Robinson v Construction & Design Australia Pty Ltd

Court of Appeal (NSW)|2024-09-02|Before: Payne JA, McHugh JA, Stevenson J

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] Ms Nerida Robinson and Mr Mark Bowmer (Owners) purchased a vacant block of land in Kiama in September 2017. The Owners approached Construction & Design Australia Pty Ltd (Builder) to construct a residential dwelling and other amenities on the land. The Owners and the Builder met on 24 July, 3 August, 30 August and 16 November 2018 to discuss the design brief. On 19 February 2019, the parties entered into an HIA NSW Residential Building Contract for Works on a Cost-Plus Basis and construction commenced shortly thereafter. Several months into construction, a dispute between the parties arose as to the Owners' budget and ability to finance the build. Construction ceased on or around 12 September 2019. The parties subsequently engaged in an exchange of written correspondence (including an email from Mr Bowmer to the Builder on 16 September 2019, an email and accompanying letter from the Builder to the Owners on 18 September 2019, and an email by Ms Robinson on 20 September 2019, to which the Builder responded with mark-ups). The contract was terminated in February 2020. In their cross-claim, the Owners alleged that the Builder had engaged in misleading or deceptive conduct contrary to s 18 of the Australian Consumer Law by making various representations as to the cost of building. The Owners also sought damages on a no transaction basis. A key issue was the conflict as to what was said in the above meetings. The parties agreed below in MFI-4 that the emails exchanged after construction had ceased (together with other specified documents) were to "be treated as evidence of the contents of the documents but not the truth of the matters alleged in the documents". The primary judge ultimately found that none of the pleaded representations was made. Further, the primary judge found that, whilst it was strictly unnecessary to consider what loss flowed from the alleged misleading or deceptive conduct, the appropriate measure of the countervailing benefit to the Owners was the value of the building works performed, and as such, there was no loss (applying Mills v Walsh [2022] NSWCA 255). On appeal, the issues were whether: The primary judge erred by using some of the documents contrary to the parties' agreement in MFI-4 when determining whether the alleged representations had in fact been made. The primary judge erred in finding that the Owners suffered no loss for the purposes of the misleading or deceptive conduct claim. The Court (Griffiths AJA, Payne and McHugh JJA agreeing) dismissed the appeal, holding: As to issue (i): The primary judge used some of the emails specified in MFI-4 to corroborate or confirm the truth of other evidence concerning whether or not the alleged representations were in fact made, but not as evidence of the truth of the matters set out in those emails: [48], [51], [58], [63] (Griffiths AJA); [1] (Payne JA); [2] (McHugh JA). As to issue (ii): Given the rejection of ground 1, ground 2 did not need to be determined and, in view of their complexity, the issues raised should await a case in which their resolution is essential: [66]-[67] (Griffiths AJA); [1] (Payne JA); [2] (McHugh JA).

JUDGMENT

PAYNE JA: I agree with Griffiths AJA.
MCHUGH JA: I agree with Griffiths AJA.
GRIFFITHS AJA: This appeal is from orders and a judgment of Stevenson J in Construction & Design Australia Pty Ltd v Robinson (No 2) [2024] NSWSC 376 (primary judgment or PJ), as well as consequential orders made on 2 May 2024 regarding costs (see Construction & Design Australia Pty Ltd v Robinson (No 3) [2024] NSWSC 504). It concerns a dispute between, on the one hand, Ms Nerida Robinson and Mr Mark Bowmer (Owners) and, on the other hand, Construction & Design Australia Pty Ltd (Builder). The directors of the Builder are two brothers, Messrs Daniel and Gerard Turnbull (without disrespect, I shall refer to them by their given names). The Owners purchased a vacant block in Kiama in September 2017. In July 2018 the Builder was approached to construct a residential dwelling and other amenities on the block. On 19 February 2019 the parties entered into an HIA NSW Residential Building Contract for Works on a Cost-Plus Basis (Contract). The Contract was terminated on 6 February 2020, after works had commenced but prior to completion of the build (PJ[1]-[12]).
By statement of claim the Builder sought damages in the total amount of $432,576.96, comprised of outstanding progress payments payable pursuant to the Contract, loss of profit and interest. By cross-claim the Owners alleged that the Builder had engaged in misleading or deceptive conduct contrary to the Australian Consumer Law (ACL), and sought damages on a no transaction basis. The primary judge held that the Builder was entitled to recover the bulk of the sum due under the Contract and that the Owners had failed to make good their cross-claim.
The primary controversy below on the cross-claim was whether the Owners could establish that the Builder made various representations to the Owners regarding price and that these representations induced the Owners to enter into the Contract.
The Owners raise the following two grounds of appeal (both of which relate to their unsuccessful cross-claim) in their amended notice of appeal filed 24 July 2024: 1. Ground 1: Stevenson J erred by using emails sent by Daniel on 18 September 2019 (which attached a lengthy letter) and 20 September 2019 (Emails) "as evidence of the truth of matters alleged in them". This error is said to be contrary to the parties' agreement in MFI-4 that the Emails (along with several other specified documents) were to "be treated as evidence of the contents of the documents but not the truth of the matters alleged in the documents". 2. Ground 2: Stevenson J erred in finding that the Owners suffered no loss by reason of the misleading or deceptive conduct claim. This was for two reasons: 1. when assessing damages under s 236 of the ACL, his Honour erred in finding that the proper measure of benefit received by the Owners was the value of the building works performed and not the present value of the land; and 2. his Honour failed to consider the Owners' entitlement to damages under s 237 of the ACL (in circumstances where the Owners contend that entry into legal relations from which a party would otherwise have abstained is sufficient to amount to a "loss" under s 237).
The Owners contend that if Ground 1 is made out, a new trial should be ordered.
The Builder has filed a notice of contention, by which it seeks an adverse credit finding against Ms Robinson.

The primary judgment summarised

The cross-claim below alleged that the Builder had made three representations to the Owners that amounted to misleading or deceptive conduct under s 18 of the ACL. The representations were pleaded as follows: 1. The $550,000 Representation: The Builder and Daniel represented that the cost of building would be about, and not significantly more than, $550,000. This representation was alleged to have been made at a meeting with the Owners on or around 30 August 2018. 2. The Spreadsheet Representations: The Builder and Gerard represented that itemised construction costs would not exceed the estimates set out in a spreadsheet prepared for the Owners. These representations were alleged to have been made in writing by an email dated 24 January 2019 to the Owners from Gerard. 3. The $750,000 Representations: The Builder represented to the Owners that the cost to build the dwelling would either fall within the Owners' budget of $750,000 or would not be substantially more than that budget. This representation was alleged to have been made by any one or more of the following events: (a) by making the $550,000 Representation and Spreadsheet Representations; (b) by failing to disclose that the cost would exceed the Owners' budget (which was referred to as "Silence Conduct"); (c) by inserting the figure of $750,000 next to "Total Estimate Funds" in the Contract on 15 February 2019; (d) by providing a certificate of insurance on 20 February 2019 which nominated a contract amount of $750,000; and (e) by an email dated 1 February 2019, which included an attachment ("long service levy documentation") stipulating that the estimated value of works was $750,000.
His Honour summarised the relevant principles at PJ[247] (citing Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60) as follows: There was no dispute before me as to the relevant principles. Both sides referred to McHugh J's observations in Butcher v Lachlan Elder Realty Pty Ltd that: (a) whether conduct is misleading or deceptive is a question of fact; (b) the test is objective; (c) the relevant course of conduct must be examined as a whole, taking into account the relevant surrounding facts and circumstances; (d) the effect of any relevant statements or actions or any silence or inaction must be considered in the context of the whole of the course of conduct; (e) where the alleged contravention relates primarily to a document: (i) the effect of the document must be examined in the context of the evidence as a whole; and (ii) the Court must have regard to all the conduct of the maker in relation to the document including the preparation and distribution, and any statement, action, silence or inaction in connection with the document.
The Owners' misleading or deceptive conduct case hinged on establishing that the alleged representations were in fact made, and that the representations induced their entry into the Contract. A dominant issue below was reconciling the various witness accounts of the events in the period prior to entry into the Contract (from July 2018 to 19 February 2019) and specifically meetings held on 24 July, 3 August, 30 August and 16 November 2018. The primary judge acknowledged that there was a "sharp divergence of recollection" between the parties and that their positions were irreconcilable (PJ[21]). Factual findings had to be made in circumstances where various oral conversations took place and no contemporaneous notes were in evidence.
The primary judge generally preferred the evidence given by Daniel and Gerard to that of Ms Robinson and Mr Bowmer. His Honour acknowledged his caution in assessing the demeanour of the various witnesses during cross-examination. He said that he preferred the evidence given by Daniel and Gerard by reference to "objectively determined matters", such as correspondence and the logic of events (PJ[24]). The primary judge ultimately found that none of the pleaded representations was made, with the exception that the long service levy documentation included a statement by the Builder that the "estimated value of work for the project was $750,000" (PJ[159]). His Honour concluded, however, that this did not induce the Owners to enter the Contract (PJ[163], [281]).
I will elaborate on these matters later, including the use of the Emails by his Honour and whether that use was contrary to MFI-4.

Assessing damages for the alleged misleading or deceptive conduct

While the primary judge noted that it was strictly unnecessary to consider what loss flowed from the alleged misleading or deceptive conduct, he proceeded to do so at PJ[289]-[317]. These reasons are relevant to ground 2.
In their cross-claim below, the Owners primarily ran a "no transaction" case, supplemented by an "alternative transaction" case. Thus, if the Builder had not made the representations alleged, the Owners claimed that they would: 1. not have entered into the Contract; 2. have entered into a fixed price contract with the Builder; 3. have entered into a fixed price contract with a different builder; or 4. have sold the property and purchased elsewhere.
The primary judge found that there was no evidence that the Owners could have entered into a fixed price contract with the Builder or any other builder (PJ[294]). Further, no evidence was adduced showing that they could have purchased an existing house in Kiama (PJ[300]-[302]). The "alternative transaction" case was not made out.
As to the "no transaction" case, the Owners submitted that, but for the alleged representations, they would not have entered the Contract and, as is the requirement for an award of damages under s 236 of the ACL, the relevant "prejudice or disadvantage suffered" (see Mills v Walsh [2022] NSWCA 255 at [109]-[110]) was "that they paid the Builder $550,000 and are liable to pay the Builder a further sum … the total disadvantage is thus in the order of $795,000" (PJ[309]).
The parties were in dispute as to the proper measure of the countervailing benefit that the Owners received under the Contract. The Builder contended that the benefit was the value of the building works performed which the primary judge accepted was just under $800,000 (PJ[311]). Conversely, the Owners contended that the benefit was the extent to which the value of the property increased by reason of the works. When valuing the land with the unfinished building works as compared to the land without improvements, the benefit was said to be $160,000 (PJ[312]). If the Owners' argument was accepted, the damages figure would be $635,000.
Applying Mills v Walsh, the primary judge accepted the Builder's argument and concluded that there was no loss. At PJ[315]-[316] his Honour reasoned as follows (emphasis in original): [315] Thus, Brereton JA, with whom Bell CJ agreed, said: "… the benefit to a proprietor under a building contract is not any enhancement in the capital value of the land, but the value of the works. Unless defective, this will typically equate with the cost of the works. The benefit is to be seen in the performance of the service, rather than in the end product which the service may or may not produce. Under a building contract, the proprietor receives labour and materials, and the value of what the proprietor receives is the value of that labour and those materials. Works under a building contract do not necessarily enhance capital value." (Emphasis added.) [316] The facts in Mills v Walsh were different from those in this case, in that the parties in the position of the Owners were induced to enter a building contract by the builder's misrepresentation that he was insured, rather than a statement concerning the likely cost of the works. But that difference does not affect the generality of the statement made by Brereton JA.

The parties' submissions summarised 1. (a) Ground 1

The Owners contend that his Honour erroneously used the Emails when making factual findings, and this led to the rejection of the Owners' misleading or deceptive conduct case. This is said to be in error in circumstances where the parties had agreed in MFI-4 that the Emails (and other specified documents) were to "be treated as evidence of the contents of the documents but not the truth of the matters alleged in the documents".
The Owners claim that this produced unfairness as the trial would have been conducted differently if MFI-4 had not been accepted (for example, their counsel below did not challenge Daniel on the content of the Emails).
The Owners' complaint that the primary judge acted inconsistently with MFI-4 is directed to his Honour's rejection of the pleaded $550,000 Representation and the $750,000 Representations. The complaint is not directed to the rejection of their Spreadsheet Representations case, presumably because his Honour's reasons for rejecting that case at PJ[254]-[277] do not rely on any of the documents in MFI-4.
The Builder submits that MFI-4 was not framed as a traditional hearsay exclusion. Instead the agreed evidentiary position permitted the primary judge to consider the "contents" of each specified document, including the Emails. The primary judge was entitled to draw inferences from the Emails by looking at their content in the context of the evidence at large. The primary judge used the contents of the Emails to corroborate and/or confirm evidence otherwise before the Court.
The Builder alternatively submits that, if the primary judge did use the Emails in error, such error was not material. This was because, when making factual findings, the primary judge also relied on other evidence, considered the logic of events, and made a "multitude of careful and considered findings with limited, or on most occasions, no use of the Emails".
In their reply, the Owners contend that the use of the Emails for the purpose of corroboration and confirmation involves using them as evidence of the truth of the matters alleged therein, which is contrary to MFI-4.

(b) Ground 2

The Owners contend that, when assessing the ACL damages claim, his Honour erred by failing to consider damages under s 237 of the ACL and the effect of an order rendering the Contract void pursuant to s 243 (which remedies were pleaded). They claim that this is a significant error in light of intermediate appellate authority which holds that, for the purposes of s 237, entry into legal relations from which a person otherwise would have abstained amounts to loss or damage (Demagogue Pty Limited v Ramensky (1992) 39 FCR 31 at 32, 44 and 47; and Harvard Nominees Pty Limited v Tiller (2020) 282 FCR 530; [2020] FCAFC 229 at [40] and [76]-[77]).
The Owners further contend that the passage relied on by the primary judge (at PJ[315]) in Mills v Walsh (being that at [140], citing ADC v White [2001] NSWCA 9 at [67]) was misconstrued. The Owners contend that the passage does not support the proposition that there are no circumstances in which benefit to a proprietor under a building contract can be assessed by reference to the enhancement of the capital value of the land. The Owners further submit that this case should be distinguished on the basis that "[the Owners] have run out of money" and the only benefit of the incomplete works to the Owners is the proceeds of the sale of the land.
The Builder submits that, whilst the pleadings sought damages pursuant to s 237 and an order under s 243, this relief was not pursued at the final hearing and the Owners ought to be bound by the way the case was run below. The Builder points to several occasions when the Owners had an opportunity to agitate for such relief. The Builder further contends that, had this relief been sought below, "in both circumstances the appellants have received the benefit of building materials and services and, in doing justice between the parties, the Owners need to account for that benefit by paying the Builder the fair and reasonable value of those works" and that there is no reason why the benefit should be measured in a different way to the approach taken by the primary judge.
As to the issue of the correct application of Mills v Walsh, the Builder submits that this Court has applied the principle in the same manner as the primary judge, even in circumstances where the aggrieved party could not afford to complete a project (citing Schrader v Broach [2024] NSWCA 14).

The Builder contends that it was open to the primary judge to make an adverse credit finding against Ms Robinson, which his Honour did not do. With reference to the "natural limitations" of the appellate process, the Owners submit in response that no such adverse finding should be made on appeal.

(a) Ground 1

In Doney v The Queen (1990) 171 CLR 207; [1990] HCA 51 at [7], the High Court described the essence of corroborative evidence as being that it "confirms", "supports" or "strengthens" other evidence in the sense that it "renders [that] other evidence more probable". In a criminal law context, corroborative evidence can be required either as a rule of law or practice. In all cases where there is a requirement of corroboration, the corroborative evidence must itself take the form of a separate item of admissible evidence (see JD Heydon, Cross on Evidence (14th Aust ed, 2024, LexisNexis) at [15.165]).
The central issue is whether, in using the Emails to corroborate or confirm other evidence concerning whether or not the alleged representations were in fact made, the primary judge acted inconsistently with the parties' agreement in MFI-4 that such documents were to be treated as evidence of the contents of those emails, but not as evidence of the truth of the matters set out therein.
MFI-4 is a handwritten document apparently drafted by the Builder's counsel below. It was provided to the Court on the fourth day of the hearing and after the witnesses had been cross-examined. Counsel for the Builder then told the Court that, although the Court had been taken to some parts of the documents the subject of MFI-4, "other than where there are [submissions] from the parties about the contents, they wouldn't otherwise be taken as truth of their contents".
It should also be noted, as part of the context in which MFI-4 was produced, that on the morning of the first day of the trial the primary judge provided the parties with a document headed "preliminary rulings on objections". It responded to some of the objections to the other party's evidence. With respect to the Builder's objections to the Owners' evidence, his Honour's preliminary rulings were as follows: As to the plaintiff's objections to the defendants' evidence, his Honour's rulings are: (a) any conversation is allowed only as evidence of the fact that the conversation took place and not as evidence of the truth of what was said; (b) the documents objected to are allowed only as evidence that documents in that form were created and not as evidence of the truth of what was contained in the documents; (c) passages objected to where a witness speaks of their state of mind are allowed only as evidence of the fact that the witness had that state of mind; and (d) where objection is taken on the basis of relevance, the passages are allowed subject to relevance and, in the case of documents the relevance of which is disputed, only as evidence of the fact that documents in that form were created.
As to the Owners' objections to the Builder's evidence, his Honour gave preliminary rulings, including as to various objections to Daniel's affidavits dated 16 March 2022 and 23 November 2023.
It is important to note that the terms of MFI-4 are expressed differently to his Honour's preliminary rulings. A distinction is drawn in MFI-4 between evidence of "the contents of the documents" and "the truth of the matters alleged in the documents". This is to be contrasted with the more orthodox distinction drawn in paragraph (b) of the preliminary rulings on the affidavit evidence (see at [35] above), between allowing "evidence that documents in that form were created" and not as "evidence of the truth" of their contents.
Another point to note at the outset is that Daniel made clear during his cross-examination that the Emails were among the documents which he had used to refresh his memory when he prepared his affidavits.
For the purpose of determining ground 1, and despite their length, it is desirable to set out the relevant parts of the Emails, together with the 16 September 2019 email to which they relate. (Mr Bowmer's email dated 16 September 2019 was also included in MFI- 4).

(i) 16 September 2019 email

The 16 September 2019 email sent by Mr Bowmer to Daniel and Gerard was as follows (without alteration): Hi Daniel and Gerard I have read your email of Thursday night and Nerida has filled me in on your phone call on Friday morning. I believe your concern was that Nerida did not communicate in a manner that was satisfactory to you regarding our ability to borrow additional funds and also that she had 'changed the goal posts'. Throughout this process we have made our financial situation abundantly clear. We have a build budget of $750,000 and were prepared to borrow an additional $100,000 based on equity in the property we currently live in if it was needed. This was to cover all costs including fencing, window coverings, landscaping, turf etc. Nerida has done nothing but communicate clearly. Last week we were scrambling to find a way ahead in an absurd situation. Indeed it is you who have changed the goal posts of what this build would cost and yet at no point did you communicate the enormity of the situation to us. This huge and seemingly endless budget blowout on your part has only come to light since Nerida commenced querying costs and invoices over the last many weeks and forcing the issue of costs and payments. Let me make this clear. The problem here is not with our communication or our financing. The problem is the almost complete lack of communication from you regarding any budget issues you were having and the enormous gap between the amount you contracted to build the house for and the invoices that have been presented by you to date. From the end of June, the invoices we have been receiving have escalated to quickly reach a point where we have been billed $648,658.22 (all invoices for work you have undertaken or authorised). Almost 87% of our budget. For this amount we have foundations, a ground floor slab and incomplete ground floor walls (one of which is bowed). Even more astounding, from our perspective, is the labour component - $251,735. The last two invoices alone have totalled $44,687.50 (excluding your margin). At no point prior to the last 2 weeks has anyone from CDA said this house could not be built for close to our budget. In fact, the opposite is true. At the beginning of this project you assured us you could build this house for our budget. Indeed in an email from Daniel on 18th July last year you stated: "A starting point for a custom built home on a block such as yours would be about $1800/m2 at the lower end, $2000/m2 as an average and upwards from there depending on how far you would like go. Given the nature of the area we commonly build in we have quite a bit of experience in designing on challenging sites. Typically our contracts range from about 600k through to about the 850k mark. We do our best to design to the budget of our clients." This translates as $743,000 for the size of our build including garden sheds - estimated at the upper end of your quoted costs. When you presented the plans to us you said the house was simple to construct and could be built for around $550,000. In January 2019, Gerard sent through a spreadsheet of costs to take us to lock up which totalled $457,600. The accompanying email stated: "I've put together a spreadsheet showing the rough estimates for the upcoming months. I've gone pretty heavy on the rates so I'd expect it to come in lower than shown in the table. I think if we prepare for worst case $450K in the next 4 months, that should be heaps. In reality I think it would be less than $400K. The numbers for February should stack up pretty accurately and there should be a fair bit of fat in the remaining months." When pushed for an update on how we were going with budget once building progressed, we were told we were 'a little over budget'. The only hint we had there were problems was by the invoices we were receiving. Our issues are not only with invoices to date, but the unknown cost to complete. Not even a reliable estimate. Indeed you don't seem to know how much this house will cost to complete. In a meeting with Gerard a few weeks ago, he did a rough calculation on the back of an envelope which came to $515,000. Since then we 've been billed an additional $108,767, presumably leaving a further $406,000 to go. Your email last Thursday claims you need us to secure a further $550,000 in funding. Are you now telling us we need the original $750,000 plus $550,000? It is frustrating that the thing that is causing us the greatest stress is that we are part way through a build (and a good chunk of the way through our budget) and your communication prior to the last few weeks led us to believe we were within $100 of the budget. At NO POINT until last week did you tell us this would go hundreds of thousands over. We listened and read very carefully every time you communicated on budget and kept tabs of extra costs. As Nerida stated in a previous email, you had communicated less than $100K more than our $750 budget. We will not spend over $1m on a house that was contracted for $750,000. Nor will we entertain your suggestion that you get an investor involved to finish this house and 'send it to market'. You do not have our permission to take an agent onto our property. I repeat, the problem is not one of financing. It is purely and solely an issue of your inability to build to budget, provide reliable costings for anything or provide an accurate estimate to complete this project. It is gobsmacking to have discovered within the last 2 weeks when we really ramped up our concerns, that in the more than 12 months since you presented plans to us and in the over 6 months since you commenced building, you have been building with apparently no idea of final build costs. At what point were you going to tell us you'd changed your thinking about build costs? At what point were you going to give us a revised price - one, by the way which we still don't have. We will not be paying for any costs that result from this delay. Last week you could provide neither an accurate cost to get to the next stage so that scaffolding could be removed, or the cost to keep the scaffolding in place while this issue of your costs was resolved, claiming that the scaffolding invoicing was 'too complex' as it was ordered in 3 parts. Thus we could not make a decision regarding the best way to prevent a further excalation [sic] in costs. This situation is of your making. These delays are your concern. You have certain contractual obligations and at this point you are falling way short . Rgds Mark Bowmer

(ii) 18 September 2019 email and attached letter

On 18 September 2019, Gerard sent an email in response to the Owners, which read: Hello Mark and Nerida, Please find attached a letter in response to your email below. Please take the time to consider its contents. We are available to discuss it with you at any point. In the mean time we will continue to work on the cost to complete quote and will endeavour to provide it and the cost to lock up quote to you in the next day or two.
The lengthy letter attached to that email (which I will treat as part of that email) was signed by Daniel and Gerard. Of particular relevance are the following passages, extracted by the primary judge at PJ[237] (without alteration): Budget design phase: Yes, we acknowledge and confirm that you came to us with a budget of $750k for the house construction and another $100k for the pool. However, what your recent emails have not mentioned is that in our very first meeting you acknowledged, and were the ones to point out, that your scope was huge and budget was small. By your own admission, you said to us that you expected you would need to extend your budget to achieve your scope. … You asked our opinion on the budget, which, as I am always careful to do, answered in a guarded way but agreed that the budget was very much under fire. Given that it is impossible to pluck an accurate number or even a ball park number out of the air, all I could offer you were some indicative square metre rates that can be applied to the size of construction. You have quoted by email dated 18th July 2018 discussing m2 rates. I note this email predates our quote for design of the project by some 2 weeks. At the time of that email we had not yet begun the design. … While several discussions were had about the importance of the $750k + $100k budget at the preliminary stage of our dealings, as the design developed, the inclusions set out in the design brief were conveyed by you as essential to the final product. As a designer, I did my best to incorporate everything you wanted and package it in a way that I thought, based off my building and design experience, would be both aesthetically pleasing and best suited to minimise the complexities of a difficult site. As the design was being finalised, further discussions were had about budget and, while we could not give you an exact figure, we did indicate to you that it would likely be outside of budget. Your response to this were words to the effect of 'we absolutely love the design, there is not a thing we want to leave out or compromise on. It is what it is. The budget was $750k; because that is how much cash we have in the bank left over from the proceeds of selling our property in Berry. If we have to go to the bank, we will.' You state in your email to us written 16th September that I told you that 'the house was simple to construct and could be built for around $550k.' I'm afraid that you have taken this comment totally out of context. Your reference does not include the rest of the conversation where I begin by saying that looking at the house alone (meaning not the pool, decks, suspended garden bed, music room, gym, office, garage structure, level lawn structure or driveways etc) that once out of the ground (meaning after we have excavated and constructed walls to floor level) the house could be built for around $550k. I continue in the conversation by explaining my tactics in designing a slender house going across the block which minimises the effect of the steepness of the site. I explain that by doing this the flow on effect to the construction of the house makes for smaller spans for roof and floor constructions which makes for an economical build. Shortly after the design was completed and submitted to council for assessment, and in a period that predated any engineering work being done on the proposed development by some three months, I met with Nerida at your home to discuss options for floor constructions. During the meeting I suggested to Nerida that we should run the proposed project through our quoting templates to try and ball park a construction cost. Nerida and I had a conversation with words to the effect: N "How long will that process take?" D "At least 5 days or so." N "Why waste your time, we love the house. It is what it is from this point. We just need to make smart choices along the way to keep the cost down."

(iii) 20 September 2019 email

In the morning on 20 September 2019, Ms Robinson responded by email to the 18 September 2019 letter. Later that same day, Daniel responded by email by inserting comments into Ms Robinson's email in red mark-up. That response is extracted below, with Daniel's mark-ups in bold: Dear Daniel and Gerard, You did not design to our brief. We worked extensively together on the design to achieve a house that to quote your words "We absolutely Love" and "Do not want to change a thing". We asked for a modern looking home with skill ion roof. When you presented the plans you told us you had specifically ignored that part of the brief in order to deliver a house that could be built to budget. Contrary to your statement, the design of the a gable roof was to minimise the breach of restriction by the roof line .... Please note a skilling is NO more expensive to build than a gable. Indeed on that day in the meeting in your home your words were "It's a pretty simple house to build. I can build this for about $550,000." Your Comment is misquoted, Explanation is detailed in our email 18th September. As the previous design we had received from a builder did have a much more complex design, complex skillion roof, extensive glass walkways, many more windows including vast sections of clerestory windows, a separate pool and outdoor pavilion this sounded accurate to us. This house had been costed at $1.4m from a builder who is known to be at the top end of costings and was a budget we told you was so beyond our reach we couldn't even borrow that amount. Your certainly did not rain in your scope by half, the land and its complexities did not change- that being at the top end of difficulty, Both South Coast Homes and CDA are subject to the same trade and supplier costs - We both price at industry standard rates. We both price projects on there merits You reinforced your credentials to accurately estimate and construct a house on a block such as ours in various emails and conversations including noting an upper limit for your builds at $850,000 and telling us no build you had worked on had ever come in at more than $50,000 over budget. You are miss quoting and/ or quoting out of context. Explanation is detailed in our email 18th September. I have no recollection of this "S0k" over budget comment. It is not in line with the way I approach my dealings so therefor deny it. I am experienced in designing and costing ... Every clients brief exceeds their budget so am very guarded in committing to anything without the opportunity of doing a full costing. We followed your explicit direction to run up fees costing the project which you decided because: "it is what it is, we don't want to change a thing" You assured us you could build for our budget of $750,000 with the only proviso ever being that "maybe that would not include finishing the pool". I disagree. I specifically told you that there is no way of knowing the cost of the house without quoting it which can only happen after the engineering was complete and council approvals were obtained and the conditions of the DA stipulated. Our last discussion of budget was when I was at your house where I suggested that we should at least run an estimate on the project before we the cost of engineering ..... You directed us not to. The figures you did provide during the build proved to be inaccurate and grossly underestimated in every case. One example is the concrete slab for the second story. My estimations were qualified as estimations only. I never claimed to address everything in it's entirety .... lt was as a comparison between floor systems based on past experience. The estimations were not tailored to your site conditions as this was prior to any external consultants being engaged and therefore site conditions were unknown. You still appear to be incapable of accurately estimating costs. Your spreadsheet of costs to build to partial lock up which you emailed yesterday (we're not sure if it can be called to lock up if there is a gaping hole in the ensuite roof where a skylight should be There is an optional extra stipulated in the price if you would like to proceed with the skylight, the price includes the roof as plan is the drawn. We felt it was an extravagance that the house did not need but put the price to there so that if directed you can know exactly how much the decision would be. and no garage door As stipulated in the quote, the garage door needs to be installed after the internal linings as the tracks are screwed over the gyprock .... The choice would be to line the garage as part of "lock up" stage or leave the door off with the garage open, or thirdly board up the garage. Whatever you require can be done and allowed for) provided a cost for windows of $40,105.73. The final, approved window quote had a cost of $44,116.30. The price of $40,105.73 is the Ex GST price for the windows. The spreadsheet adds GST at the end which is why you are viewing the ex GST amount There is a building defect in the form of a bowed wall that you did not reveal and even after we commented on it, you have made no mention or attempt at rectification. We discussed the wall with both you and Mark on site just days after the corefill was installed which is when the bow happened. On the day we didn't fill the wall with concrete so that we could straighten it and complete the concrete filling on the next pour. We have since straightened it, The remaining core filled was to be completed with our scheduled concrete pour last Monday which was canceled. You have been unable to provide supporting documents for your invoices by the date you committed to (first requested more than 2 weeks ago on 3 September). I believe Loren has given you a date as to when this will be possible to supply this to you. Given the enormity of the job {I believe she has compiled to date some 176 invoices) and the fact that Loren is a part time worker with other work commitments, the timeframe stipulated is reasonable. You continued to place orders for materials and authorise works which were well beyond our available funds with no advice to us, reference or concern for how they could be paid. You were quite aggressive to me for suspending work and implored me to continue. I abruptly halted work some 3 Hrs after you informed Loren (not me) that you had no money. I specifically did this because of the pending $22000 day on the Monday. I cancelled or future orders that were possible. The only orders that have and will come since the day I suspended work are those that suppliers could not cancel despite my pleads. Your estimates for completion continue to increase at the same time as huge invoices continue to come in. At the end of August it was $515,000 (a cost you recognised in an email would shock us) to reach total completion. You've since billed $108,777 and say there is still more unbilled. Based on your $515,000 estimate that should take the cost to completion of the build to around $400,000. Yesterday this is the approx. figure you gave us to only get to lock up stage. We have continually told you that nothing off the top of our heads can be anything but an estimation and should only be viewed as a rough guide. The two of us have been working exclusively on your project costings for the last 2 and a half weeks to give provide you with an accurate price. As Mark pointed out in his email of 16th September, the figures you are quoting here were a rough estimate written on the back of an envelope during a meeting between you and Gerard on another matter. You are fully aware, and even pointed out yourself the day following that meeting with Gerard, that the $515k figure was not a full costing and did not include a number of significant items required to complete the project. Your current (once again inaccurate) costings take us to a build cost for a very basic building shell (semi lock up stage) of approx. $1,050,000. This is almost double what you told us you could actually complete the house and pool for when you presented plans to us. We disagree with the entirety of this statement. We are disputing the costs invoiced to date. The items from this point in your email require an extensive response and will be the subject of a separate email. Some notes are made in brief but will be expanded in the email to come. There is a specific procedure to follow when disputing progress claims. We are disputing that work to date is of a sufficient standard - specifically the bowed wall. CDA is ready willing and able to address all defects as per our contract and statutory warranties. We are disputing your ability to provide accurate estimates for all future costs. We have provided you with a fixed price quote for two different stages of construction (Slab Stage and Lock Up Stage). You are aware the next quote we would be focussing on is the Cost to Fit Out Stage (as per our email correspondence with Mark yesterday) and we have not yet completed the Cost to Complete quote. It is your prerogative to accept or decline them. Obviously we will not be continuing to work on other quotes until this issue is resolved. We are disputing your ability to complete this project to any stage under what we would consider a reasonable cost. As above. You are welcome to invite other builders to submit their own quotes. As we have attempted to resolve this dispute in a meeting in our home and have been unsuccessful, and as a result of our dissatisfaction with emailed correspondence and costs emailed to us since that date we deem our personal attempt at resolution at this point to be completed. Please advise if you are taking early possession of the site. If so I would like to direct you to Clauses 23 and 26 of the contract. We have now placed this dispute in the hands of our lawyer. We still feel the best (and most cost effective) way to resolve the dispute is by working together. We are willing to attend a mediation meeting if you would like as per Clause 31. If you choose to engage a solicitor, this choice is also your prerogative. Yours sincerely, Nerida Robinson
For the following reasons, ground 1 should be rejected. I do not consider that the primary judge used the Emails in a way which was inconsistent with the agreed position recorded in MFI-4.
His Honour described his general approach to fact finding at PJ[22]-[26]. Noting the contrasting evidence of the witnesses as to whether the alleged representations were made, his Honour correctly acknowledged at PJ[24] that contemporaneous documents are generally the most reliable source of evidence as to what has occurred. He added that reference should also be made to the logic of events as revealed by objectively determined matters, including the parties' contemporaneous communications.
The transcript confirms that the primary judge was well aware of the parties' agreement in MFI-4. The terms of MFI-4 permitted consideration to be given to the "content" of each Email. I accept the Builder's contention that this permitted the primary judge to rely, as he did, on: 1. the language and tone used in the Emails (PJ[89] and [240]); 2. the form, including the level of detail contained in the Emails (PJ[81], [88], [121] and [236]); 3. the consistency of the content of the Emails with other evidence before the Court (PJ[143] and [144]); and 4. whether the content of the Emails corroborated and/or confirmed the truth of other evidence before the Court (PJ[81], [239] and [241]).
I shall now explain why the primary judge did not act inconsistently with MFI-4 in making findings regarding the four meetings which underpinned the Owners' misleading or deceptive conduct case.

24 July 2018 meeting

The primary judge stated at PJ[52] that, although there was no dispute as to what was said at this meeting and nothing said there formed part of any of the pleaded representations, his Honour concluded at PJ[64] that it was "likely" that there were discussions as to whether "a house could be built for $750,000", but it was "unlikely" that either Daniel or Gerard said that any particular house could be built on the property for $750,000 (at PJ[68]).
None of these findings relies explicitly on the Emails.

3 August 2018 meeting

The primary judge's key findings as to what was said at this meeting may be summarised as follows: 1. The primary judge accepted Daniel and Gerard's evidence that each independently recalled the substance of what was said at the 3 August 2018 meeting (PJ[81]). 2. His Honour added that, to a very large extent, Daniel's evidence concerning what was said at that meeting was corroborated by the two Emails (PJ[81], [236]-[238]). 3. Specifically, his Honour found that, at that meeting on 3 August 2018, although Daniel may not have said that Ms Robinson's budget was "shot to pieces", it was likely that he said that the budget was "under fire" (PJ[89]). 4. This finding was supported by the letter dated 18 September 2019 (which the primary judge said was likely written by Daniel), where he wrote "…by your own admission, you said to us that you expected you would need to extend your budget to achieve your scope … you asked our opinion on the budget, which, as I am always careful to do, answered in a guarded way but agreed that the budget was very much under fire…" (PJ[237]). 5. His Honour reasoned at PJ[89] that, because the lengthy letter which accompanied the 18 September 2019 email, was written in "careful and calm language", it provided a "reliable guide as to the truth as to what had passed between the parties". 6. His Honour also noted at PJ[81] that Daniel had confirmed in cross-examination that he had used the Emails to refresh his memory in preparing his affidavits. 7. Later in his reasons, at PJ[240], the primary judge said that he viewed the Emails as having "significance in the case". His Honour considered that the Emails appeared not to have been written in anger, in contrast with the Owners' emails. He then added, at PJ[240], that Daniel was not challenged in cross-examination about the contents of the Emails. 8. Finally, the primary judge said at PJ[241] that the Emails provided "confirmation" of what Daniel and Gerard deposed in their affidavits regarding what was said at the 3 August 2018 meeting.
The primary judge's acceptance of Daniel's evidence as to what was said at the 3 August 2018 meeting was relevant to his Honour's rejection of the Owners' "Silence Conduct" claim, which formed part of the basis of the $750,000 Representations (PJ[249]).
The primary judge plainly had regard to the content of the Emails in making many of these findings, but I do not consider that the Emails were used as evidence as to the truth of the matters they contain. Rather, his Honour used the content of the Emails to corroborate or confirm the truth of other evidence before the Court regarding what was said at the 3 August meeting.
Consideration was also given to an email sent by Ms Robinson on the same day as the meeting occurred, which his Honour described at PJ[90]-[91] as "likely to cast light on what was said" at the meeting.
The primary judge made the following inferences and findings with respect to this email (none of which is challenged on the appeal): 1. the terms of Ms Robinson's email were consistent with Daniel and Gerard stating at the meeting on 3 August 2018 that $750,000 would not cover everything in Ms Robinson's brief (PJ[94]); 2. the Owners were contemplating that they may have to borrow more money to complete the build (PJ[95]); 3. the Owners acknowledged that they might need to borrow funds and dispose of their "super plan" (PJ[97]); 4. the terms of the 3 August 2018 email are not inconsistent with Daniel and Gerard having said that $750,000 would not "cover all of" the matters in Ms Robinson's brief or that "you won't be able to get all [of the matters detailed in the brief] for $750,000.00" (PJ[98]); 5. it was expressly acknowledged in the email that $750,000 might not be sufficient to build the house that the Owners wanted on that site (PJ[99]); and 6. the email was consistent with Gerard and Daniel's evidence that they had said that the house the Owners wanted, as specified in Ms Robinson's brief, could not be built for their budgeted figure (PJ[99]).
I accept the Builder's submission that these findings of fact by the primary judge did not involve him accepting the truth of the contents of the 18 September 2019 email in a way which was contrary to MFI-4. It is notable that the primary judge was careful in his choice of language when describing that email as being a "reliable guide" and in providing "confirmation" of what both Gerard and Daniel had said in their affidavits (see PJ[89] and [241]). For this reason, I also reject the contention that his Honour erred in rejecting the Owners' "Silence Conduct" claim.

30 August 2018 meeting

As noted above, the Owners alleged that it was at this meeting that Daniel said that the cost of the building would be around $550,000, which formed the basis for the $550,000 Representation. The primary judge was required to resolve the competing versions as to what was said at this meeting and, in particular, whether the figure of $550,000 given by Daniel related to the cost of the building as a whole or only to a part thereof, being the living area after the floor level had been built. His Honour's approach was to: 1. Summarise the relevant evidence as to what was said as asserted by the Owners as opposed to Daniel. 2. Identify the contest as to whether the $550,000 figure referred to the entire building proposed by the Owners or merely related to the living area after the floor level had been completed (PJ[110]). 3. Note that Daniel's evidence was that the estimated figure he gave of $550,000 was based on cost to build a basic house which was nearby and did not present the engineering challenges affecting the Owners' block because of its steep slope and rocky ground (PJ[110] and [112]). 4. Note other matters which were relevant to the issue as to what the $550,000 figure related to, including: 1. evidence which established that the Builder had in fact built a nearby house on a non-sloping site where the contract figure was approximately $620,000; 2. the Owners' site was in fact steep and had a lot of rock, which would necessarily affect the price; and 3. the biggest uncertainty in terms of cost would be building to the floor level (PJ[114] and [115]). 1. Refer to Daniel's evidence during cross-examination that, owing to the difficult site conditions, building to the floor level would be difficult but thereafter the design was quite simple (PJ[116]).
These steps in the analysis led to the primary judge's finding at PJ[117] that Daniel's reference to $550,000 was directed only to the main living area once the floor level was achieved. It is notable that, up to this point of the reasons for judgment, this finding did not rely at all on the Emails.
Having made that finding at PJ[117], the primary judge then referred to other matters which were relevant to the probability as to what the figure of $550,000 was directed to. The first of those matters, which is unrelated to the Emails, was that on no occasion prior to 16 September 2019 did the Owners refer in any of their multiple emails to Daniel or Gerard having said anything about the proposed home costing $550,000.
Secondly, that figure was mentioned by them for the first time in Mr Bowmer's email dated 16 September 2019. His Honour noted at PJ[120] that, when that email was sent to the Builder, the relationship between the parties was beginning to deteriorate. It was in the context of Mr Bowmer's claim in his 16 September 2019 email that he and his wife were told that "the house was simple to construct and could be built for around $550,000" that his Honour then said at PJ[121] that "in his lengthy and careful reply to [Mr Bowmer's] 16 September 2019 email" Daniel had said that he had taken the communication "totally out of context" and gave an account regarding that figure which the primary judge viewed as consistent with Daniel's evidence. Plainly, his Honour was referring to the 18 September 2019 email. The content of that email was used by the primary judge to corroborate or confirm the truth of Daniel's affidavit and oral evidence (see at PJ[122]). In my view, that is not inconsistent with MFI-4.
It is also notable that the primary judge proceeded to give additional reasons for preferring Daniel's account that the figure of $550,000 related to the cost of the main living area once the floor level had been achieved. This included the fact that, in an email Ms Robinson sent to Daniel on 30 August 2018 (the day of the meeting), she made no reference to the alleged $550,000 Representation (PJ[125]); the terms of an email Mr Bowmer sent on 5 October 2018 (PJ[128]); the failure of Ms Robinson to make any mention of the alleged $550,000 representation in an email she sent dated 13 November 2018 (PJ[124]); nor did she make any mention of the alleged $550,000 Representation in her email dated 14 November 2018 (PJ[137]); and inconsistencies between Ms Robinson's evidence during cross-examination and the terms of her email dated 14 November 2008 (PJ[139]-[140]).

16 November 2018 meeting

The contrasting evidence given by Daniel and Ms Robinson as to what was said at this meeting is summarised at PJ[142]-[143]. Daniel gave evidence that, at that meeting, Ms Robinson had made a comment to the effect that "when the time comes for us to go to the bank we will" (PJ[142]). Ms Robinson denied that this conversation had taken place.
This conversation was relevant to the primary judge's finding that the Owners did not rely on the long service levy document when choosing to enter into the Contract. The long service levy documentation formed part of the $750,000 Representations.
The primary judge found that Daniel's recollection of what was said at the meeting was consistent with: 1. the statement in Daniel's 13 November 2018 email about using his estimating software to get a "ball park on cost", together with Ms Robinson's email response on 14 November 2018 (PJ[143]); 2. as to Daniel's recollection that Ms Robinson said that they would go to the bank when the time came, this was consistent with Ms Robinson's 3 August 2018 email, where she indicated "[w]e're very happy to answer any questions about our finances", and other evidence given by Gerard and Daniel (PJ[143]); 3. the account of events set out in Daniel's email of 20 September 2019, where he indicated "[w]e followed your explicit direction to run up fees costing the project…" (PJ[238]). His Honour said that the 20 September 2019 email was "a pointer to the probability that Daniel's recollection is correct" and cross-referred to the discussion later in the judgment at PJ[238]-[239]; and 4. the fact that "as early as 20 September 2019" (ie, the date of the letter) Daniel had made assertions which were consistent with the recollection he had which was set out in his affidavit.
The primary judge did not use the Emails as evidence of the truth of the matters contained therein; rather, their contents were used to corroborate or confirm the truth of matters raised elsewhere in the written or oral evidence, particularly that of Daniel, and why his evidence on relevant matters, including his recollection of the events that occurred at the 16 November 2018 meeting, was preferred to that of the Owners. This use is not inconsistent with the limitations imposed by MFI-4. This is reflected in his Honour's careful choice of language, including his reference at PJ[239] to part of the 20 September 2019 email being "a pointer" to the probability that Daniel's evidence as to his recollection of what was said at the 16 November 2018 meeting was correct (see also at [54] above). For completeness, I also reject the contention that his Honour erred in finding that the Owners did not rely on the long service levy document.
It is unnecessary to determine the alternative response raised by the Builder to ground 1.
For all these reasons, ground 1 is rejected.

(b) Ground 2

Ground 2 raises some difficult issues relating to the assessment of damages under the ACL and the primary judge's reliance on Mills v Walsh.
The rejection of ground 1 means that ground 2 does not strictly arise. Having regard to the complexity of the issues it raises I consider that those issues should await a case in which their resolution is essential.

Having regard to the fact that the notice of appeal will be dismissed, it is unnecessary to address the notice of contention.

Conclusion

For all these reasons, I propose that the amended notice of appeal filed 24 July 2024 be dismissed, with costs.

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: 20 December 2024

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