Roberts v Parletta Constructions Pty Ltd - [2010] SASC 248

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
ROBERTS v PARLETTA CONSTRUCTIONS PTY LTD
[2010] SASC 248
Judgment of The Honourable Justice Anderson
16 August 2010
MAGISTRATES - APPEALS AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - PERFORMANCE OF WORK - REMEDIES FOR BREACH OF CONTRACT - DAMAGES
Appellant seeks damages for breach of contract suffered as a result of the contruction of a patio on her property - appellant not initial owner of property - water leakage through patio floor and carport roof - whether leakage a result of latent defect - whether damage actually suffered - no building inspection conducted before appellant purchased the property.
Held: There was never any contract in existence between the builder and the appellant.

TORTS - NEGLIGENCE - ESSENTIALS OF ACTION FOR NEGLIGENCE - DUTY OF CARE - SPECIAL RELATIONSHIPS AND DUTIES
Whether any duty of care owed by builder to initial owner and to subsequent purchaser.
Held: No breach of builder's duty of care to initial owner and therefore no breach of duty to subsequent purchaser.
Appeal dismissed.
Bryan v Maloney (1995) 182 CLR 609, distinguished.
Woolcock Street Investments Pty Ltd v VDI Pty Ltd & Anor (2003) 216 CLR 515, considered.

ROBERTS v PARLETTA CONSTRUCTIONS PTY LTD
[2010] SASC 248
Magistrates Appeal: Civil
ANDERSON J.
Introduction

This is an appeal from the decision of a magistrate who dismissed a claim by the appellant (Ms Roberts). She had sued the respondent Parletta Constructions Pty Ltd (the builder) for $27,154.17 damages for breach of an agreement and/or for breach of duty of care.
In 1999 the builder constructed ten units on land which had been subdivided for that purpose. The land is on the corner of Sydenham Road and Stephen Terrace, Norwood.
The unit in question in this dispute is unit 2. It is a two-storey unit. The first purchaser of the unit was a Mr Marotti. He took a transfer of the unit in April 2000. He then sold the unit to a group of purchasers who in turn sold the unit to Ms Roberts in February 2006.
Background
Ms Roberts’ claim is for damages for the costs of repairing the framework of her patio deck on the first floor. The patio deck was also the roof of the carport. Ms Roberts noticed water leaking through from the patio deck to the carport during the winter of 2006. She collected the water by placing a bowl on the top of her motor vehicle which was parked in the carport.
She alleges that in 2007 the volume of water increased and she, together with the occupier of unit 4, arranged for inspection by an expert engineer, Mr Liney.
Mr Liney inspected both units. The decking of the patio was constructed with compressed fibre cement sheets supported by untreated timber laminated joists. Underneath the compressed sheets and between the roof of the carport, which was galvanised iron, there was a damp-proof membrane.
The builder had erected the units at the request of the original developer, Winter Mornings Pty Ltd (Winter Mornings). It was alleged that there was a contractual duty owed by the builder to Winter Mornings and also to the plaintiff as a subsequent purchaser to perform the building work in a proper and workmanlike manner. The breach alleged was the method of damp proofing utilised by the builder. In broad terms, the treatment was alleged to be incomplete and unsatisfactory. Likewise it was alleged that there was a duty of care owed by the builder both to Winter Mornings and to the plaintiff.
After noticing the leak and as a result of the advice of the expert Mr Liney, Ms Roberts obtained quotes in relation to the repairs necessary. It was Mr Liney’s view that the decking had to be totally replaced.
The trial
The magistrate heard evidence in the plaintiff’s case from Ms Roberts and Mr Liney. The only evidence for the builder was given by Mr Dean Frank Parletta, a director of the defendant building company. The magistrate in his reasons dealt with the construction of the deck in some detail. Mr Parletta said in his evidence that he constructed the patio decking on the basis of instructions given to him by Mr Marotti but the magistrate rejected that evidence. The magistrate found that the deck was originally sealed in some way to prevent water getting through from the external surface. It was not possible to determine how and to what extent it was originally sealed.
Ms Roberts in her evidence was not asked anything in her evidence in chief about any inspection which she made prior to purchasing the property. Such evidence may have assisted in determining the state of the waterproofing at the time of purchase. In her evidence she was taken by counsel to the contract for purchase and was then asked about the leak. She then gave evidence that after the inspection by Mr Liney the deck was repaired by a builder, Mr Black. Ms Roberts gave evidence as to what repair work was actually done. Quotes for the work were tendered. Mr Black was not called to give evidence. The magistrate had doubts about what work was actually performed, but Ms Roberts said Mr Black reconstructed the whole thing. When cross-examined she agreed that there was no building inspection prior to purchase. She also agreed that she did not seek any advice.
In Mr Liney’s inspection he took photographs which, as it turned out, were not all of unit 2 but showed damage to unit 4 in which the galvanised iron had been removed so that the timber bearers of the carport roof could be observed. The owner of that other unit engaged Mr Liney jointly with Ms Roberts.
The reasons for decision
The magistrate found that there was no evidence that the carport of unit 2 leaked to any degree prior to 2006 and that even in 2006 the amount of leaking was slight. He found it unlikely that significant damage was done to the structure by August 2007 and that in those circumstances it was unlikely that the whole structure needed to be replaced, as alleged by Ms Roberts. Mr Liney said it did need replacing.
As I have said, the magistrate clearly had considerable doubts about whether, and if so in what circumstances, how much of the work was done by Mr Black. This was because of what he perceived to be discrepancies in relation to the invoicing and Ms Roberts’ claim that she had to draw down on a loan to pay for the remedial work. The drawing down was suggested as being related to payment for the work done. It may be that the magistrate was a little harsh in his criticisms of this evidence. There was evidence as to her borrowing but how the payments were made, and in respect of what actual repair work, was a matter of some conjecture.
It is not necessary to attempt to resolve those discrepancies, in my view, for the outcome of this appeal. It is sufficient to note that the magistrate did not accept that all of the documents produced by Mr Black were genuine invoices related to work actually performed. Moreover he was not satisfied that Ms Roberts spent the amount that she claimed to have spent in relation to repairs. He therefore made a broad axe assessment, with no indication as to how he made it, in the sum of $6,500 in the event that he was wrong in his assessment of liability.
In the view I take, because I agree with the magistrate in relation to liability, it is not necessary to discuss the aspect of quantum any further. So even if the magistrate has erred on the facts, and I am not sure that he has, it does not affect the magistrate’s reasons based on the application of the law.
The legal issues
The magistrate in his reasons concentrated on the alleged tortious liability. That is understandable. The claim in contract could never be made out. There simply was never any contractual relationship between the builder and the appellant.
The claim by Ms Roberts in tort is for economic loss. She alleged that she obtained a loan of $15,000 and committed to payments including costs and interest on the loan amounting to a further $9,398.17.
Ms Roberts relied on the decision of the High Court in Bryan v Maloney (1995) 182 CLR 609. In that case the High Court held that in the circumstances of that matter a builder, who had constructed a house, could be liable in damages for pure economic loss to a subsequent owner of the house. It was after a subsequent purchaser discovered cracks in the walls that it was determined that the builder had constructed the house using inadequate footings. Essential to the reasoning was the establishment by the plaintiff that the builder owed a duty of care to the owner at the time of construction and that the means of construction breached that duty. It was an important part of the reasoning that the defect which caused the loss was latent until the damage was discovered, not by the original but by a subsequent purchaser.
As indicated earlier, the magistrate rejected Mr Parletta’s claim that the patio was designed by Mr Marotti. He found specifically that the builder was responsible for the design. He referred to the evidence of Mr Liney. He summarised his evidence, which did not show that the patio, when first constructed, was not waterproof. The magistrate found that in the absence of frequent maintenance, because of its design, the waterproofing of the patio was likely to deteriorate with time, and therefore had to be renewed.
The magistrate, after discussing the decision in Bryan and the later decision by the High Court in Woolcock Street Investments Pty Ltd v CDI Pty Ltd & Anor (2003) 216 CLR 515, found that there were cost saving measures which had been adopted in relation to the construction. The magistrate then said at [31]:
[31]One consequence of the operation of the abovementioned policy considerations is that a builder will not be liable for pure economic loss to an original or subsequent owner of a house he constructs only by reason of the fact that he employs cost saving methods of construction at least where such methods do not compromise a building’s structural integrity and are apparent upon reasonable inspection. A home owner, unprepared to pay the initial cost of a more durable patio finish but willing to undertake a higher level of ongoing maintenance might opt for the type of construction employed by the defendant. Further, a developer with an eye towards maximising his own profit might, subject to his contractual obligations, legitimately employ such methods of construction.
The magistrate held, after considering Bryan, that in this matter there was no latent defect, as in Bryan, in relation to the original construction of the decking. The magistrate found that it was cheaply constructed but nevertheless structurally sound and waterproof when constructed. He went on to say that it would have remained waterproofed had it been adequately maintained. He gave an analogy and said at [32]:
[32]… A house painted with cheap paint does not suffer from a latent defect because it will necessarily require painting more often than a structure which is protected with paint of higher quality.
It seems to me that that is perfectly sound reasoning. In the end result, the magistrate found that Ms Roberts failed to prove that there was any breach of the builder’s duty of care to the initial owner. At that point, therefore, Ms Roberts could not succeed. I agree with his analysis.
The magistrate, however, went on to consider the question of the plaintiff’s vulnerability and said at [35]:
[35]Even if the foregoing analysis of the matter is misconceived, there is a further, but related legal issue which would prevent recovery by the defendant. The plaintiff appears to have largely ignored the slight leaking in 2006. I think it more likely than not that a competent building inspection at the time of the plaintiff’s purchase would have revealed the need for maintenance to the patio deck. If there had been substantial damage to the patio structure, then I am satisfied that a careful inspection of the deck by a qualified person would have revealed that damage or at least the need to carefully consider the integrity of its structure. Such an inspection took place in 2007 and formed the basis for Mr Liney’s 2009 report. I am satisfied on balance that Mr Liney would have provided a similar report had he looked at the deck in early 2006.
After discussing Woolcock Street Investments the magistrate said at [38]:
[38]Because I am satisfied the cheap construction of the deck would have been apparent upon proper inspection at the time of purchase, it follows that the plaintiff, in purchasing the unit, was not vulnerable in the relevant sense, to the type of damage she claims to have sustained. The facts in the present case are to be distinguished from the fact situation in Bryan v Maloney where the footings were incapable of any inspection which would have revealed the latent defect, the cause of the cracking. For this further reason, the plaintiff’s claim must fail.
The magistrate then concluded that Ms Roberts had failed to establish negligence against the builder. As I have said, he found that the construction of the patio was of an inferior quality and that its integrity could only have been maintained by a regular waterproofing treatment. As I have said, the magistrate held that the structure and condition of the patio deck would have been apparent upon any proper inspection at the time of purchase. There was no evidence given of any inspection by Ms Roberts. One assumes that she must have made some general inspection before purchasing. The magistrate, not surprisingly, held in those circumstances that Ms Roberts was not vulnerable to the type of loss she sustained, and he dismissed her claim.
The arguments by the appellant
Mr Strawbridge who appeared for Ms Roberts on the appeal concentrated mainly on the magistrate’s analysis of various factual issues. I have dealt with some of those matters earlier in these reasons. I put to him during his argument that even if I accepted that the magistrate had made errors in some of his assessment of the facts, how was it that Ms Roberts could bring herself within the principles in Bryan to substantiate her legal claim.
Whilst some of the criticisms made relating to the findings of fact by the magistrate are probably justified, none is of such significance to interfere with those findings. Even if those findings were rejected, the result in law would be the same. Most of the criticisms related to the way in which the magistrate dealt with the items of damage and loss.
Mr Strawbridge was not, in my view, able to illustrate how this case could be treated as being on all fours with Bryan. This was not a case of a latent defect. As the magistrate said, the type of construction and the way in which the patio was waterproofed must have been obvious on an inspection and yet no evidence was given by Ms Roberts as to what she saw or did not see when she looked at the property for the first time prior to purchasing it. If the waterproofing had deteriorated since the time of construction it would have been apparent on inspection, according to the magistrate’s reasoning. I can see nothing wrong with this reasoning.
The question of damage and loss aside, the magistrate had a factual basis for reasoning in the way he did regarding the gradual deterioration in the waterproofing over several years.
Conclusion
In my view, this case is clearly distinguishable from Bryan on its facts. I agree with the magistrate that Ms Roberts has not got to first base in that she has not shown that the construction of the patio was in breach of the builder’s duty of care to the initial owner.
I also agree with the magistrate that there is nothing in the evidence to show that Ms Roberts was vulnerable in the sense explained by the High Court in Woolcock Street Investments.
I agree with the magistrate’s conclusions and I therefore dismiss the appeal.