ADELAIDE MARBLE SPECIALISTS PTY LTD v JITENDRA RAGUNATH [2024] SASCA 23

On Appeal from SUPREME COURT OF SOUTH AUSTRALIA (THE HONOURABLE JUSTICE KIMBER) CIV-22-005464 Appellant: ADELAIDE MARBLE SPECIALISTS PTY LTD Counsel: MR N FLOREANI KC - Solicitor: FBR LAW Respondent: JITENDRA RAGUNATH Counsel: MR C MUNT - Solicitor: LYNCH MEYER Second Respondent: MELANIE CARRAILL Counsel: MR C MUNT - Solicitor: LYNCH MEYER Hearing Date/s: 08/03/2024 File No/s: CIV-23-012099 B SUPREME COURT OF SOUTH AUSTRALIA (Court of Appeal: Civil) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment. The onus remains on any person using material in the judgment to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court in which it was generated. ADELAIDE MARBLE SPECIALISTS PTY LTD v RAGUNATH [2024] SASCA 23 Judgment of the Court of Appeal (ex tempore) (The Honourable Chief Justice Kourakis, the Honourable Justice Doyle and the Honourable Justice Bleby) 8 March 2024 APPEAL AND NEW TRIAL - PROCEDURE - SOUTH AUSTRALIA - WHEN APPEAL LIES - FROM SUPREME COURT - BY LEAVE OF COURT - GENERALLY DAMAGES - ASSESSMENT OF DAMAGES IN ACTIONS FOR BREACH OF CONTRACT - PROOF AND EVIDENCE CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - PERFORMANCE OF WORK - REMEDIES FOR BREACH OF CONTRACT - DAMAGES The appellant seeks leave to appeal from a decision of a single judge of the Supreme Court in which an appeal from a judgment of a Magistrate was dismissed. The respondents retained the appellant builder to carry out residential building work. Disputes arose and the respondents issued proceedings in the Magistrates Court seeking damages slightly in excess of $20,000 for what they claimed was defective and incomplete work. After the Magistrate had indicated an intention to enter judgment in favour of the respondents, he invited further submissions in relation to an aspect of the damages relating to the cost of replacement splashbacks, and ultimately included an amount of approximately $6,000 for this item in a total judgment of $15,230 (plus interest). The appellant appealed to a single judge of the Supreme Court, contending that the Magistrate erred in finding that the respondent had proved the reasonable cost of replacing the splashbacks and hence by increasing the damages. The single judge dismissed all grounds of appeal. -- 1 of 7 -- The appellant seeks leave to appeal to contend that the Magistrate and single judge erred in finding that the respondents had proved the reasonable cost of replacing the splashbacks. Held, per Doyle JA (Kourakis CJ and Bleby JA agreeing), dismissing the application for leave to appeal: 1. In circumstances where there is no obvious merit in the proposed appeal, the appeal does not raise any issue of general principle or importance, the time and costs associated with the proceedings are out of proportion to the issues at stake, and leaving the judgment below to stand would not occasion any substantial injustice, the interests of justice do not support a grant of leave to appeal. Adelaide Marble Specialists Pty Ltd v Ragunath [2023] SASC 139; Southern Wire Pty Ltd v Clover Communications Pty Ltd [2023] SASCA 18, considered. -- 2 of 7 -- ADELAIDE MARBLE SPECIALISTS PTY LTD v RAGUNATH & ANOR [2024] SASCA 23 Court of Appeal – Civil: Kourakis CJ, Doyle and Bleby JJA 1 KOURAKIS CJ: I agree with the reasons of Doyle JA, and agree that the application for leave to appeal should be dismissed. 2 DOYLE JA: This is an application for leave to appeal. 3 The respondent owners retained the applicant builder to carry out some residential building work. Disputes arose and the owners issued proceedings in the Magistrates Court seeking damages of slightly in excess of $20,000 for what they claimed was defective and incomplete work. 4 The trial lasted eight days, with the Magistrate observing in his reasons: All issues were minutely canvassed and the matter was vigorously prosecuted and defended. A great deal of effort went into the evidence produced and the tender bundle. Neither party blinked. Both sides were entrenched. Each had numerous witnesses to call and all issues were traversed in detail. 5 In lengthy reasons, which canvassed the parties’ evidence and arguments in detail, the Magistrate largely accepted the owners’ case. He indicated his intention to enter judgment for the owners in the amount of $16,745, but because there was some uncertainty about the owners’ claim in relation to some splashbacks which had not been supplied or installed by the builder, he gave the parties “an opportunity to agree or make submissions on the evidence as to the cost of the splashbacks”. The owners’ claim had been predicated upon a contract to supply carrara marble splashbacks, albeit that the owner had in fact ended up purchasing superior quality arabescato splashbacks from a third party supplier (Adelaide Architectural Joinery Pty Ltd (AAJ)). 6 The parties made further submissions, which included a submission by the builder that the contract between the parties had been varied to supply superior quality arabescato marble splashbacks. In a second judgment, the Magistrate accepted that the contract had been varied as the builder claimed, and after some calculations predicated upon the varied contract sum, arrived at a figure for damages of $9,655. 7 In a yet further round of submissions, the owners submitted that, having accepted a varied contract to supply arabescato splashbacks, the Magistrate had failed to include an amount reflecting the cost of purchasing the replacement arabescato splashbacks. Because the owners had originally been claiming the cost of carrara splashbacks, they had not led evidence of the cost of the arabescato splashbacks they in fact purchased from AAJ. They now sought to rely instead upon the figure the builder had quoted for these splashbacks in the varied contract (being $10,450). -- 3 of 7 -- [2024] SASCA 23 Doyle JA 2 8 The builder argued that the owners had not pleaded or proved a claim based on the cost of obtaining replacement arabescato splashbacks, and that absent proof of what they had in fact paid for the arabescato splashbacks, the Magistrate could not make a finding as to the reasonable replacement cost for those splashbacks. 9 Whilst accepting that they had not set out to plead or prove a claim based upon the cost of the arabescato splashbacks, the owners sought to answer the builder’s complaint by pointing out that it was only after the first judgment that the builder had asserted a variation to supply arabescato splashbacks. 10 The Magistrate accepted the owners’ submissions and, after some calculations using the figure of $10,450, ultimately increased the damages by about $6,000 on account of the cost of obtaining arabescato splashbacks. For reasons set out in a third judgment, the Magistrate entered judgment for $15,230 plus interest fixed in the amount of $1,770. 11 On the issue of costs, the owners had offered to consent to judgment for $15,000 inclusive of interest. The Magistrate ordered that the unsuccessful builder pay the owners’ costs on a party/party basis until 14 days after the offer had been made, and thereafter on a solicitor client basis. In the course of his costs reasons, the Magistrate mentioned his concerns about the costs that had been incurred given the relatively small claim, and the length of the trial, but said that “all parties had their eyes wide open when they went into this dispute … and trial”. He later described the proceedings as “a saga which ought never to have come to trial”, but that “the parties knew where they were going, engaged experienced solicitors … and engaged experienced counsel to deal with the problems that were going to arise.” 12 The builder appealed to a single judge of this Court on various grounds. These grounds included a complaint that the Magistrate erred in finding that the owners had proved the reasonable cost of replacing the arabescato splashbacks and hence by increasing the damages by about $6,000 on this account. 13 The single judge dismissed all grounds of appeal, including the complaint just mentioned. After explaining the context in which the issue of proof arose, the single judge held:1 It must be accepted that there are considerations which weigh against the plaintiffs having discharged the onus upon them. There is good reason to conclude the cost of Arabescato marble was known to the plaintiffs and was amenable to precise proof. I proceed on the basis those things are so. At the same time, the way the matter proceeded below must not be overlooked. The failure to lead evidence at trial is explained by the plaintiffs having installed more expensive marble than that which was to be provided under the contract which they pleaded. As the plaintiffs consistently submitted, they could not claim the cost of more expensive marble than that which they said was to be supplied under the contact which they 1 Adelaide Marble Specialists Pty Ltd v Ragunath [2023] SASC 139 at [32]-[36]. -- 4 of 7 -- [2024] SASCA 23 Doyle JA 3 pleaded. At trial, the cost of Arabescato marble was irrelevant as it had never been provided. In that circumstance, the most appropriate measure of loss was the cost the subject of the contract pleaded. The best, and indeed only, evidence of that cost was the quoted cost of Carrara marble. The leave given in the first judgment was to make submissions ‘on the evidence’ given at trial. The issue of the cost of the Arabescato marble only became relevant for the first time after the second judgment. Until that judgment, there was no varied contract and the only measure of damages for the splashbacks was the price quoted for the marble not supplied (i.e. – Carrara marble). It was only after the contract was found to be varied in the second judgment that the cost of the Arabescato marble had any relevance. At that point, it can be accepted that the best evidence was the actual cost paid by the plaintiffs for Arabescato marble. However, by that point the trial had been concluded for more than 12 months and, as set out above, the leave given in the first judgment had been to make submissions ‘on the evidence’. Those things being so, the only evidence was the quoted cost under what was, only following the second judgment, a varied contract. It cannot be said the defendant was taken by surprise. The plaintiffs’ case had always been the measure of damages was the quoted cost. There is no suggestion the Arabescato marble was not installed. Further, the cost used to measure damages was that quoted by the defendant. The defendant cannot claim that quote was not a reasonable one. In the particular circumstances of this case, the quoted cost of Arabescato marble as provided by the defendant provided a proper basis to assess the cost of that aspect of the damages under the varied contract. For the above reasons, in the particular circumstances of this case, the defendant has not established the learned Master erred in the approach he took. 14 The builder now seeks leave to appeal to this Court to challenge the Magistrate’s finding the owners had proved the cost of obtaining replacement arabescato splashbacks. The builder argues that the Magistrate (and single judge) erred in accepting that reliance upon the builder’s quote for the arabescato splashbacks was sufficient in circumstances where the owners had not adduced evidence of what they had in fact paid AAJ for those splashbacks. The builder also argues that the Magistrate (and single judge) erred in approaching the matter on the basis that the late emergence of the issue relating to the cost of the arabescato splashbacks was occasioned by the builder’s late decision to argue there was a variation to the contract, as opposed to the owners’ failure to plead and seek to prove a case in relation to the arabescato splashbacks from the outset. 15 The builder requires leave to appeal because this is a second appeal, being an appeal from the single judge’s decision on appeal from the Magistrate. 16 The owners oppose leave to appeal. They have also filed a notice of alternative contention raising several alternative methods of approaching the issue of damages and hence sustaining the Magistrate’s award of damages. 17 In deciding whether to grant leave to appeal, the Court acts in the interests of justice and by reference to three inter-related questions: whether the decision is attended by sufficient doubt to warrant its reconsideration on appeal; whether the -- 5 of 7 -- [2024] SASCA 23 Doyle JA 4 decision raises an issue of principle or general importance; and whether allowing the decision to stand would work a substantial injustice to the applicant. 18 As to the merits of the appeal, it is difficult to say much about the merits of the matter without getting into the detail of the proceedings below. However, having read the reasons of the Magistrate and single judge, and the parties’ submissions before this Court, the appeal does not appear to be a strong one. There is no obvious error in the reasoning of the Magistrate or the single judge. There is no obvious difficulty in the Magistrate’s reliance upon the fact that the issue of the replacement cost of the arabescato splashbacks only arose late in the course of the proceedings by reason of the builder’s decision to allege a variation to the contract which represented a departure from the premise upon which the case was pleaded and the trial was conducted. While it may be accepted that the appeal is bona fide and may have some merit, it does not have obvious or strong prospects of success. It is, at best, arguable. 19 Significantly in the context of an application for leave to bring a second appeal, the appeal does not raise any issue of general principle or importance. The principles governing the sufficiency of proof on issues of damages are well settled, and are not in dispute. The dispute in the present matter relates only to their application to the particular circumstances of the present case. As explained, these circumstances include the way in which the proceedings were conducted. 20 It may be accepted that success on appeal might have significant financial consequences. However, that would only be if the success on the appeal resulted in the costs order below being varied in some significant way. This consideration does not weigh heavily in considering whether there would be substantial injustice were the builder to be refused leave to appeal. 21 It is also relevant in this context that the Magistrate based the relevant component of his damages assessment on a figure taken from a quote provided by the builder. It is difficult to attach much weight to the builder’s complaint of injustice when it is predicated upon a challenge to the reasonableness of its own quoted price. The builder does not point to any evidence suggesting that the price was unreasonable. 22 Perhaps most significantly, the interests of proportionality and finality weigh heavily in this matter. The time and expense associated with these proceedings have already far exceeded the amounts at stake. As the Magistrate observed, the parties have both been represented throughout, and have contested every point. They have had the benefit of the thorough consideration and reasons of the Magistrate and single judge. 23 In circumstances where there is no obvious merit in the proposed appeal, it does not raise any issue of general principle or importance, leaving the judgment below to stand would not occasion any substantial injustice, and the time and costs -- 6 of 7 -- [2024] SASCA 23 Doyle JA 5 associated with the proceedings are already out of proportion to the issues at stake, the interests of justice do not favour a grant of leave to appeal.2 24 I would dismiss the application for leave to appeal. 25 BLEBY JA: I agree. 2 See, for example, the similar conclusion reached in Southern Wire Pty Ltd v Clover Communications Pty Ltd [2023] SASCA 18 at [60] (Livesey P and Bleby JA). -- 7 of 7 --