Raj Saneja and Manju Saneja v Dynabuild Pty Ltd Dynabuild Pty Ltd v Raj Saneja and Manju Saneja

JURISDICTION 5This Tribunal's power to hear this matter which was commenced in the Consumer Trader and Tenancy Tribunal before its abolition is derived as under Civil and Administrative Tribunal Act 2013 Schedule 1 as a part heard matter before the former Tribunal which becomes a pending proceeding in this Tribunal to be determined on the evidence heard in the former Tribunal. This Tribunal derives its jurisdiction in this matter under the Home Building Act 1989 (the Act). This dispute arises out of a contract to perform residential building work involving the construction of a new residential dwelling .The amounts in dispute in respect of such work is well within the prescribed $500,000.00 monetary limit of this Tribunal.

ISSUES 6Whether and to what extent the defects and or incomplete work alleged by the homeowners should entitle them to damages with respect to same. 7Whether the cost of the UF should have been the subject of a variation or whether such cost should have been borne by the builder on the basis that it should have been included in the fixed price. 8To what extent and on what basis did the homeowners contribute to the delay in the completion of the dwelling 9If the answer to the preceding question is yes:- did such contribution to the delay amount to a breach of contract on the part of the homeowners. If a breach on the part of the homeowners is established to what is extent has such breach caused loss to the builder.

BACKGROUND FACTS 10The homeowners purchased the subject property in around 2007 with the intention of constructing a new home for themselves. 11The homeowners engaged Krslovich Homes (KH) around May 2007 to prepare design drawings/plans with a view to obtaining local council approval for the proposed development. Plans were prepared as early as September 2007 and approval for the development was subsequently obtained. 12On 28 August 2008 the homeowners entered into a contract with KH to construct the dwelling and works commenced under that contract at least to the extent of preparation of foundations and most of the piering before KH went into liquidation in December 2008. 13At the time of the liquidation the homeowners had already paid the 5% deposit under their contract with KH in an amount of $43,615.90. 14The homeowners made a claim on Vero home warranty insurance and it is not disputed that they were reimbursed the full amount of that deposit less an excess of $500.00 around March 2009. 15Following the liquidation of KH the homeowners sought to retain another builder to continue their project around February 2009 approached the builder with a view to so retaining it. 16Rocco Natoli the sole director of the builder inspected the site sometime prior to 12 March 2009 the date upon which a preliminary construction estimate/quotation was provided by the builder to the homeowners. 17The March 2009 estimate contained reference to the various drawings dated 7 September 2007 and the KH Schedule of finishes upon which the builder's $718,181.00 estimate was based. 18On 17 February 2009 UF submits a quotation to the builder to supply and install the UF components for the proposed ground and first floor slabs for the development. 19In May 2009 the homeowners provided to the builder copies of documents including the HIA form of contract minus that part of schedule 1 which included the KH price together with all documents which formed part of that contract which it had entered with KH for the stated purpose of informing the builder of what that previous agreement had included. 20On 28 August 2009 the contract between the homeowners and the builder is executed for the amount of $790,000.00 inclusive of GST which called for completion within a 52 weeks period following the contract period commencing. 21Investigations are conducted by the builder during the period September to November 2009 to resolve issues relating to engineering design for the slabs and certification of existing piering. 22On 26 November 2009 the homeowners executed Variation Number 1, which included costs for additional piering required and the modification of the existing piering required before certification could be obtained so as to enable the building to commence. 23On the 14 December 2009 SFL Foundations commenced the physical works in relation to the additional piering in accordance with agreed Variation 1. 24Works were ongoing on the development notwithstanding delays that took place between December 2009 and eventual handover of the completed dwelling in October 2011.

THE HOMEOWNERS LAY EVIDENCE 25The homeowner Raj Saneja (RS) gave oral evidence as to the truth of his detailed statement filed and served in the proceedings which is undated. RS was then subjected to a lengthy cross examination by Mr Doyle. 26The homeowners case as put by RS is that there was a contract with KH which set out in the contract attachments the precise details of the home they wished to build. One of the documents attached to the KH contract was a "Standard Specification/Owners Selections Schedule" (the KH Specification) 27Following the collapse of KH on 3 December 2008 shortly after site works had commenced on the project, the homeowners looked for a new builder and commenced discussions with the builder in February/March 2009 during which time Mr Rocco Natoli the representative of the builder had visited the site. 28RS says that they received a construction estimate from the builder on 12 March 2009, following which discussions continued between March 2009 and August 2009 when the contract between them was signed. Further RS says that before the contract with the builder was signed he had provided to it copies of the KH contract and all of the attachments to it which were in his possession. 29RS states also in his statement that prior to signing the agreement the builder "gave every assurance that the terms of our agreement would be precisely the same as the KH agreement". He asserts that this was confirmed in two emails from the builder The first of these emails dated 18 June 2009 included the following statement: "We are finalising the last of the contract. We are using a standard HIA contract (same as you signed with KH) and it calls for ......" The second email is dated the 23 June 2009 and it included the following paragraphs: ".... It is the same contract that was signed between yourself and KH so I saw no need to reproduce it and send it to you for review. We have been quite conscious to keep the documentation and processes of your project as similar as possible ...to that KH provided to you so as to minimise any stresses or concerns to you and Mrs Saneja..." 30RS in his statement in answer to the allegations regarding the delay alleged to have occurred on the homeowners' part asserts that delays generally were of a kind that one would normally expect on this type of project and as such the builder as the expert should have accounted for them before setting the time limitation. 31As regards the delay alleged resulting from there being no valid construction certificate ("CC") RS says that the only basis for the invalidity of the CC was the fact that it named KH. He also says that this was known to the builder which had confirmed this in an email dated 1 September 2009 to Greenfield Certifiers in which it indicated that it was handling the paperwork with respect to the CC, notwithstanding that it was the homeowners' obligation to do so under the contract. 32RS referred to the written procedure laid down in Clause 9.2 of the contract which required written notification relating to claimed delays to building works which he says the builder only followed in relation to weather delays. He claimed that the builder's claimed delays apart from the weather were essentially retaliatory in response to the homeowners' application to the Tribunal. 33RS says in relation to the alleged delay caused by the lack of engineering plans, that this also was a matter raised with the builder well before any contract was signed, and that it was agreed that the builder would seek to acquire them and that the builder had indicated that there would be no issue with regard to them. 34Turning to the important issue of the UF, RS asserts that he did not know what a UF was until after it became an issue. His only concern was that the home had cement floors. He claimed that he had not been aware of the difference between UF and conventional concrete slabs. He explained that he understood that the concrete floors were included in the contract the same as in the KH contract and once again relies on the emails referred to in paragraph 29 above. He says he could not understand why there had been such an omission relating to the UF in view of such assurances that the contract would be the same as the one with KH. 35Mr Doyle's cross examination of RS focussed on trying to discredit him. Mr Doyle laboured the issue tirelessly in relation to the UF suggesting to RS that he knew the KH contract called for UF and that it was clear from the Dynabuild Specification in the contract the builder prepared that the word UF did not appear. On that basis the proposition was then put to RS that what he had said in paragraph 39 of his statement "was a lie". 36RS responded explaining that he did not understand the significance of the word UF until the builder sought to claim the variation for it. He just wanted a concrete floor and it did not matter whether it was conventional poured slab or UF prefabricated and that is why the significance of it escaped him until it was explained at the time the builder claimed the variation. 37Mr Doyle's questioning also focussed on the issue of the screw piles which were part of the foundations and he pressed him as to what he understood as the difference between his use of the word " variation" as distinct from the term "outside the contract". The fact that RS had paid SFL (the subcontractor to KH) which had installed the screw piles was raised as another issue affecting RS's credibility. RS clarified that he had paid an amount direct to SFL which was over and above the KH contract price. 38Related to the latter issue was the homeowners claim on Vero the HOW insurer following the collapse of KH. RS admitted in cross examination that he had claimed the full deposit of 5% back from Vero on the basis that "work had not started" to use the words of RS in the claim form on Vero. His evidence in answer to my questioning was that KH had done site preparation at least even though RS himself had paid for the screw piles additional to the deposit. RS confirmed in answer to Mr Doyle that he had indicated in his claim form that "work had not started".

THE BUILDERS LAY EVIDENCE 39The builder's lay evidence is contained in a detailed statement dated 13 November 2012 from Joanna Natoli (JN) the wife of the director of the builder Roy Natoli. JN explained her role in the builder's business was that of business manager and administrator. JN also gave oral evidence attesting to the truth of her aforesaid statement and then was subjected to cross examination by Mr Allan. In her statement JN sets out the history of the matter from the builder's perspective and provides copies of various relevant email and regular correspondence together with other documentation such as drawings, quotations and the like which purportedly corroborate her assertions. 40The most relevant issues which are contentious to which her statement is directed relates to the basis of the contract with the homeowners and its inclusions, the UF and the question of alleged delay on the part of the homeowners. 41Regarding the contract JN asserts that the homeowners had provided partial copies of the contractual documents with respect to the KH contract. JN says that the contract signed with the homeowners "generally followed the draft documents supplied by the Sanejas....However there were changes made to some of the scheduled items ...." 42JN claims that the homeowners had misled the builder as to the progress that had been achieved on site by KH, firstly in relation to the number of the screw piles for the foundation and secondly in relation to the claim that KH had the site ready for the first slab pour at the time of its collapse. 43In relation to the UF, JN claims that it was the builder's belief that the ground and first floors would be in accordance with the schedule of finishes in the signed contract with the homeowners which did not refer to the UF in the Dynabuild Specification. 44She further stated at paragraph 94 and 95 of her statement as follows: "94 We understood that the UF was mentioned in the drawing plans attached to the contract, however, it is stated as 'suspended UF to engineers details', there was never such engineering details provided to us therefore we believed that this was just an omission of the person drawing the drawing plans". And further at paragraph 95 "After receiving and perusing the engineering plans received on 9 October 2009 we became aware that the piles were not designed to accommodate the UF. There were communications with the owners regarding the floor type. The owners insisted on having the UF instead of a conventional floor as we had originally quoted ...." 45JN says that there were repeated requests to UF and they did not respond until the 19 January 2010 and she seeks to attribute delay to the homeowners for not providing plans and UF for not responding. 46JN generally summarises the position on delay at paragraph 216 of her statement and says as follows: "216 As stated in the previous paragraphs, the major delays were caused by waiting for a valid Constuction Certificate, waiting for valid and accurate engineering drawing plans waiting for sorting out inconsistent drawing plans provided to us and to the engineer, waiting for adequate informing and instructions concerning the piles installed by the previous builder, and waiting for various variation notices being approved. None of those delays were caused by the conduct of the builder". 47In terms of delay costs to the builder JN says at paragraph 14 of her signed statement .... "At the time of the subject contract Dynabuild was engaged in no other building work and therefore the whole of these overhead and site costs were directly attributable to the Sanejas project in Maroubra". 48JN claims that the documents attached to the contract were different to "both of the quotation plans and from documents later given to them by the Sanejas". She then sets out the history in detail relating to the obtaining of the engineering plans which she says were the responsibility of the homeowners to provide, although she claimed that because the homeowners were anxious to progress the works the builder tried to assist by obtaining quotes from other engineers and eventually established contact with Sydney Engineers, which had been the same firm of engineers which had been retained by KH. 49She asserts that no claims were sent in respect of delay and disruption according to the contract in the period August 2009 to February 2010 because it was never clear when the actual works began. It was around this time that she suggests the issues relating to copyright arose as to the use of KH plans and it was recommended to the homeowners that they seek legal advice. The inference from JN's statement being that this occurred after the signing of the contract on 28 August 2009, even though attachment JN 6 to her statement, the letter from the solicitor in relation to the copyright issue is dated 12 June 2009 prior to the contract signing by more than two months. 50Mr Allan conducted detailed cross examination of JN from which the following aspects were notable: JN did not remember the date the copyright issue regarding the plans was raised. JN agreed the idea of the contract was to work to the KH plans that the homeowners had provided, but claimed that she did not have all the KH contract documents until after the contract was signed. She said that the documents that she had in her possession at the time of the tender (presumably meaning the March 2009 quotation) were referenced within the tender document. JN agreed that the builder wanted to give the homeowners everything that KH had promised that they would get in the home that was on the plans. JN claimed that the UF quotation of February 2009 obtained by the builder was irrelevant, as there were no engineering plans that they would have relied upon. She repeated this answer a number of times. She said that the builder had questioned RS a number of times as to whether there were engineering plans and RS had advised "there were none". She denied that the builder had seen engineering plans at that time i.e. February 2009 even though the document transmittal sheet from UF of 17 February 2009 included reference to the technical plans being attached. JN was questioned about the failure of the builder to alert the homeowners as regards either the price of the UF or any delay necessitated by it. JN said that until all site inground works were complete the builder was not ready for the UF. As regards the cost of the UF she did not alert the homeowners to it she claimed until after all the figures had been finalised. In relation to the builder's website JN was hesitant in giving evidence in relation to the information contained on it regarding the subject premises or work on other jobs. She claimed that the website was just a marketing tool and that the published information was a guide only prepared by the web designer and she conveyed the impression as a marketing tool there was a licence for it to be a somewhat exaggerated version of the facts. She was very vague about dates when pressed regarding other jobs in which the builder was involved at the same time as the subject job. JN continued to dispute that the builder indeed had been engaged in any other jobs at the same time at least initially but later when pressed conceded that the other jobs identified to her were running.

THE EXPERT EVIDENCE REGARDING ALLEGED DEFECTS 51The building consultants Howard Ryan for the homeowners and Andrew Connor for the builder had provided reports that were tendered in evidence. Reliance was only placed on Mr Ryan's supplementary report dated 16 January 2013 and Mr Connor's single report of 26 March 2013. The experts had subsequently met on 4 June 2013 at an informal conclave and produced a joint Scott Schedule (the SS) which narrowed the outstanding defects claim significantly. Of the nine defects alleged three items were fully agreed. 52Mr Ryan and Mr Connor gave oral testimony although MR Ryan was not in attendance and gave his evidence via a telephone link up. There was clearly some disadvantage to the builder in not being able to put documents before Mr Ryan during cross examination particularly having regard to the fact that he did not have other than the 11 page conclave document with him and his inability to comment upon or remember certain other matters without his report was understandably concerning to Mr Zikman for the builder. 53Of the six items still in dispute three were valued at less than $500.00 each. The most attention in cross examination was given to the three more substantial items. 54Firstly in relation to the canopy roof Mr Connor said it was not a defect because there was no water penetration or problem evident and secondly because the engineering plan showed that it had been built according to its design. Mr Connor conceded in cross examination that that if he was the builder he would have graded it to the drain Mr Ryan said that the design was inadequate as it did not provide for a fall to the drain outlet. He agreed however that there was no requirement in the BCA for it to have a fall. He said that the builder should have exercised reasonable care and enquired of the designer to see whether the flat canopy should be treated differently. The builder further contended that it was left flat because the homeowners were intending to do landscaping on it which was not part of the contract and that when such was carried out it would be finished with the necessary fall. 55The air conditioning unit situated on the side passageway was the second major item. It was not disputed that in the position it was installed it clearly obstructed the passageway at the side of the house. Both experts agreed that the position of the unit on the plan i.e. in the subfloor area of the house was not ideal and the position in which it had been placed was more functional because it enabled better air flow Mr Connor in the builder's defence argued that it was so placed in order to achieve better functionality. He did not think that the relocation recommended by Mr Ryan was reasonable or necessary as it was contrary to both their views that it was functioning better in the open air position where it was located. 56The expert's evidence in relation to the third major item namely the absence of glass balustrades was not helpful. It was not clear to either expert from the plans that there were meant to be glass balustrades as well as the privacy screens in place together.

THE DELAY EXPERT 57The builder relies on the expert report from Solid Support dated 29 April 2013. Additionally it relies on the oral testimony of its author Mr Uri Shachar who was cross examined over a considerable period. 58Mr Shachar's report forms the basis for the builder's damages for delay claim against the homeowners in respect of the 116 days alleged to have been consequent on failures by the homeowners to provide appropriate documentation and make relevant decisions in accordance with the requirements of the contract in order to enable the builder to progress the works in accordance with its building programme for the job. 59It is clear however from the evidence that the builder did not have a written construction programme and the one which forms the basis for the Solid Support report is a theoretical programme developed by Mr Shackar based on the instructions he was provided in the statement from JN and from other discussions he admitted to having with the Mr Natoli. Mr Allan challenged the report on the basis of irregularity with regard to the requirements of the Expert Witness Code of conduct. 60I do not propose to summarise this expert's evidence under this heading as it is dealt with relevantly in the decision below.

THE HOMEOWNERS SUBMISSIONS 61The homeowners submit that the builder falsely led them into believing that they were getting the same home as they would have obtained from KH, subject to the stated changes, only the house the builder would have constructed would have been a better house. It is submitted that the builder's claim on the 4 March 2010 that the UF "would require a variation to our contract as we were unaware of it at the time of our tender" was patently untrue given the builder's correspondence with UF prior to the quotation. 62Mr Allan submits that JN's claimed assumption at the time of contracting; that the reference to the UF in the drawings was redundant due to the absence of engineering plans is inconsistent with the fact of the builder's prior dealings with UF in February 2009. 63Mr Allan also submits that the delay in advising the UF cost until March 2010 amounted to a deliberate concealment of it for many months so as to produce an outcome that the homeowners would have no choice but to agree to it, because to not do so would have heralded the spectre of further cessation of works on a project which had already due to factors largely beyond their control become well overdue. 64Mr Allan submits that the misleading and deceptive conduct provisions of the ACL should properly be seen as an alternative way of reaching the same end as a proper interpretation of the contract. He says that the contract drawings refer to UF and the engineers details and effectively require that reference should be made to those details and the fact that the builder chose not to obtain and refer to them in the course of agreeing to a lump sum price amounted to an assumption of a price risk with respect to the UF. He further argues that not including the word UF on the first page of the Dynabuild Specification under the heading "Construction Type" did not convert the concrete into a conventional slab. He says that the first page is simply silent on the construction type and the particularity is derived from the contract drawings which describe it as UF. 65Mr Allan's submission in relation to the builder's claim for delay damages essentially argues that firstly the builder did not comply with the provisions of the contract in notifying the homeowners of any delays and their consequential costs other than the weather delays and secondly it is clear that the builder was well and truly involved in other jobs by early 2011, which he says is a fatal floor in the delay claim given the builder's delay analysis was based on a premise that it was only working on the subject premises from 2009 through 2011. 66Mr Allan relies on authority in the decision of Turner Corporation Ltd (in p liq) v Co-Ordinated Industries Pty Ltd (1995) BCL 202 where Rolfe J said at 219: "One may be forgiven for thinking that it would be strange if there was not a requirement for actual, as opposed to potential, delay. In each case, in my opinion, it is necessary to determine what delay was caused and whether that delay, in truth, delayed the contractor". Further in the same decision at page 221-2 Rolfe J points to the following propositions emerging: "(a) where the contract provides an extension of time clause ... the fact the principal may have caused delay has the effect that an allowance should be made in accordance with the contract. It does not have the effect that the contractual provisions are thereby overlooked. (b) in any event the principal's actions must cause 'actual' as opposed to potential delay in the sense that the completion of the work is delayed by the actions of the principal. It is not to that point to say that there could have been a delay. It is necessary to establish that delay was caused." 67Mr Allan then relies on the decision in Kane Constructions Pty Ltd v Sopov (2005) VSC 237 where Warren CJ reiterated the need to prove actual delay to the builder. Mr Allan specifically refers to the statements of principle relating to EOT claims generally in paragraphs 667 to 675 of that judgment which are discussed in the decision below at paragraph 109.

THE BUILDERS SUBSMISSIONS 68Regarding the UF Mr Zikman says that the Homeowners assertion that omission of the word UF from the Dynabuild Specification amounted to misleading and deceptive conduct under the ACL provisions should be rejected. He argues that the evidence supports the proposition that the builder had not allowed for UF because the engineering plans had not been supplied by the homeowners and that the builder was transparent about this in advising that its price was subject to change once plans and specifications were provided. He relies on the assertion of Ms Natoli under cross examination that the builder's quotation never included UF and the reason that it was required to use it was only discovered after review of the engineering plans and a meeting with the engineer. 69It is further argued that because the homeowner did not know the difference between conventional and UF slabs and they believed that "they were getting a "concrete floor" so, irrespective of any ambiguity between the drawings and the specification, the issue of being misled or deceived could not have arisen". 70Mr Zikman argues also that raising of the variation request was proper having regard to the facts which emerged relating to the piers not being capable of supporting a conventional slab. The proper raising of and subsequent signing of the variation, following upon which the builder had acted, is argued to have created an estoppel in the builder's favour or alternatively that the homeowner pursuant to Clause 39 of the contract had waived any right in respect of it. 71Mr Zikman relies on paragraph 95 of the JN statement to support the proposition that the builder had allowed for concrete floors but not for the UF system because the design requirements for it were unknown. 72Mr Zikman also argues that the homeowners belief as to what they were getting is not relevant, impliedly on the basis that there was no ambiguity in the contractual documents and absent the mention of UF in the Dynabuild Specification attached to the contract relies on the authority re parole evidence in Codelfa Constructions Pty Ltd v State Rail Authority of NSW [1982] 48 CLR 337 to support the contention that the subjective intent of a party is irrelevant when it comes to determining the terms of a contract. 73The latter he argues is supportive of the builder's contention that what was offered and accepted in the contract was a conventional slab, and that what later emerged when engineering drawings became available was that it became apparent that a conventional slab was not possible, and the latter circumstance then entitled the builder to rely on the qualification in the contract "Subject to change upon receipt and detailed analysis of those plans and documents". 74Mr Zikman goes on to provide a detailed submission in relation to the builder's claim for delay damages. The submission assumes that there is no time bar to an extension of time claim under Clause 9.2 of the contract and indeed that be so even if the builder's first awareness of the cause and extent of delay is well beyond the contract completion date. He argues essentially that the failure of the builder to comply with the contractual provisions with respect to notice is not a bar to recovery of damages on the authority of Dante De Grazia trading as All Sydney Building Services v Nicholas Solomon and Ors [2010] NSWSC 322. He further relies on the expert evidence of Mr Shachar to support the basis of the claim, suggesting that there was no delay expert called by the homeowners and therefore that Mr Shacher's evidence and opinions should be accepted as unchallenged. I do not propose to summarise fully the very lengthy submissions with regard these aspects but will refer to them in the decision reasoning below. 75In relation to the final aspect of the builder's claim for damages ,namely the alleged unpaid variations invoices totalling $82,866.00 Mr Zikman submits that there was no challenge to the substance of these variation invoices nor was it put to JN in cross examination that there was no entitlement to be paid for them. He further says that although these variation claims were not raised during the course of the works this should not detract from whether the builder had any reasonable entitlement to the claims being made. He argues similarly with the EOT notice under Clause 9 that under Clause 17 of the contract there is no express time restriction on when a variation claim is made.

FACTUAL ANALYSIS 76The issues of fact that need to be resolved were outlined at paragraphs 6 to 9 above. The two major areas of dispute are whether the scope of works for the agreement should have or did in fact include UF and secondly whether the evidence in relation to the alleged delay on the part of the homeowners can be substantiated. The other issue of less controversy is the nature and extent of defects and or incomplete work which simply turns on an assessment of the evidence in relation to each item in the SS which I will address in my decision below. 77Turning firstly to the UF, I accept the evidence of RS that he had no knowledge of the meaning of UF until it was explained to him in March 2010, and whether it was a conventional slab or UF was of no consequence to him, he just wanted concrete slabs rather than timber floors. 78I find that the homeowners provided documentation relating to the KH contract which was available to them which included the KH Schedule of Finishes and a number of plans/drawings. I further find on the balance of probabilities that the builder was aware that the KH contract called for an UF system to be installed. JN's statement at paragraph 94 quoted above at paragraph 44 which asserts an assumption on the part of the builder that the floors were always to be conventional slabs I find is just not credible on the available evidence. It is entirely inconsistent with the builder having taken the trouble before quoting the job to obtain a detailed quotation from UF in February 2009. 79Similarly the statement by JN at paragraph 95 of her statement quoted above at paragraph 44 that it was at the owners insistence that an UF system was to be used is also plainly untrue on an overall assessment of the evidence. 80What I find on an analysis of the evidence is that more probably than not the builder, having received the UF quote before tendering for the job determined that some cost saving could be achieved by using a conventional slab, notwithstanding that the drawings and indeed the KH Specification clearly stated that the slabs were to be UF. It then omitted the word UF from the Dynabuild Specification and the homeowners not knowing the difference between UF and conventional slabs were not in a position to appreciate the consequence of this subtle change in the wording to "concrete slab". The homeowners were very much relying on the builder which from the tone of its correspondence with them was doing everything possible to take away the pain of the homeowners previous experience with the KH collapse. The homeowners were clearly accepting of the assurances of the builder that everything was the same or substantially similar to the KH contract if it was not specifically brought to their attention. 81The second major issue which impacts on the builder's claim against the homeowners is the issue of delay claimed to be attributable to the homeowners. Curiously in her statement JN raises the problem of copyright with regard to the builder's use of the KH drawings as a matter which caused delay, which she clearly implies at paragraphs 54 to 56 of her statement occurred after the contract had been signed. She nevertheless attached the letter from the lawyers advising the homeowners on this matter which clearly shows that the copyright issue was resolved in May/June 2009, long before the contract was signed. In cross examination she had no recollection of when this had occurred and had she read the documents properly that she was attaching to her statement she would have realised the assertion of delay resulting from the copyright issue was simply unsustainable. This copyright issue is only relevant in assessing JN's overall credibility as a witness as it is clearly not relevant to delay under the contract which was signed in August 2009. 82At paragraph 216 of her statement set out in paragraph 46 above JN identifies what she considered to be the major causes of delay. However the overall tenor of the significant amount of correspondence relevant to all these identified issues, which is provided by way of attachments to her statement, suggests a position quite contrary to what JN is actually asserting. From that correspondence one can draw the conclusion on the balance of probability that the builder itself voluntarily took control of sorting out all of the identified issues (in paragraph 216), except for the variations even though it may have been the owners' responsibility under the contract to provide the information. 83The timing in relation to what occurred with respect to the identified issues from October 2009 to April 2010 was squarely under the control of the builder and in the absence of notices to the owners indicating the builder was being delayed to its detriment by the owners failure, there is simply no basis on the available evidence to justify such a finding. 84I find that if there was delay in this period it was attributable to the builder's own decisions and inaction. The builder had given assurances, as evidenced by the correspondence, to the homeowners that it wanted to make the building project as painless as possible for them having regard to what had occurred with KH. The builder had ample information available notwithstanding the possible absence of engineering plans for the UF. The builder in fact assumed the role of undertaking the relevant enquiries after it had signed the contract. It was aware of the deficiencies or should have been well prior to the signing and therefore should have made it known that these issues required clarification sooner if it were thought necessary. 85In support of the builder's alleged loss resulting from its claim of owner delay it is asserted by JN at paragraphs 14 and 15 of her statement that the builder was engaged in no other work and indeed was not entitled under the terms of its HOW insurance to so engage other work until the contract with the homeowners was concluded. The available evidence on balance supports the conclusion that such assertions by JN were not true. The decision of the Industrial Court of NSW, in the Workcover prosecution of Mr Natoli who did not give evidence in this matter, relied on evidence from Mr Natoli in sentencing that he had been engaged in a project at Hunters Hill up until its completion in March 2010. Further evidence tendered by the homeowners establishes that the builder was engaged in a $685,000.00 project at Denning Street South Coogee between December 2010 and October 2011 when an Occupation Certificate for the South Coogee project was obtained. JN also made the concession in cross examination eventually that the builder had also commenced a job on Pittwater Road Mona Vale in December 2010. 86The builder's claims on its website on 18 March 2010 regarding this subject project that it had taken over from KH did not give any indication of delay that would prevent it being completed prior to Xmas 2010 consistent with the indications in correspondence from the builder to the homeowners. JN's attempt to explain the website on the basis that it was just a marketing tool and that there was some sort of licence to exaggerate is consistent with the tenor of her evidence generally having regard to the number of areas in which it is clearly shown to lack credibility. On an overall assessment of the progress of the works for the subject project when viewed in relation to obvious commitment required to the other projects in which the builder has reluctantly agreed it was involved it is difficult to avoid the conclusion that the pace of the subject project was geared to meet the commitments on those other projects. The basis for this conclusion is the builder was also committed to other projects up to March 2010 and subsequent to December 2010 and the most significant alleged delays are claimed before and after those dates.

Defective or Incomplete Work 87The first aspect of the homeowners' application relates to the claim for the alleged defects/incomplete work the details of which are set out in the joint SS which is in evidence. Having reviewed the available evidence and having heard from the experts I find in respect to the various items particularised as follows: SS Item 4.14 - Canopy Roof. Given Mr Connor even conceded that notwithstanding the plans, if he were the builder, he would have included a fall, I am satisfied that on balance that this item does constitute a defect and I find it proven as to the sum of $790.00. SS Item 4.15 - Calcification and Tiling. Both experts agreed liability and quantum in the sum of $8,203.00. SS Item 4.15 - Cracking to render. Both experts agreed this item is a defect and assessed quantum at $125.00. SS Item4.16 - Air Conditioning Unit Location. Whilst the unit may function better where it is located which was conceded by both experts, it clearly amounts to an obstruction where it is presently located. Since it is not placed in accordance with terms specified in the contract, irrespective of its better functionality in its current location as agreed between the experts it should have been more appropriately installed where it did not obstruct and therefore I prefer Mr Ryan's view that it does constitute a defect. There is ,disagreement between the two expects as to the reasonable cost of rectification and I therefore find an appropriate allowance to be $1,100.00. SS Item 4.17 - Glass Balustrades. I am satisfied that the glass balustrades were part of the contract works as they were included in the drawings. The privacy screens were an additional requirement of council. I am satisfied that the absence of the glass balustrades amounts to incomplete work. There is disagreement between the experts as to the reasonable cost of installation and I therefore determine the reasonable allowance to be $6,000.00. SS Item 4.19 - Garage Stair Handrail. I am not satisfied that this item is required to be installed in terms of the BCA. It is not clear from the contract that it was intended as part of the works. I therefore do not consider that this item has been established to the required standard and make no allowance for it. SS Item 4.20 _ Front Door Damage. This is a minor to hardly significant defect. However I accept the homeowners' evidence that has not occurred subsequent to occupation and it is a defect that requires repair. An allowance of $150 to cover such repair is included in this assessment. SS Item 4.21 - Internal Stairs. This also is a minor to hardly significant imperfection but the photo illustrating it shows it to appear below the finished surface rather than on top of it which on balance would confirm it occurred before the work was completed. Even though it may not be noticeable to the average visitor to the home, the homeowners knowing it is there would certainly notice it and in a home of high quality they have a right to expect it free from even seemingly minor defects. An allowance of $150.00 to cover this repair is included. SS Item 4.22 _ Kitchen Cupboards. This item has been agreed as to both liability and quantum in the sum of $1,238.00. 88The total amount in respect of the above items for defective or incomplete work is therefore $18,668.00 before the builder's margin of 20% and GST are added. The total amount after these allowances are added is $24,641.00.

THE ULTRA FLOOR 89The findings at paragraphs 77 to 80 above are pertinent to this issue as to whether the builder was entitled to make the claim as it did on 4 March 2010 for a variation to the contract for the cost of the UF. 90The homeowners wanted concrete slabs and whether or not they were of the UF variety or of the conventional kind was irrelevant to them in terms of their state of mind as I have held on the basis of the evidence that they did not know the difference. On that basis Mr Zikman contends that they could not have been deceived whether or not there was ambiguity in the contract documentation, as they were getting concrete floors consistent with their expectation. Indeed had it been possible to install conventional slabs, this issue would almost certainly not have arisen, as it is likely they would have accepted them in satisfaction of their expectation. 91The truth of the matter is that it was not at the homeowners' insistence that the UF system had to be used, contrary to the JN assertion. The UF system had to be used because the engineers advised that the existing screw piles were designed for a UF system and not for conventional poured slabs. 92The contract drawings known to the builder from the outset had always called for the UF system. The builder priced the UF system in February 2009 before finalising its quote. It did not include the omission of the UF from the Dynabuild Specification, in its statement of amendments to what it referred to in its quotation of 12 March 2009 as the "Standard Specification" which could only have been a reference to the KH Standard Specification. It failed to delete reference to UF on the drawings upon which its quotation was based which subsequently formed part of the contract documents. 93The reference to "concrete slab" under the heading Construction Type in the Dynabuild Specification is generic in nature. Neither Mr Zikman nor Mr Allan considered or explained its meaning in their respective submissions. Mr Allan contended only that the omission of the word UF from the "Construction Description" did not did not convert the contract into a "conventional" construction. As a matter of construction however the words "concrete slab" used in the Dynabuild Specification under "Construction Description" I find could be equally capable of referring to any one of a number of different types of concrete slabs including conventional poured slabs or precast types of different varieties not just UF or poured slab. The words used in the Dynabuild Specification are clearly ambiguous and I reject Mr Zikman's implied assertion that there is no ambiguity in relying on Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] 49 CLR 337 as authority for the proposition that extrinsic evidence of any subjective intention or belief can only be used where there is ambiguity. 94There is clearly ambiguity arising from the use of only the words "concrete slab" in the Dynabuild Specification before one even considers whether that ambiguity is compounded or explained by the reference to UF in the drawings. I find that given the number of different types of concrete slabs that are available the reference to "concrete slab" per se is meaningless without reference to the other evidence. 95There have been subsequent judicial considerations since Codelfa in relation to ambiguity and one of relevance is the statement of Spigelman CJ in SouthSydney Council v Royal Botanic Gardens [1999] NSWCA 478 where His Honour stated that: "It is permissible to look at surrounding circumstances for purposes of interpretation of a contract "if the language is ambiguous or susceptible of more than one meaning". (Codelfa supra at 352 per Mason J). As this passage indicates, in this context the word "ambiguity" - ironically a word not without its own difficulties - does not refer only to a situation in which the words used have more than one meaning. A broader concept of ambiguity is involved: reference to surrounding circumstances is permissible whenever the intention of the parties is, for whatever reason, doubtful." 96Mr Zikman's contention that what was in the mind of the builder was a conventional slab relying on the JN statement at paragraph 95. It is clear that Mr Zikman's contention equates "conventional slab" and "concrete slab" to be one and the same however I find that this is not established. If what the Dynabuild Specification was meant to mean was a "conventional poured slab" it did not state that in its reference to "concrete slab" and such an interpretation cannot be imputed to those words as a matter of construction and one must turn to the extrinsic evidence to find the correct meaning, following the principles enunciated in authorities referred to above . 97I find that the intention of the parties in this matter must fall into the "doubtful" category, thus calling on an objective review of the surrounding circumstances to give meaning to their bargain. 98Given the reference to the UF system in the contract drawings and in the KH Standard Specification which was stated by the builder to be the basis for the Dynabuild Specification except for the identified changes, in conjunction with the surrounding circumstances objectively viewed, I find that for the homeowners to "get the same house as KH was to have provided only better" as was the builder's undertaking was dependent on the provision of a UF system being part of that undertaking. Whether or not the homeowners knew the difference between a poured in situ slab or a precast UF slab is not relevant to that undertaking of the builder. In the circumstances where the existing piers were capable of supporting no other system than the UF, even though on the builder's submission it was not aware of that, a position that is dependent on acceptance of a less than credible witness, I find that for the builder to have excluded provision of an UF system in such circumstances from its undertaking required an express exclusion of it from the specification in unambiguous terms which it clearly failed to do. A variation as defined in Clause 1 of the contract means: (a)An omission addition or change to the building works; or (b)A change in the manner of carrying out the building works. For the foregoing reasons on a proper interpretation of the contract I find that a UF concrete slab did not amount to a variation within such defined meaning and should have been provided by the builder within the contract price and the subsequent purported variation to the contract even though executed by the homeowners can have no validity in such circumstances as the builder's insistence on it being agreed under threat of cessation of the works amounted to a clear breach of the terms of the original contract. 99The homeowners alternate argument relating to the alleged misleading and deceptive conduct under the ACL to support the basis for recovery of the cost of the UF is unnecessary to determine having regard to the above findings however the events relating to such alleged deceptive conduct in 2009 would not attract the benefit of those provisions given such legislation was not assented to until late 2010 and therefore was not applicable. Similarly the submissions on the builder's behalf that it acted to its detriment proceeding on the basis of the variation and therefore that it is entitled to the benefit of an estoppel, do not become relevant because of its invalidity. 100The homeowner is entitled therefore to be reimbursed the cost of the UF variation in the sum of $28,427.00.

The Delay Claim 101The homeowners submit that the delay claim was retaliative in response to their application filed in this Tribunal and that there was no entitlement to bring it since there was non-compliance with the provisions of Clause 9.2 of the contract regarding notices for EOT's except with regard to weather delays. This is disputed by the builder which submits that there is no time bar to bringing a claim even if there has been non-compliance with Clause 9.2. A determination of this point only becomes necessary if the Tribunal is satisfied that the claim for delay can be substantiated both as to cause and quantum. 102In seeking to establish the builder's right, Mr Zikman submits that the expert evidence of Mr Shachar which supports the builder's claim for delay damages is unchallenged by any delay expert for the homeowners and therefore should be accepted. Such a proposition is one that I cannot accept. The onus of proof to establish its claim to the required standard clearly rests with the builder. On that basis the credibility of the Shachar report needs to be tested against other criteria whether or not it has been challenged by a delay expert in opposition. 103The Shachar report relies on the letter of instruction from The Builders' Lawyer Pty Ltd dated 6 March 2013. That letter is not specific in the material that is enclosed with it although it does identify some small number of the documents. It directs Mr Shachar "to prepare a report on the reasonable and fair valuation for the delay in the project. You are directed to refer to the facts stated in the Affidavit of Joanna Natoli sworn 13 November 2012." It is not clear whether all attachments to the JN affidavit were also included but it at least suggests the details relating to the formation of contract were "as described in the affidavit". 104At paragraph 17 of his report Mr Shachar states "I have specifically considered the parties affidavits. I have assumed that the facts as referred to in these documents are correct." 105Mr Shachar in cross examination said that he relied on the contents of the affidavit of JN being true for the purpose of preparing his report confirming his report statement. 106He further explained that the builder did not have a contract works programme in respect of this project. It was therefore necessary to create a calendar and works programme which amounted to a theoretical plan as to how the house should have been built in accordance with the contractual time frame. Mr Shachar it would seem largely relying on the accuracy of the JN version of events makes his determination of the number of days delay using this theoretical programme as the yardstick for when particular events should have occurred. 107I find that the difficulty with the Shachar report is that the fact that it relies heavily on the JN statement of evidence which having regard to the many aspects of her evidence which I have held to be less than credible must similarly undermine its basis also. 108However even overlooking that difficulty, Mr Allan's reliance on the dicta expressed in paragraphs 66 and 67 above point to other problems this report faces. The Turner decision refers to the "requirement for actual, as opposed to potential, delay .... It is necessary (for the builder) to establish that delay was caused". 109The guidance as to determining actual as opposed to potential delay as submitted by Mr Allan is found in Kane Constructions of which some relevant extracts of CJ Warren's decision are as follows: "Lloyd LJ was in this way able to provide strong guidance on the appropriate approach to be taken to these sorts of cases. The analysis should be principally a factual one, with good records in support. The relevant events and their effect should be looked at according to the time in which they occur and in the context of the work actually going on at the time. In other words, global claims are bound to fail...... ......the general approach which should be taken with respect to EOT claims. More specifically, with EOT claims, the burden of proof is on the claimant to establish actual delay. Whilst theoretical calculations, particularly those contained in computer software programs, are useful tools in the building industry, generally further information will be required. Whilst there may be assumptions and calculations, it is necessarily a matter of the claimant proving in the proper way that there has been actual delay such as to substantiate claims for reimbursement. ......to assist in deciding the point, McAlpine casts the necessary approach as one that requires a builder, in this instance the plaintiff, to present a drawing by drawing, beam by beam, column by column, gutter by gutter factual analysis to show how a particular event had the effect of delaying other identified work." 110The evidence relied upon by Mr Shachar here was general in nature. Indeed JN evidence shied away from anything technical as she was not the builder on site and she repeated a number of times during cross examination that this was the case. I find that the Shachar report falls short of establishing actual delay scrutinised in accordance with such established requirements as indicated in the dicta quoted above. 111Similarly the report does not take into account the extraneous factors such as the builder's involvement in the other jobs. Considering Mr Shachar's report summary in relation to 116 alleged days delay, it is coincidentally evident that 33 days fall in the period prior to March 2010 when the builder was still involved in the Hunters Hill job and 76 days fell in the period after December 2010 after the builder had commenced the Coogee and Mona Vale jobs. Only 7 days are alleged as lost to delay between March and December 2010. 112Finally, the most significant hurdle to acceptance of Mr Shachar's delay assessment is that on his own admission under cross examination he agreed that if the start of the contract period was contingent on the homeowners' compliance with Clause 4 of the contract, in determining the initial period, then the contract period could not commence until such compliance occurred. I find that Mr Shachar's determination that 14 December 2009 should be the theoretical start date is simply wrong as the necessary certification to enable the building works to commence did not occur until the engineers signed off on 21 February 2010 meaning that pursuant amended Clause 8.1and Clause 8.2 the contract period would commence 31 working days after that date. Mr Shachar agreed that if such were the case the contractual start and finish dates would shift later in time and this would in turn require a whole new rain and holiday analysis. Whilst the builder may have had rights flowing from delays to the initial period any remedy was available under Clause 4.2 and this was never relied upon when it may have been available. 113I do not propose to deal with each of the items in respect to which Mr Shachar has assessed delay given that the absence of any revised assessment for them to account for a different contract period must render his existing assessments inaccurate. However I find in any event, in relation to the timber flooring, gas connection and the external works, all of which have been assessed as subject to significant delays by Mr Shachar, that such assessments have been based on factual presumptions that are unreliable having regard an overall reading of the evidence. 114Having regard to the foregoing findings it is clear that the builder has not established to the required standard actual delay caused by the homeowners and on that basis without more should have no entitlement to the damages which it claims under this head. 115In view of the latter findings it is not necessary to adjudicate on whether in any event the builder's delay claim is precluded by the clear failure to comply with the provisions in Clause 9 of the contract. I note however that Mr Zikman has sought to extend the meaning of Clause 9.2 by suggesting there is a requirement for the builder not only to give notice of the cause but also of "the extent of and the effect of the delay". He then suggests that the effect of delay may not become known until a much later date "at a time when the impact on other future planned activities are first appreciated and can be quantified". It is implied in his reasoning that on such assumption that if effect of delay were not immediately known that the time for the giving of notice would extend to within 10 days of the "the effect of delay" becoming known. 116It is argued that there is no time bar provided by Sub Clause 9.2 but even if there were Sub Clause 9.4 provides a stand-alone right to the builder for costs incurred on account of delays, unrestricted by any time provision. 117My own interpretation of Clause 9 is that such an extended meaning based on "effect of delay" is not available on the true construction of that provision. Clause 9 contains four subclauses all of which are linked. The first gives a right to the builder to claim an extension of time on the happening of certain defined events one being a failure by the owner to do something required under the contract. The second sub clause provides the mechanism required for the builder to make such a claim once established under the first sub clause and includes a time requirement. The third provides the mechanism required for the owner to dispute it. The fourth sub clause provides the method of calculating the loss to the builder in the event that the preconditions in the first two subclauses are met and cannot be successfully disputed by the homeowner pursuant to the third sub clause. 118Mr Zikman's further submission that the decision in Dante De Grazia provides support for the builder in this instance to be able to bring a claim for delay damages even though it has not complied with the provisions of Clause 9 is rejected on the basis the latter case involved turned on a particular factual position which is quite different to the present. It does not provide definitive authority for the proposition that non-compliance with contractual requirements can always be overlooked. 119I find that in the circumstances of this case that the cause of any alleged delays and the extent of such alleged delays would have been known to the builder within the course of the works and the complete absence of notice in compliance of Clause 9 prevent reliance upon it more than a year after the contract has ended.

THE BULDERS VARIATION CLAIMS 120The subject alleged variation invoices sought to be enforced by the builder were issued subsequent to the commencement of these proceedings in the Tribunal by the homeowners. The invoices claim amounts for project management and administrative works alleged to have been carried out by the builder on the homeowners' behalf. One of the two variation invoices also includes a claim for the 20% builder's margin said to have been omitted from previously agreed variation claims. 121Mr Zikman argues that the content of these variation invoices were not the subject of any challenge and therefore should be accepted. Further he says that the only question put to JN in cross examination regarding them, related to whether or not she had at any time prior to the commencement of the proceeding told the homeowners that these claims would be made to which she had not. 122Mr Zikman submits that there is no time provision in Clause 17 which limits a claim pursuant to it and further that it could not be expected that it would be signed off by the homeowners given that by the time the invoices were provided the parties were already in dispute. In the circumstances he says "it would be unreasonable to deny the builder its variation claims simply because.....not signed by the owners". 123No authorities are cited in support of the latter submissions. I can only suggest them to be somewhat opportunistic. The whole purpose of Clause 17 of the contract is for the parties to a contract to have a mechanism to make "sub agreements" by which to vary the principal agreement should changes to the principal agreement become necessary or desirable during the course of it. Such "sub agreements" require the same level of certainty as the principal agreement or they are simply not enforceable. 124The subject variation invoices in no way comply with the requirements of Clause 17 and on that basis the prerequisites to their enforceability have not been satisfied even if it could be proven that the amounts claimed were the subject of some informal agreed arrangement which evolved during the course of the works. No evidence was provided in any event with respect to the latter. The subject invoices amount to little more than a unilateral attempt to impose arrangements on the homeowners which have never been the subject of discussion and/or agreement. The provisions of the Home Building Act relevant to enforceability of informal contracts have not been mentioned by either Counsel and I do not propose or see any need to elaborate on them, but they would surely apply to prevent enforcement of any informal agreement if it did exist. 125As for the additional builder's margin claims said to have been omitted from the previously agreed and paid variation invoices, these can be treated no differently to the other items in the subject invoices. Those variations were agreed at a certain price which did not include a builder's margin whether or not the builder had a right to charge it at the time. If the builder had chosen to do so there may have been no agreement and hence no work in accordance with such as was proposed. However each of the parties acted in accordance with what was agreed in respect of the earlier variation invoices. The parties agreed on a fixed price for work to be carried out which did not include a margin, the work was subsequently carried out by the builder on that basis, and the homeowner then paid the agreed price in complete discharge of its obligation under that bargain . What the builder seeks to do here unilaterally is to ex post facto change the price, not even to renegotiate it, and that option is simply not available to it. 126Having regard to the foregoing reasons, I find that the subject variation invoices have no validity and are unenforceable against the homeowners. 127The builder's cross claim as to the delay claim and as to the variation invoices claim is not made out to the required standard of proof and is therefore dismissed.

COSTS 128I do not propose to adjudicate on costs until the parties have had the opportunity to provide their detailed submissions with respect to costs having regard to the foregoing decision on the substantive issues. It must be remembered however that the homeowners' claim had included consequential loss aspects of a substantial nature which were withdrawn. The relevance of those aspects to the pursuance of the builder's cross claim, as was raised by Mr Zikman in opening his submission cannot be overlooked in any determination on costs. N Correy Senior Member Civil and Administrative Tribunal of New South Wales 27 May 2014 I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Registrar

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: 21 August 2014