(1987) 162 CLR 221
Lumbers v W Cook Builders Pty Ltd (in Liquidation) (2008) 232 CLR 635
Source
Original judgment source is linked above.
Catchwords
(1987) 162 CLR 221
Lumbers v W Cook Builders Pty Ltd (in Liquidation) (2008) 232 CLR 635
Judgment (5 paragraphs)
[1]
The application of the law of estoppel (whether conventional or equitable) to the builder's claim and to the home owner's defences to the builder's claim (including any set off for rectification costs arising out of allegations of defective workmanship)
I am satisfied on the evidence that the home owner is estopped from denying payment of the builder's invoices and the third party invoices whether by denying the existence of an obligation to pay the builder's invoices and the third party invoices or by lately raised allegations of defective workmanship.
In particular, I make the following findings:
1. There was a state of affairs, specifically, the provision of work and materials by the builder to the home owner at the property, for which the builder expected payment by the home owner;
2. Such state of affairs (or assumption) was induced by the home owner's own conduct, that is, the home owner encouraging and acquiescing in the builder's reasonable belief that he (the builder) would be paid for his works and that he would be reimbursed for the expenses he incurred on the home owner's behalf;
3. The builder acted to his detriment by undertaking the works and incurring the expenses, for which he has not been paid or reimbursed;
4. The home owner should not be permitted to, or alternatively, it would be unconscionable to allow him to, depart from the assumption he induced the builder to act upon.
I find that in all the circumstances the home owner should be held to the assumption he knowingly induced. It follows from the operation of the estoppel (as well as the law of restitution and unjust enrichment) that the appropriate relief is for the home owner to pay the amounts totalling $47,206.30 claimed by the builder.
As regards a set off for indebtedness to the builder by reason of rectification costs in amounts of up to $21,154.04, or any other defence of defective workmanship, I find that the home owner's claim must be dismissed for the reasons already given; that is, the home owner has not established his incurrence of any of the costs of rectification now claimed were, in fact, for defective or incomplete work, or were otherwise caused, by the builder, nor has the home owner proved that all of the costs now sought as rectification expenses are, in fact, reasonable and properly claimable against the builder.
Further and alternatively, I find that an estoppel operates to bar any defences of the home owner which are based upon allegations of defective workmanship. There is a lack of documentary evidence of any complaint (or any written communication at all) by the home owner to the builder whether in respect of the manner in which the invoices were being rendered (specifically, at hourly rates for labour divisible by $50.00) or in respect of defective workmanship. The home owner gave evidence that he raised the complaints with the builder during conversations yet still paid the first two invoices. I prefer the evidence of Mr Antonio Di Rico who said that there was never any conversation arising out of the receipt of the invoices, that he was never informed of any disagreement of the manner in which the work the subject of the invoices had been charged, and that Mr Di Rico did not receive any correspondence from the home owner during 2012 about defective construction of the front and rear retaining walls.
Contemporaneous documents support the builder's position: see, particularly, annexures I and K to Di Rico 1, respectively, being an email from the home owner to the builder sent on 4 September 2011, and a memorandum signed by the home owner in or about September or October 2011. Such documents expressly acknowledge the outstanding amounts after the builder had ceased work on the property. The home owner attempted to explain away these acknowledgements as being a way of encouraging the builder to cease allegedly coercing or calling others to stop working on the property. However, I do not find such explanations as at all credible in the circumstances. The builder gave evidence, which I accept, that he never conducted himself in such manner. Further the builder gave evidence that he either did not know or had not spoken to the various individual and companies identified by Mr Cominos at page 11 of the statement of evidence dated 8 July 2014. Even in the face of such evidence from the builder, there was no evidence called by the home owner from any of the individuals or companies identified by the home owner as being those on the receiving end of such alleged coercion. The home owner has provided no explanation as to why those witnesses were not called. Accordingly, I draw the inference that any evidence from those companies would not have assisted the home owner's defence to the builder's claim: Jones v Dunkel (1959) 101 CLR 298.
I find that the home owner during late 2011 and 2012 continued to promote the assumption that payment of the outstanding builder's invoices and the third party invoices would be forthcoming. In doing so, the home owner adopted the practice of referring to "news" as to whether his house had been sold: see the emails sent by the home owner on 25 October 2011, 31 January 2012 and 7 April 2012, respectively, within annexure J to Di Rico 1. Such series of emails has to be read, in my opinion, in the context of the sentence in the home owner's email of 4 September 2011, which states: "once (the property is) sold all monies owing will be paid immediately". I am satisfied on all the evidence that the home owner made no attempts to complain to the builder, or to the builder's solicitors, in the face of the builder's demands for payment. The first time complaints were raised regarding the manner in which the builder's invoices had been rendered and any alleged defective workmanship was in the Local Court proceedings commenced on 20 May 2013.
There is ample evidence to support a finding that there was a conventional assumption mutually adopted by the home owner and the builder to the effect that the builder would be paid the outstanding accounts and then later, that the builder would be paid once the home owner's house was sold. Further, it is clear on the evidence that the builder thought the home owner was acting on that conventional basis and also (as importantly) that the home owner knew that the builder was doing so and/or intended that the builder should do so. The builder's detriment is established by the builder doing the work and incurring costs and expenses with his own workers and third party suppliers. The detriment is further established by the builder giving the home owner some latitude to pay; that is, refraining from taking recovery action against the home owner until May 2013, thereby increasing the time the builder has been kept out of his money.
It is also clear that there was a causal connection between the detriment suffered by the builder and the home owner's conduct as a whole. I find that all the elements of a conventional estoppel are made out on the evidence.
Further I am satisfied as to the elements of equitable estoppel in this case. It would be unconscionable for the home owner to arrogate to himself the benefit of all the time and money the builder has spent and for him to depart from the assumptions he promoted that payment be delayed to allow him time to sell his house. Equity requires the Tribunal's intervention to avoid the injustice resulting from the home owner's unconscionable conduct: Sidhu v van Dyke (2014) 251 CLR 505 at [85] - [86]. I find that the home owner must be held to all of the assumptions he knowingly induced and that the appropriate relief is payment to the builder of the outstanding accounts and the dismissal of the home owner's claims of defective workmanship including all the claims for relief arising on the home owner's application.
[2]
The home owner's claim for reimbursement of 'out of pocket legal' expenses
Among the documents (appendix 54) provided by the home owner with the submission of 15 April 2015 was an invoice from a firm of solicitors, Perry Legal, apparently addressed to the home owner in an amount of $27,491.03. It appears that the home owner is seeking reimbursement of that amount as part of his application for relief.
There is also a claim (at page 31 of the submission dated 15 April 2015) for reimbursement of the costs to the builder's solicitors ($16,000.00) awarded against the home owner.
For the reasons provided above, the home owner has not established an entitlement to any relief on his application. However, even if I had decided differently the merits of his application for relief, the claim for reimbursement of 'out of pocket' legal expenses is not supported with evidence of payment by him of the amounts sought to be reimbursed. In any event the home owner's claim is wholly misconceived. Perry Legal represented the home owner in the Local Court proceedings; specifically, on the home owner's application under s 48L of the HB act to transfer the proceedings to the Tribunal. The home owner was not legally represented in the proceedings before the Tribunal. Presumably the invoice of Perry Legal relates to the s 48L transfer application. The costs of that application were determined by Cheetham LCM on19 March 2014. It is not available to the home owner to claim those costs in the Tribunal proceedings. A res judicata arises. The issue has already been decided by the Local Court, and the costs already awarded against the home owner have been assessed and a certificate has issued.
[3]
ORDERS
The builder has made out a case for an order that the home owner pay him $47,206.30. I order that the home owner is to make payment within 28 days of the date of these orders.
The home owner has not established a case for any relief on his application. His application is dismissed.
In addition to an order in respect of the amount of $47,206.30, the builder seeks interest on that amount plus his costs, including filing fees, service fees, expert's fees and solicitors' and counsel's fees.
Presumably, the builder seeks a statutory rate of interest on the $47,206.30 from about September 2011 in an amount to be determined by the Tribunal. No calculation of loss with appropriate rate(s) of interest over the relevant period was provided to the Tribunal.
I find that there is no basis in this case to make an order for pre judgment interest, whether based on a statutory rate of interest or some other manner of calculation (e.g. a contractual rate of interest). The Civil and Administrative Tribunal Rules 2014, Div 2, Part 9, section 39 refer to s 101 of the Civil Procedure Act 2005, which relates to post judgment interest. There is no other provision giving effect to s 100 of the Civil Procedure Act which relates to pre judgment interest.
Accordingly the Tribunal does not have power to award pre judgment interest under the Civil Procedure Act or any other enabling legislation. In this regard, I am not assisted by the builder's submissions that since there is also no provision which expressly prohibits the Tribunal from awarding pre judgment interest, it can be said in the circumstances that an award of interest compensates the builder for his loss or detriment of being kept out of money for almost four years. That argument is misconceived because the Tribunal has no inherent jurisdiction to award any such 'compensation'. Even if the Tribunal did have that jurisdiction, I would not be disposed to award compensation by way of interest to the builder in the circumstances of this case. The builder neglected to take care of any concerns for timely payment because he did not ensure that the works on the property were done under a written contract complying with the HB Act and the HB Regulation and he did not specify a contractual rate of interest in the event of non-payment by the home owner.
The builder seeks an opportunity to be heard on costs with respect to his own claim and the home owner's claim. The builder has been substantially successful in both proceedings, save as to the matter of pre judgment interest on the builder's claim. In my view, it would be highly desirable and also consistent with the Tribunal's guiding principle of just, quick and cheap resolution of the real issues in the proceedings (see particularly s 36(3) of the Civil and Administrative Tribunal Act 2013), that the parties confer with a view to reaching an agreement between themselves on the matter of costs. If, however, they are unable to do so, then either party has leave to apply to the Deputy Divisional Registrar on or before 31 August 2015, to have the matter relisted before me for any argument as to costs in both proceedings.
[4]
Civil and Administrative Tribunal of New South Wales
[5]
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 28 August 2015
On 20 May 2013, the builder commenced proceedings against the home owner by Statement of Claim in the Local Court of New South Wales. This was a debt recovery action by the builder for the amount of unpaid invoices (his own and third party invoices) plus interest under the Civil Procedure Act 2005 and costs. Default judgment was entered for the builder but this was later set aside on 22 August 2013 on the home owner's Motion.
On 28 August 2013 the home owner filed a defence and cross claim in the Local Court proceedings.
The Local Court proceedings were fixed for final hearing on 3 March 2014; however, a final hearing on the merits of all matters in dispute never proceeded. The home owner appointed a solicitor who filed a Motion pursuant to s 48L of the HB Act to have the proceedings transferred to the Tribunal. A hearing of the Motion took place on 10 March 2014. The Local Court then delivered a judgment on 19 March 2014 ordering that the proceedings be transferred to the Tribunal and that the home owner pay the builder's costs of the Motion to transfer the proceedings to the Tribunal.
On 18 June 2014 the Tribunal made procedural directions for the further conduct in the Tribunal of the builder's claim and the home owner's claim, respectively. Both parties were given leave to be legally represented. The procedural directions provided for each party to file and serve points of claim and points of defence and also to exchange documents in support of their respective cases including expert reports (complying with Practice Direction 3 for Expert Witnesses), witness statements and (in the home owner's claim) a Scott Schedule dealing with liability, method of rectification and quantum which is cross referenced to the expert reports and witness statements.
On 17 July 2014 the builder lodged Points of Claim for the application in File No HB 14/18936. This document affirms the debt recovery action originally brought in the Local Court for unpaid invoices and third party invoices. The relief sought is either specified amounts totalling $47,689.83; or alternatively, an amount of reasonable remuneration in respect of works done for the home owner at the property and a reasonable sum for materials and equipment supplied. In addition, the Points of Claim specified that the builder sought interest pursuant to Regulation 39 of the Civil and Administrative Tribunal Rules 2014 together with costs pursuant to Regulation 38 of the Civil and Administrative Tribunal Rules 2014.
On 13 August 2014, the home owner lodged with the Tribunal a document titled "Response to Points of Claim". The Tribunal reads this document as the home owner's points of defence to the builder's recovery action (the proceedings in File No HB 14/18936) and further as supporting the home owner's application in File No HB 14/18947 for damages for alleged overcharging and defective work carried out in breach of the statutory warranties in the HB Act (see s 18B) and in breach of contract and/or negligently under the general law.
On 1 September 2014 the builder lodged with the Tribunal his Defence to Cross Claim. The Tribunal reads this pleading as a response to the home owner's application in HB 14/18947.
On 28 November 2014 and 4 March 2015 the proceedings were heard by me.
The builder relied upon these documents at the hearing: Affidavit of Antonio Di Rico sworn 17 July 2014 (hereinafter referred to as "Di Rico 1"), Affidavit of Martin John Sadlier sworn 17 July 2014 (hereinafter referred to as the "Sadlier Report"), Affidavit of Antonio Di Rico sworn 1 September 2014 (hereinafter referred to as "Di Rico 2"), a statement of Alan Brewer bearing date 1 February 2015 and a statement of Roberto Di Rico bearing date 25 February 2015.
The home owner relied upon these documents at the hearing: a Statement of Dion Cominos dated 22 November 2013 (lodged in the Local proceedings), a Statement of Dion Cominos dated 8 July 2014 (lodged in the Tribunal proceedings), a Response of Dion Cominos sworn 17 July 2014 to the Sadlier Report, and a Response of Dion Cominos received by the Tribunal on 25 September 2014 to Di Rico 2.
There was also oral evidence given during the two days of the hearing by Mr Antonio Di Rico, Mr Martin Sadlier, and Mr Roberto Di Rico (in the builder's case) and by Mr Cominos and Mr Dennis Hunt, engineer, in the home owner's case. The oral evidence was subject to cross examination by the other party. There were competing versions of relevant facts matters and circumstances. Determining some of the disputed factual matters meant that I had to assess and evaluate competing versions of the relevant events in 2011 and 2012, and then to decide the reliability of the lay evidence of each party in the light of the demeanour of Mr Antonio Di Rico and Mr Roberto Di Rico (on the one hand) and Mr Cominos (on the other hand), as witnesses of fact, the credibility of their answers when addressing questions of the Tribunal or the cross examination of the other party, and the extent to which contemporaneous documents (particularly, the annexures or documents exhibited to the statements of evidence and affidavits) substantiated or detracted from one or other party's version of events.
As regards the evidence of Mr Sadlier and Mr Hunt I was also required to evaluate the reliability of the assumptions and information on which each expressed opinion as well as the weight I should attach to their conclusions insofar as their conclusions bear upon the material issues for my determination on both applications.
The parties also provided written submissions in support of their respective cases. Apart from the outline submissions provided by each party at the commencement of the hearing on 28 November 2014, I made directions for further submissions (with the findings of fact and law for which each party contends) at the conclusion of the hearing of the evidence on 4 March 2015. In the home owner's case I received submissions on 15 April 2015 and in the builder's case I received submissions also on 15 April 2015. Further, each party was afforded an opportunity to respond to the submissions of the other party in their respective cases and this was done by written submissions in reply received in each case on 1 May 2015.
To do justice to the issues posed by the parties' respective cases I have given consideration to all of the evidence presented and the submissions made by the parties before, during and after the formal hearing. However, the evidence and submissions (whether written or oral) are quite extensive. It is simply not practicable for me to spell out in detail every step of my reasoning processes, or to refer to every piece of evidence. Moreover, my duty to give reasons does not require me to do so: see, for example, Moloney v Collins [2011] NSWSC 628 at [63] - [64]; cited with approval by the Tribunal's Appeal Panel in Akkari v Sartor [2015] NSWCATAP 79 at [48].
The home owner's submissions received on 15 April 2015 also attached further copy documents (the "further documents") as evidence in the home owner's case. The builder's legal representative objected to the home owner being permitted to rely on the further documents. I concur with the builder's submission that the further documents should have been produced pursuant to the Tribunal's prior procedural directions (i.e. at an earlier point in the proceedings). It is also fair to say that on a strict application of the rules of evidence, the admission of the further documents into evidence should be rejected. However, the Tribunal may inquire into and inform itself on any matter in such manner as it sees fit subject to the rules of natural justice and it is also required to take such measures as are reasonably practicable to ensure the parties have a reasonable opportunity to be heard or otherwise have their submissions considered in the proceedings: Civil and Administrative Tribunal Act 2013 s 38. As the proceedings do not involve the exercise of the Tribunal's enforcement jurisdiction, the Tribunal is not bound by the rules of evidence. The home owner submits, among other things, that the further documents address matters arising out of the cross examination of him by the builder's legal representative and in respect of which (due to time constraints) he could not respond at the conclusion of the evidence on 4 March 2015. Although the home owner has not been cross examined on the further documents, the builder's legal representative has had an opportunity to address the further documents in her submissions in reply, particularly as regards their relevance and probity. Accordingly, I have decided to read the further documents as part of the home owner's case but only in the context of their relevance and probity to the material matters for determination by the Tribunal.
RELEVANT LAW
The work conducted by the builder was "residential building work" as defined by the HB Act and the Home Building Regulation 2004. There is no written contract as required by s 7 of the HB Act for the "residential building work". Therefore, the builder is not entitled to damages or to enforce any other remedy in respect of a breach of contract committed by the home owner, and agreements between the parties to perform works on the property are unenforceable by the builder: s 10(1)(b) of the HB Act.
The builder is claiming on the basis of quantum meruit/quantum valebat/restitution/unjust enrichment for reasonable remuneration and/or a reasonable sum for work done and materials provided: Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221.
Deane J observed at 263 in Pavey & Matthews that the concept of monetary restitution:
"involves … the payment of an amount which constitutes, in all the relevant circumstances, fair and just compensation for the benefit or 'enrichment' actually or constructively accepted. Ordinarily, that will correspond to the fair value of the benefit provided (e.g. remuneration calculated at a reasonable rate for work actually done or the fair market value of materials supplied)".
The principle of unjust enrichment (for which an order for restitution may be made) refers to circumstances where there is an enrichment or benefit obtained at an applicant's expense, in circumstances which make it unjust that a respondent should retain the enrichment/benefit, and no defence is applicable or available: Mason & Carter's 'Restitution Law in Australia', Second Edition, K Mason, J W Carter and G J Tolhurst, Lexis Nexis Butterworths, 2008, page 43.
In Lumbers v W Cook Builders Pty Ltd (in Liquidation) (2008) 232 CLR 635; [2008] HCA 27 at [79], the High Court stated, relevantly, that:
"the doing of work, or payment of money, for and at the request of another, are archetypal cases in which it may be said that a person receives a 'benefit' at the 'expense' of another which the recipient 'accepts' and which it would be unconscionable for the recipient to retain without payment".
Section 94(1) of the HB Act provides:
"(1) If a contract of insurance required by section 92 is not in force, in the name of the person who contracted to do the work, in relation to any residential building work done under a contract (the "uninsured work"), the contractor who did the work:
(a) is not entitled to damages, or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, in relation to that work, and
(b) is not entitled to recover money in respect of that work under any other right of action (including a quantum meruit)".
THE BUILDER'S CLAIM
The builder submits that its claim against the home owner (based on quantum meruit, quantum valebat, restitution and/or unjust enrichment), in respect of reasonable remuneration or a reasonable sum for work done and materials provided, is an archetypal case of the kind referred to by Gummow, Hayne, Crennan and Kiefel JJ in Lumbers v W Cook Builders (in Liquidation) at [79].
It is submitted that the home owner requested the builder to undertake residential building work at the property in or about April 2011, that the builder undertook work (including the construction of the retaining wall, and the pouring of concrete for the rear slab and the front car park slab) and provided materials to enable such work to be done, that the builder has borne the cost of labour and materials accepted by the home owner, that the home owner has benefited from such acceptance (specifically, without the work done and materials supplied by the builder, the subdivided property could not have been sold in December 2012), and that in all the circumstances, it would be unjust and unconscionable for the home owner to retain the enrichment or benefit without payment. Additionally, the builder puts his case on the basis that even if the home owner had not requested the work and materials (a proposition which the builder says is not made out on the evidence), the home owner has freely accepted those works and materials in that he "did not take a reasonable opportunity open to him to reject the proffered services": Lumbers v W Cook Builders Pty Ltd (in Liquidation) at [15] per Gleeson CJ.
The builder denies the allegations of breach of statutory warranties for defective and incomplete work and further says there is no other circumstance (e.g. 'uninsured work' within the meaning of sections 92 and 94 of the HB Act) to preclude him from recovering money based on a quantum meruit with regard to the work done and materials supplied for and on behalf of the home owner. In the latter respect, the builder's case is that having obtained a contract of insurance on 5 March 2014, the practical effect is that the uninsured work done in 2011 ceased to be uninsured work by operation of s 94(3) of the HB Act.
The builder also makes a claim against the home owner on the basis of conventional and equitable estoppel: see, generally, Verwayen v The Commonwealth (1990) 170 CLR 394, Ryledar v Euphoric (2007) 69 NSWLR 603, Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, Sidhu v van Dyke (2014) 251 CLR 505 and Razdan v Westpac Banking Corporation [2014] NSWCA 126.
It is submitted that the home owner is or should be precluded from propounding the allegation that there is no money owing to the builder as a result of the works done and materials provided to the home owner and that such estoppel arises whether by denying the existence of an obligation to pay or by a lately raised claim of defective work. The key elements of an estoppel are findings of representation, causation, change of position and prejudice.
No Written Contract
While there is no written contract as required by the HB Act in this case, this does not preclude a claim by the builder otherwise than on the basis of contract.
The general law of quantum meruit/quantum valebat/restitution/unjust enrichment has been applied by the Court of Appeal on many occasions with respect to building cases involving no written contract, in the context of the HB Act: see, for example, Xu v Jinhong Design & Constructions Pty Ltd [2011] NSWCA 277 and Darin v Olzomer [2012] NSWCA 60.
The Quantum of the Builder's Claim
Where reasonable remuneration is involved, an unenforceable agreement (due to a lack of written contract) may be referred to as evidence on the question of an appropriate amount of compensation: see Pavey v Matthews at 250 and 255.
The amount outstanding pursuant to the unenforceable contract is $47,206.30 comprising work done by the builder ($21,797.33) and materials and equipment provided by the builder under third party invoices ($25,408.97). There is evidence to support the integrity of the builder's calculations of the said amounts: see Di Rico 2 paragraphs 11 - 16 and annexures A (bundle of worksheets) and B (table of invoices). The builder's usual practice (and a practice which the Tribunal accepts he followed in this case) was to keep a record of work done and materials/equipment provided to enable him to raise invoices and to update that record daily or by the end of the following day after the work had been performed.
The builder gave evidence (see Di Rico 1 at paragraph 3) that on or about 25 January 2010 during a conversation between Mr Antonio Di Rico and Mr Cominos, it was agreed between them that any works to be carried out by the builder on the property would be done on a 'do and charge' basis at the rate of $50.00 per hour including GST and that any materials and equipment could be obtained on the builder's account and the cost then passed on to the home owner at no mark-up.
In response to the home owner's contention that there was an agreed 'per block' rate for laying of blocks, the builder gave further evidence (see Di Rico 2 at paragraphs 20 - 27) as to a conversation with the home owner shortly before the works commenced in April 2011, to the following effect:
Mr Cominos asked if the builder would lay the blocks at a 'per block' rate;
Mr Di Rico said that works at a per block rate could not be done as the site was too steep and also because there was too much additional work involved including the carrying of the blocks and mortar from the road to the site up the steep driveway;
Mr Di Rico reiterated the earlier conversation that the work could be done on a 'do and charge' basis for $50.00 per hour inclusive of GST per labourer;
This was accepted by Mr Cominos as the basis of charging by the builder for the works to be undertaken including the laying of blocks.
Where there are differences between Mr Antonio Di Rico and Mr Cominos as regards the substance of what was said during material conversations, I prefer the evidence of Mr Di Rico. I am satisfied that Mr Di Rico made concessions, where appropriate to do so, as regards issues of liability and quantum in the respective cases of each party, and also that he exhibited a willingness to give answers that may have been adverse to the builder's case. On the other hand, Mr Cominos' evidence contained inconsistencies. His initial position was that the one and only agreement between him and the builder was that he would pay the builder $4.00 per block laid. Later, during his cross examination, he drew a distinction between block work and the slabs saying that Mr Di Rico wanted $300.00 per day for slab work. However when pressed for, and given time to locate, evidence of any agreement of a daily rate for slab work, he was unable to find that evidence. Mr Cominos had also prepared a two page Excel spreadsheet referring to $37.00 per hour: see attachment to the statement of evidence of Mr Cominos dated 8 July 2014. When questioned about the $37.00 per hour, the home owner then gave evidence that it related to concrete fill work. These inconsistencies make it difficult for the Tribunal to accept the reliability of any home owner's recollections of the material conversations between the parties.
Section 92 refers to the requirement that residential building work must be insured. These sections of the HB Act confirm that a claim by a builder on a non-contractual basis (e.g. quantum meruit) is available where there has been non-compliance with s 7 of the HB Act. However, the work the subject of the claim must be insured and in this regard, "uninsured work" (referred to in s 94(1)) ceases to be "uninsured work" by operation of s 94(3) which provides:
"(3) Residential building work that is uninsured work at the time the work is done ceases to be uninsured work for the purposes of this section if the required contract of insurance for the work is subsequently obtained."
Residential building work must be performed by a builder so as to comply with statutory warranties including performing work with due care and skill and in accordance with plans and specifications and using good and suitable materials: see s 18B(1)(a) - (f) of the HB Act. The warranties are implied in any contract for residential building work regardless of whether the work is performed without written contract and/or without compliance with the other requirements of s 7 of the HB Act and the Home Building Regulation.
Accordingly, any claims, if established, by a home owner in respect of breaches of statutory warranties arising from defective and incomplete work by a builder are an available defence to a builder's claim, whether the builder's claim is brought on a contractual basis or on a non-contractual basis (such as a quantum meruit). Furthermore, an equitable set off of one claim against the other claim might also arise in the circumstances: see, for example, AWA v Exicom (1990) 19 NSWLR 705.
The builder's submissions bearing on conventional and equitable estoppel may be summarised as follows:
For the period from mid-April 2011 to mid-August 2011, the home owner implicitly and explicitly made a representation to the builder that he (the home owner) would pay the builder's invoices and third party suppliers;
Relying upon the representation, the builder made the assumption he would be paid and agreed to do the work for the home owner and incur the cost and expense of paying labourers and third party suppliers;
The home owner paid, without complaint, the first two invoices which included amounts for that labour charged on an hourly basis, all of which were divisible by $50.00;
Even after the builder had ceased work on the property in August 2011 (in circumstances where the home owner had ceased to pay the subsequent invoices), the builder refrained from taking any debt recovery action at law due to his understanding or further assumption that once the property had been subdivided and sold, all outstanding money would be paid (in this regard, the Local Court proceedings were not taken until in or about February 2013 when the builder became aware the property had, in fact, been sold);
The demands for payment made during 2011, 2012 and 2013 to the home owner in the correspondence of the builder and the builder's solicitors (see annexures J and L of Di Rico 1), and the assertions appearing in the correspondence, evidence the builder's assumption he would be paid;
The assumptions were mutually adopted and this is evidenced by the home owner's conduct during 2011 and 2012, specifically, the home owner making no attempt to disabuse the builder of the assumptions the builder would be paid when the subdivided property was sold;
Upon receipt of demands for payment, the home owner did not complain to the builder or his solicitors as regards the manner in which invoices had been rendered by the builder or in respect of allegations of defective work and overcharging (in fact, such complaints did not arise until after the builder had brought the Local Court proceedings);
The relevant detriment and prejudice to the builder is to be found in these facts, matters and circumstances: that the builder did work for the home owner on the property in 2011 without payment, that the builder has incurred costs and expenses on behalf of the home owner with labourers and third party suppliers for which he has not been reimbursed, that the builder refrained from taking recovery action against the home owner to enable the home owner to sell the subdivided part of the property in or about December 2012, and further, that such refraining from legal action meant the time the builder was kept out of his money has increased.
As regards the quantum of his claim, the builder's submission is that fair and just compensation is the amount outstanding under the parties' unenforceable contract (in this instance, due to the absence of a written contract). Such amount is $47,206.30 comprising work done by the builder ($21,797.33) and materials and equipment provided by the builder under third party invoices ($25,408.97)
The builder's evidence as to work done and materials and equipment supplied was set out in Di Rico 1: see, in particular, annexure B to the affidavit which is a record of the work the builder says was conducted on the property. In his oral evidence, Mr Di Rico corrected some information in annexure B; specifically, the reference to 4,500 blocks in item 19, which should read 4,200 blocks, and Mr Di Rico's acceptance that the home owner provided and paid for blocks so that item 18 should be removed from the table of items in annexure B
Mr Martin Sadlier, an expert quantity surveyor, gave evidence in the builder's case, by way of a report which was prepared for the Local Court proceedings. The Report complies with the Tribunal's Procedural Direction 3 dated 7 February 2014 (i.e. the Expert Witness Code of Conduct). In the Sadlier Report, Mr Sadlier acknowledges that he has read and understood the Code of Conduct and agreed to be bound by it. The assumptions in relation to work and materials upon which Mr Sadlier based his expert report are set in annexure C, which is, in fact, the same document as annexure B to Di Rico 1. Taking account of the corrections to items 18 and 19 in annexure B of Di Rico 1 (as referred to above), Mr Sadlier's evidence is to this effect as to the cost of the works and materials: based on the Rawlinson Construction Guide 2011 $130,910.04 (including GST) and based on his training study and experience as a quantity surveyor $126,578.06 (including GST).
In addition, Mr Sadlier gave evidence with respect to the wage rates quoted in the Rawlinson Construction Guide 2011 for labourers and tradesmen, being (GST inclusive) figures of $60.90 and $66.81 per hour, respectively. Mr Sadlier said that the Rawlinson wage rates were in line with going rates in Newcastle in the period May 2011 to September 2011 for building and construction works of the type referred to in Di Rico 1. He gave evidence that sometimes a mark-up of 100% to those rates could be considered appropriate depending on the work being conducted and that a rate of $50.00 per hour (including GST) for supplying labour from the building trades was about 10% to 15% less than a reasonable rate for work done between May 2011 and September 2011 in Newcastle.
The builder submitted that with respect to the materials provided, the actual costs charged by the various service and materials providers (as summarised in annexure C of Di Rico 1) is the best evidence of 'fair and just compensation', because these were the fair market value of materials purchased in ordinary arm's length commercial transactions with no mark-up applied by the builder. In this respect Mr Sadlier gave evidence that it is usual for a tradesman to apply a mark-up for 10% to 15% on materials supplied.
Accordingly, I accept the builder's evidence as regards the agreed basis of charging for work and services on the property and consequently, I also find that the work in respect of the laying of blocks was not performed on a 'per block' basis.
I also accept the evidence of the expert quantity surveyor, Mr Sadlier. There was no challenge to his expertise. Other than the non-expert assertions of the home owner (to be addressed later in these Reasons), Mr Sadlier gave oral evidence to supplement his written report which was subject to questioning by the Tribunal and the home owner. His evidence was largely uncontested, and in my opinion, it must be given considerable weight.
Mr Sadlier calculated reasonable remuneration for the work and materials provided by the builder to the home owner in amounts which far exceeded the total amount sought by the builder for all the work performed and all the materials provided to the home owner. The lesser amount in Mr Sadlier's calculations is $126,578.06 including GST, whereas the total amount of the builder's claim for the four invoices (two of which were paid by the home owner) plus the third party invoices, is $77,055.77.
Mr Sadlier's evidence as regards the Rawlinson wage rates for the work performed and the materials provided by the builder to the home owner was also most persuasive. He referred to the widespread use of the Rawlinson Construction Guide in the building and construction industry and of his own use of the Guide as a quantity surveyor of at least 15 years' experience. I note also that the Rawlinson Construction Guide was observed by the Supreme Court of Western Australia as being "regarded as the foremost publication on building costs in Australia": Berryman v Hames Sharley (WA) Pty Ltd [2008] WASC 59 at [642] per Hasluck J.
In all the circumstances, I accept Mr Sadlier's evidence that an hourly rate of $50.00 including GST for supplying labour was about 10% to 15% less than a reasonable rate for work done between May 2011 and September 2011 in Newcastle.
As part of his case in response to Mr Sadlier's report, the home owner made assertions as to the going rates in the construction industry for block laying: see quotations GD Scott Bricklayer and AV Brown Bricklaying dated 18 December 2013 and 26 November 2014, respectively. These quotes include limitations of "some cutting", "scaffold to 2.4 metres", "including mortar joints" and "price subject to change due to site conditions and scaffold requirements". This evidence is most unsatisfactory. The quotes relied upon by the home owner post-date (by at least 20 months) any discussion the home owner may have had with the builder regarding the basis of charging for the works and consequently could not have influenced decisions made between the parties in 2011 as to the pricing of the works. The home owner gave evidence during his cross examination that the property was quite steep (about 45 degrees). It was then put to the home owner later in his cross examination that because the rear retaining wall was 5 metres high and because there was a limitation (i.e. the scaffolding to 2.4 metres) in the quotation of GD Scott Bricklayer which he now relied upon, this inevitably caused an increase in price for block laying on the property. The home owner refused to accept that would be the case. He disputed that the whole property was steep. He informed the Tribunal that the 45 degree gradient only extended to the present location of the front retaining wall. The front retaining wall is about 3 metres from the street boundary of the property. When referred to the plans created by the structural engineer Mr Hunt (which showed a gradient of about 45 degrees from the road extending beyond the present location of the front retaining wall), the home owner stated that the plans of his own expert witness were wrong.
In giving his oral evidence, Mr Sadlier expressed the view that the gradient of a property is apt to cause the costing of construction work (including block laying) to increase. I am satisfied that Mr Sadlier's evidence is to be preferred to the home owner's evidence as regards the reasonable cost to the builder of the block laying work carried out on the property during 2011 at the home owner's request. The quotations relied upon by the home owner have no material relevance to the issues in dispute before the Tribunal and the assertions of the home owner (unsupported by expert opinion) about the going rates in the construction industry for block laying carry no evidentiary weight in the Tribunal's determination of the issues.
Accordingly I find the amount claimed for work done by the builder ($21,797.33) is reasonable remuneration.
It is also apparent from the quantum of the claim for materials/equipment provided as well as the quantum of the third party invoices at annexure D to Di Rico 1, that Mr Di Rico, in accordance with his oral agreement with Mr Cominos, passed on the costs of the materials to the home owner at the cost incurred by the builder; in other words, there was no mark-up applied at all.
Therefore, I find that the builder's claim is reasonable in respect of the materials and equipment set out in the third party invoices ($25,408.97).