Mac v Antworks Pty Ltd - [2016] NSWCATCD 75 - NSWCATCD 2015 case summary — Zoe

NSWNSWCATCD

Mac v Antworks Pty Ltd

[2016] NSWCATCD 75

NCAT Consumer and Commercial|2015-04-08

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Source facts

Court

NCAT Consumer and Commercial

Decision date

2015-04-08

Source

Original judgment source is linked above.

Judgment (56 paragraphs)

[1]

Reasons for Decision

These proceedings were commenced in March 2013.
The Consumer Trader and Tenancy Tribunal was abolished as of 1 January 2014 and the Consumer, Trader and Tenancy Tribunal Act 2001 and the Consumer, Trader and Tenancy Tribunal Regulation 2009 were repealed. As the application was not fully determined at that time, the proceedings were 'unheard proceedings' as defined in clause 6 of Schedule 1 of the Civil and Administrative Tribunal Act 2013.
Transitional provisions in relation to unheard proceedings are set out in clause 7 of Schedule 1 of the Civil and Administrative Tribunal Act 2013. Pursuant to section 7(3) of Schedule 1 to that Act, the current Tribunal has and may exercise all the functions that the Consumer, Trader and Tenancy Tribunal had immediately before its abolition, and the provisions of the Consumer, Trader and Tenancy Tribunal Act and Consumer, Trader and Tenancy Tribunal Regulation continue to apply to unheard proceedings which expression includes pending proceedings.
In these reasons for decision I will refer to the applicants as the owners and to the respondent as the builder.
The owners claim the sum of $128,099.00 from the builder.
In response to the owners claim the builder has brought a cross application in which it makes claims against the owners in the sum of $76,611.57.
These proceedings and the builder's cross application was heard over 3 days in 2015.
The evidence in the proceedings was as follows: 1. Exhibit A three volume bundle of documents and affidavit of Nina Mac sworn 18 December 2014; 2. Exhibit B two photographs 25 March 2015; 3. Exhibit C 5 swimming pool photographs and one swimming pool plan; 4. Exhibit D photograph showing date 27 May 2012; 5. Exhibit E record of experts conclusions 8 April 2015; 6. Exhibit F Mr Nisbett's report of 12 December 2014; 7. Exhibit G bundle of five photographs of site; 8. Exhibit 1 Mr Mac's statement 4 June 2013; and 9. Exhibit 2 photographs of front of residence.

[3]

Date for Completion

Clause 10(b) of the contract required the builder to proceed with due diligence to bring the works to Practical Completion within the construction period stated in item 6B of schedule two of the contract. The parties agree that item 6B of schedule 2 referred to a construction period of 250 days. The owners submit that the date for practical completion was 19 September 2012. The builder disagrees with this submission and states that the date for practical completion was 25 March 2013.
The owner submits that the builder's quotation 7064 was a contract document. Schedule 3 to the contract required the parties to state the documents detailing the contract work. The builder's quotation 7064 is referred to in Schedule 3 in relation to the description of the work to be completed by the builder. The quotation is therefore a contract document if only for that limited purpose.
In addition, Schedule 2 of the contract stated under item 5, dealing with the method of payment, that payments would be made when the following stages of the works were reached: 1. 'As per progress payment 2. quotation number 7064'
Item 12 of schedule 2 of the contract also referred to quotation 7064 insofar as prime cost items were concerned.
I find that quote 7064 was a contract document, having effect in connection with: 1. The description of the works, 2. progress payments for the stages of the works; and 3. prime cost items,
The parties agree that after the contract was signed there was an agreement which changed the commencement date of the contract. The owners also submit that there was also an agreement that the works would be completed by 19 September 2012.
The owners' submissions are that after the contract was signed, there was in early February 2012 an amendment to the builder's quote 7064 showing a new commencement date of 8 February 2012, and at the same time the parties amended the quote to show a new work completion date of 19 September 2012. It is common ground that there was an agreement that there was a new commencement date of 8 February 2012. The amendments to quote 7064 are signed by the parties. Mr Lee of the builder agreed while giving evidence in the Tribunal that the new date for completion of the works would be 19 September 2012. I find that the amendment to quote 7064 went to both the commencement date and the completion date.
I find that the parties in effect amended the contract in early February 2012 when they agreed on a new commencement date of 8 February 2012 and that the new Date for Practical Completion of the works would be 19 September 2012. In my view their agreement as recorded on quote 7064 as signed by them must be given effect. However I find that their simple agreement did not displace important provisions of the contract such as clause 11 which dealt with delays and extensions of time. Nor did their agreement displace clause 10(b) of the contract to the effect that the construction period and in my view, the new Date for Practical Completion of the works of 19 September 2012 would be subject to change or adjustment under clause 11.
The builder submits that it is entitled to extensions of time, a submission disputed by the owners.
The builder's extension of time case is founded on its letter of 10 September 2012.
Clause 11 of the contract stipulated certain events which would entitle the builder to an extension of time if the progress of the works was delayed. I do not intend to set it out in full. Briefly, it required the builder to notify the owners in writing of matters which caused delay within a reasonable time of becoming aware of their occurrence, with a stated extension of time. The clause further provided that if the owners did not dissent in writing from the builder's notification within 5 days, the construction period would be extended by the builder's stated extension of time.
The builder's letter of 10 September 2012 was addressed to 'The lending Authorities CC: Nina Mac and Colin Mac [*****]Road Fairfield NSW'.
The contract stated the owners address to be [***]Road Fairfield NSW. Clause 30 of the contract dealt with service of notices. It stated that all notices and other documents would be deemed to have been given received or served if delivered to the other party at the relevant address in the contract and would be affected on the date of actual receipt.
I find that despite the curious reference to 'The lending Authorities' the builder's letter was sent to the owners at their address as stated in the contract. The letter which was stated to be for an extension of time, claimed an extension of time of 131 days for seven causes of delay.
The first cause of delay was for a section 96 application for a swimming pool. The delay claimed was 30 days between 12 February - 12 March. The next five causes of delay related to rain in the period March - July. The final cause of delay was in connection with a section 96 application for a retaining wall and redesign of stormwater. The delay claimed was 45 days.
Clause 11(a)(viii) of the contract allowed a claim for an extension of time for inclement weather thereby justifying the five claims based on rain. Clause 11 does not allow the builder an extension of time for making a section 96 application to the local council. If the council delayed in granting any necessary consent or approval, clause 11(a)(ix) would allow a claim for an extension of time. However the builder's extension of time claim was not based on council delay.
Having regard to clause 11 of the contract and the builder's letter of 10 September 2012, I find that clause 11 did not allow the builder to claim an extension of time for making section 96 applications to the local council.
Given that the builder's extension of time claim was dated 10 September 2012, I find that the builder had not complied with clause 11(b) of the contract in connection with its March, April, May, June and July wet weather claims because it had not notified the owners 'in writing of any matters which cause delay within a reasonable time of becoming aware of their occurrence'. I find that the builder would have been aware of the delays caused by rain at the end of the months referred to. I further find that a notice of rain delays for those months in September 2012 was not given 'within a reasonable time of becoming aware of their occurrence'.
11(c) of the contract provides that: 'Should the Owner not dissent, in writing, from the above notification within five (5) days the construction period will be extended by the period claimed in the notification under Sub-Clause (b).'
The builder places reliance on clause 11(c) of the contract as it submits that the owners did not reply to its 10 September 2012 letter within 5 days with the result that the construction period was extended by 131 days.
I find that on the proper construction of clause 11 of the contract, clause 11(c) will only operate when the builder provides a notice that complies with clause 11(b) of the contract and in particular the requirement that the builder is to notify the owners 'in writing of any matters which cause delay within a reasonable time of becoming aware of their occurrence'. The reason for such a construction is clause 11(d) of the contract set out below. If clause 11(c) were to operate in circumstances where the builder had not complied with its clause 11(b) obligations such as giving notice in a reasonable time, and where the owners failed to give written dissent within 5 days, clause 11(d) would have no work to do.
Clause 11(d) of the contract provides that: 'Delay in notifying or a failure to notify a delay will not of itself prohibit an extension of time provided the matter which is claimed to cause delay is shown to cause delay to the works.'
The builder's failure to comply with clause 11(b) is not the end of its entitlement to an extension of time.
I find that despite non-compliance with the requirement in clause 11(b) to notify the owners 'in writing of any matters which cause delay within a reasonable time of becoming aware of their occurrence' the builder will be entitled to claim an extension of time if clause 11(d) is satisfied.
The owners submit that there is no evidence which establishes that rain in March, April, May, June and July caused delay to the works. The builder's submissions do not refer to any such evidence which shows that the rain claimed caused delay to the works. Records of rainfall are the obvious example of relevant evidence.
On the evidence before the Tribunal I find that the builder has not satisfied clause 11(d) of the contract because it has not tendered any evidence to establish that rain in March, April, May, June and July 2012 caused delay to the works.
As a result of the findings in the preceding paragraphs I find that the builder was not entitled under the contract to an extension of time of 131 days as claimed in its 10 September 2012 letter.

[4]

Termination of the contract

The owners claim that they terminated the contract and rely on clause 28 of the contract. I do not propose to set clause 28 out in full. However in my view clause 27 of the contract is relevant. It states: 'With regard to any notice issued by a party pursuant to or which relies upon Clauses 26, 28 or 29 the said notice must accurately set out the matters giving rise to the issuing of the notice. Any notice which merely recites the words or intent of Clause 26, 28 or 29 without proper details will not be a valid notice. Further, any document which exists and is relied upon to support the position put forward in any of the above notices must also be served with the notice. A failure to do so will mean the notice served will be of no effect as a notice.'
On 23 February 2013 the owners by their solicitor sent the builder a letter which they submit had the effect of terminating the contract. The letter sent on behalf of the owners did not state that the owners actually terminated the contract.
The letter did not refer to clause 28 of the contract. It stated: 'It is an essential term of the Contract that all building and construction work must be finish and/or complete by 19 September 2012. We are instructed that you have failed to perform the above-mentioned term. We hereby place you on notice to cease all work effective immediately and refrain from entering the property. Our client reserves their rights to seek orders against you and/or your company for losses and damages.'
The test for 'essentiality' was laid down by Jordan CJ in Tramways Advertising Pty Ltd v Luna Park (1938) 38 SR (NSW) 632 where his Honour stated: 'The test of essentially is whether it appears form the general nature of the contract...or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or a substantial performance of the promise, as the case may be, and this ought to have been apparent to the promisor." [641 -642] and "If the innocent party would not have entered into the contract unless assured of a strict and literal performance of the promise, he may in general treat himself as discharged upon any breach of the promise, however slight." [642]
I find that it was not an essential term of the contract that all building and construction work had to be finished and/or complete by 19 September 2012. As found above, the agreement of the parties that the Date for Practical Completion would be 19 September 2012 was subject to the operation of clause 11 of the contract whereby that date could be extended. In addition the contract provided in clause 10(c)(i) that if the builder failed to bring the works to practical completion by the Date for Practical Completion, which I have found was 19 September 2012, subject to any extension of time under clause 11, then the builder would be obliged to pay the owners the sum of $250.00 per calendar week for every week from the Date for Practical Completion until the date Practical Completion was achieved.
In the contractual framework that I have found existed, which allowed for extensions of time to the date of 19 September 2012 and pre-estimated general and liquidated damages if completion was not achieved by 19 September 2012, or any extended date, I find that it cannot be said that the owners would not have entered into the contract unless they had been assured of a strict or a substantial performance of the promise to complete by 19 September 2012. The contract itself allowed (by way of extensions of time) for the possibility that there would not be strict or a substantial performance of that promise and provided for compensation to the owners in the event that the promise was not complied with in relation to the date of 19 September 2012 or any extended date.
For the reasons set out above I find that the reliance on the breach of the so called essential term did not entitle the owners to terminate the contract, since there was no such essential term. As a result I find that the letter sent on their behalf did not operate to terminate the contract.
The owners do not press the 23 February 2013 letter alone as the basis of their termination case. They rely on the position as stated in Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 that if a valid ground existed for termination, a party can later justify termination of the contract by reference to that ground even if that ground was not relied upon at the time of termination. I would add that there cannot be any dispute that the principle relied upon applies in Australian law and is binding on me.
The builder submits that the owners' letter of 23 February 2013 did not operate to terminate the contract and itself was a repudiation by the owners. The builder also submits that any termination notice based on delay was capable of remedy and the builder should have been given the time stipulated in clause 28 of the contract to remedy the default. The owners failure to state in their notice their intention to terminate the contract was also relied upon by the builder.

[6]

Failing to proceed with the works with due diligence or in a competent manner

The issue is whether the builder had at 23 February 2013 'fail[ed] to proceed with the works with due diligence or in a competent manner with regard to the circumstances of the contract works' which was a cause for issuing a default notice under clause 28(a)(ii) of the contract. Since the contract allowed for termination based on this cause of default, there is no question of whether such a default would otherwise entitle the owner to terminate the contract.
Although the owners do not address this issue I have assumed from their submissions that they approach this cause for termination as being in two parts. First, that there was a failure to proceed with the works with due diligence. Secondly, the builder had failed to remove or remedy defective work, such that the works were materially affected. I have assumed that the owners contend that the second part demonstrates that that there was a failure to proceed with the works in a competent manner.
Insofar as the first base is concerned, the owners in their submissions rely on their letters to the builder dated 12 August 2012, 19 August 2012 and 7 October 2012 which required three lists of work to be carried out. The 19 August 2012 letter required listed of work to be carried out by 13 August 2012 and 17 September 2012. In this correspondence the owners were urging the builder to carry out incomplete work and to rectify specified items of work promptly.
The question of whether a builder had failed to proceed with the works with due diligence was considered by the Court of Appeal in Hometeam Constructions Pty Ltd v McCauley [2005] NSWCA 303. At [169] - [181] McColl JA stated: '169 It might be accepted that the appellant's failure to complete the Works by the date for practical completion might be some evidence of delay (see Westminster Corporation v J Jarvis & Sons Ltd and Another [1970] 1 WLR 637 at 643 per Lord Hodson, at 645 per Viscount Dilhorne). However, whether delay is of itself sufficient to raise an inference of lack of due diligence must depend on the circumstances. 170 Despite the prevalence of clauses in building contracts requiring the work to be performed with "due diligence", defining the nature of that obligation has proven elusive. 171 In Re Stewardson Stubbs& Collett Pty Ltd & Bankstown Municipal Council, Moffitt J observed (at 1675 - 1676) that: "... [T]he question of what precisely constitutes a failure to proceed with reasonable diligence is a matter of some difficulty. However, it is an allegation of a general failure to proceed with that degree of promptness and efficiency that one would expect of a reasonable builder who has undertaken a building project in accordance with the terms of the contract in question." 172 In Hounslow London Borough Council v Twickenham Garden Developments Ltd Megarry J considered a requirement that a building contractor "proceed regularly and diligently with the works" and said (at 269): "[W]hat is the meaning of the words 'regularly' and 'diligently'? These are elusive words, on which the dictionaries help little. The words convey a sense of activity, of orderly progress, and of industry and perseverance: but such language provides little aid on the question of how much activity, progress and so on is to be expected. They are words used in a standard form of building contract in relation to functions to be discharged by the architect, and in those circumstances it may be that there is evidence that could be given, whether of usage among architects, builders and building owners or otherwise, that would be helpful in construing the words. At present, all that I can say is that I remain somewhat uncertain as to the concept enshrined in these words; and this necessarily increases the task of Mr. Harman in establishing a strong case that the contractor has failed to proceed regularly and diligently with the works, so that the architect's notice is good." (emphasis added) 173 In Hooker Constructions Pty Ltd v Chris's Engineering Co [1970] ALR 821 at 822-823, Blackburn J considered whether a head contractor had validly terminated a building sub-contract on the basis that the sub-contractor had failed "to proceed with the works with reasonable diligence" as required by the contract. After observing that the "onus is on the plaintiff to show the [sub-contractor] was in default in a way ... caught by this provision", his Honour said (at 822) that he had "not found it easy to construe this phrase 'reasonable diligence' in the context of this case". He concluded that "a sensible construction of the phrase is that the actual extent of work completed is of some significance" and that " 'diligence' in the contract means ... not only the personal industriousness of the defendant, but his efficiency and that of all who worked for him". 174 He also said (at 823) that he was entitled to accept as evidence that the defendant had not displayed reasonable diligence, "evidence that the work was, at the material time, seriously incomplete together with evidence that there were no circumstances preventing the defendant from overcoming this situation". 175 In Hooker the plaintiff led evidence that at the time it purported to terminate the sub-contract, the defendant's work was "seriously behind what could reasonably be expected [and] that the situation was not due to anything which was beyond the defendant's control". Although the defendant adduced evidence to show that "through no fault of his own, he was unable to get the necessary material to bring the work to the stage where it should have been at the material time", this did not convince Blackburn J who held the plaintiff had proved the contract was validly terminated. 176 In Australian Development Corporation Pty Ltd v White Constructions (ACT) Pty Ltd (1996) 12 BCL 317 Giles J (as his Honour then was) accepted that "where there was a specified future date for practical completion, whether [the builder] was prosecuting the project diligently was a question of fact, substantially determined by whether it was proceeding at a rate of progress according to which practical completion would be achieved by the specified date but with regard also to whether accelerative measures could bring achievement of completion by the specified date." His Honour considered competing expert evidence as to the time required to complete the building work but concluded it was unnecessary in the circumstances of that case to resolve the difference between those views. 177 As each of these cases demonstrates, "you cannot have diligence in the abstract. It must be related to the objective": Greater London Council v Cleveland Bridge and Engineering Company Ltd (1986) 34 BLR 50; see also Hick v Raymond & Reid [1893] AC 22 at 29 per Lord Herschell LC ("there is no such thing as reasonable time in the abstract"); Maynard v Goode [1926] HCA 4; (1926) 37 CLR 529 at 538 per Isaacs J ("[t]he question of what is 'reasonable time' is always relative; that is, it means 'a reasonable time under the circumstances' "). 178 There were, in my view, in the context of the Contract, at least two ways the respondent could have established that the appellant had failed to perform the works with due diligence. 179 First she could have proved: (a) the work the appellant was required to carry out under the Contract; as events transpired this included the original contract works and the rectification work; (b) what, in addition to the contract period, was a reasonable time within which the appellant ought to have executed the original contract works and the rectification work; (c) that the appellant had failed to execute the work within that reasonable time; (d) that, to the extent the appellant proffered explanations of why the work had not been executed within that reasonable time, those explanations were unacceptable. 180 As I shall explain, the appellant's case was, essentially, that this was the way the respondent was required to prove her case and that she had failed to do so. 181 Secondly, in my view, the respondent was also entitled to seek to prove lack of due diligence by establishing a case of delay in progress during construction. This appears from both Stubbs and Hooker. On this basis she could have established a failure to carry out a reasonable amount of work by a given time; that that period of time be measured by reference to all the work to be performed under the Contract or, in absolute terms, by reference to a lack of activity on site over a significant period that could not be satisfactorily explained. The onus of proving lack of due diligence was on the respondent. If the facts established by the respondent are capable of giving rise to an inference of lack of due diligence, the appellant may discharge any evidentiary onus that may pass to it, by explaining why the work progressed at that rate: see Hobbs. That evidence should be "sufficient ... to turn the scale": Brady v Group Lotus Car Cos plc [1987] 3 All ER 1050 at 1059 (CA) per Mustill LJ. '
The evidence relied on by the owners, as referred to above, establishes that before the Date of Practical Completion of 19 September 2012, in the period 12 - 19 August 2012, the owners were writing to the builder demanding that it carry out and complete specific items of work referred to. The fact that this correspondence was sent before the date for Practical Completion indicates to me that it was possible for the builder to attend to the issues that were being raised by the owners and bring the works to practical completion by the Date for Practical Completion.
On 7 October 2012 after the Date for Practical Completion, the owners wrote again to the builder setting out a list of 15 items of work that they said needed to be attended to.
Some of the items referred to in this letter indicate that substantial work remained to be carried out. The owners referred to: 'Finish all brick works, face bricks and sand stone immediately. Damage sand stone and face bricks will not accepted' Fix exposed rusted RIO in concreted slab in front of laundry door from hall way. Roof tiles not finished and still cause damage to timber framing Fix up stair all ceiling joists to a acceptable level Fix up stair all wall stud to an acceptable alignment in one surface line'
The owners' letter of 7 October 2012 has not been contradicted by the builder. I accept it as establishing that the builder had not brought the works to practical completion by the date for Practical Completion of 19 September 2012. Further I accept the owners' letter of 7 October 2012 as establishing that as of that date there was still work to be completed which was of a substantial character as opposed to being made up of minor omissions and defects which did not prevent the works being reasonably fit for their intended use.
Neither the evidence in these proceedings, the way in which the proceedings were conducted, nor the parties' final submissions concentrated specifically on the reasons why the builder did not achieve practical completion by 19 September 2012 and what if any factors stood in its path. However the evidence that I have referred to as disclosed by the owners correspondence of 12 August, 19 August and 7 October 2012 and the fact that the builder did not achieve practical completion by the Date for Practical Completion persuades me that at least up to 7 October 2012 the builder had failed to proceed with the works with due diligence. In circumstances where the evidence discloses that the builder had not attended to items of incomplete work by the date for practical completion and in addition was unable to point to any claim for an extension of time to that date, I infer that the builder has failed to proceed with the execution of the works with due diligence and with the degree of efficiency and promptness necessary to achieve that contractual objective.
On 6 January 2013 the owners wrote to the builder complaining about its performance. Significantly they stated that the builder was 4 months behind the contract schedule for the lock up stage and that there were small defects and incomplete work to be attended to. The builder responded on 6 January 2013 and stated that it would do no further work until the owners had fixed the payment situation. The builder also stated that the owners had made many changes to the plans, inferring that delay was attributable to them.
It is convenient at this point to consider the second ground relied upon which also has a connection with the issue of whether the builder failed to complete the work with due diligence.

[7]

Suspension of the Works

Clause 21 of the contract allowed the builder to suspend the works if the owners failed to make a payment in the time required by item 5 of Schedule 2. The builder was required to give a written notice of suspension to the owners.
The owners address the suspension issue in their written submissions stating that the builder suspended without cause.
The builder's email of 6 January 2013 stated so far as is relevant: 'I have decided it that I am not going to any more works for you until you have fixed the payment'
Although the builder's email was short and informal, the issue is whether it was a notice of suspension under clause 21. Clause 21(a)(i) and (b) stated: 'Should the Owner fail to: (i) pay or cause to be paid any payment or any part thereof including an amount of GST was in the time required by Item 5 Schedule 2; then the Builder may, without prejudice to his right to determine this contract, suspend the works.' 'The Builder is to give notice in writing of any suspension under this clause to the Owner.'
In Hometeam Constructions Pty Ltd v McCauley it was held in connection with a Notice of Default that: 'The Notice of Default should be construed non-technically, in accordance with business common sense, fairly in its context; the question was how a reasonable recipient would understand it.'
In my view the builder's suspension email should be construed in an identical manner to that stated in connection with a notice of default in Hometeam Constructions Pty Ltd v McCauley.
The builder's notice construed non-technically, in accordance with business common sense and fairly would I find lead a reasonable recipient to understand it as stating that the builder was stopping work until such time as the owners had paid to it money due under the contract.
In considering the builder's email of 6 January 2013 it is appropriate in my view to have regard to the fact that at that time the builder had outstanding claims for variations as referred to in the affidavit of Mr Lee sworn on 8 November 2013. At paragraphs 48 - 60 Mr Lee refers to a number of variation claims which total $39,430.00. The builder's variation claims were given in the period 5 July 2012 - 10 December 2012.
The owners submissions are that all of the builder's progress claims had been paid in their entirety and that as a result there could be no suspension under clause 21(a)(i). The owners further submit that the builder's variation claims should fail because the builder failed to comply with the contractual procedures as regards carrying out variations.
In the builder's cross application I have the considered its variation claims and have concluded that its claims for variations were not maintainable because the builder failed to comply with sections 6 and 7 of the Act as well as clause 14(d) of the contract as the variations the subject of its claims were not detailed in writing and signed by the parties to the contract. I have also found that the owners had paid the builder's claims for progress payments 1 - 6 by 10 December 2012.
In the builder's cross application I have also had regard to the fact that the builder's progress claim 007 was dated 14 December 2012 and was in the sum of $26,558.00 excluding GST. The amount claimed is consistent with the progress claim schedule contained in its quote 7064 dated 18 June 2011, which was a contract document. The stage reached was '90% Render Work is Completed'. There is no evidence that progress payment 007 was paid by the owners. Progress claim 007 is to be found in Mrs Mac's statement referred to at paragraph 71, and at page 345 of Volume 1 of the Agreed Bundle. Mrs Mac has given un-contradicted evidence that she agreed with Mr Lee of the builder that progress claim 007 would be paid by the owners when the builder gave the 'Council a plan for the front fence and satisfy Council's requirements'. Her evidence is that on 16 January 2013 the builder provided her with a front fence plan which she submitted to Council.
Mr Mac had another version of events as regards progress claim 007. He states in his affidavit of 1 August 2014 that in late January 2013 he had a conversation with the builder when he was asked when he was going to pay progress claim 7. Mr Mac refused to pay and stated that he would pay when certain conditions he imposed were met. The builder agreed to finish the waterproofing as a condition to payment. Mr Mac's evidence is that the waterproofing was finished on 7 February 2013. I find that the owners were obliged to pay progress claim 7 on that day.
I find that it was on 16 January 2013 when the builder performed its part of the agreement with Mrs Mac to give the Council a plan for the front fence and satisfy Council's requirements, which I find in context of the conversation referred to, were the council's requirements relating to the front fence. However for the reasons in the preceding paragraph I find that as at 7 February 2013 progress claim 007 in the sum of $26,558.00 plus GST became payable by the owners.
The consequence of the above findings in connection with the suspension issue is that in these proceedings and in the cross application I have found that as at 10 December 2012 the owners had paid progress claims 1 -6, that progress payment 007 only became payable on 7 February 2013 and that the owners were not liable to pay the builder's variation claims.
It follows from these findings that the builder did not have the right to suspend the works when it did on 6 January 2013.
There is the further issue of whether that state of affairs continued to 23 February 2013, the date of the owners' solicitor's letter purporting to terminate the contract. The parties' final submissions do not address this issue. The decision in Shepherd v Felt and Textiles of Australia Ltd that if a valid ground existed for termination, a party can later justify termination of the contract by reference to that ground even if that ground was not relied upon at the time of termination must, in my view, mean by reference to the 'time of termination' that the grounds now relied upon must have existed as at 23 February 2013.
In connection with issue of whether the builder failed to complete the work with due diligence, I have found that up to 7 October 2012 the builder had failed to proceed with the works with due diligence. In addition the evidence discloses that at 6 January 2013 the owners were stating to the builder that there were small defects and incomplete work to be attended to. The builder then without cause suspended the works with the result that I find that as at 23 February 2013 it had failed to carry out the work with due diligence.

[8]

Defective work - Failing to proceed with the works in a competent manner

In connection with the defective work issue, the owners rely on giving the builder various letters and lists requiring rectification of defective work on 15 July 2012, 29 July 2012, 12 August 2012, 19 August 2012 and on 7 October 2012.
Clause 28(a)(iv)b) of the contract provided that the builder failing to remove or remedy defective work, such that the works were materially affected would be a cause of default upon which the owners could rely in order to issue a notice of default.
While the contract did not provide for the owners giving the builder notice requiring it to rectify defective work, nonetheless clause 28(a)(iv)b) made the existence of defective work a cause of default which triggered the right to issue a default notice.
The issue is in my view is whether as at 23 February 2013 the defective work referred to in the owners letters and lists as referred to above remained un-remedied. As stated above, the decision in Shepherd v Felt and Textiles of Australia Ltd that if a valid ground existed for termination, a party can later justify termination of the contract by reference to that ground even if that ground was not relied upon at the time of termination must, in my view, mean by reference to the 'time of termination' that the ground of un-remedied defective work as relied upon must have existed as at 23 February 2013
The owners have not provided any evidence that there was defective building work that could not be remedied as at 23 February 2013. While they wrote numerous letters regarding defective work, the last of those letters was written on 6 January 2013 and then only in relation to small defects. The evidence does not support a finding that as at 23 February 2013 defective work was a valid ground for terminating the contract.
For the above reasons I find that the owners were not entitled to rely on their letters lists and demands regarding defective work to the builder as a valid ground for terminating the contract as at 23 February 2013 on the basis of failing to proceed with works in a competent manner.

[9]

Failure to comply with clause 12 of the contract, namely to comply with the requirements of local authorities

Under this heading the owners rely on the builder's failure to comply with clause 12 of the contract, namely to comply with the requirements of local authorities as an existing ground that could be relied upon as at 23 February 2013 to justify termination of the contract
Clause 12 of the contract required the builder, among other things, to comply with and give all notices required by New South Wales legislation or any regulation or by-law of a local authority or public service company or authority which had jurisdiction over the works.
Clause 28(a)(iv) a) provided that if the builder was in breach of the contract in that it refused or persistently neglected to comply with clause 12, that would be a cause for the owners to terminate the contract.
The issue is whether the owners can justify termination of the contract by reference to this ground. The owners deal with this issue extensively in their submissions.
The evidence in connection with issue is dealt with in the owners' retaining walls and ground level claim which is factually complex. However relevant evidence emerges from the owners submissions.
The owners rely on the fact that on 6 March 2012 an inspector from the City of Ryde inspected the works being undertaken by the builder. The inspector noted that the builder had constructed a block wall along the perimeter boundaries and the walls had not been shown on plan and the site was in an overland Path. The builder was advised to demolish and remove the walls or seek a section 96 modification.
The owners also rely on the fact that on 10 July 2012 the City of Ryde ordered the owners to demolish and remove the unauthorised retaining wall on the southern side of their property and the retaining wall adjoining the swimming pool area because the building work referred to had been carried out without the benefit of a prior development consent and construction certificate.
No doubt the City of Ryde's order of 10 July 2012 prompted the builder to make a section 96 modification application which was dealt with by the Council on 21 January 2013. The section 96 application sought approval for the retaining wall on the southern side of the property and the retaining wall adjoining the swimming pool area.
I find that the builder complied with the 6 March 2012 City of Ryde Building Inspection Report by making a section 96 application, I do not consider that it was in breach of clause 12 of the contract as regards the requirements of that document. I also find that by making a section 96 modification application in response to the City of Ryde's 10 July 2012 order, the builder was not in breach of clause 12 of the contract in connection with that order, because of the modification application.
The City of Ryde did not as part of its Section 96 consent specifically require the demolition of the block wall.
On 21 January 2013, before the contract was terminated by the owners, the City of Ryde issued Section 96 Consent No MOD2012/0135 dated 21 January 2013 which allowed, inter alia, 'Retaining walls to …southern boundary'. The relevant evidence is at page 350 of exhibit 1. I find that as 21 January 2013 there was no outstanding notice issues by the City of Ryde in connection with the retaining walls the subject of its 10 July 2012 order.
For the reasons set out above I find that the owners were not entitled as at 23 February 2013 to rely on the fact that the builder had persistently neglected to comply with clause 12 of the contract, namely to comply with the requirements of local authorities as a ground which justified terminating the contract.

[11]

The owners' claims against the builder

The owners' submissions identify 41 heads of claim which make up their claims against the builder.
The builder addresses a number of these claims in its submissions by stating that the owners' claims are incomplete work. The submission is developed by stating that the owners are unable to claim for incomplete work because: 1. They repudiated the contract ; 2. The due Date for Practical Completion had not been reached; as at 23 February 2013; and 3. As a result of the owners taking possession of the site and excluding the builder therefrom, the works are deemed to be practically complete pursuant to clause 22 of the contract and as a result the works cannot be said to be incomplete.
The builder's submissions as described above fail because I have found that the owners were entitled to terminate the contract as at 23 February 2013. That right to terminate does not arise as a result of their former solicitor's letter of that date but because the owners were as at that date entitled to terminate because of the defaults that I have identified in paragraph 101 of these Reasons for Decision. The builder's submissions also fail because I have found that the builder was not entitled to the extensions of time that it claimed in its 10 September 2012 letter. Further, because I have found that the owners were entitled to terminate the contract on 23 February 2013, they were I find entitled to take possession of their property. The contract being lawfully terminated came to an end on that date with the result that contrary to the builder's submission, clause 22 of the contract had no application or effect in order to deem the works to have been practically completed.
As a result of the builder's breaches of the contract which entitled the owners to terminate they will be entitled to the damages to place them in the same position as if the contract had been performed.
In Hungerfords v Walker 171 C.L.R., 125 at 143 the High Court stated: "The Plaintiff is entitled to full compensation for the loss which he sustains in consequence of the defendant's wrong, subject to the rules as to remoteness of damage and to the Plaintiff's duty to mitigate his loss. In principle, he should be awarded the compensation which would restore him to the position he would have been in but for the defendant's breach of contract or negligence."
This is the basic principle set out in Robinson v Harman (1848) 1 Ex.850: "that where a party sustains a loss by reason of breach of contract, he is, so far as money can do it, to be placed in the same situation with respect to damages, as if the contract had been performed."
The builder's submissions make brief comments on the 41 items which make up the owner's claims. I note that the owners cross refer these items in their submissions with the Amended Scott Schedule in Reply and Joint Report signed by their experts on 29 August 2014. I will call this document the 'conclave report'. There is also the fact that the owners' expert produced a report dated 12 December 2014, which is exhibit F in the proceedings.
In order to deal with the owners' claims, I will deal with each item of claim in turn. The order in which the owners' claims are dealt with is a descending order of quantum as in the owners' submissions, rather than the order in which they appear in the scott schedule and the experts' joint report.
I note that so far as quantum is concerned that the experts are unable to agree on a builder's margin. The owners' expert states that the margin should be 25%. The builder's expert states that the margin should be 20%. The experts do not explain why they settled upon the margin that they refer to. I have decided that I will use the builder's more conservative margin of 20% in calculating rectification costs.

[12]

Item 1 Plumbing, drainage and gas - amount claimed $22,499.00

The builder states the amount for this item is nil. The builder's position as I understand its submissions is the owners should fail in connection with this item because it relates to uncompleted work. However I have found in favour of the owners on the termination issue which entitles them to the cost to complete.
I note that the conclave report records the owners expert as stating 'OE1 could not support claim'.
However in exhibit F, the owners' expert considered this item on the basis of the cost to complete the plumbing, drainage and gas works and estimated the cost to complete the plumbing works to be $19,652.00 excluding GST. The builder's expert has not filed evidence contradicting this estimated cost. There is no suggestion so far as I am aware that this work could not be categorised as uncompleted. In any event as I have stated the builder submits that this item of claim relates to uncompleted work.
The owners' evidence regarding the cost of completion of the plumbing works is not particularly clear. They have produced a quote from First State Plumbing for $15,840.00 inclusive of GST. They have also provided a tax invoice dated 2 October 2013 from First State Plumbing in the sum of $2,066.00 inclusive of GST in relation to what appears to be additional work, over and above the original quotation. There is a further tax invoice dated 17 October 2013 from First State Plumbing which again appears to be in connection with additional work over and above the original quotation in the sum of $393.25 inclusive of GST. Mrs Mac annexes a further tax invoice dated 8 December 2013 from First State Plumbing in the sum of $3,817.00 inclusive of GST to her affidavit of 18 December 2014.
This tax invoice relates to excavators, loaders, dirt removal and labouring for eight hours. I am not persuaded that the tax invoice dated 8 December 2013 relates to the cost of completion of the plumbing works. That is certainly not clear or apparent or even suggested from the face of the tax invoice.
Based on the evidence referred to above I find that the owners have produced evidence which satisfies me that the costs of $15,840.00 + $2,066.00 + $393.25 = $18,299.25 are reasonable in completion of the plumbing works. The owners have not actually produced proof that these amounts have been paid to First State Plumbing. Nonetheless I accept their quotes and tax invoices, with the exception of the tax invoice dated 8 December 2013, as evidence of the reasonable cost to carry out this work.
The owners have been successful in establishing $18,299.25 in connection with this head of claim. Since the costs provided are from a contractor, I find that there is no reason to apply overhead, margin or profit to the cost, as often occurs when damages are assessed based on an expert's estimation. These costs would be included in the contractor's figures and on that basis there is no reason for those allowances to be added.

[13]

Item 2 Retaining walls and ground levels amount claimed - $21,668.00

The builder states the amount for this item is nil. The builder's position as I understand its submissions is the owners should fail in connection with this item because it relates to uncompleted work. However I have found in favour of the owners on the termination issue which entitles them to the cost to complete.
The conclave report records that there is no agreement between the experts in connection with this item of claim. The conclave report records that the owners' expert has calculated the costs to rectify as $16,416.75. He then adds margin and GST to that amount.
The basis of this claim is that the builder constructed a retaining wall along the south western boundary of the site without council approval.
The fact is that on 10 July 2012 the City of Ryde ordered the owners to demolish and remove the unauthorised retaining wall on the southern side of their property and the retaining wall adjoining the swimming pool area because the building work referred to had been carried out without the benefit of a prior development consent and construction certificate.
I find that, no doubt in response to the 10 July 2012 order, the builder applied for a section 96 modification application which was dealt with by the Council on 21 January 2013. The builder's section 96 application sought approval for the retaining wall on the southern side of the property and the retaining wall adjoining the swimming pool area.
On 21 January 2013 the City of Ryde issued Section 96 Consent No MOD2012/0135 dated 21 January 2013 which allowed, inter alia, 'Retaining walls to …southern boundary'. The relevant evidence is at page 350 of exhibit 1.
However the City of Ryde's Section 96 Consent dated 21 January 2013 stated that the finished levels on the southern boundary should be in accordance with an Aztec Engineer's Drawing 170210 Revision G November 2010.
Clause 1(c) of the contract required the builder to ensure that the work under the contract would comply with the conditions of a development consent, or complying development certificate and any construction certificate.
To the extent that the builder did not comply with the development consent's the owners will be entitled to damages to overcome any such failure. The measure of such damages will be the cost of the work necessary to comply.
The owners' evidence is if I may say difficult to follow. The gist of it is that the builder did not comply with the original development consent giving rise to the City of Ryde's 10 July 2012 order. Further as I understand the evidence, because the builder's section 96 modification application was not successful it became necessary for the owners to make a further application, which they did giving rise to an updated construction certificate being issued by the City of Ryde on 26 April 2013.
In order to see if some order might be inserted into this aspect of the case I requested the experts to confer to see if some agreement might emerge which might clarify or simplify issues.
The experts have produced a handwritten document which is Exhibit E. They have concluded that there are inconsistencies in the construction certificate approved plans so far as the retaining wall on the southern boundary is concerned. The experts stated: '1. The experts agree that the Removal of the section of retaining wall from the front corner of the building to the SW boundary corner, a distance of approximately 6.0 m was required to achieve Compliance for the provision of overland flow path for PCA approval. 2. The necessary work included removal of fill material to lower the rainwater tanks to the level specified by AZTEC Drawings Revision 'I'. 3. The experts agree that the approved Hydraulic design plans are not consistent with the approved architectural plans and vice-versa. 4. In respect of the various reference dates of our inspections of the subject property it is a common opinion that the site level work was incomplete'.
Having regard to the experts agreements I find that a removal of a section of a retaining wall is necessary as stated by them, and that removal of fill material is required as part of that process.
The amount claimed by the owners has been assessed by their expert as relating to carrying out the following work: 1. Remove imported fill - $8,463.00; 2. Remove the extended retaining wall - $858.75; and 3. Build a new retaining wall - $7,095.00.
The opinion of the expert supports the removal of imported fill and removal of the extended retaining wall. However they do not address the need for building of a new retaining wall. Both the owners' expert and engineer gave evidence in their reports tendered in these proceedings that stated that a new retaining wall was required. Since they did not state that such work was required in exhibit E, I will not allow a component for that work.
Based on the experts' common position I will allow the owners the sum of $8,463.00 + $858.75 = $9,321.75 + 20% margin + GST. The total amount found in the owners favour is $12,304.71.

[14]

Item 3 Electrical works amount claimed - $10,802

The Joint Expert Report dated 31 March 2014 states at item 15 in relation to Electrical Wiring 'Conclave outcome is that OE1 could not support claim'.
However in exhibit F, the owners' expert in his report dated 12 December 2014 considered this item and estimated the cost to complete the electrical works to be $9,973.89 excluding GST. The builder's expert has not filed evidence contradicting this estimated cost.
The builder's position as I understand its submissions is the owners should fail in connection with this item because it relates to uncompleted work. However I have found in favour of the owners on the termination issue which entitles them to the cost to complete.
The owners' expert started by costing the contract work based on the scope of works using Cordell's at $19,652.00 excluding GST. He ascertained that the owners had paid progress payments of $9,973.89 in connection with electrical work, leaving a balance for uncompleted work of $9,973.89 which he breaks up and details on page 6 of exhibit F.
I accept Mr Nisbett's evidence which was un-contradicted.
However the owners claim $10,802.00 for this work. This amount is made up of $9,500.00 payable to the builder's subcontractor of which $9,000.00 has been paid with the balance of $500.00 owing and another invoice in the sum of $1,302.00 claimed.
The owners rely on Mrs Mac's evidence as contained in her affidavit sworn 18 December 2014, which forms part of exhibit A. Paragraph 3.3 of her affidavit deals with the relevant costs. Mrs Mac states that the owners retained the builder's electrical subcontractor to complete the work and paid $9,000.00 for that to be done. In addition the owners state that they expended a further sum of $1,302.35 in connection with the electrical work.
The invoices supplied by the electrician to the owners are basic. Without the owners experts' evidence of cost to complete, they would be of little evidentiary value. However they are dated after the date of termination by the owner and therefore relate to work carried out post termination. I accept this evidence on the basis that it confirms the owners' expert's opinion of the cost to complete electrical work in the sum of $9,973.89.
As to the owners evidence that they expended a further sum of $1,302.35 in connection with the electrical work, I have considered the invoices annexed to Mrs Mac's affidavit to substantiate this expense. Those documents do not establish that they relate to electrical work. Because the invoices annexed to Mrs Mac's affidavit do not substantiate this expense as relating to electrical work, I do not accept her bald statement that the documents evidence the carrying out of electrical work.
I will find for the owners in the sum of $9,500.00 in relation to this item. I also find that there is no reason to apply overhead, margin or profit to the cost, as often occurs when damages are assessed based on an expert's estimation. These costs would be included in the electrician's figures and on that basis there is no reason for those allowances to be added.

[15]

Item 4 Eaves gutters and downpipes amount claimed - $10,701

The Joint Expert Report dated 31 March 2014 states at item 1 on page 30 in relation to Eaves Gutters and Downpipes Responsibility not agreed Rectification not agreed Cost not agreed.
The builder's position as I understand its submissions is the owners should fail in connection with this item because it relates to uncompleted work. However I have found in favour of the owners on the termination issue which entitles them to the cost to complete.
This item according to the owners' submissions is a mixture of defective work and incomplete work.
The owners rely on their expert's evidence in connection with this item which is at page 610 of Exhibit 1 being his supplementary report dated 23 December 2013 at paragraph 5.3.
The builder's expert addressed the owner's expert's evidence in the Joint Expert Report of 31 March 2014 where his comments are recorded.
The owner's expert relies on the owners' photographs to conclude that the gutters do not drain adequately. This, if established, would be an example of defective work.
He further observes that downpipes installed are a mixture of 50mm and 90mm downpipes, but the relevant contractual drawing requires 90mm pipes as depicted on drawing 170210. I note that the relevant information is on Sheet 5. This, if established, would also be an example of a breach of the contractual warranty in clause 1(b) of the contract in that there has been a failure to comply with the contractual drawings.
The owner's expert also states that there is guttering work which has not been completed.
As a result of the above matters the owners' expert has concluded that the entire eaves gutters and downpipes will require removal and replacement. He then costs that work at $7,708.00 and concludes that a quote for that work in the sum of $7,500 excluding GST is acceptable.
The builder's expert comments upon the owners' photographs and states that the details of the depth of any asserted ponding is not provided to enable evaluation. He states that the photos provided by the owners are inadequate to justify a replacement of the gutters which were installed by the builder. Comment is also made upon a document provided by First State Plumbing who were engaged by the owners to carry out various items of work. A First State Plumbing document attached to the owners' expert's supplementary report dated 22 September 2013 states 'It seems that gutters do not have adequate fall to drain water to downpipes.'
The builder's expert criticises the statement by stating that First State does not appear to have inspected or tested the gutter as there are no details provided to support the statement. Nonetheless I note that First State plumbing state that their comment is part of a Preliminary Observation.
The builder's expert states that if there are five locations where the gutter falls require adjustment, the reasonable cost is calculated by him as $1,070.00.
In Khan v Kang [2014] NSWCATAP 48 the Appeal Panel stated at [49 - 50]: 'It is not the case that a quotation to rectify or complete work can never be evidence supporting a claim for defective or incomplete work. A quotation from a supplier willing to rectify defects or complete incomplete work can, depending on the circumstances and the nature and content of the quotation, constitute evidence of the defects or incomplete work and of the amount required to remedy the defective work or complete any incomplete work. For example, if the person providing the quotation was suitably qualified or experienced, inspected the work, identified defects or incomplete work on that inspection, recorded his or her observations in the quotation and gave a price to rectify or complete the work, it is difficult to understand why that quotation would not provide evidence in support of a claim for defective or incomplete work. The weight to be given to the evidence would, of course, depend upon many factors. Nonetheless, it would be wrong to conclude that simply because an applicant relied only upon a quotation or quotations for the rectification or completion of work that there was no evidence to support the claim that the work was defective or incomplete.'
First State Plumbing document dated 22 September 2013 attached to the owners' expert's supplementary report is not a quotation. Nonetheless by parity of reasoning the same comments as set out above in the passage quoted may be applied to it. However given the very brief observation made regarding the adequacy of falls, I will not give that evidence great weight.
I agree with the builder's expert that the owners' photographs are not sufficiently persuasive to justify the removal and replacement of all guttering installed at the residence by the builder. In addition, the quote relied upon by the owners expert as to quantum does not prove any detail such as it could provide evidence of defective work in the context stated by the Appeal Panel in Khan v Kang as quoted above.
The owners' evidence does not persuade me that the guttering installed by the builder needs to be removed and replaced. However I am satisfied that the builder's work was defective in that undersize downpipes were used and that the work was incomplete in the details stated by the owners' expert. This evidence was not contradicted by the builder's expert.
I will calculate the cost of the necessary rectification work by using the Aspect Constructions quote in the sum of $7,500.00 excluding GST as a base. I will allow $330.00 for the rain head element of uncompleted work. For the downpipes, I will allow $1,600.00 as evidenced by a First State invoice at page 32 of Mrs Mac's affidavit sworn 18 December 2014, having deducted a notional $100.00 for a patio drain.
The total amount to be allowed in favour of the owners in connection with this item will be $1,600.00 + $330.00 =$1,930.00+ $386.00 as 20% margin = $2,316.00 + 231.60 GST = $2,547.60.

[18]

Item seven Front and side facade amount claimed - $8,104

The builder's position as I understand its submissions is the owners should fail in connection with this item because it relates to uncompleted work. However I have found in favour of the owners on the termination issue which entitles them to the cost to complete.
The Joint Expert report states in connection with this item 'Defect and liability not agreed.
This item relates to whether the design of this aspect of the works was varied. The relevant drawing is one drawn by the builder, drawing A/NM008.
The builder's quote stated, inter alia, Architecture and Landscape Plans drawing # A/NM000 - Rev J to A/NM019 would apply.
The owners' expert states that he observed that the 'parapet wall beams finish approximately 100mm below the balcony soffit'. He then states that he observed drawing A/NM008 which showed the wall beam finishing 600mm below the balcony soffit. I assume when the owners' expert refers to 'wall beam' he is referring to the 'parapet wall beams' as referred to in the opening sentence of this paragraph. He does not attach a copy of the drawing to which he refers. Nor have I been referred to any document in Exhibit 1 which shows drawing A/NM008 revision J, although I note that the drawing is at page 146 of Exhibit 1. I am unable to observe whether or not drawing A/NM008 revision J provides the detail or information that the owners' expert refers to. Finally the owners' expert concludes 'the absence of the beams is a defect'. What absent beams are being referred to, is not clear to me, nor so far as I can ascertain, shown on the drawing.
The builder's expert does not agree. He states that the soffit line referred to by the owners expert is shown in one of the structural plans and in any event the design was changed in A/NM008 revision L a copy of which he has attached to his report, such copy having been signed by one of the owners. A/NM008 revision L is dated and stamped after the contract was entered into.
The owners' expert has not provided the level of detail or explanation in his evidence that gives me any comfortable satisfaction that the matters that he refers to are correct. Unfortunately this is a difficult technical issue that the owners' expert has failed to illuminate with any clarity at all. In addition the builder's expert has provided a plausible explanation that the builder has followed the contractual documents. After all the document which the builder's expert asserts has been put into effect was signed by one of the owners.
I find that the owners have not established this item of claim on the balance of probabilities. The claim is dismissed.

[20]

Item 9 Sewer and stormwater drainage amount claimed - $6,114

The builder's position is that the owners' entitlement for this item was nil.
The Joint Expert Report states in connection with this item, Responsibility not agreed. Rectification not agreed. Cost not agreed.
The owners' expert has dealt with this item in his supplementary report. He states that he inspected the defective items referred to in a quotation from First State Plumbing dated 15 October 2013, a copy of which was attached to his report. That quotation dealt with a number of subjects including storm water drainage. The expert stated that what he observed was that the sewer and stormwater pipes had been laid with inadequate ground cover causing the pipe to be damaged in isolated areas. He also stated that the pipes had been laid without any base or surrounding aggregate for protection.
Photographs were attached to his report. He stated that in his opinion there were defects in the storm water and sewage work carried out by the builder in that drainage pipes had not been installed in accordance with AS3500. 5:2000 4.14 and Table 4.6 which he attached to his report. His method of rectification was to remove the defective sewer and stormwater pipes, excavate trenches to correct levels and reinstall existing and new PVC drainage pipes. He estimated the cost of that exercise to be $6,114.00 the amount claimed by the owners.
The builder's expert's comments are contained in The Joint Expert Report. The builder's expert does not contradict the owner's expert about whether defective work was in fact performed. I accept the owners' expert's evidence in that regard.
The builder's expert then makes observations regarding the First State Plumbing quote dated 15 October 2013 and the way in which the owners' expert has assessed the rectification costs.
I prefer the evidence of the owners' expert in this item. He has inspected the work the subject of the claim.
The owners will be entitled to an order in their favour in the sum of $6,114.00 plus margin of 20% and GST. The amount found in the owners favour is $8,070.48.

[26]

Item 15 Northern elevation external beam amount claimed - $1,410

The Joint Expert Report states in connection with this item, 'Defect and Liability not agreed'.
The gist of this defect item is that the builder has not constructed this element of the works in accordance with Drawing A/NM010/J which the owners' expert states, shows the northern elevation beam finishing 300mm below the floor frame. It is said by the owners' expert that the builder has constructed the works so that the beam referred to finishes flush with the underside of the wall frame. The owners' expert characterises this as a defect. In my view it is more accurate to say that there has been a failure to comply with section 18(B)(1)(a) of the Act which is a warranty that work will be carried out in accordance with contractual drawings.
The builder's expert's evidence is that the work has been carried out in accordance with the structural plans.
The owners' submissions in support of this item rely upon concessions made in cross examination by the builder's expert. The owners transcript references of 31 August 2015 at T84 16- 17 and 6-11 are said to be admissions that what was constructed was not consistent with the drawings and that the work proposed by the owners expert would deal with the discrepancy.
However I do not agree that the transcript establishes the concessions asserted by the owners' submissions. However the transcript does indicate that the owners have had work carried out in the area under consideration.
Having regard to all of the evidence in connection with this item, I prefer the builder's expert's evidence as it is more detailed and persuasive. The owners' expert's evidence relies on a dimension of 300mm which is not shown on drawing A/NM010/J. Although the builder's expert agrees that a lay person might say that the dimension referred to is 300mm, he does go on to say that consideration must be given to structural steel elements. I find that if there are conflicts or discrepancies between drawings, detailed drawings should prevail. The builder's expert has taken that course by having primary regard to the design engineer's details.
For the reasons provided this aspect of the owners claim is dismissed.

[38]

Item 27 Other amounts claimed by the owners

The owners claim the sum of $37,854.00 for late completion under Hadley v Baxendale, either the first or second limb.
This claim ignores the fact that clause 10(c) of the contract provided the owners with the right to claim $250.00 per calendar week by way of agreed pre-estimated general and liquidated damages if the builder failed to bring the works to practical completion by the date for practical completion, as extended. The clause states that the 'Builder is to pay or allow to the Owner by way of agreed pre-estimated general and liquidated damages'. (Emphasis added).
Clause 10(c) of the contract does not allow the owner to have the option of agreed pre-estimated general and liquidated damages on the one hand and common law damages on the other. I would go further by stating that since clause 10(c) inserts the word 'general' into the traditional liquidated damages clause, the contractual intention is that the owners' rights as to both liquidated and general damages are limited, in this case to $250.00 per calendar week. In addition I find that since the contract used the words the 'Builder is to pay or allow to the Owner by way of agreed pre-estimated general and liquidated damages' the effect was that it was mandatory for the builder to make the payment of the amount stated at item 3(a) of Schedule 2 of the Contract per calendar week, and that indicated that it was the intention of the parties that the contract excluded any right for the owner to ignore its provisions and make a claim for general damages which exceeded the amount stated in item 3(a) of Schedule 2.
As stated by the learned authors of Building and Construction Contracts in Australia, Second Edition at 9.730: 'It is very doubtful whether there can be a valid claim for unliquidated damages in the face of a liquidated damages clause: Bruno Zornow (Builders) Ltd v Beachcroft Developments Ltd (1989) 51 BLR 16.'
For the reasons provided above, the owners claim for general damages for late completion is dismissed.

[43]

Item 32 Payment for change to foundations Amount claimed - $6,120

The basis for this head of claim is an agreement alleged to have been reached between the parties concerning a change from a raft slab foundation to a foundation system based on piers. In response the builder states that there is no evidence.
The relevant facts are set out in the affidavit of Mr Mac in his affidavit dated 1 August 2013 where he states that in a conversation with Mr Lee of the builder concerning the change in the foundations from a raft slab to a pier and beam system, he objected to paying any extra for concrete piers, and the builder agreed stating 'I won't charge you any extra'. Nonetheless, on 6 March 2012 in variation 003, the builder did charge $6,120 00 plus GST for the piers which amount was paid by the owners on 13 March 2012.
The evidence thus far establishes that despite the builder's agreement not to charge for the piers, the owners did pay for them when asked to do so by the builder. The owners offer no explanation about why they paid variation 003 given that the builder said that he would not charge for the piers.
The owners' cause of action for the repayment of the sum of $6,120.00 has not been identified.
The High Court in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 considered, among other things, the remedy of restitution when there had been a mistake of fact or a mistake of law. If a plaintiff could establish either, restitution was available. The case is authority for the proposition that the owners will be entitled to recover the amount of $6,120.00 if it 'appears that the moneys were paid in the mistaken belief by the payer that he was under a legal obligation to pay them or that the payee was legally entitled to payment'
In these proceedings there is no evidence that the amount of $6,120.00 was paid by the owners under a mistake of fact and/or law.
I dismiss this aspect of the owners claim on the basis that they have not disclosed a cause of action that would entitle them to recover the amount of $6,120.00. Moreover, there is no basis upon which to make an order for the payment of that amount under section 48O(1)(a) of the Act, as submitted by the owners, without anything more. I find that an order under that section must be underpinned by an entitlement at law to the amount ordered. Section 48O(1)(a) of the Act does not in my view permit 'palm tree justice' as is the case with the former Consumer Claims Act per Yeldham J, in Fairey Australasia Pty Ltd v Joyce and Anor [1981] 2 NSWLR, 314 at 321. Approved by the Court of Appeal in SRA v Consumer Claims Tribunal 14 NSWLR at 473.

[55]

Conclusion

The owner has been successful in the following items of claim. I have included GST and Margin in those items where it is warranted. Item Number Item Description Amount found

      Plumbing drainage and gas                                                   $18,299.25

      Retaining walls and ground levels                                           $12,304.71

      Electrical works                                                            $9,500.00

      Eaves gutters and downpipes                                                 $2,547.60.

      Front fence                                                                 $10,142.88

      Garage door                                                                 $6,900.00

      Sewer and stormwater drainage                                               $8,070.48

     Waterproofing to planter boxes                                              $3,265.68

11 Concrete patio 12. Falls 13. Broken 14. Other plumbing issues 16. Hot water unit 17. Box gutter 18. Steps 19. Garage facade 20. Builders clean 22. Skylights 23. Damage to footpath 24. Glass panels 25. Glass bricks 26. Letterbox 29. Owners 34. Keys 39. Retaining 40. Change in roof plans 41. Other credits Total $3,162.72 to drainage points on balcony $3,597.00 swimming pool filter cover $2,125.20 $349.80 $1,805.76 $1,452.00 $1,147.08 $1,069.20 $950.40 $726.00 $528.00 $396.00 $110.88 $99.00 have bought building materials for use at the Builder's request $6,544.00 $968.00 walls not cement rendered and six piers and lights not installed $1,700.00 $1,273.00 $9,740.00.00 $108,774.64

Mac v Antworks Pty Ltd

At a glance

Court

Decision date

Source

Judgment (56 paragraphs)

Parties

Cases Cited (6)

Cited By (1)