Masterglass Facades Pty Ltd v Pollak - [2017] NSWCATCD 45 - NSWCATCD 2017 case summary — Zoe

NSWNSWCATCD

Masterglass Facades Pty Ltd v Pollak

[2017] NSWCATCD 45

NCAT Consumer and Commercial|2017-04-07|Before: Ian Bailey AM

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At a glance

Source facts

Court

NCAT Consumer and Commercial

Decision date

2017-04-07

Before

Ian Bailey AM

Source

Original judgment source is linked above.

Judgment (21 paragraphs)

[1]

Reasons for Decision

These proceedings involve an application by Masterglass Facades Pty Ltd ("the Applicant"), in proceedings HB 16/49943, for payment by Joseph Pollak ("the Respondent"), of an amount incurred in the supply and installation of large sliding doors to the living room of a penthouse apartment in Potts Point. The amount claimed incudes amounts for both the works identified in the initial quotation and additional costs for variations to the work during the installation of the doors.
There is a cross application by the Respondent, HB 16/53939, seeking damages arising from alleged defects in the design and installation of the sliding doors, which, it is claimed, caused the entry of rainwater during an extreme weather event on 4th and 5th June 2016. There is also an extremely complex defence to the claim including several contentions as to why the Applicant is not entitled to the payment of any amount, including a claim for a refund to the Respondent of an amount paid as a deposit.
The extent to which the parties' contentions were expressed formally was limited, particularly on the part of Applicant. This is possibly due to the straightforward and abbreviated nature of the claim by the Applicant. The Respondent relies upon an extensive Defence and Cross-Claim and lengthy submissions which refer to all of the issues which I have addressed in this decision.
Having regard to the Respondent's defence to the claim under contract, in reliance upon the provisions of the Home Building Act 1989 ("HB Act"), the Applicant seeks recovery on the basis of a quantum meruit in the alternative to the claim based on the contract. The articulation by the Applicant of this alternative basis for the claim was not in terms used by legal practitioners, however it is clear that the Respondent fully understood the legal basis for such an entitlement and the whole range of issues involved.
The parties were self-represented throughout the conduct of the proceedings. At the hearing the Applicant was represented by Mr Adam Punin assisted by Rachel Boone, neither of whom is a legal practitioner and the Respondent appeared in person. There appears to have been no directions for the filing of Points of Claim, Defence and Cross Claim. It is clear, however, that each party fully understood what relief was being sought by the other. I have addressed all issues raised by the parties in the course of the proceedings.

[2]

The Evidence

The parties served bundles of documents which included submissions, or explanations, concerning various aspects of the matters in dispute. These bundles have been given exhibit numbers as noted.
The Applicant's material comprised NCAT File Bundles: 1. Received 2 December 2016 including attachments (Exhibit A1): Submissions (3 pages)Quotation and invoices (10 pages) 1. MBA documents referring to AS 4654 - 2012 (6 pages) 2. Copy of Respondent's Expert Report 3. First Choice (E Bergmann) Report 4. (12 pages) including sketches and explanation of causation and Rainfall and rain reports 5. (9 pages) Test Results from AGS for the sliding doors 6. Extracts from Australian Standards - Windows in Buildings 1. Bundle received 24 March 2017 including mainly repetitive attachments 1-7 (Exhibit A2) 2. Bundle received 3 April 2017 including 6 attachments (Exhibit A3): 1. Summary of events 2. Emails from manufacturers Capral and Alspec 3. Council Traffic documents 4. References 5. Email from Doric 1. Bundle received 6 April 2017 including emails with Respondent's Expert (Exhibit A4)
The Respondent's material comprised NCAT File Bundles: 2. Folder received 14 March 2017 including Chronology, Statutory Declaration, Expert Report from Dan Drexler dated 4 July 2016, along with emails between parties (Exhibit R1) 4. Statutory Declaration of Paul Haddad (Exhibit R2)
The parties also provided further documents, including written submissions, on 13 April 2017. The Applicant included evidence as to the fact that the glass installed was 10.38mm Clear Energy Advantage Laminate, as required by the contract. The Respondent's additional material comprised submissions.
The Respondent in his post-hearing submissions raised a new or alternative basis for a claim concerning the standard packing, see [128-129] included in the installation of a door handle. This issue and explanation was referred to in the email from Doric, 10(15). I do not consider that this new or alternative basis for a complaint about the door handle should be considered at this late stage. Mr Punin gave evidence that samples of door handles were provided and that the Respondent requested that they be finished with matching powder-coating. Further the Claimant has not had an opportunity to respond.
The following documents, primarily extracted by me from the parties' bundles, were separately marked on the understanding that they were relevant to determination of the design, installation and water penetration issues: Documents - Applicant / Cross-respondent Exhibit MG/1 - Annotated external photograph of the sill showing the location of weepholes at the same level as external tiling and providing an explanation of the breaches of th Exhibit MG/2 - Explanatory Note as to the requirements of AS 4654 -2012 for the distance between the top of a sill and the external floor finish, referred to as the Vertical Upward Termination. Exhibit MG/3 - Annotated copy of a Catalogue drawing of the sill identifying the breaches of AS 4654 -2012. Exhibit MG/4 - 2 sketches prepared by the Applicant illustrating first how the tiling installation should have been installed and how drainage should have been able to occur, and secondly the consequences for drainage from the sill of the manner, and level at which, tiling has been installed, and an annotated photograph external view of sill. undefined Exhibit MG/5 - Copy of catalogue horizontal section configuration of doors. Exhibit MG/6 - Letter / Report from First Choice Building & Maintenance Pty Ltd, Mr E Bergman. Documents - Respondent / Cross Applicant Exhibit JP/1 - Report of NSW Master Buildering Inspectors, Mr Drexler. Exhibit JP/2 - Statutory declaration of Respondent. Exhibit JP/3 - Statutory Declaration of Paul Haddad. Exhibit JP/4 - Materials from tabs 3, 4, 5, and 6 of Exhibit R1.

[3]

Design and Installation of the Sliding Doors

The sliding doors were described in the Applicant's Quotation dated 11 March 2015 (the Quotation) as being for the: Supply and Fit:

2 x Sliding Doors - 889 Capral Aluminium System
Fitted with Sub-head, Sub-sill or angle trims as required
150mm frame allowing 2 sliding panels - Color - Silver Kintec Pearl
Glass - 10.38 Low E Laminate Safety A Grade Glass
Aluminium Suites supplied by MasterGlass are the maximum quality currently available therefore offering the highest standard in Noise Acoustic and Weather Control [A diagram disclosed that there were two sliding and one fixed panel.] NOTE: All products adhere to current Nathers testing/Wers Ratings. Also allowed in quote:
Total Supply and Installation of Commercial Glazing Package
Works to comply with relevant codes: AS 2047 Aluminium AS 1170.1 AS 1170.2 SAA Loading Code AS 1288 Glazing
Coordination of installation & materials handling
Concealed fixing details Note: Windows, doors must be installed prior to finish of surfaces
Protection of window frame prior to glazing (if applicable)
A 15% cancellation fee
A 50% deposit payable to commence works

The installation was for a commercial grade product, involving 10.38mm thick laminated glass, rather than to a domestic, or residential, standard. The substantial renovation of the Respondent's penthouse was being undertaken by Metrick Construction Group, the principal contractor for all work undertaken including the work undertaken by the Applicant (the Contractor).
The Applicant advised the Respondent that it preferred to contract directly with the Respondent rather than as a subcontractor to the Contractor. The Applicant was, however, to coordinate the performance of the sliding door works with the Contractor. The renovation work was in progress prior to the Applicant's involvement. In these circumstances the Contractor would have been required to have in place a policy of insurance under Part 6 of the HB Act for all work undertaken. There was no evidence as to whether such a policy was in place. It is understood that the contract for the renovation of the penthouse would not be exempt from Part 6 of the HB Act under clause 56 of the Home Building Regulation 2014. This follows from the fact that although the contract concerns a multi-storey building, the work does not involve the "construction" of a building but merely the modification of an existing building.
Prior to submitting the quotation the Applicant advised the Respondent that, contrary to his desire to have the internal floor finish and the external balcony finish at the same level, without a step, it would be necessary to install a waterproofed hob under the sliding doors. The Respondent accepted this advice and instructed the Contractor to install a hob to the dimensions advised by the Applicant and to have waterproofing applied to the hob to prevent water entering the interior under the hob.
At no time was the Applicant informed that it was the Respondent's intention to have tiles installed to the balcony, so as to avoid a step from the balcony outside into the unit, and for the tiles to be located above the bottom of the outer face of the sub-sill, and it would seem also above the level of the hob.
The Contractor installed the hob and states that waterproofing was installed. Apparently the Contractor also installed the tiles to the balcony at a height that is above the toe of the approximately 40mm high external face of the sub-sill installed by the Applicant and, it would seem, also above the level of the top of the hob.
The works installed by the Contractor are required to comply with the Building Code of Australia (BCA).
The design and installation of waterproofing of above ground installations, such as balconies, is addressed in AS 4654-2012 Part 2 (the Standard). The Standard applies by reason of its adoption in the Deemed to Satisfy Provisions in Part F1 of the BCA since 2013.
The Standard refers to two elements involved in the design of waterproofing systems for openings in buildings, being a sub-sill flashing or profile, and a sill section above the sub-sill.
As is clear from the terms of the Standard, the critical element in the design of waterproofing systems by way of flashings, or as in this case the aluminium profiles, is the distance from the upper level of the flashing system, (top of the sill - internally) to the level of the external finished floor level. This distance is dependent upon the relevant wind class for the location of the installation, as set out In Table A1 of Appendix A to the Standard.
Table A1 sets the required height, or Vertical Upward Termination as referred to in the Standard, for an installation across an external opening, such as applies in this case as 100mm. The actual height, as constructed by the Contractor is only approximately 35mm.
There are numerous diagrams in the Standard which make it relatively clear that, when a sill flashing system and external floor finishes are being considered, that apart from identifying the distance required by Table A1, it is also necessary to provide a 10mm gap between the bottom of the external face of the sub-sill flashing and the external floor finish.

[5]

The Report of Mr Drexler

Apart from reporting on miscellaneous defects in the installation, Mr Drexler addressed the issue of water penetration by only referring to the General Provisions in Part F1 "Damp and Weatherproofing" of the BCA. There is no reference to the Standard. Further there is no analysis, at all, of the alternative hypotheses for the cause of the water penetration.
I note that Clause F 1.4 of the Deemed to Satisfy provisions within the BCA, which was not referred to by Mr Drexler, states: F1.4 External above ground membranes Waterproofing membranes for external above ground use must comply with AS 4654 Parts 1 and 2.
The absence of a reference by Mr Drexler to the Standard is alarming having regard to the adoption and application of it in the BCA along with the extensive material published by the Master Builders Association, an example of which is the 14 page presentation on External Waterproofing included in the Applicant's materials, the last page of which states a clear and pertinent warning: Where a step down or a hob are not possible: A gutter should be formed into the substrate directly in front of the opening.
It is also surprising that Mr Drexler has not given any consideration to the explanations by the Applicant as to the application of the Standard and its relevance to the main technical issue in these proceedings.
The totality of the analysis by Mr Drexler of the critical issue is exposed only in Part 2.1.3.5 of the Report in the following terms: I observed that a standard aluminium sill has been installed at the base of the aluminium doors instead of a high rise sill to prevent water seepage through the aluminium doors and into the living room of the Unit…which is in a high wind area.
This observation is devoid of expert reasoning and is of little, if no, evidentiary value. It seems to assume that the water penetration occurred above the sill rather than above the sub-sill.
This proposition also ignores what appears to be the obvious means by which water might have entered as a result of the restriction upon the capacity of the system to drain from the sub-sill caused by the location and height of the tiling. Examination of Annexure A provides some explanation of this aspect.
I conclude that the proposal by Mr Drexler that the sill rather than the sub-sill might be replaced suggests to me that his 'specialised knowledge' does not extend to the design of water proofing for aluminium sliding doors across openings in buildings.
It is regrettable that the Respondent has placed so much reliance upon and faith in, the accuracy of this limited and unreasoned analysis.

[7]

Consideration of the Preliminary Question

The unit concerned is on the eighth or top floor of the building and is exposed to the North overlooking Sydney Harbour in, as the Respondent submitted, "a high wind area".
The meteorological records included in the Applicant's material indicate the following conditions on the relevant days: Rainfall 89mm on 4th June and 125.8mm on 5th June Wind Gusts to 89kph on 4th June and 96kph on 5th June.
By any measure, a severe storm event. The Australian Window Association Table of Static Pressures, included in the Applicant's materials, suggests that wind of 90 -100kph may generate pressures of approximately 400 Pa upon the façade. The obvious conclusion is that any construction across an opening in a building above ground level must be able to resist such an external pressure. This necessarily involves compliance with the Standard.
Annexure A includes the information contained in the Applicant's materials as to the aluminium profiles of the sill and sub-sill and also identifies the uncontroversial location of the hob and external tiling on the balcony.
This diagram also identifies the distance of 100mm required by AS 4654.2 from the top of the sill to the finished external floor level. Having regard to the suggestion in the Standard, referred to in par [25], that a 10mm gap ought to be provided from the bottom of the outer face of the sub-sill flashing to the finished external floor finish, it is clear to the Tribunal that the highest level at which the external tiling should have been laid in accordance with the Standard is that marked Level C in the diagram.
A straightforward reading of the diagram and the Standard establishes that the installation by the Contractor of the floor tiles such that they are level with the tray of the sub-sill is clearly in breach of AS 4654.2.
The Applicant has explained in many communications with the Respondent and to the Tribunal that the problem with the installation, as completed by the Contractor, is precisely the issue identified in [47-48].
Mr Punin explained, in his correspondence with the Respondent and in the course of the Hearing that the purpose of including the vertical front face of the sub-sill is to ensure that rainwater from within the sub-sill can drain out and down from the sub-sill tray. He further explained that by installing the tiles at the same level as the tray of the sub-sill, the drainage from the weepholes can be restricted in extreme conditions of rain and wind at the sub-sill located to the right of A in Annexure A. This proposition is easily understood and does not need to be established by the application of specialised knowledge.
The explanations by Mr Punin, in my view, do not offend the rules restricting the admissibility of opinion evidence because they are a reflection of common-sense. Much of the explanation by Mr Punin is reflected in the literature published by the Master Builders Association, included in the Applicant's materials, and in the Standard itself.
One issue raised by the Respondent was an allegation that the glass installed was not 10.38mm thick Low E Laminate Safety Glass. The Applicant provided evidence from the supplier indicating that the glass installed by the Applicant was compliant. I am satisfied that this allegation is incorrect.

[8]

The Report of Mr Bergman

Mr Bergman refers to the issue identified at [47-48] in the following terms: The observation made appears to be that the balcony floor tile height is too high & too close to the doors weepholes. This may allow (in) certain weather conditions to have rain water back track through the sub-sill.
This observation is understandable without the application of specialised knowledge. It is also relevant to the consideration by me of whether the water penetration occurred as a consequence of a breach by the Contractor to ensure compliance with the Standard. The breach is in failing to provide the required Vertical Upward Termination, required by the Standard, and as identified in Annexure A. The Tribunal considers that the breach is obvious.
I conclude that the sole reason for the water penetration which occurred on 4 and 5 June 2016 was the breach by the Contractor of AS 4654.2 identified at [46 and 47] above.
The Applicant provided, within its material, copies of test results conducted by AGS for the Capral 889 Sliding door with a Standard Sill, which indicate that the system prevents water penetration under a pressure of 450 Pa. The pressure during the storm event (see [44] above) appears to have been less than the pressure under the test by AGS. This suggests that if the installation of the sliding doors had been completed as designed, and in compliance the Standard, then it would not have allowed water to penetrate under the known storm conditions.
It follows, and I so conclude, that the sliding doors provided by the Applicant would have been able to resist water penetration in the storm event on 4 and 5 June 2016 if the installation completed by the Contractor had complied with the Standard. Further I conclude that water penetration would not have occurred had the external tiling not been installed at the same level as the weepholes in the Sill and had been actually installed no higher than Level C, as shown on Annexure A.
Further, I conclude that the Respondent's contentions as to the inherent unsuitability of the sliding doors supplied and installed by the Applicant are simply incorrect and appear to have been based on the inadequate and incomplete advice of Mr Drexler and an unreasoned assertion by Mr Haddad.
The exclusion of the "advice" by Mr Drexler and the "assertion" by Mr Haddad means that there is no evidence that there are major defects in the design and installation of the sliding doors provided by the Applicant.
I conclude, accordingly, that there are no defects in the design and installation of the sliding doors provided by the Applicant. I will deal with the remaining claims by the Respondent and the minor items of alleged defective or incomplete work at [126 - 138].

[11]

Other Claims as to Alleged Defective Design and Installation

I understand that in addition to the Respondent's claim for the costs of rectification based on Mr Drexler's Report, the Respondent also contends that he is entitled to a refund of the amount paid to the Applicant as a deposit. This right is said to be by way of restitution, and further by reason of an accumulation of allegations of breaches of the HB Act and an alleged misrepresentation by the Applicant as to the quality of the sliding doors.
Dealing first with the issue of the alleged misrepresentation as to quality, the Quotation included a statement: Aluminium Suites supplied by MasterGlass are the maximum quality currently available therefore offering the highest standard in Noise Acoustic and Weather Control.
The claim for a refund by way of restitution appears to be based first, on the basis of a general alleged misrepresentation as to the quality of the sliding doors in the statement in the quotation. This aspect of the defence is based upon the same arguments relied upon in support of the Respondent's claim for damages for the cost of rectification. In light of my finding that there are no major defects in the design and installation, this aspect of the defence and cross-claim fails.
The second basis upon which the Respondent asserts that the sliding doors are defective, or not fit for purpose, is because Capral Ltd, the manufacturer of the extruded aluminium components which are used in the fabrication of the Capral 889 series of sliding doors, has discontinued manufacture of that series and promotes a new series Capral 900.
The Applicant explained that the extruded sections, based on the Capral 889 design are also manufactured by Alspec Aluminium Services, a manufacturer of extruded profiles. The Applicant's documents include numerous copies of pages from an Alspec catalogue of extruded sections which are identical to the Capral profiles. The extruded sections are used by fabricators, such as the Applicant, to construct sliding doors.
The Respondent contends that it follows from the advice that the Capral 889 series is being discontinued and a new series is being promoted that the 889 series is deficient and of some inferior quality. First, the Tribunal understands that manufacturers of many components go through processes of continuing refinement, design and development. The Tribunal does not accept that this advice permits a leap in reasoning to conclude that the earlier designs were defective or that the new range is superior in performance. Any such assertion would require some reasoned comparison on a wide range of relevant criteria.
To succeed in such an assertion it would require evidence of the differences and proof that there was in fact some material inadequacy in the sliding doors provided by the Applicant.
As noted the Respondent relies upon the words in the quotation set out in [65] above. If the Respondent wished to establish a breach on the part of the Applicant based on some misrepresentation, in the words used, then it would also require at least some evidence that the quality of the sliding doors provided was, in some relevant way, inadequate.
It seems to me that the Respondent, having accepted the clearly inadequate and incorrect advice of Mr Drexler, has developed a conviction and misplaced confidence, particularly as to his legal entitlement on the basis of that advice.
The defence by the Respondent based on misrepresentation, including the claim for a refund, fails for lack of evidence and the absence of a legally coherent cause of action.

[12]

Defence in Reliance upon Home Building Act Breaches

The contract between the parties was only for the supply and installation of very large aluminium framed sliding doors on the eighth floor of an existing multi-storey residential flat building. The work was carried out in association with a contract between the Respondent and the Contractor, who as the principal contractor, was responsible for the co-ordination of all works involved in the substantial renovation of the apartment. The contract between the parties included the removal of the existing windows.
The definition of the work under the contract is set out in the Quotation in [14] above. The Tribunal considers that the definition of the scope, quality and cost of the work is clear and comprehensive. The precise dimensions were to be determined by measurements on site. The relevant applicable Standards for the work were identified. There were no drawings as none were necessary. There was no Specification because none was necessary, the details of the Capral 889 series sliding doors being embedded in the product description and the manufacturer's detailed documentation.
The Respondent has raised many breaches of the HB Act as part of the defence to the Applicant's claim for payment. The approach seems to reflect the belief on the part of the Respondent that there are serious deficiencies in the design and installation of the sliding doors. Many of the items raised have no consequence and in the circumstances do not seem to be relevant, or could not lead to any consequent relief. This comment applies particularly to the alleged breaches of section 7 of the HBA. The Tribunal does not accept that the homeowner consumer protection provisions of section 7 are all applicable to a contract for the supply and installation of aluminium framed sliding doors to a penthouse. As found at [75] the contract does include a clear and sufficient definition of the work involved.
The two important aspects of non-compliance with the HB Act which have been extensively referred to by the Respondent are the fact that the Applicant does not have a licence (in breach Section 4) and that the Applicant did not have in place an insurance policy as required under Part 6.
These breaches are addressed in Sections 10 and 94 of the HB Act respectively. The important consequence of these provisions, and the judicial consideration of them, is that a contractor in default may be entitled to recover on the basis of a quantum meruit notwithstanding their breach.
Sections 10 relevantly provides: 10 Enforceability of contracts and other rights (1) A person who contracts to do any residential building work, or any specialist work, and who so contracts: (a) in contravention of section 4 (Unlicensed contracting, or… (b) 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 (not being a contract entered into in the circumstances described in section 6 (2)), or (c) in contravention of any other provision of this Act or the regulations that is prescribed for the purposes of this paragraph, 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. However, the person is liable for damages and subject to any other remedy in respect of a breach of the contract committed by the person.
At [76] above I addressed the allegations by the Respondent as to the non-compliance of the contract with the provisions of Section 7 of the HB Act and concluded, effectively, that there was no relevant breach. Accordingly the application of section 10(1)(b) does not arise.
The Applicant, however, does not have a licence and accordingly incurs the consequence within section 10 of being unable to recover payment by an action based on the contract. Nevertheless it is clear that the right of an unlicensed contractor to recover under a contractual claim does not preclude recovery on the basis of a quantum meruit for work performed under the contract as held in Lee Gleeson Pty Ltd v Stirling Estates Pty Ltd (1991) 23 NSWLR 571 and in O'Connor v LEAW Pty Ltd (1997) 42 NSWLR 285 in which Rolfe J stated: The prohibition is against the recovery of damages or the enforcement of any other remedy "in respect of a breach of the contract". The remedy to which reference is being made is a remedy additional to or alternative to the remedy of recovering damages. It is the ultimate legal or equitable sanction to which the builder is entitled "in respect of a breach of contract". …. Pavey decides that the remedy is not dependent on there being a breach of contract and, therefore, a claim based on quantum meruit is not a remedy "in respect of a breach of the contract.
The reference to Pavey was a reference to the decision of the High Court in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221. In that case, at 257, Deane J referred to "an obligation to pay a reasonable remuneration or compensation for a benefit actually or constructively accepted". See also Urban Constructions (NSW) Ltd v Brett and Bronwyn Shearer [2015] NSWCATCD 9; Eden Constructions Pty Ltd v Grigor [2016] NSWCATAP 182; Jason and Michelle Zammit (t/as Zammit Quality Constructions) v Soul Markunsky and Shereen Markunsky [2015] NSWCATCD 21; and Lauer v Comer (No 2) [2016] NSWCATAP 158.
The issue of how the "reasonable remuneration or compensation" is assessed in a legally principled manner is addressed below.
Section 94 relevantly provides: 94 Effect of failure to insure residential building work (1) If a contract of insurance required by section 92 is not in force, in the name of the person who contracted to do the work, in relation to any residential building work done under a contract (the "uninsured work" ), the contractor who did the work: (a) 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, in relation to that work, and (b) is not entitled to recover money in respect of that work under any other right of action (including a quantum meruit). (1A) Despite section 92 (2) and subsection (1), if a court or tribunal considers it just and equitable, the contractor, despite the absence of the required contract of insurance, is entitled to recover money in respect of that work on a quantum meruit basis… (1B) A contractor who applies to a court or tribunal for a remedy under this section, or who is awarded money under this section, is not guilty of an offence under section 92 (2) by virtue only of that fact. (1C) Without limiting the factors that a court or tribunal may consider in deciding what is just and equitable under subsection (1A): (a) in relation to any contract - the court or tribunal may have regard to the impact on the resale price of the property if no contract of insurance is provided, and (b) in relation only to a contract entered into before 30 July 1999 - the court or tribunal is not to be limited by the fact that the required contract of insurance was not obtained until after the date of the contract. (2) However, the contractor remains liable for damages and subject to any other remedy in respect of any breach of the contract committed by the contractor. (3) Residential building work that is uninsured work at the time the work is done ceases to be uninsured work for the purposes of this section if the required contract of insurance for the work is subsequently obtained. Note: If a contract of insurance is in force in relation to part of the residential building work, this section applies only in relation to the part of the work that is not insured.
The remedial relief for a contractor when there has been a failure to have in place a relevant insurance policy, as stated in subsection 94(1A), permits a recovery on a quantum meruit basis when the court or tribunal considers it just and equitable to do so. This involves a separate step in the consideration of the right to recovery on the alternative basis.
As noted above at [16], there is a possibility that as a consequence of the obligation upon the Contractor to effect the relevant homeowner warranty insurance policy for all the relevant works, in which case the failure of the Applicant to insure would be irrelevant. As noted, there is, however, no evidence on the subject. The probability that such a policy was in place may be a factor in the assessment of whether it is just and equitable that the Applicant recover on a quantum meruit basis.
The Respondent asserts that the Applicant has not formerly sought relief under subsection 94(1B) and accordingly is not entitled to such a remedy. It may be that the Applicant has not expressed a claim specifically under the subsection, however the Tribunal considers that the Applicant has made it very clear that a remedy by way of recovery on a quantum meruit was being sought. It may be that the specific source, or basis, for the remedy was not articulated with precision, nonetheless the Respondent in his submissions has made it very clear that he understood that such a remedy was being sought.
The guiding principle applicable to procedure adopted for the conduct of proceedings in the Tribunal includes in subsection 36(4) of the Civil and Administrative Tribunal Act 2013 (the Act): In addition, the practice and procedure of the Tribunal should be implemented so as to facilitate the resolution of the issues between the parties in such a way that the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings.
The procedure of the Tribunal generally is also addressed in section 38 of the Act which includes in subsection 38(4): The Tribunal is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms.
In the circumstances, and with due regard to the above procedural requirement and guidance, the Tribunal considers that it is quite appropriate that legally principled consideration be given to the remedy which subsection 94(1B) of the HB Act provides. This involves the assessment of whether it is just and equitable that the remedy be applied.
Section 94(1A) of the HB Act was considered by Barrett J in Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprise Pty Ltd [2004] NSWSC 273. At paragraphs 43 - 61 of his judgment, His Honour considered the "just and equitable criterion under section 94(1A)" of the HB Act and the factors bearing upon the just and equitable assessment.
In considering the just and equitable criterion, Barrett J referred to a number of authorities which establish that the words just and equitable are of wide significance. At paragraph 49 of his judgment, Barrett J stated in connection with section 94(1A) of the HB Act: The inquiry directed by the statute is therefore, in effect, whether the surrounding circumstances are such as to justify the creation of a right and an obligation as to the payment of the sum separately determined to represent fair remuneration. The Act, as I see it, does not attempt to control quantification. That is left to the general principle imported by the expression "quantum meruit". The Act is concerned with factors influencing a decision whether, in the particular circumstances in which the court finds the parties, it is fair that one receive the quantum meruit sum and the other pay it.
In Pender v Robwenphi Pty Limited & Anor [2008] NSWSC 1144, Hall J referred to the decision of Barrett J in Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprise Pty Ltd: In relation to the analysis undertaken by Barrett J in Eddy Lau Constructions (supra), the following propositions may be derived from the judgment:- (1) The words "just and equitable" are of the widest significance and involve evaluations of questions of fact. (2) In exercising the wide discretion under the provision, a Court or Tribunal is to have regard to considerations affecting the particular transaction as are material to the decision to be made. Irrelevant matters are those that have no rational connection with the policy of the statutory requirement. (3) The statutory discretion under s.94(1A) must be exercised judicially in light of the whole of the circumstances surrounding the relevant subject matter. (4) Inquiry is directed to ascertaining whether the surrounding circumstances are such as to justify the creation of a right and an obligation as to the payment of the sum separately determined to represent fair remuneration. (5) The Act is concerned with factors influencing a decision whether, in the particular circumstances in which the Court finds the parties, it is fair that one receive the quantum meruit sum and the other pay it. It is apparent from the analysis by Barrett J in Eddy Lau Constructions (supra) that the conduct of the party in breach is an important matter for consideration. In that respect, ignorance or oversight of the statutory requirement under the Act stands in marked contrast to a contravention that is wilful or deliberate. In the present case, the determination of the Tribunal was, in effect, that the first defendant's contravention was an inadvertent one, it being a company accustomed to undertaking commercial and industrial work and not home building or renovation work. The Tribunal accepted, as it was entitled to, the evidence given which explained the first defendant's ignorance or inadvertence. These were matters of fact for the Tribunal's determination. In the circumstances of the present matter, on the evidence there was no identification of any particular form of disqualifying conduct by or on behalf of the first defendant that was material to be taken into account in determining what was "just and equitable". The Tribunal was also entitled to have regard, as Barrett J did in Eddy Lau Constructions (supra) to the fact that, if the first defendant was not granted relief under s.94(1A), the plaintiff would receive the benefit of the work undertaken by the first defendant without having to pay for that work and for the materials supplied. I will return to this issue of "benefit" below. Finally, there was no factor establish(ed) that resulted in any detriment flowing to the plaintiff by reason of the particular breaches or contraventions by the first defendant. Again, such matters involve a factual determination for the Tribunal.
In the present case the Tribunal has concluded that there are no significant defects in the design and installation of the sliding doors provided by the Applicant. This simple reality is a significant consideration in assessing whether it is just and equitable that the remedy under subsection 94(1B) of the HB Act be allowed.
It follows, even in the absence of evidence on the subject, that it is realistic to accept, for the purpose of the factor referred to in subsection 94(1C) of the HB Act, that there has been no impact upon the resale value of the Respondent's property.
The significance of the extent of any defective work and materials was considered by Barrett J in Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprise Pty Ltd as cited earlier in these reasons at [86], namely: The inquiry directed by the statute is therefore, in effect, whether the surrounding circumstances are such as to justify the creation of a right and an obligation as to the payment of the sum separately determined to represent fair remuneration. The Act, as I see it, does not attempt to control quantification. That is left to the general principle imported by the expression "quantum meruit". The Act is concerned with factors influencing a decision whether, in the particular circumstances in which the court finds the parties, it is fair that one receive the quantum meruit sum and the other pay it.
In Pender v Robwenphi Pty Limited & Anor Hall J. stated: The Tribunal was also entitled to have regard, as Barrett J did in Eddy Lau Constructions (supra) to the fact that, if the first defendant was not granted relief under s.94(1A), the plaintiff would receive the benefit of the work undertaken by the first defendant without having to pay for that work and for the materials supplied.
This application of justice as between the parties is a compelling factor to be taken into account when deciding whether it is just and equitable for the Applicant to recover on a quantum meruit basis.
I conclude that in the circumstances which prevail in these proceedings, it is just and equitable that the Applicant recover on the basis of a quantum meruit. The finding by me that there are no major defects in the design and installation of the sliding doors provided by the Applicant is compelling.

[13]

Assessment of the Quantum Meruit

The issue of how the reasonable compensation is to be assessed was considered by Bryne J in Brenner v First Artists' Management Pty Ltd [1993] 2 VR 221 and summarised in Dorter & Sharkey, Building and Construction Contracts in Australia, Second Edition as setting out the following principles: 1. The court's task is not to assess damages for breach of contract, but to ascertain what is fair and reasonable compensation for the benefit of the services performed, and accepted actually or constructively by the recipient. 2. The enquiry is not primarily directed to the cost to the plaintiff of performing the work since the law is not compensating that party for loss suffered; however, the actual cost should not be ignored. 3. Any price or commission agreed between the parties may be received as evidence of the value the parties themselves put on the services performed, even where the services have not been totally performed, but the agreed amount is not determinative of the matter.
The suggestion in Sopov v Kane Constructions Pty Ltd (No 2) [2009] VSCA 141 (Sopov) that the actual cost to the contractor is a relevant consideration when assessing a quantum meruit, is, with respect, misplaced. The approach often taken by contractors in seeking to prove a quantum meruit valuation, based on a box of invoices and an adding machine, is misconceived. Although not relevant to these proceedings, there is an arguable case for assessing a quantum meruit on the basis of the actual cost in some circumstances, for example when the remedy is sought consequent upon a termination for repudiation on the part of the principal and an election by a contractor to pursue the extra-contractual remedy, this being based on the legal principle often referred to as the Lodder and Slowey anomaly, (see Lodder v Slowey [1904] AC 442 (PC)) and referred to in Sopov. A different approach ought to be adopted when the assessment arises as a result of some relief available to avoid the consequences a statutory breach by the contractor which precludes recovery on a contractual basis.
In these proceedings the necessity for the remedial course of a quantum meruit is the breach by the Applicant of sections 4 and Part 6 of the HB Act. Section 10 of that Act does not preclude the Respondent from enforcing the terms of the contact including, in particular, the contract sum. In these circumstances, the contract sum should represent a cap on the amount recoverable by a defaulting contractor.
The assessment of the quantum meruit in these proceedings may, as an alternative, have regard to the proven diminished value of the work performed by reason of the identified minor defects. This could apply as an equitable set-off for the reasonable cost of rectification or by the assessed diminution of the value of the work performed: Mondel v Steele (1841) 8 M & W 858.
The amount of the contract sum of $28,314.00 (incl GST) is evidence of the reasonable value of the work performed, being the amount agreed between the parties. This amount also includes overheads and profit.
Another costing of the work involved in relation to the sliding doors is disclosed in the Report of Mr Drexler. The assessed the cost of rectification of the sliding door installation is $38,547.00 (incl GST) which includes a "margin".
The Respondent also claims an additional amount of $1,400.00 for the costs of removal of the demolished materials which brings the total construction-related reasonable costs claimed as damages to $39,947.00.
It is possible to draw some comparison between the cost and the scope of work assessed by Mr Drexler, and claimed by the Respondent as a reasonable cost of rectification, with the cost and scope of work claimed by the Applicant as a reasonable sum.
This comparison can be made by deducting from the total amount claimed by the Respondent those claimed costs which are unrelated to work on the sliding doors themselves. These are Item 2.5.2 for replacement of flooring at $5,200.00 and Item 2.5.8 Tiling at $5,440 (both plus GST), in the Drexler assessment, leaving $28,243 (incl GST) as the claimed reasonable costs of rectifying the sliding doors themselves.
Thus an amount of $28,243 is claimed by the Respondent as the reasonable cost to rectify work for which the Applicant seeks payment of $28,314.00.
It is then necessary to compare the scope of work involved in both sides of the exercise.
The extent of work undertaken by the Claimant included: The purchase of all: (a) aluminium profiles for the frames and doors (b) 10.38 mm glass panels, and (c) components for the installation The power coating of the aluminium sections The complete fabrication of the doors and frames The delivery to and craneage for the complete installation The installation of the whole assembly of frames, doors and glazing
The extent of work identified in the Drexler Report includes: The purchase of: (a) a new section of sill profile (b) new vertical frames for housing door handles (c) components The delivery and lifting of new sections The installation of the new sill section The removal and replacement door frames sections. Rectification of surface defects Installation of labels on doors Install a door stopper
Precisely how the scope of work as proposed by Mr Drexler was to be executed is unclear, however the activities identified by way of removal and replacement of parts of the existing installation are limited. It seems that the two doors are to be removed, but not demolished. The vertical frames on the handle side of the two doors are to be removed and replaced. The existing sill is to be removed and replaced and the doors reinstalled. There is no work at all on the major frames including the fixed panel or to any of the glazing. This represents an extremely limited extent of work in contrast with that required of the Applicant. The almost equivalent amount of the cost to carry out the limited scope of rectification work claimed by Respondent, to the amount claimed for the complete supply and installation is very compelling evidence as to the reasonableness of the amounts on both sides of the exercise.
This exercise discloses a result which in the opinion of the Tribunal, clearly demonstrates that the amount of the contract between the parties was a very reasonable amount for the work performed and an appropriate sum to accept as remuneration or compensation on the basis of a quantum meruit.
An important factor in these proceedings is the fact that the Respondent, as I understand his position, does not contend that the contract sum was anything other than a reasonable sum. Having regard to the exercise of comparing the cost and scope of the original work undertaken, with the cost and scope of the alleged necessary rectification works, this is not surprising.
However in the course of the hearing, in order to clarify the Respondent's position, in response to enquiries by me, the Respondent, on several occasions, confirmed that he, in effect, "did not contest that the amount claimed by the Applicant as a quantum meruit was a reasonable sum, but that the Applicant should have produced invoices as part of his evidence".
I understood the Respondent to mean that the Applicant should have provided evidence of the actual cost incurred. As explained at [101] this is but one element to be weighed in the assessment of the reasonable remuneration or compensation.
I conclude that the Applicant is entitled to receive the amount of $28,314.00 less the deposit of $11,326.00 leaving $16,988.00 (incl GST) to be paid.

[14]

Assessment of Claimed Variations

It is necessary to separately consider the Applicant's claim for variations in the sum of $4,023.00 (plus GST). While recovery will also be upon the basis of a quantum meruit, because the variations were not agreed to in writing, there are slightly more complex issues involved.
The recovery by a contractor for variations which, in breach of sections 6(1)(b) and 7 of the HB Act, were not in writing was by considered and Macfarlane JA in Xu v Jinhong Design & Constructions Pty Ltd [2011] NSWCA 277 who held at [106]: In these circumstances the Builder can have no claim in contract against the Owner in respect of the oral variations to the building work. Nevertheless it is likely to have (or have had) a quantum meruit claim to recover the value of In these circumstances the Builder can have no claim in contract against the Owner in respect of the oral variations to the building work. Nevertheless it is likely to have (or have had) a quantum meruit claim to recover the value of the work done in pursuance of the oral variations (Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221). A claim of that type is one to restitution or one based on unjust enrichment and is not based upon the existence of an implied contract ( Lumbers v W Cook Builders Pty Ltd [2008] 232 CLR 635 at [83] - [84].
It is accepted, in recent consideration by the Tribunal, that the conditions which must be satisfied for recovery in such circumstances are subject to proof that the amount claimed is a reasonable sum: see (Nayak v Rockwell Constructions Pty Ltd [2017] NSWCATAP): 1. The work involved must be outside the work required under the contract. 2. The owner must have knowledge of the variation as it was executed. 3. The owner knew that it was outside the contract. 4. The owner knew that contractor expected to be paid. 5. The contractor had evidence that the amount claimed was fair value.
The variation claims are listed at [59] including: Powder Coat Door Handles $550.00 (plus GST)
This claim is for a change requested by the Respondent for the Applicant to provide a powder-coat coloured finish to door handles. It is not contested that the finish was both requested and provided. I t is also clear that this was not included in the original scope. The evidence is limited, however I am satisfied that this claim meets conditions 1 to 5.
The Applicant is, accordingly, entitled to be paid an additional $550.00 (plus GST) for the powder-coating of door handles.
As to the remaining claims for variations, these seem to have arisen without any communication by the Applicant to the Respondent. It may be that some of the items were necessary as a result of the manner in which the Contractor installed the hob. This does not, however, permit the Applicant to recover such costs without satisfying the stated pre-conditions.
Accordingly I conclude that the Applicant's remaining 'variation' claims are unsuccessful.

[15]

Assessment of Respondent's Claims for Minor Defects

There are a few items of minor defects identified in Mr Drexler's report which are unrelated to the allegations of design and installation issues which I have rejected earlier in this decision. There are also a very small number of items about which there is no evidence or adequate explanation.
In this latter category are two small matters associated with the doors themselves. The first involves the spacing packers at a door handle and the other the adjustment of the fixing of a door handle.
As to the spacing packers, the evidence from the manufacturer included in the Applicant's materials discloses that the method adopted is the standard installation and the second is a matter of post-completion adjustment. In neither case could the item properly be regarded as defective.
The minor items are: 1. Remove scratches, marks and sealer on frames - $312.00 2. Supply and Install Safety Markings on doors - $302.00 3. Supply and install stopper on mid-door - $156.00
Mr Punin gave evidence that the Respondent refused the Applicant to have access for both the completion of minor items of work and to allow the Applicant to investigate the allegations about the deficiencies in the design and construction of the sliding doors. This action by the Respondent seems to have been a product of his misplaced conviction that there were major defects in the supply and installation of the sliding doors.
The Applicant was inhibited in completing the application of safety markings on the doors. His evidence is that samples were provided to the Respondent of alternative stickers. Without a selection by the Respondent and the opportunity to carry out the work, this work could not be completed.
I am satisfied that the only reason that the safety stickers were not installed by the Applicant was the Respondent's refusal to allow the work to be performed. I do not consider that in these circumstances the Respondent is entitled to recover on the basis that the cost was incurred as a result of defective or incomplete work.
The provisions of section 48MA of the HB Act refer to the obligation of the Tribunal when determining a building claim to: have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome.
This principle is reflected in the common law by a recognition that apart from having an obligation to rectify, a contractor may have a right to rectify any work which is defective or incomplete: see Diplock LJ in P and M Kaye Ltd v Hosier & Dickinson Ltd [1972] 1 WLR 146, and the concept of temporary disconformity.
The right of contractors to exercise an obligation to rectify was addressed in Bellemore, A, "Rectification of Defects by Owner Without Notice to Contractor", (2001) 17 BCL 325. Such a right may arise by reason of the terms of the contract, or on the basis of an obligation to mitigate. In this instance I find that the election by the Respondent to exclude the Applicant from having access to rectify and complete is the real proximate cause of the costs incurred and not any breach on the part of the Applicant.
The same consideration applies to the claim in relation to scratches, marks and sealer on the doors. The evidence in this respect suggests that there were very few items that required attention. The items were inspected during a view and the ease with which the items could be addressed was demonstrated by the Applicant. Accordingly I conclude that a modest allowance of no more than $150.00 (incl GST) could be justified and which can be regarded as a reduction in the value of the work performed: see [103].
The claim for an additional stopper relates solely to incomplete work. As with the item addressed at [132 to 136] an allowance of $100.00 (incl GST) should be included.
When the minimal extent of legitimate claims for defective and incomplete work, which I have concluded exist is recognised, the approach of the Respondent in the conduct of these proceedings is unfortunate. As I have observed, it may be that the Respondent adopted his strategy based on inadequate and incorrect advice.