1. The addition of GST, or $69,510, yields a grand total of $764,609.

THE TOTAL OF RECTIFICATION COSTS AND COMPLETION COSTS

1. The total of rectification costs inclusive of GST is $1,321,171. The total award in relation to completion costs inclusive of GST is $764,609. The total of rectification and completion costs is accordingly $2,085,780.

1. Under clause 44.2 of the contract the owners are entitled to deduct that reasonable cost calculated under clause 44.0 from the total of the unpaid balance of the contract price and other amounts payable by the owners under the building contract if the contract had not been terminated. Accordingly, it is necessary to make a determination about the contract price.
2. The contract price agreed between Ms Mace and Mr Fleischer and the builder was $800,000, as set out at schedule 1 clause 2 of the building contract.

Ms Mace's oral evidence that the contract price had been increased from the stipulated $800,000 to $1,200,000.

1. In the owners' final submissions, the Tribunal was reminded that Ms Mace's viva voce evidence was that the builder had not included many of the materials, fixtures and fittings contained in the builder's breakdown of costs. She deposed that the parties agreed that such items would be paid for by her and Mr Fleischer as variations to the contract price. She also deposed that the parties agreed that these additional costs would be approximately $400,000, resulting in the total costs payable to the builder to be $1,200,000. In the event, the exact amount paid to various contractors by Ms Mace and Mr Fleischer for works they contend fell within the scope of the contract totalled $422,042.98. They concede that this arrangement was not documented. They nonetheless, contend that $1,200,000 should be adopted as the contract price.
2. It was surprising that this evidence was given for a number of reasons. First of all, there appears to be no reference to this adjustment to the contract price in the pleadings. Specifically, the builder in its Points of Claim referred to the contract price being $800,000 and any other amounts owed pursuant to the building contract.[10] Ms Mace and Mr Fleischer did not deny this, but merely did not admit it.[11] They did not elaborate on the issue in their Points of Counterclaim.[12]
3. Secondly, The Tribunal made orders regarding witness statements on 12 July 2018. They were to be served by 21 December 2018, and witness statements in response were to be filed in the New Year. It was ordered that a party would not be allowed to present any evidence of the hearing which was not contained in the witness statement without justifying the need to do so to the Tribunal. A review of Ms Mace's 105-page witness statement dated 11 February 2019 indicates that at [147] she referred to the total contract price is being $800,000 including GST. That the contract sum was $800,000 was confirmed by her evidence at [552- 553] that the owners had paid $296,025.11 to the builder before the termination of the contract, and the remaining balance under the contract was $503,974.89.
4. On 16 April 2019 Ms Mace filed a witness statement in reply. This made no reference to any adjustment to the contract price.
5. Thirdly, I find it highly surprising that Ms Mace and Mr Fleischer contend that an extensively documented major domestic building contract with a stipulated contract price of $800,000, was amended with the result that the contract price was increased by more than 50% without any documentation. Section 31(1)(j) of the Domestic Building Contracts Act 1995 requires that a major domestic building contract must state the contract price, except in the case of a cost-plus contract. A major domestic building contract can of course, be varied by the builder and the procedure set out in s 37 of that Act, where the builder wishes to vary the plans and specifications, alternatively under the procedure set out in s 38 where the contract is to be varied by a building owner. No evidence was given by Ms Mace about whether s 37 or s 38 had been complied with. No submissions were made regarding these matters.
6. In all these circumstances, I am not prepared to accept that the contract price was adjusted to $1,200,000. I find that the contract price remained at $800,000.

Other amounts payable under the building contract by the owners

1. The builder gave no evidence and made no submissions about other amounts which might be payable by the owners to it under the building contract. Accordingly, there is no basis to adjust the amount payable to the builder in this respect.

1. However, any amount remaining to be paid by the owners to the builder under the building contract would have been subject to reduction in respect of any liquidated damages owed by the builder to the owners. It is relevant to note that in their opening at the hearing, Ms Mace and Mr Fleischer indicated that they were not making a claim for liquidated damages under the contract. There is, accordingly, no adjustment to be made for liquidated damages.

1. Under clause 44.2 of the contract the owners are entitled to deduct that reasonable cost calculated under clause 44.0 from the total of the unpaid balance of the contract price and other amounts payable by the owners under the building contract if the contract had not been terminated.
2. For the reasons explained above, the original contract price was $800,000, and there is no accepted basis to adjust it up or down. Prior to the termination of the contract, the owners had made payments to the builder of $296,025.11. Ms Mace in her witness statement has, as noted, confirmed the unpaid balance of the contract sum to be $503,974.89, which I round up to $503,975.
3. The total of rectification and completion costs has been found to be $2,085,780. The difference between the unpaid balance of the contract price and the other amounts payable by the owners under the contract if the contract had not been terminated, and the cost of rectification and completion, is accordingly $1,581,805. I find the builder must pay this sum to Ms Mace and Mr Fleischer.

1. Ms Mace and Mr Fleischer in their final submissions at [169-171] seek damages in the nature of interest on the sum they contend represents the reasonable and necessary cost of rectification and completion of the defective and non-compliant building works performed by the builder, less the balance of the contract price, namely $2,332,775. They say interest should be calculated from the date of filing the Points of Counterclaim under s 53 of the Domestic Building Contracts Act 1995.
2. Putting aside the fact that I reach a different assessment of the reasonable and necessary cost of rectification and completion, I decline to assess interest on this basis because I am not prepared to award interest on the expenditure on rectification and completion which has not yet been incurred by the owners.
3. However, I think it is appropriate that an award of damages in the nature of interest should be made on the sum paid by the owners to the builder under the building contract, which I find to be $296,025.11. This expenditure will be wasted because of the necessity to demolish and rebuild the house. Applying s 53(2)(b)(ii) together with ss 53(3) of the Domestic Building Contracts Act 1995, I find that Ms Mace and Mr Fleischer are entitled to an order for damages in the nature of interest on the sum of $296,025.11, calculated at the interest rate fixed from time to time under s 2 of the Penalty Interest Rates Act 1983. I also find that interest will be payable from the date Ms Mace and Mr Fleischer initiated their counterclaim (taken to be the date upon which the relevant fee was receipted by the Tribunal, namely 7 April 2017) to the date of this decision, 27 November 2019.

1. Interest on $296,025.11 at 10% per annum is $81.1028 per day. There are 965 days between 7 April 2017 and 27 November 2019. The award in respect of damages in the nature of interest is $78,264.17, which I round to $78,264.

1. As I have found above that Ms Mace and Mr Fleischer are entitled to damages in the sum of $1,581,805, and that they are entitled to damages in the nature of interest of $78,264 I award them total damages of $1,660,069.

THE BUILDER'S CLAIM FOR APPORTIONMENT AND CONTRIBUTION AGAINST THE CONSULTANTS

1. The builder contends in its defence to the owners' counterclaim that the owners' claim is:

(a) a claim for economic loss or property damage in an action arising from a failure to take reasonable care within the meaning of s 24AF(1) of the Wrongs Act and

(b) an apportionable claim within the meaning of s 24AE of the Wrongs Act.[13]

1. The builder further alleges that it and the consultants are concurrent wrongdoers within the meaning of s 24AH of the Wrongs Act and that pursuant to s 24A(1)(sic)[14] of that Act the builder's liability is limited to an amount reflecting the proportion of the loss and damage claimed by Ms Mace and Mr Fleischer that the Tribunal considers just having regard to the extent of the builder's responsibility for that loss or damage, and judgment must not be given against the Builder for more than that amount in relation to the claim[15].

The warranties contained in ss 8(b), (c) and (f) are absolute

1. The owners contend that three of the warranties implied into the building contract by s8 of the Domestic Building Contracts Act are absolute and are not qualified or limited by an obligation to use reasonable care and skill. These warranties are, in brief, the warranties as to:
   • suitability of materials (s 8(b));
   • compliance with the law (including the BCA) (s 8(c)); and
   • fitness for purpose (s 8(f)).
2. In Owners Corporation No 1 of BS613436T v LU Simon Builders Pty Ltd[17] (Lacrosse) Judge Woodward at [286] accepted a submission that these three warranties are "not qualified or limited to an obligation to use reasonable care and skill". At [285] he said:

In Barton v Stiff[18], Hargrave J (as he then was) confirmed the principle that a builder's liability for design and construction was not merely an obligation to use reasonable care. In particular, the warranty of fitness for purpose was absolute. His Honour added that: "the absolute warranty of fitness for purpose relates to the purpose as properly identified". That is, the obligation of the builder must be measured by reference to the purpose for which the building was required under the conditions likely to be encountered at the land

1. Applying Barton v Stiff, and respectfully adopting Judge Woodward's approach in Lacrosse, I accept that the warranties implied by ss 8(b),(c) and (f) are absolute. As they are not subject to an obligation to use reasonable care and skill, it follows that the builder is not entitled to apportionment in respect of these warranties.

The other warranties implied by s8 of the Domestic Building Contracts Act

1. The remaining warranties implied by s8 of the Domestic Building Contracts Act are that:

(a) the work will be carried out in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract;

(d) the work will be carried out with reasonable care and skill and will be completed by the date (or within the period) specified by the contract;

(e) if the work consists of the erection or construction of a home, or is work intended to renovate, alter, extend, improve or repair a home to a stage suitable for occupation, the home will be suitable for occupation at the time the work is completed.

1. On the basis of Lacrosse, it would seem that these warranties are qualified in the sense that the builder's obligation is limited to an obligation to use reasonable care and skill. Accordingly, liability under each of these warranties can be seen to be theoretically apportionable.
2. However, the builder did not attend at the hearing to give evidence, and nor did the building surveyors, the architect or the engineer. Accordingly, there is no basis upon which the Tribunal can make any finding as to the apportionment of liability as between the builder and any of the consultants. For this reason, I will strike out the builder's defence in so far as the builder seeks apportionment from the building surveyors, the architect and the engineer.

The builder's claim for contribution from the building surveyors, the architect and engineer

1. In its defence to the owner's counterclaim, the builder contends that if the Tribunal determines that the owners' claim is apportionable under s 24AE of the Wrongs Act, then the builder is entitled to contribution from each of the consultants under s 23B of that Act.
2. The builder presented no evidence at the hearing regarding its claims for contribution against the building surveyors, the architect and the engineer. Accordingly, these claims for contribution will be dismissed.

1. In their final submissions, Ms Mace and Mr Fleischer seek an order that the builder pay their costs of and associated with their counterclaim, such costs to be taxed in default of agreement on the standard basis in accordance with the County Court Scale of Costs.
2. For the purposes of s 109(3) of the VCAT Act, I find that I am satisfied that it is fair to make such an order having regard to the builder's failure to attend at the hearing and present any evidence or make any submissions. This failure enlivened ss 109(3)(c) - which relates to the relative strengths of the claims made by each of the parties- in favour of the owners.

1. Further, as Ms Mace and Mr Fleischer have been substantially successful in their counterclaim, they are entitled under s115B of the VCAT Act to an order that they be reimbursed by the builder the filing fee they paid on their counterclaim of $1,297.80. Ms Mace and Mr Fleischer are also entitled to be reimbursed the hearing fee they paid on each of the three days of the hearing, a total of $531.15. The total fees to be reimbursed are $1,828.95.

[1] The equivalent under the BCA 2014 which was in force at the relevant time, to a Performance Solution under the current BCA 2016.

[3] Building Regulations 2006 (Vic) Regulation 109.

[4] [1954] HCA 36; (1954) 90 CLR 613 at 617

[6] See the progress payments scheduled breakdown contained in the contract.

[9] Owners' written submissions dated 8 May 2019, at [161].

[10] Builder's Points of Claim dated 23 December 2016

[11] Ms Mace and Mr Fleischer's Points of Defence dated 7 April 2017, paragraph 7

[13] Builder's defence to Amended Consolidated Points of Counterclaim filed 30 October 2018, at [18]

[15] Builder's defence to amended consolidated points of counterclaim filed 30 October 2018, at [21]

[17] [2019] VCAT 286 at [285-286]

[18] [2006] VSC 307