Cassar Plumbing P/L v Virginia Nursery P/L - [2012] SADC 99

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
CASSAR PLUMBING P/L v VIRGINIA NURSERY P/L
[2012] SADC 99
Judgment of His Honour Judge Clayton
3 August 2012
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - THE CONTRACT - CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS
The plaintiff retained work and supplied material for a fire sprinkler system in the defendant’s premises.
HELD: Plaintiff entitled to judgment for $55,680.60.
Defendant failed to establish alleged contractual terms. Counterclaim in respect of allegedly defective work and plaintiff’s refusal to perform further work dismissed.

CASSAR PLUMBING P/L v VIRGINIA NURSERY P/L
[2012] SADC 99

The plaintiff company Cassar Plumbing Pty Ltd carries on the business of a plumber. The business is small. Mr Joe Cassar is the only plumber employed by the company, although it does use sub-contractors. Mr Cassar's wife does the bookwork.
Since 1992 the defendant Virginia Nursery Pty Ltd has conducted a nursery at Gawler Road Virginia. The shareholders and directors of the defendant are Mr Jim Gencheff and his son. Mr Gencheff is the person who acted on behalf of the defendant company in connection with the work which is the subject of these proceedings.
Mr Gencheff's family had been involved in vegetable growing for several generations. The propagation of plants for vegetable growing led to the nursery business. Initially the business was wholesale only. A retail business commenced in October 2002. The business has grown over the years and the defendant now propagates plants which it sells to the trade and the public.
Over several years the defendant has gradually constructed a large complex, which, in addition to the nursery, contains a pet shop, a kitchen shop, a gift shop, a café and restaurant and a large mall of about 2000 square metres. The total area is 25 acres of which 10 acres is dedicated to the retail business and the outdoor plant area is 4000 square metres. [1]
[1] T270.
The plaintiff carried out various types of plumbing work at Virginia Nursery. In about May 2004 Mr Cassar laid a new natural gas line to connect with relocated greenhouses that were making way for the construction of the garden centre and then in early October 2005 Mr Gencheff asked Mr Cassar if he could lay a fire pipe to the nursery’s old retail section and install fire hydrants at various locations on the property. In July 2006 the plaintiff carried out underground pipe work in a covered outdoor walkway by laying a network to service fire hose reels and in August 2006 the plaintiff laid the underground sewer for toilets, kitchen drains and water lines for taps in the main hall.
There was never a formal contract. Quotations for jobs were never requested nor provided. The plaintiff simply rendered invoices for work and materials as the work was carried out. There were no monthly or other periodic statements of account listing the debits, credits and end of month balances. The defendant did not pay the amount of the invoices in full but made payments of whatever amount it was able to afford in reduction of its debt.
The construction of the complex was not financed by a bank loan but was paid for out of the profits of the business as the building work progressed. Mr Gencheff said that the defendant had issues with its bank and was in the process of refinancing.[2] Most of the tradesmen working on the complex were on a “drip feed”.
[2] T301.
When Mr Gencheff first approached him Mr Cassar was reluctant to accept the offer of work because, to use his term, he was “a one-man band” and he was afraid of losing other work. However when Mr Gencheff told him that “we are going to build up as we go”, Mr Cassar agreed to carry out the work.[3] Mr Cassar understood that he would have to do the work in stages. First there would be an underground fire service and underground sprinkler system, then a sprinkler system in the “old cash register part”. Mr Cassar said that he would carry out some work, go away for a while and then return when requested by Mr Gencheff. The project was expected to continue for three or four years or maybe even longer.[4]
[3] T21.
[4] T21.
Mr Cassar said that they came to an arrangement where the defendant would “pay every week slowly”. He said that the defendant was paying its accounts and there was no problem.[5] Mr Cassar said the arrangement was:
Give them a bill, basically that was it, do the work, we put so many hours that we did on the dockets, that is all noted, no diaries and all that sort of stuff, and then material-wise was, yeah, just got the Reece bill, not give it straight, put it on our dockets and that was it, give it straight to Jim.[6]
[5] T28.
[6] T29.
The arrangement was referred to by some of the witnesses as “do and charge”.
Mr Cassar said that the agreed hourly rate for labour was $60 an hour and that the cost of materials was directly charged back to the defendant with no added percentage.[7] There is a dispute as to the hourly rate.
[7] T29.
Mr Gencheff said that in August 2006, when they were doing the underground drainage in the restaurant, he spoke with Mr Cassar and asked what he was charging. He said that Mr Cassar “ummed and ahhed” but eventually he said “I will be charging you $50 an hour, normally I charge $70 per hour but since you have given us work all these years and you've got heaps to do I will charge you $50”.[8]
[8] T275.
Mr Cassar carried out plumbing work himself and also engaged two other plumbers whom the plaintiff paid. Most of the work was done on weekends because that fitted in with the plumbers other commitments. Also a scissors lift on the site, which was needed by the plumbers for some of the work, was not available on weekdays.
The plaintiff charged no mark up on the materials which it purchased from Reece Pty Ltd (“Reece”), a plumbing supplier, or the labour charge of the other plumbers. Accordingly the only source of profit available to the plaintiff was the labour charge for Mr Cassar.
The extent of the work carried out by the plaintiff is indicated in the Defence where the defendant alleges that during the period from May 2004 to September 2007 the plaintiff rendered tax invoices totalling $312,660.11. The defendant also alleges that the defendant had paid the plaintiff the sum of $227,043.37.[9] There is no reason to doubt those figures.
[9] Defence para 7.
Mr Gencheff approached Mr Cassar about the fire sprinkler installation. Mr Cassar said they discussed the likely cost of the fire sprinkler work and the estimated price. Mr Cassar gave an oral estimate of the cost of materials but not labour.[10]
[10] T217.
Mr Gencheff was asked whether he had any other conversation with Mr Cassar in which he instructed Mr Cassar to do the fire sprinkler work and he said:
We had a discussion, whether it was late 06 or January 07, I asked him - I confronted him and asked him "Were you capable of doing my fire system?". He said "Yes, I can do it". I said to him "What material would you be using?" He said “Best out of copper, it would last a lifetime, I wouldn't use galvanised type because it would rust out in five years". So then I said to him "I’ve had quotes for $85,000, $90,000 to do the whole job, what do you think it's going to cost me?" and he said "It will cost you more in copper". I said "Yes, I know, copper’s more expensive but how much more?" "10, $15,000". I asked him. He said "Yes, about that". I said "Well, fair enough". I said “Do you want to do a contract?". He said “It's too hard to do a contract". I accepted that because I'd been trading with him and knew him and that’s where we ended up doing the fire sprinkler system.[11]
[11] T275 l27 to T276 l5.
Initially the defendant used the services of a firm of engineers called SECON but services of that firm were terminated and the fire sprinkler system was designed and drawings prepared by Lucid Consulting Engineers Pty Ltd (“Lucid”).
The facility is divided into two discrete areas, a mall and an area that has been referred to as the specialty shops. Both areas are protected by fire sprinkler systems which are separate.
There is some confusion as to precisely what drawings for the fire sprinkler system were provided to Mr Cassar.
Mr Cassar said he looked at the first drawing from Lucid, took it to Mr Gencheff and said "I'm not putting it in".[12]
[12]T24 l20.
There was an argument as to whether the defendant had made discovery of or produced full-sized copies of Revision A and Revision B.[13] Mr Ross-Smith, counsel for the defendant, told the court that there were three drawings and the original drawing for the fire sprinkler system was dated October 2006. He said that is not the drawing that was furnished to the plaintiff to do his work.[14]
[13] T4.
[14] T5 l20.
Mr Cassar said that neither Revision A nor Revision B was the drawing from which he worked. It is likely that other drawings had preceded those "revisions", but those original drawings are not in evidence. [15]
[15] Revision A – Exhibit D9, Revision B – Exhibit P5.
Revision A was prepared in February 2007. Mr Cassar said that he first saw Revision A after he had started work on the fire service.[16] Revision B was prepared in August 2007, after the plaintiff had ceased work. Revision B cannot have been the drawing which the plaintiff worked from.
[16] T28 l35.
Revision B contains greater detail than Revision A. In particular it specifies 25 mm sprinkler droppers in the main hall. There is no such specification in Revision A. The use by the plaintiff of 20 mm copper piping for sprinkler droppers had given rise to a discussion between Mr Gencheff and Mr Cassar which provided the stimulus for the preparation of Revision B. I return to this topic later.
In a report dated 23 August 2010 Lucid stated that Revision B was prepared “for the purpose of contractor construction of final scope of work”. Revision B contained an additional scope of works including additional sprinkler protection to certain areas, repositioning of high temperature sprinkler heads in the kitchen and “Updated wall bulkhead detail”.[17] Revision B also included an upgraded system of pipe work feeding the sprinkler droppers.
[17] Exhibit 1 p 3.
Mr Cassar said that he no longer has possession of the drawing which he worked from because in accordance with his usual practice he left the drawing on the site.[18] The drawing that he worked from is not in evidence.[19] Mr Cassar said that compared with Revision A the first drawing "had more details through the guts, through the hallway".[20] The original drawing required criss-cross pipe work across the open atrium area.
[18] T27 l6.
[19] T152 l11.
[20] T25 l26.
Mr Cassar said that he told Mr Gencheff that he did not want to carry out the work depicted in the first drawing because it was going to look terrible. After discussion Mr Gencheff rejected the grid pattern.
Mr Cassar told Mr Pat Callisto of Lucid that he needed to redesign the work and put the sprinklers in the bulkhead so that they sprayed out. Mr Cassar gave evidence that he is still waiting for the further drawing which he requested.[21]
[21] T26 l34, T28, T67 - 68, T71 l17.
Mr Lyle Henderson, the managing director of Combined Fire Systems Pty Ltd (“Combined Fire”) is a qualified fitter and turner and also a qualified fire sprinkler installer. He was asked about Revision A. Mr Henderson pointed out that an endorsement on the document stated "Issued for final approval" and said it was not a drawing that you would base a construction on because it is a consultant's drawing. He explained:
…this is only for the purpose of tendering, okay? It means that it's a final drawing that the consultant will provide and therefore going back to the due process that we normally follow, we would then use this for design purposes ourselves.[22]
[22] T368 l28.
The author of the drawings was Mr Boere, a fire sprinkler designer employed by Lucid. He gave evidence that before Revision A there were four earlier versions called preliminary plans. He said that the purpose of Revision A was the final agreed layout of the fire services.[23]
[23] T434.
Mr Boere inspected the site in 2007 and noticed the use of piping which was less than the minimum size of 25 mm.[24] He had not encountered an installation which was non-complying in that way before. He told Mr Gencheff what he had seen.[25] It is significant that in his evidence Mr Boere did not refer to any non-compliance other than the use of 20 mm copper pipe.
[24] T438.
[25] T439.
The plaintiff commenced construction of the fire sprinkler system in late 2006 even though Lucid had not provided the drawings which Mr Cassar had requested.[26] Mr Cassar said that he had verbal instructions from Mr Callisto (of Lucid) to change the original design even though the further drawings had not been provided.[27]
[26] T71.
[27] T71, T91.
The plaintiff’s claim is for the work and materials included in Invoice 2770 dated 31 March 2007, Invoice 2784 dated 31 May 2007 and Invoice 2788 dated 3 September 2007.
There is a contest as to the circumstances in which the plaintiff ceased work. I accept the evidence of Mr Cassar on this topic. He said that the defendant fell behind with its payments and the plaintiff refused to carry out any further work until a lump sum was paid in reduction of the arrears. The sum which was requested was not paid and the plaintiff walked away from the site. At that time the job was incomplete.
The last day on which the plaintiff carried out any substantive work on the site was in mid-May 2009 although the plaintiff’s last day on the site was 13 August 2007.[28] Mrs Cassar had told her husband that they needed money in the bank before he could do any more work.[29]
[28] T133 l21, T198 l1, Exhibit P14.
[29] T261.
A significant proportion of the outstanding amount comprised the cost of material purchased from Reece. The plaintiff was in a situation where it was not entitled to any mark up on the cost of the materials which it purchased for the project so that the plaintiff, which carried the initial cost of materials until it was paid by the defendant, was financing the defendant’s project for no consideration other than the labour charge which the plaintiff made for the work performed by Mr Cassar.
Mr Cassar said that with the exception of the diameter of the copper piping used for sprinkler droppers the defendant had not complained about the plaintiff’s workmanship at the time he stopped work.[30] Similarly when Mr Cassar discussed the defendant's complaint with Mr Pat Callisto of Lucid, who had been instructed to investigate the matter by the defendant, they only discussed the sprinklers in the middle of the atrium.[31]
[30] T65 l26, T129 l5, T136 l29.
[31] T71 l13, T129 l15.
Mr Cassar denied that he did not return to the site because rectification work needed to be carried out. He said that he needed money to carry on because he was $70,000 or $80,000 in debt for materials which the plaintiff had purchased for Virginia Nursery, he was a sole trader, he had to pay the bills and he could not afford to go back on site.[32]
[32] T135 l24.
I digress to mention a peripheral issue. Apparently plumbers, like the plaintiff, preferred to use copper piping. Other fire service installers who are not plumbers preferred to use galvanised piping. Plastic piping was just coming in. The plumbers fabricate copper piping on-site where it can be cut, joined and welded. Copper piping has greater longevity. Galvanised piping must be fabricated in a factory off-site and shop drawings are necessary. This difference in approach has coloured the evidence of the witnesses. The different trades compete for the same work and overall the evidence infers that there is professional jealousy and competition between plumbers on the one hand and other fire service installers on the other.
Mr Cassar told Mr Gencheff that there were two ways of doing the job, copper or galvanised piping, but if Mr Gencheff chose rolled galvanised steel Mr Cassar could not do the work. Mr Gencheff had to make a choice. He chose copper.[33]
[33] T100.
The defendant in its counterclaim has raised many complaints about the plaintiff’s work. The reports of the defendant’s experts tendered at the trial now take the complaints further than the counterclaim. The defendant claims both the cost of rectifying allegedly defective work and also the cost of completing the sprinkler system.
The plaintiff's claim
The action commenced as a straightforward claim for the cost of work and labour done and material supplied.
The defendant disputes the amount which is claimed by the plaintiff and seeks to set off its counterclaim against the plaintiff's claim. The defendant has put the plaintiff to strict proof. Mr Ross-Smith, the defendant's counsel, argued that the best evidence rule should apply and the plaintiff should not be permitted to recover the cost of any material supplied unless the invoices from Reece, the supplier, have been provided and the plaintiff has proved that it has paid Reece.
The defendant has claimed credit against the plaintiff’s claim under six separate headings. It is convenient to consider the credits claimed by the defendant before turning to the three invoices which form the basis of the plaintiff’s claim.
Credits claimed by the defendant
First credit claimed by the defendant- Items not proved
I agree with defendant’s submission that a claim of $270.23 for "Tees, copper clips, stand-off brackets, capillaries" is not substantiated by Invoice 2770. Nor is a claim for $152.85 for "Gulf, stand-off brackets, Cooper clips head, hex". The amount of Invoice 2770 should therefore be reduced by $423.08.
I do not agree that the claim for $490 for "BOC oxygen industrial D020D" should be deducted because there is no supporting Reece invoice. That item relates to oxygen used in welding. Mrs Cassar gave evidence which proves that item and the Invoice, the first document in Exhibit D8A supports the claim. I allow that item.
Second credit claimed by the defendant – payments totalling $45,000 should be credited to the defendant rather than $30,000
The defendant claims that the sum of $45,000, rather than $30,000 which has been allowed should be deducted off the invoices.[34]
[34] T264 l1.
In his written submission, Mr Ross-Smith argued that three further payments of $5,000 each are established by Exhibit P8 pp 3 and 4. The alleged payments were not pleaded in the Defence and were not referred to during the course of the trial.
On my interpretation of Exhibit P8 there is no evidence of payments totalling $45,000.
Counsel's written submission also refers to Exhibit D10 pp 47 and 48, that is the defendant’s record of the invoices received from the plaintiff and the payments made by the defendant. It does not indicate the invoices in respect of which the particular payments were made. It only records five payments of $5,000 after 26 August 2007.
Pages 2, 3 and 4 of Exhibit P8 show that six payments of $5,000 have been credited against Invoice 2770. I accept at pages 23 and 24 of Exhibit P8 as an accurate record. The defendant has not proved that $45,000 has been paid in reduction of Invoice 2770.
Third credit claimed by the defendant- Invoice 1593 - 17 January 2007- $23,716.94
This invoice does not form part of the plaintiff's claim on the pleadings. The plaintiff was not on notice that this argument was to be raised. In the context of this case there was no reason for the plaintiff to prove that it had made payment to Reece of the amount in question. I reject the defendant's claim that it is entitled to a credit of this amount.
Fourth credit claimed by the defendant- charges for toilet fittings

The plaintiff acknowledged the entitlement to a credit for toilet fittings which had been claimed twice.
Fifth credit claimed by the defendant –Alleged overcharging for labour
The defendant's case is that the agreed labour rate was $50 an hour for Mr Cassar and less for the other plumbers. In counsel’s written submission the defendant agreed to pay $50 an hour for everybody.
In Exhibit D16, Invoice number 2833 dated 8 January 2007, which was shown to Mrs Cassar in cross-examination, the plaintiff had charged an hourly rate of $50 per hour. That exhibit supports the defendant's argument. That invoice was not the subject of any other evidence and the number 2833 appears to be out of sequence for an invoice issued in January 2007.
The evidence of Mr Cassar is that the agreed labour rate was $60 an hour. The other plumbers whom the plaintiff sub-contracted charged the plaintiff $60 per hour.
The rate claimed by the defendant in its counterclaim for a plumber to carry out rectification work establishes that $60 per hour was a reasonable rate. In some cases the defendant has claimed up to $90 per hour.
I accept the evidence of Mr Cassar and find on balance that the plaintiff has proved that the agreed rate was $60 per hour. I am influenced by the fact that $60 per hour is the rate which the plaintiff had charged the defendant in a number of the invoices without demur. Also $60 per hour is the rate which the plaintiff paid the other plumbers. Why would the plaintiff agree to charge the defendant an amount which was less than the rate which the plaintiff paid to the other plumbers?[35]
[35] T29, T102 l4.
Where the plaintiff has charged more than $60 per hour the amount of the charge should be reduced to $60 per hour.[36]
Sixth credit claimed by the defendant - Deliberate overcharging for material
[36] T119.
The plaintiff has acknowledged a mark-up on some of the purchases from Reece which were charged to the defendant in Invoice 2788.
In a his written submission Mr Miller acknowledged that Mrs Cassar had added a mark-up and suggested that around 10% should be deducted from the amount claimed by the plaintiff for materials purchased from Reece. The mark‑up on the Reece invoices was a consequence of Mrs Cassar's anger at the defendant's delay in making payment and requests by the defendant for details. There is no justification for the amounts which Mrs Cassar added to the Reece invoices.
I have adopted a different approach from that suggested by Mr Miller. I have allowed the actual amount of the Reece invoices that have been produced.
In the absence of a supporting invoice a claim for material should be disallowed.
Seventh credit claimed by the defendant - tools
The defendant seeks to reduce the plaintiff's claim by deducting the cost of tools purchased by the plaintiff from Reece.
I agree that the claim of $2,096.83 for an Auspex mini tool should be disallowed.
The other disputed tools which are described as "X tools display" "Hammer drill" "cordless torch" and "adjustable wrench" are shown in a Reece invoice but are not included in the breakdown for invoice 2784.[37] I make no allowance for them.
[37] Exhibit D8 p 49.
Defendant’s further submission
The defendant has argued that the plaintiff has not proved that it paid either of the other plumbers for their labour charges.[38] In the case of the labour charges the question is whether the defendant has had the benefit of the work, not whether the plaintiff has paid the contractors.
[38] T29.
Similarly with the material purchased from Reece the defendant has required proof that the plaintiff has made payment to Reece.[39] The question is not whether the plaintiff has paid Reece. If the plaintiff has incurred a liability to pay Reece that is sufficient. The fact that the plaintiff has supplied the material to the defendant is sufficient to give rise to a liability on the part of the defendant to pay the plaintiff.
[39] T30.
The amounts claimed by the plaintiff
Invoice 2770 dated 31 March 2007 - $62,599.90
In this invoice the plaintiff claimed $47,541 for materials, $9,368 for labour including sub-contractors and $5,690.90 for GST making a total of $62,599.90.
Payments of $5,000 were made against this invoice on 10 August 2007, 30 August 2007, 6 September 2007, 14 September 2007, 22 September 2007 and 26 September 2007. The plaintiff must give credit for the sum of $30,000, but not the sum of $45,000 which is claimed by the defendant.
Prior to adjustment the balance outstanding on this invoice is $32,599.90.
The defendant claims deductions of $913.15 from this invoice. I have already indicated that credit should be given for the amounts of $270.23 and $152.85 making a total of $423.08. After deducting that amount I find that the amount payable on Invoice 2770 is $32,176.82.
Invoice 2784 dated 31 May 2007 - $17,869.50
In this invoice labour was charged at $75 per hour rather than $60 per hour. The amount of the invoice should be reduced by $15 per hour for 104 hours, that is by a total of $1,560.
In the list of materials there are a number of items which are not supported by Reece invoices. They are:
§ Pre-rinse spray gun w/grip   $170.61
§ Auspex mini tool, Auspex jaws, gas jaws               $2,096.83
§ Hydraulic coupling   $2,427.69
§ Copper, diaphragm kit, tees, silent flush inlet          $356.96
In cross-examination Mr Cassar gave evidence about the Auspex item. He said it was a tool. When asked whether he took the tool with him when he had finished using it Mr Cassar could not remember.[40] His evidence does not satisfy me that the plaintiff is entitled to charge the defendant for that item.
[40] T116 l17.
The evidence does not disclose what the other items are. There are no relevant Reece invoices. The plaintiff has not proved its claim in respect of those items. Invoice 2784 should be reduced by $5,052.09 for items not proved.
The deductions from Invoice 2784 should therefore be $1,560 in respect of labour and $5,052.09 in respect of material items not proved, that is a total of $6,612.09.
I find that the plaintiff is entitled to $11,257.41 in respect of Invoice 2784.
Invoice 2788 dated 3 September 2007 - $35,147.34
It is agreed that $12,320 should be deducted in respect of toilet units which already been charged for.
I find that $15 per hour should be deducted in respect of 43.75 hours which had been charged at $75. The labour charge should be 43.75 hours at $60 an hour namely $2,625 plus $262 50 GST.
The plaintiff has acknowledged that a mark-up was incorrectly added to the amount charged for materials purchased from Reece. In his written submission Mr Miller suggested that an allowance of 10% should be deducted from the amount charged for materials. A more appropriate approach is to allow only those items which are supported by invoices from Reece. The claim should be restricted to the amount charged by Reece.
The total claimed on Invoice 2788 for material is $27,502.13. On my calculation Exhibit P8A includes invoices which justify an entitlement to $19,358.87. They are:
§ 70332218   $61
§ 70331472   $114
§ 70330772   $10,236.07
§ 29625671   $552 20
§ 29625476   $1,728.58
§ 70331240   $489.26
§ 70331260   $2,744.95
§ 25560641   $636 .92
§ 70333047   $46.33
§ 25560052   $295.68
§ 70330773   $2,111.30
The list of invoices for Invoice 2788 in Exhibit P8A contains several items which on their face look regular but which are unsupported by Reece invoices. For example one item which is described in the list in Exhibit P8A as "Dwv pvc pipe, silt traps, reducers, brass sockets accessories etc" gave rise to a charge of $5,005.45. There are differences between the descriptions of items in that list and the list which had been included in Exhibit P8. In Exhibit P8 the item in respect of which $5,005.45 was claimed was first described in typing as "Salamander, stands, dishwasher, gas boiler and accessories etc". The typing was crossed out by hand and the other description written in hand. However no invoices have been produced. In the absence of an invoice that rather substantial item cannot be allowed.
Accordingly with respect to Invoice 2788 I find that the plaintiff has proved an entitlement to:
43.75 hours at $60 per hour  $2,625.00
        GST  $262.50
        Cost of material supported by Reece invoices          $19,358.87
        Total  $22,246.37
The claim for $12,320 in respect of toilet units has been excluded.
Conclusions as to the plaintiff's claim for materials supplied and labour
I find that the plaintiff has proved the following claim:
Invoice 2770  $32,176.82
        Invoice 2784  $11,257.41
        Invoice 2788  $22,246.37
        Total  $65,680.60
Credit of $10,000 for use of incorrect diameter pipe
In his evidence Mr Cassar said that it was pointed out to him that he had installed 20 mm copper pipe when he should have used 25 mm copper pipe.
He said that pipe was installed at a time when he was asking for Lucid to give him more drawings. He said the plaintiff had done all the main runs and needed more precise drawings to put sprinklers in. The plaintiff had started installing droppers when a person, whose name he was not sure of, pointed out that the plaintiff had "got a couple of things wrong". He said "we got wrong droppers coming down, the pipe size is too small".[41] Mr Cassar accepted what he was told without question and acknowledged that the droppers had to be replaced.[42]
[41] T64.
[42] T64.
Mr Cassar said that following a discussion with Mr Gencheff it was agreed that the plaintiff would give a credit of $10,000.[43] The evidence of Mr Cassar as to how he came to the figure of $10,000 was:
I actually roughly worked it out. Went around, worked it out. Said "Right, we need this much material, this is what the material is going to cost. If we do it now it's going to take so long to do it...[44]
[43] T64, T128.
[44] T64.
Having worked it out Mr Cassar gave Mr Gencheff a figure of $10,000.
Mr Cassar said:
We were still waiting for drawings at that stage. I needed that other set of drawings. And the bills were racking up, so I needed to get paid a little bit. And also I needed drawings. That's why I said to Jim, I said to Jim "I know I've done a mistake. I need money for materials that I have forked out and money that I've spent obviously for the job". I don't know what it come up to at this stage. And I said I need a little bit of payment and I will carry on, but I need drawings as well, but definitely drawings. And I never got them.[45]
[45] T64.
Mr Cassar said there was no response. He spoke to one of Mr Gencheff's workers and then a day later he received a phone call from Mr Gencheff. He repeated "I need a little money to carry on". Mr Cassar said:
The conversation went I needed the $50,000 to carry on for materials. He said "Oh, come and do the work and we’ll pay you" and I said "No Jim, I need that up front", and after that, that was it. That was in the same sort of conversation, I needed the $50,000 to pay all the Reece bills and all that sort of stuff, yeah. I couldn't go there and work and not get paid. I had to either work there and get paid or work somewhere else and get paid to pay the bills.[46]
[46] T65.
Mr Cassar said that Mr Gencheff never complained to him about his work.[47]
[47] T65.
The validity of the defendants claim that 25 mm pipe should have been used was not an issue in the case. The defendant relies upon an Australian Standard, although that standard does not specify the diameter of pipes but refers to flow rate calculations. There is no evidence of any relevant flow rate calculations. Mr Cassar simply accepted without question an engineer’s statement that the plaintiff should have used 25mm copper pipe.[48] The validity of the engineer’s opinion is not supported by flow rate calculations.
[48] T76.
It is significant that there is no relevant drawing which specifies 25 mm pipe for the droppers from the main run to the sprinklers. Revision A does not specify 25 mm pipe. Revision B does specify 25 mm pipe but that is not relevant because it was not prepared until after the discussions between Mr Cassar, Mr Gencheff and Mr Callisto about the diameter of the pipe that had already been installed.
Mr Cassar was asked what would be involved in correcting the error. He said all that was required was to heat and unsweat the pipe, extrude the pipe out a bit more from the 50 mm pipe coming along the line and put another dropper in with the correct piping. He said that would take 10 or 15 minutes for each dropper.[49] About 40 droppers were involved.[50]
[49] T73 - 74.
[50] T74 l30.
If an allowance of 15 minutes is made for each dropper, the time to rectify 40 droppers would be 10 hours. At $60 per hour the labour cost would be $600. There would also be the cost of 40 x 25 mm copper pipes. On that basis the allowance of $10,000 which has been by the plaintiff made was not unreasonable.
Mr Gencheff now disputes that he agreed to accept $10,000 in settlement of the defendant’s claim in respect of the use of 20 mm copper pipe. I accept the evidence of Mr Cassar which is corroborated by the contemporaneous endorsement of the words "minus for incorrect installation as agreed" on Invoice 2788.
Even if there was no agreement, the sum of $10,000 was, on the evidence, sufficient compensation for the replacement of the 20 mm copper droppers.
The sum of $10,000 should be deducted from the plaintiff’s claim.
Conclusion as to the plaintiff's claim
Accordingly I find that the plaintiff's claim, subject to any liability to set off the defendant's claim, should be assessed at $55,680.60.
The defendant’s counterclaim
In his opening the plaintiff's counsel said that there had been no prior complaints or request for rectification by the defendant. He said that the plaintiff presented the invoices, stopped work when they were not paid, commenced these proceedings and then the counterclaim appeared in the pleadings with no prior complaint to the plaintiff about the work.[51]
The Pleaded Counterclaim
[51] T12.
The defendant alleges that it requested from the plaintiff a quotation for the supply and installation of fire sprinklers, the supply and installation of a fire emergency warning system and associated plumbing works.[52] Paragraph 3 of the Amended Defence alleges:
3.    The defendant required that:
3.1    the works be undertaken promptly and that the plaintiff work with and in and around other trades so that the defendant's construction of the retail complex was not delayed; and
3.2    the work would be undertaken in a good and workmanlike manner meeting Australian Standards, and SA Fire Service and Statutory requirements; which requirements were agreed to by the plaintiff.
[52] Amended Defence para 2.
The Amended Defence alleges that in or about April 2007 the defendant became concerned as to the work undertaken by the plaintiff and the slow progress of the works, which concerns were raised with the plaintiff.[53] The Amended Defence continues:
7.3    The plaintiff last undertook work on 16 May 2007 at which time:
7.3.1    the plaintiff's work was incomplete;
7.3.2    defective work of the plaintiff was not rectified;
7.3.3    the defendant has not undertaken its work in a good and workmanlike manner;
7.3.4    the plaintiff's work is not in accordance with Australian Standards, SA Fire Service and Statutory requirements and regulations...
[53] para 7.2.
Similar allegations are made in para 11 of the Amended Defence. It is alleged that the plaintiff undertook only two thirds of the works and failed to complete the works it contracted to perform[54] and that the plaintiff delayed in carrying out its works.[55]
[54] para 11.5.
[55] para 11.6.
In the counterclaim the defendant alleges:
2.    It was an express term of the Contract that the defendant by counterclaim would undertake the Contract Works:
2.1 properly and skilfully;
2.2 in accordance with the plans and specifications provided;
2.3as required by any Statute; and
2.4 using good and proper materials.
3.      It was an implied warranty of the Contract that:
3.1 the works would be performed in a proper manner to accepted trade standards and in accordance with the plans and specifications;
3.2 all materials to be supplied for use would be good and proper; and
3.3 the work would be performed in accordance with all statutory requirements.
4.    In breach of the Contract, the defendant by counterclaim:
4.1failed to perform the Contract Works properly and skilfully in accordance with the plans and specifications and using good and proper materials; and
4.2failed to properly, or at all, manage or supervise the Contract Works.
The alleged obligation is to comply with the "plans and specifications provided" but the plans and specifications which are relied upon have not been identified.
Paragraph 5 of the counterclaim alleges that the plaintiff incorrectly installed system buttons on toilets. Paragraph 6 alleges that the plaintiff has failed to install one fire hydrant. Paragraph 7 of the Counterclaim alleges:
7.    The plaintiff is liable for the following rectification, supply and installation of the fire sprinklers:
7.1    removal of all below ceiling pipe work and caps. It has been installed in many places in 20 mm copper, and it is to be replaced with a new range of pipes complying with drawing number Lucid LEC2830-F01 Revision A;
7.2    utilisation of flexible droppers where applicable;
7.3    remove and cap all 20 mm copper pipe installed to service three sprinklers below ceiling, sidewalls and concealed space sprinklers within the bulkhead areas;
7.4    re-pipe all sprinklers within the bulkhead to comply with Lucid LEC2830-F01 Revision A;
7.5 installation of all heads within the bulkhead concealed space and below ceiling that have been left out by the plumber;
7.6 supply and install all sprinkler heads required to complete all works;
7.7rectification of the sprinkler alarm valve and install 3 + 100 mm monitored valves, pressure switch, gauges and connect the existing jacking pump;
7.8 supply and installation of all new pipe that would have to be fabricated off-site;
7.9 check and verify that all pipe work installed by the plaintiff above the mini-orb has been installed to drawing number Lucid LEC2830-F01 Revision A to ensure that it meets with Australian Standards AS2118. If so required then alter the pipe works;
7.10 check and verify water flow and pressure in the existing water supply to service the new system, including the extra coverage sprinkler heads. If so required then upgrade the water supply or supply fire pumps;
7.11 check and verify that existing pipe installed by the plumber is watertight. Confirm that on completion of rectification works contractors undertaking the works will not be held responsible for water leaks or damage from pipe installed by the plaintiff; and
7.12 penetration of floors, walls, ceilings and chasing of walls, and sealing of penetrations.
In some cases para 7 alleges an obligation to comply with Revision A and in other cases the contractual provision which is alleged to create the liability is not identified. I mention in passing that Revision A does not specify the sprinklers or the droppers where it is alleged that 25 mm copper should have been used.
The defendant complained that the plaintiff had charged $60 per hour rather than $50 per hour which it alleges was the agreed rate. It also alleged that the plaintiff overcharged $20,000 for material. I have already dealt with those complaints in my consideration of the plaintiff's claim.
The defendant also complained that the plaintiff ceased performance of the works and abandoned the site. It alleged that the defendant has incurred additional costs because of the plaintiff's failure to complete the works within a reasonable period and complained that because the plaintiff was slow in carrying out the works it delayed the completion of the retail complex.[56]
[56] Counterclaim para 12.

In the Defence and Counterclaim the defendant counterclaimed the amount of $128,000 being:
13.1 completion of fire sprinkler system  $38,126.00
13.2 plumbing works, labour and material associated with 7.1 $14,874.00
13.3 rectification of Works by defendant by counterclaim $40,000.00
13.4 rebate given double charge for materials                 $20,000.00
13.5 rebate on labour component  $15,000.00
13.6 damages occasioned by the defendant by counterclaims delays in carrying out the Works.
The rebates claimed in paras 13.4 and 13.5 have already been taken into account in the consideration of the plaintiff's claim.
In the Defence and Counterclaim the defendant alleged that the plaintiff did not hold a relevant licence for the type of work performed[57] and claimed a refund of all the payments it had made to the plaintiff totalling $227,043.37.[58] Counsel abandoned that claim when opening the defendant's case at trial.[59]
[57] para 14.
[58] para 15.
[59] T263 l27.
In the prayer for relief the defendant counterclaims:
16. Damages for:
16.1 cost of rectifying the defects;
16.2 extra costs incurred in completing the Contract Works in accordance with the plans and specifications;
16.3 repayment of overpayments;
16.4 refund of all payments made;
16.5 damages from breach of the contract;
16.6 interest;
16.7 such further or other costs as this honourable court sees fit; and
16.8 costs.
As I have already mentioned it is no longer necessary to consider the claims in paras 16.3 and 16.4.
Defendants Counterclaim at trial
In his opening address Mr Ross-Smith advised that his client no longer pursued the delay claim.[60] He said that the "defect items" are those 14 defects identified between paras 5 and 7.12 of the defendant’s counterclaim.[61] Paragraphs 5 and 6 are inconsequential. The items listed in the various subparas of para 7 all relate to the fire sprinkler system.
[60] T26.
[61] T264 l1.
By the time of trial the defendant’s claim had grown to $632,863.02 based on the assessment of Mr Centofani of C&W Building Services Pty Ltd (“C&W”).[62]
[62] T487.
The C&W assessment is unrelated to the defendant’s pleading. The items giving rise to the assessment extend beyond the fire sprinkler system. The basis for the C&W assessment is inconsistent with the contractual arrangement between the parties and it is based on incorrect assumptions. For reasons which I explain later I reject the C&W assessment.
In his written submission Mr Ross-Smith identified the following claims which were no longer pursued:
§ any reduction in the labour rate because the plaintiff was unlicensed
§ the installation due process described in s 2.3 of Mr Kubler’s report
§ the off plumb booster (Item 4 in Mr Robinson's list)
§ the 15 mm sprinkler heads which were installed in lieu of 10 mm sprinkler heads (Item 17)
§ unmonitored butterfly valves
The written submission advised that the items claimed by the defendant were Items 1, 2, and 5 to 16 of Mr Robinson’s list. I refer to the list later.
For the reimbursement of the cost of repairs already carried out and the cost of repairing defects yet to be carried out, the droppers and brackets in the centre of the main mall, the defendant counterclaims:
§ the amount of the claims for reimbursement - $55,383.07.[63] (This is the amount of invoices from Combined Fire Services and Mr McConnell).[64]
§ items still to be carried out $451,743.33.[65]
[63] para 125.
[64] Exhibit D10 pp 82 to 100.
[65] para 12.7 and Appendix F of the Defendant’s Written Outline of Submissions.
On that basis the counterclaim had become $507,126.40.
The defects in respect of which the defendant makes a claim are the fire installation items in s 2.2 of Mr Kubler’s report.[66] They have been identified by Mr Robinson in his report by the numbers1 to 18.[67]
[66] Exhibit 1 p 7.
[67] Exhibit 3 p 62 & Defendant’s Written Outline of Submissions para 76.
Counsel’s written outline said that the three main items are:
(1) The undersized dropper pipes which have been rectified,
(2) The undersized pipes in the centre of the mall which have not yet been replaced,
(3) The defective brackets (no rubber sleeves) which have not been replaced.[68]
[68] Defendant’s Written Outline of Submissions para 77.
Attachment F to the defendant’s written submission is a table setting out 16 claims derived from the C&W report. Those claims total $451,743.33. I return to consider the C&W report later.
The plaintiff’s response to the counterclaim is that the work was not completed because of the failure of the defendant to make payments. The plaintiff also alleges that the only work which was required to be redone was the replacement of the 20 mm copper droppers for which the credit of $10,000 was given.
As I have mentioned Mr Cassar gave evidence that with the exception of the diameter of the copper pipe used for droppers, Mr Gencheff had not complained about the plaintiff’s workmanship up until the time when the plaintiff stopped work.
As pleaded the defendant’s counterclaim depends largely upon an alleged failure to comply with specifications alleged to be in Revision A.[69] The allegations in para 7 of the counterclaim are not made out because the defendant has not demonstrated that Revision A contains the specifications alleged not to have been complied with.
[69] para 7.
Also the evidence does not establish that Revision A formed part of the contract.
The evidence at the trial in support of the Counterclaim
Mr Gencheff gave evidence for the defendant. In addition Mr Paul Ware from Compliant Fire Services who had quoted for rectification of the fire sprinkler work, Mr Kessen an employee of the defendant, Mr Henderson the managing director of Combined Fire Services, Mr Callisto and Mr Kubler of Lucid, and Mr Centofani of C&W Building Services Pty Ltd gave evidence. In addition the defendant relied upon reports from Lucid Consulting Engineers Pty Ltd (Mr Kubler) and C&W Building Services Pty. Ltd.
Mr Gencheff
Mr Gencheff said that in around April 2007 he looked up at the roof of the restaurant and he said to Mr Cassar “Joe, these pipes, what are you doing? They're too small. You know, I've never even used them in irrigation, they are just far too small” and Mr Cassar said “No, no, that's all right”. That led to Mr Gencheff telephoning Mr Callisto of Lucid who despatched one of his colleagues to check out the work.[70]
[70] T276.
Mr Gencheff was asked whether the Lucid employee referred to any defects in the work that had been done and replied "I can't remember if I saw the full detail but I already knew what some of the problems were, a 20 mm pipe instead of 25 mm pipe feeding each sprinkler head”.[71] The significance of that evidence is that it indicates that the only defect that had been identified to that time was the incorrect diameter of the copper piping used for the droppers. It is significant that the evidence was based on an inspection by an employee of Lucid, the designer of the system. The dropper problem existed in both the atrium and the area of the specialty shops. There was no reference to any of the other matters which the defendant has now raised.
[71] T277.
Mr Gencheff said that Mr Callisto wrote to him on 14 November 2008.[72] In the letter Mr Callisto advised that Mr Mattei, a Sprinkler Design Drafter, employed by Lucid had attended at the site in July 2007. The letter referred to the following defects:
·    The use of 20 mm droppers to sprinkler heads in numerous locations were noted, and it was reported that this is non-compliant with the relevant Australian Standard AS2118.1 - Automatic Fire Sprinkler Systems.
·    In the main Retail Hall, the Sprinkler Fitter had utilised 20 mm copper to feed several sprinklers, was also noted as being non-compliant with the above referenced standard.
·    Sprinkler spacing in several locations did not meet the requirements of AS2118.1
[72] Exhibit D10 p 69.
The letter was written in the ordinary course of business by a consultant who had been specifically instructed to check out the plaintiff’s work. It is objective and contemporaneous evidence of the facts stated. It gives rise to an inference that there were no other problems at that time.
Mr Callisto's letter to the defendant was critical of Mr Cassar on the basis that he was not experienced in the installation of fire sprinklers but had a predominantly sanitary plumbing background. I have mentioned the professional jealousy between the two trades.
So far as the comment in the letter about the spacing of the sprinklers is concerned, the location of the sprinklers was the responsibility of Lucid as the designer of the system. I accept the evidence of Mr Cassar that he had requested Lucid to provide drawings. The drawings should have specified the spacing of the sprinklers, but the drawings which Mr Cassar requested were never provided. There is no evidence that the plaintiff was ever provided with drawings which specified the spacing of sprinklers. The plaintiff cannot be criticised if Lucid did not provide Mr Cassar with drawings which specified the sprinkler spacing.
The two other points raised by Mr Callisto in the letter of 14 November 2008 related to the use of 20 mm copper pipe for droppers to sprinklers. They both raise the same issue. It is significant that in November 2007 Mr Callisto and Lucid did not identify any deficiencies with the plaintiff's work as a consequence of the inspection in July 2007 other than the diameter of the copper piping and the sprinkler spacing.
Mr Gencheff said that at the end of September 2007 Mr Ware of Compliant Fire Services Pty Ltd submitted a tender to the defendant to "carry out the rectification, supply and installation of the fire sprinklers…" The quote was for the sum of $79,983.20. The quotation did not identify any defective work of the plaintiff. In fact the quotation stated:
9. We assume that all pipe work installed by the plumber above the mini-orb has been installed to Lucid’s documentation to meet with AS2118, no allowance has been made to alter this pipe work only install the below ceiling sprinkler.
and;
11. We assume that the existing pipe installed by the plumber is watertight…[73]
[73] Exhibit D10, p 79.
The quotation by Compliant Fire Services did not separate the cost of "rectification" of existing work from the cost of "supply and installation" of new work.
There is no basis on which can be held the plaintiff responsible for new work which had yet to be carried out. If the plaintiff had carried out additional work to complete the fire sprinkler system the plaintiff would, on the basis of the “do and charge” arrangement, have been entitled to charge for the additional work involved itself. The Compliant quotation does not identify defective work of the plaintiff and it does not establish the cost of correcting any defective work. Additionally the defendant did not accept the quotation but used another plumber, Combined Fire Services, which was cheaper.[74]
[74] T284.
The Compliant quotation is of no assistance from the purpose of this case.
Mr Gencheff gave evidence about two invoices from Combined Fire Services Fire.[75] The first invoice is described as being "Re Design Valve Set Alterations and Modifications Material to the Second Fix and Labour." With GST the amount of that invoice was $13,200. There is nothing on the face of that invoice which connects the work described with the piping used for sprinkler droppers or any allegedly defective work by the plaintiff.
[75] Exhibit D10 pp 82 and 83.
The second invoice, for $24,926 including GST, was "Final Progress Claim. Labour Materials and Certification Liaise with CFS". Again there is nothing on the face of that invoice to connect the subject matter of the invoice with any allegedly defective work carried out by the plaintiff.
Mr Gencheff gave evidence that the two invoices from Combined Fire Services had been rendered to the defendant "…for the cost of rectification for work which CASA had done".[76]. The actual work carried out by Combined Fire Services was not identified on the face of the invoices nor was the work of the plaintiff which it is claimed had to be rectified. The evidence does not establish any basis for holding the plaintiff liable for whatever work was the subject of those invoices.
[76] T284
Similarly no basis has been established for holding the plaintiff liable for other invoices from Richard McConnell Plumbing which appear between pp 84 and 100 of Exhibit D10. No allegedly defective work has been identified, the rectification work has not been identified and the cost of the rectification work has not been shown to be reasonable. I noted Richard McConnell Plumbing charged for labour at $65 per hour which was more than the rate charged by the plaintiff.
Mr Gencheff did say "basically all lines that were below the main pipe had to be redone".[77] However he did not explain why that was the case or why copper was replaced with flexible stainless steel. Mr Gencheff did not explain the genesis of that requirement but Mr Henderson of Combined Fire Services, whose evidence I refer to later, did explain why the lines had to be redone. [78] That work was carried out to comply with Revision B which was not published until August 2007. The plaintiff never had an obligation to comply with Revision B. Mr Cassar did not perform any work from about late May 2007.[79]
[77] T285 l28.
[78] T286.
[79] T277 l25.
Mr Gencheff said in evidence that he contacted Mr Cassar and he agreed that Mr Cassar said "he wanted money before he would come back and do any more work or do the rectifications".[80] Mr Gencheff wanted Mr Cassar to return and complete the work. If the plaintiff had carried out the rectification work Mr Gencheff would have used him to continue with the fire sprinkler installation however he used someone else.[81]
[80] T277 l35.
[81] T278 l5.
Mr Gencheff said that the last contact between himself and Mr Cassar was most probably in September 2007 when Mr Cassar said "I want my money" and Mr Gencheff told him to finish the job and fix the problems.[82]
[82] T280.
Mr Gencheff said that the total cost of the remediation work carried out by the combination of Combined Fire Services and Mr McConnell was just over $50,000.[83] For the cost of rectification the defendant counterclaims $55,383.07. However with the cost of the additional work still to be done after the plaintiff stopped work the defendant's counterclaim has grown to over $630,000.
[83] T286 l26.
Mr Callisto of Lucid
Mr Callisto said that he first met with Mr Gencheff in October 2006 when Lucid was working with the defendant to obtain building approval for the extensions to the nursery. Because the CFS had concerns his office recommended that Mr Callisto become involved. His role was to specifically facilitate building approval and resolve a solution with the CFS that would achieve Building Rules consent. At a meeting with the CFS it was resolved that the building would be fully sprinkler protected which would achieve Building Rules consent.[84] Mr Callisto said they undertook a sprinkler design from that point.[85]
[84]T392.
[85] T392.
Mr Callisto said that Lucid was responsible for the design of the fire sprinkler system for the extension at Virginia.[86] Mr Rob Boere, a specialised Fire Design Drafter, was commissioned to prepare a drawing which he did in about October 2006. After the preliminary drawing there were revisions in February 2007.
[86] T394.
Mr Callisto said there were issues from the architect and Mr Gencheff regarding the aesthetics and the drawing was revised and reissued in a different design layout.[87] It seems likely that it was a drawing prepared in October that had been given to Mr Cassar. No copy of the drawing which Mr Cassar referred to for the purpose of his work is in evidence.
[87] T394.
Mr Callisto said that the first drawing was for comment by Mr Gencheff and an architect; it was not for a trade.[88] Revision A which followed was to obtain approval from the CFS which was given in March 2007.[89]
[88] T395.
[89] T359.
The situation therefore was that Mr Gencheff dealt with Mr Callisto who dealt with Mr Boere who drew plans, but the plans were never given to Mr Cassar who was the person carrying out the work.
When Mr Gencheff told Mr Callisto that the plaintiff had been selected to do the fire sprinkler installation work Mr Callisto expressed concern regarding the experience of Mr Cassar.[90]
[90] T396.
Mr Callisto said that in July 2007 Mr Gencheff called him and expressed concern about the use of 20 mm pipe.[91] Mr Callisto arranged for Mr Mattei, one of his “fire drafters”, to visit the site.
[91] T396.
Mr Callisto said that he forwarded an e-mail message to Mr Cassar on 23 July 2007.[92] Mr Cassar denied receiving the message. It attached a page from the Australian Standards and advised that when Mr Gencheff first raised the issue with him on 13 July2007 he advised Mr Gencheff that 20 mm pipe work was not acceptable in fire sprinkler systems. The message stated that Mr Boere, the Lucid Sprinkler Design Drafter, would be visiting the site the following day “to assess the sprinkler system scope of works for the next stage of works”.
[92] Exhibit D10 p 65.
It is inconsequential whether Mr Cassar received the e-mail from Mr Callisto on 23 July 2007 because by the time the e-mail was sent the allegedly deficient work had already been carried out.
The Australian Standard provides that “Pipe sizes shall be determined by full hydraulic calculations subject to a minimum of DN 25”.[93]Apparently Lucid did calculations but did not provide them to Mr Cassar.[94] The calculations are not in evidence. The Australian Standard does not refer to the diameter of the piping.
[93] AS 2118.1-2006 para 10.5.2.
[94] T398.
Mr Callisto said that in August 2007 the drawing was developed and reissued to include extra areas and additional details to fast track any new contractor.[95] That drawing was Revision B.
[95] T400.
A comparison of Revision A and Revision B shows the two drawings to be significantly different. Revision A contains no detail of the sprinklers or the droppers while Revision B does show the location of the sprinklers and specify 25 mm pipe. Revision B also specifies larger piping in other parts of the system. Mr Henderson, whose evidence I discuss below, referred to this topic.
Mr Ware – Compliant Fire Services
As I have mentioned Mr Ware prepared a quotation to carry out certain work for $79,983.20.[96] He is an electrician not a plumber. His instructions were “just to finish the job as per the design drawings issued”.[97] The Compliant quote was prepared in accordance with Revision B. The plaintiff had never been required to comply with Revision B which had not been prepared at the time it ceased work.
[96] Exhibit D10 p 78ff.
[97] T336 l35.
Furthermore, parts of the quote, for example paras 5, 6 and 7, relate to the supply of new equipment. The plaintiff cannot be held responsible for those items.
To the extent that the quote relates to work which had yet to be carried out or materials yet to be supplied there is no basis for holding the plaintiff responsible for those costs.
Mr Ware noticed that the sprinkler droppers were 20 mm rather than 25mm “as per the drawings”. He said that the droppers had to be 25 mm because that is what the design drawing stated.[98] The drawing that he referred to was Revision B.
[98] T338 l8.
Mr Ware assumed that Lucid had carried out a hydraulic calculation as required by the Australian Standard. As I have mentioned there is no calculation in evidence. Later Mr Ware said that if you do not use 25mm droppers the calculations do not work properly.[99] There is no evidence of that.
[99] T343 l31.
In any event the quote by Compliant was considered too high. It was not accepted by the defendant and is therefore not relevant.[100] Without wishing to be disrespectful to Mr Ware the Compliant quote is of no assistance for my purposes.
[100] T339.
Mr Henderson - Combined Fire Services

Combined had submitted an unsuccessful quote for the fire system in about November 2006. Then in about August or September 2007 after Mr Callisto of Lucid asked Mr Henderson for a quotation Mr Henderson went to the site to view the "defective work". He said:
...I did meet the client out on site and clearly we walked down through the mall and there was a number of sprinkler heads that were poorly finished and I was asked to look at that area, but predominantly over here in this - I call them the specialty shops… I was asked to also look at the sprinklers within there. The building was, I'd say, 80% complete at that moment. The sprinklers were pretty difficult to see because the majority of our work typically is above ceilings. So we were required to go above the ceiling and walk around in the ceiling space and identify the problems that were up there. It was incomplete works, but the first thing that I noticed that the sizing of the pipe works was in adequate.
Mr Henderson was asked to describe the inadequacy of the sizing of the pipes and said:
...Ordinary hazard systems are what is normally in shopping centres and they generally require large wall pipes. My witnessing of the pipes above the ceiling were very small and therefore the calculations couldn't have been completed because hydraulically the system would have been stressed and potentially wouldn't work. It would suppress a fire, but whether or not a fire took hold and gained more momentum, it would be unlikely that those pipe diameters would be able to feed the required amount of water which is undertaken - we do hydraulic calculations well and truly back from the front end and we make sure that we can actually calculate the litreage per minute that comes out of each sprinkler and that is based upon the information that is from the street. So we go right back to hydraulic assessments given to us by SA Water. We get what's called a network analysis and generally a fire plug test and that clarifies the exact amount of water which can be provided to make sure that the system complies. So from my observation above that ceiling that the pipes themselves in the specialty shop area were only of 40 mm diameter and the mains feeding it were 50. Typically a project of that nature would probably have an 80 mm main running to it and a minimum probably a 50 mill range. So that was the observation, and also within the second-fix items, the sprinklers themselves went down - protruded down through the ceiling space, so what you actually see from under a ceiling here and looking at the sprinklers above here, that they were - the drop of pipe was of 20 mm, and that is just completely unheard of...[101]
[101] T353-to 355.
He said that you cannot use a 20 mm dropper because you just can't get the flows through it and the minimum requirement is 25 mm.[102]
[102] T355.
When asked about the Australian Standard AS 2118 he said:
"That prescribes the process of how you make those determinations on part sizes and the hydraulic calculations, so it is a standard which we are all governed by to make sure that the systems comply to the building code." (T 355)
The significant thing about the evidence of Mr Henderson is that his criticism was not concerned so much with the diameter of the sprinkler droppers as it was with the main pipes and the other pipe work which fed the sprinkler droppers.
Combined redesigned the system. They changed the concealed space sprinklers from 15 mm to 10 mm which Mr Henderson said was industry‑standard and they “upsized the mains”. They hydraulically linked the mains "to get the hydraulics to work" because it was a "dead end system" and they changed the sprinkler placings to comply with Australian Standards.[103]
[103] T357.
It is apparent that what Mr Henderson described as "rectification work" was not confined to replacing the 20 mm sprinkler droppers. The invoices from Mr Henderson's firm included further work such as completely re-manufacturing a sprinkler control valve which was entirely unrelated to the sprinkler droppers.[104]
[104] T362.
Mr Henderson was referred to the C&W report where Mr Centofani referred to an observation by Mr Henderson that there was an area where there should have been 404 sprinklers but in that area 281 sprinklers had been "omitted". Mr Henderson said his company had to install the 281 sprinklers. In Item 1.2 of Table 1 of the C&W report the author took into account that Combined had advised that sprinkler heads had been omitted by the plaintiff. He said they had omitted 70% of the total of 404 sprinklers or 281 sprinklers.
The report says 123 sprinklers installed by Mr Cassar were removed because of incorrect location and pipe size. The basis for saying that sprinklers were incorrectly located is presumably a consequence of the fact that Mr Henderson worked from Revision B. The way in which Mr Henderson determined what the correct location of sprinklers should have been has not been identified. Nor does the evidence identify where the allegedly incorrectly located sprinklers had been installed. At one time Mr Henderson said the 404 sprinklers were in the mall[105], but shortly afterwards he said “think this makes more reference to the specialty shops”.[106]
[105] T363 l19.
[106] T363 l28.
Similarly the basis for the statement that sprinklers had been "omitted" by the plaintiff has not been established. What created the obligation for the plaintiff to install the 404 sprinklers? What is the specification that created the requirement? It was not Revision A. If the installation of the additional sprinklers was work yet to be carried out by the plaintiff it would have been entitled to charge for that work. There is no basis for making the plaintiff pay the cost of new work performed by another contractor.
There is no basis to hold the plaintiff liable for the work described in Item 1.2 of Table 1 in the C&W report.
Referring to the 20 mm pipe work in the mall Mr Henderson said "it is very questionable whether the true performance can be achieved from those sprinklers, given the hazard classification.[107] That evidence leaves open the question of whether the 20 mm droppers were in fact insufficient.
[107] T366.
Mr Henderson said that his firm could not install to the Lucid drawings "because it doesn't hydraulically balance the pipe work”.[108] He said that the smaller rangers which come off the main pipe as specified on Revision A were various sizes - 50, 40 and 32mm.[109] He said that the setup shown in Revision A didn't work because "it was hydraulically insufficient".[110] Mr Henderson said that the real issue was uprating the main.[111]
[108] T370.
[109] T371.
[110] T373.
[111] T376 l10.
The system had been designed by Lucid and the design issues are not the responsibility of the plaintiff.
Mr Henderson also criticised the second fix because the sprinklers protruded through the ceiling.[112]
[112] T354.
Mr Henderson referred to the invoices that pp 82 and 83 of Exhibit P10. Page 82 is an invoice for $13,200 for “Design-valve set modifications and materials for second fix and labour”. Page 83 is an invoice for “Final progress claim - Labour materials and certification - Liaise with CFS $22,660”. The invoices contain little detail but Mr Henderson said those invoices were for rectification work to the fire sprinkler system. On its face the work included liaising with the CFS and extended to work beyond replacing the sprinkler droppers.
The evidence does not establish that the work covered by the invoices was necessitated by the incorrect copper pipe used for droppers.[113] The evidence does not identify precisely what was “rectified” by Combined or who created the need for rectification. It was an error to assume that the plaintiff was responsible for everything. The evidence does not establish that the plaintiff is responsible for the work which is the subject of the invoices at pp 82 and 83 of Exhibit P10.
[113] pp 82 and 83 of Exhibit P10.
Similarly there is no basis to hold the plaintiff liable for Item 1.1 the work described in Item 1.1 of the C&W report which is described in the report as “Install omitted sprinkler heads in the mall bulkheads…”. The supporting evidence refers to the “mini orb ceiling” and the use of 20mm copper pipe. [114]
[114] T366.
The evidence of Mr Henderson does not make out the assumptions in the C&W Report. The C&W report does not identify the source of the suggested obligation to install the sprinkler heads which are referred to. It cannot have been Revision A because Revision A does not specify sprinkler heads. In any event Revision A was not a term of the plaintiff's contract and the plaintiff had no obligation to comply with Revision A. If, as seems likely, the source of the obligation assumed by the C&W report was Revision B, that document was not prepared until after the plaintiff had stopped work and did not apply to the plaintiff. No document or other basis for making the plaintiff responsible to install the sprinkler heads described by Mr Henderson has been identified.
Mr Henderson introduced an interesting side issue when he said that the set up shown in Revision A[115] did not work because it was “hydraulically insufficient”.[116] If that is correct it is not something for which the plaintiff can be held responsible. More importantly, if the piping above the sprinkler droppers was inadequate, the sprinkler droppers would have to be removed together with the piping which fed them. That is the defendant's problems are a consequence of the inadequacy of the main piping rather than the size of the sprinted droppers.
[115] Exhibit D9.
[116] T373 l5.
Mr Kubler of Lucid
Mr Kubler is a Fire Engineer and a full time Fire Fighter with the South Australian Metropolitan Fire Service. He prepared a report dated August 2010 in the name of Lucid for the purpose of the proceedings.[117]
[117] Exhibit 1 pp 1-17.
In the introduction the report states that the author was not directly involved in the design or construction phase of the project and that the report has been prepared from a compilation of factual information and information gathered from parties involved with the project. The report also took into account “information regarding the installation gained via verbal communication with Combined Fire Services management (Mr Lyle Henderson), Lucid Consulting Engineers management (Mr Pat Callisto) and Virginia Nursery management (Mr Jim Gencheff).[118] The information which the report alluded to is neither identified nor proved. The assumptions on which the report of Mr Kubler are based have not been established. Mr Kubler’s report cannot be proof of facts of which Mr Kubler did not have personal knowledge. To the extent that any opinions of Mr Kubler are based on facts which have not been proved by other evidence those opinions cannot be accepted.
[118] Exhibit 1 p 3 clause 1.2.
The first observation is that the report states that it compared what had been installed against Revision B.[119] For that reason alone the "Lucid report" is irrelevant for present purposes. Revision B did not form part of the plaintiff’s contract.
[119] See para 1.2 Scope & Limitations.
In para 2.2 of the ‘Lucid report’ Mr Kubler listed what he called “Installation Issues and Defects Identified”. The defendant's expert, Mr Robinson, assigned the numbers 1 to 18 to those items. The items which are listed in the "Lucid report" extend far beyond the defects identified in Mr Callisto’s letter of 14 November 2007. The 18 items listed in the "Lucid report" became the focus of the defendants counterclaim. Those items and the response of Mr Robinson to them are as follows:
Item 1
Mr Kubler said that the canopy sprinkler heads were poorly fitted. He acknowledged that could be rectified.[120]
[120] T411 l31, T312 l26, T413.
I accept the evidence of Mr Robinson that this would have been corrected by the plaintiff at the time of the second fix.
Item 2
Mr Kubler said that the southern boundary exposure sprinklers “appeared” to be disconnected.
Mr Robinson commented that these sprinklers were connected and operational at handover from Secon. Mr Kubler’s inspection was on 18 April 2010. It does not address the relevant time.
Item 3
Mr. Kubler said that pipe work outside the Garden Accessories area included above ground exposed copper pipe work with multiple unmonitored butterfly valves.
Mr Robinson has pointed out that monitored valves were not specified by Lucid. Also Mr Kubler has not mentioned how monitoring would occur. Mr Robinson said that the use of a padlock/chain is standard practice. I accept the evidence of Mr Robinson.
In his evidence Mr Kubler agreed with Mr Robinson.[121]
Item 4
[121] T415 l19.
Mr Kubler said that booster assembly pipe work was not vertical and was off plumb.
Mr Robinson said the assembly was able to be rectified, that it did not impair operation and it was not questioned by the CFS.
In evidence Mr Kubler agreed that functionally it would work and that it was matter of aesthetics.[122]
[122] T415 l32.
There is no substance in this item.
Item 5
This item relates to the mall sprinkler heads. It is the same as Item 1.
Item 6
The basis for this item is information provided to Mr Kubler by Mr Gencheff.
The evidence does not prove the alleged defects or the alleged rectification work.
Item7, Item 8 and Item 9
The plaintiff has accepted that 25 mm copper pipe should have been used where it used 20 mm pipe.
Item 10
Mr Kubler has asserted that the spacing of sprinklers “in several locations” did not comply with the code. The defendant has not identified the number of sprinklers or their location.
In addition I accept the evidence of Mr Robinson that the location of sprinklers is a design/documentation responsibility of Lucid. It is not something for which the plaintiff can be held responsible.
Item 11
Mr Kubler has asserted that the sprinkler control valve assembly was unworkable and had to be rebuilt. The source of his knowledge is said to be a telephone discussion with Mr Henderson. Mr Henderson did not give any evidence which substantiates the claim.
The evidence does not establish that the plaintiff has any liability for this item.
Item 12
Mr Kubler said that CFS documentation for an Agreement to Connect had not been undertaken by the plaintiff. Mr Robinson has pointed out that this could have been done at any time during the works. There is no merit in this claim.
Item 13
Mr Kubler states that Mr Henderson told him over the telephone that at the time of commissioning the pipe work leaks were present. There were no leaks when Mr Kubler visited the site himself. The evidence does not establish this Item.
Item 14
Mr Kubler has criticised the plaintiff because a Form 2 had not been completed. I accept the evidence that it would have been inappropriate for the plaintiff to complete a Form 2 if the plaintiff had not fully completed the system.
Item 15
Mr Kubler criticised the plaintiff because there were dissimilar metals in the piping and the brackets which supported the piping which were not separated by a rubber insert.
The plaintiff had proposed to deal with this problem by installing the required the rubber inserts as part of the second fix. Mr Cassar said that he did not install the rubber inserts earlier because braising of the copper pipes, which could burn the rubber, was still being carried out. Mr Kubler said he was not a qualified sprinkler installer and could not comment on that explanation.[123] I accept the plaintiff’s evidence. I reject the defendant’s submission that the plaintiff did not intend to insert the rubber inserts. [124] There is no merit in this claim.
Item 16
[123] T430.
[124] Defendant’s Written Outline of Submissions para 97.
The plaintiff has acknowledged that the use of 20 mm copper pipe was inappropriate.
Item 17
Mr Kubler criticised the plaintiff for installing 15 mm orifice sprinkler heads in lieu of 10 mm sprinkler heads.
I accept the evidence of Mr Robinson that a revision from 15mm to 10 mm was totally unwarranted as greater flows were available with a 15 mm orifice. A 10 mm orifice is a minimum requirement.
The defendant no longer pursues this item.
Item 18
After speaking with Mr Callisto, Mr Kubler criticised the plaintiff for not producing shop drawings for review and approval by Lucid.
I accept the evidence of Mr Robinson that shop drawings were not mandatory and that when copper piping is used offsite fabrication is unnecessary and shop drawings are not required. More significantly the lack of shop drawings did not give rise to any loss.
The defendant no longer pursues this item.
Conclusions as to the 18 items identified in the Lucid report
The 18 items which are identified in the Lucid report do not support the defendants counterclaim. The only items with any merit are those which are consequential upon the use of 20 mm copper pipe instead of 25 mm copper by which have been dealt with by the credit of $10,000.
Mr Fred Centofani- C&W Building Services Pty Ltd
Mr Centofani is the proprietor of C&W Building Services Pty Ltd which prepared an estimate dated 23 February 2012 for the costing of remedial work on the fire sprinklers together with additional work required on elements of the building to access the sprinkler system. He estimated the total cost to be $632,863.02.
In cross-examination Mr Cassar described that sum as "outrageous".[125] He said the calculation included work which he had not finished because he needed more drawings from Lucid.[126] He did not carry out Item 1-3 because that was the next stage. As to Item 1-4 he said "that part of the system wasn't on, so we couldn't tell if there was leaks" and Item 1-5 involved electrical wiring which was not part of his work. Mr Cassar wanted to give further examples but he was stopped by the cross-examiner.[127]
[125] T136.
[126] T136 l37.
[127] T137.
The C&W report states that the sprinkler system installed by the plaintiff “was not in accordance with approved drawings and not compliant with Australian Standards”. The report does not identify the “approved drawings” to which reference was made or the way in which the sprinkler system did not conform with those drawings. The Combined Fire Services report which the C&W report was based on relied upon Revision B. As I have said Revision B is irrelevant.
Some of the allegedly incomplete work which C&W took into account is based upon advice from Combined which is not established by evidence. The reason why the C&W report assumed that the plaintiff had an obligation to carry out the work which is referred to which is not disclosed. If it is work that the plaintiff was yet to carry out if it had not stopped work the plaintiff would have been entitled to charge for that work itself. There is no basis for holding the plaintiff liable for the cost of work which was yet to be carried out.
Mr Centofani acknowledged that the report was based on information provided to him by others.[128] He assumed that information to be correct. Unless his assumptions are shown to be correct the evidence of Mr Centofani must be rejected. The fundamental assumptions which underpin the C&W report have not been established by evidence.
[128] T441.
The C&W report does not address the actual arrangement which existed between the parties but incorrectly assumes irrelevant contractual obligations, in particular an obligation on the part of the plaintiff to comply with Revision B and a contract to complete the entire fire sprinkler system.
In his evidence Mr Centofani said that he had costed the Items in s 2.2 of the Lucid report.[129] He said that in order to give convenience to his evidence he had connected his cost items to the 18 topics marked up in Mr Robinson's report.[130] They are Items 1 to 18 to which I have referred.
[129] T443 l1.
[130] T443 l9.
That evidence is not correct. There is no connection on the face of the C&W report between the items which have been costed in Table 1 of the C&W report and the 18 topics identified by Mr Robinson.
Later in his evidence in chief Mr Centofani identified the relationship between the 18 topics identified that by Mr Robinson and the separate items in Table 1 of the C&W report. For example he said that Mr Robinson's Item 1 was Items 1.3 and 2.1 in his Table 1. It is unnecessary to conduct a complete analysis of the two lists. It is sufficient to note that there are items in the C&W Table 1 which fall outside Mr Robinson's list and therefore fall outside the ambit of the defendant’s counterclaim as it was identified by counsel. Items in Table 1 of the C&W report which fall outside Mr Robinson's list are:
§ 1.5 - supply and install the fire emergency warning system $12,581.69.
§ 4.10 - provide an operating and maintenance manual for review by the engineer $600.
§ 4.12 - coordinate a final installation inspection with CFS $4,189 68.
§ 4.13 - provide system operation training for management and staff $349.14.
§ 4.14 –Replacing pipe work - $51,649.03. (The report noted that the pipe work which the author observed was painted and therefore he could not determine if the copper pipes installed were Type A as required for fire services installation. The author stated Cassar Plumbing should provide receipts that identify the material used and that if pipes are not "Type A" they are not suitable for use in fire services and must be replaced).
§ 4.14a - $100,714.24 (This figure assumed that the pipes installed are not suitable for use in fire services and should be replaced).

The total of those items approximates $170,000. By itself the inclusion of those items in the C&W report is sufficient to completely discredit that report. With the exception of the use of 20 mm copper pipe instead of 25 mm pipe there is no basis to hold the plaintiff responsible for any of those items.[131] It is unnecessary to descend to an analysis of the merit of those items.
[131] See discussion of evidence of Mr Kubler.
I find that the only criticism of the plaintiff with any merit is that relating to the use of 20 mm copper pipe instead of 25 mm copper pipe for the sprinkler droppers. That issue was resolved by the agreed credit of $10,000.
The evidence does not establish any factual basis for the cost estimate in the C&W report. Additionally there is no evidence supporting the reasonableness of the cost estimates .For example Item 2.3 is described as:
Incorrect pipe size for fire sprinklers in the mall. Work is to be carried out by various trades and after hours (Outlines in the spreadsheet Details of Estimated Cost of Remedial Work in the Mall).
The alleged cost for that work was $264,965.82.[132] I have already referred to the evidence of Mr Cassar as to what was involved and found that $10,000 was a reasonable allowance.
[132] Exhibit 2 p 21.
The evidence does not support either the need for any of the work claimed in Appendix 1 or the reasonableness of the assessment.
Item 2.4 in the C&W report is described as “Incorrect pipe size for fire sprinklers in the canopies”. The alleged cost of the work was $43,851.92. Again there is reference to a spreadsheet which forms part of Appendix 2.[133] The spreadsheet relates to the installation of “a new 50 mm copper line next to the existing so as to maintain the fire sprinkler system fully operational". The total cost shown for that work in Appendix 2 was $98,132.11, not $43,851.92.
[133] Exhibit 2 p 34.
Again the evidence does not establish either the need for the work claimed in Appendix 2 or the reasonableness of the charges.
Specifically the evidence does not establish that the plaintiff was responsible for the installation of new 50 mm pipe. Lucid was responsible for the design of the system. Counsel did not address on the need to install 50 mm pipe. That part of the C&W report – like many other parts, has not been shown to be relevant to this action.
In his evidence Mr Callisto said that he had regard to the letter from Lucid to Mr Gencheff dated 14 November 2007 and the defects listed in Mr Kubler’s report. [134] However his cost estimates relate to items which extend beyond the items that are identified in that letter.
[134] Exhibit D10, pp 691-70.
The evidence does not establish any basis for the items which Mr Centofani has costed – other than the replacement of 20 mm copper pipe with 25 mm copper pipe. I have already found that $10,000 was an appropriate allowance for that item.
Dealing with the cost of the work which had been carried out Mr Centofani said that the work included in the invoices at pp 82 to 100 Exhibit D10 appeared to be reasonable charges for the work done.[135] However the work was not identified. Mr Centofani eventually acknowledged that he did not know what the work was. He said:
On page 82 and even 83, there are invoices for work-I mean it's not detailed as to what - it does say what its for, but there’s clearly no detail as to times or anything, so this must have been a quotation and there was an agreement between the parties and that was the price that was quoted and accepted. I think the amount on page 83 is perhaps a little bit low, and the one on 82 is a little bit high.[136]
[135] T445 l5.
[136] T446 l9 to 16.
That evidence does not establish the reasonableness of the defendant's counterclaim. It also demonstrates that the evidence of Mr Centofani can not be relied upon.
To the extent that Mr Centofani assessed the cost of work yet to be carried out the evidence does not establish any basis on which the plaintiff can be held liable for that work.
I have no doubt that Mr Centofani is a successful builder. However, in his evidence Mr Centofani misunderstood the nature of the exercise that he had embarked upon in preparing a cost estimate for the purpose of this case.[137]
[137] T445ff.
The C&W report is of no assistance for my purposes.
The Terms of the Contract
Mr Cassar gave evidence that he worked from a plan, but that plan is not in evidence. Otherwise there is no evidence of contractual documents or specifications for the work on the fire sprinkler system or any other work which might be the subject of the counter claim.
For a number of years the relationship between the parties had been that the plaintiff would carry out work at the direction of the defendant, render accounts for the work done and materials supplied and in due course receive payment. The work in connection with the fire sprinkler system was no different from other work carried out by the plaintiff for the defendant.
Mr Gencheff gave evidence that when the possibility of a contract was discussed Mr Cassar said “Its too hard to do a contract”.
Mr Gencheff gave evidence that Lucid did the design and prepared the plans for the fire sprinkler system.[138] He agreed that his agreement with Mr Cassar was "simply to do and charge as he went along".[139] [140]
[138] T281.
[139] T301 l28.
[140] Defendant’s Written Outline of Submissions para 68.
I find that the plaintiff was not retained to design the fire sprinkler system and that it had no supervisory role. There is no basis for the allegation in para 4.2 of the counterclaim.
The express terms referred to in para 2 and the implied warranties alleged in para 3 of the counterclaim are uncontroversial provisions and I have no difficulty in finding that those terms and warranties applied to the work carried out by the plaintiff. However those terms and warranties do not advance the defendants counterclaim.
I find that the evidence does not establish that it was a term of the contract that the plaintiff would comply with Revision A as alleged in para 7 of the counterclaim. I also find that Revision A did not specify the requirements which the plaintiff relies upon.
I find that the plaintiff had no obligation to complete all of the works, either within a set timeframe, or at all. It had no obligation to design the fire sprinkler system or any other part of the defendant’s complex. It is clear that the design of the fire sprinkler system was the responsibility of Lucid.
I accept the evidence of Mr Cassar that the drawing which he worked from was inappropriate and that he asked for another drawing which was never produced. There was no evidence of any drawing which described the work which the plaintiff was requested to carry out.
The defendant has not established that Revision A formed part of the contract.
In any event Revision A did not specify the detail upon which the counterclaim is based. For example it did not specify the use of 25 mm copper pipes for the droppers or the location of the sprinklers. The deficiencies of Revision A are obvious when that drawing is compared with Revision B.
Revision B was not prepared until after the plaintiff had stopped work and it could not have formed part of the plaintiff’s contract. The plaintiff was never required to comply with Revision B and it cannot be criticised if its work did not comply with Revision B.
In his written submission Mr Ross-Smith argued that there was an agreed scope of work, namely the sprinkler installation described in Revision A. I accept the evidence of Mr Cassar that he did not see Revision A until after he had started work. I reject the defendant's submission. Also the work which is alleged to have been non compliant and those specifications in Revision A which are alleged not to have been complied with have not been identified.
I find that the contract was a "do and pay " arrangement in respect of that work which Mr Gencheff identified to Mr Cassar. That is that the plaintiff carried out work at the direction of Mr Gencheff, was paid an agreed hourly rate for labour and was to be reimbursed the cost of materials supplied.
Terms can be implied as to matters such as the quality of the work but there were no express terms of the contract other than that it was a do and charge arrangement. In particular there was no specification of the scope of the work, no express term that the plaintiff would carry out all of the specified work in a particular manner or that the work would be completed by a certain date.
Most fundamentally the evidence does not establish that any particular drawing or specification had to be complied with. Revision A was not completed until February 2007 which was after the arrangement had been reached between Mr Gencheff and Mr Cassar at the end of 2006. Revision B, which contains detail which the defendant ‘s witnesses have assumed that the plaintiff failed to comply with, was not prepared until after the plaintiff had stopped work. The plaintiff was never required to comply with Revision B.
The real nature of the contract was described by Mr Cassar who gave evidence that Mr Gencheff said "We're going to build it as we go".[141] Mr Cassar understood that to mean that you do it in stages. The plaintiff had to do the underground fire service, get that up to standard, put in an underground sprinkler system and a sprinkler system in the old cash register part. Mr Cassar said the building then started to get constructed "So you do some work, then go away from while. And Jim would ring up and say "I'm up to the stage now" and he is would return. Mr Cassar said it was "Just backwards and forwards, you don't go there every day. You don't need to go every day".[142] Mr Cassar had been working at Virginia Nursery for three or four years during which time there had been an eight-month gap while the mainframe was being constructed. In addition it was necessary for Mr Cassar to coordinate his work with the work of other subcontractors.[143]
[141] T20.
[142] T21 l3.
[143] T31.
The defendant has not established any relevant terms of a contract which support its counterclaim.
Was plaintiff licensed
The assertion in the counterclaim that the plaintiff was unlicensed and for that reason has no entitlement to payment for the work done is without merit. It was not pursued. I reject that claim.
Conclusions with respect to the Counterclaim
The defendant has not established any basis for the suggested contractual obligations which the counterclaim relies upon.
The evidence does not establish the allegedly defective work of the plaintiff, the basis on which the work is alleged to be defective or the actual rectification work alleged to have been carried out or yet to be carried out.
The defendant has not established that there are any drawings or other documents which described the scope of the work to be carried out by the plaintiff. The first drawing, which Mr Cassar says is the one he worked from, is not in evidence. There is no evidence which describes what the plaintiff was required to do.
Revision A is quite different from Revision B. If the defendant had established that the plaintiff worked from Revision A or that Revision A determined the scope of the contract, the evidence does not reveal in what ways the work carried out by the plaintiff the plaintiff has contravened Revision A.
Mr Robinson, whose evidence on the topic I accept, said:
Overall the documentation produced by Lucid Consulting Engineers Pty. Ltd is inadequate and minimalistic considering their responsibility for design and documentation.[144]
[144] Exhibit 3 p 52.
I do not accept any opinion evidence put forward by Lucid. That firm was not independent and had an interest in protecting its own position. Lucid was responsible for the design of the fire sprinkler system which has been criticised by others.[145]
[145] See for example e-mail dated 18 September from 2007 Mr Paul Ware of Compliant Fires Services Pty Ltd to Mr Gencheff and the evidence of Mr Henderson.
I accept the submission of Mr Miller that the production of Revision B in August 2007, after Mr Cassar had stopped work, implies that Lucid acknowledged some responsibility. Mr Cassar said that he had repeatedly asked Lucid for more detailed drawings but none were provided. There should not have been any need for a further revision in August 2007.
Overall the evidence suggests that the job was poorly coordinated with the proprietor doing whatever could be done to trim costs.
Counterclaim paras 5 and 6 - Installation of cistern buttons and fire hydrant
There is no evidence that about cistern buttons on toilets or a fire hydrant. The claims in paras 5 and 6 of the counterclaim must be dismissed
The plaintiffs refusal to complete
Mr Ross-Smith argued that the plaintiff was not entitled to abandon the site. I reject that submission. I find that the failure of the defendant to pay the three invoices within a reasonable time, in particular the failure to reimburse the plaintiff for the cost of materials purchased from Reece, was sufficient reason for the plaintiff to refuse to perform further work.
The defendant’s principal obligation was to pay the plaintiff’s charges. In the absence of an express provision as to the time when payment should be made a term can be implied that payment was required within a reasonable time.
It is important to note the requirements of the contract. The plaintiff was required to purchase and pay for the necessary material itself. Until such time as the defendant made payment for those purchases the plaintiff was financing the defendant’s project for no consideration.
At the time when the plaintiff refused to carry out any further work the defendant was indebted to the plaintiff in a considerable sum. Mr Gencheff understood that the plaintiff was chasing him for $86,000.[146] A significant proportion of that debt was for costs which the plaintiff had incurred with Reece.
[146] T306.
I find that in all the circumstances it was reasonable for the plaintiff to refuse to perform any further work. Although my review of the invoices has resulted in a reduction of the plaintiff's entitlement there was still a sufficient dept to justify cessation of work by the plaintiff. At the time both parties believed that the full amount of the invoices was due.
I find that the plaintiff has not incurred any liability to the defendant as a consequence of its refusal to carry out further work.
Conclusions
The defendants counterclaim must be dismissed.
On the plaintiff’s claim there will be judgment in favour of the plaintiff against the defendant for the sum of $55,680.60.
I will hear counsel as to interest and costs.