ANT Building Pty Ltd ABN 64 128 896 622 v Makavelli Interiors and Fitouts Pty Ltd ABN 39 605 337 246

Category: Principal judgment

Parties: ANT Building Pty Ltd ABN 64 128 896 622 (Plaintiff)
Makavelli Interiors and Fitouts Pty Ltd ABN 39 605 337 246 (Defendant)

Representation: Solicitors:
Flame Tree Legal (Plaintiff)

File Number(s): 2023/434545

Publication restriction: Nil

JUDGMENT

1. The plaintiff entered into a contract (‘the head contract’) with the owner of land in Glebe (‘the owner’) to construct a building, including a dwelling, on that land (‘the land’).

2. On 16 September 2022, the plaintiff entered into a written contract with the defendant (‘the subcontract’) which provided for the defendant to prepare “shop drawings” and supply and install internal joinery in the dwelling.

3. In its statement of claim filed on 23 November 2023, the plaintiff alleged that some of the building works the subject of the subcontract (‘the building works’) were “residential building works” under the Home Building Act 1989 (NSW) (‘the HBA’) so that the statutory warranties provided for by the HBA were implied into the subcontract.

4. The sub-contract provided that the defendant would commence the building works in October 2022 and complete them in December 2022.

5. The initial price in the subcontract was a fixed sum of $435,550 plus GST ($479,105 including GST). Subsequently, variations to the contract works were approved at a total price of $75,041.59 including GST, which resulted in an increase in the price of the subcontract to $505,000 plus GST ($554,146.59 including GST).

6. It was an express term of the subcontract that the materials provided by the defendant, and the workmanship applied, would be “first quality no exceptions”.

7. The plaintiff alleged that the defendant breached the terms of the subcontract by failing to construct and complete the work in accordance with the subcontract and by failing to supply materials and workmanship which were “first quality”.

8. It was further alleged that the defendant repudiated the subcontract, on 5 October 2023, by informing the plaintiff, by email, that it intended to “withdraw from the job” and terminate the subcontract.

9. Upon being paid an additional $5,000 by the plaintiff on 19 October 2023 and a further $10,000 on 28 October 2023, the defendant attended at the site for a short time, but did not make any further progress with the building works, and by 23 October 2023 had not attended at the site for several days. The plaintiff gave written notice that it would accept the defendant’s repudiation and terminate the subcontract unless the defendant resumed work. The defendant did not return to work. On 31 October 2023, the plaintiff terminated the subcontract by the service of a Notice of Termination.

10. In its statement of claim, the plaintiff claimed the following loss and damage:

i. the cost of identifying defective and incomplete work;

ii. the cost of determining the manner in which the defective and incomplete work should be rectified;

iii. the cost of rectifying the defective and incomplete work;

iv. additional costs to complete re-design work;

v. delay costs; and

vi. legal costs and expert report fees and disbursements.

11. The subcontract provided for the plaintiff to pay the defendant 10% by way of deposit and a further 15% upon completion of the shop drawings.

12. The plaintiff paid the defendant $108,887.50 (excluding GST), by way of deposit, and a further $289,753.83, in nineteen tranches, on account, by way of agreed periodic payments. This arrangement came about because the defendant issued an invoice for the full subcontract price at the commencement of the subcontract, and issued a further invoice for the variations when they were agreed. The total payment by the plaintiff to the defendant under the subcontract up to and including 6 October 2023 was $398,641.33. It was the evidence of Mr Anthony Gleeson, a director of the plaintiff, who played an active role in the project, that, at the point in time by which the defendant had been paid $398,641.33, only about 30% of the joinery the subject of the subcontract had been delivered, and yet the payments made to the defendant were about 72% of the price in the subcontract. Two further payments totalling $15,000 were made in October 2023 (see [9], above).

13. In the statement of claim, the plaintiff claimed restitution of the total sum paid to the defendant, damages for breach of contract, interest, legal costs and interest on legal costs.

14. The defendant filed a defence on 16 May 2024.

Judgment on liability

15. The defendant failed to file its evidence in accordance with directions made by the Court. On 20 February 2025 the following orders were made:

1. Under UCPR 12.7 the defence filed 16/5/24 is struck out for lack of despatch.

2. Under UCPR 12.7 the cross claim proceedings commenced 16/5/24 are dismissed for lack of despatch.

3. Judgment for the plaintiff against the defendant with damages to be assessed.

…

16. The following judgment was entered:

Judgment: Makavelli Interiors & Fitouts Pty Ltd, First Defendant is liable to A.N.T. Building Pty Limited, First Plaintiff for damages and costs. Damages to be assessed. Judgment for the Plaintiff against the defendant with damages to be assessed.

17. The assessment hearing ultimately proceeded on 15 May 2025.

The assessment hearing

18. At the assessment hearing on 15 May 2025, the plaintiff tendered a Court Book containing the affidavit evidence and documents it relies upon, which comprised:

19. The affidavit of Anthony Joseph Gleeson sworn on 4 July 2024,

20. Exhibit AJG-1 to Mr Gleeson’s affidavit of 4 July 2024,

21. The affidavit of Mr Gleeson sworn on 9 April 2025,

22. Exhibit AJG-2 to Mr Gleeson’s of 9 April 2025.

23. As I have said, the defendant did not file any evidence and did not appear at the hearing. The evidence in Mr Gleeson’s affidavits is therefore uncontradicted. The plaintiff bears the burden of proof on the balance of probabilities in relation to any fact it relies upon in relation to the assessment of damages.

24. At the conclusion of the hearing, further clarification was required concerning the amounts claimed, so the plaintiff filed written submissions on 11 July 2025.

25. The plaintiff, in its supplementary written submissions, said that the contract between the plaintiff and the principal was a contract for the plaintiff to provide building works for a fixed sum to be paid by the principal. The plaintiff submitted, in relation to its contract with the principal:

The plaintiff was obliged to provide those works.

Principles and calculations relevant to the quantum of relief in a claim for restitution

22. In its written submissions, the plaintiff says that its claim for restitution is based upon a failure of consideration.

23. The plaintiff submitted that the process for assessing the claim for restitution involved ascertaining the benefit that a “wrongdoer” had gained and stripping those benefits away. It was submitted that this was a two step process of, firstly, identifying the benefit, and, secondly, calculating the value.

24. The plaintiff noted that there is evidence that it paid a deposit to the defendant of $47,910.00 under the subcontract (Mr Gleeson’s July 2024 affidavit at paragraph 14).

25. There is evidence that three variations to the subcontract were approved, in two documents. Variation 308 comprised a variation to “supply and install laminate ultimate black matt finish panels in the amount of $31,240.00 including GST” and also to “supply 60 sheets of blackbutt quarter cut veneer panelling to the ministry in the amount of $34,473.59 including GST”. Variation 310 was in the amount of $9,328.00 (see Mr Gleeson’s July 2024 affidavit at paragraphs 15a and 15b).

26. These variations increased the total value of the subcontract to $554,146.59 including GST.

27. Over the course of the project, the plaintiff paid to the defendant the total sum of $398,641.33 under the contract, which is 71.93% of the subcontract sum after the variation.

28. The plaintiff submitted, and it was Mr Gleeson’s evidence, that the defendant only completed about 30% of the works required under the subcontract (see Mr Gleeson’s April 2025 affidavit at paragraph 36).

29. In addition, the plaintiff paid $5,000 to the defendant on 19 October 2024, in response to being told, by Mr Barba on behalf of the defendant, that the defendant needed money to allow it to resume work, and a further $10,000 on 28 October 2024, on the basis of Mr Barba, on behalf of the defendant, saying that the defendant needed money to purchase more materials before it could return to work (Mr Gleeson’s April 2025 affidavit at paragraphs 47 to 52). The defendant attended the site again, briefly, but did not complete any additional work on the site.

30. The plaintiff claimed restitution in the following amounts:

31. The amount by which the defendant was overpaid (for which various conflicting figures were calculated),

32. $5,000 paid on 19 October 2024, for which no consideration was given,

33. $10,000 paid on 28 October 2024 for which no consideration was given.

34. The nature of an action for restitution was described by the High Court in ANZ Banking Group Limited v Westpac Banking Corporation (1988) 164 CLR 622 at [11]:

11. …The basis of the common law action of money had and received for recovery of an amount paid under fundamental mistake of fact should now be recognized as lying not in implied contract but in restitution or unjust enrichment (see, generally, Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour, Ltd. (1943) AC 32, at pp 61-64; Goff and Jones, The Law of Restitution, 3rd ed. (1986), pp.5ff; Birks, "English and Roman Learning in Moses v. Macferlan" (1984) 37 Current Legal Problems 1). In other words, receipt of a payment which has been made under a fundamental mistake is one of the categories of case in which the facts give rise to a prima facie obligation to make restitution, in the sense of compensation for the benefit of unjust enrichment, to the person who has sustained the countervailing detriment (cf. Pavey &Matthews Pty. Ltd. v. Paul (1987) 162 CLR 221, at pp 227, 254-257, 267). The common law right of action may arise in circumstances which also give rise to a resulting trust of specific property or funds or which would lead a modern court to grant relief by way of constructive trust. However, notwithstanding that the grounds of the action for recovery are framed in the traditional words of trust or use and that contemporary legal principles of restitution or unjust enrichment can be equated with seminal equitable notions of good conscience, the action itself is not for the enforcement of a trust or for tracing or the recovery of specific money or property. It is a common law action for recovery of the value of the unjust enrichment and the fact that specific money or property received can no longer be identified in the hands of the recipient or traced into other specific property which he holds does not of itself constitute an answer in a category of case in which the law imposes a prima facie liability to make restitution. Before that prima facie liability will be displaced, there must be circumstances (e.g. that the payment was made for good consideration such as the discharge of an existing debt or, arguably, that there has been some adverse change of position by the recipient in good faith and in reliance on the payment) which the law recognizes would make an order for restitution unjust.

32. In Tok v Rashazar [2025] NSWCA 94 Stern JA, with whom Payne JA and Kirk JA agreed, said, at [79] – [80]:

79. … the subsidiarity principle goes no further than precluding the grant of a restitutionary remedy in circumstances where to do so would undermine a relevant allocation of risk under a contract. So understood, the principle does not preclude a claim for restitution simply because the plaintiff could also have pursued a claim for damages for breach of contract. This is explained by Gageler J in Mann v Paterson Construction Pty Ltd (2019) 267 CLR 560; [2019] HCA 32 (“Mann”) at [83]:

“it would be artificial as a matter of commercial practice and wrong as a matter of legal theory to conceive of contracting parties who have not addressed the consequences of termination in the express or implied terms of their contract as having contracted to limit themselves to the contractual remedy of damages in that event. Parties contract against the background of the gamut of remedies that the legal system makes available to them. The common law gives to them the benefit, and saddles them with the detriment, of what they expressly or impliedly agree in their contract. Outside the scope of what they agree in their contract, the common law gives to them what the common law itself allows them to get.”

80. At [84], his Honour rejected the notion that “overlapping remedies in contract and in restitution are in some way anomalous”, observing that the “potential for a cause of action in restitution to overlap with a cause of action in damages for breach of contract was recognised in [Baltic Shipping at 355]”. In this regard, it should be observed that in Baltic Shipping, at 355-356, Mason CJ held that the action to recover money paid on a total failure of consideration is “available only if the contract has been discharged, either for breach or following frustration”, noting that “discharge” here “operates only prospectively, that is, it is not equivalent to rescission ab initio”.

Principles and calculations relevant to the assessment of damages in an action for breach of contract

33. The rule in Robinson v Harman (1848) 1 Ex 850 at 855 remains the guiding principle in the award of damages for breach of contract (see Tabcorp Holdings Ltd v Bowen Investment Pty Ltd (2009) 236 CLR 272; [2009] HCA 8 at [13]):

The rule of the common law is that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.

34. The plaintiff claims from the defendant the cost of the labour and materials required to complete the incomplete work and to rectify defective work.

35. The plaintiff was unable to find a joiner to complete the works in the time frame required, so it made arrangements to complete the work the subject of the subcontract and remedy the defects in the defendant’s work (the post breach work) using its own staff. The plaintiff hired the Interex factory, a joinery factory. On eight Saturdays in the period from October 2023 to March 2024 members of the plaintiff’s staff, including Mr Gleeson, prepared the cabinetry. As sections were completed, they were transported to the building site and members of the plaintiff’s staff installed them (Mr Gleesons’s April 2025 affidavit paragraphs 65 to 67).

36. The invoices for the materials used in the process undertaken by the plaintiff to complete the post breach works are provided in the exhibit to Mr Gleeson’s July 2024 affidavit, AJG-1, and are presented in a table in Mr Gleeson’s April 2025 affidavit, at paragraph 38. The materials include veneer boards, general hardware and paint, drawer runners and shelf supports, sliding door hardware, cabinet handles, medicine cabinets and mirrors for the medicine cabinets, board material and shelving.

37. The total cost to the plaintiff for materials to complete the post breach works was $108,160.45.

38. The plaintiff provided a detailed breakdown of the labour costs incurred by it in the post breach works (Mr Gleeson’s July 2024 affidavit paragraphs 73 to 177 and Mr Gleeson’s April 2025 affidavit paragraph 41). The costs are calculated on the basis of hours worked multiplied by the appropriate hourly rate which was set by reference to Rawlinson’s Costs Management Guide (Mr Gleeson’s July 2024 affidavit at paragraph 45). Generally, the carpenter’s rate of $75 per hour (excluding GST) is used. The total trade costs claimed are $245,072.69

39. The plaintiff claims fourteen hours of Mr Gleeson’s time for supervision with respect to each of the 28 joinery units completed, and arrives at a figure of $43,120.00. The plaintiff discounts its claim for supervision, having regard to the categorisation of supervision as an element of preliminaries, to $42,400.52.

40. The plaintiff claims the total labour cost for the completion of the post breach works in the sum of $287,473.21.

41. The hire of the joinery factory cost $12,000.

Consideration

42. I accept the account of the events around the entry into the subcontract, the course of the subcontract and the termination of the subcontract set out in Mr Gleeson’s affidavits, which support the allegations in the statement of claim.

43. As to the monetary sums involved in these proceedings, I make the following findings of fact, based upon the affidavits of Mr Gleeson and their exhibits:

44. At the commencement of the subcontract on 16 September 2022, the subcontract price was $479,105.00.

45. Subsequently, two variations were made to the subcontract at a total price of $75,041.59. The varied subcontract total price therefore became $554,146.59.

46. By the close of business on 6 October 2023, the total price (including the deposit) which had been paid to the defendant by the plaintiff pursuant to the subcontract was $398,641.33.

47. The amount paid to the defendant by the plaintiff represented 71.93% of the subcontract price.

48. Mr Gleeson’s assessment, which I accept, is that the defendant only undertook 30% of the work it was required to perform under the subcontract.

49. Thirty percent of the total subcontract price of $554,146.59 is $166,243.98.

50. The subcontract in clause refers to a “Progress Claim Schedule” which is defined as “the monthly Progress Claim Schedule attached to the Subcontract or available from the Builders representative if none attached”. The Progress Claim Schedule is not in evidence.

51. Clause 3 of the subcontract says:

The Builder shall pay the Sub-contractor the Subcontract Sum adjusted by way of additions or deductions made pursuant to this Subcontract in accordance with this Subcontract.

9. The defendant breached and repudiated the contract by abandoning the site on 15 October 2023, claiming that it did not have sufficient resources to continue to undertake the building works.

10. An admission was made in early October 2023 to Mr Gleeson by Mr Barba, of the defendant, that despite previous assurances made by him to Mr Gleeson, the defendant had not purchased the materials necessary to undertake the remainder of the building works.

11. On 31 October 2023, the plaintiff terminated the contract by the service of a Notice of Termination.

12. The building works were joinery works. Those joinery works were a component of a much larger project which was the subject of the head contract, dated 8 December 2020, between the plaintiff and an entity referred to, in the head contract, as “the Principal”.

13. The plaintiff provided the works the subject of the head contract and was paid the price of the head contract by the Principal.

14. Turning firstly to the assessment of damages for breach of contract, I bear in mind that the award of damages should place the plaintiff in the same situation, with respect to damages, as if the subcontract had been performed.

15. If the defendant had met its obligations to the plaintiff under the subcontract, the plaintiff would have delivered the building works the subject of the subcontract for the sum of $554,146.59.

16. As a result of the repudiation of the subcontract by the defendant, which led to its termination, the plaintiff has paid the following sums to complete the building works the subject of the subcontract:

17. $398,641.33 paid to the defendant under the subcontract,

18. $108,160.45 for materials to enable the plaintiff to complete the work,

19. $287,473.21 in labour costs, including supervision (preliminaries) to complete the building works,

20. $12,000 for the hire of the joinery factory.

21. The total spent by the plaintiff to complete the works in the subcontract is $806,274.99.

22. The amount by which the sum spent by the plaintiff exceeds the price at which the defendant agreed, in the subcontract, to perform the work, is $252,128.40 ($806,274.99 - $554,146.59).

23. The measure of the damages which should be awarded to the plaintiff for the defendant’s breach of contract, to put the plaintiff into the position it would have been in had the subcontract been performed by the defendant, is $252,128.40.

24. The plaintiff is entitled to pre-judgment interest on the sum of $252,128.40.

25. The plaintiff is further entitled to the sum of $15,000 by way of restitution. The plaintiff paid the defendant $5,000 on the basis of Mr Barba’s promise that the defendant would resume work and $10,000 requested by Mr Barba for the purchase of materials to be used in the building works. The defendant did not undertake further work or use further materials and has therefore been unjustly enriched by the sum of $15,000.

26. The question of post judgment interest can be left to s 101 of the Civil Procedure Act 2005.

27. The calculation of damages for breach of contract takes into account the amount paid to the defendant by 6 October 2023 in circumstances where the building works which would have been commensurate with the sum paid have not been performed by the defendant. There is therefore no basis for the award of an additional sum in restitution. In other words, the damages to be awarded for breach of contract incidentally address the unjust enrichment of the defendant by reason of the overpayment to it.

Costs

54. The plaintiff sought an order for indemnity costs.

55. The plaintiff has been successful in its claim, but it has not established an entitlement to indemnity costs. It is, however, entitled to an order for costs on the ordinary basis.

56. The plaintiff seeks an order for a specified gross sum costs order.

57. In Mr Gleeson’s April 2025 affidavit, at paragraphs 59 to 71, details of the legal costs incurred by the plaintiff are provided. All of the invoices claimed, which attach detailed cost entries, are provided in AJG-2 at pages 6 to 24. The total of the plaintiff’s legal costs to 9 April 2025 is $38,228.47.

58. Mr Gleeson has been provided with an estimate of $6,600 for an assessment of costs.

59. I am satisfied that the evidence provided as to costs is sufficient to enable me to arrive at an appropriate and reasonable sum for a costs order. Such a course is consistent with the guiding principles in Part 6, Division 1 of the Civil Procedure Act 2005.

60. Given the complexities of the matter, including at the interlocutory stage, I consider that a discount of 25% is appropriate to arrive at a reasonable figure for costs on the ordinary basis.

Conclusion

61. The following order will issue:

62. The defendant is to pay damages to the plaintiff in the sum of $252,128.40.

63. The defendant is to pay $15,000 to the plaintiff by way of restitution.

64. The plaintiff is to prepare draft orders for pre-judgment interest and costs, based on these reasons.

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