Shark Bay Airort v Michael Kellaway Intl Pty Ltd

[1998] HCATrans 236

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P53 of 1997

B e t w e e n -

SHARK BAY AIRPORT PTY LTD

Applicant

and

MICHAEL KELLAWAY INTERNATIONAL PTY LTD

Respondent

Application for special leave to appeal

GAUDRON
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

FROM PERTH BY VIDEO LINK TO CANBERRA

ON FRIDAY, 19 JUNE 1998, AT 11.26 AM

Copyright in the High Court of Australia

MR M.J. McCUSKER, QC:   May it please the Court, I appear with my learned friend, MR D.W. JOHN, for the applicant.  (instructed by Freehill Hollingdale and Page)

MR A. METAXAS:   If it please the Court, I appear for the respondent.  (instructed by Mr A. Metaxas)

GAUDRON J:   Yes, Mr McCusker.

MR McCUSKER:   May it please the Court, this application concerns a small but very important point, of particular importance, of course, to the applicant.  The applicant brought an action in the District Court of Western Australia seeking damages for a breach of contract and negligence.  It succeeded on the issue of liability totally, and as to damages, the applicant called several witnesses, the major witness being the head - the contracting manager for a company called Emeco.  That was a Mr Silverthorne, whose evidence relevantly appears at page 64 of the application book.  It starts, in fact, at page 63, your Honours, towards the foot of the page, where he gives evidence that he carried out further work for the new designer of the airport ‑ ‑ ‑

GAUDRON J:   But he moved the runway, did he not, in carrying out that ‑ ‑ ‑

MR McCUSKER:   Yes, your Honour.

GAUDRON J:   Yes.

MR McCUSKER:   He moved the runway, but that was a minor part, and evidence as to the additional cost of that was given and indeed referred to by the judge, Justice Kennedy, on the hearing of the appeal, and that appears at page 113.  So the removal of the runway is really a minor matter and that can be taken into account in the total assessment.  The evidence of Mr Silverthorne, which is, importantly, at page 63 through to page 64, sets out the additional costs that were incurred as a result of the changes made by the new designer, Mr Bruechle.  He refers ‑ ‑ ‑

GAUDRON J:   Even that is not the question, is it?  Even that is not the question, because the question would be, how much it would have been to build them if the design had been done correctly the first time.

MR McCUSKER:   Your Honour, the claim succeeded in both breach of contract and negligence and the ‑ ‑ ‑

GAUDRON J:   Yes, but even so, the measure of damage would not be different in either event in this case, would it?

MR McCUSKER:   Probably not, your Honour.

GAUDRON J:   No.

MR McCUSKER:   The way that the applicant approached it was to produce evidence as to what additional costs were incurred as a result of the compliance with the new design, and there was taken into account ‑ ‑ ‑

GAUDRON J:   Yes, as to what costs were incurred in the new design.

MR McCUSKER:   Yes.

GAUDRON J:   But the question was, what costs would have been incurred if the matter had been designed properly in the first place and then to allow for the difference.

MR McCUSKER:   Yes.  It was a matter of rectification of the work that had already been done, so the ‑ ‑ ‑

GAUDRON J:   But to a different plan.

MR McCUSKER:   To a different plan, yes.

GAUDRON J:   Yes.

MR McCUSKER:   And taken into account by the learned trial judge was the amount that would have had to have been paid in any event.  That appears in his judgment at page 93.  That is at line 25:

There should be deducted from these sums the amounts the plaintiff would have had to pay if the defendant’s design had been correct in the first place.

So the judge has approached it correctly in principle and the only basis upon which the Full Court set aside the award of some $140,000 for damages for breach of contract and negligence was that the evidence of Mr Silverthorne was not sufficient to support the award of damages.

GUMMOW J:   Where is the special leave question there?

MR McCUSKER:   The special leave question is, what is - there are two issues, your Honour.  The first is that the question of what is meant by sufficient evidence of damages.  The learned trial judge accepted the evidence of Mr Bruechle that there was - Mr Silverthorne, sorry - as to the cost of rectifying the work.  That appears very clearly.  The only point on which the Full Court - ‑ ‑ ‑

GAUDRON J:   But this was never a rectification case either.  It was never a rectification case.

MR McCUSKER:   It was to carry out the further work that was necessary as a result of the redesign.  The only point upon which the Full Court, your Honours, set aside the judgment was the view that was taken that for Mr Silverthorne to produce a statement of account which he said had been calculated on the basis of the drawings and plans, which he had had produced to him and which he had checked, the court considered that that was not sufficient and that evidence should have been given by the production of those plans and drawings, the source documents.  That is the short point. 

Coming back to the question of what is the special leave point - I said there were two:  the first is, what is meant by sufficiency of evidence in these circumstances; and the second is, in circumstances where some evidence has been given - as, clearly, there was at page 64 through to 65 and 66, where reference is made to the calculations and no objection is taken, but at the end of the day the court considers that further evidence could have been given, is that a circumstance in which the award should simply be set aside or is it a circumstance warranting the matter to be remitted for further hearing on the assessment of damages, simply by production, in this case, of the source documents which the Full Court considered constituted the deficiency in the plaintiff’s case as to damages?

Justice Kennedy, your Honours, at page 110 through to page 111, referred to the principle set out in Bonham-Carter v Hyde Park Hotel, where Lord Goddard said, at the foot of page 110 it is quoted:

“Plaintiffs must understand the fact that if they bring actions for damages it is for them to prove their damage; it is not enough to write down the particulars, and, so to speak, through them at the head of the Court say:  “This is what I have lost; I ask you to give me these damages.”  They have to prove it.

We accept that, of course, your Honours, but the court in Bonham-Carter and, indeed, in the other cases referred to, Wheeler v Riverside and Ashcroft v Curtin, referred to at page 111 of Justice Kennedy’s reasons, in each of those cases the court, in fact, though lamenting the very poor evidence as to damage, nevertheless made an assessment.  In this case, there is clear evidence as to the damage suffered and the basis upon which the Full Court set aside the judgment is, in our respect, wrong in principle and such as to warrant the grant of special leave.  It is epitomised at page 115 by Justice Scott’s reasons, where he refers to the evidence given by Mr Silverthorne, who had testified that the figure - one of the figures in the first item in the schedule, the schedule to which he referred being a schedule produced in evidence - it appears at page 73 of the application book, the calculations of the extra costs for the redesigned runway - his Honour Justice Scott simply said, at page 116, after referring to Silverthorne’s evidence:

Unfortunately the plans upon which that proposition was based were not produced nor were the files containing the calculation referred to, so that the only evidence before the court below was the conclusion reached by Silverthorne without the source documents from which the calculations could be done.

That is the real issue that we say gives rise to a special leave point here.  The Full Court had referred to cases where comments were made as to the requirement that the plaintiff prove the case as to damages, but those cases were all cases in which, despite the poor evidence as to damage, a calculation was made and damages awarded.  There was clearly, in this case, evidence as to damage, and the evidence of Silverthorne, who referred to the calculation, was not objected to.  This is a case, in our submission, where, at the lowest, the court should simply have sent it back for further hearing on the assessment of damages, and it is clear from their Honours’ reasons that all that that further hearing would have necessitated would have been the production of the prime source documents on which Mr Silverthorne had based his calculations. 

Finally, your Honours, on the question of special leave, we do submit, with respect, that this is a case where the interests of justice require that special leave be granted because here is a case where, put baldly, there is a patent injustice been done.  The plaintiff has established liability and that it has suffered a considerable loss as to damages so found by the trial judge, and the judgment has been reduced to a nominal sum simply because of the view that further evidence could have been called; not that there was no evidence but that further evidence could have been called.  So the circumstances in which ‑ ‑ ‑

GAUDRON J:   Should have been called.

MR McCUSKER:   Should have been called, rather ‑ ‑ ‑

GAUDRON J:   That was the view that was ‑ ‑ ‑

MR McCUSKER:   That still does not mean - it is certainly a case of “should have been called” but the point remains that there was evidence before the trial judge from which he could have, and did, make an estimate, or a calculation, indeed, of the damages.  The question that this gives rise to is where evidence is given of damages in this way by a witness producing the statement - the subcontractor producing a statement as to the cost which was clearly incurred in carrying out this work.

GAUDRON J:   Yes, but in carrying out different work.

MR McCUSKER:   Your Honour, that was not the issue, the question ‑ ‑ ‑

GAUDRON J:   Yes.  I mean, what you have got to establish is not the cost that was incurred, which, of course, you may have established.  What you had to establish was, how much that cost was increased by reason of the defective plans in the first place.  That is a much more complicated question, particularly when you have moved the runway.

MR McCUSKER:   The moving of the runway, your Honours, was dealt with by the evidence of Mr Dow, a witness called by the defendant, and it is referred to by Justice Kennedy at page 113.  Your Honours, with respect, the issue before the Full Court was a simple issue of whether Mr Silverthorne’s calculation, which appears at application book page 73 through to 75, was sufficient evidence of the damage, not as to whether that was the proper calculation of the damage but whether it was sufficient, and the Full Court ‑ ‑ ‑

GAUDRON J:   For my part, it does not even seem to be relevant to the damage.

MR McCUSKER:   That is certainly not the basis upon which the Full Court approached it, your Honours; it was accepted that it was clearly relevant as to the damage because it was, had it been backed up?

GAUDRON J:   It could have been made relevant but there were some steps in the process before it was.

MR McCUSKER:   All that had to be done, your Honours, was to produce the plans and the drawings and the persons who made the calculations.  As Mr Silverthorne said, that is easily done.  He said, “These are the calculations that I made which establish the additional costs incurred by reason of the breach.”  In those circumstances, it is not a case of the Full Court setting aside the decision on the ground that there was no evidence as to the damage; it was a case of the Full Court saying, further

evidence could have been called and should have been called, to support the statement of account which Mr Silverthorne produced, without objection, and which he said established the extra costs incurred by reason of the redesigned runway. 

If this matter were heard, your Honours, if special leave were granted, as your Honours can see from the application book, the point that arises is a short one and would not take a considerable amount of the Court’s time.  It is important, in the administration of justice, that a patent injustice such as this be remedied.  It may well be said, the evidence should have been produced, but I invite your Honours to look at the way in which the evidence of Mr Silverthorne was adduced, without objection, appearing as I said, at page 62 through to 64, where the additional costs are proved, additional cost to what we originally contracted for.  At page 64, at line 22 to 25, he was asked:

And is the redesign -

that is Bruechle’s redesign -

“We then had to rework most of the completed work and carry out the redesign, the total cost being 120,724 for the airstrip rework.

It is certainly the case that there was a moving of the runway, but the cost of that is covered, your Honours, by the evidence given by Mr Dow, in our submissions.  I think I can take the matter no further, your Honours.  They are are submissions in support of the application. 

GAUDRON J:   Thank you, Mr McCusker.  We do not need to trouble you, Mr Metaxas.

The Court is of the view that the application involves no question of general importance sufficient to attract the grant of special leave.  Accordingly, the application is refused.

MR METAXAS:   Your Honour, may I move for an order that the respondent have the costs of the application?

GAUDRON J:   Mr McCusker, what do you say about that application?

MR McCUSKER:   No reason against that, your Honour.

GAUDRON J:   The application is refused with costs.

AT 11.42 AM THE MATTER WAS CONCLUDED