NEW SOUTH WALES DISTRICT COURT
CITATION:
Rahme Civil Pty Ltd v Zeater & Sons Pty Ltd [2010] NSWDC 161
FILE NUMBER(S):
00337563 of 2009
HEARING DATE(S):
17 - 21 May and 24 June 2010
JUDGMENT DATE:
6 August 2010
PARTIES:
Rahme Civil Pty Limited - Plaintiff/Cross-Defendant
Zeater &Sons Pty Limited - Defendant/Cross-Claimant
JUDGMENT OF:
Hungerford ADCJ
COUNSEL:
Mr TO Bland for Plaintiff/Cross-Defendant
Mr MH Southwick for Defendant/Cross-Claimant
SOLICITORS:
C & M Lawyers for Plaintiff/Cross-Defendant
Macquarie Lawyers for Defendant/Cross-Claimant
CATCHWORDS:
BUILDING CONTRACTS
Construction contract for residential units
Demolition/excavation work
Damage to building by contractor's truck
Negligence of truck driver
Payment claims
Multiple payment claims
Need for a payment schedule to dispute claim
Statutory debt
Unlicensed contractor
Whether contract enforceable
Quantum meruit
Status of contractor's unpaid progress claims
Cross-claim by builder
Cost of rectification work to building
Whether damage to building caused by truck incident
Whether additional work causally related to truck incident
Set-off of separate verdicts
Costs
LEGISLATION CITED:
Builders Licensing Act 1971, s 45
Building and Construction Industry Security of Payment Act 1999, ss 3(3)(c), 8,
11(1), 13, 14, 15(2), 17(1), 17(2), 32 and Div 1 of Pt 3
Civil Procedure Act 2005, s 90(2)
Home Building Act 1989, ss 4(1) and 10(1)
Occupational Health and Safety (Demolition Licensing) Regulation 2001
CASES CITED:
Brodyn Pty Ltd t/as Time Cost and Quality v Davenport [2003] NSWSC 1019
Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2005] NSWCA 49
Grosvenor Constructions (NSW) Pty Ltd (in administration) v Musico [2004] NSWSC 344
Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140
Musico v Davenport [2003] NSWSC 977
Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221
Riverside Motors Pty Ltd v Abrahams [1945] VLR 45
Rojo Building Pty Ltd v Jillcris Pty Ltd [2006] NSWSC 309
Rojo Building Pty Ltd v Jillcris Pty Ltd [2007] NSWSC 880
Stallion Civil Group Pty Ltd v Tresedar Pty Ltd [2009] NSWDC 125
TEXTS CITED:
DECISION:
(1) Verdict for the plaintiff against the defendant on the claim in the amount of $31,662.45.
(2) Verdict for the defendant/cross-claimant against the plaintiff/cross-defendant on the cross-claim in the amount of $10,000.00.
(3) Judgment for the plaintiff/cross-defendant against the defendant/cross claimant in the proceedings by way of a set-off of the respective verdicts in the amount of $21,662.45.
(4) Defendant/cross-claimant to pay 50% of the plaintiff's/cross/defendant's costs of the proceedings on the ordinary basis in an amount as agreed or assessed.
JUDGMENT:
JUDGMENT
1 The construction of residential townhouses at 208 Bridge Road, Glebe required the demolition of an old brick factory on the site and the excavation for an undercover car park. As part of the demolition, it seems for heritage reasons imposed by the Council of the City of Sydney as the local government authority, the facade was to be maintained together with side walls in accordance with the approved development application. The demolition/ excavation subcontractor commenced work on the site in early-June 2007. However, on 22 June 2007 as one of its trucks was exiting the site, through an opening in the facade, laden with waste the right-hand rear side of the truck struck the facade wall causing damage to the brickwork; partial demolition of the wall was necessary, with propping for stability, but later the remainder of the facade was demolished and rebuilt by the builder. Work continued on the site and the demolition/excavation phase eventually was completed about 20 September 2007. In the meantime, relations between the builder and the sub-contractor became somewhat strained.
2 Issues arose as to the extent of damage to the facade, liability for costs of the truck incident, remedial costs, variations to the sub-contract to meet the repairs to the wall, additional equipment costs and the removal of waste, claimed overcharging by the sub-contractor and expense incurred by the builder in the sub-contractor allegedly not following the traffic management plan. Although the sub-contractor’s motor vehicle insurer admitted liability for the damage done by the truck to the facade and made a payment to the builder, the builder disputed the reasonableness of the amount paid and the sub-contractor declined to make-up the shortfall. The builder declined to pay the sub-contractor’s accounts in full.
3 In this action by the sub-contractor an amount of $32,269.95 was claimed in respect of monies unpaid by the builder on invoices, but on which the builder did not dispute the correctness of a sum of $17,706.55 so that, in effect, the amount at issue was only $14,563.95. The total of the demolition/ excavation works invoiced was $158,969.95 and the builder paid $126,700.00 resulting in the outstanding amount due of $32,269.95. Against that, the builder sought from the sub-contractor an amount of $83,520.62 as to the expenses to cover damage from the truck incident, less $17,850.00 received from the sub-contractor’s insurer, giving a net claim of $65,670.62. If each of the parties’ respective claims were to be upheld then an amount of $33,400.67 would be due to the builder from the sub-contractor by way of set-off. Those were the financial parameters of this dispute and it will be apparent from them, as indeed turned out to be the position, that the main focus in this case was the value of the damage from the truck incident.
Factual context of the dispute
4 A licensed builder, Zeater & Sons Pty Limited, was engaged by a related family development company, Stylish Constructions Pty Limited, to carry out the construction works for the residential townhouses at the subject site in Bridge Road which it owned. The principal and a director of Zeater & Sons, John Zeater, in late-April 2007 contacted Rabih Rahme, the sole director and secretary of Rahme Civil Pty Limited, to quote for the carrying out of demolition and excavation works on the site, including retention of the front facade, removal of all rubbish and movement of trucks on the site. Apparently, the initial quotation by Rahme Civil was considered excessive by Mr Zeater who requested an amended quotation which was provided by Rahme Civil on 2 June 2007 and accepted by Zeater & Sons on 11 June 2007. In the meantime, Rahme Civil commenced on the site on 4 June 2007 by doing some preliminary work.
5 Rahme Civil admitted it was not licensed to do demolition works as required by s 4 of the Home Building Act 1989 (the HB Act) so that, pursuant to s 10(1) thereof, it was not entitled to damages in respect of any breach of the contract it made with Zeater & Sons and the contract was unenforceable by Rahme Civil. Even so, it is relevant to point out that Rahme Civil was the holder at all relevant times for the purposes of its principal business as a demolisher/excavator of a restricted demolition licence issued by the WorkCover Authority of New South Wales under the Occupational Health and Safety (Demolition Licensing) Regulation 2001; and Mr Rahme himself had completed the OHS General Induction for Construction Work in NSW course conducted by WorkCover and held a certificate from TAFE in the Demolition Supervision 1 course. Also, it is to be noted that Rahme Civil held current insurance policies for public liability, products liability and asbestos liability covering its business activities in demolition, excavation and earthmoving, plant hire, waste removal, site clearing and asbestos removal.
6 Prior to submitting the first quotation for the works, Mr Rahme inspected the site on 28 April 2007 with Mr Zeater who explained what was to be done. During the inspection, Mr Zeater gave Mr Rahme a memorandum setting out the details of the scope of the requested quotation, essentially a lump sum for demolition and removal of debris, cubic metre rate for excavation and compliance with the approved development application. Access and egress of trucks was discussed as being through the middle or larger entry in the facade, together with a licensed traffic controller to be provided by Rahme Civil. In relation to the retained facade, Mr Rahme said the following conversation occurred with Mr Zeater, but which conversation Mr Zeater denied:
“Me: Are you going to prop the front facade during the demolition because once the walls are demolished there will be nothing to support it and hold it in place?
John: I ’m getting a subcontractor to prop the front facade before we start demolition of the factory to give it support. We’ll prop the facade by diagonal supports to the inside of the facade and vertical and horizontal beams along the front of the facade.
Some of the internal propping will need to be erected during the demolition, once the delivery office has been demolished and removed.
Me: That’s fine, so long as the facade is properly supported while we’re demolishing the factory. We don’t want the facade to collapse and hurt someone while we are working here. As you can see the building has lots of cracks and appears very fragile.
John: I know there are lots of cracks. I wish Council would allow me to demolish the facade. It would have been cheaper for me to knock it down and rebuild it then (sic) to retain it and fix it.”
7 Then, on 2 June 2007, after the initial quotation was not accepted by Zeater & Sons, Mr Rahme arranged for the amended quotation to be tendered. This was to be subject to a variation by Mr Zeater for the retention also of the right-hand wall and a large part of the left-hand wall. The price for the demolition and excavation work, exclusive of GST, was $30.000.00 for the demolition, $38.00 per cubic metre for the excavation using hydraulic excavator and $48.00 per cubic metre for the excavation using hydraulic excavator and hydraulic hammer.
8 The scope of works quoted in relation to demolition included ten roof trusses, stripping of existing building, asbestos removal, demolition and removal of existing building, removal of footings, site clean-up and site preparation for piling work/ excavation. The scope of works quoted in relation to excavation included traffic control, road cleaning, cutting the basement level and removal of clay, shale and sandstone. The quotation expressly excluded any allowance for various items which were principally removal of any surface or buried demolition material, piles, pipes, etc; removal of contaminated materials or material containing odours; “latent conditions” where the site differs materially from the physical conditions that could be reasonably anticipated at the time of tender; and site allowances, retention or liquidated damages.
9 Interestingly, the tender stated that invoices would be sent fortnightly for payment within 14 days with such invoice claims being made under the Building and Construction Industry Security of Payment Act 1999 (the SP Act); late payments were to incur interest.
10 On 11 June 2007 Mr Zeater forwarded to Rahme Civil a signed acceptance of the quotation, together with the pedestrian and traffic management plan. The works thereupon continued having commenced earlier on 4 June 2007.
Truck incident and consequent damage
11 As a preface to what occurred on 22 June 2007 as to the truck striking the facade, it is relevant to point out the substance of an alleged earlier discussion, probably during the site inspection on 28 April 2007, between Mr Rahme and Mr Zeater concerning the opening in the facade to be used by trucks, either the middle and larger opening or the narrower side opening. Mr Rahme asserted Mr Zeater then instructed the middle opening was to be used by the trucks but Mr Zeater said it was Mr Rahme who considered use of the side opening more suitable so as to permit parking of the large excavator vehicles – Mr Rahme denied that. In any event, Mr Zeater said both entries were more than adequate for the trucks to use. It seems the trucks in fact used the middle opening until Mr Rahme observed his trucks entering and exiting the site by using the left-hand narrower opening. Mr Rahme deposed he had this conversation with Mr Zeater:
“Me: J ohn, why are the trucks going through the left opening in the front facade? It’s a very narrow opening and it’s very possible that we may hit the facade. Do not forget, you have not braced the facade yet as you said you would. We have asked you on numerous occasions to brace the facade and you keep saying to us you’re working on it.
John: It has been raining for a few weeks now and the trucks are tracking mud onto the road. I need you to continue working but I do not want to get a fine. I have told your drivers to use the left opening. The concrete slab behind the left opening will minimise the tracking of mud onto the road. I know it’s narrower. Tony will assist the trucks by guiding them through.
Me: The front facade is not even braced. If we hit the facade and the facade collapses, it could kill someone. Why don’t we stop until the rain eases?
John: You have to use the left opening. I can’t afford you to stop. It’s costing me too much money in interest.”
12 Mr Zeater denied that conversation ever occurred and maintained Mr Rahme elected to use the left-hand narrower opening without any direction to him.
13 Mr Zeater was on the site mid-morning of 22 June 2007. On hearing a scraping sound he said he viewed one of Rahme Civil’s trucks driven by Ray Lebnan had collided with the side wall of the left-hand narrower opening in the facade from which the trucks had been coming in and exiting the site. He saw the section of the facade wall which had been struck had buckled and thought it to be in immediate danger of collapse. For safety reasons, Mr Zeater immediately convened a site meeting attended by Adrian Krekacs of Webcon (Zeater & Sons’ consultant civil and structural engineers), David Murty of Sydney City Council, Trenton Jones of Essential Certifiers ( the private certifying authority for the building), Mr Zeater and his brother Tony Zeater, and Mr Rahme. Mr Krekacs was said by Mr Zeater to have recommended “that the damaged section of the facade be immediately braced and that the area immediately in front be barricaded. No trucks are to enter or exit from this area anymore”. Considering the integrity of the facade to be compromised and unsafe, Mr Krekacs recommended “that the corner of the facade be demolished as soon as possible”. Mr Murty and Mr Jones agreed. Mr Krekacs then formalised his recommendation by issuing a site instruction which detailed four steps for remedial action: “Step 1 – Barricade footpath and maintain area clear; Step 2 – Install temporary braces to piers…; Step 3 – Demolish by hand part existing wall (as shown of side corner of wall and archway over opening) and return to brick pier; Step 4 – Immediately install facade retention structural steel (as shown)… no further site activity until such time as facade retention installed and certified by structural engineer.” Mr Zeater then arranged for the site instruction to be complied with by bracing the facade and barricading the area. Otherwise, Rahme Civil continued with the works.
14 A couple of weeks later, Mr Rahme and Mr Zeater had a discussion, during which responsibility for what occurred arose in the context of who instructed use of the narrower opening, and Mr Rahme sought from Mr Zeater an estimated cost of repairs. In mid-July 2007, Mr Zeater said he orally informed Mr Rahme the cost, which then included demolishing the damaged section, would be “between $25,000 to $30,000”; Mr Rahme, on the other hand, said Mr Zeater told him it would be “about $8,000.00.” Even so, Mr Rahme thereupon on 23 July 2007 made a claim on Rahme Civil’s insurer, Global Transport & Automotive Insurance Solutions Pty Limited. The claim form lodged with the insurer stated the damage from the incident to the vehicle was “scratches to trucks & dents” and to other property was “cracks to the wall.” How the accident happened was described as “truck was coming out of the driveway in which the road was lower than the driveway. Truck was turning left onto road, the back of the truck leaned to the right and hit wall causing wall to crack.”
15 Mr Zeater was anxious for the site woks to proceed but the non-finalisation of the insurance situation with the damaged wall in terms of cost and acceptance of liability were impediments. However, at Mr Zeater’s request, Rahme Civil on 27 August 2007 demolished the damaged section of the front facade; also, the demolition of the entire left-hand side wall and footings, roof frame and concrete slab in front of and behind the facade was done.
16 The insurance claim was handled by Campbell Anderson of Emersons Australia as the loss assessor. At Mr Anderson’s request, Mr Zeater provided on 3 August 2007 a quotation for the cost of remedial work to the damaged facade wall with two options: first, $27, 850.00 to cover demolition of the damaged wall and replacement brickwork; or, second, $26,975.00 to cover repairs to damaged wall, without its demolition, and toothing of wall for tying into existing front wall structure.
17 In the meantime, the consultant engineers Webcon in a report to Mr Zeater by Mr Krekacs dated 25 September 2007 recommended, following a close inspection of the facade, that the existing facade be demolished and rebuilt “in the interest of both public and worker safety on site” as proceeding “in accordance with the original architectural design will further compromise the integrity of the wall.” Mr Krekacs added in the report:
“The incident earlier in the year whereby a truck impacted with the wall highlighted the inherent risks involved with the retention of such a brittle facade constructed of lime mortar. Such incidents cannot always be anticipated or be designed for. It was fortunate the impact did not result in serious injury or a fatality. This incident required a partial demolition of the wall thus even further reducing the percentage of the original wall that is to be retained. The type of lime mortar construction observed, in our opinion, is unlikely to maintain its durability and integrity for the proposed life of the building thus further exacerbating the requirement for complete demolition and rebuild in the interests of safety.”
18 In response to his resultant concerns regarding the facade wall, Mr Zeater was, on 3 October 2007, given approval by Sydney City Council for the demolition of the entire facade which was duly done.
19 Emersons, in considering the quotation to remedy the damaged wall, engaged consulting engineers, Acumen Consulting Group Pty Limited, to assess and report upon reasonable costs for the temporary and permanent rectification works. On 9 October 2007 Acumen provided an amount of $17,850.00. It is apparent from Acumen’s report that the amount proposed took into account “that had the walling been adequately braced prior to the event, that additional bracing supplied would not have been required to the extent nominated in the rectification quotation.” Thus, Acumen reduced the amount claimed by Zeater & Sons in respect of engineering design, fabrication and installation of temporary bracing, footings and dismantling of steel support to $17,850.00 from $27,850.00. On 6 November 2007, Emersons through Mr Anderson advised Mr Zeater accordingly and he sought a review. However, the insurer remained firm in adhering to the Acumen assessment and, on 22 January 2008, Emersons forwarded to Zeater & Sons a cheque for $17,850.00 on the basis that even though “no release has been signed…liability was not being contested albeit that the entrance for the truck was a little narrow.”
20 Rahme Civil completed its site works during September 2007.
21 As to the extent and implications of the truck incident, Mr Zeater’s position was that the building was designed for the retention of the existing facade in order to maintain the streetscape and to be a selling feature of the development. He said that by reason of the damage to the facade wall by the truck, Zeater & Sons had incurred losses due to delay costs as a result of the damage and costs associated with the temporary support and demolition of the section of the facade concerned; the necessary subsequent demolition of the balance of the facade and construction of a new facade, together with delay costs, added to the loss as it covered an area approximately double the size of the area of the facade that was to be originally demolished. Reliance was placed on an expert report by a building consultant, Anthony Capaldi of Capaldi King Building Consultants Pty Limited, that the cost to demolish and rebuild the front facade would be $83,520.62 but as to which the insurer of Rahme Civil had paid only $17,850.00. So, the net loss was $65,670.62 due to alleged negligence by Rahme Civil.
Cost of demolition/ excavation works and payment claims
22 During the carrying out of the demolition/ excavation works in 2007, Rahme Civil raised eight invoices as against Zeater & Sons dated 4 July, 10 July, 12 July, 30 July, 27 August, 5 September, 7 September, and 26 September 2007. Mr Rahme deposed that he caused claims for payment to be sent to Zeater & Sons on the dates indicated in the total amount of $158,969.95. However, beyond the assertion of “causing” claims for payment to be sent, and where each invoice bore the endorsement of being made under the SP Act, there was no other evidence from Mr Rahme that such invoices were in fact sent. Indeed, Mr Zeater did not accept he had received them on the dates each invoice bore and alleged copies of such invoices later produced by Mr Rahme for use by his solicitors were in different formats – Mr Rahme explained the reason as being changes to the software in the computer programme on which the invoices were raised.
23 On 17 October 2007, Mr Rahme said he caused a statement of account to be sent to Zeater & Sons as $79,769.95 remained unpaid on the total due of $158,969.95. Then, on 7 December 2007, letter of demand for payment of $32,269.95 was sent following some further payments by Zeater & Sons. It is that amount which now remains unpaid. Mr Rahme said he then received on 12 December 2007 a letter from the solicitors for Zeater & Sons, in response to the demand, in which payment was disputed in light of the stated loss by Zeater & Sons arising from the truck incident. However, the letter enclosed payment schedules in respect of each of the invoices concerned and, importantly, the schedules specified the date each payment claim was received was the date of the respective payment claims. I accept, therefore, that each of the invoices being payment claims were in fact received by Zeater & Sons on the date each invoice bore and that each invoice was in a format as required by the SP Act. I accept too that the payment schedules were in a format as required by that statute. Whether the clams and the schedules otherwise satisfied the SP Act is, of course, another question to be later dealt with.
24 The letter of demand served on Zeater & Sons advised that unless payment was made within five days an application for adjudication of the payment claims would be made under the SP Act.
The claim, defence and cross-claim
25 In its amended form, the claim by Rahme Civil as plaintiff sought recovery from Zeater & Sons as defendant of the unpaid invoices in the amount of $32,269.95 based on three counts. First, in the absence of the defendant providing a payment schedule within 10 business days after each payment claim was served as provided by s 14(4) of the SP Act, s 15(2) of the SP Act was relied upon to enable recovery of the claimed amount as a debt. Second, and in the alternative, the demolition/ excavation contract made between the parties on 11 June 2007 pursuant to which the payment claims were made by the invoices was breached in that monies remained unpaid. Third, and in the further alternative, it was just and equitable for recovery of the monies unpaid from the invoices on a quantum meruit basis. Interest and costs were sought.
26 Any claims by the defendant for an offset against the monies claimed by the plaintiff was pleaded to be unavailable because it was the defendant who instructed the plaintiff for trucks to be driven through the narrower opening thereby denying the plaintiff’s trucks unfettered access to the site. In any event, the initial damage to the facade was to such an extent that the defendant was able to have removed by Sydney City Council the development application condition for retention of the facade so that it gained an advantage in no longer being required to maintain the original facade.
27 The defendant resisted the claim based on the SP Act in that there was no utility in a determination of such issues because s 32 of the statute operated to finally determine the parties’ respective rights. Even so, the pre-conditions for the plaintiff to rely on s 15(2) to obtain judgment on the unpaid invoices had not been met in that the relevant invoices were not in a format as required with the s 13(2) endorsement and had not been shown to have been served on the defendant in a timely way so as to satisfy s 14(4). Further, the invoices represented multiple claims during a monthly period in contravention of s 8.
28 As to the contractual claim, the defendant resisted it by reliance on a breach of s 4(1) of the HB Act by the plaintiff in not holding a licence thereunder to do residential building work so that, pursuant to s 10(1)(a), the contract made on 11 June 2007 was unenforceable.
29 The quantum meruit claim was defended on the basis that the plaintiff had to prove the real value of the work it had done and, of quite some significance, had failed to properly take account of the effects of the truck incident through the negligent act of its driver.
30 The defendant’s cross-claim was directed to recovery of the expense involved arising from the 22 June 2007 truck incident. The count, in effect, was in negligence in breach of the duty of care owed by the plaintiff to the defendant in carrying out the sub-contract for the demolition/excavation work. The particulars of negligence pleaded were failure to use an appropriate vehicle, failure to ensure the vehicle exited the site at an appropriate speed and failure to ensure the vehicle did not collide with the front facade. Liability of the plaintiff/cross-defendant was said to have been admitted by its insurer’s letter of 22 January 2008 expressly acknowledging that liability was not contested. The loss and damage thereby sustained were, as set out earlier, specified in the report by Mr Capaldi but allowing for receipt from the cross-defendant’s insurer of $17,850.00, in the amount of $65,670.62. The defendant/ cross-claimant specifically pleaded reliance on s 32 of the SP Act for adjustment of any amount found against it in favour of the plaintiff/ cross-defendant. Interest and costs were also sought.
31 The defence to the cross-claim depended upon the assertion that the plaintiff/ crossdefendant performed the works in accordance with the traffic management plan and that any damage to the front facade was due to the instructions given by Mr Zeater for trucks to use the narrower opening to enter and exit the site, to such opening being in a position away from the designated crossing point on the outside footpath and to it being partially obstructed by abutting residential dwellings. Specifically, any negligence was denied and the payment of $17,850.00 to the defendant/cross-claimant, accepted by it, was in full and final satisfaction of any claim it otherwise had. The claimed right to a set-off was denied.
Expert evidence
32 Zeater & Sons qualified Mr Capaldi to prepare a report on the costs associated with the reconstruction of the part of the facade struck by the truck and the subsequent re-construction of the building facade after Sydney City Council waived the condition for the facade to be retained. He inspected the site on 18 June 2009 which was apparently well after the site works were completed. Specifically, Mr Capaldi was asked to advise whether the quotation by Zeater & Sons of $27,850.00 to demolish and reconstruct the initial damage to the wall was reasonable, including whether the amount of $17,850.00 allowed by Acumen Consulting Group was sufficient, and to determine the cost to demolish and reconstruct the balance of the facade in accordance with the advice of Webcon as the consulting engineer and the Sydney City Council.
33 In summary, Mr Capaldi concluded in his report of 14 July 2009:
“2.1 The contractor Rahme Civil Pty Ltd should have assessed the site conditions and openings in relation to the navigation of its vehicle. If the opening was indeed too narrow then the vehicle should not have attempted to enter (sic – exit?) the site….
2.2 The amount of $17,850.00 as stated by Acumen Consulting Group is considered unreasonable for the work required to rectify the damaged area. A reasonable cost to rectify the impact-damaged area would be as per Zeater & Sons Option 1 cost of $27,850.00.
2.3 The consulting engineer, Webcon, has stated that for safety and to keep the integrity of the building, that the front facade is to be demolished and re – constructed as required. The City of Sydney Council has acknowledged that the work is required.
2.4 A reasonable cost to demolish and re-construct is $83,520.62.”
34 In supporting the Zeater & Sons cost of $27,850.00 over that of $17,850.00 allowed by Acumen as to the rectification work to the corner of the facade struck by the truck, Mr Capaldi noted that the four differences totalling $10,000.00 were made up of $300.00 for engineer design fees, $7,750.00 for fabrication and installation of temporary steel bracing, $750.00 for footings and $1,200.00 for dismantling temporary steel bracing. He noted the major difference of $7,750.00 was due to a view, as Acumen said, “that substantial amount of support had been required prior to the event. Impact as occurred was an expected design requirement for the temporary stability of the walling.” That approach seems to echo somewhat the evidence of Mr Rahme that he asked Mr Zeater to prop the facade before demolition/ excavation was commenced for safety reasons but, although Mr Zeater was said to have agreed, no such propping was done. Acumen made no comment for the remaining three differences, but it appears they related to the same reason. However, Mr Capaldi was unable to say what bracing the structural engineer, Webcon, specified beforehand because the relevant documents were not provided. However, during the hearing such documents in fact came to be produced by Zeater & Sons and from them it became clear that propping and bracing the facade wall was specified but Mr Zeater conceded it was not done before the truck incident; that too was contrary to the approved development application in cl 82 as to retention of the facade. The significance of this, it seems to me, is not to relieve Rahme Civil of liability for striking the wall, its conduct being seen in light of the existing condition, but rather in the assessment of whether Zeater & Sons thereby made a loss by claiming fixing of the bracing after the truck incident where it was earlier required to do so but did not.
35 As to his estimate of the cost to demolish the total facade of $83,520.62, Mr Capaldi did so by including the corner of the facade wall damaged by the truck. The various work items involved were identified and costed.
36 However, it is of significance, by reference to the engineer’s original drawings and architectural plans, that the significant part of the wall was to be demolished in any case and Mr Capaldi was unable to say whether the subsequent demolition of the whole facade was in fact necessary because of the truck incident. This evidence from Mr Zeater emerged by reference to Webcon’s recommendation in its letter of 25 September 2007 for demolition and rebuilding of the existing masonry facade:
“Q …Does it say that the impact of the truck caused the entirety of the facade to be compromised?
A. Not to your specific wording. It says, ‘The incident required a partial demolition of the wall, this further reducing the percentage of the original wall that is to be retained.’
…
Q …The question that is being put is, does the engineer say, ‘ I can point to the cause of this and the cause of this is the impact of the truck’?
A… all I can reply to you is that I acted under the instruction of the engineer. The engineer gave an initial site instruction on 22 June which required partial demolition of the front and the return. From there, the engineer was then called to inspect the remainder and he made the decision, under his recommendation, that it was instable and it was in the interest of worker and public safety, and I followed on from that.
…
Q. The question I put to you is, is there anywhere in the Webcon documentation where it says, ‘And the reason for the demolition of this wall is because of the impact of a truck earlier this year’?
A. Not in the letter dated 25 September.
Q. Is there anywhere else an instruction from Webcon to that effect?
A. Not that I’m aware of.”
37 No evidence was called from Webcon as the structural engineer.
38 John Worthington of John Worthington & Associates Pty Limited, building consultants, was qualified for Rahme Civil to give an expert opinion, on the basis of the invoices and supporting documents, as to the value of its claims against Zeater & Sons on a quantum meruit basis for the demolition/ excavation work. Further, Mr Worthington was asked to consider whether the assessment by Acumen for the remedial work after the truck incident was a proper costing. As to the later demolition of the total facade, Mr Worthington was asked to advise if the entire facade needed to be demolished, or only partly so, and to comment on the report by Mr Capaldi as to the cost estimate of $83,520.62. Mr Worthington reported on 27 August 2009.
39 A review of the eight invoices submitted by Rahme Civil to Zeater & Sons, albeit very much dependent on instructions from Mr Rahme, led Mr Worthington to the opinion that the amounts charged in each of them was fair and reasonable. He did have access to various photographs of the work as it progressed, plans and drawings and referred to industry standard costing guides.
40 As to the costs of remedying the corner of the facade after the truck incident, Mr Worthington agreed with Mr Capaldi that the Acumen costing of $17,850.00 would not complete the work required but he disagreed with Mr Capaldi that there was a requirement for the additional bracing as that was included in the original development application. Thus, as I understand the effect of this evidence, Mr Worthington agreed with the costing approach of Acumen.
41 Mr Worthington considered that the facade could be partly demolished and reconstructed and there was no need for the entire front facade to be demolished for repairs to be carried out to the corner damaged by the truck. This view was based on the fact that the brickwork was laid in lime mortar which, being flexible and porous with virtually no compressive or tensile stress, permitted the demolition of the damaged corner portion and its reconstruction. Having in mind the Webcon report about the brittle nature of the facade and its durability, Mr Worthington said that “irrespective of whether the facade had been damaged by the Rahme truck it would have required supporting (strengthening).”
42 The cost of $83,520.62 assessed by Mr Capaldi to demolish and rebuild the entire facade wall was not challenged by Mr Worthington; he would only have reduced it by the $17,850.00 already paid by the insurer. Indeed, he would have allowed an additional $5,000.00 to cover the cost of re-pointing the brickwork.
43 In a report dated 7 May 2010, Mr Capaldi responded to Mr Worthington’s report as to the Rahme Civil invoices. Although unable to comment on some invoices, either due to a lack of full detail or the significance of discussions between the parties, Mr Capaldi dealt with three invoices only and slightly modified Mr Worthington’s assessment.
Consideration of claim by Rahme Civil
44 The claim by Rahme Civil of $32,269.95 was, as explained earlier, the unpaid amount of the eight invoices served on Zeater & Sons. It was maintained by Rahme Civil on three bases and it is convenient to consider each in turn.
45 Statutory count: The SP Act was relied upon. I had occasion in Stallion Civil Group Pty Ltd v Tresedar Pty Ltd [2009] NSWDC 125 at [2] and [15] – [21] to state the essential aspects as to the operation of the statute. I will not repeat what was there said other than to affirm it. Suffice it to say, my view is that the SP Act is concerned with a regime with respect to payments for construction work, including as here the demolition of buildings or any works forming part of land, and it lays down a relatively undemanding process for the recovery by a contractor performing such work. The scheme is dependent upon satisfaction of certain conditions as to form and time constraints to enable payment as a debt without the need to consider the merits of the entitlement and where in such proceedings the respondent debtor is not entitled to bring a crossclaim or to raise a defence as to matters arising under the construction contract: see Div 1 of Pt 3.
However, s 32 of the statute reserves the rights of a party to take any civil proceedings in relation to a matter arising under the construction contract and, where so taken, the court concerned must allow for any amount paid under a construction contract, such as satisfaction of a debt due under the statute, and may make appropriate orders for the restitution of any amount so paid or such other order as may be appropriate.
46 Over the years, the authorities have variously described the operation of the SP Act as “a fast track interim progress payment adjudication vehicle”: per Einstein J in Brodyn Pty Ltd t/as Time Cost and Quality v Davenport [2003] NSWSC 1019 at [14]; “pay now , argue later”: per Palmer J in Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140 at [96]; and as providing “fairly rough justice”: per McDougall J in Musico v Davenport [2003] NSWSC 977 and per Einstein J in Grosvenor Constructions (NSW) Pty Ltd (in administration) v Musico [2004] NSWSC 344 at [13].
47 The present proceedings were commenced by Rahme Civil in the Local Court at Parramatta in 2008 on a general law count of work performed and materials supplied and Zeater & Sons filed a defence and cross-claim. It was not until the statement of claim was amended on 15 April 2009 that the SP Act was called in aid. The proceedings were transferred to this Court on 15 September 2009 for hearing both the claim and the cross-claim, together with the SP Act action. There is no impediment, in my view, in the SP Act claim and the general law claims proceedings concurrently: see Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2005] NSWCA 49 at [26].
48 In considering this statutory count it is a question whether the conditions laid down by the SP Act have been met.
49 I have found earlier that the invoices from Rahme Civil were served on Zeater & Sons on the respective dates indicated on each invoice and each invoice contained the relevant endorsement as being made under the SP Act as required by s 13(2)(c) to make them payment claims. That, indeed, was the initial position taken for Rahme Civil to make the payment claims valid, but, due to the uncertainties in the evidence about service, Mr TO Bland, counsel for Rahme Civil, relied on the statement of account sent to Zeater & Sons on 17 October 2007 enclosing copies of the original invoices appropriately endorsed as itself a payment claim; receipt of the statement and invoices by Zeater & Sons was accepted. Either way, said counsel, the condition had been met. Therefore, so the argument went, as Zeater & Sons had not served a payment schedule within 10 business days after service of the claims, certainly not before 12 December 2007, then it became liable to pay the outstanding balance of $32,269.95 as a debt under s 15(2)(a)(i).
50 Mr MH Southwick of counsel for Zeater & Sons took the position that there was no utility in the Court determining the SP Act claim because of the existence of the cross-claim. In any event, counsel submitted that the payment claims were invalid because they were multiple claims in contravention of s 8 in that the reference date on and from which a progress payment becomes due is the last day of the month in which the construction work was carried out. Here, as counsel emphasised, four payment claims were made in July 2007, one in August 2007 and three in September 2007.
51 Mr Southwick raised another impediment to the purported payment claims being valid. In its 7 December 2007 letter of demand on Zeater & Sons, Rahme Civil notified under s 17(2) of the SP Act an intent to make application for adjudication pursuant to s 17(1) rather than take curial proceedings for recovery of the monies as a debt. Reliance was placed on the decision of Einstein J in Rojo Building Pty Ltd v Jillcris Pty Ltd [2006] NSWSC 309 at [38] for the proposition that once having elected to proceed to adjudication then Zeater & Sons gained the right to serve a payment schedule within five business days of receiving the notice of intent, which it did on 12 December 2007; therefore, Rahme Civil could not recover as a debt through the alternative use of s 15(2). Counsel, quite properly, drew attention to the later decision of McDougall J in Rojo Building Pty Ltd v Jillcris Pty Ltd [2007] NSWSC 880 at [66] to a contrary effect but where, unlike here, a payment schedule had not in fact been served; his Honour expressly at ([57] – [58]) did not state a concluded view on that situation, only suggesting that s 3(3)(c) of the SP Act as to the adjudication remedy meant that once there was a disputed claim then it was not to be dealt with in a court as if it was undisputed.
52 Section 8 of the SP Act raises the entitlement to a progress payment from a “reference date” being, relevantly here, the “last day of the named month in which the construction work was first carried out (ie 30 June 2007)…and the last day of each subsequent named month” (ie 31 July, 31 August and 30 September 2007). A progress payment becomes due and payable under s 11(1) ten business days after a payment claim is made. The purported payment claims in this case were served pursuant to s 13(1) on Zeater & Sons on the dates indicated from July to September 2007 and with a consolidated claim served on 17 October 2007. No payment schedules under s 14 were served by Zeater & Sons within 10 business days of service, certainly not before the letter of demand of 7 December 2007. However, s 13(5) provides that not more than one payment claim in respect of each reference date can be served, although s 13(6) regardless of s 13(5) enables a payment claim to include an amount the subject of a previous claim. Given then the status of the subject payment claims, the question is whether they meet those conditions.
53 I am satisfied that the invoices issued by Rahme Civil in July and September 2007 were multiple invoices in relation to a single reference date and hence were issued in contravention of s 13(5). As Einstein J observed in Rojo v Jillcris (at [39]) as to the strictures imposed by the SP Act and the need for formal compliance – “The scheme of the Act is unforgiving in terms of the technicalities which require to be observed.” It follows, and so I find, that such invoices were not valid payment claims under the SP Act and therefore cannot support the present action for recovery of each of the amounts as a debt under s 15(2)(a)(i).
54 However, that leaves the invoice dated 27 August 2007 being No 501 in the amount of $9,594.20. This invoice covered “Demolish and remove part of front facade, side wall, footing, concrete slab and dig footing under side wall.” I accept this was a valid payment claim to which no payment schedule was served by Zeater & Sons so that Rahme Civil gained an entitlement to be so paid. Of course this is subject to Mr Southwick’s election point under s 17(1) of the SP Act. Also, the final right to such payment will be conditional upon the claims by Zeater & Sons by reason of s 32(3)(a) of the SP Act.
55 It remains on this aspect to consider whether the statement of account sent by Rahme Civil to Zeater & Sons on 17 October 2007 was a payment claim. The statement was under a covering facsimile from Mr Rahme to Mr Zeater which, as it said, was “a statement of account showing the amount outstanding.” However, beyond attaching the suitably endorsed invoices, the statement itself was not endorsed as required by s 13(2)(c) of the SP Act. It is true that s 13(6) permits a payment claim to include amounts the subject of a previous payment claim. However, as has been found, those previous claims were invalid as multiple claims and so, in my view, cannot somehow be legitimised to support the statement of account as a valid payment claim. The approach urged by Mr Bland is not open.
56 Mr Southwick’s argument that s 17(1) operated to bar any payment claims as debts because Rahme Civil thereby elected to proceed by adjudication, if correct, would defeat recovery of the $9,594.20 on invoice No 501. For myself, I would respectfully adopt and follow the reasoning of McDougall J in Rojo v Jillcris (at [61] – [68]) to the effect, as his Honour said (at [65), “a notice of intention to apply for adjudication does not amount to making an adjudication application.” Thus, the notice by Rahme Civil of 7 December 2007 indicating its intention to apply for adjudication as to the unpaid invoices was not an election for which s 15(2)(a) provides so that recovery as a debt was still available. But Zeater & Sons responded on 12 December 2007, within the allowable statutory period of five business days under s 17(2)(b), with payment schedules as it was entitiled to do under that paragraph, unlike the position in Rojo v Jillcris where no payment schedule was served. Mc Dougall J found it unnecessary to express a view on that question but did suggest (at [57]) the statutory scheme meant that the payment schedule once served made it no longer open to enforce payment as a debt in court proceedings.
57 I too do not find it necessary to consider that question. And that is because s 17(2)(a) of the SP Act provides that an adjudication application cannot be made unless the notice of intent to do so is given to the respondent by the claimant “within the period of 20 business days immediately following the due date for payment.” Here, the due dates for payment of the invoices were considerably more than 20 business days before and, so, the required period having expired, Rahme Civil could not serve an effective notice of intention to apply for adjudication; the right to apply for adjudication had been lost. More importantly, Zeater & Sons had no right to serve any payment schedules and the fact such schedules were served on 12 December 2007 did not make them valid and effective. Mr Southwick’s submission cannot be accepted.
58 On the statutory count, I find that Rahme Civil is entitled to recover $9,594.20 as a debt from Zeater & Sons.
59 General law count: The claim by Rahme Civil on this count was for work performed and supply of materials. In effect, it depended upon the construction contract made between the parties on 11 June 2007 for the demolition/excavation work. However, it was common ground that Rahme Civil held no licence under the HB Act to do residential building work contrary to the requirement of s 4(1) of the statute. By reason of s 10(1), it lost any entitlement to damages or to enforce a remedy in respect of a breach of contract by the other party, Zeater & Sons, to the contract such as a failure to pay the agreed contract price; the contract was simply unenforceable.
60 It follows, and I so hold, that this count relied upon by Rahme Civil must fail.
61 Quantum meruit count: Mr Bland relied on the fact that Rahme Civil had in fact performed work, as set out in the invoices, and it was only just and equitable that reasonable remuneration for such work be allowed. The question at issue, as counsel said, was the value of the work and for that reliance was placed on the evidence of Mr Worthington. The evidence of Mr Capaldi was put as not diminishing this position as it was of “little or no weight” and there were “invoices upon which he just did not comment.”
62 Mr Southwick resisted the claim by Rahme Civil on this count on the basis that it failed to prove the value of the work done and to properly take into account the effect of the truck incident. Mr Worthington’s evidence was criticised as simply responding to Mr Capaldi’s report and as being substantially based on instructions from Mr Rahme and the terms of the invoices.
63 In relation to the availability to bring proceedings to recover monies for work performed on a common money count where otherwise there was a statutory bar to enforce the contract, the decision in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221, as to the unenforceability of contracts not in writing contrary to s 45 pf the Builders Licensing Act 1971, is authoritative. There, Deane J said (at 262 – 263):
“There is no apparent reason in justice why a builder who is precluded from enforcing an agreement should also be deprived of the ordinary common law right to bring proceedings on a common indebitatus count to recover fair and reasonable remuneration for work which he has actually done and which has been accepted by the building owner…”
64 It was held by Mason, Wilson, Deane and Dawson JJ, Brennan J dissenting, in Pavey & Matthews that s 45 there, I add similar to s 4 here, did not prevent the bringing of an action by a builder on a quantum meruit for the value of work done and materials supplied under an oral building contract.
65 It follows, in my view, that Rahme Civil may seek recovery for the work it performed on a quantum meruit basis. The sole issue is what is the fair and reasonable value for the work so performed. However, as Deane J commented in Pavey & Matthews (at 263):
“In relation to such work, he can rely on the contract…as to the amount of remuneration and the terms of payment. If the agreed remuneration exceeds what is reasonable in the circumstances, he can rely on the unenforceability of the contract with the result that he is liable to pay no more than what is fair and reasonable.”
66 The evidence of Mr Zeater dealt with each of the invoices submitted by Rahme Civil and identified those items accepted and those disputed – the payment schedules served by Zeater & Sons on Rahme Civil on 12 December 2007 confirmed that position. With one exception, Mr Zeater conceded some payment was due or that the whole claim was acceptable. It would seem that payment of the non-disputed amounts was not effected due to the cross-claim by Zeater & Sons. In the result, of the outstanding amount of $32,269.95, there is an acceptance by Mr Zeater of $17,706.55 and a disputed amount of $14,563.40.
67 It is true that the strictly correct approach is to view the work done overall and in total to assess its reasonableness: see Riverside Motors Pty Ltd v Abrahams [1945] VLR 45 at 55 and Pavey & Matthews (at 263). However, in that exercise, apart from considering the views expressed by the expert witnesses, my view is that it is perfectly proper and open to take into account also the views of Mr Zeater. It is all the more so where he is a licensed builder. Each invoice should be separately so reviewed in terms of the price (inclusive of GST) indicated.
68 Invoice No 464 of 4 July 2007 dealt with the demolition of part of the old brick factory in the agreed contract amount of $33,000.00. Mr Worthington accepted this as the original tender price, Mr Capladi made no comment on it and neither did Mr Zeater or Mr Rahme. It was paid. I accept it as a fair and reasonable amount.
69 Invoice No 465 of 10 July 2007 in the amount of $5,599.50 related to the hire and use of a saw cutter during the demolition phase. Mr Zeater conceded an amount of $4992.00 and the disputed amount was $607.50. This represented a variation to the demolition contract to meet what Mr Rahme said was a concealed concrete beam not ascertainable at the time of the original site inspection and in respect of which the contract price excluded “latent conditions.” Mr Zeater’s position was that it was up to Rahme Civil what means and equipment it used to perform the demolition work and, in any case, the beam was not concealed. Mr Worthington considered the cost to hire the saw cutter was reasonable. Mr Capladi considered Mr Rahme should have made a full and thorough inspection prior to submitting the quotation. I am not satisfied Rahme Civil has made out a case for the extra cost of the saw cutter over the original tender price. Thus, the amount owing on this invoice becomes $4,992.00.
70 Invoice No 477 of 12 July 2007 in the amount of $5,373.50 concerned the cleaning and sorting of asbestos mixed with bricks and concrete buried under a concrete slab which was found only during demolition. Mr Zeater conceded an amount of $3,817.00 on this invoice but disputed $1,556.50. Again, Mr Rahma, relied on the “latent conditions” exclusion. It is to be noted that the original contract price excluded “any surface or buried demolition material…removal of contaminated materials” but included “asbestos removal.” Mr Worthington considered the cost reasonable by reference to the quantity as to labour and truck hire rates whereas Mr Capaldi assessed an amount at less than half of that claimed. I accept the need for an extra cost as the offending material was buried. Mr Worthington made his assessment by express reference to photographs of the material but Mr Capaldi merely expressed a view without reasoning Mr Worthington’s approach. I prefer Mr Worthington’s assessment and will therefore allow the full amount of $5,373.50 for this item.
71 Invoice No 491 of 30 July 2007 was in the amount of $577.50 in relation to the use of an excavator. Mr Zeater accepted the correctness of the invoice. Mr Worthington said the amount was reasonable; Mr Capaldi made no comment. I will accept the claimed amount as reasonable.
72 Invoice No 501 of 27 August 2007, as referred to earlier, dealt with the cost of demolishing and removing part of the front facade after the truck incident at the direction of Mr Zeater in the amount of $9,594.20. As it happened, the invoiced amount was substantially less than that calculated by Mr Capaldi of $12,018.00 who said Mr Worthington did not allow for safety on the site as to the use of “tiger tails” on electrical wires, scaffolding, providing pedestrian access and the use of a crane for the temporary support. I will, therefore, allow the invoiced amount of $9,594 as reasonable consistent with Mr Worthington’s approach.
73 Invoice No 506 of 5 September 2007 in the amount of $701.25 in relation to the use of an excavator. Mr Zeater did not dispute the correctness of this claimed amount. Mr Worthington said it was reasonable and Mr Capaldi made no comment. I will allow it.
74 Invoice No 520 of 7 September 2007 in the amount of $99,255.20 was in relation to excavation work and removal of waste material and debris. Of the claim, $93,700.00 has been paid by Zeater & Sons and the balance of $5,555.20 is disputed. The dispute arose due to differences in what Mr Rahme and Mr Zeater said they agreed as to a reduction in the rates for the removal of material from the site. Mr Rahme said, as confirmed in an email to Zeater & Sons of 27 July 2007, that the rate would be $55.00 per cubic metre whereas Mr Zeater said it would be $35.00 per cubic metre for certain types of waste and $45.00 per cubic metre for others; there was also disagreement as to the amount of waste actually removed. Regardless of any such agreement, Mr Worthington considered the rate charged by Rahme Civil for the volume of waste involved was reasonable according to industry standard charges. Mr Capaldi made no comment. Given the reasonableness of the rate according to Mr Worthington, I accept the amount claimed on the invoice so that $5,555.20 remains due.
75 Invoice No 532 of 26 September 2007 in the amount of $4,868.80 in relation to the cost of trucks to remove the debris was accepted by Mr Zeater as correct. Mr Worthington considered it to be fair and reasonable. I will allow it.
76 In the result, the amounts I accept as reasonable for the eight invoices on a quantum meruit basis are as follows –
Date Invoice No Amount
$
4.7.07 464 33,000.00
10.7.07 465 4,992.00
12.7.07 477 5,373.50
30.7.07 491 577.50
27.8.07 501 9,594.20
5.9.07 506 701.25
7.9.07 520 99,255.20
26.9.07 532 4,868.80
Total: $158,362.45
77 Zeater & Sons has paid to Rahme Civil the amount of $126,700.00 so that the balance due is $31,662.45.
Consideration of cross-claim by Zeater & Sons
78 The cross-claim sought compensation for loss arising from the truck incident of 22 June 2007 when it struck the facade wall due to the truck driver’s negligence. The measure of loss claimed was $65,670.62 for the cost of demolishing and re-building the entire wall being $83,520.62 less $17,850 already paid by the insurer.
79 I have no difficulty in finding negligence in Rahme Civil by the driver of its truck striking the wall as he exited the site with a load of waste material. It is true that the driveway used was the narrower of the two available and there was disagreement in the evidence of Mr Rahme and Mr Zeater as to who gave instructions to use that driveway. However, it was common ground that both driveways could accommodate trucks and, indeed, trucks had been in fact using the narrower driveway before the subject incident. It was simply a matter, on this occasion, of the driver failing to exercise the necessary degree of care as he exited the site so striking the wall. The driver, Mr Lebnan, did not give evidence to otherwise explain or defend his conduct. I find negligence in Rahme Civil for the incident and liability in it to compensate Zeater & Sons for the consequent loss.
80 The real issue between the parties was the measure of the loss. It is plain from the engineering drawings, consistent with the approved development application, that much of the facade was to be demolished to allow for boundary walls of units and the re-designed opening for the undercover car park. It is equally plain that the heritage parapet along with the corners at the extremities of the facade, including the corner struck by the truck, were to be retained. On the incident occurring, immediate work to secure the corner of the facade concerned was required with barricading and steel supports and then reconstruction of the damaged area – it was this work that Zeater & Sons quoted as costing $27,850.00 but Acumen assessed at $17,850.00. The difference of $10, 000.00 was due to Acumen disallowing certain costs by reducing engineering design fees by $300.00, temporary steel bracing by $7,750.00, footings by $750.00 and dismantling the steel bracing by $1,200.00; the reason was that such work to support the wall was required prior to the event but was not provided contrary to the engineering specification and the approved development application. Mr Worthington agreed with Mr Capaldi that the actual work proposed would cost more than $17,850.00 but agreed with Acumen that the work costing $10,000.00 should have been done by Zeater & Sons beforehand.
81 Then, three months later on 25 September 2007, Webcon inspected the wall and recommended that the facade in whole be demolished and re-built “in the interest of both public and worker safety…substantial demolition of the wall in accordance with the original architectural design will further compromise the integrity of the wall”. Webcon relevantly added that “the incident earlier in the year whereby a truck impacted with the wall highlighted the inherent risks involved with the retention of such a brittle facade constructed of lime mortar…This incident required a partial demolition of the wall…” It was the demolition of the entire wall to which Mr Capaldi’s estimate of $83, 520.62 related and with which Mr Worthington did not take issue with the amount.
82 In assessing the quantum of damages, the key depends upon whether as a result of the truck incident the entire facade wall needed to be demolished and rebuilt or only that corner portion struck by the truck.
83 Mr Calpadi expressed no opinion on that key question but only on the cost involved; he expressly in evidence deferred to the views of the structural engineer and considered it incumbent on a builder to follow the engineer’s instructions. For his part, Mr Worthington agreed but stated the conclusion that the facade could have been partially demolished and reconstructed so that the entire front facade did not need to be demolished for repairs to be carried out after the truck incident. That was because the lime mortar did not contain cement and remained flexible with any cracking confined to the brick joints and not the bricks themselves. Therefore, he concluded, “unless the original facade was ‘strengthened’ to compensate for the lime mortar…irrespective of whether the facade had been damaged by the Rahme truck it would have required supporting (strengthening).”
84 The further report of 25 September 2007 by Mr Krekacs of Webcon to Mr Zeater is, in my view, decisive of this issue. It is consistent with the views of Mr Worthington as to the lime mortar used in the wall and its effect on the integrity of the wall for its proposed life and as requiring “complete demolition and rebuild in the interest of safety.” That view was expressed, after a close inspection of the wall on 25 September 2007 with representatives of Sydney City Council and the Heritage Council, and in light of the site instruction Mr Krekacs issued on 22 June 2007 following the truck incident. Mr Krekacs considered that “the further proposed works entailing needling and substantial demolition of the wall in accordance with the original architectural design will further compromise the integrity of the wall”. He added that the truck incident “highlighted” the risks inherently involved with such a wall being “a brittle facade constructed of lime mortar” but that the truck incident “required a partial demolition.”
85 Mr Zeater agreed in evidence that there was nothing in Mr Krekacs report or anywhere else which related the need to demolish the whole facade to the truck striking the corner of the wall. Mr Krekacs did not give evidence and there was no explanation for such omission by Zeater & Sons as the appropriate party to do so.
86 It follows, and I so find, that there was no evidence causally relating the need to demolish the whole facade to the truck incident of 22 June 2007. Indeed, the report of Mr Krekacs said the incident required only “partial demolition” and that it was the further works “in accordance with the original architectural design” which compromised the wall’s integrity.
87 The claim by Zeater & Sons against Rahme Civil to recover the amount of $83,520.62 for demolishing and rebuilding the entire facade wall must, therefore, fail.
88 It remains to deal with the cost of remedying the damage to the corner of the wall struck by the truck. That damage, in my view, is the liability of Rahme Civil in either the sum of $27,850.00 or $17,850.00.
89 I have earlier detailed the respective views of Mr Worthington and Mr Capaldi in the context of the allowance by Acumen of $17,850.00 in lieu of Mr Zeater’s claim of $27,850.00. Essentially, it comes down to whether one accepts the items covered by the $10,000.00 difference as being a true loss to Zeater & Sons from the truck incident or rather as being a cost to which it was liable in any event if it had braced and supported the corner of the facade as the engineering drawings and approved development application specified. Of course, the corner was ultimately demolished and rebuilt with the rest of the facade but it is only practicable to consider the position as at 22 June 2007 when the damage occurred and remedial work was undertaken.
90 It may well be true that Zeater & Sons should have done some preliminary supporting work to the corner concerned and the opening in the facade through which the trucks passed; Mr Rahme said he raised that issue with Mr Zeater. However, the fact remains that Mr Rahme proceeded with the demolition/excavation regardless and in respect of which liability, in my view, is to be taken according to the then condition of the wall. Webcon instructed certain bracing and support work be done before further work was allowed on the site and it was far from clear in the evidence, certainly Webcon did not suggest it was, that that remedial work was co-extensive with the engineer’s original specifications. I think Acumen’s approach was far too strict and conservative. I accept Mr Capaldi’s evidence as to the need for the rectification work and at the cost of $27,850.00 as per Mr Zeater’s quotation. Mr Worthington did nit really take issue with the quantum so assessed.
91 Accordingly, given the $17,850.00 already received by Zeater & Sons, it is entitled to an additional $10,000.00 as compensation for the damage done by Rahme Civil’s truck.
Conclusion
92 For the foregoing reasons, Rahme Civil is entitled on its claim against Zeater & Sons to a verdict in the amount of $31,662.45 on a quantum meruit basis in respect of the demoltion/excavation work it performed at the Glebe site from June to September 2007. Zeater & Sons on its cross-claim against Rahme Civil is entitled to a verdict in the amount of $10,000.00 being the balance of the loss it suffered from the truck striking the corner of the facade on 22 June 2007 over the $17,850.00 already received. It is appropriate, pursuant to s 90(2) of the Civil Procedure Act 2005, for the respective verdicts to be subject to a set off so that Rahme Civil should have judgment in the amount of $21,662.45.
Order
93 The parties will be heard on costs before final orders are made. However, in the particular circumstances of this case, whether costs should simply follow the respective events or for each party to bear its own costs, or indeed some other order on a proportional basis, is a matter the parties may wish to expressly consider.
Counsel addressed on interest and costs
94. In the determination of this matter I make the following orders:
(1) Verdict for the plaintiff against the defendant on the claim in the amount of $31,662.45.
(2) Verdict for the defendant/cross-claimant against the plaintiff/cross defendant on the cross-claim in the amount of $10,000.00
(3) Judgment for the plaintiff/cross-defendant against the defendant/cross claimant in the proceedings by way of a set-off of the respective verdicts in the amount of $21,662.45
(4) Defendant/cross-claimant to pay 50% of the plaintiff's/cross-defendant's costs of the proceedings on the ordinary basis in an amount as agreed or assessed.
LAST UPDATED:
6 August 2010