Contract Law - Building, engineering and related contracts - Performance of work - Remedies for breach of contract - Damages - Measure of - Quantum of damages in light of breach.

Supreme Court Civil Procedure Act 1932

Supreme Court Rules 2000

Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36, 129 CLR 99

Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7, 251 CLR 640

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165

Wright v Lemon [2024] WASCA 19

Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8, 236 CLR 272

Bellgrove v Eldridge (1954) HCA 36, 90 CLR 613

Stone v Chappel [2017] SASFC 72, 128 SASR 165 at [200]

Judgment Number: [2025] TASSC 45

MURES FISHING PTY LTD (ACN 069 572 149) v PATRICK GERARD HOLLOWAY

1. The plaintiff, Mures Fishing Pty Ltd (Mures), is a long-established Tasmanian family fishing and seafood business, established in 1973 at Hobart. In addition to a restaurant business on Franklin Wharf at Victoria Dock on the Hobart waterfront, Mures operates a commercial fishing and retail fish sales operation.
2. Prior to 2013, in order to process its catch, involving washing, filleting, smoking and other related activities, Mures occupied factory premises at Glenorchy.
3. That factory was old and expensive to operate. The floor layout was not ideal for operating forklift trucks and other equipment used to move stock from processing areas to dispatch areas. (Notably however, the factory did have air conditioning).
4. The first defendant, Patrick Holloway was and is a plumber and was known to the managers of Mures through plumbing work he had undertaken for many years at both the factory and the restaurant premises. He and the second defendant, Suzzette Holloway, his wife, owned a vacant block of industrial land at 243 Kennedy Drive, Cambridge.
5. As a result of conversations between Mures managers and Mr Holloway, a plan emerged in 2013 whereby Mr and Mrs Holloway would construct a new factory on the Cambridge land, purpose-built for Mures, and would thereafter lease the facility to Mures on a long-term basis.
6. On 22 October 2014, Mures executed an agreement entitled "Agreement to Lease - Major Construction", which set out as annexure "A" a document entitled "Lease" which recited, relevantly, as follows:

"...in consideration of the rent...and the covenants...the Lessor does hereby Demise and Lease unto the Lessee all that the premises described in item 5 of the Reference Schedule ('the demised premises') together with (if any) the furniture furnishings plant and equipment in the demised premises described in Item 6 of the Reference Schedule ('the plant and equipment') ...".

"Plant and Equipment: as per the drawings and performance specifications in accordance with which the improvements on the demised premises were constructed and including but not limited to those items specified in the list annexed hereto and marked "A"" (emphasis added).

1. Annexure "A" to the lease document, entitled, "Plant and Equipment" provided, amongst other things:

"Equipment to be supplied & installed by Pat Holloway

All refrigeration & air conditioning, other than Ice Maker, Blast Freezer & Waste Chiller..."

1. Clause 2(a) of the Agreement to Lease also obliged the defendants to "cause the Lessors work to be completed in a good and workmanlike manner and to the stage of practical completion on or before 15th February 2015".
2. The "Lessors work" was defined in clause 1 of the Agreement to Lease as meaning "the work referred to in the plans and specifications". (Emphasis added)
3. In turn, the term "Plans and specifications" was defined in clause 1 as meaning "the council permit conditions in Annexure B and the drawings and performance specifications in Annexure C".
4. Annexure C provided as follows:

The Drawings and Performance Specifications are generally in accordance with a set of plans and specifications prepared by Preston Lane Architects (version 17/9/2014) contained on a compact disk titled '243 Kennedy Drive Cambridge 2014-422'." (Emphasis added.)

1. It is common ground that while there were plans and specifications on a CD that were prepared by Preston Lane (the Preston Lane plans), there was no "version 17/9/2014". Rather, the date that the folder on the CD was created was shown as "Sep 17 2014" and a file in the folder named "Architectural" was shown under the heading "Date modified" as "17/9/2014 11.05 AM". Also in the same folder were files named "Civil & Structural", "Electrical", "Hydraulic & Drainage" and "Mechanical".
2. When inserted into a computer, the CD displays the title "2014-422 date 17_9_2014". The plans in the CD file named Architectural are shown as prepared by Preston Lane with the final revision shown as "Revision" "6", dated "20/8/14" and denoted "CLC" (Clarence Council).
3. I find, notwithstanding a conflicting agreed fact prepared before trial, that the files were placed on the CD by a building surveyor, Nigel Grice. The evidence from Mr Grice was that the CD was created by him as building surveyor on 17 September 2014 and provided to Mr Holloway, who collected it on the same day for the purpose of having Preston Lane make an application for a building permit, (which Preston Lane did on that day).
4. The plaintiff entered into the lease for a term of 10 years with a further 10-year option.
5. Construction of the factory occurred between September 2014 and August 2015 and between 27 August 2015 and 22 September 2015, Mr Grice inspected the property and certified it as compliant and sufficient for the issue of occupancy certificates.
6. All did not go well thereafter.
7. The plaintiff's claim for damages is maintained on the basis that in the construction of the factory, the defendants breached the agreement to lease by failing to install items that they were contractually bound to install (14 air conditioning units), and by failing to complete some of the building works in a proper and workmanlike manner.
8. The particulars of loss set out prior to the prayer for relief in the amended statement of claim reads:

"The Plaintiff has suffered loss in that it has not received the entire benefit of the Lessor's Work as warranted under the Agreement to Lease and has been put to loss and expense as set out in the Rule 261 Statement filed with this Statement of Claim."

1. The relief sought is confined to damages, interest pursuant to s 35A of the Supreme Court Civil Procedure Act 1932 and costs. There is no prayer for further or other relief. The writ commencing the proceeding was endorsed with a claim for a liquidated demand.

1. The amount of loss and expense set out in the amended schedule required by r 261 of the Supreme Court Rules 2000 is $948,154.23. That amount is made up as shown in the following table:

Installation of Air-Conditioning units per plans entitled "015140-M01", "01514-M02" and "01514-M07";

Installation of Roof access Plan and Walkway per plans entitled "01514-M03" and "A02-05";

Reveling (sic) of concrete slabs outside Main Chiller and in dispatch area;

$151,102.23 (including 40% for preliminaries / contingencies)

$5,545.00 (including 40% for preliminaries / contingencies)

1. After concessions made by the defendants in respect of some items, the four remaining items for determination, raise two issues, as follows:

(a) Are the defendants obliged by cl 2(a) and Annexure "C" of the Agreement to Lease to "install" as "Lessor's work":

• the fourteen "refrigeration and air-conditioning units" alleged in [1](a) of the particulars subjoined to [7] of the amended statement of claim;

(b) Did the defendants' breach cl 2(a) of the Agreement for Lease by allegedly failing to complete as "Lessor's work" in a good and workmanlike manner:

• the concrete slab in the main chiller and around the dispatch area as alleged in [2](c) of the particulars subjoined to [7] of the amended statement of claim;
• the floor plate of the Gourmet products freezer and the heating element as alleged in [2](d) of the particulars subjoined to [7] of the amended statement of claim; and
• the internal wall frame and cladding of the room adjacent to the ice room as alleged in [2](e) of the particulars subjoined to [7] of the amended statement of claim.

1. Paragraph 7(1)(a) of the amended statement of claim pleads as follows:

The Defendants breached the Agreement to Lease in that:

(1) The Lessor's Work constructed on the property failed to generally accord with the engineering plans, drawings and specifications on the Compact Disc, as follows:

(a) Refrigeration and air-conditioning units referred to in drawings entitled '015140-M01' (sic), '01514-M02' and '01514-M07' within the plans and specifications and designated:

1. The defendants' defence as to the first issue concerning the air conditioning units relies on an argument involving purely a question of the construction of the Agreement to Lease. The defendants did not give evidence. The plaintiff's sole director, Will Mure, was not cross-examined on his affidavit.
2. The defendants argue that the reference in Annexure "C" to "Drawings and Performance Specifications" can only be a reference to the set of plans and specifications on the CD in the file marked "Architectural" as none of the other plans and specifications on the CD were prepared by Preston Lane Architects. Those architectural plans and specifications prepared by Preston Lane are silent as to air conditioning works.
3. The file of plans and specifications in the CD folder named Mechanical, which detail the air conditioning proposed for the works, were prepared by Andrew Sutherland Consulting Engineers and commence with the drawing number designation "O1514 - MOO REV T1" (the Sutherland plans).
4. The mechanical drawings are referenced in the Preston Lane plans by notation and on that basis the air conditioning shown or specified in the Sutherland plans might be thought to answer the description "generally in accordance with a set of plans and specifications prepared by Preston Lane Architects".
5. However, the defendants' senior counsel, Mr O'Rafferty, submits that is not so. In closing submissions, senior counsel said, in answer to a question I posed to him about this:

"Well, I mean, I can't avoid the fact that they're referenced. They are referenced in the plans [the Preston Lane plans], but because of note 27 and because of the evidence of Mr Sutherland about the nature of these plans, and because they're described as tender plans, the parties, in my submission, must have contemplated a tender process before any of this ventilation and air conditioning could be carried out as a lessor's work.

And that means, in my submission, that it isn't lessor's work, it's something else. It's part of a tender process that could be completely different to what's in those plans of Mr Sutherland. So, that's what I'm submitting to your Honour - is that the construction has to be that, because to be otherwise would make a nonsense out of this business dealing." (My emphasis.)

1. Note 27 in the Sutherland plans states, "PROVIDE WORKSHOP DRAWINGS FOR APPROVAL PRIOR TO COMMENCING ANY WORK".
2. Mr Sutherland gave evidence about the plans being "tender plans" and about the note requiring workshop plans. Rather than set out the whole of the relevant transcript of his evidence, given over two days of the trial, I gratefully adopt Mr O'Rafferty's summary of that evidence set out in his written closing submissions as follows:

"The evidence of Andrew Sutherland is that the limit of his obligation was to prepare mechanical plans for tendering via suitably qualified contractors, and that those plans are not construction plans. That his plans were provided for the sole purpose of the client using them for tender negotiations for procurement and ongoing services. That his tender plans were provided for Pat Holloway. That the tender process using his plans might be that the builder would then normally seek expressions of interest from suppliers of goods and services for the procurement and construction of the facility, following which he might provide additional services with respect to finalising plans for construction. That they would then have to go to a construction issue drawing, and then they might be refined further and become a contract issue drawing, which is an arrangement between the builder and his trade contractors or service providers. That if he were engaged by the client to modify the plans and make amendments that it is quite likely that a range of products and services may be available that are different from what's been documented, and they may be adopted for commercial reasons or alterations or improvements or changes. That workshop drawings would be produced at the completion of his commission - the contractor will then seek quotations and submissions for goods and services materials from trade contractors and for mechanical services. The successful trade contractor, when appointed, will then prepare the workshop drawings, which may also be called construction drawings. That the bid by the successful trade contractors, includes the preparation of their drawings and the scope of work could be changed at the discretion of the builder - the scope of work may change, from his tender documents to construction for various reasons including cost and fitness for purpose "at the discretion of the builder". (Transcript page references omitted.)

1. The defendants submit that the fact that the agreements entered into between the parties do not expressly provide for a tender process "may or may not be" a "failing of the solicitors acting for the parties in the preparation of those contracts" or it may be that, "objectively the parties were content to leave the tender process to Pat Holloway and his architects and mechanical engineer, "outside the ambit of the express provisions of the contracts between them." (Empasis added.)
2. The defendants submit that plaintiff's case is in contract, and it is limited to alleging a breach of clause 2(a) of the Agreement to Lease. The defendants note that no claim in equity, under the Australian Consumer Law, or by way of implied terms, is made by the plaintiff.
3. Thus, the defendants' principal defence can be viewed as comprising the black letter proposition that by the Agreement to Lease the defendants were only contractually obliged to construct what was drawn and specified in the architectural plans prepared by Preston Lane, and were not obliged to carry out, or even to put out to tender, the installation of the air conditioning plant and equipment specified as to be supplied and installed by "Pat Holloway" in Annexure "A" to the Lease.
4. Further, the defendants put forward an alternative defence, "namely that the proviso in clause 1(a) of the Agreement to Lease should be invoked" so that the term "plans and specifications" in clause 4(a)(i) of the Agreement to Lease is construed as a reference to "the drawings and performance specifications" in Item 6 of the Reference Schedule to the Lease.
5. Item 6 provides as follows:

"As per the drawings and performance specifications in accordance with which the improvements on the demised premises were constructed and including but not limited to those items specified in the list annexed hereto and marked 'A'" (Emphasis added.)

1. The defendants point out that Item 6 contemplates that "improvements" in the form of plant and equipment will be installed pursuant to "drawings and performance specifications" (not plans and specifications), and argue that "it could not be any clearer about what plant and equipment will be installed until it is ultimately installed - hence the past tense "were constructed", and hence the words "including but not limited to" and hence the open-ended words "all refrigeration & air conditioning""
2. In other words, as I comprehend the argument, the Agreement to Lease only required the defendants to provide the air conditioning contemplated after the Lessors Works were constructed and were not necessarily those referred to in the Sutherland plans and referenced in the Preston Lane plans.

1. The relevant principles of construction are well understood.
2. In Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99, Gibbs J said at p110:

"It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, "even though the construction adopted is not the most obvious, or the most grammatically accurate", to use the words from earlier authority cited in Locke v. Dunlop [1888] UKLawRpCh 140; (1888) 39 Ch D 387, at p 393 , which, although spoken in relation to a will, are applicable to the construction of written instruments generally; see also Bottomley's Case [1880] UKLawRpCh 258; (1880) 16 Ch D 681, at p 686 . Further, it will be permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid an inconsistency between that provision and the rest of the instrument. Finally, the statement of Lord Wright in Hillas & Co. Ltd. v. Arcos Ltd. [1932] UKHL 2; (1932) 147 LT 503, at p 514 , that the court should construe commercial contracts "fairly and broadly, without being too astute or subtle in finding defects", should not, in my opinion, be understood as limited to documents drawn by businessmen for themselves and without legal assistance (cf. Upper Hunter County District Council v. Australian Chilling and Freezing Co. Ltd. [1968] HCA 8; (1968) 118 CLR 429, at p 437 )."

1. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165, Gleeson CJ and Gummow, Hayne, Callinan and Heydon JJ said at [40]:

"It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction."

1. In Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640, French CJ and Hayne, Crennan and Kiefel JJ said at [35]:

"35 Both Verve and the Sellers recognised that this Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'. As Arden LJ observed in Re Golden Key Ltd [[2009] EWCA Civ 636 at [28]], unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption 'that the parties ... intended to produce a commercial result'. A commercial contract is to be construed so as to avoid it 'making commercial nonsense or working commercial inconvenience' [Zhu v Treasurer of New South Wales [2004] HCA 56; (2004) 218 CLR 530 at 559 [82]]. (Endnotes omitted, citation added.)

1. In my view, applying these established tenets, the defendants' principal argument in defence of the plaintiff's main claim, comprises a wholly frustraneous submission.
2. To conclude that the mechanical drawings, which were referenced in the Preston Lane plans, did not answer the description of being "generally in accordance with a set of plans and specifications prepared by Preston Lane Architects" because the final detail of the item "[a]ll refrigeration & air conditioning, other than Ice Maker, Blast Freezer & Waste Chiller..." referred to in Annexure A to the Lease, might not be established until after the defendants chose to carry out a tender process and the successful tenderer provided workshop drawings for approval, would be to make a commercial nonsense of the Agreement to Lease and the Lease. It is to be remembered that the two agreements must be read together and that the defendants were both the lessors and the builders.
3. Counsel for the defendants say in their written submissions:

"55 The defendants are not saying that they would not be obliged to engage in some form of tender process, but rather, that:

55.1 the defendants were only ever obliged to engage in a tender process that produced workshop drawings and performance specifications for the plant and equipment contemplated in the Preston Lane plans in the file marked 'Architectural' in the CD;

55.2 those plans of Preston Lane contemplated only very large air-conditioning and refrigeration units such as the evaporators and condensers necessary to make the various Chiller and Freezer rooms operational for the purposes of a fish processing factory under the Agreement to Lease (and those were installed); and

55.3 the twelve air-condition ventilation units claimed in this proceeding were not contemplated by the Preston Lane plans, and were not necessary to achieve the occupancy permit required by the Agreement to Lease, and which was ultimately granted.

1. Instead, the result is merely inconvenient because the plaintiff has run this case only on the express provisions of cl.2(a) of the Agreement to Lease. It is not inconvenient in the sense used in Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 at 656-657 per French CJ, Hayne, Crennan and Kiefel JJ at [35]. It is not a business inconvenience, it is a litigation inconvenience."
2. It will be apparent that I do not accept the basis of that submission.
3. I do accept that the Preston Lane plans must remain the touchstone of Annexure C to the Agreement to Lease. They are the only "plans and specifications prepared by Preston Lane Architects" on the CD. And I note that those plans do not mention air conditioning. However, they are plans and specifications prepared by Preston Lane which reference, and thus, to the relevant extent, can be said, if not to incorporate, then at least to recognise and connect to, the mechanical drawings which can be found on the same CD in the form of the Sutherland plans. Those plans do encompass, amongst other things, the provision for, if not the ultimate detail of, the air conditioning units contemplated by the Lease. That the Sutherland plans were prepared as "tender plans" does not erase the fact that those plans specified the 14 air conditioning units the subject of the plaintiff's claim and their existence as mechanical drawings is referenced in the Preston Lane plans.
4. My conclusion does not involve construing the words "generally in accordance with a set of plans and specifications prepared by Preston Lane Architects (version 17/9/2014) contained on a compact disk titled '243 Kennedy Drive Cambridge 2014-422' in Annexure C to the Agreement to Lease", as meaning both the plans and specifications prepared by Preston Lane Architects and contained in the CD file named "Architectural", and the plans and specifications prepared by Andrew Sutherland and contained in the CD file named "Mechanical". Rather, that the latter are embraced by the former. As indeed are the plans in the files in the folder named "Civil & Structural" and "Hydraulic & Drainage", which are also referenced in the Preston Lane plans.
5. It is clear to my mind it was understood that the specifics of the mechanical services to be provided by the Lessor were contained in the Sutherland plans and that is the reason for the notations in the Preston Lane plans, "refer mechanical drawings". In that regard I accept the submission of counsel for the plaintiff, Mr McTaggart KC and Mr Deayton, that the Preston Lane plans, which were architectural plans, did not contain all of the details of the Lessors work but neither were they to be read in isolation.
6. I reject as business nonsense the submission made by the defendants that, insofar as the Preston Lane plans A02-05 and A06-01 note "refer mechanical drawings", that must be taken to be a reference to the ultimate "WORKSHOP DRAWINGS FOR APPROVAL PRIOR TO COMMENCING ANY WORK" in general Note 27 of "Mr Sutherland's tender plans". That level of detail is not necessary to understand what the Agreement to Lease and the Lease required in terms of air conditioning.
7. In Wright v Lemon [2024] WASCA 19 at [533], Buss P, with whom Vaughan and Hall JJA agreed, said:

"Where a word or an expression is defined in a commercial contract the court will give effect to the definition. The proper course is to read the text of the definition into the relevant clause and then to construe the relevant clause having regard to the contract as a whole. Ordinarily, the purpose of a definition in a commercial contract is to attribute the meaning agreed upon by the parties to the relevant word or expression and to avoid unnecessary and lengthy repetition of the text of the definition in the contract."

1. The approach I have taken does not offend this principle. My approach does not render the definition subservient to the provision using it. I have simply taken a fair reading of the words in annexure C, overlooking the misdescription of the Preston Lane plans, and have then taken those plans, literally at face value. And I have applied the principle stated by Gibbs J in Australian Broadcasting Commission v Australasian Performing Right Association Ltd set out above at [40].
2. During the trial it was indicated by senior counsel for the defendants that evidence was to be led from Mr Benn Turner, an architect at Preston Lane, as to the meaning of the notations "refer mechanical drawings" in the Preston Lane plans. Counsel foreshadowed that Mr Turner's evidence would establish that such references were not references to the Sutherland plans. Mr Turner was not called, and no such evidence was adduced. Given the conclusion I have reached however, it is not necessary for me to consider whether any inference adverse to the defendants might be drawn from that.
3. There was also evidence that Mr Holloway attended a meeting with Mures' management on 21 July 2016. A contemporaneous note of what was discussed at that meeting is in evidence, at least de bene esse, from Ms Abbie Crow, the plaintiff's then Human Resources and Relationship Manager, reads:

"Concerns over the air conditioning not being installed as of yet have been raised. Pat indicated he is waiting for the last $150k of finance to come through before this can be completed."

1. The defendants argue that Mr Hollway's statement is not admissible as it is not a statement against interest because it merely reflects his subjective intention or state of mind and thus cannot, as a matter of law, be called in aid to resolve an ambiguity.
2. I make it clear, if it is not already, that the conclusion I have reached does not involve finding an ambiguity in the words of Annexure C, or between the words of Annexure C and those of Item 6 of the Reference Schedule and/or Annexure "A" of the Lease. Thus, it does not involve recourse to any of the evidence of the plaintiff's witnesses objected to by the defendants and taken in de bene esse.
3. Finally on this issue, I should say that I do not need to consider the defendants' alternative argument that recourse is open to the "proviso" to construe the extent of the Lessor's works required by the Agreement to Lease.
4. The "proviso" referred to comprises the opening words of clause 1, the "Interpretation" section of the Agreement to Lease, and states:

"In this agreement unless there be something in the subject or context inconsistent therewith the expressions following shall have the respective meanings hereinafter mentioned" (Emphasis added.)

1. As I apprehend it, there is nothing in the subject or context of the Agreement to Lease (and/or the Lease for that matter), as I have construed it, which is inconsistent with the meaning assigned in Clause 1 to the expressions "Lessor's work" or "Plans and specifications". The plans and specifications are the Preston Lane plans, but those plans refer to and embrace other drawings. There is no relevant inconsistency, just as there is no relevant ambiguity.
2. It follows that I find that the defendants are liable to the plaintiff for damages in respect of this item in the amended r 261 schedule. It is thus necessary to resolve the dispute between the parties as to the quantum of those damages.

1. In their written closing submissions, the defendants submit that the amount of $338,466, exclusive of GST and including a contingency of 5% ($16,118), as estimated by their quantity surveyor, Chad Freeman, should be adopted by me in assessing damages under this rubric, and not the amount estimated by the plaintiff's quantity surveyor, Chris Hawkins, of $729,961, exclusive of GST.
2. Both assessments are based on the likely cost of retrofitting the contracted air conditioning into the current facility.
3. Mr Hawkins' evidence was that as at 10 July 2023, the total likely cost for the installation of the missing mechanical equipment in the existing facility was $700,337. That sum is inclusive of estimated head contractor preliminaries (30%) and with contingency costs estimated at 10%.
4. Mr Hawkins provided a supplementary opinion on 14 January 2025 in which he estimated a likely escalation of 4.23% between June 2023 and September 2024 (being the date of the most recent Australian Bureau of Statistics construction industries index). Factoring in that increase, he estimated a total cost of $729,961, excluding GST, for the installation of the air conditioning equipment. That is the amount now claimed by the plaintiff.
5. Mr Hawkins' figures and calculations were not challenged by the defendants, apart from adducing evidence from Mr Freeman.
6. Mr Freeman's estimate was formulated as at October 2022, although he swore an affidavit on 18 February 2025 in which he deposed that his earlier affidavit and the annexed report remained true and correct and would do "for the pending trial".
7. Mr Hawkins' report of 10 July 2023 considered and commented upon Mr Freeman's report.
8. Mr Hawkins noted that Mr Freeman's costings were lower than would be expected when considering that the retrofit would have to take place in the context of an operational facility which would necessarily increase time and cost.
9. In addition, Mr Hawkins explained that Mr Freeman's opinion did not adequately consider the likely work involved in installing the required ductwork.
10. Finally, Mr Hawkins considered that Mr Freeman's allowance of 15% for head contractor preliminaries was too low in consideration of a commercially tendered project in an operational accredited food production facility (compare Mr Hawkins' allowance of 30% as above).
11. The defendants submit that Mr Freeman's evidence should be "preferred", however no further evidence was adduced from Mr Freeman in response to Mr Hawkins' updated opinion or his critique of Mr Freeman's assessment, and counsel for the defendants did not expand on their submission.
12. Given that I see no factual basis for doubting Mr Hawkins' unchallenged and contemporary assessment of the likely cost of carrying out the work, and given that I see no flaw in his reasoning, I perceive no basis for not accepting it.

1. The damages claimed in respect of the installation of the roof access walkway as per the plans entitled "01514-M03" and "A02-05", and in respect of the defective installation of the boardroom cabinetry, being items 3 and 7 on the amended r 261 schedule, are conceded and agreed in the total claimed of $57,156 exclusive of GST.

1. The amount claimed in respect of the re-levelling of the concrete slabs outside the main chiller and in the dispatch area of the facility to prevent water from pooling, namely $151,102.23 including 40% for preliminaries and contingencies, but exclusive of GST, is disputed.
2. The defendants submit that an assessment by Mr Freeman of $7,030 should be preferred.
3. The constant ponding of water on the floors which does not flow toward designated drainage is a significant, ongoing maintenance item and is unsatisfactory from a biosafety and compliance perspective.
4. It is not contested that, especially given the intended use and occupancy of the facility as a fish processing facility, the construction of the floors in such a manner as to permit ponding is a breach of the defendants' obligation to complete the Lessor's work in a good and workmanlike manner.
5. A report from the plaintiff's building surveyor, Roland Wierenga, is that the floors ought to be relevelled. Mr Hawkins' evidence is that such works will cost $103,550, excluding GST.
6. However, as with other anticipated works, Mr Hawkins considers a further 30% ($31,065) should be applied for the estimated of head contractor preliminaries, and a further 10% ($10,355) should be added for contingencies, leaving a total claim of $144,970 for the works. Factoring in an expected escalation of 4.23% brings the claim to $151,102.23, excluding GST.
7. The defendants rely upon an alternative rectification method in respect of the ponding and the costing for it as opined by Mr Freeman. That involves cutting the concrete floor and installing an additional drain.
8. Mr Freeman lacks the expertise to give his opinion as expert evidence. He is a quantity surveyor, and Mr Wierenga is a building surveyor. Mr Freeman's evidence was admitted after objection as context to Mr Wierenga's evidence.
9. The plaintiff submits that the proposed rectification method suggested by Mr Freeman is not feasible, for the reasons given by Mr Wierenga in his affidavit read on the trial. In particular, that the absence of ponding is a requirement of Biosecurity Tasmania as one of the prescriptive health requirements for the building which is classified as a Special Use Building.
10. In his oral evidence, Mr Wierenga said that his rectification method was preferable to Mr Freeman's, as it was "industry standard" in accordance with the relevant Australian Standard. He described Mr Freeman's suggestion as a "patch-up job" and said that significant problems obtaining approval from Biosecurity Tasmania may follow.
11. The passage from the trial transcript dealing with this is as follows:

"Okay. I'll take you on to your paragraph 4, which is at page 52 of the PDF?......Yeah.

So here's we're talking about the main floor - ?......Yes.

• ponding area. Now, at paragraph 7 of - on this page, you say:

In issuing certification in relation to any specific floor finish, Biosecurity Tasmania will take into account matters such as the ability of the floor finish to be cleaned and effectively drained. Here, the department's issued consent on the basis of the as designed plans which did not include the cutting and installation of drains into existing concrete, as per Mr Freeman's proposal.

Now, my question to you is, isn't it possible, though, that if Mr Freeman's proposal is utilised - ?......Yes.

• that Biosecurity might get - give its consent?......It might, yes.

And isn't it true that even on - on your proposal that - that the plans would have to be amended and recertified?......Correct.

So, Biosecurity would have to give certification to your - to your proposal, anyway?......They would, although, I'd say there's a higher chance, because it's in accordance with an Australian Standard, rather than a patch up job.

But again, my question to you is, isn't Mr Freeman's suggestion then, in relation to area 4, a viable option?......It could be, yes. [indistinct words]

The difficulty with Mr Freeman's proposal to construct another drainage point is that it will require at the very least, adjustments to the current concrete floor via cutting into the slab. This can in turn create issues with the concrete, such as creation of joints in the finish. Depending on the location of the drains, structural considerations may be required.

And my question to you is, these aren't insurmountable - insurmountable problems, are they?......Well, as long as you can get approval from Biosecurity, they're not insurmountable, no.

And my question about that is, isn't there a chance that that could happen with Mr Freeman's proposal, because it's a viable possibility?......I can't speak for Biosecurity, so you're suggesting it's a possibility, I mean, we - we - we like to pursue all possibilities, whether they're -

HIS HONOUR: You'd have to run it past Biosecurity first, wouldn't you?

HIS HONOUR: You'd be crazy to be cutting - cutting concrete with a concrete saw for long lines and putting drains in, and then asking Biosecurity if they would approve it.

MR O'RAFFERTY: (Resuming) Well, what about for your suggestion, would you need approval first for your suggestion from Biosecurity?......You would, but it's in accordance with an Australian standard so therefore it'd be easily accepted. There's no element of - the element of proof for compliance is less.

HIS HONOUR: Even so, you wouldn't pump (sic) that either, would you? You'd - no.

MR O'RAFFERTY: (Resuming) And I'll take you to your paragraph 10, which is over the page?......Ah, yes.

And page 53 of the PDF?......Yeah, I've got it thanks.

Even if this were not the case, there's a risk that poor installation may cause further compliance issues.

But again the same question. It might not be poor installation?......No, that's correct.

And poor installation may occur with your proposed rectification?......It can happen any - on anything, really."

1. The applicable principles as to the measure of damages in a case such as this are not in doubt.
2. In the case of defective building work, the High Court in Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 re-affirmed the rule in Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613 that the proper measure of damage is the cost of reinstatement; that is, damages representing the cost of the work necessary to produce conformity with the contract.
3. In Stone v Chappel [2017] SASFC 72, at [200], Doyle J observed:

"...it reflects the plaintiff's interest in securing performance of the contract, even if that reflects some subjective aesthetic or eccentric benefit bargained for by the plaintiff rather than some objective financial benefit. It permits the recovery of damages assessed by reference to the performance the plaintiff bargained for, rather than confining the plaintiff to compensation for the loss of the objective financial or economic benefits of performance."

1. The defendants do not argue that they are not obliged to pay compensation in the form of rectification damages. The question for me does not involve whether exceptional circumstances or questions of reasonableness make diminution in value the appropriate measure. It is merely a question of assessing the reasonable cost of producing conformity with the contract.
2. It may be accepted that the rectification works proposed by Mr Freeman in his inexpert opinion, conveyed to me in evidence by Mr Wierenga's expert opinion, amounts to a "patch up job". But so too, with respect to Mr Wierenga, is his solution of relevelling. And while Mr Wierenga's view was that there was a higher chance of his solution being accepted by Biosecurity Tasmania, because it is in accordance with an Australian Standard and "the element of proof for compliance is less", he accepted that Mr Freman's proposal could be a viable option and he accepted that none of the problems he raised with Mr Freeman's proposal were insurmountable, as long as approval from Biosecurity Tasmania was obtained and there was no poor installation.
3. In my view the state of that evidence does not justify an award of $151,102.23 and I allow a rounded off sum of $10,000 which embraces Mr Freeman's estimate of $7,030 and takes into account with a broad brush, an allowance for increased costs since the date of that estimate and a further allowance for preliminaries and contingencies.

1. The defendants argue that they are not liable for damages under this rubric. The plaintiff's claim is in the sum of $5,320, including a 40% allowance for preliminaries and contingencies per the evidence of Mr Hawkins and an acceleration of 4.23%.
2. The floor plate is underneath the doorway to the gourmet products freezer and has become subject to significant rusting. The plaintiff says that it was constructed with an inappropriately treated metal which is unsuitable for a wet environment and should have been constructed with "a more robust material, such as stainless steel".
3. The defendants do not dispute that the plate is subject to rusting but assert such corrosion is contributed to, at least in part, from exposure to brine.
4. The plaintiff points out that there is no evidence before the Court as to the use of the gourmet products chiller and that I can not make any such finding as to the extent of any alternate contribution. I accept that proposition.
5. Alternatively, the plaintiff submits that the facility was to be constructed for the use of fish processing, that I can infer that such processing would involve the use of products such as brine and that there is "no contractual or other stipulation restricting or otherwise concerning the plaintiff's use of this particular freezer".
6. In cross-examination Dr Edwards, the plaintiff's energy and water engineer, explained in his evidence the acceleration of corrosion in stainless steel is much slower than the acceleration in mild steel.
7. In the absence of any specification requiring the use of stainless steel for the plant I am not satisfied to the required degree that the use of mild steel was poor workmanship. I make no allowance under this head.

1. This last remaining item in the r 261 schedule is conceded by the defendants.
2. The plaintiff has already taken the step of rectifying the rotting walls, incurring a cost of $4,390, excluding GST.
3. This amount should be awarded.

1. There will be judgment for the plaintiff against the defendants in respects of the damages I have allowed.
2. As I understand it from opening addresses, there were also items of damage claimed and agreed prior to trial. In view of that and the fact that the defendants abandoned their counterclaim just prior to trial and were awarded costs, I should hear the parties as to the amount of the total damages and the costs of the action.
3. Given that damages have largely been awarded on a restitutionary basis as at the date of trial, I will also hear the parties as to whether, and if so what, interest should be awarded pursuant to s 35A of the Supreme Court Civil Procedure Act 1932 (see the decision of Porter AJ in Public Trustee as Administrator of the Estate of Matthew Leonard v Atileo [2023] TASSC 33 at [363] and [365].
4. I should also hear the parties as to the plaintiff's claim for consequential relief to permit it to rectify the items in respect of which it has been awarded damages for, or in the alternative, to have liberty to apply for such relief.