Cadence (90) Investments Pty Ltd v Aspire Constructions Pty Ltd; Aspire Constructions Pty Ltd v Cadence (90) Investments Pty Ltd

Medium Neutral Citation: Cadence (90) Investments Pty Ltd v Aspire Constructions Pty Ltd; Aspire Constructions Pty Ltd v Cadence (90) Investments Pty Ltd [2026] NSWSC 136

Hearing dates: 29 October – 5 November, 7 November 2025 (further submissions on 14 and 24 November 2025)

Date of orders: 4 March 2026

Decision date: 04 March 2026

Jurisdiction: Equity - Technology and Construction List

Before: Griffiths AJ

Decision: 1. Direct the parties to seek to agree short minutes of order which give effect to these reasons, including drawing attention to any arithmetical corrections to monetary figures to take into account, for example, GST.
2. Direct the parties to also seek to agree costs of the proceedings.
3. If the parties are unable to agree short minutes of order within 21 days hereof, within that time, each should file and serve their individual proposed short minutes of order together with a brief written submission not exceeding 5 pages and any supporting evidence.
4. Final orders will be made on the papers and without a further oral hearing unless a party provides good reasons why there should be a further oral hearing.
5. Grant liberty to apply on giving 48 hours’ notice.

Catchwords: BUILDING AND CONSTRUCTION — contract — damages — defects — whether geothermal heating and cooling systems, design and construction of internal access roads and general building works defective — whether breach of statutory warranties under s 18B of Home Building Act 1989 (NSW) — whether breach of statutory duty of care under s 37 of Design and Building Practitioners Act 2020 (NSW) established — whether plaintiff entitled to damages for rectification costs and/or loss of opportunity
BUILDING AND CONSTRUCTION — contract — payment — whether money paid in accordance with adjudication determination properly payable — whether builder entitled to recover amounts paid to sub-contractors under various invoices and balance of fixed builder's margin
EVIDENCE — expert evidence — admissibility — whether any weight should be given to the evidence where the independence of the expert is in question

Legislation Cited: Building & Construction Industry Security of Payment Act 1999 (NSW), s 32
Design and Building Practitioners Act 2020 (NSW), ss 3, 37
Home Building Act 1989 (NSW), ss 4, 10, 18B, 18BA, 18F
Uniform Civil Procedure Rules 2005, sch 7

Cases Cited: ACCC v Snowdale Holdings Pty Ltd (2016) 339 ALR 445; [2016] FCA 541
Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2022) 277 CLR 445; [2022] HCA 38
Ananda Marga Pracaraka Samgha Ltd v Tomar (No 4) (2012) 202 FCR 564; [2012] FCA 385
Betta Build Group Pty Ltd v El Baba [2019] NSWDC 331
Galafassi v Kelly (2014) 87 NSWLR 119
McNickle v Huntsman Chemical Company Australia Pty Ltd (Evidentiary Ruling) [2023] FCA 1268
Owners – Strata Plan No 76674 v Di Blasio Constructions Pty Ltd [2014] NSWSC 1067
Pafburn Pty Ltd v Owners – Strata Plan No 84674 (2024) 421 ALJR 133; [2024] HCA 49
Rush v Nationwide News Pty Ltd (No 5) [2018] FCA 1622
Phosphate Co-Operative Co of Australia Ltd v Shears (No 3) [1989] VR 665
Schmuelly v Elrob Construction Group Pty Ltd (No 3) [2025] NSWSC 118
Sydney South West Area Health Service v Stamoulis [2009] NSWCA 153

Texts Cited: Michael Whitten and Michael Sharkey, Brooking on Building Contracts (LexisNexis Butterworths, 6th ed, 2020)
LexisNexis, Halsbury’s Laws of Australia

Category: Principal judgment

Parties: Cadence (90) Investments Pty Ltd (Plaintiff)
Aspire Constructions Pty Limited (First Defendant)
Univenta Pty Ltd (Second Defendant)
Jacob Kearns (Third Defendant)
Dusan Trembuch (Fourth Defendant)

Representation: Counsel:
M G Lyons (Plaintiff)
J Kearns (First and Third Defendants, litigant in person)
M Thompson (Second and Fourth Defendants)
Solicitors:
Ashurst Australia (Plaintiff)
Wood Marshall Williams (Second and Fourth Defendants)

File Number(s): 2022/00236084

Publication restriction: Nil

TABLE OF CONTENTS

TABLE OF CONTENTS

PART A: INTRODUCTION

PART B: RELEVANT PARTS OF THE BUILDING CONTRACTS SUMMARISED

PART C: RELEVANT PARTS OF THE UNIVENTA SUB-CONTRACT SUMMARISED

PART D: CADENCE’S CLAIMS IN RELATION TO THE GEOTHERMAL SYSTEMS OUTLINED

(a) The Geothermal Works

(i) Cadence’s claims concerning the duties owed to it by Univenta and Mr Trembuch regarding the Geothermal Works

(ii) Alleged breach of duty of care by Univenta

(iii) Alleged breach of duty of care by Mr Trembuch

(b) The Building Contracts between Cadence and Aspire

(i) The Geothermal Works

(ii) Aspire’s warranties to Cadence in respect of the Geothermal Works

(iii) Aspire and Mr Kearns’ duties to Cadence in respect of the Geothermal Works

(iv) Subsequent variations

(v) Performance of the Geothermal Works

(c) Claim against Aspire: breach of the fitness for purpose warranty

(i) Breach of warranty

(ii) Damages

(iii) The works reasonably necessary to achieve conformity with the contractual standard

(iv) Loss of opportunity to sell the 368D House

(d) Claim against Aspire: breach of the due care and skill warranty or breach of duty of care

(e) Cadence’s claim against Mr Kearns for breach of the duty of care

PART E: CADENCE’S CLAIMS IN RELATION TO THE INTERNAL ACCESS ROADS OUTLINED

PART F: CADENCE’S CLAIMS IN RELATION TO THE GENERAL BUILDING DEFECTS OUTLINED

(a) Internal doors ($179,321)

(b) Tennis court drainage ($73,171)

(c) Cobblestone driveways/crazy paving ($57,218)

(d) Roof ventilation & leaks ($51,537)

(e) Microcement ($48,239)

(f) General power outlets ($16,127.58)

(g) Cracked highlight glass windows ($15,591.73)

(h) Exposed pipes & cables ($7,267)

(i) Gutter ($6,926.81)

(j) Roof dektites and vents ($6,102)

(k) DBP Act claim

PART G: CADENCE’S CLAIMS IN RELATION TO OVERPAYMENT OUTLINED AND DETERMINED

PART H: ASPIRE’S CROSS-CLAIM AGAINST CADENCE OUTLINED AND DETERMINED

(a) The $151,255.16 figure

(i) Cadence’s argument regarding the Univenta invoices

(ii) Cadence’s argument relating to all the invoices

(1) Stuart Bramley Electrical invoice

(2) Ison & Co invoice for internal access roads

(3) AVP invoices relating to microcement

(4) Avijohn invoice for internal access roads

(5) Rural Bitumen Services invoice for internal access roads

(6) Univenta invoices

(7) Highland Cabinetry invoice

(b) The claim for $44,545.45 for builder’s margin

PART I: CONSIDERATION AND DETERMINATION OF THE REMAINING ISSUES

(a) The lay and expert evidence

(i) The credibility and reliability of the lay evidence of Mr Cronin, Mr Kearns and Mr Trembuch

(ii) Issues regarding Dr Piechowski’s expert evidence

(iii) Dr Piechowski’s first expert report dated 19 August 2022

(iv) Dr Piechowski’s second expert report dated 5 March 2024

(b) Resolution of the remaining issues to be determined

(c) Primary case against the Univenta Defendants

(d) Secondary case against the Univenta Defendants

(e) Remaining issues concerning geothermal claims

(i) As to the geothermal claims generally

(ii) Contractual claim against Aspire

(iii) Breach of s 37 DBP Act duty against Aspire and Mr Kearns

(iv) Loss and damage

(v) Apportionment of the s 37 DBP Act claims

(f) The internal access road claim

(i) Damages claimed concerning internal access roads

(g) The general building defects claim

(i) Internal doors ($179,321)

(ii) Tennis court drainage ($73,171)

(iii) Cobblestone driveways/crazy paving ($57,218)

(iv) Roof ventilation & leaks ($51,537)

(v) Microcement ($48,239)

(vi) General power outlets (GPOs) ($16,127.58)

(vii) Cracked highlight glass windows ($15,591.73)

(viii) Exposed pipes & cables ($7,267)

(ix) Gutter ($6,926.81)

(x) Roof dektites and vents ($6,102)

(xi) DBP Act claim

(h) The overpayment claim

(i) The cross-claim

PART J: CONCLUSION

PART A: INTRODUCTION

1. These proceedings principally relate to claims for damages against a builder (Aspire Constructions Pty Ltd) and a sub-contractor (Univenta Pty Ltd). The plaintiff (Cadence (90) Investments Pty Ltd) claims that certain building works were defective in the construction of three buildings on land at 200 Bunkers Hill Road and 368D Bunkers Hill Road in Barrengarry NSW. The three buildings comprise the Main House (which was intended for use as a family residence), the 368D House (which was intended to be sold) and a Tourist Cabin (located at 200 Bunkers Hill Road, along with the Main House, and which was intended to be used for short-term rental accommodation) (collectively, the Buildings).

2. Mr Garren Cronin is the sole director of Cadence. His profession is corporate advisory, in which he has over 25 years’ experience. For the last ten years or so, he has been the Managing Director of Cadence Advisory. Mr Cronin has a background in banking.

3. As will emerge, Mr Cronin played a prominent role in developing and overseeing the building project. He was also extensively involved in finalising two expert witness reports on the geothermal systems by Cadence’s expert.

4. Cadence is the corporate trustee of the Cronin family trust (the GDC Discretionary Trust).

5. The third defendant is Mr Jake Kearns, who is the sole director and a shareholder of Aspire (the first defendant). The fourth defendant is Mr Dusan Trembuch, who is the sole director, general manager and shareholder of Univenta (the second defendant).

6. Cadence’s claims for damages relate to what it says were defective works in relation to three broad aspects of the project, namely, in relation to the installation of geothermal heating and cooling systems in each of the Buildings, the design and construction of internal access roads, and various general building works.

7. Cadence claims damages against Aspire for breach of the three Building Contracts, each dated 5 May 2020. Cadence’s claims may be summarised as follows:

(a) In relation to the geothermal systems (which were installed by Univenta as sub-contractor at the three Buildings):

(i) damages to compensate it for rectification costs incurred in relation to the geothermal systems; and (ii) damages to compensate it for the loss of the opportunity to sell the 368D House in February 2022, in circumstances where the majority of the geothermal system rectification works were not completed until October 2023, by which time the residential rural property market had declined and Cadence continued to incur holding costs.

(b) In relation to the internal access roads:

(i) damages to compensate Cadence for a proportion of the rectification costs incurred; and (ii) damages for the loss of rental income in relation to the Tourist Cabin on the basis that it could not be rented until the internal access road issues were rectified in November 2024.

(c) In relation to the general building defects, Cadence seeks damages to compensate it for rectification costs.

8. By reason of s 37 of the Design and Building Practitioners Act 2020 (NSW) (DBP A****ct), Cadence says that each of the defendants also owed it duties of care in relation to the work. Cadence says that those duties were breached and seeks:

(a) the heads of damage set out above against both Aspire and Mr Kearns; and (b) the head of damage relating to compensation for rectification costs of the geothermal systems against both Univenta and its director, Mr Trembuch.

9. Cadence also claims that it is entitled to damages against Aspire for breaches of the statutory warranties in s 18B(1)(a), (b) and (e) of the Home Building Act 1989 (NSW) (HB Act).

10. There are two further claims, namely:

(a) a claim by Cadence against Aspire for restitution of amounts paid to Aspire by Cadence to which Cadence now says Aspire had no entitlement; and (b) a cross-claim by Aspire against Cadence for monies which it says remain owing under the Building Contracts.

11. These reasons are structured in several Parts as follows:

(A) Introduction.

(B) Relevant parts of the Building Contracts summarised.

(C) Relevant parts of the Univenta sub-contract summarised.

(D) Cadence’s claims in relation to the geothermal systems outlined.

(E) Cadence’s claims in relation to the internal access roads outlined.

(F) Cadence’s claims in relation to the general building defects outlined.

(G) Cadence’s claims in relation to overpayment outlined and determined.

(H) Aspire’s cross-claim against Cadence outlined and determined.

(I) Consideration and determination of the remaining issues.

(i) Some evidentiary matters regarding the lay and expert evidence. (ii) Resolution of the remaining disputed issues.

(J) Conclusion.

12. I have relied heavily on Cadence’s written opening and closing submissions for the purposes of Parts D to H below.

PART B: RELEVANT PARTS OF THE BUILDING CONTRACTS SUMMARISED

13. As previously noted, each of the Building Contracts between Cadence and Aspire was entered into on 5 May 2020. Each was said to be a “Cost Plus (Residential) Contract” and was in the standard form provided by the Master Builders Association.

14. Under cl 1(a), it was agreed that Aspire “will, subject to these Conditions and the contract work details in Schedule 3, execute and complete the works required by the contract”.

15. Under cl 1(b), Aspire warranted that, in relation to any building works as defined in the HB Act, any residential building work as defined in that Act “will be done with due care and skill and in accordance with the plans and specifications set out in the contract” and all materials supplied by Aspire “will be good and suitable for the purpose for which they are used, and unless otherwise stated in the contract, those materials will be new”.

16. Under cl 1(c)(ii), the parties agreed that any agreement to vary the Contract, or to vary the plans and specifications for work to be done under the Contract, must be in writing, signed by on or behalf of each party to the Contract.

17. Clause 1(d) addressed the quality of construction (emphasis in original in all clauses):

Quality of construction

(d) (i) All work done under this Contract will comply with:

(a) the Building Code of Australia (to the extent required under the Environmental Planning and Assessment Act 1979, including any regulation or other instrument made under that Act), and

(b) all other relevant codes, standards and specifications that the work is required to comply with under any law, and

(c) the conditions of any relevant development consent or complying development certificate.

(ii) Despite Sub-Clause 1 (d)(i), this Contract may limit the liability of the contractor Builder, and accordingly the Builder is not liable for a failure to comply with Sub-Clause 1 (d)(i) if the failure relates solely to:

(a) a design or specification prepared by or on behalf of the Owner {but not by or on behalf of the contractor Builder), or

(b) a design or specification required by the Owner, if the contractor Builder has advised the Owner in writing that the design or specification contravenes Sub-Clause 1 (d)(i).

18. Clause 20 dealt with practical completion and stated as follows (emphasis in original in all clauses):

(a) Practical Completion is that stage when:

(i) the works are complete except for minor omissions and defects which do not prevent the works from being reasonably fit for their intended use; or

(ii) where as a special condition of the contract identifies a special purpose or result to be achieved by reason of the works is relevant, the purpose or result stated therein being achieved subject to an exception for minor omissions and defects which do not prevent the reasonable achievement of the specific outcome, if any listed as a special condition in Schedule 4.

(b) For the purposes of this Clause the works that need to be completed to achieve Practical Completion do not include

(i) the results of any labour or materials which are to be or were supplied or fixed by the Owner or work done or to be done by the Owner; or

(ii) the provision of any certificates required to obtain an occupation certificate unless the Builder is the party who is to obtain the occupation certificate.

In this contract unless stated otherwise as a special condition it is not the Builder's obligation to obtain an occupation certificate.

(c) When in the opinion of the Builder the works have reached Practical Completion, the Builder is to give to the Owner notice of this in writing**.**

(d) If the Owner disputes that Practical Completion has been reached then no later than five (5) days after the service of notice of Practical Completion the Owner must give to the Builder a written notice, of those things (if any) required by this Contract to be done to achieve Practical Completion. The Builder is to as soon as possible do all those things necessary for Practical Completion and give to the Owner notice in writing on completion of such things.

(e) In the event of the Owner not complying with the provisions of Sub-Clause 20(d), the works will be deemed to have reached Practical Completion.

Occupation or use will amount to Practical Completion

(f) (i) Should the Owner or any tenant or their employees or agents take possession of the works or any part of the works without the written agreement of the Builder, the date of Practical Completion will be the date possession is taken, unless Practical Completion has already been reached.

(ii) Without limiting the generality of this clause possession being taken will be established by any or all of such things as placement of furniture, use of any part of works, denial of access of the Builder to the works or work site or action by the Owner or their agent which prevents the Builder undertaking work.

19. Matters relating to the Defects Liability Period were dealt with in cl 22, which provided for Aspire to make good defects or faults which were attributable to its work or failure to do something at its own cost and within a reasonable time of receiving written notification by Cadence of any defects or faults arising out of workmanship or material provided by Aspire which are not in accordance with the Contract.

20. The terms of cl 22 are set out at [489] in Part I below.

21. Cadence was obliged by cl 22(d) to provide Aspire with access to carry out its obligations under cl 22 during normal working hours. Under cl 22(h), Cadence and Aspire agreed to work cooperatively and to utilise the Defects Liability Period as specified to identify and resolve issues covered by the clause.

22. Each of the Building Contracts contained 20 Special Conditions. Special Condition 9 stated that Aspire would work diligently to complete the project involving the three buildings by 20 July 2021, i.e. within 16 months after commencement. As will emerge, this was not achieved.

23. Special Condition 13 stated (without alteration):

THE BUILDER IS RESPONSIBLE FOR THE COSTS TO RECTIFY ALL DEFECTS AND ERRORS AND SUCH COSTS ARE NOT TO BE PAST ONTO THE OWNER. UNFAMILAR MATERIALS STIPULATED BY THE CLIENT WILL BE SUBJECT TO A THROUGH REVIEW BY THE BUILDER, INCLUDING AN INVESTIGATION OF HOW TO IMPLEMENT/ INSTALL SUCH MATERIALS TO A HIGH STANDARD. IF THE OWNER PERSITS TO INSTALL SUCH PRODUCTS WITHOUT REGARD TO THE CONCLUSIONS OF THE BUILDER'S REVIEW, ANY DEFECTS MAY BE SUBJECT TO RECTIFICATION AT THE COST TO THE OWNER OR THIRD PARTY CONTRACTOR/ SUPPPLIER AND NOT DEEMED A BUILDER'S DEFECT.

24. Apart from the reference to “pool”, each of the Building Contracts contained a provision in similar terms to that in paragraph (a) of Sch 3 of the Main House Building Contract, which described the works to be completed by Aspire as follows:

1 new residential house build as per the Drawings, Schedules and Specifications in (b) and (c), including pool, solar systems, internal road asphalt, water & waste treatment and geothermal heating/cooling. Furthermore, all retaining walls (inc stone cladding), free standing walls, jetty and paving connected with landscaping

25. The reference in paragraph (a) to the Drawings, Schedules and Specifications in paragraphs (b) and (c) of Sch 3 is important, as will be explained below.

PART C: RELEVANT PARTS OF THE UNIVENTA SUB-CONTRACT SUMMARISED

26. The Univenta sub-contract between Aspire and Univenta was executed on 29 April 2020. It is unnecessary to summarise all its clauses, which are in the form of a Master Builders Association Standard Trade Contract.

27. The description of works in Sch 1 referred to Aspire’s “Scope of Works” dated 28 April 2020 and three quotes made by Univenta dated 24 April 2020. Notably, no express reference was made to the GXA Reports (see further below at [38]) or any design obligations. Nor was there any reference to any design obligations in the Scope of Works. The “Project Specific Works” included reference to Univenta supplying all plant, equipment, materials and supervision required to carry out inter alia the supply of all material and labour to install a geothermal heating system including in-slab hydronic heating, active heating/cooling via fan coil units, portable hot water and pool heating (at the Main House only) as referred to in the three specified Univenta quotes.

28. Univenta emphasised that the task of design was not included in this description of the Project Specific Works.

PART D: CADENCE’S CLAIMS IN RELATION TO THE GEOTHERMAL SYSTEMS OUTLINED

29. A geothermal system uses the geothermal heat capacity of the Earth to provide both heating and cooling. There are two key components to such a system. First, the use of a ground heat exchanger (GHX), which comprises a series of loops installed either underground or in water. Water is then introduced into the loops and exchanges heat with the ground or outside water. If the internal water is cooler than the surrounding earth or water, it will be heated. The obverse occurs when the internal water is hotter than the surrounding earth or external water. Secondly, the loops are connected to a heat pump and fan coil units (FCUs). In cooler seasons, the heat pump compresses the liquid from the GHX to increase its temperature and then transfers that heat to an airstream, which is distributed by the FCUs into parts of the building. In warmer seasons, the system runs in reverse with the heat pump drawing heat out of the air and transferring it to the ground loops where it is stored.

30. Cadence seeks damages in respect of the geothermal systems installed in each of the Buildings. It claims that the systems are defective and that it had to spend substantial money rectifying the systems and achieving what it said was a sub-standard permanent solution. As will emerge, the rectification work included decoupling the cooling capacity of the geothermal systems and replacing them with conventional air-conditioning. There are key issues whether this was necessary and whether what Cadence did amounted to betterment rather than rectification.

31. In support of its claims for damages, Cadence relied on the lay evidence of Mr Cronin and Mr Michael de Maio, who is the director of engineering for CWL Group (CWL). This was the firm retained by Cadence to carry out the rectification works of the geothermal systems.

32. On geothermal issues, Cadence also placed heavy reliance upon the expert evidence of Dr Mirek Piechowski. Dr Piechowski provided four expert reports dated 19 August 2022, 5 March 2024, 24 March 2025 and 27 October 2025 respectively. Dr Piechowski also co-authored a Joint Report dated 30 October 2025, together with Dr Amir Kivi, the expert retained by the defendants. Dr Kivi provided expert reports dated 1 November 2024, 13 November 2024 and 7 October 2025.

33. Dr Piechowski participated in a joint conclave with Dr Kivi. As will be further developed below, the defendants all contended that little, if any, weight should be given to Dr Piechowski’s evidence because they claimed that his evidence was not truly independent.

34. In brief, Dr Piechowski gave evidence which supported Cadence’s claims concerning the geothermal systems, with particular reference to the following matters:

(a) failures in the design and construction of the geothermal systems at each of the Buildings; (b) the precautions reasonably required to address the risk of harm from those defects; (c) the reasonableness of the rectification work carried out on behalf of Cadence (which is primarily addressed in Dr Piechowski’s second report); and (d) a reply to Dr Kivi’s evidence.

35. In support of its claims regarding the geothermal systems, Cadence also relied on an expert report dated 12 March 2024 by Mr Christopher Daubney, a quantity surveyor. Mr Daubney participated in a joint report with Mr David Madden (an expert for the defendants). The Joint Report is dated 10 October 2025. Mr Daubney says that the reasonable costs of the geothermal rectification works was $1,107,166. It may be noted that Mr Madden was not asked to assess the rectification works which were actually carried out and instead priced an alternative scope of works in respect of the Main House only, as proposed by Dr Kivi. The pricing of those works was $95,675.69.

36. Cadence also relied upon a report dated 19 July 2024 and an updated report dated 28 October 2025 by Mr Joshua Devitt, a property valuer. Mr Devitt opined that the market value of the 368D House as at February 2022 was $7.75 million and this figure dropped to $6.25 million as at 19 July 2024. In Mr Devitt’s updated report, provided shortly before the hearing commenced, the value dropped even further to $5.85 million.

37. Descending now into more detail regarding the contractual arrangements relating to the geothermal works, it is appropriate to first address the Univenta sub-contract which pre-dated the Building Contracts (the contracts are also dealt with in Parts B and C above).

38. The Univenta sub-contract, which was executed on 29 April 2020, post-dated two reports dated 24 March 2020 and 25 March 2020 by a company called GeoExchange Australia Pty Ltd (GXA). GXA was engaged by Aspire to design the geothermal system for each of the Buildings. The first GXA report dealt with the geothermal system for the Main House. The second GXA report dealt with the 368D House and a third report dealt with the Tourist Cabin (collectively, the GXA Reports).

39. The GXA Reports provided for two scenarios for both the Main House and the 368D House. Scenario 1 involved a system that heated or cooled each house as a whole. In contrast, Scenario 2 was for a system that heated or cooled zones within each house separately. For the Tourist Cabin, the system designed by GXA was for the heating or cooling of the whole house. Univenta agreed that Scenario 1 was the scenario adopted for both the Main House and the 368D House. Ultimately, however, the parties appeared to agree that the distinction between the two scenarios was not decisive. As noted above, the geothermal systems were intended to supply heating, cooling, domestic hot water and, in addition, swimming pool heating for the Main House.

40. The GXA Reports identified “design targets” for the geothermal systems, being to cool the Buildings to 24°C when the ambient temperature was 35°C, and to heat the Buildings to 21°C when the ambient temperature was −2°C. The targets were to be achieved within 4 hours of initiation of the system and are referred to in the evidence as “ and “ respectively.

(a) GXA’s expected peak thermal heating and cooling loads that would need to be met by the system to achieve those targets within each of the Buildings, being:

(i) for the Main House: 23.2kW heating load and 24.3kW cooling load; (ii) for the 368D House: 23.0kW heating load and 20.9kW cooling load; and (iii) for the Tourist Cabin: 12.9kW heating load and 11.2kW cooling load.

(b) Additionally, the system would also need to accommodate GXA’s expected thermal loads for the domestic hot water and swimming pool heating as follows:

(i) for the Main House: 5kW domestic hot water and 9.2kW swimming pool; (ii) for the 368D House: 5kW domestic hot water; and (iii) for the Tourist Cabin: 2kW domestic hot water.

(c) A specified GHX design, a recommended heat pump and FCUs required to achieve that thermal capacity. In particular, the GXA Reports specified:

(i) the design of the GHX for each Building, being:

(a) for the Main House, two horizontal in-ground trenches 265m in length, with each containing 6 pipes (i.e. a total underground pipe length of 3,180m) separated by a minimum of 300mm; (b) for the 368D House, two horizontal in-ground trenches 260m in length, with each containing 6 pipes (i.e. a total underground pipe length of 3,120m) separated by a minimum of 300mm; and (c) for the Tourist Cabin, two horizontal in-ground trenches 148m in length, with each containing 6 pipes (i.e. a total underground pipe length of 1,776m) separated by a minimum of 300mm.

(ii) The heat pumps to be provided, being:

(a) for the Main House and the 368D House, a Stiebel Eltron WPF27 heat pump; and (b) for the Tourist Cabin, a Stiebel Eltron WPF13S heat pump.

(iii) That sufficient FCUs should be provided to meet the heating and cooling loads for each zone set out in the respective GXA Reports, being:

(a) for the Main House and 368D House: nine separate zones; and (b) for the Tourist Cabin: four separate zones.

42. Each GXA Report contained the following disclaimers (emphasis added):

The current submission is considered to be an approximately 90% design as it is common for minor revisions to be required during an installation. In most instances, these minor revisions can be addressed by the installation team without impacting the system design. If there is any uncertainty on this, please be sure to contact the author of this report for comment.

It is not the intention of this report to detail the mechanical services design such as underfloor heating, ducting, pipe runs etc. These items are able to be addressed by a competent installer in coordination with the builder or architect.

(a) The Geothermal Works

43. Aspire provided the GXA Reports to Univenta for it to tender for the geothermal works. As noted above, Univenta issued three quotes on 24 April 2020 (with references “Q400 WPF26 F”, “Q401 WPF26 F” and “Q405”), which form part of the Univenta sub-contract. The quotes contain the following relevant statements:

(a) In respect of the Main House and 368D House, that the works are “as pre [sic] Geoexchange design scenario 1 (WPF 26SET alternative)”. It may be interpolated here that, although the quote for the Tourist Cabin did not expressly refer to the GXA Reports, Cadence contended that:

(i) each quote provided that it was “based upon plans and specifications supplied by customer/engineer”, and the plans and specifications supplied relevantly included the GXA Reports; and (ii) there does not appear to be any real issue in the case that GXA Reports were in fact the basis of Univenta’s quotes.

(b) That 3 FCUs would be installed for each of the Main House and 368D House and 2 FCUs for the Tourist Cabin (along with associated duct work, pipework and dampers). (c) A control system “compatible with Control4” would be provided. Control4 is a home automation system that was to be installed in each Building. (d) The works also included the provision of hydronic underfloor heating (HUFH).

44. As noted above, on 29 April 2020, Aspire and Univenta entered into the Univenta sub-contract for a lump sum of $444,525.40.

45. By reason of these matters relating to the geothermal works, Cadence contended that the geothermal works under the Univenta sub-contract relevantly included:

(a) designing and constructing the geothermal systems (including GHXs) for each of the Main House, 368D House and Tourist Cabin in accordance with Scenario 1 of the GXA Reports so as to achieve Effective Cooling and Effective Heating, while also providing domestic hot water and swimming pool heating; (b) providing a control system for the geothermal systems compatible with Control4 and integrated with that system; (c) providing 3 FCUs for each of the Main House and 368D House, and 2 FCUs for the Tourist Cabin (along with associated duct work and dampers); and (d) HUFH.

(the Geothermal Works)

(i) Cadence’s claims concerning the duties owed to it by Univenta and Mr Trembuch regarding the Geothermal Works

46. Cadence acknowledged that the contractual obligations were between Aspire and Univenta, but also it relied on the duty of care imposed by s 37 of the DBP Act on Univenta and/or Mr Trembuch.

47. Section 37 provides:

37 Extension of duty of care

(1) A person who carries out construction work has a duty to exercise reasonable care to avoid economic loss caused by defects—

(a) in or related to a building for which the work is done, and

(b) arising from the construction work.

(2) The duty of care is owed to each owner of the land in relation to which the construction work is carried out and to each subsequent owner of the land.

(3) A person to whom the duty of care is owed is entitled to damages for the breach of the duty as if the duty were a duty established by the common law.

(4) The duty of care is owed to an owner whether or not the construction work was carried out—

(a) under a contract or other arrangement entered into with the owner or another person, or

(b) otherwise than under a contract or arrangement.

48. “Construction work” is defined in s 3 of the DBP Act to mean:

construction work means any of the following—

(a) building work,

(b) the preparation of regulated designs and other designs for building work,

(c) the manufacture or supply of a building product used for building work,

(d) supervising, coordinating, project managing or otherwise having substantive control over the carrying out of any work referred to in paragraph (a), (b) or (c).

49. There is no dispute that:

(a) the Geothermal Works carried out by Univenta were “building work” and therefore “construction work” within the meaning of s 37; (b) Mr Trembuch supervised, coordinated, project managed and had substantive control over the carrying out of Univenta’s work; and (c) Univenta and Mr Trembuch each owed Cadence a duty of care under s 37 of the DBP Act.

50. Cadence acknowledged that the duty of care owed to it by Univenta was affected by the terms of the Univenta sub-contract and it emphasised the following clauses:

(a) Univenta would carry out and complete the Geothermal Works with due care and skill: General Conditions, cl 1(a). (b) The Geothermal Works would comply with the requirements of the Building Code of Australia: General Conditions, cl 1(b). (c) Univenta warranted to Aspire that the Geothermal Works and all materials used in performing the Sub-contract Works would be reasonably fit for the specified purpose or result (being, in the circumstances set out above, the achievement of Effective Heating and Effective Cooling): Special Conditions, cl 1(f). (d) Univenta had provisioned to ensure that the Geothermal Works would fit into the required space and position.

(ii) Alleged breach of duty of care by Univenta

51. Cadence did not have a direct contractual relationship with Univenta. However, as set out above, it is common ground that Univenta nevertheless owed Cadence a duty to exercise reasonable care to avoid economic loss caused by defects in or related to the Buildings and arising from the Geothermal Works.

52. Dr Piechowski opined that a specialist sub-contractor in the position of Univenta should have:

(a) Completed its design based on the GXA Reports and sought advice from GXA or a third-party engineer if there were any material departures. (b) Undertaken a review of the Nationwide House Energy Rating Scheme (NatHERS) Certificates and window schedules, particularly in circumstances where the design departed from that provided in the GXA Reports. (c) Taken steps during the installation of the HUFH to guard against heat dissipation. This principally involved installing the loop circuits with closer spacing in a different pattern. (d) Provided the equipment and materials required by its contract (i.e. the specified number of FCUs, a properly sized water pump and dampers and a Control4 integrated system). (e) Installed the ducting in accordance with the relevant Australian Standards and the National Construction Code. (f) Installed pipework with an appropriate oxygen barrier (which was also required by the contract) and insulation. (g) Installed adequate condensate drainage pipes with sufficient gradient. (h) Allowed for adequate maintenance of the geothermal systems.

53. Cadence alleged that Univenta did not take those steps and that the failure to do so was causative of the failure of the geothermal systems and the further issues referred to above. In Cadence’s submission, it followed that Univenta is liable to compensate it for the damages described above.

54. In response, Univenta contended that it is not liable to pay damages to Cadence because:

(a) the properties of the windows as installed were different from those assumed in the GXA Reports and Univenta was not told about the changes; and (b) Cadence prevented it from making any necessary repairs or rectifications by denying it access to the building sites after relations broke down.

55. As to the first point, there is a contest on the evidence as to the extent to which those changes were causative of the under-performance of the geothermal systems. Cadence relied on Dr Piechowski's evidence that Univenta should have undertaken a review of the NatHERs Certificates, particularly in circumstances where its design departed from that in the GXA Reports.

56. As to the second point, Cadence claimed that this is not an answer to the issue of whether there was a breach of duty or not; instead, it relates to whether Cadence has mitigated its loss. Cadence contended that Univenta had to demonstrate that Cadence did not act reasonably in this respect, bearing in mind that Univenta was not licensed to carry out the relevant building work until May 2023.

57. Cadence also contended that it was not open to Univenta to seek to apportion any part of its liability to either Aspire or Mr Cronin, citing Pafburn Pty Ltd v Owners – Strata Plan No 84674 (2024) 421 ALJR 133; [2024] HCA 49. I understood this proposition not to be contested by either Univenta or Mr Trembuch.

(iii) Alleged breach of duty of care by Mr Trembuch

58. As noted above, it is common ground that:

(a) Mr Trembuch supervised, coordinated, project managed and had substantive control over the carrying out of the geothermal work by Univenta; and (b) both Univenta and Mr Trembuch owed Cadence a duty of care under s 37 of the DBP Act.

59. In those circumstances, Cadence contended that due skill and care required Mr Trembuch to take reasonable steps to cause Univenta to take the steps identified by Dr Piechowski, as outlined above.

(b) The Building Contracts between Cadence and Aspire

(i) The Geothermal Works

60. As noted above, the three Building Contracts were all entered into on 5 May 2020.

61. Under each of the Building Contracts, Aspire was required to build a new house “as per the Drawings, Schedules and Specifications”.

62. The Drawings and Schedules did not identify the works to be carried out in respect of the geothermal systems. The Specifications provided that the Geothermal Works in relation to the geothermal systems were as follows:

Perform work described here and shown on drawings including but not limited to: In-ground geothermal piping network including brine pit. Hydronic floor (in-slab) heating to entire slab area excluding garages & plant rooms. Active heating & cooling via high static fan coil units including ducting, dampers & grills. Domestic hot water system. Pool heating (200B main house only).

63. Although the Building Contracts do not expressly refer to either the GXA Reports or the Univenta sub-contract, Cadence contended that the works under the Building Contracts can only sensibly be understood as including the Geothermal Works as described above. This is because:

(a) the GXA Reports were procured by Aspire at Cadence's direction and cost for the purpose of obtaining tenders for the Geothermal Works to be performed by Aspire under the Building Contracts; (b) the Univenta sub-contract was entered into by Aspire with the approval of Cadence and forms part of the genesis or background to the transaction as between Cadence and Aspire and is relevant in identifying the commercial purpose of the contractual relationship; and (c) further, the work under the Univenta sub-contract was in fact both charged by Aspire to Cadence and paid for by Cadence under the Building Contracts.

(ii) Aspire’s warranties to Cadence in respect of the Geothermal Works

64. Section 18B of the HB Act relevantly provides:

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,

…

(2) The statutory warranties implied by this section are not limited to a contract to do residential building work for an owner of land and are also implied in a contract under which a person (the principal contractor) who has contracted to do residential building work contracts with another person (a Sub-contractor to the principal contractor) for the Sub-contractor to do the work (or any part of the work) for the principal contractor.

65. It is common ground that the Building Contracts in respect of the Main House and 368D House were contracts to do “residential building work” within the meaning of the HB Act. That is not the case with the Tourist Cabin because it does not constitute a “dwelling”.

66. Cadence contended that Aspire warranted to it that the works in respect of the Main House and 368D House (including the Geothermal Works) would be done with due skill and care by reason of s 18B(1)(a).

67. In relation to the fitness for purpose warranty in s 18B(1)(b), Cadence contended that:

(a) the GXA Reports made it clear that the purpose was to achieve Effective Heating and Effective Cooling; and (b) further, Cadence expressly communicated to Aspire that it was “really relying upon you to make sure we have the right (fit for purpose) system.”

68. The position in respect of the Tourist Cabin is different because, as noted above, it does not constitute a “dwelling” within the meaning of the HB Act. Cadence submitted, however, that terms to the same effect are, in any event, implied at common law in circumstances where the contracts are to perform work and provide materials.

(iii) Aspire and Mr Kearns’ duties to Cadence in respect of the Geothermal Works

69. It is common ground that:

(a) the works carried out by Aspire was “building work” and therefore “construction work” within the meaning of s 37; (b) Mr Kearns supervised, coordinated, project managed and had substantive control over the carrying out of building work by Aspire; and (c) Aspire and Mr Kearns each owed Cadence a duty of care under s 37 of the DBP Act.

(iv) Subsequent variations

70. There were two subsequent variations to the scope of works under the Univenta sub-contract and the Building Contracts:

(a) First, in relation to the pool at the 368D House. On 22 May 2020, Aspire sought a quote from Univenta for a pool at the 368D House to be heated by the geothermal system. That quote was issued on 1 June 2020 in the sum of $14,839 and was approved by Cadence on the same day (although not communicated by Aspire to Univenta until 3 July 2020); and (b) Second, in relation to the heat pumps. On 16 February 2021**,** Univenta provided a recommendation and quotation to Aspire for the upgrade of the geothermal system ground source heat pumps at the Main House and 368D House to Stiebel Eltron WPE-i33 H 400 Premium models, and to a Stiebel Eltron WPE-i12 unit at the Tourist Cabin for the sum of $17,600. Cadence approved those upgrades on 18 and 24 February 2021, which was communicated to Univenta at that time.

(v) Performance of the Geothermal Works

71. Construction commenced around June 2020 with the installation of sub-floor heating and cooling pipes in the slab of the Main House. Work commenced on installing the ground loop systems for the 368D House and Tourist Cabin in September 2020 and for the Main House in November 2020.

72. In August 2021, work in the plant room of the 368D House commenced and the external and internal systems were connected. On 23 September 2021, Aspire gave notice that, in its opinion, Practical Completion of the works in respect of the 368D House had been achieved. Cadence disputed this because, inter alia, the geothermal system had not yet been commissioned.

73. Mr Cronin described his on-site experience of the operation of the geothermal system at the 368D House in the period from November 2021 to January 2022. He said that the system:

(a) regularly shut down; (b) did not cool the house effectively, with rooms not reaching the set temperature even after 8 hours of operation; (c) produced scalding hot water in the laundry and kitchen, while showers were lukewarm or cold on some evenings; (d) was not integrated into the Control4 control system; (e) was leaking water from the FCU in the ceiling; and (f) was energy inefficient.

74. On 24 January 2022, Aspire gave a further notice that it considered the Main House had reached Practical Completion. Cadence disputed this in writing on the same day on the basis that, inter alia, there was “zero evidence” that the geothermal system was working to specification.

75. Mr Cronin gave evidence as to his experience of how the geothermal systems performed at the Main House and Tourist Cabin based on his on-site experience in December 2021. Those observations are also recorded in contemporaneous communications. As with the 368D House, Mr Cronin said that the system did not cool the Buildings effectively, was energy inefficient, regularly tripped and was not able to be operated effectively.

76. Univenta issued a commissioning report in respect of the Main House on 10 February 2022 (Commissioning Report). It relevantly stated that:

(a) the values displayed on the thermostats in the rooms were not reliable because they had been installed too close to light switches; and (b) there was, however, excessive heat in the rooms but this was due to the glazing of the windows which meant that the geothermal system had “limited ability” to cool the house to the “required set point temperatures”.

77. In relation to the window glazing issue, Univenta made the following points:

(a) The GXA Reports assumed that the glazing would have a “U value” of 2.4, and “SHGC” of 0.25. The “U-value” represents the rate of heat loss through a window, with a lower U-value signifying superior insulation performance and reduced heat transfer. The “Solar Heat Gain Coefficient” (SHGC) measures the extent to which solar radiation passes through the glazing. A lower SHGC indicates reduced solar heat transmission, which is advantageous for limiting heat gain during summer, but less desirable in colder conditions when passive solar warmth is beneficial. The values in the GXA Reports were based upon the window schedules provided by Aspire to GXA on 19 March 2020, but Cadence later changed the windows as insisted upon by Mr Cronin to windows which had higher SHGC values. These changes were not passed on to Univenta. (b) The NatHERS Certificates specified different (higher) U and SHGC values. Those Certificates were not, however, provided by Aspire to either GXA or Univenta.

78. By February 2022, Cadence and Aspire had fallen into dispute in relation to, inter alia, the alleged defects relating to the geothermal systems and Cadence had failed to reimburse Aspire for the payment of several invoices from sub-contractors. This resulted in Aspire suspending the works under the Building Contracts and Cadence issuing a notice of dispute. The differences were unable to be resolved and, on 29 April 2022, Cadence issued a notice of termination. On 19 May 2022, Aspire advised Cadence that the notice of termination was a wrongful repudiation of the Building Contracts and that it accepted that repudiation and terminated the contracts.

79. There is no issue that the Building Contracts were in fact terminated. It is also common ground that both parties have their accrued rights in respect of the other including, relevantly, Cadence’s causes of action for defects in the works under the Building Contracts which arise at the time of the breach (being when the defective work was performed). These are addressed in the next section.

(c) Claim against Aspire: breach of the fitness for purpose warranty

(i) Breach of warranty

80. Dr Piechowski opined in his August 2022 Report that the geothermal systems as installed were incapable of achieving Effective Cooling and Effective Heating. In summary, Dr Piechowski said that the principal factors which contributed to the geothermal systems not delivering the required performance were:

(a) Material departures from the GXA Reports in relation to the GHXs contracted and installed by Univenta, which compromised the heating and cooling performance of the systems. In brief:

(i) the GHXs at each of the Main House and the 368D House were materially undersized compared to what was specified in the GXA Reports, and were not properly installed in any event; and (ii) for the Tourist Cabin, the GHX was installed in a shallow dam rather than in a horizontal trench as specified by GXA. Dr Piechowski said this was an inappropriate design solution and added that the GHX was, in any event, undersized and improperly installed.

(b) The failure to provide an adequate number of FCUs, together with the under-sizing of the water pumps servicing those FCUs, materially compromised the overall cooling capacity of the system, particularly in key areas within the Main House and the 368D House. In brief:

(i) the number of FCUs installed did not address the GXA Report requiring FCUs for each of the 9 separate zones in the Main House and 368D House and 4 at the Tourist Cabin; (ii) only 2 FCUs were installed at each of the Main House and the 368D House, not 3 as specified in the Univenta sub-contract; and (iii) further, the water pump installed at each of those houses were incorrectly sized and not capable of providing the required flow rate to the FCUs.

(c) Improper installation of the HUFH at each house. (d) A further issue at the Tourist Cabin is that the ground source heat pump was not adequately sized, and not in accordance with the pump specified in the Univenta sub-contract, or in Univenta’s approved variation Q400 – VAR01 dated 16 February 2021.

81. Cadence claimed that initially, Dr Kivi accepted that the geothermal systems did not have the required capacity to achieve Effective Heating and Effective Cooling at each of the Buildings, but attributed this to changes in the properties of the windows and walls from those assumed in the GXA Report. He opined that, had those design inputs remained unchanged, the systems installed by Univenta would have been sufficient to meet the GXA performance requirements. Dr Kivi also opined that the geothermal systems had the required capacity to achieve Effective Heating and Effective Cooling at each of the as-built Buildings.

82. In Cadence’s submission, while that issue may be relevant to the position as against Univenta, it does not provide an answer to the breach of warranty claim as against Aspire*.* In short:

(a) On Cadence’s case, Aspire warranted that the geothermal systems would be fit for the purpose of achieving Effective Cooling and Effective Heating and those systems at each of the Buildings did not achieve that outcome. The failure of Aspire to provide such a system is not diminished by a hypothesis as to why that outcome was not achieved, unless that can be attributed to Cadence in a legally relevant sense. (b) To that end, s 18F(1)(b) of the HB Act provides a defence to a claim for breach of warranty if Aspire proves that the deficiencies which Cadence complains of arise from:

…reasonable reliance by the defendant on instructions given by a person who is a relevant professional acting for the person for whom the work was contracted to be done and who is independent of the defendant, being instructions given in writing before the work was done or confirmed in writing after the work was done.

(c) Aspire pleads a general defence pursuant to s 18F(1)(b), but does not explain how it applies to this breach of warranty. Cadence emphasised that each of GXA, Univenta and Hanlon Windows (who supplied the windows) were contractors to Aspire*.*

83. Cadence contended that there were further aspects of the Geothermal Works which were not fit for purpose. These are set out in detail in Annexure C to Dr Piechowski’s March 2025 Report. In summary:

(a) the geothermal systems were not integrated into the Control4 system; (b) air flow balancing dampers were not installed; (c) the pipework did not have the required oxygen barrier; (d) the air ductwork was improperly installed and was not adequately insulated; and (e) the long-term maintenance of the system was compromised because equipment in the plant room and ceiling space was cramped (thereby impeding access) and a dosing inlet was not provided (to allow injection of corrosion inhibitors).

84. Cadence claims that Dr Kivi agreed that it was necessary to rectify the ductwork but otherwise did not engage with the above defects in any substantive way.

85. Cadence contended that:

(a) the Geothermal Works were not fit for purpose in that they:

(i) were incapable of achieving Effective Cooling and Effective Heating; (ii) were otherwise defective in the manner described above; and

(b) Aspire has therefore breached its warranties to Cadence in this respect.

(ii) Damages

86. Cadence contended the general rule is that the measure of damages recoverable by a building owner for breach is:

(a) the cost of making the work or building conform with the contract, provided that the work undertaken is necessary to achieve conformity and is a reasonable course to adopt; and (b) profits or earnings lost by the breach.

(iii) The works reasonably necessary to achieve conformity with the contractual standard

87. On 3 August 2022, Cadence engaged a new builder, Horizon, to, inter alia, engage all necessary consultants and contractors to complete the building works or rectify the alleged defects at each of the three Buildings and, in particular, to oversee the management and completion of rectifying the geothermal systems.

88. On 24 October 2022, Cadence entered into a contract with Horizon. The work under that contract was described as “Geothermal system rectification works at Main House, Tourist Cabin and the 368D House, having regard and in response to Dr Piechowski’s Report dated 19 August 2022, including make good works, plus additional downpipe to roof 368D House and defect works not completed by Aspire Constructions”. On 28 October 2022, Horizon engaged CWL to rectify the geothermal systems in accordance with CWL’s recommendations.

89. Cadence contended that it was not feasible to rectify the Geothermal Works by, in effect, ripping up that which had already been installed as this would have involved demolishing the Buildings and disturbing some of the surrounding landscaping. Mr de Maio from CWL gave evidence that:

(a) CWL’s preferred solution to rectify the issues identified by Dr Piechowski was to install supplemental GHXs. Doing so was not possible, however, because the landscaping, driveway and tennis court had already been built; and (b) instead, he considered the appropriate course was to “decouple” the geothermal system so that it would only provide heating and portable hot water, and the cooling would instead be provided by a conventional (air sourced) reverse cycle air conditioning system.

90. Windows were tinted and eaves vents and roof vents installed to reduce the thermal load on the system as part of the rectification works.

91. This “hybrid” solution required more power with the consequence that the solar panel system and battery storage at the off-grid properties of the Main House and Tourist Cabin were upgraded.

92. Further problems emerged during the course of rectification works in relation to the HUFH system. In particular, it was found that insulation on the edges of the slabs had not been installed by Aspire and there were issues with the way in which the HUFH loops had been installed, causing material performance issues with the heating. Ultimately, new larger powered circulation pumps were installed at each of the Buildings to improve the dispersion of the heat through the HUFH system.

93. As set out above, Mr Daubney assessed the reasonable cost of these rectification works in the total sum of $1,107,166, comprised of:

(a) $69,406.50 (being $62,160.00 including GST paid to KickTECH, plus Horizon’s builder's fee of $5,401.26 including GST on amounts paid direct by Cadence and Horizon's builder’s margin of 15% on amounts paid by Horizon) to integrate the control systems of the properties with the Control4 system. (b) $328,215.64 (being $285,404.90 including GST paid by Horizon to RJ Air, plus Horizon’s builder’s margin of 15%) to rectify the ductwork and install the conventional air conditioning system. (c) $260,204.18 (being $226,264.50 including GST paid by Horizon to CWL, plus Horizon’s builder’s margin of 15%) to decouple the cooling from the geothermal systems, remediate the hydronic plant and pipework and rectify the plant room installation defects. (d) Works to upgrade the solar farm and battery storage that supplied the Main House and the Tourist Cabin to accommodate the additional energy load for the new conventional air conditioning systems totalling $109,464.30 (comprised of $100,829.30 including GST paid to Wise Integrated, $5,758.50 including GST paid to NTC Services and $2,876.50 including GST paid to Selby's Earthmoving). (e) $129,593.04 for works to reduce the thermal load required to cool the houses. These costs comprised of:

(i) $114,644.511 including GST (paid to TintFX) to tint the windows; and (ii) $14,948.53 (being $7,004.91 including GST paid by Horizon to Parrish Roofing, $3,447.50 including GST paid by Horizon to Solarbright, $1,452.60 paid by Horizon to Fresh Ventilation, $803.12 including GST paid by Horizon to Powder Principle, $186.51 including GST paid by Horizon to Capral Aluminium and $104.08 including GST paid by Horizon to Resene plus Horizon’s margin of 15%) to install eave and roof vents.

(f) $206,262.84 in costs that relate to the rectification work in general, rather than any particular breach, comprised of:

(i) $70,706.63 including GST (being $62,142.30 including GST paid by Horizon to Morris C Painting, plus Horizon's builder's fee of $8,564.33 including GST) and $7,591.77 including GST (being $5,791.85 including GST paid by Horizon to Prestigious Plastering and $809.69 paid to Decorative Solutions, plus Horizon's margin of 15%) to repair finished walls, ceilings and other works that were disturbed by the geothermal rectification work; (ii) $18,414.52 including GST (being $16,012.62 including GST paid by Horizon to Lenergy, plus Horizon’s margin of 15%) for electrical repair works including in respect of the geothermal systems at all three Houses; (iii) $4,052.16 including GST (comprised of $1,530.00 paid to Bevans Window Cleaning, $1,410.00 paid to Highland Cleaning and $1,112.16 paid to Rich Earth Landscape Gardens) for reinstatement and cleaning of areas affected by the geothermal rectification work following completion of those works. (iv) $96,424.55 including GST and Horizon's margin paid to Horizon for preliminaries, insurance and site management; and (v) $9,073.21 including GST and Horizon's margin paid to Horizon for direct labour provided by Horizon.

94. In addition, Cadence paid:

(a) $71,610 including GST to CWL for rectification of the geothermal systems; (b) $1,650 including GST to Jirgens Civil to remove and replace the defective GHX in the dam at the Tourist Cabin with a new, vertically drilled GHX; and (c) $5,074.63 including GST to Horizon to close out those and other geothermal rectification work.

95. Cadence contended that the “hybrid system” it installed as part of the rectification has left it with an inferior alternative to that which Cadence reasonably expected Aspire to deliver; namely, a premium, high‑performance, and energy‑efficient pure geothermal system designed to complement the remote and off‑grid power arrangements of the Main House and Tourist Cabin and hybrid power set up at 368D House.

96. The issue of what were appropriate rectification works in respect of the geothermal systems is hotly contested. The experts disagree. On the one hand, Dr Piechowski opined that the rectification works which were in fact carried out were reasonable. On the other hand, Dr Kivi considered that much of the work relating to the Main House was not necessary to achieve performance and indeed constituted a “major mistake”. In Dr Kivi’s opinion, to rectify any defects (assuming they existed), he would have replaced the ductwork, installed retractable shades on the outside of each of the Buildings, and installed a 15kW air-to-water heat pump. Mr Madden on behalf of the defendants has quantified the cost of carrying out those narrower rectification works to the Main House in the sum of $95,675.69.

97. I do not read Dr Kivi’s evidence on this matter as an acknowledgment by him that the Geothermal Works were in fact defective. Rather, his evidence regarding rectification work has to be read in the light of the following extracts from his first expert report:

Assuming that the Main House had been constructed in accordance with the GXA Concept Design, the designs of the Geothermal System would have been sufficient to meet the performance specifications (including the Heating and Cooling Design Target temperature and Heating and Cooling Load) set out in the Geoexchange Reports.

However, Geoexchange (GXA) thermal modeling inputs for the window SHGC, are wrong as the GXA report specifies SHGC of 0.25 instead of the SHGC rating of 0.56 which was constructed. The difference between the SHGC ratings has resulted in a higher cooling load in the as-built home than the cooling load specified in the Concept Design. The higher cooling load means that the heat pump is undersized for cooling the as-built house. This results in an overall undersizing of the cooling distribution system in the geothermal system in the as-built house.

(iv) Loss of opportunity to sell the 368D House

98. Cadence placed the 368D House on the market in November 2021. Despite interest in the property, including a signed contract at $9 million which did not formally exchange, Cadence ultimately withdrew the property from the market in February 2022. It said that this was because of the severity of the defects which had emerged at that time in relation to the geothermal system.

99. Practical completion of the rectification works at the 368D House was achieved on 13 October 2023.

100. Mr Cronin deposed that Cadence incurred holding costs in the extended period relating to the 368D House totalling $763,544.

101. The 368D House remained unsold at the time of the hearing and continued to be listed for sale.

102. Mr Devitt opined that, in February 2022, there had been multiple interest rate cuts at this time and market conditions for rural lifestyle properties were strong. He said that the market began to turn towards the end of 2022 as interest rates and inflation increased, and this continued into 2023 and 2024.

103. As noted above, Mr Devitt valued the 368D House as at February 2022 in the amount of $7.75 million and in the lesser amount of $5.85 million as at the date of the trial. These valuations were not challenged.

104. Cadence contended that the defects in the geothermal system caused it to lose the opportunity to sell the 368D House in beneficial market conditions in February 2022 and, having regard to the interest shown in that property and the market conditions at the time, that opportunity was one of substance.

105. As to damages, Cadence contended that the proper measure of damages is:

(a) the difference between market value as at February 2022 ($7.75 million) and the market value as at the date of trial ($5.85 million), plus the additional holding costs which would not have been incurred had the opportunity been realised ($763,544); and (b) a discount applied to that sum to reflect the inherent uncertainties in the opportunity being realised in fact in February 2022.

(d) Claim against Aspire: breach of the due care and skill warranty or breach of duty of care

106. As noted above, Cadence put its case against Aspire in the alternative on the basis of a failure to exercise due care and skill which constituted a breach of either the implied warranty to that effect, or the duty imposed by s 37 of the DBP Act.

107. Cadence relied on Dr Piechowski’s evidence which, in summary, is that a reasonable builder in Aspire’s position should have:

(a) Sought advice from a specialist engineer (such as GXA) as to the works proposed by Univenta in the first instance, and then during the course of the works in relation to changes in the building specifications relevant to the geothermal system (i.e. glazing). (b) Provided Univenta with the NatHERS Certificates and updated window (and glazing) specifications. (c) Sought detailed shop drawings from Univenta as to the proposed installations and reviewed them with a third-party mechanical engineer. (d) Ensured that Univenta in fact installed the plant and equipment detailed in those shop drawings. (e) Arranged for inspection and testing of the works, in particular at the ‘rough in’ stage before the works were covered. (f) Thoroughly tested and documented all mechanical, electrical and controls systems in an appropriate commissioning report or equivalent document log and provided a detailed operation and maintenance manual prior to claiming Practical Completion.

108. Cadence further contended that:

(a) those defects were caused by a failure to exercise due skill and care; and (b) the same damages as set out above in relation to the alleged breach of warranty were recoverable by Cadence.

(e) Cadence’s claim against Mr Kearns for breach of the duty of care

109. Mr Kearns was the sole director and shareholder of Aspire. As noted above, it is common ground that:

(a) Mr Kearns supervised, coordinated, project managed and had substantive control over the carrying out of building work by Aspire; and (b) Mr Kearns owed Cadence a duty of care under s 37 of the DBP Act.

110. In those circumstances, Cadence contended that exercising due skill and care required Mr Kearns to take reasonable steps to cause Aspire to take the steps outlined above.

111. Cadence contended that it is entitled to recover the same damages against Mr Kearns personally because he breached his duty of care.

PART E: CADENCE’S CLAIMS IN RELATION TO THE INTERNAL ACCESS ROADS OUTLINED

112. Prior to the building works, 200 Bunkers Hill Road was accessed only by internal gravel and dirt roads. The areas where the Main House and Tourist Cabin were to be built were undeveloped paddocks and new internal roads needed to be built to traverse them.

113. Cadence claimed that Aspire was obliged under the Building Contracts to design and construct the permanent internal access roads, including the associated stormwater drainage systems extending from Bunkers Hill Road to both the Main House and Tourist Cabin. It emphasises that, in any event, Aspire did in fact undertake these works and is consequently liable for their deficiencies.

114. Significantly, no civil geotechnical/engineering plans were obtained by anyone prior to constructing the internal access roads. However, there were Landscape Plans.

115. It is common ground that there were substantial problems with the internal access roads, including some parts of the lower side road collapsing, extensive tension cracking, detachment of the spray seal from the road base and inadequately designed and constructed stormwater drainage systems.

116. Cadence also claimed that the works did not comply with relevant conditions under the Development Approval and related documentation, including conditions relating to access by the NSW Rural Fire Service.

117. The Development Approval contained conditions that had to be complied with before a construction certificate could be issued, including Conditions 24 and 28 which related to access road design and stormwater drainage design respectively:

24. Access Road Design

A bitumen sealed driveway crossing with a compacted pavement thickness designed for 2x104 ESA (200mm minimum) must be constructed 3.5 metres wide (minimum) at the property boundary and splayed to accommodate the largest vehicle requiring access at the pavement edge line in accordance with Plan SC 2637-35.

a) Council’s Development Engineer or delegate must inspect and approve the work in accordance with Councils Engineering Design Specifications.

b) The driveway is to be constructed using a piped culvert or a gutter crossing at the table drain.

c) Existing table drains are to be realigned as necessary to prevent ponding of water (minimum distance of 2m each side to suit the pipe culvert/gutter crossing).

d) If a piped culvert is to be constructed, then the pipe must be sized to take the 20% AEP flow in the table drain or be a minimum of 375mm internal diameter whichever is greater.

e) The piped culvert is to be protected at each end by headwalls and at least the downstream side must be protected against scour and erosion (length dependent on grade).

…

Stormwater Drainage Design

28. Major and minor drainage systems must be designed by a qualified practising engineer in accordance with Council’s Engineering Design Specifications section D5 (Stormwater Drainage Design) and DCP 2014 – Chapter G2: Sustainable Stormwater Management and Erosion/Sediment Control. The minor and major systems must be designed for 20% AEP for rural areas and have consideration for the 1% AEP rainfall events respectively.

118. These two conditions were affected by other conditions, including Condition 26 which required the driveway to be designed with a four metre wide gravel pavement inclusive of one metre shoulders and associated drainage and required that the design be in accordance with Council’s Engineering Design Specifications section D2.04. Condition 29 dealt with geotechnical engineering design and certification and required that “[d]esign plans and certification prepared by a qualified Geotechnical Engineering [sic] must be provided prior to the issue of the Construction Certificate” and must address, inter alia, surface and sub-surface water management. It also required that all retaining walls be designed to meet long-term serviceability requirements and be provided with an effective drainage system.

119. Furthermore, in March 2022, when the parties were in dispute and prior to the Building Contracts being terminated, substantial damage was done to the internal access road by an extraordinary rainfall event. There was also significant rain in the region earlier that year.

120. Cadence’s evidence on this subject was given by Mr Cronin and Mr Jones, a Senior Civil/Structural Engineer at MI Engineers, who prepared a report relating to the rectification works. The parties, Cadence and Aspire, also relied upon expert evidence by their respective expert witnesses, Mr Rian Vleggaar, whose report is dated 5 March 2024, and Mr Simon Fagg, who prepared a report dated 18 October 2024. The two experts produced a Joint Report dated 22 September 2025 (Vleggaar/Fagg Joint Report) and gave evidence in the conclave.

121. The relevant condition describing the work to be completed by Aspire in paragraph (a) of Sch 3 of each of the Building Contracts required Aspire to complete “internal road asphalt” as per the Drawings, Schedules and Specifications as set out in paragraphs (b)-(c) of Sch 3 of the Building Contracts.

122. One of the Drawings specified in paragraph (c) of Sch 3 was a “Site plan” dated 20 April 2020 prepared by Cadence’s architect, Design Group Studio. The Site plan was identified as having the number A1.01. It is unclear whether a copy of this Site plan was included in the evidence. The Court was not taken to a copy of that document by any party.

123. It should be noted, however, that that Site plan may be different from the plan which formed part of the Development Approval dated 1 April 2020 in relation to the Main House. The “Overall Site Plan (Main Residence)” referred to in Part A of the Development Approval (which identifies the conditions of the approval) is a plan dated 16 January 2020 by Design Studio Group and is described as Drawing No DA1.00 Revision: C. To add to the confusion, there is a document in evidence, prepared by Design Studio Group, which is described as an “Overall Site Plan (main residence)”. It is dated January 2020, revision A, but also contains a reference to a revision date of 23 April 2020 (which post-dates the date of the Development Approval, being 1 April 2020). This Overall Site Plan depicts the vehicle driveway to and beyond the proposed Main House up to the proposed Tourist Cabin. The document contains the following notes, which plainly refer to the proposed internal access roads:

notes;

- min carriageway width of 4m with max distance lengths of 30m at 3.5m wide if an obstruction cannot be reasonably avoided or removed or where there are trees.

- curves a min inner radius of 6m

- min distance between inner and outer curves is 6m

- max crossfall 10 degrees

- max grades for sealed roads do not exceed 15 degrees (28%) and not more than 10 degrees (18%) for unsealed roads

- internal road surfaces and bridges have a capacity to carry fully loaded firefighting vehicles (28 tonnes)

124. The Court was not assisted by the parties in trying to identify in the evidence, which exceeded more than 17,000 pages, which particular version of Design Group Studio’s site plan was the relevant version for the purposes of Cadence’s claim in respect of the internal access roads. Naturally, Cadence bore the onus of proof in making good its claims on this topic.

125. The confusion described above was compounded by the fact that in the Joint Report of Mr Vleggaar and Mr Fagg dated 22 September 2025, the experts were asked to respond to a question about whether Aspire was responsible for completing any remaining design elements for the road and stormwater damage following from what is described as the “Overall Site Plan DA1.00 dated 234 April [sic] 2020 prepared by the Design Studio Group”. This plainly contained a typographical error. Later in that Joint Report, the experts answered that question with reference to what they identified as “Overall Site Plan DA1.00 dated 24 April 2020”. There does not appear to be a copy of that particular Overall Site Plan in the voluminous evidence. The Court has assumed that the correct version is that which bears a revised date of 23 April 2020 in circumstances where that pre-dates the dates of the Building Contracts. The state of the evidence is such that the Court cannot determine whether there are any material differences between that document and the “Overall Site Plan (Main Residence)” referred to in the Development Approval.

PART F: CADENCE’S CLAIMS IN RELATION TO THE GENERAL BUILDING DEFECTS OUTLINED

126. Cadence claimed damages for the cost of rectifying numerous general building defects. The claims against Aspire are made under the Building Contracts and/or the statutory duties under the DBP Act, or against both Aspire and Mr Kearns for breach of warranties in the HB Act. Cadence annexed to its post-hearing closing written submissions an updated Scott Schedule. With reference to each item, the Schedule identified the particular defect, the risk of harm, the response by Aspire and Mr Kearns, references to the parties’ respective expert evidence on general building defects and references to the quantum expert evidence.

127. Earlier, in his closing oral address, Mr Kearns had handed up a revised aide memoire which was designed to address each item of the general building defects as identified in the Joint Expert Report prepared by Mr Matthew Crosby and Mr George Nikolas (Crosby/Nikolas Joint Report). The aide memoire identified the items which were accepted by Aspire and Mr Kearns as defective, items which were disputed, items which Aspire claimed were incomplete works rather than defective, and items which were no longer pressed by Cadence. The revised aide memoire reflected the fact that, during the course of the hearing, Cadence had abandoned several items. As will shortly emerge, however, Cadence sought leave to resurrect some of those items when it provided its closing written submissions after the hearing had completed and after the defendants had provided their oral closing submissions. I will address this below.

128. It is convenient to address the relevant items concerning general building defects by reference to the broad categories used in Cadence’s written closing submissions.

(a) Internal doors ($179,321)

129. Cadence’s claims concerning internal doors are identified in items 65, 73, 165, 312 and 353 in both the revised Scott Schedule and the Crosby/Nikolas Joint Report.

130. The principal difference between the experts relates to the proper meaning of the door schedule drawings prepared by Cadence’s architect, Design Studio Group. Those drawings show internal doors with the figure of 900mm underneath (see the drawing at [466] of Part I below). The issue on which the experts disagreed is whether the figure of 900mm represents the opening before a door jamb is fitted or represents the width of the opening including the jamb. Mr Crosby opined that the drawings depicted the width of the door itself, not the opening, and that it would be a matter for the framing company to allow for the jamb. In contrast, Mr Nikolas opined that the 900mm figure included both the door and the jamb, such that a door which was 820mm wide was compliant because the remaining 80mm allowed for the door jamb. He said that all the doors met that standard, apart from three in the Tourist Cabin.

131. When asked whether there was a building practice in respect of this issue, Mr Nikolas said that, typically, door schedules show the size of the opening into which both the door and door jamb fit. In contrast, Mr Crosby gave the following evidence on business practice:

WITNESS CROSBY: … So when we order windows in particular, the windows are always on the schedule side. So if you order an 18 by 18 window, that’s what’s nominated in the schedule. The opening size is then expressed separately for the framing company, so they know how much width to give for the tolerance for that particular window. Some companies prefer 50 millimetres each side. Some companies prefer much less. So depending on the size of the window and how much movement they expect of the building, if the building is brick, then there’ll be less movement in the cladding areas than there would be if it’s a suspended pole home.

So the opening sizes will vary, but it’s very specific on the schedule. When we look at the schedule, we have a look at the size of what is required to install. And then after that, we have opening sizes nominated. And those opening sizes will be very clearly nominated for each window. And each elevation is different as well, depending on how much exposure to wind, rain, sun, whatever those things that could cause thermal movement, that could cause, you know, structural movement, the nominated sizing will change, and the openings will change. The size of the window will not, because that’s the window you have to install.

HIS HONOUR: But what’s that got to do with doors?

WITNESS CROSBY: Doors are the same. The same process.

132. It seems remarkable that there is no generally agreed building practice in relation to this matter, which must frequently arise.

(b) Tennis court drainage ($73,171)

133. Relying on the expert evidence of Mr Crosby, Cadence contended that the tennis court, being next to an elevated catchment area, was required to be protected from ponding pursuant to the National Construction Code and Australian Standard 2870, but the installed drainage system did not do so adequately.

134. In the absence of any contradicting evidence, Cadence claimed that Aspire’s work was not only in breach of the Building Contracts, but was also not in accordance with the warranties in ss 18B(1)(a) and (e) of the HB Act. This is because the work was not carried out with due care and skill and/or was not reasonably fit for purpose.

135. In its updated Scott Schedule, Cadence contended that the drainage in and around the perimeter of the tennis court and retaining wall was defective because it failed to divert water away from the tennis court. In its opening written submissions, Cadence referred to Mr Cronin’s evidence of water pooling around the tennis court. It also relied upon Mr Crosby’s supplementary report dated 10 April 2025 and the claim in item 220 of the updated Scott Schedule. Mr Crosby reproduced photographs of the tennis court area which appeared in Mr Cronin’s first affidavit and showed extensive pooling around the western and northern parts of the tennis court. Many of the photographs were taken in the first quarter of 2022, when there was usually significant rainfall in the area.

136. The cost of rectification works in relation to the tennis court drainage was $73,371, with Cadence relying on the evidence of both Mr Cronin and Mr Daubney.

137. Cadence’s claim relating to tennis court drainage was not addressed by Mr Nikolas in his expert report dated 20 September 2024. It appears that this may be because Aspire and Mr Kearns did not appreciate at the time that the claim was still pressed. The issue was, however, dealt with at some length by Mr Crosby in his supplementary expert report dated 10 April 2025. The updated Scott Schedule, which includes reference to item 220, simply records the response by Aspire and Mr Kearns and, understandably, there is no reference to any expert evidence by Mr Nikolas. Nor is item 220 specifically addressed in the revised aide memoire handed up by Mr Kearns.

138. In its closing written submissions (which were provided after the defendants had completed their closing oral submissions), Cadence simply stated that it relied upon its opening submissions in relation to the tennis court drainage defect.

139. Aspire and Mr Kearns denied that there was any defect. They contended that run-off was managed by a swale which directed all water along the surface and did so effectively. This claim was not supported by the photographs referred to above, noting however that some were taken around the time of the exceptional rain event in March 2022.

140. In their written response to Cadence’s closing written submissions, Aspire and Mr Kearns stated at [51] that they had reasonably assumed that Cadence did not press this item because of the evidence given on day two of the trial about the lack of stormwater engineering drawings. It was then noted that the tennis court is situated in a way which means that it received significant additional water runoff from the incomplete road and that there was no formal stormwater design at the time of the alleged defect and water pooling. Aspire and Mr Kearns added that Cadence should not succeed on this claim given the lack of stormwater engineering plans and the fact that Mr Cronin was content to rely on Mrs Catherine Lewis’s Landscape Plans rather than obtain proper stormwater plans and designs. They contended that this is reflected in Mr Cronin’s email dated 8 April 2020 to Shoalhaven City Council in which he sought to have particular conditions, , relating to stormwater, removed from the Development Approval. This email was sent one week after Cadence was informed of the Development Approval. The conditions relating to stormwater drainage are described at [117] of Part E above.

(c) Cobblestone driveways/crazy paving ($57,218)

141. It was not easy to follow Cadence’s case in relation to these matters. The case was not presented consistently as I will now demonstrate.

142. In Cadence’s opening written submissions, the items which it said were the subject of its complaint about defective cobblestone driveways were identified in items 3, 35, 85, 142, 217, 230, 242 and 261 in the Crosby/Nikolas Joint Report. It submitted that the experts were agreed that items 3, 85 and 242 were defective and that they also agreed that items 35, 142, 217, 230 and 261 were incomplete but they disagreed as to whether that incompleteness means that the works are defective.

143. In oral address, Mr Lyons confirmed that the only items pressed by Cadence in respect of general building defects were those identified in its opening written submissions.

144. As noted above, in addition to preparing the Crosby/Nikolas Joint Report, in the course of the hearing the experts gave further oral evidence in the conclave and were cross-examined.

145. Cadence’s case relating to these matters then changed in its written closing submissions (which were provided after the trial and oral closing addresses by the defendants). It referred to the items identified in its written opening submissions (save that it said it made a claim in relation to item 262 when in fact it was 261). Cadence then added that it did not press its claims for items 3, 35, 85, 142, 217, 242 and 262 (sic). It then said that the claimed amount of $57,218 related in fact to items 75, 230 and 240 (which relate to the cobblestone driveways and crazy paving issues in the Main House and the Tourist Cabin). It stated that notwithstanding that it had previously indicated that it was not pressing item 240 (which related to crazy paving), this was incorrect. It then sought leave to press both items 75 and 240. It contended that these changes should cause no prejudice because the items were addressed in the Crosby/Nikolas Joint Report and are similar in kind to other items identified in Cadence’s opening written submissions.

146. Cadence submitted that the experts agreed that item 75 (which related to concrete slurry on cobblestones at the Tourist Cabin) was a defect. It submitted that items 230 and 240 (which related to slurry splatter on cobblestones at the Main House and crazy paving at the Main House respectively) were incomplete, but they disagreed as to whether the incomplete nature of those works constituted a defect.

147. Cadence contended that in circumstances where Aspire asserted that the Main House building works had been completed and had not made any claim in its amended cross-claim concerning outstanding costs relating to its initial crazy paving sub-contractor (Rich Earth) or original cobblestone sub-contractor (MLT), the Court should infer that the original works relating to the crazy paving and cobblestone driveways had been completed and that such works were subsequently claimed by Aspire and paid for by Cadence.

(d) Roof ventilation & leaks ($51,537)

149. Cadence’s claim concerning the roof flashing and ventilation are addressed in items AD-4 and AD-5 of the updated Scott Schedule. The defect the subject of AD-4 is that the Main House roof had a leak causing damage to the roof rafters and ceiling and that the leak was caused by an 8mm gap between the aluminium roof flashing on the facia on the eastern side of the house near the roof valley. AD-5 relates to the absence of a passive ventilation system resulting in condensation in the roof cavity of the Main House.

150. Cadence contended that neither Aspire nor Mr Kearns contradicted Mr Crosby’s evidence that, contrary to the National Construction Code:

(a) there is a gap in the flashings through which water can penetrate; and (b) no passive ventilation was installed to prevent the accumulation of condensation.

151. Cadence relied on Mr Cronin’s evidence of roof leaking and mould at the Main House. It also relied on Mr Crosby’s estimates of the costs of rectification, being the sum of $21,060.40 in respect of flashing and $30,476.71 in respect of passive ventilation. Presumably, these figures are derived from the Trade Summary in Mr Crosby’s Supplementary Report with Costs dated 10 April 2025. The raw figures stated there (without contingency, preliminaries, builders’ overhead and profit and GST) concerning costs of rectification in respect of “Roof repair” and “Roof Ventilation” are $12,932 and $18,714.02 respectively. When those additional matters are also taken into account, however, the total estimate in respect of the roof rectification is $21,060.40, which is the amount claimed by Cadence.

152. Cadence also relied upon Mr Crosby’s Supplementary Report with Costs dated 10 April 2025 in respect of its claim concerning AD-4. Mr Crosby said that during his inspection at the site, he had noted a gap in the roof flashings in the Main House at each of the internal mitred roof bar flashings and he included some photographs he took during his inspection. Mr Crosby noted that section P2.2.2 of the National Construction Code required a roof system to be weatherproof and to prevent water entry into the dwelling. He identified the following rectification works to address the defects:

153. Set up time and install protection barriers.

154. Removal of the existing barge flashings at the internal mitre joint and store for future use.

155. Repair any structural damage if located or identified and ceiling damage.

156. Install under flashings at the junction.

157. Seal with an appropriate sealant.

158. Replace the barge flashings and fix in place.

159. Seal the 8mm gap with an appropriate flexible sealant.

160. Repair any consequential damage.

161. Clean site and remove any waste.

162. Mr Crosby added that these rectification works should be applied to all internal mitre joints of the roof systems in all three Buildings.

163. In their written response to Cadence’s closing written submissions, Aspire and Mr Kearns accepted liability in respect of roof leaks but only in the amount of $356. They submitted that the passive ventilation claim in the amount of $33,476.71 should be struck out on the basis that it related to additional works requested by Mr Cronin and was not shown anywhere in the Building Contracts or relevant plans. They contended that these extra works were requested to increase geothermal system performance and that Dr Kivi opined that the work was not necessary.

164. Mr Lyons confirmed in his opening oral address that as part of the rectification works, roof eaves and vents had been installed so that hot air could escape.

(a) a photograph of the 8mm gap at the internal mitres joint which showed that only a minor section of barge flashing required sealant and this would apply to four areas; (b) trade breakdown figures provided in Mr Crosby’s supplementary report dated 10 April 2025 in respect of AD-4, which amounted to a total of $12,932 and which Mr Kearns said were “wholly disproportionate to the limited issue identified, and amount to an almost unbelievable expansion of which is, in reality, a very minor matter”; and (c) Mr Kearns acknowledged that he would accept liability in respect of item 6 of the trade breakdown (which gave a cost of $356 for one tradesman to seal the gap in each of the four areas, applying one hour for each area).

(e) Microcement ($48,239)

158. In its opening written submissions, Cadence claimed damages in respect of what it said was defective microcement work as identified in items 11, 103, 111, 114, 116, 267, 269, 273, 274, 276 and 278 of the Joint Report.

159. In his opening oral address, Mr Lyon confirmed that Cadence was only pressing those items concerning general building defects which were identified in the opening written submissions. Cadence informed the Court and Mr Kearns that it was not pressing items 22, 23, 24, 33, 97, 246, 264 and 265. Unsurprisingly, therefore, the revised aide-memoire which Mr Kearns handed up in Court towards the end of the trial referred to these items as “Not pressed”.

160. Cadence’s position then took an unexpected and belated turn. In its written closing submissions, which were provided after the hearing had ended and after the defendants’ closing oral addresses, it stated that the items which it told the Court and Mr Kearns it was no longer pressing were in fact now pressed. It sought leave to press those items. Although Cadence accepted that this development was “unfortunate”, it said that it did not apprehend any prejudice to the affected defendants because the relevant items were addressed in the Crosby/Nikolas Joint Report and relate to similar defects and issues to items identified in the opening written submissions. It added that Mr Kearns had cross-examined Mr Crosby on the underlying issues.

161. Cadence submitted that in the Crosby/Nikolas Joint Report:

(a) Mr Crosby and Mr Nikolas agreed that items 11, 97, 103, 111, 114, 116, and 264 were incomplete, but disagreed as to whether the incomplete nature of those works therefore constituted a defect; and (b) there is a factual issue in relation to items 18, 19, 20, 22, 23, 24, 25, 26, 33, 246, 265, 267, 269, 273, 274 and 278 in that Mr Nikolas was instructed to assume that these works were completed by Aspire.

162. In relation to (a) immediately above, the experts agreed in the Crosby/Nikolas Joint Report that these works were incomplete. Mr Crosby's evidence was that water entry, cracking and blistering to the surface of the microcement had been identified in the photos provided and that "[w]ater can enter through the cracking and cause the product to flake, powder and blister, resulting in degrading and failure of the system". Cadence submitted that the microcement works were defective because it was cracking, flaking, drummy, and/or discoloured.

163. Furthermore, Cadence emphasised that Aspire had already claimed and been paid 100% of the original costs relating to its microcement sub-contractor, Architectural Venetian Plaster & Microcement (AVP), for the works at the Main House and 368D House and therefore it could not be said that the microcement works were incomplete at the Main House and the 368D House. As for the Tourist Cabin, all but $1,701 had been claimed by Aspire for the microcement works. If the Court was to find that the microcement work at the Tourist Cabin was incomplete rather than defective, Cadence acknowledged that an amount of $1,701 should be deducted from its claim.

164. In relation to (b) immediately above, Cadence contended that Aspire failed to complete these works and that Horizon’s sub-contractor, Xray Render, inspected the microcement works on 27 December 2022 and identified that the works were defective because the wrong materials had been used and there was poor preparation of concrete below the microcement.

165. Aspire and Mr Kearns opposed Cadence obtaining leave to resurrect items 22, 23, 24, 33, 97, 246 and 265. They also objected to Cadence’s contention that Mr Kearns had cross-examined Mr Crosby on the underlying microcement issues. They explained that this was because Mr Crosby had confirmed that he had not inspected the microcement defects which meant that there could be no meaningful cross-examination of him by Mr Kearns except on the distinction between incomplete and defective works. Finally, Aspire and Mr Kearns submitted that the Court should not rely on Mr Crosby’s assessment of the relevant microcement items because they represented not his opinion but that of Mr Cronin.

166. In his closing oral address, Mr Kearns emphasised that of the original 86 items in the Scott Schedule, 41 were not pressed. Mr Kearns also said that Aspire had in fact directed its then sub-contractor (AVP) to finish the microcement work “but he hadn’t quite got there”. Mr Kearns acknowledged that in respect of Aspire’s payment to AVP for microcementing, Aspire had “jumped the gun” and overpaid him because he never actually did the work. He added, however, Cadence did not give Aspire the chance for AVP to complete the microcementing work.

(f) General power outlets ($16,127.58)

167. In its opening written submissions, Cadence contended that Aspire installed surface-mounted general power outlets (GPOs) in locations where the Building Contract plans specified recessed floor GPOs. It also contended that the GPOs as installed were not compliant with the National Construction Code.

168. Mr Crosby and Mr Nikolas agreed that the GPOs had not been installed in accordance with the plans and specifications, but Mr Nikolas stated that the as-built location of the GPOs was the result of a variation, a proposition which Cadence contested.

169. In its closing written submissions, Cadence noted that its claim concerning GPOs also related to item 309, which has been addressed by the experts. Item 309 related to what was described in the updated Scott Schedule as “[s]elected electric floor box to living room NE corner not installed. A black substitute floor mounted firring had been installed instead”. In the Crosby/Nikolas Joint Report, in addressing item 309, the experts referred to item 307, which related to what was described as “[i]ncorrect electrical floor box has been installed to Living room”. Cadence did not develop its case in relation to either items 307 or 309.

170. In their written response to Cadence’s closing written submissions, Aspire and Mr Kearns acknowledged that item 309 was “synonymous” with items 72 and 307. They added, however, that the GPOs were not referred to in any of the plans mentioned in Mr Crosby’s report and that they were installed as variations. They contended that there was no defect at all; it was merely that the location and types of GPOs had been changed in accordance with Mr Cronin’s direction. They also pointed to the fact that under cross-examination, Mr Crosby said that he had been told there was a variation relating to the location of the GPOs but that he had not been provided with any such variation.

(g) Cracked highlight glass windows ($15,591.73)

171. Cadence contended that highlight glass panels at the Main House and 368D House cracked due to Aspire’s failure to allow for adequate thermal expansion gaps during installation, resulting in pressure cracking. These matters are items AD-1 to AD-3 of the Crosby/Nikolas Joint Report.

172. The experts agreed that the cracked highlight glass panels are a defect, but Mr Nikolas stated that Aspire offered to rectify the defect. This is borne out by a letter dated 16 April 2024 where Aspire offered to return to rectify specific cracked glass defects as identified in Mr Crosby’s report dated 12 March 2024. That offer was declined by Cadence. Mr Cronin said that although Aspire was notified of the cracked highlight glass at both buildings on 4 October 2023, Aspire did not agree to fix the defects until approximately 6 months later, in April 2024. By that time, Horizon and their sub-contractor, Vision Glass, had incurred costs and ordered the replacement glass.

173. In their written closing submissions in response, Aspire and Mr Kearns accepted that the cracked highlight glass windows were a defect, but they challenged the amount claimed. They said that it included an excessive amount for labour and that a significant portion of those labour costs were wasted because Cadence used a contractor who was unfamiliar with the installation method and the specific angles originally installed by Aspire. They indicated that they would accept liability in the amount of $7,500.

(h) Exposed pipes & cables ($7,267)

174. Cadence did not press this claim.

(i) Gutter ($6,926.81)

175. Cadence did not press this claim.

(j) Roof dektites and vents ($6,102)

176. Cadence contended that the roof dektites (which are used to seal vent pipe penetrations) and associated roof vents were defective because they failed to comply with the bushfire rating requirements imposed by the NSW Rural Fire Service under the conditions of the Development Approval. The matters are dealt with as items 41 and 122 of the Crosby/Nikolas Joint Report, where the experts agreed that the works were defective and within the scope of the rectification work.

177. Aspire and Mr Kearns agreed that this constituted a defect for which they are liable in the amount of $6,102.

(k) DBP Act claim

178. In addition to its contractual claims, Cadence submitted that Aspire and Mr Kearns are also each liable to compensate it for damages for breaches of their respective duties of care under s 37 of the DBP Act in relation to the general building defects.

179. In their written response, Aspire and Mr Kearns contended that Cadence had failed to provide any expert evidence in support of this claim. They said that the Court had to be satisfied that they had acted in a way “which failed to take a reasonable precaution which ultimately cause Cadence to suffer loss”. They added that Cadence had not adduced any evidence of what Aspire and Mr Kearns did not do in respect of each alleged building defect. They contended that even where they accepted liability for breach of the Building Contracts in relation to general building defects, this did not mean that they should also be found to have breached s 37 of the DBP Act because their admissions are confined to admitting the existence of the relevant defects and not any admission of a failure to take reasonable care.

PART G: CADENCE’S CLAIMS IN RELATION TO OVERPAYMENT OUTLINED AND DETERMINED

180. These claims are the subject of items 22 and 23 of the original agreed statement of issues**.** Cadence paid the sum of $193,765.50 to Aspire on an interim basis pursuant to the statutory adjudication process under the Building & Construction Industry Security of Payment Act 1999 (NSW) (the SOP Act).

181. The Court is empowered to make such orders as it considers appropriate for restitution of any amount so paid: SOP Act, s 32.

182. Cadence alleged that $82,855 of the money paid in accordance with the adjudication determination was not properly payable because:

(a) $33,519.75 relates to insurance premiums incurred on 9 June 2022 (being after the Building Contracts were terminated on either party’s case). The evidence is that, post-termination, Aspire approached the insurer and increased the contract value to which the policies related resulting in the additional premiums. Accordingly, Aspire had no accrued right to such monies at the time of termination; and (b) in relation to the balance of $49,335.25, Special Condition 13 of the Building Contracts relevantly provided that “The Builder is responsible to rectify and defects and errors and such costs are not to be past [sic] on to the owner”. Cadence relied on Mr Cronin’s evidence in support of its contention that the cost of the insurance premiums should not be passed onto it.

183. In his affidavit dated 16 October 2024, Mr Kearns explained why he believed that Aspire was entitled to claim the increased insurance premiums when the Building Contracts were terminated. He explained that Aspire was required to notify its insurer (HBCF) that the project had completed, which he did by way of a telephone call around 3 May 2022 when he told Aspire’s insurance broker (Master Builders Queensland) (MBQ) that the Building Contracts had been terminated. He explained how he provided MBQ with a statutory declaration concerning the total amount paid for the building works. He later provided additional information to MBQ clarifying the amounts claimed by Aspire and excluding amounts paid by Cadence directly to sub-contractors and suppliers. He also provided MBQ a revised statutory declaration dated 17 June 2022.

184. There is a contest between the evidence of Mr Cronin and that of Mr Kearns in respect of the $49,335.25 claimed concerning Special Condition 13. In its closing submissions, Cadence confirmed that it did not ask the Court to make findings in relation to each of the disputed items concerning Special Condition 13 but said that the issue should be resolved on the basis of whether the Court preferred the evidence of Mr Cronin or Mr Kearns in this respect.

185. I do not accept Cadence’s submission that Aspire had no accrued right to recover the insurance premiums incurred after the Building Contracts were terminated. When the Building Contracts were terminated, Aspire had accrued rights and obligations to advise the insurer of the total amounts claimed by and paid to Aspire under the Building Contracts. These amounts were then used by the insurer to calculate the final insurance premiums. This calculation resulted in an increase in those premiums, which Aspire now seeks to recover from Cadence. Although the calculation was done post-termination of the Building Contracts, it plainly related to Aspire’s accrued rights and obligations under the insurance contract as at the date that the Building Contracts were terminated. Accordingly, I find that there was no overpayment in respect of this item.

186. As to the claim of overpayment in respect of items affected by Special Condition 13, Cadence relied on Mr Cronin’s evidence in his third affidavit, particularly at [186]. Many of the disputed items addressed by Mr Cronin were for notably modest amounts, such as the item regarding cleaning slurry from cobblestones ($145.45); cleaning pavers ($78.55); and an amount of $440 regarding a claim for eight hours’ work by an Aspire apprentice. Mr Cronin’s evidence on these items was in response to Annexure A of Mr Kearns’ affidavit dated 16 October 2024. In that annexure, Mr Kearns’ commented on each of the items which Cadence claimed it had overpaid under the adjudication determination.

187. In their written response, Aspire and Mr Kearns emphasised that the only evidence supporting Cadence’s overpayment case is that given by Mr Cronin and, in particular, his assertions that he thought work which Aspire charged for was rectification work. Aspire and Mr Kearns emphasised that this evidence was unsupported by any document or other independent evidence and they emphasised that none of Cadence’s experts had addressed the issue. Accordingly, they submitted that Cadence had failed to discharge its onus of proof.

PART H: ASPIRE’S CROSS-CLAIM AGAINST CADENCE OUTLINED AND DETERMINED

190. Aspire claimed $151,255.16 for money said to be owing under the Building Contracts for works performed by it and a further $44,545.45 for the unpaid portion of an amount which it claimed is due relating to the fixed builder’s margin. These claims are the subject of items 24 and 25 of the original agreed statement of issues.

191. Aspire’s claim for damages in the amount of $151,255.16 relates to sub-contractor invoices paid by Aspire. There are 11 invoices, including 4 invoices from Univenta concerning installation of the geothermal system, which total approximately $100,000.

192. It will be necessary to descend into some detail in determining Aspire’s cross-claim. As will emerge from the following analysis, both parties pitched their submissions on the cross-claim at a high level of generality. This presented the Court with some difficulty in determining the individual claims. This uncertainty was compounded by the difficulty of ascertaining whether any of the items the subject of the cross-claim were addressed in the Crosby/Nikolas Joint Report.

193. I shall first describe the composition of the $151,255.16 figure claimed by Aspire before summarising and addressing the parties’ submissions. I will separately address Aspire’s claim in the amount of $44,545.45 for the unpaid portion of its fixed builder’s margin.

(a) The $151,255.16 figure

194. Aspire seeks to recover sub-contractor invoice amounts totalling $151,255.16 from Cadence pursuant to Sch 1, Pt 1, para (d) of the Building Contracts, which provides (emphasis in original):

The Cost of Works which are payable by the Owner include: …

(d) The cost of all work carried out by trade contractors engaged by the Builder to carry out work at the work site or in relation to the works. This cost is conclusively evidenced by an invoice or statement of costs from the trade contractor.

195. In Mr Cronin’s second affidavit dated 29 May 2024, he sets out a breakdown of the constituent amounts which add up to the $151,255 figure claimed by Aspire from Cadence:

196. The claimed amounts in the above table are also referred to in Mr Kearn’s first affidavit dated 5 March 2024**.** Those amounts are referable to invoices issued by sub-contractors to Aspire which Aspire has paid, which I will now describe.

197. The body of the Stuart Bramley Electrical invoice, which is dated 24 January 2022 and was paid on 1 February 2022, is now reproduced:

198. The invoice relates to electrical works carried out at both the Main House and at the 368D House. The $3,162.23 figure is inclusive of GST and is said by Mr Kearns to relate to “the release of retention moneys in respect of 368D”. Exclusive of GST, the figure is $2,874.55 which aligns with the amount in Mr Cronin’s table.

199. The body of the Ison & Co invoice, which was dated 14 December 2021 and paid on 1 February 2022, is extracted below:

200. The invoice relates to cement supplied for works carried out on the internal access roads as well as for sand and cement bedding for the Main House and Tourist Cabin cobblestone driveways. The figures in the invoice, which add together to $1,807.20, are inclusive of GST. Exclusive of GST, the figure is $1,642.90 which aligns with the amount in Mr Cronin’s table. As will emerge, half the cement was used at Mr Cronin’s instruction to rectify defective road works which added significantly to the cost.

201. The AVP amounts are reflected in an invoice dated 7 October 2021, the body of which is set out below:

202. By an invoice dated 9 December 2022 from Aspire to Cadence, Aspire sought reimbursement of Aspire’s payment of the amounts of $2,850 and $3,600 to AVP, producing a total of $6,450. The first item is described as “Repair BBQ rectifications, prime, microcement and seal using I-Stone” at the 368D House. The second item is described as relating to “Repair BBQ rectifications, prime, microcement and seal using I-Stone” at the Main House. In his evidence, Mr Kearns frankly stated that he “[could not] recall the specific detail about this work”, but they appear to relate to the microcement works which are dealt with in item 11 of the Crosby/Nikolas Joint Report.

203. The body of the Avijohn Contracting invoice, which was dated 28 February 2022 and paid on 7 September 2022, is set out below:

204. The invoice relates to the internal access roads. The figures in the invoice, which add together to $26,777.64, are exclusive of GST. This amount aligns with the amount in Mr Cronin’s table.

205. The body of the Rural Bitumen Services invoice, which is dated 8 February 2022 and was paid on 7 September 2022, is set out below:

(i) Cadence’s argument regarding the Univenta invoices

212. It is convenient to first deal with the 4 Univenta invoices. Cadence contended that it is not liable under Sch 1, Pt 1, para (d) of the Building Contracts to reimburse Aspire the invoiced amount of $100,821.87 that Aspire paid to Univenta because:

213. the sub-contractor costs which Aspire can recoup from Cadence under para (d) extend only to those costs which Aspire has “a legal liability to pay”; and

214. the $100,821 that Aspire paid to Univenta was not an amount that Aspire was legally liable to pay, because:

(a) the Univenta sub-contract was unenforceable by Univenta as against Aspire due to the operation of ss 4 and 10 of the HB Act; and therefore (b) the invoices that Univenta purportedly issued pursuant to that sub-contract were “not properly payable by Aspire”.

213. Section 10(1)(a) of the HB Act provides:

10 Enforceability of contracts and other rights

(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) …

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.

214. Section 4(2) of the HB Act provides:

(2) The holder of a contractor licence who has contracted to do any residential building work must not contract with another person for the other person to do the work (or any part of the work) for the holder unless the other person is the holder of a contractor licence to do work of that kind.

Maximum penalty—1,000 penalty units in the case of a corporation and 200 penalty units in any other case.

215. Cadence’s first proposition relating to para (d) is erroneous. It involves putting a gloss on that paragraph in the Building Contracts. That paragraph, construed from the perspective of a reasonable businessperson, requires Cadence to reimburse Aspire for the costs it incurs in hiring sub-contractors to perform aspects of the work that Cadence has engaged Aspire to do. Contrary to Cadence’s submission, para (d) does not contemplate any requirement for Aspire to be “legally liable” to pay an invoice before the costs particularised in that invoice fall to be reimbursed by Cadence. To read in such a requirement would be contrary to the express words of the paragraph, which contemplate that sub-contractor costs which fall within the ambit of Cadence’s reimbursement obligation are those which are “conclusively evidenced by an invoice or statement of costs” from the sub-contractor.

216. Because the first proposition is wrong, and in view of Univenta’s invoices set out above which “conclusively evidence” the cost of work carried out by Univenta, Cadence’s contention that it is not liable to pay the sum of those invoices (i.e. $100,821.86) under para (d) must be rejected. It is therefore unnecessary to consider at any length the correctness of Cadence’s second proposition set out above. Briefly, however, the proposition is based on a false predicate. The relevant statutory provisions affect the rights and obligations between Aspire and Univenta and not Aspire and Cadence. In the circumstances of the present matter, if Univenta was not licensed to perform the Geothermal Works, it would be precluded from obtaining damages or enforcing any other remedy relating to a breach of contract by Aspire. I do not accept that the statutory provisions have the wider operation and effect as claimed by Cadence.

217. Cadence further submitted that the balance of the sum claimed under Aspire’s cross-claim ($94,978.75, being $195,800.61 less $100,821.86) is set off by previous sums paid by Cadence to Aspire exceeding that balance which were also not “properly payable”, because like the $100,821.86 paid, they too were in respect of Univenta’s works under an unenforceable contract. However, this submission must also be rejected because, for the reasons set out above, whether the invoiced amounts paid by Aspire to Univenta were “properly payable” or not has no bearing on Aspire’s ability to recover those amounts from Cadence pursuant to Sch 1, Pt 1, para (d) of the Building Contracts.

(ii) Cadence’s argument relating to all the invoices

218. Cadence also submits that it has no liability to pay the $151,255.16 in sub-contractor costs because those costs are in respect of defect rectification work and the responsibility to pay those costs rests on Aspire under Special Condition 13 of the Building Contract. That Special Condition provides:

THE BUILDER IS RESPONSIBLE FOR THE COSTS TO RECTIFY ALL DEFECTS AND ERRORS AND SUCH COSTS ARE NOT TO BE PAST ONTO THE OWNER. UNFAMILAR MATERIALS STIPULATED BY THE CLIENT WILL BE SUBJECT TO A THROUGH REVIEW BY THE BUILDER, INCLUDING AN INVESTIGATION OF HOW TO IMPLEMENT / INSTALL SUCH MATERIALS TO A HIGH STANDARD. IF THE OWNER PERSITS TO INSTALL SUCH PRODUCTS WITHOUT REGARD TO THE CONCLUSIONS OF THE BUILDER'S REVIEW, ANY DEFECTS MAY BE SUBJECT TO RECTIFICATION AT THE COST TO THE OWNER OR THIRD PARTY CONTRACTOR/ SUPPPLIER AND NOT DEEMED A BUILDER'S DEFECT.

219. Cadence relied on Mr Cronin’s evidence where he asserted that each of the invoices set out in his table extracted above relate to rectification work:

I refer to paragraphs 148 to 150 of the Kearns Affidavit. I rely on paragraph 230 of the First Affidavit and say that Aspire was not entitled to payment of the SBE Invoice [i.e. Stuart Bramley Electrical invoice] as the contractor had not completed the electrical works at 368D House (free of defects) at the time Aspire demanded payment of this invoice.

…

I refer to paragraphs 153 and 154 of the Kearns Affidavit and paragraphs 74 to 79 of the Wright Affidavit. I rely on paragraphs 409 to 414of the First Affidavit and say that Aspire is not entitled to payment of the Ison Invoice as these cement supply costs relate to the rectification of the defective road works at 200 Bunkers Hill Road property (Access Road).

…

I refer to paragraphs 155 to 177 of the Kearns Affidavit and paragraphs 83 to 91 of the Wright Affidavit, and say that Aspire is not entitled to payment of the:

(i) Venetian Plaster Invoice 1 & 2 as these works involved the defective works that were subsequently fixed by a new contractor engaged by Horizon and paid by Cadence. I rely on paragraphs 291 to 316 of the First Affidavit;

(ii) Avijohn Invoice as these works related to incomplete and defective road works. I rely on paragraphs 377 to 387 of the First Affidavit;

(iii) Rural Bitumen Invoice as these works related to the rectification of the defective road works. I rely on paragraphs 409 to 411 of the First Affidavit;

(iv) Univenta Invoices 1 - 4 as the works related to the defective Geothermal Systems. I refer to paragraphs 145 to 199 of the First Affidavit;

(v) The Highland Invoice related to defective joinery at the 3680 House and Main House studies. Highland eventually completed the rectification works at the 3680 House and Main House on or around 11 May 2023 under the management of Horizon. Exhibited at CB Page No. 10873-10877 is a copy of the email from Daniel Smith to me confirming the completion of these works.

220. It is necessary to now descend into some detail concerning the invoices the subject of the cross-claim in the order in which they appear in the table set out at [195] above.

(1) Stuart Bramley Electrical invoice

221. As noted above, this invoice relates to electrical work at both the Main House and the 368D House. Most of the invoice relates to the 368D House. Relying on Mr Cronin’s second affidavit, Cadence contends that Aspire was not entitled to be reimbursed for paying this invoice because the sub-contractor had not completed the electrical works at the 368D House, free of defects, when Aspire demanded that Cadence reimburse it for paying the invoice.

222. In contrast, Mr Kearns said at [145]-[150] of his first affidavit that the sub-contractor’s invoice dated 24 January 2022 included a claim for the release of “retention moneys” in respect of the 368D House. Mr Kearns deposed that he was not aware of any reason at the time why the sub-contractor was not entitled to be paid and therefore the invoice was paid by Aspire on 1 February 2022.

223. The Court was not taken to any corroborating evidence which identified any defect in the electrical works the subject of this claim. To the extent that there is a conflict in the evidence of Mr Cronin and Mr Kearns on that issue, I prefer Mr Kearns’ evidence which is to the effect that he was not aware of any defect when the sub-contractor’s invoice was paid.

224. Accordingly, Cadence is liable to reimburse Aspire in the total amount of $2,874.55 excluding GST for the payment of this invoice.

(2) Ison & Co invoice for internal access roads

225. As noted above, this invoice relates to cement supplied for works carried out on the internal access roads and also for sand and cement bedding for the Main House and Tourist Cabin cobblestone driveways. Cadence submitted that it was not liable to reimburse Aspire for paying this invoice because the work relates to the rectification of the defective road works at the Main House (see [17] of Mr Cronin’s second affidavit). Other evidence, which I prefer, establishes that the invoice relates to the supply of 3 pallets of 20kg bags of general-purpose cement, half of which was used on the internal access road and the other half used for sand and cement bedding for the cobblestone driveway at the Main House and Tourist Cabin (see Mr Wright’s affidavit at [74]-[79]).

226. While I accept that the cement was used for the purpose of rectification of defective works on the internal access road from the shed to the Tourist Cabin, the evidence establishes that this was done at Mr Cronin’s personal instruction and was not necessary to rectify the soft-spots on this section of the road. This is discussed at greater length below under items (4)-(5). Accordingly, I find that Cadence is liable to reimburse Aspire in the amount of $826.50 excluding GST.

227. I also consider that Cadence should additionally reimburse Aspire the same amount, reflecting the fact that half of the cement which was used in the cobblestone driveways is evidently unrelated to defect rectification. It is notable that Mr Cronin’s evidence relating to this particular invoice does not address the use of some of the cement in cobblestone driveways. The evidence is unclear as to whether there is any overlap between this invoice and Cadence’s claim relating to the cobblestone driveway and crazy paving in Part F of these reasons.

228. Accordingly, Cadence is liable to reimburse Aspire in the total amount of $1,642.90 excluding GST for the payment of this invoice.

(3) AVP invoices relating to microcement

229. As noted above, this item appears to relate to microcement works which are discussed in the Nikolas/Crosby Joint Report relating to item 11. In his 12 March 2024 report, Mr Crosby said that item 11 was a defect because in rectifying the work of another sub-contractor, AVP used a product called I-Stone which is designed solely for internal use, which led to water entry, cracking and blistering to the surface of the microcement. Mr Nikolas disagreed that the work was a defect, opining that it was incomplete work because no final coat had been applied. In the Crosby/Nikolas Joint Report, the experts agreed that the relevant works were incomplete work.

230. Consistently with my findings at [518]-[523] of Part I, I find that the works were incomplete and not defective works as claimed by Cadence. Accordingly, Special Condition 13, which assigns responsibility of defect rectification work to Aspire, does not apply and I find that Cadence is liable to pay Aspire the amount of $6,450.

(4) Avijohn invoice for internal access roads

231. As noted above, this invoice relates to the internal access roads. Cadence claimed that Aspire was not entitled to be reimbursed for it having paid the Avijohn invoice because those works were incomplete and defective road work.

232. As also noted above, there is no dispute that Aspire was responsible for asphalting. It engaged Avijohn as the sub-contractor to do that work, although no sub-contract was actually signed. There is no dispute that Aspire paid Avijohn’s invoice which related to the supply and laying of hot mix and asphalt for the driveway at the 368D House, which linked the front entrance gate to the house garage, standalone garage and a car bay area (see Mr Wright’s first affidavit at [83]-[87]).

233. If this invoice relates to costs incurred for rectification of the internal access roads, Aspire would be precluded by Special Condition 13 from recovering its payment from Cadence. But the position is not so straightforward. This is because the Vleggaar/Fagg Joint Report describes this item relating to pavement reconstruction and AC10 surfacing as involving both rectification and new works. The agreed position of those experts is that replacement of the removed road base and primer seal did amount to rectification, which attracts Special Condition 13. But the experts also agreed that the “AC10 Surfacing was new works as this work had not been completed at the time of the purported Aspire suspension notice or subsequent termination of the contract by Cadence”. The new work is not caught by Special Condition 13.

234. I see no reason to not accept that agreed position. Accordingly, Special Condition 13 applies to that part of the payment which relates to defective works but Aspire is entitled to be reimbursed for the balance of its payment to Avijohn. By my calculation, this amounts to $21,812.64 excluding GST.

(5) Rural Bitumen Services invoice for internal access roads

235. As noted above, this invoice relates to the sub-contractor supplying and placing primer seal on the internal access road on 31 January 2022. Cadence claims that Aspire is not entitled to be reimbursed for paying this invoice because it relates to the rectification of defective road works (see Mr Cronin’s second affidavit at [18]). I accept that if the evidence established that the primer seal which was placed on that part of the internal access road from the site shed to the Tourist Cabin was simply related to Aspire rectifying defective road works for which it had accepted responsibility, the amount would not be recoverable because of Special Condition 13.

236. But the evidence is not so clear. Mr Cronin received an email dated 15 February 2022 from Aspire which includes reference to this invoice. The relevant parts of the email are as follows (emphasis added):

Hi Garren,

Please see below and attached all invoices relating to the roadworks repairs.

1. RVC = $8,184 (price excludes costs to Harley Rake landscaping areas) – Paid by GC

2. Rural Bitumen = $9,240

3. Isons (cement) = $1,807.20

As you are aware there are two sections of spray seal that were not to do with the repairs. These are the top side access road and the natural swale between the MH concrete dish drain and the shed. This area totalled 150m2.

In regards to the shed to TC section. This area did not have to be entirely ripped up as only a portion of this was soft, however instruction on site was to mix the entire length in with cement.

In addition to this, during a meeting on site with Rod, his operator, Aaron and yourself, it was confirmed to commence with the repair works on the basis that you would provide additional funds towards it to make sure it was solid and we appreciate your payment of RVC’s invoice.

It is evident that if the road was left un-sealed during the torrential rainfall that occurred after we sealed the roads would have had to be entirely repaired costing RVC a significant amount to complete. Repairing this small section is a fraction of the potential cost. Unfortunately RVC invoice that I was disputing has been paid in full.

We propose the costs remaining costs be split as per the allocations mentioned above.

150m2 of additional spray ($1,155) + the 40% of additional area that was not soft and requested to be mixed with cement ($3,234) = $4,389 incl GST

Remainder paid by Aspire = $4,851 incl GST

Aspire will deduct $4,851 incl GST from our next invoice following your payment of Rural Bitumen’s invoice in full.

Let me know if you require any further information.

Cheers,

Owen Cooper

Contracts Administration

237. Although the email refers to invoices “relating to the roadworks repairs”, it is also notable that it refers to instructions having been given on site to rip up all the road so as to mix cement with the consequence that sealant needed to be applied to the entire length of the road from the shed to the Tourist Cabin and not just cover the soft-spots.

238. It is evident that the reference in the email dated 15 February 2022 to an invoice from Isons (cement) in the amount of $1,807.20 is item (2) dealt with above. Half the cement was used after the entire length of the road from the shed to the Tourist Cabin was ripped up and cement applied, together with the sealant. This was evidently done at Mr Cronin’s specific instruction given on site. The rectification works went beyond simply repairing 4 soft spots as proposed by Aspire.

239. Some further light is cast upon this topic by the following extracts from a letter dated 10 March 2022 which Aspire’s then solicitor sent to Cadence:

Road-base defect

14. This matter requires a brief explanation of the defect and how it arose. We are instructed as follows:

(a) The process of constructing road-base involves:

(i) the placement and compaction of road-base material; and

(ii) once the road-base has dried and hardened, a bitumen spray seal

aggregate is applied to the top layer of the road-base.

(b) Prior to sealing the road-base, the road-base is exposed and at risk of loosening and being eroded during rainfall events.

(c) The road-base was constructed in or around 14 November 2021. Around that time, the weather forecast was for rain shortly after construction of the road-base.

In order to avoid the exposed road-base from erosion caused by rainfall, Aspire caused for the road-base sealant to be applied 17 November 2021 (before a significant forecasted rainfall event). It is noted that the following week, 80mm of rainfall occurred.

(d) At the time of sealing the road-base, some parts of the road, the road-base had not completely dried and hardened at the time of applying the sealant. This resulted in some parts of the road-base having “soft-spots” on the surface.

(e) The soft-spots occurred because in some areas of the road, the road-base had not completely hardened at the time of applying the sealant. If sealant is applied to the road-base that has not dried and hardened, the sealant will not adhere to the road-base. This causes the surface to feel soft (hence, “soft-spots”).

(f) Soft-spots in road-base are unacceptable and are a defect. The method of rectifying the defect is simple – remove the affected road-base and place, compact and then seal the new road-base. It is helpful, but not always necessary to add to the road-base mix cement to accelerate the drying and hardening process for the replacement road-base. The sole purpose and utility of mixing cement into the road-base material is to accelerate the hardening process – the cement mix otherwise has no material affect [sic] on the road-base.

(g) Aspire have identified the sections of the road that contained soft-spots. When the soft-spots were identified, Mr Cronin was informed of the existence of soft-spots and that it would be necessary for parts of the road-base to be rectified and that Aspire proposed to mix cement with the road-base to accelerate the hardening process.

(h) Mr Cronin gave a verbal direction to Aspire (Aaron Wright and Rod Rumble from RVC Vegetation & Civil) to replace all of the road-base with road-base mixed with cement, despite it not being necessary. Mr Cronin understood that the replacement of the road-base (other than at the soft-spots) would involve additional cost – as Mr Cronin said words to the effect: “I am happy to throw money at it”.

(i) Aspire has acknowledged and taken responsibility for the defects in the construction of the road-base. Aspire has already attended to rectify the defect in the road-base.

15. Aspire is aware that it is not permitted to claim for the cost of rectifying defects that it caused. It is for that reason that on 15 February 2022, Aspire offered to apply a credit to your clients in the value of $4,851.00 to reflect the value of the work undertaken by Rural Bitumen Services which related solely to the cost of rectifying the defect in the roadworks (Defect Portion). Aspire proposed to your clients that it would bear the cost of the Defect Portion.

16. Your clients dispute the Defect Portion is an accurate representation of the extent and value of the work done by Rural Bitumen Services to rectify the defect in the driveway.

17. Your client has refused to pay the Rural Bitumen Services invoice number

INV02021228 dated 8 February 2022 which is in the sum of $9,240 inclusive of GST. That invoice does not form part Aspire’s claims in its invoices that are outstanding.

18. As requested at the Meeting, Aspire has completed a review of its assessment of the Defect Portion. Aspire set out the details of its re-assessment at Annexure B. Those details include:

(a) a breakdown of costs;

(b) a marked-up site plan;

(c) a video taken by Jake Kearns on 17 November 2021; and

(d) the relevant invoices from trades.

19. Aspire have determined that the portion of the amounts charged by Rural Bitumen Services that related to it rectifying its defects was $2,371.85 (Revised Defect Portion). The Revised Defect Portion is less than the Defect Portion.

20. As a gesture of good faith and without any admission, Aspire agree to pay to Rural Bitumen Services the Defect Portion as originally proposed by Aspire ($4,851).

240. It may reasonably be inferred from these extracts that Aspire was willing to bear the cost of rectifying soft-spots on the road which it had arranged to be sealed on 17 November 2021, shortly before heavy rainfall.

241. It is evident, however, that the entire length of the road was resealed at Mr Cronin’s instruction because he wanted the entire length to be ripped up and cement applied.

242. As best I understand this material, Aspire paid Rural Bitumen’s invoice in the total amount of $9,240 (which includes GST) and was willing to give Cadence a credit in the amount of $4,851 to reflect that part of Rural Bitumen’s invoice which related solely to the cost of rectifying the roadworks defect for which Aspire accepted responsibility. In these circumstances, I do not consider that Aspire is entitled to recover that amount from Cadence after Aspire paid Rural Bitumen’s invoice. Having regard, however, to Mr Cronin’s instruction that the entire length of the road should be ripped up so as to apply cement and then totally resealed, Aspire is entitled to be reimbursed an amount reflecting the balance of its payment to Rural Bitumen, which excluding GST, amounts to a figure of $3,990.

(6) Univenta invoices

243. The 4 Univenta invoices relate to the installation of the geothermal systems rather than the cost of rectifying any defect in those systems. It follows that Aspire is entitled to be reimbursed the sum of the Univenta invoices totalling $100,821.87 excluding GST.

(7) Highland Cabinetry invoice

244. As noted above, this item relates to joinery at the 368D House and relates to the release of retention monies. Aspire only claims an amount relating to the 368D House. In his second affidavit, Mr Cronin said that Aspire was not entitled to be reimbursed for what he described as “defective joinery” at the 368D House and Main House studies because rectification works at both those places was carried out by Highland on or around 11 May 2023 under the management of Horizon.

245. It does not appear that this item was addressed by the experts. Nor was the Court taken to any evidence which supported Mr Cronin’s claim that there was defective joinery in the 368D House study to which this item evidently relates.

246. Mr Kearns said in his first affidavit that he was not aware of any reason at the time why Highland Cabinetry was not entitled to be paid its invoice and that Aspire paid it on 7 September 2022. I accept that evidence.

247. I am not satisfied that this item relates to rectification of defective work so as to preclude Aspire from being reimbursed by Cadence under Special Condition 13. Accordingly, I find that Cadence is obliged to reimburse Aspire $4,288.

248. Adding all the relevant sums together, I find that Cadence is obliged to pay Aspire $141,879.96 in respect of its cross-claim.

(b) The claim for $44,545.45 for builder’s margin

249. In Mr Cronin’s second affidavit dated 29 May 2024, he asserted that the separate $44,545.45 figure claimed in the cross-claim refers to “the balance of the 10% builder's fee / margin for the Main House, 368D House or Tourist Cabin” exclusive of GST.

250. Special Condition 4 of the Building Contracts provides:

THE FIXED BUILDER'S MARGIN OF $490,000 (INC GST) WILL BE ALLOCATED ACROSS ALL THREE BUILDS OF THE PROJECT. SUBJECT TO THE SITE(S) OF THE PROJECT BEING ACTIVE IN ANY GIVEN MONTH, 90% OF THE FIXED BUILDER'S MARGIN WILL BE PAID IN EQUALLY MONTHLY INSTALLMENTS OVER THE EXPECTED BUILDING PERIOD OF 16 MONTHS, WITH THE BALANCE OF 10% PAID WITHIN 7 DAYS OF THE COMPLETION OF THE RECTIFICATION OF ALL DEFECTS THAT ARE INDENTIFIED DURING THE DEFECT PERIOD AFTER PRACTICAL COMPLETION.

251. The fixed builder’s margin exclusive of GST is $445,454.54. 10% of that figure is $44,545.45. Aspire claims this amount from Cadence, stating that “under Special Condition 13 [sic] [noting that this reference should be to Special Condition 4], the amount functioned as a form of security; a retention-like mechanism to ensure that Aspire returned to address any legitimate defects raised during the defect liability period”.

252. Under Special Condition 4, Aspire only accrues an entitlement to the 10% balance of the fixed builder’s margin when the stipulated condition has been satisfied: namely, the completion of rectification works relating to all defects identified during the Defect Liability Period after Practical Completion.

253. Although this condition was not in fact satisfied, the gravamen of Aspire’s argument is that the condition should be taken to have been satisfied (such that it is entitled to the 10% balance of the builder’s margin) because:

254. “Aspire was prevented from returning to site to complete remaining defect works because the plaintiff denied or restricted access or replaced the works such as is the case with the microcement”;

255. that conduct amounted to “a breach of the statutory duty imposed by s 18BA of the Home Building Act, which requires a homeowner to allow the builder reasonable access to rectify defects”;

256. “A party cannot rely on its own breach to defeat the builder’s contractual entitlement”; and

257. “Aspire did rectify the legitimate defects it was permitted to address”.

258. In its submissions, Aspire did not refer to the evidence relating to its contention that it was prevented by Cadence from returning to site to complete defect rectification works. However, there is some correspondence in evidence which is relevant to this issue.

259. For example, in a letter dated 14 June 2022 to Aspire’s solicitors, Cadence’s solicitors stated:

Our client is aware of its obligations to provide access to the Project under section 18BA(3)(a)&(b) of the Home Building Act 1989 (Act). That right of access is for the specific purpose of allowing a party in breach of the statutory warranties under the Act access to a site in relation to, or in connection with, rectifying defects.

Your client’s position has been that it will not undertake any works unless all amounts in dispute are paid to it. Can you please confirm that this is no longer your client’s position and it is prepared to return to site immediately to rectify the various defects?

Upon receiving your client’s confirmation of the above, we confirm that our client is prepared to allow your client access to the Project to conduct an inspection of the defect works it is required to undertake, provided that an urgent scope of works and construction program suitable to our client is then put forward by your client and strictly adhered to by it …

… our client can have no confidence of your client’s ability to remedy the defects within the geothermal systems and does not consent to allowing your client access to those systems to undertake any works.

In addition, our client does not consent to your client undertaking any road rectification works which are urgently being assessed so that they may be repaired before further damage occurs

256. Aspire’s solicitors responded to this letter on 23 June 2022 as follows:

… once our client has had a reasonable opportunity inspect the sites and assess the defects alleged, it will consider proposing a scope of works and a construction program for the rectification of defects that it is required to rectify under the Contracts and the Home Building Act …

Your client’s refusal … to provide access to undertake rectification works (if any is required – which at this stage, our client does not admit) to the geothermal systems and the road is inconsistent with its duties under section 18BA(3)(b) of the Home Building Act …

Our client reserves all of its rights arising from your client causing for a third party to carry out any work to rectify alleged defects in our client’s work.

For the avoidance of doubt, our client:

(a) does not agree to allow others to rectify any of the alleged defects (none of which are admitted at this stage).

(b) denies that it is not “able” to undertake any of the relevant works that may be required; and

(c) if any of the rectification work is “urgent” (which our client does not admit), our client first requested access to inspect on 19 May 2022 and your client has still not provided adequate access – accordingly, any such “urgency” is self-imposed by your client.

257. The contemplated site inspection did not occur until 4 and 5 August 2022.

258. On 20 September 2022, Aspire’s solicitors sent Cadence’s solicitors a proposal for Aspire to attend the site to undertake some minor works in relation to a list of around 130 alleged defects. This proposal was accepted by Cadence through its solicitors on 22 September 2022, although it indicated that Cadence had already procured the rectification of various defects “since Aspire walked off site on 14 February 2022”.

259. After further correspondence between the parties’ solicitors as to the scope of defect rectification works that would be performed by Aspire, Cadence’s solicitors confirmed on 30 October 2022 that Cadence was “prepared to grant immediate access to the site to [Aspire] to complete the general building defect works at the Barrengarry Project”. Those works, the details of which are unclear, were commenced by Aspire on 31 October 2022 and completed by 9 December 2022, save for various items that other contractors were carrying out and one item that Aspire contended was not defective.

260. The parties later engaged in correspondence about the rectification of cracked highlight glass. In a letter dated 16 April 2024 from Aspire’s solicitors to Cadence’s solicitors, Aspire offered to rectify specific cracked highlight glass as had been identified in Mr Crosby’s expert report. Cadence’s solicitors responded on 17 April 2024 stating that:

Your client has been aware of the cracked highlight glass defects since 4 October 2023 following receipt of Mr Cronin’s affidavit which clearly set out the nature and extent of the defects. Regrettably, your client has shown no willingness to fix these defects until yesterday. Had our client been informed earlier, our client would have gladly taken up the offer.

Unfortunately, given the significant delay in the offer to rectify, it was reasonable for our client to get on with the rectification works. The replacement glass has already been ordered for installation and another contractor has been engaged to complete this work.

261. This position was again confirmed on 19 April 2024 by Cadence’s solicitors. Aspire’s solicitors responded on 22 April 2024 by email, stating:

Our client disagrees that your client gave proper notice of these additional defects and that our client has unreasonably delayed in making its proposal to rectify these additional defects.

Your client has not particularised these additional defects in its pleadings and your client has not served any expert evidence about these defects until it served the Crosby Report …

Our clients have acted reasonably by offering to rectify these defects. Our client considers your client’s rejection of the proposal to be unreasonable and a failure to mitigate its loss in contravention of section 18BA of the Home Building Act …

262. Despite raising the issue numerous times in inter partes correspondence, Aspire did not plead any breach of s 18BA of the HB Act or reliance on the prevention principle in its Amended Technology and Construction List Cross-Claim Statement. Those issues were not ventilated until Aspire raised them in its written response to Cadence’s closing submissions, which were provided to the Court on 24 November 2025 after the trial had already concluded.

263. I accept Cadence’s submission that the final instalment of the builder’s margin was only payable upon completion of the rectification of all defects that are identified during the defect period after Practical Completion, and that because those works were not completed, Aspire had not accrued a right to the amount.

264. Further, Aspire pleaded that Cadence had repudiated the Building Contracts and that Aspire had suffered loss or damage reflecting the 10% balance of the builder’s margin. Aspire sought damages in that amount.

265. Aspire alleges in its written response to Cadence’s closing submissions at [53] that the purported termination of the Building Contracts by Cadence on 29 April 2022 “was unlawful and constituted a wrongful repudiation, which Aspire accepted in its legal team’s letter of 19 May 2022”. That letter is set out below at [493] in Part I of these reasons. The letter stated that Aspire’s solicitors would provide “further detail” about why Aspire considered that Cadence had repudiated the Building Contracts.

266. The Court was not taken to any evidence which established that “further detail” was in fact given in any subsequent correspondence between Aspire and Cadence.

267. The only explanation as to why Aspire considered Cadence’s purported termination to be a repudiation is at [C.499] of Aspire’s Amended Technology and Construction List Cross-Claim Statement, where Aspire asserts in its particulars that:

Insofar as Cadence purported to terminate the Contract pursuant to the terms of the Contract, the purported termination was unlawful because: Aspire had not committed a Termination Default Event and in any event, Cadence failed to: give a Notice of Intent to Terminate; give a Notice of Dispute in respect of the defaults identified in any Notice of Intent to Terminate; and partake in a Dispute Resolution Meeting in respect of defaults identified in any Notice of Intent to Terminate.

Insofar as Cadence purported to terminate the Contract at Common Law, Aspire denied that it repudiated the Contract.

268. These matters were not elaborated upon in Aspire’s submissions. Mr Kearns only made the following bare assertion in oral address:

THIRD DEFENDANT: I believe that termination was unlawful and constituted a role for repudiation, which Aspire accepted in its legal team’s letter of 19 May 2022. I’ll move on now to the roads, if I can.

269. The issue of whether Cadence had repudiated the Building Contracts was not included in the original agreed statement of real issues for determination and the Court was not invited in Aspire’s written or oral submissions to determine the issue.

270. I do not consider that Aspire has established on the evidence that Cadence “evinced an intention to no longer be bound by the contract or stated that it intends to fulfil the contract only in a manner substantially inconsistent with its obligations and in no other way”: Galafassi v Kelly (2014) 87 NSWLR 119 at [62] (Gleeson JA, Bathurst CJ and Ward JA agreeing). Aspire has not demonstrated that Cadence’s purported termination of the Building Contracts was repudiatory and that it is entitled to damages in the sum of $44,545.45. As Cadence submitted, that amount was only “payable in consideration for the delivery of a service (defect rectification) which was [ultimately] not provided by [Aspire] and was instead provided by others”.

271. For these reasons, I reject Aspire’s claim in the amount of $44,545.45.

PART I: CONSIDERATION AND DETERMINATION OF THE REMAINING ISSUES

(a) The lay and expert evidence

272. It is necessary to address the parties’ submissions concerning the credibility and reliability of the lay evidence given by Mr Cronin, Mr Kearns and Mr Trembuch before turning to address some serious issues raised by the defendants concerning the weight to be given to the expert evidence of Dr Piechowski on geothermal issues.

(i) The credibility and reliability of the lay evidence of Mr Cronin, Mr Kearns and Mr Trembuch

273. Mr Cronin provided three affidavits dated 4 October 2023, 29 May 2024 and 4 March 2025. He was subjected to a lengthy cross-examination by both Mr Kearns and Mr Thompson. In broad terms, Mr Cronin gave evidence of the following matters:

(a) the procurement of the geothermal systems and some changes in scope during the course of the building works; (b) issues identified in the performance of the geothermal systems both before and after Aspire claimed that practical completion had occurred at both the 368D House and the Main House; (c) Cadence’s dispute with Aspire and circumstances surrounding the termination of the Building Contracts; (d) the rectification works carried out by Cadence; (e) Cadence’s losses, including the rectification costs incurred by it and the loss of the opportunity to sell the 368D House; and (f) evidence in reply concerning the geothermal systems.

274. Mr Cronin was not an impressive witness. I found many of his answers under cross-examination to be unresponsive or self-serving. He struck me as a controlling and dominating person. This is confirmed in many of the emails or conversations he had with people such as Mr Kearns and Dr Piechowski, as well as by his demeanour in the witness box. It is notable that Mr de Maio (who was called by Cadence in its case) said that he found Mr Cronin to be “very demanding”. Mr Lyons of counsel (who appeared for Cadence) acknowledged in oral address that Mr Cronin was “very hands-on with a range of matters” but then added, by way of submission, that Mr Cronin relied on others for matters relating to the design of the geothermal systems.

275. Given Mr Cronin’s forceful and demanding personality, it is perhaps unsurprising that Cadence has used nine different law firms in the course of the present proceeding.

276. In due course, I will explain why I find Mr Cronin adopted an inappropriate role in securing multiple changes to Dr Piechowski’s first and second expert reports, including on several quite technical issues. The nature and extent of Mr Cronin’s involvement in Dr Piechowski’s report raised some serious issues concerning the weight which the Court should give to Dr Piechowski’s opinions. These matters relating to Dr Piechowski’s expert evidence are elaborated on below.

277. Returning now to why I did not find Mr Cronin to be a reliable witness, a leading example of his non-responsiveness relates to a series of relevant questions he was asked under cross-examination by Mr Kearns regarding the internal access roads issue. Mr Cronin was asked several times whether he would have acted upon advice from Mr Kearns, if it had been given, that engineering plans should be obtained for the proper construction of the internal access roads. Mr Cronin repeatedly avoided directly answering that question, protesting personally (even though Cadence was well represented by Mr Lyons of counsel) that it was hypothetical. It was only after the Court intervened and directed Mr Cronin to answer the question (which was clearly relevant to causation) that he gave a responsive answer:

HIS HONOUR

Q. And what I’m putting to you is several times, now, he’s put a question to you--

A. Yes.

Q. --that if he had said to you at around about this time, and it’s roughly in the middle of the project, you should go and get engineering plans for the roads. He’s put that question to you and you haven’t answered it?

A. Look, I - I think that’s a reasonable proposition, yeah. It’s like, yes, I should have said yes. Yes, I’ve - I’ve explained that the lesson’s learned. Would I, at the time, agree to engineering? I don’t know. Cause it wasn’t put to me. Like, I’m not - I don’t know how to build a road. You’ve told me that. Like, these - this is like saying I’m a banker, you need to understand how to build a road. Like, there just wasn’t that context.

Q. He’s not asking you to build a road. He’s asking you to respond to the proposition that if he had advised you to go and get engineering plans for the roads, you would not have agreed to do so. That’s what he’s put into you?

A. Okay. I accept that I probably wouldn’t have agreed to it. Yep.

278. Another example of Mr Cronin’s unreliability as a witness relates to his evidence concerning the use of a remote-control app known as the CUE(KNX) app. Mr Thompson put to Mr Cronin in cross-examination that Univenta had explained to him that they were just using the CUE(KNX) app to fine-tune the system and that it would ultimately be integrated into the Control4 home automation system. Mr Cronin flatly denied that proposition notwithstanding an email dated 16 December 2021 from Mr Klintfalt to Mr Cronin in which Mr Klintfalt tried to explain to Mr Cronin that the geothermal system was not faulty and Mr Cronin needed to spend more time to familiarise himself with the system. The email to Mr Cronin included the following statements (emphasis added):

…

I would like to clarify that the system is NOT faulty. What had been discussed previously in design meetings and quoted for this project has been delivered by Univenta. The issues arise around the control system and understanding how the system is used.

With all our clients there is a "Soft Landing" process where the complete system is tuned over a period of months to reach the required set points and desired functionality of the occupant (you and the family). This is similar to conventional air conditioning, but also different in its approach, which means that there are many more moving parts to consider.

The Cue.app is a solution we use and need to use to tune the system to achieve realistic outcomes for your heating and cooling. Once we have this locked in the IP address and the logic can be provided to your Automation Contractor, however from this point on we will take no responsibility of the system as anything can be changed without our knowledge or instruction.

All of our other clients are very happy with the end result of the solutions we provide, however they work with us to achieve these results. Dusan is committed to working through your functionality concerns and will happily meet with you next week in Mosman where you can work through the temperature and functionality concerns. After which there will be some reprogramming of the control logic to suit your updated inputs.

Dusan is still your main contact for this project as he has in-depth knowledge across the project.

279. The following exchange occurred between Mr Thompson and Mr Cronin when he was cross-examined about this email:

Q. But Univenta explained to you, didn’t they, that they were just using that app to commission and tune the system?

A. No.

Q. I’ll take you to court book 558.

A. Mm-hmm.

Q. Paragraph 163.

A. Yes.

Q. The paragraph beginning, “The CUE app”?

A. Yeah.

Q. “Is a solution we use and need to use to tune the system to achieve realistic outcomes through heating and cooling”. Then he goes on to say - this is Mr [Klintfalt], from Univenta. Is that right?

A. Mm-hmm.

Q. “Once we have this locked in in the IP address, and the logic can be provided to your automation contractor”. I suggest to you that is Univenta indicating that once the system is fine-tuned, we can move to the automation that you desire?

A. Am I allowed to respond to that? Because there’s actually evidence that says that’s the app that we use by design.

Q. The proposition I’m putting to you is that the CUE app was used to fine-tune the system?

A. Disagree.

Q. The second proposition I’m putting to you is that Univenta was indicating in this email that, once the system was fine-tuned, they would move the operation of the system to your preferred automation app. Disagree?

A. Disagree.

280. Despite Mr Cronin’s insistence that there was actual evidence that the app was one that Univenta “use by design”, at no point did he or his Counsel point to any such evidence. Nor was there any evidence to contradict Univenta’s stated intention to integrate the CUE (KNX) app with the Control4 automation system after the geothermal system was tested and fine-tuned and the protocol issue was resolved.

281. Mr Cronin’s denial that the app was to be used for testing and fine-tuning is inconsistent with Mr Trembuch’s evidence, which I strongly prefer. At [153] and [154] of his affidavit dated 25 October 2024, Mr Trembuch said**:**

In October 2021 testing began with the remote-control system app CUE (KNX) to test the operation of the Geothermal HVAC System at each of the properties. As per Univenta's report, the outcome was successful, and all installed components were performing as designed. We found a couple of AC air outlets unbalanced and reported this to Lynx Air Conditioning (Paul Whitlock). Univenta created a list of these findings and passed it on to Aspire. All work was scheduled before the contract termination.

The system and all installed components were functioning as designed.

282. I also accept Mr Trembuch’s evidence that Univenta’s testing and commissioning of the three geothermal systems was conducted in accordance with standard processes and that all aspects of the systems performed as designed except for the following three issues:

(a) During the testing and commissioning of the Tourist Cabin, a faulty valve was identified as part of the Stiebel Eltron heat pump system. Although Univenta proposed to replace the faulty pump and conduct tests, it was prevented from doing so because Mr Cronin refused Univenta access to the site. (b) Mr Trembuch personally attended the site on several occasions during the commissioning process, especially during December 2021. During this period, Mr Cronin became increasingly more hostile toward Mr Trembuch and made unreasonable requests for him to attend the site on Christmas Eve to attend to an issue with the hot water system. (c) Despite Mr Trembuch’s efforts to explain to Mr Cronin how the geothermal system worked, Mr Cronin resisted any such understanding because he had an expectation that a geothermal system would operate the same as a conventional air conditioner.

283. I find that Mr Cronin’s dissatisfaction with the geothermal systems as built was due in large part to unrealistic expectations on his part as to how quickly the systems would provide cooling. This was tellingly demonstrated when Mr Cronin acknowledged under cross-examination that he expected temperatures of 19-21°C to be reached at the Main House within 1 hour. He acknowledged that this expectation was based on his personal experience of the operation of a conventional air-conditioning system at his Mosman home. Nothing in the GXA Reports supported this expectation

284. My reluctance to accept Mr Cronin’s evidence unless, for example, it is supported by contemporaneous documentary evidence or evidence by an impartial witness also stems in part from his response under cross-examination to various questions put to him by Mr Kearns regarding his volatile character and overbearing conduct. When Mr Kearns put to Mr Cronin that he had yelled or screamed at Mr Kearns on-site in front of staff or sub-contractors, Mr Cronin answered “Probably, yep”. When it was then put to Mr Cronin that he had become so angry on one occasion that he slammed his fist on a wall, damaging the wall, Mr Cronin said that he was not aware of that incident. Mr Cronin said that he did not remember hitting the wall. Mr Kearns then read to Mr Cronin the following diary note written by an electrician who was on-site when the relevant event occurred:

“Working on site in the morning, Liam and myself were cutting out downlights. Garren arrived on site and noticed that a few downlights that had furring channels running through the holes we had cut, and commented to Liam, ‘Well, that’s pretty shit, isn’t it?’ Liam didn’t know how to respond, and just mentioned to me, and we were cutting the holes we had previously marked. When I entered the room, Liam told me what had happened, and I then left and returned to the hallway and saw Jake, and I told him what had happened, and I took him into the room to show him. While discussing the situation with Jake, Garren charged into the room and was extremely agitated, and asked, ‘What the F is this shit, Jake? That’s not good enough.’ He then proceeded to say that if he asked for things to be fixed it doesn’t seem to happen. He mentioned the bathroom and the laundry, and then wandered down the hallway and slammed the back of his fist against the wall and yelled, ‘Look at this shit. It’s not good enough. I don’t know who’s paying for this, but it sure as shit isn’t me’.”

285. When Mr Kearns asked Mr Cronin whether this prompted his memory of the incident he responded: “Possibly. Yeah, yep”. Only then did Mr Cronin say that he now remembered getting angry to the point where he punched the wall.

286. The electrician’s diary note was tendered without objection and became Exhibit 4 in the proceeding.

287. I find it remarkable that Mr Cronin had no recollection of this significant incident prior to the diary note being shown to him in the witness box. The event also leaves little doubt that Mr Cronin had a controlling, dominating and, at times, aggressive manner.

288. I am reluctant to accept Mr Cronin’s evidence unless it is supported by other corroborating probative evidence, is against interest or is consistent with the apparent logic of events.

289. I have no hesitation in saying that, where there is a conflict in the evidence of Mr Cronin and Mr Kearns, I prefer Mr Kearn’s evidence. He struck me as a truthful and responsive witness. He frequently made concessions which were against interest. This was illustrated several times when he candidly accepted liability for many individual items, including the need to sandbag the internal access road prior to the major weather event in March 2022 and notwithstanding that, at that time, Aspire was no longer active on the building site. He also accepted liability for several individual items which Cadence claimed to be general building defects. At various times, Mr Kearns candidly acknowledged that there were deficiencies in some of Aspire’s systems and processes, including in checking whether its sub-contractors were licensed and also in checking any changes in the SHGC values of the windows. He struck me as a sincere and genuine person who was intent upon assisting the Court to the best of his ability. Mr Kearns did not hesitate to say when he had only a poor recollection of particular events. Mr Kearns was an impressive witness whose credibility and reliability I do not doubt.

290. The same may be said about Mr Trembuch. It was apparent that English is his second language and that he sometimes struggled linguistically. He swore an affidavit dated 25 October 2024. He has more than 15 years’ experience in the geothermal heating, ventilation and air conditioning industry and specialises in geothermal systems. He was subjected to a lengthy cross-examination by Mr Lyons. He impressed me as a truthful, reliable and responsive witness.

291. I accept Mr Trembuch’s evidence that it was only during the commissioning process towards the end of 2021 that Univenta was first made aware of the glazing issue and the changes to the windows in the Building which resulted in more thermal energy entering the Buildings than had been detailed in the GXA Report. I also accept his evidence that Univenta’s testing and commissioning of each of the three installed geothermal systems revealed that the systems were performing as designed except for the three issues identified in [282] above. Where there is any tension between the evidence of Mr Cronin and Mr Trembuch, I have no hesitation in preferring Mr Trembuch’s account. This includes, but is not limited to, their differing accounts relating to the CUE(KNX) app and its integration into the Control4 automated system.

(ii) Issues regarding Dr Piechowski’s expert evidence

292. Univenta and Mr Trembuch contended that Dr Piechowski’s first expert report should be given “very little, if any, weight” because it did not reflect his independent opinion in circumstances where, on several occasions, he adopted or acquiesced in the views of other people, including Mr Cronin, without disclosing the involvement of those people. Dr Piechowski’s second report was challenged on the basis that Dr Piechowski was biased because he opined on the reasonableness of the rectification works carried out under a scope of works drafted, in part, by himself, a fact which he failed to disclose in his second report.

293. These challenges to the weight to be given to Dr Piechowski’s evidence were supported by Aspire and Mr Kearns.

294. Mr Thompson, who appeared for Univenta and Mr Trembuch, submitted that these matters necessarily tainted Dr Piechowski’s third report because it was presented in reply to Dr Kivi and adopted Dr Piechowski’s earlier reports. As to the fourth report, Mr Thompson submitted that the Court need not make any findings about it in terms of Dr Piechowski’s credit because it at least addressed the relevant question regarding the performance of the geothermal system, a question which was also squarely addressed by Dr Kivi.

295. Mr Thompson was granted leave to cross-examine Dr Piechowski on these matters before he participated in a joint conclave with Dr Kivi.

296. For reasons which I will shortly develop, I find that there are some serious issues concerning Dr Piechowski’s independence. The better view is that these matters go to the weight to be given to his expert evidence, as opposed to its admissibility (see, for example, Sydney South West Area Health Service v Stamoulis [2009] NSWCA 153 at [200]ff per Ipp JA, with whom Beazley and Giles JJA agreed; Ananda Marga Pracaraka Samgha Ltd v Tomar (No 4) (2012) 202 FCR 564; [2012] FCA 385 at [35] per Dodds-Streeton J; ACCC v Snowdale Holdings Pty Ltd (2016) 339 ALR 445; [2016] FCA 541 at [382]-[413] per Siopis J; Rush v Nationwide News Pty Ltd (No 5) [2018] FCA 1622 at [35]-[36] per Wigney J and McNickle v Huntsman Chemical Company Australia Pty Ltd (Evidentiary Ruling) [2023] FCA 1268 per Lee J).

297. I will explain that, while I do not accept that Dr Piechowski’s first report should be given absolutely no weight at all, I consider that his evidence needs to be assessed with elevated caution because I have strong concerns that Dr Piechowski has not acted as the Court expects from an independent expert witness. I have concluded that significant parts of Dr Piechowski’s first report should be given only very limited weight, particularly when that evidence is contrasted with that of Dr Kivi.

298. I will also explain why Dr Piechowski’s second and subsequent reports should be given little weight (noting, however, the exception relating to his fourth report as outlined above).

(iii) Dr Piechowski’s first expert report dated 19 August 2022

301. For reasons which will be developed, I am comfortably satisfied that the evidence demonstrates that Dr Piechowski acquiesced in or adopted comments by Mr Cronin in respect of several significant parts of this report, but did not disclose the nature and extent of Mr Cronin’s involvement in its preparation and finalisation. Mr Cronin was extensively involved in reviewing and editing several iterations of the first report. Dr Piechowski permitted Mr Cronin to edit and mark-up at least one draft of that report. In other instances, Dr Piechowski simply adopted verbatim wording suggested by Mr Cronin, including on technical issues which are the provenance of the expert and not a lay person such as Mr Cronin.

302. Moreover, as Dr Piechowski acknowledged in cross-examination, nowhere in his first report did he disclose the nature and extent of Mr Cronin’s involvement in its production. Nor did he disclose the nature and extent of the effect on him of the opinions of a building consultant (believed to be Mr de Maio) who was retained by Mr Cronin to review and comment on a draft of Dr Piechowski’s first report. Mr de Maio works for a competitor of Univenta and his company (CWL) was retained by Cadence to carry out rectification works concerning the geothermal systems.

303. I do not accept Dr Piechowski’s claim that he was simply informed by Mr Cronin’s comments and observations and was not influenced by them. This claim is contradicted by the fact that, for example, Dr Piechowski was content to adopt verbatim wording suggested by Mr Cronin in respect of some important parts of his first report. Dr Piechowski also changed his draft to reflect comments by Mr Cronin, not merely of an editorial nature, but on significant technical matters for which Dr Piechowski professed considerable expertise.

304. I reject Cadence’s claim that the communications which passed between Mr Cronin and Dr Piechowski simply reflect the fact that they were generated in the course of seeking to resolve a series of “real world” problems. Cadence claimed that these problems were created by Aspire suspending its work in mid-February 2022, when there was a pressing need to finalise both the 368D House so that it could be sold and the Tourist Cabin so it could be rented to assist in meeting Cadence’s debt obligations. I consider that the communications are consistent with Mr Cronin’s controlling and domineering character.

305. In addition, I consider that the weight to be attached to Dr Piechowski’s first report is detrimentally affected by evidence which indicates that it was prepared, in part, with a view to justifying a particular scope of works for rectification which Mr Cronin had in mind and where Dr Piechowski had some personal involvement. This involvement pre-dated Dr Piechowski’s first report. Mr Cronin applied substantial pressure on Dr Piechowski to produce a report which would support that scope of works. Moreover, in early June 2022 (i.e. prior to the first report being finalised), Mr Cronin emailed Dr Piechowski emphasising the importance of Dr Piechowski providing recommendations concerning rectification of the geothermal system, including recommendations concerning its removal, as part of the proposed rectification. Mr Cronin instructed Dr Piechowski to explain in his report why the geothermal system needed to be replaced, which was Mr Cronin’s fervent personal desire at the time. Mr Cronin then effectively held out an inducement to Dr Piechowski by highlighting that he could step in as a consultant to review the implementation of a new and effective design for a geothermal system. Mr Cronin explicitly encouraged Dr Piechowski to provide a scope of works for rectification which could provide a basis for Cadence to tender the rectification work.

(1) Every report prepared by an expert witness for use in court must clearly state the opinion or opinions of the expert and must state, specify or provide—

…

(e) the reasons for and any literature or other materials utilised in support of each such opinion, and

…

(h) the extent to which any opinion which the expert has expressed involves the acceptance of another person's opinion, the identification of that other person and the opinion expressed by that other person, and

…

307. It should be noted that not all versions of the first report, which underwent numerous iterations, were adduced in evidence.

308. Dr Piechowski was engaged as an expert by Cadence’s then solicitors on 25 March 2022. He was asked to undertake the following tasks:

ANNEXURE A – SCOPE OF WORKS

1. Review GeoExchange Report (GXA20-NSW-06-R01) dated 24 March 2020, including the design scope and modelling outputs and determine if installed heating and cooling equipment is adequately sized to meet the GeoExchange design scope or the independently calculated peak heating and cooling loads.

2. Review Univenta Commissioning Report dated 10 February 2022.

3. Review the Properties and geothermal system design.

4. Review project documentation including ‘As Built’ drawings, window schedules, WERS ratings, geothermal system specifications and commissioning report(s) for each of the houses (368D, 200 Main House and 200 Tourist Cabin).

5. Run tests and modelling to review the performance of the installed geothermal systems (including hot water) at each of the houses.

a. Review and test as-built installation in terms of workmanship, energy consumption, water flow rates, delta T water temperatures and system capability and contrast findings against GeoExchange Report and Univenta Commissioning Report;

b. Independently calculate the peak cooling and heating loads based on the as-built environment (at 1hr intervals for 24hr period);

c. Review control algorithms employed to direct water to different zones (pool, DHW, house zones);

d. Simulating likely occupancy user pattern during peak summer periods;

e. Cool houses to set point of 21c (assuming 35c outside);

f. Measure time taken and energy consumption during ramp up and continuous usage; and

g. Review VRM energy usage data.

6. Carry out thermal load calculations for the three houses to establish heating and cooling loads of each building including thermal load breakdowns for each zone of the buildings and compare to data in the GeoExchange Report.

7. Provide recommendations (including the removal of the system) to rectify performance shortfalls of each of the geothermal systems and indicative costs thereof.

309. I will now summarise various documents which were put to Dr Piechowski in cross-examination by Mr Thompson prior to the conclave by the experts. The documents were produced by Cadence pursuant to a call made by Univenta and Mr Trembuch on the second day of the trial and prior to the conclave with Dr Kivi. They include correspondence passing between Dr Piechowski and Mr Cronin relating to the first report. The documents were produced in two tranches: the first being a set of non-confidential documents and the second (comprising a total of 14 documents) being released later after claims of legal professional privilege were belatedly withdrawn. This second tranche of documents became Exhibit 15 in the proceeding. It is these documents which were primarily relied upon by Mr Thompson in questioning the weight to be given to Dr Piechowski’s evidence.

310. It is evident that, by 30 May 2022, Dr Piechowski’s first report had undergone eight iterations. This particular version of the draft was provided by Dr Piechowski following a detailed email he received from Mr Cronin on 27 May 2022 at 6:39am. Mr Cronin told Dr Piechowski that he had “shared” Dr Piechowski’s “incomplete draft report” with a building consultant who had previously dealt with geothermal systems. As noted above, although the evidence is somewhat uncertain, it appears that the building consultant was Mr de Maio. In his email to Dr Piechowski, Mr Cronin set out lengthy comments from the building consultant and Mr Cronin added his own highlighting in yellow to some parts of those comments. Mr Cronin asked Dr Piechowski to “consider and respond to” the building consultant’s comments and added that there “looks to be some more content for your report too”. The building consultant’s feedback, together with Mr Cronin’s yellow highlighting (noting that Mr Cronin denied any personal expertise with geothermal systems), was as follows (highlighting in original now reproduced in red):

Holy crap that's bad.

- Water flow rate to the FCUs appears to be a major factor but has anyone measured the temperature of the water at the FCU? That would be a major factor in the capacity of the unit.

- The fact that there are no balancing valves to the FCUs is fatal for their "commissioning" report. How did they test and adjust the flow rate? They didn't.

- The return air duct photos with wires going though [sic] them are a bad look for the quality of installation.

- Shocked they used green pipe as well as dissimilar metals and had no dosing point

- Shocked at lack of adequate fall in condensate pipes. This is basic stuff.

- I don't understand the argument that your consultant makes about the pool heating between October and May. My thinking is in cooling mode, the system would dump heat to the pool via a heat exchanger rather than to the ground loop. Thus, whatever heat you are removing from the house is being transferred to the pool isn't it? In addition, in the Geoexchange design scope they defined usage as between September to May not October to May.

- It might be beneficial to calculate the required air flow rates for the supply air diffusers at 368d and tourist cabin in the main living area. Given the length of the room and the fact that the return air plenum is at the wrong end of the room, I suspect your air velocity would need to be vey [sic] high to get any effective cooling at the opposite end of the room. The very high air flow rate would mean the noise would likely be uncomfortable for occupation. Can the FCUs even pump out enough air velocity?

- I can't tell from the photos - perhaps the manifold for the underfloor heating/cooling is not insulated? There is definitely one section of brass fittings that are not lagged properly. There appears to be other pipes that ae also not lagged properly.

- Did the consultant check the pump sizing for the ground loop was adequate? What about sizing of the pool loop pump?

- The section on the FCUs not having enough capacity could be challenged because it is based on an on-coil temperature of 23 degrees. However, In the Geoexchange design scope they state that the rooms should be maintained at 24 degrees in peak solar gain (not 23). Noting the on-coil temperature could be a couple of degrees above the room temperature, they could argue that the cooling capacity of the 170y (for example) should be based on 26 degrees on coil because it could maintain a 24 degree room (as per the design spec) and this would mean your consultant would be out by a couple of KWs for total sensible load.

- Wondering if the consultant checked the sizing of the heat exchangers? (i.e, the pool heat exchanger and CHW heat exchanger).

All that being said I think you have a very strong case of malpractice.

311. Later, on 27 May 2022 at 10:23am, Mr Cronin received an email from Mr Richard Jefford (who had been selected by Dr Piechowski to visit and inspect the building sites on his behalf so as to avoid the need for Dr Piechowski personally to attend the sites). Mr Jefford provided Mr Cronin with additional comments to those of the building consultant, as is reflected in the writing coloured blue which Mr Jefford added to the yellow highlighted version (highlighting in original now reproduced in red):

On Fri, May 27, 2022 at 10:23 AM Richard Jefford wrote:

Hi Garren,

I will explain what I know here about these statements and explain further on this below.

Holy crap that's bad. Yes, the worst I've ever seen.

- Water flow rate to the FCUs appears to be a major factor but has anyone measured the temperature of the water at the FCU? That would be a major factor in the capacity of the unit. No this was due to the controls not allowing me to run an individual fan coil to test this.

- The fact that there are no balancing valves to the FCUs is fatal for their "commissioning" report. How did they test and adjust the flow rate? They didn't. Clearly.

- The return air duct photos with wires going though [sic] them are a bad look for the quality of installation. Lacks air tightness and brings in roof temperature into the fan coil air system, thus adding higher loads (higher cooling demand than just room space)

- Shocked they used green pipe as well as dissimilar metals and had no dosing point This would be an answer from someone working in the field to know this.

- Shocked at lack of adequate fall in condensate pipes. This is basic stuff. Yes

- I don't understand the argument that your consultant makes about the pool heating between October and May. My thinking is in cooling mode, the system would dump heat to the pool via a heat exchanger rather than to the ground loop. Thus, whatever heat you are removing from the house is being transferred to the pool isn't it? In addition, in the Geoexchange design scope they defined usage as between September to May not October to May. The pool situation has happened due to the installation method and Univenta said that both (heating and cooling) could not be done in summer as only a single buffer tank and using Steibel heat pumps.

- It might be beneficial to calculate the required air flow rates for the supply air diffusers at 368d and tourist cabin in the main living area. Given the length of the room and the fact that the return air plenum is at the wrong end of the room, I suspect your air velocity would need to be vey [sic] high to get any effective cooling at the opposite end of the room. The very high air flow rate would mean the noise would likely be uncomfortable for occupation. Can the FCUs even pump out enough air velocity?

No and I believe Mirek has said this.- I can't tell from the photos - perhaps the manifold for the underfloor heating/cooling is not insulated? There is definitely one section of brass fittings that are not lagged properly. There appears to be other pipes that ae also not lagged properly. Minor issue and air should be doing cooling, not floor, is best practice (design floor using floor in active cooling to help with peak load, very poor use when running ducting anyway). Needed the 3rd FCU to do the right job with correct pipe sizing, pressure drop calculations give us this.

- Did the consultant check the pump sizing for the ground loop was adequate? Mirek has done some calculations, and as I mentioned previously my calculations based on GXA design would have been for 530 mtrs of 6 pipe horizontal ground loop = 3180 metres of 25mm pipe, and they only used 1500 mtrs of 32mm. What about sizing of the pool loop pump? More to the point no pool heating can be used. Pool heating can not be used in current configuration. What about pipe insulation as well as size of pipe, we don't want a bigger pump to overcome small pipes!

- The section on the FCUs not having enough capacity could be challenged because it is based on an on-coil temperature of 23 degrees. However, In the Geoexchange design scope they state that the rooms should be maintained at 24 degrees in peak solar gain (not 23). Noting the on-coil temperature could be a couple of degrees above the room temperature, they could argue that the cooling capacity of the 170y (for example) should be based on 26 degrees on coil because it could maintain a 24 degree room (as per the design spec) and this would mean your consultant would be out by a couple of KWs for total sensible load.

- Wondering if the consultant checked the sizing of the heat exchangers? (i.e, the pool heat exchanger and CHW heat exchanger).

Mirek has covered this off.

All that being said I think you have a very strong case of malpractice.

Feel free to contact me with any questions.

312. Later that same day, Mr Cronin responded to Mr Jefford by email. He thanked him for his comments and added that there “is some good content for [Dr Piechowski] to refine in his report”. Dr Piechowski was copied in on this email. Plainly, Mr Cronin intended that Dr Piechowski would be influenced by those comments.

313. On 31 May 2022 at 6:32am, Dr Piechowski sent Mr Cronin and Mr Jefford revised version 8 of his draft report (a copy was also sent to Cadence’s then solicitor).

314. On 1 June 2022 at 7:50pm, Dr Piechowski sent the solicitor a copy of what he described as the “final draft” of his report, copying in both Mr Cronin and Mr Jefford.

315. Assuming that this is a reference to version 8 of the draft report dated 30 May 2022, it is notable that nowhere in Dr Piechowski’s discussion of the defects of the geothermal system in relation to either the Main House or the 368D House is there reference to any concern he had at that time regarding the length or size of the pipes in the ground loops. That is to be contrasted with the prominence subsequently given to those matters in Dr Piechowski’s final first expert report after Mr Cronin repeatedly drew his attention to the importance Mr Cronin personally attached to those matters.

316. On 3 June 2022, Mr Cronin sent an email to Dr Piechowski (copying Cadence’s then solicitor) concerning what was described as “Barrengarry Project: #7 Scope of Works”. This confirms that Dr Piechowski was involved in the development of a scope of works for rectification prior to him finalising his first report. Mr Cronin wrote that it was important for Dr Piechowski and not Mr Jefford “to address in a standalone document Scope of Work #7”. Mr Cronin then set out item 7 of the scope of works dated 25 March 2022, which detailed his solicitor’s instructions to Dr Piechowski to prepare an expert report (see at [308] above). After setting out the wording of item 7 in italics, Mr Cronin then provided the following additional comments or instructions to Dr Piechowski:

“Provide recommendations (including the removal of the system) to rectify performance shortfalls of each of the geothermal systems and indicative costs thereof”

Explain why the geothermal heat pumps, hot water systems etc in each house need to be replaced. Pool pipes dug up and insulated etc

This in turn will allow you to step in as a consultant in the next phase to review the implementation of the new (effective) design.

Ideally your Scope of Works (for rectification) will allow us to tender the work to Highland Geothermal, CWL etc

We will be focused on mitigation of our losses and getting an optimal solution sorted ASAP.

Cheers, Garren

317. This email indicates that Mr Cronin took it upon himself to direct Dr Piechowski as to what he needed to do in response to item 7 of the scope of works which described his retainer. Mr Cronin was not content to leave this task to his then solicitor. This is consistent with the evidence which overwhelmingly indicates that Mr Cronin has a controlling and domineering character. Dr Piechowski was asked to produce a standalone document to be used as the scope of works in obtaining tenders from sub-contractors for the rectification works. He was told that he would be able to be a consultant in reviewing the implementation of a new geothermal system.

318. None of these significant matters were disclosed by Dr Piechowski in his first report.

319. On 3 June 2022 at 8:00pm, Mr Cronin emailed Dr Piechowski, copying in the solicitor and Mr Jefford. Mr Cronin reiterated that he had “just had the building consultant review the report”. He added that the consultant had picked up what Mr Cronin described as a “key issue”, namely that “the undersized pump is accepted, but you appear to have overstated the impact of the FCU capacity limitation” (emphasis in original). Mr Cronin asked Dr Piechowski to “review and comment”. Again, this demonstrates Mr Cronin’s preparedness to take a prominent role on technical issues and in guiding the focus and content of Dr Piechowski’s expert report.

320. Mr Cronin set out in his email extracts from the building consultant’s review of the draft report (which presumably refers to Mr de Maio). The extracts are different from the comments which were passed earlier to Dr Piechowski on 27 May 2022. Mr Cronin emphasised some of that material (which is quintessentially of a technical nature) by yellow highlighting as follows (highlighting in original now reproduced in red):

A key part of the argument is that the water pump selected is undersized and this is repeated at all sites and multiple times through the report. The extent that it is undersized is calculated based on estimating the pressure drop through pipe and fittings and then plotting this on the pump curve to arrive at the estimated flow rate. However, it would have been better to measure the actual flow rate and temperature of the water at each FCU because as I will show, there could be doubt cast on the calculations. My point is really that empirical data is more objective and more defensible than calculated data because mistakes in calculations can be made then this undermines the report in court.

For example, the report states that the total sensible cooling capacity of both FCUs is actually 12.0kw rather than 17.4kw. This is because the pump is undersized and less water is being distributed to the FCUs. The 12.0kw figure is calculated based on the pump having a flow rate of 0.85l/s, which is 30% less than the 1.2L/s required. The report concludes that as the flow rate of the pump is 30% less than the design flow. then the cooling capacity to the FCUs is also 30% less i.e., 17.4kw minus 30% roughly equals 12kw.

However, this assumption is not supported by the FCU data below. A reduction in water flow rate does not equate to an equal reduction in sensible cooling capacity. For example, at 0.3L/s water flow rate to one FCU, which is a 50% reduction in water flow rate from the target of 0.6l/s, the IMD 170Y has a sensible cooling capacity of 7.7kw. 7.7kw is 12% less than 8.7kw. In other words, a 50% reduction in water flow rate results in a 12% reduction in sensible cooling capacity, not a 50% reduction in cooling capacity.

At 0.45l/s, which is a 25% reduction in water flow rate, the sensible cooling is reduced to 8.3kw, which is 5% less than 8.7kw.

321. The following day, on 4 June 2022, Dr Piechowski responded to Mr Cronin stating that “it’s a correct observation”. He said that he had amended the relevant sections of his draft report. Dr Piechowski told Mr Cronin that he had “reasons to believe that the same FCU serving Living+Dining in Main House is also supposed to be serving Foyer”.

322. Later that same day, Mr Cronin sent the following two emails to Dr Piechowski, copying in the solicitor and Mr Jefford (emphasis added, noting also that the evidence did not include a copy of the “updated version” referred to):

Hi Mirek

Allowing for the correct calculations, please find attached the updated version (Clean Word) and PDF (mark-up) to clean up consistency of language and references.

Hopefully, once you are satisfied with the report's content, this document can now be issued as the final version.

Cheers, Garren

----------

On Sat, Jun 4, 2022 at 2:53 PM Garren Cronin wrote:

Thanks Mirek

Best to fix now, than when challenged through court process.

I’m just out with family. Scanned the text. Would like to change some of the language now that the % are much lower at the FCU level.

The Large entrance / foyer is highly likely running off the FCU almost directly above this area. As you know it also services the wider living / kitchen room zone in both 368D and Main House.

I will come back to this group with comments tonight.

323. This email is significant. It states unambiguously that Mr Cronin wanted to change some of the language in the draft report to reflect his belief that the percentages are much lower at the FCU level. He foreshadowed that he would provide further comments later that day. The evidence is unclear whether Mr Cronin did in fact provide additional comments, either orally or in writing.

324. Approximately 3 hours later at 6:15pm on 5 June 2022, Dr Piechowski sent Mr Cronin what he described as the “updated Final draft”. He added that he and Mr Jefford would review and issue the scope of work for the remedial work the following morning. This again confirms that Dr Piechowski personally was involved in preparing the scope of work concerning rectification, together with Mr Jefford, prior to Dr Piechowski finalising the first report.

325. On 6 June 2022, Dr Piechowski sent to Cadence’s then solicitor (copying in Mr Cronin and Mr Jefford), a draft scope of work and costing prepared by Mr Jefford.

326. On 6 June 2022 at 7:25pm, the solicitor emailed Dr Piechowski, copying Mr Cronin, stating that, as Cadence’s independent expert, he needed “to properly determine the Defect Rectification Scope of Works necessary and that which falls out of your Report”. Dr Piechowski was told that there was a need clearly to document why he considered it necessary to remove heat pumps and the like, so the process could be justified and only relevant “mitigants” were employed. The solicitor also added that Dr Piechowski’s “Defect Rectification Scope of Works” could also be used to tender the work to short-list contractors in respect of the rectification works.

327. The following day, 7 June 2022, Dr Piechowski emailed the solicitor, providing an updated scope of works which included relevant references to the draft expert report.

328. On 8 June 2022, Mr Cronin sent an email to Dr Piechowski, copying in Cadence’s then solicitor. Mr Cronin provided the following comments on item 19 of the then existing draft scope of works, including providing suggested wording (without alteration):

Hi Mirek

Re Item 19 - would be good to update your explanation for changing DHW in Spreadsheet to be consistnet [sic] with your email. Words to the effect:

“A new DWH system which stores hot water in the coil will be more energy efficient, both thermally and spatially and importantly reduce excessive energy consumption currently experienced”

Also, Item 19 - Tourist Cabin DHW (as installed) does not work

Cheers, Garren

329. On the same day, 8 June 2022 at 1:12pm, Dr Piechowski sent an email to Mr Cronin copying in the solicitor. He attached a document headed “22139 -200 bunkers hill road remediation scope of work rev06.1.xlsx”. Dr Piechowski said that this version contained the modifications as suggested (presumably by Mr Cronin). Again, this confirms Dr Piechowski’s significant involvement in the development of a scope of works for rectification prior to him finalising his first report.

330. Item 19 of that document, which related to the installation of a new 315 L DHW tank, contained the following information under the heading “Expert Report Reference”:

Install smaller size DHW tank, with DHW stored in the tank and integrated with HP. A new DWH system which stores hot water in the coil will be more energy efficient, both thermally and spatially and importantly reduce excessive energy consumption currently experienced. The installed Tourist Cabin DHW system does not work.

331. It is notable that the penultimate sentence adopts verbatim Mr Cronin’s suggested wording in his email dated 8 June 2022. Mr Cronin’s comment that the Tourist Cabin DHW as installed does not work is also repeated verbatim in the final sentence.

332. Although this relates to the draft scope of works and not directly to the first report, it demonstrates Dr Piechowski’s willingness to adopt wording suggested by Mr Cronin. I do not accept Dr Piechowski’s oral evidence that adopting the language of a third party is a different thing from adopting that person’s opinion, particularly where technical issues are concerned and the language is supplied by a lay person.

333. On 8 June 2022, by an email sent at 8:17am by Mr Cronin to Dr Piechowski copying in the solicitor, Mr Cronin provided what he described as “suggested comments” for Dr Piechowski’s consideration. It appears that the comments were directed to version 12 of the draft first expert report. Mr Cronin said that it was important that once the legal practitioners had collated comments on the report, the references to version 12 be removed. A copy of version 12 was not included in the evidence, but the email demonstrates Mr Cronin’s ongoing and deep involvement in finalising Dr Piechowski’s first report.

334. On 6 July 2022, the solicitor emailed Dr Piechowski, copying Mr Cronin, referring to input which had been received from Cadence’s then barrister regarding Dr Piechowski’s draft report. The solicitor provided an updated draft report which was said to address some of the barrister’s concerns. The solicitor said that he had “obviously left your analysis in tact and in respect of that, we have instead included a list of questions to enable us to link source images and figures to key parts of the text and reference where materials have been sourced from”. He added that these matters appeared in comments or were embedded in the text of the revised draft. The solicitor asked Dr Piechowski to carefully review the attached amended draft report and address the queries and issues raised therein and let the solicitor know if he had any other comments. This email indicates that the solicitor was appropriately sensitive to the roles of a party’s legal advisor and an independent expert. It is regrettable that Mr Cronin did not have a similar appreciation of the different role of a party to litigation and an independent expert.

335. As noted above, version 8 of the draft report did not contain any discussion by Dr Piechowski of the adequacy of the ground loops or pipes at either the Main House or the 368D House. It is evident from the following summary of email exchanges between Mr Cronin and Dr Piechowski in the period on and from 8 June 2022 that Mr Cronin applied considerable pressure on Dr Piechowski to address this issue, which ultimately led to some significant and lengthy amendments being made before the report was finalised.

336. On 8 July 2022 at 10:11am, Mr Cronin sent an email to Dr Piechowski stating that he thought that Dr Piechowski had “missed a key issue with the Ground Loops at each Dwelling”. Mr Cronin set out a table comparing various components of the Horizontal Ground Heat Exchanger design at the Main House, with reference to the GXA Report and the Univenta Quote. This table was adopted by Dr Piechowski and was included as Table 2 in [4.1.2] of his final first report. The only change was to replace the question mark relating to pipe spacing in the Univenta Quote with a figure of “<300mm” Again, this indicates Mr Cronin’s determination to influence Dr Piechowski on technical issues and Dr Piechowski’s willingness to adopt Mr Cronin’s wording.

Observations

· What Univenta proposed in its April 2020 quotes were significantly deviated from the GXA specification for Main House

· Univenta had proposed less than half of the in-ground pipework that GXA had specified (refer table above)

· While Univenta used larger pipework (internal diameter of 32mm vs 25mm), this does not equate to a substantial increase in performance as only the difference in circumference of the pipework that transfers heat to the ground

· Apparently the DN32 pipe only transfers approximately 25% more heat on a per-metre basis

· This 25% increase is obviously not nearly enough to account for installing less than half of the amount of pipe in the ground.

· Quantity of pipe in the ground is only half the story, however; the pipework just transfers energy between the heat pumps and the ground – it’s the earth itself that is the actual heat source (in heating) or heat sink (in cooling).

· It is not clear from Univenta’s proposal how much earth was excavated, but it is doubtful that they figured 300mm spacing as this would equate to a 2.7m wide x 150m long trench, photos of Main House suggest the trenching was only 450mm and only 900mm deep (plus 200/300mm for topsoil)

· The use of pit at 368D is also wrong

…

Can you consider the above and revert with your views on whether the Report needs to be updated.

338. Also on 8 July 2022, Mr Cronin sent another email to Dr Piechowski (copying in the then solicitor) under the subject heading “Barrengarry Project - Geothermal Systems Expert Report”. Mr Cronin said that although the GXA Report had made clear that there should have been 9 FCUs to allow for zoning, Univenta proposed 4 FCUs and installed only 2. Mr Cronin added that this “should also be called out as Aspire and Univent [sic] clearly ignored the GXA Report”.

339. Later, on 8 July 2022, Mr Cronin sent an email, presumably to Dr Piechowski because it is part of a chain of emails, with the following text:

Yes - the Expert Report will need a good section under each house explaining this key issue

The Tourist Cabin / dam loop is also considered a problem as the pipe is not consistently >1.5m deep and GHE is likely to be problematic, particularly in summer

340. Dr Piechowski was asked by Mr Cronin on 11 July 2022 whether he had had a chance to review Mr Cronin’s 8 July 2022 email. Dr Piechowski replied on the same day and told Mr Cronin that he would review his comment regarding the ground loop and come back to him two days later.

341. On 13 July 2022 at 9:05pm, Mr Cronin emailed Dr Piechowski (copying in the solicitor) and asked whether Dr Piechowski had had a chance to review the ground loop and pipe layout issue. He added that the GXA Report “clearly shows 6 x 530 = 3,180 l/m of ground pipe at Main House alone” and that it was important to get Dr Piechowski’s expert report sorted in order to finalise the “legal statement of claim” which Mr Cronin was hoping to file that week.

342. Early the next day on 14 July 2022 at 7:22am, Dr Piechowski responded to Mr Cronin by email, copying in the solicitor. He wrote:

… I reviewed the GXA report and Univenta Quote_Main House_Q400 WPF26 FINAL with respect to the ground loop design. The Report specifies 6x530m=3,180m worth of ground loop pipes vs. 1,500m as per the quote. This is a departure from specifications and I will update statement of claims to reflect this. The additional construction photos also demonstrate that the required 300mm distance between the pipes has not been implemented which leads to further reduction in the ground loop capacity.

343. On 18 July 2022, Dr Piechowski responded to the solicitor (and also apparently to Mr Cronin based on the email chain). Dr Piechowski said that he had reviewed and updated his report “as per your questions and comments”. He attached two copies of the report which he hoped would assist with the review. He said that revised version 15 included the solicitor’s original comments and Dr Piechowski’s edits. He said that the version marked version 16 was a clean version of version 15 with all tracing of edits and highlights removed. Dr Piechowski added that he believed that he had addressed all of the solicitor’s comments and invited any additional comments.

344. On the same day, approximately 30 minutes after the time of Dr Piechowski’s email, Mr Cronin sent an email to Dr Piechowski in which he said:

The ground loop issue is lost at p25 - this is massive problem as it makes the whole system largely unusable based on my discussion with other players in the industry

I will come back with suggested comments / mark-ups for you to consider

345. The evidence is unclear as to whether Mr Cronin provided any suggestions comments or mark-ups for Dr Piechowski to consider on 18 July 2022, but it appears from the terms of an email dated 19 July 2025 that Mr Cronin had a discussion with Dr Piechowski the previous day.

346. Thus, on 19 July 2025, Mr Cronin sent a further email to Dr Piechowski in the following terms (emphasis in original):

Further to our discussion yesterday I have undertaken further desk top research understanding how the calculation of the ground loop piping should be undertaken (based on US studies) and other reading. As you know, the calculations are quite intense and best done with a formal model programme.

Whilst you indicated on our call that you also endorse GXA's (Main House) recommendation of 3,180 linear metres of piping, spaced 300mm apart and 1,500mm below the surface your updated Expert Report does not form a view other than noting in passing on p25 a difference between the 3,180 vs 1,500l/m of installed pipe and comment on "This is a departure from specifications and will lead to reduced performance of the ground heat exchanger".

The undersized and less than effective Ground Heat Exchanger Design (ground loop piping) is a material issue for us. When well regarded contractors in the geothermal industry won't touch the job due to this material deficiency with the ground loop, you know you have a serious problem.

To quote from the GXA Report:

"...undersizing can result in an unsustainable GHX that will fail within a few years. Undersizing can be attractive to some installers as a way of reducing costs and thus enhancing their chances of winning the project. The timeframe of this strategy is normally well after standard warranty periods expire and much sooner than the acceptable design life of a GHX"

What we really need from you is some clear analysis that takes your calculated peak thermal loads and the installed GSHP at each dwelling and uses the Barrengarry climate conditions (soil) and provides some scientific support for what the sizing of the piping loop and spacing should have been at each house.

Furthermore, Section 3.3 of the Univenta Commission Report claims:

"The Geothermal Ground loop provides a delta T (Temperature variance) during Peak summer loads of 8-10 Degrees. It should be noted that approximately 1m of earth was removed from the Geothermal collector under the tennis court. Despite this the system is still currently performing within manufacturers specification**"

Cheers, Garren

347. It is notable that this email further demonstrates Mr Cronin’s keenness to become involved in technical issues, including conducting his own desktop research, which was passed on to Dr Piechowski and to apply considerable pressure on Dr Piechowski to adopt Mr Cronin’s position on these issues.

348. On 22 July 2022, Dr Piechowski emailed both Mr Cronin and the solicitor stating that he had updated references to ground loop design and installation, referring to Table 1 and [1.2.1], [4.1.22], [4.2.24] and [5.1.5] of the then draft report. He added that, unless there were other edits regarding formal requirements, Dr Piechowski considered that this concluded the report stage. A copy of the draft report as at 22 July 2022 was not adduced in evidence.

349. Thirty minutes later, Mr Cronin sent an email to Dr Piechowski, copying in the solicitor, in which he made the following observations on what are quintessentially technical issues arising from what Dr Piechowski regarded to be effectively the final version of his report:

I noticed you did not form any views on the GHX at Tourist Cabin - is 400m of ground loop really adequate ?

Looks way too small considering:

· Tourist Cabin has a thermal cooling load of 14kW (ie ~50% of Main House / 368D House)

· 3200 - 3300 l/m for Main House and 368D with loads of 27-30kW....therore [sic] ~1600+ l/m for 14kW?

· ~50% of the 400m of ground loop at Tourist Cabin is not in water >1.0m (ie below 1.5m deservable [sic] level)

350. Approximately an hour later, Dr Piechowski responded to Mr Cronin, copying in the solicitor. Dr Piechowski wrote:

Thanks Garren, I understood that 400m of pipes are at depth of at least 1.5m, in which case 400m is adequate, e.g. much higher heat transfer rates in water than in soil. I’ll make additional comments to reflect the proximity of pipes to the surface of the dam and the negative impact on the pond loop capacity. By the way, how do you control water volume and depth in the dam, e.g. is there a minimum guaranteed volume and depth of water?

351. This is to be contrasted with what ultimately appeared in the final report approximately one month later at [4.3.25]–[4.3.29]:

4.3.25. Taking into account my thermal load calculations for the Tourist Cabin (Figure 21 of Annexure C) and based on my calculations using the Ground Loop Design 2012 Premier software, the length of dam loop piping for the Tourist Cabin should be approximately 780 linear meters.

4.3.26. Univenta’s quote Q405 Tourist F dated 24 April 2020, provided for only 400 linear meters of 32mm diameter pipe (DN32) or 51% of what I have calculated was required.

4.3.27. Based off the dam’s maximum watermark, being approximately 200mm below the bottom of the wooden jetty as illustrated by the horizontal crossbar timber in Figure 69, it would appear that the Tourist Cabin dam loop piping was installed at varying depths between approximately 0.5 to 1.5 meters below the water’s surface (assuming the dam always remained at maximum capacity, which is unlikely).

4.3.28. Figure 69 also shows that the dam loop piping was installed directly at the bottom of the dam. In my opinion, industry best practice would ensure the dam loop piping is installed above the bottom of the dam surface so it can remain in the column of water and not be buried in the silt which over time will impact its performance. All of dam loop piping should have been installed at a depth of at least 1.5 meters below the surface water at all times.

4.3.29. In my opinion, having approximately 49% less dam loop piping (400m vs 780m) and approximately 50% of the piping at a surface depth of <1.0 meters will together likely result in a material reduction in the heat transfer performance of the GHX infrastructure, even after taking account of the use of slightly larger piping (DN32 vs DN25). The failure to correctly install adequate GHX infrastructure will have substantial negative impacts on the operation and long-term performance of the connected ground source heat pump and the Tourist Cabin’s heating and cooling system.

352. It is also evident that Mr Cronin was personally involved in providing an updated version of the expert report to Dr Piechowski on 24 July 2022 because Mr Cronin asked Dr Piechowski in an email dated 25 July 2022 whether he had received “the updated Expert Report from us yesterday?”. This email was also copied to the solicitor. Mr Cronin added that the updated report had “lots of hours of work cleaning up links and formatting etc”. This demonstrates Mr Cronin’s heavy, direct and ongoing personal involvement in finalising the first report.

353. Later, on 25 July 2022, Dr Piechowski sent Mr Cronin and the solicitor an updated report (a copy of which was not adduced in evidence). Mr Cronin responded by an email, copying in the solicitor, saying that he had no further comments and he asked the solicitor to forward the draft report to Cadence’s barrister.

354. Dr Piechowski’s first expert report is dated 19 August 2022. It is important to note the following features which are relevant to the challenge to Dr Piechowski’s independence:

(a) The table which Mr Cronin sent to Dr Piechowski comparing the GXA Report and the Univenta quote was adopted virtually verbatim in [4.1.2] of the report. (b) As noted above, significant changes were made to the final report concerning undersized ground loop piping and inadequate pipe layout in both the Main House and the 368D House after Mr Cronin repeatedly raised these matters with Dr Piechowski from 8 July 2022 onwards: see [1.2.2(i) and (v)], [4.1.2]-[4.1.10], [4.2.2]-[4.2.8] and [5.1.6] of the report. (c) Although there are some express references in the report to Cadence having provided information of a factual nature to Dr Piechowski (see, for example, [1.2.2(viii)], [4.1.7], [4.1.9], [4.2.7], [4.2.12] and [4.3.6]), the report is notably silent as to the nature and scope of Mr Cronin’s heavy personal involvement in providing comments, criticisms and opinions on a range of technical matters. (d) Nor is there any disclosure of the building consultant’s detailed comments on a draft of the report which pointed out errors in Dr Piechowski’s calculations concerning the capacity of the FCUs and urged that empirical data be used (see at [320] above). The building consultant’s comments were accepted by Dr Piechowski, who said that he changed the relevant sections of the draft report accordingly (see at [321] above). (e) An assessment of the effect of the extensive involvement of Mr Cronin personally in the preparation of the first report must give particular weight to the significant fact that Mr Cronin is the driving force behind the company, which is the plaintiff itself, in the proceeding and is not a disinterested lay person. It is evident that Mr Cronin successfully applied considerable pressure in convincing Dr Piechowski that he should not only find the Geothermal Works to be defective but also that they should be entirely replaced as far as cooling is concerned. Based on his experience of cooling his Mosman home, Mr Cronin wanted an outcome whereby the buildings could be cooled to the target temperature in an hour or less, thus the geothermal cooling system had to be replaced. I accept Mr Thompson’s submission that Mr Cronin “made sure that his evidence and the expert evidence supported that outcome [i.e. a wholly different outcome to that which could be achieved by the geothermal system] and, in fact, that is what he got in the end, so his rectification scope wasn’t to enhance the geothermal system, it was to replace it with conventional air conditioning”. (f) The email which Mr Cronin sent on 3 June 2022 (see at [316] above) contained a directive to Dr Piechowski as to how he was to address item 7 of the scope of works that was described in his retainer for his first expert report (which was to be in a standalone document referred to as “Scope of Work #7”) and included an offer or inducement for him to “step in as a consultant in the next phase to review the implementation of the new (effective) design” following his completion of that document. As noted above, none of these matters were disclosed in Mr Piechowski’s final report. (g) The close nexus between the drafting of the first report and the development of a scope of works for the proposed rectification is reflected in the fact that, following a request from Mr Cronin, Dr Piechowski provided a document which provided cross-references between the draft scope of works and particular parts of the then draft first report. This cross-referencing occurred before the first report was finalised on 19 August 2022. It is also notable that Mr de Maio said that he had been provided with a draft of Dr Piechowski’s first report and used it to develop his own scope of works for rectification of the geothermal system.

355. Dr Piechowski confirmed in cross-examination that he provided consulting services to Mr Cronin after he had completed his first expert report and that the services related to the scope of rectification and the rectification works. He confirmed that he was paid an hourly rate of $300 per hour for those services.

356. In my view, the issue whether or not an expert has provided truly independent opinions to the Court falls to be determined not simply by the subjective views of the expert, but by an objective assessment of the relevant surrounding circumstances. Dr Piechowski’s view that his first expert report truly reflects his independent opinions is not consistent with the matters emphasised above regarding its evolution and development, with particular reference to the pronounced personal involvement by Mr Cronin and the repeated pressure applied by him to have Dr Piechowski change the draft report so as to reflect Mr Cronin’s comments, including on many matters of technical significance.

357. An objective evaluation of the evidence does not support Dr Piechowski’s subjective views regarding his independence.

358. When it was put to Dr Piechowski in cross-examination that his report had relied on input from other people apart from Mr Jefford, including Mr Cronin, he agreed but then added that he did not “understand input as telling me what to write”.

359. Later in his cross-examination, Dr Piechowski said that the final version of his report was “my report” and that he took input from various people but made his own conclusions. I accept that in some instances Dr Piechowski took on board the comments and input by Mr Cronin and/or the building consultant (presumably Mr de Maio) but proceeded to conduct his own analysis in response to the issues raised by them. A good example is Dr Piechowski’s response to the observations of Mr Cronin and the building consultant regarding the way he calculated flow rates in concluding that the water pump was undersized for the FCUs (see at [4.3.7] of the final report):

Based on my calculations, the installed circulating water pump (Figure 60) is the incorrect size for the fan coil unit. As illustrated in the following figures, the pump maximum static pressure at the design flow rate of 1.4L/s (based on fan coil unit specifications, 5.6kW sensible cooling at 0.7L/s) is in the order of 5.2mH2O (52kPa). Pressure Drop Analysis indicates that the total pressure drop for the installed system, at the required flow rate of 1.4L/s, is in the order of 14.8mH2O (148kPa) (Figure 58 and Figure 59). This is approximately 285% higher than the pump static pressure at this flow. Consequently, the pump is unable to provide the required water flow rate, and therefore the required cooling capacity to the fan coil unit. At the pump maximum static pressure of approximately 7.0mH2O (70.0kPa) the pump can provide the flow rate of approximately 0.9L/s, or 36% less flow than the required flow of 1.4L/s. From the IMD 95Y catalogue data, the cooling capacity of the fan coil units is therefore reduced to 10.6kW (2x5.3kW), or 5% less than their design capacity, which represents a 24% reduction against the required coincident (sensible) load of 14.0kW due to the undersized pump selection.

360. Later in his cross-examination, when it was put to Dr Piechowski that he had adopted Mr Cronin’s language in item 19 of the scope of works, he said that “adopting the language and adopting opinion are two different things”.

361. It is well to set out the following exchange between Mr Thompson and Dr Piechowski:

Q. Now I ask you to look over at the Court and confirm that these expert reports are truly your independent work products.

A. They are my independent work. The - the opinions in the - in the report are my - my opinions. I wouldn’t put anything that I don’t agree with, and I was taking input from whoever could inform my - my decision.

Q. And do you accept that your opinion was influenced by the comments from Mr Cronin?

A. I would say informed, not - not influenced. As I said, I wouldn’t write anything that I don’t agree with.

Q. Did you speak to Mr Cronin today or yesterday?

A. No.

Q. After issuing your report, you started consulting on the rectification scope; is that correct?

A. Yes.

Q. So you issued your final, final, final report on 19 August 2022; is that correct?

A. Yes.

Q. And after issuing your report, you started consulting on the rectification works?

A. Yes. I believe I, yeah - I was - I was asked to help with that.

Q. And that included in May 2023 you had a conference with Mr Cronin, Mr DeMaio and others about the rectification scope?

A. Yes.

Q. Is it fair to say that you’re part of that team developing the best possible rectification scope for the properties?

A. I - I wasn’t part of the rectification team decision what to rectify - how to rectify, what to do. The final scope, I - I wasn’t part of it.

Q. But you were providing input?

A. Yes. So yeah. Yes.

Q. In fact, I took you earlier to an actual scope of rectification attached to your email--

A. Yes, yes. That - that was mine.

Q. Then on 7 July 2023 you were asked by Mr Cronin to provide a supplementary report in these proceedings. A second report; is that correct?

A. Yes. I don’t remember whether it was Mr Cronin or the - the - the lawyers representing him.

Q. I’ll take you to tab 10, page 2. The email, 7 July 2023 from Mr Cronin to you--

A. Yes.

Q. --referencing a discussion. Does that indicate referencing a discussion? He says, “We’ll be in touch shortly with you directly about preparing a supplementary report to bring everything together about the rectification work program.”

A. Yes.

Q. And when he says “as discussed”, that suggests he had an oral conversation with you about this before sending this email.

A. Yep.

362. Examples of Dr Piechowski asserting his own independent opinion are to be contrasted with the numerous instances outlined above which indicate a preparedness on his part to acquiesce to, or fully adopt, the views of Mr Cronin on quintessentially technical issues and not merely editorial comments.

363. I respectfully adopt the following observations by Brooking J in Phosphate Co-Operative Co of Australia Ltd v Shears (No 3) [1989] VR 665 at 681, which, in my view, apply not only to independent experts in company cases but also in building and contractual disputes of the kind here:

I think it may be said to be notorious - certainly one's own experience in commercial litigation supports the view - that the writing of independent experts' reports in company cases may be remunerated at a very high rate. There will often be a danger that the client, who may well, in addition, be engaging experts who are to act in a partisan capacity, will come to regard the independent expert as another member of a team which is being paid very large sums of money to achieve a certain result. The client will often, as here, have at its disposal other advisers who are in a position, by reason of qualifications and experience, to influence, either directly, or indirectly through representations made by the client, the judgment or actions of the independent expert. The greatest circumspection is required in relation to this matter of making representations to an independent expert, not by way of correcting some error of fact, but by way of influencing his judgment on the established facts.

364. I do not accept Dr Piechowski's claim that he only took into account the input and comments of other persons in order to clarify or make clearer his own opinions. It is clear that Dr Piechowski's adoption of many comments and observations by Mr Cronin and the building consultant went well beyond merely clarifying Dr Piechowski's own opinion.

365. For all these reasons, and not without some hesitation because of the significance for Cadence’s case and Dr Piechowski personally, I accept that only limited weight should be given to the views expressed by Dr Piechowski in his first report and to other parts of his written and oral evidence which relate to that report. I strongly prefer Dr Kivi’s evidence.

(iv) Dr Piechowski’s second expert report dated 5 March 2024

366. By a letter dated 4 March 2024, Cadence’s then solicitors retained Dr Piechowski to provide a second report. Dr Piechowski was asked to answer the following questions:

…

30. How do Geothermal systems work in broad terms, including:

(a) What does “sensible” heating/cooling capacity mean?

(b) What is a thermal coincident cooling load?

(c) What is a thermal coincident heating load?

(d) What is an oxygen barrier in the pipework?

(e) What is a chemical dosing pot to inject corrosion inhibitors?

(f) What are air flow balancing dampers?

(g) What are air distribution ducts?

(h) What is air ductwork insulation?

(i) What are shut off valves on floor coils manifolds?

(j) What is the role played by piping?

(k) What is the role played by Fan Coil Units?

(l) What is the role played by slab cooling?

(m) What is the role played by the circulating water pump?

(n) What is a ground heat exchanger?

(o) What is the role played by Hydronic Underfloor Heating?

31. Since your 2022 Report, what additional defects have arisen in the works?

32. Since your 2022 Report, what additional design failures have become apparent in the works?

33. What were the requirements of the Building Contracts as between Aspire and Cadence (Contract) as to producing a Geothermal system that was fit for purpose (Functional Geothermal System)?

34. In respect of the requirements of the Contract, were any of those requirements breached in respect of the Main House regarding:

(a) Length and configuration of piping.

(b) Type of piping (including diameter and the materials).

(c) Depth of piping.

(d) Spacing of piping.

(e) Location of the piping.

(f) Dimensions and configuration of the trench used for the piping.

(g) Fan Coil Units.

(h) Slab cooling.

(i) Circulating water pump.

(j) Provision of an Operations and Maintenance Manual.

(k) The heating/cooling capacity.

(l) The thermal coincident cooling load.

(m) The thermal coincident heating load.

(n) The depth at which the pipes were installed.

(o) The space between the pipes.

(p) The oxygen barrier in the pipework.

(q) A chemical dosing pot to inject corrosion inhibitors.

(r) Air flow balancing dampers.

(s) Air distribution ducts.

(t) Air ductwork insulation.

(u) System controls.

(v) Pool heating.

(w) The location of geothermal system equipment in the plant room and ceiling space.

(x) Shut off valves on floor coils manifolds.

(y) Provision of shop drawings for the upfront design or provide As-Built documentation, including As-Built drawings, and commissioning data.

(z) The adequacy of insulation around each of the concrete slabs, including slab edge insulation, insulation underneath the slab between waffle pod ribs, and insulation used on the manifold pipes.

(aa) Tightness of water pipes connections, and leaks from fittings on FCU connections with a drip tray installed.

(bb) The ground heat exchanger.

(cc) The Hydronic Underfloor Heating.

(dd) Any other aspect.

35. In respect of the requirements of the Contract, were any of those requirements breached in respect of the 368D House regarding the matters referred to in [34] above?

36. In respect of the requirements of the Contract, were any of those requirements breached in respect of the Tourist Cabin regarding the matters referred to in [34] above?

37. What reasonable precautions should:

(a) Aspire have taken to manage the risk of harm arising from defects?

(b) Jake Kearns have taken to manage the risk of harm arising from defects?

(c) Univenta have taken to manage the risk of harm arising from defects?

(d) Dusan Trembuch have taken to manage the risk of harm arising from defects?

38. Assume that the plaintiff has undertaken the rectification work in accordance with the “Hybrid System” in accordance with the Head Contract (see [20] above), and as described in the affidavit of Mr Cronin, affidavit of Mr de Maio and affidavit of Mr Moses (see documents 13-15 of Schedule 2). Please provide your opinion as to whether those works were reasonable.

367. Dr Piechowski’s second report is dated 5 March 2024. It is reasonable to infer that Dr Piechowski was working on his second report well before 4 March 2024, as he could not possibly have finalised such a detailed report in 24 hours.

368. It is also evident from the documents in Exhibit 15 that Dr Piechowski was asked by Mr Cronin in early 2023 to review and provide comments on material which Univenta had provided in respect of its payment claim under the SOP Act. Dr Piechowski provided his comments on 20 January 2023, which Mr Cronin acknowledged later that day.

369. There was a video conference attended by at least Dr Piechowski and Mr Cronin on 25 May 2023, as referred to in Mr Cronin’s email dated 2 July 2023. Mr Cronin asked for any further thoughts Dr Piechowski had on issues such as “GHX and in-slab piping: HUFH installation practices – single meander floor circuit design, 200mm pipe spacing, piping close to slab edging, long HUFH piping lengths”, which he described as “fundamental and permanent”.

370. By an email dated 7 July 2023, Mr Cronin informed Dr Piechowski that he had engaged new lawyers and that they would be contacting Dr Piechowski directly “about preparing a supplementary report to bring everything together after the rectification work programme etc”. Mr Cronin added:

CWL Group installed the new water pumps at all the houses yesterday as agreed at the VC back on 25 May 2023. They also ran the tests you requested and will collate the data back in the office next week and send it around. Clayton called me earlier today to say the new high powered water pumps were generating a far superior flow rate for each of the three houses. However, the UFH heating ramp up profile was still very poor due: (i) reduced manifold temp (40c down from 50c), (ii) poor slab insulation (iii) poor manifold / heat pump insulation (iv) in-slab circuits being too long (v) in-slab piping placed too far apart and (vi) use of a cheap pipe (rather than the Germany piping they typically use at 8x the price).

Clayton is also adamant that the GHX at Tourist Cabin in the dam is a complete write-off. No surprises given the results of the last testing. He wants to talk to the group about an air source Heat Pump or even LPG field version to bypass the GHX altogether. He now does not think it's worth investing more money replacing the GHX at Main House or 368D House given the in-slab distribution system will always be a problem. We basically just have to best manage the system within the permanent limitations.

Anyhow, when we have CWL's latest Field Data they plan on setting up another VC with CWL, Horizon, you and I to discuss what if anything further can be done to generate some more performance from what's left of the respective Geothermal Systems.

371. Dr Piechowski’s ongoing exchanges with Mr Cronin are further reflected in the following emails dated 23 and 29 August 2023, which Mr Cronin sent to Dr Piechowski, copying in Cadence’s new solicitors (emphasis in original):

Hi Mirek,

I know back in January 2023, Kirk (Assured Legal Service) had you review Dusan Trembuch’s Statement dated 13 January 2023 (Link due to size of file:… ) as part of Aspire’s SOPA Action.

Whilst you commented on Univenta’s sole defence of three lines (pa24) and its so called “Univenta Commissioning Report” there are a few other items that are worthy of further consideration in the next phase given Dusan’s Statement was issued after your 2022 Report was completed and issued to all (including Aspire and Univenta).

Fan Coil Units

Your 2022 Report notes that Univenta failed to install the three contracted FCUs (per the Quotes forming part of Subcontract Agreement with Aspire) at each of Main House and 368D House.

However, the plot thickens. Univenta apparently sub-contracted the air conditioning works to LYNX Air Conditioning who were contracted to install certain FCUs, but actually installed smaller versions in each house (refer Annexure J of Dusan’s Statement):

● 368D House: LYNX - 2 x Temperzone IMD280 14.0kw Chilled Water FCU (actually installed: 2 x Temperzone IMD-170Y FCUs, combined maximum sensible cooling capacity of approximately 17.4kW (2x8.7kW) – refer Section 4.2.10 of Mirek’s 2022 Report) = substantially undersized cooling Kw!

● Main House: LYNX - 1 x Temperzone IMD280 14.0kw Chilled Water FCU and 1 x Temperzone IMD210 12.0kw Chilled Water FCU (actually installed: 2 x Temperzone IMD-170Y FCUs, combined maximum sensible cooling capacity of approximately 17.4kW (2x8.7kW) – refer Section 4.1.11 of Mirek’s 2022 Report) = substantially undersized cooling Kw!

● Tourist Cabin: LYNX - 1 x Temperzone IMD90H 7.0kw Chilled Water FCU and 1 x Temperzone IMD130H 10.0kw Chilled Water FCU (actually installed: 2 x Temperzone IMD-95Y, combined maximum sensible cooling capacity of 11.2kW (2x5.6kW) – refer Section 4.3.4 of Mirek’s 2022 Report) = substantially undersized cooling Kw!

You honestly can not make this stuff up – Univenta fails to meet its contractual obligations with Aspire and then LYNX duds Univenta and installs even smaller Kw units - major problem!

Photos not seen before

As I showed all on the VC with Horizon, CWL etc and yourself on 25 May 2023, Dusan’s Statement revealed a lot of photos of the in-slab pipes and GHX at each house not seen before. Annexure L (Main House), Annexure M (Tourist Cabin) and Annexure N (368D House) are worthy of further review, particularly given the issues identified by CWL on the underfloor heating commission (in-slab piping: length of circuits, spacing and pattern of pipes, type of pipe used and lack of slab insulation)

Cheers, Garren

-------

On Wed, Aug 23, 2023 at 7:52 PM Garren Cronin wrote:

Hi Mirek

Further to the VC with Franco SC et al on Monday,

In the early days of quoting for the Geothermal System rectification works, Highland Geothermal prepared the attached Excel Spreadsheet (before withdrawing from the tender due to supply lead time issues etc).

Highland's spreadsheet may still offer a reasonable framework to address the question of what would need to done to rectify the Geothermal Systems at each Dwelling (assuming we had not undertaken the programme of works with Horizon / CWL + RJ Air etc), with the exceptions of:

1. Making use of the existing GSHP at Main House and 368D House (WPE-I 33 400 Premium) – Highland wanted to replace these GSHPs (space + concerns over GHE / GHX) + TC GSHP (it's undersized anyhow because Univenta installed the wrong model vs Quote / contract)

2. GHE / GHX - What you saw / heard from CWL's commissioning field test data and the ~2hr VC with Horizon / CWL et al back at the end of May 2023 was that the GHX's at Tourist Cabin (dam) is a disaster and that the performance at Main House and 368D House GHX were also suboptimal once it likely got colder (mild winter conditions in May).

3. No one knew back then what the performance problems attributable to the in-slab distribution system were for each dwelling as the system was not capable of being properly tested by Richard and we did not have "shop drawings" or "as-built" drawings etc (despite these being a requirement of the Univenta Subcontract). What we know today from the CWL experience and the photos gathered as part of Dusan's Witness Statement dated 13 January 2023 is a lot more detail than you had back in early / mid 2022 when everyone was "flying blind"...basically there is a systematic layout problem of in-built slab pipes (circuit loops too long, pipes too wide apart, inefficient pattern) and no slab edge insulation etc

Anyhow, this spreadsheet may help you reflect on what's needed (in the most efficient manner) – as George (Building Expert / QS) will need a schedule / spreadsheet like this from you as part of the report to then allow him to cost up (QS) this important standalone scenario

Cheers, Garren

372. Under cross-examination by Mr Thompson, Dr Piechowski acknowledged that he had had input into the scope of works for rectification prior to him finalising his second report.

373. Dr Piechowski also acknowledged that he did not disclose the nature and extent of his involvement in this matter, as is reflected in the following extracts from the transcript:

Q. You were providing an opinion on the rectification scope that you, yourself, were involved in preparing; correct?

A. Yes.

Q. I apologise. I lost my flow. I might just go back two questions. So it was your opinion that a rectification scope was reasonable; correct?

A. Yes.

Q. And that you had that opinion because you were providing an opinion on the rectification scope that you, yourself, were involved in preparing?

A. Yes.

Q. And you don’t disclose anywhere in that second report your involvement in preparing the rectification scope?

A. No. Not that I remember.

Q. Can you explain to the Court how you can bring an independent mind to the review of a scope of work that you, yourself, helped prepare?

A. I was - I was - I was providing my professional opinion on the - on the - on the defects as I saw them and - and the way of rectifying it, rectifying those defects.

Q. You weren’t going to suggest in your report, were you, that it was unreasonable or that it was a bad idea to do the rectification that you, yourself, were involved in preparing?

A. No. I don’t think I did, yeah.

374. Dr Piechowski’s failure to disclose in his second report the nature and extent of his contribution to the development of a scope of works concerning rectification of the three properties reflects poorly on his understanding of the obligations of an independent expert. It is beyond argument that he was obliged, as an independent expert, to disclose in his second report, which related to the reasonableness of the rectification scope of works, that he personally had had significant involvement in the development of that scope of works prior to finalising his second report.

375. For these reasons, I give little weight to Dr Piechowski’s second report and to his subsequent reports or evidence to the extent that they relate to his second report.

(b) Resolution of the remaining issues to be determined

376. The Court was informed at the beginning of the seven day trial that the parties had all agreed a document entitled “Statement of the real issues for determination”. Twenty-five separate issues were identified in that document. At the commencement of the trial, the Court encouraged the parties to structure their closing submissions with reference to those 25 agreed issues. No party objected to that course at that time.

377. At the commencement of his closing oral address for Univenta and Mr Trembuch, Mr Thompson said, however, that he had “requested a narrower list of real issues in dispute” in relation to his clients. He then handed up an aide-memoire regarding geothermal performance which identified seven issues for determination concerning his clients. Those issues were expressed in different terms to the previous agreed statement. The new document dealt separately with what was described as the “primary case” against the Univenta defendants and the “secondary case” against them. Broadly, the distinction between the two cases reflects the difference between assessing whether the Peak Heating and Cooling Loads met the requirements in the GXA Reports (GXA Performance Requirements), as opposed to whether the installed systems met the Peak Heating and Cooling Loads of the As-Built Performance Requirements.

378. I did not understand Cadence or the other defendants to object to this changed approach in identifying the real issues for determination relating to Cadence and the Univenta defendants. Regrettably, however, Cadence’s closing written submissions (which were provided after the hearing had finished), did not reflect either the narrower list of issues in dispute between it and the Univenta defendants, nor the 25 issues originally agreed between all the parties. This added considerably more (avoidable) complexity to the Court’s task, particularly in circumstances where, as known to Cadence, the Aspire defendants had provided their closing oral submissions consistently with the original agreed statement of issues.

379. It is convenient first to address the issues between Cadence and the Univenta defendants, adopting the structure proposed by Mr Thompson.

(c) Primary case against the Univenta Defendants

1. Did the Installed Geothermal Systems meet the Peak Heating and Cooling loads specified in the GXA Report (the “GXA Performance Requirements”)?

380. For the following reasons, I answer this question in the affirmative.

381. The Univenta defendants submitted that, if the Court preferred Dr Kivi’s evidence over that of Dr Piechowski, it was unnecessary for the Court to make factual findings about the technical details of the geothermal system. That is because Dr Kivi was clear that the installed geothermal systems met the Peak Heating and Cooling Loads specified in the GXA Reports. In the Joint Report, I found Dr Kivi gave cogent explanations for why he concluded that the installed geothermal systems in all three Buildings met the Peak Heating and Peak Cooling Loads set out in the GXA Report.

382. I accept those submissions. I prefer Dr Kivi’s evidence to that of Dr Piechowski for reasons given both above and below.

383. I understood the experts ultimately to agree that the ground loops were sufficient to meet the cooling demands in respect of both the specifications in the GXA Reports and also in the Buildings as-built. But to the extent that this understanding is incorrect, I prefer the evidence of Dr Kivi over that of Dr Piechowski that the installed geothermal systems meet the Peak Heating and Cooling Loads identified in the GXA Reports.

384. I also reject Dr Piechowski’s evidence, as stated in the Joint Report, that the geothermal system installed at the Tourist Cabin was not fit for purpose because it did not comply with the GXA Reports and the dam located nearby was unsuitable “because of the uncontrolled and varying water level in the dam”. Rather, I prefer Mr Trembuch’s evidence on this topic. This was to the effect that Univenta recommended to Aspire that the dam size be increased and he also discussed that topic with GXA**.** Mr Trembuch added that, while he recognised that the fluctuating water was important, he was assured by Aspire that water would never drop below a particular point because it would be pumped from a top pond into the smaller dam**.** I accept that evidence.

385. The only remaining dispute between the experts is whether the systems met the Peak Heating Loads. The focus of disagreement between them on this issue is related to the lowest temperature which the ground loop and heat pump system could operate. Dr Piechowski acknowledged that, although technically, the systems could work down to −10°C, he used a figure of −5°C, being a more conservative approach which he believed appropriate for a new system. Based on this approach, I understood Dr Piechowski to opine that the ground loop was defective if it dropped below 0°C. This is because, on his view, a new system should sit within the “nominal envelope” without pushing the equipment to the extreme of its practical operation. In other words, new systems should not be pushed to its operational limit when it is first designed and installed, which “is incorrect … let alone good design practice”.

386. The difficulty I have with Dr Piechowski’s approach is that, as Univenta pointed out, it has no support in any industry standard. I accept Univenta’s submission that this is a case of Dr Piechowski adopting a “philosophical approach of conservative design parameters”. I prefer Dr Kivi’s approach. It is supported by Exhibit 10, which is the manufacturer’s (i.e. Stiebel Eltron) specification for heat pumps and acknowledges that the heat pumps can be operated successfully with an entering water temperature as low as -10°C (see Exhibit 10).

(a) Dr Piechowski and Dr Kivi agreed that the installed geothermal systems comfortably met the GXA heating loads. (b) Although Dr Piechowski opined this was not the case with the cooling system, this is only in respect of the living rooms in the Main House and Tourist Cabin and is in any event, relatively minor. (c) The figure of 7.8 for the living room for Main House Cooling (FCU) in Dr Piechowski’s evidence differed from the figure of 10 arrived at by Dr Kivi because Dr Piechowski used a figure of 8°C as the chilled water temperature for the FCUs compared to Dr Kivi's figure of 6°C. Dr Piechowski did not dispute that the system could be set to operate with the chilled water temperature at 6°C, but he preferred to apply a more conservative design approach which involved a temperature setting of 8°C. Dr Piechowski also applied a discount of 15% for damaged ducts.

391. I accept Mr Thompson’s submissions relating to the aide-memoire. I prefer Dr Kivi’s approach and analysis to that of Dr Piechowski. Separate from my concerns regarding Dr Piechowski’s independence as an expert witness, I am not persuaded that his more conservative design approach is to be preferred to that of Dr Kivi.

392. As to Dr Piechowski’s opinion that a discount of 15% should be applied for damaged or broken ducts, I was not taken to any other evidence which supported such a discount. There were other difficulties with Dr Piechowski’s discount. Under cross-examination by Mr Kearns, Dr Piechowski acknowledged that one of the photos he relied upon as showing damaged ducts had nothing to do with the heating and cooling system. He also frankly acknowledged that he had relied on other photos and things he was told by Mr Jefford concerning the extent of damage to the air ducts. Mr Jefford was not called as a witness in the proceeding but I accept that he did at least visit the sites. That is not the case with Dr Piechowski. It is to be recalled that Dr Piechowski never personally visited the sites at any time, including when the air ducts would have been exposed. He was fully dependent on photographs and what others told him about the ducts. I find his evidence on this topic unconvincing.

393. As noted above, Cadence also seeks damages for Univenta’s failure to integrate the CUE (KNX) app with the Control4 system. Mr Cronin gave detailed evidence of his dissatisfaction with Univenta’s obligation to fully integrate the geothermal controllers into the Control4 home automation system at each of the three Buildings. He said that, despite multiple attempts over more than six months, Univenta failed to integrate any of the controllers into the home automation systems and he described at some length correspondence and conversations relating to this issue. Mr Cronin said that he never received any satisfactory response from Aspire or Univenta as to why the controllers would not be integrated into the Control4 automation system consistently with the three quotes provided by Univenta which referred to the matter.

394. I do not accept Mr Cronin’s claim that he received no satisfactory explanation on this matter. I prefer Mr Trembuch’s evidence on this issue. Under cross-examination, Mr Trembuch said that he tried to explain to Mr Cronin that when everything was sorted Univenta intended to integrate the app into the Control4 automated system. Mr Trembuch then gave the following evidence, which I accept:

Q. You understood Mr Cronin here was raising with you that the CUE app was having difficulties integrating with the Control4 system?

A. I understood. But I try to explain to him that C-U-E app would - would we provided eventually once we’ve got everything sorted. That’s - that C-U(as said) app, we could - we could reprogram whatever as - as he wish. So when we finalise everything we will redirect the C-U app into the Control4 through the - through the routers, and that’s was whole time this conversation was about. So once we’ve got and everything sorted as he wishes, then we will convert this app into the Control4. And it’s - it’s fully capable to do that with - with additional, this router, what I mentioned to previously, because this Control4 couldn’t recognise any - any - any direction from Siemens, so there was one - one part of this was missing end - end of the day, that - which is - they call it - they call it router, and the router will translate the Siemens language, KNX Siemens to KNX Control4, and if you can excuse me, I’ll add something. Mr Cronin, the guy who was programming Control4, he was aware - he was - quoted us with these routers. He gave us the quote, okay, we would need this to get the Siemens to Control4 on top of everything and it will work.

Q. So what I want to just clarify is--

A. Yeah.

Q. --here in this email where you’re saying, “I believe, Garren, the functionality of the CUE app will be sufficient once you understand all functions and logic”--

A. Correct.

Q. --I suggest that you’re saying to Mr Cronin that there will be a CUE app to control the geothermal system.

A. Correct.

Q. But you are not saying to him that it will be integrated into the Control4 system.

A. What I meant, it will be integrated and it always was - was - was designed to integrate into Control4, but during the process, we didn’t know. We found out during the process that Control4, it can’t translate the Siemens KNX into the Control4, and that was a whole issue with Control4 system. We - we - we didn’t make it up. It was - we found out that’s - that’s the problem with the software, what Control4 was having at the time, and they were improving the system later on, that, yes, you can do that but you need to use this router, this small particle, which can be translated later on. Maybe these days you don’t need it. I don’t know, because I’m not - I’m not expert for the Control4 system.

395. I accept Mr Trembuch’s evidence that it was his intention to integrate the CUE (KNX) app into the Control4 system in due course but this would involve some technical adjustments. In particular, after learning that the Siemens protocol did not integrate automatically with the Control4 system, Mr Trembuch said that a specific router would be used to provide a solution and “translate the Siemens language” into the Control4 system. In the events that occurred, however, Cadence prevented Univenta from making those adjustments upon termination of the Building Contracts.

396. In those circumstances, I reject Cadence’s claims in respect of this matter.

2. If not, did any alleged breach of the duty of care owed by the Univenta Defendants cause the alleged underperformance of the Geothermal Systems?

397. Strictly speaking, having regard to my affirmative answer to issue 1 this issue does not arise. For completeness, however, I can indicate that I would have answered issue 2 in the negative.

398. First, while I accept that Mr Trembuch accepted in cross-examination that he had not modelled the ground loop systems before their installation there is no persuasive evidence that, if he had done so, a different outcome would have been achieved.

399. Secondly, I do not accept Cadence’s claim that Univenta and/or Mr Trembuch breached their duty of care by not checking with GXA before they changed several aspects of the ground loops, including their length and location. As noted above, I found Mr Trembuch to be a truthful and reliable witness. I also accept Mr Trembuch’s evidence that he discussed with both GXA and Aspire Univenta’s recommendation to change the ground loop for the Tourist Cabin geothermal system from a horizontal ground loop to an in-water ground loop. I also accept Mr Trembuch’s evidence that he spoke with GXA regarding the proposal to change the length of the ground loop as well as its “horseshoe” design**.**

400. Finally, I reject Cadence’s claim that the Univenta defendants breached their duty of care in not acting on the updated NatHERS Certificates in respect of glazing requirements. Mr Trembuch freely acknowledged that glazing was a very important factor in modelling the thermal requirements of the properties, not the least because of the extensive windows in the Buildings. But Univenta reasonably relied upon relevant information in the GXA Reports in its design of the geothermal systems.

3. If yes, did any alleged breach of the duty of care cause the economic loss claimed (i.e. was the rectification reasonable)?

401. Again, although this issue does not strictly arise, for completeness I can indicate why I would also answer this issue in the negative.

402. First, as Mr Thompson correctly submitted, Cadence did not attempt to link a particular defect to a particular scope of work. Its fundamental case was that rectification required a decoupling of the cooling part of the geothermal systems and the installation of hybrid systems, using conventional air-conditioned cooling.

403. Secondly, as noted above, Cadence relied heavily on Dr Piechowski’s second report in support of its claim that the geothermal rectification works carried out by it were reasonable. For reasons given above, I give scant weight to that report.

404. Thirdly, I prefer Dr Kivi’s evidence which was that the decoupling of the geothermal cooling was unnecessary and constituted “a major mistake”. Dr Kivi explained that the consequence of this decoupling was to “eliminate access to the superior efficiency of the existing geothermal system in cooling mode and diminish the effectiveness of geothermal heating by preventing the reinjection of heat into the geothermal ground for winter heating purposes” and it would also increase reliance of generator power**.**

405. Finally, the unreasonableness of Cadence’s claim for rectification costs is also demonstrated by the fact that it still claims in the amount of $104,000 for tinting the windows to reduce the SHGC value, despite the fact that Dr Piechowski ultimately accepted that the ground loops were sufficient for cooling and that the heating worked in all three Buildings**.**

(d) Secondary case against the Univenta Defendants

4. Should the Univenta Defendants have instead installed a Geothermal System to meet the Peak Heating and Cooling loads of the "as-built" properties?

5. If yes, did the installed system meet Peak Heating and Cooling Loads of the "as built" properties (the As-Built Performance Requirements*)?*

6. If not, did any alleged breach of the duty of care owed by the Univenta Defendants caused the alleged underperformance of the geothermal systems?

406. It is convenient to deal with these three issues together. The first is premised on the proposition that Univenta or Mr Trembuch should have known that the choice of windows changed at Mr Cronin’s insistence, which had significant implications for their SHGC values. It is undisputed that when Univenta was contracted to build and install geothermal systems which met the specifications in the GXA Reports, the reports it was provided identified a SHGC value of 0.25. It was not until much later that the SHGC value increased to more than 0.5 in the updated NatHERS Certificates after the choice of windows had changed. When it was put to Mr Trembuch in cross-examination that he should have taken further steps to obtain information regarding the SHGC values, he denied any requirement to do so because he relied upon GXA’s thermal modelling. I accept that evidence.

407. In any event, as Mr Thompson pointed out in closing address, if in fact Mr Trembuch had reviewed the window specifications dated 22 July 2020, each of the windows specified under the notes had a SHGC value of 0.25. Accordingly, this would not have made any difference. I also accept that, because the windows made up a very large part of each of the three Buildings, the change in the SHGC values brought about by different windows being installed was significant. I also find that no one told Univenta or Mr Trembuch about these significant changes. I do not accept Cadence’s submission that Univenta and Mr Trembuch should have made further enquiries to ascertain whether the window specifications referred to in the GXA Reports had changed. I find that they were reasonably entitled to rely on the information in the GXA Reports.

408. Finally, I accept the following submissions by Mr Thompson:

In any event, even if it is found that the Univenta Defendants should have requested an updated NatTHERS certificate at some undefined time during the course of installing the geothermal systems, it does not rise to the level of negligence which is the basis of a claim under the Design Building Practitioners Act. In particular in circumstances where it could ordinarily be expected that if significant changes were to be made to the glazing specifications in the GXA Reports after the contract based on that design had already been entered into, the subcontractor would be informed by either the owner or builder.

409. As to issue 5, its resolution again turns on whether the Court prefers the evidence of Dr Kivi over that of Dr Piechowski. For reasons given elsewhere, I strongly prefer Dr Kivi’s evidence. It demonstrates that the geothermal systems which were installed at the three properties meet the “as-built” Peak Heating and Cooling Loads, as explained by Dr Kivi in his Supplementary Report dated 7 October 2025. Dr Kivi provided detailed calculations which support his opinion that the as-built geothermal ground loop met the performance criteria set out in the GXA Reports and had enough capacity to the GXA Heating and Cooling Loads. Dr Kivi explained that the internal heating and cooling distribution remained the same under both Scenario 1 and Scenario 2. In the executive summary to his Supplementary Report, Dr Kivi made the following observations, which I accept:

Importantly, the internal heating and cooling distribution within the house remains the same under both scenarios, with the worst-case demand considered for each zone. Note that while GXA assumes under scenario 2, the zoned option is required to serve up to 67-73% of the house at any time, I have tested Univenta as-built geothermal under more rigorous conditions of NCC schedules, where it requires even a zoned air conditioning to serve the entire house when daytime and nighttime schedules overlap. This occurs over 3 hours in the morning and 5 hours at night. As a result, my energy demands on geothermal are up to 100% higher than GXA demands. Despite this more rigorous test, the installed geothermal system by Univenta successfully satisfies my higher calculated as-built demand and easily meets the demand from much lower GXA heating and cooling targets. I also assess the inside house heating and cooling distribution system under higher demands. Refer to my comments on pages 2 to 4 for a detailed discussion.

410. I accept Mr Thompson’s submission that Dr Kivi’s evidence also demonstrated that the geothermal systems are capable of meeting the daytime “as-built” Peak Cooling Load in both the 368D House and the Tourist Cabin. The geothermal system installed at the Main House failed to reach the “as-built” Peak Cooling Load for 11 hours in a year, representing only 0.4% of total daytime cooling hours. Dr Kivi also found that for the “as-built” Peak Cooling Load for the nighttime only failed for 28 hours in a year, representing 1% of total nighttime cooling hours at the Main House and the Tourist Cabin, and 0.7% of total nighttime cooling hours at the 368D House. I also accept the Univenta defendants’ submission that these constitute “minimal departures” from the Peak Cooling Load, which fall far short of establishing that the as-built geothermal systems were so defective as to justify rectification works which cost in excess of $1 million. As Mr Thompson submitted, the “evidence isn’t that the systems don’t cool or heat the properties just that they miss the ‘peak’ heating and cooling loads for less than 1% of the year against the ‘as-built’ standard”.

411. As noted above, Mr Cronin gave evidence of his experience of the geothermal systems as-built failing and not meeting his expectations in various respects. To the extent that Mr Cronin’s evidence conflicts with that of Dr Kivi, I strongly prefer the latter for reasons explained elsewhere. Moreover, as the Univenta defendants pointed out, Mr Cronin’s evidence related to a period before the Univenta defendants were given an opportunity to commission the system. Furthermore, Mr Cronin’s evidence does not reflect the true capacity of the geothermal systems because he never operated those systems with the floor slabs in cooling mode or with a chilled water temperature set to 6°C, as discussed by Dr Kivi. Finally, I refer to my finding above that Mr Cronin had unrealistic and unfounded expectations regarding the performance of the geothermal systems based on his experience of a very different system operating at his Mosman residence.

7. If yes, did any alleged breach of the duty of care cause the economic loss claimed (i.e. was the rectification reasonable)?

412. Issue 7 is predicated on Cadence succeeding on issues 4-6. Since it has failed to do so, issue 7 does not strictly arise. For completeness, however, I would also answer issue 7 in the negative, for similar reasons given above in respect of issue 3.

413. Finally, for the sake of completeness, I am satisfied that the rectification works which were carried out, so as to decouple the cooling components constituted betterment and was not truly rectification, having regard to Dr Kivi’s evidence which I accept. I do not accept Dr Piechowski’s evidence that these rectification works were reasonable for the reasons given above.

(e) Remaining issues concerning geothermal claims

414. Having addressed and determined the relevant issues against the Univenta defendants concerning the geothermal claims, I shall now turn to address and determine the remaining issues which affect Aspire and Mr Kearns, adopting the structure of the original agreed statement of issues to be determined, as modified by Univenta. There is a substantial overlap between the claims made against the Univenta defendants and the Aspire defendants. Mr Kearns made clear that he and Aspire relied upon Mr Thompson’s cross-examination and submissions in relation to those claims.

(i) As to the g****eothermal c****laims generally

1. Were the geothermal systems designed and constructed in accordance with the GeoExchange Australia Reports (GXA Report)?

2. What specifications in the GXA Reports were the geothermal systems required to meet?

415. It is convenient to deal with these two issues together. Both issues are effectively raised by issue 1 in the primary case against the Univenta defendants.

416. I repeat and adopt my answer to that issue.

(ii) Contractual claim against Aspire

3. What was Aspire’s scope of work under the Building Contracts in relation to the geothermal systems? In particular was Aspire required to deliver a geothermal system that was:

(a) designed and constructed in accordance with the specifications in the GXA Reports?

(b) fit for the purpose (in particular the purpose of achieving “Effective Heating” and “Effective Cooling”)?

417. I did not understand Cadence in its post-hearing written submissions to address these issues independently of more general issues regarding whether the geothermal systems met either the GXA Performance Requirements or the As-Built Performance Requirements.

4. Were the geothermal systems:

(a) designed and constructed in accordance with the GXA Reports?

(b) fit for the purpose of (in particular the purpose achieving “Effective Heating” and “Effective Cooling”)?

(c) otherwise designed and constructed with due skill and care?

418. These issues overlap with issue 1 in the primary case against the Univenta defendants and issues 4 and 5 of the secondary case against the Univenta defendants. Accordingly, I repeat and adopt my answers to those issues above.

(iii) Breach of s 37 DBP Act duty against Aspire and Mr Kearns

5. Did Aspire exercise reasonable care to avoid economic loss to Cadence caused by defects in the geothermal system? In particular, should Aspire have:

(a) sought advice from an independent engineer in relation to the design proposed by Univenta;

(b) provided Univenta with information relevant to its design (in particular in relation to any changes in the properties of the windows);

(c) sought detailed shop drawings from Univenta, reviewed them with a mechanical engineer to ensure they provided that which was required, ensured that the works were installed in accordance with those drawings and then ensured that those works were thoroughly tested and commissioned?

419. It is convenient to address these matters collectively.

420. Cadence submitted that if the Court accepted Dr Piechowski’s opinion that the geothermal systems installed at each Building did not satisfy the GXA Performance Requirements relating to Peak Heating and Peak Cooling targets and loads, it necessarily followed that Aspire had breached its statutory warranty of fitness for purpose.

421. That contention must fail because, as explained above, I do not accept Dr Piechowski’s opinion on that matter. Rather, I have a strong preference for Dr Kivi’s evidence. Acceptance of Dr Kivi’s opinion that the geothermal systems installed at each of the Buildings adequately complied with the GXA Reports and As-Built Performance Requirements is a sufficient answer to Cadence’s individual complaints that, for example, materially smaller GHXs were installed, the ground loop installed in the Tourist Cabin dam was a material departure from the GXA Reports. Fewer FCUs were installed than prescribed in the GXA Reports and Aspire failed to provide insulation on the edge of the slab.

422. In its closing written submissions, Cadence also relied upon parts of Mr Kearns’ evidence under cross-examination where he acknowledged some shortcomings concerning Aspire’s actions and processes. In particular, Cadence drew attention to Mr Kearns’ answer to various questions regarding his awareness of the fact that Univenta had departed from some aspects of the designs in the GXA Reports. Cadence referred to the following extracts from Mr Kearns’ cross-examination:

Q. Now, would you agree that at this time you were aware that Univenta was not simply adopting the GXA design?

A. Perhaps, should have been aware. But was aware, I - I - yeah, I mean, I did skim read a lot of this at the time. I was onsite.

Q. You were relying on Mr Cooper?

A. Yeah. Yeah, not to shift the blame onto him, but yeah, like - yeah, it’s--

Q. So, although you can’t now recall whether you understood at the time that Univenta wasn’t simply adopting the GXA design, you’d accept that you should have recognised--

A. Yeah, yeah. Yeah, I can see that now.

Q. Mr Cooper here is saying, “The quoted system below will service the main house well.” This is on 5920.

A. Yep,

Q. You did not tell Mr Cooper to go and get GXA to review--

A. Correct, yeah.

Q. --Univenta’s submission?

A. Correct, yeah.

Q. You might recall from earlier that that was one of the services GXA provided--

A. Correct, yeah.

Q. --was to review in quotes?

A. Yep.

Q. Would you agree that neither you nor Mr Cooper really had the expertise to be making a recommendation about the performance of the geothermal - about whether--

A. I’d agree with that.

Q. I’ll just finish the question just to make sure.

A. Sorry.

Q. Would you agree that neither you nor Mr Cooper really had the expertise to be making a recommendation as to the performance of the quoted system by Univenta?

A. Yeah. Yeah, I would - I agree with that.

Q. So you were aware that Mr Cronin was relying upon you and Mr Cooper to make recommendations..(not transcribable)..

A. Yep, by - if - if - if I can, it’s not exactly a yes-no answer to that - that one. Yeah, I did make it - Mr Cronin aware that I had no experience with geothermal. But yeah, we - yeah, I had no - never done geothermal.

423. I regard this evidence as constituting an admission by Mr Kearns that Aspire ought to have obtained advice from an independent engineer, such as GXA, in relation to the design changes proposed and implemented by Univenta.

424. Later in his cross-examination, when Mr Kearns was asked whether he should have engaged GXA or a consultant like it to assist with supervising installation of the geothermal system, he said that he thought that he should have. He gave a similar answer when asked whether he should have engaged someone like GXA to help assess whether the geothermal systems had been commissioned appropriately. Significantly, however, Mr Kearns then added that although he had not advised Mr Cronin to approve such engagements, he considered that, based on experience, such approval “probably wouldn’t have been available”. I accept that evidence. Thus, the admissions are not determinative because Cadence has failed to establish causation.

425. As noted above, Mr Kearns also candidly accepted in cross-examination that he ought to have told both GXA and Univenta that there was uncertainty about what windows would be used. But that admission does not assist Cadence’s claim under s 37 of the DBP Act having regard to its failure to establish that the geothermal systems did not meet the GXA Performance Requirements for reasons given above. There is also the problem of causation.

426. Similarly, Aspire’s failure to engage an independent engineer to review shop drawings and the works installed by Univenta does not mean that Cadence should succeed in its s 37 claims against Aspire and Mr Kearns.

6. As the person in substantive control of Aspire’s works, did Mr Kearns exercise reasonable care to cause Aspire to take those steps?

427. See my answers to issue 5 above.

(iv) Loss and damage

12. Having regard to the resolution of the issues above, were there defects in the geothermal systems? If so:

(a) whose breaches caused those defects?

(b) what works performed were reasonably necessary to rectify those defects, and what is the cost of those works?

(c) did the claimed rectification works constitute betterment?

(d) did those breaches cause Cadence to lose the opportunity to sell the 368D House in February 2022 and, if so, what are the appropriate damages to compensate it for that loss?

428. Strictly speaking, these issues do not arise because of Cadence’s failure to succeed on issues upon which questions of loss and damage are predicated. In view of my unqualified acceptance of Dr Kivi's evidence and my rejection of Dr Piechowski's evidence to the contrary regarding the issue of whether there were defects in the geothermal systems, I find that the geothermal systems complied with both the GXA Performance Requirements and the As-Built Performance Requirements. On this basis, no defects have been established. For completeness, however, I shall briefly indicate my findings on these issues.

429. Again, assuming contrary to the above conclusion that the geothermal systems did not meet the GXA Performance Requirements or the As-Built Requirements, I would have found that Aspire and Mr Kearns were responsible for those breaches and not Univenta (save in respect of the failure to install slab edge insulation because I accept Mr Kearns’ evidence that he told Univenta that Aspire could not provide such insulation). As noted elsewhere, Mr Kearns ultimately accepted that he ought to have been more vigilant in informing Univenta of the changes in the window glazing. This is reflected in the following extracts from Mr Kearn’s cross-examination with particular reference to his assumption that the NatHERS Certificate would be updated to match whatever was in the window schedule when, in fact, that did not occur:

Q. I’ll put it this way. If you were aware by 30 May 2020 that your assumption was incorrect, you didn’t draw that to GXA’s attention?

A. I don’t think so, no.

Q. Or to Univenta’s attention?

A. Definitely not to Univenta.

Q. Would you agree that at the time GXA was being retained to provide the design of the geothermal system, that you should have at least told GXA that there was uncertainty about what windows would be used?

A. Yes.

Q. And you would agree that you should have at least told GXA once your assumption - that’s paragraph 67 - once you identified that to be incorrect?

A. Yeah.

Q. And would you agree that you should have at least told Univenta that there was uncertainty about the windows to be ordered?

A. Yes.

Q. And that once you realised your assumption was incorrect, I’ve referred to 45 paragraph 67, that you should have told Univenta that?

A. Yes.

430. As to issue 12(b), Cadence’s primary claim for damages for rectification of the geothermal systems totalled $1,185,500. That figure relates to the performance of the systems as a whole, as opposed to any particular individual issue. I make a firm finding that, even if I am wrong in acting upon Dr Kivi’s evidence that the extent of the rectification works was totally excessive. I would not have awarded anywhere near that quantum of damages, but the permutations are too numerous to be more definitive without a clear identification of any individual defective elements in the systems. All the more so in view of Dr Piechowski changing his opinions about the performance of the systems generally while still adhering to his original view that the rectification works were reasonable.

431. In its closing written submissions, Cadence advances an alternative claim in the amount of $25,500 which it attributes to Dr Kivi in the Joint Report as reasonable rectification costs relating to any failure to meet the GXA Performance Requirements. To reiterate, Dr Kivi’s firm opinion, which I accept, is that there are no defects and consequently no rectification is required. The figure relied upon by Cadence relates to Dr Kivi’s estimate of reasonable rectification costs in the event that Cadence established the alleged defects. As Univenta pointed out in its closing submissions in response:

(a) $500 of that figure relates to FCUs for heating. They would only be necessary if Cadence established that they are not already enabled for heating, which has not been established. (b) The $5,000 figure allocated by Dr Kivi in the Joint Report for adding glycol to the geothermal systems was based on a “worst case rectification scenario” and would only apply if Dr Piechowski’s costs modelling of the GHX systems was preferred to that of Dr Kivi, whose model is based on the premise that the temperatures of the GHX never get close to zero °C, consequently no glycol anti-freeze adjustments are required. (c) The $20,000 component of Dr Kivi’s estimate of the costs of rectification relate to the ductwork being entirely replaced, but that is necessary only if Cadence established that the ductwork was in fact damaged beyond repair, which it did not.

432. I accept those submissions.

433. As to issue 12(c), I have explained why I consider that the rectification works concerning the geothermal systems were unreasonable and constituted betterment, with particular reference to the decoupling of the cooling components. Again, I strongly prefer the evidence of Dr Kivi and I reject Dr Piechowski’s opinions on the matter.

434. Finally, there is issue 12(d). Cadence claimed that it should be compensated for the loss of the opportunity to sell the 368D House in February 2022. That House was placed on the market in November 2021 and a contract was signed in the amount of $9 million but contracts for the sale of the land did not exchange. The property was withdrawn from the market in February 2022 and practical completion of the defect rectification work at the 368D House did not occur until 13 October 2023**.**

435. As noted above, Mr Devitt gave uncontradicted valuation evidence which valued the 368D House as at February 2022 in the amount of $7.75 million and in the amount of $5.85 million as at the date of the trial. If necessary, I would have accepted that evidence, which was unchallenged.

436. Assuming, contrary to the above, that I had found that the defects in the geothermal systems caused Cadence to lose the opportunity to sell the 368D House in beneficial market conditions, I would have found that Cadence was entitled to damages representing the difference between market value as at February 2022 and as at the date of the trial plus some of the additional holding costs, which, according to Mr Cronin, totalled $763,544. That figure primarily comprises interest payments of $577,133. If necessary, I would not have awarded the total figure claimed by Cadence for holding costs related to the period November 2021 to 13 October 2023, taking into account the limitations applying to the external access roads from March 2022 to early February 2024. These restrictions would necessarily have affected the capacity of any prospective buyers to inspect any of the Buildings. These restrictions were unrelated to any defects in the Geothermal Works at the 368D House.

437. I consider that a discount should be applied to reflect the inherent uncertainties of Cadence being able to realise the opportunity to sell the 368D House in February 2022. In the circumstances, and noting that the signed contract in the amount of $9 million did not exchange, I would apply a discount of 50%. This higher figure also reflects the up-market qualities of the 368D House and its remote location, factors which are likely to affect the likely sale process period.

(v) Apportionment of the s 37 DBP Act claims

13. Are Cadence’s claims against Aspire, Mr Kearns, Univenta and Mr Trembuch for breach of the s 37 duty apportionable? If so:

(a) did any of the persons identified by the defendants cause the loss or losses found by the Court above?

(b) if so, to what extent should the loss be apportioned to those persons?

438. Dealing with these issues collectively, as noted above, the defendants all accepted that apportionment was not available.

(f) The internal access road claim

14. On the proper construction of the Building Contracts, was Aspire required to design and construct the access road?

15. If not, what is the legal significance of subsequent conduct (and in particular the works performed by Aspire)? In particular, did that conduct result in:

(a) a variation to the scope of those works under the Building Contracts by conduct so as to include the design and construction of the road?

(b) those works being subject to a duty imposed by s 37 DBPA in any event?

16. If Aspire was responsible for the design and construction of the road (either under the Building Contracts, or by reason of s 37 DBPA):

(a) did Aspire exercise due skill and care in performing those works? In particular, should a reasonable builder in the position of Aspire have obtained an engineered solution for the road?

(b) did Mr Kearns exercise due skill in care by not causing Aspire to take those steps?

17. If Aspire or Mr Kearns did not exercise due skill and care, what is the loss which has been caused by those breaches and what are the appropriate damages to compensate Cadence for that loss? In particular:

(a) what are the additional costs which Cadence has incurred by reason of having the road re-constructed by a subsequent contractor?

(b) did the breach cause Cadence to lose rental income in respect of the Tourist Cabin?

18. Are Cadence’s claims against Aspire and Mr Kearns for breach of a s 37 DBPA duty apportionable? If so:

(a) did any of the persons identified by the defendants cause the loss or losses found by the Court above?

(b) if so, to what extent should the loss be apportioned to those persons?

19. If the Court finds that the access road was not defective, what damages is Cadence entitled to for breach of the insurance obligation?

439. It is convenient to deal with all these issues collectively.

440. It is common ground that detailed engineering plans were not obtained prior to the work carried out by Aspire and others relating to the internal access roads in the period prior to the Building Contracts being terminated. As will emerge, Mr Cronin ultimately accepted that it was Cadence’s responsibility to obtain such plans.

441. I reject any contention that Aspire had a contractual obligation to obtain such plans arising from the obligation imposed by the Development Approval for all works to be carried out consistently with the conditions of that Development Approval. I accept Mr Kearn’s submission that that obligation cannot be read in isolation from the scope of works under the Building Contracts. As noted above, it was relevantly stated there that the works to be completed by Aspire, including the internal road asphalt, were to be completed as per the specified Drawings, Schedules and Specifications. No detailed engineering plans were included in the documents identifying Aspire’s work. Moreover, although under cl 1(d) of the Building Contracts, all work was required to comply inter alia with the conditions of any relevant development consent, it was stated in cl 1(d)(ii) that the builder was not liable for a failure to comply with that requirement if the failure related solely to a design of all specifications prepared by or on behalf of the Owner and not on behalf of the Builder.

442. The Building Contracts stated in paragraph (b) of Sch 3 that “site access roads” were excluded from the building works. Cadence submitted that this refers to the preliminary works undertaken by Selby Earthmoving prior to Aspire commencing the building works and that Aspire retained responsibility for completing the permanent and upgraded internal access road. Aspire claimed that its obligations were limited to the mere application of asphalt to pre-formed internal roads. Cadence emphasised, however, that in fact Aspire undertook substantially more work than that, including installing drainage systems and engaging RVC as a sub-contractor to undertake works such as road widening, shaping the base layer of the road and installing stormwater drains. The works undertaken by RVC were claimed by Aspire and paid for by Cadence.

443. The evidence comfortably establishes that, independently of the proper construction of the Building Contracts regarding Aspire’s obligations, it did in fact do far more than simply asphalt parts of the internal access roads. These actions, which are referred to immediately above, are set out in some detail in Mr Cronin’s affidavit dated 4 March 2025 and are supported by contemporaneous documentation, including the video which is described at [452] below.

444. The experts also agreed that:

(a) The stormwater drainage system for the internal access road was not designed or constructed with reasonable care or skill or in accordance with the conditions of the Development Approval. (b) The road was not designed or constructed with reasonable skill or in accordance with the conditions of the Development Approval. (c) The quality assurance procedures required under Council specifications and relevant Australian Standards were not implemented.

445. Cadence claimed that Aspire’s failure to obtain design plans from a civil engineer and geotechnical engineer constituted a breach of Aspire’s warranty of due care and skill under the Building Contracts as well as a breach of its duty of care under s 37 of the DBP Act. The latter claim is also brought against Mr Kearns personally.

446. In my view, there is a significant issue of causation of loss in respect of the internal access roads. It relates to the counterfactual question whether, if it had been advised to do so, Cadence would have obtained appropriate engineering plans so that the internal access roads were designed and constructed in accordance with the Development Approval and did not need to be reconstructed. For the following reasons, I am not satisfied that Cadence has established causation and I consider that this is fatal to its claim.

447. First, Mr Cronin ultimately agreed (and in my view correctly) in his oral evidence that Cadence was responsible for obtaining engineering drawings in relation to the internal access road, as is reflected in the following extract from his cross-examination by Mr Kearns:

Q. … So would you say that you and maybe you and Mr Buscall were the ones, if - if - if - if a party - any party was to get road engineers’ drawings, it would be you two that would procure those drawings. You would - you would engage the engineer, as you had the engineer for the house, as you had all of the other consultants?

A. Yep.

Q. So it was your responsibility, yours and maybe Mr Buscall’s, to get road engineers’ drawings?

A. To satisfy the DA condition? Which condition are you referring to; the draining drawings?

Q. To get engineers’ drawings to build the road satisfactorily. I’m not so much pointing--

A. Which condition?

Q. --to a condition. I’m just - sorry, I’m just speaking in general.

A. Okay.

Q. Is it - just considering that you got and engaged all of the other consultants, so my argument is that you and Ms - and may - you and coupled with Mr Buscall are responsible--

A. Yeah.

Q. --for getting the engineer to procure--

A. Yeah.

Q. --design drawings for the road.

A. Yes. Look, that’s the biggest lesson learnt here, is the engineering drawings. It’s why it’s costing me 1.3 million to fix it up, and I’ve had to get the engineering. So absolutely, it’s a lesson learnt for sure.

448. Later in his cross-examination, Mr Cronin confirmed this evidence:

Q. And you just said, Mr Cronin, that that was a big lesson learnt.

A. Mm-hmm.

Q. And I appreciate it sounds like you’ve taken that on the chin.

A. Cost me 700,00, yeah.

Q. Yep. Because you did in fact get engineers’ drawings?

A. I did.

Q. But a couple of years later.

A. Mm-hmm.

449. Secondly, and perhaps even more significantly, Mr Cronin ultimately also agreed in his oral evidence that he probably would not have acted upon any advice from Mr Kearns to obtain such engineering plans. I accept that evidence, which was given against interest.

450. Cadence submitted that, despite this acknowledgement by Mr Cronin, the Court should find that the cost of reconstructing the road was in fact causally related to the alleged breaches because:

(a) It was not put to Mr Cronin under cross-examination that he would not have obtained appropriate engineering plans if he was told that this was required under the Development Approval, particularly in circumstances where Aspire was obliged under the Building Contract to carry out works in accordance with the conditions of the Development Approval, cl 1(d)(i)(c) and cl 1(d)(ii)(b). Those clauses are as follows:

Quality of construction

(d) (i) All work done under this Contract will comply with: …

(c) the conditions of any relevant development consent or complying development certificate …

(ii) Despite Sub-Clause 1 (d)(i), this Contract may limit the liability of the contractor Builder, and accordingly the Builder is not liable for a failure to comply with Sub-Clause 1 (d)(i) if the failure relates solely to: …

(b) a design or specification required by the Owner, if the contractor Builder has advised the Owner in writing that the design or specification contravenes Sub-Clause 1 (d)(i).

(b) Cadence emphasised that there was evidence as to how Mr Cronin in fact acted when he was advised that such plans were required. Thus, Mr Jones from MI Engineers provided detailed designs for the rectification of internal access roads, which were ultimately implemented. (c) Relatedly, Cadence pointed to an exchange of emails on 21 July 2021 between Mr Cooper from Aspire and Mr Cronin in which Mr Cooper asked for confirmation that Aspire would do “the bare minimum” for an occupation certificate at 200 Bunkers Hill Road. He said that he would be “sticking to” the original plan for the 368D House and “just needed to get a contractor to roll in some new material for Avijohn”. Mr Cronin responded as follows:

The roads at 200BHR need to get done properly – spent too much money on the houses and property for this not to happen and we all know what happens after heavy rain.

451. I will explain below at [459] why I do not accept these submissions.

452. Both Cadence and Aspire claimed that a video sent by Mr Kearns to Mr Cronin on 3 June 2021 supported their respective positions regarding the internal access road. Extracts from the video were set out in Mr Cronin’s first affidavit and a full transcript of the video was included in the evidence, which is now reproduced below:

Transcript of Jake Kearn’s video of how Aspire will be approaching the internal road building at 200 Bunkers Hill Road Property

3 June 2021

• 0:00 - 0:31

Hey Garren, just further on what we, what we started talking about, my concern with the hot mix is not so much on those flat areas where the base has been prepared pretty similar and I believe it's down to stuff that's not, not too bad, but where we come into the cut and fill sleeper sections of both tourist cabin road and from the entry gate down to Main House, this is my big concern, is what you're gonna have. You've got this stable ground that's been prepared pretty good because it's just the nature of actually cutting in further and getting to better stuff.

• 0:31 - 0:56

Even though the sub base hasn't been ripped up and rolled, it got down to better stuff from here on. I don't have heaps of faith in what's been done all the way through. I picked up on a bit of that when we dug across. So this is what I think the hot mix could end up looking like in a few years. Big cracks and especially on the edge just crumbling away.

• 0:56 - 0:57

Especially.

• 0:57 - 1:12

Here where we don't have heaps of margin to, to have a bigger shoulder of, of double, double spray, um, or even single spray that, that helps protect the hot mix from rolling off the edge. Um, so that's my concern. I'll just draw a quick picture.

• 1:13 - 1:46

So typically here in this road section what we've got, we've got a case of, um, cut. Now what that means is, um, this section here, sometimes some of this cut has been used in here a little bit, but from what I discovered when we, when we dug that pipe across, I got to see exactly what was going on here and I wasn't a big fan. There was still top soil and and [sic] stuff in here.

• 1:46 - 2:18

I mean, generally when you, when you build a road on flat ground, you, you dig in like up to 700 mil and put in proper stuff in layers and come up. So we don't even have that here, but I believe the stuff that it's been hit, I mean you can see it in some sections, it's good, it's fine, but over on this edge that worries me. So to really do hot mix and do this properly, what needs to happen is you kind of need to get back to this stuff and bulk this whole thing out and do it properly.

• 2:19 - 2:46

Um, that's my concern. So I'm wondering do we abandon hot mix? Do we just go with a double, double? It's what I've done before and it's not a bad finish. Do we go hot mix just at the main house from T intersection where you turn in, where we can have confidence in that, do the rest of it, save some bucks and save the future pain of possibly. • 2:46 - 2:47 Having this.

• 2:47 - 3:22

Happen. Do we just go double, double? So that means a bitumen spray and then a 14 mill stone. Um, so you have all your road base prepared, properly enrolled and wet up and compacted, and then you literally have bitumen spray come in and then they reverse the truck over it and sprinkle 14 mil rocks, then they bitumen spray it again, and then they sprinkle seven mil rocks. That will last a very long time and it patches easily. Um, yeah, let me know your thoughts mate. That's, that's my big, big fear at the moment is, is the money it's gonna take to really get this right.

453. Cadence relied upon this video as demonstrating that Mr Kearns assumed responsibility for the design and installation of the internal access road. It also relied on Mr Cronin’s affidavit evidence of his recollection of a conversation he had with Mr Kearns the following day, i.e. 3 June 2021:

Me "I have watched your video on the approach to the roadworks. "

Me "As you know, I am not a fan of taking short cuts. Things need to be done properly. If the road substrate has a problem, best it be fixed upfront". "

Jake “As I said in the video, there are several areas, particularly on the steep sections of the road, where the lower side of the road substrate has crappy fill that will likely give way overtime and cause damage to the road surface resulting in cracking."

Jake "You could also save some bucks and just do double-double, rather than your original preference for a final layer of hot mix"

Jake "This would involve a bitumen spray seal and 14mm stones and then a further bitumen spray seal and 7mm stones. It's easily fixed overtime."

Me "Appreciate the spray seal option is cheaper and quicker. However, I want to do this properly and will stick with the hot mix finish as originally planned. If this means more work and materials on the road substrate preparation than so, be it. We have invested way too much money in these properties to now have substandard access roads"

Jake "Understood. I will get Owen to scope the road works tender out and ensure we allow for the extra work and hot mix finish."

454. Cadence submitted that this material demonstrated that Aspire proposed to cut corners and apply quicker and cheaper solutions to complete the internal access road, in contrast with Mr Cronin’s position. I do not accept that submission. It is inconsistent with Mr Cronin’s ultimate acknowledgement that it was Cadence’s responsibility to obtain engineering drawings for the internal access roads, and also his ultimate acceptance of the proposition that, if he had been advised to do so, he probably would not have paid to obtain detailed engineering plans.

(i) Damages claimed concerning internal access roads

455. The total cost of rectification in relation to the internal access roads was $1,193,188.

456. Cadence seeks damages totalling $450,389, which is broken up into various detailed categories. Cadence presses its claim in relation to loss of rent for the Tourist Cabin and it also seeks $10,000 on the basis that Aspire acknowledged that the cost of the work to remove the landslide debris and remediate the area was in the order of $5,000 to $10,000.

457. The detailed categories comprising Cadence’s claim for damages in the amount of $450,389 are as follows:

(a) $7,843 paid to MI Engineers to investigate and assess the defects in the internal access road. (b) In relation to the monies paid to the rectification contractor (Jirgens Civil) for site establishment, amenities, project management, surveyor costs, sediment and erosion control and administration, Cadence claims $15,989 comprised of:

(i) $8,883, being 20% of the costs referred to in [115(b)] of Cadence’s opening submissions. The basis for that 20% is Mr Fagg’s evidence that 15%-20% of those costs are characterised as additional (i.e. would not have been required in the first instance). While Mr Fagg made it clear he was not a costing expert, he is familiar with the works and Cadence’s submission is that his estimate is at least a reasonable basis for the Court to assess the damages; and (ii) a sum of $7,106 as a reasonable estimate of the escalation of the balance to reflect the difference in those costs being performed in 2024 compared to 2021. Mr Madden acknowledged that if the access road work that was carried out in 2024 was instead carried out in the last half of 2021, the works would have cost less by reason of escalation of costs over time. The Court does not have direct evidence from either Mr Madden or Mr Daubney however as to the appropriate escalation rate to apply. Cadence contends that the rate of 20% is appropriate because:

(a) In his report, Mr Madden gave evidence that it was appropriate to utilise the Producer Price Indexes, Australia (ABS) to determine the escalation from June 2023 to September 2024. The ABS statistics referred to by Mr Madden were not annexed to his report (only an extract was included) but are incorporated by reference via the hyperlink referred to in that report. Cadence sought leave to adduce further entries from that ABS document (with the data not included in Mr Madden’s report highlighted in yellow) which is reproduced below:

(b) If the ABS statistics were to be used, they therefore demonstrate an escalation of 22.7% between September 2021 and March 2024. (c) In cross-examination, Mr Madden explained however that, if he was to consider escalation in the period back to 2021, he would also have considered other publications to “moderate” the analysis because data sets can vary “by percentages”. That variance of percentages can, of course, be a variance up or down. Cadence contended that adopting an escalation factor of 20% is a conservative approach to take in the circumstances.

(c) Cadence acknowledged that the evidence did not permit the Court to identify the extent to which the monies paid to Jirgens Civil had been used to remove and dispose of material. Accordingly, it pressed for only 20% of that sum (being $6,764) to reflect the escalation of the cost between 2021 and 2024 on the hypothesis that, even if it is assumed that all of this work would have been carried out in the first instance, it would have cost less at least by reason of escalation. (d) Cadence confirmed in its closing written address that the same proposition applied to the sum of $123,611 originally sought by it as payment to Jirgens Civil to supply and replace new material, such that it only pressed for 20% of that sum (being $24,722) to reflect escalation. (e) Cadence also confirmed in its closing address that the same proposition applies to the sum of $56,662 originally sought by it as payment to Jirgens Civil as a variation to undertake additional and other necessary remediation work, such that Cadence only pressed for 20% of that sum (being $11,332) to reflect escalation. (f) Cadence pressed for $144,204 which it contended was paid to the first defendant and thrown away on the performance by RVC of the defective works, including the defective stabilisation works. Cadence provided a detailed calculation in support of that claim. (g) Cadence sought $111,851 in respect of road pavement reconstruction. As to this:

(i) Cadence paid Jirgens Civil $202,709 for pavement reconstruction and asphalt concrete surfacing. Mr Vleggaar and Mr Fagg agreed that the pavement reconstruction works were necessary, but that asphalt concrete surfacing is “new” (i.e. that it would have needed to be performed in the first instance). In other words, Cadence’s damages properly included the amount for pavement reconstruction (as that is not a cost which would have been incurred had the work been done properly in the first instance), but not the asphalt surfacing (as that is work which would have been required on the counterfactual). (ii) The asphalt surfacing costs are not separately itemised in the costs actually incurred, but a reasonable estimate of the amount that would have been incurred originally could be derived from the quote from an alternative contractor at the time of the original works, which was in the sum of $90,859. (iii) Accordingly, the additional cost to Cadence for the reconstruction of the pavement is the costs incurred for both the reconstruction and the surfacing ($202,709) less the costs which would have been incurred originally for the surfacing ($90,589), being $111,851.

(h) Cadence did not press its claim in relation to the cost of replacing three culverts. (i) Cadence sought damages in the amount of $37,763 for excavated material site remediation in respect of the landscaped areas, but ultimately only pressed for 20% of that sum (being $7,553) to reflect escalation for the same reasons given above. (j) Cadence only pressed for the sum of $10,000 for the cost of removing the landslide debris from the swale drain and remediation of the drain, on the basis that Aspire accepted that the cost of the work to remove the landslide debris and remediate the area was in the order of $5,000-$10,000. (k) Cadence sought the sum of $4,015 in restitution for its payment to Jirgens Civil for the cost of demobilisation and site remediation. (l) Escalation of other amounts in the Jirgens Civil quote which, although those works would have been necessary in the first instance, would have cost less at that time. This totalled $106,116 comprised of:

(i) $63,785 for piling, being 20% of $318,925 per the Jirgens Civil quote; (ii) $22,006 for retaining walls, being 20% of $110,030.58 per the Jirgens Civil quote; (iii) $4,751 for capping beam works, being 20% of $23,756 per the Jirgens Civil quote; and (iv) $15,574 for concrete dish drains, being 20% of $77,870 per the Jirgens Civil quote.

458. Cadence has established to my satisfaction that some of the internal access road works were defective as alleged by it. As noted above, however, there is a central issue of causation which Cadence needs to establish in order to recover damages from either Aspire or Mr Kearns personally. As noted above, Mr Cronin confirmed in cross-examination that Cadence was responsible for obtaining appropriate engineering plans in relation to the internal access road. He also ultimately agreed in cross-examination that he probably would not have acted on any advice from Mr Kearns to obtain proper engineering plans so that the internal access roads conformed with relevant conditions in the Development Approval and Australian Standards. I accept that evidence, which is fatal to Cadence’s case in respect of this claim.

459. I reject Mr Lyons’ submission (see at [450] above) that this acknowledgment by Mr Cronin is not fatal to the issue of causation. In particular, I respond to the three matters raised by Mr Lyons as follows:

(a) Mr Kearns was not obliged to put to Mr Cronin that appropriate engineering plans were required under the Development Approval. Mr Cronin was well aware of that fact. Indeed, this awareness underpinned his email to Shoalhaven City Council in which he sought the removal of conditions in the Development Approval, including Condition 24, which related to access road design, as well as Condition 28, which related to stormwater drainage design. (b) Merely because Mr Cronin subsequently acted upon advice given to him in the rectification period that engineering plans were required (and he obtained advice from MI Engineers) is not to the point. The pertinent question is what Mr Cronin would have done if he had been given earlier advice about the need to obtain engineering plans, not what he actually did with the benefit of hindsight. Mr Cronin repeatedly emphasised that he had learned a bitter lesson from not having obtained proper engineering plans in the first place. (c) Nor do I attach much weight to Mr Cronin’s email exchange with Mr Cooper on 21 July 2021, as outlined at [450(c)] above. Mr Cronin’s statement in his email that the roads “need to get done properly” is expressed at a high level of generality. It also fits uncomfortably with the fact that Cadence did not obtain detailed engineering plans in respect of the internal access road prior to termination of the Building Contracts. Mr Cronin was content to rely upon Mrs Lewis’s landscape plans in this regard. Moreover, the email sits uncomfortably with Mr Cronin’s ultimate acknowledgement in cross-examination that he probably would not have acted upon advice to obtain appropriate engineering plans if Mr Kearns had advised him to do so.

460. Turning now to the quantum of damages relating to the internal access roads rectification works (and assuming that I am wrong on causation), I would have preferred Mr Fagg’s evidence that Cadence’s decision to implement a fully engineered design in 2024 following the March 2022 deluge represented the new scope of works and not merely rectification. Cadence would be entitled to the cost of the replacement of three culvert pipes as stated by Mr Fagg, but as noted above at [457(h)], this claim was not pressed.

461. For all these reasons, Cadence’s claim for damages in respect of the internal access road fails, save for an amount of $10,000 which Aspire accepts represents the costs of work to remove the landslide debris and remediate the area following the deluge in March 2022 and in circumstances where it accepts that it should have taken appropriate steps to protect the area from flooding.

462. Finally, in the event that I am wrong in concluding that neither Aspire nor Mr Kearns has any liability to pay Cadence damages in respect of the internal access roads, there is issue 17(b) as to whether that breach caused Cadence to lose rental income in respect of the Tourist Cabin. Cadence contended that it would be entitled to recover damages for loss of rent during the period May 2022 to February 2025, which Mr Craig McIntosh assessed to be a figure of $203,351. Cadence contended that, in the absence of a completed and safe internal access road to the Tourist Cabin, that Building could not be occupied or rented for holiday accommodation as intended. Cadence acknowledged that, on the hypothesis that the internal access road would have been built properly in the first instance, it was appropriate to apply a conservative estimate of 9 months for that to occur on the counterfactual, pointing to the fact that that was the period taken by Jirgens Civil to remove Aspire’s defective work and rectify it.

463. I would not have accepted those contentions. They fail to take into account the fact that, following the March 2022 deluge, Bunkers Hills Road (which provided the only external access road to the sites) was severely damaged and Shoalhaven City Council imposed strict temporary disaster load and access limits. Parts of the external road were closed to all traffic, while other parts were limited to 3-5 tonnes and confined to access by residents only. These significant limitations remained in place until the end of January 2024. It was not until November 2024 when the Council publicly announced completion of the road works, which it said took 144 days. In these circumstances, I would have accepted the submission by the Aspire defendants that the commencement date of assessing the loss of rent would be from 1 February 2024 to the time when the Tourist Cabin was first rented out, being 27 February 2025. Allowance would also need to be made for how long the works would have taken on the counterfactual, for which I would use a figure of 9 months, which is consistent with Cadence’s position.

(g) The general building defects claim

20. Were the works defective and, if so, what is the cost of rectification to which Cadence is entitled under the Building Contracts?

21. Did Aspire or Mr Kearns fail to exercise reasonable care to avoid those defects?

464. It is convenient to deal with these issues collectively, with reference to the broad categories used in Cadence’s written closing submissions as referred to in Part F above.

(i) Internal doors ($179,321)

465. As noted above, Cadence submitted that the door schedules should be read literally as applying to doors, not the wider openings into which the doors were to be fitted. It claimed that this is confirmed by the “NOTE” regarding each door in the architect’s door drawings. For example, the description in the door schedule includes the following statements in respect of one door:

solid core pre-primed hinge door with white paint finish, installed with 4 x CEAM invisible hinges.

door handle - designer doorware KALI lever

466. Cadence emphasised that this describes the door, not the opening. One difficulty with this argument is that the drawing shows a width of 900mm and the lines on the drawing appear on their face to be directed to the width of the door itself as well as the jambs, as is shown in the following extract:

467. This is a point which Mr Nikolas made in the conclave. He explained how he had used general software to superimpose upon the architect’s drawings the alignments of the door itself and the door jamb. He said that this indicated that the alignment was to the outside edge of the door jamb. Accordingly, doors with a width of approximately 820mm were compliant. Mr Crosby said that this analysis did not affect his opinion because “the measurements are just taken off a general software, not an actual measuring or specific software for measuring data in that case”.

468. I prefer Mr Nikolas’ evidence, which at least provides some objective corroboration for his description of the general building practice. I reject Cadence’s criticism that Mr Nikolas’ evidence should not be accepted because it relied on general software in analysing the drawings in the door schedules. The software used by Mr Nikolas, whatever its technical limitations, confirms what is evident to the naked eye, namely that the 900mm includes the door jamb. Accordingly, I reject Cadence’s claims in relation to internal doors, except for three doors in the Tourist Cabin (see further below).

469. For completeness, I should also indicate that I do not accept Aspire’s contention in closing address that Mr Cronin had waived Cadence’s rights under the Tourist Cabin Building Contract in respect of the three doors. I accept Cadence’s submission that waiver requires an unequivocal decision by a party, communicated to the other party, not to insist upon a right or not to exercise a power (see Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2022) 277 CLR 445; [2022] HCA 38).

470. I also accept Cadence’s submission that the mere approval of a trade quotation cannot be construed as an unequivocal decision by Cadence to accept door widths that were not in accordance with the door schedule.

471. Mr Crosby estimated the cost of rectification of all the doors in the sum of $179,321. The total cost for replacing the 5 defective doors for the Tourist Cabin (excluding contingency, preliminaries, overheads and profit, insurance and GST) is $18,968.04, which is $3,793.61 per door. I accept Mr Nikolas’ evidence that 3 of the doors in the Tourist Cabin were 50mm narrower than specified in the door schedule, a position which was agreed by Mr Crosby according to the Joint Report. Accordingly, the amount that Aspire is liable to pay in damages in respect of these three particular internal doors in the Tourist Cabin is $3,793.61 x 3 (i.e. $11,380.83) plus contingency, preliminaries, builders’ overhead and profit, insurance and GST. This amounts to $18,534.25.

(ii) Tennis court drainage ($73,171)

472. In essence, Aspire and Mr Kearns denied that they had any liability for any works relating to tennis court drainage because there was no causal link between any such defects and Cadence’s loss, as measured by its costs of the relevant rectification works. Echoing their position regarding the internal access roads, they contended that Mr Cronin would not have obtained detailed engineering plans for stormwater drainage even if he had been advised to do so. Rather, Mr Cronin was content to rely upon Mrs Lewis’s various Landscape Plans, which only dealt with stormwater drainage around the tennis court at a very general level. For the following reasons, those submissions are accepted.

473. It is necessary first to say something more about Mrs Lewis’s various Landscape Plans, even though, curiously, the Court was not taken to any of them specifically. The evidence included several such plans in relation to the Main House. They included a Landscape Plan dated 7 November 2019 for the Main House. It depicted the tennis court in the south-west area of the Main House. It depicted stone retaining walls with a maximum height of 0.9m around the perimeter of the tennis court. It also depicted a grassed drainage diversion swale to the west of the tennis court and extending in both a northerly and southerly direction.

474. The evidence also included an Earthworks Concept Plan dated 23 December 2019, prepared by Mrs Lewis, in relation to the Main House. It depicted similar stone retaining walls and a grassed drainage diversion swale, as well as indicating areas of proposed cut and fill in and around the tennis court. Both these plans were included in the Construction Certificate issued on 29 April 2020. Both plans are also referred to in Part A of the Development Approval dated 1 April 2020.

475. In his first affidavit, Mr Cronin addressed what he described as “future defect rectification works – tennis court drainage”. It is evident from [450] of that affidavit that no rectification works had been commenced in respect of the tennis court drainage issue as at the date of that affidavit, being 4 October 2023. Mr Cronin set out numerous exchanges he had with Aspire from around October 2021 regarding Mr Cronin’s concerns that excessive water was pooling behind the western and northern sides of the then recently constructed tennis court. He also pointed to [238] of the General Building Defect Report (Main House), prepared by Cadence’s architect (Design Studio Group) and dated 21 May 2022 in respect of this matter. That report stated that there did not appear to be effective drainage to the western side of the tennis court and that there was insufficient subsoil drainage to the western side of the tennis court, with the result that water was not draining properly and that water was pooling along the length of the court.

476. In his Supplementary Report dated 10 April 2025, Mr Crosby opined that the drainage works in the vicinity of the tennis court were deficient and in breach of the National Construction Code and relevant Australian Standards. He relied heavily on photographs of the area which were annexed to Mr Cronin’s affidavit, including photographs taken in the period from January to March 2022, which were times of exceptional rainfall events in the region. Mr Crosby concluded that, based on his review of the evidence, the construction of the drainage systems in and around the perimeter of the drainage court “did not adequately divert water that flowed down from the catchment area to the water retention area (dam)”.

We have complied with Condition #13 (Soil and Water Management Plan (SWMP)) which was prepared by a specialist Landscape Architect – refer attached for drawings and specifications

We have prepared and approved extensive Landscape Plans (IMC drainage diversion swales) – refer attached.

479. Presumably, the reference to the Landscape Plans is to those drawn up by Mrs Lewis, which are summarised above.

480. In the events that occurred, the Council declined to remove either of the two conditions sought by Mr Cronin (the other condition related to the internal access road design). The critical point, however, is that Mr Cronin was clearly content to rely upon Mrs Lewis’s Landscape Plans in respect of stormwater drainage design affecting not only the internal roads, but also the tennis court because he had a strong belief that they were adequate for the task and Cadence should not be required to obtain additional engineering plans. Mr Cronin was cross-examined regarding his email to Shoalhaven City Council and on his reliance on Mrs Lewis’s Landscape Plans, including in relation to stormwater drainage generally. His evidence did not derogate from the clear message in his 8 April 2020 email which recorded his view that the existing Landscape Plans were adequate.

481. Cadence adduced no evidence which indicated that it proceeded to obtain engineering plans for stormwater drainage or that the stormwater drainage adjacent to the tennis court was not installed by Aspire in accordance with Mrs Lewis’s Landscape Plans. Assuming that he was qualified to do so, Mr Crosby’s expert evidence is silent on that issue. It is also notable that there is no reference at all in his reports to Mrs Lewis’s Landscape Plans, notwithstanding that Mr Cronin strongly believed that they were adequate for the purposes of stormwater drainage design, as is reflected in his email dated 8 April 2020 to Shoalhaven City Council.

482. For the purposes of the counterfactual, I am comfortably satisfied that, even if Mr Cronin had been advised to obtain more detailed engineering plans relating to tennis court drainage prior to the Building Contracts being terminated, he would not have acted on that advice and would have continued to regard Mrs Lewis’s Landscape Plans as adequate for that purpose.

483. For these reasons, I reject Cadence’s claim in respect of tennis court drainage.

(iii) Cobblestone driveways/crazy paving ($57,218)

484. Cadence’s claims in relation to these items are described at [141]-[148] of Part F above.

485. In their written response to Cadence’s closing written submissions, Aspire and Mr Kearns acknowledged that there was a link between items 75, 230 and 240. But they opposed Cadence having leave to resurrect items 75 and 240 because Mr Kearns had not pressed his questioning of the experts on item 75 following Mr Lyons’ confirmation that Cadence did not press that particular item. The transcript supports Mr Kearns in this respect. Given that clear prejudice and the link between items 75 and 240, I decline to grant leave to Cadence to resurrect those items.

486. The only remaining item is item 230 for which Cadence does not require leave, despite it being linked to items 75 and 240. As noted above, item 230 relates to slurry splatter on cobblestones at the Main House. The core issue is whether the work, which is incomplete work, also amounts to a defect.

487. Mr Crosby maintained that although the work was incomplete work, it constituted a defect under the Building Contracts. Mr Nikolas agreed that the work was incomplete but said that it was not a defect. The resolution of this disagreement turns on the proper construction of the Building Contracts. The following statement appeared on page 1 of the Building Contracts for the Main House:

Correction of Defects to work, other than new work undertaken wholly by the Builder. The Builder is to correct defects to its work at its own cost. Refer to Clauses 20 and 22.

488. Clause 20, which related to the concept of Practical Completion, is set out at [18] in Part B above.

489. Clause 22 related to the “Defects Liability Period”. It stated:

22. Defects Liability Period

(a) The Defects Liability Period commences upon Practical Completion of the works and will continue for the period stated in Schedule 2 item (e), or if no period is stated, for thirteen (13) weeks.

(b) Prior to the expiration of the Defects Liability Period the Owner is to provide to the Builder a written list of any defects or faults arising out of workmanship or material provided by the Builder which is not in accordance with the Contract. The parties must meet to review the items listed by the Owner, if the Builder requests such a meeting.

(c) The Builder is to make good defects or faults which are attributable to the Builder's work or failure to do something at its own cost and within a reasonable time of receiving written notification issued in accordance with Sub Clauses (a) and (b) above.

(d) The Owner must provide access for the Builder to carry out its obligations under this clause during normal working hours Monday to Friday and must allow a reasonable time for such work to be carried out. The parties are free to agree on alternative times for any such work to be carried out.

(e) Subject to Sub-Clauses (a), (b) and (d), if the Builder fails to comply with its obligations under this clause within a reasonable time of the notification the Owner may, after giving the Builder twenty five (25) days written notice, engage others to make good the listed defects or faults. The Owner must provide access to the site for the Builder to do defects liability work within this notice period.

(f) The Builder's duty to attend to and carry out defects liability work is limited to work and materials or defects which directly relate to the workmanship of the Builder. It does not, as of right, extend to matters arising from the use or occupation of the works by the Owner or their agents nor does it cover fair wear and tear or design faults, where the design is not the responsibility of the Builder.

(g) Further where the work involves a renovation, the Builder's duty to attend to and carry out defects liability work does not cover matters arising from or concerning pre-existing conditions in the existing structure.

Parties to work Co-operatively

(h) The Owner and Builder agree to utilise the Defects Liability Period to identify and resolve issues covered by this clause. Consequently there is no breach by the Builder is he fails to immediately attend to matters. However the Builder must with regard to matters covered by the Defects Liability Period act with reasonable speed in carrying out necessary work.

490. As noted in the Joint Report, item 230 was identified in the document dated 21 May 2022 prepared by Design Studio Group on behalf of Cadence and titled “Internal & External Defects/Incomplete Works Inspection: Main House”. The matter was described in that report as “Slurry splatter on cobblestones. Incomplete – works not carried out with due care and skill”.

491. As noted above, on 29 April 2022 Cadence (acting through its then solicitor) gave notice under both cl 29 of the Building Contracts and the common law that it terminated the Building Contracts. An annexure to that document referred to incomplete works regarding the cobblestone driveway at both the Main House and the Tourist Cabin. Cadence’s solicitor’s letter stated that one of Aspire’s invoices included labour charges “which also relate to the rectification of the cobblestone defects (high pressure cleaning of the excess grout and cement slurry), which again has not been deducted from the Builder’s labour claims”. The letter refers to a timesheet entry having been provided by Aspire on 21 December 2021 which contained timesheet labour entries by Chris Smith for what was described as “Power wash cobble stone”. This related to the removal of cement slurry and excess grout. Cadence complained that those labour charges had not been deducted from Aspire’s cost of labour claim relating to its notice of suspension.

492. Cadence provided Aspire with a list of defects in respect of each of the properties in the form of a description of defects dated 21 May 2022 prepared by Design Studio Group. It included an item in respect of the Main House External described as “Slurry splatter on cobblestones. Incomplete – works not carried out with due care and skill”. It also included items relating to “Poorly finished cobblestones” and “Minor cracking to crazy pave adjacent to dining room window”.

493. On 19 May 2022, Aspire’s solicitor wrote to Cadence’s solicitor stating that:

Our client considers that your client’s purported termination of the contracts was unlawful and constitutes a wrongful repudiation of the contracts. We will write to you separately to provide further detail about our client’s reasons. Our client accepts your client’s wrongful repudiation of the contracts and terminates the contracts.

494. By a letter dated 25 May 2022, Aspire’s solicitor wrote to Cadence’s solicitor noting that Aspire’s building consultant had planned to access the sites on 25 and 26 May 2022 but access had been refused in an email dated 23 May 2022 from Cadence’s solicitor. Aspire’s solicitor suggested alternative dates for an inspection of the alleged defective works so that Aspire could identify the works it was required to rectify.

495. The parties remained in dispute concerning the issue of access. In a letter dated 14 June 2022 from Cadence’s then solicitor, it was stated that Aspire’s position was that it would not undertake any works to correct defects until all outstanding invoices were paid. The letter stated that Cadence would grant access to the site if that condition was removed. A copy of the letter dated 21 May 2022 from Design Studios Group identifying defects was attached.

496. There was more correspondence between the lawyers regarding Aspire’s access to the site to rectify defects, including a letter from its solicitor dated 23 June 2022. The correspondence is described in Mr Kearns’ affidavit dated 5 March 2024.

497. By a letter dated 27 June 2022, Cadence’s solicitor said that Cadence had “lost all confidence in Aspire and its contractor’s [sic] capabilities to remedy or rectify the geothermal systems given the extensive issues that have been identified since Aspire walked from site [sic] on 14 February 2022”. The letter added that Cadence was “not prepared to allow Aspire and its consultant unsupervised access to any of its properties given the breakdown of trust in your client”. The letter stated, however, that Mr Cronin would be available on 28 and 29 June 2022 for Aspire and its consultant to inspect the relevant works.

498. It is not disputed that Aspire carried out some rectification works at the sites during the period 31 October 2022 to 9 December 2022. Not all the defects then alleged by Cadence were rectified by Aspire because Aspire took the view that some were not genuine defects.

499. In their written response to Cadence’s closing written submissions, Aspire and Mr Kearns contended that Aspire offered to undertake some works in relation to inter alia item 230, with a view to attempting to narrow the parties’ dispute. They said that this would have involved Aspire’s foreman, Mr Aaron Wright supervising a sub-contractor who would clean the slurry at the sub-contractor’s expense and at no cost to Cadence, involving 3-4 hours of time. This would be charged to Aspire at a cost of $88 plus GST per hour, giving a total amount of $387.20.

500. The resolution of item 230 turns on the distinction between defects and incomplete works, an issue which I will now address.

501. In Damien Cremean, Michael Whitten and Michael Sharkey, Brooking on Building Contracts (LexisNexis Butterworths, 6th ed, 2020) at [10.1], it is stated that (emphasis added):

Building work which is not in conformity with the contract is defective. Defective work is a breach of the contract and, in the absence of contractual provisions to the contrary, gives rise to an entitlement in the proprietor to rectify the defective work and claim damages against the builder. Where defects are discovered during the progress of the works, standard form contracts typically provide a process by which the builder can be directed to rectify the work.

502. This passage was recently referred to approvingly by Rees J in Schmuelly v Elrob Construction Group Pty Ltd (No 3) [2025] NSWSC 118 at [91].

503. Similarly, Halsbury’s Law of Australia, 65 – Building and Construction at [65-1495] states (emphasis added):

The primary obligation of the contractor is to deliver up the work free of defective work upon final completion. In a building project, work is defective where it fails to comply with the requirements of the building contract [including implied requirements and those requirements which are incorporated by reference in the building contract, and work that is ancillary to that expressly or impliedly required], notwithstanding that the contractor is not guilty of any personal fault in providing such work. Whether in a given case work may properly be described as defective turns on an examination of the terms of the contract. Where the contract specifications or drawings, if fairly construed and implemented, produce work which is in some way inadequate for the intended purpose, the work is not defective, for a term will not ordinarily be implied in a contract that the contractor must check for and detect faults in the design.

504. An owner must give a builder a reasonable opportunity to rectify any defects. As Ball J (as his Honour then was) explained in Owners – Strata Plan No 76674 v Di Blasio Constructions Pty Ltd [2014] NSWSC 1067 at [44]:

In the case of building contracts, it is also generally accepted that the owner must give the builder a reasonable opportunity to rectify any defects. Often, of course, the building contract itself requires the owner to repair defects or sets out a procedure by which defects are to be made good … But, even if it does not, the owner is required to give the builder an opportunity to minimise the damages it must pay by rectifying the defects, except where its refusal to give the builder that opportunity is reasonable or where the builder has repudiated the contract by refusing to conduct any repairs …That obligation may be an aspect of the duty to mitigate, since it may be less expensive for the builder rather than a third party to rectify the defects, particularly if the builder is still on site. But the obligation is not simply an aspect of the duty to mitigate. The cost to the builder of undertaking the repairs is likely to be less than the amount that a third party would charge the owner for the same work. In that case, the owner is not mitigating its loss, but rather the builder’s damages.

505. A building contract may also set out an agreed procedure by which defects are to be made good. In the present case, such a procedure is contained in cl 22 of the Building Contracts, the terms of which are set out at [489] above.

506. In view of the timing of the termination of the Building Contracts and the dispute between Cadence and Aspire as to whether Practical Completion had in fact been achieved, it is difficult to see how cl 22 was engaged. It is unnecessary, however, to resolve that issue in circumstances where, independently of cl 22, the common law obliged Cadence to give Aspire a reasonable opportunity to rectify any defects, as was the case in Schmuelly. As Rees J explained there at [92] (emphasis added):

The building contract did provide for a defects liability period, during which the plaintiff could list any defects and the builder was obliged to fix the defects. As events unfolded, however, the parties never got to that stage of the contractual regime. So far as the contemporaneous records reveal, the builder was amenable to addressing any problems identified by the plaintiff. When the plaintiff complained about defects, the builder offered to fix them: see [55]. But as matters presently stand, the building work does contain defects. Such defects are a breach of contract, entitling the plaintiff to damages.

507. Cadence’s expert, Mr Crosby, opined that incomplete work is “a defect under the Building Contracts because the partially completed work had not achieved the contractual standard” (emphasis added). In the joint conclave, he added that this is especially so “if [incomplete work has] been invoiced for as completed works”.

508. Aspire and Mr Kearns’ expert, Mr Nikolas, opined that “defective work relates to work completed in full with a defect” and that “work that still needs to be completed under the Contract, i.e., incomplete work, is not defined as defective work”. He disagreed with Mr Crosby’s definition because of the circumstances in which the Building Contracts had been initially suspended by Aspire and then subsequently terminated, resulting in Aspire not being able to complete the outstanding work items. Mr Nikolas opined that “[defective work] is typically faulty or not as its intended purpose or use is not fulfilled, hasn’t been completed to the requirements”. I agree.

509. There seems to be little authority on the distinction between incomplete work and defective work. The parties did not draw the Court’s attention to any authority. The distinction is discussed, however, in Betta Build Group Pty Ltd v El Baba [2019] NSWDC 331. There, it was common ground that “[t]he distinction between work that was only ‘incomplete’ and work that was ‘defective’ was material … because unless a finding was made that there was ‘a defect’, the home owner was not entitled to recover compensation”: at [198]. Abadee DCJ went on to observe at [203]-[204]:

An important difference between Mr Shilson-Josling and Mr Coombes [i.e. the two experts] was the latter’s contrast of work that was ‘defective’ and that which was ‘incomplete’ … I do not accept that in circumstances where a property under construction has been left by a builder, at a point where the builder’s services are terminated prior to completion of the construction contract, in a state that prima facie does not comply with specifications or plans, or otherwise indicates a want of care and skill, [the] label of ‘incomplete(ness)’ can be applied to the work if it is in reality defective …

Whether work is ‘defective’ or merely ‘incomplete’ is a question of fact. There is little assistance in the authorities, or to be gained from the authorities, because the circumstances will widely differ in every case …

510. Item 230 relates to slurry splatter on cobblestones at the Main House. I accept that the work was incomplete. I also find, however, that Cadence did not give Aspire a reasonable opportunity to complete the works as it was required to do at common law even if cl 22 was not engaged. Aspire offered to attend to the matter but then discovered that Cadence had itself arranged for the original sub-contractor, MLT1 Australia, to rectify the work.

511. Accordingly, I reject Cadence’s claim in respect of item 230.

512. For completeness, I consider that the rectification costs in respect of item 230 are also unclear and uncertain. The updated Scott Schedule groups together items 75, 230 and 240 and provides an amount of $57,218.77, which reflects Mr Daubney’s evidence. The difficulty, however, is that figure relates to item 75 (concrete slurry on cobblestones at Tourist Cabin), item 230 (slurry splatter on cobblestones at Main House) and item 240 (defective finish to crazy pave entry control joint at Main House). The evidence does not clearly identify the cost of rectification in respect of item 230 alone. In those circumstances, if I had upheld Cadence’s claim in respect of item 230, I would have adopted Mr Kearns’ estimate of $387.20 (see at [499] above).

(iv) Roof ventilation & leaks ($51,537)

513. Cadence’s claims and Aspire’s response in respect of these items are outlined at [149]-[157] in Part F above.

514. It is convenient first to deal with the issue of leaks. Mr Cronin’s evidence regarding this subject is corroborated by Mr Crosby’s Supplementary Report, where he opined that the defective works causing the leaks were non-compliant with the National Construction Code. I accept that evidence.

515. As Cadence emphasised, Mr Nikolas did not give any evidence disputing these matters, nor did Aspire adduce any evidence contradicting Mr Crosby’s estimate of the rectification costs, being in total $21,060.40 (including contingency fees, preliminaries, overhead and profit and GST).

516. As noted above, Aspire contended that the issue of roof leaks was not raised in the conclave or at trial because it described the claim as lacking basic scrutiny. I do not accept those submissions. In fact, the issue was raised at trial and was explicitly addressed in Cadence’s opening written submissions at [4.2.4]. The Court was not taken to any evidence which contradicts Mr Crosby’s evidence that the work was defective or to his estimate of the costs of rectification. I find that Aspire is liable to pay Cadence damages in the amount of $21,060.40.

517. I find, however, that Cadence is not entitled to recover the costs of rectification for installing new eaves or vents. I accept Dr Kivi’s evidence given in his First Report dated 1 November 2024 that it was “a major error” to install new eaves because, although this would improve cooling, it would “reduce passive heating and increase active heating demand and electricity demand in the cold seasons when solar PV power is scare”. In his opening address, Mr Lyons properly acknowledged that Dr Kivi believed that the installation of roof eaves and vents was “a significant mistake”.

(v) Microcement ($48,239)

518. Cadence’s claims in respect of these items, together with Aspire’s response, are described at [158]-[166] of Part F above.

519. As noted above, Cadence requires leave to raise items 22, 23, 24, 33, 97, 246, 264 and 265, which were previously abandoned. Aspire opposed leave being granted on the basis that it would be prejudiced because the items which were previously abandoned were not then pursued by Mr Kearns in cross-examination. I accept that submission. I refuse Cadence leave to revive the abandoned items.

520. The remaining items concerning microcement are items 11, 103, 111, 114, 116, 267, 269, 273, 274, 276 and 278.

521. I understand that resolution of these items turns on the distinction between incomplete works and defective works. The distinction is discussed at [500]ff above, where it is noted that the experts, Mr Crosby and Mr Nikolas, took different views regarding the meaning of those concepts.

522. Having regard to the discussion above of that distinction, I consider that the remaining items the subject of claims regarding microcement were incomplete but not defective works. That is essentially because Aspire was not given an adequate opportunity to complete the relevant work as required under common law. I accept Mr Kearns’ evidence that he directed Aspire’s sub-contractor AVP, to finish the microcementing but Cadence did not allow that work to proceed and instead it engaged another contractor to do the work (see [166] of the Part F above).

523. There is an additional difficulty with Cadence’s claims. It relates to the fact that its total claim in relation to microcement items was said to be $48,239. It appears that that figure included the items which Cadence then abandoned and unsuccessfully sought leave to revive. Accordingly, if Cadence had enjoyed some success with any of the remaining items concerning microcement, it is difficult to see how the Court could arrive at any meaningful quantum of damages given the state of the evidence and Cadence’s onus.

(vi) General power outlets (GPOs) ($16,127.58)

524. Cadence’s claims in respect of these items, together with Aspire’s response, are summarised at [167]-[170] in Part F above.

525. Cadence has failed to discharge its onus in respect of its claim regarding GPOs. I accept Aspire’s submission that the location and types of GPOs were changed as a result of a variation and there is no defect. As noted above, Mr Crosby confirmed under cross-examination that he had been told there was a variation relating to the location of the GPOs, but he had not seen any such variation in writing.

(vii) Cracked highlight glass windows ($15,591.73)

526. Cadence’s claims in respect of this subject, together with Aspire’s response, are summarised at [171]-[173] in Part F above.

527. As noted above, Aspire and Mr Kearns accepted that the cracked highlight glass windows amounted to a defect, but they sought to reduce their liability to an amount of $7,500 because they submitted that the claimed amount of $15,591.73 was excessive and inflated. The difficulty with this response is that it is not supported by any cogent evidence which contradicts the evidence adduced by Cadence.

528. In these circumstances, I find that Aspire is liable to pay Cadence damages in the amount of $15,591.73 for this item.

(viii) Exposed pipes & cables ($7,267)

529. As noted above, Cadence did not press this claim.

(ix) Gutter ($6,926.81)

530. As noted above, Cadence did not press this claim.

(x) Roof dektites and vents ($6,102)

531. As noted at [177] above, Aspire accepted liability in the amount of $6,102.

(xi) DBP Act claim

532. Cadence’s claims against Aspire and Mr Kearns in respect of this matter, together with their response, are summarised at [178]-[179] in Part F above.

533. Cadence has failed to adduce evidence to support its claims relying on alleged breaches of the DBP Act by Aspire or Mr Kearns. I do not consider that Mr Crosby’s evidence to the effect that Aspire and Mr Kearns should have supervised the relevant works more carefully suffices in this regard. There is no specific evidence connecting any particular breach of duty to individual building defects.

534. As noted above, Mr Kearns has candidly accepted liability in respect of some of the general building defects claim but that does not mean that liability necessarily follows under the DBP Act. That is because Mr Kearns’ admissions go to the fact of the existence of relevant defects and do not extend to any concession regarding breach of duty under the DBP Act.

(h) The overpayment claim

22. Did Aspire have an accrued right to the insurance premiums at the time of termination?

23. Which of the balance of the monies the subject of the claim are of the kind prohibited by Special Condition 13?

535. I have addressed and answered these issues in Part G above.

(i) The cross-claim

24. Is Aspire prohibited from recovering the sum claimed by reason of it contracting with Univenta in contravention of s. 4 of the Home Building Act?

25. If not, what of the monies claimed are subject to Special Condition 13?

536. I have addressed and answered these issues in Part H above.

PART J: CONCLUSION

537. I will direct the parties to seek to agree short minutes of order which give effect to these reasons, including drawing attention to any arithmetical corrections to monetary figures to take into account, for example, GST.

538. To assist this task, my broad conclusions regarding the amended summons and the amended cross-summons are as follows:

(a) Amended summons

(i) First defendant to pay the plaintiff:

(a) $10,000 for the cost of removing landslide debris: see at [460] above.

(ii) First defendant to pay the plaintiff:

(a) $18,534.25 for the costs of rectifying the internal doors in the Tourist Cabin: see at [471] above. (b) $21,060.40 for the costs of rectifying the roof ventilation and leaks: see at [516] above. (c) $15,591.73 for the costs of rectifying the cracked highlight glass windows: see at [528] above. (d) $6,102 for the costs of rectifying the roof dektites and vents: see at [177] and [531] above.

(iii) Amended summons is otherwise dismissed.

(b) Amended cross-summons

(i) Cross-defendant to pay the cross-claimant $141,879.96 plus GST: see [248] above. (ii) Amended cross-summons is otherwise dismissed.

539. The parties should also seek to agree costs. With a view to minimising further costs and to assist the parties, my preliminary views on costs are as follows:

(a) The plaintiff should pay 90% of the costs of the first and third defendants, which reflects its failure to make good most of its claims and its abandonment of many items. (b) The plaintiff to pay the costs of the second and fourth defendants which reflects the rejection of all of its claims against those defendants. (c) Cross-respondent to pay 50% of the costs of the cross-claimant’s costs of the amended cross-summons, broadly reflecting the outcome of the cross-claim.

540. If the parties are unable to agree short minutes of order within 21 days hereof, within that time, each should file and serve their individual proposed short minutes of order together with a brief written submission not exceeding 5 pages and any supporting evidence.

541. It is proposed that final orders will be made on the papers and without a further oral hearing unless a party provides good reasons why there should be a further oral hearing.

542. There will be a grant of liberty to apply on giving 48 hours’ notice.

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Amendments

08 April 2026

[29]: replace "cooler" with "hotter" in sentence beginning with "The obverse occurs" [39]: delete "the" after "the scenario adopted" [335]: replace "be" with "being" [356]: replace "simply not" with "not simply" [471]: replace "and Mr Kearns are" with "is" [528]: replace "and Mr Kearns are" with "is" [531]: delete "and Mr Kearns" [538(a)(ii)]: replace "and third defendants" with "defendant"

23 April 2026

Amend cover sheet