Heski Carpenters Pty Ltd v Gaycel Pty Ltd

Heski Carpenters Pty Ltd v Gaycel Pty Ltd - [2016] VCAT 688 - VCAT 2016 case summary — Zoe

[10]

To arrive at an estimate as to the total amount of money it was likely to receive under the contract, the builder engaged Mr Odicho, an engineer with substantial experience in building project management and estimating, to prepare an estimate for the direct costs of the proposed works. The proposed works were those set out in the construction plans provided to r Odicho by the owners.
The builder says it received Mr Odicho's cost estimate, and then added an additional 16% of that sum (as agreed with the owners) for the builder's fee or profit margin, to arrive at a total sum of $1,047,485.80. The builder entered this total sum in the building contract as the builder's fair and reasonable estimate of the total amount of money that it is likely to receive under the contract ("the builder's contract price estimate").
A building permit was issued on 21 August 2012, and the builder commenced works around that time. The building contract specifies a construction period of 258 days. The builder and the owners agree that the due date for completion of works under the building contract was, subject to any approved extensions of time, around 2 May 2013.
Mr Yucel was thoroughly involved in the progression of the building works from the outset. He attended the building site frequently to inspect the progress of works and, on occasions, gave directions to the builder in respect of various works.
At Mr Yucel's request, quotations for works obtained by the builder from sub-contractors were provided to Mr Yucel, and Mr Yucel had discussions with the builder as to which quotations would be accepted. Further, at Mr Yucel's direction, all payment claims of sub-contractors engaged by the builder were to be forwarded to Mr Yucel who would arrange for payment of those claims to be made directly by Gaycel Pty Ltd to the subcontractors. As part of this arrangement, many of the subcontractors' invoices were, at the direction of the builder, addressed to Gaycel Pty Ltd.
Under these arrangements, Mr Yucel had control of the financial records as to the cost of the building works. The builder kept records of its own workers' labour time, but otherwise relied on information provided by Mr Yucel as to the accruing "direct cost" of building works.

[33]

In item 10 in the appendix to the building contract, the builder, in purported compliance with s13(2) of the Act, has specified $1,047,485.80 as the builder's contract price estimate, that is the builder's fair and reasonable estimate of the total amount of money that the builder is likely to receive under the contract.
The owners say that the builder has not met the requirement under s13(2) of the Act and that this is evident from the fact that the actual cost of the building works, up to the date they terminated the contract on 16 July 2013, was well in excess of the builder's contract price estimate. As noted above, Mr Yucel kept the financial records as to all of the costs of the building works paid by the owners. I accept Mr Yucel's evidence that the "direct costs" of the building works up to 16 July 2013 was $1,288,805.55, and that in addition to these costs, the owners had up to that time paid the builder $108,400 as the builder's fee.[1]
The owners say that a variance from the builder's contract price estimate of more than 5% is "unacceptable" in terms of the requirement of s13(2) of the Act.
In my view, a determination as to whether a builder has complied with s 13(2) of the Act is not reached by simply comparing the builder's price estimate in the contract with the costs subsequently actually incurred, even if allowance is made for variations to the works after the contract was signed.
In my view, it is necessary to assess the fairness and reasonableness of the builder's contract price estimate at the time the contract was entered.
Mr Eski says that the building contract was the first costs plus contract he had entered. He was aware of his obligation to provide an estimate of the total amount of money the builder was likely to receive and, to assist him in this regard, Mr Eski engaged Mr Odicho to prepare a cost estimate for the works.
Although not a quantity surveyor, Mr Odicho has extensive experience in building construction management and estimating. Mr Odicho prepared his cost estimate after receiving the construction plans which were emailed to him by Mr Yucel in June 2012.
On about 9 July 2013, Mr Odicho emailed to Mr Eski his cost estimate, a four page document containing itemised costings for the building works with a total cost estimate of $976,383. The document makes no reference to a builder's fee or profit margin, or GST. Mr Odicho confirmed in evidence that his cost estimate did not include any allowance for builder's profit margin or GST. In this sense Mr Odicho's estimate was an estimate of the "direct costs" of the building works, excluding GST.
In my view, having regard to the builder's obligation under s13(2) of the Act, and Mr Eski's admitted inexperience with "cost plus" contracts, it was prudent for Mr Eski to obtain a cost estimate from an independent experienced estimator such as Mr Odicho.
It would also have been prudent for Mr Eski to base his contract price estimate on Mr Odicho's estimate. Mr Eski says that this is precisely what he did. However, it is apparent that the contract price estimate in the building contract has been based on a direct costs estimate significantly lower than Mr Odicho's estimate.
As noted above, the builder specified $1,047,485.80 in item 10 in the appendix to building contract as the builder's fair and reasonable estimate of the total amount of money that the builder is likely to receive under the contract. It is clear from the additional notes written by Mr Eski in item 10 in the appendix that the estimate is the total of two sums, $903,005 and $144,480.80. Mr Eski wrote these figures in item 10 on the day he and Mr Yucel signed the building contract. Mr Eski says that the first figure, $903,005, is what he believed, at the time, was Mr Odicho's [direct costs] estimate. The second sum, $144,480.80, is the builder's fee for profit margin and insurance, which the parties agreed would be calculated as 16% of the direct costs component. $144,480.80 is 16% of $903,005.
The first figure, $903,005, is significantly less than Mr Odicho's [direct costs] estimate of $976,383.
Mr Odicho produced at the hearing a copy of his cost estimate which identifies a total estimate of $976,383. He says that after he emailed the document to the builder, he did not make any changes to it and nor did he discuss any changes to it with Mr Eski or Mr Yucel.
On 15 July 2012, Mr Eski attended the home of Mr Yucel for the purpose of completing and signing the building contract. He says that he took with him Mr Odicho's cost estimate document in electronic format on his laptop computer. Mr Eski says that when he was at Mr Yucel's home, Mr Yucel took Mr Eski's laptop for the purpose of adding to Mr Odicho's cost estimate the agreed 16% builder's fee allowance.
Item 8 in the appendix to the contract lists the documents forming part of the building contract. One of the listed documents is described as the "cost estimate attached". A copy of that attached cost estimate document was produced at the hearing. The document appears to be a copy of Mr Odicho's cost estimate document with one amendment being the addition of the agreed 16% builder's fee. However, on closer scrutiny it can be seen that the document is significantly different to Mr Odicho's "original" document:
- - a number of the itemised costings in the copy document are lower than the sums provided in Mr Odicho's original document;
- - the total cost estimate (before allowing the 16% builder's fee) in the copy document is $903,005, whereas the total estimate in Mr Odicho's original document is $976,383.
Mr Eski says that at the time he completed and signed the building contract, he believed that the cost estimate document which became the attachment to the building contract was Mr Odicho's original document, amended only to include the additional 16% allowance for the builder's fee.
When giving evidence, Mr Eski expressed surprise when the full extent of the differences between Mr Odicho's original document and the document attached to the building contract were identified. Mr Eski says he now believes that Mr Yucel must have produced the amended "copy" document during the course of Mr Eski's visit to Mr Yucel's home on15 July 2012. Mr Eski says that he relied on the altered document, believing it to be Mr Odicho's true cost estimate, when calculating the builder's contract price estimate and completing the building contract.
Although he does not directly say so, Mr Eski implies that he has been duped by Mr Yucel into inserting into the building contract a price estimate based on a direct works estimate lower than the "true" estimate provided by Mr Odicho.
Had the builder's contract price estimate been founded on Mr Odicho's "true" direct costs estimate, it would have been significantly higher. After adding the agreed 16% builder's fee, the estimate would have been $1,132,604, that is $85,119 more than the estimate inserted in the contract by Mr Eski.
Mr Yucel strongly denies that he amended Mr Odicho's estimate document. He says that on 15 July 2012, Mr Eski arrived at Mr Yucel's home with a document that Mr Yucel understood to be Mr Odicho's estimate. Mr Yucel denies making any changes to that document. He denies that he used Mr Eski's laptop at all.
Mr Eski says that, after he received Mr Odicho's cost estimate, and before he attended Mr Yucel's home on 15 July 2012, he met with Mr Yucel on site at the St Kilda units to discuss the proposed building works.
In circumstances where:
- - Mr Eski has engaged Mr Odicho for the purpose of obtaining an independent works cost estimate which Mr Eski intended to rely upon when calculating the contract price estimate; and
- - After receiving Mr Odicho's estimate, and before inserting the contract price estimate into the building contract document, Mr Eski has attended the building site to discuss the building works with Mr Yucel; and
- - Mr Eski has subsequently inserted the contract price estimate into the building contract;

[37]

The building works commenced in August 2012 and the parties agree that the due date for completion of the works, subject to approved extensions of time, was around 2 May 2013.
The two-storey double brick building, approximately 100 years old, has four units side-by-side at ground level, and for further units side-by-side on the above level 1.
The builder's own team of workers was to be used for demolition and general carpentry/framing works. Mr Yucel and Mr Eski agreed on a charge rate of $500 per day per worker for each of the workers in the builder's team.
The first stage of the works involved partial demolition along the north side of the building ahead of extensions to the units. The demolition works were tedious and included the temporary "propping" of parts of the building.
Mr Yucel became concerned at the amount of time being taken to complete the demolition works. His concern was partly due to the fact that the builder's workers were being charged out at the agreed rate of $500 per worker per day.
Mr Eski says that, because of the tedious nature of the demolition works and the limited access to site on the northern side of the property, the demolition works had to be done entirely by hand, including the painstaking removal of rubble to waste bins. Mr Yucel says that machinery could have been used to hasten the removal of rubble.
Mr Eski says also that the demolition works were, at the direction of Mr Yucel, expanded to include the removal of a number of internal walls, approximately 22 sections in all, on the upper storey. He says that Mr Yucel expressed concern that these walls were unstable and should be replaced. Mr Eski says that, in response, he advised Mr Yucel that the walls in question could be removed and replaced with stud timber walls. Mr Eski says that Mr Yucel instructed him to proceed with the removal and replacement of the walls.
The demolition works were completed by around November 2012, after which the builder's team moved on to carpentry/framing works.
Mr Yucel believed that the builder was content to proceed slowly because it meant more profit for the builder. Mr Yucel voiced his frustration in a letter he sent by email to Mr Eski on 29 December 2012 wherein he says, amongst other things:

[41]

The reference in the above letter to "Aarons and the Crew" is a reference to Mr Aaron Johnson and his crew of workers who were brought onto the project by Mr Yucel in December 2012. Mr Johnson is a carpenter who trades through his corporate entity, Jarah Construction Pty Ltd ("Jarah Constructions").
Mr Eski received the above email letter in Thailand, where he was on his honeymoon. Mr Eski responded by advising Mr Yucel that he would meet Mr Yucel to discuss the matter when he returned from his honeymoon.
In January 2013, the structural engineer for the project, Pat Baygar and Associates Pty Ltd ("the engineer"), provided a report to Mr Yucel detailing rectification works required to be carried out to the framing to meet concerns raised by the relevant building surveyor for the project, Mr Raptopoulos.
On around 21 January 2013, when Mr Eski had returned from his honeymoon, Mr Yucel met Mr Eski on site. Mr Eski says agreement was reached that :
- (a) The builder would attend to the rectifying the framing works, as per the engineers instructions, at no extra cost; and
- (b) After attending to the framing rectification works, the builder's team of workers would play no further part in the project. That is, Mr Eski accepted that the builder's team would be replaced by Mr Aaron Johnson and his team; and
- (c) The builder would discount its charges by $10,000.
I accept Mr Eski's evidence in relation to this agreement. It is not contested by Mr Yucel. The $10,000 discount appeared in the next invoice from the builder to the owners. After completing the framing rectifications, the builder's team of workers ceased working on the project.
The works progressed through to around the end of May 2013. Along the way Mr Yucel requested a number of variation extra works, that is works not included in the original construction plans, including:
- (a) two new fire places, new walls constructed around six existing fireplaces, granite steps around fire places;
- (b) new roofing over external stairs to the building;
- (c) disabled access ramp into the building;
- (d) extra wall insulation and sound batts;
- (e) battening of ceilings to accommodate a higher quality plaster finish;
- (f) bamboo flooring in the units in place of carpet;
- (g) scion matrix wall in courtyard replaced by brick wall;
- (h) front picket fence replaced with powder coated aluminium fence;
- (i) new decking; and
- (j) extra electrical works - LED lights, data and Internet network points.
Along the way, a number of works carried out by the builder's workers or subcontractors had to be rectified. For example, some rendering works had to be re-done as a result of damage caused by the installation of electrical wiring.
There is dispute as to whether some rectification works arose from builder mistakes or from a change of mind by the owners. For example, external doors leading to the decking were installed, but had to be removed and reinstalled with alternative hinging. The builder says the change was required to meet the owners changed request as to the functioning of the doors. The owners say the builder used the wrong hinges when first installing the doors.
Cabinetry was installed by Winlife Cabinets in April and May 2013. The formation and termination of cabinetry contract are discussed in detail later in these reasons. For present purpose, it is enough to say that Mr Yucel was dissatisfied with the quality of the cabinetry work and he discussed his concerns with Mr Eski, and that the result of that discussion was a letter from the builder to Winlife dated 31 May 2013 terminating Winlife's contract. Mr Yucel helped Mr Eski draft that letter. The letter states:

[57]

Poor scheduling has resulted in cost overruns with the scaffolding which was installed too early and subsequently the costs have escalated.
To date you have not been able to meet any verbal deadlines given nor produced any written project schedule to which you have attempted to work too. This has led to a project with no end date.
At significant expense our client was requested to provide laminated full-size structural and architectural plans to be kept on site. The plans were provided in a bound format with a clear notice that they were not to be separated or removed from site. Within a short space of time the plans were all over the site and yet you were not working from the stamped authorised drawings as per the building permit. This oversight has led to the omission of three laundries (units 6, 7, 8) from the final build. As the error was not discovered until all kitchens and floors were installed, it was not possible to install the laundries as per the approved drawings. As this error is your responsibility, our client expects to recover costs associated with making provision for laundries in the bathrooms and seek compensation for the loss of amenity in the bathrooms due to the compromises having to be made to accommodate the error.
Lack of your availability to instruct new contractors and to ensure they understand the scope of works and coordinate with other contractors.
Inability to supervise contractors and work to approved drawings resulting in the failure of frame inspection for both the timber framing and the structural steel components resulting in a 4 week delay to the project to carry out rectification and re-engineering works. You and our client have reached agreement on costs recovery for this and you did carry out rectification works at your cost on the timber frame to meet compliance.
Failure to supervise plastering works and associated contractors resulting in a very poor outcome for straightness/plumb of walls. Furthermore progress payments to your subcontractors were cleared without a full assessment of completeness and quality of works carried out. Your subcontractors refused to address the defects and walked off the job. This resulted in finding another contractor to finish the plastering at additional cost.
All external doors and windows were ordered by you with undersized reveals which has caused a significant amount of reworking on site to redo the reveals for all aluminium windows and to add extension pieces to the timber windows and doors. This has resulted in significant additional labour and material costs and associated delays.
Failure to properly supervise and instruct the electrical contractor has led to an acceptable wiring being installed, damage to the fire protection layers in the apartments due to inappropriate penetrations, illegal wiring and generally poor workmanship, and damage to the outside of the building in multiple locations for cable runs. You were requested to deal with this contract by way of removing them from the project but you insisted on persevering with them to the detriment of this project. You were also requested to obtain written documentation from the contractor to prove that they had ordered the main switchboard/metering enclosures and EWR order for the local supply authority. No such documentation was obtained.

[62]

The doors opening out to the ground floor decking were to open all the way out. The way they were installed with the narrow reveals required significant sized hinges which were supplied at great additional expense. After a lot of work in installing them and trialling the large parliament hinges they proved ineffective. All doors were finally removed, extended the reveals and reinstalled them with normal hinges to achieve the desired outcome. All this could have been avoided if you were on the job and supervising the construction and ordered the correct materials.
Lack of supervision of cabinetmakers resulting in very poor workmanship which was evident at the early stages. Your inability to manage this contractor has resulted in all cabinetry not being fit for purpose and having to be replaced at great cost and significant delays in completion. To date you have been forced to obtain an independent report by an architect from Archicentre on the defects to pursue the contractor. For some strange reason you think it is our client's responsibility to address your obligations.
Delays in the project have added additional cost to temporary fencing, on site toilet, parking fees and all other time related project cost.
The Caesar Stone bench tops and fireplace surrounds have been installed out of level in all cases no further payments will be made until this is corrected.
The project duration has now reached 306 days as of 19th of June 2013 (cf 260 days in contract) and is now 46 days over schedule. Our client's holding costs are in line with the liquidated damages amount allowed for in the contract, $2,483 per week, and our client is entitled to recover these costs.
The project is heading toward a $300,000 cost overrun which is in part covered by additional works approved by our client but the significant part is attributable to you as the builder and your inability to discharge your obligations under the contract.
As the builder you have obligations under the contract to ensure that work is carried out to an acceptable standard and all works and materials are fit for purpose. You have not made any attempt to recover costs from subcontractors that have carried out unacceptable works and have subsequently been dismissed from the project. It appears that you are expecting our client to simply foot the expense of pursuing legal avenues to recover costs or address such contractors through VCAT. As the contract stands this is your responsibility as the Builder to pursue these contractors at your cost and additional project costs incurred to remedy defects will be recovered from you.
Indeed your conduct has caused our client such a significant loss of time to cover for your inadequacies that he has lost an estimated $60,000 in personal income.

[84]

The contractor first engaged to supply and install the cabinetry was Mr Ibrahim trading as "IBO Cabinets". The cabinetry works were confirmed in a quotation prepared by Mr Ibrahim and forwarded to the builder on 20 September 2012 ("the IBO quotation"). The IBO quotation specified a total price of $53,000 plus GST, of which $25,000 was to be paid as a deposit. On or around 28 September 2012, before any of the cabinetry works had commenced, Gaycel Pty Ltd made direct payment to "IBO Cabinets" of the $25,000 deposit.
At the time of the IBO quotation, Mr Ergun Gulcan had for several months worked with Mr Ibrahim on several cabinetry jobs, including the Essendon cabinetry job.
Mr Gulcan says that he and Mr Ibrahim had, from around the beginning of 2013, formed a partnership using the trading name "Winlife Cabinets" under which they intended to obtain cabinetry works contracts. The partnership registered an Australian Business Number ("ABN") on 1 January 2013, however the name "Winlife Cabinets" only first became a registered business name on 23 August 2013.
In mid April 2013, at which time IBO Cabinets had commenced the fabrication of cabinets for the St Kilda units, Mr Ibrahim was facing financial difficulties and he was locked out of his rented factory premises in Derrimut. As a consequence, Mr Ibrahim was unable to complete the cabinetry works for the St Kilda units.
A proposal was put to Mr Eski and Mr Yucel that the St Kilda cabinetry job be taken over by Winlife. The proposal was put verbally by Mr Ekrem Gulcan, a nephew of Mr Ergun Gulcan. Mr Ekrem Gulcan was, at that time, acting in a managerial capacity for Winlife. Ekrem Gulcan says, and it is not disputed, that the proposal was put to Mr Eski and Mr Yucel at a meeting in a cafe on around 17 or 18 April 2013. The proposal was accepted on the understanding that the $25,000 deposit already paid to IBO Cabinets would stand as the deposit for the contract with Winlife.
In late April and May 2013, Winlife installed cabinetry in the St Kilda units. The Winlife personnel engaged on the project included Mr Ergun Gulcan, Mr Ertugral Gulcan, Mr Ekrem Gulcan and Mr Ibrahim. It is not disputed that the scope of the cabinetry works became, by agreement with builder and the owners, more extensive than the scope of works provided for in the original IBO quotation.
Winlife's invoices for the works, totalling $86,999, were addressed to Gaycel Pty Ltd. The invoices include an ABN which, on the face of the invoices, appears to be Winlife's ABN. The ABN is in fact the abovementioned ABN of the partnership of Mr Gulcan and Mr Ibrahim.
The builder says that IBO Cabinets, and subsequently Winlife, were engaged directly by the owners. The owners, through Mr Yucel, say that IBO Cabinets, and subsequently Winlife, were subcontractors engaged by the builder. I agree with Mr Yucel.
As noted earlier, the [altered] Odicho cost estimate document was annexed to, and formed part of, the building contract documentation. That document itemises joinery/cabinetry works which were ultimately carried out by Winlife. Bearing in mind also that the building contract price estimate inserted into the building contract by Mr Eski was founded on Mr Odicho's [altered] direct costs estimate, it is clear in my view that, from the outset, the scope of works under the building contract included the joinery/cabinetry works. From the outset, contractual responsibility for the joinery/cabinetry works lay with the builder.
While the owners, through Mr Yucel, played a part in the selection of Winlife to replace IBO Cabinets, and while Mr Yucel was involved in the decision to terminate Winlife's contract, in my view the builder's contractual responsibility for the cabinetry/joinery works did not change.
The fact that Winlife's invoices were addressed to, and paid directly by, Gaycel Pty Ltd does not amount to a shifting of contractual responsibility. As noted earlier, Mr Eski and Mr Yucel agreed that all sub-contractor invoices were to be forwarded to, and paid directly by, the owners.
In calculating its builder's fee, 16% of "direct costs", the builder has included the cabinetry works as part of the direct costs.
On all the evidence, I am satisfied that the builder, and not the owners, contracted first with Mr Ibrahim trading as IBO Cabinets, and later with Winlife, for the supply and installation of the cabinetry to the St Kilda units.

[85]

Mr Ibrahim says that he and Mr Ergun Gulcan were partners in the business trading as "Winlife Cabinets".
Mr Ekrem Gulcan, nephew of Ergun Gulcan, has experience in financial and business affairs. He says that he had, for a short while, an interest in the Winlife business, however the nature of the interest is vague and Ekrem confirms that his interest was never documented or formalised in a legal sense.
Mr Ergun Gulcan says that he operated under the name "Winlife Cabinets", and while he agrees that his nephew Ekrem and Mr Ibrahim had an interest in the Winlife business, he is unclear as to the nature of their interests and unable to say whether their respective interests amount to "ownership" in a legal sense.
The registration of the business name "Winlife Cabinets" sheds little light on the issue because it first became a registered business name, held by Mr Ergun Gulcan alone, on 23 August 2013.
On all the evidence, I find that "Winlife Cabinets" was, at all relevant times concerning the issues in this proceeding, the unregistered trading name under which the partnership of Mr Ergun Gulcan and Mr Ibrahim operated. I reach this finding having particular regard to the tax invoices issued by Winlife for the supply and installation of cabinetry to the St Kilda units. As noted above, the invoices cite the ABN belonging to the partnership of Mr Ergun Gulcan and Mr Ibrahim.
Having heard evidence from Ekrem Gulcan and Ergun Gulcan, I am satisfied that Ekrem's role was limited to assisting his uncle Ergun by providing managerial assistance to Winlife in respect of the cabinetry contract for the St Kilda units, and providing some of his own labour for the installation of the cabinetry. There is insufficient evidence for me to determine how Ekrem was remunerated for such assistance. I am not satisfied, on the evidence, that Ekrem has ever been a "proprietor" of the Winlife business.
For the above reasons, I am satisfied that Mr Ergun Gulcan, as one of the partners trading under the unregistered name "Winlife Cabinets", has standing to bring the proceeding for monies allegedly owed to Winlife.
Having found that the builder, and not the owners, contracted with Winlife, I am satisfied that if Winlife is owed any money in respect of the St Kilda cabinetry contract, the money is owed by the builder.

[101]

I heard evidence from three expert witnesses, Mr Mitchell, Mr Simpson and Mr Beck. Each of them also produced written reports.
Only Mr Mitchell had the benefit of inspecting the full extent of the cabinetry installed by Winlife. At his inspection on 27 June 2013, Mr Mitchell took a large number of photographs of the cabinetry in each of the 8 units. In around late July 2013, the owners arranged for the cabinetry to be rectified and completed. A number of tradespersons were engaged by the owners for these works, including Djuric Nominees Pty Ltd trading as "VRBAS Cabinet Makers" ("VRBAS"). The rectifications included replacing much of the cabinetry, particularly in the kitchens of the 8 units.
By the time Mr Simpson and Mr Beck were engaged to inspect the premises in 2014, the rectification / replacement works were completed. While they were able to inspect such of the Winlife works which had not been replaced, their assessments as to the alleged defects in the cabinetry installed by Winlife are founded primarily on their inspection of the photographs taken by Mr Mitchell on 27 June 2013.
Much of the concurrent evidence of Mr Mitchell, Mr Simpson and Mr Beck was spent examining and discussing Mr Mitchell's numerous photos of the alleged defective cabinetry works in each of the 8 units.
The photos depict numerous instances, across all 8 units, of defects including the following:
- - rough saw cuts to cabinetry panels;
- - small chips to laminated panels and doors;
- - cabinetry installed out of plumb/out of level;
- - unsightly filling of gaps, particularly where cabinetry abuts out of plumb walls;
- - misaligned cupboard doors/uneven door margins;
- - panels cut short / over cuts leaving unsightly gaps;
- - excessive/unnecessary unfilled screw and nail holes;
- - sloppy use of a button sized cover plates over screw heads;
- - sloppy fitting of sliding the wardrobe door tracks; and
- - out of level bench tops.
Mr Mitchell acknowledges the challenge in achieving a satisfactory finish when one is installing new cabinetry in old buildings where some walls are out of plumb, as was the case here. He says, however, that the result achieved by Winlife was very poor.
Mr Mitchell acknowledges that many of the defects depicted in his photographs are, when taken in isolation, minor items which might ordinarily be rectified in the "finishing" stage. However, he says that the defects cannot be considered in isolation. He says the defects covered almost every aspect of the cabinetry and were so numerous that piecemeal rectification would not achieve a satisfactory finish. He says it was necessary to replace much of the cabinetry to achieve a satisfactory finish.
Mr Beck does not accept that all of the items depicted in Mr Mitchell's photographs constitute defective works requiring rectification. He says that some of the items are so minor, or in such hidden places such as the insides of cupboards, that rectification is not warranted.
Mr Beck does, however, agree that many of the items depicted in Mr Mitchell's photographs depict cabinetry work that requires rectification. The items are plain enough to see, such as misaligned cupboard doors, unsightly gap finishing, over cuts and excessive nail/screw holes. Unlike Mr Mitchell, however, Mr Beck says that the vast majority of defects were not out of the ordinary, and that they could have been rectified by Winlife in the ordinary course of finishing off the cabinetry work. Misaligned cupboard doors, for example, would ordinarily be aligned in the finishing off stage by adjusting the adjustable hinges. Mr Beck does not agree that wholesale replacement of the cabinetry was required.
Mr Simpson's opinion falls somewhere between Mr Mitchell and Mr Beck. While he agrees with Mr Beck that a number of the items depicted in the photographs are too minor to be considered "defects", and while he agrees that some of the alleged defects are simply items requiring "adjustment", he also considers that the prevalence of the defective items throughout all the cabinetry adds up to generally unacceptable workmanship.
Having heard the evidence from the experts, and having viewed the photographs, and allowing for the fact that Winlife had not fully completed the cabinetry installation, I am satisfied that the cabinetry installed by Winlife was so riddled with defects that it was necessary, in order to bring the cabinetry to a satisfactory standard finish, to remove and replace much of the cabinetry, as the owners ultimately did. I do not accept that the majority of the defects were matters that would ordinarily be addressed in the "finishing" stage of the works. In my view, the cabinetry was substantially defective, not merely unfinished.
The Winlife contract with the builder was a contract for works and materials. The contract carried implied terms that Winlife would exercise reasonable care in carrying out the works and that the materials would be reasonably fit for purpose. These terms are implied by law. They go to the essence of the contract. If the terms are not met, the benefit the builder is entitled to expect under the contract would be rendered worthless or seriously undermined. In this sense, the terms are essential or "fundamental" terms of the contract.
Breach of a fundamental term raises an entitlement in the hands of the party who has, by the breach, been substantially deprived of the intended benefit of the contract to terminate the contract.
Having regard to the poor quality of the cabinetry as discussed above, I find that Winlife breached the implied fundamental terms of the contract, and the builder was entitled to terminate the contract, as it did.

[107]

It is clear from Mr Eski's evidence that, after the Winlife cabinetry contract was terminated, the builder refused to bear the cost of rectifying the defective cabinetry work. The builder was aware that rectification of the defective cabinetry would involve significant cost, with much of the cabinetry to be replaced. Mr Eski had, after the termination of the Winlife contract, began seeking quotations from cabinetmakers. The builder was prepared to engage a replacement cabinetry sub-contractor, but only at the owners' cost.
As I have found above, the cabinetry works fell within the builder's scope of works under the building contract.
On 1 July 2013, the builder forwarded to the owners its invoice for outstanding "builders fee" in the sum of $129,200.50. Mr Eski had calculated the invoice on the basis of the total of all "direct costs" as advised to him by Mr Yucel. Mr Eski made no deduction in respect of the cabinetry works. That is, in calculating the builder's fee, the "direct cost" of the cabinetry works was included. On 12 July 2013, the builder gave notice of its intention to terminate the building contract unless the owners paid the invoice in full.
In my view it is not credible for builder to assert, on the one hand, that the owners, not the builder, engaged Winlife, and then on the other hand to calculate its builder's fee as a percentage of the "direct cost" of works including the cabinetry works.
Upon the assertion that the cabinetry installed by Winlife was not "fit for purpose", the builder terminated Winlife's cabinetry contract. As the cabinetry was within the builder's scope of contract works, cabinetry not "fit for purpose" constitutes building works which do not meet the section 8 warranties.
In my view, the builder was obliged to bear the cost of rectifying the defective cabinetry because the cabinetry fell within the builder's scope of works under the building contract. By refusing to do so, the builder was refusing to comply with its contractual obligation in respect of the section 8 warranties. In my view the builder, by such refusal, evinced an intention to not be bound by the contract. That is, the builder "repudiated" the building contract and the owners were entitled to "accept" such repudiation and bring the contract to an end.
I find that, by their letter dated 16 July 2013, the owners exercised their entitlement to "accept" the builders' repudiation of the contract and bring the contract to an end. It does not matter, in my view, that the letter references numerous other grounds (numerous other alleged breaches of the building contract on the part of the builder) that may not have been sustainable. In my view, the owners were entitled to bring the contract to an end by reason of the builder's repudiatory conduct as discussed above, and the owners, by their letter dated 16 July 2013, unequivocally elected to exercise that entitlement.
For the above reasons, I find that the owners validly terminated the building contract on 16 July 2013.

[125]

The building contract provides for liquidated damages for delay payable by, or to be allowed by, the builder at a weekly rate of $2,483 for each week after the due completion date until the building works are actually completed or until the buildings are occupied, whichever is the earlier date. The contract also provides that in the event the contract is terminated, the liquidated damages "cease to accrue as of the date of termination."[3]
The parties agree that the due date for completion of the works under the contract, assuming no extensions of time, was on or about 2 May 2013.
Certificates of Occupancy for the 8 units were issued on 20 November 2013.
As I understand it, the owners claim $69,524 as delay damages, calculated as $2483 per week for the 28 week period from the due date for completion of works, 2 May 2013, until the issue of the certificates of occupancy, 20 November 2013.
In the owners' Amended Counterclaim dated 19 September 2014, this head of damage was characterised as liquidated damages payable pursuant to the contract.
In the owners' updated Particulars of Loss and Damage filed during the course of the hearing on 23 December 2014, this head of damage was characterised as "liquidated damages alternatively damages at common law for delay". The change in characterisation was the result of the owners' concession, made during the hearing, that their contractual right to liquidated damages could not extend beyond the date they terminated the contract, 16 July 2013.
As I understand it, then, the owners' delay damages claim is now made up of :
1. $26,071.50 as liquidated damages pursuant to the contract, calculated as $2483 per week for the period 3 May 2013 (the day following the due date for completion) to 16 July 2013 (the date the owners terminated the contract), a period of 10.5 weeks; and
2. common law damages, at $2483 per week, for the period 17 July 2013 to the date of the issue of occupancy permits, 20 November 2013.
The building contract allows for the extension of the due date for completion of works when it is fair and reasonable, subject however to the builder providing written notice to the owner of the cause and expected length of the extension of time.
The builder may well have had valid reason to claim extensions of time, particularly having regard to a number of the variations to works carried out at the request of the owners. However, prior to the termination of the contract, the builder made no written claims for extension of the completion date. Accordingly, I am satisfied that the due date for completion of the works under the building contract was not extended beyond 2 May 2013. Accordingly, I am satisfied that under the terms of the building contract, the owners are entitled to the liquidated damages for delay in the sum of $26,071.50.
The nature of the delay damages at common law claimed by the owners, over and above the contractual liquidated damages for delay, is unclear. In the owners' updated Particulars of Loss and Damage filed on 23 December 2014, the common law component of delay damages is characterised as "interest cost on borrowings".
In closing written submissions, the common law delay damages are characterised as lost rent:

[129]

During the course of the hearing, the owners sought to bring a further new claim for damages for the builder's alleged overcharging for its own workers/employees.
The building contract, at item 11.2 in the appendix in the contract, sets out the various costs and expenses which may be included in the "direct costs" incurred by the builder. One of the expenses included is "where the builder... carries out any work directly, reasonable rates for carrying out that work".
Before the building works commenced, the builder and the owners agreed that the builder would charge its own employees/workers out at the rate of $500 per day, per worker.
The owners say that the builder exploited this agreement by taking an unreasonably long time to carry out works, particularly the first stage demolition works. The owners say also that $500 per day per worker is an unreasonable charge rate, and a rate well in excess of the actual cost incurred by the builder.
Invoices produced by the builder indicate that the total sum paid by the owners for the "direct cost" of the builders own workers was $124,960.
During the hearing, at the request of the owners, the builder produced some of its business records. On the basis of those records, incomplete as they were, the owners estimate that they paid the builder approximately $86,124 more than the actual cost to the builder of its own workers engaged in the building works.
The builder objected to this new claim being raised after the commencement of the hearing. The owners say that they ought to be permitted to bring the claim because they were only first able to identify and calculate the claim upon the production of the builder's business records during the course of the hearing.
In my view the claim should not be allowed. I do not accept that the owner was unable to identify this claim well prior to the commencement of the hearing. There is no reason why the owners could not have raised this claim early in the proceeding and sought discovery of relevant documents. To allow the claim so late in the proceeding, without notice and without full discovery of all relevant documentation would, in my view, raise and unfair prejudice against the builder.
In any event, even if I allowed the claim to be brought, I would dismiss it because the charge rate for the builder's workers was the rate agreed to by the owners and the builder. In my view, it is not open to the owners to now, in hindsight, seek to amend that agreement or set it aside on the basis that the agreed rate was not reasonable. Further, as discussed above, Mr Yucel discussed his concerns with Mr Eski when Mr Eski returned from his honeymoon in January 2013. The outcome of that discussion was an agreement whereby the builder agreed to remove his workers from site once the frame rectifications were completed, and the builder also agreed to discount its charges by $10,000. Again, it is not open to the owners to now, in hindsight, seek to change the prior agreement with the builder.

[132]

Mr Eski and Mr Yucel each gave evidence as to the nature and scope of variations to the contract works. Mr Mitchell and Mr Simpson also gave concurrent expert evidence as to the nature and scope of the variations and their opinion as to a reasonable allowance, whether a "plus" or "minus", in respect of such variations. In my view, much of this evidence is irrelevant having regard to the "cost plus" nature of the building contract.
For example, a claim was made in respect of the exterior render works. The owners say that the building contract contemplated "patch and repair" render works whereas what was actually provided, and paid for, was a complete re-render of the exterior of building. The builder says that the owners requested and approved the render works actually carried out.
I heard evidence from Mr Mitchell and Mr Simpson as to what extent the render works carried out constituted variation "extra" works. That is, to what extent the render works differed from the works provided for in the building contract documentation. Mr Mitchell and Mr Simpson also gave their opinion as to the reasonable cost of render works. The point of the evidence, from the owners' standpoint, was to show that the owners paid more than they should have for the render works, having regard to the contemplated works under the building contract.
In my view, the claim is misconstrued. It is founded on the previously discussed misconstrued premise that a "cost plus" contract can be treated as if it was a fixed price contract with a nominal fixed-price. The very nature of a "cost plus" contract is that it is not possible to calculate the cost of the proposed building works without carrying out some of the proposed works.
The renderer sub-contractor was paid directly by the owners for the render works actually carried out. I heard little, if any, evidence that the sum charged was excessive. The evidence was directed at whether the works carried out by the builder were variation works, and if they were, whether the builder was entitled to charge for the variation works, and if so how much.
The extent to which the render works actually carried out may have constituted "variations" to the original scope of works under the building contract is not the point.
The cost of the rendering may have exceeded the estimated "direct cost" of rendering works as at the time the contract was signed. But that does not create a claim in the hands of the owners.
On the evidence before me, I am satisfied that the owners have retained the benefit of the render works actually carried out, and there is insufficient evidence before me to find that the cost of such works, as paid directly to the sub-contractor by the owners, was excessive. For this reason, and because the building contract was a "cost plus" contract, I find that the owners have no entitlement to damages in respect of the alleged extra cost of the render works. My finding in this regard does not affect any claim the owners may have as to the cost of rectifying defective render works for which the builder holds contractual responsibility.
A similar analysis applies to other "variation" works raised by the owners:

[136]

extra eaves; 2. extra decking; 3. wardrobe mirror sliding doors; 4. cost of extra tiling throughout the units; 5. extra electrical works including LED lights, data and Internet points; and 6. internal doors design change.
The owners have retained the benefit of all of the above works. They are not works which the builder has carried out under a frolic of its own. They are works requested by the owners or alternatively works carried out with the knowledge and approval of the owners. It is irrelevant whether some of the works, or parts of some of the works, constitute variation works under the building contract. The works have been done, the subcontractors have been paid directly by the owners and the owners have retained the benefit of the works. The owners are not entitled to compensatory damages in respect of the cost of such works.
A similar analysis applies to the charges made by the builder in respect of demolition works and wall framing works. I heard evidence from Mr Eski, Mr Yucel and the experts Mr Mitchell and Mr Simpson in relation to these works.
The builder says that, during the early demolition stage works, Mr Yucel expressed concern as to the structural integrity of a number of walls on the first level units. There is no dispute that the builder demolished extra sections of wall, 22 extra sections in all, over and above the sections of wall marked for demolition in the original construction drawings. There is no dispute that the builder constructed new timber stud walls in place of the removed walls. There is no dispute that the extra works included extra "propping" of existing works while the demolition and replacement of walls took place.
The owners challenge the extent to which the builder was entitled to charge for these "extra" works. Much of the evidence on the issue was directed at whether the original construction drawings could be construed as including some, if not all, of the extra works. The experts also gave evidence as to the reasonable cost of such extra works.
Again, in my view it is irrelevant whether such works constituted variation works under the building contract. The works were carried out at Mr Yucel's direction and/or with Mr Yucel's knowledge and approval. The owners have retained the benefit of those works. The builder was paid for the works at the agreed "direct cost" charge rate for its workers, $500 per day per worker. Whatever Mr Mitchell or Mr Simpson might consider to be a reasonable charge is, in my view, irrelevant in view of the agreed daily charge rate for the builder's workers. I do not accept, on the evidence before me, that the builder extorted the situation by taking longer than necessary to carry out the works. Having heard evidence from the experts, I am satisfied that the demolition works were tedious and painstaking, and the builder took appropriate measures in carrying out such works. I am not satisfied on the evidence before me that the owner is entitled to compensatory damages in respect of these "direct costs" paid to the builder at the agreed rate.

[137]

The plastering works carried out were more extensive than those contemplated at the time the contract was signed. As with the above listed variation works, the owners have no entitlement to the "extra" cost of plastering works merely because the works were more extensive than the original contract scope of works.
However, the owners are entitled to be compensated to the extent that the plastering works carried out by the builder's subcontractor were defective.
The builder's plaster work subcontractor was "Shield Plastering Services Pty Ltd" ("Shield"). The Shield contract price was $77,000. The price was increased by $5,500 for variation extra works in relation to plastering a suspended ceiling.
Mr Yucel was dissatisfied with the quality of some of the plastering works carried out by Shield. Shield asserted that the plastering works they carried out were in accordance with the scope of works under their contract with the builder, and that if the builder required a higher quality finish or extra plastering work, then the builder must pay extra.
Before Shield had completed its contract works, Shield and the builder fell into dispute as to whether Shield's works were in accordance with their contractual obligation, and whether Shield was entitled to extra payment for some of the works. The dispute was not resolved and Shield ceased works. At the time it ceased works, Shield had been paid $59,500, leaving an unpaid contract balance of $23,000.
A replacement plasterwork contractor, Piint.Com.Plaster Pty Ltd ("Piint") was engaged to complete the plastering works. The owners made direct payments to Piint totalling $26,715. The owners claim from the builder $3715, being the difference between the total sum paid to Piint and the un-paid contractual balance of the Shield sub contract ("$23,000"). It is claimed as the cost to rectify defective plastering works carried out by Shield.
Having examined Piint's invoices for the works it carried out, and having regard to a letter from Piint to the owners and the builder dated 18 March 2013 wherein Piint lists defects in the plaster works carried out by Shield, I am satisfied that Piint's works included significant rectification works, and the claim of $3,715 in respect of such rectification works is reasonable.
Accordingly I allow $3715 in respect of this item.

[139]

The owners claim $2,175.40 as the cost they say they incurred in rectifying timber windows. They say that the builder ordered windows with insufficient reveal size, and that the reveals had to be rectified (extended) on-site.
Mr Johnson confirmed in his evidence that the window reveals had to be extended on site.
Mr Eski concedes that the windows ordered by the builder were too narrow. However, he says that the windows ordered were standard size windows, and that windows of the correct width would have been non-standard size and, as a consequence, more expensive. Mr Eski says the extra cost to extend the undersized reveals was no more than the extra cost of the non-standard sized windows.
Mr Eski produced no documentary evidence to substantiate the alleged standard/non-standard sized windows and the cost differential between the two.
On all the evidence, I am satisfied that the owners incurred extra expense in rectifying incorrectly sized windows, and that it is reasonable that the builder bear the cost of the rectification works.
However, the evidence as to the cost of such rectification works is limited. The owners refer to two invoices of Jarah Construction, one dated 6 January 2013 and the other dated 10 January 2013. Each of the invoices itemise works carried out. I am satisfied that charges totalling $495 (not including GST) relate to the rectification of the windows. Those charges are for labour only. Although the invoice dated 6 January 2013 makes reference to materials obtained from Bowens at a cost of $4254.31, there is no indication as to what those materials were. Mr Johnson gave no evidence on this issue which might have assisted.
I am satisfied, however, that extra materials would have been required for the extension of the window reveals. In one of Mr Yucel's spreadsheets[6], the owners identify that the materials included the cost of timber at $427.09 and treated pine screws at $84.40. If the owners have produced invoices in respect of such materials cost, I am unable to locate them. However, having regard to the nature of the rectification works, I am satisfied that the claimed material cost for timber is reasonable. I consider the claimed cost for screws to be excessive. I will allow $450 as the reasonable cost for timber and screws. After also allowing $544.50 (including GST) for labour, I allow a total of $994.50 for this item of rectification works.

[145]

The building works included installing French doors opening to outside areas of the units. The builder installed the French doors, however the hinges were found to be inadequate and the doors were removed and reinstalled with appropriate hinges. The hinges first installed allowed the doors to open approximately 90 degrees, whereas the replacement hinges allow the doors to be opened 180 degrees.
The owners claim the cost incurred to rectify the doors as follows:
- - $2174 labour charge (80.5 hours at $27 per hour) for carpenter Mr Riki Fielding
- - $1815 labour charge (60.5 hours at $30 per hour) for Jarah Construction (Mr Aaron Johnson)
- - $1828.40 materials charge, including $1120 for the replacement "parliament hinges" and $578 for timber.
Mr Eski says that the original construction plans allowed for doors opening 90 degrees, and that the doors had to be removed and reinstalled with replacement hinges to accommodate Mr Yucel's request that the functioning of the doors be altered so that they open 180 degrees.
Having heard the evidence of Mr Eski and Mr Yucel, I am satisfied that the first hinges installed by the builder were inadequate having regard to the weight and size of the doors. That is, the hinges had to be replaced regardless of the degree to which they allowed the doors to open. I am also satisfied that, whatever the drawings indicate (and they are equivocal), before installing the doors the builder was aware of Mr Yucel's expectation that the doors open 180 degrees.
On the evidence before me, I find that the initial installation of the doors was unsatisfactory. To rectify the unsatisfactory work, it was necessary to remove and reinstall the doors with appropriate hinges.
I am satisfied that the builder should bear the cost of rectifying the defective installation of the doors. However, the owners are not entitled to all the costs they seek.
In my view, the owners are not entitled to the cost of materials associated with the reinstallation of the doors. Had the doors been installed correctly in the first place, the owners would still have incurred the cost of the special "parliament hinges" and the extra timber and the other materials used in reinstalling the doors. The owners might have been entitled to the cost of wasted" materials, such as the cost of the original unsuitable hinges. However, there being no evidence as to the cost of any wasted materials, I make no allowance for materials cost.
As to the labour charge, the owners produced invoices of Jarah Construction and diary notes of Mr Fielding.
The Jarah Construction invoices briefly itemise the works for which the charges have been made. Having examined the invoices, I am satisfied that Jarah Construction charged 60 hours at $30 per hour (inclusive of GST), a total of $1800, for rectification works to the French doors in the period 9 to 15 May 2013. I allow this sum.
The diary notes of Mr Fielding itemise labour hours, at the rate of $27 per hour, for works carried out in April and May 2013. On Mr Yucel's evidence, I accept that Mr Fielding was engaged by the owners to carry out various carpentry works, including rectification works to the French doors. Having examined the diary notes, I am satisfied that Mr Fielding charged approximately 31 hours, at $27 per hour, a total of $837, in respect of rectification works to the French doors. I allow $837.
For the above reasons, I allow a total of $2,637 as costs incurred by the owners in rectifying the defective installation of the French doors.

[156]

The owners say that the bamboo flooring installed in each of the 8 units is defective and needs to be entirely replaced. They rely on the expert evidence of Mr Mitchell, who also produced a written report. Mr Mitchell estimates the cost to replace the flooring is $100,811.10. His estimate includes an allowance for the cost of alternative accommodation for the residents of the units for a period of 10 days while the floors are being replaced. The owners claim the sum of Mr Mitchell's total estimate, $100,811.10.
The builder relies on the expert evidence of Mr Simpson. Mr Simpson also produced a report dated 9 October 2014 ("Mr Simpson's report"). In his report, Mr Simpson estimates the cost to rectify the flooring, if it is to be rectified, at $28,846.35. The estimate includes allowance of three days alternative accommodation for the residents of five of the units. The estimate makes no allowance in respect of unit number 5 because it was unavailable for inspection on the day Mr Simpson inspected the other units.
During the course of the hearing, I attended a view of each of the 8 units. Mr Mitchell and Mr Simpson, amongst others, accompanied me on that view.
Having inspected the floors, I am find that the bamboo flooring in all 8 units is, to varying degrees, defective. In my view, the extent of the defective works in each of the units, save for unit 5 which was not inspected by Mr Simpson prior to the preparation of his report, is accurately described in Mr Simpson's report.
In general terms, the bamboo flooring in the downstairs units (units 1, 2, 3 and 4) is, in some areas, "cupping", particularly on the northern side of the units. The flooring in the upstairs units (units 5, 6, 7 and 8) is not cupping, but it has moved in some areas and one or several gaps between the boards is noticeable. I need not detail all of my observations because, as noted, I am satisfied that the defects are accurately described in Mr Simpson's report.
I am satisfied that the defects in the flooring amount to a breach of the section 8 warranties as to works being carried out in a proper and workmanlike manner and with due care and skill. I am satisfied that the builder should bear the reasonable cost of rectifying the defective flooring.
Having viewed the floors, and having heard evidence from Mr Mitchell and Mr Simpson, I do not accept that the floors need to be entirely replaced. In my view the rectification works recommended in Mr Simpson's report are adequate and reasonable. In general terms the rectifications will require replacement of sections of the bamboo flooring in each of the downstairs units, and replacement of selected boards in the upstairs units.
In my view the rectification works required for unit 5 (not included in Mr Simpson's report) will be similar to the rectification works Mr Simpson has prescribed for unit 6.
I am also satisfied that Mr Simpson's cost estimates are reasonable. They include an allowance for builder's profit margin and contingencies of 35%. In my view that is a reasonable allowance for rectification works of this nature.
I am also satisfied that Mr Simpson's allowance for alternative accommodation is reasonable. I accept that the residents of the ground floor units will need to move out for a few days while the sections of flooring are replaced. I also accept that the rectification work to unit 7 upstairs may also require the resident to move out for a brief period. Mr Simpson allows alternative accommodation at $150 per day for 3 days for 5 units. I consider that allowance to be reasonable.
Mr Simpson's cost estimate for the rectification works to unit 6 is $1722.60. In my view, a similar allowance for unit 5 is reasonable. After making this allowance for unit 5, I find that the reasonable cost to rectify the defective bamboo flooring in all of the units is $30,568.95.

[166]

For the reasons discussed above, Mr Gulcan's claims against the owners and the builder in respect of monies allegedly owed in respect of the St Kilda units cabinetry job must fail.
Mr Gulcan also brings a claim against the builder (Heski Carpenters Pty Ltd and Mr Eski) for $14,993 as monies owed for the Essendon cabinetry job.
Mr Eski says that the Essendon cabinetry job was a works contract between his company Heski Carpenters Pty Ltd and Mr Ibrahim trading as IBO Cabinets. Mr Eski concedes that the works under that contract were completed in December 2012, and that a balance of $10,793 is owed to Mr Ibrahim.
I accept the uncontested evidence of Mr Ibrahim that, at all relevant times, he alone carried on business under the trading name "IBO Cabinets".
Mr Gulcan produced two invoices in respect of the Essendon cabinetry job. Each of the invoices is addressed to "Heski Carpenters". One of the invoices is dated 7 December 2012 and is for a sum of $7758. The other invoice is dated 17 December 2012 and is for a sum of $15,235. The invoices are clearly invoices issued by IBO Cabinets. The name "IBO Cabinets" and the ABN 25978523403 appear on the top of each invoice. That ABN is registered to Mr Ibrahim as a sole trader.
When giving evidence, Mr Gulcan amended his witness statement filed in the proceeding such that paragraph 8 in the witness statement was amended to read "IBO Cabinets completed all works under the Second Agreement at Essendon [the Essendon cabinetry job].
I accept Mr Gulcan's evidence that he worked with Mr Ibrahim on the Essendon cabinetry job. However, the evidence I have referred to above leads overwhelmingly to the conclusion that the Essendon cabinetry job was a contract between the builder and Mr Ibrahim trading as IPO Cabinets. Accordingly, I find that any monies owed by the builder in respect of the Essendon cabinetry job are owed to Mr Ibrahim, not Mr Gulcan.
For the above reasons, Mr Gulcan's claim against the builder in respect of the Essendon cabinetry fails.

At a glance

Court

Decision date

Before

Source

Judgment (171 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (1)

Heski Carpenters Pty Ltd v Gaycel Pty Ltd (Building and Property) [2016] VCAT 688 (5 May 2016)