JUDGMENT No. 5 74/81 —_— IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G92 of 1987 GENERAL DIVISION ) BETWEEN: JAMES CLAYTON MacCORMICK and MARUSIA MacCORMICK Applicants AND: HENRY ALFRED NOWLAND and MAVIS JEAN NOWLAND First Respondents AND: CORNISH SIMES & WILLIAMS PTY. LTD. Second Respondent MINUTES OF ORDER JUDGE _ MAKING ORDER: PINCUS J. DATE OF ORDER: 16 OCTOBER 1987 WHERE MADE: BRISBANE THE COURT - FINDS that the value of the house was at the date of sale $195,000. ORDERS THAT 1. Costs of today's proceedings be the applicants' costs in 2. the proceedings; The matter be adjourned to a date for mention. Settlement and entry of orders is dealt with i Order 36 of the Federal Court Rules. Portia , IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G92 of 1987 GENERAL DIVISTON ) BETWEEN: JAMES CLAYTON MacCORMICK and MARUSIA MacCORMICK Applicants AND: HENRY ALFRED NOWLAND and MAVIS JEAN NOWLAND First Respondents AND: CORNISH SIMES & WILLIAMS PTY. LTD. Second Respondent PINCUS J. 16 OCTOBER 1987 EX TEMPORE REASONS FOR JUDGMENT This is a case about a house which was bought on the basis of what are said to be misleading statements. It is in fact common ground that the house was advertised as a brick home, or a solid brick home, and that it 1s not. However, it has to be kept in mind that there is no admission of liability. The course which has been taken, in the hope of reducing the delay and the expense in resolving the dispute, has been to determine the question of value first, in the hope that the parties would be able to reach agreement on the outcome of the case; alternatively, the matter of liability will have to be determined later. On 21 August 1987, I directed that valuation reports be exchanged, and then on 8 October, I set down the issue of value for hearing today. The two valuers, who are both reputable men in their profession, have appeared before me today and I found their evidence very helpful. Mr. Slater, who is the rather less experienced of the two, made a valuation as at 15 April 1987. Mr. Cameron's valuation is as at 25 May 1987. Although there was some vague evidence given referring to a possible increase in prices since those dates, Mr. Cameron was of the opinion that there is no sales evidence to support an increase in values in the area from the date of his valuation, 25 May, until quite recently. That was material, because Mr. Cameron relied upon sales which took place very recently. His opinion was in effect that there may be an increase in values starting now, just burgeoning. However, on the evidence of Mr. Cameron, which I think I should accept, I am not able to say that there is any significant change in the value as between the valuation of Mr. Slater in April, Mr. Cameron's in May, or the present time, and I so find. The problem that both Mr. Slater and Mr. Cameron had essentially was that immediately after purchasing, the applicants, Mr. MacCormick (being an architect) did extensive work on the house, and Mrs. MacCormick has given evidence, which I accept, that a sum in the region of $100,000 was spent on that work. So that when Mr. Slater and Mr. Cameron went to value the house, they had to, in effect, reconstruct it mentally from the descriptions t they were given as to what it was like. Each of them then tried to compare his reconstructed view of the matter with sales in the area. I must say that the task seems to me to be a very difficult one; that is, unless the valuer has inspected the house substantially in the condition in which it was when it was. sold, it must be extremely difficult to get an accurate figure. The course which Mr. Cameron took, on the basis of a summation method, was to add the value of the land which he took to be $60,000 to the value of the improvements, which he took to be $162,000, arriving at a total of $222,000. That is $12,000 in excess of the price which was paid. Mr. Cameron further expressed the opinion that there would be no difference in value between the dwelling constructed of brick, cement rendered, anda dwelling constructed of concrete masonry block, cement rendered. Mr. Cameron added that he had attempted to support his summation valuation by reference to comparable sales in the area, although there were obvious difficulties about doing that, which I have mentioned. Mr. Slater expressed the opinion that cavity brick has a prestige value over and above concrete block, and I accept that that is so. The view which Mr. Slater came to was that there was a difference of about 10 per cent between brick and cement block, and he attributed a difference of two-and-a-half per cent to the factor of park adjacency. The way in which he worked it out was not to take the 10 per cent and the two-and-a-half per cent off the value on the t assumption that the house was brick and adjacent toa park. He has really added it up the other way; that is, he has reached a figure of $186,666, a figure to which when 12-and-a-half per cent 1s added, $210,000 is reached. Now it is clear from what I have said that Mr. Cameron and Mr. Slater differ on a major point, the question whether there is the difference in value between the value of brick and concrete block. They also differ in that Mr. Slater arrives at the opinion that the value of the property sold as brick and adjacent to the park, was the price agreed to be paid, $210,000. His contention, and I do not use that expression as implying that he did not believe in his contention, was that in the difficult circumstances the best one could do was take the price of the house sold with the characteristics assumed to exist, as the value. The task which Mr. Cameron set himself was inherently much more difficult, for the reasons which I have mentioned, and I feel obliged, in the circumstances, to accept Mr. Slater's view of the value of the house sold as solid brick with adjacency to the park, and I do so accept it. In accepting it, I do not wish to decry the value of Mr. Cameron's evidence, which I found to be honestly given and useful. It seems to me, however, that his contention is inherently a more difficult one because it depends on hypotheses as to what the house was like before its substantial alterations. Mr. Cooper, who appeared in the matter for the first respondents, pointed out that the rule in Spencer's Case (1907) 5 C.L.R. 418 can only find application if one has a willing but not anxious vendor and he said that there was no evidence that the vendor was not anxious. I hold, as a matter of law, that in the absence of such evidence the Court will not make an assumption in his favour. The price of $210,000 may indeed have many special factors affecting it, on the part of the purchaser and on the part of the vendor, but in the absence of proof of any such factors, one simply accepts the price. Therefore, on the two major points in issue, and with all respect to Mr. Cameron's evidence, I feel obliged to accept Mr. Slater. Without making any comparison between the two gentlemen in a general way, I thought his evidence more convincing than that of Mr. Cameron on this occasion. In particular, I find that the value of the house sold as double brick with park adjacency, was $210,000, as he says, and I accept his evidence that the house would be worth significantly less constructed of concrete block, as it is, and I reject Mr. Cameron's evidence to the contrary. It 1s not, perhaps, a matter of which one could take judicial notice, but double brick is really, as Mr. Slater Says, a prestige material. Concrete block may, in fact be pretty well as good, but people do not regard it as being quite as good. The more difficult point, although it is nothing like as large in money terms, is the question of park adjacency, because each valuer has attempted to compare a house sold with park adjacency and a house sold without park adjacency. Mr. Cameron says the difference in value is nil. He makes that finding at p.10 of his report, and it seems to me that, in part, his view in that respect is based upon what he says at p.8: "The allotment immediately to the rear of the subject Property is considerably lower in topography and has frontage to Ironside Street. The rear of this property is densly overgrown bushland which can be seen from the accompanying photographs, and this could be mistaken for parkland as Ironside Park adjoins this and other allotments with frontage to Ironside Street." It is true that, as Mr. Cameron implies, the overgrown nature of the allotment which, in fact, adjoins it could cause a visitor to mistake it for park. The owner would not mistake it for park and, as is a point properly made on behalf of the applicants, there is no lawful means of access to the park other than by going out on the street. I think there is a difference between true adjacency to the park, in the sense in which, in the circumstances, it obviously would be taken to be meant and the position as shown on the plan. And I think that I should allow something for that difference, although I am not convinced it is nearly as much as Mr. Slater says. The conclusion at which I have arrived is that the value of the property at the date of sale was $15,000 less than the sum paid for it. I also find, as I mentioned, that the value has not changed in any significant way since the date of sale. The sum of $15,000 which I have arrived at is not quite as much as the figure which was mentioned in Mr. Slater's report of $23,000 and represents my view of the matter. That is, whereas the house was sold for a sum of $210,000, in my opinion its value was $195,000, and I so hold. What I propose todo is to make the costs of today's proceedings the applicants' costs in the proceedings, and to adjourn the matter to a date for mention. + certify that this and the preceding pages are a true copy of the reasons for judgment herein of His Honour M- Justice Pincus Associate Dated 6 Ochoher (9&7