Xtraordinary Constructions Pty Ltd v Luppino - [2021] SASC 132

SUPREME COURT OF SOUTH AUSTRALIA
(Appeal to a Single Judge)
XTRAORDINARY CONSTRUCTIONS PTY LTD v LUPPINO & ANOR
[2021] SASC 132
Judgment of the Honourable Justice David
19 November 2021
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - THE CONTRACT - STATUTORY WARRANTIES FOR RESIDENTIAL BUILDING WORK
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - PERFORMANCE OF WORK - REMEDIES FOR BREACH OF CONTRACT
On or about 30 June 2010, the respondents entered into a building contract with the appellant to build a residence on the respondents' property. The residence was a multi-storey dwelling consisting of a three-car garage and an office at the lower level, and four bedrooms, living areas, two bathrooms, and an alfresco area on the upper level.
This appeal raises one issue in relation to a box gutter. It is accepted by both parties that the box gutter installed between the main roof of the property and the alfresco roof is defective and that the defects require rectification. At trial, both parties engaged different expert witnesses who proposed different design solutions to replace the defective box gutter.
On appeal, the appellant submits that the trial Magistrate erred in preferring the solution of the respondents' expert, Mr Magryn (the 'Magryn solution'), over that proposed by the appellant's expert, Mr Goldie (the 'Goldie solution'), to remedy the defective box gutter. The issues on appeal are whether the trial Magistrate was in error in making a statutory rectification order under s 37(6)(a) of the Building Work Contractors Act 1995 (SA) (the 'Act') based on the Magryn solution rather than the Goldie solution, and whether the rectification order made by the Magistrate should be set aside and substituted with an alternative order (based on the Goldie solution).
Held, per David JA, dismissing the appeal:
1. No error has been established in the trial Magistrate's decision to make an order under s 37(6)(a) of the Act that the rectification work be based on the Margryn solution.
2. The trial Magistrate did not err by not having preferred the Goldie solution.
3. The appellant has established no error by the trial Magistrate.
Building Work Contractors Act 1995 (SA) ss 32 & 37, referred to.
Luppino & Anor v Xtraordinary Constructions Pty Ltd [2021] SAMC 28, discussed.
Bellgrove v Eldridge (1954) 90 CLR 613; Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194; Dwyer v Calco Timbers Pty Ltd (2008) 234 CLR 124; Robinson V Harman (1848) 1 Ex 850; Stone v Chappel (2017) 128 SASR 165; Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272, considered.

XTRAORDINARY CONSTRUCTIONS PTY LTD v LUPPINO & ANOR
[2021] SASC 132
Supreme Court: Civil Appeal

DAVID JA:On or about 30 June 2010, the respondents, Mr Daniel Luppino and Ms Aleisha Luppino, entered into a building contract with the appellant, Xtraordinary Constructions Pty Ltd, to build a residence on the respondents’ property in Salisbury Heights. The residence was a multi-storey dwelling consisting of a three-car garage and an office at the lower level, and four bedrooms, living areas, two bathrooms, and an alfresco area on the upper level.
This appeal raises one issue in relation to a box gutter. It is accepted by both parties that the box gutter installed between the main roof of the property and the alfresco roof is defective and that the defects require rectification. At trial, both parties engaged expert witnesses who proposed different design solutions to replace the defective box gutter.
On appeal, the appellant submits that the trial Magistrate erred in preferring the solution of the respondents’ expert, Mr Magryn (the ‘Magryn solution’), over that proposed by the appellant’s expert, Mr Goldie (the ‘Goldie solution’).
Appeal Grounds
The appellant relies on the following grounds:
1.The learned Magistrate erred:
1.1.At [32] in finding that the Goldie solution would continue to pose a risk of blocking and overflow;
1.2.At [32] in finding that it was not reasonable for a property owner to be required to conduct regular maintenance;
1.3.At [33] in finding that the [respondents] were entitled to have their residence erected in accordance with the contract and the plans and specifications which formed part of it, in circumstances where it was agreed by all parties that the contract, plans and specifications did not provide a workable roof solution;
1.4.At [34] in finding that the Magryn solution was reasonable and necessary to remedy the defective internal box gutter and to provide the [respondents] with a roof line that conforms to the character of that required by the contract notwithstanding that:
1.4.1.The Magryn solution was a concept only and has not been presented in a form that could be constructed; and
1.4.2.The first [respondent’s] evidence was that he did not want the roof to be significantly lower, and the learned Magistrate found at [18] that the Magryn solution would lower the alfresco ceiling by 150mm.
2.And ought to have instead found that:
2.1.The Goldie solution was the most appropriate method to remedy the defective internal box gutter.
The appellant seeks an order in place of order 1 made by the trial Magistrate on 5 March 2021, that in respect of the defects identified at paragraph 6.1 of the respondents’ Claim,[1] remedial works are to be carried out in accordance with the remediation proposal in the Core Engineering report dated 3 March 2019. That is, an order that remediation works are to be carried out in accordance with the Goldie solution, not the Magryn solution.
[1] Claim – Revision 3 (FDN 17 in AMCCI-16-3508).
Background
On or about 30 June 2010, the respondents entered into a contract with the appellant for the construction of a multi-storey dwelling on the respondents’ property (the ‘Contract’). The total contract price was $672,300, plus the addition of a variation costing $1,515. The dwelling was designed for the respondents by architects, D’Andrea and Associates (SA) Pty Ltd. The Contract required that the building works be carried out in accordance with the Contract documents, which included, inter alia:
1.Four Master Builders Association SA Domestic Building Plain English Contracts in respect of four stages of building works (‘MBA Contracts’);
2.Architectural drawings prepared by D’Andrea and Associates (SA) Pty Ltd dated 20 April 2009 and 20 April 2010 (‘Plans’);
3.The Master Builders Specification House or Additions & Alterations dated 27 April 2010 (‘Specification’); and
4.The Schedule of Finishes prepared by the appellant dated 11 May 2010.
According to the Plans, the main roof of the building was designed to fall directly onto the alfresco roof, which was in turn designed to fall to a single linear box gutter behind a parapet wall along the rear or northern edge of the dwelling.
As built, the alfresco roof is contained in an internal parapet at a higher level than the main roof. The internal parapet is surrounded by an internal box gutter onto which the main roof drains. The internal box gutter drains in a westerly direction to an eaves gutter. It also drains in an easterly direction through three 90° turns around edges of the internal parapet wall and under a 20 mm gap in the main roof sheeting into the eaves gutter along the northern end of the building. Both parties’ experts agree that the internal box gutter is undersized and inadequate.
Clause 4.1 of the MBA Contracts stipulated that the appellant was to ‘comply with all Acts, By-Laws and/or Regulations that apply to the Work’. In the MBA Contracts, ‘Work’ was defined as ‘the house or other construction as shown on the contract drawings and described by the specification and other contract documents’.
The Specification included specifications as to rainwater goods, including all gutters, downpipes and flashings. Pursuant to cl 12(f) of the Specification, gutters were to ‘be installed to a minimum fall of 1:500 for eaves gutters and 1:100 for box gutters’. Further, all rainwater goods were to ‘comply with the requirements of AS 2179 for metal and AS 1273 for UPVC components’. As to the water service, cl 13(b) of the Specification provided that ‘[t]he water service shall comply with AS/NZS 3500’.
The first respondent signed a certificate of practical completion on 14 October 2011.
The trial
At trial, the first respondent, Mr Luppino, gave evidence. He said that during the first winter of living in the dwelling, the rainhead at the north-west corner of the building became flooded because the overflow spout was higher than the gutter level. This caused the water to flow under the eaves and down the exterior walls of the house. The appellant’s supervisor returned to the property and adjusted the overflow spout, however, the respondents continued to experience problems with rainwater leaking underneath the roof sheet. This led to damage in the ceiling of the kitchen and dining area. The damage was shown in photographs taken by the first respondent.
At trial, the respondents also called Mr Terence Magryn, a Chartered Professional Engineer, and several tradespersons, namely a licenced electrician, a licenced carpenter, a licenced bricklayer/stonemason, a licensed gyprocker, and a licensed roofer to give evidence. The appellant called two witnesses, Mr Tony Xanthopoulos, director of the appellant, and Mr Owen Goldie, a consulting civil and structural engineer. Through the experts, Mr Magryn and Mr Goldie, the parties obtained different design solutions to rectify the defective box gutter.
The respondents’ expert, Mr Magryn, expressed the view that the construction of the internal parapet and internal box gutter was the main cause of flooding inside the house. Mr Magryn described the defective internal box gutter as trapezoidal in shape, and of inadequate size and slope with minimal falls, having three internal 90° bends and collecting two valley gutters draining to normal eave gutters and not directly to downpipes. Mr Magryn opined that there were no means to safely accommodate the overflow because the internal box gutter does not have a rainhead, the gutter length is too long between downpipes, and the downpipes are too far away from the valley gutters. He said that these characteristics rendered the internal box gutter non-compliant with the National Construction Code (‘NCC’) and the relevant Australian Standard, AS/NZS 3500.5 Plumbing and Drainage – Housing Installations.
The Magryn solution
In his report, Mr Magryn recommended remedying the defective box gutter by undertaking the following work:
1.Removing the roof sheeting and framing of the alfresco area and the parapet between the main house roof and the alfresco area;
2.Reframing the alfresco roof to suit, lowering the framing so that the sheeting will be under the northern edge of the main house roof sheeting and reframing to lower the existing box gutter along the northern edge of the alfresco area to suit;
3.Recladding the alfresco roof, falling the new sheeting to the lowered box gutter along the northern edge;
4.Flashing the joint in the roof sheeting at the main house roof/alfresco junction to waterproof; and
5.Resetting the rainhead at the western end of the lowered box gutter, at the north-western corner of the alfresco area, and increasing the overflow pop in this rainhead to a full width weir, or 90 mm diameter hole.
In January 2020, Mr Magryn documented plans and specifications for this proposal.
In evidence, Mr Magryn clarified that his solution involved lowering the alfresco ceiling by 150 mm and reconstructing the roof to suit the removal of the parapet and the internal box gutter. In cross-examination, he explained that he had tried to achieve a solution leaving the alfresco ceiling at the same level, but he was not able to make it work, so the most practical solution was to lower the height of the ceiling.
After the first two days of trial, Mr Magryn and Mr Goldie conferred and produced a joint Experts Conferral document (trial Exhibit P9). In this document, Mr Magryn asserted that his design eliminated the problems experienced with the internal box gutter and internal parapet walls; met the intention and layout of the original architect’s drawings, as approved by council; met the requirements of all relevant Australian Standards; and was practical to build and achievable.
Mr Goldie’s criticisms of the Magryn solution
Mr Goldie acknowledged that while the Magryn solution has merit and the potential to work, he criticised it as ‘an extremely complicated solution to solve a relatively simple problem, namely a simple undersized box gutter’.[2]
[2] Trial Exhibit P1 at 229.
Further, Mr Goldie made specific criticisms of the Magryn solution. He expressed the view that the Magryn design did not have a proper mating of the different roof slopes in all locations. Mr Magryn disagreed and asserted that a tradesperson could cut the roof sheeting on the upper main house roof to mate with the skillion roof. He said it was ‘not a difficult exercise’.[3] A licensed roofer gave evidence and confirmed that he had no concerns about his capacity to undertake the work proposed by Mr Magryn.[4] The appellant did not challenge this evidence in cross-examination.
[3] Trial Transcript at 141.
[4] Trial Transcript at 231-2.
Mr Goldie also criticised the design requirement for the rafters to be notched ‘in several locations either to accommodate the box gutter or to integrate with the existing timber framing’.[5] Mr Goldie asserted that the notches are not in accordance with the relevant Australian Standard (AS 1684.2 Residential Timber-Framed Construction) and that the ‘over notching’ will increase the probability of the rafter failing at the notch, particularly under the weight of a person on the roof. Mr Magryn disagreed with these criticisms and explained that the rafters are notched to allow the proposed box gutter to slope with a fall of 1:200. Mr Magryn maintained that the notching is not excessive. He explained that the rafters to be used are laminated veneer lumbar, whose composition and characteristic strength is such that ‘the risk of splitting due to a notching of this extent is insignificant’.[6] Further, in cross-examination, Mr Magryn clarified that he was designing the rafters to comply with AS 1720 – Timber Structures, which he described as ‘a more difficult Code to work with’ than AS 1684, which he utilised in more generic components of his design.[7] Mr Magryn also clarified that AS 1684.2 refers to floor joists, whereas his design is concerned with a roof frame.
[5] Trial Exhibit P9 at 2.
[6] Trial Transcript at 138.
[7] Trial Transcript at 142.
Mr Goldie also criticised the rainfall intensity of 174 mm/hr utilised in the Magryn solution, compared to the higher, localised intensity of 183 mm/hr adopted by himself. Mr Goldie asserted that the higher intensity must be used, which would in turn require a larger box gutter size than that proposed in the Magryn solution. Mr Magryn stated that the difference in the rainfall intensity adopted by each expert was roughly 5%, such that the difference in the flow in the gutter for a 5% intensity increase will only be a couple of millimetres. Mr Magryn did not believe that it would make any difference to his design calculation, but maintained his rain intensity figure was adequate because the change of depth of flow in the gutter would be less than 5 mm.
Mr Goldie was also dismissive of the online application used by Mr Magryn to calculate the box gutter dimensions because the calculations required to derive the solution were not transparent and could not be scrutinised. Mr Magryn asserted that he could replicate the calculations used in the online application and he was ‘pretty sure’ they would produce the same result.[8]
[8] Trial Transcript at 144.
Mr Goldie criticised Mr Magryn’s design of the fall of the box gutter at 1:200 rather than 1:100. Mr Magryn acknowledged an inconsistency between the NCC, which requires a fall of not less than 1:100, and AS 3500 – Plumbing and Drainage, which permits a minimum gradient of 1:200.
Mr Goldie was of the view that the 90 mm diameter downpipe from the proposed box gutter in the Magryn solution is undersized, meaning that the roof will not drain properly. In response, Mr Magryn explained that the 90 mm downpipe had been incorporated in his design for visual effect as it matched the other downpipes on the building. He did not have any issue with increasing the size of the downpipe to 125 mm, as suggested by Mr Goldie. However, Mr Magryn maintained that the 90 mm downpipe was sufficient because the design incorporated a rainhead, the purpose of which was to develop enough head on the water to force it into the downpipe. Mr Goldie also disapproved of the size of the rainhead in the Magryn solution, querying whether it had been architecturally ‘realised’.[9]
[9] Trial Transcript at 190.
The Goldie solution
The Goldie solution was to increase the capacity of the existing internal box gutter by extending the flashing up the roof slope for a total length of at least 450 mm, so that it is ‘equivalent to a 200mm wide x 112mm deep gutter’.[10]
[10] Trial Exhibit P1 at 208.
Mr Magryn’s criticisms of the Goldie solution
Mr Magryn asserted that the Goldie solution does not meet the requirements of AS 3500.5 s 5.6 because it is too flat and contains three 90° bends. Mr Magryn was also concerned that it discharges under a 20 mm gap in the roof sheeting. He considered that these elements mean that the internal box gutter is much more likely to become blocked than a linear gutter. Mr Magryn observed that Mr Goldie’s calculations of waterflow were based on open channel flow and opined that they did not take into account the three corners in the box gutter. He considered that these corners would cause the water flow to lose a lot of energy and lead to water in the box gutter deepening and overflowing.
Mr Goldie, in response, asserted that any potential blockage underneath the roof sheeting was addressed by the inclusion of a rainhead at that point. He also maintained that his box gutter design met or exceeded the requirements of the necessary design codes. Mr Goldie gave evidence that there were two design pathways available under NCC vol 2 pt 3.5.2 for the design of the box gutter: ‘The first is to adopt a “deem-to-comply” solution based on AS 3500 and the second is to calculate an “alternative solution” based on first principles.’[11] In cross‑examination, Mr Goldie gave a detailed description of how his design process fell within the latter pathway. He said that he had calculated the maximum required design flow based on first principles, by using a one in 100-year storm event of five minutes duration to calculate the required length of gutter base to achieve an adequate flow capacity. Mr Goldie maintained that he used accepted numerical methods and engineering judgment to design ‘a very over-engineered’ solution.[12]
[11] Trial Exhibit P9 at 2.
[12] Trial Transcript at 204.
Mr Goldie acknowledged that his design would need to be approved by council.
Ultimately, the issue for determination by the trial Magistrate was which method of remedial work was to form the basis of a rectification order or form the basis of an award of damages to the respondents.
The Magistrate’s reasons
In her judgment, the trial Magistrate found that she was satisfied on the balance of probabilities that the appellant’s defective construction of the box gutter had caused flooding and water damage to the ceiling in the dining and kitchen areas of the building. Her Honour held that the appellant had not adduced any credible evidence to the contrary.

The trial Magistrate did not consider it necessary to determine whether the Goldie solution was Code compliant.
Her Honour considered that the Goldie solution was ‘attractive in its seeming simplicity’ in that it does not involve substantial rectification and building work.[13] However, her Honour shared Mr Magryn’s concerns as to the risk of blocking and overflow. The trial Magistrate said:[14]
… I share Mr Magryn’s concerns that it still contains three 90° bends and these will continue to pose a risk of blocking and overflow. I do not consider Mr Goldie’s suggestion of regular maintenance to prevent this is acceptable. I do not consider it is reasonable to require a property owner to conduct frequent maintenance of a rooftop to accommodate the construction of a parapet and box gutter that does not appear in the contract documents.
[13] Luppino & Anor v Xtraordinary Constructions Pty Ltd [2021] SAMC 28 at [32].
[14] Luppino & Anor v Xtraordinary Constructions Pty Ltd [2021] SAMC 28 at [32].
The trial Magistrate considered this latter element to be ‘a critical flaw’ in the appellant’s argument.[15] Her Honour said:[16]
… The [respondents] were entitled to have their residence erected ‘in accordance with the contract and the plans and specifications which formed part of it’. If Mr Goldie’s design solution is adopted, the internal parapet will remain, which is of a completely different character to the roof line as originally designed and required by the contract.
(footnote omitted)
[15] Luppino & Anor v Xtraordinary Constructions Pty Ltd [2021] SAMC 28 at [33].
[16] Luppino & Anor v Xtraordinary Constructions Pty Ltd [2021] SAMC 28 at [33].
The trial Magistrate considered that the Magryn solution, which requires removal and reconstruction of the alfresco roof, ‘would remedy the defects in the internal box gutter and produce an outcome with greater conformity with the plans and specifications’.[17] As to the cost, her Honour said:[18]
… According to the quotations of the tradespersons called by the [respondents] that were in evidence, the cost of this rectification work would approach $35,000. In the context of a building contract with a total price of $672,300, I do not consider the extent of this work to be unreasonable.
[17] Luppino & Anor v Xtraordinary Constructions Pty Ltd [2021] SAMC 28 at [34].
[18] Luppino & Anor v Xtraordinary Constructions Pty Ltd [2021] SAMC 28 at [34].
Ultimately, the trial Magistrate concluded that the Magryn solution was both reasonable and necessary to remedy the defective box gutter and ‘to provide the [respondents] with a roof line that conforms to the character of that required by the contract’.[19] Her Honour noted that the appellant was willing to undertake remedial works to rectify the box gutter and alfresco roof and this was the respondents’ preferred remedy. Accordingly, her Honour ordered that the box gutter and alfresco roof was to be rectified in accordance with the Magryn solution. The order was made pursuant to s 37(6)(a) of the Building Work Contractors Act 1995 (SA) (the ‘Act’).
[19] Luppino & Anor v Xtraordinary Constructions Pty Ltd [2021] SAMC 28 at [34].
Nature of the appeal
This is an appeal by way of rehearing. As such, the appellate court is required to undertake an independent review of the evidence and findings at first instance and form its own view as to the appropriate outcome. However, the appeal is not a hearing de novo and the appellate court should not substitute its own view or otherwise interfere unless satisfied that the trial Magistrate fell into error.
The trial Magistrate’s decision to make the challenged rectification order involved an evaluative judgment as to the remedial work to be ordered under

s 37(6)(a) of the Act. Where the decision on appeal is one involving an evaluative judgment, the principles of appellate restraint do not apply. However, in such circumstances, the identification of an error requires more than that the appellate court would have reached a different decision, but rather a conclusion that the Magistrate’s evaluative assessment miscarried in some way or that the decision was outside of the area of decisional freedom reposed in the Magistrate.[20]
[20] Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at [19], [21] per Gleeson CJ, Gaudron and Hayne JJ; Dwyer v Calco Timbers Pty Ltd (2008) 234 CLR 124 at [37]-[40].
In this appeal, there is no dispute that the box gutter is defective and requires rectification. The issues on appeal are whether the trial Magistrate was in error in making a statutory rectification order under s 37(6)(a) of the Act based on the Magryn solution rather than the Goldie solution, and whether the rectification order made by the Magistrate should be set aside and substituted with an alternative order based on the Goldie solution.
The appellant contends that the trial Magistrate, in making the challenged rectification order, was required to apply the principles enunciated in Bellgrove and v Eldrige,[21] as analysed in Stone v Chappel.[22] The appellant submits that by incorrectly applying the relevant test set out in those authorities, the trial Magistrate erred in making the findings set out in paragraphs [1.1]–[1.4] of the appeal grounds. The appellant contends that the Magryn solution is expensive and unnecessary and that the trial Magistrate erred by ordering rectification work that is over and above what is reasonable and necessary to produce conformity with the Contract.
[21] (1954) 90 CLR 613.
[22] (2017) 128 SASR 165.
Legal principles
The trial Magistrate’s order was made on a claim for breach of statutory warranties under s 32 of the Act. Section 32 of the Act says:
32—Statutory warranties
(1)     This section applies to a contract entered into on or after 22 January 1987.
(2)The following warranties on the part of the building work contractor are implied in every domestic building work contract:
(a)     a warranty that the building work will be performed in a proper manner to accepted trade standards and in accordance with the plans and specifications agreed to by the parties;
(b)     a warranty that all materials to be supplied by the contractor for use in the building work will be good and proper;
(c)     a warranty that the building work will be performed in accordance with all statutory requirements;
(d)     if the contract does not stipulate a period within which the building work must be completed—a warranty that the building work will be performed with reasonable diligence;
(e)     if the building work consists of the construction of a house—a warranty that the house will be reasonably fit for human habitation;
(f)     if the building owner has expressly made known to the contractor, or an employee or agent of the contractor, the particular purpose for which the building work is required, or the result that the building owner desires the building work to achieve, so as to show that the building owner relies on the contractor's skill and judgment—a warranty that the building work and any materials used in performing the building work will be reasonably fit for that purpose or of such a nature and quality that they might reasonably be expected to achieve that result.
…
As to the breach of warranty under s 32(2)(a), in this case, the Plans and Specification agreed to by the parties:
1.Required the installation of a box gutter between the main roof of the property and the alfresco roof to be 200 mm deep by 390 mm wide on an 18 mm gutter board with falls of not less than 1:100 and the framing of the alfresco roof to be in accordance with the area marked C3 on the Plans;
2.Did not depict an internal parapet wall;
3.Did not depict a gutter that travels beneath the roof sheets; and
4.Did not depict three 90° bends in the box gutter.
As to the breach of warranty under s 32(2)(c) and the relevant statutory requirements, the NCC and Australian Standards require minimum dimensions for the wall heights and base width of box gutters and say that they must be installed with a fall of not less than 1:100 to ensure water is not retained on and around any roof surface. The Standards also provide that box gutters should be straight, have rainheads, and provide for overflow.
Section 37 of the Act gives the Court power to make orders if there has been a failure to comply with the statutory warranties provided in s 32 of the Act. Relevantly, s 37(6)(a) of the Act provides:
(6)If, on an application under this section, the Magistrates Court is satisfied that there has been any breach of, or failure to perform or fulfil, a contract or warranty to which the proceedings relate, the Court may, subject to this section, make one or more of the following orders:
(a) to the extent to which it is satisfied that it is practicable for the breach or failure to be remedied by the performance of building work—an order requiring the performance of remedial work;
At trial, there was no dispute that the box gutter is defective, and to that extent, the roof was not constructed in accordance with the Plans and Specification agreed to by the parties and did not comply with all statutory requirements. Nor was there any dispute that the defects require rectification. The issue at trial was whether the rectification order made under s 37(6)(a) of the Act should be based on the Magryn solution or the Goldie solution.
The statutory language for a rectification order under s 37(6)(a) is that, to the extent to which the Court is satisfied that it is ‘practicable for the breach or failure to be remedied’, the Court may make an order ‘requiring the performance of remedial work’ as specified in the order.[23] Accordingly, the issue at trial was not whether damages should be assessed by reference to the cost of rectification or some other measure, but rather, whether it was practicable for the breach to be remedied by the performance of building work and the mode by which that work should be effected — that is, whether it should be based on either the Magryn solution or the Goldie solution. It did not involve an assessment of damages, but rather an order under s 37(6)(a) of the Act for remedial work.
[23] Building Work Contractors Act 1995 (SA) s 37(7)(a).
On appeal, both parties agreed that the principles in Bellgrove v Eldridge are relevant to that evaluation. I am prepared to accept, favourably to the appellant, that those principles are relevant to a magistrate’s evaluation as to the order to be made by the Court requiring the performance of remedial work, after it is satisfied that it is practicable for the breach or failure to be remedied by the performance of building work.
Assessing damages for the cost of rectification work
The ruling principle in assessing damages for breach of contract is that the plaintiff is entitled to recover the amount necessary to place him or her in the same position as if the contract had been performed.[24] In the case of defective building work, the usual measure of damages is the cost of rectifying the work to produce conformity with the contract.[25] This is known as the ‘general rule’ in Bellgrove v Eldridge. That rule is qualified by a requirement that the rectification work must be necessary to produce conformity with the contract and must be a reasonable course to adopt.[26] Whether remedial work is ‘necessary’ and ‘reasonable’ is a question of fact.[27] In Tabcorp Holdings Ltd v Bowen Investments Pty Ltd, the High Court said that the test of unreasonableness will only be satisfied by fairly exceptional circumstances.[28]
[24] Robinson v Harman (1848) 1 Ex 850 at 855.
[25] Bellgrove v Eldridge (1954) 90 CLR 613 at 617.
[26] Bellgrove v Eldridge (1954) 90 CLR 613 at 618.
[27] Bellgrove v Eldridge (1954) 90 CLR 613 at 619.
[28] (2009) 236 CLR 272 at [17].
The operation of the general rule in Bellgrove vEldridge was considered by the Full Court of the Supreme Court of South Australia in Stone v Chappel. In that case, Doyle J held that determining what is reasonable must be done objectively.[29] However, the determination must still take place in the context of the relevant contract, and hence by reference to the plaintiff’s needs and desires reflected in the bargain he or she has struck.[30]
[29] Stone v Chappel (2017) 128 SASR 165 at [255].
[30] Stone v Chappel (2017) 128 SASR 165 at [255].
After surveying the authorities, Doyle J identified several matters that will be relevant in determining the reasonableness of rectification costs. Those matters include (but are not limited to) the following considerations. First, a proper identification of the plaintiff’s performance interest; that is, the benefit bargained for by the plaintiff, and whether it is merely functional or economic in nature, or a matter of aesthetic choice or amenity on the part of the plaintiff.[31] Second, the extent to which the defendant has, despite departure from the contractual standard, nevertheless achieved the contractual objective and hence provided the plaintiff with the benefit he or she bargained for.[32] Third, any lack of proportionality between the proposed work and cost and the benefit to be achieved by the plaintiff through this work in the context of the contractual bargain struck by the parties.[33] Finally, the plaintiff’s intention and ability to carry out the rectification work insofar as those considerations shed light on the issue of the true nature of the plaintiff’s loss, or the reasonableness or otherwise of the contemplated rectification works.[34]
[31] Stone v Chappel (2017) 128 SASR 165 at [257].
[32] Stone v Chappel (2017) 128 SASR 165 at [259].
[33] Stone v Chappel (2017) 128 SASR 165 at [260].
[34] Stone v Chappel (2017) 128 SASR 165 at [263].
Turning to the issues raised on this appeal, the appellant contends that the trial Magistrate has not correctly applied the test enunciated in Bellgrove v Eldridge, as considered in Stone v Chappel. Rather, the appellant submits that the trial Magistrate preferred the Magryn solution because it produces an outcome which is of greater conformity with the Plans and Specification in respect of the amenity of the roof line, rather than determining which of the two solutions best meets the contractual objectives bargained for by the parties but not met, namely a roof that does not leak. In doing so, the appellant submits that the trial Magistrate erred in making the findings the subject of the first ground of appeal, and in ultimately preferring the Magryn solution to the Goldie solution and ordering rectification work that is over and above what is reasonable and necessary to produce conformity with the Contract. Further, the appellant contends that a correct application of the principles leads to a finding on appeal that a rectification order should be made based on the Goldie solution (as it is less expensive, does not require the roof line to be lowered, and will effectively prevent the roof from leaking). The appellant applies to this Court to substitute an order to that effect.
Grounds of appeal
Ground 1.1 – Risk of blocking and overflow
The appellant contends that the trial Magistrate erred ‘in finding that the Goldie solution would continue to pose a risk of blocking and overflow’.
The appellant submits that the only criticism that Mr Magryn made in the Experts Conferral document (trial Exhibit P9) of the Goldie solution was that it was not Code compliant and that it was prone to blockage and overflow problems, without further explanation. Further, the appellant submits that when Mr Goldie was questioned on whether his solution would pose a greater risk of blocking than a linear gutter, he responded that the gutter could be considered self-cleaning and that anyone doing basic maintenance would not need to worry about blockages. In evidence, Mr Goldie said:[35]
QMr Magryn says in para.3, about halfway down the page, ‘As the box gutter will still contain bends, it is much more likely to become blocked than a linear gutter’. Do you agree with that.
AMuch more? Is – I don’t know – I’ve been to the site, as we established. There’s nothing around, it’s pretty vacant. It would be very difficult for anybody doing minimum maintenance on their roof for it to become blocked. So, I wouldn’t agree with much more likely. It is, it is more likely just because it literally is a corner, but I think there’d be plenty of water flow through there. It would be self-cleaning, what we consider self-cleaning, but anybody doing basic maintenance would not be worried.
[35] Trial Transcript at 214.
The appellant contends this evidence indicates that the Goldie solution would not pose a real risk of blocking or overflow.
At trial, Mr Magryn gave evidence that box gutters are generally prone to becoming clogged as they are wide and flat. He considered a box gutter with 90° bends to be very unusual. He gave two reasons for this, first because they do not comply with the Standard AS3500, and second, because box gutters are very prone to being blocked. He considered that debris would tend to get trapped in a corner of the box gutter and cause build up. He also considered that the gap under the roof sheeting would be very prone to blockage. He believed that the Goldie solution would not work particularly well if any debris fell into it and that when it became blocked, it would flood into the roof space and the building. As such he did not consider it a workable solution. Overall, Mr Magryn said that in his 40 years of engineering, he had never seen a box gutter that drains underneath a roof sheet detailed or built before. Mr Magryn retained his concerns even after the expert conferral.
As can be gleaned from the trial Magistrate’s reasons, the Magistrate preferred the evidence of Mr Magryn as to the perceived difficulties with the Goldie solution in that ‘it still contains three 90° bends and these will continue to pose a risk of blocking and overflow’.[36]
[36] Luppino & Anor v Xtraordinary Constructions Pty Ltd [2021] SAMC 28 at [32].
I am satisfied that there was a sound basis for the trial Magistrate to find that the Goldie solution poses a risk of blocking and overflow: the box gutter has three 90° corners and discharges water underneath the roof sheet. Mr Magryn gave evidence that this design is highly unusual and presented a risk of blocking and overflow as debris can easily become trapped in a corner and underneath the roof sheeting. In evidence, Mr Magryn said:[37]
… I don’t think the solution that Core suggests is a good solution. I don’t think it’s even a workable solution. I think the box gutter, because of the corners and because of the way it discharges under that 20 mm gap of sheeting, it will still tend to get blocked and if it gets blocked it doesn’t matter how deep it is it will flood and it will flood into the roof space and into the building.
[37] Trial Transcript at 70.
Mr Magryn considered that there was a very high degree of risk of blockage. Mr Goldie also acknowledged in his evidence that a box gutter with bends is ‘more likely’ to become blocked than a linear box gutter.[38]
[38] Trial Transcript at 214.
Mr Magryn’s evidence as to the likely risk of a box gutter with bends that discharges water under a roof sheet provided a sound evidentiary foundation for the trial Magistrate to make the finding that the Goldie solution continued to pose a risk of blockage and overflowing. That the Goldie solution was considered to have ‘plenty of water flow’ and was described by Mr Goldie as ‘self-cleaning’ with basic maintenance did not significantly ameliorate the risks of blockage and overflowing raised by the design of the box gutter.[39] The bends in the box gutter, on the evidence of both experts, increased the risk of blockage, and on the evidence of Mr Magryn, meant there was a very high degree of risk of flooding if, for example, a dead animal or larger debris caused by a weather event became lodged in the box gutter.
[39] Trial Transcript at 214.

The appellant has not established that the trial Magistrate made an error in finding that the Goldie solution would continue to pose a risk of blocking and overflow.
Ground 1.2
The appellant complains that the trial Magistrate erred in finding that ‘it was not reasonable for a property owner to be required to conduct regular maintenance’.
The trial Magistrate did not say that it was not reasonable for a home owner to do any maintenance. Rather, her Honour said that she did not consider Mr Goldie’s suggestion of regular maintenance to prevent blockages acceptable and that she did not consider it reasonable to require a property owner to conduct frequent maintenance of a rooftop to accommodate the construction of a parapet and box gutter that does not appear in the Contract documents.
It is important to put the trial Magistrate’s finding in that regard in its complete context. Mr Magryn gave evidence that there was a risk of blockages because the water would run under the roof sheeting and around bends in the box gutter. Mr Goldie disagreed that the design of the box gutter made the risk of blockages ‘much more likely’, but he agreed that it was ‘more likely’. However, he said that blockages could be avoided with maintenance of the box gutter, that is, by ensuring that it is cleared of debris.
The trial Magistrate’s finding was made in response to the appellant’s submission that the Magistrate should prefer the Goldie solution because in part, blockages could be avoided with maintenance. There was also evidence that, in respect of this dwelling, it was difficult for the property owner to access the roof or to view the box gutter from the property. The trial Magistrate was in effect saying that it is not for the property owner to accommodate a defective design by providing maintenance of the box gutter — even with such maintenance, the disadvantages with the design of the Goldie solution remained. For example, in the event of an unexpected blockage by a dead animal or weather event which occurred between regular maintenance by the property owner. That risk could not be minimised by placing the responsibility on the property owner to maintain the box gutter and ensure it was clear of debris.
In those circumstances, and placing the finding in its complete context, I am satisfied the appellant has not established any error by the trial Magistrate.
Ground 1.3
The appellant complains that the trial Magistrate erred in finding that the respondents were entitled to have their residence erected in accordance with the Contract and the Plans and Specification which formed part of it, in circumstances where it was agreed by all parties that the Contract, Plans and Specification did not provide a workable solution.
The appellant submits that it was not relevant to ask which of the two expert solutions technically conformed with the specifications of the Contract, because the specifications could not be built. The appellant contends that in applying Stone v Chappel, the correct question was which of the solutions best met the contractual objectives bargained for by the parties. The appellant submits that the contractual objective which has not been met is having a roof that does not leak, which is a functional objective, meaning that the character of the roof line ought to have had no part to play in the trial Magistrate’s determination.
I do not accept that submission. Contrary to the appellant’s submissions, it was not accepted by the respondents that the original Plans did not provide a workable way to construct the roof. Rather, the respondents submit that the evidence supported a conclusion that the original Plans did provide a largely workable solution for the roof; the original Plans required the roof to be constructed substantially in the manner provided by the Magryn solution (but with the alfresco roof 150 mm lower than shown in the original Plans).
In her reasons, the trial Magistrate said:[40]
… According to the contract plans of D’Andrea & Associates, the main roof of the building was designed to fall directly onto the alfresco roof. The alfresco roof was designed to fall to a single linear box gutter behind a parapet wall along the rear or northern edge of the building.
[40] Luppino & Anor v Xtraordinary Constructions Pty Ltd [2021] SAMC 28 at [11].
The Magistrate said that:[41]
Instead, the alfresco roof has been contained in an internal parapet at a higher level than the main roof. The internal parapet is surrounded by an internal box gutter into which the main roof drains.
[41] Luppino & Anor v Xtraordinary Constructions Pty Ltd [2021] SAMC 28 at [11].
Her Honour found that:[42]
… The [respondents] were entitled to have their residence erected ‘in accordance with the contract and the plans and specifications which formed part of it’. If Mr Goldie’s design solution is adopted, the internal parapet will remain, which is of a completely different character to the roof line as originally designed and required by the contract’.
[42] Luppino & Anor v Xtraordinary Constructions Pty Ltd [2021] SAMC 28 at [33].
Her Honour considered that ‘the design of Mr Magryn would remedy the defects in the internal box gutter and produce an outcome with greater conformity with the plans and specifications’.[43]
[43] Luppino & Anor v Xtraordinary Constructions Pty Ltd [2021] SAMC 28 at [34].
The MBA Contracts, Plans and Specification showed that the main roof of the building was designed for water to fall from the main roof directly onto the alfresco roof. The alfresco roof was designed for water to then drain to a single linear box gutter behind a parapet wall along the rear or northern edge of the building. The Plans do not depict an internal parapet wall or a box gutter with three 90° bends which travels beneath the roof sheets.
I am satisfied that the evidence established that the Magryn solution would result in a roof line that more closely resembles that depicted in the MBA Contracts, Plans and Specification, notwithstanding that the alfresco roof must be lowered by 150 mm. I consider this to be a relatively minor matter in the context of the overall design of the roof as provided for in the original Contract.
The contractual objective in respect of the roof which was not met was primarily functional, that is to produce a roof that did not leak, but it was also aesthetic. The roof line depicted in the original Contract is significantly different to that which would result from implementing the Goldie Solution. The fact the Goldie solution significantly departs from the original design of the roof, and that the Magryn solution results in a roof line which better resembles the MBA Contracts, Plans and Specification was a relevant factor for the trial Magistrate to take into account in preferring the Magryn solution. The aesthetic design of the roof was part of the benefit bargained for by the parties; it was not only functional.
However, it is important to note that the trial Magistrate properly found that the functional aspect of the benefit bargained for by the parties, which was unmet by the defective work, and was required to be rectified by the remedial order, namely that the roof did not leak, was better met by the Magryn solution. That the aesthetic design of the Magryn solution more closely resembled the original Contract was a relevant consideration for the trial Magistrate to take into account, but the amenity of the roof line is a matter which did not stand alone as a basis for the Magistrate’s order. Indeed, the trial Magistrate’s finding that the Magryn solution better resembled the original Contract was largely incidental to her finding that the Goldie solution was prone to blockage and overflows, and that the Magryn solution better met the contractual objective of a roof that did not leak.
The appellant has demonstrated no error by the trial Magistrate.
Ground 1.4
The appellant contends that the trial Magistrate erred in finding that the Magryn solution was reasonable and necessary to remedy the defective internal box gutter and to provide the respondents with a roof line that conforms to the character required by the Contract notwithstanding that first, the Magryn solution is a concept only and has not been presented in a form that could be constructed; and second, the first respondent’s evidence that he did not want the roof to be significantly lower when the trial Magistrate found that the Magryn solution would lower the alfresco ceiling by 150 mm.
I do not accept the submission that the Magryn solution was only a concept and had not been presented in a form that could be constructed.
The evidence of Mr Magryn at trial, initially, was that his solution was a concept only.[44] However, after the trial was adjourned, trial Exhibit P9 was produced and in that document, the Magryn solution was fully costed. There was also evidence from several trade witnesses as to the cost of building the design. At trial, it was not put to any witness that there would be any difficulties in constructing the Magryn solution. By contrast, the Goldie solution has not been costed and is subject to council approval.
[44] Trial Transcript at 103.
As to the submission that the first respondent gave evidence that he did not want the alfresco ceiling height to be significantly lower, the first respondent’s evidence on the topic was in fact more nuanced. He said:[45]
QYou’re aware, aren’t you, that the Magryn proposal for the alfresco area would involve [lowering] the ceiling of the afresco area by about 600 mm.
AI wouldn’t know the exact measurements.
QWould you be happy with the outcome if the ceiling of the alfresco area was exactly the same height as the door when you enter the alfresco area.
AThat’s a lot more than 600 mm.
QWould you be happy with that outcome.
ANo, but that would be a lot more than 600 mm.
[45] Trial Transcript at 30.
There was no evidence that the alfresco roof would be lowered by 600 mm on the Magryn proposal; to the contrary, it was to be lowered by 150 mm. There is no basis to infer that the first respondent was not content for the ceiling to be lowered by 150 mm as part of the remedial work to be performed. Rather, it can be inferred from the fact that it was the first respondent who commissioned the Magryn proposal, and through his counsel urged the Court to order remedial works based on the Magryn solution, that he was content for the ceiling to be lowered by 150 mm.
There is an associated argument that the Magryn solution, in requiring the ceiling to be lowered by 150 mm (whereas the Goldie solution does not involve any lowering of the alfresco roof), supported the appellant’s contention that the Magryn solution did not provide the respondents with a roof line that conforms to the character required by the Contract.
I do not accept that submission. The Magryn solution required a very small lowering of the ceiling (as considered in the context of its overall height) and an otherwise unaltered roof line. Accordingly, it involved a relatively minor alteration to the original Contract agreed to by the parties.
The appellant has not demonstrated any error by the trial Magistrate.
Ground 2
The appellant contends that the trial Magistrate should have found that the Goldie solution ‘was the most appropriate method to remedy the defective internal box gutter’.
The appellant submits that the Magryn solution is an expensive and unnecessary solution, resulting in the trial Magistrate having erred by ordering rectification work over and above what is reasonable and necessary. The appellant contends that the trial Magistrate erred in not preferring the Goldie solution to the Magryn solution because the Magryn solution remains a concept only and cannot be built without further design; involves lowering the height of the alfresco roof; and is significantly more expensive. Further, the appellant contends there was no credible challenge to the effectiveness of the Goldie solution.
I have dealt with each of those matters in the earlier grounds, except for the issue of expense and proportionality. The trial Magistrate said:[46]
I consider the design of Mr Magryn would remedy the defects in the internal box gutter and produce an outcome with greater conformity with the plans and specifications. It will require removal and reconstruction of the alfresco roof and ceiling. According to the quotations of the tradespersons called by the [respondents] that were in evidence, the cost of this rectification work would approach $35,000. In the context of a building contract with a total price of $672,300, I do not consider the extent of this work to be unreasonable. I consider Mr Magryn’s design solution is reasonable and necessary to remedy the defective internal box gutter and to provide the [respondents] with a roof line that conforms to the character of that required by the contract.
[46] Luppino & Anor v Xtraordinary Constructions Pty Ltd [2021] SAMC 28 at [34].
It was not in dispute that the Magryn solution would be more expensive and require more rectification and building work than the Goldie solution. However, there was no evidence adduced at as to how much more expensive it would be. Further, the fact there was a cheaper alternative in the Goldie solution did not mean that it was necessarily to be preferred to the Magryn solution or that it was necessarily unreasonable to prefer the Magryn solution. A relevant matter, in determining whether it would be unreasonable to make the rectification order, is the proportionality or lack of proportionality between the proposed work and cost, and the benefit to be achieved by the respondents in the context of the contractual bargain struck by the parties. The trial Magistrate properly took that matter into account in finding that the Magryn solution was reasonable and necessary to rectify the defective box gutter and was to be preferred to the Goldie solution.
When considering the judgment as a whole, and the appellant’s complaints collectively, I am satisfied that the trial Magistrate properly applied the principles in Bellgrove v Eldridge (as considered in Stone v Chappel) in deciding to make an order under s 37(6)(a) based on the Magryn solution rather than the Goldie solution.
I consider that the trial Magistrate properly identified that the benefit bargained for by the respondents (and not met) in respect of the roof was both functional and aesthetic, and better remedied in both respects by the Magryn solution. For the reasons detailed earlier, the Magistrate was not in error in finding that the Goldie solution continued to pose a risk of blocking and overflow, and therefore would not adequately meet the contractual objective of fixing the leaking roof. The trial Magistrate also did not err in finding and taking into account that the Magryn solution produced a roof line that better resembled the original Contract and the aesthetic aspect of the benefit bargained for by the respondents.
The trial Magistrate also properly considered whether there was a lack of proportionality between making a rectification order based on the Magryn solution and the benefit to be achieved by the respondents, as assessed in the context of the contractual bargain struck by the parties. Her Honour did so in finding that the cost of rectification work at $35,000 was not unreasonable ‘[i]n the context of a building contract with a total price of $672,300’.[47] Whilst, her Honour needed to have regard to the fact the Magryn solution was ‘significantly’ more expensive than the Goldie solution, the added expense of the Magryn solution is only one consideration in the overall determination of whether it was reasonable to order the rectification work based on the Magryn solution in preference to the Goldie solution. Further, it could hardly be determinative in this case when there was no evidence adduced as to the precise difference in cost between the two solutions.
[47] Luppino & Anor v Xtraordinary Constructions Pty Ltd [2021] SAMC 28 at [34].
I am satisfied that the trial Magistrate properly applied the principles enunciated in Bellgrove v Eldridge (as considered in Stone v Chappel). I am satisfied that no error has been established in the trial Magistrate’s decision to make an order under s 37(6)(a) of the Act that the rectification work be based on the Magryn solution.
I do not consider that the trial Magistrate erred in not having preferred the Goldie solution.
Conclusion and orders
The appellant has established no error by the trial Magistrate. I dismiss the appeal.
I will hear the parties as to costs.