Roberts v Duffy

Summary of Applicant's' Claim

1. The applicants' claim is set out in their Amended Points of Claim filed 17 July 2015. I summarise their claim as follows.
2. The applicants are the registered proprietors of a property at Corindi Beach. They hold the property in trust for the beneficiaries of the Roberts Superannuation Fund.
3. On 26 August 2008, the applicants signed an agreement with the respondent for the construction of a kit home duplex on their property. On 26 August 2008 they also paid him a deposit of $16,400. The building work involved the supply of a kit home duplex by a third party Australian Premium Homes (APH).
4. On 15 September 2009 APH was placed in liquidation and the kit home duplex was not supplied.
5. The agreement of 26 August 2008 was subsequently abandoned by mutual agreement.
6. The parties then entered into discussions which resulted in them signed a BC4 form of contract on 21 December 2009. (A BC4 contract is issued by the Master Builders Association and is for use in residential construction involving homes and major renovations where there is no architect administering the contract.) The contract price was $90,200.00.
7. During the course of the subsequent building work the applicants paid the respondent a total of $229,111.56. This included a total of $122,781.56 for materials.
8. There were considerable delays in the construction of the works. On 21 August 2014 the parties signed an agreement whereby the builder agreed to return to the property and rectify certain defective works and to complete the works to lock up stage within 12 weeks, that is by 17 November 2014. It was a term of that agreement that the builder was to pay the applicants $120 per ordinary day if the works were not rectified and completed within 12 weeks.
9. The builder failed to attend the site, at all.
10. The applicants claim that the statutory warranties implied by s 18B of the Home Building Act 1989 (HBA) apply, and that the respondent has breached the following warranties implied by the HBA: 1. s 18B(1)(a); a warranty that the work will be performed in a proper and workmanlike manner and in accordance with the plans and specification set out in the contract; 2. s 18B(1)(b); a warranty that all material supplied will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new; 3. s 18B(1)(c); I warranty that the work will be done in accordance with, and will comply with, this or any other law; 4. s 18(1)(d); a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time was stipulated, within a reasonable time; 5. s 18(1)(e); a warranty that the work will result, to the extent of the work conducted, in a dwelling fit for occupation as a dwelling; 6. s 18(1)(f); a warranty that the work materials used in doing the work will be reasonably fit for the specified purpose of the construction of a dwelling.
11. In summary, the applicant's claim that these warranties were breached in the following ways: 1. s 18B(1)(a); in that: 1. the work was not performed in accordance with the plans and specifications; 2. the work was not performed in a proper and workmanlike manner, 1. s 18B(1)(b); in that: 1. the steel frames were not fit for purpose due to corrosion; 2. the particle board flooring installed was not fit for purpose due to fungal decay and moisture damage; and 3. the ply bracing was not fit for purpose due to moisture damage. 1. s 18B(1)(c); in that the work has not been performed in accordance with the Building Code of Australia; 2. s 18(1)(d); in that: 1. while there was no construction period provided in the contract, the work should have reached lock-up stage within a reasonable time of 26 weeks from the commencement of the works; construction of the dwelling commenced in or about May 2010 and had not reached lock-up stage in the contract was terminated by the applicants on fire August 2015, at which date the contract works were substantially incomplete. 2. It was an implied term of the contract that, while carrying out the building works up to and including the date of lock-up, respondent would be responsible for loss or damage to the building works, in breach of an implied term the builder through excessive delay has left the works exposed to the elements are excessive periods of time and, as a result: 1. the steel frames were not fit for purpose due to corrosion; 2. the particle board flooring installed was not fit for purpose due to fungal decay and moisture damage; and 3. the ply bracing was not fit for purpose due to moisture damage 1. s 18(1)(e); in that: 1. the steel frames were not fit for purpose due to corrosion; 2. the particle board flooring installed was not fit for purpose due to fungal decay and moisture damage; and 3. the ply bracing was not fit for purpose due to moisture damage. 1. s 18(1)(f); in that: 1. at the time of contracting it was expressly made known to the respondent that the particular purpose to which the work the subject of the contract was required or the result was designed to achieve was the construction of two dwellings suitable for use as such. 2. on contracting with the respondent as a licensed builder for the construction of the two dwellings the applicants showed that they had relied upon the respondent's skill and judgement.
12. In respect of these claims the applicants rely on the expert reports of Mr Price of 27 February 2015, 16 June 2015 and 21 July 2015.

Evidence

1. The applicants filed a bundle documents on 9 April 2015. The parties were supposed to have consulted each other in the preparation of the bundle. The Tribunal is satisfied that the applicant attempted to do so, but as Ms Dunnicliff's affidavit makes clear, the respondent failed to respond. Relevantly, the applicants' evidence included the following: 1. The affidavit of Mr David Roberts sworn 15 July 2015. 2. The affidavit of Mrs Susan Roberts sworn 15 July 2015. 3. The expert report of Mr John Price dated 27 February 2013. 4. The expert report of Mr John Price dated 16 June 2015. 5. The supplementary expert report of Mr John Price dated 21 July 2015. 6. An inspection report of Mr Paul Russell dated 18 May 2013.
2. I note that at all material times the applicants were represented by Mr Peter Merity, Solicitor. Mr Merity is a specialist Building and Construction lawyer. The affidavits of Mr and Mrs Roberts are voluminous, and have been prepared with the care and thoroughness to be expected of an expert practitioner in the area. Each affidavit sets out relevant conversations between the parties and attaches all the relevant documents including a title search, the contract, the respondent builder's building licence, the architectural plans for the building work to be carried out at the property, photographs, email correspondence and invoices.
3. There being no appearance by the respondent, all documents were tendered without objection and admitted into evidence.
4. In the circumstances, I find as follows.

Findings

1. The applicants are the registered proprietors of a property at Corindi Beach. They own the property in trust for the beneficiaries of the Roberts Superannuation Fund.
2. On 26 August 2008 the parties signed a "subcontract building agreement/contract" with the respondent to assemble a kit home duplex on the property.
3. On 26 August 2008 the applicants paid the builder a deposit of $16,400.
4. The kit home duplex was to have been supplied by Australian Premium Homes (APH), but that company was placed in liquidation on 15 September 2009 before supplying the kit home duplex.
5. As a result of the liquidation of APH and the unavailability of the kit home duplex the contract of 26 August 2008 was abandoned by mutual agreement of the parties.
6. On 21 December 2009 the parties entered into a "BC4 Contract" for the construction of two homes at the applicant's' property at Corindi Beach (the contract). The following were relevant terms of the contract: 1. The contract price was $90,200.00. 2. The contract provided for progress payments of $16,400.00 to be paid in accordance with an agreed schedule. 3. The nature of the work was the instruction of two houses. 4. While: 1. cl 10(a) provided a date for the commencement on completion of works, being a date specified in item 6(a) of Schedule 2 to the contract; 2. cl 10(b) provided a date for the practical completion of works, being a date specified in item 6(b) of Schedule 2 to the contract; 3. cl 10(c) was a liquidated damages clause, specifying the sum the respondent was to pay the applicants if the respondent failed with the weeks to completion of the date of practical completion, such sum calculated at a rate specified in item 3(a) of Schedule 2 to the contract; 4. there was no Schedule 2 attached to contract. 1. There were no special conditions. 2. Attached to and forming part of the contract were a number of site plans, floor plans, elevation plans and engineering plans.
7. While there was no construction period stated in the contract, the respondent informed the applicants, after a discussion about the issue, that both houses "would be complete by the end of 2010 and ready for rental". The applicants accepted this. Accordingly, it was a term of the contract that the works the subject of the contract would be completed by mid-December 2010.
8. The respondent is a licensed builder (licence number 26378).
9. The respondent obtained Home Owners Warranty Insurance on or about 1 March 2010.
10. The work on the two houses commenced in December 2009, at which time the respondent cut and assembled the house frames and installed the particle floor boards.
11. Progress was very slow.
12. Throughout 2010, 2011 and 2012, the applicants, individually and collectively, had various telephone discussions and meetings with the respondent about the time it was taking to complete the building works. The applicants regularly had to contact the respondent to find out how the work was progressing, and what the respondent planned to do to get the houses to "lock up".
13. At a meeting on 15 September 2012, the respondent promised the applicants that the houses could be completed to lock up stage by the end of 2012.
14. On 27 December 2012 the applicants visited the property to see if the houses had reached lock up stage as promised. They were not.
15. By January 2013 the applicants were so concerned about the state of the works they engaged their expert, Mr John Price. Mr Price prepared a report dated 27 February 2013. In summary, Mr Price set out extensive rectification works that needed to be done in the sum of $120,210.42 to rectify the defects and $48,378.66 to bring the houses to lock up stage. Mr Price estimated that it would take 8 weeks for the buildings to reach lock up stage in accordance with the contract. He also estimated that the buildings should have taken about 26 weeks to complete.
16. On 10 May 2013 the applicants caused to be sent to the respondent a copy of Mr Price's report and a notice of dispute in accordance with cl 26 of the contract. The issues in dispute were: 1. The respondent's failure to proceed with the works with due diligence or in a competent manner. 2. The respondent's refusal or persistent neglect to remove or remedy defective works.
17. On or about 18 May 2013 Mr Paul Russell, an accredited certifier, inspected progress on building work. He noted that the project was at "frame stage", and appeared to have "stalled" with work "obviously" having been suspended for some time. He said the wall cladding was not installed, that some roof sheeting appeared to be strapped down to the roof frame, and that the refrain was showing signs of corrosion due to the effects of prolonged exposure flooring was severely weathered some materials "delaminating". He considered the integrity of the flooring was very questionable.
18. On 8 June 2013 the applicants met the respondent to try and resolve the dispute as required by the contract and as set out in the notice of dispute. At the conclusion of that meeting the respondent agreed to send an email to the applicants setting out various details to finish the works. The email was to be sent by 17 June 2013. During the course of the meeting the respondent agreed to replace the floor at his own cost.
19. The applicants never received an email from the respondent.
20. On 20 September 2013 Coffs Harbour City Council advised the applicants that the building works were in a dangerous state.
21. A notice of default dated 27 May 2014 was served on the respondent on 14 June 2014.
22. By letter dated 1 August 2014, enclosing a notice of termination dated 22 July 2014, the applicants: 1. Notified the respondent that he had failed to remedy the breach is set out in the notice of default, and 2. Terminated the contract pursuant to cl 28.
23. After termination of the contract, the respondent approached the applicants in an attempt to resolve the dispute. On 21 August 2014 the parties signed an agreement whereby the builder relevantly agreed to return to the property and rectify certain defective works and to complete the works to lock up stage within 12 weeks, that is by 17 November 2014. It was a term of that agreement that the respondent was to pay the applicants $120 per ordinary day (in respect of both houses) if the works were not rectified and completed within 12 weeks.
24. In compliance with that agreement, the applicants organised and paid for a portable toilet to be delivered to the site and, in anticipation of the respondent returning to the property to rectify the defects and complete the works, paid for scaffolding to be delivered. The costs of these two matters were respectively $1,012.20 (toilet hire) and $4,832.20 (scaffolding).
25. No further work was undertaken on the property by the respondent.
26. During the course of the building work the applicants paid the respondent a total of $229,111.56. Of this amount $122,791.56 was the amount spent on materials, although that figure includes some component of labour as the invoices could not distinguish between materials and labour.
27. These proceedings were commenced on 23 December 2014.

Expert evidence

1. I note that Mr Price is a Building Construction Consultation. His reports are in a proper and appropriate form for expert reports and were prepared in accordance with the relevant Expert Witness Codes of Conduct. He is in all respects appropriately qualified to give the opinions he states in his reports.
2. The applicants rely on his three expert reports respectively dated 27 February 2013, 16 June 2015 and 28 July 2015.

Expert report of 27 February 2013

1. As noted above, Mr Price prepared a report dated 27 February 2013. In summary, Mr Price set out extensive rectification works that needed to be done in the sum of $120,210.42 to rectify the defects and $48,378.66 to bring the houses to reach lock up stage. Mr Price estimated that it would take 8 weeks for the buildings to reach lock up stage in accordance with the contract. He also estimated that the buildings should have taken about 26 weeks to complete.
2. Mr Price stated that here were numerous defects evident to the partially competed dwellings. The defects were the result of the structures being exposed to weather for more than three years. They include: 1. The steel frames having rusted in numerous places and requiring rectification prior to any linings being installed. 2. The particle board flooring in both dwellings being severely moisture damaged. 3. The expansion of the particle board floors and the growth of mould/fungus, potentially harmful, requiring removal. 4. The plywood bracing to both dwelling being moisture affected especially at the bottom of the panels, with all bracings requiring replacement. 5. Probable damage to the corrugated Colorbond roof sheeting left unprotected on the site. 6. Inappropriate infill of the subfloor to both buildings. 7. Probable damage to the Weathertex and fibro left unprotected on the site.

Expert report of 16 June 2015

1. Mr Price revisited the property on 3 June 2015. No additional work had been carried out since his last inspection. The condition of the floors and steel frame had further deteriorated. He states that the building works and not complete and a number of time related additional defects have become evident. The houses have not been protected from the weather and materials used in construction have severely deteriorated.
2. He is of the opinion that the buildings required demolition to either allow repair or replacement of the steel frames and panel floors, although it may be more economical to replace them with new any damaged or whether affected sections of the frame rather than trying to repair them. He also considers that any new builder contracted to repair the existing works would not want any materials that have to be reused except possibly the window and doors. He has allowed the windows and doors placed in his cost calculations.
3. He estimates the cost of demolishing the partially constructed houses on the ground floor top bearer, up to and including the roofs to lock-up stage both houses to be $455,442.35.

Supplementary Expert report of 28 July 2015

1. By letter dated 15 July 2015, the applicant's solicitors informed the Tribunal that the report of Mr Price dated 16 June 2015 including the following items which were not part of the contract: 1. Internal linings, in the sum of $29,280.00. 2. Ceilings, $9,600.00. 3. Plumbing, $24,404.00. 4. Electrical, $11,000. 5. Drainage, $12,127.00.
2. Mr Price removed these items from his estimate of costs appearing in his expert report of 16 June 2015. In his report of 28 July 2015 he now estimates the cost of demolishing the partially constructed houses on the ground floor top bearer, up to and including the roofs to lock-up stage both houses to be $309,508.96.00.

Findings based on expert evidence

1. The Tribunal finds that by February 2013 there were numerous defects to the partially competed dwellings as a result of the respondent's delay in completing the works. The defects were the result of the structures being exposed to weather for more than three years. These defects included: 1. The steel frames having rusted in numerous places and requiring rectification prior to any linings being installed. 2. The particle board flooring in both dwellings being severely moisture damaged. 3. The expansion of the particle board floors and the growth of mould/fungus, potentially harmful, requiring removal. 4. The plywood bracing to both dwelling being moisture affected especially at the bottom of the panels, with all bracings requiring replacement. 5. Probable damage to the corrugated Colorbond roof sheeting left unprotected on the site. 6. Inappropriate infill of the subfloor to both buildings. 7. Probable damage to the Weathertex and fibro left unprotected on the site.
2. At this time the building works could have been rectified at a cost of some $170,000. By June 2015 the buildings required demolition, at a cost of some $309,000.00.

Consideration

1. Given the findings above and the uncontradicted expert evidence, the Tribunal finds that the respondent breached the following warranties contained in the HBA: 1. s 18B(a); in that: 1. the work was not performed in accordance with the plans and specifications; 2. the work was not performed in a proper and workmanlike manner, 1. s 18B(b); in that: 1. the steel frames were not fit for purpose due to corrosion; 2. the particle board flooring installed were not fit for purpose due to fungal decay and moisture damage; and 3. the ply bracing was not fit for purpose due to moisture damage. 1. s 18(d); in that: 1. the works were not completed by mid-December 2010; 2. construction of the dwellings had not reached lock-up stage when the contract was terminated by the applicants on 5 August 2015, at which date the contract works were substantially incomplete. 3. It was an implied term of the contract that, while carrying out the building works up to and including the date of lock-up, the respondent would be responsible for loss or damage to the building works, in breach of which the builder through excessive delay left the works exposed to the elements for excessive periods of time and, as a result: 1. the steel frames were not fit for purpose due to corrosion; 2. the particle board flooring installed was not fit for purpose due to fungal decay and moisture damage; and 3. the ply bracing was not fit for purpose due to moisture damage. 1. s 18(e); in that: 1. the steel frames were not fit for purpose due to corrosion; 2. the particle board flooring installed was not fit for purpose due to fungal decay and moisture damage; and 3. the ply bracing was not fit for purpose due to moisture damage 1. s 18(f); in that: 1. at the time of contracting it was expressly made known to the respondent that the particular purpose to which the work the subject of the contract was required or the result was designed to achieve was the construction of two dwellings suitable for use as such; 2. on contracting with the respondent as a licensed builder for the construction of the two dwellings the applicants showed that they had relied upon the respondent's skill and judgement.

Damages

1. The applicants seek the following damages: 1. Costs of rectification of defective work $309,508.96 2. General damages for delay $192,000.00 3. Toilet hire $ 1,012.20 4. Scaffolding $ 4,832.30 Less claims for lock up and carport $ 24,600.00 $ 482,753.46
2. The Tribunal accepts all of these claims. Given the breaches of the contact found above: 1. The damages in relation to the costs of rectification of defective work for breach of the contract; and 2. The damages in relation to the breach of the contract of 21 August 2014 (namely general damages for delay and the costs of toilet hire and scaffolding), 3. are amply justified on the substantive, detailed and corroborated evidence and the findings set out above.

Mitigation

1. The Tribunal raised with the applicants' counsel at the hearing the issue of mitigation of damages. This had also been identified as an issue in an earlier directions hearings. The Tribunal was concerned of the effect of the principle that the applicants were under a duty to mitigate the loss. The issue arose in the context that as at 27 June 2013 the applicant's claim damages were stated as being approximately $170,000, being the costs of rectification of the two houses. However, by the time of the hearing the claim was $309,508.96, demolition and rebuilding now being required.
2. The applicants provided submissions on this issue after the hearing, which were also sent to the respondent. The principles stated in those submissions, which are amply supported by authority, may be summarised as follows. 1. The plaintiff is under a duty to mitigate their loss: see Dunkirk Colliery Co v Lever (1878) 9 Ch 20, and British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd (1912) AC 673 where Viscount Haldane LC stated at 689: the fundamental basis [for an award of damages] is … compensation for pecuniary loss naturally flowing from the breach; but this first principle is qualified by second, which imposes on a plaintive the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and the bars him from claiming 1. The plaintiff cannot recover as damages any loss which it would not have suffered had they acted as a reasonable person would have acted following the breach, it is one of the elements of measuring the plaintiffs loss: Radford v De Froberville (1977) 1 WLR 1261; Compania Financiera "Soleada" SA v Hamoor Tanker Coro Inc (The Borag) (1981) 1 ELR 274. 2. It is for the defence to show the plaintiff has failed to mitigate damages: T C Industrial Plant Pty Ltd v Robert's Queensland Pty Ltd (1963) 37 ALJR 289. 3. The ultimate burden of proving its loss lies upon the plaintiff, but the defendant bears the burden of calling evidence establishing that the plaintiff acted unreasonably: Sacher Investments Pty Ltd v Forma Stereo Consultants Pty Ltd (1976) 1 NSWLR 5 at p 9: Although a plaintive cannot recover full loss consequent upon a defendant's breach of contract, where he could have avoided such loss by taking reasonable steps, nonetheless a defendant who seeks to rely upon a failure to mitigate must show that the plaintiff ought, as a reasonable [person], to have taken certain steps for the purpose of doing so. See too the unreported judgment of Derbury Pty Ltd v ACI Australia Ltd (NSW Supreme Court, 8 August 1991, Giles J.)
3. Accordingly the applicant submits that, in the present case, where it has not been pleaded or otherwise suggested by the respondent that there has been any failure to mitigate their damages, nor any evidence adduced to that effect, the applicants are entitled to their damages as claimed. The Tribunal considers that this principle equally applies in circumstances where the respondent has filed no evidence and did not participate in the hearing.

Costs

1. The applicants seek an order for their costs. They seek orders that the respondent pay their costs: 1. On an ordinary basis up to 20 August 2014; 2. On an indemnity basis after 21 August 2014.
2. The demarcation point of 20/21 August 2014 is the service of a letter of the applicants' solicitors to the respondent dated 20 August 2014 (Calderbank offer).
3. The applicants correctly submit that s 60 of the Civil and Administrative Tribunal Act 2015 provides that each party to proceedings is to pay their own costs, and that the Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. They submit that the special circumstances upon which they rely is the service of a Calderbank offer on August 2014.
4. However, the applicants have not referred to reg 38(2)(b) of the Civil and Administrative Tribunal Rules which provides that 38 Costs in Consumer and Commercial Division of the Tribunal (1) This rule applies to proceedings for the exercise of functions of the Tribunal that are allocated to the Consumer and Commercial Division of the Tribunal. (2) Despite section 60 of the Act, the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if: . . . (b) the amount claimed or in dispute in the proceedings is more than $30,000.
5. Accordingly, the applicant's submissions proceeded under the misapprehension that they need to establish "special circumstances" to justify an award of costs. That is not correct. The usual principle that "costs follow the event" applies to claims in the Consumer and Commercial Division of the Tribunal where the amount claimed or in dispute in the proceedings is more than $30,000. The applicants, having been entirely successful in their claim, are entitled to an order for costs, on the ordinary basis.
6. As noted, the applicants also seek a special order as to costs, namely indemnity costs from 21 August 2014. The basis of the claim is the serving of a letter dated 20 August 2014 on Mr Duffy, which letter was expressed to be "without prejudice except as to costs". The letter refers to a previous offer of the applicants dated 28 May 2014 and the respondent's acceptance of that offer in a letter dated 14 August 2014 "with the exception that you do not agree to replace the hail damaged roof however you will replace the broken window". The letter of 20 August 2014 then states: In an effort to resolve this matter, our client has instructed us that it will no longer press for you to rectify and/or replaced at the taking this into consideration this means that yourself and our client are now in agreement. As there have been many offers made between yourself and our client, for completeness, our client insists on the following: that you must expressly agree to the terms previously set out in our letter dated 28 May 2014 by close of business on 21 August 2014 by signing and dating the last page of this letter when it says "Allan Duffy" and returning the whole document to us by email or facsimile. To that in accordance with paragraph 8 brackets a brackets of our clients offer that you provide them with certificates of currency in relation to all insurances prior to the commencement of the rectification work, including public liability, workers compensation and trade works. On a purely commercial basis and without admission of liability the owners willing to settle this dispute the following basis (amendments and changes to the owners previous offer underlined for ease of convenience). (bolding and underlining as in original)
7. There follows some 4 pages which set out the basis on which the owners are willing to settle the dispute. In summary, the basis is that: 1. The respondent will attend the site by 25 August 2014 and carry out a series of rectification and building works within a reasonable time, being 12 weeks, that work including the flooring, flysheet bracing, frame corrosion, installation, roof sheeting, bathroom walls, and replacement of broken window. 2. The respondent will then complete the houses to lock-up stage. 3. The applicants will pay the reasonable costs of further materials provided that the respondent provide the applicants with copies of invoices and otherwise notify them of those costs in writing 4. The respondent will arrange for four other specified items, the cost of which were to be borne by the applicants, but the respondent was to charge no margin, profit or overheads above the actual cost. These items included Weathertex and hi-impact board screws and fixings, installation blanket, wall installation, and entry door, jamb and door furniture). 5. If it becomes necessary for the applicants to engage a plumber and electrician directly to complete the plumbing "rough in, though" and electrical "rough in" while the builder is carrying out the works, then the respondent must liaise and coordinate with the applicants' subcontractors for the work to be done. 6. The respondent was to give the applicants' structural engineer reasonable access to the premises. 7. The rectification works on completion of the houses must be completed within 12 weeks and the respondent liable to pay the applicants' reasonable liquidation liquidated damages. 8. During the rectification and completion works the respondent must, at his cost: 1. maintain all insurances and provide the owners with certificates of currency prior to the commencement the rectification work on completion of the building works; 2. make good any damage that stunt of the house to in the wet rectification work and completion of the building works 3. provide quotations and invoices draw worker materials which the owners liable to pay; 4. and maintain the site in a clean and safe condition.
8. The offer was to remain open for acceptance until close of business on Thursday, 21 August 2014, that is the following day. The letter states that the applicants could rely on the letter and all related correspondence on the issue of costs pursuant to the principles invoked in Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586.
9. Justice Beazley, in a paper titled Calderbank Offers (14 March 2008) [1] made the following relevant comments about Calderbank offers: 1. The starting point in respect of the costs of proceedings is that costs follow the event. That general rule is subject to the court (here the Tribunal) determining that some other order should be made as to the whole or any part of the costs. 2. A Calderbank offer does not automatically result in the court making a favourable costs order: the question that the court (here the Tribunal) has to determine in deciding whether to do so is "… whether the offeree's failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure …" See SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323. 1. As to the circumstances in which an "offeree's failure to accept the offer" warrants departure from the ordinary rule that costs follow the event, the following principles emerge: 1. The offeror bears the persuasive burden of satisfying the court to exercise. 2. An offer of compromise must be a "genuine offer of compromise" and the offeree must be provided with an appropriate opportunity to consider and deal with the offer. 3. Whether a particular offer is a genuine offer of compromise involves and evaluative judgement upon which judicial minds might differ. 4. Factors that are relevant to the question whether a rejection is unreasonable include: 1. whether there was sufficient time to consider the offer; 2. whether the offeree had adequate information to enable it to consider the offer; and 3. whether any conditions are attached and if so, whether those conditions are reasonable. 1. The question whether the rejection of an offer was unreasonable is usually determined without adducing further evidence. 2. Where the offer is subject to a non-monetary condition, such as requirements for an apology or release, proper exercise of the discretion will involve the court (here the Tribunal) considering the reasonableness of the condition/s, and whether or not the judgment result was, in substance, more favourable than the offer: Assaf v Skalkos [2000] NSWSC 935 at [82]. 3. The usual form of a Calderbank offer derives directly from Calderbank v Calderbank itself: namely, a 'without prejudice' offer in a money sum plus costs, with an exception that the offer may be used in relation to costs.
10. I have set out above a summary of the four page letter containing the Calderbank offer. The Tribunal considers that it is not possible to discern whether or not the respondent would have been better off by accepting the offer. There also seems to be an issue that the offer was dated 20 August 2014, and was only open for acceptance until the following day. This may be explained by the earlier offer of 28 May 2014 being similar to the offer of 20 August 2014, but this earlier letter was not in evidence. In any event, the offer of 20 August 2015 requires the respondent to attend the site by 25 August 2014 to carry out the required rectification and building works. This appears to the Tribunal, on the face of the offer, to carry with it an element of unreasonableness
11. For these reasons, the Tribunal rejects the application for indemnity costs for the period for the period after 20 August 2014.

Assessment of costs

1. The applicants have asked for the Tribunal to assess and determine the costs payable pursuant to s 60(4) of the NCAT Act. In this respect I note that: 1. The "guiding principle" for the Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings: s 36(1). The Tribunal must seek to give effect to the guiding principle when it exercises any power given to it by the Civil and Administrative Tribunal Act 2013 (the Act): s 36(3)(a). 2. The practice and procedure of the Tribunal is to be implemented so as to facilitate the resolution of the issues between the parties in such a way that the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings: s 36(4), See Kurmond Homes Pty Ltd v Spiteri [2015] NSWCATAP 48.
2. Notwithstanding the large amount in issue, I consider it would be disproportionate and contrary to the guiding principle to require the applicants, given the failure of the respondent to file evidence or to appear at the hearing, to now have to their costs assessed. This would add further delay and further expense to what has already occurred. Given the fact that the applicants have provided all the detailed tax invoices of their solicitors and their expert, consistent with the proportionality principle, I consider that the appropriate course is for the Tribunal to determine costs. If costs are awarded by the Tribunal, the Tribunal may determine by whom and to what extent costs are to be paid: s 60(4) of the Act.
3. The applicants seeks payment of their: 1. Costs for the period 31 January 2013 to 20 August 2013, being $9,751.36. This figure is supported by the numerous detailed tax invoices of their instructing solicitors' forming part of the applicants' documents. I note that each invoice in this period is hand-annotated to reduce the amount of each invoice to an amount which their solicitor estimates would be recovered on the ordinary costs basis. This reduction is in broadly within a range of 25% to 33% of the total fees for each invoice. I see no reason not to accept this estimate of the applicants' costs. 2. Costs for the period 20 August 2013 to the date of the hearing, being $41,788.07. This is the figure stated to be for indemnity costs. As I have only awarded ordinary costs for this period, I have reduced the amount sought by 25%, to $31,341.05, a reduction which corresponds to lower end of the applicants' reduced estimates made in relation to their solicitors invoices for the period 31 January 2013 to 20 August 2013.
4. Accordingly, I assess the applicants' costs as being $44,092.41.
5. The applicants also seek payment of the fees of Mr Price being $16,465.00. The applicants are entitled to recover this amount.
6. Accordingly, the total of assessed costs and disbursements is $60,557.41.

Orders

1. The Tribunal orders: 1. The respondent is to pay the appellants damages in the sum of $482,753.46. 2. The respondent is to pay the appellants' costs of the proceedings, as assessed by the Tribunal. R C Titterton Senior Member Civil and Administrative Tribunal of New South Wales 16 December 2015

Endnote

1. http://www.supremecourt.justice.nsw.gov.au/Documents/beazley140308.pdf 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: 28 January 2016