Cryer v Flocchini

[2017] NSWDC 247

District Court

New South Wales

Medium Neutral Citation:	Cryer v Flocchini [2017] NSWDC 247
Hearing dates:	1, 2 June 2017
Date of orders:	02 June 2017
Decision date:	02 June 2017
Jurisdiction:	Civil
Before:	Neilson DCJ
Decision:	Verdict and judgment for the plaintiffs against the defendant for $665,765.46  Defendant to pay the plaintiff’s costs
Catchwords:	CIVIL – CONTRACT – Oral contract between farmers and a concreting contractor to construct slabs for new dairy bails, a fodder shed and a concourse between the existing dairy bails and the new dairy bails – 40% of concrete supplied did not comply with stipulated hardness/durability of 32 mpa – Defective worksmanship – Evidence required defendant’s work to be demolished and concrete disposed of and new slabs to be created to comply with plaintiff’s requirements – Claims for consequential economic loss
Category:	Principal judgment
Parties:	Gregory John Cryer (Plaintiff) Dean Flocchini (Defendant)
Representation:	Counsel: Mr C Simpson (Plaintiff) In person (Defendant)
File Number(s):	2016/204854
Publication restriction:	Nil

Judgment

1. HIS HONOUR: The plaintiffs, Mr Gregory John Cryer and his wife Joanne Marie Cryer, are dairy farmers.  They purchased a rural property near Casino in April 2014.  The address of that property is 135 Lees Lane, Hogarth Range.  When the plaintiffs purchased that property, it was a functioning dairy.  It had on it an old milking shed, which Mr Cryer refers to in his affidavit as "the old dairy".  It would appear that the technical name for a milking shed is "dairy bails".  The old dairy had been constructed about 50 years ago.  It only permitted the plaintiffs to milk six cows at any one time: there were only six milking bails in the old dairy.  The property, at the time it was purchased by the plaintiffs, carried 75 milking cows.  To maintain 75 milking cows, the total number of cows was 100. 25 cows are pastured for a break from milking at any one time. In the old dairy, it took ten minutes for each cow to be milked.  After a cow has been milked, it took several minutes to disconnect the milking equipment and release the cow into the paddock.  It then takes further time to connect the next cow to the milking equipment and thus the herd of 75 milking cows must be processed each morning and each afternoon. 

2. In par 10 of his affidavit, Mr Cryer said this:

"Milking a herd of 75 cows in the Old Dairy currently takes a minimum of three hours per milking with two operators.  The cows are milked twice each day.  The old dairy requires six hours total labour, minimum, for two operators each to undertake milking of 75 cows.  On most days, the total time spent milking exceeds eight hours."

There is no evidence that up to the present time Mr Cryer and his wife employed anyone to assist them in operating the dairy farm.  The inference to be drawn from the evidence is that it is Mr Cryer and his wife who in fact spend eight hours, at least, each day milking the herd of 75 dairy cattle. 

3. When he bought the property, it was the intention of Mr Cryer and his wife to increase the herd of milking cows to 150 by March 2015. That would require an increase in the total herd number to 200 cows.  The plan developed by the Cryers was to construct a new milking shed which Mr Cryer referred to as "the new dairy" and which could be described as "new dairy bails". In par 22 of his affidavit Mr Cryer pointed out that the new dairy would enable him to milk the herd of 150 milking cows in approximately one‑quarter of the time that it currently takes him to milk the 75 cows using the old dairy. 

4. The design of the new milking shed was described as a "double‑up herringbone pit layer" which would allow 24 cows at a minimum to walk into stalls, 12 on each side of a central pit to be milked at the same time.  Thus, 24 cows could be milked at any one time compared to the current six cows.  The idea of the central pit within the milking shed would be to enable the operator to walk into the pit and be in a lower level behind the cows which would make it easier to connect the milking equipment to each cow and, likewise, to disconnect the milking equipment from each cow.

5. In addition to building the new dairy or new dairy bails, the plaintiffs also wished to erect a fodder shed.  This was a shed which was 12 metres x 9 metres.  It was, in essence, a rectangular building which would have shelving down each long side.  In par 43 of his affidavit Mr Cryer said this:

"On the shelves [would be] grass seed/barley sprout mats or 'biscuits'.  The biscuits are watered on a regular basis from an internal irrigation system fitted above the shelving.  The runoff from the irrigation system is collected on the floor and drains to the rear of the shed where it is drained into a holding tank to be recycled for further irrigation."

The shed was to have a door at each end to allow a tractor to drive into the shed and park between the two rows of shelving allowing the tractor to load the feed and then drive out the other end of the shed.  The width of the door at each end of the narrow side of the shed was 3.4 metres and, as I understand it, there was to be a central drain such that the water that overflowed from the watering of the biscuits on the shelving would drain into the centre of the shed, then towards the rear door.

6. The plaintiffs did not engage an architect or builder.  The plaintiffs obtained plans both for the milking shed and the fodder shed from "Wide Span Sheds" which, in essence, supplied kit sheds which were to be used to form both the milking shed and the fodder shed.  To erect those kit sheds, the plaintiffs needed to have formed up for them appropriate concrete slabs.

7. The defendant is a concreting contractor.  In addition to the two slabs, the plaintiffs required a concrete concourse to be built between the "new dairy" and the "old dairy".  There were accordingly three different concreting jobs but essentially they were to be carried out during the same lot of work.  There is no dispute that a contract was formed between the plaintiffs and the defendants whereby the defendant undertook to carry out the works required by the plaintiffs for a total sum of $46,610.

8. The defendant commenced work towards the end of October 2014.  The initial work has been described by Mr Cryer as "preliminary work".  During that preliminary work Mr Cryer and the defendant marked out the boundary of the slab of the new dairy with a string line.  Also placed was a string line down the centre of what was to be the pit to indicate the centre line of the pit.  Shortly after that, the defendant arranged for an excavator to attend the property to dig the pit. 

9. Unfortunately, the excavator dug the pit using the string line not as the centre line of the pit but as one side of the pit which is described by Mr Cryer in his affidavit as the "northern boundary of the pit".  That could have been observed by Mr Cryer during the excavation.  It does not appear to have been detected by Mr Cryer nor was it the cause of any complaint by Mr Cryer prior to the defendant’s performing his concreting work.  According to par 60 of Mr Cryer's affidavit:

"This has caused the Dairy Slab to protrude into the road area where the milk tanker drives and turns around.  It is difficult for the milk tanker to do so."

However, in my view, nothing turns on this mis‑positioning of the central pit because there is no evidence that suggests that the road area could not be extended so that the milk tanker could drive and turn around without difficulty on the plaintiffs' property. 

10. Thereafter further work was performed in accordance with the oral agreement reached between the plaintiffs and the defendant. The defendant completed the work to his own satisfaction in November of 2014.  That can be gleaned from par 6 of the statement of claim which has been admitted by the defence.  Paragraph 6 says this:

"The defendant commenced the concreting work in late October 2014 and purported to complete it in November 2014."

11. A dispute has arisen as to the quality of and the workmanship of the work performed by the defendant.  Of the agreed consideration for the defendant's work, $46,610, the plaintiffs have only paid to the defendant $20,260.  It has been conceded by learned counsel for the plaintiffs that the plaintiffs must allow, against any damages they recover, the sum of $26,350 which they ought to have paid to the defendant for the work the defendant did.

12. These proceedings were commenced by statement of claim filed here at Lismore on 6 July 2016.  The plaintiffs obtained default judgment on 7 December 2016.  On the following day, a defence was filed electronically.  The defendant then moved to have the default judgment set aside.  On 20 February 2017, Levy DCJ set aside the default judgment and deemed the defence filed electronically on 8 December 2016 to be a defence to the statement of claim.  His Honour then made certain orders by consent.  Eventually the matter was set down for hearing at these sittings. Shortly before the commencement of these sittings the solicitors acting for Mr Flocchini, the defendant, filed a notice of ceasing to act.  That occurred on 17 May.  When the matter was called over at the commencement of these sittings on 29 May 2017, there was no appearance by or on behalf of the defendant and I left the matter in the list.  Mr Flocchini, together with his wife, appeared before me on Wednesday and I advised them that I would hear the case yesterday.  Yesterday, at 5pm, after hearing the evidence and what the parties wished me to take to be their addresses, I indicated that I would give judgment today.  However, this morning, Mrs Flocchini is taking judgment on behalf of her husband.

13. It is to be noted that the only positive thing done on behalf of the defendant was the filing of a defence.  No evidence was filed or served by the defendants and the defendants gave no notice that the deponent of any affidavit served by the plaintiffs was required for cross‑examination.  Nevertheless, Mr Cryer entered the witness box and answered certain questions in cross‑examination put to him by Mr Flocchini. The other evidence before me, that of a building expert, Mr David Oake, and an accountant, Mr Collin Hancock, is undisputed.  No evidence has been adduced by the defendant because the defendant failed to comply with the appropriate directions given by the Court.  I advised the defendant that he could apply for an adjournment if he wished to seek alternative legal representation but the defendant advised me that he did not have sufficient money to retain another solicitor and that he was uninsured for any liability that he had to the plaintiffs.  The evidence, accordingly, before me is all one way.

14. A number of alleged defects in the work done by the defendant has been identified by the plaintiffs.  Those alleged defects are the subject of the report of Mr Oake of 28 April 2016 which has been attested to by Mr Oake's affidavit of 8 March 2017.  A number of points at the commencement of Mr Oake's report should be noted.

15. Australian standard 3600 relates to concrete structures.  Section 4 of that standard indicates that concrete structures should have a durability or design life of between 40 to 60 years.  The following two paragraphs of Mr Oake's report are these:

"[14]  The Dairy building is recognised as being an 'animal husbandry' facility and is subject to high levels of organic acids from cattle urine and faecal matter, also known as animal slurry.  The protection of the steel reinforcement embedded within the concrete [from] the animal slurry is critical for the durability and/or serviceable life of the building.  A secondary matter is the durability of the concrete surface from wear and tear by the hoofs of the beasts being processed twice daily through the building.

[15]  The Fodder Shed is a storage facility and is subjected to organic acids from the stored chaff.  The durability of the concrete and surface hardness is important to penetration of the organic acids into their reinforcement steel and to prevent degradation of the concrete slab from typical use, including the manoeuvring of tractors across the concrete surface."

16. According to the evidence of Mr Cryer, the defendant agreed to build the slabs in question with a hardness or durability of 32 mpa (megapascals).  However, the invoices directed by Graham's Concrete Pty Ltd of Kyogle to the defendant indicate that of the 78.2 metres of concrete actually delivered by Graham's Concrete Pty Ltd to the defendant at the plaintiffs' premises 39.4% was only 25 mpa and 60.6% was 32 mpa.  Accordingly, almost 40% of the concrete was below the agreed durability or hardness which these concrete slabs called for, both because of the weight that they needed to carry and the constant use, twice daily, for the milking of 150 milking cows as far as the milking shed was concerned and for the constant wear and tear of a tractor as far as the fodder shed was concerned.  As far as the concourse was concerned, that, again, would be traversed by the milking cows and that required the same durability and hardness as to the two slabs.

17. Mr Oake's lengthy report deals with each of the objections, raised by the plaintiffs, with the work done by the defendant but many of those objections I do not need to deal with.  The first major defect is that the plaintiffs' plan clearly showed that the surface water in the milking shed was to drain away from the central pit and towards the outer edge, the outer long edge, of each slab.  After detailing this allegation, Mr Oake said this:

"[35]  Digital images provided by the Owners of bucket‑testing the drainage pattern conclusively show that the specified drainage contours have not been provided by the Contractor and have failed in the following ways:

‑ the surface of the concrete slab down does not effectively slope from the pit to direct surface water towards the slab edges

‑ surface water on the western side of the pit can track towards and flow back into the pit

‑ the edges of the concrete slab have not been contoured to provide a 500 mm wide shall dish drain to effectively collect and direct surface water towards the south‑east corner.

[36]  The result of the simple bucket test that surface water from the upper slab surface would drain into the Pit and not toward and around the perimeter of the concrete surface as detailed by the Owners' plan."

18. It was also specified that the drain to collect surface water from the Dairy Bails was to be 800 millimetres wide but, as constructed, is only 400 millimetres wide. 

19. According to the evidence before me, although this was challenged by Mr Flocchini, there was to be added to the slab of the milking shed an additional slab for a "lean‑to" to be added to the milking shed to act as a Vat Room to hold the vat into which milk collected from the cows was stored.  The plans clearly show that the top of the slab of the Vat Room was to be at exactly the same height as the slab of the milking shed.  However, it is in fact higher.  Mr Flocchini suggested to Mr Cryer in cross‑examination that Mr Cryer asked that the height of the floor of the Vat Room be greater than the height of the milking shed floor but that was denied by Mr Cryer and because of how these proceedings have been conducted, there is no evidence to rebut what Mr Cryer said in evidence. Accordingly, I accept that the height of the floor of the Vat Room is incorrect and that it should be at the same height as the milking shed and that was a significant defect in the work done by the defendant and that defect would make it extremely difficult for the vat to hold the milk and associated machinery to be placed under the roof of the lean‑to that was intended to be added by the plaintiffs to the milking shed.

20. Another defect concerns the edges of the concrete not being filled to a proper depth.  On p 6 of his report, Mr Oake said this:

"[42]  The edges of the concrete slab of the north‑eastern corner of the Vat Room have not [been] properly filled with concrete and to the full depth.  The shallow concrete clearly indicates that the subgrade was prepared to the correct level prior to placing of the concrete.

[43]  The reality is that any steel reinforcement in this area of the slab will not have the correct 'cover' of concrete and therefore corrosion of the reinforcing steel and spalling of the concrete will occur very early in the life of the slab."

21. Another defect detected by Mr Oake was that no expansion joints had been placed within any of the concrete slabs and so that the concrete slabs of both the milking shed and the fodder shed have cracked. 

22. It was also a specific requirement that the fodder shed floor be 133 mm thick but is in fact only 100 mm thick on one side.  After discussing this item, Mr Oake said this:

"In my opinion the Contractor has carried out defective building work with regard to AS 3600 S 19.1.3 by not properly placing and compacting (vibrating) the liquid concrete to the full depth of the concrete slab as specified."

23. Similarly, the dairy slab was required to be 155 mm thick and one side, at one place, is only 20 mm thick.  Again, this was pointed out by Mr Oake to be defective work in breach of the same provision of the Australia Standard.

24. Mr Cryer requested that the walls of the pit be constructed of Besser blocks.  That was not done but the defendant constructed the walls of the pit using concrete.  However, that has led to a defect.  Commencing at the top of p 9 of his report Mr Oake said this:

"[64]  I confirm that the walls of the pit are constructed of concrete which were poured at the same time as the upper slab to form a monolithic slab, and have been rendered.  The base slab of the pit was poured first and is considered to be a separate slab but connected to the upper slab with 12 mm reinforcement 'starter bars' that are now embedded in the walls of the pit.

[65]  The partial collapse of the formwork to the south end of the western wall, was apparently arrested by the Contractor during the poor.  The scabbing back of the excess concrete after curing does not [affect] the reinforcing steel 'starter bars' as they should not have been disturbed by the partial collapse.

[66]  The sand/cement rendering was required to remediate the surface of the pit walls generally.  I confirm that the render is drummy in some locations, particularly to the western wall, and that some areas of the render coating have fallen away.  This is the result of poor workmanship as the finished concrete wall patina was too dense to allow the render coating to bond.  In my opinion, an acrylic‑modified render product should have been used due to its inherent adhesive quality.

[67]  In my opinion, and due to the failure of the cement render, the Contractor has not carried out the rendering works in a proper and workman‑like manner."

25. The next item considered by Mr Oake in his report was the fact that the concrete was not all 32 mpa as I have previously discussed. 

26. Further defects found by Mr Oake were cracking of the upper slab of the dairy slab; problems arising from the rectification of the southern set of steps into the pit in the middle of the dairy bails; a problem with the concrete concourse between the old dairy and the new dairy; and that the finish put on that concrete concourse would not bear the constant wear and tear of animal traffic over it. 

27. Another defect found by Mr Oake was that to make up for the lack of the expansion joint within the slab of the Dairy Bails, the defendant cut through the slab with a saw to seek to replicate an expansion joint.  Of that Mr Oake said this:

"[92]  It is my opinion that the Contractor has carried [out] defective building work by not controlling shrinkage, cracking of the concrete slab, during the curing process.

[93]  It is also my opinion that the Contractor has carried [out] defective building work by excessively saw‑cutting the concrete slab which has resulted in forming two independent concrete slabs and by having reinforcement steel bar in contact with acidic animal slurry causing corrosion."

That defect has been indicated by photography.  Likewise, there has been cracking of the concrete of the fodder shed. 

28. Another defective observed by Mr Oake was that there was no horizontal reinforcement with steel of the walls of the pit in the Dairy Bails slab. 

29. The end of Mr Oake's report contains a four‑paragraph summary.  It is only necessary for me to quote the penultimate paragraph:

"[110]  In view of the concreting works completed to date, it is my opinion that rectification of and/or remedial work to the existing building works is not possible and therefore complete demolition of the existing building works and construction of new concrete slabs is recommended."

30. That is the only expert evidence before me as to the work performed by the defendant for the plaintiffs.  I must accept that evidence.  The plaintiffs' damages for breach of contract flow from that opinion of Mr Oake.  I ought to have said earlier, and I trust it is obvious from what I have said, that the plaintiffs have not erected on the two slabs formed by the defendant either the milking shed or the fodder shed because of the defects in them that Mr Cryer observed shortly after work was concluded by the defendant.  I accept that there has been a breach of specific oral stipulations in the contract made by the plaintiffs and the defendant, and, as a result of those breaches of contract, the only viable option for the plaintiffs is to completely demolish the work done by the defendants and to construct new concrete slabs in accordance with the plaintiffs' original specifications.

Damages

31. The demolition of the existing concrete slabs for the new dairy bails and fodder shed have been quantified by Mr Oake as amounting to $31, 961.  Kyogle Earthworx of 20 Andrew Street, Kyogle, have provided a quotation for the cost of removing, transporting and dumping of the demolished contract slabs.  Inclusive of GST, that is a further cost of $55,874.50.

32. The cost of building new slabs complying with the specifications amount to $59,386.  Again, that is the estimate of the cost provided by Mr Oake.  There is no competing estimate.

33. The plaintiffs concede that from that sum ought be deducted the sum of $26,350, which was due to the defendant for the work that the defendant actually did.  The remainder is $33,036.

34. The plaintiffs also claim a number of items of various losses that they have incurred as a result of the inadequacy of the concreting work performed by the defendant.  If the works that were stipulated by the plaintiffs had been done by the defendant to fulfill the plaintiffs' stipulations, I accept that the herd of milking cows would have increased to 150, with a total herd size of 200 cows and that the new milking shed or milking bails would have been in operation by March 2016.  The loss of profits from the doubling of the number of dairy cows amounts, between March 2015 and today's date, to $197.655.75.  That is the estimate provided by Mr Hancock and supported by a letter under the hand of Mr Bill Fulkerson, the central field officer of Norco Pty Ltd.  It is worth bearing in mind what that letter says. It is this:

"Greg and Jo Cryer have supplied milk to our cooperative for the past two years and since they bought the property at Hogarth Range.  They have been valued members of the cooperative during that time and have won respect within the industry as good farmers and from our point of view, have always provided top quality milk, well above the standard required.

Due to the delay in building the new dairy they have had to restrict their herd to a monthly average of 75 milking cows whereas a herd size of 150 milking cows would be feasible in terms of the other infrastructure and resources on the farm which have been markedly improved since they bought the farm.

Based on the production over the past 12 months of the existing 75 milkers (see attached income statement), the loss of production would be 406,019 Litres for a gross milk income of $247,869.  The average profit/cow in this region is about $750 and as Greg and Jo are considered to above average and the physical and financial management of the farm, we can conservatively use the figure of $56,250 as the net loss due to restricted herd size."

Nevertheless, the plaintiffs' claim to date is restricted to $197.655.75.  I should point out that Mr Fulkerson's letter is dated 24 August 2016.

35. Another item claimed is "forced cattle sales".  The sum claimed is $39,386.05.  I allow that sum. Anticipating doubling the size of their herd by March 2015, the plaintiffs increased the size of their herd by natural methods, by keeping calves that were born from their dairy cattle in order to double the size of the herd.  However, when the new milking bails could not be erected, it was necessary to sell that natural increase in the number of cattle.  What is claimed is the difference between that profit on the sale of those cows compared to the current cost of providing an additional 100 cows at the dairy.  The sum of $39,386.05 represents that additional impost.  As I said, I allow it.

36. In addition, the plaintiffs' claim $151,852.16 being a loss caused by a loss of the production of calves.  Mr Hancock sets out this claim in this fashion:

"Had the plaintiffs' new dairy and fodder shed been operational, the size of the herd would [have] had the potential to double and as a direct result, the number of calves born each year conservatively had the potential to double.

These calves, in excess to the dairy's requirements, would have then [been] sold to the meatworks and generate additional income for the plaintiff.

Based on the plaintiffs' advice that the current herd results in approximately 90 head of calves born each year, should the herd size have doubled an additional 180 head would have been born from 1 March 2015..."

A figure is then given for the average market value of such calves as at the date of Mr Hancock's report, 27 January 2017. The total loss to date, as I said, amounts to $151,852.16 and I allow that sum.

37. There are two remaining heads of claim; one is a claim for a modest amount of interest but when pressed, Mr Simpson abandoned that head of claim.

38. The remaining claim is a claim for additional hours of labour required for milk production in the old dairy compared with milk production in the new dairy had it been completed.  In essence, if the new dairy had been completed, the herd of 150 milking cows would have been milked at a much faster rate that currently pertains to the smaller herd of 75 milking cows using the old dairy which contains only six dairy bails.  This head of damage is discussed in par 7.2 of Mr Hancock's report, which is supported by his affidavit of 10 March 2017.  I will not quote it: it is quite lengthy. The claim put forward is for $133,225.60 which, projected through to the date of hearing, increased to $173,066.80.  This was the subject of some considerable debate between Mr Simpson and myself.  However, it is true that the plaintiff and his wife would be given much greater amount of time to do other work if the new dairy bails had been completed.  The claim is for the lost number of hours that could be spent doing other work, calculated at the rate of pay for a farm and livestock hand at a casual pay rate.  However, also claimed as part of that was a superannuation component of 9.5% and after debate, Mr Simpson agreed with me that it is difficult to see how that claim could be maintainable. After reducing the claim by 9.5% and rounding the claim down.  I would allow $156,000 under that head.

39. The total of the losses which I allow, if my mathematics and the mathematics of Mr Simpson be correct, amounts to $665,765.46.

40. For those reasons, I give verdict and judgment for the plaintiffs against the defendant for $665,765.46.

41. I order the defendant to pay the plaintiffs' costs.

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Decision last updated: 08 September 2017