Oxford (NSW) Pty Ltd v KR Properties Global Pty Ltd trading as AK Properties Group ABN 62 971 068 965

Other rectification costs "apparent from the face of the invoice"

An issue arose in the proceedings as to whether costs incurred by the Owners were attributable to work done to complete construction of the Building, as opposed to work done to rectify defects in the Building.
I dealt with the methodology adopted by the Owners to prove their loss at [J250].
That methodology was to engage Mr Mahedy to prepare the document called "Appendix C" that I attached to my reasons. [10]
As I said at [J252]: "In Appendix C, Mr Mahedy set out all of the invoices received and paid by the Owners concerning the completion and rectification of the works, together with an allocation of the amount of those invoices to three categories: (a) incomplete works relating to Stages 2 to 8; (b) incomplete works relating to Stages 9 and 10; and (c) rectification works."
I concluded: "I am prepared to accept Mr Mahedy's evidence as providing a basis for which to come to a conclusion on the total cost of completing and rectifying the work. Thus, I am satisfied that the Owners, using Mr Mahedy's methodology, have established that the amount they have expended, as set out in Appendix C, should be accepted as representing the total of the reasonable costs of completing the works and rectifying the defective work. I am not, however, persuaded that the evidence enables me to come to any conclusion as to what proportion of that total amount in Appendix C should be attributed to the cost of rectifying defective work, as opposed to completing the works. Mr Mahedy has not exposed his reasoning process on that question and, as the Builder submitted, were I simply to accept his conclusions, I too would come to an unreasoned conclusion." [11] (Emphasis in original.)
The Owners now submit that they: "… made the submission that it was possible to tell which invoices were in respect of rectification costs [i.e., as opposed to completion costs] from what was written on the invoice. The Court did not address this submission in the Judgment."
The proposition appears to be that, had I looked beyond Mr Mahedy's methodology and myself inspected each of the invoices in the Court Book, it would have been possible for me to ascertain what work was attributable to rectification of the Building and what work was attributable to the cost of completing the Building.
I was not invited to take this course during the hearing. It is true that Mr Horowitz, who appeared for the Owners, referred in closing oral submissions, on a number of occasions, to particular invoices that he submitted related only to rectification costs.
It is also true that, at my request, he provided me with an updated form of Mr Mahedy's Appendix C which contained, in the far right hand column, references to where the relevant invoices could be found in the Court Book. At one point during submissions, I said that if such a column was added to the Schedule "if I want to do a check, I can see where they are". [12] The form of Appendix C annexed to my reasons contains that last column.
But Mr Horowitz did not suggest I should examine each invoice and reach a conclusion as to which did, and did not, refer to rectification costs.
In support of his post-judgment submission that an inspection of the invoices would reveal whether or not they are attributable to rectification costs, Mr Horowitz provided a 10-page schedule headed "Defect Rectification Costs Apparent From the Face of the Invoice". That schedule lists a large number of invoices and specifies, in relation to some 75 of them, the amounts that are said to be, on the face on the invoices, attributable to defect rectification. The schedule concludes by stating that the "total defect rectification costs in the schedule" is $123,657.68.
Mr Horowitz provided no such document to me during the course of the hearing. I think the Builder is correct to submit that, in now so doing, Mr Horowitz is seeking to re-open the Owners' case to argue this point on a basis that was different from that articulated during the hearing.
Mr Horowitz identified five passages from the transcript of final closing submissions as bespeaking the proposition that the Owners' case was that it was possible to tell which invoices were in respect of rectification costs from what was written on the invoice.
But there are other passages from the transcript which show that I repeatedly asked Mr Horowitz to explain what Mr Mahedy's explanation was for his attribution of expenses to rectification as opposed to completion costs. There was also an issue about what expenses incurred by the Owners could be attributed to each of the 16 building defects the subject of the Owners' allegations. Mr Horowitz accepted that, because some expenses had been incurred in relation to one or more of those defects, it was not possible to make any such attribution.
It was in that context, in a passage to which Mr Horowitz did not refer, that we had this exchange: "HIS HONOUR: I think that what Mr Lynch and Ms Cameron are saying in their submissions, and I'm going to say this now so they can respond later if this is not right, is when they say there's no evidence of the money spent, they're referring to Mr Mahedy's affidavits where they say he doesn't in terms say that particular money was spent in relation to particular defects. I think that's what they say. But your answer to that, in part, is that may be right, but all the money that was spent is summarised in this appendix. The fact that the money was spent is not disputed. It may not be possible to allocate these expenses all to one of the categories B1 to B16, but all the expenses are there, and you say I should accept as good enough that allocation mechanism that Mr Mahedy has described. HOROWITZ: Yes, your Honour. HIS HONOUR: Because that's the best that can be done, you say, in the real world. HOROWITZ: Yes, your Honour. That's better put than I could put it."
It is true that that exchange occurred in the context of debate as to whether the Owners' expenses could be attributed to a particular defect, as opposed to the question of whether the expenses were for rectification as opposed to completion. It is also true that, immediately after that exchange, Mr Horowitz made submissions that, speaking generally, it was possible to identify some invoices as relating to rectification work.
However, as I have said, Mr Horowitz did not invite me to conduct my own review of the very large number of invoices in the Court Book to reach my own conclusion, independently of Mr Mahedy's analysis, on this question.
Had that submission been made, I would have directed the Owners to prepare a document in the nature of a Redfern Schedule setting out exactly how it was said that the invoices, on their face, bespoke rectification as opposed to completion work. That would no doubt have led to a document along the lines of the document that Mr Horowitz submitted, following delivery of judgment, and in support of the present application.
I would then have given the Builder an opportunity to respond.
That is not how the case was run.
It is clear from the Builder's submissions on this application that its position would have been that what was to be drawn from the face of the invoices was, in many cases, contestable. Indeed, Mr Horowitz accepted during the hearing that questions of inference might arise as to what was to be made of the invoices.
In these circumstances, my conclusion is that it is not now open to the Owners to seek to reagitate its case on this basis.

Endnotes

Oxford (NSW) Pty Ltd v KR Properties Global Pty Ltd trading as AK Properties Group ABN 62 971 068 965 [2023] NSWSC 343.
[2007] NSWSC 957.
At [8].
(1989) 171 CLR 125; [1989] HCA 8.
At [J298]-[J326].
At [J339]-[J346].
At [J347]-[J351].
See my decision in The Owners - Strata Plan No 87060 v Loulach Developments Pty Ltd (No 2) [2021] NSWSC 1068 at [42]-[44].
The Owners-Strata Plan 86807 v Crown Group Constructions Pty Ltd [2023] NSWSC 44 at [23] (Ball J) and The Owners-Strata Plan No 86807 v Crown Group Constructions Pty Ltd (No 2) [2023] NSWSC 520 at [18] (Ball J).
At [J251].
At [J289]-[J291].
T443.16. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 June 2023

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