|
|
[Home]
[Databases]
[WorldLII]
[Search]
[Feedback]
Federal Court of Australia |
Last Updated: 5 February 1999
TRADE PRACTICES - misleading and deceptive conduct - whether certain oral representations were made by a real estate agent about a property's dimensions and sub-divisibility to the prospective purchasers
EVIDENCE - credibility of witnesses - difficulty of satisfying the requisite onus of proof when there is no satisfactory corroborative evidence of oral representations
NEGLIGENCE - duty of a solicitor to explain a contract for the purchase of property to clients - retainer to "check the area" of property
Trade Practices Act 1974 (Cth) s 52, s 53a and s 82
Fair Trading Act 1987 (NSW) s 42, s 45 and s 68
Fox v Everingham [1983] FCA 258; (1983) 50 ALR 337
Watson v Foxman (Supreme Court of New South Wales, unreported, 3 August 1995)
STELIOS CHRISTOFIDELLIS & ORS V NED & VISJNA ZDRILIC & ORS
NG 772 OF 1995
THE HON JUSTICE MARCUS EINFELD AO
SYDNEY
19 JANUARY 1999
|
IN THE FEDERAL COURT OF AUSTRALIA | |
| NEW SOUTH WALES DISTRICT REGISTRY | NG 772 OF 1995 |
|
BETWEEN: | STELIOS CHRISTOFIDELLIS
First Applicant
MARCIA SEIXAS CHRISTOFIDELLIS Second Applicant
BELRAKE PTY LTD Third Applicant |
|
AND: | NED & VISJNA ZDRILIC
First Respondents
TERRY PFEIFFER REAL ESTATE PTY LTD Second Respondent
TERRENCE STANLEY PFEIFFER Third Respondent
TASS JAMES JOHNSON & TINO DI BELLO Fourth Respondents |
|
JUDGE: | THE HON JUSTICE MARCUS EINFELD AO |
| DATE OF ORDER: | 19 JANUARY 1999 |
| WHERE MADE: | SYDNEY |
THE COURT ORDERS THAT:
1. The application against the second, third and fourth respondents be dismissed.
2. The cross claims of those respondents be dismissed.
3. The applicants pay those respondents' costs including their costs on their cross claims.
Note: Settlement and entry of orders are dealt with in Order 36 of the Federal Court Rules.
|
IN THE FEDERAL COURT OF AUSTRALIA | |
| NEW SOUTH WALES DISTRICT REGISTRY | NG 772 OF 1995 |
|
BETWEEN: | STELIOS CHRISTOFIDELLIS
First Applicant
MARCIA SEIXAS CHRISTOFIDELLIS Second Applicant
BELRAKE PTY LTD Third Applicant |
|
AND: | NED & VISJNA ZDRILIC
First Respondents
TERRY PFEIFFER REAL ESTATE PTY LTD Second Respondent
TERRENCE STANLEY PFEIFFER Third Respondent
TASS JAMES JOHNSON & TINO DI BELLO Fourth Respondents |
JUDGE:
THE HON JUSTICE MARCUS EINFELD AO DATE: 19 JANUARY 1999 PLACE: SYDNEY
1. INTRODUCTION
1 In early April 1995, the first applicant, Stelios (Steven) Christofidellis, a builder and property developer, and the second applicant, his wife Marcia, entered into a contract with the first respondents, Ned and Visjna Zdrilic, to purchase their waterfront property at 117 Kyle Parade, Kyle Bay (the property or number 117) in Sydney's southern suburbs for $1.2 million. The third applicant is a company owned by Mr Christofidellis and one of his associates. The third respondent, Terry Pfeiffer, is a real estate agent who conducts his business through the second respondent, Terry Pfeiffer Real Estate Pty Ltd (TPRE). (Except where otherwise stated, I shall refer to these two respondents simply as Pfeiffer.) Pfeiffer acted as the agent for both parties on the sale of the property. The fourth respondents are solicitors, at relevant times in partnership, of whom Tino Di Bello was the applicants' solicitor acting on the purchase. (I shall refer to these respondents simply as Di Bello.) Prior to the planned settlement date in October 1995, the applicants informed the Zdrilics that they would not complete the contract, on the basis that the property was not subdivisible, contrary to alleged representations made to them by the Zdrilics and Pfeiffer and despite instructions having been given to Di Bello to check the matter. The property was sold by the Zdrilics to an unrelated purchaser in December 1995 for $940,000.
2. THIS APPLICATION
2 On 12 October 1995, the applicants filed this application seeking damages from the Zdrilics and Pfeiffer for contravention of the Trade Practices Act 1974 (Cth) (TPA) and the Fair Trading Act 1987 (NSW) (FTA), arising from the alleged representations, seeking damages for negligence against Di Bello, and seeking relief against the Zdrilics and Pfeiffer pursuant to the Contracts Review Act 1980 (NSW).
3 At the beginning of the hearing, consent orders were handed up disposing of the proceedings between the applicants and the Zdrilics, and consequent cross claims were settled during the hearing. The Court was also informed that the third applicant had abandoned its claims and would not participate any further. After these changes, the applicants' claims crystallised and narrowed during the hearing to three. Firstly, they sought damages against TPRE under section 82 of the TPA for misleading and deceptive conduct in breach of sections 52 and 53A; secondly, they made an equivalent claim against Pfeiffer personally under section 68 of the FTA for breaches of sections 42 and 45 of that Act. As events occurred, there was no relevant distinction between these two claims and they were and can now be dealt with as one. No claim was in the end argued under Contracts Review Act. Thirdly, the applicants claimed damages from Di Bello for negligence. Pfeiffer and Di Bello exchanged cross claims seeking indemnity or contribution if the applicants succeeded against them.
4 The claims against the Pfeiffer parties arose from alleged representations regarding the dimensions, area and subdivisibility of the property. These parties denied that the alleged representations were made. If they were found to be made, they denied that they were relied on. If they were made and relied on, they denied that they were misleading or deceptive.
5 The applicants' claim against Di Bello was that he breached his duty of care to them by failing to carry out their instructions to check the dimensions of the property and by failing to adequately explain the contract. Di Bello denied that he was asked to check the dimensions at all and asserted that although he had no specific recollection, he would have explained the contract to them, in accordance with his usual practice.
3. BACKGROUND TO THE CASE
6 There was hardly an undisputed fact in these entire proceedings. Even the preliminary and peripheral facts, which would normally provide some undisputed framework within which to determine a matter, were put in issue and from them each side sought to draw inferences as to credibility and their `usual practice' with regard to various matters. Nevertheless, I will attempt to outline the principal events as neutrally as possible, before determining the factual issues as they arose in the context of the specific claims.
3.1 67 Kyle Parade
7 In early 1994 Christofidellis was looking for a property on which he could build his family's home. After seeing several properties in the area advertised by Pfeiffer, he approached them. At this time Christofidellis' contact was mainly with a Pfeiffer employee, Aldo Manganaro, although at some point in January 1994 he did meet Pfeiffer himself. After making contact with the agency, Christofidellis was shown 67 Kyle Parade, Kyle Bay, which was a large non-waterfront property with an old fibro shack built on it. He eventually purchased the property before the scheduled auction for $450,000 and during the course of 1994 engaged an architect, Phillip Perrie, to draw up plans for a large family home.
8 There were evidently discussions between Pfeiffer and Christofidellis regarding the building of an expensive home on this particular block because of the possibility of over-capitalisation. At some point Christofidellis determined that he would convert the site into a dual occupancy and sell one of the blocks to his sister and the other to his parents. With the profit from the sale of these two properties, he then planned to purchase a large waterfront block in the area, on which he could build his family home. Christofidellis alleged, but Pfeiffer denied, that Pfeiffer told him that number 67 could be subdivided if he could obtain 30/40 square metres from one of the neighbours and permission to use the neighbour's right of way.
3.2 Introduction to 117 Kyle Parade
9 In late 1994 and early 1995, Pfeiffer showed Christofidellis a number of waterfront properties in the Blakehurst and Connell's Point areas, but apparently none were suitable. In January 1995, Pfeiffer informed Christofidellis that it was possible that 117 Kyle Parade might be for sale, although it had not yet been formally listed. It was a large waterfront block which Pfeiffer, as agent, had sold to the Zdrilics in about 1986. The friendship between the Zdrilics and the Pfeiffers had developed since that time. For some time there had been informal discussions between Zdrilic and Pfeiffer about the fact that Zdrilic needed to purchase a larger home. After inspecting a number of properties in the area, Zdrilic had formed the view that the property was worth at least $1.1 million and that he would consider selling if he was offered this amount. Pfeiffer stated that in late January 1995, the Zdrilics gave him permission to show the property to a prospective purchaser.
3.3 Inspections
10 The essence of this case is the representations allegedly made at the inspections of the property. The number and timing of the inspections and the identity of those present are therefore vitally important matters and were vehemently disputed. Pfeiffer claimed that there were only two inspections: the first, on an occasion in January 1995 when he drove with Christofidellis to the property in the rain and stopped outside in order to have a look, and the second, at the end of January or the beginning of February 1995 when he took the two applicants through the house and the land with the Zdrilics' permission. Christofidellis claimed that he attended four inspections at the property between January and March 1995; one with Pfeiffer alone, two with Pfeiffer and Mrs Christofidellis, and one with Pfeiffer and a business associate, Socrates Scott Kitas. This dispute will be dealt with in due course. For the present, it is sufficient to note that following the inspections between January and March 1995, the applicants decided to purchase the property.
3.4 Contractual negotiations
11 Throughout February and March 1995, there were negotiations between Christofidellis and Zdrilic, through Pfeiffer as intermediary, over the price of the property and the terms of the contract. Although there is a dispute as to the precise nature of the negotiations, the evidence revealed that toward the end of March a price of $1.2 million was agreed and that negotiations continued over the other terms of the contract. In accordance with his usual practice in the purchase of properties, Christofidellis attempted to secure terms that he pay as low a deposit as possible, that the settlement period be as long as possible, and that the vendors consent to the filing of a development application prior to settlement. Again, there is a dispute as to the details of the negotiations, with differing accounts from all parties as to who said what to whom and when. Unsurprisingly, the Zdrilics were resistant to all the proposed terms, and none appeared in the initial draft of the contract provided to Di Bello by the Zdrilics' solicitor, John Jeweller. However, as negotiations continued, compromises were made and eventually, although it is hotly contested as to how exactly it came to pass, agreement was reached on a 2.5% deposit and a six month settlement period with no approval for a development application to be lodged. The contracts were finalised in late March and exchanged on 4 April, although there is a dispute between the applicants and Di Bello over when the contract was signed by Christofidellis.
3.5 Professional advisers
12 Christofidellis also claimed that in the period between inspecting the property and exchange, he consulted with an array of professional advisers and informed them of his plans. Firstly, he approached his accountant, Frank Zonaras, who said that he responded to the proposal to purchase the property with the observation:
At that price you would be crazy to purchase it unless it can be subdivided.13 This remark, although deposed to by Zonaras in his affidavit, was not mentioned by Christofidellis.
14 Secondly, Christofidellis visited his bank manager, Tim Carrick, and told him of the prospective purchase. Carrick informed him that at the proposed price the property would need to be able to be subdivided to ensure finance but that otherwise he did not envisage any problems. Christofidellis conceded in his evidence that he regarded this innocuous conversation as formal approval of finance for the purchase. This somewhat cavalier approach to important matters -- repeated on various occasions -- raised the suspicion that Christofidellis does exactly what he wants to do without regard to others. This attitude which pervaded the entire transaction seems to be his general modus operandi.
15 Importantly, Christofidellis also claimed that he approached Di Bello on a separate matter in March 1995 and informed him of the proposed purchase, drew a diagram of the property, and instructed him to `check the area'. Di Bello stated that Christofidellis did tell him of the proposed purchase in early March but only to the extent that Pfeiffer would be in contact with the details. Di Bello claimed that the only occasion on which Christofidellis drew him a diagram and mentioned subdivision of the property was at a meeting some four to six weeks after exchange and that there was no request even then that Di Bello take any action in respect of the area or dimensions.
16 Prior to exchange, Christofidellis also approached his architect, Phillip Perrie, who had drawn the plans for the house on 67 Kyle Parade. Christofidellis stated that on about 23 March 1995 he saw Perrie in his office with the dimensions of the property at number 117 and asked him to `check the lay of land' and prepare a plan of subdivision. Perrie stated that he did visit the property and claimed that while he was there he called Pfeiffer and asked him about the dimensions. Pfeiffer denied being telephoned by Perrie and denied having supplied him with any dimensions. In any event, Perrie proceeded to prepare a plan of possible subdivision based on the dimensions allegedly misrepresented to Perrie and Christofidellis by Pfeiffer, and on 30 March 1995, the day on which Christofidellis claimed he signed the contract, Perrie left a message that Christofidellis could pick up the plan the next day. I shall return to this evidential conflict later.
3.6 After contract
17 Christofidellis' evidence was that after exchanging contracts on 4 April 1995, Pfeiffer told him that he would continue to negotiate to procure the Zdrilics' consent to the lodging of a development application before settlement. Pfeiffer denied that he had ever stated he would attempt to obtain this consent, maintaining that Christofidellis had told him that he only required it for renovations to the existing house. The process of selling 67 Kyle Parade also continued and although there is a dispute over whether certain offers were made and communicated to Christofidellis, the fact is that that property went to auction in late June 1995 at which the highest bid was $484,000.
18 In a conversation following the auction, Christofidellis alleged that Pfeiffer reiterated his commitment to procuring the `DA consent' for number 117. A matter of days after this conversation, the applicants approached the Zdrilics directly regarding the DA consent. They had not made an appointment, nor had they notified Pfeiffer of their intentions. Mrs Zdrilic was at home when they arrived and she referred their inquiries to her husband. Christofidellis then contacted Zdrilic who again refused permission to lodge the DA.
19 It is at this point that Christofidellis claimed he began to have `doubts' about the purchase. He went to Di Bello and obtained a copy of the contract, which he then checked carefully. He claimed he discovered then that the property was not subdivisible, as he had thought it was, and telephoned Di Bello and Paul Bailey, another solicitor, about this fact. After a meeting in early August 1995 between the three of them, there was some discussion about possible ways to get out of the contract. The applicants claimed that in late August they decided not to complete the contract and to commence proceedings on the basis that they had been misled. The respondents claimed that the proceedings were simply an attempt by the applicants to extract themselves from a contract which they could not afford to complete by transferring blame onto the respondents. The application and statement of claim were filed on 12 October 1995.
4. CREDIBILITY
20 This case is based on particular words used in conversations which took place over two years before the hearing. Even in matters in which the witnesses are genuinely attempting to recall, in good faith, what was said so long before, it is impossible that any such unaided recollection could be accurate. In this case I harbour grave doubts as to the veracity of most witnesses, let alone the accuracy of their recollections. In their submissions the applicants themselves stated:
... the precise recollection of conversations is impossible hours let alone months after they occur. To isolate insignificant comments...is unlikely to assist in determining the truth
21 This statement is no doubt true, but all witnesses deposed, and adhered under cross-examination, to the use of particular words and phrases in conversations and the fact that particular conversations did not take place. In my view, this state of affairs did not reflect well on anybody's credibility. I think that the credibility of all major witnesses suffered because each attempted to ensure that their evidence was favourable to the side they believed they were on.
22 In regard to the principal witnesses, I propose to examine only the significant issues which in my view affected their credibility. What follows is not a comprehensive analysis of all inconsistencies and anomalies or of all the strengths of the evidence, but rather some examples to support my conclusions on the weight to be given to it.
4.1 Steven Christofidellis
23 Steven Christofidellis described his occupation at the time of the hearing as a "concreter, builder and developer." He stated that in 1991 he took over his father's concreting business, in which he had been working since he left university, and remained "hands on" in the business until about 1994, when he began to engage in property development, with the purchase of a property in Moorebank on which he planned to build several factory units. His property development activities continued to expand throughout 1994 and 1995, the period in which the events the subject of these proceedings took place. Many of the development projects were conducted using the third applicant, Belrake Pty Ltd, as the vehicle, in partnership with Socrates Scott Kitas, whom Christofidellis met in about 1995. In early 1997, Christofidellis ceased his involvement with Kitas and continued his business interests on his own.
24 He was an extremely unimpressive witness. He was argumentative, uncooperative and obstructive, and constantly refused to answer even the simplest of questions in a straightforward manner, especially when he perceived that doing so may in some way harm his case. In my view, Christofidellis was quite prepared to tailor his evidence to suit his case and in particular to constructively recall conversations and particulars of conversations in a light which was favourable to him but which was often quite false.
25 The evidence revealed that Christofidellis was at the very least prepared to hide the truth if it was to his advantage to do so. This conclusion is illustrated by the events surrounding the valuation of the property at 67 Kyle Parade. On 21 April 1995 a valuer, Theo Stamoulis, valued the property at $650,000. Although as earlier mentioned, the property went to auction in June 1995 and received a highest bid of almost $200,000 less, Christofidellis instructed Stamoulis after the auction to reaffirm his valuation for the National Australia Bank without informing either Stamoulis or the bank about the auction result. Stamoulis did so. Christofidellis submitted that he cannot be criticised for this action as he was not under any duty to inform Stamoulis. Even if that assertion were legally true, it is self-evident that an auction result so far below the previous valuation would or ought to have had a profound effect on any subsequent valuation. As Christofidellis knew that the reaffirmation was to be supplied to the bank for the purposes of its assessing his financial position, it is clear that he was prepared to hide the truth in order to gain a benefit. At the very least, this occurrence showed him to be a person who does not feel any obligation to keep people fully and honestly informed.
26 Another example of this preparedness to be sparing with the truth was in his dealings with the Zdrilics over the consent to lodge a development application for number 117 prior to settlement. Christofidellis claimed he told Pfeiffer that he required the approval in order to put in an application for subdivision before settlement and yet he told the Zdrilics only that he required it to add balconies to the existing dwelling. Presumably he thought that if he told the truth the Zdrilics might doubt his resolve to complete the contract if the development application was not successful. In this instance he was actually prepared to lie in order to bolster his own position and pursue his own ends.
27 Christofidellis also made a number of fundamental errors in his evidence, some of which were corrected when they were pointed out to him. An example arose in his evidence regarding the inspections of the property. In their first affidavits, both Christofidellis and his wife deposed that they had attended an inspection with Pfeiffer at the property before exchange and had been greeted at the door by Mrs Zdrilic, after which he had a conversation with her about the property. In cross-examination it was pointed out that only Mrs Zdrilic's daughter had been at the property on that occasion and that the conversation with Mrs Zdrilic had in fact taken place after exchange and without Pfeiffer present. This error may not have been a major inaccuracy were it not that in cross-examination Christofidellis refused to simply concede that his evidence about it was wrong:
What you say in paragraph 25 and 26 of your affidavit about having conversations with Mrs Zdrilic at that time is completely wrong, is not it?---That's correct.
Your affidavit is wrong?---No, it's not. The conversation with - I went to the house with Mr Pfeiffer, knocked on the door and I thought at the time it was Mrs Zdrilic, it was her daughter. This conversation with Mrs Zdrilic happened after I exchanged the property, but I still went through the house with Terry Pfeiffer and Mrs Zdrilic's daughter was there.
So when you came to sit down and do your affidavit, you got this conversation with Mr Zdrilic completely wrong as to timing?---Yes, I did.
This is the conversation you say that took place after exchange of contracts?---With Mrs Zdrilic, that's correct.
You are not seriously saying that you thought the person who opened the door was Mrs Zdrilic, are you?---I didn't know who it was at the time, but, no it wasn't, it was her daughter, I just didn't - this whole event happened after the exchange, I made a mistake, I'm sorry.
The person who opened the door was a young girl probably in her teens, was not it?---I can't even remember the girl's face. I just said I can't remember the exact - I can't remember the person at all, but I know the conversation I had with Mr Zdrilic happened after the event, could have been her niece, I don't know who it was, can't remember.
28 This error, which was further exacerbated by his assertion of a quite telling conversation with Mrs Zdrilic on this occasion, to which I will come, does not sit comfortably with Christofidellis' assertions that he remembered the precise terms of conversations conducted at approximately the same time. One example of this dilemma arose in questioning about his advice from his architect, Phillip Perrie, in respect of the dimensions of the property:
You asked Mr Perry [sic] for advice about the subdivision capabilities of the property?---That's correct.
And you believed that he had prepared a plan based on dimensions provided by Mr Pfeiffer?---Correct.
And that plan, he told you, showed that the property could be subdivided?---Correct.
And you knew that the plan was based on those dimensions?---Correct.
And you knew that your architect had looked at the property and said to you that the dimensions did not seem right?---If they didn't seem right at all I would have told my solicitor to check it, I would have said words to that particular effect.
Would you answer the question please?---Okay.
You knew at the end of your conversation with Mr Perry that his opinion was that having looked at the land himself the dimensions that he based his plan on were not right?---Not correct.
Do you deny that Mr Perry said to you "these dimensions Pfeiffer gave me don't seem to meet my recollection of the lay of the land"?---No, I don't deny that, I just deny the first one, that he said they're not right.
Come on, Mr Christofidellis, what on earth could Mr Perry mean by that except that the dimensions are not right? He said to you "these dimensions Pfeiffer gave me don't seem to meet my recollection of the lay of the land"?---That's the layout of the land.
You understand that perfectly well to mean there was something wrong with those dimensions?---I just said I don't.
I beg your pardon?---I just said I don't.
You are saying you did not understand what Mr Perry was saying to you?---No, I did understand what Mr Perry was telling me exactly. He said it - it's not the same recollection, the layout of the land, he didn't tell me about the dimensions of the land were incorrect, they're not right. I know what he said exactly.
29 In my view this series of questions and answers showed Christofidellis' willingness to state what he thought the conversations would have been in a way which benefits his case.
30 I have not attempted to detail the inadequacies manifest in his evidence in any comprehensive form. By these examples I have simply sought seek to set out a cross-section of the problems on which I base my conclusion that he is not a witness inspiring any faith. Not only is his credibility extremely questionable, but his selective memory, or ability to remember only those details which are favourable to him, does not stand him in good stead to satisfy the onus upon an applicant in a case such as this one, involving substantial disputed verbal representations.
4.2 Marcia Christofidellis
31 Christofidellis' wife, Marcia, was nominally involved in many of the real estate transactions conducted by her husband, but does not appear to have played an active role in any of the negotiations or decisions. The evidence was that she acted on her husband's instructions, virtually without question.
32 She was not an impressive witness. The most disturbing element of her evidence, and one on which I principally base my lack of faith in her evidence generally, was that in respect of the crucial issue of the inspections of the property, she made precisely the same error as her husband and subsequently corrected it in precisely the same way. The error lay in the fact that she deposed to meeting Mrs Zdrilic on the occasion when they inspected the house before exchange, not as was the fact Mrs Zdrilic's daughter. The applicants submitted that this willingness to concede errors in recollection reflected well on their credibility. In this case it does not. I have formed the clear view from seeing Mrs Christofidellis give evidence that she did not have a clear recollection of these events at all and that her evidence has been tailored, either by her or by someone else, to fit with that of her husband. I find that there is very little corroborative value in her evidence and that the `internal consistency' which the applicants submitted was so beneficial to their case, in fact reveals an attempt to positively mislead the Court.
4.3 Terry Pfeiffer
33 Terry Pfeiffer is around sixty years of age and has been involved in the real estate industry since about 1965. Since 1974 he has carried on a real estate business in the St George area of Sydney, which in 1994 and 1995 was being conducted through TPRE. He deals primarily in residential real estate and stated that he specialised in "exclusive" properties, both waterfront and non-waterfront. Pfeiffer's wife, Roslyn, whom he married in 1988, is also a licensed real estate sales person and a director of TPRE. As well as working in the local area, the Pfeiffers lived in Kyle Parade, Kyle Bay, on the non-waterfront side of the street, and were friends and neighbours of the Zdrilics whom they met through selling them number 117 in 1986 or 1987.
34 There is apparently a stereotype of real estate agents, often intimated if not spoken in litigation in which they are involved, suggestive that their adherence to truth is less than reliable. Like all such generalisations, this belief, if it exists, is likely to be at least exaggerated and in many cases quite unfair and wrong. Nevertheless, it is necessary to carefully scrutinise evidence of all litigants whose credibility is being challenged and whose lack of credibility may lead to significant financial and reputational losses to them. All possible areas of corroboration must be examined including matters of practical commonsense and of likelihood. As will be seen, I have endeavoured to follow this course in the case of Pfeiffer.
4.4 Tino Di Bello
35 Tino Di Bello is a solicitor and, since being admitted to the Supreme Court of New South Wales in 1985, has practised at Liverpool. By the time of these events, he had become a partner of Tass Johnson. The applicants had been his clients for ten years up to 1995, in matters including conveyancing, leases, civil litigation and traffic offences. Di Bello's firm also employed a conveyancing paralegal, Joy Khan, with whom the Christofidellises had a great deal of contact and who handled a number of their conveyancing matters under Di Bello's supervision.
36 Di Bello's evidence fell to be considered against the background that he is sued in negligence for failing to carry out instructions and the ordinary duties of a solicitor. He also had much to lose in this litigation and his evidence reflected his concerns. It is sometimes said, or believed, that suing lawyers is pointless because they will always be protected by courts for fear that success against lawyers brings the legal system into disrepute. This perception, although wrong, requires that Di Bello's evidence be critically analysed to ensure that as correct a set of conclusions be drawn as possible in the circumstances of events of many years before. These reasons for judgment seek to reflect that that task was scrupulously undertaken in this case.
4.5 Other witnesses
37 I shall discuss any relevant issues of credibility of the minor players in this saga as I deal with their evidence.
5. TRADE PRACTICES CLAIM
38 The applicants claimed that in contravention of the FTA and TPA, Pfeiffer made misleading and deceptive representations on which they relied in entering into the contract to purchase the property. Although there was an enormous amount of disputed factual material placed before the Court, the evidence directly related to the elements of these causes of action is in a relatively narrow compass.
39 Given the nature of the evidence and the representations alleged, in the determination of this matter the warning of McLelland J in Watson v Foxman (Supreme Court of New South Wales, unreported, 3 August 1995) must be heeded:
Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive ... within the meaning of s.52 of the Trade Practices Act (or s.42 of the Fair Trading Act), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the Court (1) what the alleged conduct was, and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the Court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions of self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. Each element of the cause of action must be proved to the reasonable satisfaction of the Court, which means that the Court "must feel an actual persuasion of its occurrence or existence". Such satisfaction is "not ... attained or established independently of the nature and consequence of the fact or facts to be proved" including the "seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding" (Helton v Allen [1940] HCA 20; 63 CLR 691 at 712).
Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a cause of action based on s.52 of the Trade Practices Act (or s.42 of the Fair Trading Act), in the absence of some reliable contemporaneous record or other satisfactory corroboration. That is the position in the present case. There is no contemporaneous document in evidence which supports the making of any such promise or representation as is relied on and no other satisfactory corroboration.
40 McLelland J's analysis highlights not only the onus which the applicants in the present case must satisfy, but also the importance of witnesses' credibility where there are no contemporaneous corroborative documents in evidence.
5.1 The alleged representations
41 The amended statement of claim sets out the representations allegedly made by Pfeiffer in respect of the property:
(a) The property had the following dimensions: a 65 foot frontage to the street, a 130 foot frontage to the water, 270 foot and 300 foot on the two side boundaries.
(b) The property was able to be subdivided.
(c) The property was approximately double the size of 67 Kyle Parade, Kyle Bay in area.
(d) The property was approximately 2500 square metres in area.
(e) The area of the property available for building was considerably larger than the area available for building at 67 Kyle Parade, Kyle Bay.
42 It became clear that the only representations on which the applicants relied to found their case were (a) and (d), relating to the dimensions and the area of the property. In fact the correct dimensions were 176 feet by 250 feet on the side boundaries and the area was 1657 square metres. Number 67 was about 1180 square metres and was thus much more than half the size of number 117. Both Christofidellis in his evidence and counsel for the applicants in their submissions expressly disavowed reliance on any representation as to subdivisibility but nevertheless pressed for a finding that such a representation was made. In itself this limitation of the case raises the question as to how and from whom the instructions were originally obtained to make the additional three allegations. On the evidence, they could only have come from Christofidellis yet his evidence came nowhere near those instructions.
5.1.1 The inspections
43 Christofidellis alleged that the representations on which he relied were made by Pfeiffer at the inspections of the property which they attended together. There was a significant dispute as to these inspections.
Christofidellis' version
44 Christofidellis claimed that after Pfeiffer had mentioned that the property might be for sale in early January 1995, he first of all drove past in order to look at the outside of it. He claimed that after this initial cursory inspection from the road, which he undertook by himself, he attended four inspections with Pfeiffer, the first of which allegedly took place in mid-January and involved only the two of them. At this point access to the house was not available and the two men simply walked around the property. This was the first occasion on which Pfeiffer is said to have told Christofidellis of its dimensions. At the conclusion of the inspection, Christofidellis asked Pfeiffer to organise another one.
45 The second inspection allegedly took place at the end of January and involved both applicants and Pfeiffer. Again the inspection was of the property only, as access to the house was still not available. The applicants recalled that this inspection was on a weekday, and that they met Pfeiffer at the office of TPRE and then went with him to the property. Mrs Christofidellis pinpointed the date as 27 January 1995 on the basis of an entry on that date in her diary which read:
Terry Pfeiffer 3.00pm
46 The relevance to the case of whether this inspection occurred or not is not clear as there is no allegation that any relevant representations were made on this occasion. Pfeiffer claimed that this inspection did not take place. He stated that he took the applicants to inspect a property in Bowden Crescent on that afternoon, which is supported by an entry in the TPRE day book on that date referring to Bowden Crescent and to the Christofidellises. Although the entry is not exclusive of the possibility that they were also shown 117 Kyle Parade on the same afternoon, it does explain the entry in Mrs Christofidellis' diary which is used to found her recollection as to the date of the inspection. One of the rare examples of common ground in the case was that the Christofidellises were shown a number of properties in the local area at around this time and in my view there is a strong possibility that Mrs Christofidellis is mistaken in her recollection that on 27 January 1995 she visited number 117. I am fortified in this view by her inability to accurately recall inspections that definitely did take place.
47 The third inspection allegedly took place in mid to late February and involved Pfeiffer and the two applicants. In his affidavit Christofidellis deposed to meeting Pfeiffer at his office and then driving to the property where they were met at the front door of the house by Mrs Zdrilic. Mrs Christofidellis deposed to the same facts. After Mrs Zdrilic filed an affidavit contradicting this assertion, both applicants filed further affidavits conceding that they had been mistaken and amending their evidence. I have already pointed out how Christofidellis eventually and reluctantly admitted that it had in fact been Mrs Zdrilic's teenage daughter who answered the door and that he went on to admit that he did not meet Mrs Zdrilic until after the exchange of contracts. Mrs Christofidellis admitted to having been similarly confused about this inspection.
48 However, not only did Christofidellis wrongly depose that he was met by Mrs Zdrilic at this inspection, but he deposed to a detailed conversation with her which cannot possibly have been correct. If the conversation is placed in its correct time frame, which Christofidellis eventually agreed was after exchange when he went to the property to attempt to extract consent to lodge a development application prior to settlement, it cannot have taken place in the terms set out by Christofidellis. He stated that he said to Mrs Zdrilic:
I know I shouldn't be saying this in front of the agent...
49 The agent, Pfeiffer, was not present on the one occasion when Christofidellis met with Mrs Zdrilic. This statement must have been a fabrication. Further, Christofidellis deposed that Mrs Zdrilic stated:
We haven't been able to find anything in our price range yet.
50 But at the time he actually met Mrs Zdrilic, she and her husband had already exchanged contracts on their new property.
51 The applicants submitted that these errors were inconsequential. The details themselves may have been quite trivial but the vice lies in the fact that in both these respects Christofidellis clearly created the details of a conversation which did not occur in order to make plausible what he claimed was his genuine recollection of events. Not only did this error expose his faulty memory of events and their timing, but also his willingness to embellish and fabricate facts to bolster his case. In a case where the alleged representations are said to have been verbal, it did not bode well for the case of the applicants that he would simply make up details of conversations that never happened.
52 The applicants claimed that they again inspected the land with Pfeiffer who made various representations regarding the dimensions and subdivisibility of the property. I shall recount the details later. Pfeiffer agreed that this inspection did take place, but its important aspects, including the alleged representations, were disputed. In my view, as already set out in the discussion of the applicants' credibility, the fundamental error made by both of them in relation to this inspection not only casts doubt on their recollection of this event but on their entire version of what happened. It certainly cast doubt on all their evidence regarding the inspections. The disturbing fact that Mrs Christofidellis' evidence revealed precisely the same error and was corrected in precisely the same way, obviously made it particularly difficult to accept her evidence on this issue. Far from providing corroboration of her husband's version, it created great suspicion about the applicants' claims.
53 According to Christofidellis, the fourth inspection took place at some time during March 1995 and was attended by himself, Pfeiffer and Kitas. Kitas' evidence was that he inspected the property at Christofidellis' invitation to ensure that he didn't get `ripped off'. I found it difficult to accept that Christofidellis needed a "bodyguard" to protect his money. Kitas deposed that he accompanied Christofidellis to the Kyle Bay and Connell's Point areas and inspected several properties, including number 117. According to Kitas, this was the first occasion on which he had met Pfeiffer. He stated that after looking at the block and being told of its subdivision potential by Pfeiffer, he was interested in purchasing one of the two resulting blocks because the deep water frontage could accommodate a large boat. He went on to state that he asked Pfeiffer to show him some other properties in the area to demonstrate that the price of the property was realistic.
54 Pfeiffer gave evidence that he did not meet Kitas until 3 May 1995 in accord with his diary which revealed the first entry relating to Kitas as an appointment on that afternoon with him and Christofidellis. Pfeiffer's evidence was that he showed Kitas, not number 117, but several other waterfront properties in the area and that Kitas actually made offers to purchase at least two of them. These offers on other properties conflicted with his stated desire to purchase one of the subdivided blocks at number 117. His evidence that he asked Pfeiffer to show him other properties simply to confirm the price of number 117 smacked of an attempt to explain his actions ex post facto in a manner that suited the case brought by Christofidellis. On Kitas' evidence he had no reason to think that number 117 was not subdivisible and therefore no reason to believe he would not be able to purchase one of the blocks. Given Kitas' unimpressive presentation and past close association with Christofidellis, I am not prepared to accept his evidence that he attended an inspection of the property as he deposed.
Pfeiffer's version
55 Pfeiffer claimed that in January 1995, after showing Christofidellis several properties in the area, he drove with him to the property and stopped on the road outside. He claimed that as it was raining heavily they did not get out but simply looked at the property from inside the car. Christofidellis expressed interest and asked Pfeiffer to arrange an inspection. Mrs Pfeiffer indirectly supported this evidence, as she stated that she recalled Pfeiffer showing Christofidellis several properties on a particularly wet day and his saying on his return that they had stopped outside number 117 and that Christofidellis was interested in purchasing it. A court ought, however, not rely on second hand or hearsay evidence from the wife of one of the parties.
56 Pfeiffer stated that the only other inspection at which he was present was on a Saturday in late January or early February. As already explained, it was agreed that this inspection did take place and that the Zdrilics' daughter allowed them access to the house. Pfeiffer denied having been present on any other occasion when Christofidellis, his wife or Kitas inspected the property.
57 Prima facie, Zdrilic's evidence supported Pfeiffer's claim that only one substantive inspection was made because he stated that he only gave permission for one inspection of the property. However, the applicants relied on Zdrilic's evidence that the permission he did give was only for an inspection of the land and not the house. Based on this evidence, they submitted that Pfeiffer's actions in taking the Christofidellises through the house, when only the Zdrilics' daughter was present, gave rise to the inference that he would not have hesitated to conduct other unauthorised inspections. They also submitted that his professionalism was tainted by his offering the property for sale without a formal agency agreement in breach of the real estate industry's code of practice. However, this particular submission was easily rebutted by Zdrilic's evidence that the arrangements in relation to the sale of the property arose through his friendship with Pfeiffer.
58 In my view, any breach of the industry guidelines in this respect was technical and certainly not malicious, reflecting an intention on Pfeiffer's part to serve the best interests of not only his friend and neighbour, but also of Christofidellis, a valued client. The question whether Pfeiffer would have conducted unauthorised inspections is difficult to determine, as inferences are available favourable to each side. He submitted, for example, that it would have been unlikely for an agent to conduct three separate inspections of only the land without access to the house. The applicants submitted that Christofidellis was highly likely to have only inspected the land, firstly because the block's size and position were the features of the property of interest to him as potential purchaser rather than the dwelling, and secondly, because without the permission of the owners he could not go inside the house.
Conclusion on inspections
59 Having weighed all the evidence, I think it unlikely that Pfeiffer would have conducted three unauthorised inspections of land even though it belonged to his friend and neighbour. The consequences of being revealed to have conducted unauthorised inspections does not compare with the consequences of misleading the Court. Moreover, there does not appear to be a significant advantage in Pfeiffer denying that these inspections took place if they did in fact occur. Although the more inspections of the land there were, the more likely was the emphasis on subdivisibility, the case concerns not subdivisibility but representations by Pfeiffer as to dimensions and area. Additional inspections say little about that question except opportunity.
60 It is thus not necessary or relevant to decide how many inspections Christofidellis might have made of the property either on his own or with his wife or with Kitas, but rather the number of inspections which both Pfeiffer and Christofidellis attended together, for it is only on these occasions that the alleged representations could possibly have been made. Given the doubts I have expressed in relation to the evidence of the applicants and Kitas, I am not persuaded that four joint inspections took place. Despite some misgivings about the evidence of Pfeiffer, I do not accept that Pfeiffer and Christofidellis were both present at more than one inspection prior to the exchange of contracts.
61 Looking at his evidence benignly, it may be that Christofidellis confused the timing of the inspections he deposed to and the people who attended them, as was manifestly obvious in respect of the third inspection about which he gave evidence. In an effort to recall these events, he may have convinced himself that there were more joint inspections than was the fact. Less benignly, he may have thought that it was more credible to assert that more inspections of a $1+ million property took place prior to exchange or that Pfeiffer was present when he had in fact gone to the property alone or with his wife or with Kitas. Either way, I find that there was only one inspection at which Pfeiffer was present, that it took place on a Saturday in late January or early February, and that it involved going through the house and over the land.
5.1.2 The making of the representations
62 Because Christofidellis' evidence about this one inspection is fundamentally flawed, there must therefore be considerable doubt as to the accuracy of his evidence regarding the representations made. He stated in his first affidavit that, after inspecting the house and talking to Mrs Zdrilic (a happening he later conceded was wrong), his wife asked Pfeiffer:
How big is the block?
63 According to Christofidellis, Pfeiffer replied:
It's 65 foot street frontage, 130 foot water frontage, 300 feet one side of the property and 270 foot on the other side, it's approximately 2500M2
64 There was then some discussion of the price, which culminated in Mrs Christofidellis stating:
That's a lot of money.
65 Pfeiffer allegedly replied:
Steve, this block can be subdivided.
66 According to Christofidellis, there was then some discussion about how subdivision might be achieved and Pfeiffer pointed out the block next door, which he said he had sold to a local doctor who had subdivided it. Christofidellis stated that they then walked to the top of the block and Pfeiffer explained by reference to the driveway of the property next door how the doctor had subdivided his property and implied that the same process might be possible on number 117. Christofidellis stated that they then drove across the bay to Baldface Point from where Pfeiffer pointed out number 117 and the property next door by reference to the driveway which he had already pointed out and explained again how the subdivision had been done to allow both properties access to the waterfront.
67 Mrs Christofidellis' evidence of the representations made by Pfeiffer on this occasion was generally corroborative of her husband, although in far less detail. She deposed to Pfeiffer stating that the block could be subdivided but did not detail the context in which that statement was made. She also stated that Pfeiffer mentioned the dimensions of the property but stated she could only remember two of them - the "65 foot" street frontage and the "300 foot" side boundary. She failed to mention, as her husband had stated, that these dimensions were apparently given by Pfeiffer in response to a question from her. This strange omission added to the misgivings I have expressed regarding Mrs Christofidellis' evidence and the significant doubt attending her recollections of this inspection and the statements made during it.
68 Pfeiffer stated that during the inspection of the property he said words to the effect:
I sold this property to the owners many years ago. It is one of the widest water frontages around. I think the water frontage is about 127 feet and the street frontage around 60-65 feet, but, being so long ago, you will have to check.
69 In his evidence he stated:
At no stage did I indicate the length of the property to Mr Christofidellis. I had no recollection of the length. I did not consider the length of the property to be a feature of it. The length of the property was never discussed.
70 In regard to discussions with Mrs Christofidellis, he stated:
I recall that there was virtually no conversation between myself and Mrs Christofidellis except at one stage I said to her:
"What do you think of it?"
She replied:
"I love the view."
71 As Pfeiffer, Christofidellis and his wife were the only three people present, their accounts were the only direct evidence of what actually occurred and what representations were actually made. All three accounts related basically the same events. It was agreed that an inspection of the house and the land took place. It was agreed that there was some discussion of dimensions and that there was some discussion of the property next door and the fact that it was owned by a local doctor. It was also agreed that after the inspection the three travelled to Baldface Point and looked at the property from across the river, and that there was some discussion about the property next door owned by the doctor. The essential question, whether certain representations as to dimensions, area and subdivisibility were made, was not agreed. On their face, both accounts might conceivably be an accurate depiction of the events, but as they are diametrically opposed on the essential question, the Court must determine which version of events is to be accepted on the basis of inferences drawn from the surrounding circumstances and the witnesses' credibility, bearing in mind the onus on the applicants to prove their case on the balance of probabilities.
72 Pfeiffer submitted that he would not have professed such detailed and unqualified knowledge of dimensions when he had had no opportunity to refresh his memory dating back eight years to when he had sold the property to the Zdrilics. Also, he claimed it was likely that he would have remembered the width of the property as the long water frontage was a distinguishing and attractive feature. Thirdly, Pfeiffer stated that he never used metric measurements and that it is therefore inherently unlikely that he would have given the dimensions in feet and the area in square metres. Somehow he relied on this submission to show that it was therefore unlikely that he gave any dimensions at all.
73 None of these arguments were particularly cogent or persuasive and are easily negatived. Pfeiffer did profess to be very familiar with the property and admitted to giving some dimensions, in precise detail, from memory, which does not sit comfortably with his submission that he would not have done so in respect of the other dimensions. Similarly I do not accept, as was suggested, that it follows that simply because Pfeiffer was an experienced real estate agent he would not have given out precise dimensions without checking them first. On the contrary, the dimensions of an expensive property might be information that a prospective purchaser would expect an experienced agent to have available on inspection. It is common ground that the property was regarded as one of the best properties in the area so that its dimensions or approximate dimensions may well have been available to and remembered by Pfeiffer. Furthermore, experienced realtors would be in a better position than most to provide reasonable estimates from simple observations.
74 The applicants submitted that their evidence should be believed because they both had much greater reason to remember what was said to them about this property. It was their first waterfront purchase and would be their family home and so was much more important to them than to any of the respondents. It could no less be said that they also have the most to gain from remembering events in the light most favourable to their case. They also pointed to the internal consistency of their evidence. It certainly was consistent -- to the point of important identical error -- but this feature is only beneficial to them as long it is not concluded that the internal consistency is a result of contriving to produce identical evidence in an effort to mislead the Court, a possibility canvassed earlier. Similarly, the applicants submitted that their preparedness to concede flaws in their evidence and make necessary corrections stood them in good stead as credible witnesses. Alternatively, it might be put that these errors merely show that in fabricating their evidence, they have made mistakes which have been corrected only in the face of incontrovertible rebutting evidence.
75 The strongest indirect evidence supporting the applicants' contention that Pfeiffer represented the incorrect dimensions to them came from Phillip Perrie, the architect retained by Christofidellis. Perrie's evidence was that Christofidellis approached him in March 1995 and stated that he had the opportunity to purchase the property and asked him, next time he was looking at 67 Kyle Parade, to `check the lay of land' at number 117. Perrie then stated:
Approximately one week later on about Thursday 30 March, 1995 I viewed the property at 117 Kyle Parade. At about 11:30am on that day I telephoned Terry Pfeiffer. We had a conversation to the following effect:
I said:-
"Can you provide me with a survey or the dimensions, including the area of the property at 117 Kyle Parade?"
He said:-
"The property has a 65 foot frontage to the street, 130 feet frontage to the water, from the street the left side boundary is 270 foot and the right side boundary is 300 foot."
I prepared a plan of the property using these dimensions with the dimensions also converted into metres. I also drew on the plan as possible arrangement as to how the land could be subdivided.
76 In cross-examination, Perrie claimed that the conversation referred to took place when he rang Pfeiffer from his mobile phone while he was at number 117. The plan referred to was annexed to Perrie's affidavit and did show that the dimensions used by Perrie corresponded to those he stated he had been given by Pfeiffer. These were the same dimensions Christofidellis claimed Pfeiffer had given him at the inspection. Although this is certainly not direct evidence of anything Pfeiffer may have said to the applicants, it leads, if it is accepted, to an inference that Pfeiffer had the particular dimensions in his mind or otherwise readily available and was prepared to give them to people who asked without checking a survey.
77 Pfeiffer denied that the telephone conversation with Perrie ever took place, a claim that was supported in part by Perrie's mobile telephone call records, produced on subpoena. These records did not reveal any calls to Pfeiffer in the relevant period. It was Pfeiffer's case that Perrie was mistaken and that Christofidellis had given Perrie the dimensions either when he was at his office earlier in the week or by telephone at around this time. Perrie's mobile telephone records do reveal several calls to Christofidellis during this period. Although these records are not conclusive, they do cast some doubt on Perrie's assertions. Pfeiffer also gave evidence that it was his usual practice, if someone asked for a survey, to either check the contract or refer the inquiry to the vendor's solicitor. This fact, true or otherwise, would not be relevant if Pfeiffer thought he knew the dimensions of the property he was being asked about.
78 In maligning the evidence of Pfeiffer, the applicants submitted that in order to find that the alleged representations were not made, the Court must positively disbelieve the sworn evidence of both Christofidellises, Kitas and Perrie. It is true that the applicants called a number of witnesses in support of their case whereas Pfeiffer relied simply on his own word and indirectly on that of his wife. Nevertheless, numbers alone do not prove facts, and in the circumstances of this case, it is not difficult to disbelieve, or at the very least remain unpersuaded by, the applicants and their witnesses, especially if one assumes that Perrie is simply mistaken rather than fabricating evidence. His motive for lying was, and remains, a mystery to me.
5.1.3 Conclusion on the representations
79 The Court is in a particularly invidious position in this case. It is simply not realistic to expect, after essentially verbal reconstructions of events over three years later, in the context of litigation, with both money and reputations at stake, that the truth could be determined to the parties' satisfaction. Only the people actually involved in this matter know precisely what happened, and, so long after the events, with so much emotion invested in these proceedings, perhaps even the parties themselves are not now precisely sure what occurred. Nevertheless, the Court must determine the dispute before it in accordance with the law. I would add that the majority of the factual material placed before the Court and vehemently disputed, while perhaps relevant to the parties' credibility, does not bear on the fundamental question which is a relatively narrow one, namely whether the representations as to dimensions and area, relevant to subdivisibility, were made.
80 The evidence relating to the parties' dealings over 67 Kyle Parade highlights the difficult and, at times absurd, nature of this case. Nothing that happened in relation to 67 Kyle Parade had any direct bearing on whether the Christofidellises were misled and deceived by Pfeiffer in their entry into the contract to purchase number 117. Yet every single fact relating to that course of dealing was disputed and fought tooth and nail. It was Christofidellis' initial intention to build a dual occupancy on number 67. The parties disputed who first raised this possibility. Eventually Christofidellis conceded that he had, but his original claim that it had been Pfeiffer was designed to show that Pfeiffer was likely to offer his opinion on possible future uses of properties he was showing to prospective purchasers. This fact, if proven, was to have shown that Pfeiffer would have been more likely to make representations about the subdivisibility of number 117. As the assertion was ultimately conceded to be untrue, Pfeiffer claimed that the contrary claim tended to show a willingness on Christofidellis' part to project onto others thoughts and ideas that had been his own, if it was to his advantage to do so.
81 Similarly, there was a direct dispute over the sale of number 67. Christofidellis bought it for $450,000 before auction in 1994. Pfeiffer claimed that Christofidellis instructed him that he wanted $650,000 for it in 1995. Pfeiffer said that he told Christofidellis that this was unrealistic and that $520,000 was more likely but that Christofidellis insisted on attempting to achieve the higher price. Pfeiffer stated that he received an offer of $520,000 which he communicated to Christofidellis but which was rejected. Christofidellis' account was that he only wanted around $520,000 and that when Pfeiffer told him that he expected the property would achieve $650,000, he thought that he was being too optimistic. Christofidellis denied that Pfeiffer ever told him there had been an offer of $520,000 and claimed that he would have accepted it had he been informed. The only agreed fact was that the property went to auction in mid-1995 at which the highest bid was $484,000 -- an unsurprising result given the purchase the year before for $450,000.
82 Thus the accounts given by Pfeiffer and Christofidellis were diametrically opposed on who was the source of the expectation which was ultimately too high, on whether the offer of $520,000 was communicated to Christofidellis, and on whether advice was given to accept or reject it. Christofidellis relied on his version of events to ground a submission that Pfeiffer was an agent who lacked professionalism and made representations which were unfounded and to the detriment of his clients. Pfeiffer relied on his version of events to show that again Christofidellis projected fanciful ideas of his own onto others when it became clear that they were wrong. If the sale of number 67 had been at the centre of the action, this dispute would have been unremarkable. The absurdity lies in the situation that the Court was asked to determine which was the correct version of events (presumably using credibility as a factor), only to use the fact thereby established to draw an inference as to credibility which could then be used in assessing a factual issue which is actually related to the case.
83 It is my view that an experienced real estate agent like Pfeiffer would not have led his client to believe that a property could be sold for a 50% capital gain in just one year. I therefore determine this particular factual issue (only a small part of the disputed events as to number 67) in Pfeiffer's favour and find that Christofidellis cast on to Pfeiffer a mistaken judgment of his own that the property was worth more than he thought. That conclusion therefore activated Pfeiffer's submission that Christofidellis should not be believed when he alleged that Pfeiffer had made representations about the dimensions of number 117 as these allegations were a further example of Christofidellis' tendency to blame others for his own mistakes. All I can respond is that the weight to be given to this submission and any similar reasoning is minimal. The facts do not reflect well on Christofidellis but, despite their volume and the time they took at the hearing to prove, they were just too far removed from the facts concerning number 117, and were of little assistance in determining the central question in this case whether the alleged representations were made.
84 On this fundamental issue, there is significant doubt about much of what occurred, as would be expected when the dispute is over the precise words used many years ago, and now overlaid by litigation and the inevitable attendant emotion. However, the applicants brought this case, and they bear the onus of proving it on the balance of probabilities. For the reasons already set out, and bearing in mind the words of McLelland J in Watson v Foxman, I am not satisfied that the applicants have done so. Accordingly I cannot conclude that the alleged representations were made. The direct evidence of the applicants is not convincing because of serious doubts as to their veracity. The indirect evidence from other witnesses is contradictory and inconclusive and it is impossible to draw useful inferences from much of the remaining material. I have already outlined some of my concerns about the evidence of Pfeiffer and his wife, and my finding that the representations were not made is not an endorsement of their evidence or their version of events, but simply a recognition that the applicants have failed to discharge the legal onus which they took upon themselves when they brought this action.
85 Although the applicants cannot therefore succeed in their action against Pfeiffer and TPRE, in light of the bitterly contested factual disputes in this matter, it is, in my view, prudent that I consider the other elements of the action, if only briefly.
5.2 Reliance on the representations
86 As I have previously observed, the applicants pleaded five representations on which they claimed they had relied. Four related to dimensions and area and the fifth was that the property was subdivisible. During the case, they expressly disavowed reliance on the representation as to subdivision, on the basis that any reliance on what Pfeiffer had said about subdivision was displaced because Christofidellis had independently checked with his architect on this matter and relied on his professional adviser's opinion. The applicants' case was therefore that they relied on Pfeiffer's representations as to the dimensions of the property only.
87 The respondents submitted that Christofidellis was not in fact concerned with subdivision at all. They argued that he purported to rescind the contract, not because he discovered that the property was not subdivisible, but because his financial position had deteriorated so that it was not possible for him to complete. If this were true, there would be no reliance on a representation as to subdivision, let alone reliance on representations as to dimensions. However, on balance I am of the view that subdivision probably was important to him in entering the contract. According to the evidence of Zonaras, his accountant, Carrick, his bank manager, Perrie, his architect, and even Di Bello, his solicitor, he mentioned subdivision to each of them and at least some of these professional advisers informed him of the importance of subdivision in order to raise the value of the property to facilitate finance.
88 In respect of the applicants' claim of reliance on Pfeiffer's representations as to dimensions but not subdivision, the respondents claimed that this was an attempt to steer a course between Scylla and Charybdis; that is, to avoid the implausible proposition that the applicants had relied, in purchasing a $1.2 million property, on a real estate agent's opinion as to subdivisibility on the one hand, while on the other not having sued the person on whom they did rely in respect of subdivision, namely Perrie. The applicants submitted that the dimensions were crucial in determining subdivisibility and so reliance on the dimensions was sufficient to found a cause of action. The reliance allegedly arose in two ways; firstly, Christofidellis relied directly on the dimensions himself, and secondly, he relied on them through Perrie, who was allegedly given the same dimensions by Pfeiffer and based his subdivisibility calculation on them.
89 In my view, Christofidellis could not have relied directly on any representations made by Pfeiffer at all. The dimensions were only relevant to subdivision and Christofidellis did nothing with them himself. He certainly did not go to the local council before exchange to obtain their subdivision code and attempt to determine whether the property was subdivisible based on the dimensions he claimed to have been given. He said that he did so after exchange but this is irrelevant to the question of reliance in entering a contract.
90 To illustrate their point, the applicants used an analogy:
...if an agent of land said to a potential buyer who wished to build a home, that the land was virgin soil, never touched, but in fact was a disused garbage dump which could never be built on, could it seriously be suggested that the agent's representation was irrelevant because the owner was not interested in whether the soil was virgin, but only whether it could be built on?
91 Like many analogies, this one was unhelpful because in a fundamental respect it is unrelated to the facts at hand. The crucial factor in the garbage dump analogy is whether the land could be built on. The misrepresentation was that the land was virgin. The correct representation is that the land is a disused garbage dump. If the correct representation regarding the garbage dump had been made instead of the claim of virginity, it would be immediately obvious to the representee that the crucial factor, the ability to build on the land, was not achievable. In the present case, if the correct dimensions had been given to Christofidellis by Pfeiffer, it still would not have helped Christofidellis in establishing whether the property could be subdivided, because he did nothing with the dimensions himself until after exchange. Moreover, the applicants did not call the Council officer who could have established the facts even though he was apparently available.
92 The only reliance that Christofidellis could possibly have had on the dimensions is through Perrie. The applicants submitted that by relying on Perrie to check the subdivision based on dimensions supplied by Pfeiffer, either directly to Perrie or through Christofidellis, there was reliance by Christofidellis himself on the dimensions. The respondents submitted that this involved reliance by Perrie on the dimensions and reliance by Christofidellis only on Perrie's opinion as to subdivisibility.
93 I am quite doubtful that Christofidellis could be found to have relied on the dimensions in this way as a matter of law or logic but if he could, there are several other factors to consider. The first is that Perrie pointed out to Christofidellis that the dimensions did not meet his recollection of the lay of the land:
Mr Perrie: It seems okay for subdivision. I've prepared a rough plan.
Mr Christofidellis: I'll pick it up in the morning.
Mr Perrie: These dimensions Pfeiffer gave me don't seem to meet my recollection of the lay of the land. He told me the dimensions were 65 foot at the street, 130 foot at the water and 270 foot and 300 foot on the sides.
Mr Christofidellis: Those are the same dimensions I was told by Pfeiffer.
Mr Perrie: Well you could check them again with him.
94 It is clear that Perrie doubted the accuracy of the dimensions given to him and on which he based his subdivision calculations. As it happens, the plan was not picked up by Christofidellis as promised, nor did he check the dimensions which Perrie had used. However, the explanation of this evidence proffered by Christofidellis, which involved a complicated discussion of the nuances of the phrase "lay of the land", was convoluted and I do not accept it. In the context in which Perrie gave his evidence, it is clear that he was talking about dimensions. Christofidellis did not ask Pfeiffer further or again about the dimensions. He did not approach his solicitor to check a copy of the survey attached to the contract. He did not approach the vendor's solicitor for a survey. All these facts cast the gravest doubt on Christofidellis' concern about subdivision. Although I have found that it was important to him, I must conclude that he was simply careless in the extreme in protecting his own interests in the matter, even so far as to ignore the advice of his professional advisers. In my view, Christofidellis cannot be held to have relied on any representations by Pfeiffer as to dimensions.
5.3 Misleading or deceptive
95 It is not necessary to delve at length into the intricate and difficult question of whether or not the property was in fact legally capable of subdivision, principally because it is not relevant to the way in which this case was finally presented. The representations said to found this case were about dimensions and area. In my view, if the alleged representations had been made and relied on, they were misleading or deceptive, simply because they were incorrect in material respects.
5.4 Damages
96 The final element which the applicants would have had to prove if they had been successful in establishing the other parts of their claim is that reliance on the misrepresentations caused them loss and damage. The applicants submitted that their loss should be quantified by reference to the $330,000 they paid to settle their claim with the Zdrilics. They claim that they are entitled to this sum plus interest which resulted from the misleading and deceptive conduct of the respondents. Pfeiffer submitted that the correct basis for determining damages was in accordance with the High Court's decision in Kizbeau Pty Ltd v W G & B Pty Ltd [1995] HCA 4; (1995) 184 CLR 281, that is the difference between the price paid for the property and the actual value at the time of purchase. In my view, Pfeiffer's contention is correct. The settlement between the applicants and the Zdrilics is irrelevant to the quantification of damages arising from the misrepresentations of Pfeiffer. The case is slightly anomalous in that the applicants refused to complete the contract and so did not pay the balance of the purchase price, but then proceeded to commence litigation themselves. Therefore they did not pay price fixed by the misrepresentation from which would be subtracted the actual value of the property in the normal case.
97 I am of the opinion that the correct method to determine any damages is the difference between the contract price and the value of the property. In my view the damage suffered cannot be greater than it would have been if the contract had gone ahead on the basis of the misrepresentation.
98 The undisputed fact is that the applicants contracted to purchase the property for $1.2 million. They relied on the fact that the property sold for $940,000 at auction in December 1995 as indicative of the market value. They also relied on a retrospective valuation of $900,000 which they commissioned. The respondents submitted that on Christofidellis' own evidence he received at least two appraisals from real estate agents which valued the property at $1.1 million to $1.2 million at the time he rescinded the contract. They also rely on his evidence that he told Di Bello he could "probably get $1.1 million for the property".
99 In my view, the weight to be given to valuations must be considered carefully even in the most propitious circumstances, but when the valuation in question is retrospective and carried out by a valuer who has a close relationship with the applicant, even more caution is required. The valuer relied on by the applicants was after all the same valuer who affirmed a valuation of $650,000 for 67 Kyle Parade after an auction at which the highest bid was $484,000. Whether this significant discrepancy was because of a lack of care or a deliberate attempt to mislead, it does not inspire confidence about the retrospective valuation of number 117 made in the context of litigation.
100 There are several factors which cast doubt on whether the auction of number 117, which resulted in its sale by the Zdrilics for $940,000, realised the best possible price. The auction was conducted in mid-December, a traditionally poor time to sell real estate in Sydney. The applicants submitted that the auction was conducted properly with a good campaign in advance and that the Zdrilics were willing but not anxious vendors. The auction campaign may indeed have been adequate but in my view the entire operation was not ideal. The Zdrilics had committed themselves to purchasing another property and although Mr Zdrilic stated that he could have re-financed and kept number 117, this was obviously an option they would have been very keen to avoid. Although it is not necessary in the circumstances for me to make a definitive finding on the matter, I have formed the clear view that if damage was suffered by the applicants, it was minimal. In my opinion, if the contract had been completed, the applicants could have resold the property for an amount close to that which they would have paid.
6. NEGLIGENCE
101 The applicants' case in negligence against Di Bello was put on two bases. Firstly, that he failed to carry out a specific instruction given by the applicants to `check the area' of the property before exchange, and secondly, that he failed to adequately explain the contract to the applicants before they signed it. Di Bello submitted that the applicants' case turned entirely on whether his retainer included a term that he `check the area'. I reject that contention. Both the statement of claim, the evidence and the applicants' submissions clearly advanced both this ground and the allegation that the contract was not adequately explained to them.
102 To establish their case in negligence, the applicants must show that Di Bello owed them a duty of care, that the duty was breached, that they suffered foreseeable damage, and that the damage was caused by the breach.
103 There is no doubt that solicitors owe their clients a duty of care in acting for them on the purchase of a property. Similarly, there is no doubt that this duty includes an obligation to adequately explain the contract into which the clients are entering prior to their signing it: Fox v Everingham [1983] FCA 258; (1983) 50 ALR 337. The only question in this case that relates to the scope of Di Bello's duty, therefore, is whether his retainer included a term that he `check the area' of the property.
6.1 "Check the area"
104 Christofidellis claimed that he went to see Di Bello at some time during March 1995 after inspecting the property, told him about it and drew a diagram on which he marked the dimensions and explained how it might be subdivided. Christofidellis' evidence was:
I then recall drawing on a piece of paper, in his presence, a plan of the property with the dimensions provided to me by Terry Pfeiffer. I said to him:-
"Terry Pfeiffer, the agent, gave me these dimensions and told me it can be subdivided in this manner (referring him to the diagram)."
When I was drawing the front boundary of the property I said:-
"Tino, 67 Kyle Parade has a 50 foot frontage. This one has got 65. The two sides of 67 Kyle Parade are both 250 foot long. This one has 300 feet on one side and 270 feet on the other. 67 has a back boundary of of 50 feet. This one has water frontage of 130 feet."
...
I also said:-
"Please check the area of the property and its zoning."
105 Di Bello gave evidence that prior to exchange, Christofidellis had only mentioned the property to him twice. On the first occasion, in mid-March 1995, Di Bello claimed that Christofidellis stated:
I have bought a waterfront house at 117 Kyle Parade. Terry Pfeiffer will give you the details and get the vendors' solicitors to contact you.
106 On the second occasion a week or so later, Di Bello claimed Christofidellis told him:
This is going to be my dream home - I am going to settle in this house. This will make Marcia happy at last.
107 Di Bello denied that prior to exchange Christofidellis ever mentioned subdivision of the property, drew a diagram of the property, told him the dimensions of the property, or asked him to check anything in relation to the property. Di Bello did state that four to six weeks after exchange, when in his office on another matter, Christofidellis drew a diagram of the property, mentioned the dimensions and indicated how the property might be subdivided. However, Di Bello denied being asked to check the area of the property even then.
108 In my view, as Di Bello was dealing with an experienced client with whom he had many previous dealings on property transactions, he would not have been under a duty to check the area of the property unless he was specifically asked to do so before exchange took place. I accept Di Bello's evidence that Christofidellis usually undertook all council inquiries himself to ascertain the use which could be made of a property and that he had never previously asked Di Bello to undertake such inquiries on his behalf. The evidence of the expert solicitors called by both sides was that it would be unusual for a solicitor to be asked to check the area of a property. In the absence of any specific request to do so, there would be no duty to check the area of the property the subject of the transaction.
109 The Court must therefore determine whether Christofidellis did ask Di Bello to check the area. Di Bello submitted that the evidence supported a conclusion that Christofidellis had not done so. First and foremost, he stated that had such a request been made, he would have followed it up and given Christofidellis an answer. He claimed that the fact he had not done so indicated that he had not been asked to. Further, Di Bello relied on Christofidellis' evidence that it was his usual practice to persistently follow up any requests made of his expert advisers, including his solicitor, in order to ensure that they had complied with them. There was no dispute that Christofidellis had not followed up this particular request nor that he had asked Joy Khan to follow it up. Di Bello submitted that this lack of follow up in accordance with Christofidellis' usual practice indicated that the request had never been made. He also cast doubt on the timing of the conversation by reference to Christofidellis' alleged discussion of the subdivision potential of the property. He stated that it would have been contrary to Christofidellis' usual practice to inform him of any plans to subdivide before exchange, as he regarded such matters as secret.
110 Christofidellis submitted that his recollection was more reliable as this transaction was more important to him and he therefore would have remembered the details. Given my earlier findings regarding Christofidellis' credibility, this argument is not persuasive. I am not satisfied that Christofidellis did ask Di Bello to check the dimensions or area of the property prior to exchange. In my view, it is significantly more likely that the conversation occurred as deposed to by Di Bello, that is, that Christofidellis approached him and drew a diagram of the property on an occasion when he was in Di Bello's office on another matter after exchange of contracts. In the circumstances, I cannot therefore find that checking the area formed part of his retainer.
111 Even if Christofidellis had instructed Di Bello in the precise terms he deposed to in his affidavit, there is still significant doubt as to whether this would have imported a term into Di Bello's retainer that he check the area. The factors to consider would include that the request was made some two weeks prior to any contract being finalised, in circumstances where the majority of the terms, including the price, had yet to be determined. Also, the request would have been made in the context of a discussion regarding a completely separate matter and was not subsequently followed up or queried by Christofidellis when Di Bello received a contract from the vendors' solicitor and the transaction truly moved forward.
6.2 Explaining the contract
112 In any event, the result is that, in my view, Di Bello owed only a general duty to his clients to adequately explain the contract they were entering, in accordance with the principle in Fox v Everingham at 341:
At the least that obligation [to act generally in the clients' interests] required the [solicitors], either themselves or by an employee qualified to do so, to go through the contract with the [clients] and explain the salient points to them. In this way their principal rights and obligations under it would be explained as would the general course the matter might be expected to take. The respondents were also under an obligation to explain to the [clients] provisions of the contract which were in an unusual form and which might affect their interests as they were known by the [solicitors] to be.113 Despite Di Bello's submission to the contrary, it is necessary to determine the factual dispute as to the circumstances of the signing of the contract by the applicants, as this conclusion will play an integral role in determining whether an adequate explanation was given to them in discharge of his duty.
114 Di Bello claimed that both applicants attended his office on the evening of 4 April 1995. He claimed that they sat together, across his desk, and he explained the contract to them, after which they signed it. Di Bello stated that he particularly recalled this occasion because it was a rare event for him to be able get both the Christofidellises there at the same time, as they were extremely hard to dovetail. Although he did not specifically recall the words he had used, Di Bello's evidence was that he would have explained the contract to the applicants in accordance with his usual practice, which involved drawing their attention to the important terms and making sure that they were understood.
115 Christofidellis put a completely contradictory version of events. He claimed that he signed the contract on 30 March 1998 and at the same time left with Di Bello a cheque for $30,000 for the 2.5% deposit. He claimed that he initialled each page of the contract by turning up only the bottom left hand corner, and that he neither read, nor had explained to him, any terms of the contract or documents attached to it. Mrs Christofidellis also asserted that she did not sign the contract in the circumstances deposed to by Di Bello. She said that although she attended his office on the afternoon of 4 April 1995, she signed the contract in front of Joy Khan, not Di Bello, and nothing about the contract was explained to her at all.
116 As with many of the other aspects of this case, this is a difficult question for the Court to determine with any confidence. In contrast to other parts of the case, however, there are some undisputed facts. On about 17 March, agreement was reached on a price of $1.2 million and a contract was prepared by John Jeweller of Jeweller Peetz, who was acting for the Zdrilics on the sale of the property. On about 31 March, Joy Khan noted on the file that the Zdrilics had agreed to a reduced deposit and a delayed settlement, at the request of Christofidellis. On 3 April, she sent a letter to Jeweller Peetz setting out certain changes that Christofidellis had requested be made to the contract, including a term allowing him to nominate a different purchaser after exchange and a term allowing him to put to Council a development application prior to settlement. On the same day, Jeweller Peetz responded by facsimile stating that no changes would be made to the contract and that if the Christofidellises were not prepared to proceed on the contract as submitted, then the transaction would be at an end.
117 There is no dispute that contracts were exchanged on 5 April. There is in evidence the contract signed by both applicants, which is dated that day. Attached to the standard contract are several pages of special conditions, which have been signed only by Christofidellis. All of the other annexures to the contract were initialled by both applicants. On the front page of the contract, in the section which states the price and deposit to be paid, a handwritten change was made, crossing out the 5% deposit provision and making it 2.5%. This change was initialled only by Di Bello who also signed and attached to the contract a section 66W certificate stating that he explained the contract to the purchasers including that the certificate removes any cooling off period that would otherwise be applicable. Also in evidence was the deposit cheque from Christofidellis for $30,000, which was dated 30 March.
118 This undisputed evidence revealed several anomalies which both sides submitted supported their version of events. The first is the date of the deposit cheque. Christofidellis submitted that because the cheque was dated 30 March, it supported his claim that he visited Di Bello's office on that date and signed the contract while he was there, leaving the cheque with Di Bello for exchange. Di Bello submitted that the date on the cheque was certainly not determinative of the issue of when the contract was signed. He stated that it was completely in accordance with Christofidellis saying on 30 March that a 2.5% deposit was all he would give to the vendors and that if they did not accept it, then the contract would not proceed. This does accord with Christofidellis' practice as a developer in purchasing properties, in that writing the cheque for the 2.5% deposit could have amounted to pressure on the vendors to accept the reduced amount, which they in fact did the next day, according to Joy Khan's file note. It is also true that simply writing a cheque on 30 March does not exclude the possibility that he did return on 4 April to sign the finalised contract.
119 A further fact which Christofidellis claimed supported his version of events was that he did not initial the handwritten change to the front page of the contract. The evidence revealed that it was a requirement imposed by the vendors that every page and all changes be initialled by both purchasers. Joy Khan's evidence was that the acquiescence of the vendors to the reduced deposit was not negotiated until 31 March. These facts are consistent with Christofidellis' claim that he had been in to sign the contract before the reduced deposit was agreed and that he did not return after that, otherwise he would have initialled the change himself and it would not have been left to Di Bello to do so.
120 Di Bello claimed that as the terms of the contract had not been finalised by 30 March, as shown by the evidence of Joy Khan, it would have been inherently unlikely for Christofidellis to have signed a contract not yet in a form acceptable to him. In my view, it is not unlikely that a cavalier developer like Christofidellis would sign a contract before the terms had been completed, merely to save himself from having to return to his solicitor's office on another occasion. The arrogance required to assume that the terms would be worked out to his satisfaction, and that he need not bother with such troublesome and trivial details of conveyancing as signing the completed contract, was amply demonstrated during the course of this hearing. However, if this is what occurred, it would also reflect rather poorly on Di Bello's practice as a solicitor. Even if an explanation had been given on 30 March, it is difficult to see how it could possibly have been adequate, given that the terms had yet to be finalised. Of course, Mrs Christofidellis was also not present then.
121 Di Bello also submitted that it was unlikely that Christofidellis' story was correct because it meant that he had signed the special conditions on 30 March when he had given instructions to seek two more special conditions, namely the development application consent and the right to nominate a different purchaser after exchange. On the issue of signing the special conditions, Christofidellis stated that if Di Bello's version was correct, and both he and his wife had sat together and gone through the contract and then signed it, it would be highly unlikely that Mrs Christofidellis would have failed to sign the special conditions, as the vendors required, when he did sign them.
122 Mrs Christofidellis relied on the same arguments to support her claim that she had been on her own on 4 April when she attended Di Bello's office to sign the contract. She flatly denied having been given any explanation by Di Bello as she claimed not to have seen him on this occasion. Joy Khan stated that it was her practice not to witness clients signing contracts and that she left this to Di Bello as a qualified solicitor. She also claimed that she left early on 4 April because it was her birthday and so she would not have been in the office to witness Mrs Christofidellis signing the contract. Although neither of these arguments are conclusive, they do generally support Ms Khan's claims. Mrs Christofidellis' credibility and memory have both been severely impugned in the course of this case, and she did admit to having seen Di Bello personally before on at least one occasion in relation to a property transaction. In my view, it is a distinct possibility that Mrs Christofidellis was mistaken in her recollection of the events concerning the signing of the contract and has reconstructed what happened, whether subconsciously or otherwise, in a manner favourable to her case.
123 Having considered all the evidence, I find on the balance of probabilities that Christofidellis did sign the contract on 30 March and that Di Bello must have been mistaken in his recollection of events, unaided as he was by any relevant diary entries or file notes recording meetings with Christofidellis. I find that Mrs Christofidellis signed the contract on 4 April in the presence of Di Bello.
124 These findings do not, however, lead to a judgment against Di Bello for negligence. The fact that the applicants did not sign the contract in the circumstances deposed to by Di Bello does not mean that they were given no explanation of the contract when they did in fact sign it. As well as having regard to the explanation given by Di Bello, the Court must take into account, as both expert conveyancing witnesses stated, that different considerations apply to different clients in explaining contracts. In this matter, Christofidellis was an experienced property developer who had been involved a number of property transactions with Di Bello acting as his solicitor in the three years prior to this transaction. It was Christofidellis' evidence that he undertook most of the necessary council enquiries himself in relation to the properties he bought and that he was conversant with reading surveys. Further, it was not put to Di Bello that his section 66W certificate stating that he had explained the effect of the contract to the purchasers was false. In cross-examination, Mrs Christofidellis did not deny receiving an explanation but rather stated that she did not recall one. In all the circumstances, I find on the balance of probabilities that an explanation was given by Di Bello and that his explanation was adequate. Consequently I find that he did not breach the duty owed to the applicants as his clients.
6.3 Damages
125 Even if Di Bello had breached his duty of care to the applicants, there would have been several significant obstacles standing in the way of their recovering damages. The first is the issue of causation. I am certainly not convinced that Mrs Christofidellis would have decided not to sign the contract to purchase the property whatever the explanation or lack of explanation had been given by her solicitor. She was acting on her husband's instructions in a property transaction which would result in the purchase of the new family home. Her evidence was that she wanted a `big block'. Even if she had been told the dimensions, it is doubtful in the extreme that her reaction would have been not to sign because the property was not as big as she thought. As for her husband, my impression was that he would not have listened to or taken the slightest notice of any explanation proffered. Indeed, I suspect that he might have been the person doing most of the "explaining".
126 A further problem would have been remoteness of damage. The damage claimed by the Christofidellises is the amount paid by them to settle a claim with the Zdrilics. It could be argued persuasively that this damage was materially caused by their decision to settle on those terms and that to sheet home blame to Di Bello is simply too remote. Certain it is that the Christofidellises determined to rescind the contract and begin litigation rather than complete, as Christofidellis claimed to have been able to do, and then seek redress in one form or another.
127 Another issue would be contributory negligence. If there was damage suffered, it would certainly have to be determined to what extent Christofidellis' actions impacted on that damage. On this matter, the onus of proof would have fallen on Di Bello but, as has been seen, there was ample evidence that Christofidellis was a substantial architect of any losses he suffered.
7. CONCLUSION
128 The application against the second, third and fourth respondents is dismissed with costs. The cross claims are dismissed with the applicants to pay the cross claimants' costs.
|
I certify that the preceding one hundred and twenty eight (128) numbered paragraphs are a true copy of the Reasons for Judgment herein
of the Honourable Justice Marcus Einfeld AO. |
Associate:
Dated: 19 January 1999
|
Counsel for the Applicants: | Mr M. Cranitch SC and Mr P. Taylor |
| Solicitor for the Applicants: | GELLS Solicitors |
| Counsel for the Second and Third Respondents: | Mr P. Angyal |
| Solicitor for the Second and Third Respondents: | Holman Webb |
| Counsel for the Fourth Respondents: | Mr T. Castle |
| Solicitor for the Fourth Respondents: | Phillips Fox |
| Dates of Hearing: | 28, 29, 30 & 31 July 1997
1, 4 & 5 August 1997 7 & 8 October 1997 |
| Written Submissions completed: | 3 April 1998 |
| Date of Judgment: | 19 January 1999 |
AustLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.austlii.edu.au/au/cases/cth/FCA/1999/39.html