| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : CMG SERVICES -v- ACK PTY LIMITED [2004] WADC 257 CORAM : GROVES DCJ HEARD : 22-26 & 29 NOVEMBER 2004 DELIVERED : 22 DECEMBER 2004 FILE NO/S : CIV 1834 of 2000 BETWEEN : CMG SERVICES Plaintiff
AND
ACK PTY LIMITED
Defendant
Catchwords: Contract - Building - Supply and erection of roof trusses - Terms of contract - Breach by builder - Unjust enrichment - Restitution for repudiation - Damages for breach of contract
Legislation: Builders' Registration Act 1939, s 4
Builders' Registration Regulations, reg 18
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Result: Plaintiff's claim dismissed
Judgment for defendant on counterclaim Representation:
Counsel:
Plaintiff : Mr M Levitan
Defendant : Mr K Burgoyne
Solicitors:
Plaintiff : Melvyn Levitan
Defendant : Kevin Burgoyne
Case(s) referred to in judgment(s):
Briginshaw v Briginshaw (1938) 60 CLR 336
Davies v Taylor [1974] AC 207
Great City Pty Ltd v Kemayan Management Services (Aust) Pty Ltd (1999) 21 WAR 44
Miller v Minister of Pensions (1947) 2 All ER 372
Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221
Phillips v Ellinson Bros Pty Ltd (1941) 65 CLR 221
Case(s) also cited:
Appleby v Myers (1867) LR2CP 651
Bacon v Purcell (1916) 22 CLR 307
Baltic Shipping Co v Dillon (The Ship Mikhail Lermontov) (1993) 176 CLR 344
Bellgrove v Eldridge (1954) 90 CLR 613
Besser Industries (NT) Pty Ltd v Stgeecon Constructions Pty Ltd (1995) 129 ALR 308
Builders Registration Board of Western Australia v Roroka Pty Ltd, unreported; SCt of WA; BC9101203; 25 March 1991
Calabar Properties Ltd v Stitcher [1983] 3 All ER 759
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Cutter v Powell (1975) 6 Term Report 320
Ettridge v Vermin Board of the District of Murat Bay [1930] SASR 210
Foran v Wight (1989) 168 CLR 385
Forman & Co Pty Ltd v The Ship Liddesdale [1900] AC 190
Hadley v Baxendale (1854) 9 Exch 341
Hoenig v Isaacs [1952] 1 TLR 1360
Multiplex Constructions Pty Ltd v Abqarus Pty Ltd (1992) NSWLR 504
Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444
Purcell v Bacon (1914) 19 CLR 241
Roadshow Entertainment Pty Ltd v ACN 053 006 269 Pty Ltd Receiver & Manager Appointed (1997) 42 NSWLR 462
Roxborough v Rothmans Pall Mall Australia Ltd [2001] HCA 68
Sumpter v Hedges [1898] 1 QB 673
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1 GROVES DCJ: The plaintiff claims that by a written and oral agreement made between it and the defendant on 18 January 2000 ("the Agreement") the plaintiff agreed to supply and erect roof trusses, metal fascia, Hardieflex 2 and timber barges ("the Work") to the defendant's aged care hostel situated at Lot 232 Aldwych Way, Joondalup ("the site") for the sum of $107,000 ("the contract price").
2 Insofar as the agreement was in writing the plaintiff contends that it was contained in a written quotation from the plaintiff to the defendant dated 3 December 1999. Insofar as the agreement was oral it was made by Steven Davis ("Davis") for the plaintiff and Jeffrey Markoff ("Markoff") on behalf of the defendant on 18 January 2000. 3 The plaintiff claims that it was an express term of the agreement that the sum of $79,500 would be paid by the defendant to the plaintiff prior to the delivery of roof timbers to the site. The plaintiff commenced work on the site on 24 February 2000. No payment was received by the plaintiff before any roof timbers were delivered to site. It is agreed that during the course of the work the parties orally varied the agreement by changing the metal fascia from Zinc to Colourbond and the defendant agreed to pay an additional sum of $1,920 for the variation. 4 The plaintiff alleges that in breach of the express term of the agreement the defendant failed to pay the sum of $79,500 prior to the first delivery of the roof timbers on 23 February 2000. It is admitted that the defendant paid $20,000 to the supplier of the roof trusses AG Trusses on or about 24 March 2000. The plaintiff contends that by reason of the defendant's conduct and in terms of its letter to the plaintiff dated 9 April 2000 the defendant repudiated the agreement and refused any longer to be bound thereby. The plaintiff contends that as it was entitled to do it accepted the repudiation by letter dated 17 April 2000 and ceased to carry out the Work. 5 The plaintiff claims to have suffered loss and damage as a result of the defendant's unlawful repudiation of the agreement and claims the sum of $75,622.12 being its claimed actual costs incurred in undertaking work pursuant to the agreement. The statement of claim pleads a claim for damages for breach of contract on the basis that the defendant repudiated the contract. It did not contemplate that if the plaintiff were unsuccessful insofar as the terms of the contract are concerned that the plaintiff would be left without damages and no remuneration for the materials supplied and work actually undertaken. So it was that at trial the plaintiff was
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given leave to amend its statement of claim to claim in the alternative a reasonable sum for such materials and work on a quantum meruit basis. 6 The defendant denies the agreement as alleged. The defendant agrees that the plaintiff was engaged to undertake the Work for the fixed price of $107,000. However, it says that express terms of the agreement were that the Work would commence on site before the end of January 2000, the Work would be complete by the end of February 2000 and that payment for the Work completed was to be on a standard 30 day account. The defendant says further that the agreement was varied orally in or around January 2000 so that the total payment for the Work would be made upon completion of the Work. The defendant says that by not completing the Work the plaintiff repudiated the agreement which repudiation the defendant accepted. The defendant counterclaimed for the cost of remedial works said to have been required by reason of defective workmanship of the plaintiff. The Work was completed by another contractor and the defendant incurred additional costs and suffered further losses by reason of the delay in completion.
Evidence relevant to the Agreement 7 The proprietor of the plaintiff business is Steven John Davis who has worked as a carpenter and joiner for some 21 or 22 years. 8 Davis responded to a newspaper advertisement seeking roof carpenters to do the Work. He spoke to Markoff and arrangements were made for him to pick up plans at the site. Markoff informed Davis of changes to the roof line as depicted on the plans and requested that he quote on the plans with that amendment. There was a subsequent telephone conversation when there was discussion as to whether it was to be a truss roof or stick roof. Markoff enquired as to which would be the cheaper and being told that it would be trusses agreed that was what was to be quoted on. 9 In preparing his quote Davis supplied plans to AG Trusses and obtained a quotation of $73,500 Z(exhibit 53). 10 Davis provided his quote (exhibit 1) which he said was mailed to the defendant on or about Sunday 5 December 1999. The quotation is in the following terms:
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"Re Aged Care Hostel Lot 232 Aldwych Way, Joondalup Thank you for giving us the opportunity to quote on your project, sorry for the delay. The following price is for the supply and erection of roof trusses, metal fascia, hardie flex 2 and timber barges where required (at the above address). This quote has been priced upon drawings A3 and A5 dated August 1999, any work that is required outside of these plans will be charged as an extra at $38.00 per hour per man. Changes to the roof lines have been made as notified by yourself to remove all 3 degree pitched kliplock Hi ten decking with 26 degree roof for tiling by others. Builder is to supply all power and scaffolding to work safe requirements. Payment of $79,500.00 is required prior to the delivery of roof timbers to site or at the end of that month if a guaranteed credit application form is completed or similar bank guarantee letter is supplied. The remaining $30,000 is required within 14 days on completion of roof carpentry to top roof. TOTAL PRICE $109,500.00. We look forward to hearing from you." 11 Davis said that he waited a couple of weeks and not having heard from Markoff he telephoned him on 14 December 1999. He enquired if any decision had been made on his quote. Davis was about to go on holiday to New Zealand and was anxious to plan his work activities beyond his return. He said that he was told a decision had not been made. 12 On 12 January 2000 after his return from New Zealand Davis telephoned Markoff. Markoff enquired whether Davis had quoted on a job this big previously and Davis assured him that he had. The issue of the large payment up front was raised. Markoff said that no-one pays up front to which Davis responded that he (Markoff) could give a guarantee for payment and that Markoff indicated that he would think about that. 13 On 14 January 2000 Davis telephoned Markoff again when Markoff suggested that they get together and go through the quotation. 14 On 18 January 2000 Davis and Markoff met at the latter's residence. Discussion ensued as to what was involved on the job, whether or not
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Davis' business was big enough to do the job, scaffolding was discussed, as was what the trusses would cost, the cost of crane hire and ancillary timber. After some negotiation Davis reduced his price to $105,000 which was agreed. Davis and Markoff shook hands on the deal. Markoff informed him that the job was ready for commencement "now". Davis requested copies of amended plans for the truss detailer. Markoff indicated that Davis should contact the architect to arrange that. It was Davis' evidence that on that occasion there was no discussion as to arrangements for payment. Nor was there any discussion as to a completion date. That evening Davis received a telephone call from Markoff when he agreed to pay a further $2,000 for crane hire. Thus, the agreed price for the Work was $107,000. 15 Davis telephoned AG Trusses next day to advise them that he had got the job. He knocked them down $2,000 on their quote to $71,500. 16 Trusses made by AG Trusses were delivered to site on 23 February 2000 followed by a further delivery of trusses on 24 February (1st delivery), 2 and 7 March (2nd delivery), 20 March (North East corner) and 28 March (3rd and 4th Block). Davis engaged his workman on site and substantial progress in undertaking the Work was made through March. 17 No payment was sought by Davis of Markoff prior to the delivery of roof timbers to site. Nor had any guaranteed credit application form or bank guarantee been requested or proffered. Deliveries and work went on regardless. 18 On 31 January 2000 Davis had made a credit application request to AG Trusses requesting an approximate monthly credit of $50,000. AG Trusses extended credit only to the sum of $6,000 (exhibit 25). On or about 7 March 2000 Davis received from AG Trusses an invoice after the second delivery for "trusses as per quote" for $30,000. On or about 20 March 2000 a further invoice for trusses "north east corner" for $20,000 was received. 19 In or about early March Davis discussed with Markoff payment for trusses. It was Davis' evidence that he suggested that Markoff pay for them as they were stood up in situ on site. To that Markoff simply responded to the effect "Hmph" and walked off. 20 Davis said that he had asked Markoff on a couple of occasions in March for payment for trusses. He was, on Davis' evidence, reluctant to pay. Davis had paid an invoice for $30,000 ($22,000 by cheque and $8,000 credit for work which he had done for AG Trusses). On about
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24 March Davis requested $50,000 to cover the cost of trusses delivered to site. Markoff made out a cheque for $20,000 payable direct to AG Trusses. 21 Before 31 March Davis told Markoff that he needed more money to pay for trusses. Davis said that he had constantly asked Markoff, when he saw him on site, when he was going to pay further moneys for the job. Markoff fobbed him off on each occasion with mention of delay on the job and the cost of scaffolding. Davis acknowledged that he was financially stretched by this stage. There was also tension between Davis and AG Trusses over delays and failure to deliver timbers to site to enable the entire works to be completed. The plaintiff's letter dated 28 March 2000 (sent by facsimile next day) (exhibit 27) concluded: 22 AG Trusses responded by facsimile dated 3 April 2000 (exhibit 9) expressing concern as to the condition of brickwork and noted many instances where brickwork was out of plum, out of square and where heights had varied and walls were crooked. As a result that had caused an adverse effect upon the trusses which were manufactured. This response echoed the evidence of Davis that throughout the course of undertaking the Work the brickwork had been sub-standard which in turn had caused numerous difficulties in fixing the roof timbers. Again, despite the many complaints about the brickwork to Markoff Davis was simply fobbed off or the complaints ignored. 23 Things came to a head on 4 April 2000 when Davis handed a letter (exhibit 8) in the following terms to Markoff: "I can no longer cover the cost of materials for the above job. My quote I sent you dated 3 December 1999 still stands. In that quote I asked you to provide a Bank Guarantee of funds if you wished to pay for materials at the end of the month. No such form was received from you. However I continued to trade with you because I believed that you would pay up when I asked, as you did when you paid $20,000 directly to
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AG Trusses for part payment of trusses. I have already incurred costs of $30,000 in trusses, $4,500 in fascia, $5,500 in crane hire as well as wages. I now require payment on the amount as stated in the above mentioned quote of $79,500 LESS $20,000 already paid to AG Trusses PLUS $1,920 you agreed to pay for changing the fascia from zinc to colour bond LESS 10% OF 79,500 ($7,950) which is for material that is still to come to site. This figure is still in your favour as there is less than 10% of materials to be delivered. SUMMARY $79,500 re: first payment as per quote Credit $20,000 paid directly to AG Trusses Less 10% $ 7,950 materials to come Plus $ 1,920 for changing fascia to Colourbond Total $53,470 Less 10% tax $ 5,347 Total $48,123 Amount due $48,123 This payment is required immediately so I can continue to complete your job." 24 On 6 April 2000 Davis asked Markoff if he had read the letter. Seemingly with similar arrogance as had been displayed to Davis in respect of other matters his response was that he hadn't looked at the letter and had thrown it in the bin. With that Davis responded that the work would stop as he could not do any more. He instructed his employees to make safe the work and they left the job. A day or so later he phoned Markoff to enquire what they were going to do to sort the situation out to which Markoff responded that he could go back to work and finish the job. There was no suggestion that Markoff would make any further payment. Davis did not undertake any further works on the site. 25 Markoff responded by facsimile to the plaintiff on 9 April 2000 (exhibit 12) as follows:
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26 By letter dated 7 April 2000 (exhibit 11) the plaintiff's solicitor wrote to the defendant advising that unless payment of the outstanding moneys, viz $48,122 was paid no later than Wednesday 12 April 2000 the plaintiff would accept such non-payment "…as a repudiation of the contract and will claim whatever damages it has suffered from your company forthwith." 27 The defendant responded to the plaintiff's solicitors by letter dated 18 April 2000 (exhibit 15) advising, inter alia: "Your letter portrays a wrongful interpretation of what was agreed in our contract. Your client was to do the job by account and it was to be completed by the end of February." It went on to advise that new carpenters had been brought in to finish the works and any balance owing to the plaintiff would be paid after rectification of existing works and completion of unfinished sections and when costs associated with delay on the project occasioned by the plaintiff could be calculated. 28 By letter dated 17 April 2000 (exhibit 14) the plaintiff's solicitors advised the defendant that the plaintiff accepted repudiation of the contract and would proceed to take action. 29 Theresa Hodges is Davis' defacto wife. She gave evidence that she assists Davis with bookwork in relation to his business and that she had typed the quotation to the defendant. It was her evidence that she had posted the quote on the weekend of 4/5 December 1999. They departed for New Zealand on 17 December. It was her evidence too, that when they left Davis had not been advised whether or not he had got the job. So far as she was aware the quote had not been rejected by the defendant.
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30 Markoff's evidence by contrast presents a different picture to that of Davis. He said that he had received the plaintiff's quote by facsimile on or about 3/4 December 1999. He subsequently received the typewritten copy (exhibit 1). On about 5 December he telephoned Davis telling him that he wasn't getting the job. It was, said Markoff, the naivety of the letter in seeking payment of $79,500 up front which he took exception to. That caused him to be concerned that Davis' business was too small to engage on this large construction undertaking. He said that Davis' response was that it was a standard letter which he used for smaller jobs and that if he got the job then payment would be "…on a 30 day account." Davis had asked that he not make a final decision until after he had come back from New Zealand. Davis was reassuring. He emphasised that his business was big enough to undertake the works, that he would do a good job for him and he assured Markoff that the job could be completed in three or four weeks. He had further telephone calls with Davis during December and on the latter's return from New Zealand in January. In those calls Davis had reiterated his ability to undertake the works.
31 On 13/14 January 2000 there were discussions which led to agreement that the plaintiff would undertake the works for $105,000. Markoff was given to understand by Davis that he was establishing a truss manufacturing business as that was the way his business was heading and that he would be manufacturing the trusses. Furthermore, there was further discussion as to how long it would take for the roof works to be completed to which Davis responded 3-4 weeks which would enable completion by the end of February. Further, there was discussion about scheduling of the works, ie how the work on site would proceed. It was proposed that roof works would commence on the north east block and proceed in a clockwise direction across the eastern most end, the south east block, then the south west block, across the western end and finally the north west block. Roof works linking up each block would follow at the stage when those works could be completed. On Markoff's evidence this scheduling was vital for continuity on the job and planning for follow-on trades to come on site and undertake their work. 32 Thereafter he had telephone conversations with Davis on a regular basis. On one occasion Davis advised that he had been let down by a truss company and that he would now be doing the trusses with another company. It was on that occasion that Davis proposed that payment in full for the works be made at the end of the job. The expected completion date was end of February. Little work had been done in January. Payment in full on completion would effectively bring forward payment by 30 days on what Markoff said was the previous arrangement, namely
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payment on a 30 day account. Markoff said that he reluctantly agreed to that being the arrangement for payment. 33 Then in February there was a discussion when Davis asked him to pay $20,000 on account of the final delivery of trusses. Again, expecting completion by the end of February Markoff said that he agreed that he would pay on that basis. However, progress on the works did not proceed as he had anticipated. There were delays on the part of the plaintiff about which he was becoming anxious and upon which he made comment to Davis. It was not until about 24 March that he made out a cheque to A G Trusses for $20,000. Again, it was his understanding that that payment was on account of the last delivery of trusses to enable completion of the job. He received the letter from Davis dated 4 April 2000 (exhibit 8). The following day when Davis telephoned he told Davis that the letter was rubbish. The demand for payment was out of the blue and other than for the $20,000 payment, Davis had not made any prior request of him for any payment. Davis said to him that he had to be paid otherwise he would not go back on the job. Markoff enquired whether or not they could work out this impasse, but to no avail. Thereafter followed the exchange of correspondence as detailed earlier.
Conflicts of evidence between witnesses 34 As will be apparent from the outline of relevant evidence as to the terms of the agreement there are a number of areas where the evidence of Davis and Markoff are in conflict. They might succinctly be identified as follows: · Markoff said that a couple of days after receiving the faxed quote he telephoned Davis rejecting the quote. Davis denied there was any such telephone conversation. · Markoff said that in the course of that conversation he was told that the arrangement for payment would be on a 30 day account. Davis denies there was any discussion varying terms for payment. · Davis says that it was at a meeting at Markoff's residence on 18 January that agreement was reached that he would do the work for $105,000. Markoff could not recall such a meeting at his place (although he testified that he and Davis did go to his place to get copies of the plans prior to Davis giving a quotation). Markoff said that the discussions were over the telephone although they may
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have met but he could not recall such a meeting. Nor did he recall any handshake on the agreement. · Davis said that after agreement was reached the arrangement was that the architect had to draw up amended plans for the truss manufacturer. He was told to arrange that with the architect. Markoff did not recall such discussion. Revision K to the first floor plan (exhibit 6) notes the amendment made dated 24 January 2000 as "remove flat section of roof plan". · Davis' evidence was that Markoff liaised directly with AG Trusses for the supply of trusses and for scheduling or programming the progress of the works. Markoff denied any contact or liaison with AG Trusses. He was initially given to understand that Davis was manufacturing the trusses. He said he only came to learn of AG Trusses engagement when he enquired to whom he should make out the cheque for $20,000. · Markoff said that when Davis indicated that he had been let down by the truss supplier that Davis proposed payment in full on completion of the works. Davis denies such proposal and says that he never agreed to any variation in payment to that which was proposed in his quotation. · Markoff said that Davis requested that he pay the $20,000 for the last delivery of trusses. Davis denies making a request in those terms. The $20,000 was part payment on account. · Davis said that on a number of occasions both before and after payment of the $20,000 he asked Markoff when he was going to get further payment. Markoff denied that any such request was made of him. The first demand for payment was made in the plaintiff's letter dated 4 April 2000 (exhibit 8). · Markoff said that it was agreed completion of the Work would be by end February 2000. Davis says no completion date was fixed. He did agree however that
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with six men and if everything went smoothly on the job the work could have been completed within four weeks. · Markoff said that it was agreed that the work would commence on site before the end of January 2000. Davis denied that such was agreed. He had no control as to the start date as he could not start the work until trusses were delivered to site. The revision of the first floor plan was done on 24 January 2000.
Evidence of the truss manufacturer 35 The defendant called Warwick Van Der Bussche, the manager of AG Trusses, to give evidence. He confirmed receiving floor plan, elevations and roof plan from Davis to provide a quotation for roof trusses for the works. From those plans, when confirmation of the job was received, and with the assistance of a computer programme his office generated plans for the roof trusses and other timber requirements for the roof carpentry works. He attended at site to take measurements for the span of trusses before manufacture commenced. The programme discussed with Davis for scheduling delivery of trusses commenced with the north eastern block and was to proceed in a clockwork direction as previously outlined. 36 The first delivery of trusses on 23, 24 February were placed on the north east block but were found by Davis to be 160 millimetres too long. Eventually they worked out that those trusses were manufactured for the south west block. Davis blames AG Trusses for that situation on the basis that they mistook the north-east block for the south-west block on the plan. On the other hand Bussche says that Davis provided the measurements on a block of wood and that he, Davis, had made the error. Whatever be the case I am not able to resolve that. That may be an issue between Davis and his contracted supplier AG Trusses. It was of some moment to the defendant however as it put the schedule for follow-on trades out of order. As a consequence though the schedule was reversed with construction proceeding from the south west block in an anticlockwise direction. On Bussche's evidence AG Trusses delivered to site as and when they were requested for delivery by Davis. 37 There had been no discussion at the time of quotation about payment arrangements by Davis for trusses supplied. Bussche was aware that Davis had made a credit application which as he recalled was granted with a $10,000 limit (actually $6,000). He was aware that Davis had exceeded the credit limit and there was some $20,000 owing with the consequence
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that AG Trusses would not deliver further trusses until payment had been received. 38 The first contact which Bussche had with Markoff was when the latter telephoned requesting AG Trusses to certify the trusses supplied by them. He went to site and observed that the roof works were incomplete. He was asked by Markoff to inspect the roof carpentry and make a detailed list of any matters which he considered were of concern. By letter to the defendant dated 24 April 2000 (exhibit 21) he detailed some twenty three such concerns. Those items are the subject of the Scott Schedule prepared for these proceedings attached to which is a copy of Bussche's letter and plans (exhibit 20). 39 There were a number of issues also where the evidence of Davis and Bussche were in conflict. They may be succinctly identified as follows: · Davis said that the architect had to draw up amended plans for the truss manufacturer. Bussche did not receive additional plans but did their own truss plans from the dimensions on the floor plan and by measurements of brickwork at the site. · Davis said that he believed Markoff liaised directly with AG Trusses in scheduling/programming the works. Bussche said that apart from maybe meeting Markoff at site on one occasion he had no dealings or discussion with him whatsoever until after Davis had left the site. · The first delivery of trusses at north east block ended up being for the south west block and that was AG Trusses' fault having read the plans upside down according to Davis. Bussche rejected that assertion and said that the measurements were provided by Davis on a block of wood and that he had provided the measurements in the wrong order. · Davis said that by reason of his experience he was competent to effect adequate repairs to broken trusses. Bussche disputed this on the basis that without the benefit of the computerised information and calculations generated by the truss manufacturer he would not know what forces or load there would be on particular trusses.
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Onus of proof 40 It is trite to say that the standard of proof required of a party who bears the onus in civil litigation is proof on the balance of probabilities. As to the degree of cogency that a party must reach in order that it may discharge the legal burden in a civil case Denning J said: "That degree is well settled. It must carry a reasonable degree of probability, but not so high as is required in a criminal case. If the evidence is such that the tribunal can say: 'we think it more probable than not', the burden is discharged but, if the probabilities are equal, it is not." (Miller v Minister of Pensions (1947) 2 All ER 372 at 374). 41 In Davies v Taylor [1974] AC 207 at 219 Lord Simon of Glaisdale said: "[The] concept of proof on a balance of probabilities…can be restated as the burden of showing odds of at lease 51 to 49 that such and such has taken place or will do so. A competing view is that proof of a fact on a balance of probabilities requires the tribunal to 'feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality… [At] common law…it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal." (Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-2).
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Credibility of witnesses
42 Ultimately the trial of this action will be determined upon findings of credibility of witnesses. Clearly, there is a conflict between the evidence of Davis on the one hand and Markoff on the other as to the terms of the agreement and any variations thereto. 43 There can be no doubt that Davis was keen to get this job. He had worked on other large jobs but generally his work was smaller. He was looking to move into truss manufacturing, "that was the way that his business was heading." The indication which he gave to Markoff was that he would be manufacturing the trusses. It was a representation which Davis made to Markoff clearly intended to impress at a time he was actively pursuing Markoff for the job. It did not come to Markoff's notice until much later that the trusses were manufactured by AG Trusses. For whatever reason the move of Davis into truss manufacture did not eventuate at least insofar as this job was concerned. 44 On the evidence of Davis there was no discussion whatsoever concerning the terms of payment for the works. The terms were as expressed in the quotation (exhibit 1), ie $79,500 up front and the remaining $30,000 within 14 days of completion. On Davis' evidence there was mention of providing a guarantee. In any event no guaranteed credit application form or bank guarantee was supplied prior to delivery of roof timbers to site. 45 I find that it is improbable that there was no discussion about the payment being made up front. Davis was asking for a payment up front of almost 75 per cent of the contract price. To require such a large amount up front is suggestive of a small business with limited capacity trying to move up into a bigger league. That Markoff, a registered builder who had a history of developments in the industry would agree to that term without question is most improbable. He had concerns that the plaintiff's business was big enough to do the job. He had not engaged Davis previously and thus had no experience of his work, his reliability or capacity to do the job. I accept that the request for payment up front was not acceptable to Markoff and that he did take issue and state his rejection of it to Davis. 46 Davis did not provide to Markoff a credit application form and nor did Markoff provide to him a bank guarantee letter prior to delivery of any roof timbers to site. No request was made or invoice issued by Davis for payment of any money prior to the deliveries in late February and early March. That was the case despite the fact that AG Trusses had only extended to him (Davis) a credit limit of $6,000 on the quoted cost of
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$71,500. His credit application was not solely for the purpose of the supply of trusses for this project. He had other jobs on which he proposed to utilise the credit facility also. Despite that, delivery of roof timbers to site by AG Trusses and the work of erecting the roof trusses was commenced and continued to an advanced stage before Markoff was requested to make the $20,000 payment. If payment up front was a term of the agreement then Davis acquiesced in its breach for a considerable period of time. 47 Furthermore, no explanation for commencing the work without payment was proffered by Davis in his evidence. The only indication as to that is to be gleaned from his letter of 4 April 2000 wherein he states "…I continued to trade with you because I believed that you would pay up when I asked…" That explanation was well after the event and made at a time when Davis was under financial stress. It is a self-serving statement and does not assist in explaining why work was commenced before any payment was received. 48 Furthermore in the Summary in the plaintiff's letter of 4 April 2000 there is an item "Less 10% $7,950 materials to come". If as Davis contends the term of the contract was for payment of $79,500 up front then any deduction for materials still to come to site is inconsistent with that assertion. On Davis' evidence the full amount of was payable up front. That his letter of 4 April 2000 allows a reduction for materials still to come to site is strongly suggestive also that the arrangement was not for full payment up front. Again, no explanation for this apparent inconsistency was proffered by Davis. 49 Accordingly I find that Davis' evidence insofar as he contends that it was a term of the agreement that the defendant would pay the sum of $79,500 prior to the delivery of roof timbers to the site is not credible. It is, on my assessment, both improbable and is in conflict with what I find to be other credible evidence. That leads me to conclude on the balance of probabilities that in fact the requirement for the payment up front was not a term of the agreement pursuant to which the plaintiff undertook any work. 50 Evidence which might be regarded as being independent came from the witness Bussche of AG Trusses who was called by the defendant. I have identified areas where his evidence and that of Davis are in conflict. Davis asserted with some confidence that Markoff and Bussche had liaised directly in scheduling/programming the works. That was not only refuted by Markoff but was rejected by Bussche. Davis asserted that
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amended plans for the roof truss manufacturer were required but Bussche said that he did not receive any further plans. Davis said that the first delivery was of 10 trusses only whereas Bussche said that 10 packs each containing 10 trusses were delivered by semitrailer by way of the first delivery. Where there is conflict as between the evidence of Davis and Bussche I prefer the evidence of the latter he being an independent witness whose evidence I found to be reliable in all aspects. The same cannot be said insofar as Davis' evidence is concerned and that must of necessity flow through to the whole of his evidence save and except where it is confirmed by other independent evidence. 51 Whilst Davis is an experienced roof carpenter it is my view that he lacked sound business acumen. For example, there was a lack of any record keeping of site meetings, matters raised and perhaps complained of and decisions taken just as there was a failure to keep time sheets or a log of hours worked by him on the job. For the purpose of making the plaintiff's claim for loss Davis and his partner had to reconstruct the hours which it was estimated that he worked on the site. Whilst his partner said that it would have been an under estimate that by no means is confirmatory of any accurate record. In giving his evidence as to work on the project Davis was substantially reliant on his diary (exhibit 19). It was what he described a "construction diary" by which I understand that it was used only to record who was on site on which dates and where. It is of interest to note in looking at the entire diary for the year 2000 that it is only with respect to this job that there is any real record (such as it is) of events along the way. It may well be that this was the only job on which Davis had occasion to make such a record. I draw no inference from this coincidence. Furthermore, I regard the proposal in the quotation for payment of almost 75 per cent of the contract works up front is indicative of naivety on the part of Davis. 52 On the other hand I found the evidence of Markoff to be generally reliable and credible. He was intimately involved in overseeing all aspects of the construction of this aged care facility. He was involved through the planning stages, arranging finance for the acquisition of the property and construction of the development, he called tenders and engaged contractors for each of the various trades on the project and generally oversaw the Works on a daily basis. My assessment of his evidence was that his recollection of matters including timing of events was clear and precise. He did not waver on issues in cross-examination. I accept his evidence as being reliable and credible. One area of criticism might be that he, too, did not make any record of material matters which having regard to the size of this project he might have been expected to
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have done. So far as the timetable/scheduling of construction was concerned he said that he had that "…in his head…" Nevertheless given the detail which he was able to recall in respect to matters pertaining to this claim I accept that his experience in this type of development, his hands on management of the project and the speed with which he acted in dealing with matters when the plaintiff indicated it would not proceed with construction all impress as confirming that Markoff was competent in managing this type of development and therefore his recollection can generally be relied upon. 53 An area of conflict was Markoff's response so far as Davis' complaints about the quality of the workmanship on the brickwork was concerned. Markoff rejected those complaints apparently regarding them only as excuses by Davis in explanation for his slow progress in completing the Works. In that respect Davis' complaint is supported by Bussche who had occasion to observe the brickwork when he went to site to make measurements before construction of trusses. That concern was expressed in the letter from AG Trusses to the plaintiff dated 3 April 2000 (exhibit 9) a copy of which was sent to the defendant under cover of the plaintiff's letter dated 6 April 2000 (exhibit 10). That letter also made reference to an occasion on 13 March 2000 when Davis spoke to Markoff about the brickwork. The witness Mark Andrew Hansen was a carpenter employed on site by the plaintiff. He too gave evidence of brickwork being green, ie not cured and of cavities between the inner and outer walls as varying in width. The consequence of those matters delayed progress and caused difficulties in fitting of roof trusses. Insofar as this issue is concerned I accept Davis' evidence as supported by that of Bussche and Hansen that there were problems created so far as installation of the trusses were concerned by reason of the condition of the brickwork.
Term of agreement - payment for work 54 I have already rejected the plaintiff's assertion that it was a term of the agreement that the defendant would pay $79,500 prior to the delivery of roof timbers to the site. What then was the term of the agreement pursuant to which the plaintiff would be paid for the contractual work? It was the evidence of Markoff that when he telephoned Davis and rejected the quotation that Davis proposed that if he got the job payment would be on a 30 day account. Davis denies that there was any such discussion. Nevertheless, Davis was keen for the business. Given that Davis was keen to get the job I find that in all likelihood that payment on a 30 day account was another instance of the plaintiff being accommodating of the defendant to enhance his prospects of getting the job. It is a common
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practice in the building industry as Markoff indicated that payments for supply and erection of materials is paid on a standard 30 day account. Indeed, whilst there was no discussion as between Bussche and Davis as to payment for manufacture and supply of trusses it was the practice that AG Trusses rendered accounts for payment within 30 days of the end of the month. Presumably if not expressly then impliedly Davis was accepting of that arrangement with AG Trusses. No agreement for the plaintiff to do the work was reached in the telephone conversation of 5 December. Nor, seemingly, was there any discussion on the subject of arrangements for payment when agreement that the plaintiff would do the work for $105,000 was reached. In all the circumstances I am satisfied, inferentially and in the absence of credible and cogent evidence to the contrary, that the arrangement as understood between Davis and Markoff was that payment for work completed would be on a standard 30 day account. 55 On Markoff's evidence that was later varied at the end of January 2000 to payment in full at completion of the job. That transpired at the time when Davis advised Markoff that there was a shortage of timber in Western Australia from truss manufacturers. To be paid in full on completion would have been beneficial to Davis. On the one hand it would overcome his embarrassment by reason of his problem with the truss supplier. If, accepting his evidence that the works could be completed in four weeks, then it meant that he would be paid earlier than if he rendered an account for payment within 30 days after the end of the month in which the work was completed. That would undoubtedly have assisted him so far as payment to the truss supplier who had extended only limited credit. As it was Davis did not render any invoice as such at any stage to Markoff. Only the letter of demand of 4 April 2000 sought payment at a time when as I have previously commented the plaintiff was financially stretched. I conclude that it is more probable than not that the variation as to payment was therefore agreed.
Term of agreement – completion date 56 What can be gleaned from the evidence is that Davis indicated that the work could be completed in four weeks. Commencement would necessarily be dependent upon the supply of trusses and timber to site which at all times was a matter for Davis to arrange. It would also be dependent upon the brickwork being completed ahead of him so that his work could progress in a programmed way. It was dependent also on the brickwork being to standard and to the plans, ie if the brickwork was not to standard, was not complete or there were variations to the brickwork
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then that would inevitably slow down or delay progress in erecting the roof timbers. 57 I accept that Davis did make a complaint to Markoff about the standard of brickwork and demonstrated where there was poor workmanship. His concerns were echoed by Bussche in his letter of 3 April 2000. Markoff did not heed those complaints. He was apparently not accepting that there was any problem with the brickwork. He dismissed the complaints as only indicating an excuse for slow progress and delay in completion of the work. Furthermore, there were airconditioning ducts which penetrated into the roof area which were not shown in the plans and had to be accommodated in the roof timber work. Furthermore, fire walls were not complete and other remedial brickwork was required. They are matters which I find created problems and delayed progress for the plaintiff. 58 Whereas at the time when the plaintiff was engaged to do the Works Markoff indicated that the site was ready for the work to commence "now". I do not accept that to have been the case. It was Markoff's evidence that by the end of January 2000 the brickwork to the north east and south east blocks was completed and that the remainder of the brickwork including the south west and north west blocks was completed by the end of February 2000. For the reasons detailed later I am not accepting that the brickwork was complete as contended such that the plaintiff could have completed the Works in the month of February. That causes me to conclude, again on the balance of probabilities, that it was not a term of the agreement that the Works were to be completed by the end of February 2000 as the defendant contends. 59 Whilst it was no doubt important that Markoff have an indication as to the timeframe within which the plaintiff would complete the roof work so that he was able to plan follow-up trades that cannot be taken inferentially that in fact the work would be completed by a set date. As I have intimated completion would be dependent on a number of other factors and in particular completion of the brickwork. What may safely be inferred is that the roof works would follow the completion of the brickwork and would be completed within a reasonable time following completion of the brickwork. This issue is dealt with further later in these Reasons.
Findings as to the terms of the agreement 60 For the reasons outlined I make the following findings insofar as the terms of the agreement are concerned: ·
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· The plaintiff agreed to do the Work for the sum of $107,000.
· It was initially a term of the agreement that payment for the Works completed was to be on a standard 30 day account.
· The agreement for payment was subsequently varied and it was agreed that payment in full would be made upon completion of the Works.
· During the course of the Work the parties orally varied the agreement by changing the metal fascia from zinc to Colourbond and the defendant agreed to pay an additional sum of $1,920 for the variation.
· The total contract price therefore become $108,920.
· There was no express term agreed as to the date by which the Work would be completed. It is to be inferred that the Work would be completed within a reasonable time following completion of the brickwork. Repudiation of the agreement 61 The plaintiff commenced the Work on the site on 24 February 2000. By letter dated 4 April 2000 the plaintiff demanded payment immediately of money claimed to be owing so that it could continue to complete the Work. A telephone discussion between Davis and Markoff following that letter failed to resolve matters. On 6 April 2000 the plaintiff withdrew its labour and did not undertake any further works on the site. The Work was 80-85 per cent complete at that time. 62 The plaintiff's refusal to continue and complete the Work in accordance with the agreement evinced an intention on behalf of the plaintiff not to be bound by the terms of the agreement and amounted to a repudiatory breach. The defendant was entitled to terminate the agreement as it did by its letter of 9 April 2000. 63 The plaintiff in its statement of claim contends that by reason that the defendant failed to pay the sum of $79,500 prior to the delivery of the roof timbers on 24 February 2000 did by its conduct repudiate the agreement and refused any longer to be bound thereby. As it is my finding that it was not a term of the agreement that the sum of $79,500 be paid up front it follows that the plaintiff's contention must be rejected. 64 It is my finding therefore that the plaintiff repudiated the contract.
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An entire contract?
65 It is the defendant's contention that the agreement entered into between the parties was entire in nature and that neither the contract price nor any part thereof is recoverable by the plaintiff for its repudiation. That is, performance by the plaintiff in supplying and erecting roof trusses, metal fascia and associated work was a condition precedent to the recovery of the contract price. 66 I do not accept that proposition. The agreement which was initially arrived at was not one whereby payment was dependent upon the plaintiff completing the whole of the Work. Although, as I find, the agreement was subsequently varied, that does not change the character or nature of the contract which was initially entered into. That is, by subsequently varying the agreement for payment to be made on completion of the Works does not operate retrospectively to colour the agreement as constituting a contract entire in its nature.
Recovery by plaintiff of reasonable value of work completed 67 The plaintiff by amendment made to its statement of claim at trial pleads in the alternative that it is entitled to recover a reasonable sum for the materials supplied and work done on a quantum meruit basis. Quantum meruit simply means "as much as he deserved". Such quasi-contractual categories of claim are now classified as categories of restitution. 68 Where a party to a contract has done work for or conferred other non-monetary benefits on the other party the retention of such benefits in the absence of counter-performance is prima facie an unjust enrichment. The law of restitution supplies an independent cause of action for the recovery of the value of the benefits in such a case if the contract itself cannot be enforced or has been terminated. The right to claim restitution for the reasonable value of work done extends to a party in breach of contract. See generally Cheshire & Fifoot's Law of Contract 8th Australian edition par 26.7. 69 The leading Australian case in this context is Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221. In that case the company was a licensed builder and carried out the renovation of a cottage for Paul. The work was done under an oral contract providing that Paul would pay a reasonable remuneration, calculated by reference to prevailing rates in the building industry. The work was completed and Paul took occupation of the cottage, but refused to pay the amount claimed by the company. The
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company sued. Paul relied on the Builders' Licensing Act 1971 (NSW), which provided that contracts for building work were not enforceable by a builder unless in writing. 70 The High Court held that Paul could not rely on the Act. The Act precluded an action for breach of contract. But the company had an independent right to restitution based on unjust enrichment which was not affected by the Act: "The obligation does not arise from agreement at all. It is an obligation or debt imposed by law which 'arises from the defendant having taken the benefit of the work done, goods supplied, or services rendered'." [Per Deane J at 255 quoting from Phillips v Ellinson Bros Pty Ltd (1941) 65 CLR 221 at 235.] 71 Restitution in such cases involves payment of an amount which constitutes the reasonable value of the accepted benefit or enrichment, usually assessed by reference to market rates or prices. 72 Accordingly, the plaintiff is entitled to recover the reasonable value of the materials supplied and work done by the plaintiff to the stage where it repudiated the agreement. 73 In its statement of claim the plaintiff has particularised the costs associated with the work done by it. Those costs were verified by schedules and supporting invoices tendered at trial (exhibit 18). The only items on which issue was raised concerned the hours claimed by Davis for his work on site, crane hire and the costs of fasteners and bolts. As to the former Markoff contended that Davis was not on site working for all the hours claimed. However, by his own admission Markoff was not on site all the time and when there was not observing Davis all the time as to his activities on site. Davis did not keep a record of the hours which he worked but he did at the time of consulting his solicitor at the outset by reference to the hours worked by his sub-contract roof carpenters and of his own recollection arrive at the number of hours worked by him on site. Without any credible evidence to the contrary I accept that he has only claimed a reasonable number of hours for the work undertaken by him. Insofar as the other roof carpenters employed on site are concerned their hours and charges were not challenged. As to crane hire there was an issue as to waiting time on 2 March when the AG Trusses truck arrived at site late. Strictly speaking that cost is a matter between the plaintiff and AG Trusses. Allowing two hours for the delay at $150 per hour I will
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reduce the claimed amount by $300. As to the supply of fasteners and bolts it was Davis' evidence that if they were not purchased solely for this job they were purchased to re-stock supplies which he had and had used on this site. I accept that those costs are also appropriate. 74 The particulars also claim for professional fees incurred in engaging a quantity surveyor and legal fees prior to the institution of proceedings. Neither of these amounts are recoverable. They were fees incurred as a consequence of the plaintiff's repudiation of the contract. They are not costs associated with the value of the materials supplied or work done. 75 The following items will be allowed as reasonable remuneration for the work done:
Wages $22,430.74 Crane Hire 2,843.75 Independent Timbers – Fascias and restock fee 4,004.58 AG Trusses 62,898.00 VIV Ortons 286.50 Remson Steel 78.75 All Fasteners 715.60 Makit Easy Metro – Mungo Bolts 47.70 $93,605.62 Less Paid by Defendant $20,000.00 $73,305.62
Defendant's set-off and counterclaim 76 The defendant claims that by reason of the plaintiff's repudiation of the agreement it has suffered loss and damage in that it had to complete the works to the extent that they were not completed by the plaintiff. The defendant further claims that the plaintiff was in breach of the agreement by not carrying out the works which it undertook in a proper and workmanlike manner ("defective workmanship"). Furthermore, the defendant says that it necessarily had to purchase further building materials and employ further contractors to complete the incomplete part of the works ("the incomplete works"). 77 Furthermore, the defendant says that because the plaintiff did not complete the works by the end of February 2000 or within a reasonable
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time thereafter it has suffered further loss and damage by reason of the delay in completion of the works ("the delay costs"). 78 The plaintiff denies that the work which it undertook was defective and denies liability insofar as the costs incurred by the defendant in completing the roof works.
Defective workmanship 79 Following the plaintiff's repudiation of the agreement Markoff contacted Bussche of AG Trusses requesting a site inspection of the roof work and asking that he certify the roof trusses. By that I understand that he was being asked to certify that the installation of the roof trusses had been undertaken in a satisfactory and workmanlike manner. Following inspection Bussche prepared a report (exhibit 20) which identified 23 "…issues that were of concern…". Those 23 issues are particularised with the plaintiff's response in a Scott Schedule (exhibit 20). The inspection by Bussche revealed that the trusses delivered by AG Trusses: "…were not erected in accordance with the supplied instructions, both written and verbal. The broken trusses have been found to be unusable and would fail under load in their present condition. A full replacement is required in accordance with the manufacturer's instructions. At an additional cost an engineer's certification will be required to certify the installation, to confirm the above points raised by us and to certify the installation and rectification works. This is not standard practice but we feel that in this particular case it is required. Because the installation was not handled by our company and because of the issues raised regarding the installation the engineer's inspection and certification will be required." 80 The defendant engaged a roof carpenter Peter Nydegger to undertake the work which had been identified by Bussche as requiring attention. He was provided with a copy of the Bussche report and he together with another roof carpenter, Steve Freeman, attended to all of the items on that list. The work was done on an hourly rate of $25 per hour for each person. Whereas in cross-examination Nydegger was not able to specifically recall if he did deal with specific items, eg items 1, 4, 14, 16 and 22, I accept his evidence as an independent person that he did in fact as instructed attend to each item on the list. Certain of the rectification work required the removal of roof tiles and battens to enable new roof trusses to be fitted where original trusses were damaged and, in the view
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of Bussche, inadequately repaired. That work was undertaken by tiling contractors Devine Star Pty Ltd. 81 Davis acknowledged that in the course of his work a number of trusses had been blown over and damaged in situ. Utilising his skill and experience these trusses were repaired either by skew nailing and/or splinting or splicing another timber alongside the broken timber. He did not seek advice from the truss manufacturer as to whether or not repair in this manner was appropriate or adequate. Davis' experience with truss roofs was limited. I do not consider that he was in the best position to make an objective assessment as to the adequacy of the remedial action which he implemented. It was the evidence of Bussche that such repairs was not acceptable. It did not have regard to the stress and weight on the truss or the integrity of the truss as a whole. It was his evidence that where damage occurs to trusses that the roof carpenter should refer back to the truss manufacturer so that all factors taken into account in design of the truss can be considered in assessing whether repair or replacement is appropriate. That view was supported by roof carpenter, Geoffrey John Petit whom the defendant called. Petit had earlier given a quotation to the defendant to complete the roof works. However, he was not able to proceed with the work after problems with the trusses had been identified. 82 Davis in his evidence suggested that Bussche would be recommending replacement of damaged trusses to make more work for himself. That somewhat cynical attitude I reject emphatically. That suggestion was put to Bussche and rejected by him in cross-examination and he went on to explain "I was recommending the best, fastest and cheapest possible way to undertake the required remedial work." I accept Bussche as a completely credible witness with good knowledge and experience in his trade. I am accepting therefore of his assessment as to the issues which had to be addressed insofar as the remedial work was concerned. On 20 June 2000 an inspection of the remedial work was undertaken by consulting engineers Marocchi & Robinson. Their report (exhibit 22) stated: "A report was issued on the 24th April 2000 by AG Trusses with a list of defective items in the erection phase. These issues have been attended to by the erection sub-contractor. . . .
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It is our opinion that the roof truss framing as inspected is structurally adequate." 83 At the request of the plaintiff Phillip Warren Scott, a consulting structural engineer, undertook an inspection of the truss roof on 3 October 2002. His services were sought by the plaintiff to review the issues in dispute in the litigation between the parties. He prepared a report dated 15 May 2003 with photographs of certain of the areas in issue (exhibit 32). His response to each of the issues was incorporated into the Scott Schedule (exhibit 20). 84 Mr Scott in his evidence made reference to the Australian Standards AS 44-40 and AS 17.20 applicable to the installation of roof trusses and engineering design principles respectively and also to a commercial publication entitled "Installation Instructions" (exhibit 31). As much as Mr Scott's evidence confirmed by reference to these publications was that there may be different ways of dealing with particular situations insofar as installation of roof trusses is concerned. Where there might be different options either will be acceptable in terms of the standards. Thus, it leaves open variations in how a particular issue might be addressed. In a number of respects Mr Scott reported that something had been done one way which might have been done another way. That it was done another way does not suggest that it was inappropriate. On the other hand a principal area of conflict in his view was whether or not broken trusses could be repaired or need to be replaced. (Items 3, 8, 9, 10, 11 and 12 in the Scott Schedule refer). In his view the repair of any truss break could be readily undertaken by simply splicing an additional timber member to one side or the other across the break area. His report states: "This is a single, adequate and economical repair. There is no justification for a repair that involves removing roof tiles and battens and installing two half trusses. The two half trusses do not carry the roof load in their own right and rely on being supported centrally or nailed to the existing truss. We found a number of half trusses installed through the building however they typically had no central support, so the only portion of the half trusses that had been used was the portion of chord that extends for a short distance either side of the break area – a simple piece of timber would have been more than adequate." (Reference to item 3 in the Scott Schedule)." 85 Of course, Scott's assessment is contrary to that expressed by Bussche. Scott did acknowledge that the design of roof trusses is now
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done predominantly by the manufacturer of trusses with the aid of sophisticated computer programmes which will take into account the weight loading on the roof and other forces which might have to be taken into account in the design. The response of Bussche to Scott's report as to the adequacy of repairs to trusses was to the effect that Scott did not have the original truss design (they were neither requested by nor supplied to Scott) with the consequence that there was no way that Scott could give an informed opinion as to whether repairs were adequate. Without that information he could not have factored into his assessment those technical aspects which go into the design of the trusses in the first place. On the evidence of Bussche the practice in the industry now is that a roof carpenter would always verify any modification to a truss with the design engineer. 86 It should also be noted that Scott's inspection was undertaken some two years after the remedial work was done. On the other hand the inspection of Bussche was prior to that work being done. I am satisfied again by reason of the experience and knowledge of Bussche in the design and manufacture of trusses that his opinion is credible and carried weight. Whilst Scott identified different ways in which something might have been corrected in that there are different methods of repair I accept that Bussche was in the best position to indicate what was appropriate at the time when these issues were identified. That he recommended the "…best fastest and cheapest possible way to undertake the required remedial work" I also accept. Whilst not discrediting the evidence of Scott it simply has to be seen in the light of the events and circumstances at the time when it was considered necessary that the remedial work be undertaken. 87 In the end result I am satisfied to the requisite standard that the remedial work identified and undertaken was necessary and appropriate. The expense in undertaking the remedial work will be allowed.
The incomplete works 88 Apart from the remedial work Nydegger quoted for and was given the job of completing the roofing work. He gave an oral quote of $15 per square metre, he was to be paid on completion although he did put in an account for a small progress payment along the way. The work for completion was mainly in the south west block. His observation of the brickwork was that it was "no better and no worse than on other jobs". In one area where the brickwork was not level he lifted up the level to
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accommodate the truss. He and his partner Steve Freeman completed that work in three weeks. 89 Further trusses for this work were supplied by AG Trusses (exhibit 40). They quoted separately to Markoff the sum of $15,000 to supply the trusses. To the time when the plaintiff left the job AG Trusses had invoiced the plaintiff to the sum of $75,000 against their quotation of $71,500. The additional sum of $15,000 on top of the $75,000 takes the total for trusses to $90,000 (not including the trusses required for remedial work). I provided to counsel a schedule identifying the invoices and amounts of accounts rendered by AG Trusses. Neither counsel was able to proffer, nor was there any evidence as to how this increase in cost against the original quotation came to be. The issue is relevant in the context of whether or not the additional cost of $15,000 is reasonable so far as the cost of completing the Works is concerned. In the absence of any clarification I can only but assume that the additional cost (over and above the original quotation of AG Trusses to the plaintiff) was necessary for completion of the Works and was reasonable in all the circumstances. A possible explanation might be found in the letter of AG Trusses to the plaintiff dated 3 April 2000 (exhibit 9) wherein it was stated: "Certain trusses which have been manufactured have had to be resupplied because brickwork has been found to be out of square. This has resulted in extra cost and unavoidable time delays." If that were the case then clearly that would be a matter initially as between the plaintiff and AG Trusses and if validated for the plaintiff to take issue on with the defendant. That issue is not raised as part of the plaintiff's claim in any event. Accordingly, therefore, I accept that the additional cost for roof trusses was necessary and should be allowed. 90 The defendant prepared a schedule of costs of rectification and completion of the Works which was supported by various invoices tendered at trial (exhibits 35 and 36). Save for the matters already commented upon issue was not taken by the plaintiff so far as the necessity of those Works or the reasonableness of the charges therefor. Accordingly, the amounts so claimed will be allowed.
The delay costs 91 The plaintiff contends that it was a term of the agreement that the Work would be completed by the plaintiff by the end of February 2000. In fact the roof timber work was completed on 11 June 2000. The
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defendant counterclaims for delay costs based on 103 days delay. Those costs include site, toilet and shed hire, scaffolding costs, additional interest incurred on borrowings and loss of profit consequential upon the delay. 92 I have rejected the defendant's assertion that it was a term of the agreement that the Work would be completed by the end of February 2000. I will expand on my reasons for so concluding. In doing so it is relevant to have regard to the progress on the brickwork for the load bearing walls upon which the trusses and other work were to be installed. 93 It was the evidence of Davis (by reference to his diary) that on 8 March bricklayers were working on the north east block extending air-conditioning ducts up to plate height and were working on the north west block walls. On 10 March they were working on fire walls to the north block and around the stairwells and lift area. On 24 March they were working on the last portion of the fire wall at the western end. On 31 March they were finishing off the western end around the stairwell area. 94 Petit the roof carpenter who quoted to complete the work after the plaintiff had left site inspected progress on or about 11 April 2000. It was his evidence that the majority of load bearing walls were complete and that at the western end internal brickwork was still being undertaken. In cross-examination he said that it appeared that there were a few sections which were not completed mainly at the western end of the north west block. 95 Alistair William McMichael is a quantity surveyor and he was engaged by the State Bank of New South Wales, the financier of the development to assess the value of work done from time to time prior to draw-downs on the loan funds being made. In valuing the work done he was concerned to ensure that there was adequate security for the money advanced and to ensure that payment was made against finished work only. On his site visit on 25 January 2000 he noted that brickwork was complete to the lower level and 20 per cent complete to the upper level. Brickwork was advancing from the north east corner and the north east block was nearly complete. The upper level floor slab to the northern half of the building was then half laid but to the south and west blocks had not been laid although formwork and reinforcement was in position. At his next inspection on 27 March the external and interior walls to the upper level were "effectively complete" by which he stated 95 per cent complete with the balance of five per cent being tidying up work, patching work,
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etc. He noted on that occasion that a number of trades were at work and bricklayers were still finishing off their work. 96 McMichael noted in his report of 27 June 2000 that construction work had since his previous inspection been relatively slow due to difficulty obtaining trade resources and because of problems with the roof framing which brought work on site to a halt. He commented as did other witnesses that building trades were exceptionally busy at that time in the lead-up to the introduction of the Goods and Services Tax which was to be effective from 1 July 2000. There was pressure to complete works before the introduction of GST and consequently a general shortage of trades. His report indicated that the likely completion of the development was September 2000 which was "…approximately two months after the finish envisaged." It was his evidence also that the delay in completing the roof framing made it not possible to seal the building up and that in turn would delay other trades working under the roof in proceeding with weather sensitive work internally. 97 The evidence as to the progress of brickwork might be indicated as follows: 98 Markoff's evidence that in January work could commence "now" (which I take to mean erection of roof timbers) was not in fact the case. 99 As at 25 January brickwork to the upper level was 20 per cent complete and that was on the north east block. Even if roof trusses had been immediately available work could not have started then as the brickwork was not sufficiently advanced to enable continuity for the roof work. 100 Markoff says that by the end of January the north east and south east block were completed. That would suggest, having regard to McMichael's evidence that 50 per cent of the upper level brickwork was completed. I don't accept that a further 30 per cent of the brickwork was completed between 25 January and the end of January. 101 There was delay in supply of the roof trusses apparently due to a shortage of timber. 102 The first delivery of roof trusses to site was 23 and 24 February. 103 Markoff's evidence was that by the end of February all external and internal walls to the upper level were complete. Implicit in that is the suggestion that therefore the roof work should also have been complete at
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that stage. I reject that proposition. On the evidence of Davis it was not until 31 March that the bricklayers finished work at the western end. Certainly the bricklayers were on site during March given the record of complaint about the brickwork in mid March and the observations of Bussche at the end of March and the evidence of Hansen concerning problems with the brickwork. As at 27 March McMichael recorded that the upper level brickwork was 95 per cent complete and that the bricklayers were still finishing off. At the end of March roof framing was 80 to 85 percent complete. 104 On the objective evidence therefore I conclude: · The upper level brickwork was not completed to a stage by the end of January that roof framing could commence.
· Upper level brickwork was not complete as at the end of February.
· Progress of the brickwork and problems associated with the brickwork (including construction of fire walls and air-conditioning ducting) delayed the plaintiff commencing and proceeding in a scheduled/programmed manner.
· Despite the mix-up in the first delivery of trusses and wind blowing over some trusses and causing damage work progressed through March such that in four weeks 80-85 per cent of the contract work was completed.
· Brickwork to the western end was completed at the end of March.
· A reasonable estimate, given the rate of progress in March is that another two weeks would have seen the roof work finished had the plaintiff continued. That suggests that by mid April the plaintiff would have completed the Work in its entirety.
105 Whilst I am not able to conclude that a date for completion was agreed the fact remains that the failure of the plaintiff to complete the roof works within the envisaged time frame was causative of delay insofar as completion of the building was concerned. It is not the case that time for the completion of the work was unlimited. The reasonable expectation has to be that the Work would be completed within a reasonable time having regard to all relevant factors, eg weather, labour availability, completion of brickwork, etc. There is every reason why the defendant would want to complete the Works as soon as possible not the least of which being to open the building and beginning to gain an income therefrom.
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106 I have no hesitation in accepting that there was a delay in completion caused by the plaintiff's repudiation of the contract. In my view it would have been reasonable in all the circumstances as I have found them to be that the plaintiff would have completed the work by mid April 2000. On my findings the delay from mid April to 11 June approximates two months. That approximation is consistent with the evidence of McMichael in that on his inspection on 27 June he noted that likely completion of the building was September 2000 "approximately two months after the finish envisaged." The development took in its first paying residents at the commencement of October 2000.
107 Accordingly, I conclude that the defendant is entitled to damages being the costs of delay for the period from 16 April to 11 June (56 days). 108 As to the costs associated with hire of site toilet, shed and scaffolding I accept Markoff's evidence insofar as the need for those items on site for the additional period of time is concerned. 109 As to the loss of profit and interest costs incurred on borrowings due to the delay during construction the defendant called Geoffrey William Vibert, a chartered accountant and director of Bentleys mri Perth Pty Ltd. Mr Vibert specialises in auditing, corporate finance and litigation support. His report (exhibit 52) attaches the background supporting documentation and outlines the methodology adopted in arriving at an assessment of lost profits and interest costs. His final calculations were based on a 103 day delay during construction. His evidence and the manner in which he made his calculations were by and large unchallenged in cross-examination. I have no reason not to accept the integrity of the methodology adopted or his calculations arrived at in calculating the losses. In summary he concluded that as a result of the alleged 103 day delay in the construction of the facility the losses were: |