BROADHURST v WILLIAMS SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL SAMUELS AP, CLARKE and HANDLEY JJA 1 October 1991, 1 October 1991 [1991] NSWCA 33 BUILDING WORK — SCOTT SCHEDULE — RECTIFICATION COSTS — EVIDENCE Clarke JA This is an appeal from a judgment of his Honour Judge Craigie delivered on 10 June 1988. The subject matter of the proceedings before his Honour was a building owned by the defendant, the respondent here, and in respect of which certain works were performed by the plaintiff, who is the appellant here. The amount in issue was relatively small, as evidenced by his Honour's judgment, the sum of $15,623. Notwithstanding the case took at least four days and when judgment had been delivered an appeal was lodged by the plaintiff against whom the judgment had been ordered. I am bound to say that it is an unhappy situation and it is a case in which the legal costs, almost certainly, will exceed the amount of any judgment recovered. It is to be regretted the parties faced with this situation could not resolve their differences. Be that as it may the appeal has proceeded before this court and it is necessary to deal with the two grounds of appeal which were presented by Mr Callaghan on behalf of the appellant with his usual skill and complete candour. The real issues before the trial judge concerned a number of items in the Scott Schedule which was filed and which contained, in all, twenty items. His Honour found for the appellant in relation to items 1, 7, 9 and 10, and, having given his reasons for doing that, declined to allow the respondent claimed costs of rectification of the suggested defects. That finding resolved, I think, two of the substantive issues before his Honour. The third concerned item 16, which read: "Construct footings for extension in compliance with relevant codes and in a proper and workmanlike manner." The complaint which was made was summarised in the comments to the following effect: "Footings are not constructed in a proper and workmanlike manner and do not comply with council requirements. Serious cracking has developed in brickwork." Upon that issue his Honour found for the respondent and included in his judgment an amount to compensate the respondent for costs of rectification. The remaining items in the Scott Schedule essentially alleged that particular works which the appellant had contracted to complete had not been undertaken or completed or, in some respects, although substantially completed, had not finally be completed. His Honour did not deal expressly with each of those items in his judgment and that omission has led to the second ground of appeal which was argued first, and that is that: "His Honour erred (I omit the words 'in law' because they have been treated as surplusage) in holding that Mr Jarvis' evidence was common ground." 2 UNREPORTED JUDGMENTS In his judgment his Honour said this: "Tt follows then that having regard to the Scott Schedule certain items as set out in the claim of the cross-claimant cannot be sustained and otherwise the other items can be sheeted home to the plaintiff as being faulty workmanship." Then, having made some comments which are not presently relevant, his Honour continued: "Tt is common ground that the evidence of Mr Jarvis, in Ex 22, is the appropriate level of cost of the works to be performed." When I read the judgment, the notice of appeal, the written submissions and the evidence referred to in the written submissions, I was left with a strong impression that his Honour was correct in substance in stating that it was common ground that the evidence of Mr Jarvis is the appropriate level of the cost of works to be performed. I was also left with the strong impression that there was no significant dispute in relation to those matters with which his Honour did not deal. The impression that there was no significant dispute in relation to matters with which his Honour did not deal has been confirmed by a schedule diligently prepared by Mr Callaghan which shows that all the appellant had to say about those items was that he had not finished the job when he stopped work. Neither he, nor his expert witness, claimed that any of the items said to be incomplete had in fact been completed. Furthermore, leaving aside the issue concerning the footings, to which I will return in a moment and which is the subject of the first ground of appeal, there would appear to me to have been no significant evidence suggesting that Mr Jarvis' costing of the rectification of the items not in dispute was in any way in error. To my mind what his Honour said in his judgment about Mr Jarvis' evidence being common ground was merely a reflection of the attitude which had been clearly taken by counsel during addresses after the taking of the evidence. Certainly there would appear to be no evidence that the appellant advanced which in any way supported the view that there was a significant dispute about the costings on those incomplete matters which were not the subject of any specific evidence from the appellant. In those circumstances I am bound to say that I think that the second ground of appeal is completely without substance, and I will reject it. The first ground of appeal reads: "His Honour erred (and I again omit the words 'in law') in not assessing damages in accordance with the preferred evidence of Mr Watt." In his judgment his Honour dealt with a conflict which existed between Mr Lewis, an expert called by the appellant, and Mr Watt as to what rectification work was required to repair the situation created by the faulty footings. His Honour expressed a clear preference for the evidence of Mr Watt who had advocated underpinning of the foundation wall together with dismantling and re-erection of that wall. I should add that preference also indicates a rejection of the view of Mr Jarvis who said that the underpinning was not entirely satisfactory and the whole job should be done again. Having found that what needed to be done was set out in the opinion of Mr Watt his Honour did not specifically deal with the cost of carrying out that work but adopted the figure set out in the Scott Schedule, which was brought up to date to 1988, of $11,600. This figure had been advanced by Mr Jarvis and was the cost of carrying out the work which he had said needed to be done. It was not the cost of carrying out the work which Mr Watt thought was necessary and his Honour would appear to have been in error in thinking that it was. Indeed, when the URJ BROADHURST v WILLIAMS (Clarke JA) 3 appeal was called on for hearing Mr Brereton, counsel for the respondent, made an immediate concession that, in adopting the figure of $11,600, his Honour had erred and Mr Brereton stated that his client did not seek to support that figure during the hearing of the appeal. Instead he contended that the sum of $10,000 was the appropriate figure and he made an open offer, during the hearing of the appeal, to accept that amount in lieu of the figure of $11,600. It would appear that the figure of $10,000 is drawn from the evidence of Mr Jarvis who was asked, admittedly on the run, what would be the cost of carrying out the rectification work suggested by Mr Watt. He said that it was probably at least $10,000, and that it would be easier and probably better to replace the brickwork. Mr Callaghan submitted that this evidence was unsatisfactory because it was not of a considered nature and was completely inconsistent with the evidence given by Mr Lewis and was also substantially inconsistent with the evidence given by Mr Watt himself. Unfortunately, Mr Watt had initially not costed the rectification work for the footings which he believed should be carried out. When he concluded his evidence he was asked to carry out the costing exercise and he returned to court the following day to put before the court those costs. Unfortunately, he seems to have misunderstood his instruction and, furthermore, to have carried out the exercise in a rather unsatisfactory manner. He returned, however, with a figure of $4,424.13 for a substantial portion of the works which he said needed doing. Mr Callaghan has put before the court that figure, together with supplementary figures totalling $2,063.53, and submitted that those figures represent the correct evaluation of the cost of rectification. His total was $6,487.65. The court is, therefore, left to decide whether the difference of about $3,500 should be allocated one way or the other. I said earlier that Mr Watt carried out his exercise in a somewhat unsatisfactory manner for, instead of taking the 1988 figures, he took the 1980 figures and sought to increase them to make allowance for the increase in costs in the meantime. His methodology was to take the increase for 1980-1982, the increase between 1982-1985, and the increase between 1985-1988 and add each increase together and then multiply the original figure by the new figure arrived at by his calculations. He was of the opinion that the figures had increased by 31 per cent in the first period, 16.6 per cent in the second and 13 per cent in the third. He simply added those together to give him a figure of 60 per cent and, accordingly, he multiplied the original figure by 1.6. Obviously, if the figures increased by 31 per cent between 1980 and 1982, the increase of 16.6 per cent should be applied to the new figure which was appropriate at the commencement of the period, that is, in 1982. Mr Watt completely, so it seems, overlooked the compounding effect. During the hearing I looked at that aspect of the calculations and, recognising that what I did was completely on the run and perhaps rough, arrived at a figure of $6,700, as compared to Mr Watt's $4,424. I point this out because, if one adds that figure of $6,700 to the $2,063 which was required to make up the total cost of the job, one arrives at a figure only slightly less than $10,000, for which Mr Brereton opts. More importantly the flaws in Mr Watt's methodology and the omission fully to cost his rectification works leads me to the view that it would be far more satisfactory for the court to accept Mr Jarvis' estimate of $10,000 which he clearly put forward as being conservative. 4 UNREPORTED JUDGMENTS In those circumstances it must follow that the first ground of appeal should be allowed and that the judgment should be reduced by $1,600. I do not think any further reduction is necessary because, so far as I can see, his Honour did not allow to the respondent any interest on the damages which he had gained. Accordingly, in my opinion, the following orders should be made: (1) Appeal allowed. (2) Judgment of his Honour Judge Craigie set aside and in lieu thereof direct entry of judgment for the respondent in the sum of $14,023 to date from 10 June 1988. (3) The appellant to pay the respondent's costs of the trial. Samuels AP I agree. Handley JA I agree. Having heard counsel on the question of costs we think that, in the circumstances, the proper course is to make no order for the costs of the appeal. The orders will, therefore, be those which Mr Justice Clarke has proposed, and there will be no order for the costs of the appeal. Counsel for the Appellant: P R CALLAGHAN Counsel for the Respondent: P BRERETON Solicitors for the Appellant: OWEN HODGE AND SON Solicitors for the Respondent: BENJAMIN AND KHOURY