Sunbake Pty Ltd v Big River Developments - [2005] SADC 124

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
SUNBAKE PTY LTD v BIG RIVER DEVELOPMENTS
Judgment of His Honour Judge Rice
9 September 2005
CONTRACTS
Contract entered into whereby the defendant was to build a bakery for the plaintiff - defendant undertook project after a separate building company, which already had plans and specifications prepared, went into administration - defendant entered into a contract to build the bakery using those plans and specifications - before contract signed and before building work commenced, plaintiff emphasized to the defendant that the concrete floor of the bakery needed to be able to withstand the abrasive effect of steel-wheeled trolleys - plans and specifications were inadequate for that purpose and the concrete surface deteriorated substantially - claim for breach of implied warranties as to workmanship and materials and negligence.
Held, breach of implied warranties proved - defendant liable to plaintiff for cost of rectification work - damages reduced because plaintiff acted unreasonably in not having the work done at an earlier time thereby increasing deterioration and loss.
Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1981-1982) 149 CLR 337; Royal Botanic Gardens & Domain Trust v South Sydney City Council (2002) 76 ALJR 436; G H Myers and Co v Brent Cross Service Co [1934] 1 KB 46; McKone v Johnson [1966] 2 NSWLR 471, considered.

SUNBAKE PTY LTD v BIG RIVER DEVELOPMENTS
[2005] SADC 124
Introduction

This is an action for breach of contract and negligence arising from the construction of a bakery in Berri in late 1996, early 1997. In essence, the plaintiff, Sunbake Pty Ltd (“Sunbake”) claims that the defendant, Big River Developments (“Big River Developments”) breached the contract by failing to exercise a proper standard of care in the construction of the bakery. It is alleged that the breach has caused certain defects, which the defendant failed to make good, and thereby the plaintiff has suffered loss and damage. The plaintiff also alleges that the defendant was negligent in the construction of the bakery in that it failed to exercise a standard of care that was reasonably expected of it by the plaintiff. Further, it is said the defendant was negligent in that it failed to carry out its duties with due skill and care. Sunbake claims the cost of making good those defects, interest and costs.
Big River Developments was a business operated at relevant times by Mr Murray Knowling (“Mr Knowling”). At an earlier time he had been a supervisor with a building company located in Berri.
The claimed defects are of three types. The first and most significant defect relates to the construction and strength of concrete flooring of the bakery that has now significantly worn down, cracked and pitted such that the floors are uneven and represent a health hazard. The rectification that is sought would involve taking the concrete back to a clean, stable surface and the application of a new, epoxy resin surface. Such a surface would be extremely hard and suitable for a bakery, unlike the current surface.
Secondly, the claim relates to the replacement of acoustic tiles which form part of the suspended ceiling of the public and office areas (including toilets and storage) of the bakery. It is said that those tiles are inadequate for the purpose and some have become water-stained due to a leaking roof for which, it is said, the defendant is liable. The claim under this heading includes the cost of locating and sealing any roof leaks.
Thirdly, the claim relates to replacing ceramic floor tiles in the public areas that have cracks through them brought about by defects in the concrete surface.
Big River Developments’ defence is as follows. First, it does not contest that there are defects in the concrete floor but says it constructed the floors in accord with the engineers’ drawings and specifications and had no reason to depart from them. Secondly, as to the ceiling tiles, it says they were suitable for the purpose and any leaks in the roof have been brought about by subsequent work for which it was not responsible. Thirdly, as to the floor tiles, there is no proved link between the concrete surface and the cracked tiles, it did not purchase the tiles or arrange for them to be laid or agree to supervise them being laid and, therefore, was not responsible for any cracks.
Background to the contract
The background to the formation of the contract was not straightforward and requires some explanation.
Sunbake has been operating a bakery business in Berri for about 25 years. Its director, who gave evidence, is Mr Simon Stemberger (“Mr Stemberger”). For many years the bakery had operated from rented premises in Vaughan Terrace, Berri. Those premises needed significant monies spent on them by way of renovation and modification. The problems with the old bakery site are of great significance to Sunbake’s case and are dealt with below. At all events, the owners of the old site were not prepared to spend the money on renovations and modifications and were asking too much for Sunbake to purchase it. In those circumstances, Mr Stemberger, on behalf of Sunbake, decided to build a new bakery. At some stage, land situated at 18 Kay Avenue, Berri was purchased for that purpose. Before any work could commence, a house needed to be demolished and earth works undertaken.
Mr Stemberger and members of his family had had dealings with a building company known as Riverland Building Company (“Riverland Building”) of Berri. Riverland Building had also built a building across the road from the site of the proposed bakery. Mr Stemberger approached Riverland Building with a view to it building the new bakery. Although Mr Stemberger knew Mr Knowling at that time as a foreman/supervisor with Riverland Building, he had no dealings with Mr Knowling in the initial stages. Mr Knowling knew of the proposed construction because he was employed by Riverland Building, but Mr Stemberger’s dealings were with other people at the company, probably Mr Dean Slade or his son, Brenton Slade, both employees of the company. I find that there were no discussions at that stage between Mr Stemberger and Mr Knowling whereby Mr Stemberger made clear his requirements as to the new bakery.
I find that Riverland Building engaged civil and structural engineers, Zafiris & Associates Pty Ltd (“Zafiris”) of Hindley Street, Adelaide to prepare structural plans and specifications. Either Riverland Building or Zafiris arranged for the necessary soil report. That report would have taken many weeks bearing in mind that soil samples needed to be taken and tested. The plans and specifications could not be finalised until such a report was available.
The situation became complicated when, on 6 August, 1996, Riverland Building went into administration. Mr Knowling’s employment, along with that of other employees, including the two Slades, was terminated. That termination also took place on 6 August, 1996.
I find that, by 6 August, 1996, Zafiris had prepared the structural plans and specifications. I note that those plans (exhibit P3) bear the date July, 1996. The soil report must have been to hand by that time to enable a footing construction report to be prepared. There is no clear evidence that Zafiris was paid for those various reports, plans and specifications but I infer Zafiris was paid, presumably by Riverland Building (or a short-lived business referred to as K.S. Constructions – see P15). I find that Mr Stemberger had nothing to do with commissioning the engineers’ plans and reports, but he presumes he paid for them prior to the collapse of Riverland Building (TP39).
I find that once Riverland Building went into administration, Mr Knowling moved quickly to commence his own business to construct buildings, particularly Sunbake’s new bakery. Mr Knowling was the holder of a Builder’s Licence (TP209). On 9 August, 1996, Mr Knowling registered a business name of Big River Developments. From that date he was in partnership with Brenton Slade. However, for reasons that are unimportant for present purposes, that partnership ceased on 30 August, 1996. It was probably during that period that Mr Knowling obtained from Brenton Slade Riverland Building’s working file for the new bakery.
Documents tendered during the trial clearly indicate that Riverland Building had sought quotes in early 1996 from engineering companies in the Berri area for some of the construction works.
There is a difference between Mr Stemberger and Mr Knowling as to the sequence of events that led to Mr Knowling providing a quotation for the job. Those matters are dealt with below but it is clear that Mr Stemberger wanted Mr Knowling to quote and the latter was keen to do so.
The first quote, dated 20 August, 1996, was in the amount of $441,650 (exhibit P5). Mr Stemberger then asked Mr Knowling to provide another quote without allowance for a lift (to carry items between the two floors of the bakery for which an amount of $30,000 had been allowed). Mr Knowling provided a second quote, this time in the amount of $411,650 (exhibit D11). Both quotations were “....to complete work as per plans and specifications....” and, particularly:-
(3)Pour concrete footings, pads, and floors to Engineers details....
There was a further price reduction when Mr Stemberger said he would have his brother do the painting. The final figure, which was agreed, was $404,650.
Written contract dated 6 November, 1996
The parties agreed that their agreement should be committed to writing. Mr Knowling produced a standard Master Builders Building Contract. The owner was described as “Sunbake Pty Ltd” and the contractor “Big River Developments”. The contract refers to the drawings as having been prepared by Brenton Slade, consisting of six sheets and dated June, 1996. The specification is recorded as having been prepared by Big River Developments. The Footing Construction Report is recorded as having been prepared by “Zafiris & Assoc. – Numbered 960404 – No. of pages 33 – Dated 15th August” plus other documents “Engineering Details – Zafiris & Assoc.” The contract bears the date of 6 November, 1996 and is signed by both parties.
At trial, the engineers’ plans and drawings were tendered as exhibit P3. It was accepted by both parties that these plans and drawings, prepared by Zafiris & Associates Pty Ltd, being Job Number 960404 dated July, 1996 and consisting of four sheets, were the plans and drawings for the purposes of the construction of the bakery.
In addition to the plans and drawings (exhibit P3), specifications styled as “Master Builders Specification HS. 1996” were also tendered (exhibit P2). This is also signed by both parties. These were accepted by the parties as being the specifications for the works, although this document records that the contract between the parties was signed on 10 October, 1996.
The specifications include a reference to “Called Up Documents” which are referred to in the following way:-
Referenced documents and regulations are subject to ongoing revision and updating. Where reference is made to such documents the builder shall ensure compliance with the most recent edition of the document and/or regulation.
Included in the referenced documents in the specification is “AS 3600 – Concrete Structures”. Further, at page 9 of the specifications, there is a heading “Concrete and Reinforcement” under which the following is included:-
All concrete and reinforcement shall be made and placed in accordance with AS 3600.
The engineers’ plans (exhibit P3, sheet 2) state the same thing.
Sunbake places considerable reliance upon AS 3600, particularly Table 4.7 of that standard (which is annexed to the report of the plaintiff’s expert engineer, Mr R.J. Liney, dated 13 January, 2005 – exhibit P14 reproduced below). The effect of Table 4.7 (which has a heading “Strength Requirements for Abrasion”) is that, if the concrete is to be subject to “steel-wheeled traffic”, the compressive strength of the concrete must be not less than 40 MPa. It is not contested that the new bakery floor had a strength consistent with 32 MPa and not a strength of at least 40 MPa. It is also not contested that the engineers’ plans require the slab on the ground to be 20 MPa and suspended slab to be 32Mpa.
One of the major factual disputes between Mr Stemberger and Mr Knowling relates to whether Mr Stemberger told Mr Knowling that the concrete would be subject to steel-wheeled traffic and/or Mr Knowling saw that for himself when he visited the old bakery (before construction) and/or Mr Knowling should have known that or enquired as to the type of traffic.
Mr Stemberger says he told Mr Knowling the type of traffic to which the floor would be subject and Mr Knowling could see that for himself. Mr Stemberger said it was a topic of ongoing discussion and emphasis by him.
Mr Knowling, on the other hand, acknowledges that he knew that Mr Stemberger wanted a very hard concrete floor (TP205-207), but says he built the floor in accord with the engineers’ plans and drawings. He believed building in accord with those plans and drawings was adequate for the use he was told about and saw for himself.
Detailed discussion of factual setting for the contract
Both parties led evidence of discussions prior to the formation of the contract, particularly as to the needs of Sunbake in terms of the strength of the concrete floor and the type of abrasive wear to which it would be subject. Neither party objected to that course. However, in preparing these reasons, I am conscious of the limits of the parol evidence rule as discussed in the authorities such as Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1981-1982) 149 CLR 337 and Royal Botanic Gardens & Domain Trust v South Sydney City Council (2002) 76 ALJR 436. However, this is one of those cases where it is necessary to consider discussions antecedent to the contract to understand the purpose of the contract and the particular requirements of Sunbake.
As mentioned, Sunbake decided to move from its existing leased premises and build its own bakery. I find Mr Stemberger approached Riverland Building and asked it to arrange for plans and specifications to be prepared for that purpose. Initially, those dealings were not with Mr Knowling. Once an administrator was appointed to Riverland Building, Mr Knowling started his own business.
I find that it was Mr Knowling who approached Mr Stemberger with a view to undertaking the construction of the bakery. Mr Knowling would have been aware, from his employment with Riverland Building, that the bakery project was on foot. He also knew of it from one or both of the Slades (probably Brenton Slade) and obtained the working file from one of them. Mr Knowling approaching Mr Stemberger was quite sensible because Mr Knowling needed some paying work and Mr Stemberger needed a new bakery.
It also seems clear that the site where the bakery was to be built had been cleared before the collapse of Riverland Building (TP28, 38). Although Riverland Building had obtained quotations for the building work prior to its collapse, they had not been finalised and no contract had been signed between it and Sunbake.
I find that Mr Knowling was able to provide his first quote quickly because the engineers’ plans and the necessary reports had already been completed. It was clear to Mr Stemberger that, however Mr Knowling came by copies of those plans and reports, Mr Knowling was using the plans and reports that had been obtained by Riverland Building prior to its collapse (TP56-57, 61). No-one has suggested that the process should have been started again. Mr Knowling did not, by his own decision, seek fresh engineers’ plans and specifications.
The engineers’ plan in fact used, exhibit P3, shows the concrete strength for “Slabs – on ground” to be 20 MPa and for “Slabs – suspended” to be 32 MPa. There was evidence before me from Mr J. Collins, Civil Engineer, together with his report (exhibit P12), that the strength of the concrete slabs (on ground and suspended) was consistent with 32 MPa (TP73). Consistently with that finding, there seems little doubt that Mr Knowling undertook and completed the building work in conformity with the engineers’ plans and specifications.
One of the main factual issues relates to the extent of the discussions between Mr Stemberger and Mr Knowling concerning the need for a strong concrete floor and the use of steel-wheeled trolleys or racks.
I found Mr Stemberger to be an impressive witness. I accept that Mr Stemberger told Mr Knowling on a number of occasions that a strong concrete floor was needed to prevent deterioration in the concrete with the wear and tear of such trolleys. Mr Stemberger drew attention to the fact that even the steel tiles were deteriorating in the existing bakery at Berri, as well as constituting a health hazard. Mr Stemberger also explained in evidence that he had another bakery in Loxton where the concrete floor was deteriorating and that he had seen similar problems in bakeries in Adelaide. I accept that he had become “paranoid” about the problem (TP16, 43). I also accept that he raised the problem of the potential for deterioration of the concrete with Mr Knowling on many occasions, both in general discussions and when Mr Knowling visited the existing bakery, well prior to the commencement of construction.
I also make it plain that, in my view, their discussions focused on the abrasive effect of the steel wheels of the trolleys or racks. I find that Mr Knowling was shown the steel-wheeled trolleys or racks and the problems they caused when he visited Mr Stemberger at the existing bakery, also well before the commencement of construction. I found Mr Knowling to be evasive on this topic and his evidence quite unsatisfactory.
There is evidence that Mr Stemberger would have discussed the need for a strong concrete surface in his dealings with Riverland Building prior to Mr Knowling’s involvement in the project. Whether those discussions also focused on the abrasive effect of the steel wheels, I am not in a position to make a finding, although my expectation is that they did. Whether there was a breakdown in the communications with the engineers as to the use of such wheels, also I am not in a position to make a finding. Whether the engineer knew the surface was to be subject to steel-wheeled traffic, I do not know.
One matter that does appear clear, however, is that the concrete floor does not comply with the Australian Standard, AS 3600-1994, Table 4.7, in that it was not adequate for steel-wheeled traffic, which was required to be not less than 40 MPa (see exhibit P12).
I also add this. It does not seem to be disputed by Mr Knowling that Mr Stemberger said he needed a strong concrete floor (TP221, 233-4). Mr Knowling said in evidence that he was not specifically told about steel-wheeled trolleys. I have found otherwise.
On my findings, the position comes down to this. Mr Stemberger had dealings with Riverland Building in early 1996 with a view to it building a new bakery. Mr Stemberger made his requirements known to Riverland Building, although I am not able to be any more precise than that. In its turn, Riverland Building had dealings with the engineers. Presumably, Mr Stemberger’s requirements were conveyed to the engineers and plans, specifications and a footing report were prepared and obtained. The engineers’ plans and specifications required the concrete floors to have a strength or hardness of 32 MPa.

Riverland Building collapsed and it was only at this time that Mr Knowling became involved. He approached Mr Stemberger with the intention of reaching agreement with Mr Stemberger to build the new bakery. Mr Knowling obtained Riverland Building’s working file for the project, obtained quotations and eventually signed an agreement with Mr Stemberger to build the bakery.
Mr Knowling used the engineers’ plans and specifications that were already on file. From the material available to me, the bakery, so far as the concrete floors are concerned, was built in accord with those plans. The evidence shows that the strength of the concrete was quite inadequate for its intended purpose. In effect, Mr Knowling says that he followed the plans and specifications and had no reason to doubt or question them. I have found that Mr Stemberger was “paranoid’ about the need for a strong concrete floor and showed Mr Knowling the deterioration in the existing steel tiles brought about by the steel-wheeled trolleys.
Based upon my findings, was it reasonable for Mr Knowling to assume the engineers had taken account of those matters before he became involved or should he have been alerted to the need to double-check with the engineers that the floor was strong enough for steel-wheeled traffic? Should his own knowledge and experience as a licensed builder have alerted him that the floor strength was inadequate or at least should have been the subject of a query to the engineers?
It is therefore necessary, under the heading of an alleged breach of contract, to consider the terms of the contract.
Alleged breach of contract – contractual terms
The terms of the written contract are referred to above, as are the bases upon which the quotations were provided.
The terms of the written contract are these. Big River Developments, as builder (effectively Mr Knowling), agreed to build the bakery for Sunbake Pty Ltd “....in accordance with the Drawings and Specifications which have been signed by or on behalf of the parties and which are identified as follows:”, then referring to the Engineering Details and Footing Construction Report prepared by Zafiris & Associates (exhibit P1). “Drawings and Specifications” are defined to mean “....the drawings and specification referred to in the Agreement to which these conditions are annexed.” (Clause 1(a).)
As mentioned, the specifications refer to “Called up Documents” and, in combination with Condition 3(a), require all concrete and reinforcement to be made and placed in accordance with AS 3600.
Because considerable reliance is placed upon AS 3600-1994, paragraph 4.7 and Table 4.7, both are reproduced:-
4.7 ADDITIONAL REQUIREMENTS FOR ABRASION In addition to the other durability requirements of this Section, concrete for members subject to abrasion from traffic, shall have a characteristic compressive strength not less than the applicable value given in Table 4.7.
TABLE 4.7
STRENGTH REQUIREMENTS FOR ABRASION

Member and/or traffic Minimum characteristic strength (ƒ ′ _c)
MPa

Footpaths and residential driveways 20

Commercial and industrial floors not subject to vehicular traffic 25

Pavements or floors subject to:
(a)     Light pneumatic-tyred traffic (vehicles
       up to 3t gross mass)
(b)     Medium or heavy pneumatic-tyred
       traffic (vehicles heavier than 3t gross
       mass)
(c)     Non-pneumatic-tyred traffic
(d)     Steel-wheeled traffic
25

32
40
To be assessed but not less than 40

NOTE: ƒ′_c refers to the strength of the wearing course.

Also, as previously mentioned, the bakery was built, so far as the floors and slabs are concerned, in accord with the engineers’ plans and specifications.
Is there justification for an implied term?
The plaintiff (Sunbake) relies upon a line of authority concerning warranties to be implied in a contract for the supply of goods and services.
The first of those in relation to materials can be stated as follows:-
....a person contracting to do work and supply materials warrants that the materials [used] will be of good quality and reasonably fit for the purpose for which [they are being used], unless the circumstances of the contract are such as to exclude any such warranty. (See G H Myers and Co v Brent Cross Service Co [1934] 1 KB 46 at 55 per du Paracq J.)
The second, relating to the works being fit for the purpose for which they are required, can be put in these terms:-
Unlike a warranty of good workmanship, a warranty that the work will answer the purpose for which it is intended is not implied in every contract for work. The essential element for the implication of such a term is that the employer should be relying, to the knowledge of the contractor, upon the contractor’s skill and judgment and not upon his own or those of his agent. (See McKone v Johnson [1966] 2 NSWR 471 at 472.)
In my view, on the facts of this case, both warranties were implied into this contract, particularly the second. There is no doubt that Mr Stemberger was relying upon Mr Knowling’s skill and judgment in the performance of the building work and Mr Knowling well knew that.
At this point I need to return to the findings relating to the need for a strong concrete floor and that the floor would be subject to the abrasive effect of steel‑wheeled trolleys. I have already found that Mr Stemberger was “paranoid” about the problem. I emphasise that I find that the strength of the floor was not just a passing topic of conversation between the two on a couple of occasions. I find that Mr Stemberger emphasized its importance on a large number of occasions to Mr Knowling. I find that it was a primary focus of Mr Stemberger because of his experience with the existing bakery, another he owned and the problems in that regard that he knew about from other bakeries. In my view, Mr Knowling should have been alerted to the need to double-check with the engineer and/or from his own knowledge and experience to ensure that the floor was fit for its intended purpose.
It was imperative that Mr Knowling turn his mind to that issue given the emphasis I find Mr Stemberger gave it. It does not appear as though he did so. Mr Apps, on behalf of Mr Knowling, submitted that Mr Knowling was not obliged to check to ensure that all Australian Standards were observed in the engineers’ plans. Although that is probably true, his dealings with Mr Stemberger put the particular problem with steel-wheeled traffic into a category that needed him to be especially careful about the strength of the floor. On the basis of my findings, a simple telephone call was all that was needed. Further, Mr Knowling should have known the requirements contained in the Australian Standards, compliance with which was dictated in the contract.
Was there a breach of the warranties implied in the contract for the supply of goods and services?
There seems little doubt that the concrete floors of the bakery (that is, the upper and lower levels) sustained significant deterioration as the direct result of the use of steel-wheeled trolleys. For my purposes it is sufficient to refer to the observations of Mr R.J. Liney, a structural engineer called on behalf of Sunbake. In his report of 13 January, 2005, exhibit P14, he says this (p 2):-
At the time of the writer’s inspection the day’s baking had been completed and the floor had been washed down at both levels. On the upper suspended floor there was evidence of the top surface being worn down to expose the concrete aggregate in those areas which were trafficked by the steel wheeled trolleys. These trolleys are used to transport produce in and out of the ovens located on this floor level. There was noted significant pitting of the floor slab, up to approximately 20 mm, at the entrance to the ovens immediately adjacent to a steel floor plate. It appears that this pitting was caused by the trolleys rolling from the plate mounted directly on the concrete floor on to the concrete surface resulting in surface damage causing destruction of the concrete locally. In other areas it was evident that the original surface had been worn away down to the concrete matrix.
On the lower level there was a similar pattern of surface deterioration with excessive wear occurring at the location of the joints (e.g. at the internal doorway between two storage areas) and also at points of deterioration where it is believed the concrete had developed shrinkage cracking following the pour. In both cases the sides of the joints had been chipped away resulting in the trolleys causing further deterioration either side of the joint or crack.
In that same report, Mr Liney also notes that the Australian Standard strength requirements for abrasion for non-pneumatic-tyred traffic is 40 MPa. As mentioned, the strength for steel-wheeled traffic is “to be assessed by not less than 40 MPa”. Mr Liney’s view, which I accept, is that an epoxy hardener should now be applied (p 3):-
An epoxy hardener should now be applied once the surface has been prepared in accordance with the manufacturer’s requirements and the joints and cracks sealed in order to extend the life under this type of traffic for a period nominated by that particular manufacturer.
The testing for the actual strength of the concrete surfaces was undertaken by Mr J. Collins, civil engineer, by report dated 25 January, 1999 (exhibit P12). Mr Collins’ report and his evidence was to the effect that “....the quality of the concrete and the workmanship involved was consistent with 32 MPa.. However, demonstrably, the 32 MPa concrete was not suitable for the particular application and the Australian Standard is a piece of documentary evidence which supports that” (TP73, 88). He also said that “....32 MPa was woefully inadequate as has been shown” (TP74).
I find that there were breaches of the implied warranties in the contract.
In the light of that conclusion, there is little that needs to be said about the alternative basis upon which Sunbake put its case. However, based upon the factual findings I have made, Mr Knowling failed to exercise a standard of care reasonably expected of him by Sunbake. He failed to carry out his duties with due care and skill.
Did those breaches cause damage?
As has been dealt with above, there was significant damage occasioned to the concrete floors by the use of steel-wheeled trolleys. In my view, that damage was caused as the direct result of the breaches.
Relying upon the report and evidence of Mr Liney, the structural integrity of both slabs has not been generally impaired, although it will be necessary to apply an epoxy filler and hardener in the affected areas to bring them to the standard of strength for which they are used.
Evidence was given at trial by Mr B. Withers who runs a company called Goulburn Valley Maintenance Systems Pty Ltd. That company specialises in concrete floor toppings with epoxy resin systems. I accept Mr Withers’ evidence that the use of this method will rectify the problem.
Mr Withers gave a number of quotations concerning the costs associated with rectification work. The first, dated 19 April, 2002, exhibit P13, was for a total amount of $62,550. There were revisions of that amount in March, 2004 and July, 2005 such that the cost now is $82,348 plus out-of-pocket expenses for the company’s workmen for travel, meals and accommodation (exhibit P6). Those workmen, on the most recent proposal, would be six in number and, because it is said the work needs to be done in stages, would make six separate trips from Shepparton for that purpose (TP108). It is not possible to be precise about those expenses because the work may be able to be done over lesser trips. I accept that shutting down the bakery to enable all of the remedial work to be done at once is not a viable option for Sunbake (TP22, 23).
The reason for the increase in the cost of the remedial work is this. Mr Withers gave evidence that the degree or extent of the damage to the concrete surface has become worse over the ensuing years, particularly over the past twelve months or so with the continuing use of the steel-wheeled trolleys (TP104). In addition to that, there has been a marked increase in the cost of the resin necessary to do the work, along with the general increases in costs of running a business (TP112-114). I also accept Mr Withers’ evidence that he told Mr Stemberger that, unless the floor was repaired, the damage would get worse (TP117-8).
Based upon those findings, the question arises as to whether Sunbake was under an obligation to mitigate its loss and have the remedial work performed earlier. In other words, should Sunbake, acting reasonably, have taken steps to minimise the increasing damage caused by the ongoing use of steel-wheeled trolleys. The onus in this regard rests on Big River Developments. Expressed in terms of a duty, any duty on Sunbake is not to act unreasonably.
In my view, Big River Developments has satisfied that onus. As has already been noted, Mr Withers warned Mr Stemberger that the damage would get worse if left unrectified. That has happened and the cost of rectification has increased quite substantially, partly because of the increased cost of materials and doing business, but also because of the further deterioration through use.
There is no doubt that Mr Stemberger was aware of the problem as early as about six months after the building was completed (TP17, 68, 95-97). Given that evidence, in my view Big River Developments has demonstrated that Sunbake acted unreasonably in not having the remedial work undertaken no later than about mid-2002. In that regard I rely upon Mr Withers’ initial quote, exhibit P13. There was no suggestion at any stage that Mr Stemberger was not financially in a position to undertake the remedial work in 2002.
I note from exhibit P13 that the specification of the work includes the following:-
5.Saw cut the bottom floors and place new expansion joints to allow for future movement.
It is clear from Mr Withers’ evidence that that is necessary otherwise even the remedial work may deteriorate (TP103). Part of Sunbake’s claim relates to cracking of the concrete due to the absence of expansion joints. The evidence on that was quite sparse and the only allowance I would make in that regard is that necessarily subsumed in Mr Withers’ quote.
I find that the loss properly allowable to Sunbake concerning the concrete flooring is the amount of $62,550.
The claim as it related to leaks in the roof
I do not need to say much under this heading. I am prepared to accept that the roof of the new bakery has been breached in a number of places and that that has allowed water inside and caused deterioration in some of the internal ceiling tiles. However, it is not known where those breaches are, let alone who was responsible for them. As the evidence disclosed, once Big River Developments had completed its building work, Sunbake contracted with separate entities to undertake work that necessitated working on the roof. Air-conditioning units and electric motors were all supported by frames fixed to the roof (TP91-2). The evidence does not allow me to say who was responsible for leaks to the roof and any consequential damage. In any event, whilst a few of the ceiling tiles needed replacing, there was insufficient evidence to justify the claim that they all be replaced as generally unsuitable for their intended purpose.
The claim as it related to cracked floor tiles
I do not need to say much about this topic either. The evidence disclosed that some ceramic tiles in the public areas (including a public toilet) sustained hairline cracks which have not become wider but there are more of them as the years go by (TP20). However, I accept that Mr Stemberger engaged an independent contractor to perform the work. The work was not part of any contract with Big River Developments. Further, I find that Mr Knowling did not undertake to supervise the work.
Apart from those matters, I have no evidence about what caused those hairline cracks or any means of measuring damages.
There will be judgment for the plaintiff in the amount of $62,550, plus interest.
I will hear the parties on the question of interest and costs.

Member and/or traffic	Minimum characteristic strength (ƒ ′ _c) MPa
Footpaths and residential driveways	20
Commercial and industrial floors not subject to vehicular traffic	25
Pavements or floors subject to: (a) Light pneumatic-tyred traffic (vehicles up to 3t gross mass) (b) Medium or heavy pneumatic-tyred traffic (vehicles heavier than 3t gross mass) (c) Non-pneumatic-tyred traffic (d) Steel-wheeled traffic	25 32 40 To be assessed but not less than 40