CATCHWORDS TRADE PRACTICES - Contract for the erection of a dwelling house - Alleged representation by builder that it was feasible to erect a house of a particular design upon the land - Quantification of damages. CONTRACT LAW - Contract to erect house in accordance with a particular design - Quantification of damages for breach. SECRET COMMISSION - Commission received by agent of applicant from first respondent - Recoverability. Trade Practices Act 1974 s6.52, 82. NSW G.217 of 1987 JILL CHRISTINE TURNER v HUDU PTY LIMITED trading as HENDRIKS & & Wilcox J Sydney 8 July 19868 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION CORAM PLACE: DATE: No. NSW G.217 of 1987 BETWEEN: JILL CHRISTINE TURNER Applicant AND: HUDU PTY LIMITED trading as HENDRIKS & ROBERTS First Respondent HOME BUILDERS CORPORATION OF NSW PTY LIMITED Second Respondent AND BETWEEN: HUDU PTY LIMITED trading as H KS & ROBER WILCOX J SYDNEY 8 JULY 1988 Cross-Claimant AND: JILL CHRISTINE TURNER Cross-Respondent MINUTES OF ORDER THE COURT ORDERS THAT: 2. Judgment be entered in favour of Jill Christine Turner against Hudu Pty Limited in the principal proceeding in the sum of twenty-eight thousand nine hundred and twenty-two dollars and seventy-seven cents ($28,922.77). Judgment be entered in favour of Hudu Pty Limited against Jill Christine Turner in the cross-claim in the sum of twenty-one thousand one hundred and twenty-three dollars and three cents ($21,123.03). The amount of the judgment entered under order 2 be set off against the amount of the judgment entered under order 1, leaving a net balance of seven thousand seven hundred and ninety-nine dollars and seventy-four cents ($7,799.74) payable to Jill Christine Turner by Hudu Pty Limited. Judgment be entered in favour of Jill Christine Turner against Home Builders Corporation Pty Limited in the sum of one thousand seven hundred and ninety-six dollars and forty cents ($1,796.40). The respondents, Hudu Pty Limited and Home Builders Corporation Limited, pay to Jill Christine Turner her costs of these proceedings provided that, as between themselves, the said respondents shall bear the Note: burden of the costs so ordered to be paid in the proportions Hudu Pty Limited 90% and Home Builders Corporation Limited 10% and each of the said respondents shall indemnify the other in relation to costs paid to Jill Christine Turner in accordance with those proportions. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. NSW G.217 of 1987 GENERAL DIVISION BETWEEN: JILL CHRISTINE TURNER Applicant AND: HUDU PTY LIMITED trading as HENDRIKS & ROBERT. First Respondent HOME BUILDERS CORPORATION OF _NSW PTY LIMITED Second Respondent AND BETWEEN: HUDU PTY LIMITED trading as H R & ROBERT Cross—-Claimant AND: JILL CHRISTINE TURNER Cross-—Respondent CORAM: WILCOX J PLACE: SYDNEY DATE: 8 JULY 1988 REASONS FOR JUDGMENT There is before the Court a single principal proceeding in which separate claims are made against each of two respondents: Hudu Pty Limited, a builder carrying on business in the Gosford district under the title Hendriks «& Roberts, and Home Builders Corporation of NSW Pty Limited, a company which, in 1985, carried on business as an agent for builders. The two claims are linked in that they both arise out of a decision by the applicant, Jill Christine Turner, to have a dwelling house erected upon a vacant allotment owned by her at Terrigal, on the New South Wales Central Coast. The evidence in each matter overlaps, to some extent, and each claim is founded -- at least in part -- on s.52 of the Trade Practices Act 1974. But each has to be considered separately. Ms Turner's land is known as lot 43, Duncan Street, Terrigal. The allotment has a westerly aspect. In its natural condition, the land sloped, at a relatively steep but even grade, from Duncan Street to the rear boundary. No doubt because of the slope of the land, Ms Turner had always had in mind that, when she constructed a house upon the allotment, she would wish to have a split level building. In about May 1985, Ms Turner contacted Mr Paul Wilson, a principal of a building company known as TRK Constructions Pty Limited. She gave to Mr Wilson a sketch which she had prepared showing a floor plan for a three-bedroom split level home. Mr Wilson forwarded to Ms Turner a letter dated 25 May 1985 quoting the sum of $42,652 as a price for the erection of a house in accordance with the sketch plan. The quotation was to include all drafting, engineering, council and survey fees. Miss Turner did not act on this quotation immediately. Early in October 1985, apparently at the suggestion of an officer of her building society, she contacted a Mr Paul Kelly, an employee of Home Builders Corporation. During the course of her initial telephone conversation, she sought information as to the nature of his organization. According to the evidence of Ms Turner, Mr Kelly informed her "that the Corporation acted on behalf of the consumer, looking out for their interests really in the building game, protecting them really from the pitfalls that can be associated with the industry and they can really act as a mediator between that person and the builder and against any unfair advantage on the builder's behalf and just generally oversee negotiations and just make sure everything was above board and fair and honest". Mr Kelly told Ms Turner that she would not have to pay any money, that the corporation offered a free service to the public. Apparently Ms Turner told Mr Kelly that she already had a quotation and Mr Kelly told her that he would "ask around their builders for a comparable figure on the selected plan" in order to protect her interests. Following this conversation Ms Turner sent to Mr Kelly a copy of the quotation prepared by Mr Wilson and the sketch plan upon which it was based. On 12 October 1985 Ms Turner visited Mr Kelly at the offices of Home Builders Corporation. She was accompanied by her sister, Anne Gorvin, and a friend, Kurt Seeback. Mr Kelly informed Ms Turner that he had investigated Mr Wilson and had found that he was unreliable and not trustworthy, that his last project was incomplete due to a lack of funds and that he was in dispute with a client. Mr Kelly expressed the opinion that Mr Wilson was "a bad risk and unreliable" and suggested to Ms Turner that she would be better off with one of the builders on their list rather than taking an unnecessary bad risk. According to the evidence given before me by Mr Wilson, none of this was true. Despite Mr Kelly's denial, I accept the evidence of Ms Turner, which is corroborated by Ms Gorvin and Mr Seeback, that he did speak disparagingly of Mr Wilson. It is difficult to escape the conclusion that he did so for the purpose of steering Ms Turner in the direction of one of his client builders and thereby enabling his company to earn a commission. During the course of this discussion, the party was joined by Mr Mark Hicks, Managing Director of Hudu. Mr Hicks had already been furnished with a copy of the plan prepared by Ms Turner and there was then a general discussion regarding the floor plan layout and also the lighting of the building. During the course of the discussion a reference was made by Ms Turner to the proposed siting of the house. She informed Mr Hicks that the land was a sloping site and that she had always wanted to have a split level home. According to Ms Turner, she went on to say that she wanted the house "to sit on top of the land". Ms Turner says that Mr Hicks responded to this by saying "that will be right, yes, fine" and waved his hand. So far as Ms Turner is aware, Mr Hicks had not then seen the land. The meeting ended upon the basis that Mr Hicks would prepare a quotation. On 16 October 1985, Hudu submitted to Ms Turner a quetation in the sum of $41,950. The quotation included a reference to certain additional options. Apparently Ms Turner discussed these options with Mr Kelly. Some of the options were adopted and a revised tender in the sum of $44,970 was submitted by Hudu on 25 October. This tender included a provision that the plan and specification would be prepared by Hudu "based upon sketch submitted". As requested, Ms Turner paid a deposit of $1,000 on 29 October. On the same day, Hudu signed a letter addressed to Home Builders Corporation promising to pay that company a commission of $1,796.40 as commission on the agreement between Hudu and Ms Turner. $500 was paid forthwith, the balance later. At no stage was Ms Turner informed that Home Builders Corporation would seek, or that it was paid, any commission from Hudu. Her belief was that Home Builders Corporation provided a free service at government expense. During November 1985, a plan and specification was prepared for submission to the local council, Gosford City Council. The plan was prepared by a draftswoman, employed by Hudu, upon the instructions of Mr Hicks. According to Mr Hicks, he inspected the site before the plan was prepared but, to his knowledge, the draftswoman did not do so. He says that he specifically instructed the draftswoman not to show any excavation in this plan. The plan shows a layout substantially similar to that on the sketch plan prepared by Ms Turner. As envisaged by her, the building has two different levels. The front level consists of an entry porch, adjoining the carport at the left hand side of the building, a lounge room and the main bedroom. The only entry to the front of the house is from the carport. The floor plan shows a single step from the carport into the entry porch, although the site elevation indicates three steps in this position. The floor level of the remainder of the house, as depicted in the plan, is half a metre higher than that of the lower level. Access to this higher level is gained by four steps from the lounge to the dining room and also by two steps from a small corridor outside the main bedroom to a corridor leading past the bathroom towards the two rear bedrooms. The plan contains two side elevations and a cross-section showing the split. In each of those drawings there is a bold line which, it is agreed, represents the ground level. Furthermore, it is agreed that the form of the line is that habitually used to indicate natural ground level, as distinct from excavated ground level. Except in the position of the carport, the line slopes across the site ina manner consistent with its being intended to indicate a natural fall. The drawings, particularly the cross-section, clearly indicate that the building is intended to stand free of the ground, except in the carport area. There is no reference on the plan to any excavation of the site, except for a notation on the site plan: "cut and fill to carport area only". The area, the subject of this notation, is cross-hatched and it corresponds with the area of the carport as shown on the floor plan. Two notes inscribed on the plan ought to be mentioned. In the information column on the right hand side of the plan there is a note: "Ground levels are approximate only". Amongst the notes immediately adjoining the floor plan is a note: "The 'split' in this residence may differ to that shown. Builder will determine 'split' on site according to falls in land". The council approved the plan and specification, apparently in either late November or December. On 20 December 1985, Hudu wrote to Ms Turner enclosing a copy of the proposed contract and the council's stamped plans and specification. The letter suggested that Ms Turner consult her solicitor or the building society and that, when the documents were approved, she make an arrangement for an appointment at which the contract could be signed. It is not clear whether Ms Turner obtained any advice regarding the contract documents. However, she did in fact attend a meeting at the office of Hudu on 1 February 1986, when the contract was signed. On 26 February 1986, Hudu wrote to Ms Turner a letter which contained a report made by Slater, Jessop & Armstrong Pty Limited, consulting engineers. The report referred to an inspection which had taken place on 12 February and the results obtained from a test bore sunk on the property. The engineers expressed the view "that the strata found 500mm below surface is suitable to carry the proposed loading". The report went on to specify the footings and piers which would be required on the site. Reference was made to the necessity to make special provision for the foundations in the vicinity of the building upon the adjoining allotment to the north, lot 42. That building had been constructed in an excavation made to the allotment. The covering letter from Hudu informed Ms Turner that there would be an additional cost of $478 for the footings and piers and that she had the option of determining the contract if she was unwilling or unable to meet this additional cost. Ms Turner accepted the extra expense. Some time in late February or early March, the site was substantially excavated. The excavation involved the whole of the land upon which the dwelling was intended to be constructed and it had the effect of flattening out the site so that it then conformed, broadly at least, with the shape of the land as shown on the approved plan. A further effect of the excavation was to lower the level of the rear wall of the building, as compared with its position if it had been erected upon the natural ground level, by 1.3 to 1.5 metres; the difference being explained by a slight cross-fall. [In the way in which the excavation was finished, there was left a steep batter at the rear of the house. The top of the batter extends above the top of the windows in the back wall of the house, as it is now constructed. Following the excavation, the construction of the building proceeded rapidly. There was contact between Ms Turner and Hudu during the course of construction. A number of letters were exchanged regarding minor building details and, according to Ms Turner, she spoke to Mr Hicks upon a couple of occasions. However, although Ms Turner inspected the site from time to time, she did not make any comment or complaint regarding the excavation. By letter dated 3 April 1986, Hudu wrote to Ms Turner informing her that the council required her to retain the side of the excavated area and that the council would not pass the premises for habitation unless this work was done. Hudu quoted a cost of $1,500 for a retaining wall. This wall was to be erected upon the common boundary of lot 43 and lot 44. Lot 44 adjoined to the south and contained a house erected upon the unexcavated allotment. The letter went on: "Due to the extra costs that would be caused to you by stopping the works and awaiting your reply and the extra costs that would be caused by not doing the footing at this stage we are continuing and pouring the footing". Ms Turner was asked to respond accepting one of two alternatives: to have Hudu carry out the footing for the retaining work only, at a cost of $700, or to carry out both the footing and the retaining wall 10. itself, at a cost of $1,500. On 13 May 1986 Ms Turner wrote to Hudu about a number of matters. In this letter she stated: "I also advise that I formally accept the cost of $1,500 for the retaining wall to be constructed along the side of the house". Thereafter Hudu constructed the retaining wall. The house reached the stage of substantial completion at the beginning of August 1986. On 7 August Hudu wrote to Ms Turner enclosing an account for extras amounting to $7,851.24. The letter requested payment of this amount together with the supply of a letter of satisfaction to enable Hudu to receive from the building society the balance of the original contract sum. Although this sum was not specified in the letter, it is agreed between the parties that the balance then owing on the original contract sum was $8,555. This amount is still outstanding. Ms Turner did not accede to the requests contained in the letter of 7 August. She had, in the meantime, taken steps to investigate the position regarding excavation. She retained a surveyor, J R Mortensen Pty Limited. On 11 July 1986 that company furnished a report to Ms Turner of a survey made by Mr Mortensen of the land. The report contained the comment that the natural fall of the land is much steeper than was indicated on the building plan. Mr Mortensen attached to the report a photocopy of the two side elevations shown on the building plan on which he marked in red the natural fall of the land prior to excavation. As already mentioned, this shows that, at the rear, the building was 1.3 to 1.5 metres 11. lower than it would have been if erected on the natural ground level. The report also contained some photographs upon which the natural ground level was marked in red. At about this time Ms Turner also consulted Mr Norton G King, a building consultant. Mr King inspected the plan and specification and the building and he advised that the building had not been erected in accordance with the plans, as a result of which extra expenses had been, and would be, incurred. Thereafter Ms Turner declined to make any further payments to Hudu. There was correspondence between the parties, and their solicitors, regarding access to the building for inspection purposes -- Hudu taking the position that payment was required before possession would be given to Ms Turner -- regarding certain incomplete and defective items and in relation to the possible resolution of the dispute. On 19 January 1987 the solicitors for Ms Turner suggested a meeting to see whether a settlement could be reached but Hudu's solicitors responded by demanding payment of the full amount of the claim beforehand. On 20 February the applicant's solicitors forwarded a copy of Mr King's report, with other documents, and again suggested a conference to explore settlement. There was no positive response and, on 25 March 1987, the solicitors again wrote. This letter contained the following paragraph: "We confirm earlier correspondence to you that our client is paying rent in the vicinity of $120.00 per week whilst the property remains incomplete and we also confirm the actions of your client some time ago in changing the locks on the property to ensure that it retained control of the site. The rent being paid for alternative accommodation by our 12. client forms part of her claim as she is also having to pay her mortgage payments to the building society in respect of her loan on the property and obviously the longer it takes for the suggested conference to be held the more difficult it will become to reach a settlement in view of our client's claim increasing at the rate of approximately $120.00 per week." The response to this approach was a letter of 23 April 1987 in which the solicitors for Hudu, on behalf of their client, threatened to commence proceedings for the amount claimed to be owing. But, before they did so and on 20 May 1987, the present proceeding was commenced. The claim made by Ms Turner against Hudu is put in a number of ways. As I have said, reliance is placed upon s.52 of the Trade Practices Act, the argument being that Mr Hicks' response to Ms Turner's intimation that she wanted the house "to sit on top of the land" constituted a representation as to the feasibility of the plan she had proposed for the site. I have difficulty in seeing that there was such a representation but I do not think that it is necessary to reach a concluded opinion upon that matter because I am of the opinion that Ms Turner is entitled to succeed upon at least one of her alternative claims: breach of contract. There is no jurisdictional problem about the matter being disposed of on this basis. Hudu expressly concedes that the 8.52 claim was made bona fide and I am of the view that this concession is properly made. The damages available to Ms Turner upon her contract claim are not less generous than those which would be recoverable under 8.82 of the Trade Practices Act for a breach of 8.52. 13. The contract claim made by Ms Turner is pleaded in a number of ways but it includes the simple claim that Hudu failed to execute the works properly, that is in accordance with the agreed plans and specifications. I think that this case is made out. There is no doubt that the building, as erected, departs from the agreed plan. The plan shows no site excavation, other than to the carport area, whereas it is a feature of the building as erected that substantial excavation has taken place. But Hudu says that the discrepancy between the agreed plan and the building as erected does not constitute a breach of contract because there was a prior understanding between Ms Turner and Mr Hicks that the site would be excavated to the extent necessary to accommodate the plan. Ms Turner denies that any such agreement was made. I have no hesitation in accepting Ms Turner's evidence upon this question. According to Mr Hicks, he had several meetings with Ms Turner before the contract was signed. On each of these occasions, he says, at least one person other than Ms Turner was present: either Mr Kelly, Ms Gorvin or Mr Seeback. According to him, on at least one occasion there was considerable discussion about the suitability of the site during which he "told her quite plainly the plan did not suit the block. Ms Turner was quite adamant that was the plan she wanted. I was quite sure, adamant, that it did not suit". On that occasion, he said, there was much talk regarding steps, etc. None of this was 14. put to any of the three people who, according to Mr Hicks, might have been present. The alleged conversation related to a matter at the heart of this case; it is inconceivable that, armed with instructions upon the matter, counsel for Hudu would have failed to put questions to these witnesses about the conversation. It is true that Mr Kelly was an unsatisfactory witness, who claimed not to recall many important matters, but this was a conversation of some moment. It is also true that Mr Kelly claimed himself to have warned Ms Turner about the unsuitability of the plan -- a claim which was also not put to Ms Gorvin or Mr Seeback and which I do not believe -- but that is a different subject matter from the alleged conversation between Mr Hicks and Ms Turner. However, there is an even better reason than the conduct of this case for rejecting Mr Hicks' evidence regarding an agreement for excavation: the form of the plans themselves. These plans were drawn under the direct supervision of Mr Hicks, at a time later than the alleged conversation with Ms Turner when it was agreed that the whole of the building site would have to be excavated. Yet there is no hint of bulk excavation upon the plan. The plan clearly suggests that the building will be erected upon the existing slope, save for some cut and fill in the carport. To erect the home in an excavation, to a different fall, would be to depart from the plans in a significant manner; as is indicated by the perceived need to construct retaining walls to hold firm the excavation. Acceptance of Mr Hicks' evidence would involve the attribution to him of an intention to 15. mislead the local council upon a material question and to commit an offence by erecting the building in a manner inconsistent with the plan: see Local Government Act (NSW) 1919 8.306. What motive would there be for such behaviour, agreement having already been reached with Ms Turner upon the need for excavation? Why not show the excavation upon the plan? The point goes further than the mere absence from the plan of any reference to excavation. The plan clearly suggests that the house is to be fitted to the natural fall of the land, not that the land is to be moulded to the constraints of the house plan. I have already quoted the plan note regarding adjustment of the "split" shown on the plan. No adjustment would be necessary if the site was to be shaped before building commenced. The site could be levelled to the exigencies of the plan. Furthermore, the adjustment was to be made "on site according to falls in land". Mr Hicks expressly agreed in his evidence that the words "falls in land" were a reference to the natural fall of the land. But what would be the relevance of that fall upon an excavated site? A further pointer to the truth, in my opinion, is provided by the engineer's report regarding footings and piers. It will be recalled that this report referred to a strata 500mm below surface which was suitable to carry the proposed building. The engineer's report proceeded upon the basis that this strata would be used, and Hudu made its demand for extra money for the footings and piers upon this basis. 16. Yet excavation in the manner said to have been agreed would, at least, have substantially interfered with this strata. The engineers would have had to re-assess the position. I think that the report makes clear that they did not envisage excavation; yet an experienced builder would realise the necessity of disclosing to the engineers the intention to excavate in asking them to advise upon the necessary footings and piers. I think that the truth is that insufficient attention was given by Hudu to the problems of this site. I do not accept that Mr Hicks inspected the site before the plan was drawn. Had he done so he would have been alerted to the fact that the floor plan proposed by Ms Turner was not, without adjustment, suitable for the site. He would have proposed some amendments. Had Ms Turner proved unreasonable he would have had the option of declining the job. But I think that Hudu committed itself to the contract without realising that there was a problem and, when Mr Hicks and/or Mr Hendriks found that there was a problem, it was decided to resolve the problem by excavating the site. Excavation was, of course, one possible solution. But it was the prerogative of Ms Turner, not of Budu, to decide how to resolve the matter. The company was not justified in unilaterally departing from its contractual obligation and in delivering to her at the end of the project a building which, because of its position, is materially different from that required by the plan. 17. In reaching the above conclusions I do not overlook the submission made by counsel for Hudu that Ms Turner's failure to complain to the company of the making of the excavation until August, when the final payment was due, indicates that she had earlier agreed to the excavation. Under some circumstances a failure to complain affords powerful evidence that a particular event is in accordance with the prior consent of the person who might otherwise be expected to complain. But in this case there is no middle ground. It is not as if Hudu's case was that there was an oral variation of the agreement after the plan was drawn. Mr Hicks' evidence is that all this was agreed before the plan was drawn; and, for the reasons indicated, that evidence is simply not credible. Moreover, in assessing Ms Turner's silence to Hudu, it is relevant to note that, in early July, she had arranged an inspection and survey by Mr Mortensen. She was clearly dissatisfied before August. Although I find it a little surprising that she said nothing to Mr Hicks immediately upon discovering the excavation, it is understandable that she would wish to have the situation expertly assessed before taking it up with Hudu. It is not as if an earlier comment could save the situation. From her point of view the damage was done when she first discovered the excavation. 18. I am satisfied, from the evidence of Mr King, that a direct consequence of the incorrect siting of the building will be the necessity to perform the following additional work: Work already carried out by Hudu $ $ Retaining wall 1500.00 Remove excavated material 429.00 Rock excavation 270.50 Extra access cost 349.00 2548.50 plus 20% margin 509.70 3058.20 Work yet to be performed Extension of southern retaining wall 1280.00 Removal of excavated material at front 630.00 Reinstatement of ground 3780.00 5690.00 8748.20 I do not allow the sum of $478.00 claimed for footings and piers. As I have indicated, I am of the opinion that the engineers' view was that this cost would be incurred if the house was built upon the unexcavated site. To this sum must be added any diminution in value occasioned by the fact that, even after those works are carried out, the building will be sited lower than envisaged by the plans. Notwithstanding the evidence of Mr A T Starkey, a qualified valuer called on behalf of Hudu, I am satisfied 19. that there will be a loss of value. With every respect to Mr Starkey, I think that he has neither fully appreciated the effect of the change nor adequately investigated local market conditions. I prefer the evidence of Mrs G A Everson, an experienced valuer who has investigated sales in the immediate area. Mrs Everson expressed the view that the house, as constructed in the excavation, would be worth about $9,000 less than if it had been erected at the correct level. I appreciate that it would not have been possible to build upon the unexcavated site a home which exactly followed the agreed plan. Some modification, even if only to increase the number of internal stairs, would certainly have been required. Whether such a modification would have increased or decreased the cost of the building was not explored at the trial and I do not think that I should make any assumption about that matter, one way of the other. I therefore accept the figure of $9,000 loss of value without making any adjustment for any saving achieved or extra expense incurred, as a result of any necessary design modifications. Mrs Everson also expressed the view that the house now bore a "stigma", resulting from its lengthy period of non-occupation, which might excite purchaser resistance. She thought that an additional $1,000 should be allowed to compensate for the stigma. However, this argument assumes that the relevant date, for consideration of any loss of value consequential upon the breach of contract, is mid-1988. I do not think that this is correct. The relevant date is that 20. upon which the house might have been sold by Ms Turner, had she wished to extricate herself from her predicament by sale. For reasons which I will indicate, I put this time at 31 July 1987. I am not satisfied that the delay till that day was such as to attract any financially significant stigma. In addition to the above, Ms Turner makes two claims: for the cost of completing and rectifying various items and for rent. She also claims interest upon any balance payable to her. As to the first item, I am relieved from attempting to quantify the cost of attending to the list of minor items identified by Mr King by the fact that the parties have sensibly reached an agreement, reduced to a written undertaking given to the Court, as to what will be done. Should there be any breach of that undertaking, Ms Turner will have an appropriate remedy. I can deal with damages upon the basis that this work will be done without cost to Ms Turner. It is only fair to Hudu to say that it seems that Hudu was always willing to attend to any legitimate complaints about these matters and that it would probably have done so long ago, but for the larger dispute between the parties. The claim for rent is founded upon the circumstance that Hudu has declined to give possession of the house to Ms Turner until it received the moneys claimed by it from her. The company argues that it is entitled to take this attitude by virtue of cl.27(g) of the contract between the parties. That sub-clause reads: 21. "(g) Upon payment by the Owner of all monies due to the Builder, the Builder shall at the request of the Owner make available the keys to the Works and upon acceptance thereof the Owner shall be deemed to have entered into actual possession thereof and to have acknowledged that the works have been completed in accordance with this Agreement whereupon the Builder shall be relieved and discharged from all responsibility hereunder save for any liability under the Defects Liability Period. Upon acceptance of the keys as aforesaid the Works shall in all respects be at the sole risk of the Owner." It is clear that the amount claimed by Hudu for the balance of purchase price and for extras, being the sum of $16,406.24, is due to the company; subject to any offset against moneys payable by Hudu to Ms Turner. If, upon balance, Ms Turner owes money to Hudu, Hudu is justified in the stand which it took regarding the delivery of possession. If, upon the other hand, no money is owing to Hudu, Hudu is not justified in keeping Ms Turner out of possession of the premises. In this eventuality, part of the damage suffered by her is the burden of rent payments during such period as was reasonably required to allow her to resolve the matter and to obtain possession. I have assessed the total loss sustained by Ms Turner, being for extra costs of $8,748.20 and for loss of value of $9,000.00, at $17,748.20. In an account made up in August 1986 there should have been deducted the amount due to Hudu, $16,406.24, leaving a balance of $1,341.96 due to Ms Turner. It follows that cl.27(g) did not operate to entitle Hudu to deny possession to Ms Turner and that a rental 22. allowance ought to be made. But I do not think that it would be fair to allow rent up to the present time. By August 1986, when notice of practical completion was given, Ms Turner was aware of the fact and extent of the excavation. She already had obtained advice from Mr Mortensen. She received Mr King's advice in early September. Although I appreciate and applaud her desire to settle the dispute by negotiations, far too much time was allowed to pass before the proceeding was commenced in this Court. And the matter was not thereafter prosecuted with notable expedition. I think that it is reasonable to say that, with the benefit of a "flying start" in August 1986 and treating the matter with the urgency it deserved, the applicant and her advisers ought to have been able to secure resolution of the matter -- if necessary by judgment in this Court -- by the end of July 19867. Rent to that day, and that day only, should be allowed. The rent paid by Ms Turner was $70 per week for the period 9 August 1986 to 28 November 1986, a period of 16 weeks. This figure amounts to $1,120.00. During the period of 35 weeks from 28 November 1986 to 31 July 1987 she paid rent of $120 per week -- a total of $4,200. The total rent allowed should therefore be $5,320. Both parties claim pre-judgment interest on the moneys due to them. Each is entitled to such interest, but the effect of the set-off is that interest will only be actually paid upon the net balance. In calculating interest I adopt the rate of 15% per annum, being a reasonable reflection 23. of the cost of money during this period. However, interest on the rent should be allowed only from the end of the rent period, 31 July 1987. In the result, there will be judgment for Ms Turner against Hudu in the principal proceeding in the sum of $28922.77, made up as follows: $ Extra costs incurred 8748.20 Loss of value 9000.00 Loss of rent 5320.00 Interest at 15% pa on $17,748.20 from 7 August 1986 to date 5102.60 Interest at 15% pa on $5320.00 from 31 July 1987 to date 751.97 28922.77 There will be a judgment in the cross-claim in favour of Hudu in the sum of $21,123.03, calculated as follows: $ Amount due on cross-claia 16406.24 Interest on that sum at 15% pa from 7 August 1986 to date 4716.79 21123.03 The net amount payable to the applicant is the sum of $28,922.77 less $21,123.03, that is $7,799.74. I turn now to the second claim of the applicant, against Home Builders Corporation. This claim is brought only under 8.52 of the Trade Practices Act, the alleged misrepresentation being that Home Builders Corporation provided independent advice to consumers in the building 24. industry, that is potential building owners. It is clear that it did not do so. On the contrary the company was in the business of soliciting business on behalf of builders. The conduct of the company towards Ms Turner was deceptive and it amounted to a clear breach of s.52. The only real question about the claim against Home Builders Corporation is whether Ms Turner suffered any loss as a result of that company's conduct. Home Builders Corporation did not appear at the trial, and I have therefore not had the benefit of any submissions on its behalf. However, having regard to certain evidence given by Mr Hicks, I think that the proper finding is that the effect of the payment of the commission was to increase the price charged by Hudu to Ms Turner. Mr Hicks said that Hudu paid a commission calculated at 4% of the contract price and that this cost represented part of the company's overhead expenses. He agreed that, in arriving at its tender price, Hudu calculated its direct costs and added a margin and that the margin incorporates "all overheads". It follows, as one would expect, that this particular outgoing found its way, at least indirectly, into the price charged by Hudu to Ms Turner. Mr Hicks said that Hudu paid a commission calculated at 4% of the contract price and that this cost represented part of the company's overhead expenses. He agreed that, in arriving at its tender price, Hudu calculated its direct costs and added a margin and that the margin incorporates "all overheads". It follows, as one would expect, that this particular outgoing found its way, at least indirectly, into the price charged by Hudu to Ms Turner. 25. In that way she was occasioned loss by reason of the misrepresentation. She would not have been in the position of indirectly paying commission had she been told the true position. The reason is that, according to evidence given by her which I accept, she would not have knowingly become involved in any transaction where a commission was being paid. In my view the amount of the payment is recoverable by her. There is, of course, a general principle that a principal is entitled to recover from an agent the value of any secret commission, or other benefit, obtained by the agent in derogation of the agent's duty to the principal. The claim was not pleaded in this way but, had it been, Ms Turner would have been able to rely upon that principle. The result would have been the same. There should be judgment in favour of the applicant against Home Building Corporation in the sum of $1,776.40, the amount of the commission payment. As between the applicant and the two respondents, costs should follow the event; that is, Ms Turner should be entitled to recover her costs against either respondent. But, as between the two respondents, there should be an apportionment, made on a time basis. The claim against Hudu occupied the overwhelming majority of the hearing time so that, as between the two respondents, Hudu should bear 90% of the applicant's costs. 26. I certify the twenty-five (25) preceding pages to be a true copy of the Reasons for Judgment of his Honour Justice Wilcox. Associate t ponte ote: Date: 8 July "1988 Counsel for the Applicant and Cross-Respondent: Solicitors for the Applicant and Cross—-Respondent Counsel for the Pirst Respondent and Cross-Claimant: Solicitors for the First Respondent and Cross-Claimant: No appearance by the Second Respondent Date(s) of hearing: Mr I D Falukner with Miss J C Gibson Glasson, Gemmell « McGill Mr N F Francey McCarthy Writer & Ryan 14, 15, 16 and 17 June