Hestbay Pty Ltd v One Sector Pty Ltd [2024] QSC 180

Sarah Ferret | Megan Sharkey | Max Rylance

Key takeouts

This decision reinforces the obligation for a builder to strictly comply with contractual specifications and for end users of a structure to only use it for its intended purpose.  A builder’s liability will not be extended to damage caused by activities outside the intended purpose of the structure.

This decision also highlights the crucial role of fact-based expert evidence in construction disputes.

Facts

Hestbay Pty Ltd (Hestbay) engaged One Sector Pty Ltd (One Sector) to design and construct an industrial warehouse complex with a concrete slab floor in two stages, Stage 1 and Stage 2.  Post-completion tenants complained about degradation, cracking, and excessive dusting (beyond that of normal wear and tear) in the Stage 2 slab floor.

Hestbay alleged that One Sector added too much water to the cement mix during the pour of the Stage 2 slab, resulting in a defective structure with insufficient strength and surface hardness. Hestbay sought to recover its loss by way of various claims against One Sector, including breach of contract (failing to construct the slab in accordance with the contractual specifications and failing to construct a warehouse that was fit for purpose). However, it was unclear what contractual terms governed the design and construction of Stage 2 because the contract terms for Stage 2 sent to Hestbay included two documents which contained inconsistencies:

1. an AS4902-2000 contract; and
2. a tender letter.

One Sector contended that there was nothing wrong with the Stage 2 slab, even if more than the prescribed amount of water had been added to the cement mix during its pour and that any damage was caused by Hestbay’s tenants using non-pneumatic (or hard-wheeled) vehicles on it.

The court was required to determine:

• What contractual terms governed the design and construction of Stage 2
• What was the intended purpose of the Stage 2 slab
• Would the Stage 2 slab’s specifications render it fit for its purpose
• Whether the Stage 2 slab was built in accordance with its specifications
• What was the effective cause of damage to the slab

Decision

The court ruled in favour of One Sector.

Relevant contractual terms

The court found that the AS 4902-2000 conditions and the tender letter together set the contractual framework. The AS 4902-2000 conditions applied only to the extent that they were not inconsistent with the terms expressly agreed upon by the parties, which included those spelt out in the tender letter.

Was the Stage 2 slab deficient or unfit for purpose?

On the question of the slab’s deficiency and whether it was constructed in a manner fit for purpose, the court found that Hestbay did not provide conclusive evidence that an excessive water content during the pour was the direct cause of the slab’s deterioration. Factors such as the slab’s strength, thickness, slump and water to cement ration were discussed in detail on the basis of expert evidence and standard industry conditions.

Although One Sector had previously constructed similar warehouses for Hestbay with 32 MPa slabs designed for ‘general industrial use’ or a ‘broad range of industrial uses’, the court did not recognise usage by hard-wheeled vehicles as within the scope of the intended purpose.

The court acknowledged it was probable that the slab did not meet the 32 MPa compressive strength specification at the 28-day mark, but it had reached the necessary strength by the time of practical completion. Any deviation from the contractual specifications was thus deemed not material to the damage. Despite potential breaches from One Sector, the breaches were inconsequential.

Hestbay’s claim was dismissed and One Sector was not required to rectify the slab.