1972.] COLES v. SAMUELS (WaH~ 1.

) 493

be imprisoned for three months. There will be no order as to the costs

of the appeal.
Appeal allowed and sentence varied.
Solicitors for appellant: Haese, Davey & Hannan.
Solicitor for respondent: The Crown Solicitor.

JENNINGS v. ZILAHI-KISS, ZILAHI-KISS AND M. K. TREMAINE

& COMPANY PTY. LTD.
Supreme Court: Bray C.J.
Oct. 12, 13, 14, 15, 19, 20, 21, 22, 25; Nov. 9, 10; Dec. 2, 1971;
Feb. 4, 1972.
Vendor and purchaser-Sale of premises comprising house anld five
residential units-House and units licensed as lodging house and
use of cooking stoves in units restricted by municipal by-law-
Premises advertised for sale as house and flats-No disclosure to
purchaser that premises licensed as lodging house or that use of
stoves in units restricted-Premises described in contract of sale as
house and flats-Warranty by vendor that no notices issued in
respect of premises that had not been complied with--Contract
providing that error or misdescription of property should not
invalidate contract--Whether fraud or breach of warranty by
vendors-Measure of damages for fraud and breach of warranty.
Principal and agent-Land agent undertaking to arrange on behalf of
purchaser preparation of documents and settlement of sale and
purchase of residential premises-Assurance by land agent to
purchaser that employment of solicitor unnecessary-Failure by
land agent to make inquiries as to restrictions on use of property
under municipal by-law-Whether negligence on part of agent-
Whether solicitor would have been negligent in failing to make such
inquiries--Costs.
Z. and his wife were the owners of residential premises which cousisteci of
a house, in which they lived, and five small units which they let to tenants.
The premises, under a by-law of the council of the municipality in which they
were situated, were classed as a lodging house and were licensed as such by
the council. The by-law provided that no cooking stoves were permitted to
be iustalled in any room of a lodging house used for sleeping purposes, or
in any corridor or passage of any lodging house; but in fact cooking stoves
had been iustalled, in contravention of the by-law, so that the units presented
the outward appearance of self-contained fiats.
T. & Co., a licensed land agent, was instructed by Z. and his wife to seU
the premises; and the premises were accordingly advertised for sale by
T. & Co. as a "large home plus 5 modern fiats". As a result of the advem.e-
ment J. inspected the premises in company with C., a land salesman employed
by T. & Co. After discussions with Z. and his wife, and with C., J. signed
494 JENNINGS v. ZILAHI-KISS [2 S.A.S.R.

a contract to buy the premises. Before the execution of the contract C. told
J. that it was not necessairy for her Iio have a solticitor, and that T. & Co.
could arrange for all the legal work in connection with the contract and
settlement; and the contract contained a clause by which J. instructed a
licensed land broker associated with T. & Co. to prepare the necessary
documents for registration of the transfer of the premises.
The contract described the premises as a dwelling and flats. It contained
provisions that the vendor warranted that no notices, requirements or demands
in relation to the land had been issued under any Act or regulation or by
any statutory authority which had not been fully complied with; that any
error or misdescription of the property should not invalidate the contract but
should be the subject of compensation if demanded in writing before settle-
ment (but not afterwards); and that the contract had been entered into by
the purchaser on his own investigation and inspection and no party should
be bound by any representation, promise or statement not therein contained
or bring any action against T. & Co. for damages, compensation or costs in
connection therewith.
In the course of the negotiations leading up to the contract, J. was not
informed that premises were licensed as a lodging house or that there were
any restrictions on the use of stoves in them. When J. discovered this fact,
after settlement had been completed, she sued Z. and his wife for damages
for breach of warranty and for false and fraudulent representations as to the
nature and status of the units. In addition she claimed against T. & Co. that
it had undertaken to perform on her behalf all the services which a solicitor
acting for her as purchaser would normally perform and that it had been
guilty of negligence in the performance of such services.
Held, (1) That the description of the units as flats without revealing that
the premises were licensed as a lodging house and that the lodging house
by-law restricted the installation of stoves, was misleading and deceptive, and
amounted to fraud which entitled J. to damages.
(2) (a) That the vendors had warranted that the premises were flats, and
that no notices had been issued in respect of them which had not been
complied with; and these warranties had been broken.
(b) That the clause in the contract relating to error or misdescription of
the property did not extend to a misdescription so material and substantial
that but for the misdescription the purchaser would not have entered into
the contract.
Flight v. Booth (1834) 1 Bing. (N.C.) 370 (131 E.R. 1160), applied.
(c) That the clause in the contract that the purchaser had entered into the
contract on his own investigation and inspection did not relieve the vendors
from liability for breach of any warranty contained in the contract itself.
(d) That J. was accordingly entitled to damages for breach of warranty.
Measure of damages in such circumstances for fraud and breach of warranty
considered and discussed.
(3) (a) That T. & Co. had contracted with J. to perform the obligations
of a solicitor towards her in connection with the contract and settlement.
(b) That it had not been established by the evidence that T. & Co., or
its salesman C., was aware of the facts relating to the status of the unit. and
the stoves.
(c) That the facts known to T. & Co. and to C. were not such as to have
required a solicitor of reasonable skill and competence to have investigated,
1972.] JENNINGS v. ZILAHI·KISS 495

and to have inquired from the council, as to the status of the units; and that
T. & Co. had not been negligent.
Duty of a solicitor acting for a client in arranging settlement for a purchase
of land, considered and discussed.
(4) (a) That although T. & Co. had been successful in the proceedings
they should not be allowed their general costs of the action, but should be
allowed costs only in respect of certain issues.
A successful defendant, even one unsuccessfully charged with fraud, may
be deprived of his costs by reason of circumstances leading up to and con-
nected with the litigation.
(b) That Z. and his wife should be ordered to pay J.'s costs of action, but
should not be ordered to pay the costs payable by J. to T. & Co.

Local Courts-Practice-Removal of action from Supreme Court to Local

Court-Action commenced in Supreme Court for sum in excess of
jurisdiction of Local Court-Increase in jurisdiction of Local Court
by amending statute-Whether amendment applicable to proceedings
already commenced in Supreme Court-Whether action should be
removed to Local Court-Local and District Criminal Courts Act
1926-1971 (No. 1782 of 1926 - No.5 of 1971), s. 42.
Section 42 of the Local and District Criminal Courts Act 1926-1971 has
no application to actions commenced in the Supreme Court before the date
of commencement of the Local Courts Act Amendment Act 1969.
A plaintiff who recovers by action in the Supreme Court an amount which
was beyond the jurisdiction of the Local Court at the time of the commence-
ment of the action ought not normally to be penalised with regard to costs
because he failed to take steps to have the action removed into the Local
Court after its jurisdiction was increased.
ACTION.

The facts are sufficiently stated in the judgment.

T. E. Cleland and R. W. Evans, for the plaintiff.
H. C. Nield, for the defendants Mr. and Mrs. Zilahi-Kiss.
C. J. Legoe and B. R. M. Hayes, for the defendant M. K. Tremaine
and Company Pty. Ltd.
Cur. adv. vult.
Dec. 2, 1971.
BRAY C.J.:- This is a claim by the plaintiff, Mrs. Jennings the pur-
chaser, in connection with a contract dated 6th January, 1965 between
herself and the defendants, Mr. and Mrs. Zilahi-Kiss as vendors, for the
sale and purchase of a certain property at 66 Marion Street, Unley, for
the sum of £12,000 in connection with which the defendant M. K. Tre-
maine and Company Pty. Ltd. acted as land agents, originally at any rate
on behalf of the vendors.
The trial lasted for eleven days, the evidence comprised 639 pages of
shorthand notes, and the documents put in as exhibits were many and in
496 JENNINGS v. ZILAHI-KISS (Bray C.J.) [2 S.A.S.R.

some instances voluminous. I will endeavour to fill in the background

of the case and to indicate my findings of fact as concisely as possible
and I do not propose to deal in detail with the evidence or the arguments
beyond the extent necessary to achieve the purposes just mentioned, but
I have re-read the whole of the evidence and given anxious consideration
to all the arguments advanced to me. Failure to mention any particular
matter is not to be taken as an indication that I have overlooked it.
It is perhaps advisable to say at first that the property sold consisted
of a house and five units, to use a neutral term, described as fiats,
together with certain fixtures, fittings and furniture. Broadly speaking,
the plaintiff claims damages against the defendants for breach of warranty
and for false and fraudulent respresentations relating to the nature and
status of these units. In addition she claims against the defendant com-
pany that it undertook to perform on her behalf all the services which a
solicitor acting for her as purchaser would normally perform and that it
was guilty of negligence in the performance of such services whereby
she suffered damage. All the defendants deny the allegations of warranty
and fraud and the defendant company denies the agreement to act as a
quasi-solicitor and also the negligence alleged. In addition certain defences
are based on the terms of the written contract. I will refer to these later.
I propose to deal with the history of the matter chronologically and it
is necessary to start from the acquisition of 66 Marion Street by the
male and female defendant in 1952. The property was in their joint names
but it was the female defendant who interested herself in the management
of it. In 1952 the main house was the only building on the land. The
defendants had boarders living in the house whom they supplied with
meals. In about 1953 theY-!lpplied for and obtained permission from
the Unley Council to build what are now, though in an altered form,
units 4 and 5. These are contained in a building separate from the main
house. They were occupied by bachelors, according to the female defen-
dant, but she still provided them with meals. In 1960 she applied for a
further building permit. The application is Exhibit P.22. It referred
to proposed additions to the existing house "sleepout, study, shower and
lavatory". A further building permit was applied for in 1961 (Exhibit
P.23). The additions there were described as "new kitchen, laundry and
two toilets". Eventually, as I understand the female defendant, the work
done in pursuance of the two permits granted in consequence of this
application constituted what at the time of the sale were known as units
1, 2 and 3. These are contained in a building joined on to the main
house.
In 1963 the defendants applied again (Exhibit P. 23). The application
form refers to alterations to existing sleepout. The plan designates one
of the alterations as a new rumpus room and the others as passages. The
work done under the permit consisted of alterations to units 4 and 5 to
bring them into the state they were in at the time of the sale. The Unley
Council issued to the female defendant a notice of approval (Exhibit
P.25) which states:-
1972.] JENNINGS v. ZILAHI-KISS (Bray C.J.) 497

"This approval is subject to compliance with the provisions of the

Building Act 1923-53 and in particular: provided that no cooking
facilities or food preparation facilities are installed in the proposed
rumpus room and passages indicated on this proposal."
As the result of these alterations the defendants had on the property
what were, in my view, to all outward appearances to the uninitiated, five
self-contained flats, each having a separate entrance, a bed-sitting room,
kitchen, bathroom and lavatory. In units 2 and 3 the kitchen consisted of
a curtained alcove off the bed-sitting room. In units 4 and 5 it consisted
of the areas marked "passage" on the plan in Exhibit P.24. I am not
sure of the exact position of the kitchen in unit 1, which was changed
after the purchase by the plaintiff, but I do not think this is material. The
defendants let the flats and installed in their respective kitchens portable
stoves or cookers.
At this stage it should be said that Regulation 328 of the regulations
made under the Building Act 1923-1964 requires that each fiat in a
residential fiat building shall contain a kitchen or place at least 70 square
feet in area (and the alcoves I have mentioned are smaller than this)
where food may be prepared, and Regulation 329a of the same regula-
tions says that no cooking appliances shall be installed in any corridor
or passage in a residential fiat.
The female defendant had no intention of using the areas named "sleep-
out", "rumpus room" and "passage" in the various applications for the
purposes indicated and I do not think she had any real intention of using
the area marked "study" as a study either, although she says that at one
stage she thought of fitting up a workshop for her son who is studying to
be an electronics engineer. She says she described the various areas in
question in this way on the advice of officers of the council because she
was told that that was the way to get the necessary permit. Finally she
said in answer to me:-
"0. Why did you put passage there knowing that you intended to
use it to put a cooker in? A. Because Tucker [the Health Inspector of
the Council] said he could only give me a permit if I put a passage
in. O. Weren't you trying to deceive the Council into thinking that
what you intended to use as a kitchenette was really a passage? A. If
you call it in this way, yes."
As I have said, she let the so-called fiats apparently with satisfaction
both to her and to the tenants, but the harmony of the enterprise was
marred by a series of visits from the witness Tucker, the Health Inspector
of the Council. He inspected the premises some time in 1963 and in-
formed the female defendant that there was in existence a by-law of the
council, No. XLIV passed on 23rd June, 1958 relating to lodging houses
and requiring their registration and licensing, and he told her that it was
necessary for her to obtain a permit, as she calls it, under this by-law.
Flats are excluded from the operation of the by-law and are defined as
follows:-
498 JENNINGS v. ZILAHI-KISS (Bray C.J.) [2 S.A.S.R.

.. 'Flat' shall mean and include any self-contained suite of rooms

including bathroom and sanitary conveniences designed intended or
adapted to be occupied as a separate domicile."
It might well be thought that these units answered the definition of fiats,
though it may be that they infringed the regulaions under the Building
Act, but the female defendant accepted Tucker's ruling. On 4th July,
1963 she filled out an application for the registration of a lodging house
(Exhibit P. 19). She listed the five units describing them as bed-sitting
rooms and said that one male person would sleep in each of the rooms.
She paid the fee of £2 and received a licence which she renewed in
1964.
This compliance, however, did not mean that her troubles were over.
Paragraph 5 of the lodging house by-law provides as follows: "No cooking
stove of any description shall be installed in any room used for sleeping
purposes, nor in any corridor or passage of any lodging house."
Tucker inspected the premises again on at least two occasions, once in
November 1963 and once on some date in 1964. These visits were not
only related to the question of the lodging house licence but to some
trouble about a damp wall in one of the units. He says that he saw a
cooker in unit 4 together with evidence of food preparation. She says
that the cookers were there all the time and that he could have seen all of
them on the occasion of each visit. However that may be, he sent her a
letter dated 4th May, 1964 in the following terms (Exhibit P.21):-
"Re Lodging House, 66 Marion Street, Unley.
During the inspection of the above, it was noted that a stove was
allocated in the passage-way of room number 4.
As this is a contravention of the Lodging House By-Law, Number
XLIV, you make yourself liable to the penalties provided."
She says that that letter came with the renewal of the licence. She says
also that she had previously asked Tucker to refer the question of the
cooker in No.4 to the Council. He denies this. She says, in effect, that
as she heard no more after this letter she assumed that everything was
all right.
So things stood when the defendants decided to sell the property at the
end of 1964. They wanted to buy a small house at Linden Park_ The
sale of that property was in the hands of the defendant company. The
male and female defendant signed a contract to buy on 13th December,
1964 subject to the sale of Marion Street. That property had been in the
hands of other agents but the defendant company was also authorised by
the male and female defendants to sell it. The matter was handled by the
witness Mr. Coombe, a land salesman then employed by the defendant
company.
On Saturday, 2nd January, 1965, and on Monday, 4th January, 1965,
an advertisement appeared in the Advertiser in the following terms:-
 1972.] JENNINGS v. ZILAHI-KISS (Bracy c.J.) 499

" LARGE HOME PLUS

5 MODERN FLATS.
2 MILES FROM CITY.
£12,000.
This property represents first class investment WITH INCOME OF
£28 P.W. PLUS 3 BEDRMD. MODERNISED HOME, close transp.
and main shopping centre. Flats are all s.c. and completely fum., with
every mod. conv. and sep. entrance. Owner has purchased small home
and has priced to sell quickly. For inspection any time contact Selling
Agents.
M. K. TREMAINE & CO. PTY. LTD., Licensed Land Agents,
M.R.E.!., 65 King William St., 51 4954. Aft. hrs., 79 3203. "
That advertisement attracted the attention of the plaintiff and her husband
who were residents of Canberra and were minded to invest in property in
Adelaide which would give them an income and also eventually a place
where they could live on retirement.
There is no doubt that the plaintiff and her husband made two inspec-
tions of the property in the company of Coombe before deciding to buy
it. But there is a dispute as to the dates of these inspections. The plain-
tiff and her husband say the first was on Saturday, 2nd January, and the
second on Tuesday, 5th January, and that she signed some sort of informal
document relating to the purchase of the property on the evening of
Tuesday, 5th, at West Beach, where they were living, and that she signed
the contract itself in the office of the defendant company on Wednesday,
January 6th, after finance had been arranged with Challis Investments
Ltd. who eventually lent money on second mortgage over the property.
Coombe says the two visits were on either the Monday and the Wednesday
or the Tuesday and the Wednesday and that the contract was signed at
West Beach on the evening of Wednesday, 6th. The possible significance
of this did not appear until late in the trial when it was revealed that a
contract for the sale of the property to a Mr. and Mrs. Angove for the
sum of £12,000, the same sum as that for which the plaintiff ultimately
bought it and generally speaking on similar terms and conditions, had
been signed on 2nd January. That contract was subsequently cancelled
before the execution of the plaintiff's contract. I do not know that much
turns on this except in so far as the fixing of the dates may assist in decid-
ing questions of credibility. The Angoves were not called but it was
suggested in argument that words which were said by the female defendant
to have been spoken by her to the plaintiff might have been said instead
to the Angoves and that the visits had become confused. I will revert
to this.
At any rate, on the day of the first inspection the plaintiff or her
husband spoke to Coombe on the telephone, they met him in the city.
and were driven to the property. There is no dispute that he was told
that they wanted to buy a property as an investment. The Jennings were
shown thro?gh the property and the cookers were observed in each flat,
but, accordmg to them and to Coombe, nothing of great significance was
500 JENNINGS v. ZILAHI-KISS (Br30/ C.J.) [2 S.A.S.R

said on that occasion. According to the plaintiff and her husband, he

asked, on the occasion of the second visit, what the rates were, a figure
was quoted, and he said he was surprised they were so low and the
female defendant said that was because the fiats were bachelor fiats.
According to the plaintiff and her husband, he asked if everything was in
order with the Council; Coombe said he thought it was and referred the
matter to the female defendant, who said, 'Yes'. Jennings amplififies this
by saying that he also asked more specific questions about whether the
property was subject to the Fair Rents Act and whether the places were
approved and whether there were any by-laws or regulations affecting the
running of the property and the like.
Both Coombe and the female defendant deny that any question was
asked about whether things were in order with the Council. The male
defendant, who was present during part of that conversation, denies that
he heard that said.
The female defendant says that on the occasion of the first visit she told
the plaintiff and her husband that the fiats were only for bachelors and
that there was no permit for couples. She says that in the sumoom when
she, her husband, the plaintiff and her husband and Coombe were present
the plaintiff said that the rates were fairly cheap and that she replied,
"That's because it is counted as a lodging house and only for bachelors,
no permit for couples". She says that she also said that a fee of £2 was
payable in addition to the council and water rates. She was almost sure
that Coombe was there but said that he might possibly have gone out for
a few minutes.
The male defendant, who, as I have said, left the management of the
property to his wife, says that he was in the sunroom and he heard his
wife say that the premises were only for bachelors, that there was no
permit for couples, that the place was counted as a lodging house by the
council, and that there was a £2 fee payable. He says Coombe was there.
The plaintiff and her husband do not agree that the relevant conversa-
tions took place in the sunroom or that the male defendant was present
except for a short while during which the conversation was purely social.
Coombe remembers the Jennings asking about the amount of the rates
and being told what they were. He admits that it could have been said
that the premises were only for bachelors, but denies that anything was
said about there being no permit for couples or about the premises being
counted as a lodging house. He denies that anyone said that the rates
were low because the fiats were classified as bachelor fiats.
The plaintiff and her husband further say that after they left the pre-
mises on the second occasion they had another conversation with Coombe
in which they said that they would buy the property if finance could be
procured. Jennings said to Coombe that they had better arrange for a
solicitor, or, according to him, asked Coombe if he could recommend a
solicitor. Coombe said that a solicitor was not necessary because land
agents in South Australia could do the legal work and that the defendant
1972.] JENNINGS v. ZILAHI-KISS (Bray c.J.) 501

company could do it. He quoted a low fee and when surprise was
expressed about this he said, "Yes, the solicitors don't like it very much."
Coombe denies most of this but he admits that on the occasion when
the contract was signed he said that it was not necessary to have a solicitor
to arrange the settlement and that land brokers could do that in South
Australia.
The contract, Exhibit P.8, as I have said, was signed on 6th January.
It provided for the purchase of the property for £12,000 on approval of
finance. The premises are described as:-"Stone and brick, iron roof
dwelling and Besser block and Besser brick flats ( 5 ) as inspected."
It contained the following clauses:-
"The vendor warrants that no notices requirements or demands in
relation to the said land have been issued under the provisions of the
'Health Act', the 'Fences Act', 'Local Government Act' or under any
other act or regulation or by any Statutory Authority which have not been
fully complied with . . .
If any error or misdescription of the property hereby agreed to be sold
shall be discovered or any error whatsoever shall appear in the particulars
or in the conditions of this contract the same shall not invalidate this
contract but compensation in respect thereof if demanded in writing before
settlement (but not afterwards) shall be made by the Vendor or the
Purchaser as the case may require . . .
This contract has been entered into by the purchaser on his own inves-
tigation and inspection and no party shall be bound or affected by any
representation, promise or statement not herein contained or bring any
action against the said M. K. Tremaine and Co. Ltd., its servants or
agents, for damages, compensation, expenses, costs, or otherwise in con-
nection therewith."
Underneath the signature of the vendors appears a heading "Settlement
Instructions". The print under that heading reads as follows :-"To D.
J. Tremaine, Licensed Land Broker, of Bowmans Arcade, 65 King William
Street, Adelaide. You are hereby instructed to prepare the necessary
documents for registration under the 'Real Property Act' relating to the
within transaction at a minimum cost of £8/8/0 per document." This is
signed by the plaintiff and the defendants. D. J. Tremaine is a licensed
land broker. His exact connection with the defendant company is
obscure. His address is the same. Coombe says he was an employee of
the company. The witness Mr. Gibbs, the land broker who actually
arranged the settlement on instructions from D. J. Tremaine, says the
latter is employed by M. K. Tremaine to do the brokerage. In any event,
for reasons which will appear later, nothing, in my view, turns on any
distinction between D. J. Tremaine and the defendant company.
The settlement date specified in the contract was the 30th January,
1965, or within seven days of approval of finance, but in fact settlement
took place in the beginning of March. The defendant company arranged
the settlement and appeared at it on the plaintiff's behalf and it was also
502 JENNINGS v. ZILAHI-KISS (Bray C.J.) [2 S.A.S.R.

appointed to collect the rents and manage the property. To complete

the statement of he facts it remains to consider the dealings between the
female defendant and Coombe and the events which happened when the
lodging house licence fell due for renewal after the 30th April, 1964.
The female defendant says that she told Coombe at the beginning that
the units were only for bachelors, not for couples. When she saw the
advertisement she complained that it referred to them as flats, not bachelor
flats, but he said that made no difference. She is confirmed by her husband
about this. She says that between the contract and the settlement, when
the delay in settlement might have prevented her completing the contract
to buy the Linden Park property, she had several discussions with Coombe
in which she told him all about her troubles with the Council concerning
the stoves. All of this Coombe denies.
The female defendant does not, by the way, claim that she ever told
the plaintiff or her husband anything about any difficulty with the Council
about the stoves.
After the purchase the witness Mr. Crowe became a tenant of the house
on the property and later the manager of the property. He said that he
opened a letter from the Council to the female defendant dated 10th
March, 1965 which reminded her that the lodging house licence expired
on 30th April and enclosed an application form for the renewal. Crowe
gave that letter to Coombe since the defendant company was managing
the property. Coombe apparently forwarded it to the plaintiff at Can-
berra without any covering letter. She says she was puzzled but thought
it must be something to do with the house as opposed to the flats_ How-
ever, she filled in the form and returned it with the fee.
The premises were inspected on 21st April, 1965 by an inspector of
the Council, together with Coombe and other people, and the presence
of the stoves was discovered.
A letter was sent by the Council to the plaintiffff on 23rd April con-
taining the following passage:
"The inspection revealed that stoves were located in both bedrooms
or passage ways.
The Lodging House By-Law XLIV states that:-'No cooking stove
of any description shall be installed in any room used for sleeping pur-
poses, nor in any corridor or passage of any Lodging House.'
You are advised that before a renewal of this licence can be con-
side!"ed, this matter must be rectified."
The plaintiff then wrote to Coombe on 28th April (Exhibit P.7). She
asked him to enlighten her as to the meaning of the statement about the
stoves being in "both bedrooms or passage ways" and whether it was
necessary to have a lodging house licence. He replied on 30th April
(Exhibit P.7) saying:-
"Your letter of the 28th is acknowledged and I have had some
discussions with the Council and Mrs. Zillahi';'Kiss (the previous
1972.] JENNINGS v. ZILAHI-KISS (Bray C.J.) 503

owner) regarding this licence for a lodging house, as they describe

it, at 66 Marion Street.
The Council is referring only to the rooms and not to the main house
itseH.
The previous owner has informed me that cooking appliances have
been used, and apparently approved by Council, in these rooms for
some years.
According to Mr. Tucker, who is health inspector for Unley Council,
there is now a council by-law which prohibits the use of cooking
appliances in bedrooms or passageways. As the appliances in question
are in alcoves off bedrooms and not in passageways, I am at a loss
to understand their objections and feel that they are becoming very
technical.
However, the previous owner intends to approach council on this
matter and try to clear things up."
After further correspondence the plaintiff put the matter into the hands
of her solicitors.
Coombe says that he knew nothing about any lodging house licence
until he got the letter about the renewal from Crowe. He says he then
saw the female defendant, that she was upset, and that she rang Tucker
at the council. He says he went to the premises, presumably on the
inspection, and was told then by Tucker-who, by the way, was not
amongst those stated to have been present in the council's letter to the
plaintiff of 23rd April-that the presence of the cookers contravened the
by-law. In examination in chief he said he sent some sort of communica-
tion to the plaintiff about this but she says nothing about receiving any
and none has been produced. At first he said he only made one visit
to the female defendant after the renewal notice came, but later he said
he might have seen her twice. Obviously from the terms of his letter of
30th April he must have spoken to her about the stoves, not merely
about the lodging house licence.
She too says that he came out to see her about the renewal letter and
that there was only one visit, though later she said he might have' come
twice and that his visit was about the second letter, the one complaining
of the presence of the stoves. At any rate, she says that she said to
Coombe: "I want to ring Mr. Tucker, it is very injustice, because they did
not have since more than one year. I thOUght everything was O.K.", and
something of the same kind to Tucker over the telephone. It is note-
worthy that she makes no claim that she said to Coombe that the lodging
house licence could have been no surprise to him or to the plaintiff since
they were told about it on the occasion of the second inspection.
I shall now say something about the witnesses.
I was impressed by the plaintiff; I think she made some mistakes and
that towards the end of her cross-examination she contradicted herseH
on some points, but I agree with Mr. Cleland, her counsel, that this can
be attributed to the pain in her back from some disc trouble from which
504 JENNINGS v. ZILAHI-KISS (Bray c.l.) [2 S.A.S.R.

she was obviously suffering and which subsequently caused her to leave
the Court. I think she was trying to give me a truthful account of the
matter to the best of her recollection.
I was less impressed by her husband. He was somewhat too voluble,
and on occasions, particularly with regard to the alleged specific details
of his enquiries about whether council requirements had been met, I
think he was reconstructing the conversation in accordance with what
he now feels he should have said rather than in accordance with his
recollection of what he did say. But where he is supported by his wife,
broadly speaking, I accept him.
The female defendant obviously had difficulty in expressing herself in
English and she is a person of volatile temperament and loquacious dis-
position. Her counsel, Mr. Nield. addressed an earnest plea to me to
make suitable allowance for these factors and I hope that I have done
so. But her behaviour in connection with the various building applica-
tions shows plainly enough that she is prepared to make misleading state-
ments when it suits her purpose. No doubt she was impatient with what
she regarded as irritating bureaucratic formalities and relied on her
acquaintance with the council officers to guard her safely to her goal. No
doubt, too, she thought optimistically that she would hear no more about
the cookers. But I cannot but regard the evidence about these applica-
tions as reflecting gravely on her credit. Moreover, the probabilities, it
seems to me, are against her story. Jennings is an experienced insurance
agent and his wife was going to invest £12,000 in this venture. I cannot
conceive that if the female defendant had told the plaintiff and her
husband everything she says she told them they would not have asked for
further details. I will revert to this subject later. And her admitted conduct
when Coombe saw her after the council's communications with the plain-
tiff about the licence and the stoves, whether there was one visit or two,
seems to me to indicate a guilty conscience. She could have said to
Coombe that everyone had been told that the premises were counted as
a lodging house by the council and that the implications of that could
easily have been ascertained if anyone was in any doubt about it. And she
does not claim that she ever told the plaintiff anything about the dubious
status of the stoves. I cannot accept her evidence when it is contradicted
by witnesses whom I regard as more reliable.
The male defendant, I think, took little interest in the management or
the sale of the property. He does, of course, support his wife's account
of some vital matters. But I think his evidence on these topics is the
result of reconstruction and collaboration. I would hesitate to ascribe
personal dishonesty to him but I think that he has been persuaded that
his wife's account of the matter is correct and it may well be that he now
thinks that he remembers what she says happened. His lack of recollection
of other matters contrasts sharply with his purported recollection of three
or four vital sentences. He said that he was not good at remembering and
that he was first asked to recollect the alleged conversation in the sunroom
two years after it happened.
1972.] JENNINGS v. ZILAHI-KISS (Bray C,J.) 505

In short I prefer the evidence of the plaintiff and her husband to that
of the two personal defendants.
Coombe gave his evidence in a manner which seemed to me normal
and unexceptionable. Mr. Nield asserted that the witness at various times
when his testimony was at variance with that of the female defendant
looked at the ground and looked uneasy. I can only say that I did not
observe these phenomena and that I was doing my best to watch him in
the box. Mr. Nield offered to give evidence himself about Mr. Coombe's
demeanour in the box, but of course that was not legally possible for
more than one reason. Nevertheless I think there is force in Mr. Cleland's
remark that the words of Danckwerts J. in Goody v. Baring I ) are applic-
able to his evidence. There the learned Judge said of a solicitor defen-
dant:-
"But it seemed to me that his evidence was based not so much on
his actual recollection as on what he thought his usual practice was, and
what he would be likely to have done, and he suffered, as it seems to
me, from a certain amount of 'happy hindsight'. It must also be borne
in mind that to a solicitor who does one hundred conveyancing matters
in a year a particular transaction is merely one of many, while to a
client his case is the only one he has had to bother about".
I am not satisfied that his recollection is as clear as he now says it is and
on some matters I prefer the plaintiff and her husband.
r make the following findings of fact -
1. I find that the units were at all relevant times described both in the
advertisement and in conversation by the female defendant and by
Coombe as fiats or bachelor fiats.
2. I find that when the units were inspected the cookers were in position
and to all outward appearances were lawfully and properly there to
be used and nothing was said or done to indicate to the plaintiff or
her husband at any time that there was any question about the
propriety of their presence.
3. On the balance of probabilities I think Jennings did ask whether
everything was in order with the council and that the female defen-
dant, after being appealed to by Coombe, said 'Yes'. I cannot find,
however, that Jennings made the specific inquiries that he deposes to.
I do not place any reliance on Coombe's failure to recollect this
inquiry by Jennings. I think it was made in his presence.
4. I cannot find on the balance of probabilities that the female defendant
said that there was no permit for couples or that the premises were
counted by the council as a lodging house or that a fee of £2 per
annum or any other fee was payable in respect of the licence. Apart
from general considerations based on the respective credibility of
witnesses, I cannot believe that if these things had been said Jennings
would not have asked about the implications of the categorisation
of the premises as a lodging house, or asked what the licence was

(1) [1956] 1 W.L.R. 448, at p. 452.

506 JENNINGS v. ZILAHI-KISS (Bray C.].) [2 S.A.S.R.

for, or what sort of permit it was that the defendant did not have
for couples, or what was the necessity for any permit at all. He did,
he says, go to the council offices but they were shut. I do not think,
however, that I should deduce from this abortive visit that he had
some inkling of the truth about the licence or the cookers. I think
he only had in mind to make some sort of vague generalised inquiry.
I find, however, that, as the plaintiff says, the female defendant did
say in response to a comment about the lowness of the rates that
that was due to the fact that the fiats were bachelor fiats, and that
Coombe was present when that was said.
5. I find that the plaintiff entered into and performed the contract
without any knowledge that the council regarded the premises as a
lodging house and not as a complex of fiats, or that the lodging house
licence was in existence, or that it was a condition of the permission
to build units 4 and 5 that no cooking facilities or food preparation
facilities should be installed in the rooms marked "passage" on the
relevant plans, or that in the view of the council the cookers were
unlawfully installed or that there was any question at all about the
legality of their presence or their use.
6. I find that the advertisement, and the relevant statements during the
inspection of the premises and the conduct of the female defendant
on that inspection, were inserted, said or performed with the object
of inducing the plaintiff to enter into the contract.
7. I find that she entered into the contract in reliance on those state-
ments and, in particular, as she said specifically to me, that she
would not have bought the property if she had known about the
registration as a lodging house or the controversy over the stoves.
8. I cannot find that the female defendant told Coombe at any time
before the settlement about the registration of the premises as a
lodging house, or about the trouble with the council over the stoves,
or that she ever complained that the advertisement should have
described the fiats as bachelor fiats and not as fiats simpliciter. An
ingenious argument was advanced by Mr. Cleland, based on the
original insertion in the contract of the old title reference instead
of the current one, which he said showed that Coombe must have
had access to some documents in the female defendant's possession,
and on the male defendant's recollection that the conversation in the
sunroom took place about sunset, which, said Mr. Cleland, showed
that he must have been thinking of a conversation with the Angoves
instead of one with the Jennings, since the latter were never there
at or near the time of sunset and that the Angoves had therefore
been told in the presence of Coombe about the council counting the
premises as a lodging house. I could not make an adverse finding
against Coombe on the issue of what he knew about the status of the
fiats and the stoves on speculations of that kind. In truth any attempt
to establish a case against Coombe on this issue without the assistance
of the evidence of the female defendant IS an attempt to make bricks
1972.] JENNINGS v. ZILAHI-KISS (Bray C.l.) 507

without straw and I cannot extract sound straw from her evidence.
Indeed, it seemed to me that Mr. Cleland was in a dilemma because
he had at the same time to ask me to reject the female defendant as
a witness of credit where her evidence conflicted with that of the
plaintiff and her husband and yet accept her as a witness of credit
on matters which took place between her and Coombe alone, and
that notwithstanding that Coombe supported the plaintiff and her
husband as against the female defendant in several important respects.
It would, indeed, be too much to say that all suspicion has been
dispelled from my mind. I find his failure to write an explanatory
covering letter with the renewal notice or to communicate with the
plaintiff immediately after the inspection of 21 st April, 1965 dis-
quieting. I am not impressed by the general suggestion in his letter
of 30th April to the plaintiff that the lodging house by-law was a
recent innovation and that the council had condoned the presence
of the stoves. Irrespective of what he was told by the female defen-
dant he might have been expected to make some independent investi-
gation with the council, once he was alerted to the position. But I
do not think that, acting judicially, I can make a finding of a serious
dereliction of duty against him when the relevant facts are denied
by him and are only attempted to be proved by the evidence of the
personal defendants; and, of course, it would have been a serious
dereliction of duty for him to have concealed these matters from
the plaintiff and her husband if he had been told about them before
settlement.
9. I find, though I do not think that it is of much importance, that the
contract was signed at West Beach on the evening of Wednesday,
6th January, as Coombe says. I think the plaintiff and her husband
are mistaken when they say the document they signed on that occasion
is not the present contract.
10. I find that before the execution of the contract by the plaintiff
Coombe told her and her husband that it was not necessary for them
to have a solicitor and that his company could do all the legal work
in connection with the contract and the settlement, and that on that
assurance the defendant company was instructed so to proceed and
for reward. I find that any distinction of personality between D. J.
Tremaine as a land broker and the defendant company was never
brought to the notice of the plaintiff or her husband and that they
thought that it was the defendant company to whom all their instruc-
tions were given.
The next step is to consider the legal consequences of these findings.
I do not think it is necessary to consider whether there was in the
abstract any duty on the part of the personal defendants to disclose any-
thing to the plaintiff apart from matters the non-disclosure of which made
what was said and done misleading and deceptive. I think that to describe
the units as fiats or bachelor fiats without revealing that they were regis-
tered as a lodging house and that the relevant authority took the view that
508 JENNINGS v. ZILAHI·KISS (Bra.y CJ.) [2 S.A.S.R.

stoves could not lawfully be installed there was misleading and deceptive.
I think that whatever else a flat is, it is a separate dwelling with all the
normal appurtenances thereof, including a kitchen. A flat in which one
cannot lawfully cook is not, in my opinion, a flat at all. An inspection with
the cookers in situ, in my view, constituted a representation by conduct that
the cookers were lawfully there. Nor do I consider it necessary to decide
whether the units are, in the eyes of the law, flats, albeit flats erected in
contravention of the regulations under the Building Act, or whether they
are lodgings. Whether the council is right or wrong in its attitude appears
to me immaterial. The condition in the building permit, the registration
as a lodging house, and the letter Exhibit P .21 stating that the presence
of the stove was in contravention of the by-law, are, in my view, in the
nature of clouds in the defendants' right to let or describe the units as
flats, such as to make the description and inspection of them as flats
misleading and deceptive without making these matters known; ct. Hals-
bury's Laws of England 3rd ed. vol. 26, pp. 839-841; Coaks v. Boswe1ll21 ,
per Lord Selborne L.C. at p. 236; Curwen v. Yan Yean Land Co. Ltd.(II,
per Higinbotham C.J. at p. 751. The case bears some resemblance to the
Canadian case of Graham v. Legault(4), cited by Mr. Cleland.
These vital matters were all known to the personal defendants, though
not on my finding to Coombe, and were not on those findings made known
to the plaintiff or her husband or otherwise discovered by them before
settlement.
Similarly Exhibits P.21 and P.25 were in my opinion notices in relation
to the land given by a statutory authority within the meaning of the
clause in the contract mentioned above and they were certainly not "fully
complied with" at the time the contract was executed.
It seems to me, therefore, that all the conditions necessary to establish
a right of action for damages for fraud are established against the female
defendant, and therefore against the male defendant too, since she was
clearly his agent for all relevant purposes.
The misrepresentations alleged in par. 5 of the statement of claim are
as follows:-
"(1) that the apartments were in fact flats;
(2) that the apartments were let, and were lawfully let as flats;
(3) that no notices requirements or demands in relation to the property
had been issued under the provisions of the Local Government Act
or any regulation which had not been fully complied with;
( 4) that everything was in order with the Council, namely the Unley
City Council, which had given permission to erect a carport;
(5) that the defendants knew facts which justified the representation
that the apartments were in fact flats and were lawfully let as flats
and knew of no facts to the contrary; and further

(2) (886) 11 App.Cas. 232.

(3) (891) 17 V.L.R. 745.
(4) [1951] 3 D.L.R. 423.
1972.] JENNINGS v. ZILAHI·KISS (Bray C.J.) 509

(6) the defendants knowing that the plaintiff was only temporarily in
Adelaide, and knowing that she was interested in investing money
in fiats, failed to disclose to the plaintiff all matters known to them
in relation to the true nature of the property and the ability law-
fully to let the apartments as fiats."
Those representations are alleged in par. 7 to have been false in the
following respects:-
"( 1) the apartments were not fiats, but were a lodging house and were
registered as such by the defendants Zilahi-Kiss with the Corpora-
tion of the City of Unley;
(2) the cooking stoves installed as mentioned in paragraph 3 hereof
were unlawfully installed, contrary to paragraph 5 of By-law XLIV
of the said corporation;
(3) the said corporation, in about May 1964 and at other times
unknown to the plaintifI, had informed the defendants Zilahi-Kiss
of their breach of the said By-law and had required them to remove
the said cooking stoves; and
( 4) the· defendants knew the facts mentioned in this paragraph and
knew that those facts made the letting of the apartments as fiats
unlawful."
I think that the representation referred to in par. 5 ( 1) was made in the
advertisement and orally and by conduct during the inspection and in the
contract itself; that the representation referred to in par. 5 (3) was made
in the contract; that the representation referred to in par. 5 ( 4 ), in so far
as it refers to everything being in order with the council, was made orally
during the inspection; and I think the representation referred to in pars.
5 (2) and (5) can be implied from what was written in the advertisement
and the contract and what was said and done on the inspection. As for the
representation referred to in par. 5 (6), I cannot find any separate liability
for non-disclosure apart from the matters previously mentioned, but, as I
have said, the non-disclosure of what the female defendant knew was
such as to make misleading and deceptive, and therefore false and action-
able, what was written in the advertisement and the contract and said and
revealed by conduct during the inspection.
I find that these representations were false in the manner alleged in
par. 7, except that I do not think it necessary to find that the units were
not really fiats or that the presence of the stoves constituted a breach of
the by-law. It is sufficient to find that the facts relating to the building
permit, the registration as a lodging house, and the denunciation by the
council of the presence of the stoves were facts which should have been
and were not disclosed and the non-disclosure of which was sufficient to
make what was said and done misleading, deceptive and therefore false
in the sense mentioned.
All these representations were made by the female defendant, and on
behalf of both defendants, and were false to her knowledge in the sense
510 JENNINGS v. ZILAHI-KISS (Bray c.J.) [2 S.A.S.R.

mentioned in that she made them knowing of the relevant matters and
failing to disclose them.
However, the plaintiff said in cross-examination that she did not rely on
what was written in the contract but on what was said at the inspection.
I think that should be taken as including what was done on the inspection
and what was inserted in the advertisement. For the purpose of the claim
in fraud therefore, I ignore the description of the premises as fiats in the
contract and the clause about compliance with statutory notices. However,
quite enough remains to justify a finding against the personal defendants
on the issue of fraud. Indeed, the references in the advertisement and in
the conversations to the units as fiats and the inspection revealing the
cookers in situ would be enough in my view, even if I had been unable
to find that the female defendant replied in the affirmative to the question
whether everything was in order with the council. But in addition I have
so found.
No provision in the contract, in my view, can afford a defence to a
claim for fraud unless, perhaps, the plaintiff knowingly and with adver-
tence to the question of possible fraud bargains away his rights (Allen v.
Empire Life and General Assurance Co. Ltd.(S); Suburban Homes Pty. Ltd.
v. Topperi. 6 ); Snarski & Snarski v. Barbarich(7); Wehr v. Thom(S».
There is also a claim against all defendants for breach of warranty.
The warranties alleged are that the units were fiats and that no notices
had been issued which had not been complied with. I agree that the
representations with regard to these matters to which I have just referred
can equally be regarded as warranties by the male and female defendants
broken in the manner alleged, but here the defences based on the contract
are relevant.
I think that the provision that no party shall be bound or affected by
any representation, promise or statement not contained in the written
document excludes any action for breach of any verbal warranty or any
warranty by conduct or in the advertisement: Stuart v. Dundon(9).
On the other hand, I do not think that the clause relating to error or
misdescription is effective to exclude reliance on the description of the
units as fiats in the contract, which I regard as containing a warranty,
and it is certainly not apt to exclude reliance on the express warranty
that all notices by any statutory authority have been complied with.
According to the principle in Flight v. Booth(lO), such a clause does not
cover a misdescription so material and substantial that it may reasonably
be supposed but for such misdescription the purchaser would never have
entered into the contract at all, and, in my view, the description of the

(5) (1926) 22 Tas.L.S. 9.

(6) (1929) 35 A.L.R. 294.
(7) [1969] W.A.R. 46.
(8) [1969] W.A.R. 39.
(9) [1963] S.A.S.R. 134.
(10) (1834) 1 Bing. (N.C.) 370 (131 E.R. 1160)
1972.] JENNINGS v. ZILAHI·KISS (Bray C.J.) 511

units as flats falls into this class. If this is so, then before completion the
plaintiff would have been entitled to rescind if she had found out the
true state of affairs and would not have been confined to a claim for
compensation under the error or misdescription clause: and by parity of
reasoning I do not see why that clause should now exclude her from
claiming damages, even though the time for rescission has passed. In
short, in my view, the provision that compensation cannot be claimed for
error or misdescription after settlement does not apply to an error or
misdescription as substantial as that involved in describing the units as
flats without disclosing the background relating to the building permit,
the lodging house registration, and the council's attitude towards the stoves.
Nor, in my view, does the statement that the purchaser had entered
into the contract on his own investigation and inspection relieve the vendor
from any liability for breach of any warranty contained in the contract
itself.
Hence I hold that the plaintiff has also established a cause of action for
breach of warranty against the male and female defendants in connection
with the description of the units in the contract as flats and the express
warranty about compliance with all notices.
I tum now to the case against the defendant company. The claims
against it for fraud and breach of warranty must fail, the first because it
has not been shown that any relevant statement made by Coombe was
false to his knowledge or that he knew at any relevant time what the
female defendant knew about the background of the matter, the second
because the defendant company was not a party to the verbal warranties
or to the obligations of the vendor under the written contract. But there
remains the claim that it undertook to perform the obligation of a solicitor
towards the plaintiff in connection with the contract and the settlement.
I find this contract established. I find that Coombe did undertake on
behalf of the defendant company to perform for reward the services which
a solicitor for the purchaser would normally perform in connection with
this contract. If land agents will tell parties to land contracts that it is
not necessary to employ a solicitor and that the necessary work can be
done by a land agent and for reward - perhaps even without re~ard,
but it is not necessary to decide this - then it is only right that the party
who acts on the faith of that assurance should lose nothing by foregoing
the services of a solicitor and that the land agent should be held respon-
sible for extending to that party all the protection which the advice of a
reasonably competent solicitor would have given him.
In addition, the defendant company through Coombe was in effect
proposing to act in connection with this transaction for both the vendor
and the purchaser. The undesirability of this has often been pointed out
by courts and, in my view, it is not only undesirable but wrong, whether
the adviser in question is a solicitor or a land agent. It is impossible for
the same person to give satisfactory service as the confidential and expert
adviser of two parties with conflicting interests. The man who undertakes
to serve two masters may easily find himself in a. position where he must
512 JENNINGS v. ZILAHI-KISS (Bray c.J.) [2 S.A.S.R.

be false to one and possibly to both. The matter is discussed in emphatic

terms by Scrutton L.J. in Moody v. Cox and Hatt(ll); by Danckwerts J. in
Goody v. Baring< 12l; and by the same learned Judge when a member of
the Court of Appeal in Smith v. Mans1113l . No doubt the practice will con-
tinue whatever judges say; but I hope that these proceedings will bring
home to this company at least the realisation that acting for both sides
may entail financial disadvantages which far outweigh the triflling remune-
ration for drawing up the settlement documents and attending at the
settlement.
The clause in the contract absolving the defendant company from any
action "in connection herewith", i.e. the contract itself, obviously relates
only to the contract of sale and not to a contract to act as a quasi-solicitor.
Mr. Legoe, for the defendant company, however, argued that the settle-
ment instructions to D. J. Tremaine superseded any earlier oral agreement
with the result that after the plaintiff signed them she could look to D. J.
Tremaine alone to protect her interests. I reject this argument. She signed
those instructions when the document was presented to her by the
defendant company's agent without any intimation that there was any
distinction of personality between it and D. J. Tremaine. Indeed, she
never met D. J. Tremaine. As a matter of fact, on the evidence in this
case I would be prepared to find that D. J. Tremaine was an agent of the
defendant company. I think that conclusion is open from the evidence of
Mr. Coombe and Mr. Gibbs. Apart from that, however, I think that it
would be absurd to regard those instructions as a written contract super-
seding a previous oral one. The real contract is the wider one orally made
whereby in effect the defendant company undertook through the mouth
of Coombe to perform the services of a solicitor for the plaintiff in con-
nection with this transaction and the signature to the settlement instructions
was a mere incident in the course of carrying into effect that wider contract
and is to be read in its light and in its setting and not vice versa; cf.
Panorama Developments (Guilford) Ltd. v. Fidelis Furnishing Fabrics
Ltd.l14I , per Lord Denning M.R., at pp. 442-443.
I have found a contract: it remains, however, to find a breach. I have
not been able to find that Coombe possessed before settlement any
specific knowledge of the facts relating to the status of the units and the
stoves which were known to the female defendant. Ought he to have found
them out? Would a solicitor acting on behalf of the plaintiff with reason-
able skill and competence have found them out? That is the test which,
in my view, has to be applied. A professional man is only liable for the
use of ordinary care and skill. He is not bound to guarantee against all
mistakes or omissions or to be gifted with powers of divination or to
exercise extraordinary foresight, learning or vigilance: cf. Parker v.

(11) [1917] 2 Ch. 71, at p. 91.

(12) [1956] 2 All E.R. 11.
(13) [1962] 3 All E.R. 857, at pp. 859-860.
(14) [1971] 3 W.L.R. 440.
1972.] JENNINGS v. ZILAHI-KISS (Bray GJ.) 513

Roll~15), and see the the citations contained in the arguments of counsel
at pp. 287-288 of the report in the English Reports.
I regard this as one of the most difficult parts of the case but on the
whole I do not think that I can find negligence here. I do not think that
I can find that a reasonably competent solicitor, knowing what I have
found that Coombe knew and no more, would have found out about the
building permit, the lodging house licence, or the precarious state of the
stoves.
No solicitor was called to give expert evidence on either side. Mr.
Gibbs, the land broker, said that he would not normally in a case like
this have made such inquiries from the Unley Council as would have
revealed the true state of affairs, but I think he placed undue reliance on
the clause referring to the purchaser's investigation and inspection. I said
in Neagle v. POWer(16) that such evidence has not been thought necessary
in actions against solicitors and that the court presumably knows for
itself what the ordinary reasonable and prudent solicitor would do. That
is true as a general proposition, but expert evidence from solicitors has
occasionally been called, as in Goody v. Baring. 17). There are obviously
some mistakes or neglects of which a court can say no reasonably careful
solicitor would have been guilty. Such, for example, are cases where the
solicitor fails to bring an action within the period of limitation, where he
fails to advise that a promise without consideration is worthless unless
supported by a deed (see Parker v. Roll~18)), or where he fails to advise
a tenant in tail, that if he dies without barring the entail the land will not
form part of his estate (Otter v. Church, Adams, Tatham & Co.lll1), or
to take normal conveyancing precautions: cf. Hill v. Harri~20), per Russell
L.J. at p. 618. In Goody v. Baring. 21 ) a solicitor was found guilty of negli-
gence in failing to advise a purchaser that the rents payable by the tenants
in the building being purchased might be more than the standard rents
lawfully recoverable under the Rent Acts then in force in England. But
that was a question of general law in force throughout the whole country.
I do not think a solicitor is bound to know the provisions of all the
by-laws of all the local government authorities in South Australia, or even
to inquire into the possible existence of relevant by-laws unless there is
something to direct his attention to the desirability of such an inquiry.
Coombe said he had never heard of lodging houses in contemporary life
before this case and I see no reason to disbelieve him or to think that a
solicitor would have been more knowledgeable. Nor can I find that when
a solicitor is advising someone in connection with the purchase of land
on which buildings are erected he is bound to enquire into the history of

(15) (1854) 14 C.B. 691 (139 E.R. 284).

(16) [1967] S.A.S.R. 373, at p. 376.
(7) [1956] 2 An E.R. It.
(18) (1854) 14 C.B. 691 (139 E.R. 284).
(19) [1953] Ch. 280.
(20) [1965] 2 Q.B. 6Ot.
(21) [1956] 2 All E.R. 11.
514 JENNINGS v. ZILAHI-KISS (Bray c.J.) [2 S.A.S.R.

their erection in order to see whether the Building Act and regulations
have been in all respects complied with, even though it is perfectly true
that a building erected or used in defiance of the provisions of the Act
can in theory ultimately be pulled down in certain circumstances (s. 85 of
the Building Act), unless, again, there is something to direct his attention
to the necessity for such an inquiry. Nor, in my view, is the mere statement
that the property proposed to be purchased includes flats a sufficient
warning to put the solicitor on inquiry about these matters.
It is true that in this case I have found that Coombe knew, or should
have known, that the female defendant had stated that the rates on the
property were low because the flats were bachelor flats. This might seem
to a reflective mind a strange remark and an exceptionally alert or sus-
picious solicitor might have gone on to ask why this was so and to have
made inquiries from the council itself if the answer did not satisfy him,
but I do not think I could hold a solicitor negligent in failing to do this.
I think that would be to set too high a standard. I may be wrong but, in
the absence of expert evidence to the contrary, I am not prepared to hold
that a solicitor advising the plaintiff who knew what Coombe knew and no
more would be guilty of negligence if he failed to make whatever further
inquiries would have revealed the truth. I do not see why he should have
been sufficiently anxious or suspicious to pursue such inquiries.
It follows then that the action succeeds against the personal defendants
and fails against the defendant company. It remains to consider the
question of damages.
The measure of damages in fraud is, roughly speaking for the present
purposes, the difference between the value of the property and the amount
paid for it. The measure of damages for breach of warranty is the differ-
ence between the value of the property at the time the plaintiff bought it
and the value it would have had if the warranties had been fulfilled. For
both purposes it is necessary to endeavour to ascertain the actual value of
the property at 66 Marion Street, Unley, on 6th January, 1965, and the
value that property would have had if there had been no question of the
right to let the premises as flats with cookers installed and able to be used.
Two valuers were called, Mr. Fereday for the plaintiff, and Mr. Cuth-
bertson for the defendant company. Mr. Fereday inspected the property
informally in November 1965 and again for the express purpose of
valuation in January 1966. He compiled an elaborate calculation of the
value of the premises at the relevant time on two bases, on what may be
called respectively the flat basis and the lodging house basis. He arrived at
the conclusion that the value at the relevant time on the first basis was
£8,600 and on the second £6,700. If these figures are correct then the
plaintiff's damages in fraud would be £5,300 or $10,600, the difference
between £12,000 and £6,700, and for breach of warranty £1,900 or
$3,800, the difference between £8,600 and £6,700. Of course, the greater
would include the lesser; both sums could not be recovered.
Mr. Cuthbertson, as I understood him, was instructed only shortly before
the hearing. He said that he could not now undertake a valuation of the
 1972.] JENNINGS v. ZILAHI-KISS (Bray C.l.) 515

premises as at January 1965. What he did do was to examine Mr. Fere-

day's figures and methods of working and offer certain criticisms.
I am much indebted to Mr. Fereday for his careful evidence and
meticulous calculations. Nevertheless I am not prepared to adopt them in
their entirety. He has endeavoured to arrive at his values by a process of
capitalisation of net rentals. I think there is point in some of the criticisms
of the methods he adopted.
In the first place, I think the figure he has taken as the total annual
gross rental is too low. He has taken the rentals actually being paid to
the vendors at the time of the contract. They, however, were occupying
the house themselves as a residence and, of course, there was no rental
figure for that. Mr. Fereday has adopted the figure of £4.10s. per week
for this. He has explained his reasons for doing so, but I think it is too
low. In fact, the house was let to the witness Crowe for £6.10s. per week
as from 6th March, 1965. The plaintiff, too, managed to get substantially
higher rentals for the various tenants as from March 1965, except for unit
number 4 which was apparently the subject of a lease. Of course at this
time the threat from the council was still unknown to the plaintiff, and,
I presume, to the tenants. I think that Mr. Fereday's figure of total weekly
gross rentals of £31.17s. is too low and that there should be substituted
a figure of at least £35.
Then in his capitalisation process Mr. Fereday made an allowance for
the establishment by the prospective purchaser of a sinking fund to replace
the building in twenty-five years time. Mr. Cuthbertson conceded that
this was often done as an academic exercise in an examination paper, but
contended that the inclusion of this factor, though appropriate in the
nineteenth century when costs were comparatively stable, was no longer
appropriate in practice and that it ceased to be used about 1950. Modem
investors, he said, for a variety of reasons do not worry about accumula-
ting capital to replace buildings in this way and, in fact, he said, a
building, or the total asset represented by land and buildings, does not
now depreciate in the manner assumed. He referred to a recent text book
on Land Valuation and Compensation in Australia, by Rost and Collins
(1971), where the sinking fund method is discussed at pp. 218-225. At
pp. 223-224 the learned authors say:- "Foregoing criticisms show clearly
that the setting up of sinking funds to provide for future losses in value
of improvements can be quite unrealistic and, except in a notional sense,
that such funds have virtually no place in business administration." I
think the criticisms of the witness and the authors have point. I do not
think that the value of the property as at 6th January, 1965 should be
artificially diminished on the assumption that the establishment of a
sinking fund would enter into the calculations of a willing but not anxious
purchaser.
Next, in reducing the gross rentals to net rentals Mr. Fereday made a
deduction of £319 per annum as the proportion of the rents attributable
to the use by the tenants of furniture etc. But he fixed the capital value of
the items in question at £330. It seemed to me that, even allowing for the
516 JENNINGS v. ZILAHI-KISS (Br8¥ C.J.) [2 S.A.S.R.

necessity to replace the furniture after a fairly short time, the proportion
was wrong for it meant that the whole capital value of the items in question
could be recouped after little more than a year. Mr. Cuthbertson thought
that the allowance was too generous and I think so too.
Finally, Mr. Fereday ultimately adopted a capitalisation rent of 10.6
per cent. He arrived at this by analysing two sales of flat properties in
the vicinity and working out the percentage which the net rentals of those
properties bore to the prices paid. He said that if the sinking fund was
ignored an investor would expect a higher return and that the capitalisa-
tion rate should then be 11.4 per cent to 12.4 per cent. Mr. Cuthbertson
thought that even 10 per cent was too high and unrealistic a rate and he
did not agree, anyhow, that 10.6 per cent was the proper rate to be
extracted from the comparable sales analyses by Mr. Fereday. I think
10.6 per cent is slightly too high.
I have experimented with adjustments of Mr. Fereday's figures in
accordance with these considerations. Various results can be produced,
some somewhat above and some somewhat below £12,000. I am impressed
by Mr. Cuthbertson's emphasis on the Angove contract, whtch was for
a few days a subsisting contract for the purchase of the property for
£12,000, though it was certainly cancelled by mutual consent very shortly
after its execution. This, I think, is a comparable sale, though, of course,
I do not assume that the Angoves knew any more about the property than
the plaintiff. It may not be without significance that Coombe, an experien-
ced land agent, says he advised the personal defendants to consent to the
cancellation because the property was highly saleable, I assume at the
price they wanted, £12,000. On the whole I am not prepared to find that
the property was worth less than £12,000 on the 5th January, 1965 as a
complex of dwelling house and flats. Nor, for that matter, am I prepared
to find that it was worth any more.
Il it was worth £12,000 as such a complex, it must have been worth
less when encumbered and degraded by the building permit condition, the
lodging house registration, and the possible illegality of the stoves. How
much less would a purchaser, prepared to give £12,000 for it on the flat
basis, have been prepared to give for it on the lodging house basis if he
had known these matters? Mr. Cleland cited Pilkington v. Wood!22), where
Harman J. said at p. 778 that the defects in title in question there were
such that the only purchaser who would have been interested, if he had
known all the relevant facts, would have been a speculator. There, how-
ever, there was a real if remote danger that the purchaser might ultimately
be dispossessed; see p. 775. Here the title to the land and the buildings
was secure and the buildings were substantial and could, even at the worst,
have been utilized for a variety of purposes. I cannot think that the only
possible purchaser who knew all the relevant facts would be a speculator
of the kind Harman J. had in mind. Nevertheless, I am satisfied that any
purchaser knowing the matters in question and willing but not anxious
to buy would have wanted a substantial reduction before he bought.

(22) [1953] Ch. 770.

1972.] JENNINGS v. ZILAHI-KISS (Bray C.J.) 5li

In making his calculations of value on the lodging house basis Mr.

Fereday relied on the rents which were actually paid for some time in and
after November 1965. In that month, after negotiations with the council
had failed, the rents of the tenants in the five units were reduced by
thirty shillings per week each and the stoves were at least temporarily
removed. Subsequently, however, the rents were raised again and appa-
rently the present practice adopted at 66 Marion Street is for the stoves to
be taken away from the units and stored when a visit from the council
is expected once or twice a year, and otherwise to remain in position
and in use. This practice, I think, was originally adopted without the
plaintiff's actual knowledge, but I think that she must have suspected that
the tenants had not, in fact, renounced the power of cooking in the units.
The figure of thirty shillings a week apparently originated from Jennings
but he was unable to say where he got it from and I cannot regard it as
necessarily indicating the relevant diminution in rental value of the units
at the time of the contract.
On the other hand I think that the apparent disability with regard to
cooking in these units is far more than a mere matter of form. Something
was made of the fact that paragraph 5 of the by-law only refers to cooking
stoves and not to other cooking or heating appliances, but the condition
in the building permit is far more general in its language and extends to
all cooking facilities and food preparation facilities, though it is true that
the likelihood of any action by the council under the Building Act is, in
my view, considerably less than the likelihood of action to enforce the
lodging house by-law. Even there it seems to have been somewhat lethar-
gic. However, there is evidence from the witnesses Crowe and Heaven
about tenants opposing the removal of the stoves and prospective tenants
rejecting tenancies of units because of the absence of stoves, though it is
true there do not appear to have been as many vacancies, or for so long
a time, as one might have expected a priori.
Again, I find it impossible to achieve a figure with any pretence of
precision. On the whole I think a prospective purchaser who knew the
facts would have calculated on a possible reduction of rent by at least £1
a week for each of the five units or £260 a year, if ultimately the stoves
had to be completely removed, and bearing in mind that and all other
relevant matters, and making allowances for a possible reduction in out-
goings as a consequence of the removal of the stoves, and the possibility
of arriving at some modus vivendi with the council, or successfully chaI-
lenging it in court about the premises constituting a lodging house, or
making some sort of structural adjustment to the units, I think a purchaser
of the type I have envisaged, after he had found out the truth, would only
have bought the property after a reduction of £2,000 in the purchase
price. I think, in short, such a purchaser might have regarded a final
permanent reduction in rentals as a chance rather than a certainty. Ii is
coincidental but comforting that this figure is between the figure of £1,900
arrived at by Mr. Fereday as the difference between the value on a flat
basis and the value on a lodging house basis, and the figure of £2,680
518 JENNINGS v. ZILAHI-KISS (Bray CJ.) [2 S.A.S.R.

arrived at by Mr. Cuthbertson from Mr. Fereday's basic material for the
same purpose.
The approach I have adopted means that the same amount is reached
as the measure of damages in fraud and the measure of damages for
breach of warranty.
There will, therefore, be judgment for the plaintiff against the defendants
Mr. and Mrs. Zilahi-Kiss for $4,000 and the claim against the defendant
company is dismissed.
I will hear the parties on the question of costs. Several questions arise.
The ones that suggest themselves to me at the moment are -
1. Is a Bullock order appropriate? At the moment I doubt it.
2. There must be an order for costs of some sort against the defen-
dants Mr. and Mrs. Zilahi-Kiss, but should they be relieved of
having to pay the whole or some part of the additional costs caused
by the joinder of the defendant company?
3. Should I deprive the defendant company of all or part of its costs
because it has failed on certain issues or because of its conduct in
inducing the plaintiff to dispense with the services of a solictor or
in acting for both vendor and purchaser?
The action came on for further hearing on the question of costs.
T. E. Cleland and R. W. Evans, for the plaintiff.
R. G. Matheson and H. C. Nield, for the defendants Mr. and Mrs.
Zilahi-Kiss.
C. I. Legoe and B. R. M. Hales, for the defendant M. K. Tremaine and
Company Pty. Ltd.
Cur. adv. vult.
Feb. 4, 1972.
BRAY C.I.:- I have delivered judgment about the merits of this matter
and what remains is the question of costs. This is another melancholy
example of the truth of Gibbon's remark that the expense of the pursuit
sometimes exceeds the value of the prize. In some cases that cannot be
helped; this is one of them. The fact is that there is no necessary relation
between the duration or the complexity of a trial and the amount involved.
This trial was protracted but, despite some of the arguments addressed to
me, I cannot agree that it was unduly protracted. The cross-examinations
were searching and lengthy but the number and complexity of the issues
of fact necessitated searching and thorough cross-examination. It may
be that other counsel might have been shorter but methods of advocacy
vary and I cannot attribute any undue prolixity to anyone. Nor am I
prepared to say, as I was asked to do, that it is not a case which justified
the employment of two counsel.
I propose to deal first with the costs of the defendant company. It
succeeded in the action and as such it is within the proposition enunciated
1972.] JENNINGS v. ZILAHI·KISS (Bray C,],) 519

by Viscount Cave L.C. in Donald Campbell & Co. Ltd. v. Pollak{23) in the
following words:-
"A successful defendant in a non-jury case has no doubt, in the
absence of special circumstances, a reasonable expectation of obtaining
an order for the payment of his costs by the plaintiff; but he has no
right to costs unless and until the Court awards them to him, and the
Court has an absolute and unfettered discretion to award or not to
award them. This discretion, like any other discretion, must of course
be exercised judicially, and the judge ought not to exercise it against the
successful party except for some reason connected with the case."
There are various circumstances in connection with the case, which, in
my view, justify me in the exercise of my discretion in depriving it of the
major part of its costs.
I need not repeat what I have already said in my reasons for judgment.
If the defendant company had been content to remain simply the agent
of the vendor, I doubt if it would have been joined in the action, and, if
it had been, and had succeeded on the ground that no knowledge of the
falsity of the representations made by the female defendant had been
proved against it, I would have awarded it its costs of the action apart
from those of any particular issue on which it might have failed. But it was
not so content.
Coombe first of all persuaded the plaintiff and her husband that the
services of a solicitor were unnecessary and that the defendant company
could do all the necessary legal work for her in connection with the trans-
action. As a result of what he did the defendant company was put in the
position of being the agent of two parties with conflicting interests and
I think this dualism may well have exercised an inhibiting influence on his
subsequent behaviour. When he was handed by Crowe the letter from the
council reminding the plaintiff that the lodging house licence was due for
renewal, he merely forwarded it to the plaintiff in Canberra without any
covering letter. On his own case he knew nothing before then of any
lodging house licence. The defendant company was then acting as the
plaintiff's paid agent in the administration of the property. Yet apparently
Coombe made no independent inquiries from the council and offered no
comment or advice. One would not have expected this inactivity even from
a paid land agent, let alone a firm of land agents who had put themselves
forward as competent substitutes for a solicitor. He was present at the
inspection of the 21st April, as the result of which the council sent to the
plaintiff the letter of 23rd April complaining that the presence of the
cookers was a violation of the provisions of the by-law. Again Coombe did
not communicate with the plaintiff. He says he thinks he did, but he was
unable to produce a copy of any letter to that effect and I infer that none
was sent. What he did after receiving the plaintiff's letter of 28th April
was to write the letter of 30th April, Exhibit P.7, after his interview with
the female defendant. I set out the relevant passages of that letter in my

(23) [1927] A.C. 732, at pp. 811-812.

520 JENNINGS v. ZILAHI·KISS (Bray C.J.) [2 S.A.S.R.

reasons for judgment and I will not repeat them. It makes no reference
to the inspection and it infers that the lodging house by-law was a
recent one and that the council had apparently approved the use of the
cookers for some years. That letter was either disingenuous or grossly
careless. If he knew the real facts about the date and contents of the
by-law and the council's previous correspondence with the female defen-
dant (Exhibit P.21), it was disingenuous. If he did not know these things
and simply relied on what the female defendant had told him, he was
grossly careless in not making independent inquiries from the council.
By that stage, on his own story, he must have known that the female
defendant had concealed vital matters from the plaintiff and from him
and that, therefore, it was not safe to rely on her unsupported version
of anything. I think he was inhibited by the knowledge that he had been
acting for her as well as for the plaintiff and, perhaps, by a fear that even
at that stage the whole transaction might be upset and the commission
become repayable. I think he tried to gloss things over in breach of the
duty the defendant company owed to the plaintiff at least as her agent
and the paid collector of her rents.
All this, of course, does not mean that I can impose some sort of fine
on the defendant company to mark my disapproVal of Coombe's conduct.
But it does mean, in my view, that I am justified in holding that the defen-
dant company to a large extent brought this litigation upon itself. It had
so enmeshed itself in conflicting obligations and ambiguous behaviour that
it is not surprising that the plaintiff's advisers decided to join it in this
action. It could not have acted as it did, they might not unreasonably have
thought, unless it had been implicated in the original misrepresentations.
I have found that it has not been proved that Coombe knew before the
settlement what the female defendant knew and hence I have absolved
the defendant company from the charge of fraudulent misrepresentation:
but, as I said during the argument, its position to my mind bears some
analogy to that of the co-respondent who is absolved from a charge of
adultery but deprived of his costs because of his indiscretions.
In short, I think: there are here circumstances leading up to and con-
nected with the litigation sufficient to justify me in exercising my discretion
adversely to the defendant company. Mr. Legoe argued that a charge of
fraud unsustained always carries costs against the unsuccessful party and
he cited Bramley v. Parrott(24). But even in cases of unsuccessful charges
of fraud the judicial discretion conferred on the court by Order 65, rule 1
still exists. The classic case of Donald Campbell & Co. v. Pollak(2S) above
referred to was itself a case of an unsuccessful charge, if not of fraud in
the strict sense, of something very like it, namely an allegation of a
secret profit made by an employee. Lord Atkinson said in that case, at
p.823:-
"There is no such principle or rule of practice that, if a defendant
accused of fraud obtains from either a judge or jury a decision that ,he

(24) (1881) 7 V.L.R. (E.) 172, at p. 177.

(25) [1927] A.C. 732.
1972.] JENNINGS v, ZILAHI·KISS (Bray C.L) 521

is not guilty of the fraud, he is necessarily entitled to his costs, whatever

his conduct in other respects, and cannot be justly deprived of them."
Accordingly I am not prepared to award the defendant company its
general costs of the action. There are some specific issues, however, on
which it may stand in a different position. The claim against it for breach
of warranty added by amendment at the hearing had, in my view, no
prospect of success, since the company was not a party to the contract of
sale; but the additional costs caused by this are, in my view, inconsider-
able. On the other hand, the claim for damages for breach of the contract
to perform the services of a solicitor stands on the same footing as the
claim for fraud. I found that contract proved but not the breach of it.
But, of course, if I had found that Coombe knew before the settlement
what the female defendant knew, I would have found a breach of it and
hence the considerations which have led to my refusal to award costs
in respect of the claim for fraud lead also to a refusal to award costs in
respect of that claim.
There remains, however, the question of value. Here I have found
against the figure propounded by the plaintiff's valuer, Mr. Fereday, and
in doing so I have been largely influenced by the evidence of Mr. Cuth-
bertson called by the defendant company, whose evidence, of course,
operated for the benefit of the personal defendants and, as it turned out,
was unnecessary for the defendant company. However, it was, of course,
pru<lent for the company to call evidence of value. I think the issue of
value severable from the other issues in the case and that the defendant
company should receive the costs of that issue. I have been supplied with
an analysis of the time occupied during the hearing in the examination
and cross-examination of each witness. I could pass to the taxing officer
the responsibility of apportioning the costs of this issue out of the general
costs of the action. I propose, however, to wield the broad axe. I propose
to allow the defendant company the qualifying fee and witness fee of Mr.
Cuthbertson as taxed and one-fifth of the remainder of its costs of the
action. For reasons to be given that order must be against the plaintift.
I might add that, apart from the considerations I have just mentioned,
even if I had decided to give the defendant company its general costs, I
would have made some sort of deduction in respect of various factual
issues on which it failed.
I turn now to the plaintiff's costs against the defendants Zilahi-Kiss.
In limine, Mr. Matheson, who appeared for them on the argument of this
question, contended that by reason of the provisions of s. 42 of the Local
and District Criminal Courts Act 1926-1971 the plaintiff should be
deprived of her costs. In its present form, as the result of the amendment
of 1969, that section provides that, with certain irrelevant exceptions,
when the plaintiff in the Supreme Court recovers in an action founded on
contract or quasi-contract a sum that does not exceed the amount of the
Local Court jurisdictional limit, or in an action founded on tort a sum
that does not exceed one-fifth of that amount, he shall receive no costs
unless the judge otherwise orders. Since the amendment of 1969 the Local
522 JENNINGS v. ZILAHI·KISS (Bray C.J.) [2 S.A.S.R.

Court jurisdictional limit has been $8,000 for present purposes. The
plaintiff here recovered $4,000. The section therefore, if it applies to this
action, would prevent the award of costs to the plaintiff unless I thought
it just otherwise to order, if the action is rightly to be regarded as founded
on contract or quasi-contract and not on tort.
I do not pause to consider this argument, though my prima facie opinion
is that the action is founded on tort, because I do not think that s. 42
in its present form applies to this action at all. Section 5a(3) of the
present Act provides that all actions commenced under the Supreme
Court Act as in force before the commencement of the amending Act of
1969 and pending or in progress on the date of such commencement shall
be continued, completed and enforced as if the amending Act had not
been enacted. The date of its commencement was 31st August, 1970. The
writ in the present action was issued on 11th December, 1967. The
action, therefore, is to be continued and completed without regard to the
Act of 1969. The limit of the Local Court jurisdiction under the previous
legislation was £1,250 or $2,500 and there can therefore be no question
of the application of s. 42, either in its present or its previous form.
Mr. Matheson then asked me in the exercise of my discretion to deprive
the plaintiff of the whole or some part of her costs on the grounds that
she could have applied to have had the action transferred into the Local
Court after the commencement of the Act of 1969. But at that time the
action was well advanced towards trial in this Court and I refuse to hold
that, exceptional cases possibly apart, it is right for a successful plaintiff
to be penalised because he did not take steps at a late stage to have
transferred into the Local Court an action which that court had no juris-
diction to entertain at the time the action was commenced.
I think the plaintiff must have her general costs against the personal
defendants; but there remain two questions, one, whether there should be
any deduction because of the additional costs incurred by the joinder of
the defendant company or for any other reason, and the other, whether
the personal defendants should be ordered to pay the costs I have allowed
to the defendant company, either by the making of a Bullock order
(Bullock v. The London General Omnibus Company(28», whereby the
unsuccessful defendant is ordered to pay the costs which the plaintiff bas
been ordered to pay the successful defendant, or a Sanderson order
(Sanderson v. Blyth Theatre Company(27» , whereby the unsuccessful
defendant is ordered to pay the costs of the successful defendant directly
to him and no order for those costs is made against the plaintiff. These
questions are, to some extent, intertwined.
In Hazell v. Parramatta City Council and Others (No. 2pS» Isaacs J.
said at p. 592, with reference to the making of a Bullock order:-
"It is common ground to both parties: (a) that the making of any
such order involves the exercise of a judicial discretion; (b) it must
(26) [1907J 1 K.B. 264.
(27) [1903] 2 K.B. 533, at p. 539.
(28) (968) 87 W.N. (N.S.W.) Pt. 1 590.
1972.] JENNINGS v. ZILAHI-KISS (Bray C.J.) 523

have been reasonable for the plaintiff to have joined both defendants
in the action; (C) it must be reasonable in all the circumstances for the
unsuccessful defendant to be required to bear the costs incurred by the
plaintiff against the successful defendant."
The discretion is undoubted. I think it was reasonable for the plaintiff
to have joined all the defendants but I doubt whether it would be reason-
able in all the circumstances for me to order the present defendants to
pay the costs incurred by the plaintiff to the defendant company. I do not
think Mr. and Mrs. Zilahi-Kiss are responsible for the joinder of the
defendant company. Mr. Cleland placed some reliance on their answer to
an interrogatory in which they said that the female defendant had informed
both the defendant company and the plaintiff that the premises were
registered as a lodging house. But this, in my opinion, refers to the alleged
conversation on the inspection between the female defendant, the plaintiff,
her husband and Coombe and, according to the female defendant, the
male defendant too. The plaintiff at all times denied that she had ever
been told this. I do not see why it should have been assumed that the
personal defendants were more reliable about what the defendant company
had been told than about what the plaintiff had been told. I think that
answer was an unsafe foundation on which to build an assumption that it
would be possible to prove through the personal defendants that Coombe
had at the relevant time knowledge of the registration as a lodging house.
It was obvious that the plaintiff would have to attack the credibility of the
female defendant where they were in opposition and it would not have
been safe to assume that, though unreliable as regards the plaintiff, she
was reliable as regards the defendant company.
In truth the case of the personal defendants was not that the company
was liable in fraud and they were not so liable, their case was that no one
was liable in fraud, that the female defendant had disclosed all the
relevant information to the plaintiff. It is true that in the box the female
defendant deposed to further conversations with Coombe at which the
plaintiff was not present, but the plaintiff could have known nothing of this
in advance. The personal defendants were not casting responsibility on
the company; they were denying the existence of any cause CJf action in
fraud against anyone, though I think that as a second string to their bow
they were hoping that if they were implicated the company could be
implicated too, possibly as a more attractive target financially. But their
primary case was not "The company is responsible and we are not", but
"No one is responsible, there is no cause of action".
Similarly the plaintiff was not in doubt as to whether the person respon-
sible was the defendant company or the personal defendants. On her own
story and the information she had, the personal defendants were undoub-
tedly responsible. She hoped to get a finding against the company also.
She knew she could prove a case against the female defendant from her
own evidence and the documents in the possession of the council and
probably the evidence of Tucker. She had no such assurance with regard
to Coombe.
524 JENNINGS v. ZILAHI·KISS (Bray C.J.) [2 S.A.S.R.

These, I agree, are not necessarily decisive considerations (Besterman

v. British Motor Cab Company Ltd.(2'J») , but they are important ones
(Mulready v. J. H. and W. Bell Ltd.(30), per Lord Goddard C.l. at p. 219).
They make me hesitate to cast the burden of the costs payable to the
defendant company on to the personal defendant. Conversely, however,
I do not feel inclined to reduce the plaintiff's costs, which I would have
done if I had made a Bullock order. The addition of the company did
undoubtedly protract the trial, but not, in my view, by so much as might
at first sight appear. Coombe would have been an essential witness,
probably for the plaintiff, even if the company had not been joined.
Evidence of value would have been necessary from the personal defendants
if Mr. Fereday's opinion that the property was not worth £12,000 even
as a complex of fiats was to be successfully attacked. The cross-examina-
tion and addresses might have been shortened but, apart from the claim
against the defendant company as a quasi-solicitor, most, if not all, of the
essential factual issues would have had to have been canvassed.
The plaintiff is sufficiently penalized for failing on the question of value
by the order I have made about the costs of the defendant company. On
the whole, I think justice will be done if I order the personal defendants
to pay the whole of the plaintiff's costs, but refrain from making any order
against them with regard to the costs of the defendant company. Nothing
I have said is meant to interfere with the normal discretion of the taxing
officer with regard to any particular item, either as to its reasonableness
or its quantum.
The orders therefore are -
1. I order that the plaintiff's costs of the action be taxed and paid by
the defendants Zilahi-Kiss.
2. I order that the costs of the defendant company be taxed and that
the plaintiff pay the qualifying fee and witness fee allowed in
respect of Mr. Cuthbertson and one-fifth of the remainder of the
bill.
Judgment for plaintiff against defen-
dants Mr. and Mrs. Zilahi-Kiss for
$4,000 with costs.
Claim against defendant company
dismissed. Costs of defendant company
to be taxed and plaintiff to pay quali-
fying fee and witness fee allowed in
respect of witness Cuthbertson and
one-fifth of remainder of bill.
Solicitor for plaintiff: Cleland, Teesdale Smith & Co.
Solicitors for defendants Mr. and Mrs. Zilahi-Kiss: Bonnin &: Partn~rs.
Solicitors for defendant company: Norman, Waterhouse & Mutton.

(29) [1914] 3 K.B. 181.

(30) [1953] 2 All E.R. 215.