Rage Cage Sports Pty Ltd v Briarwood Pty Ltd trading as Ram Construction
[2018] ACAT 52
•7 May 2018
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
RAGE CAGE SPORTS PTY LTD v BRIARWOOD PTY LTD trading as RAM CONSTRUCTION (Civil Dispute) [2018] ACAT 52
XD 495/2017
Catchwords: CIVIL DISPUTE – Building contract-failure to rectify defects – indemnity costs under the contract
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 ss 16, 17, 48
Tribunal: Senior Member A Anforth
Date of Orders: 7 May 2018
Date of Reasons for Decision: 7 May 2018
AUSTRALIAN CAPITAL TERRITORY)
CIVIL & ADMINISTRATIVE TRIBUNAL) XD 495/2017
BETWEEN:
RAGE CAGE SPORTS PTY LTD
Applicant
AND:
BRIARWOOD PTY LTD t/as RAM CONSTRUCTION
Respondent
TRIBUNAL: Senior Member A Anforth
DATE: 7 May 2018
ORDER
The Tribunal orders that:
(a)The applicant’s claim is dismissed.
(b)Judgment for the respondent for the costs of rectification minus a set off for the ‘retention amount’ and for the agreed sum of $1,793;
(c)The matter is listed on Friday 29 June 2018 for assessment of the final amount of the judgment in accordance with the findings below.
………………………………..
Senior Member A Anforth
REASONS FOR DECISION
Summary
The ACT Government decided to build a ‘rage cage’ in Belconnen. A rage cage is an area with painted ground surface (the surface coating) surrounded by a vertical padded cage structure supported by steel poles, much like the cage around a child’s enclosed trampoline. Young people play various sports and other activities in the cage.
The ACT Government contracted with the respondent as the principal contractor to build the cage. The respondent sub-contracted with the applicant to manufacture, supply and install the cage including the painted ground surface and steel poles (the sub-contract). The sub-contract was for a total of $265,237. Both the principal contract and sub-contracts were in a standard form used by the ACT. Redbox Design Pty Ltd were retained by the ACT as the ‘superintendent’ (or project manager).
The cement slab was to be laid by the respondent in accordance with the agreed specifications. The surface painting was to be a coat of Ecoshield Performance Coating (Ecoshield) to be supplied and applied to the surface by Environmental Innovation Company Pty Ltd (EIC) acting under a further sub-contract with the applicant. Mr Haif was the director of EIC and the person who carried out the surface coating work.
The sub-contract was entered on 8 December 2014. The slab was poured on 19 January 2015 by the respondent with the superintendent from Redbox present. The slab construction inadvertently omitted the water proofing membrane that provides a moisture barrier between the slab and sub-slab. A curing agent provided to the respondent by the applicant was to be applied to the concrete the next day. The applicant alleged that the curing agent had not in fact been applied but the evidence of the respondent was to the contrary.
The slab was left to dry. During this time correspondence followed between the parties concerning whether the surface of the slab was fit for the Ecoshield coating given the absence of the water proofing membrane. Mr Haif visited the site on 13 February 2015. On 15 February 2015 the applicant advised the respondent by email that the slab was suitable to proceed with the painting with use of a densifier. The next day the applicant and Mr Haif went ahead with the painting with the use of a ‘densifier’. Mr Haif however advised that the warranty for the Ecoshield was voided due to the manner of the slab preparation. The applicant brought this fact to the respondent’s attention at the time prior to the painting.
On 21 August 2015 the respondent contacted the applicant and advised that the Ecoshield surface was bubbling and peeling. Photographs were taken and there is no question that this is so. After some correspondence between the parties an onsite meeting of the parties occurred on 21 September 2015 which failed to resolve the problem.
The applicant declined to accept liability for the problem and to rectify it. The applicant asserted that the cause of the paint failure was the absence of the water proofing membrane and that this was wholly the respondent’s fault. The applicant denied that it had advised the respondent that the slab was suitable for painting to proceed notwithstanding the lack of water proofing membrane and notwithstanding the otherwise clear terms of the applicant’s email of 15 February 2015 extracted below.
The respondent obtained an independent report from Dr Stuart Bayliss, engineer, dated 2 November 2015 and commissioned other contractors to do the rectification work. These other contractors removed all the Ecoshield paint, resurfaced the slab and repainted it. No further problems have manifested.
On 20 May 2016 the respondent rendered an account to the applicant for the rectification work in the sum of $26,773.60 and advised the applicant that it was retaining the final ‘retention payment’ due to the applicant under the sub-contract in the sum of $11,315 as part payment of the rectification costs.
Subsequent investigations of the site disclosed other defects with the slab to do with the trimming and sealing of the steel mesh embedded in the slab with was said to promote cracking. The applicant contended that the absence of the water proofing, the alleged failure to apply the curing agent to the cement and the defects with the embedded steel mesh were the ultimate cause of the ensuing problems with the surface paint.
The applicant’s claim seeks an order of $11,315 for the retention amount; $1,793 for the cost of Mr Haif attendance on site; and unspecified damages for time and expenses incurred in the dispute for which a volume of invoices and receipts were produced. In total the applicant claimed the monetary limit of the Tribunal, namely $25,000.
The respondent denied the applicant’s claim in total. The respondent contended that either the coating problem was not caused by any slab work undertaken by it; or in the alternative if this was the case then it had relied upon the applicant’s advice that it was appropriate to proceed with the coating notwithstanding any deficiencies in the slab.
The respondent counterclaimed for the cost of rectification at $26,773.60 less the agreed costs of Mr Haif’s attendance on site at $1,793 plus interest plus costs. The respondent also sought a declaration that it could retain the ‘retention payment’ of $11,315 to be used as a set off against the rectification costs.
The dispute ultimately came down to a difference of opinion between the experts concerning the cause of the paint failure. The Tribunal preferred the evidence of Dr Bayliss because it was more coherent, Dr Bayliss was better qualified than his opponents and because neither Mr Haif nor Mr Holgate for the applicant were truly independent witnesses. The cause was not the absence of the water proofing membrane but rather the failure of the applicant to properly prepare the slab surface before painting it.
Procedural history in the Tribunal
On 28 April 2017, the applicant lodged an application with the Tribunal seeking orders for remaining fees owed to the applicant (the retention payment), ACAT filing fee, as well as damages for time and expenses incurred while recovering the amount claimed.[1] The application contained a statement dated 23 December 2015 from Mr Purdy, director of the applicant.[2] He asserted that the cause of the paint adhesion problem was the defective slab preparation by the respondent. The applicant denied that either it or Mr Haif had told the respondent that it was appropriate to proceed with the coating and asserted that the contrary advice was in fact given.
[1] The amount claimed in the application dated 28 April 2017 of $13,108, Exhibit 1
[2] Exhibit 11
The statement said that:
(a)the pour occurred on 22 January 2015 without the use of the curing agent that should have been used;
(b)the pour did not contain a moisture barrier between the slab and sub-base;
(c)the pour was not inspected at the relevant ‘hold points’ before continuing to completion and was never certified at the hold points;
(d)prior to painting Mr Haif had informed the respondent that there was a problem and the coating may not take to the surface. He told the applicant that the Ecoshield warranty was voided due to the slab issues and the respondent was informed of this fact prior to painting; and
(e)after the dispute had arisen the applicant discovered the existence of other slab defects in the failure to trim and seal the ends of the steel mesh embedded within the slab.
Annexure 1 to the application included minutes of the onsite meeting between the parties on 21 September 2015. The minutes were taken by Mr Coyle who was assisting the applicant. It also included specifications and drawings for the Cage which showed the plastic moisture barrier required between the slab and sub-base.
Annexure 2 to the application contained 15 attachments labelled ‘doc’, most being multipage documents. Of most relevance are:
(a)Doc 1: an email from EIC to the respondent of 19 January 2015 telling the respondent to apply the supplied curing agent 1-3 days after the pour and explained that it was important to the Ecoshield paint penetrating into slab.
(b)Doc 3: an email of 3 February 2015 from the respondent to the applicant and Mr Haif asking whether the absence of a moisture barrier in the slab was a problem.
(c)Doc 5: an email from the applicant to the respondent of 15 February 2015 that read in part:
I can confirm that the slab is quite suitable for the Rage Cage and that Joe from Ecoshileld will add a Lithium concrete densifier (at my cost) either once or twice to prevent any moisture etc from seeping up from the ground soil level and that his pre lab tests are very positive in that the concrete is of good consistency to suck up both the densifier and the 1st coat of sealant…
(d)Photographs taken on 12 March 2015 showing some cracking of the slab.
(e)Docs 7-9: photographs taken on 21 August 2015 showing the lifting and bubbling paint surface.
(f)Doc 7: an email from the applicant to the respondent of 21 August 2015 advising the problem was caused by water pressure coming from under the slab which was the respondent fault and had voided the Ecoshield warranty.
(g)Doc 9: an email of 14 September 2015 from the respondent to the applicant saying that the painting only went ahead because the applicant advised that it was appropriate to do so.
(h)Doc 10: an email of the applicant to the respondent of 15 September 2015 denying that it gave such advice.
(i)Doc 14: photographs taken on 22 December 2016 [sic 2015] showing the paint peeling (doc 14).
On 2 May 2017 the applicant filed a set of invoices and receipts totalling $31,596.29. On 15 May 2017 he revised the list which then totalled $25,934.04. He indicated his knowledge of the jurisdictional limit of the Tribunal and that this limit applied to his claim. The invoices were for:
(a)the costs of the applicant’s own independent experts consulted;
(b)the applicants time cost in preparing and prosecuting its case in the Tribunal; and
(c)company searches and Tribunal lodgement fee.
On 1 June 2017, the respondent filed its response and counterclaim for $24,980 (Exhibit 2).[3] The respondent denied the applicants claim and asserted that the paint adhesion problem was unrelated to the slab preparation and was caused by the defective manner in which the applicant applied the surface. The response annexed a statement of claim which pleaded:
(a)the applicant was aware of the slab preparation at the time of applying the paint;
(b)the applicant advised the respondent that it was appropriate to proceed with the painting;
(c)the respondent afforded the applicant the opportunity of carrying out the rectification work in an email of 14 September 2015
(d)the respondent obtained a report from an independent expert on rectification before carrying out the work. The independent expert was The Coating Consultancy Pty Ltd whose report was dated 2 November 2015;
(e)the rectification costs were $26,773.60 (after set off of the retention amount); and
(f)the respondent admitted that it owed the applicant $1,793.00 for the cost of Mr Haif’s attendance on site so that the net claim was for $24,980.60 plus interest plus costs.
[3] Exhibit 2, response form filed by Briarwood Pty Ltd trading as Ram Constructions on 1 June 2017
Also annexed to the response were:
(a)a proforma copy of the trade contract that formed the sub-contract;
(b)an email chain between the respondent and the applicant between 3 February 2015 and 15 February 2015 in which the respondent notified the applicant of the absence of the moisture barrier between the slab and sub-base and asking whether it was still appropriate to proceed with the painting. The applicant’s reply by email of 15 February 2015 extracted above;
(c)an email from the respondent to the applicant of 14 September 2015 after the peeling had manifested, stating that the applicant had advised the respondent by email of 15 February 2015 that it was appropriate to proceed with the painting and the respondent had relied upon that advice; and
(d)a report dated 2 November 2015 from Dr Stuart Bayliss, engineer of The Coating Consultancy Pty Ltd.[4] Dr Bayliss opined that the cause of the painting peeling was inadequate paint adhesion to the slab surface caused by inadequate surface preparation by the applicant before applying the paint. The surface should have been diamond grinding or shot blasted or otherwise roughed up to receive the paint. The coating should not have been applied until four weeks after pouring of the slab. Dr Bayliss said that the trimming and sealing of steel mesh was also a deficiency but there was no evidence that it had resulted in cracking.
[4] Exhibit 12, report by Dr Bayliss
The matter was listed for conference and evaluation on 2 August 2017. Both parties attended in person but the matter was not resolved. The Tribunal made procedural orders for the parties to file their evidence and submissions.
On 14 September 2017, the applicant sought the issue of subpoenas for documents to issue against various persons. The subpoenas were issued and served.
On 18 September 2017 the applicant filed approximately 40 emails each with various attachments or differing lengths. The Tribunal declined to accept and print this volume and advised the applicant to refile in hard copy form. A large volume of documents were subsequently filed in hard copy form and eventually in a consolidated indexed form. These included:
(a)a brief statement from Mr Haif dated 13 September 2017 saying that he personally assisted the applicant to apply the Ecoshield on site;
(b)a brief statement from Mr Graham Coyle, construction management consultant, saying that he was assisting the applicant in the preparation of its case;
(c)a copy of a letter from the applicant to the respondent dated 23 December 2015 denying liability for the defects and referring to a series of annexures. The statement noted that the slab specifications required the moisture barrier and there was already cracking when the Ecoshield was applied;
(d)a short email advice from Mr A Crook, engineer, with John Skurr Consulting Engineers Pty Ltd of 9 December 2015 opining that a slab without a moisture barrier was defective;
(e)a report of Mr Coot, engineer, dated 11 December 2015 opining that a slab without a moisture barrier was defective;
(f)a 4 page email report from Mr Holgate, engineer, of TAMSA International Consulting concerning the cause of the problem (being the absence of the water membrane) and the rectification required;
(g)various extracts from Australian Standards;
(h)photographs of cracking in the cement prior to application of the Ecoshield paint;
(i)a diagram of the location of the cracks on 15 March 2015;
(j)an email of 16 September 2015 from the respondent to the applicant making a final demand for the applicant to carry out the rectification work.
(k)an email in reply to convene a site meeting to discuss the issue;
(l)a set of minutes of the site meeting on 21 September 2015 prepared by Mr Coyle on behalf of the applicant; and
(m)letters of 22 and 24 September 2015 from the applicant to the respondent setting out the understanding of the outcome of the meeting which consisted of a set of tests to ascertain the cause of the problem but no actual rectification work.
On 20 September 2017 the applicant filed:
(a)a copy of the sub-contract;
(b)ACT Government standards for kerbs, footpaths and minor works;
(c)a copy of the decision in Dunn v Hansen Australasia Pty Ltd [2017] ASTSC 17.
On 16 October 2017, the respondent submitted an amended response[5] as well as a chronology of events[6] dating from October 2014 to May 2016. The amended response contained a claim for indemnification for all costs (including legal costs) under clause 12 of the trade agreement.
[5] Exhibit 10
[6] Exhibit 5
On 16 October 2017 the respondent filed a statement by Jonathon Boyd who had been the project manager for the respondent at the relevant times.[7] The statement says:
(a)he was onsite during a pre-pour inspection by the superintendent on 16 January 2015;
(b)he was present during the pour on 19 January 2015;
(c)the superintendent attended during the pour;
(d)the absence of the water proofing membrane was the result of confusion between the superintendent and the respondent; and
(e)the omission was brought to Mr Haif’s attention on site and in writing. Mr Haif personally attended the site and satisfied himself that the Ecoshield coating could safety proceed. Mr Haif gave formal conformation via the email from the applicant of 15 February 2015.
[7] Exhibit 4
On 16 October 2017 the respondent filed a statement by Mr Peter O’Brien, the managing director of the respondent.[8] The statement recounted the content of previous statements and claims made on behalf of the respondent. He indicated that the respondent relied upon the report of Dr Stuart Bayliss.[9] He drew attention to the terms of the Ecoshield specifications which required “diamond grinding or shot blasting to ensure penetration” of the paint into the surface. The statement annexed a range of documents being those documents hitherto annexed to the statements of other witnesses.
[8] Exhibit 3
[9] Exhibit 12
On 17 October 2017 the respondent’s solicitor, Mr Falcetta, filed a statement which annexed:[10]
(a)The plans and specifications for the Cage which showed the presence of the water proofing membrane;
(b)Evidence of legal costs incurred to date of $7,514.75 and an assessment of future legal costs.
[10] Exhibit 6
On 20 October 2017 the applicant filed the report of Mr Holgate, engineer.[11] Mr Holgate was the consultant adviser to the former company, Ecoshield Pty Ltd, and claimed expertise in the application of the product. He spoke in general terms of the importance of water proofing the virtues of the use of densifiers which he said should have been sufficient in the present case. His report however does not bear on the Cage in question.
[11] Exhibit 8
On the same day the applicant filed a statement from Mr Haif.[12] He said that on the day in question he was hesitant to proceed with applying the Ecoshield paint to the Cage and only did so after making it clear to those concerned that he no longer warranted the work, that is, the Ecoshield warranty would not apply if the surface was damaged by water penetration.
[12] Exhibit 7
The matter was again listed for hearing on 31 October 2017. Mr Purdy appeared for his company and Ms Katavic of counsel appeared for the respondent. The subpoenas were called, produced and discharged. The various filed statements and other evidential documents were given Exhibit numbers without derogation to the right of parties to take issue with any one of them during the course of the proceedings.
There was preliminary discussion about witnesses and issues. The respondent tendered copies of two quotations from ACT Concrete Restorations Pty Ltd dated 5 November 2017. The first quote was for the application of a water membrane on the slab at a cost of $24,750 plus GST.[13] The second was a quote for surface preparation and joint sealing in the slab including diamond grinding at a cost of $7376 plus GST.[14] The applicant advised that it did not take issue with the reasonableness of the respondent’s rectification costs should the respondent succeed on its counter claim.[15]
[13] Exhibit 14
[14] Exhibit 13
[15] Transcript of proceedings 31 October 2017 pages 51-35
The respondent admitted the amount owing for Mr Haif’s attendance on site.
The applicant opened its case via the agency of questions asked by the Tribunal. The case for the applicant was that the absence of the water membrane was the cause of the paint failure. Mr Purdy for the applicant said that they had put two alternative solution to the respondent which the respondent rejected. The first was to dig up the slab and redo it, which he later retracted when giving his evidence. The second was to lay a water membrane across the top of the slab.[16]
[16] Transcript of proceedings 31 October 2017 pages 57-30
The case for the respondent was that the absence of the water membrane was a complete distraction. It was not the operative cause of the paint failure. The cause was the defective application of the paint by Mr Haif and the applicant per the report of Dr Bayliss.
Mr Purdy gave evidence and adopted his statement of 23 December 2015[17] and was cross examined. In evidence Mr Purdy said that he did not suggest to the respondent that the slab be repoured and that he conceded that he did not use surface abrasion techniques (diamond grinding or shot blasting). He said he was under pressure on the day on which the Ecoshield was applied because the semi-trailer was on site with rest of the cage and he needed to get it offloaded.
[17] Exhibit 11
Mr Boyd gave evidence, adopted his statement of 13 October 2017 and was cross examined. He denied that Mr Purdy or anyone else had suggested that the slab be removed or that an alternative membrane be placed over the top of the slab before painting.
Mr Holgate gave evidence of the general characteristics of Ecoshield and its susceptibility to water ingress. He adopted his statement and was cross examined. He said he had a proprietary interest in Ecoshield and had acted as an adviser to its users, including the applicant.
Dr Bayliss gave evidence and adopted his report and was cross examined. He said the concrete slab looked generally of good quality notwithstanding the cracks. He said that the problem was not the absence of the water membrane but it was the nature of the surface preparation. He said that the concrete was already cured, hard and non-porous when the Ecoshield was applied. The densifier used by Mr Haif would have caused the surface to be even less porous which further impedes the penetration of the paint. Dr Bayliss said that the surface should have been the subject of abrasive cleaning (diamond grinding or shot blasting) and not just the scrubbing that occurred in order to roughen the surface to receive the paint. The combination of the use of the densifier and the absence of the abrasive cleaning were the causes of the paint failure.
The hearing was adjourned and orders were made for both the applicant and respondent to file and serve written submissions by 15 January 2018.
On 4 December 2017 the applicant filed its final submissions. Much of the submission was directed to the proposition that Mr Boyd was not competent to supervise the construction. This purported incompetency extended to a lack of understanding of the significance of the water membrane and the need to have the slab inspected at different point of its pouring.
Mr Purdy (for the applicant) maintained that he had offered the alternative of laying a water membrane over the top of the poured slab.
On 22 December 2017 the respondent filed its final submissions in which it contended that the cause of the paint failure had nothing to do with the absence of the water membrane and was caused by the lack of surface preparation per the opinion of Dr Bayliss. The respondent noted the Ecoshields own specifications that require abrasive cleaning of the surface in the form of diamond grinding or shot blasting which had not been undertaken by Mr Haif.
The respondent noted that the subsequently rectified surface has not shown any similar issues notwithstanding the continued absence of the water membrane.
The issues for determination
The issues are:
(a)What was the cause of the Ecoshield paint failure?
(b)Whether the applicant is entitled to the return of the retention amount, the amount owed for Mr Haif’s site visit on 13 February 2015, as well as additional damages; or
(c)Whether the respondent is entitled to keep the retention amount and claim additional damages for the cost of the rectification work and other costs for the respondents loss and damage.
In both alternatives there may be issues arising from:
(a)The Tribunal’s monetary jurisdictional cap of $25,000 applicable to civil proceedings (sections 16 and 17 ACT Civil and Administrative Tribunal Act 2008);
(b)The Tribunal’s limitations in making costs orders and orders for the time and costs incurred in conducting the litigation (section 48 ACT Civil and Administrative Tribunal Act 2008).
The Tribunal’s jurisdiction
Sections 16 and 17 confer jurisdiction of the Tribunal for, inter alia, contractual disputes, which fairly describes the present matter.
The terms of the sub-contract
The contractual rights of the parties are governed by their sub-contract (as varied) and the common law.
Clause 1 of the sub-contract states that it is a term of the contract that:
(a)the applicant carry out and complete the works;
(b)in a proper and tradesperson like manner; and
(c)to the reasonable satisfaction of the respondent.
Clause 14 deals with defects and states:
(a)Before the end of the defects liability period the trade contractor must, at its own cost, rectify any part of the works that is faulty or defective and remove and replace any part of the works that is faulty or defective and remove and replace materials not in accordance with this trade contract (together called the defect).
(b)Ram Constructions may direct the trade contractor to rectify, remove or replace defects at its own costs and within the time stated by Ram Constructions before or during the defects liability period.
(c)After expiration of the defects liability period, if a statutory authority, court or tribunal requests or orders that Ram Constructions rectify or replace the rectify, at its own costs within the time stated by Ram Constructions.
(d)If the trade contractor fails to comply with a direction under this clause, Ram Constructions may have the work rectified or the materials removed and replaced by others and the costs is a debt due and payable by the trade contractor to Ram Constructions.
Clause 8 deals with the retention payment and states:
(a)Where stated in the purchase order, the trade contractor must provide retention moneys to secure the due and proper performance of the trade contract, including its obligations to rectify defects and replace materials and any amount due to Ram Constructions in connection with the trade contract.
(b)Ram Constructions may deduct and retain up to 10% of the amount payable to the Trade Contractor on a payment claim under 6(C) – until the total amount retained equals 5% of the contract sum.
Clause 12 of the sub-contract deals with the obligation of the applicant to indemnify the respondent for losses arising from an breach:
(a)The trade contractor indemnifies and keeps Ram Constructions indemnified against any:
(i) loss or damage to property, including existing property on or around the site;
(ii) claim against Ram Constructions in respect of personal injury or death or loss or damage to any property;
(iii) claim against Ram Constructions in respect of an infringement of copyright or any other intellectual property right in documents prepared for or provided to Ram Constructions; and
(iv) loss or damage as a consequence of termination or breach of the head contract arising out of, or as a consequence of, the carrying out of the works by the trade contractor or a party for whom the trade contractor is responsible.
(b)If the trade contractor indemnifies and keeps Ram Constructions indemnifies against any claims for breach of statutory warranty in respect of the works or to either the effect of the works are defective or contain omission.
Findings of fact
It is a conceded fact that the plans and specifications for the slab required the water proof membrane and the respondent failed to insert it. There were also other discrepancies between the specifications and the slab as built and a failure to trim and seal the edges of the embedded steel mesh. There may also have been non-compliance with the regulations relating to pouring of slabs and the hold points.
Contrary to the applicant’s contentions, the respondent did apply the curing agent to the slab that was provided by Mr Haif.
The above findings are relevant in so far as they were points of controversy between the parties but ultimately they are only peripherally relevant to the outcome of the case because they do not bear on the likely cause of the paint failure.
The Tribunal prefers the evidence of Dr Bayliss over that of Mr Holgate and Mr Haif. The Tribunal is satisfied that:
(a)the slab as poured was generally of good quality albeit there were a few cracks;
(b)at the time of painting the slab was cured, hard and non-porous;
(c)Ecoshield’s own specifications provided that the slab needed to be porous and the surface abrasively treated by diamond grinding or shot blasting to receive and retain the paint;
(d)the applicant did not undertake the abrasive slab treatment before painting; and
(e)the use of the densifier by applicant and Mr Haif when laying the Ecoshield paint aggravated the non-porous nature of the slab;
The cause of the peeling paint was the failure of the paint to adhere to the surface for the reasons given immediately above and was not affected by the absence of the water membrane other than it resulted in the voiding of the Ecoshield warranty. This particular consequence is not one that is raised for determination in this case. Ecoshield is not a party to these proceedings.
Mr Purdy was aware of the absence of the water membrane when he chose to go ahead with the painting. He did not have to. The Tribunal does not accept that he recommended that the slab be pulled up or that a water membrane be laid over the existing slab before painting.
It seems that Mr Purdy was caught in an economic bind. He was on site with Mr Haif and the slab was not completed. The semi-trailor with the rest of the Cage had arrived and it was costing him money to leave it unloaded. He spoke with Mr Haif who said that it was risky to go ahead with the painting but notwithstanding this hesitation the two of them decided to take the risk.
The respondent did not order the applicant to proceed with the painting. The respondent disclosed the defect in the slab and then sought and relied upon the applicant’s advice as the relevant expert. In its email of 15 February 2015 the applicant advised that the slab was suitable and that the inclusion of the densifier would solve the problem introduced by the lack of water proofing membrane. As it transpired this was wrong advice because of the adverse effects of the densifier.
Even so, the wrong advice was not the operative cause of the paint failure. It seems that Mr Purdy and Mr Haif were so preoccupied with the absence of the water membrane that they overlook the necessary slab surface preparation and in so doing set in train the real cause of the paint failure. This was entirely their own doing and their own fault.
The applicant has breached clause 1 of the sub-contract and failed to make good the defect under clause 14. Under clause 8 the respondent is entitled to retain the ‘retention amount’ and under clause 12 is entitled to be indemnified for the reasonable cost of rectification and its legal costs incurred in these proceedings.
The applicant conceded the reasonableness of the respondent’s rectification costs incurred of $38,088.60 from which it gave credit for the retention payment of $11,315 and the $1,793 owed for Mr Haif’s attendance on site. This gives a total of $24,980.
The respondent filed an affidavit as to its legal costs but it is not clear how much of the anticipated future costs actually materialised.
The total of the judgment to be entered in favour of the respondent, inclusive of its contractual right to legal costs, cannot exceed the jurisdictional cap of the Tribunal of $25,000. Any adjudication on the extent of the costs indemnity clause must take this into account.
The Tribunal admits that it is no longer clear of the exact amounts that are or are not being claimed by the respondent. Rather than guess at these figures, the orders shall be that:
(a)the applicant’s claim is dismissed;
(b)judgment is entered for the respondent;
(c)but the amount of the judgment shall be determined after hearing from the parties on this issue.
………………………………..
Senior Member A Anforth
HEARING DETAILS
FILE NUMBER: | XD 495/2017 |
PARTIES, APPLICANT: | Rage Cage Sports Pty Ltd |
PARTIES, RESPONDENT: | Briarwood Pty Ltd t/as Ram Constructions |
COUNSEL APPEARING, APPLICANT | N/A |
COUNSEL APPEARING, RESPONDENT | Ms Katavic |
SOLICITORS FOR APPLICANT | N/A |
SOLICITORS FOR RESPONDENT | Trinity Law |
TRIBUNAL MEMBERS: | Senior Member A Anforth |
DATES OF HEARING: | 31 October 2017 |
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