Brirek Industries Pty Ltd v McKenzie Group Consulting (Vic) Pty Ltd
[2011] VCC 294
•1 March 2011
| IN THE COUNTY COURT OF VICTORIA | Revised |
Not Restricted
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST
BUILDING CASES DIVISION
Case No. CI-08-05309
| BRIREK INDUSTRIES PTY LTD | Plaintiff |
| (ACN 005 807 090) | |
| v | |
| McKENZIE GROUP CONSULTING (VIC) PTY LTD | Defendant |
| (ACN 093 211 977) |
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| JUDGE: | HIS HONOUR JUDGE SHELTON |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 7-11, 15-18, 21-24 June; 23, 24, 26, 27, 30, 31 August; 1, 2, 3, 6, 7 September; 20 October and 3 December 2010 |
| DATE OF JUDGMENT: | 1 March 2011 |
| CASE MAY BE CITED AS: | Brirek Industries Pty Ltd v McKenzie Group Consulting (Vic) Pty Ltd |
| MEDIUM NEUTRAL CITATION: | [2011] VCC 294 |
REASONS FOR JUDGMENT
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Catchwords: Liability of building surveyor to commercial property developer for breach of contract and for pure economic loss in negligence – limitation period – s.129 and 134, Building Act 1993 – Premier Building & Consulting Pty Ltd v Spotless Group Ltd [2007] VSC 377; Pullen v Gutteridge [1993] 1 VR 27; McAskell & Anor v Cavendish Properties Ltd & Ors (No 2) [2008] VSC 563; McAskell & Anor v Timelink Pacific Pty Ltd & Anor [2010] VSCA 79; Australian Rail Track Corp Ltd v Leighton Contractors Pty Ltd [2003] VSC 189; Thurston v Campbell [2007] VCAT 340; Hardiman v Gory [2008] VCAT 267; BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 16 ALR 363; Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2003] VSC 27; Moorabool Shire Council v Taitapanui (2006) 14 VR 55; Caltex Oil (Australia) Pty Ltd v The Dredge ‘Willemstad’ (1976) 136 CLR 529; Caltex Refineries (Queensland) Pty Limited v Stavar [2009] NSWCA 258; Ariss v Building Practitioners Board [2010] VSC 295; Three Meade Street Ltd v Rotorua District Council [2005] 1 NZLR 504; Reeman v Department of Transport & Ors [1997] 2 Lloyd’s Rep 648; Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515; Perre v Apand Pty Ltd (1999) 198 CLR 180.
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr James Gray (Solicitor) | Just Law |
| For the Defendant | Mr G Hellyer | Tress Cox |
| HIS HONOUR: |
Introduction
1 This proceeding concerns the erection at 9 (Lot 3) Meaden Street, Southbank (“the property”) of a two-storey office block with ground level parking underneath (“the project”). The plaintiff company was a builder and developer. Its directors were, at all material times, Giuseppe Paolo Finocchiaro (“Finocchiaro”) and his wife, Nola.
2 Finocchiaro is now aged sixty-nine. He has been working in the building industry since 1965, and since 1990, has been registered as a Commercial Building Practitioner with the Building Practitioners Board. Finocchiaro stated that the plaintiff, through him, had been involved in many commercial building projects, mainly as an owner-builder, which it then sold on completion. Finocchiaro estimated that since approximately 1980 the plaintiff had been involved in three hundred to four hundred projects.
3 The defendant is sued vicariously as the employer of Melissa Chandler (“Chandler”), a private building surveyor as defined in s.3 of the Building Act 1993 (“the Act”) and the relevant building surveyor as defined in that section for the project.
4 The plaintiff claims that there was inordinate delay resulting from gross incompetence on the part of the defendant, as a result of which it suffered substantial losses. It assesses these losses at $1,751,560; alternatively $1,338,183; alternatively $1,195,801 or alternatively $707,879.
5 It bases its claim on breach of a contract made between the parties in late 2002; alternatively April 2004; or alternatively in negligence.
An Overview of the Facts
6 The facts are, to a large extent, not in issue, since Finocchiaro was in the habit of writing letters frequently to those involved in the project which normally elicited responses from recipients. Thus there is much documentation regarding the project and its history.
7 On 12 November 2001, the plaintiff entered into a contract of sale to purchase the property which was then Lot 3 on a proposed plan of subdivision of four lots, for the sum of $315,000 (“the Contract of Sale”). The vendor was J L and M J Pitt Pty Ltd & Bandow Pty Ltd. One, John Counsel (“Counsel”), was a director of the second vendor company.
8 Special Condition 16 of the Contract of Sale provided:
“This Contract is subject to and conditional upon the Vendor providing on or before settlement an approved Plan of Subdivision as detailed within proposed Plan of Subdivision PS446487E contained within this Contract together with a Town Planning Permit to develop each lot within the Subdivision as illustrated within the plans dated July 2001 which provide for the development of a three level warehouse/office and residential building.
In the event the Subdivision and Town Planning Permit as referred to in this Special Condition are not granted by the said settlement date (or any such later date as agreed in writing between the Vendor and Purchaser) this Contract will be at an end and all money paid by the Purchaser will be refunded without deduction.”
9 “The plans dated July 2001” which were annexed to the Contract of Sale, were three sketch plans prepared by Counsel Design and Development, the proprietor of which was Lance Counsel, Counsel’s brother. The plans were entitled “Proposed Development for Mr J Counsel at Meaden Street”.
10 Special Condition 17 of the Contract of Sale provided:
“The Vendor agrees to provide to the property:
(i) sewerage discharge point
(ii) storm water discharge point
(iii) water connection; within 2 metres of the Meaden Street boundary at the Vendor’s expense prior to settlement.”
11 It was subsequently agreed between the parties to the Contract of Sale that the vendor was also to provide a building permit for the property prior to settlement. On 19 November 2001, Counsel wrote to Finocchiaro as follows:
“Further to our discussion, I confirm Bandow Pty Ltd, J L and M J Pitt will
provide a Building Permit along with Planning Permit.”
12 Although the letter states that he writes as a director of Bandow Pty Ltd, the letter was on the letterhead of Bailey Heights, a company of which he was also a director. On 14 May 2002, the vendor’s agent, Dixon Kestles & Co Pty Ltd, wrote to the plaintiff as follows:
“The vendor will provide a building permit as a condition of the contract
and this will be provided to you as soon as it comes to hand.”
13 Then, on 6 October 2003, White Cleland Pty, the plaintiff’s then solicitors, wrote to Counsel at Bailey Heights as follows:
“Lot 3, 13-21 Meaden Street, Southbank Vic 3006
We act on behalf of Joe Finocchiaro in relation to the above matter.
At the outset we confirm that it was a special condition at settlement of the above property that you (the vendor) were to obtain a Planning Permit and Building Permit for our client (the purchaser). We confirm that in a letter to White Cleland from your lawyers Clark Rushford Solicitors dated 6 December 2001 it was agreed that:
1. The Vendors consent to varying the contract for it to provide for a special condition to be included to the effect;
‘the Vendor undertakes to provide planning permit
together with building permit.’
All parts of the contract can be amended accordingly.
On the basis of the above special condition and in reliance upon your representation our client entered into the contract of sale. Our client instructs that the above permits and all other relevant documentation that was to be supplied to our client at settlement has not been provided.
To date our client has only been supplied with a copy of a planning permit but has not been supplied with a copy of an entire Building Permit for the above address. … .”
14 The letter of 6 December 2001 could not be located.
15 It was not in issue that the vendor was required, prior to settlement, to provide a building permit for the project and that the plaintiff could have delayed settlement had this not been provided.
16 A planning permit was issued by the City of Port Phillip on 21 March 2002 for the four-unit development. It provided, in paragraph 16:
“This permit will expire if one of the following circumstances applies:
(a) The development is not started within two years of the date of this permit. (b) The development is not completed within one year of the date of commencement of works. The Responsible Authority may extend the periods referred to if a request is made in writing before the permit expires or within three months afterwards.”
17 It was not in issue that the requirement in paragraph 16(b) was unusual and that a period of two years from the date of commencement of works would be normal.
18 The vendor’s agent provided a copy of the planning permit to the plaintiff under cover of a letter of 14 May 2002.
19 The four-lot Plan of Subdivision, on which the property was Lot 3, was approved by the City of Port Phillip in September 2002.
20 Settlement under the Contract of Sale took place on 25 September 2002. The vendor had not by then obtained a building permit for the project. Finocchiaro states that Counsel told him he needed funds desperately and that the building permit was only a few days away from issue and therefore he agreed to settle despite the absence of a building permit.
21 The plaintiff states that at a meeting on 21 May 2002 at the vendor’s estate agent’s office in South Melbourne, Counsel indicated that he had a contract to build the other three units – Units 1, 2 and 4 – and that he could build Unit 3 for the plaintiff at the same time, which would save the plaintiff money. Finocchiaro states that Counsel told him he was a Registered Commercial Builder.
22 On 19 August 2002, Bailey Heights wrote to the plaintiff suggesting the cost to build to lock-up stage would be approximately $495,000 excluding GST. The plaintiff engaged Bailey Heights as builder for the project.
23 Accordingly, in late October 2002, Bailey Heights commenced work on the project, as well as at the same time constructing units on the adjoining Lots 1, 2 and 4. The contractual arrangements between Bailey Heights and the plaintiff were somewhat casual. Despite Finocchiaro’s penchant for writing letters, the contractual arrangement was not confirmed in writing. However, it was not in issue that the contract sum was cost plus 8 per cent plus GST. A letter from the plaintiff to Bailey Heights dated 29 October 2002 suggests that Bailey Heights had already commenced work on the project. That letter indicates that the plaintiff had taken steps to arrange a loan to finance the project and that the proposed financier, Perpetual Investments (“Perpetual”), with whom the plaintiff had dealings in the past, required a number of documents, including a copy of a building permit, before it could approve a loan. Bailey Heights wrote to the plaintiff on 31 October 2002 indicating that a building permit would be available by 8 November 2002. Finocchiaro states that he visited the property on 1 November 2002 and saw that some excavation work had been done.
24 Bailey Heights issued a tax invoice to the plaintiff dated 31 October 2002 claiming the sum of $22,605.00 for work done on the project. This invoice also charged for plans and permits which had already been paid for at settlement. The plaintiff paid the balance outstanding of $11,644.60. The tax invoice stated that it was anticipated that footings would be poured by 14 November 2002 and tilt panel installation would commence on 28 January 2002.
25 On 6 November 2002, Bailey Heights wrote to the plaintiff indicating that the building permit should be available from the defendant, the building surveyor engaged by Bailey Heights, by 8 November 2002.
26 On 19 November 2002, the defendant issued a Stage 1 Building Permit which was stated to apply to “carry out new structural works – ground slabs only” for the four lots. The Permit showed the owner as Bundow Pty Ltd, which was incorrect so far as the property was concerned, and the builder as Bailey Heights. Finocchiaro states that Counsel was continually telling him that he was awaiting the issue of a full building permit by the defendant.
27 On 20 November 2002, the plaintiff formally applied to Perpetual for a construction loan in the sum of $750,000.
28 Meanwhile Bailey Heights continued works on the project. On 30 November 2002, Bailey Heights issued a second tax invoice to the plaintiff for the sum of $15,732.20, and on 23 December 2002, a third tax invoice for the sum of $22,380.60. Further tax invoices followed on 21 January 2003 for $12,235.21, and on 28 January 2003, for $5,672.48. On 31 January 2003, Bailey Heights issued a Credit Adjustment for $10,860.40. On 28 February 2003, a further tax invoice was issued by Bailey Heights for $4,010.60.
29 On 25 March 2003, the defendant issued a Stage 2 Building Permit for “structural works only” for the four lots. Again, the owner was shown as Bundow Pty Ltd and the builder as Bailey Heights.
30 On 31 March 2003, the plaintiff received an invoice for $62,121.64 for work that Bailey Heights had done during that month. Attached to the 31 March 2003 invoice was a facsimile from the defendant to Counsel dated 24 March 2003 listing two pages of items that needed to be attended to before a full permit could be issued. Bailey Heights issued a further invoice on 6 April 2003 for $33,578.60.
31 On 11 April 2003, Finocchiaro wrote to Counsel requesting that he cease internal works and external works from the first floor up. In the letter he stated that the works were done without the necessary building permit. He was concerned because he did not have a full permit, which Perpetual needed before it advanced funds. Perpetual was not prepared to release funds against a stage permit only. Bailey Heights issued a further invoice dated 22 April 2003 for $4,272.27. The plaintiff states that on 15 May 2003, he spoke to Stephen Moloney at the defendant, who said that they could issue a building permit to him within a few days if required. In response, by letter of that date, Finocchiaro indicated that the plaintiff would only seek a transfer of the permit when it received a full permit with a full set of stamped plans.
32 On 16 May 2003, a tax invoice for $9,605.04 was issued by Bailey Heights.
33 On 3 June 2003, the defendant issued a Stage 3 Building Permit for the project only. The owner is still incorrectly shown as Bundow Pty Ltd but the builder is now shown as the plaintiff. The relevant building practitioner is shown as Finocchiaro being a commercial builder. The permit states:
“Stage of building work permitted: Variation – new builder for Unit 3.”
34 Finocchiaro did not accept this permit. On 5 June 2003, the plaintiff wrote to the defendant indicating that he was not the builder responsible for the project, and referred to his letter of 15 May 2003.
35 On 9 June 2003, the plaintiff spoke to Stephen Moloney at the defendant and was told that a full building permit was available, subject to permission from the Building Appeals Board to have the rear openings within 1.5 metres of the boundary, which should happen within a few days.
36 On 5 August 2003, the defendant issued a Stage 4 Building Permit for the four lots which was for “the construction of building as per approved documentation”. Thus, it appears on its face to be a full permit. The owner is shown on this permit as Bundow Pty Ltd and the builder as Bailey Heights.
37 In early August 2003, Finocchiaro engaged Graham Bailes of Bailes and Co, building surveyors, to assist him in discussions with the defendant and to critically assess its performance.
38 By letter of 5 August 2003 to the defendant, Bailes advises that Finocchiaro, who is now the owner of the property, intends completing the building works, and formally advises of a change of builder and owner for the project.
39 On 18 September 2003, the Building Appeals Board modified the Building Regulations to allow the rear openings to be within 1.5 metres of the boundary.
40 Following further correspondence, Bailes sent a facsimile to the defendant on 24 September 2003, stating:
“Thank you for the copy of the Modification issued in relation to the above project and as this will now formalised [sic] the issue of the building permit, could you please provide our office with a copy of the building permit stage 5 as previously stated and copies of the approved drawings.”
41 A Stage 5 Building Permit for Lots 1, 2 and 4 was issued on 7 October 2003. The purpose of its issue was to incorporate the modification by the Building Appeals Board for non-complying openings. On the same day, the defendant wrote to Bailes enclosing an application for a building permit. The letter indicated that upon receipt of the completed application, a Stage 5 Building Permit would be issued for the project.
42 The plaintiff responded to the defendant by letter dated 14 October 2003, which stated:
“Thank you for your co operation with Graham Bailes from Bailes and Co.
I am in receipt of your letter of 7/10/03 in which you request that I fill in an application for a building permit. Prior to doing this I need a copy of the full building permit issued to the original applicant for Lots 1, 2, 3 & 4, and approved plans including all modifications.
Once I have all these and I am satisfied, then I will apply for the permit for Lot 3 to be transferred to Brirek Industries Pty. Ltd. I have previously explained this both in telephone conversations and in my letter.”
43 On 17 November 2003, Bailey Heights sued Finocchiaro, his wife and the plaintiff for the sum of $141,351.86 for work done on the project.
44 On 10 February 2004, Abbott Stillman & Wilson, solicitors, acting on behalf of the plaintiff, wrote to the defendant seeking its assistance in obtaining a full building permit. Prior to this, it seems that there had been little activity on the plaintiff’s part to obtain the building permit and that rather it was pre-occupied with its County Court action which finally resolved in April 2004. Terms of Settlement signed on 6 April 2004 indicate that Finocchiaro, his wife and the plaintiff were to pay the sum of $165,000 to Bailey Heights and a plumber involved on the project, inclusive of costs. This would appear to be basically a capitulation on the part of Finocchiaro, his wife and the plaintiff.
45 On 5 April 2004, the defendant sent a facsimile to Abbott Stillman & Wilson in response to a facsimile of 31 March 2004, of which a copy was not tendered, indicating that the defendant was awaiting an application from the plaintiff to transfer the application for Lot 3 into its name.
46 In response, the plaintiff completed an application for a building permit dated 5 May 2004 seeking a transfer for the building permit for Lot 3 from Bailey Heights to it and forwarded this to the defendant on 7 April 2004. (It would appear that the application was incorrectly dated 5 May 2004 and should have been dated 5 April 2004).
47 On 29 April 2004, the defendant issued a Stage 6 Building Permit to the plaintiff for all works at Lot 3 apart from fire services. The plaintiff was shown as owner and builder on this permit, with Finocchiaro, as a commercial builder, being the relevant Building Practitioner.
48 On 27 May 2004, a Stage 7 Building Permit was issued to the plaintiff as owner and builder which included fire services, that is a full building permit and again showing Finocchiaro, a commercial builder, as the relevant Building Practitioner.
49 The Planning Permit however had expired in October 2003.
50 In issuing the Stage 6 and Stage 7 Building Permits, the defendant had overlooked the fact that the Planning Permit for the project had expired in October 2003, one year after the date of commencement of the works. Pursuant to s.24(1)(c) of the Act, the defendant was only able to issue a building permit if satisfied that “any relevant planning permit … has been obtained” and so breached this provision.
51 It appears that little occurred over the following months.
52 On 29 July 2004, the plaintiff wrote to the defendant, thanking it for organising the full building permit and seeking an extension of six months for the completion of the project which, under the Stage 7 Building Permit, was to be completed by November 2005. No reason was stated for the request which would have allowed an inordinately long period for the completion of the project given that Finocchiaro said that the project was simple and could have been wholly completed within three months. By letter of 20 August 2004, the defendant extended the date for the completion of the project to 19 May 2006.
53 On 21 October 2004, the plaintiff applied to National Australia Bank (“NAB”) for a construction loan of $450,000 to complete the project. On 8 November 2004, NAB wrote to the plaintiff seeking confirmation of Finocchiaro’s and the previous builder’s registration with the Building Practitioners Board. Enquiries from the Building Practitioners Board revealed that John Counsel, who was stated to be the building practitioner on the Stage 1, 2, 4 and 5 Building Permits, had never been registered in the Register of Building Practitioners as a commercial builder. Therefore, in issuing these stage Building Permits, the defendant was in breach of s.24A(1)(a) of the Act. This error caused some delay. However, as White Cleland advised the plaintiff by letter of 27 April 2005, the plaintiff was adequately covered by a Certification of Compliance issued by the defendant, together with confirmatory independent certification by Bailes & Co.
54 On 23 May 2005, the plaintiff wrote to the defendant seeking a variation of the building permit to allow for a further extension of the completion date to November 2006. On 8 July 2005, the plaintiff wrote to the defendant requesting a response to his letter of 23 May 2005.
55 On 12 July 2005, the plaintiff wrote to the City of Port Phillip requesting a twelve-month extension to the Planning Permit. Even had the Planning Permit contained the more usual provision that the development had to be completed within two years of the date of commencement of works, the plaintiff would have been out of time in making the request for the extension which was required to be made before the permit expired or within three months thereafter. The reason given for the request is interesting in that it makes no reference to the defendant. It states:
“There was a dispute with the original developer – Bailey Heights P/L – as building permit for construction of the 3 level project was not in order. We have taken over the project and expect to continue work within the next few months – legal matters permitting.”
56 The defendant never attended to the plaintiff’s request of 23 May 2005 for an extension of the completion date for the project despite an urgent request from White Cleland Pty to the defendant by letter dated 18 August 2005.
57 On 5 August 2005, NAB approved a loan for the project by means of an increase of the plaintiff’s business loan from it.
58 On 29 August 2005, the plaintiff received advice from the City of Port Phillip that the Planning Permit had expired and could not be extended. It was recommended that the plaintiff seek an amendment to the permit pursuant to s.72 of the Planning & Environment Act 1987 to increase the time to complete the works. The plaintiff responded to the City of Port Phillip by letter of 2 September 2005 which stated, inter alia:
“Early in May 2004 I received a letter from my solicitor who had been sent a letter from Port Phillip Council dated 28 April 04 stating that everything was in order … .”
59 By September 2005, the plaintiff was complaining to the Building Commission about the performance of Chandler. Finocchiaro sought the consent of the Building Commission to terminate the appointment of Chandler pursuant to s.81(1) of the Act. By letter of 12 October 2005, the Building Commission refused consent to the termination of Chandler’s appointment. It indicated however that the plaintiff could make application for a building permit to the City of Port Phillip without having to seek consent from the Commission for the termination of Chandler’s appointment. In accordance with this advice, the plaintiff wrote to the City of Port Phillip by letter of 21 October 2005, requesting it to take over as building surveyor for the project. In response, Building Services Victoria (“BSV”), the building surveyor arm of the City of Port Phillip, took over the role of building surveyor for the project.
60 The plaintiff applied for a new planning permit, which was issued by the City of Port Phillip on 9 November 2006.
61 On 21 February 2007, the plaintiff entered into a building contract with Pace Construction Group Pty Ltd to complete the project for the sum of $620,000.
62 On 2 March 2007, BSV issued a Building Permit which excluded fire services. On 14 March 2007, BSV amended the Building Permit to include fire services, and on 17 April 2007, issued a full Building Permit. Pace Construction Group Pty Ltd completed the project between May and October of 2007.
63 In early March 2008, the plaintiff entered into a contract to sell the property for the sum of $1.8 million and settlement occurred in July 2008, more than six- and-a-half-years after the plaintiff purchased the property. Occupation permits were granted for Lots 2 and 4 on 7 April 2004 by the defendant. As appears, basically the same drawings were used and permits issued for these two units as for the project. One of these units sold for $1.55 million in July 2004 and the other sold in June 2005 for $1.65 million.
64 Finocchiaro was, to some extent, to blame for the inordinate delay in bringing the project to fruition. As appears from the above, at times he did not pursue the project with all due expedition and at times appeared over pedantic and over technical in his approach.
65 Still, on the evidence before me, the performance of the defendant left much to be desired. For example, showing Counsel as a Registered Commercial Builder on several Stage Building Permits and issuing Stage Building Permits when an appropriate planning permit was not in force. Chandler indicated that the defendant had some inspections of building work done by unqualified employees. Arthur Liacopoulos, an employee building surveyor of the defendant, indicated that on occasions the defendant had an owner sign a blank application for a building permit and then details would be obtained over the telephone. When it was pointed out to him that the application for the Stage 1 building permit dated 15 November 2002 was identical with the application for the Stage 2 building permit dated 1 March 2003, except that the dates and the value of work are different, he indicated that with the assistance of white-out, he made the changes on the application for the second building permit.
Does the Plaintiff have a Cause of Action?
66 As indicated, the plaintiff pleads three alternate causes of action based on breach of a contract made in about late 2002; alternatively April 2004; and alternatively in negligence. I consider each of these bases of a cause of action in turn.
The Late 2002 Contract
67 Towards the end of the hearing, Mr Gray, who appeared for the plaintiff, conceded that the plaintiff’s claim based on this alleged contract was somewhat weak. In a written submission received from Mr Gray on behalf of the plaintiff dated 1 October 2010, he states, at paragraph 263:
“In the present case it is clear McKenzie Group only dealt with the builder Bailey Heights Pty Ltd and/or John Counsel, together hereinafter “Counsel” in respect to the issuing of the building permits Stages 1 to 4, the fee proposal was directed to Counsel and he ultimately made payment for the fees. So those facts and ordinary contract principles would suggest the contract was between McKenzie Group and Counsel.”
and at paragraph 272:
“The only sensible alternative analysis, which must be rejected, is that Counsel acted as agent for the undisclosed principal being the Plaintiff. However this approach to the facts must fail as there is no evidence that Counsel intended to be such agent, except that he sought to pass on the Defendant’s fees to the Plaintiff but later accepted he himself was bound to pay those fees.”
68 He referred to Premier Building & Consulting Pty Ltd v Spotless Group Ltd [2007] VSC 377 where the question was whether the plaintiff had a contract with the relevant building surveyor who coincidentally was the same defendant as here. There, as here, the builder had applied for the building permit and all dealings were between the present defendant and the builder. Byrne J concluded, at paragraph 630:
“On this slender evidence I am unable to conclude that there was a contract between Premier and McKenzie Group for the performance of the building surveyor’s work. On the balance of probabilities, I find that its retainer was with the builder. This means that the Premier claims based on breach of contract must fail.”
69 However, in his submission in reply of 15 October 2010, Mr Gray, contrary to his earlier stance, sought to rely upon a contract made in late 2002. He relied upon the following matters:
“(a)
Bailey Heights Pty Ltd had a clear contractual obligation arising from the sale of land contract with Brirek to obtain the building permit for the site: the only way this could occur was if the building permit were(sic) obtained on behalf of the owner, who after settlement in September 2002, was Brirek;
(b)
John Counsel clearly had the consent of Brirek to seek a building permit for the site and so Brirek was the undisclosed principal to the contract with McKenzie;
(c)
The payment for the building permit had already been made by Brirek as part of the negotiated contract price for the sale of the land and so Bailey Heights Pty Ltd was not entitled to any further payment in respect of the building permit from Brirek;
(d)
While the building permits ought to have been issued to Brirek as the owner of the land and building the relevant mistake was made by McKenzie in issuing the permit to a non-owner and so there was no reason for Brirek to consider in 2003 that it could influence McKenzie in the building permit process and indeed McKenzie asserted this in its scant dealings with Brirek;
(e)
While McKenzie may have cause for complaint against John Counsel because he may have mislead(sic) them about the ownership of the property, although the evidence is that McKenzie filled out a considerable part of the application forms, ultimately it is very clear the building surveyor has the obligation pursuant to statute to determine who is the owner and so all the relevant applicable vices that flow from this failure to perform its statutory duty ought to fall at the feet of McKenzie not Brirek;
(f)
McKenzie are estopped from denying the existence of the contract because of McKenzie’s representation there was a valid building permit and the effect of the Building Act which requires that a building permit could only be issued to Brirek as owner or its agent for relevant purposes. The principles from Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387 are applicable.
(g)
The present circumstances can be readily distinguished from the conclusions of Justice Byrne in Spotless, because in that case the builder conducted all the negotiations and made payment to the building surveyor themselves ostensibly and only on behalf of themselves where there were(sic) no contractual obligation on the builder to obtain the building permit for the owner.”
70 In my view, there it no merit in these submissions. The facts here are very similar to Premier Building and Consulting. There the applications for building permits were lodged by the builder as agent for the owner and permits were issued to the owner. Here, Stage Building Permits 1, 2, 4 and 5 were issued showing the owner as Bundow Pty Ltd, which was incorrect, and the builder as Bailey Heights. Building Permit Stage No. 3 was issued to the plaintiff but the plaintiff was not prepared to accept it. The fact that s.17 of the Act provides that an application for a building permit must be made “by or on behalf of the owner” did not deter Byrne J from finding that there was no contract between the owner and building surveyor for the performance of the building surveyor’s work.
71 So far as paragraph (f) is concerned, in Premier Building and Consulting, the permits were actually issued to the owner. Mr Gray submitted that in fact Stage Building Permits 1, 2, 4 and 5 were invalid since they showed the owner as Bundow Pty Ltd and the builder as Bailey Heights. I accept the submission of Mr Hellyer, who appeared for the defendant, that Stage Building Permits 1, 2, 4 and 5, which on their face appeared valid, were valid until cancelled pursuant to s.71 of the Act. To hold otherwise, where much reliance is placed upon the presence of a building permit, would give rise to much uncertainty. It will be noted that s.71 gives the relevant building surveyor a discretion not to cancel a permit even if it was obtained by fraud or misrepresentation. Here, Chandler, as the relevant building surveyor, could easily have issued a further stage permit amending the owner’s name and showing Finocchiaro as the relevant building practitioner, as in fact occurred on the Stage 6 and Stage 7 Building Permits.
72 In the circumstances, I conclude that there was no contract made between the plaintiff and the defendant for the provision of building surveying services in late 2002.
April 2004 Contract
73 Leave to rely on breach of a contract made in April 2004 was granted to the plaintiff on 2 September 2010, the 21st day of the hearing and near the conclusion of the hearing of evidence. The defendant concedes that it was engaged by the plaintiff in April 2004 to provide building surveying services. It submits however that pursuant to s.5(1)(a) of the Limitation of Actions Act 1958, which imposes a six-year limitation period, the plaintiff is barred from relying on the April 2004 contract. A cause of action for breach of contract arises upon the breach of the contract (‘Brooking on Building Contracts’ (4th ed.) at page 197). The plaintiff can therefore only rely on breaches of the April 2004 contract which have occurred after 2 September 2004. The defendant submits that no such breach has occurred.
74 Mr Gray particularly sought to rely upon the issue of the Stage 6 Building Permit on 29 April 2004 and the Stage 7 Building Permit on 27 May 2004 without planning permits being in force and therefore in breach of s.24(1)(c) of the Act.
75 He referred to Sections 129 and 134 of the Act, which provide:
“129 Definitions
In this Division—
building action means an action (including a counter-claim) for damages for loss or damage arising out of or concerning defective building work;
building work includes the design, inspection and issuing of a
permit in respect of building work.”
. . .
“134 Limitation on time when building action may be brought Despite any thing to the contrary in the Limitation of Actions Act 1958 or in any other Act or law, a building action cannot be brought more than 10 years after the date of issue of the occupancy permit in respect of the building work (whether or not the occupancy permit is subsequently cancelled or varied) or, if an occupancy permit is not issued, the date of issue under Part 4 of the certificate of final inspection of the building work.”
76 Given the definition of “building work” which refers to the “issuing of a permit in respect of building work”, s.134 would appear to apply to the April 2004 contract.
77 My reading of s.134 is that it does not enable a building action to be brought when it might not otherwise have been brought. Rather, it prevents a building action from being brought, in negligence, outside the ten-year period referred to in the section. Its purpose is to limit the common law position where the limitation period only runs in negligence from when defects in the building works were first known or manifest (see Pullen v Gutteridge [1993] 1 VR 27 at 71). Pursuant to s.35 of the Interpretation of Legislation Act 1984, I am entitled to consider the Second Reading Speech of the Minister for Planning on the Building Bill on 11 November 1993. At page 1692 of Hansard, he stated:
“The Building Bill will introduce a clear trigger date for consideration of construction liability claims. Under the current statute of limitations there is a great deal of confusion over when the existing six-year limitation period starts and ends. One test is from when damage occurs; another test is from when a fault is discernible. The result is confusion and increased litigation risk.
If one follows the first test it can be difficult to ascertain when damage actually occurred. It is conceivable that damage may have occurred during construction. If this were the case, the plaintiff -- that is, the property owner -- would be able to claim only for significantly less than six years after the issue of an occupancy permit. On the other hand, if the alternative test is followed, namely, from when the damage is discernible or infinity plus six, the liability duration is absurdly open- ended, which in turn makes it impossible for insurers to quantify risk.
In the words of the Honourable John A. R. Dowd, a previous Attorney- General of New South Wales, who in 1989 commissioned an inquiry into limitation periods in the construction industry on the basis that the construction industry warranted special attention:
‘The present law is unsatisfactory for the victim of a negligent act or omission. The starting date for the reckoning of the period of limitation is the date when the damage actually occurs, and time will start to run even if the damage is not discoverable. Potential plaintiffs may find themselves barred from taking legal action before they knew, or could even be in a position to know, they had suffered damage.’
In introducing this reform the government is mindful of the possibility that a more widespread review of liability issues may be undertaken in future, which may lead to further changes.
The Building Bill defines a clear starting date -- the date of issue of an occupancy permit -- and a clear conclusion date of 10 years from the date of issue. This will remove the existing ambiguity surrounding the time during which the building owner retains the right to issue legal proceedings.
This will provide property owners with additional protection in terms of years beyond the very short number of years that now exists.
The 10-year cap reflects international trends and laws that have been promulgated in the Northern Territory, South Australia and New Zealand over the past 18 months. It is based upon local, national and international research, which has shown a very low incidence of claims at or beyond year 10. It also represents a logical and responsible solution to a profoundly deficient and uncertain area of the law in a manner which protects the interests of all parties.
The 10-year cap applies to property damage resulting from defects in the design, construction approval and inspection of buildings. It does not, however, extend to claims for personal injury or death which may result from the damage.”
78 From the above, it appears clear to me that the mischief which s.134 addresses is open-ended potential liability in negligence in respect of defective workmanship. It is not concerned with breach of contract where the cause of action arises upon the breach. I note in passing that reference is made in the Second Reading Speech to the comment of the Honourable John A R Dowd, a previous New South Wales Attorney-General, that “… time will start to run even if the damage is not discoverable”. As indicated, this is not the law of negligence in Victoria.
79 Mr Gray sought to rely upon McAskell & Anor v Cavendish Properties Ltd & Ors (No 2) [2008] VSC 563. There, however, Hansen J stated, at paragraph 39:
“… As counsel for the builders submitted, by reference to the second reading speech, one of the purposes of the limitation provision in s 134 was to provide clear start and end dates for the operation of the new 10 year limitation period for claims in respect of defective building work, not involving personal injury or death. … .”
80 Again, in McAskell & Anor v Timelink Pacific Pty Ltd & Anor [2010] VSCA 79, Harper J, with whom the other members of the Court agreed, in relation to s.129 and 134 of the Act, stated, at paragraph 9:
“… The combined effect of these provisions is that actions for damages for loss or damage arising out of defective work for or in connection with the construction of a building must be commenced within ten years after the issue of the certificate of occupancy. Since the present proceeding was not issued within that period, it follows that the appellants must fail unless as a matter of law the breach of duty about which they complain did not involve work for or in connection with the construction of their unit.”
81 Two comments can be made about these two decisions. Firstly, s.129 and s.134 of the Act are stated to relate to claims in respect of defective building work, which is not the case here. Secondly, in these cases, more than ten years had elapsed since the grant of an occupancy permit and the issue before the Court was rather whether s.134 applied.
82 I note the comment, obiter, of Bongiorno J in Australian Rail Track Corp Ltd v Leighton Contractors Pty Ltd [2003] VSC 189 at paragraph 24:
“… the altered limitation provision in s134 suggests that building actions might indeed be confined to those concerned with defects in buildings as those defects affect building owners. … .”
83 I note that the authors of ‘Brooking on Building Contracts’, at page 288, consider s.134 in the context of an action in negligence and regard it as not extending the six-year limitation period but rather as providing “an absolute cap”.
84 In the course of submissions, I was referred to decisions in the Victorian Civil and Administrative Tribunal of Thurston v Campbell [2007] VCAT 340 and Hardiman v Gory [2008] VCAT 267 which express a contrary view on the meaning of s.134. In Thurston, Senior Member Lothian indicated, at paragraph 4, that there was no contractual relationship between the applicants and the respondent so that the claim was in negligence. She referred to two articles, one concluding that s.134 gave a plaintiff up to ten years to issue proceedings, with the other concluding that a “long stop” interpretation was preferable. Senior Member Lothian, at paragraph 31 of the judgment, stated:
“I consider the ‘long stop’ interpretation does less violence to plain English than the ‘replacement interpretation’, however I acknowledge that the latter is tenable. … .”
85 Nonetheless, Senior Member Lothian then concluded, on the basis of the Second Reading Speech, the “replacement” interpretation was the preferred interpretation.
86 In Hardiman, Deputy President Aird, considering a claim brought in both contract and tort, agreed with the approach adopted by Senior Member Lothian.
87 With great respect, I am of the view that the “long stop” or “an absolute cap” approach is the proper interpretation of the Second Reading Speech.
88 For the above reasons, I have concluded that s.134 of the Building Act only applies to claims in negligence with respect to defective work and does not extend the six-year contractual limitation period. It therefore does not apply to the claim for breach of the April 2004 contract. The plaintiff can only rely on breaches of the April 2004 contract which have occurred after 2 September 2004. It is therefore necessary to consider whether any breaches of the April 2004 contract occurred between 2 September 2004 and September 2005 when the plaintiff terminated the services of the defendant.
89 It is clear that over this period there was little activity on the defendant’s part with respect to the plaintiff. In final submissions, the only potential breach referred to during this period was an alleged breach of an ongoing obligation on the part of the defendant to advise the plaintiff that there was no planning permit in force. Clearly, the planning permit had lapsed prior to the April 2004 contract being entered into.
90 The terms of the April 2004 contract, which was admitted by the defendant, are far from clear. I agree with the submission of Mr Hellyer that the April 2004 contract was constituted by the lodging of the application for a building permit in April 2004 by the plaintiff with the defendant, and the acceptance by the defendant of the obligation to issue a permit which it did in issuing Stage 6 and Stage 7 Building Permits before the period under review. It is a question then whether it is appropriate to imply a term that there was an obligation imposed upon the defendant to advise the plaintiff that a planning permit was not in force. In my view, on the basis of the principles outlined in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 16 ALR 363, at 365 and particularly whether “it must be necessary to give business efficacy to the contract” and “it must be so obvious that ‘it goes without saying’”, it would be inappropriate to imply such a term. The plaintiff had a copy of the Planning Permit – see extract above from letter of 6 October 2003 from Abbott Stillman & Wilson to Bailey Heights. Finocchiaro was an experienced builder and developer, and as such aware of the need for a planning permit and accustomed to dealing with planning issues. Further, Bayles had a copy of all relevant documentation and could have brought the provisions of the Planning Permit to Finocchiaro’s attention when doing his exhaustive review of the defendant’s documentation.
91 I conclude that the defendant did not breach the April 2004 agreement.
The Claim in Negligence
92 Here the plaintiff is not relying on any damage to person or property. Defective workmanship is not in issue and it is clear that the claim is one for pure economic loss. It has been held that in such a case it is appropriate for the Court to proceed on the basis of a bias against finding a duty of care. For example, in Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2003] VSC 27, at paragraph 705, Gillard J stated:
“As a general proposition, the application of the Atkinian formula to personal injury and property damage cases is more likely to produce a duty of care than in a case where the claim is purely economic loss. If one is to talk in terms of a bias, one may say that in personal injury and property damage cases, there is a bias towards finding a duty of care, whereas in purely economic loss cases, the bias is to the contrary.”
And at paragraph 706:
“In the area of purely economic loss, the courts have proceeded with
caution - Perre's case at para93 per McHugh J.”
93 Mr Gray submitted that a building surveyor owed a general duty of care to an owner. Mr Hellyer disputed this. Mr Gray relied upon Moorabool Shire Council v Taitapanui (2006) 14 VR 55, where the Court of Appeal found that a building surveyor owed a duty of care to a subsequent owner in respect of the collapse of part of the foundations of a home and consequential loss.
94 Mr Hellyer also relied upon Taitapanui, and in particular, the comment of the President, obiter in part, at page 66:
“As suggested by the majority in Woolcock, the factor of known or likely reliance may best be understood as constituting, or signifying, vulnerability. Here, as the defendant surveyor knows, the owners (first and subsequent) of the house will rely — or will necessarily be dependent — on the building inspections having been done with reasonable care. Each owner is vulnerable to any failure on the part of the defendant to take such care. It may be for this reason that a comparable duty of care will not be held to arise with respect to the owners of commercial buildings, because — as the particular facts of Woolcock demonstrate — a commercial party involved with the buying and selling of commercial property may be assumed to be self-reliant in this regard. That class of case would therefore be distinguished from the present by the lack of any known reliance/dependence. No such question arises on the present appeal.”
95 I turn to consider Taitapanui.
96 At page 73 in their joint judgment, Ormiston and Ashley JJA stated:
“The categories of case in which a duty of care with respect to pure economic loss is to be found are properly to be seen as special. Foreseeability of loss, and an unbroken chain of causation, are necessary elements, but by themselves are not sufficient. An additional element which must be present has been variously described as involving one or more of known reliance or dependence of the plaintiff; the assumption of responsibility by the defendant; or the control exercised, or exercisable, by the defendant over the circumstances affecting the plaintiff’s interests. What ultimately determines whether a duty of care arises is the character of the relationship between the plaintiff and the defendant. Matters such as those which we have just mentioned, and others, bear upon the resolution of that question in the particular circumstances of particular cases; though not all of those matters will be at the forefront in every case. The question to be answered is whether, having regard to the salient features of the particular case, the connection between the parties is sufficiently close — though not necessarily physically close — as to give rise to a duty of care. When the defendant’s acts or omissions arise in connection with the discharge of statutory duties or the performance of statutory functions, the statutory framework is itself a salient feature to which consideration must be given.”
97 The focus upon “salient features” appears to have its genesis in Caltex Oil (Australia) Pty Ltd v The Dredge ‘Willemstad’ (1976) 136 CLR 529. In Taitapanui, the President stated, at page 60:
“At the same time, the decision in Woolcock reaffirms the fundamental point that the character of the relationship between the plaintiff and the defendant is critical to any analysis of duty of care to prevent pure economic loss. Specifically, the joint judgment referred with approval to the approach adopted by Stephen J in Caltex Oil (Australia) Pty Ltd v The Dredge ‘Willemstad’:
‘In Caltex Oil, Stephen J isolated a number of ‘salient features’ which combined to constitute a sufficiently close relationship to give rise to a duty of care owed to Caltex for breach of which it might recover its purely economic loss. … ’.”
98 In Caltex Refineries (Qld) Pty Limited v Stavar [2009] NSWCA 258, at paragraph 102, Allsop P stated:
“This rejection of any particular formula or methodology or test the application of which will yield an answer to the question whether there exists in any given circumstance a duty of care, and if so, its scope or content, has been accompanied by the identification of an approach to be used to assist in drawing the conclusion whether in novel circumstances the law imputes a duty and, if so, in identifying its scope or content. If the circumstances fall within an accepted category of duty, little or no difficulty arises. If, however, the posited duty is a novel one, the proper approach is to undertake a close analysis of the facts bearing on the relationship between the plaintiff and the putative tortfeasor by references to the ‘salient features’ or factors affecting the appropriateness of imputing a legal duty to take reasonable care to avoid harm or injury.”
He then gave an exhaustive list of seventeen potential salient features.
99 Ormiston and Ashley JJA, regarding the statutory scheme of the Act as a salient feature, considered it in some detail. The purpose of the statutory scheme is well summarised by Bell J in Ariss v Building Practitioners Board [2010] VSC 295, at paragraph 44:
“… The purposes of the statutory scheme are to ensure proper standards of building and construction, to protect the public from delinquent and unscrupulous building practices and to maintain the standing of the building industry. … .”
100 Clearly, here such purpose is irrelevant where there is no defective workmanship in issue.
101 In Three Meade Street Ltd v Rotorua District Council [2005] 1 NZLR 504, Venning J, in considering the relevant New Zealand Building Act, stated, at page 514:
“… A reading of the Act and the code leads inevitably to the conclusion that it is primarily concerned with the broad policy goals of promoting public safety and health rather than the protection of economic interests. … .”
102 In Reeman v Department of Transport & Ors [1997] 2 Lloyd’s Rep 648, the defendant erroneously issued a certificate of seaworthiness. The certificate was subsequently withdrawn when the error became apparent, which caused financial disaster to the plaintiffs, the owners of the vessel. At page 680, Phillips LJ stated:
“The statutory framework in the present case is one designed to promote safety at sea … What I cannot accept is … [the] further submission that, in the case of fishing vessel certificates, a subsidiary purpose for which the certificate is issued is to inform those who may, in the future, consider entering into commercial transactions, such as purchase or charter, in relation to the certified vessels. No trace of such a purpose is to be found in the statute … The protection of those whose commercial interests may foreseeably be affected by unseaworthiness of vessels forms no part of the purpose of the legislation and no part of the purpose for which fishing vessel certificates are issued.”
and at page 683:
“In a case such as the present … however, it will always be open to a party entering into a commercial transaction in relation to a certified vessel to take steps such as surveying the vessel or stipulating for contractual warranties, that will provide protection against the risk that the certificate does not reflect the true condition of the vessel.”
103 In summary, the statutory scheme, upon which Ormiston and Ashley JJA focused in Taitapanui as being “a salient feature”, is of little relevance in the present matter where it is rather the commercial interests of the plaintiff which form the basis of its claim.
104 In Taitapanui, at page 67, the President stated:
“… the factor of known or likely reliance may best be understood as
constituting, or signifying, vulnerability. … .”
105 In Taitapanui, all members of the Court accepted the explanation of the concept of vulnerability stated by the High Court in Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515, at 530-531:
“Since Caltex Oil, and most notably in Perre v Apand Pty Ltd, the vulnerability of the plaintiff has emerged as an important requirement in cases where a duty of care to avoid economic loss has been held to have been owed. ‘Vulnerability’, in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, ‘vulnerability’ is to be understood as a reference to the plaintiff's inability to protect itself from the consequences of a defendant's want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant. So, in Perre, the plaintiffs could do nothing to protect themselves from the economic consequences to them of the defendant's negligence in sowing a crop which caused the quarantining of the plaintiffs' land. In Hill v Van Erp, the intended beneficiary depended entirely upon the solicitor performing the client's retainer properly and the beneficiary could do nothing to ensure that this was done. But in Esanda Finance Corporation Ltd v Peat Marwick Hungerfords, the financier could itself have made inquiries about the financial position of the company to which it was to lend money, rather than depend upon the auditor's certification of the accounts of the company.”
106 In Perre v Apand Pty Ltd (1999) 198 CLR 180, at 225, McHugh J stated:
“… In many cases, there will be no sound reason for imposing a duty on the defendant to protect the plaintiff from economic loss where it was reasonably open to the plaintiff to take steps to protect itself. The vulnerability of the plaintiff to harm from the defendant's conduct is therefore ordinarily a prerequisite to imposing a duty. If the plaintiff has taken, or could have taken steps to protect itself from the defendant's conduct and was not induced by the defendant's conduct from taking such steps, there is no reason why the law should step in and impose a duty on the defendant to protect the plaintiff from the risk of pure economic loss.”
107 In Johnston Tiles, Gillard J stated, in respect of McHugh J’s comment, at paragraph 984:
“This approach puts an onus on a plaintiff to protect its own interests and take steps to avoid or minimise a possible risk of harm to those interests. But that has always been the common law. The law expects that people will conduct their affairs using reasonable care for their own safety and the safety of their property. We do not live in a vacuum. A person is expected to act carefully in his own interests.”
108 One of the salient features referred to by Allsop P, at paragraph 103 of Caltex Refineries (Queensland) Pty Limited v Stavar, was:
“…
(d)
the degree of vulnerability of the plaintiff to harm from the defendant’s conduct, including the capacity and reasonable expectation of a plaintiff to take steps to protect itself.
… .”
109 The plaintiff was in no sense vulnerable. Finocchiaro was an experienced builder and developer. In an internal memorandum made by Lisa Wijayanayake, a mortgage manager with Perpetual, she stated, with respect to the plaintiff’s application for a loan from it:
“… Clients have been in construction for over 20 years and Joe Finocchairo (sic) has within that time bought, constructed and sold many commercial properties.
He is a very astute businessman and possess[es] sound business acumen and conducts a very profitable business.
Longstanding client who has had an excellent history with Perpetual.”
110 In a written submission, Mr Gray referred to Finocchiaro as having “done hundreds of building projects”.
111 Finocchiaro had the means to protect the plaintiff as he in fact did by providing contractually that he was not required to settle without a building permit. Unfortunately, in retrospect, he chose to do so.
112 Mr Gray submitted that a duty of care on the part of the defendant only arose once a building permit had been issued by the defendant, that is after 19 November 2002, and that the fact that the plaintiff settled the purchase of the property without a building permit on 25 September 2002 was not relevant on the issue of vulnerability. In my view, there is no merit in this submission. The plaintiff had a clear ability to protect itself from the consequences of any negligence on the defendant’s part. It is immaterial that this opportunity arose prior to the granting of the first stage building permit.
113 The “salient features” in the matter before me are, in my view:
• The plaintiff was an experienced builder and developer; • The plaintiff was not vulnerable; • Defective workmanship, apart from a small exception, was not in issue; • The building in question was a commercial not a domestic building; •
The plaintiff was seeking to protect its commercial interests – its claim was purely financial.
114 In all the circumstances, I am of the view that the defendant did not owe a duty of care in negligence to the plaintiff.
First Floor Slab
115 In its Amended Statement of Claim, the plaintiff makes the following allegations with respect to defective workmanship, at paragraph 17:
“…
(a) Having stated in its inspection report dated 4 March 2003 that it appeared that reinforcement bars had not been installed at the stair opening and justification should be provided as to why they are not required, the defendant failed to require the builder to provide such justification and when such justification was not provided failed to require that this item be rectified. As a consequence cracking occurred to the stair openings. … (b) After the builder had removed the support and formwork for the first floor suspended slab for lot 3 prematurely, being prior to the time required by the engineering specifications, the defendant failed to advise the plaintiff and require that supports be put back in place. … .”
116 As I understand the plaintiff’s position, it claims the sum of $22,583.44 in respect of this alleged defective work. This is the sum it states was paid by it to Pace Construction Group Pty Ltd for rectification work.
117 The plaintiff claims damages in respect of this alleged defective workmanship both for breach of contract and for breach of a duty of care in negligence. As to a breach of contract, the relevant contract would be the late 2002 contract which I have concluded did not exist. As to negligence, in Taitapanui, Ormiston and Ashley JJA, with whom the President agreed, regarded the claim as one for pure economic loss even though the claim was based upon defective workmanship which caused a collapse of part of the foundations of a house – see page 68. The plaintiff had the opportunity to sue Bailey Heights (“Bailey Heights”) which carried out the alleged defective work, which it in fact did in the County Court proceedings referred to above. It could in no sense be said to be vulnerable. Apart from the presence of defective workmanship, the same “salient features” as outlined above are present with respect to this relatively minor claim.
118 I am not clear whether the plaintiff submits that its claim in negligence with respect to the alleged defective first floor slab should be considered separately from its general claim in negligence. If so, I am also of the view that the defendant did not owe a duty of care in negligence to the plaintiff in respect of the alleged defective first floor slab.
119 I note that Shane Leonard, a building surveyor called as an expert witness by the plaintiff, gave evidence that the premature removal of formwork for the first floor suspended slab, as alleged in paragraph 17(b) of the Amended Statement of Claim, was not the responsibility of the defendant.
Conclusion
120 The plaintiff has no cause of action against the defendant. There will be judgment for the defendant. I will hear from the parties on the question of costs and any other matters.
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