Elrob Construction Group Pty Ltd v Haddad

Catchwords: BUILDING AND CONSTRUCTION — Contract — Damages – claim by builder for cost of variations – alternative claim in quantum meruit
BUILDING AND CONSTRUCTION — Home Building Act 1989 (NSW) — cross-claim by owner for damages for alleged defects and incomplete works – claim for restitution of money paid under the Building and Construction Industry Security of Payment Act 1999 (NSW)

Legislation Cited: Building and Construction Industry Security of Payment Act 1999
Home Building Act 1989

Cases Cited: Bellgrove v Eldridge (1954) 90 CLR 613; [1954] HCA 36
John Holland Pty Ltd v Roads and Traffic Authority of NSW (‘John Holland’) [2007] NSWCA 140
Lumbers v W Cook Builders Pty Ltd (In Liq) (2008) 232 CLR 635
Mann v Paterson Constructions Pty Ltd [2019] HCA 32

Category: Principal judgment

Parties: Elrob Construction Group Pty Ltd (Plaintiff/Cross-Defendant)
Sami Haddad (Defendant/Cross-Claimant)

Representation: Counsel:
G Campbell (Defendant/Cross-Claimant)
Solicitors:
Madison Marcus (Defendant/Cross-Claimant)

File Number(s): 2021/00277709

Publication restriction: Nil

JUDGMENT

1. In 2017, the plaintiff, Elrob Construction Group Pty Ltd (“Elrob”), entered into two contracts with the defendant, Mr Sami Haddad, to build two double storey brick houses (“55” and “55A”, collectively, “the houses”) on a parcel of land owned by Mr Haddad in San Souci, New South Wales (“the land”). The land was to be subdivided so that each house would have its own allotment.

2. Building work was undertaken, and, in the course of the building work, numerous variations were made to the contracts.

3. In August 2020, Mr Haddad made a complaint to NSW Fair Trading about allegedly defective and incomplete work in the houses.

4. On 18 September 2020, the building certifier issued a list of works to be completed as a pre-condition to the issuing of an occupation certificate to Mr Haddad.

5. On 12 November 2020, Elrob issued payment claims 1111a and 1111b to Mr Haddad, claiming payment, for the first time, for three variations in relation to each house (six variations in total). Claim 1111a related to 55A and claim 1111b related to 55.

6. On 13 November 2020, Elrob filed proceedings in the Civil and Administrative Tribunal of New South Wales (NCAT), seeking an order for payments from Mr Haddad allegedly due under the contract with respect to 55A (“the contract”).

7. On 5 December 2020, Elrob made an application for an adjudication of payment claim 1111b under the Building and Construction Industry Security of Payment Act 1999 (“the SOPA”).

8. On 15 December 2020, a Fair Trading Rectification Order was issued against Elrob with respect to defective and incomplete works.

9. On 23 December 2020, an adjudication determination was made under the SOPA in Elrob’s favour with respect to payment claim 1111b (55) for $90,178.36.

10. On 18 January 2021, Elrob filed the adjudication certificate as a judgment. On 9 March 2021, Mr Haddad paid Elrob $95,382.52 in satisfaction of the judgment debt, including costs and interest.

11. In these proceedings, Elrob seeks the sum of $89,958.15, inclusive of GST, in relation to the variations alleged in respect of 55A, which were the subject of payment claim 1111a.

12. “Further or in the alternative” Elrob makes a claim in quantum meruit with respect to the building work provided by him for the benefit of Mr Haddad.

13. Elrob seeks interest on any damages awarded at the rate of 15%.

14. On 29 November 2021, Mr Haddad filed a cross-claim against Elrob. The cross-claim alleges that building works under the two contracts are defective and incomplete. It is alleged that the defective and incomplete work constitutes a breach of contract and a breach of statutory warranties by Elrob. Mr Haddad claims damages with respect to the defective and incomplete work.

15. Mr Haddad also seeks, in the cross-claim, restitution for the amount he paid to Elrob pursuant to the adjudication determination on the basis that the payment of that amount represents an overpayment, that Elrob has been unjustly enriched by the overpayment and that Elrob is liable to repay the amount of $95,358.52.

Elrob’s claim

16. At the hearing of the matter, Elrob relied upon the affidavit of Mr Mark Zeina of 15 November 2021, and the affidavit of Mr Luke Martin of 15 February 2023, neither of whom were required for cross-examination. Elrob also relied upon the affidavits of Mr Janko Kader dated 21 June 2021, Mr Frank Ehrlich dated 15 February 2023 and Mr Elia Elrob Boujaoude dated 11 August 2021 (‘first affidavit’) and 2 November 2021 (‘second affidavit’), all of whom also gave oral evidence. Mr Boujaoude is the principal of Elrob. He is also Mr Haddad’s wife’s uncle. Elrob also relied upon two expert reports from Mr Mario Bournelis, building consultant, both dated 14 November 2021 (in relation to 55 and 55A, respectively). Elrob relied upon a further expert report from Mr Ken Whyte, quantity surveyor of 22 June 2021. Various emails were also tendered.

17. Mr Haddad relied upon three affidavits of his own, dated 9 August 2021 (with Exhibit SH1), 31 August 2021 and 6 October 2023 (with another Exhibit SH1). He also relied upon two expert reports from Mr Anthony Capaldi, a building construction consultant, dated 10 August 2021 and 17 August 2021.

18. The building experts from each side engaged in a conclave and provided a joint report.

19. In the statement of claim, it is alleged that:

4. On or around 24 July 2017, the Plaintiff and the Respondent entered into two fixed price contracts for the Plaintiff to construct 2 double storey brick house with flat roof at the Site for the Defendant (the Contracts). At all times the Defendant intended to reside at Lot 55A.

5. The Contracts were each in the sum of $678,220.00 (plus GST). The total of the Contracts were $1,492,084.00 (inclusive of GST).

Particulars

2 x Master Builders Association Head Contract Residential Building (BC4) dated 24 July 2017.

6. Provision was made for the Contracts to be varied by way of addition, omission or substitution.

Particulars

Clause 14 of the Contracts

7. The Contracts were varied on a number of occasions with the knowledge and approval of the Respondent.

8. It was a term of the Contracts that variations did not have to be in writing and signed before the Plaintiff had an entitlement to be paid.

Particulars

Schedule 4 of the Contract – Special Conditions

9. The Contracts provided that the Defendant was required to make payment within 5 days of receipt of the Plaintiff’s invoice.

Particulars

Schedule 2, Item 4 (d)

Clause 20 (c) of the Contracts

20. The statement of claim alleges that the sum of $89,958 (inclusive of GST) remains outstanding in respect of the Lot 55A variations and that Mr Haddad has “either refused or neglected” to make the payment in respect of the 55A variations.

21. In the alternative, Elrob claims in quantum meruit with respect to the variations for 55A. Elrob pleads that it has provided the services the subject of the variation document with respect to 55A and that Mr Haddad “acknowledged, accepted and benefitted from the services the Plaintiff provided”. It is pleaded that the benefit Mr Haddad was provided with by way of the variations with respect to 55A was at the expense of Elrob, and that it is unjust in all the circumstances for Mr Haddad to continue having the benefit of the services when Elrob has not been compensated for them.

22. Mr Boujaoude has been a director of Elrob since 2010. “Elrob”, is one of his given names. Mr Boujaoude said, in his first affidavit, that both he and Elrob hold a builder’s licence. He said that the two contracts in this matter were signed on 27 July 2017 “to construct 2 double storey brick houses with flat roofs”. He said that development consent for the houses was obtained by Mr Haddad on 16 March 2018 (‘the DA consent’) and that on 12 June 2018, Mr Haddad obtained construction certificates from private certifiers.

23. There is some doubt about the date on which the contracts were signed. In the course of cross-examination, Mr Boujaoude said (T88.46):

..I was going – yesterday, I was shown contracts and where it had a digital signature on them. I don’t – and it had 27 July. That’s inaccurate. It’s 27 November. I’ve got the emails to show it, to prove it.

24. Mr Boujaoude then produced an email to Ms Haddad dated 27 November 2017 with two attachments called “Signed Revised 55 Sandringham st contract” and “Signed Revised 55A Sandringham st contract”. The two contracts attached are dated 24 July 2017 on the execution page and are only signed by Mr Boujaoude. Mr Boujaoude said that the only revision to the contract was the date. Mr Boujaoude said:

This is to show the date was 27 November 2017, not 27 July. There was two contracts. We re-signed them again. I can’t recall the reason why.

25. Mr Boujaoude said, in his first affidavit, that he obtained Home Building Compensation Fund Insurance for each of the houses on 31 May 2018. Works commenced on the site on or around 20 August 2018. Mr Boujaoude issued progress claims in the course of the works. Mr Boujaoude said that the works were complete by early November 2019.

26. Mr Boujaoude also said, in his first affidavit, that he issued eleven contract variations “during the course of the works” and also issued ten invoices for the variations.

The variations in dispute

27. The alleged variations the subject of the statement of claim are the subject of invoices attached to payment claim 1111a (CB p 2149), dated 12 November 2020, in relation to 55A. For convenience, I will refer to them as variations 003, 005A and 009.

28. Variation 003 “Additional Work” is dated 3 November 2018 and unsigned. The description of the works lists the following:

| Description of Works | Add | Deduct | | 1. Delete and credit internal timber wall & gyprock finish including all pocket doors | | $28,850.00 | | 2. Build all internal walls with common bricks with concrete lintels for all openings | $35,560.00 | | | 3. Additional charge for chasing brick wall for electrical conduit | $2,640.00 | | | 4. Cement render all internal walls (all labour and materials included) | $34,660.00 | | | 5. Add extra 2 brick columns 350 x 350 at rear patio and balcony and render finish | $3,610.00 | | | 6. Move garage walls one course each side (No Charge) | $0.00 | | | 7. Deleted balcony planter box & privacy screen A. Extended balcony and replaced all balcony balustrades with double brick and render | $4,145.00 | $2,120.00 | | 8. Added corner brick column for window and render (no charge) | $0.00 | | | Sub Total | $80,615.00 | $30,970.00 | | BOP @ 20.0% | $9,929.00 | | | Total Variation (excl GST) | | $59,574.00 |

29. In his report, Mr Whyte costed the work in Variation 003 at $58,504 (CB p 1171).

30. In his first affidavit, Mr Boujaoude says “After signing the contracts, Sami requested and approved a variation to full brick internal walls. Attached at page 315 of EB-01 is a true copy of text message dated 18 July 2017”. The text exchange says:

18 July 2017

Hi Sammy,

The costing for both house full brick with all inclusions is $1,483,420.00 and costing for brick veneer is $1,290,715.00. Let me know your thoughts.

Regards,

Elrob

18 July 2017

Hi elrob is GST included

18 July 2017

Hi Sammy, apologies but all costing is plus GST, we can reduce costing with certain materials and finishes but you will need to decide between full brick or brick veneer.

18 July 2017

Hi elrob i have to go with full brick our heart was set on it and if you can reduce in some areas that would be great god bless look forward to seeing you soon cheers

18 July 2017

Ok I will let Fadi know to continue with Basix for Full brick houses. Of course we will do our best to reduce costing in areas that will not affect the end result.

Cheers

Elrob

31. The contract is dated 24 July 2017 and was signed either on that date or on 27 November 2017 (or shortly after that date), or on both dates. It was Mr Boujaoude’s case that the contract under which Elrob was building the houses was signed on 27 November 2017. The exchange of emails in relation to the issue of whether the houses were to be double brick or brick veneer pre-dates the contract, whether it was signed on 24 July 2017 or on 27 November 2017.

32. In cross-examination in relation to the Home Building insurance of the houses, the following exchange took place with Mr Boujaoude (T31.7):

Q. The building was not brick veneer, was it? It was double brick.

A. Originally, that’s what we spoke about.

Q. Yes.

A. And then Mark added double brick, and timber internals.

Q. Right. But by the time the contract was signed, it was double brick, wasn’t it?

A. The double brick on the external, yes.

Q. So this description of brick veneer is not correct, is it?

A. No.

33. Mr Boujaoude, in cross-examination, agreed that, in his text exchange with Mr Haddad on 18 July 2017, he provided a quote for “full brick with all inclusions” and Mr Haddad replied “… I have to go with full brick, our heart was set on it…” (T43 - 45). Mr Boujaoude said that there were subsequent conversations and an email in which Mr Haddad resiled from that decision, but he did not produce the email and it is not in evidence. Mr Haddad says that he did not change his mind, and expected the houses to be full brick throughout. In other words, Mr Haddad believed that the contract was for a house with external and internal brick walls (see Mr Haddad’s affidavit of 9 August 2021 paragraphs 12 - 15).

34. The contract, on p 5 (see CB p 1442), provides that the “Work to be done at the site address”, which is 55A, is “Build double storey brick house with flat roof”. In Schedule 3, the contract says (CB p 1452):

a) Description of the work to be completed by the Builder

eg a brief description or, as per attached or dated quotation:-

Build a 4 bedroom full brick duplex with car garage.

The façade to be mixed with face brick, render and glass finish.

…

The items charged in Variation 3 “Additional Work” are all referrable to the house being constructed of brick, which was not a variation, but part of the contract.

35. Variation 005A is titled “Tiles for both houses & entry door stain”, is dated 9 September 2019, and is unsigned. The description of works lists the following:

| Description of works | Add | Deduct | | 1. Supply only imperial brown polished marble 300mm x 600mm @ $25sqm² total 46 sqm² (installation is included in original quote) | $1,150.00 | | | 2. Supply Light grey Perla concrete look matt glazed porcelain floor tile. Supply 600mm x 600mm floor tiles @ $22 per sqm² total of 95 sqm² for ground floor common area Installation at $55 per sqm² for 86.5 sqm (includes glue, grouting & sealing) 4 pallets delivered at $70 each | $1,925.00 $4,257.40 $280.00 | | | 3. Stain front entry timber doors Japanese Black & seal @ $150 per door x 2 | $300.00 | | | 4. Replace Hallway doors with glass insert @ $140 each x 2 for both houses | $280.00 | | | Sub Total | $8,692.50 | $0.00 | | BOP @ 0.0% | | $0.00 | | Total variation (excl GST) | $8,692.50 | |

36. Mr Whyte did not refer to Variation 005A in his report, and I assume that he was not provided with it. Mr Whyte did, however, refer to Variation 005 in relation to both 55 and 55A. Mr Whyte’s understanding of Variation 005 was that it related to the removal of a planter box from the plans for the first floor level balcony, which reduced the original price for the project by $8,534.60 with respect to 55A and $12,317.00 with respect to 55. In other words, the version of Variation 005 given to Mr Whyte should have resulted in a saving for Mr Haddad.

37. Mr Boujaoude did not give any evidence in his affidavits directly in relation to Variation 005A. In his first affidavit, he gives evidence in relation to Variation 005, which is also dated 9 September 2019. Variation 005 appears at CB p 328 (EB-1 p 259) and is for a total, excluding GST, of $17,165.00. The “Description of Works” is very similar to Variation 005A, except that in Variation 005, the area in item 1 is 92m², the area in item 2 is 190m² in relation to the floor tile and 173m² in relation to installation, the number of doors in item 3 is 3 and the number of hallway doors in item 4 is 4. Both Variations 005 and 005A reference “both houses”. Clearly, the version of Variation 005 referred to by Mr Boujaoude, which is the variation before the Court, is different from the Variation 005 given to Mr Whyte for the preparation of his report.

38. It is apparent, on the face of Variations 005 and 005A, that Variation 005 relates to work in both 55 and 55A, and that Variation 005A relates to the same work, but in relation to 55A only. The work is therefore the subject of both Variations. Mr Boujaoude agreed that Mr Haddad had paid for all variations except for Variations 003, 005A and 009 by the time that payment claim 1111a was issued on 12 November 2020 (T17.14). Mr Haddad gave evidence, in his affidavit of 9 August 2021 (CB p 1360), that he paid Variation 005 in cash. He was not cross-examined in relation to that evidence, and there is no evidence to contradict it. I accept his evidence. The consequence is that the work the subject of Variation 005A has already been paid for. Payment claim 1111a does not claim the full amount of Variation 005A, but claims $1,716.15.

39. Variation 009 is titled “Additional Tiling & retiling work including appliances installation and linen wardrobe”, is dated 21 December 2019, and is unsigned. The description of works lists the following:

| Description of Works | Add | Deduct | | 1. Additional tiling for skirting on rear patio & Balcony supply & install approx 38 LM @ $37.50 LM | $1,425.00 | | | 2.a.Layed Marbel flooring in Main bathroom, ensuite and powder room [sic] b.Demolish laid Marble flooring in main bathroom, ensuite & powder room [sic] c. Repair 3 bathroom flooring with sand & cement bedding d.Waterproof 3 patched bathroom floors: 1 primer and 2 coats Dribond | $2,130.00 $1,520.00 $960.00 $1,970.00 | | | 3. Additional wiring for 30 downlights and switchs (no charge for Downlights) [sic] | $5,850.00 | | | 4. Install only (owner supply appliances) Stove, Rangehood and Dishwasher | $1,140.00 | | | 5. Tile extended balcony extra approx. 24.5sqm² supply and install floor tiles | $1,450.00 | | | 6. Deleted toilet upstairs (cap off water lines and drain) | | $1,655.00 | | 7. Demo hallway brickwall about 1200mm by 2.7m and haulaway A. Hallway Linen cupboard replace hinged doors for glass sliding doors | $635.00 $640.00 | | | 8. Install only (owner supply) Stove, Rangehood and Dishwasher | $1,140.00 | | | 9. Kitchen increased cabinet space from bench to 770mm from 600mm | $0.00 | | | Sub Total | $18,860.00 | $1,655.00 | | BOP @ 20% | $3,441.00 | | | Total Variation (excl GST): | $20,646.00 | |

40. Mr Whyte does not address Variation 009 in his report, and I assume that he was not provided with it.

41. In his first affidavit, Mr Boujaoude says that Mr Haddad asked him “in or around August 2018” to “remove the wall in the hallway of 55A so make the space wider for a sliding door so I can have more storage”. Mr Boujaoude refers to a text exchange with Mr Haddad on 23 August 2018. The text exchange begins with Mr Boujaoude sending Mr Haddad a photograph of a floor plan with some markings on it. Mr Haddad responds with a text saying “perfect that’s what I wanted”. Mr Boujaoude says, in his first affidavit, that he subsequently had a telephone conversation with Mr Haddad in which he told Mr Haddad that the change would cost about $600.

42. Mr Boujaoude also says, in his first affidavit, that Elrob “replaced these doors” with glass sliding doors.

43. Items 4 and 8 on Variation 009 are substantially the same, including as to cost. Mr Boujaoude agreed, in cross-examination, that the duplication was an error (T79.41).

44. Mr Haddad, in his affidavit of 9 August 2021, said that he never agreed to any variation for $1,425 for additional tiling or skirting to the back patio. Mr Haddad said that the four items in Variation 009 for $6,580 for “lay marble to the main bathroom and demolished, repaired and waterproofed” were for work required because Elrob laid the wrong colour marble and had to remove and replace it with the correct colour. Mr Haddad said that none of the balance of the charges in Variation 009 were agreed or approved by him (see paragraph 154). In cross-examination, Mr Boujaoude said that Ms Haddad made the mistake with respect to the marble selection, and said that he had told Mr Haddad that the extra work would have to be paid for. However, Mr Boujaoude did not provide a written quote for the work and he could not remember whether he gave a verbal quote (T78-79).

45. Mr Kader, a carpenter who was employed by Elrob at the time that the houses were built, said, in his affidavit, that he saw the imperial brown polished marble tiles installed in the bathrooms and that he subsequently helped to arrange for the removal of those tiles and the water proofing and re-tiling of both properties, meaning 55 and 55A. Mr Kader, in his affidavit, also addressed the issue of the installation of lights, but it emerged in cross-examination that his understanding of that issue is based on hearsay, so I disregard it.

46. Mr Ehrlich, a contract electrician who performed electrical work in 55 and 55A in 2018, provided the invoices for the work as annexures to his affidavit. Mr Ehrlich gave evidence that Mr Haddad asked him, on site, as the building work was occurring, to install more downlights and more switches. Mr Ehrlich said, in cross-examination, that he did not discuss with Mr Haddad a price for the downlights and switches, and nor did he discuss a price for additional exterior wall lights or for new wiring and five external power points for 55A and three external power points for 55, all of which he installed. Mr Ehrlich also said that Mr Haddad asked him to install and supply extra “TV points”.

The contract and the variations

47. The contract says, in clause 1(c)(ii):

Any agreement to vary this Contract, or to vary the plans and specifications for work to be done under this Contract, must be in writing signed by or on behalf of each party to this Contract.

48. The contract says, relevantly, in clause 14 (underlining and bold font in original):

(b) For the sake of clarity, a variation is established by:

(i) written instructions from the Owner or the Owner’s representative; and or

(ii) the supply to the Builder of post contract details such as drawings: and or

…

(d) (i) if the Builder agrees to undertake a variation requested or required by the Owner, the variation is to be detailed in writing and signed by the Owner (or the Owner’s agent) and the Builder. Documents detailing the variation, including as appropriate, amended drawings or specifications, become contract documents.

…

(e) The Builder, within a reasonable time of receipt of instructions to execute a variation (ie and instruction signed by the Owner or the Owner’s agent) is to notify the Owner, in writing, of the value of the variation.

…

(h) Where a price has not been previously agreed for additional work, the Builder may proceed with the variation work, and the price to be paid for the work will be the cost as calculated in accordance with Sub-Clause (i) below, together with the allowance specified in Item 1 of Schedule 2 for supervision, overhead and profit.

(i) The cost referred to in Sub-Clause (h) above, unless otherwise agreed, will be calculated as follows:

(i) for work by the Builder’s employees, the rates for such labour are those set out in item 2 of Schedule 2. If no rates are shown, then the rates to be used are the rates published by the Master Builders Association of NSW current at the time the variation is made;

(ii) where the work or some part of it is executed by a sub-contractor, the cost to be paid under Sub-Clause (h) above is the amount properly paid or payable to the sub-contractor which will be established by provision of a proper tax invoice from the sub-contractor engaged to do the extra work.

(iii) the price for materials is the cost of the materials to the Builder. The Builder is not entitled to any discount other than a discount for prompt of cash payment.

49. None of the three variations the subject of the claim is in writing signed by or on behalf of the parties to the contract. Variations 003, 005A and 009 are not in accordance with clause 1(c)(ii) of the contract.

50. None of the items in the three variations was the subject of written instructions from the Owner or anyone else and nor were they the result of the supply to the Builder of post contract details such as drawings. Clause 14(b) and (d) of the contract have not been complied with.

51. There is no evidence that the Builder provided written notice of the valuation of the variations prior to the issue of payment claim 1111a on 12 November 2018.

52. The exhibit to Mr Boujaoude’s first affidavit, EB-01, at p 136 (CB p 205) includes a copy of a contract for 55. It is signed, but the date is unreadable. Schedule 4 to the contract says:

Any verbal instructions regarding variation will be deemed as approved and signed variations.

53. The exhibit to Mr Haddad’s affidavit of 9 August 2021, SH-01, at p SH1-25 (CB p 1403) and p SH1-59 (CB p 1437) includes a copy of two contracts, one for 55 and one for 55A, both dated on 24 July 2017, but not necessarily signed on that date. Both contracts contain a Schedule 4, which says (CB pp 1419 and 1453):

Any verbal, email or text message instruction regarding variations will be deemed as approved signed variation.

54. On the balance of probabilities, I find that the copies of the contracts provided by Mr Haddad are the contracts applicable to the claim and cross-claim in this matter.

55. I accept Mr Haddad’s evidence (see [40], above) that he did not agree to the items set out in Variation 009. He therefore gave no instruction in relation to those variations.

56. I accept Mr Haddad’s evidence that, by 1 July 2020, he had paid Elrob $1,490,520.78 under the contracts and $267,217.54 for variations. I note that Mr Whyte said, in his report, that the Tender price for the two properties, being $686,447 for 55 and $731,412 for 55A, a total of $1,417,859, was fair and reasonable pricing (see CB p 1010).

57. By 1 July 2020, a dispute had arisen between the parties to the contracts about the completion of the work. On 21 August 2020, Ms Haddad sent an email to Mr Boujaoude saying that she and Mr Haddad would contact NSW Fair Trading if he did not respond to them in relation to the work they considered to be outstanding under the contract. On 24 August 2020, well after the date on which Mr Boujaoude considered the work under the contract to have been completed, Mr Boujaoude sent an email to Ms Haddad attaching “all variation invoices”, which, was the first time that Mr or Ms Haddad had ever seen the invoices the subject of the claim. Mr Boujaoude sent those invoices again with the payment claims served on 12 November 2020.

58. Elrob’s claim is for $89,958 (inclusive of GST). It is not clear how the amount of the claim was arrived at.

59. In any event, Elrob cannot claim again for the work set out in Variation 005A, which Mr Haddad has already paid for as a component of Variation 005. In the statement attached to Payment Claim 1111a, an amount of $1,388.52, exclusive of GST, is cited for Variation 005, and $1,716.15 inclusive of GST, rather than $8,692.50 for Variation 005A, which was annexed to it. Mr Haddad, in his affidavit of 9 August 2021, speculated that the figure in Payment Claim 1111a might be intended to be the GST for Invoice 005, which was paid for in cash but, if so, it is the wrong figure and Mr Haddad’s theory is not consistent with the charging of GST on the amount. Mr Boujaoude’s attention was drawn to the discrepancies in the figures in cross-examination, but he was unable to explain them (T61 – 65).

60. The defendant has established that the total of Variation 009 is wrong because item 4 and item 8 are for the same work.

61. The statement attached to Payment Claim 1111a refers to Variation 8, not Variation 9. However, Payment Claim 1111a, on its face, says that it relates to Variations 3, 5a and 9.

62. Payment Claim 1111a was served shortly after Mr Boujaoude became aware that Mr Haddad had complained to Fair Trading NSW about the building work, and a considerable time after Mr Boujaoude indicated, by text on 1 May 2020, that he believed that work under the contract had been completed (Mr Haddad’s affidavit of 9 August 2021 paragraph 66). Mr Boujaoude had apparently told the home warranty insurer that he had finished the houses in July 2019 (Mr Haddad’s affidavit of 9 August 2021, paragraph 67). The timing of the claim, the confusion in the figures, the absence of any substantiation of the figures and the overlap with previous claims all give rise to doubts about the veracity of the claim. Mr Boujaoude’s inability to clarify the confusion in evidence cast further doubt upon whether the claim has a proper foundation.

63. This is a claim for money due and owing under a contract. It is a claim for a liquidated amount. On the evidence adduced at trial, the plaintiff has not established the veracity of the quantum of the claim on the balance of probabilities.

64. Variation 003 concerns work that Elrob was required to perform under the contract and work which was not, on the evidence, the subject of any instruction by Mr Haddad. It is not a variation under the contract. Variation 005A relates to items previously claimed in the version of Variation 005 which is before me and which has been paid in full. The basis for the charge of $1,716.15 attributed to Variation 005A in payment claim 1111a has not been established by the plaintiff.

65. I am satisfied that the items set out in Variation 009 were not the subject of any request or instructions from Mr Haddad to Mr Boujaoude, either verbally or in writing. There is no documentation of any request or any quote for the items.

66. I find that the variation documents were generated by Mr Boujaoude, without the instructions of Mr Haddad, well after Mr Boujaoude considered that the building work had been finished. On the evidence before me it has not been established that variations were made to the contract in relation to the work set out in Variations 003, 005A or 009.

67. The contract has not been terminated and remains on foot. Mr Boujaoude’s claim for damages under the contract has not been made out.

Quantum Meruit

68. In the alternative to its claim in contract, Elrob makes a claim in quantum meruit.

69. In Mann v Paterson Constructions Pty Ltd [2019] HCA 32 (‘Mann’), Keifel CJ, Bell and Keane JJ said, at [14] – [15]:

14. Restitutionary claims must respect contractual regimes and the allocations of risk made under those regimes**[28]. In Pavey & Matthews Pty Ltd v Paul[29], in a passage cited with approval by French CJ, Crennan and Kiefel JJ in Equuscorp Pty Ltd v Haxton[30]**, Deane J said:

"The quasi-contractual obligation to pay fair and just compensation for a benefit which has been accepted will only arise in a case where there is no applicable genuine agreement or where such an agreement is frustrated, avoided or unenforceable. In such a case, it is the very fact that there is no genuine agreement or that the genuine agreement is frustrated, avoided or unenforceable that provides the occasion for (and part of the circumstances giving rise to) the imposition by the law of the obligation to make restitution."

15. In Pan Ocean Shipping Co Ltd v Creditcorp Ltd ("The Trident Beauty")[31], Lord Goff of Chieveley spoke to similar effect:

"[A]s a general rule, the law of restitution has no part to play in the matter; the existence of the agreed regime renders the imposition by the law of a remedy in restitution both unnecessary and inappropriate."

Nettle, Gordon and Edelman JJ said, at [164], when discussing restitution as an alternative to contractual remedies:

164. Where a contract remains "open" – that is, "not discharged" – there is generally "neither occasion nor legal justification for the law to superimpose or impute an obligation or promise to pay a reasonable remuneration". Such an obligation or promise "would be either inconsistent with the contract or ... would duplicate the contractual obligation". But the position at law for contracts that are "closed", including, relevantly, those terminated for repudiation, is different.

70. Given that the contract has not been discharged and there has been no suggestion that it has been frustrated or avoided or has become unenforceable, Elrob’s claim in quantum meruit for payment claim 1111a must fail.

71. Even if that were not so, I am satisfied that Variation 003 relates largely to works required by the contract and Variation 005A relates to work for which the builder has already been paid. Neither can be the subject of a claim for restitution. Variation 009 includes work which had to be undertaken because Elrob initially laid the wrong tiles in a bathroom, and those costs cannot be subject to restitution. I accept Mr Haddad’s evidence that the other work set out in Variation 009 was not the subject of any agreement between Mr Haddad and Elrob. There has been no attempt on Elrob’s part to prove precisely what work was undertaken, that Mr Haddad received a benefit from that work or to prove that the cost of the work was the cost stated in Variation 009. In all of the circumstances set out above, I do not consider that the Variation documents are a reliable record of either what was done by Elrob or the cost of what was done by Elrob.

72. Elrob’s claims in contract and in quantum meruit have not been made out.

Mr Haddad’s cross-claim

73. Mr Haddad claims, correctly, in his cross-claim, that the statutory warranties in s 18B of the Home Building Act 1989 (‘HBA’) apply to the building works performed under the contracts.

74. The HBA provides, in s 18B:

18B Warranties as to residential building work

(1) The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work—

(a) a warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract,

(b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new,

(c) a warranty that the work will be done in accordance with, and will comply with, this or any other law,

(d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time,

(e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling,

(f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder’s or person’s skill and judgment.

…

75. Mr Haddad claims that the works carried out under the contracts for 55 and 55A are defective and incomplete, and relies on the reports of Mr Capaldi and the Rectification Order from the Department of Fair Trading dated 15 December 2020 for the particulars. Mr Haddad claims that the defective and incomplete works are breaches of the contracts and breaches of the statutory warranties.

76. Mr Haddad claims $241,661.12 as the cost to rectify the outstanding and defective work (see Bellgrove v Eldridge (1954) 90 CLR 613 at 617 – 618; [1954] HCA 36), comprising:

77. $75,813.07 for defective works in 55.

78. $21,158.73 for incomplete works in 55.

79. $123,234.56 for defective works for 55A.

80. $21,454.76 for incomplete works for 55A.

81. Mr Haddad also claims liquidated damages under clause 10(c) of each of the contracts, which provides:

c) i) If the Builder fails to bring the works to Practical Completion by the Date for Practical Completion calculated in accordance with Item 5 of Schedule 2, extended as provided for in Clause 11, then the Builder is to pay or allow to the Owner by way of agreed pre-estimated general and liquidated damages, a sum calculated at the rate stated in Item 3(a) of Schedule 2.

ii) This amount will be applied to the period from the day after the Date for Practical Completion under the contract until the date Practical Completion has been achieved in accordance with Clause 22. Please refer to Clause 22.

iii) Any amount payable under this clause cannot be deducted from any payment until such time as the actual date of practical completion has been determined.

iv) if ‘nil’ is inserted or no amount is specified at Item 3(a) of Schedule 2 then it is agreed that no damages are payable in relation to the time to complete the works. Any amount inserted must reflect the actual cost of the delay to the Owner.

78. Mr Haddad further claims restitution for overpayment under s 32(3)(b) of the SOPA which appears in “Part 3 Procedure for recovering progress payments” and provides:

32 Effect of Part on civil proceedings

(1) Subject to section 34, nothing in this Part affects any right that a party to a construction contract—

(a) may have under the contract, or

(b) may have under Part 2 in respect of the contract, or

(c) may have apart from this Act in respect of anything done or omitted to be done under the contract.

(2) Nothing done under or for the purposes of this Part affects any civil proceedings arising under a construction contract, whether under this Part or otherwise, except as provided by subsection (3).

(3) In any proceedings before a court or tribunal in relation to any matter arising under a construction contract, the court or tribunal—

(a) must allow for any amount paid to a party to the contract under or for the purposes of this Part in any order or award it makes in those proceedings, and

(b) may make such orders as it considers appropriate for the restitution of any amount so paid, and such other orders as it considers appropriate, having regard to its decision in those proceedings.

79. The claim for restitution relates to the sum of $95,382.52 paid by Mr Haddad under the SOPA. Mr Haddad claims, in the alternative, that Elrob has been unjustly enriched to the extent of that payment.

80. In its defence to the cross-claim, Elrob does not admit that its work at 55 and 55A was defective or incomplete, but says (in effect) that it remains ready and willing to remedy any defects and complete any incomplete work.

81. As to the claim for liquidated damages, Elrob denies that practical completion of 55A was achieved on 30 September 2020 “and relies on its Notice of Practical Completion issued on 6 November 2019”.

82. Elrob denies that Mr Haddad is entitled to damages for defective or incomplete work and also denies that he is entitled to liquidated damages.

83. Elrob denies that Mr Haddad has paid it more than it was entitled to under the contracts and pleads that Mr Haddad is not entitled to restitution for any overpayment.

Defective and incomplete works (cross-claim)

Defective works in 55

84. The building consultants, Mr Capaldi and Mr Bournelis (‘the building experts’), had a meeting some time before the hearing of this matter and compiled a detailed joint report. Mr Whyte was not requested to arrive at a valuation for the defective or incomplete works, and did not do so. Mr Haddad’s claim for defective and incomplete work relates to both houses.

55 – Defect 1: Horizontal cracking to render

85. There is a crack to the northeast corner of the façade, extending through the render. The crack is about 300mm long and less than 1mm thick. Mr Capaldi considers that the crack is consistent with a horizontal break in the masonry wall for a dampcourse or flashing for which a control joint ought to have been installed in accordance with AS3700-2011. Mr Bournelis considers that because the crack is less than 1mm thick, it need not be repaired and is not a defect. The building experts agreed that the cost of rectification would be $609.89.

86. AS2870 and AS3700 apply. I accept that, to the extent that AS2870 says that rectification is not required if the crack is less than 1mm wide, it deals only with settlement cracks and not cracking arising from other causes, such as the absence of a control joint.

87. I will allow $609.89 for defect 1.

55 - Defect 2: Poor painting to the external wall area above the garage and to the east elevation.

88. The building experts agree that the painting to the external wall above the garage on the east elevation requires remediation in the sum of $358.80

89. I will allow $358.80 for defect 2.

55 – Defect 3: Swarfing marks on the colorbond capping

90. The building experts agree that there are visible swarf marks and stains on the flashings, cappings and rendered parapet walls above the garage and adjoining the north balcony. Insufficient care has been taken to protect these surfaces during building work. The experts agree that the cost of remediation will be $274.00.

91. I will allow $274.00 for defect 3.

55 – Defect 4: Poorly installed gas and water mains and service pipes

92. Mr Capaldi measured the top of the gas service pipe at 80mm below the ground level in the garden bed on the western side of 55 next to the fence. AS/NZS 5601.1 – 2013, p 69 clause 5.4.3 provides that in no case shall depth of cover for consumer gas piping be less than 300mm. In private property (non-trafficable areas) a minimum depth of 300mm is also prescribed. Mr Capaldi also said that the quality of the backfill over the gas pipe was inadequate because it contains stone and debris as well as soil contravening clause 5.4.4 of the standard which required such fill to be “free of stones or other materials which could damage the pipe or pipe coating”.

93. Mr Capaldi measured the top of the water service pipe at 200mm below the ground level at the same location. AS/NZS 3500.1 – 2003 in clauses 5.9, 5.10 and 5.11 says that water service pipes must be installed at a minimum depth of 300mm.

94. Mr Capaldi’s opinion is that the gas pipe and the water service pipe are at risk of damage and need to be exposed and then covered with clean fill or sand. The gas pipe needs to be marked with “danger tape”. A concrete path must then be laid from the driveway side of the fence to the western external wall of 55. Mr Capaldi estimated the cost of the remedial work at $2,291.52

95. It emerged during the giving of concurrent evidence by the building experts that Mr Bournelis had not considered the gas and water pipes in the area Mr Capaldi was concerned about, so he was unable to comment.

96. I accept Mr Capaldi’s evidence on defect 4.

97. I will allow $2,291.52 for defect 4.

55 – Defect 5: Weepholes missing to first floor

98. Mr Capaldi found that three weepholes which should have been installed to the west elevation, adjoining bedroom 2 and the bathroom, have not been installed, contrary to AS3700 – 2011 “Masonry Structures page 41 clause 4.7.2, which says that weepholes are to be installed immediately above the flashing at no more than 1200mm centres”. Mr Capaldi estimated that remediation work would cost $612.00

99. Mr Bournelis believes that this is a “technical breach” because he could not see any evidence of water ingress, and he concluded that the weepholes which had been installed were working adequately.

100. It was argued for the defendant that the Building Code of Australia (‘BCA’) provides, in relation to unreinforced masonry (which includes render), in section 3.3.1.0, that Performance Requirement P2.1.1 is satisfied if it is designed and constructed in accordance with AS3700 or AS47773 Parts 1 and 2. Mr Bournelis agreed that AS3700 is applicable in this case and has been breached, but he characterised the breach as “technical” because he could not observe any detriment to the structure. The defendant submitted, in effect, that this was not the test. The requirements of the BCA, and therefore the National Construction Code (‘NCC’) (of which the BCA is a component) are that the applicable provision must be met, or a Performance Solution must be devised, and it must be demonstrated that the Performance Solution complies with the Performance Requirements (see BCA Sections 1.0.0, 1.0.2, 1.0.3 and 1.0.5). This process would involve that preparation of an expert report, including test results. No such performance solution has been put forward. The defendant’s submissions pointed to Performance requirement P2.1.1 Structural stability and resistance to actions, which require a structure to withstand a long list of “actions to which it may reasonably be expected to be subjected”, including wind, snow, earthquake, liquid pressure, rainwater, ground water and thermal action. These are not matters Mr Bournelis has dealt with in his evidence.

101. Mr Bournelis agreed that, if this defect needed to be addressed, $612 is the appropriate allowance.

102. I will allow $612.00 in relation to defect 5.

55 – Defect 6: Cracking due to brick growth

103. The building experts agree that there is cracking due to brick growth on the western elevation adjoining the garage and on the eastern elevation. The cracking has occurred in four areas. The reason for the cracking is the absence of vertical expansion joints in the external masonry to control cracking and to control brick growth. This is contrary to AS 3700 – 2011.

104. The building experts disagreed as to the cost of remediation work. Mr Capaldi’s estimate was $2,802.32 and Mr Bournelis’ estimate was $1,960.00. Mr Bournelis based his estimate partly on his observation that most of the cracks were less than 1mm thick. However, Mr Capaldi said that the cracking is due to brick growth, rather than settling, so that cracks of all widths should be remediated because they are likely to grow. Mr Capaldi showed, in his report of 27 September 2022, that the cracks are increasing in width over time. In addition, the cracks follow the line of the brickwork rather than cracking from corners as settlement cracking would do, which supports the hypothesis that the cracking is due to brick growth. I accept Mr Capaldi’s evidence.

105. I will allow $2,802.32 for defect 6.

Defect 7: Poorly installed downpipe and stormwater pipes servicing the charge system

106. Mr Capaldi said that the downpipes to the eastern elevation do not extend into the ground to be connected to the stormwater system. The R Squared Pty Ltd stormwater plans allow for the downpipes to extend vertically down the external walls and then be connected in the ground to the main stormwater line. The plans do not allow for the stormwater pipes to be fixed horizontally to the external wall. The builder has failed to install the stormwater and downpipes to the eastern elevation in accordance with the approved drawings. Mr Capaldi estimated a remediation cost of $6,511.15.

107. Mr Bournelis agreed that the downpipes and stormwater pipes have not been installed in accordance with the plans. He said that he observed that the downpipes were all connected to the rainwater tank on the westerns side. In the event that the tank becomes full, Mr Bournelis said that the tank could be connected to the pit in the front yard and gravity fed out to the street for discharge through the council stormwater pipes. Mr Bournelis did not consider this to be a defect.

108. The downpipes and stormwater pipes have not been installed in accordance with the stormwater plans. I find that this is a defect requiring remediation. The approved plans contracted for must be adhered to, and the inconvenience of having to monitor the level of the rainwater tank and periodically change the connection to the pipes to avoid the tank overflowing, under the present system, is patent.

109. The stormwater plans did not provide for the downpipes to be clipped horizontally to the exterior walls, which is unsightly.

110. Mr Bournelis was instructed that there is a stormwater line running down the length of the house to which the downpipes could be connected. On the basis of those instructions, he did not believe that any digging would be required should it be necessary to remediate the system. He estimated a remediation cost of $2,522 in the event that remediation was found to be necessary.

111. The approved stormwater plans show that it was intended that each downpipe connect to stormwater lines which run down both sides of the house (see CB pp 1502 and 1503). Those connections would now require an additional piece of pipe for each downpipe to connect it to the stormwater line. It would be necessary to dig a trench from the wall of the house to the stormwater line for each downpipe so that the downpipes can be extended, attached to the stormwater line and charged without the joints leaking.

112. Mr Bournelis has underestimated the work required to remedy this defect. I prefer Mr Capaldi’s estimate.

113. I will allow $6,511.15 for defect 7.

55 - Defect 8: Excess cement splatter on colorbond fencing

114. The building experts agreed that the colorbond fencing and posts show excessive concrete, mortar and render splatter to nine panels.

115. The experts agreed the cost of remediation at $1,236.00.

116. I will allow $1,236.00 for defect 8.

55 – Defect 9: Poorly constructed render control joint

117. The building experts agree that the builder has constructed a horizontal control joint, but a section of 320mm has been omitted, and this has resulted in horizontal cracking between the control joints.

118. The building experts agree the cost of remediation at $95.89.

119. I will allow $95.89 for defect 9.

55 – Defect 10: Poorly installed balcony outlet

120. The balcony drainage outlet has been cut short of the external balcony wall. This may result in the ingress of surface water. The building experts dealt with this in conjunction with item 41.

55 – Defect 11: Glazed barrier

121. This item was not pressed by the defendant.

55 – Defect 12: Poorly constructed tile control joint

122. The building experts agree that the centre control joint within the verandah body of tiles has been poorly installed in the wrong colour.

123. The building experts agree that the cost of rectification is $134.89

124. I will allow $134.89 for defect 12.

55 – Defect 13: Expansion joint not constructed

125. Mr Capaldi says that the builder has omitted to instal a vertical expansion joint between the main building and the verandah. AS3700 – 2-11 Masonry Structures p 43 clause 4.8.3.1 says that a joint is to be constructed where a wall changes in height more than 20%. Mr Capaldi costed the remediation work at $237.29.

126. Mr Bournelis agreed that the expansion joint had not been installed in compliance with AS3700 but considered that it was a technical breach with no practical consequences. Mr Bournelis pointed out that an expansion joint had been installed above the required area.

127. I accept Mr Capaldi’s evidence in relation to defect 13 in 55. The Australian Standard should be complied with. Failure to comply gives rise to the potential for future damage to occur to the building by way of cracking.

128. I will allow $237.29 for defect 13.

55 – Defect 14: Poorly applied sealant to the roof flashings and delamination to sealants

129. The building experts agree that the silicone sealant used as the primary weatherproofing between the external first floor wall and the roof flashings has been poorly applied and in delaminating in places.

130. The building experts agreed that the cost of remediation is $191.78.

131. I will allow $191.78 for defect 14.

55 – Defect 15: Horizontal cracking to the render

132. The building experts agree that there is horizontal cracking to the masonry and render wall adjoining bedroom 1 and above the garage apron flashings. The cracking appears to be due to a cavity flashing installed below the window and above the apron flashing.

133. The building experts agreed the cost of remediation at $609.89.

134. I will allow $609.89 for defect 15.

55 – Defect 16: Visible fixing anchors to façade cladding

135. In the course of giving evidence, Mr Bournelis conceded that the fixing anchors installed to secure the parapet cladding to the framework were visible. This is the result of the builder adopting a poor fixing technique and failing to finish the external cladding.

136. Mr Capaldi costed remediation at $1,568.80. Mr Bournelis did not provide an estimate.

137. I accept Mr Capaldi’s evidence and I will allow $1,568.80 for defect 16.

55 – Defect 17: Poorly finished concrete surfaces

138. The concrete surface finish to the garage perimeter has been roughly finished because the surface has not been trowelled smooth. Mr Bournelis said that this was because of a decision to make the garage larger than originally planned by building the internal wall further into the entry hall.

139. Mr Capaldi considered that the failure to finish the garage floor contravened HBA 18B(1)(a). Mr Bournelis did not believe that an aesthetic issue could be a defect.

140. I agree with Mr Capaldi. A failure to finish a surface which creates an aesthetic issue is a defect under HBA 18B(1)(a).

141. Mr Capaldi costed remediation at $1,086.10, including painting to conceal the repair. Mr Bournelis costed remediation at $844 without painting, but did not think that remediation was necessary.

142. I accept Mr Capaldi’s costing.

143. I will allow $1,086.10 for defect 17.

55 – Defect 18: Cracking to hallway and kitchen ceilings

144. The building experts agreed that there is visible cracking to the ceiling of the ground floor hallway. There is also visible cracking to the ceiling of the ground floor kitchen adjoining the living room. The builder has failed to instal the control joints required within the ground and first floor ceilings as required by AS/NZS 2589 – 2017 “Gypsum linings – Application and finishing” and the “Gyprock Residential Installation Guide”.

145. Mr Bournelis costed remediation at $874, which did not include the installation of control joints adequate to meet the Australian Standard.

146. Mr Capaldi costed remediation at $2,484.75, which included the installation of control joints in compliance with the standard. This should prevent further cracking. I accept Mr Capaldi’s evidence.

147. I will allow $2,484.75 for defect 18.

55 – Defect 19: Flexible sealant not installed to wet areas

148. The building experts agreed that the junction between the wall and floor tiles to all wet areas has been installed with a rigid grout joint that appears to be cement based. This is a contravention of AS3958.1 “Ceramic tiles – Part 1: Guide to the installation of ceramic tiles” and AS3740 – 2010 “Waterproofing of domestic wet areas”.

149. The building experts agreed quantum at $621.78.

150. I will allow $621.78 for defect 19.

55 – Defect 20: Wall tiles not in alignment in the bathrooms

151. The feature wall tiles to the walls of the bathrooms have been installed with inconsistent horizontal grout lines so that they are out of alignment.

152. Mr Bournelis said that the white tiles were consistent in size, but the grey feature tiles varied from 295 – 305mm, and attributed the issue to that difference in size. Mr Bournelis did not consider that the issue required remediation. Mr Capaldi also measured the tiles, and found that they were of consistent size.

153. It is evident from the photographs that the aesthetic issue with the bathroom tiles is caused by the inconsistent width of the grout, which is an issue for the tiler (see CB pp 21454-6 and 2576-8).

154. Mr Capaldi costed the remediation at $6,675.00. There is no alternative costing, and I accept Mr Capaldi’s costing.

155. I will allow $6,675.00 for defect 20.

55 – Defect 21: Sewer line has not been capped

156. The building experts agree that an airtight removable cap has not been installed on the sewer pipe that connects to the toilet suite in the bathroom.

157. The building experts agree that the remediation cost is $142.00.

158. I will allow $142.00 for defect 21.

55 – Defect 22: Poorly painted doorjambs.

159. The building experts agree that the timber substrate surface of the timber doorjambs is visible because insufficient paint has been applied.

160. The building experts agree that the remediation cost is $89.70.

161. I will allow $89.70 for defect 22.

55 – Defect 23: Cracking to the junction of the wall tiles and ceiling lining

162. The building experts agreed that poor joint setting between the wall and ceiling linings prior to the tiling of the walls has led to cracking at the junction of the wall tiles and ceiling lining.

163. The building experts agree that the cost of remediation is $95.89.

164. I will allow $95.89 for defect 23.

55 – Defect 24: Reverse falls & level areas to wet area

165. The building experts agree that the tiled floors are required to comply with AS3958.1, and that the falls to the floor wastes in the master ensuite and the first floor bathroom were not compliant. The building experts differed, however, on the extent of the work necessary for remediation of the defects in the master bedroom ensuite and the first floor bathroom. Mr Bournelis costed the replacement of two rows of tiles in each room. Mr Capaldi’s scope of work required more tiles to be replaced to achieve the required falls to the floor waste.

166. Mr Capaldi believes that a laundry is a “wet area” and therefore requires a floor waste. Mr Bournelis does not consider a laundry to be a “wet area”.

167. The BCA defines “wet area” as follows, in section 1.1.1:

Wet area means an area within a building supplied with water from a water supply system, which includes bathrooms, showers, laundries and sanitary compartments and excludes kitchens, bar areas, kitchenettes or domestic food and beverage preparation areas.

168. I accept that a domestic laundry is a “wet area” under the BCA and that it requires a floor waste.

169. Mr Bournelis costed the remediation works, being the replacement of two rows of tiles in each bathroom, at $1,458.00. Mr Capaldi costed his scope of works, which included replacing more tiles and work in the laundry, at $3,566.00

170. I prefer Mr Capaldi’s more comprehensive approach to the remediation of the insufficient falls in the bathroom floors. I also find that it is necessary to instal a floor waste in the laundry.

171. I will allow $3,566.00 for defect 24.

55 – Defect 25: Water ingress into the building from the external door

172. The building experts agree that the door to the outdoors in the laundry requires treatment to seal gaps which allow water ingress. The building experts agree to a remediation cost of $131.23.

173. I will allow $131.23 for defect 25.

55 – Defect 26: Poor finishing to the junction of the walls and window/door frames.

174. The building experts agree that the finish between the door and window frames and the rendered and painted reveals has been poorly applied.

175. The building experts agreed to a rectification cost of $251.89.

176. I will allow $251.89 for defect 26.

55 – Defect 27: Poor patching to wall surfaces below and to the surrounds of electrical, light and comms wall plates.

177. The experts agree that the wall finishes have been poorly undertaken in areas directly below wall mounted power points, light switches and comms plates.

178. Mr Capaldi costed the remediation work at $1,647.50 and Mr Bournelis costed it at $774.00. Mr Bournelis costed the work on the basis that some of the damage had been caused by the defendant, however, no factual basis for this has been established. All of the poor patching should be addressed.

179. I will allow $1,647.50. for defect 27.

55 – Defect 28: Sliding door lock unable to be engaged

180. This item was not pressed.

55 – Defect 29: Lights not operational

181. One light in the alfresco area, the north spot light and two lights on the staircase could not be turned on at the time of Mr Capaldi’s inspection. Mr Capaldi costed the remediation at $253.00.

182. Mr Bournelis had been instructed that the defendant was occupying 55, and therefore disagreed with this item being a building defect. However, once he understood that the defendant had been occupying 55A, not 55, he agreed that, if this was found to be a defect, then Mr Capaldi’s costing was reasonable.

183. 55 had not been occupied at the time of Mr Capaldi’s inspection.

184. I will allow $253 for defect 29.

55 – Defect 30: Poor finish to linen press

185. The experts agreed that the linen press lacks skirting boards and the finishing between the walls and the sliding door and the cutting of the floor tiles adjoining the walls was poor. There is excessive grout smearing on the floor tiles.

186. The building experts agreed the cost of remediation work at $266.00.

187. I will allow $266.00 for defect 30.

55 – Defect 31: Door unable to be fully opened

188. The bottom of the door is restricted in its movement due to the carpet covering the floor. Mr Capaldi considered this to be a failure to undertake the finishes required, and therefore a defect under HBA s 18B(1)(a). Mr Bournelis indicated that he thought that the carpet installers ought to have trimmed the door.

189. I agree with Mr Capaldi.

190. I will allow $78.00 for defect 31.

55 – Defect 32: Poor finishing to the underside of the stairs, slab edge and upper balustrade post

191. The building experts agree that the underside of the stairs has been poorly finished with plasterboard. The junction between the wall and the plasterboard and the junction between the plasterboard and the stair stringer have been poorly finished. The upper slab edge has been chipped and not finished with a nosing tool to achieve the required finish before painting.

192. The building experts agreed the cost of remediation work at $548.00.

193. I will allow $548.00 for defect 32.

55 – Defect 33: Delaminating render to the concrete slab edge

194. The building experts agree that the cement render to the slab edge to the landing of the stairs was cracked and drummy.

195. The building experts agree that the cost of remediation is $592.20.

196. I will allow $592.20 for defect 33.

55 – Defect 34: Cracking due to brick growth.

197. The building experts agree that there is cracking to the full height of the internal wall within the stairwell at a width of 0.5mm.

198. Mr Bournelis believed that this could be remedied within the cost assigned to defect 33. However, he admitted, in evidence that the work for defect 34 did not include the cutting of an expansion joint. An expansion joint is required and is not included in the cost of the remediation of defect 33. The supply and fixing of expansion joint sealant to match existing wall colours is further additional work required for defect 34.

199. Mr Capaldi estimated the work attributable to the remediation of defect 34 to be $313.79. I accept his evidence.

200. I will allow $313.79 for defect 34.

55 – Defect 35: Crazing cracking to rendered wall

201. Crazing cracking has occurred to the first floor north and east living room wall, the north and west wall of bedroom 3 and the north wall of the master bedroom.

202. It was Mr Capaldi’s evidence that the reason for crazing or spider web cracks in render is either that the render was not properly mixed prior to being applied or that the render mix was too wet, so that rapid moisture loss after application reduced the cohesion of the render particles. Mr Capaldi has dealt with the cost of remedying these walls together with item 36.

203. Mr Bournelis does not believe that the cracking requires rectification.

55 – Defect 36: Poorly painted internal walls and woodwork with areas being transparent.

204. The ground floor and first floor walls and woodwork are poorly painted, due to poor preparation and inconsistent finishes and texture (photographs CB p 2449). Some areas are simply bare of paint or have a very thin coating. The woodwork and the walls are all affected.

205. Mr Capaldi said that remediation would require:

206. The protection of adjacent surfaces and materials.

207. The filling and sanding of uneven areas.

208. The sanding of paint funs and paint daubs.

209. The preparation of an additional coat of paint to all walls and woodwork.

210. The making good of any disturbed finishes.

211. Cleaning on completion.

212. Mr Capaldi costed the work at $4,305.60.

213. Mr Bournelis believed that this work was covered in items 22, 27, 30, 32, 33 and 34. I disagree. The items enumerated relate to specific, small areas with specific defects. Defect 36 affects a much larger area and is well illustrated in Mr Capaldi’s photographs at CB pp 2449 – 2450.

214. I will allow $4,305.60 for defect 36.

55 – Defect 37: Differing light fittings installed

209. The colour and profile of the light fittings in the first floor hallway and upper living room differ. Six light fittings are affected.

210. Mr Capaldi costed remedial work at $303.00

211. Mr Bournelis was instructed that the defendant was living in 55, and so categorised this as a maintenance issue for the defendant. There is no evidence that the defendant has lived in 55.

212. This item relates to the light fittings installed by the builder.

213. I will allow $303.00 for defect 37.

55 – Defect 38: Horizontal cracking to the west wall

214. The building experts agree that the first floor master bedroom external west wall is cracked.

215. Mr Capaldi included the cost of remediation in defect 36. I have therefore allowed for it as part of defect 36.

55 – Defect 39: Loose sealing gasket to external door

216. Mr Capaldi, during his inspection, photographed the door trim and gasket of the first floor hallway external door on the south elevation, which has become detached, in part, from the door and laterally displaced (CB p 2454). Mr Capaldi did not find evidence of any impact damage to the edge of the door and formed the view that the defect was inherent in the door. Mr Capaldi costed remediation at $78.00

217. Mr Bournelis did not see the rubber gasket inside the door jamb. He agreed, however, that if the defect were present, the cost of rectification would be $78.

218. The photograph shows the defect

219. I will allow $78 for defect 39.

55 – Defect 40: Excessive gap to balcony door

220. The building experts agree that there is an excessive gap to the door in bedroom 1 which leads to the balcony. The gap is 22mm wide.

221. The building experts agree that the cost of remediation is $65.20.

222. I will allow $65.20 for defect 40.

55 – Defect 41: Inadequate drainage to the north and south balconies

223. The contract plan shows a floor waste with the letters “FW” in the corner of each balcony. There is no doubt that no floor waste has been installed.

224. Mr Capaldi said that the 30mm diameter PVC pipe which disperses to the outer edge of the building from the balcony is not adequate and would not cope with rain over a long period or heavy rain over a shorter period. The current situation does not comply with NCC 2017 Volume 3 DP2.1 “Surface Drainage installation” and NCC 2016 Volume 2 P2.2.1 “Surface water”. Mr Capaldi costed remediation at $4,936.20.

225. Mr Bournelis said that his instructions were that the defendant had instructed the plaintiff to omit the floor wastes from the balconies for aesthetic reasons. However, there is no evidence of the defendant giving the plaintiff those instructions and no relevant variation documentation. Mr Bournelis estimated the cost of a remediation solution to be $1,336.00.

226. I prefer Mr Capaldi’s costing. Mr Bournelis’ method is unacceptable, because it is not in conformity with the contract plans.

227. I will allow $4,936.20 for defect 41.

55 – Defect 42: Rust stains to toilet suites

228. The underside of the toilet cistern and the toilet pan in the main bathroom show corrosion around metal fixings because fixings which have not been galvanised have been used.

229. Mr Capaldi’s rectification method includes replacing the toilet pan and the fixings, because the toilet pan will have to be removed to replace the fixings, and it is likely to be damaged in the process. Mr Capaldi’s costing is $623.00.

230. Mr Bournelis’ rectification method is to change the cistern fittings at a total cost of $142.00.

231. I prefer Mr Capaldi’s more conservative method.

232. I will allow $623.00 for defect 42.

55 – Defect 43: Toilet seats do not fit the suites provided

233. The toilet suites installed in each bathroom have a toilet seat which is obviously too small for the toilet pan bowl (see photograph CB p 2468).

234. Mr Capaldi costs the remediation at $453.00.

235. Mr Bournelis was instructed that the toilet suite was purchased by the builder as a single unit, and he put forward the remediation cost on that basis. No evidence about the purchase was put forward. I am unable to find that the builder purchased the toilets as a single unit. It is unlikely that a reputable vendor would sell such a mismatched suite.

236. I will allow $453.00 for defect 43.

55 - Additional costs in relation to defects

237. The building experts agreed that 11% was an appropriate percentage for preliminaries. They further agreed that builder’s margin at 25%.

238. The sub-total of the damages to be awarded in respect of defects for 55 is $47,141.05.

239. The following additional costs are to be added:

| Sub-total | $47,141.05 | | Preliminaries – 11% | $5,185.51 | | Sub-total | $52,326.56 | | Builders Margin – 25% | $13,081.64 | | Sub-total | $65,408.20 | | GST – 10% | $6,540.82 | | Sub-total | $71,949.02 | | IUHBCF (insurance under the Home Building Compensation Fund) – 1.5% | $1,079.23 | | Total cost of rectification of 55 | $73,028.25 |

Defective and incomplete works

Incomplete works - 55

55 - Incomplete Works Item 55: North Elevation

240. The building experts agree that the following incomplete works are evident on the north elevation of 55:

241. The PVC balcony outlet has not been cut back, sealed and patch rendered and painted to complete the works of the north elevation balcony.

242. There is incomplete painting to the entry porch lower wall.

243. Perimeter movement joints have not been installed to entry porch tiles.

244. The entry porch tiles have not been cleaned of grout and cement residue from the floor tiles.

245. There is incomplete painting to the first floor parapet wall above the garage and adjoining the balcony.

246. The flexible sealant to the junction of the first floor wall and the cladding is incomplete.

247. Sealant has not been applied to the junction of the window/door frames and reveals/sills.

248. The building experts agree a cost of completion of $1006.69. I will allow $1006.69 for item 55.

55 – Incomplete works Item 56 : West elevation

242. This item comprises the following:

243. Downpipes have not been painted properly or in a consistent colour. Mr Bournelis does not consider this to be an issue to be remedied. Mr Capaldi considers it to be incomplete work. I agree with Mr Capaldi.

244. Paint smearing has not been cleaned. There was a difference of opinion as to the nature of the visual effect on the gutters; Mr Capaldi thought it was paint smearing, and Mr Bournelis thought it was paint on a plastic covering which had not been removed. In either event, work is required to complete the finish to the gutters.

245. Weephole surrounds have not been finished. They have been patched with render but not painted. The building experts agree.

246. The patch render around the hot water pipe surrounds is not painted

247. A spreader attachment has not been installed to the downpipe extending from the main upper roof. The building experts agree that this is so.

248. Sealant has not been applied to the junction of the windows/door frames and reveals/sills.

249. Mr Capaldi estimated the cost of completion to be $1077.49. Mr Bournelis estimated it to be $300, on the basis that the downpipes could be left as they are and the paint smearing issue merely required the removal of a plastic covering. Mr Capaldi also required the painting for the weephole surroundings and the hot water pipe surrounds from architectural break to architectural break, rather than patch painting. I prefer Mr Capaldi’s method.

250. I will allow $1,077.49 for item 56.

55 - Incomplete works Item 57: East Elevation

245. This item comprises the following:

246. Downpipes not painted.

247. Weephole surrounds not finished.

248. Electrical meter box not painted.

249. Missing downpipe astragals.

250. Sealant not applied to junction of window/door frames and reveals/sills.

251. The building experts agree that there are incomplete works on the east elevation, and agreed the cost of completion at $739.75.

252. I will allow $739.75 for item 57.

55 – Incomplete works Item 58: South Elevation

248. This item comprises the following:

249. The PVC balcony outlet has not been sealed and patch rendered and painted to complete the works of the south elevation balcony.

250. The verandah tiles have not been cleaned.

251. Perimeter movement joints have not been installed to verandah floor tiles.

252. Sealant has not been applied to the junction of the window/door frames and reveals/sills.

253. The building experts agreed that the cost of completing the south elevation is $388.59.

254. I will allow $388.59 for item 58.

55 – Incomplete works Item 59: Door edges not sealed and painted as per manufacturers installation guide and AS 2311

251. Mr Capaldi has provided photographs of unpainted edges and surfaces of the doors in 55 at CB pp 2578, 2582 and 2583. In oral evidence, Mr Bournelis agreed that some of the door surfaces had not been painted.

252. The building experts agreed that the work could be completed for $604.50.

253. I will allow $604.50 for item 59.

55 – Incomplete works Item 60: Sealant not installed to gaps between floor tiles and timber skirting boards and between floor tiles and sliding door units

254. The parties agree that the sealant has not been installed, and agree the completion cost at $209.67.

255. I will allow $209.67 for item 60.

55 – Incomplete works Item 61: Wet area floor waste pipes have cement and building debris in the bends and traps

256. Item 61 was not pressed.

55 – Incomplete works Item 62: Saw dust and builders debris not cleaned within kitchen and wet areas

257. The building experts agreed that this work is not complete and agreed to a cost of $78.00 to complete it.

258. I will allow $78.00 for item 62.

55 – Incomplete works Item 63: Screws missing to door hinges to the ground floor bathroom and laundry

259. This item is not pressed.

55 – Incomplete works Item 64: Overspray of paint to window and door frames and to stair balustrades not cleaned

260. The building experts agreed that there is an overspray of paint to window and door frames and to stair balustrades which has not been cleaned. The building experts agreed that the completion of this work will cost $894.00.

261. I will allow $894 for item 64.

55 - Incomplete works Item 65: Upper reveal not tiled to the kitchen west facing window

262. The photograph at p 2593 (photograph 151) shows that the upper reveal to the kitchen west facing window is unfinished. Tiling is the logical covering, given the location of the window.

263. Mr Capaldi’s costing of $385.93 is reasonable.

264. Mr Bournelis said that tiling of the reveal is not shown on the plans or in the specification, but the finishing of the reveal is a detail which would not be expected to be specifically mentioned. There is nothing in the contract to indicate that the defendant was to be responsible for finishing this surface.

265. I will allow $385.93 for item 65.

55 – Incomplete works Item 66: Gaps between kitchen wall cupboards and west wall

266. The building experts agree that this work is incomplete and agree that it will take $56.89 to complete.

267. I will allow $56.89 for item 66.

55 – Incomplete works Item 67: Gaps between head architraves and walls

268. The building experts agree that there are gaps between the head architraves and walls and agree the cost of completing the work at $234.00.

269. I will allow $234.00 for item 67.

55 – Incomplete works Item 68: Window cleaning external and internal

270. Mr Capaldi observed that the windows are affected by debris, sticker adhesive, render and paint smearing. Mr Bournelis did not observe these issues and did not provide a costing.

271. The Office of Fair Trading report from the inspection on 30 November 2020 at CB p 2135 at [50] and CB p 2139 at [69] noted that the windows should have been cleaned of cement debris and wall paint.

272. Mr Capaldi costed the cleaning of the windows at $2,836.00.

273. I will allow $2,836.00 for item 68.

55 – Incomplete works Item 69: Skirting boards

274. Sections of the skirting boards are missing in the ground floor study built in cupboard.

275. The building experts agreed the cost of completion at $181.00.

276. I will allow $181.00 for Item 69.

55 – Incomplete works Item 70: Missing section of painting to stair handrail to the upper flight

277. The building experts agreed that this work was incomplete and agreed the cost of completion at $179.40.

278. I will allow $179.40 for item 70.

55 – Incomplete works Item 71: Missing light switch cover plates to master bedroom and first floor hallway

279. The experts agree that this work is incomplete and agree the cost of completion at $60.78.

280. I will allow $60.78 for item 71.

55 – Incomplete works Item 72: Painting incomplete to master bedroom walk in robe

281. The building experts agreed that this work falls within the work allowed for in defect 36, above.

55 – Incomplete works Item 73: North and South balcony tiles not cleaned

282. The experts agree that the north and south balcony tiles require cleaning and agree that the cost is $352.00.

283. I will allow $352.00 for item 73.

55 – Incomplete works Item 74: Perimeter movement joints have not been installed to the north and south balcony floor tiles

284. The building experts agree that this work requires completion and agree that the cost is $191.78.

285. I will allow $191.78 for item 74.

55 – Incomplete works Item 75: Sealant not installed to shower screens to the ensuite and main bathrooms.

286. Mr Capaldi gave evidence that he conducted a water test in which the water ran under the shower screen, indicating either that sealant had not been applied, or had been applied inadequately. Mr Bournelis said that he saw some sealant, but it was possible that there was a gap in it.

287. Mr Capaldi costed remediation at $173.89. Mr Bournelis did not cost this item.

288. Having regard to the evidence of the water test and the photographs at CB p 2653 (photograph 272) and CB p 2654 (photograph 273) I am satisfied that the sealant to the shower screens is incomplete.

289. I will allow $173.89 for item 75.

55 – Incomplete works Item 76: Shelves missing from the wet area cabinetry

290. This item is not pressed.

55 – Incomplete works Item 77: Privacy screens missing to the north and south balconies

291. The privacy screens are shown on the building plans at CB pp 1490, 1492, 1523 and 1524. The purported deletion of the privacy screens from the scope of works is an item on an invoice entitled “Variation 3 – Additional works”, which is discussed below at [556]. I do not accept that Variation 3 – Additional works is a variation under the contract.

292. Mr Bournelis did not cost this item

293. Mr Capaldi costed the privacy screens at $2,354.00.

294. I will allow $2,354.00 for item 77.

Additional costs in relation to incomplete works

295. The total of the damages to be awarded for incomplete works for 55 is $12,004.36.

296. The following additional costs are to be added:

| Sub-total | $12,004.36 | | Preliminaries - 11% | $1,320.48 | | Sub-total | $13,324.84 | | Builder’s margin – 25% | $ 3,331.21 | | Sub-total | $16,656.05 | | GST – 10% | $1,665.60 | | Sub-total | $18,321.65 | | IUHBCF – 1.5% | $274.82 | | Total to complete 55 | $18,596.47 |

Defective and Incomplete works

Defective works - 55A

55A – Defect 89: Poor painting to the external wall elevations

297. The paint to the exterior of 55A is inconsistent in colour and there are transparent areas. The ground floor shows some paint lifting. There is a visible colour difference between the ground and first floors. Patching which has not been painted is visible to the northern, eastern and western external walls. The lower wall adjoining and below the verandah riser tiles has visible poor finishing. Retro fitted weepholes in the external walls have not been painted. There is rust coloured staining to the upper north wall elevation above the windows to bedroom 1. The mechanical fixings to the external wall of the house are corroding. There is visible cracking and separation to the north-east corner wall adjoining the entry porch soffit. The photographs are provided by Mr Capaldi from CB pp 2705 to 2708. The defects are unsightly.

298. Mr Capaldi recommended that the entire exterior of the building be repainted. He further recommended that a tubular scaffold be hired and used, so that trades could follow each other around the building, rather than having to come and go as a mobile scaffold is repositioned from time to time. Mr Capaldi’s costing for defect 89 is $21,840.00.

299. Mr Bournelis favoured the use of a mobile scaffold. He also recommends that the defects be addressed by patch painting, however, he did not precisely identify the areas to be painted. His costing of $6,492.00 allows for two painters for four days and the delivery and pick up, erecting and dismantling of a mobile scaffold platform for one week. The time for the lowering and moving of the scaffold was not allowed for. Mr Bournelis costed the work at $6,492.00.

300. I do not consider that Mr Bournelis’ method adequately addressed the many areas which require repainting. I do not consider that patch painting will result in an adequate finish. As Mr Capaldi observed, the patch painting of the exterior undertaken to date is unsightly and should not be repeated to address the many defects in the exterior painting. As to the scaffolding, Mr Capaldi’s approach seems to me to have many advantages in terms of efficiency and ease of work over Mr Bournelis’ approach.

301. I will allow $21,840.00 for item 89.

55A - Defect 90: Poorly installed gas and water mains and service pipes

302. Mr Capaldi observed that the depth at which the main gas and water service pipes have been installed on the boundary between 55 and the western boundary line at the north-west corner of the house was inadequate. He measured the top of the gas service pipe at 80mm below ground level and varying to 150mm below. He measured the top of the water service pipe at less than 200mm below the ground level (see CB pp 2710 and p 2883 – 2884).

303. The pipes are installed directly under the fence, so there is no room to add soil. The potential for damage to the pipes is patent.

304. The gas pipes are below the 300mm required by AS/NZS 5601.1, which the building experts agree applies.

305. The water service pipes are not in compliance with AS/NZS 35001 – 2003.

306. Mr Capaldi costed the remediation work at $2,291.52.

307. Mr Bournelis agreed that in considering defect 90, he had looked at the wrong location, so he was unable to comment.

308. I will allow $2,291.52 for defect 90.

55A – Defect 91: Cracking due to brick growth

309. There are two areas of cracking due to brick growth on the eastern elevation of 55A. The cause of brick growth is the lack of extension joints installed to the external masonry. The plans show three expansion joints on the eastern elevation, but the builder has not constructed them.

310. The building experts agree that defect 91 is present and agree that the cost of remediation is $1,080.58.

311. I will allow $1,080.58 for defect 91.

55A – Defect 92: Poorly installed downpipe and stormwater pipes servicing the charge system

312. This is the same defect as defect 7 in relation to 55, which is dealt with at [106] – [113] above.

313. The downpipes on the east and west elevation of 55A do not extend to the ground to be connected to the stormwater system. Instead, they discharge into a rainwater tank. Mr Bournelis said that, when the rainwater tank fills, it is connected to the pit in the front yard and gravity fed to the street for discharge into the Council stormwater system.

314. The construction of the downpipes is not in accordance with the approved R Squared Pty Ltd stormwater plans. This is a defect and a breach of contract.

315. For the same reasons as in defect 7 in relation to 55, Mr Bournelis’ proposed resolution of this issue is unsatisfactory, as it is also not in accordance with the approved plans.

316. I accept Mr Capaldi’s costing of $8,645.20.

317. I will allow $8,645.20 for defect 92.

55A – Defect 93: Excess cement splatter on colorbond fencing

318. The building experts agree that there is excess cement, mortar and render splatter on the eastern boundary colorbond fencing.

319. Mr Capaldi provided a photograph of the splatter, which affects nine panels of the fence. The splatter is extensive. The builder has both failed to protect the fence during building work and failed to clean it after the work has been undertaken.

320. Mr Capaldi suggests that the nine panels of colorbond be replaced with new panels to match the existing panels, at a cost of $1,759.11. Mr Bournelis suggests that a labourer uses spray cement remover liquid over eight hours to remove the splatter at a cost of $493.20.

321. Given the extent of the damage, I accept Mr Capaldi’s remediation method. I doubt that the fence can be restored to its former condition with liquid cement remover.

322. I will allow $1,759.11 for defect 93.

55A – Defect 94: Poorly constructed render control joint

323. The building experts agree that a section of 320mm has been omitted from a horizontal control joint on the south eastern corner of the junction of the first floor and the ground floor of 55A.

324. The building experts agree that the cost of rectification is $95.89.

325. I will allow $95.89 for defect 94.

55A – Defect 95: Visible fixing anchors to façade cladding

326. The building experts agree that there are visible fixing anchors to the front façade cladding on the first floor parapet.

327. Mr Bournelis believes that the existing screws could be secured further into the cladding, patched, set, sanded and painted over. The cost would be $470.

328. Mr Capaldi believes that the wrong type of screw had been used. He said that, if the screws were countersinking screws which had not been tightened properly, then the cladding would be loose, and it is not (T264.37-47). Mr Capaldi believes that the screws used do not have a tapered countersunk head, otherwise they would not protrude as they do (T266.12-20). Accordingly, the screws need to be removed and replaced at a cost of $1,288.80.

329. I accept Mr Capaldi’s rectification method. It seems likely that, if the existing screws could be countersunk, they would have been countersunk when installed.

330. I will allow $1,288.80 for defect 95.

55A – Defect 96: Water stain to entry porch soffit

331. The building experts agree that the entry porch soffit of 55A has a distinct water stain with mould growth. It is shown in a photograph in Mr Capaldi’s report (CB p 2726).

332. Mr Bournelis suggested that this could be rectified by the installation of a water drip and the painting of the soffit, at a cost of $304.00. A water drip is a rise or break in the surface of the soffit line that resists the migration of water from an external edge along the underside of the soffit line.

333. Mr Capaldi’s rectification method involves the construction of a water drip, the removal and replacement of the soffit line of 1.2m from the east wall to the full width of the entry porch, the supply and installation of the new sheeting section, setting, sanding and painting of the soffit in full. The cost would be $936.80.

334. Given that the soffit was been affected by water ingress for more than five years, I agree that the stained and mould affected portion should be replaced. I prefer Mr Capaldi’s method.

335. I will allow $936.80 for defect 96.

55A – Defect 97: Water stain to south verandah and balcony soffit

336. The building experts agree that there is water staining and mould growth to the south verandah and balcony soffit.

337. Mr Capaldi said that this is partly due to wind driven rain allowing water to migrate from running down the external south wall and partly due to water ingress due to failed flashings to the roof above, adjoining the parapet. In addition to the damage to the soffit, Mr Capaldi noted that the rendered piers also show water damage to the painted surfaces due to water penetrating poorly painted areas.

338. Mr Bournelis at first thought that this was the result of wind driven rain, but upon seeing Mr Capaldi’s photographs, agreed that there is another source of water entry to the porch soffit. He theorised that it could be a broken roof tile, but the roof is colorbond (T271.25). Mr Bournelis’ rectification method involves the installation of an aluminium angle to act as a drip mould for the underside of the level 1 balcony and the cleaning, sealing and painting of the soffit. Mr Bournelis costed this at $922.00.

339. Mr Capaldi’s rectification method involved:

340. the installation of a water drip

341. the removal of existing , failed sealant and the installation of new weatherproof sealants to the junction of the parapet and the roof sheeting and flashings

342. the removal and replacement of the soffit line of 1.2m from the south edge and to the full width of the south balcony.

343. supply and installation of new sheeting, and its setting and sanding

344. the painting of the south balcony soffit in full.

345. piers are to be stripped and repainted

346. external surface finishes are to match existing

347. Mr Capaldi costed his rectification method at $3,264.07.

348. The photographs at CB pp 2729-2730 show that this is an extensive problem. The source of the water must be addressed, and the widespread damage must be rectified. Only Mr Capaldi’s rectification method addresses the failed sealant and addresses all of the damage.

349. I will allow $3,264.07 for defect 97.

55A – Defect 98: Vertical cracking to the render to the south balcony

343. The building experts agree that there is cracking to the render to the south balcony.

344. This will be rectified in the works to be performed to rectify defect 89.

55A – Defect 99: Weepholes obstructed

345. The building experts agree that the weepholes on all elevations of 55A, particularly on the ground floor, have weepholes obstructed with render and mortar debris.

346. The building experts agree that the cost of rectification is $312.00.

347. I will allow $312.00 for defect 99.

55A – Defect 100: Laundry external door jambs

348. The external door jambs of the laundry door have been cut too short, so that there is a 23mm gap between the underside of the jambs and the tiled threshold. A weather strip has not been installed to the base of the door.

349. Mr Bournelis was instructed that the defendant arranged for someone else to build the concrete steps and tile outside the laundry, the inference being that that person may have damaged the door jambs. He did not, therefore, cost this defect. There is, however, no evidence that such an arrangement existed. Elrob was responsible for installing the laundry door under the contract.

350. The gap of 23mm will allow water ingress into the laundry. The jagged, unfinished edge is unsightly.

351. Mr Capaldi’s rectification method included the removal of the door, the replacement of the door jambs with properly cut door jambs, the reinstallation of the door with the installation of a weather strip and the preparation and painting of the door jambs to match the existing colours. The cost of rectification is $710.10.

352. I will allow $710.10 for defect 100.

55A – Defect 101: External service pipes and render

353. The building experts agreed that there are defects to the services on the external walls of the west elevation of 55A. The white conduit servicing the NBN wiring was not removed prior to rendering. The main electrical conduit has not been recessed into the wall prior to rendering.

354. The building experts agree the cost of remediation at $422.30.

355. I will allow $422.30 for defect 101.

55A – Defect 102: Poorly finished concrete surface

356. The building experts agree that the concrete finish to the garage perimeter has not been trowelled smooth (unlike the rest of the floor) and has a rough surface.

357. The building experts agree that the cost of remediation of this defect is $1,086.10.

358. I will allow $1,086.10 for defect 102.

55A – Defect 103: Ground floor and first floor ceilings

359. Mr Capaldi gave evidence that there are areas of the ceilings to the ground floor and the upper floor of 55 where the control joints required have not been installed. The ground floor entry, hallway, living and kitchen areas have been installed as a continuous lining with no provision for movement and expansion. The first floor hallway, upper living area and retreat suffers from the same defect.

360. AS/NZS 2589 – 2017 “Gypsum linings – Applications and finishing” provides:

…

Control joints shall be provided at not more than 12m intervals in either directions for internal walls and ceilings, and at not more than 6m intervals in either direction of external ceilings. …

361. Mr Capaldi’s evidence was that the ground floor has a continuous ceiling length of 16.4m and the first floor has a continuous ceiling length of 16.4m. In his report, Mr Capaldi identifies the locations at which control joints are required to be installed to prevent cracking. Two control joints are required on each floor.

362. Mr Capaldi costed the work required, being the installation of two control joints on each floor followed by the preparation and painting of the ceiling areas at $2,484.75.

363. Mr Bournelis said that AS/NZS 2589 – 2017 also required that specifications for control joints be provided on specifications, and none had been. He said that he observed no cracking. Mr Bournelis did not cost this defect.

364. I reject Mr Bournelis’ approach. The failure to include the control joints on specifications does not excuse the failure to build a ceiling in accordance with the Australian Standard.

365. I will allow $2,484.75 for this defect.

55A – Defect 104: Flexible sealant not installed to wet areas

366. The building experts agree that the junction between the floor and wall tiles to all wet areas has been installed with a rigid grout joint which is cement based, instead of a flexible sealant. This contravenes AS 3958.1 “Ceramic tiles – Part 1: Guide to the installation of ceramic tiles” and AS 3740 – 2010 “Waterproofing of domestic wet areas”.

367. The building experts agree that the cost of remediation is $851.56.

368. I will allow $851.56 for defect 104.

55A – Defect 105: Wall tiles not in alignment to the bathrooms

369. This is the same defect as defect 20 in 55, which I have dealt with at [151] – [155]. The analysis and conclusion is the same with respect to the tiling in the ground floor bathroom, the first floor bathroom and the main bedroom ensuite in 55A. The tiling is defective and the misalignment of the tiles and the wide grout lines are the outcome of incompetent tiling, and were not caused by the dimensions of the tiles.

370. Mr Bournelis has not costed this defect. Mr Capaldi has costed it at $6,675. I accept Mr Capaldi’s rectification method.

371. I will allow $6,675 for defect 105.

55A – Defect 106: Poorly painted doorjambs, architraves and doors

372. The building experts agree that the timber doorjambs, architraves and doors have had insufficient paint applied and have been poorly prepared, as the timber substrate is visible.

373. The building experts agree that the cost of remediation will be $450.10.

374. I will allow $450.10 for defect 106.

55A – Defect 107: Cracking to the junction of the wall tiles and ceiling lining

375. This item was not pressed.

55A – Defect 108: Reverse falls & level areas to wet area floor tiles

376. This defect relates to the ground floor bathroom, the first floor bathroom and the main bedroom ensuite.

377. Mr Capaldi measured the falls in the bathrooms in question and found that they do not comply with AS 3740 – 2010 “Waterproofing of domestic wet areas” p 12 clause 3.3 “Falls in floor finishes”, which seeks a fall of 1:100. Mr Capaldi acknowledges that a fall of 1:100 may not have been possible in all areas, but shows that there is no fall in the floor of the ground floor bathroom from the door threshold to the floor waste. The same is true in the ensuite from the door threshold to the floor waste. The floors are level. Likewise, in the first floor main bathroom, the floor tiles are level from the west wall to the floor waste. Mr Capaldi points out that the primary consideration in AS 3720 – 2010 is stated to be:

… for falls in floor finishes … to ensure water does not remain on the finished floor in a manner that can adversely affect the health or amenity of the occupations or deteriorate building elements.

Falls in floor finishes should ensure water exists the area at the floor waste or doorway if that is the designed exit point (eg laundry door to exterior). Water should not pond on the floor, with the exception of residual water remaining due to surface tension.

378. Water will pond on a level floor, creating a slip hazard and providing the potential for grout discolouration and mould growth. Mr Capaldi’s suggested remediation method involves the removal of the floor tiles and bedding in the areas affected, repair to any damaged waterproofing and the installation of a tile bed with falls to the floor waste following by tiling to match existing. The cost is $4,286.00.

379. Mr Bournelis did not detect a defect in the ground floor bathroom. He believed that the removal and reinstatement of two rows of floor tiles in both the master bedroom ensuite and the first floor bathroom could achieve the primary consideration of the Australian Standard. The costing of Mr Bournelis’ remediation was $1,458.00.

380. I prefer the more comprehensive remediation method proposed by Mr Capaldi. The level distances measured in each floor encompass more than two rows of tiles, in every case.

381. I will allow $4,286.00 for defect 108.

55A – Defect 109: Poor finishing to the junction of the walls and window/door frames

382. The building experts agree that the finish between the door and window frames and the rendered and painted reveals has been poorly executed and presents poorly.

383. The building experts agree that the cost to remedy defect 109 is $251.89.

384. I will allow $251.89 for defect 109.

55A – Defect 110: Poor patching to wall surfaces below and to the surrounds of electrical, light and comms wall plates.

385. The building experts agree that the wall finishes in areas directly before the wall mounted general purpose outlets, light switches and comms plates have been poorly executed.

386. The building experts agree that the cost to remedy defect 110 is $517.25.

387. I will allow $517.25 for defect 110.

55A – Defect 111: Poor finishing to the underside of the stairs, slab edge and upper balustrade post

388. The underside of the stairs has been poorly finished with plasterboard. The junction between the wall and the plasterboard, and the junction between the plasterboard and the stair stringer, have been poorly finished. The upper slab edge has been chipped and has not been finished with a nosing tool to achieve the required finish prior to painting. The damage has been painted over but is evident.

389. Mr Capaldi costs the remediation work at $548.00.

390. Mr Bournelis said that the builder sent a painter back to the property to touch up the paint in these areas. Mr Bournelis suggested that the damage could have been done by removalists during furniture installation prior to the touch up painting.

391. There is no evidence of a furniture removalist causing any damage. The painting touch ups have not remedied the defects.

392. Mr Capaldi’s rectification method will remove the defects.

393. I will allow $548.00 for defect 111.

55A – Defect 112: Delaminating render to the concrete slab edge

394. The building experts agree that the cement render to the slab edge to the landing of the stairs is cracked and drummy.

395. The building experts agree that the cost of remediation of this defect is $592.20.

396. I will allow $592.20 for defect 112.

55A – Defect 113: Cracking due to brick growth

397. Mr Capaldi observed this defect to the south-eastern corner of the internal stairwell. The cracking extends the full height of the internal wall of the stairway and the width of the crack is 0.4mm.

398. Mr Capaldi said that the vertical crack will increase in width and the vertical alignment of the masonry will become stepped unless the defect is remedied.

399. The remediation method is the cutting of expansion joints where the cracking has occurred and the supply and fixing of expansion joint sealant to match the wall colour. Mr Capaldi assesses the cost at $313.79. Mr Bournelis did not cost this defect individually, but said it could be remedied with defect 24.

400. I will allow $313.79 for defect 113.

55A – Defect 114: Mirror desilvering

401. The mirror in the ground floor bathroom shows premature desilvering to the base. This will expand over time.

402. Mr Bournelis was instructed that the defendant provided the mirror. However, there is no direct evidence of that, and the bathroom mirror is included in the Schedule of Finishes at item 68 (see CB p 139) and is not excluded from the contract.

403. The remedial method suggested by Mr Capaldi is the replacement of the mirror, at a cost of $263.22.

404. I will allow $263.22 for defect 114.

55A – Defect 115: Internal doors installed and then reversed.

405. The building experts agree that the following doors were installed on the wrong edge and the builder has subsequently reversed the hinged side, so that the holes in the door edges are visible where no holes should be:

406. Garage,

407. Study,

408. Ground floor bedroom,

409. Ground floor bathroom,

410. Bedroom 3, and

411. Bedroom 2.

412. The building experts agree that the cost of remediation is $589.65.

413. I will allow $589.65 for defect 115.

55A - Defect 116: Incorrect ensuite door size

408. The approved drawings show an ensuite door of 720mm in width, but the door installed is 620mm wide.

409. Mr Bournelis said that he was instructed that this was negotiated between the builder and the defendant as part of the change from timber framed walls to brick walls. There is no direct evidence of this, and, as I have found, the defendant always expected all of the walls to be brick walls.

410. Mr Bournelis doubted that a 720mm door would fit in the doorway, but had not made any measurements to substantiate that view.

411. Mr Capaldi’s rectification method allows for the removal of the door, the architraves and the door jambs to provide an opening for a 720mm door. New architraves and door jambs will then be installed, with the wider door which will be painted to match existing colours. The cost of the rectification is $1,788.70.

412. I will allow $1,788.70 for defect 116.

55A – Defect 117: Inadequate drainage to the north and south balconies

413. The building experts agree that the drainage to the north and south balconies is defective in the same way as in defect 41 at 55. The drainage system installed is not in accordance with the plans and is inadequate. The water does not disperse quickly enough and ponding has occurred. The only significant difference from 55 is that, at 55A, the spitters have been installed higher than the level of the tiles and therefore cause ponding on the balconies.

414. As in relation to defect 41, Mr Capaldi’s remediation method is in accordance with the contract plans and Mr Bournelis’ is not, so I prefer Mr Capaldi’s method, which is costed at $4,936.20.

415. I will allow $4,936.20 for defect 117.

55A – Defect 118: Rust stains to toilet suites

416. There are rust stains in the toilet in the downstairs bathroom and the ensuite. The underside of the toilet cistern shows corrosion to metal fixings consistent with the fixings not having been galvanised. The toilet pan is now stained.

417. This is the same defect as defect 42 in 55, and the same outcome is appropriate. It was the builder’s obligation to supply toilets and install them with proper fixings. There is no evidence that the defendant was involved in any part of that process.

418. Mr Capaldi’s costing of the remediation is $1,246.00.

419. I will allow $1,246.00 for defect 118.

55A – Defect 119: Toilet seats do not fit the suites provided.

420. This is the same as defect 43 for 55. The same outcome is appropriate. The photograph in relation to the toilet suites in 55A is at CB p 2783. The toilet seat is obviously not a match for the rest of the toilet suite.

421. Mr Capaldi’s rectification cost is $453.00.

422. I will allow $453.00 for defect 119.

55A – Defect 120: Bathtub waste and floor waste

423. Mr Capaldi established, on site at 55A, that, when the bathwater is released from the bathtub, water percolates up through the centre floor waste of the bathroom.

424. The building experts agreed that this was a defect caused by builders waste such as cement, sand and stone, in the pipe.

425. The building experts agreed that the cost of remediation is $327.

426. I will allow $327.00 for defect 120.

55A – Defect 121: Door unable to be opened

427. The door to the balcony from the master bedroom is restricted in its movement by the carpet because the builder did not allow for carpet in the measurement of the door. This is the same as defect 31 in 55.

428. Mr Capaldi’s cost of remediation is $78.00. Mr Bournelis did not cost remedial work for this defect.

429. I will allow $78.00 for defect 121.

55A – Defect 122: Entry double doors poorly cut and installed

430. The building experts agree that the double entry doors to the ground floor have been installed out of level and out of alignment. The main opening door, which is the western door, has been cut and installed 6mm lower than the fixed door.

431. The building experts agree that the cost of remediation is $213.35.

432. I will allow $213.35 for defect 122.

55A – Defect 123: Water ingress to living room

433. A video taken by the defendant showing water streaming through the light fittings in the ceiling of the living room of 55A was shown in Court.

434. Mr Capaldi investigated the water ingress by inspecting the roof cavity of 55A. Mr Capaldi formed the view that water was coming through a “plug” in the wall of the ceiling space. The plug had been inserted to overcome missing masonry in the ceiling space wall, directly below the ceiling space soffit. Electrical wires come from the cavity caused by the missing masonry. Mr Capaldi saw that the water was travelling along the electrical wires and dripping onto the plasterboard surface within the ceiling void. Mr Capaldi formed the view that the cavity had probably been made in the masonry to bring the wires through the wall. Mr Capaldi proposed remedial work at a cost of $1,269.66

435. Mr Bournelis simply said that he observed no water ingress during his inspection. If the defect was found, however, Mr Bournelis agreed with Mr Capaldi’s costing.

436. I will allow $1,269.66 for defect 123.

55A – Defect 124: Scratched glazing

437. The building experts agree that the western window of the ground floor dining room is scratched.

438. Mr Bournelis thought that the window could have been scratched by the owner or a visitor.

439. Mr Capaldi thought that it was much more likely that the window had been scratched during construction. He costed remediation at $236.00. Mr Bournelis agreed with that quantum. In all of the circumstances, I agree that it is likely, on the balance of probabilities, that the window was scratched during construction.

440. I will allow $236.00 for defect 124.

55A – Defect 125: Kitchen panel not aligned

441. The building experts agree that there are uneven gaps between the kitchen vertical fridge blade adjoining the hallway and the adjoining rendered wall.

442. The building experts agree that the cost of remediation is $264.00.

443. I will allow $264.00 for defect 125.

55A – Defect 126: Loose GPO

444. The building experts agree that the kitchen general purpose outlet is loose and that the cost of fixing it is $39.00.

445. I will allow $39.00 for defect 126.

55A - Defect 127: Cracking to the first floor internal walls

446. The building experts agreed that there is horizontal cracking to the west first floor hallway wall between the bathroom and bedroom 2. There is also horizontal cracking to the east first floor hallway between bedroom 3 and bedroom 4. The cracking is extensive and shown in photographs at CB pp 2797 – 2799.

447. Mr Bournelis measured some of the cracks at less than 1mm wide and thought that those cracks did not require remediation. Mr Bournelis was not sure of the cause of the cracking, but thought that it might have occurred during the drying of the render. Mr Bournelis costed remediation at $1,548.00

448. Mr Capaldi said that the cracking was not settlement cracking, so that 1mm minimum for repair did not apply under AS2870. I agree. Mr Capaldi’s remediation method allowed for the patching of cracks with epoxy filler and painting with a texture coat. Mr Capaldi costed this method at $5,661.20.

449. Mr Capaldi was concerned that the cracking might be evidence of slab deflection, and recommended that the advice of a structural engineer be obtained to prevent future cracking, but this was not costed.

450. I will allow $5,661.20 for defect 127.

55A – Defect 128: Flickering balcony light

451. The north balcony eastern downlight fitting is flickering. The building experts agree it is likely to be a faulty fitting. The cost of rectification is agreed at $149.00.

452. I will allow $149.00 for defect 128.

55A - Additional costs in relation to defects

453. As in relation to 55, the building experts agreed that 11% is an appropriate percentage for preliminaries. They further agreed the builder’s margin at 25%.

454. The sub-total of the damages to be awarded in respect of defects for 55A is $78,216.99

455. The following additional costs are to be added:

| Sub-total | $78,216.99 | | Preliminaries – 11% | $8,603.87 | | Sub-total | $86,820.86 | | Builders Margin – 25% | $21,705.21 | | Sub-total | $108,526.07 | | GST – 10% | $10,852.61 | | Sub-total | $119,378.68 | | IUHBCF – 1.5% | $1,790.68 | | Total cost of rectification of 55A | $121,169.36 |

Defective and Incomplete Works

Incomplete works – 55A

55A – Incomplete works Item 140: North Elevation

456. The incomplete works on the north elevation of 55A are the following:

457. the PVC balcony outlet has not been cut back, sealed and patch rendered and painted to complete the works of the north elevation balcony,

458. the weephole surrounds are not finished,

459. the patching to the wall adjoining the balcony is incomplete,

460. the painting to the balcony soffits and adjoining sill is incomplete,

461. sealant has not been applied to the junction of the window/door frames and the reveals/sills.

462. The building experts, in the course of giving evidence in Court, agreed the cost of completion at $340.00

463. I will allow $340 for item 140.

55A – Incomplete works Item 141: West Elevation

459. This item comprises the following:

460. downpipes are not painted,

461. paint smearing on the garage barge panel has not been cleaned,

462. the electrical meter box has not been painted,

463. the patch render to the hot water pipe surrounds has not been painted,

464. incomplete patching to the wall adjoining the kitchen and garage,

465. the spreader attachment has not been installed to the downpipe extending from the main upper roof,

466. sealant has not been applied to the junction of the window/door frames, and sills/reveals.

467. The building experts have agreed the cost of completion at $357.49.

468. I will allow $357.49 for item 141.

55A – Incomplete works Item 142: East Elevation

462. This item comprises the following:

463. downpipes are not painted,

464. incomplete patching to the wall adjoining the powder room, family room and laundry,

465. missing downpipe astragals,

466. sealant has not been applied to the junction of the window/door frames and sills/reveals,

467. sealant has not been applied to the junction of the balcony soffit and trim,

468. sealant has not been applied to the junction of the copper pipe service and wall.

469. The building experts agreed that the cost to complete the work is $892.00.

470. I will allow $892.00 for item 142.

55A – Incomplete works Item 143: South Elevation

465. This item comprises the following:

466. the PVC outlet has not been sealed and patch rendered and painted to complete the works of the south elevation balcony,

467. there is a paint section missing adjoining a light fitting,

468. incomplete painting to the balcony soffit,

469. sealant has not bee applied to the junction of window/door frames and reveals/sills.

470. The building experts agreed that the cost to complete the works was $313.59.

471. I will allow $313.59 for item 143.

55A – Incomplete works Item 144: Doors edges not sealed and painted

468. The building experts agree that the door edges have not been sealed and painted, and they agree that the cost to complete the work is $604.50.

469. I will allow $604.50 for item 144.

55A – Incomplete works Item 145: Sealant not installed to gaps between floor tiles and timber skirting boards and between floor tiles and sliding door units

470. The building experts agreed that sealant had not been applied to the areas in question. They agreed the cost of completion of the work at $209.67.

471. I will allow $209.67 for item 145.

55A – Incomplete work Items 146, 147 and 148

472. These items were not pressed.

55A – Incomplete work Item 149: Overspray of paint to window and door frames

473. The building experts agree that the cleaning of the overspray of paint to window and door frames is not complete. They cost the work at $894.00

474. I will allow $894.00 for item 149.

55A – Incomplete work Item 150: Upper reveal not tiled to kitchen west facing window

475. This is the same incomplete work item as item 65 in relation to 55. For the same reasons, it should be allowed. Mr Capaldi’s costing is $385.93. Mr Bournelis did not cost this item.

476. I will allow $385.93 for item 150.

55A – Incomplete work Item 151: Gaps between kitchen wall cupboards and west wall

477. The building experts agree that this is incomplete work, and cost it at $56.89.

478. I will allow $56.89 for item 151.

55A – Incomplete work Item 152: Gaps between head architraves and walls

479. The building experts agree that this is incomplete work and agree the costing to complete it at $234.00.

480. I will allow $234.00 for item 152.

55A – Incomplete work Item 153: Window cleaning internal and external

481. The same considerations apply to this item as to the equivalent item for 55, which is item 68. For the same reason, I accept Mr Capaldi’s costing for the item at $2,836.00.

482. I will allow $2,836.00 for item 153.

55A – Incomplete work Item 154: Complete storage room finishes

483. The first floor storage room linings and painting are incomplete. Mr Capaldi costed completion at $654.64.

484. Mr Bournelis said that he was instructed that this work was deleted from the builder’s scope of works by a variation. There is, however, no evidence of that.

485. I will allow $654.64 for this item.

55A – Incomplete work Item 155: Missing light switch cover plates to master bedroom and first floor hallway

486. The building experts agree that the light switch cover plates are missing, and agree that the cost of completion is $53.52.

487. I will allow $53.52 for item 155.

55A – Incomplete work Item 156: Painting incomplete to master bedroom walk in robe

488. The building experts agreed that the painting in the master bedroom walk in robe is incomplete.

489. Mr Bournelis said that he had included the cost of the work in his costing of defect 127, which relates to cracking to the first floor internal walls. Mr Bournelis did not separately cost the painting of the master bedroom walk in robe.

490. Mr Capaldi costed this work at $358.00 separately from any other defect or item.

491. This item was not taken into account in my consideration of defect 127.

492. I will allow $358.80 for item 156.

55A – Incomplete work Item 157: North and South Balcony tiles not cleaned

493. The building experts agreed that grout and cement residue needs to be removed from the floor tiles of the balconies. The cost of the work was agreed to be $352.00.

494. I will allow $352 for item 157.

55A – Incomplete work Item 158: Perimeter movement joints not installed to north and south balcony floor tiles

495. The building experts agreed that perimeter movement joints have not been installed, and agreed the cost of completion at $269.78.

496. I will allow $269.78 for Item 158.

55A – Incomplete work Item 159: Shelves missing from wet area cabinetry

497. This Item was not pressed.

55A – Incomplete work Item 160: Privacy screens missing to the north and south balconies

498. Privacy screens have not been installed on the north and south boundaries.

499. The development approval in relation to 55A is dated 16 March 2018 and was granted by Bayside Council. The development approval is addressed to Elrob. Condition 13 of the development approval states, in part:

Privacy Screens

(1) All privacy screens must be constructed of solid material or horizontal louvres facing in an upward direction to ensure no overlooking of adjoining properties. The screens for the balconies must be constructed to a height of 1.7m and extend the full length of the side edge of each balcony, and the screens for the windows must be for full height of the windows as shown in the plans. Details are to be submitted with the Construction Certificate.

…

500. Under s 18B(1)(c) of the HBA, the builder warrants that the building work under the contract will be done in compliance with the law. This is also a provision of the contract.

501. The development approval is subject to a condition requiring the installation of privacy screens on the side edges of each balcony, and Elrob had notice of that condition.

502. In Exhibit EB-01 attached to his affidavit of 17 August 2021, Mr Boujaoude provides a copy of the plan of the south side elevation of 55A which shows the privacy screens.

503. Mr Bournelis, in his report, said that the builder’s tender had been provided on the basis of plans which did not show privacy screens.

504. Mr Capaldi, in forming the view that the builder was obliged to construct the privacy screens, relied on a set of plans, which are attached to his statement, which incorporate changes up to 20 October 2018, and therefore post-date the development approval plans attached to the contract, which incorporate changes up to 28 August 2018. The first floor plan in the set of plans Mr Capaldi relied upon include a note at each side of both balconies which says “1.7m high privacy screen”.

505. The Court Book contains plans which are purportedly the development approval plans which are inconsistent with each other.

506. There is no direct evidence that Mr Boujaoude or Elrob agreed to the inclusion of the privacy screens in the scope of work under the contract.

507. An owner is primarily responsible for complying with a development approval.

508. On balance, the defendant has not established that Elrob had a contractual obligation to install the privacy screens.

Additional costs in relation to incomplete works

509. The total of the damages to be awarded for incomplete works for 55A is $8,812.81.

510. The following additional costs are to be added:

| Sub-total | $ 8,812.81 | | Preliminaries – 11% | $ 969.41 | | Sub-total | $ 9,782.22 | | Builders Margin – 25% | $ 2,445.55 | | Sub-total | $12,227.77 | | GST – 10% | $ 1,222.78 | | Sub-total | $13,450.55 | | IUHBCF – 1.5% | $ 201.76 | | Total to complete 55A | $13,652.31 |

511. Each of the defects in 55 and 55A for which I have made an allowance are defects in relation to which Elrob is in breach of the applicable contract because the standard of work was not done with due care and skill or was not done in accordance with the plans the subject of the contracts, contrary to the HBA s 18B(1)(a) and contrary to the terms of the contracts (see clause 1(b) of the Conditions of Contract CB p 223).

512. Each of the items of incomplete work for which I have made an allowance are breaches by Elrob of the contracts, in particular clause 1(a) of the Conditions of Contract (see CB p 223) which requires the builder to “execute and complete the works required by the Contract”.

513. The total damages in relation to the breaches of the contracts by the builder by reason of defects at 55 and 55A and by reason of incomplete work at 55 and 55A is $226,446.39.

Liquidated Damages (cross-claim)

514. The contracts provide, in clause 10(c):

Compensation may be payable by the builder

(c)(i) If the Builder fails to bring the works to Practical Completion by the Date for Practical Completion calculated in accordance with Item 5 of Schedule 2, extended as provided for in Clause 11, then the Builder is to pay or allow to the Owner by was of agreed pre-estimated general and liquidated damages, a sum calculated at the rate stated in Item 3(a) of Schedule 2.

(ii) This amount will be applied to the period from the day after the Date for Practical Completion under the contract until the date Practical Completion has been achieved in accordance with Clause 22.

(iii) Any amount payable under this clause cannot be deducted from any payment until such time as the actual date of practical completion has been determined.

(iv) If ‘nil’ is inserted or no amount is specified at Item 3(a) of Schedule 2 then it is agreed that no damages are payable in relation to the time to complete the works. Any amount inserted must reflect the actual cost of the delay to the Owner.

515. Schedule 2 to the contracts provides, in Item 3(a):

3. Delay costs – reimbursement of costs for delay

(a) Payable by Builder Refer to Clause 10(c*)* $500 per calendar week

516. Schedule 2 further provides, in Item 5:

5. Construction Period – when will the work be done?

Refer to clauses 2, 10 and 11*.*

(a) Proposed date for Commencement Refer to clause 10 7 August 2017

(b) Number of days to carry out the work Refer to clause 11 265

…

517. The contracts provide, in clause 22(f):

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

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

518. The precise date of the execution of the contracts, and the precise date for the commencement of the building work are not clear on the evidence.

519. Elrob’s case was that the works commenced on 20 August 2018 (see Mr Boujaoude’s affidavit of 11 August 2021 at paragraph 31 on CB p 50). For the purposes of its claim under clause 10(c) of the contracts, the defendant agreed that the date of commencement of the works under the contracts could be taken to be 20 August 2018.

520. Applying Item 5(b) of Schedule 2 to the contracts, if commencement of the works is taken to be 20 August 2018, then the date on which Elrob was to bring the works to practical completion was 12 May 2019.

521. The contract provides, in clause 22:

22 Practical Completion

(a) Practical completion is that stage when:

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

…

522. It is plain from the extensive list of defects and incomplete works set out above in relation to each of the houses that Elrob has not brought the building works to practical completion. Whilst some of the defective and incomplete work relates to the appearance of the houses, others relate to structural integrity and drainage. There is evidence that the house is deteriorating prematurely.

523. In Exhibit SH-1 to Mr Haddad’s affidavit of 9 August 2021, a screenshot of an email exchange between Mr Boujaoude and Mr Haddad is provided, in which the following was said:

Haddad: We need a deadline to complete this project. It’s dragged on for far too long. It’s costing week on week with no rental return. We can’t keep living like this. I’m sure you can appreciate that Elie.

Boujaoude: Last week I was available to meet you on site again but you were busy. This week Wally is busy. As far as I’m concerned my work has been completed.

524. Elrob did not perform any further works. In particular, Elrob did not address the rectification works set out in the Fair Trading inspector’s report of 1 May 2020.

525. Mr Haddad claims liquidated damages under clause 10(c) of the contract in relation to 55A from Sunday 1 May 2019 to Tuesday 1 September 2020, which is the day upon which he moved into 55A. This is a period of 68.25 weeks, which the defendant rounds down to 68 weeks x $500 (specified in Schedule 2 Item 3(a)), which results in the sum of $34,000.

526. In relation to 55, which has never been inhabited, Mr Habbab claims damages under clause 10(a) of the contract from 12 May 2019 to the date of judgment.

527. The contract, in clause 22(c),(d) and (e), provides as follows:

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

(d) Within five (5) days after the service of the notice of a Practical Completion the Owner must give to the Builder a written list of all those things (if any) required by the Contract to be done to achieve Practical Completion. The Builder is as soon as possible to do all those things necessary for Practical Completion and give to the Owner notice in writing of the completion of such things.

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

528. Mr Boujaoude’s text, in the context of Mr Haddad seeking to have the work resume, does not constitute a written notice by Elrob under clause 22 that Elrob considers the work to be practically complete. It does not purport to be such a notice, Mr Boujaoude does not say that he is speaking on behalf of Elrob and no date of practical completion is specified.

529. In his affidavit of 11 August 2021, Mr Boujaoude said, at paragraphs 196 – 201 (CB p 65):

196. On or around 6 November 2019 I attended a handover meeting with Sami [Mr Haddad] and Janko Kador.

197. At this meeting I issued Sami with a Notice of Practical Completion and final payment claim under each of the Contracts.

198. Attached at pages 368 – 369 of EB- 01 is a true copy of the Notices of Practical Completion.

199. At the handover meeting I recall a conversation with Sami to the following effect:

Me: I’ve got your handover and the outstanding invoices for variations.

Sami: Thanks for looking after me. I couldn’t have done it without you. I’m getting some money to you for the variations.

Me: Ok, thanks.

200. Following the handover meeting, I received a text message from Sami confirming he was on site.

201. Attached at pages 370 of EB-01 is a true copy of the message dated 6 November 2019.

530. Exhibit EB-01 includes a Notice of Practical Completion of Works dated 5 November 2019 and signed by Mr Boujaoude in relation to each of 55 and 55A (see CB pp 437-438, which is EB-01 pp 368 – 369). EB-01 also includes the text message referred to by Mr Boujaoude. It says (CB p439, which is EB-01 p 439):

hi elie i noticed jenco taking away some of the left over tiles 8 boxes of the one in the lounge room i hopping to keep some spare and some for the tilers in the entry doors what do u think.[sic]

531. In the course of Mr Boujaoude’s cross-examination, the following exchange took place (T54-55):

Q. You say, “On or about around 6 November 2019 I attended a handover meeting with Sami and Janko Kader”.

A. That’s right.

Q. Now, where did that meeting occur?

A. Well, we came to the house, I think it was on a weekend because we came to the house to drop the keys off, he was doing some work in the front. His brother-in -law was doing some camera equipment, he was doing some running some equipment and helping – he was helping him or doing some work in the front of the house. He was – he was on the ladder, so I came…

Q. So are you saying that occurred at the house at 55 Sandringham Street?

A. Yeah, at the front house.

Q. What time?

A. Day time, I can’t remember.

Q. Who was present at the meeting?

A. Yes, he was working and doing something with the ceiling, he’s on a ladder…

…

A …Mr Haddad was on the ladder doing some – pulling some wires or doing something with the – it’s got to do with the security cameras that his brother-in-law was installing throughout the house, and I asked him, I go, “I’ve got the package for you”, and he asked me to put it in the kitchen, we did that, and yeah, it was a bag of keys for the whole entire place, and then…

Q. What were the documents in the package that you mentioned?

A. I can’t remember, it was just documents like completion, just handover documents like the AC - the AC warranty, just the basic documents you get on completion.

Q. So did you hand the documents to Mr Haddad?

A. No, he was on the ladder, he asked me to put it in the kitchen, in the kitchen inside. There was also a bunch of keys. It wasn’t just the documents it was the documents, the whole package.

Q. You say that you handed over variation invoices at that meeting?

A. I have to refresh my memory, it’s been a while, it’s been like – it’s been years. But I remember he’s telling me that he’s going to pay me as soon as he’s getting some funds from his friend, I remember that. And he was being grateful, like thanking me for the works.

Q. Did you say that there were or were not variation invoices included initial that handover?

A. There would’ve been, maybe a reminder, there wouldv’e been, pretty sure I can’t – look, unless I look at my affidavit I can’t it’s been like seven years, six years.

532. Mr Haddad says that he sought further funds from his bank in November 2019. The bank arranged a Final Progress Inspection Report dated 18 November 2019 in which a certified practising valuer, Mr Daniel Pilz, says:

Please note, the property is internally and externally not complete.

Works not complete include:

-paint required to internal walls and external walls

-no splash back

-exposed wiring throughout

-mirrors to bathroom

-ensuite incomplete

-general clean throughout

…

533. The photographs of 55 and 55A forming part of the Final Progress Inspection Report show a site which is very much a building site, with a builder’s welded mesh fence and sand and debris around the houses. The photographs of the interior of the houses show that there is no splash back in the kitchen, the kitchen walls are untiled and unpainted, the oven is covered in plastic wrapping, there are exposed and unconnected electrical wires, internal painting has not been done in many areas, internal stairs are bare timber, flooring has not been laid in some areas, a toilet has not been installed in a bathroom and the interior is dirty and littered with debris. The houses were not inhabitable at the date of the report.

534. Despite the report, Mr Haddad paid the final contract payment.

535. In his affidavit of 9 August 2021, Mr Haddad said that, following his complaint to NSW Fair Trading, an officer of Fair Trading sent him an email dated 25 September 2020 (CB p 1709) which enclosed copies of the Notices of Completion dated 5 November 2019 which the officer said had been provided by Elrob. Mr Haddad said that the first time he saw those notices was on receipt of that letter.

536. Mr Haddad said that “only sporadic work was done after December 2019, including a bit of painting”.

537. In his affidavit of 9 August 2021, Mr Haddad said that he had conversations with Mr Boujaoude in November and December of 2019 in which he asked Mr Boujaoude to complete the work. In Exhibit SH-01, Mr Haddad provided a text exchange from 14 February 2020 in which Mr Haddad says that he has booked internal work for next week and that he is trying to “get your OC”, which I take to mean occupational certificates.

538. In his affidavit of 9 August 2021, Mr Haddad said that, on about 19 March 2020, he went to the building site. He said that he saw Mr Boujaoude at the site and had a conversation to the following effect:

65. …

Mr Boujaoude: Why are you here? There’s corona virus.

Me: I have just got back from a week’s holiday and I wanted to see where things are up to.

Him: The houses are finished as far as I am concerned.

Me What are you talking about? Have a look around. And if the job is finished where is the handover kit?

Him: I left it in the kitchen months ago.

Me: You’re kidding, right? Are you serious? I have never even seen it, and why would you leave a handover kit on the kitchen bench without telling us? How could you have done that months ago when the work still isn’t complete now? Have a look around you.

66. On 1 May 2020, Mr Boujaoude sent a text message to my wife which included the statement “As far as I am concerned my work has been completed. A copy of that is at SH -1:346.

67 At about that time my wife called the home warranty insurer on my behalf and we discovered that Elrob had told them that he had finished the Properties in about June 2019.

68 I subsequently found two emails from the insurer concerning that issue in my junk email folder. Had I received them when they were sent, I would have responded by disputing the suggestion that the work was completed (in June 2019, or at all). Copies of those emails from the insurer are at SH-1:347-350.

539. In cross-examination, Mr Boujaoude put to Mr Haddad that he spoke with him on site in early November 2019 when Mr Haddad was on a ladder, helping his brother in law with some electrical works (T106). In the course of this exchange, Mr Haddad again denied that handover was ever given to him on site. Eventually, Mr Haddad recalled that there was an occasion when he was helping his wife’s brother in law do some electrical work on the property. Mr Haddad could not recall when this took place. Mr Haddad said (T107-108):

A. I was doing electrical work, just passing wires to my wife’s brother-in -law.

…

A. And I have seen him on the property. I don’t remember if it’s that date, and he never asked – he never told me I have to handover a kit or anything like that. I don’t remember that. I’ve always been asking him over the phone, like, “When is it going to finish?” “Where’s the paperwork?”…

Q. Mr Haddad, I put it to you you received the package with keys, documentations, outstanding invoices, on that day and I put it to you you were on a ladder at the front of the property doing some repairs or some holes your brother-in-law was doing, running wires, and I asked you “Where would you want me to do with the package?” And I quote, you said “Please can you put it on the kitchen bench?”

A. I don’t remember that.

540. In further cross-examination, Mr Haddad remembered that he found some keys and a remote on the kitchen bench in about November 2019, but did not recall any package being on the kitchen bench.

541. The question to be determined in the defendant’s claim for liquidated damages under clause 10(c) of the contract is whether Mr Boujaoude gave Mr Haddad notice in writing that the building works had reached practical completion on or about 5 November 2019.

542. In his affidavit of 11 August 2021, Mr Boujaoude characterises the occasion on site when he gave Mr Haddad the handover package as a “handover meeting”. There is no mention of Mr Haddad being on a ladder helping with electrical work during the meeting. The version of events in Mr Boujaoude’s affidavit is different in some respects from the version he put to Mr Haddad in cross-examination, although the accounts are not necessarily inconsistent as to the essential facts. Both versions are consistent with Mr Boujaoude leaving a “handover package” on the kitchen bench on a day in early November 2019. Mr Boujaoude’s statement to Mr Haddad in their conversation on site in about March 2020 is also consistent with that having occurred (see [538], above). The existence of the Notices of Practical Completion dated 5 November 2019 and the evidence of their provision by Mr Boujaoude to Fair Trading prior to the writing of the Fair Trading email of 25 September 2020 is also consistent with the critical element of Mr Boujaoude’s version. The existence of the Notices is not decisive in itself, given Elrob’s approach to the generation and retention of documents evidenced in relation to the documentation of variations, which is that the documents are sometimes backdated.

543. Understandably, Mr Haddad did not, by the time of the trial, have a clear recollection of the order of events as Elrob tapered off in the performance of the building work towards the end of 2019. Ultimately, having denied that there was any handover, Mr Haddad remembered finding the keys on the kitchen bench at a time consistent with Mr Boujaoude’s version of events. It may be that documents were left with the keys, but that their significance was not apparent to Mr Haddad so he did not remember them.

544. In all of the circumstances, although the matter is finely balanced, I find, on the balance of probabilities, that Mr Boujaoude gave Mr Haddad the Notices of Completion on 5 November 2019. There is no suggestion that Mr Haddad responded within five days with a written list of required works under clause 22(d) of the contract.

545. The consequence is that the works are deemed to have reached Practical Completion on 5 November 2019 under clause 22(e) of the contract (see [527]).

546. Pursuant to clause 10(c) and Schedule 3 Item 3(a) of the contract Elrob is liable to pay Mr Haddad liquidated damages with respect to 55 and 55A from 12 May 2019 to 5 November 2019, a period of 25 weeks at the rate of $500 per week. The quantum of liquidated damages due is $12,500 for each of 55 and 55A, giving a total of $25,000.

Restitution (cross-claim)

547. The claim by the defendant for restitution relates to the sum of $95,134.52 (inclusive of interest) paid by the defendant to Elrob under the SOPA following an adjudication under that Act in relation to claim 1111b.

548. I have set out s 32(3) of the SOPA at [78], above.

549. The Court of Appeal said, in John Holland Pty Ltd v Roads and Traffic Authority of NSW (‘John Holland’) [2007] NSWCA 140, at [44]-[45]:

44 Any liability arising under the Act, whether prior to or by virtue of a determination or translated into a judgment, has been described as an interim progress payment on account (Brodyn Pty Ltd v Davenport [2003] NSWSC 1019 at [18] per Einstein J), and in Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140 at [96] Palmer J spoke of the scheme of the Act as “pay now, argue later”. There are many cases in which this has been recognised. In Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421 Hodgson JA, Mason P and I agreeing, said at [51] -

“The Act discloses a legislative intention to give an entitlement to progress payments, and to provide a mechanism to ensure that disputes concerning the amount of such payments are resolved with the minimum of delay. The payments themselves are only payments on account of a liability that will be finally determined otherwise: ss 3(4), 32. The procedure contemplates a minimum of opportunity for court involvement: ss 3(3), 25(4).”

45 The respondent cannot oppose a payment claim, or if there is a judgment upon filing an adjudication certificate cannot seek to impugn the judgment, in reliance on matters arising under the contract, so rights under the contract are preserved and can be otherwise asserted. The statutory liability established by an adjudicator’s determination can be challenged only on limited grounds: Brodyn Pty Ltd v Davenport (2004). So it is open to the respondent (or the claimant – an adjudicator’s determination may be adverse to a claimant) to contend in a final working out of the contractual mechanisms or in other proceedings for a result different from that determined by the adjudicator. Statutory liability otherwise than that established by an adjudicator’s determination is also not final, and either party may in the course of a final determination contend for a different result, see s 32(1) and (2). Section 32(3)(a) then states the obvious, that there must be allowance in any other proceedings for an amount which has been paid. Section 32(3)(b) may be unnecessary, because an order in the other proceedings that the claimant pay money to the respondent will have the effect of restitution; however, it does enable an order for restitutionary interest and, if there has been a judgment upon filing an adjudication certificate, an order contrary to the judgment: as was said by Handley JA in Falgat Construction Pty Ltd v Equity Australia Corporation Pty Ltd (2005) 62 NSWLR 385 at [21] -

“Finally, s 3(b) makes a judgment entered under s 25 on an adjudication certificate provisional only, both in what it grants and in what it refuses. A builder can pursue a claim in the courts although it was rejected by the adjudicator and the proprietor may challenge the builder's right to the amount awarded by the adjudicator and obtain restitution of any amount it has overpaid.”

550. The contract, in clause 20(e), provides that any payment to the builder is payment on account. Accordingly, the defendant submitted, the making of a payment under the SOPA does not constitute evidence that the work was performed or that the amount was due and owing. I accept that submission.

551. The defendant, by its cross-claim, sought to have the Court make a determination as to the entitlement of the plaintiff to be paid for the work the subject of invoice 1111b on a “final working out of the contractual mechanisms” referred to by the Court of Appeal in John Holland.

552. Payment claim 1111b, on the face of it, is dated 12 November 2020 and refers only to 55 (CB p 2154). The total amount of the payment claim is $90,178.36 including GST. The “Details of Works” specified in payment claim 1111b are:

To carry out building works as per contract and variations. Full details on attached documents. Inv. 3, 4,7 and 8.

553. The contract price had been paid by the date of payment claim 1111b, so the payment claim relates only variations 3,4,7 and 8.

554. The Statement provided with payment claim 1111b was dated 31 August 2020 (CB p 2155). The following was set out on the Statement:

| Invoice Date | Invoice No | Description | Amount | GST | Balance | | 3 Nov 18 | 3-Additional works | Replace all internal walls with brick and render finish | $55,179.60 | $5,517.96 | $60,697.56 | | 30 Aug 19 | 4 | Additional work and materials supplied | $ 5,992.73 | $ 599.27 | $ 6,592.00 | | 21 Dec 19 | 7 | Change Building for free standing bathtub (owner supply free standing bathtub) | $ 291.60 | $ 29.16 | $ 320.76 | | 21 Dec 19 | 8 | Additional tiling and retiling work. Appliances installation only. Linen wardrobe glass sliding doors. | $20,516.40 | $ 2,051.64 | $22,568.04 | | | | | Total amount overdue | Incl GST | $90,178.36 |

555. The invoice for variation 3 for 55 which was provided with payment claim 1111b is dated 24 August 2018 and is for a total amount of $35,000 (CB p 2156). The invoice is not for the replacement of “all internal walls with brick and render finish”. The Variation is not signed by either party to the contract. Clearly the version of the invoice for variation 3 for 55 is not the variation referred to in the payment claim.

556. There is another invoice for variation 3 called Variation 3 – Additional work. This invoice sets out nine items related to a purported change from timber stud internal walls to brick internal walls. It is almost the same as the variation with the same name in relation to 55A, which I have discussed above at [291]. To the extent that Variation 3 – Additional work enumerates costs associated with the change to the nature of the internal walls, that “change” is not chargeable as a variation because the contract was a contract to build “Double storey brick house with flat roof”. The other items in the invoice are for the deletion of the balcony planter box and privacy screen and the extension of the balcony and replacement of balcony balustrades with double brick and render (item 7). Again, there is no evidence of any documentation of this item as a variation, or of any quote. There is no evidence that the work was done by way of invoices for the work or any materials associated with them. There is no direct evidence of any relevant instruction given by Mr Haddad. Mr Boujaoude was asked about this invoice in cross-examination, and item 7 in particular, and was unable to explain it.

557. On the evidence before me, Elrob has no entitlement to any further payment with respect to either of the versions of variation 3 in respect of 55.

558. The invoice for variation 4 for 55 which was provided with payment claim 1111b is dated 30 August 2019, which is for a total sum of $26,560, and not the $6,592 figure stated on the Statement. The invoice for variation 4 is not signed by either party to the contract. Mr Boujaoude was taken to the invoice for the variation (see CB p 2157) during cross-examination. He said that Mr Haddad had paid for “some of the items” in the invoice for variation 4. Mr Boujaoude did not clarify which portion of variation 4 payment claim 1111b relates to, and it is not obvious from the figures on the invoice. The issue of what work or materials the $5,992.73 is claimed for in payment claim 1111b cannot be ascertained on the evidence before me.

559. Elrob has not established on the balance of probabilities that it has an entitlement under the contract to be paid the sum of $6,592 by reference to the invoice to variation 4 provided with payment claim 1111b. It cannot now be ascertained what work or materials the claim relates to, and, in any event, there is no evidence before me of a variation coming into existence in conformity with the requirements of the contract in subclauses 14(b) and (d) or Schedule 4 of the contract.

560. Payment claim 1111b was not accompanied by an invoice for variation 7. There is, however, a variation 7 in EB-01 at CB p 330, which is unsigned by either party to the contract and which is for both 55 and 55A (CB p 330). Payment claim 1111b is for $320.76. In cross-examination, Mr Boujaoude said that this item was for the extra work that had to be done to change the bathroom design from a built in bath to a freestanding bath. The extra work was to tile the extra floor and wall area and to position the freestanding bath. Variation 7 says, in relation to 55:

| Description of works | Add | Deduct | | 55 Sandringham St San Souci | | | | 1. Deleted inbuild acrylic bathtub | | $212 | | A. Tiled behind bathtub wall and floor (supply and install) | $485 | | | B. Install free standing bathtub (Owner supplied bathtub) | $420 | | | 2. Deleted intercom system: Credit | | $450 |

561. The total of that part of the invoice for variation 7 which relates to 55 is $243, which does not match the amount claimed for variation 7 in the Statement, which is $320.76. In addition, as became clear in the cross-examination of Mr Boujaoude, no deduction had been made by the builder for the cost of the purchase of the inbuilt bathtub which was no longer required. Only the work to install that bathtub had been credited.

562. On the evidence before me, Elrob does not have an entitlement to the sum of $320.76 from Mr Haddad in relation to variation 7. Again, in any event, variation 7 is not a variation under the terms of subclauses 14(b) and (d) under the contract.

563. The invoice for variation 8 provided with payment claim 1111b is the same as variation 9 provided with payment claim 1111a in relation to 55A. It is affected by precisely the same defects. Items 4 and 9 are duplicates. Item 3 relates to an error by Elrob with respect to the laying of the wrong tiles. In any event, there is no evidence of any of the items in variation 8 being the subject of a variation arrived at under clauses (b) and (d) of the contract. As with all of the purported variations the subject of these proceedings, there was no evidence of written instructions from the builder preceding the carrying out of any work the subject of the purported variation and there is no signed variation document, or any document at all except for the invoice. No written advice as to the price of the variation was given. The purported variation is not in accordance with subclauses 14(b) and (d) or Schedule 4 of the contract. Mr Haddad denied that verbal advice of the price was given. There is no evidence of any subcontractor invoices or receipts for payments for materials.

564. On the evidence before me, Elrob does not have an entitlement to the sum of $22,568.04 in relation to variation 8.

565. It follows that Mr Haddad is entitled under s 32(3)(b) of the SOPA to an order for the restitution of the sum of $95,134.52 paid by him to Elrob under s 23 of the SOPA. Elrob has been enriched by the payment to it of $95,134.52 at the expense of Mr Haddad, who made the payment. The payment was unjust because Elrob had and has no entitlement, as a matter of law, to the sum of $95,134.52 from Mr Haddad and Elrob has not sought to establish a defence to the cross-claim which would prevent an order for restitution (see Lumbers v W Cook Builders Pty Ltd (In Liq*)* (2008) 232 CLR 635 at pp 665 – 668).

Summary and Conclusion

566. The plaintiff has failed in its claim for the payment of Payment Claim 1111a with respect to 55A.

567. The plaintiff has failed in its claim in quantum meruit.

568. The defendant has succeeded in its claim with respect to defects and incomplete works constituting a breach of contract by the builder. The defendant is entitled to an award of damages in the total sum of $226,446.39 with respect to the defects and incomplete works.

569. The defendant has succeeded in its claim for liquidated damages under the contract in the sum of $25,000.

570. The defendant has succeeded in its claim for restitution with respect to the money paid under the SOPA and is entitled to an order for the payment to it by the defendant of $95,134.52 on that account.

571. The following orders will issue:

572. Judgment for the defendant on the plaintiff’s claim. The plaintiff’s claim is dismissed.

573. Judgment for the defendant on the first cross-claim.

574. The plaintiff is to pay the defendant the total sum of $226,446.39 for breach of the contracts.

575. The plaintiff is to pay the defendant the total sum of $25,000 by way of liquidated damages under the contracts.

576. The plaintiff is to pay the defendant the sum of $95,134.52 by way of restitution.

577. I will hear the parties as to costs.

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