Carr v Miller

Supreme Court of NSW|2018-09-20|Before: McDougall J, Dr CJ

Solicitors: Watson & Watson (Plaintiff) Carneys Lawyers (First and Second Defendants) Kemp Strang (Third Defendant) File Number(s): 2014/165881

Judgment

HIS HONOUR: The third defendant (Mr Pascali) was the proprietor of a waterfront residence at Seaforth. He arranged with his son in law, the second defendant (Mr Nowytarger), to undertake a very extensive redevelopment, purportedly in accordance with plans and specifications approved by Manly Council. When those works were substantially complete, Mr Pascali agreed to sell the property to the plaintiff (Mrs Carr). The contract was dated 7 June 2012, and called for completion within 120 days from that date.
In these proceedings, Mrs Carr says that she was deceived into completing the contract by the provision of what she claims to have been false certificates as to compliance with the conditions of the development consent, and as to applicable Home Warranty Insurance (HWI) required by s 92 of the Home Building Act 1989 (NSW) (the HB Act). Mrs Carr says that, but for the provision of those allegedly false certificates, she would not have completed the purchase. She quantifies her loss as the difference between the purchase price paid ($8.55 million) and what she says was the true value of the property at the relevant time ($5.325 million).
Mrs Carr says that the building work done by or at the direction of Mr Nowytarger was riddled with defects. It is her case that the substantial difference between the price she paid and the true value of the property reflects the impact of those defects and the cost of their rectification on a proper assessment of market value.

The parties

Mrs Carr and her husband Mr Ian Carr owned a residence at West Pennant Hills. They refurbished that residence extensively. However, for personal reasons, they decided to move. They sought a property with access to the water. They found Mr Pascali's property, which they say was marketed to them as being a new dwelling. Mr Carr handled the negotiations and the instructions to their solicitor, Mr Bryan Thomas.
The first defendant (Mr Miller) is a builder. Prior to the renovation of the property, he had undertaken building work for or in association with Mr Nowytarger. A Mr Monte Taylor worked on some of those projects as a contractor to Mr Miller or to Mr Nowytarger (the evidence is imprecise).
Mr Miller is involved because he signed three contracts, under each of which he undertook to perform residential building work (for the purposes of the HB Act) on the Seaforth property for Mr Nowytarger as "owner", for varying amounts of cover. Mr Miller obtained HWI in the sum of $170,000 before the first of those contracts was signed.
In September 2012, when the time for settlement of the contract for sale was approaching and Mrs Carr was pressing for evidence of, among other things, appropriate HWI, Mr Miller colluded with Mr Nowytarger to obtain further HWI cover. Two further HWI certificates, evidencing cover in the amount of $170,000 and $450,000 respectively, were issued on 14 September 2012.
Mr Nowytarger is, as I have noted, the son in law of Mr Pascali. Mr Nowytarger and his wife Ms Simone Pascali-Nowytarger are cross-defendants to a cross-claim brought by Mr Pascali for contribution to or indemnity in respect of any amount that Mrs Carr may recover by way of a judgment against Mr Pascali. That cross-claim arises out of a Family Relationship Deed made (relevantly) between the three of them on 2 October 2012.
Mr Nowytarger had worked as a property developer, concentrating on the Northern Beaches region of Sydney. It is clear that he was experienced in building and construction matters. However, he was not a licensed builder.
Mr Pascali entrusted Mr Nowytarger with the renovation ("reconstruction" is a better word) of the Seaforth property, and effectively authorised Mr Nowytarger to do what was necessary to have the residence rebuilt to an extremely high standard, appropriate to its waterfront location and sweeping views of Middle Harbour. Mr Pascali was not a licensed builder. Nor did he obtain an owner-builder permit [1] . And, perhaps a fortiori because he was not the owner of the property, neither did Mr Nowytarger.

The issues

I set out the statement of issues produced by the parties. As is apparent from that document, there is a contest as to whether some of the issues arise. All footnotes and comments are from the original. Claim against Mr Pascali for breach of contract 1 On its proper construction, does Special Condition 16 (SC16) require Mr Pascali to deliver evidence satisfactory to Mrs Carr acting reasonably that all building works undertaken on the property in the 6 years preceding 7 June 2012, excepting building works the subject of Special Condition 15 (SC15), (building works): (a) have been completed in accordance with the requirements of Manly Council; and (b) are covered by a current home warranty insurance policy in respect of the whole of the building works? 2 Did Mr Pascali breach SC16? In particular: (a) would the occupation certificates dated 15 August 2012 and 18 September 2012 (Occupation Certificates) have satisfied Mrs Carr acting reasonably that the building works had been completed in accordance with the requirements of Manly Council? [2] (b) did the evidence delivered by Mr Pascali satisfy Mrs Carr that the building works have been completed in accordance with the requirements of Manly Council and are covered by a current home warranty insurance policy in respect of the whole of the building works? (c) was SC16 satisfied or discharged by Mrs Carr's completion of the contract on 26 September 2016? Paragraphs 1 & 2: The Plaintiff accepts that paragraphs 1 and 2 are issues, however she maintains that the contractual obligations imposed by Special Condition 16 were more extensive than the Third Defendant contends. In particular, they were contractual obligations to: i. Complete the works in accordance with the Manly Council condition. ii. Have Home Warranty Insurance in regard to all the works. iii. That if the certificates were provided, those certificates warranted that the works had been completed in accordance with the requirements, and that all the works were covered by Home Warranty Insurance. iv. The obligations under Special Condition 16 did not merge on completion, and were not discharged simply because Mrs Carr accepted the certificates profit and settled. 3 What loss or damage did Mrs Carr from any breach of SC16? In particular [3] : (a) did Mrs Carr lose another opportunity and, if so, what was its value? (b) is the difference between the purchase price and the value of the property claimable as damages and, if so, what is the value? (c) what is the cost of obtaining the certificates required by SC16 [4] and, if they could not be obtained what are the damages for failure to obtain them? (d) is the cost of remedying the defects set out in paragraph 76 of the FASC claimable as damages and, if so, what is that cost? Paragraph 3: It is accepted that these are issues in dispute. Deceit claim against Mr Pascali 4 Did Mr Pascali make the following implied representations (Insurance Representations) [5] by providing Mrs Carr with two Home Warranty Insurance Certificates dated 14 September 2012 (HWI Certificates) on or about 19 September 2012 [6] : (a) all of the work undertaken within the last 6 years in respect of residential building for the construction of the home had been undertaken by Mr Miller? (b) all of the residential building work was the subject of home warranty insurance? (c) the home warranty insurance had been obtained without deception and would not give rise to any entitlement to avoid the policy? (d) the residential building work had been undertaken by a licensed builder? (e) by provision of the HWI Certificates, Mr Pascali had complied with SC16? Paragraph 4: In regard to paragraph 4, the representations made by Mr Pascali were not merely implied representations but express representations or implied in the alternative. Further, Mr Pascali obtained the certificates by his agent Mr Nowytarger in circumstances where Mr Nowytarger misled the brokers and insurers (further Amended Statement of Claim paragraph 22), and the deceit extends to those steps taken by Mr Nowytarger as Mr Pascali's agent to obtain the certificates through deceiving the insurer. 5 Were the Insurance Representations false [7] ? In particular [8] : (a) were the HWI Certificates obtained in circumstances of deception by Mr Miller and Mr Nowytarger [9] that give rise to an entitlement to avoid the policies? (b) was the residential building work undertaken by a licensed builder [10] ? (c) did Mr Pascali comply with SC16? Paragraph 5: The Plaintiff accepts that these are issues in dispute. 6 Did Mr Pascali know the Insurance Representations were false or was he recklessly indifferent to them being true [11] ? In particular: (a) did Mr Pascali personally know any of the Insurance Representations were false? (b) was Mr Pascali recklessly indifferent to any of the Insurance Representations being true? (c) is Mr Pascali taken to have the same knowledge as Mr Nowytarger concerning the truth or falsity of the Insurance Representations? (d) did Mr Nowytarger know any of the Insurance Representations were false or was he recklessly indifferent to their truth [12] ? Paragraph 6: The Plaintiff accepts that paragraph 6 represents issues in dispute, and that 6(c) raises the issue of whether Mr Pascali is vicariously liable for the deceit of Mr Nowytarger. 7 Did Mr Pascali make the Insurance Representations intending that Mrs Carr be deceived by them [13] , including because Mr Nowytarger intended to deceive Mrs Carr? Paragraph 7: The Plaintiff does not contend that Mr Pascali personally had the intention of deceiving Mrs Carr, but asserts that he is nevertheless liable for the deceit of Mr Nowytarger. 8 Was Mrs Carr induced by the Insurance Representations to complete the contract on 26 September 2012 [14] ? Paragraph 8: Mrs Carr gave evidence that she was induced by the insurance representations. The Plaintiff is not aware of any challenge to that evidence. 9 By tendering the Occupation Certificates on or about 19 September 2012 [15] , did Mr Pascali make the following express or implied representations (Development Representations) [16] : (a) the house was complete and had been constructed in a proper and workmanlike manner, by a licensed builder, except for the incomplete or defective work identified in the contract and the 20 September 2012 email? (b) the house had been constructed in accordance with the Manly Council DA and the construction certificate issued on or about 26 October 2010? 10 Were the Development Representations false [17] ? Paragraphs 9 & 10: The Plaintiff accepts that these are issues in dispute. 11 Did Mr Pascali know the Development Representations were false or was he recklessly indifferent to them being true [18] ? In particular: (a) did Mr Pascali personally know any of the Development Representations were false? (b) was Mr Pascali recklessly indifferent to any of the Development Representations being true? (c) is Mr Pascali taken to have the same knowledge as Mr Nowytarger concerning the truth or falsity of the Development Representations? (d) did Mr Nowytarger know any of the Development Representations were false or was he recklessly indifferent to their truth [19] ? 12 Did Mr Pascali make the Development Representations intending that Mrs Carr be deceived by them [20] , including because Mr Nowytarger intended to deceive Mrs Carr? Paragraphs 11 & 12: The Plaintiff does not contend that Mr Pascali intended to deceive Mrs Carr, and says that he is liable in deceit through his agent Mr Nowytarger. 13 Was Mrs Carr induced by the Development Representations to complete the contract on 26 September 2012 [21] ? Paragraph 13: Mrs Carr gave sworn evidence that she was induced by the development representations, and the Plaintiff is not aware of any challenge to that evidence. 14 What loss or damage did Mrs Carr from any deceit of Mr Pascali? In particular [22] : (a) did Mrs Carr lose another opportunity and, if so, what was its value? (b) if Mrs Carr claims damages for fraud on the basis of the difference between the purchase price and the value of the property, what is her loss? In particular: (i) is the correct date to make this comparison 7 June 2012 or 26 September 2012? (ii) are all the defects found after completion of the contract, or those defects that would have been covered by home warranty insurance, subsequent events that may be taken into account to determine the true or real value? (iii) should the cost of defects known prior to the end of the cooling off period be deducted from the purchase price to determine true or real value? (iv) should an amount on top of the cost of rectifying defects be included for the risk of further defects and cost blowouts and, if so, how much? (v) what is the true or real value of the property at the correct date? (vi) should Mrs Carr have to account for the value of any statutory warranties that she received the benefit of under s18D(1) of the Home Building Act? (vii) for what work (if any) was the subject of statutory warranties owed to Mrs Carr? (viii) what is the value of those warranties, including any insurance for them? (ix) in what amount should Mrs Carr have to account for the contractual rights she obtained under the contract of sale and the contract in the 20 September 2012 email? (c) is the cost of obtaining the certificates claimable as damages and, if so, what is the cost of obtaining the certificates required by SC16? (d) is the cost of remedying the defects set out in paragraph 76 of the FASC claimable as damages and, if so, what is that cost? Paragraph 14: The Plaintiff accepts that these are all issues in regard to the claim in deceit against Mr Pascali. Deceit claim against Mr Nowytarger 15 By providing the Occupation Certificates and the HWI Certificates to Mr Pascali to be provided to Mrs Carr, did Mr Nowytarger [23] expressly or impliedly make to Mrs Carr: (a) the Insurance Representations? (b) the Development Representations? 16 Were the Insurance Representations or the Development Representations false [24] ? 17 Did Mr Nowytarger know the following representations were false or was he recklessly indifferent to them being true: (a) the Insurance Representations [25] ? (b) the Development Representations [26] ? 18 Did Mr Nowtarger make the Insurance Representations or the Development Representations with the intention that Mrs Carr be deceived by them [27] ? Paragraph 18: The Plaintiff accepts that paragraph 15, 16, 17 and 18 are issues in dispute. 19 Was Mrs Carr induced by the Insurance Representations or the Development Representations to complete the contract on 26 September 2012 [28] ? Paragraph 19: Mrs Carr gave sworn evidence that she was induced by the insurance representations, and is not aware of any challenge to that evidence. 20 What loss or damage did Mrs Carr from any deceit of Mr Pascali? Paragraph 20: The Plaintiff assumes that this should have been a reference to the decit of Mr Nowytarger. Negligence claim against Mr Pascali 21 Did Mr Pascali owe Mrs Carr a duty of care to avoid foreseeable economic loss by ensuring the delivery of the HWI Certificates and the Occupation Certificates did not misrepresent the circumstances of their issue so that she was induced into believing each of the certificates [29] ? 22 Did Mr Pascali breach any such duty of care [30] (if any)? In particular: (a) was he in breach of duty if he did not establish a right to home warranty insurance for all residential building work completed in the last 6 years? (b) was he in breach of duty if he did not, and did he, establish that the home had been built in accordance with the Manly Council DA or the CC? 23 What loss or damage did Mrs Carr suffer by the alleged breach of duty of care [31] ? 24 What amount (if any) should any damages award be reduced because Mrs Carr failed to take reasonable care of her own interests in assessing and considering the HWI Certificates, the Occupation Certificates, the Insurance Representations and the Development Representations and in failing to rescind the contract [32] ? 25 Are any of the following concurrent wrongdoers and, if so, how much should Mr Pascali's liability (if any) be reduced because of their responsibility [33] : (a) Mr Nowytarger? (b) Mr Miller? (c) NSW Self Insurance Corporation, which issued the HWI Certificates by its agent Calliden Insurance Ltd? (d) Calliden Insurance Ltd, which issued the HWI Certificates as agent for and on behalf of NSW Self Insurance Corporation? (e) MT Law Group Pty Ltd, who acted for Mrs Carr on the Contract for Sale? Paragraphs 21 to 25: The Plaintiff accepts that each of the matters in paragraphs 21 to 25 are issues in dispute. The Plaintiff is uncertain what evidence, if any, will be relied upon by the Third Defendant in regard to the issues in regard to paragraph 25. Breach of statutory warranties claim against Mr Miller 26 What work is the subject of the warranties in s18B of the Home Building Act 1989 by Mr Miller? In particular: (a) what work was the subject of the agreement made on or about 28 September 2010 (Agreement) [34] ? (b) what work was the subject of the two contracts executed in 2012 and provided to Brookvale Insurance Brokers on about 3 September 2012 [35] ? (c) what work (if any) is the subject of the estoppel alleged against Mr Miller [36] ? 27 What work was done in breach of the warranties given by Mr Miller [37] ? 28 What loss and damage did Mrs Carr suffer by Mr Miller's breach of statutory warranties [38] ? Breach of statutory warranties claim against Mr Nowytarger 29 What residential building work (if any) did Mr Nowytarger undertake [39] ? 30 Did Mr Nowytarger give the warranties in s18B of the Home Building Act for such work? 31 What work was done in breach of the warranties given by Mr Nowytarger [40] ? 32 What loss and damage did Mrs Carr suffer by Mr Nowytarger's breach of statutory warranties [41] ? Paragraphs 26 to 32: The Plaintiff accepts that the matters in paragraphs 26 to 32 are issues in dispute. Breach of statutory warranties claims against Mr Pascali 33 What residential building work (if any) did Mr Pascali undertake and does that work include work undertaken by Mr Nowytarger [42] ? 34 Did Mr Pascali give any of the warranties in s18B of the Home Building Act for such work as an owner-builder [43] ? 35 What work was done in breach of the warranties given by Mr Pascali [44] ? 36 What loss and damage did Mrs Carr suffer by Mr Pascali's breach of statutory warranties [45] ? Paragraph 36: The Plaintiff will further contend that it is an issue that the reference to owner/builder in s. 18C of the Home Building Act must be read purposively, and include an owner/builder who does not hold an owner/builder permit. Contract claim against Mr Nowytarger 37 Did Mr Nowytarger breach the contract evidenced by SC15 and the 20 September 2012 email by failing to complete those works [46] ? 38 What loss and damage did Mrs Carr suffer by any such breach [47] ? Paragraphs 37 & 38: The Plaintiff accepts that the matters in paragraphs 37 and 38 are issues in dispute. Mr Pascali's cross claim against Mr Nowytarger and Simone Nowytarger 39 On the proper construction of clause 5.1(d) of the Family Relationship Deed [48] does the indemnity extend to any liability of Mr Pascali to Mrs Carr: (a) for any claims made by Mrs Carr as purchaser of the property, whether or not they relate to the buildings works? (b) for the following claims on the basis that they relate to building works conducted at the property in the 7 years before 2 October 2012: (i) breach of SC16? (ii) deceit? (iii) negligence? (iv) Mrs Carr's costs? 40 Should the Court refuse to enforce the indemnity for Mrs Carr's deceit claim? 41 If Mr Pascali is liable to Mrs Carr because of the acts and/or knowledge of Mr Nowytarger as his agent, is Mr Nowytarger liable to Mr Pascali [49] : (a) for breach of authority as Mr Pascali's agent? (b) for breach of fiduciary duty as Mr Pascali's agent?

The witnesses

All those whom I have named gave evidence. So too did a number of other witnesses of fact, including (for Mrs Carr) various tradesmen who had carried out what was said to be the rectification of defective work.
There was no sustained attack on the credibility of Mrs Carr, nor for that matter on the credibility of Mr Carr. In general, and subject to the influence of self-interest and the imperfection of human memory (as to each of which, the observations made by McClelland CJ in Eq in Watson v Foxman [50] are apposite, although there is no need to set them out), I think that each of them sought to tell the truth.
There is however one matter of concern. Mrs Carr in particular asserted that the residence had been marketed as new, and represented to be new, and that she contracted on the basis of this belief. She produced a marketing brochure which did indeed, in one place, describe the property as "new". However, there was other evidence, including of a valuation given to Mrs Carr before exchange of contracts [51] , which indicated that the residence, although extensively renovated and reconstructed, was not wholly new.
Mr Miller was a most unimpressive witness. He signed (as did Mr Nowytarger) a letter dated 8 September 2012 addressed to an insurance broker, in connection with the belated application for HWI (or further HWI). That letter stated, falsely, that Mr Miller had started the work on a certain basis, that he thereafter completed it on another basis, and that he "has completed all the building works [he was] engaged to do" [52] . The document was egregiously misleading, and intentionally so. It was signed and proffered with the intention of obtaining retrospective HWI cover. In my view, Mr Miller must have known that those statements in the letter were false [53] .
So, too, in my view, Mr Miller's evidence that he had undertaken the building work in question was false. He did not do any of the work himself, apart from a few odd jobs and some defects rectification. He claimed that he had "undertaken" the work because he had supervised Mr Taylor, who had done some of the work for Mr Nowytarger (see at [99] - [109] below).
When, Mr Taylor did that work, he was neither an employee of nor a contractor to Mr Miller. There is no way that Mr Miller could have had any responsibility for the work in question. His evidence of supervision was uncorroborated by any acceptable evidence [54] , and upon investigation proved to be baseless. In my view, that evidence was falsely given, in an attempt to provide some justification for the fraudulently obtained (as I find it was) further HWI certificate.
I accept that considerations of demeanour provide at best an uncertain guide to veracity. I have tried to put aside, as best I can, my extremely unfavourable impression of Mr Miller's demeanour in the witness box. Even without those impressions, his evidence was totally unimpressive.
I do not regard Mr Miller as a witness of truth. I am not prepared to accept his evidence on any contested issue of fact unless it is against self-interest, or is corroborated by other, acceptable, evidence, or is consistent with the probabilities viewed objectively.
Much the same may be said, and for much the same reasons, about Mr Nowytarger. He colluded in the preparation, signature and dispatch of the letter, containing false representations of fact, to which I referred at [16] above. Indeed, I think, Mr Nowytarger was the architect of the falsity, because he realised the importance of procuring a further HWI certificate. In this context, it is by no means immaterial that his wife Ms Pascali-Nowytarger was to obtain a very substantial benefit, by way of a payment of $4.17 million out of the proceeds of sale, upon settlement. I think that Mr Nowytarger was prepared to do all that he could, including making false written representations, to procure the necessary HWI certificate, to facilitate settlement and ensure payment of that sum to his wife.
Mr Nowytarger's attempts to maintain in cross-examination the fiction that Mr Miller had acted as builder, because he had supervised Mr Taylor's performance of the work, were totally unpersuasive. In my view, they were false, knowingly so, and put forward as evidence for the purpose of advancing Mr Nowytarger's and his wife's interests.
Again, I have tried to put out of mind Mr Nowytarger's unimpressive demeanour in the witness box. The conclusions that I have just expressed, and my view of the acceptability of his evidence, are based, as best can be done, upon the realities of his testimony considered in conjunction with relevant documents and the facts as they appear objectively from all the circumstances of the case.
I am not prepared to accept Mr Nowytarger's evidence on any disputed question of fact unless it is against interest, or is corroborated by other, acceptable, evidence, or is consistent with the probabilities, regarded objectively. I should make it clear that I do not regard Mr Miller's evidence as having corroborative value. Nor do I accept that Mr Nowytarger's evidence provides acceptable corroboration for Mr Miller's.
Ms Pascali-Nowytarger gave evidence. There was no real attack on her credibility. I accept that she was seeking to do her best to tell the truth, but add that, again, the passage of time and perceptions of self-interest must have influenced her testimony, even if unconsciously.
There was no attack made on Mr Pascali's credibility. In particular, it was not suggested he was in any way responsible for, or associated with (except, according to Mrs Carr, vicariously, or by delegation), the fraudulent acts perpetrated by his son in law.
Of the remaining witnesses of fact, only Mr Thomas was cross-examined. No real attack was made on his credibility. I accept that he sought to tell the truth to the best of his ability.
Where the other witnesses of fact were not cross-examined, I accept their evidence, so far as it goes.
There were several experts called. For the most part, no question of credibility (in the sense that I have been discussing the credibility of the witnesses of fact) arises. There is however an important exception, in the case of Mr Andrew Daniels. Mr Daniels is a building consultant, retained on behalf of Mrs Carr. He swore four affidavits, to which he exhibited a large number of reports and a substantial quantity of other material.
Mr Daniels was first retained in 2013. Part of his retainer was to provide expert evidence in support of Mrs Carr's defects claim. As the rectification works progressed, Mr Daniels appears to have been asked to comment upon the defects (in some cases, on the basis of reports supplied by the tradesman who did the rectification work) and to verify the cost of rectification.
It became apparent, in the course of Mr Daniel's cross-examination, that he had become identified with the cause of Mrs Carr. In my view, that has had an adverse impact on the independence and integrity of his evidence. In particular, in the course of cross-examination, Mr Daniels said in effect that: 1. at the time the rectification work was done, it was contemplated that there would be a claim made to recover the cost of rectification [55] (it was for this reason, among others, that I ruled that reports of defects observed and work done by the rectifying builder, Mr Glen Maddrell, or tradesman engaged by him, were not business records, and were thus inadmissible in the absence of verification); 2. he assessed the reasonable value of work done on the basis that if Mrs Carr had paid for an invoice, he assumed that it related to rectification work [56] ; and 3. his assessment of whether work ought to be regarded as relating to the rectification of defects took into account not only the quality of the work actually done (by or for Mr Nowytarger) but also whether, in some cases at least, the supposed rectification work was to be done to bring the property into compliance with Mrs Carr's expectations, at the time of purchase, of what she was to receive [57] . Mr Daniels said indeed that "I'm not there to judge - I'm not there to really judge the responsibility of the work. I only judge the work" [58] .
I take from this last aspect of Mr Daniels' evidence that he did not, in all cases, come to a view that the work undertaken by the rectifying builder was necessary to make good defective work existing at the time of settlement of the purchase. That bears directly on the hotly disputed questions relating to rectification and its cost.
In my view, Mr Daniels has become, to a real extent, an advocate for Mrs Carr, rather than an independent expert witness owing his primary duty to the court. In reaching that conclusion, I take into account not only the matters that I have mentioned but also Mr Daniels' marked tendency to give non-responsive answers to questions, or to add non-responsive follow-ups to otherwise responsive answers.
I add that whilst there was a concurrent evidence session (Mr Bruce Hall, an expert retained for Mr Pascali, gave evidence on a relatively small number of the defects on which Mr Daniels had commented, and to the extent that their evidence overlapped, they gave evidence concurrently), this feature of Mr Daniels' evidence was relatively restrained. His tendency to give non-responsive answers, or to volunteer non-responsive material, increased very markedly once the concurrent evidence session finished.
In all the circumstances, I do not regard Mr Daniels' evidence as being particularly convincing. I do not think that it can be accepted uncritically, even where it is not controverted. On the contrary, I think, to accept it uncritically would result in both an over-estimate of the amount of defective work for which any of the defendants could possibly be regarded as liable, and a very substantial over-estimate of the cost of rectification.

The court book

The usual order for hearing [59] was made. Among other things, that order required the production of a court book. The order's requirements as to the form of the court book were varied in ways that are of no material relevance. A court book [60] that complies with the usual order should contain, in chronological order, all documents referred to in any affidavit or statement proposed to be relied upon at the hearing [61] .
The usual order requires, further, that there be filed: 1. no later than 10 working days before the hearing, a folder of all affidavits, statements and reports to be relied upon with an index setting out in alphabetical order details of those statements [62] ; and 2. no later than five working days before the hearing, two copies, paginated and indexed, of the court book [63] .
In the present case, the court book was prepared in blithe disregard of the requirements of the usual order for hearing (as irrelevantly modified). It comprised some 33 volumes in all.
Volume 1 included the pleadings (including numerous superseded pleadings) and an index, some 80 pages long, purportedly to the whole of the court book. The provision of the index may have been intended to overcome, to some extent at least, the deficiencies in the court book to which I am about to turn. Unfortunately, the index did not specifically identify (for example) the reports of a number of experts, nor where they were to be found. That was because those reports were exhibits to one or other of the affidavits filed, and the court book did no more than indicate where those exhibits were to be found. It did so in a way which did not disclose the substance, as opposed to the formal identification (for example, Exhibit "XX4"), of the reports.
It was intended that Volume 2 should include the parties' pre-hearing submissions, but for some reason it did not do so. The volume did include a copy of what I understand to have been the Scott Schedule on which Mrs Carr relied, and Mr Nowytarger's response to it.
Volume 3 contained the affidavits upon which Mrs Carr relied. Volume 4 contained the defendants' affidavits. Volumes 5 to 27 contained the exhibits to the affidavits. Those exhibits included all the documents referred to in the exhibits to any of the affidavits of any of the witnesses of fact, all of the expert reports, and all the documents exhibited to those expert reports.
In consequence of this idiosyncratic method of production, documents that were referred to more than once in exhibits to affidavits (or indeed elsewhere) were reproduced as many times as they were referred to. That made the court book far longer than it had to be, and far less useful than it ought to have been. Its inutility was exacerbated by the inadequacies of the index, to which I have referred already. To make the court book even marginally useful, it was necessary to identify and tab separately each relevant exhibit (specifically, each expert report that was not the subject of an affidavit prepared by its author, but was "proved" through an affidavit of another witness: in particular, Mr Nowytarger).
The final six volumes of the court book comprised, so it was said, all the documents referred to in any of the affidavits of the lay witnesses, arranged in chronological order. Perhaps that represented some nod to the requirements of the usual order. One practical result of the preparation of volumes 28 to 33 is that they contain yet further replication of documents that may also be found elsewhere in the court book.
All in all, the court book was extraordinarily difficult to use, and extraordinarily productive of inefficiency in the conduct of the hearing. Perhaps I should have taken stronger action than I did (I will turn to this in a moment), and vacated the hearing so that a court book could be prepared in which relevant reports were identified by reference to the name of the person who made them, and relevant documents were included once only, and in chronological order. I did not do so. I have to say that my failure to do so arose because I under-estimated the amount of difficulty that would be caused by working with the court book that was produced.
What I did do however was indicate that I did not propose to allow any costs to be charged in respect of the preparation of the court book. Dr Birch of Senior Counsel, who appeared with Mr DeBuse of Counsel for Mrs Carr, sought to be heard on this (understandably, because those who instructed him had prepared the court book). He relied on an affidavit sworn by the solicitor who had undertaken the preparation of the court book. It appeared from that affidavit that this was the first time the solicitor had had to prepare a court book, and that he had not acquainted himself adequately (if indeed he did so at all) with the requirements of the usual order for hearing.
I do not regard that as an excuse that is any way acceptable. Its unacceptability is highlighted by the fact that the solicitors for Mr Pascali, when given the draft index to the court book (which presaged the preparation of what are now volumes 1 to 27), pointed out that a court book so produced would not comply with the requirements of the usual order, and what needed to be done. Unfortunately, that wise advice fell on deaf ears.
I remain of the view that Mrs Carr's solicitors should not be permitted to charge her any costs or disbursements in respect of the preparation of the court book. I do not see why a client should be forced to pay at all (let alone what must be many tens of thousands of dollars in costs and disbursements) for the preparation of something that did not comply with the court's orders, that was replete with wasteful duplication, and that was productive of gross inefficiency in the conduct of the proceedings. Nor do I see why, if costs orders are to be made against any of the defendants, they should bear any part of the costs referable to that ill-directed labour.
It is for those reasons that I shall order that no part of the costs or disbursements incurred with reference to the production of the court book should be charged to Mrs Carr by her solicitors. I should make it quite clear that if such costs or disbursements have been charged and paid, allowance will have to be made in some appropriate fashion. I should make it clear also that one of the consequences following from that order is that to the extent that costs are ordered against any of the defendants, they are not to include costs or disbursements referable to the production of the court book.
Unfortunately, the inutility of the court book became even more apparent when, having reserved my decision subject to the provision of written submissions as to defects (something that should not have been necessary had the case been properly prepared and conducted), I attempted to write reasons on the issues where the evidence and submissions were complete. The lack of any effective index to the contents of the court book made it well-nigh impossible to locate relevant factual material.
The parties had not, as is often done, provided marked-up copies of the affidavits and reports, indicating where in the court book the documents in question could be found. Thus, reading (for example) an affidavit of Mrs Carr and chancing upon a reference to a relevant document, it was necessary to fossick through the six volumes of the court book within which Exhibit MC-1 to her first affidavit were contained, or to another volume of the court book to find where Exhibit MC-2 to another affidavit was contained. Perhaps I could have gone to volumes 28 to 33 [64] . But counsel had not referred to those volumes in their submissions. The proposition that I should do, unguided, what counsel should have done is unappealing.
The task of locating the relevant documents would have occupied me and my staff for many weeks. The difficulty of finding the basic factual material was amplified, because the closing submissions for Mrs Carr did not identify in any detail the findings of fact that she wished the court to make, nor (a fortiori) give the evidentiary references for them.
Accordingly, several days after the conclusion of the hearing, I called the parties in for directions. I raised my concerns with them. At one stage, I was tempted simply to dismiss the proceedings (on the basis that the dismissal would not of itself bar the bringing of further proceedings), but on reflection that seemed unduly harsh, given the possibility of limitation defences if fresh proceedings were commenced.
I considered, alternatively, vacating the hearing, so that the parties would have to return and start again. That however would have involved very substantial waste of money, time and effort, and would have been prejudicial to the defendants, in a way that could not necessarily be cured by costs (each of them is an individual, and the stress of litigation cannot be discounted).
In those circumstances, I decided that the appropriate course was to give directions, with a view to bringing some order into the evidentiary chaos that the court book created, but to do so in a way that kept the threat of dismissal in the background as a sanction for non-compliance. On that basis, I made the following orders: 1. Direct the plaintiff by 26 July 2018 to serve and provide to my Associate an individual index to each of volumes 3 to 27 both inclusive of the court book. The index: a. in respect of volumes 3 and 4, must comply with [14] of the usual order for hearing; b. in respect of volumes 5 to 27, must identify by exhibit and tab numbers (as per affidavits) each document or group of documents in it; and c. when an exhibit in volumes 5 to 27 comprises an expert report, must comply with [14] of the usual order for hearing. 2. Direct the plaintiff by 26 July 2018 to serve and deliver to my Associate a copy of each affidavit read and each report tendered in the proceedings marked up with the court book reference (by volume and page) to every document exhibited or annexed to each such affidavit and report. 3. Direct the plaintiff by 26 July 2018 to serve and deliver to my Associate a document setting out: a. each finding of fact except in respect of defects that the plaintiff contends ought be made; and b. in respect of each such finding of fact, the evidentiary reference (affidavit, report, transcript, or court book volume and page) relied upon to establish it. 4. Order that if the plaintiff fails to comply with any of the foregoing orders, the proceedings be dismissed pursuant to s 91(1) of the Civil Procedure Act 2005 (NSW).
For reasons equivalent to, or that flow from, those I have given at [45] to [47] above, no part of the costs of complying with orders 1 and 2 of those just set out should be charged to Mrs Carr. Again, if costs are ordered against any defendant, they should not include costs referable to those orders.

Events leading up to the formation of the contract

Mrs Carr discovered the Seaforth property through online searches. She contacted Mr David Rothschild of LJ Hooker Seaforth, who was one of two agents named as the "vendor's agent" on the contract. The other was Mr Lionel Busquets of Ray White Seaforth. Mr Rothschild arranged an inspection. He described the house as "a spectacular new house" in an email to Mrs Carr.
Mrs Carr said that, during the inspection that took place on 1 June 2012, Mr Rothschild repeated the description of the residence as a "new house". He was not called to say to the contrary. I find that he did.
In the course of the inspection, Mrs Carr was introduced to Mr Nowytarger. He described himself as the "builder" or as the "developer". I find that he did so describe himself. Mrs Carr said that at no time did Mr Nowytarger disclose that Mr Miller, or for that matter anyone else, had been "the builder". I accept her evidence on that point.
Either Mr Rothschild or Mr Busquets provided a brochure that had been prepared for or by Ray White Seaforth. That brochure described the residence in glowing terms, emphasising its luxurious character, and at one point referred to it as "newly built".
I accept that at this time (early June 2012), Mrs Carr had no reason to think that the residence was anything other than "newly built". In so finding I take into account not only the matters to which I have just referred, but also her observation (factually correct) that the very extensive building works were unfinished at the time of her inspection.
Also on 1 June 2012, another agent from Ray White Seaforth sent an email to Mr Carr. It attached a draft contract for sale, a valuation prepared by a firm known as Pontons Valuations & Consultancy, and other documents. That valuation stated, among other things, that: "the property has been recently substantially renovated / refurbished throughout with the home essentially presenting as-new.
It included also the following observations: 4. IMPROVEMENTS 4.1 General Description Previously constructed to the site was a substantial family residence likely to have been constructed in the circa 1970's/1980's utilising full masonry walls and concrete floor construction. The recently completed residence utilised some structural elements of the previous home while making further additions/extensions. The residence has been architecturally redesigned to improve its efficiency and utility focusing on open plan executive family living and access to the views available and natural light. In my opinion, the residence represents one of the most valuable and desirable waterfront residences in this precinct. 4.2 Construction Construction comprises: ● Reinforced concrete floors throughout ● Double brick external walls with rendered and painted external finishes ● A mixture of set plaster and rendered brick internal wall linings ● Predominately painted plasterboard ceiling linings with some feature timber linings also ● Predominately aluminium framed external windows and doors ● Pitched metal roof coverings with some concrete sealed sections also.
Although it is of no present relevance, the Pontons valuation assessed the value of the Seaforth property at $9 million excluding GST.
On 4 June 2012, Mr Nowytarger provided to Mr Rothschild a list of works to be completed on the property. Mr Rothschild sent that list to Mr Carr. That list, which comprised some 39 items of incomplete work, formed the basis of a more substantial list, comprising some 52 items of work, that was annexed to the contract for sale. The parties referred to the 52 item list as "the June list". I shall do likewise. In essence, the June list comprised the original 39 items from Mr Nowytarger's list and some 13 further items that Mr and Mrs Carr requested be attended to before completion of the purchase.
Over the next few days, Mr Carr negotiated the purchase price with Mr Pascali [65] through the medium of one or other of the selling agents. Ultimately, they agreed on a price of $8.55 million. Mr Pascali stressed that the contracts had to be exchanged that day. Accordingly, Mrs Carr signed the contract and gave it to Mr Rothschild, together with a cheque for $100,000 on account of the deposit. It was only at this stage, Mrs Carr said, that she realised that the vendor was anyone other than Mr Nowytarger.
Mr Rothschild appears to have exchanged contracts, or treated them as exchanged, on 7 June 2012. He sent a sales advice notice to the solicitors. Mr Busquets did the same on the following day.
Because of the circumstances of signature and exchange, Mrs Carr had the benefit of a five day cooling off period. She or Mr Carr arranged for a building inspection to be carried out on 8 June 2012. The report was emailed to them that day. It detailed a number of items of defective or incomplete workmanship. Mr Nowytarger agreed to attend to those matters. He offered to provide a cheque for $50,000 as security for his performance. In that way, I think, the original list of 39 items prepared by Mr Nowytarger expanded to the 52 items comprised in the June list.
Mrs Carr said that she read the building report and drew comfort from a statement in it that "[t]he residence is newly built". However, just below that description, the report noted that "[t]he house has been built and renovated to a fair to reasonable standard".
Some days later, but still within the cooling off period, Mr Thomas reviewed the contract for sale. He advised that it should be amended to delete some conditions, and to include a special condition dealing with the building works. After obtaining instructions from Mr Carr, Mr Thomas wrote to Mr Pascali's solicitor, Mr Gerald Kesby. Mr Kesby, having obtained instructions, confirmed that the relevant conditions (amended slightly from the form that Mr Thomas had first suggested) should be included.
Both solicitors attended to this. The result was that special condition 16, which is the subject of the first issue, became part of the contract for sale.
It is convenient to mention at this point that Mr Thomas gave evidence to the effect that if special condition 16 were not complied with, he would advise Mrs Carr not to complete the contract, and instead to terminate it. There was some challenge to that aspect of his evidence, but I accept it. It is very difficult to understand why a solicitor who had thought the matter to be of such importance as to warrant insistence upon the inclusion of the special condition in the contract would have done other than advise his client to invoke the rights given by it if those rights accrued.
Likewise, Mrs Carr gave evidence that she would have accepted such advice, if given. In other words, she said, her position was that if the requirements of special condition 16 were not satisfied and if Mr Thomas advised her that it would be in her best interests to terminate the contract, she would have done so. Again, there was some challenge to that evidence. Again, I accept it. It is consistent with the probabilities, viewed objectively. Mr and Mrs Carr had committed themselves to spend a very large amount on the purchase of the property. Their solicitor had insisted upon special condition 16 as something necessary for their protection. The prospect that they would have ignored his advice to exercise their rights under that special condition, if those rights became exercisable, is inconsiderable.

Issue 1: the construction of special condition 16

Special condition 16 reads as follows: 16 Completion of this contract is subject to and conditional on the vendor delivering to the purchaser evidence satisfactory to the purchaser acting reasonably that all building works undertaken on the property in the 6 years preceding exchange of the contract (building works): (a) have been completed in accordance with the requirements of Manly Council (this may be by a final occupation certificate or similar certificate); and (b) are covered by a current home warranty insurance policy in respect of the whole of the building works. The vendor must use their best endeavours to complete the building works and obtain the home warranty insurance in a manner sufficient to comply with those conditions as soon as possible and in any event no later than the due date for completion. If such evidence is not provided by that date, the purchaser may, by written notice to the vendor, rescind this contract provided that the purchaser may not give a notice of rescission if the vendor provides such evidence to the purchaser before the purchaser gives the vendor a notice of rescission. Despite any other provision of the contract, until such evidence is provided, the purchaser need only pay a 5% deposit with the balance of the deposit payable within 2 business days of the provision of such evidence.
It is worth noting that at the same time as special condition 16 was inserted, so was special condition 15. That condition provided: Prior to settlement the vendor will in a proper workman-like manner complete the attached building works [i.e., those comprised in the June list].
Since reference was made to it in the course of submissions, I set out the text of special condition 8 - a "whole agreement" clause: 8. Whole Agreement The Parties agree that this Agreement contains or refers to the whole of thier [sic] Agreement in relation to the sale and purchase of a property and that except where required by law, no further promises, representations, warranties, undertakings or conditions shall be deemed to be implied in this Agreement or to arise between the parties by way of collateral or other Agreement or by reason of any promise, representation, warraty [sic], or undertaking given or made by any party to the other on or prior to the making [sic] this Agreement.

The parties' submissions

It is not immediately easy to understand the point of difference between the relevant parties (Mrs Carr and Mr Pascali) as to the proper construction of special condition 16. Both Dr Birch, and Mr Docker of Counsel, who appeared with Mr Gandar of Counsel for Mr Pascali, accepted that the special condition included a promissory element. That promissory element is Mr Pascali's promise to use his "best endeavours to complete the building works and obtain the home warranty insurance in a manner sufficient to comply with [the preceding] conditions".
In his oral closing submissions, Dr Birch went somewhat further. He submitted that the promissory element of special condition 16 did not merge upon, but rather survived, completion of the contract.
Counsel relied upon a number of decided cases. I shall refer to so many of those as seems appropriate.

Decision

When special condition 16 is analysed, the following points appear: 1. it is a condition inserted primarily, if not exclusively, for the benefit of Mrs Carr; 2. it makes completion conditional upon Mr Pascali's delivering to Mrs Carr evidence satisfactory to her (acting reasonably) that all building works of the kind described have been completed in accordance with the requirements of the Council, and in total are covered by a current HWI policy; 3. next, Mr Pascali promises to use his best endeavours to complete the works and obtain the requisite insurance so as to comply with those conditions as soon as possible, and in any event no later than the date for completion (which was 120 days following exchange); 4. next, the special condition provides that if such evidence is not given to Mrs Carr by the date for completion, she may rescind; and 5. finally, the special condition postpones until the provision of such evidence Mrs Carr's obligation to pay the balance of the deposit.
Mr Pascali's promissory obligation was not absolute. It was a "best endeavours" obligation. Further, it was what might be called a purposive obligation: that is to say, an obligation directed towards achieving satisfaction of the specified purpose. That specified purpose was the procuring of a state of affairs that would satisfy the two preceding conditions: in summary, completion in accordance with the requirements of the Council, and availability of current HWI.
I do not think that special condition 16 imposed an absolute obligation on Mr Pascali to complete the building works in every respect. Nor do I think it imposed upon him an obligation that survived completion.
It is clear that a condition such as special condition 16 may impose both a condition precedent to a completion of a contract and an implied obligation on one party to use its best endeavours to bring about the contracted state of affairs. See for example the judgment of Gibbs CJ in Perri v Coolangatta Investments Pty Ltd [66] at 541.
As Brooking J pointed out in McTier v Haupt [67] at 657, such a condition may encompass both a promissory and a strictly conditional element. The distinction is between obligations, breach of which creates a liability for damages, and conditions, the non-fulfilment of which does not.
In the present case, it seems to me, special condition 16 can be described in the words of Brennan J in Perri at 566: the obligation is not to achieve satisfaction of the condition but, rather, to do all that is reasonable (or in this case, can be done by the use of best endeavours) to that end. As his Honour continued, in words apt to this case (although with a change in the description of the relevant party): This is not a case where [Mr Pascali] promise[d] that a condition precedent to the obligation to complete will be fulfilled.
The evidence that was produced, as to completion in accordance with the requirements of the Council and as to HWI, was satisfactory to Mrs Carr (on the advice of Mr Thomas). Accordingly, she proceeded to complete the contract. At that time, so it seems to me, special condition 16 became spent. The endeavours used, whether "best" or not, had procured the stipulated result. It is too late now to maintain, as a matter of promissory obligation flowing from special condition 16, that there was surviving completion an ongoing obligation to continue to use those endeavours, and now some extant liability for breach of that ongoing obligation.
Of course, I leave out of all this the separate obligations under special condition 15. I should make it clear, also, that nothing that I have said touches upon Mrs Carr's formulation of her case in deceit.
Nor do I think that special condition 16 is concerned with the objective truth, or objective accuracy, of the evidence produced. The function of the evidence is limited to that stated in the clause: to persuade Mrs Carr, acting reasonably, that Mr Pascali's obligations to finish the work in accordance with the requirements of the Council and to procure current HWI, have been satisfied.
Dr Birch contended for a different approach. He submitted [68] : 14. Clause 16 would make no commercial sense if it was construed to have imposed no obligation upon the vendor other than to provide some evidence to Mrs Carr, and if that evidence were accepted by her, and the contract completed then the Clause be treated as spent. Such a construction would have bizarre and paradoxical consequences. It would mean that evidence that was fraudulently obtained, or certificates that were mere forgeries, provided, they led the plaintiff to complete, would nevertheless have seen the Clause satisfied. The provisions in Clause 16 "for the reasonable satisfaction of the purchaser", was a protection for the vendor against an unreasonable refusal, and would have entitled the vendor to obtain specific performance, if he had produced evidence satisfactory to a reasonable person. However, the purpose of the Clause was to ensure that the building works were compliant and insured, and the contractual conditions could not be satisfied by evidence that was false or misleading. More is said below in regard to the representational claim on this subject.
That submission is at first blush attractive. However, on analysis, it accords greater force to the promissory obligation in special condition 16 than the words will bear. And the outcome is neither bizarre nor paradoxical. If the vendor knowingly obtained fraudulent or forged evidence to satisfy the special condition, the result would be that the purchaser, being induced to complete by the provision of that evidence, would have alternative rights.

Issues 2 and 3: consequences of breach

On my view of the proper construction of special condition 16, these issues do not arise.

Issues 4 to 8: the deceit claim against Mr Pascali based on the Insurance Representations

The pleaded case is that by providing the HWI certificates to Mrs Carr, Mr Pascali represented, expressly or by implication that: 1. all of the residential building work done within the previous six years had been undertaken by Mr Miller; 2. all of that work was the subject of HWI; 3. the HWI had been obtained without deception so that there would be no entitlement to avoid the policy; 4. all that work had been undertaken by a licensed builder; and 5. by providing the HWI certificates, Mr Pascali had complied with special condition 16(b).
The submissions did not focus closely upon the specific pleaded representations. That led to protests, in particular from Mr Docker, that Mrs Carr's case was being propounded upon a basis other than that which was pleaded. Understandably, Mr Docker took the position that a plaintiff alleging deceit should be held closely to its pleaded case. In the result, it is not necessary to decide the disputes as to the width of the pleaded case (nor as to the extent that the submissions for Mrs Carr sought to go beyond it). The reasons will become apparent.

Approach to making findings of deceit in civil proceedings

The allegation of deceit is very serious. Although the court is required to be satisfied only on the balance of probabilities that the allegation of deceit has been made good, the court must take into account, in deciding whether it is so satisfied, among other things the gravity of the allegation. See s 140(2)(c) of the Evidence Act 1995 (NSW). That requirement is generally thought to reflect the approach stated in, as the first of many cases often cited, Briginshaw v Briginshaw [69] .
There is no need to set out either the text of s 140 or the relevant observations from Briginshaw (nor, for that matter, observations made in many cases in which the Briginshaw approach has been cited). I am conscious that the allegation of deceit is serious. I am conscious that to find it proved, there must be a feeling of actual satisfaction, although on the balance of probabilities, that the deceitful conduct alleged did take place and that the necessary elements of deceit, including knowledge or wilful blindness, have been made out. I have kept those matters firmly in mind in dealing with Mrs Carr's case based on deceit.

How Mr Pascali's liability is said to arise

The starting point is to make it clear that both in respect of the Insurance Representations and the Development Representations [70] , there is no suggestion that Mr Pascali was personally involved in, or had any knowledge of, the matters alleged to amount to deceit. The case is, rather, that Mr Pascali, having entrusted the performance of the building works and the procuring of the necessary occupation and HWI certificates to Mr Nowytarger, is thereby liable for the consequences of Mr Nowytarger's actions.
Mr Pascali's evidence on this point is clear. He said [71] that: 1. he authorised, in particular, Mr Nowytarger to handle the sale, and to "handle all the other decisions for [him]"; 2. he directed Mr Nowytarger to use Mr Kesby as the solicitor, but took no part in providing instructions to Mr Kesby; 3. he had no involvement in the appointment of the selling agents, but left those matters to Mr Nowytarger and Ms Pascali-Nowytarger; 4. he did not pay any of the advertising or marketing costs associated with the sale; they were paid by Mr Nowytarger or Ms Pascali-Nowytarger; and he (Mr Pascali) confirmed this in an email of 24 September 2012 to Mr Kesby; 5. he did not arrange for or have any involvement with any of the other publicity or other material relating to the proposed sale; 6. on 15 May 2012, he told Mr Kesby that all instructions were to come from Mr Nowytarger, and confirmed that in an email to Mr Kesby sent that same day; 7. he had no involvement in the negotiations relating to the sale price; 8. he left it to Mr Nowytarger and Ms Pascali-Nowytarger to decide on the selling price, and, ultimately, to decide whether to accept Mr Carr's offer of $8.55 million; 9. thereafter, at the request of Mr Nowytarger and Ms Pascali- Nowytarger, he signed the contract for sale; 10. he played no part in giving instructions to Mr Kesby in relation to requisitions on title or in relation to the special condition 16 evidence; 11. he played no part in obtaining the occupation certificate and the HWI certificates; 12. he acquiesced in Mr Nowytarger's giving permission to Mr and Mrs Carr to move into the property prior to settlement; and 13. he acquiesced in the further agreement made by Mr Nowytarger with Mrs Carr to carry out further works (described in what the parties called, as shall I, "the September list"), and countersigned that list to indicate his approval.
In case there were any doubt about it, Mr Pascali concluded his narrative of his involvement by saying [72] that he did not know if the works comprised in the September list were carried out, and: I had no involvement in the building works carried out at the Property nor was I involved in any of the subsequent negotiations with Mrs Carr about what additional work she required to the Property following settlement.
In short, Mr Pascali entrusted the entire process of carrying out the works, selling the property, and giving instructions to the agent and the solicitor before and following exchange of contracts and up until completion, to Mr Nowytarger, and to a lesser extent to Ms Pascali-Nowytarger.

The role of Mr Taylor

Mr Nowytarger and Mr Miller sought to suggest that Mr Miller had been engaged as the builder for the residential building work done upon the Seaforth property in 2011 and 2012. No one suggested that Mr Miller had done the substantial building work himself. No one suggested that Mr Miller had attended frequently at the site. Mr Taylor, who was engaged on the site from February to December 2011, said that Mr Miller appeared at the site on only three or four occasions over that time.
In the course of cross-examination, Mr Taylor described his interactions with Mr Miller, over the period February to December 2011, in the following words [73] : Q. You didn't have any cause to speak to Mr Miller during these works about the day to day conduct of the building, I take it? A. I'd liaise with him and give him an update as to where the job was at. Q. And that would be in terms of telling him that it was advanced to a particular stage and was going well, or things of that sort? A. Correct. Q. In a very general fashion? A. In a general fashion, yes. Q. Indeed it was the case that you were a friend of his and you spoke to him regularly throughout this period, is that correct? A. Sorry, I don't understand your question. Q. Yes, I'll put it again. You were a friend of Mr Miller's throughout 2011 and in regular social contact with him, is that correct? A. Not on regular social contact, but yes, I am a friend of his. Yes. Q. How often would you have been speaking with him in 2011? A. If it weren't for this job? Q. Yes? A. Once every three months. Q. Not every week or anything like that? A. No. Q. How often did you speak to him in regard to this job? A. Every week. Q. Now, I think you've agreed with me that your discussions with Mr Miller did not descend down in too great detail? A. In what respect? Q. In any respect, I thought you said a moment ago that your discussions with him were of a very general nature? A. Well, typically, you may have a detailed conversation if there's a problem. Q. He wasn't visiting the site on any regular basis throughout the whole of the works, that's correct isn't it? A. That's correct. Q. You never saw him come on the site or inspect anything? A. He did come on the site. Q. Did he come on the site to have a chat to Mr Nowytarger or yourself? A. To myself. Q. How often did he do that? A. Over the course of the job, three or four times.
Messrs Nowytarger and Miller said that the latter had in truth and reality acted as the builder, because he had supervised and directed Mr Taylor. I do not accept that evidence. It found no support in the evidence of Mr Taylor, who said no more than that he was working "on behalf of Dan" and that he spoke to Mr Miller approximately weekly.
Mr Taylor was not at the relevant time an employee of Mr Miller. He was not, at the relevant time, a contractor or subcontractor to Mr Miller. Mr Miller did not invoice Mr Nowytarger for the building work carried out by Mr Taylor. Mr Taylor invoiced Mr Nowytarger, and was paid by Mr Nowytarger, direct.
Mr Miller did not engage the numerous tradesmen who came upon the site to carry out all the necessary works. Nor did Mr Taylor. Those tradesman were engaged by Mr Nowytarger. They were supervised by Mr Nowytarger (in his absence, Mr Taylor would do his best to answer general queries, but played no part in supervision). They invoiced Mr Nowytarger, and were paid by him, direct. Neither Mr Miller nor Mr Taylor invoiced Mr Nowytarger for their services, or for supervising or directing them.
Mr Miller gave the following evidence in cross-examination [74] : Q. I'm putting it you that it's false to say, as you have in paragraph 23 of your affidavit, that you provided Monty to do the necessary work? A. I've provided the means for Monty [sic, here and following] to be able to do the necessary work. Q. Okay, can you identify to me, or to the Court rather, the manner in which you provided those means? A. By him working as a supervisor under my builder's licence. Q. Well, you didn't hire him to do that, did you? A. No. Q. He could have just gone and done it, if he'd wished, no matter what, do you agree A. No. Q. Well, I'll come back to that. Let me just take you to the first sentence in paragraph 23. You see there you say you received payment of between 8,000 and $10,000 after the work had been finished, do you see that? A. Correct. Q. That's from Mr Nowytarger, I presume? A. Yes. Q. That was for allowing your builder's licence to be used in regard to the work? A. That Monty carried out. Q. When Mr Taylor was carrying out that work, you yourself were not engaged in any acts of supervising or checking Mr Taylor, that's correct, isn't it? A. No. Q. Do you say that you went onto the site and you checked or supervised Mr Taylor while he was undertaking the works? A. No. Q. Do you say you supervised him without ever going and visiting the works, and seeing what was being done? A. I had several conversations with Monty on a weekly basis. Q. Now, other than the 8 to $10,000 you've referred to in paragraph 23, and the sum of 1,700 odd dollars I showed to you a short while ago, you did not receive any other payment in regard to all the building work done at these premises, that's correct, isn't it? A. Correct.
It is obvious from that evidence (which, being against interest, I am inclined to accept) that Mr Miller did not supervise or give directions to Mr Taylor in any sense in which those words are generally understood in the English language. It is equally obvious, both from that evidence and from the other evidence to which I refer, that Mr Miller was not the builder for any of the works, in the way that those words are generally understood in the English language.
Mr Taylor did not work for the whole of the project. When he came onto the site, the roof had been removed, the top floor concrete slab had been poured, and much of the brickwork for the upper levels of the house had been completed. (Mr Miller had had no involvement of any kind or in any capacity with the performance or supervision of those works.) The remaining brickwork was completed within about a week.
Mr Taylor described the work he was engaged to do as [75] : …the roof framing, parapet walls, some internal carpentry for the fit out, architraves in the addition [that is to say, the upper levels of the building], some angles for the bathroom for the tiler and the door jambs.
In the course of cross-examination, Mr Taylor added one additional work area: external cement sheet cladding on the top two floors of the building [76] .
The obvious inference from the whole of Mr Taylor's evidence is that he performed such work as he did as an independent contractor, pursuant to a contract direct with Mr Nowytarger. In no sense did Mr Taylor perform that work as some sort of agent or representative or personification of Mr Miller. The proposition that, in the circumstances, Mr Miller acted as the builder is unsustained and unsustainable. The evidence given by Messrs Nowytarger and Miller intended to support it is, in my view, false.
Mr Nowytarger had not made any written contract with Mr Miller for the performance of that work before or at the time the work commenced. Mr Miller had not obtained HWI before or at the time that work was commenced. The acts of procuring signed contracts and HWI were, in my view, done dishonestly, for the purpose of enabling Mr Nowytarger to obtain evidence capable of satisfying Mr Pascali's obligations under special condition 16 of the contract for sale.

The contracts for residential building work

The evidence includes a contract between Mr Nowytarger and a builder known as WJ Building Pty Ltd dated, it seems, 13 December 2010. That contract was for: Alteration & addition to dwelling, including second story addition & extention [sic] to garage.
It provided for a construction cost budget of $500,000, and a management fee of $50,000.
WJ Building obtained HWI. The certificate is dated 13 December 2010. It would appear, however, that WJ Building did no work, because on 28 March 2011, the broker who had procured the insurance advised the underwriter's representative "that cover is not required", and sought to cancel it. To obtain that cancellation, the principal of the builder made a statutory declaration in which, among other things, he stated: [N]o "building work" has commenced - this is to be taken as meaning that there has been no commencement of land clearance
The reasons for cancellation were expressed in a letter sending that declaration to the insurer's representative: Due to a delayed start date as we had other work programmed which would could [sic] no longer commit to [sic].
I am not prepared to find that the declaration and the letter contained false statements (in particular because the builder's principal was not called to give evidence). Accordingly, I treat those documents as stating the truth.
Mr Miller and Mr Nowytarger signed an application for HWI on 17 March 2011, well after building work had started (see Mr Taylor's evidence summarised at [99] to [109] above). The work was described as: addition to dwelling including second story addition & extension to garage.
The value of the work was said to be $170,000. A certificate of insurance, dated 28 March 2011, was obtained accordingly. It covered work to be carried out by Mr Miller as builder for Mr Nowytarger as owner.
In 2012 (and, I infer, after the contract for sale became binding, so that Mr Pascali was required to produce evidence of, among other things, HWI in accordance with special condition 16), Messrs Nowytarger and Miller signed a form of cost plus contract for residential building work comprising "alterations and additions to dwelling including second story addition and extension of garage" to the Seaforth property. The estimated cost of the works was $620,000. They backdated that contract to 2 December 2010. A notable feature of the contract is that it excluded a number of items of work that Mr Miller stipulated he would not carry out. They were: 1. Painting 2. Air conditioning 3. Kitchen appliances 4. Bar fridge in bar area 5. Pool equipment 6. Land scaping [sic] 7. Bath room [sic] hardware not including tapware 8. Builder's clean 9. ALL tiling 10. Water proofing [sic] 11. ALL garden retaining wall's [sic]
At about the same time, Messrs Miller and Nowytarger signed another cost plus contract, for "STAG [sic] 1 demolish existing house to first floor & do all new conc [sic] floors, slab's [sic] in total", for the sum of $170,000. That too was backdated to 2 December 2010. The work to be done was described in more detail as: (1) Demolish existing house to first floor; (2) pour new concrete slab's [sic]; (3) construct new brick wall's [sic] to support upper slab; (4) all brickwork & concrete to be done to top floor; (5) framework or other work is included in this price.
I have broken up the continuous description given in the contract because, by reference to it, Mr Taylor accepted that he had not done the first, second and third items, nor the great bulk of the fourth item.
There were exclusions in that later contract that were effectively mirrored the first ten in the earlier contract (see at [118] above).
Finally, Messrs Miller and Nowytarger prepared a third form of contract, which they backdated to 16 March 2011. It is plain that the contract was backdated, because it is in a form bearing a copyright note "May 2012". That contract, for an estimated amount of $450,000, purported to cover the construction of a new roof frame with zinc roofing, the supply and installation of windows and doors, gyprocking, plastering, plumbing and electrical work, and some external wall cladding. It too excluded work, "as on previous contract 2/12/2010", with an additional but presently irrelevant item.

The applications for HWI

The backdated forms of contract to which I have referred at [118] to [122] were used to support applications for HWI. On 8 September 2012 (which, I infer, is shortly after the forms of contract were prepared and signed), Messrs Nowytarger and Miller signed a letter to the insurance broker, Mr Craig Jennison. That letter, omitting formal parts, stated: Here is [sic] brief summary of the works carried out by Dan Miller of DAN MILLER CONSTRUCTIONS, Dan started the work as a cost plus project of $170,000 witch [sic] was to demolish the house to the first floor level then rectify all brick work and put in place four new concrete slabs up to the top floor. This work was completed by Dan with no disputes in any ways, [sic] we then gave Dan the balance of the work as a cost plus project witch [sic] was about $450,000 to complete all the other building works, roof windows, doors plaster, plumbing etc, this was done with a new cost plus contract that was recommended by the Master Builders Association of NSW. Dan has completed all the building works we engaged him to do taking the total building cost to $670,000, all works that Dan has completed was done in a satisfactory manner with no disputes on our behalf, Dan has been paid in full with no monies owing. I have no hesitation to recommend Dan Miller to any of my friends for future building work.
That letter was in substance false. It was false to say that Mr Miller "started the work as a cost plus project of $170,000" for the stated purposes. It was false to suggest (as the letter did) that Mr Miller had had anything to do with the demolition of the house to the first floor level, the rectification of brickwork, or the pouring of the slabs above it. As I have said, Mr Taylor's evidence, which on this point I accept, is that all those matters had been done before he went onto the site in February 2011. Since it was not suggested that Mr Miller did the work other than through, or by supervising, Mr Taylor, it follows inevitably that the proposition that he had done those particular items of work under the initial cost plus contract for $170,000 must be false.
For the same reasons, the express assertion that "[t]his work was completed by Dan" was false.
Finally, and necessarily, the statement that "Dan has completed all the building works we engaged him to do", being the work comprised in the two contracts, was false.
In each case, the statements to which I have referred were not only false, but must have been known by Messrs Nowytarger and Miller to be false. The representation that there were contracts in existence for the performance of the work was a pretence. The contracts themselves were shams. They were concocted to conceal the fact that in substance the work had been done by Mr Nowytarger, who was neither a licensed builder nor an owner-builder. The sham contracts were created for the purpose of persuading the underwriter to issue certificates of insurance, as in due course it did.
Further, on 12 September 2012, Mr Nowytarger sent an email to Mr Jennison in which he repeated and expanded upon the various assertions made in the letter that I have set out above. To the extent that the email repeated and expanded upon those sections of the letter which I have found to be false, so, too, the assertions in the email were false. It was all part of the charade; all part of the scheme to procure the issue of HWI certificates.
The certificates were in due course issued: one for $170,000, and one for $450,000. Each was dated 14 September 2012. Each named Mr Miller as the builder and Mr Nowytarger as the owner. Mr Nowytarger gave those certificates to Mr Kesby so that Mr Kesby could provide them to Mr Thomas in part satisfaction of the requirements of special condition 16. Mr Nowytarger must have known, when he did so, that the issue of the certificates had been procured by the knowingly false representations in the letter of 8 September 2012 and the email of 12 September 2012.
Further, Mr Nowytarger must have understood that even on his case, and on the assumption (which I am not prepared to make) that the contracts were in some way genuine, not all the building work that had been done on the Seaforth property was covered by the certificates. That is because, if the certificates had any validity whatsoever, they were valid only for the work described in the contracts that Mr Miller purportedly undertook to perform. They could not have been valid for the excluded work. Thus, as Mr Nowytarger must have known, the certificates could not have amounted to evidence "that all building works undertaken on the property in the 6 years preceding exchange of the contract… are covered by a current home warranty insurance policy in respect of the whole of the building works".
Mr Taylor gave evidence in his affidavit [77] about the contract for $620,000. He said, in particular, that in the course of a conversation at a meeting between him, Mr Miller and Mr Nowytarger, Mr Nowytarger said words to the effect: To get the sale through the Purchaser wants higher Home Owners Warranty Insurance. The broker said we need a contract. We will have to prepare one.
Although Mr Taylor was unsure of the date of the meeting, it must have taken place after contracts for the sale of the Seaforth property were exchanged.
Mr Taylor said next that he looked at a draft contract Mr Nowytarger had brought along to the meeting. Mr Taylor said that the value of the work was stated, or was then written in, at $620,000.
Next, Mr Taylor said, Mr Miller asked him to review the draft contract and to exclude work that he (Mr Taylor) did not do. Mr Taylor then did that.
Mr Taylor was cross-examined about the contract for $620,000. He gave the following evidence [78] : Q. You were never able to ascertain which works this contract applied to, is that correct? A. I wasn't ‑ I didn't have this contract so. Q. Okay, I think you've answered my question. I just take you to the list of exclusions, were those things which you told Mr Nowytarger you had not been involved in doing? A. Some of them, yes. Q. Do you say some of them you had been involved in doing? A. No, I hadn't been involved in. Q. Are they all things you had not been involved in doing? A. Yes. Q. Did you believe this was supposed to be a contract for the whole of the renovation? A. This contract? Q. Yes? A. Yes. Q. And the fact of the matter is though that there was substantially more work that you had not been involved in than just those items listed in 1 to 11 that are written out there in the list; that's correct, isn't it? A. There was more work that I was involved in? Q. There was substantially more work that you were not involved in than merely that list of 11 exclusions; that's correct, isn't it? A. Correct. Q. You didn't see any further ‑ sorry, Mr Nowytarger didn't show you any further contracts after this one; is that correct? A. I think there was another contract prepared because I recollect seeing another contract.
There are two obvious conclusions to be drawn from this aspect of Mr Taylor's evidence: 1. the contract for $620,000 was prepared to facilitate Mr Nowytarger's obtaining (through the nomination of Mr Miller as builder) an HWI certificate for residential building work on the property at Seaforth; and 2. everyone involved, including of present relevance Messrs Nowytarger and Miller, must have understood that the contract did not describe, nor attribute to Mr Miller, the whole of the residential building work that Mr Nowytarger had caused to be performed on the Seaforth property.
It follows inevitably that Mr Nowytarger must have understood that any HWI certificate issued in respect of the contract did not provide cover for all the residential building work that Mr Nowytarger had caused to be undertaken.
Of course, matters did not stop with that contract. There were the two further contracts, for $170,000 and for $450,000 respectively. But those contracts did no more than split up into two portions the work purported to have been done by Mr Miller. They did not extend the scope of that work. The conclusions that I have said follow in respect of the single contract for $620,000 follow inevitably in relation to the two separate contracts also.

The HWI certificates are provided to Mr Thomas

On 4 September 2012, Mr Jennison sent an email to Mr Nowytarger attaching "the first warranty certificate". Mr Nowytarger forwarded that email, apparently with its attachment, to Mrs Carr the same day. The attached certificate was dated 28 March 2011. It referred to Mr Miller as the builder, Mr Nowytarger as the person for whom Mr Miller had carried out residential building work, and was in the amount of $170,000.
It would appear that Mr Nowytarger also provided the certificate to Mr Kesby, because on 11 September 2012, Mr Kesby wrote to Mr Thomas stating (omitting formal parts): Please find enclosed as follows, (a) Building Occupation Certificate dated 14 August 2012 in compliance with Special Condition 16(a) and (b) Home Warrantee [sic] Insurance Certificate dated 12 April 2011 in compliance with Special Condition 16(b) Per Special Condition 16, we would now be obliged if the Purchaser would arrange to increase the Deposit held by the Agent (Ray White) from $427,500.00 to $855,000.00 within two (2) business days.
I shall return to the "Building Occupation Certificate" when dealing with the next group of issues in 2011 (see at [116] above).
The HWI certificate referred to in subpara (b) of the letter was the one that Mr Nowytarger had obtained from Mr Jennison, and forwarded to Mrs Carr on 4 September 2012. The reference to the date "12 April 2011" in Mr Kesby's letter picks up another date appearing on that certificate.
By stating that the certificate was forwarded "in compliance with Special Condition 16(b)", Mr Kesby was representing, no doubt on instructions from Mr Nowytarger, that the certificate was capable of satisfying the requirement "that all building works undertaken on the property in the 6 years preceding exchange of the contract… are covered by a current home warranty insurance policy in respect of the whole of the building works". I accept of course in sending the certificate and impliedly so representing it, Mr Kesby was acting honestly. There is no suggestion that he had any reason to think that the certificate was other than what it purported to be.
Nonetheless, the certificate did not satisfy Mr Thomas. First of all, it was the first time (to Mrs Carr's knowledge) that Mr Miller had been represented to be the builder. And secondly, it nominated Mr Nowytarger rather than Mr Pascali as the person entitled to the benefit of the insurance. Mr Thomas and Mr Kesby corresponded for some time, with Mr Thomas seeking to resolve the apparent anomalies.
The next thing of present relevance, according to Mrs Carr, is that Mr Nowytarger provided her with two further HWI certificates. That, she said, was done in mid September 2012. The certificates to which she referred were the certificates dated 14 September 2012 for $170,000 and $450,000 respectively (i.e., the certificates referred to at [129] above issued in respect of the contracts referred to at [119] and [122] above). Mr Carr sent those certificates on to Mr Thomas.
Again, Mr Thomas was concerned because the certificates stipulated that Mr Nowytarger, and not Mr Pascali, was the beneficiary of the insurance. Again, Mr Thomas corresponded with Mr Kesby on that. The issue was resolved, finally, after an approach to the insurer. The insurer sent a letter to Mr Thomas on 20 September 2012 purporting to confirm that pursuant to s 92C of the HB Act, Mr Pascali, as "successor in title to the owner" of the Seaforth property, would have extended to him the benefit of the HWI described in those certificates. The letter concluded: If required, the successors in title will be able to claim upon the Insurance in accordance with the terms of the policy and the [HB Act].
That letter appears to have satisfied Mr Thomas, although it is a little difficult to see how it could have been thought that Mr Pascali was the successor in title to Mr Nowytarger. It is equally difficult to see how, upon settlement, Mrs Carr could have been a more remote successor in title to Mr Nowytarger. Nonetheless, as I have said, Mr Thomas was satisfied.

Representations made by provision of the HWI certificates to Mr Thomas

As I have said, Mr Kesby sent the first HWI certificate to Mr Thomas under cover of a letter dated 11 September 2012. I have set out the text of the letter at [140] above. The letter represented that the HWI certificate complied with special condition 16(b) of the contract, and was effective for the purposes of the contract. The representation as to compliance is express. The representation as to effect appears from the request for the balance of the deposit to be paid. It is clear from the second part of special condition 16 (following the two lettered subparagraphs) that the balance of the deposit was only payable once evidence in accordance with the first half had been provided to Mrs Carr.
The documents provided were defective for various reasons. The parties and their lawyers corresponded continuously in an attempt to procure documents that would satisfy Mrs Carr, acting reasonably, of the matters referred to in cl 16(a),(b). I have described the steps taken at [139] to [146] above.
When the letter of 11 September 2012 is read in conjunction with special condition 16(b), the point is clear. Expressed in terms of that special condition, the letter represented that the HWI certificate was capable of satisfying Mrs Carr, acting reasonably, that all building works undertaken on the property in the 6 years preceding exchange of contract were covered by a current HWI policy in respect of the whole of those works.
Although the representation in the letter of 11 September 2012 was not expressly repeated when further documents were provided to Mr Thomas, it is obvious that those further documents were provided on the basis that they would have the same effect. In other words, when the further HWI certificates were provided, there was at the very least an implied representation that they complied with special condition 16(b); that they were "evidence" that, considered reasonably, could satisfy Mrs Carr that the whole of the building works in question were covered by a current HWI policy.
Equally plainly, those representations were made to Mrs Carr with the purpose of inducing her not to rescind the contract but, rather, to pay the balance of the deposit and thereafter to complete the contract.
In my view, the representations, both express and implied, were false. Further, in my view, Mr Nowytarger knew that they were false. The representations were false because, at the very least, the certificates did not relate to the whole of the building work carried out on the property over the six years preceding exchange of contracts.
On any view of the efficacy of the various forms of building contract signed by Messrs Nowytarger and Miller, they could not retrospectively make Mr Miller the builder who had undertaken the whole of the building works. Mr Nowytarger had caused the works up to and including the pouring of the top floor slab to be carried out before Messrs Miller and Taylor became involved. And the contracts themselves contained exclusions for which Mr Miller disclaimed responsibility.
It is simply not credible that Mr Nowytarger could have been unaware of those matters. He must have known that the HWI certificates, considered individually or together, were not capable of meeting the requirement that they should amount to evidence that all the building works he had caused to be carried out were covered by a current HWI policy.
It follows, in my view, that when Mr Nowytarger provided those certificates either directly or through Mr Kesby to Mrs Carr (including through Mr Thomas), he knew that they could not do what, contractually, they should have done. He must have known that he was ascribing to those certificates an extent of operation that they could not have. He must have known that what he was doing was untrue; indeed, deceitful.
Of course, the deceit does not stop there. Mr Nowytarger must have known that the purported contracts for residential building work that were signed to procure the issue of the HWI certificates were shams. However, that is an additional reason for, and not a necessary element of, the finding of deceit against Mr Nowytarger.
Dr Birch submitted also that there was a separate class of deceitful actions perpetrated by Messrs Nowytarger and Miller in the way that they corresponded with the broker, and through the broker the insurer, to procure the issue of the HWI certificates. Dr Birch argued that in those circumstances, the insurance apparently obtained would be voidable at the instigation of the insurer. It is not necessary to pursue this point. A finding in Mrs Carr's favour on it would not add to the scope of her redress. And (a matter to which I refer below) there is a real question as to whether the pleading has sought to sheet this particular class of deceitful actions home to Mr Pascali.

Reliance

As I have said, I accept Mrs Carr's evidence that if she had been advised to rescind the contract for non-compliance with special condition 16, she would have accepted that advice (see at [72] above). Likewise, I accept Mr Thomas' advice that if the special condition were not complied with, he would have advised Mrs Carr to rescind (see at [71] above). The provision of the HWI certificates was clearly intended to induce Mr Thomas to conclude that the special condition 16(b) had been satisfied, and to advise Mrs Carr accordingly. In other words, it was clearly intended to induce Mrs Carr not to rescind, but to proceed to completion.
It is but a short step to conclude that Mrs Carr did rely upon the HWI certificates, provided in the way, and with the express or implied representations, to which I have referred, in deciding not to rescind, but rather to complete, the contract.

Mr Pascali's liability

I accept that Mr Pascali personally had nothing to do with the building work; nor with the manufacture of sham contracts between Messrs Nowytarger and Miller; nor with the false representations made to the insurance broker; nor with the false representations in connection with the provision of the HWI certificates to Mrs Carr. Dr Birch did not suggest otherwise.
Mr Pascali left everything connected with the building works and the sale to his son in law Mr Nowytarger. However, the inevitable conclusion is that Mr Pascali in effect appointed Mr Nowytarger as his agent to do all things necessary to undertake the works and achieve and settle the sale. That is apparent from the summary of his evidence that I have given at [96] above. It follows, in my view, that Mr Pascali is liable, either vicariously or by delegation, for Mr Nowytarger's acts and omissions within the scope of his ostensible authority.
Mr Pascali played no part in providing instructions to Mr Kesby. On the contrary, he told Mr Kesby that all instructions were to come from Mr Nowytarger. Presumably, Mr Pascali was aware of special condition 16 (that would seem to follow from his signature of the contract). However, he left it to Mr Nowytarger to obtain the evidence for which special condition 16 called, and left it to Mr Nowytarger to provide that evidence to Mr Kesby.
In those circumstances, it seems to me, Mr Nowytarger was acting within the scope of his ostensible authority. When Mr Pascali told Mr Kesby to accept instructions from Mr Nowytarger, he effectively directed Mr Kesby to accept those instructions as if they had come from Mr Pascali himself.
Mr Docker took a number of points about the pleaded fraud case: for example, as to whether fraud had been pleaded against Mr Pascali in respect of the false representations made to the insurance broker, or in respect of the sham building contracts. All those matters can be put to one side because on the central issue - the false representations conveyed by the provision of the HWI certificates - what Mr Nowytarger did, and Mr Pascali's liability for those actions, are squarely within the scope of the pleaded case.
I conclude that Mr Pascali, subjectively innocent as undoubtedly he was, nonetheless is liable in law for the consequences of Mr Nowytarger's deceit relating to the HWI certificates.

Issues 9 to 14: the deceit claim against Mr Pascali based on the Development Representations

The pleaded case is that by tendering the final occupation certificate, Mr Pascali represented, expressly or impliedly, that: 1. the residential building work was complete and had been done in a proper and workmanlike manner by a licensed builder, except for the incomplete or defective work that was identified in the June and September lists; and 2. the work had been done in accordance with the development approval and the construction certificate.
As the case was conducted, this group of issues essentially turned around the second representation.
Mr Pascali's liability is said to arise on the same basis as is set out in [95] to [98] above. He is said to be liable, vicariously or by delegation, for the acts of his agent Mr Nowytarger.

The Final Occupation Certificate

There is a curiosity with special condition 16(a). Cutting through the verbiage, it requires provision of evidence that the building works have been completed in accordance with the Council's requirements. It provides that such evidence may be in the form of "a final occupation certificate or similar certificate". However, whatever it may have been that final occupation certificates certified at the relevant time (2012), it was not that the works had been completed in accordance with the requirements of the Council.
As the Environmental Planning and Assessment Act 1979 (NSW) (the EPA Act) stood in 2012, final occupation certificates were dealt with by ss 109C, 109H. I set out those sections in their 2012 form: 109C Part 4A certificates (1) The following certificates (known collectively as Part 4A certificates) may be issued for the purposes of this Part: (a) a compliance certificate, being a certificate to the effect that: (i) specified building work or subdivision work has been completed as specified in the certificate and complies with specified plans and specifications, or (ii) a condition with respect to specified building work or subdivision work (being a condition attached to a development consent or complying development certificate) has been duly complied with, or (iii) a specified building or proposed building has a specified classification identified in accordance with the Building Code of Australia, or (iv) any specified aspect of development complies with the requirements of any other provisions prescribed by the regulations, or (v) any specified aspect of development (including design of development) complies with standards or requirements specified in the certificate with respect to the development, (b) a construction certificate, being a certificate to the effect that work completed in accordance with specified plans and specifications will comply with the requirements of the regulations referred to in section 81A (5), (c) an occupation certificate, being a certificate that authorises: (i) the occupation and use of a new building, or (ii) a change of building use for an existing building, (d) a subdivision certificate, being a certificate that authorises the registration of a plan of subdivision under Division 3 of Part 23 of the Conveyancing Act 1919. (1A) A single compliance certificate may deal with any number of matters, whether of the same or of a different kind. (2) An occupation certificate: (a) may be an interim certificate or a final certificate, and (b) may be issued for the whole or any part of a building. (3) If the regulations so provide, a construction certificate may be issued subject to conditions. (4) In this section: new building includes an altered portion of, or an extension to, an existing building. Notes. (1) Sections 109M and 109N prohibit the occupation or use of a new building, and the change of building use for an existing building, unless an occupation certificate has been issued for the building. (2) A plan of subdivision (whether or not the subdivision requires development consent) is not in registrable form for the purposes of the Conveyancing Act 1919 unless it is endorsed with a subdivision certificate issued under this Division. Plans prepared for the purposes of the Strata Schemes (Freehold Development) Act 1973 or the Strata Schemes (Leasehold Development) Act 1986 are not plans of subdivision within the meaning of section 195 of the Conveyancing Act 1919 and are therefore not subject to this Division. The regulations under the Conveyancing Act 1919 provide for the manner and form in which a plan of subdivision is to be endorsed for the purpose of enabling the plan to be registered under that Act. 109H Restrictions on issue of occupation certificates (1) There are two kinds of occupation certificates, as follows: (a) an interim occupation certificate that authorises a person to commence occupation or use of a partially completed new building, or to commence a new use of part of a building resulting from a change of building use for an existing building, (b) a final occupation certificate that authorises a person to commence occupation or use of a new building, or to commence a new use of a building resulting from a change of building use for an existing building. It is not necessary for an interim occupation certificate to be issued before a final occupation certificate is issued with respect to the same building. (2) An occupation certificate must not be issued unless any preconditions to the issue of the certificate that are specified in a development consent or complying development certificate, or any requirements of a planning agreement referred to in section 93F that, by its terms, are required to be complied with before such a certificate is issued, have been met. (3) An interim occupation certificate must not be issued to authorise a person to commence to occupy or use a partially completed new building unless: (a) a development consent or complying development certificate is in force with respect to the building, and (b) in the case of a building erected pursuant to a development consent but not a complying development certificate, a construction certificate has been issued with respect to the plans and specifications for the building, and (c) the partially completed building is suitable for occupation or use in accordance with its classification under the Building Code of Australia, and (d) such other requirements as are required by the regulations to be complied with before such a certificate may be issued have been complied with. (4) An interim occupation certificate must not be issued to authorise a person to commence a new use of part of a building resulting from a change of building use for an existing building unless: (a) a development consent or complying development certificate is in force with respect to the change of building use, and (b) the part of the building is suitable for occupation or use in accordance with its classification under the Building Code of Australia, and (c) such other requirements as are required by the regulations to be complied with before such a certificate may be issued have been complied with. (5) A final occupation certificate must not be issued to authorise a person to commence occupation or use of a new building unless: (a) a development consent or complying development certificate is in force with respect to the building, and (b) in the case of a building erected pursuant to a development consent but not a complying development certificate, a construction certificate has been issued with respect to the plans and specifications for the building, and (c) the building is suitable for occupation or use in accordance with its classification under the Building Code of Australia, and (d) such other matters as are required by the regulations to be complied with before such a certificate may be issued have been complied with. (6) A final occupation certificate must not be issued to authorise a person to commence a new use of a building resulting from a change of building use for an existing building unless: (a) a development consent or complying development certificate is in force with respect to the change of building use, and (b) the building is suitable for occupation or use in accordance with its classification under the Building Code of Australia, and (c) such other matters as are required by the regulations to be complied with before such a certificate may be issued have been complied with. (7) In this section: new building includes an altered portion of, or an extension to, an existing building.
The certificate that was given to Mrs Carr was prepared by a private certifier, Mr Grant Harrington, who was the appointed Principal Certifying Authority. It was dated 15 August 2012. It named Mr Nowytarger as both the applicant and the owner. It gave details of the development consent and the construction certificate. It summarised the works. It certified:

I have been appointed as the Principal Certifying authority under s 109E;
A current Development Consent or Complying Development Certificate is in force with respect to the building;
A Construction Certificate has been issued with respect to the plans and specifications for the building;
The building is suitable for occupation or use in accordance with its Classification under the Building Code of Australia;
Where required, a final Fire Safety Certificate has been issued for the building;
Where required, a report from the Commissioner of Fire Brigades has been considered.

The certificate included a schedule that identified a number of "attachments". They included several certificates by a firm of consulting engineers, certificates from subcontractors, and three certificates signed by Mr Miller.
The engineers' and all but two of the subcontractors' certificates were addressed to Mr Nowytarger's company Blue Edge Developments. Mr Miller's certificates were addressed to Mr Nowytarger. Mr Miller certified: 1. in the first certificate, "that all building works carried out… at 4 Laura st Seaforth has [sic] followed the basix requirements and the building code of Australia. 2. In the second, "that all timbers used at 4 Laura st Seaforth building are in accordance with AS1684, AS1720, AS3959" and that "[a]ll external timbers and the new roof structure are in accordance with 1604". 3. In the third, "that all building works completed at 4 Laura st Seaforth was [sic] done in accordance with the building code of Australia".
There were also attached to the final occupation certificate three "mandatory and critical stage inspection report[s]" prepared by Mr Harrington himself.
There is nothing in the final occupation certificate that addresses the subject with which special condition 16(a) is concerned: namely, that the works were completed in accordance with the Council's requirements. Nor is there anything in the statutory regime pursuant to which such certificates were issued that required them to address whether the certified works comply with all conditions of all relevant consents.
The works were not completed in accordance with the Council's requirements. That is plain from drawings prepared by Hart Design. It is uncontroversial that those drawings disclosed that the work that was completed differed from the work that was the subject of the plans and specifications presented to and approved by the Council in a number of respects. Some of those respects were significant. Others were not.
I have no doubt that Mr Nowytarger knew that the building work as completed (to the extent that it was completed prior to settlement of the sale) did differ, in the respects identified by Hart Design, from the approved plans and specifications. I have no doubt that Mr Nowytarger understood that there had been no relevant modification of the development consent [79] .
Further, the certificates given by Mr Miller were false. There was no factual basis on which he could certify to the matters stated in any of those certificates. He sought to explain his certification by saying that Mr Taylor had carried out the requisite inspections [80] . However, Mr Taylor said that he had carried out no such inspections [81] . I prefer, and accept, Mr Taylor's evidence on this point.
Mr Miller's certificates were addressed to Mr Nowytarger. It must have been Mr Nowytarger who provided them to Mr Harrington. Mr Nowytarger must have known, at the time he provided those certificates to Mr Harrington, that they were false.
Mr Nowytarger provided the final occupation certificate either directly or through Mr Kesby to Mrs Carr (perhaps through Mr Thomas). He did so in circumstances that represented impliedly that the certificate was capable of demonstrating that all works had been carried out in accordance with the Council's requirements. He must have known that it was false to represent that the works had been so completed.

Issues 15 to 20: the deceit claim against Mr Nowytarger

For the moment, I pass over the issue of loss, which is the subject of issue 14.
Essentially for the reasons I have given, the deceit claim against Mr Nowytarger succeeds, both in respect of the Insurance Representations and the Development Representations.

Issues 21 to 25: the negligence claim against Mr Pascali

The claim was pleaded as one based on a duty of care to avoid causing economic loss. The obvious answer to that claim seems to be that Mrs Carr was not relevantly vulnerable. She had solicitors acting for her. They were able to protect her interests by requiring amendments to the contract. They did so, requiring that special conditions 15 and 16 be inserted into the contract. Had Mr Thomas thought more was required, he would have said so.
Once the contract was amended, Mrs Carr was satisfied (on her solicitors' advice, no doubt) that she was adequately protected. Had she not been so satisfied, it was open to her to exercise her right, during the cooling off period, to withdraw the contract.
In the course of submissions, Dr Birch put an alternative negligence case, based on negligent misstatement. He sought to draw an analogy between the provision of the HWI certificates and the final occupation certificate on the one hand, and the provision of answers to requisition on title on the other. He relied on the decision of the Court of Appeal in Bebonis v Angelos [82] as authority for the proposition that a vendor who answers requisitions on title comes under a common law duty of care to ensure their accuracy.
It is correct to say that the reasons of Handley JA (with whom Beazley and Heydon JJA agreed) suggest, in obiter dicta, that this might be so: see his Honour's reasons at [40]-[42], [80]-[81]. However, it is not necessary to go further into this. The case based on negligent misstatement was not pleaded. Nor is it included in the agreed statement of issues. In those circumstances, the interests of justice do not require it to be considered; on the alternative, they suggest that I should leave it alone.

Issue 26: breach of statutory warranties claim against Mr Miller

Mrs Carr's case is that, as between her and Mr Miller, the latter is estopped from saying that he did not perform any of the building work the subject of the contracts between him and Mr Nowytarger to which I have referred earlier in these reasons. That estoppel arises, Mrs Carr contends, notwithstanding that it can now been seen that the contracts were shams, created solely for the purpose of obtaining the HWI certificates.
Mrs Carr says that the estoppel arises because Mr Miller knew that the contracts were to be used for the purpose of obtaining HWI certificates, and knew that the certificates were to be given to Mrs Carr to induce her to complete, rather than rescind, the contract for sale. Mrs Carr says that Mr Miller cannot resile from the representation conveyed, namely that he had done the building work the subject of those certificates.
In my view, that analysis must be correct. Mr Miller collaborated with Mr Nowytarger in the way that I have described, for the purpose that I have described. That purpose succeeded. It is too late for Mr Miller to resile from the represented state of affairs.
However, the estoppel can go no further than the contracts themselves. That is to say, to the extent that Mr Miller is liable under the contracts (or is estopped from denying that liability), his liability can only extend to the work described in those contracts. In brief, that is the construction work excluding the items of work expressly noted on the contracts.

Issues 29 and 30: breach of statutory warranties claim against Mr Nowytarger

For the moment, I pass over the issues of breach and loss as between Mrs Carr and Mr Miller, which are the subject of issues 27 and 28.
It is clear that Mr Nowytarger effectively undertook the whole of the building work. He did so by engaging the various contractors, including Mr Taylor and the tradesman who carried out individual parcels of work, over the whole of the project. Mr Nowytarger effectively did the work as an unlicensed builder. He was not an owner-builder, either in the general sense of those words or as they were defined at the relevant time in s 3(1) of the HB Act: a person who does owner-building work (within the meaning of Part 6) and who is issued an owner-builder permit for that work.
However, as someone who did residential building work, Mr Nowytarger was required to hold a licence: see ss 4(1), 12 of the HB Act. Thus, if there were a contract of some form between Mr Pascali and Mr Nowytarger for Mr Nowytarger to do the work, s 18B would apply. The warranties apply not only to those hold licences but also to those who are required to hold them.
The fundamental problem seems to me to be to find a contract between Mr Pascali and Mr Nowytarger. Undoubtedly, Mr Pascali asked Mr Nowytarger to do the work, or to arrange for it to be done. It does not follow, however, that there was a contract between them for the performance of that work.
The pleadings are singularly unhelpful on this topic. The written submissions for Mrs Carr do no more than state that if Mr Nowytarger were found to have had an agreement with Mr Pascali then, unless Mr Pascali was an owner builder, Mr Nowytarger would be liable for the s 18B warranties.
In those circumstances, resolution of the question of Mr Nowytarger's statutory liability - his liability for the s 18B warranties - depends on resolution of issues 33 and 34. I shall turn to those issues in a moment, once again passing over, for the moment, the issues of breach and loss (as between Mrs Carr and Mr Nowytarger, issues 31 and 32). As will be seen from what I say on issues 33 and 34, I conclude that: 1. Mr Pascali was not an owner-builder, either as those words are generally understood or within the more confined definition in s 3(1) of the HB Act; and 2. the evidence does not permit the finding of any contract between Messrs Pascali and Nowytarger. It may be noted that the word "contract" is not defined in the HB Act. It must therefore bear its ordinary meaning. It cannot be extended, as is often done in other statutory contexts, to the composite expression "contract, arrangement or understanding".
It follows that Mr Nowytarger has no liability under the s 18B implied warranties.

Issues 33 and 34: breach of statutory warranties claims against Mr Pascali

Mr Pascali did not himself undertake any building work. At the most, he arranged for Mr Nowytarger to undertake the work in question. It does not seem possible to create some contractual relationship out of the arrangements between them.
The definition of residential building work includes, relevantly any work involved in, or involved in coordinating or supervising any work involved in, the construction of or the making of alterations or additions to a dwelling, or the repairing, renovation etc of a dwelling. On any view, the work done by Mr Nowytarger fell within that definition because, on any view, to the extent that he did not physically do the work himself, he coordinated and supervised it. However, there is no evidence that Mr Pascali did any of the work. Nor is there any evidence that he was involved in coordinating or supervising that work. On the contrary, the inescapable inference from his evidence is that he left it to Mr Nowytarger.
Thus, I see no basis on which it can be said that Mr Pascali was, in the general sense of the words, an owner-builder. He was undoubtedly the owner of the property. However, he did not do, or coordinate or supervise, any of the work in question; nor was he involved in any of those activities.
On that basis, Mr Pascali can have no liability as an owner-builder.
In that analysis, I have assumed that the words "owner-builder" have their ordinary meaning. It is however to be noted that they were defined in s 3(1) of the HB Act, in the terms set out at [194] above. Dr Birch submitted, relying on s 6 of the Interpretation Act 1987 (NSW), that the context of s 18C of the HB Act required that the words "owner-builder" be given their general meaning, and that they should not be confined by the statutory definition. It is unnecessary to resolve that dispute.

Issues 37 and 38: the claim against Mr Nowytarger based on the June and September lists

I shall deal with these when I return to the questions of loss and damage.

Issues 39 to 41: Mr Pascali's cross-claim against Mr Nowytarger and Ms Pascali-Nowytarger

The Family Relationship Deed

The Deed was made on 2 October 2012, some 2 days before the scheduled date for completion of the sale from Mr Pascali to Mrs Carr. The parties to the Deed were Mr Pascali, his present wife Mrs Jennifer Pascali, Ms Pascali-Nowytarger and Mr Nowytarger. The Deed's evident purpose was to achieve a realignment of the parties' property interests.
Clause 5.1 of the Deed noted that Ms Pascali-Nowytarger had a claim against Mr Pascali for a loan of $2 million, apparently made to help Mr Pascali "develop, restructure and [renovate]" the Seaforth property. That loan is evidenced by a letter dated 24 December 2007, a copy of which was annexed to the Deed (and the words I have just quoted come from that letter).
Other property interests dealt with by the Deed included ownership of a property at Balgowlah. It is of no present relevance.
So far as it is relevant, Clause 5 of the Deed provided: 5.1 In consideration of these presents (a) …. (b) Simone renounces all claim to the sum of $2,000,000.00 referred to in the letter annexed and marked "D". (c) Simone and Jason renounce and waive all claims they may have against Joseph or may come to have on his Estate including inter alia any claim of a Constructive Trust or of Equitable rights in relation to the Seaforth property deriving from improvements effected by them to that property, or the Balgowlah property. (d) Simone and Jason indemnify Joseph in respect of any claims made against Joseph by the purchaser of 4 Laura Street, Seaforth and relating to any building works conducted at that property in the last 7 years. 5.2 Joseph agrees to give to Simone by no later than 4 October 2012, the sum of $4,170,000.00. 5.3 Simone (and Jason) agree and acknowledge that the said sum of $4,170,000.00 is to be received by her in lieu and full satisfaction of any obligations otherwise arising on the parts of Joseph and Jenny, to make provisions for her in their Wills.
The principal question for decision is whether the indemnity set out in cl 5.1(d) catches the claims made by Mrs Carr against Mr Pascali in these proceedings.
The first point of significance is that para (d) relates to "any claims". The types of claim that may be the subject of the indemnity are not expressly limited.
The second point to note is that the clear purpose of the Deed was to settle, so far as possible, all claims that one party might have against the other. The indemnity is to be read in that context. In effect, by agreeing to pay, out of the proceeds of sale, $4.17 million to Ms Pascali-Nowytarger, Mr Pascali was giving away a very substantial capital sum from which, otherwise, he could have met claims that might be made against him "by the purchaser of" the Seaforth property.
The next point to note is that the indemnity is not unlimited. It is limited to "any claims made… by [Mrs Carr]… relating to any building works conducted at" the Seaforth property in the previous seven years. Clearly enough, that reminds the reader of the factual context: the extensive works of renovation and redevelopment undertaken by Mr Nowytarger on behalf of Mr Pascali.
The words "relating to" seem to me to indicate, as a matter of language divorced from context, to require no more than that there must be some connection between the two subjects that they link. The width or ambit of that connection - what is required to demonstrate it - will of course depend upon the context. However, there does not seem to me to be any functional distinction between the words "relating to" and the phrase "in relation to" which has been the subject of judicial exposition on numerous occasions [83] .
In my view, Mrs Carr's claims are claims "relating to" the building works. They do so because the contract between her and Mr Pascali expressly referred to those works, expressly required Mr Pascali to use his best endeavours to complete them in accordance with the conditions of the development consent, and expressly required Mr Pascali to use his best endeavours to produce HWI insurance in respect of them. That contract was still executory when the deed was made, and Mr Pascali's obligations under special condition 16 remained unperformed at that time.
The primary claim, the claim in deceit, arises directly out of the works, the purported contracts between Mr Nowytarger and Mr Miller to perform them, and the purported HWI certificates produced in respect of them.
No doubt, the parties to the Family Relationship Deed could have agreed that the indemnity was to relate only to defects in the building works. But they did not. They chose, instead, words that neither restricted the kinds of claim that might be the subject of the indemnity nor limited closely the relationship between the subject matter of those claims and the works.
I conclude that Mr Pascali is entitled to be indemnified by Mr Nowytarger and Ms Pascali-Nowytarger in respect of the claims brought by Mrs Carr against Mr Pascali in these proceedings.
Although there is a stated issue as to whether there is any reason why the indemnity (if it extends to the claims brought by Mrs Carr) should not be enforced, it is very difficult to see why this is so. There is no suggestion that Mr Pascali was a party to, or even that he know of or had reason to suspect, the deceit practiced by Mr Nowytarger. He is innocent of any moral, as opposed to legal, culpability for that deceit. There is no reason to decline to extend the indemnity: Hatcher v White [84] ; Burrows v Rhodes [85] .

Alternative source of obligation to indemnify

Mr Pascali also claims that if it is shown that Mr Nowytarger exceeded his authority in some way then he would be liable to indemnify Mr Pascali for the consequences. That must be correct, if only because, as an agent, Mr Nowytarger owed fiduciary duties to act in the best interests of Mr Pascali.

Approach to resolution of these issues

The defects case is relevant to the damages claimed against all defendants, but in different ways. The parties' submissions recognised this. The principal contests as to what work was defective were the subject of submissions by, in particular, Mr DeBuse for Mrs Carr and Mr Davie for Messrs Miller and Nowytarger. For the most part, Mr Docker allowed Mr Davie to make the running on these questions.
Unfortunately, the only submissions that attempted a systematic, issue by issue, analysis of the defects case were Mr Davie's, provided, pursuant to directions given after the conclusion of the hearing, on 3 August 2018, and Mr DeBuse's submissions in reply (provided pursuant to the same directions) on 15 August 2018. Before then, the debate had been conducted in a piecemeal fashion by reference to the Scott Schedule. The Scott Schedule was a somewhat haphazardly constructed document which sought in effect to pull together, item by item, the defects as they had been identified and listed by Mr Daniels in his two principal reports dated 4 July 2016 and 4 April 2017.
In the result, I think that the only practical way for me to deal with the defects issues is to take them item by item, in numerical order according to the submissions (which is not always reflected in the various iterations of the Scott Schedule that were propounded, supposedly in an attempt to make the task easier, in the course of the hearing and subsequently). I propose to give relatively brief reasons for each item (where there is a contest), including as to rectification cost where relevant. In assessing rectification cost, I am for the most part guided by Mr Daniels' estimates rather than Mr Hall's (where Mr Hall's are available), for the reasons I give below at [248]. However, because of the concerns that I have expressed as to Mr Daniels' partiality, I have in many cases trimmed his estimates. That is, I acknowledge, an arbitrary approach.
As some justification for what may seem to be an arbitrary approach, I offer the following: 1. even after all post-hearing submissions were complete, there was very little substantive guidance to the relevant evidence (if any); 2. Mr Daniels' reports were constructed in a way that, if not intended, nonetheless made them extraordinarily difficult to follow; 3. the idiosyncratic construction of the court book made it very difficult to locate supporting material on which Mr Daniels had relied; and 4. the cross-examination did little to assist in an evaluation of the defects evidence.
The result will be a statement of conclusions on each contentious defect. Some of those relate to work comprised in the June list. Some of them relate to work comprised in the September list. Others relate simply to the state of the house and its curtilage. I propose to leave it to the parties to allocate my findings into the various heads of damage, in accordance with the conclusions I have expressed above as to the liability of each of the defendants.

The claim against Mr Miller

It follows from what I have said that, as between Mrs Carr and Mr Miller, Mr Miller is liable for the cost of rectification of defects in the work that is the subject of the contracts between him and Mr Nowytarger. Since the submissions for Mrs Carr paid little attention to the detail of those contracts (including, specifically, what work was comprehended and what work was specifically excluded), I cannot find the dollar outcome of my conclusions. For the reasons I have given, the parties will need to work that out.

The claim against Mr Nowytarger

I have concluded that Mr Nowytarger is not liable pursuant to the s 18B statutory warranties. I deal with the claim in deceit in the following paragraphs. That leaves the claim against him based on the June and September lists.
Mr Nowytarger undertook to do that work. He did some of it. To the extent that it is defective or incomplete, he is liable in damages. Mr Davie submitted that the liability under the June list was limited to $50,000: the amount of the cheque tendered in effect as an earnest of performance. I do not agree. The cheque was tendered and accepted as a guarantee of good faith, not on the basis that it represented a genuine pre-estimate of loss. Mrs Carr is entitled to whatever the damages may prove to be. Once again, it will be necessary for the parties to disentangle, from my conclusions on the question of defects, those which relate to this aspect of Mr Nowytarger's liability.

The claims in deceit

Mrs Carr's methodology for assessment of damages on her deceit case (against Mr Nowytarger and against Mr Pascali) proceeds on the basis that, but for the deceit that I have found, she would not have purchased the Seaforth property. On that basis, Mrs Carr says, her damages are the difference between the purchase price paid and what she says was the true value of the property at the time. As to the true value of the property, Mrs Carr relies on reports from a valuer, Mr Paul Chaloner.
Mr Chaloner assessed the true value of the property by considering the impact of the defects and the cost of their rectification (as he was instructed to assume those matters) on the purchase price. In substance, he said, the hypothetical fully informed purchaser, aware of those matters, would have reduced the amount that he or she was prepared to pay by the cost of rectification, and less a further discount equivalent to 50% of those costs, to allow for, or accommodate, all the risks, uncertainties and contingencies inherent in any building project.
One would think that the "contingency allowance" might be somewhat higher where the project comprises rectification of defective work done by an earlier builder than it would be where the project was a new greenfield development.
Mr Pascali called a valuer, Mr Kent Wood. Mr Wood's approach initially seems to have been that the cost of rectification of defects must have been factored into the purchase price that Mrs Carr agreed to pay. The difficulty with that approach is that it assumes that Mrs Carr had been aware of all the defects and of the likely cost of their rectification (or had been aware of the defects, and was content to proceed regardless of the cost of rectification).
Although I shall return in a little more detail to the differences between the evidence of Mr Chaloner and Mr Wood, I note that Mr Wood appeared to accept in cross-examination that his approach would not apply unless the hypothetical purchaser were fully informed as to the extent and cost of rectification of the defects. In the result, the substantive difference between his approach and Mr Chaloner's came down to the assessment of the further discount that the hypothetical fully informed purchaser would require, over and above the estimated cost of rectification, to allow for contingencies.
The underlying questions, therefore, are: what is the extent of the defects, and what is the cost of their rectification? It is at this point that one very significant problem arises. That problem is one to which I have referred already. Mrs Carr's case relies on the evidence of Mr Daniels. Unfortunately, as I have recorded at [33] above, Mr Daniels has to an extent become an advocate for Mrs Carr rather than an independent expert witness owing his primary duty to the court. It follows that, even where his evidence is uncontroverted, it cannot be accepted without question.

The valuation evidence

The valuers agreed that the price that Mrs Carr agreed to pay reflected the market value of the property on the assumption that it was not affected by the defects of which she complained. However, they reached that conclusion in slightly different ways. In particular, Mr Wood sought to take account, in his valuation, of the impact of the conditions of the contract, including specifically special condition 15 and the cheque for $50,000 that Mr Nowytarger had given Mrs Carr as security for his performance of special condition 15. In effect, Mr Wood thought that figure represented the parties' assessment of the value of performance of special condition 15 (which in turn required performance of works on the June list), so that if those works were not performed, the value should be reduced by $50,000.
It is unnecessary to resolve that dispute between the valuers, although it resurfaces in a different way when considering Mr Docker's submissions on damages. Mr Docker submitted in effect that the assessment of damages for deceit (should it be found that Mr Pascali was liable in deceit) must allow, in Mr Pascali's favour, the value of all benefits obtained by Mrs Carr by entering the contract. Those benefits included the $50,000 provided by Mr Nowytarger as security. They included also the value of her claim against Mr Miller. I shall return to those matters.
I do not accept Mr Wood's thesis that Mrs Carr must be taken to have purchased with knowledge of all the defects [86] . That is, I do not assume that she was a fully informed purchaser, who had made her own assessment of the purchase price knowing everything concerning the need for, and cost of, defects rectification. On the contrary, I am satisfied that there was nothing in the presentation of the property, as at June 2012, that would have led Mrs Carr to think that many of the now-known defects existed.
I accept that the works were not entirely complete at that time, but that is a different matter. It is something covered by special condition 15 and the June list. It is also something to which the September list was addressed, but again that is a different matter.
Having said that, it could not be appropriate to make allowance for the cost of rectification of defects that were known by or disclosed to Mrs Carr before the purchase contract became binding upon her. She must be taken to have factored the cost of known defects into her assessment of the price to be paid.
Thus, the contingency sum is something to be added to the cost of rectification of hidden or unknown defects.
In principle, I think it is appropriate to ascertain the "true value" - the amount that a fully informed purchaser, aware of the existence of the defects and the likely cost of their rectification, would have paid. I think it is correct in principle to say that the hypothetical purchaser would not have discounted the defect-free market value only by the estimated cost of rectification. He or she would have allowed, in addition, for a contingency sum.
That contingency sum would take into account the fact that defects rectification is notoriously a time-consuming and difficult process, and that it is not uncommon for the scope and cost of what is required to expand as the work progresses. I do however think that Mr Chalenor's 50% allowance is excessive. In reaching that conclusion, I take into account that the sales data on which he relied, properly analysed, do not support his conclusion; indeed, if I may say so, they have very little to do with the facts of the case with which I am concerned.
In my view, the appropriate allowance, or further discount, lies somewhere between 30% and 40% of the estimated cost of rectification of the hidden or unknown. I accept that this conclusion is the product of intuition rather than analysis informed by principle, precedent and evidence. However, I have to do the best I can. Doing that, I quantify the additional allowance, or further discount, at 35% of the cost of repair of those defects.

The value of benefits Mrs Carr obtained by reason of the contract

The position that Mrs Carr finds herself in, as a result of the deceit practised upon her, is that she has a house worth substantially less than the amount she paid for it. As a result, she has a number of disparate, or discrete, rights: 1. against Mr Miller for breach of the statutory warranties, to the extent I have indicated; 2. perhaps against the HWI insurer, to a maximum of $670,000; 3. against Mr Nowytarger in deceit; and 4. against Mr Pascali in deceit.
It may be accepted that Mrs Carr cannot recover more than whatever is the total loss that she has sustained (however that is to be quantified if and when her case is ever put on a basis that allows proper quantification). It does not seem to me to follow, however, that she should be required to allow, in favour of the parties liable in deceit, for whatever Mr Miller may be worth or, for that matter, whatever her claim against the HWI insurer may be worth. In effect, the submissions for Mr Pascali on this issue seek to dissect the amount of Mrs Carr's "no transaction" damages, and to require that he meet only the amount, if any, that she cannot recover by exhausting her rights against other parties or non-parties based on different causes of action.
I do however accept that the cost of rectification or indeed completion of work comprised in of the June and September lists should not be allowed against Mr Pascali in respect of the deceit claim. That is because, as to the June list, Mrs Carr was aware of the incomplete work at the date of contract and must be taken to have made allowance for that when assessing the purchase price she would pay, including by reference to the June list itself and the tender of the $50,000 cheque to secure performance of the work contained in it.
As to the September list, Mrs Carr was aware of the further work required to be done as itemised in that list, and must be taken to have settled her purchase upon the basis that she would take the risk that this work was done, and done properly. To the extent that it was not, the cost of rectification or completion should not form part of the claim against Mr Pascali in deceit.

Mr Daniels and Mr Hall

Although I have expressed some reservations as to the acceptability of Mr Daniels' evidence, I should note that where it is in conflict with the evidence of Mr Hall, I prefer Mr Daniels. I say that because in my view Mr Daniels was more thorough in his inspections and observations. He had the very considerable benefit of having been present onsite for a lengthy period of time whilst defects were located, investigated and repaired. He based his views, as to the existence of defects, on the results of testing and inspection carried out by him, by others at his direction and under his supervision, or by independent tradesmen or contractors. By contrast, Mr Hall's views were based on relatively limited inspections.
Unfortunately, that expression of preference applies only to a very small number of the numerous defects of which Mrs Carr complains.

Defects

Counsel structured their submissions by reference to the Scott Schedule, and I shall deal with the disputes accordingly. To the extent that there are disputes that have not been resolved one way or another, I shall give brief reasons for the conclusions to which I come on each matter.
Item 1: not pressed.
Items 2A and 88: water entry from the external northern metal framed door in to the master bedroom robe area. It is common ground that the work was defective and that the defective installation of the door has caused water ingress. The difference between the experts is as to the cost. Mr Daniels has reported the actual costs incurred to rectify the defect and its consequences. Mr Hall has purported to cost the work on a basis that is not revealed in any clear way. It would appear that he did not agree that the scope of work was as wide as Mr Daniel suggested (despite the fact that Mr Hall claims that the scope was agreed). It is quite clear that Mr Hall has not analysed the invoices submitted for the rectification work. He has not given any reason for concluding that the amounts charged did not relate to work done to rectify the defect, or were in some way unreasonable. It follows that in principle I prefer Mr Daniels' approach. The total amount identified by him as paid or payable is $44,102. I allow that amount.
Item 2B: water entry in the area of the parents' retreat, level 2. The defect has been agreed and the experts agree on the cost of rectification: $1,515. I allow that amount.
Item 2C: water entry from the rear of the southern balcony into the master bedroom. This is one of the defects in respect of which I prefer Mr Daniels' evidence on the basis that his investigations and observations were, for the reasons I have briefly described, more thorough than those of Mr Hall. There is no reason to disbelieve Mr Daniels' evidence of his observations of water entry. The fact that, on a different occasion, Mr Hall found no such evidence when he was present and carried out some tests does not gainsay Mr Daniel's evidence. It is common ground between Messrs Daniels and Hall that if the defect is found to exist (and in my view that has been shown), $9,240.50 should be allowed for rectification. I allow that amount.
Item 3: water entry from the southern balcony on level 1 to the bedroom on that level. There is photographic evidence of water damage and mould. Mr Hall's evidence is of a test that he carried out on one occasion. It does not negate the evidence available through the photographs. There is in addition evidence of the cause: defects in the sills under the doors separating that bedroom from the balcony. Mr Daniels estimates the cost of rectification at $9,652. Mr Hall suggests that the cost should be $2,820. I prefer Mr Daniels' approach because his evidence addresses the defect of which he has found evidence whereas Mr Hall's costing is theoretical. I allow $9,000 for this item, partly because of what I have said as to Mr Daniels' approach to rectification costs and partly because, in a number of areas, the experts have agreed on a rectification figure that is less than Mr Daniels' estimate. The reduction is not capable of more detailed rationalisation.
Item 4: water entry from the southern balcony to bedroom 2. Again, I prefer Mr Daniels' evidence of observations, supported by photographs, to Mr Hall's evidence of one-off testing. I find that the defect has been proved. The experts agree that if it exists, the cost of rectification is (somewhat less than Mr Daniels' estimate) $8,296.50. I allow that amount.
Item 5: water damage to the ceilings of bedrooms 1 and 2. This defect is agreed. The rectification cost is agreed at $3,859 (again, less than Mr Daniels' estimate). I allow that amount.
Item 6: water ingress through the zinc metal roof above the master bedroom and parents' retreat on level 2. Mr Daniels' evidence of observations satisfies me that the defect exists (and there was little to controvert that from Mr Hall). The agreed costing for rectification, should the defect exist, is $5,500 (again, and I shall not keep repeating this, less than Mr Daniels' estimate). I do not understand the submissions put for Messrs Miller and Nowytarger as to why this amount should not be allowed, and I allow it.
Item 7: further water ingress problems. There is photographic evidence, and evidence of the results of invasive testing, that establish the existence of this defect. The evidence also, I think, establishes the cause. Mr Hall's evidence cannot stand against that record. The agreed costing, should the defect be found, is $4,522.50. I allow that amount.
Item 8: water staining to the ceiling of the living room. The defect is agreed and the cost of rectification is agreed in the sum of $973. I allow that amount.
Item 9: moisture on the internal wall surfaces of the eastern wall of the master bedroom / parents' retreat area. Mr Daniels gives evidence of observations of water and of invasive testing that confirmed the observations. I accept that evidence. It follows that there is the defect. The agreed cost of rectification is $9,900. I allow that amount.
Item 10: water entry through the bi-fold doors on the ground level. Mr Davie submitted, in substance, that the problems (to the extent that they were found to have occurred) simply reflect the choice of bi-fold doors rather than sliding doors. On that basis, he submitted, there was no defect for which his clients should be made liable. I do not agree. The problem is water entry. Whether the cause is that the doors were not fit for purpose in the location in which they were used, or were improperly installed, or defective, is irrelevant. Mr Daniels estimates the cost of repair at $25,245. There is no alternative costing propounded. In accordance with the approach I have taken earlier, I allow $24,000 for this item.
Item 11: defective drains and tiles on the ground floor balcony. There is no dispute as to the existence of the defect. Nor is there any evidence challenging Mr Daniels' costing. He assesses a figure of $43,499. Taking the approach I have earlier adopted, I propose to allow $40,000 for this item. I do not find Mr Davies' attempts to reconstruct the costing using his own expertise to be particularly persuasive. As I have noted, there was no evidence on which it could be based.
Item 12: water ingress to the games room. There is some evidence of this. Unfortunately, it was not adequately addressed either in cross-examination or in submissions. The submissions for each side seek to reconstruct what has happened by reference to partial scraps of evidence that were not thoroughly explored. I am satisfied that there is a defect. I am totally unsatisfied that Mr Daniels' costing of $51,138 is realistic. I say that because, although it is based on invoices, I am far from satisfied that all he work referred to in the relevant invoices was necessary to rectify the undoubted problem of water entry. I would allow $30,000 for this defect, adopting a more severe version of the approach identified and taken earlier in these reasons. In taking that approach, I am fortified by the recognition that Mr Daniels' assessment included invoices that were later conceded to have nothing to do with the rectification of the particular defect.
Item 13: moisture ingress, humidity and mould in the lower ground floor, bedroom and robe area. This appears to be work done by Mr Nowytarger. The work that was done differs from what was shown on the approved plans. I am satisfied that the defect exists. Mr Davies submitted that the claimed cost of rectification, $5,584, included some double counting and some wrongly attributed invoices. He submitted that, allowing for those matters, the amount should be $3,760 plus GST plus margin. The submissions in reply did not controvert that assessment. I shall allow whatever is the result of the calculation including GST and margins.
Item 14: joinery adjacent to refrigerator and damage caused by refrigerator installation. Item 14 relates to replacement of joinery which suffered damage, Mr Daniels says, as the result of the defective installation of a refrigerator. I accept his evidence of the defect. He gives the cost of rectification as $2,244. That appears to be based on what he calls "a detailed cost justification". In the absence of any helpful submissions on this item, I allow that sum.
Item 15: faulty installation of bar refrigerator causing damage to adjacent areas. The amount claimed is $22,696. That appears to include the cost of replacement of the cabinets where the refrigerator was located and the replacement of associated drainage, as well as repair to those portions of the building that were damaged by reason of water leaking from the defectively installed pipework. The submissions on this item were not at all helpful. In particular, Mr Davie's submissions made no real attempt to consider the totality of the scope of work to which Mr Daniels referred. In the circumstances, I allow $22,000 for this item.
Item 16: not pressed.
Item 17: general electrical installation defects. This is supported by the evidence of Mr Daniels and also Mr Glenn Howard, an electrician. Mrs Carr gave evidence of observations of lights blowing out and the like. She was not challenged on that. The amount claimed is $21,841. In this case, I propose to allow the whole of the amount claimed.
Item 18: electrical power supply to boatshed. Mr Carr required 32 amp three phase power, but instead got 20 amp three phase power. Mr Nowytarger appeared to accept that he had erred. The amount claimed, $6,557, is to be allowed. It is supported by, among other things, the evidence of Mr Howard as well as that of Mr Daniels.
Item 19: not pressed.
Item 20: the problem experienced is that the air-conditioning installed by or at the direction of Mr Nowytarger was not adequate for its task. There is evidence of an air-conditioning expert, Mr John McComb, comparing what was installed with what should have been installed according to industry standard calculations.
The case for Mrs Carr is that some of the installation work is defective. That is supported by Mr McComb's evidence. However, there is a wider claim, in effect that she should have received more effective air-conditioning; to put it the other way, that the air-conditioning installed was inadequate for its task. Mr Daniels' evidence is in effect that more powerful or effective air-conditioning was required "to achieve the quality of air-conditioning promoted by the Vendor", and that the new work would "establish the air-conditioning to the previously relied on advertised standard".
I accept that the defective work identified by Mr McComb requires rectification. The cost appears to be $29,700, plus whatever additional expense may be incurred in associated building work. There is no evidence of the extent or cost of that additional work. I allow $29,700. I do not understand how, beyond this, the claim can be sustained. No one has been sued in deceit on the basis that the standard of air-conditioning was falsely represented, and that Mrs Carr relied upon that supposed false representation in making her decision to purchase the property.
Item 21: access to service area. The problem is that Mr Nowytarger installed the hot water service in a location that was not permitted by reference to the Building Code of Australia, and that this posed a risk to health and safety. He moved it, in a vain attempt to rectify the problem. The consequence is that access to the hot water service, for maintenance or repair, was very difficult. The claim is for the cost of rendering the services accessible. In my view, that claim is justified. The amended amount claimed is $21,904.75 (reduced from the original estimate because it wrongly included invoices for irrelevant work). In line with my general approach to Mr Daniels' costing, I allow $20,000.
Item 22: cracking and crazing to marble bench top. There is photographic evidence of this defect. Mr Davie submitted, rather hopefully, that the cause of the defect had not been established. That does not seem to me to matter, if the defect itself is clear. The amount claimed for rectification was $23,075. The submissions in reply acknowledge that two items, totalling in excess of $3,000, were erroneously included. That is yet further vindication of the caution that needs to be exercised in considering whether to adopt Mr Daniels' estimates. In line with the approach I have taken to assessing his figures, I would reduce the sum first of all by deducting $3,075 representing the conceded incorrect invoices and then by a further $2,000, because of the opacity of the supporting invoices relied upon, and the difficulty in finding a clear connection between the work described in them and the rectification of the defect. I allow $18,000.
Item 23: not pressed.
Item 24: dehumidification to combat effects of water entry and mould formation. The defendants' position appears to be that this is somehow related to the air-conditioning issues. It is not. It relates to a demonstrated health risk posed by mould that has formed as a result of water ingress. Dehumidification was propounded as a solution by an expert, Mr David Lark. Mrs Carr accepted that advice. The cost of the works has been assessed at $59,458 (rounded). Again, there is a problem in relating some of the supporting invoices to the rectification work in question. Consistent with my general approach to Mr Daniels' evidence, I allow $55,000.
Item 25: lack of mechanical ventilation and ducting. This problem arises because some service areas were fully enclosed. They therefore required mechanical ventilation. That was not supplied. The problem appears to have arisen as a consequence of Mr Nowytarger's departure from the approved plans. The claimed cost of rectification is $38,352. Mr Davie's attempts to rework the figures are unpersuasive. Because there are the usual problems of relating invoices to the work, I allow $35,000.
Item 26: apparently not pressed (it is not addressed in submissions).
Item 27: further mould problems. This is an accepted defect. The accepted cost of rectification is $140. I allow that amount.
Item 28A: spa bath. Part of the claim appears to relate to a five person spa bath that Mr Nowytarger installed, in circumstances where the seven person spa bath originally installed was defective. Mr Nowytarger's case is that he showed Mrs Carr a brochure depicting the replacement spa bath and she accepted it. Mrs Carr accepted the substance of that evidence. The only evidence that it needs to be replaced is Mr Daniels' opinion that the larger spa is required "to comply with the owners [sic] directions and expectations". In the circumstances, that does not seem to me to be an appropriate reason for allowing any part of the cost of supplying a new spa bath.
There is an additional claim for the cost of rectifying defective decking. I accept that. I was not taken to the costing of the amount. I do not propose to look through 33 volumes of court books to find it. Whatever the costed amount is should be allowed, without deduction (there does not seem to be any direct challenge to the costing).
Item 28B: defective installation of external spa tub. There is evidence that the spa tub in question leaks. There is no real evidence as to the cause of the leaks. The cost of rectification appears to be incorporated into the costing of Item 28A. Since I am not prepared to allow the whole of Item 28A, I am entirely unclear as to what if any costs should be allowed for Item 28B. The parties' submissions did not help. In the absence of clear evidence, I decline to allow anything for Item 28B.
Item 29: defective timber retaining walls. The walls support the upper rear landscaped area. They are collapsing. The drainage, if it exists, is inadequate. Undoubtedly, the walls need to be replaced. The walls appear to be of considerable antiquity. Mr Nowytarger did some relatively small amount of work on them. There is no real evidence that the work he actually did was defective in itself. The complaint is, rather, that it was hopelessly inadequate to rectify the problems with the existing walls.
Mrs Carr gave evidence that she believed that the retaining walls were newly installed. She was not challenged on that. However, the building inspection report to which I have referred earlier pointed out, among other things: Rear timber log retaining walls are present in fair condition. Retaining wall is leaning over. Future rectification can be anticipated.
Thus, the need for replacement of the retaining walls was drawn to Mrs Carr's attention, by the report, during the cooling-off period following exchange of contracts. The complaint is in substance that the need for rectification is far more urgent.
Mr Davie suggested in his submissions that there was no evidence that the retaining walls need immediate replacement. I do not agree. The evidence of the expert engineer, Mr Vadim Topolinsky, which is supported by other expert evidence, is to the contrary.
The real problem with this aspect of Mrs Carr's claim is that she is seeking damages representing the cost of repair of a defect that was made known to her. As I have said, she must be taken to have factored this cost into the amount she was prepared to pay for the property.
I accept that the report did not convey what Mrs Carr now says is the urgency of the need for replacement. Nor did it convey the cost, which is said to be of the order of $220,000. But, accepting those points, it is difficult to see how the cost can form part of the damages that she claims. She was deceived into completing the purchase of the property: that is the result of my earlier findings. But she was not deceived into thinking that the retaining walls were structurally sound and would last for any particular length of time. I do not understand how, in justice, the cost of rectification can be allowed as part of her claim for damages for deceit.
Accordingly, I allow nothing for this item.
Were I wrong in this, it would be necessary to consider the cost of rectification. Mr Daniels' evidence is particularly opaque, even by the standards of his reports overall. It puts the amount at $245,465. The submissions for Mrs Carr conceded that this included invoices exceeding, in total, $22,000 that were not referable to the work. The very fact that almost 10% of the amount of the claim was based on invoices that are now conceded to be irrelevant is something that, to my mind, justifies the cautious approach I have taken in many places to accepting Mr Daniels' costings.
The net amount for which the claim is pressed is $223,400. Mr Davies' submissions did not offer any insight, helpful or otherwise, into the breakup or validity of this costing. Were it necessary to do so, that is the sum I would allow for item 29.
Item 30: split and decayed wood to external decking and stairs. What I have said in relation to Item 29 is applicable to this item also. The defective state of the stairs was evident. It was pointed out in the building report obtained by Mrs Carr. There was a requirement in the June list for repair of a section of dry rot in the stairs. Mr Nowytarger said that he did this. Since there is no evidence to the contrary, I am inclined to accept what he says despite my general view of his unsatisfactory testimony. I do not allow anything for this item.
The amount claimed for rectification of this defect is $331,701. Again, the costing is opaque. Again, the submissions are unhelpful. Were it necessary to assess the cost of rectification then, bearing in mind the various observations I have made as to the weight to be placed on Mr Daniels' evidence, I would allow $300,000.
Item 31: water penetration to boat shed. The substantial issue, I think, is that the water penetration is the or a result of lack of adequate drainage control. Mr Daniels said that in that respect, the works did not comply with the conditions of approval. Mr Davie submitted that since the boatshed was not a habitable area (and this is indisputably correct), there was no problem caused by water from time to time flowing into it. That is a little difficult to accept, giving the propensity of water to cause rust, mould, and decay.
Part of the amount claimed is for temporary work undertaken to lessen water ingress. The remainder is based on a quotation from a firm of landscapers. The total is $23,620. There may be a dispute as to the amount that should be allowed for waterproofing (on the basis that it is not part of the work required to be done to comply with the conditions of consent). The simplest course seems to me to allow $23,000 for this item. Whether that represents a sufficient discount for the cost of waterproofing may be open to question, but in the absence of submissions directed to this point, I do not propose to spend further time on it.
Item 32: apparently not pressed (it is not addressed in submissions).
Item 33: defective automatic gates. The automatic gates were intended to be operable remotely, by use of the telephone system. They were not. They were referred to in the September list, before the telephone system was upgraded. The amount claimed is $1,862. Since that is supported by a quotation from an independent supplier, and in the scheme of things is inconsiderable, I allow it.
Item 34: gas pool heater. Mr Daniels' evidence was based, at least in part, on a report of a plumber, Mr Luke Stapleton. Those reports were rejected. Mr Daniels is not himself qualified to express the opinions he does. I am not prepared to find that there is a defect (and on that basis the question of quantum does not arise). I allow nothing for it.
Item 35: faulty installation of gas fluid pipe. The existence of the defect and its cost of rectification are agreed. Mr Daniels quantified the cost at $1,428. If that is the agreed figured (and the submissions were not helpful on this point), it should be allowed. If it is not, then whatever the agreed figure is should be allowed.
Item 36: not pressed.
Item 37: water leaks above front awning. This is an agreed defect. Its agreed cost of rectification is $4,813.50.
Item 38: subfloor areas not treated against termite attack. Mrs Carr obtained a pest inspection report prior to purchase. If that report disclosed the problem, she purchased on the basis of it. If it did not, there is nonetheless no reason for sheeting the cost of treatment home to any of the defendants. I do not allow this item.
Items 39 and 40: cracking to internal travertine tiling on the stairs and floors. There is photographic evidence of this defect. Mr Daniels rejected the suggestion that there was only the occasional crack, quite possibly attributable to builders carrying out rectification works. I accept his evidence. The cost of rectification for the two items is $35,833. There is no challenge to the costing (as opposed to liability). I allow this sum.
Item 41: cracked external travertine tiles. There is photographic evidence of this defect. Mrs Carr gives evidence to the effect that the number and extent of cracks have increased over the years. The apparent cause is the want of any expansion joint. The estimated cost of rectification is $86,100. Again, there is no challenge to that costing, as opposed to the liability for it. I allow this sum.
Item 42: no privacy screens. It was a requirement of the Council's consent that privacy screens be installed in various places. Mr Davie submitted that Mrs Carr had requested that they be omitted. The evidence of Mr Nowytarger on which he relied does not actually say that; and even if it did, I would be loathe to accept it. The better view of the evidence is that the privacy screens were omitted to make the work of formworkers, who were responsible for the construction of the slab on which the screens were to be placed, easier. There is no challenge to the costing, $4,381. I allow that amount.
Item 43: paint damage to the eastern external wall. There is no doubt that the paint work was inadequate or defective. Mr Daniels' cost of rectification appeared to conflate this defect with a more substantial problem. Mr Hall's costing is $2,920. In the absence of any other evidence of rectification costs, that is the amount I allow.
Item 44: floor waste drain. There is no doubt that the waste drain was not changed as required by the June list. Mr Nowytarger sought to suggest that Mrs Carr had directed him not to do this. I do not accept that evidence. In the absence of any challenge of the costing, I allow the amount assessed by Mr Daniels, $5,494.
Item 45: supply and install Sonos boxes. To the extent that there is any claim for defects in this work, that claim must fail because it depends upon a report obtained by Mr Daniels that, when tendered, was objected to and rejected. To the extent that it relates to the cost paid by Mrs Carr for the actual supply and installation work, it should be allowed, because it was Mr Nowytarger's responsibility to do those things. I allow the amount claimed for that, $3,285.
Item 46: not pressed (part of Item 17).
Item 47: CCTV Cameras. The brochure described 13 CCTV cameras. Only 8 were installed. Mr Nowytarger agreed to supply and install the remaining 5, pursuant to the June and September lists. He did not do so. The amount claimed is $2,750. I allow it.
Item 48: not pressed.
Item 49: patch holes. Mr Nowytarger said he has done this work. Mrs Carr says otherwise. I prefer her evidence. I allow the agreed sum, $1,419.
Item 50: Adjust bi-fold doors. Mr Nowytarger said he has done this work. Mr Daniels said that it has not been done, or has not been done properly. I do not accept Mr Nowytarger's evidence. I allow the sum claimed, $3,297.
Items 51, 52, 53: not pressed.
Item 54: not pressed (supporting evidence rejected).
Item 55: roller blinds in bedroom. There is evidence of damage. Mr Hall was not able to inspect them. The evidence is supported by photographs. The cost of repair, where possible, or otherwise replacement is given by Mr Daniels as $13,090. It is not entirely clear how he has reached this figure. The only documentary evidence appears to be a quotation for $8,815. As I understand it, that is for the supply of new blinds. The balance may be for repair. I am not sure. In the circumstances, I allow $10,000 for this item.
Items 56, 57: not pressed.
Item 58: supply and install safes in main bedroom. The claim appears to be for a safe supplied by Mr Nowytarger (pursuant to the June list) that was not what was required. He took it back, and said he would allow credit. He has not done so. I allow the amount claimed, $1,672.
Item 59: not pressed.
Item 60: loose balustrades. There appears to be little dispute as to this or as to the cost. I allow $285.
Item 61: new lintel to support masonry brickwork. Mr Daniels said that the work, without the lintel, was unsafe. The lintel was installed at a cost of $723. I allow that amount.
Item 62: repair cracked render to front planter. Mr Nowytarger agreed to carry out the repairs (pursuant to the September list). If he did so, he did not do it properly. The complaint now made is that the planter box may not be waterproofed. The evidence (including what was observed during a view) is inconclusive. I am not satisfied that there is a defect, or at least one for which any of the defendants should be held liable in any way.
Item 63: not pressed.
Item 64: not pressed separately (part of item 17).
Item 65: sticking bedroom door. This is an agreed defect. The cost of rectification is agreed at $913. I allow that amount.
Item 66: repairs to front door. This appears on the September list. Mr Daniels inspected the door after Mr Nowytarger had attempted to repair the damage that Mrs Carr had observed. Mr Daniels said that whatever was done did not rectify the damage: "the scratches are still apparent and visible on the door". He costs the rectification at $2,435. Whilst this seems to be a large amount for the repair of a scratched door, there is no challenge to the costing and accordingly I allow that sum.
Item 67: touch up damaged walls. This item appears on the September list. It would appear that the parties agreed to share the cost of a painter. Mrs Carr's evidence is that she has paid more than her share. She claims reimbursement of the overpaid amount, $1,000. I allow that amount.
Items 68-73: not pressed.
Item 74: detailing to base of walls in various parts of the property. This is an agreed defect. The agreed cost of rectification is $5,509. I allow that sum.
Item 75: rust marks around garden tap at front of property. It is not at all clear why this is a defect, let alone one for which any of the defendants ought be held liable in any way. I allow nothing for this item.
Item 76: cracked render on boundary wall. It is not clear why this is a defect for which any of the defendants should be held liable in any way. I allow nothing for it.
Item 77: stained ensuite wall tiles. Mr Daniels gives evidence of this defect. Mr Hall claimed that he could not detect it, but it may be that the particular location was not drawn to his attention. Mr Daniels says that it is necessary to strip and re-tile (with associated work). Mr Hall said that cleaning should deal with any problem which may exist. The amount claimed is $17,263. That seems to me to be out of all proportion to the actual cosmetic defect (if any - the area was inspected in the course of the view and I have to say that the matters of which complaint is made were not readily apparent).
In my view, it would be relevantly unreasonable to strip out the bathroom, remove and replace the tiles, and then reconstruct the bathroom, which is in effect what Mr Daniels says needs to be done. Such benefit as may be obtained by that would be out of all proportion to the cost. On the assumption (which I make simply because it is not worth pursuing the matter) that there is a discernible colour variation and that this is the result of some defect in the materials, I allow $500 by way of general damages.
Item 78: Misaligned side panel of walk-in robe. Mr Daniels said that the installation was not done in a proper way, that the panel is not properly fixed, and that as a result it has moved out of alignment. There is support for that both in photographs and from what was observed in the course of the view. He assesses the cost of repair at $3,089. In the absence of any controversy as to the amount, I allow that sum.
Item 79: not pressed separately (dealt with as part of item 40).
Items 80A, 80B: lack of venting or air circulation in various locations. I accept Mr Daniels' evidence that there should have been, but was not, adequate ventilation of provision for air circulation in the areas that he identifies. He assesses the cost of repair at $2,969. There is no controversy as to the amount. I allow that sum.
Item 81: failure of tiling on level 1 south balcony. Mr Davie suggested that this has already been claimed under item 41, and is therefore a "double-dipping" claim. I do not agree. Mr Daniels explains that they relate to separate areas. There does not appear to be any dispute as to the estimated cost, $32,339. I allow that sum.
Item 82: service hatch. Mr Daniels identifies that a service hatch in a wet area was constructed out of unsuitable material: plasterboard. I accept that evidence. He assesses the cost of repair at $1,485. There is no dispute as to that, and that is the amount I allow.
Item 83: not separately pressed (dealt with as part of Item 41).
Item 84: not separately pressed (dealt with as part of Item 81).
Item 85: defective gas reticulation services. Mr Daniels' evidence is that the gas piping installed is insufficient to deliver appropriate pressure for the various gas appliances that are served by it. He adds that the installation does not comply with a relevant Australian standard. He assesses the cost of rectification at $24,443, relying on evidence from others which has been put before the court. I find that there is the defect alleged. I assess the cost of rectification in the sum claimed, $24,443.
Item 86: water ingress in south eastern corner. The defect is conceded and the cost of rectification is likewise conceded. I allow the conceded sum, $5,955.
Item 87: not pressed.
Item 88: not separately pressed (dealt as part of Item 2).
Item 89: defective glass security door. Mrs Carr gives evidence of this defect. So, too, does Mr Daniels. Mr Nowytarger sought to blame the problem on a locking mechanism installed by Mrs Carr. Consistent with my general view of Mr Nowytarger's lack of credibility, I do not accept that evidence. Mr Daniels said that the failure of the door happened because the materials were not suitable for their purpose. I accept that evidence. Mr Daniels assessed the cost of repair at $5,393. That is a cost actually incurred and supported by an invoice. I allow it.
Item 90: kitchen gas oven. It appears to be common ground that the oven is not working properly. It is not at all clear whether this is related to the lack of gas pressure, or due to some inherent problem, although Mr Daniels appears to think that the problem with the operation of the oven is due to the insufficient supply of gas. In addition, Mr Daniels observed buckling to the door, so that it did not seal properly, and that the door would not fully open. It appears that replacement parts cannot be obtained. Mr Daniels said that the oven should be replaced. He assesses the cost of $21,161. Whilst I accept that it would be desirable if the oven door closed properly and sealed completely, it is difficult to understand how it could be reasonable to spend so much money to alleviate some loss of heat (there is no quantitative assessment of the impact, if any, that such heat loss as there is has on the efficiency of the oven). In the absence of evidence on this point, I am not prepared to allow any amount for rectification.
Item 91: underfloor heating. Mr Daniels identified the defects. There is no dispute as to that part of his evidence. He said that the installation needs to be replaced. I accept that evidence. Mr Daniels assessed the cost of rectification at $20,883. In the absence of any controversy as to the amount, I allow it.
Item 92: moisture penetration in the lower ground floor robe area. Mr Davie submitted that this fell under item 13. It does not. Mr Daniels identifies it separately. Likewise, he identifies the cost of rectification. I accept that the defect is present, as Mr Daniels has observed, and that the cost of rectification is the amount of $7,490 that he gives. I allow that amount.
Item 93: gas hot water unit servicing lower ground and ground floors. The defect identified by Mr Daniels is that the unit installed is one suitable for external use, not for use in an enclosed and unventilated space. Mr Daniels was cross-examined to the effect that the space had been enclosed by Mrs Carr, after Mr Nowytarger had finished his work. However, the photographic evidence shows that the "enclosure" was not a full door but some form of gate, with apertures which would allow the escape of gases. The real problem is that the unit was installed in a confined space when it should not have been. The evidence on this point came not just from Mr Daniels but also from Mr Ross Brown, a licensed plumber, drainer and gas-fitter, and hydraulic services engineer. His report was admitted without objection and he was not required for cross-examination. In addition, the report of Mr Ashley Moran dated 21 July 2014 corroborates the defect. That report was admitted without objection. I am satisfied that the defect exists and that it must be rectified. The cost incurred was $18,826. I allow that sum.
Item 94: water seepage to the driveway. Messrs Daniels and Hall agreed that there was evidence of discolouration to the driveway consistent with water staining. They posited (or speculated as to) different causes. Mr Daniels suggested that it was caused by overflow of water from the spoon drain at the top of the driveway. Mr Hall suggested that it was caused by a leaking water meter on an adjacent property. Neither explanation appears to me to involve much more than speculation. In the absence of evidence that the cause is something for which any of the defendants might be held liable in any way, I do not allow anything for this asserted defect.
Item 95: crack to eastern wall of ensuite bathroom. It is agreed that there is a defect. The only difference is as to the cost of repairs. The amount claimed by Mrs Carr includes a relatively small amount for temporary work. In my view, the full sum, $14,220, that is claimed should be allowed.
Item 96: not pressed:
Item 97: amounts paid to Hart Design. As I understand it, this relates to the survey and drafting work undertaken by Hart Design to identify and document discrepancies between the approved plans and what was in fact constructed. Mrs Carr said that it was necessary for her to carry out the work to discover the extent to which he was deceived. I do not think that that amount is recoverable on this basis. If it is to be allowed, it would be a disbursement incurred for the purposes of Mrs Carr's case. That indeed was the way that Mr Davie put his submission on this item.
Item 98: failure to install stormwater reticulation and drainage system. As I have noted earlier, the conditions of consent required construction of the stormwater drainage system. That was not done. To that extent, the work was not done in accordance with the requirements of the Council. In my view, it is a defect that should be allowed. Mr Daniels assesses the total cost (excluding work referable to some planter boxes) at $17,597. Although there is necessarily some element of contingency there, because not all the work has been performed, that is the amount that I allow.
Item 99: water ingress to dining room from external planter boxes. Mr Daniels gives evidence of this defect. I accept that evidence. He identifies the cost of repair at $32,233. In this case, I revert to my customary approach to Mr Daniels' costings and allow $30,000.
Item 1A: not pressed.
Item 2A frameless glazed door in cellar. Mr Daniels said that the door fell off because the hinges were inadequate to carry its weight, either because the screws were too short or because there should have been a third hinge. The estimated cost of the repair is $5,003. Mr Davie's submissions questioned the explanation, without pointing to any evidence that could controvert it. I conclude that there was a defect and that the amount claimed should be allowed.
Item 3A: waterproofing failure on front balcony. Mr Daniels relates this to Item 88 (which in turn relates back to Item 2) but on the basis that it is a separate aspect of the overall defective work. Mr Davie appeared to suggest that whatever the problem was that was referred to in Item 3A, it would have been covered by those earlier defects. I do not agree. Mr Daniels' supplementary report makes it clear that it is a separate head of claim. The amount claimed is $6,864. I allow $6,000 for this.
Item 4A: drafting costs. Mr Daniels says that this should be related to Item 92, but the appropriate cross-reference would appear to be to Item 97. The suggested purpose relates to obtaining retrospective approval (presumably, pursuant to s 96 of the EPA Act) for the works, to the extent that they depart from the approved plans. Mr Daniels costs this item at $40,995. It is entirely unclear how he has reached that sum. It does not appear to be supported by any documentary evidence. I do not know what if any expertise he has in assessing such costs. In the absence of proof, I am not prepared to allow anything for this item.
Item 5A: investigation of sewer line locations and connections. This claim also arises from the unauthorised changes to the approved drawings. The claim is for the cost of locating the sewer lines, inspecting their connections, and making application for retrospective approval and certification. Mr Daniels costs the work at $88,506. Unlike the previous item, this does seem to fall within the ambit of Mr Daniel's expertise. Consistently with my general approach, I allow $80,000.
Item 6A: defective frosted glazed panels. Mr Daniels identifies the defect and the work necessary to rectify it. He costs that work at $7,842. I am satisfied, on the basis of Mr Daniels' evidence, that there is a defect. I allow $7,000 for its rectification.
Item 7A: zinc roof sheets. It appears that some roof sheets lifted as the result of a storm. Mr Davie submitted that it should be the subject of an insurance claim. Mr Daniels, however, gave evidence that the sheets had not been appropriately fixed, including in accordance with the manufacturer's requirements. He costed the repair at $6,058. I allow that amount.
Item 8A: recessed wall lights in swimming pool. Mr Daniels gave evidence of defects. He costed the rectification at $5,153. I accept his evidence that the work was defective and I assess the cost of rectification at $5,000.

Summary

The parties will have to consider my conclusions and apportion responsibility for the defects and amounts that I have found to: 1. the breach of statutory warranties claim against Mr Miller, to the extent that he is estopped from denying that he is liable for breach of statutory warranties by reason of having signed the contracts; 2. the deceit claim against Messrs Nowytarger and Pascali; or 3. the claim against Mr Nowytarger in respect of the June and September lists.
As I hope I have made clear already, it is not a "one or the other" process. Mr Miller is liable for the work that he is estopped from denying he did. Mr Pascali is liable for the difference between the price paid for the property and its true value, with the limitations that I have already accepted. Mr Nowytarger is liable for defective or incomplete work the subject of the June and September lists.
As to the "true value" case, once the relevant works have been identified and the total rectification cost is calculated, the deceit damages will be that total, with a 35% increment.

Conclusion and orders

Mrs Carr is entitled to succeed to the extent that I have found and in the various ways that I have found. For the reasons I have given, I am simply not in a position to allocate my findings as between the various claims that, I have said, should succeed. The parties will have to do that.
The appropriate course is to give the parties an opportunity to consider these reasons and to seek to agree on the orders to be made to give effect to them (except as to costs, which for the time being, and to the extent that I have not dealt with them already, I will reserve).
I make the following orders: 1. direct the parties to confer with a view to preparing and agreeing to the orders appropriate to give effect to these reasons. 2. Stand matter over to 9:30am on 16 October 2018 before me for entry of judgment and for further directions. 3. Order that no part of the costs or disbursements incurred with reference to the production of the court book are to be charged to the plaintiff by her solicitors. 4. Order that no part of the costs or disbursements incurred with reference to orders 1 and 2 made on 18 July 2018 are to be charged to the plaintiff by her solicitors. 5. For the avoidance of doubt, order that no part of the costs referred to in orders 3 and 4 are to be allowed on assessment pursuant to any costs orders that may be made in favour of the plaintiff against any of the defendants. 6. Subject to orders 3 to 5, reserve costs for further consideration.

Endnotes

See Division 3 of Part 3 of the HB Act.
It is common ground Mr Pascali did not deliver evidence that the whole of the building works were covered by home warranty insurance.
See particulars to [52] FASC CB 1/1210
The third defendant concedes this is the appropriate measure of damage for breach of SC16, if breached.
FASC [29] CB 1/1203
FASC [20], [27] CB 1/1200, 1203
FASC [41] CB 1/1207
The third defendant accepts that Insurance Representations (a), (b) and (d) were false, if made.
Such circumstances are pleaded in FASC [22]
FASC [10]-[11], [26], [30] CB 1/1198, 1202, 1203
FASC [40], [46] and [51] CB 1/1208, 1209
FASC [10]-[11], [22], [26], [30], [40], [46], [51] CB 1/1198, 1201, 1202, 1203, 1207, 1208, 1209
FASC [47] and [51] CB 1/1208, 1209
FASC [43], [44(a)-(b)] CB 1/1207, 1208
FASC [20], [33] CB 1/1200, 1204
FASC [37] CB 1/1204
FASC [41] CB 1/1207
FASC [39]-[40], [46], [51] CB 1/1205-1207, 1208, 1209
FASC [10]-[11], [26], [39]-[40], [46], [51] CB 1/1198, 1202, 1205-1207, 1208, 1209
FASC [47] and [51] CB 1/1208, 1209
FASC [43], [44(c)] CB 1/1207, 1208
See particulars to [53] FASC CB 1/1210
FASC [34], [38] CB 1/1204, 1205
FASC [41] CB 1/1207
FASC [10]-[11], [22], [26], [30], [40], [46], [51] CB 1/1198, 1201, 1202, 1203, 1207, 1208, 1209
FASC [10]-[11], [26], [39]-[40], [46], [51] CB 1/1198, 1202, 1205-1207, 1208, 1209
FASC [47] and [51] CB 1/1208, 1209
FASC [43], [44] CB 1/1207, 1208
FASC [48]
FASC [49], [50]
FASC [53]
Third defendant's defence [78(a)] CB 1/1236
Third defendant's defence [78(b)-(i)] CB 1/1236-1237
FASC [8] CB 1/1198
FASC [22(a)] CB 1/1201
FASC [61]-[67] CB 1/1211-1212
FASC [76] CB 1/1214-1216 and Scott Schedule CB 2/3141
FASC [77] CB 1/1216
FASC [10]-[11], [26], [71] CB 1/1198, 1202, 1213
FASC [76] CB 1/1214-1216 and Scott Schedule CB 2/3141
FASC [77] CB 1/1216
FASC [10]-[11], [26], [71]-[74] CB 1/1198, 1202, 1213-1214
FASC [74]-[75] CB 1/1214
FASC [76] CB 1/1214-1216 and Scott Schedule CB 2/3141
FASC [77] CB 1/1216
FASC [54]-[55] CB 1/1210
FASC [56] CB 1/1210
Pascali's cross claim at [15]-[16]; Nowytargers' defence to cross claim at [15]-[18]
Pascali's cross claim at [2]-[7] and [10]-[14]; Nowytargers' defence to cross claim at [2]-[7] and [10]-[14]
(1995) 49 NSWLR 315.
See at [61] below.
See at [123] - [126] below.
Having said that, it must be noted that Mr Miller has not been sued in deceit. See T168.26-169.13.
In particular, it is not supported by Mr Taylor's evidence: see at [100] below.
T426.24-.28.
T427.13-.25.
T428.7-.44.
T428.46-.47.
See Practice Note SC Eq 3. Annexure 3.
See [7]-[11], [15].
At [7] - [11].
At [14].
At [15].
See at [43] above.
In fact, Mr Nowtarger handed the negotiations for Ms Pascali: see at [96(7)] below.
(1982) 149 CLR 537.
[1992] 1 VR 653.
Written closing submissions, [14].
(1938) 60 CLR 336.
See at [12] above.
Affidavit sworn 23 November 2017 at [52] and following.
Ibid at [88].
T177.12-178.13.
T119.20-120.13.
Affidavit sworn 23 October 2017 at [16].
T175.48-176.5.
At [28]-[32].
T181.1-.35.
See EPA Act, s 96.
T158.16-.23.
T171.15-.17.
(2002) 56 NSWLR 127.
PMT Partners Pty Ltd (in liq) v Australian National Parks & Wildlife Service (1995) 184 CLR 301; O'Grady v Northern Queensland Co Ltd (1990) 169 CLR 356; Fountain v Alexander (1982) 150 CLR 615; BI (Contracting) Pty Ltd v AW Baulderstone Holdings Pty Ltd [2007] NSWCA 173. Those cases represent no more than the briefest and most incomplete citation of the numerous decisions considering the words "in relation to" and cognate expressions.
(1953) 53 SR (NSW) 285.
[1899] 1 QB 816.
See at [232] above. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 September 2018

As the Environmental Planning and Assessment Act 1979(NSW)

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