Britton v Evans

The defective works claim

1. The Homeowners allege that the work carried out by the Builder breaches the Contract and/or the statutory warranties found in s 18B of the Act: 18B WARRANTIES AS TO RESIDENTIAL BUILDING WORK (1) The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work-- (a) a warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract, (b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new, (c) a warranty that the work will be done in accordance with, and will comply with, this or any other law, (d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time, (e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling, (f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder's or person's skill and judgment.
2. The principles which should be applied when dealing with defect claims have been summarised by Senior Member Goldstein in several cases, including in Chouhan v Morrison Homes Pty Ltd [2021] NSWCATCD 155: 21 In Deacon v National Strategic Constructions Pty Ltd; National Strategic Constructions Pty Ltd v Deacon [2017] NSWCATAP 185 an Appeal Panel approved of what I stated in MacFayden and Anor v G Tadrosse [2014] NSWCATCD 194 at [46] in connection of what evidence in my view needs to be provided in order to establish a beach of the implied warranties in s18B(1) of the Act, or in these proceedings, the express warranties in clause 39: 'Evidence that work does not comply with the Building Code of Australia would establish a basis for a finding that sub section 18B(c) of the Act has been breached. Evidence of the details in which work does not comply with the contractual plans and specifications would form the basis for a finding that sub section 18B(a) of the Act has been breached. Evidence of work not being carried out in a proper and workmanlike manner would in my view involve identification of the work in question, a statement of how the expert would expect it to be carried out in in a proper and workmanlike manner and then identification of the factors which establish that the way in which the work has been carried out falls short of it being carried out in a proper and workmanlike manner. Evidence of this nature, if accepted, would form the basis for a finding that sub section 18B(a) of the Act has been breached.' 22. In Hislop v Jakanda Pty Limited [2019] NSWCATCD (unreported) I referred to the above decisions and stated in connection with an allegation that work does not comply with plans or specifications: 'I would enlarge upon the extract above by stating 'Identification of, first the relevant contractual plans and specifications and secondly, evidence of the details in which the work, as built, does not comply with those contractual plans and specifications would form the basis for a finding that sub section 18B(1)(a) of the Act has been breached'.
3. I will apply these principles when considering each item in the Scott Schedule.

Item 1 - Refund of monies paid to the Builder $29,496.61

1. The Homeowners seek to claw back the monies paid to the Builder on the basis that he breached the Act in contracting to carry out work for which he was not properly licensed, failing to ensure that there was a written contract complying with s 7 of the Act, and failing to obtain Homeowners warranty insurance. This issue was dealt with in Alexander & Anor v Gregoriou & Ors [2010] NSWDC 15 (22 February 2010): 89 The Court was not referred to any authorities in which a court has considered the entitlement for a party to recoup or "claw-back" monies already paid to a builder under a contract which offended the statutory provisions as to contracting, licensing and insurance. In Brodyn Pty Ltd t/as Time Cost and Quality v Davenport [2004] NSWCA 394; (2004) 61 NSWLR 421, Hodgson JA (with whom Mason P and Giles JA agreed) said as to the effect of ss 10 and 94 (at [82]; at 449): "In my opinion, the civil consequences for an unlicensed contractor for its breach of s.4 are those set out in s10, and not any wider deprivation of remedies. In my opinion this is confirmed by the different provisions of s94 which explicitly precludes, in the event of breach of the insurance provisions, the obtaining of a quantum meruit unless a court considers it just and equitable. In my opinion, the remedy given by the Act is not of the nature of damages or any other remedy in respect of breach of contract nor is it enforcement of the contract: it is a statutory remedy, albeit one that in part makes reference to the terms of a contract, and thus it is not affected by s10 of the Home Building Act." 90 To a similar effect, Bryson JA (Santow JA agreeing) in Kalokerinos v HIA Insurance Services Pty Ltd [2004] NSWCA 312 at [34]- [35]: said: "34 A provision in legislation that a contract is not enforceable is not a provision that rights do not arise under it, and does not prevent establishment of and decision by reference to those rights, if they are relevant in some other context than enforcement of the contract by a person whose right to enforce the contract is forbidden. There is no provision to the effect that the contract is void; and the contract continues to exist and to have whatever effects its provision produce on the rights of other parties than the licensee referred to in s 10." 35...The actions which the builder took (acceptance of repudiation and termination of the building contract) cannot fall within the concept of enforcement in any way; s 10 does not interfere with the working out of rights under the contract at any point except at a point of enforcement...." 91 It is to be emphasised that contracts made as infringing ss 4(1), 7(1) and 92(1) are not void or illegal, only that they are unenforceable at the suit of the offending contractor; but, it is to be added, enforceable by the innocent party: see Trimtor Building Consultants Pty Ltd v Hilton [1983] 1 NSWLR 259 at 261 and Lee Gleeson Pty Ltd v Sterling Estates Pty Ltd (1991) 23 NSWLR 571 at 585-586. 92 Finally on this aspect, the following reasoning by Deane J in Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221 at 262-263, as to s 45 of the Builders Licensing Act 1971 which had similar terms to s 7 of the Home Building Act as to the unenforceability of contracts not in writing, is authoritative: "There is no apparent reason in justice why a builder who is precluded from enforcing an agreement should also be deprived of the ordinary common law right to bring proceedings on a common indebitatus count to recover fair and reasonable remuneration for work which he has actually done and which has been accepted by the building owner... Nor, upon a consideration of the words of s 45 in their context in the Act, am I able to identify any legislative intent to deprive the builder of that ordinary common law right. The section does not make an agreement to which it applies illegal or void. Nor do its words disclose any legislative intent to penalise the builder beyond making the agreement itself unenforceable by him against the other party. ... Plainly enough, the survival of the ordinary common law right of the builder to recover, in an action founded on restitution or unjust enrichment, reasonable remuneration for work done and accepted under a contract which is unenforceable by him does not frustrate the purpose of the section to provide protection for a building owner. ..." 93 In Pavey & Matthews it was held by Mason, Wilson, Deane and Dawson JJ, Brennan J dissenting, that s 45 did not prevent the bringing of an action by a builder on a quantum meruit for the value of work done and materials supplied under an oral building contract. 94 It follows, and I so find, that the legislative scheme itself of the Home Building Act does not entitle the Alexanders to recoup from either the Gregoriou company or ASB the monies already voluntarily paid by them under the oral contracts in the respective amounts of $59,400 and $295,830.12. However, the Gregoriou company and ASB are not entitled to enforce the contracts against the Alexanders to obtain the outstanding monies said to be due otherwise than under a quantum meruit.
2. I accordingly decline to order the Builder to repay the Homeowners the monies paid pursuant to the contract. However, the Builder is not entitled to enforce the contract in respect of the amount which is claimed to be outstanding. He has provided no evidence to support a quantum meruit claim, and in addition, the variations which form part of the claim are disputed. I am not satisfied that there are grounds which would support an order for the Homeowners to pay this amount.
3. I accordingly order that the Homeowners do not have to pay the sum of $5990.60 claimed by the Builder.

Item 2.6 Plumbing inspection $2013.61

1. The Homeowners' expert Mr Taylor notes that no certification for the plumbing works was provided. He has allowed the costs to excavate and certify the work, as well as the Authority's inspection fee.
2. The Builder says that the plumber has the certification. However, the Builder has not provided any details of the plumber nor a copy of the certification. He gave no explanation for having not done so.
3. In these circumstances I am satisfied that the Homeowners are entitled to the sum of $2013.61 to enable them to have the plumbing certified.

Item 2.7 Waterproofing Inspection $660.00

1. The Builder has not provided a waterproofing certificate. He says that a licensed waterproofer did the waterproofing but he has provided no details of that person, nor a copy of the certification. In these circumstances I am satisfied that the Homeowners are entitled to the sum of $660.00 to enable them to have the waterproofing certified.

Item 2.8 - floor does not slope to drain

1. Mr Taylor provides evidence that the floor slopes away from the drain. This is evidence of a breach of the statutory warranty that the work be carried out with due care and skill. He has estimated a cost of $1064.88 to rectify that defect.
2. The Builder said he hadn't inspected it and could make no comment. I allow the amount claimed.

Item 2.9 Black trim $605.83

1. The trim around the tiles is exposed. The Builder conceded that it was incomplete. The work has not been carried out with due care and skill. I allow the amount claimed.

Item 2.10 Barn door $687.30

1. The barn door has been incorrectly hung. It will need replacement. The Builder said that it had been hung correctly but this is inconsistent with evidence from the manufacturer/supplier. This work has not been carried out with due care and skill. I allow the mount claimed.

Item 2.11 Blockwork damaged $179.47

1. The Builder said this would have been rectified. I allow the amount claimed.

Item 2.12 Bathroom electrical incomplete $752.98

1. The bathroom electrical work is incomplete. The Builder refused to provide the electrician's details to enable the completion of this work. I allow the amount claimed.

Item 2.13 Ceiling not sanded $73.00

1. The Builder conceded that this work was incomplete. I allow the amount claimed.

Item 2.14 Toilet roll holder and mirror not supplied $79.15

1. These items were included in the quote but have not been supplied. I allow the amount claimed.

Item 2.15 Shower screen not supplied $1408.00

1. Supply and installation of the shower screen was included in the quote. The amount claimed is the cost of the shower screen ordered by the Builder. The Builder questioned what shower screen the Homeowners were entitled to but there was no provisional allowance provided in the quote. I allow the amount claimed.

Item 2.16 - Timber cladding not installed with due care and skill $395.75

1. Mr Taylor reports that the cladding was not aligned at the back door where it is visible. The Builder said he couldn't align it because the boards have a slightly different profile. I am satisfied that the work has not been carried out with due care and skill and I allow the amount claimed.

Item 2.17 - Electrical incomplete $621.02

1. The electrical work is incomplete. I allow the amount claimed.

Item 2.18 Toilet roll holder and mirror not supplied $79.15

1. These items were included in the quote but have not been supplied. I allow the amount claimed.

Item 2.19 Grate drain cover missing $259.77

1. The Builder said that he has the grate at his place. He gave no reason as to why he had not returned it. I allow the amount claimed for its replacement.

Item 2.20 Shower screen not supplied $1456.40

1. Supply and installation of the shower screen was included in the quote. The amount claimed is the cost of the shower screen ordered by the Builder. I allow the amount claimed.

Item 2.21 Door not supplied $180.00

1. The Builder claims that the door was not included in the quote but gives no reason as to why that was. I am satisfied that the door ought to have been included and allow the amount claimed.

Item 2.22 Black trim $276.91

1. The trim around the tiles is exposed. The Builder conceded that it was incomplete. The work has not been carried out with due care and skill. I allow the amount claimed.

Item 2.23 Window overcharged $1102.37

1. Mr Taylor reports that the Builder charged $1370.00 for installation of the bathroom window. He calculates a reasonable charge for this work at $349.45. In addition the flyscreen was removed by the Builder and has not been returned.
2. I allow the amount claimed for the flyscreen. However I am not satisfied that the window could be supplied for the amount claimed by Mr Taylor, in the absence of any reasoning or supporting documents. The variation has been paid by the Homeowners. I disallow that part of the claim.

Item 2.24 Ceiling not sanded $73.00

1. This work is incomplete. I allow the amount claimed.

Item 2.25 variation incorrectly charged $200.00

1. This claim is by way of a claim for repayment of a variation charged by the Builder and paid by the Homeowners. Mr Taylor says the Homeowners did not realise a cost was involved. That evidence is hearsay. I am not satisfied that the Homeowners have proven an entitlement to this refund and I disallow it.

Work order or money order

1. I am required to consider s 48MA of the Act. A work order is the preferred outcome in home building disputes. However, the Builder is not appropriately licensed to carry out the work. In addition, he did the work in the absence of home warranty insurance and without a written contract. He attempted to justify having done so by claiming that he advised the Homeowners to obtain an owner builders permit, a claim which the Homeowners denied. His total disregard of his obligations under the Act makes a work order inappropriate.

Expert Report fees

1. The Homeowners also claim the sum of $2970.00 for the cost of obtaining expert evidence in these proceedings. The general rule in the Tribunal is that parties pay their own costs unless Rule 38 applies or there are special circumstances. Rule 38 applies because the amount of the claim exceeded $30,000.
2. Where Rule 38 applies the Tribunal may make an order for the payment of costs. It must exercise a discretion and must exercise that discretion judicially. Costs orders are made to compensate a successful party, and not to punish an unsuccessful party.
3. I am satisfied that the Builder should reimburse the Homeowners for part of the cost of the expert fees. The claim for repayment of the monies paid pursuant to the contract was misconceived. Without that part of the claim, Rule 38 would not apply. However, I consider that in any event there are special circumstances as the complexity of the proceedings required the expert evidence supplied.
4. I will order the Builder to pay 75% of the expert report fees, $2227.50.

Conclusion

1. I accordingly order the Builder to pay the Homeowners the sum of $13,175.54 made up as follows:

• Item 2.6 Plumbing inspection $2013.61
• Item 2.7 Waterproofing Inspection $660.00 Bathroom 1
• Item 2.8 - floor does not slope to drain $1064.88
• Item 2.9 Black trim $605.83
• Item 2.10 Barn door $687.30
• Item 2.11 Blockwork damaged $179.47
• Item 2.12 Bathroom electrical incomplete $752.98
• Item 2.13 Ceiling not sanded $73.00
• Item 2.14 Toilet roll holder and mirror not supplied $79.15
• Item 2.15 Shower screen not supplied $1408.00 Bathroom 2
• Item 2.16 - Timber cladding not installed with due care and skill $395.75
• Item 2.17 - Electrical incomplete $621.02
• Item 2.18 Toilet roll holder and mirror not supplied $79.15
• Item 2.19 Grate drain cover missing $259.77
• Item 2.20 Shower screen not supplied $1456.40
• Item 2.21 Door not supplied $180.00
• Item 2.22 Black trim $276.91
• Item 2.23 Flyscreen missing $81.82
• Item 2.24 Ceiling not sanded $73.00
• Expert report fees $2227.50

Orders

1. Joanne Britton and Graham Britton are not required to pay to Aaron James Evans trading as AJE Carpentry the sum of $5990.60 claimed.
2. Aaron James Evans trading as AJE Carpentry is, on or before 1 October 2022, to pay to Joanne Britton and Graham Britton the sum of $13,175.54.

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

Amendments 27 September 2023 - Formatting amendments. 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: 27 September 2023