Buckley v Ashby; Ashby v Buckley

Buckley v Ashby; Ashby v Buckley - [2018] NSWCATCD 82 - NSWCATCD 2018 case summary — Zoe

[7]

The scope of work

There is a dispute between the parties about the precise scope of the work that the builder was obliged to carry out pursuant to the contract. This is unfortunate, especially since the owner stated in evidence that she attempted to be specific and careful in detailing the scope of work. Her evidence is also to the effect that she paid no attention to checking that the contract she signed contained an accurate or complete description of the work that she thought would be carried out.
The way in which the parties referred to the documents which identified the contractual scope of works may be described as careless or thoughtless given the lack of detail to which I will refer. It may be that the parties were incapable of reducing the scope of work to writing in a clear way. As I have stated at the commencement of these Reasons, the contractual description of the work that the builder was obliged to construct and complete was hopelessly inadequate.
As stated at [6] the contract at clause 1 described the contract documents as: 1. Specifications of 11 pages prepared by Kitome and a BASIX prepared by Kitome, both dated 18 March 2016; and 2. plans of 3 pages dated 8/4/19 prepared by Mr Pierre Dragh, an engineer.
Identification of the 11 page Specification prepared by Kitome, is not a straightforward exercise. As a preliminary observation the mere fact that documents might be placed in a folder in a certain order in exhibit A, namely after the building contract, does not necessarily mean that the documents are those referred to in the contract.
Without reference to extrinsic evidence I am unable to make a finding about what precisely was the 11 page Specification prepared by Kitome, as referred to in clause 1 of the contract. It may be the case that there never was an 11 page Specification prepared by Kitome.
The other contract documents, namely the BASIX and Mr Dragh's plans which are comprised of General Notes, a Footing and Joists layout, and a Footing and Slab Plan are capable of easy identification and appear at various places in exhibit A.
Of equal importance in determining the scope of works is clause 1 of the contract which also stated that the following items and materials were excluded from the contract: 1. Frames; 2. Trusses; 3. Roof; 4. Windows; 5. Appliances; 6. Kitchen; 7. Floor coverings; 8. Blinds; 9. Bathroom fixtures; and 10. Light fittings
In Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (2015) 256 CLR 104 at [46] - [52] French CJ, Nettle and Gordon JJ stated: [46] The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose. [47] In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract. [48] Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning. [49] However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals. [50] Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties' statements and actions reflecting their actual intentions and expectations. [51] Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption "that the parties ... intended to produce a commercial result". Put another way, a commercial contract should be construed so as to avoid it "making commercial nonsense or working commercial inconvenience". [52] These observations are not intended to state any departure from the law as set out in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales and Electricity Generation Corporation v Woodside Energy Ltd. We agree with the observations of Kiefel and Keane JJ with respect to Western Export Services Inc v Jireh International Pty Ltd. (citations omitted) (Emphasis added)
The owner's submission state that reference to extrinsic material is necessary because the parties allege in their pleadings that there were oral terms of the contract.

[9]

Recourse to extrinsic evidence

The owner's submissions are that it is necessary to have recourse to extrinsic evidence. In my view it is necessary to have recourse to extrinsic evidence in order that I may make findings about what the builder was required to build. This is necessary because of the fact that that the parties did not when they completed clause 1 of the contract state with any precision the scope of work that the builder was to perform.
As stated at [49] of Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited: 'However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating".'
In these proceedings I find that it is necessary to identify an important object of the contract, namely precisely what the builder was required to build because of the parties' failure to make that clear in the contract itself. I find that that task will be facilitated by an understanding of the genesis of the transaction and the background and context of the contract.
There is another basis for having recourse to extrinsic evidence which arises out of my observation at [7]. White v Australian and New Zealand Theatres Ltd [1943] HCA 6; (1943) 67 CLR 266 involved a written contract between two theatrical artists and a company which owned and controlled theatres in Australia. The contract provided that the company engaged the "sole professional services" of the artists "as required and directed" for a stated period on certain terms and conditions as to remuneration. The contract did not specify the nature of those professional services. The court held that extrinsic evidence was admissible to identify the services.
In County Securities Pty Limited v Challenger Group Holdings Pty Limited & Anor [2008] NSWCA 193 Spigelman CJ stated at [7]: 'A need to identify the particular subject matter of the contract has often arisen, even in the case of a written agreement where there is a form of words to be interpreted. In the present case, the subject matter and the concomitant terms of the contract must be inferred from a combination of surrounding circumstances including conversations, documents and conduct none of which provide a definitive form of words. The issue is not one of interpretation, because there are no words to interpret. The issue is one of fact: what did the parties agree?'
In support of this statement Spigelman CJ referred to the following authorities at [9] and [10]: '9. As Griffith CJ said in Deane v The City Bank of Sydney (1904) 2 CLR 198 at 209: " ... [W]hen a contract is partly in writing and partly verbal, all the circumstances may be looked at and considered for the purpose of construing the contract, and even to vary the written documents ..." 10 Furthermore, as Barwick CJ put it in Handbury v Nolan (1977) 13 ALR 339 at 341: "The matter ... is not to be resolved ... by construction of written documents, but as a matter of fact, i.e. what in substance was the subject matter of the sale and purchase."'
Also at [15] and 16] of Spigelman CJ's judgement (references omitted): 'There are numerous examples in which extrinsic evidence has been used to identify the subject matter of a written contract. A classic example of the application of this principle is the written reference to "your wool" in the contract considered in MacDonald v Longbottom [1859] EngR 635; (1859) 1 E & E 977; 120 ER 1177. The issue in that case was whether or not pre-contractual discussions were admissible to identify what was meant by the phrase "your wool". Lord Campbell CJ said at E& E 984; ER 1179: "There cannot be the slightest objection to the admission of evidence of this previous conversation, which neither alters nor adds to the written contract, but merely enables us to ascertain what was the subject matter referred to therein."
I find that there is sufficient authority, as referred to above, to justify me having recourse to extrinsic evidence to ascertain the object of the of the contract and in addition its subject matter, namely what was the scope of the work the builder was to carry out having regard to the contract documents referred to and the work that had expressly been excluded from the builder's scope of work.

[10]

The Background

The owner states that she received a quote from Kitome in an undated quote which is at pages 51 -53 of exhibit B for stage one, two and three inclusions and a floor kit. I am not persuaded that this evidence is correct insofar as the documents to which she refers are said to be part of a quote. However it may not be relevant whether the documents were part of a quote or were from some other source.
The owner's evidence regarding her contract with Kitome is not clear. It does not refer to the contract itself, but I have been referred to a Kitome Purchase Agreement Amendment Advice whereby she removed stages 2 and 3 from her contract with Kitome.
I find that the 3 stages as referred to in [34] are of significance as they indicate the original scope of work that the owner was contemplating having constructed and they show the price that Kitome would charge for supplying the inclusions referred to.
The owner has explained that Kitome's modus operandi was to supply an owner with the necessary components or supply items and the owner would then engage a builder to construct the residence using the items supplied by Kitome. I accept her evidence which is not controversial.
I find that the builder's evidence provides the best factual background of the documents that Kitome prepared in connection with the owner's proposed residence. The documents put into evidence by the builder establish that in April 2016 Kitome sent to the builder a large number of documents to tender on which are referred to at [10] of Mrs Ashby's affidavit. I find that these documents were prepared by Kitome in connection with the owner's proposed residence.
Importantly the builder's evidence contains the agreement between the owner and Kitome dated 15 September 2015 for a contract price of $180,166.00 which was made up of the amounts quoted by Kitome in the undated quote referred to at pages 51 -53 of exhibit B for the stage one, two and three inclusions and a floor kit. I find that the agreement between the owner and Kitome included at pages 9, 10 and 11 the stage one, two and three inclusions and a floor kit inclusion. I would add that these pages are the same as identified by the owner as being contained in Kitome's quote.
The factual background to the contract between the parties discloses as found that the owner had contracted with Kitome for the construction of a residence in a delivery method which involved Kitome delivering components that she would have a builder construct to form the final product which would be a residential dwelling. The facts also establish that the Kitome components were deliverable in three stages which were documented in the form of written schedules titled stages 1, 2 and 3 inclusions which contained descriptions of what would be provided. Kitome also provided drawings which depicted how the residence would be configured including its measurements and which allowed a consumer such as the owner to know from the drawings the dimensions and appearance of the finished residence.
There is no suggestion by either party that there was any other design or specification relevant to the residence the builder was obliged to construct other than the documents provided by Kitome.
I find that the owner came into contact with the builder in April/May 2016 as a potential builder who would use the Kitome components to construct a residence for her. Following that meeting the parties met on a number of occasions.
As a result of her meetings with the builder and her discussions with him, I find that the owner decided to remove the work contained in stages 2 and 3 of her contract with Kitome. I also find that the owner formalised this with Kitome in a Purchase Agreement Amendment Advice dated 18 May 2016.
I further find that the dispute between the parties in these proceedings revolves around the extent to which they agreed that the builder would carry out stages 2 and 3 as defined and documented by Kitome.
Stages 2 and 3 were described in two different ways. First, the owner states that the Kitome quote as referred to at pages 52 - 53 of exhibit B was made up of the 'Stage One Inclusions - Stage Two Inclusions and Stage Three Inclusions'. The Kitome contract with the owner also contained the Stage One Inclusions - Stage Two Inclusions and Stage Three Inclusions.
The Kitome document titled 'Builders Brief' given by Kitome to the builder also described stages 2 and 3. The stage 2 Kitome kit construction work was described as:

Supply of all materials and labour to rough in associated internal plumbing and electrical services. Works undertaken by a suitable licensed contractor.
Installation of Kitome supplied steel ceiling batons.
Installation of Kitome supplied R2.0 wall bats to outer wall areas.
Installation of 86.55 lineal metres of Kitome supplied sound insolation to all internal wall areas prior to the application of plaster sheeting to walls.
Installation of Kitome supplied plasterboard sheeting, stud adhesives and fixings to wall and ceiling areas.
Installation of Kitome supplied Villaboard or Aquacheck boards to walls of designated wet areas.
Setting joints with Kitome supplied base and top coat materials.
Installation of Kitome supplied R3.5 ceiling batts.
Installation of Kitome supplied CSR '90mm Cove' profile cornices throughout the building.
Installation of Kitome supplied 67mm timber architraves.
Installation of Kitome supplied 67mm timber skirtings.
Installation of Kitome supplied internal timber door jambs, timber doors and associated hardware.
Installation of Kitome supplied sliding Smartrobe doors to bed 2, 3, 4 and study build in robes.
Installation of Kitome supplied shelving to bed 2, 3, 4 and study robes, PTY, linen and bed1 WIR.
Installation of Kitome supplied manhole kit.

The stage 3 Kitome kit construction work was described as:

Installation of Kitome supplied kitchen pack (bench tops, under bench cabinetry shelving island bench).
Installation of Kitome supplied kitchen sink.
Installation of Kitome supplied kitchen tap ware.
Installation of Kitome supplied electric oven.
Installation of Kitome supplied electric cooktop.
Installation of Kitome supplied electric range hood.
Installation of 1800mm wide custom vanity unit to main bathroom.
Installation of 900mm wide vanity to Ensuite.
Installation of Kitome supplied tap ware to main bathroom, E - S and laundry.
Installation of Kitome supplied toilet units to 2 x WC and 1 x Ensuite.
Installation of Kitome supplied cabinetry and stainless steel tub in laundry.
Supply and installation of standard chrome floor grate to main bathroom, E - S and laundry.
Supply and installation of mirrors over main bathroom and ensuite vanity unit.
Supply and installation of a semi frames glass shower screen to E - S.
Installation of Kitome supplied corner bath tub in bathroom.
Supply of all materials and labour to waterproof wet area floors, wall junction and shower walls.
Supply of all materials and labour to screed floors to accommodate tiled areas in bathroom, E - S and laundry areas.
Supply and installation of three coats of paint to all internal walls, ceiling doors and woodwork areas. Colour is to be selected by owner.
Supply and installation of three coats of paint to eaves, veranda posts, beams and rafters. Colours to be selected by owner.
Installation of client supplied floor tiles to kitchen, PTY, dining, living, laundry, bathroom, E - S hallways and linen.
Supply and installation of carpet and underlay to lounge. Bed 1, 2, 3, 4 & study by owner.
Proposal excludes the supply of window and glass door coverings.

External works and services were described as:

Supply & installation of a 315 Litre off peak hot water system.
Trenching works for stormwater, water supply, sewer and electricity service connections. Trench to be covered once services have been connected, inspected and improved.
Supply of materials and labour to connect dwelling to town water supply.
Supply of materials and labour to connect dwelling to mains power.
Supply of materials and labour to connect dwelling to town sewer system
Owner to supply own BASIX and BAL compliant rainwater tank and pump system.
Installation and connection of owner supplied tank and pump to 2 outdoor taps.
Supply of materials and labour to connect stormwater overflow from tank to a sub-service disbursement pit as specified by a suitable consultant/engineer.
Owners have requested that building heating and cooling system remains excluded from proposal.
Supply and installation of a 2 x brass outdoor taps.
Exclude any form of external landscaping.
Exclude driveways and paths.

I also find that the builder provided the owner with a number of quotes. These quotes are all dated 8 May 2016 are referred to in Mrs Ashby's affidavit and are contained in Exhibit JA1 to her affidavit. I find that these quotes are basic and provide little assistance in establishing the scope of works. However the quotes establish that the builder would carry out generally described activities for $176,000.00, supply stage 2 work for $21,000.00, external works for $7,200.00 supply work in an electrical schedule would for $5,400.00 and that a garage slab would be provided for $15,700.00. The total amount of the quotes provided by the builder was $225,300.00. I further find that the quotes were superceded by the signed building contract.
The evidence satisfies me that the parties met on 3 occasions following the meeting referred to at [42].

[12]

Third meeting

The owner states that at this meeting which she says occurred between 19 May and 1 June 2016 she and the builder worked out in detail the scope of the contractual works. By this time she would have received all of the builder's quotes.
The owner states that at this meeting she and her mother wrote on and marked up a document which she describes as the Kitome quote. The owner identifies this document as being part of the exhibit to the builder's affidavit. The documents to which she refers are the stage 2 and 3 inclusions prepared by Kitome, and which I have found were contained within the owner's contract with Kitome. The owner's evidence is that crossings out on the pages to which I have referred meant that the items had been discussed. The owner states that the fact that items had been crossed out did not mean that the item had been excluded from the scope of works. I find that all items in stage 2 had been crossed out with the exception of staircase and man hole kit. I also find that all items in stage 3 had been crossed out.
The builder has given evidence about the owner's marking of the Kitome document which sets out its proposal for the stage 1, 2 and 3 inclusions-. He states that at some time after 20 April 2016, but without stating precisely or approximately when, the owner told him that she was going to take stages 2 and 3 out of the work that she wanted him to do. He further states that the marking of the stage 2 and 3 inclusions prepared by Kitome by the owner indicated that the marked items in stages 2 and 3 had been deleted by her. On that basis the builder states that stages 2 and 3 were not included in the contractual scope of works.
The owner's evidence is that at the third meeting there were discussions between herself and the builder about stage 2 and that during those discussions she told the builder a number of her requirements such as: 1. Her brother would do the wardrobe fit out; 2. she wanted the architraves, skirtings and internal doors to be made of wood; and 3. she wanted sound insulation in all of the walls.
In connection with stage 3, the owner's evidence is that the installation of the kitchen and kitchen appliances 'were not part of the respondent's quote'. I take this evidence to be a concession on her part that supply of kitchen appliances and installation of the kitchen did not form part of the contractual scope of works. This evidence is confirmed by clause 1 of the contract which contains an 'Excluded items schedule' which describes 'Appliances' and 'Kitchen' as excluded items.
The owner then asserts that the remainder of stage 3 was part of the builder's quote. Clearly the builder's quotes did not refer to stage 3 or any of the items referred to therein. I understand the owner to be asserting that the bathrooms and laundry were part of the contractual scope of works. At this point I point out that the owner's evidence is contradicted by the contract which states that bathroom fixtures are excluded from the contract.
The builder's evidence regarding the pre contractual discussions are brief. It is notable that the builder's account of this period is of a general nature and does not describe the events which occurred with as much detail as the owner's evidence. The builder's wife Mrs Ashby swore an affidavit which dealt with the pre contractual discussions. Mrs Ashby states that she takes care of the administrative side of her husband's building business and that she prepared the builder's quotes based on what her husband gave her to write.
Mrs Ashby who was present at the pre contractual meetings states that the owner said that: 1. She would purchase fixtures and fittings for the kitchen and bathrooms; 2. Her brother would do the shelving for the pantry, wardrobes and linen cupboard and the hand railing and shed; and 3. The kitchen and pantry would be done by others.
Mrs Ashby also stated that the owner scribbled on the Kitome quote deleting the items that she did not want the builder to do
Mrs Ashby stated in cross examination that she prepared the contract.
At paragraph 18 of her statement Mrs Ashby gives evidence of what the contract specifically included. I find that such evidence is not particularly helpful and what Mrs Ashby thought was in the contract or was intended to be in the contract ought to be inadmissible. As stated in Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited 'What is inadmissible is evidence of the parties' statements and actions reflecting their actual intentions and expectations'.
Mrs Ashby refers to the BASIX document, which she states was dated 18 March 2016, although it is dated 15 April 2016. She also refers to the KITOME specifications which are referred to in the contract. The documents to which Mrs Ashby refers are plans for building approval. I find that these documents are not specifications, as that word is traditionally used. Mrs Ashby also refers to the engineering plans prepared by Mr Dragh.
Mrs Ashby also refers to shed plans as being specifically included in the contract. I find that the contract does not refer to the shed plans which Mrs Ashby states were included in the contract.
At paragraph 19 of her affidavit Mrs Ashby gives evidence that the contract included and excluded other documents to which she refers, although clause 1 of the contract does not refer to those documents. I will not give her evidence substantial, if any weight as it is conclusionary in nature and is not supported by clause 1. As for what the contract excluded, I will have regard to clause 1 of the contract which contains an 'Excluded items schedule'.
I find that in having regard to the extrinsic evidence regarding the scope of work that the builder was required to do in consideration of being paid the contract price, that I will have regard to what was said and discussed by the parties, and the documents that were supplied by Kitome. However I do not consider it to be appropriate or helpful to give much weight to what a witness might say they thought or understood to constitute the contract scope of works.
I find that the owner's evidence and Mrs Ashby's confirms what is written in the contract, namely that the owner excluded the supply of kitchen appliances and installation of the kitchen from the contractual scope of works. Mrs Ashby states that the owner included the pantry in this exclusion of works. This is a matter which is in dispute. The owner's evidence does not specifically state that the pantry was discussed. The Kitome ground floor plan WD2 A indicates that the pantry forms part of the kitchen. Because of this fact I find as a matter of contractual construction that references to the kitchen include the pantry and that the reference to the Kitchen in the Excluded items schedule in clause 1 of the contract also includes the pantry.
I find that as a result of her conversations with the builder, the contract between the parties allowed for the builder installing the KITOME stage 1 supplies, excluding bricks.
I further find that although the contract did not specifically say so, that the builder contracted to build a residence as depicted in the plans sent to the builder on 20 April 2016. I make this finding as a matter of commercial common sense since it was obvious that the builder was to construct a residence for the owners and the only plans that were available were those provided by Kitome. The description of the building works in clause 1 and the owner's case at its highest including the stage 2 and 3 inclusions give no indication of how the building was to be configured. I find that adherence to the Kitome plans was obviously intended by the parties.
I also find on the evidence of the owner, the builder and Mrs Ashby that at a meeting held between the parties, they discussed the Kitome stage 2 and 3 inclusions documents. I accept the owner's evidence and find that the meeting took place at a time between 19 May and 1 June 2016 when such a discussion took place. I also find that before this meeting on 8 May 2016 that the builder had given the owner a number of quotes, one of which included the supply of stage 2, external works and an electrical schedule. In addition I find that at the meetings between the parties they referred to the Kitome stage 2 and 3 inclusions documents, not the detailed Kitome descriptions of stages 2 and 3 as referred to at [46] and [47] of these reasons. I make this finding because the parties do not refer to these Kitome descriptions of stages 2 and 3 in their evidence and further because there is no evidence that I can find that the owner actually received the 'Builder's Brief' prepared by Kitome.
I prefer the evidence of the owner to the evidence of the builder and his wife as regards the pre contractual discussions they had regarding the builder's scope of works. I find that the owner's evidence is more detailed and overall she has a greater recollection of the events in the sequence that they occurred. I find that the builder's evidence to be general in this area and that reflects a casual attitude on his part as regards a detailed and precise approach to a proper description of the work that he would perform in consideration of being paid the contract price. In addition the evidence indicates the builder would respond in a general way when asked questions by the owner and her mother about details of the work to be performed. This leads me to find that the builder had a casual attitude as stated and perhaps an attitude that things would just work themselves out. I have no confidence that Mr Ashby's account of the facts leading to the signing of the contract is anything more than superficial or that Mr Ashby made an effort to document or record precisely what work he would be carrying out pursuant to the contract.
As regards Mrs Ashby, her evidence was that she was responsible for the administrative side of her husband's building business. She also agreed that she prepared the contract. In preparing the contract I find that Mrs Ashby failed to complete clause 1 of the contract properly by referring to documents that would describe the work that the builder would carry out. In addition I find that Mrs Ashby's evidence, as contained in her statement, demonstrates that she failed to complete clause 1, by inadvertence or because she did not appreciate what the task required and therefore failed to address what was required in an adequate way. For example in the box in clause 1 which states 'Specifications: prepared by', Mrs Ashby has entered 'Kitome', 11 pages dated 18/3/2016. In her statement she refers to the Kitome specifications as being at pages 143 -154 of exhibit JA. The documents at those pages are a set of plans of 12 pages most of which are dated 18/3/2016. I find that her reference to plans as specifications to be an error. I find that there is a possibility that there is no Kitome specification to match the one which Mrs Ashby has referred to in clause 1.
Mrs Ashby's statement also asserts that the contract included: 1. Shed plans; 2. builders brief of 4 pages; and 3. the specification from Kitome bearing the owner' handwriting, despite the fact that she as the person who prepared the contract did not refer to these documents in clause 1 of the contract (which she easily could have) which was the proper place for documents of this nature to be referred to.
I do not accept Mrs Ashby's evidence in paragraphs 18(c), (e) or 19 of her statement because it is conclusionary in nature, in the case of 18(c) obviously wrong and does not provide proper evidence of what was discussed between the parties to enable me to form a conclusion about what work the parties agreed the builder would carry out.
Given my findings above, I find in connection that the work the builder was to carry out under the contract was to construct the residence in accordance with the plans sent to him by Kitomes. In that regard I find that the builder was to do all of the work referred to in the Kitomes stage 1 with the materials supplied by Kitome. I find that the parties agreed that the builder would supply all of the items in stage 2 except for shelving, that architraves and shelving would be in wood and that there would be insulation in walls. As regards stage 3, I find that the owner agreed that she would be responsible for the installation of the kitchen and kitchen appliances. I am not persuaded that the parties agreed that the builder would supply all of the other items referred to in the stage 3 inclusions, which I find did not refer to or allow for painting. The builder never quoted for stage 3 and the owner's evidence does not persuade me that there was a specific agreement that the stage 3 inclusions would be provided. As stated the owner agreed that she would be responsible for the installation of the kitchen and kitchen appliances and the contract specifically excluded bathroom fixtures. These items made up the bulk of the stage 3 inclusions.
I further find based on the builder's quotations that he agreed to provide the Kitome stage 2 inclusions, except as specifically excluded, the external work, the electrical work detailed in the Kitome electrical schedule and a garage slab.
I reject the builder's evidence that the contract did not allow for the Kitome Stage 2 or 3 inclusions. I have found that the builder's quotes totalled $225,300.00 and that the contract he signed had a contract price of $223,000.00 or $223,800.00. I do not accept that a minor reduction in the contract price reflected or was intended to justify the deletion of the stage 2 inclusions.
I find that the owner picked the contract up at the builder's residence and later signed it. She states that she did not go through the contract in detail as she assumed that the matters discussed between the parties were addressed in the contract. Unfortunately for her, that evidence seems to be correct and is accepted.
There is more than one version of the contract. I find that the difference between the contracts is the contract price and the dates when the owner signed the contract.
The contract in the owner's bundle of documents has a contract price of $223,800.00. The contract in the builder's bundle of documents has a contract price of $223,000.00.
The evidence being the emails from the owner's mother satisfies me that ultimately she requested the builder to amend the contract because the owner's bank required that to be done because of inconsistencies in the contract that had been provided to them.

[15]

Termination by the owner

In Shepherd v Felt & Textiles of Australia Ltd [1931] HCA 21; (1931) 45 CLR 359 in a well-known passage Dixon J. stated: 'But the rule is of general application in the discharge of contract by breach, and enables a party to any simple contract who fails or refuses further to observe its stipulations to rely upon a breach of conditions, committed before he so failed or so refused, by the opposite party to the contract as operating to absolve him from the contract as from the time of such breach of condition whether he was aware of it or not when he himself failed or refused to perform the stipulations of the contract. "It is a long established rule of law that a contracting party, who, after he has become entitled to refuse performance of his contractual obligations, gives a wrong reason for his refusal, does not thereby deprive himself of a justification which in fact existed, whether he was aware of it or not" (per Greer J., Taylor v. Oakes Roncoroni & Co.[22]; see, too, per Lord Sumner in British and Beningtons Ltd. v. North Western Cachar Tea Co.[23] and per Starke J. in Henry Dean & Sons (Sydney) Ltd. v. P. O'Day Pty. Ltd.[24]).'
The owner has not placed reliance on the principles referred to in the case referred to above, or cited that authority.
The right to terminate a contract at common law will not be excluded by a clause such as clause 25 of the contract, unless that is specifically stated in the contract. Authority to support that proposition is to be found at [60] in Dimitropoulos v Capital Constructions Pty Ltd; Capital Constructions Pty Ltd v Dimitropoulos [2018] NSWCATAP 100 where an Appeal Panel stated: 'It should also be remembered that cl 33 is a right to end the contract separate to rights at common law to terminate the contract. In this regard, the rights under the general law to terminate should not be regarded as excluded unless the contract manifests an explicit intention to do so: see e.g. Amann Aviation Pty Ltd v Commonwealth (1991) 100 ALR 267 at 300, Concutt v Worrell [2000] HCA 64; (2000) 75 ALJR 312 at [23], Progressive Mailing House Pty Ltd v Tabali Pty Ltd 157 CLR 17 at 30.'
Clause 25 of the contract does not state an explicit intention to exclude common law rights to terminate the contract.
In considering what a breach of an essential term of the contract might be, I have had regard to the decision of the High Court in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited [2007] HCA 61 at [47] -[48] where Mason CJ and Gummow, Heydon and Crennan JJ stated: 'For present purposes, there are two relevant circumstances in which a breach of contract by one party may entitle the other to terminate. The first is where the obligation with which there has been failure to comply has been agreed by the contracting parties to be essential. Such an obligation is sometimes described as a condition. In Australian law, a well-known exposition was that of Jordan CJ in Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd who, in comparing conditions and warranties, employed language reflected in many statutory provisions. The widespread statutory adoption of the distinction between conditions and warranties, or essential and inessential terms, is an established part of the background against which the common law has developed. The Chief Justice of New South Wales said (references omitted): "... The question whether a term in a contract is a condition or a warranty, i.e., an essential or a non-essential promise, depends upon the intention of the parties as appearing in or from the contract. The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or a substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promisor. If the innocent party would not have entered into the contract unless assured of a strict and literal performance of the promise, he may in general treat himself as discharged upon any breach of the promise, however slight. If he contracted in reliance upon a substantial performance of the promise, any substantial breach will ordinarily justify a discharge. In some cases it is expressly provided that a particular promise is essential to the contract, e.g., by a stipulation that it is the basis or of the essence of the contract; but in the absence of express provision the question is one of construction for the Court, when once the terms of contract have been ascertained. In general, Courts of common law have been more ready than Courts of Equity to regard promises as essential. This is in part due to the fact that Courts of common law are in the main concerned with ordinary commercial contracts in which it is common to find provisions which are intended to be strictly and literally performed. ..." 'What Jordan CJ said as to substantial performance, and substantial breach, is now to be read in the light of later developments in the law. What is of immediate significance is his reference to the question he was addressing as one of construction of the contract. It is the common intention of the parties, expressed in the language of their contract, understood in the context of the relationship established by that contract and (in a case such as the present) the commercial purpose it served, that determines whether a term is "essential", so that any breach will justify termination.'

[17]

Implied term

The owner also submits that there was an implied term of the contract that the builder would perform reasonable attempts for the completion of all work necessary for the issue of an occupation certificate, stating that the issue of such a certificate required completion of all necessary mandatory critical stage inspections. The focus of the implied term is the completion of all mandatory critical stage inspections.
In BP Refinery (Western port) Ltd v Shire of Hastings (1997) 180 CLR 266 the Privy Council identified the following criteria which must be met before a term could be implied into a contract. The term contended for must: 'be reasonable and equitable; be necessary to give business efficacy to the transaction; be so obvious it goes without saying; be capable of clear expression; not contradict an express term of the contract'
The owner's submissions do not address the authorities relevant to the implication of a term into a contract, or develop the submission as to why, in the circumstances of these proceedings, such an implication should be made. In particular the owner's submissions do not address why the above criteria have been met in connection with the term sought.
The builder's submissions refer to BP Refinery (Western port) Ltd v Shire of Hastings and state that the implication of the term contended for by the owner would be inconsistent with clause 23 which relates to defects rectification, clause 27 which relates to disputes and clause 25 which relates to termination of the contract by the owner.
I find that the above clauses and the subjects to which they relate do not contradict the term which the owner seeks to imply. Such a term if found would impose an obligation on the builder during the construction of the works to carry out and complete all mandatory critical stage inspections necessary to obtain an occupation certificate. I do not consider that obligation to be in any way inconsistent with clauses 23, 25 or 27 of the contract which do not deal with what the builder must do, or the work that he must perform pursuant to the contract, before practical completion.
I further find that the relevant provisions of the contract have not been identified by the parties. In my view clauses 17 and 18 are relevant to the term sought to be implied by the owner. Clause 17 deals with 'Approvals' and Clause 18 deals with 'Compliance with requirements of local statutory authorities'
Relevantly clause 17 states: 'The contractor must also apply for and obtain, at its expense, all approvals required from any public authority to occupy and use the completed work. The cost of doing so and all fees are included in the contract price'
Clause 18 states, among other things: 'In carrying out the work the contractor must comply with the codes standards specifications and conditions of consent as set out in Clause 3.'
Clause 3 states: 'The contractor will comply with all relevant Australian Standards, laws and the requirements of the relevant local council and all statutory authorities with respect to the work.'
Having regard to clauses 3, 17 and 18 and in particular to the obligation imposed on the builder to obtain, at his expense, all approvals required from any public authority to occupy and use the completed work, I find that it is not necessary to imply a term into the contract that the builder must perform reasonable attempts for the completion of all work necessary for the issue of an occupation certificate, namely the completion of all mandatory critical stage inspections.
The reasons for my finding is that there is an express term of the contract, clause 17, which requires the builder to obtain at his own expense, all approvals required from any public authority to occupy and use the completed work. I find that it is neither necessary to give business efficacy to the contract nor so obvious that it goes without saying to imply the term for which the owner contends. A further reason is that given the builder's obligation to obtain an approval to occupy and use the residence, in other words an occupation certificate, he is necessarily required to do all things to achieve that outcome. That obligation is contained in clause 3 of the contract which requires the builder to comply with the requirements of the relevant local council and all statutory authorities with respect to the work. This would I find extend to compliance with the requirements relating to mandatory critical stage inspections. These are further reasons why the term contended for is neither necessary to give business efficacy to the contract nor so obvious that it goes without saying. I find that it is not necessary to imply the term because the contract addresses the issue without the need for such a term.
Having regard to my refusal to imply the term contended for at [101] of the owner's final submissions together with my finding that the contract addresses the issue of compliance with the requirements relating to mandatory critical stage inspections in other ways, I will consider whether a failure by the builder to comply with mandatory critical stage inspections in compliance with clause 3, would breach an essential term of the contract.

[18]

Was the term an essential term of the contract?

The requirements for finding that a term of a contract is or was an essential term are referred to above at [96]. In deciding whether an obligation by the builder to comply with mandatory critical stage inspections was an essential term, it is necessary that the term can be described as one which satisfies the test of essentiality which: 'depends upon the intention of the parties as appearing in or from the contract. The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or a substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promisor'
Having regard to the terms of the contract considered as a whole and in particular having regard to the obligation of the builder under clause 3 to comply the requirements of the relevant local council and all statutory authorities with respect to the work, I have no doubt that the term was of such importance to the owner that she would not have entered into the contract unless she had been assured of strict or substantial performance of the term and that this ought to have been apparent to the builder. A reason for making this finding is that compliance with the requirements of the local council and all statutory authorities are so obviously highly important matters which will have a direct impact on the ability of an owner to use and occupy residential premises that the requirement for strict or substantial performance of the obligation to comply is readily apparent. I therefore find that the obligation by the builder to comply with mandatory critical stage inspections was an essential term.
I do not regard clause 17 to be relevant to the question of whether an obligation by the builder to comply with mandatory critical stage inspections was an essential term, because satisfaction of the clause 17 obligation, although dependant on carrying out mandatory critical stage inspections, would have arisen at the completion of the work and after the owners 7 April 2017 notice.

[19]

Did the builder breach the term?

In support of her contention that the builder breached the obligation to comply with mandatory critical stage inspections, the owner has relied upon: 1. A letter from the Eurobodella Shire Council dated 12 January 2018; 2. The evidence of Ms Patmore of the Eurobodella Shire Council given at the hearing; and 3. An email from the certifier to the builder on 29 November 2016.
The letter from the Eurobodella Shire Council dated 12 January 2018 related to an application by the owner for an occupation certificate and information provided by the owner in support of such application. The Eurobodella Shire Council stated that critical stage inspections were found to be incomplete, namely a 13/10/16 frame (dwelling) inspection, a 14/10/16 frame inspection (reinspection) and a 27/2/17 stormwater drainage inspection. The council stated that all of these inspections were incomplete and there was no further evidence of reinspections with satisfactory outcomes. The letter further states that no further critical stage inspections were carried out after 27 February 2017.
Ms Patmore is an employee of the Eurobodella Shire Council. She gave evidence before the Tribunal and stated that her role is the supervisor for building certifiers relating to the council's compliance role. Ms Patmore stated that framing inspections were carried out in connection with the building work the subject of these proceedings but not all defects were 'checked off' by the certifier. Ms Patmore's evidence was that if not all defects were checked by the certifier and the builder then covered the frame, as occurred, it would be unlikely that a certifier could certify the frame. At T6 and 7 (Day 2) Ms Patmore stated: 'Ms Patmore: And there's no evidence that they have been inspected as rectified, we cannot be confident that the building is suitable for occupation according to building code. Counsel: and my question for you is in order to be confident that they have been inspected and rectified, would it be necessary for a certifier to visually inspect the area? Ms Patmore: I would expect so, that would be standard. Counsel: If the builder provided a statutory declaration saying no I have rectified the works and have provided that declaration to a certifier? Ms Patmore: It would be up to the individual certifier to make that call, that judgement, in the circumstances had the person done it or had some other evidence maybe, I don't know, I couldn't answer that whether that would be suitable for that particular frame inspection. Counsel: Would it be suitable for a council in circumstances in this matter? Ms Patmore: No. Counsel: If you got a certificate that was based on a statutory declaration from the builder would that be satisfactory for the council? Ms Patmore: Not at this point, not coming in with a final occupation with no other evidence from a certifier who undertook the inspection'
The email from the certifier to the builder on 29 November 2016 refers to a frame inspection on 13/10/16 in relation to which the certifier states that his records indicate that there were a number of issues including 6 specific issues that he identified. The certifier stated: 'Point 3 and 4 were reinspected and satisfactory however the other matters are usually followed up at the Pre-sheet inspection. Can you please confirm in writing if the above matters were addressed prior to installing internal linings'
The builder's submissions in reply do not address whether there was a breach of the term contended for by the owner.
The evidence that the owner relies upon as referred to in [117] -[120] is sufficient to satisfy me to make a finding that the builder failed to complete the following critical stage inspections: 1. frame (dwelling) inspection, and 2. stormwater drainage inspection.
Given my findings in the preceding paragraph, I find that at 7 April 2017 the builder had breached an essential term of the contract, namely clause 3 by the failures referred to.
The findings above support the conclusion that the termination of the contract by the owner on 8 April 2017 was justified.
It follows that the owner will be entitled to damages consequent on the breach of the essential term, being the cost to complete the contractual work and the cost of rectifying defective work.

[21]

Item 7.1 - Concrete floor to the garage - amount claimed $7,200.00

This claim relates to the size of the garage slab and illustrates the effects of the parties' failure to adequately document or define the scope of the work.
The owner's expert Mr Wallace referred to the builder's quote dated 8 May 2016 which allowed for a garage slab of 102.9 m². Mr Wallace states that the as built garage slab is 54m². He therefore concludes that cost of the garage slab should be reduced allowing the owner a credit, claimed in the Joint Report at $7,200.00.
The contract signed by the parties was dated 1 June 2016 and therefore superceded the builder's quote dated 8 May 2016.
The owner's submissions rely upon the evidence of the owners mother at [30] of her affidavit sworn 13 December 2017 in which she gives an account of a discussion of the parties at the second meeting when a reduction of the size of the shed was discussed and the builder allegedly stated that the parties could 'fix up the difference with the final account'.
The builder's expert has referred to the builder's evidence and concluded that there was no difference between what was priced and what was built.
The builder's evidence about this issue is at paragraph 21 of his affidavit. He states that his quote was mistaken in referring to a slab of 102.9 m². He states that his quote was based on the shed plan showing the size of the floor that he was to construct which was pinned to the drawings he tendered on which he states are at pages 12 - 20 of JA-1 and specifically page 14 which deals with Door Jamb locations. He further states that he obtained the price from concreters who he showed the plans to. The effect of the builder's evidence is that his reference to a slab of 102.9 m² was due to a mistake on his part.
The pages of JA-1 referred to by the builder relate to a quote from Mordek and pages from ShedTech. Those plans at pages 12 - 20 of JA-1 do not refer to a slab of 102.9 m². The builder's reference to page 14 of JA-1 does not assist his assertion that such document contributed to his error, if that is indeed his position as insofar as it shows the dimensions of the slab as 6.0m x 5.5m = 33m² slab, which is confirmed by page 16 of JA-1, 'Shed Specifics'. Further the builder's expert's reference to a quote from Mordek dated 23 May 2016 is I find quite irrelevant since that quote post-dates the builder's 8 May quote by 15 days. I find that quote can have no relevance to what the builder quoted on at 8 May 2018.
I do not accept the builder's evidence about the mistake he made. As it is, I find, self-serving and not persuasive. In fact I have no confidence in his account of what occurred in connection with this issue.
I accept the owner's mothers evidence that that the builder when discussing this issue stated that there would be an adjustment in relation to the size of the garage.
I find the builder's evidence that he made a mistake in quoting to provide a slab of 102.9 m² to be self-serving with the un-stated implication being that he intended to refer to a slab of a smaller size.
I find in favour of the owner in the sum of $7,200.00 that the builder overcharged for the slab he provided since his price was for a slab of approximately 48 m² more than actually provided. I also find that the owner is not entitled to a margin on this amount.

[27]

Item 7.3.3 - Doors - amount claimed $1,733.00

The experts are unable to agree on this item. The experts agree that the doors have been removed and replaced by a painting contractor engaged by the owner. The builder's expert is of the view that the painter has incorrectly reinstalled the doors.
The owner's expert inspected the residence on 24 April and 2 May 2017 after the owner's termination notice was given on 8 April 2017. In his report the expert discusses a number of defects with the doors and also discusses the rectification methodology. In the joint report he allows for 20 hours rectification at $70.00 per hour with an allowance for materials of $175.00.
The builder's expert has referred to a painting quotation dated 6 November 2016 addressed to the owner which states as an item of work 'Remove all doors and hinges'. He also refers to comments from the builder that the defects were caused by the owner's painter incorrectly reinstalling the doors.
The owner has given evidence of the painters work at [110] of her statement. Her evidence is that the painters put door numbers on each door and each door was placed near to where it was originally located.
The builder's evidence is that the doors as installed by him and his carpenter were plumb and worked properly. His evidence at [106] of his 15 September 2017 affidavit strongly suggests that the painter was engaged by the owner and worked concurrently with him, at a time which I find was after the painter provided his quote on 6 November 2016. I accept that evidence.
I find that the owner's painter did remove all doors and hinges as part of his work, as stated in his quote and also reinstalled the doors and hinges.
I have had regard to the owner's expert reports and find that the defective work there referred to in a detailed manner is indicative, in the main, of work which would have been carried out when the doors were originally installed rather than when the doors were removed and replaced by the owner's painter.
I also find that the builder's expert's report in relation to this dispute is of little assistance to me since he repeats his client's argument rather than using his expertise to analyse whether the defects he agrees exist were caused by the builder or by the painter replacing the doors and hinges.
I prefer the owner's more detailed expert evidence in connection with item of claim. As a result I will find for the owner in the amount of $1,733.00.

[39]

Item 7.4.12 Window - amount claimed $1,324.00

There are 2 parts to this item, first storm moulding at $90.00 which the experts agree on. The second part relates to the flyscreens to the living room. $1,225.00 is claimed for this item.
The owner's expert does not address the issue of the flyscreens to the living room. He simply agrees with the comments in the Surety report without referring to them specifically. The Surety report does not address the issue of the flyscreens to the living room.
In his amended Scot Schedule the owner's expert refers to an invoice which the owner was to supply and which I have not seen. Nor have I been referred to any such invoice. The owner's photographs show 2 photographs of flyscreens which show some damage.
The builder's expert states that the flyscreens were not part of the builder's contract.
The owner's evidence is that her father installed the flyscreens because they were being damaged by the debris produced when the builder's workers or subcontractors were cutting tiles on the back verandas where the flyscreens were being stored. The owner also stated that wood chips or fragments from a drop saw on the back veranda caused damage to the flyscreens.
The builder states that the flyscreens were installed by the owner's mother and that at the time he left site that they were stored in the shed.
Mrs Ashby makes some observations in her affidavit about the flyscreens and the fact that her husband did not install them. She also makes some observations regarding the cost of repair of flyscreens. The basis to support her evidence rests is not disclosed. I find that Mrs Ashby is not put forward as a costing expert or a person who has obtained experience in costing building work by reason of her role in preparing building contracts for her husband.
Mr David swore an affidavit on behalf of the builder. He also said that the owner's mother installed the flyscreens and that they were stored in the shed.
Section SE of volume 1 of exhibit A contains a quote dated 23 May 2017 from Wildeline for Aluminium flyscreens for the lounge, dining room, study, ensuite/WC1 and WC2 and for one other area not described. This quote does not provide for a flyscreen to the area referred to in the scott schedule, namely the living room
The only evidence there is from the owner in support of this claim is when she was cross examined.
I do not accept the builder's evidence that the flyscreens were installed by the owner's mother. I prefer the owner's evidence that they were installed by her father. In addition the owner's mother denies installing the flyscreens.
This claim is if I may say presented in a chaotic way. The owner gives no evidence in chief to support it. Nor do her experts. It appears in the amended scott schedule without explanation and without a proper basis. While there is a quote from a flyscreen supplier in the sum of $1,717.00 (inc GST) which is different to the amount claimed of $1,225.00, the quote does not relate to the area complained of. In addition there is poor photographic evidence of damage to only 2 screens. The only evidence from the owner is in her cross examination. The evidence of the builder and his workman contradict the owner's evidence.
I am not persuaded that the scraps of evidence about this item establish the fact that the builder damaged the flyscreens. I would also add that there is no evidence who supplied the screens.
I will make an order in the owner's favour in the amount agreed by the experts, $90.00.

[63]

Incomplete work - Painting costs - amount claimed $17,475.00

There is a disagreement between the experts about whether painting the interior and exterior of the premises was within the contractual building works.
The owner submits that painting was included in the contract by reference to a Builders Brief document which under stage 3 allows for the supply and installation of paint both internally and externally. The document is not a contract document, although it forms part of the background to the parties contracting. Importantly the 'Stage Three Inclusion' documents which the owner specifically considered and marked as referred to in her evidence did not refer to painting at all. I find that there is no evidence that the owner specifically discussed with the builder the painting issue or that the builder agreed to or priced for the internal or external painting of the residence.
Even accepting the owner's evidence regarding the stage 3 inclusions, that document does not refer to internal or external painting. Moreover the owner's evidence does not suggest that her discussions with the builder at the various meetings referred to earlier in these reasons addressed the document Kitome Builders Brief and the items of work referred to under the headings 'Stage 3 Kit Construction'.
This item of the owner's claim is rejected for the reasons provided.
The amounts that I have found in favour of the owner are: Item number Amount found in favour of the owner 7.1 $7,200.00 - No Margin Allowed 7.2.2 $7,150.00 7.2.3 $2,321.00 - No Margin Allowed 7.2.5 $1,771.00 7.3.1 $1,353.00 7.3.2 $154.00 7.3.3 $1,733.00 7.3.4 Agreed Nil 7.3.5 $473.00 7.3.6 $192.50 7.3.7 $93.50 7.3.8 Agreed Nil 7.3.9 $445.00 7.3.10 $171.00 7.3.14 $193.00 7.4.1 $742.00 7.4.3 $550.00 7.4.6 $154.00 7.4.12 $90.00 7.5.2 $820.00 - No Margin Allowed 7.5.4 $709.00 7.5.5 $4,697.00 7.6.1 $561.00 7.6.2 $154.00 - No Margin Allowed 7.6.5 $242.00 8.1 Nil 8.2 $528.00 8.3 $129.00 8.4 & 8.5 Nil 8.6 $286.00 8.7 Nil 8.8 Agreed Nil 8.9 $1,392.00 8.10 $154.00 8.11 $842.00 8.12 $297.00 8.13 $2,277.00 8.14 $2,244.00 8.15 $1,972.00 8.16 Nil Incomplete Work - Duct for Range Hood Nil Painting costs Nil Sub Total $42,090.00 Builder's margin and On-costs 25 % $7,898.75 Total $49,988.75

[65]

HB 17/45250

In his application the builder sought orders that he did not have to pay the owner $100,000.00 and that the owner pay him $75,839.06.
The amount of $75,839.06 is made up of: 1. Unpaid progress claims - $48,504; and 2. Variations extra work - $27,225.06.
The builder relied upon an expert report dated 25 September 2017 from Mr Rohde who states that he was instructed on what appears to be a different claim than the one set out in the builder's application.
Mr Rhode states that he was asked to comment on the builder's claim for $46,653.02 comprising: '$22,400 in unpaid progress claims pursuant to the Contract; $24,253 being final claim less a reasonable sum for a builder's clean; $21,585.13 for work done and payment for extras'
I would point out that the amount of $46,653.02 is an obvious error. The correct calculation is $68,230.13.
The owner's experts have not responded to Mr Rohde's 25 September 2017 report.
The parties' experts met on 29 November 2017 in relation to the builder's claim. They agreed very little. To the extent that the experts have agreed on matters of quantum in their Joint Scott Schedule, I will have regard to their agreements.
In considering the builder's claim it is important to have regard to the fact that I have decided that the owner was entitled to terminate the contract.
At the conclusion of the evidence in these proceedings, counsel for the owner raised section 10 of the Act which stated, at the time the contract was entered into: '(1) A person who contracts to do any residential building work, or any specialist work, and who so contracts: (a) in contravention of section 4 (Unlicensed contracting), or (b) under a contract to which the requirements of section 7 apply that is not in writing or that does not have sufficient description of the work to which it relates (not being a contract entered into in the circumstances described in section 6 (2)), or (c) in contravention of any other provision of this Act or the regulations that is prescribed for the purposes of this paragraph, 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, and the contract is unenforceable by the person who contracted to do the work. However, the person is liable for damages and subject to any other remedy in respect of a breach of the contract committed by the person. (2), (3) (Repealed) (4) This section does not affect the liability of the person for an offence against a provision of or made under this or any other Act.'
The owner submits that the contract the subject of this dispute 'does not have sufficient description of the work to which it relates' The owner states that section 10 raises jurisdictional issues, rather than a point which should be taken by way of a defence.
I find that it is plain that the contract does not contain a sufficient description of the work to which it relates which I find is a deplorable state of affairs that has produced real difficulty for the parties and for the Tribunal in determining their claims. Having made that finding I further find that section 10 of the Act makes it untenable for me to make an award of damages for the builder or to enforce a remedy in his favour in respect of a breach of contract given the finding that I have made.
The builder's submissions state that an Anshun estoppel should arise.
The builder's cross application was accompanied by Points of Claim. I am unaware of a pleaded defence to the Cross Claim.
If the owner's late reliance on section 10 was to be upheld, there is a real possibility that the builder would be subject to prejudice that would justify a claim that he was denied procedural fairness. To raise a submission at the close of evidence that has the potential to deny the builder recovery on the basis upon which he has brought his case, plainly may or probably would have deprived him of opportunities to run his case in a different way. A submission of ambush might properly be made.
If section 10 of the Act had been raised at an early stage and not as an afterthought, the builder would have been able to consider the decision of the High Court in Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221 where at [13] Deane J stated: The quasi-contractual obligation to pay fair and just compensation for a benefit which has been accepted will only arise in a case where there is no applicable genuine agreement or where such an agreement is frustrated, avoided or unenforceable. In such a case, it is the very fact that there is no genuine agreement or that the genuine agreement is frustrated, avoided or unenforceable that provides the occasion for (and part of the circumstances giving rise to) the imposition by the law of the obligation to make restitution.'
If as contended by the owner, section 10 has the effect of denying the builder a right to damages or enforcing any other remedy in respect of a breach of the contract and to make the contract unenforceable by the builder, I find that the builder would have a right to claim restitution.
The owner's submissions contend that the builder would only be able to bring a quantum meruit claim if it were 'just and equitable'. However the basis for that submission is not referred to, nor has any factual basis which may be required to support the submission been identified. In these circumstances, I reject the owner's 'just and equitable' submission
The builder in his submissions in reply states that: 'The builder submits that all his cross claims are documented, explained and independently assessed by an expert. There is sufficient documentation on which the Tribunal member can rely to determine a quantum merit.'
I have decided that in order to accommodate the owner's late reliance on section 10 of the Act that the most appropriate course to adopt having regard to the guiding principle contained in section 36 of the Civil and Administrative Tribunal Act 2013 and based on the builder's submission as referred to in the preceding paragraph is, first, to find that section 10 of the Act applies to the builder's cross claim on the basis that I have found that it is plain that the contract does not contain a sufficient description of the work to which it relates. Secondly, I will grant the builder leave to put his case on a quantum meruit basis on the authority of Pavey & Matthews Pty Ltd v Paul but relying on the same evidence that it has filed in the proceedings.
I do not regard this to occasion any disadvantage to the owner given that she has not filed a response to Mr Rohde's 25 September 2017 report and has otherwise had opportunities to respond to the builder's evidence which she did in her affidavit of 15 December 2017.
In Pavey & Matthews Pty Ltd v Paul at [24] of his judgment, Deane J. stated: 'What the concept of monetary restitution involves is 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). In some categories of case, however, it would be to affront rather than satisfy the requirements of good conscience and justice which inspire the concept or principle of restitution or unjust enrichment to determine what constitutes fair and just compensation for a benefit accepted by reference only to what would represent a fair remuneration for the work involved or a fair market value of materials supplied. One such category of case is that in which unsolicited but subsequently accepted work is done in improving property in circumstances where remuneration for the unsolicited work calculated at what was a reasonable rate would far exceed the enhanced value of the property. More relevant for present purposes is the special category of case where restitution is sought by one party for work which he has executed under a contract which has become unenforceable by reason of his failure to comply with the requirements of a statutory provision which was enacted to protect the other party. In that category of case, it would be contrary to the general notions of restitution or unjust enrichment if what constituted fair and just compensation for the benefit accepted by the other party were to be ascertained without regard to any identifiable real detriment sustained by that other party by reason of the failure of the first party to ensure that the requirements of the statutory provision were satisfied.'
The above passages indicate that the reference to 'quantum meruit' is to be understood to be as resting on or referring to restitution or unjust enrichment. Further, the passage quoted from Deane J.'s judgement indicates that the Tribunal is to value the 'fair and just compensation for the benefit or "enrichment" actually or constructively accepted'.
It is however necessary to take into account any identifiable real detriment to the owner as referred to above by Deane J.
In connection with the calculation of a quantum meruit, I have had regard to the judgement of Bryne J. in Brenner v First Artists' Management Pty Ltd [1993] 2 VR 221 summarised in Dorter & Sharkey Building and Construction Contracts in Australia as setting out the following principles: 1. 'The courts task is not to assess damages for breach of contract, but to ascertain what is fair and reasonable compensation for the benefit of the services performed, and accepted actually or constructively by the recipient; 2. The enquiry is not primarily directed to the cost to the plaintiff of performing the work since the law is not compensating that party for loss suffered; however, the actual cost should not be ignored; 3. Any price or commission agreed between the parties may be received as evidence of the value the parties themselves put on the services performed, even where the services have not been totally performed, but the agreed amount is not determinative of the matter.'
I have also had regard to the judgement of Barrett J in Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprise Pty Ltd when he stated under the heading of 'Relevance of evidence of actual cost of certain elements that: 'while evidence of actual expenditure may be relevant to an assessment of what is a reasonable reward for work done and expenditure incurred, the amount of such actual expenditure as may be proved does not operate in any way as a controlling factor. The quantum meruit sum is the reasonable cost of the work done and expenditure incurred, with the assessment of reasonableness being undertaken by reference to the results produced and evidence of what it would in the ordinary course of things be necessary to outlay in order to produce those results'.
I will proceed on the basis that the onus is on the builder to establish the value of 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)' per Deane J. in Pavey & Matthews Pty Ltd v Paul supra, or the 'fair and reasonable compensation for the benefit of the services performed, and accepted actually or constructively by the recipient' per Byrne J. in Brenner v First Artists' Management Pty Ltd, supra.
I will now consider the builder's claim in the order that it is referred to in the builder's written submissions. The parties' experts prepared a Joint Scott Schedule Report dated 29 November 2017 on the builder's application which I will refer to when relevant.

[66]

Claim for $48,504.00 relating to progress payments.

The evidence for this claim is found in in an invoice sent to the owner on 10 April 2017 for $22,400.00 for Electrical and Plumbing and an invoice dated 15 September 2017 which claims $26,104.00 without stating the work to which the payment claim relates, a margin on a suppliers invoice less an amount for an estimated clean up. The total amount claimed was $24,253.02.
There was no agreement by the experts in connection with this issue.
Mr Rohde's 25 September 2017 report considers these claims at [35] - [42]. He adjusts these claims for interest and other matters and concludes that the claims which total $46,653.02 should be adjusted to $48,504.00.
Applying the principles referred to above to the valuation of this aspect of the builder's quantum meruit claim, I find that Mr Rohde's report is of no assistance because he: 1. Makes no attempt to ascertain what was a fair and reasonable compensation for the benefit of the services performed by the builder and accepted actually or constructively by the owner (per Brenner v First Artists' Management); 2. Does not state what was the reasonable cost of the work done and expenditure incurred was in relation to the work the subject of these invoices (per Eddy Lau Constructions); 3. Does not state what the actual costs or expenditure were in relation to the work the subject of these invoices (per Brenner v First Artists' Management and Eddy Lau Constructions); and 4. Does not state what the contract may have, if at all, designated as the price for the work the subject of these invoices;
I also find that the invoices themselves are of no assistance. While they provide the briefest description, in some cases, of the work they refer to, they do not address any of the criteria referred to above. For example a claim for $26,104.00 for 'Final payment' does not satisfy any of the above criteria. The invoice for 'Electrical and Plumbing' for $22,400.00 while identifying the trade work claimed also does not satisfy any of the above criteria.
Having regard to the deficiencies of the builder's evidence I have come to the conclusion that I should approach the task in a broader fashion, rather than rejecting the claim for a lack of evidence.
In Council of the City of Sydney v Woodward [2000] NSWCA 201 Heydon JA at [12] (Priestley and Meagher JJA both agreeing) referred to the following proposition as a matter of principle: 'The position which obtains when a Court is asked to determine a reasonable remuneration payable to a plaintiff, on a quantum meruit basis, is as Renard makes quite plain, that it is the task of the Court to stand back from the evidence and to weigh up, in general terms from all of the evidence before it, what is a fair and reasonable amount to be paid to a plaintiff'
Having regard to the passage cited above, I conclude that the builder should be paid the amount claimed of $22,400.00 for Electrical and Plumbing since the evidence satisfies me that he did carry out that work.
I find that the builder is not entitled to recover the amount claimed in his invoice dated 15 September 2017 for $24,253.02 since that invoice does not refer to the work carried out leading me to find that any benefit to the owner cannot be identified. Nor have I been referred to the work the subject of this invoice or the benefit conferred. So far as the invoice claims $1,089.02 for a margin on a suppliers invoice, I am unable to find that such amount constitutes a fair and reasonable remuneration for what the evidence discloses was the builder placing an order with a supplier and telling the owner to attend at the supplier and pay for the item and to make arrangements for its delivery.

[75]

Additional electrical works - amount claimed $5,068.00

There is no agreement between the experts regarding this item of claim by the builder. The builder's expert does no more than refer to the builder's evidence and state that he accepts it. He has conducted an exercise in his schedule of electrical works which is not referred to in the body of his report and which is different to the position the builder took and which is unexplained. I find that there is no rational explanation, supported by evidence of the amount claimed, namely the sum of $5,068.00.
The builder's evidence is that the additional electrical work was dealt with by his wife and the owner's mother.
Mrs Ashby has given evidence that she told the owner's mother that additional power points would be charged at $120.00 per point. Mrs Ashby then states that the builder then told her that he saw the owner ordering the electrician to put in additional power points, although the builder provides no such evidence.
At best the builder's case is that he supplied more electrical work than he allowed for. Mrs Ashby's evidence is that she calculated the additional electrical work, although I find that while her working sheet may make sense to her it is not capable of producing or disclosing to me a reliable conclusion of what extra work may have been carried out. She goes on to state that the builder claimed the extra cost in the sum of $1,640.00 in invoice 105 dated 9 April 2017.
The owner's expert has referred to invoices in the sum of $3,840.00 without identifying them
The evidence is very poor in connection with this claim. The builder's expert's evidence is not explained adequately to satisfy me that it is a correct and reliable assessment and differs to what the builder thought was the position at the relevant time. The owner's expert refers to invoices which he does not identify.
I prefer the evidence of Mrs Ashby given that she dealt with the issue at the time relying on the information that she thought was the most relevant.
I will make an order in favour of the builder in the sum of $1,640.00. I will also allow GST of $164.00 which brings the amount found to $1,804.00.

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