Parletta Constructions P/L v Prince & Ors (No. 2) No. DCCIV-98-1113

Parletta Constructions Pty Ltd v Prince, Prince, Hartect Pty Ltd and Egis Consulting Australia Pty Ltd (No. 2)
[2000] SADC D101

Judge Sulan
Civil

This matter involves a dispute between Parletta Constructions Pty Ltd (“the builder”), David Prince and Margaret Prince (“the proprietors”) and Hartect Pty Ltd (“the architect”). The proprietors claim damages against the builder in respect of a number of defects in the construction of a residential property at Camac Road, Balhannah. The builder joined the architect as a third party.
On the 12th November 1998, Judge Hume referred the dispute to arbitration pursuant to section 33 of the District Court Act (“the Act”) which empowers the Court to refer an action or any issues arising in an action, for trial by an arbitrator. On the 1st June 1999, the arbitrator delivered an interim award (the first interim award). The arbitrator determined that in respect of a number of claims, the work was defective and the architect was liable. He concluded that in respect of the defects, the subject of this application, the builder was not liable. Section 33(4) of the Act provides that that the Court will, unless good reason is shown to the contrary, adopt the award of the arbitrator as its judgment on the action or issues referred.
By application dated the 9th August 1999, the architect sought, inter alia, an order that the first interim award not be registered as a judgment of the Court. On the 25th February 2000, I ruled on that application.
In my reasons I dealt with the factual background to the application, which I do not intend to repeat in these reasons. I concluded that in respect of four heads of claim, the arbitrator had not adequately considered whether the defects had arisen from the wrongful acts or defaults of other persons, and in particular, whether the builder was liable to contribute. I remitted those heads of claim to the arbitrator for further consideration and for determination whether there should be contribution from others, in particular the builder. I concluded that the arbitrator had not adequately considered the application of section 72 of the Development Act, which provides :
“Negation of joint and several liability in certain cases
72.    (1)    If-
(a)    building work is defective; and
(b)    the defect or defects arise from the wrongful acts or defaults of two or more persons; and
(c)    those persons would, apart from this section, be jointly and severally liable for damage or loss resulting from the defective work; and
(d)    an action is brought against any one or more of those persons to recover damages for that damage or loss,
the court may only give judgment against a defendant, or each defendant, for such amount as may be just and equitable having regard to the extent to which the act or default of that defendant contributed to the damage or loss.
(2)    An act or default for which a person is vicariously liable will be taken to be an act or default of that person for the purposes of this section.”

I concluded that the arbitrator had not adequately considered whether the defects may have arisen from the wrongful acts or defaults of other persons.

On 2nd March 2000, I made the following orders :
1.      That the following matters be referred back to the arbitrator for further consideration and the making of a further award:
1.2 Internal Tiling being Item F16 of the interim award;
1.3 External Tiling being Item F17 of the interim award;
1.4 Slate Nosing and kitchen doors being Item F18 of the interim award; and
1.5 Render being Item F19 of the interim award.
2.      That the parties, if so advised, may make submissions to the arbitrator in respect of items F16, F17, F18 and F19.
1.      That no fresh evidence be presented to the arbitrator without the prior granting of leave to do so by this Court.
2.      That the fourth party proceedings be adjourned for further consideration to a date to be fixed after receipt of the arbitrator’s further award.
3.      That all further matters including the question of costs be adjourned for further consideration.
4.      That the parties may apply for further orders and directions.
The matter was then the subject of further argument before the arbitrator who delivered a further interim award on the 26th April 2000 (the second interim award).
The arbitrator made the following findings :
“Regarding Item F16 of my first interim award - interior tiling, I find that the builder complied with the intentions of the contract and the architect’s instructions and that architect solely is in default and ultimately liable for the defects that have occurred. (Internal Tiling)
Regarding Item F17 of my first interim award - exterior (verandah) tiling, I find that, with one exception, the builder complied with the intentions of the contract and the architect’s instructions and that architect solely is in default and ultimately liable for the defects that have occurred. The exception is that the builder did not provide tile bedding mortar as specified, although it was not demonstrably the cause of the delamination of the verandah tiling, it may have contributed to it, and therefore the builder should be responsible for the cost of replacing it and the tile underlay system (i.e. the adhesive or adhesive and underlay system). The builder should not, however, be held responsible for any demolition costs. (External Tiling)
Regarding Item F18 of my first interim award - slate nosing and kitchen doors, I find that the builder complied with the intentions of the contract and the architect’s instructions and that architect solely is in default and ultimately liable for the defects that have occurred. (Slate Nosing and Kitchen Doors)
Regarding Item F19 of my first interim award - damaged render below the slate nosing of the verandah, I find that the builder complied with the intentions of the contract and the architect’s instructions and that architect solely is in default and ultimately liable for the defects that have occurred. (Damaged Render Below the Slate Nosing of the Verandah)”
On the 11th May 2000, the matter came before me for further directions. I was informed by Mr O’Sullivan for the architect, that his client intended to make application pursuant to section 33(4) of the Act that the Court should not adopt the second interim award as its judgment. I directed that the architect need not make a further interlocutory application in writing, and I gave directions as to the filing and delivery of written submissions by the parties.
On the 12th July 2000, I heard further argument. Mr O’Sullivan submitted that the arbitrator had made an error of law, in that he had applied the wrong test in considering whether there should be an apportionment of liability in relation to each of the matters considered by the arbitrator.
It was further submitted that the arbitrator’s decision was perverse or manifestly unreasonable.
Mr O’Sullivan submitted that the arbitrator had determined the issues by reference to the contract between the proprietors and the builder, when the correct approach should have been for the arbitrator to consider and determine whether the architect and builder were respectively in breach of their duty of care to the proprietors. If there was a breach causative of loss or damage, the arbitrator was required, by section 72 of the Development Act, to apportion liability between them.
In support of the architect’s contention, Mr O’Sullivan submitted that although the arbitrator stated in the second interim award that he had close regard to section 72, the arbitrator failed to set out his understanding of the section, nor had he applied it to the case.
Mr Possingham, on behalf of the builder, submitted that the issue to be considered by the arbitrator in the second interim award was the question of whether the defects arose from the wrongful acts of persons other than the architect and whether those persons would be jointly and severally liable for damage or loss resulting from the defective work and if they were, the respective contribution required of each of those persons to remedy the defects. He submitted that although the arbitrator had concluded that in each case, other than for one exception, the builder complied with the intentions of the contract and followed the architect’s instructions, and therefore the architect was solely in default and liable for the defects, that on consideration of the arbitrator’s reasoning, it is clear that the arbitrator applied the correct test when considering the question of contribution. He submitted that although the arbitrator may have explained his findings in terms which suggest that he only considered the contractual position, on reading the arbitrator’s reasons, it is clear that he correctly applied his mind to the issue of contributory negligence and to section 72 of the Development Act.
Mr Wilkinson on behalf of the proprietors, supported the submissions of Mr Possingham and further submitted that section 72 of the Development Act only applies if the architect and builder are jointly and severally liable. He submitted that section 72 had no application because there is no joint and several liability.
Both Mr O’Sullivan and Mr Possingham responded that section 72 did apply and it had been submitted to the arbitrator that he could apportion liability if he so determined.
Section 72 of the Development Act was considered by Judge Kitchen in NBD Bank v South Italy Tiling SA Pty Ltd and Ginos and Associates (Judgment No. D3596, 1st May 1997). His Honour made the following observation :
“Section 72 does not become relevant until the court finds that a defect in building work arises from the wrongful acts or defaults of two or more persons. In my opinion ‘wrongful’ in this context means a breach of a tortious, or perhaps a contractual, duty imposed by the general law.”
It was submitted by Mr Wilkinson that in this case there could not be joint and several liability. As to that submission, I refer to the pleadings. The builder, in its amended third party notice, alleges that the owners have claimed, inter alia, that the builder neglected and failed to diligently execute and complete certain building works and thereafter failed to remedy that work. The work included cracking to internal tiling, drummy tiling to the verandah and pergola areas and displaced slate nosing at the entry and kitchen door steps. The builder alleges against the architect that in respect of some of the work, if it was held to be defective, the defects were due to the negligence of the architect. In particular, it is alleged that cracks in the tiles to the corridor and the drummy tiling to the verandah and pergola areas were caused by the negligence of the architect. The builder also alleges that in respect of the displaced slate nosing at the entry steps and the kitchen door steps, those defects were due to the negligence of the architect. The builder sought indemnity in respect of the owners’ claim against the builder as it relates to those matters and sought contribution from the architect in respect of any judgment given against the builder. In its amended defence to the third party notice the architect denies that it was negligent and alternatively, if it was found that the architect was liable, the architect claims contribution against the builder pursuant to section 72 of the Development Act.
It is therefore clear that there are allegations on the one hand by the builder that the architect was negligent and on the other hand by the architect that in respect of any negligence that may be found against it, the builder should contribute. The pleadings between the architect and the builder raise the issue of tortious liability and the application of section 72 of the Development Act. Where an architect has designed certain works and the builder carries them out, and those works are defective, both the architect and builder owe a duty of care to the owner to ensure that the construction is not defective. In that regard, if each of them is in breach of their respective duty to the owner and the building work is defective, then they may be jointly and severally liable within the meaning of section 72 of the Development Act. In those circumstances, the Court would be required to apportion liability and give judgment against each defendant for such amount as may be just and equitable, having regard to the extent to which the act or default of that defendant contributed to the damage or loss. The question of joint tort feasors was discussed in Thompson v ACTV (1996) 141 ALR 1 at 4. Their Honours Brennan CJ, Dawson and Toohey JJ stated :
“The difference between joint tortfeasors and several tort feasors is that the former are responsible for the same tort whereas the latter are responsible only for the same damage. As was said in Koursk, for there to be joint tortfeasors ‘there must be a concurrence in the act or acts causing damage, not merely a coincidence of separate acts which by the conjoined effect caused damage’.”
I consider that in respect of the alleged defective work and the consequential damage, there is concurrence in the act or acts of the architect and builder. Of course, they have different functions to perform, but those functions are carried out to achieve a satisfactory result for the proprietors. In respect of the subject work, there is concurrence in that the architect has designed and specified the work to be carried out, the builder is required to undertake the work and the architect is required to certify the satisfactory completion of the work. In that regard, they are, in my view, jointly and severally liable for any work negligently carried out, if negligence against them is established. (see Carosella and Carosella v Ginos & Gilbert Pty Ltd and Others (1981) 27 SASR 515) The question is whether both can be said to have breached their duty of care and if so, whether liability ought to be apportioned between them.
The second interim award deals with a number of general propositions before dealing specifically with the remitted matters. In respect of those general matters, the arbitrator sought to explain a number of technical matters which he considered to be relevant. In the course of that preliminary discussion, the arbitrator referred to the duty of care of the architect.
Although the arbitrator may have expressed his findings by reference to the building contract, I conclude that his reasoning in respect of each item remitted, demonstrates that he considered the respective roles of the architect and builder and that he turned his mind to the issues of negligence and contribution. I reject the contention that the arbitrator applied an incorrect test in considering the question of contribution and the application of section 72 of the Development Act.

The Internal Tiles

In the second interim award the arbitrator stated that he had carefully considered the builder’s role in executing the work. The arbitrator concluded that the architect was negligent in preparing the specifications and drawings which the builder conscientiously followed and that the builder in no way caused or contributed to the defects in respect of the internal tiling. In his reasons the arbitrator concluded that an architect would be expected to have more than a rudimentary knowledge of building material behaviour and would be expected to consult with other experts as to what provisions should be made to accommodate the behaviour of various forms of materials. He concluded that he would not expect the same degree of knowledge or diligence of a trade school trained builder. He did, however, state that he would expect a domestic builder to heed the provisions of the contract documents and if in doubt to consult the architect or relevant trade standards.
As to the internal tiling, the arbitrator concluded that the substantial reason for the cracking which occurred was a failure to apply an underlay between the concrete base and the tiles. The concrete base upon which the tiles were laid exhibited cracking. The arbitrator found that the builder must have known that the concrete was cracked. The builder used a cement not an organic based bedding material.
Division 9 of the specification deals with ceramic tiles and finishes. In the general introduction at paragraph 104 of the specification, reference is made to Australian Standard 3958.1. Paragraph 202 requires an organic based adhesive complying with Australian Standard 2358. Paragraph 203, dealing with underlay and backing boards, states that they are not applicable. Paragraph 3.3.3.2 of Australian Standard 3958.1 refers to a cement based adhesive, modified mortar or organic adhesive. Under the heading “Preparation by Other Trades” the Standard states that the slab must be well cured, dimensionally stable and free of cracks, waxy or oily films and curing compounds, if no underlay is provided. Paragraph 3.3.3.4 of the Standard deals with cement based adhesive or organic adhesive, liquid applied underlay. Under the heading “Preparation by Other Trades” the Standard provides that the slab should be well cured and dry, dimensionally stable and free of waxy or oily films.
It was submitted on behalf of the architect that the builder failed to use an organic based adhesive but used a cement based adhesive. Further, it was submitted that when the builder considered Australian Standard 3958.1, the builder should have been alerted to a potential problem if he laid the tiles directly upon a cement base, if the slab was cracked, because the Standard specified that the slab must be free of cracks, in such circumstances. The builder should have considered whether to apply an underlay in accordance with paragraph 3.3.3.4 of the Standard. It was submitted on behalf of the architect that the builder should have referred the question of whether underlay was required, to the architect, before proceeding with the work, even though the specification stated that underlay and backing boards were not applicable.
In the second interim award the arbitrator dealt with Australian Standard 3958.1, in particular paragraph 3.3.3.2. He criticised the architect for failure to specify a bedding system consistent with paragraph 3.3.3.4 of AS 3958.1. He does not appear to have dealt with the question of whether the builder should have raised the problem with the architect. The specification at paragraph 104 refers the builder to Australian Standard 3958.1, 1991, but does not specify whether section 3.3.3.2 or section 3.3.3.4 applies. In my view, the arbitrator’s criticism of the architect for failing to specify a bedding system consistent with paragraph 3.3.3.4, is justified but the question of whether the builder should have been alert to the problem once he observed the cracking to the cement floor, was not adequately dealt with by the arbitrator. In my view, when the specification is read together with the Australian Standard 3958.1, there is an ambiguity which should have caused the builder to question the architect about the method which should have been adopted in laying the tiles. The arbitrator has failed to adequately deal with the duty of the builder to have raised these matters with the architect.
Further, the arbitrator concluded that the fixing of the tiles by way of cement based adhesive rather than organic based adhesive as specified, was not causative of the cracking to the tiles. In Australian Standard 2358, 1990, relating to adhesives for fixing ceramic tiles, there is a table which deals with the specific characteristics of organic adhesive and cement based adhesive. One of the characteristics referred to by the arbitrator is the shear modulus of elasticity. This is the property which determines how much the adhesive would distort when subject to sheer stress. That is the stress induced by the application of equal opposing stressors in the planes of the interfaces of the materials on either side of the adhesive. The arbitrator determined that the minimum sheer modulus elasticity for both organic adhesive and cement based adhesive is identical. However, the relevant table states that the shear modulus of elasticity for organic adhesives is greater than .01 mega pascals and for cement based adhesive is greater than .1 mega pascals. A mega pascal is equivalent to one million Newtons of force per square metre. Counsel for the architect submitted that the arbitrator was in error in his conclusion that the minimum of shear modulus elasticity for organic adhesive and cement based adhesive is identical and therefore his conclusion that the use of cement based adhesive had no effect on the outcome, could not be supported.

I agree with Mr O’Sullivan’s submission that the arbitrator erred in concluding that the shear modulus of elasticity for both organic and cement based adhesives is identical. The question of the extent to which the use of a cement based adhesive may have been causative of the tiles cracking is unclear on the material before me. It will require further evidence on the subject. It follows that the arbitrator erred in his determination.
For these reasons I conclude in respect of the first and second interim awards relating to internal tiling (F16), there is good reason not to adopt the awards.

External (Verandah) Tiling (F17)

The arbitrator raised the following technical issues :
1.      The tiles are not ceramic.
He observed the relevant physical characteristics of the tiles are not known. He concluded that such factors as the coefficient of linear expansion, whether the tiles changed dimension upon wetting or drying or simple exposure to the atmosphere and do they exhibit time based growth, are matters which required further enquiry and were the responsibility of the architect.
1.      There was a two layered system between the tiles and the concrete being a cement mortar bedding layer or “screed” followed by a cement based adhesive immediately below the tile.
2.      There had been a substantial bond failure between the base concrete and the bedding layer.
3.      No movement joints had been provided in the verandah tiling.
4.      The very accurately defined tile pattern between the bordering tiles is diagonally disposed to the edges of the verandah.
The outside tiling was very complex. The architect produced a number of detailed drawings. The drawings made inadequate provision for movement joints.
Before the arbitrator, the architect contended that the specific problems affecting the external tiling were a combination of a weak screed and an absence of movement joints as recommended in Australian Standard 3958.1. The arbitrator heard evidence from Mr Goldfinch, an engineer, who explained that different materials exhibit dimensional change with time. In a three layered system, because of a number of factors, including time, temperature and moisture change, one of the outer layers may exhibit shrinkage or compression strain, whereas the other layer or layers may exhibit expansion or elongation strain. The evidence of Mr Goldfinch was that the provision of movement joints may not have been sufficient to avoid the problem of drumminess to the tiles. The arbitrator determined that there was not enough technical evidence to support or deny the possibility that the debonding was caused by some material expanding against other static material or material which was contracting. In my view, if the builder seeks to rely on an argument that the failure to provide adequate expansion joints did not contribute to the cause of the problem, the builder carries the onus of proof to establish the proposition. It does not follow from Mr Goldfinch’s evidence that the failure to make provision for movement joints was not part of the cause of the drumminess to the tiles. Mr Goldfinch was merely speculating. I turn to the question of movement joints.
AS 3958.1, “movement joints” at paragraph 5.4.5 provides :
5.4.5.1      General     Movement joints are discontinuities in the tiled surface, filled with permanently deformable material, which are intended to perform the following functions:
(a)    Separation of the tiled surface from fixed elements such as columns and walls.
(b)    Subdivision of large areas of tiled surface into smaller sections to compensate for induced strain from various causes.
(c)    To interrupt the tiled surface to match discontinuities in the substrate such as construction joints and movement joints.
It is essential that movement joints are carried through the tile and the bedding. Movement joints should be filled with permanently deformable materials such as polystyrene and be sealed with materials which are equally deformable as well as resistant to chemical and physical attack. All joints should be rectangular in section with firm, straight, smooth edges, free from cavities and irregularities. When forming the joints it is useful to insert a fillet to ensure smooth clean faces to the joints, and remove it only when the cladding is sufficiently firm. Care should be taken to avoid grout or other materials becoming trapped in the joint cavity, as these will prevent the proper application of the back-up and sealant.
Unless otherwise specified, movement joints should be constructed as shown in Figures 5.1 and 5.2 and as detailed below.

Paragraph 5.4.5.2, which deals with floors, provides that movement joints should be located and then stored in accordance with the manufacturer’s recommendations, as follows :

(a)    …..
(b)    Intermediate joints    Intermediate joints type (c), (d) or (e) shown in Figure 5.1 should be inserted at intermediate positions to accommodate deflections of the base and movements in the flooring. Intermediate movement joints should be provided in evenly-spaced positions at approximately 4.5 m centres, or at locations where stress might reasonably be expected in -
(i)    …..
(ii) external floors where any dimension exceeds 4.5 m.

The arbitrator concluded that the width of the verandah tiling varied from a minimum of about 1.7 metres to as much as 7 metres. The specification provides that “expansion joints to floor tiling should be provided as indicated and to manufacturer’s recommendation”. The arbitrator interpreted the words “as indicated” as referring to “as shown on drawings”, and concluded that the drawings show none. He further concluded that various terms used by the manufacturer were ambiguous and the specification was ambiguous. He considered that the responsibility to resolve the ambiguity lay solely with the architect. He noted that the tile pattern itself was so complex that it would not have been possible for the builder to locate where various expansion joints should have been placed.

The arbitrator concluded that the architect was negligent in preparing the specification and drawings. He did not regard the builder as having a duty to refer any ambiguity to the architect before proceeding with the work. He found that the builder erred in batching the bedding mortar for the external tiling and he determined that as a consequence, the builder should contribute to the rectification of the external tiling by replacing the tile bedding mortar and the tile underlay system. He determined that the builder should not be responsible for the cost of demolition.
Mr O’Sullivan contended that the arbitrator failed to deal adequately with the question of the builder’s responsibility to refer the question of the inadequate provision for expansion joints to the architect, when the Australian Standard referred to expansion joints and the specification referred the builder to the Australian Standard. In my view, there is force in that submission. I conclude that the arbitrator has not adequately dealt with the question of the failure of the builder to raise with the architect, the ambiguity between the specification and the drawings, particularly in respect of the provision of the expansion joints.
I find that there is good reason not to adopt the award in respect of the findings relating to the external tiling.

Slate Nosing (F18) and (F19)

As to the findings relating to the slate nosing and kitchen doors (F18) and the damaged render below the slate nosing of the verandah (F19), I conclude that those matters are so integrally tied to the findings relating to the tiling, that there is good reason not to adopt the award of the arbitrator in respect of those items.
It was urged upon me to consider whether in the circumstances I could resolve the issues on the material before me. The issues were the subject of evidence, including expert evidence. I do not have a transcript of that evidence and I am not able to make any assessment of the evidence or the merits of any argument relating to the evidence. I regret that I am not in a position to make any final determination.
Mr Wilkinson, for the proprietors, urged me to refuse the application insofar as the award determined that the proprietors are not liable. It has been acknowledged by Mr O’Sullivan and Mr Possingham that this dispute is essentially between the architect and the builder. I have considered whether I should only refuse to register the award insofar as it determines the relative liability of the architect and builder to rectify the defects. In my view, it is very difficult and impractical to attempt to dissect the award in the way urged by Mr Wilkinson. Furthermore, it is difficult to anticipate what evidence may be led at the trial and how that evidence may impact upon the proprietors’ counterclaim. It is undesirable that part of the trial be determined at this stage without any evidence having been heard. It may be that the parties can agree to limit the issues and the proprietors may therefore be relieved from the further cost of the trial. In my view, it is a matter for the trial Judge to determine how the matter should proceed. I decline the application.
I will hear the parties as to the appropriate orders which should be made and as to costs.

[2000] SADC 101

17 August 2000