Fitzpatrick v Ten Dam & Anor [2007] ACTSC 33 (21 May 2007)

Last Updated: 8 May 2008

FITZPATRICK v TEN DAM and ANOR [2007] ACTSC 33 (21 MAY 2007)

CIVIL APPEAL - appeal from Magistrates Court - role of appellate court - need for appellate restraint - magistrate's findings based on credibility of witness - findings open to magistrate.

Magistrates Court (Civil Jurisdiction) Rules 2004 (ACT), Rule 230

Fox v Percy [2003] HCA 22; (2003) 214 CLR 118

Pledge v Roads and Traffic Authority [2004] HCA 13; (2004) 78 ALJR 572

CSR Ltd v Della Maddalena [2006] HCA 1; (2006) 80 ALJR 458

Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531

Whitehouse v Jordan [1980] UKHL 12; [1981] 1 WLR 246

Suisse Atlantique Société d'Armement Maritime SA v NV Rotterdamsche Kolen Centrale (1967) 1 AC 361

ON APPEAL FROM THE MAGISTRATES COURT OF THE AUSTRALIAN CAPITAL TERRITORY

No. SCA 78 of 2005

Judge: Gray J

Supreme Court of the ACT

Date: 21 May 2007

IN THE SUPREME COURT OF THE )

) No. SCA 78 of 2005

AUSTRALIAN CAPITAL TERRITORY )

ON APPEAL FROM THE MAGISTRATES COURT OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN: IAN NOEL FITZPATRICK

Appellant

AND: HENDRIKUS JULIUS TEN DAM and JOLANDA HELENE HENRIETTE TEN DAM

Respondents

ORDER

Judge: Gray J

Date: 21 May 2007

Place: Canberra

THE COURT ORDERS THAT:

1. The appeal be dismissed with costs.

1. Ian Noel Fitzpatrick, a builder (the appellant), appeals against a decision of a magistrate finding that he was in breach of a contract to carry out building works for Hendrikus Julius Ten Dam and Jolanda Helene Henriette Ten Dam (the respondents), at Lots 3 and 4 Lorn Street, Collector in the State of New South Wales. After allowing for a set-off in the appellant's favour of $17,620.16 (including interest), the magistrate entered judgment for the respondents in the sum of $13,667.75 with costs to be agreed or taxed.

Background

2. The appellant entered into a contract in writing with the respondents to erect a single storey, four bedroom dwelling on land owned by the respondents. The contract was apparently executed on 21 December 2001 but was subject to further written exchanges and oral variations particularly as the respondents undertook to do certain of the works under the contract themselves. The original contract was executed in the Australian Capital Territory. The appellant was, at that time, a licensed builder in New South Wales. The variations to the contract which provided for aspects to be undertaken or arranged by the respondents did not concern the issue that arises on this appeal. The commencement date of the works was eventually agreed at 4 March 2002, completion was to be within 230 days excluding public holidays and rostered days off.

3. It is common ground that the principal matter in dispute under the contract was the external cladding of the dwelling house in a James Hardie product called HardiTex (also referred to as blue board).

4. Although the respondents sued in the Magistrates Court in respect of other relatively minor works, those matters are not now the subject of contention and the appeal before this court is confined to the alleged breach of contract in respect of the HardiTex cladding.

The relevant terms of the contract

5. On the hearing of this appeal, I was referred to the following contractual terms which are to be found in the original contract in writing executed by the parties (the Contract).

1. Responsibility of Builder and Results of Construction

(a) The Builder will in a proper and workmanlike manner with due or proper diligence and subject to these Conditions execute and complete the works shown on the Contract Drawings and described in the Specification.

...

2. Owner's Responsibilities Concerning the Works

The Owner must do all things necessary to:

(a) ...

(b) ...

(c) Make payment as required by the contract within the period required by the contract. ...

(d) ...

(e) ...

...

11. Delays and Extensions of Time

(a) Should the progress of the works be delayed by any of the following causes or conditions resulting from them:

...

(v) any act, default, delay or omission on the part of the Owner in providing instructions, making payment or doing a thing necessary to allow the works to proceed;

...

then in any such case the Builder must and is to receive a fair and reasonable extension of time to the Construction Period.

...

20. Payment

...

(c) The Owner must pay the amount of the progress payment claim to the Builder within the period stated in Item 6 of Schedule 1, or, if no period is stated, within ten (10) days of the date the claim was submitted to the Owner.

(d) the making of any progress payment to the Builder is to be taken as payment on account.

(e) Should the Builder not receive from the Owner payment of any or part of any progress payment by the due date, the Builder will be entitled to interest on the overdue amount at the rate specified in Item 7 of Schedule 1. Further in appropriate circumstances Clause 21 may be used and relied upon by the builder.

21. Suspension of Work

(a) Should the Owner fail to pay or cause to be paid any payment or any part thereof including an amount for GST within the time required by Item 6 of Schedule 1, the Builder may, without prejudice to his right to determine this Contract, suspend the works. The ability to suspend will also be available if the Owner fails to comply with Clause 2(b) [evidence of owner's capacity to pay for the works]. Suspension pursuant to this clause will act as a bar to any claim for damages, compensation or offset by the Owner against the Builder which relates to the period of suspension or consequences of such suspension.

(b) The Builder is to give notice in writing of any suspension under this Clause to the Owner.

(c) The parties must, in relation to a dispute as to payment or otherwise, conduct a meeting pursuant to Clause 27. (Please refer to clause 27).

(d) The Builder must recommence the works within twenty (20) days of the payment being made. This period may be changed by agreement.

(e) Any period of suspension will automatically and as of right extend the construction period and by consequence the date for practical completion.

22. Practical completion

(a) Practical Completion is that stage when the works are completed except for minor omissions and defects which do not prevent the works from being reasonably fit for occupation as a dwelling or where Item 12 of Schedule 1 is relevant, the purpose or result stated therein is achieved. For the purposes of this Clause the works do not include any labour or materials which are to be or were supplied or fixed by the Owner.

(b) When in the opinion of the Builder the works have reached Practical Completion, the Builder is to give to the Owner notice of this in writing.

...

(e) Should the Owner or any tenant or their employees or agents take possession of the works or any part of the works without the written agreement of the Builder, the date of Practical Completion will be the date possession is taken, unless Practical Completion has already been reached. Without limiting the generality of this clause possession will be evidenced by any or all of such things as placement of furniture, use of any part of works, denial of access of the Builder to the works or action by the Owner or their agent which prevents the Builder undertaking work.

24. Contract Maintenance Period

(a) The Contract Maintenance Period commences upon Practical Completion of the works and will continue for the period stated in Item 10 of Schedule 1, or if no period is stated, for thirteen (13) weeks.

(b) Prior to the expiration of the Contract maintenance Period the Owner is to provide to the Builder a written list of any defects or faults arising out of workmanship or material provided by the Builder which is not in accordance with the Contract.

(c) The Builder is to make good any defects or faults notified under Sub-Clause (b) at his own cost and within a reasonable time of notification.

(d) The Owner must provide access for the Builder to carry out his obligations under this Clause during normal working hours Monday to Friday and must allow a reasonable time for such work to be carried out.

...

25. Determination by the Owner

(a) If the Builder is in default in any of the following respects, namely:

...

(ii) if he fails to proceed with the works with due diligence or in a competent manner with regard to the circumstances of the contract works; ...

...

AND if,

In the case of any default that is capable of remedy, the default continues for twenty five (25) days after notice in writing has been given to the Builder specifying the default and stating the Owner's intention of determining the Builder's employment, THEN the Owner may, without prejudice to any other rights or remedies, by notice served as allowed by Clause 29 determine the employment of the Builder under this Contract.

...

26. Determination by the Builder

(a) If the Owner is in default in any of the following respects, namely:

...

(iv) if he fails to pay the Builder any progress payment within ten (10) days of a written request; or within the period stated in Item 6 of Schedule 1, whichever is the later; ...

...

AND, if in the case of any such default that is capable of remedy, the default continues for ten (10) days after notice in writing specifying the same and stating the Builder's intention of determining its employment has been given to the Owner, THEN the Builder may without prejudice to any other rights or remedies, by notice served pursuant to Clause 29 determine his employment under this Contract.

27. Dispute Resolution

Notify the other party of matters in dispute

If any dispute or difference (a dispute) concerning this Agreement or work arises between the Owner and the Builder then the party relying on the dispute must give the other written notice of the dispute.

Parties must meet and seek to resolve dispute

Within five (5) business days after the giving of such a notice the parties must confer at least once to attempt to resolve the dispute or to agree on methods of resolving the dispute by other means such as mediation, expert determination or arbitration. ...

In the absence of such a meeting a party is not entitled to terminate the contract whether pursuant to Clauses 25 or 26 or otherwise. However, if a party refuses to attend the meeting the other party can rely on its willingness to attend as satisfying the holding of the meeting and thereby proceed pursuant to Clause 25 or 26 as appropriate.

The progress under the contract

6. A considerable amount of work had apparently been done under the Contract since the agreed commencement date of 4 March 2002, but it does not appear that either of the parties formally regarded the Contract as completed. On 5 February 2003, the appellant gave to the respondents an "updated progress payment account" in the sum of $13,927.14. This account is the basis for the cross-claim made by the appellant against the respondents in these proceedings.

7. At that stage, no notice had been given by the appellant that the works had reached practical completion (see Clause 22(b) of the Contract), nor had the owners taken possession. There were a number of matters which at least the respondents regarded as in issue under the contract and a notice of matters in dispute dated 5 March 2003 was given to the builder under Clause 27 of the Contract. The notice set out the matters said to be in issue being the quantum of the "builder's claim payable" (which I take to refer to the "updated progress payment account"), the workmanship in relation to certain (not specified) aspects of the work, the time taken to complete the work and the delay costs said to be payable.

8. A meeting on site took place on 18 March 2003 between the appellant, the respondents, Mr Jerry Howard of the Master Builders Association, and the respondents' solicitor. As a consequence, the appellant's solicitors, by letter dated 19 March 2003 to the respondents' solicitors, advised that the appellant was "happy to carry out the work agreed yesterday" provided he received $9,285.00 within seven days. At the same time, a balance of $4,642.14 (presumably from the total of $13,927.14 that constituted the "updated progress payment account") was to be paid into the solicitor's trust account" pending completion of the work". The letter concluded, "once the building works have been completed in accordance with the Contract the balance of the monies will be payable".

9. It seems to me to be quite plain that this letter cannot be regarded as a notice of practical completion under the Contract, but rather kept the Contract on foot at least until the agreed work was performed. That seems to be confirmed by a later letter, on 25 March 2003, from the appellant's solicitors to the respondents' solicitors which threatens termination by their client pursuant to Clause 26 of the Contract for default in not making the "progress payments as they fall due".

Whether the contract was suspended

10. In his oral submissions Mr Walker, who appeared as counsel for the appellant, put the proposition that the letter of 19 March 2003, from the appellant's solicitors to the respondents' solicitors, was a notice of suspension of the works for the purposes of Clause 21(b) of the Contract.

11. Although this circumstance was pleaded by the appellant in his defence, it does not appear to have been an issue before the magistrate as its acceptance would have acted as a bar, in the terms of Clause 21(a) of the Contract, "to any claim for damages, compensation or offset by the Owner against the Builder which relates to the period of suspension or consequences of such suspension". In any event, I am not able to see why the conditional offer by the appellant to perform the works should have the effect of suspending the contract without an express notice in writing in terms that the Contract is to be suspended.

The events after the meeting on 18 March 2003

12. Although the meeting on 18 March 2003 did not take place within the five business days of the giving of the notice envisaged by Clause 27 of the Contract, it fulfilled the requirement of that clause that "the parties must confer at least once to attempt to resolve the dispute ...". That meant that both parties were in the position of being entitled to proceed to determination of the Contract under Clause 25 in the case of the respondents and under Clause 26 in the case of the appellant.

Whether practical completion

13. Before the meeting that was to take place on 18 March 2003, the respondents had apparently received a report from Mobius Design prepared by Mr Tim Lee, an architect (referred to either as the Lee report or the Mobius report). That report was clearly the subject of discussion at the meeting as the inspection report compiled by Mr Howard and which accompanied the appellant's solicitors' letter of 19 March 2003 dealt seriatim with the points made in the Lee report. However, the Lee report apparently was also the basis for the respondents giving a further notice dated 24 March 2003 pursuant to Clause 27 of the Contract. That notice alleged that the appellant had "failed to undertake the works with due diligence or in a competent manner". The notice described this failure as "the defective works". That is an unfortunate expression because it appears to have engendered a view held by the appellant, or perhaps by the appellant's advisers, that the appellant was entitled to remedy the alleged defects at his own cost within a reasonable time. That right relies upon Clause 24 of the Contract in respect of the "Contract Maintenance Period". However, that clause does not operate until the contract maintenance period commences after the date of practical completion and that period only commences at the time provided for by Clause 22. As I have already observed, the notice required by that clause had not been given by the appellant nor had the respondents taken possession of the works so as to bring the contract maintenance period into operation. Further, the Lee report commented, "All this required work will place the already unusually long construction time further past the expected date for completion". It is clear from this comment that the Lee report is not intended by its author to be the written list of defects required by Clause 24(b) to be given by the respondents to the appellant in the contract maintenance period.

14. On 1 April 2003, a representative of James Hardie Building Products carried out a site inspection and, by letter dated 11 April 2003, reported to the respondents that the HardiTex sheets were not fixed in accordance with the manufacturer's fixing recommendations. Details were given.

15. The appellant was given a copy of that letter and responded to it through his solicitors on 23 April 2003.

16. Sometime in May 2003, the respondents took possession of the premises. That apparently occurred without the appellant's written agreement. The appellant's cross-claim alleges that it was on or before 26 May 2003. The respondents admit this in their defence to the cross-claim. That event would invoke Clause 22 of the Contract and would be the date for Practical Completion envisaged by that Clause but, in the event, nothing would seem to turn on this consequence.

17. By letter dated 15 May 2003, the respondents' solicitors wrongly, it seems to me, referred to the HardiTex representative's report as having been given to the appellant at what was referred to as the meeting of 19 March 2003, but which I take to be the meeting of 18 March 2003. That letter also called for rectification of "defective works" and threatened termination of the contract. I do not regard that letter as invoking the appellant's obligations to make good defects under the contract maintenance period but rather drawing attention to the appellant's default that could result in termination under Clause 25 of the Contract. It is of note that the letter referred to both the notices that had been given under Clause 27 of the Contract. In my view, the only operative notice was the earlier notice given on 5 March 2003. The later notice of 24 March 2003 could only be said to be giving more particularity to the earlier notice but I take the essential nature of the "dispute" for the purposes of Clause 27 of the Contract to be the same. That dispute was the workmanship particularised in Mr Lee's report which included the installation of the blue board wall cladding. In that respect, the report noted that "The whole of the installation [of the blue board] needs replacing to the manufacturer's current printed instructions". The report also stated in summary that,

Externally the standard of workmanship I would expect of a qualified builder is simply not evident. The installation of the HardiTex "blue board" is unacceptable ... Remedial works to the external cladding and finishing of the building will be extensive to firstly: correctly install the blue board ...

18. By letter dated 16 May 2003, apparently received by the appellant's solicitors on 21 May 2003, James Hardie responded to the appellant's solicitors' letter of 23 April 2003. The response took issue with some of the matters that had been raised by the appellant's solicitors. It is not clear whether that response was, in fact, communicated to the respondents at that stage.

19. By letter dated 26 May 2003 and faxed to the appellant's solicitors on that day, the respondents' solicitors notified that:

In accordance with Notices issued pursuant to clause 27 of the Building Agreement, our client formally advises that the Building Agreement is terminated as of today's date, pursuant to clause 25(a).

That event took place more than the 25 days specified in Clause 25 of the Contract after the notices in writing had been given under Clause 27 of the Contract.

Termination of the Contract

20. I am satisfied that the entitlement to terminate the Contract only after a meeting to attempt to resolve the dispute referred to in Clause 27 of the Contract was satisfied by the meeting that took place on 18 March 2003 after the notice given on 5 March 2003. Accordingly, Clause 25 of the Contract could be invoked by the respondents to determine the employment of the appellant under the Contract.

21. Thereafter, in an exchange of correspondence, the appellant's solicitors denied that the termination was valid and the respondents' solicitors asserted that it was.

The grounds of appeal

22. The appellant's grounds of appeal as amended are that:

(a) The Magistrate failed to determine or properly determine whether the appellant had "failed to perform the works in a competent manner and with due diligence" as pleaded in the respondents' claim.

(b) The Magistrate was in error in relying on the Hardies Manual as indicative of what constituted performing the works in a competent manner.

(c) Insofar as the Magistrate relied on the Hardies Manual, he failed to determine which of several Hardies Manuals was the applicable Manual for the work in question.

(d) The Magistrate misused his advantage as a trial judge in rejecting the evidence of Mr Jones.

(da) The Magistrate was in error in rejecting the repair methods suggested by Mr Jones in favour of the complete replacement of the blueboard sheeting and re-doing the whole external cladding.

(e) The Magistrate was in error in concluding, "I do not believe in the circumstances it would have been appropriate to require the plaintiff to allow the defendant to attempt to rectify these significant failures particularly in the way the defendant now proposes."

(ea) The Magistrate was in error in failing to hold that the respondents had no cause of action for damages unless and until they had afforded the appellant an opportunity to rectify any defects.

(eb) The Magistrate was in error in failing to hold that the respondents had wrongfully terminated the contract.

(f) The Magistrate was in error in awarding the respondents interest in their claim for damages when the respondents had not expended any funds to rectify the works in respect of which the award of damages was made.

(Amendments underlined)

Termination of the Contract

23. Mr Walker, for the appellant, placed at the forefront of his oral submissions the proposition that the respondents had wrongfully terminated the Contract. He also asserted that the appellant was entitled to make good, within a reasonable time, any defects or faults that had been notified. This submission takes up the matters set out in a general way in paragraphs (ea) and (eb) of the grounds of appeal.

24. In his reasons, the magistrate says,

The defendant argues that the plaintiff acted illegally in terminating the contract per the letter of the 26^th of May 2003. The defendant sets out in some detail in the written submissions the basis of this particular argument. It is clear from the contract that the plaintiff had a right under the contract to terminate the contract in certain circumstances. I am satisfied on the evidence before me that, as at the date of termination, namely the 26^th of May 2003, the defendant was in breach of the contract and that therefore the plaintiff was entitled to terminate. The breach clearly relates to the failure by the defendant to install the blue board in such a way as to comply with the contractual requirement to act in "a proper and workmanlike manner with due or proper diligence."

Clause 25 of the Contract permits termination by the owner on failure to proceed with the works with due diligence or in a competent manner. It seems that the magistrate was also of the view that the default in so doing was not capable of remedy. He said,

The defendant also argues that the actions of the plaintiff have prevented the defendant from repairing whatever failures there may have been in relation to his work. The evidence is clear that the failures by the defendant were significant and I do not believe in the circumstances it would have been appropriate to require the plaintiff to allow the defendant to attempt to rectify these significant failures, particularly in the way the defendant now proposes.

Although ground of appeal (e) alleges that this finding by the magistrate was in error, it is a finding open to him on the evidence and unless the appellant can make good his general challenge to the magistrate's findings, there is no reason why it should not stand. If that finding stands, then Clause 25 of the Contract authorises the respondents to "determine the employment of the Building under this Contract".

25. The submission concerning the opportunity that the appellant might have to rectify defects seems to be solely based on the provision in Clause 24(c) of the Contract that the builder is to make good any notified defects or faults within a reasonable time of notification. As I have said earlier in commenting upon the steps taken by the parties, this is the provision for rectification that the contract maintenance period provides for and that period had not commenced at the time that the respondents gave notice in accordance with Clause 27 of the Contract.

26. I am satisfied that it was open to the respondents to give the notice of termination that they did and the issue properly before the magistrate was whether the ground particularised in the notice of dispute and set out in the statement of claim as breach of the Contract in failing to undertake the works with due diligence or in a competent manner had been made out. There is no general requirement under the Contract that the respondents should afford the appellant an opportunity to remedy any defects if the appellant was in breach of contract. It follows that the appellant does not make out the complaints made in paragraphs (e), (ea) and (eb) of the grounds of appeal.

This court's approach to the magistrate's findings

27. The other grounds of appeal (with the exception of the ground contained in paragraph (f)) are all directed to the findings that the magistrate made on the evidence before him. The approach that I am to take is that which the High Court has set out in cases such as Fox v Percy [2003] HCA 22; (2003) 214 CLR 118, Pledge v Roads and Traffic Authority [2004] HCA 13; (2004) 78 ALJR 572 and, more recently, CSR Ltd v Della Maddalena [2006] HCA 1; (2006) 80 ALJR 458.

28. There is, as Gleeson CJ, Gummow and Kirby JJ observe in Fox v Percy (supra at 127):

... the need for appellate respect for the advantages of trial judges, and especially where their decisions might be affected by their impression about the credibility of witnesses whom the trial judge sees but the appellate court does not.

They also said in that case (at 128):

Over more than a century, this Court, and courts like it, have given instruction on how to resolve the dichotomy between the foregoing appellate obligations and appellate restraint. From time to time, by reference to considerations particular to each case, different emphasis appears in such reasons. However, the mere fact that a trial judge necessarily reached a conclusion favouring the witnesses of one party over those of another does not, and cannot, prevent the performance by a court of appeal of the functions imposed on it by statute. In particular cases incontrovertible facts or uncontested testimony will demonstrate that the trial judge's conclusions are erroneous, even when they appear to be, or are stated to be, based on credibility findings.

That this is so is demonstrated in several recent decisions of this Court. In some, quite rare, cases, although the facts fall short of being "incontrovertible", an appellate conclusion may be reached that the decision at trial is "glaringly improbable"  or "contrary to compelling inferences" in the case. In such circumstances, the appellate court is not relieved of its statutory functions by the fact that the trial judge has, expressly or implicitly, reached a conclusion influenced by an opinion concerning the credibility of witnesses.

29. Those principles were reiterated by Kirby J, with whom Gleeson J agreed, in CSR v Della Maddalena (supra at 466 [21]). Kirby J also pointed out (supra at 466 [22] citing Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531 at 551) that:

However, where the conclusion of the primary judge depends on inferences drawn from undisputed facts or facts that have been found but can equally be determined by the appellate court, without relevant disadvantage, the duty of the appellate court is clear. It derives from the parliamentary enactment. It "will give respect and weight to the conclusion of the trial judge, but, once having reached its own conclusion, will not shrink from giving effect to it".

The present case is one which does not permit inferences to be drawn from undisputed facts but rather depends very much upon the evidence given by the witnesses in the hearing before the magistrate.

30. In fact, on this appeal the appellant's submissions concentrate on canvassing the matters before the magistrate and saying that he should have come to different conclusions. Whilst accepting that I have a duty on appeal to "rehear" this matter, the tests to be fulfilled that might justify a reversal of the decision are those referred to by Kirby J in Della Maddalena (at [21]) as:

"... failed to use or has palpably misused his advantage" or where "incontrovertible facts or uncontested testimony" demonstrates the findings to be erroneous; or where they are "glaringly improbable" and "contrary to compelling inferences".

The issues on the evidence

31. It may be fairly said, and I think this is common ground, that the issues in this matter come down to whether the blue board cladding was correctly installed and, if it had not been, whether rectification of the incorrect installation required complete replacement.

The magistrate's findings in respect to the witnesses

32. The submissions put to me on the part of the appellant essentially sought that I review the magistrate's decision without reference to the findings that the magistrate made as to the impression that the witnesses made upon him. The contest in this case was between the opinions given by two witnesses called to give opinion evidence based upon their specialised knowledge: Mr Lee, an architect, was put forward as an expert in the respondents' case, and Mr Jones, a builder, was put forward as an expert in the appellant's case.

33. However, the magistrate made quite positive findings on the contest between these two witnesses. He said, as to Mr Lee:

The plaintiff and defendant employed experts and reports were tendered from both the plaintiff's and the defendant's expert. Mr Lee provided a report on behalf of the plaintiff and this report has been described as the Mobius report. Mr Lee was by occupation an architect and his report is very detailed and sets out comprehensively the various matters which he regarded as significant in relation to the erection of [the] residence at Collector.

He took a quite different view to the report made and the oral evidence given by Mr Jones. He referred to the terms in which Mr Jones had couched his report. In particular, the magistrate referred to the opening paragraph of Mr Jones' report in these terms:

I consider the owner's claim (and the Mobius report), is the most grossly exaggerated and distorted emphasis of minor maintenance items I have encountered in recent years, particularly when considering the economical type of single stud construction utilised on this residence (essentially, the modern counterpart of the older "fibro home"). These documents make sweeping statements and broad generalisations which are both misleading, incorrect and unfair.

34. The magistrate could also have referred to Mr Jones' comments in the summary to that report:

As previously outlined, I consider the Mobius report to be incorrect, misleading and grossly exaggerated. It is not a balanced document and from a professional viewpoint, I find it quite incredible. It is unfair and derogatory to a builder who has done a good job under difficult circumstances. I am in complete disagreement with the conclusions drawn in the Mobius summary.

It seems to me that if views of this nature are held, then Mr Jones' report and his oral testimony should make good such trenchant criticism. It is apparent that, as far as the magistrate's view was concerned, neither did so. In an oft cited passage, Lord Wilberforce in Whitehouse v Jordan [1980] UKHL 12; [1981] 1 WLR 246 at 256-7 observed:

... it [is] necessary that expert evidence presented to the court should be, and should be seen to be, the independent product of the expert, uninfluenced as to form or content by the exigencies of litigation. To the extent that it is not, the evidence is likely to be not only incorrect but self-defeating.

35. In my view, it was open to the magistrate to hold that the terms in which Mr Jones couched his report demonstrated a degree of partiality on his part which went far beyond the robust expression of his view. Further, he had the opportunity of seeing and hearing Mr Jones give his evidence. In these circumstances, the magistrate was entitled to be of the view that little weight could be given to that evidence and that Mr Jones could not be accepted as an objective witness whose evidence he should accept.

36. The magistrate made these specific findings:

Mr Jones' evidence, in my view, cannot be accepted. He showed a complete lack of the appropriate objectivity required from an expert to be of any use to the court and his attitude is in clear distinction to that displayed by Mr Lee both in his report and in his oral evidence. I have no alternative other than to reject in total the report provided by Mr Jones and also his oral evidence. His suggested method of repairing the work omitted to be done by the defendant is in my view so fraught with potential problems as to be not worthy of reasonable consideration. The evidence of the defendant, concerning the options for repairs, perhaps not surprisingly, echoes Mr Jones' views and as such cannot be accepted either.

37. The magistrate had before him the views of Mr Lee as set out in his report:

14.0 BLUE BOARD WALL CLADDING

14.1 The blue board is not correctly installed. The manufacturers current printed installation manual is included as an appendix

14.2 The control joints have no rear flashing, the gap is greater than 6mm, the board is not square finished, there is no filler in the openings.

14.3 The set joints show sub standard workmanship, there is a single coat of cement only. The cement has not been feathered across the board with a skim coat to allow a smooth invisible joint once painted. The cement has been applied with a pallet knife of approximately 50mm width creating ridges and gouges in the "finished" joint

14.4 There is no stainless steel starter strip, as per the installation manual, to the base of the wall sheeting.

14.5 The clout nails are, in most cases, sitting proud of the face of the board or worse have been punched below the surface - both installation methods are not recommended by the manufacturer.

14.6 The internal corners are not to [t]he manufacturers installation manual.

14.7 There is no flashing under the wall framing.

14.8 There are not enough expansion/control joints both horizontal or vertical

REQUIRED ACTION

The installation of the blue board is incorrect and is not acceptable

The whole of the installation needs replacing to the manufacturers current printed instructions.

Existing material cannot be reused.

38. Mr Jones' report disputed the points made by Mr Lee but it is clear that the magistrate rejected those matters raised by Mr Jones. Before me, the appellant sought to justify Mr Jones' view. Having regard to the magistrate's findings on credibility, the difficulty that the appellant has in this appeal is in being able to show that Mr Lee's evidence and opinions upon which the magistrate was prepared to act, can be said to be erroneous, improbable or contrary to compelling inferences to the necessary extent that would demonstrate appealable error.

The manufacturer's manuals

39. The principle thrust of the appellant's submission is that the magistrate did not distinguish between the various manuals of the manufacturer that were put before him in assessing the evidence given by Mr Lee, Mr Jones and the appellant. Despite the fact that there were a number of the manufacturer's manuals put in evidence, the difference between them does not appear to be significant. The appellant's evidence before the magistrate seems to accept his failure to follow a number of the manufacturer's recommendations in respect of the fixing of the cladding and that evidence does not appear to be referrable to any particular one of the manuals put in evidence. In any event, it can be argued that it was for the appellant to have regard to the appropriate manual. It is not for me to assess the effect of the appellant's evidence, but it does not appear to me to preclude the magistrate from taking the view that he did. More particularly, I consider that there is considerable force in the magistrate's finding that:

Each of the issues indicate a failure on the part of the defendant to comply with the recommendations contained in the manual supplied by the manufacturer. While it is clear that the manual may not be the be all and end all it is clear that if the manual is not followed then the rights that the owner, in this case the plaintiff, may have in relation to the product can be severely compromised. The considerable number of departures from the manual by the defendant, in my view, indicate a failure on the part of the defendant to properly understand his responsibility in relation to the erection of the external cladding. (My emphasis)

40. That finding is independently supported by a letter dated 11 April 2003 received by the respondents from James Hardie Building Products after their representative had carried out a site inspection. Although details of the letter were challenged in correspondence between the appellant and James Hardie, nonetheless the letter confirms the views held by Mr Lee. The letter also warns that the company accepts no responsibility for unsuccessful installation. The view is offered, "In this situation it seems quite obvious that the installation practices are not concurrent with our fixing requirements".

41. The magistrate goes on to describe the departures from the manual and the appellant's failure to understand his responsibilities in erecting the cladding as a "fundamental breach of contract between the parties". This expression was criticised by the appellant in the further written submissions that were made. However, I do not regard the magistrate as intending to refer to the loss of the benefit of the contract as a whole (cf Suisse Atlantique Société d'Armement Maritime SA v NV Rotterdamsche Kolen Centrale (1967) 1 AC 361). I take the magistrate to be describing what he regarded as breach of a term or condition of the contract. That term is the obligation under Clause 1(a) of the Contract that the appellant, "in a proper and workmanlike manner with due and proper diligence" execute and complete the Contract works. That was the breach of contract that he was called upon to consider on the pleadings set out in paragraph 7 of the Particulars of Claim and he found that breach serious enough to justify the respondents taking action to terminate the Contract.

42. In any event, the points taken by the appellant as to the effect that the manuals had on the magistrate's consideration of the matter is quite overstated. As Mr Hausfeld, for the respondents, points out in his written submissions, there was evidence before the magistrate of the appellant being in breach of the condition that the appellant execute the works in a workmanlike manner irrespective of the requirements of the manuals. He points to aspects of Mr Lee's oral evidence that:

(a) The absence of vertical control joints increases the risk of cladding boards cracking through horizontal movement

(b) The absence of sufficient horizontal control joints at gable ends increases the risk of cladding boards cracking through vertical movement of the boards ...

(c) The absence of flashing behind control joints would potentially allow water penetration

(d) Control joints had been wrongly constructed. The Appellant had used chamfered edges on the boards (suitable for non-control joints) rather than square edges: ... [F]illing the edge up to square with a filler provides another area of potential breakdown in the cladding

(e) The missing starter strip around the bottom of the boards would increase the likelihood of later physical damage and reduce crispness of the finished appearance

(f) The fact that control joint gaps were not the required 6mm could lead to sealant failure and weather penetration

(g) There were numerous overdriven nails which could compromise the strength of the surrounding board ...

43. In my view, the grounds of appeal relating to the magistrate's finding (relying, as it does, on his acceptance of Mr Lee's evidence) as to breach of contract (ground (a)) and the magistrate's references to and use of the manufacturers' manuals in making that finding (grounds (b) and (c)) are not made out.

The measure of damages

44. As I have said, the magistrate made positive findings accepting the evidence of the respondents' expert witness, Mr Lee, and he rejected both the evidence given by Mr Jones and the evidence given by the appellant as to remedying the defective work. Ground of appeal (d) claims that the magistrate "misused his advantage as a trial judge in rejecting the evidence of Mr Jones". The complaint made in the written submissions is that the magistrate made no attempt to assess the evidence of Mr Jones insofar as it related to the whole of the building work done by the appellant. In view of the terms in which Mr Jones couched his report and the way the case was conducted, I can see no error in the magistrate not attempting an overall assessment to bring to account matters which by that time were not then in contention between the parties.

45. The magistrate had the benefit of extensive cross-examination of both experts on the matters in issue between the parties including the issue of the repair methods suggested by Mr Jones. Ground of appeal (da) complains that the magistrate should not have rejected this evidence. I have already referred to the magistrate's finding that Mr Jones' suggested method of repairing the work as "so fraught with potential problems as to be not worthy of reasonable consideration". In light of that, the findings that the magistrate made in determining whether he could accept the evidence of Mr Lee is pertinent. He said:

Mr Lee is an experienced architect and had a degree of familiarity with construction work involving blue board. His evidence was given in a measured and appropriate way and I have no hesitation in accepting his view that the only reasonable way to overcome the deficiency left by the defendant is to replace all of the sheeting and to redo the whole external cladding. While this does seem to be a somewhat significant project I am satisfied that it is unavoidable.

That was a finding open to him and I am not able to say that it should not have been made.

46. The extent of the work required to be done to redo the faulty installation was the subject of a quote from Anable and Ridley Building Constructions Pty Ltd. Mr Ridley, a principal of that company, gave evidence. He was not cross-examined as to the necessity for the removal of the existing work. It can be implied from his responses that he accepted the necessity to wholly replace the blue board fixed by the appellant. The cross-examination concentrated almost entirely on the suggestion that his quote was exaggerated or inflated. These are circumstances where the magistrate has accepted the opinion of an expert witness as to the work necessary to remedy the appellant's breach of contract and the person who has been commissioned to do that work has not been challenged as to its necessity. I am not able to see error in the magistrate's finding that the respondents' damages should be determined on the basis of replacing all of the sheeting.

Interest

47. The ground constituted by paragraph (f) of the grounds of appeal may be disposed of shortly. It is said that the respondents are not entitled to interest on this claim for damages as they had not expended any funds to rectify the works. The assessment of the cost to complete the works occasioned by the appellant's breach of contract is based on a quote to perform those works. That assessment is the measure of the appellant's damages. Rule 230 of the Magistrates Court (Civil Jurisdiction) Rules 2004, which applied at the time, provided for interest to be included in the amount of judgment for debt, damages or value of goods "unless good cause is shown to the contrary". In the case of sums awarded as damages, it is not to the point to say that monies have not been expended. In the present case, the damages became due and payable at least as allowed by the magistrate from the time of termination and there is no good reason why the respondents should not have their interest on them from that date.

Conclusion

48. The appellant has failed to make good any of his grounds of appeal. The appeal is dismissed with costs. Although the respondents have requested that those costs be ordered on a solicitor/client basis, I am not persuaded that this case justifies taking that somewhat exceptional course and I decline the respondents' request that I do so.

I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Gray.

Associate:

Date: 21 May 2007

Counsel for the appellant: Mr P Walker

Solicitor for the appellant: Colquhoun Murphy

Counsel for the respondents: Mr S Hausfeld

Solicitor for the respondents: Meyer Vandenberg Lawyers

Dates of hearing: 23 February 2006, 31 July 2006

Date of judgment: 21 May 2007