Delaney v Winn

Primary judgment

1. As noted above, his Honour found that the evidence established that there was no contract between the parties ([6]) and no challenge is made to that finding.
2. His Honour then went on to recount the basis on which the proceedings had been conducted (at [9]) as follows: The proceedings were conducted, as I saw it, on a type of tacit understanding that although there was clearly no contract between the plaintiffs on the one hand and the defendant, nevertheless the defendant appreciated that he was providing a report that would be provided to a potential purchaser of the property and that the purchaser would probably rely on that report to some extent in deciding whether or not to purchase the property. This could mean that the defendant had a duty of care to the plaintiffs that would render him liable to them if he negligently carried out an inspection and was the cause of a report that was wrong or inadequate AND that the loss which was suffered was causally related to the alleged breach of duty.
3. Later in his Honour's reasons, as has earlier been noted, the duty of care owed by Mr Winn was articulated as being a duty "to carry out an inspection complying with the Standard and to submit it to Graphic" ([58]). His Honour concluded that Mr Winn had complied with that duty. His Honour then proceeded to consider Mr Winn's conduct at the site meeting that took place a couple of weeks after the Report was provided to the appellants. His Honour noted (at [59]) that Mr Winn had agreed to go to the site to discuss his findings and had done so on one occasion. His Honour expressed this as being something done separately from the carrying out of the duty he had referred to in the preceding paragraph.
4. His Honour said: … He made [Ms Delaney] aware of the need to get engineering advice, plumbing and draining advice and advice from an electrician. He could do no more than give the advice. In the written report, he made it plain that a number of matters might require further advice from other skilled persons. [Ms Delaney] obviously questioned him closely. Her notes on the report indicate that and she concluded that she would need to spend money to rectify various defects.
5. At [61], his Honour found that Mr Winn did not give Ms Delaney negligent advice and was not in breach of any duty of care to her in preparing the substance of the Report or in speaking to her later on the site.
6. His Honour thus concluded (at [62]) that Mr Winn was not guilty of making any negligent misstatement to the appellants and that the claim against him on that basis also failed. In light of that conclusion, his Honour's findings on causation and damages were obiter. I will consider them in due course when addressing the grounds of appeal relating to those findings.

Extension of time

1. By notice of appeal filed on 23 July 2014, the appellants seek to challenge the whole of the decision of the primary judge.
2. The notice of appeal was served on 21 August 2014. A notice of intention to appeal had earlier been filed and served on 8 May 2014. The appellants' chronology made reference to the lodgement of the notice of appeal with an application for fee postponement or waiver. In the written submissions filed for Mr Winn on this appeal, attention was drawn to the need for the appellants to obtain an extension of time for the filing and service of the notice of appeal pursuant to r 51.9(1)(b) of the Uniform Civil Procedure Rules 2005 (NSW) ('UCPR'). No such extension of time had been sought by the appellants.
3. At the commencement of the hearing of the proceedings in this Court, an application was made by the appellants for leave to file in court an affidavit of the appellants' instructing solicitor deposing as to the date of lodgement for filing of the notice of appeal and the circumstances in which the sealed copies were returned for service, for the purpose of explaining the delay and seeking an extension of time for the purposes of the service of the notice of appeal.
4. The respondent's position was that an extension of time was necessary but that it ought be granted. It was not suggested that the respondent had suffered any prejudice by the late service of the notice of appeal. That being the case, it was not considered necessary by this Court for the appellants to file the foreshadowed affidavit. To regularise the proceedings, an extension of time for the filing and service of the notice of appeal to 21 August 2014 should be granted.

Ground 1 - alleged error as to duty of care (appellants' submissions [18]-[22]; respondent's submissions [4]-[5])

1. By their first ground of appeal, the appellants contend that: 1. His Honour erred in failing to find that the respondent owed the appellants a duty of care in inspecting the property and advising them about its condition in a pre-purchase inspection report dictated by him (subsequently engrossed by others) and in making further representations to them about the condition of the property, orally and by his conduct. (my emphasis)
2. Ground 1 of the grounds of appeal is misconceived. The first part of the duty there contended for was conceded by Mr Winn, albeit that the scope of the duty he conceded was limited by reference to what was required by the Australian Standard. The second part of the duty that the appellants say his Honour should have found (i.e., the part italicised above) was nowhere pleaded. Nevertheless, to the extent that his Honour in fact considered whether there was breach of a duty of care in giving oral advice at the site meeting (see [59]-[62]), his Honour implicitly proceeded on the basis that there was a duty of care owed by Mr Winn when he gave advice (or made representations) about the property at the site meeting.
3. It simply cannot be said, as the appellants' written submissions (at [18]) assert, that the primary judge failed expressly to articulate the duty of care owed by Mr Winn when his Honour clearly did so at [58] of his reasons. The gravamen of the appellants' complaint under ground 1 of the appeal must be understood as a complaint that his Honour did not articulate the duty of care in the terms for which they now contend. However, that complaint cannot fairly be made when the appellants themselves made no apparent effort either in their pleading or in submissions at the hearing to do so.
4. As articulated by Counsel appearing for the appellants on the appeal, Ms Heath, the duty of care for which the appellants now contend and which they say his Honour should have found, was a duty to take reasonable care in giving advice that: … extended in one transaction over the provision of the report and the provision of the oral advice on site which included an express or implied adoption of the report that had already been given. So that if there was something lacking in the report it needed to be qualified at the time of the oral advice (T 7.36-44).
5. The appellants contend that his Honour erred in considering, as two separate events, inferentially giving rise to two separate duties, the provision of the Report on the one hand and Mr Winn's attendance at the site meeting on the other (see appellants' submissions at [18]). Ms Heath submits that once Mr Winn attended the site meeting to discuss the contents of the Report he was, at least by implication, "continuing the contents of the report, adopting the contents of the report as had been provided, and there was a continuing duty on him at that stage to take reasonable care to ensure that the appropriate advice had been given" (T.12.1; T 12.13). By "appropriate advice", Ms Heath meant that, where Mr Winn had formed an opinion about something, his "true" opinion should be conveyed and not an understated or limited form of his opinion.
6. So expressed, the appellants' complaint is not a complaint about Mr Winn's inspection or his part in the preparation of the subsequent Report amounting to a negligent failure to comply with the requirements of the Australian Standard for a standard property report. Rather, it is a complaint that Mr Winn, having by implication "adopted" the Report, failed to correct any omissions or incorrect statements in the Report at the site meeting and/or failed thereby to convey his "true opinion" of what he had observed.
7. No such duty was pleaded. Nor was any such duty articulated before his Honour, as the appellants' Counsel ultimately conceded (at T 12.41). Instead, the appellants submit that the scope of the duty for which they now contend was something that was dealt with to a large extent "sub silento" in the context of discussion between his Honour and Counsel for the respective parties as to the hotly contested questions of breach and/or should be implied from the submissions made as to breach. It is said that Mr Winn generally made a concession in the proceedings below as to the existence of a duty of care and that the scope and content of the duty should have been inferred from the submissions made for the appellants as to breach.
8. Apart from the fact that identifying the scope of the duty contended for by the appellants by reference to inferences said to be available to be drawn from closing submissions on breach is hardly a satisfactory way to conduct litigation, it is inconsistent with the basis on which the appellants' Counsel at trial in fact put their case (see [62]-[63] and [66] below).

Analysis of pleading

1. There can be no dispute that what was pleaded at [3] of the statement of claim was that there was a contract between Mr Winn and the appellants. It was alleged that the appellants agreed for reward to engage Mr Winn as their building consultant and that he accepted such engagement "to carry out a pre-purchase residential building inspection of the property and to provide [them] with a written residential building report on the condition of the property".
2. At [6], the appellants went on to plead that: 6. It was an express or alternatively an implied term and condition of the said engagement and the defendant thereby warranted or alternatively it was the duty of the defendant [my emphasis] that: (a) He would exercise all reasonable care, skill, diligence and competence as a building consultant in carrying out the said inspection being a visual inspection of accessible areas available at the time of inspection and in making the report, (b) in making the said report the defendant would observe and report all visible defects in the said property and all other signs and matters from which the existence or probable defects ought reasonably to be inferred and what measures or recommendations would be required to be taken to investigate or remedy the same. (c) in making the report, the defendant would comply with Australian Standard AS 4349.1 Property Inspections - Part 1 Residential Buildings.
3. Counsel appearing for the appellants on the appeal described this as a "classic case of pleading contract and negligence in the alternative" (T3.10). Such a proposition requires the words "or alternatively it was the duty of the defendant", as highlighted above, to be read as introducing a separate allegation of a tortious duty of care arising independently of the pleaded contract to which reference was clearly made in the preceding words of that paragraph. No attempt was made to plead the facts, matters or circumstances allegedly giving rise to any such duty of care.
4. Moreover, the scope of any such non-contractual duty of care does not, by reference to 6-(c) of the pleading, extend beyond the inspection and the making of the Report. Therefore, even on a charitable characterisation of the pleading it does not plead a duty of care in the expanded sense of that which ground 1 of the notice of appeal contends his Honour erred in failing to find. There is simply no hint of a claim based on a duty of care "in making further representations to [the appellants] about the condition of the property, orally and by his conduct" after the making of the Report.
5. The way in which the appellants now contend that the pleading should be understood is also inconsistent with the way they responded to the respondent's request for particulars of the claim prior to the hearing.
6. By letter dated 5 October 2012, Mr Winn's solicitors sought particulars, among other things, of the allegations made in [6] of the statement of claim. The appellants' solicitors responded to that request by letter dated 7 February 2013.
7. The response to a request that the appellants identify the implied term or terms of the alleged engagement that were contained in the pleading at [6] was as follows: 13. As to the implied terms: The defendant will exercise all reasonable care, skill, diligence and competence as a building consultant in carrying out the inspection being a visual inspection of accessible areas available at the time of inspection and in making the report, the defendant will observe and report all visible defects in the property and all other signs and matters from which the existence or probable defects ought reasonably to be inferred and report what measures or recommendations will be required to be taken to investigate the same. Further, in making the report, the defendant under his building consultancy licence, will also comply with the said Australian Standard. Further, to enable the above, the defendant will carry out the inspection in a manner, quality and effect in respect of all relevant matters to enable preparation of a pre-purchase residential building report on the condition of the property and in all respects also comply with the Australian Standard AS 4349.1 Property Inspections - Part 1 Residential buildings, the defendant at all times acting under and in accordance with the defendant's building consultancy licence.
8. The appellants were asked to identify the basis or the source of the warranties and the duties alleged at 6. The response from the appellants' solicitors was that "[t]he basis is constituted by the implied terms of engagement and agreement". In other words, the alleged duty to observe and report all visible defects in the property and to make recommendations as pleaded in 6 was said to be one based or sourced in the implied terms of the contract that his Honour, unsurprisingly on the evidence, found did not exist.
9. True it is that, at [11], the appellants pleaded that: 11. In carrying out the inspection and in making the report, the defendant was in breach of the said engagement and guilty of breaches of the said terms, conditions and warranties and of the said duty and was guilty of negligence in the performance of his services. [my emphasis] but the response to a request for specification of the precise facts and circumstances relied upon to allege that Mr Winn was guilty of negligence in the performance of his services (question 37) was met simply with the response that the said facts and circumstances were those relied upon or as set out in [11] of the statement of claim.
10. Even were it permissible (which it is not - see Shanmugaratnam v Strasburger Enterprises (Properties) Pty Ltd [2004] NSWCA 229 at [13]) for a party to expand its pleaded case by reference to particulars, the particulars to [11] of the statement of claim (contextually provided as particulars of the alleged breach of the terms of Mr Winn's engagement), simply list a series of alleged failures on the part of Mr Winn (at (a) and (j)), or of the Report (at (b)-(i)), to do or report certain things, followed by the statement at 11 that Mr Winn "failed to exercise any, or any reasonable, due care, skill, diligence or competence in respect of the inspection and the making of the report". Again nothing is there asserted as to any negligence after the making of the Report.
11. In light of those responses from the appellants' solicitors the appellants cannot now be heard to say that what was pleaded at [3] and [6] of the statement of claim was an alternative claim in negligence for breach of a tortious duty of care separate from the contractual duty of care that had been pleaded. Still less can it be maintained that the scope of any such (unpleaded) tortious duty of care extended beyond the inspection and making of the Report.

Extent to which there was a consensual departure from the pleadings

1. It is certainly the case that the parties may, by consent, choose to disregard or abandon the case as pleaded and fight their case on some other basis. So much has been recognised in Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in Liq) [1916] HCA 81; (1916) 22 CLR 490 (at 517 per Isaacs and Rich JJ); Dare v Pulham [1982] HCA 70; (1982) 148 CLR 658 (at [6] 664 per Murphy, Wilson, Brennan, Deane and Dawson JJ); Vines v ASIC [2007] NSWCA 75; (2007) 62 ACSR 1 (at 17 [57] per Spigelman CJ); Benton v Scott's Refrigerated Freightways [2008] NSWCA 143 (see Campbell JA at [41]-[43]); and see Ingot Capital Investments Pty Limited v Macquarie Equity Capital Markets Limited [No 6] [2007] NSWSC 124; (2007) 63 ACSR 1 at first instance per McDougall J and on appeal, [2008] NSWCA 206; (2008) 73 NSWLR 653 per Ipp JA.
2. The appropriate course where there is acquiescence in a departure from the pleadings is for there to be an amendment of the pleadings to reflect the actual basis on which the case is being contested. In London Passenger Transport Board v Moscrop [1942] AC 332, Lord Russell of Killowen at 347, in a passage cited by Campbell JA in Benton at [41], made the reason for this clear: Any departure from the cause of action alleged, or the relief claimed in the pleadings should be preceded, or, at all events, accompanied, by the relevant amendments, so that the exact cause of action alleged and relief claimed shall form part of the court's record, and be capable of being referred to thereafter should necessity arise. Pleadings should not be 'deemed to be amended' or 'treated as amended'. They should be amended in fact.
3. The difficulty in proceeding to consider a claim based on some breach of an unpleaded tortious duty of care, without an amendment to the pleading to reflect the new case being conducted, is that it permits scope for dispute, as has occurred in the present case, as to what precisely was the ambit of the acquiescence by the defending party to any departure from the plaintiffs' pleaded case. The respondent does not concede that he acquiesced in any departure from the pleadings beyond the concession that he owed a duty of care to comply with the requirements of the Australian Standard in his inspection for the purposes of the preparation of the Report.
4. To determine the scope of the consensual departure from the pleadings it is necessary to consider the way that the case was conducted.
5. Counsel for the appellants says that it was conceded at first instance that there was no contract between the appellants and Mr Winn personally and that the case proceeded accordingly on "the claim in negligence" (written submissions at [5]). She submits that the appellants' case began as a case of negligent failure carefully to inspect and observe the matters that Mr Dickinson opined a competent building inspector should have observed but then, in cross-examination of Mr Winn, "quickly became more about [his] omission to report the matters he actually did observe and the opinions he actually formed but refrained from expressing in his report or his oral advice" (written submissions at [25]-[26]).
6. Neither of those propositions is borne out on a review of the transcript.
7. First, what appears to have been conceded by Counsel appearing for the appellants at the hearing below (Mr Vernier) was that the breach of contract claim "was a difficult claim for us to make", but it was not at that stage expressly abandoned (see Black 2.20-25). Even by the time of closing submissions Mr Vernier still submitted that the case had two "major limbs" the first being the breach of contract claim, although he made no submissions on that issue (see Black 187.15). In those circumstances it cannot be said that the contract claim was abandoned or conceded by the appellants.
8. Second, the appellants' case was classified in opening by Mr Vernier as being one of "negligent advice in relation to a building inspection report" (Black 1.19), which was said also to include a pleaded claim for breach of contract (Black 2.19). While that might be said to encompass the description that the case began as a negligent failure to observe matters, it does not in terms encompass any case based on non-disclosure of matters actually observed but not conveyed at the site meeting nor of a failure to correct matters in the Report; nor was any such case articulated at first instance.
9. In response to the complaint made by Senior Counsel appearing for Mr Winn (Mr Pesman SC) when the hearing commenced in the District Court, to the effect that there was no pleading of a duty of care or as to the alleged standard of care said to be owed to the appellants and that it was not clear that the negligence pleading extended beyond the contract pleading (Black 3.5ff), Mr Vernier stated in opening that the appellants' case was "fairly clear in that it was a negligent advice-type case and the damages that flow from that" (Black 4.42), also referring to the "personal injury claim" of Ms Delaney (being that which was referred to in the response to the request for particulars of quantum). In closing submissions, the second limb of the case (after the contract claim) was described as comprised of the economic loss sustained by the negligence of Mr Winn "arising from" the Report and the personal injury sustained by Ms Delaney as a result of the negligence of Mr Winn.
10. Insofar as the appellants now contend that his Honour should have recognised the "continuing nature" of the transaction or advice and should have articulated a continuing duty, including a duty to correct or clarify the written advice after the site meeting, if necessary, as recommended by the Australian Standard, both to avoid any misunderstanding of the content or significance of the advice and to ensure that the advice given actually conformed to Mr Winn's opinions (written submissions [20] - [22]), nowhere in the transcript of the proceedings before his Honour was a duty of that kind articulated.
11. Faced with this difficulty, Counsel for the appellants contended that such a duty of care had been implicitly conceded by the respondent (at Black 201.48) in closing submissions, when Mr Pesman submitted that, to the extent that his Honour was not satisfied with the Report on its face, that was not causative of any loss because any gaps in the Report were largely corrected by the on-site meeting. It is said that, implicit in this statement, is a concession that what was relied upon by the appellants was the Report and what was said at the subsequent site meeting. Counsel for the appellants asserts that Mr Winn thus accepted that what was in issue was the one "transaction advice/report" modified by such further advice as necessary.
12. The difficulty with that submission is that, in closing submissions (at Black 189.26), Counsel then appearing for the appellants had expressly identified the task for the primary judge as being "to determine whether there was a negligence that arose as a result of the preparation of the information contained in the building report by the defendant", without reference to any such expanded duty of care.
13. For his part, Mr Pesman (at Black 197.12) made it clear to the primary judge that the respondent had approached the case as one in which the issue was whether there had been compliance with the requirements of the Australian Standard, saying that: What your Honour hasn't been addressed on is the subject of the standard of care and that actually is critical because whether or not defects are identified or whether observations are made are to be tested by the requirements. It appears there is no dispute between us that those requirements are contained within and entirely contained within AS4349.1. There are some significant aspects of that which contain the duties which Mr Winn had, to which your Honour hasn't been specifically taken and your Honour should be taken. …
14. Moreover, his Honour, in the course of closing submissions (at Black 190), indicated that his understanding of the way the case was put by the appellants was that the respondent should have reported "on every single one" of the matters to which Mr Dickinson had referred (namely: that the house had ineffective drains; that because of the nature of the slope of the land, water ran "all around the place" in the subfloor area; that the gutters were in bad condition "and sort of hanging in an observable fashion so that obviously enough, if rain did come, there'd be ponding in the gutters and the gutters would just overflow, they wouldn't get to the downpipe because they were in such a bad state", and that there was evidence of badly done repair work and uneven stairs and cracked bricks) and on this appeal Counsel for the appellants accepted that his Honour's understanding of the case accorded with the way it had been run. That did not, however, encompass the expanded case now put for the appellants as summarised above.
15. When pressed on this issue during argument on the appeal, the position put for the appellants was that the case was one based on Mr Dickinson's report and Mr Winn's concessions in cross-examination, Ms Heath emphasising that it was not known until cross-examination that Mr Winn had an opinion that he had not disclosed. However, there was no application at any stage to amend to widen the case that was being run or to run a different case. The appellants are bound by the forensic decisions that were made in the conduct of the hearing in that regard.

Conclusion as to ground 1

1. Ground 1 cannot be maintained. There is no basis for the contention that his Honour erred in not articulating or finding a duty of care for which the appellants had not in their pleadings or otherwise contended. His Honour articulated a duty of care (at [58]) that was consistent with that which the appellants, in their conduct of the case though not their pleadings, had contended and which was conceded by Mr Winn.
2. To the extent that his Honour seems to have gone further than that, and to have considered also whether there was breach of a broader duty in the context of the advice given at the site meeting, the fact that his Honour referred to the site meeting as a separate event from the making of the Report does not reveal error on his Honour's part. Even if there had been an error in treating these as two separate events, such that his Honour wrongly considered that there were two separate duties of care - i.e., a duty of care when inspecting the property for the purpose of the making of a report in the first place and then a duty that arose at the site meeting in the context of the advice there given, it is not established that his Honour's conclusion as to breach was affected by any such error (for the reasons set out below).

Findings as to alleged breach of duty of care

1. Grounds 2-7 raise a number of challenges to his Honour's conclusion that there was no breach by Mr Winn of the duty of care he owed to them. There is considerable overlap both between these five grounds and with some of the later grounds of appeal (namely, grounds 13-16, 19-21 and 23). I will therefore consider those later grounds under this broad heading before turning to the complaints made as to other findings.

Grounds 2-7 - alleged error as to finding re alleged breach of duty (appellants' submissions [23]-[35]; respondent's submissions [6]-[21])

1. Dealing first with grounds 2-7, they are as follows: 2. His Honour erred in failing to find the respondent had breached his duty of care to the appellants. 3. His Honour should have found the respondent breached his duty of care to the appellants by negligently misstating his opinion in the dictated report, in that he failed to include critical limitations and qualifications to which the respondent considered his opinion was subject. 4. His Honour should have found the respondent made negligent misrepresentations to the appellants, orally and by conduct, to the effect that he adopted the contents of the written report as a correct statement of his opinion when the true fact was the written report omitted critical limitations and qualifications to which the respondent considered his opinion was subject. 5. His Honour erred in failing to find that the inspection performed by the respondent and the advice given by him to the appellants fell below the standard to be expected of a competent building inspector. 6. His Honour should have found that the respondent's advice to the appellants omitted to mention substantial building defects to the property that he did observe or, alternatively, that a competent inspector should have observed at the time of his inspections. 7. His Honour should have found that the respondent's advice to the appellants materially understated the significance and seriousness of the building defects to the property that he did observe or, alternatively, that a competent inspector should have observed at the time of his inspections.
2. Ground 2 is a broad challenge to the conclusion that there was no breach of duty by Mr Winn. This must be considered on the basis that the case was run as one where the alleged duty of care he owed, whether in his inspection of the property for the purposes of the Report or at the later site meeting, was to comply with the requirements of the Australian Standard for a standard property report.
3. Grounds 3-4 raise issues, in essence, as to whether Mr Winn conveyed his "true opinion" to the appellants, by reference to a series of what are identified as critical limitations and qualifications to which his opinion is said to have been subject. Ground 4, for the reasons set out above, is not premised on the pleaded duty nor is it consistent with the way the case was run.
4. Grounds 5-7 raise issues as to whether Mr Winn's inspection and subsequent advice to the appellants fell below the standard of that of a reasonably competent building inspector.

Critical limitations and qualifications to which Mr Winn's opinion was said to be subject - grounds 3 and 4

1. The complaints made under these grounds were not ones raised on the pleadings or at the hearing at first instance. They cannot now be maintained. That is sufficient to dispose of the appeal on those grounds but in any event, for the following reasons, they are without foundation.
2. The critical matters "of his own observation and opinion" that it is said Mr Winn omitted from the Report and his subsequent oral advice were itemised at [27] of the appellants' submissions. Mr Winn contends that it is a misrepresentation of his evidence to suggest that he considered his opinion was subject to the 13 matters there set out. He also maintains that the assertions made by the appellants in this context do not give rise to any appellable error.

● Engagement of structural/geotechnical engineer

1. The first two "critical" matters can conveniently be grouped together. It is said that Mr Winn considered that a structural engineer should be consulted about the property generally - a distinction there being drawn between such a consultation and one that was simply referable to the retaining wall or walls (27) - and that a geotechnical engineer should be consulted to advise generally because of the slope and the presence of other land above the site (27). The first is one of the six "key errors" to which the Court's attention was drawn in the outline of the appellants' submissions on the appeal, namely that his Honour did not refer to Mr Winn's evidence that he had dictated a warning as to structural areas generally.
2. Reference is made in this regard to Mr Winn's affidavit (at [17] and [55]). In the first of the paragraphs to which the appellants refer, Mr Winn deposed that the Report substantially reflected his observations as dictated. He identified the "only major omission" in the Report as being with respect to the retaining walls in that he said that he had dictated a recommendation that an engineer be engaged "to assess any structural issues, including the structural issues I have observed, such as with respect to the retaining wall" (at [17]). In the second of those paragraphs, Mr Winn responded to matters that had been raised by Mr Dickinson and says he repeated the advice he had dictated, but which was omitted from the Report, to Ms Delaney orally at the site meeting.
3. Mr Winn denied the suggestion put to him in cross-examination that he had fabricated his evidence as to there being an omission from the Report. The significance placed by the appellants on Mr Winn's evidence as to there having been an omission from the Report in this respect is not wholly clear. It was submitted that this was a relevant admission by Mr Winn that such advice (i.e, advice that a structural engineer should be consulted) was advice that was necessary to be given not only in respect of the retaining wall but also in relation to the property generally (see T 6.45-7.2). This appears to be aligned with the appellants' contention that Mr Winn, by his conduct, implicitly "adopted" the Report and thereby came under a duty (or a continuing duty) to correct the Report if it did not convey his "true opinion" such that his failure to give advice as to the engagement of a structural engineer to look at the property generally was in breach of that duty.
4. Reference is also made to Mr Winn's evidence that it was his usual practice to include a recommendation to engage an engineer for further inspection where he observed "cracking in any brickwork, foundations, columns, anything substantial" (at Black 73.17; my emphasis); that he verbally advised Ms Delaney, her father and the agent that he recommended a structural engineer be engaged "which ultimately he would engage a geotech engineer" (at Black 116.34); and that in his conversation with the agent on site he referred to a structural engineer but that "he would most likely use - and that's why I used the expression that it will cost a bit because he will need the services of a geotech engineer" (at Black 106.40).
5. Ms Delaney conceded in cross-examination (Black 38.41) that Mr Winn gave advice orally as to the engagement of a structural engineer. The distinction now sought to be drawn between advice of a general kind and advice specific to the retaining walls does not take into account that Mr Winn's advice was that he would recommend engaging a structural engineer where there was "anything substantial". He did not concede that the fact that there was cracking in every wall was substantial or significant in that sense. Nor does the evidence support the conclusion that he considered the cracking that had been repaired in the foundation wall a substantial matter. Therefore, the evidence to which the appellants point does not support a conclusion that this was a "critical limitation or qualification" to his opinion.
6. As to the second of those matters, Mr Winn's evidence was not that he was of the opinion that a geotechnical engineer should be consulted. Rather, on a natural reading of the transcript, Mr Winn gave evidence that a structural engineer would most likely use or need the services of a geotechnical engineer (Black 106.40; Black 116.33).

● Unsuitable footings

1. The third "critical" matter identified was that the footings were unusual for the location and, by implication, unsuitable (written submissions at 27). Reference is made by the appellants to Mr Winn's evidence (at [11] of his affidavit) to the effect that when he first saw the property he noticed that it was unusual in that the house was built on an exceptionally steep slope and, unlike most other houses in the area, it was not on structural steel columns. It is submitted that the significance of the slope for the house construction was not obvious and that the unusual nature of the footing materials for the area was a matter for expertise on which the appellants were entitled to rely on Mr Winn.
2. The appellants concede that the Australian Standard did not require Mr Winn to assess the adequacy of the footings (though I interpose to note that this was particularised by them as a particular of negligence in the pleading see 11(xiii)). The Australian Standard (at A2.3) specifically gives, as an example of the proposition that standard property inspections do not cover everything, that the consultant would not normally check the adequacy of footings.
3. Nevertheless, it is submitted by the appellants that the fact that he was not required to assess the adequacy of the footings "did not absolve him from a duty to report significant observations he actually made, particularly when those observations also affected the general quality rating that could reasonably be given in comparison to other similar dwellings" (submissions 27). There is no basis for concluding that, because it was unusual for there not to be steel footings, Mr Winn considered that the actual footings were unsuitable or that this was a factor that he considered could affect the general quality rating of the building. Mr Winn was not cross-examined as to whether he considered the footings were unsuitable.

● Significance of the "slip area"

1. The fourth "critical" matter to which the appellants point in this context is that which is referred to in Mr Winn's affidavit at [54], namely that the property's zoning was that commonly known as being a "slip area", and his statement that "[b]eing positioned on the lower side of these land conditions would cause poor overland flow of heavy rainfall. Instances of heavy rainfall would generally result in poor stabilisation of the property and dwelling, and surrounding areas". In this regard, the appellants concede that they had been informed by their solicitor that it was a slip area but say that they had only been advised that this might limit new construction. They maintain that they were otherwise reliant on Mr Winn to advise them of any significance of the property being in a slip area for the performance of the building as built. The significance to which they point appears to be the future impact of heavy rainfall.
2. The Australian Standard (at 2.3.6) notes the aspects of the site that are to form part of a standard inspection for defects. Significance of the zoning of the area is not one of them. Nor, as Mr Winn points out, does the Australian Standard require a forecast of potential future damage of the kind that may result from heavy rainfall in such an area (Mr Winn referring to 3.3 and 3.4 of the Australian Standard in this regard). In any event, the significance of the area being a slip area was not shown to be a critical limitation or qualification on Mr Winn's opinion as to the condition of the property.

● Cracking

1. The fifth, sixth and seventh "critical" matters to which the appellants point in this context relate to the issue of cracking: namely, that cracking would be expected because of the type of construction and the location of the property (referring to Mr Winn's evidence at Black 76.40; Black 120.7); that there were cracks in all areas and in every external building brickwall (referring to Mr Winn's evidence at Black 99.3); and that building standards of the era of construction of this dwelling were in his opinion poor and that was a cause of the extensive cracking that he observed (Black 99.14).
2. For Mr Winn it is submitted that it does not follow, from the evidence he gave that "there has to be cracking in most timber-framed dwellings and especially in that location" (Black 76.39), that his opinion was, as was attributed to him by the appellants, that the site conditions would be likely to cause further cracking to that type of dwelling. Such a suggestion was not raised in the District Court proceedings.
3. As to the prevalence of cracking, Mr Winn attributed the fact that there was cracking visible in every single wall to the age of the property (Black 99.3). The fact that there was cracking was referred to both in the Report and in the discussion on site. The Australian Standard (at 3.3) provides that "[w]hether or not a defect should be regarded as significant, depends to a large extent upon the age and type of building being inspected". Mr Winn's evidence was that he regarded much of the cracking as "superficial and minor" (Black 119-120).
4. As to the reference to his opinion about "building standards", what Mr Winn said, in answer to a question from his Honour as to the age of the property, was that "[b]uilding standards 33 years ago weren't that crash hot". Insofar as Mr Winn, in that exchange, implicitly attributed the cracking in the walls to the quality of building standards in the era when it was built, he submits that this was a matter on which he was not required to comment.
5. None of the matters raised in relation to cracking was shown to be a critical qualification or limitation on Mr Winn's opinion.

● "Idiosyncratic" meaning of "good"

1. The eighth matter noted as a critical qualification or limitation on Mr Winn's advice, which the appellants say was omitted, was what was described by them as Mr Winn's "unusual, indeed idiosyncratic, use of "good" as a descriptor". This is said to have been a critical omission.
2. The appellants maintain that Mr Winn ascribed a meaning to "good" that "strained the bounds of common understanding". Reference is made to Mr Winn's evidence (at Black 119.40-43 and at Black 119.45; 120.1). It is said that Mr Winn's use of the word "good", in his assessment of the general condition of the property, meant no more than that the building was "mostly still there standing. It hasn't collapsed" (Black 120.17).
3. The suggestion that Mr Winn's opinion was that a property was in good condition (having regard to its age and type) simply because it was still standing does not fairly characterise his evidence as it appears on the transcript.
4. At Black 119, Mr Winn was cross-examined as to the summary contained in the Report that overall the property was in a good condition. Asked whether, having regard to what Mr Dickinson had observed as to the state of the retaining walls, he would say that the property was generally not in a good condition, Mr Winn did not accept this. He said he would still say that the property would be in good condition. When then asked by his Honour whether, if the retaining walls were at the time Mr Winn inspected the property in the condition that they were (in 2007) when Mr Dickinson inspected the property, he would accept that the property would not have been in good condition, Mr Winn's response (at Black 119.37) was: A. If it was only the retaining wall your Honour that was in issue, it could've still been in good condition but there most probably would've been a note under significant matters or other issues, but if everything that's in the report as being in evidence when I did my inspection my classification would've most likely gone down to fair, not poor. I see poor as a place that's almost ready for demolition. Fair is one that needs a lot of work, good is quite a habitable place that needs some maintenance. Excellent is almost brand new. (my emphasis)
5. Pressed on this answer, Mr Winn said that he thought "a lot of it [i.e., the defects observed by Mr Dickinson] was superficial and minor". There was then the following exchange between Mr Winn and the primary judge: Q. Finding rot and cracking and badly done handyman style work to brickwork and the like. How would you describe that as good? A. Taken in context your Honour for the age of the property and the location, I still state that I believe that it was in good condition in line with my report. Q. Location, what, because it's in the bush somewhere? A. And under the conditions with the slope.
6. It was when further pressed on that opinion that Mr Winn said: A. I see it is a property that with some maintenance, your Honour, it wouldn't have been a problem with it. Your Honour, it's mostly still in the - nothing's happened to it, it's mostly still there standing. It hasn't collapsed. It's only the same as any property, needs a bit of maintenance.
7. Read in context, Mr Winn was not saying that his definition of "good" was that a building was still standing and had not collapsed. It is quite clear that what he was saying was that he regarded a property as being in good condition (for its age and type) if it was "quite a habitable place that needs some maintenance". On the spectrum from excellent to poor, such a definition of "good" does not strike me as on its face unusual or idiosyncratic.

● "Idiosyncratic" meaning of "surface water drainage"

1. The ninth matter to which the appellants point is what they describe as Mr Winn's "unusual, idiosyncratic limitation" of the term "surface water drainage".
2. At Black 103.18, Mr Winn explained what was meant by surface water drainage as "the overflow water that would - if your property is on a slope, … sheet across the property". The appellants accept this as being a conventional and correct usage of the term. What they maintain is an idiosyncratic view of surface water drainage is Mr Winn's later answer that surface water drainage was drainage "that is not affected by any paved or other drainage or manmade object, it's natural." (Black 103.47); being the water that runs across the actual property itself, within the fence lines. However, by that answer, Mr Winn appeared to contrast drainage issues relating to built channels or gutters or the like that would change the flow or direction of the water from the concept of how water would naturally drain off a property.
3. Mr Winn accepted that he could determine the particular direction that water may run when looking and paths or paved areas (Black 103.31) and that it was not necessary that it be a rainy day to make that determination (Black 103.38).
4. The significance of this issue is that the Report expressed the opinion that the surface water drainage appeared to be adequate. Mr Winn did not in cross-examination accept that Mr Dickinson's assessment that the fact that the site was severely affected by overland surface water flow (and that the slope of the concrete path would convey surface water onto the wall and site soil adjacent to the footings during rain periods) was a defect because he said that there might have been "no other alternative [than] to sheet the water that way" (Black 104.40ff).
5. The appellants maintain that Mr Winn's "definition" of surface water drainage being limited to drainage not affected by any paved or other drainage or manmade object should not have been believed by his Honour but say that, if it was, then Mr Winn should have informed the appellants of such an unusual use of the expression.
6. The response to this complaint by Mr Winn is that he did not observe any issues with surface water drainage at the time of his inspection (Black 105.9; 112.12) and hence there was no qualification or limitation required of his opinion as to surface water drainage. It is submitted that when Mr Winn said "I'm not saying it's been done correctly" (Black 104.48-9), he was referring to the paving that had been referred to in Mr Dickinson's report (to which he had been taken in cross-examination) in the context of the cross-examination in which he was asked whether he accepted that as a defect.
7. Read in context, Mr Winn's evidence on this issue (at Black 103.47) can only sensibly be understood, consistent with his explanation of what was meant by surface water drainage, as being that the comment in the Report to the effect that surface water drainage appeared adequate was not an assessment as to, or observation of, the adequacy of any manmade drainage systems on the property. In that sense there was no obvious idiosyncracy in the answer and no qualification required to his opinion.

● Repairs to the property

1. The tenth and eleventh matters to which the appellants point relate to repairs that Mr Winn had observed in relation to the property. In the Report there was reference to repairs to a foundation wall that had cracked again. In cross-examination Mr Winn said that there was evidence that there were repairs in various locations that he would say had been done to sell the property, as in maintenance to make the property look all right (Black 87.27-42). He accepted that he had not noted all the areas where that type of repair had occurred but did not accept that he was required to do so (Black 87.48-88.1).
2. In relation to the repair that he had noted to the brickwork, Mr Winn said that the reason that the lower areas had been pointed out was because it was fairly significant (Black 94.15). Mr Winn also said that he could tell that the foundation wall had been repaired but observed that it had not been done in what he would call a tradesman-like manner (Black 94.17). It is by no means apparent that this was a critical qualification or limitation on Mr Winn's opinion.
3. Mr Winn points out that it was not contended in the District Court proceedings that there was an obligation to report on all cosmetic repairs and that such an obligation does not appear in the Australian Standard.

● Flow of water onto footings

1. The penultimate complaint made by the appellants is that Mr Winn had not noted that it was necessary "to take precautions to prevent water flowing onto the sub-floor area creating problems as in washing out footings or pondings" (submissions at 27). Reference is there made to Mr Winn's acceptance that the condition of the rear path, that directed water onto the area of the footings, was probably present at the time of his inspection and report (Black 109.50ff; Black 111.23).
2. Mr Winn's evidence was that he did not observe any issues with surface for the water drainage at the time of his inspection (Black 105.9; Black 112.12). It is noted that he said that when he carried out his inspection it was so dry under the house that it was like talcum powder (Black 111.38). Whether Mr Winn should have observed this feature of the property is raised by grounds 5 - 7. There is, however, no basis having regard to Mr Winn's evidence to say that he actually observed any defect in the path alignment in this regard.

● Masonry walls

1. Finally, reference is made to Mr Winn's evidence as to the reference in the Report to "masonry walls". Mr Winn said that he used that term because he could not clarify whether a wall was designed as a retaining wall; rather an engineer would need to comment on that (Black 77.27ff). The criticism made by the appellants in this respect is that they say Mr Winn knew that the Report would include his comments about the garden walls under the heading "retaining walls" and that he did not qualify his opinion "to make it clear that it could not be assumed that the walls were designed for that purpose at all without engineering opinion on their adequacy, or the significance of that opinion" (submission 27).
2. Mr Winn says that the import of that evidence was that only an engineer could offer an opinion as to whether a wall was designed as a retaining wall. He also noted that he had not dictated the headings of the Report, just the content, although he appears to have accepted that his comments would be put into that section of the Report (Black 77.38 - 78.7).
3. The complaint here seems to be that Mr Winn did not, when recommending the engagement of a structural engineer as Ms Delaney concedes he did, go on to say that only a structural engineer could give advice as to the adequacy of the design, as retaining walls, of the walls referred to under that heading in the Report; i.e., whether the walls served that function. The very fact that Mr Winn was referring to the engagement of a structural engineer in the context of discussion as to the structural integrity of the wall in which there was obvious evidence of movement must have made it apparent to Ms Delaney that Mr Winn was not purporting to offer advice as to the structural design or function of that or other walls as a retaining wall.
4. In any event, Ms Delaney's complaint was not that she should have been advised to obtain advice as to whether any particular wall had been designed as a retaining wall or was adequate to serve such a function, but that the advice to engage a structural engineer was given only once and not with sufficient urgency to cause her to feel concern about the issue or to retain an engineer prior to the purchase to advise on the structural integrity of the walls. It is not clear, as the respondent points out, how the omission of a qualification of the kind that it is now suggested should have been made in this respect would be of any material import.

Conclusion as to grounds 3-4

1. The evidence does not support the contention that the matters identified by the appellants as critical limitations and qualifications to which Mr Winn's opinion was subject were indeed matters to which his opinion was subject nor that they were matters the omission of which meant that his opinion was misrepresented or negligently misstated in the Report or at the site meeting. Those grounds are not made good.

Standard required of a reasonably competent building inspector - grounds 5-7

1. The Australian Standard relevantly contains the following. 2.2 General … The consultant should consider when making the assessment, matters such as stability, water tightness and the standard of workmanship. … 3.3 The Standard Property Report … A standard property report provided by the consultant should include the following: … (e) A summary which includes an opinion as to the overall condition of the residential dwelling in the context of its age, type and general expectations of similar properties. (f) A list of any significant matters which requires attention or rectification. (g) If necessary, a recommendation that a further inspection or assessment be carried out by a suitably accredited specialist, e.g. pest inspector …
2. Contrary to the evidence given by Mr Dickinson (at Black 160.24), the Australian Standard makes clear that a building report should not be seen as an "all-encompassing report dealing with a building from every aspect", but, rather, "should be seen as a reasonable attempt to identify any significant defects visible at the time of the inspection" (Australian Standard at 3.3). The significance of perceived defects was dependent on an assessment of matters such as the age and type of the building. Clearly a building inspector is required to carry out an evaluative exercise in that regard and it is reasonable to assume that there would be scope for reasonable minds to differ in the assessment of the significance of perceived defects.
3. The principal complaint by the appellants in this regard (see submissions at [23]), was Mr Winn's assessment of the property as being in "good" condition. The appellants maintain that such an assessment was not reasonably open on the conditions that should have been observed by a competent inspector. As noted above, Mr Dickinson, who inspected the building after the heavy rain in April 2007, considered the building to be "below average". Mr Ransley's opinion, insofar as he considered on the basis of his review of the Report that Mr Winn had complied with the Australian Standard, must be taken as concluding that an assessment of "good" was reasonably open on the conditions noted in the Report.
4. The appellants point to the deficiencies identified by Mr Dickinson in the Report, the most important of which they say are: 1. the failure properly to record cracking to the external masonry walls (Australian Standard 2.3.2(a)(iii)); 2. the failure adequately to record the differential or rotational movement of the external masonry walls (Australian Standard 2.3.2(a)(v)); 3. the substantial understatement of the actual site conditions for surface water drainage, together with the short and long term effect on the building (Australian Standard 2.3.6(f)), noting that the Australian Standard required the consultant to consider stability and watertightness (Australian Standard 2.2); 4. the substantial understatement of the actual site conditions for storm water runoff, it being contended that no adequate description or warning was provided (Australian Standard 2.3.6(g)); 5. that the summary opinion did not accurately record the overall condition of the dwelling in the context of its age, type and general expectations of similar properties (Australian Standard 3.3(e)); 6. the statement, with which Mr Dickinson disagreed, that there were no significant matters which required attention and rectification (Australian Standard 3.3(f)); and 7. there being no recommendation that a further inspection or assessment by a structural engineer or geotechnical engineer of the property generally (as opposed to simply of the retaining walls) was necessary (Australian Standard 3.3(g)).
5. Mr Dickinson's conclusion was that the Report substantially understated the actual state of the building and did not provide "an adequate warning for the current owners to assist them in making an assessment and to arrive at a decision with regards to purchasing the property". As to what Mr Dickinson perceived would have been an adequate, accurate and not understated report of the deficiencies in the property, one is driven to his own building report. That, however, went beyond the requirements of a standard property inspection report - perhaps unsurprisingly, since Mr Dickinson was expressly retained to "carry out a site inspection to assess building defects and deficiencies and prepare a detailed report in connection with" the property, not to carry out a standard pre-purchase inspection.
6. What his Honour was presented with, therefore, was a detailed defects report by Mr Dickinson, based on an inspection after heavy rain and after "new looking" cracking and defects had been discovered in the property, that went beyond the scope of a standard property report. His Honour was in effect asked to conclude, from the defects Mr Dickinson had discovered (applying a higher standard than required of Mr Winn), that Mr Winn had not exercised the standard of care of a reasonably competent building inspector when carrying out a different task to that carried out by Mr Dickinson and at an earlier time before the emergence of new cracking and water damage in 2007.
7. I have extracted above the relevant parts of clauses 2.2 and 3.3 of the Australian Standard on which the appellants rely. Clause 2.3.2 states that the consultant should inspect and assess the "general condition" of particular parts of the building exterior including masonry walls, for defects, including cracking ((a)(iii)) and for differential or rotational movement ((a)(v)). Clause 2.3.6 lists, as items which form part of the standard property inspection; surface water drainage ((f)) and stormwater run off ((g)).
8. The contention that Mr Winn did not comply with the standard required of a reasonably competent building inspector in inspecting and reporting on those matters was the issue on which Mr Dickinson and Mr Ransley differed. The appellants also relied on the report of their structural engineer, Mr Jessop, but his view was presumably informed by his position as a specialist engineer.
9. Mr Ransley, who did not himself inspect the property, concluded from the content of the Report that Mr Winn's inspection "was a genuine attempt to meet the requirements of AS 4349.1 and to view the property thoroughly" (Ransley report at [2.5.3]). He was not able to say whether Mr Winn's observations and judgments were an accurate assessment of the property "at the time of the inspection" ([2.5.3]), not having inspected the property himself at the time, but was of the opinion that neither could Mr Dickinson have been in a position to do so, he having inspected the property some 11 months after Mr Winn had done so ([2.6.7]).
10. Mr Ransley pointed out that Mr Dickinson's report included "lengthy observations" some about parts of the property not required to be covered by a standard property inspection (such as compliance of the roof structure and structural retaining walls) ([2.6.4]). In other words, he considered that Mr Dickinson's report went beyond that required for a standard property report.
11. The appellants submit that Mr Ransley's oral evidence was supportive of a finding of breach of duty. In particular, it is said that Mr Ransley: accepted that reporting on the significance of an observation for the purchase of the property was a required part of a standard property report (Black 179.44); considered that any crack in the brickwork over 5mm should have an engineer's opinion and that it was necessary to know whether cracking was still moving, which might not be able to be determined on only one inspection (Black 179.4; Black 185.11); considered that while problems with retaining walls may only rarely be an "immediate" issue they were certainly something that should be attended to (Black 183.36) (by which the appellants understand him to have meant that they should be included in a list of significant matters requiring attention); and considered that a building inspector looking at a steeply sloping property should take note of water flow and large trees on the property to consider the prospect of land slip and should look at the property next door or behind and, if thought to be an issue, would include this in the Report and recommend advice from a geotechnical engineer or the local council (Black 183.45; Black 184.1).
12. The respondent submits that this misrepresents the evidence given by Mr Ransley. In particular, it is noted that, as to the kinds of significant matters that Mr Ransley said might require immediate attention (see Black 183.32), he referred to "a leak through a roof", "[p]erhaps a security problem, front door lock that doesn't work or something like that" - not to the fact that there was or had been movement in retaining walls. Mr Ransley's opinion was that retaining walls generally took a long time to move and that it was a very slow process even once they had started; hence it was that only very rarely did they pose an immediate issue.
13. Moreover, insofar as Mr Ransley agreed that the movement of retaining walls and major cracking on the brickwork were matters to note in a property inspection report, those were in fact included in the Report.
14. The conclusion that Mr Dickinson's report, and his view as to what was required of a reasonably competent building inspector preparing a standard property report, did not accord with what the Australian Standard required in that regard is one that was clearly open, having regard to Mr Ransley's view as to the task that Mr Winn appeared to have carried out contrasted with the detailed nature of Mr Dickinson's own report and, significantly, having regard to the evidence given by Mr Dickinson himself in cross-examination (at Black 160). There, the following exchange took place: Q. And it's your understanding is it that the building report is not to be an all encompassing report dealing with the building from every aspect, do you have that understanding? A. No I believe it should be. Q. So is it your view that the report should be an all encompassing report dealing with the building in every aspect? A. All the aspects that a client should be aware of to make an informed judgment to purchase a property. Q. Well. Do you think it contains this obligation, that the only requirement is that it's a reasonable attempt to identify any significant defects? A. Yes. Q. And do you agree with this that whether or not a defect is to be regarded as significant depends to a large extent upon the age and type of the building being inspected? A. Not necessarily.
15. Mr Dickinson's opinion in that regard is squarely contradicted by the terms of the Australian Standard itself.
16. The appellants maintain that the question whether Mr Dickinson's report went beyond the scope of a standard property report (which they at least implicitly appear now to accept), because he went into details as to matters such as height of risers in the property and other aspects of deflection, does not address the deficiencies identified in the Report as to matters such as structural problems, stability and watertightness that they maintain were required to be taken into account on a standard property inspection.
17. However, that does not address the difficulty that it was open to his Honour to conclude, as in effect his Honour did, that what Mr Dickinson (who had been specifically commissioned to report on building defects - not to provide a standard building inspection report per se) had done was to apply a "Rolls Royce" standard when assessing the property and when commenting on the Report, rather than opining on what a reasonably competent building inspector would have observed and included in the Report.

Conclusion as to grounds 5-7

1. The Report noted cracking to the external masonry walls; it noted movement to the retaining wall; it noted that there had been repairs made to the foundation wall and that it had cracked again; it expressed an opinion as to surface water drainage based on a visual inspection at a time when the property was dry.
2. Mr Dickinson insisted that a standard building report should be an all-encompassing report dealing with a building from every aspect (Black 160). Mr Ransley disagreed (Black 178.1) and said that a standard building report was "a report about the condition of the property at the time of inspection" and that it should be seen as a "general indication" of the state of the building at that time. Mr Ransley's opinion accords with what is said in the Australian Standard itself.
3. Insofar as Mr Dickinson did not address the correct test as to what a reasonably competent building inspector should have observed, and reported, on a standard inspection of this property in September 2006, no error was shown in his Honour accepting Mr Ransley's opinion as to Mr Dickinson's report and in concluding that there had been no breach of a duty to comply with the Australian Standard.
4. These grounds are not made out.

Grounds 13-14 - findings as to what building defects were or should have been observed (appellants' submissions [16]; [24]; [26]-[27] [32]-[33]; [44]; respondent's submissions [35]-[40])

1. Grounds 13-14 also raise the question of the building defects that it is said a reasonably competent building inspector should have observed. The appellants contend that: 13. His Honour wrongly conflates the question of what building defects were observed by the respondent, or which should have been observed by a competent building inspector at the time of the respondent's inspections, with [sic] 14. His Honour erred in finding that the damage to the property was "scarcely noticeable" at the time of the respondent's inspections, if this finding is a finding that material defects, and consequential damage caused by the material defects, were not observed by the respondent and were not reasonably observable to a competent building inspector at that time.
2. Appeal ground 13 is on its face incomplete. By reference to [44] of the appellants' submissions, it appears that the complaint made by the appellants in this ground is that his Honour wrongly conflated the damage caused by the heavy rain with the unreported defects that they say Mr Winn should have observed.
3. Reference is made to [55] of his Honour's reasons where his Honour said: I would accept that much of the damage Mr Dickinson saw was caused by very heavy rain and the ingress of water onto the property from neighbouring properties as well as from the street above the property. The standard inspection did not require forecasts to be made of potential future damage from water, tree collapse, storm damage or any other source. What was required was a visual inspection and the expression of an opinion based on the visual inspection.
4. To the extent that Mr Dickinson described the property as in a "water damaged condition" that on its face would seem to refer to water damage occurring during the 2007 rains. It was the appellants' own case that "new looking cracking" and defects to the property appeared after that rain. Logically, if the new looking cracking had only appeared after the rain it could not have been visible prior to the rain (though the underlying structural cause may well have been evident before then, at least to a structural engineer).
5. His Honour's comment at [55], though expressed in quantitative terms, does not conflate the pre-2007 and post-2007 damage. It is predicated on there being a difference between the pre-April 2007 and post-April 2007 damage. This ground of appeal is therefore misconceived.
6. In any event, Mr Dickinson's comments as to the Report make reference throughout to matters not being adequately or accurately recorded or being substantially understated, for the most part the only elucidation of this commentary is provided by reference to his own defects report, which his Honour accepted was in fact a special property inspection report and went far beyond the standard that Mr Winn was required to apply ([54]). The particular defects, or the extent of those defects, as at the time of Mr Winn's inspection that Mr Dickinson's reports suggests should have been noted in the Report (which the appellants maintain his Honour wrongly conflated with the post 2007 damage that Mr Dickinson observed) are not readily apparent from Mr Dickinson's reports.
7. As to appeal ground 14, this is a reference to [53] of his Honour's reasons in which his Honour accepted the opinions of Mr Ransley and Mr Winn as to what compliance with the Australian Standard required in preference to that of Mr Dickinson. This ground overlaps with the grounds raised by grounds 19-23 which I consider shortly. Suffice it here to note that his Honour had the benefit of the oral evidence from the respective building consultants. He accepted the evidence of Mr Ransley and Mr Winn and concluded that the latter had carried out an inspection that complied with the Australian Standard. That conclusion was open to his Honour.

Ground 15 - failure to determine critical issues in case (appellants' submissions [28]; respondent's submissions [41]-[45])

1. The appellants contend that: 15. His Honour failed to determine critical issues in the case, namely (1) what building defects in the property, specially, were actually observed by the respondent or were observable by a competent building inspector at the time of the respondent's inspection; (2) what, if any, advice as to the significance or seriousness of such defects should the respondent have given that he did not give; and (3) what, if any, advice for further specialist assessment should the respondent have given that he did not give.
2. This ground overlaps with grounds 19-23.
3. At the outset, it should be noted that the case as conducted before his Honour did not readily lend itself to a detailed analysis of the issues raised in ground 15(1)-(3) above. What was contended was that Mr Winn had understated or not adequately reported on particular issues, such as: the movement of the retaining wall - which was noted in the Report; the cracking to the foundation wall - which was also noted in the Report; the suitability of the footings - the adequacy of which was not a matter on which a standard property inspection report was required to opine; the absence of structures to deal with surface water drainage and the defective paving that it is said directed stormwater to the footings.
4. The respondent maintains that it is clear from [51] and [58] of his Honour's reasons that his Honour accepted the opinion of Mr Ransley that Mr Winn had adequately observed and reported on the defects observable by a competent building inspector at the time of the inspection and that in those circumstances there was no failure by his Honour as contended in 15(1) or (2) of the appeal grounds. While it is true that his Honour did not address in his reasons each of the particular defects observed by Mr Dickinson in order to rule as to whether each was actually observed by Mr Winn or was observable by a competent building inspector at that time and what advice, if any, Mr Winn failed to give as to the significance or seriousness of those defects, the basis on which his Honour found that Mr Winn had complied with his duty of care was made clear. His Honour accepted that the test applied by Mr Dickinson was, in effect, too high a standard for a standard property inspection and accepted Mr Ransley's evidence to which I have referred above.
5. As to appeal ground 15(3), Mr Winn says that the appellants have not made clear what other specialist assessment they contend they should have been advised to obtain, beyond that of a structural engineer which he had recommended. The suggestion that Mr Winn believed that a geotechnical engineer should have been consulted involves a misrepresentation of Mr Winn's evidence (as I have already explained).
6. Though his Honour's reasons were brief, I am not persuaded that his Honour erred in the conclusions reached as to breach. Even if the fact that his Honour did not address in detail each and every asserted defect in the property rendered the reasons inadequate in this respect, it would not have lead me to conclude that there had been a miscarriage of justice such as to warrant the matter being remitted for findings on those issues having regard to UCPR r 51.53.

Ground 16 - Australian Standard (appellants' submissions [29]; [34]; respondent's submissions [46]-[50])

1. By ground 16, the appellants contend that: 16. His Honour misconstrued and misapplied the Australian Standard 4349.1-1995.
2. The appellants refer to this ground at [29] and [34] of their submissions. So far as can be gleaned from those paragraphs the complaint is that his Honour misconstrued the requirements of the Australian Standard (at 3.3(f) and (g)) to give a list of significant matters requiring attention and to make appropriate recommendations for further advice. Complaint is made as to the sufficiency of the advice given in relation to the retaining wall (namely as to the urgency and importance of seeking that advice and the significance of delay in so doing) ([29]). Further, it is said that there was no basis for expressing the opinion that drainage on the property was adequate when there was no provision for surface water drainage at all.
3. This ground raises issues, again, as to the acceptance of Mr Ransley's evidence, since Mr Ransley was of the view that the inspection carried out was adequate for the purposes of a standard property inspection. I deal with this in the context of grounds 19-21 and 23 below.

Grounds 19-21; 23 - findings re building experts' evidence (appellants' submissions [24]; [28]; [33]; respondent's submissions [59]-[62]; [65])

1. The complaints made as to the findings in relation to expert building evidence are encompassed in the following grounds: 19. His Honour's reasoning process failed to properly engage with the expert evidence and the areas of agreement and reasons for disagreement between the experts. 20. His Honour wrongly rejected the evidence by Mr Dickinson. 21. His Honour failed to apply the opinions of Mr Ransley, whose evidence he expressly accepted, that were favourable to the appellants' case to his consideration of the evidence and in drawing conclusions. 23. His Honour wrongly rejected the evidence of Mr Jessop.
2. The appellants maintain that his Honour's assessment of the expert evidence was highly superficial. They complain that his Honour did not engage in any analysis of Mr Winn's evidence nor did he engage in the appellants' case on the significance of the understatement of problems and overvaluing of the standard of the property as "good" (referring in this regard to what was said in Keith v Gal [2013] NSWCA 339 at [109] - [119]). They maintain that his Honour should have considered more closely the evidence of Mr Dickinson, as well as that of Mr Ransley and Mr Winn, on the issue as to whether Mr Winn was required to qualify his advice to state "at least" all the relevant matters and facts he had actually observed (submissions at [35]). Built into that submission is an assumption that the so-called qualifications and limitations on Mr Winn's opinion (grounds 3-4) are established.
3. The manner in which his Honour dealt with the expert building evidence was as follows. His Honour made reference to the provisions of the Australian Standard (at [19]-[22]). His Honour noted that much of Mr Winn's cross-examination was concerned with pressing him about opinions expressed by Mr Dickinson (at [52]). His Honour noted that Mr Dickinson had been asked to carry out "a site inspection to assess building defects and deficiencies" and to prepare a detailed report in connection with the property (at [52]). His Honour referred briefly to the assessment by Mr Dickinson of the property (at [53]). His Honour noted that both Mr Winn and the building consultant called by him, Mr Ransley, had given evidence that Mr Dickinson was wrong in his opinions (at [53]).
4. His Honour summarised Mr Dickinson's report as expressing the opinion that the defects he had discovered should have been discoverable by Mr Winn when the latter did his report ([53]) and noted that Mr Dickinson had carried out his inspection of damage occurring after very heavy rain. His Honour said at [53] that "[w]hat Mr Dickinson was saying was that he could say from his inspection of damage occurring after very heavy rain, that this should have been apparent a year before when conditions were very dry and the damage was scarcely noticeable".
5. At [54], his Honour said: I listened very attentively to Mr Dickinson's evidence. It was clear to me that he did a very detailed report, far beyond that envisaged for a standard inspection. He carried out detailed measurements and investigated matters far beyond what was required for a standard inspection carried out in accordance with the Australian Standard. What he produced was in fact a special purpose report.
6. His Honour went on to conclude at [56] - [57] that: I do not accept that Mr Winn, one year before very heavy rain occurred, should have been able to forecast the likely extent of damage to the house. I reject Mr Dickinson's opinion. I accept the opinion of the defendant and the opinion of Mr Ransley. To the extent that Mr Dickinson's opinion differs from Mr Winn, I prefer the opinion of Mr Winn because it was based on the requirements of the standard. (my emphasis)
7. The respondent maintains that his Honour correctly rejected the evidence of Mr Dickinson essentially on the basis that he applied the wrong standard - namely, that which applied to a special property purpose inspection and report, instead of a standard property inspection and report.
8. That submission gains support from the extract of Mr Dickinson's cross-examination (at Black 160.21-38) set out earlier in these reasons. As already noted, Mr Dickinson's responses in that exchange are inconsistent with the statements contained in the Australian Standard.
9. I accept that his Honour's analysis of the expert evidence was brief. However, the principal dispute between the experts was as to whether there had been compliance with the Australian Standard. The opinion as to whether the property was in good condition was an evaluative exercise, as was the attribution of significance to defects that were noted or as to the adequacy of particular matters such as surface water drainage. Mr Dickinson's view differed from that of Mr Winn. His Honour obviously accepted that Mr Winn's opinion fell within the range of that which a reasonably competent building inspector might form bearing in mind that Mr Winn saw the property in dry conditions and before any water damage from the April 2007 rain had occurred. It cannot be said that his Honour's conclusion, though briefly stated, was not open on the evidence.
10. As to appeal ground 23, the respondent notes that Mr Jessop's evidence was not rejected, though he maintains it was qualified by reference to the fact that Mr Jessop had not inspected the property at the time of Mr Winn's inspection and his statement was that the deflections and cracking could have occurred at any time up to and including May 2007.
11. In his report, Mr Jessop stated that: there was no evidence of a system of pits, pipes, kerbs, dish drains or the like for the interception and disposal of surface stormwater; the car parking area slabs had originally been constructed with good falls away from the retaining walls - however, paving slabs around the west and north walls of the residence displayed crossfalls towards the building, and paved terraces behind damaged garden brick walls displayed slumping and surface falls towards the walls; and concrete steps/stairs displayed no evidence of a stormwater interception from car parking level down to house level. His conclusion was that lack of control of surface stormwater drainage created greater risk to structures from hydrostatic pressures and dampness and he noted considerable damage to garden walls appeared already to have occurred.
12. Mr Pesman had submitted to the primary judge that he would accept Mr Jessop without reservation (Black 205: 10 - 11; Black 205: 29 - 32) but that even accepted in its entirety that evidence did not assist the appellants in light of the finding that the respondent had complied with the Australian Standard. His Honour, by the fact that he did not refer to that evidence, appears to have done so.
13. There is no error shown in his Honour's treatment of Mr Jessop's report in those circumstances. Mr Jessop was in a position to comment on the deficiencies in the property that were observable by a structural engineer, who would have a specialist view of their significance. Mr Winn was not a structural engineer and was not required, in order to comply with the Australian Standard, to give structural advice.

Grounds 8-9 - causation and reliance (appellants' submissions [36]-[44]; respondent's submissions [22]-[26])

1. Having found that there was no breach of a duty of care owed to the appellants, his Honour went on to make findings as to causation and reliance (as well as damages).
2. His Honour found that the appellants did not enter into the contract to purchase the property in reliance on what was in the Report but that they had decided to go ahead: because of their acceptance of the presence of defects as disclosed in the Report; in the knowledge of further advice from Mr Winn, rejected by them, about the need to get expert opinion on engineering, plumbing, draining and electrical matters; having considered the answers given by him to a series of questions; and because Ms Delaney could use the defects to bargain down the price of the property ([63]). His Honour concluded at [64] that Ms Delaney's main motivation in going ahead with the purchase was so she could get a bargain with the property.
3. His Honour went on to hold (at [65]) that there was no causal link between any statement or misstatement of Mr Winn and any loss suffered by the appellants, saying that: The evidence does not establish that the price received by the plaintiffs on resale of the house was diminished because of anything said by the defendant. If the house was damaged by rain and flood, that damage was not caused by the defendant giving a report or commenting on it. Furthermore, no evidence was given to establish that the lesser price received was due to damage to the house.
4. The appellants contest those findings in grounds 8 and 9 of the notice of appeal: 8. His Honour erred in failing to find the respondent's breaches of his duty of care to the appellants caused them damage. 9. His Honour applied an incorrect test of causation of economic loss.
5. The appellants submit that it is the essence of a pre-purchase inspection that the report of the findings is intended to be relied upon by the prospective purchasers in deciding whether to proceed with the purchase and that it is inherently likely that they will do so. They submit that the fact that Ms Delaney followed up the Report with care, prepared detailed questions, and used the advice about the defects which were disclosed in the Report in order to bargain for a reduced price, was evidence that the appellants did indeed rely on Mr Winn's advice.
6. I agree that neither the fact that the appellants bought the property in the knowledge of the defects reported by Mr Winn nor the fact that Ms Delaney's motivation in purchasing the property was to obtain a bargain would necessarily lead to a conclusion that the appellants were not relying on Mr Winn's advice when purchasing the property. The conduct of the appellant in negotiating a reduced price based on the defects noted in the Report would give rise to the inference that, had the appellants been aware of further defects they would be likely to have sought a further reduction in the price and/or have decided not to purchase the property at the price that they did.
7. In that regard I note that the valuation evidence on which the appellants relied estimated the value of the house at the time of the appellants' purchase at $320,000 assuming the condition as reported by Facility Solutions and at $255,000 assuming "full knowledge" of defects and damage. What comprised "full knowledge" of those defects and damage as at 5 September 2006, as opposed to the time of the valuer's inspection, was not made clear in the valuation report. Therefore, it is unclear whether part or all of that damage was post April 2007. Nevertheless, there was on that evidence a difference of about $65,000 in the market value of the property on the different assumptions.
8. The conclusion that there was no reliance by the appellants on the Report, or Mr Winn's advice at the site meeting, when purchasing the property is inconsistent in my opinion with the use that Ms Delaney did make of the Report in negotiating for a reduced purchase price. Ground 8 is made out.
9. As to the finding by his Honour as to causation, the appellants submit that his Honour erred in formulating the test for causation of damage in a pure economic loss claim arising from negligent advice. They maintain that the question was not whether the price received by them on re-sale was diminished because of anything said by Mr Winn; nor was it relevant that the damage to the house was not caused by the Report or Mr Winn's comment on it. The appellants accept that the rain and stormwater were the occasion of the damage to the property in 2007 but maintain that those were not the relevant legal cause of the damage suffered as a consequence of their reliance on the Report or the subsequent advice.
10. Whether or not causation was established was to be determined by reference to the general principles articulated in s 5D of the Civil Liability Act 2002 (NSW) which require a determination both as to factual causation (that the negligence was a necessary condition of the occurrence of the harm) and as to the appropriateness for the scope of liability to extend to the harm so caused.
11. In the present case, I agree that the question was not whether the Report or Mr Winn's subsequent advice had caused the damage occasioned to the house during the heavy rains in August 2007, but, rather, was whether any negligence in the inspection and preparation of the Report, or in the advice given thereafter, was a necessary condition of the occurrence of the economic loss claimed to have been suffered by the appellants.
12. If, as the evidence showed, the appellants relied on the Report in deciding to purchase the property, then the valuation evidence (which seems not to have been challenged) supported a conclusion that the property they acquired was worth less than the price they paid for it. If so, then factual causation was established. The question then would be whether or not, and why, responsibility for the harm should be imposed on Mr Winn. His Honour did not address those issues. Ground 9 is made out.
13. The fact that error has been established in those obiter findings does not, however, assist the appellants in light of the conclusions I have reached as to their challenge to his Honour's findings on breach.

Ground 10 - finding of time at which Mr Winn first saw the Report (appellants' submissions [19]; respondent's submissions [27])

1. Ground 10 raises a factual challenge to his Honour's findings. It is contended that: 10. His Honour erred in finding that the respondent did not see a copy of his engrossed written report as provided to the appellants until late 2012. His Honour should have found the respondent had a copy of his engrossed report before and at a site inspection with the appellants, alternatively with the first appellant, in August 2006 and that he referred to that report during the site inspection.
2. Mr Winn accepts that the finding by his Honour that he did not receive a copy of the Report until 2012 is inconsistent with the evidence given by him at the hearing to the effect that he had a copy of the Report at the site inspection in 2006. It does not seem to have been put to Mr Winn that his affidavit was intentionally false in this regard. It would be consistent, for example, with there having been a simple error on his part when he swore his affidavit, which was corrected or clarified in the witness box.
3. In any event, it does not appear that this error made any difference to his Honour's ultimate findings. It is not established that Mr Winn read the Report prior to or at the site meeting, realised it was in error, and then failed to qualify it. As to the finding that the advice given during the inspection was not negligent, that finding was open to his Honour on the evidence. Nothing therefore turns on the issue raised by ground 10.

Grounds 11-12 - findings re advice given (appellants' submissions [27]; [29]-[31]; [34]; respondent's submissions [28]-[34])

1. Grounds 11 and 12 challenge other aspects of his Honour's factual findings. 11. His Honour erred in finding that the respondent advised the first appellant to have the property inspected by a structural engineer to assess any structural issues. His Honour should have found the respondent's advice was limited to advising that a structural engineer assess one garden retaining wall. 12. His Honour erred in finding the respondent did not purport to give advice about what might happen if heavy rain fell. His Honour should have found that the respondent's expression of opinion as to the adequacy of surface drainage was not limited, expressly or by implication, to dry weather conditions.
2. As to appeal ground 11, the appellants submit that his Honour erred in finding that Mr Winn recommended that the appellants get engineering advice generally and that the appellants had rejected that advice ([59] and [63]) because his Honour had earlier found at [46] that Mr Winn had "only" recommended an engineer in respect of the retaining walls. In contrast, they say there was no such recommendation in relation to the "cracked and badly repaired" foundation wall.
3. Attention needs to be given to what his Honour actually found. At [46] his Honour found that "when talking about this wall [the retaining wall in the garden area]" Mr Winn had suggested that the advice of a structural engineer be obtained. That was not a finding that the recommendation was "only" in relation to the retaining wall although that clearly was the context in which the suggestion or recommendation was made. Paragraphs [59] and [63] do not make any reference to the context in which the advice as to a structural engineer was given; they simply restate the finding that advice was given as to obtaining an opinion from a structural engineer.
4. In Mr Winn's affidavit (at 41), he did not say that his recommendation was limited to the retaining wall although the context in which he referred to the engagement of a structural engineer was explained as being when Ms Delaney and her father raised the comments in the Report concerning the structural integrity of the retaining wall and specifically the 25mm movement. In any event, for the reasons already given, nothing relevantly turns on the distinction.
5. The appellants further contend (though this is not raised by ground 11 in its terms) that his Honour was wrong to find that they had been sufficiently advised to have engineering advice about the lower brick work and block work retaining walls. They say that their complaint was that they had not been advised that this was a serious or substantial matter that required their urgent attention. They point to Mr Ransley's agreement that an issue had to be assessed by the consultant in terms of the significance for the purchase of the property and that any significance had to be assessed in the long term (Black 179.43; Black 180.9). That, however, says nothing about whether, in the present case, Mr Winn's view as to the cracking to the foundation wall was one that no reasonably competent building inspector could form.
6. Mr Winn considered the cracking to be superficial and minor; that he did not see the cracking to the foundation wall as a significant issue; and that where he did see a significant issue he recommended that a structural engineer be consulted. On his assessment of the cracking, Mr Ransley's evidence would lead to the conclusion that it was not unreasonable for Mr Winn not to make further reference to the cracking that had been repaired in the foundation wall.
7. As to appeal ground 12, the Report stated that surface water drainage "appears adequate" and that stormwater run off "appears satisfactory". At [43], his Honour observed, as an important matter to be noted, that the property was purchased during a time that the area was dry and the Report dealt with what Mr Winn saw at the time he inspected the property. His Honour went on to say that Mr Winn did not purport to express an opinion about what might happen if heavy rain fell. The emphasis placed on the weather conditions at the time of inspection accedes with the emphasis placed by Mr Ransley on the visual nature of the inspection.
8. The appellants contend that his Honour erred in finding that Mr Winn did not purport to express an opinion about what might happen if heavy rain fell, given that Mr Winn had expressed an opinion as to the adequacy of surface water drainage and storm water run off. It is submitted that his Honour also erred in holding that the standard inspection did not require forecast to be made of potential future damage from water, tree collapse, storm damage or any other source (at [55]-[56]).
9. The findings made by his Honour at [55] - [56] do not, as the appellant suggests, confine Mr Winn's opinion as to the adequacy of surface water drainage or stormwater to dry weather conditions. That would indeed be a contradiction in terms. Nor does his Honour in terms make any finding as to whether Mr Winn's advice purported to make a forecast as to the likely extent of potential future water damage - rather, his Honour found that no such forecast was required to be given. Relevantly, his Honour's finding was that much of the damage Mr Dickinson observed had been caused by events after Mr Winn's inspection (and thus was not visible at the time of that earlier inspection).
10. It is not apparent the basis on which it is suggested by the appellants that the Australian Standard, by requiring an opinion as to, for example, watertightness of the premises, required a forecast to be provided of the extent of damage that might follow heavy rain. His Honour, in the paragraphs challenged by this ground seems to have been saying no more than that the Australian Standard did not require such a forecast.

Ground 17 - conclusions did not follow intermediate findings (appellants' submissions [31]; respondent's submissions [51]-[53]) 17. His Honour's conclusions did not follow from his intermediate findings of fact.

1. Reference to this ground of appeal is made at [31] of the appellants' submissions. The appellants contend that the primary judge erred in finding (at [59] and [63]) that Mr Winn recommended that the appellants get engineering advice generally or that the appellants rejected that advice. I have considered this above.

Ground 18 - adequacy of reasons (appellants' submissions [28]; [49]; [50]; respondent's submissions [54]-[58]) 18. His Honour failed to give proper and sufficient reasons.

1. The only specific reference to this ground in the appellants' submissions is at [50] although the complaint that his Honour did not engage with the evidence of the experts also implicitly raises this ground.
2. The appellants (at [49] & [50] of their submissions) refer to the evidence of Dr Canaris, the expert psychiatrist who gave evidence as to Ms Delaney's mental condition.
3. Dr Canaris stated in the summary and conclusions section of his report that Ms Delaney had a long standing history of psychiatric illness and had been diagnosed with "major depressive disorder, post-traumatic stress disorder". He noted some clinicians "may have considered the presence of a borderline personality disorder or at least traits". He stated that Ms Delaney's account suggested that "her purchase of the defective property with all the financial difficulties this has brought in its train has significantly aggravated her depressive illness". Dr Canaris suspected that Ms Delaney would have needed long term psychiatric care "even without the added burdens emanating from the purchase of the property" but considered that the level of her need for care had "probably been significantly increased". He found no evidence of psychosis.
4. Dr Canaris was not cross-examined. The appellants contend that the history Ms Delaney had given to Dr Canaris had the effect, pursuant to s 60 of the Evidence Act 1995 (NSW), of being evidence of the fact (citing Ceva Logistics (Australia) Pty Ltd v Redbno Investments Pty Ltd [2013] NSWCA 46 per McColl JA at [6] and Bergin CJ in Eq (at [143]).
5. The appellants concede that his Honour was not bound to accept Dr Canaris' findings as to Ms Delaney's mental state but maintain that his Honour was required to give adequate and cogent reasons why those findings would not be accepted.
6. This ground overlaps with appeal ground 22 and I will consider it under that heading.

Grounds 22; 24-26 - mental harm claim (appellants' submissions [23]-[35]; [45]-[51]; respondent's submissions [63]-[64]; [66]-[69])

1. These grounds deal with Ms Delaney's mental harm claim. 22. His Honour wrongly rejected the evidence of Dr Canaris. 24. His Honour wrongly found there was no evidence that the first appellant suffered mental harm. 25. His Honour wrongly found there was no evidence that the first appellant suffered mental harm as a result of the respondent's breaches of duty. 26. His Honour should have found the first appellant suffered compensable personal injury caused by the respondent's breach of duty.
2. The loss claimed was pleaded at [15] of the statement of claim as follows: 15. In further consequence, the plaintiffs have been compelled to pay contractors to carry out certain repairs and to remedy certain defects, the further costs of rectification being at least $159,000.00 and to sell the property on 15th May, 2009 for $274,621.00 such that the plaintiffs have lost the capital appreciation they would otherwise have made, lost from the purchase price the plaintiffs paid for the property, and have been put to great trouble, inconvenience, mortgage interest, mortgage expenses, other expenses and mental harm and have thereby suffered loss and damages.
3. The alleged mental harm was identified, in response to a request for particulars of the quantum of the damages claimed, as being: (x) Each of the plaintiffs suffered mental harm due to the traumas arising from the purchase of a seriously defective property without their knowledge at the time of purchase and subsequently discovered, and from consequences caused by the purchase including financial distress and ongoing financial stress, development of adverse behaviour and relationship issues which in the case of the first plaintiff, was already suffering from depression and after the purchase has had criminal convictions recorded against her for anti-social behaviour and criminal conduct.
4. There was nothing to which his Honour's attention was drawn as to any mental harm caused to Mr Cullinan and no issue was raised on appeal as to this part of the particularised case.
5. The primary judge cannot be said to have rejected Dr Canaris' report in an evidentiary sense. There was discussion with Counsel at the hearing (at Black 22-24) as to the expert report. His Honour indicated that he would allow the report but went on to say that, unless he was of the opinion that Ms Delaney had suffered psychiatric injury directly referable to Mr Winn's negligence and that exceeded 15% of a most extreme case, Ms Delaney could not receive anything for it (Black 23.34). His Honour also there expressed the opinion that there was "a great deal of difference between feeling bad, feeling upset, feeling stressed and strained and suffering a psychiatric injury" (Black 23.45). On that basis, Mr Pesman did not cross-examine Dr Canaris and indicated that he would deal with his report in submissions.
6. The respondent notes that the appellants' Counsel submitted in closing (at Black 187.38): The difficulty we have but obviously that the matter that the defendant will raise is that under the Civil Liability Act [sic], in order to make a claim of this nature, we need to establish 15% of the worst case … there is not a lot the plaintiffs can submit in relation to that, the evidence is as is.
7. Mr Vernier conceded (at Black 188. 20/44) that he had a "really steep hurdle" to establish 15% of a most extreme case of a psychiatric nature and acknowledged that the only evidence he had was the report from Dr Canaris.
8. His Honour ultimately concluded that there was no evidence of Ms Delaney suffering "any mental harm at all that could possibly be compensable in these proceedings", commenting that she may have suffered some stress but that this would not entitle her to recover damages from Mr Winn and that she could not show that Mr Winn did anything to cause her stress or any form of mental injury ([66]). The inclusion of the qualification "that could possibly be compensable" makes clear that his Honour was not suggesting that there was no evidence of mental harm at all; there was simply none that was compensable. His Honour therefore did not reject the conclusions expressed by Dr Canaris as to Ms Delaney's mental state.
9. There was no evidence to demonstrate that Ms Delaney had suffered a psychiatric injury that was at least 15% of a most extreme case (s 16(1) Civil Liability Act 2002 (NSW)). Hence, his Honour correctly rejected the claim for non-economic loss and correctly held in those circumstances there was no evidence that she suffered any mental harm at all "that could possibly be compensable in these proceedings" (at [66]). His Honour gave adequate reasons for that conclusion.
10. These grounds are not made good.

Grounds 27-29 - credibility findings (appellants' submissions [19]; [51]-[62]; respondent's submissions [70]-[75])

1. In the course of his Honour's reasons, his Honour made observations as to the credibility of Mr Winn and Ms Delaney, respectively. His Honour noted that there was no evidence given by the second appellant (Mr Cullinan) or Ms Delaney's father (who had been present at the site meeting attended by Mr Winn). His Honour's conclusion was that neither of those persons would have assisted Ms Delaney's case if they were called ([36]) - that being said in the context of the conflict in the evidence between Ms Delaney and Mr Winn as to whether there had been more than one meeting on site at which Mr Winn attended.
2. Having earlier (at [25]) expressed the opinion that Mr Winn's evidence was truthful and honest, at [29], when addressing the dispute as to the number of meetings attended by Mr Winn with Ms Delaney on site, his Honour said that Mr Winn "gave evidence in a calm and considered manner and impressed me as being a witness in truth".
3. As to Ms Delaney, his Honour noted that she was "an aggressive and at times abusive witness" (at [31]-[33]) and said he had formed the opinion that she was "by nature a bully, hard to control and contemptuous of authority" (at [34]). His Honour stated, at [34] that he was not prepared to accept her evidence where it conflicted with that of Mr Winn, nor was he able to accept that she suffered mental harm for which he said there was no real evidence.
4. At [67], his Honour made clear that he did not accept Ms Delaney as a reliable and honest witness and that he accepted the evidence of Mr Winn in preference to that of Ms Delaney wherever there was a contradiction between them.
5. The appellants raise three grounds of appeal in relation to those findings. 27. His Honour erred in making credibility findings about the first appellant. 28. His Honour erred in the use his Honour made of findings about the demeanour and personality of the first appellant which were logically irrelevant to the matters his Honour had to determine. 29. His Honour erred in making credibility findings about the respondent.
6. The appellants complain that credit findings were made about the parties on a "most rudimentary" assessment of their demeanour in court. They contend that his Honour simply contrasted Mr Winn's calmness with Ms Delaney's rudeness and did not make the credibility findings on the basis of any analysis of their evidence or its consistency and inherent likelihood (submissions at [52]).
7. It is accepted by Ms Heath that Ms Delaney was "[n]o doubt" a witness who "did not conform to the conventions of giving evidence or the standard of behaviour required in a courtroom, even of a person who is or may be feeling bewildered and frustrated by the legal process" ([53]). However, it is submitted that his Honour should have considered the evidence of her mental illness, particularly the post-traumatic stress disorder. It is submitted that his Honour made findings about Ms Delaney that were unfair but that even if she were exacting or querulous or aggressive that did not detract from her reliance on Mr Winn or the likelihood she would suffer personal injury if her major personal financial assessment in her home suffered sudden reverse as she has alleged.
8. There is little doubt from my review of the transcript that Ms Delaney was, as Mr Pesman submits, aggressive, non-responsive and argumentative in giving evidence. The respondent refers, by way of example to several transcript references (at Black 34.8-11; 36.50 - 37.4; 38.41-46; 39.19; 41.4 - 17 and 4.22 - 29). During Mr Pesman's closing submissions, Ms Delaney behaved offensively and was excluded from the Court. Mr Pesman submits that her conduct was unacceptable and substantially more serious than that of a witness who did not conform to the conventions of giving evidence or who was "exacting".
9. A trial judge may make findings about credibility on the basis of a witness' conduct and demeanour in Court (see Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [25] - [31] per Gleeson CJ, Gummow and Kirby JJ and at [65] - [66] per McHugh J). The assessment of Ms Delaney at [31]-[33] cannot be described as unfair, having regard to the manner in which the transcript reveals Ms Delaney behaved in Court, irrespective of whether or not that was attributable to her mental condition (and in that regard there was no suggestion made to his Honour that this was the explanation for her behaviour).
10. The real question is whether that assessment justified the finding at [67]. In that regard, in exchanges with Mr Vernier his Honour appears to have taken into account not simply Ms Delaney's behaviour in Court but also the unreliability of Ms Delaney's recollection of two (or three) meetings with Mr Winn (Black 194.10-20). Ms Delaney's apparent reluctance to concede matters such as whether Mr Winn had given a recommendation to engage a structural engineer would also have supported a conclusion as to her reliability as a witness.
11. In any event, the credit of Ms Delaney was not critical in the determination of the issues relevant to the ultimate conclusion reached by his Honour. It was not demonstrated that the differences between her version of events and Mr Winn's would have led to any different conclusion. His Honour accepted in the course of exchanges with Mr Vernier in closing submissions that the credit of Ms Delaney was not a significant issue (Black 194.4-8). That is the appellants' submission in this appeal at [62]. This ground therefore goes nowhere.
12. As to Mr Winn, it is said that his Honour erred in assessing Mr Winn's credit because he overlooked and disregarded "significant unexplained falsehood" in his evidence, persistent deflection and equivocation. The wrong finding as to when Mr Winn first saw the written report was regarded by the appellants as critical to his Honour's favourable assessment of the respondent's credit. It was not put to Mr Winn that his affidavit was intentionally false in that regard. Nor was that a finding critical to the determination of the case against the appellants.
13. It is further asserted by the appellants that through much of the evidence, Mr Winn sought to deflect responsibility to have reported about defence and damage that Mr Dickinson observed by asserting any such issue was a structural matter. What is characterised as persistent deflection by reference to the characterisation of issues as "structural" is, however, equally consistent with Mr Winn having the understanding that his role was not to give advice as to structural matters. The complaint as to his Honour's assessment of Mr Winn's credibility is not made out. Moreover, Mr Ransley's evidence supported the conclusion that Mr Winn had complied with the standard of care expected for a building inspection of this kind.

Conclusion

1. For the above reasons, the appeal should be dismissed. I propose the following orders: 1. Extend time for the filing and service of the appellants' notice of appeal to 21 August 2014. 2. Dismiss the appeal with costs.
2. EMMETT JA: This appeal is concerned with complaints made by the appellants concerning a building inspection report provided to them by the respondent prior to their purchase of a house at Springfield, New South Wales. They say that the respondent negligently failed to identify defects in the house and that, had the defects been disclosed, they would not have proceeded with the purchase of the house.
3. The appellants sued the respondent in the District Court of New South Wales claiming damages in respect of the loss they suffered by having purchased the house. They sued the respondent for breach of contract, although it is clear that there was no contract between the appellants and the respondent. However, the District Court also dealt with a somewhat ephemeral claim by the appellants that the respondent was liable to them for negligent misstatement. The primary judge endeavoured to articulate a duty of care said to be owed by the respondent to the appellants, although it was not the subject of any matter referred to in the pleadings. Ultimately, his Honour entered a verdict for the respondent. The appellants now appeal from the orders of the District Court.
4. I have had the advantage of reading in draft form the proposed reasons of Ward JA for dismissing the appeal. I agree with her Honour's reasons for the orders proposed by her Honour.
5. GLEESON JA: I agree with Ward JA.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 May 2015