McKAY v Hudson
[2001] WASCA 387
•5 DECEMBER 2001
McKAY & ANOR -v- HUDSON & ORS [2001] WASCA 387
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2001] WASCA 387 | |
| THE FULL COURT (WA) | |||
| Case No: | FUL:71/2001 | 5 NOVEMBER 2001 | |
| Coram: | WALLWORK J MURRAY J OLSSON AUJ | 5/12/01 | |
| 19 | Judgment Part: | 1 of 1 | |
| Result: | Appeal allowed in part | ||
| B | |||
| PDF Version |
| Parties: | RODERICK DOUGLAS McKAY KATHLEEN GLENYS McKAY JOHN FRANCIS HUDSON MARGARET ROSE HUDSON COLIN EDWIN BAILEY SUSAN LYSLE BAILEY |
Catchwords: | Damages Approach to assessment Breach of contractual obligations Contract for site development for sale of caravans Deterioration of site post development Instability of structure Defective construction Appropriate remedial works Motion for leave to adduce fresh evidence rejected |
Legislation: | Nil |
Case References: | Alucraft Pty Ltd (In Liq) v Grocon Ltd (The Flinders Street Contract) [1996] 2 VR 386 Bellgrove v Eldridge (1954) 90 CLR 613 Greater Wollongong City Council v Cowan (1955) 93 CLR 435 Hadley v Baxendale (1854) 9 Exch 341 Jacob and Youngs v Kent (1921) 129 NE 889 Surrey County Council v Bredero Homes Ltd [1993] 3 All ER 705 University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481 Urban Transport Authority of NSW v Nweiser (1992) 28 NSWLR 471 Wilson v Peisley (1975) 30 ALJR 207 Brockway v Pando (2000) 22 WAR 405 Commonwealth Bank of Australia v Quade (1991) 178 CLR 134 Hansen v Gloucester Developments Pty Ltd (1992) 1 Qd R 14 Hawkins v Clayton (1988) 164 CLR 539 Jandon Constructions (a firm) v Lyons [1999] WASCA 310 Orr v Holmes (1948) 76 CLR 632 Ruxley Electronics and Constructions Ltd v Forsyth [1995] 3 WLR 118 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liq) (1999) 160 ALR 588 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : McKAY & ANOR -v- HUDSON & ORS [2001] WASCA 387 CORAM : WALLWORK J
- MURRAY J
OLSSON AUJ
- KATHLEEN GLENYS McKAY
Appellants
AND
JOHN FRANCIS HUDSON
MARGARET ROSE HUDSON
COLIN EDWIN BAILEY
SUSAN LYSLE BAILEY
Respondents
Catchwords:
Damages - Approach to assessment - Breach of contractual obligations - Contract for site development for sale of caravans - Deterioration of site post development - Instability of structure - Defective construction - Appropriate remedial works - Motion for leave to adduce fresh evidence rejected
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Legislation:
Nil
Result:
Appeal allowed in part
Category: B
Representation:
Counsel:
Appellants : Mr G A Rabe
Respondents : Mr B P Wheatley
Solicitors:
Appellants : Goldfinch & Co
Respondents : Murfett & Co
Case(s) referred to in judgment(s):
Alucraft Pty Ltd (In Liq) v Grocon Ltd (The Flinders Street Contract) [1996] 2 VR 386
Bellgrove v Eldridge (1954) 90 CLR 613
Greater Wollongong City Council v Cowan (1955) 93 CLR 435
Hadley v Baxendale (1854) 9 Exch 341
Jacob and Youngs v Kent (1921) 129 NE 889
Surrey County Council v Bredero Homes Ltd [1993] 3 All ER 705
University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481
Urban Transport Authority of NSW v Nweiser (1992) 28 NSWLR 471
Wilson v Peisley (1975) 30 ALJR 207
(Page 3)
Case(s) also cited:
Brockway v Pando (2000) 22 WAR 405
Commonwealth Bank of Australia v Quade (1991) 178 CLR 134
Hansen v Gloucester Developments Pty Ltd (1992) 1 Qd R 14
Hawkins v Clayton (1988) 164 CLR 539
Jandon Constructions (a firm) v Lyons [1999] WASCA 310
Orr v Holmes (1948) 76 CLR 632
Ruxley Electronics and Constructions Ltd v Forsyth [1995] 3 WLR 118
State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liq) (1999) 160 ALR 588
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1 WALLWORK J: I agree with the reasons for judgment and the conclusions of Olsson AUJ.
2 There is nothing I wish to add.
3 MURRAY J: I am in entire agreement with Olsson AUJ that for the reasons given by his Honour the appeal should be allowed to the extent of reducing the award of damages by the sum of $50,000.
4 OLSSON AUJ: This is an appeal against a judgment entered by a District Court Judge against the appellants in the sum of $171,113.25 for damages and for payment of the costs of the action. There is also a related notice of motion for leave to adduce fresh evidence.
5 In essence, the appeal seeks to impugn the quantum of damages awarded. It is not now in dispute that the appellants were in breach of their contractual obligations to the respondents and therefore liable in damages to them.
6 The respondents had originally claimed damages from the appellants in respect of causes of action based both on negligent execution of work and also breach of contract. In the event, the learned trial Judge awarded the above sum by way of damages for breach of contract.
7 As appears from the reasons for decision published by the learned trial Judge, much of the narrative fact was common ground between the parties.
8 The respondents were the owners of premises at Panton Road, Mandurah, which they desired to develop as a site for the sale of caravans. The appellants were earthmoving and paving contractors.
9 Early in 1994, the parties entered into discussions concerning the levelling of the proposed site and the paving of it with a red, hot mix asphalt surface.
10 The appellants originally tendered a quotation of $68,350 for the proposed works which, inter alia, involved the laying of a 25 mm hot mix surface on a ".150 limestone base with gravel top". Following discussions between the parties, a revised price of $70,000 was agreed upon. This figure included the provision of storm water sumps, lids and storm water pipe, which had not been provided for in the original quotation. As I
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- understand the reasons of the learned trial Judge, additional works to the value of $7008.50 were later agreed.
11 It was common ground that, following completion of work, the respondents paid to the appellant all but $825 of the agreed contract price and extras.
12 In the course of his carefully reasoned decision, the learned trial Judge made these basic findings:
(1) That, in breach of the contract, the appellants failed to comply with the terms of the contract as to the thickness of materials to be used;
(2) That, also in breach of the contract, the appellants laid the asphalt when the base was too wet;
(3) That cracks commenced appearing in the paving by about August 1994, only some three months after completion of the laying of it; and
(4) That, as at time of trial in early 2001, cracking had extended over most of the surface of the paving and potholes had developed in two specific areas, namely in front of the office at its south-west corner and in front of the workshop door to the north-east.
13 But a glance at photographs and video films tendered in evidence reveals the serious, obvious and extensive nature of cracking and extent of the potholing. As the learned trial Judge noted in his reasons, the male appellant conceded, in cross-examination, that "there could be 90 per cent block cracking".
14 Those reasons traversed the evidence of three civil engineers who had been called to give expert evidence; Messrs Rimpas and Hogg on behalf of the respondents and Mr Simpson on behalf of the appellants.
15 Each of the experts ventured opinions both as to the reasons for the deterioration of the asphalt surface and also what remedial steps were appropriate in the circumstances. Those witnesses were not ad idem as to the precise causes of the defects (at least as to primary causation), or as to appropriate remediation works.
16 Having considered their views, the learned trial Judge concluded that "the cause of the cracking was that the base course was too wet and not properly conditioned prior to the asphalt being laid and to a lesser extent by the other factors". I take the "other factors" to have included varied
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- thicknesses of the hot mix, gravel and limestone (not in conformity with the contract) and inadequate compaction levels.
17 In my opinion, the above conclusion was well open to the learned trial Judge and beyond challenge on this appeal. Indeed, that was not the main thrust of the contentions of counsel for the appellants.
18 Having reviewed the conflicting expert evidence in that regard, the learned trial Judge upheld the opinions of the respondents' experts that the proper course of remedial action was to remove the existing paving and replace it in a manner which achieved conformity with the requirements of the contract between the parties.
19 He found that the reasonable cost of so doing at time of trial, based on a quotation of Red Roo the Earthmovers, was $171,938.25. He disallowed an additional claim for economic loss in respect of the period of disruption resulting from the rectification works, both because any loss sustained would be that of the entities actually conducting the business (and not the respondents) and also because no reliable evidence had been adduced to support the claim.
20 The net amount of the judgment entered was the above sum, less the $825 balance of contract price admittedly unpaid by the respondents.
21 At trial it had been the fundamental contention of the respondents that the only acceptable and reasonable mode of rectification of the defects in the asphalt was that recommended by their experts, as above recited. The appellants had strongly contended that the approach espoused by their expert ought to be adopted, ie, that a process known as "crack sealing", whereby the cracks are blown out to remove sand and debris and then filled with black or coloured bitumen as a maintenance option and not a rehabilitation process – coupled with repair of any potholes - would have been adequate.
22 The appellants' expert had essentially argued that –
• the pavements had already performed functionally for approximately 40 per cent of their anticipated lifespan and should achieve a substantial proportion of the normally anticipated lifespan;
• sudden catastrophic failure of large sections of the pavement ought not be anticipated;
• the main deterioration over time was likely to be the formation of isolated potholes, which would require patching; and
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- • this being so, removal and replacement was simply not justified.
23 After the conclusion of the trial and before judgment was delivered, the solicitors for the appellants had their attention drawn to the fact that advertisements were being published in the motoring section of The West Australian in this format:
"Coromal Caravans
Hudson's Coromal
Mandurah
(08) 9581 7300
Huge range of
New Coromals
Best Presented
Yard in W.A.
No pressure selling
***************
This is what gives us the edge.
A phone call or short drive
could end your frustration.
It's worth the trial."
24 At trial counsel for the respondents opened on the basis that they had required the work to be done to give a fine, long-lasting finish and to create a showpiece for the selling of caravans. Objection was taken to this and evidence led to that effect, on the basis that it had not been the subject of any relevant plea. Evidence on the topic was taken de bene esse. Ultimately, in his reasons for judgment, the learned trial Judge held the evidence to be inadmissible.
25 When the appellants' solicitor became aware of the advertisements, he sought the advice of counsel as to whether steps should be taken to attempt to place evidence of them before the learned trial Judge - presumably upon the basis that this potentially bore on the issue as to whether it was necessary or reasonable to remove and replace the paving, as contended for by the respondents.
26 Counsel advised against seeking leave to re-open on the footing that, to adduce evidence in relation to a case which the appellants had argued was not relevant and had not been pleaded would be contradictory.
27 As I understand the argument, it is now said that the evidence of the advertisement has become relevant on the findings made by the learned trial Judge. The argument which the appellants will seek to advance is -
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- "How can it be both reasonable and necessary to remove and replace paving which, although superficially cracked, is structurally sound and will continue to meet the purpose for which it was required for the full extent of its design life, when the fine finish issue is not a relevant consideration and the respondents themselves advertise the caravan yard as 'The best presented yard in WA'?"
28 It is trite to say that it is only in an exceptional case that the court will permit a party against whom an adverse decision has been given to raise a new line of argument which – deliberately or by inadvertence – the party did not pursue, when there was an opportunity of doing so (University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481 at 483).
29 In the instant case, the appellants themselves raised the point and elected to abide by counsel's advice not to pursue the point.
30 With all due respect, it is difficult to follow the logic of that advice. On the appellants' present contention, if the proposed evidence is significant in the respect now sought to be propounded, it was always so significant, regardless of the fine finish issue. There would have been no inconsistency in advancing it. The omission of the appellants to seek to re-open was a deliberate tactical decision and, generally speaking, they should be held to it – notwithstanding what fell from Clarke JA in Urban Transport Authority of NSW v Nweiser (1992) 28 NSWLR 471 at 478. It is most undesirable that parties be permitted to re-open their evidentiary case in circumstances such as that now under consideration, unless the exclusion of the new evidence is patently likely to lead to an injustice because of the apparently persuasive and important nature of the material sought to be adduced. I consider that the application should not succeed for that reason.
31 Quite apart from that consideration, if the appellants wish to now adduce fresh evidence, they must, in any event, satisfy three preconditions:
(1) that it could not, by reasonable diligence, have been obtained at the trial;
(2) that, had it been adduced at that time, an opposite result would have been likely; and
(3) that the proposed new evidence is credible (Greater Wollongong City Council v Cowan (1955) 93 CLR 435).
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32 I do not understand how it can be said that a failure to meet discovery obligations led to the situation which developed, as asserted on behalf of the appellants. The relevant advertisements all seem to have appeared post-trial and the appellants became aware of them in time to seek to re-open, had they decided to do so.
33 Moreover, it is difficult to perceive how it could fairly be contended that, had the evidence of the advertisements been adduced, an opposite result would have been likely.
34 As to this, two aspects arise for consideration.
35 First, as the learned trial Judge pointed out, the respondents were the registered proprietors of the site but, as from 1 July 1999, the businesses conducted at it have been carried on in partnership by John Hudson Services Pty Ltd (as trustee for the J & M Hudson Family Trust) and Crestwood Corporation Pty Ltd (as trustee for the C & S Bailey Family Trust). The relevant advertisements were clearly placed on behalf of the proprietors of the businesses and it is by no means clear that their beneficial interests and those of the respondents were necessarily one and the same.
36 Second, and more importantly, the phrase "Best presented yard in W.A." is expressed in somewhat equivocal terms. Given its context and on a normal construction of the words used, it may well simply bear on the content of the yard and the stock in it, rather than the physical condition of the surface of the yard itself. At the very least, it is extremely doubtful that the expression used could fairly be taken as an implied admission on the part of the respondents that the defects complained of by them were so inconsequential that they did not warrant the removal and replacement of the surface, as contended for at trial. But a glance at the photographic evidence indicates how improbable that situation would be.
37 It follows that the appellants fall far short of meeting the second test which they must satisfy.
38 I would, unhesitatingly, reject the motion for leave to adduce fresh evidence.
39 I return, then, to the main thrust of the appeal.
40 I consider that counsel for the respondent is on sound ground when he takes, as his commencement point, the principle that an appellate court ought not to disturb an assessment of damages such as this unless it is
(Page 10)
- convinced that the trial Judge has acted on a wrong principle of law, or has misapprehended the facts, or the amount of the assessment is so inordinately low or high as to be a wholly erroneous estimate of the damage suffered (Wilson v Peisley (1975) 30 ALJR 207 at 209).
41 In the instant case, the learned trial Judge correctly appreciated that the approach which he had to pursue was that which stemmed from Hadley v Baxendale (1854) 9 Exch 341 at 345 and, in the context of a construction work dispute, best found expression in Bellgrove v Eldridge (1954) 90 CLR 613 at 618 – 619.
42 As he pointed out, it was beyond dispute that, at the time of entry into the contract, the appellants well knew that the respondents intended to set up a workshop and showroom on the subject site.
43 Hadley v Baxendale (supra) establishes the well-known principle that damages for breach of contract are awarded for such loss as may fairly and reasonably be considered either as arising naturally (ie according to the usual course of things) from such a breach itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time when the contract was made, as the probable result of the breach of it.
44 The High Court held, in Bellgrove v Eldridge (supra), that (relevantly for present purposes) a translation of that principle into a defective construction work environment implies that the measure of contractual damages is the difference between the contract price of the work and the cost of making the works conform to the contract, plus the amount of profits or earnings shown to have been lost by the breach.
45 In making such an assessment, the Court must be satisfied both that the remedial work said to be required is "necessary" to produce conformity with the contractual requirement and also that the embarking on that work is a "reasonable" course to adopt in all the circumstances.
46 In the course of its judgment in Bellgrove v Eldridge (supra) the High Court made the point that, in some cases, the only practicable method of producing conformity with the contract requirements may be by demolishing the whole of the construction works and replacing them (618).
47 As the learned trial Judge appreciated, whether or not proposed remedial work is both "necessary" and "reasonable" is a question of fact in
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- each particular case. On the evidence before him, he held that removal and replacement of the asphalt surface was both reasonable and necessary.
48 A principal contention of counsel for the appellants was that the learned trial Judge erred in construing the evidence of the expert witnesses Rimpas and Hogg as indicating that the paving had to be "demolished and replaced". He argued that the evidence of those witnesses was not to the effect that the paving had to be removed and redone, but, rather, that such action was required if, and only if, aesthetic considerations were relevant. He went on to contend that such considerations were held to be irrelevant, because they were not pleaded as an issue.
49 Counsel went on to argue that –
• the contract required no more than that the paving be capable of use as a caravan workshop and showroom;
• even in its cracked condition it remained fully functional and could be used for that purpose; and, thus
• removal and replacement was not a necessary and reasonable course to adopt.
50 He stressed that the respondents had adopted what he described as an "all or nothing" approach and that no alternative claim for crack sealing had been mounted. He said that the availability of other remedies such as crack sealing was, nevertheless, important, as throwing light on what was reasonable and necessary in the circumstances.
51 It was submitted on behalf of the appellants that, absent the issue of aesthetic considerations, there was simply no evidence to support a finding that demolition and replacement was "necessary". This was the more so when it was borne in mind that the respondents' own experts accepted that:
• the paving remains functional;
• it is structurally sound and has a significant residual life;
• it would remain serviceable for a full life span, although it would require two reseals instead of one, during that time;
• there is no rutting and catastrophic failure is not anticipated with present type of use; and
• the paving is only subjected to light traffic and, if left untreated, there would be no structural damage by that use during its residual life.
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52 Counsel for the appellants further submitted that, in any event, the respondents had not satisfied the test of "reasonableness".
53 There were several strands to this argument.
54 First, it was said that there was no evidence that the respondents would use the damages to remove and replace the paving. On the contrary, the probabilities are against a likely demolition of what is a fully functional surface, provided that adequate maintenance by way of crack sealing is carried out.
55 Second, it was contended, on the basis of what fell from Cardozo J in Jacob and Youngs v Kent (1921) 129 NE 889 at 891 that the cost of rectification is grossly or unfairly out of proportion to the good to be attained, to the point that it could not properly be awarded. Crack sealing (say) twice would only cost $20,000, whereas what is here in contemplation is damages of about $172,000, plus interest.
56 Third, it was asserted that there was a proven failure of the respondents to mitigate their loss by resorting to crack sealing as a maintenance measure. It was said that the expert evidence indicated that cracks needed to be resealed when they occurred as a matter of asset preservation; a failure to do so will lead to serious detrimental effects and accelerated deterioration; there has, in fact, been a significant deterioration in the cracks over the past seven years; and the potholes and general deterioration would have been prevented by earlier maintenance, had it been carried out.
57 Further, there was a miscellany of other factors which combined to contra-indicate the reasonableness of the respondents' claim. These included the following considerations:
(i) there was no evidence of diminution in value of the premises, due to premature cracking;
(ii) similarly, there was no evidence that the cracked paving adversely affected the commercial viability of premises used for the retail sale of caravans;
(iii) no customer complaints had been received about the condition of the site, nor had it adversely affected profitability of the business;
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- (iv) assuming fresh evidence to be permitted, the respondents themselves regard the premises, in their present condition to be the "best presented yard in WA";
(v) a failure to focus attention on asset preservation has, itself, been unreasonable;
(vi) photographic evidence indicates no more than a requirement for crack-sealing maintenance;
(vii) the respondents have already had the benefit of use of the paving for 40 per cent of its design life. If the damages were used for removal and replacement, they would receive a windfall of 28 years' usage, when the original contract only entitled them to paving with a 20-year design life.
(viii) public policy considerations, it was said, demand a close scrutiny of the respondents' intentions as to use of damages awarded; subsequent purchasers ought to be protected; and overcompensation of plaintiffs ought to be prevented. Such policy considerations should be given effect to in deciding what is, and is not, "reasonable" on the basis of the reasoning in cases such as Alucraft Pty Ltd (In Liq) v Grocon Ltd (The Flinders Street Contract) [1996] 2 VR 386; Surrey County Council v Bredero Homes Ltd [1993] 3 All ER 705at 709 – 710, 715 – 715.
59 A second prong of the appellants' appeal was an assertion that the learned trial Judge erred in law in acting upon the quote of Red Roo the Earthmovers, because this was based on the construction of paving of a quality superior than that which was contracted for.
60 The complaints in this regard were that:
• the quotation assumed a limestone sub-base 200 millimetres thick, as against 150 millimetres contracted for;
• no attempt was made to ensure that the replacement quotes were for works in terms of the contract;
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- • $5000 of the quote related to NATA testing not provided for by the original contract;
• $800 had been allowed for line marking, which was not required by the contract.
61 In replying to the appellants' contentions, counsel for the respondents took issue with the suggestion that the witnesses Rimpas and Hogg had not expressed the opinion that it was only necessary that the defective paving be removed and replaced for aesthetic considerations which had not been pleaded and were therefore irrelevant.
62 As he rightly pointed out, the expert evidence fell to be considered against the background that, at all material times the appellants steadfastly refused to carry out any remedial work on the site.
63 I agree with him that the appellants' characterisation of the effect of the evidence of Rimpas is inaccurate and unreal.
64 What this witness in fact said was that the cracking had become more severe and extensive over time. The cracks had heaved upward (because of the factors recorded by the learned trial Judge in par 28 of his reasons), causing little bumps in the pavement which can be detected when driving over it. There was actual potholing and also signs of potential future potholing.
65 His evidence indicated a steadily (if not fairly rapidly) deteriorating situation. The photographic and video evidence vividly confirms that assessment.
66 The learned trial Judge accurately summarised the evidence of this witness as indicating that the cracking of the paving was unacceptable for three main reasons, namely:
(1) the cracks were aesthetically unacceptable;
(2) the heaving could result in a person tripping; and
(3) the cracks permit the ingress of water which could lead to structural failure under heavy traffic.
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68 He accepted that an attempt could be made to repair the surface by crack sealing but said that this would not necessarily prevent new cracks from occurring, because of the nature of the base course material. He emphasized that, quite apart from the fact that crack sealing would have been aesthetically unacceptable, it simply did "not address the underlying problem".
69 He did identify another possible strategy, but opined that it would be "a waste of money".
70 In my view, the learned trial Judge accurately summarised the fundamental conclusion expressed by Rimpas in these terms -
"He was of the view that one of the cheapest ways to correct the cracking problem was to remove the existing asphalt surface together with the gravel base course to reveal the limestone sub-base. The sub-base would then be scarified and tapped-up with additional limestone, reworked and compacted to design levels. The limestone would then be surfaced with a minimum of 35 mm of oxide added gravel asphalt."
71 Equally, I agree that the appellants' summation of the evidence of the witness Hogg does not adequately reflect the effect of the testimony of that witness.
72 Indeed, read as a whole, Hogg's evidence was substantially to the same effect as that of Rimpas.
73 Having estimated the extent of block cracking across the paved area at about 90 per cent of the total, he made the point that the widening of the cracks over time and development of potholes would shorten the service life of the pavement.
74 He testified that possible remedial work included crack sealing or removal of the existing asphalt, rehabilitation of the base course and replacement with a fresh asphalt seal. He expressly made the point that crack sealing would probably not be acceptable due to aesthetic considerations and was, in any event, usually undertaken as a temporary measure prior to the rehabilitation of a pavement. Its effect was only to temporarily extend the pavement life. I take his view to be based on the premise that the inherent defects in the pavement construction would simply continue to operate and give rise to further serious and extensive cracking.
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75 Mr Hogg noted the lack of thickness of material, in breach of the contract, and opined that this contributed to the cracking – a view to which the learned trial Judge subscribed.
76 When one studies Hogg's report and evidence, there can be little doubt that his basic conclusion was that a proper rehabilitation of the pavement was justified, having regard to the high cracking severity observed.
77 Contrary to the appellants' submissions, there was therefore ample justification for the conclusion come to by the learned trial Judge that damages ought to be calculated upon the basis that rehabilitation was both necessary and reasonable in the circumstances. I would uphold that assessment of the situation.
78 In my opinion, counsel for the respondents is undoubtedly correct when he argues that the fact that the learned trial Judge ruled that evidence on behalf of his clients as to aesthetic considerations on their part and as to what they had in contemplation was inadmissible did not exclude the relevance of the adverse aesthetic effect of black (or even coloured) bitumen crack sealing on the existing red pavement finish, when contemplating the appropriateness and reasonableness of possible alternative remedial measures.
79 Distilled to the essence the obvious and commonsense point made by both Messrs Rimpas and Hogg was that, even if crack sealing was a theoretic remedial possibility which arose for consideration, the reality of the situation was that the practical effect would be so aesthetically unattractive, in the setting in question, that it could not seriously be entertained. This is a quite different issue to that debated in relation to the evidence admissibility point.
80 That brings me to various aspects raised by the appellants bearing on the issue of reasonableness.
81 The attention of the Court was not invited to any published authority which stands for the proposition that a claimant needs to prove not only that the damages claimed are, as a matter of well-established principle, proper, but, also, that the claimant has the intention of applying the damages in a particular fashion. This is a novel proposition which cannot withstand serious scrutiny. One obvious riposte is that, as a matter of logic and plain commonsense, even if the relevant rectification works are not carried out, the patent defects would surely sound in loss to the claimant by reason of their almost certain diminution in the value of the
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- property. More importantly, such a contention stands counter to what fell from the High Court in Bellgrove v Eldridge (supra). In that case, an issue arose as to whether the building owner, having obtained and recovered a judgment based on a need to demolish and rebuild would, in fact, demolish and rebuild. The High Court commented:
"To our mind this circumstance is quite immaterial and is but one variation of a feature which so often presents itself in the assessment of damages, in cases where they must be assessed once and for all."
83 The short answer to the argument based on mitigation, because crack sealing was not carried out, is that the justified finding of the learned trial Judge clearly establishes that the proper, necessary remedy was rehabilitation and not a mere crack sealing, short-term maintenance measure. A failure to mitigate cannot logically arise from an option which the evidence, as accepted, does not support as being appropriate in the circumstances.
84 I next come to the so-called "public interest" aspect and other factors said to impact on the issue of what is "reasonable".
85 For reasons already expressed, it seems to me that there was no onus on the respondents to establish that there had been a diminution in value of the premises and the extent of that diminution; that the commercial viability of the premises had been adversely affected by the cracking; or
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- that customer complaints had been received. These are simply irrelevant considerations for present purposes. I have already dealt with the argument based on the alleged duty of the respondents to have embarked on a programme of crack sealing.
86 It is true that, if the recommended rehabilitation works are now carried out, the practical effect will be to extend what, otherwise, would have been the normal design life of the pavement. However, such a situation largely stems from the appellants' own conduct and attitude. They were requested to rectify the defects at a point relatively early after the cracking became apparent, but they did not do so. It is their intransigence which led to the delay associated with the conduct of the present litigation. They cannot now be heard to complain about the consequences of such a situation.
87 The "public policy" considerations may simply be disposed of.
88 I have already dealt with the relevance of the future intentions of the respondents. There is no need to revert to that aspect.
89 The real riposte to the appellants' submissions on this score is that the authorities upon which they rely do not support or establish the proposition advanced. Both cases turned on facts peculiar to them and neither gives rise to any general principle of present relevance.
90 In Alucraft Pty Ltd (In Liq) v Grocon Ltd (The Flinders Street Contract) (supra), a dispute arose between the contractor and a sub-contractor in respect of admittedly defective work related to window installations. Because, on the evidence, it appeared most unlikely that the building owner would demand rectification, the contractor was held not entitled to windfall damages to recoup it for rectification costs which it was most unlikely to occur. Nominal damages were assessed to allow for the small risk that the contractor might, in future, be called on to rectify.
91 Surrey County Council v Bredero Homes Ltd (supra) turned on a different point altogether. The Court held that, although damages might, in an appropriate case, earn profit which an injured plaintiff has lost, they did not cover an award to a plaintiff of the profit which the defendant had gained for himself by his breach of contract, when the plaintiff had, himself, suffered no loss.
92 I would, therefore, reject the miscellaneous points advanced on behalf of the appellants.
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93 In my opinion, at the end of the day, there is only one aspect of the appeal which has merit.
94 The original quotations obtained by the respondents for the rehabilitation works found to be necessary and reasonable were significantly increased to the later prices due to cost increases over time and the impact of GST. An initial quotation of Red Roo the Earthmovers given in May 1995 for the recommended rehabilitation work was for $121,980, a figure less than a quotation obtained from Boral at about the same time. By 20 December 2000 this had escalated to $171,938.25. It is to be noted that the Malatesta quotation obtained on 17 September 1996 was for $128,661.
95 Given the intransigent attitude of the appellants and delays and forensic activity resulting from it, I am of the opinion that, by mid 1995 it was incumbent upon the respondents to mitigate their damage by taking steps to have the pavement rehabilitated. They did not do so, with the result that the cost of rehabilitation has now escalated by some $50,000. There is no explanation why they did not then have the work done, nor is it suggested that, financially, they were not in a position to commission the rehabilitation. I consider that it is inappropriate that the cost of their inactivity be now visited on the appellants.
96 In the circumstances, I would allow this appeal for the purpose of reducing the quantum of damages by $50,000 to allow for that factor. I would otherwise confirm the judgment of the learned trial Judge.
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