Supreme Court New South Wales Medium Neutral Citation: Neville's Bus Service Pty Ltd v Total Group Constructions Pty Ltd [2024] NSWSC 215 Hearing dates: 29 and 30 January; 20 to 22 February 2024 Decision date: 08 March 2024 Jurisdiction: Equity - Technology and Construction List Before: Ball J Decision: (1) Direct that by 22 March 2024 the parties provide to my Associate short minutes of order which give effect to these reasons for judgment and which deal with the question of costs, if costs can be agreed; (2) Direct that if the parties cannot agree on the terms of the short minutes of order, each party by 28 March 2024 serve and provide to my Associate a form of orders that that party seeks and an outline of written submissions not exceeding 3 pages in support of those orders; (3) Stand the matter over to 5 April 2024 or such other date as is agreed with my Associate. Catchwords: BUILDING AND CONSTRUCTION — Contract — Damages — Defects — Concrete slab not constructed in accordance with specifications BUILDING AND CONSTRUCTION — Contract — Dispute Resolution — Experts and expert evidence — Where experts disagree on extent and quantum of damages CONTRACTS — Remedies — Damages — Loss or damage — Where defects are agreed but extent of damage and rectification are not CONTRACTS — Remedies — Damages — Loss or damage — Whether to deduct settlement figure of another defendant from judgment sum Legislation Cited: Australian Consumer Law Building and Construction Industry Long Service Payments Act 1986 (NSW) Building and Construction Industry Long Service Payments Regulation 2022 (NSW) Civil Procedure Act 2005 (NSW) Environmental Planning and Assessment Act 1979 (NSW) Local Government Act 1993 (NSW) Cases Cited: Armory v Delamirie (1722) 1 Stra 505; 93 ER 664 BCI Finances Pty Ltd (In Liq) v Binetter (No 4) [2016] FCA 1351; (2016) 348 ALR 227 Bellgrove v Eldridge (1954) 90 CLR 613 Owners SP 92450 v JKN Para 1 Pty Limited [2023] NSWCA 114 Blatch v Archer (1774) 1 Cowp 63; 98 ER 969 Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2006] NSWCA 361 Gerard Cassegrain & Co Pty Ltd v Cassegrain (2013) 87 NSWLR 284; [2013] NSWCA 453 Houghton v Immer (No 155) (1997) 44 NSWLR 46 LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd (No 3) (1990) 24 NSWLR 499 McCartney & Ors v Orica Investments Pty Ltd & Ors [2011] NSWCA 337 Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 Westpoint Management Ltd v Chocolate Factory Apartments Ltd; Chocolate Factory Apartments v Westpoint Finance & Ors [2007] NSWCA 253 Texts Cited: Rawlinson's Australian Construction Handbook (Rawlhouse Publishing, 24th ed, 2024) Category: Principal judgment Parties: Neville's Bus Service Pty Ltd (Plaintiff) Total Group Constructions Pty Ltd (First Defendant) Jay Roberto Squillacioti (Second Defendant) Ronisch Pty Ltd (Third Defendant) Lisa May Squillacioti (Fourth Defendant) MSL Consulting Pty Ltd (Fifth Defendant) Representation: Counsel: NJ Kidd SC with J Adamopoulos (Plaintiff) DP O'Connor with C Langford (Defendants) Solicitors: Madison Marcus (Plaintiff) Adams & Partner Lawyers (Defendants) File Number(s): 2020/142849 Publication restriction: None JUDGMENT Introduction 1. The plaintiff, Neville's Bus Services Pty Ltd (NBS), is the owner and operator of a public transport and charter bus business. In August 2013, it was the successful tenderer to provide to Transport for NSW (TfNSW) public bus services in Region 15, which is one of the regions into which the State's public bus services are divided and which is located in southwest Sydney. Under the terms of the contract resulting from the tender, NBS was to operate approximately 108 buses owned by TfNSW on routes within Region 15 for an initial term of five years with two options to renew, the first of which was for a period of three years and the second of which was for a period of one year. 2. In anticipation that it might be the successful tenderer, NBS, in about May 2013, entered into a call option to acquire a large parcel of land in Bluett Drive, Smeaton Grange (the Land) to be developed as a bus depot if its tender was successful. It applied for, and on 25 March 2014, was successful in obtaining development consent from the Camden Council to develop the Land as a bus depot. It had engaged the first defendant, Total Group Constructions Pty Ltd (TGC), to assist it in locating the Land, and to prepare a design specification for the depot and to apply for development consent. TGC, in turn, engaged Brett Taylor + Associates as the architects for the project. In about February 2014, TGC also engaged the fifth defendant, MSL Consulting Engineers Pty Limited (MSL), to prepare the structural design and documentation for the bus and carparking pavement slab which is approximately 120 m wide and 140 m long and which formed a major part of the development. 3. On 22 May 2014, following the success of its tender, NBS exercised the option to acquire the Land. On or about 23 July 2014, it entered into a contract with TGC for the construction of the depot (the Construction Contract). The depot consists of an industrial warehouse, office and concrete parking bays for the 108 buses that NBC would operate for TfNSW together with a further 21 buses owned by it as well as a number of cars. TGC's obligations under the Construction Contract were guaranteed by the second to fourth defendants. 4. In these proceedings, NBS contends that the depot, and in particular the concrete paving, was not constructed in accordance with the Construction Contract and is defective. It claims the cost of replacing the concrete paving and carrying out certain other rectification work. A claim for misleading and deceptive conduct was abandoned prior to the commencement of the hearing and NBS's claim for consequential loss was abandoned during the hearing. A claim against MSL has been settled. 5. The remaining defendants accept that the pavement has a number of defects. However, they take issue with the extent of the necessary rectification work and its cost. The second to fourth defendants accept that they are liable for any amount for which TGC is liable. The Construction Contract 1. Under the Construction Contract, the Builder (that is, TGC) was required "to complete the work described in Schedule 1, pursuant to the contract conditions". 2. Clause 1(a) of the contract conditions provides: The Builder will, in a workman like manner and with proper expedition and subject to these Conditions, execute and complete the works as noted in Schedule 1 in accordance with the plans and specifications. Unless otherwise provided the Builder shall use suitable new materials. 1. Schedule 1 describes the work to be performed under the contract as "Construction of New Industrial Warehouse, amenities, double storey office and infrastructure". It also incorporates 17 architectural "drawings" ("drawing" is a mis-description of some of the documents) and revision A of a specification prepared by TGC (the Specification). 2. Drawing 1 is described as a "Cover Sheet". It sets out standards that various aspects of the works must meet. In Section C.3 Subsoil Drains it states: Provide subsoil drains where necessary to intercept groundwater seepage and prevent water build up behind walls and under floors. Connect subsoil drains to the stormwater drainage system. Comply with the following minimum depths, measured to the crown of the pipe. — 100mm below formation level of the pavement, kerb or channel. — 450mm below the finished surface of unpaved ground. Backfill with 20mm nominal size washed screenings, to the following depths: — to the underside of the bases of overlying structures such as pavements, slabs and channels. 1. The Specification under the heading "Concrete" states: The works described in this section shall include but not necessarily be limited to — Concrete Pavement/Reinforced Concrete Pavement, Footings, ground floor and suspended slabs, site works including kerbing and crossovers. The quality and workmanship shall be constructed in accordance with Australian Standards, Local Council requirements, Structural Engineers design and any other Statutory requirements. 1. Under the heading "Stormwater Services" the Specification states: Site levels surrounding topography need to be investigated so that stormwater drainage can cater for a 1 in 100 year flood. Stormwater drainage shall be designed to meet local Council requirements. All pavements shall be grade to kerbs, spoons drains and top grated drains to collected [sic] stormwater by an underground drainage system that shall discharge to a connection point nominated [sic] Council. 1. Condition (1) of the general requirements of the development consent states that the development is to be in accordance with plans and documents listed in the consent, including a "stormwater drainage concept plan" dated 24 February 2014 and prepared by Robert R Wilson & Associates. Paragraph 1 of the construction notes to that plan states that "All works shall be carried out in accordance with Council's standard specification …". The Council's standard specification in force at the relevant time states in Section 5.11 Backfilling: All drainage lines shall be inspected and approved by Council prior to backfilling. Unless otherwise specified or directed, drainage excavations shall be backfilled and compacted with approved noncohesive granular material in accordance with AS3725 'Loads on Buried Concrete Pipes' and Section 5.5 of this Specification, to sub-grade level under roads or a maximum of half the internal diameter of the pipe above the pipe obvert in other areas. Selected backfilling shall be placed in layers not exceeding 300 mm compacted thicknesses. 1. Section 5.13 of the standard specification relevantly states: Subsoil drainage shall be constructed where shown on the Engineering Plans or in the positions and in the manner required by the Principal Certifying Authority. Subsoil drainage shall be laid adjacent to every stormwater pipe and culvert for a minimum distance of 3-metres upstream of each pit. … 1. Clauses FP1.1 to FP1.3 of the Building Code of Australia (BCA) as in force at the relevant time provided: FP1.1 Surface water, resulting from a storm having an average recurrence interval of 20 years and which is collected or concentrated by a building or sitework, must be disposed of in a way that avoids the likelihood of damage or nuisance to any other property. FP1.2 Surface water, resulting from a storm having an average recurrence interval of 100 years must not enter the building. … FP1.3 A drainage system for the disposal of surface water resulting from a storm having an average recurrence interval of- (a) 20 years must- (i) convey surface water to an appropriate outfall; and (ii) avoid surface water damaging the building; and (b) 100 years must avoid the entry of surface water into a building. 1. The effect of these provisions is that TGC was required (by the Specification) to provide subsoil drains where necessary to intercept groundwater seepage and prevent water build-up behind walls and under floors and to connect those drains to the stormwater drainage system. That system had to meet the requirements set out in Sections 5.11 and 5.13 of the standard specification. In addition, TGC was required (again by the Specification) to construct the concrete pavement in accordance with Australian Standards, Local Council requirements, "Structural Engineers design [sic]" and the BCA. Additional factual background 1. On 30 May 2014, Mr Michael Pereira, a director of MSL, sent Mr Mick Squillacioti, a project manager of TGC and the father of Mr Joseph Squillacioti, TGC's sole director, drawings prepared by MSL relating to the concrete paving including drawing S12 Revision A, which sets out a detailed map of the concrete slabs to be poured to form the concrete paving. That drawing indicated that in parking areas the concrete should be 150mm thick and should rest on a 50mm sand layer and a 100mm thick "DGS20 subbase course. Minimum dry density ratio of 98% modified — TYP". The drawing also indicated that three types of joint running in east-westerly and north-southerly rows (to form a grid pattern) should be used between the concrete slabs. Those joints were dowel joints, key joints and sawcut joints. The drawing indicated that the dowel joints and key joints should be filled with sealant. 2. Mr Pereira, who gave evidence for NBS, says that shortly before the concrete was due to be poured, he had a conversation with the second defendant, Mr Jay Squillacioti, who was a director of TGC between January 2013 and June 2017, is the brother of Joseph, and was the person from TGC responsible for overseeing the construction on site. Mr Pereira says that in that conversation Mr Squillacioti said that TGC wanted to increase the size of the pours of the concrete to save time and costs. Mr Pereira said that he would look at the issue. As a result, on 6 November 2014, MSL issued drawing S12 Revision B. Revision B made two principal changes to the original version of the drawing. The first was to reduce the number of rows of key joints and dowel joints running in a north-southerly direction and only to specify key joints in every fifth row running in an east-westerly direction. All other rows of joints were specified as sawcut joints. By their nature, those joints were to be inserted after the concrete had been poured, and consequently they did not limit the size of the pours. The second change was to increase the thickness of the concrete in the parking areas to 160 mm. 3. There is no written evidence that Revision B was sent to TGC. Although Mr Squillacioti's evidence is not entirely consistent on the matter, he says that he never received it. He gives a quite different account of his conversations with Mr Pereira. According to him, in late July or early August 2014, they had a conversation on site. He says that during that conversation they discussed Revision A, which was spread over the bonnet of a car. Mr Squillacioti says that he asked why the drawing specified both key joints and dowel joints (he says that he thought it was unusual to specify both types of joint in the same pavement) and why those joints had to be sealed (he says that in his experience sealant would only be used in internal paving). He also asked whether the strength of the concrete should be 32 MPa and asked Mr Pereira why the concrete was only 150 mm thick. He says that Mr Pereira said that the drawing contained mistakes and that Mr Pereira made some handwritten changes to it and said that he would go back to the office and draw the changes up properly. Mr Squillacioti says that despite several requests he never received the revised drawing. Instead, in early November 2014, they met again on site. Again, Mr Pereira made some handwritten changes to a clean version of Revision A while it was resting on the bonnet of a car. Mr Squillacioti says (quoting from his affidavit evidence) that Mr Pereira made the following changes to Revision A: (a) The concrete slab panels now looked regular. (b) Key joints were removed; (c) The requirement to seal the concrete joints had been removed; (d) Some of the beams on the perimeter had been removed; and (e) The thickness of the concrete was now 160mm. Mr Pereira said that TGC should use that amended drawing to go ahead with the concrete pours and to let him know if Mr Squillacioti had any questions. TGC does not have a copy of the amended drawing. 1. The concrete was poured in November and December 2014. On 16 December 2014, MSL issued a certificate certifying relevantly that the design of the pavement reinforcement slab "is structurally adequate, complies with the relevant Australian Codes, and is suitable for the proposed usage". The certificate refers to drawing S12-A, which Mr Pereira says was an error. According to him, the reference should have been to version B of the drawing. At about that time, NBS took possession of the site. 2. I accept Mr Pereira's version of events. Plainly, MSL prepared version B of drawing S12. There is no reason to doubt that it was prepared on or about the date that it bears – that is, on or about 6 November 2013, shortly before the concrete was poured. The effect of the change in design was to permit larger slabs to be poured because the number of key joints and dowel joints (both of which were required to be inserted between slabs before they were poured) had been reduced. It is not plausible that Mr Pereira would have agreed in a conversation with Mr Squillacioti in about August 2013 that it was an error to include both key and dowel joints in the design when both types of joint continued to be included in the drawing dated 6 November 2013. 3. Mr Squillacioti's account of events also cannot explain how version B of the drawing came to be prepared, and the preparation of that version appears to be inconsistent with the thrust of Mr Squillacioti's evidence that, despite repeated requests, Mr Pereira had failed to prepare a revised drawing, since he appears to have had no difficulty preparing version B in November 2013. The final version of the drawing by reference to which the work was performed was an important document. On Mr Squillacioti's evidence, he had the only copy. In those circumstances, it is to be expected that he would have kept that copy. Apparently, however, he did not, and he offers no plausible explanation for not doing so. 4. The certificate issued by MSL is more consistent with Mr Pereira's version of events. It refers to version A, rather than version B. That is a plausible referencing error. On the other hand, if the true position was that Mr Pereira had understood that the work had been performed in accordance with a drawing that he had modified substantially in hand and that he had accepted that it was a mistake to include both key and dowel joints, it is to be expected that those facts would have been reflected in MSL's certificate. 5. Finally, it is not plausible that Mr Squillacioti would have a clear recollection of the handwritten changes nine years after the event. Moreover, it is unclear both from his written evidence and what he said in cross-examination what he meant when he said "The concrete slab panels now looked regular" or how the drawing could be marked up in an intelligible way to achieve that result. Both version A and version B of S12 are detailed drawings showing each panel, of which there are in excess of 400, and the joints between them. Most of the panels, except some of those at the edges are set out in a regular grid pattern. It is difficult to understand how it could be said that the drawing does not look regular or how it could sensibly have been amended in hand so that it appeared to be more regular. 6. It is true that there is no written evidence that version B of the drawing was sent to TGC and TGC has not produced a copy of that version. However, it is plausible that Mr Pereira handed the drawing to Mr Squillacioti during a site visit. It is unlikely that Mr Pereira prepared the revised drawing and then did nothing with it. 7. Not long after NBS took possession of the site, cracks began to appear in the concrete pavement. Over time, the cracks have become worse, and spalling (delamination of the concrete from the substrate) has developed. One of the experts retained by NBS, Mr Vadim Topolinsky, has prepared a series of detailed diagrams showing the location and extent of cracking of many of the panels as at late 2021. No issue is taken with the accuracy of those drawings, which indicate that the pavement suffers from extensive cracking and spalling. Two other problems with the pavement have also developed. The first is that some panels have moved vertically so that the edges of adjoining panels are at different heights. The second is that following heavy rainfall a number of panels exhibit an effect known as "pumping", which means that when a bus drives over the panel the pressure on the panel forces dirty water or slurry from under the panel through the cracks in the panels and the joints between them to the surface. That, in turn, reduces the substrate supporting the panels, which leads to further cracking and movement. In para 18 of their Response to the Further Amended Technology and Construction List Statement, the defendants, consistently with evidence given in a report prepared by Dr Tian Ng, a structural engineer called by them, admit that the pavement suffers from the following defects: 1. punching shear failure noted at the dowel joints; 2. pumping distress at joint due to void creation and/or loss of support under pavement; 3. vertical differential separation of saw cut joint; 4. settlement of pavement kerb; 5. excessive saw cut joint opening; 6. crazing cracking on concrete pavement surface; 7. plastic shrinkage cracking; 8. shrinkage and thermal contraction cracking; 9. re-entrant corner cracking. 1. In para 22 of their list response, the defendants also admit that by reason of those matters TGC "failed to perform the contract and failed to perform and observe the terms, conditions and provisions contained in the contract". 2. In addition to problems with the pavement, on occasions when there has been heavy rain the office and workshop area has flooded. 3. When the cracks began to appear in the pavement, NBS raised the issue with TGC. There is considerable evidence before the Court in relation to those complaints and what occurred between 2015, when the issue was first raised with TGC, and May 2020, when NBS commenced these proceedings. Having regard to the admissions made in their list response, it is not necessary to deal with those events in any detail. TGC accepted that there were cracks in the pavement which at the time it attributed to heavy use. It indicated that it was willing to undertake some maintenance work on the pavement, although it did not accept that it was under any obligation to do so. However, agreement could not be reached on the scope of that work or how the costs of repair were to be shared and ultimately NBS commenced these proceedings. 4. In December 2018, before proceedings were commenced, Mr Jay Squillacioti asked Mr Pereira to prepare an as-built drawing of the pavement. Relying partly on information given to him by Mr Squillacioti, Mr Pereira prepared a draft of that drawing, which he sent to Mr Squillacioti on 21 February 2019. That drawing (referred to as version C) made several changes, including removing the key joints and replacing them with dowel joints. Following further discussions between Mr Pereira and Mr Squillacioti, on 10 April 2019, Mr Squillacioti returned that drawing with some changes marked up in hand. After a further exchange of emails, Mr Pereira issued a final version of the drawing on 10 May 2019. According to that version, no sealant had been applied to any of the joints, no key joints were installed and there was no reference to the slabs having been laid on a 50 mm sand layer and a 100 mm thick layer of Envirobase DSG20. 5. TfNSW exercised the options to renew the service contract for three years and one year, with the result that the contract expired on 7 October 2023. NBS was unsuccessful in re-tendering for the contract. Consequently, the site is no longer used by it as a bus depot, although NBS continues to store a number of buses that it owns at the site and has considered using those buses to provide a private charter service. It has also considered leasing all or part of the site and has been approached by a number of potential tenants. However, NBS's position appears to be that it does not wish to enter a lease for the site until it knows the outcome of the current proceedings. The evidence is that NBS intends to repair the pavement if it succeeds in these proceedings. Liability 1. NBS has led evidence from three experts on liability. They are Mr Topolinsky, a structural engineer, Mr Simon Fagg, a geotechnical engineer, and Mr Ross Brown, an hydraulic engineer. 2. Mr Topolinsky and Mr Fagg participated in a conclave with two experts on liability called by TGC, Dr Ng and Mr Richard Noonan, a geotechnical engineer, and the four experts produced a joint report. Those experts agree that there are three sources of water that have affected the pavement. They are: 1 Springs from the Bringelly Shale bedrock material below the area of the pavement. 2 Seepage at the interface of the rock and soil material from the northern and eastern boundaries of the site. 3 Water flow through joints and cracks within the current pavement. 1. Mr Fagg, but not the other experts, expressed the view that investigations undertaken by him and Mr Noonan were "strong evidence" that the stormwater trenches were backfilled with non-permeable cohesive backfill materials contrary to the Council Specification, and that that prevented the sub-pavement drainage that was installed from operating effectively. 2. The conclusion of Mr Fagg is supported by testing undertaken by Geotech Testing Pty Ltd. Relevantly, it carried out field density testing at six locations above the stormwater pipes. That testing indicated that the material sitting on top of the pipes was clay, which is not a permeable non-cohesive granular material. The only reasonable inference from those test results is that the channels in those locations were not backfilled with material complying with the Council Specification. As Mr Fagg explained: Yes, that the material doesn't comply with the council specification. The council specification in 5.11 requires both that the material immediately around the pipe, which would ordinarily be called the pipe bedding, be a non-cohesive material and that the material above that bedding layer up to the underside of the pavement would also be non-cohesive. So, anywhere within that column where these tests were undertaken - and yes, the levels aren't specified, but anywhere within that column of material would need to be non-cohesive material. And these test results clearly show that cohesive material in non-compliance with the specification have been used. 1. Mr Noonan agreed: All right. Mr Noonan, what do you say to the proposition that if there is any clay of any significant degree in the column above the trench up to the underside of the pavement then it doesn't comply with clause 5.11, do you agree with that proposition? WITNESS NOONAN: That's correct, yes. 1. It is reasonable to infer that the same material was used at other locations. 2. In any event, all four experts agreed that "Irrespective of the stormwater trench backfill materials, there was insufficient sub-pavement drainage, resulting in the softening of the subgrade materials" and that "As a consequence of the cracking in the pavements, softened subgrade over the 9 years since construction and requirements to install a sub-pavement drainage system to accommodate the groundwater springs on the site" at least some part of the pavement needs to be replaced, although they differ on the extent of the pavement requiring replacement. Mr Topolinsky expressed the view that the whole pavement needs to be replaced. Dr Ng agrees that most of the pavement needs to be replaced but considers that two areas shaded in red on the diagram attached as Annexure A (9057666, pdf) Annexure A (9057666, pdf) to this judgment need not be replaced, since those areas do not exhibit any defects. Mr Noonan expressed the view that only the area shaded in purple on the diagram attached as Annexure B (1293932, pdf) needs to be replaced. 3. In final submissions, NBS no longer pressed a claim that the whole pavement requires replacement. It accepted the conclusion of Dr Ng that the areas shaded in red do not need to be replaced. 4. The four experts broadly agree on the scope of works required to replace the pavement in the area identified by Dr Ng or the area identified by Mr Noonan. Mr Topolinsky expressed the view that the pavement should be 220 mm thick rather than the 160 mm that was specified by MSL and that Dr Ng accepts as appropriate. In final submissions, NBS accepted that in assessing damages the appropriate thickness to use is 160 mm, since that was what was required by the contractual specification (which relevantly required the pavement to be laid in accordance with the drawing prepared by MSL). If the pavement was defective because the concrete was not thick enough, that was a defect for which MSL only was responsible. 5. Mr Brown (who did not participate in the conclave and was not cross-examined) gave evidence in relation to the stormwater drainage system. His evidence was that (1) much of the existing stormwater drainage network of piping and pits under and in the concrete paving has been damaged or is defective largely as a result of the inadequate drainage and build-up of water under the pavement and will need to be replaced; (2) the stormwater drainage system for the pavement area was inadequate principally because of the extended spacing and inlet capacity of the drainage pits, which could not cope with the stormwater runoff generated by the site; and (3) the water-proofing and drainage system at the rear of the office/workshop building was inadequate to cope with stormwater from the northern part of the site. There is no reason not to accept Mr Brown's evidence. His evidence is consistent with the evidence of the other experts. It explains why the office and workshop area has flooded on a number of occasions. The evidence was not challenged. 6. Having regard to the admissions made in the list response and the conclusions of the experts there is no dispute on the question of liability. TGC was required to construct stormwater and sub-pavement drainage systems that met various requirements. Without being exhaustive, TGC had to provide "subsoil drains where necessary to intercept groundwater seepage and prevent water build up behind walls and under floors" (Drawing 1). The stormwater drainage system had to be designed to cater for a 1 in 100 year flood (the Specification), the drainage lines had to be backfilled "with approved noncohesive granular material" (section 5.11 of the standard specification) and, on the findings I have made, the pavement had to be laid in accordance with drawing S12 Revision B. Among other things, that drawing required the installation of key and dowel joints which were to be sealed and required that the concrete pavement rest on a 50 mm sand layer and a 100 mm DGS subbase course. The pavement did not meet those requirements and, as a result, it suffered from the defects described earlier. The only issue that remains to be resolved is the extent of the pavement that needs to be replaced, and, in particular, whether the whole pavement other than the areas shaded in red on Annexure A need to be replaced or whether only that part of the pavement identified by Mr Noonan in Annexure B needs to be replaced. Extent of pavement requiring replacement 1. In my opinion, the whole pavement (other than the area shaded in red in Annexure A) must be replaced and NBS's damages must be assessed on that basis. 2. The prima facie measure of damages for defective building work is the cost of reinstatement to produce a building which is substantially in accordance with the contract. As Dixon CJ, Webb and Taylor JJ said in Bellgrove v Eldridge (1954) 90 CLR 613 at 617 in a frequently quoted passage: In the present case, the respondent was entitled to have a building erected upon her land in accordance with the contract and the plans and specifications which formed part of it, and her damage is the loss which she has sustained by the failure of the appellant to perform his obligation to her. This loss cannot be measured by comparing the value of the building which has been erected with the value it would have borne if erected in accordance with the contract; her loss can, prima facie, be measured only by ascertaining the amount required to rectify the defects complained of and so give to her the equivalent of a building on her land which is substantially in accordance with the contract. (Emphasis in original.) The principal qualification to this general principle is that "not only must the work undertaken be necessary to produce conformity, but that also, it must be a reasonable course to adopt" (at 618). The test of "unreasonableness" is only to be satisfied "by fairly exceptional circumstances", such as where the proposed rectification is out of all proportion to the benefit to be obtained: id at 617; Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 at [17]. See also Westpoint Management Ltd v Chocolate Factory Apartments Ltd; Chocolate Factory Apartments v Westpoint Finance & Ors [2007] NSWCA 253 at [43] per Giles JA (with whom McColl and Campbell JJA agreed); Owners SP 92450 v JKN Para 1 Pty Limited [2023] NSWCA 114 at [68] per Gleeson JA (with whom White and Brereton JJA agreed); Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2006] NSWCA 361 at [82]-[88]. 1. In the present case, the inadequate sub-pavement drainage system is not limited to the area identified by Mr Noonan. It affects the whole pavement area. It has contributed to extensive cracking both inside and outside the area identified by him. It is reasonable to infer that the inadequate drainage will lead to further deterioration of the pavement area unless remedied. It is not unreasonable for NBS to insist that the whole area which does not comply with the contractual specification and is affected by the cracking be replaced. 2. It is not clear on what basis Mr Noonan has selected the area to be replaced. The area identified by him corresponds to an area identified in a diagram prepared by Mr Fagg. The diagram prepared by Mr Fagg describes the area as "pavement defects". But it is plain that that is not the only area where defects exist. Mr Noonan explained in evidence that he had focussed on the area shaded in purple, seen in Annexure B, because that was where most of the differential movement in the concrete panels has occurred. But the differential movement is not limited to those areas, and as I have explained differential movement in the panels is not the only defect in the pavement. The effect of Mr Noonan's evidence is that it would be unreasonable of NBS to replace panels which are subject to extensive cracking. I cannot accept that. 3. Mr Noonan suggested that if the pavement in the area shaded in purple was replaced, that would improve the drainage for the pavement as a whole because the area to be replaced was situated on the northern side of the site and the site sloped from north to south, with the result that some of the excess water would be collected by the new drainage system installed in the area to be replaced. However, Mr Noonan had done no analysis from which it could be concluded that that would be an adequate solution to the problem. It would not deal with the water coming from springs in the area outside the area shaded in purple. Parts of the pavement would still be the subject of extensive cracking and even Mr Noonan accepts that there are areas outside the area shaded in purple that will need to be repaired. Finally, Mr Noonan accepts that part of the proposed underwater drainage system lies outside the area shaded in purple. Presumably, that part would need to be taken up to allow the system to be installed. In my opinion, Mr Noonan's proposal is not a reasonable one. 4. There is a suggestion in some of TGC's opening submissions that NBS should not be entitled to recover the costs of replacing the pavement because the facility is no longer being used as a bus depot. That contention was not advanced in final submissions and must be rejected. Irrespective of the particular use that the facility is being put to now, NBS contracted for a pavement that met certain specifications. The fact that it may not have an immediate use for a pavement of those specifications does mean that its damages should be assessed on some different basis. The position may be different if, for example, the site was in the process of being sold. In that case, it might be appropriate to assess damages by reference to the difference in value between the site as it is and the price that could be obtained if the pavement was replaced. But here, there is no evidence that NBS proposes to sell the site. Damages 1. NBS led evidence from an expert quantity surveyor, Mr David Madden, on the reasonable costs of replacing the pavement. TGC served evidence in response from Mr Michael Sturgess. Both experts prepared a joint report attaching a number of spreadsheets setting out their costings of replacing the pavement by reference to various scopes of work and, where they disagreed on those costs, a brief statement of their reasons for doing so. On the conclusions I have reached and the concessions made by NBS, the relevant scope of works is the one involving the replacement of the whole pavement other than the areas shaded in red on Annexure A with concrete that is 160 mm thick. It also assumes that the work will not need to be staged, since the site is not currently being used. On that basis, Mr Madden assesses the total rectification costs as at 31 December 2023 to be $11,033,046.38 (including GST). Mr Sturgess assesses them on the same basis to be $8,058,923.46 (including GST). NBS also claims additional out of pocket expenses of $4,235 as the costs of grinding back a raised edge of one of the concrete panels. TGC submits that the amount of $675,000 that NBS has recovered from MSL must be deducted from the costs of repair, on the basis that NBS cannot recover twice for the same loss. 2. In assessing the evidence given by Mr Madden and Mr Sturgess, NBS relied on two legal maxims or principles that were said to be relevant. One is the maxim stated by Lord Mansfield in Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970 that evidence "is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted". See also Gerard Cassegrain & Co Pty Ltd v Cassegrain (2013) 87 NSWLR 284; [2013] NSWCA 453 at [26] per Beazley P; BCI Finances Pty Ltd (In Liq) v Binetter (No 4) [2016] FCA 1351; (2016) 348 ALR 227 at [125] per Gleeson J). The other is the principle derived from Armory v Delamirie (1722) 1 Stra 505; 93 ER 664 that "the Court should assess [damages] in a robust manner, relying on the presumption against wrongdoers, … and resolving doubtful questions against the party "whose actions have made an accurate determination so problematic"": see Houghton v Immer (1997) 44 NSWLR 46 at 59 per Handley JA (with whom Mason P and Beazley JA agreed), quoting LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd (1990) 24 NSWLR 499 at 508 per Hodgson J. See also McCartney & Ors v Orica Investments Pty Ltd & Ors [2011] NSWCA 337. It will be convenient to return to those principles where necessary in discussing the areas of disagreement between Mr Madden and Mr Sturgess. As will become apparent, the issues in this case can be resolved without particular resort to either principle. Disposal of concrete (Item 3.0) 1. There is a major difference between the experts in relation to the costs of disposing of the concrete. Both have used rates published by BINGO Industries, which operates the nearest waste disposal facility to the site. However, Mr Madden has used the rate for General Solid Waste (GSW) of $247.50 (including GST) per tonne, to which he has applied a volume discount of five percent. Mr Sturgess has used a rate for clean concrete of $33 per tonne (including GST), to which he has applied a volume discount of ten percent. Mr Sturgess has also allowed an amount of $26,960.00 to wash the concrete. Both experts agree that the amount of concrete to be disposed of is 6013.2 tonnes. The large difference in price arises from the fact that clean concrete can be crushed and recycled, whereas GSW cannot. 2. I largely prefer the evidence of Mr Madden on this issue. As removed from the ground, the concrete could not be regarded as clean concrete. It will contain steel reinforcement and the steel dowels. Some of the base beneath the concrete is likely to stick to it and, as Mr Madden says, some of the base is likely to have become embedded in the concrete at the time that it was poured. Concrete in that state could not be regarded as clean concrete that is ready to be crushed and recycled. Mr Sturgess accepts as much because he allows an additional cost for washing the concrete. But I do not accept that that would be sufficient. Plainly, washing will not remove the steel and it will not remove debris that was embedded in the concrete at the time it was poured. In this regard, Mr Madden's evidence that concrete that is classified as clean is normally concrete in suspended slabs and pillars strikes me as plausible. It may be that it is possible to separate clean concrete out of the total waste. But no evidence has been led on the costs of doing that, what proportion of the concrete could be salvaged and whether the work would be cost effective. Absent evidence of that type, in my opinion the concrete is properly classified as GSW. 3. The experts agree that it should be possible to negotiate some discount on BINGO Industries' list prices. That seems plausible given that both accept that disposal of the concrete would be a large job. They disagree on the amount of the discount. Neither of them gives any reason for their choice of discount, other than their experience. Both did have discussions with representatives of BINGO Industries in relation to disposal of the concrete. But unsurprisingly, those discussions did not produce any indication of the likely discount. 4. NBS suggests that this is an instance where it is appropriate to apply the principle in Armory v Delamirie and choose the lower figure. I do not accept that submission. This is not a case where difficulties in assessment arise from the wrongdoing of the defendant. Rather, the experts have expressed different views on the issue. There is no reason for choosing the opinion of one expert over the other. Plainly, a range of discounts is possible. In the circumstances, in my opinion, it is appropriate to allow a discount of 7.5 percent. 5. The experts also disagree on the costs of cartage of the concrete. Mr Madden has used a figure of $59,266.10. Mr Sturgess has used a figure of $42,429.14. Both experts have taken the cost of cartage of the concrete from Rawlinsons Australian Construction Handbook, which provides for a figure of $3.5/m3 for each 5 kilometres. They also agree that the distance from the site to BINGO Industries facility is 35.2 km. However, Mr Sturgess has assumed that the first 10 kilometres is excluded from these figures. 6. In my opinion, the approach taken by Mr Sturgess is incorrect. The experts have taken the cost of cartage from the section of Rawlinsons dealing with Excavation. That section has an item under the heading "DISPOSAL" which provides a figure for "Additional cost of carting excavated material each additional 5km over 10 km". It gives a figure of $3.50 for each cubic metre for that item, which is the figure the experts have used. However, the cost of demolishing a concrete slab is dealt with under the heading "DEMOLITIONS". A note to that section states "Prices allow for the removal of debris to a loading point within 50 metres". It is apparent, therefore, that the prices for excavation allow for transport of up to 10 km. On the other hand, the prices for the demotion of concrete slabs do not. Accordingly, the approach taken by Mr Madden is the correct one. Disposal of excavated material (item 5.0) 1. It is accepted by the experts that the rate that should be applied to the disposal of excavated material is the rate applicable to GSW – that is $225/m3. The only question is what discount should be allowed. For the reasons given in relation to the disposal of the concrete, in my opinion, an appropriate rate is 7.5 percent. Soft spots (item 9) 1. Mr Madden has allowed an additional $30,000 to replace any "soft spots" in the ground before pouring the new concrete. Mr Sturgess has allowed an amount of $20,000. It is common ground that there are some soft spots in the area of the pavement caused by springs, but the number is unknown. It appears that the experts accept that some allowance for this item is appropriate since it is known that there are some soft spots. To the extent that the figure chosen is an under-estimate, it will be covered by the allowance for contingencies. There is no basis for choosing between the figures chosen by the two experts. Neither has sought to estimate the number of soft spots or the costs of remedying each one. In those circumstances, it is appropriate to choose a mid-point between the two figures – that is, $25,000. Installation of subbase (item 10.0) 1. Mr Madden has allowed an amount of $288,633.60 for the costs of installing the subbase, whereas Mr Sturgess has allowed $198,435.50. They agree on quantities. However, Mr Madden has used the figure from Rawlinsons for the installation of a base course for bitumen paving which is described as "Crushed rock/blue metal base course including grading, rolling and consolidating to receive". Mr Sturgess has used the figure from Rawlinsons for the base course for Roadworks, which is described as "Crushed rock/blue metal". 2. In my opinion, the appropriate rate is the one chosen by Mr Madden. Mr Sturgess accepted that a subbase needs to be compacted and tested carefully because it forms part of the engineered foundation of the pavement. However, the rate chosen by Mr Sturgess does not allow for that work, whereas the one chosen by Mr Madden does. Purchase of dowels (items 30.0 and Item 33.0) 1. Mr Madden allowed $48,878.97 for the purchase of galvanised dowels and $64,251.88 for the purchase of Danley galvanised diamond dowels, whereas Mr Sturgess allowed $26,920.60 and $49,540.34 respectively. Again, the experts agree on quantities. Mr Madden has used the current list price for dowels that are equivalent to those specified. Mr Sturgess used the list price for alternative dowels as at October 2020 and increased the prices using an escalation rate in Rawlinsons. 2. In my opinion, the approach adopted by Mr Madden is likely to produce a more accurate estimate, since it cannot be assumed that the price of dowels has increased in accordance with some general escalation rate. Accordingly, I accept Mr Madden's figures. Labour costs of installing dowels (item 31.0) 1. Mr Madden has allowed $25,634.84 for the labour costs of installing the dowels. Mr Sturgess has allowed $12,606.88 for the same work. The difference between them arises from the fact that Mr Sturgess has assumed that the work can be done by one person, whereas Mr Madden has allowed for two. 2. The dowels sit in cradles that are 4.5 metres long to facilitate their installation. Mr Madden gave the following explanation of how they were installed: To, to your question, two people - is not just carrying this to place, you actually need to tie it in with tie wire as well. So, you need to, to place it in position, a person on either end is a typical arrangement. You have the tie wire which ties it to the reinforcement meshes there. They, they tie that off both ends at the same time, pick up another one and move to one. It's a, it's a sequence of two people to get - to give you a reasonable production. The idea that somebody can lift something in the middle and someway stretch a metre and a half each way to tie it on each end, I, I - it's a two person job, for efficiency, in my view. That evidence seems to me to be reasonable, and I accept it, with the result that I accept Mr Madden's figure. Filling of joints (items 36.0 and 40.0a) 1. Both these items relate to the filling of the joints with sealant. Mr Madden has allowed amounts of $164,212.90 and $8,800.54, whereas Mr Sturgess has allowed amounts of $83,631.88 and $4,482.02 respectively. Mr Sturgess has assumed that the joints could be filled at the rate of 5 minutes per metre whereas Mr Madden has used a rate of 15 minutes per metre. Mr Madden gives the following explanation of what is involved: So, firstly, there's a rod that you're put in for, which is a spongy rod that you put in. The idea of the backing rod is, is so you can limit the amount of sealant going in; it doesn't vary; you fill it to the top of the backing rod. So you need to actually put the, the backing rod in first and get the depth in that. So it has to be precise, as in 10 millimetres thick, to make sure the joint is an appropriate thickness. And so you put that backing rod in first, and then sometimes there's one person, sometimes it's two people. It comes in a 3 metre length. And then, and then they come back, as Mr Sturgess has correctly said, and, and put, put the silicone in that. I, I believe the allowance that I have is appropriate and the time it would take. 1. It strikes me as implausible that the work described by Mr Madden could be done at the rate of 5 minutes for each metre. I prefer his estimate of the time involved and for that reason accept his costings. Drilling and epoxy of dowels (item 40.0) 1. This item relates to the insertion of dowels which connect the replacement pavement to the existing pavement. It requires holes to be drilled into the existing pavement of approximately 250 mm in length to take the new dowels and for the holes to be filled with epoxy. Mr Madden has allowed $36,524.84 for this work whereas Mr Sturgess has allowed $31,626.84, making a difference of $4,898.00. The difference relates to the length of time it is said the work will take, the rates charged and the equipment used in the drill bit. 2. Again, I prefer the evidence given by Mr Madden. Mr Madden explained the work that was involved and the difficulty in drilling the appropriate holes. Mr Sturgess did not take issue with the explanation given by Mr Madden. In my opinion, Mr Sturgess tended to underestimate the time that various tasks would take. I accept Mr Madden's figure. Line marking (item 41.0) 1. This item relates to the costs of painting new lines and marks on the pavement. Mr Madden has allowed an amount of $10,000, whereas Mr Sturgess has allowed an amount of $5,000. 2. Mr Madden counted the number of symbols (21) and allowed an amount of $100 per symbol. He also allowed one week for painting the lines. Mr Sturgess does not explain why he thought the approach taken by Mr Madden was unreasonable. He came up with his own figure based on "experience and recollection". I prefer the approach of Mr Madden and accept his figure. Bus wash – reinstatement (item 1a) 1. This item relates to the costs of reinstating the bus wash after it is disassembled to permit the new pavement to be laid. Mr Madden has allowed an amount of $71,600.00 for that work, whereas Mr Sturgess has allowed $35,000, making a difference of $36,600. In estimating the cost, Mr Madden has allowed $45,000 for the installation of drainage lines and pits. He has also assumed that it will take six workers four weeks to decommission and recommission the automated washer and has allowed $5,000 for replacement parts. In the experts' joint report, Mr Sturgess gave no explanation for how he arrived at his figure. He did not address the issue in his own report. When giving oral evidence, he simply said that he thought the labour component allowed for by Mr Madden was high and that it came down to his experience. 2. Both experts accepted that they had limited experience in disassembling and reassembling bus washes. However, approximately $50,000 of the amount allowed for by Mr Madden relates to the installation of drainage lines and pits and replacement parts. Mr Sturgess did not take issue with those items. The bus wash is a large and quite complicated piece of machinery. The amount allowed for by Mr Madden does not appear to be unreasonable. I accept that amount, and consequently accept his figure for this item. Sundry installations (item 1b) 1. This difference between the experts in relation to these items principally relates to the installation of new bollards and wheel stops. Mr Madden has allowed a figure of $6,100, whereas Mr Sturgess has allowed a figure of $4,500. Mr Madden counted the number of bollards and wheel stops and estimated a cost per item. Mr Sturgess has simply allowed a lump sum. He does not explain why he disagrees with Mr Madden's approach or allowances. In my opinion, Mr Madden's approach is likely to lead to a more accurate estimate. I accept his figure. 2. There are some other very minor differences between the experts the total of which produces a small amount in TGC's favour. I accept that amount. Consequently, I accept Mr Madden's figure for Sundry Installations. Drainage Stormwater pipe replacement (item 35.0) 1. The replacement of the stormwater drainage system was costed by Mr Brown, who was not cross-examined. Mr Madden has adopted Mr Brown's figures. Mr Sturgess disagrees with four of the items identified by Mr Brown. The first concerns the cost of replacing the stormwater pipes. Mr Brown has allowed a figure of $254,489.92, whereas Mr Sturgess has allowed a figure of $121,579.38, making a difference of $132,910.54. 2. Mr Sturgess's detailed costings are not before the Court. In the joint expert report, he says that he has used the same rates as Mr Brown. However, he says that Mr Brown has allowed for the replacement of the pits whereas he has assumed that they can be reused. Although it is not entirely clear, it appears that Mr Sturgess has also assumed that some pipes can be reused. At one point, he suggested that there was overlap in the scope of works prepared by Mr Brown and the scope of works prepared by the liability experts for the installation of a sub-pavement drainage system, although ultimately he accepted that there was not an overlap. 3. Mr Brown gave the following evidence in relation to these matters: 107. As structural failure of the pipework is occurring, pipe relining methods are not, in my view, an appropriate or adequate means of repair, as although these types of remediation will render the stormwater drainage piping watertight, if conducted satisfactorily, they do not provide, nor are they intended to provide, structural strengthening of a pipe to the extent of increasing the class of piping used, or to provide additional structural strength sufficient to remedy poor installation and backfilling methods used in the initial installation of stormwater drainage pipework. 108. Accordingly, in my view, the reasonable and necessary remedial works to ensure the proper operation for the stormwater drainage pipework serving the site will require the removal and replacement of the failed stormwater drainage pipework identified at the site, and replacement with class 4 reinforced concrete pipework, supported with a HS2 bedding, side, and backfill support, properly placed and compacted, with certification of compaction provided by a suitably qualified, independent geotechnical engineer. 109. The existing stormwater drainage pits, whilst poorly installed and jointed, do not, in my view, show structural damage to an extent requiring their total replacement, and these elements, where possible, may be removed, repaired with a suitable epoxy mortar, and reinstalled, sealed and returned to reuse. Notwithstanding such, it is likely that they will be damaged in the removal of the existing failed stormwater drainage pipework to an extent requiring their replacement, and accordingly, this has been accounted for in my remedial works estimate at annexure 7 of this report. 1. Mr Brown explains in these paragraphs why he believes the pipes and drainage pits must be replaced. He was not cross-examined on that evidence. The evidence appears to be reasonable. Mr Sturgess does not advance any reason for thinking that it is not. For those reasons, I accept Mr Brown's evidence and his costings in relation to this item. Drainage – Project Preliminaries (Item 37.0) 1. Mr Brown has allowed $64,139.36 for project preliminaries, whereas Mr Sturgess has allowed $32,070.00, making a difference of $32,069.36. 2. The reasons for the difference were not explained in the joint expert report. Mr Sturgess said in the joint report that the reasons he disagreed with Mr Brown were given in a document marked "ANNEXURE H". However, that annexure was not in evidence. Mr Sturgess gave the following oral explanation: Mr Madden and myself have been asked to consider the, the scope of works contained in both the Abel & Brown report and also in the scope of works entertained or opined in the joint engineering report, which included additional drainage. My answer is that there is a duplication, in my view, in terms of additional drainage and there's half of the work to be done. And hence half of the preliminaries and half of the hire and half of the project - sorry, the, the mark up would also - sorry, not the mark up, but that's the reason for 50%. 1. This reasoning appears to depend on the mistaken assumption that there is an overlap in the stormwater drainage system designed by Mr Brown and the sub-pavement drainage system specified by the other liability experts. It may be that the point Mr Sturgess is making is that both systems will be installed by the same contractor so that the amount allowed for preliminaries should be reduced. However, the evidence is not clear on the point. The issue was never put to Mr Brown. In those circumstances, I accept Mr Brown's evidence and his costings for preliminaries. Drainage – Hire (Item 38.0) 1. This issue raises the same issue as preliminaries. Mr Sturgess has halved Mr Brown's estimate for this item. The reasons appear to be the same as the reasons given in relation to preliminaries. For the reasons given in that context, I accept Mr Brown's estimate. Drainage – Additional excavation (Items 44.0 and 50.0) 1. These items relate to the cost of disposing of additional excavation material. The only issue between the experts is whether a discount of five percent or ten percent should be applied to BINGO Industries published rates. This issue should be resolved in the same way as earlier items concerning this issue – that is, by applying a discount of 7.5 percent. Water entry into buildings 1. These items relate to the work necessary to prevent water ingress into the office and workshop. The necessary scope of work and costing is set out in Mr Brown's report, which Mr Madden has accepted. Mr Sturgess does not express an opinion on this work, since it was not the subject of the joint report prepared by the liability experts other than Mr Brown. Accordingly, Mr Brown's costings should be accepted. Authority fees (item 10) 1. Mr Madden has allowed $106,679.73 for this item whereas Mr Sturgess has allowed an amount of $12,801.84. Mr Madden's figure is calculated as 3 percent of the costs of the work. Mr Sturgess has sought to break down the fees that are likely to be payable. The difference between them relates largely to whether it will be necessary to lodge a development application to the local council in respect of the work and whether levies will be payable under s 1.5 of the Environmental Planning and Assessment Act 1979 (NSW) (the EPA Act) and s 34 of the Building and Construction Industry Long Service Payments Act 1986 (NSW) (the Long Service Act). 2. In my opinion, it is appropriate to assume that a development application will need to be lodged. That was the uncontradicted opinion of Mr Topolinsky in the joint report prepared by the liability experts. The work is similar in nature to the construction of the original pavement, which did require development approval. 3. Under s 7.12 of the EPA a consent authority may impose, as a condition of development consent, a requirement that "the applicant pay a levy of the percentage, authorised by a contribution plan, of the proposed cost of carrying out the development". Mr Madden gave evidence that in his experience councils applied a s 7.12 levy in all development consents. Mr Sturgess did not take issue with that evidence. 4. Section 8.6 of the Camden Council's Contributions Planning Policy document relevantly provides: In the case of existing development on a site, it is accepted practice that a credit equal to that existing development on a site is taken into consideration. For example: ● Where an existing detached dwelling is located on a site, the credit would be for a single dwelling; … ● Where a contribution has been paid on a site and the development application has been superseded by another application/contribution; … 1. TGC submitted that consistently with that statement the Council would not levy a contribution in this case. I do not accept that submission. The proposed work is new work that involves demolition of the existing pavement and its replacement with a new pavement. It is not work that supersedes work that was the subject of a previous development application. Nor could it be regarded as repair work to an existing pavement. In the absence of any other evidence, in my opinion, it is reasonable to infer that a levy will be payable. 2. Section 34 of the Long Service Act provides: (1) A long service levy is payable in respect of the erection of every building, except as provided by this section. (2) A long service levy is not payable— (a) (Repealed) (b) in respect of the erection of a building if a long service levy has already been paid in respect of the erection of that building or of other buildings of which that building forms part, or (c) in the circumstances and to the extent prescribed by the regulations. "Building" has the meaning given to that expression in the Local Government Act 1993 (NSW) (LGA): s 33(1). The levy is payable on the issue of a construction certificate: s 37. The rate is 0.25 percent of the costs of the building work: Building and Construction Industry Long Service Payments Regulation 2022 (NSW), cl 14(b). 1. It is not suggested that there is any relevant regulation which excludes the payment of the levy in this case. The demolition of the existing pavement and the construction of a new pavement in its place is a new building. The levy is therefore likely to be payable in this case. 2. It follows that I accept the amount allowed by Mr Madden in respect of authority fees. Contingencies 1. Both experts agree that an allowance should be made for contingencies. Mr Madden has chosen a figure of ten percent of the estimated costs. Mr Sturgess has chosen a figure of five percent. 2. Mr Madden gives the following explanation for his choice in his second report: 5.22. There is a possibility that some defect items have not been identified and the scope of rectification works might not be complete to address all the non-identified defect items. 5.23. There will be a number of unforeseen items that will be discovered on opening the work. There may be issues regarding the programming of rectification work. 5.24. There is a risk that the design may need to be altered or changed to suit rectification methodologies. 5.25. Latent conditions. 5.26. Rectification of defects is inherently difficult to estimate. 5.27. The industry accepted contingency is between 3% and 12% for work of this nature and I have adopted a 10% contingency as being reasonable given the external or civil work as this is subject to more risks and unforeseen conditions such as latent site/ground condition and weather condition. 1. Mr Sturgess did not explain his choice in his report. He did, however, give the following explanation when giving oral evidence: Well, you've got a joint engineering report where geotechnical engineers, structural engineers have held a conclave, put forward their respective views. The geotechnical fellows have, have put through a view in terms of what is needed to be done to the site. They've increased the, the drainage and they've minimised the areas where things can, can blow out. We've considered everything in detail in our costings at annexure C. I can see limited grounds for a contingency in excess of 5%. 1. I prefer Mr Madden's explanation. The difficulty with the one given by Mr Sturgess is that it only focusses on the risks relating to the design of the pavement and the costing of that design. Mr Sturgess appears to place little weight on other contingencies such as uncertainties relating to the condition of the ground under the pavement, the difficulties of attaching the new pavement to the part that is being retained, inclement weather and changes in market conditions. Consequently, in my opinion, an appropriate amount to allow for contingencies is ten percent. Out of pocket expenses 1. No reason was advanced for why NBS should not recover its out-of-pocket expenses of repairing the concrete. I would allow that claim. Interest 1. The costings prepared by Mr Madden and Mr Sturgess were as at 31 December 2023. A question arose concerning whether those figures should be adjusted to take account of increases in prices since then. One possible way of doing that is to permit NBS to recover pre-judgment interest from 1 January 2024 to the date of judgment. No adjustment needs to be made for the period following judgment since NBS will be entitled to post judgment interest under s 101 of the Civil Procedure Act 2005 (NSW). 2. I have concluded that no amount should be allowed for pre-judgment interest. The period between 31 December 2023 and the date judgment is entered will be short. Damages will include an amount for contingencies, which I have allowed at ten percent. In my opinion, that adequately compensates NDS for any changes in prices between 31 December 2023 and the date judgment is entered. Settlement with MSL 1. TGC submits that it should receive credit for the settlement that NBS has reached with MSL. NBS takes issue with that contention on the basis that the amount it has or is entitled to receive from MSL compensates it for a different loss. 2. I accept NBS's submission. NBS settled with MSL for a lump sum payment of $675,000. It is reasonable to infer that that amount included an amount in respect of NBS's recoverable costs and an amount reflecting NBS's claim that a properly designed pavement would have included concrete that was 220 mm thick. Plainly, NBS does not claim either of those losses from TGC. 3. NBS also made a claim against MSL in respect of a certificate it issued on 15 December 2014 certifying that the concrete works were constructed in accordance with the drawings prepared by MSL and the certificate it issued on 16 December 2014 in which it represented among other things that the concrete works were structurally adequate and complied with the relevant Australian Standards and the drawings prepared by MSL. Those representations were said to be misleading and deceptive in contravention of s 18 of the Australian Consumer Law. NBS pleaded that had those representations not been made, the final occupation certificate would not have been issued and NBS would have required TGC to rectify the faults with the pavement. However, it is difficult to see what damages would flow from these allegations. NBS has had the use of the depot. Irrespective of the certificates, it was entitled to and has made a (successful) claim for rectification of the pavement. 4. It is also worth observing that according to the evidence given by Mr Madden, the additional costs of laying a 220 mm slab in the area other than that shaded red in Annexure A (and associated costs) are approximately $3.7 million more than the costs of laying a slab that is 160 mm thick, which is much more than the settlement amount. 5. Taking those matters into account, I am satisfied that the payment received from MSL relates to a different loss from the loss NBS is entitled to recover from TGC. Accordingly, the settlement amount should not be deducted from the damages that NBS is entitled to recover from TGC (and the guarantors). Orders and costs 1. TGC indicated that it wanted an opportunity to address the Court on costs once reasons for judgment were published. I have not accepted NBS's claim in full and some adjustment will need to be made to Mr Madden's calculations to arrive at the judgment amount. 2. Accordingly, the orders of the Court are: 1. Direct that by 22 March 2024 the parties provide to my Associate short minutes of order which give effect to these reasons for judgment and which deal with the question of costs, if costs can be agreed; 2. Direct that if the parties cannot agree on the terms of the short minutes of order, each party by 28 March 2024 serve and provide to my Associate a form of orders that that party seeks and an outline of written submissions not exceeding 3 pages in support of those orders; 3. Stand the matter over to 5 April 2024 or such other date as is agreed with my Associate. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 March 2024