consequential losses - whether conduct of appellants was unconscionable.

By majority, appeal allowed - cross-appeal dismissed.

Local Government Act 1934 (SA); Misrepresentation Act 1972 (SA) s 7(1), s 7(2); Trade Practices Act 1974 s 51AC, referred to.
Australian Competition and Consumer Commission v 4WD Systems Pty Ltd (2003) 200 ALR 491; Blomley v Ryan (1956) 99 CLR 362; Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; Eighth SRJ Pty Ltd v Merity (1997) 7 BPR 15, distinguished.
Academy of Health & Fitness Pty Ltd v Power [1973] VR 254; Banks v Copas Newnham Pty Ltd [2002] QCA 217; Butcher v Lachlan Elder Realty Pty Ltd (2004) 79 ALJR 308 ; Eveready Australia Pty Ltd v Gillette Australia Pty Ltd (No 4) [1999] FCA 1824; (2000) 22 ATPR 41-751 ; General Newspapers Pty Ltd v Telstra Corp (1993) 45 FCR 164; Given v Pryor (1979) 39 FLR 437; John G Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd (1993) 15 ATPR 41-356; Kadissi v Jankovic (1987) VR 255; Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563; Mount Gambier Co-op Milling Society Ltd v Williams [1921] SASR 185; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191; Pryor v Given (1980) 30 ALR 189; R v Credit Tribunal (SA); Ex parte General Motors Acceptance Corporation, Australia (1977) 137 CLR 545; Riley McKay Pty Ltd v Bannerman (1977) 31 FLR 129; Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 4 ATPR 43,733; Pappas v Soulac Pty Ltd (1983) 50 ALR 231, considered.

MITCHELL & ANOR v VALHERIE
[2005] SASC 350

Full Court:      Sulan,…

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Mitchell v Valherie [2005] SASC 350
Case
[2005] SASC 350
Decision Date

CaseChat Overview and Summary

The appeal in Mitchell v Valherie involved a dispute over the sale of a house, specifically whether there was a misrepresentation regarding the condition of the property. The case was heard by the South Australian Court of Appeal. The defendants argued that the trial judge's finding of misrepresentation was incorrect, and they also contested the assessment of damages. The plaintiff, on the other hand, sought an increase in the damages awarded. The court was tasked with determining whether the trial judge correctly identified a misrepresentation and whether the damages awarded were appropriate.

The court considered several key issues, including whether the evidence presented was sufficient to establish the existence of defects at the time of the alleged misrepresentation. The plaintiff provided expert evidence from a building surveying technician and another expert, which the trial judge accepted. The court found no reason to overturn the trial judge's acceptance of this evidence, affirming the existence of the defects. The court also examined whether the trial judge erred in applying the doctrine of caveat emptor, concluding that since the plaintiff relied on the agent's statements, the doctrine did not apply. Furthermore, the court assessed whether there was a causal link between the misrepresentation and the damages claimed, finding that the plaintiff's reliance on the misrepresentation was a significant factor in her decision to purchase the property.

The South Australian Court of Appeal upheld the trial judge's findings on the misrepresentation and the existence of defects, dismissing the appeal regarding liability. However, the court allowed the appeal in respect of damages, reducing the amount awarded to $27,909.70. The court found no error in the trial judge's assessment of damages, dismissing the cross-appeal. Consequently, the court's final order was to dismiss the appeal in respect of liability but allow the appeal regarding damages, with the damages reassessed to $27,909.70, and to dismiss the cross-appeal.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

The trial judge was correct in his conclusion that it was a misrepresentation of the condition of the house for the defendants to say, through their agent, that there was nothing to spend. This ground of appeal has not been made out.Was there reliable evidence of the existence of the defects at the time that the statements were made to the plaintiff? The plaintiff relied upon the reports and the evidence of Mr Rositano and Mr van der Horst, a building surveying technician, who is qualified to inspect domestic buildings. A major part of his work consists of pre-purchase inspections. The trial judge accepted the evidence of Mr Rositano that there were a number of serious faults, including brick cracking, floor levels and framing that were not likely to be sudden faults. Mr van der Horst’s evidence was that in a number of areas of cracking there appeared to have been repairs. Bare walls appeared to have been recently renovated. The cornices appeared to be renovation work. This evidence was admissible. Each witness was qualified to express expert opinion about the condition of the building and about defects, and when those defects were likely to have occurred. I agree with White J, that no basis for disturbing the trial judge’s findings has been demonstrated. I agree with White J’s reasons and his conclusion that the defendants have failed to establish this ground of contention. Did the trial judge err in not applying the doctrine of caveat emptor? If the agent had not presented the plaintiff with the pamphlet, and simply allowed the plaintiff to purchase the premises, relying entirely on her own judgment, then the action must fail. But the trial judge found that reliance had been placed by the plaintiff upon statements of the agent. Once it is established that there was a representation upon which the plaintiff relied, then the doctrine of caveat emptor has little application. I agree with the reasons of White J. Causation The defendants submit that the trial judge erred in finding that there was a causal link between the alleged misrepresentation and the damages. It was submitted that the plaintiff relied entirely upon her own judgment in purchasing the property, and that the misrepresentation had no causal effect upon her decision. The plaintiff gave the following evidence:… I had lived the previous 14 years in Paris. I really needed a place that was not going to require any more expense because I simply could not afford to pay any more than the purchase price. I also did not have the time to redecorate or renovate a house. Because of these requirements I was not going to buy a cheaper house where I would have some works to do, repair works or renovation works, I just didn’t have the time or didn’t have the money. Even if I had to pay a little bit more, and I thought at the time this particular property in Windsor Gardens, because I had been inquiring around Adelaide and I knew – because I knew that I could not afford more than $100,000, I knew that in order to find a good property where I would not have any more work to do in it, any more to spend, I would need to go in the cheaper areas …[12][12] Appeal Book Vol 2 p 39 lines 14-30

Decision

Reasons for decision

However, apart from the trial judge’s failure to have regard to the capital gain of $24,500, based on his initial valuation of $75,000, and given the evidence with which he was presented, I would not disturb his finding. Conclusion I would dismiss the appeal in respect of liability. I would allow the appeal as to damages. I would assess the damages at $27,909.70.The Cross Appeal The respondent contends that the trial judge erred in failing to assess damages for consequential losses alleged to have arisen from the misrepresentation. It is unnecessary for me to deal in detail with the respondent’s contention having regard to the conclusions of White and Layton JJ. However, I am of the view that no error has been demonstrated in the approach of the trial judge. I would make no order in respect of the cross appeal. WHITE J: On 23 December 2004, a District Court Judge found that the appellants’ land agent had, during the course of an open inspection, misrepresented the quality of their home to the respondent who was then a prospective purchaser. In particular, the Judge found that a statement by the land agent in respect of the home “Nothing to Spend – Perfect Presentation” misrepresented the true condition of the home. The Judge found that the misrepresentation was actionable pursuant to the Misrepresentation Act 1972 (SA) and assessed the plaintiff’s losses in consequence of the misrepresentation in the sum of $53,409.70. The appellants appeal against the finding of misrepresentation and against the assessment of damages. The respondent cross-appeals against the assessment of damages, seeking an order that the damages be increased. At the trial, both parties were unrepresented. On the appeal, the appellants were represented by counsel but the respondent remained unrepresented. It is convenient, in these reasons, to refer to the parties by their description at trial, ie, the respondent as plaintiff and the appellants as defendants.The Circumstances of the Sale The defendants had owned and lived in the property at 4 Lothian Avenue, Windsor Gardens since 1980. It contained a 3-bedroom bungalow. The defendants wished to sell the property. They retained the real estate firm known as “Ray White Glynde” to act as their agent in that regard. A Ms Mansergh was the particular agent within that firm who acted for the defendants. On Saturday, 20 February 1999, Ray White Glynde published in “The Advertiser” an advertisement in the following terms:WINDSOR GDNS4 Lothian Avenue• Open SUN 3.30-4.30 •Cosy – Immaculate StyleLovely gardens & outside ent., solid brick, 3 lge BRs, open plan lounge/dine, nice views, modern kitchen & bathroom, heating/cooling, plenty of parking. Reduced to sell $99,950. Joan Mansergh 0414 378 334 Glynde. The plaintiff attended the open inspection on Sunday, 21 February 1999. On entering the house, she was given by Ms Mansergh a single page brochure which was of the kind commonly issued by land agents during the course of an open inspection. On the front of the brochure, and above the address and sketch of the house, were the following words:Nothing to Spend – Perfect Presentation3 bedrooms with built in robesLarge LoungeCombustion HeaterUpgraded KitchenModern Bathroom CoolingLarge Private rear gardens

Ratio Decidendi

Legal Principle Established

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