| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : BGC CONSTRUCTION PTY LTD -v- ELVIDGE PTY LTD [2005] WADC 103 CORAM : COMMISSIONER KEEN HEARD : 30 MARCH 2005 DELIVERED : 9 JUNE 2005 FILE NO/S : CIV 1840 of 2001 BETWEEN : BGC CONSTRUCTION PTY LTD Plaintiff
AND
ELVIDGE PTY LTD
Defendant
Catchwords: Building contract - Performance of works - Practical completion - Deviation from approved plans - entitlement to payment - Variation - Duty of care - Mistake - Estoppel - Damages
Legislation: Evidence Act 1906
Local Government (Miscellaneous Provisions) Act 1960
Result: Judgment for the plaintiff
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Representation:
Counsel:
Plaintiff : Mr A D Throssell
Defendant : Mr M D Cuerden
Solicitors:
Plaintiff : Hotchkin Hanly
Defendant : Holborn Lenhoff Massey
Case(s) referred to in judgment(s):
Bolton v Mahadeva [1972] 1 WLR 1009
Bonham Carter v Hyde Park Hotel Ltd (1948) 64 TLR 177
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 535
Equuscorp Pty Ltd v Glengallan Investments Pty Ltd; Equuscorp Pty Ltd v Codd; Equusco [2004] HCA 55 at 33
Hoenig v Isaacs [1952] 2 All ER 176
Michael Kellaway International Pty Ltd v Shark Bay Airport Pty Ltd FCt of SCt of WA Library No 970614; 13 November 1997
Nene Housing Society Limited v National Westminster Bank Limited [1980] 16 BLR 22 at 33
Osman v J Ralph Moss [1970] 1 Lloyd's Rep 331
Phillips v Ellison Bros Pty Ltd (1941) 65 CLR 221
Case(s) also cited:
Beneficial Finance Corp Limited v Multiplex Constructions Pty Ltd 91995) 36 NSWLR 51
BP Refinery (Western Port) v Hastings Shire Council (1997) 180 CLR 266
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
CSS Investments Pty Ltd v Lopiron Pty Ltd (1987) 76 ALR 463
Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26
Mills v Heuston (1909) 9 SR (NSW) 463
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New Zealand Shipping Co v Societe de Ateliers et Chantiers de France [1919] AC 1
Photo Production Ltd v Securicor Transport Ltd [1980] AC 827
Plumor Pty Ltd v Handley (1996) 41 NSWLR 30
Ritz Hotel Ltd v Charles of the Ritz Ltd (No 15 and 16) (1987) 14 NSWLR 107
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Introduction 1 This is claim by the plaintiff for the balance said to be due under a building contract for the construction of a house at Lot 160 Battery Road Parkerville. The plaintiff, as builder, claims that the house has reached practical completion and seeks the balance due under the contract in the sum of $37,438 plus interest under the contract. 2 The defendant denies that the construction of the house has reached practical completion on the grounds that the house has not been built according to the contract and in accordance with the drawings and approved plans. The defendant further claims that progress claims made to date under the contract have been made under a mistake, and seeks, by counterclaim, a refund of those payments. Further, the defendant seeks reimbursement of a fine and costs imposed upon the defendant for failure to comply with a notice issued by the relevant Shire under the Local Government (Miscellaneous Provisions) Act 1960 ("LGA").
Background 3 The defendant was the owner of two adjacent blocks of land, being Lots 159 and 160 Battery Road Parkerville. 4 On 13 January 1999 the plaintiff and defendant entered into a building contract ("the contract") for the construction of a house on Lot 160 for the total sum of $67,650. The contract price was to be paid by way of progress payments set out in the contract. The contract provided for interest on any outstanding progress payment at the rate of 20 per cent per annum. Variations were made to the contract resulting in an increase in the price of the house by $4,378. 5 It is common ground that under the contract the defendant was to undertake the site works which included cutting and preparation of the ground, and the forming of the sand pad prior to the commencement of construction of the works under the contract. 6 It is also common ground that the original drawings in respect of the construction provided for a sand pad level for the building at 14.5 metres. Further, the set back of the building from the front boundary of the property was to be 12 metres. 7 It seems that by reason of certain difficulties the house could not be constructed at the set back at 12 metres from the front boundary but had to
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have a reduced set back. Further, at the same time a retaining wall between Lot 160 and Lot 159, originally noted to be 2.2 metres high, was be reduced to 1.2 metres and the sand pad level on Lot 160 reduced to 13.5 metres. 8 It seems that amended plans were lodged with the Mundaring Shire Council (the Shire) and approved by it, showing the reduced set back to seven metres but not for reduction in the sand pad level to 13.5 metres. 9 It is common ground that the defendant commenced the site works through its contractor Christopher Allan Mitchell and in doing those site works cut the land to the 13.5 metres level. 10 That reduction in the site level brought about a response from the Shire on 6 May 1999 requiring the plaintiff to secure the site and make it safe and requesting that no further works proceed on the site until a resolution could be found as to the retaining of the earthworks on Lot 160 Battery Road. The cut to 13.5 metres had resulted in a "cliff" between Lots 160 and 161 (on the eastern side of Lot 160) of approximately four metres. 11 Subsequently, the sand pad was prepared and compacted, and the plaintiff commenced work in or about October 1999 and brought the building to a stage of completion in May 2000. Apart from two minor items noted on an inspection for the purposes of establishing practical completion, there was and is no complaint by the defendant that the building is otherwise than of a good standard. 12 The reduction in the sand pad level was not the subject of any approval by the Shire and by a notice pursuant to s 401(1)(b) LGA (served upon the defendant), the Shire required the defendant to remove the dwelling so as to remove the cause of the complaint being the departure from the approved plans and specifications. The defendant appealed to the Minister for Local Government. This appeal was dismissed and the defendant was subsequently prosecuted in the Court of Petty Sessions at Midland for failure to comply with the notice and fined $2,000 and ordered to pay the Shire's costs in the sum of $5,065. 13 The house has not been demolished but retaining on the eastern boundary, to the satisfaction of the Shire, has taken place and the Shire has not insisted upon demolition of the house. 14 The defendant has not taken possession of the house.
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The claim and counterclaim
15 As mentioned above, the plaintiff's claim is for the outstanding progress payments and interest thereon under the contract. That claim was made on the basis that practical completion had been achieved on or about 8 June 2000. 16 The defence and counterclaim alleges that the express terms of the contract included the completion of the works by the plaintiff in accordance with the contract and the drawings, plans and specifications. It was also alleged by the defendant that the contract contained certain implied terms that the plaintiff would comply with any direction or requirement of the Shire but that allegation was abandoned at trial. 17 The defendant alleges that at the practical completion inspection on 12 May 2000 there was an agreement that practical completion would not occur until the plaintiff had constructed a retaining wall on the eastern boundary of the land to the satisfaction of the Shire. 18 The defendant denies that the works were practically complete on 8 June 2000 for a number of reasons but principally by reason of the building works having been carried out at a level of 13.5 metres in breach of the terms of the building contract. It is said that that failure to carry out the works in accordance with the building contract also meant that the plaintiff had failed to carry out the works in accordance with the building licence. That failure to carry out the works in accordance with the building contract and the contract documents lead to a failure to achieve practical completion. 19 There is no dispute on the pleadings and as acknowledged at trial that the amount claimed by the plaintiff was correctly calculated in the sum of $37,438. 20 The defendant counterclaimed in respect to loss and damage arising out of the breach of contract alleged on the part of the plaintiff. That claim related to the notice served by the Shire and the subsequent construction of the retaining wall on the eastern side. It is pleaded that that was provided at a cost of $23,850 comprising $12,250 paid to the engineer and $11,600 to the contractor carrying out the work. That retaining wall was built in March 2004. 21 Further losses are claimed being the fine and costs ordered to be paid in the Court of Petty Sessions.
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22 The defendant also pleaded a duty of care on the part of the plaintiff to take reasonable care to ensure that the land had been levelled to 14.5 metres before commencing to carry out of the works. The defendant pleaded that in breach of that duty the plaintiff carried out the works to a level of 13.5 metres and as a result thereof, the defendant suffered the loss and damage mentioned above.
23 The defendant further alleged that by reason of the breach of contract on the part of the plaintiff, the plaintiff was not entitled to payment of the progress payments. It was alleged that those progress payments had been made under a mistake of fact, alternatively a mistake of law, namely that the plaintiff had been carrying out the works in accordance with the building contract and was thereby entitled to the progress payments. In the alternative to that, the defendant says there has been a total failure of consideration in respect of those progress payments. The defendant claims repayment of those progress payments. 24 In addition to the foregoing, the defendant alleges that, practical completion not having been achieved the defendant is entitled to liquidated damages under the contract at the rate of $30 per day from 3 May 2000 until judgment. 25 A further claim was made in respect of the alleged battering of the eastern boundary by the plaintiff, and in respect of the defendant's liability to the proprietor of the neighbouring property. That claim was abandoned at trial. 26 Further pleadings were received by way of reply and defence to counterclaim and by way of rejoinder to the reply. It is not necessary for me for the purposes of these reasons to go into the detail of those pleadings save to say that the plaintiff's position was that it was the defendant's responsibility to carry out the construction of the retaining wall to the eastern boundary, and to apply for variation of the approved plans. Amongst other things it was said that if the works were not practically complete by virtue of the house being built at a level of 13.5 metres, or that level not having been approved, that arose by virtue of the acts or omission of the defendant, and it would be unconscionable for the defendant to resile from its conduct in permitting the plaintiff to carry out the works at the lower level. 27 Questions of estoppel and/or waiver are raised by the defendant against the plaintiff in the defendant's rejoinder. The estoppel was said to prevent the plaintiff relying on the deemed practical completion arising by
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virtue of cl 10(e) of the building contract for a number of reasons but including an allegation that at a site meeting on 23 June 1999 the plaintiff or its representative, a Mr Noon indicated to the defendant's representatives, Mr and Mrs Black, that "it looks as if we are going to do the wall". It is alleged that constituted a representation that the plaintiff would carry out the necessary works to retain the eastern boundary of the land. It is said that, amongst other things, the plaintiff having commenced the works, the defendant was thereafter unable to redo the site works at the sand pad level of 14.5 metres and lost the opportunity to do so. 28 The alternative claim that is put is that the plaintiff waived its right to rely on cl 10(e) of the contract of a deemed practical completion.
The evidence 29 The plaintiff's case is simple and in many material particulars not challenged. The bulk of the challenge to the plaintiff's right to claim the balance of the contract sum comes from the pleaded matters set out by the defendant as set out above. Accordingly, for the purposes of these reasons it is appropriate for me to consider first the evidence led on behalf of the defendant.
The defendant's evidence 30 The directors of the defendant company were Mr Alan ElvidgeBlack and his wife Merle Lillian Black. Mr Black signed a statement of his evidence on 22 July 2002. He died on 23 April 2004, and I admitted his statement into evidence subject to certain objections pursuant to s 79C Evidence Act 1906. Apart from that statement I received oral evidence from Mrs Black. 31 The evidence of Mr Black, as evidenced by his statement, revealed that prior to his death he worked in real estate. In cross-examination Mrs Black accepted that he was an experienced real estate agent who had been involved in a number of developments with Mrs Black. 32 Having acquired Lots 159 and 160 Battery Road Parkerville in 1995 or 1996, the defendant, with the intention of developing that land by building houses on the lots came to inspect a display home of the plaintiff. Mr and Mrs Black met with Mr Brandenberg of the plaintiff company to discuss the development.
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33 According to Mr Black, Mr Brandenberg advised that the plaintiff would draw all plans and site plans and that when the defendant carried out the site works the plaintiff would not take on the site until it complied with all shire requirements. A contract was signed by Mr and Mrs Black on behalf of the defendant on 30 October 1998 for the erection of a single storey residence on Lot 160 for the sum of $67,650. According to Mr Black, the site works were to be carried out by the defendant, and a contract particular sheet executed on the same day showed that the variations to this style of house, Angelique, were to be the same as for Lot 159.
34 Mr Black's evidence was that Homestyle drew the plans and they were told by Mr Brandenberg that the plaintiff would use their engineers and take responsibility to make sure that everything was all right before the plaintiff took over the site. According to Mr Black's statement, Mr and Mrs Black relied upon the plaintiff's expertise in drawing the plans. 35 Mr Black's evidence continued to the effect that in about December 1998 plans were lodged with the Shire and he contacted a Mr Chris Mitchell of Chris Mitchell Earthworks regarding the site works and obtained and accepted a quotation in respect thereof. 36 According to Mr Black in late December 1998 it became apparent that the plans that had been lodged with the Shire had omitted to show a shed on the adjoining Lot 159 which somehow might affect the development on Lot 160, and it also seemed that the septic system on Lot 160 would not fit in under the current plans. According to Mr Black he discussed the same with a Mr Watson at the Shire and received advice to lodge new plans showing the reduced set back from the front boundary. He subsequently met Mr Watson when there was a further discussion regarding the reduced set backs, and also some discussion about the reduction of the retaining wall between Lots 159 and 160 from 2.2 metres to 1.2 metres. According to Mr Black that reduction in the height of the retaining wall also meant that the floor level on Lot 160 could be reduced to 13.5 metres from the 14.5 metres shown on the plans. According to Mr Black he was advised to send plans showing the alterations to the planning department and when the set backs were approved the level of the sand pad would be picked up, as would the height of the retaining wall.
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37 Mr Black then altered the plans by inserting "13.5" and deleting "14.5" as to the sand pad level and noting the reduced height of the retaining wall.
38 It seems common ground that a variation order No 47205 was prepared by the plaintiff in respect of the re-positioning of the house on the block, and Mr Black's evidence was that he advised the plaintiff of the new floor level by noting on that variation order that application has been made to the Shire to reduce the original set backs and that the sand pad level on Lot 160 was reduced to 13.5 metres. 39 Thereafter Mr Black wrote to the Shire on 23 December 1998 concerning the reduced set backs for both lots, and purported to enclose a plan showing the reduced set backs, and sought approval. The letter makes no reference to the reduction in the height of the sand pad, nor the retaining wall. 40 Thereafter Mr Black contacted Structerre Engineers (Structerre) to discuss the reduction in the floor level to 13.5 metres and a reduction in the retaining wall. According to his evidence the indication he received was that there would be no problem in so doing. 41 Thereafter Mr Black had the site works carried out by Mr Mitchell and the sand pad level cut to 13.5 metres. According to his evidence, once that was done he was "astounded" at the deepness and depth of the cut to the eastern boundary of the property. It had created what he described as a virtual cliff face of four metres. He then rang Mr Miles Noon, a supervisor for the plaintiff and, according to Mr Black, said that they had "one hell of a problem out here". According to Mr Black, Mr Noon said they would have engineers out there to have a look at the site. 42 Mr Black was subsequently advised by Mr Smith from the Shire that the reduction to 13.5 metres had never been approved by the Shire. According to Mr Black he was "dumbfounded" because according to him, he had made a ll the arrangements for it to be at 13.5 metres and had done so on the basis that the Shire had advised him to send the plans in at that level. 43 This departure from the approved plans brought about a letter from the Shire to the plaintiff, dated 6 May 1999 requiring the plaintiff builder to secure the site and make it safe, and advising that no further works were to proceed until a resolution could be found as to the retaining of the earthworks on the lot. Mr Black received a copy of that letter from the
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plaintiff. Mr Black was concerned and wrote to the Shire on 2 June 1999 referring to his discussions with the engineer from Structerre and his meetings with the Shire and raising some concerns about what had occurred, and who might be responsible for the additional costs that would be incurred. 44 According to Mr Black the cut on the eastern side was an eyesore, and he and his wife contacted a Mr Sheardown with a view to landscaping the area. Mr Sheardown brought some rocks to the site in about May, but any further works were put on hold at the same time as Mr Black had been advised by the Shire that no work was to be done on the embankment until plans and specifications for retaining had been lodged with the Shire. Mr Black then contacted a firm, Compile Australia, to provide a quotation as to what had to be done, and a possible cost. He received a quotation dated 10 June 1999 in the sum of $14,700. 45 After receiving that quotation Mr Black made an appointment to see Mr Noon of the plaintiff company, on site on 16 June 1999. According to Mr Black he advised Mr Noon that the defendant had been let down badly by the plaintiff's plan drawers and site engineers, and by not advising of the need for an expensive retaining wall. According to Mr Black, he told Mr Noon that had he known of this when the plans were drawn up, he would not have proceeded. 46 A subsequent meeting was arranged at the site on 23 June 1999 which was attended by Mr Noon, Mr Ray Holland from the plaintiff, and Mr Gurvais Purich of Structerre, Mr Black and his wife. According to Mr Black he held the plaintiff and the Shire responsible for what had occurred. His evidence was that at the conclusion of the meeting, Mr Noon came over to him and his wife and said "it looks as if we are going to do the wall". Mr Black's evidence was that he was then satisfied and operated on the assumption that the problem would be sorted out between the plaintiff and the Shire. 47 Thereafter, further communications took place between Mr Black and the Shire, and on 4 August 1999 he received a telephone call from Mr Noon to the effect that the batter on Lot 160 should have been done by then. His response was that he didn't know anything about it. Subsequently on 9 August 1999 Mr Noon again telephoned Mr Black and said that he had had a meeting with Mr Mitchell and to advise him what to do with the batter.
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48 On 29 September 1999 Mr Black wrote to Mr Mitchell setting out a chronology of events, in particular delays in the works and requiring Mr Mitchell to proceed and to finish the job by 13 October 1999 "ready for the builders to start".
49 It seems that those works were done because according to the evidence of Mr Black, Structerre went to the site and carried out compaction tests on the sand pad and provided a compaction certificate dated 6 October 1999. 50 According to Mr Black, at that stage he believed everything had been resolved with the Shire and the building could proceed. He assumed that everything had been sorted out between the Shire and the plaintiff as to what needed to be done to the boundary wall. According to his evidence he was happy and the building commenced in October 1999, and it was his understanding that it would not commence until the Shire and the plaintiff had resolved the Shire's concerns as to the floor level and the retention of the eastern boundary. 51 Subsequently Mr Black received from the Shire a notice dated 10 March 2000 issued pursuant to LGA, s 401, requiring the removal of the dwelling so as to remove the cause of the objection that the finished floor level of the dwelling was not in compliance with the plans and specifications approved by the Shire. The notice also noted that the batter on the eastern boundary constituted a safety hazard. Mr Black appealed the notice to the Minister for Local Government. This appeal was unsuccessful. 52 The next contact that Mr Black had with the plaintiff was when he and his wife met Mr Wally Timms on site on 12 May 2000 for the purposes of a practical completion inspection. According to him, he advised Mr Timms that the defendant would not be signing anything on Lot 160 until the wall (the retaining wall) had been done on the eastern boundary. According to Mr Black, Mr Timms said that he didn't think that they would have to wait long as he understood that it had all been sorted out. The record of practical completion inspection contained the words "no second signing until walls are done". According to Mr Black that is a reference to the eastern boundary. 53 As I have noted above, objection was taken to parts of Mr Black's statement and his evidence concluded with a statement that he was unable to get inside the house as he did not have a key and was unable to obtain the keys because otherwise he would be deemed to have taken possession.
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54 Having accepted this statement into evidence under s 79(C) of the Evidence Act, it is necessary for me to try to estimate the weight to be attached to the statement, and in estimating the weight guidance is given by s 79(D) of that Act. Before proceeding with that exercise it is relevant that I should first consider the evidence of Mrs Black.
55 Mrs Black's evidence was taken by way of a signed statement dated 9 March 2005 received into evidence. Much of that evidence is a corroboration of the statement of Mr Black and in very similar terms. However, parts of the statement were amplified by questions in examination-in-chief. In relation to the meeting on 23 June 1999, her evidence was that she and her husband had told the plaintiff words to the effect "you and the Shire are responsible for the fiasco, and as far as we're concerned, you can fix it up, and we are not going to take any responsibility". She continued that she said "you are responsible for the oversight in not noting a need for a retaining wall and you can sort the matter out yourselves". She further said that Noon, Purich and Holland were discussing things amongst themselves, but it was while they were having those discussions that Mr Noon came over and spoke to Mr and Mrs Black and said "it looks as if we're going to do the wall". 56 Mrs Black confirmed that notices had been issued by the Shire in respect of the building and that the defendant was prosecuted in respect of the same in the Court of Petty Sessions at Midland on 14 October 2003. Sentencing was deferred pending resolution in relation to the construction of the retaining wall. In February 2003, Mr and Mrs Black had a meeting on site with the Shire and an engineer, Mr van der Meer, the plaintiff and the solicitors for the parties. The Shire was apparently content with the proposals of Mr van der Meer who was subsequently contracted to provide design and project management for the retaining wall According to Mrs Black, his fee for that was $12,250, and the defendant contracted with Keytown Constructions to construct the retaining wall for a further sum of $11,600 and she produced invoices from those persons in those amounts. After the wall was retained the defendant was sentenced on 24 March 2004. A fine of $2,500 was imposed with costs of $5,065.20. 57 In cross-examination Mrs Black could not recall if she had read her husband's statement before preparing her own. She was further somewhat vague as to how her own statement was prepared. 58 Mrs Black was cross-examined at length about the site works and what advice was taken and what dealings she had had with Structerre.
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According to her the only time that they had telephoned Structerre was to see if the 13.5 level would fit in with the contours, and that was at the Shire's instigation. She did not recall meeting Mr Purich from Structerre at the site, and is adamant that Mr Purich had not come to site to give advice on possible retaining options for the eastern cut. She is adamant that she had never met Mr Purich. She denied receiving any advice from Structerre in a letter of 25 May 1999 addressed to her husband and following an inspection on 20 May 1999. She further denied that at such a meeting her husband was keen to look at the most economically viable solutions to keep the costs of retaining down. 59 She was also asked whether or not she had been advised by her husband that he had met Mr Purich on site to which she responded, not as far as she could remember. 60 Under cross-examination she accepted that she assisted her husband to draft the letter that he wrote to the Shire on 20 May 1999 (Exhibit 15). Assessment of Mr Black's evidence 61 I have noted that Mrs Black's evidence was generally a corroboration of the evidence given by her husband in his statement. As I have noted, she was vague as to how her own statement was prepared, and in what circumstances. I was left in little doubt, as could be expected in a case such as this, that over the years and prior to his death, Mr Black discussed these events with his wife, and so to some degree they would have no doubt formed a common picture or view of those events in their minds. Accordingly, I cannot conclude too much from the fact that their evidence is similar in many respects. Further, one might also expect that similarity in the evidence given the large volume of documents that was produced in this matter which of themselves tend to set out a history. 62 Nevertheless, I am required to consider the weight to be given to Mr Black's statement. The statement was made on 22 July 2002. Accordingly, it is a statement that was made at a time when the building of the house had been completed and prior to the prosecution of the defendant coming on for hearing in the Court of Petty Sessions in Midland and at a time when this matter had been entered for trial. Thus it cannot be said that the statement has been made contemporaneously with the occurrence or existence of all of the facts stated in the statement, it is a statement that has been made during the period when there was a continuous unfolding of the events concerning the house.
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63 Apart from whether or not Mr Black would have some incentive to misrepresent the facts, being one of the matters referred to in s 79D of the Evidence Act none of the other matters referred to in that section appear to me to be relevant in this matter.
64 In the circumstances I find that Mr Black, being so closely linked to the defendant, was likely to be self-serving in his statement. It is not as if he is an entirely independent witness. Accordingly, in my opinion, I must test and evaluate his evidence in the light of the documents that existed at the material time, and the other evidence received.
Plaintiff's evidence
65 Mr Brandenburg was the sales consultant for the plaintiff. His evidence was to the effect that he completed the building contract and that the defendant was to carry out the site works. He had some general discussion with the defendant about what was entailed, but other than that he had very little else to do with Mr and Mrs Black. He had no particular reason to recall this matter. However, apart from confirming that the plaintiff would prepare the sand pad, he did not recall discussing with Mr and Mrs Black that the plaintiff would be using their own engineers in the context as suggest by Mr and Mrs Black. Generally speaking, I formed the impression that Mr Brandenburg was genuinely trying to do his best to recall the events leading up to the contract, but at the end of the day his evidence did not take the matter very much further.
66 Mr Timms was the maintenance supervisor employed by the plaintiff and attended the practical completion inspection on 12 May 2000. From that inspection he noted the un-retained eastern boundary and confirmed that Mr Black had said words to the effect that "Housing Innovations" should have put a limestone retaining wall there. He agreed he recorded on the practical completion inspection certificate the words "no second signing until walls are done" and said that he did this to record the fact that Mr Black would not do a second signing of the record until the retaining wall had been constructed. He advised Mr Black that he would go back to the office and check. 67 Upon anybody's evidence Mr Timms appears to have only become involved at this stage of the construction. According to his evidence after the inspection he spoke to Mr Holland, the construction manager, and advised him that the two items that were noted on practical completion
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had been attended to, but the owner was not going to sign off until the retaining wall issue was resolved. 68 It was put to Mr Timms in cross-examination that he had said at that meeting that he didn't think that the defendants would have to wait long as he understood it was being sorted out. He denied making any such statement. 69 Whilst there may be some discrepancy between what Mr Timms relates of the conversation on that day and what Mr and Mrs Black say occurred, the meeting confirms that, at least at that stage, Mr Black was requiring some resolution of the problem with the retaining wall from the plaintiff. 70 I formed the view that Mr Timms was an honest witness who again was genuinely attempting to recall the events as accurately as possible.
71 Mr Noon was the site supervisor for the plaintiff at the material time. His evidence was that he would supervise the work and if there were problems report the matter to either Terry Cassells or Ray Holland. He had no authority to spend money on behalf of the plaintiff or to have any additional works carried out without a variation order being signed. 72 Mr Noon did not recall meeting the earth worker, Mr Mitchell on this particular site, and he did not engage Mr Mitchell to do any site works or give instructions to carry out any site works, or as to how any earth works were to be done. 73 When reviewing the file for the job he inspected the building licence that had been issued and noticed that the plans received by the plaintiff from the Shire were not signed. Those plans had several hand written amendments in black pen, which was unusual, as, according to Mr Noon, amendments to plans were usually made in red. 74 Mr Noon subsequently received a facsimile transmission from the Shire dated 6 May 1999 (Exhibit 10) in which the plaintiff was instructed not to carry out any further works. He said that he sent a copy to Mr Black. He subsequently received another facsimile transmission from the Shire dated 14 May 1999 (Exhibit 12) in relation to what was described as the excessive excavation that had occurred on site and the need for retention. The letter requested the submission of amended plans, engineering report and certification. Various information was provided
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by the Shire in relation to such matters, and according to Mr Noon, he sent all of that information on to Mr Black. 75 I have noted that Mr Black's evidence was that he obtained a quotation from Compile Australia dated 10 June 1999 in relation to the retaining of the wall. In his statement he said that he telephoned and arranged to meet Mr Noon on the site on 16 June 1999. Mr Noon gave evidence that he did not recall any such meeting, nor meeting Mr Black on site by himself or that he recalled the conversation about the need for an expensive retaining wall. 76 Under cross-examination, Mr Noon accepted that the plaintiff had prepared the house plans for the house, and that those plans had been approved by the Shire on 23 February 1999. He also accepted that the plans that he had with the hand written changes were not approved plans. He never saw any approved plans incorporating the changes that were shown in handwriting on the earlier plans, and by May 1999 he knew that the plans which he had were not approved. 77 According to Mr Noon's evidence he advised Mr Holland that there was a problem, and this occurred before the Shire communicated the problem to the plaintiff in its facsimile transmission of 6 May 1999. Mr Noon accepted that after being alerted to the fact that the plan was not approved he did not communicate with the Shire to locate an approved plan, or ask anybody else to do so. 78 Mr Noon was cross-examined about the problems with the cut to the eastern boundary. Before becoming aware of the problem by reason of the facsimile transmission from the Shire of 6 May 1999, he had prepared a variation order in respect of Lot 160 Battery Road being variation order No 48723 (Exhibit 49). It was pointed out to Mr Noon that the document referred to "retaining wall by owner". According to Mr Noon that was a reference to all retaining walls. However, it was pointed out to him that a similar variation order in respect of Lot 159 (Exhibit 54) referred to retaining walls in the plural in circumstances where there was a retaining wall on the western boundary of Lot 159 and the common retaining wall between Lots 159 and 160. Mr Noon did not accept that variation order No 48723 by reference the words retaining wall in the singular necessarily meant that it did not include all retaining walls. At the time of preparing that document Mr Noon was not aware of any problems with the cut on the eastern side.
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79 It was Mr Noon's evidence, in cross-examination, that the plaintiff had absolutely nothing to do with the site works or retention walls, and would not have become involved in the process.
80 Mr Noon accepted that he received a subsequent letter from the Shire dated 14 May 1999 (Exhibit 12) which he read. The letter referred to a discussion between the Shire's building surveyor, Mr Smith and Mr Noon, about the excessive excavation that had taken place and the need for retention. Mr Noon had no recollection of that phone call. He acknowledged that he would have read the letter which advised that the finished floor levels were not approved and required approval, and the steps that needed to be taken in order to obtain approval. 81 Mr Noon did not recall having the discussion with Mr Black at which Mr Black said there was "one hell of a problem out here", nor did he recall saying he would have engineers out there to have a look at it. 82 The meeting of 23 June 1999 did take place, but by that stage, according to Mr Noon, the plaintiff had not yet taken possession of the site. 83 Mr Noon was cross-examined as to why he involved Mr Purich, the engineer at this stage. It was suggested to him he did so because the plaintiff was becoming involved in those site works. He denied any such suggestion and became evasive as to why Mr Purich was involved at that stage, particularly where, according to Mr Noon, Homestyle wasn't doing the site works. He also denied the earlier meeting described by Mr Black occurring on 16 June 1999. 84 At the meeting of 23 June 1999, Mr Noon denied walking over to Mr and Mrs Black and saying the words "it looks as if we are going to do the wall". Generally Mr Noon's recollection of that meeting is that very little was said and done, and indeed Mr Purich did not give any advice. 85 As to Mr Black's allegation that he spoke to Mr Noon on 4 August 1999 at which Mr Noon is said to have remarked that the batter on Lot 160 should have been done by then, and that it could be left to him, he did not recall any such discussion. Further, he denied speaking to Mr Mitchell, the earth worker, about the battering to the eastern boundary. 86 Subsequently he recalled seeing a report from Mr Purich addressed to the plaintiff, dated 6 September 1999 (Exhibit 19) as to which he said he just put it in the file and had not instigated the letter. He said that he had no idea why Mr Purich had produced that report. It was suggested to
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him that he had in fact had a meeting with Mr Mitchell prior to 6 September 1999 that Mr Mitchell had required something from the engineer, and the plaintiff took it upon itself to obtain advice from Mr Purich. Mr Noon denied that that was so. 87 Generally I formed the view that much of the evidence of Mr Noon was a reconstruction of events rather than a genuine recollection. I formed this view by his manner of answering questions as to what "would" have occurred, and the general lack of recollection of a large number of events. For example in his evidence he said that he recalled speaking to both Ray Holland and Allan Black in the same words to the effect that the plan that the plaintiff had was not signed and then followed: "Do you actually recall having that conversation with Mr Black? … not a hundred per cent but I would've called him to say, you know … Could I suggest to you that what you say in paragraph 14 is in effect an assumption that you would have spoken to Mr Black? … yes. Because in your mind it's likely you would have done so? … yes that's correct." 88 Although some of Mr Noon's evidence is acceptable in as much as it is consistent with the contents of contemporaneous documents, on the whole, I found his evidence vague and inconsistent with other witnesses, particularly Mr Purich and Mr Mitchell whose evidence I deal with below. 89 Mr Purich is an engineer providing engineering services under the name of Structerre Consulting Engineers. 90 Mr Purich gave evidence that about 26 February 1998 Structerre inspected Lot 160 Battery Road for the purposes of assessing the footing requirements for a house to be built on the site. It produced a certificate of inspection of that date, and he confirmed that the signature on the certificate was that of his assistant Mr Chris Pirie. 91 Mr Purich denied that he was the engineer at Structerre with whom Mr Black said that he had a discussion about the reduction in the floor levels to 13.5 metres.
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92 By reference to a series of business documents, Mr Purich gave evidence that the records of the business of Structerre show that Mr Black requested Structerre to attend at the site for the purpose of a "retaining wall inspection". Those records show that that inspection took place on 20 May 1999 and was the subject of a short report from Structerre dated 25 May 1999 (Exhibit 61) in which it was noted that the soil would need to be retained in accordance with certain details said to be attached to that letter. Structerre sent an invoice on 31 May 1999 to Mr Black in respect of that inspection.
93 Subsequently around mid June 1999, Mr Purich was contacted by Mr Ray Holland, construction manager for the plaintiff, who said that he needed him to attend a meeting on site to discuss the batter to the eastern boundary. He attended the meeting on 23 June 1999 with Holland, Noon and Mr and Mrs Black. According to Mr Purich he advised Mr Black to put up a retaining wall. He was fairly certain that he directed the words to Mr Black because it was his understanding at the time that Mr Black was responsible for the site works. His recollection was that Mr Black responded with words to the effect "we're not doing anything, it's your fault" and "not my problem; your problem". 94 Mr Purich sent a letter dated 29 June 1999 (Exhibit 17) to the plaintiff setting out his findings and recommendations following his inspection on 23 June 1999. He said that the purpose of attending the meeting was to prepare that report, and that he had been asked to attend the meeting by Mr Holland. In that report he noted that: "…retaining was always going to be required as part of land scaping by the home owner, and the action of battering the top of the bank down has, in fact, reduced the retaining requirement to approximately 2,000 mm, as opposed to the full height of 3,000 mm, had the pad been constructed to the higher desired level." 95 By letter dated 6 September 1999 (Exhibit 19) to the plaintiff, Mr Purich provided advice on how to carry out the batter. 96 On 6 October 1999 Structerre produced a compaction test certificate in respect of the sand pad (part Exhibit 21). That certificate notes the client as Chris E/M which I deduced to be Chris Mitchell Earthworks. It appears that that certificate was sent by Chris Mitchell Earthworks to Mr Black.
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97 Subsequently on 17 May 2000, Mr Purich was requested by Mr Holland to attend the site and inspect the batter on the eastern boundary. This was after the practical completion inspection carried out by Mr Timms. Mr Purich caused a report dated 22 May 2000 to be prepared and sent to the plaintiff (Exhibit 63). In that report Mr Purich noted that:
"This assessment is subject to the batter being stabilised and as earthworks were performed by the owner separately to the building contract, it would be more appropriate for the owner to seek his own professional engineering advice on how the batter should be stabilised." 98 Mr Purich's evidence then moved to June 2001 when he was requested by Mr Holland to prepare a detail of a limestone retaining wall that would be suitable to retain the batter on the eastern boundary. This Structerre did and sent to the plaintiff on 13 June 2001 (Exhibit 64). It appears from his evidence that Mr Holland was not satisfied with that detail and a further detail was sent on 19 June 2001 (Exhibit 65). There is some divergence between the evidence of Mr Purich and Mr Holland as to why the detail had to be amended, but in the end nothing turns on that. Further advice was given by Structerre to the plaintiff by letter dated 29 June 2001(Exhibit 66) in respect of retaining and stabilising of the rest of the batter above the proposed limestone wall. 99 Mr Purich was asked as to what would have been involved in raising the sand pad level from 13.5 metres to 14.5 metres. His initial response was that it just involved bringing in a metre of sand and placing, levelling and compacting it which was just normal earthworks. However, in cross-examination he did observe that if that was done then the retaining wall between Lot 160 and Lot 159 would have to be raised which would require engineering approval and some considerable works. 100 Mr Purich did not recall any separate discussion between Mr Noon and Mr and Mrs Black at the site meeting of 23 June 1999. Whilst he sent the report of 29 June 1999 to Mr Holland, he did not send a copy to Mr Black. Mr Purich also thought that there was a second meeting with Mr Noon before he issued his further report of 6 September 1999. His evidence was that Mr Noon would have asked for those recommendations. 101 Mr Purich gave his evidence in a straight forward manner and, despite the period of time that has elapsed, in a way that suggested that he had a fairly clear recollection of the events.
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Christopher Alan Mitchell 102 Mr Mitchell was the earth worker who prepared the site at Lot 160 Battery Road. By letter dated 6 July 1998 (Exhibit 4), Mr Black requested Mr Mitchell to prepare written quotes for site works for both Lot 159 and Lot 160 Battery Road as per an attached plan. The site works were to include the septic and leach drains on Lot 160 but not on Lot 159, but the retaining walls shown were not to be included in the costing as separate quotes were in hand for these. Mr Mitchell then met Mr and Mrs Black on site to discuss the job, and he asked Mr Black about the retaining walls and was told that he (Mr Black) was getting it done. 103 Subsequently Mr Mitchell was advised by Mr Black that the sand pad level had changed to 13.4 metres. On 12 January 1999 Mr Mitchell provided a quote to Mr Black in respect of Lot 160 Battery Road "to cut supply sand fill 600 mm sand pad level pad to 13.400 and compact with engineers certificate" (Exhibit 68). The quotation contained no reference to retaining walls. Mr Black accepted that quote. 104 In about April 1999 Mr Mitchell commenced the earth works on Lot 160 and in cutting and levelling the site to 13.4 metres, noticed that this created a very large cut on the eastern boundary. The cut was approximately four metres high. He knew that a slope of that height and angle might be unstable and was unlikely to be acceptable to the Shire without measures taken to stabilise it. He also noticed at that time that the plans that Mr Black had given to him for Lot 160 were not properly stamped and signed by the Shire. He was concerned enough to contact the building department at the Shire and phoned Mr Black requesting a site meeting. He told Mr Black that he did not wish to carry on any further and in relation to the eastern boundary that it needed "a retaining wall and a fence because there are kids there". Mr Black's response was that that was not his problem. When Mr Mitchell asked him about the plans not being signed, Mr Black said "Oh no, it's alright". During cross-examination, it was put to Mr Mitchell that Mr Black did not indicate to him that he knew the plans were unsigned. Mr Mitchell did not agree. 105 Mr Mitchell had a number of meetings with Mr Black on site about the cut to the eastern boundary, and at one time was advised by Mr Black that he was going to get another contractor to come in and batter. 106 Mr Mitchell recalled seeing the report from Structerre of 6 September 1999 (Exhibit 19) with recommendations as to the batter.
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107 On 13 September 1999 Mr Mitchell issued his invoice to Mr Black in respect of the site works for Lots 159 and 160 Battery Road to which a note was added requesting a meeting with Mr Black and his engineer as Mr Mitchell required written confirmation as to how or what would be needed to complete the job. In response a meeting was held at which Mr Black said that Mr Mitchell would be paid in full once he had done the battering to the eastern boundary. Mr Mitchell advised Mr Black that he would do the battering for $780 and Mr Black responded "I will release the funds from my building society once the compaction certificate is forwarded to me". In his evidence Mr Mitchell said that he performed that work under the supervision of Mr Purich and Mr Pirie of Structerre and, by way of explanation, in "accordance with their instructions".
108 Subsequently the compaction certificate was issued and Mr Mitchell sent that to Mr Black. 109 Mr Mitchell said that at no time was he asked to do the earth works at 14.5 metres or quote on building a retaining wall on the eastern boundary. 110 Mr Mitchell was cross-examined on a letter of 29 September 1999 from Mr Black to Mr Mitchell (Exhibit 20). That letter sets out a chronology of events from 4 August 1999 to 26 September 1999. Mr Mitchell confirmed that he met Mr Noon of the plaintiff on site. From his evidence it appears that the meeting was an accidental meeting at site, and Mr Mitchell could not remember any detail of the discussion. He agreed that it was possible that he had asked to see Mr Noon on site, he being the construction manager. He confirmed that he was not going to go any further with the job until an engineer had looked at the retaining walls, and that he wanted something from Mr Noon's engineer. 111 Mr Mitchell's evidence demonstrates that he was concerned about retaining the eastern boundary and required engineering input. He struck me as being a reliable witness, and apart from his evidence regarding the retaining, he really threw very little light on the other issues in this case.
112 Mr Sheardown carried out the levelling of the pad at the block for Mr Mitchell and had some discussions with Mr Black regarding stone pitching of the cut. Ultimately it appears that he didn't wish to proceed as footings had been laid and space was too restricted for him to work. It appears that he brought some rock in to the property, but as to when this actually occurred there is some measure of doubt when comparing his
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evidence to that of Mr Black. Generally Mr Sheardown's evidence was vague in the extreme and of little value. All that could be gleaned from his evidence was that he did have some discussions with Mr Black probably in about May 1999 regarding rock pitching the cut and supplied the rocks which were ultimately used on Lot 159.
Ray Holland 113 Mr Holland was the construction manager for the plaintiff. In about 28 March 2002 he retired. Mr Holland produced a number of the documents relevant to the building contract, including the contract itself, which was signed on behalf of the plaintiff on 30 January 1999 (Exhibit 7) the construction quotation and standard specification (Exhibit 72) which notes that the site works were to be by owner and a set of drawings marked with the stamp "return to builder final working plans with variations" which bear the signatures of Mr and Mrs Black and which are dated 14 April 1999 (Exhibits 52 and 73). 114 Mr Holland produced a variation order No 47209 dated 4 January 1999 (Exhibit 74) which deals with the relocating of the home on the block to a front set back of 7,000 mm as requested by owner on 23 December 1999. That variation order is endorsed with the words "subject to council approval". He also produced the variation order No 48723 (Exhibit 49) which also referred to the site works and the retaining wall by owner along with other matters being the septic system, stormwater disposal and subsoil drainage all to be carried out by owner. That document was signed by the builder on 28 April 1999 and by Mr Black on 5 May 1999 and is endorsed with the words "please find attached copies of approved building licence, engineering detail and shire requirements". 115 Mr Holland viewed the letter of 14 May 1999 from the Shire (Exhibit 12) which sets out the Shire's requirements with regards to amended plans and retaining of the eastern boundary. He did not send a copy to Mr Black because he noted that the shire had already copied it to Mr Black. His evidence was that he discussed this letter with Mr Gomboc of the Shire and said to him "it is approved on the plan". Mr Gomboc's response was that the plan had never been signed. This was the first time that Mr Holland became aware that the plan had not been signed by the Shire. He did not notice that the amendments were in black and not red because he was working off the construction file which only contained a photocopy of the plan. In his discussion with Mr Gomboc he was advised that the Shire was not concerned about the level but needed the bank on the eastern boundary to be stabilised and asked for some plans to show
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retaining walls. Mr Holland was then shown a series of documents (Exhibit 76) which comprised retaining wall details prepared by the drafting department of the plaintiff and some site plans showing the sand pad level of the residence at 13.5 metres and the set back at 7 metres. He does not know if or when those documents were sent to the Shire. 116 Mr Holland recalled the meeting on site on 23 June 1999. His evidence was that Mr Purich told the Black's to put up a retaining wall and further that the top section of the cut needed to be battered as it was unsafe. He recalled Mr Black saying words to him to the effect that "it is your responsibility, you, Homestyle and the Shire are responsible for this fiasco. As far as we're concerned you can fix it. We aren't going to do anything". He did not recall Mrs Black stating that the plaintiff was responsible for the oversight in not noting a need for a retaining wall. He did not recall Mr Noon breaking away from Mr Purich and himself to speak to Mr and Mrs Black. After the meeting, Mr Holland looked at the contract and called Mr Black to confirm that the retaining wall was his responsibility. Mr Black's response was that they were not going to do it. 117 After forwarding to the Shire the reports from Structerre dated 30 June 1999 (Exhibit 17), Mr Holland received a facsimile transmission from the Shire dated 12 October 1999 (Exhibit 22) indicating it had received notification that the plaintiff intended to pour footings at the above site, and that the issues raised in the correspondence of 14 May 1999 (Exhibit 12) had not been resolved. It noted that details of the proposed retaining wall had not been received, and the Shire considered the site to be unsafe and would not be attending the pour. Mr Holland said in evidence that he became concerned about the plaintiff's liability under the contract to complete the home within the time specified in the contract if they continued to wait. He approved the plaintiff to commence work on the site despite the sand pad level being unapproved. His evidence was that the house could be erected without causing any problems or frustrating the erection of the retaining wall. 118 On 15 October 1999 the Shire wrote to Mr Holland (Exhibit 24) advising that no building licence existed for the construction of the retaining wall and requiring application for approval to be made prior to any works being commenced on site. Subsequently, by letter dated 30 November 1999 (Exhibit 81) the Shire advised Mr Holland that this matter would be considered by the Planning Building and Health Committee on 7 December 1999, and invited him to attend. A copy of the report to the Committee was sent to Mr Holland and it appears that a copy of the letter was also sent to the defendant.
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119 Mr Holland attended the meeting on 7 December 1999, and according to his evidence little transpired. Mr Holland then received a further letter from the Shire dated 8 December 1999 (Exhibit 26) advising that these issues were still outstanding and that the earthworks were not in accordance with the approved plans. That letter also referred to a written undertaking from the plaintiff that no further works would be carried out on the site until the developer carried out the repairs to the retaining walls. Mr Holland disagreed that they had breached any undertaking and no such undertaking was produced at trial.
120 A site meeting was held on 16 May 2000 which Mr Purich attended and which was also attended by four councillors from the Shire, and Mr Black. Mr Purich made further recommendations in the form of his letter of 22 May 2000 (Exhibit 63). 121 The Shire wrote again to the plaintiff on 26 May 2000 (Exhibit 30), again requiring submission of details for the retention of the embankment so that this could be considered by the Shire's consulting structural engineer. That letter noted that if the requirement was not complied with within 30 days, notice under s 401(1)(b) of the LGA would issue. Mr Holland wrote to Mr Black on 6 June 2000 (Exhibit 77) enclosing a copy of that letter from the Shire and requesting his undertaking that he would attend to the direction contained therein by 9 June 2000. On 8 June 2000 Mr Holland wrote to Mr Gomboc at the Shire (Exhibit 78) advising that Mr Black would not try to sort out the problems. On 5 October 2000 the Shire issued notices under s 401 LGA to both the plaintiff and the defendant (Exhibits 33 and 34). The plaintiff did not lodge an appeal against the notice. 122 Thereafter steps were taken by the plaintiff to obtain a retaining wall designed from Structerre (Exhibits 64 and 65) and further advice was obtained from Structerre dated 29 June 2001 (Exhibit 66) regarding stabilising of the batter. 123 Finally Mr Holland attended a meeting on site on 18 February 2003 with Mr and Mrs Black, the parties solicitors, Mr van der Meer the engineer, representatives from the Shire, and the Shire's engineer, Mr Airey, who was shown a report from Mr van der Meer which he apparently approved. 124 Under cross-examination Mr Holland accepted that the plaintiff took possession of the site in October 1999 and commenced its building works. By that time he knew that nothing had been done about the retention of
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the eastern boundary and the Blacks had said nothing to suggest that their position had changed. Mr Holland agreed that the site works had not been done in accordance with the terms of the building licence and that no application for the approval of a retaining wall had been made by the plaintiff. Further, Mr Holland agreed that sometime prior to 7 June 2001 the plaintiff had agreed to build a one metre high retaining wall. However, it was not clear from his evidence as to what the true nature of that agreement was. All that can be said is that it appears that this was the retaining wall that is seen in the drawings attached to the letter from Structerre of 13 June 2001(Exhibit 64) at three metres high, and then the amended drawings attached to their letter of 19 June 2001 (Exhibit 65) showing the wall to be one metre high. 125 The passage of time has hampered the ability of many of the witnesses to give a detailed account of the events. Mr Holland while attempting to do his best to recount the events has not only been hampered by the delay but by his own retirement from work. However, it appeared to me that he had a role to play in the dealings with the plaintiff's solicitors during the continuance of the dispute and, knowing of the dispute and the Shire's involvement one is left to wonder why, in the course of business of the plaintiff, Mr Holland did not keep proper and full notes of the events. This is particularly so when one considers that what comes out of his evidence is a knowledge of the problems of the lack of approval for the work at the level of 13.5 metres and that Mr and Mrs Black were not going to do anything about the retaining wall and were blaming the plaintiff and the Shire. I was left to wonder that had such notes been kept his otherwise generally vague account of the events and his reliance upon assumptions and reconstruction may have been avoided.
126 Mr Pirie was Mr Purich's assistant at Structerre. His evidence was that he inspected the premises on 20 May 1999 at the request of Mr Black and offered to provide alternative means of retaining the eastern boundary. This he did by letter dated 25 May 1999 (Exhibit 61). Generally his evidence did not take the matter very much further save to demonstrate that at a fairly early stage Mr Black was consulting with Structerre concerning retaining the eastern boundary.
127 Mr Gomboc was at material times area manager, building services for the Shire of Mundaring. As such it was his duty to approve building
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applications as well as to prepare reports to committees and Council in respect to any non-compliance of various regulations. 128 Mr Gomboc's evidence came by way of a signed statement from him dated 6 March 2005 which was tendered in evidence with various deletions to reflect agreed inadmissible evidence. His evidence to a large extent corroborated the events insofar as the Shire was involved as detailed by other witnesses and in relation to the non-compliance with approved plans of the building. 129 In relation to the Shire's letter of 14 May 1999 (Exhibit 12) Mr Gomboc's evidence was that had the three numbered paragraphs been complied with that would have formed the basis of Mr Gomboc preparing a report to the committee to address the matter of non-compliance regarding the finish floor level. His evidence was that the recommendation was to allow the finish floor level to stay at 13.5 metres subject to those three items being attended to and amended plans showing that the new level. In addition detailed engineers reports on soil certification would have been required. His evidence was that in May 1999 the Shire accepted that recommendation and the letter was written to both the plaintiff and the defendant. That recommendation was unlikely to have changed at any subsequent time. 130 Indeed in his evidence by way of statement he said that during the course of the prosecution of the defendant the Shire's position remained the same, that is to say that the dwelling on Lot 160 would be allowed to remain subject to compliance with the Shire's requirements set out in the letter of 14 May 1999. He further gave evidence that the learned Magistrate in sentencing and considering whether or not to make an order for compliance with the notice to demolish was affected by whether or not the defendant complied with the Shire's requirements set out in that letter.
Credibility and assessment of witnesses 131 I have noted with each witness the view that I have formed of his or her evidence. In particular I have dealt with the weight to given to Mr Black's evidence and have noted that he was likely to be self-serving in the giving of his statement. It is relevant to note that these proceedings were underway and success in the proceedings would give a financial benefit to the defendant and accordingly himself and his wife. There may also been an on flow effect in the prosecution which the defendant company faced and placed the defendant in a stronger position so far as steps that would have to be taken to avoid the demolition of the house for example by retaining of the cut on the eastern side of lot 160. In the
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circumstance unless the evidence of Mr Black is supported by contemporaneous documentation I reject his evidence where it is in conflict with other witnesses except insofar as the evidence of those other witnesses is itself unacceptable. I have noted that a number of witnesses were not all together satisfactory in the way in which they gave their evidence. 132 As I have noted many of the witnesses were hampered by the time it has passed and appeared to me to trying to do their best to recount the events. Others were not only vague and inconsistent but generally would have been assisted if proper notes had been kept at the time. In the end, whilst I find that some of the evidence of certain witnesses was unsatisfactory it was not such that I could disregard their evidence in its entirety where it was in conflict with another witness and I am left to glean what I can out of the evidence taken as a whole.
Argument
133 The plaintiff's argument can be brought down to the simple proposition that the plaintiff contracted to build a house for the defendant which it has done and it is entitled to payment. The plaintiff's case is that it was not responsible for the earthworks and it was the defendant that caused the site to be cut to a level inconsistent with the planning approval that had been granted and, following that cut, allowed or encouraged the plaintiff to build at that level.
134 The defendant argues that the claim is in debt and, to be paid, the plaintiff had to complete the works subject to the contract and achieve practical completion prior to the issue of the writ. It says that this was not done. The plaintiff was required to complete the works in accordance with the contract and the approved plans and the licence. The defendant argues that there was no variation to the contract to allow for the building to be constructed at a sand pad level at 13.5 metres and therefore there is non-compliance with the contract and, it follows, no practical completion of the house. 135 The defendant also argues that the carrying out of the site works at 13.5 metres by the defendant does not create an estoppel as against it so far as alleging that the works had not been completed in accordance with the contract. On the contrary the defendant argues that the plaintiff is estopped from denying any alleged agreement by the plaintiff to build the
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retaining wall, such agreement arising out of the meeting on 23 June 1999. 136 The defendant also argues that it was labouring under a mistake when it made the progress payments under the contract to the defendant and is therefore entitled to restitution of those progress payments. 137 In addition the defendant argues that it is entitled to damages in accordance with its counterclaim, details of which I have set out previously.
The contract provisions 138 The contract (Exhibit 7) relevantly contains the following clauses: 1. Construction of the works. The builder shall complete all works described in item 2 of the Schedule ("the Works") in accordance with this Contract and the drawings, plans and specifications, including all addenda and schedules, to be drawn in accordance with the Contract Particulars Sheet (annexed hereto or as varied by agreement) ("the Contract Documents") and signed by the Proprietor, for the price described in item 3 of the Schedule (the "Contract Price"). Approvals (a) this contract is conditional upon: (i)… (ii) a building licence …being issued in respect to Works … (iii) all other approvals required to be obtained … (b) The Builder shall apply for the building licence and all approvals required by any statute or subsidiary legislation and shall pay all necessary fees for such a licence or approvals. (c) The Builder shall: (i) do all reasonable things required to done to obtain any building licence or approval required to be obtained pursuant to clause 2(a);
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(ii) do all things necessary to comply with any condition attached to such building licence or approval; and (iii) not unreasonably decline to accept a condition attached to such building licence or approval. (d) The Proprietor shall; (i) … (ii) to the extent to which the Proprietor is required by law, or otherwise elects to apply for a building licence or obtain any approval pursuant to any statute or subsidiary legislation, do all reasonable things required to obtain such building licence or approval, and shall act promptly and diligently in so doing; (iii) … (iv) … 3 THE CONTRACT PRICE (a) In consideration of the Builder executing and completing the Works, the Proprietor shall pay the Builder the Contract Price by way of deposit and progress payments in the matter described in item 5 of the Schedule. At each such stage, the Builder shall give the Proprietor a Certificate stating that the Works have been completed to that stage and stating the amount of the progress payment required ("the Certificate"). The Proprietor shall pay the amount within TEN (10) days of date of the Certificate. (b) If the Proprietor does not pay a progress payment within the time specified the sub-clause (a), the Builder may elect to continue with the Works and charge the Proprietor interest at the rate specified in item 7 of the Schedule on the amount of the progress payment due from the date it was due to the date of payment. 5 VARIATIONS AND CONTINGENCIES (a) …
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(b) Should the Proprietor wish to vary the Works, he shall give notice thereof in writing to the Builder. If the Builder agrees to the variation, it shall give to the Proprietor a variation order setting out the nature and costs of the variation, and any conditions to be attached to undertaking the variation. Upon receipt by the Builder of the variation document duly signed by the Proprietor, the Builder shall vary the Works in accordance with the variation order, and vary the Contract Price accordingly. 10 COMMENCENT, COMPLETION AND DELAYS (a) … (b) The Builder shall not be responsible for any delays in commencing the Works or completing the Works after commencement over which the Builder has no control including (without limiting the generality thereof): (d) Practical completion of the Works is deemed to have taken place when: (i) the Works are completed except for any omissions or defects which do not prevent the works from being reasonably capable of being used for its intended purpose: or (ii) … (e) If the Works are not reasonably capable of being used for its intended purpose only because of any act or omission by the
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Proprietor or by a relevant local or state authority, the Works shall nevertheless be deemed to be practically complete. (i) If the Builder breaches sub-clause 10(a), (the clause requiring completion of the works within the time prescribed in the schedule) it shall be liable to pay the Proprietor liquidated damages of the rate of THIRTY DOLLARS ($30) per day for each day beyond the due date for practical completion until practical completion is deemed to have taken place. 20. WORKS CARRIED OUT BY PROPRIETOR (a) – (g) … (h) Should the Proprietor cause any part of the site works to be undertaken by a person other than the Builder, the Proprietor shall produce to the Builder prior to the Builder commencing the Works a certificate and/or report from an appropriately qualified consultant verifying that the Site has been adequately prepared and the Site is suitable for construction of the Works. The Proprietor indemnifies the Builder and its servants and agents against any claim by third parties in respect to any loss or damage directly or indirectly cause by inadequate preparation of the site works. (i) Where site works involve a cut and fill to create a level area for the works, and expose steep banks of excavation or overfill within the Site boundary, the Proprietor shall be responsible for stabilising the banks at his cost. (j) the Proprietor shall be wholly responsible for the quality of work undertaken or the materials supplied by or on behalf of the Proprietor and for any loss or damage suffered or incurred by any person arising from such work undertaken or materials supplied by or behalf of the Proprietor and shall keep the Builder fully indemnified in respect thereof. 139 The schedule described the works as a single story residence at a contract price of $67,650 with payments being: Deposit $ 500
Slab down/finance approval 30 per cent $19,795
Roof cover 30 per cent $20,295
Practical completion 40 per cent $27,060
Total $67,650
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140 Commencement and completion were to be, respectively, 20 days from the latest date that all pre-condition specified in clause 10(a) had been satisfied and 145 days from the date the builder commenced the works.
141 Interest was specified at 20 per cent per annum. 142 The contract referred to the Contract Particular Sheet (Exhibit 48) which merely referred to the variations to be the same as lot 159 Battery Road, Parkerville. The specification (Exhibit 72) contained a note that site works were to be by owner. The relevant contract plans signed on behalf of the defendant (Exhibit 52 & 73) contained on Exhibit 52, the notation at the foot of the page "retaining not included/in addition to contract remains owners responsibility".
The law
143 A contractor who fails to complete the works is generally unable to sue for the price for work done. There is a dual obligation to carry out and complete the works: Nene Housing Society Limited v National Westminster Bank Limited [1980] 16 BLR 22 at 33. 144 Where the contract is an entire contract ie where the parties agree that complete performance is a condition precedent to enforcement, failure to complete performance will result in the contract price being unrecoverable; Phillips v Ellison Bros Pty Ltd (1941) 65 CLR 221. 145 This outcome maybe mitigated by the doctrine of substantial performance whereby the promisor may be liable to pay the price; Hoenig v Isaacs [1952] 2 All ER 176; cf Bolton v Mahadeva [1972] 1 WLR 1009 at 1015. Where the doctrine applies and there is substantial performance the price is recoverable but the contractor maybe liable in damages for breach of the contract.
The terms of the contract 146 It is trite law that the party executing a contract is generally bound by its terms Equuscorp Pty Ltd v Glengallan Investments Pty Ltd; Equuscorp Pty Ltd v Codd; Equusco [2004] HCA 55 at 33.
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147 Both parties relied on estoppel in the sense of a party being estopped from relying upon contractual terms. The estoppel was expressed, correctly by the defendant, as a waiver in the sense that a party is estopped where the other party has relied on what has been said or done by the other; Carter and Harland, Contract Law in Australia, 4th ed, Butterworths 2002 at (390) – (393).
148 A payer is prima facie is entitled to recover monies paid under a mistake if it appears that the monies were paid in the mistaken belief by the payer that he was under a legal obligation to pay them or that the payee was legally entitled to payment. In order to recover the payer does not have to prove "unjustness" over and above the mistake. It is a defence to a claim to recover money paid under a mistake that the payee has adversely changed his position in reliance on the payment; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 535 at 379. 149 In David Securities (supra) it was argued on behalf of the defendant that the plaintiff should be required to prove that retention of the monies by the recipient would be unjust in all the circumstance before recovery should be granted; if the circumstances of the case show that it would not be unjust for the recipient to retain the money, the fact that the plaintiff could point to a causative mistake, whether the fact or law, would not assist the plaintiff (ibid at p 378). The majority rejected that approach and said (p 379): "Accordingly it is not legitimate to determine whether an enrichment is unjust by reference to some subjective evaluation of what is fair or unconscionable. Instead, recovery depends upon the existence of a qualifying or vitiating factor such a mistake, duress or legality. As this Court stated in Westpac Banking Corporations (Australia New Zealand Banking Group Limited v Westpac Banking Corporation (1998) 164 CLR 662): 'In other words, receipt of a payment which has been made under a fundamental mistake is one of the categories of case in which the facts give rise to a prima facie obligation to make restitution, in the sense of compensation for the benefit
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of unjust enrichment, to the person who has sustained the countervailing detriment .' The respondents submission that the appellants must independently prove "unjustness" over and above the mistake cannot therefore be sustained. The fact that the payment has been caused by a mistake is sufficient to give rise to a prima facie obligation on the part of the respondent to make restitution. Before that prima facie liability is displaced, the respondent must point to circumstances which the law recognises would make an order for restitution unjust. There can be no restitution in such circumstances because the law will not provide for recovery expect when the enrichment is unjust. It follows that the recipient of a payment, which is sought to be recovered on the grounds of unjust enrichment, is entitled to raise by way of answer any matter or circumstance which shows that his or her receipt (or retention) of the payment is not unjust." 150 In David Securities defences were raised including that the payments by the appellants were made for good consideration. The Court took up whether there had been a failure of consideration and, at p 382, the majority said: "So, in the context of failure in consideration, the failure is judged from the perspective of the payer. In Rover International Ltd v Cannon Film Ltd, Kerr LJ stated: |