Hughes v Midson

NCAT Consumer and Commercial|2023-07-20

REASONS FOR DECISION

Mr Hughes is a builder (the builder). Ms Midson is the owner (the homeowner) of a residential home located at ** Lawson Crescent, Orange (the Property). On 22 December 2022 the builder and the homeowner entered into a written contract for the builder to undertake residential building work at the Property. Disputes have arisen between the parties and these reasons for decision deal with two applications before the Tribunal concerning those disputes.
In application HB 22/29183 the builder seeks a money order against the homeowner for payments alleged to be due under the home building contract.
In application HB 22/30007 the homeowner seeks money orders by way of compensation for alleged defective work performed by the builder.
The applications were heard together on 20 July 2023. During the hearing the builder represented himself and Mr Evans, solicitor, represented the homeowner.
At the conclusion of the hearing directions were made for the filing of written submissions.

Evidence

The parties prepared and tendered a Joint Tender Book, which was marked exhibit 1. Exhibit 1 contained, amongst other documents: 1. an affidavit of the builder dated 13 April 2022; 2. an affidavit of the homeowner dated 15 July 2022; 3. a statement by the builder dated 21 December 2022; 4. an expert report by Westinspect dated 2 August 2022; 5. an expert report by Barnson dated 1 January 2023; 6. an expert report by Auspro Building Services dated 10 March 2023.

Facts

The Tribunal makes the following findings of fact.
Since about July 2020 the homeowner has been the registered proprietor of the Property.
The homeowner wished to renovate and make additions to the Property so that her parents, Beverely Midson (Mrs Midson) and Gregory Midson (Mr Midson) could reside at the Property. Mr Midson requires the use of a wheelchair so the renovations/additions needed to be wheelchair accessible.
To undertake the renovations/additions the homeowner required plans and drawings and a builder.
The builder and the homeowner and her family have known each other for at least a few years and by September 2020 it appears that the parties contemplated he would be engaged as the builder to undertake the renovations/additions.
On about 1 September 2020 Mr McKinnon of McKinnon Design, building designers, undertook an initial visit to the Property.
On 8 September 2020 McKinnon Design sent an email to Mrs and Mr Midson attaching a quotation and terms and conditions for the provision of plans and drawings for the proposed renovations/additions (Ex 1, p. 252). That email records that Mrs and Mr Midson were to be McKinnon Design's clients, whereas the plans would record that the owner was their daughter, the homeowner. The builder was also copied into this communication.
In December 2020 the builder, the homeowner and her parents met at the Property (Ex 1, p. 24, [3]).
The builder's evidence is that a hand drawn sketch was produced at this meeting by the homeowner or her mother (Ex 1, p. 24, [3]). The builder says the homeowner drew the sketch (Ex 1, p. 24, [3]).
The hand drawn sketch depicts in very bare terms the areas which are to be added to the existing dwelling (Ex 1, p. 29). The diagonally crossed spaces on that sketch depict the existing dwelling and the other areas depict the new spaces. The detail on this sketch is minimal.
The homeowner's evidence is that on 22 December 2022 there was a meeting with the builder, Mr McKinnon, her parents and herself (Ex 1, p. 97, [9]).
The homeowner's evidence is that at the meeting the contends of a hand drawn sketch were discussed but she does not recall who drew it. The homeowner's evidence does not exclude the possibility that the hand drawn sketch was made earlier than the 22 December 2020 meeting.
On 22 December 2020 the builder and the homeowner signed a written contract (the Contract).
Clause 1 of the Contract is headed "Contract documents". It provides as follows: This contract consists of owner, contractor, site and price details, the Clauses 1 through to 30 (hereafter referred to as 'the contract conditions') and any additional conditions agreed to by the owner and contractor which must be in writing, together with the section for signatories and contract date appearing after the contract conditions. All plans and specifications for work to be done under this contract, including any variations to those plans and specifications are taken to form part of this contract. Any agreement to vary this contract, or to vary the plans and specifications for work to be done under this contract, must be in writing signed by each party to this contract. The documents listed below also form part of this contract and must be attached:
Clause 1 then contains three tables. The headings on the first table are "Specifications prepared by", "No. of pages" and "Date". In relation to "Specifications prepared by" the words "McKinnon design" are recorded in handwriting. Under "No. of pages" the numeral "2" is recorded in handwriting. Under "Date" there is handwriting recording "22/12/20". There were in fact no specification prepared by McKinnon Design that were dated 22 December 2022 and no specifications were attached to the Contract. Further, as at 22 December 2022 there was no document prepared by McKinnon Design that contained or purported to contain specifications for the renovations or additions to the Property. It follows that the reference to a 2 page, "McKinnon design" document containing specifications in clause 1 of the Contract did not refer to an existing document to which the parties (objectively) intended to refer and the table in clause 1 did not incorporate any actual specifications.
The headings on the second table are "Plans prepared by", "No. of pages" and "Date". In relation to "Plans prepared by" the words "McKinnon design" are recorded in handwriting. Under "No. of pages" the numeral "3" is recorded in handwriting. Under "Date" there is handwriting recording "22/12/20". There were in fact no plans prepared by McKinnon design that were dated 22 December 2022 and no plans were attached to the Contract. Indeed, it is common ground that no formal plans had been given to the homeowner on or before 22 December 2020 (Ex 1, p. 235, [4]). Further, as at 22 December 2022 there was no document prepared by McKinnon Design that contained or purported to contain the plans for the renovations or additions to the Property. It follows that the reference to a 3 page, "McKinnon design" document containing plans in clause 1 of the Contract did not refer to an existing document to which the parties (objectively) intended to refer and the table in clause 1 did not incorporate any actual plans.
During cross examination the builder said that McKinnon Design plans had in fact been prepared on dates prior to 22 December 2020. At one point a date of June 2020 was identified by the builder. In contrast, in his affidavit in reply dated 21 December 2021 the builder deposed as follows (Ex 1, p. 235, [4]): The [homeowner] states in paragraph 10 of her affidavit that no formal plans had been given to her by 22 December 2020, which is the date the contract was signed. This is true…
I do not accept the builder's evidence that McKinnon Designs had prepared any plans prior to 22 December 2020. I do not accept the builder's evidence in this respect because McKinnon Designs dates the first iteration of their plans, described as drafts, at January 2021 (Ex 1, pp. 139 and 146) and I accept this evidence. The builder's evidence that plans were made prior to 22 December 2022 is also not corroborated by any plans or drawings that were produced at the hearing. I find the only 'plan' that had been prepared prior to signing of the Contract was the hand-drawn sketch.
The builder contended that "the plan which the initial contract price was based upon was the hand-drawn sketch by Bev Midson" (Ex 1, p. 235, [4]). However, even if the estimate of costs was based on the hand-drawn sketch, clause 1 of the Contract did not incorporate by reference that document.
The homebuilder's evidence was that she "did not know what documents are being referred to in clause 1 of the Contract" (Ex 1, p. 98, [15]).
Although the homeowner's evidence was to the effect that some of the handwritten information recorded on the Contract was completed in by the builder on 22 December 2020, it was not suggested that this occurred after she signed the document (Ex 1, p. 98, [14]-[15]).
Notwithstanding the above, neither party in the proceedings contended that the written contract was void for uncertainty.
It appears that the builder and homeowner rushed to sign the Contract in the expectation or intention that if a contract was signed prior to 31 December 2020 then the homeowner would be able to obtain a grant under the Federal Government's Home Builder's Grant. This may explain why the parties signed an agreement purporting to expressly incorporate specifications and plans that did not in fact exist. In fact, it ultimately transpired that the proposed building work at the Property did not qualify for the Home Builder's Grant.
I now turn to set out other important provisions of the Contract.
Clause 10 is headed "Provisional sums" and is in the following terms: The contract price includes the items of work set out in the provisional sums schedule for which the contractor cannot give a definite price. The provisional sums schedule set (sic) out the amount allowed for the cost of each item of work, including GST. The contractor warrants that the provisional sums allowed have been estimated with reasonable care and skill, and in light of information necessary and available at the date of this contract and taking into account such factors as a competent and experienced contractor should have taken into account in estimating the provisional sums. The contractor must also offer to the owner or the owner's representative the opportunity, with adequate written notice, to be present at the site during the performance of any work included in the provisional sums schedule in order to verify the actual cost of the work. The contractor does not have to delay the work if the owner is unable to attend at the time the work is to be performed. If the actual cost to the contractor is greater than the provisional sum allowed, the excess amount together with the contractor's margin of ________ % on the excess, to cover overheads, supervision and profit shall be added to the contract price, along with the additional GST. If the actual cost to the contractor is less than the provisional sum allowed, the contract price will be reduced by the difference between the provisional sum allowed and the actual cost. Any such addition or deduction will be taken into account in the next progress payment or as agreed between the parties. The contractor must provide a copy of any relevant invoice, receipt or other document evidencing the actual cost of the work included in the provisional sums schedule at the time payment is requested.
The space for insertion of the contractor's margin in clause 10 was left blank.
Clause 10 then sets out a table headed "Provisional sums schedule" which recorded the following information: Items of work Unit Dollar rate per unit Provisional sum (including GST) Deposit $15,200.00 Commencement $22,000.00 Floor completion $10,000.00 Lock up $25,000.00 Walls lined $20,000.00 Kitchenet $29,000.00 Completion $20,800.00 Total cost $152,000.00

Clause 12 is headed "Progress Payments" and provides as follows: The owner must pay the contract price by progress payments within 5 business days of the completion of the stages of the work nominated in the schedule of progress payments. The contractor must notify the owner in writing when a stage of the work has reached completion. A stage of work has reached completion when it has been finished in accordance with the contract documents and any variations agreed to and there are no omissions or defects that prevent that stage of the work from being reasonably capable of being used for its intended purpose. Any deposit paid is deducted from the first progress payment. Despite the preceding paragraph, if the owner's lending authority (if applicable) is to make all or any progress payments, then the contractor agrees to accept the usual payment terms (including the need for inspections and certifications required by the lending authority) in place of the requirements specified in the preceding paragraph. Schedule if progress payments (to be completed by the parties) Stages of Work Amount Commencement $37,200.00 (less deposit: $15,200) $22,000.00 Floor completion $29,000.00 Lock up $45,000.00 Completion Kit & bathroom $22,800.00 Completion $18,000.00

Payment of a progress payment is not to be regarded as acceptance by the owner that the work has been completed satisfactorily or in accordance with the contract documents.

Clause 13 is headed "Variations". It provides as follows: The work to be done or materials used under this contract may be varied: • at the request of the owner, or • at the request of the contractor. If the necessity for the variation is due to the fault of the contractor the owner will not be liable for any increase in the contract price, or • due to such other matters that could not reasonably be expected to be foreseen by an experienced, competent and skilled contractor for the completion of the work at the date of the contract, or • due to a requirement of a council or other statutory authority relating to the work, if at the date of this contract such requirement could not reasonably have been foreseen by the contractor. Procedure for variations Before commencing work on a variation, the contractor must provide to the owner a notice in writing containing a description of the work and the price (including separate disclosure of the GST and the component of the price attributable to any consequential increase in the cost of the building cover contract entered into by the contractor in respect of the work to be done under this contract). If not otherwise specified the price will be taken to include the contractor's margin for overheads, supervision and profit. The notice must then be signed and dated by both parties to constitute acceptance. If the time for completion will be delayed by the variation the contractor must include in the notice an estimate of the additional time required. Any extension of time must be dealt with in accordance with Clause 7. The requirement for variations to be in writing does not apply where, if the work were not to be done promptly there is likely to be a hazard to the health or safety of any person or to the public or to be damage to property and the work could not be done promptly if the variation had to be put in writing before commencing the work. Variations shall be subject to the overall conditions of this contract. Adjustment of contract price The contract price may be adjusted as a consequence of: (a) variations to work or materials agreed in accordance with this Clause13; and (b) any variation to the cost of the building cover contract entered into by the contractor in respect of the work to be done under this contract. The cost of deletions from the contract will be deducted from the contract price. The price of any variation specified in the notice signed and dated by both parties will be added to the contract price. The component of the increase to the contract price that is attributable to an increase in the cost of the associated building cover contract must be separately disclosed. Any adjustment to the contract price will be taken into account at the time of the next progress payment or paid as agreed by the parties
In January 2021 McKinnon Design produced the first set of plans and drawings, described as drafts (Ex 1, pp. 139 and 146).
The builder received a copy of these plans in January 2021. The builder says he provided a copy of the homeowner and to Mrs Midson (Ex 1, p. 236, [6]). An SMS text message exchange between the builder and Mrs Midson in January 2021 points to Mrs Midson having knowledge or awareness of the content of the plans, including an SMS text message from Mrs Midson recording that a wheelchair access ramp is placed "along the front verandah" and that Mrs Midson does not want it in that location (Ex 1, p. 258).
The homeowner's evidence as to receipt of the plans and drawings is somewhat curious. Her affidavit records: 18. Despite work stating on 31 March 2021, I did not see any completed plans by McKinnon Designs. 19. I allowed the works to proceed based on my relationship with the [the builder], being that of a close family friend. I trusted and assumed that the plaintiff would construct the works as we had discussed and agreed during the meeting on 22 December 2020. 20. Although I cannot rule it out, I do not recall ever having seen any of the design drawings by McKinnon Designs during the construction of the works. I only saw the plans attached to the email from Craig McKinnon to me dated 12 October 2021…
In February 2021 another set of plans was prepared by McKinnon Designs.
At the end of March 2021 the builder commenced work on the Property.
The builder claims that a number of variations were orally agreed after 22 December 2022. The builder's evidence in this respect is generally not very specific as to particular variations. A notable exception relates to the change from the January 2021 plans in the location of the ramp (see Ex 1, pp. 24-25, [5]).
The homeowner denies that she agreed to any variations. There is no dispute that the alleged variations were not agreed in writing. One of the central disputes is whether the variations were agreed, the scope of the work that comprises a variation (as distinct from work contemplated by the contract) and the costs attributable to the variations.
In relation to the ramp, the homeowner's evidence is that it was meant to be built on the eastern side of the Property, consistent with the hand drawn sketch (Ex 1, p. 99, [23]). However, the ramp was in fact built on the southern side. The variations in plans prepared by McKinnon Design reflect the changed design. The homeowner says that she "did not approve this alteration" (Ex 1, p. 99, [24]).
The homeowner's evidence in this respect is somewhat difficult to accept. The SMS text messages from her mother to the builder in January 2021 make clear that the location of the ramp as originally contemplated was not satisfactory from the homeowner's mother's point of view. The change in the location of the ramp is a stark matter which would have been readily noticed as the ramp was being built.
However, it is also clear that the contractual arrangements were such that the client of McKinnon Design was Mrs Midson whereas the client of the builder was the homeowner. Ultimately, the builder was in the position of being requested to build to plans prepared on behalf of the homeowner's mother and which the homeowner says she did not see prior to October 2021. Those plans and drawings contain changes which the homeowner says she did not approve. The builder's position was therefore difficult, although I also note that the builder could have protected himself by ensuring that the homeowner agreed to variations, including changed plans and designs, in writing.
On 22 September 2021 the builder issued a tax invoice for $18,000. The tax invoice recorded "This represents completion" (Ex 1, p. 161).
The parties did not provide a breakdown of the total amounts paid to the builder. The $18,000 recorded as the amount representing "the completion" (Ex 1, p. 161) suggests that the builder had otherwise been paid $134,000 ($152,000 less $18,000) and I infer that was the case. In drawing this inference, I also rely on the conversation at [26] of the homeowner's affidavit which suggests that the unpaid balance of the Contract price of $152,000 was $18,000 (Ex 1, pp. 99-100) and paragraph 12 of the Statement of Claim which implies that the unpaid amount other than claimed variations was $18,000 (Ex 1, p. 3).
On 26 September 2021 the builder issued another invoice for $33,420. The sum of $33,420 is net of a credit of $13,200 for "Payments received in cash" (Ex 1, pp. 152-153; copy at pp. 162-163). The introductory words to the 26 September 2021 invoice were as follows: This bill outlies all extra work outside the contract which was based on concept drawings, anything outside concept drawings is extra work and paid for as a variation
The variations include the following items (Ex 1, pp. 152-153): (i) Remodelling the kitchen ($6,500) (ii) Removing external door to sun-room, removing an external wall lining and related work ($4,200) (iii) Door to exit side of new extension to facilitate wheelchair access, extra support for roof ($3,200) (iv) Extra kitchen cupboards ($900) (v) Variation costs to decking due to change in materials ($7,800) (vi) Remove hot water system ($1,500) (vii) Four extra gas outlets ($1,500) (viii) Extra ramp to front of house ($7,600) (ix) Extra electrical works ($3,000) (x) Lay floating floor ($1,200)
Thereafter, during September and October 2021, there was correspondence between the parties as to incomplete work, defective work and outstanding claims.
On 12 October 2021 the builder issued a further invoice for the following items (Ex 1, p. 165): Changes to drawings on 4 separate occasions $1,800 Stairs to main verandah $2,100 Double doors to storeroom $2,800
The circumstances relating to the $13,200 recorded on the 26 September 2021 invoice and described as "Payments received in cash" have not been explained.
The builder did not adduce any tax invoices or receipts to substantiate the claimed variations. Moreover, and significantly, the builder did not produce any tax invoices or receipts to substantiate the actual costs referrable to the progress claims that had been paid by the builder. As will be explained below, the absence of evidence as to costs in circumstances where the Contract costs agreed are only provisional sums presents problems for the builder's claims.
On 27 September 2021 the builder's contractor licence expired (Ex 1, p. 167).
On 9 October 2021 the homeowner wrote to the builder advising that he was not to "come back onsite" because his contractor licence had expired (Ex 1, p. 155).
On 9 October 2021 the builder's licence was renewed (Ex 6).
Thereafter communications became strained.
On 20 December 2021 there was a serious leak in the bathroom ceiling. By 7 January 2022 "water was streaming through the light fitting" (Ex 1, p. 102, [47]).
On 7 January 2022 the builder commenced proceedings in the Local Court by filing a statement of claim. The builder's Local Court proceedings were subsequently transferred to the Tribunal.
On 25 January 2022 the builder's solicitors wrote to the homeowner's solicitors advising, in part, that because the builder had not been paid he would "not attend site to inspect any alleged defect or to form a view on the cause of any alleged defect or to consider whether to carry out an emergency fix" (Ex 1, p. 185A). The builder's affidavit in reply accepts that he refused to return to site and gives a number of reasons (Ex 1, pp. 246-247).
The builder seeks payment of the tax invoices issued 22 September 2021, 26 September 2021 and 12 October 2021.
The homeowner claimed that many elements of the work undertaken by the builder were either defective or incomplete and claimed a monetary remedy for breaches of the statutory warranties contained in s 18B of the HB Act. I will deal with these allegations made by the homeowner in detail below.

Jurisdiction

Section 48A of the HB Act defines a building claim as follows: building claim means a claim for - (a) the payment of a specified sum of money, or (b) the supply of specified services, or (c) relief from payment of a specified sum of money, or (d) the delivery, return or replacement of specified goods or goods of a specified description, or (e) a combination of two or more of the remedies referred to in paragraphs (a)-(d), that arises from a supply of building goods or services whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services, but does not include a claim that the regulations declare not to be a building claim.
The builder's claim is for "the payment of a specified sum of money". That claim arises from the supply of building goods or services to the homeowner. Consequently, it is a building claim within the meaning of section 48A of the HB Act and the Tribunal has jurisdiction under s 48K to hear and determine the matter.
Similarly, the homeowner's claim is for "the payment of a specified sum of money" in respect of alleged breaches the statutory warranties prescribed by s 18B of the HB Act. That claim arises from the supply of building goods or services. Consequently, it is a building claim within the meaning of section 48A of the HB Act and the Tribunal has jurisdiction under s 48K to hear and determine the matter.

Builder's Claim

The builder claims the sum of $58,120. That amount is comprised of $18,000 said to be owing under the Contract in respect of the original scope of the Contract and the balance is referrable to variations (less credits).
I will first consider the builder's claim for $18,000, which is the subject of the 22 September 2021 invoice.
The Contract was not a fixed price contract. The whole of the estimated contract price of $152,000 was agreed as a provisional sum and recorded in clause 10 as such.
Pursuant to clause 10, the builder was required to reduce the contract sum by the difference between the estimate of $152,000 and the builder's actual costs or, alternatively, was permitted to require payment in excess of $152,000 in the event that the actual costs, properly calculated, exceeded $152,000. The calculation process included a provision for a "contractor's margin" but, surprisingly, this was left blank in clause 10. In any event, in these proceedings the builder has not produced invoices and records to establish that his actual costs exceeded the amounts that he has in fact been paid. The builder also has not produced any other cogent evidence that establishes, on the balance of probabilities, the extent of the actual costs incurred by him. In the absence of such evidence the Tribunal cannot be satisfied that the builder's actual costs exceed what he has already been paid.
Moreover, the matters recorded in the preceding paragraph appear to have been well understood by the builder. In the builder's affidavit in reply he records, amongst other things (Ex 1, p. 235, [4]): This form of contract meant that if the works under the contract cost less than the allowances which I allowed in the provisional sums section, I would provide a discount to the [homeowner] for the difference between the provisional sum and the actual cost of doing the work, and visa (sic) versa if the cost was more than the allowance.
Notwithstanding the builder's understanding, as set out in the preceding paragraph, during the hearing the builder's case proceeded on the basis that the balance of the contract price of $18,000 was payable irrespective of the builder's actual costs. There was no evidence that established that the actual costs for the work undertaken exceeded the amounts that the builder had been paid up to that point even thought that was required because the parties had agreed the whole of the contract price was a provisional sum and, pursuant to clause 10, there was a requirement by which the contract price was to be reduced in the event the provisional sum exceeded the actual costs. The builder was required to prove his actual costs and to show that his actual costs meant that $18,000 was incurred and therefore owed.
I turn to consider the builder's claim in respect of the alleged variations.
Section 6 of the HB Act provides, relevantly: 6 Application of requirements for contracts (1) Sections 7-7E apply to a contract under which the holder of a contractor licence undertakes - (a) to do, in person, or by others, any residential building work or any specialist work, or (b) to vary any such undertaking to do residential building work or any specialist work or the way in which any such work is to be done.
In these proceedings there was no dispute that the Contract provided for Mr Hughes, a licence holder, to do residential building work.
Section 7 of the HB Act provides that, for contracts to which it applies, the contract must be in writing, be dated and signed or on behalf of the parties to it. Sub-sections 7(2)-7(5) of the HB Act set out matters which must be contained in a contract as follows: 7(2) A contract must contain - (a) the names of the parties, including the name of the holder of the contractor licence shown on the contractor licence, and (b) the number of the contractor licence, and (c) a sufficient description of the work to which the contract relates, and (d) any plans and specifications for the work, and (e) the contract price if known, and (f) any statutory warranties applicable to the work, and (f1) … (g) … (h) in the case of a contract to do residential building work (other than a construction contract to which the Building and Construction Industry Security of Payment Act 1999 applies) - details of any progress payments payable under the contract, and (i) … (j) any other matter prescribed by the regulations for inclusion in the contract. (3) The contract must comply with any requirements of the regulations. (4) If the contract price is known, it must be stated in a prominent position on the first page of the contract. (5) If the contract price is not known or may be varied under the contract, the contract must contain a warning to that effect and an explanation of the effect of the provision allowing variation of the price. The warning and explanation must be placed next to the price if the price is known.
The amount prescribed by clause 5 of the Home Building Regulation 2014 for the purposes of s 7(1A) is $20,000. The contract price under the Contract was $152,000, albeit that was a provisional sum. The contract price exceeds the prescribed amount with the consequence that s 7 of the HB Act applied to the Contract.
Section 7E of the HB Act relevantly provides: 7E Terms of contracts (1) A contract must include (and is taken to include) each of the terms set out in Part 1 of Schedule 2. A contract that contains a term that is inconsistent with a term set out in Part 1 of Schedule 2 is unenforceable to the extent of the inconsistency. (2) The regulations may make provision for or with respect to - (a) terms or other matter that must be included in a contract or a class of contracts, or (b) terms or other matter that must not be included in a contract or a class of contracts. (3) If the regulations require a contract or class of contracts to contain a specified term (a prescribed term), a contract of the kind concerned is taken to include the term. A contract that contains a term that is inconsistent with a prescribed term is unenforceable to the extent of the inconsistency. (4) If the regulations provide that any term or other matter must not be included in a contract or a class of contracts, any contract that contains that term or other matter is unenforceable to the extent that it includes or applies to that term or other matter.
For the purposes of s 7E(1) of the HB Act, clause 1 of schedule 2 of the HB Act is presently relevant. Clause 1 of schedule 2 provides: 1 Plans and specifications (1) All plans and specifications for work to be done under this contract, including any variations to those plans and specifications, are taken to form part of this contract. (2) Any agreement to vary this contract, or to vary the plans and specifications for work to be done under this contract, must be in writing signed by or on behalf of each party to this contract. (3) This clause only applies to a contract to which section 7AA (Consumer information) of the Home Building Act 1989 applies.
Section 10 of the HB Act provides: 10 Enforceability of contracts and other rights (1) A person who contracts to do any residential building work, or any specialist work, and who so contracts - (a) in contravention of section 4 (Unlicensed contracting), or (b) under a contract to which the requirements of section 7 apply that is not in writing or that does not have sufficient description of the work to which it relates (not being a contract entered into in the circumstances described in section 6(2)), or (c) in contravention of any other provision of this Act or the regulations that is prescribed for the purposes of this paragraph, is not entitled to damages or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, and the contract is unenforceable by the person who contracted to do the work. However, the person is liable for damages and subject to any other remedy in respect of a breach of the contract committed by the person.
As discussed above, s 7 applied to the Contract, with the consequence that sub-section 10(1)(b) was satisfied and s 10 was thereby engaged.
In Xu v Jinhong Design & Constructions Pty Ltd [2011] NSWCA 277 Basten JA said, relevantly: [28] …The effect of s 7E is that, where a regulation requires that a contract contain a clause in prescribed terms, it is taken to include that clause, and any term inconsistent with that clause is unenforceable. Clause 12 of the Regulation requires that certain conditions are included in contracts, as provided by Schedule 2; Schedule 2, cl 1 requires that all plans and specifications for work to be done under a contract are taken to form part of the contract and continues: "(2) Any agreement to vary this contract, or to vary the plans and specifications for work to be done under this contract, must be in writing signed by or on behalf each party to this contract." [29] It would follow that a residential building contract cannot permit a variation which is not in writing. An oral variation which would itself involve residential building work cannot be enforced as a separate contract because that contract would not be in writing. The tentative view set out in the first sentence of the passage cited from Zhao is not correct.
In Xu v Jinhong Design & Constructions Pty Ltd [2011] NSWCA 277 MacFarlane JA observed: [105] Section 6(1)(b) of the Act in my view clearly indicates that the requirement of writing imposed by s 7 applies to variations, as here, of the ambit of the residential building work. The breadth of operation of s 6(1)(b) is indicated by the fact that it is expressed to apply to the variation of "any such undertaking to do residential building work ... or the way in which any such work is to be done" and not simply to the variation of the contract under which such undertaking is given. This supports the view that the subsection operates on an agreement to change the nature or quantum of building work even if that is made under a provision of the building contract dealing with variations in the work and does not involve a variation of the building contract itself. To construe the subsection otherwise would be to render it largely inoperative. [106] In these circumstances the Builder can have no claim in contract against the Owner in respect of the oral variations to the building work. Nevertheless it is likely to have (or have had) a quantum meruit claim to recover the value of the work done in pursuance of the oral variations ( Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221). A claim of that type is one to restitution or one based on unjust enrichment and is not based upon the existence of an implied contract ( Lumbers v W Cook Builders Pty Ltd [2008] HCA 27; (2008) 232 CLR 635 at [83] - [84]).
There is no dispute that the alleged variations were not in agreed in writing.
Similarly, the evidence did not establish that the various iterations of the plans and drawings made by McKinnon Designs were agreed "in writing signed by or on behalf of", relevantly, the homeowner.
Consequently, by reason of s 10, the builder's claims in respect of the alleged variations cannot be enforced as a contractual claim.
The builder's claim in respect of the alleged variations was framed as a claim in contract. The statement of claim filed in the Local Court prior to the transfer of these proceedings to the Tribunal makes no claim based on quantum meruit.
Similarly, at the hearing no claim was made in respect of the alleged variations on the basis of quantum meruit and the builder's submissions did not contend for any relief on the basis of quantum meruit.
In those circumstances, there would be a real risk of procedural unfairness if the builder's claim in respect of the alleged variations were determined on the basis of quantum meruit.
In addition, even if there were no risks of denial of procedural fairness, the evidence to found a claim for a remedy on the basis of quantum meruit in respect of alleged variations was not adduced. In particular, the builder did not adduce any invoices or receipts to show the costs that he actually incurred and reconcile those matters with amounts that he had been paid so as to show that there were costs for which he was not paid. In other words, the builder did not show that the actual costs in respect of the alleged variations meant that the amounts that he had actually been paid were less than his total actual costs, including the cost of the variations.
Consequently, is unnecessary to determine, in respect of the builder's claims, which work comprised a variation and which work was not a variation. It is also not necessary to determine, in respect of the builder's claims, whether those variations had been orally agreed.
However, in the interests of completeness, I do not accept that there were oral agreements to the effect of the variations between the builder and the homeowner. To some extent I base this finding on the evidence of the builder and the homeowner in cross examination. My impression was that the builder was less clear and somewhat confused in respect of events and dates. For example, dates as to the creation of McKinnon Design plans prior to 1 January 2021 I find are incorrect. In contrast, the homeowner appeared to have a better recollection of events and was more considered in carefully answering questions.
In relation to the alleged variations in relation to the location of the ramp I also find that Mrs Midson, the homeowner's mother, knew that the location had been moved from the original depiction in the January 2021 plans and that the change in location was at least partly due to her wishes as expressed in the SMS text message at Ex 1, p. 258. However, I am not persuaded that an agreement was made by or on behalf of the homeowner. I note the homeowner disputed that variations had been agreed by her with the builder.
For the above reasons, the builder's claim in respect of the alleged variations has not been established.
It follows that the builder has not established an entitlement to any relief and his application is dismissed.

Homeowner's claims

The homeowner claims $58,074.31 for breach of the statutory warranties prescribed by s 18B of the HB Act.
Section 18B of the HB Act provides as follows: 18B Warranties as to residential building work (1) The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work - (a) a warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract, (b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new, (c) a warranty that the work will be done in accordance with, and will comply with, this or any other law, (d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time, (e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling, (f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder's or person's skill and judgment.
As discussed above, the Contract did not attach plans or specifications. In those circumstances, one of the critical issues in these proceedings is identifying the scope of the Contract and what work was required by the Contract.
The homeowner claimed that many items of work undertaken by the builder were defective. In this respect, the homeowner deposed to allege defects in her affidavit and also relied on an expert building report by David Dillon on Westinpect (the Westinspect Report) and an expert report from an engineer, Richard Doonan of Barnson (the Barnson Report).
The builder cross examined Mr Dillon and Mr Barnson.
The builder relied on an expert building report from Edward Brincat or Auspro Building Services Pty Ltd (the Auspro Report). The homeowner had, by her solicitors, notified the builder that Mr Brincat was required for cross examination. However, Mr Brincat was not available for cross examination. The homeowner objected to the tender of the Auspro report on the basis that Mr Brincat was not available for cross examination. I permitted the builder to tender and rely on the Auspro report on the basis that the unavailability of Mr Brincat was a matter to be taken into account in the weight to be accorded to the Auspro report. In this respect, it is important to note that matters the subject of contention between the experts should be assessed having due regard to the circumstance that one expert has been subjected to cross examination and tested whereas the other has not.
I turn to make some general observations about the homeowner's evidence and submissions and the framing of her case. In terms of the evidence, the Westinspect Report often lacked any reasoning process to identify the reason that the item identified as a defect or requiring remedy was in fact a defect.
In relation to the homeowner's written submissions, the defects are dealt with in 7 very short paragraphs comprising less than a page (paragraphs [43]-[49]). Apart from one defect, the submissions do not engage with any of the defects individually or separately, even if the amount claimed is relatively significant. The one exception relates to a concession concerning the alleged "poorly installed decking", which Mr Dillon, the homeowner's building expert, largely conceded was not a defect.
A further difficulty for the Tribunal has been the parties' failure to identify with any degree of precision the scope of the Contract works. The homeowner's submissions, with some force, make the point that many of the builder's submissions are mere assertion without supporting evidence. This criticism applies in relation to the builder's assertions as to those works that were part of the Contract as well as works which were said to not be part of the Contract and alleged to be variations.
However, and conversely, the homeowner's evidence and submissions have not set out with any precision the foundation for the contention that matters of which they complain, particularly incomplete work, were included within the original scope of the Contract and/or have been paid for by the homeowner.
One explanation for this gap in evidence may be that the Contract did not contain or incorporate agreed specifications and plans. Nevertheless, as noted above, neither party contended that the Contract was void for uncertainty.
I turn to consider each claimed defect.
The first item in the Westinspect Report is item 10. It relates to the homeowner changing one of external door key locks. This was because as at October 2021 the builder retained one of the keys for the previous lock and would not return it, despite requests to do so (see Ex 1, pp. 170 - 176). The homeowner's submissions do not explain how this item comprises a breach of the statutory warranties or a contractual breach. Nevertheless, it is ordinarily the case that as part of the completion of a building project the builder returns keys to the homeowner. Consequently, there will be an order that the builder pays the costs of the locksmith, namely, $176.00 (Ex 1, p. 177).
Item 11 relates to door painting of an external door being incomplete. A photograph shows that this is the case. I am satisfied this defect has been established. The assessed cost is $85.00.
Item 12 relates to the kitchen cabinets. The Westinspect Report notes "cabinets not complete" and also notes "This appears to be ADDITIONAL work over and above the Contract work for the Addition" and "Complete cupboard doors and fronts" (Ex 1, p. 284, original emphasis). This alleged defect raises two problems.
First, the Westinspect Report appears to make a concession that the work was pursuant to a variation. This is consistent with the builder's claims as to the variations in the invoice at Ex 1, pp. 152-153. However, if that is the case, the homeowner has not shown that she suffered any damage. The damage is not merely the cost of an alternative builder completing the work unless the homeowner has already paid the builder in these proceedings for the said work. There is no evidence to that effect in these proceedings. Rather, the loss is the price paid to the existing builder for work that is incomplete plus the difference in price for an alternative builder to complete the said work and the price that was agreed with the builder in these proceedings. This evidence was not adduced.
Second, there is no precision in the homeowner's evidence of the kitchen items that were contemplated inclusions in the original scope of the contract or that a variation, presumably oral, was agreed. Having regard to the Westinspect Report and Ex 1, pp. 152-153, and to the absence of precise evidence from the homeowner as to what the parties agreed in relation to the kitchen, I am not satisfied that the homeowner has established that the complaint in item 12 of the Westinspect Report was within the scope of the Contract as at 22 December 2022. I am also not satisfied as to the scope of the variation in circumstances where the homeowner does not give evidence as to this matter. I am also not satisfied that the homeowner has made payment for the work said to be incomplete.
The next item of the Westinspect report relates to the laundry (Ex 1, p. 284, item 13). In relation to the laundry, the Westinspect report records "This appears to be ADDITIONAL work over and above the Contract work for the Addition" (original emphasis). I am not satisfied that the homeowner has established, on the balance of probabilities, that the work that is required was within the original scope of works or an agreed variation and, if the latter, that it has been paid for.
The next two items of the Westinspect Report are items 15 and 16 (Ex 1, pp. 288-289, items 15 and 16). The Westinspect report records the need for painting work to be completed and the need for application of a flexible sealant between the floor covering and the skirting board. The photographs relating to these items provide sufficient support to satisfy me of these defects. The builder did not make any submissions in relation to these items. The defects are quantified at $150.00 and $179.50. This does not include builder's margin and GST.
The next item in the Westinspect Report relates to water staining to the ceiling of the sunroom (Ex 1, p. 289, item 17). The staining relates to the water penetration from the roof. As will be discussed below, the Tribunal has concluded that the roof defects, as will be discussed below, have been established. It follows that the loss relating to this item is recoverable. The Westinspect Report assesses the cost of rectification as $345.10. The Auspro Report assesses the rectification cost at $100.00 (Ex 1, p. 435). In circumstances where Mr Dillon was cross examined and I have observed his evidence and demeanour I am satisfied that his estimate is appropriate.
The next item in the Westinspect Report is the painting of the southern door (Ex 1, p. 290, item 18). No submissions were made about this item and the cost has not been separately identified (see Ex 1, p. 322). I am not satisfied that the homeowner has established a loss that the Tribunal is in a position to quantify in respect of this item.
Items 19 and 20 in the Westinspect Report are pictures and do not articulate any defects.
The next item in the Westinspect Report is repair to the benchtop (Ex 1, p. 293, item 21). The Westinspect Report merely records "End of benchtop is poorly finished". There is no other reasoning. The accompanying photograph does not assist in explaining the issue. The homeowner's submissions do not assist in understanding the alleged defect. I am not satisfied that the homeowner has established that the alleged defect.
The next item in the Westinspect Report is the alleged need for a flexible sealant in an area between a kitchen cabinet and the adjacent wall (Ex 1, p. 293, item 22). I am satisfied that this defect has been established. The defect is quantified at $40.00 (Ex 1, p. 323).
The next item in the Westinspect Report relates to the absence of a splashback in the kitchen (Ex 1, p. 293, item 23). The builder disputes that a splashback was within the agreed scope of works under the Contract. There was no evidence from the homeowner to establish that the parties agreed a splashback would be installed. During the hearing the homeowner submitted that a kitchen requires a splashback. I am not satisfied that is necessarily the case. It follows that I am not satisfied that the homeowner has established that the absence of a splashback constitutes a breach of contract or breach of the statutory warranties prescribed by s 18B.
The next item in the Westinspect Report relates to bubbling in a vinyl floor surface in the bathroom (Ex 1, p. 294, item 24). One of the photographs shows significant bubbling (see Ex 1, p. 294, photograph (a)). There was no submission by the builder that this work was not undertaken by the builder or not within the Contract. I am satisfied that the defect has been established. The quantum to address this defect is assessed at $300.00 which seems reasonable (Ex 1, p. 323). The Auspro Report assesses the rectification cost at $150.00. In circumstances where Mr Dillon was cross examined and I have observed his evidence and demeanour I am satisfied that his estimate is appropriate.
The next item in the Westinspect Report is the observation that the bedroom door binds on the floor (Ex 1, p. 295, item 26). I accept this evidence. The quantum to address this defect is assessed at $42.50 which I accept as reasonable (Ex 1, p. 323).
The next item in the Westinspect Report is said to be the need for painting the top (horizontal) surface of the storeroom door (Ex 1, p. 295, item 27). I accept this evidence. The quantum to address this defect is assessed at $260.00 which I do not accept is reasonable (Ex 1, p. 323). In addition, the quantification at exhibit 1, p. 323 seems to relate to more than the top of one door in that the description of the rectification work is "Paint top and bottoms of doors as necessary". I consider a cost of around $75.00 to be adequate for the painting of the top surface of the storeroom door.
The next item in the Westinspect Report relates to tie-downs (Ex 1, pp. 296-297, items 28 and 29). The Westinspect Report states "concern as to the method/inadequate tie down". The Auspro report notes, in reference to the Westinspect Report, that the nature of the alleged defect as described in the Westinspect Report is unclear. That is a fair observation.
However, in relation to the tie-down connections, the homeowner also relies on the Barnson Report (Ex 1, pp. 379-413). At section 3 of the Barnson Report Mr Noonan, an engineer, concluded that the tie downs did not comply with AS1684.2-2010. In particular, the northern non-loading bearing wall is fixed to roof trusses with flexible ties but no intersecting walls, strutting beams, ceiling battens or tie members at 3m spacing were observed/present. The lateral support requirements for non-load bearing walls prescribed by clause 6.2.5 of AS1684.2-2010 require lateral support by means of intersecting walls, strutting beams, ceiling battens or tie members at 3m spacing.
The Auspro report also deals with Mr Noonan's evidence. The Auspro Report relevantly observed that the roof trusses have been inspected and approved by Council (Ex 1, p. 433, [1.6.61]). However, the Auspro Report does not dispute that AS1684.2-2010 applies and does not engage directly with whether the builder has complied with AS1684.2-2010, clause 6.2.5.
The builder cross examined Mr Noonan, including as to the relevant standards applicable. Mr Noonan did not resile from his opinions. Mr Noonan presented in the witness box as a professional person providing his genuinely held opinions. He did not present as an advocate. I accept his evidence.
I am satisfied that this defect has been established. The Westinspect Report assesses the cost to rectify or address item 28 at $720.00 and item 29 at $1,000.00. These estimates appear reasonable considering the nature of the defects.
The next two items in the Westinspect Report also relate to the roof space (Ex 1, p. 298, items 30 and 31). Item 30 records that there is very poor/inadequate flashing detail and the join of the existing roof and new roof. The new roof is a colorbond roof whereas the pre-existing roof was tiled. One of the photographs shows that sunlight is visible from the inside of the roof space indicating gaps (Ex 1, p. 298, top photograph). Item 39 (Ex 1, p. 314) is also an alleged roof defect. The Westinspect Report records (Ex 1, p. 314): The new roof pitch does not match the existing as detailed in the supplied plans. …. Even if the new roof pitch was the same as existing, because the external wall steps out, there would have had to be a part gable in this area anyway. The new roof should have been installed to align with the rear of the existing dwelling. The tiled roof should have been amended to adjoin the new roof area…. a. as previous image - VERY poor flashing detail, roof leakage evident into existing bathroom.
I also note that in January 2022 water penetration into the dwelling was significant.
The Auspro Report records that Mr Brincat concurs that rectification is required "using the existing as built extended roof for a part gable" (Ex 1, p. 426, [1.6.39]).
Finally, the builder has been paid for the completion of the roof because roof work would ordinarily occur prior to the stage described in the Contract as Lock up and prior to interior works in the kitchen and bathroom.
The Westinspect Report quantifies the cost of rectification for item 39 at $7,697.84 and $500.00 for council fees amendment to the development approval. The figure of $7,697.84 includes a sum of $1,482.84 for supply of concrete roof tiles "as necessary" (Ex 1, p. 325). The newly installed roof is a colorbond roof. There was no explanation as to the need for additional concrete roof tiles. It may be that such tiles are necessary to align the old and new roof. However, that has not been explained. I am not persuaded that the $1,482.84 referrable to concrete roof tiles is necessary to rectify the defect. The amount that I accept in relation to this defect is $6,215.00 and $500.00 for council fees.
I am satisfied that the roof defects have been established and the cost of rectifying those defects is $7,697.84 and $500.00 for council fees amendment to the development approval. It also follows that item 31 has been established. The cost to address item 31 is $125.00.
The next item in the Westinspect Report relates to the installation of a sliding door (Ex 1, p. 299, item 32). The Westinspect Report merely asserts "sliding door not properly installed/supported in this area. Rectifications and/or repair required" (Ex 1, p. 299). There is no reasoning and consequently no explanation as to the nature or cause of the defect. I am not satisfied that the defect has been explained or established on the balance of probabilities.
The next item in the Westinspect Report relates to external areas that require painting (Ex 1, pp. 300-303, item 34). The photographs clearly show that the external painting is incomplete. However, I am not satisfied that the homeowner has established that the work relating to the external painting has been paid for by the homeowner. Since the painting relates to external areas the work may be a component of the $18,000.00 invoice dated 22 September 2022. That invoice has not been paid and the builder's claim for payment is to be dismissed. However, the converse of these matters is that on the evidence adduced in these proceedings, where the homeowner has paid for the work and not adduced evidence of an amount that would need to be paid to an alternative builder in excess of the amount under the Contract, the homeowner has not established that she has suffered loss and damage by reason of these items of incomplete work.
The next item in the Westinspect Report is that no weathershield was installed (Ex 1, p. 303, item 35). The photographs at Ex 1, pp. 303 and 304 establish that a weathershield was not installed in front of a door that opens to exterior timber decking. I accept that this defect has been established. The quantum to address this defect is assessed at $111.14 which I accept as reasonable (Ex 1, p. 324).
The next item in the Westinspect Report relates to alleged defects in the constructions of the ramp (Ex 1, p. 303, item 36). The ramp is said to be shorter and consequently steeper, than depicted in the plans. The plans to which the Westinspect Report is likely referring are annexed to the said report. However, the homeowner's case is that no plans after 22 December 2022 were agreed to by her. The HB Act precludes a builder from enforcing an oral variation to a building contract but not the homeowner. However, although under the HB Act a homeowner can enforce an oral variation of a building contract, it is still necessary for the homeowner to prove, on the balance of probabilities, the oral variation. The homeowner has not proven that the plans annexed to the Westinspect Report were agreed at any point with the builder. In fact, the homeowner's case was inconsistent with there having been any plans accepted by her after 22 December 2022.
The homeowner could have shown that there was a defect in respect of the construction of the ramp by showing that it is too steep by reference to applicable standards, as distinct from non-conformity with plans. However, the evidence does not establish this type of defect and the Westinspect Report frames the defect in the gradient only in terms of non-conformity with plans. In fact, the evidence of Mr Brincat suggests otherwise. Mr Brincat calculated the gradient and noted that it is less than the gradient in the Council approved plans (Ex 1, pp. 424-425, [1.6.32] - [1.6.34]).
However, one defect in respect of the ramp which I am satisfied has been established is that the ramp terminates 30mm above the ground (see Ex 1, p. 425, [1.6.34]). This was conceded by the builder during cross examination. Considering, amongst other things, that the known purpose of the ramp is to facilitate wheelchair access, I find that this is a defect. There are no separate costings for making good this defect or the method for so doing. The Westinspect Report did not cost this item. It would require some work, possibly extending the ramp with a concrete strip (see Ex 1, p. 425, [1.6.24]).
Another defect relating the ramp that I am satisfied has been established is that the handrail/balustrade of the ramp is not installed plumb. This is part of the defects identified in item 36. There was no costing estimated for this item as a separate defect.
The Auspro Report assesses that the cost to install a concrete strip and to adjust the handrail would be $680.00 in labour and $100.00 in materials. I am satisfied that these estimates are reasonable for the two defects in respect of the ramp which I have found have been established.
The next item in the Westinspect Report relates to alleged defects in the external cladding (Ex 1, pp. 305-313, item 37). These defects include poor installation, the cladding in contact with the ground, poor surface finish and unfinished portions. An extensive set of photographs evidence this defect and I am satisfied it has been established. The quantum to address this defect is assessed at $5,602.50 which I accept as reasonable (Ex 1, p. 324).
The next item in the Westinspect Report relates to alleged defects in the roof guttering (Ex 1, p. 317, item 40). The Auspro Report concurs (Ex 1, p. 427, [1.6.42]). I accept this defect has been established. Both the Westinspect Report and the Auspro Report assess the cost of rectification at $42.50 which is reasonable.
The next item in the Westinspect Report relates to alleged defects in a downpipe (Ex 1, p. 317, item 41). The Auspro Report concurs (Ex 1, p. 427, [1.6.43]). I accept this defect has been established. Both the Westinspect Report and the Auspro Report assess the cost of rectification at $135.00 which is reasonable.
The next item in the Westinspect Report relates to alleged decking defects (Ex 1, p. 318, item 42). Subject to one qualification, the homeowner's submissions do not press item 42 of the Westinspect Report having regard to concessions made by Mr Dillon during cross examination. The qualification is that Mr Dillon maintained that the screws had not been installed properly and were raised. The homeowner implicitly concedes there is no direct evidence of the cost of rectifying this but submits the Tribunal should allow $1,682.23. I do not accept this is an appropriate amount or an amount supported by evidence. From Mr Dillon's evidence in cross examination it seemed to me that any issue with raised screws was easily capable of being addressed by any builder in a short period of time. I am not satisfied that loss has been established.
The next item in the Westinspect Report relates to alleged defects in a piece of timber on the ramp/deck area (Ex 1, p. 319, item 43). The Auspro Report concurs (Ex 1, p. 430, [1.6.48]). I accept this defect has been established. The Westinspect Report assesses the cost of rectification at $85.00 whereas and the Auspro Report assess the cost of rectification at $42.50 which is reasonable. In circumstances where Mr Dillon was cross examined and I have observed his evidence and demeanour I am satisfied that his estimate is appropriate.
The next item in the Westinspect Report relates to adjustment of balustrade wires (Ex 1, p. 319, item 44). The Auspro Report concurs (Ex 1, p. 430, [1.6.49]). I accept this defect has been established. Both the Westinspect Report and the Auspro Report assess the cost of rectification at $85.00 which is reasonable.
Item 45 in the Westinspect Report relates to the external roof. The claim in relation to costs for rectifying the roof has been dealt with in respect of item 39 above. No separate amount is claimed for item 46.
The next item in the Westinspect Report relates to cladding contact with the ground surface (Ex 1, p. 320, item 46). This item is separately identified from the other cladding defects dealt with at item 37 above and separately costed. The Auspro Report concurs (Ex 1, p. 430, [1.6.51]). I accept this defect has been established. The Westinspect Report assesses the cost of rectification at $680.00 whereas and the Auspro Report assess the cost of rectification at $340.00 which is reasonable. In circumstances where Mr Dillon was cross examined and I have observed his evidence and approach I am satisfied that his estimate is appropriate.
In respect of item 47 of the Westinspect Report, Mr Dillon observes that one screw has been used for a hold down and states that further investigation is necessary to determine whether this is sufficient (Ex 1, p. 320, item 47).
Mr Noonan's evidence in this respect is that the single screw is insufficient and that this does not comply with AS1684.2:2010, table 9.4 (Ex 1, pp. 387-388). Mr Brincat concurs with Mr Noonan in respect of this issue (Ex 1, p. 433, [1.6.61] - [1.6.63]). I accept this defect has been established.
The Auspro Report assesses the cost to rectify the defect in item 47 at $600.00 (Ex 1, p.437). The Westinspect Report also assesses the cost to rectify the defect in item 47 at $600.00. I am satisfied that this cost is reasonable.
The next item in the Westinspect Report relates to the positioning of piers in respect of the concrete footing (Ex 1, p. 320, item 48). The alleged defect is that the piers do not sit in the centre of the concrete footings.
The Barnson Report addresses this issue at [4.1] and [4.2] (Ex 1, p. 390). Mr Noonan observes that the "concrete footing is greater than 75mm from the centre of the steel piers" (Ex 1, p. 390, [4.1]). Mr Noonan opines that contravenes AS2159:2009, clause 7.2 (Tolerances and Defects) which prescribes that, unless otherwise specified, the permissible deviation for a pile installed from land with a cut-off level no more than 2m below piling platform is 75mm.
The Auspro Report records that this standard is not applicable to Uni-pier or similar steel pier installations (Ex 1, p. 433, [1.6.65]). Mr Brincat refers to the Uni-pier specifications but the reasoning as to why AS2159:2009, clause 7.2 does not apply is not apparent.
The photographs in the Westinspect Report disclose that some piles are clearly not centred in the concrete footing.
I am satisfied that the defect referred to in item 47 has been established on the balance of probabilities.
The Westinspect Report assesses the rectification cost at $1,200.00. I am satisfied this is reasonable.
A summary of the amounts which I have found the homeowner has established is as follows: 1. Lock and key (including GST) - $176.00 2. Item 11 - $85.00 3. Item 15 - $150.00 4. Item 16 - $179.50 5. Item 17 - $345.10 6. Item 22 - $40.00 7. Item 24 - $300.00 8. Item 26 - $42.50 9. Item 27 - $75.00 10. Item 28 - $720.00 11. Item 29 - $1,000.00 12. Item 31 - $125.00 13. Item 35 - $111.14 14. Item 36 - $780.00 15. Item 37 - 5,602.50 16. Item 39 - $6,215.00 17. Item 39 - $500.00 (council fees) 18. Item 40 - $42.50 19. Item 41 - $135.00 20. Item 43 - $85.00 21. Item 44 - $85.00 22. Item 46 - $680.00 23. Item 47 - $600.00 24. Item 48 - $1,200.00
Item (1) in the preceding paragraph includes GST and builders margin. The $500 fee for council should not include builder's margin. The total of all the items other than the key/lock item (item 1) and the $500 fee for council is $18,598.24.
The builder's margin which Mr Dillon considers reasonable is 20%. Mr Brincat considers 15% reasonable. I consider 15% unlikely to be accepted by a builder as a margin and consequently I accept that 20% is appropriate. This is consistent with many decisions in the Tribunal decided under the HB Act.
Consequently, a margin or 20% to $18,598.24 gives a figure of $22,317.89.
The next step is to add 10% GST to $22,317.89, which results in a figure of $24,459.68.
The final step is to add $500 (council fees) and $176.00 (key/lock) to $24,459.68, which gives a figure of $25,225.68.

Work Order or Monetary Remedy

In relation to the appropriate remedy, the homeowner seeks a money order.
Section 48MO of the Act provides as follows: A court or tribunal determining a building claim involving an allegation of defective residential building work or specialist work by a party to proceedings (the "responsible party") is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome.
Section 48MA was recently considered by Senior Member Burton in Culina v Timilty Constructins Pty Ltd [2022] NSWCATCD 109. In that case Senior Member Burton relevantly said: [14] Under HBA s 48MA, a work order is the preferred, not the mandatory, outcome for defective work: Galdona v Peacock [2017] NSWCATAP 64 at [65]. Personal animosity is not sufficient to displace the primacy of a work order for defective work, as the test is objective and the flexibility of s 48O permits an order that the builder fulfil a work order by engaging another party to carry out the work order on behalf of the builder. [15] However, relational breakdown is an element in objective assessment, as can be the builder's conduct in unrelated projects and as will be doubts about the builder's capacity or skills to undertake the required remediation, the builder's attitude to the standard of work done and willingness to return and the likelihood of further dispute not meaning that a work order would be a timely or cost-effective resolution: Owners SP 78465 v MD Constructions PL [2016] NSWSC 162 at [47]-[48]; Brooks v Gannon Constructions PL [2017] NSWCATCD 12 (appeal not affecting s 48MA decision); Galdona at [64]; BNT Constructions PL v Allen [2017] NSWCATAP 186 at [33]-[36]; Kumar v Sabharwal [2017] NSWCATAP 200 at [29]-[30]; Clements v Murphy [2018] NSWCATAP 152 at [30], citing with approval Kurmond Homes PL v Marsden [2018] NSWCATAP 23 at [31]-[32], [46]; Brennan Constructions PL v Davison [2018] NSWCATAP 210 at [15]-[21]. [16] A work order is always available as one of the range of choices under HBA s 48O, even though there is no statutory preference for it in respect of incomplete work and it would be unusual to direct a builder to complete work under a work order where the builder's performance is the reason for acceptance of repudiation or termination of the building contract: Clements at [22]-[33]. It would be otherwise where the owner repudiated or provided the grounds for termination of the contract: White v Sunrise Pools Aust PL [2017] NSWCATAP 216 at [5], [70]. [17] The ultimate litmus test for whether a work order should be made, and formulating its content, is whether it is appropriate, having regard to the fact that HBA s 48O(3) imports the requirement in s 79U(1) of the Fair Trading Act 1987 (NSW) that the orders will be fair and equitable to all the parties to the claim: Petropoulos v CPD Holdings PL t/as The Bathroom Exchange (No 2) [2018] NSWCATAP 233 at [28], [30], citing with approval Kurmond Homes PL v Marsden [2018] NSWCATAP 23 at [25]. [18] A work order must focus on the particular defect to be rectified and must be certain, practical and enforceable: Catapult Constructions PL v Denison [2018] NSWCATAP 158 at [46]-[61] and authority there cited. The evidentiary onus is on the homeowner to set out the appropriate method of rectification: ibid, at [59]. [19] The parties are also under an obligation under Civil and Administrative Tribunal Act 2013 (NSW) (CATA) s 36(3) to co-operate to achieve the guiding principle in CATA s 36(1) which extends to the necessary co-operation, including provision of access, to ensure that work orders can be implemented in an orderly manner: Maiolo v Chiarelli [2016] NSWCATAP 81 at [40]-[46], [55]. This reinforces the express obligation in HBA s 18BA(3)(b), (5). [20] There is a co-ordinate focus on the conduct of the owner in assessing the form of relief. In ordinary principles of contract law imported into construction contracts, an owner's claim for monetary compensation requires the owner to act reasonably in relation to the claimed monetary loss in order for the claimed loss to be recoverable: cp HBA s 18BA(1), (5). This includes giving the builder a reasonable opportunity to remediate or complete, or to minimise damages by remediating what it can and will do: cp HBA s 18BA(1), (3)(b), (5). The owner may be justified in a reasonable loss of confidence in the willingness and ability of the builder to do the remediation and completion. The evidential onus is on the builder to prove that the owner acted unreasonably: Owners SP 76674 v Di Blasio Constructions PL [2014] NSWSC 1067 at [42]-[48], adopted in Owners SP 78465 v MD Constructions PL [2016] NSWSC 162 at [26]-[30] and GPM Constructions PL v Baker [2018] NSWCATAP 119 at [38]. This is consistent with the orthodox principles at general law: TCN Channel 9 PL v Hayden Enterprises PL (1989) 16 NSWLR 130 at 158; principles summarised in Downer EDI Rail PL v John Holland PL [2018] NSWSC 326 at [585] and authority there cited. [21] If the owner has acted reasonably then, since the builder is a wrongdoer, it will not defeat the owner's claim that the builder can suggest other and more beneficial alternative methods of remediation: Unity Insurance Brokers PL v Rocco Pezzano PL (1998) 192 CLR 603 at 654; Karakominakis v Big Country Developments PL [2000] NSWCA 313 at [187]. [22] HBA s 48MA does not seem to reverse or otherwise disturb this evidential onus. What s 48MA does, at most, on the authorities mentioned in preceding paragraphs, is to require the decision-maker to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome. In having regard to a principle that states a preferred outcome, the basis for the principle to operate still needs to be established. How that is established and when it is established is built on and derived from the rules just described about establishing measure of loss.
The homeowner gave evidence of feeling intimidated by the builder. Although I did not see any threatening conduct from the builder, some of his written communications after 22 September 2021 were robust and intemperate. However, it is also clear he felt genuinely entitled to payment and considered his treatment to have been unfair, which may explain those communications. Nevertheless, I accept that the homeowner's feelings of intimidation are also genuine.
The homeowner suspects that the builder has made reports to the school where she teaches about her conduct. The evidence did not make good that the builder was the source of the complaints so it is not necessary to consider the nature of those matters further.
I also find there is a clear lack of trust between the parties.
I also note that the builder was not willing to return to the Property even after major water penetration in January 2022. That water penetration would suggest that at the very least the builder should have assessed whether his building work was a cause of the water penetration. Even though the parties were in dispute about payment, at that point in time the homeowner had paid for the roof work.
In these proceedings I have concluded that a money order in favour of the homeowner is the appropriate remedy for the following reasons: 1. The homeowner's feelings of intimidation; 2. The lack of trust between the parties; 3. The builder's unwillingness to attend site to look at defects in January 2022 notwithstanding the significant water penetration. 4. The relationship between the homeowner (and her family) and the builder has broken down.
Consequently, there will be a money order.

Costs

The homeowner has indicated in submissions that she wishes to be heard on costs.
I will give the parties an opportunity to consider these reasons and the orders made.
If the parties cannot agree on appropriate orders as to costs and a party wishes to make submissions as to costs then that party is directed to file and serve by 12 January 2024 written submissions not exceeding 5 pages (with references to evidence relied on to be identified in those submissions).
A party that intends to oppose an application for an order for costs is to file and serve by 2 February 2024 written submissions in response not exceeding 5 pages (with references to evidence relied on to be identified in those submissions).
I will then decide whether or not the matter will be dealt with on the papers.

Orders

The Tribunal makes the following orders: 1. Dismiss proceedings HB 22/29183. 2. Order that Tony Joseph Hughes pay Eryn Louise Midson the sum of $25,225.68 within 14 days. 3. Any party seeking a costs order is to file and serve by 12 January 2024 written submissions not exceeding 5 pages, with references to the evidence relied identified in those submissions. 4. Any party that intends to oppose an application for a costs order is to file and serve by 2 February 2024 written submissions in response not exceeding 5 pages, with references to the evidence relied on identified in those submissions. 5. Reserve all question of costs, including whether to dispense with a hearing as to costs. 6. Otherwise dismiss proceedings HB 22/30007.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 August 2024

At a glance

Court

Decision date

Source

Judgment (12 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (24)