Franck Bauchet and Margaret Bauchet v Mirage Pools Pty Ltd [2001] NSWSC 201 (2 April 2001)

Last Updated: 19 April 2001

NEW SOUTH WALES SUPREME COURT

CITATION: Franck Bauchet and Margaret Bauchet v Mirage Pools Pty Ltd [2001] NSWSC 201

CURRENT JURISDICTION:

FILE NUMBER(S): 11191/00

HEARING DATE{S): 14/8/2000

16/8/2000

JUDGMENT DATE: 02/04/2001

PARTIES:

Franck Bauchet

Margaret Bauchet

Mirage Pools Pty Ltd

JUDGMENT OF: Dowd J

LOWER COURT JURISDICTION: Local Court

LOWER COURT FILE NUMBER(S): 40/98

LOWER COURT JUDICIAL OFFICER: Cluston LCM

COUNSEL:

Mr M Boyd - Plaintiffs

Mr D Allen - Defendant

SOLICITORS:

Roach & Halligan Solicitors- Plaintiffs

Thurlow Fisher Solicitors- Defendant

CATCHWORDS:

Appeal from Magistrate

Contract

Statutory express and implied warranties

"Good, substantial and workmanlike manner"

Damages for breach not precluded by warranty provision

ACTS CITED:

Home Building Act 1989

Justices Act 1902

Local Courts (Civil Claims) Act 1970

Suitors Fund Act 1951

DECISION:

1. Referred back to Local Court for assessment of damages; 2. Plaintiffs to have costs; 3. Certificate under Suitors Fund Act.

JUDGMENT:

THE SUPREME COURT

OF NEW SOUTH WALES

COMMON LAW DIVISION

DOWD J

2 April 2001

11191/00

FRANCK BAUCHET and MARGARET BAUCHET v MIRAGE POOLS PTY LTD

REASONS FOR JUDGMENT

1 This is an appeal by Franck Bauchet (first plaintiff) and Margaret Bauchet (second plaintiff), under Pt 51B SCR, for an order that the judgment of Cluston LCM of the Bankstown Local Court dated 19 April 2000 be set aside. A further order is sought that the proceedings be remitted to the Local Court for assessment of the quantum of damages on the cross-claim brought by the plaintiffs who were the defendants in the Local Court proceedings. The plaintiffs in this appeal claim that the Learned Magistrate should enter judgment for the amount of the assessment carried out pursuant to the remission order that is sought.

2 The proceedings in the Local Court arose from a dispute between the defendant company, Mirage Pools Pty Limited (`Mirage'), the plaintiff before the Local Court, a builder of swimming pools, and the plaintiffs, proprietors of the home where the swimming pool was built.

3 The plaintiffs failed to pay a final instalment of the contract price owing, whereupon Mirage instituted proceedings seeking recovery of the balance.

4 The plaintiffs filed a cross-claim alleging that the defendant failed to carry out the work in a "proper and workmanlike manner", particularly in relation to some of the paving which had become discoloured with mould after the work was completed.

5 Cluston LCM held that the mould was caused by Mirage's failure to both seal the pavers with a sealant prior to laying them, and by omitting to properly drain the retaining wall that Mirage erected.

6 The Learned Magistrate however declined in that respect to award damages to the plaintiffs in their cross-claim, on the basis that it was not an express term of the contract entered into by the plaintiffs and Mirage, that Mirage should seal the pavers or provide any drainage to the retaining wall.

7 The plaintiffs contend that the Learned Magistrate erred in law, and that he should have found that clause 1 of the contract, which required Mirage to carry out the work "in good, substantial and workmanlike manner", to require Mirage to seal the pavers and to provide adequate drainage.

8 Cluston LCM also held that the presence of a warranty clause in the contract precluded the plaintiffs from recovering in respect of other minor defects in the pool equipment if they did not comply with the warranty procedure. In this appeal, the plaintiffs contended that this finding constituted an error of law, and Mirage should be required to compensate the plaintiffs for the costs of the repairs to the pool pump and for the costs incurred in repairing leaks to the pool.

Facts

9 By Agreement dated 20 June 1997, Mirage agreed with the plaintiffs to construct a swimming pool at the plaintiffs' premises, 6 Sugarloaf Crescent, Castlecrag, for the sum of $19,788.00 Three variations to this contract were subsequently agreed. First, in June 1997, the plaintiffs agreed to pay Mirage $780.00 for Council's fees and insurance.

10 Second, on 24 October 1997, the plaintiffs agreed to pay the additional sum of $7,476.00 for extra coping, a retainer wall and an additional sum of $804.00 for extra piers. This variation was confirmed in writing.

11 Third, on 16 December 1997, Mirage agreed, again by written variation, to reduce the contract price by $150.00 for the plaintiffs supplying of tiles for the pool. The total contract price came to $28,698.00. The pool was constructed.

12 The plaintiffs paid three progress and variation payments to Mirage in the amount of $2,760.00 on 23 June 1997, $12,238.00 on 24 October 1997 and $7,915.00 on 31 October 1997. The sum total of their payments was $22,913.00.

13 On 16 December 1997, the plaintiffs made a further progress payment by cheque in the sum of $4,800.00, in reduction of the outstanding balance of the price payable under the Agreement as varied. This cheque was stopped. The plaintiffs thereafter made no further payments.

Local Court Hearing

14 In a Statement of Liquidated Claim filed on 9 January 1998, Mirage claimed the sum of $5,785.00, being the difference between the total contract price and the total of the progress payments, less the credit allowed by the defendant for pool tiles. During the course of the Local Court hearing, Mirage advised that it was prepared to take into account the cost of waterline tiling undertaken by the first plaintiff.

15 In their cross-claim, the plaintiffs claimed a set-off in the sum of $7,288.00, which was calculated as follows:

1. Cost to clean up site $195.00

2. Mr Bauchet's labour to remove

rubbish from the site and complete

waterline tiling $600.00

3. Repairs to leaking pool $275.00

4. Repairs to pool pump $120.00

5. Removal and replacement of

pavers around and adjacent to pool $1,298.00

6. Removal and replacement of

coping around pool $4,800.00

Total $7,288.00

16 In the Local Court hearing, the second plaintiff gave evidence to the effect that the work site was in a mess after the Mirage employees had completed the pool. She gave evidence that the first plaintiff spent two days cleaning up the site, in which he hired a Mini Skip at a cost of $195.00. The first plaintiff also incurred $72.60 in dumping fees.

17 The second plaintiff gave evidence that Mirage's site foreman, Ken, had informed her that he would remove all tree stumps and earth from the site. The first plaintiff's evidence was that by expending two days to clean up the site himself, he not only incurred clean-up costs, but also forfeited income which he received as a plumber, which he estimated as costing between $150 and $200 a day. The plaintiffs submitted that it was an implied term of the contract that Mirage would keep the site clean after it had finished construction of the swimming pool.

18 In response to this claim, Mirage contended that it relied on clauses 2.7 and 2.9 of the contract. Under clause 2.7, the contract price was stated as not including excavation of rock, shale or other obstructions and excavation and disposal of "additional overburden".

19 Clause 2.9 created a provisional allowance for cartage and tipping at $500.00. In the Learned Magistrate's view, it was clear from the terms of the contract that cartage and tipping was a prime cost item, where additional rubbish removal beyond $500.00 would be on a cost-plus basis.

20 Cluston LCM held that, having regard to the express terms of the contract, he could not accept the plaintiff's contention that there was an implied term of the contract that Mirage would ensure that the site remained clean after construction was completed. On that basis, the Learned Magistrate refused to allow recovery of any costs incurred by the plaintiffs in cleaning up the site once Mirage had left the premises.

21 An expert witness called by Mirage calculated that the cost of such work was valued at $150.00, being $100.00 for labour and $50.00 for the cost of the tiles. Cluston LCM held that considering that Mirage had previously granted a provision of $150.00 to the plaintiffs in relation to the cost of the tiles, based on expert evidence, he was satisfied that the further $150.00 credit allowed by Mirage in relation to this item was appropriate.

22 On the issue of the repairs made to leaks in the pool, the second plaintiff said that in January 1998 she noticed that the waterline in the pool was decreasing. In July 1998 she engaged a pool leak detection company to effect repairs, after which there was no further problem with the waterline. The plaintiffs contended that such leaks, which commenced shortly after construction, constituted a breach of the defendant's obligation under clause 1 of the contract to construct a pool in a "good, substantial and workmanlike manner".

23 In response to the above allegation, Mirage sought to rely on part of clause 12 of the contract, which relevantly provided that:

12....

The contractual warranty covers any defects discovered in the construction of the structural shell excluding surface finishes, within a period of 4 years beyond the first three years after the filling of the pool with water (being a total of 7 years, provided that such defects are due to faulty workmanship or the use of inappropriate materials on the part of the Contractor. In this event, the Contractor shall, within a reasonable period (not exceeding twenty-one days) or within such period as may be agreed by the parties after receipt of written notice from the Customer, commence to rectify and shall rectify with due diligence such defects at his own cost.

24 And further:

...

The Customer acknowledges that the Contractor may not be obliged to carry out any work pursuant to the above-stated CONTRACTUAL warranties while any monies are due and owing to the Contractor under this Contract.

25 The Learned Magistrate found that it was agreed that the plaintiffs gave Mirage no written or oral notice of the leak in the pool, as required by cl12, and that contract monies were due to Mirage at the time that the leak in the pool had occurred. Cluston LCM held that the absence of notice and the fact that monies were due at the relevant time precluded the plaintiffs from recovering the costs incurred in having another contractor rectify the leak.

26 On the issue of the pool pump, the second plaintiff in her evidence said that she noticed a problem with the filter in the pool's water pump in November 1998. She said that she notified a Mr Broughton, of Mirage, of the problem. The second plaintiff said that his response was that since monies were owed to Mirage under the contract, Mirage would not do any warranty work on the pump.

27 The second plaintiff said that the first plaintiff engaged a contractor to repair the pump at a cost of between $120 and $140, but said that the invoice had been lost.

28 The first plaintiff's evidence was that the water pump had become noisy and that he had engaged a contractor to remove and repair the pump. He said that although the invoice for the repair work had been lost, he was unable to remember how much the repair cost was.

29 The plaintiffs relied on the warranty provision contained in part of cl12 of the contract, which stated:

...

A contractual warranty covers any defects due to faulty workmanship or defective materials discovered in any accessories or other items installed by the Contractor. The Contractor shall rectify any such defects during the same period of warranty, if any, as offered by the manufacturer of those items, from the date of the filling of the pool with water.

30 Cluston LCM however held that that warranty was also subject to the provision that the contractor, Mirage, was not obliged to carry out any work pursuant to that warranty while monies were due under the contract.

31 The first plaintiff also said that after the pool had been constructed, he noticed that there were some two dozen blue spots on some of the coping pavers. He said that he had unsuccessfully tried removing the stains with scrubbing and wire brushes. In his report, Mr Legg said that upon inspection of the pool on 5 June 1999, he observed the blue spots over the stained paving around the pool, and opined that it was unlikely that water blasting would remove the spots. Mr Legg added that chemical removal would cause staining to the pavers.

32 Mirage called an expert witness, Mr Clarke, who was of the view that it was highly likely that water blasting would remove the stains without damaging the pavers.

33 While the plaintiffs submitted that Mirage should pay for the cost of removing the pavers and replacing them with new sealed coping pavers, Mirage contended that unless the most probable result of water blasting would be damage to the coping pavers, then water blasting would be the most appropriate form of rectifying the pavers.

34 The Learned Magistrate accepted the latter contention, noting that he was not satisfied that water blasting would damage the pavers. His Worship accordingly held that the plaintiffs' claim in respect of this item should be limited to the cost of cleaning the pavers, which was estimated at $100.00.

35 There was further an issue relating to a number of pavers referred to in the evidence as "winterstone" pavers that were laid adjacent to the pool. These pavers had been purchased by the first plaintiff and laid by Mirage, pursuant to the variation in the contract of 24 October 1997. The evidence clearly suggested that mould was growing through the pavers to a significant extent.

36 In dealing with the above issue, Cluston LCM dealt with the cause of the mould, the appropriate method of rectification, and whether or not the defendant was legally liable to pay for repairing the damaged pavers.

37 Mr Clarke, in his evidence, expressed the view that the mould was caused by lack of routine maintenance by the plaintiffs. However, in cross-examination and re-examination, Mr Clarke said that the retaining walls should have been properly drained when they were constructed.

38 On the other hand, the three expert witnesses called by the plaintiffs attributed the mould to building defects. Mr Legg was of the view that the mould resulted from a failure to seal the pavers before they were laid. Mr Sinclair gave the same explanation, along with the reason that water was leaking through the weep holes in the retaining walls around the pool area and onto the paved area. Mr Cox stated that the mould was caused by a combination of a failure to seal the pavers and a failure to drain the paved area.

39 Cluston LCM held that the mould was attributed to a failure to seal the pavers before they were laid, and a failure to properly drain the retaining wall erected around the pool.

40 After considering what the several experts had to say about the method of rectification, the Learned Magistrate was of the view that the only appropriate method of rectification of the mould was removal of the pavers and replacement with new, correctly sealed ones.

41 In the Local Court, the issue was as to who was to be liable for the cost of such rectification, it being common ground that the first plaintiff had purchased the pavers, and that the supply and laying of the pavers was not part of the original contract. It was however covered in the variation of 24 October 1997, which provided for paving as follows:

"... extra coping and retaining wall- owner supply finish material, Mirage Pools to apply and fix including cutting, total cost $7,476.00".

42 The first plaintiff submitted that when he bought the pavers, he was advised that the pavers should be sealed before they were laid. The first plaintiff said that he spoke with Ken, Mirage's representative on the site, and informed him that the pavers had to be sealed and that he had given Ken a piece of paper in relation to the paving. The first plaintiff said that Ken told him, "Don't worry mate, we'll look after it".

43 Mirage's counsel put to both plaintiffs during cross-examination that no such instructions were given to Ken, and further, that Ken did not agree to "look after" the sealing of the pavers. Ken was however not called to give evidence. The Learned Magistrate was satisfied on the balance of probabilities that such a conversation did take place between the first plaintiff and Ken, and found that Ken said "Don't worry mate, we'll look after it".

44 Cluston LCM however noted that the next question was whether this obliged Mirage to seal the pavers prior to laying them. The Learned Magistrate said that there was "no doubt that the paving work was a variation to the original Contract" (at page 7 of judgment). His Worship however indicated that clause 10 provided for variations in the following terms:

All requests by either party for any variation in the works or their progress shall be confirmed in writing and shall be subject to acceptance by the other party.

45 His Worship then went on to say that the variation applicable to the paving work did not stipulate sealing the pavers but merely "apply and fix". His Worship found that in the absence of any express written variation requiring Mirage to seal the pavers, the plaintiffs could not establish that Mirage was under a contractual liability to seal the pavers.

46 On the issue of the retaining wall, it was common ground that Mirage constructed the wall as a variation to the original contract. Cluston LCM found that that variation was silent as to the installation of drainage work in association with the retaining wall. As before, his Worship held that that in the absence of any express variation evidenced by writing, the plaintiffs failed to establish that Mirage was liable for the performing of that work.

47 The Learned Magistrate held in favour of Mirage as against the plaintiffs in the action to the sum of $5,635.00, being the claim of $5785 less $150 allowed by Mirage. A verdict for the plaintiffs as against Mirage in the cross-claim was entered in the sum of $100.00. A final judgment in favour of Mirage was entered in the sum of $5,535.00.

Powers of this Court

48 Section 69 of the Local Courts (Civil Claims) Act 1970, under which the original proceedings were brought, provides that all judgments shall be final and conclusive, except where a party considers that a judgment of the Court is erroneous in point of law, and may appeal as of right to this Court. The applicable parts of Part 5 of the Justices Act 1902 apply.

49 Part 51B SCR makes provision for such appeals. The appeal is only on the ground that there is an error of law.

50 In hearing the appeal, the Court is empowered by s109 of the Justices Act 1902 to dismiss the appeal, or to quash the order appealed against or any part of it, or making such order as it thinks just, or remit the matter to the Local Court to hear the matter on appeal.

Grounds of Appeal

51 The plaintiffs contend that the Learned Magistrate made an error of law by not finding that Mirage did not carry out the work on the swimming pool in "good, substantial and workmanlike manner", by sealing the pavers and providing adequate drainage. The plaintiffs also submitted that Mirage should compensate the plaintiffs for the costs of repairs to the pool pump and for the cost of repairs to a leak in the pool.

52 The plaintiffs seek an order that the proceedings be referred to the Learned Magistrate to assess the cost of removing and replacing the pavers affected by mould with sealed pavers, and the cost of installing appropriate drainage to the retaining wall. The plaintiffs also seek an order that their damages on the cross-claim included the sum of $275.00 for the leak repair, and $120.00 for the pump repair. The plaintiffs further seek a direction that the Local Court be directed to reconsider the question of costs once a final determination has been made on the quantum of the plaintiffs' cross-claim.

"Good, Substantial and Workmanlike Manner"

53 In the hearing before the Local Court Magistrate, Cluston LCM identified that the cause of the mould growth on the pavers was due to the defendant's failure to seal the pavers prior to laying them, and by the defendant failing to properly drain the retaining wall. The plaintiffs submitted that both these failures amounted to breaches of the contractual obligation to perform the work in "good, substantial and workmanlike manner with due diligence", in accordance with clause 1 of the contract.

54 To this end, the plaintiffs also relied upon s18B(a) and (b) of the Home Building Act 1989 (`the Act'), which provides:

s18B ...

The following warranties by the holder of a licence, or a person required to hold a licence before entering into a contract, are implied into every contract to do residential building work:

(a) a warranty that the work will be performed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract,

(f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the licence or person required to hold a licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder's or person's skill and judgment.

55 Under s3 of the Act, "residential building work" is defined to include construction of a dwelling. Under the same section, "dwelling" is defined as including a "... swimming pool... constructed for use in conjunction with a dwelling...".

56 The plaintiffs further submitted that the learned magistrate made an error of law in holding that despite the express instruction from the first plaintiff to Ken that the pavers should be sealed before they were laid, the defendant was not liable for the defect because the variation did not specifically refer to sealing the pavers before they were laid.

57 In the plaintiffs' submission, the above finding constituted an error of law in two ways. Firstly, because the terms of the variation arguably did not override the express obligation in clause 1 of the contract and s18B to carry out the work in a workmanlike manner. And secondly, by saying "Don't worry mate, we'll look after it", Mirage waived the requirement in clause 10 that the instruction must be in writing.

58 Mirage responded by submitting that any reliance placed on Ken's words were misplaced. It pointed out that Cluston LCM failed to find that these words had any promissory intent, and that there was only a finding of fact that these words were merely said.

59 Mirage also pointed to the fact that his Worship found that these words were said after the variation was agreed to, and that because they were not reduced to writing, as a matter of law, no consideration was given for this promise. Mirage submitted such a promise as falling within the category of post-consideration.

60 The plaintiffs submitted that Cluston LCM made a further error of law in failing to state that the rectification of the defect to the pavers also required the provision of adequate drainage to the retaining wall. They submitted that this followed from His Worship's finding that this was a cause of the mould problem. The plaintiffs said that that there was no basis upon which his Worship could have determined that replacing the pavers only would have been an adequate rectification, where he failed to give any reason for making a distinction between the two causes of the mould.

61 The plaintiffs raised a similar argument with regard to the retaining wall. The plaintiffs submitted that it was outside their field of expertise to determine the appropriate manner in which to construct the retaining wall, and it followed that specific details as to drainage would not form part of an instruction to Mirage when requesting the latter to build a retaining wall. The plaintiffs therefore submitted that the absence of specific instruction in the variation did not absolve Mirage from being obliged to build the retaining wall in a good, proper and workmanlike manner.

62 Alternatively, the plaintiffs relied on s18B(f) of the Act, as set out above, which implied a warranty into the contract.

63 The plaintiffs submitted that the retaining wall is not fit for its purpose in that it fails to retain moisture and this causes mould to grow on the paving adjacent to it.

64 In response, Mirage submitted that for the plaintiffs to show that his Worship erred in failing to find that all work was to be performed in a good, substantial and workmanlike manner, the plaintiffs must show that there was a contract for the sealing of the pavers and the installation of drainage works behind a retaining wall. The contract as varied defined the work to be carried out in that manner.

65 Mirage submitted that pursuant to clause 10, all variations to the contract necessitated confirmation in writing, and that the parties had agreed that the parole evidence rule would apply to their Agreement. As enumerated by Innes J in Mercantile Bank of Sydney v Taylor Mercantile Bank of Sydney v Taylor [1891] NSWLawRp 87; (1891) 12 LR (NSW) 252 (hereinafter the Mercantile Bank case)., the parole evidence rule provides that:

"where a contract is reduced into writing, where the contract appears in the writing to be entire, it is presumed that the writing contains all the terms of it, and evidence will not be admitted of any previous or contemporaneous agreement which would have the effect of adding to or varying it in any way" Quoted in Mercantile Bank, note 1 at 262..

66 In other words, where a contract is wholly in writing, evidence is not admissible to vary or contradict the written document.

67 The parole evidence rule essentially operates to restrict the parties to a written contract from adducing oral or written evidence which contradicts the contents of the contract. In Bacchus Marsh Concentrated Milk Co Ltd v Joseph Nathan & Co Ltd Bacchus Marsh Concentrated Milk Co Ltd v Joseph Nathan & Co Ltd [1919] HCA 18; (1919) 26 CLR 410, at 451-452., Higgins J indicated that the rule aims to prevent written agreements being changed by the "uncertain testimony of slippery memory".

68 By applying the above principle to the present case, Mirage submitted that the variation dated 24 October 1997 provided for paving in the following terms, "extra coping and retaining wall- owner supply finish material. Mirage Pools to apply and fix include cutting, total cost $7,475.00". On this basis, Mirage submitted that the plaintiffs could not say that the work to be performed extended beyond this variation, and relied on Codelfa Constructions Pty Limited v State Rail Authority of New South Wales Codelfa Constructions Pty Limited v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337. to that end.

69 Mirage submitted that this was what the learned magistrate had decided, and that the plaintiffs could not show an agreement in writing for the sealing and drainage work to be performed. Rather, the agreement between the parties was contained wholly within the written contract and variations to that contract.

70 Finally, Mirage submitted that the learned magistrate correctly determined that the contract did not provide for the sealing of pavers nor the building of drainage works.

Leaking Pool and Defective Pump

71 The plaintiffs submitted that on both the issue of the leaking pool and the defective pump, Mirage breached the statutory warranty in s18B(f) or the warranty in clause 12 of the contract.

72 The plaintiffs firstly submitted that the Learned Magistrate engaged in an error of law when interpreting clause 12. They asserted that the proviso in the warranty may entitle Mirage to elect not to attend to repair, but that it did not destroy the warranty. It would follow that if Mirage chose not to repair and the plaintiffs are forced to contract someone else to undertake the repair, then Mirage remains liable for that cost.

73 The plaintiffs further submitted that in relation to the leak, although they did not inform Mirage of the leak, the effect of the proviso in the clause was that the plaintiffs were limited to the amount it would have cost Mirage to remedy the defect. There was however no evidence of this cost.

74 Taken together, the plaintiffs' version is that as they are entitled to the statutory warranty, the finding by the magistrate that the warranty was void because money was still owing to Mirage is contrary to the express provisions of s18G, which relevantly provides:

s18G

A provision of an agreement or other instrument that purports to restrict or remove the rights of a person in respect of any statutory warranty is void.

The plaintiffs asserted that if the learned magistrate's interpretation of clause 12 is correct, then the clause is void pursuant to s18G of the Act.

75 Mirage continued to rely on clause 12 of the contract as stipulating that the plaintiffs acknowledged that the contractor may not be obliged to carry out work pursuant to any contractual warranties while any monies were due to the contractor. Mirage also indicated that clause 12 required the plaintiffs to give written notice of any defect requiring repair. Mirage reasoned that the Learned Magistrate correctly determined that in relation to the pool pump and leak to the pool that as no notice had been given and as monies were due, Mirage had no contractual obligation to undertake any rectification work.

76 Mirage contended that the contract was never terminated, and conceded that the warranty clause operated. Mirage submitted that for defects not justifying termination of the contract, the warranty clause determined the rights of the parties in relation to those defects. Mirage set out those rights as:

1. The plaintiffs were to provide written notice of any defect.

2. Mirage was to begin rectifying the defect within twenty-one days of receipt of the written notice.

3. The rectification costs were that of Mirage.

4. If money was owed by the plaintiffs, Mirage was not obliged to carry out the required work.

77 Mirage submitted that two points from the above rights were of particular importance. On payment of monies due, the plaintiffs had a contractual right to enforce rectification works. And if these rectification works were not carried out within twenty-one days of notice having been given, then the plaintiffs had a cause of action against Mirage.

78 Mirage submitted that although it was burdened by being contractually bound to rectify defects if notice was given and all monies due were paid, clause 12 also protected Mirage by allowing the defendant to rectify defects at its own cost, and it need not incur further expense under the contract whilst there were monies owing by the other party.

79 Mirage submitted that the requirement of notice was a contractual right, where it initiated a process by which Mirage was able to rectify defects. Mirage submitted that failure by the plaintiff to give notice of a defect was a breach of the contract, and `robbed' Mirage of its right to rectify the defect. Mirage alleged that failure to give notice was a breach that gave rise to a cause of action in the hands of Mirage.

80 Mirage therefore submitted that the plaintiffs were deprived of bringing a cause of action for breach of contract, when to successfully support the action the plaintiff must ask the court to ignore its own breach. Mirage ultimately submitted that the plaintiffs failed to show that there existed any overriding common law right entitling the plaintiffs to disregard the warranty procedure, for there could be no such procedure, the parties being free to agree to a procedure to ensure that defects were rectified, and that the summons ought to be dismissed.

The Contract

81 The obligation of Mirage under the contract was to complete the work in a "good, substantial and workmanlike manner with due diligence in accordance with the following description, and the customer, approved plans, and SAA Codes where relevant".

82 Clause 2.6 provided for a rate for the cost of excavation where

... circumstances beyond the control of the Contractor which were not reasonably foreseeable by the Contractor at the time this contract was entered into, make it necessary for the adoption of any method or means of excavation different from the method or means selected in this clause, ...,

The clause then provides for calculating such costs.

83 The clause headed "Warranty" has been set out in part above, but it is important to note the introductory words, which provide that the warranties are in addition to and do not exclude or limit statutory conditions or warranties implied into the contract by the Trade Practices Act 1975 (Cth) and other Commonwealth, State or Territory law. The warranty provision sets out the rights and duties of the parties, but does not exclude other rights. The contract clearly imports the common law obligation that work contracted to be done will be reasonably fit for the purpose, and that work will be done in a proper and workmanlike manner. This is as a matter of common law and is little different, in these proceedings, to the obligations imposed by the Act. It is to be noted in that latter respect that s18G of the Act prohibits the exclusion of any statutory warranties.

84 There is no attempt in the contract to exclude or limit the common law or statutory warranties, and the terms of the contract do not make the warranty clause as set out a substitution for such warranties on conditions.

85 If a customer chooses to give notice under cl13, certain obligations arise on the part of the contractor. This, however, does not preclude a consumer, in this case the plaintiffs, from seeking damages for breach. If a breach of the contract is established, the plaintiffs are not precluded from having carried out their own rectification work, and can offset this against any debt or recover such expenses for rectification as damages. The warranty provision does not constitute an exclusion of implied or statutory warranties.

86 As to the variations to the contract by way of addendum, the contract had been amended by the parties. Those amendments however, are amendments of the original contract, and therefore any provision covered by those amendments are subject to the same obligations and warranties as for the original contract. The amended contract operates as a whole, and it is not necessary to specifically apply conditions of the head contract to each addendum. Those conditions apply to the whole contract as amended.

87 Mirage is a skilled and experienced builder of swimming pools, otherwise it would not be in the business holding a licence to that effect. It is not necessary for a consumer contracting work from any skilled contractor, to know the intimate workings of how that skilled worker carries out a business. It is not necessary for a person seeking to have panel work done on a car or someone seeking to have work done on an electrical appliance or air conditioning unit or a hairstyling, to instruct the skilled worker as to how that work is to be carried out.

88 Failure to specifically contract in writing that pavers should be sealed did not become part of the contract by written inclusion, but arises from the obligation of the contractor to carry out the work in terms of the express condition about that work being carried out in a "good, substantial and workmanlike manner", and that the work and materials should be reasonably fit. The purpose of the construction of retaining walls is to retain water, not to allow water to seep through. The contract does not set out in detail the obligations as to whether drainage or sealing is part of the contract. That obligation arises out of the express contractual obligations in the contract.

89 I do not consider that it was open to the parties to impose an obligation on Mirage by the conversation with the supervisor, Ken, but His Worship's finding that that conversation took place, can only lead to the inference that the sealing of the pavers as an issue had been brought to the attention of the Mirage employee. The obligation to seal those pavers is part of the obligation of Mirage to carry out work that will be reasonably fit for the specified purpose. Unsealed pavers over excavated soil is clearly something which Mirage would be aware is a requirement to prevent seepage through the pavers.

90 There is nothing in the contract which constitutes that the warranty provisions are a code as submitted on behalf of Mirage. The fact that moneys may be owing by the plaintiffs is only an impediment to Mirage being called on under the warranty provisions. This does not absolve Mirage as contractor from its obligations under the contract, namely, to carry out the work as contracted.

91 Failure to give notice under the warranty provisions may prevent the plaintiffs from calling on Mirage under that warranty provision, but it does not disentitle the plaintiffs from recovering for breach of an express term of the contract.

92 There is a provision in the contract covering default by the contractor for failure to comply with the terms and conditions of the contract, but gives the plaintiffs an entitlement to give seven days notice in writing to terminate the contract. This, in its terms, does not abrogate the right of the plaintiffs to seek to be compensated for that breach.

Lower Court Findings

93 I would have thought that the question of the cleaning up of the site, as with the work of any tradesman such as I have set out above, would be a necessary incident of work being carried out in "good, substantial and workmanlike manner". It however appears that His Worship found that the allowances made were sufficient to cover this and as such, is a finding of fact which this Court cannot disturb.

94 As to the $275.00 for work done for leaking around the pool, I consider that it is covered by Mirage's obligation to carry out the work as contracted in a "good, substantial and workmanlike manner". The fact that there was no notice given pursuant to cl12 of the contract does not disentitle the plaintiffs to be compensated for the work done, and therefore this sum of $275 should be allowed as damages for breach of the contract.

95 Similarly, damages for the repairs to the pool pump should also be allowed.

96 As to the removal and replacement of coping around the pool, His Worship made a finding of fact for which an allowance has been made, which the plaintiffs do not seek to disturb.

97 For the reasons I have set out about, I consider that Mirage was obliged to carry out the sealing of the pavers before they were laid, and to properly drain the retaining wall erected around the pool surrounds. His Worship accepted the evidence as to causation, being the experts called by the plaintiffs, and found that there is a requirement that the pavers be removed and replaced with new correctly sealed pavers.

98 I accept His Worship's findings that there was no contractual stipulation that the pavers were to be specifically sealed, but this is an obligation of Mirage in terms of its expertise in placing pavers on a site where there has been excavation, and where His Worship has found as a matter of fact that the failure to properly drain the retaining wall erected around the pool surrounds was causative of the moisture which discoloured the pavers. The plaintiffs are therefore entitled to damages for rectification of the paving, and in this respect His Worship erred.

99 His Worship found that the variation of the contract was silent as to the installation of drainage work in association with the retaining wall. His Worship also found that this was causative of the damage, but held that the failure to specify the drainage work disentitled the plaintiffs to recover damages by way of set - off for rectification work.

100 For the reasons set out above, I consider that in construing the contract, the drainage works as referred to by His Worship are a necessary incident behind a retaining wall in the circumstances of this case. The essence of a retaining wall is that it should retain that which is behind it, and water is clearly part of that. It is a clear necessary incident of the construction of a retaining wall, that any moisture, as well as the soil behind it, should be retained by that wall, and the installation of proper drainage is necessarily an incident of carrying out the wok in a proper and workmanlike manner.

101 From an evidentiary point of view, the very fact that the moisture occurred in the pavers as emanating from the wall, as found by His Worship, speaks for itself.

102 In consider therefore that His Worship was in error in his finding that the plaintiffs were not entitled to recover for the removal and replacement of pavers, and for the construction of proper drainage behind the retaining wall, as I have indicated, I consider that His Worship was also in error in relation to the cost of leak detection, and for the work done to the repairs to the pool pump.

103 I consider that the photographic evidence which was provisionally admitted under s57 of the Evidence Act 1995 should be rejected as being unnecessary. It is inappropriate for this Court to re - examine such conditions of fact.

104 As to the question of costs, I consider that the plaintiffs should recover costs of this appeal against Mirage, but that Mirage should have a certificate under s6 of the Suitors Fund Act 1951, in respect of that order.

105 I propose therefore to refer the matter back to the Local Court for the calculation of damages, and consequently an examination of the question of costs if it then appears appropriate, that the order made by His Worship did not reflect the proper order in the light of the findings that this Court has made and the assessment made by His Worship.

Orders

106 I make the following orders:

1. The final judgment of Cluston LCM in favour of Mirage is set aside;

2. The verdict of Cluston LCM on the cross action of the plaintiffs is remitted to His Worship for assessment of damages in accordance with law in lieu thereof of the amount of one hundred dollars ($100) previously assessed;

3. The order for costs by Cluston LCM be set aside to be reconsidered by His Worship after calculation of the amounts of damages on the verdict on the cross action;

4. Mirage to pay the plaintiffs costs of this appeal; and

5. Mirage is to have a certificate under s6 of the Suitors Fund Act 1951.

oOo

LAST UPDATED: 12/04/2001