Schibrowski v Top Design Kitchens Pty Ltd [2025] NSWCATCD 11

1. In accordance with the Tribunal orders dated 24th November 2023 as extended, the parties' experts were directed to meet and prepare a joint report in the form of a scott schedule ('JER'). Such a meeting occurred on 29 July 2024 and a JER was filed in the Tribunal, a copy of which is in Exhibit A.
2. There were five categories of defective building work identified and agreed by the experts. The experts prepared a summary of the conclave, which stated that defect items 1, 3 and 5 were agreed with a total rectification cost of $64,439.00 which included preliminaries, builder's margins and GST.
3. In relation to defect items 2 and 4, the experts agreed the defect and liability. They did not reach agreement on the rectification costs. The applicants' expert's opinion was that the combined rectification costs for defect items 2 and 4 was $161,832.00. The respondents' expert stated that the combined rectification costs were $119,830.21.
4. Defect item 2 was described as joinery not in accordance with the tender drawings. Defect item 4 was described as an ensuite not in accordance with the tender drawings.
5. Despite the agreements made by the experts, the respondents denied that they contracted to carry out what has been described as the 'Bay Window Work'. They assert that the applicants contracted directly with a builder referred to as 'Rob' to carry out that work. The Bay Window Work corresponds to defect item 1 which Mr Frizzel stated in cross examination had been agreed by the experts under item 1.

1. At the hearing Mr Frizzell, Dr Cunniffe, Mr Schibrowski and Mr Valderrama were cross examined.

1. There is no agreement between the parties as to the documents that evidence the contract. The applicants plead at [6] of the Points of Claim that the contract was entered into on 17 March 2022 and was for a lump sum of $194,753.00.
2. The applicants Outline of submissions depart from their pleaded position. I will proceed on the basis that the applicants' case is fully set out in their Outline of Submissions and to the extent that there is a divergence between the Points of Claim and the Outline of Submissions, I will rely on the Outline of Submissions.
3. At [17] and [18] of the Outline of Submissions, the applicants' position is stated as follows:

'On 19 May 2022, A-Plan provides a revised quote for the bay window extension works [TB342]

On 22 May 2022, the First applicant and the Second Respondent have a conversation confirming the scope of works and agreeing to enter into the agreement whereby the Respondents would complete the Renovation Works. (the Contract) [TB186]'

1. The difference between the applicants' pleaded position and their position in their Outline of Submissions is that the contract was entered into on or about 19 - 22 May 2022, not 17 March 2022 as pleaded.
2. Contrary to the applicant's pleaded position I do not accept that the contract included the parties' conversations between 1 February and 17 March 2022. I find those conversations to be pre-contractual discussions and negotiations. In that regard, I find that the documentary evidence in these proceedings should be given more weight than the parties evidence of their conversations and what they intended to do, or to achieve.
3. This position that I have taken is derived from Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited [2015] HCA 37; (2015) 256 CLR 104 where French CJ, Nettle and Gordon JJ stated at [46] and [50]:

[46] The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.

[50] Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties' statements and actions reflecting their actual intentions and expectations. (emphasis added)

1. In B & M Mitchell Pty Ltd v Mikell Investments Pty Ltd & Divlist Pty Ltd t/as Contemporary Homes [2018] NSWCATAP 35 at [46 - 47] an Appeal Panel stated in the process of construing the meaning of a building contract:

'It is an uncontroversial principle of law that when one construes the meaning of a contract the task is to ascertain the intention of the parties looked at objectively (see Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales 149 CLR 337 at 351) where Mason J quotes Lord Wilberforce in Reardon Smith Line Ltd V Hansen-Tangen [1976] 1 WLR 989).

In the Codelfa case, Mason J referred to the parol evidence rule the purpose of which, his Honour said, is to "exclude extrinsic evidence (except as to surrounding circumstances), including direct statements of intention (except in cases of latent ambiguity) and antecedent negotiations, to subtract from, add to, vary or contradict the language of a written instrument"'

1. The Points of Defence do not engage directly with the issue of the contract between the parties and how it was documented. After pleading various positions at [6a)] at [7d)] and [8] the respondents' position was that:

'The contract was comprised of three separate quotes for the works to the Property.' [7d)]

'The Contract only consisted only of the terms printed in three (3) separate quotes for works to the property:

a) New Kitchen works (stripping-out old kitchen, manufacturing and installing the new kitchen); and

b) Ensuite bathroom works; and

c) the bid submitted by the Applicants' nominated builder with whom the Applicants evaded discussing precise contractual terms of engagement with.' [8].

1. I find that on 19 May 2022 by email, the first respondent provided a quote for the applicants. The quote provided on 19 May was in fact in the form of a tax invoice which was dated 17 March 2022 for a total amount of $290,327.31. It is at pages 342 and 343 of exhibit A. The Description of the works stated by the first respondent was:

(a) Boat shed toilet - trades;

(b) Ensuite - trades;

(c) Kitchen;

(d) Kitchenette - Boat shed;

(e) Flooring for upstairs and downstairs; and

(f) building cost.

1. The first applicant's evidence is that he and the second respondent met on 22 May 2022. The first applicant refers to this in his statement dated 5 April 2024 at [57] when he states that in a conversation with the second respondent, it was agreed that the boat shed works would be put on hold, but the main kitchen and the ensuite works would proceed.
2. A deposit of $15,000.00 was requested by the respondent, which was paid by the applicants in instalments by 25 May 2022. The second respondent does not address this meeting in his written statement, although he does acknowledge receiving 3 separate payment amounts of $15,000 in the period 23 - 25 May 2022.
3. The first applicant was not cross examined on the 22 May meeting as referred to in his statement, although it was put to him that the first respondent had never contracted with him, a suggestion that he did not agree with, referring to a quote, an invoice and progress claims and stating later that he and his wife had a contractual relationship with the first respondent. The first applicant stated that he had no direct relationships with trades including a company or business known as ACB.
4. The second respondent provided a witness statement dated 28 June 2024, which is in Exhibit A, referring to his pre-contractual interactions with the first applicant. At [36] of this statement the second respondent states that in the latter part of March 2022, he received a telephone call from the first applicant. seeking his urgent help in identifying any available builder for him to contract with that might be interested to build out the DA approved bay window adjacent to the existing kitchen area. He also states that he informed the first applicant that he was only in the trade of kitchen, bathroom and laundry works and that he did not possess the skill set or licences to manage a licenced builder. The second respondent states that he found a potential builder, MGA projects and in April 2022, he accompanied that builder to the property to assess the bay window area and to take preliminary measurements. An email of 21 April 2022 is referred to at [42] of the second respondent's statement but it is not annexed to his statement. The second respondent's evidence proceeds to state that the following day the first applicant asked him to find another builder because the first builder, MGA projects, was too expensive.
5. The second respondent states that he identified a second builder and at 4:00 pm on 16 May 2022, the first applicant sent him an SMS stating;

'Also, if you could get your builder to price up the scope for the external works so we can get rolling on that too.'

1. The SMS referred to is not in evidence. I also observe that the above statement is not highly relevant as it relates to the external works which are not the subject of these proceedings. The reference to 'your builder' may be interpreted to mean a builder that the first respondent would manage, despite the fact that the second respondent states that previously he informed the first applicant he did not possess the skill set or licences to manage a licenced builder.
2. I do not find the second respondent's evidence to be particularly helpful, primarily because he did not respond directly to the first applicant's 5 April 2024 statement, he does not address the first applicant's evidence at [57] about the 22 May meeting and importantly does not refer to the emails that he sent in the pre-contractual period or the emails which are alleged by the applicants to be the first respondent's quote for the works which they accepted. There is also the fact that the first respondent stated in its Points of Defence that the contract was comprised of three separate quotes for the works to the property which are not identified, and the respondents' evidence does not identify the quotes which are referred to, nor does it provide the evidence which would justify a finding in their favour on that basis.
3. I accept the first applicant's evidence in his witness statement because it has not been contradicted by the second respondent in his statement in these proceedings and also because the first applicant was consistent when being cross examined that he entered into a contract with the first respondent. The fact that the 19 May 2022 email attaching the 17 March 2002 tax invoice/quote, was the last document in the evidence, in which the first respondent offered to carry out differing scopes of work which were individually priced is in my view evidence that the parties had advanced their discussions and negotiations to the point where their agreement could be reduced to writing and finalised.
4. I find that the applicants and the first respondent agreed that the first respondent would carry out the following work as referred to in the first respondent's tax invoice dated 17 March 2022 which was attached to its email of 19 May 2022 as amended by the conversation that they had on 22 May 2022. The work to be carried out by the first respondent and the price to be paid by the applicants was as follows:

(a) Ensuite - trades - $50,507.90;

(b) Kitchen - $95,274.45;

(c) Flooring for upstairs and downstairs - $25,522.73; and

(d) building cost - $48,970.00.

1. The applicants' position is that flooring works were also not part of the work that the first respondent was engaged to carry out. The flooring works were not mentioned at the meeting on 22 May 2022, so there can be no certainty whether the parties intended to include or exclude them. I find that such uncertainty is a consequence of what in my view is the casual way in which the parties went about documenting the agreement whereby work of some $200,000.00 or more was to be carried out and paid for. It may be inferred that the flooring works would not be included, since they did not fall within the scope of the main kitchen and the ensuite works which were to proceed, although the basis for such an inference is not strong. In any event I find that the flooring works are not relevant since the defective works the subject of these proceedings do not relate to flooring work.
2. I find that the Bay window work was depicted in a plan prepared by the respondents dated 30 June 2022, which was referred to and identified at the hearing. That plan was produced after the date of the contract and as such, has not been taken into account when making findings as to the contract between the parties.
3. I also find that the parties to the contract were the applicants and Top Design Kitchens Pty Ltd trading as A Plan Kitchens & Bathrooms.
4. Finally, in connection with the contract, I find that the warranties referred to in section 18B(1) of the HBA were implied into the parties' contract.

1. The experts did not agree the rectification costs associated with defect item 2 which was described as kitchen joinery not in accordance with the tender drawings. The applicants' expert assessed the cost of rectification at $154,813.00, refer pages53 - 55 exhibit A. The respondents' expert assessed the cost of rectification at $117,958.74.
2. The difference between the rectification costs of the experts is explained in the JER at 628/9 as being in the applicants' expert's assessment of the kitchen joinery replacement cost of $127,669.00 as opposed to the respondents' expert's assessment of the replacement cost of $104,888.74. The experts agreed the demolition costs of $13,070.00 excluding GST. The difference between the experts appears to be that the respondents' expert has proceeded on the basis that it will be possible to remove and store the bay window benchtop presumably for reuse, whereas the applicants' expert does not allow for that to occur.
3. If the respondents are not successful in obtaining a work order, I find that it is appropriate to allow the replacement cost of $127,669.00 as assessed by the applicants' expert. First, there is no certainty that such amount will be adequate for the kitchen joinery replacement in the future, which justifies the slightly greater cost. Secondly, there can be no assurance that a future kitchen joinery contractor will accept the use of the bay window benchtop or even if it is accepted, that there will be a significant reduction in costs associated with such use. For these reasons I find that the rectification cost of $154,813.00 as assessed by Mr Frizzell will be the amount found in the applicants' favour in connection with defect item 2.
4. The finding in favour of the higher assessment may be justified by reference to the observations of Handley JA in Houghton v Immer (No 155) Pty Ltd [1997] NSWSC 608; (1977) 44 NSWLR 46 at 59: where his honour stated

"In my judgment the Court should assess the compensation in a robust manner, relying on the presumption against wrongdoers, the onus of proof, and resolving doubtful questions against the party 'whose actions have made an accurate determination so problematic'."

1. Similarly, in McCartney & Ors v Orica Investments Pty Ltd & Ors [2011] NSWCA 337 at [158]:, it was said:

"Where within the proved case there is a range ... the wrongdoer can hardly complain if the loss is found at the upper end of the range."

1. The experts did not agree the rectification costs associated with defect item 4 The applicants' expert described the defect as an ensuite not in accordance with the tender drawings. There are 7 items of the failure to comply with the tender drawings, three of which are stated to be sourced from the applicants' instructions.
2. The respondents' expert describes the defect as an ensuite cavity door which has not been provided with the matching V groove as the walk in wardrobe.
3. The applicants' expert assessed the cost of rectification at $6,390.00, although he increased it in the JER to $7,019.00. The respondents' expert assessed the cost of rectification at $1,871.47.
4. The difference between the parties' experts is that the applicants' expert has referred to defective work of a more significant nature than that referred to by the respondents' expert. I prefer the applicants' expert's evidence as it is more detailed and supported by the first applicant's statement and appendices F13 and 14 to Mr Frizzell's report in support of the reimbursement of $1,555.00 expended by the applicants in supplying items for the ensuite. In addition in cross examination Dr Cunniffe agreed that his costs did not include installing missing items such as mirrored doors or bathroom mirrors or stone purchased by the applicants. These items were referred to in Appendices F13 and 14 in Mr Frizzell's report. Because of my preference for the detail in Mr Frizzell's report and because Dr Cunniffe did nit include all relevant items of cost, I will accept the applicants' expert's assessed cost of rectification at $6,390.00
5. I reject Mr Frizzell's increase of $629.00 to the cost of rectification referred to in the JER at 631 of exhibit A in relation to the cost of painting the new door as there is no detail or break up of the increased cost. However, Dr Cunniffe did address this element when he stated that he allowed 3 hours for a painter at $90.20 per hour to paint the new door at a total of $270.60. The amount found for this item is $6,390.00 + $270.60 = $6,660.00. I will accept this evidence as a proper element to be included in this defect item.
6. For these reasons I find that the rectification cost of $6,660.00 as assessed by Mr Frizzell ($6,390.00 + $270.60) will be the amount found in the applicants' favour in connection with defect item 4.
7. Before leaving the topic of the assessment of defective work, it was suggested at the hearing that the experts had in connection with defect item 2 being kitchen joinery not in accordance with the tender drawings commenced with the use of the quoted price of $95,274.45 and then added an uplift to that amount. It was said that the difference between the experts as regards the uplift which was responsible for the fact that they had arrived at different rectification assessments for defect item 2. This position was not expressed in the experts' reports or in the JER. I have determined the disputed assessments of defect item 2 and 4 on the basis of the experts' evidence contained in their respective reports and in the JER. If an agreement had been reached by the experts, then I would have expected that they would have made that position quite clear in the JER, which they did not do. In addition the parties did not submit that the rectification costs would differ in any way if the quote and uplift method of assessment were used, or state what the differing costs would be, if there were a difference.

Section 48MA of the HBA

1. I am required to consider Section 48MA of the HBA which states:

'A court or tribunal determining a building claim involving an allegation of defective residential building work or specialist work by a party to the proceedings (the responsible party) is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome.'

1. The respondents' Points of Defence [42(a)] states that a work order is sought. The second respondent states that he has in the past offered to rectify defective works an offer and readiness to do so that he confirms in his witness statement, [74].
2. The parties' experts agreed that 5 categories of work were defective with estimated rectification costs ranging from $226,271.00 to $184,269.21. I find that this is an alarming situation given that the price of the work that was to be undertaken was either $220,275.08 or $194,752.35 depending upon whether flooring was included in the scope of work, refer [27] and [28] above. Given the severity of the defective work carried out by the first respondent, and apart from indicating a general willingness to carry out the rectification work, the first respondent has not provided evidence of what it would do or what resources it would use to rectify the defective work to the necessary levels of quality that would comply with the requirements of the HBA, particularly s18B(1)(a). Another factor is that the first respondent has not offered to have its work inspected to provide a degree of certainty that its work will be of the requisite quality and comply with all relevant drawings, including its own. Such a process is of value in ensuring that the rectification work is properly caried out and importantly assists in ensuring an outcome that does not involve these proceedings returning to the Tribunal in the form of a renewal.
3. I find that the defective work carried out by the first respondent was substantially defective. For example the first respondent's own expert agreed that the kitchen journey was not in accordance with the tender drawings. He assessed the rectification cost to be $117,958.74.
4. For the reasons that I have set out in the preceding paragraphs, I am not persuaded that the first respondent has demonstrated an ability or the resources to be able to carry out the substantial rectification work that is required. As a result I have decided not to make an order which provides that rectification of the defective work by the responsible party is the preferred outcome.
5. I will therefore make a money order in favour of the applicants pursuant to s48O of the HBA.

Design and Building Practitioners Act 2020

1. The applicants have brought a case under the Design and Building Practitioners Act 2020 ('DBPA**'**) against both of the respondents. It is pleaded at [30] of the Points of Claim that the that the respondents undertook construction work within the meaning of section 36(1) of the DBPA. It is also alleged that pursuant to s37(1) and Schedule 1 clause 5(1) of the DBPA, the respondents owed the applicants a duty to exercise reasonable care to avoid economic loss caused by defects. Section 37(1) of the DBPA states:

'A person who carries out construction work has a duty to exercise reasonable care to avoid economic loss caused by defects -

(a) in or related to a building for which the work is done, and

(b) arising from the construction work.'

1. At [31] of the Points of Claim it is alleged that the respondents owed the applicants a duty to exercise reasonable care to avoid economic loss caused by the Defects

(a) related to the design works carried out by the respondents in the design of the works and in the preparation of the construction drawings;

(b) arising from the work for the Property.

1. Section 39 of the DBPA operates so that a duty of care under s37(1) cannot be avoided because work has been subcontracted. The section states:

'A person who owes a duty of care under this Part is not entitled to delegate that duty.'

1. In their Points of Defence the respondents do not address [30] of the Points of Claim. The jurisdiction of the Tribunal to consider a DBPA claim was not raised. In particular the second respondent does not deny that he undertook 'construction work' within the meaning of section 36(1) of the DBPA. At [31] of the Points of Defence the respondents state that they:

'substantially complied with the duty to exercise reasonable care to avoid economic loss as far as reasonably possible in light of all circumstances and points of defence,'

1. I find that the respondent's failure to deny [30] of the Points of Claim coupled with their position at [31] of the Points of Defence amounts to an admission by them that the duty of care under s37(1) of the DBPA applies to them, although they say that a number of matters referred to at [31 i. ii.iii] of the Points of Defence operate to relieve them of liability under the DBPA.
2. In The Owners - Strata Plan No 87060 v Loulach Developments Pty Ltd (No 2) [2021] NSWSC 1068 Stevenson J stated at [42] and [43]:

'These authorities establish that a plaintiff alleging a breach of duty of care by a builder, and this must include a breach of the Statutory Duty of Care, must identify the specific risks that the builder was required to manage, and the precautions that should have been taken to manage those risks.

It is not sufficient simply to assert a defect and allege that the builder was required to take whatever precautions were needed to ensure that the defect not be present.'

1. The applicants DBPA case was not pleaded or developed in the manner in which Stevenson J stated it should be. In fact this cause of action received scant or little attention in the proceedings. Because the applicants DBPA case against the respondents did not identify the specific risks that the respondents were required to manage, and the precautions that should have been taken to manage those risks, I will dismiss it.

1. The parties' experts agreed defect items 1, 3 and 5 at $64,439.00 I have accepted Mr Frizzell's estimate of the cost of rectification of items 2 and 4 at $154,813.00 and $6,660.00 a total of $161,473.00.
2. In total the agreed amounts and the amounts I have found total $225,912.00.
3. I will make an order in the applicants favour in that amount against the contracting party, the first applicant.

1. In the event that a party is minded to make an application for costs, such application must be lodged in the Tribunal and served on/given to the costs respondent within 14 days of the date of the orders in these proceedings either attaching or referring to the documents relied upon in support of the application.
2. The costs respondent will have 14 days after the date it receives the application to lodge in the Tribunal and serve on/give to the costs applicant its submissions, if any, in response to the costs application, such submissions either attaching or referring to the documents relied upon.
3. The parties must state in their submissions whether or not they consent to the costs application being determined on the basis of the parties written submissions and attached documents, if any, without the need for a hearing.
4. Subject to the parties' submissions, the Tribunal will determine any costs application made on the basis of the submissions and papers filed in the Tribunal.

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.