Brown Falconer Group Pty Limited v South Parklands Hockey and Tennis Centre Inc (No 2)
[2005] SASC 296
•4 August 2005
SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Application)
BROWN FALCONER GROUP PTY LIMITED & ANOR v SOUTH PARKLANDS HOCKEY AND TENNIS CENTRE INC & ORS (NO 2)
Judgment of The Full Court
(The Honourable Justice Duggan, The Honourable Justice Besanko and The Honourable Justice White)
4 August 2005
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - POWERS OF COURT - REOPENING APPEAL
Appeal - reasons for judgment - application to reopen appeal - whether method of assessing damages resulted in denial of procedural fairness to appellants - application refused - no denial of procedural fairness to appellants.
McAdam v Robertson (1999) 73 SASR 360, considered.
BROWN FALCONER GROUP PTY LIMITED & ANOR v SOUTH PARKLANDS HOCKEY AND TENNIS CENTRE INC & ORS (NO 2)
[2005] SASC 296Full Court: Duggan, Besanko and White JJ
THE COURT: The Court delivered reasons for judgment in this appeal on 9 March 2005 ([2005] SASC 75).
On 26 July 2005 the Court made various orders in the appeal. We rejected the appellants’ application to reopen the appeal and we made the following orders:
1 Appeal allowed.
2Paras 1, 2 and 6 of the orders made by the trial judge on 6 April 2004 will be set aside. The other orders made by the trial judge on that date will stand.
3The appellants will pay the respondents’ damages in the sum of $644,256.95 including interest.
4The application for a stay of the judgment pending application for a grant of special leave to the High Court and any ensuing appeal will be refused.
5The money standing in court to the credit of this action in an account entitled No 286 of 1997 South Parklands Hockey and Tennis Centre Incorporated v Brown Falconer Group & Ors, together with all interest accrued thereon at the date of payment out, is to be paid out of court to the solicitors for the respondents.
6No order as to the costs of the appeal.
The following are the Court’s reasons for the orders rejecting the application to reopen the appeal, for awarding interest in the manner indicated and for making no order as to the costs of the appeal.
The application to reopen the appeal
The respondents claimed damages against the appellants for negligent advice in relation to the construction of recreational facilities in the South Parklands. The appellants admitted liability at the trial and the principal issue before the trial judge was the assessment of damages. The appeal to this Court was against that assessment.
The trial judge ruled that the most appropriate measure of damages was the cost of necessary and reasonable work to rectify the playing surface which had been constructed on the site. He held that the rectification would require a reconstruction of the playing surface. The cost of rectification was assessed at $523,724 and, after allowing for certain other heads of damage, the trial judge gave judgment for the respondents in the sum of $622,766.95 exclusive of costs and interest.
This Court concluded that damages had been assessed on an incorrect basis. In our view the proper method of assessment was by way of calculating the expenditure which had been wasted on the project. We reached the conclusion that the amount which was appropriate to award on this basis was $452,608.
After we published our reasons, Mr Trim QC, for the appellants, requested an adjournment in order to take instructions on submissions which he might make as to the orders to be made by the Court. We refrained from making orders and the adjournment was granted.
When the Court resumed on 18 March 2005 Mr Trim applied to reopen the appeal. This Court has the power to reopen an appeal before the drawing up and entry of the formal orders of the Court (McAdam v Robertson (1999) 73 SASR 360). In this case we are one stage further back in that the Court has not yet made orders. Although the respondents submitted that we should not reopen the appeal they did not submit that we did not have the power to reopen the appeal. We will refer to the application as an application to reopen the appeal, although whether that is strictly accurate in view of the fact that orders have not been made is something that we need not consider. The power to reopen the appeal is not in issue.
The appellants’ application to reopen was based on the submission that to assess damages based on wasted expenditure would result in a denial of procedural fairness to the appellant. They argued that this Court had assessed damages on a basis which had not been pleaded or raised at the trial or on the hearing of the appeal. According to the submission, the extent of the use of the facility by the respondents from the time of the construction up to the present was relevant to an assessment of damages on the basis of wasted expenditure and this issue had not been explored properly by the appellants. The appellants asked the Court to reconsider its decision, allow the appeal and substitute a finding that the respondents were entitled to no more than nominal damages.
The respondents argued that the matters relevant to an assessment of damages based on wasted expenditure were the subject of enquiry and investigation at the trial and that they were discussed on appeal. They submitted that it was open to this Court to assess the damages on this basis on appeal and they opposed the application to reopen the appeal.
After hearing submissions, the Court adjourned to consider the application and the parties were directed to provide to the Court a list of references in the trial transcript to the issue of the use to which the facility had been put since its construction. In due course the references were forwarded to the Court.
In the reasons for judgment delivered on 9 March 2005, Duggan J (with whom the other members of the Court agreed) considered whether damages could be assessed on the basis of wasted expenditure. His Honour answered that question in the affirmative. He said (at [61] and [62]):
The respondents’ case for damages was not put forward at trial or on appeal on the basis of wasted expenditure. However, the evidence relevant to such a claim was before the court and the trial judge tested his assessment of the amount to be awarded by reference to the wasted expenditure method: reasons at [121]. Mr Trim QC, for the appellants, agreed that if there was a claim for damages, it was a claim for wasted expenditure. However, he pointed out that the claim was made on another basis and that, in any event, the expenditure was not wasted because of the continuous use of the facility by the respondents after it had been installed. In his submission only nominal damages should have been awarded.
The assessment of damages based on wasted expenditure is a straightforward exercise in the present case. The potential components of such an award were in evidence at the trial. The only controversial aspect is whether the respondents’ use of the facility is a matter to be taken into account. This was an issue before the trial judge, albeit in a somewhat different context. In the view that I take of the matter it is not unfair at this stage to consider whether the respondents should be compensated on account of wasted expenditure.
His Honour then proceeded to calculate the wasted expenditure and in the course of doing that he considered if any reduction should be made to recognise the use of the playing field by the respondents. His Honour said (at [67] – [70] inclusive):
On the other hand, I do not think that any reduction should be made for the past use of the facility. The standard of the facility was a far cry from the standard which had been stipulated. The playing surface remained even and level for only a short time. The trial judge found that the deformations in the playing surface were extensive. Players of hockey and tennis have to contend with erratic ball movement. The deformations have resulted in an increased risk of injury to players.
In the course of his reasons the trial judge said at [50]:
“The evidence was, and I find, that in hockey the run of the ball is a very important aspect of the game particularly with more skilled players. The surface is now not suitable for premier league competition in the district competition so that, not only is it not possible to play those games on this pitch, but also the Hockey Club cannot allow its facilities to be used for inter-state or international games or even by players practising for inter-state or international games. On 21 April 1998, Hockey SA wrote to the Hockey Club informing it of complaints it had received concerning the unevenness of the surface and asking the Hockey Club to inform it as to progress of these proceedings. I find that concerns about the uneven surface have not been confined to the plaintiffs.
For tennis, the variations in surface cause an erratic and irregular bounce of the ball. The ball not only bounces either high or low in some locations but in others it bounces either left or right instead of coming relatively straight on towards the players. In addition, the variations in surface level create a risk of injury to players running to play a stroke. On 31 July 2000, Tennis SA wrote to the Tennis Club. It referred to complaints it had received as to the uneven surface and stated that it would not recommend the facility for competitions while the pitch remained in that condition.”
In the light of these findings the trial judge held that, in its present state, the surface is unsuitable for little more than social tennis or hockey. He found that the playing surface is wholly unsuited for its specified purpose.
In the circumstances I do not think any reduction should be made in the award of damages for the respondents’ use of the defective playing field (cf. Roman Catholic Trusts Corporation v Van Driel Ltd & Ors [2001] VSC 310 (28 August 2001) at [264] – [266]).
We have considered the submissions of the parties made on 18 March 2005 and the references in the trial transcript to the issue of the use to which the facility has been put since its construction. We see no reason to change our earlier conclusion that it was open to this Court to assess damages on the basis of wasted expenditure. Our reasons for that conclusion are the same as those set out in our earlier reasons.
We think it is clear from the transcript of submissions made on the hearing of the appeal on 3 August 2004 that counsel for the appellants was given a full opportunity at that time to address the question of whether damages could be assessed on the basis of wasted expenditure and, if so, whether there should be any reduction in the damages for the use of the facility by the respondents. However, as one of the submissions made by senior counsel for the appellants was that he had not fully addressed the issue of whether there should be any reduction in the damages for the use of the facility by the respondents at the hearing of the appeal on 3 August 2004, we decided to afford to the parties one further opportunity to address that issue. On 5 July 2005 the Court caused a letter to be sent to the parties in the following terms:
The Court has received from both parties the references to the transcript relating to the question of the use of the facility as discussed at the hearing on 18th March 2005 (transcript page 31). The Court is not inviting further submissions on whether it is open to the Court to assess damages on the basis of wasted expenditure. However, the Court wishes to be satisfied that the parties have made all the submissions they wish to make on the topic of whether, assuming damages can be assessed on the basis of wasted expenditure, the damages are affected in any way by any use to which the facility was put.
The Court will sit on Tuesday 26 July 2005 at 9.30 am to hear any further submissions the parties wish to make on the topic identified above (and only that topic). If the parties, or either of them, have made all the submissions they wish to make on the above topic, then it is requested that you advise me within 7 days. If there are no further submissions the Court will deliver its decision on the appellant’s application to reopen the appeal at the above time.
We received further submissions of the appellants dated 14 July 2005, which we have carefully considered. The respondents did not put forward further submissions.
The Court sat again on 26 July 2005. At that time neither party sought to make any further oral submissions on the topic identified in the letter dated 5 July 2005. We rejected the appellants’ application to reopen the appeal.
We have considered the submissions made since 9 March 2005 on the topic of whether there should be a reduction in the damages by reason of the use made of the facility. We see no reason to change the conclusion in our reasons of 9 March 2005 that no reduction in the damages awarded for wasted expenditure should be made for the past use of the facility by the respondents. We reiterate the matters identified in our earlier reasons. We wish to record in particular that we reject the appellants’ submission that the real purpose for the construction of the facility was achieved. As the trial judge quite clearly found, the playing surface is wholly unsuited for its specified purpose.
Other Issues
Interest
As we have said, damages for wasted expenditure were assessed in the sum of $452,608. The respondent claimed interest on this sum.
On 26 July 2005 we made an order awarding damages in the sum of $644,256.95 including interest. That broadly represented an allowance for interest at what we considered the appropriate rate over the relevant period but acknowledging that in the absence of a cross-appeal the figure should not exceed the total amount awarded by the trial judge.
Costs
We did not interfere with the trial judge’s decision on costs. As to the costs of the appeal, on 26 July 2005 we made no order as to costs. In the circumstances, that was the appropriate order. Although the respondents were successful in holding the award of damages, they did so on a different basis from that adopted by the Judge. The respondents sought to uphold the basis adopted by the Judge and never abandoned it on the hearing of the appeal. It is difficult to be precise, but we considered that justice would be done if there was no order as to the costs of the appeal.
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