The applicant must pay to the respondent the sum of $21,511.14.
Costs are reserved. Any application for costs must be made within 30 days of the date of this order.
The principal registrar is directed to refer any application for costs to Member Nash who will make directions for the further conduct of the application for costs.
[2]
Mrs Fotopoulos is an elderly Greek lady who has lived in her house in Richmond since she bought it with her husband in 1974. Modern Greek is her first language and she remains part of the Greek community in Richmond. Like many of the older generation who speak Greek as their first language, she struggles to speak or understand English and she relies heavily on her family and other members of the Greek community who have a better grasp of English to assist her as necessary.
In particular, like many of her generation, Mrs Fotopoulos always relied on her husband Mr Panagiotis Fotopoulos to manage all the household finances and any legal matters. The house remains in Mr Fotopoulos's name even though he has passed away.
Mrs Fotopoulos has two adult daughters, one who lives in Richmond near her and one who lives in the south eastern suburbs with her husband and children.
On 29 December 2016 Mrs Fotopoulos received a show cause notice from Yarra City Council in relation to the western wall and fence of her property. Her property shares that boundary with a laneway.
Mrs Fotopoulos took no action about the show cause notice and on 15 March 2017 was served with a building order which required her to repair the external masonry wall within 30 days of the date of the order.
Upon receiving the building order from the Yarra City Council, Mrs Fotopoulos telephoned Ilias Moutidis (also known as Louie). Louie is the sole director of the respondent (Landmark). Mrs Fotopoulos knew Louie through a neighbour who he had done work for in the past. They are both of Greek descent and therefore Mrs Fotopoulos could speak to Louie in Greek.
Mrs Fotopoulos told Louie she had received the building order from the Council and asked him to come to her home. Louie came to her house and she showed him the building order.
Upon reading the building order Louie commented that an engineer was required and suggested Fay Engineering and Management Consulting Service (the engineer) who he had used on previous projects. Louie called the engineer and made an appointment for them to meet at Mrs Fotopoulos's house. The engineer then met at Mrs Fotopoulos's house sometime before 7 June 2017 to discuss the scope of works required to comply with the building order.
As the repair of the wall would impact the kitchen and bathroom, Mrs Fotopoulos asked Louie to also replace her kitchen with a new kitchen and to renovate the bathroom and laundry. In particular, she wanted the toilet moved from the indoor bathroom to the outdoor laundry.
[3]
Mrs Fotopoulos describes the scope of the works to be carried out by Landmark as the repair and underpinning of the western wall of the property and the front fence, a new timber kitchen and new bathroom, new laundry and repairs to the cracks inside the house and necessary painting.
Mrs Fotopoulos and Louie did not enter into a signed written contract for the work. Louie quoted her a cost of $44,300.00. In addition there were variations to the contract agreed for the payment of the Building Surveyor in the sum of $950.00, the cost of the structural engineer in the sum of $1,350.00 and for the supply and installation of a split system air conditioner in the sum of $1,950.00. These variations increased the total cost to $48,550.00.
Whilst doing the works at the property, Louie issued invoices to Mrs Fotopoulos pursuant to which she paid $25,000.00. Landmark claims it is owed $23,550 as the amount outstanding.
Mrs Fotopoulos says she never signed a contract and did not sign the invoices given to her by Louie. She claims that her agreement with Landmark is an oral contract to do works. Mrs Fotopoulos's counsel argued that it is a contract for domestic building work which falls within the scope of the Domestic Building Contracts Act 1995 (Vic) (the Act) and therefore the warranties in the Act are implied into the contract between Mrs Fotopoulos and Landmark.
Mrs Fotopoulos's claim against Landmark is based on a breach of contract and breach of the statutory warranties in section 8 of the Act. Mrs Fotopoulos claims damages in the nature of the cost to repair and/or rectify the works done by Landmark.
All of the works done were said, by Mrs Fotopoulos, to have either been done contrary to Landmark's obligations under the implied warranties in the contract or not done at all and she claims $77,226.00 as the cost of rectifying the works undertaken by Louie and she also claims $15,000.00 for her legal costs.
Landmark agrees that the contract is a major domestic building contract but says that the contract is of no effect under s.31(2) of the Act. In those circumstances Landmark relies on s.53 and says it is entitled to be paid on the basis of the value of the work done, that is on a quantum meruit, and relies on the invoices already rendered and the balance owing in the sum of $23,550.
Alternatively, Landmark says the assessment of the value of the works done has been assessed by its independent expert Mr Trevor Jeffrey who has assessed the reasonable cost of the works done by Louie as $90,080.00.
Landmark claims $86,832.00 being $90,080.00 less $3,248.00 allowed for rectification of defective works it agrees require rectification.
[4]
Counsel for Mrs Fotopoulos has suggested that the position adopted by Landmark in its pleadings filed with the Tribunal is a different case from the case argued in its closing arguments when referring to the application of section 31(2) of the Act and seeking an assessment of the value of the works done by Landmark for Mrs Fotopoulos on a quantum meruit basis if the contract is of no effect by reason of the operation of the Act.
While the matters in sections 31(2) and 53 of the Act are not specifically pleaded by Landmark in its defence and counterclaim, the alternative claim for the payment of an amount assessed on the basis of a quantum meruit is specifically included in the prayer for relief.
Both parties conducted their cases on the basis that there is no written contract; the agreement between the parties is oral.
Counsel for Mrs Fotopoulos chose to present her client's case on the basis that the Act still applied irrespective of whether the contract was oral or written no matter what the contract price.
Further, whether or not the contract is unenforceable by reason of the Act is a question of law for the Tribunal to determine.
[5]
In order to determine the scope of the case I am required to determine, I consider it is necessary for me to determine the applicability of the Act to the agreement entered into between Mrs Fotopoulos and Landmark, and in particular, whether the agreement is a major domestic building contract under the Act[1]. Both parties agree that it is a domestic building contract but not the consequences of it so being.
Section 3 defines terms used in the Act, including
[6]
builder means a person who, or a partnership which -
[7]
manages or arranges the carrying out of domestic building work; or
[8]
intends to carry out, or to manage or arrange the carrying out of, domestic building work;
[9]
domestic building contract means a contract to carry out, or to arrange or manage the carrying out of, domestic building work other than a contract between a builder and a sub-contractor;
[10]
domestic building work means any work referred to in section 5 that is not excluded from the operation of this Act by section 6;
[11]
major domestic building contract means a domestic building contract in which the contract price for the carrying out of domestic building work is more than [$10,000[2]] ...;
[12]
Section 5(1)(b) sets out the work to which the Act applies, including, inter alia,
[13]
the renovation, alteration, extension, improvement or repair of a home.
[14]
Section 6 prescribes building work to which the Act does not apply. Of relevance in this case is s.6(a),
[15]
any work that the regulations state is not building work to which this Act applies;
[16]
It is clear that the nature of the work undertaken by the Louie for Mrs Fotopoulos, repair of the wall, installation of a new kitchen and renovation of a bathroom and laundry, falls within the scope of the Act as domestic building work. I therefore find that the Act applies to the agreement between Mrs Fotopoulos and Louie.
The cost of the works to be undertaken by Louie was $48,500.00, in excess of the $10,000.00 threshold in the Regulations. It is clear that if a domestic building contract is for a price greater than $10,000.00, it must be a major domestic building contract. The Act does not provide for a domestic building contract with a price greater than $10,000.00 to not be classified as a major domestic building contract. I therefore also find that the agreement between Mrs Fotopoulos and Louie is a major domestic building contract.
[17]
What happens if there is no written major domestic building contract?
[18]
Section 31 of the Act states that a major domestic building contract must contain certain provisions. It relevantly provides:
[19]
(1) A builder must not enter into a major domestic building
[20]
(b) sets out in full all the terms of the contract; and
[21]
(c) has a detailed description of the work to be carried out
[22]
(d) includes the plans and specifications for the work and
[23]
those plans and specifications contain enough information to enable the obtaining of a building permit; and
[24]
(e) states the names and addresses of the parties to the
[25]
(f) states the registration number (as it appears on the
A major domestic building contract is of no effect unless it is signed by the builder and the building owner (or their authorised agents).
[40]
As the total value of the work was more than $10,000.00, it is clear that this is a situation where a written major domestic building contract containing all the matters required by s.31(1) of the Act should have been used.
The evidence at the hearing was that no complying major domestic building contract was used. The contract was evidenced only by Landmark's invoices and by the fact that Mrs Fotopoulos had made payments against those invoices totalling $25,000.00.
As s.31(2) of the Act states that a major domestic building contract is of no effect unless it is signed by the builder and the building owner, I find that Landmark cannot sue on the contract for the balance of payment.
However, the Tribunal has jurisdiction under s.53(2)(b)(iii) of the Act to order the payment of a sum of money by way of restitution to Landmark for work already done. Any such sum must account for the value of the works done and any cost of rectifying any defects in the work.
Landmark claims the value of the work done is as determined by Mr Jeffrey assessed at $90,080.00. This is despite it having quoted a fixed price of $48,500.00 and does not reflect that Landmark has received $25,000.00 from Mrs Fotopoulos to date.
It is incongruous that Landmark's failure to ensure the contract complied with the DBC Act requirements that the contract be signed could result in the builder being paid more on a quantum meruit basis than had been bargained for as the contract price.
The High Court recently stated in Mann v Paterson[3]
[41]
Equally, where the claim is founded on an obligation to pay for services rendered under a contract which is unenforceable, it has been held that "[o] rdinarily" the measure of restitution "will correspond to the fair value of the benefit provided (eg remuneration calculated at a reasonable rate for work actually done or the fair market value of material supplied)[4]". Prices stated in the contract are regarded as relevant, but they remain "evidence only, on the question of amount"[5]. That approach is informed by a legal concern that direct application of the contract price would risk incoherence with the policy of the law rendering the contract unenforceable, although this will always require consideration of that policy. As Mason and Wilson JJ noted in Pavey & Matthews Pty Ltd v Paul:
[42]
"if the effect of bringing an action on a quantum meruit was simply to enforce the oral contract in some circumstances only, though not in all the circumstances in which an action on the contract would succeed, it might be persuasively contended that the action on a quantum meruit was an indirect means of enforcing the oral contract."
[43]
The High Court also considered the position of the English courts in relation to the assessment of a quantum meruit claim for work done and material supplied.[6]
[44]
More recently, in England, the courts have adopted a more nuanced approach. In Cressman v Coys of Kensington (Sales) Ltd, Mance LJ observed[7] that the "general concern" of the law of restitution "is with benefit to the particular defendant, or so-called 'subjective devaluation '"[8].
[45]
Their Honours Nettle, Gordon and Edelman JJ at paragraph [210] referred to a decision of Lord Neuberger of Abbotsbury PSC, as follows
[46]
"... although not expressing a concluded view on the subject, [Lord Neuberger] stated as follows:
[47]
"In my view, it may well be that, in some cases of unjust enrichment, subjective devaluation could be invoked by a defendant to justify the award of a smaller sum than that which would be prima facie payable...
[48]
[I]t may often be unreasonable for a claimant to claim a market-based payment .... where there have been prior discussions and the defendant has indicated that he would not be prepared to pay as much is the market price for the benefit.
[49]
It would seem wrong ... for the claimant to be better off as a result of the law coming to his rescue, as it were, by permitting him to invoke unjust enrichment, then he would have been if he had had the benefit of a legally enforceable contractual claim for a quantified sum."
[50]
This principle was adopted by their Honours Nettle, Gordon and Edelman JJ at paragraph [215]. While their Honours' comments were confirmed to circumstances where a contract is terminated prior to it having been completed, these are relevant considerations where a contract is unenforceable.
Accordingly, while the value of the work done by Landmark must be assessed on the basis of the reasonable market value, the value of that work must also be determined by the Tribunal in the context of what Landmark was prepared to accept as reasonable remuneration for the work done.
It is important to bear in mind that because the contract between the parties is unenforceable, the scope of works, and more particularly, any works that may have formed part of the contract but were not undertaken by Landmark are not works for which Mrs Fotopoulos may claim damages for an alleged failure to perform. Much of the evidence led on behalf of Mrs Fotopoulos was directed to this point and is therefore not of relevance to the decision I must make.
Landmark called Mr Jeffrey, a quantity surveyor to give expert evidence as to the reasonable market value of the works done by Landmark. Mr Jeffrey prepared a report dated 21 December 2018 addressing the claim by Mrs Fotopoulos of defective works. Mr Jeffrey then prepared a revised report dated 24 May 2019 which included his calculations of the reasonable market value of the works done by Landmark at the property.
Mrs Fotopoulos called Mr Berkowitz, a quantity surveyor, to give expert evidence as to the cost of undertaking rectification works and the works alleged to form part of the contract, but which were not undertaken.
No evidence was led on behalf of Mrs Fotopoulos as to the reasonable market value of the works undertaken by Landmark. This is not a criticism of Mr Berkowitz and his expert evidence. He was not instructed to consider this issue.
No evidence was led by either party as to whether or not any of the matters complained of did in fact constitute defective works and if so the appropriate manner of rectifying those works. Rather the evidence relied on by the applicant was the lay evidence of Mrs Fotopoulos to the effect that she didn't get what she asked for. The expert evidence of Mr Berkowitz was directed to the cost of rectifying the works said by Mrs Fotopoulos to have been done incorrectly or to be defective.
The evidence on behalf of Landmark was a direct reply to the evidence led by Mrs Fotopoulos and again did not comment on whether or not an item was defective but as evidence of a quantity surveyor, was directed to the cost of rectifying the items alleged by Mrs Fotopoulos to have been defective.
Landmark did concede that there was one item which required rectification which was the water leak in the bathroom however, Landmark disputed the cost attributed to the rectification of that item by Mrs Fotopoulos.
Turning to the work done.
[51]
RESPONDENT'S CLAIM FOR WORK DONE AND MATERIALS SUPPLIED
[52]
Mr Jeffrey's expert report assesses the value of the works done by Landmark, including contingencies and builder's margin at $90,080.00.
As noted above, Mr Berkowitz was not instructed to assess the value of the work done and did not do so.
Mr Jeffrey's report assessing the reasonable value of the works done sets out the categories of work identified and the scope of the work under each heading. It includes an allowance for scaffolding, first aid, site fencing, plumbing, plastering and painting, to list only a few of the categories of work. However, Mr Jeffrey's report does not take into account that Landmark subcontracted much of the work to others who then invoiced Landmark for payment. This is because Mr Jeffrey was not provided with this information when preparing his report.
An expert can only prepare a report based on the instructions given by the legal representatives of the party. If there is an omission from that information or incorrect assumption within those instructions, the evidence of the expert becomes of no assistance to the Tribunal because it does not accord with the facts presented in evidence.
Mr Jeffrey's report was thorough but the underlying assumptions which formed the basis of his instructions, namely that Landmark had performed the work itself was erroneous.
For example, "Kitchens 4 Life" supplied and installed the new kitchen and provided an invoice to Landmark for payment in the sum of $6,050.00. The joinery work for the kitchen was estimated at $6,350.00 by Mr Jeffrey.
The painting and plaster work were also undertaken by a subcontractor which charged $2,420.00 for the plasterwork and $2,750.00 for the painting respectively. Whereas Mr Jeffrey has allowed $4,555.00 for plasterwork and $1,512.00 for painting. There is a disparity between the figures assessed by Mr Jeffrey and the actual costs incurred.
I therefore find that I am unable to rely on the evidence of Mr Jeffrey as to the reasonable market value of the works done at the property as it is does not take into account the engagement of subcontractors by Landmark to undertake these works separately or the actual costs incurred in doing so.
To rely on Mr Jeffrey's assessment of the overall value of the works being $90,080.00 results in Landmark obtaining what appears to be significant windfall for work done by subcontractors. In accordance with the comments of the majority in Mann v Paterson, the contract price is relevant in determining the fair value for restitution on a quantum meruit basis, and I consider that that approach, rather than Jeffrey's figure, is fair.
The only real evidence before me as to the value of the work done by both Landmark and its subcontractors is the price agreed between Mrs Fotopoulos and Louie including all variations totalling $48,550.00 of which Mrs Fotopoulos has paid $25,000.00 to date. I find therefore that the balance of costs owing to Landmark by Mrs Fotopoulos for the work done and materials supplied is $23,550.00.
This amount must then be adjusted to take into account the cost of rectifying any of the alleged defective works which require rectification.
[53]
The problem with the bathroom is that the external gutter and downpipe at the south-western corner of the wall that was installed by Landmark was installed incorrectly. As a consequence of this erroneous installation Mrs Fotopoulos says that there is a water leak into the bathroom. The photographs incorporated into each of the expert reports show that there is water damage in the ceiling corner and inside the vanity cupboard under the basin. Mrs Fotopoulos also complains about the tiles and floor suggesting they look cracked and dirty and finally, that there was no mirror installed above the vanity as requested.
Landmark concedes that there is a water leak and that an allowance for rectifying this item must be made in favour of Mrs Fotopoulos.
Mr Berkowitz records in his report that in his opinion, an allowance of $5,045.00 for what he describes as additional items. These items are not confined to the bathroom leak. In fact, Mr Berkowitz's report barely refers to the bathroom leak other than to allow for repairing and repainting the bathroom plasterboard and cornice allowed at $280.00 and to repair the roof plumbing allowed at $650.00. Mr Jeffrey agrees with these sums. These sums are excluding GST. Mr Jeffrey also allows $145.00 plus GST for painting.
Mr Berkowitz also allows $200.00 plus GST to repair the leak in the vanity whereas Mr Jeffrey could not identify a leak. The photographs shown to the Tribunal during the hearing evidence water stains in the cupboard of the vanity under the sink. I therefore find that there was a leak in the vanity which requires repair.
I therefore allow the rectification costs for repair of the bathroom leak in the sum of $1,275.00 plus GST.
Despite the contract between the parties being of no effect and therefore any items omitted from the works are not available to be compensated, both parties agree that Mrs Fotopoulos should be compensated for the omission of the installation of a mirror in the bathroom. Both parties agree that compensation should be allowed in the sum of $110.00 plus GST. In the light of the concessions made by Landmark in relation to this matter I will allow to Mrs Fotopoulos the sum of $110.00 plus GST for the installation of a mirror above the vanity in the bathroom.
The other complaint is that the toilet was moved from the bathroom to the laundry outside. This complaint appears to have been made by Mrs Fotopoulos' daughter (the one who lives close to Mrs Fotopoulos) rather than Mrs Fotopoulos. Mrs Fotopoulos gave evidence that she asked Louie to move the toilet from the internal bathroom to the external laundry as she did not like having the toilet off the kitchen. While a younger generation may question why someone would move the toilet from inside the body of the house to a room external to the house, it is not defective work as it was moved specifically at the request of Mrs Fotopoulos.
[54]
The floor tiles in the laundry, kitchen and bathroom
[55]
Mrs Fotopoulos complains that the floor tiles in the laundry, kitchen and bathroom are cracked and always look dirty no matter how much she cleans them.
Both experts agree that the tiles at the entrance to the laundry require rectification and agree an allowance of $150.00 plus GST should be made. Accordingly, I allow the sum of $150.00 plus GST for that item.
It is unfortunate that there is a complete absence of any expert evidence on behalf of Mrs Fotopoulos about what, if any, defects exist in the work done by Landmark or any damage to the property caused by Landmark in undertaking the works. This absence means that where there is conflict about the existence of a defect between the quantity surveyor experts who each give evidence about the cost of rectifying the defects alleged by Mrs Fotopoulos, I am unable to find that a defect exists that was caused by Landmark.
Accordingly, in the case of damaged tiles, save where both experts agreed about the need to repair the laundry entry, I find there is no evidence of any other defects or damage caused by Landmark.
[56]
The alleged defective work in the laundry is that the toilet was relocated from the bathroom to the laundry resulting in the laundry sink door being unable to be opened fully. The other complaint is that Mrs Fotopoulos had requested the installation of another cupboard which had not occurred.
As set out above, items which are alleged to have formed part of the contract that were not done are not matters that I am able to award compensation for as the contract is unenforceable pursuant to section 31(2) of the Act.
With respect to the relocation of the toilet, Mrs Fotopoulos confirmed that she told Louie to move the toilet from the bathroom to the laundry and to install more drawers in the laundry and do all the electrical work required. Therefore, the moving of the toilet to the outdoor laundry is not defective work.
[57]
The evidence of Mrs Fotopoulos with respect to the western wall was that she was told by Louie and the engineer that because of the lean in the northern part of the western wall adjacent to the living room it had to be stabilised. To do this they had to open up the foundations and build it to be stable. Further, the southern section of the western wall abutting the kitchen and bathroom required building works because the back was open and there was some water leakage.
Mrs Fotopoulos's position is that the entire western wall needed to have work done to it, not just the southern section, and that underpinning of the wall was required under the terms of the contract but was not done by Landmark.
The engineer's drawings do not include any underpinning of the wall. The building permit was issued on the basis of the engineer's drawings. Mrs Fotopoulos admits that the engineer's drawings do not refer to any form of underpinning.
No evidence was led on behalf of Mrs Fotopoulos that the wall was dangerous and required further work to be done to it. The substance of all the evidence was directed at the absence of underpinning and whether underpinning formed part of the works required to be undertaken under the terms of the contract.
In the absence of any evidence to the contrary, I can therefore only conclude that the works undertaken by Landmark complied with the engineer's drawings particularly as there have been no further orders issued by Yarra City Council and the Building Surveyor did not refuse to certify the works after the inspection of each stage was done.
The other claim with respect to the wall is for the cost of rectifying the concrete overpour in the adjoining laneway which occurred because of the works done to the wall by Landmark.
Mrs Fotopoulos does not own the laneway. It is a public laneway within the purview of Yarra City Council. Therefore, while it is apparent from the photographs provided to the Tribunal that there has been concrete overpour in the laneway, it is not Mrs Fotopoulos's property that has been affected. Further, Yarra City Council has not served any notice on Mrs Fotopoulos requiring her to rectify the concrete overpours. There is no evidence of any loss suffered by Mrs Fotopoulos.
I therefore dismiss the claim for the costs of underpinning the wall and rectifying the concrete overspills.
[58]
Mrs Fotopoulos gave evidence that because the western wall next to the kitchen had to be demolished and reconstructed her kitchen needed to be removed and a new kitchen installed. Mrs Fotopoulos says that she at all times stated that she wanted a new timber kitchen. However, the tax invoices in the information from the kitchen company indicate that Mrs Fotopoulos wanted a white kitchen with stone bench tops, and this is what was installed. Mrs Fotopoulos agreed that she said she wanted a white kitchen. Her evidence was that she knew her daughter Christine, where she was staying during the renovation, spoke with Louie and told him that Mrs Fotopoulos wanted a kitchen like her daughter Christine's, which was white and had stone bench tops.
However, she has subsequently said she had wanted a timber kitchen not a laminate kitchen (which was installed).
Mrs Fotopoulos's other complaint about the kitchen was that the drawers were not big enough and the oven was too hot and she kept burning the food.
It appears that it is only when her other daughter (the daughter who lives near her) considered that the kitchen was not of a very good quality that the issue of whether it was a laminate white kitchen or a timber kitchen was raised. Mrs Fotopoulos did not raise this complaint when she immediately returned to her house.
The invoice from 'Kitchens 4 Life' is dated 5 July 2017 with payment due by 4 August 2017 and records that the sum of $6,050.00 had been paid in full. It clearly records that Kitchens 4 Life were to
[59]
NEW KITCHEN FINISHED IN WHITE MELAMINE AS PER CLIENT TINA FOTOPOULOS REQUEST ON 25/07/17 AT HER PREMISES IN RICHMOND
[60]
It is clear from this invoice, Mrs Fotopoulos (or her daughter Tina whom she was staying with) chose when speaking with the kitchen supplier, a white melamine kitchen with stone bench tops.
That Mrs Fotopoulos has subsequently determined that she does not like the white melamine kitchen does not mean that it was installed contrary to the contract, defectively or that the kitchen itself is not fit for purpose. It is clear from this independent, contemporaneous, document that Mrs Fotopoulos, or her daughter on her behalf, chose the kitchen that has been installed. No evidence to the contrary was led on behalf of Mrs Fotopoulos and Mrs Fotopoulos confirmed that her daughter Tina had been the person who spoke with the kitchen suppliers.
I therefore dismiss the claim relating to whether or not the kitchen is non-compliant or defective by reason of not being a timber kitchen.
With respect to the other issues raised regarding the kitchen as to the operation of the oven, splashback installation, the window pelmet being damaged, the doorframes and door locks each being damaged, any gaps in the Caesarstone bench and the cooktop are matters about which there is no expert evidence. There is no evidence before the Tribunal as to what if any items in the kitchen are defective.
Accordingly, for the reasons outlined above about the issues raised by the absence of any expert evidence regarding any defective works, I dismiss the claim with respect to these items.
[61]
Mrs Fotopoulos gave evidence that Louie had said that wherever there were any cracks in the property he would fix them up once the wall had been repaired. Louie denied that he agreed to do any of that work. None of the work was done.
In relation to this matter it is an item that is alleged to have formed part of the terms of the contract that was not done by Landmark. As noted above as the contract is unenforceable these claims do not attract a claim for damages. Accordingly, I dismiss this claim.
[62]
For the rectification costs, a Builder's margin and an allowance for contingencies needs to be included in the costs as these items are in addition to costs allowed above. Both experts agree a reasonable Builder's margin for works of this scale is 15% and an allowance of 5% for construction contingencies is appropriate. I accept that agreed position and allow a builder's margin of $230.25 plus GST being 15% of $1,535.00 and an allowance for construction contingencies in the sum of $88.26 plus GST being 5% of the sum of $1,765.25.
[63]
In summary, I find that the contract between the parties is:
a major domestic building contract for the sum of $48,550.00
is not in writing or signed
falls within the scope of s.31(2) of the Act, and
is unenforceable.
Accordingly, Mrs Fotopoulos's claims for works alleged to have been agreed to be done, that were not done, must fail.
Landmark undertook works at the property at the request of Mrs Fotopoulos. Even though the contract between them is unenforceable, Landmark is entitled under section 53 of the Act to be remunerated for the reasonable value of work carried out and in respect of which the owners have obtained a benefit, that is on a quantum meruit basis.
The reasonable value of work is usually determined by the market value of the work undertaken. Landmark relied upon expert evidence in support of its claim for $90,080.00 being the reasonable cost of its work at the property. This is almost double the contract price. I consider that the expert evidence from Mr Jeffrey is not the best evidence before me as to the market value of the work due to the failure of the expert evidence to take account of the use of subcontractors in the works being undertaken. As such best evidence before me as to the market value of the work is the agreed contract price despite the contract being unenforceable.
Such payment to Landmark must take into account any costs of rectifying defective work. I therefore find that Mrs Fotopoulos must pay to Landmark the sum of $23,550.00 less the amount allowed for rectification of defective work.
The absence of any expert evidence on behalf of Mrs Fotopoulos as to any defects at the property mean that any award for rectification works is limited to those matters which both parties agree require rectification.
The total costs allowed for rectification of defective works is in the sum of $2,038.86 being the total of the amounts set out in the findings above.
After deducting the amount allowed for rectification of the works, Mrs Fotopoulos must pay to Landmark the sum of $21,511.14.
[64]
[1]Nicinski v Chemay (Building and Property) [2016] VCAT 649 (27 April 2016) and Tozoulis v Hughes (Building and Property) [2016] VCAT 512.
[8] See Birks, An Introduction to the Law of Restitution (1989) at 109-132; Burrows, The Law of Restitution, 3rd ed (2011) at 47-60; Virgo, The Principles of the Law of Restitution, 3rd ed (2015) at 69-72.
Parties
Applicant/Plaintiff:
Fotopoulos
Respondent/Defendant:
Landmark Building Design Pty Ltd
Legislation Cited (2)
Building Contracts Act 1995
Building Contracts Regulations 2017
Cases Cited (2)
Fotopoulos v Landmark Building Design Pty Ltd (Building and Property) [2020] VCAT 1130 (8 October 2020)