Patel v Redmyre Group Limited

Did the appellants validly terminate the building contract?

1. In order to consider this matter, we first refer to some provisions of the building contract and to some details of what occurred between the parties.
2. Clause 23 required the appellants to notify the respondent in writing of any omissions or defects in the building work which had become apparent within 13 weeks of the work having been completed, such notification to be given within 10 business days after the expiry of the 13 weeks period. The respondent was required to rectify the omissions and defects at its own cost within 30 business days of receipt of that notification.
3. On 20 February 2019 solicitors for the appellants wrote to the respondent alleging that it had failed to execute the work with due diligence and within the time stipulated in the contract. The letter referred in part to Clause 25 of the contract as entitling the appellants to terminate on the basis of failure to proceed diligently with the work. It was alleged that this failure included an ongoing failure to respond to many demands made by the appellants that the respondent provide a schedule of works and an estimated time for completion and demanded that these be provided within 10 days with a threat to terminate the contract if this did not occur.
4. There followed some communications between the parties. On 7 March 2019 the appellants' solicitors wrote to the respondent referring to the letter of 20 February 2019, noting that the respondent had failed to respond to the letter, and stating that the contract was terminated pursuant to Clause 25 with immediate effect. The letter then set out details of 26 items which were said to be incomplete, noted that the locks had been changed, that the appellants had retaken possession of the property and that any attempt by the respondent to enter the premises would be "deemed trespass and result in prosecution."
5. Clause 25 of the building contract entitled the appellants to terminate the contract provided that the processes set out in that clause had been complied with. If the respondent had "failed to proceed diligently" with the building work the appellants were entitled to notify the respondent in writing that unless the default was remedied within 10 business days or such longer period as was specified and the respondent did not comply with that request within that time, or if the default could not be remedied, the appellants were entitled to terminate the contract by giving written notice to that effect to the respondent.
6. In his reasons for decision the Senior Member said that he was not satisfied that the letter of 20 February 2019 was a valid notice as contemplated by clause 25 of the contract because firstly the appellants had not established that the respondent had failed to proceed with the works diligently in breach of the contract and secondly because the respondent did not have an obligation under the contract to provide a schedule of works and estimated time for completion. Accordingly, in order to succeed in demonstrating that the letter constituted a valid notice, the appellants were required to establish that the respondent had failed to proceed with the works diligently in breach of the contract.

Did the respondent fail to proceed with the works diligently in breach of the contract?

1. The determination of this matter is of considerable significance in determining in turn the rights and obligations of the parties under the contract.
2. It was uncontroversial that building work commenced no later than 3 January 2018, and that the date contemplated for completion within 32 weeks was 27 August 2018. The building work consisted of the renovation, restoration and conservation of a 4-storey residential terrace of historical interest in the inner city area. The relevant development consent required the use of an experienced heritage consultant, and the use of experienced trades persons who were skilled in traditional building and engineering trades. During the course of the building works a number of variations were undertaken by the respondent at the request of the appellants.
3. It is clear from voluminous communications between the parties commencing in November 2018 that the appellants were unhappy with the amount of building work then completed by the respondent and the quality of some of that work. Allegations to this effect made by the appellants were rejected by the respondent, and the respondent complained that the building work had been delayed because of the appellants' own involvement in the project which was said to have "created delays, confusion, frustration and at times, chaos." In oral evidence the principal representative of the respondent, Mr M Gouros, said that the work was delayed because he had to wait for work to be completed by contractors engaged by the appellants. These communications continued into early February 2019 and culminated in the communications of 20 February and 7 March 2019 which we have earlier referred to.
4. In dealing with this issue the Senior Member referred to the documentary evidence concerning the communications between the parties, oral evidence given on behalf of each of the parties and the evidence of a consultant retained by the appellants, Mr Paul O'Donnell, who had provided two written reports and who gave oral evidence in the proceedings. In that oral evidence Mr O'Donnell said that the building works were almost 50% incomplete at the time that the contract was purportedly terminated by the appellants.
5. Mr O'Donnell provided two reports consequent upon inspection of the site on 31 March 2019. He noted that as at that date the appellants had paid to the respondent $501,972 of which $447,250 represented part payment of the contract sum, allowing for payment for variations of $54,722. Mr O'Donnell assessed the works as being "substantially not completed" and described a number of items which were incomplete. He thought that in general terms an amount of approximately $215,000 would be required to complete the work. Mr O'Donnell provided a second report following a further inspection on 3 February 2020 in which he noted additional omissions and defects in the building work which had been discovered by the appellants. We have found nothing in the second report which would impact upon any assessment of whether the respondent had proceeded to carry out the building works with due diligence.
6. Mr O'Donnell gave oral evidence in the proceedings before the Senior Member concurrently with evidence given by Mr A Capaldi an expert who had been retained by the respondent. The experts had prepared a joint report. They differed in their opinion about the nature and extent of the work which was required to be completed and the cost of that work. The Senior Member asked Mr O'Donnell to provide his expert opinion about the appropriate rates which could be charged for the work, and in doing so to describe in general terms the scope of works to be carried out. In responding to this request Mr O'Donnell said Scope of works - about 50% or less complete. All of the restoration issues - floor, skirtings, architrave, restore doors, windows and the like, and perhaps the highly specialised works were outstanding including ceilings, walls and restoration. It is a 150 year old building plus, and the works were specialist, complicated, difficult to match where restoration and repair are preferred over any replacement, and then if replacement it required a difficult matching obligation to like, similar products as detailed in the specification for those works to be completed. Those works in terms of the scope then followed that those particular specifics of historic restoration type work meant that it determined how you are going to address the issue of costing it and rates.
7. The joint evidence of Messrs O'Donnell and Capaldi extended over a day and a half of hearing time. Our perusal of the transcript indicates that the only reference made to the extent to which the building works had been completed by the respondent was the brief reference in the oral evidence of Mr O'Donnell which we have extracted above. We do not apprehend that any particular question about this matter was addressed to Mr O'Donnell or, indeed, to Mr Capaldi by either counsel appearing for the parties or by the Senior Member. In essence, the evidence of these two experts was confined to the scope of works necessary to complete the building works and the cost of same. This is a matter which will assume some significance, to which we shall shortly refer.
8. A contentious issue between the parties in determining whether the respondent had proceeded with due diligence was whether variations to the work requested by the appellants had caused a significant delay. The respondent had never made a claim for an extension of time to complete the building works by reason of any variation, which it was entitled to make under Clause 7 of the building contract. The Senior Member held that this failure to seek a formal extension of time did not affect the enquiry which needed to be undertaken in determining whether the builder had proceeded with due diligence. This conclusion, with which we agree, was not challenged in these appeal proceedings.
9. The Senior Member, having considered the evidence given by the respondent with respect to the time taken to carry out the work associated with a number of variations and evidence adduced on behalf of the appellants concluded: there was no evidence challenging the builder's estimate of between 14 and 15 weeks for variations 1 to 6 and 10 which were agreed. The owners' defence as to variations 5 and 6 was as to an accord and satisfaction and did not challenge the existence of these variations. Taking into account the additional time of between 14 and 15 weeks for these variations, the notional completion date became between 7 and 14 December 2018.
10. In written submissions the appellants said that the Senior Member must have arrived at the extension of the notional completion date by reference to the evidence as to the time taken to complete each variation. Thus, this assumed that each variation was carried out consecutively. However, there was evidence before the Senior Member that some of the variations were attended to concurrently, and not consecutively. The appellants asserted that therefore the reasoning of the Senior Member which formed the basis of the extension of the notional completion date was incorrect.
11. In written submissions in reply the respondent referred to evidence given on its behalf in the course of the hearing and submitted that some of it at least was indicative that not all of the variations were carried out concurrently. Furthermore, it was asserted that no argument was made at first instance that the delays referred to in the evidence given on behalf of the respondent were concurrent delays, and if such an argument had been made the respondent would have had an opportunity to deal with and lead evidence on it. In these circumstances it was submitted that we should not deal with this submission of the appellants.
12. We are able to deal with this particular submission, by reference to the overall in-principle approach which we intend taking to resolve this issue.
13. In determining that the appellants had not established that the respondent had failed to proceed with the works diligently in breach of the contract the Senior Member referred to the decision of the NSW Court of Appeal in Hometeam Constructions Pty Ltd v McCauley [2005] NSWCA 303 and in particular the judgement of McColl JA (with which Ipp and Tobias JJA agreed). At [170] and following her Honour said 170 Despite the prevalence of clauses in building contracts requiring the work to be performed with "due diligence", defining the nature of that obligation has proven elusive. 171 In Re Stewardson Stubbs & Collett Pty Ltd & Bankstown Municipal Council, Moffitt J observed (at 1675 - 1676) that: "... [T]he question of what precisely constitutes a failure to proceed with reasonable diligence is a matter of some difficulty. However, it is an allegation of a general failure to proceed with that degree of promptness and efficiency that one would expect of a reasonable builder who has undertaken a building project in accordance with the terms of the contract in question." 172 In Hounslow London Borough Council v Twickenham Garden Developments Ltd Megarry J considered a requirement that a building contractor "proceed regularly and diligently with the works" and said (at 269): "[W]hat is the meaning of the words 'regularly' and 'diligently'? These are elusive words, on which the dictionaries help little. The words convey a sense of activity, of orderly progress, and of industry and perseverance: but such language provides little aid on the question of how much activity, progress and so on is to be expected. They are words used in a standard form of building contract in relation to functions to be discharged by the architect, and in those circumstances it may be that there is evidence that could be given, whether of usage among architects, builders and building owners or otherwise, that would be helpful in construing the words. At present, all that I can say is that I remain somewhat uncertain as to the concept enshrined in these words; and this necessarily increases the task of Mr. Harman in establishing a strong case that the contractor has failed to proceed regularly and diligently with the works, so that the architect's notice is good." (emphasis added) 173 In Hooker Constructions Pty Ltd v Chris's Engineering Co [1970] ALR 821 at 822-823, Blackburn J considered whether a head contractor had validly terminated a building sub-contract on the basis that the sub-contractor had failed "to proceed with the works with reasonable diligence" as required by the contract. After observing that the "onus is on the plaintiff to show the [sub-contractor] was in default in a way ... caught by this provision", his Honour said (at 822) that he had "not found it easy to construe this phrase 'reasonable diligence' in the context of this case". He concluded that "a sensible construction of the phrase is that the actual extent of work completed is of some significance" and that " 'diligence' in the contract means ... not only the personal industriousness of the defendant, but his efficiency and that of all who worked for him". 174 He also said (at 823) that he was entitled to accept as evidence that the defendant had not displayed reasonable diligence, "evidence that the work was, at the material time, seriously incomplete together with evidence that there were no circumstances preventing the defendant from overcoming this situation". 175 In Hooker the plaintiff led evidence that at the time it purported to terminate the sub-contract, the defendant's work was "seriously behind what could reasonably be expected [and] that the situation was not due to anything which was beyond the defendant's control". Although the defendant adduced evidence to show that "through no fault of his own, he was unable to get the necessary material to bring the work to the stage where it should have been at the material time", this did not convince Blackburn J who held the plaintiff had proved the contract was validly terminated. 176 In Australian Development Corporation Pty Ltd v White Constructions (ACT) Pty Ltd (1996) 12 BCL 317 Giles J (as his Honour then was) accepted that "where there was a specified future date for practical completion, whether [the builder] was prosecuting the project diligently was a question of fact, substantially determined by whether it was proceeding at a rate of progress according to which practical completion would be achieved by the specified date but with regard also to whether accelerative measures could bring achievement of completion by the specified date." His Honour considered competing expert evidence as to the time required to complete the building work but concluded it was unnecessary in the circumstances of that case to resolve the difference between those views. 177 As each of these cases demonstrates, "you cannot have diligence in the abstract. It must be related to the objective": Greater London Council v Cleveland Bridge and Engineering Company Ltd (1986) 34 BLR 50; see also Hick v Raymond & Reid [1893] AC 22 at 29 per Lord Herschell LC ("there is no such thing as reasonable time in the abstract"); Maynard v Goode [1926] HCA 4; (1926) 37 CLR 529 at 538 per Isaacs J ("[t]he question of what is 'reasonable time' is always relative; that is, it means 'a reasonable time under the circumstances' "). 178 There were, in my view, in the context of the Contract, at least two ways the respondent could have established that the appellant had failed to perform the works with due diligence. 179 First she could have proved: (a) the work the appellant was required to carry out under the Contract; as events transpired this included the original contract works and the rectification work; (b) what, in addition to the contract period, was a reasonable time within which the appellant ought to have executed the original contract works and the rectification work; (c) that the appellant had failed to execute the work within that reasonable time; (d) that, to the extent the appellant proffered explanations of why the work had not been executed within that reasonable time, those explanations were unacceptable. 180 As I shall explain, the appellant's case was, essentially, that this was the way the respondent was required to prove her case and that she had failed to do so. 181 Secondly, in my view, the respondent was also entitled to seek to prove lack of due diligence by establishing a case of delay in progress during construction. This appears from both Stubbs and Hooker. On this basis she could have established a failure to carry out a reasonable amount of work by a given time; that that period of time be measured by reference to all the work to be performed under the Contract or, in absolute terms, by reference to a lack of activity on site over a significant period that could not be satisfactorily explained. The onus of proving lack of due diligence was on the respondent. If the facts established by the respondent are capable of giving rise to an inference of lack of due diligence, the appellant may discharge any evidentiary onus that may pass to it, by explaining why the work progressed at that rate: see Hobbs. That evidence should be "sufficient ... to turn the scale": Brady v Group Lotus Car Cos plc [1987] 3 All ER 1050 at 1059 (CA) per Mustill LJ.
14. We refer also her Honour's conclusion at [199] 199 Accordingly in order to establish that the Works, including the rectification work, had not been performed with due diligence, it was incumbent on the respondent, in my view, to call evidence of the nature of that called in Hooker to establish that at the time the Notice of Default was served, the Works were seriously incomplete and there were no circumstances preventing the appellant from having performed the Works at a more rapid rate.
15. In submitting to the Senior Member and to us on appeal that that the respondent had not proceeded with due diligence the appellants relied upon the following matters 1. the date for practical completion was, on the evidence, 27 July 2018 and when the contract was terminated on 7 March 2019 the building works were less than 50% completed. In so submitting the appellants relied on the opinion of Mr O'Donnell given in oral evidence. 2. even if some allowance were made for the time taken to carry out variations, the respondent could not be held to have proceeded with due diligence by reason of the extent of the building work then remaining to be completed.
16. In dealing with this fundamental submission, it is important to bear in mind that the Senior Member did not find that the respondent had not failed to proceed with due diligence. The Senior Member found that the appellants had not established that the respondent had so failed. In so finding the Senior Member had regard to the principles set out in Hometeam Constructions which we have extracted above. It was not sufficient for the appellants to have held the firm belief that the respondent had inappropriately delayed the completion of the building works and had therefore failed to carry them out with due diligence. It was necessary for the appellants to have adduced appropriate evidence concerning the period during which a builder carrying out work appropriately and competently should have performed the work that was carried out, so as to form a basis upon which such a finding could be made. No such evidence was adduced. Furthermore, as the Senior Member observed, the appellants did not adduce any evidence that there were no circumstances preventing the respondent from having performed the works at a more rapid rate.
17. The Senior Member rejected the evidence of Mr O'Donnell that the building works were less than 50% complete in March 2019. Firstly, no reference to this evidence had been made by Mr O'Donnell in his two reports, and secondly his opinion was based upon a consideration of the fact that "all of the restoration issues" were outstanding. The Senior Member regarded this as an exaggeration having regard to the incomplete works claimed by the appellants. Furthermore, the opinion of Mr O'Donnell "did not take into account the issue of whether the work undertaken by other contractors the (appellants) engaged occasioned delay to the (respondent) in undertaking the works." We agree that it was open to the Senior Member to reject this evidence on this basis, and in so doing his discretion did not miscarry in any relevant manner such as to impact upon the outcome of these appeal proceedings.
18. We conclude that the Senior Member did not fall into appellable error in determining that the appellants had failed to demonstrate that the respondent did not proceed to carry out the building works with due diligence. On this basis it followed that the appellants had failed to prove that the respondent was in breach of the building contract at the time that they purported to terminate it in the letter of 7 March 2019.

Did the appellants validly terminate the contract under clause 25?

1. As we have previously observed, Clause 25 of the building contract provided for termination by the owner "due to the fault of the contractor." Relevantly, for our purposes, Clause 25 provided that if the contractor fails to proceed diligently with the work the owner may, if that default can be remedied, notify the contractor in writing that unless the default is remedied within 10 business days or such longer period as specified, the owner will terminate the contract. The clause then provided that if the contractor does not comply with the owner's request within the time allowed, or if the default cannot be remedied, the owner may terminate the contract by giving written notice to that effect to the contractor.
2. We have previously referred to the letter of 20 February 2019 from the appellants' solicitors to the respondent. In that letter the solicitors referred in brief terms to the provisions of the building contract, alleged that the respondent had failed to execute the works with due diligence and within the time fixed for practical completion, asserted that this letter "constitutes yet another written notice by our clients to you concerning the significant delay in completing the project", referred to clause 25 of the contract and that the respondent's failure to respond to the appellants' many demands for a schedule of works and estimated time for completion was also indicative of the respondent's failure to proceed diligently with the works. The letter demanded that the respondent provide a schedule of works remaining to be carried out with a firm timeline for completion as a matter of urgency and within 10 days and stated that should be appellants not agree with the proposed schedule of works and timeline that they would "terminate the contract."
3. As the Senior Member observed, there was no requirement in the contract for the respondent to provide a schedule of works as demanded by the appellants in the 20 February 2019 letter. It is arguable that the letter did not therefore constitute the notice required by clause 25. However, this question is academic in circumstances where the Senior Member found that the appellants had not discharged the burden which fell to them of demonstrating that the respondent had failed to proceed with due diligence.
4. We have already concluded that the Senior Member did not fall into error in so finding. It follows, therefore, that the appellants' solicitors' letter of 7 March 2019 purporting to terminate the contract with immediate effect because the respondent was in breach of the contract and statutory warranties had no proper basis and the appellants were not thereby entitled to terminate the contract. In so concluding, the Senior Member did not fall into error.

Did the appellants validly terminate the contract at general law?

1. The appellants submitted that there had been on the respondent's part a substantial absence of due diligence such that this constituted a repudiation by the builder of its obligations under the contract by manifesting an intention to no longer be bound by it. Such manifestation had occurred by no later than 7 March 2019, and the respondent's repudiation was accepted in their solicitors' letter of that date. This submission was rejected by the Senior Member who found that the letter of 7 March 2019 from the appellants' solicitors to the respondent constituted a repudiation of the building contract by the appellants. Not only did the letter purport to terminate the contract with immediate effect, but the respondent was advised that the appellants had changed the locks, had re-taken possession of the property and that "…Any attempt by you to enter the premises will be deemed trespass and result in prosecution." The respondent was required to make arrangements to uplift any personal possessions or tools left on the premises.
2. The Senior Member applied the principles dealing with the repudiation of contracts referred to by the NSW Court of Appeal in DCT Projects Pty Limited v Champion Homes Sales Pty Limited [2016] NSWCA 117. At [39] and [41] Gleeson JA (Macfarlan JA and Sackville AJA agreeing) said 39 For the conduct of a party to constitute a renunciation of its contractual obligations it must be shown that the party is either unwilling or unable to perform its contractual obligations, that is, it has evinced an intention to no longer be bound by the contract, or stated that it intends to fulfil the contract only in a manner substantially inconsistent with its obligations and in no other way: Shevill v Builders Licensing Board [1982] HCA 47; 149 CLR 620 (Shevill) at 625-626 (Gibbs CJ); Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; 166 CLR 623 at 634, 647-648, 658; Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; 233 CLR 115 (Koompahtoo) at [44]. Repudiation is a serious matter and is not to be lightly found or inferred: Shevill at 633 (Wilson J). … 41 A renunciation can be made either by words or conduct, provided it is clearly made: Universal Cargo Carriers Corporation v Citati at 436. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it: Koompahtoo at [44]; Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd at 659 (Deane and Dawson JJ) and 647 (Brennan J).
3. In rejecting the appellants' submission that the respondent had manifested an unwillingness to perform the contract the Senior Member referred in part to the following 1. contemporaneous emails between Mr Narendra Jain, a director of the third named appellant, and Mr Gouros, the principal of the respondent, together with the evidence of Mr Gouros, demonstrated that there was some activity on the building site between November 2018 and 7 March 2019 2. the lack of activity alleged by the appellants was explained by the sequence of particular items where the respondent was forced to wait for work to be completed by contractors engaged directly by the appellants 3. the appellants bore the onus of proving the work could have been carried out by the respondent more expeditiously but had not discharged that onus. Accordingly, the appellants had not established that there was unreasonable delay on the part of the respondent.
4. Having regard to the above matters the Senior Member concluded that there was no valid ground available to the appellants to terminate the contract under the general law by reason of any repudiation by the respondent. In so concluding the Senior Member had regard to the well-known principles established in the High Court of Australia in Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359; [1931] HCA 21.
5. In their Amended Grounds of Appeal, the appellants challenged the findings of the Senior Member set out in (1) and (2) of [39] above by asserting that there was "insufficient evidence" to establish these matters. The Senior Member had available a detailed affidavit of Mr Gouros sworn 24 December 2019 filed on behalf the respondent which dealt extensively with the reasons for the delay in completing the building works by reference to a large number of variations, and work carried out respect to the main bathroom, fireplaces, and kitchen stove area. That affidavit is 20 pages in length and annexed copies of relevant communications with the appellants and others extending over approximately 169 pages. Extensive affidavit material and supporting documents were also filed on behalf of the appellants. In addition, a number of these matters were the subject of oral evidence from the parties and in some of the evidence given by the experts retained by each of the parties, both in written form and orally.
6. We observe that there was an abundance of evidentiary material with respect to these contentious matters. The appellants submitted that there was insufficient evidence before the Senior Member to have enabled him to make the findings which they attacked as having no or insufficient foundation. However, they did not refer us to that evidence, nor did they seek to analyse it and inform us in what manner and why it was insufficient to establish the matters referred to. No such detail is contained in the appellants' written submissions. In addition, no such attempt was made by counsel for the appellants (who did not represent them before the Senior Member, was not the author of the written submissions nor, presumably, the Amended Grounds of Appeal) during the course of the appeal hearing. In these circumstances it is neither appropriate nor necessary that we undertake any detailed analysis of all of this substantial evidentiary material for ourselves to determine whether there is any validity in this ground of the appeal. We reject it accordingly as having no demonstrated basis.

Whether the appellants were entitled to damages for the costs to complete the building works and to rectify defective work, and damages for delay.

1. In the proceedings before the Senior Member the appellants identified a number of items of work which were said to be incomplete and claimed $215,683 for the cost of completion after allowing to the respondent an amount unpaid under the building contract. The basis of this claim was articulated in Clause 22 of the appellants' Points of Claim. Clause 22 also included a claim for $130,000 in damages based on a 26 weeks' delay, making a total of $345,683. Clause 25 of the Points of Claim sought that the respondent pay the applicants "by way of restitution, refund, debt or damages" the amount of $345,683 plus interest and costs.
2. The appellants' solicitors' letter of 7 March 2019, which predated the issue of the Points of Claim alleged that the cost of completing the building works was of the order of $150,000, that the appellants had paid the respondent $447,250 excluding variation payments of $54,722.50 and that they had therefore overpaid the respondent by $97,750, repayment of which was demanded forthwith.
3. During submissions made on the fourth and final day of the hearing before the Senior Member on 29 September 2020 Mr Alexander who was then counsel for the appellants sought to make a claim on their behalf seeking repayment of the amount allegedly overpaid, which had been referred to in the letter of 7 March 2019. He submitted that it could be accommodated within a claim referable to monies paid "by way of restitution, refund, debt or damages" as referred to in Clause 25 of the Points of Claim. Counsel for the respondent resisted this claim asserting that it had not been raised in the substantive proceedings, and if it had been raised, he would have advised the respondent to seek evidence from a quantity surveyor to meet that claim.
4. The Senior Member gave oral reasons for rejecting the late claim for overpayment brought by the appellants. He rejected it on the basis that it had not been raised in the Points of Claim, it was not canvassed in the evidence of the experts and the builder would have been entitled to seek evidence from an expert to deal with it.
5. In written submissions before us the appellants asserted that the Senior Member erred in finding that the overpayment issue was not canvassed on the evidence. It was said that both experts gave evidence about the reasonable costs to complete the works and the amount already paid under the contract. However, we observe that this evidence does not deal with a claim for overpayment which involves ascertaining the value of the works already completed.
6. The appellants have not undertaken any appropriate analysis of the evidence given in the proceedings and its relevance to the determination of this issue. In the absence of any reference to the evidence on which to base this broad submission we are unable to consider it and we reject this submission of the appellants. Furthermore, the appellants have not provided any submissions to suggest that the discretion of the Senior Member, in determining to reject the late application made by them during the course of submissions after the conclusion of the evidence on the last day of the hearing, otherwise miscarried. This submission is rejected in its entirety.
7. Before considering the entitlement of the appellants to claim certain damages and costs in the context of the reasons for decision of the Senior Member, and the bases upon which the appellants sought to appeal, we first refer to a letter from the respondent's solicitors to the appellants' solicitors dated 4 April 2019. That letter contained a detailed response to the 26 items of alleged defective and incomplete work contained in the appellants' solicitors' letter of 7 March 2019. The letter concluded by stating that the respondent was prepared to attend the premises to complete the building works subject to the comments made with respect to each of the 26 items and to rectify any defects in its own work. For that purpose, the respondent sought access to the building site.
8. The appellants declined to engage with the respondent with respect to the matters raised in the letter of 4 April 2019 and proceeded to arrange for the building works to be completed by others.
9. The Senior Member rejected the claims of the appellants for damages for the costs to complete the building works and to rectify defective work, and damages for delay. He had previously found that the contract had been repudiated by the appellants in their letter of 7 March 2019, but the contract remained on foot because the respondent had not terminated it in response to the repudiation, having requested an opportunity to return to the site to complete the building works and rectify any defects as referred to in the letter of 4 April 2019. In this regard the Senior Member noted that the respondent was required to complete the works and rectify any defects for which it was responsible at no cost to the appellants. Accordingly, the appellants would only be entitled to have the work of making good carried out by others and claim the cost of doing so from the respondent as provided for by the procedures contained in clause 25 of the contract.
10. In so concluding, the Senior Member closely followed the reasoning of White J (as his Honour then was) in the Supreme Court of NSW in Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWSC 1302. In his reasons for decision the Senior Member summarised the findings of White J. Because those findings are instructive in identifying the relevant principles which apply to disputes arising under building contracts of the kind which is the subject of these proceedings, we set out the following extract from his Honour's reasons Cost of Rectification of Defects 68 Although Parkline did not accept the plaintiffs' repudiation of the contract as putting an end to it, the plaintiffs prevented Parkline from carrying out after 14 January 2005 any further rectification work of the defects notified by Quirk. 69 Under clause 6.11 the Architect could require the making good of defects whether those defects were due to the materials or workmanship not being in accordance with the contract, or whether the defects occurred notwithstanding that the materials and workmanship were in accordance with the contract. In the latter case, the making good of the defects was to be dealt with as a variation (clause 6.11.04). 70 Where a defect was due to work not being done in accordance with the agreement, there was an existing breach by the builder of clause 1.03.02. That is to say, the builder's obligation was not simply to ensure that at the end of the defects liability period, or at the end of a reasonable time for making good defects of which a list was given under clause 6.11, the works were executed in accordance with the contract. Rather, the builder had an ongoing responsibility to execute the works in accordance with the agreement. 71 As Parkline did not accept the plaintiff's repudiation of the agreement, it remained on foot. The plaintiffs claimed they were entitled to damages for the cost of rectifying defects even though Parkline was prevented from completing the rectification of defects notified pursuant to clause 6.11, by being excluded from the site. In my view, Parkline was entitled to make good notified defects in accordance with clause 6.11. The plaintiffs would only be entitled to have the work of making good carried out by others and claim the cost of doing so from Parkline in accordance with the procedures in clause 6.11. 72 Parkline submitted that it was so entitled, and that clause 6.11 was a code determining the rights and obligations of both parties in respect of the making good of defective work (Turner Corporation Pty Ltd v Austotel Pty Ltd (1994) 13 BCL 378). The plaintiffs contended that clause 6.11 does not establish such a code and that clear and express words would be needed to rebut the presumption that the plaintiffs retained all remedies available to them for breach of contract. The plaintiffs submitted that in any event, their entitlement to damages for defective work which was in breach of statutory warranties implied by s 18B of the Home Building Act 1989 (NSW) could not be restricted or removed by such a code. That is because s 18G of the Home Building Act provides that "A provision of an agreement or other instrument that purports to restrict or remove the rights of a person in respect of any statutory warranty is void." Parkline denies that the Home Building Act applies and denies that to construe clause 6.11 as a code for dealing with the plaintiffs' rights in respect of defective work whilst the contract is on foot would infringe s 18G. 73 The referee expressed general agreement with the reasoning of Cole J (as his Honour then was) in Turner Corporation Pty Ltd v Austotel Pty Ltd, although he found it unnecessary to decide whether he accepted Cole J's conclusion in that case that the standard conditions which his Honour was there considering created a code outside of which there was no entitlement on the part of the principal to recover damages for defective work. In Turner Corporation Pty Ltd v Austotel Pty Ltd, Cole J considered a standard form of building contract known as "Building Works Contract - JCCA 1985 With Quantities (Third Print - August 1988)". That contract contained clauses the same, or materially the same, as the present contract. In particular it included the same provisions as clause 1.03 describing the builder's obligations, clause 3.05 requiring the proprietor to allow the builder reasonable access to the site and the works to make good defects the architect required be carried out under clauses 5.04-5.06, and 6.11. After discussing the provisions, Cole J said (at [394]-[395]): "It follows, in my view, that the contract does provide a code which establishes the rights, obligations and liabilities of the parties, and the mechanisms by which completion of the Works is to be achieved. In summary, the Builder is given possession of the site for the purpose of and with the obligation to bring the Works to Practical Completion by the Date for Practical Completion. The Proprietor has no general right to bring others onto the site to perform or complete portions of the Works. However, if prior to Practical Completion there appears defects or omissions in the Works, the Architect may give to the Builder a notice to rectify those defects or omissions within a reasonable time. If the Builder fails to rectify or complete the defects or omissions as so directed by the Architect, the Proprietor by contractual right, after a further notice from the Architect to the Builder, may engage others to enter upon the site and rectify or complete those defects or omissions. Once Practical Completion is achieved under the contract, the defects liability period commences and the Builder surrenders possession of the site back to the Proprietor. Although the Proprietor then has possession of the site, the Builder retains the right to enter upon the site to permit it to rectify notified defects, and it has the obligation to rectify such notified defects within a reasonable time as directed by the Architect, and in any event not later than a reasonable time after the expiration of the defects liability period. If it fails to do so, the Proprietor may, after a further notice from the Architect, have the notified defective or omitted works performed by others at the Builder's costs. Alternatively, by agreement, the omitted or defective works may be removed from the contract works with an appropriate monetary adjustment to the contract sum. A third alternative is that the Proprietor may be able to rely upon the default of the Builder to rectify the defective or incomplete works as a ground for terminating its employment under the contract and thereafter having the works completed by others at the Builder's cost pursuant to cl 12. However, if none of these three contractual powers is exercised, the Builder may become entitled to a final certificate which will result in it [being] entitled to plead completion of performance of the Works 'in accordance with the terms of the agreement to the reasonable satisfaction of the Architect'. There is, in my view, no room for a 'wider common law right' in the Proprietor to treat noncompliance with the contractual obligation by the Builder as a separate basis for claiming damages being the cost of having a third party rectify or complete defective or omitted works. That is because the contract specifies and confers upon the Proprietor its rights flowing from such breach; that is, the parties have, by contract, agreed upon the consequences to each of the Proprietor and the Builder, both as rights and powers flowing from and the consequences of, such breach. The word 'may' is used because there are alternative contractual rights available to the Proprietor. It also follows, in my view, that the Proprietor has no entitlement to recover the cost of work performed by others at the request of the Proprietor unless prior to such work being performed the Architect has given the notice required by cl 5.06.01 prior to the Date for Practical Completion, or pursuant to cl 5.06.01 as incorporated by cl 6.11.05 after the Date for Practical Completion." 74 In deciding to grant leave to appeal from the arbitrator's award that the proprietor was entitled to recover costs, complete works and to rectify defective workmanship and materials although it had not followed the procedural steps and notice provisions for the rectification of defective workmanship and materials by the builder, Cole J said that the issue raised was an important question of construction of a standard form contract and that "the determination of the issue ... will add substantially to the certainty of the commercial law". So far as the researches of counsel went, his Honour's decision on this point has stood for 15 years without adverse comment. It was distinguished in Hughes v Dormley Pty Ltd [2001] WASC 83 in a case where the builder was not capable of remedying the defects (at [39]), but that is not this case and in such a case the proprietor would be entitled to terminate the contract. 75 Nonetheless, counsel for the plaintiffs submitted that Cole J's decision in Turner Corporation Pty Ltd v Austotel Pty Ltd should not be followed on this point. Counsel submitted that where a builder was in breach of its contract, clear and express words would be required before the principal became disentitled from recovering damages for the cost of others rectifying the defects. Cole J dealt with that argument at 395. His Honour held that whilst clear words were necessary before a party's common law right to sue for damages for breach of contract could be contractually removed, express words were not required. Counsel for the plaintiffs submitted that this was an error. They referred to the speech of Lord Diplock in Gilbert Ash (Northern) Ltd v Modern Engingeering (Bristol) Ltd [1974] AC 689 at 717 where his Lordship said: "It is, of course, open to parties to a contract for sale of goods or for work and labour or for both to exclude by express agreement a remedy for its breach which would otherwise arise by operation of law or such remedy may be excluded by usage binding on the parties (cf Sale of Goods Act 1893, s 55). But in construing such a contract one starts with the presumption that neither party intends to abandon any remedies for its breach arising by operation of law, and clear express words must be used in order to rebut this presumption." 76 Cole J accepted that clear words were necessary but did not accept that express words were necessary for this purpose. Later expressions of this principle at the highest authority (Stocznia Gdanska SA v Latvian Shipping Co [1998] UKHL 9; [1998] 1 WLR 574 at 585; Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 75 ALJR 312 at [23]) are in accordance with Cole J's approach, namely that clear words are needed to rebut the presumption that a contracting party does not intend to abandon any remedies for breach of the contract arising by operation of law. 77 As a decision intended to give certainty to the construction of a standard form of building contract, I would follow Cole J's decision in Turner Corporation Pty Ltd v Austotel Pty Ltd, unless satisfied that it was clearly wrong. So far from thinking the decision clearly wrong, I agree with Cole J's reasoning. 78 However, this result is a restriction on the rights of the proprietor which would be rendered ineffective by s 18G of the Home Building Act in the case of the statutory warranties under s 18B of the Home Building Act, if that Act applies.
11. White J next considered the provisions of the Home Building Act relevant to statutory warranties, which are as follows 18B Warranties as to residential building work (1) The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work - (a) a warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract, (b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new, (c) a warranty that the work will be done in accordance with, and will comply with, this or any other law, (d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time, (e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling, (f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder's or person's skill and judgment. (2) The statutory warranties implied by this section are not limited to a contract to do residential building work for an owner of land and are also implied in a contract under which a person (the principal contractor) who has contracted to do residential building work contracts with another person (a subcontractor to the principal contractor) for the subcontractor to do the work (or any part of the work) for the principal contractor. 18BA Duties of person having benefit of statutory warranty (1) Breach of a statutory warranty implied in a contract constitutes a breach of the contract and accordingly - (a) a party to the contract who suffers loss arising from the breach has a duty to mitigate their loss, and (b) the onus of establishing a failure to mitigate loss is on the party alleging the failure. (2) The duty of a party to a contract to mitigate loss in respect of a breach of a statutory warranty extends to a person who has the benefit of the statutory warranty or who is entitled to the same rights as those that a party to the contract has in respect of the statutory warranty. (3) The following duties apply to a person who has the benefit of a statutory warranty but do not limit any duty the person has to mitigate loss arising from breach of a statutory warranty - (a) when a breach of the statutory warranty becomes apparent, the person must make reasonable efforts to ensure that a person against whom the warranty can be enforced is given notice in writing of the breach within 6 months after the breach becomes apparent, (b) the person must not unreasonably refuse a person who is in breach of the statutory warranty such access to the residential building work concerned as that person may reasonably require for the purpose of or in connection with rectifying the breach (the duty to allow reasonable access). (4) A breach of warranty becomes apparent for the purposes of this section when any person entitled to the benefit of the warranty first becomes aware (or ought reasonably to have become aware) of the breach. (5) If a failure to comply with a duty under this section is established in proceedings before a court or tribunal concerning a breach of a statutory warranty, the failure is a matter that the court or tribunal may take into account. If the failure is a failure to comply with the duty to allow reasonable access, the court or tribunal must take the failure into account. 18G Warranties may not be excluded A provision of an agreement or other instrument that purports to restrict or remove the rights of a person in respect of any statutory warranty is void.
12. White J then proceeded to deal with the entitlement of the plaintiffs to claim damages for breach of the statutory warranties against the builder. His Honour said 81 Even though it was open to the plaintiffs to seek damages for defective work which was the result of the breach of statutory warranties, notwithstanding that they did not pursue the procedures for rectification under clause 6.11, it was still necessary for the plaintiffs to show that the carrying out of rectification work by a third party was necessary and reasonable (Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613 at 619; Westpoint Management Ltd v Chocolate Factory Apartments Ltd [2007] NSWCA 253 at [45]). Moreover, if the defective work was included on one of the lists given by the architect pursuant to clause 6.11, Parkline was both obliged and entitled to do the work. It is one thing to say that s 18G precludes the plaintiffs from being compelled to follow the procedures in clause 6.11 in the case of a breach of a statutory warranty. It is another to say that the section enables the plaintiffs to ignore the procedures in clause 6.11 once they have been invoked. 82 Parkline gave evidence which the referee accepted that its subcontractors would have rectified the notified defects at no or minimal cost to it. Parkline was entitled under clause 3.05 to reasonable access to the works in order to make good the defects. If the plaintiffs were otherwise entitled to damages for the cost of having third parties carry out the work which, but for the plaintiffs' breach of contract, Parkline or its subcontractors would have carried out at no cost to the plaintiffs, then the loss Parkline suffered from the plaintiffs' repudiation of the contract would include its liability to pay damages, which liability would not have been incurred had the plaintiffs honoured the contract. To avoid circuity of action, the plaintiffs would not be entitled to recover such damages if they could otherwise be established. Because the plaintiffs did not establish the precise nature and extent of the defective work for which Parkline was liable by reason of a breach of statutory warranty, they did not show that any such defects were not covered by the lists issued by Quirk on or before 14 January 2005. Hence, no damages were established.
13. The Senior Member adopted the same reasoning in dealing with this aspect of the appellants' claims for damages. He concluded that To the extent that the owners could establish that there was incomplete work, then where that work had yet to be performed by the builder as set out in the 4 April 2019 letter, then there was no breach of the implied warranty in the contract prescribed by section 18 B (1) (a) of the Home Building Act by the builder and they have suffered no loss. To the extent that the owners could establish that there was incomplete work where that work had been performed by the builder and/or defective work by the builder, then there would be a breach of the implied warranty in the contract … and they would be entitled to damages. … Having regard to the principles in Bitannia and my finding that subsequent to 7 March, 2019 the builder was entitled to and required to complete the works and rectify any defects for which was responsible at no cost to the owners, even if the owners could establish that there was incomplete work and/or defective work by the builder in breach of the implied warranty in the contract prescribed by s18B(1)(a) ..., they are only entitled to nominal damages for breach of the contract.
14. In their Amended Grounds of Appeal, the appellants said that the Senior Member was in error in so finding because the contract had been terminated prior to the letter of 4 April 2019. This is contrary to the finding of the Senior Member that the contract remained on foot as at 4 April, 2019 because the respondent had not accepted the repudiation by the appellants in their letter of 7 March, 2019. We have already concluded that these findings were clearly open to the Senior Member on the evidence, and do not indicate any appellable error on his part. It follows that this submission must fail.

Variations 11 and 12

1. In his reasons for decision the Senior Member considered whether the respondent was entitled to be paid for a number of variations, the details of which were traversed with particularity. The Amended Grounds of Appeal are directed to findings of the Senior Member that the appellants were liable to pay the respondent for the cost of variations 11 and 12 on a quantum meruit basis. The basis of these grounds of appeal was a finding made in the case of each variation that the Senior Member was not satisfied that the variation had been requested by the appellants. The appellants submitted that in those circumstances there was no actual or constructive acceptance by the owners of the works sufficient to impose upon them an obligation to pay for such works, payment for which was only sought by the Respondent in February 2019.
2. The Amended Grounds of Appeal make specific reference to the findings of the Senior Member. With respect to variation 11, it was said that the Senior Member ought to have found that item 2 was within the scope of works of variation 1, that item 1 was within the scope of works being restoration of the stairs and that items 3 and 5 were within the scope of works under the building contract. Similar detailed references are made with respect to variation 12. There is no reference in these grounds of appeal to any detail in the underlying documents in support of these grounds. Neither do the written submissions descend into any detail about these matters. During the course of oral submissions, we were advised that the appellants did not rely on these grounds. In the absence of any relevant reference to the underlying evidentiary material upon which we could make any informed decision, these grounds are dismissed.
3. With respect to Variation 12, the appellants noted in submissions that the Senior Member was not satisfied that any of the matters referred to in this variation were requested by them. They submitted that because the appellants had not actually or constructively agreed to pay for these works there should be no obligation to make any payment calculated on a quantum meruit basis.
4. However, this simplistic submission belies the factual circumstances applied by the Senior Member in finding that the appellants should pay the respondent the sum of $6696.25 for structural work carried out to the main bathroom floor frame which was included within variation 12. After reviewing relevant evidence, the Senior Member said that he was not satisfied that the appellants requested the works carried out in variation 12 during the course of the job. However, he found that the respondent had completed all of these works and that they were for the benefit of the appellants. In referring to the evidence of Mr Narendra Jain, the Senior Member said He was aware that the purpose of the works was to strengthen the floor joists in the first floor bathroom to allow penetration for piping. He was also aware that the builder undertook these works in the context of its commercial relationship with the owners under the contract and did not make any objection. He was further aware that Mr Zimmerman certified his satisfaction that the works were structurally adequate to carry the proposed loads in the first floor bathroom.
5. It was on this basis that the Senior Member relied upon and applied the decision of Vickery J in the Victorian Supreme Court in Vasco Investments v Morgan Stanley Australia Ltd [2014] VSC 455. At [337] to [339] his Honour said 337 The following principles apply to an action in quantum meruit, as derived from Pavey & Matthews Pty Ltd v Paul, Brenner v First Artist Management Pty Ltd, Lumbers v W Cook Builders Pty Ltd (in liq) and the cases cited therein. 338 Vasco's claim under this head is a claim in restitution arising out of services performed. 339 The law may impose an obligation to make restitution on a quantum meruit basis, under what I will call the first class of case, where the plaintiff proves: Actual or constructive acceptance of the benefit of the provider's goods or services by the recipient; The recipient of the goods or services should have realised that the provider expected to be paid; and It would be unjust for the recipient to take the benefit of the goods or services provided without paying a reasonable sum for them.
6. In written submissions the appellants relied upon the decision of the NSW Court of Appeal in Built Interiors Pty Ltd v 3 Dinosaurs Pty Ltd & Anor [2003] NSWCA 290. Meagher and Ipp JJA agreed with the judgement of Mason P in which, relevantly, his Honour said 53 The Builder bore and assumed the difficult task at trial of establishing either that the Contract had itself been varied so as to permit contractual recovery on a different basis; or that restitutionary principles permitted the Builder to sue off the Contract. As I understand it, the Builder contended that a contractual variation, and/or unjust enrichment giving rise to a restitutionary claim, occurred every time an individual "Variation" was actually agreed upon and the necessary work done. This was in the context where the formal Contract continued in force as the framework for regulating the parties' rights during construction work and its aftermath, including the proceedings litigated in the District Court. This was a difficult task, all the more so because no question of repudiation or acceptance thereof was ever raised (Liebe v Molloy [1906] HCA 67; (1906) 4 CLR 347; Brooks Robinson Pty Ltd v Rothfield [1951] VicLawRp 58; [1951] VLR 405 at 409; Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251; Trimis v Mina [1999] NSWCA 140 (1999) 16 BCL 288). 54 The Builder's evidence was completely unmatched to any claim that the contract had been varied and the trial judge was correct to reject the alternative restitutionary claim (Red 181-2). The type of work involved in the disputed variations claims was very much part and parcel of the overall project. There was nothing to indicate that at any time the parties moved away from viewing the Contract as the complete framework by which their legal rights would be governed. Some of the items may well have qualified as "Variations" within the definition in Clause 1.2, but the procedural stipulations in Clause 6.7 had not been complied with. This offers no basis for the Builder ignoring the contract (by suing in restitution) and leaves the Builder far short of proving a case of contractual variation. 55 The Builder faced additional hurdles. Assuming that it was open for it to ignore Clause 6.7, the Builder could only recover additional recompense, either in contract or restitution (assuming availability), if it could show that: . work was done that went beyond the contractual works; . this was done at the request of the Proprietors (the possibility of "free acceptance" within restitutionary principles was never put into the ring); and . that work had a proven cost and/or value.
7. In relying on the extract set out above the appellants ignored the actual factual basis which applied to those proceedings as observed by Mason P later, at [57] when referring to findings of the trial judge, that firstly the builder had not established that the amounts claimed represented both variations to the building contract and also reasonable and proper sums for the carrying out of those variations and secondly that the work that was carried out was within the scope of the contract. The trial judge also found that if the additional building works could be characterised as variations, then payment for them would be based upon the provisions of the contract. The judgment of Mason P makes it clear that his Honour's observations were based upon the factual matrix described by the trial judge. Those factual circumstances differ from the findings of the Senior Member in these proceedings which we have set out in [60] above. Mr Jain was aware the work was being carried out and that it was for the benefit of the appellants.
8. In their written submissions the appellants also relied upon the decision of Priestly JA in the NSW Court of Appeal in Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251 cited by Mason P in Trimis & v Mina [1999] NSWCA 140 60 Priestley JA (at 271-2) discussed the early High Court decision of Liebe v Molloy, a case which (like the present) involved a claim for extras for which there was no order in writing in the context of a lump sum written contract that stipulated that such claims should be disallowed. The High Court held that if the proper inferences for the facts were (i) that the employer had actual knowledge of the extra works as they were being done, (ii) knew that they were outside the contract and (iii) knew that the builder expected to be paid for them as extras then a contract to pay them could properly be implied. If however the fact was that the owner did not know the particular works were extras or did not know or believe that the builder expected to be paid for them, then it would be proper to conclude that no contract to pay for them should be implied. In the light of those considerations, Griffith CJ (who gave the judgment of the Court) said (at 354): When a man does work for another without any express contract relating to the matter, an implied contract arises to pay for it at its fair value. Such an implication arises from an express request to do work made under such circumstances as to exclude the idea that the work was covered by a written contract. So it would arise from the owner standing by and seeing the work done by the other party, knowing that the other party, in this case the contractor, was doing the work in the belief that he would be paid for it as extra work... 61 Priestley JA continued (at 272): One point which seems to me to be basic to the decision in Liebe is that if the work claimed for had been work required by the contract to be done, then the builder could not recover for it, because he had not complied with the contractual requirements. If however the work was work which the builder was not required to do by the contract ("outside the contract" in the words of the High Court) then, if certain further facts were found, the builder could recover. It may be that the basis of such recovery would these days be referred to ideas of restitution rather than implied contract.
9. Far from supporting the appellants' submissions on this matter, we would apply the concluding observations of Priestley JA at [60] extracted above as supporting the conclusions of the Senior Member with respect to this matter.
10. We reject this aspect of the appellants' submissions.

Was the Senior Member in error in holding that the letter of 20 February 2019 was not a valid notice?

1. This matter was raised as a separate ground of appeal in the Amended Grounds of Appeal. In essence, in written submissions the appellants said that the Senior Member was in error in declining to find that the respondent had failed to proceed with the works diligently in breach of the contract.
2. We agree with the submissions of the respondent that the various matters raised by the appellants in their written submissions in support of this ground traversed the factual issues already considered by us in upholding the finding of the Senior Member that the appellants had failed to establish to the satisfaction of the Tribunal that the respondent had not proceeded to complete the works with due diligence.
3. We have previously dealt with these matters and it is not necessary or appropriate to reconsider them.
4. This "separate ground of appeal" is dismissed accordingly.

Application for referral

1. The hearing of these appeal proceedings concluded on 19 April 2021 when we reserved our decision. On 23 April 2021, the appellants filed an application to the Tribunal to refer a question of law to the Supreme Court of NSW under section 54 of the Civil and Administrative Tribunal Act 2013 (NSW). That application was made without reference to the Tribunal and without seeking leave to have the hearing of the proceedings reopened. It was inappropriate for the appellants to have made such an application in these circumstances. However, the respondent has responded to the application and, in the circumstances, it is preferable to deal with it notwithstanding that it was irregularly made.
2. Section 54 of that Act is in the following terms 54 References of questions of law to Supreme Court (1) The Tribunal (including when constituted as an Appeal Panel) may, of its own motion or at the request of a party, refer a question of law arising in the proceedings to the Supreme Court for the opinion of the Court. (2) The Tribunal may refer a question of law under this section only if the President has consented in writing to the question being referred. (3) The Supreme Court has jurisdiction to hear and determine any question of law referred to it under this section, but may decline to exercise that jurisdiction if it considers it appropriate to do so. (4) If a question of law arising in proceedings has been referred to the Supreme Court under this section, the Tribunal is not - (a) to give a decision in the proceedings to which the question is relevant while the reference is pending, or (b) to proceed in a manner, or make a decision, that is inconsistent with the opinion of the Supreme Court on the question. (5) Subsection (4) extends to the Tribunal when constituted as an Appeal Panel that is determining an internal appeal from a decision of the Tribunal in proceedings before which a question of law has been referred by the Tribunal at first instance to the Supreme Court under this section.
3. As we understand the question of law which we are asked to refer, it deals with who bears the onus of proof in the circumstances of these proceedings as to whether or not the respondent's work was carried out with due diligence in circumstances where; 1. the work was not done within the time stipulated in the contract 2. no extension of time was claimed and applied for under a provision in the contract 3. the works were significantly incomplete on the "stipulated completion date" and remained significantly incomplete as at the date of termination of the contract.
4. In support of the application for referral the appellants said that this matter "carries universal importance in building cases where the homeowner terminates the contract on the basis of the building work was not done with due diligence. Building contracts invariably attract variations. Often questions arise whether or not the variations entail or necessitate an extension of time to complete the works." A secondary matter was said to arise where a builder does not apply for an extension of time under a contract provision and whether this in itself is a factor determinative of whether or not the builder proceeded with due diligence. It was then asserted that the "concept of due diligence is crucial in building cases………"
5. In a response to the application the respondent referred us to the decision of this Tribunal in Milner v Commissioner of Police, NSW Police Force [2017] NSWCATOD 37. Senior Member Emeritus Professor G Walker said at [14] and following: There is a wide range of circumstances in which the power to refer may be exercised. In particular, it is not confined to those cases where "there is no existing authoritative statement on the particular question of law": Urban Consolidation and Development Pty Ltd v Commissioner of State Revenue [2010] VCAT 2124 at [15] - [16]. Situations where the outcome of a number of other pending cases may turn on the answer to the question of law, as is true in the present instance, may be appropriate for referral. A party may also take the view that ultimately the question is likely to find its way to the Supreme Court in any event. It is accepted that the court expects referrals to be accompanied by a statement of agreed facts and that the question of law referred must be formulated with precision and care. The question of the appropriateness of referring a question of law to the Supreme Court has received some attention from the tribunal and its predecessor, the Administrative Decisions Tribunal. Legal Services Commissioner v Bryden [2009] NSWADT 76 dealt with s 79A of the Administrative Decisions Tribunal Act 1997, which for present purposes is very similar to s 54. In it the tribunal said: The Tribunal has a very clear view about its duty and its role in the judicial process and, in particular, the role of the Tribunal in exercising power in this Division. The Tribunal is clearly of the opinion that the proper process is through this Tribunal. After all, that is the job of this Tribunal.... Whether a regulation is ultra vires or not is to be determined in accordance with law, precedent and statutory interpretation. This Tribunal is as well-placed as anyone to determine matters of public importance. Indeed, such matters are often determined in this and other Divisions of this Tribunal. A good example is Watt v Forests NSW [2007] NSWADT 197 (at [22]). "Indeed", it continued, "[the Division's] constituted members are of long standing and seniority and we are of the view that it is in the interests of justice that the proceedings continue before us and questions of law not be referred pursuant to Section 79A" (at [25]).
6. We note in the context of this application that in the decision under appeal the Senior Member made a number of factual findings which are the subject of dispute in these appeal proceedings. Those findings remain contentious in the eyes of the appellants, especially as they relate to the question of whether the works were significantly incomplete on the date fixed for completion. Indeed, the question of law which the appellant seeks to have referred includes as a fundamental fact that "the works were significantly incomplete on the stipulated completion date and remained significantly incomplete as at the date of termination of contract." The Senior Member declined to make that finding on the basis of the evidence before him. We have previously concluded that in doing so the Senior Member did not fall into error.
7. If the question of law posited by the appellants were framed in more elegant terms, it would nevertheless require the Supreme Court to make findings about this particular factual matter. Because of the provisions of section 54(5) we would not be able to determine this matter for ourselves pending the outcome of the referral to the Supreme Court. As was observed in Milner we may anticipate that it is inappropriate to refer a question of law under section 54 which does not have a firmly established factual basis.
8. In so concluding, it follows that we reject the additional submission of the appellants that the decision in Hometeam is not relevant to the determination of these proceedings.
9. The application for referral is rejected.

Is leave to appeal necessary?

1. Leave to appeal is necessary except on a ground involving a question of law. It is arguable that some of the grounds of appeal such as the application of the principles of quantum meruit involve questions of law. It is also clear that some of the submissions made by the appellants were challenges to factual findings which did not raise a question of law. As we have determined, for reasons which we have previously set out, to dismiss each and every ground of appeal it is not necessary that we differentiate between those grounds where leave is necessary and those where it is not. It is sufficient if we dispose of these appeal proceedings by ordering, as we propose to do, that they be dismissed.

Costs

1. The parties agreed that these proceedings attract the costs jurisdiction of this Tribunal and that costs should follow the event. We shall so order.

Orders

1. We make the following orders 1. The appeal is dismissed 2. The appellants are to pay the costs of the respondent assessed in default of agreement

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 14 May 2021