Tokich Homes Pty Ltd v Hewatt Earthworks Pty Ltd
[2013] ACTSC 137
•25 July 2013
TOKICH HOMES PTY LTD v HEWATT EARTHWORKS PTY LTD & ANOR
[2013] ACTSC 137 (25 July 2013)
CONTRACT – Claim by property owner for breach of contract in construction of farm dams – associated claims in negligence and under Trade Practices and Fair Trading legislation – no breach of contract established – no negligence established – statutory claims not made out – judgment for defendants.
Fair Trading Act 1992 (ACT)
Fair Trading Act1987 (NSW)
Trade Practices Act 1974 (Cth)
Jones v Dunkel (1959) 101 CLR 298
No. SC 614 of 2004
Judge: Master Harper
Supreme Court of the ACT
Date: 25 July 2013
IN THE SUPREME COURT OF THE )
) No. SC 614 of 2004
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN: TOKICH HOMES PTY LTD
(ACN 056 553 701)Plaintiff
AND: HEWATT EARTHWORKS
PTY LTD
(ACN 008 623 309)First defendant
AND: GEOFFREY JOHN HEWATT
Second defendant
ORDER
Judge: Master Harper
Date: 25 July 2013
Place: Canberra
THE COURT ORDERS THAT:
judgment be entered for the defendants.
the defendants’ costs be paid by the plaintiff.
This action was commenced in November 2003 in the Magistrates Court by the present defendant Hewatt Earthworks Pty Ltd against the present plaintiff Tokich Homes Pty Ltd. The claim was for the balance due under a contract for excavation work carried out in late 2002 and early 2003 on land owned by Tokich Homes at Mitchell. The claim was for $26,000 plus interest.
In March 2004, Tokich Homes filed a defence and cross-claim. The cross-claim was for the expected cost of rectification work on dams on a rural property in Spring Range Road, Hall, in New South Wales, a short distance north of the Australian Capital Territory border. The claim was for $63,800, and admitted a setoff for the amount claim by Hewatt Earthworks for the work at Mitchell.
The cross-claim pleaded that Tokich Homes was the registered proprietor of the property, and engaged Hewatt Earthworks to construct two dams at a cost of $40,000. The dams were constructed and the agreed amount paid. The dams were unsatisfactory in that they leaked. Repairs were attempted by Hewatt Earthworks but were unsuccessful.
In August 2004, Hewatt Earthworks applied for summary judgment for the amount claimed in respect of the Mitchell work. On 7 September 2004 Special Magistrate Thompson ordered the entry of summary judgment plus costs, with a stay of execution until the counterclaim had been determined.
On 15 September 2004 Tokich Homes applied for an order removing the cross-claim to this Court on the basis that the amount claimed exceeded the then jurisdictional limit of the Magistrates Court. This was not opposed, and on 24 September 2004 I ordered the removal, reserving the costs of the application.
Hewatt Earthworks appealed against the order of Special Magistrate Thompson directing the entry of summary judgment. The appeal was heard by Crispin J on 10 February 2005. His Honour upheld the appeal and set aside the orders of the Magistrate.
The progress of the matter was thereafter characterised by long delays. Tokich Homes changed solicitors a number of times. The cross-claim was amended twice. In July 2006 a second defendant, Mr GJ Hewatt, a director of Hewatt Earthworks, was joined as a defendant, reserving his right to plead a limitation defence. The amended cross-claim pleaded a first contract made in June 1999 between Ante Tony Tokich on behalf of Tokich Homes and Mr Hewatt on behalf of Hewatt Earthworks, to design and construct two dams for an amount of approximately $25,000. An implied term was pleaded, that Hewatt Earthworks would exercise all due care, skill and diligence in carrying out the works. In breach of contract, and in breach of a duty of care to Tokich Homes, Hewatt Earthworks failed to complete the task in such a way that the two dams were watertight and reasonably fit for their purpose. Particulars of the asserted breaches were:
a) failure to obtain government approvals for the work;
b) failure to use adequate and appropriate machinery in carrying out the works and in compaction;
c) failure to use adequate and appropriate building materials and soils;
d) failure to carry out density testing.
Tokich Homes also asserted breach of a second contract, made between John Tokich and Mr Hewatt in about November 2002, to rectify problems with cracking and seepage in the rear dam. Excavated clay soils from the Mitchell site were moved to the farm and used in the rectification works. The rectification works were unsuccessful. Particulars of breaches by Hewatt Earthworks were generally the same as in respect of the first contract.
Parallel claims were made in negligence, and claims were made under the Trade Practices Act 1974 (Cth), the Fair Trading Act1987 (NSW) and the Fair Trading Act 1992 (ACT). The only claims made against Mr Hewatt personally were under those Acts.
The order for joinder of Mr Hewatt as a defendant was made on 28 July 2006. The order was not taken out, nor was an amended cross-claim filed or served at the time. The amended cross-claim was not filed until January 2009. Not much happened in the interim. The present solicitors for Tokich Homes came on to the record in November 2007, but took no steps for another year, resulting in the proceeding being struck out by operation of the Court Procedures Rules 2006, rule 75(2). The proceeding was reinstated without opposition on 8 December 2008. The amended cross-claim was eventually filed in the following month. In May 2009 an answer to the cross-claim was filed, including a limitation defence on behalf of the second defendant. Senior counsel for Tokich Homes did not seek to be heard in closing address on the limitation point and hence did not seriously pursue the claim against Mr Hewatt personally.
The oral evidence
Evidence for Tokich Homes was given by Mr John Tokich, a director of the company, who is the son of Ante Tony Tokich. The father is not a director or shareholder and was not called to give evidence. There was no explanation for his not being called.
Evidence for Tokich Homes was also given by Mr J P Thompson, a civil engineer and a principal of Coffey Geotechnics Pty Ltd.
For Hewatt Earthworks, evidence was given by Mr Hewatt, Mr Warren Alley and Mr RR Gaspari. Mr Gaspari is an accountant employed by Hewatt Earthworks. Mr Alley was the bulldozer driver principally engaged in the construction of the dams in 1999.
The evidence of John Tokich was that the company Tokich Homes bought the property with the intention that a house would be built on it where he and his family would live. He was a shareholder and director of the company. His father had owned farms at Gundaroo and Murrumbateman in earlier years. The concept was that the company would first build a house for John, then a second house for his brother.
His father had always been a house builder. He and his brother formed the company Tokich Homes, which also engaged in house building. John Tokich was himself a licensed builder.
He gave evidence of a day at the farm when he and his father were putting in a road from the front gate up to the house site, using a bobcat and a backhoe. Mr Hewatt, whom they knew of but had not previously met, drove past in a large grader, came in and introduced himself. He lived a short distance away, and he graded the road while he was there. There was then some discussion about building dams on either side of the house. Mr Tokich said that Mr Hewatt seemed to know quite a bit about good locations for dams. There were already five or six small dams on the property when it was purchased.
After the discussions on that first day, Mr Tokich telephoned Mr Hewatt, who came out to the property again with his accountant, Mr Gaspari. Asked about what further discussions took place Mr Tokich said “yes, pretty much we worked out where we’d have two nice, big dams. One on this side, one on the other side. And they gave us a price to do it which we thought we were happy with to have, you know, the water features either side”.
He was asked whether there was any discussion about obtaining official permission to construct the dams. He replied “when we asked that question we were told we didn’t, Geoff told us that we didn’t need any approvals for dams”.
He was asked whether there was any discussion about the methods to be used to construct the dams. He replied “he had all the machinery so we presumed he would know what to do with them to build the dams for us”. Mr Tokich said that Mr Hewatt mentioned that he had previously constructed a large dam at another property in the area, Capricorn Park, and that he would take them out to have a look. They duly went, and Mr Tokich said that the dam was very impressive. It was some three times the size of the front dam subsequently put in at the Tokich property.
A document was tendered on Hewatt Earthworks letterhead, dated 29 June 1999, signed by Mr Gaspari on behalf of Mr Hewatt and addressed to Mr Tony Tokich at an Isaacs address, reading as follows:
Re: Construction of dams at Spring Range Road property
This is to confirm that the construction of two dams at the above property will be approximately $25,000.
It is apparent that the $25,000 was originally the lower figure of a range, but the upper figure was obliterated, and the obliteration also signed by Mr Gaspari.
Mr Tokich said that the work started soon afterwards. He was asked who turned up to do the work. He said that Mr Hewatt was there as boss. There were always two other men there, one driving a bulldozer and the other a scraper. Another staff member would turn up to refuel the plant diesel tanks and there was a water truck. Compaction of soil was by the bulldozer. There was no roller on the site. The dams took about a month to construct. Meanwhile John Tokich was working on building his own house on the property, and also doing other jobs in Canberra.
Also tendered was an invoice on Hewatt Earthworks letterhead dated 31 August 1999, addressed to Mr John Tokich at his home address at Ngunnawal. The invoice had been typed to read as follows:
Detail – dams at Spring Range Road Hall
Construction of two dams at the above property
Dam no 1 10.2 mega litres
Dam no 2 over 10 mega litres
$20,215.00
Extras
Hire of Excavator
18/7/99 doc 3751 8.00 hrs $95.00
$760.00
19/7/99 doc 3752 10.50 hrs $95.00
$997.50
20/7/99 doc 3753 6.00 hrs $95.00
$570.00
18/8/99 doc 911 5.00 hrs $95.00
$475.00
Floatage
$475.00
Hire of Scraper
7/8/99 doc 4108 8.5 hrs $120.00
$1020.00
Total Gross
$24,512.50
Less Nil PPS Tax
Total Due
$24,512.50
The invoice had been altered in handwriting to delete all of the extras, and to change the total to $20,215.00, and the word “paid” had been written on the invoice.
Mr Tokich said that within a week of the dams being completed he had a visit at the property by two men from the NSW Land and Water Conservation Department, Mr Webb and Mr Gustafson, both based at Leeton. His understanding was that a neighbour had complained about the dams, but he also suspected that they may have been detected by satellite. Mr Webb and Mr Gustafson first made contact by telephone, and then came out to inspect the site. The inspection had taken place by 18 August 1999, the date of a letter in evidence from Mr Gustafson addressed to Mr Tony Tokich.
Mr Tokich said “we called Mr Hewatt immediately, and he attended while Mr Webb and Mr Gustafson were there”. It became apparent that prior approval to construct the dams had been required, in the form of a licence, that properties like the Tokich property were subject to a harvestable water limit, and that the capacity of the dams exceeded the limit. Mr Tokich said that he had been unaware until then that government permission was needed to construct the dams. He recalled that five or six years earlier his father had had a dam installed on his farm and that no licence had been required.
The letter from Mr Gustafson to Mr Tony Tokich of 18 August 1999 set out the action required by the Department. The front dam, north of the house and presumably so described because it was closer to the public road than the other dam, was required to have a diversion bank at least 600 mm high constructed on its upslope margin, to exclude the dam from the catchment, meaning that it would receive no runoff of surface water. It could thus be filled only from a natural spring said to be situated in the bottom of the dam (and, presumably, from any rainwater which fell into the dam itself).
The rear dam had a capacity of between 8 and 10 megalitres. The harvestable right for the property was 4.7 megalitres. One alternative was for Tokich Homes to purchase a licence to authorise a volume exceeding the harvestable right. Another alternative was to apply for a stock and domestic licence, which might or might not be approved. The third and least attractive option was to remove or alter the dam so that its volume did not exceed the harvestable right.
Mr Tokich got in touch with Mr Hewatt who came out to the site while Mr Webb was there, and dug a diversion trench with his grader.
In February 2000 Mr Gustafson wrote to Mr Tony Tokich again, referring to an inspection by Mr Webb the previous day, and informing him that the rear dam had been licensed, but with a condition which precluded the construction of any further dams on the property.
Subsequently Mr Hewatt performed some remedial work on the rear dam. Clay was bought by truck from the Mitchell site to the farm, with a view to using the clay to waterproof the dam wall. John Tokich’s evidence was that the remedial work was unsuccessful. The leaking was worse after it, and the dam level went down.
It was led from John Tokich that there had been a considerable amount of fill put in subsequently behind the dam since the remedial work. He said that more fill had been put into the front dam than the rear dam. He estimated that “maybe 40,000 cubic went into the back and double that and more into the front”. He said that this continued over a period of about five years.
From 2001 or 2002 through to about 2006 drought conditions prevailed in the area. On the downside of the wall of the front dam, even during the drought, the soil was soggy and producing bright green grass.
Mr Tokich was asked who had put the fill into the dams. His answer was “there was myself, my workers on both bobcats and backhoes. There was a D group bulldozer, there was Paragalli’s front end loader. So it was a multitude of machinery over the three to five years”. He said that he did not have to pay for any of it, and that his staff would have had to tip the fill somewhere in any event. He estimated that the hours put in by himself and his staff over the years had been “40,000 hours maybe” engaged in this task.
He said that it remained his intention to fix both dams to the stage where they were watertight and functioning as originally intended.
He said that Hewatt Earthworks did not charge for the remedial work carried out on the rear dam.
On 29 September 2003 John Tokich handwrote on an order form a document which read as follows:
I Geoff Hewatt of Hewatt Earthworks agree to fix the leaking dam at 180 Spring Range Road Hall, NSW. The second attempt has made the dam leak more than before, and the work was left in an unfinished state. Also one dam was backfilled – with promises to return to dig the new 3ML dam, which was approved by a water inspector from Yass – as yet the dam has not been dug.
Mr Tokich’s evidence was that he showed this to Mr Hewatt and asked him to sign it. He said that Mr Hewatt “just laughed and walked away and that was the last time we ever had anything to do with each other basically”.
The evidence of the engineer, Mr Thompson, was that all farm dams have some degree of seepage. Seepage of the order of 5 to 10% would be regarded as reasonable. His estimate of the degree of seepage of both dams on the Tokich property was of the order of 60 to 70%.
Mr Thompson explained that the construction of an adequately watertight farm dam required the use of low permeability material (soil, clay and rock) compacted to the correct level. It was important to ensure that rock fragments were not too large. It was possible to over-compact the material, and to that extent dam construction was different from road construction where a high level of compaction was desirable. It was necessary to ensure that the soil component used in dam construction was of a sufficiently low permeability to prevent the development of flow paths. Once erosion developed, small pipes or tunnels could form in the dam, which would tend to become larger over time.
There was no Australian standard governing farm dams. It could not be assumed that the soil and other materials excavated to form the dam would be adequate for its wall, and it might be necessary to bring materials on to a farm from somewhere else. It was also possible that the floor of a farm dam might be permeable, although generally an unsatisfactory dam floor would seal over time as it filtered up, filling cracks and creating a blanket over the floor. The same process did not work as well with the dam wall. Sediment tended not to attach itself to the dam wall because of the slope. Most would gravitate to the bottom of the wall and the floor of the dam.
Mr Thompson said that in his experience it would be unusual for a civil engineer to be engaged to advise prior to the construction of a farm dam. It was usual practice for civil engineers to be engaged in relation to large dams, for example for town water supply, but not for smaller farm dams.
Counsel for Hewatt Earthworks gave a short opening in which he said that his client’s case was that the arrangements about the construction of the dam had been between Mr Hewatt and Mr Ante Tony Tokich, father of John Tokich, and that the arrangement had been that Mr Hewatt would provide earthmoving equipment and an operator to construct two dams at locations determined by Mr Tokich snr. In effect, he said, the arrangement was one for hourly hire rather than for a lump sum, or for an amount calculated on any other basis. The location of the dams had been selected by Mr Tokich snr despite concerns on the part of Mr Hewatt. The work was undertaken as instructed on an “all care but no responsibility” basis.
Mr Hewatt’s evidence was that the arrangements about building of the dams had arisen from a meeting he had with Tony Tokich and his son John. Prior to this meeting he had had a brief encounter with them when he was driving past the property on his grader. They had waved him in and asked him whether he could grade the road, which he did immediately and fairly quickly. He had been in something of a hurry on that day.
Some time afterwards, Tony Tokich had contacted him. There had previously been some connection between Tony Tokich and Mr Gaspari who worked with Hewatt Earthworks. Mr Hewatt said that he went to the farm and looked at the sites which they pointed out to him. He could not remember exactly who was there, the incident being eleven years before he gave his evidence. He was certain that Tony Tokich was there but was unsure whether John Tokich had been there. He said that Tony was the spokesman for the family and for anything that happened to the dams. John Tokich had been busy and came and went from the property a lot.
Tony Tokich told him that there were two dams to be put in. The front dam was intended to look attractive from the house. Mr Hewatt said that it was to be a large dam, but that the catchment for it was minimal. This concerned him. He did not know how they were going to fill the dam. There had been some discussion about this on the day but he could not recall the details. He had also been concerned that there was a shortage of material to construct the dam wall. He said that farm dams were typically constructed out of the material found on site. He noticed a spring at the top end of the dam which would help in filling it. There was also a spring below where the dam wall was to be built.
Mr Hewatt’s recollection was that he had his bulldozer operator, Mr Warren Alley, with him on that day.
Mr Hewatt said that he generally undertook the negotiations with a farm owner about the construction of a dam, because in his experience farmers were often concerned at the likely cost. He had a mental rule of thumb about what it would cost approximately per megalitre, and he used this in the discussions. He had said that he would do the job on an hourly hire, with an estimate of the likely total cost.
As to the site he was shown for the rear dam, he suggested that it be moved further downstream where there would be better catchment. He said that both he and Mr Alley raised the question of the location of the rear dam, but Tony Tokich had been definite that the dam was to go into the site he had decided on.
Mr Alley was a subcontractor rather than an employee of Hewatt Earthworks. He mainly worked for another quarrying company in the area, which owned his bulldozer, but Mr Hewatt from time to time arranged to use his services and the bulldozer, and cross-hired plant from time to time to the other company. He said that Mr Alley had a good reputation in the area for building farm dams.
Mr Hewatt was asked whether there had been any discussion about permits or government approval in relation to the dams with Tony Tokich. He said that there had been a discussion. Tony Tokich had confirmed that he had the necessary permits for the construction of the dams. Mr Hewatt’s understanding was that the NSW legislation at the time required the property owner to obtain permission, rather than the contractor.
Mr Hewatt said that several times during the construction of the dams he raised the question of permits or licences with Tony Tokich, who assured him each time that they were coming. Mr Hewatt said that his concern was related to his belief that the dams would exceed the harvest entitlement of the property, but he did not suggest that he put this to either Tony or John Tokich.
Mr Hewatt said that once construction started, he had little involvement. The most senior person on site for Hewatt Earthworks was Mr Alley, the bulldozer operator. There were other people on site at different times, including an excavator operator and a scraper operator. There were perhaps five or six pieces of plant coming and going on some days, and thus five or six people there at a time, with only one or two there on other days. They were to work pursuant to directions given by Mr Tony Tokich. Because Mr Hewatt lived nearby, he sometimes dropped in as he was passing. He was motivated to build a relationship with Tony Tokich in the hope of getting more work from Tokich Homes. Soon after the construction of the rear dam commenced, Mr Hewatt went to Europe and was away for six to seven weeks.
Some time later, Tony Tokich gave Mr Hewatt the Mitchell job, to remove spoil from a building site and take it to the farm. The material was delivered to the farm by truck drivers either employed by or subcontractors to Hewatt Earthworks. It was then put in place by a bulldozer operator working for Hewatt Earthworks, using a Hewatt bulldozer. Following discussions between Mr Hewatt and members of the Tokich family, he used the fill to put what he described as another keyway into the rear dam to control the seepage. There was more clay content in the spoil from Mitchell. He also had his staff use a 12-tonne roller to compact the material. He did not charge for the use of the excavator or roller. He explained that this was what he generally did following an excavation and removal of spoil, influenced in the particular case by the fact that he was trying to build a relationship with Tokich Homes.
During the construction of the dams, Mr Hewatt said that he had a telephone call in something of a panic from one of his drivers, asking him to get to the site quickly because there were people from NSW Water there who had stopped work. Mr Hewatt went to the farm. He knew the two men from Leeton from earlier dealings.
Mr Hewatt said that he was instructed by the two men from NSW Water to convert the front dam into a turkey’s nest dam. This involved ringing it in and baffling the overflow so that there was no flow of water into the dam from above. There was no spillway, and no need for one. He said that until then it had not been intended to be a turkey’s nest dam, and it had a spillway initially.
Mr Hewatt agreed that he had probably taken members of the Tokich family to Capricorn Park to look at the dam there. This was not a dam he had build originally, but he had extended it pursuant to a licence issued by NSW Water and Conservation. He had done this work probably four or five years before constructing the dams for the Tokich family.
Mr Hewatt was asked whether he had assured John Tokich that the dams would fix themselves over time. He could not recall saying this, but his experience had been that most farm dams initially seeped to some extent and that this eventually slowed. He said that his company never guaranteed a farm dam and that no one else did.
In cross-examination, he conceded that he had probably told John Tokich that most farm dams improved their leakage problems and fixed themselves over time.
Warren Alley gave evidence that in 1999 he had been employed by a company controlled by Geoff Schmidt as a plant operator, specifically a bulldozer driver. Mr Schmidt told him that he would be working on the Tokich job. He went out and looked at the site with Tony Tokich, who told him what to do and selected the sites for construction of the dams. On the first day they looked only at the site for the front dam. Mr Alley took the view that it was not a good site because of the presence of two springs, the lower of which he thought had been underneath the back of the proposed dam wall.
Mr Alley by 1999 had been driving bulldozers for about 30 years, and most of his work had involved the construction of rural dams.
He recalled that there had been no catchment for the front dam but he had been informed that it was to be a turkey’s nest dam, filled by other means. Also, the material to be used for the dam wall was in his view unsatisfactory, being too silty. Nevertheless he did what he was told, and spent about a week and a half with his bulldozer building the front dam, compacting the wall as best he could with the bulldozer. The dam wall material was course and shaley, material which water was likely to run through rather than be held by it. He would normally have dug a core trench through the wall and backfilled it with clay, but there was no clay available on the site. He said that he told Tony Tokich that the dam wall was unsatisfactory and would be very unlikely to hold water at all. Tony Tokich replied that he wanted the dam wall built, and he hoped that it would seal over time. Tony Tokich was there every day, and he and Mr Alley talked about the job every day.
The site for the rear dam was also selected by Tony Tokich. Mr Alley regarded the site as an impossible one for a dam, because of rock formation. His view was that the rear dam would not hold water. He told Tony Tokich this. Tony Tokich told him to keep going and was happy to proceed with the dam in that position.
Mr Alley said that he asked Tony Tokich whether he had a permit to build the dams. Mr Tokich replied that he did.
In cross-examination, Mr Alley said that the bulldozer he had used was the ideal size for construction of a farm dam. He had only ever used a bulldozer as the means of compacting, and had never used rollers. He said that rollers were only necessary with much larger dams.
It was put to Mr Alley that the front dam had not been created as a turkey’s nest dam, but converted into one in about 2003. Mr Alley adhered to his earlier evidence that it had been a turkey’s nest dam from the start. He said that he had constructed two or three dozen dams since the dams at the Tokich farm. He had first been asked to give evidence in the case two or three years before the hearing, probably nine years after the events he was asked to recall.
Mr Alley was asked about the involvement of John Tokich. He recognised him in court, and said that he had been on site quite often, and involved in discussions from time to time about the property, the dams, and how the job was going.
He saw Mr Hewatt on site only twice, for fairly short periods. Mr Gaspari came out quite often but did not give him any instructions of a technical nature.
Mr Gaspari gave evidence that he had been with Hewatt Earthworks since 1998, initially as accountant. For the two years before he gave evidence he had been business manager. By 1999, and since, he had been the number two in the company to Mr Hewatt.
His first knowledge of the Tokich job was when Mr Hewatt informed him that he had been talking to Tony Tokich about building two dams on the property. All of the negotiations about the job were undertaken by Mr Hewatt, but he took Mr Gaspari out to the site to show him around because he was going overseas. Mr Gaspari already knew the Tokich family, having bought a rural property from them at some earlier time. In addition, his father and uncles knew Tony Tokich as an acquaintance. Mr Gaspari did not really know John Tokich before the job although he thought that he might have met him once or twice.
Before Mr Hewatt went overseas, Mr Gaspari went to the site with him a number of times. Mr Hewatt would talk to Tony Tokich. Mr Gaspari’s only involvement was that he would go to the site and collect dockets from the plant operators, including Mr Alley. He said that John Tokich would be there sometimes, but was generally busy working in Canberra “and really his father was looking after the whole project for him”.
Mr Gaspari was asked whether he had any involvement with officers from NSW Water. He said that he had met Mr Webb. His understanding was that neighbours had complained about the size of the front dam. Tony Tokich spoke to him, and Tony Tokich met on site someone from NSW Water based in Yass. He had some recollection that Hewatt Earthworks thereafter hired a grader to the Tokich family to convert the front dam into a turkey’s nest.
Mr Gaspari was asked about the quotation dated 26 June 1999. He identified his signature on the document in two places. His recollection was that Tony Tokich had asked for a written quotation. The document had been typed with a range of $25,000 to $30,000, which Mr Gaspari put because he wanted some leeway if necessary above $25,000 if the work took longer than expected. He said that the Tokiches had asked him to cross out the figure $30,000, and he had done so, and hand-delivered the quotation to Tony Tokich.
His evidence was that it was part of his job to collect dockets from the operators each day. Mr Alley had a docket book with three copies of each docket, the top copy going to Hewatt Earthworks, the second copy to Mr Schmidt’s company and the third copy staying in the book. Mr Gaspari said that he collected his copy of the dockets each day. He would sign the docket book and take his copy back to the office, to check against the monthly statements received from Mr Schmidt’s company. The book would remain with the operator on site.
Mr Gaspari was asked whether he had been able to find the dockets for the purpose of the court case. He said he had looked for them, but had been unable to find them and thought they had probably been destroyed. It was the general practice at Hewatt Earthworks to destroy documents after seven years. He would have kept them had he been asked to do so, but no one had asked him and it had not occurred to him that they might be necessary for the case. He had found out he would be giving evidence himself only a week before the trial.
It was put to him that he had been aware for a number of years that there had been legal proceedings between Tokich Homes and Hewatt Earthworks. He accepted this, but said that he “thought it just died in the water, because nothing happened for quite a while and just all of a sudden it all came out of the stream again”. This strikes me as understandable, and consistent with the history of the matter, with its lengthy delays. Mr Gaspari was asked about the invoice dated 31 August 1999. He said that he had prepared the document, and that the handwriting on it was his. He was asked why he had deleted a number of the figures, and reduced the total. He said that the reason was that Tony Tokich would not pay the full amount. They had a conversation about it, and Mr Tokich was adamant. Mr Gaspari took the view that there was not much choice about it, and agreed to reduce the price. I take account of the fact that this happened at a time when, according to Mr Hewatt, he was keen to get further work from Tokich Homes in the future.
Neither party issued a notice for production of documents or a subpoena to Mr Schmidt or his company, for production of the original docket book, or the second copy of the docket.
Senior counsel for Tokich Homes put to Mr Gaspari that the invoice was addressed to Mr John Tokich. Mr Gaspari accepted this, but said that he had dropped the invoice off to his father, Tony Tokich.
He said that the invoice was drawn as requested by the Tokiches. He was asked why he had not itemised the hours the bulldozer was used on the job. His answer was that Tony Tokich had not asked him to do so.
Consideration of the evidence
The first thing that must be said is that all of the witnesses were giving their evidence some twelve years after the original events on which the claim by Tokich Homes is based. It would be surprising if the recall of any of the witnesses was completely accurate after that lapse of time, and particularly surprising if they were able to recall conversations with any precision.
Having said that, I formed the view that both Mr Alley and Mr Gaspari were honest and truthful witnesses, doing their best to remember the events. I generally accept Mr Alley’s evidence. Senior counsel for the plaintiff attacked his evidence on two principal bases.
Firstly, his evidence that the front dam was built as a turkey’s nest dam from the start, and secondly his failure to mention that Mr Gaspari collected dockets from him each day on site. As to the turkey’s nest issue, it seems clear from the documentary evidence that the front dam was altered so as to ensure that it was incapable of collecting runoff following the intervention of the men from NSW Water. But it seems to me that it must have been obvious to Mr Alley as an experienced bulldozer driver and farm dam constructor that the position of the front dam was such that it would collect almost no runoff in any event, and that it was always intended to be an ornamental dam or lake, rather than a conventional working farm dam. It is not, to me, surprising that his present recollection is that it was always to be a turkey’s nest dam.
As to the other criticism, Mr Alley was asked about whether anyone other than Mr Hewatt attended on site. He said that Mr Gaspari used to come out often. He was asked whether Mr Gaspari gave any technical direction and answered in the negative, adding “no, he just come out to – as a general how’re you going”. But senior counsel for the plaintiff did not ask Mr Alley anything about dockets, and it is hardly surprising that, having regard to the questions he was asked, he did not volunteer anything about that aspect.
I generally accept Mr Alley’s evidence, and in particular I accept his evidence that the person he principally dealt with from Tokich Homes was Tony Tokich rather than John Tokich. His evidence was that Tony Tokich selected the sites for the dam, and gave general instructions about the size of each of the dams. I accept that Mr Alley expressed his concerns to Tony Tokich about whether the dams would hold water, and that Tony Tokich, notwithstanding this, directed him to continue with building the dams as best he could, using the materials available on site in the hope that they would seal. I accept that Tony Tokich was on site every day and that Mr Alley talked to him every day. I accept that Mr Alley asked Tony Tokich whether he had the required permit or permits to build the dams, and that Tony Tokich replied in the affirmative. I also accept his evidence that he had constructed many farm dams up to the size of the Tokich dams, and had not used any method of compaction other than the weight of his bulldozer. It was not put to him in cross-examination that he was other than a competent and experienced bulldozer driver and constructor of farm dams, or that dams he had worked on had otherwise been unsatisfactory.
I also generally accepted the evidence of Mr Gaspari. I take account of the fact that he might be seen as in the Hewatt camp, having worked for a number of years with Mr Hewatt and still working with Hewatt Earthworks by the time he gave his evidence, but taking that into account I found him honest and genuine. He gave his evidence in a forthright and unemotional manner, and I have no reason to suspect that it was other than truthful to the best of his recollection. I accept his evidence that his dealings generally were with Tony Tokich rather than John Tokich, and that this was his observation of the dealings between Mr Hewatt and the Tokich family. I accept his evidence about the practice of collecting dockets on site from the bulldozer operator. I accept that he had no reason to realise that it might be important to retain the dockets for the purpose of the case.
I found John Tokich to be somewhat emotional when giving his evidence, particularly during cross-examination. Where his evidence was inconsistent with that of either Mr Alley or Mr Gaspari, I preferred the evidence of the latter. I formed the view that John Tokich had a somewhat emotional involvement in the issues and that, probably subconsciously, this affected the reliability of his evidence. I reject his evidence that the dealings with Mr Hewatt were conducted by him rather than his father. I am satisfied that his father was involved in the original negotiations with Mr Hewatt about construction of the dams, and I am satisfied that it was his father who was on site and generally in control of operations during the period while the dams were constructed.
His father, Ante Tony Tokich, was a witness I would have expected to be called in the plaintiff’s case in chief, having regard to the particulars provided. Those representing the plaintiff had a further opportunity to call him in reply, and indeed had a chance to consider doing so at the end of the second day of the hearing but, I must conclude, made a forensic decision not to do so. I can only conclude that the evidence of Ante Tony Tokich would not have helped the plaintiff’s case. I would have expected Mr Tokich snr to be called as a witness in the plaintiff’s case as a person likely to be able to provide admissible evidence as to the principal facts in issue: Jones v Dunkel (1959) 101 CLR 298. I am unable to infer that his evidence would have been positively unfavourable to the plaintiff’s case, but his absence as a witness means that I can more readily accept the evidence of Mr Alley and Mr Gaspari, and indeed the evidence of Mr Hewatt, as to matters I might have expected, having regard to the evidence of Mr John Tokich, that his father might have contradicted.
Mr Hewatt also tended to get a little emotional during cross-examination, and I thought that his recollection of events, hardly surprisingly twelve years afterwards, was not completely reliable. But I accept his evidence that he was contacted about building the dams by Ante Tony Tokich and that the sites for the two dams were selected by Mr Tokich snr, who was not particularly interested in advice from Mr Hewatt or Mr Alley about whether the sites were appropriate. I also accept his evidence that he raised with Tony Tokich the necessity to have government licences or permits for the construction of the dams, and that Tony Tokich gave assurances that he had this aspect of the matter in hand.
I also accept Mr Hewatt’s evidence that he dealt with Tony Tokich about the remedial work which was undertaken subsequently using clay fill from the Mitchell site.
The evidence of the plaintiff’s engineering expert, Mr Thompson, was not the subject of serious challenge, and I accept it, as I do the written reports from his firm tendered as part of the plaintiff’s case.
Factual findings
I am satisfied that a contract was entered between the parties for the construction of two dams on the property. The contract was generally oral, the one written component being the quote of 29 June 1999.
Mr Hewatt gave evidence that the contract was effectively one for the hire at an hourly rate of plant and plant operators. I am not persuaded that this is a proper description of what was agreed. I am satisfied that there was a contract whereby Hewatt Earthworks would construct the two dams on the property. As to price, I have some difficulty in coming to findings as to precisely what the agreement was about how the amount to be paid was to be calculated. Fortunately it is unnecessary for me to make findings about this, because eventually the quoted price was reduced, and the reduced price paid. It may well be that the contract left the final price open, and that there was something short of a meeting of the minds about how it was to be calculated. But this potential issue resolved itself soon after the dams were completed, with the reduction of the account and the payment of the reduced amount.
I am satisfied that it was a term of the agreement, reached orally between Ante Tony Tokich and Mr Hewatt and perhaps also Mr Alley, that the dams were to be constructed in locations determined and identified by Mr Tokich, using such soil, rock and other natural materials as were available on site, primarily from the excavations themselves. I am satisfied that Mr Hewatt and Mr Alley expressed their concerns to Tony Tokich, about both the locations of the two dams and the materials to be used, but that Tony Tokich insisted on his position on both those issues.
I am satisfied that, as it turned out, both dams had serious shortcomings, leaked and were otherwise less than entirely satisfactory.
As to the remedial works, I am satisfied that a subsequent contract was reached between the parties whereby Hewatt Earthworks were to remove spoil and fill from the Mitchell site by truck to the property where they were to use the material to try to fix and waterproof the dams. I am satisfied that this contract was also made on behalf of Tokich Homes by Ante Tony Tokich. I am not satisfied that Hewatt Earthworks did anything less than it had agreed to do in relation to the remedial work. I am not satisfied that there was any breach of that contract.
Conclusion
I am not persuaded that Hewatt Earthworks has been guilty of any breach of its contract with Tokich Homes. I accept that it was either an oral term or an implied term of the contract that Hewatt Earthworks was experienced and qualified to construct farm dams, and that it would use appropriate care and skill in doing so, but I am not satisfied that it failed in that regard. I find that Hewatt Earthworks did what it was asked to do and what it contracted to do, subject to the limitations imposed upon it by Tokich Homes as to the location of the dams and as to the materials to be used. I am satisfied that Hewatt Earthworks, through Mr Hewatt and Mr Alley, gave adequate and appropriate warnings to Ante Tony Tokich that both the location and the proposed materials for the dams were or might well prove to be inadequate, and that Mr Tokich ignored the warnings.
In the result, Tokich Homes has ended up with dams which are unsatisfactory, but as to that outcome it has only itself to blame.
The claim in negligence is based upon the same facts and particulars as the claim in contract. I am not satisfied that Hewatt Earthworks has committed any breach of its duty of care to Tokich Homes. Hewatt gave appropriate warnings and did the best it could in the conditions which were imposed upon it.
As to the Trade Practices and Fair Trading counts, I am not satisfied that Hewatt Earthworks, or Mr Hewatt personally, made any inaccurate or misleading representations to Tokich Homes.
There will accordingly be judgment for the defendants, Hewatt Earthworks Pty Ltd and Geoffrey John Hewatt, with costs.
I certify that the preceding one hundred (100) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Master Harper.
Associate:
Date: 25 July 2013
Counsel for the plaintiff: Mr GT Little SC and Mr ID Bradfield
Solicitor for the plaintiff: Elringtons
Counsel for the defendant: Mr WL Sharwood
Solicitor for the defendant: Howes Kaye Halpin
Date of hearing: 15,16, 17 August 2011
Date of judgment: 25 July 2013
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