Sam Technology Communications Pty Ltd v Stowe Australia Pty Ltd

The plaintiff's claim was ultimately to the sum of $54,530.28. But for the fact that the it failed to meet the deadline set by Stowe.

The weight of evidence suggests that the intercom systems was close to being in working order. The major outstanding work to be done was the installation of the handsets which did not arrive on time from Spain and some testing of the system.

Sam paid a wholesale price of about $2500 for the handsets that were not used on the Multiplex job. The plaintiff argues that, first, there is no evidence that the handsets could be used again and, second, perhaps more forcefully, that the credit to be given to the defendant is only for the wholesale price. It is argued by the plaintiff that the purpose of an award of damages is to place the injured party in the position it would otherwise have been but for the wrong it suffered. It argues that deducting the sum the plaintiff would have charged the defendant (about $16,000) for the handsets from the contract price would not place the plaintiff in its original position.

Five things can be said about that. First, the handsets were never supplied to the defendant and therefore it should not have to pay for something it did not receive. Second, it seems unlikely that Sam would be unable to use the handsets again, given that its very business was to install such items. Third, if it did so, it presumably would mark up the price of those handsets as was the case here. Fourth, it would self-evidently be unfair if, due to its own contractual breach or its delay in supplying the handsets, the loss of profit the plaintiff suffered by failing to install the handsets fell upon the defendant. Fifth, if it was entitled to the profit and to re-sell the telephones with a mark up, the plaintiff would be double-dipping, receiving an unfair windfall at the expense of the defendant. In my view, the plaintiff's claim ought be reduced by the amount invoiced in respect of the handsets, namely $16,600 not the $2500 it actually cost the plaintiff to purchase the handsets, and that sum be credited to Stowe.

In relation to work undertaken by HSI, the plaintiff concedes that an allowance ought be made to the defendant for materials and labour of some amount. It calculated a sum of $3580 would be fair and reasonable in the circumstances. This was based on premises that 40 hours of work had been provided and charged at $52 per hour to accelerate the completion of the works and $1500 of materials had been used in the process. It is to be noted that much of the work done by HSI relevant to these proceedings was not so much rectification work but completion work, that is, acceleration of the work.

HSI claimed $10,857 for labour, being for 179 hours at $45 per hour plus 38 hours on penalty rates for seven tradesmen working from 23 January to 30 January 2003 in respect of work done for Stowe.

It also charged $15,104.00 for materials. They included $10,500 for handsets. Technical assistance in commissioning and testing the new system installed was also charged by HSI to Stowe. The aggregate was a sum of $28,557.10.

Almost with its last gasp in the case, and over objection, Stowe tendered a document which purported to summarise its cross-claim against Sam and its admissions of liability. Ex 14. As I noted in my decision of 5 February 2007, this was not a very satisfactory way to proceed.

It is not clear how the figure of $25,961 now claimed Ex 20. by Stowe for work done by HSI relates to the document which was HSI's report to Stowe concerning its costs. There is a difference of nearly $3000 between the two. No break down of work done on the intercom system is in evidence and there is no satisfactory way of assessing the work done and materials used in relation to the intercom system. As was admitted in evidence, at least some of the work HSI did was rectification of works not performed by Sam, but those are not costed in any adequate way. The court must therefore do the best it can with the evidence. I consider that it would be reasonable to estimate 90 per cent of that claim as being referable to Sam work, a sum of $22,560.17. As will be developed below, however, the credit given to Stowe in respect of the handsets must be taken into account.

The plaintiff further contends that there was no reason proven for the defendant installing a new intercom system. It says that the evidence and findings of fact I made previously demonstrate that the Spanish handsets were landed on 28 January 2003, practical completion was required by 31 January 2003 and that, accordingly, it was unreasonable to go to the expense of installing an entirely new system.

With the benefit of hindsight, it is now clear that the Sam system could have been installed and made operational by 31 January. The difficulty Stowe faced in the few days leading up to 28 January, however, was the uncertainty of the date of landing of the handsets and, perhaps just as important, the uncertainty of the date of the customs clearance of the handsets. Stowe was under considerable pressure from the head contractor, Multiplex, and was by late January on an excruciatingly tight deadline. It was therefore reasonable, in my view, for it to accelerate the work not only by bringing in reinforcements but also by installing an available intercom system rather than waiting for one that had so far not materialised and the arrival of which might be further delayed.

It is difficult to ascertain with certainty precisely how much of the materials claimed went to the issue of rectification and completion of the intercom system but from a close reading of the report of Mr Crew Ex 20. it appears that the bulk of HSI's work was related to that project, but that is somewhat difficult to judge because we do not know how long each item on Mr Crew's list took. It would follow that most of the labour costs were also incurred that way but with the qualification I have just made.

In Hyder Consulting (Australia) Pty Ltd v Wilh Wilhemsen Agency Pty Ltd [2001] NSWCA 313, Sheller JA said (at [54]): In my opinion, if a defendant negligently damages or destroys the plaintiff's property and there is no evidence that the plaintiff had any reasonable choice other than to replace or repair what had been damaged or destroyed, the cost of replacement or repair, provided it is not extravagant is recoverable as damages. In each case it is a question of fact . 15. Similarly, if, to put itself in its original position, the injured party is required to pay for the costs of completion of a project left incomplete by the other party due to that party's fault, it will entitled to the reasonable, but not extravagant, cost of those works.

16. The onus, of course, lies upon the party asserting that it has suffered the loss to prove the necessary causal connection and the quantum of the loss. Generally speaking, an injured party is not entitled to better itself at the expense of the other party. This means, among other things, in assessing the damages on the cross-claim, the credit given by Sam in respect of the handsets must also be taken into account. Stowe cannot both have a credit for the handsets it did not pay for and claim the cost of the new handsets and their accessories from Sam. It also cannot better itself by taking a credit from Sam for $16,600 for handset, buy new handsets for $10,500 and pocket the difference as a windfall. It must allow the full $16,600 to Sam.

17. Given the findings and comments I have made above, in my view it would be reasonable to allow the cross-claim in a sum of $5960.17. This is calculated by taking the figure of $22,560.17 I estimated as the cost of the works undertaken by HSI in respect of Sam's work and reducing it by the $16,600 credited to Stowe for the handsets. There will be a verdict for the cross-claimant for that sum plus interest to be assessed and judgment accordingly.

18. There will therefore be a verdict for the plaintiff in relation to its claim in the sum of $37,930.28 and judgment accordingly plus interest to be assessed.

19. I reserve the question of costs. Parties to have liberty to apply on that issue.

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