In the recent case of Mills v Walsh[1] the NSW Court of Appeal found that based on the evidence provided that no loss was demonstrated as a result of the misrepresentation.
Brief Summary of the Facts
Mr Mills and Ms Zhang engaged JSW Property Projects Pty Ltd to renovate a residential property owned by Ms Zhang and ultimately paid $500,000.00 in progress payments. The dispute arose when further money was requested, which was declined leading to the cessation of building work.
The defendant builder was represented during negotiations for the contract by its sole director and shareholder Mr Walsh, who was not found to be a party to the contract.
The Court found that Mr Walsh engaged in misleading and deceptive conduct by failing to advise Mr Mills and Ms Zhang that the building company did not hold the relevant license to complete the works.
Mr Mills and Ms Zhang claimed their loss should be assessed on a “no transaction” case on the basis they would not have engaged the defendant had they known it was not licensed to conduct the work.
Decision
Brereton JA found that in a no transaction case it is the plaintiff that is required to prove loss and that, in a contract for work and materials, the benefit to the owner of the property is the value of the work and the materials, not simply the end product. The assessment of loss therefore is not related to the value of the property at the end of the construction but is based on the reasonable cost of the work done and the building materials provided. In a contract for work and material that involves proving that the materials provided and the work done has either no value at all or a value that is less than the amount paid.
In this case, the plaintiffs did not provide any satisfactory evidence relating to the value of the work done or materials provided and therefore, despite accepting that the plaintiffs had been misled by Mr Walsh, the Court of Appeal upheld the trial judge’s assessment that the plaintiffs had failed to discharge their onus of proving that they had incurred any loss or damage because the evidence indicated that the amount paid was either less than or equivalent to the benefit received.
For further information about misleading and deceptive conduct in the course of business, please contact David Collins or Kristy Nunn from our dispute resolution and litigation team.
[1] [2022] NSW CA 225
Liability limited by a scheme approved under Professional Standards Legislation
