Westpoint Constructions Pty Ltd v Haden Engineering Pty Ltd
[2005] WADC 166
•1 SEPTEMBER 2005
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: WESTPOINT CONSTRUCTIONS PTY LTD -v- HADEN ENGINEERING PTY LTD [2005] WADC 166
CORAM: COMMISSIONER KEEN
HEARD: 11-15 APRIL 2005, 23 JUNE 2005
DELIVERED : 1 SEPTEMBER 2005
FILE NO/S: CIV 1755 of 2001
BETWEEN: WESTPOINT CONSTRUCTIONS PTY LTD (ACN 009 399 740)
Plaintiff
AND
HADEN ENGINEERING PTY LTD (ACN 000 694 173)
Defendant
Catchwords:
Building and engineering - Construction of contract - Liquidated damages - Variations - Turns on own facts
Legislation:
New Tax System (Goods and Services Tax) Act 1990
Supreme Court Act 1935
Trade Practices Act 1974 (Cth)
Result:
Claim dismissed
Counterclaim succeeds in part
Representation:
Counsel:
Plaintiff: Mr N D C Dillon
Defendant: Mr P B O'Neal
Solicitors:
Plaintiff: Nash Clavey
Defendant: Corrs Chambers Westgarth
Case(s) referred to in judgment(s):
Bonham Carter v Hyde Park Hotel Ltd (1948) 64 Tas LR 177
Cable (1956) Ltd v Hutcherson Bros Pty Ltd (1969) 123 CLR 143
Michael Kellaway International Pty Ltd v Shark Bay Airport Pty Ltd, unreported; FCt SCt of WA; Library No 970614; 13 November 1997
Thorn v The Mayor and Commonalty of London [1876] 1 App Case 120
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] ALJR 129
Case(s) also cited:
ABB Power Generation v Chapple (2001) 25 WAR 158
Antaios Compania Naviera SA v Salen Rederierna AB [1985] 1 AC 191
Australia and New Zealand Banking Group Ltd NZ Banking Group Ltd v Westpac Banking Corporation (1987-1988) 164 CLR 662
Butt v McDonald (1896) 7 QLJ 68
Cable (1956) Ltd v Hutcherson Bros Pty Ltd (1969) 123 CLR 143
Cellulose Acetate Silk Co v Widnes Foundry (1925) Ld [1933] AC 20
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1981-1982) 149 CLR 337
Concut Pty Ltd v Worrell and Another (2000) 176 ALR 693
Gollin & Co Ltd v Karenlee Nominees Pty Ltd (1983) 153 CLR 455
Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26
International Fina Services AG v Katrina Shipping Ltd [1995] 2 Lloyd's Rep 334
J Kitchen & Sons Pty Ltd v Stewart's Cash and Carry Stores (1942) 66 CLR 116
Wickman Machine Tool Sales Ltd v Schuler A G [1974] AC 235
Mackay v Dick [1881] 6 AC 251
Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181
Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] 3 All ER 352
Mendl & Co v Ropner & Co [1913] 1 KB 27
Molloy v Liebe (1910) 102 LT 616
Pan Foods Company Importers & Distributors Pty Ltd and Others v Australia and New Zealand Banking Group Ltd and Others (2000) 170 ALR 579
Temloc Ltd v Errill Properties Ltd (1987) 39 BLR 30
COMMISSIONER KEEN: The parties are parties to a sub‑contract for the provision of mechanical services for the Paragon Stage 2 Apartments in Hay Street Perth.
Under the sub‑contract the plaintiff is the builder and the defendant the sub‑contractor. The sub‑contract was for the defendant to carry out the design, supply, installation, testing and commissioning of the mechanical services, and in particular the stair pressurisation at the works.
The plaintiff's claim against the defendant is for liquidated damages for delay in the carrying out of the sub‑contract works by the defendant. Such liquidated damages are claimed both under the sub‑contract at $1,000 per day and under the head‑contract between the plaintiff and the principal, Westpoint Management Ltd as trustee for the Paragon Apartments Trust and Paragon Apartments Ltd.
The defendant denies the plaintiff's claim, and makes various claims as to extensions of time, variations, and other matters, details of which are set out below.
The relevant contracts
The head‑contract is dated 1 June 1999 and is made between the principal and the plaintiff, and is in respect of the erection of a 17 storey residential apartment tower for the sum of $19,982,000 exclusive of GST.
The sub‑contract between the plaintiff and the defendant (exhibit 14) is signed of behalf of the plaintiff on 24 January 1999, and on behalf of the defendant on 25 January 2000. This sub‑contract replaced a sub‑contract originally negotiated with T O'Connor. The sub‑contract was to design, supply, install, test and commission mechanical services at the works as described in annexure A to that sub‑contract for a guaranteed maximum price of $668,000 exclusive of GST.
The relevant terms of the sub‑contract
The sub‑contract comprised the sub‑contract agreement referred to, to which are annexed standard conditions of sub‑contract works agreement, Annexure A being the scope of works, Annexure B being a standard sub‑contract check list, Annexure C being a sub‑contractor safety/risk management plan and Annexure D being a deed of release. In addition there is a drawing register, a mechanical services specification and a set of drawings numbered MO1 to MO4 dated May 1999 and drawn by Geoff Hesford.
The sub‑contract works were put out to tender, and the mechanical services specification and drawings MO1 to MO4 formed part of the tendered documents. T O'Connor successfully tendered for the contract. By reason of a relationship between T O'Connor and the defendant the contract was ultimately awarded to the defendant.
The relevant terms of the sub‑contract agreement included:
1.That the works would be in accordance with the mechanical services specification.
2.The drawings were to be as per the head‑contract drawings, and the drawing register (which so far as the mechanical services were concerned included the drawings MO1 to MO4).
3.The guaranteed maximum price under the sub‑contract was $668,000 exclusive of GST.
4.By special condition 9.5 "Any obligations of Builder to the Client/Proprietor under the Head Contract shall also be deemed to be an obligation of the sub-contractor to the Builder."
5.Liquidated damage at $1,000 per calendar day.
The standard conditions of the sub‑contract works agreement relevantly included the following:-
"2 COMPLETION
(a)If the Subcontractor fails to complete the Works or any stage by the dates specified in the Construction Programme or within any extended time approved in writing by the Builder the Subcontractor shall pay or allow by way of liquidated damages the sum stated in the Schedule (Item 6) for each day during which the Works or the relevant stage shall remain incomplete.
(b)The Builder shall make a reasonable extension of time in respect of any delay not caused or contributed to by act or default of the Subcontractor.
…
4. VARIATIONS
The Subcontractor shall vary the Works as required by the Builder but shall not be entitled to claim payment for any variation not authorised in writing.
The price of any variation shall be added to or deducted from the Contract sum, and should the parties not agree upon a price the Builder may require the Subcontractor to execute the variation and the matter of price may be referred to arbitration in accordance with the provisions hereof or at his option the Builder may have the variation carried out by another person in which case the Subcontractor will allow free access to such person and his employees as required.
Variations will be assessed by way of quantifying the works in accordance with the Australian Method of Measurement and applying the Contract Schedule of Rates or, in the event that these are not available for like works, reasonable market rates.
…
6. PERFORMANCE
That if the Subcontractor shall wholly suspend or neglect to proceed with the Works with due diligence the Builder may give notice in writing to the Subcontractor and if the Subcontractor shall not proceed with the works in a manner satisfactory to the Builder within three days of the date of such notice then the Builder may employ another Subcontractor or such other workmen as may be necessary to complete the works. The Builder may deduct charge or retain all money as he shall pay or incur in the completion of the Works from monies due to the Subcontractor and the Subcontractor shall not in any manner do or cause to be done any act or thing whatever to prevent the persons so employed from completing the Works."
Annexure A Scope of Works provided (inter alia) for the design, supply, install, test and commission of mechanical services including two stairwell pressurisation systems. Annexure A went on to note "includes design development from initial design by Geoff Hesford Engineering, updating mechanical drawings as required and provision of As‑Built's on completion, all in accordance with the documents and conditions outlined in this agreement".
Annexure B being the standard sub‑contract checklist shows that drawings, specification, electricity and storage were all to be provided by the plaintiff, and the defendant was to provide a firm price for the works.
Annexure C being in respect of sub‑contractor safety/risk management provided at cl 2k for the sub-contractor to establish, implement and maintain its safety management plan pertaining to provision for (inter alia), site security and public safety.
The Mechanical Services specification relevantly contained the following provisions:
"101 Overview
This section of the specification sets out the works to be carried out by a suitably experienced mechanical services company as a subcontractor to the Contractor.
Notwithstanding the segregation of the work described in this section, the Contractor retains full responsibility for the provision of all work and associated work, specified or obvious required for the satisfactory installation and operation of the mechanical services.
102This Section of the Specification
This section of the Specification provides a brief for the design criteria and system requirements for the mechanical services installation. This section should be read in conjunction with the architectural drawings and has been prepared to inform of the technical requirements of the Proprietor, to provide the minimum standards and methods of construction of the various systems.
This section is not intended as an all‑embracing document. As such, the mechanical contractor will be fully responsible for the full design of any aspects of the system not fully covered in these documents, and in accordance with good engineering practices, to perform the envisaged duty to the satisfaction of the Superintendent.
103Completion of Design and Documentation:
The Proprietor has retained a consulting engineer to prepare this outline scope of works and associated documents to provide sufficient technical detail to enable competitive tenders to be called for a design and construct contract of the Mechanical Services.
The mechanical contractor is required to engage a consulting engineer (approved by the Superintendent) to complete the detailed design and documentation in association with the Proprietor's architect and other nominated Consultants.
The mechanical contractor's consulting engineer shall provide the requisite Certificates of Compliance.
104Stage 2 Works
Stage 2 works shall comprise the design, documentation, installation, commissioning, warranty and defects liability service of:
•Two stairwell pressurisation systems
•Two stairwell pressurisation relief systems
301Retain Responsibility
The Contractor shall retain full responsibility for the provision and coordination of the services and associated works. The reference hereunder to various subcontractor responsibilities is intended only to assist identification of normal co‑ordinated provisions.
306Co‑ordination of Associated Works
The mechanical contractor shall ensure that all associated works required for the installation and operation of the mechanical services is either adequately documented in the architectural/structural/electrical drawings, or provide supplementary drawings/instructions accordingly.
406Coordination
Thoroughly coordinate the mechanical services with all other trades particularly allowing adequate time and resource for the full and proper testing, commissioning and hand‑over of these services.
1407Practical Completion
The works shall not be granted Practical Completion until the following is achieved
•all systems fully tested and commissioned to the Superintendent's satisfaction
•testing and commissioning records have been submitted and accepted
•all major items noted and the Practical Completion Inspection Report have been completed
•as installed, drawings have been submitted
•draft edition of O & M manuals have been submitted
•Principal instruction has been effected
•Compliance Certificate has been issued."
The head‑contract, apart from as noted above, relevantly provides for the plaintiff to bring the works to practical completion defined as "when they are reasonably fit for use or occupation". The head‑contract further provides that in the event that the works do not reach practical completion within the time required (under that head‑contract) the contractor shall pay or allow the principal by way of liquidated or ascertain damages the amount set out in the schedule for every day that shall lapse from the time provided for practical completion until the works are brought to practical completion. The rate was $1,000 per day. The head‑contract also provided that the plaintiff would comply, in relation to the design of the works, with the requirements of authorities including the Fire and Emergency Services Authority (FESA).
The nature of the sub‑contract works
Put simply, the stair pressurisation system provides for a pressurisation shaft adjacent to the escape stairs. That shaft is pressurised with air forced into the shaft by way of a fan on the top of the shaft. That pressurised air then passes through a grill into the stairwell. Once the door between the stairwell and the corridor of a relevant floor is opened, the air will then pass into the corridor and escape through grills in the corridor wall into a relief shaft or shafts. That relief shaft has on the top of the shaft a fan to extract the air from the relief shaft. The purpose of the stair pressurisation is to ensure that the stairwell is pressurised with air so that in the event of a fire the pressurised air prevents smoke from entering the stairwell.
The issues between the parties
The plaintiff claims that the defendant has delayed the works and claims liquidated damages under its sub‑contract at $1,000 per day, and also under the head‑contract in a similar sum.
The defendant claims that the delays were occasioned by default on the part of the plaintiff, and that the defendant is entitled to extensions of time. The defendant claimed in respect of such extensions of time, costs from 8 September 2000 to 24 March 2001. Further cost of extensions were claimed from 24 March 2001 to 29 May 2001. These claims were made in par 22 to par 32 of the defence and counterclaim, and were abandoned at trial (T 649).
It became apparent that the system, as originally designed, and being a purge system did not work and could not be made to work, and was changed to a zone system. The defendant claims the cost of the variation from a purge system to a zone system in the sum of $70,333.45. Alternatively, the plaintiff claims that sum as being for works outside the scope of works required under the sub‑contract.
The defendant also counterclaims the sum of $15,472 (excluding GST) in respect of progress claims made but not paid. This is not disputed by the plaintiff who merely seeks to set‑off against that sum, such sums as the plaintiff may be awarded.
Further, the defendant claims in respect of certain variations set out in par 45 of the counterclaim which have not been paid for by the plaintiff. Again, the plaintiff accepts the price of $8,658 but again seeks a set‑off.
Finally, the defendant makes a claim in respect of a breach of s 51AC Trade Practices Act 1974 (Cth) in respect of certain air‑conditioning units provided by the defendant to the plaintiff in the sum of $8,480.
Further background
The works, the subject of the sub‑contract included the design of the stair pressurisation systems from initial designs that had been prepared by Geoff Hesford Engineering (Hesford).
After the sub‑contract was awarded the defendant retained the services of Hesford to assist with the design. Hesford in turn allocated a Mr Elgar to assist with the design of the system.
Allowing for the change of the system from a purge system to a zone system, it was agreed between the parties that the sub‑contract works were completed on 14 May 2001.
It is common ground that for whatever reason the purge system did not work, and could not meet the relevant Australian Standards for the building. As such, the building could not achieve certification from the local authority being the City of Perth by utilizing that purged system. The certification was obtained after the change to the zone system.
It is not necessary for the purposes of these reasons to go into the difference between these systems.
It is also common ground that the last programme to completion was one that was revised on 23 January 2001 and issued on 24 January 2001. It is to be found as document 16 in exhibit 1. It relevantly provides as to the sub‑contract works:-
| ID | Task Name | Duration | Start | Finish |
| 382 | Stair pressurisation Fans, ductwork and controls | 36 days | Tue, 2/01/01 | Tue, 13/02/01 |
| 383 | Test and commission services | 6 days | Wed, 14/02/01 | Tue, 20/02/01 |
As part of its contract the defendant was also to supply and install 153 air‑conditioners. These air‑conditioners were supplied by the defendant to the plaintiff and paid for by the plaintiff. Whilst they were stored waiting to be use, a number were damaged by water or sewerage. A claim was made on insurance and these were replaced. Subsequently, five of the air‑conditioners were stolen from the site. There was a dispute as to whether it was the defendant or the plaintiff who was responsible for the loss and the replacement of the air‑conditioners. The defendant replaced the air‑conditioners so as to be able to complete the works and paid for that replacement.
The evidence for the plaintiff
Duncan Walker
Mr Walker was the project manager for these works from February 2000. He took over the building when it was at level 7 and continued with the construction until completion.
Mr Walker admitted under cross‑examination that this was the first project that he had managed of multi‑storey apartments. His experience was in mining and industrial.
On his arrival at the works, the works were some months behind schedule. It was he who produced the revised programme.
His evidence was that the defendant's work was part of the critical path for the works as the building cannot obtain classification from the City of Perth without (inter alia) the fire systems being in place and the systems need to be tested and signed off.
His evidence was that he inspected the works many times daily and had meetings with sub‑contractors and produced various minutes. His evidence about the production of these minutes was somewhat vague, and it seems from his evidence that they were not, or not all of them were, prepared by him, but by his assistant.
It was Mr Walker who issued the revised programme from which it will be seen that the stair pressurisation was to be completed by 13 February 2001 with testing and commissioning completed by 20 February 2001.
On 21 February 2001 there had been a meeting of sub‑contractors. Document No 23 in exhibit 1 is a minute of that meeting. So far as it relates to the defendant it noted that the defendant had advised that it was up to date and would be demobilising labour until new work areas became available. It further noted that SS (Steve Salter for the defendant) would provide a defect list for the plaintiff to action.
A minute of sub‑contractors meeting of 28 February 2001 also relevantly noted that the defendant had advised that it was up to date and had demobilised labour until new work areas had become available. It further noted that grills to west stairwell were to be set 100 millimetres lower than the east stairwell to allow room for fluorescent light to be installed. The work required openings to be cut. The minute also noted that the defendant stated that it wished to commence commissioning the stair pressurisation system. However, the stairwells were not completed by 26 February 2001 as requested, thus delaying the works. It further noted that SS was to provide a defect list for the stairwells for the plaintiff to action. Further, it noted that the stair grills were to be completed to allow all holes to be filled prior to commissioning the stairwell pressurisation fans.
The minutes for 7 March 2001 (document 25 exhibit 1) relevantly contains similar information to the previous minutes.
The minutes for 14 March 2001 (document 26 exhibit 1) again contains similar information, but noted that SS had previously provided the plaintiff with a defects list for stairwells for the plaintiff to action.
Minutes for the meeting dated 14 (sic 21) March 2001 (document 27 exhibit 1) relevantly noted similar matters, in particular that the stairwells will be complete and ready for testing by 23 March 01, and that Kevin Baker (for the plaintiff) would action the builders works.
On 28 March 2001 a further meeting was held and minutes prepared (document 28 exhibit 1) in which it was again noted by SS that the builder's works to the stairwells remained incomplete, and that testing would not be completed by 31 March 2001, and that KB was to action the builder's works. It also again noted that SS had provided the defects list for the stairwells to the plaintiff for action.
On 4 April 2001 a sub‑contractor consultants' meeting was held. The minutes are document 29 at exhibit 1. The purpose of the meeting was to review activities required to achieve classification of the building which was proposed for 11 April 2001. Relevantly in those minutes it is to be noted that Jarrad Elgar of Geoff Hesford Engineering raised the issue of smoke detection in the stair pressurisation shafts. Salter and Elgar were to inspect after the meeting to confirm if the installation is acceptable under the code. It was further noted that a Lance Carter from All Purpose Electrical Services was to confirm that interface to "MSSB" was complete to allow stair pressurisation to proceed. SS was to inspect the stairwell to confirm any works required to allow the test to proceed, and against the initials DW (Duncan Walker), "test to be scheduled for Sunday, 8/4/01 to allow unimpeded access to the stairwells. If test cannot be completed on this date then out of hours work to proceed during the following week."
On 4 April 2001 a further meeting of sub‑contractors was held and minutes prepared (document 30 exhibit 1) which relevantly again note that the defendant was up to date and would bring labour on site as new work areas became available, that the builders work to the stairwells remained incomplete, and testing would not be completed by 31 March.
The minutes of the meeting on 11 April 2001 (document 31 exhibit 1) also noted that holes required patching.
The minutes for the meeting on 18 April 2001 (document 32 exhibit 1) noticed a number of things required to achieve classification, including the stair pressurisation system. Salter and Elgar noted that the stair pressurisation tests were still incomplete with items of possible defects identified by JE.
By 26 April 2001 (minutes at document 33 exhibit 1) it was noted that the stair pressurisation test remained outstanding.
On 26 April 2001 (minutes at document 34 exhibit 1) Elgar noted that the defendant had closed out all items with the exception of obtaining a satisfactory result for stair pressurisation tests. It was noted that Walker instructed Baker to immediately carry out investigations with stair pressurisation fans running, using smoke or similar methods, and block off levels 10 down with plastic to allow air leakage in upper floors to be more readily identified and remedied.
On 2 May 2001 (minute at document 35 exhibit 1) it was noted that SS had stated that in his opinion the stair pressurisation tests have been a total waste of time, and that the defendant would submit costs for overtime. The stair pressurisation tests remained outstanding.
Mr Walker, when dealing with these various minutes, gave evidence that the defendant was complaining that there was air leakage in various places in the building which the defendant believed was impacting upon the test results. He instructed Baker to check it out and fix it.
Mr Walker then had a meeting with Mr Salter. Mr Walker's recollection of the events was vague, and only marginally prompted by reading documents tendered in the action. He said that advice had been received from Norman Disney Young as to the stair pressurisation system. According to Mr Walker he told Salter to "go away and make it work". He said that he instructed the defendant to carry out whatever works they needed to do to put it right. In any event, following that meeting Mr Walker sent to Mr Salter a facsimile transmission dated 4 May 2001 (document 86 exhibit 1). That document is headed "Re: Notice of Default". It complains that the defendant had failed to complete the works in accordance with the construction programme, and instructed Mr Salter to "carry out whatever works, including re‑design as required, to ensure that the Stair Pressurisation System … complies with all relevant codes and regulations thus enabling Geoff Hesford to issue the requisite Certificates of Compliance for the stair pressurisation system in accordance with cl 103 of the Mechanical Services Specification." He also acknowledged that the defendant reserved the right to claim additional costs for all works that are required to complete the sub‑contract that are additional to the scope of works defined in the Sub‑contract Works Agreement. He also noted that liquidated damages would be applied for every day the practical completion was delayed.
Advice had been obtained from Norman Disney Young in relation to these problems. The advice (contained within exhibit 3) was passed on to the defendant. It included advice that an alternative solution was to convert the installed system into a zone system rather than the purge system.
Mr Walker's evidence was that the defendant had complained about air leakage in the building, around doors and through ceilings. He said that the plaintiff was not apprised of the need for these issues to be air tight until the stair pressurisation system failed to come up to specifications. It was then that the plaintiff took steps to try to overcome these problems (T 90 ‑ 91).
As a result of the letter of 4 May 2001, the system was re‑designed to a zone system. Mr Walker said that he was never advised of any extra costs in relation to those works.
Mr Walker said that he was not aware of any issue arising as to the availability of electricity.
Following Mr Walker's letter of 4 May, he received a reply from the defendant on 7 May 2001 (document 88 exhibit 1) referring to the meeting held on 4 May 2001. In that letter the defendant said:
"[I]t was also confirmed at the above meeting that the stair pressurisation performance could not be achieved due to the building construction restrictions placed on the system. Namely the size and integrity of your masonry relief air shafts.
We again reiterate of our intention to forward the variation cost for the agreed modification to yourselves for payment."
The letter also rejected the imposition of liquidated damages for delay.
By letter dated 10 May 2001 (document 93 exhibit 1) from the defendant to Mr Walker, the defendant advised Mr Walker of further items that still required attention by the plaintiff to complete the testing of the system. Mr Walker said the plaintiff put resources into fixing these items.
Under cross‑examination Mr Walker accepted that towards the end of April he observed significant leakage in the building, but said that he would not expect to find anything else (T 98). However, when questioned about standards for this type of building, fire rating and smoke proofing, he confessed to have little or no direct knowledge, and confirmed that this was the first project of this kind that he had been involved in.
Mr Walker accepted that the services provided by the defendant were such that they had to follow other trades and agreed that the defendant's work had been delayed. It was not the defendant's fault, but agreed that an extension of time had been granted to the defendant although no extension of time claims had been put by the plaintiff to its principal or any such claims had been ignored.
Mr Walker conceded that much of the functioning of these stairwell pressurisation systems were beyond his expertise. When asked if he knew that air tight integrity was required (T 111) he answered that there was nothing on the plans to that effect, and he didn't appreciate that it was required to be air tight (T 112), but agreed (T 114) that there was some degree of air tightness required.
Mr Walker conceded that by the end of January 2001, the defendant had very little to do as its works were virtually complete (T 121). He accepted that certain work was required in order for the testing of the system to take place (for example T 129) and that those requests were reasonable. However, later (T 131) he attempted to avoid responsibility for these matters not having been attended to.
On 5 April 2001 the project architect, Mr Trethewey, wrote to Mr Walker requesting work as listed by the defendant as snagging work be completed. This request (exhibit 7A) was accepted by Mr Walker as being a "rocket" from the architect because the work had not been done.
Mr Walker also accepted that by that date he had already issued a programme requiring completion of the stairwell pressurisation system by 20 February 2001, but had not issued a fresh programme despite delays which were not caused by the defendant (T 138).
Mr Walker accepted that there were problems with the masonry. He had no knowledge of any rubbish in the relief shafts, despite this being referred to in a facsimile from the architect dated 19 April 2001 (exhibit 8).
Mr Walker accepted that by mid April 2001 it was apparent there were problems with the stairwell pressurisation system, and that part of the problem was possibly the leakages in the building (T 149). Indeed, he had received a facsimile from Geoff Hesford Engineering dated 12 April 2001 to that effect (part exhibit 11).
On 20 April 2001, he received a further facsimile from Geoff Hesford Engineering (exhibit 12). That facsimile referred to the clearing out of the relief air shafts which was expected to make a measurable difference. In cross‑examination he did not know what the clearing out referred to, and his answers to cross‑examination revealed (T 153) that he took little or no steps to make enquiries as to what was wrong. The facsimile also continued to refer to air leakage which Mr Baker was to attend to.
On or about 26 April 2001, he went to see what was going on with the pressurisation system and carried out an inspection. He noted leakage of air from a variety of sources, as he put it "the majority of which were coming under the apartment doors". He could see plastic protecting the carpet flapping. He also acknowledge that there was air coming from the panels in the ceiling.
Following that inspection he wrote by email on 26 April 2001 to Mr Evan Aldridge and Peter Cook (exhibit 13) in which he said:
"Previous tests have failed as a result of excessive air leakage from various sources within the building back to the return air shafts".
"A further test was conducted after hours on Tuesday 24/04/01 following remedial works carried out by Westpoint Construction to limit the amount of air leakage through the service shafts within the building. I remained on site to witness this test.
The results, although much better than previous tests, remain marginally below the requirements of the BCA".
"Following discussions with Jarrad Elgar, the mechanical consultant working for Hesford Engineering, it was decided to attempt to further reduce the leakage of air on the upper floors prior to a further test to be carried out this evening."
"As discussed at the consultants' meeting the balance of air supply and return air in stairwells is not an exact science and can be influenced by many factors. The leakage from the lift shaft and around apartment doors is a known factor and has been allowed for in the design of the fans. The extraction fans have now been tuned to work at maximum capacity in an effort to improve results. However replacing these fans with more powerful fans will, in all probability, not resolve the problems. The iterative measures of locating and sealing areas of leakage appears to present the fastest possible solution to this situation".
After the system was changed to a zone system, the defendant claimed the costs of those works but Mr Walker could not recall if he responded.
As to the stolen air‑conditioners he acknowledge in cross‑examination that the first set of air‑conditioners were under the plaintiff's care and control (T162). Subsequently, air‑conditioners were delivered on an as required basis. Other than that he had little or no knowledge about the delivery of the air‑conditioners to the site, nor where they were stored. It is his view that after the order was placed for the replacement air‑conditioners, the responsibility for them was that of the defendant. Although he did not advise the defendant of this. He acknowledged that he told the defendant that the defendant had to pay for the five stolen air‑conditioners.
Generally speaking, Mr Walker was an unsatisfactory witness. He had the responsibility as project manager to oversee the project. Yet on all critical issues he was vague as to what had occurred. For example, after giving instructions to Mr Baker to carry out remedial work, he either did not follow it up or was unable to give evidence that he had followed it up, to see if the work had been done. This was in the context of a large project having been delayed for some considerable time when he arrived at the works, and he was giving strict instructions to sub‑contractors, and providing them with a programme for completion of the works. That completion was dependent, at the end of the period of the programme, upon the certification of the building which in turn was dependent upon the stair pressurisation system being passed.
Notwithstanding this, his understanding of the system and of what was going on at the material time, was vague in the extreme.
He accepted that the defendant was delayed by others, yet appeared to ignore their position, and apparently most of their complaints that were being made at the time.
In the circumstances, given that a large amount of his evidence was either vague or by way of reconstruction, I would have difficulty in accepting his evidence where it conflicts with the evidence of others. An example of his vagueness in the giving of his evidence is demonstrated at p 98 of the transcript. Given that the stair pressurisation was an important, if not critical element so far as approval by the City of Perth was concerned, he was unable to give any evidence (when asked by his counsel) of whether he received the certifying documents or whether he undertook a last examination of the building before he left the works. This demonstrates a complete lack of knowledge or system to record these important milestones in the development of this building.
Jeffrey Neil Dusting
Mr Dusting is a mechanical engineer with Norman Disney & Young, and specialises in mechanical services systems.
Mr Dusting, as an expert, produced two reports; a report dated 11 April 2005 (exhibit 15) and a supplementary report (exhibit 15a). Parts of those reports were excluded following objections from the defence, and other parts accepted, either as introductory or background material, or merely on the basis of the assumptions on which he relied.
Mr Dusting gave a general description of how the stair pressurisation system worked. There is not much, if any, dispute about how this system operates.
Mr Dusting was taken to document No 10 in exhibit 1 being drawing No MO2. He was of the view that the diagram was probably more advanced than what he would call a conceptual design. He described it as a developed design (T 279).
In his first report he was of the opinion that the relief shafts were "tightly sized" and based upon the calculations carried out by Mr Elgar (exhibits 21A and 21B) he was of the opinion that those calculations would require a high level of sealing to prevent excessive air leakage. He was of the opinion that excessive leakage would be occurring at that level of pressure difference in a building with average tightness.
He was also of the opinion "the reason why the zone system was a practical solution to the problem in this building was due to the restricted size of the relief shafts and the large negative pressures this creates on the upper levels."
His expert evidence was that the exact parameters of the system are determined during the detailed design and that was the contractors responsibility (T 282). He was of the opinion that it was the responsibility of the mechanical engineer to ensure that the mechanical specifications would achieve the desired result (T 288). He said that a mechanical engineer, whose tender has been accepted, would then move on to the next stage, that is to say the development design and satisfy himself that the design is going to satisfy the design intent (T 291).
I have noted that according to Mr Dusting drawing MO2 was more of a developed design, although he did express some concern about the size of the relief shafts. In his report (exhibit 15) in answer to a question as to what a reasonably competent engineer would have advised, and at what stage of the project advice would have been given, he said:
"The reliance upon the air tightness of the corridors and building skin when the system has relief shafts sized as they were on this project is not so obvious until a detailed analysis is done. From the information before us the original tender documents indicate shaft sizes that would not immediately raise this as a concern."
On 27 April 2001 Mr Dusting gave advice to the plaintiff (document 85 exhibit 1). Having noted that the behaviour of stair pressurised systems are not easily predicted, he said:
"The system adopted on the Paragon is a single fan at the top supplying 16 levels and an exit door via a shaft in the stair. The fan capacities appear to be adequate for a purging type system and comply with NDY design guides. Our guides however do not recommend serving over 13 levels via a single fan system due to the pressure drop that is created between the top of the stair and the bottom of the stair."
On 2 May 2001 he provided further advice to the plaintiff (part document 85 exhibit 1) in which he considered a number of solutions to the problem in this building, one of which was to convert the system to a zoned system.
In his second report (exhibit 15a) he clarified his original report and at 5.3 opined that:
"Given the design deficiency in relation to the size of the relief system shaft, the purge system as propounded in the initial design and adopted by Haden, would have failed notwithstanding the building, including the stairwells, relief shafts and corridors, meeting a standard of air tightness that would be average for a building of this type.
However, we consider the purge system may have operated successfully, notwithstanding the design deficiency of the relief system shaft, if the building had been of an air tightness which was above the standard of air tightness that would be average for a building of this type."
He was of the view that the defendant should have advised the architect of the size of the shaft required to make the system work, or the necessity for the air tightness of the building to be substantially higher than usually expected.
Under cross‑examination he accepted that an improperly constructed building would create significant air leakages which could contribute to the failure of the system (T 316).
In his second report at 6.2 he was of the opinion that the defendant should have insisted that the relief system shaft was not of an adequate size to allow for the purge system to operate successfully, and to ensure that the architect included such an adequately designed shaft for the building works. Also, once it was identified that the relief system shaft as built was of inadequate size, the defendant should have advised an increase in the size of the relief shaft, or ensure that steps were taken so that the building would be significantly above normal standards in respect of air tightness. The alternative was to consider a zone system.
At 8.2 he was of the view that an experienced mechanical engineer would have realised the size of the relief system shaft was critical to the success of the purge system as propounded in the initial design and adopted by the defendant.
Apart from the question of the size of the shaft, Mr Dusting accepted that the proper functioning of the relief shafts would be dependent to a large degree on them not being obstructed with debris or other materials (T 329). He further accepted that there was always a certain amount of debris in the shafts which was cleaned-up just before commissioning. He also accepted that it had to be cleaned-up properly to test the system as well as the doors being properly sealed in the stairwell (T 330)
Mr James Baker
Mr Baker was the site finishing foreman for the plaintiff. He did not come to these works until the works had reached the 3rd floor stage. He left when the building was basically finished (T 355/356).
It was Mr Baker's role to supervise sub-contractors including the brickwork and the construction of the shafts. He said that he did not have any difficulties out of the ordinary in relation to this. He was also instructed to seal gaps in the shafts. He said that he had observed this being done and that after completion of those works the shaft was clean and sealed. So far as sealing other aspects of the work namely cupboards where cables were situated he said that when these were discovered, they were sealed off with tape for the purposes of the commissioning and they would be fixed up the following day.
He said that the end result was that the shaft was neat and tidy and there were no gaps.
So far as the commissioning process was concerned he recalled that there were problems with door closers being affected by other trades. He recalled Mr Salter coming to the site on a number of occasions to try to test the system and encountering problems and giving instructions for these to be fixed (T 357).
Mr Baker's recollection of events was vague. He was shown the architects facsimile of 19 April 2001 (exhibit 8) which referred to gaps and cleaning of the ducts but none of this appeared to jog his memory of events (T 358-359).
He accepted that he was assisting in the commissioning process and there were places found where there were leakages of air (T 360) which he was instructed to fix. As far as he recalls he kept going on fixing matters until he left. Whilst he can not recall many aspects of the jobs he did recall there was an issue of air leakage under the apartment doors (T 361) and accepted in re-examination that the ceilings would not be air tight (T 362).
Graeme John Rundle
Mr Rundle is a chartered accountant and is company secretary and a director of Westpoint Management. He was also the company secretary to the plaintiff. He held various positions within the group.
Mr Rundle attempted to give evidence of funding arrangements within the group with respect of the development which evidence went nowhere, save to say that certain loans had to be extended which involved certain fees payable to the bank advancing the money.
In the end his evidence was of no value. In any event the plaintiff has abandoned the claim in respect of this liability to its principal for damages which are other than liquidated damages. Mr Rundle's evidence did not even go as far as to prove that any liquidated damages had in fact been paid or were payable by the plaintiff to its principal.
Antonio Gianni Fabris
Evidence was also called from a Mr Fabris a Quantity Surveyor with Ralph Beattie Bosworth. His role was to assess the level of works reach for draw-downs on the bank finance and issue certificates for that purpose. His evidence did not go any matter in issue.
The defendant's evidence
Jarrod Dennis Elgar
Mr Elgar is a designer of ventilation and air-conditioning systems and holds a diploma in mechanical engineering obtained in 1978. He has been in the business of designing and then commissioning, heating ventilating and air-conditioning systems since 1975.
Mr Elgar was involved in this matter initially to assist in the development of the original designs for the initial tender purposes. Thereafter he worked with the defendant after it had successfully tendered for the job and had been awarded the contract for the mechanical services. The defendant had engaged Geoff Hesford and Mr Elgar was a sub-consultant to Mr Hesford (T 381).
Mr Elgar gave evidence about changes in shaft sizes particularly the relief shaft on the south-side (see exhibit 19) in contrast to the original design shown on drawing MO2. That change can also be seen on exhibit 20 where the slab between floors protrudes into the southern relief shaft.
It was Mr Elgar who carried out the necessary calculations for the pressurisation system intended to be used in the building having regard to the restrictions on the flow of air that could be expected at various parts of the system. His calculations can be found as exhibits 21A and 21B. In making those calculations he had regard to the fact that this was a Class 3 building. Such a building he would expect to be better sealed than an average building and would expect a reasonable air tightness within it (T 402). In carrying out his calculations he made various allowances for air leakage. He said (T 428) that the design (prepared by Hesford) was based upon an expected air tightness of the building. He said that it was not possible for buildings to be completely air tight but given its nature and being a Class 3 type building one would expect this to be very air tight building in comparison to others.
Mr Elgar took part in the commissioning process. He said (T 407) that he went to the building for testing and commissioning at least four or five times. He thought that was about the end of April.
Door pull tests were carried out to ensure that the pull to open the door was under 11 kilos (T 409). This test was carried out "innumerable times" because the doors weren't adjusted and there were gaps under the doors. In addition to this the testing also included the measuring of air velocity through openings. It appears that there were no real concerns about the door pull test, but he noted that the building exhibited an "enormous amount of leakage". He said that air was coming through places where it would not normally be expected and it was different from one level to another. He described a variety of sources of leakage (T 412).
Prior to changing over to the zone system he had come to the opinion that they could not get to a point without some considerable effort on the plaintiffs part, to seal the system enough and achieve minimum required air velocity (T 415).
Prior to this Mr Elgar had demonstrated to Mr Baker where he thought the leakage was coming from and discussed with him how it might be rectified. He made this issue of leakage clear to Mr Baker (T 429).
The change to the zone system was made despite there having been an improvement in the system due to the work carried out by the plaintiff (T 417) but there was still residual leakage coming through the ceiling of the corridor. He said that this could be felt. It could also be seen if one held paper up to the ceiling it fluttered or by way of smoke from a cigarette.
Mr Elgar said that in dealing with the detailed design his instructions were to work with the "Westpoint Consulting Group, the architect… to develop mechanical service systems as they developed their design". He also considered that the design was appropriate for the building (T 426).
Geoffrey Allan James Hesford
Mr Hesford is a consulting engineer specialising in building ventilation and air-conditioning systems and is the principal of Geoff Hesford Engineering.
It was Mr Hesford who produced the mechanical services specifications for these works (document 8 exhibit 1) for the purposes of obtaining the building licence and the purposes of the tendering of mechanical services. He also prepared the drawings MO1-MO4. He had settled the configurations of the system to be used when the building was constructed (T 449). He gave evidence as to how he determined the dimensions of the air-relief shafts. He was of the opinion that they were adequate to allow the system to function (T 451).
Mr Hesford said that the size of the shafts had been determined (T 457), He said that unless there was something glaringly wrong or had been omitted the mechanical contractor would be expected to be given something that works or is workable.
Mr Hesford believed that the system wasn't meeting results because of leakages of air. He advised the plaintiff of this (T 461). He said that he reached a point that the did not believe that, without basically pulling the building apart and putting it back together again, they would ever get to the desired or the required standards (T 462). When questioned as to whether or not the initial design took into account that the shaft may have had some leakage he responded that the shaft had to built as a fire rated shaft that had to be airtight and therefore as a mechanical engineer the assumption is that the shaft would be air tight and confirmed that minor leakage was allowed for (T 480).
Wing Cheung Fok
Mr Fok is a chartered mechanical engineer practicing in the field of mechanical services with particular experience in heating ventilation and air‑conditioning systems.
Mr Fok produced a report dated November 2003 (exhibit 28).
Specifically at 1.4 Mr Fok notes that he was asked:
1.What assumption could a reasonably competent mechanical engineer specialising in stair pressurisation systems make about the amount of leakage to be expected from the stairwell, corridors and air shafts.
2.Was the failure of the purge system to supply air at the velocities required attributed to:
(a)the original design of the system;
(b)failure to adequately seal the stairwells, corridors or air shafts from air leaks;
(c) any other cause of combination of cause.
Mr Fok discarded issues to (b) and (c) on the basis of his instruction that the "door pulls are excellent" but the requirement to achieve a "1m/s" airflow is not fully satisfied. He felt that items 2(b) and (c) were not issues that were contributing to the failure to achieve certification of the stairwell pressurisation system.
Mr Fok considered the calculation of the air quantity and noted that, because of the uncertainties in the estimation of the level of leakage, engineering practice was to calculate a total airflow and include a safety allowance of 25 per cent of the calculated airflow. In relation to the calculations carried out by Mr Elgar he noted that the calculation does not make any reference to any specific consideration of leakage but that the adoption of 8,000L/s for the calculated requirements of 5,380 L/s gives an overall safety factor of about 49 per cent. However, Mr Fok carried out his own calculation and whilst considering that Mr Elgar's calculations were "based on a simplistic approach" came to the view that the design capacity was adequate.
On the first issue which he was asked to comment on he noted that as part of the design process the requirement for the appropriate standard of construction of the stairwell and pressurisation shafts, ceiling penetrations and door, and other possible leakage paths would need to be addressed by the design mechanical engineer in conjunction with the architect and other project team members, so that the required standard for construction is defined and specified. However, he went to say that, for this type of building, a reasonably competent mechanical engineer would assume:
· The stairwell and pressurisation shafts are required to be fire rated and therefore it is reasonable to assume that walls and the joints between the walls and floor slabs would be of good construction with no significant constructions cracks/gaps and other leakage points such as unsealed service penetrations.
· Stairwell doors (which are required to fire rated) would be expected to be reasonably well sealed.
However he did qualify those assumptions by saying whilst they were reasonable, co-ordination and discussion between the design mechanical engineer and other design team members was necessary to ensure that the level of leakage assumed in the design calculations is achieved on completion of the construction work.
Mr Fok went on to deal with issue 2(a) and noted that the original system as designed could have been made to perform satisfactorily with respect to the 1m/s requirement, assuming that the leakage was comparable to an amount reasonably assumed and the appropriate testing and trouble shooting were carried out to determine all possible causes of the initial non-performance and appropriate rectification work implemented.
Whilst apparently suggesting that issues 2(b) and (c) were not contributing to the failure to achieve certification Mr Fok went onto deal with the same. He said that although no detailed surveys or quantitative assessments were done he considered that it is reasonable to conclude, based on the reported observations of the leakages and their characteristics, that the leakage paths were extensive and the leakage amount was higher than would be reasonably allowed for in the design calculation. He was of the view that the significant amount of leakage, of which he was advised, was a key factor which would adversely affect performance of the system with respect to the 1m/s velocity.
Mr Fok was careful to note that no comprehensive or systematic investigation or testing was performed to properly determine the possible causes of the non-performance of the purge system. Without such investigation and testing, he said it was not possible to determine other causes which might have contributed to the non-performance of the purge system. One of the key factors for the proper performance of the pressurisation system is the proper relief of the of the pressurisation air. He went to say that therefore the design of the air relief system is a key component and has an important bearing on the overall operation of the stairwell pressurisation system. His evidence, in his report, was that if proper relief is not provided back pressure will build up resulting in reduced airflow from the stairwell.
Mr Fok went on to say:
"The drawings of the relief shafts and the sub-ducts arrangement indicated that 'localised' restrictions at the floor penetration locations and sub-ducts arrangement would result in pressure losses such that there may be a distinct pressure gradient over the height of each shaft. As differential pressure measurements were apparently not taken, it is not possible to assess the magnitude of the pressure gradient and its effect on the air relief on different floors.
The significant amount of leakages is likely to have an adverse impact on the achievement on the 1m/s due to 'short circuiting' which results in a large amount of pressurisation air being sucked out at the upper floors thus 'starving' the lower floors.
As no comprehensive investigation was done, it is not possible to conclusively state that there were performance short comings with the relief system which might have significantly contributed to the non-performance of the purge system."
Mr Fok was examined as to the role of a mechanical engineer provided with an initial design which was developed prior to him being engaged. Mr Fok was of the view that such an engineer would look at the conceptual design to see whether there was any concern with the concept and, if he is happy that he is able to develop the design, continue. He said that he would look at the design and if there were no special reasons or very important reasons that would effect the conceptual design being developed further into a proper working design he would be inclined to stick with it and try to develop that design. However, should he find that is probably not a good idea and there are other factors which might minimise or increase the risks of achieving a proper design then he would go back to the architect to discuss it. He acknowledged that if the design of the building and structure had been "locked in" it would be difficult to change the concept design further. When asked if it was the case that the design may not work what would he do, he answered that if the design has a very high risk that it will not work then it is the responsible action on his part to bring it to the attention to all people concerned to see whether it can be resolved. (T 508-510)
Mr Fok in cross-examination, repeated that he would expect the shaft, if it is fire rated, to be reasonably air tight (T 51-511). Further dealing with that (T 515), relying on that assumption that the shaft would be fire rated and very well sealed he would have assumed there were no holes between the floors as well. He went onto say that in the design of the building, it is not normally the responsibility of mechanical engineers, it is the reasonability of the architect to deal with these matters, but if he became aware of them he would point them out.
Mr Fok was asked how important the leakage was in the air relief shafts at the connection between the top of the shafts walls and the underside of the concrete slab. He responded that that area could be sealed but there were other areas of leakage which would impact on the system so that looking at just that particular area might not help to improve the system significantly. Counsel then took him to other areas where he had been advised of leakages and put it to him that if those matters had been attended to then the conclusions in this report would need to be reconsidered. Mr Fok said that that was probably true. However, he was also of the view that increasing the size of the shaft might not reduce the pressure loss significantly. (T 530-531)
Significantly, in relation to whether the air relief shafts were under sized he was asked what effect that would have on the door pull tests. He said that the back pressure would have the potential to increase the door pull on the door when it was opened. Indeed paraphrasing his evidence at (T 533-534) it seems that it would significantly increase the pull pressure on the door and thus the amount of force necessary to open the door.
Larry Leonard Bennett
Mr Bennett was the senior building officer with the City of Perth.
He gave evidence that this was a Class 2 building under the building code. Such a building requires what is called bounding construction around the outside of the unit and that bounding construction under the building code has to have a certain fire rating to resist fire either getting into the units or escaping out of them.
He carried out a inspection on 11 April 2001 for the purposes of certification of the building. He prepared a list of matters which needed to be attended to some of which referred to the stair pressurisation system. The list was part of exhibit 30 at tab 2.
One such matter was to seal the plant room walls to the underside of the roof. This was at the top floor of the building. He sent a copy of that list to the architect Mr Trethewey.
He re-attended at the premises on the 11 May 2001 when the system was again tested. On that occasion the airflow velocity through the stair doors still did not meet the requirement of the Australian Standard (see tab 5 exhibit 30). However, it was only the 15th floor on the east stair that did not comply and on the west stair it was only mezzanine that did not comply. Despite that failing that he was then of the view that the stair pressurisation system was performing reasonably well (T 547) but nevertheless it was decided to carry out a smoke test to see how effective the air flow was in keeping smoke out of the stairs.
That smoke test was done on 14 May 2005. He prepared a list of items (tab 6 exhibit 30) ticking off those with which he was satisfied on 14 May. By 15 May 2005 all matters had been attended to and he issued the certificate of classification (tab 8 exhibit 30).
Under cross-examination Mr Bennett said that he did not go to each floor to look at the ceiling of each floor. The inspection process merely was to pick half a dozen levels to have a look at as a sample (T 551). He was not able to see if the walls actually went up to seal to the slab. Accordingly, his reference to the wall not reaching the slab was merely on that top floor. That was the plant room and that was the only one he could see, because the others had suspended ceilings.
Steven Paul Salter
Mr Salter was the project manager for the defendant. His evidence-in-chief was given by way of a signed statement dated 15 April 2005, with annexures which all became exhibit 31.
Mr Salter started as project manager on 23 May 2000 when the works were already well underway. He said that at that stage the defendant was ahead of its program. He said that by 18 November 2000 the project was no where near complete.
His evidence was that on 24 January 2001 the plaintiff issued a further revised instruction program dated 23 January 2001(document 16 exhibit 1). That program provided for a completion of the works on 24 March 2001. Under that program the defendant was required was to complete construction of the system and commissioning by 20 February 2001.
Mr Salter said that come 14 February 2001 he advised the plaintiff that the defendant was ready to commence testing but was advised by Mr Walker that the stairwells would not be completed until 26 February 2001. Mr Walker requested a defects list from Mr Salter.
On 17 February 2001 Mr Salter found that the stairwells were not in a condition where testing could be commenced.
At par 27 of his statement he set out a number of defects which still required attention by the plaintiff. Thereafter in his statement he sets out correspondence and meetings that he had with Mr Walker. At such meetings he advised Mr Walker that the defendant was unable to commence testing due to the various defects in the stairwells. One such meeting on 4 April 2001 (par 34 of his statement) was also attended by Mr Hesford and Mr Elgar. At that meeting Mr Salter advised Mr Walker that the defects remained unremedied and continued to prevent the defendant from commissioning the system.
The defendant commenced commissioning on 5 April 2001. There were problems and a snagging list was prepared and sent to Mr Walker. That list is document 73 in exhibit 1.
On 10 and 11 April 2001the defendant attempted commissioning again with the assistance of Mr Elgar. Again defects were found and noted to the plaintiff (documents 75, 31 and 76 in exhibit 1). Further, on 12 April 2001 Mr Elgar wrote to Mr Walker raising the defects in relation to air leakages (document 77 exhibit 1).
Mr Salter received a letter from Mr Walker (document 80 exhibit 1) stating that the defendant was behind schedule and would be liable for damages. Mr Salter spoke to Mr Walker and asked him to point out where it was that the defendant was causing delay. Mr Walker said that the defendant had not caused delay to any other trades. Mr Salter made it clear to Mr Walker that the defendant had itself been delayed.
Mr Salter, in his statement, then went on to deal with the testing of the system which is generally in accordance with the evidence of other witnesses. It is common ground that the purge system did not work.
Following the suggestion from Norman Disney & Young of the solution by providing a zone system (document 85 exhibit 1) Mr Salter advised Mr Walker that any change would be a variation to the contract. Mr Salter produced a time table for the revised works, and provided that to Mr Walker. It was following that that Mr Walker sent a notice of default (document 86 exhibit 1) instructing the defendant to carry out whatever works, including re‑design of the system, necessary to ensure the system was completed.
In his statement Mr Salter gave details of the defendant's additional costs arising out of the extensions of time sought by it. However, I need not canvas these given that those claims have now fallen away (T 649).
Mr Salter gave evidence that he submitted a claim for the costs incurred as a result of delays experienced in commissioning the stairwell system, including changing the design of the system. These are set out in par 63 of his statement.
Before considering these costs it is worth noting that the defendant's counterclaim in respect of the costs of installing the zone system is set out at par 38 of the defence and counterclaim, and is said to be the reasonable market price for carrying out the works in the sum of $70,333.45 (excluding GST).
The documents said to support this claim are p 113 to p 136 in exhibit 1. I deal with those documents later in these reasons, but for the moment note that the evidence in relation to this claim is purely limited to the production of those documents. No evidence was given to explain the documents nor was any evidence led to explain the content of those documents, that is to say as to what works each document was related to, and the extent to which it related to those works. Further, there was no evidence to show that any such costs were the reasonable market price for carrying out those works.
Mr Salter also gave evidence, by way of his statement, in relation to the stolen air‑conditioners. There appears to be no dispute that some of the original air‑conditioners delivered were water damaged, and were replaced under the plaintiff's insurance policy.
On 14 March 2001 Mr Salter received information that five more air‑conditioners had been stolen. Mr Salter met with Mr Walker and requested that he provide a variation order to replace those further stolen air‑conditioners (document 98 exhibit 1). Mr Walker refused and advised Mr Salter that unless the defendant completed the installation of all air‑conditioners in accordance with the dates set out in the construction programme, the plaintiff may charge liquidated damages of $1,000 for each day of delay, but he did not say that it would be so charged. To avoid that claim, Mr Salter ordered five new air‑conditioners at a cost of $8,480 which the plaintiff did not pay for.
Under cross‑examination Mr Salter accepted that the air‑conditioners were delivered generally in bundles as they became available from the supplier and to try to fit them in with the programme.
The plaintiff's claim
The plaintiff's claim is grounded in the revised construction programme that required the completion of the defendant's work including testing and commissioning by 20 February 2001. The plaintiff relies upon cl 2 of the sub‑contract.
It is not disputed that the plaintiff did not grant any extension of time in writing, to the defendant. In view of the relationship between the plaintiff and the proprietor, extensions of time appeared not to be a feature of this development. Leaving aside any question as to whether or not the system was adequate, I find that as at 31 January 2001 the defendant had installed its system. In other words, consistent with the programme at item 382, the defendant was still on target. At that time there was still work to be completed by the plaintiff before the testing could be carried out. It seems from the unchallenged evidence of Mr Salter that on 14 February 2001, he advised the plaintiff that the defendant was ready to test the system but was advised by Mr Walker that the stairwells would not be completed until 26 February 2001. If that is the case then clearly the programme at item 383 which required testing to commence on 14 February 2001 could not be adhered to.
There is a good deal of evidence to show that the plaintiff was still carrying out work on the stairwells and other parts of the building either by way of completion or by way of rectification work at that time.
I find as a fact that, even with the system as it then stood, in its state of readiness for testing, testing could not be commenced on the date as specified in the programme due to delays or defects in the building attributable to the plaintiff.
The sub‑contract entered into by the defendant was a composite contract to "design, supply, install, test and commission the mechanical services … ". For the plaintiff to rely on cl 2 of the sub‑contract, the plaintiff seeks to disregard the responsibility for that delay. Clause 2 provides for the payment of liquidated damages in the event of the sub‑contractor failing to complete the works in accordance with the construction programme. Clause 2 provides that the builder shall make reasonable extensions of time in respect of any delay not caused or contributed to by the act or default of the sub‑contractor. That recognises the need for a consideration of a cause or connection between the delay and any loss deemed or assumed to have been suffered for which liquidated damages were agreed. Liquidated damages are a genuine pre‑estimate of the loss expected to be suffered by one party by reason of the default or breach of the contract by the other party. Such claims are grounded in default on the part of the other party.
The defendant argues that cl 2(a) of the sub‑contract does not require that extensions of time be approved in writing by the plaintiff, but by cl 2(b) obliges the plaintiff to grant a reasonable extension of time whether requested or not.
In the circumstances, given my findings that the defendant had completed its physical work of construction by 31 January 2001 and that it was ready to commence testing on 14 February 2001 in accordance with the contract, I find that the defendant was entitled to extensions of time for any period thereafter where there was a delay in commencing the commissioning which was not as a result of any fault of the part of the defendant.
The plaintiff argues that the defendant was obliged under the sub‑contract to design, supply, install and test the stair pressurisation system all for a guaranteed maximum price of $668,000. The plaintiff argues that the defendant is responsible for the ultimate delivery of the system which complies with the sub‑contract specifications. It relies upon the evidence of Mr Dusting and of Mr Fok to the effect that a person in the defendant's position should review the conceptual design to determine whether it will work. At the end of the day there is probably little difference between the evidence of these two experts. There is some suggestion by Mr Dusting that the relief shafts were of inadequate size. This is not necessarily agreed to by Mr Fok who, when considering the sizing of those shafts thought that if they were inadequate, then absent any other leakage, this would have had an effect upon the door pull pressures. Nevertheless, Mr Dusting's evidence was that it is the mechanical engineer's responsibility to ensure that the desired result is achieved. Mr Fok was broadly of a similar view save to say that having been provided with a conceptual design, the mechanical engineer assumes, or will be entitled to assume that a building of this type would be reasonably air tight and need only go beyond the conceptual design if there was a significant risk that that design would not work.
The evidence Mr Fok and of Mr Elgar in relation to the various calculations that were carried out relative to the design suggest that the design ought to have worked.
This is a case where the defendant was required to tender upon an initial conceptual design prepared by Mr Hesford. The evidence is that the purge system ought to work on that conceptual design. The defendant tendered and was awarded this guaranteed maximum price contract on that basis.
The plaintiff, during the course of examination of witnesses, appears to be suggesting that if, after the contract is awarded, problems arise or the mechanical engineer can foresee problems with the conceptual design, it has an obligation to bring that to the attention of the architects, engineers and other persons involved in the project.
In considering whether the defendant has an obligation under the contract to deliver a system which complies with the sub‑contract specifications and provide a warranty that it will perform adequately, one cannot ignore the conceptual design on which the defendant was required to tender. If one accepts the evidence of Mr Elgar and Mr Fok that this design with all of its component parts ought to work, then the plaintiff's argument would mean that it is the defendant that is taking on the risk of the system not working by reason of aspects of the concept that are beyond its control, for example, the size of the relief shafts. As Mr Hesford put it "the fundamental parameters of where the shafts are, the sizes of the shafts, are pretty well set in jelly … have been determined" (T 457). Accordingly, as the evidence demonstrates, it might be very difficult to then change those aspects.
In this matter I am required to consider the proper construction of the sub‑contract. Annexure A to the sub‑contract provides for:
"design, supply, install, test and commission mechanical services to the above project including but limited to ‑
·two stairwell pressurisation systems;
·two stairwell pressurisation relief systems.
Includes design development from initial design by Geoff Hesford Engineering, updating mechanical drawings as required and provision of As‑Built's on completion, all in accordance with the documents and conditions outlined in this agreement."
The documents provided with the contract include the conceptual drawings showing the stairwells and the relief shafts. The question, in the construction of this contract, is (inter alia) what was it that the defendant had to design.
The mechanical services specification is said to provide a brief for the design criteria and systems requirements and should be read in conjunction with the architectural drawings. The specification is said to have been prepared to inform of the technical requirements of the proprietor, and to provide the minimum standards and methods of construction of the various systems. It is said not to be an all embracing document, and the mechanical contractor is to be fully responsible for the full design of any aspect of the system "not fully covered in these documents" and in accordance with good engineering practices to perform the envisaged duty to the satisfaction of the superintendent. I pause to note that there was no evidence given of the appointment of a superintendent in this case. The mechanical contractor was required to engage consulting engineers to complete the detailed design and documentation. Nowhere does the specification refer to the type of stair pressurisation system, ie, a purge system or a zone system.
It will be remembered that Mr Hesford had been engaged by the proprietor to prepare the specification and the mechanical services drawings. His evidence was that after the defendant was awarded the sub‑contract based upon his drawings and specifications, the defendant then had to carry out the preparation of workshop drawings, that is to say the elements that have to be incorporated into the building, and to connect all of the various elements together. Also the other design work required of the defendant was to finalise the equipment specifications so the correct equipment could be obtained (T 455‑456). It was after describing this aspect of the design that Mr Hesford gave his evidence that the size of the shafts had already been determined and "pretty well set in jelly". This was an unusual expression given that it appears to be an expression of flexibility, but it appears quite clear from his evidence that Mr Hesford in fact meant the opposite.
There is no doubt that, subject to any vitiating circumstances, a person entering into a contract is taken to have agreed to be bound by the terms thereof; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] ALJR 129. The plaintiff says the defendant cannot disavow the provision of the scope of works for the guaranteed maximum price, or delivery of the works contracted for within that price. On the other hand the defendant argues that the principles of commercial construction should be applied to a case such as this and argues that a common sense approach is to be taken to the interpretation of commercial contracts. It further argues that the Court should be reluctant to accept a construction which would achieve an unreasonable result, that there is a need to arrive at an interpretation which is practical and commercially sensible in a business and practical sense, and that common sense should prevail. The defendant cited a number of authorities in support of those propositions.
The plaintiff relied upon a number of authorities for its proposition and in particular, Thorn v The Mayor and Commonalty of London [1876] 1 App Case 120. That was a case where the plaintiff had contracted to take down a bridge and build a new one. Plans and specifications had been provided and furnished. Descriptions had been given "believed to be correct" but were not guaranteed. The plan consisted of the use of caissons which turned out to be of no value and the work done in an attempt to use them was wholly lost, and the bridge had to be built in a different manner. The contractor sought compensation for his loss of time and labour occasioned by the failure of the caissons and sought a declaration that the defendants had warranted that the bridge could be inexpensively built according to the plans and specifications. Lord Cairns LC speaking of the alleged warranty that the bridge could be inexpensively built according to the plans and specifications said it raised a very serious and a very alarming question which, if it were to be entertained, would go to nearly every kind of work in which a contractor is employed, and in which, for convenience, specifications of the details of the work are issued by the person who desires to employ the contractor. He continued that if it were to be held that there is, with regard to the specification, an implied warranty on the part of the person who invited the tenders for the contract, that the work can be done in the way and under the conditions mentioned in the specification, so that he is liable in damages if it is found that it cannot be so done, the consequences would be most alarming.
However, the Lord Chancellor did note that, in that case, if the work was the kind of additional or varied work contemplated by the contract, the plaintiff should be paid for it and according to the prices regulated by the contract. If it was work that was so peculiar or unexpected or so different from what any person reckoned or calculated upon, that is not within the contract at all, the plaintiff would then have had two courses; to refuse to go on with the work or go on with the work and to be paid a quantum meruit.
It seems to me that this case does not assist in the resolution of the problem in the current case in view of findings I have made as to the quality of the work carried out by the plaintiff.
The defendant argues that there is nothing in the sub‑contract that warrants the conclusion that the defendant "warranted the efficacy of the works (it) had agreed to erect" relying upon Cable (1956) Ltd v Hutcherson Bros Pty Ltd (1969) 123 CLR 143. However, this case does not assist in the present case in as much as that was a building contract under which the contractor was to execute and complete the works shown on the contract drawings, and described in the specification and conditions of the contract. Barwick CJ noted at 150 that the choice between the contentions (of the parties) could be made without reference to decided cases. His Honour said that no doubt at times the question whether the promise of a builder is to produce a result or merely to do specific work is difficult to answer. He went on the say "in reaching a conclusion, the fact that it can be seen that reliance is placed upon the skill and judgment of the builder, may on occasions be an important, if not a decisive consideration". That case is distinguishable from the present case in which the defendant was to design the system.
The proper interpretation of this contract, whilst having regard to commercial and common sense considerations, has to be determined according to the contract itself. This was a contract in which the defendant was given a raw building design, including stairwell and relief shaft sizes to work with, and from which it then had to design a system which would operate as a stair pressurisation system and which would, after completion, allow a certificate of compliance to be issued. The contract did not specify what type of system and how it was to work. That was a matter for the defendant. Accordingly on a proper construction of this contract, I find that the contract did oblige the defendant to provide a system that would work, and would comply with necessary requirements and standards. However, that obligation only extended to that part of the system for which the defendant was responsible, that is to say the design, supply and installation as described by Mr Hesford. The defendant was not responsible for the construction of the relief shafts or any other part of the fabric of the building. However, if a system could not be designed given the parameters of the shaft that was in place, I accept that in order to fulfil its obligations to supply a system that would work, the defendant would necessarily have to liaise and confer with the architect, engineers and others involved in the project.
I make this finding of a requirement for the efficacy of the works based upon a reading of the contract as a whole including Annexure A and the Mechanical Services Specification. To demonstrate that, Section 102 of the Specification makes the mechanical contractor fully responsible for the full design of any aspect of the system not fully covered in the documents in accordance with good engineering practice. Section 103 of that document provides that the mechanical contractor is required to engage a consulting engineer to complete the detailed design and documentation in association with the proprietor's architect another nominated consultants. Given that level of obligation of design it is clear to me that by this contract the defendant was responsible for the ultimate delivery of a system which would work subsequent to being presented with a construction which would allow that to occur.
The purge system as designed by the defendant failed. The real question is why did it fail? Did it fail because of some inherent defect in the design or was the design adequate but the system failed due to some defect in the building itself. If the former I would find that the change to the zone system was the responsibility of the defendant. If the latter then, depending upon the circumstances, the responsibility for the failure would fall on the plaintiff.
The difficulty in this case is in trying to establish the cause of the failure. Counsel for the defendant said the deficiency of the expert evidence called by both parties is that neither expert had the opportunity to see the building either before and after the change to the zone system. That was probably a fair comment.
I have made certain findings of fact in relation to the quality of the works carried out by the plaintiff and the ongoing remedial work conducted by it so as to overcome problems with leakage of air. Notwithstanding that work the system still did not achieve satisfactory results although, prior to the change to the zone system, it came very close to doing so. In the end the complaint by the defendant comes down to the fact that there was still air leakage although this was said to be around the suspended ceilings. There is no direct evidence of anybody observing any holes in this area. Indeed the smoke test that was carried out in the presence of Mr Bennett appeared to be a smoke test at the stair doors not at the ceiling.
I accept the evidence of Mr Fok that if this building had an average air tightness this system should have worked. I do not accept that the relief shafts were too small. The size had been determined by Mr Hesford who said that they were adequate and had been determined prior to the defendant coming to this contract. Further, in support of this finding I accept the evidence of Mr Fok that had the building been air tight (to the extent that one could expect) if the relief shafts had been under size this would have manifested itself in difficulties with the door pull. That was not the case.
Counsel for the plaintiff argued that the building passed all other fire and safety tests. He argued that this was a building which was built to a particular standard and that there was no evidence to say that it hadn't reached that standard. He argued that the Court was being asked to speculate that because there were problems it might not have been to of a certain standard. He pointed out no evidence had been called from the architect as to this.
Whilst there is some force in this argument in as much as the evidence of leakage from the ceiling was not conclusive it was put to Mr Walker that there was air coming down from panels in the ceiling and he accepted that may have been the case and he did not know where the air was coming from. Again this is not conclusive. Mr Hesford said (T 462) that they had:
"got to the point where all of the work that Westpoint had been doing in terms of sealing the building and sealing the shafts and making sure that the door closes were – everything was fine‑tuned as best we could get it. As I said, we had reached the point where I didn't believe that without basically pulling the building apart and putting it back together again that we would ever, ever get to the desired or required standards."
Nevertheless, in my opinion, the evidence demonstrates something more than just speculation as to the standard of the building. It demonstrates that the building did suffer deficiencies in construction which, accepting as I do the evidence of Mr Hesford and Mr Fok that the systems should have worked, leads me to the conclusion that not all those deficiencies had been or could be cured. I am not required to determine whether the building had been built to a particular standard for any other purpose.
I have found that the defendant's purge system was completed and ready for commissioning and testing by 14 February 2001. Delays in testing were caused by the defects in the building or non‑completion of the building. Had the defendant been able to commence its testing once its works were completed there is no reason to believe that the testing and commissioning could not have been completed within the six days allowed in the programme. Indeed, the evidence suggests that once the zone system was in place there was no delay in testing that particular system.
I find that, in the circumstances, a purge system could have been installed and commissioned by 20 February 2001, in accordance with the programme, but for the delays on the part of the plaintiff.
The defendant argues that it is entitled to extensions of time under the contract and that at the very least it applied for extensions of time verbally. I am of the view that the plaintiff would have been obliged to give relevant extensions of time to the defendant. However, in view of my findings it is not necessary for me to decide the extent of those extensions of time. I have come to the conclusion that the delays in testing and commissioning the system were not delays that were caused by the defendant and in those circumstances the plaintiff has not satisfied me that it is entitled to liquidated damages for the sum claimed or indeed for any sum under the contract.
In view of that finding it is not necessary for me to decide the effect of the incorporation of the Head Contract terms into the sub‑contract insofar as they relate to the payment of liquidated damages by the plaintiff to the principal. I have already noted that there is no evidence to show that such damages have been paid or indeed would be imposed upon the plaintiff.
The defendant's claim
Having found that the purged system failed by reason of some defect in the building itself rather than by reason of a defect in design or construction on the part of the defendant, the additional work of converting the system into a zone system would seem to me to fall within the description of the kind of additional or varied work as contemplated by the contract and to be paid for according to the contract or was peculiar or unexpected work to be paid for on a quantum meruit as described by the Lord Chancellor in Thorn's case.
The plaintiff relies upon the standard conditions of sub‑contract that the variation was not authorised in writing. The defendant relies upon the facsimile transmission from the plaintiff dated 17 April 2001, exhibit 11, to "carry out whatever works are required to achieve a positive test result" and the facsimile from the plaintiff headed Notice of Default dated 4 May 2001, document 86 exhibit 1, to "carry out whatever work, including re‑design as required".
The defendant alternatively bases a claim upon the works being outside the stated works required under the sub‑contract and that it would be unjust for the defendant not to receive reasonable recompense for that non‑contract work.
By the time of the facsimile transmission of 4 May 2001 the possibility of the system being changed to a zone system had been canvassed; see Norman Disney & Young facsimile transmission 2 May 2001 being part of exhibit 3.
I am satisfied that in the context of the progress of these works and the difficulties that were being encountered, particularly by the plaintiff in fixing problem areas in the construction, that the parties were aware that there would have to be a variation to the design of the system for the system to work. I am fortified in that conclusion by the evidence of Mr Hesford that, short of pulling the building apart, nothing else could be done.
I am also satisfied that at the time of writing the letters of 17 April and 4 May 2001 Mr Walker had such a change in mind. Such a change was also clear to the defendant by its letter of 7 May 2001 being document 88 in exhibit 1.
Accordingly, to the extent that it is necessary for any variation to be authorised in writing I find that the two letters do constitute a variation under the contract.
Alternatively, given my findings that the purge system was an adequate system by design any such change to a zone system would constitute work falling within the second description given by the Lord Chancellor in Thorn's case, that is to say, so different from what the defendant reckoned or calculated upon as to not be within the contract at all and as to which the defendant would be entitled to be paid a quantum meruit.
Whether it be a variation for which payment under the contract should be made at market rate or the work be outside the contract when payment should be a quantum meruit, or as the defendant pleads a reasonable recompense for the non‑contract work, the question remains what is the proper cost for that work. The defendant claims the sum of $70,333.45 in respect thereof.
The evidence as to this comes from Mr Salter but as I have noted that evidence was purely limited to the production of documents said to support the claim. According to his statement those documents were comprised in the claim submitted by him to the plaintiff and being document 101 in exhibit 1. The claim in par 38 of the counterclaim is a reflection of what is to be found in p 5 of document 101 exhibit 1, but in addition there is added a profit margin of 10 per cent. Those claims are also reflected in par 63 of Mr Salter's statement. Document 101 of itself contained no further detail to throw light on these claims. I was advised that documents 113‑136 of exhibit 1 were the appropriate documents giving rise to these claims.
If the claim is a claim for variation under the contract then it is a claim for additional sums calculated in accordance with cl 4 of the standard conditions of the sub‑contract. Absent any evidence as to quantifying the value of the works according to the Australian method of measurement or an ability to apply any contract schedule of rates one is left with a quantification at reasonable market rates. As I have noted if the works are outside the contract then it would be on a quantum meruit. It would seem to me for the purposes of this exercise that there is no difference between a market rate and a quantum meruit or, as the defendant puts it, reasonable recompense for the non-contract work.
I repeat that no evidence was given to explain the documents that have been placed before me. Unfortunately, those documents do not readily speak for themselves so that I have difficulty in discerning from those documents which of them relate to which particular claim made by the defendant. All that was said by Mr Salter was that these documents were the documents that he used to come up with the costs that are referred to in par 63 of his statement (T 563).
Not only were these costs no proved but they were claimed under pars 33 to 39 of the counterclaim as the reasonable market price of a change from the purge system to the zone system (par 38) that change occurring between 4 May and 14 May 2001 (par 37).
To the extent that I have been able to analyse those documents and claims some of the documents appear to relate to the cost of commissioning or the labour of Mr Salter prior to the change to the zone system. To the extent that those costs were additional to the cost allowed for by the defendant in its tender price or were wasted costs and were incurred due to the state of the building as provided by the plaintiff, it would seem to me that they are not part of the cost of the variation. At best they might be a claim for additional work caused by the plaintiff due to its failure to supply an airtight building. However the claim has not been put on any such footing by way of breach of contract or otherwise.
Further there was no evidence to prove the time claimed by Mr Salter and it was not possible for me to reconcile any such time to the problems with the stair pressurisation system.
Other documents did appear to relate to the changed system whether by way of materials supplied or commissioning, eg documents 123, 123.1, 127, 128 and 129 in exhibit 1. However, I am left with the difficulty that there was no evidence to show that what was charged to the defendant by other contractors was in fact a reasonable market rate.
It would be speculative on my part to try further to analyse all of those documents. Even if I could identify a particular invoice as being referable to a particular claim there is no evidence to show that such a cost was anything other than the cost occasioned to the defendant rather than being either a reasonable market rate or "reasonable recompense for the non‑contract work". It is for the defendant to prove these costs, whether they be a variation cost or by way of damage suffered, and in the circumstances I am not satisfied that these additional costs have been properly proved by the defendant. I adopt what was said in Bonham Carter v Hyde Park Hotel Ltd (1948) 64 Tas LR 177 at 178 per Lord Goddard CJ, and in Michael Kellaway International Pty Ltd v Shark Bay Airport Pty Ltd, unreported; FCt SCt of WA; Library No 970614; 13 November 1997 per Kennedy J in relation to proof of damages.
The claim in respect of the air‑conditioning units was a claim made under s 51AC Trade Practices Act. The plaintiff's case is that the plaintiff's conduct in refusing to issue a variation order to replace the stolen air‑conditioners and requiring the defendant to complete the works according to the construction programme and on a failure to do so it would charge liquidated damages at the rate of $1,000 a day was unconscionable.
The evidence of Mr Salter that he ordered the five new air‑conditioners at a cost to the defendant of $8,480 was not challenged. In cross‑examination Mr Salter acknowledged that the air‑conditioners that had been damaged were removed from the site and that replacement air‑conditioners were being delivered to the site as they were needed by the defendant.
Mr Salter's evidence according to his statement was that after discovering that these five air‑conditioners had been stolen he told Mr Walker and asked for a variation order which was refused and he was told by Mr Walker that if the defendant did not complete installation of all air‑conditioners in accordance with the dates set out in the construction programme the liquidated damages may be imposed. However, his evidence was that Mr Walker did not say that the plaintiff would charge liquidated damages.
In the circumstances, whilst there may well have been some disagreement as to who was responsible for the safe‑keeping of the air‑conditioners there is nothing in the evidence before me which satisfies me that the plaintiff acted unconscionably in demanding that the contract be fulfilled otherwise liquidated damages might be imposed.
In the circumstances this aspect of the defendant's counterclaim fails.
Conclusions
In view of my findings above I find that the plaintiff's claim fails and should be dismissed.
As to the defendant's claim for the cost of variation from the purge to the zone system, the defendant's claim fails as I am unable to make any assessment in respect of the value thereof.
The defendant's claim in respect of the air‑conditioners also fails for the reasons stated.
There being no set‑off available to the plaintiff the defendant is entitled to judgment on its claim for unpaid progress payments under par 43 of the counterclaim in the sum of $15,472.
On a similar basis the defendant is entitled to judgment in respect of unpaid variations set out in par 47 of the counterclaim in the sum of $8,658.
Accordingly, there will be judgment for the defendant against the plaintiff in the sum of $24,130.
These sums were claimed exclusive of GST but a claim was made by the defendant for such sums the defendant may be liable to pay in respect thereof by way of GST pursuant to a New Tax System (Goods and Services Tax) Act 1990. I will hear the parties on this aspect of the claim.
Interest is claimed pursuant to s 32 of the Supreme Court Act 1935 from 29 May 2001 and I will hear the parties as to calculations as to this which may depend upon the resolution of the claim to an additional sum by way of GST.
Further, I will hear the parties on the question of costs herein.
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