Bajaj v Arunachalam (Building and Property) [2025] VCAT 1138

1. The respondent must pay the applicants the sum of $14,042.63.
2. Costs are reserved.

1. By 4:00pm on 16 January 2026, any party applying for an order for costs must give the Tribunal and the respondent the following additional information:

(a) a completed Application for costs form and evidence of payment;

(b) the amount and details of the costs claimed, including any itemised bills with invoices;

(c) the basis upon which costs are to be awarded and submissions/case authorities in support of this; and

(d) a copy of any other document relied upon to support the costs application.

Response from other parties to application for costs

1. By 4:00pm on 30 January 2026, if the any party wishes to oppose or otherwise respond to the application for costs, they must give to the Tribunal and the applicant:

(a) submissions in response which explain their position in respect of the costs application, including any basis on which he may oppose the application; and

(b) a copy of any documents/cases relied on in their submissions.

1. Unless varied by further order of the Tribunal, the hearing of any application for costs will be conducted 'on the papers' on 9 February 2026. No attendance is required.
2. If a party objects to the application for costs being determined 'on the papers', they must advise the Tribunal and the parties of this by 4:00pm on 6 February 2026 and provide reasons for their objection.

(Delivered orally, subsequently transcribed and edited for grammar)

1. I begin by way of background with a summary of facts that were not substantially contested in the proceeding.
2. Dr and Mrs Bajaj purchased a residential property in Doncaster and planned to renovate it before moving in. The main work related to bathroom and kitchen refurbishment, cabinetry, flooring works (subsequently varied), and painting (subsequently confined).
3. They had a short timeframe for the works and were introduced to Mr Arunachalam, a renovator, who could meet their timetable through a mutual friend.
4. After an inspection and discussions, the applicants and respondent finalised the scope and pricing of works as reflected in a purchase order prepared by the respondent dated 17 February 2021.
5. The agreed price of the work was $54,410.
6. The respondent made the applicants aware he was not a registered builder but that he would use appropriate trades as required for the work. The applicants agreed to proceed on this basis.
7. A deposit was paid on 22 February 2021.
8. Work commenced on 6 March 2021.
9. The Bajajs moved in on or around 11-13 April 2021.
10. Soon after, they were concerned that certain works within the scope agreed had not been completed, and that other works were defective.
11. Mr Arunachalam returned to attend to some of these items, but the relationship between them broke down and the works have remained incomplete.
12. The applicants explained that they verbally terminated the contract in April 2021.
13. They have paid the respondent $50,189 to date.
14. On 27 April 2021, the respondent issued a final invoice for $5,043.00 (which included deductions for services removed from scope) which was withheld by the applicants, purportedly on account of the defective works.
15. The applicants attempted to file the proceeding on or around 7 September 2021 (albeit in the wrong List). It was subsequently transferred to the Building and Property List.
16. They originally alleged misleading and deceptive conduct by the respondent and claimed damages as a result. They sought damages equivalent to the full value of the work as agreed in the purchase order.

1. I turn to the claims for the parties as presented at the hearing.
2. I granted leave to the applicants to amend their points of claim at the commencement of the hearing to withdraw the claim of misleading and deceptive conduct, and to rely exclusively on a claim for breach of warranties under section 8 of the Domestic Building Contracts Act 1995 (Vic) ('the Act') causing loss and damage.
3. At the start of the hearing, the applicants confirmed that they relied on the expert report filed on behalf of the respondent which quantified the defective and incomplete works at $29,263.50 at 2025 pricing.
4. The respondent filed an amended counter-claim with leave of the Tribunal, alleging that the contract or agreement between the parties was not signed and was therefore unenforceable by virtue of section 31(2) of the Act.
5. It therefore relied on a quantum meruit claim for the reasonable value of the work, with a deduction for the amount already paid to the respondent.
6. More specifically, submissions on behalf of the respondent claimed that the reasonable value of the work was either:

(a) $130,750 for the market value of the works as at 2021 (excluding external and roof painting), minus the amount paid to date - based on the expert evidence of Mr Troy Freeman of Insight Building Consultants dated 22 August 2025 at Appendix B; OR

(b) the cost of the materials and labour valued at $80,000 in the amended Points of Defence and Counter-claim plus 20% margin for profit & project management and overheads 'being the industry standard', minus the amount paid to date.

1. I heard sworn or affirmed evidence at the hearing from both applicants, and also from the respondent, its expert witness Mr Freeman, and his carpenter, Mr Daniel Beamont. Each were cross-examined by the other party.
2. I have also considered the remaining witness statements and documents as filed with the parties in the proceeding, including submissions and supplementary submissions.
3. I turn next to the matters I identify as determinative in this proceeding.

1. The first issue is whether there was an enforceable contract between the parties for the domestic building works.
2. Having regard to the documents filed in the proceeding, in particular, the purchase order and correspondence and action between the parties in respect of it, I find:

(a) The works associated with the purchase order initially constituted items 1-7 of the purchase order dated 17 February 2021, plus a stated 2.5% contingency fee itemized at $1,300. It expressly excluded project management fees, which were provided free of cost with a line item of $0.

(b) The work meets the definition of domestic building work under section 5(b) of the Act since it concerns the 'renovation, alteration and improvement or repair of a home'.

(c) The applicants meet the definition of 'building owner' under the Act.

(d) The respondent is included within the definition of a 'builder' in the Act since he is a person 'who carries out or intends to carry out domestic building work'.

(e) Since the payment amount due was above $10,000, it constitutes a 'major domestic building contract' under the Act and Regulations. Section 31(1) provides necessary elements for such a contract, including the need for details of the builder's registration. It was not possible for the respondent to comply with this requirement given his lack of registration.

(f) The purchase order was most likely signed by Dr Bajaj on behalf of the applicants, as confirmed in his evidence and referred to in text communication by Mr Arunachalam.

(g) However, I find it was not signed by Mr Arunachalam as the renovator.

(h) Relevantly, Section 31(2) of the Act provides:

A major domestic building contract is of no effect unless it is signed by the builder and the building owner (or their authorised agents). [Tribunal emphasis]

1. I turn to the application of this provision on the facts before me.

1. I do not dispute the fact that a purchase order may for some purposes be regarded as a 'contract' under the Act.
2. However, I am unable to accept submissions on behalf of the applicants that the contract can be regarded as signed by 'the builder' simply because the purchase order contained the name and details of 'the builder'.
3. It is conventional for every purchase order to contain the name and details of the service provider in the header.
4. I regard this as very different to the positive and deliberate act of signing of a contract (whether by wet ink or electronically), intended to record and generate the primary source of legal rights in respect of its content.
5. The legislation makes it clear that signature is required.
6. In the absence of a definition of this term in the Act, I have applied this term's ordinary meaning, being the application of a mark that represents a person's name as a form of identification or authorisation.
7. There is no such recorded signature by the respondent on the document constituting the agreement or contract before me. There is not even a defined area for Mr Arunachalam's signature on this document; as distinct from the 'order acceptance' portion of the purchase order, to be signed and dated by Dr Bajaj.
8. This finding is consistent with the protective purpose of this section as expressed in In Drossos & Makarios v Marvel Homes Pty Ltd:[1]

...to protect both parties, and particularly building owners, from onerous contractual obligations in respect of domestic building works, unless the contract, relied upon, is signed by both the builder and the building owner (or their authorised agents).

1. I distinguish the facts of this case from those referred to in submissions for the applicants, namely:
   • Allsopp v Elly Property Pty Ltd[2] which considered the requirements for notice under an existing contract, having regard to the very specific provision in the Electronic Transactions (Victoria) Act 2000 (Vic); and
   • Kavia Holdings Pty Ltd v Suntrack Holdings Pty Ltd[3], which concerned an option to renew under a lease.
2. By contrast, the scenario before me concerns an express legislative requirement for signature when entering a contract, as distinct from some other form of notice under an already executed document.
3. The legal position as applied in cases including Crowe v Strictly Cabinets Pty Ltd[4] ('Strictly Cabinets') is clear.
4. There is no enforceable contract between the parties before me.
5. For this reason, I do not need to make findings on any claim for termination or repudiation as claimed by the parties to the extent relevant.
6. Nonetheless, there are still obligations between the parties since they had reached an agreement, works were provided and money was paid in purported reliance on it.

CLAIM FOR RESTITUTION ON THE BASIS OF QUANTUM MERUIT

1. Having found that the agreement between the parties is unenforceable under the Act, I turn to the respondent's counter-claim, which seeks an award of restitution on the basis of quantum meruit.

1. While there is no enforceable contract between the parties, the work remains 'domestic building work' and a discretion exists under section 53(2)(b)(iii) of the Act and potentially at common law to order restitution.
2. Section 53 pertains to the settlement of building disputes at VCAT. Subsection 1 provides that 'VCAT may make any order it considers fair to resolve a building dispute'.
3. Without limiting this power, sub-sections 2(b)(ii) and (iii) enable the Tribunal to order the payment of a sum of money by way of damages or restitution.
4. This may include an amount representing the reasonable market value of the works, as claimed.
5. I find that this proceeding is a building dispute for the purposes of section 54 of the Act.

1. The respondent submitted he was entitled to the fair market value of the work carried out by way of restitution in circumstances where the contract was unenforceable.
2. He eschewed the suggestion that the original contract price was determinative of the quantum meruit value, especially since it did not include a proportion for project management and profit margin.
3. He sought an order for actual costs - representing fair value but not reasonable market value per se - plus a project management fee of 20% (minus the amount paid to him to date).
4. Alternatively, he sought the market value of the work as calculated by Mr Freeman in his expert report, as at 2021 figures (minus the amount paid to date).
5. By contrast, the applicant submitted I should follow the reasoning of the majority in the High Court decision of Mann v Paterson Constructions Pty Ltd[5] ('Mann v Paterson'), to the effect that the agreed price of the works should ordinarily act as a ceiling to the amount ordered by way of restitution (albeit the submission was made by the applicants in terms of the agreed price being a definitive ceiling).
6. It submitted this was apposite on the particular facts of this case even in circumstances where the contract in question was unenforceable, and that market value is not a reasonable basis on which to assess the benefit received by the owners.
7. The starting point is that irrespective of whether I determine this aspect of the proceeding under section 53(2)(b) of the Act or under common law principles, an award of costs to the respondent is discretionary, not automatic.
8. It hinges on what is fair and equitable on all the facts before me.
9. This is a decision that focuses on what is fair for both parties, having regard to the substantial merits of the case in line with my obligation under section 97 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic).
10. From the outset, I accept the sworn evidence of Mr Arunachalam that his costs on the job for materials and labour substantially exceeded the agreed price of $54,000 or thereabouts. The actual cost to him in 2021 was in the order of $80,000.
11. However, the threshold question is whether it is fair and equitable for the respondent to be able to recoup more than the agreed contract price by way of quantum meruit on the facts before me.
12. If the answer is yes, I then need to consider which methodology to adopt as the basis for determining quantum - actual 'cost plus', or costs on the Rawlinson's schedule as at 2021.

Is it fair and equitable to award more than the agreed contract price on the facts of this case?

1. I acknowledge the binding case authority of Pavey & Matthews Pty Ltd v Paul[6] which stands for the proposition that where there is no enforceable contract, a builder can still recover fair and just compensation for its work, not under the contract, but on the basis of restitution or unjust enrichment arising from the owner's acceptance of the benefits accruing to it from the builder's performance of the unenforceable contract.
2. The concept of quantum meruit is well established in case law, although the parties in this proceeding diverged as to its aim.
3. I find that the concept of quantum meruit principally seeks to ensure there is reasonable payment for services performed for another i.e. 'what one has earned'. This may arise in the context of a claim based on an inoperative mechanism for payment and/or a claim for restitution on the basis of unjust enrichment. It is ground-truthed against whether there would be a windfall to the owner by receipt of the works.
4. In this case, I accept that the respondent provided services were requested by the owners. They took the benefit of these services in the form of renovation works to their home.
5. The question is whether they have already paid fair value for these services (albeit under an unenforceable contract), or whether some additional adjustment is required to achieve a fair outcome for the respondent as service provider.
6. While some of these works are objectively defective, this claim can be valued and set off from the amount reasonably owing to the respondent. I address which unpaid amounts can reasonably be justified shortly.
7. I have carefully considered the supplementary submissions on behalf of the parties made as to the effect of the decision of the High Court in Mann v Paterson on the determinations I am required to make.
8. I find that I am not strictly bound by the principal findings of the Court in that case, mainly because the fact scenario underpinning the decision is in a very different category to the facts before me.
9. In that case, the Court was faced with a binding contract that had been repudiated by the owner and accepted by the builder. In those circumstances, it held that the contract was not void ab initio - instead, liabilities incurred until the date of repudiation endured.
10. In determining the amount of restitution by way of quantum meruit for work undertaken after the contract was repudiated, the majority (Nettle, Gordon and Edelman JJ) held that the amount should prima facie not exceed a fair value calculated in accordance with the contract price (or appropriate part). Their reasons include:[7]

...where the claim is founded on an obligation to pay for services rendered under a contract which is unenforceable, it has been held that "[o]rdinarily" the measure for restitution "will correspond to the fair value of the benefit provided...Prices stated in a contract are regarded as relevant but they remain evidence only, on the question of amount". That approach is informed by a legal concern that direct application of the contract price would risk incoherence with the policy of the law rendering the contract unenforceable, although this will always required consideration of that policy.

1. This element of the judgement is directly relevant to the exercise of my discretion in this case.
2. In addition, I find there are numerous parallels in the reasoning of the court that are relevant to the exercise of my discretion in circumstances where there was no enforceable contract from the outset.
3. A theme that runs through many of the judgements in Mann v Paterson is the importance of giving weight to decisions by parties when negotiating agreements, as to what is reasonable market value and where risk should lie. This is expressed in terms of the need for restitutionary claims to respect contractual regimes and allocations of risk.
4. More recently, the Tribunal in Fotopoulos v Landmark Building Design Pty Ltd[8] ('Fotopoulos') determined that this principle is also relevant when a contract is unenforceable. It held:[9]

Accordingly, while the value of the work done by Landmark must be assessed on the basis of the reasonable market value, the value of that work must also be determined by the Tribunal in the context of what Landmark was prepared to accept as reasonable remuneration for the work done.

1. There are a suite of reasons on the facts of this particular proceeding why I decline to award actual costs ('costs plus' or otherwise) or market costs calculated by Mr Freeman in favour of the respondent in the exercise of my discretion.
2. The first reason stems from what is fair in all the circumstances.
3. In Mann v Paterson, their Honours Nettle, Gordon and Edelman JJ referred to a decision of Lord Neuberger of Abbotsbury PSC in respect of the law of restitution, which they adopted:[10]

...although not expressing a concluded view on the subject, [Lord Neuberger] stated as follows:

"In my view, it may well be that, in some cases of unjust enrichment, subjective devaluation could be invoked by a defendant to justify the award of a smaller sum than that which would be prima facie payable...

[I]t may often be unreasonable for a claimant to claim a market-based payment .... where there have been prior discussions and the defendant has indicated that he would not be prepared to pay as much is the market price for the benefit.

It would seem wrong ... for the claimant to be better off as a result of the law coming to his rescue, as it were, by permitting him to invoke unjust enrichment, then he would have been if he had had the benefit of a legally enforceable contractual claim for a quantified sum."

1. In line with the reasoning in Mann v Paterson, the terms of the unenforceable contract between these parties informs the amount that may be recoverable by way of restitution.
2. There is clear evidence that the parties thought the bargain they struck as to the agreed price plus variations was binding on them.
3. Further, there is clear evidence that the deal made precluded any claim for project management or profit margin costs, based on the mutual relationship between them and a common contact person.
4. Their actions were entirely consistent with this bargain until the applicants failed to pay the respondent's final invoice.
5. This was their recorded expectation and they had acted on this expectation accordingly consistently in all of their dealings until the final invoice was issued. Further, the sum of the services was calculated by the respondent with figures quoted by him as representing fair value (in a 'split cost' estimate) in document No. 1 of the bundle of documents for the respondent.
6. In these circumstances, and for reasons that follow, this is not a case where it would be unconscionable to confine the respondent to a figure equivalent to the bargain struck.
7. Like the Tribunal in Fotopolous, I find that the most reliable indicator of the reasonable value of the works in this case is what the parties had agreed to pay under the purchase order. I say more about this below.
8. The second reason stems from an important policy consideration. At its most basic, the policy question in this proceeding is whether a non-registered builder who has not followed legislated processes required of him in entering into a major domestic building contract should be able to seek the actual or reasonable market value of the work, which would vastly exceed what he would otherwise be entitled to had there been a lawful and binding contract.
9. The Tribunal in Fotopoulos observed:[11]

It is incongruous that Landmark's failure to ensure the contract complied with the DBC Act requirements that the contract be signed could result in the builder being paid more on a quantum meruit basis than had been bargained for as the contract price.

1. In a similar vein, I am not persuaded by submissions for the respondent that this outcome would be fair or reasonable, especially in the context of the purpose and objectives of the Act.
2. The legislative scheme seeks transparency and accountability between builder and owner in building projects. This is elevated to specific requirements for a major building contract. It is also fundamentally tied to the system of builder registration and appropriate insurance for each job to ensure appropriate standards within the profession and that owners are suitably protected if projects go awry.
3. If an unregistered builder (i.e. self-described renovator) could avoid its responsibilities under this legislation by departing from the statutory requirements for a relevant contract, then rely on its own breach to seek a higher form of payment after the event (i.e. what one may call 'self-interested non-compliance'), this would have clear potential to subvert the purpose of the legislation.
4. It may also have the undesirable potential effect of enabling a deliberate pattern of behaviour by unqualified or unregistered builders to this effect.
5. In this case, I consider that the risk of harm in this scenario is greater than potential incoherence with policy rendering the contract legally unenforceable.
6. The third reason relates to what is equitable on the facts of this proceeding. The respondent is not a registered builder, neither is he a skilled tradesperson or competent project manager. To the extent that he represented he could do the work to a warrantable standard at a fixed price (subject to variations), he made an objective assessment of value and carried the risk of underquoting on this project.
7. There is also no cogent evidence before me that the respondent provided any indication during the course of the project that his actual costs exceeded the agreed cost and that he sought any variation to cover this amount (as distinct from other amounts recorded in variations in writing).
8. Likewise, there is no evidence before me indicating that the applicants ever agreed to pay actual costs on a different basis of calculation.
9. The fourth reason addresses whether there has in fact been an unjustified 'windfall' or unjust enrichment to the owners that should be remedied in favour of an order for restitution to the respondent.
10. The fact the work cost Mr Arunachalam approximately $80,000 (if the evidence underpinning his claim is to be accepted) when he had quoted the job for approximately $54,000 is not in my view a reliable measure of the actual benefit received by the owners.
11. There are no persuasive facts in this proceeding that would justify interference with this allocation of risk.
12. Although the respondent may consider in retrospect it was a 'bad bargain' on his part, is not a reason to allow him to depart from it as a matter of equity.
13. I have already confirmed that the materials and labour provided by the respondent and paid for by the owners have provided a benefit to the owners. To the extent that this has enhanced their residential property, it is retained by the applicants. They have substantially paid for this to date.
14. In Roxborough v Rothmans of Pall Mall Australia Ltd,[12] Justice Gummow described the 'gap-filling and auxiliary role of restitutionary remedies'. I apply this logic to the case before me.
15. Beyond these payments made, there is no expert evidence before me to support a claim that the applicants have obtained any 'windfall', such as by a disproportionate increase in the value of their property as a result.
16. Once I make appropriate orders for outstanding payments, the applicants will have paid agreed value for the works, based on what was understood and accepted by both parties to represent reasonable market value at the time.
17. This clearly distinguishes the facts before me from the majority of cases where this List of the Tribunal has made an award by way of quantum meruit, either in the absence of consideration or fair consideration, to ensure that the builder is paid a fair price for the work they have performed, such as in Fotopolous where the owner sought to withhold substantial payment for the work on the basis there was no enforceable contract.
18. In these circumstances, there is also no persuasive reason to allow the respondent to achieve a substantially improved outcome by way of restitution than under the agreement itself.
19. I echo the findings of the Tribunal in Fotopolous that the best indicator of the real value of the work provided and the commensurate benefit received on the facts before me is the deal struck between the parties, represented by the agreed purchase order plus agreed variations.
20. To find otherwise in this case would also cause real detriment to the owners, occasioned by the respondent's failure to ensure the requirements of the Act were satisfied.

Outstanding amounts that should be paid to the respondent and offsets

1. Should any money that has been claimed by the respondent but withheld be awarded?
2. I accept that the agreement is not legally enforceable and therefore, the respondent does not have an automatic right to demand payment under the final invoice or for variations he claims have not been factored into the final price claimed.
3. Once again, I return to what was agreed by the parties as important evidence and a significant starting point in this case.
4. Turning to the substantive value of the works for which money has been withheld, I find that:
   • The claim for the remaining 20% of the negotiated price as recorded in the invoice dated 6 May 2021 represents reasonable renumeration for the provision of the services and the benefit to the owner of the remaining work carried out but not yet paid for.
   • It is necessary to deduct services paid for but not provided to the applicants (i.e. external painting and roof painting, to the value of $2,900 and $2,500 respectively).
   • It is fair to make a reasonable allowance for 5 days' rent in favour of the applicants as agreed to account for delayed completion of the works at $439.
   • Fundamentally, where there is no enforceable contract, the respondent carries the risk of attempting to invoice additional variations after a final invoice has been rendered and there is no clear evidence of acceptance by the owners.
   • The respondent has failed to satisfy me that there is sufficient documentation to evidence the applicants' request or consent to the remaining variations for which outstanding sums are claimed (to the value of $3,900).
   • Beyond this, there was reasonable doubt raised in cross-examination as to whether aspects of these charges have already been invoiced to and paid for by the applicants.
   • Even if these aspects had been demonstrated on the balance of probabilities, I am not satisfied that the owners have received a distinct benefit from these works in the nature of a windfall or unjust enrichment that could be separately quantified or should be repaid.
5. For the record, even if I had accepted the basis of the quantum meruit claim, I would have rejected the respondent's submission that reasonable or fair market value should be determined as calculated by Mr Freeman since:
   • In this case, we have the benefit of both agreed and actual costs which are most representative of reasonable value, depending on which approach is adopted as a matter of fairness. I have already indicated my conclusions on this above.
   • By contrast, the calculations by Mr Freeman represent industry-standard quantifications, expressed in terms of reasonable market value. However, the 'Rawlinson's' costs[13] which have been calculated also most likely assume provision by a qualified and registered builder. Mr Arunachalam does not have this experience or status and could not charge equivalent costs in all instances. He has also subcontracted a notable portion of these works, without the costings specifically accounting for this, which was considered a deficiency by the Tribunal in Fotopoulos; and
   • Notably, I find that a key element of the agreement as reflected in documentation between the parties is that the respondent agreed to provide the works on a cost-only basis, with marginal contingency allowance and no profit or project management fees.[14] For this reason, it would not be equitable on the facts before me to add a figure (calculated at a total of 24% for these items) as proposed by Mr Freeman.

1. The next question is whether the respondent is legally responsible for defects and incomplete works, such that it is appropriate to deduct an amount from the reasonable value of the works.
2. The rationale for why it is appropriate to consider this matter in the context of an unenforceable contract is explained by the Tribunal in a succinct way in Strictly Cabinets:[15]

Logically, in the absence of an effective contract, an owner cannot seek damages for breach of contract for defective or incomplete work. However, if the building work is defective, then this is a relevant factor in assessing the 'benefit' to the owner of that work, where the defects render the work to be less beneficial. Accordingly, in assessing a quantum meruit, it is appropriate to take into account any costs reasonably incurred (or to be incurred) by an owner in abating defective work carried out by a contractor.

1. This was not disputed by the respondent in the current proceeding. However, it sought to confine the period of payment of the defects to the value of the works as at 2021.
2. He relied on the expert report of Mr Freeman and largely accepted responsibility for most items identified as defects or incomplete works, subject to some qualifications made in Mr Arunachalam's witness statements.
3. The applicants relied on the report of Mr Freeman in full, as evidence of both the scope and cost of all defective and incomplete works.
4. I find that the respondent is liable for the defective and incomplete works as confirmed in this report.
5. The applicants gave detailed evidence, which was not denied, of representations given to them by the respondent that he would be responsible for the delivery and quality of the work, generally as per item 8 of their amended Points of Claim. This formed part of their agreement.
6. I accept the evidence of Mr Freeman as to the nature and scope of the defective works.
7. To the extent that the respondent in his oral and written evidence contested that some of these matters were defects, or alleged they were not within the agreed scope of works, I prefer the independent expert evidence of Mr Freeman.
8. He has taken an objective and professional view of the scope of the works as formally documented between the parties.
9. More specifically, on the depth of the wardrobe, I agree with Mr Freeman's interpretation of the sketch plan forming part of the agreed specifications that the depth would be 600 mm, which is an industry standard measurement. By contrast, there is no documented evidence of Mr Arunachalam's position that Mrs Bajaj agreed to a lesser depth because of the spacing between the wardrobe and the bed.
10. Likewise, while the applicants may have selected a shower head that was not suitable for over-bath because of its size, the responsibility for the overall design meeting relevant standards rested with Mr Arunachalam. It is clear that the glass panel does not meet acceptable construction standards and requires re-design and replacement.
11. I accept that no refund is payable to the applicants in respect of item 7 (installation of kitchen appliances) as assessed by Mr Freeman, since they were to pay for these appliances and the work quoted by the respondent to reinstall the existing appliances was in fact carried out. He has not allocated any amount against this item.

1. Having found that the respondent carries this liability, I turn next to the rationale for how I arrive at the value of the defects and incomplete works.
2. Mr Freeman valued the defects/incomplete works at $19,085.63 if costed on 2021 figures or $29,362.50 if costed on 2025 figures. I find that these figures represent reasonable market value for items 1-20 as at those dates, noting that some are not accepted by him as being relevant 'defects' or 'incomplete works' and have a zero costing allocated.

Should the defects/incomplete works be valued as at 2021 or 2025 (or some other time)?

1. The respondent advocated for the former, while the applicants advocated for the latter.
2. In my view, this will depend on whether the applicants suitably mitigated their loss. This is an obligation placed on any claimant in a defective or incomplete works case when seeking appropriate financial remedies.
3. In my opinion, it is not directly to the point as to whether the respondent was given the opportunity to return to complete the work by the applicants. As I mentioned at the hearing, this is because an owner is not legally obliged to provide this opportunity to a renovator or builder as a pre-cursor to a legitimate defects claim.
4. In any event, it appears that the relationship between them had broken down by late April 2021, at which stage the applicants would have needed to consider their options.
5. I accept the evidence that the applicants had attempted to undertake minor repairs themselves from time to time, but had principally sought to avoid affecting the works, in case this may shift liability onto them.
6. However, they did not seek independent advice or legal advice about their options or obligations to rectify or complete, for which I find they had no reasonable excuse, especially in circumstances where some of the works were clearly not suitably functional.
7. They should have organised an assessment and taken advice about repair options earlier. This is especially pertinent when there was obvious scope for the defects to worsen with time, such as by water damage (even if the actual use of these facilities was limited by the applicants).
8. For the record, I am not satisfied that the sworn evidence given by the applicants in response to questions in evidence-in-chief from their counsel has come close to demonstrating on the balance of probabilities that they had insufficient funds to meet rectification costs at that time, subject to a potential (whole or partial) reimbursement if successful in this proceeding.
9. Ms Bajaj referred to her full time job throughout, with Dr Bajaj at times working full time and at times part time as a doctor.
10. While I appreciate they had other financial commitments involved with the purchase and renovation of the property and living expenses (including child rearing), there was no financial evidence indicating that they could not have structured their finances in a way to carry out the rectification works (valued between $19,000 and $29,000 or thereabouts, depending on when they would have been carried out).
11. Likewise, while they may not have entirely appreciated the complete scope and extent of the defects until the defects inspection report was prepared by Mr Vermont at the instigation of DBDRV on 31 July 2023, I do not regard this as a key obstacle to them seeking advice and taking action on the basis of what was already known to them at the time.
12. Instead, I find that the primary motivation for not addressing the deficiencies in the works as disclosed from evidence by both Dr and Mrs Bajaj was to avoid unintentional consequences of 'tampering with the evidence' i.e. defects, or the potential shift of liability onto themselves.
13. I regard this as an insufficient reason to fail to mitigate, even avoiding the obvious option of seeking professional advice about their opportunities or obligations in this regard.
14. For this reason, I find that it is fair that the rectification costs should be calculated at 2021 figures as calculated by Mr Freeman.

(a) There was an agreement for building work between the applicants and the respondent that is covered by the Act, but that this was not in the form of an enforceable contract under this legislation since it was not signed by both parties.

(b) Notwithstanding, it is fair and reasonable to require the respondent to pay the applicants for the defective and incomplete works, in the sum of $19,085.63.

(c) Having regard to all relevant matters, especially fairness and contemporary policy, I ultimately decline to exercise my discretion to make an award of restitution in favour of the respondent, beyond the value of the documented and agreed work he has provided but not been compensated for.

(d) I am not persuaded that the facts`1 of this case warrant an award of actual or market value of the works by way of quantum meruit in order to avoid a windfall or unjust enrichment to the owners.

(e) Having found that the works constitute 'domestic building work' for the purpose of the Act, I find that the agreed price as reflected in the purchase order dated 27 April 2021 is the best evidence of fair value for the work delivered but not yet paid, subject to offsets on the facts of this case.

(f) It is therefore appropriate to award the respondent $5,043 by way of restitution for agreed work carried out but not yet paid for by the applicants, deducted from the amount awarded for defects and incomplete work.

(g) Taking all this into account, the final sum payable by the respondent to the applicants is $14,042.63.

1. I have reserved costs in the proceeding as requested, with a timetable for parties to indicate whether they wish to make a claim for costs. Associated procedural orders will follow.

1. Claims in the Building and Property List can be complex and multi-layered, with outcomes difficult to predict until the case is heard in full and deliberated upon.
2. For this reason, parties are strongly encouraged to explore settlement options, even after evidence has been filed in a proceeding or at the commencement of the hearing if offered and feasible.

[1] [2014] VSC 384, at [32].

[2] [2024] VSC 669.

[3] [2011] NSWSC 716.

[4] (Building and Property) [2023] VCAT 1141.

[5] [2019] HCA 32.

[6] [1987] HCA 5; (1987) 162 CLR 221.

[8] (Building and Property) [2020] VCAT 1130.

[12] [2001] HCA 68; (2001) 208 CLR 516 at 545.

[13] On the basis of the industry-accepted Rawlinsons Construction Cost Guides for the applicable year.

[14] This was confirmed in the respondent's amended Points of Defence and Counterclaim at paragraph 6.

[15] As above, at 85, referencing Julian Bailey, Construction Law (3rd edition, LPP), [6.221].