Brumby v Pearton
[1991] TASSC 77
•15 August 1991
Serial No 60/1991
List "A"
COURT: SUPREME COURT OF TASMANIA
CITATION: Brumby v Pearton [1991] TASSC 77; A60/1991
PARTIES: BRUMBY
v
PEARTON
FILE NO/S: 854/1983
DELIVERED ON: 15 August 1991
JUDGMENT OF: Crawford J
Judgment Number: A60/1991
Number of paragraphs: 43
Serial No 60/1991
List "A"
File No 854/1983
BRUMBY & ANOR v PEARTON & ANOR
REASONS FOR JUDGMENT CRAWFORD J
15 August 1991
The plaintiffs have owned the brick house and land at 212 Opossum Road, Norwood, since the land was conveyed to them by Mr and Mrs Lucadou–Wells on 25 May 1982. The footings have proved too shallow in clay which has expanded and contracted with variations of moisture content and as a result, the house has sustained major structural damage. The plaintiffs commenced this action for damages, based on negligence, in October 1983. The defendants were the late Mr J A Pearton and the second defendant, Mr Laver. They built the house. Mr Pearton died in 1987 and the first defendant stands in his place as his personal representative. For convenience I will refer to the late Mr Pearton and Mr Laver as "the defendants".
In September 1977 there was lodged with the Municipality of St Leonards a form of Application to Erect a Building which was in the defendants' names and which identified them as the owners of the land. The plan and specifications of the proposed house purported to have been prepared by Design and Drafting Service for the defendants. On 13 September 1977 a form of Building Approval was signed by the municipality's Building Surveyor, Mr Nieuwhof. It stated that the plan and specifications submitted by the defendants had been approved, "to be built according to plan and specifications approved by the Council".
Construction of the house by the defendants commenced on about 19 October 1977 and was completed by about 17 May 1978. There was no evidence of what the defendants intended to do with the property while they were building the house, but by 11 August 1978 Mr and Mrs Lucadou–Wells were the owners. They had acquired it from the defendants.
I accept generally the evidence of all of the plaintiffs' witnesses including the first plaintiff. Prior to agreeing to purchase the property from Mr and Mrs Lucadou–Wells, he and his wife went there on two or three occasions and each time spent at least an hour looking around and checking for any apparent signs of defects, "particularly looking for cracks in the brickwork and that sort of thing". None was apparent. They were told by the vendors that they had purchased it new in 1978. The plaintiffs took possession in May 1982.
In about October or November 1982 the plaintiffs noticed a few cracks in internal plaster which they did not consider significant. In about November 1982 they noticed a more significant crack leading from a lounge room window. Mr Brumby looked outside and found that brick work had dropped significantly. At about the same time doors were jamming, door frames having moved. There were then noticed substantial cracks in the exterior brick work of the building. Obviously the foundations had moved. All the cracks appeared within the space of about four months. No new cracks have developed since early 1983. Expert advice was sought. Eventually the plaintiffs were told that the foundations should be underpinned to prevent the house falling down. That work was carried out on the western side and north western corner in early 1986. It seems that the cracks did not substantially worsen after the initial four months of their emergence and some may have been improved by the 1986 underpinning. They do open and close, presumably because of variations in the moisture content of the clay base.
In about January or February 1983 Mr Brumby constructed a workshop under the house which involved some excavation and concrete work, but I find it did not cause any of the structural damage.
Photographs of the damage were tendered and I inspected the house. I will not describe the damage in detail. There was no dispute about it. It was so substantial as to lead the only valuer who gave evidence to conclude that the value of the property in its distressed condition on 20 November 1990 was $53,000.00, whereas if it had been undamaged the value would have been $96,000.00.
The house was built on clay on a sloping site. The footings are called continuous concrete footings or strip footings, having been poured into a trench. They continuously bear on the bottom of the trench. Because of the sloping site the footings are stepped with the result that the depth of the footings (the depth of the trench) is not uniform around the house. One witness, Mr Newman, who is an architect, said the variation in depth could be expected to be up to but not more than 300 millimetres. Another witness, Mr Widdowson, who is a building consultant, would expect variations of up to 200 millimetres. They were both speaking generally and not from investigations at this particular site.
Mr Newman gave evidence of measuring the depth of the footings at various points and he produced photographs of a rule being used at four locations. The first measurement was "a touch over 300 millimetres". The second and third were 500 millimetres. The fourth measurement was made near a step in the footing, and measured below the step at about 520 millimetres and above it at about 400 or "a touch over". The evidence of Mr Widdowson was that the footings were approximately 400 millimetres below natural ground level at some places. Mr Brumby measured the depth at one point at between 380 and 400 millimetres. No defence evidence was called about the subject. In answers to interrogatories both defendants said "the foundations were stepped foundations and I do not believe that at any place they would have been less than 380 mm (15 inches)". Upon the basis of all this evidence I am satisfied that the depth of the stepped footings varied between a little over 300 and 520 millimetres, and that much of the depth was in the vicinity of 400 millimetres.
The specifications did not state the required depth. The plan did not clearly provide for it, but from a section drawing of the proposed house my measurement of the drawn footings revealed a depth of between 600 and 700 millimetres. Mr Newman said that if the depth is to be scaled off from a plan, when step footings are to be used, the measurement will be the minimum depth for the footings. But he said it was not good practice to scale the depth from plans and that the specifications should be looked at for the measurement. The scale measurement from the section would only be an indication.
Mr Widdowson drew attention to the fact that the specifications provided that the footings were to be constructed "as shown on the drawings" and he measured the depth shown on the plan of the section to which I have referred at 700 millimetres. He said that a drawing is "one means of achieving an indication of what that depth or width or height may be".
The specifications required "(a)ll excavations to be concrete filled, shall be tested and approved by the Council before filling". The Building Regulations 1965, reg200(3) required that "all excavations for footings of buildings shall be taken down to solid ground approved by the surveyor, and no concrete for footings shall be placed in position until the bottom has been approved". The requirement for solid ground is important. In my opinion clay which is liable to significantly expand and contract with variations of water content depending on the elements, is not solid ground. However the evidence established that the "surveyor" did inspect and approve the excavations for the footings. The municipality's records suggest that its Building Inspector, Mr Gatty, who died some years ago, inspected the foundations on 2 November 1978. In answers to interrogatories the defendants said that "the only inspection made by the local Council was before the foundations were poured at the time the reinforcement was in position".
The house was built on clay which is common to a substantial part of the Launceston area including the suburb of Norwood in which the house is situated. All of the experts who gave evidence, and who had experience in the building industry, agreed that it expands and contracts with variations of moisture content and that the footings must be sufficiently deep to be out of the area where the moisture content will significantly vary. A vital issue in the case was the depth to which the excavations for the footings should have been dug by the defendants to avoid significant movement of the clay base and consequent damage to the structure of the house. I have no hesitation in concluding from the evidence that if the excavation had been taken to a substantially lower depth the damage would not have occurred.
I therefore turn to a consideration of the expert evidence concerning the depth to which the excavations should have been taken in accordance with sound building practices in 1977, and which could reasonably have been expected of a builder of a house on the reactive clay existing at the site. Mr Newman has been practising as an architect since 1953 and has been aware of the problem with reactive clays since then. It was his practice to design and supervise structures on such clay with the excavation for the foundation at a depth of three feet or one metre below natural ground level. He said there would have been no dwellings in the area of clay which he designed with footings of less than a metre in depth. He was of opinion that the expansion and contraction of the clay would be very much more than twice as great at 500 millimetres than at a metre. Shallow clay is subject to greater variation between wet and dry conditions. He produced a list of 54 builders who erected buildings to his design and under his supervision in the period between the 1950's and the 1970's. He selected from his files at random his designs for houses built in the period December 1959 and May 1963 and all of thirteen built on similar clay had footings of one metre or more in depth. He was of opinion that 900 millimetres should have been the absolute minimum for the plaintiffs' house. He was quite positive in his assertion that the damage to the house has been caused by the expansion and contraction of the clay causing the foundations to rise and fall. If the footings had been 1 to 1.2 metres deep any movement would have been minimal and the building would have had enough flexibility to withstand it.
A consulting engineer, Mr Pitt, gave evidence. In his opinion the house has been founded on reactive clays which were subject to seasonal changes in moisture content and subsequent volume changes as a result. Consequent on the volume changes, the foundations had been subjected to settlement which in some parts of the house was different from others, giving rise to differential movement. Based on his experience in the Tamar region the footings should have been at a depth of at least one metre and probably 1.2 to 1.3 metres. He has only practiced in the Launceston area since 1984, but gave evidence of having examined buildings in suburban Launceston which were constructed prior to 1978. It was his experience that the buildings which had problems were either constructed with insubstantial strip footings at a shallow depth or a slab of light construction. If the plaintiffs' house had had footings to a depth of 1 to 1.2 metres there was "every chance" it would have been sufficient to withstand differential movement with seasonal moisture changes.
Mr Widdowson's experience in the building industry in the Launceston area commenced in the early 1960s. He was, at various times, an apprentice builder, builder's foreman, construction supervisor and contract administrator and construction manager. Since 1981 he has been a private building consultant. The builders with whom he worked in the 1960's and 1970's had a common practice to construct footings in the type of clay involved in this case to a depth where it was not subject to "atmospheric influences". The normal rule was between 900 and 1,200 millimetres. His opinion was that the footings of the plaintiffs' house were not deep enough. He had had no experience with builders constructing footings only 400 to 500 millimetres deep and said that 500 millimetres was not a sufficient depth to avoid "atmospheric influences". He admitted to knowing of one or two instances of strip footings to a depth of 400 to 500 millimetres however.
Evidence was called for the defence from Mr Nieuwhof. He is presently a consulting engineer. For fifteen years to 1985 he was employed by the St Leonards Council as Municipal Engineer and Building Surveyor. Prior to that he had been employed in the field of civil engineering. At no time had he inspected the plaintiffs' property. He said that in his experience the Council generally required the depth of the excavation for footings to be 500 millimetres, unless there was filling or soft soil in which cases the excavation was required to be 500 millimetres into solid ground. It was not the practice of the Council to require footings to have a depth of 1 to 1.2 metres. In 1977 and 1978 it was well known that clay would expand and contract depending on moisture content. The Council's building inspector would require deepening of a particular excavation if he thought it was unsuitable. If he found the depth of a trench was less than 500 millimetres, say 400 millimetres, he should have told the builder to deepen the foundations. He believed that in the 1970's it was well known to "the vast majority of builders" that the clay soils in the area were reactive and that special care was needed to be taken. But he thought 500 millimetres was sufficient for footings.
The defence also called evidence from an expert in soil mechanics, Mr Ingles. He only came to Tasmania in 1984. In the greater Launceston area he has examined the excavated footings of about five houses built between ten and twenty years ago. His general observations since coming to Tasmania have been that strip footings were commonly only 450 to 600 millimetres deep, which was not sufficient, and he concluded that there had been insufficient recognition of the dangers involved with depths of that order. His evidence in this regard was supported by the evidence of Mr Nieuwhof to which I have referred.
The second defendant did not give evidence. No explanation for his failure to do so was given.
I have no hesitation in concluding that the depth of the footings was insufficient and that as a result the house suffered substantial damage. I am satisfied that, on the balance of probabilities, the standard of the majority of builders in the Launceston area in 1977 to 1978 was to excavate to a substantially greater depth than did the defendants. In particular the evidence of Mr Newman and Mr Widdowson satisfies me that reasonable and sound building practices at that time required footings to be at least 900 millimetres deep in clay of the type described. The failure of one of the defendants, Mr Laver, to give evidence makes it easier for me to be so satisfied, although even without that consideration I would still find for the plaintiffs in this regard.
The only indication in the plan and specifications of the depth required was between 600 and 700 millimetres. The depth of the footings was substantially less than that. But the indication of the depth in the section drawing did not affect the duty of a reasonably competent builder to go to a greater depth in accordance with the sound building practices in Launceston established by the plaintiffs' experts.
The evidence of Mr Nieuwhof established that his municipality required the depth to be a minimum of 500 millimetres. But I do not accept that that was a sufficient depth, nor that it complied with the standards of Launceston builders in general. In any event the depth of the footings did not comply with the municipality's standard.
Accordingly I find that some of the particulars of negligence in the statement of claim have been proved. They are that the defendants constructed the foundation level at a depth insufficient to contend with the natural movement of the clay base due to changing moisture content, that they failed to take into account sufficiently the soil conditions when constructing the footings and that they constructed the footings at a depth less than shown on the plan.
I hold that the defendants owed a duty of care to the plaintiffs to take reasonable care as builders and that they breached that duty in the respects I have just mentioned. The concept of reliance has played a major part of the reasoning of judges of the High Court in recent years when considering the question of duty. If it be important in this case, then I say that I infer that the plaintiffs, having carefully inspected the house for cracks and signs of damage before purchasing, and having found no such signs, relied on the builders having properly constructed the house and reasonably assumed that there were no defects of substance which might have deterred them from purchasing the house if they had been aware of them. There is sufficient proximity in the relationship between the plaintiffs and the defendants for the existence of a tortious duty of care.
The High Court judgments have been reviewed by a number of State courts and I do not propose to repeat that review. But I will refer to the judgments of at least some of those State courts. They are authority for the proposition that a builder can be held liable to a subsequent owner of the building for negligent construction work.
I n Miell v Hatjopoulos [1988] BCL 258 a developer engaged the defendant to build a block of units. The defendants so constructed a home unit that the damp course was bridged and moisture was able to rise up the walls. The developer sold the unit to a purchaser who subsequently sold to the plaintiff. The plaintiff's claim for damages before a magistrate failed and the appeal came before Johnston J of the Supreme Court of South Australia. Johnston J applied what had been said by Legoe J in an earlier appeal in the same case. Legoe J had said:
"Having read very carefully the decision of the High Court in Council of the Shire of Sutherland v Heyman ((1985) 157 CLR 424; 2 BCL 119) I am of the opinion that the respondent builders owed a duty of care to the appellants, the subsequent purchasers of the property. ... The damage which resulted was clearly of a foreseeable type of damage and the relationship between the builders and the subsequent purchasers was, in my judgment, within the general principles as discussed by the High Court in Sutherland v Heyman particularly in the judgment of Deane J (see also Jaensch v Coffey (1984) 155 CLR 549 at 583–587; 54 ALR 417 at 443–446)."
In National Mutual Life Association of Australia Ltd v Coffey & Partners Pty Ltd [1990] Aust Torts Reports 81–057 the issue was whether a statement of claim should have been struck out as disclosing no cause of action. The defendant civil engineers were engaged by the owner of land to determine the appropriate foundation system for a building to be constructed. After construction the owner sold to the plaintiff's assignor of the right of action. The statement of claim alleged that the defendant gave negligent advice to the original owner, negligently designed the foundations and thereafter negligently supervised the construction of the foundations. The matter went on appeal to the Full Court of the Supreme Court of Queensland. It was conceded that the loss was purely economic. Connolly J, with whom Macrossan CJ and Kelly SPJ concurred, reviewed the judgments of the High Court in Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1975–1976) 136 CLR 529, Jaensch v Coffey (supra) and Council of the Shire of Sutherland v Heyman (supra) and concluded at p68, 249:
"Nevertheless there are powerful reasons for believing that such a duty is owed and that succession to the ownership of the subject matter of the professional design should be regarded as creating a relationship of the necessary proximity. The reliance which a prospective purchaser of a building, which is seen to be standing in apparent good order, on the exercise of due care by the doubtless unknown designers and builders is at least as real as the reliance placed by the public on the due performance of public duties."
Connolly J considered that the decision of the House of Lords in D & F Estates Ltd v Church Commissioners of England [1989] AC 177 was in fundamental conflict with the line of authority in the High Court commencing with Caltex.
In Dutton v Jalapen Pty Ltd an unreported judgment of Ambrose J of the Supreme Court of Queensland (referred to in [1991] ACL 355 QLD 13 and delivered on 14 March 1991) the facts were that the defendant developer subdivided hilly land upon which it caused a great deal of fill to be deposited. It then sold blocks to the plaintiffs who constructed, or commenced to construct, houses. It was held that the filling work was negligently performed and was so inadequate that all of the land was unsuitable for building. The completed and uncompleted houses would have to be demolished. The building structures were only deficient because they had been designed for land which had been properly filled. Ambrose J was of the view that there was a sufficient proximity of relationship between the plaintiffs and the developer to make it liable. He thought it unnecessary to embark upon a consideration of whether the damage suffered was physical damage or "mere" economic loss, although he preferred the view that the damage to the structures was physical damage, whereas the loss sustained by paying a purchase price for worthless land was economic damage.
Opat v National Mutual Life Association of Australasia Ltd is also unreported (but referred to in [1991] ACL 65 VIC 1). The judgment was of Southwell J of the Supreme Court of Victoria and delivered on the same day as the judgment in Dutton. A developer employed a builder to construct a 23 storey block of units. The action was brought on behalf of a number of purchasers who bought units from the developer and on behalf of a number of others who bought units from purchasers who had earlier bought from the developer. The hearing before Southwell J concerned whether the statement of claim disclosed a cause of action against the builder. The pleading alleged that the builder had been aware that the units constructed would be sold to other persons for residential use and might thereafter be resold to others for residential use. It claimed that the builder owed a duty to the unit owners to take reasonable care in the construction of the building and that the duty was breached with the result that the units had serious defects.
Southwell J reviewed the "divergence of opinion between the High Court and the House of Lords on the question of the extent of a wrong doer's liability for purely economic loss". He referred to D & F Estates Ltd v Church Commissioners for England (supra), Murphy v Brentwood District Council [1990] 2 All ER 908 and Department of the Environment v Thomas Bates & Son Ltd [1990] 2 All ER 943, and to Caltex, Sutherland, San Sebastian Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (1986) 162 CLR 340 and Hawkins v Clayton (1988) 164 CLR 539. He performed an extensive review of those and other cases and concluded that he should adopt the reasoning of the Full Court of Queensland in National Mutual Life Association of Australia v Coffey (supra). However he also concluded that, in the category of case he was considering, "it is necessary for a plaintiff to plead and prove reliance in order to establish the required proximity". Because the plaintiffs had not pleaded that they relied upon the builder having taken due care in construction, he determined that the statement of claim did not disclose a cause of action. I suspect that an application to amend may well have followed. No issue was taken before me by the defendants that reliance was not pleaded by the plaintiffs.
Southwell J also referred to an unreported judgment delivered on 27 December 1990 by Malcolm CJ of the Supreme Court of Western Australia in CAI Fences Pty Ltd v A Ravi (Builder) Pty Ltd (referred to in [1991] ACL 110 WA 8) which appears to support the existence of a duty in a case such as this.
The final State judgment to which I refer is that in this State of Neasey J in Lowden v Lewis, unreported 601989. In that case the two defendants between them designed and constructed two units on a steep block of land. They sold one of the units to the plaintiff. A retaining wall at the back of the units collapsed and caused a driveway and parking area to also give way. Neasey J found the defendants liable for a breach of an implied term in the contract of sale that the structures would be fit for habitation and not defectively or improperly constructed. He also found liability in negligence. At p26 he said:
"Nor am I in any doubt as to the existence of the requisite duty. The closeness of the relationship between the plaintiff and the defendants, the former being the first buyer from the defendants after the retaining wall was built, although there was no contractual relationship between them at the time it was built, and the fact that the safety and stability of the driveway area depended upon the security of the retaining wall, are together a sure indication that the requisite proximity relationship existed".
I tend to the view that the nature of the loss suffered by the plaintiffs can correctly be labelled as damage to property rather than mere economic loss. The evidence established that the structure of the house was sound and properly constructed, the only defect being that the footings of the house were not placed sufficiently deep into the ground. As a result the structure of the house has suffered substantial damage. Even if wrong in this I would still find for the plaintiffs.
I turn to damages. By early 1986 it was reasonably considered by the plaintiffs that unless some underpinning work was carried out, as a matter of urgency, there was a real danger that an area of wall would fall down. Mr Newman specified the work to be done and supervised it. On about 22 April 1986 the plaintiffs paid a Mr Petterwood, a builder, $3,190.00 for that work and in about June 1986 they paid Mr Newman's firm $552.50 for his services. That expenditure was necessitated by the defendants' negligence and will be allowed.
There remains quite substantial work to be done to the house. First there must be more underpinning work carried out so that it is stable. Second, the damage to the fabric of the house will need to be reinstated. For example cracked brick work will need to be reinstated, floors repacked and other repair work performed. The evidence of Mr Pitt was that the cost of such work in November 1989 would have been $35,000.00 and that for the year following 5% should be added to reflect current increases in building costs. I accept this evidence of Mr Pitt with one reservation.
Included in Mr Pitt's estimate of the costs was $500.00 for demolition and replacement of an external driveway slab. There was no evidence of the cause sufficient to indicate negligence on the part of the defendants. The plan and specifications made no provision for an external driveway. Precisely what the damage was is not clear. I therefore propose to disallow $500.00 of Mr Pitt's estimate.
A further item in his estimate was $1,050.00 for demolishing and replacing the garage concrete floor. That has substantial cracking in it. Mr Pitt's evidence was that the cause is inadequate reinforcement in the slab. Mr Newman's opinion was that the slab was not sufficiently reinforced. In answers to interrogatories the defendants admitted that they did not provide reinforcement. The plan specified reinforcement with the symbol "F62" and the specifications required that reinforcement be provided "as indicated". The evidence established that the concrete was poured straight onto the clay base and because reinforcing was not included movement in the concrete has resulted. I find that negligence by the defendants is responsible and that the item should be allowed in the damages.
I propose to allow $37,500.00 as the reasonable cost of rectification work still to be carried out. It was conceded by the defendants that it was reasonable for the plaintiffs to delay carrying out the work and the assessment of this item of damages is calculated as follows:
Estimated costs of work in November 1989 – as allowed $34,500.00
Add 5% per annum to the date of judgment (21 months) $_3,000.00
$37,500.00
I also accept the evidence of the valuer, Mr Thomas, that once the rectification work has been performed some evidence that the house had been damaged will exist, (Mr Pitt agreed) and as a result the value of the house will still be diminished by $5,000.00 notwithstanding the performance of the work. That sum will be included in the damages.
The remaining item is a claim for damages in the nature of interest on the sums of $3,190.00 and $552.50 paid by the plaintiffs in 1986 for the work done then. The plaintiffs' counsel said it was claimed in accordance with Hungerfords v Walker (1989) 84 ALR 119. Counsel for the defendants contended that it should not be awarded, but if it is, he and the plaintiffs' counsel agreed on behalf of their respective clients, that the appropriate interest rate to be applied is 15% per annum. I have found it difficult to reconcile that agreement with the submission by the defendants' counsel that no interest should be awarded at all.
The only relevant evidence about the matter was that of the male plaintiff, Mr Brumby, who said that the two sums of money were paid when he was asked respectively "did you pay that account" and "did you pay it". There was no evidence indicating that the money was borrowed or that it came out of savings. There was no evidence at all as to its source. Nor was there evidence that if it had not been paid the plaintiffs would have used it in some way or that, by having to wait for reimbursement by way of damages, they have suffered loss.
Hungerfords does not require damages in the nature of interest to be awarded simply because a payment has been made by the plaintiff prior to trial and in respect of which compensation will be included in the damages award. The loss must be established by evidence. In view of the concession by the defendants that 15% per annum would be the appropriate rate of interest if it is to be allowed at all, only little evidence would have been necessary for that interest to be included in the award. However in the complete absence of any evidence of loss nothing in the nature of interest will be included.
There will be judgment for the plaintiffs against the defendants for $46,242.50 calculated as follows:
Amount paid to G Petterwood $ 3,190.00
Amount paid to Jack Newman & Associates $ 552.50
Assessed cost of rectification and repair work
yet to be carried out $37,500.00
Diminished value of the plaintiffs' property after
such work has been completed $ 5,000.00
Total $46,242.50
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