Schulze v WILLIAMS
[2006] SASC 330
•10 November 2006
SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
SCHULZE & ANOR v WILLIAMS
[2006] SASC 330
Judgment of The Honourable Justice Layton
10 November 2006
MAGISTRATES - APPEALS FROM AND CONTROL OVER MAGISTRATES - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT - PRINCIPLES ON WHICH COURT ACTS
TRADE AND COMMERCE - TRADE PRACTICES AND RELATED MATTERS - CONSUMER PROTECTION - MISLEADING, DECEPTIVE OR UNCONSCIONABLE CONDUCT
PROCEDURE - COSTS - SCALES OF COSTS
Appeal from Magistrate - Appeal by re-hearing - Credibility - Contract - Real estate agent's fee on commission - Interpretation of Residential Sales Agency Agreement - Defence, Set Off and Counterclaim - False representations - Fair Trading Act - Whether future representations - Whether reasonable grounds for representation - Effect of Notice to Admit - Costs orders on Supreme Court Scale. Held: Appeal dismissed on all grounds.
Magistrates Court Act 1991 (SA) s 40; Magistrates Court (Civil) Rules 1992 (SA) r 76(3), r 106(1)(c); Supreme Court Rules 1987 (SA) r 97.17; Fair Trading Act 1986 (SA) s 54, s 56, referred to.
Fox v Percy (2003) 214 CLR 118; Ting v Blanche (1993) 118 ALR 543, applied.
SCHULZE & ANOR v WILLIAMS
[2006] SASC 330Magistrates Appeal
LAYTON J.
This is an appeal against the judgment of a Magistrate dated 20 April 2006, pursuant to s 40 of the Magistrates Court Act 1991. The Magistrate entered judgment for the plaintiff (now the respondent) for professional fees for the sale of a property amounting to $10,750, together with interest of $1,075, making a total of $11,825. The Magistrate also awarded costs to the plaintiff on the basis of the Third Schedule to the Magistrate’s Court Rules up to 22 August 2005, and thereafter at 90 per cent of the Supreme Court Scale.
The defendants (now the appellants), were the vendors of a residential property at Mills Road, Berri (“the property”). The plaintiff was a real estate agent who owned and operated the L.J. Hooker Agency in Berri. Mr Pieter Stuffers was a real estate agent employed on a commission basis by the respondent.
The action began as a simple claim in contract for the agent’s professional fee agreed at three per cent of the sale price, being the amount set out in a Residential Sales Agency Agreement (“the Agreement”). This Agreement gave the respondent sole agency to sell the property and provided that the respondent would be deemed to have effected the sale of the property if the appellants “entered into a Contract to effect the sale of the property whether through the Agency of the Agent or otherwise” during the period of the Agreement.
It was alleged by the respondent that on 25 June 2004, the appellants entered a contract for the sale of the property which was prior to the expiry date in the Agreement, namely 30 June 2004. Therefore the agency fee was claimed.
The appellants filed a Defence and Set-Off which was later amended to include a Counterclaim. The appellants disputed that the Agreement accurately recorded their arrangement and said that the sole Agency Agreement was for 90 days only and expired on 19 June 2004, rather than 30 June 2004, the expiry date set out in the Agreement. In addition, the appellants alleged that the respondent made false representations contrary to s 52 of the Trade Practices Act 1974 (Cth) and s 56 of the Fair Trading Act 1986 (SA) and sought damages and/or rectification pursuant to these Acts. Further, the appellants sought a declaration that the Agreement was void ab initio, damages for negligent misstatement and equitable compensation for breach of fiduciary duty. Therefore upon the filing of the Defence and Counterclaim, the proceedings became significantly more complicated.
The Magistrate heard the case over three days, which included hearing and receiving detailed submissions from both parties. The Magistrate dismissed the appellants’ Defence and Counterclaim in its entirety and ordered that the professional fees be paid.
Grounds of appeal and approach
The appellant has put forward 27 grounds of appeal, only two of which, Grounds 21 and 22, were not pursued. The appeal is by way of rehearing (R 97.17 Supreme Court Rules 1987). Apart from the interpretation of the Agreement and its terms, many of the findings made by the Magistrate which led to her to judgment in favour of the respondent, are to a large extent based on her findings as to the credibility of the witnesses for respective parties. Primarily, the male appellant Mr Schulze, and Mr Pieter Stuffers the agent of the respondent, who were the main actors.
In approaching matters concerning credibility of witnesses on appeal, the following principles apply as discussed in the case of Fox v Percy (2003) 214 CLR 118. The majority, Gleeson CJ, Gummow and Kirby JJ indicated that:
·an appellate court is obliged to give the judgment which in its opinion ought to have been given in the first instance.[1]
·an appellate court must of necessity observe the “natural limitations” which include the disadvantage that an appellate court has when compared with the trial Judge in respect of the evaluation of witnesses’ credibility and the “feeling” of a case which an appellate court, reading the transcript, cannot always share.[2]
·an appellate court is obliged to conduct a real review of the trial and of the judge’s reasoning.[3]
·an appellate court is not excused from the task of weighing conflicting evidence and drawing its own inferences and conclusions, though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in that respect.[4]
·if after making proper allowance for the advantages of the trial Judge, the appellate court concludes that an error has been shown, it is authorised and obliged to discharge appellate duties in accordance with the statute.[5]
[1] Fox v Percy (2003) 214 CLR 118, 125. Citing Dearman v Dearman (1908) 7 CLR 549, 561.
[2] Ibid, 125-6.
[3] Ibid, 126-7.
[4] Ibid, 127.
[5] Ibid, 127-8.
Approach of Magistrate
The Magistrate based her decision primarily on findings of fact which in turn, as she indicated, were required to be made on the balance of probabilities “between competing versions of events given by Mr Stuffers, Mr Schulze and Mr Mele”.
As to the competing versions of events given by Mr Stuffers and Mr Schulze, the Magistrate throughout her reasons expressed adverse findings against Mr Schulze and acceptance of the evidence of Mr Stuffers. In particular, at paragraph [27] of her reasons her Honour stated:
I reject Mr Schulze’s evidence that he deceived Mr Stuffers by these written statements because he did not want to hurt Mr Stuffers’ feelings. This explanation, like many justifications offered by Mr Schulze during cross-examination for his deceitful course of conduct and fabrications to Mr Stuffers, was implausible, illogical and incredulous.
By contrast, in relation to Mr Stuffers, the Magistrate found at paragraph [28] of her reasons:
Mr Stuffers gave his evidence in a straightforward, responsive and helpful way; he did not embellish and his account was plausible and logical. I accept his evidence in its entirety.
The expression by the Magistrate as to her findings on credibility in part refers to the manner in which each of them gave their evidence. However, when considering her reasoning as a whole, the Magistrate has correctly approached the matter, by not too readily drawing conclusions about truthfulness and reliability solely or mainly based upon the appearance of witnesses, but also by looking at facts and the apparent logic of events.[6]
[6] Fox v Percy (2003) 214 CLR 118, 129.
Common chronology of events
In her reasons for decision, the Magistrate set out a chronology of events “not in dispute”. One of the events included in this chronology is now contested. The following is a chronology of events, which amends and builds upon the chronology contained in the Magistrate’s reasons:
8 March 2004 - Mr Stuffers first meets the appellants at the property for the purpose of an appraisal.
15 March 2004 - Mr Stuffers attends at the property and gives the appellants an appraisal letter dated 15 March 2004 (Exhibit P1). The appraisal letter stated:
As I mentioned your property is unique and very hard to compare to others, regarding views etc, but I would suggest a price range between $380,000.00 and $400,000.
21 March 2004 - The appellants signed a contract, not subject to finance, to purchase a house at Hahndorf (“the Hahndorf property”) for $385,000, with a settlement date set for 30 April 2004.
22 March 2004 - Mr Stuffers attended the property and the appellants signed the Agreement (Exhibit P2).
2, 9,16, 23, - The property was advertised for sale at mid to high
30 April, $400,000’s (save for 9 April 2004 when the price advertised14 & 21 May stated was “in the $400’000s”).
and 4 June 200411 June 2004 - The property was advertised low to mid $400,000’s.
15 June 2004 - Mr Stuffers spoke with Mr Schulze who agreed to lower the price in the next advertisement.
18 June 2004 - The property was advertised as “offers over $395,000”.
(Friday)
20 June 2004 - The appellants met Mr Mele and entered into an oral
(Sunday)agreement to sell the property for $350,000. The respondent’s “for sale sign” at the property was removed by the appellants.
21 June 2004 - Mr Mele instructed Ms H Brown, a registered conveyancer,
(Monday)to prepare documents to purchase the property from the appellants.
Ms Brown telephoned Mr Schulze who confirmed that he would sell his property to Mr Mele for $350,000.
Mr Schulze telephoned Mr Stuffers and told him he was taking the property off the market.
22 June 2004 - Mr Schulze writes to Mr Stuffers and advises him
(Tuesday)(Exhibit P8)
We have decided to withdraw the house from the market as advised, basically to see what happens and to reconsider our options. Obviously we are disappointed that we have not sold so far. Although we have no other agent in mind at this stage, we would like to end our contract with you … One of our options is to “go it alone” with the sale for the moment, but as I said, we are not clear yet what direction we will take.
25 June 2004 - The appellants attend the conveyancer’s office and sign a written contract for the sale of the property to Mr and Mrs Mele (Exhibit P15).
25 June 2004 - Mr Stuffers receives the letter written by Mr Schulze dated 22 June 2004
Mr Stuffers in response sends a letter dated 25 June 2004 (Exhibit P9) which says, inter alia:
I received your letter dated 22/6/04 today, even though we spoke on the phone that day regarding the signs that you took down on the weekend. I too am sorry that a sale was not achieved in the three month period that I had the property listed and actively marketed it. But like I said in the [sic] very early in the piece, if a property is over priced and stays on the market too long, it kills the interest in it. In my original appraisal I stated that in our opinion your property should sell for between $380,000.00 to $400,000.00. I feel that if we had gone with that we would have had a sale. Anyway it didn’t happen, “that’s life”.
30 June 2004 - The date set out in the Agency Agreement for the expiration of the sole agency. (Exhibit P2)
30 June 2004 - Mr and Mrs Mele move into the property prior to settlement.
1 July 2004 - Mr Schulze writes a ‘Thank You’ note to Mr Stuffers (Exhibit P10).
2 July 2004 - Mr Schulze writes a letter to Mr Stuffers (Exhibit P11).
12 August 2004 - Settlement occurs for the sale of the property to Mr and Mrs Mele.
Grounds of appeal
As previously indicated, 25 grounds of appeal were pursued. I will deal with some collectively as many are linked by topic.
The grounds of appeal do not specifically seek to challenge the Magistrate’s findings on credibility, but instead focus on arguments that the findings were either wrong, against the weight of evidence, or inconsistent with other alleged findings. However, there was an implied challenge to the Magistrate’s credibility findings, by reason of the content of the grounds.
Dealing first with the grounds of appeal which challenge findings of fact. Most of the findings of fact challenged on appeal relate to the representations alleged to have been made by Mr Stuffers which were false or misleading. Three representations were alleged.
First representation
Grounds 1 – 3
In the Amended Defence, Set off and Counterclaim, it was pleaded that in March 2004, during the first visit by Mr Stuffers to the appellants’ property, Mr Stuffers said to the appellants “What do you want for this. Half a million or so?” It was pleaded that by these words the appellants understood Mr Stuffers to mean that his impression of the property was that it was worth $500,000 or thereabouts, or in the alternative, that the appellants would be able to procure a purchase of the property in the sum of $500,000 or thereabouts.
The evidence given by Mr Schulze was that when Mr Stuffers went to the property on 8 March 2004, his first comment was: “Well, what do you reckon’ half a million”.
By contrast, the evidence of Mr Stuffers was that, in response to Mr Schulze talking about why his property was worth more than another property sold nearby, Mr Stuffers said “Who knows, somebody might give you half a million for it”.
The Magistrate did not expressly conclude which version of the two she accepted, but she did find in paragraph [10] of her reasons: “I do not accept that Mr Stuffers made a representation by stating that price of half a million dollars was achievable”. Bearing in mind her general rejection of the credibility of the evidence of the male appellant and her general acceptance of the evidence of Mr Stuffers, in conjunction with her finding in paragraph [10], it appears that the Magistrate accepted Mr Stuffers’ version of the conversation on that first occasion.
In any event, on appeal the appellants were content to accept and rely on the version given by Mr Stuffers, in order to mount a new legal argument that his statement was an implied representation as to a future matter. It was argued that the comment was a representation that half a million dollars was a possible future sale price for the property and the Magistrate was therefore wrong in finding that Mr Stuffers had not made a representation that half a million dollars was achievable.
I entertained this new argument by the appellants on the basis that it was essentially a legal argument. In my view, the statement of “who knows, somebody might give you half a million dollars for it”, was in the overall context of the first meeting between the appellants and Mr Stuffers, an introductory statement speculating as to what somebody might be prepared to offer for the property. It was made in the context of a preliminary visit to the property for the purpose of appraisal, when it was known by the male appellant that after this visit Mr Stuffers would look at comparative sales and provide a written appraisal of what the property might sell for. It was not a statement which represented either expressly or impliedly, that the property was worth half a million dollars or that it could be sold for half a million dollars. Further, the evidence of the male appellant was that Mr Stuffers gave “no real figure that day. The only figure mentioned that day was half a million dollars”.
Moreover, a representation as to “worth” would not in any event be a representation as to a future matter as it is by its nature an assessment of current value. I reject the appellants’ submission on this point.
In relation to this first meeting and the first representation, the appellants challenged the Magistrate’s finding that it was agreed that on 8 March Mr Stuffers suggested that “the property should be advertised for sale at a price between $380,0000 and $400,000”. The respondent conceded that this finding was inaccurate. At the same time the respondent pointed out that at paragraphs [9] and [10] of her reasons, the Magistrate considered the details of the first meeting. Apart from incorrectly recording that the initial meeting took place “on 8 April” instead of “8 March”, the remainder of the paragraphs clearly demonstrate that the Magistrate was aware that the content of the discussion on that day was an issue between the parties and was not agreed as set out in the chronology. At paragraph [9] the Magistrate states:
Although the parties do not agree on the content of their conversation about the Watson property, they agree that a comparison was made when discussing the worth of the property, which resulted in the comment made by Mr Stuffers ‘Who knows, somebody may give you half a million for it’.
Therefore the clear inaccuracy of the Magistrate in setting out the chronology has not led her to any error in her reasoning when dealing with her findings as to the first representation. This inaccuracy is also irrelevant having regard to the way in which the appellant argued the first representation, as discussed above, namely by acceptance of the evidence of Mr Stuffers.
In summary, I do not consider that there was any error by the Magistrate as to the first representation, which impacted upon her reasoning, and for the reasons given I reject the submissions of the appellants on this point.
Second representation
Ground 4
The second representation was alleged to be contained in an appraisal letter sent by Mr Stuffers to the appellants dated 15 March 2004. The letter stated:
The current Real Estate market is extremely active with properties in short supply. We use statistical information to gain market prices obtained and recent sales in the Berri area.
As I mentioned your property is unique and very hard to compare to others, regarding views etc, but I would suggest a price range between $380,000 and $400,000 (emphasis added).
The appellants in their pleading and in argument before me, submitted that the statement emphasised above in the appraisal, was a representation as to a future matter and represented “that the land was worth”, or in the alternative “a price could be achieved”, in the range of $380,000 - $400,000.
In relation to the submission that the statement was a representation as to the worth of the property, if that was a correct characterisation it would not in my view amount to a future representation in its context, as it would have been a present day value which was provided. I also note that Mr Stuffers was a real estate agent whose role in providing an appraisal was to advise the price for which a property may be put on the market, as distinct from giving a current valuation of the property, such as would be given by a valuer. I do not consider that the statement in the letter of appraisal amounted to a valuation of the property, but instead provided a price range within which Mr Stuffers recommended the property be put on the market.
In relation to the submission that the statement was a representation as to “a price range which could be achieved”, I consider that as the prime purpose for the appraisal was to suggest a price range at which the property could be put on the market, it was also implied that a sale could be achieved within that range. As to whether this may be characterised as a representation as to a future matter, the appellants relied upon the case of Ting v Blanche (1993) 118 ALR 543 (“Ting”).
In Ting, the alleged representations were made to a prospective purchaser regarding the rental that could be achieved for certain property, based on a rental value per foot. In that case, the representation: “you can expect about $8”, was more overtly expressed as a future representation.
In this case there was no overt expression such as “you can expect about $380,000 - $400,000”, however there is an implication by the very nature and purpose of the appraisal letter, that a future sale of the property could be achieved for a price in the range of $380,000 to $400,000.
Whilst the statement in the appraisal is setting out what may be regarded as Mr Stuffers’ state of mind at that time of the appraisal, this does not prevent the statement from also being a representation as to a future event - namely the future sale of the property for a price within that range. The decision in Ting is authority for the proposition that a representation as to an event or conduct in the future is not excluded from being considered a future matter, merely because it also implies a representation as to the maker’s present state of mind.
That being the case, the statement does in my view amount to a future representation pursuant to s 54(1) of the Fair Trading Act 1987 (SA) (“FTA”) and requires that the respondent adduce evidence proving that Mr Stuffers had reasonable grounds for making the representation. In the absence of reasonable grounds being so proved, the representation will be deemed to be misleading by operation of s 54(2) FTA.
Accordingly, I turn now to consider whether there were reasonable grounds for making the statement. I return first of all to the terms of the letter of appraisal and note the qualifying preface to the statement as to the price range, which read:
As I mentioned your property is unique and very hard to compare to others, regarding views etc, but I would suggest a price range between $380,000 and $400,000. (emphasis added)
Mr Stuffers gave evidence that no comparative sales analysis could be done in order to reach his conclusion as to the achievable price range, because there was nothing with which he could appropriately compare the property. He gave evidence about another property sold a couple of hundred metres down the road from the property. This property was different in that it was overlooking the river, had a swimming pool, and had been sold the year before for $362,000. This is in contrast to the appellants’ property, which did not have a river view, had no pool, and on which there was a much older house. At the same time the size of the land on the property was greater (1 ¾ acres).
Mr Stuffers also gave evidence that there was little by way of comparative sales for houses in residential areas in Berri as there were few properties as large as this one. When asked whether he could have used properties in Renmark or Loxton for comparison, he indicated that in his experience of some six years, every town has different values. He also obtained a printout of sales in the area (Exhibit P19) but again this was of little assistance for comparative analysis. He gave evidence that as an employee of L.J. Hooker he had sold approximately 23 properties in the Berri area in the last two years.
In the net result he used the property further down the road which had sold the year before for $362,000 and added 10 to 20% to arrive at the range of $380,000 to $400,000.
In all of the circumstances, I am satisfied that there was evidence adduced which demonstrated a reasonable basis for Mr Stuffers’ appraisal. In reaching this conclusion, I note that he was not a qualified valuer, there was little else to compare the property with, and that he heavily relied on his own personal experience in forming the valuation.
The fact that the property was subsequently sold for $350,000 to Mr and Mrs Mele, is not necessarily demonstrative of the value of the property. Whilst it has some relevance to the issue of whether there was a reasonable basis for the representation, it is not determinative of it. The property was advertised at a figure above the range given by Mr Stuffers in his written appraisal throughout April, May, and up until 18 June 2004, when it was reduced to $395,000.
As the Magistrate rightly observed at paragraph [22]
I am not persuaded that because Mr and Mrs Mele purchased the property for $350,000, that figure sets the property’s proper value or market value. I find it more likely that the failed, lengthy advertising campaign had a negative impact and as Mr Stuffers suggested in his letter of 25 June (P9), the market had been killed. Mr Mele had sufficient experience as a real estate investor to find a bargain.
I therefore reject that there is a basis for the claim that a misleading representation was made in the written appraisal given by Mr Stuffers as alleged by the appellants. This is even without considering whether or not there had been any reliance on any such representation which is discussed later in these reasons.
Third representation
Grounds 5, 6, 9, 10 and 11
The third representation was alleged to have occurred shortly after 15 March 2004, at a time the appellants cannot precisely recall. It was alleged that at this time Mr Stuffers revised the respondent’s estimated price or value to $450,000. It was also pleaded that it was “said contemporaneously therewith, that the Land ‘would sell quickly’ at that price”. This was the price at which the property was to be offered for sale, according to the Agreement which provided for the property to be advertised “At the price of $450,000 or such other prices as the Vendor may specify”.
The Magistrate found that Mr Stuffers did not make a representation that the property would sell for $450,000, and found it more likely that the appellants themselves asked for the property to be offered for sale at $450,000.
The evidence of Mr Stuffers was that when he gave the appellants the written appraisal, Mr Schulze said: “…that’s too low, we want a bit more than that”. Mr Stuffers gave evidence that the price of $450,000 was inserted in the Agreement as Mr Schulze’s idea and that he (Mr Stuffers ) said “let’s try it at that price”. Mr Stuffers also gave evidence that the price of $450,000 was put in there even though it was higher than the appraisal price because “…you’ve got to give it a go, don’t you?”. In cross-examination Mr Stuffers again emphasised that the figure was Mr Schulze’s idea and that it was his prerogative to say that he wanted more than the written appraisal. He also said that after the first month he told Mr Schulze that the price should be reduced.
By contrast, when asked as to how the figure of $450,000 was inserted in the Agreement, Mr Schulze gave the following evidence-in-chief:
Q. Can you explain how that figure came to be put in there.
A It would have been suggested by Pieter and agreed to.
Q It would have been; can you recall whether there were any discussions about it.
A.No. I have to say not absolutely specifically but Pieter said we'd always get 450, so that was obviously the figure we agreed on, yes.
This evidence appears to be based upon supposition rather than actual recall, and was not improved upon during cross-examination. The evidence of Mr Schulze was that he and his wife thought they would get about $450,000 based upon what Mr Stuffers had said. He also said when cross-examined:
Q That's because that's the price you wanted, wasn't it, 450,000.
A. Pieter said he thought we would get 450,000.
Q. I suggest he never said that to you at all, it's untrue.
A. I'm sorry but he did. My version is that he did and I'll stick by that.
It can be seen from this evidence, that he had become more affirmative on the point during cross-examination.
Later in his evidence under cross-examination he was further asked:
Q. I suggest you told him that you wanted it to be put on the market for $450,000.
A.After he has mentioned the first half a million, which we all in reality thought, well, that's a lot more than we thought; we thought about 450 and he agreed with it. He said it should sell for that and it shouldn't take long….
…
Q.See if you could answer this question yes or no. Do you agree that you told him the property was to be put on the market at 450,000.
A. Yes.
Q.I suggest you did that because that was the price you wanted for it, not because he’d told you that's what you'd get for it. Do you agree or disagree with that.
A. Disagree.
Simply based on the transcript of evidence alone, I consider that the evidence of Mr Schulze is not compelling, and instead appears to confirm Mr Stuffers’ evidence that it was probably the appellants who suggested and asked for the figure of $450,000 to be inserted into the Agreement.
The Magistrate found support for her finding that it was Mr Schulze who asked for that sum to be inserted in the Agreement, in the fact that it was contrary to the written appraisal given by Mr Stuffers. Further she stated that:
The only reasonable inference is that the appellants did not accept the appraisal, as it appears absurd for a real estate agent to record in writing an appraisal far lower than what is stated orally or informally. Such a contradiction should lead to the vendor being suspicious of such contradictory behaviour on behalf of an agent and I prefer Mr Stuffers’ evidence on this matter. (emphasis added)
Whilst one may question the Magistrate’s expression that this was the “only reasonable inference” and it appears “absurd”, nonetheless this was certainly an inference which could more readily be drawn from the documentation, supported as it was by coherent evidence of Mr Stuffers in contrast to the lack of specificity and assumptions of the male appellant. I also agree with the Magistrate that a real estate agent who provided an oral appraisal which was higher than the written appraisal, would lead a vendor to be suspicious.
In addition, the evidence as to this third representation also needs to be considered in the context of the other two representations and the overall findings of credibility of the Magistrate in relation to Mr Stuffers and Mr Schulze.
I reject the appellant's argument with regard to the third representation.
Falsity of representations and reliance
Grounds 13,14, 15, 16, 17, 18, 19 and 20
In view of the fact that I have rejected the arguments for misrepresentation, in relation to the first representation and third representations, and have found that there was a reasonable basis for the second representation, there is no need for me to consider the grounds in relation to falsity.
I have already dealt with the only representation which could have been characterised as being a future representation and have found that there were reasonable grounds for the price range which was suggested by Mr Stuffers as being achievable.
In relation to reliance, as to the second representation Mr Schulze gave no evidence that he relied upon the written appraisal in entering into the Agreement or the contract to purchase the Hahndorf land. The onus was on the appellants to prove a causative link between the written appraisal and either their conduct in entering into the Agreement, or their contract to purchase the Hahndorf land.
In relation to the entering into the Agreement, there is no evidence that the appellants relied upon the letter of appraisal when entering into the Agreement. I agree with the Magistrate’s conclusion, that the insertion of $450,000 in the Agreement was made at the suggestion and direction of the appellants and was a figure greater than the written appraisal. Apart from the fact that there was no evidence of reliance, this would suggest it improbable that there was reliance on the written appraisal. Further, it was only the male appellant, Mr Schulze, who gave evidence. There was no evidence of any reliance at all by the female appellant, Mrs Schulze.
In relation to the purchase of the Hahndorf land, again there was no evidence that the appellants relied upon the written appraisal. The appellants had already formed the view that the property was worth about $450,000; they had been looking for other properties to purchase in the Adelaide Hills prior to the written appraisal and they were looking in the $400,000 plus price bracket.
Further, Mr Schulze said that when Mr Stuffers gave him the written appraisal, he told Mr Stuffers that the property was “worth more than that”. The appellants settled on the Hahndorf land because “… when we walked through the door we both loved it, which we hadn’t got from any other house. The grounds and the house were just what we were looking for”. The appellants felt that they could afford it at $385,000, it was not subject to finance. They entered into the contract for the purchase of the Hahndorf property only six days after the written appraisal and before they had even signed the Agreement with Mr Stuffers for the sale of the land, which did not occur until the next day. The Agreement provided for a sole agency to cease on 30 June 2004. The settlement on the Hahndorf property was for two months earlier, namely 30 April 2004.
Mr Schulze was also cross-examined about the financing of the purchase of the Hahndorf property and made no reference to the letter of appraisal in the course of that evidence, but instead referred to the third representation which was rejected by the Magistrate and which I have also rejected.
In short, even if there had been a misleading representation contained in the written appraisal, which I reject, there is no causative link which has been proved to show reliance on it for the purpose of either entering into the Agreement, or for the purchase of the Hahndorf property.
In addition, there is no evidence that the appellant suffered any loss or damage as a consequence of the written appraisal. The Magistrate found, and I consider that the evidence supports her conclusion, that the later sale of the property to Mr and Mrs Mele for $350,000, was due to factors other than the written appraisal; namely, the failed lengthy advertising campaign at an unrealistic value, and the experience of Mr Mele to take advantage of a bargain. I therefore reject the appellants’ argument.
Whether the appellants informed Mr Stuffers of the purchase of another property
Grounds 7 and 8
The Magistrate found at paragraph [13] that:
For reasons unknown, the defendants did not tell Mr Stuffers that they had purchased the Hahndorf property. I am unsure why they did not consider it prudent to confide in Mr Stuffers about their timetable for moving to a new property. However, their failure to do so coupled with their omission in ever speaking with Mr Stuffers about the importance of realising half a million dollars for the property confirms my finding that Mr Stuffers made no representation as to the property’s sale price.
The Magistrate further found at [17]:
The purchase of the Hahndorf property without consultation with Mr Stuffers suggests confidence or optimism about the sale of the property and they did not share any apprehension about a shortfall in finance or the cost of bridging finance with Mr Stuffers.
The appellants submit that these findings of the Magistrate were incorrect, and that as she relied on an incorrect finding for the purpose of concluding adversely to the credit of Mr Schulze, her decision was flawed.
The respondent concedes that the Magistrate was partly incorrect in the findings set out above. Counsel for the respondent referred to the evidence of Mr Stuffers that the appellants did mention for the first time, a couple of weeks after the property had been for sale, that they had purchased the Hahndorf property. That aspect of the Magistrate’s finding was therefore incorrect. However, the Magistrate was correct in finding that the appellants purchased the Hahndorf land without any consultation with Mr Stuffers and that the appellants never spoke to Mr Stuffers about the importance of realising half a million dollars for the land. These findings are highly relevant to the Magistrate drawing adverse conclusions about the covert behaviour of the appellants, linked as it was to other behaviour found by the Magistrate which was not challenged on appeal. Therefore, in my view the aspect of her finding that was incorrect was not pivotal to her reasoning and I therefore reject the appellants’ submissions in relation to the importance of that error.
Notice to Admit
Ground 23
Ground 23 of the appellants’ Supplementary Notice of Appeal submitted that the Magistrate erred in failing to find that the facts set out in the Defendants’ Notice to Admit dated 31 October 2004 were deemed to have been admitted by the respondent.
Rule 76(3) of the Magistrates Court (Civil) Rules 1992, provides that:
(3)(a)A party may by notice in writing to any other party, request that party to admit facts or the authenticity or admissibility of a relevant document specified in the notice. A copy of this Sub-rule must be served with the notice.
(b)If and to the extent that the other party fails by notice in writing to object (including detailed reasons for the objection) to the facts or documents specified in the notice within 21 days of the service of the notice, the contents of the notice will be taken to be admitted upon proof of service of the request to admit.
(c)At the trial of an action the Court may admit evidence contrary to any such admission.
The appellants submit that the balance of the facts alleged in the Notice to Admit dated 31 October 2004 were met with the response “Not admitted”. The appellants submit that this response is not “notice in writing to object (including detailed reasons for the objection) to the facts… specified in the notice”.
At trial, a great deal of evidence was adduced which was contrary to the alleged admissions. No objection was taken in relation to this evidence, until the issue of the notice to admit was raised after the respondent had closed its case.
The respondent submitted that objection should have been taken, and the issue of the Notice to Admit raised, before the contrary evidence was given and before the respondent had closed its case. Further, it was contended by the respondent that a number of matters sought to be admitted were either improper or involved matters of law. The respondent submitted that in these circumstances it was proper for the Magistrate to dispense with strict compliance with R 76(3), and to admit evidence contrary to the alleged admissions. I agree with that submission.
Commission under the Sales Agency Agreement
Ground 24
The appellants also argued that the Magistrate erred in finding that the Agreement gave the respondent a right to be paid commission in the circumstances of the case. Counsel for the appellants submitted that the correct interpretation of the Agreement would not give rise to a right to be paid commission, in circumstances where the sale was not procured by the agent and where the sale was for less than the price stated in the Agreement.
I consider that this interpretation is not open having regard to the terms of the Agreement. Paragraph 2 of the Agreement provides:
2.The vendor appoints the Agent as its agent to effect a sale of the Property in the manner and at the price specified in the Schedule or at such other price as the Vendor after consultation with the Agent may nominate in writing to the Agent. The Agent accepts this appointment and undertakes to use its best endeavours to effect a sale of the Property.
Paragraph 6 of the Agreement relevantly provides:
6.1If the Agent effects a sale of the Property, the Vendor must pay to the Agent the Professional Fee immediately upon completion of the sale. (emphasis added)
6.2For the purpose of this Agreement, the Agent is deemed to have effected a sale of the Property IF EITHER:
….
6.2.4 during the Term of the sole agency the Vendor enters into a contract to effect a sale of the Property whether through the agency of the Agent or otherwise;
The Schedule to the Agreement provides that the property shall be offered for sale “at the price of $450,000 or such other price as the Vendor shall specify in writing”.
The appellants’ contention is that paragraph 6 of the Agreement is limited by the reference to price in paragraph two, so that paragraph 6.2.4 only applies when the property is sold at the price nominated in the Schedule.
Reading the Agreement as a whole, it is clear that such an interpretation would fail to give the Agreement its proper meaning and effect. Paragraph 6.2 deems certain sales to have been effected by the agent for the purposes of attracting the commission in 6.1.
Paragraph 6.1 which provides for the commission makes no reference to the price at which the sale is effected, or the price that is contained in the Schedule. The obligation to pay is unqualified by these prices, or by the reference to price in paragraph 2.
The control of the price at which the property is offered for sale and is sold, is solely that of the vendor. The vendor may set the price, change the price, or sell other than through the agent at his/her own chosen price. Whichever sale occurs within the period of the Agreement is then a sale which attracts the commission in paragraph 6.1.
It would be absurd for the Agreement to be read so as to allow the respondent to be paid a commission only if and when the property was sold for the exact price set out in the Agreement. Such an interpretation would allow the vendors to escape liability to pay a commission, merely by selling the property at a price higher or lower than that specified in the Agreement or specified by the vendor in writing.
This ground of appeal therefore fails.
Costs
Grounds 26 - 27
The Magistrate awarded costs to the respondent at 70 per cent of the Supreme Court Scale up to 22 August 2005, and thereafter at 90 per cent of the Supreme Court Scale. The Magistrate considered that the proceedings changed significantly on 22 August 2005 when the appellants filed an Amended Defence and Counterclaim. The Magistrate noted that the Amended Defence, Set-Off and Counterclaim consisted of 11 pages of pleadings, and raised a number of issues.
The appellant argued that the Magistrate should have awarded costs to the respondent for the whole of the action on a party-party basis according to the Third Schedule of the Magistrates Court (Civil) Rules 1992.
Rule 106(1)(c) provides that, “where the action involved unusual difficulty or intricacy, or other proper cause exists - a successful party is entitled to costs on such percentage of the Supreme Court scale as the Court specifies”. The appellants argued that the action was not unusually difficult or intricate, and that the Magistrate failed to find that it was so. The appellants pointed to the Magistrate’s remarks that there should be some recognition of the complexity of the matter, “without declaring the matter a complex action”. The appellants also argued that the filing of an Amended Defence, Set-Off and Counterclaim on 22 August 2006 was insufficient to “tip the balance” in favour of an order under Rule 106(1)(c).
Counsel for the respondent submitted that the Magistrate’s reasons clearly demonstrated that the Magistrate was of the opinion that “proper cause” existed to award costs as a percentage of the Supreme Court Scale.
Having seen the written submissions provided by both counsel to the Magistrate at the hearing, mostly related to the Defence, Set-Off and Counterclaim, I consider the order for costs to be apposite. I reject that submission.
Conclusion
For the reasons set out above I dismiss the appeal.
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