Roman Catholic Trusts Corporation v Van Driel Ltd

SUPREME COURT OF VICTORIA

COMMERCIAL & EQUITY DIVISION

BUILDING CASES LIST

No. 4404 of 1997

ROMAN CATHOLIC TRUSTS CORPORATION	Plaintiff
v
VAN DRIEL LTD & ORS	Defendants

---

JUDGE:	Hansen J
WHERE HELD:	Melbourne
DATE OF HEARING:	1–2, 4, 7–11, 14–18, 21–25, 28–30 August, 4–6 September 2000
DATE OF JUDGMENT:	28 August 2001
CASE MAY BE CITED AS:	Roman Catholic Trusts Corporation v Van Driel Ltd
MEDIUM NEUTRAL CITATION:	[2001] VSC 310

---

Contract – Building contract – Multi-purpose hall and bus turnaround area for Catholic regional college – Alleged defects to roof and floor of hall and bus turnaround area – Whether installation of roof defective - Whether installation of skylights defective - Whether installation of north and south wall flashings defective - Whether moisture in concrete slab residual moisture – Whether further moisture entered slab from below – Whether construction of pavement above interceptor pit defective.

Tort – Engineer engaged by architect - Multi-purpose hall and bus turnaround area for Catholic regional college – Alleged defects to roof and floor of hall and bus turnaround area – Whether design of pavement in bus turnaround area adequate in respect of interceptor pit and generally.

Contract – Architect's design contract – Multi-purpose hall and bus turnaround area for Catholic regional college – Alleged defects to roof and floor of hall and bus turnaround area – Whether design of roof defective - Whether design of skylights defective - Whether design of north and south wall flashings defective – Whether architect responsible for drainage in bus turnaround area.

Parol evidence rule – Exceptions to parol evidence rule – Surrounding circumstances – Identity of a party – "Emmaus College" inserted as Proprietor in building contract – "Emmaus College" not a legal entity – Roman Catholic Trusts Corporation owns land on which works conducted – Whether party to contract is Corporation, College board or executive, or Association of Canonical Administrators – Whether Corporation is proper plaintiff – Roman Catholic Trusts Act 1907 – Bradley Egg Farm Ltd v Clifford [1943] 2 All ER 378 – Carlton Cricket & Football Social Club v Joseph [1970] VR 487 – RSC Chapter I Order 35 (Admissions).

Loss and damage – Where rectification works completed and paid for by "Emmaus College" – Whether plaintiff suffered loss and damage – St Martins Property Corporation Ltd v Sir Robert McAlpine Ltd [1994] 1 AC 85 – Alfred McAlpine Construction Ltd v Panatown Ltd [2000] 3 WLR 946.

Contribution between defendants – Wrongs Act 1958.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J R Dixon	Phillips Fox
For the 1^st Defendant	Mr M J Stirling	Deacons
For the 2^nd Defendant	Mr P J Cosgrave	Connery & Partners
For the 3^rd Defendant	Mr M T Settle	Solomon & Associates

---

CONTENTS page para

1. Introduction................................................................................................................ 1......... [1]

2. The Pleadings.............................................................................................................. 5....... [13]

Against the builder............................................................................................... 5....... [14]
Against the engineer............................................................................................. 8....... [28]
Against the architect........................................................................................... 10....... [33]

3. Witnesses................................................................................................................... 12....... [41]

The plaintiff......................................................................................................... 12....... [42]
         The builder........................................................................................................... 15....... [51]
         The engineer........................................................................................................ 17....... [61]
         The architect......................................................................................................... 18....... [65]
         Some observations concerning the expert evidence...................................... 19....... [68]

4. The Proper Plaintiff.................................................................................................. 19....... [71]

Further facts......................................................................................................... 20....... [73]
The submissions.................................................................................................. 30....... [91]
Loss and damage suffered................................................................................. 37..... [105]

5. The Roof..................................................................................................................... 40..... [110]

Leakage and rectification................................................................................... 44..... [121]
         Roof design and installation.............................................................................. 49..... [134]
         Soaker design and installation.......................................................................... 51..... [140]
         The south and north walls................................................................................. 55..... [153]
         Gap above the ventilator.................................................................................... 57..... [158]
         Practical completion and the builder's defences .......................................... 58..... [160]
         Conclusion........................................................................................................... 64..... [177]

6. The Floor.................................................................................................................... 65..... [179]

The site.................................................................................................................. 66..... [181]
         Construction of the slab..................................................................................... 67..... [185]
         Installation of the floor....................................................................................... 72..... [193]
         Alleged maintenance problems and emergence of defects.......................... 75..... [200]
         Investigation and reports................................................................................... 78..... [211]
         Experts' reports................................................................................................... 83..... [221]
         Residual water: The "rule of thumb"................................................................ 86..... [230]
         Residual water: The testing method................................................................ 91..... [239]
         Residual water: The test results........................................................................ 93..... [243]
         Residual water: Conclusion............................................................................... 96..... [250]
         External water..................................................................................................... 96..... [252]
         Conclusion........................................................................................................... 98..... [256]

7. The Bus Turnaround Area.................................................................................... 104..... [273]

Engagement of consultants for the bus turnaround area........................... 108..... [283]
         The initial design work.................................................................................... 110..... [288]
         Discovery of the interceptor pit and laying of asphalt................................ 115..... [302]
         Failure and rectification................................................................................... 123..... [323]
         The Golder report and resulting works......................................................... 126..... [332]
         Consequences of failures................................................................................. 133..... [351]
         Builder's defences............................................................................................. 136..... [362]
         Conclusion......................................................................................................... 137..... [368]

8. Legal costs............................................................................................................... 140..... [378]

9. Goods and services tax.......................................................................................... 141..... [379]

10. Miscellaneous claims of the builder.................................................................. 141..... [380]

11. Architect's counterclaim...................................................................................... 146..... [396]

12. Conclusion............................................................................................................. 148..... [402]

---

HIS HONOUR:

1. Introduction

The Roman Catholic Trusts Corporation ("the Corporation") owns an area of land at 503 Springvale Road, Forest Hill at which is conducted a Catholic secondary school called Emmaus College. The Corporation is incorporated, and holds the land on trust for the benefit of the Roman Catholic Church, pursuant to the Roman Catholic Trusts Act 1907. Emmaus College is not a corporate body or an unincorporated association and it is not a registered business name; it is merely the name of the school conducted at the site.

The College determined that it required a hall for various school activities and an improved facility within the school grounds for the movement and parking of buses and cars. In January 1990 the College engaged an architect, Paul Anthony Hede, to provide architectural services for the proposed works. Hede engaged consulting engineers Perrett Simpson Pty Ltd ("Perrett Simpson"). Following the preparation of documentation the job went to tender. On 17 August 1990 a contract was let to a builder, Van Driel Ltd ("Van Driel"). Work commenced on site in early September 1990 and was seemingly completed in about mid-1991. On 21 July 1991 the project works were officially opened. The school took occupation on 23 July 1991, on which day the builder claims that the works reached practical completion.

By September 1991 there was evident failure in the road pavement in the bus turnaround area and the roof of the hall was not watertight. Then, in May 1992, defects became apparent in the floor of the hall. Investigations were carried out in the three areas. The roof and the driveway were rectified. The floor was a more difficult problem. It has not been rectified.

On 14 February 1997 the Corporation filed a writ against Van Driel and Perrett Simpson as defendants. On 19 September 1997 Perrett Simpson joined Hede as a third party. Not long after Hede was added as the third defendant to the proceeding.

Each defendant has claimed contribution or indemnity from the other under Part IV of the Wrongs Act 1958. Perrett Simpson's claim against Hede is made by its third party notice. The other claims are made by the short form of notice applicable between existing parties to a proceeding.

The Corporation's claim against each defendant is for the loss and damage allegedly suffered as a result of defects for which the defendant was liable. The claims against the builder and the architect are based in contract and a duty of care in tort while the claim against the engineer is based only on a duty of care in tort. The first and third defendants raise a counterclaim.

The Corporation filed up to date particulars of its loss and damage during the trial. The amounts claimed are:

(a)

Bus turnaround area:

□         investigation and report $3,900.00

□         administration of tender process 560.00

□         rectification works 63,115.00

□         supervision costs

6,325.00

$73,900.00

Plus interest from payment to 1 August 2000, and continuing

$52,017.80

(b)

Roof:

□         cost of repairs $15,546.57

□         investigation and report

13,070.00

$28,616.57

Plus interest from payment to 1 August 2000, and continuing

$21,416.11

(c)

Floor:

□         investigation, monitoring and report $17,040.60

□         current replacement costs

164,648.00

$181,688.60

Plus interest calculated on investigation cost from payment to 1 August 2000, and continuing, say

$12,500.00

(d)

Legal costs incurred pre-writ associated with above:

$16,856.11

Plus interest from payment to 1 August 2000, and continuing, say

$12,000.00

(e)

10% GST or an indemnity in respect thereof

(f)

Damages or an indemnity in respect of third defendant's counterclaim:

$15,850.00

Excluding (e) and (f) the claim totals $398,995.19, subject to interest being revised to the date of judgment.

The Corporation claims each item of loss and damage from the builder. The claim against the engineer is limited to (a), (d), (e) and (f) which in dollar terms, and excluding (e) and (f), is $125,917.80 subject to interest being brought up to date. The architect is sued for (a), (b), (d) and (e), which in dollar terms, and excluding (e), is $175,950.48 subject to interest being brought up to date.

Amounts of this magnitude are not such that without more, such as the determination of an important matter of principle, would warrant litigation being conducted in this Court with the intensity and cost that has obtained in this case. The defects in the bus turnaround area and the roof had been investigated and rectified prior to the writ being filed. The floor had been investigated but rectification works had not been carried out due to the complexity of the issue and the cost of rectification. Thus had the situation ground to the point it was at when the writ was filed on 14 February 1997. There had been an alleged practical completion, followed quickly by the manifestation of defects, the more readily rectifiable of which had been attended to. Eventually the writ was filed, an event which could hardly have been surprising but which resulted in a level and extent of legal activity out of proportion to the size of the claim and the issues involved.

When the writ was filed it carried a statement of claim which particularised the defects and the amounts claimed. The areas of claim were those mentioned above, namely, the roof, bus turnaround area, the floor and legal costs. It is worth looking back and noting the amounts then claimed. The total amounts claimed were: against the builder $271,275.28, against the engineer $73,340.00, and against the architect $118,812,68. The Corporation also claimed interest. It seems staggering that claims of such relatively modest amount and which raised no particular point of principle were considered, let alone permitted, by the legal practitioners involved and those for whom they acted to be an appropriate occasion for the vexatious and tendentious way in which the litigation was conducted following the filing of the writ. One can only wonder at the relative enormity of the costs that have been incurred. Experienced people with reasonable minds, allowing for differences of opinion, and having regard to the realities of litigation and the high costs involved, ordinarily would seek to avoid, and would have avoided, such litigation.

A perusal of the file reveals that prior to the trial commencing on 1 August 2000 the case was before a Judge or a Master in the order of 30 times. In my view that number of occasions was intolerable. It is not a sufficient answer for a legal practitioner or a client to say that at one time and then at another they thought of this or that point to agitate. Legal practitioners should conduct cases in the courts with a concentration on substance, expedition and a minimum of cost. It is difficult to see how that central proposition, and the attendant public and private interest, was observed in this case. In the course of the pre-trial jousts, the proceeding was fixed for trial on 16 August 1999 on an estimate of duration of 30 days. That fixture was put off and the trial was refixed for hearing on 1 August 2000 when it came on before me, following further pre-trial jousts, on an estimate of duration of 20 days. It ran for 24 days. There were issues of fact and law but no issue of principle was raised for determination.

Many witnesses were called. The plaintiff called 14 witnesses and tendered one short witness statement by consent. The builder called 13 witnesses, the engineer three and the architect two. A number of the witnesses were called to give opinion evidence based on their expertise in a particular area. I refer more particularly to the matter of witnesses below.

2. The Pleadings

In this section I am concerned to identify the issues as defined by the pleadings. I do not overlook the several points made by counsel in final address.

Against the builder

The building contract was in writing dated 17 August 1990. It was the JCC B 1985 Without Quantities Building Works Contract and incorporated plans and specifications and certain other documents. The contract provides that the site be made available to the builder on or before 23 August 1990 and that for the sum of $1,473,616 the works referred to in the contract be undertaken and brought to practical completion by 6 June 1991. The third defendant is stated to have been appointed as architect for the purposes of the contract. The parties to the contract are the Proprietor, which is named on the face page of the contract as Emmaus College, and the Builder, which is named as Van Driel Ltd. The word Proprietor is not defined in the contract. For the Proprietor the contract was executed by Luc Julianus Omer Matthys, then the parish priest of St Thomas the Apostle's Parish, Blackburn, and now Bishop of Armidale.

The Corporation is the only plaintiff and sues on the basis that it was the Proprietor under the contract and that as such it contracted with Van Driel. Van Driel denies that it contracted with the Corporation. Van Driel claims that it contracted with either the members of the board of Emmaus College and its executive or the members of the Association of Canonical Administrators of the College. The other defendants do not rely on this point. As Perrett Simpson was engaged by the architect it could not have been, and it was not, sued on a contract. Hence it never took a point that the Corporation was not a competent plaintiff against it. Initially, in its defence, the architect took the builder's point. It abandoned the point at an early stage of the trial.

It is common ground that the builder was required to carry out the works in accordance with the plans and specifications and other contract documents and in a proper and workmanlike manner. The builder is also sued in negligence, it being alleged that the circumstances which constitute a breach of the contract also constitute a breach of the duty to take reasonable care. The duty of care, but not a breach, was admitted at an early stage in the trial.

The third amended statement of claim (which I refer to as the statement of claim) alleges that the builder was in breach in the following respects:

(a)the multi-purpose hall was not watertight and water penetrated due to:
(i)inadequate and/or defective flashing to the south and north walls at curved roof areas and to the roof generally;

(ii)inadequacies with and defective installation of the sky lights to the roof;

(b)failure of the bitumen pavement at the bus turnaround area caused inter alia by a failure to construct in accordance with contractual requirements and to properly compact the sub-base and base course to the pavement;
(c)failure of the floor to the hall due, inter alia, to excess moisture in the concrete slab.

Much greater detail of the alleged defects was provided in particulars filed prior to the trial. Further particulars of (c) were provided during the trial.

In its fourth amended defence (which I refer to merely as the defence) the builder denies that it was in breach. The builder alleges further that, if it was in breach of the contract or a duty of care, any loss and damage suffered in consequence was suffered by Emmaus College and not by the Corporation. In particulars to this plea it was stated that the amounts referred to in the particulars of loss and damage were paid by Emmaus College and not the Corporation.

The Corporation's statement of claim concludes with an allegation against each defendant that the Corporation had been deprived of the use of the money comprising its loss and damage, and claimed damages for the loss of use of such monies in accordance with the principle in Hungerfords v Walker. Each defendant denied the allegation and opposed the claim. It is clear from the particulars of loss and damage and the plaintiff's submissions that this claim was abandoned.

Having responded to the statement of claim against it, the builder proceeds with some further pleas and concludes with a counterclaim. In paras. 11-15 it is alleged that the builder is not liable for the costs of any rectification work which may have been undertaken by others, because the proprietor failed to comply with cl. 5.06 of the contract which inter alia required the builder to have been in default of a notice from the architect requiring the builder to perform the works before others were engaged to perform them. Certain works to the roof, and the bus turnaround pavement and associated drainage, are referred to in particulars of this plea. The plaintiff denies this allegation.

Then the builder alleges (in para. 16) that if it was liable for the costs of any work undertaken by others which was not the subject of an instruction from the architect, any amount recoverable is limited to the amount by which that cost exceeds the amount which would have been payable to it if it had performed the work. This is based on the provisions of cl. 5.06. Again the plaintiff denies the allegation.

Then it is alleged by the builder that the works it performed were damaged by others prior and subsequent to practical completion on 22 July 1991. Of the five items of damage stated in the defence (para. 17), three were abandoned in the course of final addresses. The two remaining are: first, sewerage and storm water drains and rectification of drains including the main outfall drain; and, second, the failure of the College to maintain floor sealer to the floor of the hall in accordance with the manufacturer's recommendations. The plaintiff denies this claim.

Then it is alleged by the builder that, if it is liable in respect of the floor, the plaintiff has had the use and benefit of the floor and any damages should be reduced by the value of that use. The plaintiff denies the allegation.

Then the builder alleges that, if it was liable in respect of the bus turnaround area, the rectification works have resulted in a betterment to the plaintiff for which the builder is not liable. The work represented by the betterment is beyond the scope of the builder's work under the contract. The plaintiff denies this allegation.

Paragraphs 18-20 of the defence, alleging that the contract required that notice be given before litigation was commenced, were abandoned in the course of final addresses.

In para. 22 of its defence, the builder alleges that the plaintiff has failed to pay a variation of $2,816.35 for the supply and installation of cast iron drains in lieu of UPVC drains across the existing septic tank. In para. 23 it is alleged that the plaintiff has failed to release a bank guarantee in the sum of $36,840.40. The matter of a final certificate is then referred to in some further paragraphs as a basis for alleging the builder has suffered loss and damage. Then in paras. 24-26 the builder claims to be entitled to certain site and off-site administration costs: alternatively $22,800 (para. 24), or $47,600 (para 25), or continuing since 26 April 1991 (para. 26). The builder claims to be entitled to set off these amounts against any amount payable to the plaintiff. By a counterclaim the builder seeks an order that the plaintiff deliver up the guarantee.

In a defence to the counterclaim the plaintiff alleges that the builder's several claims of set off are barred by s. 5(1) of the Limitation of Actions Act 1958.

Against the engineer

The plaintiff alleges that the architect engaged the engineer to carry out the structural and civil design of the works, all necessary inspections thereof and to ensure that the works accorded with the design intent. By its defence the engineer denies this allegation. The fact is that the architect did engage the engineer. There was no issue that the engineer was engaged or, despite denials in the defence, that it was a term of the engagement that the engineer owed a duty to exercise reasonable care and skill in performing the requisite services or that it owed a duty of care in tort which extended to the plaintiff to exercise reasonable care and skill in performing the services.

In its defence the engineer alleges that:

(a)it was engaged to and did prepare structural computations and drawings and make periodic inspections of the building works during construction to observe accord with design intent;
(b)it was not engaged to perform full time supervision of the works;
(c)the builder was solely responsible for carrying out the building works in accordance with the contract drawings, specification and directions given inter alia by the architect.

The plaintiff alleges that in breach of its duty of care the engineer was negligent in producing an inadequate design of the bitumen pavement for the bus turnaround area having regard to the soil conditions, in not obtaining or giving proper advice as to investigating and testing the soil in the area, and inadequately designing the level of compaction works and/or checking that those works were properly carried out by the builder. The engineer denies these allegations and alleges that it was not obliged to ensure that the compaction works were properly carried out.

The defence then denied the claim of loss and damage. In the alternative it alleged that any loss or damage was caused by factors for which it was not responsible. Both in the defence and further particulars the engineer identified these as: a failure by the builder to properly carry out the works including compaction of the sub-base, laying the pavement to the specified thickness and attending to drainage problems identified by the engineer; the failure of the school to act in accordance with the engineer's recommendation as to removal of a disused septic system; and the failure to install suitable sub-surface drains.

By further pleas the engineer alleges that its design of the bitumen pavement was adequate, that it had obtained advice from a geotechnical engineer McGregor Soil and Research Engineering Pty Ltd ("McGregor") on the soil conditions in order to obtain appropriate recommendations on the foundations and design parameters for the extensions, that it used the advice in designing the works, and had communicated the advice to the builder and the architect.

Against the architect

The plaintiff alleges that by an agreement made in or about early 1990 the Proprietor by its agent James Christian Fabris, who is and was the Principal of the College, engaged the architect to undertake all structural and engineering services required for the proper carrying out of the works. Originally the architect's defence had taken the same point as the builder that it had not been engaged by the plaintiff. This was abandoned by counsel at an early stage of the trial and, consistently, in his closing address counsel stated that the architect did not rely on the defence that "he was engaged by anyone other than the plaintiff". To bring the defence into line with this concession, and other points of defence that had been abandoned, I gave the architect leave to file an amended defence and counterclaim very late in final addresses. By oversight, I think, the amended defence that was filed deleted the plea, and omitted to add a new plea in substitution, to the plaintiff's plea of the agreement. In the circumstances this does not matter as the architect's position is clear. Indeed in para. 23 of the architect's counterclaim it is alleged that in or about early 1990 the architect was engaged "by the plaintiff" to carry out architectural services and to engage other consultants as required including engineers on behalf of "the plaintiff" in respect of the works.

The defence denies the usual allegation that it was a term of the agreement that the architect act with the care and skill of a reasonably competent architect and that he was under a duty in tort to act with reasonable care. These propositions were not however disputed at the trial. The defence also denies an allegation that the architect be paid 12% of the final building cost of the works. Nothing turns on this as the fact is that the architect was engaged on an agreed basis of remuneration. Also denied is the plaintiff's allegation that the architect's fee was inclusive of all consulting services necessary for the works. The allegation was simply too wide in the circumstances.

The plaintiff then alleges that in the following areas the architect failed to properly carry out his services:

(a)the design of the roof was defective concerning the flashing to the north and south walls and generally, and to the skylights, and he failed to ensure the placement of proper flashing and installation of the skylights;
(b)the design of the bitumen pavement at the bus turnaround area was defective having regard to the soil conditions, he did not obtain proper advice or advise as to the need for such advice concerning the soil conditions, the design regarding the compaction works was inadequate and he did not ensure those works were properly carried out, and did not ensure the builder properly carried out the works.

In his defence the architect denies these allegations and alleges, in summary, that: he properly performed his services as architect; he was not engaged to supervise the works as distinct from a periodic inspection; he was not an engineer; the second defendant was engaged to design and supervise the construction of the bus turnaround area and carry out and advise as to carrying out all testing and investigations in relation to it; the second defendant engaged McGregor; the services of an hydraulics engineer were utilised when required; the builder was engaged to carry out the works in accordance with the contract and design intent. The architect was entitled to rely on the consultants as being reasonably competent to perform the tasks they undertook. In all the circumstances the architect had not been negligent.

The defence then denies the claim of loss and damage. It further alleges that any such loss and damage has been suffered by Emmaus College and not the plaintiff; counsel for the architect ignored this contention in final address and I take it to have been abandoned.

The defence then alleges that the plaintiff did not rely on advice of the architect. Rather, the plaintiff relied, in respect of matters that were not architectural, on the particular consultant engaged by the architect on the plaintiff's behalf, and on the Diocesan Building Advisory Service.

It is then alleged, on the hypothesis that the architect was in breach in relation to the hall and that the plaintiff had suffered loss and damage as a result, that the plaintiff had the continued use and benefit of the hall since construction and that any damages should be reduced by the value of that benefit. Then, in relation to the bus turnaround area, it is alleged that the method of rectification had resulted in a betterment to the plaintiff. These matters were relied upon by way of a set off.

The defence concludes with a counterclaim for $15,850 for services provided in connection with rectification works and which services are alleged to have been outside the scope of the initial agreement. The amount is claimed as a variation to the initial agreement or on a quantum merit. In addition the architect claims the amount of any income tax payable on the amount or an indemnity in respect thereof. The plaintiff denies this claim on the basis that all of the services were provided under the architect's engagement for the project.

3. Witnesses

I referred earlier to the total number of witnesses. In this section I identify the witnesses as they were called by the different parties and, in a general way only, the issue or issues with which their evidence was concerned.

The plaintiff

The first witnesses were Bishop Matthys and Sir Thomas Francis Little, Archbishop of the Roman Catholic Archdiocese of Melbourne during the relevant period and now Archbishop Emeritus. Their evidence was concerned with the issue whether the Corporation was the proper plaintiff.

The next two witnesses were Douglas William Burton, the Property Officer of the plaintiff, whose evidence concerned the Corporation's ownership of the College land and buildings; and Diego Vilchez, an employee of the Catholic Archdiocese of Melbourne, who was engaged as a building adviser with the Diocesan Building Advisory Service ("the DBAS"). The DBAS is a service established as part of the Diocesan Building Committee ("the DBC"). The DBC was established by the Archbishop of Melbourne to provide advice and recommendations to the Corporation in relation to capital works over $15,000 proposed to be undertaken at parishes and schools owned by the Corporation. Vilchez interviewed the tenderers for the Emmaus College project.

The next witness was Fabris, the Principal of the College. He was the person who gave evidence for the client of background matters leading to the award of the contract, events during the course of the works, discovery of defects and their investigation, rectification works and the present situation. He was examined over a period of somewhat more than two days.

Next to give evidence was John Robert Browning, a building consultant. The College engaged him in June 1993 to investigate the leaking of water into the hall. He gave evidence of investigations into that problem and of the remedial works undertaken. He also gave evidence of the problem concerning the floor and of investigations in an attempt to identify the cause of the problem. His evidence occupied a little under two days.

The following four witnesses gave evidence of tasks they performed as part of the investigative work undertaken by Browning.

(a)Ian Hamilton Mudge, a concrete consultant, conducted moisture tests of the concrete slab to the hall to ascertain the relative humidity of the slab and hence the level of moisture in it.
(b)John Bland Hay, a specialist in the performance of timber and timber products, conducted moisture tests of the plywood sheets in the Gransprung floor that had been laid on the slab. To understand this, it is useful now to describe the flooring system adopted. First is the concrete slab which covered the entire floor area of the hall. A 200 micron plastic sheet was laid on the slab. On top of this was laid the Gransprung floor. This type of floor is comprised of a sandwich of two layers of 12mm ply laid diagonally, the sheets being stapled and glued together using a water based adhesive. The sheets are laid on a matrix of 8 mm expanded rubber pads attached to the underside of the lower sheet of ply. They rest on the plastic sheet. They keep the ply off the slab and the plastic sheet and create a cushion effect for users of the floor. Granwood blocks are then glued to the surface of the upper ply. The blocks are a composition mix, not timber, and are 10 mm thick and rib-backed.
(c)Franklin Maxwell Campbell, who had long experience in the airconditioning ventilation industry, devised a system of introducing air, assisted by fans, to ventilate the underside of the lower plywood layer of the floor with the object of ascertaining by testing whether the moisture level in the flooring system could be reduced.
(d)Leopold Franz Cerny in December 1994 drilled 210 pairs of holes into the floor, the first into the top ply sheet and the second into the bottom sheet, for the purpose of testing moisture levels in the sheets. He also cut openings into the hall to allow fans to be installed as part of Campbell's scheme to ventilate the space below the ply.

The roof rectification work was dealt with by the contractor who performed the work, Robert Mather Rossiter, who at the time owned Garry Owen Roof and Building Services ("Garry Owen").

On the issue of the bus turnaround area, evidence was given by a geotechnical engineer Jack Ronald Morgan, a principal of Golder Associates Pty Ltd ("Golder"), who in early April 1992 were asked by the architect Hede to provide a geotechnical assessment of the failed pavement in the area. Golder submitted a proposal which was accepted by the College on 5 June 1992. Golder investigated and reported on the matter. In August 1993 the College asked Golder to prepare a specification for rectification works and this was provided in September. The works were carried out under Golder's supervision in January 1995. The contractor engaged for the works was Tasman Urban Developments, a division of Superdriveways Pty Ltd, a director of which, Charles Ernest Richardson, gave evidence at the trial.

The remaining witness called by the plaintiff was Matthew Andrew Buckle, a geotechnical engineer employed by Hardrock Geotechnical Pty Ltd, consulting engineers, who at the request of Browning attended at the site on 27 September 1999 to investigate and test soil obtained from four holes which had been cut through the slab of the hall floor on 7 September 1999. He was asked to conduct limited moisture tests on the filling and natural soil at the four locations to determine the soil moisture content, and to comment on the results. The soil was tested and he reported and advised on the results.

As mentioned earlier, the plaintiff tendered a witness statement by consent. It was by a solicitor to establish as fair and reasonable a large proportion of the legal costs claimed by the plaintiff.

The builder

Four of the witnesses called by the builder were its two joint managing directors, a director who was the project manager, and a former employee who was the site foreman for the works. The joint managing directors were Siegfried Stehle and Brian Thomas McKeogh. The project manager was Jeffrey John Edwards and the foreman was Robert John Kanngieser.

The division of functions between Stehle and McKeogh was that Stehle was responsible for seeking work and for the preparation and submission of tenders and negotiations leading to the signing of a contract, while McKeogh's main responsibility was in the carrying out of a project. Stehle gave evidence of the tender and of the steps leading to the award of the contract, on the issue whether the Proprietor under the contract was the Corporation, and on the time spent and costs recoverable by Van Driel since practical completion. He also identified a number of documents in the Court Book. McKeogh's involvement was attendance at a pre-tender interview, a number of visits to the site and a meeting and a letter after practical completion.

Edwards and Kanngieser gave evidence of matters that occurred on site concerning the areas relevant to the case.

Evidence was then given by the following sub-contractors to Van Driel:

(a)Terrence Edward Potten was the managing director of Terry Potten Flooring Pty Ltd ("Terry Potten Flooring") which installed the Gransprung floor in March/April 1991. He gave evidence of testing for moisture in the slab and, being of the view that it was appropriate to do so, of then laying the floor commencing with the plastic sheet. He gave evidence of subsequent observations of the floor and concerning its proper maintenance. Among other things, he said that in July 1992 he replaced some of the surface blocks in the floor. In the course of this work moisture was noticed under the Granwood block layer. The builder was informed and told that there was no point in carrying out further repairs to the floor until the cause of the moisture ingression was established.
(b)Frank Robert Dalsanto was the project supervisor for Ortech Industries Pty Ltd ("Ortech") which installed the roof on the hall. He gave evidence as to that and of subsequent returns to the site to check for leaks.
(c)Graeme Stanley Savage was an estimator and project manager for Ace Contractors and Staff Pty Ltd ("Ace") which carried out the earthworks for the project and constructed the bitumen pavement and associated works. These works included site preparation and proof rolling. He gave evidence as to the carrying out of the works and of relevant matters that occurred in the process.
(d)Ronald Gregory Cooper was the general manager of Ace. He too gave evidence of relevant events in the course of the works. As with Savage, his evidence was directed to the works in the bus turnaround area.

The remaining five witnesses were of the expert category. They were either engineers or architects and were called to give their opinion on one aspect or another of the case.

The first called was Ian Lachlan McKenzie. He is an environmental/geotechnical engineer and a director of Beveridge Williams & Co Pty Ltd ("Beveridge Williams"), Environmental Division. He gave evidence as to the natural movement of water on the school land and of the need for adequate subsoil drainage to the north and north-west of the hall to intercept the natural direction of the flow of ground water in a south-easterly direction (towards the bus turnaround area) and hence a continuing source of water to the underside of the hall slab.

The second expert called was Geoffrey Colin Nixon of GC Nixon and Associates Pty Ltd, consulting civil and structural engineers. Nixon inspected the site on 5 July 1999. While he made some comments concerning the roof, his evidence was directed to dealing with the claim against the builder on the bus turnaround area and the failure of the hall floor.

The third expert called was an architect, Leigh James Harding, who inspected the hall including the floor and the surrounds on 5 July 1999. His evidence was principally directed to the matters of moisture ingression in the floor including the source of that moisture, and leaks to the roof.

The fourth expert was Brendan Joseph Corcoran, a civil and structural engineer with The GHD Group. He has particular expertise in concrete. He inspected the site on 14 July 2000 upon being engaged on behalf of Van Driel. His evidence was concerned with the slab and a range of matters which he considered bore on or might explain the ingression of moisture into the slab and the floor.

The fifth expert was a civil and structural engineer David Beauchamp. Initially, at their request, he had provided two reports to the third defendant's solicitors in May 1998. The third defendant did not propose to call Beauchamp and the first defendant, having previously been provided with a copy of the reports, announced it would do so during the trial. His reports were tendered in the course of his evidence. He dealt with a series of issues concerning the design and building of the roof, the floor, and the pavement, and the location of professional responsibility.

The engineer

The three witnesses called by Perrett Simpson were a director Dale Andrew Simpson, a former employee Martin John Brock, and a civil engineer Peter Robin Jack who gave evidence as an independent expert.

Simpson was the principal at Perrett Simpson responsible for the project. Perrett Simpson had previously worked on projects with an architectural firm of which Hede had been a member, and both firms had previously been involved at the College. He agreed Perrett Simpson's retainer for the project with Hede. He entrusted day-to-day responsibility for the project to Brock, subject to his continuing supervision. He gave evidence as to matters that occurred during the course of the works and subsequently when problems arose. His evidence, and that of the other witnesses, was directed to the bus turnaround area which was the only part of the project in respect of which the engineer was sued.

Brock gave evidence of the initial discussions, the design work and matters that arose in the course of the works and subsequently when problems had arisen.

The evidence of Jack was directed to dealing with and refuting points of attack upon the quality and competence of Perrett Simpson's design for the pavement and their instructions concerning the construction of the vehicular area.

The architect

The two witnesses called by the architect were the third defendant Paul Anthony Hede and a former employee Philip Glenn Templeton, who was employed by Hede in September 1990 to September 1991. In his employment, Templeton was the administering architect for the project subject to Hede's supervision.

Hede gave evidence of background matters; his retainer for the project, which included responsibility for engaging and paying the fees of consultants; his engagement of Perrett Simpson; the documentation and tender and letting of the contract; and of matters that occurred in the course of the works that concerned the areas in issue including his counterclaim.

Templeton's evidence was of lesser compass both in terms of time and the matters dealt with.

Some observations concerning the expert evidence

Unfortunately, but noticeably in my opinion, there was a tendency in some but not all of the expert witnesses to be a soldier to advance the interest of the party who called him, as distinct from being an independent expert expressing an opinion to assist the court. As to the position of an expert witness in a civil case I refer with respectful agreement to the judgment of Cresswell J in National Justice Compania Naviera SA v Prudential Assurance Co Ltd.[1]
[1][1993] 2 Ll LR 68 at 81-82.

During the trial I had to draw attention to the necessity for a witness called to give opinion evidence to state his instructions and identify the materials provided to him. This is to enable the other party and the Court to know the factual basis on which the witness has formed the relevant opinion. At present I merely make the point and do not develop the instances in the trial in which this requirement was not satisfied.

I mention one further matter concerning the expert witnesses. While the facts in this case occurred around 10 years ago and the passage of such a time must diminish recollections, there was to be detected, really in the case of the first defendant, a concentration on expert evidence and, by comparison on some important aspects, a lightness or lack of evidence of the fact of what actually happened on the site in the course of carrying out the works. This is not to say that there was no evidence of what occurred during the works but that in more than one critical respect the evidence was light on or lacking in detail or persuasion as to what had actually occurred. Unless the relevant fact or facts can be found, or there is a satisfactory basis on which a relevant inference may be drawn, the expert called to give opinion evidence may lack a sufficient evidentiary basis on which to found his opinion.

4. The Proper Plaintiff

The plaintiff and the builder agree in their pleadings that the building contract was in writing. They also agree that the party with whom the builder contracted was not Emmaus College although that name was placed in the contract as the "Proprietor". It is also common ground that when Bishop Matthys placed his signature on the contract under the words "Signed by the Proprietor" he did not do so on his own behalf. When he signed the contract he did not add any words to indicate the capacity in which, or on whose behalf, he signed it; nor did he inform the builder's representatives present at the signing of the contract of the capacity in which, or on whose behalf, he signed the contract. Nevertheless, it is common ground that he signed the contract for another party and that that party was not Emmaus College. The question is: who was that party?

As mentioned at [15] the Corporation submits that the proper conclusion is that it was the Proprietor under the contract, whereas the builder submits that the Proprietor was either the members of the board of Emmaus College and its executive or the members of the Association of Canonical Administrators of the College. In his submission, counsel for the builder did not opt for or prefer one of those two as being the Proprietor; it was for the court to decide which of the two was the Proprietor under the contract.

Further facts

It is useful at this point to set out some evidence regarding the structure of the College, the contents of the contract, and how it came to be executed. There was evidence from Little, Matthys, Burton, Vilchez, Fabris, Stehle, McKeogh and Hede which was relevant to these points. I have had regard to their oral evidence and their witness statements, but I do not consider it necessary to set it out in full. Unless stated otherwise, I accept the evidence I describe below as the fact; most of it was not in dispute.

As I have mentioned, the Corporation holds the land at 503 Springvale Road on trust for the Roman Catholic Church pursuant to the Roman Catholic Trusts Act. Following his appointment as Archbishop of Melbourne, Little became one of the six trustees and remained so during the relevant time. The Emmaus College Board Constitution, ratified by the Archbishop on 6 October 1980, governed the operations of the College from about that date. According to cl. 3, ownership of the land and buildings occupied by the College was vested in the Corporation. By cl. 4, the member parishes were to underwrite the cost of land and buildings. One of the member parishes was St Thomas the Apostle's Parish, of which Matthys was the parish priest between 1986 and 1996. The constitution then provided for a College Board, which pursuant to cl. 5(c) had "executive power to act under the authority of the Archbishop and within the terms of diocesan regulations regarding the establishment and conduct of schools"; by cl. 6(d) the Board was responsible for controlling the College finances. The membership of the College Board included, amongst others, the Principal ex officio and four parish priests elected by the parish priests of the region. Fabris, having become the Principal in 1982, was on the Board throughout the relevant time; by March 1990 Matthys had been elected to the Board. Although not expressly provided for in the constitution, various committees were established within the Board, including the Buildings, Grounds & Equipment Committee, of which Fabris was a member by December 1989 and through the relevant period; there was also an Executive Committee of the Board which, according to the minutes of the annual meeting of the College Board held on 15 March 1990, included Fabris and Matthys. The constitution does not refer to contract-making power; Mattys's evidence was that the Board does not have power to enter into contracts.

The structure of the College was altered during 1990 and 1991. By decree of the Archbishop on 11 May 1990, the Association of Canonical Administrators of Emmaus College ("the ACA"), consisting of the priests of the member parishes, was established as a private juridical person. Matthys was elected as its first president. The decree states:

" The College will be governed by the Association according to the Statutes for the Association of Canonical Administrators of Colleges approved by me on 2nd December, 1988, and by the provisions of ordinary administration as defined in Canon Law and determined by the Archbishop."

To this extent, the 1980 constitution appears to be varied. The Statutes referred to in the decree provide, amongst other things, that the role of the ACA includes signing contracts in relation to the financial arrangements of the College; apart from the specified responsibilities, all other matters are delegated to the College Board according to the College's constitution. I add that the ACA existed in an informal way before the Archbishop's decree; for instance, it is referred to in correspondence in May and June 1989.[2]

[2]See, for instance, [79] below.

By a process that is not entirely clear, a new Constitution for Emmaus College, Forest Hill dated 13 May 1991 was adopted, one of its purposes evidently being to acknowledge the role of the ACA as created by the Archbishop's decree of the previous year. The new constitution, which begins by stating that the College has been established "[w]ith the approval and under the direction of the Archbishop of Melbourne", is in substantially similar terms to the 1980 constitution, certainly in relation to the clauses I have referred to (now differently numbered), except to the following extent.

(a)Ownership of the land and buildings is still stated to be vested in the Corporation, but it is now added that the Corporation holds the land and buildings in trust for the member parishes of the region.
(b)There is a definition of "Canonical Administrators" as "the Parish Priests of the Member Parishes acting as a juridical person. (Canons 113–123)". This is clearly a reference to the ACA.
(c)A preamble now states that the College:
" is managed by the Emmaus College Board, under delegation from the Canonical Administrators, in accordance with the Constitution which is approved by the Archbishop. According to the provision of Canon Law the College Board acts as a Board of Management, and is responsible to the Canonical Administrators who in turn are subject to the vigilance of the Archbishop. (Canon 1279.)"

(d)The clause about executive power now states that the Board has "executive power to act under the authority of the Canonical Administrators, and within the terms of diocesan regulations regarding the establishment and conduct of schools".
(e)Some aspects of financial management require the involvement of the Canonical Administrators.

Some new provisions also deserve mention: cl. 7 provides for an Executive to act with delegated authority on behalf of the Board, apparently taking over the function of the Executive Committee of the Board under the former constitution; and cl. 18 provides for distribution to the member parishes of any surplus upon winding up or dissolution of the College. There is still no express reference to contract-making power.

At this point it is possible to draw some conclusions about the College. Emmaus College itself is not a legal entity; rather, it is the name of a school. It is part of the Roman Catholic Church. The plaintiff Corporation holds the land on which the school is conducted on trust for the Church. In fact, the Corporation is the legal owner of not just the land on which Emmaus College is conducted, but all the property (real and otherwise) of the Church. It is readily to be understood that, for practical reasons, correspondence will be conducted in the College's name, separate accounts will be kept in relation to the College, there will be a bank account in the College's name, etc. The College has a measure of independence in its operations, but this is within the confines of constitutions and decrees made by, or with the authority of, the Archbishop; whatever other authority the Archbishop may have, the currently relevant capacity in which he acts is as a trustee of the Corporation. The College's limited independence of action is in no way an indication that it has independent legal personality, just as it would be absurd to suggest, for instance, in the case of an individual who operated two businesses, that the fact that there were separate bank accounts or that books were kept separately somehow indicated that each business had legal personality. The correct analysis of the operations of the College is that it is part of the Church, all of whose property is held by the Corporation for the benefit of the members of the Church; all acts in respect of the College are legally those of the Corporation, performed under delegated authority. The ACA may be a juridical person, but in relation to the College it can only act within the confines of the authority given to it by the Corporation.

Having described the structure of the College, I now set out, to the extent relevant, the steps leading to the execution of the contract on 17 August 1990.

The project was initially to proceed in 1989 and to that end Little wrote to Fabris on 17 May 1989, relevantly stating:

" The Diocesan Building Committee has conveyed to me its recommendations regarding the project for a multi-purpose hall, toilets, changeroom, canteen, carpark and earthworks.
I hereby give my approval for the project provided that the Archdiocese receive an assurance in writing from the Canonical Administrators of the College to jointly and severally underwrite the debt servicing requirements of this project, while at the same time continuing to meet the Diocese's obligations, particularly to the Diocesan Extension and Maintenance Fund. I am given to understand that the estimated cost will be $2,527,582.
The Roman Catholic Trust's [sic] Corporation for the Diocese of Melbourne hereby authorises you to act as agent for the Corporation for the purpose of executing any necessary contract documents (excluding the obtaining of finance and property sale/purchase) in this project."

At this stage, there was consideration of selling part of the land occupied by the College to help fund the project, but instead the Board decided to reduce its scope. On 6 December 1989, the Buildings, Grounds & Equipment Committee determined that the architect should be engaged for the revised project. The architect redesigned the project on the basis of a project cost of $1.69 million. In order to allow the architect to apply for building approval for the revisions, on 23 April 1990 Fabris wrote a letter addressed "to whom it may concern" at the Nunawading City Council in the following terms:
" As owners of the land, we hereby give permission to Hede – Architects, Interior Designers to submit for Building Approval for the proposed works at Emmaus College, Junior School, 503 Springvale Road, Forest Hill."

The letter was on Emmaus College letterhead, but Fabris signed "For the Roman Catholic Trusts Corporation". This shows clearly his awareness of the letter of authority from Little and of the capacity in which he was acting. The resulting building approval, dated 24 August 1990, showed the name of the owner as "Catholic Diocese of Melbourne" and its address as "Cathedral Place, East Melbourne".

At a meeting of the College Board on 21 June 1990, Fabris reported that approval had been obtained from the Grants Allocation Committee, Diocesan Finance Feasibility Committee, Diocesan Building Committee and the Schools Provident Fund. These are various bodies within the structure of the Roman Catholic Church, and I comment on two of them only.

(a)I have already described the role of the DBC (and the DBAS within it) at [43] above. The DBC is guided in its activities by the Diocesan Building Procedures Manual, the relevant version being Issue 7 dated 19 June 1989. Counsel for the builder placed much reliance on the Manual, and specifically statements in it that the building contract will be "prepared and signed between the proprietor (client) and the contractor (builder)" following formal approval by the Archbishop, or that "[t]he client will then enter into a contract with the successful tenderer". It is clear from a statement in the Manual, that the DBC "will ensure that contracts on projects entered into on [Corporation] property do not put the [Corporation] at risk by client failure to observe proper duties and regulation to such projects", that the client is not the Corporation (although it is implicit in the statement that the Corporation remains ultimately responsible for the project). In this case, according to Vilchez, the "client" was Emmaus College.

(b)The reference to the Schools Provident Fund refers to a loan from that body for $1.5 million, later reduced to $1.4 million.[3] The loan was obtained in the name of Emmaus College. The ACA had agreed to underwrite the debt servicing requirements of the earlier project in 1989; according to Matthys's evidence, such an agreement was a normal requirement for a project of this sort, and I would infer that either the ACA's agreement in relation to the earlier project carried over, or that a new agreement was reached in relation to the lesser amount. By the constitution, as I have mentioned, the member parishes were also required to underwrite the cost of land and buildings. The actual source of funds for repaying the loan, however, was a levy on parents of students attending the College.

[3]The first defendant referred in cross-examination of Fabris to the inclusion of freehold land and buildings and improvements as non-current assets of the College on the College's balance sheet submitted as part of the documentation for the loan. However, in re-examination the witness was shown notes to the balance sheet, which state that "[a]lthough the College's Freehold Land is officially owned by the Catholic Diocesan Trust, it is included in the financial accounts of the College as per advice from the Catholic Diocesan Trust". Fabris stated, and I would infer, that the "Catholic Diocesan Trust" was a reference to the plaintiff Corporation.

As the time for tendering and then executing the contract approached, on 25 June 1990 Little wrote to Matthys in the same form as the earlier letter to Fabris, relevantly stating:

" The Diocesan Building Committee has conveyed to me its recommendations regarding the project for Emmaus College – Forest Hill Campus re the Multi-Purpose Hall and School amenities.
I hereby give my approval for the project. I am given to understand that the estimated cost will be $2,000,000.
The Roman Catholic Trust's [sic] Corporation for the Diocese of Melbourne hereby authorises you to act as agent for the Corporation for the purpose of executing any necessary contract documents (excluding the obtaining of finance and property sale/purchase) in this project."

The letter was addressed to Matthys as president of the ACA. I accept it as an authentic document.[4]

[4]I say this because the first defendant, in response to a notice from the plaintiff to admit this letter, served a notice of dispute. This was apparently not to dispute the authenticity of the letter as such, but rather on the basis that it was not "what it purports to be", in the terms of RSC Chapter I Order 35. Apparently the first defendant was thus wishing to indicate a dispute as to the interpretation of the document. This is not the purpose of Order 35. The interpretation of the document is a task for the judge in any event.

The project then went to tender. The tender documents included the specifications prepared by the architect, which were headed "Specification for Alterations and Additions at Emmaus College, Junior School at 503 Springvale Road, Forest Hill". I note that in Section 000 Preliminaries, Subsection 999 Schedule to Preliminaries, the signage to be placed at the site is specified to include the words: "PROPRIETOR: Emmaus College".

Van Driel submitted a tender dated 26 July 1990, together with a related letter of the same date, both addressed to the "Diocesan Advisory Service" (clearly intended to refer to the DBAS), and qualified the tender by a letter dated 31 July to the architect. Tender interviews were conducted on 10 August at a hall in Brunswick Street, Fitzroy owned by the Corporation. The minutes of the College Board meeting on 16 August 1990 record that the architect and DBAS had recommended Van Driel be awarded the contract, that the Executive Committee of the Board agreed, and that the contract would be signed the next day.

Execution of the contract indeed occurred on 17 August 1990, at the presbytery of St Thomas the Apostle's Parish, Blackburn attended by Matthys, Fabris, Stehle and the architect. The contract refers to the parties as the "Proprietor" and the "Builder".

For the "Proprietor", Matthys signed his name only, with no indication as to the capacity in which he did so. Matthys had the letter from Little with him, but he did not refer to it in any way; nor was he asked for any authority. Matthys stated in his evidence that he signed the contract for and on behalf of the plaintiff Corporation. Further, he gave evidence that he had not been requested by any member of the College Board or the ACA, nor any person associated therewith, to enter into the contract on behalf of Emmaus College, the College Board or the ACA, and that he had no authority or permission to do so. After execution, the Proprietor's part of the contract was lodged with the DBAS.

For the "Builder", Stehle superimposed his signature over a stamp containing the words "Van Driel Limited" and the company's address. He said that a representative of Emmaus College signed the contract on behalf of Emmaus College and "that was good enough for me". The builder had executed contracts for various groups within the Roman Catholic Church over the previous 30 years; McKeogh estimated that 25% of the contracts were with the Corporation and 75% with other entities.

It is convenient at this stage to make some further reference to the contract. The contract commences in cl. 1.01 by stating that the agreement is made between the Proprietor and the Builder. Clause 1.02 provides that the Builder shall upon the site being made available by the Proprietor commence the execution of the works, thereafter regularly and diligently proceed to execute and complete the works, and bring the works to practical completion by the Date for Practical Completion (which by cl. 1.06.09 was 6 June 1991, subject to adjustment). Clause 1.03 provides that the Proprietor shall, subject to the contract, make the site available to the Builder on or before the Date for Possession (which by cl. 1.06.08 is 23 August 1990) and shall, in consideration of the Builder carrying out its obligations under the contract, pay to the Builder the Contract Sum (which by cl. 1.06.07 was $1,473,616). Clause 1.06 is a definition clause. It provides that in the contract and, subject to inconsistency, the words and phrases set out in the clause shall have the meanings given to them in the clause. The first definition, in cl. 1.06.01, is of the Proprietor and reads:

"The Proprietor – Emmaus College
of 503 Springvale Rd.
Forest Hill 3131".

The name and address of the College are inserted in hand. This was done by the architect on the basis that he had at all times received instructions from Fabris, who he understood was acting under the instructions of the College Board and its Building Advisory Committee; in addition, D'Orio Davis Hede Pty Ltd, a practice of which the architect had been a principal, had done so with a previous contract for the College. The contract does not otherwise define the word "Proprietor". By inserting the name Emmaus College on the face page of the contract and in the definition in cl. 1.06.01, no more was done in this respect than to refer to the name of the school conducted at 503 Springvale Road, Forest Hill. As mentioned, it is common ground that Emmaus College was not the Proprietor with whom the builder contracted; it was not a legal entity and had no capacity to contract. I add that by cl. 3.04 and 3.05, the Builder is granted legal possession of the site for the purposes of conducting the works and later access to make good any defects.

I also mention briefly the specifications, which are incorporated by reference into the contract and to which the definitions in the contract apply. The document in fact adopts terminology from the contract such as "Proprietor" and "Builder". In Section 000 Preliminaries, Subsection 070 Site, it is stated:

" The Principal [defined in the specifications to have the same meaning as "the Proprietor"] or persons authorized by the Principal will continue in possession and occupancy of the parts of the site and existing buildings shown in the Drawings …";

and later:
" Due to Proprietors [sic] need for continuous occupation of the site the builder is to submit a site management plan to the architect for approval prior to commencing work".

Thus the specifications contemplate that the Proprietor may not be the occupant of the site but has the right to determine occupancy.

For the sake of completeness, I set out some further facts subsequent to execution of the contract referred to in evidence. First, the insurance for the works by Catholic Church Insurance Ltd was in the name of "Roman Catholic Trusts Corporation for Diocese of Melbourne: Emmaus College – Forest Hill". Secondly, Stehle pointed out in his witness statement that the builder received various correspondence relating to the project from the College on College letterhead; and all payments were received from Emmaus College. Thirdly, in 1996 an appeal in relation to a planning permit at the College was brought before the Victorian Administrative Appeals Tribunal in the name of Emmaus College. Fourthly, by a letter dated 13 February 1997 to the Corporation's solicitors, Mr E W Excell, business manager of the Catholic Archdiocese of Melbourne, stated that the Corporation would in normal circumstances become the plaintiff or defendant in legal action arising out of ownership of its property.

These are the circumstances in which there was a contract between a Proprietor and a Builder. Under the contract, the Builder—Van Driel—undertook performance and received payments, but it is common ground that the party named as Proprietor—Emmaus College—was not the Proprietor and there is uncertainty as to who the Proprietor was, that is, as to the identity of the party with whom the builder contracted.

The submissions

During final address, Mr Stirling made a fairly lengthy oral submission addressing his written submissions on the issue of the identity of the Proprietor. The treatment by Mr Dixon was considerably shorter. I was assisted by Mr Dixon's submissions; I refer to them only where necessary.

The starting point in understanding both submissions is the parol evidence rule, which was usefully described by Mason J (as he then was) in Codelfa Constructions Pty Ltd v State Rail Authority of NSW:[5]

" The broad purpose of the parol evidence rule is to exclude extrinsic evidence (except as to surrounding circumstances), including direct statements of intention (except in cases of latent ambiguity) and antecedent negotiations, to subtract from, add to, vary or contradict the language of a written instrument".

[5](1982) 149 CLR 337 at 347.

In relation to the exception in respect of surrounding circumstances mentioned by his Honour, he concluded:[6]

" The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning."

His Honour went on to state that this exception does not in general make admissible evidence as to statements and actions of the parties which are reflective of their actual intentions, aspirations or expectations.[7] I do not rely on statements of this type referred to above.

[6](1982) 149 CLR 337 at 352.

[7](1982) 149 CLR 337 at 352. Mr Stirling also referred on this point to Rosser v Austral Wine and Spirit Co Pty Ltd [1980] VR 313 at 316; McClean v Kennard (1874) 9 LR Ch App 336 at 347-8; and Kennedy v De Trafford [1897] AC 181 at 188.

There is another exception to the parol evidence rule which is relevant in this case: where there is ambiguity on the face of the written instrument as to the identity of a party to a contract, extrinsic evidence is admissible to identify the party or the relationship between the parties or the capacity in which a party contracted.[8] As Lord Parker of Waddington said in Fung Ping Shan v Tong Shun:[9]

" There can be no doubt that parol evidence as to the identity of a party is always admissible, but in considering such evidence it is of paramount importance to bear in mind the indicia of identity afforded by the deed itself."

The words of Mason J in respect of evidence of actual intention would be equally relevant to this exception. I have not had cause to rely on such evidence.

[8]Mr Stirling referred to Lewison, Interpretation of Contracts (2nd ed) at 45; Fung Ping Shan v Tong Shun [1918] AC 403 at 406; Lovesy v Palmer [1916] 2 Ch 233 at 238–9; Edwards v Edwards (1918) 24 CLR 312 at 316; Re A&K Holdings Pty Ltd [1964] VR 257 at 263. Mr Dixon referred to Halsbury's Laws of Australia at [110-2325] (and cases cited therein); Greig and Davis, The Law of Contract (1987) at 418–9; Chitty on Contracts (27th ed) at 12-107; and The Ines [1995] 2 Lloyds' LR 144.

[9][1918] AC 403 at 406.

In this case, either of these two exceptions applies to allow consideration of evidence other than the words of the contract itself.

I now turn to the submissions for the builder. Mr Stirling placed reliance on the words of Lord Parker and "the paramount importance" of "the indicia of identity afforded by the deed itself". He also referred to Edwards v Edwards[10] as authority that extrinsic evidence may be led to clarify an ambiguity or misdescription as to a party, but not to contradict the face of the contract. For that reason, he submitted, only persons within the structure or framework of "Emmaus College" could be identified as the Proprietor, namely the members of the College Board and Executive, or the members of the ACA; there was no warrant for the imposition on the builder of a party that is not referred to in the contract or described by it.
[10](1918) 24 CLR 312 at 316.

In emphasising the expression "the indicia of identity afforded by the deed itself", Mr Stirling appears to have neglected the indicia other than the name placed in clause 1.06.01 and on the face page of the contract. On the face of the written instrument in this case, looked at as a whole, there are indications that the Proprietor should own or at least control the land to the extent that enables it to meet its underlying obligation to make the site available and give possession to the Builder: see cll. 1.03, 1.06, 3.04 and 3.05 of the contract and the parts of the specifications referred to at [88] above. It is instructive, and consistent in this regard, that the second meaning of "proprietor" in the Oxford Dictionary is:

" One who holds something as property; one who has the exclusive right or title to the use or disposal of a thing; an owner".

The word "Proprietor" would thus be understood as a reference to the owner or the person who otherwise has the right or title to the use or disposal of the property in question. In this case, that properly was the land and buildings at 503 Springvale Road, Forest Hill at which the school known as Emmaus College was conducted. The Corporation was registered as the proprietor of the fee simple estate in the land and owned the buildings erected thereon. Although there is no reference to the Corporation in the contract or the documents incorporated into it, the indications are strong that the ambiguous definition of the Proprietor as "Emmaus College" is intended to refer to the registered proprietor of the land, that is, the Corporation; and while it is possible, as Mr Stirling submitted, that the party with whom a builder contracts could be a licensee or lessee, the contract in this case is not consistent with the Proprietor being a licensee, lessee or any other occupant.

By contrast, neither the contract nor the documents incorporated in it refer to or name the members of the College Board and its executive, or of the ACA. Nor is it a necessary inference from the use of the words "Emmaus College" themselves that any such body or any of the persons constituting them was intended to be the Proprietor. Looking at the contract as a whole, I would reject any submission to that effect. While the College Board and its executive, and the members of the ACA, may be candidates for consideration as persons within the structure and framework of "Emmaus College", as Mr Stirling said, so too is the plaintiff Corporation. What is more, as the legal owner of the land and all College property, the plaintiff is the best contender to be the Proprietor.

That is on the face of the written instrument, and if that was the only evidence to be examined in determining the identity of the Proprietor I would conclude that the Proprietor was, and was intended to be, the Corporation. However, there being an undeniable ambiguity in the naming of "Emmaus College", which is not a legal entity capable of entering into a contract, as the Proprietor, it is appropriate to consider the surrounding circumstances and extrinsic evidence.

Notwithstanding his submission I have already mentioned, that the inquiry should be focused on the contract itself, Mr Stirling went on to refer to such evidence. He submitted that the relevant approach was to identify the legal persons standing behind "Emmaus College";[11] and he referred to the approach in relation to a voluntary association, which he said was to choose from the persons under the umbrella of the organisation to give effect to the intention of the parties. Mr Stirling relied on the words of Scott LJ in Bradley Egg Farm Ltd v Clifford:[12]

" That the plaintiffs intended to make a real contract with somebody is beyond doubt; but it is equally beyond doubt that they had never formed any intention in their own minds beyond the vague one of making a contract with the person or persons the law would hold responsible on the contract. They did not, of course, think about it at all; they merely assumed, with the confidence natural to a nation which normally carries out its contracts, that somebody would be responsible. They expected performance and not breach; but the rest was assumption which they never even began to think about.
In these circumstances, what is the function of the law? Surely it is to imply an intention on the plaintiffs' part to make their contract with the person or persons to whom alone in the circumstances of the case the law regards as the persons responsible. That cannot be the society, for it does not exist. The law, therefore, has to choose from the various persons associated together under the umbrella of the society's name, those most concerned in the function of making contracts, those of the associated persons who were most directly concerned, and to discard those who were, for any reason, least directly concerned."

There is nothing in any of these statements to exclude the plaintiff as the contracting party in this case. The registered proprietor of the land on which Emmaus College is operated and the legal owner of all College property could fittingly be described as the legal person standing behind the College; the registered proprietor of land and legal owner of property falls within the umbrella of the organisation of the College; the registered proprietor is a person who in the circumstances of the case the law could regard as the person responsible for a building contract on its land; the registered proprietor is directly concerned, in that its proprietary rights are affected. It should not be assumed from the application of principle by Scott LJ to the situation before him that only natural persons are to be considered.

[11]M&M Civil Engineering Pty Ltd v Sunshine Coast Turf Club (1987) 2 Qd R 401 at 407.

[12]Bradley Egg Farm Ltd v Clifford [1943] 2 All ER 378 at 386. Mr Stirling also referred to Peckham v Moore [1975] 1 NSWLR 353 at 367, 369; Carlton Cricket & Football Social Club v Joseph [1970] VR 487 at 499; Smith v Yarnold (1969) 90 WN(NSW) 316 at 323.

I have concluded at [297] above that at the initial design stage Brock had an inadequate basis for designing by experience and did not take into account relevant factors such as design life and traffic loading. But the more important question is his design input when the interceptor pit was discovered. As I have concluded at [312] above, Brock ought to have revisited the entire design at this point. It is even clearer than at the earlier stage that a prudent designer would have designed a thicker pavement for the sub-grade conditions of this site if he had turned his mind to the relevant factors. I accept Morgan's conclusion that the pavement was simply inadequate in the circumstances.

As for the builder, notwithstanding Cooper's evidence that more material was delivered to site than required for the specified pavement thickness (see [315] above), the fact is that the testing by both MacGregor (see [325]) and Golder (see [334]) showed that the pavement was as thin as 150 mm at various points. MacGregor's tests were in the direct vicinity of the interceptor pit; most of Golder's tests within the new pavement area were also near the pit or the failed area of pavement at the northern edge; at AH 5, the one auger hole classed as Category 1, the pavement thickness was 170 mm. This is the only specific evidence of thickness for the parts of the new pavement other than the interceptor pit and northern edge. As I have mentioned at [334] above, Morgan said that a departure of 10 or 20 mm from the specified thickness was not specified and that a thickness of less than 180 mm was deficient. I accept this statement and find that the construction of the pavement was deficient, both in the areas of the interceptor pit and northern edge, but also generally. This construction defect exacerbated the inadequacy of the engineer's design.

In relation to drainage, I have found at [300] above that it was up to the architect to ensure that drainage was attended to. This was even more so once the interceptor pit had been discovered and the engineer specifically directed his attention to the matter; Brock's letter of 21 September 1990 to the architect clearly refers to surface and sub-soil drainage: see [311]–[312] above. While CR Knight was brought onto the site in October 1990, the focus appears to have been on stormwater drainage: see [314] above. But there is no evidence that CR Knight considered the installation of any agricultural drains and no evidence that any were in fact installed, notwithstanding Beauchamp's view, which I accept, that it was normal practice to design and install agricultural drains behind kerbs on the high side of the pavement. Morgan said expressly that there were no drains around the north-eastern perimeter that had been installed at the time of construction.

Morgan said that drainage as such might not cause a pavement to fail; rather, the pavement in this case failed because the sub-grade material was soft as a result of water either being present to start with or getting in during the life of the pavement. He said that the perimeter agricultural drains would maintain existing conditions of the sub-grade by preventing further water from getting in. The fact is that water was observed by MacGregor running along the bottom of the base course layer on top of the compacted clay filling in January 1992: see [325] above. While I make no finding as to the precise origin of the water, I find it would have been prevented by perimeter drainage. I accept MacGregor's conclusion, which is in accord with Morgan's, that that water would soften the clay fill sub-grade and could lead to a reduction in strength of the base course.

I conclude that, due to the problems with both thickness and drainage that I have set out, reconstruction of the new pavement was both necessary and warranted.

To remove the possibility of doubt, I add a note that it was not established that damage to the pre-existing pavement had been occasioned or, if so, was attributable to any act or omission by any defendant. The pavement was not designed by the architect or engineer or built by the builder. It had been constructed in about 1968 and was still classed in Categories 1 and 2 by Morgan in 1992. I have dealt with Brock's letter of 3 May 1991 at [321]–[322] above: it does not demonstrate damage caused by the builder to the driveway. The Golder report assesses the pre-existing pavement together with the new and recommends a complete reconstruction; from the work that was subsequently done, it might be inferred that this was meant to include the pre-existing pavement and was taken to so mean. However, while some of the auger holes do possibly relate to pre-existing pavement and the report makes findings in relation to those auger holes in respect of moisture and CBRs, and while some of the statements in that report might be applicable to the pre-existing pavement, the focus of the Golder report is very much on the design and construction of the new pavement and I do not see a causal connection between those findings and comments and the breaches of the defendants. Correctly, the plaintiff did not claim the cost of replacing the pre-existing pavement.

Builder's defences

I now deal with several matters raised in the builder's defence.

The first matter to deal with are the defences referred to at [20]–[21] above. These are the defences contained in paras. 11–16 of the defence and which depend on cl. 5.06 of the contract.

As noted at [20] the plea in paras. 11–15 related to certain works to the roof and to the bus turnaround pavement and associated drainage. As the defence related to the roof and the hall (but not to the floor) I dealt with the defence and the plea in para. 16 in the section of this judgment concerning the roof: see [160]–[176] above. It remains to deal with the pleas in paras. 11–16 insofar as they concern the bus turnaround area. It is therefore appropriate to note in more detail the description of the work in particulars to para. 15 of the defence which the builder relies on as undertaken by another party and which work was not the subject of the building contract. The work is removal of pavement constructed by the builder in accordance with the contract and replacement with a 410 mm pavement specified by Golder, and construction of 42 linear metres of agricultural drain and connection to an existing stormwater pit as specified by Golder.

Having identified the works in question it is sufficient to refer to and adopt the discussion of the defences in paras. 11–16 at [160]–[176] above. That discussion and conclusions are as applicable to the matters raised concerning the bus turnaround area as they are to the matters raised concerning the roof and hall. It is, however, necessary to add that the position with the bus turnaround area differs in that certain of the works carried out by others were outside the scope of works in the building contract and hence not truly items of rectification. As pointed out above, these works and the cost of performing them have been excluded from the costs recoverable in this litigation.

It is unnecessary to consider the matter further. The defences in paras. 11–16 relating to the bus turnaround area fail.

The next point is the allegation referred to at [22] above that the work of the builder on sewerage and storm water drainage works and rectification of drains including the main outfall drain was damaged by other persons prior and subsequent to practical completion on 22 July 1991. In final address counsel for the builder referred to this as a drainage issue in the context of causation in relation to the hall area. In other words, the allegation did not relate to the bus turnaround area. In any event, even if it did, it would fail as there was no evidence to support such an allegation.

Conclusion

I conclude that the plaintiff is entitled to recover all amounts in its particulars of loss and damage, except for the $2,192 attributable to area 3, in relation to which I have found there is no basis for a finding of fault in respect of the sub-grade, and the $2,062 which I have mentioned could not be claimed. Based on the figures at [277]–[279] above, the total amount is $69,645.

There was a difference in approach as to whether it was appropriate to award this sum to the plaintiff as damages or some other sum arrived at on a different basis. The difference was expressed in the submissions of counsel for the plaintiff on the one hand and counsel for the engineer (whose submissions were supported by the other defendants) on the other hand.

Counsel for the plaintiff submitted that it was reasonable and just in the circumstances of the case to recover the rectification costs of $69,645: see Bellgrove v Eldridge.[39] In relation to the architect counsel submitted specifically that he should be found to have contracted to produce a result, namely a bus turnaround pavement capable of handling the peak hour influx of buses and the commercial refuse trucks, such a pavement being that designed by Golder. This was to be distinguished from an engagement to exercise due care and skill as an architect in performing work pursuant to his engagement. There is reference to this distinction in Auburn Municipal Council v ARC Engineering Pty Ltd.[40] It is sufficient to say that in my view the architect's engagement was of the latter kind and not the former.
[39](1954) 90 CLR 613.
[40][1973] 1 NSWLR 513 at 531.

In the course of his submission that the appropriate measure of loss, and damages recoverable, was the cost of rectification, counsel referred in addition to Bellgrove to the New Zealand case of Bevan Investments Ltd v Blackhall & Struthers[41] and Duncan Wallace, Hudson's Building and Engineering Contracts (11th ed) at 8.143. In the circumstances it was reasonable for the plaintiff to recover the cost of rectification.
[41][1973] 2 NZLR 45; on appeal [1978] 2 NZLR 97.

Against this, counsel for the engineer addressed an alternative submission. First, relying on evidence of Fabris that the money the College spent on the new pavement in 1991 was totally wasted, he submitted that the loss was represented by that expenditure. Relying on evidence of Savage as to the cost of those works and allowing for various other costs, he submitted that the loss was about $38,000, although at another point he referred to the original cost in 1990 of the pavement being around the $40,000 mark.

The alternative basis on which counsel submitted damages could be awarded was more generous to the plaintiff. On this basis, which also relied on evidence of Savage, it was submitted that the damages were the amount remaining after deducting $25,000 from the claim which, as noted above is $69,645. The amount of $25,000 is derived from Savage's evidence that the extra cost in building the thicker pavement in 1991 would have been approximately $25,026. Unless that sum, rounded to say $25,000, was allowed the plaintiff would to that extent obtain a windfall gain at the expense of the defendants if it recovered the full rectification costs. On this basis the claim is $44,645. Counsel referred to W Jeffreys Holdings Pty Ltd v Appleyard & Associates[42] and Beregold Pty Ltd v D Mitsopoulos (trading as D Mitsopoulos & Associates)[43] to support these submissions.
[42](1990) 10 BCL 298; Supreme Court of New South Wales (Cole J), 9 February 1990.
[43](1999) 15 BCL 290; Supreme Court of New South Wales (Cole J), 10 November 1992.

Counsel for the plaintiff did not accept the reliability of the figures relied on in the first submission for the engineer. He submitted the engineer had not placed satisfactory evidence before the Court to show how or to what extent the original cost of work was less than the cost of rectification. He submitted that the evidence indicated that on either basis submitted by the engineer there was not an appreciable difference from the cost of rectification. The evidence of Savage amounted to the thicker pavement being about 40% more expensive, while the evidence of Stehle had it at about 50%. Either basis produced a figure of about $40,000. To this must be added a variation of $4,367 for agricultural drains and $2,125.20 for the pit and soft spots. This produced a total of $46,492.20. Counsel submitted an allowance be made for engineering fees, but I do not agree as these were borne by the architect. Counsel addressed no submission as to how an allowance should be made in respect of the architect's fees. Finally, counsel submitted that the figure for comparison was the amount of $63,114 which was the cost paid to Tasman Urban Developments for constructing the pavement.

I have already found that the reconstruction of the pavement, including the attendant work of new drainage, was necessary and warranted. I find that the further work, including the nature and degree of supervision, was reasonably undertaken in response to the circumstances confronting the College. I find that the rectification works undertaken were the only practicable way of remedying the situation and obtaining a pavement that was appropriate for the purpose of the College. In this situation it does not seem to me that an issue of betterment arises. In this case the facts and findings lead me to conclude that the plaintiff is entitled to, and should succeed on its claim to recover, the costs of rectification. I find that all of the items were reasonable in amount and properly and reasonably undertaken.

But it is necessary at this point to return to the builder's defence concerning the betterment issue. I referred to this at [24]. The issue concerning betterment here is that the extra pavement thickness and drainage works involved a scope of work that was not within the builder's engagement. Hence, while the builder was at fault in the performance of the works, the method of rectification was significantly beyond the contractual scope of work. The position of the builder is distinct from the engineer and architect, who each were obliged to exercise professional skill and judgment to achieve the desired result. I conclude that in the case of the builder the betterment approach should be adopted. On this approach the amount of $25,000 should be allowed against the claim of $69,645.

It remains only to say that I consider the just and equitable contributions by the three defendants to be 40% on the part of each of the builder and engineer and 20% on the part of the architect.

8. Legal Costs

This section concerns the plaintiff's claim for legal costs incurred prior to commencement of the proceeding. In the particulars filed during the trial the amount claimed was $16,586.11 (see [7]), but as stated in Exhibit S the claim is for $14,706.11. Neither the claim nor the amount was contested. The claim is allowed. The only question that arises is whether the claim should be borne by the defendants equally or on a proportionate basis according to their assessed responsibility for the three areas of rectification. Against the former is the fact that initially and for some time the architect was not a defendant to the proceeding. The joinder followed the architect being made a third party by the engineer. On balance it seems to me that the fair and just course is that the costs be borne on a proportionate basis, in accordance with the three defendants' respective liabilities for the roof, floor and bus turnaround area. This is subject to some figures being updated or confirmed, and interest being calculated. I will hear counsel once this has been done.

9. Good and Services Tax

The plaintiff seeks an order that the defendants pay the amount of any GST payable by it in respect of any judgment amount, or an indemnity in respect of such GST. The result of discussion at the trial was that I should hear counsel on this aspect after judgment. The parties would then know what was payable to the plaintiff and have had a greater opportunity to acquaint themselves with the operation of GST in relation to judgments for damages. Accordingly I will hear counsel on the issue.

10. Miscellaneous Claims of the Builder

I now deal with several issues raised in the builder's defence.

The first concerns a variation of $2,816.35 which the plaintiff has not paid or allowed; I referred to this at [26]. The builder raised a set-off and counterclaim to recover this amount. The plaintiff does not dispute the item but submits that the claim is barred by s. 5(1) of the Limitation of Actions Act. According to the plaintiff's counsel the relevant dates were these: the cause of action was complete by 26 April 1991 but the claim was not made until 26 February 1998. Those facts were not disputed. The builder conceded that the counterclaim was barred but submitted that it could rely on the claim as a set-off. Counsel for the plaintiff disputed this, contending that the set-off also was barred by the statute. Counsel for the plaintiff elaborated on this submission in a memorandum provided subsequent to the trial. Neither at the trial nor in response to the memorandum did counsel for the builder address any submission to establish that the claim could be relied on as a set-off. That may have reflected a view that it was out of proportion to devote resources in the Supreme Court, with all the expense that this case has involved, to a claim for less than $3,000, and that it was appropriate to leave it to me to come up with a decision on the matter, for better or worse. I can understand that approach although it was his client's point and it gave me no assistance in deciding the case. For its part, it might have been supposed that the plaintiff would have conceded the set-off in order to concentrate on more important matters. After all, the builder performed the work and the plaintiff has retained the benefit of it. But none of that mattered to the plaintiff which was happy to have the benefit without paying for it. Wherever commonsense and practical judgment might have been found it was not to be found with the plaintiff on this point.

The submission of counsel for the builder is that the application of s. 30 of the Limitation of Actions Act rests on the distinction between a set-off which may be raised as a defence and a cross demand enforceable only by an independent claim. He referred to McDonnell & East Ltd v McGregor[44] and Sidney Raper Pty Ltd v Commonwealth Trading Bank of Australia.[45] The time bar applied to the latter type of claim and it was submitted that the builder's variation claim was in that category. If the submission is correct the builder's claim must fail. Whether it is correct must rest on an analysis of the party's rights under the contract. I heard no submission on that matter. In other words I do not have the benefit of a submission of the construction and operation of the contract relative to the builder's right to recover the value of a variation, by independent claim or certificate or set-off, from the plaintiff. I do not propose to spend time trawling through the contract on such a minor point on which counsel have not addressed the necessary submissions. I will hear counsel on the point, assuming it continues to be pressed.
[44](1936) 56 CLR 50 at 57–58.
[45](1975) 2 NSWLR 227 at 236–237.

The next claim of the builder is that in breach of the contract the plaintiff has not returned a bank guarantee dated 22 August 1990. Related to this allegation is the plea in para. 27 of the defence that in breach of the contract on or before 31 May 1994 the services of the architect were terminated or otherwise discharged and no other architect was appointed in his place. It was then alleged (in para. 28) that by reason of those matters no final certificate was or could be issued under the contract and no instructions could be given to the builder in respect of the contract. It was then alleged (in para. 29) that consequently and in breach of the contract the proprietor under the contract had not released the guarantee to the builder. As a result (it was alleged in para. 30) the builder had suffered loss and damage the amount of which was relied on as a set-off (para. 31). Finally, there was a counterclaim for an order for the delivery up and release to the builder of the guarantee. There was no counterclaim for the alleged loss and damage.

In final address the submission of counsel for the builder was put in a sentence or two: if it is found the builder substantially completed the works it is entitled to the return of the guarantee. Further, determination of the architect's retainer precluded the builder from obtaining a final certificate. Nothing was said as to the amount of any set-off and I take it to be abandoned.

I reject the builder's submissions. It is sufficient to refer to the following facts. As discussed above, following occupation of the building in July 1991, the builder did not apply for a certificate of practical completion and none was issued. The College voluntarily (and without request and as though practical completion had been achieved) returned the first bank guarantee to the builder on 19 February 1992 and, as contemplated by the contract, continued to hold the guarantee in question as security. The architect issued an instruction no. 27 dated 22 December 1992 which required the builder to attend to matters the subject of the litigation. The builder never complied with the instruction being of the view it was not obliged to do so. In essence, as Stehle recognised in cross-examination, the question as to whether the builder was obliged to have done so was left for determination in the litigation. Of course the litigation sought to recover the costs of carrying out works in the instruction and rectifying defects in the areas identified. I accept Hede's evidence that the builder was given a fair opportunity to rectify defects before others were engaged for that purpose. I also accept that Hede correctly stated the fact to be that the project never reached final completion because the instruction no. 27 remained outstanding and included the defects the subject of the litigation. Stehle conceded, correctly, that if the builder should have, but had not, complied with the instruction, it was not entitled to a final certificate. My judgment establishes the builder was in error in not complying with the instruction. In any event, on 13 October 1994 the builder had withdrawn all prior claims for a final certificate and then and subsequently sought advice as to when a final certificate may be claimed. The response, in short, was to refer to instruction no. 27, and ultimately others were engaged to perform rectification works. A claim for a final certificate was not made. Finally, not only was the architect's retainer not terminated as alleged in the defence but nothing that passed between the College and the architect was the reason why the architect did not issue the builder a final certificate. The reason was because the builder was not entitled to the certificate. In the circumstances the plaintiff has been entitled to retain the guarantee as security. The counterclaim fails.

The final point raised in the builder's defence is the claim for site administration costs in paras. 24-26. Paragraphs 24 and 25 are alternatives while para. 26 is expressed as being further or in the alternative. Extended and off-site administration costs are claimed in paras. 24 and 25, in the former from 26 April 1991 until 22 July 1991, and in the latter from 26 April 1991 to 19 February 1992. In para. 26 the builder claims all costs and expenses incurred in connection with the contract on and after 26 April 1991. The builder relied on the amount or amounts thus produced as a set-off.

The claim was put on the basis that the builder's tender letter had stated the quotation was a fixed price and that extension of time costs would be charged at the fixed rate of $1,900 for each week of the extended contract period to allow for site administration costs. That sum was used to produce a quantification of the claim under paras. 24 and 25. The builder provided further particulars dated 22 April 1998 in which a quantification was provided under each paragraph. They are not identical. In his evidence Stehle said the particulars were correct. In final address counsel for the builder said nothing as to which paragraph of the defence should succeed or in what amount. Stehle had been cross-examined on the claim and, in effect, although without saying so, counsel must be taken to have left it to me to conclude as I considered correct. His final address on the issue was a summary reference of several sentences.

The claim (in paras. 24-26) was first made in the further amended defence and counterclaim dated 6 February 1998. In cross-examination Stehle explained that while the builder had always had the right or option to make the claim, it never did so from 26 April 1991 until 6 February 1998 when it raised it in the amended pleading in the litigation. That was without any prior notification to any person. Clearly, the claim was an afterthought brought into existence to seek to find some ground of attack or defence.

Counsel for the plaintiff submitted that the claim had no merit. He further submitted that even if the claim had merit it was statute barred as the claim was not brought within six years of the accrual of the cause of action. It is correct that with the exception of continuing bank charges and a small amount or two under para. 26 the amounts claimed in the particulars were incurred or suffered, and the cause of action was complete, prior to six years before the claim was raised. Those amounts, which constitute the exception, are small in relation to the total and in themselves not such as to warrant the set-off being raised.

Assuming the builder is entitled to bring the claim, the issue which is raised as to set‑off stands in the same position as the set‑off claim in respect of the variation. I have a submission from the plaintiff but nothing from the builder. If that is where matters stood I would hear from counsel on this issue also. However I consider the claim fails for other reasons which I can shortly state.

First, the builder's reliance on the tender document referring to the quote as a fixed price and to the extension of time cost of $1,900 per week refer to two different things. The builder submitted his price on 26 July 1990 stating that the price was firm provided the works could be commenced on site within four weeks from that date and completed as per its work program within 10 calendar months. The price was accepted and the parties entered into a lump sum contract in which the builder's price was stated to be the contract sum or such other sum as shall be determined from time to time in accordance with the contract. There was provision for variations and extensions of time. The date for possession of the site was 23 August 1990 and for completion was 6 June 1991. The figure of $1,900 related to and was designed to cover the builder against site administration costs incurred due to the time for practical completion being extended: see cl. 9 of the contract.

It is therefore seen that reference in the builder's submission to the quotation being a fixed price is irrelevant to the present issue. The present issue is not concerned with the amount of the contract sum. The issue is concerned with the liability to pay or allow site administration costs of $1,900 per week in the period of contract extensions. Even if I was wrong in that understanding, the builder's tender letter held the price firm for four weeks. It is in that sense that the price was fixed. The contract was entered into within that period for the tender sum but on terms and conditions which allowed for variation in that sum. It is certainly not acting within four weeks, let alone a reasonable time, to seek to vary the contract sum at the time when it did in 1998. But, in truth, that is not what the builder was seeking to do. What the builder was seeking to do was establish an entitlement to site administration costs calculated by reference to the stipulated rate without bringing the claim within the provisions of cl. 9 of the contract, that is to say, without relating it to an extension of time, or even to actual performance and what was happening on the job in order to establish an entitlement.

In addition there was the unsatisfactory evidence of Stehle as to the time from when it was appropriate to commence the calculation and the period in respect of which the costs might be claimed. The evidence was self-serving and contrived.

Then there was the further fact that the claim was not related to any breach of the contract or other fault of the College. Doubtless that was because it could not be. That seems a sufficient and likely reason why, in combination with the defective works the consequences of which the College was struggling with, the builder never made this claim.

For all these reasons the claim fails.

11. Architect's Counterclaim

I conclude with the architect's counterclaim. I referred to this at [40] above.

In his evidence Hede identified and relied on a schedule annexed to his defence which contained a chronological outline of the work performed by him between 18 March 1992 and 22 July 1997. In the pleading of the claim (paras. 24 and 25 of the defence and counterclaim) it is alleged that following on the failure of the builder to remedy certain defects to the works the plaintiff retained or requested the architect to carry out work in respect of rectification and assist the plaintiff in pursuing its legal proceeding against the builder. It is alleged that the work requested of the architect, and performed, was outside the scope of his original retainer. In these circumstances, and whether as a matter of agreement or quantum meruit, the architect was entitled to be paid for his services and the amount claimed to $15,850 was a reasonable amount.

The architect's claim addressed itself to the existence of defects which the builder had failed to rectify. It is not stated but the premise must be that the builder was responsible for the defects, not merely that for some incidental reason it had failed to rectify them. Indeed this is made clear by the further particulars provided by the architect dated 7 April 1998. The particulars refer to defects in the bus turnaround area, the skylight and the floor. I have found that the architect is liable in respect of the bus turnaround area and the roof. That means that the factual premise in the architect's plea is wrong. It means that the architect's work related to the rectification of work for the defective nature of which he was in part responsible.

The schedule of work was simply a running chronology. The items were not allocated to the three areas in question: bus turnaround, roof and floor. Nor was any such break-up attempted by counsel in evidence or in final address. It is not possible for me to attempt any such division, in particular by isolating the items that relate to the floor in respect to which the architect was not sued and is not liable to contribute. Even if it was possible to make a division I would have no way of assigning a value for such item or items as the evidence simply assigned a gross number of hours for the work. Furthermore, the time spent was allocated to principal and senior architect but again there was no evidence to establish which of them worked what hours in relation to which item of work in relation to any of the areas, in particular the floor. Moreover, in relation to the bus turnaround area there is the difficulty in assigning items (and a value) in respect of work that Hede referred to as outside the scope of the original work. Hede said that that extra work related to the driveway and was the obtaining of prices from three different contractors. When asked to do so, Hede could not find a reference to that work in the schedule. In other words, he was unable to identify an entry in the schedule which related to work other than that associated with the project and the subject of the litigation.

Hede never rendered an invoice for the work the subject of the counterclaim. He explained that omission on the basis that he had an on-going relationship with the school under which he would obtain further fees for further works, and in fact he had had one subsequent project. He also agreed that the building contract had not reached final completion because instruction no. 27 was outstanding. He also agreed that the builder and its contractors had been given a fair opportunity to rectify defects before the College engaged others to do so. In view of my findings, that conclusion extends to the architect himself.

In these circumstances and for these reasons I am of the view that the counterclaim fails for want of establishing, on the balance of probabilities, any particular item or items of work done, and by whom and at what value, by the architect in relation to work which was either additional work (in the sense of being outside the scope of original work) or an area of the work (that is, the floor) in respect of which the architect has not been adjudged at fault.

12. Conclusion

To summarise my earlier conclusions, in respect of the roof the plaintiff is entitled to recover $18,993.57; the builder is solely liable for $915.57; as to $13,558.50, the just and equitable contribution is one half by each of the builder and architect; as to $4,519.50, the just and equitable contribution is one third by the architect and two thirds by the builder. In respect of the floor the plaintiff is entitled to payment of the costs of investigations (plus interest) and the cost of replacement, subject to clarification and updating as I have referred to at [180] above. In respect of the bus turnaround area the plaintiff is entitled to recover $44,645 against the builder and $69,645 against the engineer and architect, for which I consider the just and equitable contribution to be 40% by the builder (but to an amount limited to $44,645), 40% by the engineer and 20% by the architect.

The plaintiff is also entitled to pre-trial legal costs of $14,706.11 which, as I have found at [378] above, is to be borne by the defendants proportionately to their final responsibility in respect of the roof, floor and bus turnaround area as variously updated and clarified, and after allowing for interest of the relevant amounts. I will hear the parties as to GST (see [379]) and the builder's set-off claim if it is pressed (see [382]). The assorted claims by the builder, and the architect's counterclaim, fail.

I will adjourn the further hearing to Friday 31 August 2001, when I will hear counsel as to any matters which still require it, including costs, and make final orders. I should be provided with minutes of orders by 4.00 pm on Thursday.

---

(a)	Bus turnaround area:
□ investigation and report	$3,900.00
□ administration of tender process	560.00
□ rectification works	63,115.00
□ supervision costs	6,325.00
$73,900.00
Plus interest from payment to 1 August 2000, and continuing	$52,017.80
(b)	Roof:
□ cost of repairs	$15,546.57
□ investigation and report	13,070.00
$28,616.57
Plus interest from payment to 1 August 2000, and continuing	$21,416.11
(c)	Floor:
□ investigation, monitoring and report	$17,040.60
□ current replacement costs	164,648.00
$181,688.60
Plus interest calculated on investigation cost from payment to 1 August 2000, and continuing, say	$12,500.00
(d)	Legal costs incurred pre-writ associated with above:	$16,856.11
Plus interest from payment to 1 August 2000, and continuing, say	$12,000.00
(e)	10% GST or an indemnity in respect thereof
(f)	Damages or an indemnity in respect of third defendant's counterclaim:	$15,850.00

[2001] VSC 310

28 August 2001