Elias v Alloha Formwork & Construction Pty Ltd (No 2) [2017] NSWSC 1716

Supreme Court New South Wales

Medium Neutral Citation: Elias v Alloha Formwork & Construction Pty Ltd (No 2) [2017] NSWSC 1716 Hearing dates: On the papers Decision date: 08 December 2017 Jurisdiction: Equity - Technology and Construction List Before: Ball J Decision: See paragraph [1] Catchwords: CIVIL PROCEDURE – reopening judgment where issue not dealt with NEGLIGENCE – Duty of care – Causation – Whether but for the third defendant's negligence the plaintiff would have suffered loss Legislation Cited: Civil Liability Act 2002 (NSW) s 5E Uniform Civil Procedure Rules 2005 (NSW) r 36.17 Cases Cited: Elias v Alloha Formwork & Construction Pty Ltd [2017] NSWSC 1546 Category: Procedural and other rulings Parties: Toni Elias (First Plaintiff) Saide Elias (Second Plaintiff) Alloha Formwork & Construction Pty Ltd (First Defendant) Antonios Boumelhem (Second Defendant) Monzer Farah (Third Defendant) Representation: Counsel: AM Pickles SC with M McMahon (Plaintiffs) J Phillips SC (First and Second Defendants) JA Steele with L Robb Vujcic (Third Defendant)

Solicitors: Elias Gates & Associates (Plaintiffs) Mitry Lawyers (First and Second Defendants) Gilchrist Connell (Third Defendants) File Number(s): 2016/152816 Publication restriction: None

Judgment 1. On 8 December 2017, the third defendant, Mr Farah, made an application pursuant to Uniform Civil Procedure Rules 2005 (NSW) r 36.17 for me to reopen a judgment I delivered in this matter on 17 November 2017 (Elias v Alloha Formwork & Construction Pty Ltd [2017] NSWSC 1546) to deal with an argument raised by Mr Farah which was not dealt with by my judgment. The application had been foreshadowed in a letter dated 4 December 2017 from Mr Farah's solicitors to my Associate. At the time the application was made I indicated that I accepted that my judgment had not dealt with the issue, that I had concluded that the issue had no effect on my decision and that I would provide the parties with a supplementary judgment setting out my reasons. This is that judgment. 2. The proceedings relevantly concerned a claim by the plaintiffs, Mr and Mrs Elias, to recover the costs of rectifying structural defects with a house they are in the process of building in Rawson Road, Greenacre. They claimed those costs from Mr Farah who had prepared the structural drawings for the house. The drawings had been prepared on the basis that the soil classification was class M whereas I concluded that the correct classification was class H1. The expert engineers retained by the parties agreed that in order to make the foundations suitable for a class H1 site it was necessary to underpin the entire footings system and that the cost of doing that work was $357,500. I concluded that that amount was recoverable by Mr and Mrs Elias from Mr Farah. 3. Mr Farah submits that in reaching that conclusion I failed to address the question of causation which had been raised by para 43 of his Technology & Construction List Response. Relevantly, that paragraph is in the following terms: In response to paragraph 104 to 108 of the Contentions, the Third Defendant: (a) denies that the Plaintiffs have suffered any loss or damage as a result of any conduct of the Third Defendant; (b) denies that the Plaintiffs are entitled to any of the relief claimed against the Third Defendant; (c) says that to the extent that he is alleged to have failed to exercise reasonable skill and care he relies on section 5D of the Civil Liability Act 2002 (NSW) (CLA) and says that at all material times a. his conduct was not a necessary condition of the occurrence of the defects and incomplete work; and b. it is not appropriate for the scope of his liability to extend to the defects and incomplete work; … 1. Mr Farah explained that defence in his opening submissions and amended opening submissions in the following terms: Finally, any assessment of loss would have to take into account the plaintiffs' net position. The plaintiffs have not proved that any net loss because on their case, the plaintiffs would have always had to pay for the construction of piers (in the event the Court finds the site to be 'H1') … 1. I accept that I did not deal with this defence in my judgment and that I should have done so. 2. On the conclusions I reached, but for Mr Farah's negligence, he would have prepared structural drawings on the basis that the site was properly classified as class H1. Had he done so, in my opinion, the first defendant, Alloha Formwork & Construction Pty Ltd, who was the builder, would have constructed the foundations in accordance with those drawings. It is true that Alloha did not construct the building strictly in accordance with the structural drawings actually prepared by Mr Farah. However, the foundations were constructed in a way that made them suitable for a class M site consistently with the drawings that it had been given and there is no reason to think that if the structural drawings had specified a foundation that was suitable for a class H1 site, Alloha would not have constructed the foundations in accordance with those drawings. Had the foundations been constructed for a class H1 site, the rectification work would have been unnecessary. Consequently, Mr Farah's negligence was a necessary condition of the occurrence of the defective work. 3. During the hearing, Mr Farah submitted that the conclusion of the previous paragraph was wrong because it took no account of the additional costs of constructing foundations which were suitable. 4. I do not accept that submission. One difficulty with the submission is that it mischaracterises the issue. The question that must be asked is if Mr Farah had prepared structural drawings that were suitable for a class H1 site would Alloha have increased the fixed price it charged to construct the house in accordance with those drawings. That raises the question of how the structural drawings would have differed from those actually prepared by Mr Farah and whether those differences would have caused Alloha to increase the fixed price that it charged. 5. There was very little evidence before the court going to those matters. Neither of the structural engineers called by the parties (or Mr Farah for that matter) gave evidence of what Mr Farah's drawings would have shown if they had been prepared non-negligently on the basis that the site was properly classified as H1. Mr David Stubbs, the expert witness called by the plaintiffs, did express the opinion that if the site had been classified as a class P, the appropriate footing system for the dwelling was a "pier-and-beam" system. Both structural engineers also ultimately accepted that the rectification work proposed by Mr Stubbs on the basis that the site classification was class P was also the appropriate means of rectification if the site was classified as H1. However, that still left open what original design should have been adopted for a class H1 site and whether the first defendant would have increased the fixed price contract to construct foundations in accordance with that design. In the absence of any evidence, I was not prepared to conclude that Alloha would have charged more. 6. I accept that some more work would have been involved in constructing a foundation for a class H1 site. However, the scope and cost of that work is unclear. There is no reason to think that the work and the costs would have borne any relationship to the rectification work and its costs. Alloha was not licensed. It appears to have taken a lax view when it came to costing the work covered by the contract. So, for example, it agreed to a fixed price contract even though the specifications contained a poor description of the work that was to be done and of the finishes in particular. Without knowing the additional costs to Alloha of constructing foundations suitable for a class H1 site, I am not prepared to infer that Alloha would have increased the price of the contract. 7. Nor do I think it was necessary in those circumstances for Mr and Mrs Elias to prove what those additional costs were in order to succeed. Mr and Mrs Elias bore the onus of proving all facts relevant to the issue of causation: see Civil Liability Act 2002 (NSW) s 5E. They also bore the onus of proving that they had suffered damages as a consequence of Mr Farah's negligence. However, that does not mean that they were not entitled to rely on an inference arising from the absence of evidence. As I have said, absent any evidence on the question of costs, the inference in this case was that the price charged by Alloha would have remained the same.