Demac Homes (Qld) Pty Ltd v Laing Bricklaying Pty Ltd [2013] QCAT 454

CITATION: Demac Homes (Qld) Pty Ltd v Laing Bricklaying Pty Ltd [2013] QCAT 454 PARTIES: Demac Homes (Qld) Pty Ltd (Applicant) v Laing Bricklaying Pty Ltd (Respondent) APPLICATION NUMBER: BDL105-13 MATTER TYPE: Building matters HEARING DATE: 28 August 2013 HEARD AT: Brisbane DECISION OF: Michelle Howard, Acting Senior Member DELIVERED ON: 9 September 2013 DELIVERED AT: Brisbane ORDERS MADE: 1. The application is dismissed. CATCHWORDS: BUILDING- SUBCONTRACTOR- whether implied term in contract- whether implied term breached- if so, whether loss mitigated BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 Hungerfords v Walker (1989) 63 ALJR 210 British Westinghouse Electrical and Manufacturing Co ltd v Underground Electric Railways Co of London Ltd [1912] AC 673 Payzu Limited v Saunders [1919] 2 KB 581 APPEARANCES and REPRESENTATION (if any): APPLICANT: Mr Des Ryan, Director of Demac Homes (Qld) Pty Ltd RESPONDENT: Mr Geoff Laing, Director of Laing Bricklaying Pty Ltd REASONS FOR DECISION [1] Demac Homes (Qld) Pty Ltd engaged Laing Bricklaying Pty Ltd to lay bricks as part of the construction of a house at a domestic building site. -- 1 of 6 -- 2 Subsequently, Demac Homes considered there were problems with the job and that it had not been done to an acceptable standard. The representatives of Demac Homes who gave evidence and Mr Blair Elvin of Austral Bricks, the supplier of the bricks, each described what they saw as an issue with the bricks in different terms. [2] Mr Des Ryan, director of Demac Homes, who attended a site inspection with Austral’s representative, described seeing a white substance around the edges on almost every brick. Mr Michael Wood, Construction Manager for Demac Homes, described the bricks as ‘patchy in areas’, with variations in the colour of the mortar between the bricks, light in some places and dark in others. He also says that where it was darker, he thought that the face of the bricks were covered in mortar, although his view of what he was seeing altered after speaking with Mr Elvin. Mr Elvin, a sales representative from Austral Bricks, inspected in September 2012. He looked at three sides of the house only. He observed variations in the mortar colour around the house where a white substance had leached from the mortar. He estimated that some 2000 of the (approximately) 4000 bricks he observed were affected. [3] Demac Homes ultimately took steps to have the bricks rendered and painted to cover the discolouration. The cost of the rendering and painting was $6663.80. Demac Homes now seeks damages in this amount from Laing Bricklaying. Laing Bricklaying seeks orders that the claim be dismissed. [4] Demac Homes submits essentially that the bricks were not laid in an appropriate and tradesman-like manner and that this resulted in the discolouration. There was no written contract between the parties (although there is some documentary evidence about it). To reflect the presumed intention of the parties and provide business efficacy to the contract, it is reasonable in some circumstances to imply a term or terms into a contract. 1 A term to the effect that Laing Bricklaying was to lay the bricks in an appropriate and tradesman-like manner would give business efficacy. Such a term is a reasonable and obvious term in the agreement. I am satisfied that the contract contained an implied term to this effect. [5] To succeed on its claim, in essence, Demac Homes must reasonably satisfy me that Laing Bricklaying breached the implied term to lay the bricks in an appropriate and tradesman-like manner, and that it occasioned loss as a result. The primary objective of damages is to compensate a party for actual loss suffered as a result of the other party’s failure to perform the contract according to its terms.2 However, it is well- established that a party claiming damages must mitigate its loss, and act 1 For example, BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 discusses implied terms necessary to provide business efficacy. 2 Hungerfords v Walker (1989) 63 ALJR 210. -- 2 of 6 -- 3 reasonably.3 Whether a party has acted reasonably or unreasonably is a question of fact.4 [6] The history of events after the discolouration was observed [7] When Mr Wood initially observed the discolouration, he contacted Mr Geoff Laing, who is a BSA registered bricklayer and the director of Laing Bricklaying. Mr Laing suggested, and it was agreed, that the brickwork be subjected to a high pressure hosing. Mr Peter Dopking, the bricklayer who had been engaged on the job returned to use a high pressure hose on the brickwork. He told the Tribunal that he saw the brickwork after it dried off and he considered that the hosing had adequately dealt with the discolouration. [8] Mr Wood and Mr Laing agree that shortly after this they had a further discussion. Mr Wood says that he told Mr Laing the result was not good enough and that another solution would have to be tried. He says that Mr Laing suggested an acid wash but then took no action to do anything more. [9] Mr Laing on the other hand says that Mr Wood said he did not think the brickwork looked ‘all that good’, but that the owners views were yet to be obtained to ascertain whether it was acceptable to them. Mr Laing can not recall whether he said that an acid wash was an option, but accepts that he may have as he considers this would have been the next step had the owners said the job was not acceptable. He says he has on other occasions successfully used acid wash or engaged professional brick cleaners to remove discolouration. However, he expected that if the owners raised any further issue about the brickwork that he would be contacted again by Demac Homes. That being the case, he took no further action at that point. [10] Mr Wood says that timing was critical because Demac Homes was ready to hand the house over to the owners who were refusing to pay the final payment claim until the discolouration on the bricks was attended to. On Mr Ryan’s suggestion, he contacted Austral Bricks to explore whether there was something wrong with the bricks themselves. Mr Laing was not invited to the site visit with Austral Bricks or made aware of it. Austral Bricks sent Mr Elwin to inspect. Mr Elwin told Mr Ryan and Mr Wood that there was nothing wrong with the bricks or the manufacture of them. They say that he told them he considered the patchiness was due to the way the bricks were laid, causing lime and calcium to leach out of the mortar. [11] What caused the discolouration? [12] Mr Elwin is not a chemist or scientist. He has worked for Austral bricks for 7 years as a sales representative. He said he based his comments on his 3 British Westinghouse Electrical and Manufacturing Co ltd v Underground Electric Railways Co of London Ltd [1912] AC 673. 4 Payzu Limited v Saunders [1919] 2 KB 581. -- 3 of 6 -- 4 experience and observations at Austral Bricks over this period. He also says he discussed what he saw with an unidentified person ‘in the lab’ at Austral Bricks and showed him photos of the bricks in question. No other person from Austral Bricks viewed the site personally. [13] Mr Elwin is not an expert witness. Further, his employer Austral Bricks was effectively being asked by Demac Homes to consider whether it was responsible for the brickwork issue. Therefore, he was not independent. It was in the interests of his employer for him to deny problems with manufacture of the bricks. These matters are taken into account in my assessment of his evidence and the weight it is to be accorded. That said, his evidence about what causes discolouration on bricks is broadly consistent with the evidence of Mr Laing and Mr Dopking. [14] Mr Elwin acknowledged having seen this type of discolouration occur, he estimated 25 times in the last 7 years and considered that the discolouration at this site was of medium severity when compared to others he had seen. He stated that he thought the discolouration was caused by calcium or lime coming out of the mortar joints. He said that in his experience this occurred either because there was a lot of rain around at the time or because dry and wet bricks were laid together. He said that in his experience either could be responsible. Although not aware that any notification is given with bricks when sold that wet and dry bricks should not be laid together, he suggested that all wet bricks or all dry bricks should be laid together. It was common ground that the bricks concerned were laid during a period during which there was considerable rain. [15] Mr Laing’s evidence was that discolouration appearing on bricks is more widespread than Mr Elwin acknowledged. He suggested that during wet conditions (that is, periods of regular heavy rain), about 40% of jobs were affected to some extent. [16] Consistently, Mr Dopking accepted that lime or calcium could come out if bricks were laid wet, but said it also sometimes occurred when they were laid dry. He said he did not consider himself an expert about leaching, but he had seen this happen. Noting that brick is made of natural product and there are variations in them, he suggested that it could be worse with darker brick. He described the bricks laid at the site as light brown. [17] The laying of the bricks [18] Mr Laing said that his bricklayers do not lay in the wet, unless they lay under cover of eaves which, as I understand it, overhang a house perimeter some 600mm. However, he was not at the site when these bricks were laid. Mr Laing also spoke about the pressure builders exert on bricklayers to get jobs done quickly whatever the prevailing weather conditions. [19] Mr Wood said he visited the site every day and that one morning he was there for half an hour meeting with the tradesperson who was constructing an alfresco. He says he observed the bricklayers laying bricks in the rain. -- 4 of 6 -- 5 He says he specifically remembers that the rain was not coming straight down, but was on an angle wetting the bricks. This is a bare assertion made without further detail. That he might recall the angle at which rain was falling or have observed it particularly while engaged in a meeting with another tradesperson seems inherently improbable to me. It is inconsistent with Mr Dopking’s evidence referred to in subsequent paragraphs. Mr Dopking explained why he could be so certain that the bricks were not laid in the rain and his explanation is compelling. I have given his evidence greater weight accordingly. [20] Mr Dopking recalls that during the job, there were ‘off and on’ showers. He said that it was not possible he had laid the bricks in the rain. He said that you can not lay bricks in the rain. He explained that bricks will accept a little bit of water but if they are sodden they can not be laid, because having spread a mortar bed, after laying a few bricks, they start to sink. Therefore, he said he was quite certain that he did not lay the bricks in the rain. I accept Mr Dopking’s evidence that the bricks were not, and could not be laid in the rain. The explanation he gave was compelling and reasonable. [21] Rendering and other possible solutions for discolouration on bricks [22] At or following Mr Elwin’s site visit he recommended the use of a product called Noskum on the brickwork. Mr Wood says Demac Homes used this but there was no marked improvement. Without further contact with Mr Laing, Demac Homes then engaged cement renderers to render the house and for the render to be painted. In response to questions about why Demac Homes did not get back to Mr Laing again, Mr Wood says in somewhat vague terms that he attempted to telephone him and that he mentioned the problem to a crew doing a job for Mr Laing’s over the road, but who told him to contact Mr Laing directly. Mr Laing asserts that he was not further contacted by telephone. He also did not receive email or correspondence about it, which is not disputed. [23] Mr Laing said that on occasions when he had jobs affected by discolouration, he had ‘acid cleaned’ the bricks himself, and then used a neutraliser on them if necessary. He estimated the cost at about $500. However, on some occasions, he had engaged professional brick cleaners to do the job as they are the experts on the best chemicals to use in the particular situation. To the best of his recollection, the cost of this was about $800. [24] Both Mr Ryan and Mr Wood spoke of time pressures to hand over the house. Mr Ryan also suggested that once they had Austral Bricks to the site they then knew that the only way to fix the problem was to render the house and he did not believe that Mr Laing would take responsibility for the problem suggesting this was typical of tradespeople. -- 5 of 6 -- 6 [25] Did Laing Bricklaying breach the contract? [26] The claim that the bricks were not laid in an appropriate and tradesman- like manner relates only to the discolouration which developed on them after they were laid. [27] As indicated, I give greater weight to the evidence of Mr Dopking about the laying of the bricks than I do to Mr Wood’s. Therefore, I do not accept that they were laid in the rain. It was common ground that there were prevailing wet weather conditions at the time of the job. Mr Elwin and Mr Laing agree that leaching of substances out of the mortar causing discolouration can occur during wet weather, that is, irrespective of the bricks being laid wet or in the rain. Consistently Mr Dopking says it can occur when dry bricks are laid. [28] On the evidence before me, I am not reasonably satisfied that the discolouration occurred as a result of the manner in which the bricks were laid. I consider that it is more probable than not, that it occurred as a result of the prevailing wet weather conditions which existed at the time. Therefore, I am not satisfied that it resulted from the breach of the implied term for the bricks to be laid in an appropriate and workman-like manner. The application is therefore dismissed. [29] Observations regarding mitigation of loss [30] I make the observation that if I am wrong and the implied term in the contract was breached, I would not be satisfied that Demac Homes acted reasonably to mitigate its loss. Accepting Mr Laing’s evidence, I am satisfied that after the high pressure hosing, he was not advised that the owners did not find the result acceptable. Also, Laing Bricklaying ought reasonably to have been made aware of and invited to the meeting with Austral Bricks. [31] I am satisfied that Mr Wood and Mr Ryan of Demac Homes, being concerned to hand over the house and obtain the final payment decided not to further involve Mr Laing in discussions due to Mr Ryan’s belief that tradespeople generally will not accept responsibility. Had Mr Laing been further involved, the acid wash and neutraliser solution would likely have been tried at considerably less cost than rendering and painting. Mr Laing has had success using it in the past. It may well have been successful here. I accept Mr Laing’s evidence that the cost for that treatment would have been somewhere between $500 and $800, depending on whether he did it or professional brick cleaners did it. This is considerably less than the $6663.80 claimed by Demac Homes. [32] Accordingly, I am not satisfied that Demac Homes acted reasonably in acting as it did, in rendering and painting the house without further reference to Mr Laing. It failed to act reasonably to mitigate its loss. If I had concluded that Demac Homes was entitled to damages, I would have awarded $800 being, on the evidence before me, the cost for professional brick cleaners to treat the discolouration on the bricks. -- 6 of 6 --