Hodgkinson v Doepel & Associates Architects Pty Ltd - [2006] WASC 237

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: HODGKINSON -v- DOEPEL & ASSOCIATES ARCHITECTS PTY LTD [2006] WASC 237

CORAM: SIMMONDS J

HEARD: 15-19, 22-26, 29 & 30 AUGUST 2005

DELIVERED : 27 OCTOBER 2006

FILE NO/S: CIV 2698 of 2001

BETWEEN: EDWARD WILLIAM HODGKINSON
Plaintiff
AND
DOEPEL & ASSOCIATES ARCHITECTS PTY LTD (ACN 069 628 440)
Defendant

Catchwords:

Contract - Terms of contract - Whether "the house" cost estimate made on reasonable grounds - Scope of "the house" cost estimate - Misleading and deceptive conduct - Turns on own facts

Legislation:

Fair Trading Act 1987 (WA), s 9(2), s 10, s 12(1)(b)
Land Tax Assessment Act 1976 (WA), s 24
Trade Practices Act 1974 (Cth), s 51A(2), s 52, s 53(aa)

Result:

Plaintiff's claim partially successful

Category: B

Representation:

Counsel:

Plaintiff: Mr G R Donaldson SC & Mr J D Finlay
Defendant: Mr P G McGowan

Solicitors:

Plaintiff: J D Finlay & Co
Defendant: Phillips Fox

Case(s) referred to in judgment(s):

J & J C Abrams Ltd v Ancliffe [1978] 2 NZLR 420
McBratney & Anor v Boston, unreported; FCt SCt of WA; Library No 940567; 14 October 1994

Case(s) also cited:

Astley v Austrust Ltd (1999) 197 CLR 1
Auburn Municipal Council v ARC Engineering [1973] 1 NSWLR 513
Bellgrove v Eldridge (1954) 90 CLR 613
Beregold Pty Ltd v Mitsopoulous (1999) 15 BCL 290
Brown Falconer Group Pty Ltd v South Parklands Hockey and Tennis Club Inc [2005] SASC 75
Bryan v Maloney (1995) 182 CLR 609
Coleman v Gordon M Jenkins and Associates (1989) ATPR 40-960
Cummings v Lewis (1993) ATPR (Digest) 46-103
Florida Hotels Pty Ltd v Mayo (1965) 113 CLR 588
Henville v Walker (2001) 206 CLR 459
Lyons v Jandon Constructions (a firm), unreported; SCt of WA; Library No 980394; 20 July 1998
March v Stramare (E & M H) Pty Ltd (1991) 171 CLR 506
Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494
Medlin v State Government Insurance Commission (SA) (1995) 182 CLR 1
Rogers v Whitaker (1992) 175 CLR 479
South Parklands Hockey and Tennis Club Inc v Brown Falconer Group Pty Ltd [2004] SASC 81
Voli v Inglewood Shire Council (1963) 110 CLR 74
Wardley Australia Ltd v Western Australia (1992) 175 CLR 512

TABLE OF CONTENTS

Introduction
Mr Hodgkinson's background
Mr Doepel's background
The Hodgkinsons acquire Lot 9, Blenheim Lane, Mt Claremont

The initial meetings between Mr Hodgkinson and Mr Doepel in March 1998
The initial indications of the Hodgkinsons' budget, and what it covered
The evidence as to homes of a standard design
The evidence as to the building licence
The exclusions from the brief to Mr Doepel
The evolution of the project between March 1998 and November 1998
The letter from Mr Doepel to the Hodgkinsons dated 30 November 1998 and further changes
The further evolution of the project from December 1998 to July 1999
The two letters dated 22 July 1999
The agreement between the Hodgkinsons and the defendant of July 1999
Further evolution of the design between 22 July 1999 and 25 October 1999
The application for and grant of a building licence
The period of construction to 27 September 2000
The period of construction from 27 September 2000 to the cessation of work in September / October 2001
Witnesses in this case
Was there no more than an indication of what the Hodgkinsons might be prepared to spend on the project?
Did the defendant make any cost estimates for the project?
What did "the house" cost estimate cover? Was the estimate not borne out?
Was "the house" cost estimate negligently made?
What loss or damage was caused by “the house” cost estimate?
Was "the house" cost estimate misleading or deceptive conduct?
Did the Hodgkinsons act unreasonably or fail to mitigate their loss in relation to "the house" cost estimate?
What is the measure of the Hodgkinsons' loss or damage in respect of "the house" cost estimate?
Was there loss or damage by misleading or deceptive conduct by failure to inform the Hodgkinsons of certain matters?
Was there loss by a cost estimate representation as to the additional limestone and rammed earth walls?
Was there a representation as to completion time?
Is there liability for any defective drawings?
The claim for pre‑judgment interest on damages

Orders

SIMMONDS J:

Introduction

This is an action in respect of the provision of architectural and building services in relation to the construction of a new residence on Lot 9, Blenheim Lane in Mt Claremont. A residence was partially built on Lot 9, as 2 Blenheim Lane. The plaintiff, Mr Edward William Hodgkinson ("Mr Hodgkinson"), and his then wife, Mrs Kelly Hodgkinson ("Mrs Hodgkinson"), had bought the vacant land that was Lot 9, Blenheim Land, Mt Claremont, and had approached the defendant company through its principal, Mr Kimbal Wayne Doepel ("Mr Doepel"), who was known to Mr Hodgkinson. There was a series of discussions, some involving just Mr Hodgkinson and Mr Doepel, and some involving both the latter and Mr and Mrs Hodgkinson. The defendant produced a series of sketch plans. Ultimately, plans were settled. Mr and Mrs Hodgkinson engaged the defendant to provide architectural design services and at least some building supervision services for a new two storey home to be built on Lot 9 Blenheim Lane. The defendant applied for and obtained, first, development approval of the plans, and then a building licence from the local authority on further plans. Construction began. Variations were made to the plans. Relations between the parties began to deteriorate. This deterioration culminated in the defendant suspending its services, and then Mr and Mrs Hodgkinson terminating the defendant's engagement. Mr and Mrs Hodgkinson engaged another firm to provide design and building supervision services and the work continued. However, the work was not completed. Ultimately, the partially completed house and certain goods acquired to go in it were sold for slightly more than the expenditures on the house, the goods and the land.
Mr and Mrs Hodgkinson separated on 22 February 2002, and were subsequently divorced. By the terms of the divorce arrangements Mrs Hodgkinson assigned to her former husband all of her interest in the house, and any cause of action in relation to it.
The action is for damages principally for negligent advice as to the cost of the work and the time taken for completion; for breach of contract in relation to the services provided and not provided in relation to advice as to that cost and that time; and for contraventions of the Trade Practices Act 1974 (Cth) and the Fair Trading Act (WA) in relation to the services provided and not provided as to advice as to that cost and that time.
In the original pleadings by the parties, there was a claim for damages by the plaintiff that was abandoned at trial, and a counterclaim by the defendant that was dismissed prior to trial. There were also some modifications of the statement of claim sought by the plaintiff in other respects. I gave leave for the statement of claim to be amended accordingly.
On the case as finally presented, the following issues arise:
•Was there no more than a budget or budgets for the work, or was there also a cost estimate provided by the defendant in respect of it or a part of it which was not borne out?
•Was any such cost estimate negligently made?
•What loss or damage was caused by "the house" cost estimate?
•To what forms of liability does any such loss or damage give rise?
•Did the Hodgkinsons act unreasonably in relation to any such cost estimate or fail to mitigate any such loss?
•What is the measure of any such loss?
•Was there loss caused by any misleading or deceptive conduct by the defendant's failure to inform the Hodgkinsons of certain matters?
•Was there loss caused by a cost estimate representation as to certain walls in the house?
•Was there a representation as to completion time?
•Was there liability for the cost of certain drawings done to replace ones by the defendant?
•Should interest be allowed on damages awarded to the plaintiff and if so for what period?
This judgment proceeds by reviewing the facts of this case, before considering these issues and introducing further factual detail as required.

Mr Hodgkinson's background

Mr Hodgkinson at the trial had been a project manager for land development and a consultant to the Perron Group. For the past 30 to 35 years he had been a project manager and real estate agent. As a project manager for the Perron Group since 1970 his work had been to find and develop tracts of land for the purposes of residential house allotments. As a real estate agent he had employed staff to sell the building lots so developed.
Prior to the construction of the house in this case, he had been involved in the construction of two residences, one in 1985 in Mosman Park, and one in 1995, on Earls Court in Mt Claremont. Both residences were for himself. He employed an architect to design, and to engage a builder for, the 1985 house, which had been built with limestone walls, a finish that as will be seen is of some significance to this case. He contracted with Plunkett Homes for it to construct the 1995 house.
He had been involved, with his brother, in the construction of a medical centre in Ocean Reef, for which they engaged a firm as architect and an individual as builder. He had been involved in a development of a business park at Mandurah that ultimately did not come to fruition. There is also evidence he had been involved in a property leased to a commercial tenant in Gould Street, Herdsman. I note that it was the evidence of Mr Doepel that he was told by Mr Hodgkinson he had "developed [the building on the Gould Street Herdsman property] in his own right" (examination‑in‑chief, TS 604). However, Mr Hodgkinson's evidence was that he had bought this property complete with the buildings on it leased to their commercial tenant (examination‑in chief, TS 257). This evidence was not challenged, and I find the plaintiff's account to be established.
As will become clear below, the extent of the background of Mr Hodgkinson relevant to the work on the house in this case assumes some significance.
Mr Hodgkinson had known Mr K Doepel, of the defendant company, Doepel & Associates Architects Pty Ltd, since about 1995. Mr Hodgkinson appears to have become acquainted with Mr Doepel no later than when the latter was working as architect in the development of three service stations, one for Ampol and two for Shell, on three properties, one of which Mr Hodgkinson owned, and the other two of which he leased. Mr Hodgkinson had some dealings with Mr Doepel in relation to the possibility of the development of the business park at Mandurah. The exact nature of those dealings was unclear, but in any event the development, at least as far construction to any designs by Mr Kim Doepel was concerned, did not go ahead, as I have indicated

Mr Doepel's background

Mr Doepel has bachelors degrees in architecture and has been a registered architect since May 1988. He is an associate member of the Royal Australian Institute of Architects.
Mr Doepel is also a registered builder, and is a member of the Australian Institute of Project Managers.
He practises as an architect with his company, the defendant. His practice is (examination‑in‑chief, TS 603):
" … predominantly in the design of commercial buildings. The design of residential properties is only a very small part of my practice and I generally design residential properties only for my commercial clients."

The Hodgkinsons acquire Lot 9, Blenheim Lane, Mt Claremont

On 21 March 1998 Mr Hodgkinson and his then wife, Mrs Hodgkinson, purchased at auction Lot 9, Blenheim Lane, Mt Claremont. This lot at its rear faced over the playing grounds of John XXIII College. The purchase price of this property was $350,000. Stamp duty was $10,775 and transfer costs were $699. The property was purchased to provide a residence for the Hodgkinson family. At the time the Hodgkinsons were living nearby, in the Earls Court home they had had built. Their daughter, then 7 years old, was a student at John XXIII College.
Settlement of the sale occurred on 22 April 1998.

The initial meetings between Mr Hodgkinson and Mr Doepel in March 1998

At the latest shortly after the purchase of the property on Blenheim Lane, but before settlement, Mr Hodgkinson contacted Mr Doepel by telephone to discuss the preparation of plans for a residence to be built on Lot 9, Blenheim Lane ("the Blenheim Lane project"). This led to a meeting of the two men at the offices of the defendant to discuss the possibility of engaging the defendant to prepare documentation to construct a residence on the property. This meeting was followed by further ones, both at the Hodgkinson residence on Earls Court in Mt Claremont, and at the defendant's offices. There was some dispute whether or not both Mr and Mrs Hodgkinson were involved in any of the meetings at the defendant's offices. In any event there appears to be no dispute that by 26 March 1998 Mr Doepel had agreed to do preliminary plans for the Hodgkinsons' residence. There is some agreement, but also some considerable disagreement, between the evidence of Mr Hodgkinson and Mr Doepel as to what was said at these March meetings by Mr Hodgkinson and his wife in relation to the budget for the work, and what this did, and did not, cover.
As to the March meetings, Mr Hodgkinson's evidence is that he had said what the Hodgkinsons wanted was a two storey residence on the property and he had indicated a budget for the residence. The residence was to include (his examination‑in‑chief, TS 156):
"During these early meetings with Doepel I stated to him words to the effect that I required the design to include a flat roof, external walls to be constructed in limestone and Donnybrook stone in some areas, the internal walls to be brick and plaster, triple rafts to be located at the front of the residence, a swimming pool to be built across the block and a cabana to be built as part of the residence, a rammed earth division wall on the ground floor.
Timber flooring of good quality would be installed in all areas except bedrooms 3 and 4, the TV room and the office. Indoor benches and cupboards, central airconditioning. Benchtops and splashbacks in the kitchen and cabana areas would be made of granite. There would be marble walls and floors in the main en suite, guest toilet and floor of the entrance to the house. All other bathrooms and the laundry would be tiled and wood be full height. There would be a security system."
As to the budget, Mr Hodgkinson testified he had indicated to Mr Doepel it was $400,000, and also testified as to what it covered and did not cover, as follows (his examination‑in‑chief, TS 152):
"I stated to Doepel at the first meeting words to the effect that the budget for the construction of the residence, not including a swimming pool, soft furnishing, landscaping, special equipment and furniture, was 400,000.
I decided to exclude the items in the previous paragraph because I did not want to pay a fee to Doepel for procuring these items and I also wanted the opportunity to choose the items and to shop around and get the best price I could. I did not have unlimited funds available to construct the residence.
I had a budget of 400,000 to construct the house and 100,000 for items mentioned above to finish the house."
There is some dispute as to whether or not Mr Hodgkinson told Mr Doepel of the allocation to the excluded items. I will return to that dispute below.
Mr Doepel's evidence was that Mr Hodgkinson told him the following, as to the house Mr Hodgkinson wanted (examination‑in‑chief, TS 606 ‑ TS 608):
"In March 1998 Ted said the house he wanted was to have a limestone exterior with some feature Donnybrook stone on the front entry with a brick inner loop, feature walls inside of either limestone or Donnybrook stone, a master bedroom, a double garage, a large office, because Ted works a lot from home, a kitchen, a meals room flowing into the family room, a formal sitting room and a cellar under the stairs. The first floor was to have three bedrooms, a rumpus room, an ensuite off one of the bedrooms, a bathroom and a balcony.
…
The main bedroom was to have an ensuite and a walk in robe. There was to be a powder room, a pool, an outdoor shower with hot and cold water and a garden shed. The house was to be two storey. All the bedrooms were to be double sized bedrooms. Double size bedrooms are a minimum of three metres by 3.6 metres so that a double bed can fit in the room.
Kelly's daughter was to have a bedroom located on the first floor of the house. It is the only bedroom on the first floor with an ensuite. There was to be reverse cycle airconditioning to both floors, a security system and a large capacity hot water system.
Ted said that he would organise the landscaping. He said he proposed to have Epcad Landscaping do this as he had used them on his other projects. Ted said that Epcad was a trade he used for his commercial developments. I did not know them. Ted said that he would be responsible for the pool, airconditioning, security system, landscaping, special equipment, fixtures and fittings which were not part of my brief. I was responsible for the hot water system, which is a standard inclusion in normal houses.
Ted said he also wanted the house to include special fixtures and fittings. However, Ted was to organise these items separately with the help of an interior designer. Ted said that the special fixtures and fittings would include all the appliances: the whitegoods, the light fittings, the door handles, the furnishings, floor finishes and window treatments.
Ted said that he wanted the external appearance of the house to be square and contemporary-looking with parapets. Ted and I did not discuss my fees to design the house at this time. I said that I would prepare some preliminary layouts and catch up with him and Kelly at a later date. Ted said that there was no urgency for the project."
Mr Doepel's evidence was also (examination‑in‑chief, TS 609):
"Ted told me that he wanted to spend about $400,000 on the shell of the house up to lockup. He aid he would be responsible for the pool, landscaping, special fixtures and fittings, security system, floor finishes and airconditioning."
Mr Doepel also gave this evidence as to the style of the house Mr Hodgkinson said he wanted at this time (examination‑in‑chief, TS 611):
"Ted said that he wanted a comfortable house. Ted said that he did not want to live in a project house and he wanted something different from that. Ted told me that he liked open-plan living. The block had never to be built out views and Ted said that he wanted to capitalise on them."
It will be seen that there is matter in common between the two descriptions, but also points of difference.
As to the points in common for the two storey residence, although there is no mention in the quoted passage from Mr Doepel's evidence of a flat roof, he subsequently testified that such a roof was discussed (cross‑examination, TS 803). The descriptions of the exterior walls are much the same. (The interior ones are a different matter, to which I will return.) There would be four bedrooms and an office. There would be a security system, and air conditioning ("central", on Mr Hodgkinson's evidence, "reverse cycle" on Mr Doepel's). There would be a swimming pool.
There were items in both lists not appearing in the other. Mr Hodgkinson's evidence referred to a TV room, a cabana, and a rammed earth division wall on the ground floor, while Mr Doepel's evidence as to the initial discussions did not refer to any of these. Mr Hodgkinson's evidence referred to internal walls of brick and plaster, while Mr Doepel's evidence made no reference to internal walls of that sort, rather referring to "feature walls", as I will again indicate. Mr Hodgkinson's evidence referred to timber flooring, inbuilt benches and cupboards, bench tops and splash backs in certain areas in granite, marble walls and floors in certain areas, and full height tiling in other areas, while Mr Doepel's evidence made no such references. Mr Hodgkinson's evidence was that the wooden flooring was important to him, at least in what would be his daughter's bedroom, because of her asthma. The family's Earls Court residence had wooden flooring in his daughter's bedroom. Mr Hodgkinson's evidence was also that the proposed residence was meant to reflect another aspect of the Earls Court residence, which had full height marble on some of the walls and marble on some of its flooring, and full height tiles on all walls in the second bathroom.

Mr Doepel's evidence referred to an ensuite and a walk in robe for the master bedroom on the ground floor, a powder room, meals room flowing into the family room, a formal sitting room, a cellar under the stairs, a rumpus room, an ensuite off one of the first floor bedrooms, a first floor bathroom, a first floor balcony, a large capacity hot water system, an outdoor shower with hot and cold water, and a garden shed, while Mr Hodgkinson's evidence referred to none of these. Mr Doepel's evidence referred to feature walls inside of either limestone or Donnybrook stone, while Mr Hodgkinson's evidence made no reference to internal walls of those sorts.
Mr Doepel's initial design sketches (Exhibits D491 – D494), some at least of which were shown to Mr Hodgkinson in about July 1998 (cross‑examination of Mr Hodgkinson, TS 353) indicate some but not all of the detail which Mr Doepel's evidence sets out. Thus, the sketches show, on the ground floor, a double garage, an office, a meals room connected with a family room, a sitting room, and a master bedroom. The sketches show, on the first floor, three bedrooms, one with what appears to be with an ensuite, a bathroom, a rumpus room, and a balcony. There is no labelling or other detail to identify any other features of the sort Mr Doepel's evidence refers to.

The initial indications of the Hodgkinsons' budget, and what it covered

There was also agreement as to what Mr Hodgkinson had initially indicated was the sum the Hodgkinsons wanted to spend or had as a budget, at $400,000.
Mr Doepel's evidence was that the scope of what that sum covered was a "shell" (examination‑in‑chief, TS 609; cross‑examination, TS 745 and TS 810), which he explained as a residence completed to the "lock‑up" point, rather than a completed residence. A completed residence was one in which the client could live, and would feature such items as floor coverings, window treatments, full appliances, cabinetry and furniture. He described what was included in a "shell", in the sense in which he was using the word, in cross‑examination as follows (TS 744 ‑ TS 745):
"---Standard doors would be but not specially-made doors, no.
So doors were always in the figure?---Standard doors would have been in the figure, so a door and a doorframe, say, $150 each.
A door and a doorframe?---As opposed to, you know, I think $4000 each.
And the windows were in?---Windows were in, yes.
Yes, and kitchen appliances were in a standard cost estimate?---For the shell of the house, yes.
Right. Just pause there. So kitchen appliances are a part of the shell. What else is in the shell?---It's basically a locked up situation so you've got external walls, internal walls, roof on, but no painting, no special finishes, no floor coverings, no special cabinetry, no special - - -
Hang on. But you've got kitchen appliances?---You would have basic kitchen appliances.
Yes, and kitchen cabinets to put the kitchen appliances into. You're not going to put a whole pile of kitchen appliances in the middle of a concrete shell of a floor, are you?---Not normally, but that was not part of my scope of work.
It wasn't part of your scope of work?---No.
What, in 1998?---Yes."
He acknowledged he could not recall a specific occasion on which he had used the word "shell" in his dealings with the Hodgkinsons, and the word does not appear in any of the documents that passed between them. However, he also testified that he was sure he had used the word or a similar one with them (cross‑examination, TS 745).

The evidence as to homes of a standard design

There was no evidence of an understanding in the residence building industry of "shell". However, there was evidence from representatives of two firms of builders of residences to standard designs which indicated what their firms included and did not include in their firms' standard designs. They were witnesses called by the plaintiff.
One witness was a Mr Dean Harding, an after sales service manger for J‑Corp Ltd, which, trading as Oswald Homes, builds homes, and did at all times material to this case. In 1998 Oswald Homes built a "standard specification" home on Lot 11, Blenheim Lane, Mt Claremont for a price of $269,495. This was near the Hodgkinsons' proposed house. In his testimony Mr Harding appeared to agree to a description of the home as a project home with some variations. I will return to this home's cost and some of its features later in these reasons. For now, I note that tendered into evidence was a document dated 16 April 1998 (Exhibit P232) which set out as a "schedule of finishes" the specifications for this house, and a further document (Exhibit P233) which was a variation form for the house.
In cross‑examination, Mr Harding testified that homes of the sort represented by that on Lot 11, Blenheim Lane did not include a number of items on the basis they would not be ones all buyers would want, but would consider "discretionary". For the house on Lot 11 Blenheim Lane, there would have been an allowance within the price for the home for some kitchen appliances, but not (as the specifications indicated) such items as a dishwasher, a hot plate and a microwave, although there would be a recess provided for the latter at least. There was no provision for an intercom system, a vacuum system, an alarm system, or air conditioning. There was no provision for floor covering except by way of an allowance of $40 per square metre, and except as a variation to the standard specifications.
The other witness to give evidence of this sort was a Mr Alwyn Even, the general manager for Webb & Brown‑Neaves, a firm that primarily builds residences, and which did at all times material to this case. Mr Even accepted that his firm builds project homes. In 1999 his firm entered into a contract to build a residence on Lot 4, Prince Albert Court, Mt Claremont for a price of $250,728. Particulars for that residence were put into evidence (Exhibit P237), as were the variations to those particulars (Exhibit P238), and the plans for the residence (Exhibit P239). As with the house on Lot 11, Blenheim Lane Mt Claremont, I will return to the price and some of the features of Lot 4, Prince Albert Court later in these reasons. For now, I note that Mr Even indicated in examination‑in‑chief what a buyer from his firm of a residence at this price would in 1999 have normally received, and not received (TS 527 – TS 528):
"Can you, if you are able to, tell me what a home owner would have got for that price for this house in 1999?---Only in general specifics. Generally a house would consist of the tiling that's shown on the plan, kitchen cupboards, vanity cupboards, mirrors, appliances as in wall oven, hotplate, range hood, hot water system. It's probably easier to say what it doesn't include and it wouldn't be floor coverings, any
Just pausing there, when you say it wouldn't include floor coverings, I think you said there would be tiling in the bathroom?---It would include tiling as hatched on the plan.
Yes, but it wouldn't include carpet or - - -?---Carpets or timber floors or tiling to living areas in that price.
Thank you. Are there any other things it would not include?---Airconditioning, window treatments
Sorry. Just pausing there, that's curtains or blinds?---Curtains or blinds, or timber blinds or something like that.
Yes?---Landscaping, reticulation. It may or may not in those days have included painted walls. It's a general thing that that's included these days but in those days it may not have included, for that price, painted walls.
Yes, I see?---But the rest of the house is painted, depending on also whether it was too wet to paint when the owner took possession.
Yes, all right, and so what a person gets for that price is not a house that somebody could go into - I suppose they could go into and live in it straightaway but ordinarily one would expect that somebody would spend more money to get it to the stage that they wanted to live in it?---That's correct, yes."
It is apparent from considering the evidence in this respect of the two witnesses that there is much in common between them as to what buyers of similar priced homes in the same area would not receive for the price. This included floor coverings (except for the allowance in the case of 11 Blenheim Lane, and some tiling in the case of Lot 4 Prince Albert Court, Mt Claremont), window treatments and air conditioning. There is also at least one difference: included in the house on Lot 4 Prince Albert Court, but not included the house on Lot 11 Blenheim Lane, was a hot plate.
Mr Even also testified as to the specifications for a further standard specification home ("The Residence") built by Webb & Brown‑Neaves at about this time, one for which they also had built a display home on Lot 8, Prince Albert Court, Mt Claremont. The Residence, he testified, was the most expensive home his firm built at that time, and had a cost in 1999 of $392,700. Its standard specifications, set out in a brochure on the design (Exhibit P250), included items not included in the standard specifications for the houses on Lot 4, Prince Albert Court and Lot 11, Blenheim Lane, Mt Claremont, including "marble top servery to the kitchen cupboards" and a "Quality security system with three motion sensors, door switch, keypad and two sirens". But like the other two homes, The Residence did not include such items as floor coverings (except for some tiling) and window treatments. The display home version of the Residence on Lot 8, Prince Albert Court, Mt Claremont included a range of items not included in the standard specifications as indicated in a document listing them (Exhibit P240). Those items were such as floor coverings (carpet and timber), window treatments and air conditioning.
However, it is clear from the evidence as to the standard specification homes and the display homes that there is no equivalent detailed documentation listing the inclusions and the exclusions, or non-inclusions, in the Hodgkinsons' home, encompassed by their budget of $400,000, either in 1998 or, as will be seen, later, when plans for the home were submitted for development approval and a building licence with the local authority in 1999.

The evidence as to the building licence

As I will indicate below, an application for a building licence was made in December 1999 by the defendant. The value put on the building at that time was $300,000, and as will be seen there is a controversy on the evidence as to whether or not Mr Hodgkinson was the source of that figure.
Of relevance in this context, Mr Doepel was asked in cross‑examination what he understood the building for the purposes of the application covered (TS 911 – TS 912):
"So there was an application for the building licence and that's page 55 and it is exhibit P26. Yes, that's it. So that's the application for the building licence that you filled out?---That's correct.
And you are the builder noted on there?---That's correct.
And you see there that there's an estimated value of the building work at $300,000?---That's correct.
The building work being referred to in that application, what's that?---It is the whole of the house excepting for the landscaping, pool, driveway and anything that might - like soft furnishings and furniture and things like that. It's actually whatever is fixed in the house.
So it's floor coverings?---Well, not normally carpets or timber or things like that, but basically a house that you could, you know, move into.
Yes?---Yes.
So it's not a shell?---No."

The exclusions from the brief to Mr Doepel

As to the exclusions referred to in Mr Hodgkinson's evidence, being the swimming pool, as well as "soft furnishings", landscaping, "special equipment" and furniture, he testified, as I have indicated, that he had excluded those items because he did not wish to pay Mr Doepel a fee for procuring them and because he wanted the opportunity to choose them for the best price he could find. His evidence was also, as I have indicated, that at the time he had a budget of $100,000 for the excluded items.
There was considerable attention directed at the trial to the lack of specificity in the quoted terms. Mr Hodgkinson admitted under cross‑examination he was not sure exactly what he had meant by those terms (TS 336 – TS 339, and TS 340 – TS 347). He appeared, after some equivocation, to indicate he meant carpet and curtains (if that was the form of window treatment ultimately decided upon) to be within "soft furnishings". He said television and DVD equipment was "probably" within "special equipment", together with some but not all of the speakers to be installed in the house. He also gave as an example of "special equipment" a cellar in the garage. As will be indicated later, a cellar in the garage was added to the specifications for the property after the defendant had ceased to be associated with it. I will have occasion to return to this listing below.
Mr Hodgkinson said that air conditioning and a solar vacuum system were not within "special equipment", but rather within the "house" for the purposes of the $400,000 figure he used with Mr Doepel (cross‑examination, TS 344).
He said his uncertainty had to do with the early stage of the process.
He also testified he had contemplated at this early stage that the Hodgkinsons would work with an interior designer on the "internal fit‑out" (TS 341). The fee for this work was not included within the budget for the "house", although it was not referred to any of the specific exclusions (TS 347).
Mr Hodgkinson's evidence as to the grade or quality of house he had in mind that he had communicated to Mr Doepel in the March 1998 discussions with him was this (cross‑examination, TS 347):
"Did you say to him that you wanted the house to stand out and not look like a project home?---No. I said I wanted it to look subtle down the end of the street and just to fit in nicely to the end of the street.
Did you tell him that you wanted the external appearance of the house to be square and contemporary-looking with parapets?---Yes."
I have already referred to Mr Doepel's evidence as to the grade or quality of the home Mr Hodgkinson had in mind.
In any event, I note the use of all of the quoted terms, except for "soft furnishings", in the letters dated 22 July 1999 from the defendant to the Hodgkinsons (Exhibits P14 and P15), to which I return below, in which the following appears:
"Further to the completion of the previous sketch plans in December 1998 we confirm that the house budget is in the range $390,000 to $400,000 not including pool, landscaping, special equipment and furniture."
Mr Doepel's evidence as to the items he understood to be excluded referred to the ones previously indicated, which differ from those for Mr Hodgkinson in their specified exclusion of air conditioning, a security system, all the appliances, the whitegoods, the light fittings, the door handles, floor finishes and window treatments. As I have indicated, Mr Doepel also gave evidence that he understood a shell "normally" to include allowances for doors, and kitchen appliances. It was not clear from his evidence whether or not such allowances were appropriate in this case, because of the Hodgkinsons' list of exclusions.

The evolution of the project between March 1998 and November 1998

Between March and November 1998 the defendant produced a number of sketch plans for the work. There is no contest that over that period the design of the house changed. Among others, the living areas of the house changed, from a ground floor of 271 square metres to one of 292 square metres, while the first floor changed from one of 133 square metres to one of 173.8 square metres (examination‑in‑chief of Mr Doepel, TS 643). This represented a change in total living area from 404 square metres to 465.8 square metres (cross‑examination of Mr Doepel, TS 834, TS 831).
As I will indicate, there is likewise no contest that there was by 22 July 1999 a further increase in the area of the ground floor, to raise the total living area to 525.8 square metres.
There were also changes in the lay‑out of the house, involving the designs of particular rooms, increases and reductions in the areas of particular rooms and spaces, the addition of new spaces, the relocation of rooms and a change in the shape of at least one part of the house, from a curved to a square look (examination‑in‑chief of Mr Doepel, TS 615 ‑ TS 617, and TS 619; and sketch plans produced by him over this period, some of which have amendments annotated on them, SK1.1 ‑ SK4, being Exhibits D493 ‑ D494, D502 ‑ D507.)
There were also changes to other areas lying outside the footprint of the house, including most notably an increase in the size of the swimming pool (examination‑in‑chief of Mr Doepel, TS 617 and sketch plan showing amendment, SK1.1 as amended, being Exhibit D496).

The letter from Mr Doepel to the Hodgkinsons dated 30 November 1998 and further changes

Under cover of a letter dated 30 November 1998 (Exhibit P13) Mr Doepel sent plans (identified in the evidence of Mr Doepel as SK5, which appear to be Exhibit D515: see examination‑in‑chief, TS 623 and TS 625) to the Hodgkinsons. These were identified in Mr Doepel's evidence as the first formal or full size plans.
The letter itself set out a "budget breakdown based on an overall expenditure of $500,000 as confirmed by you". The letter broke this down under the headings "Project Budget", for "house areas". These were a:
•ground floor plan for 292 square metres, and a first floor plan of 173.50 square metres, both areas shown at $750 per square metre, producing the amounts of $219,000 and "$130,100" (in fact the figure is $130,125: there was no explanation for this discrepancy at the trial), respectively;
•a garage area at 46.20 square metres and a balcony area of 21 square metres, both shown at $500 per square metre, producing the amounts of $23,100 and $10,500, respectively;
•paving of 251 square metres shown at $35 per square metre, producing the amount of $10,000 (in fact the figure is $8,785: there was no explanation for this discrepancy at the trial);
•a pool "say $35,000"; and
•landscaping shown at $13,000, for a total of $440,700.
This produced, Mr Doepel testified, a total, for the portion of the work to which he understood the Hodgkinsons' budget of $400,000 to relate, of $382,700 ($219,000 + $130,100 + $23,100 + $10,500) (cross‑examination, TS 828 – 832).
To these amounts, and under the next heading, "Architectural Fees", for schematic design, design development, development approval application and working drawings and specifications, was added a further $20,800. And there were two further line items, one for "structural engineer say $3,500.00", and the other for "project management" of $35,000.00.
An overall total of $500,000 was shown.
There was considerable attention directed to how the figure of $500,000 fitted with Mr Hodgkinson's account of his budget of $400,000. Mr Hodgkinson was cross‑examined on it as follows (TS 361 – TS 364):
"All right. So he's told you, and you can see this, that he has worked out this exercise based upon $750 a square metre. Do you see that?---Yes, I see that.
And you didn't think to either disabuse him of that belief or tell him he was wrong?---No, because I weren't moving on it at all.
But if it was wrong you would have said so, wouldn't you?---No, no, not at all.
The fact that you weren't, as it were, moving on it, why is that a reason not to correct something which you now say was wrong?---I corrected it - well, later on
Sorry. When did you correct it?---No, it's the wrong word I used.
Yes?---I said when I sold the office building I told Kim to go ahead and then I asked, to make certain, can he still build this house for 400,000, which he gave to me in writing, and I asked for it in writing.
And you never corrected anything that was said in this letter, did you?---No, never.
All right. What it says is that this exercise produced as a figure of $500,000?---Yes.
Did you say to him, 'Look, Kim, you've got it wrong. The budget is not 500, it's 400'?---I've already told you I said nothing about the letter to him whatsoever.
All right. So your evidence is that's wrong as well but you didn't correct it?---Yes.
Is there anything else in the letter that's wrong and you didn't correct it?---I didn't correct anything at all in there.
So when he says $500,000, first page, page 24, $500,000 confirmed by you, you say that's wrong as well but you didn't correct him?---I didn't correct it. I didn't answer this letter and if you go through it correctly 500,000 includes a pool, includes landscaping, so there is 50,000 roughly.
Mr Hodgkinson, just listen to my question, not what you want to tell me. I'm directing your attention to the words that appear in the second sentence of the letter on page 24. Can you find that?---Yes, 'As confirmed by you'.
Right, and do you say that is wrong?---I can't remember at all confirming this letter to him whatsoever.
No, no, just take a moment and read the sentence carefully?---I said - - -
Read it carefully yourself then I will ask you the question again?---Yes.
What the sentence says is that this $500,000 is the figure that you have confirmed as your budget. Do you say that that is wrong?---I say it is wrong because I didn't confirm it and the letter I'm looking at is not even signed.
And because you say - sorry, is there some point there? Do you deny that you got this letter?---No, I don't deny - - -
You identified in your evidence it's a letter you received, didn't you?---Yes, but it's not signed either.
It's a file copy, isn't it? You would have the original. Correct?---I don't know if I have or not. I can't answer that.
What's the point that you're making here, Mr Hodgkinson?---I just notice the letter is not signed.
You accepted in your own evidence that this was a letter that you received?---Yes.
And you've accepted that you did not respond to it?---I'm only making a comment the letter was not signed.
So it's all wrong but you don't respond in any way?---No, I
Is that the long and the short of it?---Yes. That's what I think I did[.]"

The reference to Mr Hodgkinson telling Mr Doepel to "go ahead" at a later stage appears to be one to events in July 1999, to which I return below.
I understand this evidence to be that Mr Hodgkinson did not consider the overall budget figure to be "all wrong", but rather to include the previously discussed figure of $400,000, as he indicated. The difference between that figure and $500,000 is explained by the other items in the letter, particularly the swimming pool, landscaping and paving.
This is consistent with Mr Doepel's evidence, to which I referred. It is also consistent with Mr Hodgkinson's failure to respond to this letter. That failure is not in my view to be explained entirely by the lack of certainty the building project would go ahead. Thus, there was a sufficient prospect for it going ahead that the design continued to evolve after the letter but before the "go ahead", as I will indicate.
For the defendant, it was put to me that on the evidence this letter confirmed or at least was consistent with an allocation of responsibility with respect to the budget for the building project as between the Hodgkinsons and the defendant. The Hodgkinsons through Mr Hodgkinson supplied the figure for the ground and first floor of $750 per square metre. The defendant was not responsible in any way for the appropriateness of that figure.
Mr Doepel's evidence with respect to the figures of $750 per square metre and $500 per square metre used in the letter of 30 November 1998 was this (examination‑in‑chief, TS 612, TS 624):
"---The [March 1998] 400,000 building cost was based on a rate of $750 a square metre which Ted said he could achieve because of his contacts. The $750 per square metre rate was a trade rate. At the time the going rate for a residence of this type with standard finishes and fixtures was about $850 per square metre.
Just pause there. You need to look at volume 1 of the defendant's index to trial bundle, so again grey volumes, volume 1 at pages 9 to 65. Do you identify that as the Ralph Beattie Bosworth pocket compendium for Perth, January 1999? Is that right?---That's correct.
Yes. I tender that, your Honour.
SIMMONDS J: Yes. That will become exhibit D4 pocket compendium of Ralph Beattie Bosworth January 1999.
EXHIBIT D4 Defendant
Pocket compendium of Ralph Beattie Bosworth for January 1999
…The trade rate of $500 a square metre was adopted for the garage and balcony as these two areas are not finished to the same standard as the main house."
He later confirmed that the "trade rate" was one to do with the "major" cost component of the house, its limestone walls (cross‑examination, TS 915). He elaborated on this in the following terms (TS 916):
"[I]n your mind what sum did you ascribe to the external limestone leaf, both to purchase and to lay?---I didn't specifically calculate a number but I knew that you could in fact get larger project houses in limestone, ie, like the one next door for Mr Fletcher, which was external walls out of limestone, and that was in the range I think of about 450 to less than 500 thousand, so that was - I didn't know anything about limestone. I knew that you could have a limestone‑clad house in that range, which was in the sort of range that Mr Hodgkinson was talking about, and he being an expert in limestone I probably, in hindsight, unwittingly accepted his advice."
In his cross‑examination, he elaborated on his testimony as to the rate of $850 per square metre, explaining that he had gone to the publication (Exhibit D4) at the same time the figure of $750 had been used in the early discussions of the project, in March 1998. That publication was one on building costs for projects of varying descriptions, from which he identified a figure of $850 per square metre as the otherwise appropriate rate. This figure was one he acknowledged he had identified as at a point in the range in that publication for "Building Costs Residential Houses Architect designed $/squ m gross 800 ‑ 1100 medium standard finish". This was the middle range, between "Speculative 500‑600 Low standard finish", and "Prestige executive 1100‑1700 Various levels High standard finish". He explained that identification as follows (cross‑examination, TS 749 and TS 821):
"This is what you're referring to there, Houses. Yes?---Yes.
Speculative: what's a speculative house?---That might be like a project house.
Do you know?---Not particularly.
But you use this standard even though you don't know what the terms mean?---Well, spec houses are houses that builders build and then sell, so they're built on spec with no particular client in mind.
So that's what it is?---Yes.
You do know?---Well, I'm just presuming. That's my understanding of it.
Okay. The next one, Architect Design, 800 to 1100?---That's correct.
Medium Standard Finish?---Yes.
Sorry, what did you say the number you would have used was, for this house? 850, wasn't it?---Yes.
So at the lower end of this?---That's right, because I didn't have a complete scope and other things were being done by others, so I used the lower end of the scale because fixtures and fittings and special equipment would be by somebody else, of which I had no control.
…
And it's not in here, is it, that in March 1998 he told you that he was proceeding on the basis - just a moment. I'm looking at 102, so is it your evidence or your recollection that in March 98 he gave you this rate of 750?---That's correct, yes.
So is it around then that you went and consulted the guide?---Look, I would have looked at the guide at some stage before I had written the letter in November of 98 where I had the 750. I didn't give Mr Hodgkinson a copy of page 18 because we had discussed the rate that he believed he could achieve in the house.
I'm just trying to understand why you, with the process you went through - not what you said to him or you say he said to you; why you put this house as explained to you in March 1998 into this middle band?---Because he'd never said to me that he wanted to have a luxurious over the top house. Even the house that was finally built doesn't fit into the prestige executive residence.
Right?---You go around, you know, The Coombe and Saunders Street and other places and you'll see prestige executive residences. This is not one.
He wanted a house that he would be proud of because other people's opinions mattered to him a lot?---That's right. He wanted something different. He didn't want a project house.
He wanted a quality house?---That's right.
And you put that in the middle band?---Yes. You can have a quality project house for 110,000."
He further testified that he had chosen a value towards the bottom of the range as follows (cross‑examination, TS 750):
"But these rates here aren't rates for estimating shells, are they?---No. T [sic] why you've got between 800 and 1100.
That's right?---There's a $300 a square metre difference which is, you know, a third of the value.
So you have gone at the bottom range of this?---Yes.
For just the shell. Is that right?---Well, knowing that others were doing other things, yes."
Later in these reasons I will refer to evidence of a consultant architect called for the defendant, a Mr Standen, which would I find indicate that this location of the house in the cost per square metres bands was too low.
He also testified he had described the rate of $850 per square metre at the time the rate of $750 per square metre was discussed (cross‑examination, TS 755).
Mr Doepel's evidence as to the derivation of the rate per square metre for the garage area and the balcony was as follows (cross‑examination, TS 832‑ TS 833):
"$500 per square metre?---That's correct, for the garage.
Who came up with that?---I did, and that's because a garage isn't finished to the same standard as a house, meaning that you would normally have, say, painted brickwork instead of rendered and plastered. You would have surface mounted fluorescent fittings. You wouldn't have the same amount of finish.
It's just fanciful, Mr Doepel, that Mr Hodgkinson gives you a rate for the house and you come up with a rate for the garage?---No, it's not. By the same token, I've got the same rate for balcony. Now, if you don't have a roof and you don't have external walls, you would agree that it wouldn't cost the same as inside the house when you have those things. That's how the rate is derived at."
The prior experience he was referring to was (cross‑examination, TS 917):
"Because he engaged an architect and a builder to build one house some years before?---He had built a limestone house, had used the same stonemasons and, I presume, had purchased the stone from the same source. Now, even if there was an architect and a builder, he would've been aware of those costs.
Why?---Because he employed them.
Well, how do you know that?---He said so.
He had a builder?---He said so a few days ago.
For the Mosman Park home?---That's correct.
So you just proceeded on the basis in going through your own thought process in relation to this, that, 'Well, I've got no idea about the limestone'?---Well, basically, yes."
Mr Hodgkinson’s evidence was that he had not been the source of the $750 figure and had given no indication he considered he could obtain trade rates for the project (cross‑examination, TS 361).
With respect to the figure of $750, I note the evidence I return to below, from this project, that Mr Hodgkinson considered he knew enough about the costs of construction with brick and plaster walls to be able to estimate, accurately on the evidence of the quantity surveyor who testified in this case, the cost of such walls he was considering having replaced with rammed earth ones. I also consider the evidence as to his prior property development experience, in commercial and residential developments. I find on all of this evidence that he had some understanding of costs of construction relevant to the construction of a residence. However, I am unable to conclude that this would have enabled him to provide a figure of $750 himself. Below, I consider the more likely explanation for that figure on the evidence before me.
With respect to the matter of trade rates for the project, I note that Mr Hodgkinson acknowledged in cross‑examination he had identified and dealt directly with P & P Italiano Limestone, who were responsible for the brickwork and stone work for the project, because of their work in providing walls for prior projects with which he had been associated, including one of his houses (TS 358). In relation to the Blenheim Lane project, he had paid on their invoices without discussing their rates with them, because of his satisfaction with their prior work on projects for him (TS 393). However, there appears to be no evidence that he was aware of the rates they had charged on any of their prior work, on the projects for him or on other projects in which he had been involved.
I note also that the defendant had not been involved in any of the dealings with P & P Italiano (cross‑examination, TS 405), although from the invoice and quotation documents with respect to limestone and work on it (Exhibits D319 ‑ D334) the work they did appears mostly to have occurred after the defendant's involvement ceased. I also note that a fax dated 21 December 1999 from P & P Italiano, attaching a quotation from the supplier of limestone for the project, Meteor Stone, refers to "prices as discussed with Kim Doepel". It appears from those documents that invoices from Meteor Stone were directed to Mr Hodgkinson who paid them. This pattern, of Mr Hodgkinson dealing with the suppliers of limestone work and materials, continued after the defendant had suspended work on it and a building designer firm had been retained for the project (cross‑examination of a Mr Dancer of Hindley & Associates, to whom I return below, TS 501). It also appears, as I will indicate below, that the limestone contractors were the only contractors for the Blenheim Lane project who were both identified for its purposes, and dealt with exclusively or almost exclusively, by the Hodgkinsons.
I have already set out the evidence that Mr Doepel did not consider he was able to estimate the cost of limestone walls. However, I also note the following evidence (cross‑examination of Mr Doepel, TS 805 – TS 806):
"Can I put it to you that when a client is talking to you about the sorts of matters that Mr Hodgkinson is talking to you about, a limestone house, a limestone two storey house with all bedrooms being double sized bedrooms, when you're talking about feature internal walls out of limestone, Donnybrook stone or rammed earth, swimming pools and landscaping, cellars and the like, that's a very expensive house, isn't it?---Not necessarily. I mean, for instance, the house next door had all of those things and that was, you know, not all that expensive.
Which house?---The Fletchers' house.
It had a swimming pool?---Yes.
And you know how much that house cost to build, do you?---Well, I think it was around 450 to 500 thousand, and that was limestone as well.
So you could have then built a limestone house with a pool for 450,000 at the time?---No, Mr Hodgkinson could have gone to Riverstone and had an identical house to the one next door for about that price; correct."
I conclude from this evidence that it is more likely the figure of $750 was arrived in the discussions between Mr Doepel and Mr Hodgkinson as a result of Mr Doepel's consideration of the publication (Exhibit D4) just referred to, and of what he knew of the cost of the house next door just referred to, which appears to have been a "project home", as well as of his assumption that a price of $750 could be attained after allowing for the removal of a builder's margin on the work, and for Mr Hodgkinson's contacts, at least in relation to limestone. I also conclude that it is more likely than not Mr Hodgkinson was aware that Mr Doepel had left the matter of limestone largely to him, but was not aware that Mr Doepel was relying on him obtaining a substantial trade discount in relation to the limestone. I do not find that Mr Hodgkinson indicated to Mr Doepel that he could obtain such a trade discount.
Mr Doepel also testified that Mr Hodgkinson had allowed, beyond "$50,000" for "landscaping and a swimming pool" (on the letter itself, $48,000), a further "$100,000 for the internal fit out" (examination‑in‑chief, TS 613). This last amount, Mr Doepel testified, was not included in the budget break down in the letter of 30 November 1998 (cross‑examination, TS 836), and was beyond the amounts for the swimming pool and the landscaping (TS 837). Mr Doepel testified he did not understand this last amount as a budget, but as an amount "he may spend on the fit‑out" (TS 836). I have previously referred to Mr Hodgkinson's evidence that he had a budget of $100,000 for all of the excluded items, including the swimming pool and landscaping.
The plans enclosed with the letter dated 30 November 1998, Mr Doepel said, were for the Hodgkinsons' approval prior to the plans being submitted to the local authority for its approval. In the event plans for the work were not submitted to the local authority until nine months later, on 4 August 1999.
Following the letter dated 30 November 1998 letter, a further set of sketch plans was produced (sketch plans SK5.1, Exhibit D516) which was sent to the Hodgkinsons in December 1998. These were apparently to reflect further changes requested by Mr Hodgkinson after he saw the plans included with the letter of 30 November 1998. The changes he requested were to certain windows in the house, the enlargement of a walk in robe, to the entry to the porch, the lengthening of the car stand on its northern side, the addition of a window, the adding of certain section lines and the adding of a street verge (examination‑in‑chief of Mr Doepel, TS 625).

The further evolution of the project from December 1998 to July 1999

Further changes in the design were made in the period leading up to the finalisation of a set of plans submitted to the City of Nedlands for development approval, after the Hodgkinsons had given their approval in July 1999.
In particular, changes were precipitated by the request from the neighbour at the northern boundary of Lot 9, Blenheim Lane seeking approval from the Hodgkinsons for the neighbour's home to be built with its garage at that boundary. The request was made in 1999, and its consequences were said by Mr Doepel to be as follows (examination‑in‑chief, TS 629 – TS 630):
"Ted's neighbour's plans had a garage against the northern boundary of Ted's property, ie, adjacent to Ted's proposed office. Ted said that he was concerned this would affect the workability of the office due to noise levels. He therefore wanted me to redesign the house. This led me to designing what I call the second concept.
The second concept had some significant changes. The garage was moved to the northern side of the property, became a three car garage and was built to the boundary with a parapet wall. The study was moved to the southern side, a television room was added, a second powder room was added and there were changes to many rooms including the storeroom, laundry, powder room, study, pantry, master bedroom, walk in robe and the position of the pool motor. I prepared a series of sketches dated 5 April 1999 which reflected the changes requested by Ted and Kelly."
This resulted in a further set of plans being sent to the Hodgkinsons, in April 1999, while they were away overseas. On their return in May 1999 they requested further changes, on Mr Doepel's testimony (examination‑in‑chief, TS 630). The changes asked for, and a further round of changes, were said by Mr Doepel to be as follows (examination‑in‑chief, TS 632 – TS 633):
"---The changes from the previous design were the shape of the laundry, a bathroom had been added to the east of the laundry, a large cupboard was added to the laundry, the garage door was changed to a double door and a single door, the study was moved, the television room increased in width from 3.5 metres to four metres, the shape of the kitchen benches changed, the layout of the walk in robe to the main bedroom and a waterfall was added to the pool on the northern end.
On 31 May 1999 I met with Ted and Kelly at their house and was instructed to make further changes to the plans. The changes were an angled wall between the ensuite and the television room, the cabana increased in length by 500 millimetres to the east, the television room was changed to incorporate double doors splayed to the staircase and the design of the kitchen.
…
---At approximately 1 pm on 5 July 1999 I met with Ted and Kelly at their residence at 2 Earls Court, Claremont."
The effect of the changes made up to this meeting was described by Mr Doepel as follows (examination‑in‑chief, TS 633):
"What was the effect of those changes?---Well, it changed the internal layout of the house, but it also brought the design at that stage to what we believed to be the final changes."
A further change Mr Doepel identified in his evidence was the addition of a rammed earth internal wall, along the family room to the master bedroom. This on his evidence came about as a result of discussions between Mr Hodgkinson and Mr Doepel in late 1998 and early 1999. Mr Doepel obtained a quotation from a supplier he identified, Ramtec, for $4,900, for the wall, which it appears became part of the house design (examination‑in‑chief of Mr Doepel, TS 653 – TS 654). I have previously referred to Mr Hodgkinson's evidence that an internal rammed earth division wall was a part of the specifications for the house from the early discussions.
What happened at the meeting of 5 July 1999 is not evident from the evidence. However, I note that not long before that meeting, on 2 July 1999, on Mr Hodgkinson's evidence he paid the defendant $10,000 for architectural services provided, the first such payment (examination‑in‑chief, TS 160). As I will indicate below, there is some uncertainty on the evidence as to this amount, but not that the first such amount was paid at about this time. This indicates to me that the parties considered they were approaching the conclusion of an important stage in the building project.

Indeed, it appears to be common ground between the parties that Mr Doepel and Mr Hodgkinson together reached the view in July that the design of the house had evolved to the point where development approval for the project from the relevant local authority could be sought.
Also in July 1999, on 16 July, the Gould Street property in Herdsman, to which I previously referred, was sold. There was no evidence before me of the net proceeds of the sale, that is to say, the proceeds after satisfaction of any amounts secured on the property. There is evidence the gross proceeds were in the order of $3 million (cross‑examination of Mr Hodgkinson, TS 269 ‑ TS 270). However, it is not in contest that it was after this sale that Mr Hodgkinson told Mr Doepel to "go ahead" (cross‑examination, TS 362).

The two letters dated 22 July 1999

Mr Hodgkinson's evidence was also that prior to 22 July 1999 he and Mr Doepel had a meeting about the work. This meeting occurred shortly after the finalisation of the plans for that work. These plans were ones reflecting the changes since those of December 1998. Mr Hodgkinson's evidence was that, at that meeting, he requested and received a confirmation from Mr Doepel that the costs of the work, with the exclusions for the swimming pool and landscaping, special equipment and furniture, would be between $390,000 and $400,000. Mr Hodgkinson asked for Mr Doepel to confirm his answer in writing (examination‑in‑chief, TS 161).
Mr Doepel gave no evidence as to such a meeting. However, there is no contest that there was an exchange between the parties initiated by a letter dated 22 July 1999 from the defendant to the Hodgkinsons the terms of which contained a budget confirmation as well as a statement of the defendant's costs, a request for payment and advice as to "colour coordination with Kelly [Hodgkinson]". I consider on this evidence it is more likely than not there had been an exchange between the parties, arising out of the finalisation of the plans for the building project for the purposes of development approval, in which the matters in the letter had been addressed in some form. This exchange had occurred before the first of the letters of 22 July 1999 was sent.
The first letter dated 22 July 1999 from the defendant to Mr Hodgkinson (Exhibit P14), signed by Mr Doepel, began:
"Further to the completion of the previous sketch plans in December 1998 we confirm that the house budget is in the range $390,000 to $400,000 not including pool, landscaping, special equipment and furniture."
The balance of the letter comprised four paragraphs on the defendant's costs and other fees, and a paragraph on a "structural engineer", to which I return.
There was also one paragraph recommending a person, a Ms Elizabeth Brickhill, to advise in the area of "colour and design management". The paragraph went on:
"Elizabeth would be pleased to meet with you once the sketch plans are complete to advise you in this area, and she will discuss and agree her charges direct."
There was a concluding paragraph asking for "another $10,000 towards our costs, as we will be starting working drawings while you are away".
As to the defendant's costs and fees, the letter noted that "the costs to prepare the designs and council drawings to December" were “$7,362.00", of which the Hodgkinsons had paid $5,000, leaving a balance of $2,362. It is not clear why, if Mr Hodgkinson had paid $10,000, as I have indicated was his evidence, the figure of $5,000 was used.
The letter said there needed to be added a further $1,500, for the cost "to redo the plans (Todd's time only)", and a still further $11,780, for "working drawings". (The reference to "Todd" was to a Mr Todd Doepel, who at the time worked in the defendant's office, and to whom I will return.) An additional $20,000 was referred to, "to assist with the coordination of the building works in conjunction with yourself". And it was added that "we will need a structural engineer at about $3,000", although it was also said that "we will get some quotes". The total of all of these amounts not paid was $38,642.
On the letter (Exhibit P14) there were annotations which it was not contested were in Mr Hodgkinson's handwriting. These were a sum of "$40,642", and also "spoke to Kim agreed at $35 000 23/7/99". If the figure of $40,642 was intended to be the total of the amounts in the letter shown as not paid, it appears to be too great, by $2,000.
In any event, it is not contested it was agreed that the total should be revised to $35,000 and an "ammended [sic] letter" also dated 22 July 1999 was faxed to Mr Hodgkinson on 23 July 1999 (Exhibit P15). This letter repeated the paragraph as to the "house budget" which began the previous letter. It then indicated that "to design and prepare drawings and supervise using our Building Licence our fee will be $35,000.00". The letter said nothing further about the make-up of the defendant's costs and fees, and did not refer to any amounts as having already been paid. In particular, there was no repetition of the passage in the previous letter allocating $20,000 "to assist the coordination of the building works in conjunction with yourself". The later letter went on to repeat the remaining paragraphs from the previous letter, to do with a structural engineer, colour management and advice, and the request for $10,000 towards the defendant's costs.
It will be seen that the letter that is Exhibit P15 was meant to replace the previous letter, Exhibit P14, by embodying the new agreement as to the balance of the defendant's costs and fees. This implied a total for costs and fees, if the $5,000 already paid was included, of $40,000. It is not altogether clear if this included the cost of a structural engineer. However, as will become apparent when I consider the agreement between the defendant and the Hodgkinsons below, it seems it is not to be regarded as included.
Mr Hodgkinson's evidence was also that, in the 23 July 1999 telephone conversation, he had also told Mr Doepel of his keenness for the work to be completed before the introduction of the GST, on 1 July 2000. Mr Hodgkinson's evidence was that Mr Doepel replied in terms that the work would be completed by September 2000 if the defendant were engaged to prepare the plans and to be the builder supervising the work.
Under cross examination, however, Mr Hodgkinson appears to have become confused between his preference for 1 July 2000, and what he recalled Mr Doepel indicated, which at one point he said had been completion by 1 July 2000, but which he later said was wrong.
It will be noted that there is no reference to a completion date of any sort in either form of the 22 July 1999 letter (Exhibits P14 and P15). I will also note, when I reach the written portion of the agreement between the parties, a written portion I find was entered into after the settlement of the defendant's fees as I have indicated, that that portion also does not contain any reference to a completion date.

The agreement between the Hodgkinsons and the defendant of July 1999

Mr Hodgkinson's evidence was that a second agreement was entered into between the Hodgkinsons and the defendant at about the same time as the letters dated 22 July 1999. There is reason to believe, from the writing going to show this agreement (Exhibit P2), that it was entered into after the parties arrived at their agreement with respect to the $35,000 for fees. Further, in cross‑examination Mr Hodgkinson testified it was concluded shortly after that agreement (cross‑examination, TS 365). As I will indicate the writing (Exhibit P2) records among other things that figure of $35,000 for fees.
The writing (Exhibit P2) was on the form provided by the Royal Australian Institute of Architects, and was dated 26 March 1998 ("the RAIA form"). On Mr Hodgkinson's evidence this backdating was at Mr Doepel's request, to cover the earlier work done. The coverage of that work is also evident from the date of the agreement in all of the circumstances. This coverage would indicate to me that the new agreement replaced any previous one, and I so find.
The RAIA form's provisions were set out under five headings. They were "Responsibilities of the architect", "Responsibilities of the client", "The services", "The fees" and "Reimbursable expenses". Under the heading "The services", under the sub‑heading "3.4 Contract administration", there was an entry, written alongside the item "other", "project management of building works".
Mr Doepel's evidence as to what was meant by this last reference was as follows (cross‑examination, TS 775):
"You weren't just warehousing or allowing Mr Hodgkinson to use your licence; you were the builder?---I was the registered builder, yes.
Yes, the builder. You were responsible for the building of the property. Yes?---As the project manager, yes.
So where it says in your statement that Mr Hodgkinson was the builder, that's just untrue again, isn't it?---No, that's not true.
All right. Well, who was the builder then, you or him?---We were both responsible for building, organising various parts of the building. There was no building contract."
Under the heading "The fees" all of the sub‑headings were crossed out except the one, "4.3 Lump sum fees", which showed a total of $35,000. This in my view indicates this document must have been executed after the revision in the fees and costs that resulted in the revised 22 July letter. It seems likely this amount included the amount already paid, to which the earlier form of the letter had referred, given the dating of the agreement, 26 March 1998. There is no evidence of any design work done before that date. There was no reference in the RAIA form to any work schedule or completion date for the work.
I now note other provisions in the RAIA form of possible significance to this case.
Under the heading "Responsibilities of the architect", the following provisions, among others, appear (italics in the original):
"The architect [the defendant] shall:
1.1provide the services described in this agreement and shall exercise the skill and professionalism of a qualified, registered architect in doing so.
…
1.3provide, where appropriate, indications of the cost of the works which are not a guarantee of the actual cost, a quotation or a tender
1.4co-ordinate and integrate the work of all specialist consultants but shall not be responsible for the services provided by them
or
1.4on behalf of the client, engage and be responsible for the services provided by specialist consultants and shall co-ordinate and integrate their work with the architectural work
(strike out one of these clauses to suit project arrangements)"
I note that there is no such striking out in the RAIA form.
Under the heading "Responsibilities of the client", the following provisions, among others, appear (italics in the original):
"The client [the Hodgkinsons] shall:
….
2.2provide the architect with a realistic project budget and all relevant information required by the architect to complete the services described in this agreement
2.3engage specialist consultants required by the project after consultation with the architect and shall pay all fees and expenses associated with their engagement
(strike out if consultants engaged by architect)
…
2.5recognise that their original brief and other requirements may be altered when approval is given by them to the design as it develops through each stage of the design process."
There is no such striking out in the RAIA form.
Under the heading "The services", after the introductory words quoted, the following provisions appear, among others:
"Generally, the architect will provide the following services at each stage of the project. Additional services should be included if required by the project.
3.1Sketch design
….
Design stage
•Prepare preliminary costing
…
•Obtain client's approval to proceed with final design
3.1Detailed design
•Review final design against budget and prepare updated cost estimate
…
•Obtain client's approval of contract documents and to call tenders."
There was no evidence in this case that tenders were ever called for any part of the building project while the defendant was contracted to it.

Further evolution of the design between 22 July 1999 and 25 October 1999

On 2 August 1999, Mr Hodgkinson paid the defendant a further $10,000 towards its fees (examination‑in‑chief, TS 169).
On 4 August 1999, the defendant submitted plans to the local authority, the Nedlands City Council, for development approval. Those plans were apparently the ones finalised before the 22 July meeting and were Exhibit D537. On 9 September 1999 Mr Doepel faxed "amended drawings" to the City, "following our meeting in your office with Mr Ted Hodgkinson" (Exhibit P16; and the changed plans, Exhibits D538A, D538D, and D540).
Mr Doepel's evidence was that the changes from the "previous design" were (examination‑in‑chief, TS 642):
" … [T]he roof was added to the pool equipment room, the balcony was increased in size, the window sills in the rumpus room were raised, a robe was added to one of the spare bedrooms, the second floor bathroom was increased in size and a bath added and a portico screen was added."
By a letter dated 20 October 1999 the City wrote to the defendant that development approval had been given (Exhibit P22).
Mr Doepel's evidence was that on or about 25 October 1999 the design for the house was changed again "following further discussion with the Hodgkinsons" (examination‑in‑chief, TS 642). Those changes were shown on plans prepared by the defendant (Exhibits D539 and D541), and were described in Mr Doepel's evidence as follows (examination‑in‑chief, TS 642):
" … [T]he walk in robe design changed, the ensuite bathroom adjoining the master bedroom was made larger, the office was made larger, the porch was made larger, the kitchen was made larger, a stainless steel sink, barbecue, ice box and bench were added to the cabana, the return bench in the laundry was made longer and the ensuite bathroom to the second bedroom was completely redesigned."
On 25 October 1999 the defendant applied to the City for development approval for "the construction side fence, pool equipment room and retaining walls" for the work (Exhibit P25). It is to be noted that none of these changes is included in the list in Mr Doepel's evidence just quoted.
There was considerable attention directed in the cross‑examination of Mr Doepel to the relationship between those changes and "the house budget" of $390,000 to $400,000 in the letter dated 22 July 1999 from the defendant to the Hodgkinsons. The exchanges with him were as follows (cross‑examination, TS 849 – TS 855):
"Now, could you look in that book of pleadings again please, page 42? You will see there a paragraph 7.4. Do you see that?---Yes.
'Defendant prepared a new set of sketch plans, being a sixth set, which were dated 25 October 1999'?---Yes.
And that's what you referred to as the second expanded residence?---No.
Well, it is?---What they refer to is the second amendments to the July 1999 development approval plans, which were relodged back to the City of Nedlands for development approval on the walls. I've got them here. I can point to you the changes, if you like. It's the wall at the end of the property. Shall I point them out to you?
Just?---I would like to, actually. I would like to point out to you the differences because you don't seem to understand what the sets of drawings mean. There are lots of sets of drawings. They all comprise of work that we did at different stages.
Just tell me - and if you need to look at a plan to answer it but I don't need to look at a plan unless I tell you, all right? 7.4:
Defendant prepared a new set of sketch plans, being a sixth set, which were dated 25 October 1999, which revised sketch plans were drawn in accordance with the plaintiff's ongoing amended instructions and detailed a much larger house than the original residence and comprised a substantial and material departure from the scope of the brief pleaded in 6.
I can take you to 6 if you want to see that. Now, do you have any understanding what those plans are?---I do.
There's a set of plans of 25 October which detail a much larger house than the original residence?---That's correct, and you've already pointed out those differences in area.
These are the DA plans we're talking of?---And I've done the calculation on the differences from the March 1998 plans to the July 1999 plans. These are essentially the July 1999 plans, first amended on 9 September, second amended on 25 October. There they are, one, two, three.
Yes, and it's the same area?---Substantially different to the original design of the house. That statement is correct.
Sorry, that was entirely my fault. I switched off a bit then. The DA plans - we will talk about those - they're the August 99 plans?---They are the July 1990 (sic) plans submitted on 4 August 1999, I think.
They're the DA plans. We all know what they are?---And they were amended on the 9th of the 9th and amended once again on the 25th of the 10th, showing extra work each time they are amended.
Yes, it didn't detail a much larger house. The size of the house didn't change after the DA plans, did it?
McGOWAN, MR:   That's not what paragraph 7.4 says, 'The original residence'?---No, that's correct.
DONALDSON, MR:   The original, okay. I'm grateful to my friend.
So 25 October, they're no different in size or the house depicted in the 25 October 99 plans are no different in size to the DA plans?---Well, I can confirm that to you if I look at the drawing.
Is the answer 'Yes'?---Well, I can tell you that if ‑ I've got three sets of plans there all done after July 1999.
But you looked at these transparencies. It's a simple question. It's the same-size house. It never got any bigger after the DA plans?---I think the areas are slightly different and I pointed that out in the schedule.
It was within half a metre, wasn't it?---Some dimensions are different.
All right. So that's the house we're talking about?---If we're talking about the second design, which are the plans that were submitted for the development approval, they are different from the original design done in 1998.
Thank you. In November 98 they're much bigger. I'm happy to call them 'bigger.' Happy with that?---Thank you.
But 25 October 99 plans deal with the same dimensioned house as the DA plans with this slight change of half a square metre or whatever it is. Do you accept that?---Yes.
What this says is ‑ 7.4 - you 'prepared a new set of sketch plans on 25 October 99 drawn in accordance with their ongoing amended instructions; detailed a much larger house than the original residence.' Just pausing there - - -?---That's correct.
- - - that's either March 98 or November 98?---Yes.
It doesn't matter ‑ 'and comprised a substantial and material departure from the scope of the brief pleaded in 6 hereof.' If you want to turn back a page you will see what 6 is. That's what you were told in March 98. Okay?---Yes.
I'm just trying to be fair to you, Mr Doepel, so that's what that's about?---Yes.
Which Mr Doepel, on behalf of the defendant, told the plaintiffs and the first plaintiff, as property developer, knew would increase the cost of the residence substantially.' Now, when did you tell Mr Hodgkinson that?---Well, as far as the house itself is concerned, I had confirmed on 22 July that that house plan was within the budget, and that was $394,350. I didn't actually confirm that precise figure but I did confirm that it was within that budget of 390 to 400. So what this refers to, if the house price budget is the same, it must refer to the other changes that were made on 25 October drawing on the instructions of Mr Hodgkinson which would cost, you know, a considerable amount of money.
Your plea is that a new set of plans were prepared and dated October 99?---Yes.
- - - for a house in exactly the same dimensions as the DA plans. Yes?---Basically.
That was bigger or a much larger house than the March 98 one?---Yes.
So that's what we're comparing. We're comparing October 99 to March 98. Yes?---Yes.
It comprised a substantial and material departure from the brief that you were given in March 98.' That's what you say. Yes?---Yes.
And you say that you told the plaintiffs that that would increase the cost of the residence substantially?---If we're referring to the October plans, yes. The changes on the 25 October plans would have increased the cost substantially.
Why?---Because there was a massive retaining wall at the rear of the property which is depicted on the 25 October plans which would have cost a considerable amount of money which was never in the brief. It was never part of the costs; it was never part of the works.
But wasn't fencing, on your evidence, always excluded from the budget?---The whole reason for 25 October plans was to show those changes and those plans had to be resubmitted back to the City of Nedlands for a development approval and that's those plans on the end. That's the only change in those plans from the plans of the 9th of the 9th.
That isn't - sorry?---And the plans of the 9th of the 9th were also submitted to the City of Nedlands. In fact, there were three sets of plans submitted to the City of Nedlands, one set on 4 August, one set on the 9th of the 9th and a further set on 25 October, each one depicting additional work to the scope on the plans in - you can't just build things without approval so those three sets of plans show additional work that had to be approved by the council before it could be built.
Didn't it work like this: there were the DA plans that were submitted?---Yes.
There were conditions imposed?---Yes.
- - - which required a tree of a particular height?---That was the 9th of the 9th plans.
That's right?---They had to be relodged back with the council?
Yes, so they had nothing to do with the Hodgkinsons. You say that they did but in fact they were as a result of conditions imposed on the development approval by the council?---That's correct.
So that's them, and the 25 October plans dealt with the retaining wall, didn't they?---That defined the new wall of the rear of the property which Mr Hodgkinson wanted raised to above the level of the swimming pool and that wall was put in by Landcorp so we had to get Landcorp's approval and also the City of Nedlands.
So the 25 October plans?---And that's the only difference in those plans, to my recollection, to the ones of the 9th of the 9th.
Just increase the height of the wall?---Substantial increase.
Yes, but you needed a separate development approval to increase the wall?---And also Landcorp approval.
Yes, because they owned the adjoining land?---It was a condition of the purchase that the existing boundary fences that Landcorp had put in could not be altered, changed without their approval. That's why we needed their approval, as well as the City of Nedlands.
So you needed approval from Landcorp as a condition of that; you needed a separate DA from the council for the fence?---That's right.
So it is your evidence that you said to Mr Hodgkinson that that change to the fence would increase the cost of the residence substantially?---Well, the wording in the pleadings isn't precisely correct the way it has been put.
Did you ever have a conversation with Mr Hodgkinson about an increase in the cost or an increase in the budget from 22 July through to October 1999?---In regard to the fence on the 25 October plans, yes, and he understood that if you add height to a fence, that's going to cost extra money, but with the actual house, as that hadn't changed, that was still within the budget.
So in relation to the residence it didn't change at all?---No.
SIMMONDS J:   Can I clarify that answer, Mr Doepel? Are you saying that so far as the residence budget is concerned, the 390 to 400 envelope had not changed in your view between 22 July 99 through to and including 25 October 99?---For the actual house, yes.
For the actual house?---Yes."

I have set out a table to summarise the matters I have just described, below:

Item 35:

1999 Scale:

100 hours, SP$270 Max (on 25.9 hours) $6,993.00

Hours, in Schedule 4

Rate, in Schedule 5 Senior practitioner

Total in Draft Bill of Costs

25.9

264.00

$6,837.60

Item 36:

2002 Scale:

100 hours,

SP $313, Max (on 45.8 hours) $14,335.40

Hours, in Schedule 4

Rate, Senior practitioner

45.8

319.00

$14,610.20

Item 37:

2004 Scale:

100 hours,

SP $341, Max (100 Hours)

$34,100.00

Hours, in Schedule 4

Rate, Senior counsel (2004) Scale, SC, Maximum $506)

31

352.50

$10,927.50

Hours, in Schedule 4

Rate, Senior practitioner

127.25

333.00

$42,374.25

Hours, in Schedule 4

Rate, Senior practitioner

1.4

209.00

$292.60

Hours, in Schedule 4

Rate, Clerk (2004 Scale, C/PL, $176)

19.5

132.00

$2,574.00

TOTAL

$77,616.15

I should note that some of my figures above do not tally with those shown in the Finlay affidavit of 23 January 2007, annexure "JDF1", Sch 4. The discrepancies are the following.
I note the figure for 2004 shown above for the senior counsel is slightly higher than the corresponding figure, in the Finlay affidavit of 23 January 2007, annexure "JDF1", Sch 4, Pt C, of $10,927.20. Mr Garnsworthy explained this simply as a mathematical error.
I also note the figure for 2004 shown above for the first senior practitioner, of $42,374.25, which is the product of $330 per hour and 127.25 hours, is different from the corresponding figure shown in the Finlay affidavit of 23 January 2007, annexure "JDF1", Sch 4, Pt C, which is $41,992.50. Mr Garnsworthy appeared to explain this as a mathematical error.
I also note that the total shown in the Finlay affidavit of 23 January 2007, annexure "JDF1", Sch 4, Pt C, of $77,258.40, is different both from the total shown above, and also from the total of the component figures shown in the Schedule, which should be $77,234.40. Mr Garnsworthy again appeared to explain this as a mathematical error.
However, it will be seen that, whatever is the correct figure, it represents a claim that is substantially higher than that allowed for under the most recent Determination, that of 2004. The difference is accounted for by the much larger number of hours (250.85 hours) than the maximum allowed for getting up, under all of the relevant Determinations (100 hours, as I have indicated), as well as the inclusion of a claim for Senior Counsel's work, where the relevant Determination (2004 ‑ indeed all Determinations) refers to the work of a senior practitioner. The effect of the larger number of hours is offset somewhat by the lesser hourly rates, than those allowed for a senior practitioner under the relevant Determination, for all of the others who participated in the getting up.
I consider there is sufficient evidence of the inadequacy of the relevant scale item, considered as the 2004 Determination, item 13.
I also consider there is sufficient evidence, in the Finlay affidavit of 23 January 2007, with my appreciation of the trial, that this was due to the complexity of the case as I have described it. My appreciation of the case is, of course, that deriving from my experience as the trial Judge: see on the relevance of that experience SDS Corporation (supra), Roberts‑Smith J, at [148].
However, counsel for the defendant, Mr Forbes, put to me that there was insufficient evidence of the costs of getting up because the work described under that head in Sch 4 is not tracked into any of the accounts. I took this to be a reference to all of the fee earners concerned.
However, I do not consider that such identification is required. In my view, it is sufficient that a person who may be expected to know the allocation of work between those who have rendered accounts has provided evidence of the sort contained in the Finlay affidavit of 23 January 2007 that they have done that work, at the rates indicated. Mr Finlay was the solicitor for the plaintiff at least from shortly after the writ was issued, but not before that issuance. In that respect, both parties agreed, the Finlay affidavit of 23 January 2007, par 10, needed to be corrected, and was so treated before me.
I note that my determination of the work done and its cost is of the kind described as "essentially preliminary and provisional in nature for the purpose of the exercise of the discretion" in Esther Investments (supra), Malcolm CJ at 404.
I consider that a special costs order is appropriate for getting up the case for trial, to the effect that the limits of any relevant determination as to hours or hourly rate not apply. See Flotilla Nominees (supra), per Pullin J, as to this form of order where work above the maximum involving work done by a fee earner at above the hourly rate provided for is involved.
I note, however, the point from SDS Corporation (supra), Roberts‑Smith J, at [162] on the power of the taxation officer.

Application of these principles in this case: statement of claim

I took this to be a claim by reference to the entry in the draft bill of costs, Item 2, for work done in 2001 on the statement of claim, and the relevant scale item, that under the 1999 Determination, Item number 6a; and draft bill of costs, Item 7, for work done in December 2003 and April 2004 on the amended and re‑amended statements of claim, and the relevant scale item, that under the 2002 Determination, Item number 6a.
I need to deal with the two draft bill of costs items both separately and together.
In relation to draft bill of costs, Item 2, the relevant item in the 1999 Determination allows for a maximum of 10 hours at the senior practitioner hourly rate of $270 or a total of $2,700.
The draft bill of costs, Item 2, shows $3,229.60.
From the document "Summary 1" part of annexure "JF1" to the Finlay affidavit of 23 January 2007, it is indicated the basis for the claim is work of 11.74 hours at what appears to be the hourly rate for the deponent, the fee earner, of $275.09.
Both the claim's work hours and hourly rate are then above the 1999 Determination.
Mr Garnsworthy drew my attention to the description in "Summary 1" of the "[w]ork performed in relation to the statement of claim including" the listed items.
It seems to me that Summary 1 describes work done and paid for which shows the inadequacy of the scale item.
I also consider there is sufficient evidence, in the Finlay affidavit of 23 January 2007, with my appreciation of the trial, that this was due to the complexity of the case as I have described it.
It is the case that the difference is not very great between the scale allowance and the claim, and that this would incline me against making the order if it rested on that difference alone: SDS Corporation (supra) Roberts‑Smith J, at [151].
However, the difference claimed is greater than that indicated simply by that comparison, as there is another Item in the draft bill of costs of which I am asked to take account.
In relation to draft bill of costs, Item 7, the relevant item in the 2002 Determination allows for a maximum of 10 hours at the senior practitioner hourly rate of $313, or a total of $3,130.
The draft bill of costs, Item 7, shows $5,777.20, made up of counsel fees of $3,665.20 and solicitor's fees of $2,112.00.
From the document "Summary 2" part of annexure "JF1" to the Finlay affidavit of 23 January 2007, it is indicated the basis for the claim is 7.7 hours of the deponent's work at what appears to be the hourly rate of $274.29; and 11.9 hours of counsel's work, at what appears to be the hourly rate of $308.00.
Here, the claim's work hours are above, but its hourly rates are below, the 2002 Determination.
I consider that Summary 2 shows the inadequacy of the relevant scale item. I consider there is sufficient evidence, in the Finlay affidavit of 23 January 2007, with my appreciation of the trial, that this was due to the complexity of the case as I have described it.
Finally, when draft bill of costs Items 2 and 7 are aggregated, the total is significantly greater both than the largest allowance under the relevant scales (under the 2002 Determination) or the aggregate of the allowances under the relevant scales (under both the 1999 and the 2002 Determinations).
Counsel for the defendant, Mr Forbes, put to me that no special costs order was appropriate on the material before me, as the statement of claim was once and for all work that should be taken to include all amendments. The work done here on the evidence before me was due to amendments. Further, none of the amendments was shown to be due to activity of the defendant, but rather at best changes of circumstance and at worst corrections of errors in the original drafting. Finally, complexity in the facts and law would not necessarily find reflection in the statement of claim.
I do not agree with any of these propositions.
It seems to me that a case's factual complexity, including complexity relevant to a complex legal issue might emerge or intensify over the time following the preparation of the statement of claim, necessitating amendments. It is not a matter of allocating fault to the party responsible for costs. The nature of the other party's case may be such that there is the need for the relevant drafting, of the original document or any amendments, which entails the costs in question.
Accordingly, I consider a special costs order is appropriate for the statement of claim, to the effect that the limits of any relevant determination as to hours not apply. See Flotilla Nominees (supra), per Pullin J, as to this form of order where work above the maximum involving work done by a fee earner at or below the hourly rate provided for is involved.
Again, I note the point from SDS Corporation (supra), Roberts‑Smith J, at [162] on the power of the taxation officer.

Application of these principles in this case: giving particulars of the amended reply

I took this to be a claim by reference to the entry in the draft bill of costs, Item 9, for work done in September 2004, and the reference there to the relevant scale item, that under the 2004 Determination, Item number 6b.
The scale item allows for a maximum of five hours at the junior practitioner hourly rate of $231, or a total of $1,045.
The draft bill of costs shows a claim for $1,896.40.
From the document "Summary 3" part of annexure "JF1" to the Finlay affidavit of 23 January 2007, it is indicated the basis for the claim is work of 6.9 hours at what appears to be the hourly rate for the deponent, the fee earner, of $274.84.
Thus, there is a claim for a higher number of hours at a higher hourly rate than the maximum allowed under the scale.
Mr Garnsworthy drew my attention to the description in "Summary 3" of the "[w]ork performed in relation to the Plaintiff's Answers to Defendant's Request dated July 04 for Further and Better Particulars of Plaintiff's Amended Reply including" the matters listed there.
I consider that Summary 3 shows the inadequacy of the relevant scale item. Again, I consider there is sufficient evidence, in the Finlay affidavit of 23 January 2007, with my appreciation of the trial, that this was due to the complexity of the case as I have described it. The particulars went to matters of some significant complexity, and were accordingly themselves substantial and complex.
Counsel for the defendant, Mr Forbes, put to me that there was no evidence or no sufficient evidence that the work for the particulars required the services of a practitioner other than the junior practitioner provided for in the relevant scale item. I took this also to be a submission that there was no evidence or no sufficient evidence that the hours of work required were above the maximum allowed at that rate.
I consider this is met by the position I am in, with the Finlay affidavit of 23 January 2007, and my experience as the trial Judge, to assess whether a sufficient basis for the exercise of my discretion to make a special costs order is made out.
I consider that a special costs order is appropriate for giving particulars of the amended reply, to the effect that the limits of any relevant determination as to hours or hourly rate not apply. See Flotilla Nominees (supra), per Pullin J, as to this form of order where work above the maximum involving work done by a fee earner at above the hourly rate provided for is involved.
I note, however, the point from SDS Corporation (supra), Roberts‑Smith J, at [162] on the power of the taxation officer.

Application of these principles in this case: costs of attending an informal conference

I took this to be a claim by reference to the entry in the draft bill of costs, Item 33, for work done in April 2005, and the reference there to the relevant Scale item, that under the 2004 Determination, Item number 23.
The scale item allows for attendance by a senior practitioner at the scale's maximum hourly rate of $341. It sets no maximum time. The draft bill of costs shows for the scale item the amount of $1,641.20, which equates to 4.8 hours.
The draft bill of costs claim is $6,041.20, referring both to attendance at a conference of three hours, and preparation (including attendance and preparation of senior counsel). The Finlay affidavit of 23 January 2007 indicates that both the deponent and senior counsel worked on preparing for the conference.
There is no further detail in the Finlay affidavit of 23 January 2007. In particular, there is no indication of the hourly rates for senior counsel and the deponent for the work done, nor of details as to what was considered likely to occur or did occur at this conference.
Mr Garnsworthy put to me in relation to this claim that I should see the complexity I have described earlier as accounting for the expenditures on the item in question.
However, it seems to me that there is more evidence than that to which I have referred with which I should be provided before I can make a special costs order under this heading. My experience as the trial Judge is of no assistance to me in considering what might have been seen as likely to occur or that did occur such that expenditure at that level, on two fee earners, might be seen to be appropriate because of the complexity, factual and legal, in this case.
I would not make the order sought here.

Application of these principles in this case: reasonable allowance for opening and closing submissions

I was unable to find any discrete Item or Items in the draft bill of costs referring to this claim.
However, Mr Garnsworthy drew to my attention Item 39, for the first day of trial (at $44,384.80, for Senior Counsel, compared with the relevant scale item, in the 2004 Determination, Item 19b, of $17,644.00); and Item 59, for the second last day of trial (at $9,428.40, compared with the relevant scale item, in the 2004 Determination, Item 19d, of $4,411.00).
I note that the work done would thus be covered by the account of senior counsel a copy of which is annexure "JDF4" to the Finlay affidavit of 23 January 2007, which shows work done, principally identified as "getting up" or "attend court", over the period beginning 1 August. That account shows the hourly rate as less than $400 per hour, where the relevant scale shows the maximum rate for senior counsel at $473.
Thus, the claim is for more than the maximum number of hours allowed for in the relevant scale item, but below the maximum hourly rate.
I also note the reference to the opening and closing submissions prepared by senior counsel in the Finlay affidavit of 23 January 2007.
I further note that my experience at trial was indeed that the written opening and closing submissions, provided prior to or shortly after oral argument, were of significant assistance to me. They were in considerable detail, in particular in relation to the matters of factual complexity and legal complexity to which I earlier referred.
It seems to me that the work on such submissions is appropriately to be referred to the scale items I have referred to, and might in a suitable case warrant a special costs order.
It is true, as counsel for the defendant, Mr Forbes, put to me, such work might also simply be a part of good preparation for the opening and closing phases of the trial. Thus, it might be said, at least the opening submissions might form part of the amount for getting up the case for trial. Indeed the account of senior counsel refers to "getting up" as I have indicated.
However, that submission seems to me to go to avoiding any double counting of work, which would be for the taxation officer, not for me. How the account labels the work done is less important than the true nature of the work done, as that is ultimately determined by the taxation officer.
It is also true, as Mr Forbes also put to me, that there is no indication in the accounts for senior counsel forming part of the Finlay affidavit of 23 January 2007 that work on the opening and closing submissions is identified as part of the work charged for. However, I consider there is sufficient evidence, for my purposes at least, in the Finlay affidavit of 23 January 2007, that senior counsel did the work, and can be expected to have been paid for it.
I consider that the Finlay affidavit of 23 January 2007 shows the inadequacy of the relevant scale item in the respect the subject of the special costs order sought.
I also consider there is sufficient evidence, in the Finlay affidavit of 23 January 2007, with my appreciation of the trial, that this was due to the complexity of the case as I have described it.
Accordingly I consider a special costs order is appropriate for the cost of opening and closing submissions prepared by senior counsel such that the limits of any relevant determination as to hours not apply. See Flotilla Nominees (supra), per Pullin J, as to this form of order where work above the maximum involving work done by a fee earner at or below the hourly rate provided for is involved. I note that this special costs order only goes to the particular work identified.
Again, I note the point from SDS Corporation (supra), Roberts‑Smith J, at [162] on the power of the taxation officer.

Application of these principles: the costs argument before me

Mr Garnsworthy, in his written submissions (par 5), put to me, as I have previously indicated, that the costs of the present application were "beyond the scope of taking a reserved decision", under which, on the practice of taxation as he described it, the matter might otherwise be referred to the scale item for taking a reserved decision, under the 2006 Determination, Item 19(g). That item allows only for the attendance of a clerk or paralegal at the maximum hourly rate provided for such persons, of $176.
Counsel for the defendant, Mr Forbes, did not disagree such a special costs order might be appropriate, on that basis. However, he put to me that it was only appropriate if the plaintiff was successful in obtaining all of the special costs orders it sought. In the event it obtained less than all, its costs should be scaled back proportionately.
I agree with the submission, but would add that account must also be taken of the substance of the issues on which the plaintiff succeeded and failed. If the issue or issues of the latter sort were relatively minor in character by comparison with those on which the plaintiff succeeded, it seems to me a scaling back would not be appropriate.
Here the plaintiff has succeeded on all of the major issues for which it contended, with the exception of those involved in the claim in respect of the informal conference. Those issues were, in my view, the least substantial of the major ones I have referred to.
I consider then that simply scaling back by reference to the number of orders for which the plaintiff contended on which the plaintiff succeeded (five out of six) or to the number of such orders raising major issues (four out of five) would be inappropriate.
Doing the best I can, I would order the plaintiff recover 90 per cent of his costs of this application to be taxed with the other costs if not agreed.

Orders on the present application

I will hear from the parties as to the orders I should make following from these reasons.

Item 35: 1999 Scale: 100 hours, SP$270 Max (on 25.9 hours) $6,993.00	Hours, in Schedule 4	Rate, in Schedule 5 Senior practitioner	Total in Draft Bill of Costs
25.9	264.00	$6,837.60
Item 36: 2002 Scale: 100 hours, SP $313, Max (on 45.8 hours) $14,335.40	Hours, in Schedule 4	Rate, Senior practitioner
45.8	319.00	$14,610.20
Item 37: 2004 Scale: 100 hours, SP $341, Max (100 Hours) $34,100.00	Hours, in Schedule 4	Rate, Senior counsel (2004) Scale, SC, Maximum $506)
31	352.50	$10,927.50
Hours, in Schedule 4	Rate, Senior practitioner
127.25	333.00	$42,374.25
Hours, in Schedule 4	Rate, Senior practitioner
1.4	209.00	$292.60
Hours, in Schedule 4	Rate, Clerk (2004 Scale, C/PL, $176)
19.5	132.00	$2,574.00
TOTAL	$77,616.15