Machayekhy v Bayeh

NCAT Consumer and Commercial|2024-01-18

Thompson v Chapman [2016] NSWCATAP 6 Toll (FGCT) Pty Ltd v Alphafarm Pty Ltd [2004] HCA 52 Texts Cited: None cited Category: Principal judgment Parties: First Applicant - Adrian Machayekhy Second Applicant - Azadeh Ghorashi

First Respondent - Sarkis Bayeh Second Respondent - Antoun Chidiac Third Respondent - Gaton Projects Pty Ltd Fourth Respondent - Ozzie Building Brokers Pty Ltd Fifth Respondent - Tecbuilt Pty Ltd Representation: Solicitors: Applicants - L D Xu Second, Third and Fourth Respondents - S Dick File Number(s): 2023/00411099 (formerly HB 23/05842) Publication restriction: Nil

Jurisdiction

These proceedings relate to residential building work, seek an amount within the limits of the Tribunal's jurisdiction, and have been commenced within time. Accordingly, the Tribunal could have jurisdiction under the HBA. However, it is noted there was a question raised against the applicants of whether any contract with Mr Machayekhy is covered by the HBA as the subject premises are solely owned by his spouse, Ms Ghorashi.
By reference to the Fair Trading Act 1987 (the FTA), it appears the applicants consumers (within s 79D) bringing a consumer claim (within s 79E), for a supply of services, with goods (within s 79F), that the supply was made in New South Wales (within s 79K), and the proceedings have been commenced within the time limit imposed by s 79L. As a result, s 79I of the FTA entitle the applicants to have this claim determined by the Tribunal as a consumer claim.
The effect of s 28 of the FTA is that the provisions of the ACL, which is Schedule 2 to the Competition and Consumer Act 2010 (Cth), became part of the law of New South Wales and applies to these proceedings. However, noting that reg 77A of the Competition and Consumer Regulations 2010 (Cth) imposes a jurisdictional limit of $100,000, it needs to be recorded that the applicant's solicitor, Mr Xu, indicated that the applicants are content to limit their claim to $100,000.

Hearing

The applicants both attended the hearing, with their solicitor. A solicitor appeared for the second, third and fourth respondents. The second respondent, Mr Chidiac, was also present. There was no appearance by or for the either the first respondent, Mr Bayeh, or the fifth respondent, Tecbuilt.
In the Civil and Administrative Tribunal Rules 2014 (NSW) (the Rules), r 35(2) applies to this Division of the Tribunal. It reads as follows: Where a hearing is held for proceedings to which this rule applies, the Tribunal may proceed to hear the proceedings in the absence of a party who has failed to attend the hearing if - (a) the Tribunal is satisfied that notice of the hearing was duly served on the party, or (b) the Tribunal, being satisfied that service of notice of the hearing on the party has been duly attempted or having given directions under rule 15 to bring it to the notice of the party, considers that justice requires that the matter be dealt with in the absence of the party.
The Tribunal's file contains a copy of a notice of hearing addressed to both Mr Bayeh and Tecbuilt, advising the date, time, and location of the hearing. The Registrar's standard practices in notifying parties of the date, time and place of hearing is set out in the statutory declaration of the Divisional Registrar of the Consumer and Commercial Division sworn the 29 July 2014. Having perused the Tribunal file, the Tribunal is satisfied that, in accordance with the Registrar's usual practices, a notice of the hearing was issued to both Mr Bayeh and Tecbuilt, neither of which has not been returned. Accordingly, the Tribunal is satisfied that the notice of hearing has been duly served on those respondents.
The Tribunal is satisfied that its discretion should be exercised in favour of proceeding with the hearing because of (1) non-attendance at the hearing, (2) no explanation provided for that absence, and (3) the history of this application does not suggest any intention of participating in the proceedings. However, proceeding in the absence of a party does not remove the need for the applicants, who bear the onus of proof, to establish both a legal and factual basis for their claims.
At the outset of the hearing, the Tribunal advised there were three stages of the hearing: (1) identification of documents to be admitted as evidence, (2) any questioning of the other party's witness(es), and (3) closing submissions as to what it was contended should be the outcome of the proceedings and why.
Although a joint tender bundle was submitted, and was admitted as Exhibit A, there was no other copy prepared and the copy that was did not have the requisite pagination which made the conduct of the hearing unnecessarily more difficult. The respondents sought to tender telephone records which were initially marked for identification (MFI 1) and later tendered and admitted, without objection, as Exhibit B. During submissions, it became apparent that the applicants wished to rely on a copy of their application which was admitted, without objection, as Exhibit C.
There was cross-examination of Mr Machayekhy, Mr Billimoria, and Mr Chidiac, but not of Mr Chalhoub, after which closing submissions were made, following the usual sequence of applicants then respondents then applicants in reply so that each party had an opportunity to speak not only in support of their case but also in response to the case of the other party.

Relevant law

In the ACL, s 18(1) provides as follows: A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
The statutory warranties for residential building work, set out in s 18B(1) of the HBA, are: 1. a warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract, 2. a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new, 3. a warranty that the work will be done in accordance with, and will comply with, this and any other law, 4. a warranty that the work will be done with due diligence and within the time stipulated in the contract or, if no time is stipulated, within a reasonable time, 5. a warranty that, if the work consists of the construction of a dwelling, the marking or alternations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling, 6. a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes know to the holder of the contractor licence or person required to hold a contractor's licence, or another person with express or apparent authority to enter into or vary any contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires that work to achieve, so as to show that the owner relies on the holder's or person's skill or judgment.
It is also necessary to note that s 48MA of the HBA provides: A court or tribunal determining a build claim involving an allegation of defective residential building work or specialist work by a party to the proceedings (the responsible party) is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome.
Prior decisions which have considered those words assist in its consideration in this case. Galdona v Peacock [2017] NSWCATAP 64 (Galdona) noted that s 48MA provided for a preferred outcome, not a mandatory outcome. It is clear the Tribunal is required to weigh up the factors in each case and make an evidence-based decision: Brooks v Gannon Constructions Pty Limited [2017] NSWCATCD 12 (Brooks) at [64]. However, as Mr Bayeh (1) was not a licensed builder, (2) abandoned the work, and (3) cannot be located, that statutory presumption has clearly been displaced i.n relation to any claim against him
If a money order is to be made, the assessment of the amount payable must be determined by reference to the fundamental principle that the party affected by the breach should be put in the same position as if the breach had not occurred: Haines v Bendall [1991] HCA 15 (Haines).
It is also necessary to note that, where there has been defective work, the rectification method must be both necessary and reasonable and the rectification cost must be reasonable: Bellgrove v Eldridge [1954] HCA 36 (Bellgrove).
The decision in Bellgrove also reminds that it is necessary to deduct any unpaid balance of the contract price when awarding damages. A hypothetical example serves to illustrate why. If a builder was contracted to do work with a contract price of $100,000 and, after the owner had paid $70,000, there were defects which would cost $50,000 to repair, then to award the owner $50,000 would be to give the owner $100,000 worth of work despite only $70,000 having been paid. Deducting the unpaid balance of the contract price of $30,000 ($100,000 less $70,000) gives damages of $20,000. As a result, the owner paid $70,000 to the builder, and pays $50,000 for the repairs but receives damages of $20,000, giving a net outlay of $100,000 which accords with what was said in Haines because that is what the owner would have paid if the work had been completed without any defects.
An expert witness is permitted to give opinion evidence. However, there are matters which the Tribunal needs to consider when deciding what weight to give to that evidence. The first is whether the expert has qualifications and/or experience in the relevant field.
Secondly, whether the expert has read and agreed to be bound by the Tribunal's Procedural Direction 3 which reminds that it is the duty of an expert to assist the Tribunal and not be an advocate for the party for whom he provided a report.
Thirdly, decisions such as Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305 (Makita) make it clear that, for expert evidence to be accepted: (1) the opinion must clearly indicate the facts upon which it is based, (2) those facts must be proved so there is a factual basis for the opinion, (3) reasons or the process of reasoning for the opinion must be disclosed, and (4) any opinion must fall within the expert's qualifications and experience.

Applicants' evidence

Mr Machayekhy indicated in his affidavit that his neighbour, Mr Billimoria, introduced him to Mr Bayeh while he was doing work on Mr Billimoria's home. He said that Mr Bayeh rang Mr Chidiac and that, later the same day, they came to where he lives and spoke to him. On that occasion, Mr Chidiac was said to have given Mr Machayekhy a business card for OBB, a company which has Mr Chidiac as its sole shareholder, sole director and only secretary. It was asserted that there was a discussion for about 20 minutes, during which Mr Chidiac was the lead participant.
While a copy of OBB's website was annexed, no evidence was provided as to when the deponent consulted that website. Although the affidavit included selective quotations from that website, seeking to suggest OBB was a builder, the name of OBB suggests it is a broker and the website does not contain any licence details, which would be expected if it was a builder.
In a 3 June 2022 email to Mr Machayekhy, Mr Chidiac described himself as a director of Tecbuilt. It was said that email came with "a contract" for work valued at "about $29,000" which was not accepted because Mr Machayekhy wanted additional work done. An ASIC search for Tecbuilt dated 5 October 2022 suggested that company was owned and controlled by "Charazad Rahe". Next, it was said there was a telephone conversation, lasting about 30 minutes, between Mr Machayekhy and Mr Chidiac "On or about 6 June 2023 (sic)" during which Mr Chidiac was said to have said that "Tecbuilt is one of his companies" and that Mr Bayeh should be contacted for "day-to-day work".
Mr Bayeh was said to have attended the subject property "On or about 8 June 2023 (sic)" with two copies of a document headed "Scope of Works & Schedule of Inclusions & Contract" which showed alternative prices of $89,926 and $91,426, both said to require GST to be added, and was already signed by Mr Chidiac. It was alleged that Mr Bayeh said Mr Machayekhy only had to sign that document to "seal the deal".
It was said by Mr Machayekhy that he noticed that Gaton was shown on that document as "Nominated Builder" and that Mr Bayeh has said that Gaton was one of Mr Chidiac's companies and held the licence that would be used for the work. Mr Machayekhy also said: "I assumed that this must be the business name of Mr Bayeh as he is the builder who will do the work and there was never another party in between". Another ASIC search, also dated 5 October 2022, suggests that Gaton is a company that is owned and controlled by Antoine Chaloub.
Mr Machayekhy's evidence was that he was only willing to pay $80,000, that Mr Bayeh said he needed to speak to Mr Chidiac, and that he went outside and made a five-minute phone call to a person who Mr Machayekhy "presumed to be Mr Chidiac" but conceded he was not part of that conversation. It was said that Mr Bayeh then said that $80,000 was acceptable provided Mr Machayheky signed the contact and paid half "up front". The sequence of events suggested by Mr Machayekhy was that he gave Mr Bayek $8,000 in cash, they shook hands, Mr Bayeh recorded the payment on the contract "and signed his name", then Mr Bayeh amended the contract by crossing out the original price and "wrote $80,000" after which Mr Machayekhy signed both copies of the contract. It was also asserted that, at no time prior to signing that contract had Mr Chidiac made it known to Mr Machayekhy that "he was a representative of any other party or company" or "that he was a broker".
The evidence of this witness was that the subject building work began around 10 June 2022, with that work being overseen by Mr Bayeh. Then, between 18 June and 17 July in 2022, the applicants were overseas. It was said that, after becoming aware around 25 June 2022 that the subject building work had stopped, Mr Machayekhy contacted Mr Bayeh and, in response, was provided with a photo of him in a hospital bed and was later told by Mr Bayeh that work was unable to continue due to heavy rainfall. Mr Machayekhy said that, upon returning from overseas, the construction work had been abandoned. When contacted, Mr Bayeh was said to have recommended that a retaining wall be built as a priority, due to heavy rainfall.
As a result, it was said that Mr Machyekhy and Mr Billlimoria agreed to a scope of work proposed by Mr Bayeh, which was said to have been "recorded on a sheet and added to the contract". The specified amount was $51,800 and it was suggested that Mr Machayekhy's share was $21,000 and that two amounts of $5,000 were paid towards that work, on 26 and 28 July 2022. Afterwards, it was said that construction work resumed on 29 July 2022, unsupervised, as Mr Bayeh was not present.
After issues were raised by the local council, Mr Bayeh sought and obtained a further $5,300 from Mr Machayekhy. Following receipt of a notice from that council, Mr Machayekhy said that on or about 18 August 2022 he rang Mr Chidiac to complain after which Mr Chidiac and Mr Bayeh came to the premises in Thornleigh and made comments to suggest he would address the concerns that had been raised in relation to the conduct of Mr Bayeh. It was said that, on each of the next three days, Mr Chidiac rang Mr Machayekhy to check whether Mr Bayeh was working and whether he was satisfied with his work.
By reason of the council-imposed deadline, Mr Machayekhy said he paid $2,450 in cash to a third-party contractor to "orchestrate a rapid clean up". Following further representations by Mr Bayeh, Mr Machayekhy made further payments to Mr Bayeh, in cash, which were said to total $10,500. However, after that clean-up finished and the council deadline of 30 August 2022, Mr Machayekhy said he has had no contract with Mr Bayeh. Shortly afterwards, a person named Roy told Mr Machayekhy that he had done the clean-up work but had not been paid by Mr Bayeh.
Around 30 August 2022, when Mr Machayekhy rang Mr Chidiac, he was told that he had nothing to do with Mr Bayeh or Tecbuilt or Gaton, that money paid by Mr Machayekhy was paid to Mr Bayeh and not him, that Mr Bayeh was not authorised to amend the contract, and that he would not refund money or finish the work. Reference was made to what was said to have been the experience of Mr Billimoria in relation to Mr Chidiac, Gaton, and Mr Bayeh and to obtaining (1) a report from an engineer, Mr Noushini, in relation to defective and incomplete work, and (2) a quote from a licensed builder.
The total amount outlaid by Mr Machayekhy was said to be $96,695.
Cross-examination of this witness was dominated by doing no more than putting to this witness what he had said in his evidence in chief. It was denied that, during their initial meeting, Mr Chidiac said he was an agent for Tecbuilt, that his role was to get builders to do building work, and that if a scope of works was agreed then a contract in the NSW Fair Trading form would be provided with the builder he nominated. Mr Machayehky contradicted his affidavit by saying that he altered the document, signed by Mr Chidiac, that was provided to him by Mr Bayeh in June 2022. He also conceded (1) that he did not know if Mr Bayeh spoke to Mr Chidiac before suggesting the revised price of $80,000 was agreed, (2) that he had accepted what Mr Bayeh said when he claimed to have spoken to Mr Chidiac, (3) that he made payments to accounts nominated by Mr Bayeh, (4) that he paid cash to Mr Bayeh, and (5) that he never received any payment instructions from Mr Chidiac. When taken to the May 2022 document which specified an amount in the vicinity of $29,000, Mr Machayekhy said he had not noticed that Gaton was the nominated builder.
In re-examination, when asked if he was ever introduced to anyone from Gaton, Mr Machayekhy said: "I assumed Bayeh was part of one of those companies". He also said that he thought the document dated 8 June 2022 which he signed was the contract and that, when he paid money, he believed he was paying money under that contract.
Mr Billimoria provided a two-page statutory declaration in which he said he came in touch with Mr Chidiac of OBB who provided a lump sum quotation and that, after acceptance of that quotation, he was introduced to Mr Chalhoub of Gaton and to Mr Bayeh who was "to act as supervisor for the work". A contract, in the NSW Fair Trading form, was said to have been signed by "Mr Chalhoub and Mr Chidiac as authorised representatives of [Gaton]", but no copy of that contract was provided. It was said that "Mr Chidiac and Gaton Projects had informed us to make future payments for the project … directly to Mr Bayeh."
This statutory declaration included hearsay evidence of what Mr Billimoria understood Mr Bayeh had said to Mr Machayekhy, but Mr Billimoria conceded that he was not part of the discussions which Mr Machayekhy had in relation to his project. Mr Billimoria indicated that his project was abandoned around June 2022 and that a dispute arose in December 2022, towards its completion.
Cross-examination revealed that Mr Billimoria paid a deposit to Mr Chidiac and other payments to Mr Bayeh, who he thought was acting for Gaton. Further, that the dispute over his work arose in 2022 and that, while he could not recall the month, it was after work of Mr Machayekhy's project had started and after 8 June 2022. In re-examination, Mr Billimoria said he thought that when he made payments to Mr Bayeh he was making payments under the contract.

Respondents' evidence

It is convenient to use the words 'the respondents' to refer to the second, third and fourth respondents, unless otherwise indicated.
Mr Chidiac swore an affidavit in which he said he was the sole director of Tebuilt and was an authorised representative of Gaton but did not say anything in relation to OBB. He referred to a meeting he had with Mr Machayekhy in late April or early May in 2022 at the premises which are the subject of these proceedings and set out matters which he claimed he said on that occasion. He went on to say he subsequently sent a document dated 3 May 2022, headed "Scope of Work & Schedule of inclusions & Contract", which quoted amounts of $29,236 plus GST or $33,736 plus GST if mosaic tiles were used instead of pebble crete (the May 2022 document). He maintained that he was authorised to nominate Gaton as the builder for that work.
After being informed by Mr Bayeh that additional work had been requested, a revised version of that document was prepared. That document, said to be on the letterhead of Tecbuilt, showed alternative prices of $86,926 plus GST or $91,426 plus GST (the June 2022 document), and again showed Gaton as the nominated builder.
It was suggested by Mr Chidiac that he signed that document as an agent for Tecbuilt and that it was intended to enter into a contract in NSW Fair Trading form for that work, with a 10% deposit payable, the nominated builder (Gaton) taking out homeowners' warranty insurance when the contract was executed, and Gaton paying a commission to Tecbuilt when that contract was signed. Further, it was contended that acceptance of that offer was never conveyed to him, to OBB, to Tecbuilt, or Gaton.
Mr Chidicac's evidence was that he heard nothing further in relation to this project until 27 August 2022 when he received a text message from Mr Machayekhy, following which he visited the subject property on 29 August 2022. He asserted that, on that occasion, he suggested there was no contract with Tecbuilt or Gaton and that Mr Bayeh claimed: "your deal is with me".
This witness claimed that no money paid by Mr Machayekhy for his project was received by either Gaton or Tecbuilt and that Mr Bayeh was not agent of OBB, Gaton or Tecbuilt. Further, that the alterations made to the June 2022 document were made without the knowledge, authority, or consent of either OBB, Gaton or Tecbuilt.
When cross-examined, Mr Chidiac said the signed June 2022 document was given to Mr Bayeh to take to Mr Machayekhy as a matter of convenience and that Mr Bayeh was working for Gaton, and "not us". However, it was conceded by Mr Chidiac that he instructed Mr Billimoria to pay Mr Bayeh. He denied receiving a phone call from Mr Bayeh on 8 June 2022. After initially denying that he attended Mr Machakekhy's project after construction stalled, then being shown photos said to have been taken on 8 August 2022, this witness conceded that he went to those premises in Thornleigh on that date.
It was suggested that Mr Bayeh was working for Gaton as a sub-contractor and that Mr Chidiac's role was to 'drum up' business and the nominate a builder such as Gaton. Further, it was said that OBB had stopped trading and that a business card for OBB had only been given to Mr Machayekhy to give him the phone number shown on that business card.
Mr Chidiac suggested he did not know work was being done for Mr Machayekhy and that went with Mr Bayeh in August 2022 to see if he could get work out of the situation. He claimed he told Mr Bayeh that as he had taken money, he should carry out the required work. He agreed with the proposition that Mr Bayeh stole work off him. It was the evidence of this witness that he did not know where Mr Bayeh now is, and that he had disappeared about a year ago.
In re-examination, it was said that the instructing Mr Billimoria to pay Mr Bayeh was done on the instructions of Mr Chalhoub, the owner of Gaton, and that nothing was done in relation to the work proposed in the June 2022 document as that document never came back and the offer was not accepted.
Mr Chalhoub signed a two-page affidavit in which he indicated that he is a director of Gaton. He said he consented to Gaton being the nominated builder in both the May 2022 document, and the June 2022 document. His evidence was that his consent was limited to an agreement with Tecbuilt for Gaton to enter into a HIA (Housing Industry Association) form of contract if the scope of works was accepted but that he was never told that scope of works had been accepted. He denied that either Mr Chidiac or Tecbuilt or Mr Bayeh was ever an agent of Gaton. It was the evidence of this witness that he had never been to the subject premises until 12 August 2023 (shortly before this application was lodged) when Mr Machayekhy asked him to leave, and that he had never met Ms Ghorashi.
As indicated above, Mr Chalhoub was not cross-examined.

Applicants' submissions

It was suggested that the work that was done and the amounts claimed were not in issue and that the only question was who is responsible. The applicant's case was put on two grounds: (1) a contract claim, and (2) an ACL claim based not on any contract but on misleading and deceptive conduct. The main issue was said to be the question of whether Mr Chidiac was aware of the amendment of the 8 June 2022 document.
Reference was made to matters including the OBB website and the initial conversation, prior to the May 2022 document, and to the circumstances surrounding the 8 June 2022 meeting at which the June 2022 document was amended. It was suggested that Mr Bayeh should be held to have been the agent of Mr Chidiac, and that the telephone records showed substantial telephone communication between Mr Bayeh and Mr Chidiac after 8 June 2022. Further, that if Mr Chidiac was not party to the contract said to have been created on 8 June 2022, why did he attend the property in August 2022. There was also a suggestion that the position in relation to Mr Machayekhy should be compared to that of Mr Billimoria, notably that Mr Chidiac told Mr Billimoria to pay Mr Bayeh. It was suggested there was a pattern of behaviour.
In summary, it was put to the Tribunal that Mr Chidiac was part of the contract, was aware of the amendments, and attended the property when problems arose which were said to be inconsistent with him being only a broker. Reference was also made to the payments said to have been made, and to the amounts claimed in the Points of Claim, at [34] and, in the alternative, at [35].

Respondents' submissions

It was the case for the respondents that Mr Machayekhy did not enter into any contract with either Tecbuilt, OBB, or Gaton, that the offer made by Mr Chidiac was not accepted, and that Mr Bayeh should not be considered to have been the agent of Mr Chidiac. It was also noted that Mr Machayekhy was not an owner of the property with the contended result that the HBA did not apply.
The position was said to have been that if the offer contained in the June 2022 document was accepted then a contract would have been finalised, followed by homeowners' warranty insurance. It was also observed that there was no evidence as to when Mr Machayekhy viewed the website of OBB. Further, that the ASIC searches for OBB, Gaton and Tecbuilt each post-dated the 8 June 2022 meeting of Mr Machayekhy and Mr Bayeh. The amounts suggested by the applicants were not contested.

Submissions in reply

In reply, it was suggested that whether Mr Machayekhy is either the owner or an owner of the subject property is immaterial as the HBA regulates contracts for residential building work. Also, that what appeared on the website of OBB was a representation to the general public. The Tribunal was taken to the documents said to support the amounts claimed in the Points of Claim at [34] for each of which there was a supporting document. An attempt was made to reconcile the evidence of the amounts paid with the figure appearing in the Points of Claim at [35] and it was conceded that there was no supporting evidence supporting the amount of $9,950 that was referred to in that paragraph.

Consideration

The evidence of Mr Machayekhy is not considered reliable: (1) his suggestion that he was unaware that Mr Chidiac operated as a broker is contradicted by the business card he was given when they first met, (2) there is no evidence that he consulted OBB's website before a dispute arose, as to which see [107] below, and (3) the selective quotation of what appears on that website goes beyond the bounds of advocacy because it suggests he read words which favoured his case but not those which contradicted it.
It appears to the Tribunal that the evidence of Mr Chidiac should also be treated with caution: (1) in cross-examination, he denied returning to the site until shown photos which indicated his appearance at the site on 8 August 2022, (2) the reasons he gave for going to the site on that occasion were not convincing, (3) it is difficult to accept that, after signing a document in relation to work worth more than $90,000 and providing it to Mr Bayeh to take to Mr Machayekhy, he did not follow up the fate of that offer with Mr Bayeh, and (4) his claim that there would be a Fair Trading form of contract does not marry with Mr Chalhoub's suggestion that an HIA form would be used.
As to what was said during the first meeting of Mr Machayekhy and Mr Chidiac, the Tribunal prefers the more specific evidence of Mr Chidiac to the less detailed evidence of Mr Machayekhy.
It must be noted, in relation to the written and oral evidence of Mr Billimoria, that he too has a dispute over building work carried out by Mr Bayeh and that aspects of his written evidence were hearsay. His evidence must also be treated with caution. It is also noted that the evidence of Mr Billimoria includes that Mr Chidiac told him he represented Gaton which is contrary to the evidence of Gaton's owner, Mr Chalhoub.
Mr Chalhoub was not cross-examined. In Ashby v Slipper [2014] FCAFC 15 at [77] it was said that "as a general proposition, evidence, which is not inherently incredible and which is unchallenged, ought to be accepted: Precision Plastics Pty Ltd v Demir (1975) 132 CLR 372 at 370-371 (per Gibbs J, Stephen J agreeing, Murphy J generally agreeing). The evidence may of course be rejected if it is contradicted by facts otherwise established by the evidence or the particular circumstances point to its rejection." No reason was advanced during submissions for not accepting Mr Chalhoub's evidence and the Tribunal is unable to discern any such reason.
From the evidence, having regard to the submissions, the Tribunal makes the following findings of fact: 1. In late April or early May in 2022 Mr Machayekhy and Mr Chidiac met and, during their conversation, Mr Chidiac provided a business for OBB to him and, during their conversation on that occasion, Mr Chidiac said he was a building broker. 2. On or after 3 May 2022, Mr Chidiac caused a document that was headed "Scope of Works & Schedule of Inclusions & Contract" to be provided to Mr Machayekhy which showed alternative prices of $29,236 and $33,736 (each plus GST). 3. After Mr Machayekhy sought the inclusion of additional work, a revised version of that document, still bearing the 3 May 2022 date on its cover page, was prepared, showing alternative prices of $89,926 and $91,426 (each plus GST). 4. That document, which had been signed by Mr Chidiac, was taken by Mr Bayeh to Mr Machayekhy who did not accept either of those amounts but suggested a final price of $80,000 inclusive of GST. 5. After Mr Bayeh moved away and had a telephone conversation, he represented to Mr Mr Machayekhy that his suggested price was acceptable, Mr Machayekhy signed the amended document, which was initialled by Mr Bayah, they shook hands, and agreed to make payments to Mr Bayeh. 6. Neither on that occasion, or on any other occasion prior to a meeting on 8 August 2022, did Mr Machayekhy speak with Mr Chidiac. 7. After that 8 June 2022 meeting, Mr Machayekhy made payments in accordance with instructions from Mr Bayeh, some to a bank account and others in cash. 8. Shortly after his 8 June 2022 meeting with Mr Machayekhy, on about 10 June 2022, Mr Bayeh commenced the building work. 9. Shortly after he went overseas on 18 June 2022, Mr Machayekhy was advised that the building work had ceased. 10. After Mr Machayekhy's 17 July 2022 return from that overseas trip, he reached an agreement with Mr Bayeh, on or about 25 July 2022, for rebuilding a retaining wall at a cost to him of $21,000 and Mr Machayekhy paid Mr Bayeh $10,000: $5,000 on 26 and a further $5,000 on 28 July 2022. 11. On or about 8 August 2022, due to problems with his local council, Mr Machayekhy contacted Mr Chidiac who came to his premises with Mr Bayeh. 12. After Mr Bayeh carried out work on 19, 20 and 21 August 2022, he ceased work at the premises. 13. Mr Machayekhy then arranged for someone else to do clean-up work due to an imminent council deadline. 14. On 26 August 2022, after Mr Bayeh made representations to Mr Machayekhy that any amount he paid for that clean-up work would be treated as payment towards the work previously agreed, Mr Machayekhy paid Mr Bayeh a total of $10,500 for that clean-up work. 15. After the council deadline of 30 August 2022, Mr Bayeh did not conduct any further work for Mr Machayekhy who did not hear again from Mr Bayeh.
Whenever determining an issue relating to the formation of the contract or its parties or its terms, that question is not determined by reference to what either of the parties thought or what they intended. Many decisions, such as that of the High Court of Australia in Toll (FGCT) Pty Ltd v Alphafarm Pty Ltd [2004] HCA 52 (Toll) at [40], have established that contract law is concerned not with the subjective intentions of the parties to a contract, but rather with the outward manifestations of those intentions. That is sometimes referred to as the objective theory of contract because the assessment is not made from the subjective view of either party but objectively, as if a reasonable person was considering what was said and done by both parties at the relevant time.
The law in relation to the use of subsequent conduct is that such conduct is admissible on the question of whether a contract was formed, but not on the question of what a contract means: Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61 at [25]-[26], per Heydon JA.
Omitting Mr Machayekhy's evidence of what he assumed, and Mr Chidiac's evidence of what he intended to do, in accordance with the objective theory of contract, the first consideration must be the document which is said to constitute the contract, being the June 2022 document that was headed "Scope of Works & Schedule of Inclusions & Contract".
While that document was not in a standard form, and appeared to be a quotation, it was capable of being a contract for three reasons. First, its heading included the word "Contract" which meant it purported to be a contract. Secondly, unlike a quotation, it included a page which provided space for both parties to sign. Thirdly, even if it could be said to be only in the form of a quotation, it nonetheless constituted an offer which was capable of acceptance and provided for consideration.
However, the fact that the document bore the details of Tecbuilt at the top of the first page is not sufficient to create a contract with that company. Nor is the fact that Gaton was nominated as the builder sufficient because a contract between two parties could expressly provide for work to be carried out by a named third party. Likewise, the appearance of "Ozzie BB initials" in the lower right corner of each page except the cover page is not enough to render OBB a contracting party. Further, there is nothing on the last page, which was signed by Mr Chidiac, to suggest he was signing on behalf of any of those companies.
The fact that the last page of the June 2022 document was signed by Mr Chidiac, without any suggestion that he was signing either as the director of a company or as an agent, coupled with the fact that he signed alongside the word "Contractor", is sufficient to make him a party to that contract document. While the last page did also contain the words "or authorised agent", there was nothing to indicate any applicable agency.
As a result, had Mr Machayekhy signed the June 2022 document without any alteration, he would have created a binding contract between himself and Mr Chidiac, who would have been personally liable, even if the work was carried out by Gaton, as the nominated builder, or by Mr Bayeh.
However, since Mr Machayekhy amended the June 2022 document, he did not accept the offer contained in that document but instead made a counter-offer which would only have become binding if it was accepted. There is no direct evidence that Mr Chidiac accepted that counter-offer. That counter-offer was not signed after the handwritten amendments were added. To be effective, those amendments would have needed to be at least initialled by Mr Chidiac.
As those handwritten amendments were initialled but not signed by Mr Bayeh, the only way it could be said that the counter-offer became an enforceable contract with Mr Chidiac would be if Mr Bayeh had actual or ostensible (ie apparent) authority to enter into contracts on behalf of Mr Chidiac. It was suggested that Mr Bayeh rang Mr Chidiac but that is an assumption on the part of Mr Machayekhy. Furthermore, the evidence does not provide support for such a telephone call because Exhibit B is a copy of Mr Chidiac's phone records which means those pages only show details of calls he made, not calls he received, and there is no evidence of what time on 8 June 2022 these events were said to have occurred.
Again, applying the objective theory of contract, the evidence is insufficient to clothe Mr Bayeh with authority to bind Mr Chidiac, noting that (1) during the initial conversation Mr Machayekhy had with Mr Chidiac, it was clear that Mr Chidiac was 'the boss' and nothing was said to suggested Mr Bayeh had authority to bind him, (2) during that conversation Mr Chidiac said Mr Bayeh could be contacted for "day to day work" which does not suggest authority to accept a contract price reduction of around $90,000 plus GST to $80,000 inclusive of GST , (3) Mr Bayeh was working next door on 8 June 2022 with the result that his role is consistent with that of him being the person who took a document prepared by Mr Chidiac to Mr Machayekhy, (4) Mr Machayekhy took no steps to contact Mr Chidiac.
The Tribunal does not consider any contract between Mr Machayekhy and Mr Chidiac arose from the 8 June 2022 document because the Mr Chidiac's offer was not accepted, and Mr Machayekhy's counter-offer was not accepted by either Mr Chidiac or anyone with the authority to bind him.
Mr Bayeh (1) initialled the 8 June 2022 document, (2) told Mr Machayekhy his offer of $80,000 including GST was acceptable, (3) shook hands with Mr Machayekhy, and (4) directed him as to how money was to be paid. Applying the objective theory of contract, a contract was formed between Mr Machayekhy and Mr Bayeh on that occasion for him to carry out the work specified in that document for that price.
That view is supported by subsequent conduct of (1) Mr Bayeh carrying out the work, and (2) Mr Bayeh seeking and obtaining payments for that work. Such evidence is admissible as to whether a contract was formed.
As to the question of whether the HBA applies to a contract made with Mr Machayekhy when he is not the owner of the subject property, the HBA applies to a contract to do residential building work and also countenances a claim for work done materials supplied when there is no enforceable contract (ie a quantum meruit claim). There is nothing in the HBA that requires the contract to be with the owner of the property. It is noted that a non-contracting owner can obtain the benefit of the provisions of the HBA as can a successor in title, such as a person who purchases a property from an owner who contracts with a builder. By way of example, the children of an elderly person could enter into a contract for work to be done on a home owned by their aged parents with the aim of improving their home without burdening them with the cost or stress of that work. Simply stated, the HBA applies because there is residential building work and not because it is an owner contracting with a builder.
Accordingly, the provisions of the HBA apply to the contract made on 8 June 2022 between Mr Machayekhy and Mr Bayeh (the first agreement).
There was a subsequent arrangement in relation to the damaged retaining wall. However, the document relating to that work was a single page which does not contain any reference to OBB, Gaton, Tecbuilt, or Mr Chidiac. That document lists work to be carried out for Mr Machayekhy and his neighbour and the only indication of the other party is the line which reads "Simon" followed by a phone number. That document bears the initials of Mr Machayekhy and Mr Bayeh.
Unlike the 8 June 2022 document, that page contains nothing to suggest Mr Chidiac had either involvement in it or knowledge of it. That document constitutes an agreement reached between Mr Machayekhy and Mr Bayeh, on or about 25 July 2022, for Mr Bayeh to carry out the work stipulated in that document in return for Mr Machayekhy paying him $21,000 (the second agreement), with the neighbour contributing an amount of $25,900.
There was a third agreement between Mr Machayekhy and Mr Bayeh in relation to the clean-up work that was motivated by a desire to achieve compliance by Mr Machayekhy with the requirements of the local council. That was a verbal agreement but related to work that was required under either the first contract or the second contract. This third agreement involved no more than Mr Bayeh doing work he had already contracted to do, under the first and second agreements, and Mr Machayekhy making further payments towards the cost of that work. This agreement was no more than a variation of earlier agreements.
The next question it is necessary to consider is whether there was a breach of the first agreement and/or second agreement by Mr Bayeh.
The applicants relied on a report from an engineer dated 15 October 2022 which suggested photos were taken on 27 September 2022 and said: "we have completed a survey of the site condition on the 27th October 2022". How the date of the report could precede the date of inspection was not explained.
That report has low probative value for many reasons: (1) there was nothing to suggest its author had read and agreed to be bound by the Tribunal's code of conduct for expert witnesses, (2) there was no indication of the author's qualifications and experience other than the inclusion of the post-nominals "PhD, MEng, BSc, MIE Aust", (3) there is nothing to indicate what documents, if any, were provided to this expert, (4) there is no expression of opinion, and (5) there is no reference to anything that could form the basis for any such opinion. This report only serves to provide 33 pages of photos and, of the 35 photos provided, there are only 11 single line headings. This evidence goes no further than to show the status of the work as at 27 September 2022.
As a result, the engineer's report provides no evidence to support any allegation of defective work and only provides some evidence that supports a claim that there was incomplete work. Photos taken by an engineer do not prove Mr Machayekhy's case any more than if he took those photos himself.
It is clear the work the subject of both the first and second agreements was incomplete. While neither of those agreements specified either a duration for the work or a date of completion, the failure to complete the work covered by those agreements constitutes a breach of each agreement by reason of the term implied by paragraph (d) of s 18B(1) of the HBA which required the completion of that work within a reasonable time. Even if it could be said that the HBA did not apply, an implied term that the work be completed within a reasonable time is warranted, having regard to the five requirements set out by the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] HCA 40; 180 CLR 266. Either way, there was a breach of each agreement by Mr Bayeh which entitled Mr Machayekhy to damages.
Work covered by the first agreement, for which the price was $80,000 (including GST), was set out in the document dated 8 June 2022. Although that scope of work was drafted by Mr Chidiac, it was signed by Mr Machayekhy and initialled by Mr Bayeh who agreed to carry out that work: Remove pavers from driveway and carport, make good on same area, and remove all debris from site. Supply and install reinforced colour concrete to same area with expansion joints where required, and acid wash and seal existing driveway. Cut concrete in swimming pool - full length of pool and dig foundation to be filled with reinforced concrete. Build stairs and landing at the end of the pool. Build concrete wall approximately 10 lm x 1.75 lm at one end and 1.25 lm at the other end. Walls to be waterproofed according to Engineers Plans. Back fill part of pool and concrete to same area. Supply and install acrylic render to existing pool walls and floor. Supply and install pebble crete to same area. Rearrange and prepare swimming pool area (see at end of this Scope of Work) Remove capping from edge of pool all around and install [travertine] capping bullnose 30m. Supply and install water line for pool using mosaic tiles. Remove all rubbish from site. Remove existing retaining wall being 13.5m x .5m., then build retaining wall 13.5m x .5m, complete with reinforced foundation 18 lm. X 1.8m, broken up into two (2) sections. .6m x 18lm concrete walkway. Provide step 1.2m wide break up into four (4) steps including agg line to be connected to existing drains and waterproof same area. Provide plastic behind retaining walls. Excavate back landing to same level as existing backyard and build two (2) steps into the house. Build 3m steps from the house to swimming pool. Supply and install reinforced concrete approximately 154m2 - area to be levelled with sand and cement, then tile with [travertine] tiles including all preparation and tiles.
Work covered by the second agreement, for which $21,000 was payable by Mr Machayekhy, was set out in a document (which made no reference to GST). Initialled by both Mr Machayekhy and Mr Bayeh, that document provided as follows: Work at 2 & 4 ***, Thornleigh Remove existing colorbond fencer and all old sleepers. Excavate footing from the back of yard to the front all sides. Footing 600 deep 500 wide concrete footing using 12mm bars and F72 mesh. Build double retaining wall using [Besser] blocks and steel bars inside to [Besser] blocks. Fill up double retaining walls with concrete. Install new colorbond green fence to the back yard and front. Supply all materials, take rubbish away. Simon : 0450 *** *** $51,800
As to the cost of completion of the work, the applicants relied on a quote for $125,840 for work described in that quote as follows: Description Line Total Retaining wall construction including footing, core filled blocks with cement render finish 60 linear meter and 90 sqm $31,500.00 Drainage plumbing works including excavation, piping, pit supply and labour and connection to the site discharge point $8,000.00 Swimming pool party wall construction, cavity fill and compaction, pool equipment installation, tiling and coping and balustrades $32,000.00 Landscaping including levelling, compaction, bedding and travertine stone laying supply and labour 65 sqm $19,500.00 Carport floor plain concrete supply and labour 60 sqm $12,000.00 Timber deck construction supply and labour 30m with stairs $11,400.00 Sub-total $114,400.00 Discount $0.00 GST (10%) $11,440.00 Total $125,840.00

However, there is no evidence to link the work set out in that quotation to the unfinished work. Indeed, the quotation includes references to balustrades and the construction of a timber deck, neither of which are referred to in the work specified in either the first agreement or the second agreement, set out above.
A second quotation for $15,400 was provided by a design and consultancy firm because its "Description of Work" was as follows: DA/CDC package preparation of the extension/renovation works i.e. retaining wall replacement swimming pool renovation, backyard landscaping, driveway resurfacing including: 1. Preparing site plan, boundary survey, and as built layout of the existing structures signed by a registered surveyour (sic) 2. Landscape design and certification by a registered landscape architect 3. Architectural drawings for DA/CDC lodgement including: Proposed site plan/analysis, Proposed plans, Proposed elevations, Proposed sections, Schedule of external colours and finishes. Notification plans 4. Stormwater design/drawings/certificates 5. Structural design of all required structure including but not limited to the retaining walls, swimming pool etc 6. Costs Estimate (for DA/CDC application purpose only) 7. Waste management report 8. DA/CDC paperwork preparation and lodgement via NSW Planning Portal 9. Architectural drawings amendments during council/PCA assessment process, if required Exclusions: • Town planners/SEE report if required - we can organise but client to pay the costs • BASIX/NATHERS (thermal assessment) reports and certificates if required - we can organise but client to pay the costs • Arborist, fire, Geotech, acoustic, site contamination, archaeological or similar - we can organise but client to pay the costs • Council fees • Certifier fees • Sydhey Water fees • Any other authority costs, fees and charges • Road opening permits etc • Project management during CC stage • Site inspection by third party consultants • Amendments required during council DA assessment process which are not related to design such as neighbour's objection or surprises such as overland flooding or archaeological matters. • Cost estimate by a quantity surveyor (sometimes required by council or the financial institution)
Gallagher v Masters Installation Pty Ltd [2017] NSWCATAP 117 (Gallagher) is often cited in support of the proposition that, in circumstances where precision is not possible, the Tribunal must do the best it can on the basis of the evidence that is available. By reference to what was said in that case at [49-51], the distinction is between the principle that difficulty of assessment is not a barrier, as indicated in Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54, and the situation in Gerrard v Slamar [2004] WASC 253 where there was a lack of evidence and an estimate or guess should not be made to make good that omission.
Pacorp Holdings Pty Ltd v Waller [2017] NSWCATAP 167 at [58] is but one example of the application of what was said in Gallagher and the position was succinctly stated in that case as being that "provided that some evidence of loss or damage has been produced, difficulty of assessment is not a bar to the assessment of damages, and where precise evidence is not available, the court or tribunal must do the best it can."
The problem in this case is that Mr Machayekhy, having been previously content to have a brief description of the work, shake hands with Mr Bayeh and make payments as demanded by him, including payments in cash, is now seeking to recover an amount based on an entirely different approach. His approach to the desired work has changed from a high level of informality to a high level of formality in circumstances where he is now seeking to have someone else pay for the subject work. Metaphorically speaking, the difference between the work covered by the agreements with Mr Bayeh (set out in [89] and [90] above) and the work covered but the quotations upon which Mr Machayekhy now relies (set out in [91] and [93] above) resembles the difference between a second-hand car bought from a disreputable dealer and a new car purchased from the maker's dealership.
Having sought and obtained a discount from either $98,918.60 or $100,568.60 to $80,000 for the first agreement, and a discount from $25,900 (half of $51,800) to $21,000, the amounts now claimed by Mr Machayeky do not include any reference to a discount.
The Tribunal is driven to the conclusion that Mr Machayekhy sought to have work carried for amounts that could not be achieved and, Mr Bayeh having walked away from the agreements made with Mr Machayekhy, he now seeks to recover the full cost of recovering the agreed work, plus more, at an undiscounted cost.
Further, it must be remembered that the work covered by the second agreement was to be paid by two people, with Mr Machayekhy's share of the suggested $51,800 total price being $21,000. To award Mr Machayekhy the cost of completing the retaining wall would clearly be to overcompensate him.
The Tribunal makes the following determinations: 1. The amount which Mr Machayekhy was obliged to pay Mr Bayeh under his agreements with Mr Bayeh was $101,000: $80,000 plus $21,000. 2. However, the work which Mr Bayeh contracted to carry out bore a total contract price of $126,900, calculated as $80,000 under the first agreement, $21,000 under the second agreement for Mr Machayekhy's share and $25,900 for the adjoining owner's share. 3. No defective work has been proved. 4. The work covered by the first and second agreements was incomplete and, doing the best it can on the available evidence, namely the photos in the engineer's report, the work was 50% complete. 5. Based on the quotation for $125,840, again doing the best it can on the available evidence, the reasonable cost of completion of the work covered by the agreements between Mr Machayekhy and Mr Bayeh, allowing for work in that itemised quotation beyond the scope of those agreements and for the fact that Mr Machayekhy can only recover half the cost of the retaining wall that was the subject of the second agreement, is $83,893, being 2/3 of that amount of $125,840.
For the reasons indicated above, it is necessary to determine the total amount that the evidence establishes was paid by Mr Machayekhy to Mr Bayeh. The Tribunal determines that amount to be $88,250, calculated as follows: Date Description Amount 08 Jun 22 Machayekhy affidavit [31] and AM-6 $8,000 09 Jun 22 Machayekhy affidavit [35] and AM-6 $12,000 09 Jun 22 Machayekhy affidavit [36] and AM-6, 8 $4,000 11 Jun 22 Machayekhy affidavit [36] and AM-6, 8 $16,000 17 Jun 22 Machayekhy affidavit [43] and AM-9 $20,000 26 Jul 22 Machayekhy affidavit [52] and AM-11 $5,000 28 Jul 22 Machayekhy affidavit [52] and AM-11 $5,000 05 Aug 22 Machayekhy affidavit [56] and AM-12 $5,300 25 Aug 22 Machayekhy affidavit [73] (paid to a third party for work Mr Bayeh was obligated to carry out) $2,450 29 Aug 22 Machayekhy affidavit [75] and AM-15 $10,500 (payments of $1,000, $1,100, $1,100, $1,500, $3,800 and $2,000 to Mr Bayeh on or before that date)

Since the amount payable to Mr Bayeh under the agreements was $101,000 and a total amount of $88,250 was paid, the unpaid balance is $12,750. As a result, the Tribunal considers Mr Machayekhy is entitled to recover $71,143, being the assessed cost of completion of the work covered by their agreements, namely $83,893, less the unpaid balance of $12,750.
It remains to consider the claims based on s 18(1) of the ACL, being claims which allege that Mr Chidiac and Mr Bayeh engaged in conduct that was either misleading, or deceptive, or likely to either mislead or deceive.
In the Points of Claim, the following allegations, said to constitute breaches of s 18 of the ACL, were made. Those allegations are set out below as they appear in that document: 22 On or about 8 June 2022, Mr Chidiac have made written representations to Mr Machayekhy, and to the general public, that is misleading and deceptive, or is likely to misled and deceive. Particulars 22.1 Mr Chidiac represented to Mr Machayekhy in the form of written scope of work that is labelled 'Schedule of Works & Inclusions & Contract' which is not a formal contract; 22.2 Mr Chidiac, by way of directing Mr Machayekhy to a website accessible to the general public, where it displayed that Ozzie provides extensive range of home construction services. 23 Between about 31 May 2022 to about 10 September 2022, Mr Chidiac and Mr Bayeh made verbal representations and omissions that is misleading or deceptive, or is likely to mislead or deceive. Particulars 23.1 Mr Chidiac and Mr Bayeh made statements such that Mr Bayeh was the employee or subcontractor of Mr Chidiac, 23.2 Mr Chidiac and Mr Bayeh made statements in relation to the scope of work would not require any relevant council approval; and 23.3 Mr Chidiac and Mr Bayeh made statements such that Mr Chidiac would ultimately be the person responsible for the work to be completed. 24 About 8 June 2022, Mr Chidiac and Mr Bayeh implied by omission that is misleading or deceptive or is likely to misled or deceive. Particulars 24.1 Mr Chidiac and Mr Bayeh, by omission, implied that they held valid contractors' licence. 24.2 Mr Chidiac and Mr Bayeh, by omission, implied that the work to be done on the property would be carried out with reasonable diligence and care; and 24.3 Mr Chidiac and Mr Bayeh, by omission, implied the dealings between the parties would be in accordance with the relevant applicable laws and regulations, including the Home Building Act 1989 (NSW).
It is convenient to use those sub-paragraph numbers refer to those allegations and to deal with each of them in turn.
As to [22.1], the fact that the 8 June 2022 document was not a "formal contract" does not constitute misleading or deceptive conduct. There is no evidence he ever sought a "formal contract": the evidence is that he was content to sign a document, shake hands with Mr Bayeh, and agree to straightaway pay $40,000 for work with a contract price of $80,000. No doubt Mr Machayekhy now wishes he had sought a standard form contract but that does not render either the conduct of Mr Chidiac in preparing the 8 June 2022 document or Mr Bayeh providing it to Mr Machayekhy conduct that is misleading or deceptive or likely to mislead or likely to deceive. If Mr Machayekhy wanted a "formal contract" then he only had to write on the 8 June 2022 document to indicate that it was accepted as a quotation and/or that it was subject to a "formal contact".
In relation to [22.2], while Mr Machayekhy said, in his affidavit at [18], he conducted a search of OBB's website but there was no clear evidence of when he did that. In his affidavit at [39], Mr Machayekhy said: At no time prior to signing the Contract, during my interaction with Mr Chidiac, did he: 39.1 Make it known to me, orally or by writing, that he was a representative of any other party or company; and 39.2 That he was a broker.
There can only be two possibilities: either (1) that evidence is correct which would mean that Mr Machayekhy did not consult OBB's website until after he signed the 8 June 2022 contract, or (2) the evidence quoted in the previous paragraph is, to be polite, incorrect. Neither alternative assists the applicants' case. The former alternative would mean the allegation set out in [22.2] fails. The latter alternative would mean that any finding in favour of Mr Machayekhy as to [22.2] would be directly opposed to his sworn evidence.
Even if it be assumed, in favour of Mr Machayekhy, that he consulted OBB's website prior to signing the 8 June 2022 document, the three printed pages that were provided (in annexure AM-3) do not make any reference to "an extensive range of construction services". Those pages do no more than suggest "We specialise in home improvement services …". This allegation must be rejected.
Moving to [23.1]. There is no direct evidence in Mr Machayekhy's affidavit of Mr Chidiac saying that Mr Bayeh was either his employee or subcontractor. Even if it could be said there was such evidence, Mr Machayekhy is not considered to be a reliable witness and the Tribunal is not prepared to make a finding based solely on his evidence. Further, even if this allegation were held to have been established, no damage was caused to Mr Machayekhy because he did not accept the offer contained in the 8 June 2022 document that was signed by Mr Chidiac but instead chose to enter into a direct arrangement with Mr Bayeh.
In [23.2] it is alleged that Mr Chidiac and Mr Bayeh both suggested the work did not require council approval. There does not appear to be any evidence that Mr Bayeh made any such suggestion. There is evidence from Mr Machayekhy, in his affidavit at [22.4], that Mr Chidiac made that suggestion to him. The Tribunal rejects this allegation for the following reasons.
First, the evidence of Mr Machayekhy is not considered sufficiently reliable to warrant a finding in his favour on this issue without corroborating evidence.
Secondly, this allegation was never put to Mr Chidiac during his cross-examination. While s 38(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (the CATA), provides that the rules of evidence do not apply to these proceedings, s 38(2) also requires that the rules of natural justice be followed. Applying what is commonly referred to as the rule in Browne v Dunn (1893) 6 R 67, HL, it would be procedurally unfair to find that the allegation that Mr Chidiac said the work did not require Council approval has been proved when it was not put to him during cross-examination.
Thirdly, three documents provided at AM-13 respectively suggest (1) work was done on five trees but that does not appear to be covered by the work specified in either the 6 June 2022 document (the first agreement) or the additional work relating to the retaining wall (the second agreement), (2) there was pruning of trees which appears to be outside those scope of work set out in those documents, and (3) there was a failure to install sediment and erosion controls. None of those documents suggest the subject work required council approval.
While the documents submitted in support of the amount claimed suggest it is proposed to obtain council approval for that work, the scope of which goes beyond what was included in the 6 June 2022 document or the additional work relating to the retaining wall.
Turning to [23.3], this allegation suggests, in a general rather than specific form, that Mr Chidiac made statements that Mr Chidiac would "ulimtately be the person responsible for the work to be completed". This breadth of this allegation was not narrowed in closing submissions for the applicants. It could be said that, by signing the 8 June 2022 document, Mr Chidiac made himself responsible for the scope of work set out in that document. However, that offer was never accepted. Instead, Mr Machayekhy made a counter-offer and the evidence does not justify a finding that Mr Chidiac ever accepted that offer. What happened is that Mr Machayekhy reached agreements with Mr Bayeh and the evidence does not warrant any finding that Mr Chidiac was aware of Mr Bayeh's work prior to Mr Machayekhy complaining to him in August 2022. As a result, this allegation also fails.
Next, [24.1]. There is nothing to warrant an implication that Mr Chidiac represented he held a valid contractor's licence, and it is not reasonable to make that implication when the evidence is that Mr Chidiac represented himself to be a building broker. The only potential basis for such an implication is Mr Chidiac signing the 8 June 2022 document in a manner that suggested he was a contractor. However, the offer contained in that document was not accepted by Mr Machayekhy who made a counter-offer and proceeded to make agreements with Mr Bayeh.
As to Mr Bayeh, it could be said that by offering to carry out work he was presenting himself as a licensed builder. The 20 January 2023 letter from NSW Fair Trading suggests Mr Bayeh does not have such a licence. However, there is no evidence to suggest that Mr Machayekhy considered that important at the time he entered into arrangement, that he ever asked Mr Bayeh if he had a builder's licence, or that he would not have proceeded if he knew at that time that Mr Bayeh did not hold a builder's licence.
In those circumstances, even if the alleged implication is made, the evidence does not support a finding that any loss was caused. Even if it could be said that causation was established, Mr Machayekhy's loss would be the same as that already determined in relation to his claim based on the law of contract.
The allegation set out in [24.2] appears to be an abbreviated form of the statutory warranties implied into every contract for residential building work by paragraphs (a) and (d) in s 18B(1) of the HBA. As those warranties apply regardless of any act or omission on the part of either Mr Chidiac or Mr Bayeh, they cannot form the basis of a claim for misleading and deceptive conduct.
The position on relation to the allegation made in [24.3] is the same. Framing an allegation based on s 18(1) of the ACL by reference to either what appears in paragraph (c) of s 18B(1) of the HBA or the entirety of the HBA and alleging misleading or deceptive conduct can be "by omission, implied" does not create a cause of action separate and additional to those created by the provisions of the HBA.
For the reasons, set out above, the allegations based on s 18(1) of the ACL are rejected. There is no basis for any such claim against Mr Chidiac. Even if there could be said to be a basis for such a claim against Mr Bayeh, what was the damage caused by any such misleading and deceptive conduct?
If there was misleading or deceptive conduct on the part of Mr Bayeh that caused Mr Machayekhy to enter into agreements with him, the resulting damage caused by such conduct was that he has paid money for work which has not been completed. While there was a suggestion that Mr Machayekhy should be granted a refund of the amounts he paid, that would be to overcompensate Mr Machayekhy since he has obtained the benefit of some building work in return for paying a total of $88,250. The Tribunal considers that any damages to which Mr Machayekhy could entitled if it be held that Mr Bayeh breached s 18(1) of the ACL is the same amount as previously determined by the Tribunal to be the amount required to put Mr Machayekhy in the same condition as if the building work had been completed.
There was no evidence from Ms Ghorashi and nothing to suggest she has any valid claim against any of the respondents. The only valid claim which Mr Machayekhy has is against Mr Bayeh for damages of $71,143 for breach of contract. In those circumstances, the claims against the other four respondents must be dismissed.

Costs

In the CATA the effect of s 60 is that each party is to bear their own costs unless there are special circumstances which warrant an order for costs. However, s 35 of the CATA operates to make s 60 subject to r 38(2) of the Rules which provides as follows: Despite section 60 of the Act, the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if: (a) … (b) the amount claimed or in dispute in the proceedings is more than $30,000.
Since the amount claimed in the application exceeded $30,000, r 38(2) applies. In such cases, there is a general discretion to award costs and it is well established, by decisions such as News v Cotes [2019] NSWCATAP 186, Bonita v Shen [2016] NSWCATAP 159 and Thompson v Chapman [2016] NSWCATAP 6, that: (1) the starting point is that the usual order for costs should be in favour of the successful party, (2) the award is not to punish the unsuccessful party but to compensate the successful party for the costs incurred in the proceedings, and (3) departure from the usual order is permissible if the circumstances favour that course of action.
When r 38 applies it is not necessary to establish special circumstances and the usual order is that costs follow the event (ie follow the outcome of the case) unless there is disentitling behaviour by the successful party: Latoudis v Casey [1990] HCA 59, Oshlak v Richmond River Council [1998] HCA 11.
The question of costs is not straightforward in this case in that, while the applicants have been successful against one respondent, they have been unsuccessful against the remaining respondents.
More than a century ago, in Bullock v London General Omnibus Co [1907] 1 KB 264 and Sanderson v Blyth Theatre Co [1903] 2 KB 533, orders were made in cases where a plaintiff sued more than one defendant but was not successful against each defendant. The orders for costs made in those cases have come to be known as a Bullock order and a Sanderson order, respectively. They seek to achieve the same outcome but in different ways. A Bullock order requires the plaintiff to pay the costs of the successful defendant(s) but permits those costs to be recovered against the unsuccessful defendant. A Sanderson order is more direct as it requires the unsuccessful defendant to pay the costs of both the plaintiff and the successful defendant(s).
In Stevedoring Industry Finance Committee v Gibson [2000] NSWCA 179 at [128], the following summary was quoted, taken from what was said in Lackersteen v Jones (No 2) (1988) 93 FLR 442 at 449: 1. It must be seen to have been reasonable and proper for the plaintiff to have sued the successful defendant. 2. The causes of action against two or more defendants need not be the same but they must be substantially connected or dependent the one on the other. 3. While it is essential to find that the plaintiff has acted reasonably and properly that alone is not sufficient. The court must find something in the conduct of the unsuccessful defendant which makes it a proper exercise of discretion. 4. Finally, in considering whether to make such an order, the court should, in the exercise of its discretion balance overall two considerations of policy: the first, that an unnecessary multiplicity of actions should not be forced on litigants, so that a plaintiff who acts reasonably in joining two or more defendants should not be penalised or lose the fruits of his victory in costs on the basis that he should have either elected or taken separate actions; secondly, that an unsuccessful defendant should not have to pay more than one set of costs merely because he is unsuccessful.
As the second, third and fourth respondents have been successful in these proceedings, and as there is nothing to suggest disentitling conduct on their part, they are entitled to an order that the applicants pay their costs. As the applicants achieved success against the first respondent, and as there is nothing to suggest disentitling conduct on their part, they are entitled to an order that the first respondent pay their costs.
Hence, the questions which arise in this instance are (1) whether a Bullock or Sanderson order should be made, and (2) if so, which of those forms of should be made?
First, should a Bullock or Sanderson order be made? It was reasonable for the applicants to have sued all five respondents when their details appeared on the 8 June 2022 document in one form or another. The causes of action were the same: the primary cause of action was in contract and the issue was with whom the contract was made by Mr Machayekhy. There is conduct on the part of the unsuccessful respondents which warrants the exercise of discretion in favour of a Bullock or Sanderson order, noting that the same lawyer who represented Mr Chidiac also represented Gaton and OBB: (1) Mr Chidiac was the primary participant, (2) he prepared document which contained references to the other successful respondents, and (3) it was Mr Chidiac who sent Mr Bayeh to meeting with Mr Machayekhy on 8 June 2022.
As to the relevant policy considerations, it is clear one application involving all relevant parties was a reasonable and preferable course of action for the applicants because separate applications may have resulted in inconsistent findings. If neither a Bullock order nor a Sanderson order is made, the costs orders would be for (1) for Mr Bayeh to pay the applicants' costs, and (2) the applicants to pay the costs of Mr Chidiac, Gaton and OBB. With the whereabouts of Mr Bayeh being unknown, the practical effect of those usual orders would be that the successful applicants are required to bear the costs of each party who participated in the proceedings. It is noted that a Bullock order would create the same situation as the usual orders for costs as they are unlikely to recover either damages or costs from Mr Bayeh because his whereabouts are unknown. On the other hand, a Sanderson order would require Mr Bayeh to pay the costs of both the successful applicants and the successful respondents.
The Tribunal is satisfied that a departure from the usual form of orders can be justified by the circumstances in these proceedings. As a Bullock order would not, in the circumstances of this case, create a different outcome, the question becomes whether a Sanderson order should be made.
Reasons why the Tribunal considers a Sanderson order should be made may be summarised as: (1) the problem which arise takes its origin from a document prepared by Mr Chidiac, (2) the costs of Gaton and OBB add little, if anything to the costs of the successful respondents, (3) the applicants enjoyed mixed success, but were justified in commencing these proceedings, (4) Mr Bayeh was the cause of the damages which created the need for these proceedings.
However, the parties did not make any submissions, during the hearing, as to costs. In those circumstances, the practical course is to make an order for costs but include provision for written submissions to be made if either party seeks a different costs order. Any such submissions should indicate whether it is accepted that the Tribunal should exercise the power conferred by s 50(2) of the CATA to dispense with a further hearing on the question of costs and determine costs on the papers.

Orders

For the reasons set out above, the following orders are made: 1. The first respondent, Sarkis Bayeh, is to pay the first applicant, Adrian Machayekhy, $71,143.00 immediately. 2. The application is otherwise dismissed. 3. The first respondent is to pay the costs of the second, third and fourth respondents and the applicants, on the ordinary basis, as agreed or assessed. 4. If either party wishes to contend that a different costs order should be made, order (3) ceases to have effect and the following orders apply: 1. Any application for a different costs order is to be filed and served, supported by submissions (not exceeding five pages in length) and evidence within 14 days of the date of these orders. 2. Any submissions (not exceeding five pages in length) and evidence in response are to be file and served with the following 14 days. 3. Any submissions in reply (not exceeding two pages in length) and evidence in reply are to be filed and served within the following 7 days. 4. Any such submissions should indicate whether it is agreed that the Tribunal should dispense with a hearing.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 August 2024

Australian Consumer Law Civil and Administrative Tribunal Act 2013(NSW)

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