Wang v Gelnar P/L - [2023] SASC 43

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeal: Civil)
WANG v GELNAR P/L
[2023] SASC 43
Judgment of the Honourable Justice Stanley
31 March 2023
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - PERFORMANCE OF WORK - REMEDIES FOR BREACH OF CONTRACT - DAMAGES
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - REMUNERATION - EXTRAS AND ALTERATIONS
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - ADMISSION OF FURTHER EVIDENCE - EVIDENCE NOT AVAILABLE AT HEARING
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - EXCESSIVE OR INADEQUATE DAMAGES - DAMAGES INADEQUATE
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - POINTS AND OBJECTIONS NOT TAKEN BELOW
This is an appeal from the judgment of a magistrate who allowed a claim for the cost of unpaid work done pursuant to a building contract and awarded the respondent the sum of $21,581.82 together with interest in an amount of $3,000. The magistrate also dismissed a counterclaim by the appellant for the sum of $70,702.66 for damages for defective works negligently performed.
The appellant alleges that the works were defective due to the provision of understrength concrete in the foundations, resulting in a loss of rental income for a period of 34 weeks.
The trial magistrate found that the use of understrength concrete was a breach of contract, but the weaker concrete was nonetheless fit for purpose and did not cause any defect in the structural integrity of the foundation. Accordingly, the magistrate found that there was no loss suffered as a result of the breach of contract.
The trial magistrate also allowed a claim for $2,700, being the costs of what she found to be variation works which the appellant claimed were rectification works.
The grounds of appeal raised by the appellant are:
1.      That the learned magistrate erred in finding that all of the costs associated with the delay to building works were not “costs that can be directly attributed” to the breach of contract; and
2.      That the learned magistrate erred in accepting a variation claim in the amount of $2,700 because the relevant works formed part of the contractor’s obligations under the contract.
Held:
1.      The magistrate did not err in finding that all of the costs associated with the delay to building works were not “costs that can be directly attributed” to the breach of the contract.
2.      The magistrate did not err in accepting the variation claim.
3.      The appeal is dismissed.
4.      The question of costs is reserved.
Pitt v Commissioner for Consumer Affairs [2021] SASCA 24; Sunlight Nominees Pty Ltd v Zotti & Zotti [2019] SASCFC 11; Taylor v Hayes (1990) 53 SASR 282; University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481; Viscariello v Livesey & Anor [2013] SASC 99; Wade v Australian Railway Historical Society (2000) 77 SASR 221; Warren v Coombes (1979) 142 CLR 531; Water Board v Moustakas (1988) 180 CLR 491, considered.

WANG v GELNAR P/L
[2023] SASC 43
Single judge appeal
STANLEY J:
Introduction

This is an appeal from the judgment of a magistrate who allowed a claim for the cost of unpaid work done pursuant to a building contract and awarded the respondent the sum of $21,581.82 together with interest in an amount of $3,000. The magistrate also dismissed a counterclaim by the appellant for the sum of $70,702.66 for damages for defective works negligently performed.
The respondent is a company (Gelnar) that specialises in concrete foundations. Its sole director is Mr Leonardos. It entered into a contract with the appellant to lay concrete foundations at the appellant’s property in Oaklands Park where he was constructing three townhouses. The contract price originally was $61,220. During the course of the work the appellant paid the respondent $40,000. The appellant admits that he has not paid the full contract price. His case before the magistrate and on appeal is that he was fully justified in not doing so because the works were defective and Gelnar was negligent in the manner in which it went about those works. The respondent also claimed it was owed $2,700 for variation works. The appellant cross-claimed $54,060 in expected rental loss for a period of 34 weeks. The trial was conducted by the appellant on the basis that this loss resulted from defects in the works as a result of the respondent’s negligence. In addition the appellant denied any liability to pay $2,700 for variation works. He alleged the relevant works were for rectification, not a variation to the contract.
Essentially, the alleged defect was the provision of understrength concrete in the foundations. The foundations were constructed in August or, at the latest, by mid-September 2019 in two separate concrete pours. The concrete was of a strength of 20MPa notwithstanding that the contract specified that the concrete to be used had to be of a strength of 25MPa.
The magistrate found that the use of 20 MPa strength concrete in the construction was a breach of the contract, but the weaker concrete was nonetheless fit for purpose and did not cause any defect in the structural integrity of the foundation. The magistrate expressly found the concrete strength in the foundation constructed by the respondent exceeded 20MPa and complied with the Australian Standard.
Accordingly, the magistrate found that there was no loss suffered as a result of the breach of contract. The appellant had appointed a building supervisor who was responsible for inspecting the respondent’s work. The magistrate found that the building supervisor inspected and approved the respondent’s work at which point the appellant’s obligation to pay the respondent for its work crystalised. However, because of his dissatisfaction with the strength of the concrete used, the appellant stopped work on the construction for a period from mid-September 2019 to December 2019, during which time various tests were performed to assess the concrete strength. The magistrate found there was a delay of some four months between when the foundation was completed and when the steelwork was erected.
The magistrate held that most of the respondent’s loss the subject of the counterclaim arose from the allegation that the defective work caused a delay in the completion of the townhouses and a loss of rental income that, but for the delay, would have been received. The magistrate rejected this claim. She held that the appellant should have relied on the opinion of his supervisor that the strength of the foundations was sufficient. Mr Leonardos also reassured the appellant that this was the case. However, the appellant rejected that advice. The magistrate found that Mr Wang should not have ignored that advice. He did so at his own risk. She found that ultimately the appellant chose to utilise the respondent’s work to complete the dwellings but failed to pay the respondent’s invoice. The magistrate was satisfied that the costs associated with the delay were not costs that could be directly attributed to the breach of contract by the respondent.
In addition to rejecting the claim for lost rental income, the magistrate allowed a claim for $2,700, being the costs of what she found to be variation works which the appellant claimed were rectification works. The magistrate accepted the evidence of Mr Leonardos that the amount of $2,700 related to work done at the request of the appellant’s building supervisor, Mr Momir “Mike” Popovich. That evidence was unchallenged and Mr Popovich did not give evidence.
The appeal
On the hearing of the appeal I permitted an amendment to the grounds which narrowed the issues on appeal.
The revised grounds of appeal are:
·That the learned magistrate erred in finding that all of the costs associated with the delay to building works were not “costs that can be directly attributed” to the breach of contract (ground 1); and
·That the learned magistrate erred in accepting a variation claim in the amount of $2,700 because the relevant works formed part of the contractor’s obligations under the contract (ground 2).
Application to admit fresh evidence
On the hearing of the appeal the appellant sought to adduce further evidence which was set out in an affidavit of the appellant of 18 January 2023.
The further evidence concerned conduct of the appellant during the period from mid-August 2019 until the structural steel was installed on 17 December 2019. On 7 November 2019 the appellant emailed Mr Popovich instructing him that he should arrange for the next step to be taken in the construction. Most of the events between mid-August and mid-December concerned steps taken by the appellant to obtain advice in relation to the suitability of the concrete. The test results in relation to the concrete were obtained from Adelaide Brighton Cement and Lab SA. Advice was obtained from Concrete Engineering Australia in relation to the test results.
I refused the application to adduce fresh evidence on the appeal. I did so for these reasons.
The appellant contends that in substance he gave evidence of these matters at trial, although the affidavit includes additional evidence, in the nature of detailed testimony about the steps undertaken by the appellant during this period and documentary exhibits that, with one exception, were not tendered at trial. The exception is an email from the appellant’s wife to Mr Leonardos setting out various complaints to do with aspects of the construction work including, but not limited to, the concrete foundation and its strength.
The Court has a discretion pursuant to UCR 217.10(c) to admit further evidence on appeal. In Viscariello v Livesey & Anor,[1] White J summarised the principles relevant to the exercise of a power such as that conferred by UCR 217.10(c) in a passage subsequently approved by the Full Court in Sunlight Nominees Pty Ltd v Zotti& Zotti.[2]White J said:[3]
The nature and exercise of a power to receive further evidence such as that contained in r 286(3)(a) was considered by the High Court in CDJ v VAJ. The present appeal is not the occasion to review in detail the principles stated in CDJ. The following principles relevant to the determination of the appellant's application to adduce further evidence may be stated:
1.The exercise of the discretion to receive further evidence under r 286(3)(a) is not necessarily to be approached in the same manner as discussed in Wollongong Corporation v Cowan and McCann v Parsons, which are appropriate to the procedures of the common law courts.
2.The discretion is to be exercised in the context that the substantive issue before the Court is whether the decision of the Tribunal as to the appellant's standing involved error. The context is not one involving a person's liberty or the care and custody of children (as was the case in CDJ).
3.The circumstance that this Court is concerned with the existence or otherwise of error suggests that the further evidence must be capable of having a material bearing on that question, although it need not be decisive.
4.The discretion is not so wide that the Court may receive further evidence merely because it is useful.
5.The ability or otherwise of the appellant to have obtained the evidence for use at first instance, and any explanation for him not having done so, are important considerations. Ordinarily, further evidence is not received in order to allow a party to patch up deficiencies in its case if those deficiencies could have been addressed by the exercise of ordinary diligence at first instance.
6.The public interest in the finality of litigation is an important consideration.
[1] [2013] SASC 99.
[2] [2019] SASCFC 11 at [42].
[3] [2013] SASC 99 at [132].
While the Court will, in the exercise of its discretion, have regard to the importance of the principle of finality, ultimately it is the interests of justice which dictate whether the Court should exercise its discretion in favour of the application to admit new evidence on appeal. None of that, however, detracts from the importance of finality.
In this matter I am satisfied that with the exercise of reasonable diligence the appellant could have obtained the evidence for use at the trial. In fact, I am satisfied that the failure to adduce much of the evidence at trial which is now sought to be led on the appeal was the result of a deliberate forensic decision made by the appellant. That is because much of that evidence actually undermined the case being prosecuted by the appellant at trial, that the delay occasioning his loss resulted from the negligent defects in the works alleged by him.
The documents exhibited to the appellant’s affidavit reveal the advice the appellant was receiving at an early stage in the period of delay that established the strength of the concrete laid by the respondent was adequate and fit for purpose. This could only have served to undermine the case the appellant was conducting at trial.
That the failure to adduce this evidence at trial was the result of a deliberate forensic decision means that the appellant’s submission that he was disadvantaged in the conduct of the trial because he was a litigant in person lacks substance. Being self-represented and not a native English speaker does not explain in this case why the evidence contained in the appellant’s affidavit could not have been used at the trial.
Further, it is not clear that had this evidence been adduced at the trial, the appellant would have defeated the respondent’s claim and succeeded in his crossclaim.
The evidence the appellant now seeks to lead is inconsistent with the case he ran at trial. At trial he argued that the concrete was in fact less than 20MPa and that it was not fit for purpose. The failure to use the concrete specified in the contract resulted in the delay while he undertook investigations into its adequacy. Those investigations were not completed until 5 November 2019 when the appellant received the opinion of David Cockburn from Concrete Engineering Australia, that allayed, or should have allayed the appellant’s concerns in this regard. This resulted in the appellant advising Mr Popovich to resume the construction work. Ultimately that led to the townhouses being constructed on the foundations laid by the respondent. On appeal there is no challenge to the magistrate’s finding that the concrete used by the respondent was fit for purpose. The evidence now sought to be adduced reveals that the appellant at the latest was aware of this by 5 November 2019, but in fact he had received advice to the same effect as early as 10 October 2019. This was less than a month after the completion of the concrete work which occurred by 16 September 2019 at the latest. Accordingly, the period of delay which could reasonably be attributed to the breach of contract is less than one month. That delay has to be considered against the background that the new evidence also discloses that the appellant’s development was not completed until 30 January 2022. This was 16 months after the issue of the suitability of the concrete arose.
In these circumstances there is insufficient evidence, even allowing for the new evidence sought to be adduced on appeal, that the delay caused by the investigations undertaken by the appellant consequent upon the breach of contract caused any consequential loss of rent. Even if everything the appellant claims was proved, there is no evidence that the delay resulting from breach of contract contributed to the 16-month delay in the completion of the development. The appellant would bear the onus of proving that the 16-month delay would have been reduced had the concrete specified in the contract been used. If the appeal was allowed and the new trial sought by the appellant was ordered by this Court, further evidence would be necessary to explain the 16-month delay and how, if at all, this was the result of the breach of contract.
In any event, if there was error in the magistrate’s finding that the steps taken by the appellant to investigate the suitability of the concrete used by the respondent were unreasonable, that would not necessarily lead to judgment in favour of the appellant. That finding was made in a context where the forensic issue at the trial was the suitability of the concrete and whether the works were defective by reason of the use of concrete of a lesser strength than was specified in the contract. The magistrate’s finding was made in the context of that forensic contest. The appellant now seeks to run a different case, albeit one based on delay, on appeal. He should be bound by his conduct of the trial.[4]
[4] Water Board v Moustakas (1988) 180 CLR 491 at 497; University of Wollongong v Metwally (No. 2) (1985) 59 ALJR 481 at 483.
Furthermore, finality is an important consideration in this matter. The trial occupied three days in the Magistrates Court. On appeal, the appellant is seeking to have the matter remitted for retrial. At its highest, the appellant is now seeking to avoid the liability to pay damages to the respondent in the sum of $23,920 and claim damages from the respondent in the sum of about $20,000. The costs are seriously disproportionate to the amount of money at stake. In itself, that is a powerful consideration against granting the application.
Appeal
The claim for damages for delay caused by the breach of contract
Although this Court is required to undertake an independent review of the evidence and findings made by the magistrate and form its own view as to the appropriate outcome,[5] the appeal is not a hearing de novo and the appellate court should not substitute its own view, or otherwise interfere, unless satisfied that the magistrate fell into error.[6]
[5] Taylor v Hayes (1990) 53 SASR 282 at 291; Warren v Coombes (1979) 142 CLR 531 at 551; Pitt v Commissioner for Consumer Affairs [2021] SASCA 24 at [115].
[6] Wade v Australian Railway Historical Society (2000) 77 SASR 221 at 227; Pitt v Commissioner for Consumer Affairs [2021] SASCA 24 at [115].
No error in the findings made by the magistrate in relation to the suitability of the concrete used in the construction works has been demonstrated. On the contrary, as I have noted, there is no challenge on appeal to this finding. Rather, the appellant seeks to invoke the appellate jurisdiction of this Court to obtain a new trial at which he can run a different case from the one he lost before the magistrate. For the reasons set out above, this would be contrary to well-established principle as explained by the High Court in University of Wollongong v Metwally (No. 2).[7]The importance of finality in litigation stands firmly against allowing such a course. In any event, for the reasons set out above, the evidence does not prove that there is an identifiable loss of rental income, even assuming the appellant proved that there was a period of delay of some months following the breach of contract by the use of concrete under the specified strength, while he conducted investigations into its fitness for purpose.
[7] (1985) 59 ALJR 481.
Ultimately, as the magistrate found, the appellant chose to utilise the respondent’s work for the construction of the townhouses but not to pay the respondent’s invoice for that work. In my view there is no error in that conclusion.
I reject this ground of appeal.
The claim for rectification in the sum of $2,700
At issue in relation to the claim for $2,700 is that the respondent charged this sum for undertaking what it alleged was a variation to the works. On the other hand, the appellant asserts that the work was by way of rectification of a breach of the contract. As explained above, there is a lacuna in the evidence because of the failure to call Mr Popovich. However, I am satisfied in any event that the evidence establishes that the need for the work was a variation sought by the appellant through Mr Popovich rather than work required to repair a defect.

Mr Leonardos gave evidence that an invoice was rendered for “further work undertaken” in an amount of $2,700. Mr Leonardos said that this work was performed at the insistence of Mr Popovich. Mr Leonardos said that the footing plan specified that the footing beams needed to be 200 mm below the floor level. When Mr Popovich inspected the site for the purposes of approving payment, he said that the work that had been performed was not “right”. Mr Leonardos responded that the work had been performed in accordance with the footing plan but Mr Popovich directed him to raise the footings to the rebate level. This was done the following day. This was the work charged in the sum of $2,700.
Mr Leonardos’ evidence in this regard was uncontradicted. It is consistent with the work being a variation to the footing plan rather than repairs.
In my view the evidence is sufficiently clear that the relevant work constituted a variation rather than a repair.
In my view the magistrate did not fall into error in finding that the respondent was entitled to charge for this work as a variation.
I reject this ground of appeal.
Conclusion
I would dismiss the appeal. I would hear the parties as to costs.