FEDERAL COURT OF AUSTRALIA .. Adaboccde .. District Registry ewes woeeeeesee Division No. of Action Gy, Bo. TITLE OF ACTION .22:, Wate» Aver vy AC SCO Adee (i + Anor Date(s) of hearing arfofee ,iefe/er Date judgment 7 ez 17/3/27 delivered TALS... Counsel and solicitors for oem iam iat Counsel and solicitors for kane nee CATCHWORDS TRADE PRACTICES - consumer protection - misleading or deceptive conduct - sale of house omissions and false representation - assessment of damages Trade Practices Act 1974 Metropolitan Adelaide Road Widening Plan Act (S.A.) 1972 Land & Business Agents Act (S.A.) 1972 No. G15 of 1986 JAMES STEPHEN WALSH and ELIZABETH ANN WALSH v. PTY LTD and BRENTON CHARLES ADCOCK FORSTER, J. ADELAIDE: 7 APRIL 1987 A.C. & C.C. ADCOCK IN THE FEDERAL COURT OF AUSTRALIA ) SOUTH AUSTRALTA DISTRICT REGISTRY No. G15 of 1986 GENERAL DIVISTON BETWEEN: JAMES STEPHEN WALSH and ELIZABETH ANN WALSH Applicants - and - A.C. & C.C. ADCOCK PTY LTD and BRENTON CHARLES ADCOCK Respondents MINUTE OF ORDER JUDGE MAKING ORDER 3 FORSTER J. WHERE MADE : ADELAIDE DATE OF ORDER 7 APRIL 1987 THE COURT ORDERS THAT: 1. Judgment be entered for the applicants in the sum of $6,000. 2. The applicants receive the costs of their action, such costs to be taxed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. Il' THE FEDERAL COURT OF AUSTRALIA } SOUTH AUSTFALIA DISTRICT REGISTRY Mo. G15 of 1986 GENERAL DIVISION BETWEEN: JAMES STEPHEN WALSH and ELIZABETH ANN WALSH Applicants - and - A.C. & C.C. ADCOCK PTY LTD and BRENTON CHARLES ADCOCK Respondents REASONS FOR JUDGMENT CORAM: Forster, J. This action arises from conduct which it is claimed constitutes a breach of 5.52(1) and 5.53A(1) of the Trade Practices Act and the applicants claim damages pursuant to §.82(1) of that Act. The dispute concerns the sale by auction of land and improvements situated at 428 Glynburn Road, Erindale ("the property") on 16 November 1984 for a purchase price of $363,000. Settlement took place on 28 February 1985. The first respondent, A.C. and C.C. Adcock Pty Ltd, was the real estate company responsible as agents of the vendors for the promotion and sale of the property. The second respondent, Brenton Charles Adcock ("Adcock"), was at all material times a licensed manager in the employ of the first respondent. 2. At the auction of the property the applicants, James Stephen Walsh and Elizabeth Ann Waish, made the successful bid for the property and signed the contract of sale and purchase on that day. The property was at all material times affected by the Metropolitan Adelaide Road Widening Plan Act (S.A.) 1972 (as amended) to the extent that there was a strip of land up to 2.14 metres in width along the western houndary of the property abutting Glynburn Road which might be compulsorily acquired for the purpose of road widening and which might not be built upon without the consent of the Commissioner of Highways. The evidence of Clemens whom I mention below satisfies me that on the halance of probabilities if the applicants sought consent from the Commissioner to erect fencing and appropriate surrounds for a tennis court on the strip it would be granted. The first respondent failed to disclose to either of the applicants that the property was 50 affected. The statement pursuant to s.90(4) of the Land and Business Agents Act (S.A) 1972 (as amended) and signed by Rodney Adcock as an agent of the first respondent neglected to disclose that the strip of land I mention appeared on the Metropolitan Adelaide Road Widening Plan. On 14 November 1984 the respondents conducted an open inspection of the property. Both applicants attended this open inspection. A sales brochure was distributed which was headed and endorsed with the name of the first respondent and listed Adcock as one of the company's agents responsible for the sale of the property. The brochure described the property as "a huge allotment measuring 159' x 200' with room for a n/s tennis court". A site plan on the rear of the brochure suggested the position of the tennis court to be in the north west corner of the property adjacent to the northern boundary and Glynburn Road. At the open inspection on 14 November 1984 Adcock made representations to both applicants that there was sufficient space on the land to construct a north/south tennis court in the north-western corner of the property. While Adcock had no specific recollection of the applicants, he admitted that it was highly unlikely that the applicants would not have been presented with a sales brochure. He did not deny that the representations as to the tennis court had been made. I have no reason not to accept the evidence of the applicants in this regard. On the day of, and immediately prior to, the auction of the property on 16 November 1984, the applicants allege a conversation took place between the applicants, Adcock and Bruce Corbet Whittem ("Whittem") who was assisting the applicants in the purchase of a suitable property. Adcock denies that he was involved in such a conversation. The evidence of the applicants and of Whittem was for the most part consistent, particularly with respect to the more salient points and I have no reason to disbelieve them. Whittem, although assisting the Applicants, was to some extent a 4. disinterested party and his recollection of the dialogue was steadfast and credible. Whittem, who is a land agent, had no doubt in regard to his identification of Adcock as the person with whom he had a conversation. Whittem had been involved in the sale of a nearby property on Glynburn Road. During the conversation, and in the presence of both applicants, he made enquiries of Adcock about the road widening scheme and its effect on the property. Whittem said in evidence that he said to Adcock "Are you sure that there is not road widening on Glynburn Road?" He said that Adcock replied "No there is no road widening on Glynburn Road any more." Whittem said that he then said "Are you sure Brenton there is not because I sold one previously down the road about a mile just twelve months prior and there is road widening on that property?" Whittem says that Adcock replied "No there is not any road widening in fact the Highways Department are now giving the land back to the owners - or selling it back." Adcock denies that this conversation or any conversation with Whittem took place but I believe Whittem as to the substance of this conversation to which the male applicant also attests. The applicants according to their own evidence and that of Whittem were looking for a substantial property with a tennis court or the potential for a tennis court. I accept that this was a primary consideration in their acquisition of a new property. In so far as they were not informed and deliberately or negligently misled as to the effect of the road widening scheme on the property and, in particular, the possibility of 5. interference with the positioning of a tennis court in the north-west corner of the property, the applicants were induced by the conduct of the respondent into the purchase of the property. The first respondent and the second respondent as agent of the first respondent and a "person involved" have breached 6.52(1) and 5.53A(1)(b) of the Trade Practices Act and are therefore liable for the loss and damage suffered by the applicants. The applicants became aware of the application of the road widening scheme to the property between the time of the auction and the date of settlement. One option available to them was to rescind the contract, but they chose to proceed to settlement after an unsuccessful attempt to negotiate a lower price. What loss have the applicants suffered as a consequence of the contravening conduct of the first respondent? This is I think to be measured by comparing the real value of the property bought with the price they paid for it. Acquisition of any of the strip has not taken place, and, in the opinion of Gerald William Clemens, supervising engineer in charge of the planning liaison section of the Highways Department, it is "unlikely ever" to take place. The applicants have not endeavoured to construct a tennis court on the property. Neither have they approached the Highways Department with a proposal to construct a tennis court and 6. associated structures on this part of the property, elements of which would require the consent of the Commissioner of Highways. It is also relevant that extensive roadworks were undertaken on the relevant part of Glynburn Road in 1984 and that road widening is highly unlikely in the future. Evidence in regard to the value of the property and the quantification of the loss suffered by the applicants was advanced on behalf of the applicants by Peter Maxwell Woon and on behalf of the respondents by Robin Graham Turner ("Woon and Turner"). Both these men have had considerable experience. I found the evidence and opinions of Turner to be more convincing than those of Woon not least because Turner addressed himself directly to the question which, in my view, requires answering which is the real ralue of the property at the date of the sale bearing in mind the effect of the possible road widening. Woon addressed himself to a somewhat different question, i.e. the loss suffered by the applicants because of the non-disclosure of possible road widening which he treated as being the loss of the possibility of having a tennis court which, in my view, because of the evidence of Clemens was the wrong question. To be fair to Woon he was probably not asked the appropriate question and on his instruction assumed that there was no possibility of constructing a tennis court on the land. Turner in his written valuation assessed the value of the property on the day of the sale assuming knowledge of the plan prepared pursuant to the Metropolitan Adelaide Road Widening 7. Plan Act 1972 at $360,000 which 1s $3,000 less than was paid. In his oral evidence he altered this opinion somewhat and assessed the effect of the non-disclosure of the possible road widening as §5,000. Woon on the other hand gave it as his written opinion that the applicants "have paid in my opinion $55,000 more for the property than they would have if the property had not been promoted as having a north/south tennis court potential". Apart from asking himself the wrong question Woon fell into error in my opinion by assuming that the applicants were prevented from building a tennis court which, in my view, bearing in mind the evidence of Clemens was an incorrect assumption. Whether or not an east/west tennis court is now regarded as acceptable for social tennis as Turner says and this would readily be accommodated on the land, Woon did not even consider the possibility of obtaining consent to the erection of a north/south tennis court. I consider that Woon's valuation of the loss suffered is an extravagent one and proceeded on wrong principles, possibly, as I have said because of the instructions he received. Doing the best I can and making use of the evidence of both valuers but principally that of Turner, I assess the real value of the property at the time of the sale at $357,000 and the applicants' damages at §6,000. 8. There will be judgment for the applicants in the sum of $6,000 and costs to be taxed. I certify that this and the + preceding pages are a true copy of the Reas for Judgment Mr Stice Forster. Associat c Dated: Z , 48%. Counsel for the Appiicants Mr B.M. Burley Solicitors for the Applicants Nieild and Co. Counsel for the Respondents Mr A.J. Besanko Solicitors for the Respondents R.R. Bentley & Co. Pty Ltd