Plaintiffs v Defendant

1 The plaintiffs, by originating motion, apply for leave to appeal, and, if leave is granted, they appeal, from a decision of a Member of the Victorian Civil and Administrative Tribunal ("the Tribunal") dated 30 October 2013. By that decision, the Tribunal ordered that the plaintiffs pay to the defendant the sum of $199,191.52, and that the plaintiffs' counterclaim be dismissed.

2 By an order dated 17 December 2013, an Associate Justice of the Court directed that the plaintiffs' application for leave to appeal be heard and determined by the Court which is to hear and determine the appeal, if leave is granted.

3 The issues before the Tribunal arose out of building works carried out by the defendant for the plaintiffs at their home at Tanner Grove, Northcote.

4 In March 2009, the plaintiffs' home suffered substantial fire damage. The plaintiffs' insurer, Allianz Australia Insurance Ltd ("Alliance"), indemnified them for the cost of rectifying the fire damage in the amount of $122,747.22. At the plaintiffs' request, Allianz approved the defendant to carry out the rectification works for the plaintiffs. The plaintiffs and the defendant did not enter into a written contract, for the rectification of the fire damage work, in compliance with the Domestic Building Contracts Act 1995 (Vic) ("the Act"). Instead, they relied on an email dated 15 October 2009 from the insurer's loss adjustor to the plaintiffs and the defendant approving the carrying out of the fire damage repair works by the defendant in the sum of $122,747.22.

5 As their home was to undergo substantial rectification works, the plaintiffs decided that they would also add an upper storey extension to their home. For that purpose, they engaged the defendant, under a separate building contract dated 11 May 2010, to carry out the extension works for the sum of $295,900.

6 The defendant commenced the building works, consisting of the fire damage repair works and the extension works, in July 2010. At that time, the plaintiffs were living overseas, and the first plaintiff's brother, George Drossos, who is qualified electrician, exercised some supervision of the defendant's works on their behalf. By October 2010, George Drossos had concerns in relation to the building works. In particular, he was concerned that the building site was untidy and unsafe, and that the floor boards to the ground floor of the home had been damaged by rain because the defendant had failed to take adequate steps to protect the home from being exposed to inclement weather. In November, George Drossos, on behalf of the plaintiffs, engaged a building consultant, Mr Milner, to inspect the home. That inspection was carried out on 24 November, and Mr Milner provided his report on 13 December.

7 In the meantime the plaintiffs, on 5 December 2010, sent a letter to the defendant listing a number of concerns which the plaintiffs had about the conduct by the defendant of the building works. The plaintiffs requested the defendant to provide a written detailed response outlining how the defendant proposed to rectify the defective building work, and stated that if the defendant failed to provide an adequate response, they would terminate the building contract and seek damages.

8 Subsequently, on 21 December 2010 the plaintiffs, having received Mr Milner's report, instructed their lawyers to terminate the defendant's engagement. By letter dated 21 December, the plaintiffs' lawyers notified the defendant that its contract with the plaintiffs was terminated. Following receipt of that letter, the defendant vacated the property. At that stage, the plaintiffs had paid to the defendant the sum of $22,637.36 in respect of the fire damage repair works, and the sum of $52,887.36 in respect of the extension works.

9 The defendant subsequently issued a proceeding in the Tribunal against the plaintiffs claiming damages on the basis that the plaintiffs had wrongfully terminated the building contract which it alleged it had with the plaintiffs. The defendant maintained that the extension contract had been varied to include the fire damage repair works, so that all the building works (the fire damage repair works and the extension works) were encompassed in the one contract. The defendant claimed damages in the sum of $239,442.81, which it alleged were caused by the wrongful termination of the contract by the plaintiffs. In the alternative, the defendant made a claim against the plaintiffs on a quantum meruit basis.

10 In response, the plaintiffs maintained that, at all times, there were two contracts between them and the defendant, one contract in respect of the fire damage repair works, and the other contract in respect of the extension works. The plaintiffs maintained that they were justified in terminating both contracts on 21 December 2010, because of repudiatory conduct by the defendant in respect of those contracts. The plaintiffs asserted a counterclaim against the defendant claiming damages in the sum of $249,034.06, for the increased costs which they claimed to have incurred in rectifying and completing the building works. They also claimed damages for delay in completing the building works and lost rental income in the sum of $30,657.

11 The case was heard over a period of seven days in September 2013 by the Tribunal Member. On 30 October, the Member delivered his reasons for decision, in which he made the following findings:

• The fire damage repair works agreement and the extension contract remained separate contracts, although all the building works were interconnected and were carried out at the same time;
• The fire damage repair works agreement constituted a major domestic building contract under the Act, and because it was not signed by the plaintiffs and the defendant, pursuant to s 31(2) of the Act, it was of no effect;
• The defendant was entitled to damages on a quantum meruit basis in respect of the works it carried out under the fire damage repair works agreement;
• The defendant did not repudiate the extension works contract, and the plaintiffs' termination of the contract was not justified;
• The defendant was entitled to damages for wrongful termination of the extension contract.

12 The Member assessed the damages payable by the plaintiffs to the defendant as follows:

• The Member considered that at the time the contract was repudiated by the plaintiffs, the extension works had progressed to 50 per cent completion of the lock up stage. He allowed a profit margin of 15 per cent. On that basis, and allowing for payments made by the plaintiffs to the defendant in respect of the extension contract ($30,250) the Member assessed the sum of $152,567 as damages arising from the plaintiffs wrongful termination of the extension contract.
• The Member also assessed that the fire damage repair works had progressed to 50 per cent of the lock up stage at the time the plaintiffs had terminated the engagement by the defendant to undertake that work. Taking into account the payment made by Allianz to the defendant ($22,637.36), the Member determined the sum of $51,009.96 as the fair value of the fire damage repair works carried out by the defendant, and for which the defendant had not been paid.
• The Member assessed the reasonable costs of works necessary to rectify the defective work undertaken by the defendant in the sum of $39,651.80.
• On that basis, the Member assessed the defendant's damages, payable by the plaintiffs, in the sum of $163,925.16. He also awarded interest in the amount of $35,266.36, and thus assessed the defendant's total damages, including interest, in the sum of $199,191.52.

13 In the draft notice of appeal, relied on in support of the application for leave to appeal, the plaintiffs identified eight questions of law, which they claimed arise out of the proposed appeal, namely:

(1) Was the defendant's non-compliance with ss 8 and 31 of the Act sufficient to permit the plaintiffs to terminate the contract for the fire damage repair works?

(2) Were the same works covered by the scope of works provided for under both the contract for fire damage repair works and the extension contract, and, if the plaintiffs were entitled to terminate the contract for the fire damage repair works, did that entitle the plaintiffs to also terminate the extension contract?

(3) Should the Tribunal have considered all of the grounds relied on by the plaintiffs in their evidence and closing address to justify termination of both contracts?

(4) Were the grounds relied on by the plaintiffs either individually or collectively sufficient to justify them terminating both contracts at common law?

(5) Were the defects in the works carried out by the defendant, that were relied upon by the plaintiffs and found by the Tribunal, either individually or collectively sufficient grounds to justify the plaintiffs terminating both contracts?

(6) Were the findings and calculation of the defendant's entitlement to damages open on the evidence?

(7) Was the body of evidence presented by the plaintiffs so overwhelming in proof of their case as to termination of both contracts that the decision of the Tribunal was "perverse" in the circumstances?

(8) Was the finding by the Member, that the extension contract had not been properly terminated by the plaintiffs, open on the evidence, and was his finding so unreasonable such that it was "perverse" in the circumstances?

14 Based on those stated questions of law, the plaintiffs, in their proposed notice of appeal, specified ten grounds of appeal on which they seek to rely, namely:

"(1) The Member erred in law in finding that there was a contract for the fire damage rectification works but that pursuant to s 31(2) of the Domestic Building Contracts Act 1995 that contract was of no effect.

(2) The Member erred in law in failing to make any finding as to whether the appellants were entitled to terminate the contract for the fire damage repair works.

(3) The Member erred in law in failing to reconsider the respondent's [defendant's] non-compliance with ss 8 and 31 of the Domestic Building Contracts Act 1995 for a major domestic building contract in relation to the fire damage repair works, which works were found to be intertwined and carried out concurrently with the extension contract, and finding this work did not entitle the appellants to terminate both contracts.

(4) The Member erred in law in failing to consider all of the grounds relied upon by the appellants [plaintiffs] either individually or collectively to terminate both of the contracts.

(5) The Member erred in law in finding that the defects and the works carried out by the respondent when viewed individually or collectively did not amount to a fundamental breach or repudiatory conduct by the respondent.

(6) The Member erred in law in finding that the respondent's failure to replace the Baltic flooring was the evincing of an intention to no longer be bound by the extension works contract and did not amount to a fundamental breach of that contract.

(7) The Member erred in law in finding that the repair of the truss joists to the study before further work took place was not a fundamental breach of the extension works contracts.

(8) The Member erred in law in finding that the fire damage works and extension works had progressed to 50 per cent completion of lock up stage.

(9) The Member erred in law in his findings and calculation as to the respondent's entitlement to damages and quantum meruit.

(10) The Member erred in law in finding that the rectification costs in respect of the fire damage repair work is assessed as the cost the plaintiff would have been incurred in attending to rectification works had the contract not been terminated when there is no finding that the applicants were not entitled to terminate the contract for the fire damage repair works."

15 The plaintiffs filed written submissions in which they sought to address each of the questions of law, and grounds of appeal, that I have set out above. In oral submissions, Mr Manly QC, who appeared with Mr Settle for the plaintiffs, narrowed the scope of the plaintiffs' submissions considerably. As I understand it, the submissions made by Mr Manly ultimately involved the abandonment of most of the questions of law, and grounds of appeal, contained in the draft notice of appeal.

16 In essence, Mr Manly made three principal submissions in support of the application for leave to appeal, and, if leave be granted, in support of the appeal.

17 The first submission concerned the effect of the Member's finding that, pursuant to s 31(2) of the Act, the fire damage repair contract was of no effect. Mr Manly accepted that, having reached that conclusion, the Member, correctly, determined, on a quantum meruit basis, the rights of the builder, in respect of the fire damage repair works carried out by it.[1] However, he submitted that, in doing so, the Member failed to take into account the owners' rights. He submitted that s 53(1) of the Act, which requires the Tribunal to make any order it considers "fair" to resolve a domestic building dispute, required the Member to take into account the position of the plaintiffs, as well as the defendant.

18 In particular, Mr Manly submitted that s 31(2) of the Act has the effect that any building contract, to which it applies, is not rendered void or of no effect from its inception, but, rather, s 31(2) only operates "in futuro". Mr Manly submitted that until one or other of the parties to the contract sought to rely on s 31(2) of the Act, the contract remained valid and in force. That being so, Mr Manly submitted that the Member had failed to consider whether, in the circumstances, the defendant had repudiated the building works contract. Mr Manly submitted that if the defendant was found to have repudiated that contract, the plaintiffs would be entitled to damages consisting of the additional cost to them for the completion of the works described in the fire damage repair works contract.

19 The second submission by Mr Manly related to the assessment by the Member of defects in the defendant's work, for the purpose of offsetting the cost of remedying those defects against the defendant's entitlement to payment for the value of works performed by it in respect of the fire damage repair works. In this respect, Mr Manly referred to the "Scott" schedule, which, apparently, was provided to the Member, and which was an exhibit to the affidavit by the plaintiffs' solicitors in support of the application for leave to appeal. By reference to that affidavit, Mr Manly submitted there were thirteen defects in the works, described in the Scott schedule, which were not the subject of consideration by the Member in his reasons. Mr Manly submitted that the Member erred in law in failing to consider, and rule upon, those defects.

20 The third submission by Mr Manly related to the finding by the Member, for the purposes of the assessment of damages, that the works carried out by the builder had progressed to 50 per cent completion of the lock up stage, both in respect of the fire damage repair works, and also in respect of the extension contract. Mr Manly noted that the Member had estimated the value of the completed fire damage repair work at $73,647.32 and the value of the completed extension works at the date of termination at $162,745. Thus the total value for both components for the works at the date of termination was $236,393.32, which comprised approximately 56 per cent of the total "contract cost" of carrying out both works, namely, $418,647.22.

21 Mr Manly pointed out further that the building consultant on behalf of the defendant, Mr Johnson, had assessed that it would cost $296,564.70 to complete the whole of the works. That sum is approximately 71 per cent of the total cost of $418,647.22. On that basis, he submitted that the "total work" performed by the defendant pursuant to both contracts was only 29 per cent "complete" as at the date of termination.

22 Mr Manly further pointed out that the expert builder who gave evidence on behalf of the plaintiffs, Mr Tavrou, estimated that it would cost $356,346.95 to complete the whole of the works pursuant to both contracts from the date of termination. On that basis, Mr Manly submitted that the total work undertaken by the defendant pursuant to both contracts was only 15 per cent complete as at the date of termination.

23 Accordingly, Mr Manly submitted that the finding by the Member that, at the date of termination, the works were at 50 per cent completion of the lock up stage, was not open to the Member on the evidence.

24 In response, Mr Levin QC, who appeared with Mr Pumpa for the defendant, submitted that, on its correct construction, s 31(2) of the Act is unambiguous, and it provides that any contract, to which it applies, is of no effect at any time. He noted that Mr Manly did not dispute that the defendant was entitled to recover the fair value of the works performed by it on a quantum meruit, notwithstanding that there was no contract in existence that complied with s 31 of the Act. He submitted that that circumstance did not have the effect that, under s 53 of the Act, the Member should notionally "reinstate" the fire damage repair works contract, in order to determine whether the plaintiffs had any residual rights under it. He observed that if that be the case, then the inquiry would extend to whether the defendant also had any residual rights under that agreement. Mr Levin submitted that the proper legal analysis is that, the contract being of no effect, the defendant was entitled to compensation for the fair and reasonable value of the work performed by it, taking into account the cost of remedying or completing any defective aspect of that work.

25 In response to the second submission by Mr Manly, Mr Levin pointed out that a number of the matters, referred to in Ms Yau's affidavit, had in fact been the subject of a determination by the Member. He submitted that the complaint made by the plaintiffs, concerning the aspects of the Scott schedule, does not raise any question of law, but, rather, involves questions of fact. Mr Levin pointed out that the calculation of damages by the Member involved the determination by him of a number of different lines in the equation. The complaint made by the plaintiffs was confined to one line of that equation, and, in particular, an assertion that the Member failed to take into account a limited number of items in determining the value of that line in the equation.

26 Mr Levin contended that the third submission made by Mr Manly was misconceived. He pointed out that the schedule for payments for the fire damage works relied on by the parties, and the extension works contract, each specified the payments which were to be made at each particular stage of the works. Those payments did not, necessarily, correspond with the value of the works completed to that stage. Nor did the proportion, which the payments constituted of the total contract price, necessarily correlate with the proportion, which the value of the works, the subject of those payments, would constitute of the works when completed.

27 In considering the submissions made on behalf of the plaintiffs, it is important to bear in mind the nature of the proceeding which is before the court. Section 148(1) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) permits a party, to a proceeding before the Tribunal, to appeal, by leave, on a question of law from an order of the Tribunal. Such an appeal, being confined to one involving a question of law, is of narrower ambit than an appeal from the trial division of this Court, or the County Court, to the Court of Appeal. The appeal is not by right, but rather, as I stated, by leave. On an application for leave, the applicant must identify a question of law (as distinct from a question of fact) which is important to the success of the appeal, if leave be granted. On an application for leave, the applicant need not establish error by the Tribunal, but, rather, that there is a real or significant argument to be put that such an error exists.[2]

28 For that purpose, it is important that an applicant should clearly specify the particular question, or questions, of law that are raised by the appeal, and specify, with precision, the grounds upon which it is proposed that leave be granted. In the present case, the questions of law, and grounds of appeal, stated in the proposed notice of appeal, were, in large measure, repetitive, and some of them were difficult to understand, if not incomprehensible.

29 In the end, it would seem that Mr Manly only relied on one of the questions of law contained in the document, and only sought to rely on a small number of the proposed grounds of appeal. The first submission made by him, and which I have set out above, does not correspond with any of the questions of law or proposed grounds of appeal contained in the document. However, if I consider that such a submission had merit, I would give leave to the plaintiffs to amend the proposed notice of appeal accordingly. The second submission, in the broadest sense, could be said to come within question number six, and the ninth ground of appeal, contained in the document, but only because that question, and that proposed ground of appeal, are each expressed in wide and unspecific terms. The same observation may be made about the third submission by Mr Manly, which, conceivably, falls within question number six and proposed ground of appeal number eight.

30 The imprecision of the questions of law, and grounds of appeal, stated in the document, is unfortunate. It has added to the complexity of the task confronting the parties, and has compounded the costs incurred by both parties on the application for leave to appeal and the appeal. It would have been preferable if the parties had addressed the formulation of the questions of law, in the proposed grounds of appeal, before persuading the Associate Justice to refer the application for leave, as well as the appeal, to the Trial Division. With those remarks, I now turn to consider the three submissions made by Mr Manly on behalf of the plaintiffs.

31 As conceded by Mr Manly, the first submission made by him depends on acceptance of the proposition that, on its proper construction, s 31(2) of the Act does not mean that a building contract, to which it applies, is of no effect from the outset. I do not accept that proposition. In my view, the plain meaning of s 31(2) is that a contract, to which it applies, is ineffective to confer any rights, or impose any liabilities or obligations, on the parties, from the outset. There is nothing in the legislation which requires or justifies a construction of s 31(2) other than in accordance with its ordinary language. The only other provision in the Act, relied on by Mr Manly, in support of his submission, is s 133, which provides that a failure by a builder to comply with the requirement in the Act in relation to a domestic building contract does not make the contract "illegal, void or unenforceable". Mr Manly contrasted those three terms with the phrase, in s 31(2), that a contract which is not signed is "of no effect". However, that comparison does not advance the submission made on behalf of the plaintiffs. The use of different terminology in s 133 does not, of itself, justify a strained or artificial meaning of the words used in s 31(2).

32 I am fortified in that conclusion by the consideration that the construction of s 31(2), contended for by the plaintiffs, could produce anomalous and unintended results. If Mr Manly's submission is correct, then a building proprietor, ignorant of his or her rights, might fail to avail himself of s 31(2), until he has incurred considerable obligations under the particular domestic building contract. Such a consequence would subvert the clear intention of s 31(2), namely, to protect both parties, and particularly building owners, from onerous contractual obligations in respect of domestic building works, unless the contract, relied upon, is signed by both the builder and the building owner (or their authorised agents).

33 In addition, the construction of s 31(2), relied on by the plaintiffs, leaves open the question as to the time at which the contract would be "of no effect", if that phrase were not construed according to its ordinary meaning. If, as Mr Manly appeared to contend, the contract remains on foot until one or other of the parties to it asserts that it is no longer of effect, such a conclusion would involve substituting the word "voidable" for the phrase "of no effect" in s 31(2) of the Act. As I stated, there is no justification for re-writing s 31(2), or construing it other than according to its plain ordinary meaning.

34 Mr Manly also relied on s 53(1) of the Act, which provides that the Tribunal may make any order it considers "fair" to resolve a domestic building dispute. Mr Manly submitted that, as the defendant was entitled to payment on a quantum meruit in respect of the work carried out by it, it was fair that, similarly, the plaintiffs should be entitled to any damages arising out of the termination of the defendant's engagement, if the Tribunal found that, by its conduct, the defendant had repudiated that engagement.

35 I do not accept that submission. The power of the Tribunal, to make any "order" it considers fair, does not authorise the Tribunal to disregard the legal rights and entitlements of the parties involved in a domestic building dispute. At the time at which the plaintiffs terminated the defendant's engagement to carry out the fire damage repair work, the defendant had a legal entitlement to be paid, on a quantum meruit basis, the fair value of the work so far carried out by it on behalf of the plaintiffs. However, because there was no legally effective contract between the plaintiffs and the defendant, neither party had an entitlement, at law, to claim damages from the other party based on the other party's repudiation of the contract. Section 53(1) of the Act does not authorise the Tribunal to create a legal fiction, which is contrary to the facts of the case, and to the correct analysis of the legal position of the parties.

36 For those reasons, I do not accept the first submission made by Mr Manly, namely, that the Member erred in failing to consider whether the fire damage repair works contract had been repudiated by the builder, and in failing to consider the plaintiffs' claim for damages in respect of that repudiation. At all material times, the fire damage repair works contract was of no effect, and, accordingly, there was no contract that was susceptible of being repudiated by either of the parties to it.

37 The second submission by the plaintiffs relates to the assessment, by the Member, of defects, which the plaintiffs allege in the works carried out by the defendant. Originally, Mr Manly relied on thirteen items specified in his instructing solicitor's affidavit, which, it was asserted, had not been considered by the Member. However, in the course of submissions, it became clear that the Member had, in fact, considered, and made a determination in respect of, a number of those items. At the conclusion of submissions, I gave the plaintiffs leave to file supplementary written submissions specifying the aspects of the Scott schedule, which the plaintiffs contend were not the subject of adjudication by the Member. The defendant was granted leave to file submissions in response.

38 In their supplementary written submissions, counsel for the plaintiffs specified seven items, contained in the Scott schedule, which, it was submitted, were not considered and adjudicated upon by the Member. Those items appeared at the conclusion of the Scott schedule, and were described as "plumbing inspection and repair; electrical wiring to be re-run, strip and clean; bathroom shower base; remove joinery and re-fit; relocate beams at stairwell opening; rectify roof plumbing, replace flashings and gutters; engineering inspection". Counsel referred to two reports by Mr Tavrou, which were admitted in evidence before the Tribunal, dated 17 February 2012 and 17 June 2013, which referred to those items, and which allocated a cost in relation to each of them. On that basis, it was submitted that the Member had failed to take into account the seven defects, and that that failure was an error of law by the Member. The plaintiffs claimed, in their supplementary submissions, that there should be an adjustment to the value of the defects, found by the Tribunal, in the amount of $13,123.63.

39 In response, counsel for the defendant, in further written submissions, contended that none of the items, referred to by the plaintiffs in their supplementary written submissions, were the subject of evidence by Mr Tavrou or by any other building expert. Accordingly, there was no evidence to substantiate the items, or the costings of them in Mr Tavrou's report.

40 The Member was obliged to consider, and rule upon, any defects in the works, carried out by the defendant, which were the subject of evidence before the Member. A failure to consider and rule upon such evidence would, in an appropriate case, constitute an error of law. However, in order to establish such an error, the plaintiffs were required to identify evidence before the Tribunal, which established that the items relied on were defects in the works carried out by the defendant, and the reasonable cost of remedying those defects. On a proper analysis of the material relied on by the plaintiffs in their supplementary submissions, they have not been able to point to any evidence, in respect of the seven items referred to in their written submissions, which the Member did not consider, and which, if he had considered it, would have substantiated the existence of the seven alleged defects and the amounts which the plaintiffs claim should have been allowed in respect of them.

41 In his report dated 17 February 2013 Mr Tavrou listed four of the items, and in his report dated 17 June 2013, he listed all seven of the items, now relied on by the plaintiffs. He did so in a section in his report entitled "additional items beyond report". In neither report did he explain why those items are "additional items", and whether, and if so why or how, they constituted defects in the works carried out by the defendant. The Scott schedule itself is not evidence, and the inclusion of those items in the schedule did not have the effect that, in some way, those items became the subject of evidence before the Member.

42 In thorough and careful reasons for decision, the Member analysed, and ruled upon, the various issues which were raised in the proceeding before him. In particular, the Member considered, and dealt with, the issue of the alleged defects in the defendant's work, in some detail. As Mr Levin pointed out, that issue concerned the quantification of one line in the equation, by which the amount of the defendant's claim, in respect of the fire damage repair works, was determined. In those circumstances, in order to demonstrate an error of law in respect of that aspect of the Member's ruling, the plaintiffs were obliged to specify the evidence which, with some clarity, would have established the items which, it is alleged, the Member overlooked. In their oral and written submissions, counsel for the plaintiffs have not been able to point to any such evidence before the Tribunal. Accordingly, I do not accept the submission, on behalf of the plaintiffs, that in assessing the amount to be allowed in respect of the defects in the defendant's work, the Member failed to take into account, and adjudicate upon, the items alleged by the plaintiffs.

43 The third submission by the plaintiffs concerned the finding by the Member that the fire damage repair works, and the extension works, had each progressed to a point equivalent to 50 per cent of the lock up stage. The fundamental contention by the plaintiffs is that that finding has the effect that the defendant is entitled to payment of an amount which exceeds the proportionate value of the works, taking into account the estimated cost of completing those works.

44 In determining the stage, which the fire damage repair works had reached, the Member used the insurance payment schedule as a guide. By doing so, he concluded, from an examination of the evidence, that the works had proceeded to 50 per cent completion of the lock up stage. The plaintiffs did not point to any evidence to support a proposition that such a finding by the Member was not open on the evidence. Indeed, the submission made by the plaintiffs was not directed to the factual finding by the Member that the works had proceeded past the frame stage, and that 50 per cent of the lock up stage had been completed. Nor did the plaintiffs point to any evidence, adduced before the Member, upon which to sustain a submission that it was not open to the Member to find that the fair and reasonable value of the fire damage repair works, so far completed, was $73,647.32. In particular, the plaintiffs have not sought to identify any evidence, put before the Member, as to the fair and reasonable value of the works carried out by the defendant, as a basis for the submission that the Tribunal erred in law in estimating that value for the purpose of the quantum meruit claim made by the defendant.

45 Rather, counsel for the plaintiffs advanced an argument based on the Member's findings as to the total value of the works so far completed, expressed as a percentage of the total cost to complete both works (as prescribed by the extension works contract and by the scheduled cost of the fire damage repair works). The plaintiffs compared that percentage with the estimated total cost to complete both works as at termination (as estimated by a building expert), expressed as a percentage of the total cost to complete both works (as prescribed by the extension works contract and by the scheduled cost of the fire damage repair works).

46 That comparison is, in my view, misconceived. The fact that the estimated cost of the works, necessary to complete the fire damage repair works, when expressed as a percentage of the total cost of the works contained in the insurance schedule, exceeds the amount remaining unpaid to the builder, under that schedule, when expressed as a percentage of the scheduled total cost of the works, does not necessarily mean that the calculation by the Member, of the fair and reasonable value of the works so far undertaken by the defendant, was not open on the evidence, or was, in some way, erroneous. The flaw, in the plaintiffs' submission, lies in the unfounded assumption that the total scheduled cost of the fire damage repair works ($122,747.22) must equate with the total sum produced by the addition of the amounts so far paid to the builder in respect of the fire damage repair works, with the estimated cost to complete those works at the time of the termination of the builder's engagement on those works.

47 Similarly, the submission on behalf of the plaintiffs in respect of the finding by the Member, that the extension works had proceeded to 50 per cent of the lock up stage, is also flawed. Again, the plaintiffs have not pointed to any evidence to support a submission that the factual finding by the Member, that the works had progressed to 50 per cent of the lock up stage, was not open on the evidence. At the time at which the plaintiffs terminated the contract, the defendant was entitled to payment for the works thus far carried out by it under that contract. As a result of the factual finding by the Member, that at the point at which the contract was terminated by the plaintiffs, the defendant had completed 50 per cent of the lock up stage of the works prescribed by the contract, the defendant had a contractual entitlement to be paid for that percentage of that stage of the contract works completed by it.

48 The rights and liabilities of the parties, on termination of the contract, were to be determined according to the terms of the extension works contract. It is not relevant that the estimated cost to complete the extension works, when expressed as a percentage of the contract sum ($295,900), might exceed, or not equate with, the amount remaining unpaid to the defendant under the extension works contract, when expressed as a percentage of the contract sum. For example, under the extension contract, the amount of the deposit, and the amounts payable in respect of the demolition and frame stages, constituted 40 per cent of the total contract price. If the contract had been terminated at that stage, the defendant would have been entitled to 40 per cent of the total contract price. The defendant's contractual entitlement to that payment would not be affected, if it were demonstrated that the cost to complete the extension works exceeded the residual amount of the contract sum still payable under the contract, namely, 60 per cent of the contract sum. Such a consideration could not detract from, or affect, the builder's entitlement to payment as prescribed by the extension works contract.

49 For the reasons which I have set out above, I do not accept the submissions, made on behalf of the plaintiffs, that there was a relevant error of law by the Member. Further, I do not consider that any of the three principal submissions, made on behalf of the plaintiffs, constitute a real or significant argument that any error of law was made by the Member. Accordingly, I dismiss the application by the plaintiffs for leave to appeal against the decision of the Tribunal. If, contrary to that conclusion, I had given leave to the plaintiffs to appeal, for the reasons I have set out above, I would have dismissed the appeal by the plaintiffs against that decision.

50 It follows that the proceeding should be dismissed. I shall hear counsel on the question of costs.

[1] Dover Beach Pty Ltd v Geftine Pty Ltd [2008] VSCA 248; (2008) 21 VR 442, 463 [101] (Ashley JA), 468-9 [130] (Redlich JA).

[2] Secretary to the Department of Premier & Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331, 335 (Phillips JA); Myers v Medical Practitioners Board of Victoria [2007] VSCA 163, [30]-[32] (Warren CJ).