Roadline Contracting Pty Ltd v Kurungal WNK Housing Pty Ltd
[2021] WADC 32
•15 APRIL 2021
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: ROADLINE CONTRACTING PTY LTD -v- KURUNGAL WNK HOUSING PTY LTD [2021] WADC 32
CORAM: PRINCIPAL REGISTRAR MELVILLE
HEARD: 10 FEBRUARY & 15 MARCH 2021
DELIVERED : 15 APRIL 2021
FILE NO/S: CIV 684 of 2020
BETWEEN: ROADLINE CONTRACTING PTY LTD
Plaintiff
AND
KURUNGAL WNK HOUSING PTY LTD
Defendant
Catchwords:
Assessment of damages - Turns on its own facts
Legislation:
Nil
Result:
Damages assessed in the sum of $66,416.22
Representation:
Counsel:
| Plaintiff | : | Ms V Oh |
| Defendant | : | Not applicable |
Solicitors:
| Plaintiff | : | Mossensons |
| Defendant | : | Not applicable |
Case(s) referred to in decision(s):
Willshee v Westcourt Ltd [2009] WASCA 87
PRINCIPAL REGISTRAR MELVILLE:
This matter comes before me for an assessment of damages following the entry of judgment in default of appearance on 5 June 2020. The action was commenced by writ endorsed with a claim for damages representing the cost of remedying alleged defective concreting provided by the defendant at the Wangkatjungka Community.
It was ordered that the evidence in this matter be given on affidavit. In this regard the plaintiff filed several affidavits, being more particularly affidavits of Mr Patrick Bennison sworn to November 2020 and 22 December 2020 and an affidavit of Mr Michael Lang sworn 8 March 2021.
The defendant did not participate in the assessment of damages and filed no affidavit evidence.
From the affidavit evidence it is apparent the plaintiff had tendered for and entered into a contract with The Housing Authority (the Housing Authority) to perform certain work including, relevantly, the construction of concrete kerbs at Tenth Street, in the Wangkatjangka Community.[1]
[1] Affidavit of Michael Lang sworn 8 March 2021, Attachment ML-4.
The contract specifications required the concrete to have a minimum compressive strength of not less than 20 MPa (or 25 MPa).[2] The contract went on to provide that if the work was not done properly the Housing Authority through its contract superintendent could issue a notice to the plaintiff requiring the work be remediated and if the plaintiff failed to do so could have that work done by a third party and claim that cost from the plaintiff.[3]
[2] Affidavit of Patrick Bennison sworn 22 December 2020, par 10 and Attachment PB-3 thereto.
[3] Affidavit of Michael Lang sworn 8 March 2021, Attachment ML-2 General Conditions of Contract, cl 30.3.
The plaintiff in turn contracted with the defendant for the supply of concrete for the kerbing. The work was performed on or about the 26 October 2017. Unfortunately upon testing it was discovered the concrete did not have the required compressive strength, being rated at around 8.5 - 12 MPa.
Consequently the Housing Authority issued a notice requiring the work be remediated and this work was performed between 10 June 2019 and 15 June 2019. To redo the work the plaintiff allocated its own labour and equipment to the work. The evidence of Patrick Bennison is that this labour and equipment would otherwise have been allocated to other sites, which work would have generated income for the plaintiff according to the plaintiff's usual rates.[4]
[4] Affidavit of Patrick Bennison sworn 22 December 2020, pars 25 - 34.
The plaintiff also engaged contractors to assist in the installation of the kerbs and for the supply of concrete, being Kimberley Kerbs and Webbcrete respectively.
According to the plaintiff's calculation its losses can be broken down into the following categories being:
(a)fuel and bitumen;
(b)third party concrete costs;
(c)concrete testing costs;
(d)accommodation costs at Fitzroy Lodge;
(e)internal labour costs; and
(f)the use of internal plant and equipment.
These costs the plaintiff alleges to total $118,804.62. However the plaintiff seeks by way of an assessment a discounted amount of $113,160.74.[5]
[5] Affidavit of Patrick Bennison sworn 22 December 2020, par 39.
In its tender the plaintiff included at page 76 a schedule headed 'Day Standby Rates' in which the daily rate for various plant and equipment was specified together with the daily rate for labour, the latter being as follows:
(a)supervisor $1200;
(b)operator $850;
(c)general $750.
However, at par 34 and Attachment PB-16.1 of the affidavit of Patrick Bennison the evidence is that the plaintiff's hourly charge out rate for labour in 2019 - 2020 was:
(a)supervisor $105;
(b)operator labour $75;
(c)labour (skilled) $65;
(d)labour (unskilled) $60.
In its tender at page 80 the plaintiff stated it intended to employ three aboriginal workers as 'operators' at a rate of $27.30 per hour for two of them and $23.40 per hour for one of them.[6]
[6] Affidavit of Michael Lang sworn 8 March 2021 at page 182, Attachment ML-4.
The law
In Willshee v Westcourt Ltd the Court of Appeal confirmed the common law principle applicable for calculating damages for breach of contract is that the party who sustains a loss is to be placed, insofar as money can do it, in the same situation as if the contract had been performed.[7]
[7] Willshee v Westcourt Ltd [2009] WASCA 87 [62].
This of course begs the question, what is the loss?
Plaintiff's submission
The plaintiff submits the loss suffered by the plaintiff should be measured by the cost of redoing the work associated with laying the concrete kerbing. The plaintiff then submits that 'cost' can best be measured by not only the cost of having to purchase more concrete and provide accommodation and meals for its workers, but also by reference to the daily rates that it could have charged the Housing Authority for plant equipment and labour, being more particularly those rates found in the tender document, which tender was accepted.
The plaintiff would appear to equate those rates with the plaintiff's 'internal costs' and goes on to submit that if these costs should not be accepted as expenses for which the plaintiff ought to be compensated, then they should be taken as evidence of what the plaintiff's liability to the Housing Authority may be if the remediation work was taken out of the hands of the plaintiff by the Housing Authority and was done or arranged to be done through others by the Housing Authority.
However, in my view because the plaintiff has successfully remediated the work relating to the kerbing, the prospect of the Housing Authority taking responsibility for the work and passing on to the plaintiff its costs including any costs that a third party may have charged the Housing Authority at the same commercial rates as appear in the plaintiff's tender appears non-existent.
Further, if the starting point of the exercise is to put the plaintiff in the position the plaintiff would have been if the defendant had performed the contract, then damages should be awarded so that the plaintiff will receive what it would have earned, including any profit pursuant to the contract by the Housing Authority. The amount payable under the contract is a fixed amount as was tendered by the plaintiff. In my view there is no doubt that fixed amount was determined by the plaintiff having regard to its actual costs of doing the job plus profit.
On the evidence before me it is not possible to determine what is the component for profit but it seems clear that at least some of the profit is embedded in the rates prescribed for plant, equipment and labour. That is, the rates prescribed for the plant, equipment and labour include the plaintiff's actual costs of wages, administration costs, insurances, leases and other overheads, plus a percentage for profit.
Now that the plaintiff has remediated the work it seems clear the plaintiff has been paid or is entitled to be paid by the Housing Authority the full amount owing under the agreement, which as observed above, includes its profits. However to arrive at this point is not to get to the point where the plaintiff would have been if the contract had been performed by the defendant as agreed. That is because the plaintiff has incurred additional costs in rectifying the work which costs it is entitled to get back from the defendant.
The plaintiff also submits that this labour, plant and equipment could have been applied to other jobs. Implicit in this assertion is the proposition the plaintiff has lost profit as a result of being unable to utilize this labour and plant on other jobs.[8] I find this evidence compelling in so far as it reveals that the plaintiff has profit embedded in it labour and equipment charge out rates, the precise amount of which is undisclosed.
[8] Affidavit of Patrick Bennison sworn to 22 December 2020, pars 33 - 35.
However, for the following reasons I am not persuaded that the plaintiff has in fact suffered any such loss of profit.
Firstly, no other contracts to which the plaintiff could have allocated this labour and plant at about this period of time have been produced in evidence.
Secondly, it seems inevitable that had this labour been allocated to another contract it would not have resulted in any increased profit for the plaintiff. If the other contract was for a fixed sum it is not demonstrated that any additional labour or plant would result in an increase in profit. All that seemingly would be achieved would be to reduce the time it would take the plaintiff to perform the work. Alternatively if the work to be charged for under another contract was by way of a daily rate, similarly any additional labour and plant would only have the effect of reducing the number of days it would take to complete the work under the contract with any increase in profit associated with charging for more labour and plant being offset by the reduced days for which labour and plant could be charged.
In my view the plaintiff is entitled to recover the actual costs of remediating the work but not profit on those actual costs because to allow the plaintiff those profits will put the plaintiff in a better position than the plaintiff would have been had the contract been performed by the defendant as agreed. The plaintiff will be in a better position in that it will have recovered not only profit on its contract with the Housing Authority but also profits it would not otherwise have achieved by redoing the defective work.
I now turn to deal with the plaintiff's case for the recovery of its losses caused by the default of the defendant adopting the classification structure used by Patrick Bennison.[9]
Fuel and Bitumen
[9] Affidavit of Patrick Bennison sworn to 22 December 2020, par 39.
I allow this part of the claim in the claimed amount of $4,365.[10]
Webbcrete and Kimberley Kerbs
[10] Affidavit of Patrick Bennison sworn 2 November 2020, Attachment PB-8, page 2.
The invoices rendered by these entities are produced and I allow this part of the claim in the claimed amount of $26,542.[11]
Kimberley Soil Lab
[11] Affidavit of Patrick Bennison sworn to 22 December 2020, par 39, Attachment PB-18.
The invoices rendered by Kimberly Soil Lab are produced and I allow this part of the claim in the claimed amount of $6,390.[12]
Accommodation
[12] Affidavit of Patrick Bennison sworn to 22 December 2020, par 39, Attachment PB-18.
The invoices for Fitzroy Lodge are produced and evidence the cost of accommodation and dinner of 8 employees for the period 12 June 2019 to 14 June 2019. I allow the amounts claimed by these persons in full.
A further invoice is produced for Mr M Lang who appears to be a director of the plaintiff company for one night's accommodation on 13 June 2019. I accept that it would be necessary for a senior person within the ranks of the plaintiff to attend the site of the works to check on the adequate progress of the works, particularly in light of the problems that had created the need for this work. However, the invoice reveals the amount of $169.90 charged for alcohol and the sum of $94 charged for a meal in circumstances in which the most charged for a meal on the other accounts was $40.
Accordingly I would deduct $169.90 for the alcohol and $54 for the meal on the basis they are not amounts that the defendant should be required to pay, and allow this part of the claim in the amount of $5,578.72.
Labour costs
The plaintiff claims a sum of $25,425 for labour involved in the remediation works. Those labour costs appear to be broken down in an Excel spreadsheet prepared by Patrick Bennison and found in Attachment PB-8 to his affidavit sworn 2 November 2020. This includes $3,000 for the operations manager.
Amongst those costs is also a claimed cost of a director for the 13 June 2019, 14 June 2019 15 June 2019 and 10 September 2019 at the rate of $150 per hour and in the total sum of $5,550, together with the cost of a 'Prado' at what appears to be a daily rate of $300 for 3 days, totalling $900.
There is no evidence before me that the director is an employee of the plaintiff and no evidence that the plaintiff has paid the director anything over and above what it would have paid the director, either by wages salary or directors fees, in any event.
Accordingly I am not persuaded the amount claimed represents a loss to the plaintiff and I disallow the sum of $5,550 claimed.
With regard to the Prado, this vehicle does not appear as a vehicle described in the document headed 'Day Standby Rates'[13] that the plaintiff would provide and no explanation is provided as to why and how the vehicle, if in fact it be the plaintiff's vehicle, costs the plaintiff $300 per day. I am not persuaded the plaintiff has incurred this loss and I would disallow the claimed amount of $900.
[13] Affidavit of Patrick Bennison sworn 2 November 2020, Attachment PB-9; Affidavit of Patrick Bennison sworn 2 November 2020, Attachment PB-16; Affidavit of Michael Lang sworn 8 March 2021, Attachment Ml-4.
I now turn to labour costs constituted by a supervisor and two operators referred to by the plaintiff in Attachment PB-8 labour rates adopted by the plaintiff in its calculations.
In respect of the supervisor, although the amount claimed is $120 per hour, I would adopt the labour rate of $105 per hour having regard to the evidence provided by Patrick Bennison in his affidavit of 22 December 2020 at Attachment 16.1. I am prepared to adopt the hourly rate of $75 for the operators. However, as I have indicated above, I am satisfied that embedded into these hourly rates is a profit margin. In the absence of any better evidence I propose to deduct the sum of 15% from those rates for profit.
Accordingly I assess the damages in this category using the following methodology:
1
The plaintiff claims total labour costs in its spreadsheet at 'PB-8' page 2
$22,425.00
2
I deduct the claim for the Director of
$5,550.00
3
I deduct $15 per hour for the supervisor for his 63 hours, in the total amount of
$945.00
4
Sub total
$15,930.00
5
I deduct 15% for profit embedded in the hourly rates
$2,389.50
6
Total
$13,540.50
Plant and Equipment
The plaintiff claims the sum of $50,280 for plant and equipment as per the spreadsheet found at Attachment PB-17 to the affidavit of Patrick Bennison sworn 22 December 2020. I conclude that this equipment was not hired by the plaintiff from third parties in view of the absence of invoices from third parties and the fact the plaintiff describes it as part of its 'internal costs'.
Once again I have difficulties with the fact that the figures used by the plaintiff appear to represent the rate at which it would charge out the use of its equipment. Again, I take the view that there is embedded profit on these charge out rates which is not identified.
Further, even if there was no embedded profit, I am not persuaded that the figures claimed in the schedule represent the actual costs of the equipment. I have no evidence as to the rate of depreciation, the purchase price or leasing costs of the equipment as the case may be or the extent to which the operating costs of the equipment may exceed the cost of having the equipment lay idle, as it would if not being used in this remedial work or other work.
As I have observed, I am not persuaded there was other work to which this equipment could have been utilised at the time it was being used on this job. Again, mindful that the purpose of awarding damages to the plaintiff is to restore it to the position it would have been had there been no breach of contract, on the evidence as presented it is difficult to determine the actual cost to the plaintiff in providing this equipment over the five days in June 2019.
I am satisfied there was some cost to the plaintiff if only by way of wear and tear and maintenance costs or bringing forward of maintenance costs that otherwise would have been deferred to sometime in the future. I note an amount for fuel has been claimed as a separate amount. I am also satisfied that the costs of providing the machinery would involve some clerical and administrative support of an unknown amount. In the circumstances I would allow the sum of $10,000.
Accordingly I assess damages in the total amount of $66,416.22.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
NF
Registrars Associate
15 APRIL 2021
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