ACT CIVIL & ADMINISTRATIVE TRIBUNAL

BAVAP PTY LTD v C & B PTY LTD (Civil Dispute) [2019] ACAT 15

XD 146/2018

Catchwords CIVIL DISPUTE – breach of contract – industrial surface coating contract – failure to rectify defects – fitness for purpose – failure to nominate time of the essence – duty to mitigate losses

Cases cited: Karacominakis v Big Country Developments Pty Ltd & Ors; Big Country Developments Pty Ltd v Chadlace Pty Ltd & Ors; J W Wall Investment Co Pty Ltd & Ors v Big Country Developments Pty Ltd & Ors; Hollingsworth & Anor v Big Country Developments Pty Ltd & Ors [2000] NSWCA 313TC Industrial Plant Pty Ltd v Robert’s Queensland Pty Ltd [1963] HCA 57

Tribunal: Senior Member A Anforth

Date of Orders: 31 January 2019Date of Reasons for Decision: 31 January 2019

AUSTRALIAN CAPITAL TERRITORY )CIVIL & ADMINISTRATIVE TRIBUNAL ) XD 146/2018

BETWEEN:

BAVAP PTY LTDApplicant

AND:

C & B PTY LTDRespondent

TRIBUNAL: Senior Member A Anforth

DATE: 31 January 2019

ORDER

The Tribunal orders that:

1. The applicant’s claim is dismissed.

2. The applicant is to pay $3,397 to the respondent plus any amount arising from Orders 3 to 5 below.

3. By 15 February 2019, the respondent is to file with the Tribunal and give to the applicant submissions on whether they seek the costs of the expert report prepared by Mr Simmons and material in support of the amounts claimed (if any), and advise whether they wish to be heard on that issue.

4. By 22 February 2019, the applicant is to file with the Tribunal and give to the respondent any submissions in reply, and advise whether they wish to be heard on the issue.

5. If either party wishes to be heard, the Tribunal will list the matter for hearing on this issue. If neither party wishes to be heard, the matter will be decided in chambers on the written submissions.

………………………………..Senior Member A Anforth

REASONS FOR DECISION

Introduction

1. The respondent held a contract with Toll Holdings Pty Ltd and the

ACT Government to resurface an existing concrete floor and a new concrete

floor in a helicopter flight hanger at Hume in the Australian Capital Territory.

2. In September 2017 the respondent sub-contracted with the applicant for part of

that work. The parties approached the matter in an informal manner. There was

no formal contract beyond an original quote and a purchase order. There was no

specified time for completion and minimal agreed scope of works.

3. The task involved grinding the existing concrete surfaces to prepare them to

receive an Epimax surface with line markings. Epimax is an epoxy resin.

The Epimax surface was to be laid on both the existing floor and the new

concrete floor. It was to be laid in three successive coats in accordance with the

manufacturer’s instructions, which required that each successive coat be laid

between 16 to 24 hours of the previous coat. The original quote provided for a

slip resistance at the P2 level. Part way through the work the respondent

increased the requirement to a P4 slip level, which the applicant additionally

quoted for on 28 November 2017.1

4. Work commenced on 20 November 2017 and was substantially progressed to

the laying of the second coat within two days when a dispute arose, largely

concerning the quality of the work and the timing of completion. The dispute

rapidly escalated to the point where the parties were in stand-off mode, but not

before the applicant had laid the third and final coat on 6 December 2017. The

respondent was asserting defective work and insisting on certain rectification.

The applicant denied the defective work.

5. Within a few weeks the dispute reached the point that the respondent purported

to terminate its contract with the applicant and brought in a new contractor to

carry out the rectifications and complete the job.

1 Exhibit 2 page 32

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6. The applicant now claims for the work it carried out in the sum of $24,806. The

respondent denies this claim and counter claims for the rectification costs of

$14,936.60.

7. The respondent asserts the following defective work:

(a) grinding marks in the base concrete showing through on the new surface;

(b) failure to follow the Epimax manufacturer’s directions, and in particular

failure to apply each of the successive three coats within 24 hours of the

prior coat;

(c) delamination of the Epimax coating occurring;

(d) inadequate and inconsistent slip resistance varying between P1 and P4;

(e) excessively thin third and final coat;

(f) inconsistent colouring of the final coat;

(g) abrasion marks to the walls said to be caused by the applicant’s grinding;

and

(h) failure of the applicant’s employees to follow safety guidelines.

The factual background

8. It is useful to trace the sequence of events in the short time frame concerned.

9. On 15 September 2017 the applicant provided the respondent with a quote for

$23,837 to:

Grind and patch 575m2 and supply/install 3 x epoxy roll coat Epimax 333WB-SR, allowing for R11 finish @ $34.00m2 + GST

Grind existing line marking around 50m2

Supply/install joint sealant 40 lm 20mm x 20mm @ 20.00lm + GST.2

10. The respondent accepted the applicant’s quote by email ‘purchase order’ on

18 September 2017 without variation.3 The acceptance did not provide any time

for completion or provide any specification other than “epoxy flooring to the

new Aero Medical Hanger with P2 sip(sic) rating, grind existing line marking

and 40lm of joint sealant.”

2 Exhibit 2 page 173 Exhibit 2 page 16

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11. The respondent’s purchase order issued to the applicant included a number of

work health and safety conditions, summarised as follows:

(a) Before starting on site the applicant was required to ensure that all their

on site personnel had completed the relevant occupational health and

safety (OH&S) induction4 and submitted the following to the

respondent’s project manager:

(i) training records and competency certificates for all on site staff

engaged by the applicants;5

(ii) relevant Material Safety Data Sheets (MSDS) for hazardous

materials to be used on site and the relevant control measures.6

(b) While working on site the applicant was required to:

(i) comply with all relevant OH&S requirements and all lawful

instructions from supervisors;7

(ii) supervise the behaviour of on site personnel to ensure compliance

with site safety rules;8

(iii) undertake monthly Tool Box meetings;9

(iv) provide a safety representative to attend the site safety consultation

meetings;10 and

(v) undertake safety rectification/corrective action identification,

management and review of its effectiveness as required.11

12. The applicant commenced work grinding and preparing the floor on

20 November 2017.

4 Exhibit 2 page 18, item A03 Before starting on site (i)5 Exhibit 2 page 18, item A03 Before starting on site (iv)(b)6 Exhibit 2 page 18, item A03 Before starting on site (iv)(d)7 Exhibit 2 page 18, item A03 While working on site (i) 8 Exhibit 2 page 19, item A03 While working on site (iii)9 Exhibit 2 page 19, item A03 While working on site (x)10 Exhibit 2 page 19, item A03 While working on site (xi)11 Exhibit 2 page 19, item A03 While working on site (xiv)

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13. On 21 November at 9.19am the respondent emailed the applicant and asked for

confirmation that the proposed P2 finish to the floor was similar to the R11

finish that was originally proposed.12

14. The applicant emailed the necessary safety documentation required by the

respondent on Tuesday 21 November 2017 at 11.30am13 and an email

discussion followed about the adequacy of the applicant’s MSDS

documentation for the three-part application of the epoxy flooring.

15. The applicant conducted an on site Tool Box Talk on Wednesday

22 November 2017 to train four staff on the safety requirements for applying the

epoxy flooring, particularly the use of personal protective equipment (PPE).14

Application of the first coat of epoxy flooring commenced later the same day.

16. A dispute also occurred between the parties on Wednesday 22 November 2017

regarding the applicant’s employees using the PPE correctly. Accusations were

made by the applicant of harassment by the respondent. An accusation was

made by the respondent that a wall had been damaged (that is, marked) by poor

use of equipment.15

17. The dispute became heated and the applicant’s senior foreman Wolfgang

Peschler was banned from the site due to threatening behaviour. Consequently,

another employee, Chris Peschler, became site foreman, but a director of the

applicant company, Anja Peschler, became the main point of contact for all

works.16

18. On Friday 24 November 2017 the applicant completed the second coat applied

over the final half of the floor.17 The respondent advised at 2.40pm that the third

coat needed to be completed on Monday 27 November 2017 and if it was not,

the applicant would be liable for any damage arising from the delay.18 At

12 Exhibit 1 page 5/7213 Exhibit 1 page 4/7214 Exhibit 1 page A115 Exhibit 2 page 416 Exhibit 1 pages A1-A417 Exhibit 1 page A418 Exhibit 1 page A4

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4.10pm the respondent advised the applicant that the quality of the finish

required had been increase from a P2 slip rating to a P4 slip rating.19

19. On Monday 27 November 2017 the applicant advised the respondent that the

materials for the final coat with a P4 rating would be available and could be

applied on the following Friday (1 December 2017).20

20. On Tuesday 28 November 2017 at 9.10am the applicant was notified that grind

marks needed to be removed and the floor cleaned of bird droppings before the

final coating.21

21. The applicant replied the same day at 12.59pm stating that grind marks were

unavoidable due to the soft concrete, its porosity confirmed by the quantity of

epoxy already used, and that no further grinding would be done to remove the

marks as three people had already spent an extra day on preparatory work.

A quote (QU-0194, $2,992) for the additional cost of the P4 finish, loss of work

on Monday 27 November 2017 and cleaning was attached.22

22. The respondent conducted an extensive inspection of the floor on

28 November 2017 identifying 108 items mapped on a floor plan that needed

rectification before the final coat was applied.23

23. Later on 28 November 2017 at 3.53pm the respondent emailed the applicant

attaching a sample of 6 of the 108 photos taken and stating:

The grind marks are predominantly where the hand grinder was used and are found on both the old and new concrete - refer attached sample photos.

Photos also identify samples of locations (old bolts, conduit) where floor not patched before epoxy painting commenced.

This work will not be accepted by the Client. Regardless of how much time has been spent on grinding, it cannot be left as is. Please ensure that Bavap inspects and repairs the work before proceeding further.24

19 Exhibit 2 page 2720 Exhibit 2 page 2921 Exhibit 2 page 3022 Exhibit 2 pages 31-3223 Exhibit 2 page 524 Exhibit 1 pages 19-25

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24. Emails and phone messages were exchanged on Wednesday 29 November 2017

and Thursday 30 November 2017 to arrange an on site inspection by the

applicant and confirm rectification works. As the applicant’s director was not

immediately available, a request was made for the senior foreman,

Mr Wolfgang Peschler, to attend instead. This request was denied by the

respondent.25

25. The applicant was advised on Thursday 30 November 2017 by the respondent

that rectification work would need to be completed by others at the applicant’s

expense if an inspection and rectification works were not confirmed by Friday

1 December 2017.26 The respondent asserted that the applicant’s director had

not been on site since the commencement of the installation of the Epimax

system.27 Contrary to this assertion, the on site time sheets provided by the

applicant indicated that the applicant’s director was on site on 22 November

201728 (and also on 5 December 201729).

26. On 30 November 2017 and prior to the inspection on Friday 1 December 2018

the applicant advised that:

The final Coat with anti slip has not been applied as yet, defecting is not appropriate at this stage. Thank you for pointing out the very few patches.30

27. The respondent replied on 1 December 2017 that repairs would be more

difficult after the final coat and that he had over 100 photographs on file

indicating defects.31

28. Following an inspection involving both parties on 1 December 2017 the

respondent confirmed that the work needed to be completed by Thursday

6 December 2017 in order to avoid the respondent breaching its contract with

their client, Toll Holdings.32

25 Exhibit 1 pages 31-3526 Exhibit 1 page 3427 Exhibit 1 page 3428 Exhibit 1 page 629 Exhibit 2 page 16330 Exhibit 1 page 3531 Exhibit 1 page 3632 Exhibit 1 page 37

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29. After the joint inspection on Friday 1 December 2017 the applicant informed

the respondent by email33 that the floor had been prepared to specification, and

that an A class finish was not specified, and repeated that the poor quality of the

concrete was a significant factor in causing the grind marks. It was said that:

(a) the final coat would be completed by Wednesday 6 December 2017;

(b) defects would be corrected;

(c) removing grind marks would be additional works, along with extra

patching, and blending in height differences in some slabs; and

(d) the respondent needed to inform the applicant by 11.00am on

Monday 4 December 2017 if the additional patching/blending was to be

done.

30. On Monday 4 December 2017 at 8.49am the respondent informed the applicant

by email that:

(a) the floor appears to have been prepared in accordance with Epimax

preparation requirements;

(b) the gouging of the floor which remained unrectified is not acceptable, but

an A class finish is not required;

(c) unless the applicant commenced rectifying the gouges that day a third

party would be engaged to complete the works;

(d) the cost of rectification by a third party would be at the applicant’s

expense; and

(e) confirmation that the applicant would commence rectification was

requested by 12.00pm. 34

31. On Monday 4 December 2017 at 1.17pm the respondent confirmed they were

proceeding to engage an alternate contractor to repair the grinding gouges in the

concrete.35

33 Exhibit 1 page 3834 Exhibit 1 page 3935 Exhibit 1 page 40

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32. On Monday 4 December 2017 at 1.49pm36 the applicant replied that:

(a) no charges by an alternate contractor would be accepted;

(b) as the work was incomplete, defects cannot be specified; and

(c) the job would be completed by Wednesday 6 December 2017.

33. On Tuesday 5 December 2017 at 9.01am37 the respondent:

(a) notified the applicant that works are not to proceed until the gouges and

grind marks have been rectified; and

(b) forwarded a QA Inspection and Test Plan for the Epoxy floor works so

that a sample of the final finish quality could be assessed on an identified

area before the final coat could be applied to the whole floor.

34. On Tuesday 5 December 2017 at 11.39pm the applicant responded that:38

(a) QA requirements will delay the work and increase costs, and the costs for

the delay will not be accepted;

(b) pen marking indicating locations of gouges, grind marks and drip marks

needed to be removed before the final coat;

(c) works confirmed the previous day to apply the final coat cannot be

cancelled given the Wednesday 6 December 2017 deadline, and rain was

predicted for that date;

(d) workers had been on site the previous day to carry out repairs and this had

been completed;

(e) as the final coat had not been applied, the floor could not possibly be

tested;

(f) the floor was to be either ground or shot blasted before the final coat;

(g) advice had been received that the floor could fail if the few grind marks

were feathered or polished, and that it was necessary to supply a product

that was fit for purpose; and

36 Exhibit 1 page 4137 Applicant’s final submission 16 August 2018 page 4338 Applicant’s final submission 16 August 2018 page 46

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(h) a sample was not required at the time of quoting but could be provided at

an additional cost.

35. On Tuesday 5 December 2017 at 12.32pm39 the respondent emailed the

applicant stating that:

(a) he was unaware of the applicant’s work plans for the day;

(b) work had been undertaken the previous day to remove some drip marks

and areas of original paint;

(c) pen markings would be removed if a sample test confirmed that the

remaining grind marks would be covered by the final coat;

(d) the applicant had said the previous Friday that the final coat would not

cover the grind marks; and

(e) the final coat could be applied that day but that an assurance was required

through a sample process that the grind marks and drip marks would not

be visible at completion.

36. A statement provided by Janeyah Bayley,40 one of the applicant’s employees,

states that:

(a) any defects were sanded and scraped on 4 December 2017 and after

cleaning, scrubbing and vacuuming a coat was applied to the areas treated;

(b) on 5 December 2017 the areas painted the previous day were sanded and

the entire floor area was polished, scrubbed and machine washed;

(c) on 6 December 2017 the entire floor was swept, vacuumed and painted

with the final coat;

(d) the workers were “hounded” about wearing the correct PPE but the

respondent’s staff did not comply themselves;

(e) there had been conflict between the parties on the first day they attended

the site involving Wolfgang Peschler, Anja Peschler and the respondent’s

site manager.

39 Applicant’s final submission 16 August 2018 pages 47-48 40 Applicant’s final submission 16 August 2018 page 49

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37. On 7 December 2017 the respondent informed the applicant that:41

(a) all defects previously notified and some additional items needed to be

rectified by 13 December 2017;

(b) the agreement with Elizabeth Peschler made on 5 December 2017 for an

identified test area to be painted first before the final coat was applied to

the entire floor was ignored;

(c) no trial sample was completed and the final coat was applied on 6 

December 2017 without rectifying any defects, getting any pre-approvals

to proceed and without sign-off of “hold points”;

(d) following an inspection the following were identified:

(i) the grit had been inconsistently applied to achieve a uniform P4 slip

rating;

(ii) there was a 30mm gap around the walls;

(iii) there were areas where the concrete floor was still visible;

(iv) the final coat was inconsistent in thickness;

(v) the floor appeared dusty before the final coat and concern was

expressed about the bond with the second coat; and

(vi) grind marks, gouges, drip marks and original paint remained on the

floor;

(e) an independent company would assess the work;

(f) if rectification works were not completed by 13 December 2017 repairs

would be at the applicant’s expense; and

(g) there would be no further time extensions.

38. On 10 December 2017 the applicant emailed the respondent:

(a) restating complaints of harassment and misogyny by one of the

respondent’s employees;

(b) repeating that there were problems with the quality of the concrete before

the job was accepted and since work commenced;41 Applicant’s final submission 16 August 2018 page 50

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(c) saying that no objective evidence had been provided about work defects

and that only a general statement had been made which was not

acceptable;

(d) offering to repeat advice regarding particular marks on the floor that were

not the applicant’s responsibility and expressing concern about pen/biro

markings which could damage sealants;

(e) stating that liability would not be accepted for work conducted by another

contractor to repair gouge marks as this could void the product warranty;

and

(f) saying that the applicant remained “ready and willing to do all things

reasonable to ensure a satisfactory outcome.” 42

39. On 11 December 2017 the respondent emailed the applicant:

(a) recognising the interpersonal conflict and referring to the outcome of a

visit by a union representative initiated by the applicant;

(b) confirming that Wolfgang Peschler, the applicant’s senior foreman, had

been excluded from the site for making violent threats;

(c) denying that there had been any discussion about the quality of the

concrete before work commenced and that this only arose after grind

marks and gouges became apparent;

(d) stating that photos and site inspections had provided objective evidence of

defects indicating that statements of floor gouging were not “general” in

nature;

(e) saying that the applicant had not negotiated a reasonable outcome to

rectify works or install the product consistent with the manufacturer’s

recommendations; and

(f) indicating that claims about marking pen/biro markings were trivial when

the applicant “had total disregard to installing the product as per the

manufacturers recommendations to date.” 43

42 Applicant’s final submission 16 August 2018 page 5243 Applicant’s final submission 16 August 2018 page 53

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40. On 12 December 2017 the applicant emailed the respondent stating that: 44

(a) they had inspected the floor that day and would repair one area that was

chipped and would repair it so that line marking would not be held up and

that “I am satisfied the floor is fit for purpose and ready for handover”;

and

(b) no charges by another contractor for repairs to the floor would be

accepted.

41. On 14 December, 2017 the respondent had the site inspected by

Dynamic Flooring Australia Pty Ltd (DF) to provide a quote for rectification45.

DF noted that:

(a) gouge marks resulted from a too harsh cutting disk;

(b) there was inconsistent grit application – a P4 slip rating could not be

achieved; and

(c) the whole Epimax system would have to be removed as the third coat

should have been applied within 24 hours of the second coat.

42. On 18 December 2017 at 10.20am the applicant sought to have a worker access

the site to carry out repairs identified on 12 December 2017 and requested

payment of invoices by 30 January 2018.46

43. The respondent replied on 18 December 201747 at 10.59am that the site was

closed for the year and that:

(a) flooring defects would be completed by others; and

(b) all rectification works by the applicant should have been completed by

13 December 2017.

44 Applicant’s final submission 16 August 2018 page 5645 Respondent’s final submission 20 August 2018 page 246 Applicant’s final submission 16 August 2018 page 5747 Applicant’s final submission 16 August 2018 page 58

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44. The applicant then emailed the respondent on 18 December 2017 at 4.17pm

stating that:

(a) No defect list had been issued after the final coat and that the photos of

defects were taken after the second coat and during the period when

patching and sanding was underway.

(b) No previous advice was given that the site would be closed that day

barring workers from undertaking repairs identified as necessary by the

applicant but not acknowledged by the respondent.

(c) Only three working days were allowed to rectify defects but that at least

10 working days should have been allowed in accordance with the

industry standard, expiring 22 December 2017.

(d) A current defect list should be provided but that the floor “is completed

and fit for purpose, except for one area which I will attend to rectifying

when the site reopens in 2018.” 48

45. On 8 January 2017 the respondent emailed the applicant: stating that no further

defect list would be issued as items previously identified had not been rectified,

and that a slip rating test was to be conducted; and agreeing to an inspection

involving an Epimax representative and the applicant. 49

46. An Epimax supplier visited the site on 10 January 2017 and reported that:50

(a) three small areas may be below the required slip rating;

(b) the whole space should be reviewed by a National Association of Testing

Authorities (NATA) and industry approved test contractor; and

(c) areas below standard should be taped off in a square, the area ground back

and Epimax reapplied in accordance with the manufacturer’s

specification.

47. On 12 January 2017 the respondent entered a contract with DF to carry out the

rectification work.

48 Applicant’s final submission 16 August 2018 page 59-6049 Applicant’s final submission 16 August 2018 page 6650 Applicant’s final submission 16 August 2018 page 68-69

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48. The respondent had a slip rating test completed on 18 January 2018 by an

organisation certified by the NATA. The report51 stated that the grey epoxy

tested achieved the equivalent of a P2 classification and did not meet the

minimum recommended classification of P4 and further:

there was significant variability in the floor surface from one test specimen to another … an abrupt change in slip resistance can result in an unexpected change in gait, and increased potential for a slip accident.52

49. On 19 January 2017 Mr Max Simmons (Managing Director, Epimax Pty Ltd),

DF and the respondent agreed through discussion that the only way to repair the

floor was to have it removed and a new floor laid; another coat could not be

installed over what had already been laid.53 Max Simmons had not attended the

site to inspect the floor laid by the applicant at any time.54

50. At the hearing Mr Simmons stated that:

I’ve never known anything to be sanded off when it came to performance coatings on concrete. You could sand things off if they’re a coating on timber but not on concrete. My view is it should always be ground off.55

51. On 24 January 2018 the respondent notified the applicant of the slip test

results,56 stating that Epimax Pty Ltd would not warranty the product,57 noting

that the applicant had made minimal efforts to address defective work and

stating that there was no option but to engage a third party to complete the

rectification works so that a product warranty could be obtained at the

applicant’s expense. A summary of costs was provided to the applicant.

51 Exhibit 2 page 202-20852 Exhibit 2 page 20753 Respondent’s final submission 20 August 2018 page 354 Transcript of proceedings 10 August 2018 page 6755 Transcript of proceedings 10 August 2018 page 65 [32]-[35]56 Exhibit 2 page 20057 Exhibit 2 page 197

15

52. On 29 January 2018 DF commenced removing the floor laid by the applicant.

DF stated that hand grinding easily removed floor flakes. A large portion of

grinding gouges left by the applicant were removed.58 From 30 January 2018

until 1 February 2018 DF laid the new Epimax floor; each coat was applied

within 24 hours of the previous coat.59

53. On 15 February 2018 the slip test was repeated by the NATA qualified

organisation with the floor certified to a P4 rating.60

54. On 24 May 2018 Epimax confirmed that it would warrant both the floor and the

DF commissioning process.61

55. On 11 July 2018 Dr Stuart Bayliss, Director of The Coatings Consultancy Pty

Ltd submitted a report62 to the applicant responding to a range of questions and

stating that another top coat could have been applied to obtain a P4 slip rating

without removing the entire previous coatings.63 The surface could have been

etched for a bond by sanding, and a light grinding. The consultant added:

this would be a normal means of preparation and recoating for example when the existing slip resistant aggregate was worn away and reinstatement of slip rating is required.64

56. In preparing the report Dr Bayliss relied on three photos and a five second

video. The consultant had not attended the site to inspect the application at any

time.65

58 Respondent’s final submission 20 August 2018 page 359 Respondent’s final submission 20 August 2018 page 360 Exhibit 2 page 24361 Exhibit 4 page 662 Exhibit 5 page 163 Exhibit 5 page 4, [2.8] 64 Exhibit 5 page 4, [2.8]65 Exhibit 5 page 2, [1.6]-[1.8]

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57. Following an affirmation at the hearing on 10 August 2018 at 11.50am Dr

Bayliss stated that different methods can be used to rectify a floor:

You can use different methods. You can use things like the 3M pads which, of course, aggregate and they sort of write over non-slip but abrase the epoxy surface. So, yes, it would be possible. I think if you’re asking if it’s possible to treat the existing flor without removing it, yes, it is by using that sort of method and, also, I think I answered before I’m not sure how much or what parts of the floor had a lower slip rating, so you’d have to, you know make a judgement as to where, you know, would you coat, recoat, the entire floor or just selected areas. 66

The history of the proceedings in the tribunal

58. The applicant lodged its claim on 7 February 2018 with a range of appended

documents.67 The applicant set out a history of the relevant events consistent

with that set out above. The applicant denied that the work was defective and

asserted the preparation and installation was as recommended by Epimax. The

gouging caused by grinding was due to the softness of the existing cement

surface. There was no delamination occurring. Mr Simmons had never visited

the site and his views were based only on what he had been told by the

respondent.

59. On 9 March 2018 the respondent filed its response denying the claim, and its

counterclaim. The respondent asserted the following defects:

(a) grinding marks showing through on the new surface after the third coat;

(b) failure to follow the manufacturer’s directions and in particular failure to

apply each of the successive three coats within 24 hours of the prior coat;

(c) delamination of the Epimax coating occurring;

(d) inadequate and inconsistent slip resistance varying between P1 and P4;

(e) excessively thin third and final coat;

(f) inconsistent colouring of the final coat;

(g) abrasion marks to the walls said to be caused by the applicant’s grinding;

and

(h) failure of the applicant’s employees to follow safety guidelines.

66 Transcript of proceedings 10 August 2018 pages 46-4767 Exhibit 1

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60. The respondent appended a range of documents68 including:

(a) photographs purporting to show the delamination, visible grinding marks,

uneven surface, colour differences and marks to the walls;

(b) the original quote from the applicant, the quote for the increase to P4 slip

rating, and the respondent purchase order;

(c) a copy of the slip resistance report of Advanced Technology Testing and

Research (ATTAR) dated 19 January 2018;

(d) the Epimax manufacturer's instructions; and

(e) a range of emails referred to above.

61. A conciliation conference was convened on 12 April 2018 but agreement was

not reached. On the same day directions were made for the parties to file and

serve evidence relied upon.

62. On 10 May 2018 the applicant filed and served documents.69 There were no

submissions. Attached were various emails and a series of photographs. The

photographs showed a superior final product to that shown in the respondent’s

photographs but they did show some unevenness, roughness, circular grinding

marks and large crosses showing through the final coat being the texta cross

placed there by the respondent before the final coat was applied.

63. On 8 June 2018 the respondent filed and served submissions and documents.70

The documents included:

(a) A letter from Epimax stating that it would not honour its warranty on the

floor as laid by the applicant.

(b) A witness statement from Sean MacCionnaith dated 7 June 2018. He was

the site manager for the respondent. Mr MacCionnaith expressed the

opinion that the applicant’s staff had little experience with hand grinders

and did a poor job. He had issues with their work health and safety

compliance.

68 Exhibit 269 Exhibit 370 Exhibit 4

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(c) A witness statement from Mark Bulley (a director of the respondent)

dated 5 June 2018. He said that the marks around the walls of the hanger

were caused by the applicant’s employees using small hand grinders.

He described how the second coat was marked with big crosses to indicate

the defective areas. The applicant went ahead and laid the third coat

without his consent and it was so thin that the large crosses were still

visible. Mr Bulley described the agreement between the parties to use a

sample test area for the third coat around a particular column. The

applicant is said to have disregarded the arrangement and proceeded to lay

the third coat on other areas before then completing the whole surface. On

completion, delamination of some of the surface was occurring, and there

were issues with slip, colour and consistency of thickness.

(d) A witness statement from Vince Cossetto who was the project manager

for the respondent (and a director of the respondent). He denied that the

applicant had ever offered to return to site and rectify the problems.

64. On 27 June 2018 directions were made for the parties to file and serve any

intended expert reports.

65. On 12 July 2018 the applicant filed and served an expert report from Dr Stuart

Bayliss dated 11 July 2018.71 Dr Bayliss provided a curriculum vitae and

statement of his experience in the present industry. He indicated the material

provided to him included photographs but that he had not personally attended

the site. Dr Bayliss commented:

(a) the colour differences appeared to be caused by the use of different

batches of Epimax rather than inconsistency within a batch;

(b) excess water use can affect slip rating;

(c) successive coats of Epimax can be applied more than 24 hours after the

previous coat if the previous coating is lightly ground and etched; and

(d) an additional coating of aluminium oxide could have been applied to the

third coat to achieve a P4 rating without having to remove the coating.

71 Exhibit 5

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66. On 26 July 2018 the respondent filed and served a report by Max Simmons

(founder and managing director of Epimax) dated 24 July 2018.72 Mr Simmons

gave a short summary of his experience that qualified him to comment,

including that he has tertiary qualification from Sydney Univrsity in chemistry

and years of experience in the industry. He:

(a) advised that successive coats of Epimax had to be applied between 16 to

24 hours of the previous coat. He gave a short explanation of the reason

for this. A failure to comply can affect adhesion i.e. lead to delamination;

(b) advised that the adhesion failure affects the slip resistance; and

(c) noted the colour differences and translucency of the third coat which he

speculated may be due to use of excess water in mixing the product.

67. The matter was listed for hearing on 10 August 2018. Ms Peschler (director)

appeared for the applicant, and Mr Cosseto and Mr Bulley (directors) appeared

for the respondent.

68. Ms Peschler opened the case for the applicant. Her position was that the

respondent was overstating the issues but that the applicant was prepared to

carry out rectifications if given the details and the opportunity. Essentially Ms

Peschler was arguing that the respondent was premature in bringing a third

party in to carry out the rectification work.

69. Mr Cossetto opened the case for the respondent. Other than reciting the history

of the matter he said that he did not know the strength (or softness) of the

existing concrete floor which had been laid some 20 years earlier. He said that

his principal contract with the ACT Government required the floor to be

completed by the end of December 2017 and that he gave the applicant notice to

have the rectification finished before that time.

70. Dr Bayliss gave evidence. He adopted his report of 11 July 2018. He opined that

the slip rating issue could have been cured without removing and re-laying the

whole floor. He said that the gouges from grinding may or may not be of

functional significance depending on their depth. He could not comment further

72 Exhibit 6

20

on this point. He said that delamination could be treated locally without

replacing the whole floor if the areas of delamination were small. In such case,

locally grinding back to bare concrete was not necessary. The local surface

could be prepared by roughing (or profiling) the surface for a new non-slip

coating.

71. Mr Simmons gave evidence by telephone. Mr Simmons adopted his report of

25 July 2018. He acknowledged that he had never been on site.

72. Mr Simmons was adamant that with either slip resistance failure or

delamination, grinding back to bare concrete was necessary. He did not agree

with Dr Bayliss’s view that the slip resistance or delamination problems could

be corrected without grinding back to bare concrete. They could, however, be

addressed on a panel by panel basis. He referred to the gouges as being of

aesthetic significance only.

73. There then ensued a dialogue with the parties in the nature of closing

submissions. During that dialogue various issues were traversed including the

issue of whether the applicant had in fact refused to carry out rectification, and

whether the rectification actually undertaken was an overreaction to the defects.

During the final part of the hearing the respondent had argued that the failure to

attain a P4 standard would and should have been obvious by mere inspection to

any professional in the industry.

74. At the conclusion of the hearing orders were made that the parties may file and

serve any final submissions by 17 August 2018, after which the matter was

reserved for decision.

75. The respondent filed final submissions on 17 August 2018. These submissions

were largely a recitation of the history and a time line. The respondent sought to

clarify the amount of its cross-claim. After allowing the applicant its variation

for the upgrade to P4 slip rate, the respondent asserted that the applicant’s claim

was $22,297, which is not consistent with the amount the applicant itself

claimed of $24,806 inclusive of the tribunal filing fee.

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76. The total rectification costs incurred by the respondent in paying DF ($29,376)

plus $550 for the marks on the walls, costs of obtaining a final slip rating test

($2,255.00), and in time costs in dealing with the applicant over the dispute

($3,300) were said to be $35,481.60, giving a net cross-claim of $13,184

calculated by reference to the respondent’s understanding of the amount of the

applicant’s claim in paragraph 75 above.

77. The applicant filed final submissions on 20 August 2018. The applicant argued

that it was prepared to undertake rectifications but only those it was responsible

for. It was said that a light grinding and new coat of anti-slip material would

have been sufficient. The applicant never received the slip report from ATTAR

and so was always in the position of having to take the respondent’s word for

that defect.

Consideration of the issues:

78. The issues to be considered are:

(a) what was the scope of the contract;

(b) was it breached by one or both of the parties;

(c) did the innocent party mitigate their losses; and

(d) what is the extent of the damages suffered by the innocent party.

79. The contract was to perform the work set out in the quote at paragraph 9 above.

The contract was subsequently varied to provide for a P4 slip rating at the

additional cost of $2,992.73

80. There was no ‘time of the essence’ clause or any other time clause in the

agreement. Such time restraints as the respondent faced in its head contract were

not incorporated into the sub-contract with the applicant.

81. The contract did not provide for any particular grade of finish. It did not

expressly incorporate any of the terms of any standard industry contract or

industry norms. Any conditions on the quality of the finish arise by implication

73 Exhibit 2 page 32

22

only; that is, terms implied by law or to be implied as a fact from the dealings

between the parties.

82. The floor was to be used as a helicopter hanger. Aesthetic qualities would not be

as relevant in this context as may be the case in a residential context. Safety and

durability issues would be more relevant. The Tribunal finds that it was an

implied term that the applicant would produce a surface that:

(a) was safe for its intended purpose;

(b) would last for a period of time that was normal for the Epimax surface;

and

(c) would result in a valid warranty of the work by Epimax.

83. The safety issue is that of the slip rating. The durability issue is that of the

delamination and the warranty issue raises the issue of compliance with the

Epimax instructions.

84. The aesthetic issues concern the visible gouge marks in the concrete, marks on

the side walls and the inconsistent colouring.

85. The Tribunal finds that the applicant breached the contract insofar as:

(a) The slip rating was agreed by variation to be P4 and it was not. The

independent ATTAR assessment found the slip rating to be variable and

to range between P1 and P4.

(b) Partial delamination was occurring immediately after the third coat was

laid and was amply demonstrated in the photographs in evidence.

(c) The surfaces were not laid in the timeframe required by Epimax; that is,

the coats were not laid between 16 to 24 hours of the previous coat,

leading to Epimax disavowing its warranty. The applicant did not deny

this allegation.

(d) The aesthetic finish was poor as shown in the photographs.

86. The respondent breached the contract insofar as:

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(a) It purported to impose temporal deadlines that formed no part of the

contract.

(b) It threatened termination of the contract based on a failure to complete

within a timeframe that formed no part of the contract.74

(c) It actually purported to terminate the contract on the same above

impermissible grounds and then appeared to treat the contract as still

being on foot by entering further negotiations with the applicant.75

(d) It finally terminated the contract by 12 January 2018 on the same

impermissible grounds when it entered a contract with DF to carry out the

rectifications.

87. The mitigation issue arises in respect of both breaches. In respect of the breach

by the applicant, the mitigation issue concerns whether the respondent:

(a) could and should have given the applicant a greater opportunity to carry

out the rectification before retaining DF to do the work; and

(b) could have carried out the rectification without pulling up the entire three

coats and starting the job from the beginning.

88. In respect of the breach by the respondent the mitigation issue concerns whether

the applicant could and should have returned to site and repaired each of the

defects at paragraph 85 above.

89. The mitigation issues overlap. Whether the respondent could and should have

given the applicant further opportunities to rectify the defects, and whether the

applicant could and should have taken that opportunity, depends in part on

whether the applicant was prepared to remedy the defects.

90. The applicant made inconsistent statements on this issue. At times it said that it

was “ready and willing to all things reasonable to ensure a satisfactory

outcome”76 and other like statements.77 At other times the applicant said that it

74 See paragraphs 25, 28, 30(c), 37(a), 37(f) and 43(b) above75 See paragraphs 31 and 43 above76 See paragraph 38(f) above77 See paragraphs 40(a) and 42 above

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would not be taking responsibility for some or most of the defects78 and that the

surface was “completed and fit for purpose.”79

91. Had the applicant unequivocally said that it would attend to the defects listed at

paragraph 85 above then the respondent would have been obliged to permit

reasonable time for that to occur. However the applicant’s hard line statements

that it was not accepting responsibility for some or most of these defects has to

be taken into account. In the face of these statements it was reasonable for

the respondent to conclude that further negotiations with the applicant were not

likely to achieve any productive outcome.

92. The duty to mitigate is only to take reasonable steps and the bar is not set high

for the innocent party. Reasonable actions on the part of the innocent party do

not require it to take such further actions for the purpose of mitigation that

actually cause the innocent party further harm.80

93. The other mitigation issue is whether it was necessary for the respondent to pull

up all the work done by the applicant and start again. There was inconsistent

evidence on this point.

94. The main issue was the safety or slip rating issue. There is no doubt that the

final product handed over by the applicant did not conform to P4 and was not

consistent in its slip rating. The applicant maintained that the problem could

have been solved by lightly grinding the top surface and laying a coat of

aluminium oxide. Dr Bayliss supported this thesis. Mr Simmons was strongly

opposed to this as a reasonable course of action and said that the whole three

coats needed to be removed and work done again.

78 See paragraphs 29(c), 32, 34, 38 and 40 above79 See paragraph 44(d) above80 TC Industrial Plant Pty Ltd v Robert’s Queensland Pty Ltd [1963] HCA

57; Karacominakis v Big Country Developments Pty Ltd & Ors; Big Country Developments Pty Ltd v Chadlace Pty Ltd & Ors; J W Wall Investment Co Pty Ltd & Ors v Big Country Developments Pty Ltd & Ors; Hollingsworth & Anor v Big Country Developments Pty Ltd & Ors [2000] NSWCA 313

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95. Mr Simmons is the founder and managing director of Epimax and is the more

experienced witness with this product. The applicant had in fact contacted Mr

Simmons for advice during their work.

96. The delamination issue also produced inconsistency in the evidence. Dr Bayliss

proposed local repairs around the points of delamination. Mr Simmons said that

the delamination could be done panel by panel but had to be taken back to bare

concrete. The delamination was located across various parts of the floor over

multiple panels.

97. In relation to the grinding gouges it is obvious that any solutions to this problem

required removing the surfaces back to bare concrete.

98. When the work was completed by DF it did not have any of the above defects

including the aesthetic defects. Given that DF removed the existing surfaces to

bare concrete and used the same Epimax product, the Tribunal can only assume

that the difference in outcomes is due to the difference in workmanship between

the applicant and DF.

99. In the end the Tribunal:

(a) is more persuaded by Mr Simmons and the respondent that the defects

were caused by defective work by the applicant;

(b) finds it was reasonable for the respondent to terminate the contract and

hire DF to carry out the rectifications and complete the job; and

(c) finds it was reasonable to approach the rectification by pulling up the

existing coats back to bare concrete and starting from the beginning.

100. The applicant’s claim is therefore dismissed. The respondent’s counter-claim is

upheld.

101. The respondent is entitled to damage on an indemnity basis, that is, the measure

of its loss when the cost of the final job by DF is compared to the cost that the

respondent would have paid had the applicant delivered under the contract.

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102. The applicant’s work, except for some grinding of the bare concrete, would be

of no value to the respondent as it was all removed. In fact, there would have

been a cost to the respondent in DF removing the applicant’s work before DF

could start the job again.

103. The quote by the applicant accepted by the respondent was for $23,837 to which

has to be added the variation for the P4 finish of $2,992, giving a total of

$26,829. Had the applicant delivered on the contract then the respondent would

have paid $26,829.

104. The respondent in fact paid DF $29,376 for the floors inclusive of removing

existing surfaces and $550 for painting the marked walls. These amounts are

allowed.

105. The respondent paid $2,255 for two slip tests. One of these concerned the floor

laid by the applicant and the other was the final test on the DF floors. It is not

apparent from the terms of the original quote that the cost of slip testing was a

cost to the applicant. If it were so then given the amount involved it would have

been reasonable for this cost to have been included in the original quote but it

was not. There was no evidence that it was an industry norm that the party

laying the floor bear this costs. This cost is not allowed.

106. The respondent claims $3,300 in time costs involved in its dispute with the

applicant. There is no contractual right to these costs and costs of this kind are

not allowed in the Tribunal.

107. The total allowable sum paid to DF is $29,926. Therefore the loss incurred by

the respondent is $29,926 less $26,829, totalling $3,097.

108. In addition to the sum of $3,097 the respondent is entitled to the tribunal filing

fee of $300 paid for the counter-claim.

109. The Tribunal is unaware of any cost of the expert report paid to Mr Simmons

for the expert report provided by him, and makes directions for the respondent

to indicate whether they seek to claim this amount and whether they wish to be

heard on that issue.

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………………………………..Senior Member A Anforth

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HEARING DETAILS

FILE NUMBER: XD 146/2018

PARTIES, APPLICANT: Bavap Pty Ltd

PARTIES, RESPONDENT: C & B Pty Ltd

COUNSEL APPEARING, APPLICANT N/A

COUNSEL APPEARING, RESPONDENT N/A

SOLICITORS FOR APPLICANT N/A

SOLICITORS FOR RESPONDENT N/A

TRIBUNAL MEMBERS: Senior Member A Anforth

DATES OF HEARING: 10 August 2018

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