Durklyn Pty Ltd v Peter A O'Neill & Associates Pty Ltd & Ors [1990] QSC 366

10 30 40 50 IN THE SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION BEFORE MR. JUSTICE COOPER ✓ BRISBANE, 1 NOVEMBER 1990 No. 4774 of 1989 (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold.without the written authority of the Chief Court Reporter,Court Reporting Bureau.) BETWEEN: DURKLYN PTY. LTD. -and- PETER A. O'NEILL & ASSOCIATES PTY. LTD. -and- DESIGN COLLABORATIVE ARCHITECTS PTY. LTD. -and- NOEL LINDSAY EDSER -and- CLAUS SIEVERS PTY. LTD. -and- TONY MONTAGNA -and- STEPHEN HUGH PEARSON JUDGMENT Plaintiff First Defendant Second Defendant ThirdDefendant FourthDefendant First Third Party Second Third Party HIS HONOUR: In this matter I make the following orders: (1) I give judgment in favour of the plaintiff against .:r.:ar, Qld. 1 10 20 30 40 50 -- 1 of 57 -- 10 the first and second defendants in the sum of $136,595.12, which sum includes interest. (2) I give judgment in favour of the fourth defendant against the plaintiff and dismiss the action against the fourth defendant. (3) I order that the first and second defendants pay the plaintiff's costs of and incidental to the action, including reserved costs, if any, to be taxed. (4) I order that the plaintiff pay the fourth defendant's costs of and incidental to the action, including 20 reserved costs, if any, to be taxed. (5) I order that the second defendant pay by way of contribution to the first defendant, an amount equal to so much as is paid by the first defendant to the plaintiff on account of damages and taxed costs as exceeds one-half of 30 the judgment against the first defendant in favour of the plaintiff. (6) I order that the third defendant pay the first defendant by way of damages for negligence such sum as the first defendant is obliged to pay to the plaintiff on 40 account of damages and taxed costs after the receipt of any contribution actually paid by the second defendant to the first defendant. I publish my reasons. 50 60 2 10 30 40 50 60 -- 2 of 57 -- r IN THE SUPREME COURT OF QUEENSLAND No. 4774 of 1989 Before Mr. Justice Cooper BETWEEN: CATCHWORDS: Counsel: Solicitors: DURKLYN PTY. LTD. - and - PETER A. O'NEILL & ASSOCIATES PTY. LTD. - and - DESIGN COLLABORATIVE ARCHITECTS PTY. LTD. - and - NOEL LINDSAY EDSER - and - CLAUS SIEVERS PTY. LTD. - and - TONY MONTAGNA - and - STEPHEN HUGH PEARSON JUDGMENT - COOPER J. Plaintiff First Defendant Second Defendant Third Defendant Fourth Defendant First Third Party Second Third Party Delivered the 1st day of November, 1990. D.R. Boughen for plaintiff W. Sofronoff Q.C. with him M. Bland for first defendant Mr. Sievers appearing for himself Primrose Couper Cronin Rudkin for plaintiff Cannan and Peterson for first defendant Hearing dates: 26 September to 5 October, 1989. -- 3 of 57 -- IN THE SUPREME COURT OF QUEENSLAND BETWEEN: DURKLYN PTY. LTD. - and - PETER A. O'NEILL & ASSOCIATES PTY. LTD. - and - DESIGN COLLABORATIVE ARCHITECTS PTY. LTD. - and - NOEL LINDSAY EDSER - and - CLAUS SIEVERS PTY. LTD. - and - TONY MONTAGNA - and - STEPHEN HUGH PEARSON JUDGMENT - COOPER J. No. 4774 of 1989 Plaintiff First Defendant Second Defendant Third Defendant Fourth Defendant First Third Party Second Third Party Delivered the 1st day of November, 1990. The plaintiff in this action is the owner of certain land at Sorrento on the Gold Coast. The company is controlled by Sir Justin and Lady Hickey. In 1982 the company was desirous of having constructed a residence on the land at Sorrento as the Hickey family residence. The residence was ultimately -- 4 of 57 -- 2 constructed by the fourth defendant. The plaintiff, by its statement of claim, complains that there were defects in the design or workmanship or a failure to build in accordance with the specifications. The areas of complaint relate to:- (a) the carport roof; (b) the driveway and forecourt of the residence; (c) the passenger lift; (d) the dumb waiter; (e) corner beading to the angles of external plaster work; and (f) eave openings. The claims are brought against the first defendant, the second defendant and the third defendant as architects and the parties responsible for certifying the works for payment, and the fourth defendant as builder. On the trial of the action the second and third defendants did not appear. There is a question at the · outset as to who was the architect engaged by the plaintiff. The plaintiff pleaded in the alternative either a contract with the first defendant, or a contract with the first and second defendants, or a contract with the first and third defendants. The first defendant denies that it was party to a contract between itself and the plaintiff whereby it was engaged as architect to design and supervise the construction of the house premises at Sorrento. Further, the first defendant denies that it was party to any contract whereby it undertook any obligations "relating to the construction of the said residence or the administration of any such construction". The first defendant -- 5 of 57 -- 3 contended that ·the relevant contract for the provision of architectural services was between the plaintiff on the one hand and the first defendant and either the second or third defendant. The material terms of that agreement were that the first defendant would perform the design function and that the third defendant, either on his own behalf or on behalf of the second defendant, would· supervise and administer construction of the house. It was further contended that it was not part of such a contract that either the first defendant or the second or third defendants would be responsible for the due performance of the architectural services agreed by the contract to be separately provided by the other architects. It is therefore necessary to determine the contractual arrangements between the plaintiff and the first, second and third defendants. Mr. Tang was an architect and a principal of the first defendant. Mr. Tang was, in 1981, a neighbour of the Hickeys who then lived in Sydney. In late 1981 Tang discussed with the Hickeys their intended move to Queensland and his interest in providing the architectural services in relation to the building of their home in that State. I find that there was an informal understanding that Tang would prepare some designs for their consideration. In early 1982 Sir Justin Hickey discussed with Tang the breakup of the fees which would be payable on the job and Tang advised Hickey that the fees would be 4 per cent of the cost of works for the drawings and 3 per cent of the cost for supervision. I find in that discussion Tang advised Hickey that the residence would be able to be constructed for $1 million and that Tang would do the -- 6 of 57 -- 4 supervision of the works, Tang intending to purchase a home unit on the Gold Coast to provide him with a base to work from. I find that in February or March 1982 Tang advised Hickey that the estimated cost had risen to $1.2 million and that he agreed with Hickey that, irrespective of the ultimate cost of construction, he would accept a fixed fee of $70,000.00. I accept the evidence of Sir Justin Hickey that he became concerned as to the ability of Tang to properly supervise the works in Queensland with his time divided between Sydney and the Gold Coast. In response to Hickey's concern, Tang agreed to obtain the services of a local architect to supervise the project and introduced the third defendant to Sir Justin and Lady Hickey. The third defendant was acceptable to the Hickeys and it was, I find, the understanding of Sir· Justin Hickey that the third defendant would do the supervision of the house construction when building began. So far as the evidence discloses, the matter had not proceeded beyond the design concept stage by this time. Importantly, I find that no binding contractual arrangements had been entered into by Sir Justin Hickey on his own behalf or on behalf of the plaintiff with either the first, second or third defendants or any of them. The steps which had been taken by Tang and Hickey were merely preparatory in the hope or expectation that some formal arrangement would be agreed to if the project were to proceed. I find in accordance with the admissions made in the pleadings that the second defendant carried on business as "Noel L. Edser & Associates, Architects". -- 7 of 57 -- 5 Neither Tang nor Edser gave evidence. It is not possible with any certainty, from the evidence of Sir Justin Hickey, to say when it was agreed to proceed with the project in accordance with the design prepared by Tang. However, from ex. 4 3, a letter of 16 August, 1982 from the first defendant to the third defendant concerning the arrangements between them "if either or both projects proceed to Building application", it would appear that no decision had been made at that time. I should record that I have not had regard to the contents of exs. 43 and 44 in determining the contractual arrangements between the plaintiff and the first and second or third defendants. On 13 September, 1982, a letter under the letterhead "Tang O'Neill Pty Ltd Architects in Association with Noel L. Edser & Associates, Architects", was sent to Sir Justin Hickey. The letter said:- "13th September, 1982 Sir Justin Hickey P. 0. Box 195 SURFERS PARADISE OLD 4217 Dear Sir Justin, Re: Residence for Sir Justin & Lady Barbara Hickey Lot 1, R.P. 163791 Par. Nerang Maiseilles Court, Sorrento, Gold Coast With reference to our previous discussions, we have pleasure in accepting the commission for the above mentioned work and also confirm our agreed Architectural fee of 7%. The Architectural fee is 7% of the Cost of Works as defined by the R.A.I.A. The fee shall be apportioned in three stages initially and in the last stage of contract administration (construction of building) the fees will be paid on a monthly basis. The stages of work are: -- 8 of 57 -- 6 1) Schematic Design Stage 2) Up to and including design development 3) Up to and including Contract Documentation 4) Up to and including tender and Contract Administration 15% of fees 15% of fees 40% of fees 30% of fees Should you require further information, please contact the undersigned. Yours sincerely, TANG O'NEILL PTY LIMITED LAURENCE TANG LT/cd cc: Noel Edser & Associates." There was no direct evidence of the "previous discussions" referred to in the letter. A further letter was sent on the same letterhead on 13 September, 1982 in the following terms:- "13th September, 1982 Sir Justin Hickey P. 0. Box 195 SURFERS PARADISE OLD 4217 Dear Sir Justin, Re: Residence for Sir Justin & Lady Barbara Hickey Lot 1, R.P. 163791 Par. Nerang Marseilles Court, Sorrento, Gold Coast We confirm that we have begun working drawings and detail designs on the above project. We have chosen on your behalf the following consultants: 1) Moir & Harding Pty Ltd (Structural Engineers) (Bill Moir) 23 Orchid Avenue, Surfers Paradise (075) 38 6500 (John Metzroth) 200 Goulburn Street, Sydney (02) 212 5268 -- 9 of 57 -- 7 2) Smith Paul & Partners (Hydraulic Engineers) (Steve Paul) 63-67 Edward Street, Brisbane (07) 221 5583 6 Markeri Street, Mermaid Beach (075) 31 5946 (Warren Smith) 321 Kent Street, Sydney (02) 29 1312. We will be writing to you shortly in respect of their professional charges. We also recommend the engagement of a Mechanical & Electrical Engineer as · well as a Landscape Consultant. The sketch drawings of 200: 1 scale are now being transferred to 100: 1 working drawings. The larger drawings with room sizes in imperial measurements (feet and inches) will be forwarded to you as soon as possible. We enclose herewith our first Memorandum of Fees for· the above project. Please forward half the amount ($5,775.00) direct to our Associate, Noel I. Edser & Associates. Should you require any clarification, please do not hesitate to contact the undersigned. Yours sincerely, TANG O'NEILL PTY LIMITED .LAURENCE TANG" Sir Justin Hickey gave evidence that the proposed fee arrangement was inconsistent with his earlier exchange with Tang as to fees being fixed at $70,000.00 and that he raised this matter with Tang. This is confirmed by a letter of 20 October, 1982, under the same letterhead, sent to Sir Justin Hickey as follows:- "20th October, 1982 Sir Justin Hickey P. 0. Box 195SURFERS PARADISE OLD 4217 Dear Sir Justin, -- 10 of 57 -- 8 Re: Residence for Sir Justin & Lady Barbara Hickey Lot 1, R. P. 163791 Par. Nerang, Maiseilles Court Sorrento, Gold Coast. Job No. 82:21 We confirm our discussion of the 15th October, 1982 on the above project with regard to Architectural Fees. The full Architectural Fees for carrying out of the above works -will be $70,000. This replaces any previous fees agreement. The mode of payment will be, as agreed: a) Upon submission of Building Plans to Council - $25,000. b) Upon submission to Builders for tendering - $25,000. c) The remainder of the $20,000 will be divided into. monthly payments based upon the contract building period. Should you require further clarification, please do not hesitate to contact the undersigned. Yours faithfully, LAURENCE TANG LT/cd cc: Noel I. Edser" On 25 October, 1982, under the letterhead of Accident Insurance Mutual Limited, the following letter was sent:- "Tang O'Neill Pty. Limited, P.O. Box 415, CHATSWOOD 2067. ATTENTION: Mr. Laurence Tang Re: Residence for Sir Justin & Lady Barbara Hickey Lot 1, R.P. 163791 Par. Nerang, Maiseilles Court, Sorrento. Job No. 82:21 Dear Sir, We wish to advise of our agreement with the terms of mode of payment re Architectural Fees, as set out in your advice of 20th. inst. Yours faithfully, SIR JUSTIN HICKEY, CHAIRMAN." -- 11 of 57 -- 9 There is nothing in the material to suggest that the first, second or third defendants were aware of the existence of the plaintiff. The arrangements which were being entered into were, so far as the correspondence reveals, with Sir Justin Hickey. The use of the letterhead of Accident Insurance Mutual Limited by Sir Justin Hickey was not intended to have any contractual significance. The case before me was conducted on the basis that whatever contractual arrangements were made by Sir Justin Hickey, such arrangements were made on behalf of the plaintiff and that the plaintiff in fact paid the fee of $70,000.00 I propose to·make my findings on that basis. I find that the first and second defendants contracted jointly to provide all architectural services including design, contract documentation, tender, supervision and contract administration for the sum of $70,000.00. Although I find that it was the general understanding of the parties that the second defendant by the third defendant would generally undertake the supervision and administration of the contract, I am satisfied that such an understanding did not amount to a contractual term. I am satisfied that the fees payable by the plaintiff were payable to the first and second defendants jointly and that they were jointly and severally liable for the proper discharge of the obligations undertaken by them. Mr. Sofronoff Q.C. relied upon the following evidence of Sir Justin Hickey as an admission that the respective architects were paid for the separate functions each provided and thus that the architects contracted separately and not jointly:- -- 12 of 57 -- made. 10 "He was paid for designing and Edser was paid for• supervision; that's the case, isn't it?-- We paid 70 thousand dollars and were taken up the creek. Call it anything you wish, sir. You paid Tang O'Neill because they were the designers; you paid Edser because he was the supervisor; that's so, isn't it?-- Right." In my view the evidence does not support the contention The plaintiff knew that generally it was intended that certain functions would be performed by the two architects and that because of the presence of the second defendant on the Gold Coast, the supervision would primarily, if not totally, be performed by the second defendant. In context I do not se~ the statement going further than that the second defendant was paid for work of the type which the parties to the contract expected the third defendant would undertake. Indeed, the architects were not paid by the plaintiff for the separate work each performed. The invoices of 8 November, 1982, 1 August, 1983, 17 February, 1984 and 17 October, 1984 (ex. 6) show that the entire sum of $70,000.00 was claimed in accordance with the stages set out in the letter of 20 October, 1982 (ex. 3) and directed to be paid as to half to the first defendant and as half to the second defendant. The only fee which relates directly to the supervision of the works is the fee for $20,000.00. This fee was rendered on 17 February, 1984 as $13,810.00 and on 17 October, 1984 for the balance. All prior fees related to design, obtaining Council approval and tendering. All fees comprising the $70,000.00 were claimed under the letterhead of both architects with a direction that they should be paid one-half each. The second defendant, on the evidence of Sir Justin Hickey, Lady Hickey and Mr. Sievers, performed architectural -- 13 of 57 -- 1 1 functions by the third defendant beyond supervising construction of the home and was engaged in the preparation of the tender documents and drawings and the calling of tenders. Although I have not found it necessary to rely on such conduct of the parties to determine the terms of the contract, such conduct constitutes admissions as to the existence of the contract, the parties to it and its basic terms and may be referred to for the purpose of determining each of those matters. (See Australian Energy Limited v. Lennard Oil NL [1986] 2 Qd.R. 216 at 237 per Thomas J., with whom Andrews C.J. agreed, and the cases cited there.) Although Mr. Sofronoff Q.C. referred me to the inclusion of the second defendant as "The Architect" in cl. 3 of the contract between the plaintiff and the fourth defendant, the designation of the second defendant as the architect in the contract is not determinative of the arrangements between the parties as to the provision of architectural services to the plaintiff. The administration of the building contract requires the designation of a particular person. In the circumstances of this case the logical person to designate was the local architect. The contract and the tender documents acknowledge, for what it is worth, that the drawings, specifications and the like were prepared by "Noel L. Edser & Associates in association with Tang O'Neill Pty. Ltd.". To my mind what is more important in the subsequent conduct of the first defendant is a failure to deny a responsibility for the contract administration which it now disowns. In a lette~ from the first defendant to Sir Justin Hickey of 1 August, 1983 -- 14 of 57 -- 12 (ex. 7) enclosing a memorandum of fees, the first defendant, by Mr. O'Neill, states:- "We take note of your comments and will act accordingly to make sure that adequate administration will be evident during the construction of the project. If you require any further information, please do not hesitate to contact the undersigned." Sir Justin Hickey gave the following evidence as to the circumstances leading up to the receipt of the letter which I accept:- "That letter that you have there that I have referred you to earlier, it is dated, I think, 1 August 1983; is it?-- It is. Was that receipted to you, then, at around the time of the signing of the contract with the builder?-- Yes, it would have been. And at that stage, the works then hadn't commenced as at 1 August 1983? At least they hadn't commenced?-- I am unsure, Mr. Boughen. I am just wondering if that assists you in recollecting the discussion that you had with Mr. Tang referred to in that letter?-- Well, of course, what is referred to here is probably the very beginning of our complaints about Edser and Tang and O'Neill not attending to their duties in a professional manner, that is, supervision, drawings, architects - the whole thing - what we were paying $70,000 for. That was when we commenced to complain. Whether the building had started, I'm not sure, because the drawings were not in place when the builder went to start. My friend here began - the things he was doing on the land - he came to me - I think Barbara and I----- This is Claus Sievers?-- Yes, and said we did not have sufficient drawings, and it is important that those - it is critical that those drawings come in and that the bar charts could be kept running." By July 1984 there were difficulties on the job in relation to price overruns. On 26 July, 1984 the first defendant, by Mr. O'Neill, wrote to the plaintiff as follows:- -- 15 of 57 -- 13 11 26th July, 1984 Attention: Sir Justin Hickey Durklyn Pty Limited P. 0. Box 195 SURFERS PARADISE OLD 4217 Dear Justin, Re: Residence of Sir Justin & Lady Hickey Lot 1. R.P. 163791 Par. Nerang, Maiseilles Court Sorrento Gold Coast. Job No. 82:21. With reference to our telephone conversation with your secretary of today's date, we are writing to confirm that we have cancelled the meeting of 30th July, 1984 to enable the production of a full report of the projected contract price on your residence. When all the information has been processed we will contact you to arrange a mutually agreed time for a further meeting. Yours faithfully, TANG O'NEILL PTY LIMITED" I do not accept the submission of Mr. Sofronoff Q.C. that each of these letters ought, in the circumstances, to be construed as nothing more than a gratuitous offer to render such assistance as the first defendant could, either out of a sense of friendship or some moral obligation, for having introduced the second defendant to the Hickeys as a suitable architect to undertake supervision of the works. The letters are consistent with an acknowledgement on the part of the first defendant that it has continuing obligations in the discharge of its functions as architects to the plaintiff. For the above reasons I am satisfied that the first and second defendants jointly contracted with the plaintiff as architects. There being no contrary intention on the evidence I accept, they were bound jointly and severally to perform the promissory obligations undertaken as architects and were jointly -- 16 of 57 -- 14 and severally liable in the event of any breach by them of the contract (s. 54, Property Law Act 1974 as amended). The first and second defendants as architects were, by their contract, bound to design the house, let the contract, supervise the building and advise the plaintiff with respect to payment of the builder and acceptance of the work. The plaintiff under the contract was entitled to expect, so far as care and skill could make it, a house which was in accordance with the plans and specifications, free from defect and fit for the purpose of a family residence (Edelman v. Boehm (1964) 26 S.A.S.R. 66 note F.C. at 73-74; Clayton v. Woodman & Son (Builders) Ltd. [1962] 1 W.L.R. 585 at 593). To the extent that the first and second defendants as companies relied upon the third defendant to carry out any of these functions, they became liable for his default in so doing. The obligations of the fourth defendant as builder are contained in a written building contract between the plaintiff and the fourth defendant dated 4 August, 1983 ( "the building contract"). On 4 December, 1984 the second defendant by the third defendant, pursuant to cl. 25(f) of the building contract, certified that the house was practically complete. On 2 April, 1985 the second defendant by the third defendant, pursuant to cl. 31 (b) of the building contract, certified for final payment in an amount of $100,137.19 remaining due to the fourth defendant and that the fourth defendant had completed construction of the residence in accordance with its obligations under the building contract. -- 17 of 57 -- 15 On 23 May, 1985 the plaintiff paid to the fourth defendant the sum of $93,872.60. The plaintiff claims that the certificate as to final payment was isstied by the architects in breach of their duty to exercise care and skill in the performance of their duties as architects and that by virtue of the defects the subject of this action the works were worth substantially less than the sum of $2,170,508.93 certified. The plaintiff alleges that it has wholly lost the sum of $93,872.60 and has incurred further loss by the conduct of the architects. I turn now to the defects complained of. 1. The carport roof: Some time after the work was finished the concrete slab roof of the visitors' car-park was found to have deflected so that about two-thirds of it was below the level of the rain water outlets. In consequence ponding of rain water occurs on the roof. Evidence was given by Mr. Ian Ferrier, an architect who inspected the residence and reported to the plaintiff on it. In his opinion it is necessary to re-grade the upper surface of the slab using a light-weight concrete. The allegation made against the architects is that they failed to supervise the works sufficiently to observe the deflection in the slab and wrongly certified for its payment (see item 1, schedule to amended statement of claim). The allegation against the fourth defendant is that it "did not construct the roof of the carport as a plan surface". Mr. Ferrier gave the following evidence which I accept:- "You also speak carport roof?-- of waterYes. ponding on the visitors -- 18 of 57 -- 16 With that problem exhibited, is it the architects responsibility or alternatively should he have supervised that the works had been completed with that particular defect being evident?-- I am not certain whether the deflection there is a deflection of about 25 millimetres in the length of the slab which is ponding the water, and I am not certain whether the deflection is due to the sagging of the formwork or insufficient support of the formwork, or what you might call 'fine design' which allows for some deflections in order to reduce the amount of concrete required. It is possible that if no rain had fallen at the time the building was being put up, or shortly after completion, that the architect might not have realised that there was a deflection there but unfortunately the situation, as far as this particular matter is concerned, is that because of the deflectionthe water can't get away into the downpipes and consequently there is water ponding all the time, with three major consequences: one would be misquito (sic) breeding and the second would be algae growth and the· third would be unsightly and would cause some deterioration of surface in due course, ... I think you have said, you have very fairly said inthe course of your evidence in chief about the carport roof that that the plumbing problem was apparent to you because it had recently rained, that there was some 2 cm. of water in the ponds?-- 25 it was. And you said that the architect· might not have realised that there was a problem if there had been no rain?-- That is correct. It is the case, isn't it, that the architect as you said is only required to make periodic inspections of the work?-- Yes. And that in the absence of any rain that particular problem would not have been apparent from any other factor?-- That is quite probable, yes. BY MR. BOUGHEN: If I can just take up a recent question and answer that Mr. Sievers put to you. He asked you about a carport roof being within accepted tolerances and referred to a certain report?-- Yes. What was the report? Are you familiar with the report that Mr. Sievers was referring to?-- I don't recall - I may have seen it but there is a differencebetween a slab deflecting within tolerances (sic) when it's not required to drain water and a slab deflecting -- 19 of 57 -- 17 where the outlets are no longer going to be able to carry the water away, and one could not design a slab to those tolerances in that case. That requires different design criteria?-- Either that after the provision after the slab has deflected - to fill it with a simple suitable material before putting the surface that you want. In relation to that, in your view, should the architect have inspected the surface of that slab roof at an appropriate time to determine what its level was, before issuing any certificates in relation to the completion of the works?-- I don't think so. I would think that you would rely on your defects liability period to point up any sort of defect of that sort. It is not encumbrant (sic) normally on the supervising architect or the inspector to go architect, pardon me - to go to that degree of detail unless he has got reason to suspect that it is not going to be satisfactory. He would have relied, you· see, on his engineer to supervise that the reinforcement was in the right place and things of that sort." There is no evidence to support a finding that the carport roof when constructed was not built in accordance with the plans and specifications supplied by the architects to the fourth defendant. By cl. 26(a) of the building contract, the fourth defendant was only obliged to make good at its own expense defects notified during the defects liability period (26 weeks from practical completion) which "are due to materials and/or workmanship not being in accordance with" the building contract. The plaintiff has failed to satisfy me on the balance of probabilities that the deflection was caused by a failure on the part of the fourth defendant. There is no allegation against the architects for faulty design of the concrete slab roof of the carport. The complaint as to the roof of the carport did not form part of the defects list prepared by the plaintiff on 26 April, 1985 (see ex. 14). The i tern No. 16 "Roof - inspection of roof area required - -- 20 of 57 -- 18 suspected water dampness problem" does not relate to, the carport. It relates to the entry of water through the eaves (item 6 to schedule to statement of claim). This appears clearly from the report of Rider Hunt and Partners dated 21 May, 1985 (part of ex. 67) under defect 16 of the schedule of rectification work. (See also item (xvi) of the plaintiff's notice of dispute dated 10 May, 1985, doc. E11, ex. 69.) There is no evidence that the plaintiff ever brought this defect to the attention of the architects during the defects period or prior to the institution of this suit. Having regard to the evidence of Mr. Ferrier, I am not persuaded that the architects were negligent in not observing the deflection during the supervision of the works. As I have said there is no evidence to make a finding that the. deflection occurred as a result of faulty workmanship. Nor in my opinion has the plaintiff shown any breach of duty in certifying payment for this work. It does not follow that failure to find a defect which a reasonable examination would have disclosed, necessarily means that an architect is in breach of his duty to a building owner so as to be liable in negligence (East Ham Corporation v. Bernard Sunley & Sons Ltd. [1966] A.C. 406 at 443). In the instant case the fall is not readily observable from ground level and only became apparent from observations from above when ponding was observed after rain. I am not prepared to hold that the architects were negligent for failing to observe it, when it only became apparent after rain. For the plaintiff to recover against the architects it must first prove on the balance of probabilities the cause of the -- 21 of 57 -- 19 defect and that the conduct of the architects was itself causative of the defect or some loss flowing from it. In this ca~e the plaintiff has put up two hypotheses which are equally open. One, insufficient design, forms no part of the claim against the architects. Even if the defect had been discovered by the architects, the plaintiff would have been obliged to pay the fourth defendant for the cost of building the carport and roof. The plaintiff would only have been entitled to withhold the cost of rectification if the defect was the result of the materials or workmanship not being in accordance with the building contract and the fourth defendant had failed to ;make good under cl. 26(a) of the building contract. The plaintiff has simply failed to prove its entitlement to recover in respect of para. 9(a) of the statement of claim. 2. The driveway and forecourt: The The specification (ex. 5) provided under para. 4.18:- "Dri veway slab shall be 1 2 5 mm. thick reinforced to Engineers Detail." slab was not constructed in accordance with the specification. I accept the evidence of Mr. Antony Montagna, the concreting subcontractor, that the third defendant came to him to prepare a price for the most economical driveway which Mr. Montagna could lay. In consequence Mr. Montagna prepared the following quotation:- "Dear Sirs, The following is Exposed Aggregate Rickey's residence. our quotation paving at Sir for Concrete Justin and and Lady Concrete and square meters (sic). Total: Aggregate, approximate area (sic) at $34 - 00 per square $47,600 - 00. 1400 meter -- 22 of 57 -- 20 Concrete depth 80mm, reinforcing mesh gauge F52. Exposed Aggregate¼" White Byron Bay pebbles in grey cement and coloured infill, average depth 20mm. Builder to supply and place pattern forms. Removal of forms and infill finished in Black, Brown or Golden pebbles included in quotation. Aluminium Angles for expansion joints $4 - 50 per lineal meter (sic), to be measured on site. Edging, soil compaction, including base preparation and levels to be fixed by builder. Water and electricity to be supplied on site. Concrete area to be kept free of other tradesmen and vehicles. If required: Steps, treads and risers $18 - 00 per lineal meter (sic). Risers $9 - 00 per lineal meter· (sic) . First progress payment to be made two weeks after commencement of job and remainder to be paid weekly. Workers compensation Number: AW790192202. Yours sincerely," As appears from the reports of Mr. Robert Gallagher, consulting ·engineer, and investigations done by Soil Surveys & Exploration Pty. Ltd., the slab thickness varies from 65 to 115 mm. with a mean of 92 mm. The topping thickness varies from 18 to 27 mm. with a mean of 22 mm. Allowing for standard deviation, Mr. Gallagher concludes that mean slab thickness of 79.3 mm. is in accord with Mr. Montagna's quotation. There is no suggestion from any of the expert evidence that this is not correct and I find that the concrete thickness of the slab is in accordance with the quotation. The topping of exposed aggregate was laid to a design by Mr. Christopher Malmoux. The design is ex. 58. It is apparent -- 23 of 57 -- 21 that the design is not a working drawing. Mr. Montagna gave the following evidence which I accept:- "You could still have put expansion joints on that design but cutting it in straight lines, couldn't you?-- The architect which designed this plan here, this design to mark them in the way he wants them and come to me and say 'Tony, this is it' and he would have to tell me what sort of expansion joints he wanted. Did he do that?-- No. Did the architect give you any plans other than that design?-- You can see there is no expansion joint shown in here. That is a surface design?-- That is what I had to work on. Did you ask the architect to give you some information on expansion joints?-- Yes, we discussed with Edser - we discussed the expansion joint that is why I cut the concrete because the expansion joint was there. Before you laid the driveway or laid the base of the driveway and cut those joints did you talk with the architect as to where the joints were going to go?-- Yes, the joint always goes on the weakest point, if it is a bend or corner or whatever. If it is a large area you put them in squares, otherwise you cut them on the weak spot of the slab. Before you started to cut your joints - let me start at the beginning. You put down a big slab of concrete?-- Yes. One large slab?-- No, we put - it was poured in four or five days. Poured the concrete in four or five days. I suggest it took one day to put down the concrete part of the driveway?-- No man could put a 14 hundred meter (sic) of concrete in one day. You say it took four or five days?-- Yes. Were there joints between the various sections you laid?-- The joints were done - we laid today - it was timber with double mesh and that was formed as a joint. We start the next day nearly all of them that got the small dowel bar----- -- 24 of 57 -- 22 This went through from the slab laid on day one with the dowel bar sticking through for the slab to be laid on day 2?-- Yes. They were ultimately joined together?-- Yes. After you had done that did you then cut joints into the concrete?-- Yes, I got the diamond saw and cut about where the joint was supposeo to go. Before you cut the joint with a diamond saw talk to Mr. Edser and say 'Where should I joints?'?-- Yes but·he said, you know, that he told me 'Tony, you know better than me. where they are required.' You went and appropriate?-- put them Yes. where you thought did you put the is what Put them it was How long after you had finished laying the concrete slab did you put the joints in top?-- We start' cutting with a saw, that is it. Straight away?-- By the time we finished one end we started from the beginning - would be about the next day. These saw cuts, how deep did they go?-- The depth was half the depth of the concrete. About inch and a half?-- Yes. Did you ever put any other types of.joints in the base layer?-- No, what other joint did you put on? Did you put wide expansion joints on?-- No, it is all cut by a saw. Just these saw cuts?-- Yes, you can't cut too deep or you cut to the mesh. If you cut to the mesh the slab separates. They (sic) is why you cut half and make sure you don't cut the mesh. Now, after the slab had been cut and so on you then went to put the surface on; is that right?-- Correct. You put the white or the light coloured aggregate on first; is that right?-- Yeah. And once that had set you pulled the styrofoam blocks out on (sic) put the next colour in?-- A few days after, the next day, what ever. -- 25 of 57 -- 23 How long did that process take?-- I can't recall. About three weeks a minimum. I can't guess, that amount of aggregate, it would have to be about two and and (sic) a half, three weeks, could be more. When the aggregate was being laid there was some aluminium angles that went down; is that right?-- Now we go back on the joints. Just tell me, aluminium angles were used?-- Yes. And they were used for joints; is that right?-- As a stop joint. Those aluminium angles that were used as stop joints, did they follow the cuts that you put in the bottom slab?-- Exactly. So where ever you cut in the bottom slab an aluminium angle was laid on top of it?-- Was supposed to be double but they didn't want it double, so we just had' to go for single. Now, were there - were all the cracks that you cut into the base layer, were they covered by an aluminium stop piece on top?-- Yeah. So when we see all these straight aluminium angles on the top, there's a saw cut underneath?-- Yeah. BY HIS HONOUR: Why do you say they were supposed to be double?-- I was referring before, Your Honour, if you put a double aluminium and you leave a gap of fivemil. then you .fill that gap with silicon that this forms an expungent (sic) joint. Right?-- When I was - started to do that, they stopped me, they said no, we want no joint whatsoever. Who stopped you doing that?-- Ian Wilson was his name but he must have had from somebody else, somebody above him, now, who give the order, I don't ask question, I even refer to Noel Edser. I said, 'Noel,what you going to do?' He said, 'Tony, that's what they want. 1 'Tony, that's what I want. 1 ?-- 'Tony, that's what they want, give them what they want.' BY MR. BOUGHEN: You say Wilson told you not to putthem in?-- He had instruction in his hand. Everything around the house was instruction only. You couldn't touch anything unless you had instruction inyour hand or that's it. -- 26 of 57 -- 24 So you went ahead and did it that way; is that right?-- Yeah. Now did you talk to anybody else about the expansion joints apart from Ian Wilson, this is as you were doing the work?-- I told Edser, that's what I was referring, I told Edser about the spongy joints. He said to do it that way?-- That's exactly what he said, 'That's what they want, you give them what they want. ' Without asking any question. If they ask question, they give you the sack from the job and you wouldn't work there any more. Now, when did you have that conversation with Edser?-- If I would remember all the times and the areas of the discussion. This particular one?-- Edser discuss the thing about ten or eleven in the morning. What I'm getting at was this after you'd started the driveway?-- When I was starting the driveway, that's when they stopped me from producing joints, the spungy (sic) joining. I'm trying to fix it down in time. I'm talking about the conversation you had with Mr. Edser?-- Yes. Was that after you'd started work on the driveway?-- After started - I started working but laying the aggregate or laying the concrete. You tell me?-- You asking the question, you tell me. After you started laying the aggregate that you had this conversation?-- I didn't start laying actually, yes, it was. We had the mixer going and the first joinder was near the garage, the main garage doors and the aluminium there was about 30 square metres and I already had a double aluminium there and I said no, there is another one. Now, there are some expansion joints in the driveway, aren't there?-- I cut them down, they got to be - no, no spungy (sic) joint at all, nothing. Nothing?-- No, only stop joints." The topping as constructed contained no expansion joints. Aluminium strips were placed at various places in the topping. The use of such strips does not allow for expansion of the topping, the strips acting to constrain the topping when it -- 27 of 57 -- 25 expands. The topping has cracked and delaminated in a number of places and has become drummy. I find that the topping surface has cracked and delaminated for the following reasons:- (a) the absence of expansion joints in the topping surface; (b) differential expansion between the topping and the concrete slab; (c) shrinkage cracking in the sub-slab being reflected in the topping cover; and (d) the use of aluminium strips constraining the topping and thus exacerbating the problem of differential expansion and forcing the topping to lift up and away from the concrete slab. A proper design for the topping would have included provision for expansion joints and would not have included the use of the aluminium strips. I accept the evidence of Mr. Cole that Mr. Malmoux, an interior designer employed by the plaintiff and the designer of the surface design of the driveway, did not wish his design to be interfered with by the provision of expansion joints and expressed this view to the builder. I accept the evidence of Mr. Cole that Mr. Malmoux told the builders not to include expansion joints in the topping which joints would have been provided in the normal course as standard building practice. The issue of whether expansion joints were to be provided was placed before the third defendant as architect. I find that the third defendant directed the fourth defendant to construct the topping without expansion joints ana to use aluminium strips. -- 28 of 57 -- 26 It was submitted that I should find that Lady Hickey was aware of the builder's desire to place expansion joints in the topping and the builder's concern that the topping would crack without such joints and that Mr. Malmoux and the architect had directed that such joints be deleted from the works. There is no evidence which satisfies me that this was the case. I find that the third defendant was negligent in directing the builder to exclude expansion joints and to use aluminium strips. The third defendant was not entitled to rely on the wishes of Mr. Malmoux who was not qualified nor authorised to make decisions as to departures from standard building practice. Without the authority of the plaintiff, after properly advising it of the risks inherent in removing the expansion joints, the architects were in breach of their duty to exercise reasonable care and skill, to depart from standard building practice in the manner in which the third defendant did and for which they are responsible. The fourth defendant constructed the concrete slab and topping in accordance with the instructions of the architect under the building contract as it was obliged to do. In consequence 'the fourth defendant is not liable to the plaintiff for the defective condition of the driveway topping. Although other defects in the topping and laying of the slab were alleged against the builder in the statement of claim, these were neither pressed nor proved. I turn now to the concrete slab. The specification provided for a thickness of 125 mm. of reinforced concrete. I find that the sub-base under the slab is of a high standard and that there -- 29 of 57 -- 27 has been no failure of the sub-base. On the engineering evidence I am satisfied that if the specified thickness of 125 mm. had been provided the concrete slab, having regard to the use which would be made of it, would certainly have had a life equal to that of the house and more probably longer. The main issue between the expert engineering witnesses was as to the likely life of the slab as laid. I find that there is no evidence of structural failure in the slab at this time. It is common ground that fatigue in a slab does not show until failure or immediately prior to failure. Mr. Gallagher has performed calculations whereby in his opinion the slab ought to have failed within two years. The calculations which he has made use road construction criteria. Road construction involves vehicles tracking over the same point in the roadway and the movements are cumulative. Because of the concentration of the movement over a particular point fatigue will ultimately occur along the line where the vehicles track. The use of such criteria is not altogether appropriate for this driveway. The area is so large that there is less possibility of vehicles tracking over the same point. The only areas where there is a likelihood of.vehicle movements over the same point are at the driveway entrance, the visitors' car-park, and up to and through the porte-cochere. The expert engineering evidence called by the first defendant was concerned with:- (a) ascertaining whether the slab had failed at this time; and -- 30 of 57 -- 28 (b) the cause of the present distress in terms of cracking and delamination of the top surface. The investigation which they carried out was not concerned with the possibility of future distress in the slab, any possible cause for future distress and when if at all the slab would fail. Although Mr. Philp and Mr. Wilson were dismissive of the calculations of Mr. Gallagher because the slab had not failed within two years, neither was prepared to say that there was no risk of the slab failing within the next 15 to 20 years. Mr. Philp would not speculate as to the likely life of the slab. Mr. Wilson opined that the slab as constructed on the particular sub-base, if used only for light axle loadings, would have a life of 20 years. He agreed however that the use of heavy vehicles e.g. a five ton truck once per week would result in the fatigue resistance of the slab reducing at a much greater rate than the 20 years he contended for. Mr. Wilson gave the following evidence:- "You are saying because it hasn't failed yet you have got to presume that it is not going to fail within the next 20 years?-- Because it hasn't failed yet it has got a good chance of going on. But you can't point to anything that supports that other than the fact that it hasn't failed yet?-- No. BY MR. BOUGHEN: Now, Mr. Wilson, you were about inbuilt safety factors. That in no suggest to you, justifies an underdesign pavement?-- No. talking way, I of any And it is the case, is it not, that palpably this particular pavement is underdesigned?-- I don't know that it was designed at all. Perhaps it wasn't; perhaps it wasn't. Had it been by anybody, an engineer or a nonqualified person, it was palpably underdesigned; I suggest?-- Yes. -- 31 of 57 -- 29 Let me put to you finally that really what all these examples we have gone through indicate is that this slab, with the sort of vehicles that are likely to travel over it, is suseptible (sic) to a fatigue failure within a life span of 20 years?-- May I rephrase that? This pavement is more likely to be suseptible (sic) than if it had been designed and put in 100 millimeters (sic). I can't say that it is going to fail. I can't say, it is just not on. You can't say it won't fail either, can you?-- No. Certainly it is not a slab which falls within that category, that with proper design application one could say is not going to fail with a degree of probability and is acceptable in engineering practice, it does not fall within that category?-- I don't follow that. You say you cannot guarantee the slab won't fail?-- Yes. You can if you properly design it say there is a high probability it won't fail?-- Yes. This is not a slab which falls within that category?-- No. In fact, you say it is impossible to put an assessment of the probability on that?-- Impossible, yes." Both Mr. Philp and Mr. Wilson, if they had been designing the driveway, would have specified a thickness of concrete of not less than 100 mm. The design tables, ex. 55, indicate that if one assumes some trucks or heavy vehicles were servicing the house, a design of between 120 mm. to 130 mm. should be used. Further, ex. 29, "Paths and Driveways" a publication of the Cement and Concrete Association of Australia, indicates that the construction "rule of thumb" without detailed engineering design is to provide 100 mm. thickness for a car driveway and 125 mm. thickness when trucks are passing over the driveway. -- 32 of 57 -- 30 The provision of 125 mm. in the specification reflects a conservative approach in accordance with the industry rule of thumb and consistent with the design tables. There is no evidence to support a finding that the third defendant had the qualifications to do an independent design of the driveway. A proper design of -the slab would have provided for a thickness of not less than )00 mm. and, depending upon the view taken by the designer as to the likely use of the slab, could range up to 130 mm. I find that the design of the slab as laid is significantly deficient. A design which departs substantially from the design codes is faulty design "unless it can be demonstrated that it conforms to accepted engineering practice by rational analysis" (per Beattie J. in Bevan v. Blackhall & Struthers (No. 2) [1973] 2 N.Z.L.R. 45 at 66). The design of the slab as laid departs substantially from all the relevant design criteria and does not conform to accepted engineering practice. The first defendant has not sought to justify the design by any rational analysis, which, having regard to the evidence of Mr. Wilson, it would be impossible to do. Rather the first defendant has sought to argue that the deficiencies in the slab are not sufficient to justify its replacement. I am satisfied that the under-design of the slab is sufficient to place the slab at risk of early failure and that on the balance of probabilities the slab will fail earlier rather than later. I do not accept as a matter of probability that the slab will have a life of 20 years. To place any life on the slab -- 33 of 57 -- 31 is in my view, on the available evidence, a matter of speculation dependent upon the future use of the driveway. There is no evidence that the existing driveway and topping can be altered so as to give a driveway which will last at least the life of the house which would have been the position if the architect had designed or directed construction of a slab 125 mm. thick as required by the ·specification. The case put by the first defendant is that the surface should be removed and replaced and the plaintiff should use the concrete slab for whatever its useful life may turn out to be. In my opinion it is unreasonable to require the plaintiff to go to the trouble and expense in re-topping the slab if there is a risk that the slab may fail at an early date. Should failure occur the slab would have to be replaced, either wholly or in part, and the expense of re-topping would be wasted. Where the life of the driveway is problematic and where the cost of replacement of the topping on the unchallenged evidence of Mr. Gallagher is $81,580.00, the risk associated with the slab does not have to be borne by the plaintiff. In my opinion the architects must bear the consequence of the defective design and they must bear the risk of early failure. Having regard to the estimated cost of re-topping and the absence of any evidence as to a means of rectifying the slab to bring it up to the standard it ought to have been if properly designed, I am of the opinion that removal of the slab and defective topping is 1 in all the circumstances, reasonable. The original cost of the slab, including the topping, was $47,600.00. In reliance upon the architects to exercise proper -- 34 of 57 -- > 32 skill and judgment that sum has been totally lost to the plaintiff. The plaintiff has claimed by way of damages the cost of removal of the existing driveway and its replacement to a design, including new topping design, of Mr. Gallagher. The new design is substantially different and if the architects had performed their duty and designed an adequate driveway the cost to the plaintiff would have been substantially higher than the sum of $47,600.00 actually paid. This is not a case where there has been a failure to construct a structure in accordance with plans and specifications where the damages recoverable by the building owner are "prima facie to be measured only by ascertaining the amount required to rectify the defects complained of and so to give to (the building owner) the equivalent of a building on her land which is substantially in accordance with the contract" (Bellgrove v. Eldridge (1954) 90 C.L.R. 613 at 617). The architects did not contract to produce a result nor, warrant that the completed works would be free from defects. Their contract was to exercise reasonable care and skill with a view to producing a result. But for the default of the architects the plaintiff would have had a different design which would have included greater work and materials and would have cost the plaintiff substantially more than the sum actually expended. To do substantial justice between the plaintiff and the architects requires that the plaintiff recover the costs · thrown away together with the cost of restoring the driveway area to its original condition so that the plaintiff can now have designed and constructed the driveway which ought to have -- 35 of 57 -- 33 originally been designed and constructed. The architects are not obliged to pay the cost of different works which 'the plaintiff would, in any event, have been obliged to pay but for the default of the architects (see Auburn Municipal Council v. A.R.C. Engineering Ltd. [1973] 1 N.S.W.L.R. 513 at 526, 533-535; Smail v. D.L. Starbuck Pty. Ltd. [1971] V.R. 449 at 453). The slab and topping were laid in 1984. A reasonable time to investigate the problem with the slab after cracking and delamination became apparent and to take steps to remove the slab and commence reconstruction expired at the latest in 1988 when the plaintiff received reports from Mr. Gallagher, the engineer, and Mr. Ferrier, the architect, that the slab and topping were inadequately designed and needed to be replaced. The cost of demolition in 1988 was $9,600.00 and the cost of site consolidation was $2,400.00 (ex. 27). I do not accept that it was reasonable for the plaintiff to await the outcome of the litigation before undertaking remedial work. The plaintiff was obliged to act reasonably in its own interests to mitigate its loss and could not stand by and allow the costs of the remedial work to increase over time. There are- no circumstances which persuade me that the plaintiff's loss ought to be assessed at a date later than 1988 (see Johnson v. Perez (1988-1989) 166 C.L.R. 351; Dodd Properties Ltd. v. Canterbury City Council [1980) 1 W.L.R. 433). The plaintiff's loss under this head is:- (a) Original cost thrown away (b) Demolition of the works (c) Site consolidation $47,600.00 $ 9,600.00 $ 2,400.00 $59,600.00 -- 36 of 57 -- 34 3. The passenger and service lifts: The passenger lift and dumb waiter were provided by Stephen Hugh Pearson trading as Safeway Electrical. The subcontractor was nominated by the second defendant and by written subcontract dated 23 January, 1984 contracted for the.following works:- "For the manufacture, delivery installation of the Passenger Lift · Service Lift (Dumb Waiter) Works. and completed Works and the All work shall be carried out as directed, by the Builder under the terms of the Sub-Contract Agreement herewith, and in accordance with the Plans, Specifications, relevant Local Authority By-Laws and Standards, and as generally described upon Contract Documents and Details provided by the Architect relevant to those Documents, and in accordance with' the provisions of the Head Contract." The lift and dumb waiter have never been fully completed although at one stage the lift was operational. I accept the evidence of Sir Justin Hickey that the dumb waiter has never worked. The subcontractor provided details of the lifts to the Division of Occupational Safety. On 20 August, 1984 the Chief Inspector of Machinery wrote to Sir Justin Hickey advising that the passenger lift and service lift machinery did not "comply entirely with the standard required by this Division" and warned that if the lifts came under the Inspection of Machinery Act and Regulations, the plaintiff may be required "to dismantle, remove or modify the lift machinery to the prescribed standard of construction". The concern of the Chief Inspector of Machinery at that time was that if servants resided in the home the Act and Regulations would apply. The installation was inspected by Mr. M.W. Strathdee the Inspector of Lifts at Southport on 9 October, 1984 with the third -- 37 of 57 -- 35 defendant and the subcontractor. On 2 5 October, 1984 Mr. Strathdee wrote to Sir Justin Hickey, which letter (ex. 9) included the following observation:- "I can only re-iterate my concern for the safety of any person who uses this machinery, and recommend that consideration be given towards having the installer seek professional help in re-designing the equipment to comply as near as possible with the Australian Standard Lift Code. However, this would involve a . great deal of alteration to existing materials." As a consequence of receiving the advice of Mr. Strathdee, the plaintiff rendered the passenger lift inoperable. The adequacy of the nominated subcontractor's design was raised by the fourth defendant in a letter to the third defendant dated 1 2 March, 1 9 8 4 ( ex . 6 O, p . 31 ) . The fourth defendant received no reply and itself arranged for inspection of the plans and installation. In consequence the fourth defendant wrote to the third defendant on 21 May, 1984 again expressing concern and asking "for your confirmation of the adequacy of the nominated design and installation". On 30 May, 1984 the fourth defendant wrote to the third defendant recommending that the works be taken out of the subcontractor's control and seeking "urgent advice" from the third defendant. On 6 June, 1984 W. E. Bassett and Partners Pty. Ltd., consulting engineers engaged by the fourth defendant, in a report of that date advised that in their view the lift was approximately 65 per cent complete and made certain observations as to the adequacy of certain features of the lift as constructed and recommendations for modification. The report of the consulting engineer was predicated on the basis that the lift as a domestic installation did not require approval by the Department of Occupational Safety, Weights and Measure. Such -- 38 of 57 -- 36 approval was not possible because the works did not comply with Australian Standard 1735 compliance with which was a condition of approval. I accept the evidence of Mr. R.T. Angus, civil engineer, that when he inspected the lift and dumb waiter neither installation was complete, neither was safe and neither. was capable of being used. Mr. Angus gave the following evidence:- "BY MR. BOUGHEN: Did you see certain plans produced by Mr. Pearson relating to the lift?-- Yes, I did. And in your view what was the better method of having a serviceable lift in this residence; to complete the original design or to put a fresh unit?-- Our recommendation on the original report was to replace' the unit. And why was that?-- Well, we felt that the original design was amateurish, and really was not a proven design or proven application, and the cost difference at that time seems to be that money would be better spent - to be put in something that we know has proved its operation and its reliability. So far as the Morling lift - take that as an example because that was the one that was recommended, as I understand it?-- Yes. Was that lift?-- standard Yes. specification, a standard size So it wasn' t a case of them coming up with their special design?-- No, not at all." Mr. Angus accepted that the lift could be finished although there would be safety problems. "Can I suggest to you that each of these items goes to the safety of the lift rather than its functioning as a lift?-- I'd say that machinery was probably the only one. Yes, with the exception of the machine room which goes to neither. But my understanding of your evidence is that a journey in this lift, although fraught with hazard should anything go wrong, would nonetheless get you from one floor to the other?-- Yes, it certainly would do that if it was finished, yes, it would do that." -- 39 of 57 -- 37 The scrap value of the installations would be in the vicinity of $3,200.00 on the evidence of Mr. Angus. This figure was not challenged and accordingly I accept it as the reasonable scrap value of the installations. Mr. M. W. Strathdee, the former inspector of lifts at Southport and a lift inspector of 26 years' experience with 18 years' previous experience with lifts, gave evidence that the design of both the lift and the dumb waiter was unsafe. He also gave evidence that the subcontractor was totally unqualified to undertake the design and construction of the lifts. The qualifications of the subcontractor were no more than completing part only of an electrical apprenticeship at the Northgate Cannery. Mr. Strathdee gave the following evidence:- "BY MR. BOUGHEN: Did you also yourself give certain oral advice · to Sir Justin about whether the lift should be used or not?-- Yes. What was that advice?-- I told him not to use it even if it didn't require my inspection. I felt that it was so unsafe that it was a death trap for anyone to use it. Did that unsafeness, did that relate to design or construction or both?-- Both." Mr. Strathdee was not cross-examined by any party to the proceedings. I accept the evidence of Mr. Strathdee. I find that the design on both the lift and the dumb waiter is inadequate and unsafe and that although the lift and dumb waiter may be completed to the original design, the final result would still be unsafe. I find that the plaintiff acted reasonably in sealing off both lifts and in not proceeding to their completion. -- 40 of 57 -- 38 I find that the second defendant as architect under the building contract was negligent in nominating an unqualified person to design and install both lifts. The second defendant was also negligent in failing to adequately check the design. The second defendant was also in breach of its duty to the plaintiff in certifying payment of the works when the second defendant by the third defendant knew that the works were incomplete. The plaintiff has paid out the sum of $22,000.00 for the lifts. Save for the scrap value of $3,200.00, the money has been wasted as I find that the lifts, even if completed, wil'l be unsafe. The expert opinion is that an alternative standard lift design ought to be adopted. I am satisfied that no contractor is prepared to complete the works in accordance with the drawings and make such modifications, if possible, as will render the work both safe and operable. In all the circumstances I am satisfied that demolition and removal of the two lifts is reasonable. The fourth defendant had no design function under the building contract. It had no control over the design. It acted reasonably throughout when it queried the safety of the design and the competency of the subcontractor and sought directions from the architect under the building contract as to completion of the works. The allegations against the fourth defendant contained in para. 9(c) of the second amended statement of claim are that the electric passenger lift required by the specification was not installed by the fourth defendant in a good and workmanlike manner. The deficiencies are particularised in subparas (i) to -- 41 of 57 -- 39 (xviii). The claim is that in consequence of the deficiencies it is necessary to remove and replace the lift. The particulars in para. 9(c)(i) to (xii) inclusive are taken from the report of W.E. Bassett and Partners Pty. Ltd. dated 29 April, 1986 (ex. 37). The deficiencies are merely the respects in which the design and installation do not comply with The Lift Code - Australian Standard 1735 Part 2. The building contract does not require that the fourth defendant design, build or install a lift which complies with the Australian Standard. The complaint in respect of the defects in subparas. (i) to (xviii) relate to the design inadequacies for which the fourth defendant is not liable. Further the second defendant did not direct the fourth defendant to construct or modify the passenger lift so as to bring it into conformity with the Australian Code. The defects alleged in paras. 9(c) (xiii) to (xviii) are taken from the report of W. E. Bassett and. Partners Pty. Ltd. dated 6 June, 1984. The matters complained of were not included in the specification accepted by the second defendant and provided to the fourth defendant (see ex. 60, pp. 25-27). The matters raised in paras. 9(c)(xiii), (xiv) and (xvi) were subjects of concern when the fourth defendant saw the subcontractor's sketch details and were referred to the second defendant by letter dated 12 March, defendant sought directions (ex. 60, directions, on the evidence before me, 1984 pp. when the 31-37). fourth Those The were never given. matters in paras. 9(c) (xv) and (xvii), on the evidence of Mr. Sievers which I accept, were never required under any drawing -- 42 of 57 -- 40 or specification provided by the plaintiff or the architects and were not subject to any direction. The allegation in para. 9(c) (xviii) is not made out on the evidence. On the evidence of Sir Justin Hickey the lift was rendered inoperable by Mr. Strathdee by his removing the fuses. The plaintiff's claim against the fourth defendant is not for the cost to complete the existing works in accordance with the subcontractor's design. It is to abandon the works and install a new lift to the design of A.P. Marling Pty. Ltd. The plaintiff has, since the lifts were sealed off in 1984, and, in particular since receiving the advice of W.E. Bassett; and Partners Pty. Ltd. in 1986 and Mr. Ferrier, the architect in 1986, determined to abandon the works. The incomplete condition of the lifts flows from the decision of the plaintiff not to require the fourth defendant to complete the works to the original design. The failure to complete is not causative of the loss which the plaintiff has suffered. The plaintiff's loss was caused solely from the conduct of the second defendant in nominating and ·subcontractor. approving the design and work of the In the premises I find that the plaintiff has failed to make out the case pleaded against the fourth defendant in para. 9(c) of the amended statement of claim. For similar reasons the plaintiff has failed to make out against the fourth defendant the case pleaded in para. 9(d) of the amended statement of claim. I find that the plaintiff's loss was solely caused by the inadequate design of the service lift for which the fourth defendant is not liable. -- 43 of 57 -- 41 The plaintiff has claimed the cost of installing a new Loadmaster lift and dumb waiter and the cost of associated building work to enable the same to be installed. The lifts al though perf arming the same function as the original installations are of a completely different design to that approved by the third defendant. The decision to install them involves a complete abandonment of the contract works. On 15 July, 1986 A.P. Marling Pty. Ltd. quoted for supply of the passenger lift. The quotation was for $33,450.00 plus sales tax if applicable. The price did not include building work to be supplied by others ( see ex. 22 annexure p. 3 "work by others"). Mr. Ferrier on behalf of the plaintiff in January 1987 prepared a specification and tender for the building works. One of the tenderers was the fourth defendant. However, no tenderer was accepted and the work was not undertaken. No evidence was given by Mr. Ferrier as to what tender prices were received or why the work did not proceed. On 4 September, 1986 A.P. Marling Pty. Ltd. quoted for a Loadmaster Service lift (dumb waiter) in the sum of $8,461.00 plus $229.00 sales tax if applicable. On 15 March, 1989 A.P. Marling Pty. Ltd. revised the quotation for the passenger lift to $38,930.00 plus sales tax if applicable. In his evidence Mr. Ferrier gave the cost of providing a new passenger lift, including all associated building work which involves removal of the existing work as $55,363.00 at the time of trial. To that sum must be added professional fees 0£ $5,536.00 giving a total of $60,899.00. The cost of the dumb -- 44 of 57 -- 42 waiter at the date of trial he assessed at $10,000.00 such figure including provision of the lift, building works and professional fees. The plaintiff therefore sought to recover $70,899.00 in respect of the lifts. The lifts which the plaintiff now wishes to install are such that they comply "with relevant statutory regulations and/or the standards of the Standards Association of Australia" (General Conditions of Quotation and Sale para. 10, exs. 22, 23 and 39). The dumb waiter and installation are specifically to be in accordance with A.S. 1735 Part 4, 1982 Lift Code (ex. 39, p. 2). Unfortunately, the existing over-run clearance and pit depth do not comply with the existing Australian standard (ex. 37) and enlargement of the pit, if necessary, is part of the contemplated new works (ex. 22 para. A24). I am satisfied that the work contemplated is substantially different work to the work provided for in the original design. The loss flowing from the .architects' default is the money thrown away on the useless construction together with the cost of returning the building to a state where the plaintiff can start again to have designed and installed a safe lift system. The cost of installing lifts to substantially different designs and standards of construction and installation was not caused by the negligence of the third defendant. Such cost arises from the decision to abandon the old works and adopt a new and substantially different design. (See Auburn Municipal Council v. A.R.C. Engineering Ltd. (supra) and Smail v. D.L. Starbuck Pty. Ltd. (supra). -- 45 of 57 -- 43 The loss to the plaintiff of the money thrown away and the cost of removing the lifts and reinstating the works ought to be assessed at the date the plaintiff had determined to abandon the original works and take steps to remove them. A reasonable time to take those steps expired in late 1986, early 1987 when the plaintiff sought and obtained quotations for the building works . . There are no circumstances which persuade me that in order to do justice to the plaintiff damages ought to be assessed at a later date than at a time when the plaintiff had had reasonable time to investigate the problem and to determine upon an appropriate course of remedial action (Johnson v. Perez ( 1 9 8 8-1 9 8 9 ) 1 6 6 C . L . R . 3 51 at 3 5 5- 3 5 8 , 3 6 7 , 3 71 , 3 8 0 ; Dodd Properties Ltd. v. Canterbury City Council (1980] 1 W.L.R. 433 at 457-458). The plaintiff called no evidence as to the cost of removal of the existing lift and dumb waiter and the reinstatement of the works to enable work to commence on :installation of the new Loadmaster lift and dumb waiter. Evidence was given by Mr. Ferrier that at trial the total cost of the new lift was $55,363.00 excluding professional fees. The lift component at that time was $38,930.00. Thus the associated building work was costed at $16,433.00. Part of the work on the evidence of Mr. Ferrier involves breaking into the roof of the house and removing the existing lift and supporting structure by crane. Doing the best I can to arrive at a late 1986, early 1987 figure excluding new work, I allow $10,000.00 for the cost of removing the existing lift and reinstating the works. -- 46 of 57 -- 44 So far as the dumb waiter is concerned, the work involved in removing the structure is substantially less than removing the lift. Again no direct evidence was given as to this cost. The work involved requires the demolition of the steel structure, the removal of the electrics and the box and associated clearing up. I allow a sum of $1,000.00 to cover this cost . 4. . The plaintiff's loss •under this head is:- Cost of lifts thrown away Cost of removal of existing lifts and reinstating works Less scrap value of lifts and motors Beading to exterior plaster work: $22,000.00 $11,000.00 $33,000.00 $ 3,200.00 $29,800.00 "Square nose corner beads Lysaghts or other approved equal" are specified in ell. 17.03 and 17.04 of the specification for use at external angles of vertical surfaces. The beads are required to be galvanised by cl. 17.04.3. The provision of such beading is to protect the angles from chipping. Since the installation of the beading, it has started to rust where used on the exterior surfaces of the house. In consequence, rust staining has broken through the painted plaster and presents a rusted dilapidated appearance to the edging of the plaster work. In his report, Mr. Ferrier attaches a copy of the then relevant Lysaght catalogue and specification. He states:- "It will be noted that these corner beads are galvanized with zinc coating of 200 grams/m 2 in order to protect the steel base metal from rusting during the process of wet plastering. The coating thickness, of 200 grams/m 2 is not adequate for use in external -- 47 of 57 -- 45 conditions and certainly not adequate where the external environment carries salt in the water vapour as is the case in coastal situations. For adequate protection in these circumstances a coating thickness in the order of 600 grams/m 2 is desirable. The use of the square nosed corner beads in exterior applications is not recommended by the manufacturer. Square nosed corner beads are only manufactured to one specification ( 200 grams/m 2 ) and for exterior applications they would need to be re-galvanized to provide the necessary thickness of zinc coating, or not used at all." By para. 11 of its second further amended statement of claim, the plaintiff alleges that the architect, in breach of its duty, specified inadequate zinc coating for the beads for external use. Mr. Ferrier gave the following evidence:- "In your view so far as good architectural practice is concerned, should the beads have been specified?-- No. Not unless they had been also specified to receive a heavier coating of galvanizing." Mr. Ferrier, in his evidence, questioned the necessity for the use of beading in the external situation. However, the case pleaded against the architect is not that it was negligent to specify external use of beading. Rather, the sole allegation is that the specified covering was so inadequate, having regard to the coastal environment where the house was to be constructed, as to be in breach of the duty to use reasonable care and skill in formulating the specification. Mr. Ferrier gave as his opinion that 600 grams per square metre of galvanising on the beading was necessary in the location where it was used. Inferentially, an architect exercising -- 48 of 57 -- 46 reasonable care and skill would, on his evidence, have specified such a level of galvanising. I find that the specification of 200 grams of zinc galvanising per square metre for the beading for external use was totally inadequate and that the architects failed to use reasonable care and skill in the preparation of the specification in this respect. The first defendant submits that nonetheless any defect in the design has not been shown to be causative of the loss. Firstly, it is submitted that it has not been shown that the beading used, in fact, only had a zinc galvanising of 200 grams per square metre. Secondly, it has not been shown that using 600 grams of zinc galvanising would have avoided the problem. Mr. Ferrier gave the following evidence:- "Secondly, it is my second experience of having a product which is intended for internal use being used externally where the end result, that has manifested itself in this case, that the product has rusted because the galvanized coating is not adequate. The only reason the cornice pieces are galvanized with a thin layer of zinc is so that during the process of wet plastering, which is a once · only action, there won't be any rusting. But constant exposure to atmospheric conditions, which is conducive to rusting of unprotected metals was not ever intended with those sorts of corner beads. I did ask the laboratory to test a sample that was taken off the building and what they have said is that the corroded sample has a covering of 775 grams of zinc per square metre. Now, we cannot tell from that what the original total coating was but if the object which was specified in Clauses 17. 03 and 1 7. 04 of the specifications were used, then the original coating would have been 200 grams per square metre and for proper protection against atmospheric conditions such as those which are experienced at the coast, one would need to have three times that thickness of zinc to be sure to avoid rusting. So whilst the intention was honourable, I suppose, to make sure that you have a corner that wouldn' t be damaged, if it was used to excess, it wasn' t needed further up and, secondly, it wasn't necessary in order to get a clean square joint. You -- 49 of 57 -- 47 can do that without corner beads. In fact in most situations cornice pieces aren't used extensively, so one could not argue that it was necessary to use them to get a square edge." There is no question that the beading is rusting and staining the concrete. In the absence of any evidence as to testing then I would have drawn the inference that the beading used was in accordance with ell. 17. 03 and 17. 04 of the specification and that inadequate zinc galvanising was causative of the rusting and staining. However the evidence, albeit hearsay which was not objected to, that a corroded sample tested at 775 grams of zinc per square metre precludes the drawing of such an inference. Such a figure opens the possibility that the architects, subsequent to the preparation of the original specification, determined that Lysaght beading with 200 grams of zinc galvanising was inadequate and increased the specification. The figure of 775 grams is in excess of the 600 grams Mr. Ferrier considered appropriate. It may well be that the beading should never have been used in the location in which it was, a suggestion which clearly comes through from the evidence of Mr. Ferrier. However, this was not the case pleaded against the architects and para. 11 of the second further amended statement of claim was based solely on the adequacy of the galvanising as specified in the specifications, ex. 5. In all the circumstances, the plaintiff has failed to prove that its loss or damage was caused by the breach of duty of the architects as alleged. No claim was made against the fourth defendant in respect of this item. -- 50 of 57 -- 48 5. Inadequate design of the eaves: The eaves were constructed of Western Red Cedar boarding with a continuous gap 150 mm. wide along the full inner perimeter of the eaves as detailed on drawing A/18. The drawing was prepared by "Noel Edser and Associates". The first defendant submitted that it was not liable for the work carried on by the second or third defendants. For reasons which I have given earlier, I do not accept that submission. Mr. Ferrier gave evidence that the width of the opening was so wide that it admitted large volumes of salt-laden air into the roof cavity. As a consequence the metal roof members were being corroded. In his opinion, over time, the structural integrity of the roof members would be affected. Lady Hickey gave evidence, which I accept, that wind entered through the gap causing excessive noise in the upstairs of the house. When it rained the wind forced rain through the opening into the roof cavity which leaked into the interior of the house through skylights and light fittings. These problems were resolved when rectification work was undertaken to the ~aves under the supervision of Mr. Ferrier. I find that the provision of a gap of 150 mm. was excessive and that an architect exercising reasonable care would have designed a ventilation opening substantially narrower so as to prevent the excessive entry of salt-laden air. It was not suggested otherwise by the defendants. The defect was fixed by reducing substantially the gap. The cost of the rectification work was:- -- 51 of 57 -- (a) Building (b) Painting 49 (c) Architect design and supervision $2,259.00 $ 410.00 $ 225.00 $2,894.00 The work was done and, so far as the evidence indicates, was paid for in or about July 1986. General Damages The plaintiff has endorsed a claim for general damages or, alternatively, for damages for breach of contract or negligence. Mr. Boughen, who appeared for the plaintiff, submitted that damages were at large and that general damages should be awarded because:- (a) the household had been, and would be, disrupted; (b) the plaintiff company will be restricted in its use of the premises while the remedial work is carried out; and (c) the plaintiff company has been inconvenienced because the lift and dumb waiter have never worked. In support of this submission reference was made to a decision of Woodward J. in D. Galambos & Sons Pty. Ltd. v. McIntyre (1975) 5 A.C.T.R. 10 and a further decision of Menhemmitt J. in Burke v. Lunn [1976] V.R. 268. In the later case His Honour adopted the award of a special referee allowing damages for physical inconvenience and time spent by a building owner in rectifying or arranging to rectify defects. At pp. 285-286 of the report Menhemmitt J. regarded such amounts as permissible heads of damage for breach of contract. The action was commenced in the Supreme Court and certain questions were referred to a special referee by the court. Question 5 was:- -- 52 of 57 -- 50 "5. Whether in respect of both the sunroom and the other work the defendant has suffered any and, if so, what loss by reason of the inconvenience caused to him by reason of any work which was not properly done or any materials which were not proper and adequate and by reason of the time spent by the defendant in rectifying and arranging to rectify the same, and, if so, what allowance, if any, should be made by the plaintiff to compensate the defendant in respect of that loss." It is clear that the claim for damages under such a head was raised as an issue and litigated before the special referee. In D. Galambos & Son Pty. Ltd. v. McIntyre the defective workmanship was a failure to build a garage and other areas below the main house to the strict height requirements for habitable areas which were laid down in the plans and specifications. In consequence, the building owners could not lawfully use the areas as a projection room, bar and granny flat as they had contemplated. The trial judge found that the building owner had specifically told the builder that they wanted to use all areas under the house and referred particularly to a projection room and bar. Any loss was thus not remote. His Honour found that although there was no loss in value of the house there was "a distinct diminution in the enjoyment of the house - amounting to more than a mere annoyance" which "could be compensated for in an action for breach of contract by the builder even though no pecuniary loss could be shown" (5 A.C.T.R. at 14). In the case before me the plaintiff has pleaded no claim for loss of use or inconvenience arising out of any breach of contract by the architects or the builders. No evidence was led directly as to the issue. No evidence was led as to the basis upon which Sir Justin Hickey and his family occupy the residence, although one may infer that it was constructed for their use and -- 53 of 57 -- 51 occupation under such arrangements, if any, as exist between the plaintiff and them in that regard. Sir Justin Hickey and his family are not parties to the action and cannot therefore recover damages, if any, to which they might be entitled under this head. Finally, there is no evidence that the plaintiff itself either used the premises or the lift and dumb waiter or that it had itself been restricted or inconvenienced as submitted by Mr. Boughen. In all the circumstances, the claim under this head fails as it has not been pleaded and would, in any event, fail for lack of evidence as to the past or future circumstances of' the plaintiff establishing a right to recover damages under these heads. Interest The plaintiff paid out for the cost of the driveway and lifts on the architects' certification in 1985. The cost of the remedial work to the eaves was paid for in July 1986. I have found that by 1986 the plaintiff was aware of the defects and ought, by late 1986, early 1987 in respect of the lifts, and, by 1988 in respect of the driveway, have taken steps to effect such remedial works as were necessary to remove the defective structures and reinstate the land in order that works to the alternative designs could be carried out. In consequence the damages recoverable have been assessed as at late 1986, early 1987 and 1988 respectively. I am of the opinion that a reasonable period to award interest under the Common Law Practice Act in respect of all of -- 54 of 57 -- 52 the damages is a period of four years. The appropriate rate is 12 per cent per annum. Judgment The plaintiff is entitled to recover against the first and second defendants the sum of $136,595.12, including interest in the sum of $44,301.12. The sum is compiled as follows:- Driveway $ 59,600.00 Lifts $ 29,800.00 Eaves $ 2,894.00 $ 92,294.00 Interest at 12 per cent for four years $ 44,301.12 $136,595.12 The fourth defendant is entitled to judgment against the plaintiff. The first defendant's claim for contribution against the second and third defendants As I have found the first and second defendants jointly agreed with the plaintiff to provide architectural services. The arrangement as between the first and second defendants, as appears from exs. 42 and 43, was that the fees would be divided equally and that the "allocation of work to provide the services should be handled by mutual agreement at the relevant stages". The first and second defendants as joint contractors became jointly and severally liable for performance of the joint promissory obligations undertaken (sees. 54 of the Property Law Act 1974 as amended). I have rejected the submission that the first defendant was by agreement only responsible for the original design of the building. -- 55 of 57 -- 53 The evidence discloses that the first and second defendants each received one-half of the fees paid. As between the first defendant and the second defendant, the second defendant must bear the burden of the loss equally with the first defendant. The second defendant must therefore pay by way of contribution one-half of the damages awarded to the plaintiff and one-half of the taxed costs of the plaintiff of and incidental to the action including reserved costs. As between the first defendant and the third defendant, the latter was in the discharge of his functions in a relationship of proximity to the first defendant. As such the third defendant owed to the first defendant a duty of care to exercise the reasonable care and skill of a reasonably competent architect in performing the work delegated to him by the first and second defendants. For the reasons I have given he failed to exercise such reasonable care and skill and was negligent in the performance of his work as architect. It was foreseeable that if he breached his duty the first defendant would become liable in damages to the plaintiff for such loss occasioned to it by his default. In the circumstances, the third defendant is liable in damages to the first defendant. I assess the damages as being equal to such sum as the first defendant is obliged to pay to the plaintiff on account of damages and taxed costs after the receipt of any contribution actually paid by the second defendant to the first defendant. -- 56 of 57 -- 54 Orders 1 . I give judgment in favour of the plaintiff against the first and second defendants in the sum of $136,595.12. 2. I give judgment in favour of the fourth defendant against the plaintiff and dismiss the action against the fourth defendant. 3. I order that the first and second defendants· pay the plaintiff's costs of and incidental to the action, including reserved costs, if any, to be taxed~ 4. I order that the plaintiff pay the fourth defendant's costs of and incidental to the action, including reserved costs, if any, to be taxed. 5. I order that the second defendant pay by way of contribution to the first defendant an amount equal to so much as is paid by the first defendant to the plaintiff on account of damages and taxed costs as exceeds one-half of the judgment against the first defendant in favour of the plaintiff. 6. I order that the third defendant pay the first defendant by way of damages for negligence such sum as the first defendant is obliged to pay to the plaintiff on account of damages and taxed costs after the receipt of any contribution actually paid by the second defendant to the first defendant. -- 57 of 57 --