Dempsey v Sleiman; Sleiman v Dempsey

The applicant's defects report

1. The summary of findings, opinions and conclusions is contained at page 7 of the City Wide Building Consultants Pty Ltd.
2. The expert makes only 4 findings of defective work: 1. the plumbing at the back of the joinery does not align correctly as required. 2. the contractor did not account for the thickness of the side panels to the joinery therefore reducing internal space and causing installation difficulties to appliances and installation of the hot water unit. 3. the contractor has damaged the edges of the joinery and chipped edges evident whilst attempting to install the oven. 4. the contract plans indicate a shadow line above the wall mounted cupboards throughout the kitchen of 25 mm but the actual shadow line ranges from 29mm to 32mm making an unsightly finish and "is not what the client ordered".
3. The expert does not describe any other defects. The expert notes he was "instructed" that: 1. the owner engaged a second contractor to remove joinery and store on-site. 2. the contractor removed the sink for measurements but as the builder did not returned the sink, the owner was required to purchase a new sink for $884. 3. The doors to the wall cupboard adjacent to the kitchen sink are misaligned and do not close properly.
4. The expert states that he was instructed that a kitchen island is 'is out of square' by 60 mm. It is important to note that Mr Bournelis does not express an expert opinion that the kitchen island is defective. It is alleged by the owner that the kitchen island does not stop flush with the tiles but encroaches onto the wooden floorboards. The owner alleges that the builder was strictly instructed to follow the design concept of unit 26 above, where the kitchen island is set flush with the tiles, and does not encroach onto the wooden flooring. This is a question of fact which will be addressed further below in these reasons.
5. In respect of the allegation that the cabinets installed at the back of the kitchen were not installed correctly, I have considered the expert report of G. Stilo relevant to the backwall only. The report relevantly states as follows: "Design dimensions vary from the actual installation dimensions, this has caused plumbing not to line up correctly. Existing plumbing was rectified to suit plans with an internal dimension of 557 mm. Once cabinet was installed this was not the case, it ends up with 515 mm internal dimension causing the cabinet to be cut out which is not acceptable practice. Actual measurements taken after the original installation demonstrate that the builder did not allow for cabinetry thickness. Due to this the size of the cabinet has been reduced in width. The cabinet for the hot water system was too tight and could not be connected to the shut-off valve could not be reached for emergencies. Existing plumbing was rectified to suit plans with an internal dimension of 557 mm once cabinet was installed this was not the case it ends up with 515 mm internal dimension causing the cabinet to be cut out which is not acceptable practice."
6. The builder relies on points of claim with a chronology and 21 attachments. The documents were tendered in defence to Ms Dempsey's defects claim, HB 18/49798. I have referred to the photographs, statements and the Molony report. I make the following findings in respect of the defects and have adopted the numbering of the Bournelis report.
7. Defect 1 - Dismantle joinery: there is no evidence to support the owner's submission that she expended $440 for the dismantling and storing of the laundry and fridge. It is not itemised in the Caesar Developments invoice and she has tendered no invoices or text messages that she has paid for this expense. I decline to make an award for this head of damage.
8. Defect 3 - Caesar Development Pty Ltd Rectification cost: I am satisfied the measurements on the tendered plans show that the internal dimensions of the hot water cupboard and the associated cabinetry provided for 557mm internal, with additional allowance for cupboard walls of 18mm, plus 7mm thickness on the left hand side and a further 18 mm on the right hand side. The cabinetry on the kitchen back wall was clearly not built to plan as the internal as built dimensions of 515mm are not conform with the plans and specifications. I accept the opinions of Messrs Bournelis and G Stilo to this effect, insofar it is necessary to rely on expert opinion, as the plans speak for themselves.
9. In light of the findings above, the owner is entitled to the reasonable cost of correcting the defective work (Craftsmen Restoration & Renovations Pty Ltd v Boland [2011] NSWCA 147). The damages allowed must be necessary to produce conformity with the contract and also a reasonable course to adopt. (Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613). In light of the Bournelis opinion I am persuaded that it was reasonable to remove the cabinetry at the back wall to enable connection and installation of appliances, such as the hot water heater and the dryer.
10. I am satisfied that the cost of rectification, in respect of those items where the breach by the builder has been established, are reasonable under the circumstances and I award $9448 for actual costs incurred, as summarised in the Caesar Development Pty Ltd documents (and as claimed in the owners' submissions under "moneys spent and lost") supported by invoices for actual payments made to contractors.
11. In the absence of any evidence to the contrary I am satisfied that the cost of rectification claimed in respect of these items is reasonable and make the award accordingly.
12. Defect 2 - Render rear wall: I am satisfied that it was necessary to re- render the back wall after the removal of the defective joinery. I make an award of $880 for the rendering of the kitchen wall. I accept the sworn evidence of the owner that she paid cash, which is supported by a text message from the renderer.
13. Defect 4 - Chipped joinery below oven: Ms Dempsey gave sworn evidence that the joinery was chipped at the conclusion of the respondent's installation and that the oven did not fit. The photographs of the joinery provided by the respondent shows that there were no chips after he had completed the joinery installation. I accept and prefer the explanation of the respondent and his expert "that the chipped damage is consistent to (sic) the feet of the oven and in my opinion has been done during the installation of the oven by the electrician". I am not persuaded that this is a matter for expert evidence. I accept that the photographs of the installed joinery show no chips. The photographs taken with the oven in situ, after the electrical contractor had completed the installation, show chipped edges. On balance I am not persuaded that the owner has demonstrated that the respondent caused the chips. I make no award for the chips I do award, further below in these reasons, $200 for the installation of the oven.
14. Defect 5 - Inconsistent shadow line: The owner claims $5,274 for the removal and reinstallation of 11 cupboards "to achieve a consistent shadow line". The claim for damages for a faulty shadow line is dismissed. I have had regard the Bournelis report. It does not state that the shadowline is defective by reference to Australian Standards and or the Building Code of Australia. He merely accepts the owners instructions that the shadow line is unsightly and "not what the owner ordered". I accept and prefer the photographs and measurements of the respondent's expert, Mr Damien Moloney who states that: "I do agree that the shadowline does deviate 3mm across the entire length of the cupboards, however 3mm is completely within tolerance and with the floor to ceiling height also being between 2378mm and 2341mm. The shadow line is governed by the floor height, cupboard height and ceiling height. If the cupboard is the correct height as per plan, which it is, then the shadow line will need to shrink or grow, within tolerance, to allow the cupboard to fit in between the floor and ceiling boundaries."
15. In the absence of any specific reference to breaches of the Australian Standard, or the BCA, I am not satisfied that the applicant has discharged her onus of proof and I am not satisfied that the expert expresses an opinion that the work is defective.
16. Defect 6 - Kitchen sink: Ms Dempsey states that the contractor took delivery of her sink for measurements and refused to return it. Eventually she had to pay $884 for a replacement sink. I am satisfied that the refusal to return the sink was unreasonable by the contractor and that, in order to finish installation of the kitchen and to minimise any further losses, Ms Dempsey was required to purchase a replacement sink. Again, this is not a matter for expert evidence, but rather a contractual issue. In my view it was an implied term of the agreement between the parties that any appliances and fixtures which were removed for measurement needed to be returned to the premises. The builder's failure to return the sink was therefore a breach of an implied term. The loss is assessed at $884.
17. Defect 7 - Island bench panel: The owner claims $2290 for the adjustment of the island bench panel by 60mm. Ms Dempsey claims that she instructed the builder that the island bench should finish flush with the tiles. Mr Bournelis does not describe this as a defect. I note in particular paragraph 9.1.1 of the expert report which states "I am instructed that the owner indicated to the contractor that in an attempt to replicate the kitchen at unit 26 the contractor should follow the same finish lines in relation to the floor finishes see photographs below". Neither the experts' photographs nor paragraph 9.1.1 demonstrate defective work. I have had regards to the floorplans signed by the owner and it does not denote a finish line in relation to flooring or tiles. Nor is it alleged that the cabinetry was not built according to plans and specifications. There is nothing in the contemporaneous correspondence to support Ms Dempsey's allegation that it was a term of the contract that the contractor finish the cabinetry flush with the tiled surface. In all of the circumstances I cannot find that a breach of the contract has been established, nor can I arrive at a finding that the owner has established a breach of the statutory warranties.
18. Defect 8 - clean up costs. In accordance with these findings there is no future work to be carried out and there is no evidence before me that Ms Dempsey paid for additional clean up costs. I make no award for this head of damage.
19. None of these awards attract further margins and or GST as they have already been paid.

Incidental damages

1. Loss of Rent - The owner pleads at paragraph 28 of the points of claim that "she leases out unit 21 and unit 26 as an air B&B unit. Due to the builder's failure to complete the works within the agreed period, unit 21 and unit 26 could not be leased out from July to August 2018. It is estimated that the owner has lost rental income of approximately $29,866 during this period. See letter dated 21 February 2019 from Mr Dennis Radcliffe of D and M Radcliffe Pty Ltd."
2. I have had regard to the letter of Mr Radcliffe, accountant. The report does not attach the material upon which the expert relied in coming to his conclusions. Further the report does not attach the expert code of conduct which is freely available on the NCAT website. I have had regard to the principles of Makita v Sprowles which are well known.
3. In Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705, Heydon JA , as his Honour then was, held that under s 79 of the Evidence Act 1995, the basis rule remained a rule of admissibility. In effect, Heydon JA held that unless a party is required to prove the facts upon which an expert's opinion is based, it was not possible for a court to decide whether the opinion was based on the expert's specialised knowledge.
4. As the expert has not attached Ms Dempsey's bank statements or Airbnb records on which the accounting conclusions are based, I cannot decide whether the opinion is based on specialised knowledge or merely recounts instructions given by the owner. In addition, the expert accepts a number of underlying assumptions that are not supported by evidence. For example, the expert states that unit 21 was not let out by reason of the builder's delay. In her application form Ms Dempsey names unit 21 as her permanent address. There is no evidence before me setting out that Ms Dempsey had planned to vacate her principal residence in the months July to August 2018; there are no records from Air BnB or supporting affidavits to the effect that Ms Dempsey had advertised unit 21 at any stage for the relevant period, or had withdrawn the unit from the rental market.
5. In addition, the expert states that "Gail located from unit 21 to 26 as to be on call to supervise the renovation work or unit 21". There is nothing to suggest that the applicant was obliged to move to unit 26 and had no other, less costly option, available to her. On the evidence of her accountant she simply elected to move into unit 26 to supervise the renovations to her residence, unit 21. The accountant is expressing his view on causation, which is the ultimate question for the Tribunal: "The delay in the kitchen cupboards resulted in unit 21 not being available for rent until 7 September 2018". This, in my view, is not a matter for expert opinion but a question of fact for the Tribunal. On balance I am not satisfied that the letter satisfies the requirements of Makita v Sprowles, it does not express "specialised knowledge".

Was the breach of contract causative of the owner's loss of rent for both units?

1. I have had regard to the principles in Hadley v Baxendale (1854) 156 E.R. 145, at 151: Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally ie., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.
2. For the reasons set out above I am satisfied that the respondent breached the contract when he performed defective work and refused to acknowledge the defects and/or rectify the backwall. The question to be determined is whether it was in the contemplation of both parties that the probable result of any breach of the contract would more probably than not result in the applicant's loss of Airbnb income. On balance, I find that the applicant did indicate that she would be letting out a unit after the kitchen installation. The text messages suggest that Mr Sleiman knew that time was of the essence. I do not accept that the applicant indicated that she would be renting out both units, and there is no evidence before me that it was in the ordinary contemplation of the parties that in the event of delay, the probable result wold be a loss of rental income to both units 21 and 26.
3. I note that the evidence of Ms Dempsey established that the oven was installed on 27 June 2018 and the cabinets were removed from the wall on 28 June 2018, a new sink was delivered on 2 July. The last entry relevant to the issues between the parties is 27 July 2018 "cabinet guys back to fit new cupboards where cabinets were taken away".
4. For reasons expressed above the respondent is liable for defects in the wall cabinetry. I am satisfied that the owner, upon realising that the hot water unit and the dryer could not fit, acted expeditiously and removed the defective cabinets and instructed Caesar Developments to fit new cabinetry. I find that the refusal by the contractor to remedy the backwall was a repudiation of the contract and that by engaging new contractors the owner accepted the repudiation and effectively terminated the contract at common law.
5. It would be, in my view, in the ordinary contemplation of the parties that Airbnb bookings in unit 26 would be on hold until such time as the appliances could be fitted. However, I do not accept that Mr Sleiman knew or was told that both units were being let out. Any loss of rent for the second unit is due to the fact that Ms Dempsey elected to move into unit 26 to supervise the renovations in unit 21.
6. Whilst I arrive at a finding that some incidental damages should be awarded, this would be for losses incurred in respect of one unit. The floor sanders were still in unit 21 as late as 13 June 2018 and the applicant states that "this should have been the final tradesman". On 27 July 2019 the entry reads "The cabinet guys came to fit new cupboards where cabinet was taken away." In my view the measure of the applicant's loss is limited to the period from 13 June to 27 July or 6.5 weeks of rental income for one unit. For the reasons set out above I cannot rely on the accountant's letter. But I have had regard to the Airbnb tax invoices for 2017 attached to the application form, which set out, in Ms Dempsey's own words that the loss for unit 26, "my accommodation for the renovation period was rented out full time at $1275 per week x 6.5 = $8288." I accept this as the best evidence of the applicant's loss for a period of 6.5 weeks, being the time it took to rectify the defective back wall, and I make an award in that sum.
7. The measure of the applicant's loss is further supported by evidence and submissions attached to the original application form where Ms Dempsey states "Monday 30 July 2018 moved back to my Apt - unit 21 (not Fri 15th June) 6.5 weeks late." I am not certain how the applicant, by the time the matter was listed for hearing, had increased her claim for lost rent from 6 to 12 weeks. I find the contemporaneous evidence attached to the application form as more probative than the later submissions.
8. I decline to award the $200 for the refitting of the microwave and oven, the amount is not supported by evidence such as invoices or quotes. The $200 claim, underlined in emails, was typed by Ms Dempsey, not the contractor.
9. The applicant states she seeks $450 for loss of use of a garage because she was obliged to store the discarded cupboards as Mr Sleiman refused to collect them. The applicant has made no submission as to the legal basis why the defective cupboards required storage rather than being disposed of immediately. There was no contractual requirement to store the items in light of Mr Sleiman's refusal to collect them.
10. In summary, in light of these reasons, I make a finding that the builder is liable to the owner in the sum of $19,500.

Adjournment

1. The applicant brought an application for adjournment to produce bank statements and Airbnb receipts. The application was opposed and the respondent stated he would suffer significant prejudice. I am not satisfied that the mere provision of bank statements would have cured the deficiencies in the report. The applicant was obliged to tender her evidence in accordance with directions. She sought and was granted extensions of time to file evidence and filed further evidence without being granted leave to do so. No good basis has been shown why the applicant should not proceed with the hearing and even less so in light of the extensions already granted. There is no suggestion that the application is otherwise not ready for hearing.
2. I cannot see why the applicant should be entitled to adjourn the hearing, or why she would legitimately wish to do so, when her claim is ready to be heard, significant resources (including Tribunal resources) have been committed to it, and there is no suggestion that the case cannot be run without expert accounting opinion.
3. Section 36 of the New South Wales Civil and Administrative Tribunal Act 2014 requires the true issues in the case to be determined justly, quickly and cheaply. To adjourn the hearing in this case would, in my opinion, have been contrary to each of those requirements. Accordingly the application was dismissed.

HB 18/40912 - The builder's claim

1. The builder filed application HB 18/40912 seeking damages in the sum of $29,005. Messrs Sleiman, as applicants, filed documents which served both as a defence to the defects claim and as evidence in chief to the builders' claim for debt recovery. I have had regard to the points of claim, and attachments 1 to 34. In addition the builder relies on documents entitled A to G in support of claim HB 18/40912 for debt recovery. The builder claims he is owed damages for breach of contract "for refusal to make payment pursuant to the agreement" and in the alternative on a quantum meruit basis.
2. The owner argues that the builder is in breach of the Home Building Act 1989 for the following reasons: 1. the contract between the parties does not comply with the requirements of the form of contracts specified in section 7 of the Act; and 2. the builder is in breach of section 92 of the Act; and 3. failed to obtain a contract of insurance under the Home Building Compensation Fund; and 4. failed to provide the owner with a certificate of insurance evidencing the contract of insurance ; and 5. commenced the works without obtaining insurance and providing the owner with a certificate of insurance
3. The owner further submits the builder , in accordance with sections 10 and 94 of the Act, is not entitled to: 1. damages or any other remedy; and 2. recover money in respect of the works under any other right of action (including a quantum meruit).
4. It is further pleaded that the builder in an act of repudiation has expressly refused to complete the work subject of the contract, including to rectify defects and/or omissions to the work.

Consideration

1. I have had regard to section 94 (1A) of the Home Building Act 1989 (HBA) : Despite section 92 (2) and subsection (1), if a court or tribunal considers it just and equitable, the contractor, despite the absence of the required contract of insurance, is entitled to recover money in respect of that work on a quantum meruit basis completed before the termination of the contract on or about 7 June 2018.
2. I find that that the work done by Perfect Kitchen for the applicant, was largely done in conformity with the oral agreement and the quote, (with the exception of the defects identified in respect of the backwall) but which Perfect Kitchen is unable to recover under the agreement by operation of the HBA. Perfect Kitchen carried out that work on the understanding that it would be paid for the services provided, and Perfect Kitchen is liable to make payment to its contractor for those works completed before termination, for example the cost incurred for the stone benchtop provider. In light of my finding that the contract was terminated on or about 7 July 2018 the builder is entitled to payment for costs incurred before 7 July 2018, provided it is just and equitable.
3. In the absence of any contrary evidence as to the value of the work carried out by Perfect Kitchen, I am entitled to regard the invoices tendered by the Perfect Kitchen as reflecting the fair and reasonable value of materials purchased by Perfect Kitchen. I reject the owner's submissions that the invoices are fabricated and falsified as there is no evidence to support this contention.
4. However, in respect of the claim for labour costs, I am not satisfied that the builder has established, pursuant to s94 of the Act, that it is just and equitable that he be awarded such costs. The only material before the Tribunal which went to the reasonableness of the quantum of the respondent's claim for labour costs is a list entitled "total material and labour costs" included in submissions. These were not supported by site diaries, invoices or evidence of actual expenditure on labour.
5. I find this is insufficient material, given that success in a quantum meruit claim will require that the claimant establish that the sum sought is "fair and reasonable in the circumstances as compensation for the benefit of the work which he has actually done and which has been accepted by the building owner" (see Pavey & Matthews Pty Ltd v Paul (1985) 162 CLR 221per Deane J at [23]). In light of the fact that the builder performed unlicensed and uninsured work and did not comply with the writing requirements of the Act, I am not satisfied it is "fair and reasonable in the circumstances" that the builder be awarded costs for labour and there is insufficient evidence to support such a claim.
6. In respect of the materials for which an award is sought, the respondent has incurred significant costs on materials.
7. In cases of a quantum meruit, it is necessary to assess the fair and reasonable value of the benefit conferred on the owner, by the work performed by the contractor, and a tribunal of fact is entitled to consider a wide variety of evidence in determining what is a fair and reasonable value. The actual costs incurred are not necessarily determinative, but are a factor to be considered and evidence of the contract price and actual cost incurred by a builder can be relevant, but the weight to be given to it may vary depending on the circumstances of each case.
8. In light of all of the evidence tendered by the applicant I find that the following expenses have been incurred by the builder before termination and are supported by invoices issued to Perfect Kitchens, and or Messrs Ali and Hassam Sleiman: 1. QT invoice Star white satin job: Woolloomooloo kit $1519; 2. Lincoln Sentry doors and hinges $1340; 3. Prestige Stone & Marble $9200.
9. I dismiss the remainder of the claim. The remaining invoices are issued to "Perfect Kitchens Pty Ltd", which is not a contracting party. In the absence of any other evidence I am not satisfied that the costs claimed and the remaining invoices tendered have any relevance to the claim before me. The invoices make no mention of Perfect Kitchens and there is no reference to the agreement or the premises, the subject of these proceedings.
10. Deducting the $7500 deposit paid by the owner, I make an award of $4559 in favour of the builder.
11. In light of these findings I deduct $4559 from the $19,500 awarded in favour of Ms Dempsey. Accordingly, I make an order for $14,941 in favour of Ms Dempsey as per order one above and dismiss the builder's application.

COSTS

1. As both parties were somewhat successful in their claims, I suggest that the parties each pay their own costs, which does not require any further order from the Tribunal.
2. The owner claimed damages exceeding $30,000 and is not required to establish "special circumstances" before an order for costs may be made in her favour. The builder, as he claimed $24,800, must establish special circumstances within the meaning of s60 of the Act, before an order for costs may be made.
3. I note that the applicant has made a Calderbank offer dated 13 February 2019 offering to settle her claim HB 18/49798. The letter does not offer to settle the related proceedings. In light of the Calderbank offer it is appropriate that the parties make submissions on the question of costs. 1. The owner shall provide written submissions on the question of costs on or about 1 August 2019. 2. The builder shall file and serve written submissions on the question of costs on or about 8 August 2019. 3. The owner shall provide written submissions in reply, if any, by 15 August 2019. 4. If a party requests a hearing on the question of costs, that party should make appropriate submissions and the Tribunal will determine whether the question of costs can be determined on the papers without the further need of the parties to appear.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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: 29 March 2022