Hull v Thompson [2001] NSWCA 359 (15 October 2001)

Last Updated: 22 October 2001

NEW SOUTH WALES COURT OF APPEAL

CITATION: Hull v Thompson [2001] NSWCA 359

FILE NUMBER(S):

40988/00

HEARING DATE(S): 24 September 2001

JUDGMENT DATE: 15/10/2001

PARTIES:

M & E M Hull Pty Limited v Steven and Rita Thompson & Anor

JUDGMENT OF: Sheller JA Davies AJA Rolfe AJA

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): DC 39/99

LOWER COURT JUDICIAL OFFICER: Delaney DCJ

COUNSEL:

Appellant - R F Margo SC, Mr G J Durie

Respondents - T K Tobin QC, Mr A J Black

SOLICITORS:

Appellant - Warren F Ball & Co

Respondents - Mark Mulock & Co

CATCHWORDS:

TORTS - negligence - where failure to build concrete slab of specified thickness resulted in damage to buildings - whether proper basis for damages demolition and reconstruction or repair and diminution in value - whether trial Judge gave adequate reasons - appeal dismissed

LEGISLATION CITED:

Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613

Rentokil Pty Limited v Channon (1990) 19 NSWLR 417

Pantalone v Alaouie (1989) 18 NSWLR 119

Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430

Mifsud v Campbell (1990) 21 NSWLR 75

DECISION:

Appeal dismissed with costs

JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40988/2000

DC 39 of 1999

SHELLER JA

DAVIES AJA

ROLFE AJA

15 October 2001

M & E M HULL PTY LIMITED

v

STEVEN AND RITA THOMPSON & ANOR

TORTS - negligence - where failure to build concrete slab of specified thickness resulted in damage to buildings - whether proper basis for damages demolition and reconstruction or repair and diminution in value - whether trial Judge gave adequate reasons - appeal dismissed.

The appellant entered into a contract with the first respondent to construct a two storey house and garage. The building specifications required the appellant to construct a 130mm thick concrete slab at ground level, as the buildings were to be erected on an essentially clay surface. The appellant failed to do this, which resulted in cracking and other damage to the buildings. The respondents sued the appellant claiming damage based on the cost of repairing the premises and diminution in value. At trial the respondents amended the Statement of Claim to claim damages on the alternative basis of the cost of demolition and reconstruction of the dwelling. The appellant did not apply for an adjournment or seek leave to cross-examine the respondents' expert witnesses. Accordingly, the case proceeded on the basis of various experts' reports on which there was no cross-examination.

The trial Judge found in favour of the first respondent and awarded damages on the basis of demolition and reconstruction. The issues on appeal were whether his Honour was correct in awarding damages on that basis and whether he gave sufficient reasons for that conclusion.

HELD per Rolfe AJA (Sheller JA & Davies AJA agreeing):

(i) Prima facie if there is no cross-examination of an expert, there is no basis for a Judge not to accept the unchallenged evidence. This is subject to certain qualifications which do not apply in this case. The only reasonable inferences to be drawn from the failure of the appellant to cross-examine are that his instructions were that their evidence was probably right, or that a calculated decision was taken to try to argue the matter without attacking the evidence. In these circumstances, the appellant's claim for a new trial has no attraction.

(ii) The trial Judge was wholly entitled to interpret the evidence of Mr Hall, one of the expert witnesses for the respondents, as stating that the reasonable response to the damage caused by the appellant was demolition and reconstruction. Conversely, it was not unreasonable for the trial Judge to reject the opinion of the appellant's expert witness. Accordingly, his Honour was entitled to find that the reasonable method of rectification was by demolition and reconstruction.

(iii) A consideration of whether reasons provided in a judgment are adequate depends upon the particular case and the matters in issue. Whilst there were obviously further matters to which his Honour could have referred, many of them were not in issue. It is difficult to see, in the circumstances in which this case was conducted, what more his Honour could have said in favouring the view to which he came than he did. He exposed a sufficient reasoning process as to his conclusion that the respondents were entitled to the damages he awarded them.

ORDERS

Appeal dismissed with costs.

IN THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40988/2000

DC 39 of 1999

SHELLER JA

DAVIES AJA

ROLFE AJA

15 October 2001

M & E M HULL PTY LIMITED

v

STEVEN AND RITA THOMPSON & ANOR

Judgment

1 SHELLER JA: I agree with Rolfe AJA.

2 DAVIES AJA: I agree with Rolfe AJA.

3 ROLFE AJA

INTRODUCTION

(a) The Basic Issues

On or about 22 October 1991, the plaintiffs/respondents, Mr and Mrs Thompson, for whom Mr T K Tobin of Queen's Counsel and Mr A J Black of Counsel appeared, entered into a contract with the defendant/appellant, M & E M Hull Pty Limited, which at all material times carried on business as a builder and for which Mr R F Margo of Senior Counsel and Mr G J Durie of Counsel appeared on the hearing of the appeal but not at first instance, for the construction of a 2 storey house and garage at Lot 319 Hinxman Road, Castlereagh. I should add that Mr Tobin did not appear at first instance.

4 Relevantly for present purposes, the specifications required the appellant to construct a 130 millimetres thick concrete slab at ground level under the living and garage areas. Compliance with this obligation was of great importance as the buildings were to be erected on an essentially clay surface in which there was instability. Accordingly, if the slab was not of at least the specified thickness, there was a very real risk that there would be substantial movement in the buildings leading to cracking and other defects and deteriorations.

5 The appellant failed to build a slab conformably with the specifications. The result was that the premises suffered cracking and other damage in respect of which the respondents sued the appellant in the District Court at Penrith by an Ordinary Statement of Claim issued on 2 February 1999. Initially they claimed damages in the order of $150,000 based on the cost of repairing the premises and diminution in value. Subsequently, an alternative claim was made on the basis that it was necessary to demolish and reconstruct the premises, the damages being in the order of $600,000. The appellant defended the proceedings on various grounds to which it is unnecessary to make reference, save for certain specific purposes to which I shall refer, because the substantive issues on appeal were whether the trial Judge, Delaney DCJ, was correct in awarding damages on a demolition and reconstruction basis, and whether he gave sufficient reasons for the conclusion to which he came. The appellant did not seek to argue that it was not in breach of contract and not liable to pay damages to the respondents for rectification. In the result his Honour entered a verdict and judgment for the respondents in the sum of $601,200 with costs, and dismissed a cross-claim brought by the appellant against a structural engineer, Mr W G Scott, with costs. Although the appellant also appealed against this part of the decision, the appeal was not pursued. We were informed by Mr Margo that orders have been agreed with Mr Scott and none, in relation to the appeal against him, were required from this Court.

(b) The Course of The Litigation

6 The hearing was originally placed in a 3 weeks' running list, which was to commence on 15 May 2000 at Penrith Court. We were handed, without objection, a letter from the registrar of that Court setting out the matters listed and certain procedures which would apply to their hearing. However, these proceedings, which were number 80 in that list, either were not reached or, for some other reason, did not proceed at those sittings. The hearing commenced before his Honour at Penrith on 6 November 2000. There was an inherent assumption by the parties that the same procedures applied to those sittings.

7 On 28 March 2000, the solicitors for the respondents wrote to those for the appellant. A copy of that letter is not with the appeal papers. On 29 March 2000, the solicitors for the appellant replied, inter alia:

"Under cover of your letter of 22nd March 2000 reports were served consistent with a claim for rectification. The reports served have been in your possession since July 1998".

The letter continued:

"Now you indicate that further reports will be served which are not consistent with the particulars pleaded in paragraph 13 of your Statement of Claim. You have not proposed to amend your Statement of Claim. We will be objecting to any evidence or reports inconsistent with the relief sought and particularised in your Statement of Claim.

If you wish to amend at this late stage we would produce this letter for his Honour, Judge Delaney, in support of any application for costs in relation to the vacation of the hearing date".

8 On 31 March 2000, the solicitors for the respondents forwarded to the solicitors for the appellant a building report from Burswood Homes and advised that the respondents would be seeking various fees for removal, storage of goods and rent amounting to approximately $19,000, and demolition and rebuilding costs of $591,200. That was the amount of Burswood Homes' tender to demolish and rebuild the premises. The letter did not indicate that there would be any amendment made to the Statement of Claim to accommodate this alternative claim and, although the matter was not heard until 6 November 2000, no amendment was made to that date.

9 At the commencement of the hearing a number of documents, including the tender from Burswood Homes, was sought to be tendered. Counsel then appearing for the appellant objected on the ground that the pleadings "quite clearly state in paragraph 12" that the damages sought were for rectification and made out no case for demolition and reconstruction. The proceedings were then adjourned to the following day and Mr Black applied to amend the Statement of Claim by adding paragraph 14, which stated:

"14 In the alternative the Plaintiffs claim the cost of demolition and rebuilding of the dwelling.

PARTICULARS

Pursuant to the report of Burswood Homes Pty Ltd served

upon the defendant".

10 Counsel then appearing for the appellant objected to the amendment on the ground that until then the only case pleaded by the respondents was for damages for rectification. That was obviously correct, but the letter of 31 March 2000 made it abundantly clear that demolition and rebuilding costs would be sought.

11 His Honour allowed the amendment and no appeal is brought against that exercise of his discretion. Of more significance, so far as I am concerned, is the fact that when the amendment was allowed to plead the alternative case, pursuant to which the respondents were claiming a vastly increased amount, Counsel for the appellant neither made an application for an adjournment to meet that case, nor sought leave to cross-examine the respondents' expert witnesses, who advocated demolition and reconstruction, or the author of the Burswood Homes' tender. Accordingly, the case proceeded on the basis of the various expert reports on which there was no cross-examination. I should add that Mr Black made no application to cross-examine two experts, who had furnished reports which did not support demolition and reconstruction.

12 The failure to cross-examine any of the experts was raised by this Court. Pursuant to questions about that and the consequences of failing to do so the letter from the registrar was handed to the Court. Page 2 of that letter contained a number of notes as to how the proceedings were to go forward including that no expert witnesses were to be called unless prior arrangements were made with the trial Judge. On page 3 there was an emphasised note advising practitioners that if it was intended to bring any expert witnesses in the first 25 matters on the running list, the Judge must first be advised. As I have said there is no material before the Court to indicate the position in relation to the November sittings, although the matter proceeded on the assumption to which I referred. However, the simple fact is that if evidence was to be given by way of a report, and it was desired to cross-examine the author, at the very least an application could have been made to the trial Judge for leave to do so.

13 There was no suggestion that the legal representatives for the parties were not aware of the Court's requirements in this regard, nor that the trial Judge would not have allowed witnesses to be called for cross-examination. However, how his Honour would have exercised his discretion is irrelevant as no such application was made to him.

14 The notice of appeal raised nine grounds. The first two asserted that his Honour had failed to consider a defence raised under the Limitation Act. These were not pursued at the hearing. It was not in issue that this defence was abandoned before his Honour. The inclusion in a notice of appeal of grounds asserting a failure by a trial Judge to consider a defence abandoned at the hearing is, in my opinion, totally inappropriate. Grounds 8 and 9 were not pressed.

THE ISSUES ON APPEAL

15 It is not necessary, in my opinion, to consider any matters litigated, other than those I have identified. The first question is whether the respondents were entitled, according to relevant legal principles, to have damages assessed on the basis that the premises be demolished and re-erected, as his Honour found, rather than simply rectified. In his very frank submissions, Mr Margo acknowledged that there was evidence before the trial Judge on which he could have found that this was a proper case for demolition and re-construction. His main submission was, however, that when one viewed the whole of the evidence it was not reasonable for his Honour to come to that conclusion, and that a consideration of it should have led his Honour to the conclusion that damages should have been awarded based on rectification rather than demolition and reconstruction.

16 The parties accepted, correctly in my view, that the relevant legal principles are those stated by the High Court in Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613. In that case there were defective foundations and the trial Judge held that in those circumstances demolition and rebuilding was reasonable and necessary to provide a building in conformity with the contract. With that conclusion the High Court agreed. In their joint judgment, Dixon CJ, Webb and Taylor JJ said, at page 617:

"In the present case, the respondent was entitled to have a building erected upon her land in accordance with the contracts and plans and specifications which formed part of it, and her damage is the loss which she has sustained by the failure of the appellant to perform his obligations to her. This loss cannot be measured by comparing the value of the building which has been erected with the value it would have borne if erected in accordance with the contract; her loss can, prima facie, be measured only by ascertaining the amount required to rectify the defects complained of and so give to her the equivalent of a building on her land which is substantially in accordance with the contract".

17 Their Honours considered that an owner is entitled to the reasonable cost of rectifying the departure or defect so far as that is possible, and that the measure of damages, subject to a qualification, is the difference between the contract price of the work or building contracted for and the cost of making it conform to the contract with certain associated damages.

18 At page 618 they continued:

"But the work necessary to remedy defects in a building and so produce conformity with the plans and specifications may, and frequently will, require the removal or demolition of some part of the structure. And it is obvious that the necessary remedial work may call for the removal or demolition of a more or less substantial part of the building. Indeed - and such was held to be the position in the present case - there may well be cases where the only practicable method of producing conformity with plans and specifications is by demolishing the whole of the building and erecting another in its place. In none of these cases is anything more done than that work which is required to achieve conformity and the cost of the work, whether it be necessary to replace only a small part, or a substantial part, or, indeed, the whole of the building is, subject to the qualification which we have already mentioned and to which we shall refer, together with any appropriate consequential damages, the extent of the building owner's loss".

19 Their Honours nextly stated the qualification:

"The qualification, however, to which this rule is subject is that, not only must the work undertaken be necessary to produce conformity, but that also, it must be a reasonable course to adopt ... We prefer, however, to think that the building owner's right to undertake remedial works at the expense of a builder is not subject to any limit other than is to be found in the expressions "necessary" and "reasonable", for the expression "economic waste" appears to us to go too far and would deny to a building owner the right to demolish a structure which, though satisfactory as a structure of a particular type, is quite different in character from that called for by the contract. Many examples may, of course, be given of remedial work, which though necessary to produce conformity would not constitute a reasonable method of dealing with the situation and in such cases the true measure of the building owner's loss will be the diminution in value, if any, produced by the departure from the plans and specifications or by the defective workmanship or materials. As to what remedial work is both "necessary" and "reasonable" in any particular case is a question of fact. But the question whether demolition and re-erection is a reasonable method of remedying defects does not arise when defective foundations seriously threaten the stability of a house and when the threat can be removed only by such a course. That work, in such circumstances, is obviously reasonable and in our opinion may be undertaken at the expense of the builder".

20 Because of the way in which the parties, and particularly the appellant, chose to conduct the case, his Honour had before him only the reports of four expert engineers, none of whom was required for cross-examination. This Court has, on a number of occasions, remarked on the difficulties a Court confronts when asked to decide matters involving various types of expertise without the benefit of at least the principal expert witnesses being cross-examined.

21 Prima facie if there is no cross-examination of an expert, (and indeed most witnesses), there is no basis for a Judge not to accept the unchallenged evidence. I say "prima facie" because there are circumstances in which evidence in a report may be rejected or subject to criticism or doubt. This may occur where, for example, the report is ex facie illogical or inherently inconsistent; or where it is based on an incorrect or incomplete history; or where the assumptions on which it is founded are not established. However, in the absence of some such matters, there is no rational reason to not accept unchallenged evidence.

22 The reports of the respondents' two experts did not suffer from any of these deficiencies. Each recommended demolition and re-construction. Mr Margo put many submissions to this Court as to why that was an unreasonable response to the problem. However, the matters Mr Margo put by way of submission should, in my opinion, have been put to the witnesses. As a matter of fairness, they should have been given the opportunity of answering criticisms of their views. As experience in conducting litigation frequently shows, cross-examination, far from eroding the expressed views, often strengthens them as the expert explains in more detail the reasoning process.

23 Furthermore, the Court has the opportunity of hearing the expert and making an evaluation of his or her evidence.

24 Another consequence may well flow from the failure to cross-examine. In the present case the appellant did not challenge the respondents' experts views. In such circumstances one may ask why the appellant should have been allowed to call any contrary evidence. The lack of challenge meant, at least prima facie, that the appellant accepted the views propounded. To allow conflicting evidence to be called raised, to some extent, a false issue. However, no objection was taken to the tender of that evidence.

25 The only reasonable inferences to be drawn from the failure of Counsel for the appellant to cross-examine the respondents' experts are that his instructions were that their evidence was probably right; or that a calculated decision (perhaps influenced by the first point) was taken to try to argue the matter without attacking the evidence. In these circumstances, the appellant's claim now for a new trial has no attraction. Either the new trial would be conducted in the same way, in which event, for reasons I shall seek to show, the result should be the same, or the appellant would seek to conduct the new trial in the way in which I think it should have on the first occasion.

26 The remarks I have made about cross-examination apply equally to the failure to cross-examine the author of the Burswood Homes tender.

27 Mr Margo accepted the force of the criticism of the failure to cross-examine. However, he submitted that the same approach was taken by Counsel for the respondents. Undoubtedly there was no attempt by Mr Black to cross-examine those witnesses, but the fact was that in the absence of cross-examination of his witnesses there was no need for him to seek to advance the appellant's case by undertaking cross-examination.

28 I shall now examine the evidence of the experts.

THE EXPERT EVIDENCE

29 The principal expert evidence for the respondents was contained in 3 reports from Mr Hall of Kneebone, Beretta & Hall Pty Ltd dated 10 March 1997, 14 July 1998 and 13 September 2000 and in a report from Mr Gaskell of David Gaskell & Associates dated 29 February 2000.

30 In his report of 10 March 1997 Mr Hall reported on the cracking in the premises and criticised the absence of internal stiffening beams below load bearing walls. He said the purpose of them was to control slab movement in reactive clay soils. He suggested that the appellant be asked what rectification it would carry out and that an investigation of the sub floor soil be conducted by a geo-technical engineer to determine if the ground had reached its optimum moisture level, so that it could be decided if further swelling of the soil would be likely. He also considered an opinion should be sought from the geo-technical engineer as to the work thought necessary to stabilise the foundation soil. He concluded:

"No rectification of the cracks in the plasterboard or floor tiles is recommended until it can be determined that the extent of further movement will be minimal".

31 On 14 July 1998, he wrote that the design did not comply with a certain standard; that levels taken by a surveyor indicated approximately 20mm upheaval along the centre wall, which was also indicated by the extent of cracking; that measured slab thickness at core holes indicated up to 30mm undersize; and that a geo-technical report indicated fill below the slab to have been poorly compacted, although movement in the floor at that stage showed upheaval rather then settlement.

32 He then set out rectification work, which he thought to be appropriate and concluded:

"On completion of under pinning work (full details to follow) the damage caused to the internal frame work and plasterboard lining can be repaired.

A full specification of rectification work is being prepared and will be available in the next few days when a Builder's quotation on the work can be obtained".

33 In his report of 13 September 2000 he referred to an inspection made on 10 August 2000 to reassess the condition of the premises and determine a scope of works for rectification. He considered that generally they were in a similar condition to that noted at the time of his first inspection in February 1997, although he noted certain other relatively minor defects. He summarised the structural defects existing in the house and noted certain changes in position from a survey report. He then set out both structural and non-structural rectification work, at the conclusion of which he stated:

"It should be noted that the structural rectification work recommended is to provide additional support to minimise the extent of further movement where damage to the house has occurred. The extent of further movement due to the uncompacted underfloor filling, the reduced slab thickness from the Engineering design and due to the omission of internal stiffening beams as required by the Australian Standard "Residential Slabs and Footings Code AS2870-1988" cannot be predicted. It is not practical or economically feasible to overcome these built in defects without demolition and reconstruction of the house". (My emphasis)

34 Much time was spent in argument on the appeal as to what Mr Hall meant in the final paragraph of this report and how the need to demolish and re-erect was justified. Mr Margo, naturally enough, placed strong emphasis upon the fact that there had already been detailed consideration of rectification work, which had been priced by a building expert, Mr Plaister, at some $150,000. In these circumstances he asked rhetorically why Mr Hall thought it necessary to demolish and reconstruct. He submitted that having regard to all of his reports the concluding paragraph was neither justified nor could be treated as more than a throw away line. I disagree with these submissions. Mr Hall approached the matter, particularly in his final report, on two bases. First, he recommended that certain work be done to minimise the extent of further movement where damage had occurred. He then moved to future and other problems, which he said could not be predicted. On one reading of this it may have been open to the appellant to submit that the respondents had not discharged the onus of proof. Mr Margo expressly disclaimed any reliance on such a submission. I think, on reflection, this was an appropriate approach because a fair reading of the whole sentence indicated that Mr Hall was of the view that there would be further movement, but that the extent of it could not be predicted. If Mr Hall had not thought there would be further movement then he would not have been concerned with over-coming "these built-in defects". It was his opinion that there were such defects and, whilst he did not use the word "reasonable", his choice of the words "not practical or economically feasible to overcome them" indicate to me, as clearly as may be, that he was saying that without demolition and reconstruction those defects could not be overcome. Thus, it is not unreasonable to conclude that he was saying that the reasonable response to the problem created by the appellant was to demolish and reconstruct.

35 The significance of this portion of his report could not have been overlooked by those representing the appellant. It provided clear support for the respondents' principal case and, while Mr Margo made many submissions that other evidence tended to militate against those conclusions he was left with the almost impossible situation, to which I have referred, that Mr Hall had never been challenged about the views he had expressed. Not only had Mr Hall not been challenged, but no application had been made to the trial Judge to cross-examine him. In these circumstances, it seems to me, that the trial Judge was wholly entitled to give this passage in the report the meaning, which, in my opinion, it bears.

36 Mr Hall's view was borne out in even stronger terms by Mr Gaskell. He had visited the site on two occasions. He came to the conclusion that the work had not been carried out properly for all the reasons he stated and, after giving certain opinions, he continued:

"This case is a litany of faults resulting in what can only be described as a major structural fault in the final construction". (My emphasis)

37 In the penultimate paragraph of his report, he wrote:-

"Because of the nature of the fault of the building, being a foundation support problem which has developed under a major structural internal support wall it would be impractical to attempt to repair the faults and maintain the integrity of the house. As such it is our recommendation that the only practical repair would involve the demolition of the existing dwelling and the reconstruction of the dwelling from the piers up. The existing perimeter piers should not be removed and an engineer engaged to determine the correct design for the foundation support for the new structure".

38 The situation, which confronted his Honour at this point, was that a highly significant part of the building work, namely the slab which was to support the building, had not been built in accordance with the specifications. Its failure had led to cracking and other damage requiring rectification. Mr Hall could not predict what further damage would occur, although it was conceded that he was stating that there would be further damage, and Mr Gaskell regarded the problem as "a major structural fault" calling for the remedy to which he referred.

39 At this point it is appropriate to refer to certain evidence given by Mr Scott on 8 November 2000 at transcript pages 5 & 6. At page 6, in answer to Mr Black, Mr Scott said:

"Q. Well do you agree that it was known to be a clay site and therefore reactive?

A. Yes.

Q. Therefore you considered that it would need either a 130 millimetres thick or an internal stiffening beam?

A. Correct.

Q. And it's correct to say, is it not, that if there is no stiffening beam and if the thickness is reduced the proportion of reduction in the thickness is not the proportion of affectation of the strength of the slab?

A. That's correct.

Q. And the affectation is in general a far greater proportion?

A. That's right. It's generally the square of the number.

Q. So applying that, if the slab were designed to be a 130 and constructed at a 100 the loss of strength of a slab would be something of the order of 65 to 70%?

A. That would be about correct".

40 The evidence supported the view that there was a construction of the order of 100 millimetres, so that, accordingly, there was a substantial loss of strength of the slab. This evidence tends to support that of Messrs Hall and Gaskell. On the other hand, it should be noted, that even without that evidence this had been well established.

41 The solicitors for Mr Scott obtained a report from Mr Wright of Alan L Wright & Associates Pty Ltd. He read various documentation, including Mr Hall's first two reports and Mr Gaskell's report. His principal task was to comment upon the adequacy of the design of Mr Scott. He considered it was adequate. He noted that he had not inspected the site and therefore could not comment on cracking in the walls and ceilings.

42 He concluded the report by referring to that of Mr Gaskell and, in sub paragraph (v), he said:

"The assertion that the house be demolished we consider to be an unsubstantiated and a gross over reaction".

43 Immediately after that observation, he continued:

"Therefore is (sic) conclusion with reference to both engineering reports we believe that there is no evidence that the design doesn't comply with AS2870 and the performance of the slab cannot be determined, as it has not been constructed in accordance with the engineers (sic) drawings".

44 Bearing in mind that Mr Wright had never inspected the premises and that he was prepared to concede that the performance of the slab could not be determined for the reason he gave, his statement that Mr Gaskell's assertion that the house be demolished was both unsubstantiated and a gross over reaction cannot, even in the absence of cross-examination, in my view, be accepted. This unduly inflammatory language, i.e. (v), is not, in my opinion, the language of a dispassionate expert, but rather that of an advocate. It is also, as I have said, contrary, as I read the report, to the very next paragraph. These criticisms lead me to the conclusion that it would not be unreasonable to reject this opinion.

45 The final expert evidence was produced by Mr A W McCarthy of Civil Projects (Aust) Pty Ltd in a report dated 19 October 2000 addressed to the appellant. Mr McCarthy inspected the premises on 15 August 2000 and expressed the view that the damage to the interior was observed as detailed in previous reports by other consultants. He saw no cracking in the brickwork of the external walls, and wrote:

"Since the entire floor slab is built upon filled ground which is, as the geo-technical engineer report states, poorly compacted one would have expected the movements to have been of settlement and consolidation rather than of upheavals. The solutions for corrections have involved various procedures from stabilisation of the sub surface moisture conditions, under pinning and complete demolition of the residence".

46 He suggested various steps to be taken and continued:

"Repair of the residence should not be commenced until all the movements have ceased and stabilised. Once this stabilisation has occurred it is our opinion that under pinning of the slab is not necessary. We do not consider under pinning of the external walls to be necessary as there were no cracks in the brickwork and there are already foundation piers placed under the edge beams of the slabs.

The Kneebone, Beretta & Hall report of 13 September 2000 states that `it is not practical or economically feasible to overcome the built-in defects without demolition and reconstruction of the residence'. The built-in defects are referred to as `uncompacted under floor filling, reduced slab thickness from the engineering design and omission of internal stiffening beams'. It's our opinion that these defects can be overcome by the stabilisation of the moisture content of the sub floor filling and that when this is achieved the subfloor filling will adequately support the 2 storey residence".

47 As the evidence thus stood:

(a) The two experts called by the respondents had expressed the view that the reasonable course was demolition and rebuilding and their reports were not the subject of any substantial criticism;

(b) Mr Wright expressed a contrary view, but in terms I find quite unsatisfactory and upon which I would place no reliance. Mr McCarthy also expressed a contrary view, although in doing so he was clearly of the opinion that no repairs should be commenced until all the movements had ceased and stabilised. He believed they "can be overcome" by the stabilisation of the moisture content of the sub floor filling such as to give adequate support to the residence;

(c) The slab was weakened by 65 to 70 per cent; and

(d) Mr Margo conceded that in these circumstances the evidence permitted his Honour to find that the reasonable method of rectification was by the demolition and reconstruction, notwithstanding his submissions to the contrary.

In my opinion, that concession was properly made. The reports of Messrs Hall and Gaskell were firm and unequivocal . In my opinion, his Honour was entitled to find, as he did, on the basis of this evidence that the respondents had proved that the measure of damages awarded by his Honour was the proper one.

48 Mr McCarthy expressed the opinion that as the slab had not performed to limit the damage to the premises, the obligation to do that was the responsibility of the designing engineer.

49 These various expert reports cried out for cross-examination if the validity of the opinions expressed by the authors were to be challenged. There was none and whilst Mr Margo made the point that neither Mr Wright nor Mr McCarthy was cross-examined, he did not resile from his concession that there was evidence, which supported the view that there should be demolition and reconstruction.

HIS HONOUR'S REASONS

50 His Honour's reasons on the essential issue, namely the correct measure of damages, were brief. However, he was fully aware of the decision in Bellgrove, to which he made quite extensive reference, and he said, on a number of occasions, that it was necessary for the remedial work to be reasonable. In addition to Bellgrove, he referred to the decisions in Rentokil Pty Limited v Channon (1990) 19 NSWLR 417 and Pantalone v Alaouie (1989) 18 NSWLR 119. He then referred to the concluding sentence of Mr Hall's report of 13 September 2000, and continued:

"I find that as a result of the breach of contract that I have found on the part of the defendant, that the measure of damages should be in accordance with that principle and the facts in this case support that that is a course which should be adopted in the assessment of damages payable by the defendant".

He said:

"The property was such that in all the circumstances, to suggest another form of rectification as the defendant did in this case is not consistent either with the principle or with the facts as I have found them."

51 He repeated that the cost of rectification had to be reasonable, but it is to be borne in mind that once his Honour found that there had to be reconstruction there was no cross-examination of the author of the tender from Burswood Homes to seek to suggest, for example, that there could be some salvage of material or to suggest, as Mr Margo submitted at one stage, that the house to be built was different from that it was replacing.

THE SUFFICIENCY OF HIS HONOUR'S REASONS

52 The second matter for consideration is whether his Honour gave sufficient reasons to justify the conclusion to which he came. The necessity for adequate reasons has been discussed in many well known authorities most of which are gathered in Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430. It is unnecessary, for the purposes of this judgment, that the principles be repeated at any length.

53 The extent and content of reasons will depend upon the particular case under consideration and the matters in issue. The present case was not one in which his Honour had to deal with conflicting oral evidence, which would make his evaluation and assessment of it appropriate and relevant. Rather, as I have pointed out on a number of occasions, on the critical issue he was left with four reports. In addition, of course, he had before him the concession that the contract specifications had not been met, that the premises were suffering damage and that the slab was greatly weakened. The failure to meet the contract specification was in relation to a critical part of the premises, namely their foundation.

54 The matter was obviously presented to his Honour as one in which it was for him to determine which view of the experts he would accept. In this Court, it was conceded that it was open to him to accept that propounded by Messrs Hall and Gaskell. His Honour did accept the view put forward by Mr Hall expressly and, impliedly therefore, that of Mr Gaskell. It is, I might add, somewhat surprising that his Honour failed to refer to the latter's evidence which, in some respects, was more forceful than that of Mr Hall. However, the inevitable inference is that he also accepted it.

55 In these circumstances, the other inevitable consequence is that his Honour rejected the evidence of Messrs Wright and McCarthy.

56 The problem said to arise is that he failed to articulate why he accepted the evidence of Messrs Hall and Gaskell and rejected the evidence of Messrs Wright and McCarthy.

57 Once the matter is stated in that way, and having regard to the way in which the case was fought before his Honour, the question arises as to what additional matter he could have said, which would have elucidated his reasons. As I have said, there was no issue in which he was placed in a better position to evaluate their evidence as a result of their giving viva voce evidence.

58 His Honour could have said that he accepted the unchallenged evidence of Messrs Hall and Gaskell and that the conclusion to which they came was, in his opinion, consistent with the appellant's contractual breach and the damage which manifested itself. However, had he done so he would not have added to the material, which was essentially uncontradicted at an evidentiary level, to which I have referred.

59 At RAB, p 39 his Honour, having referred to the breach of contract by the appellant found:

"That the measure of damages should be in accordance with that principle and the facts in this case support that that is a course which should be adopted in the assessment of damages payable by the defendant".

Shortly thereafter, he continued:

"The property was such that in all the circumstances, to suggest another form of rectification as the defendant did in this case is not consistent either with principle or with the facts as I have found them".

60 In relation to the actual amount his Honour relied, as he was clearly entitled to do, on the tender from Burswood Homes and at RAB p 40 found that the only conclusion to which he could reasonably come, "in the absence of evidence to the contrary," was that that amount claimed by the respondents should be allowed.

61 Whilst there were obviously further matters to which his Honour could have referred, many of them were not in issue. For example it is clear to everyone that none of the experts were cross-examined. Whilst many Judges may have referred to that and the consequences flowing from it, it can hardly be said that in the circumstances of this case the failure to use those words indicated a lack of reasons. All that having been said, it is difficult to see, in the circumstances in which this case was conducted, what more his Honour could have said in favouring the view to which he came than he did. Certainly he exposed a sufficient reasoning process as to his conclusion that the respondents were entitled to the damages he awarded them. Therefore, the appellant was not deprived of any ability to conduct a proper appeal, nor was any such submission made, although it was said that his Honour's failure to give more detailed reasons left the appellant with some sense of grievance. On the facts of this case and having regard to the way it was presented to his Honour, I am not satisfied that any such feeling is justified.

62 Accordingly, on the particular facts of this case I consider that his Honour gave sufficient reasons. As Samuels JA said in Mifsud v Campbell (1990) 21 NSWLR 75 at page 728:

"Similarly, in my opinion, it is an incident of judicial duty for

the judge to consider all the evidence in the case. It is

plainly unnecessary for a Judge to refer to all the evidence

led in the proceedings or to indicate which of it is accepted

or rejected. The extent of the duty to record the evidence given and the findings made depend, as the duty to give reasons does, upon the circumstances of the individual case".

ORDERS PROPOSED

63 In my opinion the appeal should be dismissed with costs.

******

LAST UPDATED: 17/10/2001