PARTIES: ––––

IN THE local Court

AT ALICE SPRINGS IN THE NORTHERN

TERRITORY OF AUSTRALIA

No. 20819899

BETWEEN:

Rick Shelton t/as Rick Shelton Mobile Mechanic

Plaintiff

AND:

oaktech Pty ltd t/as eureka garages and sheds

Defendant

REASONS FOR JUDGMENT

(Delivered 11 May 2011)

Mr Neill SM:

1. I published my Reasons for Judgement in this matter on 17 September 2010. Those Reasons included a number of findings of fact and of law. The Defendant appealed from some of those findings by Notice of Appeal dated 15 October 2010. The appeal was heard by the Supreme Court on 4 February 2011 and Mildren J delivered his Reasons for Judgement on 11 February 2011.

2. The appeal was allowed in part. Mildren J upheld the appeal from my finding that the supply of the sliding doors in question was subject to a reservation excluding liability for damage to those doors as a result of the high wind event on or about 22 September 2008 – see paragraph [28] of the Supreme Court Reasons. The matter was remitted to me for reconsideration - see paragraph [44] of the Supreme Court Reasons. Mildren J did not otherwise disturb any of my findings.

3. In the light of paragraph [28] of the Reasons for Judgement of Mildren J and of my observations and findings in paras [105] to [107] of my original Reasons I now find that the provision of inadequate frames for the sliding doors was a breach of the contractual conditions implied by subsections 19(a) and (b) of the Goods Act 1958 (Vic), that the goods had to be of merchantable quality and fit for the purpose for which they were supplied.

4. The inclusion of liability for the role of the inadequate door frames in the failure of the doors in the high winds on 22 September 2008 requires me to reconsider the Plaintiff's claim as pleaded in paragraph 9.6 of its final Statement of Claim. My original finding excluding such liability in high wind situations was relevant solely to the issue pleaded in this paragraph - see paragraphs [104] and [107] of my original Reasons. Paragraph 9.6 of the final Statement of Claim pleaded as follows: “9.6 dislocation of sliding shed doors and buckling of door frames and sheet metal as a result of wind force”. These pleadings define the issue now to be considered by me. The hearing as regards this issue was not run on any broader basis.

5. This means that my dismissal of the Plaintiff’s claim for the defect pleaded in paragraph 9.6 of the final Statement of Claim no longer stands. Necessarily the costs Orders I made consequent upon my original Decision no longer stand.

6. My findings leading to dismissal of the Plaintiff's claims as pleaded in paragraphs 9.1 to 9.5 inclusive of the final Statement of Claim remain undisturbed, and the Plaintiff's claims as pleaded in those 5 paragraphs remain dismissed.

7. My finding in para [3] above does not resolve the matter. I now need to assess the damage the Plaintiff suffered as a result of the breach of those implied contractual conditions. I will then need to consider the Defendant’s pleading of contributory negligence by the Plaintiff set out in paragraph 12 of the final Defence. I do not need to consider the Defendant’s pleading in paragraph 14 of the final Defence raising the Proportionate Liability Act (NT) because the supply of the inadequate frames was admitted to be the fault solely of the Defendant – see the evidence of Mr Domenic Sabatino at transcript p347.9 to p348.3 and I so find.

DAMAGE

A. Physical Damage

8. The only damage relevant to my consideration is that which occurred during and after the high wind event on 22 September 2008 – see my observation in para [106] of my original Reasons.

9. Three qualified engineers submitted reports and gave evidence. All three agreed that the doors’ frames were inadequate. I now consider their evidence as to what role this played in the dislocation of the sliding doors and buckling of door frames and sheet metal as a result of wind force.

10. Engineer Mr Duncan Ward provided a report which became ExP2. He reported on an inspection of the doors after the high wind event when the doors had dislocated and fallen into the workshop. This inspection found “…that the door framing members damage (sic) where the door would have deflected into the adjacent structure… The door was found to be bent at vertical members joined, and tek screws appeared to have pulled through the thin walled RHS framing members” – report p2.3 (“the door damage”).

11. He conceded in cross examination that it was “possible” the door damage could have occurred after the doors blew in and landed on the equipment inside the shed – transcript p76.5. This was not explored further in the cross examination or the subsequent re-examination.

12. Engineer Richard Liney at p8.5 in his report ExP13 said: “It appears during this storm that the edge purlin section rotated so much that the door itself was released at the top of the frame and blew into the building. In so doing, the frame members were distorted, not only by the wind load but also by what appears to be impact on plant within the shed (emphasis added)”. He added nothing to this issue and nothing of significance to his report generally in his very brief evidence on 23 March 2010.

13. Mr Liney’s opinion on this issue accords with Mr Ward’s concession and, in part, with the opinion of the third engineer Mr Ross Proud. Mr Proud provided 3 reports which were tendered by consent and together became ExD28. In his third report (dated 22 February 2010) Mr Proud concluded at p4.7 in paragraph numbered 13 as follows: “The damage to the doors observed (Photo attached A1) was consistent with an impact force. The collision of the doors with stationary machinery when they blew in or collision of moving machinery with the stationary doors are consistent with the damage observed (emphasis added)”. In addition, he said in his first report (undated) at p4.5 in numbered paragraph 7 when identifying problems with the doors which had occurred “…from the minute they were installed ( p4.1)”, that “Some of the sheeting and door frame damage is as a result of attempts to open the doors with machinery such as forklifts (emphasis added)”. Mr Proud’s reports were tendered without objection and he was not challenged either in examination in chief or in cross-examination on these opinions as to the cause of damage to the doors.

14. I find on the basis of this foregoing evidence on the balance of probabilities that the door damage was caused in part i) by attempts to open the doors with machinery such as forklifts, ii) by wind load affecting the inadequate door frames on 22 September 2008, and iii) further and subsequently, by the collision of the doors with stationary machinery when the doors blew in on that date.

15. The second and third of these causes are relevant to my consideration of the Plaintiff’s damage. I find that the part of the door damage which was occasioned by the use of machinery such forklifts was not caused by the Defendant.

16. Engineer Mr Duncan Ward tendered a report – ExP2 – and gave evidence at the hearing. He prepared remedial specifications and drawings for the Plaintiff – ExP3 - which related to the doors as a whole and their attachment to the shed, not just to the inadequate frames. ExP3 did not cost the suggested remediation, nor did Mr Ward do so in his evidence.

17. Evidence of the likely cost of this overall remediation came from Rick’s Plumbing - $3,700 ExP14.28 – and from Basso Concreting - $4,200 ExP14.29 – and from Outback Welding & Trailers - $32,586.77 ExP14.27. The total of the estimated costs in the three exhibits comes to $40,486.77. The total cost of the shed, with the original doors, was $62,291, plus the $13,200 cost of erecting the shed – ExD25 – a total of $75,491. The proposed cost of remedying all of the defects alleged with respect to those doors was therefore more than half of the whole original cost of buying the shed and erecting it.

18. Mr Michael Ackerman gave live evidence in relation to the steelwork costed in ExP14.27, but there was no evidence other than ExP3 led to explain why the plumbing or the concrete works costed in ExP14.28 and ExP14.29 respectively were required as a consequence of the inadequate door frames, or even why they were required at all. I cannot ascertain from ExP3 that the plumbing or concreting works were required as a consequence of the inadequate door frames.

19. I am not satisfied that any need for the proposed remedial plumbing and concrete works was caused by the inadequate door frames and I do not allow anything for those proposed works.

20. ExP3, ExP14.27 and the evidence of Mr Ackerman all make it plain that the remediation costed in ExP14.27 contemplated the complete removal of the damaged doors and then the fabrication of brand new doors with brand new door frames, flashings, cladding and door latches and the system for their attachment to the shed “as per engineer’s specifications”. This also included the cost of purchasing all the materials for this work and the hire of a crane and all labour required to carry out the work.

21. This evidence deals with remediation of all the problems alleged with the doors. It does not identify the remediation or cost required solely because of the inadequate frames.

22. It does not address the possibility of repairing the doors with strengthened or replaced frames. It simply assumes that the damaged doors must be discarded and they and their system of attachment replaced with brand new ones.

23. There is evidence from engineer Ross Proud concerning Mr Ward’s proposed remediation. First, he said it was “one option” – transcript p263.10, and later he said it was an “adequate” option – p269.3. There then followed this exchange:

“McConnel: What are the other options Mr Proud?

Proud: There’s probably 10 or 15 options. Everyone will have their own opinion on that. There is – the important thing is to restrain that bottom edge of the purlin against the lateral load. Whether that’s done with bridging, whether that’s done with an eave strut of appropriate size which is the Opus Quantec (Mr Ward) solution, whether it’s done with some other method, everyone will have their options (sic) on that.

McConnel: And in terms of the spectrum of options, what would you say about the Opus Quantec McWilliam proposal?

Proud: I think it’s an expensive option. There’s a lot of – the size of the sections that we’re dealing with, it would inevitably involve craning and fairly substantial site welding which increases the cost and the complexity of the task.

McConnel: And what’s your view about whether that is an appropriate remedy for these doors?

Proud:…it’s appropriate in the sense of from the individual’s point of view who’s designed it. It’s certainly adequate. In my opinion, I wouldn’t have chosen it.

McConnel: Why not?

Proud: Because I think it’s too complex.” – transcript p269.7 to p 270.6.

24. There is no evidence before me that total replacement is the only option or even the most practicable option. There is evidence showing that replacement is what Mr Shelton for the Plaintiff wanted, because he believed an offer by the Defendant of “minor repairs” would not permanently fix the problem – transcript p178.2 to p178.4. However, Mr Shelton did not provide the basis for his belief.

25. Mr Domenic Sabatino is a director of the Defendant Company. He gave evidence he had been involved in the manufacture of industrial sheds for 25 years – p319.5. I found that Mr Sabatino was an expert in the legal sense in the construction of sheds, and Mr Floreani for the Plaintiff agreed with that at p352.8. I found similarly at p353.5.

26. ExP14.24 is an undated letter from Mr Sabatino to Rick Shelton -- it appears to have been transmitted via facsimile on 28 November 2008. Parts of that letter are relevant to the question of damage flowing from the inadequate door frames. In this exhibit Mr Sabatino stated his opinion that the "Door sections are in good condition except for one dinted corner" -- numbered paragraph 2. He went on to propose methods of repair, both in relation to the damage relevant to the inadequate door frames and to the broader issues with respect to the doors, which in his opinion would make the doors functional.

27. In relation to the damage due to the inadequate door frames he made three proposals. First, he proposed that the door frames be welded and damaged sections be replaced -- first sentence in numbered paragraph 2. Second, he proposed that the one dinted corner be cut out and a new piece re-welded and second RHS tubing to be added "to strengthen" -- last sentence numbered paragraph 2. Third, he proposed damaged sheeting be replaced -- numbered paragraph 6.

28. In the second paragraph of this exhibit Mr Sabatino stated that the Defendant had incurred expenses totalling $3,679 to visit the shed site in Alice Springs from Melbourne and to provide an engineer's report with respect to the problems alleged with the doors. He concluded his letter by stating that the Defendant would not be involved in any of the labour or labour costs associated with putting any of his repair recommendations into effect. On behalf of the Defendant he offered to contribute up to $500 for materials only in addition to the sum of $3,609 already expended by the Defendant. However, I note that Mr Sabatino attended in Alice Springs to inspect the shed on this occasion in compliance with a direction by Judicial Registrar McNamara as part of these proceedings – p370.8. Accordingly this expenditure of $3,679 should properly be seen as a disbursement comprising part of the Defendant’s legal costs and not as any remediation by the Defendant, and I so find.

29. In his evidence in chief Mr Sabatino accepted that inadequate door frames had been provided through the Defendant’s error – transcript p347.9 to p348.3. He then proposed to correct the problem by welding “…sections on the inside of the vertical existing members…thereby strengthening their strength” – p348.8. He proposed to do this by taking the external cladding off the doors while the doors were up in place, welding the components to the doors, and replacing the cladding, at the Defendant’s expense – p349.3.

30. Mr Sabatino’s evidence as to how the inadequate door frames might be strengthened and the doors repaired was the only evidence before me specific to repair as opposed to total replacement, and it was not challenged in cross examination. I accept his evidence as to repairing the damaged doors and strengthening the inadequate frames and I prefer this option to the Plaintiff’s proposed remediation because refabricating and replacing the doors and systems of attachment is expensive and complex when compared with strengthening and repairing the doors as proposed.

31. Mr Sabatino gave no live evidence as to the cost of materials and labour for repairing the damage to the doors and the inadequate frames as he proposed. The only evidence before me as to cost was that of Mr Ackerman live and in ExP14.27. That evidence did not deal specifically with the limited damage and repairs which I have found are required in part as a consequence of the inadequate frames. There is no doubt that the Plaintiff did suffer some damage on 22 September 2008 as a consequence of the inadequate frames and I shall do the best I can on the limited evidence to identify and assess that damage.

32. Evidence before the Court established that there were four doors, each one comprising four rectangular frames of 5 metres by 1.5 metres connected along the 5 metre sides (see Proud, Ackerman).Accordingly there were two “vertical existing members” as described by Sabatino in each section, a total of eight in each door which gives us a total of thirty two in the four doors.

33. Mr Sabatino proposed welding “sections” on the inside of the vertical existing members. He proposed doing this while the doors were in place, first removing and subsequently replacing the cladding.

34. Mr Ackerman gave evidence that it would take 2 men 4 x 10 hour days (80 man hours) – p316.4 - at $80 per hour per man – p312.8 - to weld all the steel once it was supplied, for the 4 doors- p308.9 to 309.4. This work would include the 32 x 1.5 metre horizontal members as well as the 32 x 5 metre vertical members. Mr Sabatino’s repairs would involve only welding sections on the inside of each vertical section. In the absence of precise evidence, I propose to treat the work involved in the welding of the internal sections as equivalent to the welding of all the vertical members. 1.5 metres is 3/10 of 5 metres, so I allow the reciprocal 7/10 of the 80 man hours in the 4 days for the work on the vertical members – that is 56 man hours. I assess this cost at 56 x $80 = $4,480.

35. In addition, there would be the cost of removing and replacing the cladding. Mr Ackerman was unable to advise this cost. – p314.4. I propose to allow one further 10 hour day comprising 20 man hours at $80 per hour, which is $1,600.

36. One of the 4 doors was blown into the shed and would need the assistance of a crane and a scissor lift to hang it. Mr Ackerman gave evidence about hanging doors and said it would take one day to hang all 4 doors – p312.10/313.1. I allow 3 hours for the hanging of the one door, which is 6 man hours which is $480.

37. The hire of a crane would cost $200 per hour plus $80 per hour for a rigger – Ackerman p313.4. This would cost $840 for the 3 hours. The hire of the scissor lift would cost about $250 for a day – p313.8. I propose to allow half a day which is $125.

38. ExP14.27 allows $14,024.34 for the cost of all materials, including crane etc hire. These materials include replacement beams, frames, cladding etc. Doing the best I can on the evidence before me, I propose to allow $2,000 for the steel required for the sections to be welded to the vertical existing members and any steel repairs generally such as the dinted corner referred to by Mr Sabatino and replacing any cladding.

39. The total of the foregoing is $9,525. With 10% GST of $952.50 this comes to $10,477.50.

B. Business Disruption

40. The Plaintiff tendered a profit and loss statement comparing the financial years 2008 and 2009 - ExP22.This was prepared by chartered accountants Lockwood Partners. No evidence was called to interpret this document. Mr Floreani for the Plaintiff conceded in his written submissions as follows: “It is accepted that assessing loss under this head of damage is a difficult task in the absence of expert evidence. Shelton submits that it would be appropriate for the Court to award nominal damages under this head of damage on the basis that there is clear evidence of business disruption, but the precise qualification (sic) of the loss is not possible”.

41. Mr Rick Shelton did give evidence of business disruption. He did not give any evidence linking any business disruption to any reduced profit. It was conceded on his behalf that he lacked the expertise to do so – transcript p182.10 to p183.1.

42. ExP22 does show a $16,664 reduction in profit from 2008 to 2009.However, it also shows an increase in expenses of $24,027 from 2008 to 2009. The exhibit further shows that Mr Shelton increased his principal’s drawings from the Plaintiff’s business by $23,600 between 2008 and 2009. Part of either or both of the increased expenses and/or drawings could explain the reduced profit.

43. Accordingly, solely on the basis of ExP22 and of the evidence of Mr Shelton, I am unable to be satisfied that the Plaintiff suffered any loss of income or profit as a consequence of the damage to the shed doors.

C. Costs of Engineer’s Reports

44. The Plaintiff has claimed as part of its damage the cost of the report dated 21 January 2009 of Opus Quantec McWilliam – tax invoice ExP4 - and the cost of that organisation’s preparing the remedial specifications and drawings dated 19/3/09 – tax invoice ExP5. Both services were provided to the Plaintiff well after it commenced this litigation against the Defendant – transcript p45.5. The report – ExP2 – makes it plain that it was commissioned to provide an opinion as to the cause of the damage in the high wind event. The specifications and drawings – ExP3 – relate to the remediation of that damage. No steps had been taken to put that proposed remediation into effect at the time of the hearing in March 2010.

45. I find that the costs in these two tax invoices are disbursements comprising part of the Plaintiff’s costs in the proceeding and are not part of the Plaintiff’s damages in the proceeding.

46. Accordingly, I assess the Plaintiff’s damage at $10,477.50.

CONTRIBUTORY NEGLIGENCE

47. My findings relevant to responsibility for the failure generally of the doors in the high wind situation on or about 22 September 2008 were set out in para [107] of my original Reasons. I reproduce those below for ease of reference.

“107. The evidence is that the doors were subjected to very high winds on the occasion that they dislocated and buckled – para [7] above. I find that the inadequate frames contributed in part to this failure, but only to a minor degree (emphasis added). I find that the first three defects pleaded in paras 9.1, 9.2 and 9.3 together with the replacement of the top rollers with a pin and the use of Tek screws instead of welding were overwhelmingly responsible for the failure of the door on 22 September 2008…(emphasis added)”.

These findings and the findings on which they were based set out earlier in my original Reasons, were not disturbed on appeal.

48. My findings in paragraph 107 of my original Reasons are equivalent to findings of contributory negligence by the Plaintiff as pleaded by the Defendant in paragraph 12 of the final Defence and as particularised in 12.1 to 12.4 inclusive thereof which plead as follows:

“12. Further and in the alternative to paragraph 11 hereof, the defendant says that if, which is denied, the shed is defective or damaged as alleged or at all, then any defect or damage to the shed was caused or contributed by the plaintiff’s own negligence.

Particulars of Negligence

12.1 The Plaintiff failed to take adequate steps to ensure that the shed was erected in accordance with the plans, industry standards and in a workman-like manner;

12.2 The Plaintiff directed the former Second Defendant to erect and hang the sliding doors before the floor slab had been poured and the bottom track for the sliding doors was in place thereby causing the purlin and bridging to bend;

12.3 The Plaintiff permitted the former second defendant to assemble the shed door frames using tek screws to join the panels instead of welding them together which resulted in a substantially weaker door frame;

12.4 The Plaintiff modified the doors by removing the top rollers and replacing them with an improvised pin device that did not sit securely in the top track, allowing the door to dislodge from the track and come loose; and

12.5 The Plaintiff installed or allowed to be installed the bottom track for the sliding doors out of alignment, causing the doors to jam”.

49. I previously found that the contract between the parties was governed by the law of the State of Victoria and not by the law of the Northern Territory of Australia – see paragraph [24] of my original Reasons. Sections 25, 26 and 63 of the Wrongs Act 1958 (Victoria) apply to this question of contributory negligence. They relevantly provide as follows:

“25. Definitions

In this part unless inconsistent with the context or subject-matter- “court” means, in relation to any claim, the court or arbitrator by or before whom the claim falls to be determined.

“Wrong” means an act or omission that-

(a) gives rise to a liability in tort in respect of which a defence of contributory negligence is available at common law; or

(b) amounts to a breach of a contractual duty of care that is concurrent and co-extensive with a duty of care in tort.

26. Liability for contributory negligence

(1) If a person (the claimant) suffers damage as the result partly of the claimant’s failure to take reasonable care (contributory negligence) and partly of the wrong of any other person or persons-

(a) except as provided in section 63, a claim in respect of the damages is not defeated by reason of the contributory negligence of the claimant; and

(b) the damages recoverable in respect of the wrong must be reduced to such extent as the court thinks just and equitable having regard to the claimant’s share in the responsibility for the damage.

(2) Where damages are recoverable by any person by virtue of subsection (1) subject to such reduction as is therein mentioned, the court shall find and record the total damages which, apart from any limitation referred to in subsection (1b) and (1c), would have been awarded, if the claimant had not been guilty of contributory negligence”.

50. In view of my findings in para [107] of my original Reasons, reproduced above, and in view of my finding in para [15] above of these Reasons as to the Plaintiff’s sole responsibility for the damage to the doors sustained through the use of machinery on the doors, I find the Plaintiff by its own actions contributed to the dislocation of the doors when they blew into the workshop on 22 September 2008, and to the consequential damage to the doors.

51. Pursuant to subsection 26(1)(b) of the Wrongs Act (Vic) I think it just and equitable to reduce the Plaintiff’s assessed damage to 20%, having regard to the Plaintiff’s “overwhelming” share in the responsibility for the damage. 20% of $10,447.50 is $2,089.50.

CONCLUSION

52. I award the Plaintiff damages of $2,089.50 as at 22 September 2008. I now turn to the question of interest on that award of damages.

53. The parties were to agree a rate of interest and submit that. If they could not agree, they were to file affidavit material as to commercial rates of interest over the period 22 September 2008 to date – see transcript p376.9 to 377.4. As it happened, the issue appears to have been overlooked.

54. The Plaintiff has been successful to the extent that there is an award of damages in its favour. However, the Plaintiff was unsuccessful on various issues.

55. I will hear the parties as to interest on the award of damages, and on the question of costs. For these purposes I list this matter before me at 9:00am on Friday 3 June 2011. The parties have leave to attend by their counsel by videoconferencing on that date.

Dated this 11th day of May 2011.

_________________________

John Neill

STIPENDIARY MAGISTRATE