DRA Industries Pty Ltd v Kuredale Pty Ltd
[2018] WASCA 17
•20 FEBRUARY 2018
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: DRA INDUSTRIES PTY LTD -v- KUREDALE PTY LTD [2018] WASCA 17
CORAM: BUSS P
MURPHY JA
MITCHELL JA
HEARD: 19 JANUARY 2018
DELIVERED : 20 FEBRUARY 2018
FILE NO/S: CACV 43 of 2017
BETWEEN: DRA INDUSTRIES PTY LTD
Appellant
AND
KUREDALE PTY LTD
Respondent
ON APPEAL FROM:
Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA
Coram :PETRUSA DCJ
Citation :KUREDALE PTY LTD -v- DRA INDUSTRIES PTY LTD [2017] WADC 46
File No :CIV 4048 of 2014
Catchwords:
Negligence - Contract - Contractor engaged to perform painting services for steel roofing in stadium - Corrosion appeared - Defective work - Whether judge failed to address nature and extent of contractor's breach - Whether findings of fact open to trial judge
Legislation:
Nil
Result:
Appeal dismissed
Category: B
Representation:
Counsel:
Appellant: Mr P J Hannan & Mr M de Kerloy
Respondent: Mr R D Shaw
Solicitors:
Appellant: Mony de Kerloy Barristers and Solicitors
Respondent: Lavan
Case(s) referred to in judgment(s):
Abalos v Australian Postal Commission [1990] HCA 47; (1990) 171 CLR 167
Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613
Kuredale Pty Ltd v DRA Industries Pty Ltd [2017] WADC 46
Robinson Helicopter Co Inc v McDermott [2016] HCA 22; (2016) 90 ALJR 679
JUDGMENT OF THE COURT:
Introduction
This is an appeal against a decision of Petrusa DCJ in Kuredale Pty Ltd v DRA Industries Pty Ltd[1] (primary decision). In the primary proceedings, the respondent (Kuredale) sued the appellant (DRA) for breach of contract and breach of duty of care in relation to DRA's performance of its engagement to carry out protective paint treatment to certain steelworks for Kuredale. Kuredale alleged, in effect, that DRA had failed to coat the steel with the thickness of coating required, measured in terms of 'dry film thickness of coating'. The steelworks were supplied by Kuredale for the construction of an athletics stadium in Mount Claremont known as AK Reserve Athletics Stadium. There emerged, some years later, evidence of corrosion in the steelworks, which Kuredale rectified at its cost. Kuredale claimed damages from DRA to recover its costs of the rectification work. The primary judge found in favour of Kuredale. DRA appeals against that decision.
[1] Kuredale Pty Ltd v DRA Industries Pty Ltd [2017] WADC 46.
For the reasons which follow, the appeal should be dismissed.
The pleadings
As discussed in more detail later, the appeal raises an allegation to the effect that the primary judge failed to address the correct issues in the case. It is convenient at the outset to identify the issues on the pleadings.
In substance, Kuredale pleaded that:
1.In December 2007, it was engaged by the builder of the stadium, BGC Construction Pty Ltd (Builder) to supply steelworks for the construction of the stadium, and in May 2008, the Builder advised that it required the steelworks to have protective treatment applied to the works.
2.In December 2008, Kuredale provided DRA with certain written specifications (Specifications) for the application of protective treatment to the steelworks in a document entitled 'Dulux Protective Coatings Abridged Specification for the AK Reserve Athletics Stadium'.
3.Kuredale supplied the steel to DRA for treatment in three tranches and, with respect to each of tranche of steel delivered, engaged DRA to carry out protective treatment work to the steel. This resulted in three separate contracts.
4.The first tranche was delivered in or about December 2008. The second tranche was delivered in or about January 2009, and the third tranche was delivered on or about 27 February 2009.
5.DRA owed a duty to exercise reasonable care and skill in carrying out the treatment work.
6.Each contract contained certain terms, including that DRA would:
(a)treat the steel in accordance with the Specifications; and
(b)perform the works in a proper and workmanlike manner.
7.DRA failed to complete the works in a proper and workmanlike manner in breach of contract, and failed to exercise reasonable care and skill in breach of its duty of care. The following particulars were given:
(a)the upper‑facing surfaces of the majority of tubular steel members exhibited severe premature corrosion;
(b)some site welds exhibited evidence of corrosion;
(c)a report indicated that at least 85% of the coating failures on the steel were due to DRA applying inadequate dry film thickness; and
(d)testing of the corroded areas indicated that coatings were less than half of the specified film build.
8.Kuredale requested DRA to carry out remedial works on or about 18 October 2013, but DRA did not do so.
9.Kuredale, in consequence, carried out its own remediation work at a cost of around $106,000 plus GST. It thereby suffered loss and damage as a result of DRA's breach of contract and breach of duty of care.
DRA admitted the matters in pars 2 ‑ 5 above. It also admitted, in effect, that it was required to carry out the treatment in accordance with the Specifications.[2]
[2] Amended defence, par 19; BB 40.
DRA also alleged that:
1.The steelwork was 'extensively damaged and/or degraded' by Kuredale after the steel had been collected from DRA's factory, including in the process of installing and assembling the steelwork.[3]
2.In October 2013, DRA, accompanied by a representative of Dulux, carried out inspections and determined that in respect of the steelwork coated by DRA at its factory, a surface area of (approximately) 60 sqm, out of a total of 2,100 sqm, 'required defect repair or remediation'.[4]
3.DRA provided and paid for two painters to remediate the (approximately) 60 sqm at the stadium at a cost of $16,500.[5]
4.'The work carried out by [DRA] was carried out with reasonable care and skill and the (approx) 60 sqm that had less paint then [sic] required was remediated upon request and in accordance with the Specification.'[6]
[3] Amended defence, par 25.
[4] Amended defence, par 28.
[5] Amended defence, par 29.
[6] Amended defence, par 32.
The primary decision
Background findings
The judge made, in effect, the following findings.
At all material times, Kuredale was in the business of manufacturing and supplying steelworks. Kuredale contracted with the Builder to supply steelworks for the construction of the stadium. The Builder required the steelworks to have protective treatment applied. Kuredale engaged DRA to provide the protective coating to the steelworks. The purpose of the protective coating was to protect the steelworks from corrosion. The protective treatment was to be applied by DRA at its factory in accordance with the Specifications.
Accordingly, under the terms of the engagement between DRA and Kuredale, DRA was responsible for applying prime and top coats to the steelworks in accordance with the Specifications at its factory. DRA did not agree to be responsible for the treatment of welding joints and dealing with erection damage. Those matters were the responsibility of Kuredale.[7]
[7] Primary decision [5] - [6].
The Specifications required that the steel be coated with a specified dry film thickness of coating (or 'DFT'). The 'nominated' thickness was 325 microns with the minimum being 260 microns and the maximum being 330 microns. Any thickness within the range would ensure that the protection was efficacious.[8]
[8] Primary decision [7].
The steelwork was delivered to DRA's factory in three tranches. DRA carried out the protective treatment to each tranche of the steelwork delivered.
The steelwork was erected in the stadium in the first half of 2009.[9] The transportation and erection process caused some damage to the steelwork which was repaired by Kuredale 'as was its obligation'.[10]
[9] Primary decision [8].
[10] Primary decision [10]. Presumably, this was an 'obligation' owed by Kuredale to the Builder.
A Dulux protective coating warranty was signed by Kuredale and DRA in July 2009.
The steelworks coated by DRA and supplied by Kuredale for the construction of the stadium included around 20 inverted pyramid‑shaped structures referred to as 'pods'. The pods sat above the amenity and office buildings in the stadium. Some of the steelworks in the pods extended out into the open spaces at the edge of the buildings, whilst others cantilevered over the grandstand and were up against the trim roof deck.[11]
[11] Primary decision [71].
In September 2013, Kuredale was notified by the Builder that the steelwork was defective. In particular, the upper‑facing surfaces of the majority of the steelwork in the roofing area were exhibiting severe premature corrosion.[12]
[12] Primary decision [11].
There was a site inspection in October 2013, attended by, amongst others, representatives of Kuredale, DRA, the Builder and the stadium owner. Following the inspection DRA engaged two employees, Mr Sandstrom and Mr Mutch, to attend the site and provide advice on the extent of DRA's responsibility for the corrosion. In a letter dated 18 October 2013, Mr Mutch, on behalf of DRA, identified four issues. One was rust on the steel beams due to 'low DFTs'. The other issues identified were rust on areas of site welds, rust due to mechanical damage, and paint‑flaking or 'delamination'. DRA accepted that (subject to some issues relating to the failure by the stadium owner to inspect and clean the area) it was responsible for the rust on the steel beams due to low DFT. DRA recommended patching these areas on the steel beams (the Patch Repair specification).[13]
[13] Primary decision [12] - [13].
In or around early November 2013, Kuredale obtained an opinion from Dr Zurhaar, a chemist and materials scientist. He found that the upper‑facing surfaces of the majority of the tubular steel members of the pods exhibited severe premature corrosion. He also found that at least 85% of the coating failures on the site related to the coating system that was factory‑applied by DRA. He also found evidence of early corrosion on some site welds. He recommended the recoating all the steel in the roofing area in accordance with a specification dated 6 November 2013.[14]
[14] Primary decision [15], [41]. In this context, it is to be noted that the evidence of Mr Heyden, construction manager of Kuredale, was that there was only a repaint of the pods, not an entire repaint of all the structural steel in the stadium: ts 104.
Kuredale accepted Dr Zurhaar's recommendation and repainted the entire steel structure of the roof.[15]
[15] Primary decision [16].
DRA accepted that:
1.it undertook to perform the works in accordance with the Specifications;[16]
2.it was required to exercise reasonable care and skill in performing the works, and that any failure to do so gave rise to an obligation on its part to rectify the works that were defective;[17]
3.it breached its duty of care in respect of some of the protective coating;[18] and
4.it was responsible for remediating defects that arose from a breach of its duty of care.[19]
[16] Primary decision [20].
[17] Primary decision [31].
[18] Primary decision [1].
[19] Primary decision [22].
DRA maintained that the Patch Repair specification was sufficient to correct its failures, and DRA contributed two men for two weeks in relation to the remediation work undertaken by Kuredale.[20]
Dr Zurhaar's evidence
[20] Primary decision [16].
Dr Zurhaar, who had recommended the repaint in early 2013, was called as a witness for Kuredale at the trial. The judge made the following findings with respect to Dr Zurhaar's evidence:
1.The steelwork exhibited evidence of coating failures. The coating failures resulted in, or involved, 'corrosion', and 'delamination', ie, paint‑flaking.[21]
[21] Primary decision [12], [15] - [16], [42] - [44].
2.There was evidence of widespread early corrosion of the steelwork.[22]
[22] Primary decision [47].
3.The majority of the tubular steel members had upper‑facing surfaces exhibiting 'severe premature corrosion'.[23]
[23] Primary decision [15].
4.The upper‑facing surfaces of the pods displayed the most severe corrosion.[24]
[24] Primary decision [42].
5.Dr Zurhaar tested the adjacent and peripheral areas (or the 'margins') of the corroded areas on the upper‑facing surfaces of the pods using an electronic magnetic gauge.[25] Dr Zurhaar found that the DFT levels in those areas were less than half of the level specified in the Specifications.[26]
[25] Primary decision [68]; ts 121: Dr Zurhaar's evidence was that it was not possible to test the corroded areas themselves as they had no paint left on them so it was necessary to test the surrounding areas in order to assess how much the paint was originally on the areas that were now corroded.
[26] Primary decision [68].
6.Dr Zurhaar's testing also showed that there were areas with low DFT, even where there was no visible sign of rust and in areas which were 'just beginning to corrode'.[27]
[27] Primary decision [69].
7.Dr Zurhaar also carried out a visual inspection of inaccessible areas, and saw sections which, to his trained eye, showed signs of rust.[28]
[28] Primary decision [75].
8.Dr Zurhaar also had the opportunity, unlike representatives of DRA, to inspect and test areas that extended over the grandstand whilst lifting equipment was available in the remediation process.[29]
[29] Primary decision [75].
9.The corrosion on the upper‑facing surfaces of the pods was caused by low DFT arising from the painting at DRA's factory.[30]
[30] Primary decision [42].
10.There were also some corrosion at site welds. This resulted from coating failures on‑site.[31]
[31] Primary decision [43].
11.The areas of delamination were much smaller and less extensive than the areas of corrosion. The delaminated areas resulted from coating failures on‑site.[32]
[32] Primary decision [43], [50].
12.At least 85% of the area exhibiting coating failure in the stadium in November 2013 related to the coating system applied at DRA's factory.[33]
[33] Primary decision [44].
13.It was not possible to state with any confidence the percentage of the total surface area of the steel where the coating was deficient. That was because not all the steelwork was accessible for testing. As to visual inspection, a trained eye could pick up some deficient areas but not all of them, given that many deficient areas had 'only just begun' to corrode.[34]
[34] Primary decision [44].
14.In November 2013, Dr Zurhaar recommended that all the steel in the roof be recoated because:
(a)The only way to accurately measure the percentage of steel that required remedial work would be to bring proper access equipment to the site and comprehensively and systematically test the whole area. The results would need to be marked up and put on drawings. The cost of this type of investigation would be a third of the total costs of a complete repaint.[35]
[35] Primary decision [45].
(b)There would be logistical difficulties in obtaining access to all the steelwork for testing in an active public facility, and the testing would involve downtime and disruption of services.[36]
[36] Primary decision [46].
(c)There would be difficulties in drawing the line in terms of determining low DFT and the extent of the margins requiring treatment.[37]
[37] Primary decision [46].
(d)Given the lack of confidence anyone could have in determining the full extent of deficient coatings without testing it, it was:[38]
[38] Primary decision [47].
reasonable given the extent of the testing in fact carried out and the widespread early evidence of corrosion, for a complete recoating. This would be the only way to assure the asset owner that all of the steel would be protected from corrosion for the intended service life of the coating system. (emphasis added)
(e)The extent of the damage was severe enough to go beyond patching. In accordance with industry practice, where one third or more of the structure was affected, Dr Zurhaar would always recommend that a complete repaint was appropriate.[39]
(f)Moreover, a total repaint of the steel in the roof would produce, unlike a patch repair on specific areas, an architecturally acceptable finish, and this confirmed the view that a total repaint was required. However, even absent that consideration, a total repaint was required to ensure that the technical deficiencies were addressed.[40]
(g)Dr Zurhaar's view of the need for a total repaint of the roof steel took into account the state of the steelworks as a whole, and thereby took into account the condition of the steel by reason of the defective coating by DRA at the factory, as well as the condition of the steel in the areas of delamination and site welds.
(h)The problems with the site welds would not themselves have called for a recoating of the total steelwork.
(i)As to the areas of delamination which were much smaller and less extensive than the areas of corrosion, Dr Zurhaar 'did not honestly know what he would have recommended if the only areas of difficulty were the delamination areas because he did not turn his mind to it at the time. … [I]t never entered his head that anyone would suggest that this was a patch job'.[41]
The cause of visible corrosion
[39] Primary decision [48].
[40] Primary decision [53].
[41] Primary decision [51].
The visible corrosion to the upper‑facing surfaces of the pods was caused by the low DFT applied in DRA's factory, as opposed to 'rust creep' as had been suggested by DRA's expert.[42]
The areas affected by low dry film thickness
[42] Primary decision [63] - [68].
Even if the area of and around the corrosion which was visible on all the upper‑facing surfaces of the roof beams was about 12% of the total area of the steelworks, as contended by DRA, that area was not co‑extensive with the whole area of steel that had low DFT.[43]
[43] Primary decision [63.2], [75] - [77], [86].
Areas with low DFT extended beyond the visibly corroded areas which appeared in the majority of the tubular steel members in the roof. They included sections in the inaccessible areas of the roof that showed no visible signs of rust, and sections of steel in the roof which were only just beginning to corrode.[44]
[44] Primary decision [77], [86].
The area of steelwork with low DFT which did not yet show evidence of rusting would ultimately have failed.[45]
Breach
[45] Primary decision [86].
When the primary judge's reasons are read as a whole, it is evident that her Honour found that:
(a)the exercise of reasonable care, and/or the express terms of the contract, required DRA to apply to all the steelwork the specified dry film coating, or DFT, in accordance with the Specifications;[46] and
(b)DRA breached its duty of care and the terms of the contract by failing to coat all of the steel with a DFT of between 260 and 330 microns.[47]
[46] See, in particular, points 1 ‑ 4 of [19] above.
[47] See, in particular, point 3 of [19] above and points 1 ‑ 9 of [21] above.
On her Honour's findings, the breach concerned all, or nearly all, of the tubular steel members used in the roofing area of the stadium. That finding was implicit in her acceptance of Dr Zurhaar's evidence referred to by her Honour. His evidence was that corrosion, caused by low DFT, appeared on surfaces in the majority of the tubular steel members in the roofing area, and even the tubular members which showed no corrosion or where the corrosion had only just begun, also had surfaces with low DFT.[48]
[48] See, in particular, points 2 ‑ 8 of [21] above. Indeed, Dr Zurhaar's evidence was that he could not find a pod that was not affected by a deficiency in DFT: GB 115 ‑ 116.
Although not specifically referred to by her Honour in her reasons, that conclusion also tends to be confirmed by the evidence as to the uniformity of the problem with the coating. Dr Zurhaar's evidence was that the underneath surface of the tubular members (which formed the top surface when the pods were installed) 'were shadowed during painting and only received partial coverage with paint'.[49]
[49] Dr Zurhaar's report, 12/11/13, GB 415; see also GB 116 ‑ 117.
That was confirmed, in effect, by the evidence of DRA's manager, Mr Sandstrom. His evidence included the following:[50]
All right. Mr Zurhaar made some suggestion … where there was low dry film thickness on all of the pods, seemed to be consistent right throughout all of the pods. Would you agree with that?‑‑‑I'd agree with that. The ‑ ‑ ‑
And - - -?- - - basically when - when they were painted, you were doing an overhead paint.
Yes?‑‑‑But when the pyramids were turned over - - -
Yes?‑‑‑- - - what was the bottom, then became the top.
Yes. And that was where there was low dry film thickness?‑‑‑That's correct.
And so that just is - fairly consistently throughout, that seemed to have been the case?‑‑‑Pretty much, yes.
Measure of damages
[50] GB 212.
The primary judge said:[51]
[51] Primary decision [33] - [36].
Prima facie, the measure of damages for defective works performed is the cost of rectification or to ensure conformity to the contract's requirements. The only exception to this is where it is not necessary to produce conformity or not a reasonable course to adopt: see Bellgrove v Eldridge (1954) 90 CLR 613, especially at 617 and 618. The High Court when discussing Bellgrove v Eldridge and this exception said:
'The example which the Court gave of unreasonableness was the following:
"No one would doubt that where pursuant to a building contract calling for the erection of a house with cement rendered external walls of second-hand bricks, the builder has constructed the walls of new bricks of first quality the owner would not be entitled to the cost of demolishing the walls and re-erecting them in second-hand bricks."
That tends to indicate that the test of "unreasonableness" is only to be satisfied by fairly exceptional circumstances. The example given by the Court aligns closely with what Oliver J said in Radford v De Froberville, that is, that the diminution in value measure of damages will only apply where the innocent party is "merely using a technical breach to secure an uncovenanted profit".'
(See Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 [17]).
What is reasonable and necessary may be replacement rather than 'make do and mend' rectification: see Linklaters Business Services v Sir Robert McApline Ltd [2011] BLR 108.
A relevant consideration is whether or not making the work conform would give rise to an ongoing risk that would be placed on an innocent party, in this case the stadium owner: see J-Corp v Gilmore [2005] WASCA 136, especially at [47].
As to what remedial work is both necessary and reasonable in any particular case is a question of fact: Bellgrove v Eldridge (169).
Necessary and reasonable to repaint
The judge concluded:[52]
Having considered the matters raised I am satisfied that it was reasonable for [Kuredale] to adopt Dr Zurhaar's recommendation. I am therefore satisfied that it was necessary and reasonable to repaint all the structural steel in the roofing area in order to remedy [DRA's] defective workmanship thereby ensuring the technical deficiencies had been addressed.
Quantum
[52] Primary decision [87].
The judge said that the total cost involved in performing the remediation works was $122,000, being (approximately) $106,000 paid by Kuredale and the costs of the men who DRA supplied to undertake remedial work in the sum of $16,000.
The judge said:[53]
The matter requiring determination is whether [Kuredale] should be entitled to recover the total cost of the remedial works (less the contribution already made by [DRA]) given that the repainting also remediated the poorly performed site repairs that showed signs of rusting and the areas of delamination: these two defects being the result of [Kuredale's] poor workmanship.
…
I have accepted Dr Zurhaar's expert opinion that the observable areas of corrosion justified a complete repaint. Of the observable corrosion at least 85% was the result of coating failures that were factory applied. [Kuredale's] poor workmanship was then, responsible for about 15% of the observable corrosion. When you take into account that Dr Zurhaar's expert opinion was also that the delamination issue alone was such that '[y]ou might end up in a delicate argument as to whether they were sufficiently limited to make patching reasonable or not' (ts 166), I consider that [Kuredale] should bear some of the cost of the repaint. I consider that the appropriate measure of [Kuredale's] loss is 85% of the total cost of the remedial works less the contribution that [DRA] has already made. I have calculated this to be $87,321.47. I would allow interest pursuant to section 32 Supreme Court Act 1935 from 30 April 2014.
[53] Primary decision [105], [107].
The appeal
DRA has three grounds of appeal to the following effect:
1.The judge erred in law by failing to address the correct issues in the case, in that:
(a)she only addressed herself to the secondary issue as to what was reasonable to remedy DRA's alleged breach; and
(b)she failed to address the anterior issue of whether DRA had committed a breach beyond its admission that it was required to remediate 60 sqm of steelwork out of a total surface area of steelwork of 2,100 sqm.
2.The judge erred in law and in fact in implicitly finding that 85% of the corrosion on the structural steel supports of the roofing was the result of coating failures by DRA.
3.Alternatively to ground 2, the judge erred in fact in implicitly finding that 85% of the corrosion was attributable to DRA.
In its particulars to ground 3, DRA contends that:
(a)full paint remediation commenced on 12 November 2013;
(b)there was a variety of other causes of corrosion and damage, including site welds and mechanical damage for which Kuredale was responsible, and matters for which the stadium owner was responsible, being a leaking air conditioner and the failure to clean the steel; and
(c)the only evidence in support of the judge's finding was Dr Zurhaar's expert evidence, and that opinion carried 'little or no weight'.
In relation to particular 3(c), DRA alleged, in effect, that:
1.In November 2013, Dr Zurhaar had only been asked to look at the stadium as a whole and give a recommendation for remediation, and he was not concerned with 'dividing up liabilities' between DRA, Kuredale and the stadium owner.[54]
[54] Particulars (d), (e), (f).
2.Dr Zurhaar's letter of 12 November 2013 was not an 'expert report prepared for the giving of evidence'.[55]
3.Dr Zurhaar's opinion was based on visual impression of the corrosion damage.[56]
4.Dr Zurhaar's opinion was made without accurately or systematically (or at all) measuring the extent of different causes of corrosion.[57]
5.Dr Zurhaar's opinion was given without reference to or knowledge of the facts that:
(a)the only evidence of measured corrosion was the 60 sqm figure referred to by DRA's witnesses; and
(b)information provided by DRA to Kuredale had not been provided to Dr Zurhaar.[58]
6.The judge 'overlooked' the matters in (a) and (b) of 5 above.[59]
7.The judge 'overlooked' that Dr Zurhaar had said that delamination was present randomly and extensively in all the tubular members,[60] and that it was not possible to state with any confidence the total surface area that was deficient and defective.[61]
[55] Particular (f).
[56] Particular (g).
[57] Particular (h).
[58] Particulars (i), (l), (m).
[59] Particulars (l), (m).
[60] Particular (j).
[61] Particular (k).
Also in relation to ground 3, DRA referred to the matters in its schedule filed pursuant to Consolidated Practice Direction 7.4.2.[62] Those matters are largely repetitive of other matters particularised by DRA. They are:
1.DRA's evidence to the effect that the corrosion caused by DRA required remediation of a surface area of only, approximately, 60 sqm.
2.Dr Zurhaar had not been provided with DRA's assessment of the corrosion and its extent before making his initial recommendation to repaint the roofing structure.
3.Dr Zurhaar was not asked to decide, and was not concerned with, which party was liable for which defects, and the extent of such liability.
4.Neither DRA nor Dr Zurhaar had done a systematic assessment or testing of the extent of the corrosion or the extent of each cause of corrosion.
5.There was evidence of considerable corrosion beyond that attributable to DRA. There was corrosion associated with site welds and mechanical damage, and there was also paint delamination.
6.On Kuredale's 'own case, it was equally possible that the delamination … was sufficient … to have required a full repaint'.[63]
[62] Particular (n).
[63] Reference was made to Dr Zurhaar's evidence at GB 166 and to primary decision [50].
Disposition
Ground 1
As indicated at [26] ‑ [27] above, the judge found, in effect, that DRA breached its duty of care and the terms of the contract by failing to coat all of the steel to the requisite level of DFT on the surfaces of all, or nearly all, of the tubular steel members used in the roofing area of the stadium. The duty of DRA was to apply the appropriate DFT to the whole area of all the tubular members of the roofing steelworks supplied by Kuredale for coating. Her Honour, consistently with Dr Zurhaar's evidence, determined the existence and extent of DRA's breach by reference to the number of tubular members coated by DRA with low DFT. Moreover, her Honour found that the surface area of and around the visible signs of corrosion, referred to by DRA as being 60 sqm, did not represent the full extent of the surface area affected by low DFT. These findings were based on the evidence of Dr Zurhaar.
Her Honour accordingly addressed the 'anterior issue' as to whether DRA had committed a breach beyond its admission that it was required to remediate 60 sqm of the steel work in the roof.
In any event, DRA's 'admission' that it was required to remediate 60 sqm of the steelwork in the roof merely begged the question of what remediation work was necessary and reasonable, given that all or nearly all of the tubular steel members in the roof were affected by low DFT caused by DRA. In this regard it is to be noted that DRA did not challenge the judge's approach to the measure of damage by reference to the principle in Bellgrove v Eldridge.[64]
[64] Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613. See appeal ts 11 - 12.
It is true that her Honour said that the 'fundamental issue [was] whether it was necessary and reasonable to repaint all the structural steelwork in the roofing area in order to remedy [DRA's] defective workmanship'.[65] However, her Honour's statement of that issue does not alter the fact that her Honour's reasons disclose the findings of breach referred to in [26] ‑ [27] above.
[65] Primary decision [37].
Ground 1 should be dismissed.
Ground 2
Ground 2 seeks to attack the judge's 'implicit finding' that 85% of the corrosion on the structural steel supports for the roofing area of the stadium was the result of coating failure supplied by DRA. It is contended, in effect, that this 'implicit finding' was based on speculation and not evidence.
The judge's express finding, based on Dr Zurhaar's evidence, was that 85% of the coating failures observed by Dr Zurhaar in early November 2013 related to the coating system applied by DRA.[66]
[66] Primary decision [44], [85].
Dr Zurhaar was qualified to inspect and report on any coating failures observed in the roofing.[67] His visual inspection revealed corrosion, the most serious of which occurred in the upper facing surfaces of the steel pods. That corrosion was, in his opinion, the result of low DFT.[68] Dr Zurhaar also observed coating failures involving corrosion at some site welds, and delamination. Both of the latter were, according to Dr Zurhaar, the result of 'site applied coating failures' (ie, not the responsibility of DRA).[69] Having identified different types of coating failures that he had observed in early November 2013, and having carried out testing for low DFT, Dr Zurhaar gave an estimate in his report of 12 November 2013 that 85% of the observable coating failures were attributable to low DFT that was factory‑applied (by DRA). The opinion expressed by Dr Zurhaar on 12 November 2013 was confirmed by his evidence at trial.[70]
[67] Primary decision [38].
[68] Primary decision [42].
[69] Primary decision [43].
[70] The report was tendered, GB 127; and Dr Zurhaar confirmed his evidence in that regard, particularly at GB 169 ‑ 170.
The judge was entitled to accept that evidence. It was open to the judge to find, as her Honour did, that 85% of the observable coating failures evident in early November 2013 related to the coating system applied by DRA.
If and to the extent that her Honour also made an implicit finding to the effect that 85% of the observable corrosion (as opposed to coating failures more generally including the delamination) was the result of DRA's breach, that finding was also open to her Honour. That is because:
1.Most of the visible corrosion appeared in the upper‑facing members of the steel pods, for which DRA was responsible.
2.DRA does not point to any evidence indicating that there was extensive corrosion at site welds. Mr Mutch's letter, prepared on behalf of DRA, referred to areas of site welds which were rusting, but did not indicate their extent.[71] Dr Zurhaar described the site welds as 'far and few between'.[72] Dr Zurhaar's evidence, which the judge accepted, was that the number of site welds affected would not of itself have justified a full repaint.[73]
3.Mr Mutch's letter referred to 'several areas' of mechanical damage.[74] DRA does not suggest in this appeal that there was evidence of extensive mechanical damage. Dr Zurhaar's evidence in cross‑examination was that mechanical damage is 'usually a very low percentage'.[75] It was not put to him that the percentage in this particular case was greater than usual.
[71] GB 404.
[72] GB 172.
[73] Primary decision [50].
[74] GB 404.
[75] GB 158.
Ground 2 should be dismissed.
Ground 3
It is difficult to see how ground 3 differs in any material way from ground 2. Nevertheless, the following observations may be made with respect to the particulars to ground 3 (see [35] above).
Particular (a) is a fact, but it does not of itself, or in combination with the other particulars, point to error.
As to particular (b), the judge had regard to the other sources of coating failure, including rusting at site welds, delamination and lack of cleaning and maintenance.[76] Her Honour nevertheless concluded, based on Dr Zurhaar's evidence, that DRA was responsible for 85% of the coating failures visible in early November 2013. In doing so, her Honour rejected the expert evidence led by DRA concerning the extent to which the coating failures arose from DRA's defective work.[77]
[76] Primary decision [42] - [43], [49] - [51], [57.5], [58].
[77] Primary decision [62] - [77], [78] ‑ [87].
As to particular (c), there is nothing inherently implausible in Dr Zurhaar's evidence, or any basis upon which to conclude that the primary judge palpably misused her advantage in resolving the conflicts of expert evidence at trial.[78] In relation to the specific points referred to by DRA (see [36] above:
1.If anything, the fact that Dr Zurhaar provided a contemporaneous report on the nature and extent of the deficiencies in November 2013 without 'dividing up liabilities' gives credence to his opinion. It does not detract from it.
2.The same observations apply to point 2. The fact that Dr Zurhaar's report of 12 November 2013 was not an 'expert report prepared for the giving of evidence' tends to underscore the objectivity of the opinions expressed in it.
3.Dr Zurhaar's report of 12 November 2013 was not solely based on the visual inspection of the corrosion. He did testing insofar as was practicable at that point in time. Moreover, he subsequently had the opportunity to carry out further testing in areas previously inaccessible, when remediation work was being carried out.[79]
4.The judge noted that Dr Zurhaar did not carry out comprehensive testing of all the steelwork in November 2013. However, her Honour accepted Dr Zurhaar's evidence to the effect that as at November 2013, (1) all or nearly all of the tubular members had low DFT, (2) there were logistical difficulties in carrying out further, comprehensive, testing, (3) there were direct and consequential costs in carrying out any more testing at that time, and (4) it was reasonable, given the extent of testing in fact carried out, for a complete recoating to be undertaken.[80]
5.The matters referred to in point 5 are not indicative of error by the primary judge. Dr Zurhaar was himself competent and qualified to inspect and assess the nature and extent of the corrosion that was observable in early November 2013. He did not require Mr Mutch's letter to assist him. Further, the letter prepared by Mr Mutch was put to Dr Zurhaar in cross‑examination, but it was not put to Dr Zurhaar that this letter should cause him to change his earlier opinion.[81]
6.The judge did not 'overlook' the matter referred to by DRA in point 5(a). Her Honour referred to this in her reasons.[82] For the reasons given above, it was irrelevant that Dr Zurhaar had not been provided with the letter prepared by DRA before undertaking his inspection and reporting in November 2013.
7.The judge did not 'overlook' Dr Zurhaar's evidence as to delamination. Her Honour referred to it.[83] Her Honour also referred to Dr Zurhaar's evidence to it not being possible to state with any confidence the total surface area with visible corrosion that was deficient. This was not overlooked.[84] Moreover, her Honour accepted Dr Zurhaar's evidence that the percentage of the total surface area is not, in itself, determinative of the question of whether, in this particular case, it was necessary and reasonable to undertake a full repaint.[85]
[78] Abalos v Australian Postal Commission [1990] HCA 47; (1990) 171 CLR 167, 179; Robinson Helicopter Co Inc v McDermott [2016] HCA 22; (2016) 90 ALJR 679 [43].
[79] Primary decision [75].
[80] See the findings referred to in (14) of [21] above.
[81] GB 153 ‑ 154.
[82] Primary decision [86].
[83] Primary decision [43], [49], [50], [51]. See also GB 159, being the transcript reference expressly referred to by her Honour at [50].
[84] Primary decision [44].
[85] Primary decision [86].
As to the matters referred to in DRA's schedule under Practice Direction 7.4.2, these matters are effectively repetitious of other matters addressed above, although two further points may be noted. First, none of the evidence referred to in par 1 of DRA's schedule, including Mr Mutch's letter of 10 October 2013, refers to a remediation area of 60 sqm. However, it may be accepted that there was some oral evidence to that effect (although not relied upon by DRA in its schedule).[86] Secondly, Kuredale's case, and Dr Zurhaar's evidence, was not that Dr Zurhaar would have recommended a total repaint if the only area of difficulty included the delamination area. Dr Zurhaar had not turned his mind to that at the time.[87]
[86] GB 195.
[87] Primary decision [51].
Finally, DRA's submissions included reference to numerous authorities including on matters such as onus of proof, fact‑finding, the drawing of inferences, and the duty of a judge to have regard to the material submissions made by the parties. None of those cases assist in any real way in the disposition of this appeal. The authorities do not assist in identifying errors of the particular kinds alleged by DRA in grounds 1 ‑ 3.
Conclusion
The appeal should be dismissed.
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