JAAFAR v SATTOUT SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CRIPPS, SHELLER JJA and KIRBY P 5 June 1992, 28 August 1992 [1992] NSWCA 117 NEGLIGENCE — solicitor — breach of duty of care — purchase of home property — alleged failure to warn of sewer line — solicitor gives evidence that he showed Water Board diagram — judge accepts solicitor's testimony — on appeal to Court of Appeal APPEAL — new grounds — negligence claim against solicitor — new basis of claim proposed for first time on appeal Held: (Cripps JA; Kirby P and Sheller JA concurring): Upon the findings made, within the issues litigated at trial, no error had been shown to authorise intervention on appeal. Brunskill and Anor v Sovereign Marine and General Insurance Co Ltd and Ors (1985) 59 ALJR 842 (HC); Abalos v Australian Postal Commission (1990) 171 CLR 167 applied. Held: The requirements of procedural fairness obliged the Court of Appeal to refuse leave to enlarge the issues on appeal beyond those litigated at trial. The University of Wollongong and Ors v Metwally [No 2] (1985) 59 ALJR 481 (HC); Coulton and Ors v Holcombe and Ors (1986) 162 CLR | applied. Local Government Act 1919, s317A. Metropolitan Water, Sewerage and Drainage Act 1924, s262. Kirby P I agree with the reasons of Cripps JA and with his orders. Sheller JA I have had the benefit of reading the judgment of Cripps JA and agree with it and the orders therein proposed. Cripps JA This is an appeal from a decision of Herron DCJ entering judgment forthe respondent (defendant) in an action brought by the appellants (the plaintiffs). The case arose out of the purchase of a property, No 54A Fifth Avenue, Berala in January 1979. The appellants were the purchasers and the respondent was their solicitor. The subject proceedings were commenced in the District Court in February 1983. The appellants alleged that the respondent, by his conduct, was in breach of his contractual obligations to them and, as well, in breach of his common law duty of care. They allege that he failed in his duty to advise them of the presence of a sewer line passing through the rear of No 54A and under the house erected on the land. Before Herron DCJ, it was the appellants' case that the respondent failed to make any inquiry as to whether the property was adversely affected by a sewer line and ignored the appellants' expressed concern that they did not want to buy a property adversely affected by such a line. The respondent's case was that the appellants were told of the sewer line. He said he showed them a diagram from the Metropolitan Water Sewerage and Drainage Board (the Board) which made it clear that a 9" pipe passed through the land and under the house. He also said he explained to them precisely where the line would pass under the rooms in the house. The factual issues were decided in favour of the respondent. 2 UNREPORTED JUDGMENTS On 8 February 1990, the appellants appealed to this Court alleging that the trial judge erred in law in failing to find that the respondent had showed them the diagram from the Board and in failing to find that he had "conducted all relevant searches at the Water Board prior to the exchange of contracts". It was also claimed that the learned trial judge erred in failing to give sufficient weight to the fact that: the receipt for the fee owing to the Board for the provision of the diagram (called the Diagram of Sanitary Drainage) was dated the day after the respondent said he showed it to the appellants. Upon the appeal coming on for hearing, the appellants sought to amend the Notice of Appeal to allege that the learned trial judge also erred in failing to find that the respondent "did all that was reasonable in the circumstances"; "that the respondent was not in breach of contract"; "that he was not negligent". The written submissions make it plain that what the appellants wish to argue, in addition to the claims made at the trial, is that the respondent's advice was negligent or deficient in other respects and that his conduct fell short of that ordinarily expected of a purchaser's solicitor. It was said, for example, that the respondent failed to explain the provisions of s262 of the Metropolitan Water Sewerage and Drainage Act 1924 as it applied in 1979 to the effect that the Board may demolish any structure lawfully placed over the sewer having the effect of interfering with or obstructing the carrying of sewage and that it may recover the cost and expense of so doing from the person causing the interference; that the survey should have been updated and, in any event, the respondent should have advised the appellants of the provisions of the Local Government Act 1919 with respect to the survey; that the respondent failed adequately to explain the effect of the Certificate of Compliance issued pursuant to s317A (as it was in 1979) of the Local Government Act 1919. It was also said that the respondent was in breach of his duty to the appellant because, on the signing of the contract, he permitted the estate agent who had been responsible for the sale to be present. For reasons which I shall presently give, I do not think the appellants should be permitted to raise these new grounds. Before I do, I will deal with the Notice of Appeal as originally filed. As I have said, on 20 February 1979, the appellants as purchasers entered into a contract for the sale of land with the vendor, Ljubomir Cvitanovic, described as being "Lot 35 s6 in Deposited Plan 2057 and being the whole of the land in Certificate of Title 12373 Folio 208 together with all improvements thereof and known as 54 Fifth Avenue, Berala'. (In fact, the property was 54A Fifth Avenue). The respondent, on behalf of the appellants, received the counterpart of the contract on 12 February 1979. As a matter of urgency, he ordered certain searches and, of relevance to the present case, he ordered a Diagram of Sanitary Drainage from the Board. The transcript records that he said he received the diagram at 10.30 pm on 20 February 1979. It is common ground that he said he received the diagram at 10.30 am on 20 February 1979 and that the transcript does not accurately record his answer. The respondent further said that he showed the diagram to the appellants and explained to them in detail where the pipe ran. He said he told them that the presence of the pipe could affect the value of the property and that if the Board requested that the pipe be relocated, they may have to pay for it. He further said if the pipe burst and damaged the house, they may not be indemnified by the Board. He offered to make more detailed inquiries about the matter and told the appellants that if he did, it would take a few days for answers to be received. He said the appellants said they wished to go ahead with the transaction because they believed they were in danger of being URJ JAAFAR v SATTOUT (Cripps JA) 3 gazumped and that the house was the only one they could afford. According to the respondent, the appellants said that in any event it was their expectation that they would live in the section of the house over the pipe only until such time as they could afford to rebuild on the front portion of the block. The appellants' version was in direct conflict with the respondent's. They said they had told the respondent they did not want any problems with the transaction and that if there were any, they would not exchange contracts. They said the respondent was aware of their concern with respect to the possible presence of the sewer line because he had previously warned them against purchasing land through which a sewer line passed. They said in evidence that they were shown a diagram of sanitary drainage for No 54, ie Lot 34, prior to signing the contract. They said this showed there was no sewer line passing through the land. Pausing there, I mention that the sewer line passes through No 54A but stops at the boundary and does not pass through No 54. They said this showed there was no sewer line passing through the land. They said the first they knew about a sewer line passing through the land occurred two years later when, after moving to Adelaide, they tried to sell the house. Both appellants gave evidence, although most of it was given by the male appellant, Mr Jaafar. He categorically denied he was shown the diagram with respect to Lot 35 (No 54A) and maintained that the diagram he saw showed no sewer line passing through the property. He was extensively cross examined about this matter. He agreed that he had seen a large ventilator pipe on the subject property prior to purchase. The pipe was approximately 45 feet high. However, Mr Jaafar said he didn't take any notice of it. The learned trial judge believed the respondent and disbelieved the appellants. He made it clear that his finding was not merely that the appellants had failed to discharge the onus of proof. He found that the respondent was telling the truth. He said he was not prepared to conclude that the male appellant was being deliberately dishonest. Rather, he said he had "got into his head" that the respondent was responsible for "his loss" (a reference, presumably, to the difficulties of selling the house). (In the proceedings, it was agreed that if successful in the proceedings, the appellants were entitled to damages in the sum of $2700 being, apparently, the difference between the value of the land unaffected by the sewer line and the value of the land as affected. We are not concerned with this aspect of the matter.) In my opinion, the appeal must fail. This Court will not interfere with findings of a trial judge which are dependant upon his assessment and evaluation of conflicting oral evidence (see Abalos v Australian Postal Commission (1990) 171 CLR 167). It is clear that the learned trial judge formed an opinion about Mr Jaafar's credibility. He did not accept his evidence. An appeal court will not reverse conclusions based on credibility unless it has been shown that the trial judge misused his advantage in seeing witnesses. That has not been established. Further, it has not been demonstrated that the evidence accepted by the learned trial judge was inconsistent with uncontradicted facts or was glaringly improbable - in my opinion, quite the reverse (see Brunskill and Anor v Sovereign Marine and General Insurance Co Ltd and Ors (1985) 59 ALJR 842. There were inconsistencies in Mr Jaafar's evidence. There was evidence which supported the learned trial judge's positive conclusion that the respondent "quite apart from any question of demeanour, was telling the truth" For example, the vendor's solicitor had ruled out CL17(d) in the contract. CL17(d) gave the purchaser the right to rescind should the land be affected by "any mains or pipes 4 UNREPORTED JUDGMENTS or any water, sewerage or drainage authority passing through the land". That alerted the respondent to the possibility that the land was adversely affected. Also the diagram which the appellants swore they saw prior to the signing of the contract was not issued by the Board until 27 February 1979 - seven days after they had signed the contract. In March 1981 the Bankstown Legal Aid Office wrote to the respondent on the appellant's behalf alleging that the appellants were not told anything about sewer lines and that the diagram with respect to No 54 was shown to them, not on 20 February 1979 or any time prior thereto, but some time shortly before March 1981 (about two years after the contract date). The appellants sought to rely on the circumstance that the Board's files recorded 21 February 1979 as the date of the receipt of the fee for the diagram of sanitary drainage. The respondent said he ordered the diagram on 19 February and it was delivered on 20 February by Law Stationers. He said he did not pay for it on 19 February and was not sure who did. That is where the matter was left. In my opinion, the recording by the Board of the receipt of the fee on 21 February is not inconsistent with the respondent receiving the Certificate on 20 February. The respondent said it was not uncommon for such diagrams to be supplied and to be paid for later and his evidence was not challenged. Furthermore, the appellants face an obvious difficulty. In the proceedings before the learned trial judge, they swore they had seen a diagram. The diagram for which the receipt was given on 21 February was dated 20 February. The only other diagram referred to in evidence was dated 27 February. If they saw the diagram, and they swore they did, the only reasonable conclusion open to the judge was that it was the diagram dated 20 February. That diagram plainly showed the sewer line. For these reasons, I find that the grounds of appeal have not been made out. I turn now to the amended grounds of appeal. There was no exploration of any issues at the trial other than those referred to above. Mr Alexis, on behalf of the appellants, concedes that the matters he now wishes to raise were never raised before the trial judge in opening, during the course of the evidence or in final address. The respondent was never given the opportunity to respond to the inferences Mr Alexis now submits he is able to "distil" from the judgment. In the course of the respondent maintaining his denial that he had not shown the diagram to the appellants and his claim that he had discussed the line with them, he spoke of other advice he had given. No attempt was made to make out a case that upon the assumption that the respondents were aware of the diagram for No 54A, the conduct of the respondent fell below the appropriate standard. By way of illustration, the respondent, during the course of maintaining he had shown the diagram to the appellants, gave evidence in general terms of the sort of advice he gave them. It was never put to him that his advice fell short of that required from a competent solicitor in all the circumstances because, for example, he did not refer, in terms, to s62 of the Metropolitan Water Sewerage and Drainage Act 1924 - a claim now made. There is an evident difficulty with the appellants' present submission. Not only were the matters now raised not canvassed and the respondent not given the opportunity to respond, but that, upon the assumption that it be established that the advice given fell below the appropriate standard, a further question remains, viz, whether the appellants would have proceeded with the transaction notwithstanding the allegedly defective advice. That matter was never examined. It appeared to be assumed in submission that the Court would conclude that the appellants would not have proceeded with the transaction by reason of the alleged acts or omissions now relied on. URJ JAAFAR v SATTOUT (Cripps JA) 5 The evidence at the trial was that the appellants knew they were in danger of being gazumped. They knew there was a line passing through the property and they knew that the Board might not indemnify them if the line was damaged. They said they wished to go ahead with the transaction nonetheless because the house was the only one they could afford and, in any event, they were hoping to rebuild on the front of the block. They had been told that if anything happened to the pipe, the Board might enter on the land and destroy the building under which the pipe ran. Whether they would have changed their minds if one or more of the allegations now made were made out is entirely moot. In The University of Wollongong and Ors v Metwally No 2 (1985) 59 ALJIR 481 the High Court said: "Tt is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had the opportunity to do so". The principles upon which a court should act when such application is made were approved by the High Court in Coulton v Holcombe (1986) 162 CLR 1. They were: "[The] finality of litigation; the difficulty of inducing an appeal court to consider new facts; the undesirability of encouraging tactical decisions not to present an issue at first instance: keeping it in reserve for appeal; and the need for vigilance to avoid injustice to a party having to meet new facts and new issues of law for the first time at the appeal court". In the present case, there are no countervailing considerations. In Coulton the majority referred to the circumstance that the trial is the place ordinarily for the settling of disputes. It was said at 7: "Tf it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish. The powers of an appellate court with respect to amendment are ordinarily to be exercised within the general framework upon the issues so determined and not otherwise". In the present case, the appellants had the opportunity at the trial to raise the issues they now wish to raise in this Court. It would seem to me, with respect, that the attempt to raise them now is, in truth, no more than a recognition of the futility of the original grounds of appeal. But assuming that is not so, it matters not, in my opinion, whether the failure to raise them at the trial was the result of incompetence or tactics. The issues cannot be raised on the appeal. For the abovementioned reasons, I have come to the conclusion that the appeal should be dismissed and the appellants should pay the respondent's costs. 1. Appeal dismissed; and 2. Appellants to pay the respondent's costs. Counsel for the Appellant: T A Alexis Instructed by: M Chahoud Counsel for the Respondent: R A Gray Instructed by: Ebsworth and Ebsworth