Singhota v Australian Luxury Living Pty Ltd

Preliminary matter - why the Owner's Proceedings were heard ex parte

1. The first part of the hearing was spent considering whether the hearing of the Owner's Proceedings should proceed in the absence of the Builder. After considering the evidence and submissions of the Owner I determined that it was appropriate to hear the Owner's Proceedings in the absence of the Builder. My reasons for so deciding are set out below.

Materials relevant to deciding whether to hear the matter ex parte

1. In deciding whether to hear the matter ex parte I had regard to the following: 1. The Tribunal file. 2. An affidavit of Sinead McCormick dated 22 May 2023. Ms McCormick is a law graduate employed by the Owner's solicitors Gupta & Co. Ms McCormick's affidavit annexes copies of various correspondence with the Builder's former solicitors (Harrington Lawyers) and with the Builder's sole director and shareholder, Mr Christian Nasr. 3. Oral evidence given under affirmation by Sourabh Gupta. Mr Gupta is a principal lawyer with the Owner's solicitor on record. 4. Copies of text message correspondence between Mr Gupta and Mr Nasr exchanged on the morning of the hearing. 5. Copies of email correspondence between Mr Gupta and Harrington Lawyers exchanged on the morning of the hearing.
2. Having considered those materials I was satisfied that: 1. On 8 December 2022 the Tribunal made procedural directions requiring the Builder to file and serve its expert evidence by 30 January 2023. That direction was not complied with by the Builder. As of the date of the hearing no expert evidence had been filed by the Builder. 2. On or about 31 January 2023 the Tribunal registry received an email from Harrington Lawyers attaching a letter stating that the firm was no longer acting for the Builder in the Owner's Proceedings, and requesting that all future correspondence be forwarded to Mr Nasr. Both a personal email address and a postal address for Mr Nasr were provided. Although that letter does not specifically refer to the Builder's Proceedings, I inferred from the covering email (which sets out the file numbers for both matters), and from subsequent correspondence from Harrington Lawyers to Mr Nasr (outlined below), that Harrington Lawyers had intended to inform the Tribunal that it was no longer acting for Mr Nasr in either matter. 3. On 1 February 2023 the Tribunal registry issued notices of hearing to the parties in respect of both the Owner's Proceedings and the Builder's Proceedings, informing the parties that the matter was listed for a two day hearing on 23 and 24 May 2023. The notice of hearing in respect of the Owner's Proceedings was addressed to the Builder at Mr Nasr's personal email address and the notice of hearing in respect of the Builder's Proceedings was addressed to the Builder at Harrington Lawyers' email address. 4. On 1 February 2023 Ms Holly Tang of Harrington Lawyers emailed a copy of the Tribunal's notice of hearing in the Builder's Proceedings to Mr Nasr's personal email address. The covering email stated "We attach the Notice of Final Hearing received today from NCAT. We note that we have updated the eService notices to your email address so that future correspondence will be directed to you". The subject line of the email stated "Re: Australian Luxury Living Re Building & Construction Dispute - [address of premises]" 5. On 16 May 2023 Mr Gupta sent an email to Mr Nasr requesting the Builder's address for delivery of a hard copy of the court book (which was required to be prepared by the parties and filed with the Tribunal not later than seven days prior to the hearing). The email also informed Mr Nasr that he would be required to attend the hearing for cross-examination. On 17 May 2023 Ms McCormick sent an email to Mr Nasr providing a link to a soft copy of the court book. On 19 May 2023 Ms McCormick sent a further email to Mr Nasr requesting a copy of his address for service. 6. No response was received to any of those emails. 7. On 22 May 2023 Ms McCormick telephoned Mr Nasr, introduced herself, and attempted to ask him for an address for service of the court book. Mr Nasr ended the call while Ms McCormick was speaking. 8. On the morning of the hearing Mr Gupta telephoned Mr Nasr and attempted to ask him if he was aware that the hearing was on that day. Mr Nasr ended the call while Mr Gupta was speaking. Mr Nasr then sent a text message to Mr Gupta saying "Hi sorry didn't know it was on today. Wish Ranjit the best of luck".

Legal framework applicable to deciding whether to hear the matter ex parte

1. Rule 35 of the Civil and Administrative Tribunal Rules 2014 (NSW) (the NCAT Rules) provides that the Tribunal may proceed to hear a matter in the absence of a party who has failed to attend the hearing: 1. if it is satisfied that notice of the hearing was duly served on the party, or 2. if being satisfied that service of notice of the hearing has been duly attempted, or having given directions under rule 15 to bring it to the notice of the party, the Tribunal considers that justice requires that the matter be dealt with in the absence of the party concerned.
2. Rule 13(2) of the NCAT Rules relevantly provides: A notice or document may be served on or given to a person or body … (g) in the case of a person or body that has consented to electronic service by means of an email address or mobile phone number specified by the person or body - by transmitting the notice or document in an electronic format, addressed to the person or body, to that address or number".
3. The guiding principle of the Tribunal set out in section 36 of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act) is also relevant. Its application is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. Litigants, and their lawyers if they are represented, are under a legislative duty to co-operate with the Tribunal to give effect to the guiding principle.

Consideration of whether to hear the matter ex parte

1. After considering the materials before me, I was satisfied that: 1. By virtue of the email from Harrington Lawyers dated 31 January 2023 the Builder consented to electronic service by email (to Mr Nasr's personal email address). 2. On 1 February 2023 the Tribunal sent a notice of hearing in respect of the Owner's Proceedings to the Builder at the email address provided for service by Harrington Lawyers. 3. The Builder was also informed by Harrington Lawyers on 1 February 2023 that the final hearing of the "Dispute" would occur on 23 and 24 May 2023.
2. For these reasons I was satisfied that a notice of hearing was duly served on the Builder, and that the builder was on notice of the hearing.
3. Further, it would have been contrary to the interests of justice and to the guiding principle of the Tribunal to have adjourned the hearing having regard to the following: 1. The Builder failed to attend the hearing without providing any explanation to the Tribunal, despite being on notice of the hearing. 2. The Builder had not complied with the procedural directions made at the directions hearing on 8 December 2022. 3. Mr Nasr's conduct, including his failure to respond to the Owner's solicitor's correspondence leading up to the hearing, his termination of telephone conversations with the Owner's solicitors, and his text message sent on the morning of the hearing stating "Wish Ranjit the best of luck", evinces an attitude of indifference to the proceedings and an unwillingness to defend the Owner's claim. 4. The Owner had invested considerable resources to prepare for and attend the hearing, including by engaging counsel and having her experts on stand-by for the hearing. She would have been considerably disadvantaged if the hearing had not proceeded on the day.
4. For these reasons the Owner's Proceedings were heard in the absence of the Builder.

Does the Tribunal have jurisdiction?

1. I am satisfied that the Owner's claim is a 'building claim' for the purposes of section 48A of the HB Act as it is a claim for the payment of money that arises from a supply of goods or services supplied for or in connection with the carrying out of residential building work: see definitions of "building claim" and "building goods or services" in s 48A(1), and "residential building work" in Sch 1 to the HB Act.
2. The time limits for lodgement of building claims are set out in s 48K and s18E of the HB Act. Relevantly, claims for breach of a statutory warranty must be brought within six years for a breach that results in a 'major defect' or two years in any other case: HB Act s 18E(1)(b).
3. Where the work to which the claim relates was not completed, the warranty period starts on the date the contract was terminated, or if the contract was not terminated, the date on which work under the contract ceased: HB Act s 18E(1)(d).
4. Claims for breach of contract must be brought within three years after the last date on which supply of the relevant building goods or services was made: HB Act 48K(3).
5. In this case the Tribunal proceedings were commenced on 29 July 2022, which was approximately 14 months after the Contract was executed, five months after the Builder ceased working on the site and four months after the contract was purportedly terminated. The claim (both under contract and in respect of the implied warranties) was brought within time.
6. For these reasons I am satisfied that the Tribunal has jurisdiction to hear and determine this claim under the HB Act.

What evidence and materials were before the Tribunal?

1. The Owner relied on the following documents: 1. The Owner's Points of Claim dated 29 July 2022; 2. The Builder's Points of Defence dated 26 August 2022; 3. The Owner's Reply to Defence dated 12 October 2022; 4. Written submissions dated 25 May 2023; 5. A chronology tendered by the Owner and marked Exhibit A1; 6. An outline tendered by the Owner and marked Exhibit A2; 7. An expert report prepared by Mr K Whyte (quantity surveyor) dated 8 September 2022 and marked Exhibit A3; 8. An expert report prepared by Mr A Grieve (civil engineer) dated 8 September 2022 and marked Exhibit A4; 9. A statement of the Owner dated 22 December 2022 (attaching exhibit RS1) and marked Exhibit A5; 10. A statement of the Owner dated 27 February 2023 (attaching exhibit RS2) and marked Exhibit A6; 11. A statement of the Owner dated 15 May 2023 (attaching exhibit RS3) and marked Exhibit A7.
2. The Builder filed Points of Defence and Points of Cross-Claim. I have had regard to the Points of Defence. The Points of Cross-Claim are irrelevant given that the Builder's Claim was dismissed for lack of appearance.
3. The only evidence filed by the Builder was an affidavit of Mr Nasr dated 21 December 2021 together with exhibit CN-1. Insofar as that affidavit relates to the Builder's Claim I have had no regard to it as it is irrelevant. Insofar as the affidavit relates to the Owner's Claim I given little or no weight to it given that Mr Nasr did not attend the hearing or make himself available for cross-examination.

The building contract

1. The relevant facts, established on the basis of the evidence before me, are as follows.
2. On or about 4 May 2021 the parties entered into a fixed price written contract for the construction of a new residence (the Fixed Price Contract). The Fixed Price Contract was for a fixed price of $850,000.
3. Following further discussions between the parties, on or about 8 June 2021 the parties signed a further agreement (the Project Management Contract) requiring payment by the Owner of a further $143,000.
4. In these reasons I will refer to the Fixed Price Contract and the Project Management Contract collectively as "the Contract".
5. Both the Fixed Price Contract and the Project Management Contract were in the form of the HIA standard form contract for a "NSW Residential Building Contract for New Dwellings".
6. In mid-June 2021 the Owner paid the Builder $10,090.43 for home owners' warranty insurance and a deposit of $85,000.
7. The Builder took physical control of the site in late June 2021 and excavation works commenced on about 12 July 2021.
8. On 18 July 2021 the Owner's private certifier issued a construction certificate. The certificate refers to the Development Consent and to the structural engineer's drawings and specifications dated 10 June 2021.
9. On or about 19 November 2021 the Owner's private certifier issued a "Certificate of Non-Compliance" (CNC) to the Owner and the Builder. The CNC identified the following three areas of non-compliance: 1. The retaining wall works to the western boundary do not appear to be within the property boundary; 2. Additional sediment barriers are required; 3. Critical stage inspections missed for basement footings, basement slab, basement walls, retaining wall footings.
10. The CNC identified various steps required to remedy the non-compliance, namely: 1. Provide survey report; 2. Provide dilapidation survey of neighbouring properties; 3. Provide engineers certificate for excavation and retaining walls; 4. Provide additional sediment control measures to the lower norther, eastern and southern sides of the property; and 5. Provide critical stage inspection reports from a registered certifier.
11. The CNC nominated the date of 3 December 2021 as the date by which the Builder was required to remedy the non-compliances.
12. The Owner subsequently arranged for a structural engineer, Charles Camenzuli to attend the site. On or about 19 November 2021 Mr Camenzuli visited the site and on 20 November 2021 he issued a report specifying a range of defects, namely: 1. Retaining wall posts non-compliant with the structural engineer's drawings; 2. Dincel type walls not poured with concrete in the correct manner; 3. Cog reinforcement bars not the correct size; 4. Backfilling against the Dincel walls had occurred without the ground floor slab in place; 5. Ag drains placed too high relative to the basement slab edge; 6. Building dimensions as per the council approved plans had not been complied with, with discrepancies of up to 400 mm noted .
13. On 24 November 2021 the Builder served a notice of suspension on the Owner.
14. At a meeting on 26 November 2021 between the Owner and Mr Nasr, Mr Nasr made comments which indicated that the Builder no longer intended to be bound by the Fixed Price Contract or the Project Management Contract.
15. On 30 November 2021 the Builder sent an email to the Owner clearly stating an intention to perform no further work until such time as certain monies had been paid by the Owner.
16. There is no evidence that the Builder took any steps to comply, in whole or in part, with the requirements of the CNC or to remedy the defects identified by Mr Camenzuli.
17. On 17 December 2021 Mr Camenzuli wrote to the Builder stating "the site is unsafe, dangerous and unstable".
18. On 4 February 2022 the Builder's solicitors issued a letter to the Owner alleging that the Owner had breached the Contract including by failing to make payments due under the Contract.
19. On 5 February 2022 the Owner wrote to the Builder's solicitors denying any breach.
20. On or about 7 February 2022 the Owner's structural engineer issued an engineer's certificate of non-compliance (ECNC) identifying areas of non-compliance: 1. dincel walls having been concrete core filled without engineer's approval resulting in structural defects within the dincel wall; 2. non-compliance with the structural engineer's drawings and non-compliance with various Australian standards.
21. In or about February 2022 The Hills Shire Council directed the Builder to undertake emergency works to make the site secure and minimise potential damage to the neighbouring property. The Builder returned to site and carried out some works in response to that direction on or before 5 March 2022. However, the works done by the Builder at that time (or indeed at any time) did not address the defects identified in the CNC or the ECNC.
22. On 7 March 2022 the Builder's solicitors wrote to the Owner purporting to terminate the Contract on the ground that the Owner had breached the Contract, including by failing to pay amounts due under the Contract.
23. On 5 April 2022 the Hills Shire Council issued a further notice to the Owner identifying that the works undertaken were in contravention of the development consent. The notice relevantly stated: condition No 36 … requires a dilapidation survey to be obtained if rock is encountered during the excavation works. The works onsite have substantially progressed beyond the point of rock being discovered and has therefore resulted in a large cut on the boundary shared with [the neighbouring property]. The result of these works is that the excavation is unretained and potentially poses a significant risk to the adjoining properties.
24. Attached to the notice was an "Emergency Development Control Order" requiring the Owner to carry out certain works to address the safety issues identified by the council.
25. On 27 May 2022 the Owner's solicitors wrote to the Builder's solicitors alleging that the Builder had repudiated the Contract and stating that the Owner expressly accepted the Builder's repudiation. The repudiatory conduct alleged by the Owner included conduct demonstrating an inability to perform the Contract, suspension of performance of work, failing to make the site safe and purporting to terminate the Contract where no entitlement to do so under the Contract had arisen.
26. The evidence does not establish that the Owner was in arrears, or otherwise in breach of contract, when, on 7 March 2023 the Builder, through his solicitors, purported to terminate the Contract on the ground of breach. The Builder's conduct, involving suspending work under the Contract, failing to make the site safe, failing to address the issues raised in the ENC and the ECNC and purporting to terminate the Contract when he had no right to do so, evince an unwillingness to be bound by the Contract. This amounted to a repudiation of the Contract which gave rise to an entitlement in the Owner to accept the repudiation and terminate the Contract or, alternatively, elect to affirm the Contract: McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457 at 476-477.
27. By her letter (through her solicitors) of 27 May 2022 the Owner elected to terminate the Contract and the Contract thus came to an end.
28. In May 2023 the Owner entered into a new building contract with a third party (Abla's Constructions Pty Ltd) for remediation works and construction of her new home.

Development Consent

1. The development application consent approved by Hills Shire Council on 17 February 2021 (Development Consent) is an important document in these proceedings.
2. Relevantly the Development Consent: 1. sets out the requirements that the Owner and any contracting builder must meet when having the proposed dwelling constructed; 2. states that the development must be carried out in accordance with specified approved plans and details, which include the structural engineering plans; 3. refers to a requirement for the appointment of a principal certifier in accordance with the Environmental Planning and Assessment Regulations 2000; 4. contains the following condition: Critical Stage Inspections and Inspections by the Principal Certifier Section 6.6 of the Environmental Planning and Assessment Act 1979 requires critical stage inspections to be carried out for building work … Prior to allowing building works to commence the Principal Certifier must give notice of these inspections … An Occupation Certificate cannot be issued and the building may not be able to be used or occupied where any mandatory critical stage inspections or other inspection required by the Principal Certifier is not carried out. Inspections can only be carried out by the Principal Certifier unless agreed to by the Principal Certifier beforehand and subject to that person being a registered certifier;
3. The structural engineering drawings approved by Hills Shire Council include drawings for the basement areas of the proposed dwellings. These set out the design and build requirements for the basement footings piers and slab.

The Contract

1. The relevant provisions of the Fixed Price Contract include: 1. A stipulation that the contract price would be funded by the Owner's bank (ANZ); 2. In schedule 4 ("Description of Work"), a statement that "the building works are described in detail in the plans and specifications"; 3. In schedule 5 ("Other Contract Documents"), a list of documents forming part of the Fixed Price Contract; 4. In the section headed "Special Conditions", a provision that "All monies must be paid in full before documents are released and stages are progressed"; 5. In cl 40 ("Mandatory Conditions"), a requirement that the building works will comply with: 1. The Building Code of Australia; 2. All other relevant codes standards and specifications that the building works are required to comply with under any law; and 3. The conditions of any relevant development consent or complying development certificate.

Experts

1. It is not necessary to deal with the Owner's expert evidence in great detail. The experts have complied with the Tribunal's Expert Code of Conduct and are clearly adequately qualified to provide the opinions contained in their respective reports. In the absence of any countervailing expert evidence, I accept the opinions of the Owner's experts. In short: 1. The report of Mr Anthony Grieve (engineer) identifies a number of defects in the works carried out by the Builder and sets out a scope of works for rectification of those defects. 2. The report of Mr Ken Whyte (quantity surveyor) provides an opinion based on Mr Grieve's scope of works for rectification. He estimates that the total cost to rectify the Builder's defects is $366,254. 3. The defects established by the expert reports, as well as the other evidence including the report of Mr Camenzuli, the CNC and the ECNC, include, relevantly, non-compliance with the Development consent, non-compliance with various Australian standards and non-compliance with the plans and specifications.
2. The evidence also establishes that the works done by the Builder are of no use to the Owner. Most importantly, the failure by the Builder to carry out critical stage inspections as required by the Development Consent means that the only way to remedy the defects is to remove them and start again. It is not possible to carry put those inspections retrospectively.

Payments and losses

1. The evidence establishes that between April 2021 and November 2021 the Owner paid the Builder a total of $259,000 under the Contract and $68,984.45 under the Project Management Contract. The total paid to the Builder was thus $328,484.43.
2. The evidence also establishes that: 1. the payments under the Contract were funded by the Owner's bank (ANZ), that the Builder was on notice of this fact, and that between 17 June 2021 (when the loan account was opened) and 16 September 2022 (when the loan account was closed) the Owner incurred interest on those payments totalling $8608.98; 2. the Owner paid $6992.70 to various experts to evaluate the state of the property after the CNC was issued; 3. between 17 December 221 and 27 February 2021 the Owner incurred costs of $145,389.22 for remediation works which were essential to render the site safe; and 4. Works consistent with the remedial scope of works identified by the Owner's experts have recently been undertaken by the new contractor Abla Constructions Pty Ltd at a cost to the Owner of $314,098.69.

Did the Builder breach the statutory warranties or the Contract ?

Statutory warranties - legal framework

1. Under s 18B of the HB Act the following warranties are implied in every contract to do residential building work: (a) a warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract, (b) a warranty that all materials supplied by the holder or person 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, (c) a warranty that the work will be done in accordance with, and will comply with, this or any other law, (d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time, (e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling, (f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder's or person's skill and judgment.
2. The principles applicable to determining whether there has been a breach of the statutory warranties in s 18B of the Act were summarised in Deacon v National Strategic Constructions Pty Ltd; National Strategic Constructions Pty Ltd v Deacon [2017] NSWCATAP 185 as follows (at [46]): Although objective standards such as Australian Standards, the Building Code of Australia and the Guide are of significant relevance in establishing whether work has been performed in a proper and workmanlike manner (Wheeler v Ecroplot Pty Ltd [2010] NSWCA 61 at [10]), the absence of such evidence does not automatically mean a homeowner has failed to establish breach of statutory warranty. In our view, the relevant principle was succinctly stated by Senior Member Goldstein in G MacFayden and Anor v G Tadrosse [2014] NSWCATCD 194 at [46] as follows: …[E]vidence that work does not comply with the Building Code of Australia would establish a basis for a finding that sub section 18B(c) of the Act has been breached. Evidence of the details in which work does not comply with the contractual plans and specifications would form the basis for a finding that sub section 18B(a) of the Act has been breached. Evidence of work not being carried out in a proper and workmanlike manner would in my view involve identification of the work in question, a statement of how the expert would expect it to be carried out in in a proper and workmanlike manner and then identification of the factors which establish that the way in which the work has been carried out falls short of it being carried out in a proper and workmanlike manner. Evidence of this nature, if accepted, would form the basis for a finding that sub section 18B(a) of the Act has been breached.
3. As was also set out in Deacon, the Tribunal, when considering whether breach of s 18B of the HB Act has been established, must consider and make findings in respect of: 1. Whether the owner has established on the balance of probabilities that works have not been performed in accordance with s 18B of the HB Act. 2. If a 'defect' (in the sense of failure to comply with s 18B of the HB Act) is established, what is the appropriate method to rectify that defect.

Did the Builder comply with the statutory warranties and with the Contract?

1. I am satisfied that the works performed by the Builder breached s 18B(1)(a) and (c) of the HB Act because the works: 1. did not comply with the plans and specifications set out in the Contract; 2. did not comply with various Australian standards; and 3. did not comply with the conditions of the Development Consent with which the Builder is required by law to comply; and
2. For the same reasons I am satisfied that the Builder breached clause 40.1 of the Fixed Price Contract and the Project Management Contract.

Should the Tribunal make a work order or money order?

1. By reason of s 48MA of the Act, the Tribunal must have regard to the principle that rectification of defective work by the responsible party is the preferred outcome.
2. In Kurmond Homes Pty Ltd v Marsden [2018] NSWCATAP 23 at [41]-[46] the Appeal Panel stated as follows: While not appropriate to seek to define all circumstances that might justify a court or tribunal making an order that departs from the preferred outcome, it is necessary to give some consideration to the nature of the obligation imposed on the court or tribunal by s 48MA. First, the principle, by its terms, only applies "in determining a building claim involving an allegation of defective residential building work or specialist work". It is not expressed to apply where, for example, the building claim only involves an allegation of incomplete residential building work or specialist work. That is not to suggest s 48O does not otherwise permit a work order in respect of work found to be incomplete. Second, s 48MA is directed towards the remedy or "outcome" to be provided by the court or tribunal where a claimant establishes the responsible party has carried out defective residential building work or specialist work. In this sense, it is not properly described as a "presumption". Rather, it is a remedy to be "preferred" to other forms of order which the court or tribunal might make. Third, while s 48MA provides the court or tribunal "is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome", the section does not mandate that a work order must be made in all cases. Further, the section does not confine the form of orders that may be made under s 48O, including an order that defective work be rectified by the responsible party engaging another person to carry out that work on behalf of the responsible party. Fourth, the term "preferred" is not defined. The HB Act and Regulations do not specify circumstances in which the preferred outcome is not to be adopted. However, guidance as to the meaning of "preferred" and the circumstances that would justify an order for a different outcome is found in the second reading speech where the Minister for Fair Trading makes clear that the purpose of the amendment was to: (1) prevent a homeowner from unreasonably refusing a builder access to a building site to rectify defective work; (2) permit a builder to return to carry out necessary rectification work if they are willing; and (3) support the timely and cost-effective resolution of disputes. That is, in deciding what order should be made, a court or tribunal may consider whether there is a reasonable basis for any objection raised by the homeowner to the builder being permitted to rectify the defective work, the terms of any order, whether the builder is willing to return and whether such an order would support a timely and cost effective resolution of the dispute.
3. Whether the Tribunal departs from the "preferred outcome" that the builder who performed the defective work involves the exercise of discretion (Leung v Alexakis [2018] NSWCATAP 11 at [139]; Robinson v Hindmarsh Construction Australia Pty Ltd [2021] NSWCATAP 51 at [66]).
4. In my view this is a case where it would be appropriate to exercise my discretion in favour of departing from the preferred outcome. My reasons for this are as follows: 1. The Builder has not been on site since early 2022, at which time the project was still in its early stages. The site was left in an unsafe condition, and the Builder failed to respond to directions from the Owner's certifier and engineer in late 2021 to address serious compliance and safety issues. 2. The Builder repudiated the Contract which resulted in the Contract being terminated by the Owner. 3. The Builder did not attend the hearing and effectively abandoned both the defence of the Owner's claim and the prosecution of his cross-claim. It has refused to engage with the Owner's solicitors. Mr Nasr's text messages on the morning of the hearing, as well as his conduct in "hanging up" on the Owner's solicitors prior to the hearing, evince a cavalier approach to the proceedings and to his company's responsibilities to the Owner.
5. The Builder's approach causes me to have serious concerns about its attitude to the standard of work done, its willingness to return to the site, and the likelihood that a work order will lead to further dispute, meaning that a work order in these circumstances would not be a timely or cost-effective solution to the dispute.
6. In any case the Owner has now engaged a new contractor to attend to the defective works and construct her new home so that a work order would be of no utility to the Owner.

What is the appropriate remedy?

1. The general principle to apply in assessing damages for breach of contract is that stated in Robinson v Harman (1848) 1 Exch 850; 154 ER 363 (and affirmed by the High Court including in Tabcorp Holdings Ltd v Bowen investments Pty Ltd [2009] HCA 8) being that "where a party sustains a loss by reason of breach of contract, he is, so far as money can do it, to be placed in the same situation with respect to damages, as if the contract had been performed."
2. The case of Hadley v Baxendale (1854) 9 Exch 341 provides well-established principles in relation to the assessment of damages for breach of contract. Damages can be recovered if the loss results from the usual course of events or if the loss was in the contemplation of both parties at the time the contract was entered into.
3. In this instance the reasonably foreseeable losses suffered by the Owner as a result of the Builder's breaches are as follows: 1. The cost to rectify the defective works; 2. The sum paid to make the site safe in the period after termination of the Builder's contract: $145,389.23; 3. The sum of $6992.70 paid to the Owner's expert to obtain advice regarding the non-conforming works; and 4. The interest payments made to the Owner's bank totalling $8608.98 which were wasted because of the Builder's failure to perform the Contract.
4. For reasons explained, the only way to remedy the defects is effectively to remove the defective works and start again. I am satisfied that the sums invoiced by Abla Constructions Pty Ltd to perform this work most accurately reflect the actual cost to the Owner of rectifying the defective works. That cost is $314,098.69.
5. The total of the above amounts is $475,089.60.

Conclusion and orders

1. For these reasons I make the following orders: 1. The respondent is to pay the applicant $475,089.60 immediately. 2. The applicant is to file and serve submissions and documents on costs in both HB 22/26835 and HB 22/40388 by 14 days from the date of these orders. 3. The respondent is to file and serve submissions and documents on any costs application in HB 22/26835 and HB 22/40388 by 28 days from the date of these orders. 4. The applicant is to file and serve costs submissions in reply by 35 days from the date of these orders. 5. The costs submissions of the parties are to state whether the parties seek an oral hearing on the issue of costs, or consent to the costs application being determined on the papers in accordance with s 50 (2) of the Civil and Administrative Tribunal Act 2013 (NSW). 6. The Tribunal may determine it appropriate to deal with any costs application on the papers and without a further oral hearing.

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

Amendments 14 August 2023 - Formatting amendments. 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: 14 August 2023