Norris v Hanson & Hanson No. Scgrg-98-101 Judgment No. S6882

NORRIS v HANSON & HANSON
[1998] SASC S6882

Magistrates Appeal
OLSSON J

This is an appeal, by a defendant at first instance, against the decision of a stipendiary magistrate sitting in the Civil Jurisdiction of the Magistrates Court.
That decision is supported by detailed written reasons running to some 123 pages. These reflect a close analysis of oral evidence and argument which spanned many hearing days.
As readily appears from the reasons, the learned magistrate was confronted with differing versions of historical fact which were impossible to reconcile. At the end of the day he made specific findings of relative credibility as to the principal parties and certain of the other witnesses called. These findings formed what were, essentially, the linch pin of the conclusions to which he ultimately came.
One of the major features of his findings was that the learned magistrate generally preferred the evidence of the male respondent/defendant and his witnesses to that of the appellant. A perusal of the published reasons readily reveals that there was a substantial body of evidence which supported the conclusion to which he came in that regard. It was a view fairly open to him, with which, on well settled grounds of principle, it is quite inappropriate for this court to interfere.
I do not find it necessary, for present purposes, to embark on a fully definitive analysis of the evidence.
The litigation stemmed from an informal agreement made between the appellant and the respondents in late 1995, whereby the latter, an earthmoving and civil construction contractor, undertook to develop a private airstrip on a property at Springton which had been purchased by the former. Disputes arose between the parties both as to the fundamental terms of the contract and also whether the airstrip works, as executed, conformed with the obligations of the respondents, as originally agreed. Additionally, the claim involved questions concerning the construction of a dam on the property, as incidental to what were the main contract works.
A major issue which arose at trial was as to whether the works related to the airstrip were to be executed for a fixed contract price, or were to be performed on what might be described as a “charge up” basis, reflecting time and plant actually expended and used.
At trial it was virtual common ground that, at the time at which work actually got under way, both parties understood that it was to be performed for an agreed, “all up” sum, “subject to finding rock”.
There is no doubt that this was based on a document signed on behalf of the respondents and expressed in these terms:-
“ 6/9/95
Greg Norris
Springton SA
To carry out works as discussed
1...... Cut & fill to desired falls and batters for airstrip
2...... Supply concrete pipes under airstrip and roadways Rocla 300 concrete pipes
3...... Excavate for dam
4...... Regrade existing road and roll
5...... Shape and form new section of road and supply and compact base material
6...... Excavate hanger site
7...... Excavate tank site
......... Lump Sum Price $14,500-00
subject to finding rock.
Yours faithfully
AR & M Hanson Civil Constructions”
Some dispute arose at trial as to what was connoted by the phrase “subject to finding rock”.
It is scarcely surprising that the learned magistrate concluded that this was intended as a qualification of an otherwise fixed lump sum price. It indicated an express agreement that, in the event that significant hard rock was encountered during earthmoving activities on site, the respondents were to be entitled to raise reasonable additional charges reflecting the cost of dealing with such a contingency.
The respondents’ case was that, initially, the relevant work progressed quite rapidly and no problems were encountered. The respondents asserted that, because the appellant perceived it to be to his advantage to do so, he requested the respondents to consider changing over to an hourly rate price, computed in relation to plant and labour actually employed. (The respondents had earlier supplied the appellant with detailed rates which would be charged on such a basis.) This occurred only a day or so after commencement of work.
On the whole of the evidence the learned magistrate found - contrary to the appellant’s evidence - that the latter did advance such a proposition; and that it was accepted by the respondents in lieu of the contractual basis originally embarked upon.
Unfortunately for the appellant, after a few days of excellent progress, a significant amount of hard rock was encountered. Additional heavy plant had to be brought in and the whole time frame (and the associated cost) “blew out”. As the learned magistrate put it:-
“This problem with rock slowed down the job very considerably and the hours spent on the job ultimately blew out such that the original estimate of five days for the building of the airstrip turned out to be far too short. In fact, on their evidence, work was done by Hanson or his employees upon 25 days upon the project overall. It was not the case that upon every day every item of machinery was used. But nonetheless, the length of time taken from beginning to end blew out very considerably such that the job was not finally completed (on the plaintiff’s case) until Wednesday, 18 October 1998. It doubled from say 12 days work to 25 days work.”
That situation, in turn, led to other problems. Because of the late finish of the work, the appellant contended that it became too late in the season to seed the airstrip, so as to grass its surface. This led to later erosion damage, particularly on the sloping north and south ends of the airstrip.
Quite apart from the question of the fundamental basis of payment for work done, a major issue also arose as to the scope of work contemplated by the contract made between the parties. There were no detailed specifications. The above quotation, and an hourly rates quotation which preceded it, literally, constituted the only relevant documentation evidencing the arrangements come to. These were the product of on site discussions between the parties.
At trial it was asserted by the appellant that, in the oral discussions which led to the quotations, it was made clear at the outset that he required the airstrip to have an even gradient to the north from a track which crossed it towards its southern end. The respondents denied that suggestion and asserted that they were simply asked, in effect, to produce an even surface by cutting certain hill tops and filling valley segments, ie by removing a series of undulations along the surface. To produce the gradient later contended for by the appellant would have required a major filling task, costing an additional $14000 - $16000. But a glance at the contour plan exhibited in the proceedings verifies the accuracy of the assertion of what would have been required. The contours drop down quite significantly at the northern end.
The learned magistrate rejected the appellant’s evidence on this score. He commented:-
“The scope of the works was as described by the plaintiff. There was a requirement imposed by the defendant during the course of the works that there be an even fall from the track at the northern end of the airstrip. I find, however, that that was not spelt out by the defendant to the plaintiff at the time when the plaintiff contracted to carry out the work. Had that been spelt out then as Mr Stuart Skinner’s drawings and calculations demonstrate, the plaintiff is most unlikely to have proposed a lump sum price as shown in the document, annexure A, to the claim nor is he likely to have estimated the hours shown in Exhibit B to the same document.”
The respondents’ case as to the scope of work to be performed on the airstrip, as accepted by the learned magistrate, was found to be as under:-
“The brief, according to Mr Moffa, given to the plaintiff was to cut the tops off the hills and fill in the valleys along the length of the runway. The land sloped downhill but was undulating. The plaintiff says that what was required to be built was nothing like a commercial landing strip but a landing strip designed for private use by the defendant and his wife for purposes of commuting between his proposed home and Parafield Airport. Accordingly, the defendant says that whilst the gradient may not be even, that is not really to the point and the airstrip built accords with the instructions given to the plaintiff at the time.
The plaintiff describes meeting the defendant and driving the length of the airstrip and having a discussion. Hanson said of Norris ‘He just told me. Standing there, looked back up at the airstrip towards the top end, hill has to come off, knock the hill off. Fill the valley, the other side, piece up the piece at the top end. We couldn’t do much about that, it’s too steep anyhow’.”
It was, eventually, not in dispute that a dam constructed by the respondents, as portion of the contract obligations, was defective in certain respects. However, there was a dispute between the parties as to the nature and purpose of the dam. The learned magistrate said:-
“The position with respect to the dam site is rather more complicated. Much at the end of the day turns upon the view which I have of the credit of Hanson and Norris respectively. For reasons which I have part explained and will say more about in my conclusions, I prefer the evidence of the plaintiff to that of the defendant. The specifications of the dam are not spelt out. Hanson says that the dam was described to him as being primarily there for asthetic purposes. I believe him. The defendant has failed to allow his loss to be mitigated. The problem could have been fixed at no cost to him. Whilst the defendant’s case would be powerful were it spelt out to the plaintiff that this was to be a dam for purposes of storage of water, that was not spelt out. In those circumstances, the failure of the plaintiff to provide a clay liner by importation of material, if necessary, does not establish a breach of contract in relation to the dam construction.”
“I reject the claim made for the costs of rectifying the dam. The plaintiff was willing to rectify but the defendant would not permit him to do that. I reject the defendant’s assertion that the size or general construction of the dam was contrary to what had been agreed.”
Against the foregoing background the learned magistrate allowed the respondents’ claim based on an hourly rates approach, subject to certain detailed adjustments. He also allowed one, relatively minor, item of a counterclaim prosecuted by the appellant.
In his notice of appeal the appellant originally pleaded some seven separate grounds. However, at the hearing, his counsel intimated that it was desired only to pursue an appeal as to the following two grounds, namely:-
“1.The learned Magistrate, on the basis of the facts as found by the learned Magistrate, erred in that he failed to find:
(a)that the contract between the plaintiff and the defendant contained an implied warranty that the excavation works would result in the construction of an airfield which would be suitable for the purpose of enabling normal or ordinary light aircraft to safety take-off and land; and
(b)the plaintiffs were in breach of that implied warranty.
2.The learned Magistrate in finding that the defendant had failed to mitigate his loss by refusing to accept the plaintiffs’ offer to remedy the defective workmanship in respect of the dam failed to take into account that the offer to repair the dam would reduce its volume by over half of its original size, and that as a consequence such an offer was manifestly unreasonable.”

Such grounds were not pleaded, in those terms, in the original notice of appeal, but I allowed them, by amendment, in substitution for the original grounds.

The abandonment of the original grounds of appeal and the amendment made is highly significant for present purposes. The plain fact of the matter is that the first ground of appeal now sought to be relied upon seeks to raise a topic which not only finds no reflection in the pleadings in the action, but also was never ventilated as a live issue at trial.
The defence and counterclaim (which had been the subject of substantial amendment over time) raised three specific issues, namely:-

(1)... failure to complete contract works according to the original agreement between the parties;

performance of work negligently and in breach of contract; and

failure to carry out works in a proper and workmanlike manner.

Nowhere in the pleadings is to be found any reference to the alleged existence of any express or implied warranty, nor of any alleged breach of warranty, as now sought to be promoted in the first ground of appeal.
Equally, such topics did not attract any consideration in the addresses of counsel at trial. Those addresses went forward on the basis of detailed note form outlines tendered by counsel to the learned magistrate. These still remain on file.
That tendered by counsel for the present appellant speaks for itself. The opening paragraph is expressed in these terms:-
“1..... The principal issues that need to be addressed in deciding this case are as follows:
1.1... Was the contract to carry out the work a lump sum contract or an hourly rate contract?
1.2... If the contract was a lump sum contract:
.what is the effect of the words ‘subject to finding rock’ in Exhibit P3?
.what additional sum (if any) is the plaintiff entitled to as a result of these words?
1.3... Was it a term of the contract that the airstrip have even (but different) gradients from the point that the vehicle track crossed the proposed airstrip to each of the northern and southern ends of the airstrip? If this was such a term:
.was it breached?
.what losses flow from that breach?
.does the breach prevent the plaintiffs from suing for the balance of the contract sum?
.Were the plaintiffs in breach of their contract in building the dam that they did? If they were, what losses flow from this breach?”
The issue now sought to be raised was not adverted to at any stage of the trial. This is the explanation why it did not rate any mention either in the reasons for decision published by the learned magistrate, or in the quite detailed grounds of appeal (since abandoned) which were originally filed.
Mr Moffa complains that, as a matter of well settled principle, it is simply not open to the appellant to seek to rely on the first ground at this juncture.
There is a wealth of published authority bearing on this question.
A convenient commencement point is the dictum of Cox J, as a member of the Full Court, in Zurich Australian Insurance Ltd v Wood (1997) 69 SASR 572 at 578, where he commented:-
“The general rule is that a party is bound by the conduct of his case at the trial, and it is only in the most exceptional circumstances that he will be allowed on appeal to raise a new argument which, deliberately or inadvertently, he failed to put during the hearing ...”

That dictum clearly derives from University of Wollongong and Others v Metwally (No 2) (1985) 59 ALJR 481 at 483. (See also Paltara Pty Ltd & Another v Dempster and Others (1991) 6 WAR 85 at 99, Banque Commerciale S.A. en Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 284, O’Brien & Ors v Komesaroff (1981-82) 150 CLR 310 at 319, Tyson v Brisbane Market Freight Brokers Pty Ltd (1994) 120 ALR 1 at 9.)

The prohibition against raising an issue on appeal for the first time is virtually absolute if it appears that the point, if successful, would require further evidence, or a new trial. (Electricity Commission of New South Wales v Yates (1993) 30 NSWLR 351 at 356, Coulton and Others v Holcombe and Others (1986) 162 CLR 1 at 16, Australia and New Zealand Banking Group Ltd v Hunter BNZ Finance Ltd [1991] 2 VR 407 at 415.)
Mr O’Brien, of counsel for the appellant, sought to meet this principle by asserting that, although the point now raised was not debated at trial, nevertheless, all of the facts and evidence relevant to such issue were placed before the court apropos the specific matters actually pleaded and in contention. In effect, he says that all that in issue is but another issue of law arising on the facts already before the court.
In my view this is too simplistic an assessment of the situation. True it is that various aspects of the evidence led were not irrelevant, as portion of the overall matrix of facts, to the issue of any potential warranty. However, as Mr Moffa fairly points out, had the issue now sought to be relied upon at trial been live, this would have had a distinct bearing on the scope and emphasis of cross examination of witnesses and also some aspects of evidence led in chief. There may well have been a need for some additional expert evidence. The alleged warranty necessarily gives rise to a particular focus on factual aspects such as the precise extent to which the appellant made known to the respondents the particular purpose for which the airstrip was required, the extent to which the appellant held out or professed relevant skill and the extent to which the appellant in fact relied on the respondents’ skill and judgment.
It is undoubtedly true that some aspects of the evidence did actually bear on some facets of those matters, but it requires little imagination to perceive that, had the warranty aspect been a real issue, certain aspects of the evidence and cross examination would have had a quite different focus, at least from the respondents’ viewpoint. Thus, if the court concluded that, prima facie, the point now raised had force, there would necessarily have to be a reference back for a retrial. That situation is, on the authorities, fatal to the appellant’s attempt to now litigate this issue. There must be an appropriate degree of finality to litigation. What the appellant is seeking to do is pursue a totally new direction for the first time. The virtual total abandonment of the original grounds of appeal and the raising of a new ground for the first time speaks volumes as to this.
However, lest I be considered in error as to that conclusion, it is desirable that I deal with the merits of the appellant’s case with regard to the first ground.
That ground is based on the proposition that the common law implies a warranty of fitness for the purpose for which work is performed, in building and construction contracts. (Young & Marten Ltd v McManus Childs Ltd [1969] 1 AC 454. See also Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd (1968) 120 CLR 516.)
Such a warranty arises where the following pre-requisite conditions are satisfied:-

(a).... where the employer makes known to the contractor the particular purpose for which the work is required (Martin v McNamara [1951] SR Q 225 at 232, McKone v Johnson [1966] 2 NSWR 471 at 473, Stewart v Reavell’s Garage [1952] 2 QB 545 at 549);
(b)the nature of the contract is such that it is within the course of the contractor’s business to perform such contracts (Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd (supra) at 521);
(c)there is no term in the contract which would exclude the implication of such a warranty (Young & Marten Pty Ltd v McManus Childs Ltd [1969] 1 AC 454 at 466, G H Meyers and Company v Brent Cross Service Company [1934] 1 KB 46 at 55); and
(d)the employer relied on the contractor’s skill and judgment. (See dicta in the various cases cited in (a) to (c) above.)

The short answer to the propositions above advanced is that, even if it be accepted that the evidence, as found, satisfies pre-requisites (b) and (c), the findings made by the learned magistrate expressly negative (a) and (d).
I have already cited his recitation of what the appellant requested the male respondent to do.
As Mr Moffa, of counsel for the respondent, additionally stressed, the learned magistrate, inter alia, also had this to say:-
“The defendant appears to put his case upon the basis that he relied upon Hanson possessing expertise as to construction of airstrips. That, in my view, puts the plaintiff in a position which he is most unlikely ever to have assumed and which he did not, in fact, assume.”
“The defendant operates a flying school. He obviously is a very experienced pilot. He obviously knew far more about what sort of strip in what location would be suitable than what the plaintiff did. The suggestion that the defendant relied upon the plaintiff’s expertise simply does not ring true.”
“There is force in the submission of Mr Moffa also that in his dealings with other experts e.g. Mr Burns of Bone and Tonkin that it was the defendant himself who was laying down the specifications about what the airstrip would be. That evidence as Mr Moffa suggests points to the defendant being self reliant rather than relying upon the plaintiff. I am satisfied as the plaintiff asserts that he was given no plans or specifications.”

Elsewhere in his reasons the learned magistrate spoke, at some length, of the discussions which the appellant had with the witness Burns, who prepared the relevant contour plan and sought and obtained the requisite development approval for construction of the airstrip. There may well have been relatively detailed discussions between them about some operational aspects. On the other hand the material before me strongly indicates the probability of some ex post facto rationalisation on the part of the appellant as to the detail to which he descended in speaking with the male respondent. It was the view of the learned magistrate that the detailed initial design of the airstrip was the initiative of the appellant in concert with Burns; and that the respondents were merely told to attend to what was described as “knocking the tops off hills and filling in valleys”. The question of gradient towards the north was not even raised by the appellant with the male respondent until well into the contract execution.
Certainly the respondents knew that they were to construct an airstrip, but the findings of the learned magistrate are utterly inconsistent with them either possessing or representing any particular technical skill in airstrip design and construction, or knowledge of any specific technical/operational requirements. They simply executed earthmoving works indicated and contracted for by the appellant.
It cannot be stressed too strongly that these conclusions were arrived at against the background of the judgment of the learned magistrate as to the relative credibility of the principal parties. On an overall reading of his reasons it is patent, beyond any doubt, that the learned magistrate unequivocally rejected the suggestion that the appellant placed reliance on any skill or judgment of the respondents related to the construction of airstrips. Indeed, the appellant’s evidentiary case, as presented, was really quite inconsistent with such a proposition.
It was never suggested, or at least proved, that the respondents professed any particular skill in constructing an airstrip of the type in question, despite the fact that they had done some previous earthmoving work on certain airstrips. They knew that the appellant operated a flying school, and, on his own evidence, it was the appellant who, at all times, was indicating what he required. I think that Mr Moffa is undoubtedly correct when he points to the evidence given by the witness Burns and the treatment of it by the learned magistrate. The learned magistrate indicated that the evidence gave the clear impression of the degree of self reliance of the appellant, both as to the siting of the airstrip and the mode of its development.
There can be no doubt, on the findings of credibility, that the respondents simply did what they reasonably understood the appellant to have directed them to do.
It seems to me, on a fair reading of the findings of fact, quite unreal to seek to argue that the problem of the undesirable gradients at the ends of the airstrip should be sheeted home to the respondents. These were plainly questions singularly within the field of experience and understanding of the appellant and necessarily related to the performance of the types of aircraft proposed to be operated by him. No doubt the airstrip, as it currently stands, is only capable of limited use with its present gradients, but this is an issue going to the inherent design of the project (for which the appellant was clearly responsible), rather than the execution by the respondents of works which they were specifically requested to carry out.
As to the erosion problem this was the product of the apparent inability of the appellant to seed the airstrip to grass in time, due to the delay caused by the hard rock problem. It was not the outcome of any default on the part of the respondents.
Overall, the evidence given by the witness Schwerdt, as to the useability of the airstrip, must be considered in light of the other facts in the case, as found by the learned magistrate. Moreover, I agree with Mr Moffa that Mr O’Brien’s emphasis on the findings of the learned magistrate at page 51 of his reasons exhibits a misconstruction of what is there recorded. The learned magistrate was there speaking of the airstrip in its present eroded condition. The re‑examination of the witness Schwerdt quite clearly indicated that, if the relatively minor work required to make good those defects is carried out, the airstrip is capable of servicing the types of aircraft envisaged by the appellant.
On any view the first ground of appeal now sought to be relied upon must fail.
As to the dam the appellant argues that the appellant was entitled to reject the offer of the respondents to remedy the overflow defect, free of charge, by developing a slip way of appropriate depth in the embankment. He says that the learned magistrate was in error in regarding that rejection as a failure to mitigate damage, because acceptance of the respondents’ proposed remedy would have led to a substantial reduction in storage capacity. It was contended by Mr O’Brien that what was eventually done by the appellant did not result in creation of a storage dam of fundamentally larger size and storage capacity than that originally bargained for.
It seems to me that the short answer to these points is that they all depend, for their validity, upon what was originally envisaged by the agreement between the parties. This, in turn, rests, critically, on the findings made as to relative credibility of witnesses.
I have already recited the ultimate findings made by the learned magistrate in this regard.
Those findings expressly negate the very basis of what Mr O’Brien now seeks to argue. The learned magistrate has found, as a fact, that, subject to rectification of the spillway, the appellant got what was contracted for. That he later chose to have a larger capacity dam is something which he cannot now visit on the respondents in terms of additional cost.
There is no basis upon which this court is justified, consistently with well settled principle, in interfering with a finding of fact which was not only fairly open on the evidence, but, also, was the product of findings as to credibility as to what was quoted for.
The appeal in this matter must be dismissed as to both grounds.

[1998] SASC 6882

9 October 1998