CJD Equipment v A&C Constructions - [2009] NSWSC 1362

No judgment structure available for this case.

CITATION: CJD Equipment v A&C Constructions [2009] NSWSC 1362

HEARING DATE(S): 6/10/09, 07/10/09, 08/10/09, 09/10/09.

JUDGMENT DATE :
10 December 2009

JURISDICTION: Equity Division
Technology & Construction List

JUDGMENT OF: McDougall J at 1

DECISION: See paragraphs [407] to [410] of the judgment.

CATCHWORDS: BUILDING AND ENGINEERING CONTRACTS – construction – terms to be implied where contractual documents limited – whether implied term of fitness for purpose – performance – whether design defective – whether caused damage to constructed premises – whether subcontractors made representations to the principal – whether resultant liability of sub-contractors – remedies – damages – quantification – apportionment of damages between defendants – mitigation – whether plaintiff mitigated loss. - TORT – whether duty of care owed – whether plaintiff relevantly vulnerable – scope of duty – whether damage to building properly characterised as economic loss – causation – whether loss complained of caused by design or representations made by defendants – whether plaintiffs’ amendments to design a novus actus interveniens.

LEGISLATION CITED: Civil Liability Act 2002
Evidence Act 1995 (NSW)
Trade Practices Act 1974
Uniform Civil Procedure Rules

CATEGORY: Principal judgment

CASES CITED: Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389
Bryan v Maloney (1995) 182 CLR 609
Digi-Tech (Australia) Ltd v Brand (2004) 62 IPR 184
Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (2008) 68 ACSR 595
Jones v Dunkel (1959) 101 CLR 298
Murphy v Brentwood District Council [1991] 1 AC 398
Perre v Apand Pty Ltd (1999) 198 CLR 180
Ralf Dutton v Jalapen Pty Ltd (1994) 10 BCL 338
Sutherland Shire Council v Heyman (1985) 157 CLR 424
Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515

PARTIES: CJD Equipment Pty Limited (Plaintiff)
A&C Constructions Pty Limited (First Defendant)
Allan Keith Jeffree (Second Defendant)
GF Murphy Consulting Pty Limited (Third Defendant)
Telford Building Systems (Aust) Pty Limited (Fourth Defendant)
Peter Marcus Consulting Engineers Pty Limited (Fifth Defendant)

FILE NUMBER(S): SC 55065/08

COUNSEL: F C Corsaro SC / D C Price (Plaintiff)
E M Olsson SC / M P Tanevski (First and Second Defendants)
R J Cheney (Third Defendant)
I G B Roberts (Fourth Defendant)
D Fagan SC (Fifth Defendant)

SOLICITORS: The Builder's Lawyers (Plaintiff)
Walsh & Blair Lawyers (First and Second Defendants)
Kennedys Lawyers (Second Defendant)
DLA Phillips Fox (Fourth Defendant)
Colin Biggers & Paisley (Fifth Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY & CONSTRUCTION LIST

McDOUGALL J

10 December 2009

55065/08 CJD EQUIPMENT PTY LIMITED v A & C CONSTRUCTIONS PTY LIMITED & 4 ORS

JUDGMENT

1 HIS HONOUR: The plaintiff (CJD) imports, sells and services heavy earthmoving and construction machinery. It carries on that business throughout Australia, including (since about March 2003) from premises at Smeaton Grange in New South Wales (the Smeaton Grange premises). The Smeaton Grange premises were constructed for CJD by the first defendant (A & C). CJD says that the premises are defective, and unfit for its purposes. It seeks damages from A & C and from those (including the second defendant, Mr Jeffree, the principal of A & C) who were involved in the design of the premises.

Factual background

2 The principals of CJD - at least, at times relevant to these proceedings – were Messrs Ron Rafferty and Rob Jowett. CJD has its headquarters in Western Australia. Messrs Rafferty and Jowett were based there. In 2001 and 2002, CJD’s state manager for New South Wales was Mr Rob Perrin. Mr Perrin had immediate responsibility for the design and construction of the Smeaton Grange premises. He reported to Messrs Rafferty and Jowett. Although Messrs Rafferty and Jowett had some direct dealings with A&C, the great majority of the dealings between the two companies were conducted by Mr Perrin (for CJD) and Mr Jeffree (for A&C).

3 Before March 2003 (which is when CJD took over, and commenced to carry on business from, the Smeaton Grange premises) CJD carried on business from leased premises at Minto. Towards the end of 2001, CJD learned that the lease of those premises would not be renewed. It looked for other premises in the vicinity (i.e., in the area to the southwest of Sydney) to lease. There was nothing suitable available. CJD decided to buy land and have premises constructed to its requirements. It acquired the land at Smeaton Grange. (There is a dispute as to the precise circumstances in which CJD acquired the land at Smeaton Grange. I will return to this.)

4 The site comprises a rectangular parcel of land, orientated (on its longer side) to the northwest. The parties adopted the convention that the longer boundaries ran from west to east, and the shorter boundaries from north to south. It is convenient to adopt that convention. Doing so, the site can be described as bounded by Smeaton Grange Road to the south and Anzac Avenue to the west, and to slope from a high point at its south-east corner diagonally across the site to a low point at its north-west corner. The proposed works included not only a large building, suitable for CJD’s uses (and a smaller adjacent building as well), but also a substantial external pavement. Accordingly, because of the topography of the site, it was necessary to undertake cut and fill works to obtain a sufficient level area on which to construct the pavement and erect the buildings.

5 CJD procured investigations of the land at Smeaton Grange. In particular, it commissioned Jeffrey and Katauskas Pty Limited (J&K), a firm of geotechnical and environmental engineers, to investigate the geotechnical conditions of the land. J&K produced a report dated 19 November 2001 (the J&K 2001 report). It will be necessary to return to some of the features of that report.

6 Before J&K was retained, CJD retained a firm of architects, Williams and Hassall Pty Ltd (Williams and Hassall), to prepare preliminary sketches and elevations for the works that CJD required. Williams and Hassall produced what might be called a concept design in about January 2001. That design was updated in November 2001.

7 In December 2001 (after the J&K 2001 report had been produced), CJD approached A&C and other builders. It provided A&C with a copy of the J&K 2001 report and the updated Williams and Hassall drawings. It is CJD’s case that the builders who were approached were asked to undertake the design (perhaps, more accurately, to develop the detailed design) and construction of premises generally following the concept expressed in the updated Williams and Hassall drawings. Those premises were intended to be used for the sale and servicing of the heavy earthmoving and construction equipment imported and sold by CJD.

8 Mr Jeffree visited A&C’s premises at Minto from time to time, to discuss the project with Mr Perrin. He became aware of the kinds of machinery sold and serviced by CJD: including heavy vehicles running on tyres, and heavy tracked machines. Mr Jeffree observed that the concrete driveways and slabs at Minto “were cracked and sunken everywhere”. He “had not seen any concrete slabs in such poor condition”. (See para 21 of Mr Jeffree’s statement dated 1 September 2008.)

9 Mr Jeffree commented on this to Mr Perrin, and Mr Perrin replied “[w]e are very hard on our concrete” (see para 22 of Mr Jeffree’s statement).

10 In late 2001, Mr Jeffree approached the fourth defendant (Telford) to quote on the design and supply of a steel framed building conforming to the concept plan prepared by Williams and Hassall. Telford designs, manufactures and supplies prefabricated kit buildings for industrial, commercial and other uses. Its principle, Mr Andrew Telford, is a licensed builder. Telford provided a number of preliminary designs and quotations. At some stage, and certainly before preliminary design plans were prepared and given to A&C, Telford was given the J&K 2001 report.

11 In January 2002, Mr Jeffree contacted the third defendant (Murphy). Murphy is a firm carrying on the practice of a structural engineer. Its principal is Mr Gary Murphy. Mr Murphy had worked with Mr Jeffree on a number of occasions prior to 2002. Mr Jeffree asked Mr Murphy to carry out the design of drainage and regrading works for the site. He gave Mr Murphy a copy of the J&K 2001 report, and some hand-drawn concept sketches. Those concept sketches may have been based on the Williams and Hassall concept. Although the evidence is not clear on this point, it is likely that they were prepared by A&C.

12 In early February 2002, Mr Murphy produced drawings detailing the drainage and site regrading works. They were amended in April 2002.

13 In early March 2002, Mr Jeffree asked Mr Murphy to design the external pavement areas. That work required Mr Murphy to design not only the concrete slabs but also the subbase, or base course, on which they rested, and the underlying subgrade. Mr Murphy said that he would need to engage a geotechnical engineer, and recommended Geotechnique Pty Ltd (Geotechnique). Mr Jeffree agreed that Geotechnique should be retained. Shortly thereafter, Mr Murphy asked Geotechnique to propose a suitable pavement design. Not surprisingly, Geotechnique required information as to the loadings to which the pavement would be subject. Mr Murphy sought this from A&C. In turn, A&C sought relevant information from CJD. On 15 March 2002, CJD provided a letter (the loadings letter) to A&C. That letter gave information as to machine weights and ground pressures, and enclosed brochures for the various kinds of machines that would be sold from or serviced at the Smeaton Grange premises. It will be necessary to return to the terms of that letter.

14 A&C provided the loadings letter and its enclosures to Mr Murphy, who in turn passed them on to Geotechnique. Geotechnique gave Mr Muprhy a report dated 4 April 2002. The job reference for that report included the identifying letters “AA” and it is convenient to refer to it by those letters. The AA report recommended, among other things, reinforced concrete slabs laid over a “sub-base course”, of specified material, 100mm thick. Geotechnique suggested that the slabs should be generally 310mm thick, but with thickened edges 450mm deep. Geotechnique specified particular compaction ratios for the “sub-base course” and the subgrade. The compaction specified for subgrade was consistent with the J&K 2001 report, in that J&K had recommended compaction to between 98% and 102% of standard maximum dry density (SMDD) and Geotechnique specified compaction to 100% SMDD.

15 Mr Murphy provided the AA report to Mr Jeffree. Mr Jeffree discussed it with Mr Perrin. It will be necessary to return to the detail of the discussions between Mr Jeffree and Mr Perrin, but for present purposes it is sufficient to note that Mr Perrin was not prepared to pay for slabs as thick as those recommended by Geotechnique, and insisted on a redesign incorporating thinner slabs. The underlying rationale for Mr Perrin’s position (which was supported by Mr Rafferty) appears to have been that CJD’s experience, in other premises elsewhere in Australia, suggested that reinforced concrete slabs about 150mm thick were sufficient to withstand the loads imposed by the machinery that CJD sold and serviced.

16 Mr Murphy asked Geotechnique to redesign the slab to take into account CJD’s concerns. Geotechnique provided a further report, with a reference incorporating the letters “AB”. It is convenient to refer to that as the AB report. The AB report suggested two “options”. One provided for slabs subjected to vehicle weights of no more than 3 tonnes. Geotechnique suggested that those slabs could be constructed as 150mm reinforced concrete slabs over 150mm subbase. The other option, for slabs trafficked by the heavy vehicles, was for slabs generally 180mm thick over 150mm of subbase, with thickened edges comprising 280mm of reinforced concrete.

17 After Mr Murphy received the AB report, he prepared a design for the external pavement. His design provided for a reinforced concrete slab 180mm thick generally, with thickened edges; but for a 310mm thick slab (again, with thickened edges) where heavy equipment was to be unloaded and moved. Mr Murphy assumed (as Geotechnique had assumed in its AB report) that heavy equipment would be moved onto and from the site on low loaders, which because of their multiple axles would reduce the pressure exerted on the pavement by the heavy equipment. Mr Murphy’s design also provided for the compaction of the subgrade, and other matters. It will be necessary to return to the detail.

18 CJD remained unhappy with the amount of concrete required. It put pressure on Mr Jeffree to procure a design for even thinner slabs. Mr Murphy was not prepared to depart from his design. Accordingly, Mr Jeffree approached the fifth defendant (Marcus), another firm carrying on practice as a structural engineer. He spoke to Mr Peter Marcus, the principal of Marcus, and requested Mr Marcus to design internal and external pavements with a uniform thickness of 180mm. Mr Marcus agreed. There are some questions both as to the terms of the retainer and as to precisely what Mr Marcus designed.

19 Meanwhile, on 6 June 2002, A&C provided a quotation to CJD for the construction of the premises. The quotation was prepared on the basis of, among other things, Murphy’s pavement drawings. The amount quoted, exclusive of GST, was $3,145,500.00. That quotation was accepted by purchase order dated 26 June 2002.

20 One of the more unusual features of this case is that there is no written contract relating to the preliminary work carried out by A&C prior to 26 June 2002. There is no doubt that some sort of contract or arrangement existed between CJD and A&C. For about six months prior to 26 June 2002, A&C retained consultants to develop the design of the premises and CJD paid A&C for that work, and reimbursed the costs incurred by it. But the only evidence of the terms on which A&C undertook that work is to be found in the evidence given by Messrs Perrin and Jeffree.

21 Another unusual feature is that the only formal documentation of the contract for the construction of the premises is that comprised by the quotation of 6 June 2002 and the purchase order accepting it of 26 June 2002. The terms of the contract are those emerging from the documents in question (supplemented, in a fairly exiguous way, by some other correspondence), or emerging from disputed accounts of the discussions between Messrs Perrin and Jeffree, and those implied by law.

22 In the same vein – although somewhat out of sequence – yet another unusual feature of this case is that there is no formal “as built” record of what was constructed.

23 One of the major issues in contention between CJD and A&C relates to the circumstances in which (as appears to have happened) the design for the

24 Construction of the premises proceeded. The site was cut and filled to provide a level platform, and compaction works were performed. The slabs were then laid. A steel framed building, generally in accordance with Telford’s design, was constructed. On the Anzac Avenue (or, conventionally, western) frontage, a glass curtain wall was constructed. The design and construction of that curtain wall was undertaken by Campbelltown Glass Services Pty Ltd (the glazier). The glazier is not a party to these proceedings, although A&C and Mr Jeffree made a belated attempt to join it, shortly before the scheduled commencement of the hearing. The design prepared by the glazier provided for the curtain wall to be supported by the internal slab, and for the framing components of the curtain wall to be attached to the steel frame designed and supplied by Telford. The design of the curtain wall did not provide for the possibility of relative movement between the curtain wall framing members and the steel structural members.

25 CJD moved into the Smeaton Grange premises in March 2003. After about two years, CJD’s employees noticed signs of movement – “heave” – in the internal slab. To jump ahead: it is now common ground that the heave occurred because water penetrated underneath the slab and caused the compacted fill, which included reactive clay material, to swell. Since the curtain wall was constructed on the slab, the heaving of the slab transmitted forces to the curtain wall; and because the curtain wall could not move relative to the steel frame (which was not constructed on the slab, but separately founded on piers to rock), the curtain wall became distressed and the glass within it cracked.

Outline of CJD’s case

26 CJD claims that:

(1) the slabs (by which I mean the internal and external slabs), as constructed, are inadequate for the known design loads communicated to A&C and through A&C to Murphy and Marcus;

(2) the design or the construction of the slabs was inadequate, because the joints between individual panels were not sealed to prevent the ingress of moisture;

(3) the absence of sealing meant that moisture could penetrate through the slab and the subbase to the subgrade, causing the reactive clay material in the subgrade to swell;

(4) the swelling of the subgrade was exacerbated because it had been over-compacted (beyond the tolerances specified in the J&K 2001 report);

(5) accordingly, the internal slab heaved;

(7) because the glass curtain wall was fixed to the internal slab and could not move relative to the steel frame of the building, it suffered damage; and

27 CJD says further that that in various respects the building as constructed does not comply with certain requirements of the Building Code of Australia (BCA).

28 Thus, CJD says:

(1) all the slabs (internal and external) should be removed;

(2) the subbase should be removed, and the subgrade should be treated so as to compact it in accordance with the recommendations contained in the J&K 2001 report;

(3) the slabs should then be rebuilt, to a thickness generally of 310mm but with thickened edges – i.e., in accordance with the recommendations contained in the Geotechnique AA report;

(4) the glass curtain wall should be repaired, including by refixing it to the structural steel members so that if there is further movement in the slab, it can move independently of the steel frame; and

29 CJD alleges that, for reasons that are probably apparent from what I have said, each of the defendants has contributed to the harm that it has suffered. The defendants deny that they are liable, but say that, if they are, CJD’s claim is an “apportionable claim” for the purposes of Part 4 of the Civil Liability Act 2002, and that they are entitled to limit their liability in accordance with s 35 of that Act.

The issues

30 The parties agreed on what they said were the real issues in dispute that emerge from the facts as I have outlined them and the contentions that I have briefly sketched. Unfortunately, because some of the parties – in particular, CJD – appeared to treat the Court’s orders (included in the usual order for hearing) as discretionary rather than mandatory, many of the issues were stated at a level of generality that does little to assist in defining and resolving the real issues in dispute. With that caveat, the issues agreed by the parties are as follows:

(“the Building Contract”)

CJD

(“A&C”)

2. Whether the Building Contract was varied to absolve A&C from any responsibility consequent on a redesign of the pavement slabs to a thickness of 180mm.

3. The nature of the arrangements made between A&C and:

(a) Murphy;

(b) Telford;

(c) Marcus;

for the preparation of any design pertaining to the Premises, the supervision of the construction works, and the use of any design prepared for the construction of the Premises.

4. What use, if any, did A&C make of the elements of the design of the Premises provided by:

(a) Murphy;

(b) Telford

(c) Marcus

5. The responsibility of A&C and Telford, if any, for ensuring the design and construction of the building complied with BCA Requirements.

6. To the extent that the building contains any departures from the BCA requirements, whether the acceptance by the Council of the design and the construction of the premises or the issue by Council of a Development Consent or Construction Certificate was an acceptance of those departures.

7. Did:

(a) A&C owe CJD the duty alleged in paragraph 23 of the Further Amended List Statement?

“Jeffree”

“Murphy”

“Telford”)

“Marcus”)

8. Did A&C, Telford or Murphy represent that the design of, or their respective designs relating to, the Premises were adequate and suitable for CJD?

9. If so:

(a) was any representation made by one of those defendants aided and abetted by either A&C or Jeffree?

(b) Did CJD rely on any representation made by any one of the defendants?

10. The nature and extent of any defective:

(a) design or

(b) construction

of the Premises and the responsibility of each defendant for those defects and deficiencies.

Trade Practices Act 1974 (Cth)

12. Having regard to the nature of any deficiency in the design of the Premises prepared by any of the defendants, did Telford have a duty to detect and warn CJD of those deficiencies, and if so, whether they breached that duty.

13. Whether any deficiency in the design or construction of the Premises caused any loss or damage to CJD and the quantification of that loss, and in particular whether the design of the pavement prepared by Marcus operates to break the chain of causation in respect of any design errors in the designs by Telford or Murphy.

14. Did A&C on its own initiative or in conjunction with CJD elect to delete the sealing of joints and / or change the specification of joints as designed by Murphy and /or Marcus?

15. Whether CJD’s own acts and omissions, including by instructing the builder to delete the sealants to joints that were designed by Murphy, and / or to change the specification of joints as designed by Murphy and / or Marcus, if so found, and in operating heavy tracked vehicles across the pavements, caused or contributed to any loss suffered by it.

16. What is the scope and cost of any rectification work required to address the defects, if any, for which the defendant, or any of them are liable?

17. Did CJD fail to mitigate its loss and if so, to what extent?

31 The problem to which I have referred at [30] above was exacerbated because the various expert witnesses whom the parties intended to call did not confer as required by para 1 of the usual order for hearing (modified, in a now immaterial respect, to extend the time by which the experts were to confer and provide their joint report). Again, that appeared to reflect a view, at least on the part of CJD, that compliance with the Court’s orders was discretionary rather than mandatory. The expert evidence covered three broad disciplines – geotechnical engineering, structural engineering and costing. The reports were many, and the issues upon them numerous. Because the experts did not confer as required, the issues between them were not narrowed until after the commencement of the hearing. Indeed, in the case of the costing experts, the issues between them were not narrowed until the evidence was all but finished. Thus, the real issues in dispute did not reflect what ultimately became the experts’ views as to the matters in issue between them and the reasons for those matters being in issue.

Credibility

32 Some of the issues involve significant factual disputes, and conflicts between the evidence of various witnesses. Accordingly, before turning to the issues, I shall set out my views on the credibility of the witnesses.

Mr Rafferty

33 Mr Rafferty gave evidence by a statement dated 8 August 2008. Many of the paragraphs in that statement were inadmissible, and were not pressed. Mr Rafferty was cross-examined. No real attempt was made to impeach his credibility: no doubt, because his evidence, as qualified in cross-examination, did not really touch on the disputed issues of fact. That is because, although Mr Rafferty gave evidence in his statement (paras 27 to 29) of discussions with Mr Jeffree at CJD’s premises at Minto in about May 2002, it became apparent from Mr Rafferty’s cross-examination that it was Mr Perrin who had had the relevant discussions with Mr Jeffree. Mr Rafferty said that Mr Perrin reported the results of those (and other) conversations to him. He accepted that he himself did not speak to Mr Jeffree as suggested in those paragraphs. (See, generally, T29.29-30.25.)

34 Accordingly, to the extent that Mr Rafferty suggested in his statement (paras 25 and 27-29) that he himself was involved in meetings with Mr Jeffree, I do not accept that evidence. Further, because in substance Mr Rafferty’s evidence appears to reflect what he says he was told by Mr Perrin, I do not think that it can be accepted as providing anything significant by way of corroboration of Mr Perrin’s evidence.

35 I do not think that Mr Rafferty intended to deceive the Court. On the contrary, I thought that he sought to tell the truth as best his memory permitted. The real difficulty seems to me to be that insufficient care was taken in the drafting of his statement, and his memory was not fully tested. That having been said, it is to Mr Rafferty’s credit that he did not seek to maintain the truth of the paragraphs in question, and was frank to concede, in effect, that those paragraphs were mistaken.

Mr Perrin

36 Mr Perrin gave evidence by way of statement in chief and statement in reply, dated respectively 25 August 2008 and 7 September 2009. He was cross-examined extensively. Because there is a significant conflict between his evidence and that of Mr Jeffree, a sustained attack was made on his credibility in cross-examination. That attack was repeated in closing submissions.

37 I found it difficult to assess the reliability of Mr Perrin’s evidence. That is because one of the stranger features of CJD’s case was that it sought to adduce the greater part of its evidence as to the making and performance of the contract or contracts in question through Mr Rafferty (who had no direct involvement) rather than through Mr Perrin (who did). Thus, Mr Perrin’s evidence in chief (through his statement) was relatively brief; and most of the detail that emerged came through cross-examination.

38 There were aspects of Mr Perrin’s evidence that caused me concern. For example: there was an issue between CJD and A&C as to the removal of bracing at the eastern end of the building (using, as always unless otherwise indicated, the convention referred to at [4] above). It was put to Mr Perrin that the bracing was removed whilst he was employed by CJD. He denied that “absolutely” (T109.44-.48). He was reminded of a conversation with Mr Jeffree, which he accepted “most likely would have” happened, to the effect that Mr Jeffree advised most strongly against removal of the bracing, saying that it was required “for structural purposes” (T109.50-110.3). Having been so reminded, Mr Perrin adhered to his evidence that the bracing was still in place when he left the employ of CJD at the end of October 2002 (T110.5-.10). Then, shown an email dated 21 October 2002 from him to a Mr Greg Clark, Mr Perrin accepted that by that email he had instructed Mr Clark to remove the bracing (T110.12-.43).

39 I accept that someone might not remember, after seven years, having given an instruction for removal of bracing. But Mr Perrin went further than saying that he did not remember. He denied, emphatically and more than once, that the bracing had been removed during the course of his employment. Although this might seem to be a small matter in itself, it is symptomatic of a general tendency that I perceived in Mr Perrin’s evidence: namely that his memory appeared to be clear in matters that might be thought to favour CJD, and less than clear in matters that might be thought not to favour CJD, or to favour A&C.

40 Another, and troubling, issue relates to Mr Perrin’s diaries. He retired from the employ of CJD in late 2002. He had kept diaries during his employment. There is reason to think that at least some part of those diaries remained available to Mr Perrin in July 2006. Mr Rafferty had asked Mr Perrin to write setting out his recollection of relevant events. Mr Perrin replied by letter dated 17 July 2006. That letter commenced:

41 By July 2006, CJD and A&C were in dispute as to problems with the building and the causes of those problems. A&C had written a letter of 12 October 2005 (to which it will be necessary to return) in effect attributing responsibility for the problems to CJD. Further, CJD had retained a structural engineer (Mr Robert O’Hea) to advise it on possible breaches of

42 The only “diaries” of Mr Perrin’s that were discovered were covers, with absolutely nothing inside of any relevance. There was nothing in what had been discovered that, had it been reviewed, could have assisted in any way in refreshing Mr Perrin’s recollection of relevant events.

43 Mr Perrin said in cross-examination that his diaries were shredded after he retired (T84.35). Further, he said, that by 2006 the diaries “didn’t exist” (T85.14) and that they “just weren’t – they’d gone” (T85.17). He was unable to give any, let alone credible, explanation of what he had meant when he told Mr Rafferty, in the letter of 17 July 2006, that he had “reviewed what was left of [the] diaries” (T85.19-.22).

44 Two obvious possibilities suggest themselves. One is that Mr Perrin was telling Mr Rafferty the truth in the letter, and that he had reviewed his diaries before writing. If that is so then Mr Perrin was not telling the truth in his cross-examination. The other is that Mr Perrin was telling the truth in his cross-examination. In that case, this aspect of his letter to Mr Rafferty was, at the very least, misleading. There may be a third possibility: namely, that both now and in July 2006 Mr Perrin had no real recollection of events.

45 The first and second alternative are adverse to Mr Perrin’s credit, and the credibility of his evidence. The third, whilst it might not have a direct bearing on credit, certainly affects the credibility of his evidence.

46 Having observed Mr Perrin in the witness box during a lengthy cross-examination, and considering his evidence in total, I have formed the strong impression that his recollection of events has become strongly coloured by a desire – perhaps subconscious – to do his best for his former employer.

47 For those reasons, I do not regard Mr Perrin as a witness whose evidence, to the extent that it relates to matters in dispute, can be accepted as reliable.

Mr Jowett

48 Mr Jowett gave evidence only in reply: directed to rebutting an assertion that he attended a meeting with, among others, Mr Jeffree on 21 June 2002. Mr Jowett was not required for cross-examination (although notice for him to attend for cross-examination had been given, and he had travelled from his residence at Port Headland in Western Australia for the purpose of giving evidence).

49 So far as Mr Jowett’s evidence goes – and the point to which it goes is no longer in dispute – I accept it.

Mr Jeffree

50 Mr Jeffree gave evidence by a statement dated 1 September 2008. He is the other witness whose evidence, in critical areas, is the subject of dispute. A sustained attack was made on his credibility both in cross-examination and in closing submissions. Mr Corsaro of Senior Counsel, who appeared with Mr D C Price of counsel for CJD, did not shrink from putting to Mr Jeffree, and submitting, that Mr Jeffree had falsified what were said to be contemporaneous records that, if accepted, provided powerful support for some vital aspects of A&C’s case.

51 There were aspects of Mr Jeffree’s evidence that gave me cause for concern. I start with the meeting of 21 June 2002. According to Mr Jeffree’s statement, he had a meeting on site on 21 June 2002 with, among others, Mr Jowett and Mr Perrin. That meeting is highly significant because Mr Jeffree said that, during it, he warned CJD that a slab less than 310mm thick would not be adequate for its purposes, and said that he would “have to give you a letter saying that we’re not going to be responsible for that design, namely having the slabs at less than 310mm”. Mr Jeffree said that he wrote such a letter on 25 June 2002, and gave it to Mr Perrin that day.

52 Mr Jeffree referred to what he said was his site diary note for Friday 21 June 2006. So far as it is relevant, that diary note reads as follows:

“Rob Perrin + Rob Jarrett [sic] onsite 9.00am

A.J. checked out DCL Jobs

Discussed slabs – redesign – P Marcus, - G Murphy not happy to redesign slabs (to reduce thickness) A&C to issue letter to CJD re Slab thickness reduction – can’t warrant structural adequacy, against [the next word is unclear] and any possible structural defects resulting

53 “DCL” was the concrete subcontractor.

54 Mr Jeffree said in his statement (para 93) that the meeting was with Mr Jowett, and that Mr Perrin arrived a bit later. The words in question were said, in the statement, to have been uttered to Mr Jowett.

55 Mr Jeffree was taken to that paragraph in his evidence in chief. He acknowledged that he had read Mr Jowett’s statement of 8 September 2009 (which denied that Mr Jowett had attended the meeting in question, and attached documents which corroborated, or purported to corroborate, that Mr Jowett had been at his residence at Port Headland on 21 June 2002). Mr Jeffree was then asked whether he wished to correct para 93 of his statement. He said (T132.3-.15):

“Q. What is it that you wish to correct.

A. I believe I must have been wrong about Mr Jowett being on site on that occasion.

56 In cross-examination, Mr Jeffree accepted that, when he signed his statement, he could “put a face to Mr Jowett’s name” and that he “knew who Mr Jowett was” (T151.11-.35). He believed that the conversation in question “was a significant one” (T152.46).

57 The explanation given by Mr Jeffree was in substance that he had not met Mr Jowett prior to 21 June 2002, and did not then know him. He said that he met a number of people from CJD, at Minto and elsewhere. Quite often, he could not pick up their names when he met them. In those circumstances, he said, it was his practice to put a series of dots in his diary. He said that in this case he had not picked up the name of the person whom he described as “Rob Jarrett”: thus he put a series of dots in his diary; and he came back later and filled in the name, intending to refer to Mr Jowett (T152.35-.37, 153.35-.43). Although that explanation was challenged, I accept it. There is no doubt, when one examines the original of Mr Jeffree’s diary for 21 June 2002, that there is a series of dots overwritten by the words “Rob Jarrett”. There are other instances in that diary where the same practice has been followed. It is not surprising that, in the context of a busy meeting with several people, Mr Jeffree might not pick up the name of someone whom he had not previously met.

58 Thus, whilst the diary note is obviously incorrect insofar as it refers to “Rob Jarrett”, and equally is incorrect insofar as it suggests that Mr Jowett was at the meeting in question, it does not follow that it is inaccurate insofar as it purports to record the substance of what was discussed at that meeting. Being mistaken as to the name of a person attending a meeting is one thing. Being mistaken as to, or more accurately being prepared to falsify a note as to, the substance of what was discussed at that meeting is something altogether different.

59 Further, although there was some confusion as to precisely when Mr Perrin attended the meeting and to whom (if not Mr Jowett or Mr Perrin) Mr Jeffree spoke, I do not find this surprising having regard to the passage of time. No doubt, when Mr Jeffree came to prepare his statement, he had regard to his diary (and to other contemporaneous documents). After all, one of the reasons for keeping a site diary is to record significant events relating to a construction project. Presumably, when he read the diary, he took the reference to “Rob Jarrett” not quite at face value, but as referring to Mr Jowett; and took it from that reference that Mr Jowett had been present at the meeting.

60 I do not regard the matters to which Mr Corsaro drew attention, in relation to the diary note or Mr Jeffree’s evidence based upon it, as indicating dishonesty. On the contrary, in my view, the substance of the diary note ought be accepted as accurate. In brief, that is because it is quite clear that CJD through Mr Perrin was putting pressure on A&C through Mr Jeffree to reduce the thickness of the slabs; and that Mr Jeffree was concerned that slabs as thin as CJD wanted them would be inadequate for their duty. It is thus inherently likely that Mr Jeffree would have protested, as he said he did.

61 There were other areas of Mr Jeffree’s evidence that were, to put it mildly, confusing. For example: he said that the thickness of the slab was reduced, to effect a substantial saving (of the order of $100,000.00 to $200,000.00). But when cross-examined on the documents prepared by him for the purpose of pricing up the works, he was unable to show where the saving had been achieved. Ms Olsson of Senior Counsel, who appeared with Mr Tanevski of counsel for A&C and Mr Jeffree, submitted that the saving was reflected in the quotation, because the quotation was based on the design prepared by Mr Murphy. That was in substance a design for slabs 180mm thick but with thickened edges, save for a small portion where heavy vehicles were to be unloaded, which was 310mm thick. Mr Corsaro disputed this explanation. However, the matter had not been pursued with Mr Jeffree in cross-examination (or, for that matter, in re-examination). Accordingly, I am not prepared to conclude that the confusion betrays unreliability; it is quite possible that, if asked to give an explanation (or if cross-examined on the explanation advanced in submissions), Mr Jeffree could have given satisfactory evidence.

62 Again, Mr Jeffree was cross-examined as to his evidence that the sealing of the joints between slabs was omitted at the express instruction of Mr Perrin, so as to achieve a further cost saving. However, when Mr Jeffree was taken to the documents prepared by him in pricing up the works, it was unclear that in fact any saving had been passed on to CJD. Indeed, so far as the evidence goes, the better explanation appears to be that no saving was passed on.

63 The effect of Mr Jeffree’s evidence was that there were numerous changes made to the design, which had to be reflected in attempts to reprice the works. Whilst this is not of itself a satisfactory explanation for the apparent discrepancy between his oral evidence and the documents, I do not regard it as a matter reflecting so adversely on his credibility that it calls into question the totality of his evidence to the extent that it is in dispute.

64 Again, Mr Jeffree gave somewhat confused evidence as to whether there was or was not an edge beam spanning the piers beneath the steel structural members, and by which those structural members were supported. However, on analysis, the confusion in this aspect of Mr Jeffree’s evidence seems to be more a misunderstanding, or confusion of terminology, between him and Mr Corsaro, rather than something indicating unreliability or worse. (See, generally, T165.44-169.13, 180.5-.12 and 183.30-184.41).

65 Another major issue in relation to Mr Jeffree’s evidence related to the letter dated 25 June 2002 that, he said, he wrote and gave to Mr Perrin. In substance, Mr Corsaro submitted that the letter was not prepared on the date it bears; was not given to Mr Perrin; and, on the contrary, was fabricated after the event to give credence to Mr Jeffree’s evidence. For the reasons that I give below, in dealing with that issue of fact, I reject those criticisms of this aspect of Mr Jeffree’s evidence.

66 In my view, Mr Jeffree did not give false evidence, and did not seek to mislead the Court. On the contrary, I thought that he sought to give accurate evidence as best his memory would permit. I have no doubt that there are defects in his memory. However, in general, I prefer Mr Jeffree’s evidence to that of Mr Perrin. In particular, to the extent that Mr Jeffree’s evidence is supported by contemporaneous records, or seems to me to accord with the probabilities objectively ascertained, I accept it.

Mr Murphy

67 Mr Murphy gave evidence by statement dated 29 September 2008. He was cross-examined. No attack was made on his credit. I accept Mr Murphy as a witness who sought to tell the truth to the best of his ability. Indeed, his honesty was reflected in answers that he gave that, as he must have appreciated, were adverse to his interest.

Mr Telford

68 Mr Telford gave evidence by statement dated 22 September 2008. He was not cross-examined. I accept his evidence, so far as it goes.

Mr Marcus

69 Mr Marcus gave evidence by way of an unsworn draft affidavit, prepared following a conference on 7 March 2008, admitted pursuant to s 67 of the Evidence Act 1995 (NSW). There was unchallenged medical evidence to the effect that Mr Marcus was, and at all material times from 13 August 2008 had been, physically and mentally incapable of attending to the litigation. For most if not all of that time his mental state was such that, to quote one of his treating medical practitioners, he was “not a suitable candidate for witness testimony… due to his cognitive decline”.

70 Mr Marcus’ draft affidavit was admitted with a reservation as to the weight (if any) to be given to it. There were some respects in which the draft affidavit is consistent with other evidence that, in my view, is reliable; and to the extent that there is such consistency, then I accept what Mr Marcus said. However, to the extent that what was said in the draft affidavit is not so corroborated, and does not otherwise correspond with the probabilities objectively ascertained, I conclude that it cannot be afforded substantial weight. Indeed, as can be seen, there are some apparent inconsistencies between what Mr Marcus said in the draft affidavit and other aspects of the evidence. Of course, I accept that if Mr Marcus had remained well, and able to focus on the litigation, it is at least possible that those apparent inconsistencies might have been reconciled.

Mr O’Hea

71 Ms Olsson submitted that Mr O’Hea’s evidence should be rejected, on the basis that he was not an independent expert. His evidence (which comprised a number of statements, and was supplemented by a joint expert report to which he had contributed, some evidence in chief and extensive cross-examination) was admitted on the voir dire. In final submissions, I indicated that I proposed to admit the evidence, again with a reservation as to the weight to be accorded to it.

72 In essence, Ms Olsson’s submission was that Mr O’Hea had become closely identified with CJD’s case; that he had undertaken a substantial role, of an adversarial nature, in the preparation of the case; and that many of his opinions were expressed in the language of advocacy.

73 Mr O’Hea was first retained to advise CJD in 2005. The retainer was made directly with CJD (T303.28,304.25). He met CJD’s solicitor, Dr David Doyle, at about that time.

74 Mr O’Hea carried out a number of tasks, and from time to time reported to Dr Doyle. In a memorandum dated 7 June 2006, Mr O’Hea reported on what he considered were defects that were evident in the Smeaton Grange premises and the responsibility that various entities (including the defendants in these proceedings and others) might have for those defects. One of the points raised by Mr O’Hea in that memorandum related to A&C’s letter of 25 June 2002. He said that, by that letter, A&C was attempting “to globally disclaim all design responsibility…” and recommended that the letter “should be given further consideration”. He stated that “[w]e need to be confident that this document is not damaging to our arguments”. A little later in the same memorandum, he referred to “our own records”, “us”, and to what “we would need… for us to be successful”. He explained the use of the first person plural pronouns as “[p]robably due to my ignorance” (T309.19).

75 At some later time, Mr O’Hea directed an undated document headed “Preliminary Thoughts” to Dr Doyle. That document discusses possible causes of differences in level over the floor of the Smeaton Grange premises. Again, it uses the first person plural pronouns “us”, “our” and “we”: for example, “[w]e will then probably need a geotechnical expert to help us”.

76 In about February 2006, Mr O’Hea prepared some sort of report for Dr Doyle (its approximate date may be identified from a facsimile transmission note dated “03/02/2006”). It does not appear that, in preparing that report, Mr O’Hea considered that he was acting as an independent expert bound by UCPR r 31.23 and Schedule 7. It is however interesting that, in that report, Mr O’Hea effectively discounted moisture penetration through unsealed joints and openings between the exterior slab panels as a cause of moisture penetration through to the subgrade. On the contrary, he thought, “the most likely scenario” was that moisture was drawn up from a water table underneath the slab.

77 It became apparent that Mr O’Hea had been involved in the preparation of the “Statement of Claim”. On 1 September 2006, he sent Dr Doyle “the log of hours worked on which” he had based an invoice for fees. That document included two meetings concerning the statement of claim and an attendance of an hour to “Review final Statement of Claim”. Mr O’Hea was cross-examined on that document. In my view, he equivocated over it (T322.34-.53):

Q. And that not only have you assisted in making a case for A&C Constructions but you have been paid for assisting with the statement of claim?
A. I am note quite sure how I was paid to assist with the statement of claim.

Q. Well, let me show you your invoice and log of hours worked at 1 September 2006. You invoice the plaintiff's solicitor, didn't you, for not only meeting with Dr Doyle regarding the statement of claim for also for your work on revising the statement of claim, isn't that right?
A. I certainly had a look at the document that was produced, I believe, by Dr Doyle, or his staff, and where there were things, and the detail of it I can't remember, 'cos it was quite a comprehensive document. Where there are areas of it that seem not to make sense technically I would have drawn that to his attention, but I was not sort of assisting as such with them complying a statement of claim. I was just sort of trying to make it a little bit more technically correct or logical.

78 After Mr O’Hea had an opportunity to read the document, he gave further, and in my view also equivocating, evidence (T323.13-.24):

79 There are other documents. I will not take up time discussing them. In my view, the clear inference from the documents, and from Mr O’Hea’s evidence in relation to them is that he identified himself with CJD, and regarded himself as part of the “team” whose duty it was to prepare the litigation for CJD and to maximise its prospects for success.

80 Mr O’Hea did not subscribe to Schedule 7 until about 2008:

81 There is nothing at all wrong with a party retaining an expert to assist it in the preparation of its case. Indeed, where the case involves technical issues, it is desirable that a party should do so: to ensure that the real issues are identified, and false issues are discarded. But it is quite another thing to say that an expert retained for that purpose should thereafter be used as an independent expert witness for the purpose of giving evidence.

82 Looking at the whole of Mr O’Hea’s evidence, and the documents to which I have referred, I am not satisfied that Mr O’Hea should be regarded as an independent and objective expert witness. In reaching this conclusion, I take into account also the way in which he answered a number of the questions put to him. I accept the submission that, on occasions, he used the language of advocacy.

83 To the extent that there is any remaining discrepancy between Mr O’Hea’s evidence and the evidence of the defendants’ engineering experts, I prefer the evidence of the latter gentlemen. There is no doubt that their only involvement was as independent experts; and indeed, no attempt was made to show otherwise.

Mr Hoare

84 Mr Timothy Hoare is another engineering expert called by CJD to give expert evidence. His evidence included a report dated 16 November 2008 and a report in reply dated 15 September 2009.

85 Ms Olsson at one stage suggested that Mr Hoare too may have been overly identified with CJD’s cause. She cross-examined him on an email of 27 April 2007 to Dr Doyle. That email concerned damage caused to the slabs by “crawler tracked vehicles”. In the course of it, Mr Hoare observed:

I am sure that smart defence councel [sic] would then say that the client has not followed their original brief, and therefore the case of the as observed damage is not their problem. More so the client [CJD] has not done anything to mitigate the further damage and subsequent loss… [in original]

Hopefully you can see my point.. [in original] I would appreciate your thoughts on this.

86 I am not sure that it is part of the duty of an independent expert, who subscribes or who is to be asked to subscribe to UCPR r 31.23 and Schedule 7, to comment on what “smart defence councel” might say. However, the significance of this point is limited, because Mr Hoare’s evidence diverged from that of the defendants’ experts in only two ways.

87 One of those divergences concerned a view held by Mr Hoare and Mr O’Hea that there were “some other locations [i.e., other than as agreed by the defendants’ experts] where there is structurally significant slab cracking (other than normal shrinkage cracks) in the general vicinity of the Wash Bay” (see joint report of the engineering experts dated 25 September 2009, dealing with what the experts called “Question B1”). For the reasons that I have given, I do not regard Mr O’Hea’s evidence on this point as having any great weight. Thus, I do not regard it as supporting Mr Hoare’s opinion. In circumstances where the slabs in question are not precisely identified, I prefer the evidence of the defendants’ experts, to the effect that there were no damaged external slabs requiring rectification, other than those agreed by all experts as set out in the joint report.

88 The second area in which Mr Hoare’s evidence diverges from the view presented in the joint report relates to the adequacy of the slabs to withstand the loads advised by CJD in the loadings letter. Mr Hoare said he had carried out calculations, the effect of which was to show that the slabs were not serviceable, and would be unlikely to last for a reasonable design life which he quantified at 40 to 60 years in accordance with an applicable Australian Standard. The defendants’ experts did not controvert this evidence. Indeed, one of them, Mr Robert Herbertson, said that he had checked Mr Hoare’s calculations and agreed with them. It follows that I accept this aspect of Mr Hoare’s evidence.

The remaining experts

89 There was no challenge to the credibility of the remaining experts. Not all of them were required for cross-examination. Accordingly, to the extent that it is relevant, I accept their evidence.

First and second issues: the terms of the contract between CJD and A&C, and whether there was any variation to that contract

Outline of the dispute

90 In substance, CJD contended that its contract with A&C was a “design and construct” contract, whereby A&C undertook the detailed design of the Smeaton Grange premises, and agreed to construct them. The alternative case propounded by CJD was that there was an initial contract for detailed design, or design development; and a subsequent contract for construction.

91 A&C’s case was that the contract constituted by acceptance of its quotation of 6 June 2002 (the June contract) was, as the quotation specified, for construction only. In the alternative, A&C said that if there were an anterior contract for detailed design (or design development), aspects of the design – specifically, the design of the slabs – were taken out of its hands when (on A&C’s case) CJD directed that there be a slab with a uniform thickness of 180mm.

The pleaded case

92 Unfortunately, because of the deficiencies in the agreed issues to which I have adverted, it is necessary to pay some regard to the “pleaded” case contained in the further amended list statement and further amended list response (the reference to pleadings is incorrect but convenient).

93 CJD’s further amended list statement asserted that there were two relevant agreements:

(1) An “Initial Design Agreement”, said to have been made orally in discussions between Messrs Perrin and Jeffree in about January 2002; and

94 The Initial Design Agreement was said to include (among others) the following terms (taken from para 9 of the contentions in the further amended list statement):

9. The Initial Building Design was defective, and contrary to the Initial Design Representation. Telford’s conceptual design did not meet CJD’s requirements for a building which would be suitable for a showroom, workshop and office for CJD’s heavy vehicle business. The deficiencies in the Initial Building Design were:

(a) the design did not identify and specify an adequate internal slab thickness for the ground floor slab;

(b) the design did not specify a superstructure support system for the Curtain Wall to isolate the Curtain Wall from movements in the internal slab and the remainder of the Building;

(c) the design did not specify the requirement for support structure under the walls of the Building that would provide support which was independent of the ground floor slab to isolate movements in the ground floor slab from having any effect on the walls of the Building;

(d) the design did not specify adequate drainage falls to the undercover carpark ground slab;

(e) the design did not specify the ground slabs as floating slabs independent of the Building footings and walls, to isolate any movement in the ground slab from the other structure;

(f) the design did not specify void formers under the Curtain Wall support structure to isolate the Curtain Wall from ground movements;

(g) the design did not properly account for the stress and deflection limits of Span/250 (for commercial building) as defined in AS 2047-1999 section 2.3.3 in connection with the mullion arrangement;

(h) the design did not specify mid-span support in some of the Curtain Wall mullions;

(i) the design did not specify the appropriate grade of safety glass for the Curtain Wall; and

(j) elements of the Building which were designed did not comply with the requirements of the Building Code of Australia.

95 The Design and Construct Agreement was said to include (among others) the following terms (taken from para 21 of the contentions in the further amended list statement):

Claims against Jeffree

21. CJD claims damages or compensation against Jeffree for:

(a) Jeffree’s negligence in failing to detect the errors in the Initial Building Design and the Initial Pavement Design;

(b) aiding and abetting of A&C’s, Murphy and Telford’s misleading and deceptive conduct in making the Initial Design Representation;

(c) the negligent preparation of the Detailed Design and failure to ensure the Detailed Design and the Marcus Design were sufficient for CJD’s purposes; and [sic]

96 By their further amended list response A&C and Mr Jeffree denied the making of any Initial Design Agreement (para 15):

97 No doubt because of that denial, A&C and Mr Jeffree did not respond specifically to the terms alleged by CJD to form part of the Initial Design Agreement.

98 Further, A&C denies that it entered into any agreement of the kind characterised as the Design and Construct Contract. It says that the only agreement made was a “lump sum construction agreement”. Further, it denies any terms relating to design. See paras 19 and 20 of its further amended list response:

19. The First named Defendant denies that on 6 June 2002 it entered into a design, develop and construct agreement for the premises with CJD however the Firstnamed Defendant agrees that on 6 June 2002 it entered into a lump sum construction agreement for the premises with CJD.

20. The First named Defendant denies the construction contract included terms such as those contained in 21(a), (b) and (c) or that it developed the initial building design and initial pavement design referred to in paragraph 22 or that it had any implied contractual or other Common Law duties to review and check matters such as the engineering designs prepared by others which were clearly outside its expertise.

Claim against A&C

20. CJD claims damages or compensation against A&C for:

(a) breach of the Initial Design Agreement for failing to ensure the Initial Building Design and the Initial Pavement Design met CJD’s requirements and were sufficient for the construction of a building which was suitable for CJD to use in its heavy machinery business as a showroom, workshop and office;

(b) A&C’s negligence in failing to detect the errors in the Initial Building Design and in the Initial Pavement Design while undertaking work under the Initial Design Agreement or in the preparation of the Detailed Design under the Design and Construct Contract;

(d) negligence or breach of the Design and Construct Contract in failing to detect the errors in the Initial Building Design and in the Initial Pavement Design and for failing to ensure the Detailed Design and the Marcus Design were sufficient for CJD’s requirements.

The evidence: Initial Design Agreement

99 It is common ground that CJD provided the updated Williams and Hassall drawings to A&C. Equally, it is common ground that CJD procured the J&K 2001 report in about November 2001, and provided it to A&C shortly thereafter.

100 Mr Rafferty’s statement (to the extent that it was admitted into evidence) says no more than that, those things having happened:

(1) CJD paid A&C’s tax invoices “for all of the design costs, including, inter alias [sic], architectural, structural, hydraulic and landscaping design”;

(2) in early March 2002, A&C submitted to Camden Council an application for development approval and a construction certificate for the proposed works; and

101 Mr Perrin’s statement says no more than that, before construction commenced, he had a number of meetings with Mr Jeffree and gave Mr Jeffree information concerning the use that CJD proposed to make of the Smeaton Grange premises. That information relating to the size and weight of vehicles, the types of equipment that would be installed in the service area, and what was needed in the office and workshop areas.

102 Mr Jeffree said in his statement that he was first approached to give a “budget price” for what he described as “a very basic building” – a “basic “ball park” figure”.

103 Thereafter, Mr Jeffree said, he had a meeting with Mr Perrin in which Mr Perrin provided the Williams and Hassall drawings and said, in effect, that CJD wanted premises in accordance with those drawings and “more upmarket than the budget price building” the subject of Mr Jeffree’s earlier quotation.

104 After a number of presently irrelevantly meetings, Mr Jeffree said that he had another meeting with Mr Perrin (the date is not given but I infer that it was probably in late 2001) in the course of which Mr Perrin asked Mr Jeffree to organise some quotes for the designs, and Mr Jeffree said:

I can organise for the preparation of a set of working drawings to be completed on your behalf to submit to Council.

105 Thereafter, Mr Jeffree said, he asked Telford to prepare a design and price for a steel framed building in accordance with CJD’s requirements. At a later time, Mr Jeffrey said, he approached Mr Murphy, a landscape designer, a noise consultant and an air-conditioning designer. The effect of Mr Jeffree’s evidence in cross-examination is that he accepted that A&C was retained to develop the design, or prepare a detailed design, so that a development approval and construction certificate could be obtained. It is clear that the reason why he would not accept responsibility for the design is not that the initial contract or arrangement did not concern design but, rather, that CJD overrode at least some aspects of the design process. See for example T158.1-38:

“Q. Do I take it that you would say to his Honour that you were the person who needed to be satisfied that all the works being undertaken ultimately complied with whatever design intent came from drawings provided to you by others?
A. That's correct.

Q. I think that there's no issue about this but please let me know if there is: You would accept that you were initially asked to undertake work to develop a design for this building sufficient for you to then design and construct; correct?
A. Well, the design was basically - the initial design was given to us which we had to alter.

Q. And alter for the purposes of ensuring that the plaintiff's essential requirements were incorporated in that which had to be documented and built; true?
A. No, that's not correct.

Q. In what way am I wrong?
A. I was given too many directions which went against my advice and the advice of the engineers.

Q. We'll come to that but at the time that you were first retained, engaged, I take it you would say to his Honour you entered into this arrangement on the understanding that you were firstly going to do work in getting together consultants to design the various aspects of the building and then that building would be taken forward to construction; correct?
A. Correct.

Q. And do I take it that you were the person responsible for coordinating the various elements of the building that had to be designed?
A. Coordinating the design or the various elements?

Q. Coordinating the design of the various elements?
A. Correct.

106 In this context, it may be noted that, from time to time, A&C rendered tax invoices to CJD in which elements of the claims were described as “design progress claim”. In my view, those tax invoices are, and in particular the description of the claim is, consistent with the proposition that there was an “Initial Design Agreement” generally of the kind alleged by CJD.

107 It may also be noted that Ms Olsson put it to Mr Rafferty that he was “aware… that CJD paid A&C to further the design from the Mills and Hassall plans”: a proposition to which Mr Rafferty, perhaps not surprisingly, assented (T26.14-.16).

108 There is no doubt that A&C, through Mr Jeffree, knew the detail of CJD’s proposed usage of the Smeaton Grange premises.

The evidence: Design and Construct Contract

109 Mr Corsaro characterised the June contract as one “for finalisation of the design and construction of the premises”. I do not accept that characterisation. As I have said, the pleaded agreement is one in writing, comprised of the quotation of 6 June 2002 and the purchase order of 26 June 2002 accepting the quotation. There is nothing in those documents to suggest A&C undertook any, or any further, design obligation. In terms, the quotation is a “revised “Lump Sum Quotation” for the construction of your new development…”. The extent of work is specified by reference to identified drawings issued by Telford and by Murphy.

110 The purchase order of 26 June 2002 is said to be “as per quotation dated 6 June 2002”. That quotation is described as “proposed (new) facility to house” CJD at the Smeaton Grange premises. There is nothing in the acceptance to suggest that CJD sought, or sought to impose, any obligation in relation to design, or further design.

111 In short, the written agreement that is pleaded and proved is one for construction only.

Conclusions on the pleaded agreements

112 I conclude that CJD and A&C did make an Initial Design Agreement of the kind alleged by CJD.

113 The parties did not address in detail on the terms of the Initial Design Agreement. However, in my view, that agreement did include terms (for the most part, implied) of the kind alleged by CJD. In so far as those terms relate to the standard of care to be used, fitness for purpose and the like, they are self evident. The last obligation – relating to coordination – was in substance accepted by Mr Jeffree in the passage from his cross-examination that I have set out at [105] above.

114 However, I conclude, the June contract was one for construction only, and contained no element of design. That is hardly surprising, given the history (as to CJD’s “involvement”, to use for the moment a neutral term, in the design process) in the period leading up to the making of the June contract.

115 Again, the parties did not address in detail on the terms of the June contract. For the reasons that I have given, I do not accept that it included the term, as to development of the design, alleged in para 21(a) of CJD’s contentions. Nor do I accept that the June contract contained a term requiring A&C to construct the premises to a detailed design that would be suitable for CJD’s purposes. The question of design, and the suitability of the design, fall to be considered under the Initial Design Agreement. For essentially similar reasons, I do not accept that the June contract contained an implied term of the kind alleged in para 21(c) of CJD’s contentions.

116 I do however accept that the June contract did include a term, as to reasonable care, of the kind alleged in para 21(b) of the contentions.

117 Those conclusions do not dispel the real controversy, which is as to the extent and effect of CJD’s involvement in the design process: a question raised by the second issue. It is to that question that I now turn.

The evidence as to CJD’s involvement in the design process

118 The statements of Messrs Rafferty and Perrin are essentially silent on the topic of CJD’s involvement in the design process. It is hard to avoid the conclusion that Mr Perrin, in particular, sought to minimise the extent of his involvement.

119 Mr Jeffree was not so reticent. He said, in substance, that after Mr Murphy had forwarded Geotechnique’s AA report (which proposed a 310mm reinforced concrete slab with thickened edges for the individual panels) he discussed it with Mr Perrin, and Mr Perrin asked how much it would cost. According to Mr Jeffree, he gave Mr Perrin some information and Mr Perrin said that CJD would not pay for that thickness of concrete. Mr Jeffree said that he told Mr Perrin that the slabs were required to meet the loads that would be imposed on them, but that Mr Perrin insisted that CJD would not pay for so much concrete. According to Mr Jeffree, Mr Perrin said that the slabs would have to be redesigned.

120 In his statement in reply, Mr Perrin denied that he used words to the effect of those last referred to. According to him, he said words to the effect:

That is a huge amount of money. Is there anyway to reduce it by having someone have a look at it?

121 Partly for the reasons that I have given, and partly for reasons that I shall shortly give in analysing this aspect of the evidence, I prefer the substance of Mr Jeffree’s account.

122 After that discussion took place, Mr Jeffree met Mr Murphy and asked him to consider whether the slab could be redesigned. Mr Murphy asked Geotechnique to comment, and it provided him with the AB report. Mr Murphy prepared a design for the external pavement based substantially on one of the alternatives – “Option B” – set out in that report. The design was for slabs generally 180mm thick, but with substantially thickened edges, and for an unloading area with a slab 310mm thick. To move away from the present issue for a moment: Mr Murphy’s design provided for the joints between slab panels to be filled with an impervious polysulphide sealant; and it noted: “INTERNAL PAVEMENT (By Others)”.

123 According to Mr Jeffree, he then had a further discussion with Mr Perrin in which they looked at the AB report. He said that Mr Perrin said that it would still cost too much, and proposed other options (including pavers on top of road base). Again according to Mr Jeffree, Mr Perrin also said that most of the machines would be “33 tonners” and asked if the slabs could be designed for that load. Mr Jeffree says that he replied:

Well you can, but I’m not going to be held responsible for any damage caused by the use of the heavier machines.

124 Mr Perrin’s statement in reply did not challenge this aspect of Mr Jeffree’s evidence, and I accept it.

125 Mr Jeffree said that he then discussed the matter again with Mr Murphy, who said that even if the slabs in general were designed on the basis that they would be used by machines weighing no more than 33 tonnes, there would still need to be in effect a “parking area”, with a slab 310mm thick, for the heavier vehicles.

126 Mr Murphy procured a further report, known as the “AC report”, from Geotechnique. The AC report recommended, among other things, a pavement comprising a 260mm reinforced concrete slab on a 150mm base course, with the slabs to have thickened edges 370mm deep.

127 According to Mr Jeffree, he discussed the AC report with Mr Perrin and Mr Perrin said words to the effect that he just wanted 150mm of concrete over the whole site. Mr Jeffree pointed out that the engineer would not agree with that. He said that, after “a reasonably heated discussion”, Mr Perrin said words to the effect:

You’ll just have to find another engineer that will do it.

128 Mr Perrin’s statement in reply did not dispute this aspect of Mr Jeffree’s evidence, and I accept it.

129 Mr Jeffree said that he then spoke to Mr Murphy once more, and that Mr Murphy said, not surprisingly, that he was not prepared to put his name to a pavement design of the kind required by Mr Perrin. After that discussion, Mr Jeffree said that he spoke to Mr Perrin and they had a conversation to the following effect (para 80 of Mr Jeffree’s statement):

80. I went back to Rob Perrin and said:

“Murphy won’t have anything to do with it.”

“Well, you’ll just have to find an engineer who will.”

“That will be very hard. What engineer is going to put his name on something that will be under designed?”

“The only way would be to cover myself and the engineer. We’ll have to give you a letter advising we’ll take no responsibility for any inadequacies of the slabs if anything goes wrong.”

130 Of this paragraph, Mr Perrin said, in his statement in reply (para 7):

I do not recall a conversation with Mr Jeffree in words to the effect set out in paragraph 80 of Mr Jeffree’s statement.

131 That response may be contrasted with other paragraphs of Mr Perrin’s statement in reply, in which he denied saying words attributed to him in other paragraphs of Mr Jeffree’s statement, or denied having a conversation with Mr Jeffree as alleged by Mr Jeffree. I accept this aspect of Mr Jeffree’s evidence.

132 At this stage, it is convenient to break the narrative for the purpose of noting the following points:

(1) CJD had premises all over Australia, from which it carried on its business of selling and servicing heavy earthmoving and construction machinery;

(2) slabs 150mm thick had proved serviceable (except, perhaps, for damage caused by the passage over them of tracked machines);

(3) both Mr Rafferty and Mr Perrin were keen to reduce the cost of the Smeaton Grange project as much as possible; and

133 Mr Rafferty accepted, among others, the following propositions:

(1) over the years CJD had had extensive experience in building or renovating premises throughout Australia (T28.33-29.2);

(2) it was “fundamentally… true” that the 300 [sic] mm external slab originally allowed by the builder was “at CJD’s request… changed to 180mm with a dollar credit given in the contract, same as for the other slabs” (T43.46-.50);

(3) CJD asked A&C “for another opinion” in relation to slab thickness (T64.25); and

134 For the reasons given at [33] and [34] above, I conclude that Mr Rafferty’s understanding, as revealed in the second, third and fourth of those answers, was based on what he had been told from time to time by Mr Perrin.

135 In assessing the evidence, I take into account not only those concessions made by Mr Rafferty, but what appear to me to be the probabilities, objectively ascertained, in so far as they can be understood at the time. In assessing the probabilities, I take into account CJD’s understanding that, elsewhere in Australia, reinforced concrete slabs 150mm thick had proved sufficient to withstand the loadings imposed on them; CJD’s understandable desire to save money in the construction of the Smeaton Grange premises; and (a matter particularly relevant to an understanding of A&C’s position) the likely reaction of a builder whose customer was in effect rejecting the advice of the builder and a specialist engineer as to an essential element of the proposed design.

136 Returning to the narrative: after the discussions to which I have referred at [127] and [129] above, Mr Jeffree approached Mr Marcus. He gave Mr Marcus a history of what had happened, and said in substance that the slabs should be generally 180mm thick (apparently without thickened edges to the individual panels), but with an area of slab 310mm thick where heavy vehicles were to be unloaded and parked. According to Mr Jeffree, Mr Marcus agreed with this “because of the Geotechnique reports” (Mr Jeffree’s evidence was that he discussed the Geotechnqiue reports with Mr Marcus at this meeting).

137 Mr Jeffree said that, after his meeting with Mr Marcus, he had a further discussion with Mr Perrin, in which words to the following effect were said (see paras 85 to 87 of Mr Jeffree’s statement):

I then went back to Perrin and said:

“I’ve got an engineer. The engineer won’t come at 150 millimetres, but will design the slabs at 180 provided there is an area of 310 millimetres set aside for heavy vehicles to be unloaded and parked.”

However, I said:

”These vehicles must never move off the 310 millimetres area.”

Rob Perrin said to me words or words to the effect:

“No, I don’t agree to have any area of 310 millimetres – they must be all 180 millimetres.”

138 Mr Perrin denied that he said words to the effect of those attributed to him in para 87; he did not deny, or otherwise cavil, with paras 85 and 86.

139 Mr Perrin was cross-examined at some length as to the conversations with Mr Jeffree, and his attitude to the designs that were proposed. It is clear from what he said that there was “a bit of a stalemate” between him and Mr Jeffree: he saying that CJD would not pay for the slabs required by the engineer, and Mr Jeffree saying that the engineer’s advice should be followed (T93.12-.15). However, when asked why it was that he was insisting on reduction of the cost of the slab, Mr Perrin was somewhat coy. He would not accept that it was over-designed, or that CJD was “being ripped off”, and said that it was his not “personal opinion” that the slab was over-designed (T93.28-.43):

325 In addition, CJD submitted that there were other defects, or perhaps more accurately manifestations of defects, as follows:

(1) damage had been caused to the slabs, specifically spalling to joints, by the passage of steel tracked vehicles over them; and

326 The second of the defects referred to at [324] – omission of sealing in the joints between the slabs – meant that water could penetrate between the slabs through the subbase to the subgrade. The subgrade included reactive clay material. Such material swells when it becomes moist. The first of those defects – over-compaction – exacerbated the swelling. The swelling of the over-compacted fill caused some of the slabs to heave.

327 The third of those defects – mounting the curtain wall on the internal slab – meant that when the internal slab heaved, pressure was applied to the curtain wall. The fourth defect – failure to affix the curtain wall to the structural steel members in a way that would have permitted one to move relative to the other – meant that, when the heave of the slab applied upward force to the curtain wall, it became distorted, and some of the glass panes in it cracked.

Over-compaction

328 I have concluded that, read as a whole, Murphy’s specifications for compaction were not deficient. But even if they were, it does not follow that Murphy was responsible for over-compaction and the results. That is because, as I have said, there is no acceptable evidence that CJD in fact relied on note 13 (to the exclusion of note 1) in undertaking compaction, or that Mr Ihnatev of SMEC did so: see at [195] to [198] above.

329 It follows that responsibility for over-compaction rests with A&C.

330 Mr Cheney submitted in the alternative that even if Murphy owed, and breached, a duty of care, it was not responsible for any loss that followed from the over-compaction. He relied on the fact that the design was taken out of Murphy’s hands as breaking the chain of causation: a novus actus interveniens.

331 It is unnecessary to do anything more than summarise the relevant facts. Mr Murphy refused to put his name to, or to sign off on, any further reduction in the thickness of the slabs. The redesign of the slabs was undertaken by Marcus. The Marcus design did not supersede the Murphy design in so far as the Murphy design had dealt with compaction. Nor was it required to do so: Marcus’ retainer was to design a slab of the thickness required by CJD. The slab design prepared by Marcus retained elements of Murphy’s design, including Murphy’s various specifications for compaction of the subgrade.

332 However, one consequence of the change (from Murphy to Marcus) was that Murphy had no responsibility for supervising the works during construction. That role was undertaken by Marcus. Mr Marcus said that he performed it, and that he was “satisfied at the time, based upon [his] observations that [the] external slabs had been properly constructed and were consistent with [his] drawings and site instructions”. In addition, as I have noted, A&C retained SMEC in connection with the earthworks, and Mr Ihnatiev of that firm had day to day responsibility for the supervision and testing of, among other things, compaction.

333 It is not necessary to decide whether, in the circumstances, there was a break in the chain of causation. That is not relevant to my conclusion, at [329] above that responsibility for over-compaction rests with A&C.

Omission of sealing

334 The Murphy drawings specified sealing between slabs in the external pavements. As I have said above, the better view of the Marcus drawing is that it likewise specified sealing between slabs (internal and external). Although Mr Corsaro attacked Mr Marcus’ stated rationale (which was to prevent the ingress of dust, not water), this does not matter. As Mr Fagan submitted, the rationale is irrelevant; and sealing would have prevented the ingress of moisture as well as of dust.

335 It was A&C’s case that sealing between the joints was omitted at the direction of CJD, through Mr Perrin. I referred to this, in considering the question of credibility (see at [62] above).

336 Mr Jeffree said in his statement (para 89) that he had a conversation with Mr Perrin in which Mr Perrin directed Mr Jeffree to delete sealing between the joints:

89. When I was preparing my estimate in order to provide a price to CJD, I allowed for an amount in respect of sealing the joints between the concrete slabs. I proposed that this jointing would be used both in the saw cut joints, and the dowelled joint. I had allowed for joint sealant because I wished to minimise, if not entirely, remove the opportunity for water to gain access underneath the concrete slab – both inside and outside the building.

Sometime, I believe in the second half of April 2002, in the course of one of my meetings with Mr Rob Perrin, words to the effect of the following conversation took place:-

“How much have you allowed for jointing”.

“I think it was about $11,000.00”.

(In fact I had allowed $13,000.00 in my estimate – see p7, document ”25” annexed hereto).

“Take it out”.

“It keeps the water from entering the sub-grade via the open joints. Are you talking about inside and outside?”

“Yes.”

“I think you should at least keep it on the outside.”

“Just take it out.”

337 According to Mr Jeffree, he recorded this direction both on the Murphy drawing and on his worksheets in which he had priced up the works (in each case, by writing “deleted C.J.D.”).

338 Mr Perrin denied that he had had a conversation as alleged in para 89, or that otherwise he instructed Mr Jeffree to “take jointing out of the concrete slabs”. (It is quite clear that “jointing” was intended to refer to sealing between the slabs panels).

339 Mr Jeffree was challenged vigorously on this aspect (and others) of his evidence, as was Mr Perrin. In essence, as Mr Corsaro recognised, the challenge to this aspect of Mr Jeffree’s evidence requires the conclusion that he had deliberately falsified A&C’s records.

340 I have set out at [144] above A&C’s letter of 25 June 2002 to CJD. It will be observed that one of the matters referred to in the last paragraph is “joints”. In my view, that is to be read as a reference to the deletion of sealing.

341 I have set out at [151] above an extract from Mr Jeffree’s letter to CJD dated 12 October 2005. That refers not only to reduction in the thickness of the slabs but also to deletion of joint sealing. It notes that “[t]his procedure was rejected by CJD”. It is extraordinary, and in my view telling, that CJD did not reply to this letter, denying that the instruction was given. The failure to reply corroborates the conclusion that I would have reached in any event, based on my general preference for the evidence of Mr Jeffree over that of Mr Perrin where the two are in conflict.

342 In this context, I take into account what seem to me to be the probabilities, regarding the matter objectively. A&C is a builder. It makes its money by carrying out construction work. Presumably, if Mr Jeffree prices a job correctly, A&C makes some margin on the various items of work. Thus, there was no incentive for A&C to delete the sealing of the joints unless it was trying to cut costs by cutting corners. I find it very difficult to understand why an experienced builder, who understood (as Mr Jeffree did understand) the importance of sealing slab joints when the slabs are underlain by compacted reactive clay material, would delete sealing between the joints. To do so would be to invite a claim.

343 On the other hand, CJD was keen to save money. In my view, it is likely that Mr Perrin would have directed steps that might assist it to do so, even though given warnings as to the consequences of taking those steps. I do not accept his evidence to the contrary.

344 Accordingly, I find that responsibility for the absence of sealing at the joints of the slabs rests with CJD.

Defects relating to the curtain wall

345 It appears to be the case that the curtain wall was designed and installed by the glazier (Campbelltown Glass Services). There is no evidence to show who was responsible for the defective elements in the design. However, A&C had contractual responsibility to CJD for the works. A&C knew (through the J&K 2001 report) that the internal slab should be a floating slab: i.e. that, among other things, the walls of the building should not rest on it. It follows that, even assuming that the glazier was responsible for this aspect of the design, A&C should have rejected it. If the curtain wall had been supported by the steel framing members or the edge beam on which they were supported, the distress and failure that has occurred would not have happened.

346 Again, there is no evidence as to who was responsible for designing the way in which the curtain wall was affixed to the structural steel members. It was not Telford. That method of affixing was defective only because the curtain wall was supported on the slab, and thus likely to move to the extent that the slab heaved. It is either an independent or concurrent cause of the damage to the curtain wall. It too falls within the ambit of A&C’s contractual responsibility for the works.

BCA non-compliance

347 The effect of Mr Michaels’ evidence is that to the extent that there is non-compliance with the BCA, that is a result of the way that the premises were constructed or are used. It does not follow from Telford’s design.

348 A&C is responsible for the construction; and I repeat that it retained its own consultant to advise it on BCA issues.

349 It follows that, to the extent that there are non-compliances with the BCA, A&C should be held responsible.

Damage to the pavement joints

350 CJD originally required rails set into the concrete slab to be installed in the workshop area so that steel tracked vehicles could be manoeuvred on the rails, not directly on the concrete surface. It directed that the rails be removed. Mr Rafferty said that their purpose was not to prevent damage to the concrete, but to protect the painted service of the concrete. I do not accept that explanation. Among other things, it is inconsistent with the terms of the loadings letter. It is clear that CJD was aware that tracked vehicles had caused great damage to slabs at its other premises. The engineering evidence supports the conclusion that moving tracked vehicles on rails would prevent them from damaging the slab.

351 Mr Rafferty said also that the rails were useless, because tracked vehicles tended to slip off them. However, he did not say that he disclosed this to CJD (or anyone else).

352 It is necessary to look in some detail at the loadings letter. The brochures attached to that letter identified, among the vehicles or equipment that would utilise the Smeaton Grange premises, a tracked vehicle known as a Volvo EC 460 long crawler. Of this vehicle, the loadings letter said:

³

Machines are transported into and out of the facility by Low Loader Trailer Units.

353 In my view, the clear inference from this letter is that when tracked machines (only one was identified in the letter) were being moved around the premises, they would be moved on low loaders except within the workshop; and when they were moved within the workshop, they would move on rails, not directly on the concrete.

354 There is nothing in the letter, or elsewhere in the evidence to which I was taken, to suggest that CJD made it known to A&C that steel tracked vehicles would rumble at will, or at random, around the premises generally. Although I have not set out the whole of the loadings letter, it does not suggest that the tracked vehicles would move otherwise than in the way indicated in the passage that I have extracted. By contrast, of another sort of machine, the letter said:

this machine… would not enter the workshop. It would however move about the workshop yard.

355 Reading the letter as a whole, the contrast between what was said of the machine that would not enter the workshop but would move around the yard, and what was said about the tracked machine, is clear, and reinforces the view that I take of the letter.

356 It follows that, to the extent that damage has been caused to slabs in the workshop bay by the movement of tracked vehicles, responsibility rests with CJD because CJD directed removal of the rails. To the extent that damage has been caused to external slabs by the movement of tracked vehicles, responsibility rests with CJD because it did not instruct A&C to design those slabs to withstand such damage.

357 It might be added that the cost of constructing the external pavement (and for that matter the workshop slabs) to resist spalling caused by the movement of tracked vehicles would have been very substantial. Given CJD’s attitude to cost, and given that, in its other premises, it was apparently prepared to put up with degradation of slabs through vehicle movement, it is unlikely in the extreme that any such direction would have been given.

Other instances of slab degradation

358 The experts identified a section of slab near the wash bay that had substantially broken up. They thought that this was probably due to degrading of the subgrade through water ingress. Their joint report did not suggest that over-compaction of the subgrade (assuming, for the moment, that these slabs were constructed in an area of fill rather than cut) had anything to do with the damage. Accordingly, it is appropriate to regard this failure as something flowing from the deletion of sealing between joints, and to allocate responsibility for it to CJD.

359 Messrs O’Hea and Hoare gave evidence that there were other locations, in the general vicinity of the wash bay, where there was structurally significant slab cracking (not normal shrinkage cracks). The other engineering experts did not agree. I prefer the view of those other experts (i.e., experts retained by one or other of the defendants) to that of Messrs O’Hea and Hoare.

Eleventh issue: liability under the Trade Practices Act

360 There are two problems with the eleventh issue. The first is that it has nothing to do with “question 7”; presumably, it should read as referring to the eighth issue. The second problem is that there is an intermediate step which is wholly omitted: namely, whether such representations as were made were misleading or deceptive.

361 Essentially for the reasons that I have given in considering whether any representations were made, I conclude that the representation made by A&C was not misleading or deceptive, because:

(1) it was a representation as to a present matter – its state of mind, or understanding; and

Twelfth issue: Telford’s alleged duty to warn

The pleaded case

362 The duty to warn case is pleaded in paras 29 to 32 of the contentions:

29. From about July to September 2002, Telford supplied and delivered to the premises the components of the Building.

30. In the circumstances, Telford owed CJD a duty to warn CJD if the Initial Building Design would result in the Building not being fit for use as a showroom, workshop and office space in the conduct of CJD’s heavy vehicle business.

31. In breach of that duty, Telford failed to warn CJD that the Initial Building Design would result in the Premises not being fit for use as a showroom, workshop and office space in the conduct of CJD’s heavy vehicle business.

The allegations of unsuitability

363 The external slabs can be put to one side. Telford had nothing to do with them. The “failure to warn” case relates to the building.

364 As to the building, CJD says that the defective elements are:

(1) the internal slab;

(2) the curtain wall; and

365 Telford had no part in the design of the internal slab. Although its drawings specified a slab detail, it was never intended that this slab detail be constructed. The slab that was constructed was designed by Marcus. The structure of the building supplied by Telford did not rest on the internal slab. It rested on an edge beam spanning concrete piers founded to rock. Thus, so far as Telford is concerned, the design that it specified reflected the J&K 2001 report, in that structural elements of the building were not supported by the internal slab.

366 Telford did not design the curtain wall. The curtain wall had not been designed at the time Telford completed its “Initial Building Design”. The submissions for CJD strove valiantly to explain how Telford should have taken into account loads to be imposed by a glass curtain wall at the time it finalised its initial building design. Mr Corsaro referred (closing submissions, para 107) to evidence of Telford’s principal, Mr Andrew Telford. At paras 37 to 40 of his statement, Mr Telford referred to amendments to the Telford design to accommodate changes to the mezzanine floor space and fire rated doors. He said that these changes led to “a requirement for additional footings which resulted in an amended footing plans being produced and certified”. However, that work does not form part of the “Initial Building Design” which, by para 6 of part A of CJD’s further amended list statement, is defined to mean Telford’s “conceptual design of the Building”.

367 In any event, the problems with the curtain wall arose because it was mounted on the internal slab, and affixed to the steel structural members in a way that did not permit one to move relative to the other. Thus, as I have now said several times, when the internal slab heaved, and forced the curtain wall upwards, it suffered distress and damage. Telford was not responsible for designing the method by which the curtain wall was affixed to the steel structural members; nor could it have been, in circumstances where the glass curtain wall did not form part of its design brief, and (on the evidence) had not been designed when Telford completed its Initial Building Design.

368 Mr O’Hea gave evidence that the designer of the building should have had regard to the loads that the building was required to support, including loads transmitted by the curtain wall. There are problems with that aspect of Mr O’Hea’s evidence. The first is that, even with his considerable powers of advocacy, he was unable to give any rational explanation of how the designer of the structure could have accommodated loads that were not, at the time the design of the structure was completed, in existence. The second is that, as I have just indicated, this passage of Mr O’Hea’s evidence is more in the nature of advocacy than expert evidence. That can be seen from the fact that, although Mr O’Hea acknowledged that the distress to the curtain wall was the result of movement to the slab, nonetheless (he said) the designer of the frame should have provided information to the designer of the curtain wall in respect of certain forces that have absolutely nothing to do with the actual problems in this case. I set out the relevant passage (T392.40-393.33):

Q. Now putting the slab to one side, the structure as it exists in the Telford drawings, that is the footings and the structural steel elements were capable of being used by a facade designer to come up with a facade design that accommodated the requirement of the building including the loading likely to be imposed on the wall, correct?
A. Loadings were likely to be imposed on the wall.

Q. By the building or imposed by the wall on the building?

A. Yes.

Q. The information that you say was required to be provided is information concerning movement of the slab as opposed to the footings and the structural steel building?
A. In so far as the distress we are seeing at the moment is concerned, that is correct, but there is still information that you would expect the designer of the structural frame to provide to the facade engineer in terms of other movements of the building frame such as thermal, such as wind load swaying and things like that.

Q. But there is no movement of that sort, of that nature relevant in this case that has not been provided to any designer that is causing distress to the wall?
A. Um --

Q. The only distress to the wall in this case has been caused by the upward movement of the slab?
A. Yes, that is correct.

Q. Having regard to the fact that the curtain wall had not been designed or detailed at even a conceptual level at the time the Telford drawing came into existence in February 2002, how the separation between the wall and the structure was to be accommodated by the curtain wall design was a matter for the curtain wall designer?
A. Yes, but there is still an interface there to do with the fact that the curtain wall may have provided slotted holes in its frame that would have tolerated movement and ought to tolerate some movement because of reasons other than the slab heave.

369 I do not regard that evidence as providing any support for this aspect of CJD’s case. It does not seem to me to involve any application of relevant expertise but rather, as I have indicated, to be argumentative, or in the nature of advocacy. To my mind, Mr O’Hea took refuge in the verbal formula of “interface”, in an attempt to conceal the fact that he was doing no more than advocating this part of CJD’s case under the guise of giving expert evidence.

370 In the circumstances, Telford came under no duty to warn. But even if it did, the breach of duty goes nowhere, because the damage to the curtain wall does not flow from any inadequacy in the structural steel to support the loads imposed by it.

Thirteen, fourteenth and fifteenth issues: damage

371 By reason of the conclusions to which I have come in respect of the tenth issue, this issue is confined to:

(1) the internal slab;

(2) the curtain wall; and

The internal slab

372 There are two causes of the heave in the internal slab:

(1) the deletion of sealing in the joints in both the interior and exterior slabs; and

373 It is clear from the expert evidence that the second cause had no independent operation. That is to say, over-compaction of itself, absent any penetration of moisture, would not have caused the slab to heave. It was only because moisture did penetrate between the joints in the slab that the swelling occurred. Over-compaction exacerbated the degree of swelling.

374 The geotechnical experts agreed, in a joint report produced following their belated conference, that “heave of the slab–on–grade… can be explained by water penetration through the open joints”, although, they said without specificity, “there might be other sources of moisture ingress” (para 4(a)).

375 There was no expert evidence to indicate the extent to which over-compaction had exacerbated the amount of heave.

376 In circumstances where the over-compaction would have had no deleterious impact on the serviceability of the Smeaton Grange premises save for the penetration of moisture, but where (because moisture did penetrate) it did have an impact on the amount of damage caused, I think that the primary responsibility for damage resulting from slab heave should be attributed to CJD. I say that because, as I have found, it was CJD that directed removal of the sealing between joints; and it did so notwithstanding a warning of the danger that might result. However, A&C, through Mr Jeffree, clearly understood that if there were no sealing between joints then water would penetrate through the slab. In those circumstances, A&C should have been particularly alert to the danger of over-compaction. However, Mr Jeffree seems to have held the view (despite the engineering information in his possession) that, the higher the compaction ratio achieved, the better.

377 In those circumstances, unaided both by expert evidence and by any submission on the point, I think that responsibility for slab heave should be apportioned 75% to CJD and 25% to A&C. I acknowledge that this is an essentially unreasoned and instinctive reaction to, or synthesis from, the facts that I have summarised.

The curtain wall

378 There is no evidence to explain why, contrary to the clear implication available from the J&K 2001 report, the curtain wall was constructed on the internal slab. The evidence does not disclose whether the glazier was given a copy of the J&K 2001 report. If it were not, there was no reason for it to have considered:

(1) supporting the curtain wall other than on the slab; or

379 Regardless of what the glazier might or might not have known, A&C should have understood that the curtain wall should not be affixed to the slab.

380 The distress and damage to the curtain wall have been caused by heave in the slab. However, it does not follow that responsibility for that damage should follow the apportionment of responsibility for heave in the slab. There is another factor: that just identified. A&C should have ensured that the curtain wall was independent of the slab.

381 Accordingly, I think it appropriate to apportion the major part of the responsibility, for damage to the curtain wall, to A&C and the minor part to CJD. I do so 85% to A&C and 15% to CJD. This apportionment may be described in the same terms as that set out at [377] above.

Non-compliance with the BCA

382 On the conclusions to which I have come, responsibility for this must rest with A&C. Many of the instances of non-compliance would not have occurred had A&C followed Telford’s drawings. A&C retained its own BCA expert to advise it on compliance issues.

Other matters

383 On my findings, CJD is responsible for any inadequacy in the external slabs, flowing from their design at a thickness of 180mm. It is also responsible for damage to those slabs (in particular, spalling at the joints) caused by the movement of heavy tracked vehicles over them.

Sixteenth issue: scope and cost of rectification work

384 The costing experts, Messrs Andrew Condliffe and Paul Elphick, eventually met – during the second week of the hearing – and prepared a joint report. Unfortunately, in one respect – relating to the internal slab – it is not possible to correlate the costing in their report to what was agreed between the engineering experts. In another respect – BCA compliance – they costed some scope or description of works, known (after its source) as the Mainbrace scope, procured by Mr Condliffe, but not made available to the defendants or their experts (apart from Mr Elphick) for assessment. Mr Elphick assessed the Mainbrace scope only from the point of view of costing the work. He agreed that he could not say that it was a scope of work necessary for rectification of BCA non-compliance (T402.46-.50). In those circumstances, there being no explanation for why it was that Mr Condliffe had not met earlier with Mr Elphick (when, it was common ground, Mr Elphick had been available to meet since before the commencement of the hearing) I rejected so much of the joint report as related to the Mainbrace scope.

385 To the extent that rejection of the Mainbrace scope and the costing of it causes detriment to CJD, that is a problem of its own making. Its expert evidence was required well before the hearing, not (through the back door) during the second week of the hearing. To admit the Mainbrace scope and its costing would have been prejudicial to the defendants, who should have had, but were denied, the opportunity to check the scope of work. In circumstances where the defendants were not, and CJD was, the author of the problem, it is CJD that must bear the consequences.

386 The result is that the only evidence of the cost of rectification of the works that do not comply with the BCA is a “budget only” or “order of magnitude” figure prepared by Mr Condliffe in the sum of $147,648.00.

The internal slab

387 The engineering experts agreed that the appropriate rectification works for the internal slab were those proposed in a joint report of the defendants’ experts following meetings held on 2 and 27 July 2009. The report of those meetings has to be read in conjunction with a marked-up plan. Unfortunately, it is not easy to discern either from the report or from the marked-up plan what precisely is the work required for rectification of the internal slab.

388 Equally, as I have said, it is impossible to tell from the joint report of the costing experts which item (or items) of their joint report relates to whatever is the scope of work identified by the engineering experts.

389 In those circumstances, it will be necessary to leave it to the parties to attempt to sort the matter out, and to reserve liberty to apply in the event that they cannot.

The curtain wall

390 The engineering experts agreed on the scope of work for rectification of the curtain wall. The costing experts costed that scope of work at $380,199.00 (inclusive of design costs and GST).

BCA compliance

391 For the reasons that I have given, Mr Condliffe’s “budget only” / “order of magnitude” figure of $147,648.00 should be allowed. I do not know whether or not that figure includes GST. The parties should be able to agree on this.

392 There may be a question as to whether allowance should be made in this (or any other) category of rectification for GST, if it appears that CJD would be entitled to an input credit for the GST component of any cost of rectification.

Seventeenth issue: mitigation

393 On my findings, the issue of mitigation is relevant only to the rectification works referred to in the previous section of these reasons.

394 A&C, who took the lead on this issue, submitted that CJD should have sealed the slab joints in 2005 when movement was first identified, and that CJD should have taken steps to ensure that any further movement in the slab did not cause further distress to the curtain wall. In substance, those measures were proposed in Mr Jeffree’s letter of 12 October 2005 to CJD, to which I have referred in more than one place above.

395 Mr John Alden, an expert engineer retained by Murphy, said (report of 7 August 2009, paras 4.5.11 and following) that:

(1) damage to the curtain wall could have been minimised once it became apparent that the heaving of the slab was causing the curtain wall frame to distort (I interpolate that this was apparent by October 2005);

(2) in particular, releasing and reattaching the connection (between mullions and the building framing) would have relieved stress; and

396 Mr Alden accepted that his solution would not have been permanent, and would not have prevented all damage – in particular, damage that had occurred before the adjustments were carried out. However, he said, “it would have avoided the severe damage now evident, causing a safety risk related to breakage or detachment of glass panels”. Mr Alden was not challenged on this evidence.

397 In the same report, Mr Alden supported the proposition that CJD should have sealed the joints as soon as it became aware of the problem and was advised to do (para 4.5.23). Again, he was not challenged on this evidence.

398 There is no evidence that would enable the Court to assess to what extent the curtain wall has deteriorated since distress was first observed. However, I think, it is a reasonable inference from Mr Alden’s evidence that, had the works to which he referred been performed it would not now be necessary to replace the curtain wall.

399 In this context, it may be noted that CJD had retained a consultant, Hyder Consulting Pty Ltd, to advise it when problems in the building became apparent. Hyder recommended that some remedial work be carried out. Mr O’Hea said at first that remedial work recommended by Hyder had been carried out (T321.12-26). However, when taken to the detail of the remedial work suggested by Hyder, he was forced to accept that it had not been carried out (T325.25 – 326.25).

400 Ms Olsson accepted (closing submissions, para 127) “that there is no expert evidence to opine [sic] the precise amount of damage caused or increased by CJD’s failure to mitigate.” She submitted that “[i]t is difficult to assess the damages flowing from the failure to mitigate, however… mere difficulty in assessing damages does not relieve a court from the responsibility of estimating them as best as it can”. It would have been more accurate to omit the word “precise” and to replace the word “difficult” with “impossible”.

401 Nor is there any evidence of the costs that would have been incurred in carrying out, by way of mitigation, remedial works of the kind suggested by Mr Alden (or, for that matter, by Hyder).

402 The onus, in relation to mitigation, is on the defendant alleging failure to mitigate to show that there were steps that could have been taken to mitigate the loss, and that it was reasonable for the plaintiff to have taken those steps. The concept of mitigation is closely related to the concept of reasonableness, and a plaintiff is not obliged to take unreasonable steps to mitigate its loss. However, because a plaintiff is obliged to act reasonably, if (in relation to mitigation) it does not do so, the consequences should not be borne by the defendant.

403 CJD did not offer any explanation of its failure to mitigate. CJD was given advice as to steps that should be taken in relation to the curtain wall. Since it did not give any evidence as to its failure to take those steps, the available inference is that it feared to lead such evidence. Drawing that inference, as I do, it is open to infer, on the basis of the evidence to which I have referred, that CJD acted unreasonably in failing to carry out remedial works at an earlier time. In those circumstances, it is not entitled to recover the amount claimed. That is because to award that amount by way of damages would be to visit on the relevant defendant – on my findings, A&C – the consequences of CJD’s unreasonable failure to act.

404 CJD did not lead, or point to, evidence to suggest that the steps recommended by Mr Alden, or indeed the steps recommended by Hyder, were unreasonable in the relevant sense. As to Mr Alden: his evidence was that the steps recommended by him (see at [395] above) were not likely to have been difficult. It was not put to Mr Alden that the steps recommended by him were of such novelty or obscurity that someone in CJD’s position, seeking to act reasonably to mitigate its loss, should not have thought to undertake them.

405 Mr O’Hea did not suggest, in his cross-examination on the steps recommended by Hyder, that they would novel, or obscure, or difficult, or that for some other reason it was not reasonable to expect a reasonable person in CJD’s position at the relevant time to have undertaken them.

406 Accordingly, and drawing the inference from CJD’s silence to which I have referred at [403] above, I conclude that CJD has acted unreasonably, and failed to mitigate its loss. In circumstances where the steps recommended by Mr Alden, if taken, would have rendered replacement of the curtain wall unnecessary, it follows that the only quantification of loss in respect of the curtain wall – namely, of the cost of its removal and replacement – ought not be allowed. There is no other evidence of damage that should be allowed in respect of this aspect of the claim.

Conclusion and orders

407 It follows that CJD’s claim succeeds in part as against A&C:

(1) for 25% of the cost of rectifying the internal slab, in accordance with the rectification proposed by the engineering experts and costed by the costing experts; and

408 Since CJD has succeeded only in respect of aspects of its contract claim against A&C, it follows that there is no case of accessorial liability against Mr Jeffree, and its claim against him fails.

409 CJD’s claim fails against the other defendants.

410 I make the following orders:

(1) direct entry of judgment for the plaintiff against the first defendant for damages to be assessed in accordance with these reasons;

(2) reserve liberty to apply on seven days’ notice in respect of the assessment of damages.

(3) direct entry of judgment for the second, third, fourth and fifth defendants against the plaintiff.

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Citations

CJD Equipment v A&C Constructions [2009] NSWSC 1362

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CITATION:	CJD Equipment v A&C Constructions [2009] NSWSC 1362
HEARING DATE(S):	6/10/09, 07/10/09, 08/10/09, 09/10/09.
JUDGMENT DATE :	10 December 2009
JURISDICTION:	Equity Division Technology & Construction List
JUDGMENT OF:	McDougall J at 1
DECISION:	See paragraphs [407] to [410] of the judgment.
CATCHWORDS:	BUILDING AND ENGINEERING CONTRACTS – construction – terms to be implied where contractual documents limited – whether implied term of fitness for purpose – performance – whether design defective – whether caused damage to constructed premises – whether subcontractors made representations to the principal – whether resultant liability of sub-contractors – remedies – damages – quantification – apportionment of damages between defendants – mitigation – whether plaintiff mitigated loss. - TORT – whether duty of care owed – whether plaintiff relevantly vulnerable – scope of duty – whether damage to building properly characterised as economic loss – causation – whether loss complained of caused by design or representations made by defendants – whether plaintiffs’ amendments to design a novus actus interveniens.
LEGISLATION CITED:	Civil Liability Act 2002 Evidence Act 1995 (NSW) Trade Practices Act 1974 Uniform Civil Procedure Rules
CATEGORY:	Principal judgment
CASES CITED:	Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 Bryan v Maloney (1995) 182 CLR 609 Digi-Tech (Australia) Ltd v Brand (2004) 62 IPR 184 Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (2008) 68 ACSR 595 Jones v Dunkel (1959) 101 CLR 298 Murphy v Brentwood District Council [1991] 1 AC 398 Perre v Apand Pty Ltd (1999) 198 CLR 180 Ralf Dutton v Jalapen Pty Ltd (1994) 10 BCL 338 Sutherland Shire Council v Heyman (1985) 157 CLR 424 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515
PARTIES:	CJD Equipment Pty Limited (Plaintiff) A&C Constructions Pty Limited (First Defendant) Allan Keith Jeffree (Second Defendant) GF Murphy Consulting Pty Limited (Third Defendant) Telford Building Systems (Aust) Pty Limited (Fourth Defendant) Peter Marcus Consulting Engineers Pty Limited (Fifth Defendant)
FILE NUMBER(S):	SC 55065/08
COUNSEL:	F C Corsaro SC / D C Price (Plaintiff) E M Olsson SC / M P Tanevski (First and Second Defendants) R J Cheney (Third Defendant) I G B Roberts (Fourth Defendant) D Fagan SC (Fifth Defendant)
SOLICITORS:	The Builder's Lawyers (Plaintiff) Walsh & Blair Lawyers (First and Second Defendants) Kennedys Lawyers (Second Defendant) DLA Phillips Fox (Fourth Defendant) Colin Biggers & Paisley (Fifth Defendant)