| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : KANNIS HOLDINGS PTY LTD -v- CASTELLI WA PTY LTD [2003] WADC 249 CORAM : DEPUTY REGISTRAR HEWITT HEARD : 28 JULY & 15 OCTOBER 2003 DELIVERED : 17 NOVEMBER 2003 FILE NO/S : CIV 56 of 2003 BETWEEN : KANNIS HOLDINGS PTY LTD (ACN 008 685 112) Plaintiff
AND
CASTELLI WA PTY LTD (ACN 090 432 938)
Defendant
Catchwords:
Assessment of damages - Building - Turns on its own facts
Legislation: Nil
Result: Damages assessed at $170,762.94
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Representation:
Counsel:
Plaintiff : Mr R D Shaw
Defendant : Mr D M McKenna
Solicitors:
Plaintiff : Phillips Fox
Defendant : Jarman McKenna
Case(s) referred to in judgment(s):
Nil
Case(s) also cited:
Dulieu v White & Sons [1901] 2 KB 669
Harbutt's Plasticine Ltd v Wayne Tank and Pump Co Ltd [1970] 1 QB 447
Hay (or Bourhill) v Young [1943] AC 92
Hyder Consulting (Australia) Pty Ltd v Wilh Wilhensem Agency Pty Ltd [2001] NWSCA 313
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1 DEPUTY REGISTRAR HEWITT: The writ in this matter was issuedon the 13 January 2003 seeking damages for harm alleged to have been sustained to a building on land of which the plaintiff was a registered proprietor caused by construction works which were undertaken on the lot adjoining that building.
2 The defendant appeared to the action but did not file a defence to the plaintiff's statement of claim, as a consequence of which a default judgment for damages to be assessed was entered on 14 April 2003. It is that assessment with which I am required to deal. 3 The matter proceeded before me on two separate days and the bulk of the evidence was given by way of affidavit and the deponents of certain of the affidavits, which had been filed, were called for the purpose of cross-examination. 4 There are a number of different aspects to the assessment and I shall deal with each in turn. The first issue with which I must deal is the plaintiff's claim for the cost of injection grouting under the building to stabilise it. On that score the plaintiff and the defendant offered different hypotheses as to the cause of damage to the building and the appropriate remediation required. 5 In order to understand that evidence it is necessary to understand that on the adjoining block the defendant installed what is described as contiguous piling running most of the length of the eastern boundary of the plaintiff's land at a distance of about 85 centimetres from the wall of the plaintiff's building. The process of installing contiguous piling requires the drilling of holes into the earth and the filling of those holes with injected concrete such that the end result is a concrete wall buried in the ground which somewhat resembles a palisade. Once that concrete piling has set sufficiently it is then possible to excavate behind it and to proceed with the balance of the building project. Additionally in order to support the land on the other boundaries of the defendant's lot sheet piling was inserted. That is a process by which interlocking steel sheets are hammered into the ground to form a retaining wall. It is the evidence of all of the witnesses that the process of installing contiguous piling does not create significant vibration which would damage the adjoining properties but the process of hammering in sheet piling does generate damaging vibrations which may be transmitted to adjoining buildings. It is also the uncontradicted evidence that the plaintiff's building was approximately one century old and might be described as a relatively fragile structure easily effected by such vibrations. It is also the evidence
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that a pre-construction inspection showed the building to be in excellent condition. 6 The plaintiff engaged engineers Airey Ryan and Hill to inspect the building and advise appropriate remedial measures to be undertaken. One of the principals of that business Mr Peter Airey was a witness in the proceedings and an employee of that firm of engineers, Mr Steven Miotti was also called as a witness. As a consequence of his inspections Mr Airey formed the conclusion that there had been significant subsidence of the footing of the plaintiff's building along its eastern boundary and that the probable cause of that subsidence was what he described as a sliding wedge beneath it. In essence a sliding wedge is a body of sand which has slipped down a plane of weakness thus lowering the surface of the land. Exhibit B contains a plan which describes in visual form the hypothesis which Mr Airey reached. He considered that the most likely cause of the sliding wedge developing was the fact that the contiguous piling had not been secured by anchors and thus when soil was removed from behind that wall it had rotated on its base loosening the support of the soil and permitting the sliding wedge to develop. Mr Airey hypothesised that the wedge so created extended approximately five metres in depth and approximately five metres in width. He reached that conclusion on the basis that on his evidence the damage to the building indicated that subsidence had occurred from the eastern most wall to the centre passage of the building which was a distance of about five metres and the likely angle of the sheer surface of the sliding wedge was approximately 45 degrees which was consistent with what the parties agree was the approximate depth of the contiguous piling. In this opinion Mr Miotti concurred and it was further Mr Airey's evidence that the degree of subsidence on the footings on the eastern side of the plaintiff's building was so extreme that it was plainly visible on inspection and it was his view that the wall on the eastern boundary was clearly "out of plumb" by a significant amount and he estimated that amount as being not less than 50 millimetres. In effect it was Mr Airey's opinion that the eastern half the plaintiff's building had sunk to an appreciable degree so that the eastern wall was tilting, and the walls of the passage in the middle of the building likewise had moved significantly. Elsewhere in the evidence there is reference to the fact it was necessary to remove the floors in some parts of the building, raise the floor joists to the required levels and relay the floors. 7 It was the evidence of Mr Airey that given his hypothesis of the angle and depth of the sliding wedge which had developed under the plaintiff's building the only satisfactory way of restoring it to a stable
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condition was to undergo a process of injection of superfine grout beneath the footings. That process involves the insertion of a spear through which the grout is injected into the soil so that as the spear is retracted and grout injected in effect a concrete pillar is created upon which the footing rests. In the opinion of Mr Airey given the nature of the damage a programme of injection of superfine grout pillars or columns to a depth consistent with his hypothesis of the position of the sliding wedge was necessary in order to restore the stability of the building. 8 Opposing that evidence was the evidence of Mr Peter Salter also a engineer of considerable experience who was engaged by the defendant's insurers to advise them of the necessary remedial work required to be undertaken to the plaintiff's building. Mr Salter was of the view that the damage to the plaintiff's building was due to the strain imposed upon it by the vibration of hammering in the sheet piling which was used by the defendant and that the evidence of a sliding wedge was tenuous. He was of the view that the contiguous piling which had been installed offered sufficient support to the soil under the plaintiff's building and that it was not necessary to inject grout to support it. He did however feel that given the fact that the soil was apparently disturbed some injection of superfine grout should be undertaken as a safety measure but to a very much lesser extent than that proposed by the plaintiff's engineer and obviously at a considerably lesser cost. 9 It was Mr Salter's evidence that had there been a sliding wedge it would have occurred much higher in the soil under the plaintiff's building than was hypothesised by Mr Airey as a consequence much less injection of superfine grout would be required. 10 In essence Mr Salter was of the view that there had not been significant subsidence in the building and the damage was a consequence of the exposure of a fragile old building to the vibrations which were caused by the installation of sheet pilings. He agreed with the proposition that vibration alone would not have caused significant subsidence in the building. 11 There was considerable debate as to the interpretation of the results at compaction testing and the desirability of undertaking further tests using more sophisticated equipment. As to the need for further testing I accept the evidence of Mr Airey that the space available was too confined to permit the tests to be undertaken. At the end of the day I find the evidence of Mr Miotti to be the most logical and I accept it. In Mr Miotti's view evidence of the existence of a sliding wedge cannot be
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proved or disproved by the results of compaction testing because the soil disturbed along the plane of weakness would be relatively narrow and unable to be distinguished from other naturally occurring variations. 12 None of the engineers involved appeared to have made accurate measurements of the degree of subsidence of the building nor of the degree of inclination of the walls, which they noted. On that score however there is independent evidence to show that the building was in fact tearing apart at the centre passage and had moved at that point some significant distance. The evidence of Mr John Kannis an architect who was a tenant of the building and of the architect who was engaged by the plaintiff namely Mr Phillip Fagin both supported the proposition that there was significant subsidence of the building in portion of its eastern boundary. Mr Kannis noted the fact that the central passage began to widen so that the carpet did not fit anymore. 13 Mr Fagin on inspecting the building considered its condition to be alarming and he considered that in one of the rooms there had been a drop of some 75 millimetres or thereabout along the eastern wall. The architect formed the view that the roof was holding the building together. 14 In those circumstances I have reached the conclusion that there was significant subsidence under some of the footings along the eastern boundary of the plaintiff's land and at the most probable cause of that subsidence was the development of a sliding wedge in the manner described by Mr Peter Airey. Undoubtedly the vibration which was caused by the sheet piling was a contributing factor to some of the damage of the building but the magnitude of the damage was such that in my view it cannot be adequately explained by vibration alone. Given the fact that the subsidence appeared to have penetrated approximately five metres into the plaintiff's building I am also of view that the proposed remedial measures suggested by Mr Airey were appropriate in the circumstances and the plaintiff acted reasonably in adopting Mr Airey's explanation and implementing his proposed remedial measures. 15 I next turn to the issue of the contracting out of the repairs required to the building including the injection of superfine grout according to the remedial measures recommended by Mr Airey. 16 The evidence before me established that repairs of this kind required to the plaintiff's building are a extremely specialised area of expertise and only a limited number of companies and individuals are prepared to, and have the expertise, necessary to carry out work of that kind.
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17 In the event one of the small number of companies which was considered by all parties to be competent to carry out the works was engaged to undertake the repairs of the building. Given the uncertainties concerning the repair of the building and the prospect that the damage might be more extensive than supposed or other complications might emerge during the repair process the company was not prepared to give a fixed price quote but gave an indicative price prior to entering a cost plus contract. That process was reviewed and approved by a quantity surveyor Mr Ashton who considered that the estimate provided by the Barclay Group was reasonable and their total price after the work was completed of $146,517.44 likewise to be reasonable.
18 Those assessments were based on the proposition that the full remedial programme recommended by Mr Airey was required and it was no part of Mr Ashton's task to offer any judgment of the need or otherwise for the full programme to be implemented. 19 In the event in the process of injecting the superfine grout the soil in certain areas into which that grout was injected was found to be so compacted that it was unable to permeate the soil and was therefore rejected. 20 Mr Steven Miotti was an engineer directly involved in the supervision of the injection grouting. It was originally planned that only every second of the proposed injections along the eastern boundary would be made at first and that the intermediate injections would be made after the first had stabilised. Reviewing the response of the soil to the injection process Mr Miotti concluded that it would not be necessary to inject the intermediate piles to their full depth and as a consequence advised the company undertaking the work that the intermediate piles along the east wall need only be injected to approximately one half of the originally proposed depth. Accordingly 24 of the 48 piles under the eastern boundary wall were injected to a depth of 2.1 metres rather than the originally proposed 4.8 metres. Notwithstanding that the engineer had approved what I would regard as a very considerable diminution in the scope of the work required it seems no effort was made to have that saving translated into a reduction in the price. 21 The contractor Barclay Group had subcontracted the grouting to Bachy Pty Ltd and it seems to me that since the scope of the work was very significantly reduced by the decision of the engineer to reduce approximately one half of the grouted peers under the eastern boundary from 4.8 metres to 2.1 metres there were going to be considerable savings
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in time and material usage which could have, and should have, been reflected in a price reduction. 22 No thought appears to have be given to this aspect of the matter. 23 By my calculations the saving in respect of the eastern boundary wall by the reduction in the required height of the superfine grout pillars was in the order of 25 per cent and that of the overall cost of the superfine grouting in the vicinity of 11 per cent. I calculate those figures by working out the total pile depths which were required to be injected under the original proposal and the total depths actually used on the job. 24 No attempt was made to renegotiate the prices in the light of the reduction of the scope of the works but given the fact that there was an obvious saving to the contractor it was my opinion that that overtures should have been made and it probable that a reduction could have been achieved. Therefore insofar as part of the plaintiff's claim is for superfine grouting beneath the building I would reduce it by 11 per cent including the mark-up imposed by the Barclay Group under its cost plus contract. Insofar as the plaintiff's claim comprises the costs for restoration undertaken by the Barclay Group, save for the reduction to which I have earlier referred which I will later quantify I am satisfied that the work undertaken was required to restore the building to a proper condition, that the charges rendered by the Barclay Group for the work were reasonable and I allow as a component of the damage the cost of those works. 25 Additionally, I consider the plaintiff acted reasonably in engaging an architect to advise it on the work which was necessary to be done and for him to in turn engage an engineer to advise on the appropriate remedial tasks necessary to reinstate the building. 26 Additionally, I am of the view that it was prudent to engage a quantity surveyor to review the costs of the proposed work to advise as to whether or not those charges were reasonable and I consider in adopting that stance and engaging in these processes the plaintiff acted reasonably and the costs of the various professionals so engaged should form part of the damages awarded. 27 There are however other aspects of the claim which need to be considered. First is a claim for loss of rental for a tenant with whom a surrender of lease was negotiated. I accept that it was reasonable to negotiate a surrender of a portion of the leased area of the business since that facilitated repairs which could then be accomplished by tenants moving from various parts of the building whilst that which they normally
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occupied were attended too. However, I do not agree that the full cost of the surrender of the lease should be visited on the defendant. The tenant left on the 30 November 2001 but it was not until toward the end of February 2002 that a contract for the repair work was entered in to. The tenant's lease would have expired in April 2003. The area vacated by the tenant was available for tenancy again from the 1 September 2002 and was promptly reoccupied. In my opinion an appropriate allowance for the loss of the rental opportunity during the period of the works should be five months. I base that conclusion on the fact that the evidence before me suggested that the works did not proceed with great speed and indeed it was not considered a matter of particular urgency that any completion date be achieved. In reaching that decision I have regard for the fact that the tenant had not paid rent subsequent to the 30 September 2001 and had previously negotiated an arrangement to forgo the rent increase otherwise due under the terms of the lease. The calculation of the loss will therefore be the base rental of $1614.13 together with $280 per week for the car parking licence. As to the charge of $400 per month for variable outgoings there has not been put in evidence before me anything from which I could calculate what variable outgoings were incurred and which would have been recoverable by the plaintiff from its tenant during a period of occupancy and I therefore make no allowance for that component. 28 As to the claim for a sum of $11,207 for legal fees the only information that I am given on that score is contained in the affidavit of Mr G M Carrello in par 20 where he says: " I engaged Phillips Fox Lawyers to ensure the plaintiff took all proper steps with respect to having the remedial works carried out. The total costs paid to Phillips Fox Lawyers was $11,207 with which sum I consider to be reasonable." 29 I have no information at all as to what legal advice was required and how the charges were raised. In the absence of such evidence I totally disallow any allowance for legal fees. 30 The further head of claim is the sum of $5,000 which Mr Carrello brings forward in par 21 of his affidavit in the following terms: "As General Manager of the plaintiff I rendered accounts for time spent with respect with looking after the plaintiff's affairs. I estimate that I have rendered accounts of not less than $5,000 for myself and my staff to the plaintiff for time spent with
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respect to resolving the issues and having the repairs to the damage carried out. I consider this sum to be reasonable in accordance with normal rates charged for this time of work." 31 I again echo my comments in regard to the legal fees. I no idea what work was done, how long it took, who it was done by, what rates were charged or any basis of assessing whether any of those aspects are reasonable or otherwise. As a consequence I completely disallow that aspect of the claim. Challenges were made to the quality of the remedial work carried out to repair the cracks and other problems within the building and the need to re-do some of the work. In my view the totality of the evidence establishes that the work which was carried out was necessary to restore the building to an acceptable condition and the charges for that work were reasonable. In summary therefore I assess the damages payable by the defendant to the plaintiff under the terms of the judgment as follows:
Remedial Works $146,517.44 Less deduction for Microfine grout injection $ 6,867.60 Balance $139,649.84 Loss of rental $ 10,417.70 Architect $ 9,130.00 Quantity surveyor $ 2,772.00 Engineers $ 8,793.40 Total $170,762.94 |