Albert Shire Council v Bamford
[1997] QCA 462
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- Unreported Judgment
- Appeal Determined (QCA)
- Albert Shire Council v Bamford[1997] QCA 462
- Add to List
Albert Shire Council v Bamford[1997] QCA 462
Reported at [1998] 2 Qd R 125
Albert Shire Council v Bamford[1997] QCA 462
Reported at [1998] 2 Qd R 125
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 5074 of 1996.
Brisbane
[Albert Shire Council v. Bamford & Anor.]
BETWEEN:
ALBERT SHIRE COUNCIL
(Defendant) Appellant
AND:
NEIL RAYMOND BAMFORD and
SANDRA DALE BAMFORD
(Plaintiffs) Respondents
McPherson J.A.
Pincus J.A.
Thomas J.
Judgment delivered 19 December 1997
Joint reasons for judgment of Pincus J.A. and Thomas J., separate concurring reasons of McPherson J.A.
APPEAL DISMISSED WITH COSTS. CROSS-APPEAL ALLOWED WITH COSTS AND THE AMOUNT FOR WHICH JUDGMENT WAS GIVEN BELOW ($375,659) REPLACED BY A SUM OF $391,079.
CATCHWORDS: TOWN PLANNING - subdivision - whether subdivisional approval was negligent - duty of Council in determining whether land suitable for residential subdivision.
DAMAGES - assessment of damages - whether exception to general rule governing awards of damages in tort - whether correct allowance for interest on purchase price made.
The Council of the Shire of Sutherland v. Heyman (1985) 157 C.L.R. 424
Rentokil Pty Ltd v. Channon (1990) 19 N.S.W.L.R. 417.
Local Government Act 1936 s. 34(12)
Counsel: Mr P A Keane Q.C. with him Mr K N Wilson for the appellant.
Mr S S W Couper Q.C. for the respondents.
Solicitors: King & Company for the appellant.
Barker Gosling for the respondents.
Hearing date: 13 November 1997.
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 5074 of 1997
Brisbane
Before McPherson J.A.
Pincus J.A.
Thomas J.
[Albert Shire Council v. Bamford and Anor]
BETWEEN:
ALBERT SHIRE COUNCIL
(Defendant) Appellant
AND:
NEIL RAYMOND BAMFORD
and SANDRA DALE BAMFORD
(Plaintiffs) Respondents
REASONS FOR JUDGMENT - McPHERSON J.A.
Judgment delivered 19 December 1997
I agree that, for the reasons given by Pincus J.A., this appeal should be dismissed with costs. I also agree with his Honour’s reasons for concluding that the cross-appeal should be allowed with costs by increasing to the extent proposed the amount for which judgment was given in the court below.
There are only two matters on which I wish to add comments of my own to what Pincus J.A. has already said. The first is that I agree that it takes too narrow a view of the defendant Council’s function under s. 34(12)(g) of the Local Government Act 1936 to consider it as confined to examining the documentary form of application submitted by the developer to the Council for approval to subdivide. In imposing that function on the Council, s. 34(12)(g) provides that:
“In respect of any application for approval of a subdivision of land ... the Local Authority shall take into consideration:
...
- whether the land or any part thereof ... is not fit to be used for residential purposes ...”.
It has been said of the words “in respect of” with which s. 34(12) is introduced that “they have the widest possible meaning of any expression intended to convey some connexion or relation between the two subject-matters to which they refer”. See State Government Insurance Office (Qld.) v. Crittenden (1966) 117 C.L.R. 412, 416, citing Trustees Executors & Agency Co. Ltd. v. Reilly [1941] V.L.R. 110, 111. That being so, when, as s. 34(12)(g) does here in mandatory terms, a duty is imposed on the Council of taking into consideration the fitness of the land, or any part of it, to be used for residential purposes, it does not seem to me legitimate to contend that the Council’s duty is confined to simply looking at the formal application either alone or in conjunction with the documents accompanying the application. In many, if not most, cases the matters so disclosed would not be sufficient to enable the Council to discharge its function of considering whether or not the land or a part of it proposed to be subdivided for residential purposes was in fact fit to be used for such purposes.
How much further the Council is obliged to go is a matter which in this instance we are not called on to determine. The question to be considered on this appeal is not whether the Council literally satisfied its statutory duty, but, as appears from the extracts from Sutherland Shire Council v. Heyman (1985) 157 C.L.R. 424 set out in the reasons of Pincus J.A., whether the Council was negligent in carrying out or purporting to carry out that function. The effect of exercising its power of approving an application for subdivision is to create a series of new allotments that would otherwise not be available for purchase and use by members of the public for residential purposes. Section 34(1) of the Act, in the form in which it stood at the relevant time, prohibited the subdivision of land except in accordance with that Act of which s. 34(12)(g) forms a part. By s. 3(1) the expressions “subdivision” and “subdivide” were defined to mean dividing land into parts, whether the dividing took the form of one or more of several specified methods, including a dealing or instrument inter vivos “rendering different parts available for separate dispositions or separate occupation”. By s. 34(6)(e) of the Act it was not until a plan of subdivision had been noted under the seal of the Local Authority, and indorsed with its approval, that land would lawfully be subdivided and sold in that form. Until that stage was reached, any agreement to sell or dispose of an allotment forming part of the land to be subdivided was, although not illegal or void, nevertheless by virtue of s. 34(19)(iv) conditional only in the sense of being subject to such approval being obtained. Furthermore, under s. 119 of the Real Property Act 1861, it was only when the plan was registered that the subdivided allotments became capable of being dealt with as land under that Act capable of being transferred on sale.
Enough has been said to show that the function of a Council under s. 34(12)(g) has consequences that go well beyond simple fulfilment of an administrative or executive duty at local government level. The effect of approving a subdivision puts into circulation something which, in that form, is for the first time capable of being bought and sold, or, in other words, dealt with as a merchantable commodity. Viewed in that way, the Council’s action may be compared to that of the manufacturer in Donoghue v. Stevenson [1932] A.C. 562 who, by fabricating a commodity and making it available for distribution to the public, comes under a duty of care to persons who sustain damage through negligence in the course of manufacturing it.
What nevertheless appears anomalous is that, according to the present state of the law, the same is not necessarily true of the developer, who, on one view, is the party primarily responsible for the defect in the land. That is because, in contract at least, the dominant principle remains one of caveat emptor, according to which, on the sale of real estate, there is no implied warranty that the property sold has any particular quality, or is suitable for any particular purpose: see Stonham, Vendor and Purchaser §350, at 219. The authorities cited in support of that proposition are, when examined, found to be cases concerning sales of leasehold interests. It may be that they should not and would not be so readily applied to a developer and vendor of land who, by subdividing a larger area, brings into existence new allotments intended for use for residential purposes.
However, while this may explain why it is the Council rather than the developer that is the target of proceedings like these, it cannot relieve the Council of liability for its negligence in performing its statutory function. Indeed, on one view, it may impose on a local authority an even more exacting duty of care of ensuring that land for which subdivisional approval is sought under s. 34(12)(g) is fit to be used for residential purpose.
For all these reasons, and especially for those given by Pincus J.A., the defendant Council, in considering and approving the application to subdivide the land, was subject to a duty, which it negligently breached, to take care that the subdivided allotment which was bought and built upon by the plaintiffs was fit to be used for residential purposes.
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 5074 of 1996.
Brisbane
Before McPherson J.A.
Pincus J.A.
Thomas J.
[Albert Shire Council v. Bamford & Anor.]
BETWEEN:
ALBERT SHIRE COUNCIL
(Defendant) Appellant
AND:
NEIL RAYMOND BAMFORD and
SANDRA DALE BAMFORD
(Plaintiffs) Respondents
JOINT REASONS FOR JUDGMENT - PINCUS J.A. AND THOMAS J.
Judgment delivered 19 December 1997
This is an appeal against a judgment of the Supreme Court (Derrington J) awarding damages in favour of the respondent/plaintiffs against the appellant Council, the principal causes of action sued on being negligent grant of subdivisional approval and negligent grant of approval to carry out building work. The former allegation was in dispute and the latter was not; that is, the appellant admitted that the grant of building approval was negligent and it does not now challenge the award of such part of the damages as flows from that negligence. The respondents also relied on allegations that the appellant should have warned them that a dwelling house built on a lot they bought was at substantial risk from a landslip.
The principal issue in the appeal is whether the primary judge was right in holding, as he did, that the subdivisional approval was also negligently given. Judgment was granted against the appellant on the basis that it had a duty of care, for the purposes of the law of negligence, in determining whether or not to grant subdivisional approval and that a breach of that duty could be made the basis of an action in damages by persons damaged by it, including the respondents who were purchasers of part of the subdivided land. The judge held in substance that the appellant failed to give proper attention to the suitability of the land for residential purposes, that the block which the respondents bought was not suitable for that purpose unless one built a special sort of house in a particular part of the block, and that the appellant was liable in damages as for a breach of its duty owed to the respondents, the damages being a sum designed to put the respondents in the position they would have enjoyed if they had never bought the block. The main element in the award, which totalled $375,659, was the sum of $301,541 being the cost of the land and cost of construction of a house upon it, augmented by certain sums "to bring them into line with present day costs". The damages were awarded on the basis that the house which the respondents built was useless and valueless; it became uninhabitable because of movement of earth and rock on the allotment. There is a challenge to the award of damages from both sides and that will be dealt with after dealing with the appeal with respect to liability.
The appellant, represented by Mr Keane QC SG, with whom Mr K Wilson appeared, argued that the judge should have concluded that the respondents had no cause of action based on the subdivisional approval because, even if the appellant’s efforts to investigate the suitability of the land for residential subdivision were at a low level, the claim against the appellant on that basis should have been dismissed; it was said that the appellant was not obliged to take steps actively to investigate the land’s suitability for that purpose. Mr Keane argued the appellant was obliged to do no more, in considering the suitability of the land for residential subdivision, than to collect and consider such information on that subject as was within its own knowledge and to consider the documents presented by the applicant for subdivision against the background of that knowledge. Mr Keane contended that, although the evidence showed that a proper investigation by an adequately qualified person would have discovered the unsuitability of the land for residential subdivision, the appellant had no obligation to engage such a person.
In answer to that contention, Mr Couper QC argued for the respondents that the duty of the Council in determining whether the land was suitable for residential subdivision extended so far as to take such steps as might be reasonably necessary, in the circumstances, to determine the land’s suitability, whether or not such steps might involve going beyond the material already in the appellant’s possession at the time of the application for subdivision and the documents presented by the applicant for subdivision.
Mr Keane also argued, although not pressing this point strongly, that if his contention with respect to the scope of the appellant’s duty was rejected, then the judge was still in error, because what was done by the Council by way of investigation was reasonably sufficient.
Mr Keane’s first point was based upon a suggested construction of s. 34(12) of the Local Government Act 1936 in the form which it bore at relevant times. Section 34(1) forbade subdivision of land "by any private person or company except in accordance with this Act". Section 34(6) required the lodgement of an application for subdivision accompanied by plans and specifications. Section 34(12) read as follows:
" Or in approving subdivision. In respect of any application for approval of a subdivision of land (whether the subdivision involves the opening of a road or not) the Local Authority shall take into consideration -
- The size and shape and utility of each separate parcel; and
- The length of road frontage of each separate parcel; and
- The situation and planning of the separate parcels in relation to public convenience, present and prospective; and
- Subject to subsection (12E) of this section, the existing and proposed means of access to each separate parcel; and
- Whether or not the owner will transfer or convey to the Local Authority in fee-simple for a nominal consideration any necessary drainage reserves; and
- Whether the locality is or probably will become a residential locality; and
- Whether the land or any part thereof is low-lying so as not to be reasonably capable of being drained, or is not fit to be used for residential purposes; and
- The maximum standard number of houses to the acre, if any, fixed by the Local Authority; and
- Whether an area of the land to be subdivided should be provided for use as public garden or recreation space or whether the applicant should pay to the Local Authority a sum to be expended towards providing land for use as public garden or recreation space; and
- The truncating of land abutting on road junctions or intersections of roads; and
- The situation and planning of the separate parcels in relation to the costs of supplying water, gas and electricity to the several parcels including in particular whether the subdivision could be redesigned so as to reduce those costs, or any thereof, and either to the supplier or to the consumer, or both:
- Whether in accordance with a by-law of the Local Authority, the applicant, in respect of water supply or sewerage or both water supply and sewerage, should be required to -
- provide for the reticulation thereof to the land to be subdivided;
- contribute towards the cost of the provision thereof (other than by reticulation) to the land to be subdivided, by way of a contribution towards the cost (whether incurred before or after the making of the application) in connection with the construction of mains, or the augmentation of existing mains, or the construction of pumping stations, or the augmentation of existing pumping stations, required to be undertaken by the Local Authority for such provision, other than the cost of constructing a main or pumping station which is in existence at the date of the coming into operation of the by-law:
Provided that the Local Authority shall not take into consideration the matters set out in subparagraphs (e), (g), (h), (i), (j) and (l) of the first paragraph of this subsection unless in its opinion the land the subject of the application is situated in a part of the Area which is being used or will, if the subdivision is effected, be used for residential, commercial or industrial purposes."
The main sub-paragraph, for present purposes, is (g). The argument advanced for the appellant was to the effect that, in requiring the local authority to take into consideration matters such as (a), (f) and (g), the statute did not contemplate consideration of anything other than the application itself, against the background of matters already within the knowledge of the local authority. The interpretation contended for would, we suppose, be more easily supported if the words "In respect of any application" with which the subsection begins were replaced by "In examining the documents comprising any application".
It is in our view desirable, in determining the correctness or otherwise of the submission in question, to consider the leading case on the liability in tort of a local authority exercising functions of the present kind, which is The Council of the Shire of Sutherland v. Heyman (1985) 157 C.L.R. 424. A number of questions dealt with in the reasons given in that case are of limited present relevance and it is enough to discuss what the judges said which is of direct application to a case of the present kind.
The Sutherland case was an action by house purchasers seeking damages for defects in a building causing them loss which they said was attributable to negligent council inspection of a building in the course of construction. Gibbs CJ, with whom Wilson J was in general agreement, posed the question whether the appellant Council owed a duty of care to the respondents (432) and for that purpose first considered the council’s relevant statutory powers and duties. One of the provisions to which his Honour referred, s. 317A of the Local Government Act 1919 (N.S.W.), entitled any person to apply for a certificate to the effect that in the opinion of the Council a building complied with the approved plans and specifications and with other matters. It had been argued that s. 317A set the limits of the duties owed by the Council to private citizens when acting under the relevant part of the Act. Gibbs CJ did not agree:
"The respondents’ action is founded on negligence, and not on breach of statutory duty, and the statutory provisions to which reference has been made are relied on not as a source of the Council’s obligations, but as the setting in which its acts and omissions have to be considered." (434)
His Honour pointed out that the relevant statutory provision imposed on the Council no duty to make an inspection of the footings (the subject of the respondents’ complaint) in the circumstances of the case. (435) But Gibbs CJ, referring to the "well-settled principle" that "when statutory powers are conferred they must be exercised with reasonable care", went on to say (445):
"Once it is accepted, as it must be, that the ordinary principles of the law of negligence apply to public authorities, it follows that they are liable for damage caused by a negligent failure to act when they are under a duty to act, or for a negligent failure to consider whether to exercise a power conferred on them with the intention that it should be exercised if and when the public interest requires it.
Where a public authority has decided to exercise a power, and has done so negligently, a person who has acted in reliance on what the public authority has done may have no difficulty in proving that the damage which he has suffered has been caused by the negligence".
Gibbs CJ held in effect that it was not proved that in the circumstances a failure to inspect the footings would have been negligent, nor was it proved that any inspection was carried out. (448) Mason J (as his Honour then was) remarked (457, 458):
"There is . . . no reason why a public authority should not be subject to a common law duty of care in appropriate circumstances in relation to performing, or failing to perform, its functions, except in so far as its policy making and, perhaps, its discretionary decisions are concerned."
Brennan J (as his Honour then was) said: (479)
"Where a p erson, whether a public authority or not, and whether acting in exercise of a statutory power or not, does something which creates or increases the risk of injury to another, he brings himself into such a relationship with the other that he is bound to do what is reasonable to prevent the occurrence of that injury unless statute excludes the duty."
These observations support the view, which Mr Keane does not contest, that the appellant Council had a duty of care to the respondents in exercising its function of considering applications for subdivision under s. 34(12) of the Local Government Act 1936. They also indicate that in determining the scope of that duty one is not confined to looking for a positive indication in the governing statute that particular actions must be taken, or avoided, in certain circumstances; the Council may properly be held negligent in exercising a statutory function, although it has breached no positive requirement of the statute. In the present case one looks to the terms of s. 34 and of any other relevant statutory provisions to ascertain the council’s powers and functions in considering a subdivision application and then looks to the evidence to determine whether they have been exercised and performed negligently or otherwise. One can readily postulate circumstances in which a council which has fully complied with all that the statute positively requires would nevertheless be properly held guilty of negligence in doing so.
Apart from all that, we consider one cannot sensibly construe s. 34(12) as intended to confine the local authority’s attention, in considering the matters listed, first, to the application documents and, secondly, to the authority’s own knowledge. The latter is not mentioned in the section and the appellant’s argument, we suppose, includes reference to it simply to avoid submitting an absurdity; it would indeed be absurd to read s. 34(12) as not requiring the local authority, in considering whether land is fit for residential purposes, to ignore its own knowledge about its suitability. And the proposition that the statute indicates that the local authority shall not, even where that is necessary in a practical sense, be obliged to make any positive inquiries with respect to the matters listed in subs. (12) receives no support, in our view, from the language actually used. What that language conveys is only that, in deciding whether or not to grant an application, the local authority is to take into consideration all the listed matters; it does not set out nor imply any limit on the methods to be used or the information to be gathered in fulfilling that function.
For the purposes of the claim in negligence all that the respondent needs from s. 34(12) is the truth that the appellant must, in deciding whether to grant an application for subdivision, consider certain factors; whether in particular circumstances the authority’s statutory function so defined has been carried out negligently, or otherwise, is not a point to which s. 34(12) can supply an answer.
In our opinion the submission that s. 34(12) defines the sources of information or the methods to be used in considering the matters listed must be rejected, as must the contention that the subsection requires the local authority to consider only the content of the application documents and matters already within its own knowledge. But even if s. 34(12) were read as confining the local authority’s functions in the way submitted, the conclusion at which the judge arrived, that there was negligence causing loss to the plaintiff, would still stand. Mr Couper gave a number of reasons for thinking that the person who occupied the position of deputy shire engineer at the relevant time ("the shire engineer") should have been alert to the risk of land slipping on the block in question, one of which was the content of an investigation report by Soil Surveys Pty Ltd dated 25 August 1978. The significance of the date is that the report came into the appellant’s possession between approval of a plan of subdivision including the subject land, advised on 3 October 1977, and approval of an amended design which "reconfigured" the relevant land, lot 21, advised on 1 November 1978.
It was the lot on the amended design which was bought by the respondents. It has occurred to us that there might have been something to be said for the proposition that the Soil Surveys Pty Ltd report is of limited relevance; it was not available when the subdivision of lot 21 was first approved and perhaps the appellant might have contended that the subsequent approval, including the reconfigured lot 21, could reasonably have been given without any further consideration of the suitability of that lot for residential purposes. But no such contention was advanced below; nor was the point argued for the appellant here. We therefore proceed on the basis that the approval of the amended design, after the appellant had the Soil Surveys Pty Ltd report, must withstand scrutiny on its own merits, so to speak.
The Soil Surveys Pty Ltd report was carried out at the request of consulting engineers to investigate "the stability of the natural slopes" for the purposes of a proposed subdivision described as "Mudgeeraba Park Stage 2 and 3". The first page of the report showed that Stage 2 consisted of lots 24 to 32 and 39 to 42, and the second page showed that Stage 3 consisted of lots 33 to 38.
That is, the report did not include any investigation of the stability of the development including the subject lot 21; as p. 1 of the report indicates, that was part of Stages 1A and 1B, in respect of which roads in the subdivision were then complete. The evidence of the shire engineer included a suggestion that the report said there was a sufficient site for a house on lot 21; but the report simply did not say that, as appeared subsequently to be conceded by the shire engineer. In discussing Stage 2, which includes lots adjacent to lot 21, the report referred to steep slopes, to evidence of large scale slope failure on lot 42, to a "smaller but equally significant slip" in a location which is quite close to lot 21, and to "unstable zones" at chainage 1325 and chainage 863, both landslide areas in the vicinity of lot 21; the larger landslide area actually crosses the boundary onto lot 21. With reference to chainage 1325, "general problems with this slide area" were said to include:
"slide debris may include timber and could settle differentially with time"
. . .
"Regrowth vegetation north west of the track (Lot 42) is only small with no trees of any size. This may mean that erosion or movement is continuing"
. . .
"The vertical escarpment appears to be in a state of continuous erosion and undermining, with large boulders toppling from the face".
Chainage 863, the smaller of the two unstable zones, is partly located on lot 22, which is adjacent to lot 21, and there was reference to "evidence of recent instability". The report said:
"Thus, the whole zone should be considered potentially active under natural conditions. Interference with the toe area, due to roadworks, etc, will almost certainly speed up the process of downslope movements, leading to a long term stability problem".
It should be noted that the "toe area" referred to terminated on lot 21.
It seems evident that although the report did not discuss lot 21 specifically, it raised doubts about the stability of areas close to that lot and in particular about the future of a large area of slippage crossing the boundary between lot 21 and an adjacent lot. The shire engineer was questioned about the report; some of this evidence must be quoted.
"Did you understand that there was certainly potential for there to be further land slip problems in lot 21 associated with the toe of that very large land slip?-- No, I didn’t.
Did you make any inquiry about whether that was a possibility or not?-- No.
Do you see lot 25 there is a marking and the key tells us that that refers to minor scree in gully?-- Yes.
Did you make any inquiry as to whether that had any impact or possible impact upon the suitability of lot 25 or lot 21 in terms of potential land slip problems?-- Only from the report, which tells me that there was sufficient site for a house.
That’s on lot 25?-- Lot 25 and 21.
. . .
Do you say there’s anything in that report which says to you that there is a suitable house site on lot 21?-- The only thing I would point to is 3.2.5. Lot 21 is not specifically mentioned. "
More generally, the engineer’s evidence was to the effect that he found nothing in the Soil Surveys Pty Ltd report to cast doubt upon the stability of any relevant area. It is our opinion that no careful reader of the report could have reached that conclusion. The toe of the large landslip, referred to in the first question we have quoted, is that which is the subject of specific pessimistic remarks in the report.
The argument from inconvenience which is pressed on behalf of the appellant is that it is impractical for the appellant to go to the expense of hiring expert opinion in such cases, that has no substance here. The appellant had an expert report before it which made plain the likelihood of serious problems of land movement relevant to lot 21, and, of course, other lots. If the appellant, having studied the Soil Surveys Pty Ltd report was in doubt about the extent to which any of the lots was likely to be affected by instability, it could have asked the applicant for subdivision to obtain more detailed opinions from Soil Surveys Pty Ltd.
It is difficult to accept that the appellant, if it drew from the Soil Surveys Pty Ltd report that there were no stability problems affecting lot 21, could have studied that report with any care. Mr Couper pointed out that, apart from the report, there were other reasons why the appellant should have been concerned about the question of land stability. Aerial photographs taken in 1974, which the Council could have but did not trouble to obtain, showed evidence of recent slips and, on the evidence, the relevant area generally was of a kind which is known to be prone to slippage. There is in our view no cogent reason to disagree with the learned primary judge’s conclusion on the question whether, in approving the subdivision of lot 21, purchased by the respondents, the appellant acted negligently.
It should be added, for the sake of completeness, that the evidence showed that part of the site, which was a large one, was suitable for building but, the judge held, "for only a limited range of styles of houses, such as pole houses, and then only with expensive infrastructure . . . [t]echnically the lot [i.e. lot 21] met the description of a home-site, but only in a limited way which would not be apparent to an ordinary purchaser, and because of this, such a description was quite misleading". The appellant took no point about this aspect of the primary judge’s reasoning. As we have mentioned, there was an alternative plea of a failure to warn, on the part of the appellant; it may be implicit in the primary judge’s conclusion that at the least the appellant should have warned or made arrangements for warning potential purchasers that there was a significant risk of a landslip on the site in question. It is unnecessary to discuss that point, however, which was not the subject of argument before us.
In the result, the appellant’s contention that by reason of the terms of s. 34(12) of the Local Government Act 1936 the appellant had no duty to go further than it in fact did, in investigating the suitability of the land for subdivision, as well as its alternative contention that in any event it took reasonable care must both be rejected and the appeal on the question of liability fails.
There remains an argument with respect to quantum; both sides attack the primary judge’s assessment. It is desirable to make two preliminary observations. The first is that, although we do not entirely concur in the primary judge’s assessment, it must be said, with respect, that the difficult issue of damages has been dealt with in a comprehensive and careful way. Secondly, it is established that in assessment of damages in tort the usual measure (being that adopted by the primary judge in the present case) is that sum which will place the plaintiffs in the position they would have enjoyed had the tort not been committed: Gates v. The City Mutual Life Assurance Society Ltd (1986) 160 C.L.R. 1 at 11-12.
The principal attack on the award, made by the respondents, was that the primary judge should have treated the case as an exception to the general rule governing awards of damages in tort; Mr Couper submitted that the respondents should have been held entitled to an award which included as a component what the primary judge (who rejected this submission below) described as:
" . . . the present value of the subject land, assessed on the basis that it is without the relevant defect produced by the presence of the slip, an uncontradicted amount of $130,000 . . . ".
We were invited to hold that the judge erred in failing to apply the decision of the New South Wales Court of Appeal in Rentokil Pty Ltd v. Channon (1990) 19 N.S.W.L.R. 417. That was a case in which an action was brought in tort and in contract, complaining that a house which the plaintiff bought was infested by termites, the defendant had made a report, for a fee, that it was free of termites. The primary judge performed an exercise like the one which the respondent put forward in the present case and, by a majority, the assessment was upheld. In the principal judgment of the majority, that of Meagher J.A., his Honour recognises the basic rule in tort and contrasts it with that in contract (432). But examination of the reasons shows, in our view, that the judge did not think it necessary to determine whether the damages should be assessed in tort or in contract. The conclusion was simply that, on the facts, the method of assessment used was correct. There are three reasons why this Court should not, in our opinion, differ from the trial judge as to application of the Rentokil case. One is that the case involved an action brought both in tort and in contract, whereas this suit is in tort only. A second is that the Rentokil case did not purport to lay down any rule or principle applicable to cases in which damages are sought on the basis that the plaintiff has been caused to acquire defective realty; Meagher J.A. regarded the case as falling within the category of those in which damages are sought against the provider of a negligent report or valuation (432). Thirdly, it seems undesirable to encourage the growth of a heterogeneous collection of exceptions to the basic tort rule; to do so would rather complicate the law in this area. And that would be done without any evident advantage; as was recognised in Rentokil (431), the difference in money terms between the two methods of valuation is not necessarily of great significance. Conceding, as one must, that there will be instances in which fair compensation cannot be assessed, in a tort case, by estimating how much better off the plaintiff would have been if the tort had never been committed, we are unconvinced that this is such a case. The principal complaint made by the respondent about the damages must therefore be rejected.
A second complaint is that the judge did not, as to the price of the land, make a correct allowance for interest on the purchase price. The respondents paid $39,000 for the land and it is common ground that if the approach based on Rentokil is rejected the respondent was entitled to have added to the sum outlaid on the land (which was at the time valueless) interest at a suitable rate to the date of trial. His Honour added to the $39,000 purchase price, expended in 1986, $15,000 to bring that sum "into line with present day costs". At the trial the appellant contended that the interest on the $39,000 should be a sum between $30,420 and $38,025, depending upon whether one used an interest rate of 8% or 10%. At the hearing of the appeal the appellant was unable to explain by what means his Honour reached that figure of $15,000, being a little under half the lower amount the appellant had put up at the trial. Counsel for the appellant suggested that perhaps the judge made a discount for contingencies, but that appears to be unlikely. In our opinion the respondent is entitled to have the damages augmented so as to allow interest at 8% on the lot’s purchase price, resulting in an increase in the damages of $15,420. The appellant made a complaint about a sum of $9,408 which was included in the damages, but that was not pressed at the hearing.
In our opinion the appeal should be dismissed with costs. The cross-appeal should be allowed with costs and the amount for which judgment was given below ($375,659) replaced by a sum of $391,079.