The NSW Court of Appeal has handed down its decision in
Walker Group Constructions v Tzaneros Investments 
NSWCA 27. The plaintiff claimed damages from Walker Group
Constructions alleging defective concrete paving. Once the pavement
was laid, cracks began to develop, and as a result, some concrete
slabs had to be repaired. Sometime later the plaintiff carried out
further rectification whereby old slabs were replaced with
reinforced concrete slabs. That cost was claimed from the
defendant. The defendants argued that the rectification works
undertaken by the plaintiff would result in betterment.
At first instance, The New South Wales Supreme Court held that
it was not appropriate to make a discount for betterment, a view
which the Court of Appeal shared. The court focused on the two
circumstances enunciated in Tyco Australia Ltd Pty v Optus
Networks Pty Ltd  NSWCA 333 in which an allowance for
betterment would be made:
when a plaintiff chose to acquire a more valuable asset than
that which had to be replaced; for less expenditure it could have
acquired an asset which would have been as satisfactory as that
replaced. The defendant did not point to any other method of repair
of the pavement which would cost less than the solution proposed
and within conformity with the contract.
when the plaintiff may have to give credit if there is a
benefit which is not remote in time or speculative and can be
quantified. The Court held that as the pavement had a minimum
design time of 20 years, a pavement properly designed to the
specification would not be expected to be unusable immediately on
the expiration of such a period. The future benefit to be obtained
by the proposed pavement was therefore speculative.
The court emphasised that even where the defendant can show a
benefit that is not speculative, care should be taken in applying a
discount as it could result in the defendant's breach requiring
a plaintiff to pay for capital expenditure, which it would
otherwise be unwilling or perhaps financially unable to
This decision will hopefully provide more certainty around when
discounts for betterment apply.
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