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[2025] NSWCA 259
appellant. Appeal allowed. Orders 1 to 3 made below were set aside and judgment was ordered for the first defendant against the plaintiff. The Court declared that the amount otherwise owing was nil after...
The Court of Appeal reduced the builder's judgment by $3,243,175. Most of the disputed infrastructure payments remained with the builder because the contract treated those works as separately payable excluded items, even though they were not true variations. Consultancy fees were different: they were included in the contract sum, so the developer received a $133,175 credit. The contractual practical-completion date remained 20 April 2020, producing $210,000 in liquidated damages. The builder also received a $2.9 million benefit through a related-party property transaction connected with releases of coordinate liabilities, and that benefit reduced the developer's liability. The Court ordered judgment for the developer and declared the amount otherwise owing nil, while directing further submissions about whether judgment should also be entered on the developer's liquidated-damages cross-claim.
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2,346 words · generated 06/10/2026
6 cited instruments linked from this judgment.
The dispute arose from a design and construct contract for a multi-storey mixed-use development on land in Ryde. The developer, Kaloriziko Pty Ltd as trustee for the Ryde Combined Unit Trust, engaged Calibre Construction Group Pty Ltd as builder. The contract sum was $31 million [11], [29]. After the builder sued for unpaid contract amounts and variations, the developer argued that the award should be reduced for payments made for work that was not truly a variation, consultancy fees, delay, and a settlement benefit the builder received through a property transaction.
At first instance, the builder was awarded $2,137,430.86 plus interest [4]. The primary judge rejected the developer's proposed credits for the disputed paid variations, the consultancy-fee claim was allowed, the liquidated-damages claim was dismissed, and no reduction was made for the deed and property transfer [90]-[96].
The Court of Appeal, comprising Mitchelmore JA, Kirk JA and Adamson JA, allowed the appeal. Mitchelmore JA and Kirk JA agreed with Adamson JA [1]-[3]. The Court reduced the amount otherwise owing by a total of $3,243,175: $133,175 for V0044, $210,000 for liquidated damages, and $2.9 million for the undervalue of the Arncliffe properties [169]-[171]. It declared the amount otherwise owing nil. The Court also directed further submissions on whether the developer sought judgment on its liquidated-damages cross-claim [170]-[171].
The outcome on the first group of disputed payments was mixed. The Court held that the work in variations 1, 7, 11, 13 and 21 was not actually a variation, but the builder could retain the amounts because the work qualified as separately payable excluded items relating to services or infrastructure upgrades [107]-[113]. This distinction is important: deciding whether work is a contractual variation is not necessarily the same as deciding whether it is separately payable under another contractual provision.
The contract contained two relevant mechanisms. Clause 36 governed directions and pricing for variations. Clause 37.2 said that payment other than final payment was payment on account only [38]-[39]. The Court rejected the idea that approval and payment alone could convert work already included in the WUC into a variation. It accepted the developer's argument that the primary judge had erred in treating the approval and payment as preventing a later challenge to the classification [97]-[107].
But that did not settle whether the builder could keep the money. The contract's definition of excluded items included “services or infrastructure upgrades” and certain fees payable to authorities and service providers [33]. The Court considered the development consent, plans, and contractual context. Those materials showed that the development required significant services and infrastructure work, including utility connections, upgrades and public-domain works [9], [109]. It construed the contract as including these works within the WUC while permitting separate payment because their costs were not included in the fixed contract sum [110]-[112]. Thus, the developer obtained no credit for those five paid items [113].
V0044 concerned consultancy fees, not infrastructure. The builder accepted that consultancy fees fell within the WUC and were not excluded items [116]. The primary judge had allowed the claim because it was marked approved, without resolving the disputed alleged pre-contractual discussion [114]. The Court considered that discussion irrelevant under the entire contract clause, cl 5, and held that approval could not turn non-variation work into a variation [115]-[118]. Clause 36.4 was a pricing mechanism for actual variations, not a mechanism to add payment for work already covered by the contract sum. Clause 37.2 meant the approved amount remained subject to adjustment [118]-[120]. The developer therefore received a $133,175 credit.
The delay issue turned on the contract's start point, not the number of approved extensions. The construction certificate issued on 20 August 2018, and item 7(b) allowed 20 months for practical completion, producing 20 April 2020 [13], [40]. The builder relied on project documents identifying 23 May 2020 as the original completion date. The Court found no written instrument executed by both parties changing the date, as cl 5(b) required [32], [122]. Nor did the report marked “acceptable” establish an agreement: it post-dated the first reference to 23 May 2020, and the surrounding correspondence concerned how clearly to present progress to a financier [20]-[21], [124].
The Court considered possible explanations for the inconsistent date, including an undocumented written variation, an oral agreement, or a calculation error. It held that the evidence did not establish any of those explanations sufficiently to draw a positive inference [125]-[128]. With the original date of 20 April 2020 and 102 approved EOT days, the developer was entitled to $210,000 in liquidated damages for 28 days [121], [129]-[130].
The deed issue concerned double recovery and coordinate liability. Mortgages had been granted to secure the builder's claim, with the mortgagors jointly and severally liable for the secured amount or judgment debt [46]-[48], [139]. A later deed released Ninth Campsie and Ms Tran from their mortgage liabilities. In connection with that arrangement, a Tran-related company transferred three Arncliffe properties to a builder-related company for $5 million [49], [56]-[60]. The Court held that the relevant liabilities were coordinate with the developer's liability and that the deed discharged part of that common burden [137]-[140].
The Court did not treat the use of separate companies as decisive. It looked to the transaction's commercial substance and concluded that the undervalue was part of the benefit obtained in exchange for releases of coordinate liabilities [142]-[143]. It also applied the principle that the plaintiff bears the onus of establishing what part of a settlement benefit does not relate to the coordinate liability. The builder had not discharged that onus, so the full benefit was credited [144]-[156].
Finally, the Court of Appeal itself determined the property's value. The primary judge had found that the properties were worth more than $5 million but had not quantified the amount [94]-[96]. The Court considered the prior sales, comparable transactions, market data and competing expert opinions. It preferred Mr Garnsey's evidence and assessed the value at about $7.9 million [161]-[168]. The difference from the $5 million sale price was $2.9 million.
This judgment applied existing contractual and equitable principles to the particular contract and evidence. It did not purport to replace the cited authorities or announce that every approval, payment or related-party transfer has the same effect.
On variations, the Court applied the distinction between work that is genuinely additional or changed and work the contractor already owes under the contract. It relied on Al-Atabi v Zaidi and Wormald Engineering in considering the role of carefully regulated contractual variation processes [102]-[107], [119]. The judgment makes clear that approval or pricing cannot, by itself, make existing WUC into a variation. It also shows why classification is only one step: the excluded-items clauses independently made the relevant infrastructure work separately payable [108]-[112].
On completion dates, the Court applied the parties' written variation requirement and the evidentiary principles discussed in Bradshaw v McEwans, Luxton v Vines and Jones v Dunkel [127]-[129]. A series of documents repeating a date did not establish the contract had been varied where they did not satisfy the contractual formality and the evidence also supported a clerical or calculation error. The Court noted the possible relevance of promissory estoppel under Waltons Stores, but found no basis on the evidence to treat the date as changed [127].
On coordinate liability and settlement credits, the Court applied the contribution principle in Burke v LFOT and the prohibition on double recovery discussed in Anderson v Canaccord Genuity Financial (No 2) [134]-[136]. It relied on Townsend and Boncristiano for the treatment of settlement benefits and the burden of proving that some portion is unrelated to the overlapping liability [145]-[156]. The practical effect is that a plaintiff who has received a benefit in resolving a coordinate liability cannot avoid a credit merely because the benefit was routed through related entities or its allocation was not documented. The judgment's application depended on its findings about the mortgage obligations, releases, related entities, and commercial substance [139]-[143].
For valuation, the Court exercised its appellate function under s 75A of the Supreme Court Act 1970 (NSW). It considered that the evidence was sufficiently complete and no credibility issue required the matter to be sent back [166]. This was an application of appellate fact-finding powers to the record before the Court, not a general rule that valuation disputes should always be determined on appeal.
At [107], Adamson JA said that approval and payment “did not override the express contractual provision that all payments, except final payments, were payments on account.” In plain English, interim approval did not necessarily settle the final contractual account or prevent a later assessment of what the work was.
At [110], the Court said the contract showed an intention to include infrastructure work within the WUC but pay for it separately because it was outside the contract sum. In plain English, the builder had to perform the work under the project, but the agreed lump sum did not necessarily cover its cost.
At [118], the Court stated: “The pricing of a non-variation does not convert it to a variation.” This captures the threshold point. A price, stamp or approval does not change the underlying contractual character of the work.
At [127], the Court described the competing explanations for the completion date as “conjectural and speculative” and insufficient for a positive inference. In plain English, the repeated appearance of 23 May 2020 did not prove why that date was used or establish an agreement to change the contract.
At [143], the Court said it had to look beyond separate legal personalities and consider the transaction's substance. In plain English, related companies could not be considered in isolation where the deed and transfer formed part of one commercial arrangement.
At [156], the Court concluded that the builder had not discharged its onus of showing what portion of the benefit was unrelated to coordinate liability. In plain English, because the builder did not establish a different allocation, the full benefit was credited against the developer's liability.
The judgment is particularly relevant where a construction contract has a formal variation process and a dispute arises about whether approved work was genuinely outside the original scope. A court may need to examine both the variation provisions and any separate exclusions or reimbursable categories. The case illustrates that a contractor may fail to establish a variation but still have a separate contractual basis for payment, as happened with the infrastructure items [107]-[113].
It is also relevant where a party relies on an approval stamp, progress claim, or pricing entry to establish payment entitlement. The judgment treats such material as insufficient to transform work already within the WUC into a variation, especially where interim payments are expressly on account [118]-[120].
For practical-completion disputes, the case concerns a contract that required written execution by both parties for variations, while project reports and extension-of-time forms repeatedly contained a different date. The Court examined when the date first appeared, what the relevant correspondence concerned, and whether the documents met the contractual formality [121]-[129]. The case does not establish that every inconsistent project record is a mere clerical error; its conclusion depended on the particular evidence and the absence of a qualifying written variation.
The deed reasoning may be relevant where a claimant settles with another party whose liability overlaps or is coordinate with that of a defendant still in the proceedings. It is especially pertinent where settlement consideration is delivered through related entities or includes a transfer of property at an alleged undervalue. The court may examine the economic substance, whether liabilities were released, and who bears the evidential burden concerning allocation [140]-[156].
Finally, the valuation part may matter where the trial judge finds an asset has value above a transaction price but declines to quantify the difference despite valuation evidence. The Court considered whether the record was adequate for appellate determination and whether credibility issues required remitter [161]-[167].
The judgment is dated 5 December 2025, and the supplied text contains no decisions issued after it. It is therefore not possible from this source to describe how later courts have treated Kaloriziko.
The judgment itself discusses earlier authorities and describes their role. It considered Al-Atabi and Wormald in relation to compliance with variation procedures [102]-[107], applied Codelfa in relation to using surrounding circumstances to construe an ambiguous contractual term [109], and applied Burke, Anderson, Townsend and Boncristiano to coordinate liability, settlement benefits and double recovery [134]-[156]. It also considered Ikosidekas v Glenis as a related application of the burden of proving the allocation of settlement amounts [153]-[154]. Those are the authorities discussed by this Court, not later treatment of Kaloriziko itself.
The orders left a procedural matter for further submissions. Although the Court found the developer was entitled to $210,000 in liquidated damages, the notice of appeal had not sought an order for judgment in that amount. The Court therefore directed the developer to indicate whether it sought judgment on its cross-claim, followed by response and reply submissions [170]-[171]. The supplied judgment does not set out the later result of that process.
The reasons also do not establish a general method for valuing all property transfers connected with settlements. The Court preferred Mr Garnsey's evidence on this record, including the subject properties' earlier sales, comparable sites and market movement [167]. Different evidence could produce a different valuation analysis.
Likewise, the judgment does not resolve every possible question about how the variation clauses would operate for work that is not an excluded item, or how a properly documented settlement might apportion consideration between releases, costs and other claims. Its conclusions depend on the wording of this contract, the evidence about these parties and the absence of evidence from the builder to separate the benefit [118]-[120], [155]-[156].
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Kaloriziko Pty Ltd as trustee for Ryde Combined Unit Trust v Calibre Construction Group Pty Ltd (No 2) [2025] NSWCA 259
Hearing dates: 17 November 2025
Decision date: 05 December 2025
Before: Mitchelmore JA at [1]
Kirk JA at [2]
Adamson JA at [3]
Decision: (1) Allow the appeal.
(2) Set aside orders 1 to 3 of the orders made on 19 June 2025 and, in lieu thereof, order judgment for the first defendant against the plaintiff.
(3) Declare that the amount otherwise owing by the first defendant/first appellant to the plaintiff/first respondent is nil taking into account the following reductions, which total $3,243,175:
(a) $133,175 (for the value of V0044 for consultancy fees);
(b) $210,000 (for liquidated damages); and
(c) $2.9 million (being the difference between the market value of the properties known as 31, 33 and 35 Flora Street, Arncliffe and the amounts for which they were sold in February 2024 in discharge of liability which was coordinate with that of the first defendant’s liability to the plaintiff).
(4) Set aside the costs orders made on 2 July 2025 and, in lieu thereof, order the plaintiff to pay the first and second defendant’s costs of the proceedings in the Court below.
(5) Order the first respondent to pay the appellants’ costs of the appeal.
(6) Direct the first appellant by 5pm on 10 December 2025 to file and serve and email to the Associates to the judges who constitute the Court for this matter submissions accompanied by a draft minute of order indicating whether it seeks judgment in its favour on its cross-claim in the amount of $210,000 (disregarding interest) for liquidated damages.
(7) Direct the first respondent by 5pm on 12 December 2025, in the same manner as specified in (6) above, to respond to any submissions or draft orders proposed.
(8) Direct the first appellant to provide any reply by 5pm on 15 December 2025 in the same manner as specified in (6) above.
(9) If either the appellants or the first respondent wishes to contend for a costs order, either in the Court below or in this Court, different from the orders proposed in (4) or (5) above, then, failing agreement, the party, or parties, is to provide submissions in support of the different order sought within the timeframes in the timetable specified above.
Catchwords: BUILDING AND CONSTRUCTION — design and construct contract — apartment development — payment for variations —construction of “variation”, “direction” and contractual pricing mechanism
CONTRACTS — interpretation — whether parties agreed to exclude consultants’ fees from contract sum — practical completion — whether date for practical completion varied by agreement — claim for liquidated damages for delay
EQUITY — contribution — co-ordinate liability — deed of settlement — whether settlement conferred benefit on builder requiring reduction of damages — valuation dispute as to alleged undervalue of transferred properties
Legislation Cited: Supreme Court Act 1970 (NSW), s 75A
Cases Cited: Al-Atabi v Zaidi [2009] NSWCA 433
AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170; [1986] HCA 63
Anderson v Canaccord Genuity Financial (No 2) (2024) 115 NSWLR 1; [2024] NSWCA 161
Boncristiano and Anor v Lohmann and Ors [1998] 4 VR 82; [1998] VSC 228
Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1
Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17
Calibre Construction Group Pty Ltd v Kaloriziko Pty Ltd atf Ryde Combined Unit Trust; Kaloriziko Pty Ltd atf Ryde Combined Unit Trust v Calibre Construction Group Pty Ltd (No 2) [2025] NSWSC 593
Calibre Construction Group Pty Ltd v Kaloriziko Pty Ltd atf Ryde Combined Unit Trust; Kaloriziko Pty Ltd atf Ryde Combined Unit Trust v Calibre Construction Group Pty Ltd (No 3) [2025] NSWSC 646
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337; [1982] HCA 24.
Friend v Brooker (2009) 239 CLR 129, [2009] HCA 21
House v The King (1936) 55 CLR 499; [1936] HCA 40
Ikosidekas v Glenis [2023] VSCA 134
Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8
Luxton v Vines (1952) 85 CLR 352; [1952] HCA 19
MMAL Rentals Pty Ltd v Bruning (2004) 63 NSWLR 167; [2004] NSWCA 451
Parkin v Thorold (1852) 16 Beav 59; 51 ER 698
Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 77 ALJR 768; [2003] HCA 10
The Nominal Defendant v Gabriel (2007) 71 NSWLR 150; [2007] NSWCA 52
Townsend v Stone Toms & Partners (1984) 27 BLR 26
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7
Wormald Engineering Pty Ltd v Resources Conservations Co. International (1992) 8 BCL 158
Category: Principal judgment
Parties: Kaloriziko Pty Ltd as trustee for Ryde Combined Unit Trust (First Appellant)
Camile Chanine (Second Appellant)
Calibre Construction Group Pty Ltd (First Respondent)
Eddie Tran (Second Respondent)
Ninth Campsie Pty Ltd (Third Respondent)
Representation: Counsel:
M Ashhurst SC / S Scott (Appellants)
S Balafoutis SC / M Sheldon / Y Truong (First Respondent)
Solicitors:
Fortis Law (Appellants)
One Group Legal (First Respondent)
File Number(s): 2025/261209
[This headnote is not to be read as part of the judgment]
The appellants, Kaloriziko Pty Ltd as trustee for Ryde Combined Unit Trust (the developer) and its director Camile Chanine, appeal from a decision of Stevenson J (the primary judge) awarding damages to the first respondent, Calibre Construction Group Pty Ltd (the builder). The dispute arose under a design and construct contract for the development of an apartment complex in Ryde.
At trial, the builder claimed damages for underpayments and unpaid variation work. The developer contended that the damages should be reduced to account for payments it said were not true variations, liquidated damages for delay, and the benefit the builder received under a deed of settlement resolving the builder’s claims against other parties said to have co-ordinate liability with that of the developer. The primary judge awarded the builder $2,137,430.86 plus interest.
On appeal, the issues which arose were: (1) whether the primary judge erred in finding that the developer had approved and agreed to pay certain variations; (2) whether the contract price included consultants’ fees; (3) whether the date for practical completion had been varied in accordance with the contract; and (4) whether a deed whereby the builder released co-defendants from liability in return for a transfer of a property at an alleged undervalue reduced the developer’s liability to the builder. As the fourth issue was resolved in the developer’s favour, a further question arose as to the extent of any reduction.
The Court concluded that the appeal should be allowed, and the primary judge’s orders set aside, with judgment to be entered for the developer.
The Court held (Adamson JA, Mitchelmore and Kirk JJA agreeing) allowing the appeal:
Issue 1: whether the primary judge was in error in rejecting the developer’s claim for a credit for its payments to the builder for variations 1, 7, 11, 13 and 21 (grounds 1-3)
(1) Variations 1, 7, 11, 13 and 21 were not variations, as the work fell within the work under contract (WUC). The developer’s approval and payment of these claims did not displace cl 37.2, which provides that all payments other than the final payment are payments on account. The primary judge erred in concluding otherwise: [97]-[99], [107].
(2) However, each item constituted an “excluded item” under cl 1, being “services or infrastructure upgrades” within cl 2(b), as supported by the development consent, plans and the contractual context: [100]-[101], [108].
(3) The contract required such services and infrastructure works to be performed as part of the WUC but paid for separately, as they were not included in the contract sum. The works comprising each of the disputed items fell within that category: [109]-[112].
(4) Accordingly, although the asserted error is made out, the builder was entitled to retain the amounts paid, and no credit is owed to the developer: [113].
Al-Atabi v Zaidi [2009] NSWCA 433; Wormald Engineering Pty Ltd v Resources Conservations Co. International (1992) 8 BCL 158; Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337; [1982] HCA 24, considered.
Issue 2: whether the primary judge was in error in allowing the builder’s claim for variation 44 (for consultancy fees) (grounds 4-5)
(5) The primary judge allowed the claim for variation 44 on the basis that the variation had been “approved” by the developer. No finding was made as to whether the alleged pre-contractual discussion concerning consultancy fees occurred: [114].
(6) Consultancy fees fell within the WUC and were not excluded items. Pre-contractual discussions were irrelevant by reason of an entire contract clause. The fact of “approval” could not convert a non-variation into a variation, and cl 37.2 applied in terms: [115].
(7) The builder’s reliance on cl 36 was misplaced. The developer’s approval did not operate as a direction under cl 36.1, nor could it “price” a variation under cl 36.4. Pricing or approving was ineffective to transform a non-variation into a variation. Any approval was no more than an implied admission capable of being displaced by the true contractual position: [117]-[118].
(8) As consultancy fees formed part of the WUC and were covered by the contract sum, the builder had no entitlement to payment for variation 44. Under cl 37.2 the developer was entitled to a credit for the approved amount: [118]-[120].
(9) Accordingly, grounds 4 and 5 are made out, and the developer is entitled to a credit of $133,175: [120].
The Nominal Defendant v Gabriel (2007) 71 NSWLR 150; [2007] NSWCA 52; Al-Atabi v Zaidi [2009] NSWCA 433; Wormald Engineering Pty Ltd v Resources Conservations Co. International (1992) 8 BCL 158, considered.
Issue 3: whether the date for practical completion had been varied separately from the total period for which EOTs had been granted (grounds 6-7)
(10) The contracted date for practical completion was not validly varied from 20 April 2020 to 23 May 2020. No written variation existed as required by cl 5(b), and the documents referring to 23 May 2020 were consistent with clerical error or miscalculation: [121]-[124].
(11) Neither an oral agreement nor any conduct by the parties supported a variation. A Jones v Dunkel inference could not establish one: [127].
(12) Because the original contracted date was 20 April 2020, and the approved EOTs totalled 102 days, the developer was entitled to $210,000 in liquidated damages. Grounds 6 and 7 were upheld, and the judgment sum reduced accordingly: [121], [129]-[130].
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7; Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1; Luxton v Vines (1952) 85 CLR 352; [1952] HCA 19; Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8, considered.
Issue 4: whether the primary judge was in error in finding that he could not assess whether the deed discharged any co-ordinate liability between the mortgagors and the developer and that therefore allowing no reduction in the damages to be awarded to the builder on that basis (grounds 8-13)
(13) The mortgagors’ liabilities under the mortgages were co-ordinate with the developer’s liability to the builder, and the deed released Ninth Campsie and Ms Tran from those liabilities: [137]-[141].
(14) Although the Arncliffe properties were transferred through related entities, the substance of the transaction was that the builder, in return for releasing parties with co-ordinate liability, the builder obtained the benefit of property which its related company acquired at an undervalue. The Court was required to look beyond the form of the dealings to their commercial effect: [142]-[143].
(15) The benefit of the deed to the builder was the full amount of the undervalue (the difference between the properties’ true value and the $5 million paid). The builder did not discharge its onus of proving that any part of the benefit related to anything other than the release of co-ordinate liability; accordingly, no deduction should be made for the value of the releases: [144]-[147].
(16) The primary judge erred in allowing no reduction for the discharge of liability which was coordinate with that of the developer. Grounds 8-11 are made out, and the developer is entitled to a credit equal to the full undervalue of the Arncliffe properties: [156].
Townsend v Stone Toms & Partners (1984) 27 BLR 26; Boncristiano and Anor v Lohmann and Ors [1998] 4 VR 82; [1998] VSC 228; Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17; Anderson v Canaccord Genuity Financial (No 2) (2024) 115 NSWLR 1; [2024] NSWCA 161; Friend v Brooker (2009) 239 CLR 129, [2009] HCA 21; AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170; [1986] HCA 63; Parkin v Thorold (1852) 16 Beav 59; 51 ER 698; Ikosidekas v Glenis [2023] VSCA 134, considered.
Issue 5: by what sum ought the builder’s damages be reduced to take account of the benefit it obtained by the deed (grounds 12-15)
(17) The developer was entitled to a reduction equal to the difference between the market value of the Arncliffe properties and the $5 million for which the builder paid for them. The primary judge erred in finding he could not quantify the undervalue in circumstances where the evidence including recent sales of the subject properties, comparable sales, market data and expert valuations: [157]-[164].
(18) As all relevant evidence was before the Court and no credibility issues arose, the Court of Appeal could itself determine value. The developer’s valuation evidence, which was preferred, established that the properties were worth about $7.9 million at the time of their sale for $5 million to the builder: [166]-[167].
(19) The amount of $2.9 million must be deducted from the builder’s damages. Grounds 12-14 are made out: [168].
House v The King (1936) 55 CLR 499; [1936] HCA 40; Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 77 ALJR 768; [2003] HCA 10; MMAL Rentals Pty Ltd v Bruning (2004) 63 NSWLR 167; [2004] NSWCA 451, considered.
MITCHELMORE JA: I agree with Adamson JA.
KIRK JA: I agree with Adamson JA.
ADAMSON JA: The appellants, Kaloriziko Pty Ltd as trustee for Ryde Combined Unit Trust (the developer) and one of its directors, Camile Chanine (Mr Chanine), appeal against a decision of Stevenson J (the primary judge), awarding damages to the first respondent, Calibre Construction Group Pty Ltd (the builder). In the Court below, the builder claimed damages against the developer for various breaches of a design and construct contract (the contract) for the development of an apartment complex in Ryde. The developer argued that the builder’s damages ought be reduced for payments made for variations, which were not actually variations; liquidated damages for delay; and to take account of the benefit obtained by the builder by reason of a settlement by deed of its claims against parties which had a coordinate liability with the developer.
The primary judge awarded damages to the builder in the sum of $2,137,430.86 plus interest of $568,829.14. The developer claims on appeal that this amount ought be reduced by the following amounts:
| Grounds of appeal | Amount by which judgment ought be reduced | | 1-3 | $569,778 (the total of V0001, V0007, V011, V013 and V021) | | 4-5 | $133,175 (the value of V0044) | | 6-7 | $210,000 in liquidated damages ($7,500 per day for 28 days) | | 8-13 | $2,900,000 (the difference between the price paid for three properties at Arncliffe ($5 million) and the value attributed to those properties ($7,900,000) by the appellants’ valuer). |
The grounds give rise to five issues as to whether the primary judge erred in finding that:
the developer had “approved” and paid certain “variations” and had, therefore, “agreed to vary the work under contract (WUC)”, such that it was now not open to the developer to challenge this “approval” (grounds 1-3);
the parties had agreed to vary the contract to exclude the cost of consultants’ fees (grounds 4-5);
the date for practical completion of the contract works had been varied separately from the periods for which an extension of time had been granted (grounds 6-7); and
his Honour could not assess whether the deed (as defined below) discharged any co-ordinate liability between the mortgagors and the developer and that therefore no reduction in the damages to be awarded to the builder ought be made on that basis (grounds 8-13).
If issue (4) is determined in favour of the developer, this gives rise to a further issue:
by what amount ought the builder’s damages be reduced to take account of the benefit it obtained by the deed (grounds 14-15).
For the reasons that follow, the appeal must be allowed and the judgment ordered by the Court below set aside and replaced by a judgment in favour of the developer.
The principal judgment delivered by the primary judge is Calibre Construction Group Pty Ltd v Kaloriziko Pty Ltd atf Ryde Combined Unit Trust; Kaloriziko Pty Ltd atf Ryde Combined Unit Trust v Calibre Construction Group Pty Ltd (No 2) [2025] NSWSC 593. References to paragraph numbers in this judgment will be referred to as “J”. The primary judge also gave a further judgment: Calibre Construction Group Pty Ltd v Kaloriziko Pty Ltd atf Ryde Combined Unit Trust; Kaloriziko Pty Ltd atf Ryde Combined Unit Trust v Calibre Construction Group Pty Ltd (No 3) [2025] NSWSC 646, correcting some matters in the original judgment but it is unnecessary to refer to it.
The developer was incorporated in 2015 with Mr Chanine as its director. In October 2016, the developer purchased land in St Anne’s Street, Ryde (the site) and obtained Development Consent No LDA2015/0654 in respect of that site. In July 2017, the Development Consent was subsequently amended.
The conditions of the original Development Consent included the following conditions relevant to infrastructure:
13. Public Utilities. Compliance with the requirements (including financial costs) of any relevant utility provider (e.g. Energy Australia, Sydney Water, Telstra, RMS, Council etc) in relation to any connections, works, repairs, relocation, replacements and/or adjustments to public infrastructure or services affected by the development.
…
- Sydney Water Tap in™. The approved plans must be submitted to the Sydney Water Tap inTM on-line service to determine whether the development will affect any Sydney Water sewer or water main, stormwater drains and/or easement, and if further requirements need to be met.
…
58. Service infrastructure/utilities. Unless specifically shown on the approved architectural plans, all service infrastructure/utilities including electrical substations, fire hydrants, gas meters and the like shall be located within the building envelope. Where this is not possible and subject to Council approval, such infrastructure shall be located on the subject site and appropriately screened from view. Electrical substations specifically shown on the approved architectural plans should also include appropriate screening where possible.
Details of all service infrastructure/utilities are to be approved prior to the issue of the Construction Certificate.
…
79. Public domain improvements - The public domain is to be upgraded along all three frontages of the development site - Victoria Road, Little Church Street and St Anne’s Street, in accordance with the City of Ryde Public Domain Technical Manual, Section 7 - Ryde Town Centre. The work is to include but not be limited to paving, lighting upgrade, street furniture and plantings.
A public domain plan for the following works shall be submitted to Council for approval by Council, prior to the issue of the Construction Certificate.
…
(d) The street lighting along the Victoria Road, Little Church Street and Saint Anne’s Street frontages is to be upgraded in accordance with Australian Standard AS1158:2010 Lighting for Roads and Public Spaces …
The street lighting shall remain on the Ausgrid network, and LED luminaires shall be used where possible. Plans are to be prepared and certified by a suitably qualified Electrical Design Consultant for the upgrade to the network, and are to be submitted to Council and Ausgrid for approval prior to commencement of work.
…
133 Sydney Water - Section 73. A Section 73 Compliance Certificate under the Sydney Water Act 1994 must be obtained from Sydney Water Corporation. Application must be made through an authorised Water Servicing Co-ordinator. …
(Emphasis in original.)
The references to infrastructure in the Development Consent are relevant to issue (1) (and grounds 1-3): whether the builder was entitled to retain the amounts paid for purported variations because they were “excluded items” under the contract, as they amounted to “infrastructure upgrades” (addressed below).
In November 2017, the developer and the builder entered into the contract pursuant to which the builder agreed to design and construct on the site a multi-storey, mixed use residential and commercial development comprising four towers and a hundred units. The Contract comprised a Formal Instrument of Agreement, General Conditions in the AS 4902-2000 format and ancillary documents: J [1]. The contract required the developer to retain 5% of the contract sum as security (retention) and for the retention to be paid to the builder over a period of 12 months after the issue of a certificate of practical completion. The retention was to be “held in trust” by the developer for the builder. It was common ground that the developer breached the contract by failing to hold the retention on trust for the builder. The terms of the contract are addressed separately below.
On 14 February 2018, Sydney Water issued a notice of requirements for a compliance certificate pursuant to s 73 of the Sydney Water Act 1994 (NSW). The requirements included adjustment of the water main, sewer main and stormwater, if required by Sydney Water as a consequence of the development on the site. The notice also said:
Large Water Service Connection
A water main are available to provide your development with a domestic supply. The size of your development means that you will need a connection larger than the standard domestic 20 mm size.
On 20 August 2018, the construction certificate was issued. Accordingly, the original contracted date for practical completion was 20 April 2020, as the contract defined the date as the date 20 months from the issue of the construction certificate (see further below).
On 27 August 2018, approved street lighting plans for the development were forwarded to the developer by Ryde City Council, which indicated the existing configuration of street lights and the proposed arrangement as well as diagrams for the existing and proposed substation.
On 28 August 2018, Eddie Tran (the third defendant in the Court below and the second respondent in this Court) became a director and shareholder of the developer (with Mr Chanine). Ninth Campsie Pty Ltd (Ninth Campsie), the fourth defendant in the Court below and the third respondent to the appeal, was a company associated with Mr Tran’s daughter, Hillary Tran (Ms Tran). The relationships between relevant companies and their directors and shareholders are significant for issues (4) and (5).
The builder submitted various claims for extensions of time (EOT). The first, EOT claim 001, dated 13 September 2018 claimed 3 days on the basis of inclement weather. The claim indicated, on the first page, that the “original contracted completion date” was 23 May 2020 (and not 20 April 2020, see above). However, the second page contained the following above the signature of Nicole Rizk (a Project Assistant for the developer), who approved the EOT:
NOTES:
1. Start date – 20/08/2018
2. Duration Time for Completion: TBC
NOTES:
1. Start date – 23/07/2018
2. Duration Time for Completion: 20 Months from issuance of Construction Certificate
(Emphasis added to indicate change from previous documents.)
This notation also appeared in subsequent EOT claims, including on the final claim, EOT claim 051 (which had been submitted as EOT 036 and was rejected and was resubmitted as EOT 051 on 14 October 2020, after the date of practical completion). The developer’s “approved” stamp was applied on top of the notation above Ms Rizk’s signature and the date of approval, being 20 November 2020.
The date of 23 May 2020, which was described as the “Original Contracted Completion Date”, was included on page 1 of every EOT claim submitted by the builder and on several other documents. It was also included in the Project Control Group (PCG) reports, including the first PCG report dated 22 December 2018, that were submitted by the builder to the developer from time to time to outline the current status of the development.
On 26 April 2019, Ms Rizk asked the builder for a PCG report so that she could circulate it to the parties for the meeting the following week. On 30 April 2019, the builder emailed Ms Rizk to assure her that he was working on it. At 9.32am on 1 May 2019, the builder emailed PCG report no. 3, in draft, to Ms Rizk. In her response at 10.10am that day, Ms Rizk asked the builder to “include in the report how far ahead of the updated construction programme [the builder] are”, indicating that “[i]t’ll be good to include this for our financer”. At 10.25am, the builder responded saying that the “[s]tatus line” (indicating the progress of the works by reference to a time line) had already been depicted as a green vertical line in the program and included a screen shot of the relevant page. In an email sent at 10.40am, Ms Rizk asked that it be made “more obvious for the financer”. The builder sent a further revised draft by email at 11.20am. In her email sent at 11.22am, Ms Rizk, said, “[t]his is acceptable. Thanks. I’ll email copies through now” (Emphasis added).
Ms Rizk’s use of the word “acceptable” was relied on by the builder as an indication that the developer accepted that the date of 23 May 2020, which was described in all PCG reports as “Original Construction Completion Date”, was correctly described and that there must have been an agreement to vary the original date of 20 April 2020.
The developer relied on the contract to submit that the “original contracted completion date” was 20 April 2020 (being 20 months after 20 August 2018). It claimed liquidated damages of $210,000 ($7,500 per day for 28 days) on the basis that EOT of 102 days (not including weekends or public holidays) had been approved, taking the date for practical completion to 18 August 2020. It was common ground that the date of practical completion was 15 September 2020. The developer’s challenge to the primary judge’s denial of its claim is the subject of grounds 6-7 (issue (3)).
The builder relied on the date of 23 May 2020 (the provenance of which was not revealed by the evidence) as the starting point, which gave rise to a date for practical completion of 15 September 2020 (taking into account the EOTs of 102 days), which coincided with the date of practical completion.
The Contractor requests that the Principal Representative issues a direction to Calibre Construction Group to vary the Works.
The variation was approved by Marwan Chanine, Mr Chanine’s son, on behalf of the developer on 31 October 2018.
The builder submitted claims for “variations” which were stamped “approved” and paid by the developer. The “variations” which are the subject of grounds 1-3 can be summarised as follows.
| Number | Date | Description | Amount | Date approved | | V001 | 26 Oct 18 | Supply & Install Substation and Street Lighting Up-Grade Works | $438,900 | 31 Oct 18 | | V007 | 13 May 19 | Section 73 Sydney Water Works (Part 1) | $69,494.59 | 30 May 19 | | V011 | 13 May 19 | Locate Underground Services SW Cnr via Pot Holing | $14,990 | 13 May 19 | | V013 | 29 Jan 19 | Road Opening Permit incl Road Restoration Costs – Substation and Streetlighting Works | $21,423.60 | 29 Jan 19 | | V021 | 4 Sep 19 (revised) | Section 73 Sydney Water Works (Part 2) | $25,300 | 5 Sep 19 |
| Number | Date | Description | Amount | Date approved | | V044 | 8 Oct 20 | Consultant Fees Post CC incl Design, Inspection Reports, OC | $133,175.50 | 20 Nov 20 |
As referred to above, the contract between the developer and the builder comprised:
a Formal Instrument of Agreement dated 30 November 2017;
General Conditions in the AS 4902-2000 (the General Conditions); and
format and ancillary documents.
Notwithstanding any other condition in this Contract, the Parties expressly agree that the Excluded Items and any associated fees to authorise and/or service providers in relation to the Excluded Items do not form part of the Contract Sum and should any work be required to perform the Excluded Items, that work, including any work incidental to performing that work will be in addition to the Contract Sum and will constitute a Variation to the Contract.
Clause 3(j) of the Formal Instrument of Agreement provided that the contract sum may be varied in accordance with cl 36.4 of the General Conditions, which provides that the developer’s representative shall price each “variation”, which is defined in cl 1 of the General Conditions (see below).
Clause 4 of the Formal Instrument of Agreement listed the contract documents, which included the General Conditions.
Clause 5 provided:
Entire contract
(a) The documents listed in clause 4 constitute the entire agreement between the parties in respect of the Works and the Contract supersedes all previous agreements, undertakings and communications, whether written or oral, relating to the subject matter of the Contract.
(b) The Contract may be varied only by written instrument executed by both parties.
date for practical completion means:
(a) where Item 7(a) provides a date for practical completion, the date;
(b) where Item 7(b) provides a period of time for practical completion, the last day of the period,
but if any EOT for practical completion is directed by the Principal’s Representative or allowed in any expert determination or litigation, it means the date resulting therefrom;
…
direction includes agreement, approval, assessment, authorisation, certificate, decision, demand, determination, explanation, instruction, notice, order, permission, rejection, request or requirement;
…
excluded items means any work or costs, fees or charges in relation to the following:
…
(v) services or infrastructure upgrades;
(vi) any fees payable to any authorities and/or service providers and/or infrastructure stakeholders;
…
…
Services includes water, stormwater, gas, steam, compressed air, electricity, drainage, sewerage, telephone, security, fire services, control systems, or telecommunication pipes, cables, facilities, ducts, wires and conduits including connection and access points, meters, junctions, changes in direction, fittings, cocks, sumps and pits;
…
variation has the meaning in clause 36
…
WUC (from ‘work under the Contract’) means the work which the Contractor is or may be required to carry out and complete under the Contract and includes variations, remedial work, construction plant and temporary works …
(Emphasis in original.)
Clause 11.3 relevantly provides that, except for the “Excluded Work” (a term which is not defined in the General Conditions but which may be a reference to “excluded items”, as was contended by the builder), the builder must, at its expense, procure and maintain all, in effect, permits necessary for the carrying out of the WUC.
Clause 16A provides, in effect, that the builder shall insure the WUC until the builder ceases to be responsible for their care. The insurance cover is required to be not less than the aggregate of certain nominated items, including “provision in Item 23(c) for consultants*’* fees and Principal*’*s consultants’ fees”: cl 16A(i) (Emphasis in original.). Item 23(c) in the schedule to the General Conditions does not specify a figure for these fees.
Clause 25.2 includes the following:
Subject to Item 2(b) (Excluded Works), the Contractor agrees that it is responsible for, and assumes the risk of all additional work, increased costs and any damage, expense, loss, liability or delay (including any delay in achieving practical completion) it suffers or incurs arising out of, or in any way in connection with the site conditions actually encountered during the execution of WUC, including the suitability or otherwise of the site (including site conditions) for WUC.
(Emphasis in italics in original and emphasis in bold added.)
The builder submitted that “Item 2(b)” in this clause ought be understood as a reference to cl 2(b) of the Formal Instrument of Agreement and “Excluded Works” should be understood as a reference to “excluded items”, as defined in cl 1 of the General Conditions. This submission is relevant to grounds 1-3.
Clause 36 will be set out in full because of its importance to grounds 1-5. It provides for variations as follows:
36.1 Directing variations
The Contractor shall not vary WUC except as directed in writing.
The Principal’s Representative, before the date of practical completion, may direct the Contractor to vary WUC by any one or more of the following which is nevertheless of a character and extent contemplated by, and capable of being carried out under, the provisions of the Contract (including being within the warranties in subclause 2.2):
(a) increase, decrease or omit any part;
(b) change the character or quality of any material or work;
(c) change the levels, lines, positions or dimensions of any part of the WUC;
(d) carry out additional work; and
(e) demolish or remove material or work no longer required by the Principal.
If the Contractor is directed to carry out a variation pursuant to subclause 36.1(b):
(i) the Contractor shall immediately and prior to the variation being priced, carry out the work the subject of the variation; and
(ii) the variation will be valued under subclause 36.4 (including any delay costs if applicable) during the carrying out of the work, the subject of the variation.
36.2 Proposed variations
The *Principal’*s Representative may give the Contractor written notice of a proposed variation.
The Contractor shall as soon as practicable after receiving such direction, notify the *Principal’*s Representative in writing whether the proposed variation can be effected, and shall include the following information:
(a) the scope of the work involved in the proposed variation;
(b) effect the Contractor anticipates that the proposed variation will have on the program (including the date for practical completion);
(c) the period of time being claimed as an EOT in respect of the proposed variation; and
(d) a detailed breakdown of the cost (including all warranties and delay costs, if any) of the proposed variation.
Upon receipt of the information from the Contractor the *Principal’*s Representative may at its sole discretion:
(a) direct the Contractor to provide further information;
(b) direct the Contractor to carry out the proposed variation on the condition that the cost of the proposed variation will be valued under clause 36.4 (including any delay costs if applicable) during the carrying out of the work, the subject of the variation;
(c) negotiate with the Contractor in relation to the scope and cost of the proposed variation; or
(d) reject the terms of the *Contractor’*s notification in which case the Contractor shall have no obligation in respect of the proposed variation.
36.3 Variations for convenience of Contractor
If the Contractor requests the Principal’s Representative to direct a variation for the convenience of the Contractor, the Principal’s Representative may do so. The direction shall be written and may be conditional. Unless the direction provides otherwise, the Contractor shall be entitled to neither extra time nor extra money.
36.4 Pricing
The *Principal’*s Representative shall, as soon as possible, price each variation using the following order of precedence:
(a) using prior agreement, provided only that the agreed value is approved by the by [sic] agreement between the parties;
(b) schedule of rates at Annexure Part T (if any);
(c) applicable rates or prices in the Contract;
and
(d) reasonable rates or prices, which shall include an amount calculated by applying the percentage stated at Item 13C;
and any deductions shall include an amount calculated by applying the percentage stated at Item 13D.
Subject to clause 36.3, that price shall be added to or deducted from the contract sum.
(Emphasis in original.)
Neither a progress certificate nor a payment of moneys shall be evidence that the subject WUC has been carried out satisfactorily. Payment other than final payment shall be payment on account only.
(Emphasis in original.)
Annexure A to the General Conditions (which “shall be read as part of the Contract”) (the Schedule), provides, in item 7(b), that the period of time for practical completion in cl 1 is “20 months from the date that [the] Construction Certificate is issued”.
Item 22A of the Schedule provides, for the purposes of cl 11.3, that the approvals which the developer must obtain at its own expense are “S 96 Application and access to neighbouring properties including but not limited to access to airspace, permission to install anchors into neighbouring properties and substation approvals”.
Item 23 of the Schedule contains provision for “consultants’ fees and Principal’s consultants’ fees”, for the purposes of cl 16A, but no amount or rate has been inserted.
The documents attached to, and which formed part of, the contract included a construction program prepared by the builder which listed the various items of work. The offsite works included item 47, “Substation – Design and Approval” and item 48, “Substation – Lead Time”. These items were relied on by the developer as an indication that infrastructure of itself was not, as the builder contended, an excluded item.
On 26 May 2023, the Court below noted that the parties had agreed that the freezing orders were to be discharged and substituted with mortgages granted to the builder over five properties owned by entities associated with Mr Chanine and Mr Tran including one owned by Ninth Campsie and one owned by Ms Tran.
On 29 May 2023, mortgages were granted to the builder by Ninth Campsie (of which Ms Tran was the sole director) over 105/SP102978; by Ms Tran over 47/SP101074 and also by two companies, Marwan Layla Pty Ltd and The Wave Rockdale Pty Ltd, of which Mr Chanine was sole director, over 72/SP96421, 11/SP103369 and 36/SP103369.
Annexed to each of the mortgages and marked “A” were the terms of an agreement between Ninth Campsie, The Wave Rockdale Pty Ltd, Marwan Layla Pty Ltd and Ms Tran, who were defined collectively as “Mortgagors”, and the builder, as “Mortgagee”. The terms defined “Defendant Parties” as meaning the developer, Mr Chanine, Mr Tran and Ninth Campsie. Each mortgage was security for payment of the Secured Money (which was defined to mean $2,963,529.21 or, upon judgment being entered, the “Relevant Judgment Debt”). The “Secured Moneys” were required to be paid on the latter of 42 days after the time for payment of an agreement to resolve the proceedings or orders being entered for any one or more of the Defendant parties to pay an amount to the builder.
Subsequently, the builder entered into a Deed of Agreement and Set-Off dated 8 February 2024 with Ninth Campsie, Mr Tran, Apolo Apartments Pty Ltd (Apolo) and Aerial Holdings Pty Ltd (Aerial) (the deed). Mr Tran and Ninth Campsie were defined as “the Tran Parties”. The deed provides for the transfer of “Property” from Apolo defined as the Vendor, and Aerial, defined as the Purchaser.
Apolo had purchased three adjoining residential properties, 31, 33 and 35 Flora Street, Arncliffe (the Arncliffe properties) four years earlier, on 21 February 2020, from unrelated parties for a total of $6,920,062, which comprised $2.75 million; $2,085,031 (for no. 33); and $2,085,031 (for no. 35). These figures are derived from the registered transfers dated 4 September 2020 which were in evidence before the primary judge.
I note that the contracts for sale of these properties dated 21 February 2020, which were also in evidence before the primary judge specified that the consideration for each of 33 and 35 Flora Street, Arncliffe was $2,585,031. This Court raised this apparent discrepancy with the parties after the conclusion of the oral hearing.
The developer submitted (in written submissions on this point dated 28 November 2025):
… While it is possible that there is an error in the transfers (or that the transfers do not disclose the full amount of the consideration paid to the vendors of 33 and 35 …), the appellants are unable to identify any additional evidence or principle that would allow this Court to prefer the sale price shown in the Contracts for Sale compared to that disclosed in the transfers.
The difficulty with any form of "comparable sale" analysis (which the builder exclusively relied upon) is that the comparable sites under consideration are always (by definition) not identical to the subject properties. The 2020 sales of the three subject properties provide the only direct evidence of actual sales of these same properties. Adjusting this actual sales evidence for time demonstrates conclusively the undervalue sale of these three properties in 2024.
The builder submitted in written submissions dated 28 November 2025 that the sale price was potentially affected by the fact that the contracts were executed pursuant to an option deed which was executed by the parties in August 2017. Although the option deeds are not in evidence, the notices of exercise of call options dated 21 February 2020 for each of 31, 33 and 35 Flora Street, Arncliffe were in evidence. The builder submitted that the appropriate methodology was the “direct comparison” method based on sales of comparable properties in 2024 and that it was “unsafe to rely on the prices recorded in the 2020 contracts”. This submission was repeated in further reply submissions dated 1 December 2025.
In light of the parties’ concessions, this Court will proceed on the basis that the sale price of each of 33 and 35 was $2,085,031. The valuation evidence is addressed further below.
The recitals to the deed stated as follows:
A. [The builder], [the developer] and the Tran parties are parties to the Litigation.
B. [Mr] Tran holds 49% of the units in [the developer].
C. The Vendor is a Related Party to the Tran Parties.
D. The Purchaser is a Related Party to [the builder].
E. The Tran Parties have reached an agreement which results in a resolution of any exposure the Tran Parties have in the Litigation, whether in their own right or as unit holders of [the developer].
F. The Vendor wishes to sell the Property and the Purchaser wishes to purchase the Property.
G. The Vendor and the Purchaser have reached an agreement whereby the Purchaser will purchase the Property from the Vendor pursuant to the terms and conditions contained in the Contract, provided that [the builder] and the Tran Parties enter into this Deed.
H. The parties have agreed to an arrangement whereby
(a) The Vendor will sell the Property to the Purchaser pursuant to the terms of the Contract for a purchase price of $5,000,000, plus the value of the Litigation Liability (if any); and
(b) In consideration of the Vendor and the Purchaser entering into the Contract, [the builder] will release the Tran Parties from the Litigation Liability and will offset any amount the Tran Parties will be required to contribute to [the developer] to pay [the builder] in respect of the Litigation Liability.
I. The effect of the arrangement that the parties have reached is that in the event that there exists a Litigation Liability, the Tran parties portion of the Litigation Liability forms part of the purchase price of the Property and the liability of the Tran Parties to [the builder] will be set off against the liability of the Purchaser to the Vendor under the Contract.
J. The Parties have agreed to record their agreement in writing by entering into this Deed .
The deed defined “Litigation Liability” as meaning any amount payable to the builder by the Tran Parties in the proceedings, whether in their own right or as unitholder of the developer, up to 50% of any award, judgment, compromise or settlement entered against the developer in the proceedings.
The effect of the deed was that Ninth Campsie and Ms Tran were released from their liabilities under the mortgages in exchange for the transfer from Apolo (a party related to Ninth Campsie and Mr Tran), of the Arncliffe properties to a party related to the builder for $5 million.
Apolo was, as stated in recital C, related to Mr Tran and Ninth Campsie. Its sole shareholder is Trish Quach.
Ali Mohanna is the sole director of the builder. Mr Mohanna’s wife, Rami Farhat, is the sole shareholder of Aerial.
In the Court below, the developer disputed that certain work claimed by the builder as “variations” (1, 7, 11, 13 and 21) and which it had paid, constituted “variations” within the meaning of the contract and sought to recover the amounts it had paid in respect of these “variations”. It argued that its payment of any disputed variations was a payment on account only and that it did not vary the WUC.
The builder disputed these propositions but also submitted, in the alternative, that the variations were “excluded items” under the contact for which it was entitled to be paid.
115 However, during discussions with Marwan (on behalf of [the developer]) prior to entry into the Contract, we had a conversation to the following effect:
Marwan: We will take care of the consultants. Let’s deduct that from the contract sum.
Me: That’s fine, but then you will be responsible for engaging all consultants and paying all their fees. We won*’*t be responsible for it.
The builder alleged that, following that conversation, the contract sum was reduced by $600,000.
Marwan Chanine denied any such conversation or that the contract sum had been reduced as a consequence.
At the request of the primary judge the parties set out their respective contentions as to the disputed “variations” in a schedule (the Redfern Schedule).
The builder, having settled its claim against Mr Tran and Ninth Campsie by the deed, sought to recover the retention from the developer (under contract and on the basis of alleged breach of trust) and Mr Chanine (for being knowingly concerned in the developer’s breach of trust).
The developer submitted that its liability to the builder was coordinate with that of Mr Tran and Ninth Campsie. It further submitted that the sale of the Arncliffe properties was at an undervalue of about $2.9 million and that the effect of this was to reduce the developers’ liability to the builder by that amount.
The builder called an expert valuer, Andrew McDonnell, and the developer called an expert valuer, Nicholas Garnsey. Mr McDonnell opined that the value of the Arncliffe properties as at the date of the deed was $5.5 million and Mr Garnsey opined that it was $7.9 million.
Mr Garnsey was instructed that the sale price of each of 33 and 35 was $2,085,031.11 (which has been confirmed to be common ground). He noted in his report:
I have not been provided with contracts for sale or option agreements and I therefore cannot comment as to any conditions attached to these transfers which may have influenced the consideration paid for each transfer.
In any event, Mr Garnsey defended his use of the sale prices of the Arncliffe properties in February 2020 as a relevant consideration to their value four years later.
The primary judge appears to have adopted the second sentence in paragraph 19 of the joint report as the reason why his Honour did not consider the prior sales to be relevant in any event.
The comparison between the sale price of a property on one date and its value on a later date (which was used by Mr Garnsey but not by Mr McDonnell) is only one part of the process of valuation. Both experts had regard to sales which they identified as comparable (addressed below).
The evidence which was considered by the valuers was collected by the primary judge and set out in a table which was annexed to his Honour’s reasons and is reproduced below (footnotes omitted).
Valuer General Valuations for subject sales
| Valuing year | 31 Flora**·** Street | 33 Flora Street | 35 Flora Street | combined | from 2020 | | 01/07/20 | 608,000 | 608,000 | 608,000 | 1,824,000 | 0% | | 01/07/21 | 913,000 | 913,000 | 913,000 | 2,739,000 | 50% | | 01/07/22 | 1,000,000 | 1,000,000 | 1,000,000 | 3,000,000 | 65% | | 01/07/23 | 1,100,000 | 1,100,000 | 1,100,000 | 3,300,000 | 81% | | 01/07/24 | 1,230,000 | 1,230,000 | 1,230,000 | 3,690,000 | 102% |
RPDATA Arncliffe Median House prices -v- expert assessment of development sites
| March Quarter 2020 | March Quarter 2024 | % change RP Data | McDonnell % change | Garnsey % change | | $1,120,000 | 1,610,000 | 44% | -15% | 14% |
Subject property sales
| Date of sale | 31 Flora Street | 33 Flora Street | 35 Flora Street | combined | % change from 2020 | | 21/02/20 | 2,750,000 | 2,085,031 | 2,085,031 | 6,920,062 | | | 09/02/24 | 1,666,667 | 1,666,667 | 1,666,667 | 5,000,000 | -28% |
Expert valuations for 09/02/24 sales
| Date of sale | McDonnell Combined valuations | % change from 2020 sales | Garnsey combined valuations | % change from 2020 sales | | 09/02/24 | $5,533,500 | <-27.8%> | $7,906,613 | 14.25% |
As is apparent from this table, Mr Garnsey’s view was that the market growth in the local area between February 2020 and February 2024 was approximately 14%. If that % growth is applied to, $6.9 million, the result is approximately $7.9 million (as set out in the table). Mr Garnsey’s figure of 14% was derived from four sources of evidence: first, the sale of the Arncliffe properties in 2020 being in line with comparable sales; second, the movement in value having regard to comparable properties; third, the information derived from RP Data which showed an increase in median house prices in the area between 2020 and 2024 of 44%; and, fourth, trends in the increasing value of land as reflected in the Valuer-General’s ratings over that period.
Mr Garnsey’s evidence of the year-by-year movement of the market in Arncliffe was, as set out in the joint report, as follows:
- [Mr Garnsey] is of the opinion that the market was rising between 2020 and April 2022 and was weak between May 2022 and February 2024.
21. [Mr Garnsey] is of the opinion that market growth in total between February 2020 and February 2024 was approximately 14%.
22. [Mr Garnsey] acknowledges that it is difficult to precisely attribute growth rates however to assist the court he would apply growth rates to the calendar years based on his experience of the market conditions and research for his Statement of Evidence as:
2020 – 7.5%
2021 – 7.5%
2022 – 0.0%
2023 – 0.0%
2024 – 0.0%
With respect to Apolo’s purchase of the Arncliffe properties in February 2020, Mr Garnsey had regard to two sites, which he considered to be directly comparable, which comprised several properties with varying dates of exchange and settlement from 2020-2024:
site 1 (which comprised six adjoining properties on the same side of Duncan Street, Arncliffe); and
site 2 (which comprised 3 adjoining properties on the other side of that street).
In respect of sites 1 and 2, Mr Garnsey considered that adjustment needed to be made for consolidation.
With respect to Apolo’s sale of the Arncliffe properties to Aerial on 9 February 2024, Mr Garnsey considered three sites, which he considered to be directly comparable, which also comprised several properties with varying dates of exchange and settlement from 2022-2024:
site 3 (which comprised seven adjoining properties on the opposite side of the street as the Arncliffe properties);
site 5 (which comprised three adjoining properties on Charles Street, Arncliffe); and
site 6 (which comprised four properties on the other side of the street from the Arncliffe properties).
In respect of these sites, Mr Garnsey considered that adjustment was required for “consolidation and DA where appropriate.”
Mr Garnsey opined that “sites when purchased piecemeal would achieve a premium of at least 10% when sold in one line and further that sites that sell with DA compared to sites without DA generally obtain a premium of 15%”. He adjusted the raw figures for the comparable sales to take account of these two matters.
The experts differed as to the relevance of the price paid by Apolo for the Arncliffe properties in 2020. Their respective positions were summarised in the joint report as follows:
18. [Mr Garnsey] is of the opinion that the first sale of the subject properties for $6,920,062 is the best evidence of the market value of the property in the calendar year 2020 based upon the sale itself and being supported comparable sales in the local area.
19. [Mr McDonnell] was not requested to provide a valuation assessment for the 21/2/2020 or 4/9/2020. Furthermore, we are [he is] unaware of the circumstances of the original sale of the amalgamated site back in 2020 and whether this is an arm’s length market value transaction.
| Conclusive Opinion as to Market Value | | Item | Date | Base Value/m² | Base Value $ | Consolid-ation % | DA % | Uplift % | Market Value ($/m²) | Market value | | Consolidated without DA | 21 Feb 20 | $3,650 | $5,398,350 | 10% | | 10% | $4,015 | $5,940,594 | | Consolidated with DA | 4 Sep 20 | $3,750 | $5,546,250 | 10% | 15% | 25% | $4,688 | $6,935,625 | | Consolidated with DA | 9 Feb 24 | $4,275 | $6,322,725 | 10% | 15% | 25% | $5,344 | $7,906,613 |
According to Mr Garnsey, the combined value of the Arncliffe properties as at settlement date in September 2020 of $6,935,625, is of a similar order to the combined sale price to Apolo of $6,920,062. This formed part of the basis of his opinion that the price at which Apolo purchased the Arncliffe properties in 2020 reflected their market value.
The experts agreed that Mr Garnsey’s sites 3 (7 on the opposite side of the street from the Arncliffe properties, the contracts for the sale of which were exchanged in March 2023) and 6 (4 adjoining properties on the opposite side of the street from the Arncliffe properties, the contracts for the sale of which were exchanged between July 2023 and November 2023) were relevant comparables. Because these sales were in 2023, it was not necessary for an adjustment to be made for time because Mr Garnsey did not consider that there had been any market growth between 2023 and 2024 (see the figures above).
Mr Garnsey said, on the basis of site 6:
I consider that the market value of the Subject Properties as at 09/02/2024 as a consolidated site with DA would on balance be in the order of $4,275/m² plus a 10% premium for consolidation plus a premium for DA of 15%. I have assessed this figure having regard to the sale of Site 6 which was fully DA approved but not consolidated at the time of settlement. The sale price for Site 6 of $5,028/m² less a 15% allowance for DA reflects a base rate of approximately $4,275/m² to which I have added premiums for consolidation and DA.
Mr Garnsey arrived at a value for the Arncliffe properties of $7,906,613 as at February 2024 on the basis of their 2020 sale price, the RP Data and his consideration of comparable sites.
Mr McDonnell’s figure of $5,533,000 for the value of the Arncliffe properties in 2024 implied a market reduction of 28% from the total amount for which Apolo had purchased them in 2020. Mr McDonnell, as set out above, maintained that their purchase price in 2020 could not be taken into account because of the lack of evidence of the transactions. However, it was not suggested that there was any relationship between the vendors of the Arncliffe properties on the one hand and Apolo on the other. Mr McDonnell accepted that he did not have empirical evidence to support the 28% reduction. Nor did he accept that a comparison between the price at which Apolo purchased the Arncliffe properties in 2020 and the price for which he valued them in 2024 would constitute a “credible check” for his valuation.
Although Mr McDonnell accepted that, as a matter of arithmetic a reduction of 28% in the value of the Arncliffe properties was inconsistent with the trend as shown in the Valuer-General’s valuations for the same period for the same three properties, he said that there were “different parameters”, which could account for the inconsistency. Mr McDonnell did not accept that Valuer-General’s assessments were useful to test a valuation of a property.
In the Court below, the primary judge:
expressed his finding on each variation in the Redfern Schedule annexed to the judgment: J [113];
allowed the builder’s claim to recover the retention from the developer on the basis of contract (but not breach of trust);
allowed the builder’s claim of $250,000 for the balance of the contract sum;
allowed about $270,000 for unpaid variations;
accepted the developer’s submission that alleged variations 1, 7, 11, 13 and 21 were not, in fact, variations since the work for which they claimed fell within the WUC (this is indicated in the Redfern Schedule by the word “Rejected” next to each claim);
rejected the developer’s claim that its payments were on account and ought be credited to it, finding that, as the developer had given the direction to the builder under cl 36.1 to vary the WUC, priced that work under cl 36.4, and paid for the work, it was not open to the developer to argue that the work did not constitute a “variation” (J [110]) or that the payment was on account only (J [102]-[102]; and [111]-[112]) (see also the Redfern Schedule, which contains the words “Claim Rejected – Approved”);
accepted the builder’s claim for consultants’ fees (on the basis that it was “approved” by the developer) as indicated on the Redfern Schedule, but made no finding as to how the conflict between the evidence of Ali Mohanna and Marwan Chanine ought be resolved;
rejected the developer’s claim for a credit for liquidated damages on the basis that the original contracted date for practical completion was 23 May 2020 and not 20 April 2020 (J [149]-[150]);
rejected the builder’s claim against Mr Chanine on the basis that no trust of the retention fund had ever been created;
accepted that certain entities who were parties to the settlement of the builder’s claim against Ninth Campsie and Mr Tran had a coordinate liability with the developer for any judgment debt: J [58] (see also J2 [8]-[15]);
found that he could not assess whether the effect of the deed was to cause a discharge of that liability to the builder; and
found that it was likely that, as at the date of the deed, the value of the Arncliffe properties was “more than $5 million” but was not persuaded that any other conclusion as to their value at that time could be drawn (J [81]).
103 The chaussure to cl 36.4 provided that, once such pricing had occurred, the price was to be added to or deducted from the contract sum. That is, the question of what extra amount the Builder was to be paid for the directed work was not to be revisited.
104 The Developer relied upon a sentence in cl 37.2 of the Contract to contend that any “pricing” by the Developer’s Representative under cl 36.4 was provisional and “on account” only.
105 Clause 37.2 dealt with the provision by the Developer’s Representative of a “progress certificate” to the Developer and the Builder following receipt by the Developer’s Representative of a progress claim by the Builder.
106 Clause 37.2 provided relevantly:
“Subject to subclause 37.6, the [Developer’s Representative] shall within 15 Business Days after receiving the progress claim pay to the [Builder] the balance of the progress certificate.
If any set-off under clause 37.6 produces a negative balance, the [Builder] shall pay that balance to the [Developer] within 7 days of receiving written notice thereof. Neither a progress certificate nor a payment of moneys shall be evidence that the subject [Work Under Contract] has been carried out satisfactorily. Payment other than final payment shall be payment on account only.” (Emphasis in original.)
107 I do not see that this provision has any role to play in the proper construction of cl 36.4.
108 The provision in cl 37.2 is dealing with payment of progress claims and it is in that context that the final words of cl 37.2 provide that ”payment other than final payment shall be payment on account only”.
109 Reasonable persons in the position of the parties would not understand that the effect of the words used in these provisions to be that the Developer’s Representative could, first, give a direction to the Builder under cl 36.1 to vary the Work Under Contract and then price the variation on the basis set forth in cl 36.4(a), but leave it open to the Developer later to contend that there has been no ”variation”.
147 It is common ground that practical completion was in fact achieved on 15 September 2020; that was the date of practical completion.
148 What divides the parties is whether the date for practical completion was 20 April 2020 or 23 May 2020.
149 The Contract provided that the date for practical completion was 20 months from the date that a Construction Certificate was issued. The Construction Certificate was issued on 20 August 2018; 20 months from that date is 20 April 2020.
150 However, the definition of date for practical completion provided:
“… but if any [extension of time] for practical completion is directed by the [Developer’s Representative] … it means the date resulting therefrom”.
151 The Contract contained a wide definition of “direction” to include “agreement”.
152 The Builder pointed to entries in a number of Project Control Group reports stating that the “Original Construction Start Date” was 23 July 2018 and that the “Original Construction Completion Date” was 23 May 2020.
153 Indeed, the Project Control Group Report for 2 May 2019, containing these entries, was circulated to the Developer’s Representative prior to the meeting, and described by Ms Nicole Rizk, the Project Assistant employed by the Developer’s Representative, as being “acceptable”.
154 Further claims for an extension of time were made by the Builder on 13 September 2018, 2, 5, and 20 October 2018, 10 November 2018 and 1, 5, and 20 December 2018. The “Original Contracted Completion Date” was described in each of these documents as being 23 May 2020.
155 There is no evidence that the Developer’s Representative took issue with 23 May 2020 being described in any of these documents as the Original Contracted Completion Date.
156 The evidence of Mr Marwan Chanine, who is Mr Chanine’s son and the sole director of the Developer’s Representative, was that he did not notice these entries. However, as I have set out, it is clear that Ms Rizk did notice the entry in the 2 May 2019 Project Control Group Report.
157 I infer from these documents that the Developer’s Representative did agree that the Original Contracted Completion Date, and thus the date for practical completion, was 23 May 2020.
158 Mr Ashhurst pointed to a provision in the Contract providing that a variation to the Contract must be in writing and signed by each party.
159 But the question here is whether the Developer’s Representative “directed” an “extension of time”. Such a direction could take the form of an agreement and I see no reason why that agreement needed to be in writing and signed by both parties.
160 I am satisfied, in these circumstances, that the original extended date for practical completion was 23 May 2020 and with the agreed extensions of time of 102 days, the extended date for practical completion was 19 September 2020.
161 Accordingly, the Developer’s claim for liquidated damages is dismissed.
51 Mr Ashhurst submitted that the Developer, Mr Chanine and Mr Tran had a “coordinate liability to [the Builder] for the contract debts of [the Developer]” and that “these debts are alleged to be $256,409.41 (in unpaid variation claims) and $1,619,220.18 for [the Developer’s] breach of trust by … failing to withhold retention monies owed under the Contract”.
…
56 Mr Ashhurst submitted that:
“The Mortgages resulted in the defendants sharing a common burden in respect of the obligations owned to [the Builder] such as to result in mutual rights and obligations. This resulted in the requisite mutuality … for the purposes of a set-off”.
57 But “the defendants” are not parties to the Mortgages. Any coordinate liability could only arise between the mortgagors of the Mortgages: Ninth Campsie, Ms Tran, and two other companies: Marwan Layla Pty Ltd and The Wave Rockdale Pty Ltd; and the Developer.
58 Those mortgagors, by the Mortgages, each provided security for the amount of the Freezing Order and the Asset Preservation Order, $2,963,529.21, and also for the amount of any judgment obtained by the Builder in these proceedings. They and the Developer each had a coordinate liability for any such judgment.
(Footnotes omitted and emphasis added.)
64 There is, however, another factor to be taken into account to determine what benefit the Builder obtained by reason of the Deed. That other factor is the value to the Builder of Mr Tran’s and Ninth Campsie’s “Litigation Liability” that, by reason of the Deed, the Builder surrendered. In addition to paying $5 million for the Arncliffe Properties, the Builder forewent whatever entitlement it had to pursue Mr Tran and Ninth Campsie to judgment in these proceedings. The Builder thus obtained title to the Arncliffe Properties by paying the $5 million. But it also “paid” whatever the value might then have been of its claims against those parties.
65 There is no evidence before me as to what the value to the Builder of that claim was as at the date of the Deed. The Builder’s claim against Mr Tran was for the full value of the Retention, based on his alleged knowing involvement in the Developer’s alleged breach of trust. Based on my findings, that claim is of no value, as there was no trust. But that was not a matter known to the parties to the Deed at the time of its execution.
66 Assessment of the cost to the Builder of its surrender of its s 37A claim against Ninth Campsie would involve factors including the value of the unit transferred to it by the Developer and an assessment of the Builders prospects of making out its s 37A claim. None of this was explored before me.
67 For these reasons alone, I cannot assess to what, if any, extent the effect of the Deed was to cause a discharge of any coordinate liability to the Builder.
(Footnotes omitted.)
There is no evidence before me of the circumstances in which Apolo Apartments made those purchases. Neither valuer could find any evidence of any marketing of the properties. Presumably, Mr Tran approached each of the homeowners and negotiated the best price he could with a view to creating a development site from the three properties. What factors motivated each vendor at that time to sell is not known. There is no evidence that the sale price of $6.92 million represented the then market value of the three sites, whether separately or as a development site.
(Emphasis added.)
76 These matters suggest that careful attention needs to be given to Mr McDonnell’s opinion that the value of the three sites, as a development site, as at the date of the Deed, was some $1.4 million less than the sale price of the three sites four years earlier.
77 Both experts agreed that the appropriate valuation method was by reference to comparable sales. Both agreed that the most comparable site was the site known as “Site 3” which is in the same street as the Arncliffe Properties.
78 Mr Garnsey agreed in cross-examination that applying his rate of $4,173 per square metre in relation to “Site 3” to the Arncliffe Properties would result in a value in the order of $6.8 million.
79 There was also debate between the experts about what adjustments would be needed to make “Site 3” truly comparable to the Arncliffe Properties. Mr McDonnell suggested that a 5% to 10% deduction was required whereas Mr Garnsey opined that a 10% increase was required. There was also debate about the extent to which Council contributions of some $9,000 per lot in relation to the Arncliffe Properties should be brought to account.
80 It was for the Developer to prove that Apolo Apartments sold the Arncliffe Properties to Aerial Holdings at an undervalue, and what that undervalue was.
81 The evidence of the experts persuades me that the likely true value of the Arncliffe Properties as at the date of the Deed was more than $5 million. But otherwise, I [am] not persuaded that I can come to any conclusion as to their value at that time.
As referred to above, the primary judge found that variations 1, 7, 11, 13 and 21 were not, in fact, variations, since they fell within the WUC but that the developer was precluded from claiming that they were paid on account as it had costed and paid for them in accordance with cl 36.4 of the general conditions.
Mr Ashhurst SC, who appeared with Ms Scott for the appellant, submitted that the fact that the pricing mechanism in cl 36.4 was used neither transformed a non-variation into a variation, nor did it override the express words of cl 37.2 that “payment other than final payment shall be payment on account only”. Mr Ashhurst relied on the following summary in Construction Law, Volume II, 2nd ed, Julian Bailey, at 7.40:
A threshold issue is whether the work in question actually constituted work different to that which the contractor was required to perform under the contract. If it did not, the putative variation will amount to no more than the contractor performing work that it was required to perform by the contract all along. In such a case, the contractor’s entitlement to additional renumeration and/or time to perform its contract works will be unaffected by the fact that it performed the variation work in question. The contractor will have no basis for making the variation claim.
Mr Ashhurst also relied on *Al-*Atabi v Zaidi [2009] NSWCA 433 (*Al-*Atabi) and Wormald Engineering Pty Ltd v Resources Conservations Co. International (1992) 8 BCL 158 (Wormald).
Mr Balafoutis SC, who appeared with Mr Sheldon and Ms Truong for the builder, primarily relied on the amended notice of contention filed in Court on 17 November 2025 to support the primary judge’s finding that the builder was entitled to retain the amounts paid for variations 1, 7, 11, 13 and 21. He submitted that these items were “excluded items” within the meaning of cl 1 of the General Conditions by reason of cl 2(b) of the Formal Instrument of Agreement because they each constituted “work or costs, fees or charges in relation to … services or infrastructure upgrades”. He relied on the definition of “Services”, as defined in cl 1 of the General Conditions (set out above). In the alternative, he submitted that they constituted variations as they had been directed and approved by the developer as such and that there was no contractual mechanism to reverse the payment of the agreed variation.
Mr Balafoutis submitted that the work comprised in variations 1, 7, 11, 13 and 21 constituted “excluded items” referred to above as:
it was plain from the commercial context that the development required an upgrade of the surrounding infrastructure as three residential dwellings were to be replaced by a substantial number of units, giving rise to a need for increased water, drainage, sewerage, power (requiring the installation of a substation), street lighting and other infrastructure;
the natural meaning of the word “infrastructure” is the essential services necessary for urban areas to function, with the result that an “infrastructure upgrade” includes modifications to existing infrastructure as well as the construction of new infrastructure;
the contract was entered into on 13 November 2017, about a year after development consent was granted in October 2016, but the scope of work to be performed relating to the infrastructure for the development was not known as at the date of the contract because it still had to be determined by the statutory authorities; and
various textual matters in the contract, including:
(a) the inclusion in the definition of “excluded items” in cl 1 of the General Conditions of fees payable to any authorities and/or service providers and/or infrastructure stakeholders; (b) the provision in cl 25.2 of the General Conditions that the builder’s agreement to be responsible for additional work, increased cost etc of executing the WUC is subject to “Item 2(b) [which the builder says should be read as cl 2(b) of the Formal Instrument of Agreement] (Excluded Works) [which the builder says should be read as “excluded item”] within cl 1 of the General Conditions; and (c) cl 11.3 of the General Conditions which exempts from the builder’s obligation to pay for all “permits”, “Excluded Work”, which the builder contended ought be read as “excluded items” within cl 1 of the General Conditions.
The fact the fourth respondent [the principal’s representative] signed the Variation Advice did not conclusively establish the appellant’s entitlement to be paid the amount set out therein. The Variation Advice was not a document creating a contract in which case the principle concerning the binding effect of a signature generally applies: Toll. The Variation Advice purported to give effect to cl 12 of the LSC. In order to establish the appellant’s entitlement to claim for the sums there set out, the appellant had to establish that the requirements of cl 12 had been satisfied [which it could not because it was issued after the word had been done].
In *Al-*Atabi, unlike in the present case, no payment of the claimed variations had been made and the principal had questioned the builder’s entitlement to be paid.
In Wormald, the Superintendent issued a number of variation orders. The contractor (Wormald) carried out the work for the cost of which it was paid. The payment did not take into account the effect on the performance of the contract or the effect of any dislocations on the performance of the contract. The contractor claimed that the consequence of the variations was that it had to engage additional labour to complete the contract works, as varied and had incurred additional costs in the order of $400,000, which it claimed in arbitration. The arbitrator rejected the claim. Wormald appealed against the award to the Supreme Court, which dismissed its appeal.
Clause 40.2 of the contract entitled the Superintendent to order the contractor to do additional work and required the contractor to comply with such an order. The Superintendent was obliged to determine that amount of fair and reasonable adjustment to be made to the moneys payable to the contractor as a result of complying with the order. Clause 40.2 also provided:
If, in the opinion of the Contractor, compliance with the Superintendent’s order, pursuant to this sub-clause, is likely to prevent him from or prejudice him in fulfilling any of his obligations (including guarantees) under the Contract, he shall forthwith notify the Superintendent thereof in writing, and the Superintendent shall as speedily as is practicable determine whether or not his order shall be complied with.
The contract provides a carefully regulated régime. As the arbitrator pointed out, the principal feature is that the contract calls for the payment of a lump sum for the carrying out of the works. It is to be varied only in accordance with carefully constructed machinery steps. A programme of works is prepared and supervised by the superintendent. The contract lays down detailed procedures for situations which may involve a disruption of the programme, the carrying out of work not provided for in the original specifications, the omission of work which is provided for and the circumstances in which any liability over and above that contracted for as the lump sum may be incurred. The controlling person throughout is the superintendent. The controlling mechanism is the giving of notices by the contractor to the superintendent at the earliest possible time to alert him to the fact that a change may be required in either the programme or quantum payable. …
Their purpose [of cl 40.2] is to provide the respondent, through the superintendent, prior to the implementation of the variation orders, with information as to their likely effect so as to allow the respondent to make an informed assessment as to whether or not the variation orders should be confirmed. … The step-by-step route to be followed is, first, variation order by the superintendent, in ample time beforehand, to allow the contractor both to re-programme and to form an opinion as to its likely impact if the variation is implemented.
I accept Mr Ashhurst’s submission (set out above) that the primary judge was correct to find that the alleged variations were not, in fact, variations. I also accept, for the reasons Mr Ashhurst advanced, based on *Al-*Atabi and Wormald, that the developer’s “approval” and payment of the amounts claimed did not override the express contractual provision that all payments, except final payments, were payments on account. The primary judge’s finding to the contrary was erroneous.
I accept Mr Balafoutis’ submission that each of the variations qualified as an “excluded item” within the meaning of cl 1 of the General Conditions for the reasons he advanced. Although the wording of the provision in cl 25.2 extracted above and cl 11.3 is infelicitous because it uses the term “Excluded Work” rather than “excluded items” (which is the term used in cl 2(b) of the Formal Instrument of Agreement and cl 1 of the General Conditions), it is sufficiently plain that this construction accords with the parties’ objective intentions.
Although resort cannot be had to post-contractual documents, it is plain from the terms of the Development Consent and the plans referred to in the contract documents, which pre-dated the contract, that considerable services and infrastructure would need to be constructed and existing infrastructure and services would need to be upgraded to accommodate the significant increase in the number of dwellings and density of population on the site. These documents evidence the surrounding circumstances against the background of which the contract can be construed: Codelfa Construction Pty L**td v State Rail Authority of NSW (1982) 149 CLR 337 at 348-352 (Mason J); [1982] HCA 24 (Codelfa). As the language of the definition of excluded item is susceptible of more than one meaning, evidence of the surrounding circumstances is admissible to assist in its interpretation: Codelfa at 352.
The clauses referred to above evince an objective contractual intention to include works relating to services and infrastructure within the WUC but to provide that the builder was entitled to be paid for them separately because they were not included within the contract sum. It can reasonably be inferred that a reason for this course was to avoid placing the risk on one party or the other for having to estimate the cost of those works in advance, which would have been necessary if the remuneration for the works had been included in the fixed price under the contract.
Variation 1 concerned installation of an electricity substation and the upgrade of street lighting. Variation 13, which is related to variation 1, is described as “Road Opening Permit incl Road Restoration Costs – Substation & Street Lighting Works”. Variation 7 is described as “Section 73 Sydney Water Works (Part 1) and Variation 21 is described as “Section 73 Sydney Water Works (Part 1). Variation 11 is described as “Locate Underground Services SW Cnr via Pot Holing”, which involved locating underground services at night, which was said to be related to sewer and water connection. It was not suggested that there was any material distinction for present purposes between any of the purported variations. I understood the question to be one of construction of the contract rather than analysis of each of the variations.
The primary judge’s reasons for allowing this claim were that the variation had been “approved” by the developer, as indicated on the Redfern Schedule, although not paid. It can be inferred that this was the basis of his Honour’s decision since no finding was made as to whether the pre-contractual discussion about consultancy fees had occurred, as alleged by the builder and denied by the developer.
Mr Ashhurst submitted that:
the alleged pre-contractual discussion was, in any event, irrelevant to the claim since the entire contract clause (cl 5) in the Formal Instrument of Agreement excluded it from consideration and it was not reflected in any of the documents listed in cl 4 as comprising the contact;
the absence of any figure in item 23(c) of the Schedule for consultants’ fees supported the submission that such fees were included in the contract sum;
the fact of “approval” could not transform a non-variation (because the fees were within the WUC) into a variation (which would require the works to be outside the WUC); and
cl 37.2, which provided that “[p]ayment other than final payment shall be payment on account only”, applied in terms.
Mr Balafoutis accepted that consultancy fees otherwise fell within the WUC and did not fall within the definition of excluded item. However, he submitted that it did not matter that the consultancy fees were not a variation since the effect of cl 36 of the General Conditions was that the builder was not required to give credit for the amounts paid for variation 44 because the developer had approved the variation. He submitted as follows:
cl 36.1 provides that the developer’s representative may “direct” the builder to vary the WUC;
as cl 1 defines “direction” to include “agreement, approval … notice [and] permission”, the word “direct” in cl 36.1 means agree, approve, notify or permit;
cl 36.2 provides that the developer’s representative may give the builder written “notice” of a proposed variation;
cl 36.4 provides that the developer’s representative shall, as soon as possible, price each variation and that “that price shall be added or deducted from the contract sum”;
the developer’s approval of the variation constituted a direction in writing for the purposes of cl 36.1; an approval of the variation under cl 36.2; and a pricing of that variation under cl 36.4, with the effect that the price approved was added to the contract sum, as confirmed by documents issued by the developer which recorded that the contract sum was increased by the amount of the approved variations; and
there was no mechanism to reverse that addition to the contract sum.
There was no issue about the total number of days for which EOTs had been approved (102 days) or that the date of practical completion was 15 September 2020. Thus, issue (3) turns on whether the primary judge’s finding that the parties ought be taken to have varied the original contracted date for practical completion, disregarding EOTs, from 20 April 2020 to 23 May 2020 ought be disturbed. If the date was 20 April 2020, the developer was entitled to credit for liquidated damages of $210,000; if it was 23 May 2020, the developer was not entitled to any liquidated damages since the date for practical completion (being the original contracted date plus the total EOTs) would correspond to the date of practical completion.
Mr Ashhurst argued that, for the date for practical completion to be varied, it would have been necessary for there to be a “written instrument executed by both parties”, as required by cl 5(b) of the Formal Instrument of Agreement. He submitted that, as no such instrument had been tendered, and the matter was disputed, the original contracted date for practical completion was, and remained, 20 April 2020 (being 20 months after 20 August 2018, being the date of the construction certificate). He submitted that none of the documents relied on by the builder, such as EOT approvals or PCG reports (which specified an original contracted date for practical completion of 23 May 2020) met the requirements of cl 5(b).
Mr Ashhurst further submitted that the inference drawn by the primary judge at J [156] that it was “clear” that Ms Rizk noticed the entry (being the reference to 23 May 2020, rather than 20 April 2020) was erroneous. He submitted that the inference could not properly be drawn in circumstances where Ms Rizk was not called to give evidence; the evidence of the email chain with the builder’s representative showed that she was concerned about highlighting where the works were up to (with a view to putting the progress in a positive light for the financier); and her comment that the PCG Report no. 3 was “acceptable” did not amount to her giving her imprimatur, on behalf of the developer, to every word and integer in it.
As the first reference to 23 May 2020 being the original contracted date for practical completion was in the first EOT claim dated 13 September 2018, it can reasonably be inferred that any agreement to vary that date must have happened on or prior to that date. Thus, I regard Ms Rizk’s use of the word “acceptable” in her email of 1 May 2019 as ineffective to make a change, even if it were otherwise relevant. Further, the circumstance that she approved EOTs dating from 15 December 2018 (EOT 007) which indicated a start date of 23 July 2018 (rather than the actual date of 20 August 2018 on which the construction certificate was issued) is telling. It is consistent with the inference that her focus was on the length of, and reason for, the EOT sought rather than the background information in the form. The date of 23 July 2018 is also anomalous. It may have derived from someone incorrectly deducting 20 months from the “original contracted completion date” of 23 May 2020 (it is actually 22 months before the 23 July 2018) but there are other possibilities.
Mr Ashhurst submitted that, to the extent to which the $5 million purchase price was an undervalue of the Arncliffe properties, the difference between $5 million and their real value amounted to a discharge of the concurrent liability between the developer (the principal debtor under the deed), Ninth Campsie and Mr Tran. Thus, he submitted that the difference between the true value of the properties ($5 million plus $x) and the $5 million which the builder paid for them, that is, $x, ought be applied to the developer’s credit.
Mr Ashhurst submitted that the relevant question was whether the coordinate liability between the mortgagors and the developer was discharged or reduced by the transfer of the Arncliffe properties to the builder and that, accordingly, the primary judge had to determine the coordinate liability of the mortgagors and whether that liability (in respect of some of the mortgagors) was released by the transfer of the Arncliffe properties.
On the question of quantum, Mr Ashhurst submitted that no allowance ought be made, in assessing the benefit obtained by the builder under the deed, for the loss of its claims against Mr Tran and Ninth Campsie for their alleged knowing involvement in the developer’s alleged breach of trust as the builder had not proved which portion of the benefit it obtained was referable to the value of the Arncliffe properties, which to the settlement of the claims against Ninth Campsie and Mr Tran and which to costs associated with those claims. He relied on Townsend v Stone Toms & Partners (1984) 27 BLR 26 (Townsend) and Boncristiano and Anor v Lohmann and Ors [1998] 4 VR 82; [1998] VSC 228 (Boncristiano).
The applicable principles are:
“when a person pays more than his or her share of a common monetary obligation, the payment pro tanto discharges the obligation of all who owe the common obligation”: Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17 (Burke) at [38];
the principle against double recovery means that the plaintiff cannot recover more than its loss against the defendants to the proceedings: Anderson v Canaccord Genuity Financial (No 2) (2024) 115 NSWLR 1; [2024] NSWCA 161 (Anderson) at [67]ff;
the release of one or more people subject to a joint and several obligation does not release them all: Anderson at [170]; and
where a plaintiff had received a benefit from a party with which a defendant has a coordinate liability, the defendant is entitled to have credited against its liability the full amount of that benefit unless the plaintiff (who bears the onus) has established the part of the benefit which does not relate to the coordinate liability, in which case the defendant is only entitled to the benefit less the amount established as not relating to the coordinate liability: Townsend and Boncristiano.
The principle in (1) was expressed in Burke as follows at [38]:
Both common law and equity give a person the right to obtain contribution to a payment made by that person in discharging “a common obligation” that is owed by that person and others. In determining whether there is “a common obligation”, the traditional test is whether the liability of each party “is of the same nature and to the same extent”. Early cases suggested that the common law right arose as a result of an implied contract between the parties. But … the equitable principles now cover the field. Those principles are based on the equitable doctrine of equality. When a person pays more than his or her share of a common monetary obligation, the payment pro tanto discharges the obligation of all who owe the common obligation. In accordance with the maxim that equality is equity, equity requires the common burden to be shared equally so that none of those owing the common obligation will pay more than his or her share of the burden. An order of contribution prevents the injustice that would otherwise flow to the plaintiff by the defendant being enriched at the plaintiff’s expense in circumstances where they have a common obligation to meet the liability which the plaintiff has met or will have to meet.
(Footnotes omitted.)
Were equity not to intervene, then it would remain within the power of the creditor [in this case, the builder] so to act as to cause one debtor [Ninth Campsie and Mr Tran] to be relieved of a responsibility shared with another [the developer].
The primary judge found that, under the mortgages, the mortgagors each had a liability for the amount of any judgment obtained by the builder which was coordinate with the developer’s liability to the builder: J [58]. However, his Honour found that the deed did not discharge any coordinate liability of the developer to the builder: J [55]-[84].
The appellant challenged that finding in grounds 9-10. The respondent submitted that the finding was correct but that his Honour ought also to have found that the builder received no benefit from the deed and that none of the persons said to be subject to the coordinate liability transferred any property under the deed.
As referred to above, the mortgagors, who granted mortgages of properties of which they were registered proprietors, were Ms Tran, Ninth Campsie, The Wave Rockdale Pty Ltd and Marwan Layla Pty Ltd. Pursuant to the mortgages, the mortgagors were jointly and severally liable for $2,963,529.21 (being the amount claimed in the proceedings) or, upon judgment in respect of each of the “Defendant Parties” (defined as the developer, Mr Chanine, Mr Tran and Ninth Campsie), the amount of the judgment sum.
The deed released Ninth Campsie and Ms Tran from their liabilities under the mortgages. Because the deed discharged a liability which was coordinate with the developer’s liability to the builder, the developer’s liability must be reduced accordingly, to prevent double recovery by the builder. The consideration for that release was the transfer by Apolo of the Arncliffe properties to Aerial, a company associated with the builder. The value of the consideration for the release was the difference between the sale price, $5 million and the value of the Arncliffe properties at the time of the sale in February 2024.
Mr Balafoutis submitted that the transaction (being the transfer of the Arncliffe properties for $5 million in return for the releases given) had to be for the benefit of the builder and that because the transfer was not to the builder, it could not be shown that the builder obtained a benefit. On this basis, he submitted that the Court should regard each company and individual party to the transaction as a separate legal person, whether natural or corporate, for the purposes of determining whether part of the coordinate liability has been discharged.
As explained in Burke at [38], the applicable principle has both a legal and an equitable provenance but “the equitable principles now cover the field”. Accordingly, the equitable maxim that equity looks to the intent, rather than to the form applies: AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 at 197-198 (Deane J); [1986] HCA 63. As Lord Romilly MR said in Parkin v Thorold (1852) 16 Beav 59 at 66-67; 51 ER 698 at 71:
Courts of Equity make a distinction in all cases between that which is matter of substance and that which is matter of form; and if it find that by insisting on the form, the substance will be defeated, it holds it to be inequitable to allow a person to insist on such form, and thereby defeat the substance.
The next question is what reduction ought be made in the developer’s liability to the builder as a consequence of the deed and whether any allowance ought be made for the value of the releases granted by the builder to Ninth Campsie and Mr Tran. For the reasons which follow, I consider that the developer’s liability ought be reduced by the full amount of the undervalue and that no allowance ought be made for the value of the releases.
In Boncristiano, the appellants sued their builders and the local council. In their defence, the builders alleged that the owners were estopped by an earlier compromise. This led the appellants to sue their solicitors. Their claim against their solicitors was settled for $5,000. The primary judge held that $3,000 of the settlement sum of $5,000 paid by the solicitors ought be deducted from the damages awarded. Judgment was given for the owners against the builders and the local council in the sum of $12,249.92. As between them, the primary judge found the builders 70% responsible and the council 30% responsible. The owners appealed on several grounds, including that their damages ought not be reduced by the payment by the solicitors.
The Victorian Court of Appeal dismissed that ground and held that the primary judge was correct to reduce the damages on account of the settlement with the solicitors. Indeed, Winneke P said at 88 that it may have been appropriate for the primary judge to give credit to the builders for the full $5,000. His Honour said further:
… in cases where the plaintiff seeks to recover from the several defendants compensation in respect of the same damage it is fundamental that the plaintiff cannot recover more than the total damage which he or she has sustained. Where the claims for damages are concurrent, in the sense that the claims “overlap”, recovery by the plaintiff of the whole or part of the loss claimed from one defendant will necessarily be taken into account in assessing the damages to be recovered from the other.
The starting point, and one on which there is a good deal of clear authority, is that where a plaintiff with concurrent claims against two persons has actually recovered all or part of his loss from another, that recovery goes in diminution of the damages which will be awarded against the defendant.
A plaintiff can never, as I understand the law, merely because his claim may lie against more than one person, recover more than the total sum due.
(Emphasis added.)
… The law, which now embraces equity, will not permit a plaintiff, whatever procedural device is used, to recover more than the damages which have been suffered, no matter what the cause of action upon which he proceeds against the various defendants.
It is not to the point to argue … that the claims made against the various defendants proceed from different causes of action. The fundamental question is whether the claims against the various defendants are “concurrent” in the sense that the relief sought is the same. Nor is it to the point that the damages received from one defendant have been received pursuant to a compromise of the claim against that defendant, by way of acceptance of moneys in court or otherwise …
(Citations omitted.)
It was contended by Mr. Ritter that the learned judge was in no position in this case to call upon the owners to bring to account a portion of the settlement sum paid by the solicitors because there was nothing in the material before him which could have enabled him to find what, if any, portion of the settlement sum was attributable to the satisfaction of the substance of the owners’ claim as distinct from a claim, say, for the costs of that claim. However the paucity of that material cannot, as I understand the law, affect the application of the principle to which I have referred. Quite apart from the fact that the terms of the settlement between the owners and the solicitors stipulated that the sum paid was “in settlement of the claim made” against the solicitors (as to which compare the terms of settlement in the Banque Keyser case at 881), it seems to me that the fact of payment raises against the owners a presumption that the amount of the settlement was offered and accepted in satisfaction of the concurrent claim made by the owners against the solicitors and the builders.
(Emphasis added.)
It is said that the burden lies on the defendant to show that a part of the claim against him has already been satisfied and to demonstrate the extent to which recovery has already been completed by the plaintiff … Allowing this, however, it seems to me that the initial burden is discharged when the defendant shows acceptance of a payment-in, in causes of action where there are concurrent claims against him. If it is to be said that the payment-in relates to some claims which are not concurrent, or which could not succeed against the defendant, the only person capable of providing that guidance is the plaintiff himself, who has accepted the payment.
(Citations omitted.)
The builders having proved that the owners had accepted the sum of $5000 from the solicitors in “full and final settlement of the … proceeding” against them, the builders were entitled to claim, as they did, that such sum should be presumed to have been accepted in fulfilment of the concurrent claims made by the owners against them and the solicitors.
In Anderson, this Court, at [91], distinguished Boncristiano on the basis that, in Boncristiano the owners had not established that the monies received from the solicitors related to another claim, rather than a concurrent claim, whereas in that case, Mrs Anderson’s claim for equitable compensation was different from her claim for costs and that the settlement deeds executed by the other parties expressly apportioned the amount paid to costs.
Boncristiano was applied in Ikosidekas v Glenis [2023] VSCA 134. In that case, the plaintiff claimed the same damage against White, MWL and Glenis and settled with White and MWL for a costs-inclusive amount of $160,000. There was no evidence of the amount of costs incurred by the plaintiff in pursuing White and MWL. The trial judge dismissed the plaintiff’s claim on the basis that the whole of the settlement should be applied in reduction of his claim. The plaintiff appealed on several grounds. Relevantly, he argued on appeal that an amount for legal costs ought to have been allowed against the contribution.
The Victorian Court of Appeal dismissed this ground and said at [53]:
The onus was clearly on Ikosidekas to put evidence before the Court as to the amount of the total legal costs referred to in the trust account statement which it was contended related only to the claims against White and MWL. Such a claim could easily be pleaded and supported by evidence. For example, the solicitor for Ikosidekas could have given evidence based on his records of the work done, and produced the bills of costs rendered to Ikosidekas. None of this was done. Further, the fact that the settlement deed was not produced is relevant. Although Ikosidekas gave unchallenged evidence that the settlement was for all of his claims, including interest and costs, that was second‑hand evidence of a document which ought to have been produced in evidence. There was no good reason for not doing so. Accordingly, the facts of this case are similar to those in Boncristiano …
The jurisprudential basis for the principle established by Towns**end and Boncristiano is clear. If it were otherwise, plaintiffs could manipulate settlements with some defendants at the expense of those defendants who choose to defend the claims in court with the consequence that the Court would be powerless to prevent double recovery because it would not know what part of the settlement was referable to the overlapping claims made by the plaintiff against the defendants who resolved their disputes and those who litigated them. By casting the onus of proof on the plaintiff to prove if any part of the benefit received as a result of the settlement is not referable to the coordinate liability between the defendants who are parties to the settlement and the defendants who are before the Court, the Court is in a position to enforce the rule against double recovery and thereby protect its processes from abuse.
The effect of Boncristiano and Townsend is that the onus of proving what portion of the monies was applied in satisfaction of the liability falls on the person who could have said how the amount paid to settle the claim was to be divided. In the present case, the builder has done nothing to discharge its onus. The appellant has made out grounds 8-11.
For the reasons given above, the developer is entitled to a reduction in the damages for which it is liable, for the amount, if any, by which the value of the Arncliffe properties exceeded their purchase price of $5 million.
The appellant challenged his Honour’s factual finding that, although he was persuaded that the value of the Arncliffe properties was more than $5 million as at the date of the deed, he could not come to a conclusion as to how much more (J [81]).
The respondent submitted that it was necessary for the appellant, in order to disturb the primary judge’s finding, to establish a House v The King (1936) 55 CLR 499; [1936] HCA 40 error.
I do not accept this submission. The issues were:
whether the Arncliffe properties were worth more than the $5 million which the builder paid for them; and,
if so, how much more.
The primary judge decided (1) but not (2). His Honour’s reasons for not determining the value at the time of the transfer were that he did not feel persuaded that he could, on the basis of the evidence. This finding was erroneous. There was a plethora of evidence from which value could be determined, including relatively recent actual sales of the Arncliffe properties and sales of comparable properties. Judicial determination of property value on the basis of such evidence as was available to the primary judge is commonplace, both in commercial proceedings and also for the purposes of determining compensation for compulsory acquisition of property.
The present case was neither a case where a party could not, nor had not, adduced precise evidence of the amount claimed: see Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 77 ALJR 768; [2003] HCA 10 at [38] (Hayne J, Gleeson CJ, McHugh and Kirby JJ agreeing). The developer sought to establish the value of the Arncliffe properties on various bases: prior sales of the properties with evidence of capital appreciation in the area; data from the Valuer-General’s ratings of properties in the area at the relevant time; evidence of comparable sales; and the expert evidence of valuers.
Nor do I consider that there was any basis for his Honour to regard the sales in February 2020 as being other than arms’ length sales at market value between willing but not anxious parties. In MMAL Rentals Pty Ltd v Bruning (2004) 63 NSWLR 167; [2004] NSWCA 451, this Court said at [55]:
A test of a “market value”, whether in a statutory or contractual context, usually invokes the test long established and frequently applied in Spencer v Commonwealth (1907) 5 CLR 418 especially at 432 and 440-441, of a willing but not anxious purchaser and vendor, bargaining with each other. This approach was most recently expressed in a joint judgment of three judges of the High Court in Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at 514 [49]: “… the value … is to be identified according to what price freely contracting, fully informed parties would have offered and accepted for it”.
The price specified in the transfers from the three pairs of separate vendors of the three properties which comprised the Arncliffe properties was prima facie evidence of their market value as at the date of the contracts, 21 February 2020. The primary judge was prepared to “presume”, correctly, that “Mr Tran approached each of the homeowners and negotiated the best price he could with a view to creating a development site from the three properties” (J [72]). If the builder wished to challenge this proposition, it was required to adduce evidence to indicate that these were other than arms’ length transactions. Further, although the difference between the price of 33 and 35 Flora Street, Arncliffe as reflected in the contracts for sale and as reflected in the transfers was significant, this disparity does not gainsay the compelling inference that the developer would not have exercised the option to buy the properties had it considered that the price provided for in the option was materially above the market price of the properties.
It was common ground that, as at February 2024, the highest and best use of the Arncliffe properties (and of the comparable sites) was as sites for the development of blocks of units.
As his Honour did not make a finding of the value of the Arncliffe properties at the time of their transfer to the builder, it is for this Court to do so on the basis of the evidence. Mr Ashhurst indicated that he considered that this Court might remit the matter to be determined by a single judge, although he would prefer that this Court undertake the task. There are several reasons why remitter would not be appropriate in the circumstances of the present case. First, it would involve the parties in additional expense and cause further delay in the final resolution of the matter. Second, it would not be an efficient use of judicial resources since this Court already has the evidence of the experts and the documentary evidence of value. Third, there is no issue of credibility involved which might make it necessary for the decision maker to see and hear the witnesses. Fourthly, this Court’s powers under s 75A of the Supreme Court Act 1970 (NSW) are ample for the purpose. Fifthly, neither party submitted that remitter was necessary.
The evidence of Mr McDonnell was unsatisfactory. He was not asked to value the Arncliffe properties as at 2020 and did not accept that the price for which Apolo purchased those properties in 2020 could be relevant to their value in 2024. He accepted that the value he put on the properties as at 2024 represented a 28% discount on the price which Apolo had paid for the properties. He refused to acknowledge the substantial increase in property values in the area in the relevant period (which was established by other objective evidence, including the Valuer-General’s valuations and the RP Data). By contrast, Mr Garnsey’s opinion was supported by the evidence of sales of the subject properties in 2020, analysis of comparable sales and took into account the movement in the market over the relevant period. The primary judge did not address Mr Garnsey’s opinion in any detail. I accept Mr Garnsey’s opinion that the value of the Arncliffe properties as at the time they were sold to Aerial for $5 million was in the order of $7.9 million.
| Grounds of appeal made out | Amount by which judgment ought be reduced | Item the subject of reduction | | 4-5 | $133,175 | The value of V0044. | | 6-7 | $210,000 | Liquidated damages of $7,500 per day for 28 days. | | 8-15 | $2,900,000 | The difference between the price paid for the Arncliffe properties in February 2024 ($5 million) and their value ($7.9 million). | | TOTAL | $3,243,175 | |
For the reasons given above, I propose the following orders:
Allow the appeal.
Set aside orders 1 to 3 of the orders made on 19 June 2025 and, in lieu thereof, order judgment for the first defendant against the plaintiff.
Declare that the amount otherwise owing by the first defendant/first appellant to the plaintiff/first respondent is nil taking into account the following reductions, which total $3,243,175:
(a) $133,175 (for the value of V0044 for consultancy fees); (b) $210,000 (for liquidated damages); and (c) $2.9 million (being the difference between the market value of the properties known as 31, 33 and 35 Flora Street, Arncliffe and the amounts for which they were sold in February 2024 in discharge of liability which was coordinate with that of the first defendant’s liability to the plaintiff).
**********
Kaloriziko Pty Ltd as trustee for Ryde Combined Unit Trust
Calibre Construction Group Pty Ltd
(1986) 162 CLR 170
(2024) 115 NSWLR 1
(1951) 217 ALR 1
(2002) 209 CLR 282
(1982) 149 CLR 337
(2009) 239 CLR 129
(1936) 55 CLR 499
(1959) 101 CLR 298
(1952) 85 CLR 352
(2004) 63 NSWLR 167
(2003) 77 ALJR 768
(2007) 71 NSWLR 150
(1988) 164 CLR 387
(1907) 5 CLR 418
(1998) 196 CLR 494
Appeal allowed. Orders 1 to 3 made below were set aside and judgment was ordered for the first defendant against the plaintiff. The Court declared that the amount otherwise owing was nil after reductions of $133,175 for V0044, $210,000 for liquidated damages, and $2.9 million for the undervalue of the Arncliffe properties. Costs orders were made, subject to further submissions on any different order. The first appellant was directed to indicate whether it sought judgment on its $210,000 liquidated-damages cross-claim.
By letter dated 8 October 2018, the developer wrote to the builder requesting the submission of a variation for the substation. Although the letter post-dated the contract this was relied on by the builder in support of its argument that infrastructure was an excluded item under the contract. On 26 October 2018 the builder submitted variation 1, entitled “Supply & Install Substation and Street Lighting Up-Grade Works” in an amount of $438,900. The claim contained the following endorsement:
It follows from the construction which I prefer that the builder is entitled to retain the amounts which were paid as variations 1, 7, 11, 13 and 21 because it had a separate right to be paid for the work covered by the purported variations, since, as the work constituted “services or infrastructure upgrades”, it fell within the definition of “excluded items”.
For these reasons, although the error alleged in grounds 1-3 has been established, the primary judge’s finding that no credit ought be given to the developer for these amounts is supported by the analysis in paragraph 3 of the amended notice of contention. Accordingly, the appeal ought not be allowed on grounds 1-3. It is not necessary to address the builder’s alternative argument that it was entitled to retain the payments by reason of cl 36 of the General Conditions.
Mr Balafoutis argued that the consequence of the developer approving variation 44 was that the builder was entitled to retain the amount of variation 44, even if it were not actually a variation.
I reject Mr Balafoutis’ submission. The developer’s approval of a variation cannot transform a non-variation into a variation and could not vary the WUC pursuant to cl 36. Even if the approval constituted an implied admission that the works were a variation, this is simply a piece of evidence which can be displaced by other evidence which shows that the admission was incorrectly made: The Nominal Defendant v Gabriel (2007) 71 NSWLR 150; [2007] NSWCA 52 at [113] (Campbell JA). If the work comprised in the purported variation did not constitute a variation because it was part of the WUC in any event, the builder had no right to be paid for it since the work was covered by the contract sum. Clause 36.4 has no effect because it is a pricing mechanism which is premised on there being an actual variation (rather than a purported or mistaken valuation or something which may, or may not, constitute a variation). This is necessarily implicit in the opening words of cl 36.4 (which requires the developer’s representative to “price each variation”). The pricing of a non-variation does not convert it to a variation. Further, the proposition that, once payment for a non-variation is approved, it cannot be undone is inconsistent with the second sentence of cl 37.2 (that “[p]ayment other than final payment shall be payment on account only”).
The passages cited above from Construction Law, Wormald and *Al-*Atabi highlight the importance of strict compliance with provisions such as cl 36. When cl 36 is complied with (that is, that there is a variation which is priced), the builder has a right to payment in addition to the original contract sum agreed but when the conditions for that to occur have not been fulfilled, no such right accrues. If payment is made or, as in this case, allowance for payment is made by an increase in the contract sum, the developer is entitled to credit in that amount, in accordance with cl 37.2.
For these reasons, I am persuaded that grounds 4-5 have been made out and the developer is entitled to a credit of $133,175 for the approved value of variation 44.
At least the following three hypotheses are open on the evidence:
prior to 13 September 2018 (the first EOT claim, which identified the original contracted date for practical completion as 23 May 2020), the parties had varied the original contracted date for practical completion by written instrument signed by the parties in accordance with cl 5(b) of the Formal Instrument of Agreement;
prior to 13 September 2018, the parties had orally agreed to vary the original contracted date for practical completion from 20 April 2020 to 23 May 2020; and
on or prior to 13 September 2018, someone had miscalculated the date for practical completion (which was the date which derived from the date of the construction certificate), either because they mistook the date of the construction certificate or incorrectly calculated the date 20 months after that date or incorrectly calculated the date 20 months before the date on the document and the error had been replicated in subsequent documents, including EOT claims and PCG reports by authors who were focused on other matters, such as whether the EOT sought ought be granted or the progress of the works.
Hypothesis (1) is possible but not probable because there is no evidence of any such instrument in writing. Hypothesis (2) is possible but not probable because there is no evidence of any such oral agreement or, indeed, any discussion about changing the original date for practical completion. The only evidence of Mr Mohanna on point was that “the initial date of practical completion was discussed” on 22 October 2018 in connection with the draft PCG report. Not only did this evidence not indicate that agreement had been reached on the topic, the claimed conversation occurred subsequent to the first reference to 23 May 2020 (in the first EOT claim dated 13 September 2018).
Further, absent a promissory estoppel of the character recognised in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7, an oral agreement or statement relied upon, would not have been effective to vary the date because it would not have met the requirements of cl 5(b). Hypothesis (3) is available and may be the most likely but, once again, is unsupported by any evidence. I regard the choice between the hypotheses as being conjectural and speculative and therefore insufficient to form the basis for a positive inference: Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 at 5 (Dixon, Williams, Webb, Fullagar and Kitto JJ), extracted and applied in Luxton v Vines (1952) 85 CLR 352 at 358 (Dixon, Fullagar and Kitto JJ); [1952] HCA 19.
Even if a Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 inference were available in respect of Ms Rizk, it would not assist the builder since it would not rise beyond an inference that her evidence would neither have assisted the developer’s case nor supported an inference otherwise available. In any event, the documents she approved contained inconsistencies between dates, as outlined above. Further, Ms Rizk’s use of the word “acceptable” on 1 May 2019, post-dated the first reference to 23 May 2020 (on 13 September 2018, so far as is revealed by the evidence) by some eight months.
Nor can the question be resolved by reference to the onus of proof. The developer claimed a credit for liquidated damages of $210,000, which were payable if the original contracted date for practical completion was 20 April 2020 but not if it were 23 May 2020. It discharged its onus to a prima facie level by relying on the definition of “date for practical completion” in cl 1 of the definitions in the General Conditions and item 7(b) of the Schedule. The only evidence which the builder adduced to the contrary was a series of documents which did not meet the requirements for a variation of the date for practical completion and which were consistent with hypothesis (3) above.
For the reasons given above, I regard the primary judge’s finding that the contract date for practical completion had been varied by an undocumented EOT or otherwise as erroneous. Grounds 6 and 7 have been made out, with the consequence that the judgment sum ought be reduced by $210,000.
For these reasons, I am satisfied that the Arncliffe properties were sold to Aerial at an undervalue of $2.9 million in February 2024. This amount must be deducted from the developer’s liability in accordance with the principles of coordinate liability. Grounds 12-14 have been made out.