Valherie v Mitchell No. DCCIV-02-1195

VALHERIE V MITCHELL AND ARNOTT
[2004] SADC 20
Judge Kitchen
Civil

This is an appeal against the order of an acting Master (“the Master”) dismissing an application by the appellant (the plaintiff in the action) for summary judgment and a subsequent application by the appellant that the respondents’ defence be struck out.
The proceedings have a somewhat complicated history and were preceded by an earlier action by the appellant against the respondents and others.
The appellant came to Australia from France in 1972 and settled in Sydney where she mainly lived until 1984 when she returned to live in France; during her residence in Sydney she became a naturalised Australian citizen in 1975.
In the latter part of 1998 the appellant returned to Australia, to Adelaide, and looked to purchase a house intending to settle here.
The appellant’s case is that in February 1999 she saw a newspaper advertisement, in which an agent offered for sale a house in Windsor Gardens. The advertisement stated the house to be, inter alia, “immaculate” and the price to be “reduced to sell $99,950”. The appellant went to inspect the house. The house was owned by the respondents.
The appellant claims that at the inspection the agent handed to her a one page “brochure” containing representations concerning the house which included “nothing to spend – perfect presentation”, relying on which and the advertisement, and the appearance of the house and statements allegedly made to her by the agent, the appellant offered $99,000 to purchase the house; the offer was accepted and settlement of the transaction occurred on 9^th April 1999.
About eight days after settlement an architect, engaged by the appellant, inspected the house and provided to the appellant a written report identifying, on the appellant’s case, “serious faults” in the house. In November 1999 the appellant engaged a building consultant to inspect and provide to her a report on the state of the house; that report on the appellant’s case identified extensive internal and external cracking and deformation of walls.
After approaches to the Commissioner of Consumer and Business Affairs, and the Valuer-General, the appellant on 4^th July 2000 wrote to the respondents to the effect that she rescinded the contract between her and the respondents for the sale and purchase of the house, and in August 2000 she commenced proceedings in this court against the respondents, the respondents’ agent and other defendants.
The appellant said that in September 2000, because of the state of the house, she went to live in rented accommodation and in early December 2000, having “suffered a nervous breakdown”, she left the country and returned to France. In February 2001 while the appellant was in France a Master of this court dismissed the appellant’s action against the “other defendants” and ordered that she file a fresh statement of claim – the appellant failed to do so and her action against the respondents and the respondents’ agent was dismissed with costs. At the end of 2001 the appellant returned to Adelaide, learned that there had been an auction sale of the house by the Sheriff, and instituted an appeal against the order made by the Master in February 2001. The appeal was dismissed but, the appellant says, the presiding Judge informed her she could “re-instate a claim for misrepresentation”.
The appellant commenced the present proceedings against the respondents by summons filed on 20^th August 2002 claiming “compensation for damages and consequential loss in relation to the misrepresentation of a real property”; that summons was supported by the appellant’s affidavit. On 4^th September 2002 the respondents applied for an order striking out the action on the grounds it was “an abuse of the process of the court’ and “scandalous, frivolous and vexatious claims”. In support of that application the respondents filed their joint affidavit in which they summarised the events in the first proceedings.
On 13^th September 2002 the appellant filed an application for summary judgment, testifying she had not been served with the respondents’ application dated 4^th September 2002; she subsequently on 16^th September 2002 filed an affidavit in answer to that of the respondents. On 7^th October 2002, the appellant filed an affidavit at the direction of the Master testifying why she did not comply with the order made in February 2001 in the first proceedings.
The Master dismissed the respondents’ application for an order that the appellant’s action be struck out. On 10^th March 2003, the Master being satisfied the action should proceed on pleadings, an order was made that the appellant file a statement of claim within 21 days; he adjourned the summons for directions to 22^nd April 2003. A statement of claim was filed on 27^th March 2003.
On 8^th April 2003 the respondents filed an application to strike out the appellant’s claim on the ground it
“1. Discloses no reasonable cause of action;
2.Is scandalous and vexatious in its matter”.
That application was heard by the Master on the same date, 22^nd April 2003, as the summons for directions. On that occasion the Master distilled the respondents’ application to strike out to be limited to the allegation by the appellant upon which a claim for mental distress was made; on that issue the Master reserved his decision.
On 13^th May 2003 the Master dismissed the respondents’ application to strike out, ordered that the appellant file a fresh copy of her statement of claim within 7days and directed that the respondents file a defence within a further 14 days; he adjourned the proceedings for further directions on 24^th June 2003. On 20^th May 2003 the appellant filed her fresh statement of claim.
On 13^th June 2003 the appellant filed an application for an order that judgment be entered against the respondents, for damages to be assessed, on the ground that the respondents had failed to file a defence. That application was considered by the Master on 22^nd June 2003 together with an oral application made by the appellant on that day, for an order that the defence (which was filed on 18 June 2003) be struck out; the Master reserved his decision to 11^th July 2003 and on that day dismissed both applications. No written reasons were given by the Master.
As to each of her applications determined by the Master on 11^th July 2003, the appellant had filed affidavits in support; they were filed on 16^th June 2003 (FDN 30) and 23^rd June 2003 (FDN 37). They are not confined to facts within the appellant’s knowledge – they include what amounted to submissions. They do however contain the substance of the submissions made by the appellant on this appeal.
In her statement of claim the appellant alleges her personal history and circumstances prior to her arrival in Adelaide in 1998 with the intention of permanently settling here, and that she did not know of “soil movements, soil subsidence and wall cracking” in Adelaide. The appellant alleges (paragraphs 4-7, 9, 10 and 11, with particulars,) that the respondents “and/or” the (unnamed) “real estate sales agent acting on behalf of the” respondents made representations to the appellant (expressly, impliedly or by conduct) concerning the house at Windsor Gardens, on which she relied to purchase the house, and that the representations made were false to the knowledge of the respondents or the respondents were reckless whether they were true or false; allegations are also made against the respondents of unconscionable conduct, and breach of a duty of care owed to the appellant. In paragraph 8 the appellant alleges the nature and extent of defects (as I will call them for brevity) which she, or experts she engaged, discovered or identified the house to have after she took possession. The appellant claims damages, common law or equitable compensatory damages, exemplary damages and aggravated damages (paragraphs 12 and 13).
In their defence the respondents admit some allegations, deny others and as to the remainder plead they do not know and therefore cannot admit them. They also plead some positive allegations against the appellant (paragraph 13 of the defence).
In her application to the Master for judgment against the respondents, for damages to be assessed, the appellant relied on Rule 54.05 which provides:
“54.05Where an admission of the truth of a fact, or the authenticity of a document, is made by a party, either by his pleadings or otherwise, any other party may apply to the Court for such orders as he may be entitled to on the admission, without the determination of any other question between the parties, and the Court may make such order as it thinks just.”
and submitted (FDN 30) “the (appellants) have admitted the representation and have admitted they knowingly falsely represented the property in their affidavit of 8^th April 2003”. A copy, but not the original, of an affidavit by the respondents sworn on 7^th April 2003, is included in the court’s file. I infer it was filed, on 8^th April 2003, in support of the respondents’ application of the same date seeking an order to strike out the statement of claim which the appellant had filed on 27^th March 2003. Paragraph 4 of the affidavit is:
“4/ It has become inherently obvious that the plaintiff takes absolutely no responsibility for her actions in anything she does, hence the claims that the house was purchased strictly on the agent’s say so and the wording of an advert and brochure.
As a mature aged adult who claims to have bought and sold properties, ran a successful business, and also to have been involved in the real estate business in France, we find the plaintiff’s claims very hard to accept, since they imply complete naivety on her part.”
The appellant (I infer from her affidavit) submitted to the Master a dictionary definition of “naïve” and argued that by the respondents’ use of the word “naivety” it should be found they knew the representations “should not have been trusted, therefore were false and known to be false by the (respondents)” and the appellant was entitled to judgment.
In relation to the application for an order that the respondents’ defence be struck out, the appellant (I infer from her affidavit) submitted that the defence disclosed no “cause” of defence, did not comply with Rule 46A.05, 47.01 and 47.04, caused prejudice to the appellant, and delay in the proceedings, and was frivolous.
The appellant’s notice of appeal complains:
“3.The Master erred in fact in finding that the statement contained in paragraph 4, page 2, of the respondents’ affidavit of 8^th April 2003 is not an admission on their part that their representations of the property were false and known to be false by them.
4. The Master erred in law in finding that the respondents’ defence is adequate, is not in breach of the Rules of Court of this Court, is not unfair to the plaintiff/appellant and should not be struck out.”
In Ellis v Allen (1919) 1 Ch. 904, it was held that an admission made by the defendant in a letter written by his solicitor after action brought, was an admission made “or otherwise” within the meaning of the English High Court Rules equivalent to Rule 54.05. In my judgment an admission in an affidavit filed by a defendant in the proceedings would also be one made “by his pleadings or otherwise”.
The principles for the determination of an application for judgment on admissions are clear. In Ellis (supra) Sargant J wrote, at 908-909:
“The object of the rule was to enable a party to obtain speedy judgment where the other party has made a plain admission entitling the former to succeed … In my judgment it applies wherever there is a clear admission of facts in the face of which it is impossible for the party making it to succeed.”
In Ash v Hutchinson & Co Publishers Limited (1936) Ch. 489 (CA) Greene LJ wrote at 503:
“A plaintiff who relies for the proof of a substantial part of his case upon admissions in the defence must, in my judgment, show that the matters in question are clearly pleaded and as clearly admitted; he is not entitled to ask the Court to read meanings into his pleading which upon a fair construction do not clearly appear in order to fix the defendants with an admission.”
In her statement of claim the appellant pleads:
“4.During her research, the plaintiff read an advertisement for the Property and inspected it on or about the   21^st of February 1999, at which time a number of representations were made to her by the defendants and by the real estate sales agent acting on behalf of the defendants (hereafter referred to as “the Agent”) to the effect that the Property:
4.1was a “quality” and sound property,
4.2could be lived in for a number of years without requiring any further expense in the near future.
(hereafter jointly referred to as “the Representations”).
5.The Representations were:
5.1partly express and partly implied,
5.2made by conduct of the defendants and/or the Agent.
Particulars
As to the express parts:
(i)Advertisement for the sale of the Property placed by the Agent in the Advertiser of Saturday 20 February 1999 which contained the word “immaculate”,
(ii)Brochure of the Property given to the plaintiff by the Agent on or about Sunday 21 February 1999 at the start of the plaintiff’s inspection of the Property, which contained the words “Nothing to Spend – Perfect Presentation”,
(iii)Conversation between the plaintiff and the Agent on or about Sunday 21 February 1999, in which the Agent stated that the house:
(a)    was a ‘quality’ property,
(b)    had been very well maintained by the two ladies who owned it,
(c)    had been redecorated inside two years before,
(d)    had been painted outside one year before,
(iv)The Agent further stated that the present owners loved the house and were only selling because the garden had become too much work at their age.
(v)The actions of the Agent were performed on behalf of and/or as the agent of the defendants.
As to the implied parts:
(vi)The ‘immaculate’ presentation of the Property:
(a)    the painted outside walls were impeccable,
(b)    the inside walls and ceilings, either painted or wall-papered, were impeccable,
(c)    the overall appearance of the entire property was of a very sound and very well-maintained property,
(vii)The presentation of the Property reinforced the representations conveyed by the advertisement and the brochure,
(viii)All of these representations were reinforced by the Agent’s representations.
(ix)The actions of the Agent were performed on behalf of and/or as the agent of the defendants.
As to the conduct:
The plaintiff repeats the particulars set out above.”
“9.     The plaintiff says that the Representations were made by the defendants (directly and/or through their agent) fraudulently and deceitfully, with an intention to mislead and deceive, in order to induce prospective purchasers, and therefore the plaintiff, into purchasing the property.”
In the respondents’ affidavit, upon which the appellant relies, paragraphs 1 and 4 depose:
“1/ Misrepresentation:
No misrepresentation took place during the marketing of the house as claimed:
Immaculate “Plaintiff agrees this was so in Para 5 (vi)
Perfect Presentation “Again as agreed by plaintiff in Para 5 (vi)
Nothing to Spend: “Common every day sentence used by real estate agents”
Agent will verify comments by other parties who inspected that “it was the best presented house they had seen in a long time.”
4/It has become inherently obvious that the plaintiff takes absolutely no responsibility for her actions in anything she does, hence the claims that the house was purchased strictly on the agent’s say so and the wording of an advert and brochure.
As a mature aged adult who claims to have bought and sold properties, ran a successful business, and also to have been involved in the real estate business in France, we find the plaintiff’s claims very hard to accept, since they imply complete naivety on her part.”
I note at this point that although it would appear the parties possibly had the benefit of assistance from a legal practitioner, or the like, in preparing the statement of claim and the defence, the various affidavits seem to have been written without such assistance; as I remarked earlier, the affidavits are not confined to material facts but contain submissions and argument.
As to paragraph 4 of the Statement of Claim the respondents admit that the appellant inspected the property on or about 21^st February 1999, plead that they do not know and therefore cannot admit the allegation that the appellant read an advertisement for the property and deny the representations were made to the appellant. As to paragraph 5 of the Statement of Claim, the respondents, inter alia, admit there was an advertisement placed by the agent containing the word “immaculate”, and that the appellant was given a brochure as alleged by the appellant; admit paragraph 5.2 (vi)(a),(b) and (c); they deny that “the presentation of the property reinforced the representations conveyed by the advertisement and the brochure” (5.2)(vii) but in the alternative plead that “any representations in the advertisement and the brochure referred to the appearance of the property”. The respondents plead that they do not know and therefore cannot admit the representations alleged (paragraph 5.2 (iii) and (iv) of the statement of claim) to have been made by the agent to the appellant.
The appellant submitted that a dictionary definition of “naïve” being “extremely simple and trusting; having or showing an excessively simple and trusting view of the world and human nature, often as a result of youth and inexperience”, the respondents’ use of the word “naivety” therefore
·indicates that reliance on the representations about the property to make a decision to purchase it implies excessive trust and
·implies that the representations were not to be, and should not have been, trusted because they were false and
·the respondents have admitted their representations were false and known by them to be false.
From this analysis, the appellant contended that a prospective purchaser who had not “trusted” the representations would have arranged a pre-purchase inspection of the property, and a report, by an expert which would have revealed (what the appellant pleads to be) the true state of the property and either not purchased the property at all or purchased it at a considerably lesser price that the appellant paid.
The appellant’s case against the respondents for fraudulent misrepresentation depends upon her proving that the respondents made, or were responsible for the making of, a statement of fact which induced the appellant to enter into the contract with the respondents, that the statement was not true at the time it was made and that the respondents lacked belief in the truth of the statement or made it recklessly not caring whether it was true or false, that is the respondents did not honestly believe the statement was true. A finding concerning the respondents’ state of mind cannot be made without ascertaining how they understood the advertisement, or the brochure, for which they are (if it be the case) responsible: John McGrath Motors (Canberra) Pty Ltd v Applebee (1964) 110 CLR 656. I put to one side the statements allegedly made by the respondents’ agent to the appellant; I do not accept that the respondents use (in their affidavit) of the phrase “on the agent’s say so” constitute an admission by the respondents that those statements were made to the appellant.
In my judgment the respondents’ words in the last sentence of paragraph 4 of their affidavit, including the phrase “imply complete naivety on her part” on which the appellant substantially relies do not amount to a clear admission that the represented description of the property to be “immaculate” and “nothing to spend – perfect presentation” was made by them fraudulently as alleged by the appellant in paragraph 9 of the Statement of Claim. In my opinion the accusation of “naivety” on the appellant’s part implies no more, in the context, than that for the reasons asserted in the same sentence the appellant’s claims against them are not to be accepted.

Concerning the Defence, the appellant’s submission is that it should be struck out because it does not disclose a reasonable cause of defence, it does not comply with the Rules governing pleadings, it does not give fair notice of the respondent’s defence and it is frivolous.
In her submissions the appellant relied on Rule 46A.05(2), Rule 47.01 (which required that a defendant must plead specifically every ground of defence on which he relies, and the facts giving rise to them), Rule 47.04 (that no evasive denial or negative pregnant be pleaded in any defence) and Rule 46.18.
Rule 46A.05(2) provides:
“(2)   The Defence must plead, but plead only:
(a)    what parts, if any, of the Statement of Claim are admitted;
(b)    the material facts relied upon to constitute any ground of defence on which the defendant bears an evidentiary or a legal onus of proof;
(c)    such further material facts as are necessary to give other parties fair notice of the defendant’s case which they will have to meet;
(d)    any defences in law; and
(e)    any statutory provisions to be relied upon by the defendant.”
The appellant’s action was commenced on 20^th August 2002 and by a subsequent order of a Master it has proceeded on pleadings, therefore Rule 46A applies to the action but Rules 47.01 and 47.04 do not (see Rules 46A.01 and 46A.16). Rule 46.18 applies to pleadings governed by Rule 46A except insofar as it is inconsistent with Rule 46A.
The defence by pleading the denials or non-admissions it has, does not comply with Rule 46A.05 if, as I consider the Rule is to be construed, that which is not admitted is denied in the sense that the appellant must prove the none admitted materials facts alleged in the Statement of Claim. The defence does admit parts of the Statement of Claim and in paragraph 13 pleads material facts as to some of which the respondents bear, at least, an evidential onus of proof; therefore in my opinion the provisions of Rule 46A.05(3) do not apply.
The substance of the respondents’ defence is:
(a) that any of the representations the appellant may prove were made to her by the agent, other than what appear in the advertisement and the brochure, were made without the respondent’s express or implied authority
(b) that the representations made in the advertisement and the brochure were only as to the appearance of the property
(c) that any want of repair to, or dilapidations of, the property after it was purchased by the appellant were caused by the appellant’s failure to maintain and care for the property, and her abandonment of it
(d) a reliance on a specified clause of the contract of sale and purchase.
In my opinion the appellant knows from the defence that she must give, or adduce evidence, before the court as to each of the allegations of material fact in her Statement of Claim not admitted in the defence, and she is alerted to the case which the respondents will seek to make, or call evidence about, namely the summary in the preceding paragraph.
The defence, as I have said, includes denials and non-admissions which Rule 46A.05 does not permit, at least in the form they appear in the defence, but in my opinion that does not, in the exercise of the discretion under Rule 46.18, warrant an order striking out the defence either wholly or in part. In an application to strike out a defence it is not for the court to embark upon a trial of the merits of the case disclosed in the statement of claim or the defence to it.
The appellant submitted that the respondents’ defence is frivolous. I agree with the learned author of Civil Procedure in South Australia, in his commentary on Rule 3.01, that “frivolous” generally means “something that is not worthy of serious attention”. In my opinion the respondents’ case as drawn from the defence cannot be so described when it is taken into account that the appellant’s claims allege fraud on the respondents’ part, the damages she seeks are substantial and the parties are unrepresented; that latter matter alone should cause the court to be cautious in taking a step of striking out a defence for a failure to comply with the Rules.
The appeal against the Master’s order is dismissed.

[2004] SADC 20

30 January 2004