Supply Laminex kitchen white in colour with white PVC edging as per drawing

Overhead cupboards white Laminex finish white PVC edging

Construct bulkhead two overhead cupboards and ceiling

Supply Laminex laundry white in colour with white PVC edging as per drawing

Supply and fit sliding door and all fixing include locking latch

Sand and polish flooring to kitchen, laundry, new toilet area and entrance to bathroom

1. Attached to the quotation was a payment schedule setting out briefly the various stages for payments, including initial deposit, completion of kitchen stage, completion of laundry stage, and so on.
2. Shortly after receiving the quote, Mr Hughes telephoned the applicant and confirmed that he [Mr Hughes] and his wife accepted the quotation.
3. On about 26 May 2015, the owners paid to the applicant a deposit of $13,200.
4. On about 3 June 2016, the applicant provided to the owners schematic drawings of the cabinetry for the kitchen.
5. Works commenced in the first week of June 2016. On 11 June 2015, the owners made a further payment of $5000 to the applicant.
6. On 17 June 2015, most of the kitchen cabinetry was installed. At this time, other works had been carried out to the toilet, bathroom and laundry, but the works were not yet complete. Works still to be done included :
   • - completion of plastering works
   • - installation of bulkheads to kitchen
   • - installation of bench tops in kitchen and laundry
   • - general finishing works to all cabinetry including adjustments and cleaning
   • - sanding and polishing of floors
7. There is no dispute that the price for the works was increased by $1100 (not including GST) for extra plastering works.
8. The owners were disappointed with the kitchen cabinetry that was installed on 17 June 2015. Although the cabinetry was not finished, it was apparent to the owners that the cabinetry would not meet their expectations. Features such as a pullout rubbish bin, a compartment for the microwave, soft close hinges and high quality draw runners had not been provided. Although the quotation did not specify such matters, the owners believed, from their discussions with the applicant prior to accepting the quotation, that the cabinetry would be of a higher quality than the cabinetry installed.
9. No further works were carried out after 17 June 2015. On 24 June 2015, Mr Hughes advised the applicant that the applicant's engagement was terminated. On 25 June 2015, Mr Hughes followed up with a lengthy email to the applicant setting out his dissatisfaction with the works. On 2 July 2015, the applicant provided a lengthy response email to the owners.
10. On around 16 July 2015, the applicant commenced this proceeding against the owners. The applicant says that the owners wrongly terminated the works contract, and the applicant claims damages of around $15,350. The damages are calculated as the unpaid balance of the contract ($20,630 including GST), less an allowance for the bench tops which were not installed and the floor polishing works which had not been carried out (the applicant allows $5,280 including GST). The applicant also makes a claim for costs associated with the proceeding.
11. By counterclaim, the owners seek damages for the cost to rectify alleged defects in the works carried out by the applicant together with the cost of remedial works to upgrade the kitchen cabinetry to the quality they expected. At the hearing, the owners confirmed the sum sought is $4,527.
12. In addition, the owners say they should be reimbursed $3,378 which they say is the difference between the total sum they say they paid to the applicant ($19,300) and the value of the works carried out by the applicant as assessed by a quantity surveyor ($15,922). The owners produced a report by the quantity surveyor, Mr Abbenhuys ("the quantity surveyor") but he was not called to give evidence.
13. The applicant gave evidence in support of his claims. Mr Hughes gave evidence in support of the owners' claims. The owners also called evidence from Mr Kleverkamp, the cabinetmaker engaged by the owners to rectify and complete the cabinetry works. The owners also called evidence from Mr Pezzimenti, a registered building inspector, who inspected the works carried out by the applicant.

1. Section 31 (2) of the Domestic Building Contracts Act 1995 ("the DBC Act") provides:

A major domestic building contract is of no effect unless it is signed by the builder and the building owner (or their authorised agents).

1. There is no dispute that the applicant and the owners did not sign any contract document. The quotation confirms the works and the price for the works, however the quotation was not signed.
2. Accordingly, if the agreement for the carrying out of the works as set out in the quotation constitutes a major domestic building contract, such contract is, pursuant to section 31 (2) of the DBC Act, of no effect.
3. Section 3 of the DBC Act defines various terms:

builder means a person who, or a partnership which -

(b) manages or arranges the carrying out of domestic building work; or

(c) intends to carry out, or to manage or arrange the carrying out of, domestic building work;

domestic building contract means a contract to carry out, or to arrange or manage the carrying out of, domestic building work other than a contract between a builder and a sub-contractor;

domestic building work means any work referred to in section 5 that is not excluded from the operation of this Act by section 6;

major domestic building contract means a domestic building contract in which the contract price for the carrying out of domestic building work is more than $5000 (or any higher amount fixed by the regulations);

sub-contractor means a person who enters into a contract with a builder to carry out part of the work that is to be carried out under a domestic building contract.

1. Section 5 of the DBC Act sets out the work to which the DBC Act applies. Such work includes:

the renovation, alteration, extension, improvement or repair of a home [section 5(1)(b)]

1. Section 6 of the DBC Act prescribes building work to which the DBC Act does not apply. None of the excluded works are applicable in this case. One of the categories of excluded work is set out in section 6 (a):

(a) any work that the regulations state is not building work to which this Act applies;

1. Section 6 of the Domestic Building Contracts Regulations 2007 provides:

For the purpose of section 6(a) of the Act [the DBC Act], work is not building work to which the Act applies if the work is to be carried out under a contract in relation to one only of the following types of work -

(a) attaching external fixtures (including awnings, security screens, insect screens and balustrades);

(h) plumbing work as defined in section 221C of the Building Act 1993;

(j) erecting a chain wire fence to enclose a tennis court;

(k) erecting a mast, pole, antenna, aerial or similar structure.

1. Having regard to the above legislative provisions, and having regard to the fact that the works agreed to be carried out by the applicant included cabinetry, carpentry, plastering and floor polishing, I am satisfied that the works constitute domestic building works under the DBC Act, and that the agreement between the applicant and the owners in respect of such works constituted a major domestic building contract.
2. For completeness I note that the contract is not a builder/sub-contractor contract because there is no contractual intermediary between the applicant and the owners. That is, the applicant was not engaged by someone other than the owners with whom the owners had contracted to carry out building works. The owners and the applicant contracted directly with each other.
3. Accordingly, I am satisfied that pursuant to section 31 (2) of the DBC Act the contract between the owners and the applicant for the carrying out of the works as set out in the quotation is of no effect.
4. Where does this leave the parties?
5. It means that neither the applicant nor the owners can enforce any entitlements or obligations under the contract.
6. But having regard to the fact that works were carried out by the applicant, and the owners have retained the benefit of those works, in my view the applicant should be reasonably compensated for the works he carried out (including the works he arranged to be carried out by tradespeople he engaged). That is, the owners ought to pay the reasonable value of the works carried out by the applicant. In assessing such reasonable value, allowance should be made for the reasonable cost to the owners of rectifying any defects in the works.

1. The applicant says he was paid the deposit of $13,200, and a further payment of $5000, for a total of $18,200. Mr Hughes says that, in addition to these payments, he also paid the applicant $1,100 in respect of the plasterwork variations.
2. Mr Hughes says that shortly before this hearing commenced, he discovered his original copy of the payment schedule attached to the quotation. The schedule has handwritten notes on it of payments made. Mr Hughes says that he believes he made the handwritten notes to confirm the payments made. One of the handwritten notes identifies a payment of $1,100 for the plasterwork variations.
3. However, the document is at odds with other evidence. In his email to the applicant dated 25 June 2015, Mr Hughes states "I have paid you a total of $18,200". This was a very detailed email prepared by Mr Hughes the day after he terminated the applicant's engagement.
4. The applicant has also produced records of telephone text messages between himself and Mr Hughes. One such message from Mr Hughes to the applicant dated 24 June 2015 (the day Mr Hughes terminated the applicant's engagement) states "I have paid you $18,300 already in cash"
5. I found Mr Hughes to be an honest witness. When presented with the conflicting documentation above, Mr Hughes conceded that he really could not recall whether he had made the additional payment of $1,100.
6. On all the evidence, I am not satisfied that the owners paid the additional $1,100 to the applicant. I find that the total sum paid by the owners to the applicant was $18,200.

1. The applicant provides little evidence as to the value of the works he carried out. He starts with the contract price, and then makes a deduction for the works which were not completed. He says the incomplete works were limited to the supply and installation of the kitchen and laundry bench tops and the polishing of the floors. He allows $1800 (not including GST) for the bench tops and $3000 (not including GST) for the floor polishing works.
2. As noted above, in my view the incomplete works included more than the bench tops and the floor polishing works. And in any event, in my view the assessment of the value of works carried out is not reached by simply deducting an estimated value for incomplete works from the contract price. The contract is of no effect. As such, the agreed price may be one matter that might be considered, but it is not conclusive.
3. The applicant produced no documentation, such as invoices or accounts, that might assist in assessing the value of works carried out. During the hearing, the owners called for the applicant to produce such documentary evidence as he had relevant to the cost of the works carried out. The applicant produced only a few excerpts from his work diary, and they do not assist in assessing the value of works carried out.
4. The owners rely on the report of the quantity surveyor dated 21 August 2015. The report indicates that the quantity surveyor inspected the home on 6 August 2015. On the basis of that inspection, instructions and photographic evidence provided by Mr Hughes and the cabinetry drawings originally provided to the owners by the applicant, the quantity surveyor produced a short itemised assessment of the value of works carried out by the applicant. The quantity surveyor's total estimate is $15,922 inclusive of GST.
5. It is surprising that the quantity surveyor's report makes no reference to the quotation, but instead says that the "scope of works has been based upon verbal advice from Cameron Hughes".
6. The quantity surveyor's evidence might have been very helpful, however he was not called to give evidence. As such I was unable to question him on the instructions he was provided by Mr Hughes. Nor was I able to clarify the comments and figures contained in his report.
7. And as the applicant himself says, it is not fair that the applicant was given no opportunity to cross-examine the quantity surveyor.
8. While I may accept the quantity surveyor's report as evidence, in my view it has little probative value.
9. In the course of the hearing I was also shown a number of photos of the works carried out by the applicant.
10. On all the evidence, including the quotation, the evidence given by the applicant, Mr Hughes, Mr Kleverkamp and Mr Pezzimenti, the photos and other documents produced at the hearing including quantity surveyor's report, I find that the value of works carried out by the applicant (before making any allowance for rectification works) is the total sum paid by the owners to the applicant, namely $18,200. On the evidence before me, I am satisfied that this is a fair value for the works carried out by the applicant, before making deduction for the reasonable cost of rectifying defects in the works.

1. In making allowance for rectification of defective works, I make no allowance for what the owners call "remedial" works to the cabinetry. In this regard the owners are referring to the installation of soft hinges, pullout rubbish bin, higher quality drawer runners and other works to bring the cabinetry works to the standard they expected. In my view, these works represent an "upgrade" to the quality of the cabinetry, not rectification of defects in the cabinetry, and as such they are not taken into account as part of the assessment of the value of the works carried out by the applicant.

1. I accept Mr Kleverkamp's evidence that one of the benches in the kitchen was out of level and he and his assistant spent 1 ½ hours levelling it, as best they could. I consider Mr Kleverkamp's charge rate of $66 per hour for each of himself and his assistant as reasonable. Accordingly I allow $198 (not including GST) as the reasonable rectification cost for this item.

1. I accept Mr Pezzimenti's evidence that the kitchen cupboards above the cooktop needed to be raised because the gap between the cupboards and the cooktop would be, when the benchtops were installed, less than the required gap, 600 mm, as mandated by the relevant Australian standard on gas installations. I accept Mr Kleverkamp's evidence that he and his assistant spent 2 hours raising the cupboards. At a charge rate of $66 per hour per man, I allow $264 (not including GST) as the reasonable rectification cost for this item.

1. The applicant had fabricated bulkheads for installation in the kitchen. The bulkheads were not installed, but were left on site. I accept Mr Kleverkamp's evidence that the bulkheads were made of inferior and unsuitable "packing" timber. I also accept Kleverkamp's evidence that he spent 1 ½ hours plus $70 in materials in making replacement bulkheads. Allowing a charge rate of $66 per hour, I allow $169 (not including GST) as the reasonable rectification cost for this item.

1. The owners say that much of the plaster work carried out by the applicant was unsatisfactory. Having heard the evidence of Mr Pezzimenti, I am satisfied that much of the plastering work had not been finally finished, and as such constitutes "incomplete" rather than "defective" works.
2. I am, however, satisfied that one particular piece of plasterwork was defective and required rectification. I accept Mr Perzzimenti's evidence that a corner cover strip was installed over an existing corner cover strip, creating a bulky and unsightly finish to the corner. The work in question was depicted in a photo.
3. The owners engaged a friend of theirs, Mr Beveridge, to carry out various works including plaster works. I accept, on the basis of an invoice addressed to the owners from Mr Beveridge, that Mr Beveridge charged charged $60 per hour for plaster works. I consider that to be a reasonable charge rate. I also consider 2 hours to be a reasonable allowance for rectifying the defective plasterwork. Accordingly I allow $120 (not including GST) as the reasonable rectification cost for this item.

1. Mr Kleverkamp says that he spent half an hour shortening one bench in the kitchen so that there was sufficient room to install the overhanging "waterfall" benchtop. Having seen a photo of the bench in question, before it was altered, I am not satisfied that the works were necessary to rectify a defect in the bench installed by the applicant. Accordingly I make no allowance for this item.

1. Mr Pezzimenti says that the distance between the rear gas burner in the cooktop and the plasterboard wall behind it did not meet the minimum required 200 mm clearance gap to a combustible surface. While this may have been the case, there is now no problem because the owners have installed a tile splashback. If the applicant was obliged at all to supply and install a splashback, in my view this item constitutes incomplete work, not defective work. Accordingly I make no allowance for this item.

1. During the course of the works, Mr Hughes attended Harvey Norman to pay for, and pickup, a rangehood ordered by the applicant. The rangehood was not suitable for the kitchen, and Mr Hughes returned it to Harvey Norman. At the time he returned it, Mr Hughes selected and purchased an alternative rangehood which, to the best of his limited knowledge, appeared to be suitable. This alternative rangehood cost $647. It turned out that the replacement rangehood was also not suitable and, ultimately, Mr Hughes purchased a further rangehood which was installed.
2. Mr Hughes has unsuccessfully attempted to obtain from Harvey Norman a refund of the purchase price, $647, for the first unsuitable replacement rangehood. He says that the applicant should bear this cost because it was the applicant's mistake, ordering the wrong rangehood in the first instance, which led to Mr Hughes embarking on the journey to replace the rangehood.
3. I do not accept that the applicant is responsible for this item. Mr Hughes, and not the applicant, selected the unsuitable rangehood in respect of which Harvey Norman will not provide a refund. There is insufficient causal connection between any act or omission on the part of the applicant and the "loss" of the owners. The owners claim for this item is refused.

1. For the above reasons, I allow a total sum of $751 (not including GST) as the reasonable cost to the owners of rectifying defects in the works carried out by the applicant. After allowing for GST, I allow a total sum to the owners of $826.

1. For the above reasons, I informed the parties that I would order the applicant to pay the owners $826, and I would order that the applicant's claim be dismissed. I then asked the parties if they wished to make any application in respect of costs. The owners confirmed they were seeking a cost order and sought to rely on a settlement offer made 9 March 2016.

Section 109 of the Victorian Civil and Administrative Tribunal Act 1998 ("the Act") provides that each party is to bear its own costs in the proceeding, however the Tribunal may, if it is satisfied that it is fair to do so, order that a party pay all or a specified part of the costs of another party. The relevant provisions of s109 are:

(1) Subject to this Division, each party is to bear their own costs in the proceeding.

(2) At any time, the Tribunal may order that a party pay all or a specified part of the costs of another party in a proceeding.

(3) The Tribunal may make an order under subsection (2) only if satisfied that it is fair to do so, having regard to -

(a) whether a party has conducted the proceeding in a way that unnecessarily disadvantaged another party to the proceeding by conduct such as -

(i) failing to comply with an order or direction of the Tribunal without reasonable excuse;

(ii) failing to comply with this Act, the regulations, the rules or an enabling enactment;

(iii) asking for an adjournment as a result of (i) or (ii);

(v) attempting to deceive another party or the Tribunal;

(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceeding;

(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law;

(e) any other matter the Tribunal considers relevant.

1. In Vero Insurance Ltd v The Gombac Group Pty Ltd[1] Gillard J sets out the step by step approach to be taken by this Tribunal when considering an application for costs pursuant to s109 of the Act:
   1. The prima facie rule is that each party should bear their own costs of the proceeding;
   2. The Tribunal should make an order awarding costs, being all or a specified part of costs, only if it is satisfied that it is fair to do so. That is a finding essential to making an order;
   3. In determining whether it is fair to do so, that is, to award costs, the Tribunal must have regard to the matters stated in s109(3).
2. Section 112 of the Act makes special provision in respect of the making of a cost order in circumstances where a party has rejected a settlement offer made by another party:

112 Presumption of order for costs if settlement offer is rejected

(a) a party to a proceeding (other than a proceeding for review of a decision) gives another party an offer in writing to settle the proceeding; and

(b) the other party does not accept the offer within the time the offer is open; and

(c) the offer complies with sections 113 and 114; and

(d) in the opinion of the Tribunal, the orders made by the Tribunal in the proceeding are not more favourable to the other party than the offer.

(2) If this section applies and unless the Tribunal orders otherwise, a party who made an offer referred to in subsection (1)(a) is entitled to an order that the party who did not accept the offer pay all costs incurred by the offering party after the offer was made.

(3) In determining whether its orders are or are not more favourable to a party than an offer, the Tribunal -

(a) must take into account any costs it would have ordered on the date the offer was made; and

(b) must disregard any interest or costs it ordered in respect of any period after the date the offer was received.

1. On 9 March 2016, the owners' lawyers faxed a settlement offer to the applicant, whereby the owners offered to settle the proceeding on the basis that:
   1. the owners would pay $5000 to the applicant, the payment to be made within 7 days of the date of the applicant's acceptance of the offer; and
   2. each party would otherwise be responsible for paying their own legal costs.
2. The offer was open for acceptance for 14 days. The letter containing the offer also provided very clear notification to the applicant that:
   1. the offer was a genuine attempt to finalise the matter, on a commercial basis, in order to avoid unnecessary legal expenses; and
   2. in the event the applicant did not accept the offer, and judgement ultimately given in the proceeding was more favourable to the owners than the offer, the owners would rely on the offer in making application for a costs order in their favour in respect of costs incurred after the offer was made.
3. Section 113 and 114 of the Act set out various criteria, such as the period in which an offer must be open for acceptance, required for an offer to attract the operation of section 112 of the Act. The settlement offer made by the owners complies with section 113 and 114.
4. I am satisfied that the offer was more favourable to the applicant than the judgement I have given above, namely that the owners pay the applicant $826. In reaching this conclusion I have taken into account, as required by section 112(3)(a) of the Act, whether a cost order might have been made on the date the offer was made, 9 March 2016. Having regard to the nature and quantum of the claims of the parties, and taking into account also the fact that the applicant was not represented by lawyers, I am satisfied that had I given judgement on 9 March 2016 in favour of the owners in a sum of $826, I would not have departed from the prima facie rule that each party bear their own costs. Having regard to this, it is very clear that the offer to pay the applicant $5000, with each party bearing their own costs, is more favourable to the applicant than the judgement of $826 in favour of the owners.
5. The applicant was aware that the owners had engaged lawyers and were incurring legal costs. At a directions hearing on 19 January 2016, the owners were represented by their lawyer and the Tribunal ordered that each party may be represented by professional advocates at the hearing. The Tribunal also ordered "costs reserved" on that day.
6. For the above reasons, I am satisfied that an order should be made, pursuant to section 112(2) of the Act, that the applicant pay the owner's costs of the proceeding incurred after 9 March 2016.
7. When making a cost order, the Tribunal will often consider 2 broad bases, namely "standard" and "indemnity", upon which the quantum of costs might be assessed. The "standard" basis generally includes all costs necessary or proper for the attainment of justice or for defending the matter. The higher "indemnity" basis generally includes all costs actually incurred save in so far as they are of an unreasonable amount or have been unreasonably incurred.
8. It should not be presumed that "all costs" as referred to in s112(2) of the Act means costs on an indemnity basis. Any order for costs pursuant to section 112(2) of the Act is, as the section itself provides, subject to the Tribunal's discretion to order otherwise. In my view such discretion includes the discretion to both make a cost order and to determine the basis for assessing the sum of such costs. Such an interpretation is, in my view, consistent with the comment of Ashley JA in Verlado & Another v Andonov (2010) VSCA 38 at [47]:

Section 112(2) creates, on the one hand, a prima facie entitlement to payment of "all costs" in favour of a successful offeror. Ordinarily, it appears, costs would be assessed in such a case on a party and party basis - although the tribunal would be empowered to allow costs on a more favourable basis.

[the "party and party" basis for costs, as it was then known, is akin to what is now the "standard" basis for costs]

1. As I have noted in the past[2], in my view an order for indemnity costs should only be made in exceptional or extreme cases such as where the conduct of a party is vexatious or particularly obstructive or where a party's case is hopeless or fanciful and with no real prospect of success or where a claim is brought for an ulterior purpose.
2. I do not consider this to be an exceptional or extreme case warranting an order for costs on an indemnity basis.
3. Often the Tribunal will make a general cost order to the effect that a party must pay the other party's costs on a particular basis, and if the parties cannot reach agreement on the quantum of the costs, the quantum will be assessed by the Victorian Costs Court. In this case, however, I determined that I would assess the quantum of costs in preference to putting the parties to the additional time and expense of attempting to negotiate a sum and, as I considered would be likely, proceeding to the Victorian Costs Court.
4. Having been given some time to consider the matter, the owners lawyer proposed that costs be ordered in the sum of $9636.50, calculated as follows:
   • - $4500 made up of $1,500 for each of the 3 days of the hearing as the cost of representation by the owners' solicitor, Mr Rallis;
   • - $4,500 for the cost of preparation for the hearing and including the cost of a second solicitor appearing on one day of the hearing to "instruct" Mr Rallis;
   • - $400 being the cost of hearing fees paid to the Tribunal by the owners;
   • - $236 as witness expense of Mr Kleverkamp. Mr Kleverkamp gave evidence that this would be his witness expense charge.
5. I considered the total sum claimed was excessive. I allowed a sum of $5386.50, calculated as follows:
   • - $1500 for each of the first two days of the hearing as the reasonable cost of representation by Mr Rallis. A total of $3,000;
   • - $750 for the third day of the hearing as the reasonable cost of representation by Mr Rallis. The third day was a short day and the hearing concluded at around noon;
   • - $1000 preparation costs for the hearing. The owners lawyers prepared a court book of documents which was very useful during the course of the hearing;
   • - $400 for hearing fees;
   • - $236.50 witness expense for Mr Kleverkamp.
6. For the above reasons, I will order that the applicant pay the respondent's costs of the proceeding incurred after 9 March 2016, such costs fixed in the sum of $5386.50.

[1] [2007] VSC 117 at [20]

[2] Taylor v Trentwood Homes Pty Ltd [2012] VCAT 1125 at para 34