Court of Appeal (WA)|1999-12-22|Before: Mr P, Wallwork J, White J, Wheeler J

Jandon Constructions (A Firm) & Ors v Lyons & Anor [1999] WASCA 310 (22 December 1999)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : JANDON CONSTRUCTIONS (A FIRM) & ORS -v- LYONS & ANOR [1999] WASCA 310

CIVILSTRUCT PTY LTD Trading As ANDREOTTA CARDENOSA CONSULTING ENGINEERS

Torts - Negligence - Defective building work - Damages - Appropriate measure of - Doubtful remedy - Turns on own facts

First Respondent (First Plaintiff) : Mr T Lampropoulos

Second Respondent (Second Plaintiff) : Mr T Lampropoulos

First Appellant (First Defendant) : Godfrey Virtue & Co

Second Appellant (Second Defendant) : Freehill Hollingdale & Page

Third Appellant (Third Defendant) : Freehill Hollingdale & Page

First Respondent (First Plaintiff) : Gibson & Gibson

Second Respondent (Second Plaintiff) : Gibson & Gibson

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

Carosella v Ginos and Gilbert Pty Ltd (1981) 27 SASR 515

De Cesare v Deluxe Motors Pty Ltd (1996) 67 SASR 28

Leotta v Public Transport Commission (NSW) (1976) 9 ALR 437

Lever Brothers Ltd v Bell [1931] 1 KB 557

Miller v Jennings [1954] HCA 65; (1954) 92 CLR 190

Mummery v Irvings Pty Ltd [1956] HCA 45; (1956) 96 CLR 99

Ruxley Electronics & Construction Ltd v Forsyth [1996] 1 AC 344

Water Board v Moustakas [1988] HCA 12; (1988) 180 CLR 491

White v Vandervell Trustees Ltd [1974] 1 Ch 269

Wilson v Piesley (1975) 7 ALR 517

1 WALLWORK J: On 21 July 1998, in the Supreme Court at Perth the two respondents (then plaintiffs) obtained judgment in an action against the three appellants arising from the defective construction by the first appellant of a home for the two respondents. The second and third appellants were engineers who had advised the first appellant.

2 The learned trial Judge gave judgment to the respondents on the basis that he was satisfied as to liability and that the proper measure of damages was the cost of demolition and reconstruction of the home. The appellants now appeal against the award of damages.

3 His Honour said it was reasonable for the respondents to have a house built on proper foundations, rather than put up with a house having been patched in the manner which had been suggested by the appellants. His Honour said that the only evidence he had concerning the cost of demolition and reconstruction was the uncontradicted evidence of a quantity surveyor who had estimated that to demolish and replace the home would entail an expenditure of $273,000. His Honour also awarded the respondents damages for the cost of furniture removal and alternative accommodation during the demolition and construction period of the replacement home and for their emotional distress arising from their ordeal. The damages other than for costs of the demolition and reconstruction are not appealed against.

4 The sole cause of action against the second and third appellants had been in negligence. There was no action against them for breach of contract or under the Trade Practices Act because there had been no contract between them and the respondents. The second and third appellants had been engaged by the first appellant who was the builder.

5 At the appeal it was squarely put for the appellants that their case was whether or not demolition was the appropriate remedy. It was conceded that without remedial work the house was seriously threatened and that at the time of the trial there had been evidence of further cracks appearing. It was not conceded however, that there had been any threat to life or limb. An expert engineer, Mr Glick had said that the roof did not cause any threat of falling. Another expert engineer Mr Van der Meer, had said he would not do anything to the roof.

6 In essence, the appellants contended that the evidence at the trial had established that unstable soil beneath the house had caused cracking and other defects in the house, but that the soil could be stabilised. Further, that possible rectification measures which had been put to the expert witnesses who had been called by the respondents were practical and reasonable. It was contended that if implemented, those rectification measures would result in a dwelling which was not vulnerable. They would put the respondents in the same position as they would have been had the home originally been built on proper foundations.

7 The appellants took issue with a number of the learned trial Judge's basic premises. One of those was that the learned Judge had stated that he did not think the respondents' expert engineer, Mr Van der Meer, had been very confident that a cut-off drain, which it had been suggested to him would stop water getting under the house, would actually work.

8 Mr Van der Meer had given evidence that he had no reason to suspect that the soil under the house in the north-west corner had not come to a state of equilibrium. However he had some uncertainty with respect to the soil under the south and south-east side of the house. He had agreed that that area needed to be stabilised before any repair work was done. He was concerned that that area had been exposed to water flowing down the driveway which could go, and probably had gone, under the house. He had said that once the soil under the house had been stabilised, he did not know whether there would be any more cracking. To provide an insurance policy against any further movement, there should be some "joints" put in the walls inside the house.

9 Mr Van der Meer had said that a cut-off drain could be extended along the south side of the building, across the driveway and down past the west of the building. Water coming down the drive would flow into the drain and would be transported away from the house. The drain would be 600mm wide, and would be filled with a coarse material, eg blue metal, with a pipe to drain the water away. There would also be an impervious membrane under the soil between the trench and the house.

10 In cross-examination Mr Van der Meer agreed that the suggested drain and membrane was not an extremely doubtful remedy. It was likely to succeed. He said he would wait some 18 months to two years to allow the measures to have effect before completing the restoration of the home. The drain work would cost about $3000 or $4000. The work on the joints inside the home would then take about 8 to 9 weeks for three people. It could be accelerated by having more workers. The joint work would cost about $15,000. The existing cracks in the home could be repaired at a cost of another $8000 to $10,000. He did not think the roof needed reinforcing.

11 Mr Van der Meer said that if the moisture content under the house was kept stable there should be no more movement after the repair work and no more cracking. He believed that the measures he had suggested should stabilise the soil, but he could not guarantee it. If the moisture content of the ground was stabilised there might be some minor cracking, but not to the extent previously. Such minor cracking would not be out of the ordinary for houses in that area. If it was desired to underpin the north-west corner of the house, that could be done in two weeks at an approximate cost of $7000 to $8000. He did not recommend that last mentioned work.

12 The statement of his Honour which is complained of is that he said of Mr Van der Meer's evidence "I think his evidence is to be understood as being to the effect that there was a real risk (not just a fanciful risk) that the drain may not be effective or wholly effective." His Honour said he thought that this had been made clear in Mr Van der Meer's evidence. That Mr Van der Meer simply did not know whether the stabilisation method would prevent further cracking.

13 Counsel for the second and third appellants stated that in essence, their appeal was based on the fact that the learned trial Judge had held that what was proposed by way of remedial work was a doubtful remedy and hence the respondents ought not be obliged to accept it. It was submitted that this conclusion of his Honour had been directly against the weight of the evidence.

14 Counsel pointed to the evidence of Mr Glick, another expert engineer, who when it was put to him that he would agree that it was more probable than not that rectification would work, had answered "Yes". He was then asked "In fact it's very likely to work, isn't it?" His answer was "Yes....".

15 It was put to Mr Glick that once the soil was relatively stable under the house, a supporting beam could be put in the north-west corner, the internal damage could then be repaired and joints could be put in, if one wanted to be abundantly cautious. He was then asked "Your opinion, I put it to you, is that it is very likely to work isn't it?". He said "Yes". It was put to him "And the level of your reluctance to guarantee is the fact that there may be, in your opinion, some further cracking". His answer was "Correct". He was then asked "But you wouldn't anticipate that further cracking to be significant do you?". His answer was "No".

16 In re-examination Mr Glick elaborated on that answer. He said "There could be some opening or minor cracking again at cornices, or at newly formed articulated joints, that type of thing, but I expect they would be minor."

17 Mr Glick gave evidence concerning the detail of how the cracks could be repaired. He said it would also be a good idea to make sure the roof was properly tied down or fixed in some way so that it would not move unless in a very unusual case.

18 The next matter which was disputed, was his Honour's statement that it had not been established that the existing drain along the east of the house was not working. His Honour commented that Mr Gordon's opinion on the question had not been invited. With respect, that last comment was not correct. Mr Gordon was asked "... but the point is you don't know why it's not working?" His answer was "Yes I do". He was then asked "Tell us?". His answer was "I don't think it's deep enough".

19 Having discussed some of the proposed repair and stabilisation work on the house, his Honour said:

"I must say all of this seems a very unsatisfactory set of solutions. No doubt it could all be done for less than the cost of demolishing the house and re-erecting it on proper foundations. But in the light of the experience with the existing cut-off drain, there is not much reason to be confident that additional cut-off drains will eliminate all soil movement under this house."

The appellants suggested that this was a wrong conclusion.

"Even if, after 18 months (Mr Gordon would wait three years), the cut-off drain or drains appeared to work, there would remain a risk of some continuing movement and in the event of continuing movement vertical cracking might still occur notwithstanding the installation of jointing throughout the house."

21 As stated above, what Mr Van der Meer had said was, that if the moisture content of the ground was stabilised, there might be some minor cracking but not to the extent that there had been. Further, that any minor cracking would not be out of the ordinary for houses in that area.

22 The appellants also complained that the learned Judge in his findings, had wrongly concentrated on the "wrongly designed footings" and had said "...the question is whether the building should be demolished and rebuilt on proper footings". His Honour had said "The evidence is that these footings cannot be repaired or underpinned without risking further damage...Hence, subject to reasonableness, the only way the plaintiff can obtain a house with proper foundations is to demolish this structure and install proper footings and rebuild the house."

23 It was submitted that this was a wrong focus on putting the footings in the position they would have been had the design not been negligent, whereas the law was that the respondents were entitled to a house which was as stable as it would have been in that area if it had been properly designed. The respondents were entitled to a structurally sound house. The measure of damages was that which would give them a structurally sound house. If that could be achieved by another method than by constructing the foundations in the way they should have been constructed had they not been put in negligently, then that was what the remedy ought to be. It was wrong to focus on the cost of fixing the footings. The focus should have been on the cost of obtaining a structurally sound house.

24 It was submitted that the evidence had established that the soil beneath the house could be stabilised. With that stabilisation, the effect of the evidence had been that it was to be expected that there would be no further cracking other than was ordinary for a house in that area.

25 It was stressed that Mr Van der Meer had said that stabilisation by means of the proposed drain and an impervious membrane associated with it would in his opinion be likely to succeed.

26 In my opinion it is apparent from what is set out above, that Mr Glick also thought that stabilisation by way of the trench and associated work would be very likely to work. He would not anticipate any further significant cracking apart from some minor cracking. He would also have tied down the roof.

27 The appellants' submission that his Honour's comment "But in the light of the experience with the existing cut-off drain there was not much reason to be confident that additional cut-off drains will eliminate all soil movement under this house", was not supported by the evidence, is with respect correct.

28 Also his Honour's finding concerning Mr Van der Meer's evidence "I think his evidence is to be understood as being to the effect that there is a real risk (not just a fanciful risk) that the drain may not be effective or wholly effective", was not with respect, the effect of Mr Van der Meer's evidence.

29 His Honour's finding that even if after 18 months the cut-off drain or drains appeared to work "there would remain a risk of some continuing movement and in the event of continuing movement, vertical cracking might still occur notwithstanding the installation of jointing throughout the house" should in my view be subject to Mr Van der Meer's evidence that the cracking would be no more than would be found in a house built on proper foundations in the area. Mr Van der Meer described it as some minor cracking which would not be out of the ordinary for houses in the area.

30 The evidence established in my opinion that on the balance of probabilities the soil beneath the house could be stabilised. Once the soil under the house was stabilised the house could be stabilised.

31 His Honour made some comments about the problem with "wall tilting" and "wall rotation". He said that the repairs proposed would not correct the lean or tilt in those walls which did tilt.

32 The submission was made for the appellants that these matters had not originally been complained of by the respondents and obviously had not been a problem for them. The respondents were not initially concerned about the wall tilt as was evidenced by the fact that there was no reference to it in the pleadings or in the particulars, or in their evidence. The real question was how the respondents could obtain a structurally sound house.

33 Finally it was said that there was no reference in the evidence from the respondents as to wall rotation, tilting, the slope of the floor or the roof moving.

34 Having discussed the fact that the wall cracks could be repaired his Honour concluded:

"Whilst this may be so, that form of remediation would not correct the lean or tilt in those walls that do now tilt. There are at least two which do, they being the wall between the family room and the laundry and the long north-south passage wall."

35 The appellants submitted that that was not the pleaded case. In my opinion that is correct. The trial was not fought on the question of tilting. The respondents had not contended that they should get demolition because of the tilt. As the appellants' counsel put it, the degree of tilting would have had to have been looked at; also the number of walls which were tilting. There were only two which were the subject of evidence. It was submitted that this tilting did not need curing. In any event, even if a wall had been out of line, that was not a sufficient reason to pull down the house. The tilting was only noticeable to an expert and had not been of sufficient concern to warrant a mention in the pleadings. There was no suggestion that if the wall was not fixed the roof was going to fall down.

36 The learned Judge said that he did not understand how the remedial work:

"...could relieve the stresses under which the uncracked sections of the structure may now be placed. As I understand the evidence, cracking occurs only when the force created by movement exceeds the tensile strength of the masonry. I do not understand this to mean that uncracked areas of this house are not under movement stress or that the cracking which has occurred has relieved all the stress. That there is no cracking at a certain place may mean no more than that at that place the forces created by movement in the foundations are presently less at those locations than the tensile strength of the masonry. It would seem to follow from this that uncracked areas may now be vulnerable to the slightest further movement."

37 The appellants' counsel submitted that that question had not been canvassed in the evidence. The expert evidence had been that if the soil was stabilised and the remedial work carried out, the extent of further cracking should be no more than that to be expected in a properly built house in the area. It was said that the only thing which had fallen down over the years had been one piece of plaster in the hallway. The cracking had been the problem. There had been no suggestion in the evidence that anything further would happen to the house than further cracks and further plaster falling, if the remedial work was not carried out.

38 Mention was made of his Honour's comments that the north-west section of the house was 40mm lower than it should be relative to the south-east section and that there was a slope of 23mm across the family room floor and that these discrepancies could not be recovered.

39 It was submitted that there was nothing apparent to the naked eye in that regard. Mr Glick's evidence had been that he had had to go out and measure to come to that conclusion. It was said that those discrepancies were so minor that they did not warrant pulling down the house.

40 In summary it was contended for the appellants that the tilt, the wall rotation and the slope of the family room floor were not reasons which would justify demolition. There had been no evidence from the respondents that they were worried about those matters. They had not been pleaded.

41 It is my opinion that the appellants are correct in their primary contention that there was not sufficient evidence for the learned Judge to conclude that the demolition of the home was the only way it could be fixed. The appeal should therefore succeed to that extent.

42 The question remains, were the respondents entitled to damages. They had claimed damages against each of the appellants in the statement of claim. However, it was submitted for the appellants that in par 17 of the statement of claim they had only claimed for the cost of demolition and reconstruction. That they had never claimed damages as an alternative to that remedy.

43 It was submitted for the appellants that had an alternative claim for damages been pleaded, there would have been evidence called by the appellants on that question. That they had chosen to give no evidence on that question because they were concerned with a claim for demolition only. The purpose of the appellants eliciting the evidence concerning the cost of the rectification had been to anticipate any point which might be made that there had been no evidence as to what that might cost or that it might be outrageously expensive; to give the court a comparison as to the likelihood of the cost of reasonable and necessary remedial work versus demolition, because the appellants said they did not have the total cost of demolition. It was said that the cost of remedial work would be significantly less.

44 It was contended for the appellants that the respondents had "been given every chance since these proceedings were commenced in the District Court to explore all sorts of other remedies" and that they had sought only one. It was submitted for the appellants that if a verdict was entered for the respondents on the basis of the costs of rectification which had been elicited in cross-examination, that would be an injustice to the appellants.

45 The appellants contended that the relief which may be granted to a party must be founded on the pleadings: Dare v Pulham [1982] HCA 70; (1982) 148 CLR 658 at 664. And that a trial Judge may not raise the issue on which he decides, if it is not pleaded without the pleadings being amended: Blay v Pollard [1930] 1 KB 628 at 634. Further, that the public interest in the finality of litigation requires that a party must be refused leave to make a case on appeal, which is inconsistent with that party's pleadings: Tyson v Brisbane Market Freight Brokers Pty Ltd [1994] HCA 67; (1994) 68 ALJR 304 at 310 - 311. It was contended that without an amendment to the statement of claim it is not open to the respondents to seek, or for this Court to award, damages based on the cost of the stabilisation and repair work of which evidence was adduced at trial.

46 On the other hand the respondents say in their supplementary submissions:

"1 Although the Respondents do not accept all the submissions in the Appellants' supplementary submissions, the Respondents do accept that in all the circumstances of this matter the appeal should be determined according to only whether the Trial Judge's assessment of damages was wrong.

2 Further and in any event although there was evidence about the value of the house in its current state that 'its value on the open market has decreased, arguably to nothing' (AB581, Exhibit 9 Report of Mr Gordon), there is no evidence about the value of house if the doubtful repairs were carried out and no evidence about the cost of repairing the roof, the leaning walls and the sloping floor."

It is not clear to me what these submissions of the respondents mean.

47 In any event, in their statement of claim the respondents claimed damages for breach of contract or alternatively for negligence and pursuant to s 79 of the Fair Trading Act 1987 (WA) against the first appellant. They claimed damages for negligence against the other appellants. There was evidence before the learned Judge as to the cost of rectification of the faults in the home. It would not be just to dismiss the respondents' claim if this Court is of the view that they did not make out a claim for demolition and reconstruction.

48 I would allow the appeal and award the respondents the sum of $35,000 for the cost of remedying the acknowledged defects in the home together with interest on those damages from 20 July 1998, the date of the judgment, at the appropriate rate of interest on judgments. The sum of $35,000 is an assessment which is derived from the evidence of Mr Van Der Meer which appears at pp 416 - 418 of the appeal book. See also the remarks of the appellants' counsel on 14 April 1999 at p 32 of the transcript. The $35,000 is conservatively calculated as follows:

49 Leave was granted on 14 April 1999 to the respondents to withdraw the cross-appeal with no order as to costs.

50 WHITE J: This is an appeal against the judgment of Anderson J on 21 July 1998, when his Honour ordered that there be judgment for the first and second respondents (plaintiffs in the action) in the sum of $281,150, together with costs. The action arose as a result of a breach of contract by the first appellant for the construction of a dwelling-house for the first and second respondents; more particularly, in relation to the defective construction of the footings of the house and as against the second and third appellants, the claims were for damages for negligence also arising out of the construction of defective footings for the dwelling-house. In the amended statement of claim, which is dated 7 March, 1997, the respondents (as plaintiffs) pleaded the existence of the lump sum building contract dated 18 April 1989 between the respondents (as plaintiffs) and the first appellant (as first defendant) whereby the first appellant agreed to execute and complete for the respondents the building works upon the property owned by them for a sum of $132,214 in accordance with the drawings, plans and specifications referred to in the contract. It is further pleaded in the statement of claim that there were express terms and conditions of the contract, inter alia, that the first appellant would execute and complete the works in a proper and workmanlike manner and that the first appellant might, at its option, subcontract the whole or any portion of the works, but any such subcontracting should not relieve the first appellant from any of its responsibilities or obligations under the contract. It is pleaded that the first appellant constructed the works in purported compliance with the contract and that the first appellant was in breach of the terms of the contract in that the design of the footings for the building forming part of the works was defective and the footings for the building were defective.

51 It is further pleaded in the statement of claim that the first appellant engaged the second appellant and/or the third appellant to prepare the design for the construction of the footings and foundations for the building, that the second and third appellants were, and each of them was, under a duty of care to the plaintiffs and that they breached that duty of care negligently in that the design of the footings and foundations provided for the footings and foundations to be constructed in a defective manner and on unstable subsoil. In par 16, the respondents pleaded:

(i) the breach of contract pleaded in paragraph 8 hereof;

(ii) the breach of duty pleaded in paragraph 10 hereof;

(iii) the breach of the statutory implied terms pleaded in paragraph 12 hereof; and

(iv) the breach of duty pleaded in paragraph 15 hereof;

numerous portions of the building have subsided causing severe cracking and consequential damage to the building, its fittings and services."

52 Importantly, the respondents pleaded in par 17 of the re-amended statement of claim as follows:

"17. The subsidence, cracking and consequential damage pleaded in paragraph 16 hereof are of such a serious and fundamental nature and so extensive that it is not reasonably practicable to remedy those defects and consequently the only course open to the plaintiffs is to demolish the building and to erect another house on the property; and in consequence thereof the plaintiffs have suffered loss and damage."

53 The particulars to par 17 list the estimated cost of demolition and reconstruction of the building, the estimated cost of fees of architect and structural engineer for reconstruction, the estimated cost of renting alternative accommodation during reconstruction and the estimated cost of carriers to remove furniture and effects from the building before reconstruction and the return of items thereafter. The total sum claimed under that paragraph was $249,970.

54 The statement of claim contained the following prayers for relief:

(a) damages for breach of contract including damages for loss of enjoyment, inconvenience and distress;

(b) alternatively, damages for negligence, including damages for loss of enjoyment, inconvenience and distress;

(c) in the further alternative damages pursuant to section 79 of the Fair Trading Act 1987 (WA), including damages for loss of enjoyment, inconvenience and distress;

(d) interest on the whole of the damages awarded under paragraphs (a), (b) and (c) hereof at the rate of 8% per annum from 1 December 1989 until payment or judgment pursuant to section 32 of the Supreme Court Act 1935 (as amended);

(e) such further or other relief as this Honourable Court deems fit;

2. Against the second and third defendants and each of them:

(a) damages for negligence including damages for loss of enjoyment, inconvenience and distress;

(b) interest on the whole of the damages awarded under paragraph (a) hereof at the rate of 8% per annum from 1 December 1989 until payment or judgment, pursuant to section 32 of the Supreme Court Act 1935 (as amended);

55 The appellants appeal against the judgment of Anderson J on a number of grounds. The remaining nine grounds of appeal (ground 1 having been abandoned at the hearing of the appeal), may be briefly summarised, I hope fairly, as follows:

2. The learned trial Judge erred in basing an award of damages on damage not pleaded, namely a tilt in 2 walls and the slope of the family room floor.

3. The proper measure of damage was not the cost of the work necessary to put the building on proper footings but was the cost of putting the respondents, so far as money can do so, into the same position as if their house was as stable and prone to cracking as it would have been had it been built on proper footings.

4. There was no evidence to warrant a finding that the footings cannot now do their job to the extent that their inadequate design may have allowed.

5. The learned trial Judge should have found, on the evidence, that the soil beneath the residence has reached a stable equilibrium or is capable of being stabilised and that the soil surrounding the residence is capable of being stabilised.

6. The learned trial Judge erred in holding that the existing cut-off drain was not completely effective as a stabilising technique and that there is a real risk that the installation of additional cut-off drains may not be effective.

7. The learned trial Judge should have held that any movement or cracking likely to occur will be no greater than would be expected in the case of a house properly built in the Darling Escarpment areas.

8. The award of damages should not have been based upon wall tilting.

9. The learned trial Judge should have held that, once all soil was stabilised, the rectification methods proposed by the expert witnesses were practical and reasonable.

10. The learned trial Judge erred in holding that demolition and re-erection was a reasonable method of putting the respondents into the position in which they would have been but for the appellants' negligence.

56 The main thrust of the appeal is that the learned trial Judge erred in law in awarding damages to the respondents on the basis of the demolition of the existing home and the construction of a new house in lieu thereof.

57 The appellants do not dispute that the house was defective in the way alleged by the respondents, nor is it seriously disputed that the second and third appellants were negligent in the design of the footings.

58 In the course of his oral argument, counsel for the second and third defendants submitted that, because the sole claim for damages made by the respondents was for the cost of the demolition and the re-erection of the dwelling-house, in the event that this Court were to find that that was not the proper measure, the respondents would necessarily fail to recover anything, as they had not pleaded nor had they particularised damages on any basis other than the cost of demolition and re-erection. Accordingly, Mr Penglis submitted, this Court could not substitute an award of damages representing the cost of repairs to the admittedly defective work, if it upheld the appellants' submission that the appropriate measure of damages was not the cost of demolition and re-erection as claimed by the respondents.

59 Mr Monaco, counsel for the first appellant, supported Mr Penglis' submissions, maintaining that throughout the course of the action, "the whole presentation of the case was all about demolition versus nothing and all the evidence that was led by the plaintiff was directed towards that point and it was only in cross-examination that we brought out information concerning remedial work. The appellants made the point, therefore, that they had gone to trial on the basis that the respondents' only claim was for demolition and re-erection and that the respondents were not, therefore, claiming damages being the cost of repairs to the building. They contended that, had the pleadings been otherwise, they would have wished to bring evidence as to the cost of repairs. Mr Monaco said that the evidence of Mr Van der Meer as to the cost of repairs was simply a "guesstimate off the top of his head" and that Mr Van der Meer had not come to court prepared to give evidence as to costs of repairs. Accordingly, the appellants submitted that, if this Court were to find that the appropriate remedy was not the demolition and re-erection of the house, that would be the end of the matter and the respondents would recover nothing for the defective work and design on the part of the appellants.

60 In the course of his judgment, the learned trial Judge said, at AB 42:

"I turn now to the issue of damages. In considering this issue, I accept that the plaintiffs selected this land intending that the house to be built on it would be their permanent family home. Putting to one side for the moment the limitation of liability clause in the building contract, it was not suggested that as between the defendants there should be a different approach to the assessment of damages. As against the first defendant in contract, the plaintiffs are entitled to damages based on the cost of obtaining a house which is in conformity with the building contract; that is, a house constructed in a proper and workmanlike manner: Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613 at 617-619. As against the second and third defendants in tort, the plaintiffs are entitled to damages in a sum which, so far as money can do so, will put them in the same position as they would have been in if these defendants had not been negligent: Anns v Merton London Borough Council [1977] UKHL 4; [1977] 2 WLR 1024; Evans v Balog (1976) 1 NSWLR 36. In the circumstances of this case, the measure of the damages in both instances will be the same; namely, the cost of the work necessary to remedy the defects. As the defects are in the foundations and comprise wrongly designed footings, the question is whether the building should be demolished and rebuilt on proper footings. Subject to reasonableness, that would appear, prima facie, to be the proper basis on which to assess damages. The evidence is that these footings cannot be repaired or underpinned without risking further damage. See especially Mr Van der Meer's evidence at transcript 284, 312. Hence, subject to reasonableness, the only way the plaintiff can obtain a house with proper foundations is to demolish this structure and install proper footings and rebuild the house.

The qualification to the rule that the owner is entitled to recover as damages the cost of remedying the defects and bringing the works into conformity with the building contract, even where this would involve demolition and reconstruction, is that 'not only must the work undertaken be necessary to produce conformity, but that also, it must be a reasonable course to adopt'. Belgrove v Eldridge (supra) at 618.

In this case, the defendants submit that it is not reasonable to demolish this house and rebuild it on a proper foundation. This is because, so the defendants submit, the cracks can be repaired and, although the foundations cannot, steps can be taken to minimise further soil movement and protect the house against any movement that might still occur. On the other hand, the plaintiffs claim that the damage is so bad and so extensive and is of such a nature that it cannot be repaired in a way that will bring the house to a reasonable standard, and anyway the effectiveness of the remedial measures is uncertain."

61 The main issue on this appeal is as to whether the learned trial Judge was right to find that the demolition and re-erection of the respondents' dwelling house was a reasonable and appropriate remedy for the defects in question.

62 In effect, the appellants contend that because the respondents have based their claim exclusively on the allegation that the house must be demolished and reconstructed then, notwithstanding the breach of contract and the negligence established as against the appellants, the respondents should be denied any relief on this appeal. The appellants ask simply that the judgment be set aside and that the respondents pay the costs of the trial and the appeal.

63 The learned trial Judge made a number of findings of fact, some of which are the subject of complaint by the appellants. Some of those findings of fact which appear not to be challenged, or in dispute, are the following:

"(1) The respondents intended this to be their permanent family home;

(2) the land upon which the building was constructed slopes from east to west;

(3) there are bands of highly reactive clay (dolerite dykes) on the land;

(4) the appropriate classification under the Australian Standard for residential slabs and footings, AS2870.1-1998 would be moderately to highly reactive clay site;

(5) the house is located in a designated seismic zone;

(6) the footings are inadequate and wrongly designed for the soil conditions on the site;

(7) what was required was a stiffened raft system of footings, comprising a grid of cross-linked beams, joined with reinforcement, which should have been at least 800 mm deep;

(8) the cracks to the house are vertical and horizontal, they do not merely follow mortar joints but also travel through bricks, they reveal displacement (changes in plane) in walls, and wall tilting and are distributed throughout the house. Many of these cracks are both wide and long;

(9) movement in the foundations has caused the rotation of some walls which have in turn caused the roof to move. The roof movement was in a westerly direction, down the hill;

(11) differential floor movements have resulted in a difference in floor levels of 40 mm between one corner of the house and another;

(13) once wall cracks such as these have opened up they may continue to widen;

(14) the residence has broken up and does not serve the purpose for which it was designed and it is not reasonably habitable;

(15) the existing footings have broken into two sections;

(16) the footings cannot be repaired or underpinned without risking further damage;

(17) the discrepancies in the floor levels cannot be recovered;

(18) there is still an unacceptable degree of movement continuing throughout the structure, sufficient to cause cracking and to cause existing cracks to open and close and to produce measurable differences in levels between sections of the house;

(19) all that can be done to attempt to eliminate the instability in the ground is to install more cut-off drains, stabilisation might take 18 months, two years or three years. Mr Gordon doubts that the existing cut-off drain was working were well founded;

(20) no attempt should be made to repair the fabric of the house until three years or so have elapsed and the soils have in fact stabilised;

(21) there is a real risk that the proposed drains may not be effective or wholly effective;

(22) if, after waiting for the appropriate period of time, it seemed that stabilisation has occurred, it would still be prudent to introduce into the masonry walls both jointing and steel reinforcement throughout the house. The joints would be visible and some of the steel columns might also need to be visible. Vertical cracking might occur between joint locations and jointing does not prevent the problem of wall tilting, horizontal cracking, or wall rotation. The structure of the house would be weakened and vulnerable."

64 The appellants contended that none of the respondents' experts suggested that the foundations of the house seriously threatened the stability of the house.

65 In this regard, it is perhaps significant that the respondents' expert, Mr Van der Meer, a consulting structural engineer, was asked (AB 419):

"To stabilise the house and bring it into, let's use the expression, habitable condition although opinions might differ as to what that means - stabilise it and bring it into habitable condition, could you just tell me what you would do?---Certainly articulation would be the number 1 priority to enable us to introduce joints in all the walls. Those joints would need to be specially dowelled with steel reinforcing rods because by introducing the joints you are in fact weakening the house so it becomes vulnerable to virtually total collapse under an earthquake. That's the worrying thing about introducing joints into this house without specific measures to reinforce these joints - is that you introduce a lot of instabilities in the house under seismic loading and we know the hills is a designated seismic zone. So you could argue that it doesn't comply with Australian Standards for seismic design. So you might be living in what we call a pack of cards. You might be living in something that in fact becomes very unstable when an earthquake strikes."

"I am not sure whether you are saying that that would be the consequence if you didn't be careful how you designed the joints or whether it would be the consequence however you designed the joints?"

"I would like to see a design for the joint and discuss between engineers before the work is done because that's the only part the I have a problem - the stability of the house with all the joints in it. Special measures have to be taken to ensure that the joints are properly reinforced; that they can transmit sheer forces during an earthquake. In not many external walls we have those steel columns. You saw those little columns we detailed?

Yes?---That's fine where you have got a cavity. Where you haven't got a cavity you can't do that. You then need to go inside the wall and do reinforcing measures inside the wall itself."

66 In evidence-in-chief, Mr Van Der Meer gave the following evidence at AB 374:

"---Yes, there were a lot of cracks over windows and doors. There was - the cracking was related to tilting of the walls. There were vertical cracks and horizontal cracks at low levels in the house and having seen quite a number of these houses with these sort of problems, they were just - it related back to similar problems with previous houses that I have seen. So it's an experience thing, I suppose.

Having observed all of that, what conclusion did you draw about the cause of that sort of cracking?---Having observed the nature of the cracks and the size of the cracks I concluded it was foundation movement.

In relation to the present footings of the house are they able to be repaired?---No."

"Mr Van der Meer, you said in evidence-in-chief - you used the expression, 'The house had broken its back'. I put it to you that whilst that is a colourful expression there is no evidence to your knowledge to suggest that the house has split in two. Correct?---No, I think there is evidence that the house has split in two.

Where is the split?---It's that crack - in your diagram it's crack number 5 which is virtually the full height of that north-south wall.

But there's no external crack there, is there?---Well, it's not an external wall. It's an internal.

I'm putting to you that this is not a case of one part of the house having broken away from the other part of the house, is it?---Certainly not.

No. What you're saying by that expression, I put to you, is that part of the house appears to have moved downwards. Correct?---Yes.

And as a consequence two particular points either side internally there's cracking?---Yes."

68 These grounds raise a similar issue and rest upon a false premise. The learned trial Judge did not base his award of damages on damage not pleaded, namely, a tilt in two walls and the slope of the family room floor. Those matters were canvassed during the trial and were taken into account in his Honour's assessment that the appropriate remedy was the demolition and reconstruction of the dwelling. I would not uphold this ground of appeal.

69 I accept that the proper measure of damages was not the cost necessary to put the building on proper footings but was the cost of putting the respondents, so far as money can do, into the same position as if their house were as stable and prone to cracking as it would have been had it been built on proper footings. In view of the evidence of the witnesses Gordon and Van der Meer, which I have set out above, I am not persuaded that his Honour erred in concluding that the only appropriate remedy was the demolition and reconstruction of the dwelling. The building is in a seismic zone and Mr Van der Meer's evidence that the repair work would weaken the structure, so that " ... you might be living in what we call a pack of cards. You might be living in something that in fact becomes very unstable when an earthquake strikes ... " was evidence on which the learned trial Judge could properly come to the conclusion, which he did.

70 It is not clear to me in what way the fact (if it be the fact) that the footings can now do their job "to the extent that their inadequate design may have allowed" is of relevance to the appellant's case. In itself, that proposition does not offer a basis for setting aside the decision of the learned trial Judge and I would not uphold this ground of appeal.

71 It was the contention of the appellants that, although the evidence established that the cracking and other defects in the house had been caused by unstable soil beneath the building, it was possible to stabilise that soil and thereby prevent any further serious cracking. They contended that the remedial work suggested by the appellants' counsel to the expert witnesses offered a reasonable alternative to demolition and reconstruction of the house.

72 The learned trial Judge formed the view that Mr Van der Meer had not been confident that a cut-off drain would work.

73 At AB 374, Mr Van der Meer gave the following evidence-in-chief:

"Can you explain that in more detail, what you mean by that?---Yes, there were a lot of cracks over window and doors. There was - the cracking was related to tilting of the walls. There were vertical cracks and horizontal cracks at low levels in the house and having seen quite a number of these houses with these sort of problems, they were just - it related back to similar problems with previous houses that I have seen. So it's an experience thing, I suppose.

In relation to the present footings of the house, are they able to be repaired?---No."

74 I have set out above the passage of Mr Van der Meer's evidence that the house had "split in two".

75 At AB 418, Mr Van der Meer gave the following evidence under cross-examination:

" ... If we can keep the moisture content stable under the house there should be no more movement.

So there should be no more cracking?---That's right.

And all of that is predicated on stabilising the soil. Correct?---Yes.

You're just not going to guarantee it?---That's right.

If you stabilise the soil even if you did have some more cracks appear you would expect them to be the same sort of cracks you would expect to see in any house in this area. Correct?---Not necessarily because I believe the foundation system isn't the correct one for this house, so in other houses you may see - the cracking may stop after a period.

"- - - and you put in the joints that you're suggesting you put in and you do the patchwork that you're suggesting - - - ?---Yes.

" - - - your evidence is that you wouldn't expect to see any other cracks?---No, that's not my evidence at all.

What is your evidence?---My evidence is that there may still be cracking occurring after the joints are put in but it may occur in a spot where we haven't put a joint, for example.

Do you expect that to be the case once you have gone through the measures you have suggested?---If the moisture content of the ground has been stabilised there may be some minor cracking but not to the extent that we have seen.

And that minor cracking would not be out of the ordinary, would it?---Not for houses in this area, no."

76 It is apparent, therefore, that Mr Van der Meer was basing the success of the proposed remedial work on the prior stabilisation of the soil beneath the house. It is only if the soil is stabilised that such remedial works might succeed and as to that issue, having discussed possible methods of construction of a cut-off drain, Mr Van der Meer gave this evidence in relation to the opinion of Mr Gordon:

"And whether or not that would be successful you would, I put it to you, differ to the likes of Mr Gordon. Isn't that correct?---I'm not sure of Mr Gordon's advice to you on that.

"No, no, but do you have a view as to whether or not that would stabilise the soil or is that a matter for a geotechnical expert?---Yes, it's more in his realm than mine."

77 Mr Gordon had expressed the view (which the learned trial Judge accepted) that:

"The residence constructed at 1 Gray Road has broken up, and does not serve the purpose for which it was designed."

78 In his report, he added: "It's [sic] value on the open market has decreased, arguably to nothing." In addition, in the report, he discussed three possible remedial measures, namely:

(1) Underpinning (which would require piles round the north-west corner and down the west side for some 9 metres or 14 metres if the suspected tributary dyke is present, such piles to be at least 200 mm in diameter and taken down 2 metres in clay soils and into rock and to be spaced at intervals to be determined by engineering analysis, but possibly of the order of 1.5 to 2 metres);

(2) Mud jacking (a process whereby a water and soil cement or soil-lime-cement grout is pumped underneath the slab, under pressure to produce a lifting force that floats the slab to the desired level); and

(3) Jet grouting (whereby the jetting action with high-pressure grout mixes the grout with the in situ soil to give a column of grout up to 1 metre in diameter.)

79 During his cross-examination, Mr Gordon was asked by the learned trial Judge:

"I just haven't quite followed that, I'm sorry to interrupt, but you could stabilise it tomorrow, couldn't you?---Yes, if you put enough money into it.

"Yes?---Yes. Yes. If you underpin the whole house, yes."

80 It was not suggested, I think, that underpinning the house would be a reasonable alternative to its demolition and reconstruction.

81 The consulting engineer, Mr G L Glick, gave evidence. At AB 288, he said, in part:

" ... Well, what puzzled me was why was that corner in particular 40 millimetres below the opposite corner? There is variation in the level as the house is built but I don't believe any normal reputable builder would build brickwork 40 millimetres out of level. So there was a relative movement between those two corners, and I was seeking the reason for that."

82 He suggested calling in Mr Gordon to advise whether dolerite dykes were present and, following a report that there was such a dyke there, he concluded that the existence of dolerite clay upon which the house had been constructed was the cause of the problems.

83 At AB 298 - 299, Mr Glick's evidence was as follows:

"Have you considered, Mr Glick, whether from an engineering point of view that 40-millimetre drop across the house is able to be repaired?---I don't follow exactly the implication of that question.

You have spoken about a 40-millimetre drop from the south-east to the north-west corner?---Yes.

Are there any remedial measures that can be taken to recover - - -?---To bring it back to level?

"Yes?---In this instance I would say no. It's virtually impossible to jack those footings back up again without creating all sorts of other consequential problems in the house. You can maintain it probably where it is but I wouldn't like to be given the job of - or I couldn't categorically say you could jack it back to where it was, no. You can't."

"Is it possible to carry out repair work to stabilise this movement about which you have spoken?

HIS HONOUR: To stop it flexing?---Can you stop - - - "

Jandon Constructions (A Firm) & Ors v Lyons & Anor [1999] WASCA 310

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (218 paragraphs)

Jandon Constructions (A Firm) & Ors v Lyons & Anor [1999] WASCA 310 (22 December 1999)

Parties

Legislation Cited (2)

Cases Cited (11)