Middleton v Wrona [2023] NSWCATAP 158 | Case summary

Decision on restitution

In the present case, the builder, represented by Counsel, did not frame the grounds of appeal as any discrete, identifiable question of law. Rather, the builder said that the Tribunal "applied a wrong principle of law, or alternatively identified the wrong issue or asked the wrong question".
Some questions of law appear to emerge from the submissions made, relating to: 1. the requirements for a claimant seeking restitution to establish a "qualifying or vitiating" factor; and 2. the requirements for a claimant seeking a refund of excess progress payments under a contract to establish a contractual term to that effect and breach thereof.
However, whether the complaints made in the present appeal are properly categorised as raising a question of law, in light of the evidence presented to the Tribunal and the conclusions of the Tribunal in respect of that evidence concerning the order for the builder to pay an amount of $65,280.59 to the homeowners, we are satisfied that the builder may have suffered a substantial miscarriage of justice because the decision was not fair and equitable or was against the weight of evidence. Consequently, to the extent necessary, leave to appeal should be granted.
Our reasons for reaching that conclusion are as follows.
The Tribunal made an award in favour of the homeowners on the basis of restitution.
It is convenient to first summarise the principles applicable to such an award: 1. Restitution may be ordered on a number of bases. These include monies had and received (for example where there has been payment by mistake-whether of law or fact) and claims in quantum meruit: see eg David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; [1992] HCA 48 (David Securities); Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7 (Equuscorp); and Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; [1987] HCA 5 (Pavey & Matthews). 2. There must be a qualifying or vitiating factor in order to establish the right to restitution. As was said by the plurality in David Securities at 379: Accordingly, it is not legitimate to determine whether an enrichment is unjust by reference to some subjective evaluation of what is fair or unconscionable. Instead, recovery depends upon the existence of a qualifying or vitiating factor such as mistake, duress or illegality. As this Court stated in Westpac Banking Corporation ((1988) 164 CLR, at p 673): "In other words, receipt of a payment which has been made under a fundamental mistake is one of the categories of case in which the facts give rise to a prima facie obligation to make restitution, in the sense of compensation for the benefit of unjust enrichment, to the person who has sustained the countervailing detriment" 1. There is no separate right of action for "unjust enrichment". Rather, this description is a taxonomy of the different phrases above. This is despite the expression often being used in pleadings: see "What's in a name? The taxonomical and conceptual divide between unjust enrichment and equity", The Hon Justice Julie Ward, 13 June 2019; University of Queensland Current Legal Issues Seminars 2019; law.uq.edu.au/files/46745/UnjustEnrichment_Aus_final.pdf. 2. In this regard, in Equuscorp, French CJ and Crennan and Kiefel JJ said at [30]-[34] (full citations omitted): 30. In David Securities Pty Ltd v Commonwealth Bank of Australia, this Court explained the part played by unjust enrichment in a claim for money had and received (in that case for recovery of a payment made under mistake of law). That explanation may be expressed, at a fairly high level of abstraction, as an approach to determining such claims. In summary: recovery depends upon enrichment of the defendant by reason of one or more recognised classes of "qualifying or vitiating" factors; the category of case must involve a qualifying or vitiating factor such as mistake, duress, illegality or failure of consideration, by reason of which the enrichment of the defendant is treated by the law as unjust; unjust enrichment so identified gives rise to a prima facie obligation to make restitution; the prima facie liability can be displaced by circumstances which the law recognises would make an order for restitution unjust. Unjust enrichment therefore has a taxonomical function referring to categories of cases in which the law allows recovery by one person of a benefit retained by another. In that aspect, it does not found or reflect any "all-embracing theory of restitutionary rights and remedies". It does not, however, exclude the emergence of novel occasions of unjust enrichment supporting claims for restitutionary relief. It has been said of Lord Mansfield's judgment in Moses v Macferlan that it was his view that "the grounds for obtaining relief in money had and received were not to be considered static and the remedy could be made available in any case in which money had been paid in circumstances where it was unjust for the defendant to retain it." Nor is the emergence of general principle precluded when "derived from judicial decisions upon particular instances". These appeals, however, focus upon the particular category of case involving "failure of consideration". 31. Failure of consideration is one of the factors that makes retention of a benefit prima facie unjust. It was recognised by Lord Mansfield as a ground for a claim for money had and received. It was a criterion of recoverability which survived the rejection in the United Kingdom and Australia of the implied contract theory. This Court has, on more than one occasion, described failure of consideration in terms set out by the late Professor Birks: "Failure of the consideration for a payment ... means that the state of affairs contemplated as the basis or reason for the payment has failed to materialise or, if it did exist, has failed to sustain itself." 32. As Gummow J pointed out in Roxborough v Rothmans of Pall Mall Australia Ltd, failure of consideration for the purpose of a claim for money had and received is not confined by contractual principles. In that case there had been no failure of performance by Rothmans of any promise it had made. There was no question of repudiation by it of its contractual obligations. The question was whether it was "unconscionable" for Rothmans as the recipient of payments to retain them in circumstances in which it was not specifically intended or especially provided that it should so enjoy them. The question of unconscionability, as his Honour explained, derived from the general equitable notions which found expression in the common law count for money had and received. This Court acknowledged in Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation that "contemporary legal principles of restitution or unjust enrichment can be equated with seminal equitable notions of good conscience" albeit the action itself is not for the enforcement of a trust. The reference to conscionability in this context, however, does not mean that whether enrichment is unjust is to be determined by reference to a subjective evaluation of what is fair or unconscionable. As the Court reiterated in Farah Constructions Pty Ltd v Say-Dee Pty Ltd: "recovery rather depends on the existence of a qualifying or vitiating factor falling into some particular category." (Footnote omitted) 33. Failure of consideration as a basis for a claim for money had and received may arise from a number of causes. One cause is illegality. Where a payment is made under a contract which is unenforceable for illegality, the unenforceability of the agreement may constitute a failure of consideration which is capable of supporting a claim for recovery of the payment. It is not necessary for present purposes to expatiate upon the concept of "total failure of consideration" debated in the submissions to this Court, its amelioration by the concept of apportionment of consideration and the question whether "total failure of consideration", however understood, is necessary to a claim for money had and received based upon failure of consideration. What is important for present purposes is the interaction between the foundation for the claims for money had and received in this case and the policy of the common law which renders unenforceable an agreement made for the furtherance of an illegal purpose. 34. The outcome of a restitutionary claim for benefits received under a contract which is unenforceable for illegality, will depend upon whether it would be unjust for the recipient of a benefit under the contract to retain that benefit. There is no one-size-fits-all answer to the question of recoverability. As with the question of recoverability under a contract affected by illegality the outcome of the claim will depend upon the scope and purpose of the relevant statute. The central policy consideration at stake, as this Court said in Miller, is the coherence of the law. In that context it will be relevant that the statutory purpose is protective of a class of persons from whom the claimant seeks recovery. Also relevant will be the position of the claimant and whether it is an innocent party or involved in the illegality. 1. The onus is on a claimant to establish its entitlement: Coshott per Kirk JA at [18]. The fact of payment by one party and receipt by another is not sufficient. A qualifying or vitiating factor must be proved by the claimant. In this regard His Honour continued at [21]-[22]: 21. Thus it is not necessary for a claimant to establish that in all the circumstances retention of the money is unjust. Rather, the claimant must establish the existence of some qualifying or vitiating factor which gives rise to a prima facie obligation to make restitution. The defendant may then seek to establish some responsive defence which displaces that prima facie obligation, on which the defendant will bear the onus. 22. The necessity for a claimant to establish some "qualifying or vitiating factor" in order to make out a claim for money had and received has been reiterated a number of times since David Securities by members of the High Court: Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2003) 230 CLR 89; [2007] HCA 22 at [150]; Bofinger v Kingsway Group Limited (2009) 239 CLR 269; [2009] HCA 44 at [89]; Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7 at [29]-[30] and [101]; Australian Financial Services and Leasing Pty Limited v Hills Industries Limited (2014) 253 CLR 560; [2014] HCA 14 at [73]; see also Sims v Commonwealth of Australia [2022] NSWCA 194 at [140]-[146]. The presence of such a factor goes to establish that money the defendant received is held to the use of the plaintiff so as to found a claim to restitution. Recognised categories of such factors include mistake, duress, illegality or failure of consideration, but the categories are not closed: note Moses v Macferlan (1760) 2 Burr 1005 at 1012; 97 ER 676 at 681; Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; [2001] HCA 68 at [93]-[95]; Equuscorp at [30]; Mann v Paterson Constructions Pty Ltd (2019) 267 CLR 560; [2019] HCA 32 at [213].
The claim for repayment was dealt with by the Tribunal at [94]-[161] of the reasons.
At [96], the Tribunal noted the homeowners' claims were put forward on five bases, namely breach of contract, unjust enrichment, monies had and received, the Australian Consumer Law (NSW) (ACL), and the Contracts Review Act 1980 (NSW) .
Tribunal rejected the claims under the ACL (at [131]) and Contracts Review Act (at [135]). No challenges are made to these conclusions in this appeal.
As for the claim for "unjust enrichment", as explained above, this taxonomy does not give rise to a separate right of action.
As to the contract claim and the monies had and received claim, having noted the powers of the Tribunal under s 49O(1)(a) of the HB Act 1989 to make a money order against a party, "whether by way of debt, damages or restitution or refund of any money paid by the owners", the Tribunal dealt with the claim as a claim for "restitution": reasons at [136]-[137]. Neither party contended in this appeal that the reference to "restitution" was other than reference to a claim for monies had and received.
The Tribunal made the following findings concerning the restitution claim: 1. The total amount paid for the renovation contract and garage contract was $525,150. The amount paid for the renovation contract was "significantly more than the contract price": reasons at [19]. By "contract price" we understand the Tribunal to mean the amount of $300,000 contained in the written contract (commencing AB 668), the contract price of $300,000 found at AB 683. The finding concerning under-payment of $2,000 for the garage contract is not in dispute in this appeal. 2. The builder carried out significantly more work than originally agreed in the renovation contract: reasons at [151]. 3. The additional works were not part of the original renovation contract and the Tribunal was satisfied that the owners understood they "had to pay a fair and reasonable amount for the additional works": reasons at [152]-[153]. 4. As to the claim for repayment in respect of the additional work, the Tribunal rejected this claim. In doing so, the Tribunal said at [156]-[158]: 156 The Tribunal is not satisfied that the owners have established on the evidence adduced that the additional works done, charged for by the builder and paid for by the owners should be repaid to the owners. The works were carried out as of necessity to fulfill the owners, particularly Mrs Wrona's requirements for the renovation of the dwelling. 157 Although there is no quantifying evidence adduced by the owners through an expert quantity surveyor assessing the cost of the additional works, Mr Capaldi expresses an opinion of the value of the works charged for and not delivered. Mr Grieve's evidence is that the builder was significantly underpaid for the work that he carried out and quantified in the spread sheet at Appendix E to his report. 158 The owners contend that the only works that the builder should be compensated for are the works set out in the owners' evidence at paragraph 37 of Mrs Wrona's second affidavit, which would give a credit to the builder of $31,146 against the claim made by the owners for the refund of the claimed overpayment. This concession only has relevance if the Tribunal were to find that the owners were entitled to the whole of the amount of payment exceeding the combined contract price of $390,000.00, which it does not. . 1. The Tribunal accepted the evidence of Mr Capaldi in Appendix B of his report that there were credits under the renovation contract for work not done or adjustments to amounts otherwise included in the original contract sum, which the builder was required to give the respondent. These credits total $67,280.59. They are recorded at [159] of the reasons as follows: (1) Allowance for difference in price between sandstone sheeting as per contract not supplied and installed $22,106.00 (2) Difference in price allowed for vertical balustrade handrails and cost for the supplied balustrade $5,477.00. (3) Hot water system supplied not as invoiced and charged to owners, difference is a credit due to the owners of $232.37 . (4) The plans show three awnings to be supplied. Only two have been supplied. The owners must be credited for one awning of $805.00. (5) There has been a PC item double charge and the amount of $5,378.87 is to be credited to the owners. (6) Home hardware invoice has been charged twice to the owners. The owners must credited for $6,191.35. (7) There is an agreed credit to the owners for prime cost items in the amount of $17,690. (8) The contract provided that the builder would remove all waste from the site. The builder charged the owners $4,750 for waste removal. The owners are entitled to a credit for $4,750.00. (9) There is double entry in the accounts on the same day of $545.00 for tools purchased from Sydney Tools. The owners should be credited for one charge of $545.00. (10) There are two additional incorrect charges, one for Tweedies Plumbing for work on another unrelated job of $935. The other for masonry delivered to another job in the amount of $3,170.00. (11) The total of the credits found by Mr Capaldi is $67,280.59.
Consequently, after taking account of the underpayment of $2,000 for the garage contract, the Tribunal awarded $65,280.59: reasons at [161].
This decision was made in circumstances where the builder had withdrawn his cross claim and defence by way of set off. However, in light of the submissions from the homeowners, it is necessary to briefly examine the issues raised by the parties which remained for determination having regard to the builder's defence denying any entitlement of the homeowners to be repaid monies.
In his amended points of defence (AB 389 and following), the builder asserted he was entitled to be paid the amount of $300,000 inclusive of GST in accordance with the original renovation contract "plus a fair and reasonable amount for all work carried out over and above the quotation". Otherwise, the builder denied: 1. he had overcharged the homeowners (contrary to the allegation in para 19 of the homeowners' amended points of claim (at AB 387); 2. he had breached the terms of the renovation contract in respect of charges made for work performed; and/or 3. that the homeowners were entitled to restitution on the basis of monies had and received or that he had been unjustly enriched in receiving the payments listed in para 19 of the homeowners' amended points of claim.
In support of his position, evidence was provided from his expert, Mr Grieve, in respect of credits in favour of the homeowners and the cost of additional works performed by the builder in consequence of requests from the homeowners during the course of construction.
In this regard, it would seem that some expert evidence was sought to be provided by the homeowners' expert Mr Capaldi as to works which the homeowners accepted were carried out "beyond the contract", said to be valued by Mr Capaldi at $31,148.61 inclusive of GST: transcript AB 178 at line 857-868. There, Counsel for the homeowners, Mr Barham, said: "And the [homeowners] do not wish to be seen as trying to obtain a judgment on the one hand, without being able or being accused, perhaps is a better way of putting it, of skirting their responsibilities on the other hand. It is claimed that there were some further works on the [homeowners'] case beyond the contract, which were undertaken by the … builder, and Mr Capaldi has costed those works. Now, whilst the costs may have gone, there is no mechanism for there to be a credit to the builder, unless the [homeowners] obtain a judgment their way. And the [homeowners] are content that if a judgment is obtained in their favour, that there would be a credit off that judgment for the amount of Mr Capaldi's costings, which you can see from the last page, page 6, are $31,148.61 inclusive of GST."
This report of Mr Capaldi (who works for the company Tyrells) was apparently dated 11 February (February Report): transcript AB 177 line 831-833. It does not appear to be in the agreed bundle for this appeal and, in any event, does not appear to have been admitted into evidence.
In this regard, the following exchange occurred concerning the February Report at transcript AB 179 line 929 - AB 180 line 989: Mr Barham: What I'm suggesting is that it is in fact a concession in my friend's way, in my friend's favour. Mr Davie: Yes, but the point is, the point is it is different from the valuation which Mr Grieve has done. Mr Barham: Yes, but Mr Grieve's valuation was done in the context of there being a cross claim on foot, and Mr - Mr Davie: No, it wasn't. It is just as relevant, because there's a claim against me for unjust enrichment. Mr Barham: Yes. Mr Davie: Now, the facts of this matter, as shown in the evidence of Mr Grieve, is that the person that has been unjustly enriched in the - or at least this is what our argument will be - the person that has been unjustly enriched in these proceedings is not the builder, but quite plainly the owner. Because when you take into account credits and variations, that's over and above the contract price as I understand, the reasonable costs owing to the builder is $419,618. That would put paid to any claim on a quantum meruit, which is pleaded. That is why it is relevant. So I can't deal - the evidence of Mr Capaldi, at least in part, is inconsistent with the evidence of Mr Grieve, in order to deal with this aspect of Mr Capaldi's evidence, there's no evidence being provided as to why this [unintelligible 00:57:31] before the hearing. I would have to at the very least take instructions from Mr Grieve, which I can't do. Mr Barham: Look, I'm in a similar position, Tribunal Member, that I also need to speak to Mr Capaldi. I've only seen this report as well. But - Mr Davie: I can't deal with it. And it is frankly a reasonably important part of my defence. Mr Barham: Sorry, I didn't hear that, Mr Davie. Mr Davie: I can't deal with it, and it relates to an important part of my defence. Mr Barham: Right, well, what I'll ask my instructing solicitor to do in the background, and maybe Mr Davie could do the same, is do a comparison of what Mr Capaldi comes up with in respect of these concession items as against what Mr Grieve does. I don't know if there's [unintelligible 00:58:22]. Tribunal: I think Mr Davie's position, he can't deal with it in any case. I mean, it's such a late - presented, filed with the Tribunal after the hearing had started today, and without any leave or any notice it was going to be relied upon. It's very difficult, Mr Barham, to just add another brick on the load. Mr Barham: I accept that that's a difficulty, Senior Member. Tribunal: Yes. Well, unless there's something else, if you're seeking leave to rely on it now, and Mr Davie is opposing that reliance, are you asking me to rule on it? Mr Barham: I won't make the application now, because as the day develops, and as tomorrow develops, maybe there may be some movement, and maybe Mr Davie's position may change. Tribunal Yes. Mr Barham: I'm not going to seek an adjournment on the strength of it. Tribunal: Okay.
Despite the report not being admitted and notwithstanding the counterclaim and defence by way of set off being withdrawn, it seems clear to us that the builder was continuing to rely on his entitlement to retain the payments made, as part of his defence that the homeowners were not "unjustly enriched" and not entitled to an order for restitution.
Indeed, the final submissions of the parties in the proceedings at first instance recognise the fact that the entitlement of the builder to retain the monies in respect of extra work performed and the entitlement of the homeowners to have any credits brought to account remained live issues in the proceedings: see eg homeowners' submissions AB 142-3 paras 163-166 and the builder's submissions AB 106 para 108.
In passing, we note the homeowners' apparent concession in closing submissions in the proceedings at first instance (AB 147-8 para 187) that the amount of $31,146 should be allowed in favour of the builder in respect of any money order that was made. Leaving aside the evidence of Mr Grieve, it is evident the Tribunal did not allow this amount in making a money award in the sum of $65,280.59 in favour of the homeowners.
Having regard to the above, the issue of the builder's entitlement for work performed remained a matter for determination by the Tribunal notwithstanding the withdrawal of the cross-claim and defence by way of set off. This is because the manner in which the case proceeded always had as a central issue whether the builder had been overpaid for all works done, whether or not additional work was properly framed as a variation to the renovation contract or additional works outside that contract and whether or not the homeowners' claimed entitlement to repayment arose by reason of a breach of contract or on the basis of a restitutionary claim.
In these circumstances, the principle in Coulton v Holcombe has no application in the present appeal.
Prior to dealing with the question of whether the Tribunal was correct in making an award for $65,280.59, we should first deal with the terms of the contract, the payments made and whether the additional works are properly categorised as a variation to the renovation contract.
As noted above, the renovation contract is found at AB 668 and following. It is in the Fair Trading NSW form of contract entitled "Home building contract for work over $20,000". The scope of the work and exclusions are set out in clause 1: AB 675-6.
In addition, under clause 10-Provisional sums (AB 681) the following has been written into the Provisional sums schedule: Quotation dated 14th Feb 2016 form part of this contract. All work carried out over and above this quotation will be done with discussion between the owner and builder agreed to by both parties to ensure a fair and reasonable outcome
The provisional sum schedule shows a total cost of $0.00 for provisional sums. However, the handwriting makes clear that additional work beyond the scope in the original renovation contract is both anticipated and will not be done for free.
Clause 11-Prime cost items schedule again refers to the quotation dated 14 February 2016 (AB 682).
Clause 12- Progress payments (AB 683) deals with progress payments. Eight progress payments are listed in the schedule: 1. Preconstruction payment $70,000 (less deposit of $5100) $64,900 2. Frame and roof structure (rear) $64,000 3. Front entry/cladding/windows $50,000 4. Lock-up $40,000 5. Internal modifications $30,000 6. Bathroom/laundry $25,000 7. Kitchen $20,000 8. Complete as per quotation $5000 Total $300,000
Clause 12 relevantly states: The owner must pay the contract price by progress payments within 5 business days of the completion of the stages of the work nominated in the schedule of progress payments. The contractor must notify the owner in writing when a stage of the work has reached completion. A stage of work has reached completion when it has been finished in accordance with the contract documents and any variations agreed to and there are no omissions or defects that prevent that stage of the work from being reasonably capable of being used for its intended purpose. Any deposit paid is deducted from the first progress payment. … Payment of a progress payment is not to be regarded as acceptance by the owner that the work has been completed satisfactorily or in accordance with the contract documents. If there is any bona fide dispute in relation to value or quality of work done, the dispute must be dealt with in accordance with the dispute resolution procedure set out in Clause 27. In those circumstances, the parties agree as follows: (a) the owner may withhold from the progress payment, an amount estimated by the owner, acting reasonably, equal to the owner's estimate of the value of the disputed item (b) the contractor must continue to carry out its obligations under this contract pending resolution of the dispute.
Variations are dealt with in Clause 13-Variations (AB 684). Relevantly, this clause provides: Procedure for variations Before commencing work on a variation, the contractor must provide to the owner a notice in writing containing a description of the work and the price (including GST). If not otherwise specified the price will be taken to include the contractor's margin for overheads, supervision and profit. The notice must be signed and dated by both parties to constitute acceptance. … Variations shall be subject to the overall conditions of this contract. Adjustment of contract price The cost of deletions from the contract will be deducted from the contract price. The price of any variation specified in the notice signed and dated by both parties will be added to the contract price. Any adjustment to the contract price due to an agreed variation will be taken into account at the time of the next progress payment or paid as agreed by the parties.
Clause 14 (AB 685) regulates the time for payment and mandates that an owner must pay a progress payment or other amounts due under the contract unless notice of dispute is given as required by that clause.
Clause 15-Final payment (AB 686) deals with the final payment. Absent notice of dispute under clause 14, payment must be made in accordance with clause 14, with interest payable on late payments.
Clause 23 - Defects rectification (AB 690) specifies the builder's obligation to rectify defects which become apparent within 13 weeks from the date of completion as determined under clause 8. It permits the owner to give notice within 10 days of that period of any omissions or defects, after which the builder has 30 days to complete that work. Again, clause 27 applies to resolving disputes on these matters.
The homeowners' claim was alternatively framed as a breach of contract claim. As to the entitlement to be repaid for breach of contract in respect of overcharging, the homeowners said at paras 20-23 of their amended points of claim (AB 388): 20. By charging the [homeowners] twice in respect of the same work the [builder] breached the [renovation contract] and [garage contract]. 21. By charging the [homeowners] in respect of work not carried out the [builder] breached the [renovation contract] and [garage contract]. 22. By charging the [homeowners] in respect of goods and services which were not supplied or which were not contracted for the [builder] breached the [renovation contract] and the [garage contract]. 23. As a result of the said breaches the [homeowners] suffered loss and damage, being the amount of the overcharges.
No particular term was pleaded as having been breached.
The homeowners' closing submissions did not identify whether the term said to have been breached was oral, in writing or implied. Having referred to the decisions of McGrath and Amcor (AB 148) the homeowners submitted at para 189: Whilst it is true that both those courts [referring to the decisions in McGrath and Amcor] seem to assume that the overcharge was a breach of contract, there is nothing wrong with such an assumption. If parties agree that something will be charged on one basis, and it is not charged on that basis, but on a different basis, then prima facie there is a breach of the contract. It is no different to contracting to buy beans and being delivered peas.
This submission highlights the problem with the claim for repayment in this case based on breach of contract.
As noted above, there was a lump sum of $300,000 specified as the contract price in the original renovation contract. This was the price for all the works specified in the renovation contract. Individual items of work, including those for which allowances for overpayment were made by the Tribunal, were not assigned a particular price nor were the homeowners obliged to pay for each item of work separately.
The contract price was to be paid progressively as required by clause 12. This clause entitled the builder to claim a progress payment when particular stages of the work were complete. The combined operation of this clause and clause 14: 1. permitted the homeowner to dispute the "value or quality of the work done", the subject of the progress payment; 2. allowed the homeowner to withhold from the progress payment, "an amount estimated by the owner, acting reasonably, equal to the owner's estimate of the value of the disputed item"; 3. required the homeowners to pay any balance not in dispute; and 4. did not permit withholding of payment unless the owner had notified the builder "in writing within 5 days of receiving the claim setting out the reasons for that disagreement".
On the other hand, clause 12 made clear that payment of a progress claim was "not to be regarded as acceptance by the [homeowners] that the work had been completed satisfactorily or in accordance with the contract documents".
In these circumstances, the fact a progress claim was made when the particular stage had not been reached or where there was defective work that might be done in a particular stage could not, of itself, constitute a breach of contract. To the contrary, in our view, all progress payments, other than a final payment under clause 15, must properly to be construed as payments "on account".
In addition, variations under clause 13 were permitted. As stated above, the contract expressly recognised that requests would be made for such variations during the work. Clause 13 provided a procedure, in particular that a variation would be in writing. The amount of the variation was to be "taken into account at the time of the next progress payment or paid as agreed by the parties".
The Tribunal found there was extra work- significantly more than in the original renovation contract - and there was an entitlement of the builder to be paid a "fair and reasonable amount" for that work: reasons at [151]-[152]. The work included, at least, the works requested by the homeowners set out in [147] of the reasons. There was no challenge to these findings in the appeal.
The Tribunal accepted that additional work was done by the builder and paid for by the homeowners and that the homeowners had not proved they should be repaid in respect of this work. The Tribunal also found "[t]he works were carried out as of necessity to fulfil the owners, particularly Mrs Wrona's requirements for the renovation of the dwelling": reasons at [156]. Again, these findings were not challenged in this appeal.
The basis of the builder's entitlement to remuneration was either under a variation to the original contract, for work done under a separate contract or, if any contract or variation was unenforceable because of the HB Act, the builder could claim the fair value of the work on a quantum meruit basis.
While the Tribunal found at [128] that there was no evidence either party had complied with clause 13 procedure, nonetheless it would appear the requests for additional works were within the scope of variations contemplated in the renovation contract and constituted an oral variation capable of enforcement at the suit of the homeowners. In this regard there was offer, acceptance and consideration which was paid, that consideration being paid as part of the requests for progress and other payments during the course of the works. As explained in Wright v Foresight Constructions Pty Ltd [2011] NSWCA 327, even where a variation is oral and unenforceable by a builder, it can be relied on by the builder by way of defence to a claim by a homeowner under the contract: per Giles JA at [6]-[7], Basten JA at [43]-[48] and Handley AJA at [56]-[57].
Alternatively, there was a separate oral contract enforceable at the suit of the homeowner in connection with the additional works. If so, the builder was entitled by way of defence to rely on that contract in response to the homeowners' claims that the builder had been overpaid for the works performed.
In our view there was an oral variation of the renovation contract. This is consistent with the expressed intention in the written contract that the homeowners would request additional work or change the work after the contract was signed, as recognised in the handwritten addition to clause 10, set out above.
However, regardless of which analysis is applied, the request for payment of a progress claim in circumstances where all works in a stage had not been completed and/or there were defects in those works does not constitute a breach of contract by the builder. There can be no implied term to that effect, for the reasons expressed in Friends' Provident at 279G, and because it is contrary to the express obligation upon the homeowners to pay unless notice of dispute is given by the homeowners. As to the second reason see: Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337; [1982] HCA 24 per Mason J at 347 referring to the fifth requirement for implication of a term in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 at 283; (1977) 52 ALJR 20, at p 26; [1977] HCA 40.
In respect of the final payment claim, we do not think that the mere fact of making a claim in accordance with the amount specified in the schedule in cl 12 constitutes a breach by the builder in circumstances where there is a dispute mechanism available to the homeowners. Further, any overpayment arising from the homeowners paying earlier progress claims does not, by that fact alone, give rise to an action for breach of contract.
Rather, an action for breach would only arise if there was a term of the contract to account for moneys paid under the contract in excess of the agreed price or by way of a restitutionary claim and there was a failure to do so. That would, of course, involve an accounting in respect of the whole contract - not elements of work, as it was a lump sum contract.
Otherwise, unless the charging of an amount was impermissible and itself constituted a breach of contract, any claim for repayment was properly a restitutionary claim. As stated by Daubney J in McGrath at [215]: In submissions, Global made the point in passing that this claim ought properly have been brought as a restitutionary claim by MCPL. That may well be, but the fact remains that, in breach of the terms of the Contract, Global charged for more than it was entitled to receive. On any basis it is appropriate that there be an order that Global pay to MCPL the amount of the overpayment.
This is consistent with the statement of Dixon J (as he then was) in York Air Conditioning & Refrigeration (Asia) Pty Ltd v Commonwealth (1949) 80 CLR 11; [1949] HCA 23 (York). York was an appeal from a decision of Williams J sitting at first instance exercising original jurisdiction in the High Court. The Commonwealth claimed repayment of monies which it said it had overpaid in respect of the supply of goods. The claim had variously been advanced on the basis of "money repayable under the terms of the contract; money paid under a mistake of fact; money paid as upon a failure of consideration; and (relied upon by the plaintiff before Williams J, but not upon appeal) estoppel": per Latham CJ at 46.
In the context of a contract where progress payments had been made, Dixon J said at 63-4: Such a payment is prima facie to be considered provisional. When the liability has been ascertained the residue of the money lies in the payee's hands un-applied to the purpose for which it was received, namely the discharge of the ultimate debt. Once it is found to have been paid provisionally and not finally, all difficulty disappears, in my opinion, and the balance can be recovered in an action of money had and received.
York was concerned with a contract that permitted the price for the supplied items to be adjusted downward. In circumstances where there were progress payments made provisionally or on account, it was necessary to determine the total payable to the supplier for goods and services supplied to determine the balance that constituted overpayment. This must be so whether dealt with in contract or as a restitutionary claim. The only exception would be where there are separately payable amounts and a particular payment is specifically appropriated to a particular item of work for which there is a specific price.
In the present case the homeowners did not suggest the contract provided for appropriation of money paid by way of progress claims to particular items of work for which repayment was ordered pursuant to order 3. Mere payment of a progress payment could not have that effect under this particular contract.
Further, assuming there is a contractual obligation on the builder to account, breach of which will entitle the homeowners to claim damages, it was necessary for the homeowners to establish that they had paid a total amount in excess of the amount due under the renovation contract as varied or, alternatively, in respect of both contracts. This is because the payments made as progress payments were on account and were in respect of both the works the subject of the original renovation contract and the additional work and the garage contract, not payments for the specific items of work to which Order 3 relates. The same analysis applies if there was no contract and monies were payable for the additional work by way of quantum meruit.
As to a claim for restitution, as stated above, an applicant seeking restitution must prove the "qualifying or vitiating factor": Coshott supra. Consistent with what was said by Dixon J in York, this involves an applicant proving they have paid more than what is due to the recipient. In the present case, the qualifying or vitiating factor to be proved (where the Tribunal found work was done and paid for in addition to the original renovation contract) is that the amount paid by the homeowners to the builder for all the works performed was more than the amount properly payable.
The Tribunal found that extra work had been done at the request of the homeowners for which a fair and reasonable price was payable. The Tribunal did not bring this matter to account, either by way of analysing amounts due to the builder in contract (including any variations for additional work) or in respect of services provided if the work done by the builder is properly considered as outside any contract. Rather, all the Tribunal did was to look at some items of work not performed or changed and ordered repayment in respect of the assessed value of these items only.
In doing so, the Tribunal expressly found that the homeowners had not established any entitlement to be repaid amounts charged by the builder and paid by them for any additional work.
These findings do not establish either overpayment under a lump sum contract in respect of the works performed, or that the builder has received money in excess of his entitlement to payment.
In these circumstances, order 3 should be set aside.
Further, in light of the Tribunal's findings concerning: 1. that there had been significant additional work to that contained in the original renovation contract for which the homeowners had agreed to pay; 2. that the total amount paid by the homeowners was $525,150.00 against the original contract sums of $390,000.00 for the renovation contract and garage contract, being a difference of $135,150: reasons at [149]-[150]; 3. the acceptance by the Tribunal that the builder was entitled to $2000 being the balance due under the garage contract; 4. the evidence of Mr Grieve who valued the additional work at $419,618; 5. the absence of evidence from the homeowners as to the builder's proper entitlement to payment for that additional work or any evidence to otherwise counter that of Mr Grieve; the homeowners have failed to prove on the proper taking of accounts that any amount is due to them.
There is no basis for us to make a substitute finding of overpayment nor is there any reason to remit this issue to the Tribunal at first instance for reconsideration. The only evidence admitted concerning the extra work was that of Mr Grieve. On this evidence, the builder was underpaid. The homeowners did not press any application in respect of the February Report of Mr Capaldi. Simply put, the homeowners failed to prove they paid more than was properly payable to the builder for all the work performed.
As will appear below, we do not propose to set aside any work orders. Consequently, there is no issue of damages to be determined which might otherwise have necessitated a remittal of these proceedings for the purpose of determining any monetary issues.

Decision on the Garage

The Tribunal was required to determine whether the garage had been properly constructed by the builder in accordance with the engineering design provided by Mr Turner from D&M Consulting Pty Ltd (garage engineering drawings): AB 1281-3. If not, the Tribunal was also required to determine what work was required for rectification and what was the proper remedy - either damages for defective work or a work order.
There was no challenge to the Tribunal's conclusion that a work order was appropriate as opposed to an award of damages. Rather, the challenge by the builder went to the issue of whether there was defective work and, if so, whether identified defects required the demolition and reconstruction of the garage.
The garage was apparently constructed in 2017. The proceedings were commenced in 2020. There was no suggestion the proceedings had not been brought in time: reasons at [14]-[15].
The reasons indicate that the Tribunal had regard to the evidence of the parties filed in support of their respective positions.
The Tribunal made the following findings: 1. Piers for the garage slab are not located in the area indicated in the garage engineering drawings. Further, there are only three piers along the western side, contrary to the engineering drawings that required four piers: reasons at [36]; 2. There were 19 cracks in the garage slab and the slab was not 100 mm thick throughout. The minimum strength of the concrete was tested and shown to be 27 MPA against a required strength of 32 MPA: reasons at [37]; 3. There was "deflection in the slab with heaving" at crack 2 (between 3 and 5 mm) and at crack 13 (of 3 mm), the Tribunal rejecting the builder's submission that there was no evidence of slab movement. In this regard the evidence of Mr Capaldi was unchallenged: reasons at [45]. We note this evidence was not about the width of the cracks but rather the differential height of each side of the crack. On this point Mr Capaldi said in his report dated 7 October 2020 (AB 1551 at AB 1564): 8. Further, there are 2 instances where there was possible heaving over cracks 2 and 13. 9. Using a Stabila 2m box level, I placed the level over the centre of the cracking and the level was found to be rocking. 10. The heaving to crack 2 was measured to be 3 mm-5 mm and the heaving to crack 13 was measured to be 3 mm. 1. The Tribunal preferred the evidence of the homeowners' geotechnical expert Mr Bandara to the builder's geotechnical expert Mr Smith because Mr Bandara had carried out borehole testing on the western side and Mr Smith evidence related to another location. This evidence is generally recorded at [38] of the reasons. 2. The evidence of Mr Bandara included that he found fill at the western edge of the garage ranged in depth from 600 mm to 1.6 m and that the edge beam placed on uncontrolled fill had led to differential settlement. In this regard the Tribunal noted the site had been classified as Class P by Mr Bandara, contrary to Mr Turner's classification of class M and that the evidence of Mr Bandara supported his contention that there was significant variation in the foundation material: reasons at [38(5)-(6)]. 3. In reaching these conclusions, the Tribunal gave the evidence of Mr Turner on this subject reduced weight, as Mr Turner was not a geotechnical engineer: reasons at [48]. 4. At [39]-[41] the Tribunal said: 39 The Tribunal is satisfied that the opinion of Mr Bandara should be preferred to those of Mr Smith as they were based on "visual-tactile methods (core sampling and visual inspection) and not as reliant on DCP tests. Mr Bandara's opinion is also in accordance with those of Ideal Geotech. Ideal Geotech was the first geotechnical engineer retained by the builder to provide expert opinion, before being replaced by Mr Smith. 40 The DCP test result of Ideal Geotech more favourably replicates the result of Mr Bandara results than they do of Mr Smith's results. The results support Mr Bandara's finding that the fill depth is much greater than the 900mm found by Mr Smith, supporting the overall conclusion that the piers were founded on uncompacted fill. 41 Mr Bandara's opinion should be accepted because he says that Mr Smith's assumptions are predicated upon the foundation having performed adequately when that is not the case, and when allowable bearing capacities at 400kPa and above are only provided in limited circumstances in clay and most often requires bedrock. It appears to be common ground that the bedrock is deeper than the footings were specified and the pier depths were not measured during the inspections. 1. As to the competing engineering evidence of Mr Walford and Mr Turner, it is clear to us from reading the reasons as a whole that the Tribunal accepted the evidence of Mr Walford including: 1. that the load of the piers exceeds the capacity of the underlying soil profile and the piers are likely to settle further before stabilising: reasons at [50]; 2. while underpinning the edge beams may arrest any future movement of the edge beams, internal beams and the slab would be founded on differential material and subject to further settlement. Consequently, demolishing and rebuilding would be a quicker and cheaper solution: reasons at [50]; 3. to date the garage slab had not been "'tested to anywhere near the intended serviceable design capacity' and is not capable of being used as a 3 vehicle garage structure with an upper story without suffering further and continued damage": reasons at [51]; 4. the evidence of Mr Capaldi supported the likelihood of future damage: reasons at [52]. The evidence of Mr Walford and the parties' contentions concerning the competing views of the engineering experts are summarised at [42]-[43] of the reasons. 1. Having regard to the nature of the defects, the likelihood of further cracking and/or movement of the garage slab, the Tribunal determined demolition and rebuilding was necessary and that a work order should be made as this would reduce the cost of the builder.
The first question is whether the builder has identified a question of law for which there is a right of appeal. The only matter that could be a question of law, as opposed whether the Tribunal made an error of law, is the "no evidence" ground, although this seems to raise a question of whether there was in fact evidence.
Whether or not the matter raised is a question of law, a review by us of the material provided in connection with this appeal indicates that the "no evidence" submission concerning the Tribunal's finding must fail. There can be no doubt that Mr Bandara gave evidence concerning the material under the garage slab nor can there be any doubt that Mr Walford and Mr Capaldi gave evidence concerning the physical features of the slab, its design, and loading of the slab. This included Mr Walford's evidence about the capacity of the slab to perform its intended purpose when under full load.
Consequently, in the absence of any other identified question of law, leave is required to challenge the Tribunal's decision
As to the builder's challenge to the factual conclusions, in our view leave to appeal should not be granted.
To use the language of Collins at [77], it could not be said "the evidence in its totality preponderates so strongly against the conclusion found by the tribunal at first instance that it can be said that the conclusion was not one that a reasonable tribunal member could reach". Nor could it be said the builder was "deprived of a "significant possibility" or a "chance which was fairly open" of achieving a different and more favourable result because of one of the circumstances referred to in cl 12(1)(a), (b)": Collins at [78].
This is demonstrated by a review of some of the evidence relied upon by the builder to support the application for leave and said to demonstrate error by the Tribunal.
First is the cross examination of Mr Walford and Mr Turner. Here the builder said that Mr Walford conceded the slab was not out of plane and had not heaved.
At AB 225 line 3210 - AB 230 line 3483 the following cross examination of the expert witnesses occurred: Mr Davie: Now, one of the things that Mr Turner has done, is he's measured the slab to see if there's any significant change in the levels, hasn't he, to see whether it's flat? Mr Walford: Yes, I believe so. Mr Davie: And I think he said that it's flat within a tolerance of about 2 millimetres. Is that correct, Mr Turner? Mr Turner: That's correct, on the points that I raised in the four corners in comparison to the centre of the slab. There was basically a differential of about 2 millimetres. Mr Davie: Perhaps I could ask this to both Mr Walford and Mr Turner, who are obviously structural engineers; that indicates, does it not, that there hasn't been any measurable significant deflection in the slab? Mr Turner: I would completely agree. Mr Walford: Yeah, I'd just clarify between deflection and settlement, a similar premise, but I would agree. Mr Davie: So it is possible, I suppose, as you said, for there to be settlement, so that the structure as a whole rotates, and the slab remains a plane, rather than deflecting, but there's no suggestion that that's the case in this particular instance, is there? Mr Walford: Not based upon those measurements. Mr Davie: Now, again, this is addressed to both of you. One of the things you both addressed in your report is the cause of the cracking that's been observed in the garage slab, isn't it? Mr Walford: Yes. Mr Turner: Yes. Mr Davie: Now, there's nothing to indicate that the cracking is caused by any differential settlement and deflection of the slab, is there? Mr Walford: No, not based upon the measurements taken, no, not at this stage, no.
As can be seen above, the questions asked of Mr Walford by the builder's counsel Mr Davie, about the slab deflecting, relate to the measurements taken by Mr Turner concerning the relative levels of the corners of the slab with the centre point of the slab: see Mr Turner's evidence AB 225 line 3219-3221 commencing "That's correct, on the points I raised …". They are not questions about the evidence of Mr Walford concerning his site observation or the measurements taken by Mr Capaldi concerning cracks 2 and 13.
As to this evidence, at 9.0 of his report dated 17 August 2020 (AB 1618 at AB 1623) Mr Walford states: 9.0 Site Observation 9.1 A 450 mm high landscaping retaining wall was observed along the western boundary and approximately 600 mm of the external wall of the garage (western). The wall was reportedly installed by the Owners post-construction to ensure that soils are not lost into the neighbouring property (see Photographs 4-6 in Appendix C). 9.2 The concrete edge beam along the western side of the garage (Photograph 6) was exposed and highlighted the following: 9.2.1 The concrete edge beam along the western side of the garage is between 720-750 mm deep; 9.2.2 Only three (3) piers were observed under the western edge beam; 9.3 a single vertical articulation joint was noted along the rear (northern) elevation of the garage, however, no joints were observed on either the eastern or western elevations (See Photographs 7 & 8 of Appendix C); 9.4 No obvious cracking was noted in the brickwork; 9.5 Generally, the cracking I observed in the garage was consistent with the extent and magnitude of cracks reported by Mr Capaldi in the Tyrells Property Inspections Pty Ltd report referenced earlier in this report. As such, these measurements have not been replicated or reproduced as part of my report."
Mr Walford then gave evidence concerning the problems with the slab, its founding and likely failure mechanism under full load in his report. Having referred to various "Design Considerations" and "Geotechnical Considerations/findings" in section 10.0 of his report at AB 1624, Mr Walford said at section 11.0 of his report (AB 1625-6): 11.0 EXPERT OPINION 11.1 I have been asked to provide my professional opinion on: - 11.1.1 The cause or causes of the defects to the dwelling, 11 1.2 Based upon the above observations and evidence, it is my expert opinion that the cracking/movement observed in the reinforced concrete slabs is a result of both a lack of sufficient shrinkage/temperature control reinforcement in the slabs and also the differential movement/settlement of the slab panels with respect to the surrounding edge beams. With regards to the exact mechanism, there are many contributing factors such as the exceedance of the allowable bearing pressures under the edge beams/piers, the loosely compacted foundation under the slabs and/or the lack of suitable crack control reinforcement in the slab panels themselves. 11.1.3 I must note that while the "as-built" structure has not performed satisfactorily to date, it is likely that the defects would not have been anywhere near as significant had the construction been undertaken in strict accordance with the original design specifications i.e. edge beams and slabs founded on natural soils or compacted engineered fills (Please see Appendix D for associated calculations). 11.1.4 While the cracking would not have been as severe, I am of the opinion that the cracking associated with the minor degree of crack control provided would have been manageable and/or easily remedied (if necessary). 11.1.5 What in your opinion are deemed necessary rectifications of the defects to the dwelling? 11.1 6 In my expert opinion, it would be almost impossible to arrest all future movement in the structure by conventional repair methods such as cement stabilisation or underpinning alone for a number of reasons: 11.1.6.1 The piers appear to exceed the capacity of the underlying natural soil profile depth and are likely to settle further before coming to rest. While underpinning the edge beams would arrest this movement, the internal beams and slabs would still be founded on a different material and would be subject to settlement. 11.1.6.2 The extent of uncontrolled and/or uncompacted fill is up to 1600mm deep, and as such, it is unlikely that the weight of the slabs alone has compacted it to a point where cement stabilisation would be effective under the slab panels. In fact, the relatively low DCP blow counts noted in Appendix B of the geotechnical report would suggest that the slabs are potentially no longer in direct and uniform contact with the foundation. 11.1.7 As such, and in order to arrest all future movement to within acceptable limits, I would suggest that the perimeter beams need to be underpinned to at least the depth of the existing piers (in natural soils) and at least five (5) piers be installed under the existing internal beams to a similar depth. The internal piers will obviously require the local removal of slabs/beams and reinstatement upon completion. 11.1.8 Once this work has been completed we can assess the viability of injecting the foundation with cement stabilisation, however, it is likely that this will not be economical and/or successful, and as such, it may be easier/cheaper to install a number of piles in the middle of the slab panels at the same time as the internal beams are being re-supported. 11.1.9 Alternatively, and depending on the costs associated with the proposed rectification method outlined above, it may be quicker (and subsequently cheaper) to demolish the structure and rebuild it.
In cross examination by Mr Davie, Mr Walford maintained his position about the defective work concerning the soil profile, the piers and the capacity of the structure as built to support the design load. This can be seen from the cross examination that continued at AB 226 line 3252 - AB 230 line 3486. Mr Davie: There is absolutely no mechanism which you've been able to observe which indicates that there's anything about the foundations which has caused the cracking, is there Mr Walford? Mr Walford: I missed the first couple of words, sorry, Mr Davie. Mr Davie: The mechanism - if there is any differential settlement in the footing, the mechanism by which that might cause cracking would be deflection in the slab. Is that right, Mr Turner? Mr Turner: That's correct. Mr Davie: Do you agree with that, Mr Walford? Mr Walford: I would agree that if, under full load, and I apologise for interrupting before, but clarification for the sake of we're talking about footing classification, you're quite right that a class M or a class S or whatever is generally due to the reactivity or potential for movement in a footing. But what I think we're dealing with here is beyond [unintelligible 03:19:55] pressures, which are based upon the potential settlement, or the expected settlement of a footing. Now, to the best of my knowledge - Mr Davie: Mr Walford - sorry. Mr Barham: Please don't interrupt him. Mr Davie: I stopped, I apologised. Mr Walford: [Unintelligible 03:20:12] the garage has not been utilised fully in accordance with the code and the required loading, so I understand what you're suggesting, and I think we haven't seen it to date, but I also don't think that we have had the garage at a serviceable limit for the whole duration since it was constructed. Mr Davie: Are you talking about additional [light globes 03:20:34] in the garage? Mr Walford: Not additional, what it was designed for. So we've got a code whereby we have to design for 2.5 kpa loading, and because of cracks, and obviously the reason why we're here today, the owners have not used the garage to its full capacity, as would be expected. Mr Davie: Are you basically saying that you might see damage if you parked another car in it? Mr Walford: I'm just saying the calculations featured in my report, and the basis of our assessment, that the footings are inadequate, and we would expect to see settlement, is based upon using the garage, and to the capacity that the code requires. I don't believe that we have [unintelligible 03:21:29], therefore I don't believe that- Mr Davie: Therefore - sorry. Mr Walford: - and so I don't believe that the evidence that you're - sorry, Mr Davie, you go. Mr Davie: Sorry, can we just see where we're in agreement and where we're in disagreement? We're in agreement that after four years, there's been no measurable deflection in the slab? Mr Walford: Based upon the measurements by Mr Turner, yes, I would agree. Mr Davie: And it would follow that after four years there's been no differential settlement of the footings, or at least not sufficiently to deflect the slab, yes? Mr Walford: I would agree. There's differentiation between the slab and the footings, but yes, you're right. Mr Davie: And you would agree that defect which you've really concerned yourself with in this garage are the cracks in the slab? Mr Walford: Correct. The only apparent defect at this time is the cracking in the slab. Mr Davie: But you've also I think agreed with Mr Turner's metrics; those cracks wouldn't constitute a defect, haven't you, on their own? Mr Walford: Correct. Mr Davie: So we've got a garage here that after drought and wetter weather than a drought, hasn't got any defects at all. Correct? Mr Walford: By defects, if we're talking about the cracks and the metrics by which Mr Turner's discussed, correct. I don't believe that based upon its service to date, that the defects are the cracks that we're discussing, and are they within the tolerances, then I believe so. My concern as outlined in the report is more to do with the fact that we haven't utilised this structure, so it has not been tested in order for us to actually ascertain what defects may be there. Mr Davie: Well, can I just explore a bit further with you what you mean by [unintelligible 03:21:30]. Are you talking about parking additional cars in the garage? Mr Walford: As I suggested earlier, there is a code [unintelligible 03:24:14] requires us to have a particular loading [unintelligible 03:24:15]. Mr Davie: What additional use are you talking about, Mr Walford? Mr Walford: Using it to its capacity, parking a heavier vehicle in there, using it for storage, they're loading it up to the 250 kilos a square metre load [unintelligible 03:24:32]. Mr Davie: Parking a heavy vehicle, or using it for storage? Mr Barham: Please don't interrupt his answers. You ask him a question, you should - Mr Davie: No, look, I'm sorry, I don't intend to be, it's just that I'm getting a kind of choppy reception. Member: And look, I can understand that. I'm getting break ups, and I've got images going in and out, I've got audio going in and out. So I think we've just got to - Mr Davie: I'm sorry Mr Walford, I'm not being discourteous to you, but sometimes the sound stops, and I haven't realised that you haven't stopped. Mr Walford: Okay, so what I was suggesting Mr Davie is that [unintelligible 03:25:13] does not necessarily achieve the required load rating of that slab, which at the end of the day is what it's been designed for, and what it should be constructed to, and my concern is while we're discussing what is only apparent, we can't exclude the fact that that it hasn't been used in its full capacity, and to be honest, the owners have not wanted to park heavy vehicles or store a whole lot of things in there, because of the cracks and this ongoing matter. Mr Davie: Well, to leave that aside, [unintelligible 03:25:49] you haven't, as far as I'm aware, you haven't carried out any actual calculations based on additional storage in the garage, or putting in another - driving a land rover or some other car in there, have you? You've just basically expressed a concern. Mr Walford: No, I have carried out calculations, and they were featured in the first report, and they were [unintelligible 03:26:19] in my second report. Mr Davie: No, no, no, sorry, I don't want to talk at cross-purposes. You haven't done any calculations comparing the current use of the garage with any envisaged additional use of the garage, to say, "Oh, well, it may not be functioning now, but if you put a few more pounds or a bit more pressure in the garage, it might fail". You've done no calculation of that kind. Mr Walford: No. What I have done is I've assessed what it has been or should be developed to, in other words, what the client has expected to get from their garage, and use that for the basis of our report, not necessarily what it has or has not been used for to this day. Mr Davie: Well, that takes me on to this, Mr Walford; your calculations are based on some geotechnical findings, aren't they? Assumptions? Mr Walford: The calculations, no. They are, and I look at how the bearing pressure is presented, and I compare it to that. The calculations are separate. At the end of the day, I'm comparing those to an allowable bearing pressure. Mr Davie: But let us say - the thing that is concerning me is this; if as you have assumed, the slab edges and piers are not adequately supported by the substrate, then you would expect to see significant distress to the garage structurally already, wouldn't you? Mr Walford: Not necessarily. I'm trying to articulate I don't believe they've been fully tested to their required design load. Mr Davie: Well, Mr Turner, what do you say? Mr Turner: Well, I'm looking at that, and I would have thought the bearing capacity calculation undertaken by Mr Walford I think came in at about 240 kpa on the piers, and taking into consideration there were actually five piers along that edge, the calculations I've done fairly quickly was for a 2 ton vehicle in comparison to a 1,350 kilogram vehicle. The difference [unintelligible 03:28:48] capacity of the end of the pier would make a difference of 10 kpa, which I don't think is actually significant. Mr Davie: That's correct, isn't it, Mr Walford? Mr Walford: I haven't seen these calculations presented, so I can't really question them. But I guess we're going back to the same point, that the difference in a vehicle, we're comparing something that should have been designed for 250 kilos per square, with a change in vehicles, and not being able to utilise - or not having utilised it for that load. So we can change vehicles, we can put two motorbikes in there and do that, but it has not been tested to what it is required to perform to. Mr Davie: It does contain a certain element of [unintelligible 03:29:34] analysis, doesn't it, Mr Walford? Because here we have two structural engineers, one of whom [unintelligible 03:29:41], one of whom broadly says it's okay, and one of whom - you, Mr Walford - says it's not okay. But the fact of the matter is, there's nothing wrong with the garage, is there? Despite shrink and swell over the years, for four years, it's showing no signs of distress, whatsoever. Mr Walford: I'm sorry, was that a question? What was the - Mr Davie: Yes. If you were right, you would have expected some sort of distress to have manifested itself. Mr Walford: No, we're coming back to the same point. I don't believe it's been fully tested. I understand where Mr Turner's, where his calculations have just come from, and I don't disagree that changing the mass of the vehicle which covers a couple of square metres may not significantly impact the bearing on one pier. But what I'm trying to articulate is that this design, when we do a design and we check the bearing capacity on these piers and what is required, will be a much larger number then either of those vehicles just on their own. So I understand where you're coming from, I understand the question, but the issue I have is that while there are no defects presented due to this settlement at present, I would argue that they have not been loaded to anywhere near that pressure. Mr Davie: What's your reaction to that, Mr Turner? Mr Turner: Well, that may be the case, but we don't have any indication that there's any failure of any part of the slab. Realistically I can't see any damage to that garage, other than the indication of the cracking, which in my opinion as I've suggested before, is shrinkage cracking. I accept the fact that the thickness of the slab is less than the design thickness of the slab, but as you will have read in my report, the Australian Standard allows an [85 thick 03:31:42] slab, if the slab is - have I gone? … Mr Turner: Yes. As I said, the Australian Standard 85 thick slab, if the slab is supervised in construction by an engineer. So that's the reason why I do not consider the 85, or the reduction in the thickness of the slab has an effect on the longevity of the actual garage. And realistically, the main weight of that garage is definitely around the outside perimeter slab. If there were any indications of settlement under the slab, you would expect the slab to deflect in the middle, downwards, and this would be, as a result, this would result in the closing of the cracks, rather than any opening up of the cracks. So the reason why you would only get cracking occurring at the top of the slab would be whereby the slab actually is heaving, and there's no indication whatsoever of that, and [unintelligible 03:32:48] would in fact help the reduction in the heaving, if they were actually entrained. Mr Davie: I think I've put everything I wish to, to Mr Walford. I don't know if Mr Barham wants to ask Mr Turner anything?
There was no direct questioning concerning the measurements taken by Mr Capaldi about the cracks, particularly cracks 2 and 13 and their significance, in terms of height differential between the edges of each crack (as opposed to the width of each crack). Rather, the context of the questioning concerning cracks was in connection with the measurements of Mr Turner (identified above) and what could be drawn simply from the fact of the cracks.
It can be seen from the above passages of cross-examination that Mr Walford and Mr Turner had different opinions. Throughout, Mr Walford maintained his opinion as to why the slab as constructed was not in accordance with the design and was not sufficient. The Tribunal provided rational reasons as to why it preferred the evidence of Mr Walford, including based on the observations and measurements of Mr Capaldi, the observations and tests of Mr Bandara and the use of the garage and its loading.
We see no reason why the Tribunal was in error in accepting the evidence of Mr Bandara based on the testing he carried out in preference to the builder's geotechnical expert, Mr Smith and the investigations done by that expert.
The Tribunal was also entitled to have regard to the thickness of the slab and the concrete strength in determining whether the slab had been constructed in accordance with the requirements of the contract and would perform as required.
The fact of different opinions is not, of itself, a basis to grant leave and the evidence identified does not, when considered in context, suggest error to warrant the grant of leave. The decision made was one available on the evidence and the garage work order (Order 1) was therefore an appropriate remedy.
It follows that leave to appeal should be refused and this aspect of the appeal should be dismissed.
As noted above, a stay of the garage work order was made by the Appeal Panel on 28 October 2022. This stay should be lifted. As there was no challenge to the timeframe specified for the completion of this work (namely 9 months as specified in Order 4(1)(f) made 1 September 2022) we should vary order 4(1)(f) to require the work, the subject of the garage work order, to be completed within 9 months from the date of our orders.

Middleton v Wrona

At a glance

Court

Decision date

Catchwords

Source

Catchwords

Judgment (19 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (41)

Cited By (4)