Proprietors Units Plan v Jiniess Pty Ltd
[2001] NTSC 65
•8 August 2001
Proprietors Units Plan & Ors v Jiniess Pty Ltd & Ors [2001] NTSC 65
PARTIES:PROPRIETORS UNITS PLAN NO 95/38
AND
HETHERINGTON & SIMMONS DEVELOPMENTS PTY LTD
AND
DROSOS & DESPINA KLIDARAS
AND
ALLAN GRAHAM ANDERSON
AND
THOMAS CHRISTOPHER SAWYER
AND
BOULEVARD INVESTMENTS (NT) PTY LTD
AND
RELKDAR PTY LTD
AND
MARIA JOSEPHINE STEPHENS & ALAN ROBERT STEPHENS
AND
MARISTEW PTY LTD
AND
MARILYNNE PAMELA PASPALEY
v
JINIESS PTY LTD
AND
SINCLAIR KNIGHT MERZ PTY LTD
AND
SLEEMAN DUNKLEY TREACY PTY LTD
AND
JOHN GLYNATSIS
TITLE OF COURT: SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION: SUPREME COURT OF THE NORTHERN TERRITORY EXERCISING TERRITORY JURISDICTION
FILE NO:245 of 1998 (9827956)
DELIVERED: 8 August 2001
HEARING DATES: 25 July 2001
JUDGMENT OF: RILEY J
REPRESENTATION:
Counsel:
Plaintiffs:C. Cureton
1st & 4th Defendants: J Glynatsis (In Person)
2nd & 3rd Defendants: No appearance
Solicitors:
Plaintiffs:Purcell Lancione Cureton
1st & 4th Defendants: J Glynatsis (In Person)
2nd & 3rd Defendants: No appearance
Judgment category classification: B
Judgment ID Number: ril0115
Number of pages: 18
ril0115
IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWINProprietors Units Plan & Ors v Jiniess Pty Ltd & Ors [2000] NTSC 65
No. 245 of 1998 (9827956)
BETWEEN:
PROPRIETORS UNITS PLAN NO 95/38
First Plaintiff
AND
HETHERINGTON & SIMMONS DEVELOPMENTS PTY LTD
Second Plaintiff
AND
DROSOS & DESPINA KLIDARAS
Third Plaintiff
AND
ALLAN GRAHAM ANDERSON
Fourth Plaintiff
AND
THOMAS CHRISTOPHER SAWYER
Fifth Plaintiff
AND
BOULEVARD INVESTMENTS (NT) PTY LTD
Sixth Plaintiff
AND
RELKDAR PTY LTD
Seventh Plaintiff
AND
MARIA JOSEPHINE STEPHENS & ALAN ROBERT STEPHENS
Eighth Plaintiff
AND
MARISTEW PTY LTD
Ninth Plaintiff
AND
MARILYNNE PAMELA PASPALEY
Tenth Plaintiff
AND:
JINIESS PTY LTD
First Defendant
AND
SINCLAIR KNIGHT MERZ PTY LTD
Second Defendant
AND
SLEEMAN DUNKLEY TREACY PTY LTD
Third Defendant
AND
JOHN GLYNATSIS
Fourth Defendant
CORAM: RILEY J
REASONS FOR JUDGMENT
(Delivered 8 August 2001)
On 31 October 2000 I delivered reasons for judgment in relation to liability issues in these proceedings. In summary my conclusions were as follows:
(1)There will be judgment for the sixth, seventh and ninth plaintiffs against the third defendant;
(a) in negligence for the plaintiffs remaining claims; and
(b)for misleading and deceptive conduct contrary to the Trade Practices Act and Consumer Affairs and Fair Trading Act;
but not the plaintiffs’ claims for negligence and misleading and deceptive conduct in the second defendant’s design and certification of the remedial works conducted in 1997, which claims are dismissed.
(2)There will be judgment for the first, sixth, seventh and ninth plaintiffs against the first defendant for its:
(a)negligence in its original design, certification and construction of the building;
(b)misleading and deceptive conduct contrary to the Trade Practices Act and the Consumer Affairs and Fair Trading Act constituted by certifying compliance of the original construction with the initial Building Regulations and Code.
(3)There will be judgment for the first plaintiff against the fourth defendant pursuant to the Trade Practices Act and Consumer Affairs and Fair Trading Act for the misleading and deceptive conduct of the first and fourth defendants.
On 25 and 26 July 2001 the matter resumed before me for assessment of damages. In the meantime the solicitors for the third defendant had applied for and been granted leave to cease acting for the third defendant. The reason for the application centred upon the appointment of provisional liquidators to the insurer of the third defendant. When the matter resumed there was no appearance on behalf of the third defendant.
Mr Glynatsis continued to appear on his own behalf and on behalf of the first defendant. However he informed me that the legal assistance that he had received during the course of the hearing on liability issues was no longer available to him. His involvement in this part of the hearing was limited. In effect the matter proceeded as an uncontested hearing.
I heard evidence from a quantity surveyor Donald Maxwell Hill. He was the superintendent for the remedial work carried out by the first plaintiff.
Three firms of engineers were requested to provide proposals for the remedial work. Mr Hill gave evidence that:
“Of these three, TCM Meinhardt (subsequent renamed Townes Chappell Mudgway Pty Ltd) were successful on the basis of design solution being an articulated slab concept which was aesthetically acceptable and the most commercial viable solution and which incorporated sufficient slope to the slab for further settlement and the matter of being a good price.”
The successful engineers produced a number of structural drawings covering the scope of the remedial works and these were then provided to six building contractors. The design proposed by the engineers was also provided to another firm of engineers for what was described as an “audit” report.
Hansen & Yuncken Pty Ltd was the successful tenderer based upon price. A contract was negotiated with that company for a lump sum price.
The contract period was 12 weeks from commencement. Some delays were involved in reaching completion because of builder caused delays, unit holders’ variations (eg the installation of spas) and inclement weather. It was the opinion of Mr Hill that a reasonable period for the construction of the “unvaried remedial works” was from 2 January 2001 until 9 April 2001. In fact the work was completed on 1 June 2001.
In his statement, which became Exhibit P93, Mr Hill gave evidence in the following terms:
“19.I have been requested to itemise the costs incurred in respect to certain items of the remedial work. (T)he following costs were incurred by the first plaintiff in respect to the identified items as follows (all costs exclude GST):-
DESCRIPTION COSTS
Cost to install membrane to external slab
and planters $13,998.18
Cost to install membrane to retaining wall $ 1,789.09
Cost to repair cracks in block wall between
units 7 and 8 $ 3,263.86
Cost of base plates to shade structures $ 200.00
Rescreed existing floors $10,699.09
Cost of floor tiles to external terraces
(screening supply and lay) $65,861.81
Cost of floor tiles to stairwells (supply & lay) $ 970.00
Cost for screeding to front balconies to achieve
falls to existing floor wastes approximately $ 2,640.00
Cost of balcony demolition, (units 6 and 8) new
concrete slab, formwork, reinforcement,
membrane and tiling $ 9,230.40
20.I am instructed by Mr Cureton, solicitor for the first plaintiff that this Honourable Court has in a judgment on liability determined apportionment of liability to the first (plaintiff) as between the first and fourth defendants on the one part and the third defendant on the other part as to certain build items.
21.I am instructed that the following apportionment has been determined upon in respect to the above described items.
DESCRIPTION APPORTIONMENT APPORTIONMENT
OF COST FIRST &
FOURTH
DEFENDANT
(a)Cost to install membrane to
external slab 50% builder $6,999.09
(b)Cost to install membrane to rear
retaining wall 100% builder $ 735.00
(c)Cost to repair cracks in block work
wall between units 7 and 8 331/3% builder $1,087.95
(d)Cost of base plates to shade
structures100% builder $ 200.00
(e)Cost of floor tiles to external terraces
(screed, supply and lay) 100% builder $65,861.81
(f)Cost floor tiles to stairwell 100% builder $ 970.00
(g)Extra cost for screeding floors to
achieve falls to floor waste 100% builder $ 2,640.00
(h)Cost of balcony demolition upper
balcony demolition new concrete slab
formwork replacement membrane (x2)
balconies units 6 and 8) 100% builder $ 9,230.40
TOTAL$87,724.25
22.The above cost items totalled and put against the contract sum quantum of the remedial works costs which is attributable to items which have been apportioned to the builder is approximately 15%.
23.Additional costs of the builder’s apportionment of the remedial works includes:-
(a)Project manager fees $28,850 @ 15% $ 4,327.50
(b)Engineering fees $30,172.50 @ 15% $ 4,525.88
(c)Builder’s preliminaries $87,724.25
@ 16.23%$14,237.65
TOTAL$27,418.53”
The apportionments referred to by Mr Hill reflect those set out in the reasons for judgment published on 31 October 2000. I accept the evidence of Mr Hill as to the description of the work undertaken, that the work was an appropriate, necessary and reasonable response to the defective work and I accept the costs associated therewith.
The Claim of the First Plaintiff
The first plaintiff claims to be entitled to damages from the first and fourth defendants in the sum of $119,541.36. That figure is made up of the amounts referred to in items (a) to (e) in par 21 of the evidence of Mr Hill set out above. To those amounts should be added the sum of $10,699.09 for the item “rescreed existing floors” referred to in par 19 of his evidence which amount was inadvertently omitted from the figures set out in par 21.
Further the “additional costs” related to the remedial works detailed in par 23 of the evidence of Mr Hill are to be included in the claim giving an amount claimed of $108,673.97. To this must be added an allowance for GST of 10% consistent with the evidence of Mr Hill. The total claimed by the first plaintiff is therefore the sum of $119,541.36. There is no challenge to that claim and in all the circumstances I allow it.
The Claim of the Seventh Plaintiff
The seventh plaintiff claims against the first and fourth defendants the sum of $3144.99 and against the third defendant the sum of $10,071.93. No judgment has been entered in favour of the seventh plaintiff against the fourth defendant and I make no award against that defendant. In addition the seventh plaintiff claims “loss of value due to building blight” and “loss of amenity (solatium)”. I deal with these additional claims later in these reasons.
In relation to the claim against the first defendant the claim of the seventh plaintiff is as follows:
Stairwell tiling $485.00
Screeding front balconies $528.00
Upper balcony reconstruction $1,846.08
Subtotal $2,859.08
GST $285.91
Total $3,144.99The amount claimed for stairwell tiling is one half of the total cost of $970 referred to in par 19 of the evidence of Mr Hill. This cost was shared between the units owned by the seventh and ninth plaintiffs. The amount for screeding front balconies is one fifth of the amount referred to in the evidence of Mr Hill. The total cost of screeding the front balconies is shared between the five upper level unit holders. The amount claimed in respect of the upper balcony construction is one fifth of the amount referred to in the evidence of Mr Hill the cost being shared between the five units.
There is no challenge to this claim and in all the circumstances I allow it.
The claim against the third defendant is in the sum of $10,071.93 made up as follows:
Relocation Costs and Expenses whilst remedial works executed
Power disconnection at Cullen Bay $55.00
Power connection at Larrakeyah $56.00
Power disconnection at Larrakeyah $55.00
Power connection at Cullen Bay $56.00
Disconnection at Cullen Bay
Telephone connection at Cullen Bay $66.25
Rent at Larrakeyah (Raine & Horne) 11/12/00
to 27/03/01 $6,409.50
Rent at Northgate 28/03/01 to 09/04/01 at
$85.71 per day $1,114.23
Removalist to Larrakeyah (Darwin Hi-Tech
removalists) $1,168.75
Removal from Larrakeyah to storage, and
storage to Cullen Bay $1,091.20Subtotal $10,071.93
Those costs were incurred by the seventh plaintiff in relocating its tenant Mr Burns whilst the works were undertaken. I have received into evidence the invoices relevant to each of those amounts claimed. They each result from the negligence of the third defendant. I allow the claim in the sum of $10,071.93.
The Claim of the Ninth Plaintiff
The ninth plaintiff has claimed damages against the first and fourth defendants in the sum of $3144.99 and against the third defendant in the sum of $12,201.24. No judgment has been entered in favour of the ninth plaintiff against the fourth defendant and I make no award against that defendant.
The claim against the first defendant is in exactly the same terms as that of the seventh plaintiff against the first defendant and for the reasons I have discussed under that heading that claim is allowed.
The claim against the third defendant is particularised as follows:
Relocation Costs and Expenses whilst remedial works executed
Accommodation from 11 December 2000 until
9 April 2001 (17 weeks @ $285.00 per week $4,845.00
Removal boxes purchased $96.50
Removal to temporary accommodation $760.00
Labour $200.00
Packing and unpacking $500.00
Relocate back and storage $1,100.00
Potted plant removal $315.00
Telephone connection x2 $110.00
Telephone re-connection x2 $110.00
Transport and insurance $850.00
Utilities connection $50.91
Replace plants $300.00
Board dogs x2 plus plant storage
04/12/00-18/03/01 $1,995.00
19/03/01-09/04/01 $403.83
Cleaning $250.00
Return potted plants $315.00
Subtotal $12,201.24Those costs were incurred by the ninth plaintiff in relocating its tenants Mr and Mrs Cox whilst the works were undertaken. I have been provided with the invoices that relate to those amounts and for the same reasons as expressed in relation to the claim of the seventh plaintiff allow the claim in the sum of $12,201.24.
Each of the seventh and ninth plaintiffs made further claims against the third defendant for damages for “loss of value due to building blight” and “loss of amenity (solatium)”.
Loss of Amenity
The seventh and ninth plaintiffs have sought unspecified damages against the third defendant under the heading of Loss of Amenity – Solatium. The claim as developed in argument was for damages for distress, vexation and disappointment arising as a consequence of the conduct of the third defendant.
The evidence in this regard came from Michael John Burns on behalf of the seventh plaintiff and Stuart Edward Cox on behalf of the ninth plaintiff.
The evidence of Mr Burns addressed his need to vacate the unit which he leased from the seventh plaintiff. There was no evidence of any particular distress, vexation or disappointment suffered by him beyond what would be expected in the normal course of having to move in such circumstances whilst remedial works are undertaken.
The evidence of Mr Cox was to a similar effect but went further and included the following:
“My wife and myself have suffered substantial vexation and distress over the whole saga of the defects in our unit and building, and throughout the extended course of the litigation. We have also suffered substantially inconvenience and loss of amenity in having to relocate ourselves, at our own cost, for the period that we were forced to be absent from our unit.”
The claims made under this heading confuse the individual occupants of the units within the building with the company that owns the unit and is in fact the plaintiff in each case. Mr Burns and Mr and Mrs Cox occupied their respective units by arrangement with the seventh and ninth plaintiffs. They were not the owners of the units they were not parties to the proceedings.
If it be accepted that distress, vexation or disappointment was suffered as a consequence of the actions of the third defendant then those emotions were suffered by the named individuals not by the corporate entities. Those named individuals were not parties to the proceedings and are not entitled to any award of damages within the proceedings.
I do not make any allowance under this head.
Loss of Value Due to Building Blight
In this case the effect of the evidence is that, notwithstanding that the building has been repaired, there is a diminution in the market value of the units. The researches of counsel did not reveal any authority to support the proposition that a plaintiff in this situation is entitled to recover both the cost of repairs and damages in respect of diminution in market value. I was referred to the decision in England of Thomas & Others v T.A.Phillips (Builders) Ltd and Taff-Ely Borough Council (1985) 9 Con LR 72 in which the plaintiffs were allowed damages for diminution in value of a house in addition to the cost of the remedial works. However that decision was doubted in the later case of Murphy v Brentwood District Council [1991] 1 AC 398. Murphy v Brentwood District Council (supra) was not followed on wider issues in Australia in Bryan v Maloney (1995) 182 CLR 609.
In relation to chattels it was held in Payton v Brooks [1974] 1 Lloyd’s Rep 241 that in an appropriate case damages for diminution in value going beyond the cost of repair may be recoverable. In that case Roskill LJ said (at 245):
“There are many cases which arise, whether in the field of contract law or of tort, where the cost of repairs is a prima facie method of ascertaining the diminution in value. But it is not the only method of measuring the loss. In a case where the evidence justifies a finding that there has been, on top of the cost of repairs, some diminution in market value – or, to put the point another way, justifies the conclusion that the loss to the plaintiff has not been fully compensated by the receipt of the cost of complete and adequate repairs, because of a resultant diminution in market value – I can see no reason why the plaintiff should be deprived of recovery under that head of damages also.”
Edmund Davies and Buckley LJJ expressed similar views. These views were adopted by the Full Court of the Supreme Court of Queensland in Davidson v J.S.Gilbert Fabrications Pty Ltd [1986] 1 Qd R 1.
Damages in the law of torts are “essentially restitutionary being designed to ensure that the plaintiff is restored, so far as money can do it, to his former position by compensating for the loss sustained, no less and no more”: per McPherson J in Davidson v J.S.Gilbert Fabrications Pty Ltd (supra at 4). In the Commonwealth v Amann Aviation Pty Limited (1991) 174 CLR 64 Deane J said at 116:
“The general principle governing the assessment of compensatory damages in both contract and tort is that the plaintiff should receive the monetary sum which, so far as money can, represents fair and adequate compensation for the loss or injury sustained by reason of the defendant’s wrongful conduct. The application of that general principle ordinarily involves a comparison, sometimes implicit, between a hypothetical and an actual state of affairs: what relevantly represents the position in which the plaintiff would have been if the wrongful act (ie the repudiation or breach of contract or the tort) had not occurred and what relevantly represents the position in which the plaintiff is or will be after the occurrence of the wrongful act.”
In the present case there is expert evidence that the individual plaintiffs have sustained loss which goes beyond the cost of repairs and is reflected in a loss of market value “notwithstanding that excellent repairs have been carried out” (per Buckley LJ in Payton v Brooks supra at 244). In my view the present matter is an appropriate case for the plaintiffs to recover more than the mere cost of repairs and direct consequential losses. They are entitled to compensation in respect of the diminution of market value that results from the negligence of the third defendant.
The sixth, seventh and ninth plaintiffs called Trevor Paul Dalton who gave expert evidence as a valuer. He indicated that he had “considered the impact in the market place of the building’s notoriety resulting from the defects”. He observed that the market place “has been aware of design and/or construction problems within the subject building” and he referred to media reports of the present proceedings. It was his opinion that there was a loss of value in the building in “an amount that takes into account the concern and poor impression of the property that a potential purchaser would have of the subject property”. He regarded the loss of value “or blight” as the result of the market’s perception that the property will remain “tainted” and concern “whether the defects can be fully rectified, without future defects arising at any future time.”
He expressed the view that as at the present time the discount applicable to the poor reputation of the building would amount to some 5 percent to 25 percent of the current market value. The figure would be lower in the case of retail/commercial units and greater for residential units. He went on to say:
“This discount is my interpretation of the market’s perception of the subject units and is an apportionment of the diminution in value over and above the allowance that the market would consider appropriate to reflect the cost of undertaking the necessary rectification works.”
Later he said that a potential purchaser in the market place will:
“… differentiate between a ‘tainted’ property and all other properties where there is any uncertainty about the extent of any defects identified in that property, whether such defects have or can be fully rectified and whether further defects may develop at a later date. I consider that any potential purchaser will require a discount from normal Market Value even after all necessary rectification works are completed, in view of the property’s notoriety for poor design and construction and the perception of the property in the marketplace.”
Mr Dalton expressed the view that this situation would remain for a number of years but gradually decrease over time.
Mr Dalton gave evidence as to the estimated present value of the units based on the assumption they were completed properly in the first place ie assuming that all of the structural design and construction work had been properly undertaken and completed during the original construction period. He then compared that with the value of the units assuming that all of the rectification work was completed in accordance with the rectification program referred to above ie assuming a successful rectification program.
In relation to unit 5 (the property of the sixth plaintiff) the figures were $115,000 and $105,000, a difference of $10,000. In relation to unit 6 (the unit of the seventh plaintiff) the figures were $375,000 and $325,000, a difference of $50,000. In relation to unit 8 (the unit of the ninth plaintiff) the figures were $350,000 and $305,000, a difference of $45,000. Each of those plaintiffs claims the respective differences by way of damages.
The level of the discount is a matter for speculation. There is no body of experience directly related to the circumstances of this matter upon which Mr Dalton was able to draw. Whilst it is accepted that there are matters of perception that will affect the market value of real property there is no record of any previous experience of a kind similar to that with which Mr Dalton is now confronted. He researched the matter and discussed it with others in his field and others involved in the relevant market place. The opinion he has expressed is the product of that process. He agreed that it is an imprecise process that leaves a wide margin for error.
Whilst I accept that the reputation of the building is such that it will lead potential purchasers to seek a reduction in price it is my view that any reduction achieved will be at the lower end of the scale. This is because, upon proper enquiry, a purchaser will find that although the building had a problem some years ago the problem has been rectified. As a consequence of that history the processes of rectification involved rigorous professional assessment that may not have applied to similar buildings in the same area. In this case the rectification works were prepared by a new engineer and the design was subjected to scrutiny by a further independent engineer who is described as an audit engineer. These processes would be likely to lead a purchaser to conclude that rigorous and exhaustive consideration has been given to the problems that previously existed and those problems have been identified and resolved. Whilst the history of the building would not enhance its value the considerations that I have described will in my opinion minimise the negative impact of that history upon the value of the building and the individual units within it.
I am unable to accept that the diminution in value is as high as Mr Dalton has suggested. I am of the view that there should be no allowance in respect of unit 5 which is the commercial/retail unit. That is because, as Mr Dalton conceded, a purchaser of a commercial property of that kind is most likely to base any assessment of the purchase price upon the return offered by the premises as distinct from considerations that may be applicable to residential units where “the market is largely driven by owner/occupiers, rather than investors”. In relation to the residential units it seems to me that an allowance of around 5 percent is appropriate under this head and I therefore allow $19,000 in respect of the seventh plaintiff and $18,000 in respect of the ninth plaintiff under this head of damage.
I award damages as follows:
(a)In favour of the first plaintiff against the first and fourth defendants the sum of $119,541.36.
(b)In favour of the seventh plaintiff against the first defendant in the sum of $3144.99.
(c)In favour of the seventh plaintiff against the third defendant in the sum of $10,071.93 for relocation costs and the like plus $19,000 for diminution in value giving a total award against the third defendant of $29,071.93.
(d)In favour of the ninth plaintiff against the first defendant in the sum of $3144.99.
(e)In favour of the ninth plaintiff against the third defendant in the sum of $12,201.24 for relocation costs and the like together with $18,000 in respect of diminution in value giving a total of $30,201.24.
On the basis of the evidence before me the sixth plaintiff has failed to establish that it suffered any loss or damage and I make no award in favour of that plaintiff.
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