Mashat v Build Property Pty Ltd [2025] NSWCATCD 152;

(1) damages for the cost to rectify the defective work or in the alternative, a work order for the removal of the frames and trusses and their instillation; and

(2) delay damages for increased construction costs to complete the project and lost rent.

(1) says it is owed money by the applicant either pursuant to the BP Contract on a quantum meruit basis; and

(2) seeks to be indemnified by SPD in respect of any relief ordered against it on the applicant's claim.

1. The evidence was primarily contained in a 2,173 page three-volume joint hearing bundle of documents (JB). The following documents were also tendered:

(1) Email from Arshia Jain dated 19 May (Ex. 1).

(2) Email from Nimish Mittal to Ali Mashat dated 18 December 2023 (Ex. 2).

(3) Email from Ali Mashat to Nimish Mittal dated 18 December 2023 (Ex. 3). SPD.

(4) Conclave report dated 17 February 2025 (Ex. 4).

(5) Email from Ali Mashat to BP dated 14 February 2024 attaching a quote from Crellin Carpentry (Ex. 5).

(6) Site Inspection Report of Halina Engineers (Ex. A).

(7) Extract from what was referred to as "the NASH" headed "Class 1 and10 buildings" (Ex B).

(8) Tax Invoice from Building certifies to BP dated 5 April 2023 (Ex. C).

(9) Email from the applicant to BP dated 20 July 2023 (Ex. D).

1. Exhibit 5's use was limited to dealing with the question of whether or not SPD had advised Mr Mashat to terminate the contract with SPD.
2. The parties lay witnesses, being, the applicant, Mr Ouraha for BP and Mr Saleque for SPD, were all cross examined. The experts, Mr Prasad, for the applicant and Dr Nguyen for SPD gave evidence concurrently.
3. The expert evidence dispute primarily concerned whether the defective frames and trusses could be remedied in situ or whether they needed to be removed, re-engineered, and reinstalled.
4. Once that is determined, it is a question of whether a money order or a work order ought to be made, mindful also, that SPD contends that the SPD Contract has not been terminated and therefore, relying on Brewarrina Shire Council v Beckhaus Civil Pty Ltd & Or [2005] NSWCA 248, the Tribunal cannot order damages.
5. Following the hearing, directions were made for the filing of an agreed statement of issues and chronology and written submissions, and the Tribunal received:

(1) A Transcript.

(2) The parties "Joint Summary of Issues for determination".

(3) The applicant's closing submissions and applicant's Chronology.

(4) BP's closing submissions.

(5) SPD's closing submissions and SPD's chronology.

(6) Applicant's closing submissions in reply.

(7) BP's reply to SPD's submissions on BP's indemnity claim.

1. The parties agree that the instillation of steel frames and trusses by SPD was defective and that SPD was not licensed. Further, the evidence made clear that SPD did not capacity to instal the frames and trusses and used at least three different contractors.
2. Having regard to the "Joint Summary of Issues for Determination" (Joint Statement of Issues), the issues for consideration are:

(1) (Issue 2) The nature of and the terms of the BP Contract and more particularly:

(a) was it a term of the BP Contract that BP was to only recommend licensed contractors to be engaged to carry out the building works; or

(b) was it a term of the BP Contract that BP was to notify the applicant of any reasons why a particular contractor whose quote had been obtained was unsuitable to be selected to carry out building works, and

(c) if one or other of those terms applied, did BP breach it?

(2) (Issue 1) Whether BP was a party to the SPD Contract and if so, in what capacity, and does it mean that BP is liable for the works carried out by SPD?

(3) (Issue 3) If BP breached the BP Contract was any such breach causative of any loss suffered by the applicant.

(4) (Issue 4) The scope of the rectification work required, and more particularly, can the defective work of SPD be remedied in situ or does the work (i.e. the frames and trusses) have to be removed and replaced.

(5) (Issue 5) Is the applicant entitled to damages for defective work against BP and / or SPD? and if so, what is the sum of damages?

(6) (Issue 6) Whether a money order or a work order should be made, and if so, the form of the order and whether the order should be against BP as well as SPD. Relevant to whether a money order can be made is whether the SPD Contract has been terminated and if not, whether it is open to the Tribunal to make an order for damages

(7) (Issue 7) Whether the applicant is entitled to delay damages against BP and / or SPD? And if so:

(a) has there been a failure to mitigate? and

(b) can SPD rely on clause 18 of the SPD Contract (Consequential Loss) to limit its liability or is that clause unenforceable by reason of sections 10 and /or 94 of the HB Act or void pursuant to s 18G of the HB Act.

(8) (Issue 8) If BP is liable to the applicant, is it entitled to be indemnified by SPD?

(9) (Issue 9) Whether BP is owed any money by the applicant pursuant to the BP Contract, or on quantum meruit basis, and if so, how much?

(10) (Issues 10 and 11) - Raised by BP, but which the applicant contends are not open on the parties' pleadings. Subject to a consideration of issue 2:

(a) whether BP acted reasonably in accepting a representation from SPD that it was licensed carry out the work and,

(b) if the terms of the BP Contract included an obligation to 'check if the necessary licenses were held', did the first respondent discharge that obligation by making a direct enquiry of SPD as to whether it had the necessary licenses.

1. There was no dispute as to jurisdiction and I am satisfied that the dispute is in respect of two contracts to do, and the doing of "residential building work" as that term is defined in the Home Building Act 1989 NSW (the HBA), and that the Tribunal has jurisdiction to hear and determine the matter.

Consideration of back ground facts and the agreed issues

Contract between the Applicant and SPD and Issue 2 as to its terms

1. On or about 27 March 2023, the applicant and BP entered the BP Contract in respect of the construction of a double-story residential dwelling house with granny flat at the Property.
2. The evidence was unclear as to the terms of the BP Contract and the extent to which it written, oral and / or implied, with much of the dispute arising because of a lack of a written record of what was in the end agreed.
3. The applicant and BP exchanged emails and text messages in February 2023 in which the applicant texted that he would like [to use BP's license] but on a "cost + your fees basis" and BP emailed that it could do it for "$90,000.00";
4. On 25 March 2023, BP emailed the applicant attaching a "Construction Estimate" (the Estimate) dated 21/03/2023, which stated:

This quote is for constructing a New Double Story Dwelling with granny flat at [the Property]

...

The Cost Plus price quote is based on the plans submitted on 10/02/2023.

...

4. Frame and LVL

Standard - conventional or Frames and Trusses 90 x 45 MGP10, Pine and LVL to support roof as required as per Australian standard

...

This is a Cost plus Price Quotation for Ali Mashat, for a New Double Story Dwelling with granny flat at ...

"Quoted Price" of "$1,250,000.00 - $1,300,000.00"

Builders fees at 10%".

1. Thereafter, the applicant and BP exchanged further emails in late March 2023 in which the applicant, amongst other things:

(1) On 25 March detailed termite treatment required, queried the timber framing to be installed, queried the piering to be installed, requested a 25 year structural warranty, advised that he need more time to read the [Estimate] and stated:

I need you to build this house as if you were building it for yourself

I am not after minimal basic just to beet national building code of Australia (NCC) requirements.

I am not after a standard home. Please do not give me the minimum.

This is my lifetime home, must be built to a high standard with high-quality items everywhere.

Why 26L GAS hot water system for big house? It is not sufficient.

Need 25 KW Air Conditioner for main house (minimum)

Why 2 drawers for wardrobes

1 Down light is not sufficient. I am looking at 200 + Downlights for main house alone, more with Granny Flat.

I need to do more reading of the contract, and we need to discuss these please.

Also, what happens of I agree to what you have put (materials / items) and change my mind and want something else. I'm talking about Costs.

(a) sought confirmation as to whether the 10% Builders fee is included in the estimate of $1.25 -$3 million?

(b) noted:

Also, there are many items in your estimate that are not mentioned, e.g The Kitchen, Type/design, Toilet/shower type etc... etc... many many items, doors, windows, fireplace etc... etc...I cannot sign contract

(c) suggested to the effect that that what could be done is that:

(i) they sign a Contract such that BP charges 10% of the build cost; and

(ii) BP tell the applicant what items are needed up front and along the way with a minimum of 4 weeks' notice and recommend "people, with their quote" with the applicant to "check or choose differently" and once agreed upon, make payment for the relevant "item / workmanship" or that part of the construction, but stating:

I also would reserve the right to change them or choose a different item if I didn't like either the looks / appealingness (sic), Quality or workmanship

(1) Neither the 25 or 27 March emails make any reference to either the house or granny flat being rented out or the time within which the work was to be performed;

(2) The 25 March appears to identify work that will be required to be added to or changed from the Estimate;

(3) The 27 March email makes clear that the applicant will be entitled to make changes to materials, the work or contractors for "looks/appealing ness, Quality or workmanship" reasons.

(4) The 27 March email makes no reference to BP's role with respect to the work to be performed by any contractors.

(5) In my view, the nature of the applicant's required involvement and that there are items to be added that are not mentioned in the Estimate, would make identification of an actual cost or time for completion difficult.

1. On 29 March 2023, the applicant and Mr Ouraha had a phone conversation in which they discussed how the engagement of BP by the applicant was to proceed. None of what was discussed was reduced to or confirmed in writing and the applicant and Mr Ouraha give differing versions of what was said.
2. Consequently, there is a dispute as to what the final terms were and what BP was to do.
3. In particular, was BP generally responsible, as the head contractor, for the work performed by other contractors, otherwise to what extent was BP to supervise and project manage the work, and what was BP required to do when recommending and providing the quotes of subcontractors.
4. In cross examination, Mr Ouraha for BP, gave evidence to the effect that BP's margin was originally going to be 5% but went up to 10%, and if BP was put in charge of the whole build, the margin would be 20%. The difficulty I have with that evidence is that the Estimate on its face states that it was provided on a cost plus (10 % Builders fee) basis for "constructing a New Double Story Dwelling with granny flat".
5. Having regard to the applicant's Amended Points of Claim (APOC), BP's Points of Defence, which admit paragraphs 4, 4.1, 4.2, 4A (a), (b), (f), (g) (save that BP also says that it was subject to direction from applicant who had the final decision) (h) and (i) of the APOC, the Estimate and the emails exchanged between Mr Mashat and BP on 25 and 27 March, and the applicant's and Mr Ohoura's competing versions of the 29 March phone conversation considered in the context of which if any version fits comfortably with agreed or known facts, I find:

(1) The contract between the applicant and BP was entered on about 27 or 29 March 2023.

(2) The agreement was partly written, partly oral and partly implied having arisen from the Estimate, emails exchanged on about 25 and 27 March 2023 and the telephone conversation on 29 March.

(3) The contract was a cost plus contract (although the applicant was to pay contractors directly and would only be paying BP the 10%) with an estimated price of $1,250,000.00 to $1,300,000.00.

(4) To the extent written it comprised the Estimate and emails from the applicant to the BP on 25 and 27 March 2025 and included that it was in respect of "constructing a new Double Storey Dwelling with granny flat at the [Property]" which relevantly included "4, Frame and LVL".

(5) The relevant oral terms of the contract were to the effect that:

(a) BP was to inform the applicant of the work to be performed;

(b) BP was to recommend suppliers and subcontractors to be used for the work to be performed to the applicant;

(c) BP was to obtain quotes for the work by suppliers and subcontractors and provide the quotes to the applicant;

(d) The applicant could obtain his own quotes for suppliers and contractors and provide them to BP for any recommendation;

(e) BP would make recommendations to the applicant including as to a supplier or subcontractors suitability;

(f) The applicant would determine the suppliers or subcontractors to be used;

(g) The applicant's name would be placed on any contract with any contractors for the purposes of the applicant then making payment direct the subcontractors.

1. The warranties implied by s 18 B (1) would also be implied into the HB Contract.
2. S 18B (1) of the HB Act states:

(1) The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work -

(a) a warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract,

(b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new,

(c) a warranty that the work will be done in accordance with, and will comply with, this or any other law,

(d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time,

(e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling,

(f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder's or person's skill and judgment.

(2) The statutory warranties implied by this section are not limited to a contract to do residential building work for an owner of land and are also implied in a contract under which a person (the principal contractor) who has contracted to do residential building work contracts with another person (a subcontractor to the principal contractor) for the subcontractor to do the work (or any part of the work) for the principal contractor.

1. The effect of the warranties is that they apply to the work contemplated or required by the BP Contract regardless of whether that work is performed by the contractor or another person engaged by the contractor to do the work.
2. Having regard to Issue 2, mindful that BP was licensed I am not however satisfied and do not find that the express or implied terms of the BP Contract included:

(1) that BP was to only recommend licensed contractors to be engaged to carry out the building works; or

(2) that BP was to notify the applicant of any reasons why a particular contractor whose quote had been obtained was unsuitable to be selected to carry out building works.

1. Terms to that effect are not in the Estimate or the relevant emails and I am not satisfied that the cross examination evidence referred to by the applicant is clear enough to give rise to the above terms as an oral term. Nor, in my view are they terms that go without saying and are necessary to give business efficacy to the BP Contract.

Issue 3, breach, and sections 7 and 10 of the HB Act

1. It follows that the alleged breaches of those terms identified at 2 (i), (ii), (ii) and (iv) of the Joint Statement of Issues and Issue 3, do not require determination, and the making of recommendations for the provision of quotes for subcontractors or suppliers, including, for example SPD who were unlicensed, would therefore only fall be considered, for example, in the context of whether BP performed its duties with due care and skill.
2. Further in respect of the BP Contract, however it arises and whatever its terms, there is no issue, and I am satisfied and find that, it does not comply with the requirements of s 7 of the HB Act, which include that a contract must be in writing and be dated and signed by or on behalf of each of the parties to it.
3. Relevant to BP's claim for unpaid work is that s 10 of the HB then provides that a person who contracts to do any residential building work, or any specialist work, and who so contracts under a contract to which the requirements of section 7 apply that is not in writing or that does not have sufficient description of the work to which it relates is not entitled to damages or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, and the contract is unenforceable by the person who contracted to do the work.
4. It follows that any claim by BP for money it says it is owed for work performed only be made on a quantum meruit basis.

SPD Contract and Issue 1 as to whether BP was a party to the SPD Contract

1. On 3 April 2024, BP obtained two quotes for the supply and instillation of steel frames and trusses and related work at the Property and emailed them to the applicant.
2. One was a quote from Prime Steel Frames and Trusses with client name "Sam" for the supply and instillation of "frames, joist, yellow tongue, compressed fibro and trusses to main house" and "walls and trusses to granny flat" for $106,755.00.
3. The other was in the form of a document headed "Contract Agreement" from SPD for amongst other items "steel wall frames" and "steel trusses" at the Property identifying the client as "Sam Ouraha" and a price incl GST of "$106,216.00".
4. There is no issue that BP recommended SPD to the applicant at least because SPD's estimate included design.
5. Prime Steel Frames and Trusses were not engaged to do any work, but a revised quotes from SPD were emailed to BP and from BP to the applicant on 11 and 13 April 2023.
6. Following discussions between Mr Saleque (for SPD), the applicant and Mr Ouraha during which the applicant negotiated with Mr Saleque regarding the deposit to be paid, a fourth revised quote for $119,545.00, also in the form of a document headed "Contract Agreement", was emailed to BP and the Applicant on 19 April 2023.
7. As had been the case in the previous quotes, the Client was identified as "Sam Ouraha" and the client email as BP's email address. The email stated: "Hi Sam Best and final quote prepared by our estimator for your perusal."
8. The applicant:

(1) made handwritten amendments, by inserting additional terms identified as A, 1, 2 and 3, and otherwise at clauses 13.2 and 14, to the terms set out in the 19 April quote;

(2) Identified Sam Ouraha as "The Builder" and inserted his name as "the Owner", so that the "Client" was identified as Sam Ouraha, as the builder and Ali Mashat as the owner;

(3) inserted his mobile number and email address; and

(4) on the last page inserted his details as "the Purchaser" and "owner", dated and signed the quote.

1. The applicant then emailed the "signed contract" to SPD's email address and addressed it to "Dear Hardcore Steel Frames and Trusses" stating

1.I have signed the agreement subject to the following:

2.No production is to take place unless both myself and my builder, have agreed and signed off on the shop drawings.

3.There possibly may be some changes to the first floor, and my builder would be in contact with you regarding them. They need to be taken into account and be reflected in the design, i.e., the shop drawings please.

4.Extra support would be needed for the En-suite of the Master Bed Room (1st floor) due to the bathtub. The Bath Tub will most likely be a large bathtub, and support would need to be provided to account for the weight of Water when the bathtub is fully filled with water.

4.Delivery should not take place unless all parties have agreed on a delivery date.

5.Please note that there is no column support in the inner corner of the ground floor Alfresco of the main house (where the two bifold doors meet). Thus, there will be a large span from the Left wall of the Family to the way to the Right wall of the Alfresco - A fully open span, with no walls or columns in between other than the walls clearly shown on the DA plan.

1. The email also noted that it attached Approved DA Plans, window schedule (colour schedule and information) and autoclad files of the plans from the architect and referred to the payment of "the 30% deposit ($35,863.50)" and attached a screen shot of a record of the payment.
2. On 20 April, the applicant also sent three text messages to Sam Ouraha stating:

Please get quote for Slab, I am signing the contract today any delays in delivery as result of my fault will be very expensive for me,

Please get quote for Slab, I am signing the hardcore steel frame and trusses contract today any delays in delivery as result of my fault will be very expensive for me,

I have emailed the signed contract to Hardcore steel and have transferred 30% deposit ($35863.50) screen shot of transfer attached to the email.

I have CC's yourself in the email.

1. Mindful of the dispute between the applicant and Sam Ouraha as to what was discussed before the applicant signed and emailed the SPD Contract, given the lack of any email or text message referring to or conforming what was discussed, I am not satisfied of either the applicant's or Mr Ouraha's version of what was discussed, and I am not satisfied that the handwritten terms were added by the applicant after they were discussed with Mr Ouraha.
2. The dispute between the parties, and identified as Agreed issue 1 is:

(1) whether BP is a party to the SPD Contract, and if so,

(2) does that mean BP is liable for the works carried out by SPD as its subcontractor.

1. Relevant to a consideration of this issue, I have been referred to the following principles by the applicant or BP (noting that SPD agrees with the applicant on this issue), and in respect of which I understand there is no dispute, with the dispute being as to whether and if so, how they apply here:

(1) A contract may be inferred from the acts and conduct of parties as well as or in the absence of their words. The question is whether the conduct of the parties viewed in the light of the surrounding circumstances shows a tacit understanding or agreement:

(2) Acceptance of the terms of a contract may be inferred if there is no actual communication of that acceptance, where the conduct relied upon can be objectively determined to indicate that the party intended to be bound by the contract formed.

(3) Conduct occurring after the date of a contract was allegedly formed by acceptance of an offer is admissible on the question of whether a contract has been formed as alleged.

(4) The terms to a contract should be construed so as to give them the meaning intended by the parties.

(5) Intention is (subject to limited exceptions) determined objectively; what would a reasonable person think was intended by the term. Consistent with other contract law principles, intention of the parties is determined objectively, not by reference to actual subjective intent.

1. The applicant refers to twelve matter in support of its submission that BP is a party to the SPD contract. In summary, the applicant relies on:

(1) the BP contract;

(2) Mr Ouraha's conduct up to 20 April 2023 being consistent with BP being a party to the SPD Contract;

(3) the applicant's name being inserted next to Mr Ouraha's name on the contract and Mr Ouraha's name not being crossed out;

(4) Mr Ouraha not taking issue with being named as a party on the SPD Contract;

(5) SPD emailing Mr Ouraha in July 2023 with revised pricing;

(6) BP being named as an applicant in a claim against SPD;

(7) SPD claiming 10 % on amounts paid to SPD; and that

1. The applicant also submits that in the orthodox way where the SPD's works form part of the building works, SPD would be BP's subcontractor, such that the implied warranties that applied to the work contemplated by the BP Contract would include SPD's work.
2. BP in summary, submits:

(1) that it did not sign the SPD contract;

(2) general discussions between the applicant and Mr Ouraha are irrelevant to the extent that they occurred before the contract was signed;

(3) the applicant took control of negotiations with SPD; and

(4) that the applicant commenced proceedings also naming BP as an applicant.

1. In so far as the applicant seeks to rely on what it refers to as the orthodox way where a homeowner contracts with a builder who then engages subcontractors and is responsible for the work of the builder's subcontractors, in my view, the arrangement between the applicant and BP was anything but orthodox. Two examples being that:

(1) rather than confirming their arrangement in a document signed by the applicant and BP that their arrangement arose from the Estimate and emails exchanged and conversations that took place after the Estimate was sent by BP and

(2) the applicant making handwritten changes to the SPD Contract and then inserting his name as a client and signing the contract.

1. Doing the best I can from the somewhat confusing way the applicant and BP went about formalising there arrangement, in my view , relevant to a consideration of whether BP is a party to the SPD contract, the objective purpose of the BP Contract included for the applicant to have the benefit of BP's license and BP obtaining home warranty insurance and for BP to obtain quotes and recommend contractors and in consultation with the applicant, at least supervise and manage contractors in respect of the performance of their work.
2. As between the applicant, SPD and BP in respect of the SPD Contract and whether BP is a party to the SPD Contract:

(1) Putting to one side that it is only signed by the applicant, on the face of the SPD Contract it is between:

(a) Sam Ourimbah (or possibly BP) as the Builder and [the applicant], as the owner as the Client;

(b) and [SPD].

(2) There is no evidence that Mr Ouraha was shown the handwritten amendments made by the applicant before they were inserted and the signed contract emailed to SPD.

(3) Having said that, no issue was ever taken by BP or Sam Ouraha to Sam Ouraha being named as the "Client" and BP's email address being identified as the "Client Email" on every version of the SPD Agreement, all of which were emailed to Sam Ouraha and BP or the version signed by the applicant which was emailed to SPD and BP;

1. Further, BP's conduct following the making of the SPD Contract included:

(a) arranged for the home warranty insurance certificates which identify work being carried out by "Build Property Pty Ltd" with "License number 361897C" for a contract amounts totalling $1,200,000.00 pursuant to a contract made on 27 March 2023; and

(b) engaging with SPD in respect of revised quote from SPD which it received on 26 July and emailed to the applicant on 27 July;

1. That conduct is consistent with their being a contract between the applicant, BP and SPD.
2. It follows, in my view, that looked at objectively, BP is a party to the SPD Contract.
3. The real difficulty is whether that means that SPD is BP's subcontractor and whether BP is liable for the works carried out by SPD as its subcontractor.
4. Consistent with the approach of BP and the applicant originally being named as the applicant in the claim against SPD, looked at objectively, on the face of the Contract, BP and the applicant are collectively "the Client" or principal.
5. In my view it is therefore not the orthodox builder and subcontractor contract contended for by the applicant.
6. Having said that, the work contemplated by the SPD Contract was part of the work contemplated by the BP Contract, being in respect of "the construction of a New Double Storey dwelling with granny flat" including "4. Frame and LVL" and at some level would therefore be covered by the implied warranties that apply to the BP Contract.
7. In respect of Issue 1:

(1) I am satisfied that BP is a party to the SPD contract;

(2) In so far as BP is a party to the SPD Contract it is collectively with the applicant, the Client or the principal.

(3) BP would be liable for the works carried out by SPD, because that work is part of the work contemplated by the BP Contract and to which the implied warranties apply.

1. Having said that, mindful that for the reasons given below I will be making a work order, the work order will be against SPD as the "the responsible party" in summary, because:

(1) BP and the applicant were collectively the "Client", and the SPD contract was not an orthodox builder and subcontractor contract;

(2) There is no dispute that the defective work is in respect of the instillation of the frames and trusses which BP was contacted to do and is clearly the work of SPD, not SPD and BP; and

(3) s 48MA of the HB Act provides:

A court or tribunal determining a building 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.

Events from the entering of SPD contract on 20 April (including obtaining of a construction certificate, delivery of frames and trusses to the Property in September 2022 and issues regarding delay and defective work) up to the commencement of proceedings in November 2023

1. Following Mr Ouraha text messaging the applicant on 19 April 2023 identifying the premiums payable for home warranty insurance for a contract price of $500,000.00 $800,000.00 and $1,200,000.00 and the applicant informing Mr Ouraha on 11 May that he had made the payments for both (one with a contract price of $900,000.00 and the other $300,000.00), home warranty insurance Certificates of Home Warranty Insurance were issued on 15 May 2023.
2. One was for $900,000.00 and the other for $300,000.00. They include the following information:

Description of construction as advised by builder: Construction of a double storey dwelling with attached secondary dwelling.

Licence number: 361897C

Carried out by: Build Property Pty ltd

Contract date: 27 March 2023.

1. An application for a construction certificate was lodged on 31 July 2023 and a construction certificate obtained on 1 August 2023.
2. Around 18 to 20 September, emails were exchanged between the applicant and SBD regarding shop drawings.
3. The steel frames were delivered to the Property on 27 September 2023 and their installation by SPD or its subcontractors commenced shortly thereafter.
4. On 10 October, the applicant had paid SPD $22,000.00, bringing the total amount paid to $129,727.00.
5. The applicant sent SPD an email following up the progress of the works on 27 October 2023.
6. Following emails from the applicant to SPD on 5 November 2023 complaining about the progress of the works, 6 November 2023 seeking SPD's licence number and insurance details, and between 11 and 14 November complaining about defects and the progress of the works, the applicant filed its application on 16 November 2025.

1. Following the commencement of proceedings, the parties continued to engage with each other regarding the applicant and BP's concerns with delays and defective work in respect of the work to be performed by SPD.
2. Throughout December 2023, emails were exchanged between SPD and the applicant and BP in respect of the quality of the work and delays in relation to the installation of the frames and trusses, including BP providing a list of items to be attended to on 11 December 2023, and the applicant and BP refusing to provide scaffolding until defects in the work performed by SPD had been remedied and because they were of the opinion that scaffolding could not be attached to the frame because the frame was defective and dangerous.
3. On 13 January 2024, the applicant emailed SPD raising concerns of fallen wall frames, giving directions of what rectification work was required, and maintaining that existing defects were to be rectified before scaffolding was to be provided.
4. On 23 February 2024, the applicant's then solicitor wrote to BP and SPD attaching an engineering report, directing BP and SPD to remedy alleged breaches of their respective contracts and claiming an entitlement for the applicant to terminate "the Contract".
5. BP's solicitor responded on 4 March 2024 contending that BP was ready, willing and able to continue its work under the BP Contract and suggesting the SBP Contract be terminated.
6. BP's director (later amended to BP) was joined as a party to the applicant's claim in February 2024.

Issue 4 Whether the appropriate rectification is to remedy in situ or remove and replace the frames and trusses

1. The applicant seeks damages for defective work or in the alternative an order that SPD and BP rectify the defective work.
2. In relation to the identification of defects and the appropriate rectification work, the parties relied on competing engineering experts.
3. The applicant relied on the evidence of Mr Prasad and SPD on the evidence of Mr Nguyen.
4. In his report dated 5 June, Mr Prasad identified a significant number of defects with the frames and trusses installed by SPD and stated that because of "excessive defects", "damages to the steel frame" and "how widespread the issues are", he recommends "a complete demolish and rebuild of the steel frame". He then attaches "Appendix D - Scott Schedule" in which he identifies the work required for the removal of the steel framing and then the design, supply and instillation of new steel framing and estimates the cost of the work at $283,708.00.
5. A supplementary report by Mr Prasad dated 6 November 2024, which was in response to a report of Mr Ha Nguyen of Halina Engineers (for SPD), in which Mr Prasad identified an alternative scope of work that involved the removal and / or repair of identified defects, which Mr Prasad said was more labour intensive and required strict supervision. In the "Alternative Scott Schedule" attached to the report he provided an alternative scope of work and cost of $191,698.00.
6. That alternative scope was repeated in a "Conclave Report" written by Mr Prasad and dated 17 February 2024.
7. The report of Mr Nguyen, for SPD, was dated 29 August 2024. Mr Nguyen's report had 87 photos of issues with the frame and trusses and provided his responses / comments in respect of each item. His report did not include an itemised scope of work and costing in a Scott Schedule format.
8. At the hearing:

(1) Mr Prasad gave evidence to the effect that in his view the most appropriate scope of work, because of how widespread the defects were and their number, was that the existing structure be removed and the frames and trusses re- engineered and then installed;

(2) In respect of one of the more significant defects, being gaps at the bottom of studs and widespread defects:

(a) Mr Prasad suggested an in situ repair involving putting another vertical stud back to back;

(b) Mr Nguyen gave evidence to the effect that that would not work and recommended using angle brackets;

(c) Mr Prasad then gave evidence to the effect that Mr Nguyen's proposal would not work.

1. The effect being, that both experts were of the opinion that the defects could be remedied on site but disagreed with each other's method of dealing with gaps at the bottom of studs to the extent that they each were of the view that the others proposal would not work.
2. In its closing submission:

(1) The applicant submits that the appropriate rectification work is the removal and replacement as first proposed by Mr Prasad and that any damages ordered, if that was the appropriate rectification work, should be $283,708.00.

(2) SPD does not rely on a scope of work proposed by Mr Nguyen including in respect of dealing with gaps at the bottom of studs, and submits that the appropriate rectification work is the scope of work identified in Mr Prasad's 6 November 2024 report for an in situ repair and that any damages ordered, if that was the appropriate rectification work, should be $138,294.63, being Mr Prasad's calculations but reducing the amount for engineering inspections from $24,000.00 to $6,000.00 and reducing the amount for accidental damages of 40% ($40,216.00) to 10% ($11,425.49).

1. Although Mr Prasad was of the view that a repair could be performed on site subject to strict supervision and quality control procedures with additional engineering inspections, as noted above he maintained at the hearing that in his opinion the preferred rectification was complete removal of the frames and trusses and the instillation of new steel framework.
2. His reasons for that included

(1) the number and extent of defects, some of which he describes as major,

(2) the alternative in situ rectification assumes that the high level of skill required and a lot of supervision can be obtained; and

(3) framing and roof trusses will have to be removed in any event so that particle board flooring that has been damaged by exposure to the weather can be removed with that involving a risk of damage to those frames and trusses.

(1) Both the applicant and SPD ultimately relied on a scope of work proposed by Mr Prasad and Mr Prasad's reasoned preferred rectification was the removal and replacement of the steel frames and trusses;

(2) Mr Prasad and Mr Nguyen were in disagreement as to how the widespread defect of gaps at the bottom of studs could be rectified;

(3) There is a likelihood of further damage to the frames and issues that are required to be removed to remove the damaged flooring board;

(4) Mr Prasad's opinion, which I accept is that the rectification in situ will require a high degree of skill and supervising, and there was no evidence of any contractors will to take on the task;

(5) The extra cost is not so much more than the estimated cost of trying to repair the frames such that it could be considered prohibitively expensive or unreasonable;

(6) The framing is required for a new house;

in my view the reasonable and appropriate rectification is the removal and replacement of the framing as provided for in the Scott Schedule at Appendix D of Mr Prasad's 5 June 2024 Report (JB p 1299 & 1300).

1. In the absence of any evidence to the contrary I also accept Mr Prasad's evidence as to the cost of that work and find that the reasonable cost of the rectification work is $283,708.00.

Issue 5 Is the applicant entitled to damages for defective work as against BP and / or SPD, and if so, what damages? &

Issue 6 Should the Tribunal make a money order or work order in respect of the defects?

1. In so far as whether a work order or a money order is concerned, the issues are, firstly, whether the SPD contract (or for that matter the BP contract) has been terminated and if not, is it open to the applicant to claim damages and secondly, if it is, mindful of s 48 MA of the HB Act, should a work order or a money order ne made.
2. Given that the parties continued to communicate with each other in attempting to have SPD return to perform work after the proceedings had been commenced, that the applicant, in correspondence from his then solicitors in February 2024 asserted an entitlement to termination, but there is no evidence of the SPD Contract or the BP Contract having been terminated, I am not satisfied that the SPD Contract or the BP Contracts have been terminated
3. On my reading of how this Tribunal has applied Brewarrina, where breaches of warranties implied by s 18 B of the HB Act are concerned:

(1) The general principle is to the effect that while the contract remains on foot, it is open to the builder to rectify any defect, at least as long as the owner maintains that practical completion has not been achieved, with the consequence that an entitlement to damages has not yet accrued.

(2) That principle can have no application to a claim seeking orders that a building contractor perform work required to be undertaken by the terms of a building contract, or, in relation to work governed by the HBA, to a claim pursuant to s 48O(1)(c) of the HBA for orders that the builder carry out work. ....

(3) Neither the statement of principle set out in Brewarrina Council nor the logic underlying that principle precludes the Tribunal from determining a claim for work orders pursuant to s 48O(1)(c) of the HBA while the contract remains on foot. Little v J & K Homes Pty Ltd [2017] NSWCATAP 84 (21 April 2017) (Little) at [11].

(4) Where damages are sought for delay and defective work, until such time as the contract was terminated, such an order, other than the payment of damages for delay, was not open. Little at [23].

1. I therefore find that the contract remains on foot and that it is not open for the applicant to claim damages for defective work.
2. Even if it were, because the proposed rectification work is to be performed by appropriate licensed contractors supervised by an engineer nominated by the applicant, with the applicant not directly performing the work, SPD has some familiarity with the site and the plans and there is no reason for the applicant and SPD to deal with each other whilst the works are performed, I would propose, in any event, to follow the preferred course provided for in s 48MA and make a work order.
3. An issue then arises as to whether a work order ought to be made against BP, or SPD or both BP and SPD.
4. The parties did not refer any authorities relevant to the resolution of that issue.
5. In Leung v Alexakis [2018] NSWCATAP 11 (5 January 2018) the Appeal Panel considered s 48MA and s 49O of the HBA in the context of an owner builder who did not actually perform the relevant defective work. The Appeal Panel:

(1) At [108], did not accept that the context in which the word 'party' is used in s48 MA, other than as noted in the section, is limited to cases where the party is the holder of a contractor licence, or that the form of order is limited to an order in terms that the responsible person do any rectification work personally.

(2) At [109], said that Section 48MA requires preference be given to orders requiring rectification by a responsible party of defective residential building work.

(3) Referred to the power to make the work orders found in s 48O of the HB Act, which states:

(1) In determining a building claim, the Tribunal is empowered to make one or more of the following orders as it considers appropriate:

...

(c) an order that a party to the proceedings:

(i) do any specified work or perform any specified service or any obligation arising under this Act or the terms of any agreement, or

(ii) do or perform, or refrain from doing or performing, any specified act, matter or thing.

(2) The Tribunal can make an order even if it is not the order that the applicant asked for.

(4) At [111] and [112], found that the powers are cast in wide terms, not limited to ordering a party to perform a contractual obligation or to do any rectification work personally and would include:

(a) ordering a party who is liable for defective building work to engage another person to perform rectification work and for the party who is liable, to pay for such work, or

(b) to require a party to take steps to cause a subcontractor to carry out rectification work, including any specialist work which may require a particular authority.

(5) At [113] and [114], that there is no reason the power under s 48O should be construed in a manner which confines its scope or to interpret s48MA as having that effect on the general powers and that doing so would mean that anyone who was liable for work of a subcontractor or third party and who had not done the work themselves may be liable to pay compensation, rather than have the benefit of the preferred outcome principle and an order which enabled them to rectify the work at their cost and/or require the subcontractor or third party who had done defective work for the responsible party to return to the site to rectify the defects at no cost to the person who was primarily liable to a homeowner or successor in title.

(6) At [117] and [118], that the expression "work by a party to the proceedings" used in s 48MA concerns work both work done personally or for which the person was responsible.

(7) At [119] and [120] that by its terms, s 48MA makes clear that a court or tribunal in determining a claim for defective work is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome and that liability for defective residential building work can be imposed upon a party by a contract, under common law or by legislation and each of these may give rise to a building claim within the meaning of Part 3A of the HBA.

1. Although the warranties implied by s 18B may make BP responsible for the work SPD contracted with the applicant and BP to perform, in my view. the appropriate order is that the work order be made against SPD because:

(1) SPD's Contract was with the applicant and BP as the Client, and SPD was not BP's subcontractor the orthodox way, but was BP and the applicant's contractor;

(2) both BP, and significantly the applicant were involved in giving direction to SPD;

(3) there is no dispute that the defective work was the work SPD was contracted to performed and which SPD by its subcontractors performed and

(4) that even if an order was made against BP, it would be entitled to require SPD to return to the site to rectify the defects.

(1) Pursuant to Section 48O of the Home Building Act 1989 (NSW) the Tribunal makes the following work order in relation to the performance of remedial work to the Applicant's premises against the Second Respondent, SPD St Mary's Pty Ltd (SPD).

(2) SPD is to arrange for suitably qualified and licensed subcontractors to perform the remedial work identified in the Scott Schedule at Appendix D - pages 62 and 63 of the Report of Mr Prasad of Inhouse Engineers Pty Ltd dated 5 June 2024, (JB 1299 to 1300) (the Scott Schedule) subject to and in accordance with Orders (3) to (8) below (Work).

(3) The Work is to:

(a) be commenced within 1 month of these orders;

(b) be completed within 4 months of these orders;

(c) be undertaken by appropriately licenced and insured subcontractors and tradesman;

(d) be performed with due care and skill; and

(e) comply with, the Building Code of Australia; all relevant codes, standards and specifications; and any other law.

(4) The applicant and SPD are to jointly appoint a supervising engineer to be chosen by the applicant (the Supervisor) to perform the inspections referred to at Item 8 of the Scott Schedule.

(5) The Supervisors costs of and incidental to the inspections required by Item 8 re to be paid by SPD capped at $5000.00.

(6) The parties are at liberty to apply for an extension of the time referred to in order 2, such application to be supported by brief submissions and evidence.

(7) For the avoidance of doubt, SPD is responsible at its cost for the preliminary and miscellaneous works, including "Scaffold" identified at Item 10 of the Scott Schedule.

(8) The applicant is to give reasonable access to the Property to SPD and its contractors so that the Work can be performed.

(9) The applicant has leave to renew these proceedings if order 2 is not complied with within the period specified.

1. Because the proposed order is different to what was proposed by any of the parties, I will give the parties the opportunity to confer for the purpose reaching agreement as to the final form of the Work Order having regard to my findings and failing that to file submissions in support of the final form of the Work Order having regard to these Reasons.

Issue 7 Is the Applicant entitled to delay damages as against BP and / or SPD and if so, has there been a failure to mitigate.

1. The applicant claims delay damages for increased building costs to install the steel frames and trusses and to complete the project, and for loss of rent.
2. In summary, the applicant submits the following:

(1) Because the SPD Contract did not provide a set time it is therefore implied that the works will be performed within a reasonable time.

(2) The unchallenged expert evidence of Mr Moises Lopez in a report dated 21 June 2024 was that a competent contractor would complete the contracted scope of works within three months.

(3) Because the construction certificate was issued on 1 August 2023, the three-month period would ordinarily commence from that date.

(4) Given the tribunal was not in a position to assess conclusively which party was responsible for the delay in the finalisation of shop drawings, a reasonable time to allow for the works to be completed would be to 1 January

(5) SPD and BP should therefore be responsible for damages from that date until three months after the decision in these proceedings on the basis that that will be sufficient time for a new contractor to be engaged to complete the works that SPD were originally contracted to complete.

(6) The applicant's evidence that he intended to rent the house and granny flat out and that he would move in once married should be accepted.

(7) The loss of rent claim should be calculated $1,100.00 per week for the house and $520.00 per week for the granny flat from 1 November 2023, being $101,597.77 to 14 March 2025 and continuing at $231.43 per day.

(8) Relying on the report of Mr Lopez, the delay has resulted in an increase costs of labour and materials for the completion of the building (i.e. the rest of the work) from the original construction programme by $185,049.75.

1. BP opposes the delay damages claim, submitting:

(1) It has no contractual or other liability to the applicant for delay damages.

(2) It has done all in its power to assist the applicant to enforce its contractual rights against SPD and to mitigate its loss.

(3) The evidence as to rental for the granny flat contains assumptions of fact that were not made out on the evidence and is simply speculative.

1. SPD also opposes the applicant's delay damages claim, submitting:

(1) Mr Lopez does not explain why he has estimated the 2023 costs at $1.123 million when the BP Contract estimate was $1,250,000.00 to $1,300,000.00, and mindful that the applicant's case was that there were items missing from the estimate, the true cost would be higher than the estimate.

(2) Mr Lopez and the applicant's claim generally ignores the fact that the contract was costs plus, which are often used because the precise nature and extent of the work is not known and therefore cannot be priced accurately.

(3) The applicant agreed that the Estimate was a guide and that a number of items were missing from the Estimate.

(4) Having regard to the above, the total cost to undertake the work was not known and could fluctuate.

(5) Further, because the works were in their infancy, there were to many variables that would affect identifying the price increases.

(6) The applicant has not discharged the onus of satisfying the Tribunal and the Tribunal would not be satisfied that the applicant intended to rent the house or the granny flat out;

1. Although the contract was a costs plus contract, it was not intended that BP would be paid anything other than the 10 percent on amounts invoiced by contractors, with the applicant being able to:

(1) negotiate with contractors directly;

(2) determine the contractors to be used; and

(3) engage with contractors to obtain invoices and pay them directly.

1. In my view, identifying what the costs would have been and what they may have increased to can only be speculation because:

(1) The BP Contract was a cost plus contract which only included an estimate;

(2) The evidence made clear that there were items missing from the Estimate;

(3) Having regard to, for example the handwritten amendments made by the applicant to the SPD Contract, the exact extent of the work was not known and would be varied; and

(4) The level of active involvement the applicant had in dealing with the contractors with respect to the work completed to date and mindful of the form the BP Contract ultimately took with the applicant being able to change materials or contractors or choose a different item if he didn't like "either the looks / appealingness (sic), Quality or workmanship".

1. In coming to that view, I am mindful of the report of Mr Lopez and the Annexures to that report, and that Mr Lopez was not cross examined and that neither respondent served a responding report, but on my reading of Mr Lopez report I can not see where those matters of concern have been considered.
2. Further, given I am making a work order, any evidence of increased costs for the design, supply and instillation of the structural steel is of no consequence, because SPD will be responsible for whatever the increased cost will be.
3. For the above reasons, I am not satisfied that the applicant has suffered any loss by an increase in the cost to have frames and trusses installed or the house completed.

(1) None of the 25 or 27 March emails of the applicant responding to the Estimate provided by BP make any reference to an intention to rent the house or the granny flat out;

(2) Despite several emails and text messages being exchanged between the applicant and BP or the applicant and SPD following the making of the BP Contract, including up to November and December 2023 when the applicant and BP were raising concerns about delays and defective work by SPD, I have not been taken to:

(a) any email or text message where the applicant indicates an intention to rent out either the house or the granny flat;

(b) any contemporaneous record, consistent with an intention to rent out either the house or the granny flat.

1. I therefore do not accept the applicant's evidence that he intended to rent them out and am not satisfied that the application had any intention to rent out either the house or the granny flat.
2. Having found that I am not satisfied on the evidence that the applicant intended to rent the house or the granny flat out, it follows that the applicant did not inform either BP or SPD of any intention to rent the house or the granny flat out, and mindful that the property was on the face of the evidence to be developed as a residential house with granny flat, I am not satisfied that it was reasonably foreseeable to BP or SPD that if there were any delays in the completion of either the work contemplated by the BP Contract or the SPD Contract that the applicant would suffer a loss of rent.
3. In answer to Issue 7, the applicant is not entitled to any delay damages.

Issue 8 If BP is liable to the applicant, is it entitled to be indemnified by SPD.

1. Because I have determined to make a work order against SPD only and the delay damages claim against BP has not been made out, this issue does not fall to be determined.

Issue 9 Is BP owed any money by the applicant pursuant to the BP Contract or on a quantum meruit basis.

1. By its Amended Points of Claim (Cross Claim), BP claims amounts of:

(1) $2,339.70 incl GST for direct construction costs incurred but not paid for by the applicant;

(2) $7,700.00 pursuant to a separate oral agreement to prepare and lodge a construction certificate;

(3) 10% builder's fee of $29,464.19; and

(4) in the alternative to (1), (2) and (3), $39,503.76 on a quantum meruit basis as the fair value of the work performed.

1. The applicant, as the cross defendant, denies BP's entitlement to the cross claim amounts.
2. In its closing submissions, BP submits to the effect that the entitlement to the amounts claimed is established by the evidence of Mr Ouraha which the Tribunal ought to accept, and evidence given by the applicant in cross examination 'that if BM did its job, it would get its builder's fee and that the defects that exist outweigh what I should be paying him' as establishing an entitlement to the amounts claimed.
3. BP's closing submission do not however identify with any particularity, the evidence in chief relied on to establishes the amounts claim.
4. The applicant submits that none of the amounts claimed arise under a contract that complies with s 7 of the HB Act and that, because of s 10 of the HB Act, BP is limited to a claim in quantum meruit limited to the fair market value of the work it carried out or the value of any benefit the applicant has derived and that the applicant has not established an entitlement to any of the amounts claimed.
5. The evidence of Mr Ouraha in respect of the amounts claimed commences at paragraph [102] of his affidavit.
6. In relation to the claim for $7000.00 claim, the relevant evidence appears to be paragraphs [104], [106] and [107] of Mr Ouraha's affidavit.
7. Although Mr Ouraha asserts the existence of an oral agreement, he does not identify the work performed, or mindful that the claim can only be made on a quantum meruit basis, how $7700.00 is the reasonable value of the work performed.
8. The claim for $7.000.00 is therefore rejected.
9. In relation to the claim for $2,339.70, the relevant evidence appears to be paragraphs [103], [106] and [107] of Mr Ouraha's affidavit.
10. Although Mr Ouraha asserts that he incurred costs during the construction process of $850.00 to hire an excavator, $277.00 for aggregate and hired a skip bin to the applicant for $1000.00, the evidence does not:

(1) identify when the amounts of $850.00 and $277.00 were paid;

(2) mindful that the arrangement ultimately made was for BP to be paid 10% of costs paid by the applicant, identify any basis on which the payment of the costs was incurred;

(3) identify any arrangement or agreement for the hire of the skip bin;

(4) provide any documentary evidence supporting the payment of the costs in relation to the project or the hire of the skip bin; and otherwise

(5) mindful that the claim can only be made on a quantum meruit basis, how the amounts of $850.00, $277.00 or $1000.00 are the reasonable value of t work performed by BP or benefit to the applicant.

1. The claims for $850.00, $277.00 and $1000.00 are therefore rejected.
2. The evidence relevant to the claim for $29,464.19 is at paragraphs [105], [106] and [107] of the affidavit.
3. Mr Ouraha's evidence identifies amounts which he says he understands the applicant has paid and claims "10% Builder's fee per agreement".
4. The difficulty with that evidence, is that Ouraha is not entitled to be paid pursuant to the BP Agreement, although I accept that the fact of the agreement may be relevant to the quantum of quantum meruit claim.
5. The evidence however does not establish by reference to the work performed the reasonable value of that work. It provides a calculation based on the BP Contract which does not comply with s 7 of the HB Act.
6. The claim for $29,464.19 is therefore rejected.

1. I will defer making final orders until the parties have had the opportunity to consider the proposed Work Order, with the intention that save for the making of the Work Order and any costs order, the applications will be otherwise dismissed.

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.