Moore v Paton[2002] QDC 119

CIVIL JURISDICTION

JUDGE BRABAZON QC

and

SOUTHPORT

DATE 05/04/2002

JUDGMENT

HIS HONOUR: This litigation arises out of a contract of sale dated 30th July 1997. Mr and Mrs Moore (as she now is) bought a house at Mermaid Waters for $169,100. The contract contained the usual clause about inspection. The contract was conditional upon the buyer obtaining a building report on the property by the building inspection date on terms satisfactory to the buyer.

Mr Paton, the present defendant, gave his report dated 6th August. He reported that the house was 16 years old and had been built by a reputable Gold Coast builder. He went on:

The sale then settled on the 20th of November 1997. Mr and Mrs Moore had no concerns about the condition of the house and made no complaint about Mr Paton's report until June 2000. On the 6th of May 2000 they entered into a contract to sell the house to Miss Byrne for $185,100. Likewise, that contract of sale was subject to an inspection report. A report was obtained and Miss Byrne's solicitors wrote to the Moores' solicitors on 15th May 2000. The letter simply said that Miss Byrne was in receipt of a building inspection report and that it was not to her satisfaction. The contract of sale was, therefore, terminated.

At the trial no evidence was given about the content of that report or reports. The reports themselves are not in evidence. The inference is that the matters which concerned Miss Byrne had at least some connection and were not entirely unrelated to the matters which were raised at the trial.

The solicitors for Mr and Mrs Moore then wrote to Mr Paton on 9th June 2000 saying that they had relied on his report in deciding to purchase the property. They made complaints about defects, which his report had not revealed. Four particular allegations made against him about defects including major subsidance, severe cracking in the brickwork, that substantial rectification work had been carried out along the entire front half of the dwelling with underpinning leaving drill holes evident in the concrete drive, and that, in any case, the property had been constructed in an area which was notorious for substantial subsidance problems.

At the trial damages were sought against Mr Paton. At first three measures of damage were put forward. Repairs amounting to $15,000 were claimed. However, that claim was not pursued at the trial. What was pursued was a claim for a diminution in the market value of the property if the inspection report had been done properly and the defects had been revealed. That was said to be an amount of $10,000 according to the valuer Miss Graham. There was also a figure of $8,200 claimed because of the sale of the property, at a reduced price.

After the Byrne contract was terminated on 7 September 2001 a further contract with a purchaser by the name of Micallef was entered into for an amount of $176, 900. That contract of sale was not subject to a building inspection. It duly settled. It will be seen that the amount obtained because of that sale was $8,200 less than the sale price in the Byrne contract.

When the matter came on for hearing in the Magistrates Court three issues were litigated: first, what was Mr Paton's retainer when he spoke to Mr Moore and was engaged; secondly, what was the true condition of the house at the time of the inspection; and thirdly, what were the damages.

The retainer according to the judgment below is set out in the reasons of the learned Magistrate in this Court during the hearing of the appeal it was made clear by counsel for the appellant that there was no challenge to the finding about the particulars of the retainer.

(It may be noted that in the learned Magistrate's findings there was no mention of the inspection being concerned with any subsidance in the area. I mention that because in his evidence Mr Moore asserted that in speaking to Mr Paton he had asked him to look at the question of subsidance. Mr Paton denied that. The matter was not pursued at the trial, and that is the likely explanation why no mention was made of it by the learned Magistrate and why there is no challenge to that finding.)

The finding of the learned Magistrate was in these terms:

During the appeal the question of structural soundness was likewise not challenged; that is to say, that part of Mr Paton's report which said that the building had generally presented as being sound was not challenged. The reason for the absence of a challenge is to be found in the evidence of the trial. The learned Magistrate accepted the evidence of the engineer Mr O'Shea who had been called at the trial by the plaintiffs.

In his report in which he was critical about what had been observed or not observed about cracking and the presence of signs that showed that the house had been underpinned previously, he did consider that the house was reasonably sound from a structural point of view. His conclusion was consistent with the evidence of the previous owner Mr Clark who spoke about the underpinning that had been done not long after he had moved in and that the house had then remained, in effect, in pretty much a stable condition until he sold it to Mr and Mrs Moore.

The learned Magistrate then went on in his reasons to mention the evidence of Mr O'Shea. As the learned Magistrate pointed out, there was no evidence that the building was structurally unsound at the time of the inspection because of subsidance. He pointed out, consistently with the evidence, that the house may have been unstable in the past but that there was no evidence that it was at the time of the inspection and there was no evidence that it might occur again.

For those reasons the learned Magistrate reached the conclusion that Mr Paton had not breached his contract with Mr and Mrs Moore and that, therefore, their claim against him should be dismissed.

On the appeal it is submitted that the learned Magistrate entirely overlooked the fact that claims of negligence had also been made against Mr Paton. It is true that he said nothing about those claims, and it is also true that they were made in the further amended statement of claim. See the contents of paragraphs 8 to 13 of the statement of claim.

In short, those claims can be summarised by saying, in effect, that Mr Paton should have looked for and found the defects set out in Mr O'Shea's report which, according to him, were numerous enough and should have been evident to the eye of a builder, not just an engineer. It might also be noted that the defence admitted that Mr Paton knew that Mr and Mrs Moore would rely upon his report in deciding whether to continue with their contract of sale or not and because of the relationship between them he owed them a duty of care in relation to his inspection of the house.

The pleading then goes on to assert, in substance, that he should have done many things beyond merely looking out for structural damage and reporting on whether or not the house was structurally sound.

In cases of this nature the retainer is at the centre of any consideration of the duty of care owed to the purchaser of a house. Mr Paton was not given, in this case, a general instruction to protect the purchasers' interests. If he had been given that instruction, his inspection should indeed have gone further and alerted them to the previous and perhaps present difficulties with the house. But those were not his instructions.

There can be no difference in this case in the scope of his duty of care and the scope of his duty to fulfil his contract, according to its terms. No different finding is possible.

The learned Magistrate was right in dismissing the claim even if he did not turn his mind specifically to the question of the claim in negligence. Because the matters that Mr Paton had to attend to in each case were the same, he did not need to mention it.

It is not possible to convert the specific retainer in this case into a wider and more general responsibility to advise about matters that otherwise might have been of interest to the purchasers.

In principle, see the discussion of concurrent duties in tort and contract in Fleming, 9th Edition, pages 203 to 205 and the discussion in the High Court in the recent decision of Astley v Austrust 197 CLR at paras 47 and 48.

In conclusion, the question of damages might be touched on. The learned Magistrate thought that $8,200 would be the right amount of damages if he were wrong in his conclusions about liability. His decision was before the decision of the Court of Appeal in Manwelland v Dames and Moore (2001) QCA 436. That decision was given on 16th of October last year.

As the Court of Appeal demonstrates, the learned Magistrate was right to take into account later developments and not confine his attention to any difference in value at the time of any breach of contract or negligence.

There were difficulties with this assessment and some imponderables. If it be important, it may be helpful to say that, in my opinion, there is no sufficient reason to disturb the finding of $8,200 as the appropriate measure of damages. The appeal and cross appeal is dismissed.

Now, is there a question of costs other than perhaps that the respondent recover its costs from the appellants? I suppose that's what is asked for in the usual way. The costs haven't been settled beforehand, I take it?

MR O'DEA: No, your Honour.

HIS HONOUR: All right. Mr Campbell?

MR CAMPBELL: That should be the order except there was a cross appeal as well in relation to quantum, your Honour.

HIS HONOUR: Oh, I see.

MR CAMPBELL: So really-----

HIS HONOUR: Which got nowhere.

MR CAMPBELL: Really the order should be that the respondent pay the appellants' costs in respect of my appeal if the same - sorry. The appellants should pay the respondent's costs of my appeal, the Moore appeal, if I can put it that way, and that should be the same in relation to the cross appeal, your Honour.

HIS HONOUR: Well, there might be some merit in that. One can't think that the cross appeal made much difference, really.

MR CAMPBELL: Well, not-----

HIS HONOUR: There may be some small differences.

MR CAMPBELL: There could be some, your Honour. Be sought out on taxation, I would have thought.

HIS HONOUR: I think that is right.

MR CAMPBELL: Yes.

HIS HONOUR: I think that is right, there will be some small measure costs, because of perusing and instructing counsel on the scale.

MR CAMPBELL: Yes.

HIS HONOUR: So that might be the appropriate order. There was a cross appeal. All right, thank you. Perhaps you can both tell me if there's any dissent in the effectiveness of this form of words to achieve what we have just been discussing.

Appeal and cross appeal dismissed. Appellant to pay respondent's costs of the appeal and respondent to pay the appellant any additional costs incurred by reason of the cross appeal, each to be assessed on the standard basis.

That's really what you were saying, I think, Mr Campbell, weren't you?

MR CAMPBELL: I think that's the way we word it on taxation.

HIS HONOUR: Yes. Are you content with that?

MR O'DEA: Yes.

HIS HONOUR: All right. That's the order, then. Thank you, gentlemen. Thank you for your assistance.