Kuredale Pty Ltd v Dra Industries Pty Ltd - [2017] WADC 46

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: KUREDALE PTY LTD -v- DRA INDUSTRIES PTY LTD [2017] WADC 46

CORAM: PETRUSA DCJ

HEARD: 27-30 SEPTEMBER 2016

DELIVERED : 31 MARCH 2017

FILE NO/S: CIV 4048 of 2014

BETWEEN: KUREDALE PTY LTD
Plaintiff
AND
DRA INDUSTRIES PTY LTD
Defendant

Catchwords:

Contract - Breach of contract - Damages - Measure of damages - Turns on own facts
Tort - Breach of duty - Damages - Measure of damages - Turns on own facts

Legislation:

Nil

Result:

Judgment for the plaintiff in the sum of $87,321.47

Representation:

Counsel:

Plaintiff: Mr R D Shaw
Defendant: Mr M Mony De Kerloy

Solicitors:

Plaintiff: Lavan Legal
Defendant: Mony De Kerloy

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

Bellgrove v Eldridge (1954) 90 CLR 613
J-Corp v Gilmore [2005] WASCA 136
Linklaters Business Services v Sir Robert McApline Ltd [2011] BLR 108
Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272

PETRUSA DCJ:

Introduction

The plaintiff claims the defendant owed it a duty of care to carry out work with reasonable care and skill when applying protective coating to structural steelwork for the roofing area of the new athletic stadium at AK Reserve, Underwood Avenue, Mount Claremont. In breach of that duty, the plaintiff claims the defendant failed to apply the protective coating to the specified film build and seeks to recover its loss. The defendant accepts it breached its duty in respect of some of the protective coating. The issues are:
1.the appropriate measure of the plaintiff's loss; and
2.the extent to which the defendant should bear those costs given;
(a)the contribution already made; and
(b)the other defects in the paintwork that were not the responsibility of the defendant.

Background

The plaintiff is in the business of steelworks manufacturing and supply. The defendant is in the business of supplying and installing protective coatings for steelworks.
The plaintiff contracted with BGC Constructions Pty Ltd (BGC) to supply steelworks for the construction of the new athletic stadium at AK Reserve, Underwood Avenue, Mount Claremont.
On about 18 May 2008 BGC advised the plaintiff that it required a protective treatment to be applied to the structural steelwork to be used at the stadium. The plaintiff through its senior construction manager, Mr Heyden subsequently approached the defendant to apply the protective coating. Mr Sandstrom, the manager of the defendant's painting division provided a quotation for the work.
The plaintiff engaged the defendant to apply the protective coating to the steel beams and inverted steel pyramids (referred to in evidence as the pods). The protective treatment to the steel was intended to prevent it from corroding. The work was to be done in accordance with the specification dated 18 July 2008 (exhibit 24). The original specification was prepared by Mr Edwards an employee of Dulux Paints, the provider of the protective coating. The original specification provided for:
(a)The method and manner of the application of the prime and top coats to the steel beams and inverted steel pyramids.
(b)The method and manner of treatment of welding joints and welding splatter.
(c)The method and manner of dealing with erection damage.
The defendant was responsible for the application of the prime and top coats to the steel beams and inverted steel pyramids at their factory (being (a) above). The plaintiff was responsible for the transportation and erection of the steelworks and therefore responsible for (b) and (c) above.
Further and importantly, the original specification provided that the coating would only be efficacious if there was an adequate coating of paint or film build. The film build is referred to in the documents as the dry film thickness or DFT. The dry film thickness is measured in microns. The original specification set out a minimum, a maximum and a nominated DFT for each layer of paint to be applied ultimately giving a total DFT for the coating system. The original specification provided that the total DFT would be between 260 microns (minimum) and 330 microns (maximum) with the nominated DFT being 325 microns. Whilst the nominated DFT was the goal a DFT falling between the minimum and maximum would ensure the protective coating was efficacious.
The steelwork was delivered to the defendant's factory in three shipments or tranches. The defendant carried out the protective coating work. The steelwork was then erected on the stadium in the first half of 2009. The transportation and erection process had caused damage which was repaired by the plaintiff, as was its obligation.
In April 2009 when the project was either finished or still in progress, Mr Mutch (who was then working for the plaintiff) attended the site with Mr Edwards (a representative of Dulux Paint) because of concerns about noticeable patchiness where the site repairs had been carried out. Following some reassurances the works were accepted and nothing further was done.
A Dulux protective coating performance warranty was signed by the plaintiff as the builder and the defendant as the applicator in July 2009.
In mid to late September 2013 the plaintiff was notified that the steelwork was defective and, in particular, the upper facing surfaces of the majority of the steelwork in the roofing area were exhibiting severe premature corrosion.
A site inspection was arranged and occurred in mid-October 2013. Attendees included representatives from the plaintiff, the defendant, the builder, the architect and the stadium owner. Following this site inspection, the defendant arranged for two of its employees, Mr Sandstrom and Mr Mutch, to re‑attend the site and provide advice regarding the extent of the defendant's responsibility for the corrosion. Their findings were documented in a letter dated 18 October 2013 (exhibit 12). The letter identified four issues, namely:
1.Rust on beams due to 'low DFTs'.
2.Rust on areas of site welds.
3.Rust due to mechanical damage not repaired.
4.Paint flaking or delamination.
The defendant acknowledged, subject to some issues relating to the failure by the stadium owner to inspect and clean the area, that it was responsible for the 'rust on the beams due to low DFTs'. A repair procedure that involved patching the defective areas on the beams was attached to the letter (exhibit 28) (hereinafter referred to as the patch repair specification).
In late October 2013 a further meeting was held to discuss the manner in which the defects were to be remediated. Again the meeting was attended by representatives of the plaintiff, the defendant, the builder, the architect and the stadium owner. The defendant's representatives were asked to leave the meeting after a short time as they were perceived to be obstructing constructive discussion of the appropriate rectification procedure.
Following that meeting the plaintiff obtained an opinion from Dr Zurhaar, a chemist and materials scientist. Dr Zurhaar found that the upper facing surfaces of the majority of tubular steel members exhibited severe premature corrosion. Further, though there was also evidence of early corrosion to some site welds at least 85% of the coating failures on the site related to the coating system that was factory applied (exhibits 14 and 29). In his opinion the appropriate rectification procedure was to repaint the entire steel structure in accordance with a specification dated 6 November 2013 (exhibit 29.1).
The plaintiff adopted Dr Zurhaar's recommendation and repainted the entire steel structure. The defendant opposed the full repaint maintaining that the patch repair specification sufficiently dealt with the coating failures for which it was responsible. The defendant contributed two men each for two weeks to the remedial works that were undertaken by the plaintiff and therefore maintains that they have made good their responsibility.

The pleadings

The plaintiff's amended statement of claim, pleads:
1.that in breach of contract the defendant failed to complete works in a proper and workmanlike manner; and
2.in the alternative the defendant breached a duty in tort, owed to the plaintiff to exercise reasonable skill and care in carrying out the works.
As a result of the breach of contract or the breach of duty the plaintiff claims that the defendant failed to apply the coating to the specified film build. As a result of the defendant's failure the plaintiff claims to have suffered loss and damage being the cost of completely repainting the steel works and seeks to recover this from the defendant. The amount claimed is $105,639.69 plus GST and interest.
In relation to the breach of contract the plaintiff relies on terms and conditions attached to the three purchase orders associated with the three tranches of steel delivered to the defendant's factory.
The defendant accepts that it provided a quote to perform the protective coating to the steel and that it subsequently undertook those works in accordance with the original specification. It denies that it received any terms and conditions with the purchase orders. In any event the defendant says that the purchase orders were not received until after the defendant had carried out work on the tranches of steel. It therefore denies that there has been any breach of contract.
The defendant however, accepted that it owed the plaintiff a duty to exercise reasonable care and skill in performing the works. The defendant denied that it breached the duty but for an area of approximately 60 sqm of the inverted steel pyramids and steel beams. The defendant denies that the plaintiff has suffered any loss and damage by reason of this because the defendant has met its responsibility by providing the services of two painters for two weeks each, during the remediation procedure undertaken by the plaintiff. In addition the defendant pleads that the plaintiff's decision to repaint all of the steelworks went well beyond what was reasonable to remediate the defects the result of the defendant's breach of duty.
Given the defendant's concession that it owed a duty to exercise reasonable care and skill in performing the works and was responsible for remediating defects that arose from a breach of that duty the trial proceeded effectively on the basis that the issues to be resolved were:
1.whether the appropriate measure of the plaintiff's loss, was the cost of a complete repaint of the steelwork; and
2.whether the defendant should bear all of those costs given there were other defects in the paintwork that were not the responsibility of the defendant.
Before proceeding to consider the matter further it is necessary to say something about:
1.some technical matters that were not in dispute in the trial; and
2.the law that applies to this case.

Undisputed technical information

In the original specification three coats of paint were to be applied to a total film build (or total DFT) of between 260 microns and 330 microns with the total nominated DFT of 325 microns.
The original painting specification provided that the top coat was to be a Dulux paint known as Ferreko No. 3. This paint is a micaceous iron oxide fortified epoxy paint that gives a metallic appearance. It was common ground that Ferreko No. 3 (and the associated coating system) had a long track record of protecting external structural steel in similar constructions and environments. The intended service life of this paint is 20 years despite the fact that Dulux only gave a warranty for a period of 10 years.
The paint, however, has two drawbacks that are well known in the industry. First, it is an epoxy paint. This means that it fades and chalks over time. The chalking means that it is not possible to colour match it when spot painting a surface because the chalking effect cannot be replicated. The touch-ups will eventually fade to the same colour but it will take between two and three years for this to occur, not two or three months which is the case in other paints.
The second drawback to Ferreko No. 3 is that it contains a metallic flake component. This means that the method used to apply the paint affects how these flakes lie and therefore how the paint looks. Spray painting will allow the flakes to stand upright. The use of a paintbrush or roller will deposit the flakes differently. It is therefore impossible to patch repair without a clearly dissimilar finish. Fading and time does not alter this fact.
The original specification (and in fact any specification) outlines the procedure to be adopted when the paint is applied in the factory and for paint applied on site to repair (or touch up) damage the result of transportation and construction (including site welding). There needs to be a distinct site repair procedure because there are limitations on the nature of the surface preparation and method of application that can be undertaken on site: different tools are available and the environmental conditions are different
If the site welds and construction and transportation damage are not repaired using the site repair procedure, then a number of consequences may follow, namely:
1.the site welds or other mechanical damage can rust because the coating does not adhere; and
2.the paint can delaminate because it has not properly adhered to the surrounding surface.
Further the original specification (and in fact any specification) makes it clear that when repairing or undertaking remedial works, it is necessary to go beyond the margins of an affected area. This is because there needs to be an area of consolidation with the existing coating. The result of this is that the area to be remediated is greater than the defective area.

The law

The law applicable to this case is well settled and not in dispute. The performance of defective work will normally constitute a breach of at least an implied term to perform work in a good and workmanlike manner. There was, as I have already said an issue in the proceedings as to whether the terms and conditions referred to in the plaintiff's purchase order, were incorporated into the dealings between the parties. Nothing turns on this because it is accepted that the defendant was required to exercise reasonable care and skill in performing the works and that failure to do so, gave rise to an obligation to rectify the works that were defective.
A contractor's liability to correct defects is not affected by a failure on the part of the proprietor to identify defects and direct that they be rectified, even where there is power under a contract to do so. It is for this reason that the plaintiff's failure to implement quality assurance measures, at the time the works were initially undertaken, do not bear on the defendant's obligation to rectify defects caused by its failures.
Prima facie, the measure of damages for defective works performed is the cost of rectification or to ensure conformity to the contract's requirements. The only exception to this is where it is not necessary to produce conformity or not a reasonable course to adopt: see Bellgrove v Eldridge (1954) 90 CLR 613, especially at 617 and 618. The High Court when discussing Bellgrove v Eldridge and this exception said:
The example which the Court gave of unreasonableness was the following:
No one would doubt that where pursuant to a building contract calling for the erection of a house with cement rendered external walls of second-hand bricks, the builder has constructed the walls of new bricks of first quality the owner would not be entitled to the cost of demolishing the walls and re-erecting them in second-hand bricks.
That tends to indicate that the test of 'unreasonableness' is only to be satisfied by fairly exceptional circumstances. The example given by the Court aligns closely with what Oliver J said in Radford v De Froberville, that is, that the diminution in value measure of damages will only apply where the innocent party is 'merely using a technical breach to secure an uncovenanted profit'.
(See Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 [17]).
What is reasonable and necessary may be replacement rather than 'make do and mend' rectification: see Linklaters Business Services v Sir Robert McApline Ltd [2011] BLR 108.
A relevant consideration is whether or not making the work conform would give rise to an ongoing risk that would be placed on an innocent party, in this case the stadium owner: see J-Corp v Gilmore [2005] WASCA 136, especially at [47].
As to what remedial work is both necessary and reasonable in any particular case is a question of fact: Bellgrove v Eldridge (169).

Issues

The fundamental issue then is whether it was necessary and reasonable to repaint all the structural steelwork in the roofing area in order to remedy the defendant's defective workmanship? Resolution of this question requires consideration of the expert opinions led by each side. The plaintiff relied on the opinion of Dr Zurhaar that the steelwork should be entirely repainted. At trial the defence relied on the opinion of Mr Burkett, that a patch repair procedure was appropriate. Before considering their respective opinions it is convenient to set out the qualifications and experience of Dr Zurhaar and Mr Burkett.

Dr Zurhaar's qualifications

Dr Zurhaar is a chemist and materials scientist. He has a Bachelor of Applied Science in applied chemistry, a graduate diploma in chemistry, a Masters of Applied Science and a PhD in polymer science (science of paints and coatings). He has been involved with commercial and industrial materials and coatings for 30 years. He has developed project coating specifications, provided superintendence and investigative quality assurance services for construction of numerous stadiums. He is currently a scientific consultant and chartered chemist in his own business. He has a number of specific research areas including investigation of building materials and structural failures due to materials defects or poor work practices. He is a senior sessional member with the State Administrative Tribunal – Civil and Commercial, is a certified analyst with the National Association of Testing Authorities (NATA) and holds various other professional and academic positions.

Mr Burkett's Qualifications

Mr Burkett has been involved in the painting and decorating industry for over 50 years. He is a certified level 3 inspector with the National Association of Coating Engineers (NACE). This is an international qualification for all steelwork coatings that involve heavy duty insulation like insulation under the sea. He has been a NACE inspector since 2002 and before that was an inspector with the Australian Corrosion Association (ACA). ACA was the governing body in Australia from 1992. He has lectured at TAFE since 1979, teaching painting and decorating and industrial coatings. For 37 years he was involved in consulting, trade training and writing of specifications and giving client advice.
As the foregoing demonstrates whilst the background of the experts is different there is no basis for differentiating between them based on their expertise alone. I now turn to the opinions given.

Dr Zurhaar's opinion – Repaint all the roofing steelwork

Dr Zurhaar was engaged by the plaintiff to provide an opinion regarding the cause of the corrosion and to recommend a remedial process. The remedial process recommended was for all the steel in the roofing area to be repainted in accordance with a Dulux specification dated 6 November 2013 (hereinafter referred to as the Zurhaar specification). Dr Zurhaar's recommendation was influenced by the following factors;
1.the extent of the damage visible;
2.the lack of confidence in determining the extent of the deficient coatings;
3.the need to ensure all technical deficiencies were addressed; and
4.the need for an architecturally acceptable finish.

Dr Zurhaar's assessment was that the upper facing surfaces of the pods were the principal areas that displayed the most severe corrosion. This corrosion was the result of insufficient film build or low DFTs. This paint was factory applied.
There were also site welds which displayed some areas of corrosion and other areas that showed delamination. Both of these were the result of site applied coating failures.
In his opinion though at least 85% of the coating failures related to the coating system that was factory applied. In Dr Zurhaar's opinion it was not possible to state with any confidence the percentage of the total surface area that was deficient or defective because a visual inspection alone could not assess the steel's coating compliance. This was because many deficient areas had only just begun to corrode. A trained eye could pick up some of these areas, though not necessarily all of them. Further all of the steelwork was not accessible and could not be properly tested or assessed.
Dr Zurhaar however did not endeavour to accurately measure the percentage of steel that required remedial work. He did not do this because in his opinion the only way to do a proper evaluation would be to comprehensively and systematically test the entire surface area of the steelworks by bringing to the site proper access equipment. The results of the testing would then need to be marked up and put on drawings so that the proper extent and cost could be evaluated. The cost of this type of investigation would have been about a third of the total cost of a complete repaint.
In addition there were other factors that would need to be weighed. First, decisions would need to be made about 'where you draw the line' in terms of determining the low DFTs and the extent of the margins that would need to be treated. Then there were issues such as the difficulty in accessing the steel in an active public facility; down time, disruption to services, etc.
In his expert opinion given the lack of confidence anyone could have in determining the full extent of deficient coatings (without testing all of it), it was reasonable given the extent of the testing in fact carried out and the widespread early evidence of corrosion, for a complete recoating. This would be the only way to assure the asset owner that all of the steel would be protected from corrosion for the intended service life of the coating system.
Perhaps more specifically, in his expert opinion, the observable areas of corrosion and necessary repair work warranted a full repaint. To this end he said that whilst he did not do exact measurements, he used his professional experience and judgment to assess the situation and in his opinion the extent of the damage was severe enough to go beyond patching. His evidence was that, consistent with industry standard, where a third or more of the structure was affected he would always recommend that the disparity was sufficient to justify/demand the entire structure be repainted. Notwithstanding this, a holistic approach was required. For example, 5% damage could be sufficiently severe in the right location to warrant a complete repaint.
Dr Zurhaar accepted that his recommendation was based on his observations of the steelwork as a whole. This included not just the areas with low DFTs but also the corrosion at the site welds and the delamination. He did not consider the separate causes of the difficulties because he was simply asked to look at the stadium as a whole and give a recommendation and was not concerned with dividing up liability.
When pressed in cross-examination Dr Zurhaar gave the following evidence. First, repairing site welds could never justify a full repaint of a structure. When asked whether he would have recommended an entire repaint if the delamination issue had been the only problem, he said:
I would expect that I would end up in a position where there would be a debate as to whether the surface area that constitutes the delaminations was sufficiently large to go down the same road as I'm going down with the corrosion areas. The corrosion areas in my view were far larger and more extensive than these patches. You might end up in a delicate argument as to whether they were sufficiently limited to make patching reasonable or not. (ts 166)
He however, readily admitted that he did not honestly know what he would have recommended if the only areas of difficulty were the delamination areas because he did not turn his mind to it at the time. He said it never entered his head that anyone would suggest that this was a patch job.
Apart from addressing the technical deficiencies, Dr Zurhaar also considered it relevant that any proposed remedial works produce an architectural, aesthetically acceptable finish. His evidence was that the rust was visible from the ground particularly in areas where the stadium had an elevated walkway. On that basis the remedial work would also been seen. Given Ferreko No. 3 was a micaceous iron oxide fortified epoxy paint, a patch repair would have resulted in a quilted finish. There would be stripes or spots of completely different colours resulting in a poor visual appearance. Whilst it was accepted in the industry that there would be a need to do 'touch‑ups' during construction these generally constitute a very small percentage, probably less than 2 % of the surface area of the steel. In Dr Zurhaar's opinion this was well outside what could be called 'touch‑ups'.
Though Dr Zurhaar identified an architecturally acceptable finish as a consideration he said that he would nonetheless have recommended a complete repaint in this case even if a different coating system (i.e. one not involving a micaceous iron oxide fortified epoxy paint) had been used at first instance. This was because there was the need to ensure that technical deficiencies were addressed.
Before moving to consider Mr Burkett's opinion I should note that the Zurhaar specification provided for the top coat to be a product called Weathermax HBR and not Ferreko No. 3 as required by the original specification. I will deal with the significance of this later.

Mr Burkett's opinion – Patch repair sufficient

Moving to Mr Burkett's opinion. Mr Burkett's opinion was not sought by the defendant until the proceedings were commenced and therefore after the remedial work was completed. Notwithstanding this Mr Burkett had attended the site to inspect the corrosion prior to any remedial works. He had done so at the request of the stadium owner. It is not known what views he reached or what opinions he gave following that site inspection because the fact of it was not revealed until he gave evidence at trial. However it is clear that Mr Burkett relied to some extent on the observations he made during that earlier site inspection.
In Mr Burkett's opinion it was not necessary to entirely repaint the structure because the remedial specification obtained by the defendant would have addressed the corrosion and durability issues and still have been architecturally acceptable. Mr Burkett's opinion appeared to arise from a number of observations, assessments and conjectures.
First, Mr Burkett visited the site and in his view:
1.the corrosion was on the upper facing surfaces of the pods and the site welds;
2.the corrosion was not visible from the seating/public areas of the stadium;
3.there was a blanket of dust on the beams and there was no evidence of washing down or maintenance;
4.there was no visible corrosion/rust on the inaccessible areas, though there were rust runs; and
5.there was visible delamination on three beams.
Secondly, Mr Burkett did not accept that the only cause of the corrosion on the upper facing surfaces of the beams were low DFTs; rust creep promoted by lack of cleaning and maintenance was also a cause. Notwithstanding this Mr Burkett appears to have accepted that the areas measured by Mr Sandstrom and Mr Mutch were the areas requiring remediation by the defendant. Somewhat inconsistently Mr Burkett in his report dated 25 August 2016 (exhibit 41) says:
When 10% of corrosion was visible and of that 10%, 50% was from site damage and non complying repairs by Metro, all that was required was remedial work not a full repaint.
In any event, Mr Burkett's evidence was that the only circumstances he could envisage where a complete repaint was warranted was if there was rusting all around the pipes. He accepted that if there was more than 5% corrosion rates on the steel (worked out on a square meter basis) within the first 12 months then the warranty suggested a repaint may be indicated. Mr Burkett however said that one could not now know what the corrosion rate was in the first 12 months and therefore the provisions in the warranty were irrelevant.
Mr Burkett accepted that visual effect would be a relevant consideration in determining the appropriate remedial process though only if the area under consideration was highly visible. He did not consider that to be the case here. He had checked by looking up as he worked his way from the seats at the front of the stadium to those at the back and 'while you saw some forms of discolouration, it wasn't really rust' (ts 305), he 'really couldn't see any of this rusting' (ts 335).
Mr Burkett further contented that any patchiness associated with the defendant's remedial process was visually acceptable because patchiness had been accepted by the parties at the construction stage (exhibit 40, page 4). I take this contention to be a reference to the evidence given by Mr Mutch about the occasion in April 2009 when he attended the site with a representative of Dulux because of concerns about noticeable patchiness where the site repairs had been carried out.

Full repaint v patch repair – Anaylsis of opinions

In order to properly evaluate the opinions of both Dr Zurhaar and Mr Burkett I need to determine the extent of the coating failures that arise from the defendant's defective work.

The extent of the defendant's defective work

It is accepted that there were coating failures on the upper facing surfaces of the roof beams that were factory applied and hence the fault/responsibility of the defendant. The coating failure in this instance was the result of inadequate film build or low DFTs. In determining the extent of these coating failures two issues arise:
1.Whether the visible corrosion on the beams was an accurate reflection of extent of the low DFTs in those areas; and
2.Whether the areas with visible corrosion were the only areas where the factory applied coating was deficient in that it had low DFTs.
In respect of the first issue the plaintiff contended that the areas of corrosion were indicative of the areas of low DFTs and therefore the defendant's defective works. The defendant submitted that the area with low DFTs was not as great as the corroded areas and in fact was likely much less. It is convenient to deal, the defendant's position first.
The defendant's submission was based on the evidence given by Mr Burkett in relation to 'rust creep'.
Mr Burkett's evidence in relation to rust creep was as follows. Once rusting starts it will worsen unless it is constantly worked at and maintained. If not arrested, it will start to under-creep the paintwork. According to the Australian Standards, if rust is not arrested from pinpoints, it will creep 2 ‑ 3 mm within a year. However, rust could creep as much as 5 mm in a year, depending on environmental factors. Rust can get in under good paint, lift it up and it would then flake away.
Mr Burkett's opinion was that the visible corrosion was partly the result of rust creep because when he tested the DFTs at the margins of the corroded areas he did not find any areas of low DFTs. Further Mr Burkett gave evidence that any rusting the result of low DFTs would certainly have become visible within two years. In fact his evidence was that if the beams had not begun to rust in the first year they were probably not going to rust.
I do not accept the defence submission and find that the areas of corrosion visible on the upper facing surfaces of the roof beams do reflect the extent of areas of low DFTs in those locations. I make this finding because of the evidence given by Dr Zurhaar, Mr Mutch and Mr Sandstrom about the tests they performed. All tested the DFTs of the paint at the margins of the corroded areas on the upper facing surfaces of the beams. Dr Zurhaar found that the total DFT on the margins ranged from 120 to 160 microns which was less than half of the specified film build. Mr Mutch and Mr Sandstrom both of whom were called by the defence, confirmed that the DFTs on the margins were low. I accept this evidence. This evidence is inconsistent with 'rust creep' being the cause of the visible corrosion on the upper facing surfaces of the beams.
Further, whilst Dr Zurhaar was never asked about 'rust creep' he did give some evidence inconsistent with Mr Burkett's opinion. This evidence related to when rusting, the result of low DFTs, will become evident. Dr Zurhaar's evidence was that he found areas with low DFTs that either showed no visible signs of rust or were only just beginning to corrode. The explanation for this was that a large number of parameters dictate when something eventually breaks through and fails. A few extra microns here and there make a difference. By way of example Dr Zurhaar identified a pipe up against the trim deck roofing which had only just begun to show visible rusting. Its location against the trim deck roofing affected its exposure to the elements: see photograph annexed to Dr Zurhaar's report exhibit 30.
Having found that the visible corrosion on the upper facing surfaces of the beams does represent areas of low DFTs I turn to consider whether these areas were the only areas of low DFTs in the factory applied coatings. This was an area of some considerable contention at trial given the accessibility issues associated with the inspection of the steelworks.
The steelworks included inverted pyramidal shaped structures referred to as pods. There were about 20 pods and they came in two different sizes. These pods sat above the amenity and office buildings and cantilevered out over the grandstand. It is clear that there were areas that could not be accessed other than with the use of lifting equipment the provision of which was expensive. Equally clear is that there was considerable variation in the degree to which the inaccessible areas could be visually examined. Some of the areas extended only out into the open space at the edges of the buildings, whilst others cantilevered out over the grandstand and were up against the trim deck roofing.
Mr Sandstrom accepted that DFT readings could not be made on all areas because they could not be accessed. However, he said that he did get up onto the roof and visually examine the inaccessible areas. He could not see any deterioration of the paintwork. He believed that any rust would have been visible after five years.
Mr Mutch also visually inspected the inaccessible areas and could not see any evidence of rusting when looking at those areas from the ground/oval. Further when asked about the DFT testing he had in fact carried out Mr Mutch did not recall there being any areas of low DFTs other than the rusted areas. He, however, conceded in cross-examination that there may have been marginal areas.
Mr Burkett accepted there were areas he could not access but he too saw no evidence of rust. He accepted there was some evidence of 'rust runs'. A 'rust run' is rust staining as opposed to actual rusting: where rust from another place has run over the beams. He believed the rust he saw in those areas came from drilled holes through the roof into the beam and not from the beam itself. He conceded that he was not able to measure the DFTs of the paint in these areas.
Dr Zurhaar's evidence was that during his visual inspection of the inaccessible areas he saw sections which to his trained eye showed signs of rust. Consistent with this, Dr Zurhaar subsequently found areas with low DFTs that either showed no visible signs of rust or were only just beginning to corrode. These were in the inaccessible portions of the steelwork. Unlike Messrs Sandstrom, Mutch and Burkett, Dr Zurhaar had the opportunity to visually inspect and test the areas that extended out over the grandstand during the remedial process when lifting equipment was available. Dr Zurhaar's evidence about the results of his testing of the beams in the inaccessible areas was not challenged in cross-examination.
I accept the empirical evidence of Dr Zurhaar and find that the corroded areas on the upper facing surfaces do not represent the full extent of the defendant's defective work.
I find then that the defects in the factory applied paint extended beyond the visibly corroded areas and include sections in the inaccessible areas that showed no visible signs of rust or were only just beginning to corrode.

Effect of determination of the extent of the defendant's defective works.

I have therefore made findings consistent with Dr Zurhaar's contentions about the extent of the defendant's defective works and inconsistent with Mr Burkett's opinion.
Further and inconsistent with Mr Burkett's evidence I find that the use of a spray gun in the circumstances of this case to assist in achieving an architecturally acceptable finish, was not a viable option. In this regard I accept the evidence of both Dr Zurhaar and Mr Sandstrom.
Dr Zurhaar accepted that whilst it was possible to spray paint onsite, it was not done unless the site could be turned into a spray booth. In this case the steelworks were small tubes of steel in an elevated area. Any attempt to paint them with a spray gun would give rise to overspray which could not be wiped off. Mr Sandstrom agreed, acknowledging that because of the environmental conditions blasting and spray painting equipment was not used.
I have therefore rejected three central facts that unpin Mr Burkett's opinion and I would on this basis alone reject his opinion that a patch repair was an adequate remedy for the defendant's defective works.
It was submitted during argument that I would reject Mr Burkett's evidence on the basis that he was not objective and impartial. There were three bases for this submission. First, he did not disclose in his reports all the sources of information upon which he had based his opinion. In particular his did not disclose in his reports that:
1.he had relied on information and observations made for a report he prepared for the government (the report was not produced);
2.he obtained documents directly from the defendant company and not through the solicitors who retained him; and
3.he met with and discussed the 'ins and outs of what was involved' with Mr Dalla Riva the owner of the defendant company on a number of occasions.
Second, Mr Burkett admitted he considered Mr Dalla Riva to be someone who did things 'the right way' (ts 332). Lastly the language used by Mr Burkett in his reports suggests he had aligned himself with the defendant and was lobbying on its behalf. By way of example in his report of 25 August 2016 (exhibit 41) he, in response to Dr Zurhaar's opinion the one could have no confidence about the percentage of the total area that was defective, said:
DRA did a full assessment costed it and generously agreed to paint areas that were not their responsibility as a measure of good faith.
Whilst these matters raise concerns about Mr Burkett's independence, they do not of themselves suggest his opinions are invalid. However, when looked at in combination with the aspects of his evidence that were contradicted by the defendant's own witnesses (eg, no low DFTs at the margins of the corroded areas etc) and my factual finding in relation to the three central facts that unpin his opinion I reject his opinion.

In contradistinction I found Dr Zurhaar to be logical, concise and cogent. He made appropriate concessions and his explanations for his opinions made sense and were understandable. I accept his opinion that it was necessary to repaint all the structural steel given the coating failures on those steelworks, 85% of which he considered were attributable to factory applied coatings. His opinions in this regard were supported, where possible, by empirical evidence and were otherwise justified by logical reasoning.
In coming to this conclusion I have taken into account the submission made by the defendant that the corroded areas on the upper facing surfaces of the beams comprised only about 12% of the total area of the steelworks (based on the measurements made by Mr Sandstrom and Mr Mutch: 60 sqm out of a total of 502 sqm) which of itself did not justify a full repaint. I accept Dr Zurhaar's evidence that the percentage of the total surface area is not determinative of the decision to undertake a full repaint and in any event I have found that the defective factory applied coating extended beyond the corroded areas. Moreover I have found that not all areas of low DFTs were corroded nor were they all showing signs of rusting nor were they all in areas that were readily accessible. Lastly I accept Dr Zurhaar's opinion that the areas of low DFTs that did not yet show evidence of rusting would have ultimately failed.
Having considered the matters raised I am satisfied that it was reasonable for the plaintiff to adopt Dr Zurhaar's recommendation. I am therefore satisfied that it was necessary and reasonable to repaint all the structural steel in the roofing area in order to remedy the defendant's defective workmanship thereby ensuring the technical deficiencies had been addressed.
Before moving to the issue of damages I want to deal with three matters raised in the evidence, that it was submitted were relevant to the issues and that I have not mentioned to this point, namely:
1.the timing of the decision to repaint;
2.the failure to conduct annual inspections and cleaning of the steelworks; and
3.that the Zurhaar specification was an upgrade.

Timing of the decision to repaint

It was submitted by the defendant that the plaintiff's decision to repaint the whole of the steelworks was purely a commercial one. It was put to Mr Heyden in cross-examination that;
1.the decision to undertake a full repaint was made at the meeting held in later October 2013 (i.e. before Dr Zurhaar's opinion was sought); and
2.BGC had put commercial pressure on the plaintiff to repaint the whole job. The pressure included withholding monies owned to the plaintiff for other works.
Mr Heyden denied both these propositions saying that the reason he engaged Dr Zurhaar was to obtain an opinion as to the best way to repair the coating failures. I accept Mr Heyden's evidence on this, notwithstanding Mr Sandstrom's evidence that Mr Heyden had told him the decision was a commercial one made to remain on good terms with BGC.
In part I reject Mr Sandstrom's evidence on this point because his oral testimony was not entirely consistent with claims made in his statement that was tendered at trial. In his statement Mr Sandstrom went further saying Mr Heyden told him BGC were withholding monies to secure their co-operation (exhibit 37, par 46). The failure to mention this when asked directly about this matter has affected my assessment of his credit on this issue.
Further, it was never put to Dr Zurhaar that he was in effect told what his recommendation should be and merely produced a report which supported this position. Whilst Dr Zurhaar would, no doubt, have denied the allegation, had it been put, I consider that Dr Zurhaar approached his assessment from a position of independence and made his recommendation based on his observations and testings and applying his expert judgment.

Failure to conduct annual inspections and cleaning

The defendant also submitted that annual inspections and cleaning of the paintwork would have detected the problem earlier and reduced the degree of damage both because of the early detection and the improved environmental conditions. It is common ground that had the extent of the damage been less, then the amount of preparation required of the surface would have been less (i.e. you would not need to grind off layers of brown dust). This does not bear on the extent of the defective work nor on whether the defendant was responsible for remediating the defect. Had the low DFTs been identified at any earlier time the defendant would still have been responsible to remedy it. To suggest simply that areas of low DTFs may not have failed or not as many areas would have failed by September 2013 had there been annual inspections and cleaning does not alleviate the defendant of its duty to use skill and care in carrying out the work in accordance with the specification. The defect exists (whether it has manifested or not) and therefore the defendant's responsibility to fix it exists. The self-evident truth of this is borne out by the fact that despite the lack of annual inspections and cleaning, there was no corrosion in areas where the dry film thickness of the coating conformed with the original specification.

Zurhaar specification an upgrade

Despite any findings regarding Mr Burkett's opinion he does raise a relevant consideration namely whether the Zurhaar specification was in fact an 'upgrade'. Mr Burkett's rationale for this was that the Zurhaar specification;
1.used Durabuild STE as a primer and this was not a technical necessity;
2.used Weathermax HBR as a top coat and this was a superior and more expensive product; and
3.provided that areas without visible rust be repainted thereby giving greater corrosive protection than initially required.
I will deal with the first two matters because the last is a natural consequence of the recommendation to repaint the entire surface of the steelworks. If the finding of this court is that it was necessary and reasonable to repaint all the structural steelwork in the roofing area in order to remedy the defendant's defective workmanship that is the remedy regardless of any perceived advantages accruing to the building owner.
There was no evidence led at trial by either party as to the technical properties of Durabuild STE or it's suitability for this remedial work. It is difficult then to evaluate Mr Burkett's assertion that it was not technically necessary. However when the patch repair specification relied on by the defendant, also provided for the use of Durabuild STE as a primer, I do not consider that it should be viewed as an upgrade.
Further it was uncontested that both Weathermax HBR and Ferreko No. 3 give high levels of corrosive protection. No evidence was led that suggested one was better than the other in this regard. It is acknowledged that Weathermax HBR does not give a patchy appearance when touched up but I cannot agree that this amounts to an upgrade. From the evidence it is clear that it was not selected because of this feature but rather because Ferreko No. 3 would not give a uniform appearance if applied with a brush or roller over the entire surface. Weathermax HBR is a more expensive product but it has a greater spread rate (i.e. the same amount of paint will cover a larger area). The extra cost was said to have been 83 cents per square metre and therefore only added a marginal extra amount to the overall costs of the remedial works in fact undertaken. This additional cost is a matter that goes to quantum rather than whether the use of Weathermax HBR amounts to an upgrade.

Damages

Having determined that it was necessary and reasonable to repaint all the structural steelwork in the roofing area in order to remedy the defendant's defective workmanship, I now turn to consider the issue of damages.
The plaintiff has provided a schedule of the cost of the works undertaken together with supporting documentation (see exhibit 22). There was, subject to two matters, no real dispute at trial that these costs were in fact incurred or that they were unreasonable. To the contrary, Mr Dalla Riva in a letter to the plaintiff at the time of the events estimated that a full repaint would cost in the vicinity of $110,000 - $130,000 (see exhibit 16).
The two matters raised were:
1.whether the plaintiff's schedule of costs included the labour provided by the defendant; and
2.whether the costs sought by the plaintiff should properly include the inspection fee of Dr Zurhaar during the remedial process given the plaintiff had been required to provide this under the original agreement.
A perusal of the documents tendered in support of the claim (see exhibit 22) together with evidence as to the identities of the defendant's employees (see exhibit 36) reveals that the costs claimed by the plaintiff does not include the hours worked by the defendant's employees.
Insofar as the inspection fees are concerned I consider that they were necessary to ensure technical compliance had been achieved during the remedial process and are properly part of the remedial costs.
The only other matter is that relating to the additional cost of the Weathermax HBR paint. Given that both experts considered that an architecturally acceptable finish was a valid consideration the change in the paint was in my view reasonable and necessary.
The amount in fact sought by the plaintiff is $105,639.69 plus GST. The defendant contributed two men for two weeks towards the performance of the remedial works at a cost of $16,481.77. The total cost involved in performing the works was $122,121.46 (putting any claim for GST to one side).
The matter requiring determination is whether the plaintiff should be entitled to recover the total cost of the remedial works (less the contribution already made by the defendant) given that the repainting also remediated the poorly performed site repairs that showed signs of rusting and the areas of delamination: these two defects being the result of the plaintiff's poor workmanship.
The plaintiff's primary contention is that given it was necessary and reasonable to undertake the full repaint as a result of the defendant's defective work the defendant should bear the full costs.
I have accepted Dr Zurhaar's expert opinion that the observable areas of corrosion justified a complete repaint. Of the observable corrosion at least 85% was the result of coating failures that were factory applied. The plaintiff's poor workmanship was then, responsible for about 15% of the observable corrosion. When you take into account that Dr Zurhaar's expert opinion was also that the delamination issue alone was such that '[y]ou might end up in a delicate argument as to whether they were sufficiently limited to make patching reasonable or not' (ts 166), I consider that the plaintiff should bear some of the cost of the repaint. I consider that the appropriate measure of the plaintiff's loss is 85% of the total cost of the remedial works less the contribution that the defendant has already made. I have calculated this to be $87,321.47. I would allow interest pursuant to section 32 Supreme Court Act 1935 from 30 April 2014.
I have not dealt with the claim for GST as there was no evidence about this nor did either party direct any submissions to this point. I will give the parties liberty to apply in relation to this issue.