Silastone Trading Pty Ltd v Body Corporate for Q1
[2017] QCAT 349
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- Unreported Judgment
- Silastone Trading Pty Ltd v Body Corporate for Q1[2017] QCAT 349
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Silastone Trading Pty Ltd v Body Corporate for Q1[2017] QCAT 349
Silastone Trading Pty Ltd v Body Corporate for Q1[2017] QCAT 349
CITATION: | Silastone Trading Pty Ltd v Body Corporate for Q1 and Anor [2017] QCAT 349 |
PARTIES: | Silastone Trading Pty Ltd (Applicant) |
v | |
Body Corporate for Q1 CTS 34498 (First Respondent) and Q1 Management Pty Ltd (Second Respondent) | |
APPLICATION NUMBER: | BDL242-16 |
MATTER TYPE: | Building matters |
HEARING DATE: | 17 August 2017 |
HEARD AT: | Southport |
DECISION OF: | Member Howe |
DELIVERED ON: | 19 October 2017 |
DELIVERED AT: | Brisbane |
ORDERS MADE: |
|
CATCHWORDS: | CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – REMEDIES FOR BREACH OF CONTRACT – DAMAGES – MEASURE OF – Domestic Building Dispute – builder’s obligation under the contract – whether builder failed to perform obligation – whether work defective – whether costs of rectification reasonable – whether an award for solatium possible – set-off – cost orders Queensland Building and Construction Commission Act 1991 (Qld), Schedule 1B,s 22 Archibald v Powlett [2017] VSCA 259 Baltic Shipping Company v Dillon [1993] HCA 4 Bellgrove v Eldridge (1954) 90 CLR 613 Benson v Rational Entertainment Enterprises Limited (No 3) [2017] NSWSC 922 Coshott and Anor v Fewings Joinery Pty Ltd [1996] NSWCA 122 Radford v De Froberville [1977] 1 WLR 1262; [1978] 1 All ER 33 Ruxledge Electronics and Construction Ltd v Forsyth [1995] 3 All ER 268 Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8 Tamawood Ltd v Paans & Anor [2004] QDC 427 Tamburini v SFN Constructions Pty Ltd [2011] NSWCTTT 26 |
REPRESENTATIVES: | |
APPLICANT: | Represented by R Ivessa of Counsel instructed by Paladin Legal |
RESPONDENT: | Represented by L Preston of Carter Newell, Solicitors |
REASONS FOR DECISION
- [1]The applicant (the contractor) carries on business as a concreting contractor. The first respondent (Q1) is the body corporate of a very tall residential and holiday resort tower complex in Surfers Paradise at the Gold Coast. Q1 engaged the contractor to lay a long concrete slab deck near a pool to the complex. The agreed price of all the work was $33,490 plus GST.
- [2]The concrete slab was poured on 29 and 30 July 2015. After that the concrete was honed to achieve a smooth polished finish.
- [3]Q1 was unhappy with the job. Q1 maintains the slab has been laid without control joints, it is the wrong colour, the honing work is not uniform and there is substantial aesthetic variation across the surface of the works. Q1 refuses to pay a final sum of $8,800 claimed by the contractor. The contractor has sued in the Tribunal for that sum and Q1 has counterclaimed for the cost of rectification of defective work with options ranging from $23,836 to $41,816 plus GST.
Background
- [4]There was no formal written contract between the parties. Instead, the contractor gave a written quote of $33,490 plus GST for the job on or about 23 July 2015. The quote encompassed additional options of honing and sealing for additional specified costs. Q1 accepted the quote with all options by a work order dated 27 July 2015. There was one contract with three phases of work, the laying of the slab, then honing the slab and finally sealing.
- [5]In an earlier email dated 11 July 2015, the maintenance manager for Q1, Mr Frawley, had written to the contractor “Confirming the concrete will be PT3 (CSR – Honed – 32MPA BNL 10mm100% CCS Onyx Oxide pigment).”
- [6]The contractor thereafter quoted “To supply all labour, concreting tools and equipment, materials and other equipment hire required to remove existing timber decking and to replace with ‘PT3’ concrete deck”, which “… includes … supply of Hy-Tec concrete as specified (‘PT3’ type with onyx colour).”
- [7]Q1’s work order then confirmed “Remove and dispose of existing timber deck and replace with exposed concrete, PT3 (CSR – HONED _ 32MPA BNL 10mm 100% CCS Onyx Oxide pigment) the same mix as the existing reflection pond bridge concrete as quoted 23/7/15. Includes honing by professional contractor and application of sealer.”
Correct Mix
- [8]Q1 argues the contractor was required to deliver the PT3 mix which was the same mix as the existing reflection pond bridge concrete. But they say the slab laid by the contractor is not the same colour as the existing reflection pond bridge concrete and therefore the contractor has breached his obligations under the contract.
- [9]There was no mention in the email of 11 July 2015 from Mr Frawley to the contractor about the desired concrete mix PT3 matching or being the same colour as the reflection pond bridge concrete. Nor was there mention in the quote about matching colours. It was only in the work order that mention is made of PT3 being the same mix as the reflection pond bridge concrete. The work order is very specific. It identifies a formula for the required concrete mix.
- [10]In the email of 11 July 2015, there are references to a number of options as to colours that Q1 will consider, including “sand” and “manilla folder”. I conclude the work order did no more than finally specify the onyx colour option described as PT3 as the choice. The reference in the work order to that mix being the same mix as the reflection pond bridge concrete did no more than explain why the PT3 mix was chosen. That the colour of the reflection pond bridge concrete was derived from the PT3 formula was entirely a matter of knowledge or belief discrete to Q1.
- [11]What was required of the contractor was to pour a slab in accordance with its quote, which was to supply a PT3 formula mix as specified, which Q1 asserts was the same mix as the reflection pond bridge concrete. I do not conclude it was an additional term of the agreement that the contractor ensure the colours of the different slabs matched if use of a PT3 mix not result in a colour match.
- [12]The photographic evidence tendered does show an apparent marked contrast between the colour of the poured slab and that of the reflection pond bridge concrete. There also appears to be a difference in the ratio of exposed stone to cement in each surface. Q1’s argument is that because there is such a discrepancy between the colour and stone to cement ratio, the mix for the slab was not PT3.
- [13]The concrete delivered is described in the Hy-Tec invoice as “Exposed 32MPA Hy-Tec Blue Honed” with the additional reference to “Onyx 44 Oxide-32MPA 1 x 9.9KG”.
- [14]Mr Johnson, the contractor’s principal director and operator, gave evidence that he did not order a specific PT3 concrete mix from Hy-Tec. He said someone from Q1 did that. His evidence at hearing was he telephoned Hy-Tec to arrange delivery and said he wanted the “Q1” mix, did they know what he meant by that? Hy-Tec said they did. He maintained it was not his obligation to order the right mix. He left that up to Q1. In that regard, I find Mr Johnson was clearly wrong. He contracted to supply and lay concrete as specified in his quote, namely the PT3 mix previously specified to him by Mr Frawley in the email of 11 July 2015.
- [15]Mr Johnson maintained someone from Q1 told Hy-Tec what the PT3 specification was. A sales representative from Hy-Tec had been on site beforehand and the mix was arranged between someone from Q1 and the sales representative. He did not say how he knew that nor who it was from Q1 who informed Hy-Tec.
- [16]Q1 refutes that suggestion. It says no one from Q1 arranged anything with a Hy-Tec sales representative or otherwise advised Hy-Tec about the PT3 mix.
- [17]Mr Frawley, the Q1 maintenance manager, gave evidence that he found the PT3 specification for the reflection pond bridge concrete in the maintenance manual for the Q1 tower. He forwarded the relevant extract from the manual to the contractor in his email of 11 July 2015. In fact, under the heading “Concrete” on the extract, the supplier is identified as Readymix, and there are four mix types with different specifications noted, PT1, PT2, PT3 and PT4. He said the reflection pond bridge concrete was a PT3 mix.
- [18]Mr Johnson’s evidence was that he asked Hy-Tec to supply the “Q1 mix”. He did not specify what the Q1 mix was. He did not refer to any particular Q1 mix. All the PT mixes have different colours. PT1 is described as bluestone honed; PT2 pewter honed; PT3 onyx honed; PT3A onyx broom finished; and PT4 natural grey broom finished. The mix supplied by Hy-Tec was onyx, not one of the other colours. Someone must have mentioned “onyx” to Hy-Tec because that was the colour mix delivered.
- [19]Counsel for the contractor submitted at hearing that what was poured was indeed the PT3 mix. Mr Johnson also said that in his statement of evidence. However, he admits he did not specify that particular mix when ordering concrete from Hy-Tec and though he maintained at hearing he checked the delivery docket he failed to explain what he checked or what was on the docket. If it was the same as the Hy-Tec invoice description, it did not set out the PT3 formula in the same terms as the email from Mr Frawley of 11 July 2015.
- [20]Counsel went further at hearing and submitted that it was PT3 that was supplied as evidenced by the Hy-Tec invoice. I cannot agree with that. The Hy-Tec invoice description is different to the PT3 mix description specified in the email of 11 July and the Q1 work order.
- [21]Equally however, I must say it has not been established to my satisfaction that the mix delivered was not a Hy-tec equivalent of that formula. There was no evidence called from either Hy-tec or Readymix to clarify the issue. Indeed, I note that in a quotation provided to Q1 by concrete contractor Mr McKenna for cost of replacement of the slab, he refers to yet a different formula again: “32 MPA Hanson Imagecrete concrete”. Am I to assume that is the equivalent Hanson concrete supplier mix of the PT3 formula or an entirely different colour and stone mix? There are indeed far too many assumptions I am left to make by the parties in this matter.
- [22]Despite Mr Johnson’s cavalier approach to his obligations under the agreement to order and lay the requisite concrete mix, the onus of showing the mix supplied was not PT3 lies on Q1. The photographic evidence shows a different consistency and colour of the slab to the existing reflection pond bridge concrete and the Hy-Tec invoice does not correspond exactly as to description but the failure of the contractor to supply the PT3 mix is not admitted and Q1 must come up to proof on its claim that what was supplied was not PT3. I conclude it has not done so.
- [23]The evidence relied on by Q1 is limited to the photographic evidence and the non-matching description of the Hy-tec invoice with the PT3 formula set out in the Q1 maintenance manual. To my mind, the suggested contrasting colour and stone mix of the slab to the reflection pond bridge concrete in the photographic evidence is not sufficient to preclude other possible explanations for differences. Whether photographs accurately depict colours or defects is a very common bone of contention in building cases. There is also the possibility of the different sealer coats on both surfaces having a colour effect. There is mention of a difference occurring where sealers are simply over-coated in an undated letter from the sealing contractor to the builder.[1] There is also the possibility of different curing conditions between the two slabs. Mr Johnson maintains he spoke to Mr Frawley and told him there would be a variation between the old concrete at the reflection pond bridge and the new slab because of age. He denies saying that eventually the two areas would match.[2]
- [24]Mr Frawley said he represented Q1 concerning the laying of the slab and during the process liaised with Mr Aaron Davis from Hy-Tec, the contractor and the Q1 body corporate committee. He said that the PT3 mix was not the first choice, and indeed not the second choice (which was PT2), but the stone used in the PT2 mix was no longer available. I conclude he was told that by Mr Davis and indeed he refers to that in an email to the contractor dated 21 April 2015.[3] It was not only Mr Frawley who had direct dealings with Mr Davis however. In an email to the contractor dated 23 July 2014,[4] Mr Frawley refers to the body corporate meeting with that gentleman some weeks previously and the committee having finally decided on PT3.
- [25]I conclude that Mr Davis from Hy-tec understood and was advised by someone associated with Q1 that the mix to be used in the slab was PT3 and what that formula was. I accept Mr Johnson’s evidence that he telephoned Hy-Tec and simply ordered the “Q1 mix”. Given none of the other available mixes (PT1 or PT4) are suggested to be the mix delivered, but certainly an onyx mix was supplied according to the Hy-Tec invoice, on balance I conclude that what was delivered was the Hy-Tec equivalent of the PT3 mix pursuant to the formula in the maintenance manual, which was what the contractor was obliged to supply under the contract.
- [26]Accordingly, I am unable to conclude the contractor breached his obligations in failing to supply a PT3 mix as stipulated in the Q1 maintenance manual. As found above, I do not conclude the contractor was additionally obligated to ensure the slab colour matched the concrete used in the reflection bridge.
Honing and Sealing
- [27]Q1 say the honing and sealing work has not been uniform with the result that there is an aesthetically unacceptable variation across the surface of the slab and the work does not match the existing reflection pond bridge concrete.
- [28]The evidence about this is primarily one photograph.[5] Mr Johnson looked at the photograph and said he couldn’t see the stones which it was suggested the photo shows have popped out from the surface. I agree with him.
- [29]Further Mr Johnson maintains it has been two years since he has done the job and if there are problems with stones popping out or with the sealing, which he denies, such problems may have been caused by factors other than his workmanship, such as the use of a water-based sealer which breaks down in the sun if not re-applied within 12 months. Mr Johnson maintained the photographic evidence suggested there was no sealer coating remaining evident. If that is the case, he says cleaning products or even pool chlorine could have damaged the surface, if there was damage, which he does not admit.[6]
- [30]Quite simply there is insufficient evidence to enable me to conclude the honing or sealing work was not done to an appropriate standard. Mr Baker, the engineer who gave evidence about the structural adequacy of the slab on behalf of Q1, had nothing to say about it in his report.
Defective Building Work
- [31]Apart from the issue about the colour and stone mix of the concrete blend, Q1 maintains the work done is defective. Q1 says there are no control joints or expansion joints in the work which are required by the standard AS3727-1993 Guide to Residential Pavements. In result, the concrete displays unreasonable cracking and deterioration which will probably worsen over time. The slab may cause damage to surrounding structures.
- [32]Q1 says the warranties implied in Part 3 Divisions 2 and 3 of Schedule 1B of the Queensland Building and Construction Commission Act 1991 (QBCC Act) which concern domestic building contracts apply and the contractor is in breach of those warranties. By s 22 of Schedule 1B, the builder warrants he will carry out the work in an appropriate and skilful way and with reasonable care and skill.
- [33]The warranties do apply to the subject contract and work despite the site being a high-rise apartment block. By s 3 of Schedule 1B, a domestic building contract includes a contract to carry out domestic building work. Domestic building work is defined in s 4(1)(b) of Schedule 1B to include the renovation, alteration, extension, improvement or repair of a home. Home is defined in s 9 of Schedule 1B as a building or portion of a building that is designed, constructed or adapted for use as a residence and amongst one example given are strata or community title home units or residential units. By s 4(3), domestic building work includes work associated with the renovation, alteration, extension, improvement or repair of a home and by s 4(4), work associated extends to landscaping and paving.
- [34]Q1 says s 21 of Schedule 1B therefore applies so that the contractor warranted the work would be carried out in accordance with all relevant laws and legal requirements, including for example the Building Act 1975 (Qld). Further, by s 22 the contractor warranted the work would be carried out in an appropriate and skilful way and with reasonable care and skill.
- [35]Q1’s principal complaint is the lack of control joints across the slab. The builder disputes the lack of expansion joints (or perhaps more correctly isolation joints) around the perimeter but admits he didn’t add control joints. He disputes that such were required given he used a raft type construction similar to a house pad and the appropriate standard to follow he maintains was therefore AS2870-2011 Residential Slabs and Footings.
- [36]Control joints are drawn in concrete slabs to control random cracking. They create weakened planes where the concrete can crack in a straight line and thereby be hidden and the result is a more attractive and uniform finish. Generally however, concrete does crack.
- [37]Q1 called Mr Baker, the structural engineer, to give evidence. Mr Baker says the appropriate standard that applied to the contractor’s work was AS3727-1993 Guide to Residential Pavements. With a slab of 150mm thickness, reinforced with F72 mesh, control joints should have been provided every 4 metres. Despite Counsel challenging Mr Baker’s interpretation of the relevant table in the standard, I accept Mr Baker correctly interpreted the requirements of the standard. Indeed, I accept the evidence of Mr Baker generally on all aspects of the engineering evidence, including his opinion that the correct standard to be followed in the circumstances was AS3727-1993 Guide to Residential Pavements. I found him to be a steady and impartial expert witness well-versed in his profession.
- [38]According to Mr Baker, even if the appropriate standard was AS2870-2011 Residential Slabs and Footings, the builder failed to follow that standard because he failed to lay thickened edge beams (support walls) around all four sides of the slab as required. He only laid thickened edge beams along the two long sides of the slab, not at the ends. More importantly, the key to using edge beams to prevent cracking in house slabs is the reinforcement laid towards the bottom of each edge beam, and here, he maintains, there was none. That assertion was not disputed by the contractor.
- [39]Further, Mr Johnson admitted at hearing that his design for the slab was not based on AS2870-2011. He simply suggested that standard was a more appropriate standard given his use of a raft design.
- [40]Neither standard has regulatory application here. Adherence to a standard may be required in say the Building Code of Australia (BCA), but the only reference in the BCA to either standard is a reference to AS2870-2011 concerning damp proofing floors and walls of dwellings.
- [41]Australian standards are reflections and formulations of best construction practice. Where not prescribed to be followed by regulation, non-compliance will not necessarily mean the construction is flawed simply by virtue of non-compliance. Construction or design work that complies with the appropriate standard will generally be presumed to be adequate and satisfactory and a contractor following a standard will generally be safe from assertions of poor or negligent design or workmanship. Where construction or design does not comply with a relevant standard or conform to accepted best construction practice however, it may be necessary for the contractor or engineer concerned to show how the construction or design of the work is in any case satisfactory.
- [42]But even though the appropriate standard was AS3727-1993 Guide to Residential Pavements, which I have found, Mr Baker agreed at hearing that given the expiration of time the slab has been down, 2 years, it may be considered structurally sound. The only cracking has been the shrinkage cracking across the whole width of the slab in the middle and at the quarter mark at the southern end and at the northern quarter mark where there is a shrinkage crack that extends for about 600mm. He had also observed minor spalling of the concrete surface along the shrinkage crack in the middle.
- [43]Mr Baker does not say that there would not have been shrinkage cracks if the builder had put in control joints as stipulated in that standard. He does say in his report that the extent of the shrinkage cracking may be attributable to the absence of slab control joints within the slab and isolation joints along the shorter end edges.[7] I understand his evidence to be that the slab is structurally sound and the shrinkage cracks are within the acceptable limits of cracking permitted in AS3727-1993 in that they do not exceed 1.5 mm. Here the cracks were in the order 0.5 to 1 mm. However, the shrinkage cracks would not have been visible or as visible nor perhaps as extensive had control joints been used.
- [44]Mr Baker concludes the slab is structurally sound and the issue is simply one of aesthetics. He says the cracking is unsightly.[8]
- [45]I conclude the design of the slab was inadequate so as to preclude shrinkage cracks. The addition of control joints would have hidden the shrinkage cracks to a significant degree. I also conclude the shrinkage cracks are unsightly.
- [46]Mr Baker’s opinion was also that all the construction (isolation) joints should have been sealed as stipulated by AS3727-1993. There is some confusion about the use of the rubber expansion material Ableflex at the perimeters of the slab. Mr Johnson’s evidence was initially that there was Ableflex installed at three sides along the isolation joints, then his evidence became that it was installed on all four sides. Mr Baker thought there was no Ableflex along the two short ends because when he visited he simply could not see Ableflex along either short end.
- [47]Mr Johnson said he had hidden the Ableflex under a thin coating of concrete mix to hide it. Mr Johnson said if there had not been Ableflex on all sides there would have been damage there caused by expansion, and there wasn’t any such damage. Mr Baker agrees the slab is sound and does not note any damage to the surrounding fixtures.
- [48]Mr Baker’s suggestion that all the isolation joints should have been sealed to stop water getting under the slab was not challenged by the builder.
- [49]I conclude, given there is no damage around the perimeter where the slab meets other fixed surfaces, the Ableflex expansion material was added to all sides. I also conclude however that the perimeter joints are not sealed and they should have been to prevent water entry under the slab. Given the proximity to the pool this seems a fairly obvious requirement. Mr Baker noted all other slabs adjacent to the pool had been so sealed.
- [50]Given the lack of control joints and failure to seal the slab at the isolation joints, I conclude the contractor breached his warranty to carry out the work in an appropriate and skilful way and with reasonable care and skill.
- [51]What remedy does Q1 have in consequence of such breach of warranty?
Damages
- [52]In Bellgrove v Eldridge[9] the High Court adopted the statement of principle about damages in building cases as stated in Hudson on Building Contracts: “The measure of the damages recoverable by the building owner for the breach of a building contract is, it is submitted, the difference between the contract price of the work or building contracted for and the cost of making the work or building conform to the contract, with the addition, in most cases, of the amount of profits or earnings lost by the breach.”
- [53]The High Court said that statement of principle was qualified by the requirement that not only must the work to be undertaken be necessary to produce conformity to the contract but also it must be a reasonable course to adopt.[10] The example given in Bellgrove was a building contract calling for erection of a house with cement rendered walls of second-hand bricks and the builder uses new bricks instead. In that situation, the owner would not be entitled to the cost of demolishing the walls and re-erecting them using second-hand bricks.
- [54]The High Court later said in Tabcorp Holdings Ltd v Bowen Investments Pty Ltd[11] that the example of unreasonableness given in Bellgrove indicated that the test of “unreasonableness” is only to be satisfied by fairly exceptional circumstances.
- [55]It was also noted in Tabcorp that there may be other factors besides financial considerations to be considered in determining what is reasonable rectification work. Factors such as aesthetic expectations may also be an important feature of the transaction.[12] The High Court adopt the words of Oliver J in Radford v De Froberville:[13] "If he contracts for the supply of that which he thinks serves his interests – be they commercial, aesthetic or merely eccentric – then if that which is contracted for is not supplied by the other contracting party I do not see why, in principle, he should not be compensated by being provided with the cost of supplying it through someone else or in a different way, subject to the proviso, of course, that he is seeking compensation for a genuine loss and not merely using a technical breach to secure an uncovenanted profit."
- [56]With these factors in mind I turn to consider the rectification proposals of the respondent in respect of the slab. The slab is structurally sound but the aesthetics of the slab are flawed by the two full width and one partial shrinkage cracks. The shrinkage cracks are small, less than 1mm wide.
- [57]Mr Johnson maintained there are shrinkage cracks in other concrete areas of Q1. He identified the main entrance of Q1 and the footpaths heading towards the hotel.[14] He wasn’t challenged about that.
- [58]Though there appears to have been confusion about the correct nomenclature of control joints as opposed to expansion or construction/isolation joints, all of which achieve different things, I accept a representative from Q1 was concerned about the lack of control joints immediately following the pour and that the issue was raised with the contractor. Mr Johnson said they were not necessary although he could still add them at that point of time. According to Mr Johnson, Mr Frawley said Q1 wanted them put in to match the others.[15] It is not clear therefore whether it was raised as an aesthetic or structural integrity issue by the querist who raised the matter.
- [59]Q1 asserts the slab is “manifestly unacceptable”.[16] Much of what is unacceptable however appears to be the colour and the failure to match the slab with the concrete at the reflection pond bridge. Mr Ivessa conceded at hearing that Q1 is a five star resort, but other than that concession I have no information about how the shortfall of the slab aesthetics detracts from the general aesthetics or design or coordination schemes utilised (if any) at Q1. Some limited photographic evidence was tendered by Q1.[17] Those photographs suggest the slab cracking has a far greater aesthetic deficit than do photographs of the cracks and the broader slab area appended to Mr Baker’s report. Mr Baker described the cracks as “unaesthetically pleasing”.[18]
- [60]Is the cracking so lacking aesthetically as to justify the structurally sound slab being demolished in part and new panels of concrete added or the top removed over the entire surface and the top tiled over? Those are the only acceptable remedies to Q1. They reject a more limited solution of filling the cracks and re-honing and resealing the areas concerned on the basis this will similarly detract further from the aesthetics of the slab.
- [61]To my mind, the cost of remedying the defect as proposed by Q1 is out of all proportion to the benefit to be obtained. I have concluded the contractor is not responsible for any defect associated with the colour and stone mix of the slab. The only defect the contractor is responsible for is the two full and one partial shrinkage cracks. That so-called defect is aesthetic only, not structural. In my opinion the remedies proposed are unreasonable in the circumstances in terms of the Bellgrove qualification to the rule that rectification must be a reasonable method of dealing with the situation.
- [62]Mr McKenna gave evidence about the cost of rectification. He proposed three solutions. First, total replacement of the slab at a cost of $41,816 plus GST. Second, cutting out and replacing three one-metre wide cross sections of the slab to remove the cracked areas. The cost of that was estimated to be $23,836 plus GST. Third was removing 20 to 30 mm from the top of the slab and installing ceramic tiles over the top at a cost of $26,857 plus GST. He refused to give an estimate for filling the cracks only because the result would be poor.
- [63]I conclude none of these proposals are reasonable. According to Bellgrove, where the cost of rectification is unreasonable the only true measure of loss will be diminution of value, if any, produced by the defective workmanship.[19] There is no evidence that there has been any such diminution of value.
- [64]That leaves the waterproofing issue however. I have found the contractor should have sealed all isolation joints. Mr McKenna priced that task at $1,960 in his estimate associated with retiling. There would be sundry charges necessary for that task. An appropriate proportion of the sundries is 10% of the “preliminaries” amount of $6,065 in Mr McKenna’s quotation, which is $605. On that GST will be payable. The total cost of such rectification (or perhaps incomplete work) is $2,821.50.
Solatium
- [65]Is Q1 entitled to an award of damages for the disappointment in not being provided with a deck aesthetically free from shrinkage crack defects?
- [66]Hallen J in the New South Wales Supreme Court decision of Benson v Rational Entertainment Enterprises Limited (No 3)[20] noted the general principles of the assessment of damages for breach of contract as follows: “For a plaintiff to recover a sum of money as damages, for harm suffered as a result of the defendant's breach of contract, the plaintiff must be able to prove the existence of the contract, the breach and the loss. A plaintiff who cannot prove any of these three requirements, generally speaking, cannot recover damages.”[21]
- [67]There are a number of recent Tribunal decisions however, both in Queensland and New South Wales, where awards of damages on the basis of solatium have been made in cases where the Tribunal has found the owner’s “loss cannot be fully or adequately compensated by an order for damages under the usual heads.”[22] Those decisions rely on the House of Lords decision of Ruxledge Electronics and Construction Ltd v Forsyth.[23]
- [68]In Ruxledge it was accepted by the House of Lords that where rectification work was not necessary and reasonable and there was no diminution in the market value of the property, damages were appropriately awarded for the owner’s loss of amenity. There it was an express term of a building contract that a pool to be built would be 7 foot 6 inches deep. After it was built it was found to be 9 inches short of that overall and where a person dived in it was only 6 feet. The judge at first instance awarded the owner general damages of £2,500 for loss of amenity. The trial judge found no diminution in the value of the property due to the breach of contract and also that it would be unreasonable for the pool to be demolished and rebuilt at a cost of £21,569. Other than in respect of depth, the pool was in all respects adequately constructed.
- [69]The Court of Appeal reversed the decision at first instance on the basis that Mr Forsyth had suffered real loss which could only be measured by the cost of rebuilding to meet the terms of the contract, the Court finding there was no other available measure. The Court of Appeal did not deal with the loss of amenity argument. In the House of Lords, the original decision was reinstated. The House of Lords found it was unreasonable to insist on reinstatement of the pool because the cost of rebuilding was entirely disproportionate to any prospective benefit to Mr Forsyth. Bellgrove v Eldridge was referred to with approval in support of the proposition that reasonableness should be taken into account.
- [70]The Law Lords justified their decision about a reduced award being appropriate on a number of different bases. Lord Jauncey found that since it had not been challenged by the appellant builder it was unnecessary to discuss it. Lord Mustill similarly found that the amount had not been disputed and therefore the original decision should be restored. Lord Lloyd accepted as did the judge at first instance the owner’s proposition that swimming pools are not necessities but built for fun. They were a pleasurable amenity. He found the loss of that amenity may sound in damages. Both the judge at first instance and Lord Lloyd based the award on English holiday cases, where the object of the contract is to afford pleasure. Where a tour operator fails to provide what the contract called for, the plaintiff may recover damages for disappointment. Similarly, the contract for the pool was for the provision of a pleasurable amenity and the owner’s pleasure was not as great as it would have been if the swimming pool had been 7 foot 6 inches deep.[24]
- [71]This decision was relied on in the New South Wales Court of Appeal decision of Coshott and Anor v Fewings Joinery Pty Ltd,[25] where the owner engaged a builder to build a home and stipulated that the construction be to a very high standard. A number of joinery items were found to be defective including defective window sills. Tallow wood was stipulated for under the contract but hard to source seasoned and the builder had used green tallow wood instead. The wood shrank as it dried in place and caused small unpainted parts of the upper horizontal plane of the inner sills to be exposed and caused some cracking of paint near the junction of inner and external sill. The owner wanted all the window structures replaced, not just the sills, at a cost of $25,687.99. The judge at first instance allowed $3,205 for replacement of sills only.
- [72]The judge also awarded “solatium” of $5,000 as compensation for the inconvenience the plaintiff’s would suffer from the rectification work and for the disappointment of the plaintiffs in not getting the exact high quality result for which they had bargained. The builder said there was no basis for making such an award. The Court of Appeal upheld the judge’s decision to give such award and relied on Ruxley as authority for that and found such award appropriate.
- [73]In Tamawood Ltd v Paans & Anor,[26] McGill DCJ said: “If there has been no loss of value, then damages for loss of amenity can be awarded on the basis of the decision in Ruxley Electronics and Construction Pty Ltd … a decision which has been followed in Australia.”[27] His Honour is probably referring to Coshott as the decision following Ruxley in Australia.
- [74]But in the very recent decision of Archibald v Powlett¸[28] the Victorian Court of Appeal in discussing damages for distress and disappointment in breach of contract cases reminded us that:
62 The general rule is that damages for anxiety, disappointment and distress are not recoverable in an action for breach of contract. The principal exceptions to that rule are where the contract is one whose object is to provide enjoyment, relaxation or freedom from molestation, and where the damages proceed from physical inconvenience caused by the breach. It is the latter exception upon which the respondent relied.
63 The respondent pointed to several cases in which damages for anxiety, distress and disappointment have been awarded following breach of a building contract giving rise to physical discomfort or inconvenience. However, all of these cases involved physical imposition upon the plaintiff, whether by virtue of having to live with offensive odours or a leaking roof, or in unsanitary or dirty conditions, or being obliged to vacate the defective premises. Nothing of this kind was alleged in the present case, where the respondent’s premises were intended for the conduct of a business rather than her own occupation.
- [75]The Victorian Court of Appeal cited Baltic Shipping Company v Dillon[29] as authority. There, Mason CJ said at [44]:
On the other hand, as a matter of ordinary experience, it is evident that, while the innocent party to a contract will generally be disappointed if the defendant does not perform the contract, the innocent party's disappointment and distress are seldom so significant as to attract an award of damages on that score. For that reason, if for no other, it is preferable to adopt the rule that damages for disappointment and distress are not recoverable unless they proceed from physical inconvenience caused by the breach or unless the contract is one the object of which is to provide enjoyment, relaxation or freedom from molestation. In cases falling within the last-mentioned category, the damages flow directly from the breach of contract, the promise being to provide enjoyment, relaxation or freedom from molestation.
- [76]The basis upon which Ruxley was decided, namely loss of amenity, might arguably be within the exceptions to the rule against damages for disappointment or distress stated in Baltic Shipping on the basis that the contract in Ruxley was for the provision of pleasure or relaxation and that was not provided by the other party. But the limitations explained in Baltic Shipping still apply in Australia and to the extent Ruxley is relied on to extend or deviate from those limitations it should not be followed. Too liberal an application of the exceptions to disappointment damages leads potentially to awards based on compensation principles rather than damages for loss.
- [77]Here, though the concrete slab forms a decking area adjacent to a pool, it is also simply a walkway at the resort. There is no evidence of inability to utilise the area concerned. The object of the building exercise has been achieved. Though Q1 has residential apartments, it is also a commercial venture. It is a resort. The construction was no more than a simple commercial transaction. Q1 is a corporation and as such it is hard to conceive of a corporation suffering physical inconvenience caused by the breach or a loss of pleasure, relaxation or amenity. A residential aspect to enjoyment of the new decking area rather than a standard commercial transaction was no part of the case presented by Q1.[30] The contract was therefore not one of those falling within the exceptions to the rule that there is no award of damages for disappointment or distress, the exceptions being very limited.
- [78]The contractor failed in his warranty to carry out the work in an appropriate and skilful way and with reasonable care and skill and in result the slab suffers from some random shrinkage cracking, but Q1 cannot recover compensation or damages for any disappointment in that result.
Conclusion
- [79]It is not disputed that Q1 has not paid the balance outstanding to the contractor of $8,800. The contractor is entitled to that sum. From it Q1 is entitled to set off the cost of sealing the isolation joints in the sum of $2,821.50. That leaves a balance owing to the contractor of $5,978.50.
- [80]Interest payable on that amount from 22 October 2015, when payment of the balance due under the contract was finally demanded, to say 3 October 2017, is $669.61
- [81]There are no orders sought against the second respondent.
Footnotes
[1] Ex 3 page 20.
[2] T 24 L 40.
[3] Ex 2.
[4] Ibid.
[5] Ex 3 page 70.
[6] T47 L13-22.
[7] Ex 6 page 2.
[8] T 75 L 38-44.
[9] (1954) 90 CLR 613.
[10] Ibid, 618.
[11] [2009] HCA 8; (2009) 236 CLR 272.
[12] Ibid, [16].
[13] [1977] 1 WLR 1262, 1270; [1978] 1 All ER 33, 42.
[14] T17 L22-28.
[15] T34 L9-10.
[16] T98 L36.
[17] Ex 7.
[18] Ex 6 page 3.
[19] (1954) 90 CLR 613, 619.
[20] [2017] NSWSC 922.
[21] At [267].
[22] Tamburini v SFN Constructions Pty Ltd [2011] NSWCTTT 26.
[23] [1995] 3 All ER 268.
[24] At 289.
[25] [1996] NSWCA 122.
[26] [2004] QDC 427.
[27] At [60].
[28] [2017] VSCA 259.
[29] [1993] HCA 4.
[30] As with Archibald v Powlett above.