Comfort Engineering P/L v Cementaid (SA) P/L No. DCCIV-97-376

[2001] SADC 34

Comfort Engineering Pty Ltd t/as Oasis Airconditioning
v Cementaid (SA) Pty Ltd
[2001] SADC 34

Judge Herriman

INTRODUCTION

1. The plaintiff in this action (“Oasis”) carries on business as a mechanical services contractor, principally in air‑conditioning works. In association with that, it carries out other minor building works from time to time. It is the holder of a category 3 builder’s licence issued under the Builders Licensing Act 1986, covering various trades, including plumbing, air-conditioning, installation, sheetmetal working, space heating, wall and floor tiling, insulation and swimming pool construction.

2. Its principal witness, Ronald Bogers (“Bogers”), was, at relevant times, its managing director.  Bogers is the holder of a category 2 builder’s licence issued under the same Act.

3. The defendant, which I will refer to as “Cementaid”, is, amongst other things, a manufacturer, distributor and consultant dealing with admixtures and surface treatments for concrete.  It has a technical service and production centre based in Adelaide and it is part of the Cementaid International Group. 

4. For some years prior to 1996, Oasis had had a business relationship with the occupier and tenants of land at Salisbury, loosely described as the premises of  the Defence, Science and Technology Organisation (“DSTO”), at which premises the plaintiff had carried out various works.

5. At relevant times, the DSTO conducted its own enterprise from those premises, but it also let out various sites within them to particular organisations involved in the manufacture of materials in which it was interested.  One such organisation was known as British Aerospace (Australia) Limited (“BAL”) and that company, at relevant times, occupied several buildings there, including buildings described as numbers 64 and 102.

6. In 1996, BAL was interested in refurbishing a number of its buildings, including number 64, and those works were to include alterations to internal walls, the installation of new floor surfaces and air‑conditioning.  Building 64, in particular, was to be refurbished, to a standard suitable for the installation, within it, of high‑precision machinery, and that meant, inter alia, the removal of internal partitions, patching and repainting of walls, replacing ceilings, removal of a timber floor and its supporting concrete base, replacement of that base with a new epoxy‑coated concrete platform, and the installation of new electrical and  purpose‑built air‑conditioning systems.

7. As regards the flooring, BAL required a strong, level concrete floor with an epoxy surface which would be suitable as a base for its high‑precision machinery.  That surface was to be acid‑resistant, of a type which would permit the easy dispersal and cleaning of spillages, including oils, and one which would present a clean and attractive appearance to persons visiting and inspecting the workshop.  In the latter connection, BAL envisaged that it would frequently be showing the workshop to its customers, including government officials and sophisticated potential customers from within and outside Australia.  The floor had to be sufficiently strong and durable to carry the weight of large machinery and the movement of fork-lifts within the premises. 

8. BAL was seeking to have all these works completed as soon as possible and, to avoid maximum disruption, it wished to take advantage of the 1996/97 Christmas holiday period for them.

9. In late 1996, the plaintiff entered into a contract with BAL to refurbish the buildings in question, in particular, Building 64.

10. This dispute concerns a sub‑contract concluded between the plaintiff and the defendant over the installation, by the defendant, of part of the floor surface of Building 64.  The total floor area of that building was very substantial and was to be laid in three stages.  This matter concerns Stage 1, the application of additives to new concrete and the coating of that concrete with epoxy over an area of some 1,500 square metres.  The plaintiff contends that the defendant, in breach of a warranty, express or implied, failed to properly carry out those works, with the result that it was obliged to terminate the sub‑contract and incur additional costs and expense in having the surface completed by others.

THE PLAINTIFF’S CASE

Ronald Bogers

1. Although the plaintiff had had a long business relationship with DSTO and with BAL, or its immediate predecessors at the site, Mr Bogers said it had limited experience in carrying out certain of the building tasks required in the refurbishment, in particular, the removal and replacement of concrete flooring and its surface finishing.

2. That fact, Bogers said, was well-known to BAL and it became a topic of discussion between them after Oasis first submitted its tender for the works.  BAL told Bogers that the plaintiff’s tender would not be considered unless the plaintiff could provide some assurances as to its capacity to obtain competent sub‑contractors to undertake the flooring work and, indeed, performance guarantees relating to it.

3. For all relevant purposes, in these dealings, the plaintiff was represented by Bogers and it was he who took steps to secure a sub-contractor who could provide the assurances of quality and performance required by BAL.  He began this task by searching in the Yellow Pages.  He saw that Cementaid, a name he had encountered before, advertised as a provider of protective coatings for flooring.  As it was too late in the afternoon to contact Cementaid, South Australia, he noted that there was a Perth office and rang there on the afternoon of 25 November 1996.  He advised a person there of the problem he was facing and of his requirements.  That office referred him to its Sydney office, which he rang the next morning.  He then spoke to a person called “Steve”.  He informed Steve that he needed to install a high‑strength concrete base, but one that was quick‑drying so that an epoxy surface could promptly be applied to it. He said the epoxy had to be hard, able to withstand heavy machinery and the movement of vehicles including fork‑lifts and trucks, acid‑resistant, oil‑resistant, coloured, washable and of a clean appearance, the latter because the premises would be on display to potential customers.

4. In response, he was told by Steve that there were products in the Cementaid range that would be available and he would send relevant information by way of facsimile.  A copy of a facsimile which then came from Cementaid (NSW) to the plaintiff was admitted into evidence as Exhibit P5.  That document does not mean much by itself and needs to be read in conjunction with the Exhibits P6 and P7, which deal with the products referred to in P5.

5. The plaintiff was attracted to the third option discussed in P5, as it had the quickest drying time and could be applied to newly‑laid concrete after only seven days (as opposed to the usual 28‑day curing period).  This factor was significant, as it substantially reduced the time during which BAL would be deprived of its facility.  This option was also the least expensive of the three.

6. Steve then invited Bogers to contact the South Australian manager of Cementaid, Mr Derek Dunn, because he said local prices might vary.  Bogers attempted to ring Dunn on the following day, but he was absent in Darwin.  After speaking with the receptionist, however, Bogers said, he attended the defendant’s premises and collected two pamphlets, Exhibits P6 and P7.  Although Bogers’ evidence as to this was not challenged,  I am satisfied he was mistaken in saying he obtained P6 in that way.  The defendant adduced no evidence as to this, but paragraph 8 of the Amended Defence asserts that that document in fact accompanied the facsimile, Exhibit P5, and I am satisfied it did.  It plainly bears facsimile transmission notes corroborating that.

7. Having read the pamphlets P6 and P7, in particular, P6, Bogers said that he felt confident as to the suitability of the defendant’s 3CC Fast Dry System used with its Supershield epoxy product, because it offered benefits that were consistent with BAL requirements, namely, oil and acid resistance, hardness and durability; it could be applied by roll‑coating, which meant a fast application with an even film; and the concreted additive meant a fast curing time.  As well, it was easily cleaned and had decorative, safety and hygiene benefits.  He was also impressed by the claim (P7) that the defendant was part of an international technical service and production organisation that provided monitoring, site liaison and product guarantees.  Finally, he noted that the coating could be “adapted to a hygienic smooth finish, or varying abrasion, resistance, anti-slip surfaces” (p.63).

8. Generally, P7 dealt with the concrete additive system.  Whilst Bogers said this was then a matter of significance to him because of the fast curing benefit it offered, it did not become an issue in the hearing.  The more relevant aspect of that document, in terms of the dispute, is Bogers’ claim to have been comforted by the material on its last page relating to the Cementaid “Group”, which group included the defendant.

9. Bogers said he took P6 and P7 to BAL for their consideration and they were impressed by the qualities of the proposed system.  He told them the epoxy could be applied within seven days of the concrete pour.

10. Bogers said he was not sure whether as a result of those discussions he adjusted his job tender to BAL on Building 64, but from the evidence of Mangelson, it appears that he did.

11. In the event, Oasis’ adjusted tender for works, including Building 64, was then accepted by BAL.  At this point, Oasis had not concluded any contract with Cementaid.

12. Derek Dunn, sales manager of the defendant, then returned from Darwin and had a conversation with Bogers.  Bogers repeated to him that he required a quick‑drying concrete and Dunn confirmed that that could be achieved.  Bogers then went on to speak of the features in the defendant’s products which he and BAL found suitable for the job.  They were the same features I have referred to above.

13. On 11 December 1996, Dunn faxed to the plaintiff a letter containing the defendant’s “suggested procedure and our requirements regarding 3CC & Supershield concrete topping”.  Inter alia, that document described the procedure for “new concrete topping” involving the “3CC fast dry system” and for the epoxy surface.   That fax concluded that the plaintiff should liaise with the concrete supplier regarding, inter alia, cement content, placing of concrete, use of aliphatic acid and curing. The defendant said it would itself deal with that supplier over matters connected with its concrete adhesive. 

14. A site visit was then arranged on a date Bogers could not precisely identify, but which, other evidence (P10) showed, took place on 11 December 1996.  Bogers said he took Dunn to Building 102 and showed him the floor there.  A previous refurbishment with an epoxy floor coating, had been undertaken in that building.  Bogers said he showed Dunn two areas, one of which he told Dunn was in a form acceptable to BAL and the other of which was not in an acceptable form, and he explained why this was so.  The unacceptable one, he said, was dull, had paint colour smears and was porous, whereas the acceptable one was clean, uniform and shiny.  Dunn then knew he (Bogers) had the pamphlets P6 and P7.

15. Following that meeting, the defendant forwarded a letter and enclosed quotation to the plaintiff dated 17 December 1996 (P11).  That quotation proposed, inter alia, that the defendant would “Supply and Apply SUPERSHIELD 100 Epoxy Coating” and it was expressed to be subject to conditions, amongst others, that the surface be clean and free of materials, that prior acid washing of concrete surfaces was strongly recommended and there were other provisions relating to site access and pricing.  It further referred to “standard conditions of sale and supply”, which were in an attached printed form.  Those “conditions” included the following:

    “2....... Any description given of the goods has been given by way of identification thereof and by way of the seller’s opinion only and the use of such description shall not constitute any contract of sale by description.

    ...

    4....... It is agreed that the buyer takes the goods on the basis of his own judgment as to quality and fitness for any purpose and the seller shall not be responsible for, and gives no warranty as to quality or fitness of the goods for any purpose unless such a warranty is given in writing signed by a Director of the seller.

    ...

    6....... The seller’s liability and the buyer’s rights are affected by State and Federal laws as referred to below.  To the extent permitted by those laws, and subject to the following, the seller shall in no circumstances be liable for damages of any nature including damages for consequential losses in connection with the supply by the seller of goods or performance of services, or any part thereof, pursuant to this agreement, or any failure to supply such goods or services or part thereof.  The seller’s liability whether in contract or tort or otherwise shall be limited at the option of the seller to:

    (i)..... In the case of the supply of goods either:

    (a)the replacement of any defective goods or part thereof;

    ........ (b)     the repair of any defective goods or part thereof; and

    (ii)    In the case of the performance of services, the performance of any defective services again.

    ........ Note: Provisions of the Trade Practices Act 1974 and other statues (sic) rules or regulations for the time being in force in Australia may imply certain conditions or warranties or impose obligations on the seller which may not except to a limited extent be excluded, restricted or modified by the provisions contained in this agreement.”

    7....... The seller may give advice or recommendations to buyers of goods and/or services.  The seller shall not be liable in respect of any incidental, special, consequential, general or other damages (whether arising out of contract, negligence or howsoever) in connection with or arising out of the giving of any advice or recommendations.”

Those conditions expressly identify the “seller” as Cementaid (NSW) Pty Ltd, and not as the defendant.

1. Although there appears to have been no written acceptance by the plaintiff of the defendant’s quotation, it is not disputed that it was orally accepted soon afterwards and that the defendant became involved in performing its work in late January and early February 1997.

2. Bogers was unable to produce his work diary, which had been lost, but it was not generally in dispute that at some time in mid to late-January 1997, the original floor of the Building 64 was removed and the new concrete floor laid.  That process took over five days.  Nor was it disputed that the new concrete floor was properly prepared and laid, with the defendant participating in the deployment of the 3CC system.  Dunn was present on each day of the concrete pour and came to the site on two occasions prior to the application of the epoxy coating to inspect its curing.  He then directed the plaintiff to arrange for the surface to be thoroughly washed.  The plaintiff contracted another party to do that.

3. It was common ground that work was completed in late January 1997 and that the first of three epoxy coatings was applied on 30 January 1997.  Two further coats were then laid over consecutive days.

4. On Bogers’ understanding, and so later evidence showed, a Mr Keith Boyce, painter, was sub-contracted to the defendant to apply that Supershield 100 epoxy coating.  It came in several kits, each of two containers, which were then mixed on site, in equal volumes, before being applied with a paint roller.  Because of the outside temperature on two days, that application took place in the evenings.  Bogers said that, even after the first coat was applied, some blistering was seen by him near a door opening in the north wall.  He spoke to Dunn and Boyce about it, but neither could offer an explanation.  The applicator Boyce said he would fix it by scraping it and applying another first coat, and that was apparently done. 

5. It was not disputed that Building 64 is rectangular in shape and that the longer northern side contains an opening, which is now covered with a roller door.  To the best of Bogers’ recollection, that roller door was not in place at the time the epoxy was first applied, but he had arranged for some black polythene sheeting to be placed across the opening to prevent exposure of the floor to the weather.  An external scaffolding had been put in place to help support that sheeting.  Bogers could not remember whether anyone had advised this, but he conceded the sheeting still did not completely cover the opening. 

6. Some days after the third coat of epoxy had been applied by the defendant, Bogers, in company with Messrs Lander, Mangelson and a ceiling sub‑contractor, Michael Larecki, inspected the finish.  They walked over the entire floor.  Bogers said that in all areas of it, there were spots where the epoxy was cracking and separating from the concrete base.  It was observable visually in some places and in others could be felt as you walked over it.  Lander and Mangelson told Bogers that that finish was unacceptable and he agreed with them.  He was directed to speak to the defendant about an appropriate solution, a “get well plan” as it was described, so he arranged to meet Dunn and Boyce at the site.  That meeting occurred on that same day.  Also present, said Bogers, were Larecki and Steve Hockenhull, an Oasis employee.  A floor inspection then took place.  Bogers said they first went to the area near the northern wall opening where the blistering had previously occurred.  It was blistering again, so Dunn proposed once again recoating it, but Bogers said the problem was not confined to that area, but was over the whole floor.  Dunn said he would patch repair it, whereupon, Bogers said, he sought an assurance that the epoxy coating had adhered and would continue to adhere everywhere.  Dunn was not forthcoming on that, he said, so he took a coin and dropped it in random spots over the whole floor area, he thought in about twelve areas.  It caused chipping of the epoxy and Larecki’s spatula was then used to demonstrate how the coating separated from the floor. 

7. At that point, Dunn conceded to him that he could not guarantee how much of the coating had properly adhered. 

8. The parties then separated into groups to discuss the position and Dunn subsequently informed Bogers that he proposed to return that evening with some men and they would scrape and clean the entire floor of epoxy.  Bogers said there was then no discussion about recoating it or who would bear the cost of all this, but he assumed from what was said that Dunn was accepting responsibility for that.

9. He said that that night, Boyce returned with between nine and twelve people with paint scrapers and they began removing the coating.  Bogers remained there with them till midnight and took a small part in the work, but he said that it became apparent towards the end of the evening that the scraping was not working.  The resin had adhered to the floor strongly in some places and not in others, hence in parts it was easily removed and, in others, not.  Eighty five per cent of it could be lifted, but the rest could not be.  He said that on the next day, a further four men came back and worked on those and other areas, but it was very slow work and at the end of that time, they had probably fully cleaned only 40 square metres of the 1,500-metre coverage.  It was obvious to all parties that there was not going to be sufficient time or manpower to remove the epoxy by this method.  At this point, Boyce told him he thought there had to be an easier way and said he would go away and come up with something.

10. Next morning, Boyce arrived at the site with a terrazzo grinder, a machine described as like a heavy-duty floor polisher with a stone abrasive.  It was applied to the floor, but was not effective in removing the still‑adhered epoxy, as it tended to skid across it.  Boyce then said that that method was not working and he took the grinder away. 

1. The matter was then left to be discussed with Dunn on the next day and a meeting, indeed, took place that day, 7 February 1997, with Dunn, Boyce, Bogers and Hockenhull.  According to Bogers, it became apparent from their conversation that neither Dunn nor Boyce had any clear idea how to remove the epoxy, so he took matters into his own hands and made some phone calls, as a result of which he spoke to Wiley Street Grit Blasting Pty Ltd (“WSGB”).  He was told by them (by a Mr Cutting, as later evidence showed) that shot‑blasting was the only recommended way of removing the epoxy.

2. WSGB were ready to come to the site more or less immediately and Bogers invited them to do that.  He then returned to Boyce and Dunn and told them what he had discussed with WSGB and learned.  As their discussion progressed, Bogers said he reached the conclusion that it was not his problem to fix, but the defendant’s, so he went away and telephoned WSGB, telling them not to come for the moment and saying that they would need to receive an order from somebody else.  He then resumed his conversation with Dunn and Boyce, telling them that he had put WSGB on hold, as he did not think it was his responsibility to organise or pay for the epoxy removal.  Dunn then asked him to ring WSGB and invite them to come out and do a test.  If it was successful, Dunn said, he would instruct them to carry out the works under the defendant’s supervision.  Having received that assurance, Bogers yet again rang WSGB, said the circumstances had changed and that they were invited by the applicator to come out.

3. Within 90 minutes, a Mr Koch from WSGB arrived with a shot‑blaster.  Bogers met him and introduced him to Dunn and Boyce.  Hockenhull was also there.  The shot‑blaster was then tested over two 25‑30 metre runs on the floor.  It appeared to remove the epoxy coating in those areas and the concrete surface was left with no more than some small dents.  Dunn and Boyce then inspected it and Dunn told Bogers and Koch that it was satisfactory.  Bogers then told Dunn that it was up to him to instruct Koch to proceed and, on his account, Dunn did just that, saying that he would take the responsibility and would pay.

4. Koch thereupon began to shot‑blast the entire area.  Dunn left after 15 minutes, but Boyce, Bogers and Hockenhull remained longer.  Bogers himself left after an hour.  He said he heard Dunn instruct Boyce to supervise the works and Boyce remained after he left. 

5. Bogers did not return to the site that day or the next, nor did he speak to anybody there, but on the third day he went back there.  He believed that was on Sunday, 9 February 1997.  He did not see Boyce or Koch, nor could he recall seeing the shot‑blaster operator.  He saw that the floor had been cleaned of epoxy, but in his words, “It didn’t look like a concrete floor any more” (p.144).  The concrete surface had been stripped, exposing the small aggregate beneath, and it had a rough tarmac finish with rutting. 

6. In consequence, Bogers arranged a meeting with Dunn on the following morning, which Boyce attended and, he said, possibly others.  The floor was inspected and he then told Dunn that he could not see how it could be repaired and re-coated using the same products, because it was so uneven, pitted and undulating.  He did not think it could be adequately filled with an epoxy coat.

7. Dunn then informed him that it was an option to add a silica product to the epoxy and this would have the effect of filling the holes and ruts, as it would self‑level.  Dunn said he did not know the name of the silica, but it was in powder form and, if it was done correctly with the right quantity of powder, a flat, smooth surface would be achieved.  He could not do it that day, however, and needed some days to get the material.  Bogers allowed him that time and, some few days later, Dunn, or somebody on his behalf, returned and applied a further coating to the surface.  After that was done, Bogers first inspected it by himself and then with BAL and, finally, with Dunn.  From his own observations, this measure had not rectified the situation or achieved a level floor at all; in fact, the mixture had simply followed the contours of the surface holes and undulations left by the shot‑blaster.  The surface was still cratered and rutted and had sunken areas of up to four to five millimetres.  Photographs were produced (P15), which he identified as having been taken to demonstrate those features.  

8. At their meeting, Dunn conceded that the floor was not much better, but it could be improved.  Bogers said that if that was the best that could be done, BAL would not accept it. 

9. Dunn then proposed a solution involving a test coat to a small area of the floor using another preparation and application method.  Bogers saw the test done.  The test area was first scruffed to an abrasive level and then a mix of epoxy and silica was applied in an attempt to fill the rutting.  It was applied in two different ways, using a roller and a squeegee, but, he said, it achieved nothing.  The test area remained cratered and uneven; it appeared much the same as before. 

10. On his own account, Bogers had by this time lost confidence in the ability of the defendant to remedy the situation. 

11. He had a meeting with BAL on Sunday, 16 February and was informed that BAL regarded the floor surface as unacceptable.  They subsequently wrote to him confirming that (P18).

12. In consequence of that meeting, the plaintiff wrote to Cementaid on 17 February, saying the floor was unacceptable, that payment would not be made and that the plaintiff had “lost faith in your ability to rectify the works”.  The plaintiff threatened that it would hold the defendant accountable for any rectification costs (P19).  By way of reply, Mr Michael Aldred of Cementaid Australia Group wrote two letters to the plaintiff, on 19 and 21 February 1997 (P20 and P21). 

13. In P20, Aldred said he was responding to the plaintiff’s request of Dunn for rectification works to be carried out, yet it was apparent by then that the plaintiff was no longer calling upon the defendant to rectify, but was looking to find a third party to do that (P19).  At all events, in that same letter, Aldred conceded that the original epoxy had been “loaded with the wrong colour”, that its removal had left “some ruts and imperfections” and that they were looking at means of rectifying the matter.  He then set out a rectification plan, which effectively involved substantially levelling the floor, filling in the holes and ruts and applying a new epoxy coat.  Aldred said he would guarantee the performance of the new coat, but he could not offer a definitive time-frame for the works.  The letter went on to say:

    “In my investigation of the matter so far, it appears that the job may have been rushed initially, not enough proper curing, not enough time to do proper surface preparation etc., aside from the poor colour batching of the epoxy itself.  It is possible that if these items had been done properly when they were done, we would be complete and out of the job by now.  Too much time has already gone past, and neither of us would care to do it again.  If it takes another day, it takes another day.  It is less expensive for all parties to do it right ... Mr Bogers, I deeply regret that you and your client have been put to inconvenience on this project.  I assure you though that Cementaid (SA) Pty. Ltd. Will complete the job to both yours and your client’s satisfaction.”

14. In his following letter of 21 February (P21), Aldred continued with his proposal for rectification and, pertinently, observed:

    “.. The visibility of the filled and rectified indentations and ruts is due to the large expanse of the very smooth, very high gloss finish of the coating, combined with the extensive, bright lighting installed in the workshop.

    ... According to our Mr Derek Dunn, and our applicator, the previous indentations and ruts in the section where you ground the floor are still visible anyway.”

The emphasis is mine and I will return to it later, but what is of significance is that Aldred appeared to be conceding the floor’s unevenness, but suggesting that the floor‑grinding work had been carried out by the plaintiff.

1. The letter went on to suggest that the “final finish coat be a matt finish” and, in particular, contained these passages:

   “Cementaid want to assist you and your clients as much as is reasonable ... I repeat my offer to speak with your own clients to help resolve this matter amicably and rapidly, and to be in Adelaide personally to do so ...”

At that point in the letter, Aldred then noted he had had a phone call from Dunn, who had been informed by the plaintiff that it intended to engage another contractor to grind the floor and to have another epoxy applied to the surface.  Aldred went on:

“We do not accept this action.  The floor, even as it is, complies with AS3600 Standard and is fit for the purposes you contracted Cementaid for.  Once rectified by ourselves, the objections as to visibility of markings should no longer be valid, and we are waiting on your go-ahead to complete this work in a timely fashion. 

Should you go ahead with the plan you have stated this afternoon to Mr Dunn, to engage another contractor to re-do the floor works, all costs liability and responsibility for the floor will be to you only.  Cementaid (SA) Pty. Ltd. do not and will not accept any liability for the floor or for your actions or for any costs associated with it, and reserve our rights to be paid for the works done by us, as contracted.”

Aldred signed both letters as “Managing Director Cementaid (SA) Pty. Ltd.”.

1. According to Bogers, the plaintiff regarded the defendant’s final proposal as involving much the same work as had just been unsuccessfully attempted, albeit that there was a proposal to manually fill holes.  Bogers took the view that that filling was so extensive that it would take a very long time and would, in any event, present a cosmetic issue.  He said he spoke to Aldred on the phone about it several times and told him that he (Aldred) needed to inspect the floor to understand the problem.  Aldred then said he would come on the next flight to Adelaide, but he did not arrive.  He provided no explanation for that and when Bogers rang to ask why he had not come, Aldred was not available to speak to him. 

2. The defendant did not at trial challenge that evidence, call Aldred or proffer any explanation for his failure to come to Adelaide.

3. In consequence of those matters, Bogers took steps to have the floor rectified by other parties.  In the first place, he had learned that the use of a diamond grinder might achieve a better, more level concrete surface and he called in a contractor to carry out such a test on a small portion of the floor.  The grinding did not remove all indentations, but reduced their depth and made the surface generally more level.

4. As a result of further enquiries, on 24 or 25 February, the plaintiff then contacted a Mr McGowan of Epirez Construction Products Pty Ltd (“Epirez”) and told him of the problem.  McGowan visited the site and inspected the floor.  He said that a roll coat of epoxy would not adequately fill up the holes and rutting in the floor, as the mix was not self‑levelling.  He advised that the entire surface be removed, first because it could not be guaranteed that one type of epoxy would adhere to another and, secondly, because the existing coating exaggerated level differences within the floor surface.  He advised the use of a diamond grinder to level it and then recommended the application of a self‑levelling epoxy to a thickness of three millimetres in order to fill any remaining troughs or holes.  He proposed to use his product Epirez ESL (or “Epoxy Self Levelling”).  He said a three‑millimetre thickness was required because there would still be indentations which the grinder would not flatten out.

5. In consequence of his advice, the plaintiff spoke to a contractor with whom Epirez had frequently dealt, Austcoat Services (“Austcoat”), and a Mr Terry Leonard of that firm provided him with a quote for the coating work, which was in an amount of $51,600.  The plaintiff accepted it, and thereupon arranged for the diamond grinding to be undertaken by Breakaway Concrete Cutting & Drilling (S.A.) Pty. Ltd (“Breakaway”), which presented and was paid its invoice for $12,000.

6. Austcoat then applied the Epirez ESL epoxy coating for the contract price of $51,600.  When it was completed, it was observed that the finish was, as Bogers described it, like a sheet of glass and very slippery.  The plaintiff realised that this finish was not in a form acceptable to BAL and, having received advice about appropriate remedies from Austcoat, he instructed Austcoat to apply an additional, non‑slip, coating of Epirez “Supatuff HD” at a cost of $6,500.

7. That work was completed and was, and remains, in a form acceptable to the plaintiff and to BAL.  The total invoice from Austcoat was thus $51,600 for the application of the Epirez self-levelling system and an amount of $6,500 for the non‑slip coating, making a total of $58,100.  Other evidence disclosed that, in consequence of the early payment by the plaintiff of that account, a discount of $1,600 was provided, thus the nett cost was $56,500.

8. Further, the plaintiff said that in consequence of the diamond grinding work, it had to engage Adelaide Sweeping Services Pty. Ltd. to remove the sludge and materials resulting and it produced an invoice from that entity for that work in the sum of $2,080 (P24).  Bogers also produced an invoice from Breakaway in the sum of $12,000 for the grinding work itself (P25). 

9. The plaintiff then sought to lead evidence of a concrete coring cost undertaken by it to ensure the concrete base was properly suitable.  Objection was taken to the tendering of that document, it was not an expense which had been claimed or pleaded in the Statement of Claim and, in the event, the plaintiff did not persist with its application.

10. The plaintiff did, however, produce and tender an invoice from J.D.S. & P.H. Gibson, Painting Contractors (“Gibson”) (P26) for $11,100, which on its face referred to works carried out on both Stage 1 and Stage 2 in Building 64.  Part of that account was claimed by the plaintiff for repairing damage to painted walls, pillars and door jambs in Building 64, allegedly arising from the remedial works made necessary by the failure of the defendant’s coatings.  The plaintiff purported to say that he estimated an amount of $3,600 comprised in the $11,600 invoice was attributable to that remedial work.  Objection was rightly taken by the defendant to that evidence and, ultimately, no person was called from Gibson to provide any break-down of the overall figure which could be attributable to remedial works on Stage 1.  I will return to that matter in due course.

11. Finally, Bogers said that despite the diamond grinding work of Breakaway, there were areas of depression in the floor which were not successfully stripped and, in consequence, he and two others spent two days manually removing these.  One such person was the electrical sub‑contractor and Bogers said that, in consequence of that contribution, certain adjustments were made to that person’s final account.  He did not produce that account, however, nor call the electrician to prove those adjustments.  Otherwise, he said that he did not keep a record of his own labour in this work, nor had he a record of what he actually paid to his other employee for it.  He said, however, that the rate of remuneration for unskilled labour in 1997 was no less than $15 per hour and that he and that employee had worked between twelve and 20 hours on that removal.  I will return to that matter in due course.

12. He also sought to claim for his lost time in site supervision and escorting sub‑contractors to and from the site in connection with the remedial work, but, again, he provided no particulars of that claim and did not produce any records relating to it.

13. In opening his cross‑examination, defence counsel attacked Bogers on the earlier pleadings in the action, putting to him that the plaintiff had originally relied upon an assertion that the original coating of epoxy had been defective because of colour problems, saying it was that which had led to the decision to remove it.  As with many attacks on pleadings, I was not satisfied it was particularly successful.  True it was that paragraph 5 of the More Explicit Statement of Claim of 14 July 1997 appeared to place reliance upon that issue, but that plea then became ambiguous because paragraph 6 of that same document then appeared to focus on the significance of the blistering problem.  In his evidence, Bogers pointed to that and said that the plaintiff’s allegation as to colour defects was ultimately withdrawn from its pleadings because, whilst both matters were of concern, the main issue was adhesion and, further, because the plea as to colour had led the defendant to join a third party in the action, thereby delaying its progress to trial.  I must say that common sense, in any event, dictates that if there was, indeed, a problem of non‑adhesion of the epoxy, it would be fundamental and would override any issue about colouring.

14. In this connection, I was referred to a fiat of this court of 7 December 1998 and interlocutory documents in connection with it, where application had been made by the plaintiff to remove that part of its pleading relating to colour problems and to the defendant’s then assertion that that step had been a ploy by the plaintiff to prevent it (the defendant) from recovering damages from a third party.  Nothing in the associated documentation supported that assertion, nor, in any event, did it assist the defendant’s position:  as I have noted, any question of adhesion would be fundamental.

15. Bogers was then attacked on the basis that the plaintiff had not taken any steps to protect the original coating from the elements in that it had failed to cover the doorway opening on the northern side of the building at all.  Bogers conceded that, when the project had originally commenced, there was no door in place there, but he said that at a point which he could not now identify, a roller door had been installed.  Even so, however, he maintained that he had covered that opening, prior to the first coating, with the black plastic previously described.  He denied speaking to Dunn after the first coat, complaining about adhesion near the door and being told to shade the opening.  It was suggested to him that Dunn would say otherwise in his evidence, but, interestingly, Dunn later seemed to agree some form of covering had been in place (p.448).

16. Bogers acknowledged, however, that the plastic was not completely effective and that there were gaps in the opening, as a result of which some rain water did get inside the building and onto the floor.  It was in consequence of the entry of that water that the colour leaching became observable.  He said that water had not been placed there deliberately by him for testing purposes. 

17. The plaintiff’s pleading on that issue was attacked, but again to little effect.  It did not damage Bogers’ credit and otherwise it seemed to me of little importance whether the leaching problem had been detected where rain water got in or had also been observed where water had been deliberate placed elsewhere.

18. It was further put to Bogers that the defendant’s sub-contractor who applied the epoxy, Mr Boyce, complained, after the second coat, of footprints being on the floor.  Bogers denied that and he further denied that Boyce had told him of an observed problem of colour separation and that he had told Boyce to stop painting because of it. Boyce said nothing of this in his evidence.

19. Bogers agreed that at the inspection of the floor with Dunn and Boyce (and, he said, others) colour problems were discussed, but said that they also discussed brittleness and lack of adhesion.  He agreed that Dunn had said that he would ring Sydney about the colour problem, that that occurred, that Dunn then explained there was possibly a wrong solvent in the epoxy and that the problem could be cured by the application of a clear coat.  He said he was happy to accept such a solution, as that would overcome the bleeding problem, but it would not fix the lack of adhesion. Dunn had said he could repair one particular area of the floor, but he could not guarantee the adhesion of the floor surface in other areas.  That was the major problem. 

1. He was then challenged as to whether he met Mr Koch of WSGB at the entrance to the facility.  A visitor’s book extract was shown to him (P27), but he said the signature of the accompanying person was not his.

2. He admitted that he had sent to the defendant a claim for rectification works in a nett sum of $52,180 (D2).  That document did not include a claim for the non‑slip coat of $6,500, a claim put forward in the summons. 

3. A number of other matters were put to Bogers:  that Dunn asked him about some cracking in the concrete floor prior to the first coat; that Dunn warned about bringing heavy machinery onto the surface without a plate; that Boyce expressed concern to Dunn about sources of concrete; that just prior to the first coat, Dunn recommended the wetting of the concrete surface with aliphatic alcohol.  Bogers variously could not recall or denied these matters and, curiously, no evidence of them emerged in the defence case.

4. Bogers further denied ringing Dunn after the first coat to say that it was not satisfactorily applied near the door, or that Dunn told him that there must be shade provided there, as it would not cure if it was too hot. 

5. He was cross-examined about Koch’s visit to the site with the shot‑blasting machine.  He said that after the test runs were done, he asked Dunn if the concrete pitting troubled Dunn and Dunn said no.  He was tested on the circumstances in which Koch continued to complete the shot-blasting of the floor and said that after discussions with Dunn, it was he (Dunn) who said he would issue the order for the work to be carried out.  It was not a matter of his agreeing with Dunn that the work should continue.  He had no part in instructing Koch to continue, nor did Dunn seek his permission for it to continue.  He heard Dunn tell Koch to carry on with the work and passed no comment about it.  He agreed that Dunn then left.  He denied that, at any stage, Koch stopped the blasting and asked him to inspect the floor.  He further denied Koch saying at any stage that he did not want to continue with the work on any part of the floor, nor did it happen that he told Koch to carry on.  He denied any discussions with Boyce about that.  He denied that after the shot‑blasting had been done, there were impurities observable in the concrete, including wood, peach stones and the like. 

Peter Mangelson

1. The plaintiff next called Peter Mangelson, the operations support manager of BAL.  He spoke of the tendering process for the works to be carried out on the various buildings at DSTO and of how the works, at Building 64, included the air‑conditioning, electrical fit-outs, lighting and a new floor.  He spoke of Stage 1 flooring, in Building 64, covering an area of approximately 1,500 square metres, and how BAL required it to be prepared for the installation of precision machinery with fine tolerances.  The floor had to be level, acid‑resistant, able to be easily cleaned from oils and swarf, able to carry heavy machinery and able to withstand the movement of heavy vehicles, such as fork‑lifts.  There was only limited scope for adjusting the precision machinery on account of an uneven floor.  He explained how the likely deposit of oil, chemicals and metal materials on the floor made it essential that the floor be level and easily cleaned, in particular for occupational health and safety reasons. 

2. His company wanted a single contractor to do all the work and he described how the plaintiff was on a short list of tenderers.  He recognised the exhibit P6 and the reference to the 3CC system on P7, although he had not seen the pamphlet P7 before.    He explained how P6 had been sent to him by the plaintiff and how his company found it appealing, in particular because the concrete additives and the epoxy were coming from a single source.  His company was also comforted that the defendant company would support and guarantee the work and because the epoxy provided a finish of the kind they were seeking.  He explained how the general appearance of the epoxy was quite important because of the likelihood that customers would be taken into the machine shop on inspection tours.  He said that BAL took the view that the plaintiff’s tender was strengthened by the contents of P6 and they then accepted it.

3. The timetable was a tight one and designed to take advantage of the Christmas shut‑down.  A fast concrete curing time was thus significant.  He spoke of his observations as to the work carried out.  He could not give the precise dates, but his recollection of the sequence of events was generally consistent with that of other witnesses.  The concrete was poured mid to late-January and it was allowed to cure in the order of one week, he said.  He thought the first coat of epoxy was applied in late January or early February and he first saw it one to two days after all three coats had been applied.  It was then able to be walked upon and he examined it with Bogers, Lander and their works manager.  They walked over the whole area of the floor.  He described it as having an appealing presentation from a distance, but as they got closer, he saw that particular areas were lifting from the concrete base, in particular there was a large patch near the open northern doorway.  He did not know whether the roller door was then installed, albeit that that was to be part of the works program.  He said there was then some form of polythene covering over the doorway, that it was taped across and secure.  He thought it was an effective means of excluding the weather.

4. He went on to describe the areas where the epoxy had not appeared to adhere and said that when they were tapped, the coating would break and splinter.  It otherwise presented a bubbled appearance so that you could see a gap between it and the floor.  He said there were areas of bubbling over the entire Stage 1 floor.  The most obvious was near the door, but it appeared to be gradually delaminating in many areas.  It could be detected by tapping the surface.  He said he told Bogers that it was unacceptable and that steps should be taken to rectify it immediately.  His view was that the bubbling was so extensive that it would need complete removal of the epoxy and reapplication, and he told Bogers of that.  Bogers agreed that it had not adhered properly and said he would speak to the defendant and would come back with a plan to cure the problem.  It is of some interest that, at this point, Mangelson had not noticed any discolouration problem.  At least he did not comment upon it.

5. Subsequently, he said, Bogers told him of what he (Mangelson) described as the “get well” plan.  It was within a few days of their conversation and the plan was to scabble the surface and abrasively remove the epoxy, not using a solvent, to then clean it and reapply the epoxy.  He remembered later seeing a scabbling machine working on the floor.  He did not know what kind of machine it was, but thought it had a rotating disc or burr or something of that kind.  He thought it was removing the epoxy and the top part of the concrete down to the aggregate.  He had been at work over the weekend of 8 and 9 February and it was likely that he saw the machine working at that time.  When he saw it, it had taken a three to four‑metre wide strip near the north wall.  It had not reached half-way across the floor.  So far as he was concerned, it was what he had thought would happen, albeit that he was not happy with the delay that was occurring. 

6. He then saw the floor after all that work was done and there was what he described as a lot of roughness in it.  His company then had a meeting with the plaintiff because they were concerned about that roughness.  Ruts were present where the machine had tracked and he was concerned about the ability of the applicator to obtain a level surface over that rutting.  Bogers told him that, based on the information he had been given, the next process would achieve that levelling.   He was thus happy for the remedial works to continue.

7. He had little to do with Bogers, then, until after the next epoxy coating had been applied.  He then inspected it and met with Lander and Bogers.  He said it was clear that the re-coating was not satisfactory, as it had left large indentations where the rutting and scabbling had not satisfactorily been levelled by the epoxy.  He told Bogers it was not acceptable and a solution was urgently required. Bogers agreed with that and said he would do something about it.  Bogers later told him that because of his dissatisfaction with the work, he thought he should engage another contractor.  He did recall that there was what he described as a “last ditch attempt” to further repair a specific section of the floor, but it did not appear to him to improve it markedly. 

8. He recalled that the plaintiff then brought in other contractors and he recognised the name of Epirez.  He recalled being told of an epoxy product recommended by that company which would have a self-levelling capacity.  Ultimately, he saw the floor after the plaintiff had had rectification works carried out and he said it was of the standard they were expecting and had contracted for.

9. In cross-examination, he identified a “Scope of Work” document issued by his company, which he said set out its expectations in connection with the works.  He said that document had actually been prepared after the contract was entered into, but it summarised what had been discussed between BAL and the plaintiff before acceptance of the tender.  He said that Bogers had initially quoted a particular figure for the works, but after refinement and negotiation, the final order was for a lesser amount.  He was not able to recall being told anything about colour leaching at the inspection after the first coating nor, indeed, could he remember hearing anything about that until recently.  He did not remember being told by Bogers of rain getting onto the floor, or of colour leaching.  He agreed he had seen the floor after Koch had completed strips totalling three to four metres and that the aggregate was exposed, but he did not recall hearing Koch saying anything about being unhappy with it or not wanting to go on with the work, nor did he remember Bogers having any discussion with the machine operator about that.  He simply watched the work begin and then he left.

David Lander

1. David Lander was called.  He is no longer employed by BAL, but was an employee at the relevant time.  He described the refurbishment program, particularly as it related to Building 64 and the standard of finish required by BAL, in much the same terms as had Mangelson.  He also spoke of the tendering process and the dealings he had with Bogers, including the latter’s provision of the brochure P6.  He said that, having read P6, he discussed it with Mangelson and they were satisfied about the defendant’s product and the likelihood it would be properly applied.  That led to the overall contract being granted to the plaintiff. 

2. He recalled that, after the concrete was laid, it cured in one week or less.  He said that he and Mangelson inspected the works as many as three times a day, but did not walk over the floor for some days after the last coat, of the first application of epoxy, was completed.  He then observed blistering and lifting of the epoxy surface.  He recalled there was an area particularly affected near what he described as the “air lock” from Building 64 to another building, but there was blistering spasmodically over the whole floor.  He and Mangelson thought it was totally unsatisfactory, because trucks moving over the floor would lift the epoxy surface altogether and expose the concrete.  He said that was the main defect.  He also saw there was some colour leaching near the position of the roller door where some moisture had got in, but that did not concern him.

3. He spoke to Bogers and told him the finish was not acceptable.  Bogers said he would fix it, but did not at first say how.  He returned later to say they would attempt some local fixing.  That was indeed attempted, but it was not very successful and more patches had developed, anyway, so he concluded it would not be satisfactory. 

4. He was then aware that the floor had been shot‑blasted and in fact saw it happening at one point, and thought that the machine appeared to be effective in removing the epoxy.  After it was done, however, he noticed that the floor surface was rough and undulating, and he was concerned about how a flat surface could be achieved.  On speaking to Bogers, he was told that the new epoxy surface would self‑level and cover the undulations, which he thought in some cases went down to a depth of five millimetres.  He recalled then that another epoxy coat was later applied and he said the resulting finish was “disgraceful” (p.312).  The surface was still rough and undulating, it was very shiny and looked terrible.  He said Bogers was then told that it was unacceptable.

5. He recalled that the defendant later attempted to level the surface in one area, but he could not recall the sequence of events and was not sure who carried out that work.  He was interested only in what the direct contractor, the plaintiff, could do for them.  He said that, in the end, the floor finish obtained by the plaintiff was acceptable.

6. In cross‑examination, he denied ever having discussed the question of a high‑gloss finish with Bogers and said that all that Bogers had been told was that the finish had to be similar to that shown to him in Buildings 65 and 102, where the finish was non‑slip and of a matt finish.  He agreed that the references in P8 and P9 to acid‑resistant concrete and the involvement of Cementaid at the batching plant and at the pour gave his company confidence.  He further agreed that at about that time, he was attending work as many as seven days a week.  He did not watch the original concrete pour or whether it was sprayed, and could not provide details of every inspection he made of the floor. 

7. He did not recall being introduced to Mr Boyce, nor how the epoxy was mixed, although he knew that once mixed, it had to be applied fairly quickly, so it was therefore mixed in small amounts.  He only saw the first application some few days after it was completed.  He did not know when the roller door was put in place, but remembered that there was black polythene in place somewhere in the building when he first inspected the coating.  He was not sure whether it covered the northern doorway.  He did recall a time when there was nothing in that doorway, but he could not remember whether or not the floor was then painted.

8. He described some colour leaching spots he saw near the door opening, but the floor was then dry.  He thought Bogers had first drawn their attention to it and he said it would have worried him if he had known the floor had become wet whilst curing or if colour would bleach whenever it became wet.  He was then asked: 

   “Q...... Do you recall an occasion when someone suggested that clear layer, another coat of clear epoxy could be put over the top to stop any potential for leaching colour.

   A.No, because leaching wasn’t really an issue to be perfectly honest.” (p.323)

He was focussed on the problem of non‑adhesion.  He saw WSGB arrive and saw their operative at work, but was not aware a trial run was done, nor was he aware of the operator stopping and complaining about damaging the floor.

Philip McGowan

1. The plaintiff next called Philip McGowan, the State Manager of a company identified as “Epirez”, a manufacturer of epoxy resins and grouts.  Mr McGowan had been employed by that entity for some 25 years, and related how Bogers contacted him in February 1997 and how he agreed to go and inspect the floor of Building 64.  When he got there, he saw a terrazzo grinding contractor removing an epoxy coating on the floor.  There were some untouched areas and he could see that there was pitting and bubbling of epoxy over those areas.  The surface was, there, very uneven, with highs and lows, and although he did not measure the differences between them, he thought it was as much as three millimetres.

2. He understood that the plaintiff’s requirement was that the floor be flat and, having seen it, he concluded that the only way a level surface could be obtained, even over the ground areas, was with a self‑levelling epoxy.  He explained that not all epoxy resins were self‑levelling and, indeed, they required specific formulations to achieve that.  Such applications were more expensive than a standard roll coat, not so much because the costs of the basic materials differed, but because the application had to be as much as six times thicker.  He would use a self‑levelling mix not merely where the surface was uneven, but also because, on occasions, extra thickness was required for wear reasons.  On an uneven surface, a self‑levelling epoxy provided a flatter, smoother finish.  Another option was a trowelled topping, but that was very labour‑intensive and would cost much the same. 

Michael Larecki

1. The plaintiff then called Mr Michael Larecki, a ceiling fixer and a person who performed sub‑contract work for it on the DSTO refurbishment.  He had worked at Building 64 for most of January/February 1997 and was there when the concrete was poured.  He said it was afterwards treated by the application of some form of silicon.  After the last of it was laid, he saw the first and each successive epoxy coat.  He recalled walking upon the completed coating within a matter of days of the last coat.  He was with Bogers, who dropped a coin on the coating and it chipped.  He then put a spatula under the chip and it easily lifted the coating.  They repeated this process several times randomly over a substantial part of the floor area and the results were similar on most occasions they dropped the coin.  He also saw some colour bleeding from the coating near the position of the roller door. 

2. He was aware that that coating was subsequently removed by a scabbling machine, which he thought operated as a mass of pumping needles, and he observed afterwards that this had effectively broken the concrete surface and exposed the aggregate.  He did not hear the machine operator or anybody express any concern about that.

3. In cross-examination, he agreed there was dampness where the colour was seen to be leaching from the epoxy, but he could not remember who swept water from the floor.  He could not remember whether the roller door was then installed, but said there was not a lot of water there, it was a patch.  He did not meet the person who used the scabbling machine, nor did he know who instructed the operator, nor did he see the operator conferring with anybody else.

Terry Leonard

1. The principal of Austcoat, Mr Terry Leonard, was called.  He spoke of having 25 years’ experience in the industry, applying coatings to steel and concrete materials.  He said he principally used Epirez products, but not exclusively.  He told of being approached by Bogers to inspect the floor and to recommend the most suitable course to rectify it.  He described the floor after the second epoxy coating in much the same manner as it has previously been described, and he said he advised the plaintiff to use a self‑levelling system to correct it, in particular the Epirez system.  He said the ruts in the floor were in some cases up to seven millimetres deep, but were generally in the two to three-millimetre range.  He said before the general coat was applied, they used self‑levelling Epirez product to build up the lower, or depressed, areas in the floor.  The system involved applying a prime coat and then a three‑millimetre epoxy topping.

2. He said when that work was completed, the floor was deemed to be too slippery, so he advised the application of a silica carbide roll coat to provide non‑slip properties, and that was done.  He said that Epirez self‑levelling epoxy always produced a hard high‑gloss finish.

3. In cross‑examination, he said he had not had much to do with the defendant’s Supershield 100 product.  When he had first seen the floor, he could not comment on the glossiness of its finish, as he was working on it and there were water and other materials on it.

Steven Hockenhull

1. Finally, the plaintiff called Steven Hockenhull, its site supervisor on the DSTO contract, in particular the work on Building 64.  He spoke of Stage 1 of the project.  He was present when the concrete was poured.  There were five pours and he said that some sort of chemical was added or applied to it, but he did not know what it was or where it came from.  Some of it was put in the concrete trucks and some was sprayed as a film on the concrete with a pump action sprayer.  He thought there was a five‑day curing time, after which three epoxy coats were applied, and three days later he walked on the surface with Bogers and, he thought, Dunn.

2. He saw blisters on it and described the epoxy as lifting from the surface in patches over the entire floor area.  There was no particular area where bubbling was concentrated.  He saw Bogers and Dunn drop coins on the epoxy in various places and it chipped and flaked.  He then saw scrapers used to see if it lifted, and it lifted easily.  He said Dunn and Bogers were discussing a way of resolving the problem.  They conversed on several occasions over a number of days.  He did not particularly listen in, but he did recall Dunn saying that it was not necessary to remove the whole floor and that it could be fixed.

3. He then observed repair attempts, including scraping and attempts to cut back the epoxy.  It was primed and repainted, but it still lifted.  He then saw grinders used to flatten the surface.  He described the grinder as like a terrazzo grinder.  He said it was not very effective and the grinder hardly touched the floor.

4. He then recalled escorting to the building a man from WSGB with a “sand‑blaster”, as he described it.  It was used and was more effective than the grinder.  He saw the operator do a test run.  Bogers was present, as was Dunn and, he thought, Boyce.  The trial run lifted all the resin and left the concrete with very small pits, like it was roughened up.  He then saw Dunn, Bogers and Boyce talking.  He did not hear what they were saying, but he next knew that the WSGB operator was given the go‑ahead to do the whole floor.  He did not know who gave it, but it followed a conversation between Bogers and Dunn. 

5. He was then on site while the grit blasting was occurring and it appeared to be removing the epoxy coating, but he did not take too much notice of it as he had his own work to do.  He soon afterwards left the site and at that stage had not seen anything untoward about the state of the floor.  He returned to the site on the following day, but again did not take much notice of it and saw nothing untoward.  He was attending to other matters.

6. On the third day of that work, he went to the site and he then noticed that the concrete floor was gouged with hollows and badly pitted.  It had small cracks.  Some of the gouges were about three millimetres deep.  He was concerned and called in  Bogers either that day or the next.  Bogers was aware of it.  He was present, on that day or the next, when Dunn, Boyce and Bogers met at the site.  He recalled that Dunn said the problem could be fixed using a filler mixed with epoxy resin, but said it made the covering three times thicker.  Dunn said that it self‑levelled.  Soon afterwards, it appeared that that advice was implemented and further epoxy was applied.  After it was finished, there were several further meetings between Dunn, Boyce and Bogers, at which he was also present.  In those meetings, neither Dunn nor Boyce said they were satisfied with the floor finish, but he could not remember whether any further action was then recommended.  He said the floor was then as depicted in the photographs Exhibit P15.

7. He remembered then that a further remedial test was undertaken on a six‑square‑metre area of the floor.  It was taped off and it was repainted with epoxy, using a spatula, rollers and a spray.  None of those methods was successful in achieving a better level.  The floor surface still had hollows and pitting, and it was lifting.  After that, he did not know what the defendant did, but was aware that Austcoat came on site.

8. He was cross-examined about the roller door, but he did not know when it was in place in the northern wall.  He said that black polythene plastic was used to cordon off doorways to keep the dust out.  He was not able to say whether it was over the northern door, but it could have been, nor could he remember whether there was scaffolding near that door.  He did not see any rain on the floor after the first epoxy coatings; in fact, he did not recall it raining at that time.  As to the colour problem, he said there were a couple of different colours showing, but he did not know if that was due to the application.  He was not told that colour was leaching from the material.

THE DEFENDANT’S CASE

1. In opening the defence case, its counsel said that his client’s contention was that the decision to lift the original epoxy coating was made because of the problem of colour separation alone.  In consequence, the plaintiff’s case being based on the adhesion problem, it must necessarily fail.  Alternatively, he said, if it were found that the decision was made as a consequence of both the colour problem and adhesion, the plaintiff still faced the same difficulty with causation.  His client further contended that the shot‑blasting was carried out on the instructions and with the approval of the plaintiff, and that a person from WSGB would support that.  Accordingly, the plaintiff had to accept responsibility for it and was the author of its own misfortune.

Keith Boyce

1. The defendant called Keith Boyce, painter and decorator, who sub‑contracted with the defendant to apply the original epoxy flooring to Building 64.  He said he was provided with Supershield 100 by the defendant, and he had used it before quite a few times.  He described how it was a mix of two substances and had to be applied quickly, as it set within 20 to 30 minutes.  In this instance, he had used three men with rollers to apply it.  Prior to its application, he had seen the floor cleaned by the plaintiff’s contractors using a machine. 

2. At this point in the evidence, it was agreed between the parties that the defendant had applied the first batch of epoxy resin in the three days commencing on 30 January 1997, that that work was inspected on 3 February 1997 by Boyce, Dunn and Bogers, and that the shot‑blasting had commenced on 7 February and continued until 9 February 1997.

3. Boyce said that the first epoxy coat was applied in normal hours, although the day was very hot.  On the second day, he and his other applicators observed there was some colour separation as they applied that coat.  They did not tell anybody apart from Dunn, whom he phoned about it.  He said that on the third day, as they applied the next coat, there was more colour separation occurring.

4. He said that it had rained overnight between the second and third coats, and when they had returned on the third day to put on the third coat, there was water on the floor, which, with the colour separation, looked like ink.  He said he “would have” phoned Dunn, who then came out there.  He said Bogers also came there, that Bogers was concerned about the matter and wanted answers, and, further, that Dunn was surprised.  Later, as his evidence progressed, it became clear from what he said and, indeed, from the evidence of all the other witnesses, that he was confused about the timing of these events and that he was describing a meeting with Dunn and Bogers which took place after all three coats of the first application had been applied. 

5. He said Bogers was also concerned about the adhesion of the epoxy to the floor.  He saw Bogers drop a coin on the floor and it chipped the epoxy coating.  Bogers then asked him what he thought and he (Boyce) took out a scraper and was able to lift the coat off where the chip was.  Bogers then asked him whether the whole floor was like that, saying he was very concerned it had not been laid properly.  Dunn intervened to say they would fix it and Boyce told Dunn he could fix it. 

6. Dunn then directed him to come back that night and lift up the coating.  In consequence, that evening he brought in a number of men and different sanding equipment, and they spent four hours working on it trying to lift the surface, but it was a waste of time.  Some areas would lift easily and others would not lift at all.  When Bogers saw it, he agreed with that.  They stayed there until 1 a.m. that night, but it was a waste because it was extremely difficult to remove the epoxy in those areas where it had adhered. 

7. When asked where the blistering was, he said it “was pretty much in front of the roller door entrance” (p.393), about three to four metres inside that entrance in an area of about twelve square metres.  He said the roller door was not in place at the time the three coats were applied, but there was an orange plastic covering over the door entrance.  It was fairly heavy‑duty plastic.  He did not know how it was secured, but there was a scaffolding nearby outside. 

8. On the following day, he had a meeting with Dunn and Bogers, and a shot-blaster operator Bogers had organised to do a sample run.  From his own observations, that sample run was very successful, because it took the epoxy coating off and did not damage the concrete surface.  He saw Bogers and Dunn speaking.  He did not remember their conversation word for word, but he said that the effect of it was that Dunn was reassuring Bogers that the job would be fixed, that the defendant would strip off and re-coat the epoxy.  He was then asked whether he heard somebody telling the shot-blaster operator to continue with his work and he said yes, he did, that he thought it was Dunn who said to the operator “carry on or words to that effect” (p.395).

9. Dunn then left the site and a short while later, the shot‑blaster Koch “hit some, what I would call soft spots, and he took the topping of the concrete right off”.   Koch then approached him about it and he then phoned Dunn.  He was then asked (p.397):

   “Q...... Was there anybody other than you that he approached.

   A.The chap that was working for me was there and I can’t remember if Ron was still on site or not.

   Q...... Can you remember whether Derek was on site or not.

   A.Derek had left, I think, but I’m not sure if we phoned or caught him before he got out the gate, but irrespective, it had to come off, and it was just left at that.

   Q...... Did you, personally, instruct the shot blasting person to carry on.

   A.I don’t recall personally telling him, because I was only supplying the labour, but it was a general consensus that it had to be done; the job had to be fixed, irrespective of what damage it was doing.

   Q...... Can you recall being part of a conversation with the shot blaster, yourself and somebody else, about the hitting of the soft spot.  Was there a conversation.

   A.Derek Dunn and I had a conversation with the amount of damage that it was doing.  On what particular day, I can’t remember, but I was concerned with the depth that it was going and I think Ron was concerned with it as well, and there was a solution that we would add a silica flour to the product to thicken it, to take out the indentations of the damage.”

   He left the site about half an hour after the shot-blaster operator resumed his work. 

At all events, he said the solution was later adopted to apply silica flour to the epoxy to take out the dips, and that was done. 

1. He returned to the premises on the day following and the shot‑blaster was still working.  There were patches where the shot‑blaster had not removed the epoxy and he and an employee worked that day manually scraping them off.  Dunn then came there and he had a discussion with him about mixing silica flour with epoxy and applying it “to various parts of the floor” (p.399).  That was done and he later recoated the floor twice.  After that, he had nothing more to do with it.

2. In cross‑examination, he explained that after shot‑blasting had been done, he first put on a simple epoxy coat and, on the following day, an epoxy coat with a flour mix.  He also agreed that the coin‑dropping test was carried out by Dunn and Bogers over different areas of the floor surface; in fact, most of the 1,500 square metre area.  He was then asked:

   “Q.     ... So, all the various areas were tested in this way, with the coin.

   A....... I think it was - yes, I can’t remember the exact amount, but he did it in a couple of spots, yes.

   Q.In a few spots.

   A....... Yes, a couple.

   Q.When the coin dropped, it chipped the epoxy resin coating on most occasions.

   A....... Yes.

   Q.On most occasions.

   A....... On several occasions, yes.”

Those answers cast some doubt on his earlier evidence as to the blistering being near the roller door only.

Graeme Cutting

1. The defence then called Graeme Cutting, a director of WSGB.  He said he was telephoned by Bogers in February 1997 concerning a problem with a floor at DSTO.  After discussing the problem, he said that his firm could remove the epoxy by shot‑blasting, but the matter was then left “ up in the air at that time” because he was not sure “whether he was going to got (sic) that way or not” (p.406).  Indeed, Bogers later rang and cancelled the proposed visit.  Later again, Bogers called, said it had to be done and asked for somebody to go out there.  He said his second‑in‑command went out there (Koch) to carry out a sample run, as they always do that. 

2. He did not, himself, ever go to the premises, but he later sent an invoice to the plaintiff for the work they had carried out there.  He said he had never had any contact with Cementaid, but had left matters to Koch, who was handling the job for the company.  He identified the invoice P14 as the one sent to Oasis.  He said that it was sent to the plaintiff “immediately after the job was finished”.

3. In cross‑examination, he was shown Exhibit P28.  He identified it as a copy invoice from his company (albeit that it was a very poor print) and he said he thought he had sent it to Cementaid after Bogers had directed him to do that.  He said the first invoice (P14) had been sent to Oasis and the invoice P28 had been later sent to Cementaid.  He said the date on each invoice was the date the job was done and not the date on which they were sent out.  He agreed his company’s invoices came from booklets of one hundred forms, numbered consecutively, and his attention was then drawn to the fact that the exhibit P14 was numbered 97 and P28 was numbered 90.  It was then suggested to him that the correct sequence was that Invoice No. 90 had been sent to the defendant at first and that No. 97 had been later sent to the plaintiff.  He said he did not think so.  He said that when the later invoice had been sent to the defendant, they had told him it was the plaintiff’s problem, that it was nothing to do with them.

4. He was then shown the exhibit P23, being a letter from the defendant to his company, which challenged the liability of the defendant to pay Invoice 90, not on grounds that it was properly payable by the plaintiff, but upon the basis that the work had not been carried out properly.  His first response before reading it was that that letter contained claims by the defendant that the liability attached to Oasis and not to it, but when he perused it, he was not able to point to any such passage.

5. He agreed that his company had instituted proceedings in the Magistrates Court against both plaintiff and defendant, and that Exhibit P23 had been attached to the summons in support of that claim.

6. He was then asked to read the exhibit P23 carefully and he did so.  He then said he had never seen the letter before and had no idea how it came to be attached to the summons.  It was put to him that it constituted an acknowledgment by the defendant that it had a contract with his company, but he said he had never contracted with the defendant.

7. He was then shown a copy of a letter his company had written to the plaintiff on 4 May 1997 (P29) and he said it affirmed that his company had been instructed by the plaintiff to invoice the defendant for the work.  That letter contained a passage to the following effect:

   “At all times, we were instructed by your applicator what to do and to keep going even though we pointed out to you and him that we might damage floor.”

8. On being pressed in further cross‑examination about the sequence of the invoices, he agreed that possibly he might have invoiced Cementaid before the plaintiff. 

9. It was then put to him that he had been told by the defendant that he would recover his fee only if he cooperated with the defendant in the action, but he denied that.  He went on to say that he had instructed his solicitors to sue only the plaintiff and not the defendant, and that his solicitors had not complied with his instructions.

John Koch

1. Mr Koch next gave evidence.  He was the assistant manager of WSGB and he recalled that in early 1997, he went to DSTO with the shot‑blaster to carry out some work there.  He had been operating the machine for some years.  He was sent there by Cutting.  He said he met Bogers at the gate and was shown by him to the floor of the building - this clearly conflicted with the evidence of Bogers and Larecki.

2. He said he was asked to conduct a trial run along the floor with the shot‑blaster, and he did that.  He was then present at a conversation between Bogers and another person, whom he said he knew vaguely was attached to the defendant.  He said the substance of the conversation was that, having looked at his sampling work, they considered it was acceptable and it was Bogers who then told him to go ahead.  He did not see the person from Cementaid after that. 

3. He said he began the work, but soon he noticed the floor began to rut and fall apart.  The machine was taking some of the top of the concrete off in particular sections, exposing the aggregate.  He said he stopped work and first spoke to Bogers, who said he did not know what was going on, so he went and got another person who came over and that person said to him “Carry on, we will fill it with product”.  He did not know who the other person was, but he nevertheless carried on with the work.  He said Bogers was there on and off during the time he did the work, but he only worked the first day and somebody took over from him for the remaining days.

4. In cross‑examination, he said that he did not know the name of the person who told him to carry on after the damage was first noted, but that person said that they would fill the floor with product.  He later discovered that person was the epoxy applicator.  He did not know his name, nor whom he worked for.  That person may have been present at the original conversation he had with Bogers and the representative from the defendant, but he could not say.  He affirmed it was Bogers who told him to go ahead after the original test and not the person from Cementaid.  It was put to him that he was instructed to proceed by the defendant and not the plaintiff, but he denied that.  It was put to him that he did not tell Bogers, as well as the applicator, about the damage to the floor, but he said he did.  He said that after that initial conversation, he several times told the applicator of the problem because Bogers was not about.  He had never seen the letter P23.

5. He denied he was asserting Bogers’ involvement in order to assist his employer to recover their debt.

6. He was shown the invoices P14 and P28.  He had been told by Cutting that an invoice had been sent to Oasis and that one was subsequently sent to Cementaid.  When the sequence of the invoices was put to him as being apparently contrary to that, he proffered that there were several invoice books.  He habitually took one with him when he went out on jobs and Cutting had one as well.  He got people to sign his invoices.  He then acknowledged that neither of the invoices shown to him were signed by him because he did not finish the job and that meant that he did not write either of them.  I inferred from that and the evidence of Cutting (who said nothing about a second book) that both invoices had come from the same book.

1. It was obvious, from his own evidence, that at the time of the relevant events, he had only been in his employment with the defendant for a short while and had very little experience in epoxy application.  On the one hand, he acknowledged that, but, on the other, he seemed prepared to express opinions, both at the time of the relevant events and later at trial, as to the suitability and various aspects of the work carried out by the defendant.

2. In his evidence dealing with WSGB, I felt Dunn deliberately sought to distance himself from responsibility for, and supervision of, the work that was undertaken by that contractor.  Contrary to the evidence of Bogers and the defendant’s own witness Boyce, he said that Bogers told Koch to go ahead, yet he acknowledged that he authorised the work and that the defendant would pay for it.  Further, he left his sub‑contractor (Boyce) at the site when the work began.  Finally, he said nothing as to Boyce’s claim (p.398) that he, Boyce, contacted Dunn and told him about the damage the shot‑blasting was causing.

3. As to the witnesses Cutting and Koch, I formed a very unfavourable impression of what each had to say.  Each purported to claim that the original invoice had been sent to the plaintiff and then, at Bogers’ request, had been redirected to the defendant.  When confronted by the sequence of invoice numbers, which strongly put that claim into question, Cutting was able to offer no satisfactory explanation and Koch postulated an explanation which fell apart under further cross‑examination.  Cutting’s denial of any familiarity with the same defendant letter of 12 March 1997 (P23) was equally incredible, given his role in the business and its attachment to the proceedings instituted by his company in the Magistrates Court.  I had grave reservations about the motives of each witness in seeking to support the defence proposition that the sand‑blasting work had been contracted for by the plaintiff.  Of course, Cutting was not in a position to give direct evidence about that because he was not on site at the relevant time, but his other evidence was quite unreliable and clearly tainted with self‑interest. 

   -  the contractual arrangements

4. In discussing legal issues, I deferred my reasons for finding that there was, here, an implied warranty that the completed work would be fit for the purpose for which it was intended. 

5. I am satisfied, however, that such a warranty was implied in the original contract and in each of its variations.  Further, for the reasons previously discussed, I am satisfied that that implied warranty was not excluded by the circumstances of any of those contracts, nor by any express provisions of them.  My reasons for finding such a term was implied are as follows:

6. Bogers gave unchallenged evidence of his discussions with Steve of Cementaid (NSW) Pty Ltd, wherein he provided specific details of the plaintiff’s requirements for the workshop floor surface, namely, that it had to be hard, able to withstand heavy machinery and trucks, acid and oil‑resistant, washable and of a clean‑coloured appearance so as to present an attractive floor to potential customers.  In response, he said, Cementaid (NSW) Pty Ltd forward the letter P5, a letter which purports to contain recommendations about products and their application.  The provenance of that letter was not challenged.

7. Interestingly, notwithstanding the difference in entities, by its Amended Defence, the defendant, at paragraph 8, effectively admitted that Cementaid (NSW) Pty Ltd was its agent, for the purposes of that communication, by itself accepting responsibility for the transmission of that letter (P5) to the plaintiff, along with brochures which contained the matters pleaded in paragraph 2.4 of the plaintiff’s Amended Statement of Claim.

8. The defendant thereby acknowledged that the plaintiff had, at the relevant time, made known the purpose for which the materials and work were required, that it had been called upon it to exercise its skill and judgment in making recommendations in response and that it had made them (i.e. in P5).

   I should stress that, save as I have just found, I have not considered that Cementaid (NSW) Pty Ltd was for any other purposes the agent of the defendant, nor vice versa.  My finding arises solely but expressly out of paragraph 8 of the Amended Defence.

9. The matter does not end there, however.  The plaintiff’s evidence, through Bogers, was that in a telephone call in late November or early December 1996, it made known to the defendant, through Dunn, the purpose for which the floor surface was to be used.  Whilst the defence denied this, Boger’s evidence about it was not challenged, nor, indeed, did Dunn say anything to the contrary. The defendant’s letter (P21 at paragraphs 6 and 7) itself acknowledged its sensitivity to the plaintiff’s requirement for a smooth, level floor surface suitable for a “heavy duty workshop floor”.  Unspoken in the plaintiff’s requirement for a suitable epoxy coating, but axiomatic, as I find it to be, was that the coating would, like any other paint or sealant, adhere to the surface to which it was applied.

10. The plaintiff showed the defendant a floor surface of a kind it was seeking to achieve and explained that the qualities its client sought in that surface were that it be clean, uniform and shiny.  As I have found, this is uncontested.

11. That the plaintiff again sought the exercise of the defendant’s skill and judgment can be inferred as well from the defendant’s response, which was to proffer further advice as to the appropriate product and its application (P11 and P12).

12. That the plaintiff, to the defendant’s knowledge, plainly relied upon that advice can be inferred from its acceptance of the defendant’s recommendation and quotation.

13. In summary, then, as to the contractual arrangements, I have found:

14. that the original contract was concluded between the plaintiff and the defendant by the plaintiff’s acceptance between 17 December 1996 and late January 1997 of the defendant’s quotation dated 17 December 1996;

15. that implied in that contract were terms which I am satisfied, in all the circumstances, were essential or fundamental to it, namely:

    (a).... that the defendant would perform the epoxy application in a good and workmanlike manner using materials of a good and sufficient quality and which were reasonably fit for their purpose;

    (b)that the completed work would be fit for the purpose for which it was intended, namely, the provision of a smooth, level and durable floor surface suitable for “a heavy duty workshop floor”;

16. that the terms of that original contract were varied by agreement between the parties on or about Friday, 7 February 1997, when the defendant undertook, at its own cost, to have the original epoxy coating removed and replaced.  Save as to that variation, I am satisfied that the original contract was to remain on foot so that the same terms remained implied in it (the first variation);

17. that the terms of that original contract were further varied on Monday, 10 February 1997, when it was agreed that, because of the damage caused to the floor surface by shot-blasting, the epoxy recoating would be varied so that a mix of epoxy and silica flour would be applied to the floor surface.  Save for that variation (the second variation), I am satisfied that the terms of the original contract, as varied by the first variation, remained and, in particular, that the same terms remained implied in it.

18. In the light of those findings, I have little difficulty in further finding that, if the original epoxy coating failed to adhere to the concrete floor for reasons unconnected with any neglect or intervention by the plaintiff, then that was the result of either its inadequate quality or poor workmanship, or both, and the result was, in any event, that it was not fit for its intended purpose.  

19. Finally, on this point, although it was not pleaded or argued by the plaintiff, it seems to me that ordinary common sense dictates that, irrespective of any statutory or common law, it must be implied in any contract for the “painting” of a surface, a term that the paint will, in fact, adhere.

    - the reason for removing the original coating

20. What, then, was the problem that arose after the application of the original coating of epoxy?  The plaintiff contends that the main problem was the lifting and bubbling of the epoxy coating over the entire surface of Stage 1 of the project, albeit that it concedes that colour leaching was also evident and that, too, was a concern.  The defendant, through Dunn, says that that lifting and bubbling occurred only in the vicinity of the northern roller door entrance to the building and that the plaintiff’s main concern was the colour problem. 

21. On the issue of where the lifting and bubbling occurred, I unhesitatingly prefer the evidence of Bogers and the witnesses Mangelson, Lander, Larecki and Hockenhull.  All described general bubbling and lifting of the epoxy surface over the entire area of the Stage 1 floor and most recalled the coin and spatula tests conducted randomly and which disclosed that non‑adhesion.  Their evidence was remarkably consistent.  Further, that the blistering was widespread is manifest not only from their evidence, but from the evidence of Dunn himself on the results of remedial works undertaken to strip the original coating.  As a result of the use, first of spatulas and then the sand‑blasting machine, the entire surface was seen to be in a “patchy” state. There were some areas where the epoxy held fast and others where it was successfully removed, even with scrapers.  That is consistent with the “patchy” non‑adhesion described by the witnesses mentioned above.

22. I reject the evidence of Dunn on this point, not merely because of my general reservations about his reliability, but because it smacked of reconstruction.  From his own evidence and diary notes, it appears that the problems he first identified were indeed discolouration and non‑adhesion near the roller door (see P31 - entries of 31 January and 3 February 1997), but it is all too readily apparent from the same source and, indeed, the evidence of almost every other witness, that these concerns were rapidly overtaken by the gradual and extensive delamination of the coating.  Dunn could not explain the change in tone of his notes on this topic from 5 February onwards and sought to interpret it as all or mostly relating back to colour problems.

23. He also appeared to have reached a fixed view about there having been no covering on the northern doorway when the epoxy had been laid, that that had been the cause of the non‑adhesion, hence that the blistering was only present in that vicinity.  Not only was that evidence flawed, as I have found, because there was blistering over the entire surface, but, in any event, I reject his evidence that there was no covering over that doorway at the time of the original epoxy applications.  I do so for these reasons:

24. because it was plainly contradicted by the evidence of other witnesses who were at the site at the time, namely, Bogers, Mangels, Lander, Larecki, Hockenhull (to a lesser extent) and the defence witness Boyce;

25. because in an apparent slip, Dunn himself (at p.448) acknowledged that water had penetrated the building notwithstanding the presence of a cover.

26. Further to that, Dunn was alone in having no recollection of the coin testing being conducted over the whole floor area, although he recalled a spatula had been used and he thought it had not been a fair test.

27. As I have noted, Dunn, himself, was at first confused about the distinction between pigmentation and bleeding problems.  He originally spoke of the problem as colour bleeding where the surface was wet, but he later expanded upon that to describe problems of streaky or uneven pigmentation in the epoxy. Clearly, there were problems of both kinds, but, as I have already observed, sensibly it can only have been of marginal interest to the plaintiff in circumstances where the epoxy was not adhering, anyway.

28. Finally, even the letter from Aldred (P20) on page 2, appeared to treat the colour problem as secondary:

    “In my investigation of the matter, so far, it appears that the job may have been rushed initially, not enough proper curing, not enough time to do proper surface preparation etc, aside from the poor colour batching of the epoxy itself.”

29. Dunn further sought to say that, as Bogers’ principal concern was the discolouration of the floor, he (Dunn) had proposed the application of another coat to cover it.  Bogers had been interested in that, he said, but required assurances as to it not quickly wearing through.  Dunn could not give them, hence removal was accepted as the only option.  That account of events was rejected by Bogers and, in the context of what I have found, it has no cogency.  Plainly, if wear had been the main concern, the application of more than one coat would likely have been discussed, yet Dunn did not purport to say it was.

    - WSGB

30. The circumstances of the involvement of WSGB in shot‑blasting work to remove the original coat and its performance of that work were very much in issue and are central to the determination of this matter.

31. It is uncontested that Bogers first contacted them.  Clearly, he then spoke to Cutting.  Bogers said that he then had misgivings about taking on a substantial role in remedying the problem, because he did not see it as his problem, and hence he delayed the proposed site visit of WSGB whilst he spoke to Dunn and Boyce.  That evidence is corroborated by Cutting’s own account of the telephone requests.

32. I find that, after then speaking to Dunn and Boyce, Dunn requested he have WSGB visit the premises and Bogers thereupon asked that they come. 

33. There is then no doubt, on the evidence, that Koch arrived at DSTO, undertook a short run of shot‑blasting and then waited whilst Dunn, Bogers and Boyce discussed the result.  Equally, there is no doubt that there was general consensus that the results of that trial were satisfactory. 

34. Dunn said that Bogers then instructed Koch to proceed, but only Koch supported that account.  Bogers said Dunn gave the instruction and Dunn’s sub‑contractor, Boyce, agreed with that.

35. Having regard to my generally adverse observations as to the credit of Dunn and Koch, and for the further reasons set out below, I find it was Dunn who told Koch to proceed.  That finding is not only consistent with the evidence of those witnesses upon whom I found I could generally rely, but with:

36. the unchallenged evidence that it was the defendant which undertook to meet the costs of WSGB; and

37. the further conclusion I have reached that WSGB sent its first invoice to the defendant.

Indeed, in this latter connection, I was surprised at the defence insistence that it was Bogers who gave the relevant instruction and became the contracting party when, clearly, even on its own account, it was given in the presence of Dunn, who had just agreed to bear the cost of the work.  Even were I satisfied that Bogers had given that direction, I would have had no trouble finding he did so as agent for the defendant.

- the WSGB work

1. The defendant raised a further issue as to this work by asserting that the plaintiff was present at relevant times during its performance and that, at a particular point, Koch approached Bogers, saying he was concerned about damage the process was causing to the concrete.  It contended that Bogers saw that pitting and rutting was being caused, but that he nevertheless instructed Koch to carry on and did not intervene to prevent damage. 

2. The source of that attack was the evidence of Koch himself, who said that when he realised the concrete was being damaged, he stopped work for a moment and told Bogers “and another bloke” (p.420) (who, I am satisfied, was Boyce) about it, showing them where the damage was.  Koch said that Bogers then said that he did not know what to do about it, but “the applicator” (“Boyce”), whom he “vaguely” thought (p.421) was from the defendant company, then intervened and instructed him to go ahead with the work, saying that he (Boyce) would fill it in.  That evidence did not match the defendant’s contention and Boyce’s evidence on the point did not assist it, either; indeed, Boyce directly implicated the defendant in the decision to continue notwithstanding the damage. 

3. For his part, he (Boyce) recalled Koch hitting some soft spots and damaging the concrete surface.  Koch then approached him.  His workman was with him, but he could not recall if Bogers was still on the site.  In consequence, he telephoned Dunn to tell him about it.  He could not remember if he caught Dunn at the gate or not, but “irrespective, it had to come off, and it was just left at that” (p.397).

4. Boyce could not recall specifically telling Koch to go ahead, but “it was a general consensus that it had to be done; the job had to be fixed, irrespective of what damage it was doing” (p.397).  He returned to the site on the following day and saw that damage was still occurring.  He called in Dunn to see it.  He and his workman then concentrated on removing patches of epoxy which the blasting had not lifted. 

5. Bogers, for his part, denied that he had any conversation with Koch about damage and his denial is not inconsistent with Boyce’s evidence.  It conflicts directly with Koch, however, albeit that Koch affirms it was not Bogers who told him to continue.

6. I have already commented on the reliability of Koch’s evidence.  Because of my general confidence in Bogers (corroborated, again, by Boyce), I prefer his evidence that he was not present when Koch drew attention to the damage.  I am satisfied that it is likely that Koch approached Boyce and received instructions from Boyce in the terms he related, Boyce having, in the meantime, discussed the matter with Dunn.  In any event, whether Boyce was authorised by Dunn to give those instructions is not to the point.  Dunn had instructed WSGB to perform the work and I am satisfied that the defendant is accountable for whatever happened after it commenced.

   - the condition of the floor after shot-blasting and what was then agreed

7. There was a consensus on the pleadings and the evidence that after WSGB departed, the floor was in a pitted and rutted condition.  Dunn purported to attribute that, at least in part, to imperfections in the concrete left by the pouring contractor, but their existence was disputed and not supported by Boyce.  In any event, were the same present, they would never had been exposed save for the need to remove the original epoxy coating and the work performance of WSGB, for both of which problems I have found the defendant was accountable.

8. As I have already found, there was then a second variation to the original contract, whereby it was agreed that the epoxy/silica flour mix would be applied to the rough surface left by WSGB.  In evidence, Dunn said the epoxy/silica suggestion came from Boyce and that Bogers took it up, whereas Bogers said the proposal actually came from Dunn, who said it would achieve a smooth, flat surface suitable for a heavy‑duty workshop floor, albeit that he acknowledged he agreed to it being done.  Whilst I find it was Dunn who proposed the solution, the source of the proposal is really  immaterial.  All three were present and there is no doubt, and I find, that Dunn, whether directly or through Boyce, represented to Bogers, who relied upon that representation, that the defendant would by this method achieve a flat, smooth surface suitable for a heavy‑duty workshop floor.

9. I have then considered paragraphs 4.4 of the Amended Statement of Claim and 20.5 of the Amended Defence.  I am satisfied from this and the evidence that, in conjunction with these remedial works, the defendant expressly warranted that they would remove the undulations and “provide a flat finish” (paragraph 20.5). 

10. If I am wrong in finding that that warranty was an express one, I am nevertheless satisfied that the defendant’s use of those words implied that such a result would be achieved.

    - the results of the epoxy/silica application

1. On the plaintiff’s case, the application of the epoxy/silica mix did not achieve a flat or smooth finish and, according to Bogers, simply emphasised the undulations in the floor.  It was rejected by BAL and he made that fact known to the defendant.

2. By paragraph 21 of its Defence, the defendant pleaded that that mix was applied to the floor “in accordance with the directions of the plaintiff” and “that the floor as finally laid by the plaintiff (sic) complied with all Australian standards for the application of epoxy resin coating to concrete floors”.  In P21, Aldred suggested this, adding that it was “fit for the purpose you contracted Cementaid for”.  Neither that pleading nor the letter was supported by the evidence of Dunn, nor by a number of other concessions in the two letters (P20 and P21).  It is quite contrary to all other evidence in the matter and, pointedly, no evidence was led from the applicator himself, Boyce, supporting it.  Of significance, too, is that after that mixture was applied, the defendant continued to press for the opportunity to rectify it. 

3. I am satisfied, and find, that the finish obtained by the application of the epoxy/silica coating, did not comply with the implied terms in the original contract as twice varied, nor the defendant’s representation as to its likely effectiveness, in that the resulting finish was not fit for its intended purpose.

   - termination of the contract

4. The plaintiff allowed the defendant the opportunity to demonstrate its capacity to rectify that last application and a test area was done, but I am satisfied from all the evidence, in particular that of Bogers, Mangelson and Hockenhull, that the result remained unsatisfactory and unfit for the intended purpose.   It was at that point that the plaintiff decided to terminate the contract. 

5. I am satisfied that, in all the circumstances, it was entitled to do so.  The defendant had at first failed to apply epoxy which satisfactorily adhered to the floor surface (and, as I find, incidentally, had provided a product with defective pigmentation).  It had then undertaken to remove that coating manually, but that had failed.  It had then sought to use a terrazzo grinder, but that had failed.  It had engaged WSGB to shot‑blast the floor, but had failed to adequately supervise its activities so that the floor was badly scoured.  It had then proposed levelling the surface with the epoxy/silica solution, but that had failed.  It had undertaken the repair of a test area, but that had proved unsatisfactory.  Mr Aldred of the defendant company, in connection with a final attempt at rectification, had said he would come to Adelaide, but had failed to come. 

6. At every point, the floor was plainly in a condition which was unacceptable to BAL. 

7. I have already found that, at the very least, the application of a smooth, level surface capable of serving the needs of a heavy‑duty workshop was an essential condition of the original contract and its variations, and I am satisfied that in those circumstances, the plaintiff had reasonably “lost faith” in the ability of the defendant to complete the works, that it was entitled to terminate the contract and could not reasonably be expected to have entertained the further requests of the defendant (P20 and P21) to carry out further rectification.  Its conduct, in so doing, was not unconscionable.

Causation

1. The plaintiff’s damages claim is based upon the costs and expenses it allegedly incurred in rectifying the problems which I have found remained after completion by the defendant of its works pursuant to the second variation - in short, the cost of restoring the surface to a condition fit for its intended purpose. 

2. The claim as pleaded relies upon the warranty I have found was given by the defendant on 11 February 1997 that the result of the epoxy resin/silica flour mix would meet the intended purpose of which it knew and on which it advised, of obtaining a smooth, level floor surface for a heavy‑duty workshop.  I am satisfied that that warranty did form part, and became a condition, of the second contract variation and that, for the reasons I have mentioned, it was breached by the defendant. 

3. I am further satisfied, in any event, that the failure of the defendant to apply a satisfactory surface with the epoxy/silica coating breached further terms implied in the contract either that the materials supplied would be of a good and sufficient quality and fit for their purpose or that the work would be carried out in a good and workmanlike manner, or both of them. 

4. Whilst the plaintiff pleaded (paragraph 3.3) that it was induced to enter into the original contract by certain representations made by the defendant, it did not seek specific relief in consequence of that and I am not minded to further deal with that question.

5. Finally, for whatever relevance it may have in the light of Astley v Austrust Limited (1999) 197 CLR 1, I am satisfied that the plaintiff has not caused or contributed (contractually or tortiously) to the problems of non‑adhesion, the results of the WSGB work or the failure of the silica/epoxy coating.

6. For these reasons, I find the plaintiff is entitled to recover from the defendant the reasonable cost of restoring the floor to the condition contracted for.  I thus move to the assessment of damages.

DAMAGES

1. I shall deal with the various heads of damage claimed in their order in the pleadings:

2. Manual stripping of the epoxy in areas where the diamond grinder was not effective - $2,500

   Bogers said, in this respect, that he, an employee and the site electrician spent two days at this work in order to prepare the floor for the Epirez coat.  The electrician’s account was, he said, later adjusted for this contribution.  No details of that were produced, however, nor was the electrician or his employee called.  Bogers had not kept time or payment records for any of this work.

   I am thus not satisfied he has proved the asserted loss of $2,500.  I am, however, satisfied and, indeed, it was unchallenged, that the asserted work was done and that Bogers and his employee spent between 12 and 20 hours on it.  The applicable rate of remuneration then for unskilled labour was at least $15 per hour.  Doing the best I can, I will therefore allow for a total of 32 hours’ labouring work at $15, a cost of $480.  I award that sum under this head.

3. Diamond grinding cost - $12,000

   I am satisfied that this cost was properly incurred and paid, and I will allow the full amount.

4. Repainting pillar and wall damage - $3,600

   The plaintiff’s evidence on this claim was quite unsatisfactory.  A painter’s account for $11,100 was produced and Bogers purported to say that the plaintiff’s claim of $3,600 was his estimate of the proportion of that account attributable to repair and repainting works resulting from the diamond grinding.  I am not satisfied that loss was proved and on what was before me, I can make no valid attempt at assessing any other sum.  This part of the claim fails.

5. Removal of  slurry - $2,080

   This cost I find was properly incurred in cleaning up from the grinding work and I will allow it as claimed.

6. Site supervision and escorting - $9,600

   Bogers purported to say this was an estimated overhead cost borne by the plaintiff in connection with facilitating the repair works.  No particulars were provided in respect of it, however, and the most I am prepared to allow is a nominal amount for the time I accept Bogers would have expended in arranging contracts, facilitating site access and some supervision of sub‑contractors involved in repair works.  Based on a $15 per hour rate, I will allow $300.

7. Resurface costs - $58,100

   At trial, it emerged that the raw cost of this work, after an early payment discount, was $56,500.  Even so, the defendant challenged part of the invoice, an amount of $6,500, which related to the application of a non‑slip coating of Epirez Supatuff HD, contending that it was never part of the original remedial contract with Epirez and was an “afterthought”.  There was merit in that challenge.  The plaintiff never established that the original contract with the defendant, or as twice varied, had promised a non‑slip surface.  Indeed, from all the evidence and particularly the observations in paragraphs 9 and 10 of P21 (made at a time before this emerged as an issue), it became apparent that the Supershield 100 coating had been destined to yield a high‑gloss finish.

   The plaintiff has not established that this part of the remedial works was a loss consequential upon the defendant’s breach, and I will not allow it.

   I will therefore apportion the $1,600 discount to each of the separate Austcoat claims and allow damages under this head of $50,200.

8. In summary, then, damages are assessed as follows:

   (1)........ Manual stripping  $480

   (2)........ Diamond grinding  $12,000

   (3)........ Repainting   Nil

   (4)........ Slurry removal  $2,080

   (5)........ Site supervision and escorting  $300

   (6)........ Resurface costs  $50,200

   ............. _______

   ............. $65,060             _______

9. Against that total should be debited the amount of $31,000 which the plaintiff was, pursuant to the original contract, destined to pay in any event.

10. I therefore assess damages at $34,060 and there will be judgment for the plaintiff in that amount.  I will hear the parties as to interest and any consequential orders.