Bigby v Kondra & Anor [2017] QSC 37

SUPREME COURT OF QUEENSLAND CITATION: Bigby v Kondra & Anor [2017] QSC 37 PARTIES: GRAHAM CHARLES BIGBY and LYNETTE GWENDOLINE BIGBY (plaintiffs) v DANIEL JOHN KONDRA (first defendant) and ZURICH AUSTRALIAN INSURANCE LIMITED (second defendant) FILE NO: 7798 of 2013 DIVISION: Trial Division PROCEEDING: Trial ORIGINATING COURT: Supreme Court of Queensland at Brisbane DELIVERED ON: 14 March 2017 DELIVERED AT: Brisbane HEARING DATE: 18, 19, 20, 21 and 22 April 2016 JUDGE: Daubney J ORDER: 1. Judgment for the plaintiffs against the first defendant in the sum of $1,822,490.43 (inclusive of interest to date). 2. A declaration that the second defendant is liable to indemnify the first defendant for its liability to the plaintiffs in respect of that judgment. 3. I will hear the parties as to costs. CATCHWORDS: TORTS – NEGLIGENCE – PROFESSIONS AND TRADES – BUILDERS – ESSENTIALS OF ACTION FOR NEGLIGENCE – DUTY OF CARE – REASONABLE FORESEEABILITY OF DAMAGE – GENERALLY – Where the plaintiffs’ house suffered damage through improperly installed windows producing internal pressure – where the windows were not adequately secured for weather conditions which occurred – where the windows were installed by a third party – where there was a contractual duty on the first defendant to supervise construction of the house – whether the first defendant failed to adequately supervise the construction of the house – whether the first defendant’s duty to supervise could be satisfied by reliance on the third party contractor -- 1 of 43 -- 2 INSURANCE – GENERALLY – THE POLICY – CONDITIONS, WARRANTIES AND EXCEPTIONS – EXCLUSION CLAUSES – where the first defendant held a policy of insurance with the second defendant – where the first defendant assigned rights to indemnity under the policy to the plaintiffs – whether the plaintiffs’ house was an occurrence in connection with the first defendant’s business – whether the damage to the plaintiffs’ house was a the product of the first defendant Civil Liability Act 2003 Domestic Building Contracts Act 2000 Arrow International Limited v QBE Insurance (International) Limited [2009] 3 NZLR 650 Aspen Insurance UK Limited v Adana Construction Limited [2015] EWCA Civ 176 DellaVedova v HIH Casualty & General Insurance Limited (1997) 9 ANZ Ins Cases 61-383 Florida Hotels Pty Ltd v Mayo (1965) 113 CLR 588 GIO General Limited v Newcastle City Council (1996) 38 NSWLR 558 Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 March v E & M H Stramare Pty Ltd (1990-1991) 171 CLR 506 Mulligan v Coffs Harbour City Council (2005) 223 CLR 486 Road & Traffic Authority (NSW) v Dederer (2007) 234 CLR 330 Wyong Shire Council v Shirt (1980) 146 CLR 40 COUNSEL: S.S.W. Couper QC for the plaintiffs M. Callanan for the first defendant R. Cavanagh SC with D. Williams for the second defendant SOLICITORS: Carter Newell for the plaintiffs McInnes Wilson for the first defendant Landers & Rogers for the second defendant Introduction [1] On the afternoon of 16 November 2008, a severe storm hit the western suburbs of Brisbane. The house then owned by the plaintiffs at 55 Kimruska Place, The Gap, was badly damaged. The house had been built for the plaintiffs in 2003-2004 by the first defendant, who was a registered builder. [2] The plaintiffs sued the first defendant, seeking damages for the loss and damage they suffered by reason of the damage to the house. The quantum of the plaintiffs’ claims (principally being the costs of reconstruction and the value of lost contents) has been agreed. Liability remains in issue. -- 2 of 43 -- 3 [3] Any cause of action the plaintiffs may have had against the first defendant was statute- barred. Accordingly, the plaintiffs’ sole remaining cause of action against the first defendant was in negligence. [4] The first defendant held “Business Insurance” with the second defendant. In December 2008, the first defendant made a claim under that policy for indemnity in respect of any liability he might have to pay compensation to the plaintiffs for the damage they suffered. Some six years later, the second defendant denied any obligation to indemnify the first defendant. In May 2015, the first defendant assigned his rights to indemnity under the insurance policy to the plaintiffs, and the second defendant was subsequently given notice of that assignment. [5] Accordingly, in this proceeding the plaintiffs also seek a declaration that the second defendant is obliged to indemnify the first defendant in respect of the first defendant’s liability to the plaintiffs. Retainer of the first defendant [6] On 25 October 2003, the plaintiffs and the first defendant signed an “Owner/Contractor Agreement”. Clause 1 of that agreement relevantly provided: “1. The contractor accepts the relationship of trust and confidence established between his company and the owner by this agreement. He covenants with the owner to furnish his best skill and judgment in furthering the interest of the owner. He agrees to furnish efficient business administration and supervision and to use his best efforts to furnish at all times an adequate supply of work as in materials, and to perform the work in a most expeditious, economical and workmanlike manner.” [7] This agreement went on to provide for works to commence on 1 November 2003, and for the first defendant to use his best efforts to complete the work by 1 June 2004. [8] By cl 4, the plaintiffs agreed “in consideration of the performance of the contract … to pay [the first defendant] as compensation for his services a contractor’s fee …”. That fee was then specified to include “$40/hour for builder as a supervisor/co- ordinator/tradesman …”. [9] Clause 6 provided, inter alia, that “[a]ll portions of the work that the contractor’s employees cannot perform directly shall be performed under subcontracts”. [10] By cl 14, the first defendant was required to deliver weekly statements to the plaintiffs “showing in complete detail all costs incurred by his company in the execution of this contract for the preceding week as set out in typical ‘progress payment statement’, and the plaintiffs were required to review and pay on such statements within three days. [11] Clause 16 of the agreement provided: “16. The contractor hereby agrees to hold the owner harmless and to indemnify the owner against any and all claims which may arise during the course of the work as a consequence of the negligent acts or deliberate omissions of the contractor, its agents or employees.” -- 3 of 43 -- 4 [12] The plaintiffs and the first defendant also, on 6 November 2003, executed an agreement in then standard form prescribed by the Queensland Building Services Authority (“QBSA”) for domestic building contracts, incorporating the general conditions of building contract issued by the QBSA in November 2002. This agreement specified that the price to be paid by the plaintiffs to the first defendant for the construction of the house was $460,000, payable by nominated instalments. This agreement also specified the architectural and engineering drawings for the construction, and required that the first defendant build the house in compliance with, inter alia, the Domestic Building Contracts Act 2000 (“DBCA”) and “in an appropriate and skilful way and with reasonable care and skill”. [13] As this project was the construction of a detached dwelling, it was “domestic building work” under s 8(1) of the DBCA. Section 7(1) provided: “A ‘domestic building contract’ is a contract – (a) to carry out domestic building work; or (b) to manage the carrying out of domestic building work.” [14] Schedule 2 to the DBCA contained the following definitions: “‘building contractor’ means a person who – (a) carries out domestic building work; or (b) manages the carrying out of domestic building work; or (c) has carried out, or managed the carrying out of, domestic building work; or (d) intends to carry out, or to manage the carrying out of, domestic building work. … ‘manage’, the carrying out of domestic building work, includes provide supervisory, advisory or administrative services for carrying out the work. … ‘subject work’, for a domestic building contract, means – (a) the domestic building work carried out, being carried out or to be carried out under the contract; or (b) the domestic building work the carrying out of which has been, is being or is to be managed under the contract.” [15] It is clear that the first defendant was a “building contractor” under the DBCA and that, apart from building, he had agreed to provide supervisory services, i.e. to “manage” within the meaning of that term in the DBCA. This was included within the “subject work” he agreed to perform. The first defendant was, therefore, subject to the statutory warranty imposed by s 44 of the DBCA: “44. The building contractor warrants the subject work will be carried out – (a) in an appropriate and skilful way; and (b) with reasonable care and skill.” -- 4 of 43 -- 5 [16] The “progress payment statements” submitted by the first defendant to the plaintiffs1 reveal that he charged the plaintiffs for rendering the services of “builder/supervisor/carpenter”. The house and the damage done [17] Construction of the house was completed in August 2004. It was a double storey masonry veneer structure with a metal roof, upper timber floor and lower concrete slab on ground floor. It was located near the top of a hill, and had extensive views looking to the south.2 [18] As viewed from the front (i.e. the southern aspect), the house comprised two wings which were joined by a roughly triangular bridge. On the upper level, the western wing contained two bedrooms, a study and a bathroom. The eastern wing contained the lounge, the dining room and the master bedroom at the front, moving through to the kitchen and a family room. [19] A copy of Exhibit 2, which is the plan of the upper level, is annexed to this judgment. That plan also enumerates the windows in the upper level. Each of the lounge and dining room featured large picture windows (W2.21 and W2.18 respectively) which were projected about 600 millimetres beyond the normal wall line. The sides of each of these projections was also a narrow window, resulting in a window box effect. For convenience, I will adopt the convention of referring to the windows simply by their plan numbers. [20] An expert engineer, Mr Brett Mills, inspected the site in the aftermath of the storm on five occasions between 17 November and 22 December 2008. In his report dated 1 November 2010,3 Mr Mills described the storm damage to the house as including: “i. Roof to the upper level lounge, dining, bedroom one, ensuite, walk in robe, laundry, kitchen, family room and deck removed; ii. External walls and windows to the upper level lounge (W2.20, W2.21, W2.22), dining ((W2.17, W2.18, W2.19), bedroom one (W2.15, W2.16), ensuite (W2.13, W2.14) removed; iii. Windows to upper level deck/bridge (W.2.26), study (W2.27), bedroom two (W2.18), bedroom 3 (W2.01) blown in or sucked out of their jambs. Windows (W2.27) glass unbroken but blown in off jambs. iv. Lower level entry doors and sidelights hail marked but windows not smashed by any wind blown debris. v. Lower level window to rumpus W1.12 glass mostly unbroken but blown inwards off its jamb. vi. Lower level garage door remained intact (unknown if garage door was open or closed during storm). vii. Collapsed ceiling to lower level rumpus, lounge, kitchen, bath, guest room and terrace.” 1 Exhibit 1. 2 This description derived from Exhibit 5, report of Brett Mills dated 1 November 2010, paras 6(a) and (b). 3 Exhibit 5. -- 5 of 43 -- 6 [21] In a report dated 28 July 2014, the expert engineer called by the defendants, Mr Eric Fox, described the house failure as follows: “1. The principal failure mechanism was an ‘explosive’ over-pressurisation of the east wing of the upper level, in which the south side of the roof over the Lounge and Dining areas and Bedroom 1 ‘peeled away’ towards the north, and then the roof itself was torn from the supports along the north edge, over the Family area. At the same time the internal pressure caused failure of the remaining external walls and roof in the east wing, including the Bedroom 1 area. 2. The most likely cause of the failure was inadequate strength of the lateral support at the tops of windows W2.18 and W2.21. The inadequate strength was probably due to a combination of insufficient connection between the window frames to the soffit framing (for example the failure to utilise the fixing blocks at all connections), and inadequate connection between the soffit framing and the external wall lintels.” [22] The expert engineer called at trial by the plaintiffs, Mr Stephane Rebibou, effectively adopted Mr Mills’ description of the damage done to the house. [23] There was no issue that the house was extensively damaged, and so much was apparent from the many photographs included in the experts’ reports and the photographs taken on site by the loss adjuster, Mr McCosker, who also gave evidence before me. [24] A report dated 31 October 2014 by Dr John Holmes, who has particular engineering expertise in relation to wind loads and wind effects, was admitted by consent. Dr Holmes summarised the conclusions from his investigations as follows: “In summary, I conclude that:  The site in question at 55 Kimruska Place, The Gap, should properly have been classified as N4 according to Australian Standard AS 4055-1992. That classification is based on the design gust speed of 61 m/s (220 km/hour). A misclassification as N3 corresponds to a design wind speed of 50 m/s and calculated wind loads 32% lower.  Although it is not a legal requirement of the Building Code, for a high-value house in an exposed location like this, a structural engineer could have used AS/NZS 1170.2:2002, instead of AS 4055, to determine the wind loads. However, according to my interpretation of AS/NZS 1170.2, the design gust wind speed at the height of the house would have been 60.7 m/s, nearly identical to the 61 m/s corresponding to the N4 classification in AS 4055. On the other hand, use of AS/NZS 1170.2 could have led to a more realistic assessment of internal pressures – a major contributor to the structural failure of this house.  Based on the limited evidence available, I believe the maximum 0.2-second gust at the site during the event on 16th November 2008 was between 48 and 60 m/s (173 to 216km/h), with a best estimate of 54 m/s. That is, it was below the nominal design wind speed for cladding loads obtained from both AS 4055 and AS/NZS 1170.2. The wind direction producing this gust was south-southeast.  I believe that the window failures on the south wall, and the resulting failure of the roof of the east wing, would most likely have occurred before the peak of the storm, i.e. at a gust wind speed below 50 m/s. -- 6 of 43 -- 7  Thus, failure of the structure was most likely initiated at a wind gust speed below the nominal 50 m/s gust speed of the N3 classification. This was a result of inadequate support of the window framing to the house structure. The window failures on the windward (southern) wall resulted in high positive internal pressures, which the structure of the building was not capable of withstanding.  It should be noted that none of the ‘N’ categories in AS 4055 allow for high internal pressures produced by large dominant openings in the walls, in contrast to the ‘C’ (cyclonic) categories in that standard, which do allow for the likelihood of large openings being produced by direct wind pressure or flying debris.  There may well have been an ‘overshoot’ in internal pressure produced by the sudden failure of a window on the windward wall of the building. This could have produce (sic) an increase of up to 50% in the internal pressure above that specified by AS/NZS 1170.2, for a short period, and contributed significantly to the resulting roof and wall failure of the building.” The windows as installed [25] The aluminium-framed window units for the house were supplied by Gateway Aluminium (Qld) Pty Ltd (“Gateway”). It was not in issue that the male plaintiff, Mr Bigby, ordered the window units directly from Gateway and paid for them. Nor was it suggested that there was any contractual relationship between the first defendant and Gateway. [26] Installation of these window units essentially involved a two stage process. First, each unit had an external aluminium frame (or “fixing”) which needed to be affixed in the respective window cavity in the building frame. Fixing blocks (or fixing plates) were spaced (or should have been spaced) along each limb of the fixing frame. Proper installation of the fixing frame required that it be attached to the surrounding wooden frame by screws through the fixing plates. Secondly, a window frame itself was clipped into its respective fixing frame. Once the window frames themselves were clipped into place, it was not possible to remove them without damaging the whole unit. One of the consequences of this was that, once a window frame was clipped into place, it was not possible to see whether or not the fixing frame itself had been properly installed with screws through the fixing plates. [27] It was not in issue that all of the windows in the house, except W2.17 – W2.22 (i.e. the box windowed features in the lounge and dining room) were installed by the first defendant. The first defendant said that W2.17 – W2.22 had been installed by a Gateway installer. [28] What was beyond doubt was that none of the window units had been properly installed. So, for example, Mr Mills’ report contains photos of the fixing frame of W2.18 clearly showing that it had been screwed directly to the surrounding wooden frame without using the fixing blocks or plates. The photos also amply demonstrate the holes left where the screw heads simply pulled through the aluminium fixing frame because fixing plates had not been used. Mr Mills pointed to other examples of the aluminium fixing frames only being attached to surrounding jambs with a couple of nails. -- 7 of 43 -- 8 [29] The consequences of this inadequate installation were graphically demonstrated in this case in which, during the storm, a strong southerly wind assaulted the front of the house. The window units suffered “lateral deflection”, i.e. they were literally pushed in by the wind. [30] As a consequence of a pre-trial conclave, Mr Fox and Mr Rebibou recorded in a joint report their agreement on a number of matters including: 1. Failure initiation was the inwards collapse of windows on the windward (southern side) of the east wing at the upper level floor and the rest followed from that; 2. The windows were not adequately secured for either N3 or N4 conditions; 3. There was no evidence that the windows themselves failed; rather, failure was due to installation; 4. The windows certainly installed by the first defendant (i.e. those other than W2.17 – W2.22) were inadequately fastened; 5. W2.17 – W2.22 were also inadequately installed. The window structures [31] A point of contention between the parties was whether I could determine the sequence in which the window structures failed. Counsel for the second defendant urged for a finding, in effect, that W2.18 collapsed inward, leading to the over-pressurisation and W2.21 probably then blew off with everything else. It was said that this made sense because, in the aftermath, the remnants of W2.21 were found in the back yard and W2.18 was found inside the house. The assertion that the failure of W2.18 was the initial and substantial cause of the over-pressurisation, and the drastic consequences which followed, was relevant to the second defendant’s argument on causation. Mr Mills stated his opinion about the “approximate sequence of failure” as follows: “(a) Windows W2.17 to W2.22 blew into the dwelling along with window W2.26. Window W2.08 blew out the rear of the dwelling and W2.28 blew out of the dwelling and around the western corner. Window 2.01 partly blew out of the surrounding frame. During the windows blowing in at the front of the dwelling and out at the rear of the dwelling, the interior was subjected to a high level of internal positive pressure and the roof lifted off and some external walls collapsed.” [32] Apart from having their reports in evidence, I had the benefit of Mr Fox and Mr Rebibou giving their evidence concurrently. This was particularly useful in this case, as it permitted their competing views on a number of topics to be juxtaposed and discussed directly. [33] It is true that Mr Fox expressed a preference for the notion that the sequence involved the initial failure of W2.18. It is equally true, however, that Mr Fox quite properly hedged this expression of preference with what he described as “ifs and buts”. He described his -- 8 of 43 -- 9 preference as having been an “impression” based on his observations, and that it was his “feeling” when he inspected the house.4 [34] Mr Rebibou was not prepared to commit to a particular sequence of failures, saying that it was not possible to identify such a precise sequence in the circumstances of this case. [35] Mr Fox summed up his views as follows:5 “My – my feeling was that the – the – the over-pressurisation event happened due to one window failing, and that the other one probably failed as a result of that, rather than say both failing instantaneously at the same time or – or something like that.” [36] Mr Rebibou was then asked whether he agreed, to which he responded:6 “What I agree with is that – and it seems to me that although, by the sounds of it, it would be good and people want to know exactly the – the – the way this failure occurred, I can’t agree with any of these comments, from the point of view that I think one window may have indeed failed and then led to the failure of other windows etcetera, but it may’ve indeed been two, it may’ve been three, it may’ve been soffits. I don’t think we’re capable of actually piecing the failure together, other than to come up with a general formulation for what happened. I think that’s essentially what I can tell here. It’s saying yeah, could be this window, could be that one; could be two windows, could be three windows. At the moment, the windows may be in other locations because they were still tied in some way to the roof that failed and took the windows with them. So therefore we’re seeing parts of a window in another part of the – of the failure zone, if you will: because it was tied to another element that also failed. I – I don’t think it’s possible to just look at this and say one window failed then caused the failure of the others, and that’s what happened. I – I just don’t think it’s as precise as that. And I wouldn’t want you to think that we’re that good at – at being able to determine this in some precise way. MR CAVANAGH: Well --- MR REBIBOU: I don’t think we can. MR CAVANAGH: Well, what you’re really saying is that – correct me if I’m wrong; but you think there’s a lot of possibilities here, but you’re not really able to say what is likely to have occurred. Is that right? MR REBIBOU: Not in a precise fashion, no. I – I can come up with a number of general – and that’s what I think we’ve done and that’s what we’ve agreed that the general mechanism is for failure; but not that there is a precise one, that this and only this occurred, and because there’s remnants of this window in the kitchen, it means that. For all I know, that – that window frame was held up by some other tie-down – maybe a – a – a [indistinct] galvanised iron strap – to the rest of the frame; as the frame’s collapsed, it’s taken the window with it. And now we’re looking at it in the kitchen, in the swimming pool, but it – actually the roof failed and that’s what took the windows with it. But --- MR CAVANAGH: [indistinct] MR REBIBOU: I just don’t want to be misinterpreted into saying that I know that this is what happened. And at the moment, I don’t think there’s enough to go by to even suggest that there’s a high probability of this or a high probability of that. I 4 T 2-108. 5 T 2-108.22. 6 T 2-108 – 2-109. -- 9 of 43 -- 10 think there is a high probability that the windows failed, certainly on the windward face. And at the moment, the only evidence I have to suggest which windows these were are the comments in the Mills’ report and the comments from Mrs Bigby. And that’s why I keep going back to that: because that’s all that I have. I don’t – the rest could’ve been done in so many other different ways. It – it could’ve occurred – and we would’ve had very similar debris around the property via other methods and means and – and – and – in other words, the – as I described before [indistinct] the windows were connected to other bits. They’re not just in isolation. They are in some way tied down, via straps, via lintels – not very well, obviously, which is why we’re – we’ve identified the main mechanism. But for me to in some way identify one window over another – I just can’t do that.” [37] I then asked Mr Fox whether he wanted to add anything to Mr Rebibou’s commentary, to which he responded that he wanted to repeat his initial comment that “we don’t know for sure”. He continued7: “There’s no smoking gun. There was no – there was no video or something or other that – that showed us the sequence of exactly what happened. All – all I’m saying is that – is I believe these are the most likely scenarios.” [38] It is appropriate also to recount the following further passage of concurrent evidence8: “MR CAVANAGH: And now, on Tuesday, the – I asked some questions about the likely sequence of events. I just want to take you to that. Essentially, at page 106 and following, your Honour. Your Honour, but – I’ll re-put the question. Mr Fox, you identified a sequence of events or initiation sequence for this over-pressurisation that occurred and you identified it as starting with window 18, I think, on Tuesday. Do you remember saying that? MR FOX: Well, yeah, with a few – with a fair few if’s and but’s and things like that in front, yes, yeah. MR CAVANAGH: Could you – I just want to ask the same question again now that we’ve heard all this other evidence about the framing and everything like that. What, in your opinion, is the most likely sequence of events? MR FOX: Well, I still believe the most likely sequence of events is that one of those windows failed laterally. That led to the initial over-pressurisation. It then gets very iffy. The roof lifted, who knows what went after that, but I think that is the most likely sequence of events. MR CAVANAGH: Okay. Now, remember I – do you agree with that, Mr Rebibou? Just to refresh your memory, on Tuesday you said --- MR REBIBOU: I remember --- MR CAVANAGH: --- everything’s possible but you didn’t seem to agree with that proposition, so I’m going to ask you again: do you agree with Mr Fox or not? MR REBIBOU: Not that it’s specifically these two windows. I don’t agree that I can made such a comment. MR CAVANAGH: I see. Now --- MR REBIBOU: I agree that it’s the windows, but as far as being those two specifically --- 7 T 2-109.44. 8 T 4-85 – 4-87. -- 10 of 43 -- 11 MR CAVANAGH: You can’t say. MR REBIBOU: Well, I can’t say and especially the only evidence that I have, as I believe I highlighted on Tuesday, was Mr Mills identifying that following a discussion with Mrs Bigby and then she herself identified at a different window as well. So --- MR CAVANAGH: Now, Mr – thank you, have you finished? Mr Fox, remember on Tuesday I took you to photographs that showed – one seemed to be inside window 18 and the other was found outside. MR FOX: Yes. MR CAVANAGH: And do you – I think you indicated there was some significance about trying to identify which window would’ve gone first, so to speak? Do you remember saying that? MR FOX: Yes, yes. MR CAVANAGH: So is that still your view? That’s it likely to be – if window 18 was found inside, is that likely to be the one that initiated the over-pressure event? MR FOX: Probably, but I emphasise the if’s and but’s that went with that as well, you know. MR CAVANAGH: Yes. As far as you can say. MR FOX: I think that’s the most likely thing, but --- MR CAVANAGH: And Mr Rebibou, you’re still not able to say either way? MR REBIBOU: Definitely. MR CAVANAGH: Okay.” [39] I am unable to accept the propositions about the sequence of failures, as contended for by the second defendant. Mr Fox’s expressions of preference for that sequence were, quite properly, both tentative and qualified. [40] Rather, it seems to me that the proper finding on the evidence of these experts, which I make, is that the three windows at the front of the house (W2.18, W2.21 and W2.26) all failed at about the same time. [41] I note in this regard that Mr Fox accepted as “a probability” that window W2.26 probably blew in at about the same time as the other windows, and that if W2.26 failed at the same time as the others, it was another source of the wind blowing into the house.9 The window frames failed [42] In practical terms, the other important timing issue before me was whether, with the frontal onslaught of the storm, the window frames themselves failed before the wooden framing, thereby being the initial causative failure which led to the “over-pressurisation event” which destroyed much of the house. [43] In Mr Mills’ reports, he repeatedly referred to the front windows “blowing in” and the rear windows” blowing out” – see, for example, his opinion as to the “approximate 9 T 2-102. -- 11 of 43 -- 12 sequence of failure” quoted above at [31]. In his report dated 1 November 2010, Mr Mills also referred to his “examination of [other] upper and lower level windows that had blown in on their frames but still had the glass unbroken”,10 his examination of the fixings of windows to jambs which “revealed no significant fixing was obvious and that only tee nails had been used”,11 and the fact that there “appeared to be no visible fixings of the sill of windows W2.17 to W2.22 to the dining and lounge room, and head fixings were generally only fastened through the aluminium extrusion and not through the fixing blocks provided”.12 [44] Mr Mills said that his examination of the wreckage appeared to confirm “that the principal mode of failure was: (i) windows blew in and roof blow (sic) off from the wind pressure during the storm (ii) some perimeter walls and some leeward windows then blew out.” [45] Mr Mills also specifically expressed the opinion that the builder had failed “to fix the windows to the jambs in a competent, workmanlike manner”.13 [46] I have already referred to the joint report of Mr Fox and Mr Rebibou. In that report, they said: “7. With regard to the windows installed by Kondra, it was clear that, based on site inspections and photographic evidence, these were inadequately fastened. 8. With regard to windows W2.17 to W2.22, the experts remain unclear as to who was responsible for their installation. 9. The experts agree that the evidence we have reviewed included no design details for the installation of these windows. Based on evidence after the failure, the experts agree that these windows were also inadequately installed (for example, screws through the frame were not installed through fixing blocks).” [47] A significant amount of time at the trial and in submissions was directed to another question, namely the adequacy of the wooden framing to which the window units were affixed, and particularly the framing above W2.17 – W2.22. In this regard, for example, and as noted above at [21], Mr Fox had initially opined that the inadequate strength of lateral support at the tops of W2.18 and W2.21 was probably due to a combination of the inadequate connection between the window frames and the soffit framing “and inadequate connection between the soffit framing and the external wall lintels”. Mr Fox, however, effectively resiled from the second element of this equation when he was made aware of what the first defendant said he had actually installed by way of soffit members above these windows (Exhibit 6). This is discussed further below. [48] Be that as it may, what was never in issue was the patent and complete inadequacy of the fastening of the windows’ fixing frames to the surrounding wooden frames. Mr Fox ultimately confirmed that his views about the adequacy of the connection between the 10 Paragraph 8(c). 11 Paragraph 8(d). 12 Paragraph 8(h). 13 Paragraph 10(b). -- 12 of 43 -- 13 soffit and the external wall lintels had changed since the time he wrote his report, and I asked him to clarify his position in the following exchange:14 “HIS HONOUR: So now – just so that I understand it, now, with the benefit of the further information and inquiries you’ve been making, you don’t place any reliance on there being inadequate connection between the soffit framing and the external wall lintels. But is it still your view that the likely cause of the failure was inadequate strength of lateral support at the top of the windows, and that was due – what do you say? To insufficient connection between the window frames and the soffit framing, is that - - - MR FOX: I don’t think the window frame – the aluminium frame was connected strongly enough to the soffit.” [49] For his part, Mr Rebibou had not deviated from the opinion he had expressed even in his first written report that “the most probable failure mechanism here was via a failure of the windows connections which resulted in an “explosive over-pressurisation” of the upper level …”. [50] Importantly, Mr Fox and Mr Rebibou gave the following concurrent evidence about the failure of the window frames themselves:15 “MR CAVANAGH: Bearing in mind that- just taking you to photographs of the missing screws and you both agree the connection between the aluminium window frame and the timber framing was very weak? MR REBIBOU: Correct. I certainly - - - MR CAVANAGH: The connection between the aluminium framing and the floor was seemingly very weak. Is that right? MR FOX: Correct. MR REBIBOU: Uh-huh. MR CAVANAGH: Is - most likely, what occurred here is that the aluminium window frame - the first thing to happen was pushed out of the timber framing? MR FOX: Pushed in. MR CAVANAGH: Do you agree with that? MR FOX: Inwards. Yeah. MR CAVANAGH: Pushed inwards. MR FOX: Yeah. MR CAVANAGH: Yes. Do you agree with that, Mr Rebibou? MR REBIBOU: Yes, I do. I-I think we have to bear in mind, however, that for those two windows, the front ones, I don’t believe they were fixed to timber at the base. MR CAVANAGH: Right. Okay. Well, what - - - MR REBIBOU: I think - - - 14 T 4-95. 15 T 4-87 – 4-88. -- 13 of 43 -- 14 MR CAVANAGH: However they were affixed. So - and once one of those two windows was pushed inwards, sufficient difference in pressure was created to cause that overpressurisation of the wind. MR REBIBOU: Or another window. MR CAVANAGH: Is that right? MR REBIBOU: No. No. MR CAVANAGH: Oh, okay. MR REBIBOU: Another window would’ve resulted in something similar as well. MR CAVANAGH: Another window, then. Okay. But Mr Fox, you say one of those two windows was pushed inwards. Yes? MR FOX: Yes. MR CAVANAGH: And you say, pushed inwards away from the framing? MR FOX: Yes. MR CAVANAGH: It follows, doesn’t it, that the framing has nothing at all to do with the cause of this overpressurisation event, doesn’t it? Because on that evidence, the windows were pushed away from the framing and created the overpressurisation event; is that right? MR FOX: Yes. MR CAVANAGH: Do you agree with that, Mr Rebibou? MR REBIBOU: To an extent, I think it is. Not to the catastrophic result that we might be ending up with.” [51] All of this evidence, and a common sense appreciation of the paucity of the attachment between the window fixing frames and their surrounding wooden frames, lead me to conclude that it was more likely than not that the window fixing frames themselves were the first to separate from the wooden framing with the onset of the storm winds. [52] Accordingly, I find that, regardless of the strength or adequacy of the wooden frames to which they were affixed, the inadequacy of the fixing of the window fixing frames resulted in what I consider to be the initial failure, namely the “blowing in” of the windows at the front of the house. Non-expert witnesses [53] Before turning to the case in negligence, it is necessary to say something about the non- expert witnesses who gave evidence before me. Mr Bigby [54] Mr Bigby gave relatively brief evidence in which he confirmed having ordered the windows directly from Gateway. He said that he personally assisted the first defendant in the installation of W2.28 and W2.27, but did not observe the installation of any other windows. He referred to a discussion with the first defendant, Mr Kondra, about the need to cantilever the floor to support W2.17 – W2.22, but said he had no discussion with the first defendant about who would install the windows. Nor did he have any discussion -- 14 of 43 -- 15 with the first defendant about whether Mr Kondra would supervise the installation of any windows. He said that the first defendant never indicated there was any limitation on what he regarded as being his responsibility for the construction of the house. [55] Mr Bigby described a “big difference” between the W2.17 – W2.22 windows and the other windows in the house, saying that the other windows came “pre-framed”. He said he had no particular discussion with the proprietor of Gateway about the windows – “he was given the plans, and he just – just constructed the windows”.16 [56] In relation to the supply of W2.17 – W2.22, Mr Bigby said that the Gateway proprietor did not contact him with updates, but that he did have conversations with the first defendant about delays in delivery. [57] In further evidence, it was put to Mr Bigby that there had been no conversation with Mr Kondra concerning cantilevering the floor. Mr Bigby disagreed. Mr Bigby also disagreed with the proposition put to him that the first defendant had told him that the first defendant had had a discussion with either an engineer or an architect about fixing the issue. Mrs Bigby [58] Mrs Bigby was inside the house when the storm hit. She described being in the kitchen/family room area when the house “exploded”, saying it “went in a huge bang”.17 She denied having any conversation with the first defendant in which she was supposed to have described to him that she observed W2.18 and W2.21 “wobbling violently in and out”. To the extent that it is necessary, I prefer the evidence of Mrs Bigby on this point, and find that she had no such discussion with Mr Kondra. Mr Brown [59] Warren Brown, now a retired civil engineer, had been the principal of Warren Brown & Associates Pty Ltd, the consulting engineering firm which produced the engineering plans for the construction of the house. Mr Brown was not called to give evidence in an expert capacity. His firm had about 25 on staff. He said that he did not recall having any discussion with the first defendant about any aspect of the construction, and certainly not about how W2.17 – W2.22 should be framed or held in place. [60] Mr Brown identified a number of engineering documents and certificates which bore his signature.18 [61] Under cross-examination, Mr Brown confirmed that he did not speak with the first defendant personally, but agreed that he was unable to say whether any of his employed engineers may have spoken with the first defendant from time to time. [62] In the course of Mr Brown’s evidence, it was clarified that the engineer’s drawings for the house showed 190 millimetre x 350 millimetre lintels above the lounge and dining room window structures. It was not contentious that the presence of these lintels would have adversely impacted on the siting of the picture windows, and the lintels were not 16 T 1-47. 17 T 1-54. 18 Exhibit 4. -- 15 of 43 -- 16 included in the course of construction. Counsel for the plaintiffs made it clear that there was no complaint about the omission of the lintels as such, nor was it suggested that there was a subsequent engineer’s drawing which should have been followed by the first defendant. Mr McCosker [63] Mr Gregory McCosker, a loss adjuster, gave evidence about his observations of the site on the occasions he attended shortly after the storm. He produced a number of photographs. He said that, on his observation, part of the frame of W2.21 was still in the lounge room, but the balance (what he described as the “internal elements”) had travelled through the rear of the house and ended up near the swimming pool at the back. The window frame for W2.18 was in the kitchen, caught on the kitchen sink.19 Mr Kondra [64] The first defendant, Mr Kondra, gave evidence in two tranches. I should say at the outset that, for the reasons which appear below, I did not regard Mr Kondra as a particularly reliable witness, and his evidence needs to be viewed through that prism. [65] Mr Kondra said he had no involvement in the retainer of Gateway for the supply of windows, and that neither of the plaintiffs said anything to him about supervision of Gateway’s work. [66] He confirmed that, apart from W2.17 – W2.22, all of the other windows were prefabricated, and he installed them. [67] He said that W2.17 – W2.22 were not prefabricated. The dimensions were measured on site by a Gateway representative. Mr Kondra said that after the measurements had been taken, he had numerous communications with a Gateway representative to ascertain installation dates. He described being given dates which would “come and go”, and the consequent delays to the project. He said that he eventually spoke with the boss at Gateway, when he voiced his disappointment in the Gateway’s representative. He said that, despite subsequent attempts, he did not again speak with the Gateway boss. He said that he discussed his disappointment in Gateway with Mr Bigby, and that the project was basically stopped for three weeks while waiting for these windows. [68] Mr Kondra said he first saw W2.17 – W2.22 one day when he returned to site after picking up some materials and he saw the window installer packing up. No-one had told him these windows would be arriving that day, and he did not see the frames being put in. He did not know the installer’s name, describing him only as an “elderly gentleman”. He said he inspected the work, saying20: “Well, basically, when I looked at the job everything was straight, plumb, no bows, no obvious errors in actual external part of the frame.” [69] He was unable to tell if the window frame had been attached to the house because “the external part of the frame was all clipped and finished off”. 19 Depicted in photograph 49. 20 T 2-28. -- 16 of 43 -- 17 [70] Mr Kondra gave evidence about discussions he said he had with a representative (whom he could not identify) from Mr Brown’s office, and eventually an on site meeting, concerning the removal of the lintel over W2.17 – W2.22 and said that he was told to “frame it out” and “put blocking in”. He said this is what he did. Mr Kondra then produced a drawing (Exhibit 6), which he had prepared two or three days before he gave evidence before me, and which he said portrayed (in section view) the framing and blocking he installed over W2.17 – W2.22. He said the blocking had to “go in to support the window”, and went between the horizontal eave soffit members21, which in turn were nailed to the roof truss tails by either end nails or skew nails. The blocking went for the entire length of the windows. He said the blocking was to provide a place for the aluminium frames to be screwed into, and also to prevent deflection in the eave soffit member. [71] Under cross-examination, Mr Kondra confirmed that he knew that it was important for the windows to be properly installed so as to be able to resist wind loads. He said that he went to see if the windows were properly installed at the end of the job, but conceded that this was at a time when he could not have told whether or not they had been properly installed. [72] Mr Kondra was cross-examined on the terms of his contract with the plaintiffs, and confirmed that he knew that, by its terms, he was informing the plaintiffs that he would supervise construction of the house, and that this included the windows.22 He also confirmed having charged them for that supervision, and described the extent of his supervision of various trades, such as concreters and framers. In relation to the framing subcontractors, he gave the following evidence23: “What did you do to supervise that work?---Basically looked over the job, what I could see, and made sure everything was correct before final inspection. So is it fair to say that your supervising of that work was checking by you to make sure that job was done properly?--- Yes. On the surface, yes. And that’s what you understood that ‘supervision’ was. Correct?---Correct. Checking to make sure that the work of a subbie was done properly?---Make sure everything was straight, in line, plumb – yes. In general, yes. It’s not just ‘straight, in line, plumb’, is it, Mr Kondra?---Yeah. It’s making sure that the people doing the actual work of framing in this case, did their job properly?---Yes.” [73] As to the windows, Mr Kondra confirmed that he installed the prefabricated windows, and that at no time did he think that Gateway had any responsibility to install those windows. In relation to W2.17 – W2.22, however, Mr Kondra said that the Gateway representative had told him that Gateway was going to install these windows. He again described arriving on site to find the installer packing up, and then gave this evidence24: “All right. And did you talk to this elderly person?---I believe I did. Yes. 21 T 2-37. 22 T 2-46. 23 T 2-47 – 2.48. 24 T 2-49 – 2-50. -- 17 of 43 -- 18 All right. Now, just let me understand: did you go up with this elderly person, have a look at what he’d done?---Yes. You did. Did you ask him to come with you to have a look at what he’d done?---I don’t remember that. Did you ask him to tell you what he’d done?---Yeah. I think we had a discussion about it. All right. And what did you ask him?---Well, you know, be probably general questions, but I – I can’t remember specifically what I asked him. But he would’ve – look, I can’t assume. I can’t assume. It would – it would’ve been along the lines of how did everything go? Was there any dramas?” [74] Mr Kondra confirmed he had no idea whether anybody at Gateway was qualified to install windows, and he did not ask the Gateway installer what his qualifications were. [75] Mr Kondra was then challenged with a series of previous statements he had made which were inconsistent with evidence he had given before me. [76] In a statement to the Queensland Civil and Administrative Tribunal (QCAT) in 2009, Mr Kondra had referred to the plaintiffs organising the “materials and installation of the glazing of the windows”, said that he had no part in the glazier’s work, and said “I did not inspect the work, nor was my obliged to in the circumstances”. Mr Kondra’s attempt to explain this before me by saying that he was referring to not inspecting the window fixings was unconvincing. Indeed, Mr Kondra then confirmed before me that if he had been on site when the windows were being installed, he would have regarded it as part of his job to supervise and ensure that the windows were going in correctly. [77] In a written submission dated 23 January 2009, which was made for a QBSA investigation, Mr Kondra repeatedly referred to having consulted with and spoken with Mr Brown. In fact, as he confirmed in evidence before me, he had no idea at the time who Mr Brown actually was, and could not recall who he had actually spoken to. [78] Mr Kondra was cross-examined on further apparent discrepancies in that QBSA submission concerning the way in which the eaves blocking above W2.17 – W2.22 had come about. [79] Mr Kondra was also cross-examined about a letter he had written to his insurer’s solicitors in 2013 after his claim for indemnity had been refused, and in which he said that W2.17 – W2.22 were certainly the “fail point” in causing damage to the house, but which were not supplied or installed by him. There was then the following passage of evidence25: “You say you were happy to proceed without any pieces of paper from the engineers about any structural matters?---Proceed with what? To build the house?---Yeah, well, once the inspection – final frame inspection is done, you can proceed. Can I suggest this to you, Mr Kondra: that so far as the framing of those windows 2.17 to 2.22 was concerned, that was one of those cases where you believed you could resolve it yourself?---No. 25 T 2-64. -- 18 of 43 -- 19 Can I take you back to the first page of that letter, to the third paragraph where you’re talking about windows 2.22 to 2.17?---Mmm. You accept, do you, that they are certainly the fail point in causing the damage to the house?---Yes. And then if – can I take you to page – second-last page of the letter to the fourth paragraph where again you’re talking about these windows 2.22 to 2.17; I want to draw your attention to the fourth line where you say: I had no part in the glazier’s work as the glazier was a friend of the owners. Were you trying to convey there, Mr Kondra, that you were relieved of responsibility because the – someone from Gateway was a friend of the owners?---No, that’s – no. That’s not - - - Well, why did you - - -?--- - - - correct. - - - say that?--- That’s not correct. Why’d you say it, then?---Look, I can’t recall.” [80] After Mr Kondra finished his evidence, the experts, Mr Fox and Mr Rebibou, commenced their concurrent evidence. In the course of that, Mr Fox was questioned about opinions he had expressed about the failure of W2.18 and W2.21, in the context of matters which had been reported by Mr Mills. Mr Fox was referred to his own report in which he had said: “Based on the above considerations, in my opinion it is quite possible that the failure was initiated by lateral deflections of the heads of W2.18 and/or W2.21 due to inadequate connection of the window frames and inadequate support from the soffit frame.” [81] In relation to his reference to “inadequate installation of the window frames”, Mr Fox confirmed that, by this, he was saying that the window frame was not adequately attached to whatever it was attached to. In relation to the second part of the sentence, however, he said that his reference to “inadequate support from the soffit frame” was not a criticism by him of the way in which the support was produced. He said that when he wrote his report, he did not know how the frame had been constructed and “was just assuming that [it] was constructed in accordance with the standard”.26 He referred to the Australian Standards for timber framing and said that if the engineer had not prescribed a particular requirement for the framing then “it would default back to the timber framing code”.27 He confirmed this by saying:28 “If the engineer does not have specific requirements for those connections, then the builder will build it in accordance with the timber framing code, and it’s … assumed in that case that the timber framing code would provide adequate connection.” [82] Mr Fox went on to say that he did not accept Mr Mills’ conclusion that the soffit framing was inadequately attached to the main frame of the residence. Mr Fox referred to the framing having been fixed with skew nails, which he said was “nominal fixing” in accordance with the relevant standard. He described this as being correct fixing, and did 26 T 2-112. 27 T 2-113. 28 T 2-114. -- 19 of 43 -- 20 not interpret it as being inadequately connected. When asked why he referred in his report to inadequate support from soffit framing in circumstances where he thought that the connections were in accordance with the timber framing code, Mr Fox responded:29 “Well, just because if the head failed laterally it was not provided with sufficient support from the soffit framing by whatever – whatever mechanism. You know, keep – keep in mind that I didn’t know – I – and – then. I don’t know what the framing was. I still don’t know personally what the framing was. I mean, if the soffit framing was only 35 x 35 members it would have been inadequate. I – I don’t know. But the bottom line was that the soffit framing didn’t – the – the connection between the window and soffit framing didn’t provide enough support.” [83] Under further questioning, Mr Fox confirmed that nowhere in his report had he suggested that the “nominal fixing” of the soffit framing with skew nails complied with the timber framing code or in any other way was an acceptable form of fixing. He immediately went on to say, however, that he did not know what the framing of the soffit was, he did not address it in his report, and it was not a live issue at the time. He continued30: “But the – the question now come up about the nominal fixing and is it skew nails. Well, that is an appropriate fixing in accordance with the standard. I’ve been asked that question the last few days.” [84] He then confirmed that no-one had asked him to produce a report about that topic. [85] Mr Fox then went on to give some brief evidence about the requirements for “nominal fixing” under the relevant timber framing standard. [86] Ultimately, this line of questioning led to the following passage of evidence:31 “MR COUPER: So just so I’m clear, you, you say, now hold the view that the framing which held those windows, 2.18 and 2.21, in place was adequate; is that right? MR FOX: I believe – well, assuming it was built in accordance with the standards, I believe it was adequate. Yeah. I mean, I haven’t seen it. I don’t know whether it was built in accordance with the standard or not. If it was, I believe it was adequate. MR COUPER: And when were you first asked to consider that question? MR FOX: Well, I think it was just – I – I spent the last 18 months not thinking about it, up to last week, so it would’ve been probably last week when the – the – the question came up about how the soffit had been framed. MR COUPER: And were you given a copy of that drawing, exhibit 6, which is in front of you, to consider that question? MR FOX: No, I wasn’t. MR COUPER: But you were given instructions about what you should assume about the framing for the purpose of forming a view about the adequacy of it; is that right? MR FOX: Yeah. That – that’d be a fair way to put it, I think. 29 T 2-116. 30 T 2-118. 31 T 2-120 – 2-121. -- 20 of 43 -- 21 MR COUPER: And you anticipated giving evidence about those matters, based on those instructions, in this trial; is that right? MR FOX: Well, I don’t know that I’d go as far as to say I anticipated giving evidence about it, but it was obviously an issue that was coming up.” [87] This evidence from Mr Fox led to the expert witnesses being stood down, and an application on behalf of the plaintiffs for an adjournment of the trial on the basis that the evidence which had fallen from Mr Fox amounted to a positive case sought to be advanced on behalf of the defendants which had not previously been advertised. It is unnecessary for present purposes to rehearse the argument which ensued. It is sufficient to note that the opinion I expressed in the course of the ensuing argument that the evidence that had lately fallen from Mr Fox, on any fair view, represented a departure from the clear meaning of the opinions that he had previously expressed in his report or, if not a departure, then a gloss that had previously not been advertised.32 [88] In those circumstances, after hearing argument from counsel, it was determined that the appropriate way to proceed would be for me to direct, as I did, that the parties clarify these matters by urgently delivering further amended pleadings, for the experts to confer further, for Mr Kondra to be recalled to give further evidence and be cross-examined further, and for the experts then to continue with their concurrent evidence. [89] It was against this backdrop that Mr Kondra was recalled to give further evidence. [90] Mr Kondra was referred to the drawing of the soffit members he said he had installed (Exhibit 6) and also a photo showing window frames in the swimming pool. This was a photo which had been taken by Mr Fox, and Mr Kondra said that he looked at it the day before he gave this further evidence. From this photo (Exhibit 9, an expanded version of which became Exhibit 10) he said that these soffit members were spaced at 450 millimetres. He also gauged this by reference to the plans which showed the roof trusses spaced at 900 millimetres. By reference to the framing shown in the expanded photograph (Exhibit 10), Mr Kondra explained how the framing and blocking had been affixed by nails. He said there were two nails joining each member, and described the purpose of the blocking, which ran the whole length of the windows (ie W2.18 – W2.21) as being to provide stiffness for the soffit members and to provide fixing for the aluminium window frames. [91] Under cross-examination, Mr Kondra said that he had drawn Exhibit 6 only the day before he first gave evidence, and that his memory of the soffit members being spaced at 450 millimetres was based entirely on having seen the photo taken by Mr Fox, which he had reviewed the day before he gave this further evidence. [92] He confirmed that it was he who had constructed the framing above W2.18 – W2.21. He was then challenged with a statement he had made to the QBSA in 2009 in which he described the carpentry services provided by a subcontractor, GMC, and in which he had said, amongst other things, that GMC erected eaves on the property. In evidence before me, Mr Kondra confirmed that the reference to eaves included erection of soffit members, but asserted that he himself, and not GMC, had done the “little bit” above W2.18 – W2.21. The following gives the flavour of this passage of evidence:33 32 T 2-133. 33 T 4-18. -- 21 of 43 -- 22 “All right. So that was just a mistake on your part to say GMC also erected eaves without carving out of it one small part of the eaves. Is that right?---You could say that, yes. All right. Just so I understand them, is it your evidence now that GMC erected every other part of the eaves, except the area above windows 2.18 and 2.21?---You could say that. Yes, you could say that.” [93] Mr Kondra then explicitly confirmed that GMC had no involvement at all in anything to do with the framing above W2.17 – W2.22, but was challenged by a statement he had made to the QBSA that it had been noted by GMC that the framed lintel beams (on the original drawings) for these windows affected the overall height of the windows. Mr Kondra sought to explain this apparent divergence by saying that GMC was not able to do the framing because it had identified this issue, and this was why Mr Kondra had to go back to the engineer. He said GMC was going to frame it up, but then was not able to. He then said that, after a decision had been made about the framing, it was not done by GMC because those contractors were not on site at the time. Mr Kondra then said:34 “I can’t remember if they were on-site or not or whether they were on another part of the section, but I’m telling you now that I did do this. I can remember doing it, because I spoke to the engineer and did exactly what he told me to do.” [94] Mr Kondra was challenged about his recollection of his meeting about this issue with the engineer, and was adamant there were two meetings. [95] In an ensuing passage of cross-examination, it became apparent that Mr Kondra’s evidence about the soffit framing he had said he installed above the subject windows was largely, if not completely, a reconstruction rather than a memory:35 “No, no. Leave aside the photograph, take up exhibit 6. I understand your evidence – I understood you to say that where the soffit member was adjacent to a truss tail, the soffit member was connected, that is, nailed, to the truss tail. is that right?--- Yeah. Well, I would think so. Yes. You would think so?---Yes. Yep. I would think so. Was it or wasn’t it? Or don’t you recall?---I don’t recall, but that’s what I would normally do. You don’t recall?---No. Is it fair to say, Mr Kondra, you have no recollection at all about how the framing above windows 2.18 and 2.21 was constructed?---No. No. That’s the best that I can remember of what I would do, because I would normally do that – I mean – normally do that on other jobs. So it’s, you know, it’s a standard way of framing [indistinct]. Just let me ask you about these things so I’m clear. Exhibit 6 is this, right – is a reconstruction that you’ve based on your normal way of doing things. is that right?- --Yes. And what I believe happened – framed up on the site. And it’s a reconstruction because you’ve got no actual memory of what you did in framing up above those windows. Correct?---Yes, I have, because it’s pretty 34 T 4-20. 35 T 4.25-25 – 4-26. -- 22 of 43 -- 23 standard when you do it many times in a job that that’s what you do. If you’re doing the same thing most times, yes, that’s what you normally do. Mr Kondra, are you suggesting it was pretty standard for you to be framing up these 3.6 metre long, 2.7 metre high windows 600 mills out from the wall of the house?- --No. No. Is that standard?---No, no- that’s not – that – no. So this job bore no relationship to your standard soffit framing, did it?---No. No. So you can’t possibly say that you can reconstruct what you did on this job by thinking about what you normally did for soffit framing, can you?---I can if I constructed it myself, yes. Well - - -?---I wouldn’t be able to comment on this if I didn’t do that myself. If somebody else had done it I – I wouldn’t remember what I was able to see. Well, I’ll ask you my question again. Do you remember whether the soffit members were nailed to the truss tails?---Look, I believe they were, and – but I cannot be sure. All right?---I was asked to draw what I thought happened on here and that’s what I believe I thought. And your best belief, as I understand you, is that where the soffit member was adjacent to a truss tail it was nailed to the truss tail. Is that right?---I believe so, yes. All right. Just explain to me then, if you would – you see the word ‘blocking’ and look at the arrow to the right – just explain to me if the soffit member is nailed to the truss tail where does that blocking fit in?---That blocking fits in-between either the truss tail – truss tail or the actual soffit member itself. I don’t understand that. What do you mean?---So if you have a soffit member running here and a soffit member running there, you can block in-between that, or you can block in-between the actual – it depends on which side you put the timber. Well, I understand that. What my question to you is, do you recall, firstly, whether you put that blocking in at all?---No, I didn’t. You didn’t put that blocking in?---No, I – that’s the only way – look, that’s the only way that you can get another member – a soffit member in-between that. Otherwise that’s just floating in the breeze. How can a soffit member just finish with nothing being there? You can’t – you can’t just let it hang in a flap. It has to be tied in with another bit of timber. Let’s just take this in stages, Mr Kondra. Do you actually recall putting in the blocking shown at the right-hand side of that drawing?---I don’t recall exactly, but, yes, I would have done it.” [96] Consistent with this was his evidence a short time later that he produced the drawing (Exhibit 6) as his “best recollection of what [he] probably would have done on-site” and that it “would probably be right” that when, on the previous evening, he found a photo of what he thought was part of the framing, he decided that the soffit members were spaced at 450 millimetres.36 36 T 4-31. -- 23 of 43 -- 24 [97] Mr Kondra was then referred to the evidence he had previously given to the effect that he could not inspect the installation of the subject windows because the installer had finished before Mr Kondra arrived on site, and: (a) confirmed that he could have instructed Gateway not to commence installation unless he was on site to observe, but referred again to the difficulties he had in contacting the Gateway representative; (b) confirmed that he did not give Gateway instructions not to install the windows unless he was on site to observe; (c) when pressed on whatever discussion he had with the Gateway installer, ultimately conceded that, in fact, he had no memory or recollection of any such discussion. Was the builder guilty of negligence? [98] The plaintiffs’ case in negligence was pursued under three discrete allegations: (a) that the first defendant failed to adequately supervise the construction of the house; (b) that the first defendant failed to fix the windows to the jambs in a competent and workmanlike manner; (c) that the first defendant failed to install additional bracing and lateral support above window heads to W2.17 to W2.22. Failure to supervise [99] Windows 2.17 to W2.22 had been installed by Gateway, not by the first defendant. The installation was clearly defective. The plaintiffs’ case was that the first defendant owed the plaintiffs a duty to exercise reasonable care and skill in supervising the work of construction of the house, including in relation to the installation of W2.17 – W2.22. The plaintiffs’ argument was that the first defendant’s failure to observe this duty resulted in the defective installation of these windows by Gateway, and the failure of these defectively installed windows was causative of the loss suffered by the plaintiffs. [100] The first defendant argued: (a) to the extent that there was a contractual duty on the first defendant to supervise which informed the ambit of the first defendant’s duty to the plaintiffs in tort, the duty to supervise extended only to work undertaken by the first defendant, his workers, or his subcontractors; (b) Gateway was not a subcontractor to the first defendant, but was contracted directly by the plaintiffs; (c) even if the first defendant was under a duty to supervise Gateway, his supervision in this case was to the requisite standard; (d) given that the Gateway installer had finished the installation when the first defendant arrived on site, the only way the first defendant could have inspected the affixation of the fixing frames was by destroying the frames themselves. [101] Similar arguments were advanced by the second defendant, summarised by senior counsel in argument as:37 37 T 5-4. -- 24 of 43 -- 25 (a) whatever might have been the first defendant’s obligation under contract, it was not to supervise the work of another skilled independent contractor retained specifically by the plaintiffs; (b) the first defendant’s duty was limited to doing the work the first defendant was retained to perform in a competent, diligent manner with reasonable care. [102] Further, it was argued that even if there was a duty to supervise, it was only a duty to exercise reasonable care. The first defendant was not, by this duty, under an obligation to stand next to the Gateway installer watching him work. This, it was argued, would be an unacceptable fetter on the function of the residential builder who must build at the same time, be offsite to organise materials, and coordinate other aspects of the project. [103] Moreover, invoking also the breach calculus articulated in s 9 of the Civil Liability Act 2003 (“CLA”), the first defendant contended that whatever the duty of the first defendant in respect of supervision, there were no reasonable steps or precautions the first defendant might have taken, whether under the guise of supervision or otherwise, which would have informed him of the defects in W2.18 and W2.21 and the poor workmanship of Gateway. [104] It is quite clear, on the face of the “Owner/Contractor Agreement” that the first defendant was under a contractual obligation to supervise the construction of the project. This was clear from cl 1 and necessarily to be inferred from cl 4, which obliged the plaintiffs to pay the first defendant for his services as, amongst other things, a supervisor. This obligation to supervise was not limited in scope by cl 6. And the first defendant charged, and was paid for, his services as a supervisor. [105] Also, the agreement between the plaintiffs and the first defendant was a domestic building contract regulated by the DBCA, relevant provisions of which are set out earlier in this judgment. As noted above, the first defendant had agreed to provide supervisory services, which were included in the “subject work” he agreed to perform, and he was therefore subject to the statutory warranty to carry out the supervisory services with reasonable care and skill. The ambit of this statutory warranty was not limited to work performed only by the first defendant or his direct contractors. Rather, it was an incident of there being a “domestic building contract” to carry out “domestic building work”, and attached to, relevantly, the provision of supervisory services for carrying out the domestic building work. [106] It is notable in this context that Mr Kondra expressly confirmed in his evidence that, by his contract, he was informing the plaintiffs that he would supervise construction of the house, and this included the windows. Moreover, as noted above, he conceded that if he had been on site when the aluminium fixing frames were being installed he would have regarded it as part of his job to supervise and ensure the windows were going in correctly. [107] In the circumstances of this case, where the builder had expressly agreed to provide and be remunerated for his supervisory services, it clear that the first defendant owed the plaintiffs a common law duty to exercise due care, skill and diligence in the performance of those supervisory services. That duty was, of course, able to be discharged by the exercise of reasonable care by the first defendant.38 38 Road & Traffic Authority (NSW) v Dederer (2007) 234 CLR 330, per Gummow J at [43]. -- 25 of 43 -- 26 [108] The plaintiffs’ contention was that the first defendant’s absence during, and lack of supervision of, the installation of these windows amounted to a breach of that duty. [109] Counsel for the first defendant pointed to a list of matters from which, it was said, it should be concluded that the supervision by the first defendant was to the requisite standard. In brief, these were: – the lack of discussions between the plaintiffs and the first defendant about Gateway’s involvement; – the fact that the other windows installed by the first defendant were prefabricated, but W2.17 – W2.22 were bespoke windows measured and installed by Gateway; – the lack of response and difficulties of communication with the Gateway representative about installation dates; – the fact that neither the plaintiffs nor Gateway informed the first defendant of the date when these windows would actually be installed; – the fact that the first defendant’s first knowledge of the installation was when he arrived on site to find the Gateway installer packing up; – the issuing of a certificate by Gateway on 21 February 2005 which stated that the aluminium units supplied including installation and glazing were in strict accordance with the Building Code of Australia and the relevant wind loading standard. [110] Reference was also made to Mr Kondra’s evidence that he looked at the windows and saw no obvious errors, and the undisputed fact that post-installation observation of the fixing of the frames would have involved destructive testing. [111] Counsel for the second defendant also contended that: – even if there was a duty to supervise, this did not involve second guessing or standing over a skilled contractor while it was performing its work; – the first defendant was not on site at the time of installation, had not been informed of the date of installation, and had nothing to do with the arrangements for the Gateway representative to attend for installation of these windows; – any duty on the first defendant to supervise was discharged by the first defendant’s numerous requests of Gateway to be informed of the installation date. [112] Consideration of the content and ambit of the first defendant’s duty to supervise is, in my view, usefully informed by observations by Barwick CJ in Florida Hotels Pty Ltd v Mayo.39 That case concerned an architect retained by a property owner. The architect was under a contractual and legal duty to supervise construction of a swimming pool which was being undertaken by tradesmen and labourers engaged by the property owner. Reinforcing mesh was improperly laid by the owner’s employees in the absence of the architect, and concrete poured before the mesh was inspected. When formwork around 39 (1965) 113 CLR 588. -- 26 of 43 -- 27 the concrete was removed, the slab failed and a worker was seriously injured. The architects had nominated days for their routine periodic inspections and claimed that, because they had previously been informed of the times for concrete pours, they were entitled to assume that concrete would not be poured on days between their routine inspections. Barwick CJ said:40 “I am clearly of opinion that in law the respondents were not so entitled. They were bound to supervise the work, inspecting it with due skill and care. There can be no doubt that due skill and care in this case required them to supervise the work done in preparation for the pouring of concrete to form these slabs. The facts of this case bring out starkly the importance of the performance of this obligation. In my opinion, the respondents were bound to take reasonable steps to ensure that they inspected the formwork and the placed reinforcement before concrete was poured and the work covered up. They do not satisfy this by relying on the workmen whose work they were employed to supervise: in particular, they were not entitled to assume from past satisfactory performances of the foreman, that they would be notified of the readiness of the work for inspection and of the time for the pouring of the concrete. They were not engaged to supervise only such work as could be seen on the particular days of their routine inspections, or to attend to supervise only when advised that an occasion for supervision had arisen or was about to arise. They owed a duty to keep themselves informed of the progress of the work. They were bound, in my opinion, at least to have made reasonable arrangements of a reliable nature to be kept informed of the general progress of the work and, in particular, to be notified of the readiness of formwork and the placement of reinforcement for the pouring of concrete; these arrangements ought to have included clear and express instructions to the foreman that work of the kind in question must not be covered up till the respondents had inspected it or, at the very least, had an adequate opportunity for its inspection. Cf. Jameson v. Simon (1). These obligations were no less applicable because the appellant had not contracted with a builder to do the work of extensions to the hotel. Apart from the consequences of the breach of such an obligation, in my opinion, there is no significant difference in the nature of the obligation of the architect to supervise in either case. Of course, in deciding what in a particular case that obligation required him to do, it may well be that the fact that the building owner directly employed tradesmen and labourers to carry out the work increases the area of what it would be reasonable for the architect to do in performance of his obligation. But, in my opinion, in neither case may the architect merely wait to be informed that the work is or will be ready for his inspection. Here, no arrangements had been made for the respondents to be notified of the completion of the formwork or of the placement of the reinforcement. No instructions had been given that concrete should not be poured before inspection or an opportunity to make an inspection of the formwork and the reinforcement in position. In a nutshell, on any view of the credible facts of the case, the respondent Wark took the risk that concrete might be poured between the days of his routine inspections and without his supervision of the preparatory work. To my mind, the recital of these facts amply demonstrates the respondents’ breach of their obligation to the appellant to supervise the work with due skill and care and, for my part, I would have been prepared to dispose of this case so far as liability of the respondents on the second count is concerned, on the basis of them alone.” (emphasis added) 40 At 593-594. -- 27 of 43 -- 28 [113] In the present case, the first defendant knew that it was important for the windows to be properly installed so as to be able to resist wind loads. Adapting the words of Barwick CJ, this required, at least, that the first defendant had made reasonable arrangements of a reliable nature to be kept informed of the timetable for the installation of these windows, and this should have included clear and express instructions to Gateway that the aluminium fixing frames ought not be obscured by “clipping in” the window frames until the first defendant had inspected, or at the very least had adequate opportunity to inspect, the affixation of the fixing frames. [114] The fact that the first defendant experienced difficulties in communicating with and obtaining information from the Gateway representative did not relieve him of observance of that duty. If anything, it ought have provided an imperative for him to do what he said he could have, but did not, do, namely instruct Gateway not to commence installation of the subject windows until he was on site to observe. [115] Further, even if I were prepared to accept the first defendant’s version of his discussion with the Gateway installer (noting his own concession that he could not remember specifics of the conversation), neither that discussion, nor indeed the issuing of a “certificate” after the event by Gateway, could operate to discharge the duty to supervise. As in the Florida Hotels case, the supervisor’s duty is not satisfied by relying on the very workers whose work the supervisor is employed to supervise. [116] Due supervision of the installation of these windows would, or ought, have revealed the patent inadequacy of the installation. The windows failed because of the inadequate installation, and this failure was directly causative of the explosive over-pressurisation which destroyed the house. [117] Accordingly, I find the first defendant liable to the plaintiffs in negligence under this head for the damage suffered. [118] In view of that finding of liability, it is not necessary for me to make findings in relation to the other two allegations of negligence. It is, however, appropriate for me to say something about each of them, albeit as briefly as possible. Failure to fix the windows to the jambs in a competent and workmanlike manner [119] Much of the argument by the defendants in relation to this particular of negligence was directed to the affixation of W2.17 – W2.22. It is sufficient in that regard to say that it is clear that these windows were not installed by the first defendant, and that the first defendant is not vicariously liable for the defective installation of those windows by Gateway. [120] The first defendant did, however, install all of the other windows in the house, including W2.26. That window was defectively installed. It failed at about the same time as W2.18 and W2.21. [121] By inadequately installing W2.26, the first defendant clearly breached his duty to exercise the due care and skill of a reasonably competent tradesman. [122] There was no issue in this case that the failure of W2.18 and W2.21 were causative of the damage suffered. W2.26 was a front facing window on the eastern side of the bridge which separated the two wings of the house. It failed at about the same time as W2.18 -- 28 of 43 -- 29 and W2.21, but its failure was independent of the failure of those other windows. The question for determination under this head would have been whether the failure of W2.26, which undoubtedly contributed in some part to the over-pressurisation event which occurred, ought be regarded as causative of the damage suffered such as to found a finding of liability. The plaintiffs, of course, bore the onus of proof on causation, both at common law and by reason of s 12 of the CLA. [123] In March v E & M H Stramare Pty Ltd,41 McHugh J, after propounding the adoption of the “causa sine qua non” test (the “but for” test) as the exclusive test of causation said:42 “One obvious exception to this rule must be the unusual case where the damage is the result of the simultaneous operation of two or more separate and independent events each of which was sufficient to cause the damage. None of the various tests of causation suggested by courts and writers, however, is satisfactory in dealing with this exception case. Perhaps no more can done in this situation than to treat each wrongful act as an independent cause for legal purposes. The terms of a statute, legal rule or legal instrument may also require a different approach from the ‘but for’ test. In general, however, the ‘but for’ test should be seen as the test of legal causation. Any other rule limiting responsibility for damage caused by a wrongful act or omission should be recognised as a policy-based rule concerned with remoteness of damage and not causation.” (emphasis added) [124] See also Fleming’s “The Law of Torts” (10th edition)43 in which it is said in the context of multiple causes of harm:44 “Attribution of liability is more difficult where more than one set of sufficient conditions accounts for a single injury. The issue arises where another factor, itself sufficient, combined with or duplicated the effect of the defendant’s act to jointly produce the injury, as when two persons simultaneously approach a leaking gas pipe with lighted candles or several fires merge and destroy a house. To apply the ‘but for’ test without modification in such cases would lead to the conclusion that neither set of conditions was necessary, although each was sufficient. Adherence of the ‘but for’ test as the exclusive test of causation recognise that in this exceptional case the only answer is to treat each wrongful act as an independent cause for legal purposes.” (emphasis added) [125] Thus, in order to establish the element of causation under this head of negligence in the circumstances of this case, it would have been necessary for the plaintiffs to prove, on the balance of probabilities, that the failure of W2.26 itself was sufficient to cause the damage. [126] In seeking to establish this, the plaintiffs relied on the evidence of Mr Rebibou which, it was submitted by counsel for the plaintiffs, was sufficient to establish that the failure of W2.26 was a material cause of the damage to the plaintiffs’ house. [127] What Mr Rebibou had relevantly said in a report dated 7 April 2015 was: “Given that window W2.26 is located on the windward wall, it is reasonable to identify that failure of this window would have simply provided further opportunity for the main failure mechanism to transpire.” 41 (1990-1991) 171 CLR 506. 42 At 534. 43 Law Book Co, 2011. 44 At [9.70] and omitting references and citations. -- 29 of 43 -- 30 [128] It is true that, in the course of giving evidence before me, Mr Rebibou said that even if it was the case that only W2.26 failed by itself, and every other window was shut, that would still have created a massive internal pressure build-up which would have led to the failure of tie-down mechanisms.45 This was said, however, in the context of the experts giving evidence concurrently in which they were expressing views about the sequence of window failures. Mr Rebibou subsequently confirmed that he had not expected there to be such an argument about “one window versus another”. He explained that what he was trying to convey was:46 “… that the main mechanism is failure of the windows and the failure of the windows is the mechanism that has transpired. This [W2.26] is just another window that confirms that that’s the mechanism. Not so much that it’s these two main windows or such and such a main window that did it first, I don’t think it’s possible to identify that one did it before another. What we do know is that an opening was created which allowed the pressure differential. What we are assuming is that, based on the evidence in the Mills Engineers report, that the opening was created by failure of windows.” [129] Mr Rebibou then confirmed that what he was trying to convey was that if W2.26 failed, then that failure would have contributed to the overall house collapse. [130] Mr Fox expressed an opinion directly on the question whether the failure of W2.26 of itself would have been sufficient to cause the damage, saying he found it very difficult to believe that W2.26 would let in enough wind to entirely demolish the east wing “as though a bomb had gone off” in circumstances where W2.28 (in bedroom 2 in the west wing) had failed but had not blown out the window in bedroom 3 opposite it.47 [131] Mr Fox said that, in examining the matter, it had not even entered his mind that W2.26 would have been a significant contributing factor.48 [132] In my view, the evidence of Mr Rebibou went no further than establishing that the ingress of air through the failure of W2.26 contributed to the over-pressurisation event. Had it been necessary for me to decide the point, I would, on this evidence as a whole, have determined that, while the failure of W2.26 did contribute to the event which occurred, the plaintiffs had not proved on the balance of probabilities that the failure of W2.26 of itself was sufficient to cause the damage. [133] On that basis, the plaintiffs would not have established liability against the first defendant under this head of negligence. Failure to install additional bracing and support above W2.17 – W2.22 [134] As may be gathered from my description above of the course of the trial, this allegation virtually took on a life of its own after the first defendant produced Exhibit 6, which he said represented the soffit members he had installed above W2.17 – W2.22. [135] Mr Kondra’s evidence about this drawing and whether it represented what he had actually built (or not built) was far from satisfactory. So much will be apparent from my recitation 45 T 2-91. 46 T 2-97. 47 T 2-95. 48 T 2-96. -- 30 of 43 -- 31 of his evidence above, particularly at [95]-[96]. That evidence, combined with the inconsistencies in previous versions he had given, would have constrained me to conclude that I was not satisfied that the first defendant had in fact installed the bracing represented by Exhibit 6. [136] However, that finding alone, and of itself, would not have yielded a finding of liability against the first defendant under this heading. [137] As was submitted by counsel for the second defendant, it appears that the genesis for this particular allegation lies in the report of Mr Mills in which he criticised the engineer, not the builder, for “failing to properly detail critical bracing and tie-down connections to the windows W2.17 – W2.22 to adequate support and tie the heads back to the structure”. Mr Mills’ criticism of the builder in that report did not mention this structural defect. [138] This particular allegation of negligence against the first defendant builder was made in paragraph 13(i) of the amended statement of claim, in which it was alleged that the first defendant “failed to install additional bracing and lateral support above window heads to W2.17 – W2.22”. [139] During the course of the trial, the plaintiffs provided the following particulars of that allegation: “We set out below particulars of paragraph 13(i) of the amended statement of claim as to the need to install additional bracing and lateral support above window heads W2.17 to W2.22, which is evidenced by, or to be inferred from, the following: 1. The structure ought to have had a design classification of N4 or alternatively N3. (Joint Report of Experts). 2. For an N4 classification the design gust wind speed for the house is 61 metres per second (Holmes report, section 8) or alternatively 57 metres per second (Fox report). 3. For an N3 classification the design gust wind speed for the house is 50 metres per second (Holmes report). 4. The maximum wind gust speed at the site during the storm was 54 metres per second (Holmes report) or alternatively 53 metres per second (Fox report). 5. If the window support structure had been built to N3 classification, it would not have suffered the complete failure at the heads that occurred (Fox report, page 35). 6. It is likely that the window failures in the south wall occurred at a wind gust speed below the nominal 50 metres per second gust speed for the N3 classification (Holmes report). 7. From the matters in paragraphs 1 to 6, it is to be inferred that additional bracing and lateral support was required to meet normal design wind loadings. 8. Further or alternatively, such requirement is established by the expert evidence as follows: (a) a cause of the failure was the inadequate support of the window framing to the house structure (Holmes report, section 8); -- 31 of 43 -- 32 (b) further or alternatively, a cause of the failure was that the pine soffit framing was hot adequately braced or tied back to the lintel and top plate (Mills report); (c) further or alternatively, a cause of the failure was the inadequate connection between the soffit framing and the external wall lintels (Fox report, pages 4, 7, 27, 34, 35, 39 and 41 ); (d) further or alternatively, a cause of the failure was that the window assemblies as secured during construction were too weak to resist normal design wind loads (Fox report, page 5); (e) further or alternatively, a cause of the failure was that the lateral support of the window heads was a serious weakness in the structure of the residence (Fox report, page 37).” [140] Ultimately, the first defendant’s defence to these allegations pleaded that the first defendant: “(i) admits the defendant did not install bracing and lateral support above window heads W2.17 to W2.22 additional to that specified in the WEA plans (as pleaded at paragraph 13(b) above); (ia) Says that in the circumstances pleaded at paragraph 13(b) above, the southfacing wall between windows 2.22 and 2.17 was constructed in accordance with acceptable building practice and in accordance with Australian Standard 1684.2 (1999) (in particular, part 9.5 of the standard); (iaa) In the premises of the two preceding subparagraphs there was no failure as alleged, and in the alternative to that, any such failure does not constitute a breach of duty; (ii) otherwise denies the allegations;” [141] I note in passing the apparent inconsistency between the first subparagraph of that pleading and Mr Kondra’s evidence relating to Exhibit 6, but in light of what I have said earlier about his evidence it is not necessary for me to deal further with this. [142] The final version of the second defendant’s defence denied paragraph 13(a) of the amended statement of claim on the following grounds: “(i) the First Defendant was not engaged, or retained, or requested to install additional bracing and lateral support above window heads to W2.17 to W2.22. otherwise than in accordance with architectural and engineering plans drawn for the dwelling: (ii) engineering specifications drawn by Warren Brown & Associates were insufficient to provide direction in relation to the manner of construction of the lintel and soffit structure above W2.17 to W2.22; (iii) the First Defendant sought advice from a representative of Warren Brown & Associates in respect of the manner of construction of the structure above W2.17 to W2.22 in a meeting on-site during construction in which: (A) the representative of Warren Brown & Associates confirmed that it was OK to delete the lintel: (B) the First Defendant proposed to frame the structure by installing ‘70 x 35’ timber soffits from the house attached to the truss tail by skew nail, -- 32 of 43 -- 33 and installing blocking for the window head to be screwed into, to which the representative of Warren Brown & Associates indicated that this was an acceptable method of construction: (iv) in reliance upon the advice from the representative of Warren Brown and Associates, and in conformity with that advice, the First Defendant constructed the soffit structure in the manner shown in the drawing attached to this pleading and marked ‘A’: (v) the method of construction adopted by the First Defendant and shown in the drawing marked ‘A’ was: (A) done in accordance with industry standards: and (B) compliant with AS 1684.2.” [143] Considerable time and energy at the hearing was expended on the question of the nature and adequacy (or inadequacy) of the soffit members which Mr Kondra asserted he had installed (Exhibit 6) and whether they complied with the relevant Australian standards. [144] For present purposes, however, it is necessary to take a step back and view the plaintiffs’ case on this point in context. [145] The amended statement of claim relevantly pleaded an obligation on the first defendant “to avoid foreseeable risks of economic loss, occasioned by reason of defects causing damage to the house and requiring remedial expenses” (para 7), and then asserted that, in those premises, “the first defendant owed the plaintiffs a duty of care to exercise all due care and skill in constructing the house to the standard reasonably to be expected of the builder of domestic residences, including a duty to … use bracing materials of the appropriate width and strength” (para 9(h)). [146] In final submissions, counsel for the plaintiffs argued that the breach alleged by paragraph 13(i) of the amended statement of claim involved two components: – whether additional bracing and lateral support were required for the framing above the relevant window heads, and – whether the first defendant breached his duty of care by failing to install additional bracing and lateral support. [147] The casting of the questions in this way, however, obscured the proper nature of the inquiries to be undertaken in a case of this nature. [148] In Mulligan v Coffs Harbour City Council,49 Hayne J summarised the authoritative statements which had been made by Mason J (as he then was) in Wyong Shire Council v Shirt50 concerning the test for breach of a duty of reasonable care by saying that in assessing what performance of that duty requires it is necessary to ask first, whether the risk of injury of the kind sustained by the plaintiff was reasonably foreseeable and secondly, what the reasonable person would have done in response to that risk. Hayne J continued:51 49 (2005) 223 CLR 486. 50 (1980) 146 CLR 40 at 47. 51 At [50], and omitting footnotes. -- 33 of 43 -- 34 “Although the judgment about what would have been the reasonable response to the risk must be made after the event, the inquiry is directed to identifying what the reasonable response would have been by a person looking forward at the prospect of the risk of injury. That must be assessed having regard to the magnitude of the risk, the degree of probability of its occurrence, the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities the alleged tortfeasor may have. And because the inquiry is prospective, there is no basis for assuming that the only risk to be considered by the reasonable person is the particular kind of risk that came to pass at the place and in the way it did.” [149] Thus, even assuming in favour of the plaintiffs that the pleaded risk was sufficiently and correctly identified,52 a necessary inquiry is to identify, with some precision, what a reasonable person in the position of the first defendant would have done by way of response to the reasonably foreseeable risk.53 A cognate inquiry arises under s 9(1)(c) of the CLA, providing, as it does, that a person does not breach a duty to take precautions against a risk of harm unless, in the circumstances, a reasonable person in the position of the person would have taken the precautions. Section 9(2) requires the court, when deciding whether a reasonable person would have taken precautions, to consider (amongst other relevant factors): – the probability that the harm would occur if care were not taken; – the likely seriousness of the harm; – the burden of taking precautions to avoid the risk of harm; – the social utility of the activity that creates the risk of harm. [150] As noted, the relevant duty pleaded by the plaintiffs was a duty to “use bracing materials of the appropriate width and strength”. There was no elucidation on the pleadings or in the evidence of what such bracing materials “of appropriate width and strength” actually were. [151] The pleaded breach was a failure “to install additional bracing and lateral support” above the relevant window heads. Again, there was no explanation on the pleadings or in the evidence of what this bracing was supposed to be, what it was supposed to be “additional” to, or what the “lateral support” was supposed to be. [152] Counsel for the plaintiffs conceded that the plaintiffs’ case about whether additional framing and lateral support were required was essentially circumstantial. By reference to the particulars, it was contended that: – the wind speed at which the windows failed was likely to have been less than the nominated designed wind gust speed for a house of N3 classification; – it follows that the windows should not have failed; – the fact of failure is evidence of structural inadequacy. 52 Roads and Traffic Authority (NSW) v Dederer (2007) 234 CLR 330 per Gummow J at [59]. 53 Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540, per Gummow & Hayne JJ at [192]. -- 34 of 43 -- 35 [153] Even if I again assume that process of reasoning in the plaintiffs’ favour, the best it yields is a conclusion that what was constructed was inadequate. [154] What it does not do is address the necessary inquiry of identifying, with some precision, the precautions which a reasonable person would have taken. There was no shortage of evidence criticising the framing which Mr Kondra said he had constructed (Exhibit 6). But there was no evidence of what precautions he ought to have taken, nor at any point was a case put to Mr Kondra as to what he ought to have built by way of a precaution against the pleaded risk. [155] The absence of evidence on the plaintiffs’ side to address this necessary inquiry about precautions would, of itself, have precluded a finding of breach by the first defendant under this head of negligence. [156] There would also, in my view, have been a further obstacle for the plaintiffs under this head of negligence. The premise on which this allegation was founded was that the structural failure was causative of the over-pressurisation event. Yet, as I have found above, the inadequacy of the fixing of the windows’ fixing frames allowed the initial “blowing in” of the windows which caused the over-pressurisation event. In the circumstances, however, it is not necessary for me to expand further on this topic. Is the insurer liable to indemnify the builder? [157] Having found that the first defendant is liable to the plaintiffs in negligence, it is now necessary to determine whether the second defendant is obliged to indemnify the first defendant for that liability. [158] As at 16 November 2008, the first defendant held a policy of insurance with the second defendant. The operative provision of the policy provided: “Cover Subject to the Limits of Liability stated in the schedule and the terms and conditions of this cover section, we will pay all sums that the insured person shall become legally liable to pay for compensation in respect of:  personal injury;  property damage;  advertising liability; happening during the period of insurance within the territorial limits as a result of an occurrence in connection with your business or products.” [159] In view of my findings above, the first defendant is to be regarded as legally liable to pay for the property damage which the plaintiffs suffered on 16 November 2008. It was not in issue that this date was within the “period of insurance” (as specified in the schedule to the policy), nor that the property damage had occurred within the “territorial limits” (as that term was defined). [160] The first issue was whether the property damage happened “as a result of an occurrence in connection with [the first defendant’s] business or product”. [161] The policy contained the following definitions: -- 35 of 43 -- 36 “Business business means for the purpose of this cover section only, all activities and operations of your business shown in the schedule including the ownership and tenancy of premises, private work carried out with your consent by your employees for any of your directors or senior executive officers, the provision or management of canteen, social or sports organisations, childcare facilities for your employees, and internal first aid given by your medical persons, fire services and ambulance services. … Occurrence occurrence means an event or series of events including continuous or repeated exposure to substantially the same general conditions which results, unexpectedly and unintentionally from your standpoint, in personal injury or property damage or advertising liability during the period of insurance. All personal injury or property damage happening during the period of insurance attributable to one source or to a common cause or to the same general conditions shall be deemed to be one occurrence. … Products products means anything which is or is deemed to have been manufactured, grown, extracted, produced, processed, sold, supplied, distributed, imported, exported, repaired, serviced, installed, assembled, erected or constructed by you (including packaging or containers) in the course of your business and after it has ceased to be in your physical custody or under your legal control. … Property damage property damage means: (a) physical injury to or loss of or destruction of tangible property including loss of use of that property at any time resulting therefrom; (b) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by physical damage to or destruction of other tangible property.” [162] The second defendant’s fundamental argument was that the “occurrence” was the storm which occurred on 16 November 2008, and that this “occurrence” was plainly not in connection with the first defendant’s business. [163] In advancing that proposition, and in resisting alternative formulations of the “occurrence” advanced by the plaintiffs, the second defendant relied particularly on GIO General Limited v Newcastle City Council.54 That case arose out of the Newcastle earthquake on 28 December 1999, which caused death, personal injury and serious damage to property. Some of the people killed and injured were in the Newcastle Workers’ Club. Those club premises were badly damaged. This case before the New South Wales Court of Appeal concerned the liability of an insurer to indemnify the local 54 (1996) 38 NSWLR 558. -- 36 of 43 -- 37 authority under a policy which included coverage for public liability. Relevantly, that policy required the insurer to indemnify in respect of property damage “caused by an occurrence in connection with the business” of the local authority. At first instance, it had been held that the relevant occurrence was “the earthquake and the contemporaneous collapse of the building”. As to this, Kirby P, with whom Powell JA agreed, said:55 “The difficulty with the finding is that the ‘collapse of the building’ was, in fact, the relevant damaged property’. Hence if Bainton J is correct, the property damage was, in part, caused by itself. With respect, this construction would not make sense. Therefore, the relevant ‘occurrence must be limited to the earthquake itself. This characterisation conforms with common sense. The most direct and most obvious cause of the damage to the club was the Newcastle earthquake. … … However, it cannot be said, on any reasonable construction of the phrase, that the ‘occurrence’, in this case, the earthquake, occurred in connection with these activities. An earthquake, as such, cannot be ‘in connection’ with the business of local government.” [164] Sheller JA, however, was of a contrary view:56 “Undoubtedly the earthquake of 28 December 1989 was within the definition of an occurrence. But when the phrase speaks of ‘caused by an occurrence, in my opinion, it speaks in the context of the insured’s legal liability for injury or damage from an occurrence which is ‘causally relevant’, a phrase I have taken from Fleming on the Law of Torts, 8th ed, (1992), Sydney, Law Book Co, at 194. In that context the occurrence is not the earthquake but the insured’s act which rendered it legally liable to pay. Thus if a structure is unsound because the insured designed it negligently, the fact that its collapse was caused by an earthquake does not mean that it was not caused by an occurrence or event of negligence. In March v E and M H Stramare Pty Ltd (1991) 171 CLR 506 at 509, Mason CJ, with whose judgment Toohey J generally and Gaudron J agreed, said: ‘... In philosophy and science, the concept of causation has been developed in the context of explaining phenomena by reference to the relationship between conditions and occurrences. In law, on the other hand, problems of causation arise in the context of ascertaining or apportioning legal responsibility for a given occurrence. The law does not accept John Stuart Mill’s definition of cause as the sum of the conditions which are jointly sufficient to produce it. Thus, at law, a person may be responsible for damage when his or her wrongful conduct is one of a number of conditions sufficient to produce that damage: see McLean v Bell (1932) 147 LT 262 at 264, per Lord Wright; Sherman v Nymboida Collieries Pty Ltd (1963) 109 CLR 580 at 590- 591, per Windeyer J.’ With the greatest respect I do not think that the appellant’s liability to indemnify the insured for legal liability to pay compensation in respect of damage to property is excluded merely by saying that the damage was caused by the earthquake. Indeed if, as I think, what is causally relevant is the act of the insured which rendered it legally liable to pay compensation, everything suggests that that was an occurrence in connection with the insured’s business.” 55 At 567. 56 At 572-573. -- 37 of 43 -- 38 [165] In this context, it is relevant, too, to bear in mind the observations of Cooper J in Dellavedova v HIH Casualty & General Insurance Limited:57 “My view as to the proper construction of the words of limitation in this policy is consistent with the construction of the term ‘any circumstance or occurrence’ in other liability insurance policies. Consistency of approach is desirable in the insurance market to give certainty as to the nature of the cover offered by underwriters and sought by assureds. Nevertheless, great care must be taken in having regard to the interpretation of clauses in other insurance policies because of the importance of context to the meaning of language. Bearing that caution in mind, the use of the word ‘occurrence’ in insurance policies in the context of legal liability to third parties carries a meaning that the occurrence is causally relevant to that liability: per Sheller JA in GIO General Ltd v Newcastle City Council (1996) 9 ANZ Insurance Cases ¶61-301 at 76,367-76,368; (1996) 38 NSWLR 558 at 572; FAI General Insurance Co Ltd v Hendry Rae & Court (1993) 7 ANZ Insurance Cases ¶61-200 at 78,301, 78,306-78,307; (1993) 115 FLR 50 at 67, 74; Bowling v Weinert [1978] 2 NSWLR 282 at 291-292. The context itself identifies the relevant occurrence as being the mishap rather than its consequences: Distillers Company BioChemicals (Australia) Pty Ltd v Ajax Insurance Company Ltd (1974) 130 CLR l at 19.” (emphasis added) [166] Contrary to the submission of counsel for the second defendant, I do not consider the present case to be very similar to the Newcastle City Council case. In that case, it was clear that it was the earthquake itself which directly did the damage. In this case, it was not the storm per se which, to adapt Mr Fox’s description, blew up the house. Nor, for that matter, was it the faulty windows themselves which directly did the damage to the house, although, as found above, the defective installation of the windows was causative of the damage suffered. [167] Rather, in a real and practical sense, the event which directly did the damage was the over-pressurisation event which was of such a magnitude, to paraphrase Mr Fox again, as to have demolished the east wing as though a bomb had gone off. In this regard: (a) I have set out above at [21] Mr Fox’s description of the “principal failure mechanism” being the “explosive” over-pressurisation with the direct consequences he described; (b) in his report dated 1 December 2014, Mr Rebibou confirmed that “based on the available data, the most probable failure mechanism here was by a failure of the windows connections which resulted in an “explosive over-pressurisation” of the upper level led to instantaneous increase in internal pressure”. [168] Accordingly, I find that the relevant “occurrence” for the purposes of this policy was the explosive over-pressurisation event. [169] That event did not occur in isolation. It occurred, and in the circumstances of this case was caused to occur, by the failure of the defectively installed windows. The installation of those windows was obviously part of the first defendant’s business. On that basis, I further find that this was in occurrence in connection with the first defendant’s business. [170] The second defendant’s next argument was that it was entitled to deny indemnity in reliance on the following exclusion in the policy: 57 (1997) 9 ANZ Ins Cases 61-383 at 27,206. -- 38 of 43 -- 39 “5. Damage to products Property damage to products if the damage is attributed to any defect in them or to their harmful nature or unsuitability.” [171] The second defendant’s argument was as follows: (a) the plaintiffs’ house was the “product” of the first defendant; (b) the damage was attributed to a defect in the house, ie the defectively installed windows; (c) the exclusion therefore operated to relieve the second defendant of liability to indemnify. [172] In relation to whether the house was a “product” of the first defendant, the second defendant referred to the definition of “products” (set out above) and said that the house was something “erected or constructed” by the first defendant, and therefore fell within the ambit of the term. [173] In relation to interpretation of the term “products”, counsel were able to refer me only to a couple of authorities. [174] The first was a single judge decision in the High Court of New Zealand, Arrow International Limited v QBE Insurance (International) Limited.58 In that case, Mackenzie J observed, in obiter dicta, that the word “property” in a similar definition to that with which I am now concerned was not on its ordinary meaning limited to goods and could include a building.59 [175] More recently, in Aspen Insurance UK Limited v Adana Construction Limited60 the English Court of Appeal was concerned with a case concerning the failure of a constructed concrete crane base. One of the questions before the court was whether this concrete base as a whole was a “Product” for the purposes of an exclusion in the relevant policy of insurance. Christopher Clarke LJ, with whom Gloster and Vos LLJ agreed, said: “36. The structure of the definition is to provide that Product means ‘any product or goods’ (undefined) followed by past participles relating to the manner in which the insured came to provide it (‘manufactured, constructed, installed, altered, repaired, processed,’) and then to the transaction by which it came to leave their care, custody or control (‘sold, leased, supplied or distributed’). In order to be a Product the item in question must, therefore, have been provided by, and have left the insured’s control in, one or other of the wide range of means specified. But it does not necessarily follow that an item which was so produced, or which left the insured’s control in one of the specified ways is, on that account alone, a Product. 37. A product (with a small ‘p’) can be given a very wide meaning. It could mean anything which is the result of any process of manufacture or construction. In that case it would cover the construction of a building, as Mr Calver (as I understood him) said that it did. On that footing, if the insured builds a house and, because of the faulty workmanship of his employee part of the roof falls 58 [2009] 3 NZLR 650. 59 At [89]. 60 [2015] EWCA Civ 176. -- 39 of 43 -- 40 off, there is no Public Liability cover, although there might be Product Liability cover, unless the house was still in the insured’s occupation or control, although that too might well be excluded under the Product Liability exception. If part of the roof falls off when the insured is carrying out snagging work on the ground floor there is, if Aspen is right, no insurance under either section. 38. Whilst a meaning which had the result that a house or a roof was a Product is a possible one, it does not seem to me that the parties to an insurance of this kind should be taken to have intended that result. In order for there to be exclusion from Public Liability cover there needs to be something causative of the insured’s liability which would reasonably be regarded by someone with the background knowledge of these parties as a product in the conventional or natural sense of the word, since in defining ‘Product’ as ‘any product or goods’ they adopted that sense. A house or a roof does not fall into that category. 39. The context in which the definition appears is that of a building services liability policy which was intended to cover liability for faulty workmanship, materials or design (other than making good). I accept that there may be a potential overlap between the two - if a Product was defective on account of the poor workmanship of the insured. (It is not necessary in the present case to decide whether the Product exclusion would then deny cover, although I incline to the view that it would). In the context of a policy of this nature, the parties must, as it seems to me, be taken to have intended that there would be a wide range of circumstances in which liability for negligent workmanship - one of the most common grounds of liability of building contractors - as well as faulty materials and design would arise. 40. The combination of workmanship, materials and design in the construction trade usually results in the production of something. If, whenever it does, there is a Product, whose failure or inadequacy, if it gives rise to liability to third parties, is excluded from Public Liability cover, the insurance expressly provided by the exception to exclusion 5 is very much reduced. Such an interpretation would also appear to render the foundation clause otiose. A construction of the policy which makes a clear distinction between (i) workmanship; (ii) materials; (iii) design; (iv) Products/products, with substantial cover being given in respect of (i) - (iii), rather than having (i) - (iii) largely overtaken by (iv) is preferable. Indeed, on Aspen’s approach, it would be difficult to discern how there would ever be cover for design liability, since a design is something that in a loose sense is a product, and could certainly be said to be supplied. … 42. The meaning of ‘a product’ may elude precise definition, depending, as it does, on whether the item in question is what you would really and naturally describe as a product. Without attempting a precise definition, I would regard a hallmark of a product, in this context, as being that it was something which, at least originally, was a tangible and moveable item which can be transferred from one person to another; and not something which only came into existence to form part of the land on which it was created. I appreciate that this analysis could be said to introduce indicia which the definition does not contain and, thus, open to an objection similar to that which I expressed in para 32 above. It is, however, in my view, a more reliable guide to the correct answer to the basic question as to the meaning in this context of a product.” -- 40 of 43 -- 41 [176] For my part, I would respectfully adopt the reasoning articulated in that case, and, as applied to the present case, would hold that the plaintiffs’ house was not a “product” of the first defendant. [177] There is, in any event, a further reason for so holding, which derives from the terms of the policy in the present case. There was a further exclusion in the following terms: “Construction personal injury or property damage caused by the demolition, underpinning, removal of support, dewatering, alteration, renovation, construction, erection of and/or addition to any building, structure, plant or equipment by or on behalf of an insured person. Exclusion 15 shall not apply to each individual contract you undertake that does to exceed the sum of $500,000.” [178] It was admitted on the pleadings that the contract price for the plaintiffs’ house was $460,000. Accordingly, exclusion 15 was not available to the second defendant in this case. [179] It is highly relevant, however, that exclusion 15 expressly and unequivocally applies to the construction or erection of any building. This makes it clear, in my view, that the policy ought be read as extending to property damage to a building constructed by the first defendant, provided the contract price did not exceed $500,000. To construe these exclusions otherwise would lead to an unacceptable tension on the face of exclusion 5 and exclusion 15, and render the exception to exclusion 15 completely meaningless. [180] Accordingly, I find that the second defendant is not entitled to rely on exclusion 5 in order to avoid indemnifying the first defendant. [181] The plaintiffs having taken an assignment of the benefit of the relevant policy, they are entitled to a declaration that the second defendant is liable to indemnify the first defendant. Conclusion [182] For the reasons set out above: (a) the first defendant is liable to the plaintiffs in negligence, and (b) the second defendant is liable to indemnify the first defendant in respect of that liability. [183] The quantum of the plaintiffs’ claim was agreed in the sum of $1,172,967.62. It was also agreed that interest should be calculated from 19 March 2010.61 Interest on that sum to the date of judgment, calculated on the requisite Reserve Bank of Australia pre-judgment rates, amounts to $649,522.81. The total, inclusive of interest, is therefore $1,822,490.43. [184] Accordingly, there will be the following orders: 1. judgment for the plaintiffs against the first defendant in the sum of $1,822,490.43 (inclusive of interest to date); 61 Ex. 18. -- 41 of 43 -- 42 2. a declaration that the second defendant is liable to indemnify the first defendant for its liability to the plaintiffs in respect of that judgment; 3. I will hear the parties as to costs. -- 42 of 43 -- 43 -- 43 of 43 --