Max Build Pty Ltd v The Owners – Strata Plan No 54026

Hearing dates: 23 May 2025

Date of orders: 23 May 2025

Decision date: 23 May 2025

Jurisdiction: Equity - Technology and Construction List

Before: Rees J

Decision: Rulings made under s 192A, Evidence Act 1995 (NSW)

Catchwords: PROCEDURE — advance ruling under s 192A Evidence Act — claim by builder for unpaid amounts – cross-claim by owner for building defects — where owner’s expert relies on identification of defects by another, neither having expertise to identify defects — where owner’s quantity surveyor then relies on that evidence — advance rulings made.

Legislation Cited: Evidence Act 1995 (NSW), s 192A

Cases Cited: Owners Strata Plan 90189 v Park View Constructions [2022] NSWSC 1382

Category: Procedural rulings

Parties: Max Build Pty Ltd (Plaintiff)
The Owners – Strata Plan No. 54026 (Defendant)
TOP Consulting Group (NSW) Pty Ltd (Second Cross-Defendant)

Representation: Counsel:
M Sheldon (Plaintiff)
F Ashworth (Defendant)
A Toogood, Solicitor (Second Cross-Defendant)
Solicitors:
Construction Legal (Plaintiff)
Sparke Helmore Lawyers (Defendant)
Moray & Agnew Lawyers (Second Cross-Defendant)

File Number(s): 2023/290009

ex tempore JUDGMENT

1. HER HONOUR: In these proceedings, the plaintiff builder sues the defendant owner for unpaid amounts under a building contract, together with lost profits said to flow from termination of that contract. The defendant owner cross-claims against the builder and the superintendent, alleging that the building works were not performed with reasonable care and skill. The matter has yet to be allocated a hearing date.

2. The builder seeks a ruling under s 192A of the Evidence Act 1995 (NSW), which provides:

192A Advance rulings and findings

Where a question arises in any proceedings, being a question about—

(a) the admissibility or use of evidence proposed to be adduced,

…

the court may, if it considers it to be appropriate to do so, give a ruling or make a finding in relation to the question before the evidence is adduced in the proceedings.

3. The builder seeks a ruling that the expert report of Timothy Haynes dated 25 October 2024 is not admissible, either as to the whole of the report or as to Appendix 4. The plaintiff also seeks a ruling that parts of the expert report of quantity surveyor David Madden dated 22 November 2024 are inadmissible, being some paragraphs within the body of the report and also Annexure K. Both expert reports were served by the owner.

4. The circumstances in which such a ruling may be made were canvassed in the Owners Strata Plan 90189 v Park View Constructions [2022] NSWSC 1382 at [39]-[48]. In short, it may be considered appropriate to give an advance ruling in circumstances where (at [42]): (citations omitted)

(a) it is apparent that there is a problem with the admissibility of the evidence in question;

(b) it is inevitable that a ruling will need to be made in respect of that evidence, such that the Court’s time will not be wasted in doing so;

(c) the material necessary to make a ruling has been or can then be ascertained; and

(d) such a ruling will assist with the efficient conduct of the final hearing, including by giving the party whose evidence is the subject of an adverse advance ruling the opportunity to marshall evidence in proper form, avoiding the need to call witnesses or to require other witnesses for cross-examination, or where there is an objection to the trial judge considering the evidentiary material.

5. I consider that it is appropriate to make such a ruling in this case for, essentially, the reasons advanced by the builder's solicitor, Jessica Rippon.

(a) The parties have served their evidence-in-chief. (b) The builder will need to retain three experts to respond to the owner’s expert evidence which the builder considers is inadmissible. The likely cost of responding to the owner’s expert reports will be some $200,000 as matters presently stand, but will be some $50,000 if the reports are ruled inadmissible, as the builder thinks will be the case. (c) The builder is concerned that if its objections are taken at trial, and succeeds, there is a risk that the trial will be vacated on an application by the owner to fix the resulting problem with its case.

6. Having reviewed the expert reports in question, it is apparent that there is a problem with the admissibility of the expert evidence, in particular, how defective building work has been identified and how that identification is then relied upon by subsequent experts. It is inevitable that a ruling will need to be made in respect of that evidence. The builder has squarely raised its objection in correspondence. The builder clearly intends to take the same objection at trial. The material necessary to make a ruling has been assembled in the Court Book on this application. Such a ruling will assist with the efficient conduct of the trial, including by giving the owner an opportunity to address any problem with the admissibility of its expert evidence before trial.

7. Turning to the objections, it is necessary to give some factual background. In November 2020, the owner retained the builder to perform remedial building work on a heritage building, being the old ‘Grace Brothers’ building on Broadway. In 2022, the builder sought approval for two variations to the work. The variations were rejected. On 6 July 2022, the builder suspended work.

8. The owner engaged Robert Madden to inspect the building works to identify any items of visibly defective, incomplete or non-compliant work. Mr Madden is a quantity surveyor. He did a ‘walk-through’ of the building and took some photographs. Robert Madden produced a report on 5 September 2022 and a second report on 27 September 2022. In each report, Robert Madden attached photographs of the state of the building works at the time and also added his observations. Some of the observations were simply stating what he had seen. Other observations extended to expressing his view as to whether the work observed was defective of not.

9. Robert Madden’s qualifications to express an expert opinion as to whether building work was defective were not sought to be established by the owner, who simply relies on him as a witness of fact. Nor is there any evidence that he had expertise to identify building defects.

10. In any event, on 4 October 2022, the owner purported to terminate the building contract.

11. Turning to Mr Haynes’ report, there are two problems.

12. First, Mr Haynes relies on Robert Madden's observations as to whether the building work was defective, incomplete, or demonstrated a failure to properly protect the works. The fact that Mr Haynes has done so is apparent from his first report, at paragraph 237, where he says that he has based his view on both the descriptions (which include Robert Madden’s observations in his defects reports) and the photographic evidence. Mr Haynes makes this plain in his supplementary report at paragraph 29, where he says he has reviewed both the descriptions and the photographic evidence. Based on that review, Mr Haynes has expressed his opinion.

13. That is, Robert Madden's observations formed an apparently significant ingredient in Mr Haynes' subsequent consideration of whether the work was incomplete or defective. As mentioned, Robert Madden has no known qualifications to identify building defects. As a consequence, Mr Haynes' report rests on an unsolid foundation.

14. Second, from reading Mr Haynes' curriculum vitae and his description of his experience, Mr Hayne does not have expertise to identify building defects either. That is not to say that Mr Haynes is not highly qualified, but simply that he is not qualified on this particular subject.

15. Mr Haynes is skilled in construction management and has given expert evidence in a range of matters in relation to construction management, quantum and delay matters. He has provided training on “commercial issues arising on construction and engineering projects”, including in relation to defective works. As I read his affidavit, Mr Haynes has no particular expertise in identifying defective building work, but has expertise in assisting to manage the commercial issues which arise from such work. Whilst Mr Haynes is a member of the Chartered Institute of Building, I do not think it follows that, as was submitted by the owner, he is “a builder” per se. A review of Mr Haynes’ (impressive) appointments as an expert in relation to buildings, energy, infrastructure and oil and gas projects suggests that his time has been devoted elsewhere.

16. In the result, where Mr Haynes has formed an opinion as to whether building work is defective based, in part, on Robert Madden’s observations (where Robert Madden did not have any relevant qualifications) and his own views (absent expertise on his part to identify defective building work), Mr Haynes’ opinion is not admissible as expert evidence on this subject.

17. The problem is then compounded as quantity surveyor David Madden (no relation to Robert, I am told) relies on Mr Haynes' identification of defects, in circumstances where Mr Haynes has relied on Robert Madden's identification of defects. The foundation on which David Madden’s work rests is itself defective.

18. A further complaint is made that David Madden's report lacks detail and fails to set out proper reasoning for his calculation of the cost of remedying the defects. I accept that the methodology outlaid is bare. While it does pose difficulties for the builder in meeting that evidence, I would not reject his report on that account alone.

19. Both Mr Haynes and David Madden also express views on matters of law, which are interesting but of little assistance to the Court. In David Madden’s case, he is not qualified to opine on this subject. This is not to criticise either witness, who were asked to opine on these questions.

20. For these reasons, I rule that the report of Mr Haynes and the portions of David Madden’s report to which objection is taken (being paragraphs 6.76 to 6.103, paragraphs 7.28 to 7.38 and Annexure K) are inadmissible. Further, in respect of David Madden's report, I make a ruling under s 136 of the Evidence Act that paragraphs 6.1 to 6.1.4 and 7.1 to 7.4 are admitted as evidence of the expert's assumptions/understanding only.

**********