Assessing Damages in Construction Disputes and the Controversy of Quantum Evidence

When a Court is faced with no expert evidence on quantum, is a simple quote with a global figure enough for the Court to assess damages for replacement of individual items of defective work? Tran v Packaging Logistics Pty Ltd [2023] VSC 755 suggests the answer is 'yes'.

An appeal and cross appeal of a decision of the Magistrates’ Court in Tran & Le v Packaging Logistics Pty Ltd [2022] VMC 10, where the Magistrate found that some of the windows and doors supplied and installed by the defendant (Austral) should be repaired and some needed to be replaced.  Having found that not all the windows and doors needed to be replaced, the Magistrate only had evidence of a simple quote with a global figure for the replacement of all the doors and windows.  The quote did not contain a breakdown of the replacement value of each window or door.

The Magistrate declined to estimate the cost of replacing windows and doors (there were different sizes and shapes and specifications) when he had no breakdown of cost to refer to. The Magistrate did award damages for repair of some of the doors and windows based on the evidence of an expert (Spencer). 

The plaintiff (owners) appealed to the Supreme Court of Victoria, arguing that the Magistrate erred in not awarding damages for the replacement of the defective windows and doors.  Austral cross appealed arguing that insofar as the Court awarded damages for repair arguing that Spencer’s evidence was not admissible or probative

The facts of the case were that Austral had agreed to supply and install three large glass windows, two sets of bi-fold doors, and two sets of sliding doors.   The cost of the installation was $59,000.  

The Magistrate found that the glass was not certified as required, and there were numerous defects in supply and installation of doors and windows.

Quantum evidence

The building owner tendered evidence of:

(a) A report of a building consultant (Campbell) who identified numerous defects in supply and installation.  The building consultant was not requested to, and did not, opine on the cost of rectification;

(b) A report of a fitter and machinist (Spencer) who identified defects, said that some windows and doors could be repaired but that others would need to be replaced.  He did not provide evidence on quantum.

(c) A quote for $82,240 plus GST for the removal and replacement of all the relevant doors and windows (the quote).  Mr. Samartzis who prepared the quote was called to give evidence.  The quote gave specifications for the doors and windows to be removed and replaced but did not break down how the figure of $82,240 was arrived at.  In cross examination, Mr. Samartzis said that the documents that set out his workings were ‘confidential’.  Austral did not seek to call for those documents.

It is interesting to note that the author of the quote had signed a Form 44A witness code of conduct form [7 and footnote 9].  By signing Form 44A the declarant promised to the Court that, amongst other things, ‘the expert has made all the inquiries which the expert believes are desirable and appropriate, (save for any matters identified explicitly in the report) and that no matters of significance which the expert regards as relevant have, to the knowledge of the expert, been withheld from the Court’ [3(i) Form 44A].  It would seem that a claim of ‘confidentiality’ would be inconsistent with his declaration, as his workings are clearly matters of significance, and indeed were central to the evidence on quantum.  This was not a point raised before the Magistrate nor raised on appeal. 

Austral did not tender any evidence on quantum.  As will be discussed below, the Court found this was a forensic decision, likely to have been based on an assessment of the evidence that the Plaintiff had marshaled. 

The quote.

The quote was a ‘global’ quote with no breakdown of component costs, the Court provided an extract of the quote at [43]:

The quote relevantly provided for the removal and supply of installation of the following for $82,240 plus GST:

First Floor

3300mm × 10,100mm = 1, 10 leaf bi-fold door                 (Upstairs Bi-Fold Doors)

2820mm × 3190mm = 1, apartment style sliding door        (Upstairs Sliding Door)

Ground floor

2810mm × 4480mm = 1, apartment style sliding door  (Downstairs Sliding Doors)

3300mm × 3850mm = 1, apartment style sliding door  (as above)

2810mm × 3100mm × 1830mm = 1, corner 6 leaf bi-fold door       (Corner Bi-Fold)

2530mm × 2450mm = 3, fixed windows pool windows                (Pool Windows)

2360mm × 1000mm = 1, single swinging door

On appeal Austral argued that the quote was inadmissible.  The Court  at [17] said:

‘A simple quote is not, ordinarily, opinion evidence because the quote does not ordinarily state that the identified price is, in the quoter’s opinion, the market price.  I disagree that this makes the quote inadmissible.  I reject the premise of Austral’s argument that the only evidence that may be led to establish the market or a fair price for a good or service is an opinion from an expert as to what that person thinks is the market or fair price…  ...  The Court might conclude that the market or a fair price is in accordance with the quoted price if it is satisfied that the quoter carries on business in that market, particularly if the quoted price is the only evidence or otherwise is not challenged as unreasonable in some way.’

Assessment of Damages

When considering replacement or rectification ‘if more than one method of making the goods and services conform to the contractual obligation were available a claimant would ordinarily be entitled only to damages having regard to the least expensive approach’ [31]. 

The Magistrate appeared to be faced with two different methods of rectification, (i) replacement of all the windows or (ii) a combination of repair and replacement.  The method of repair and replacement was supported by the evidence of Spencer, which the Magistrate accepted, however the only evidence (the quote) available was for full replacement.

The Court, citing High Court authority, held that ‘Where there has been an actual loss of some sort, the common law does not permit difficulties of estimating the loss in money to defeat the only remedy it provided for breach of contract, an award of damages.  This is the case even if it were in the power of the claiming party to lease more satisfactory evidence’ (citations omitted) [45].

The Court resolved the issue of global quote not matching the evidence on method of rectification this way at [47]: 

‘…Rather, in my view, it would have been open to the Magistrate, had his Honour wished to do so, to estimate a figure having regard to the evidence as to the various items and this quote that represented fair and reasonable compensation for the need to remove and replace the underlined items.  It would, of course, be necessary to be conservative – to allow only what could be allowed on ‘an absolutely safe basis’ – and any assessment could only be an estimate.  But where there has been a finding of breach leading to a need to replace those items, it was open to the Court to make an estimate.

The decision to leave the quote evidence as it was without anything further was referred to at [48]:

‘…Also, Austral objected to Ms Tran and Mr Le’s counsel’s asking Mr Samartzis to provide the breakdown of the Pacific Shopfitters Pty Ltd quote, presumably because it should have been included prior to trial, and chose not to engage in any such questioning itself. That was entirely proper, but it reflects that fact that Austral, rather than being simply unable to lead evidence on the matter, made its own forensic decision to have the Magistrate consider damages on the evidence in the state it was in. It should be remembered that both parties chose to leave the evidence before the Court in the state it was.’

And at [58]:

‘…Here, for example, it is apparent that Austral made certain forensic decisions in the way it conducted its cross-examination and chose what evidence itself to lead based on what it perceived to be deficiencies in [the owners] evidentiary material. For those reasons, exceptional circumstances are, properly, required before a party is granted leave to reopen the case after factual findings have been made and reasons published.’

The case serves as a reminder for respondents to defective works claims who should be careful before making the forensic decision not to call any evidence to contradict the claimant’s evidence on quantum.  Even if the claimant’s evidence appears a little thin, even if it is a simple quote, a respondent should nevertheless consider calling evidence to contradict or challenge the evidence of the quote.