Walsh v Archi Lab Pty Ltd

The experts

1. The owners engaged Mr Calandra to provide a report on their behalf. There was no objection to Mr Calandra's experience or expertise. I accept Mr Calandra as a witness qualified to give opinion evidence in the Tribunal. Mr Calandra was not required for cross examination. Messrs Kim and Kidnie were engaged to prepare a report for the builder. There was no objection to their experience or expertise. I accept Messrs Kim and Kidnie as witnesses qualified to give opinion evidence in the Tribunal. They were not required for cross examination. Their joint report is exhibit B. I will give the appropriate weight to the evidence of the experts, noting that on a number of occasions their evidence seems to stray into the realm of advocacy. This may be explicable as they were engaged by lay witnesses and the evidentiary foundation upon which they could rely, or base assumptions on, was not well established.
2. I have had regard to exhibit B which is a conclave report. I have found it to be of little assistance in determining some of the issues in the proceedings. It does not clearly address the issue of what money the owners expended in completing the work described in the contract. I have referred to the conclave report in connection with the builder's quantum meruit claim and defects.

The owners' claim

1. Since the owners' claim was filed first in time, I will deal with it first. The owners' claim has a number of elements which were referred to when they opened their case, namely the cost of: 1. Completion of the building work; 2. Rectification of defects; 3. Delays by the builder in completing the building work; and 4. Legal and expert fees.

Completion of the building work

1. The owners will only be able to claim the cost of completing the building work if they are found to have rightfully terminated the contract. In that case they will be entitled to damages based on the principle in Robinson v Harman (1848) 1 Ex.850 namely: "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. This principal is subject to the qualification that to the extent that the owners did not pay the full amount of the agreed contract sum, the builder will be entitled to a credit, equivalent to the unpaid balance, against the completion cost.
3. The owners' evidence which is accepted by the builder, is that they paid the builder a deposit of $64,300.00.
4. The contract prepared by the builder did not include clauses which dealt with the termination of the contract.
5. In an undated solicitor's letter, said to have been sent on 6 May 2022, solicitors acting on behalf of the owners wrote to the builder stating as follows: 'We refer to Archi Lab's contract with our client, and to recent communications between the parties. 1. The purpose of this letter is to: Put you on notice of our client's position; Encourage you to seek legal advice in relation to your position; and Seek an amicable resolution to the current situation. 2. We are instructed as follows: On or around February 2022 Archi Lab provided a quote for home building works sought by our client. After some negotiations, the parties entered into the final version of the contract on 16 February 2022. Works were commenced thereafter, and various disputes arose between the parties about (1) the scope of the contract, (2) the costs associated with various items of work under the contract and whether Archi Lab was entitled to additional or further payments, and (3) delays in the performance of works under the contract. On 3 May 2022, Archi Labs sent an email which demanded an advance payment purportedly for the supply of materials. Our client does not agree that Archi Labs is entitled to advanced payment under the contract or at all. On 5 May 2022, Mr Jeong Ui of Archi Labs attended the premises, confronted our client and his wife, and demanded return of tools and materials. Works under the contract have ceased. 3. Archi Lab's substantial breaches of the Home Building Act: Archi Lab does not appear to be licensed to undertake the trade work which it is presently undertaking. Section 4(a) of the act penalises such conduct with a maximum penalty of 1,000 penalty units. Archi lab also does not appear to have obtained home warranty insurance in relation to the works. This is a major problem, and attracts a maximum of 1,000 penalty units in the case of a corporation. Archi Lab appears also to have committed a series of other breaches under the Home Building Act, including but not limited to: The contract, being a contract for home building work where the contract price exceeds the prescribed amount, was a contract to which the requirements of section 7 of the Act apply, and does not comply with the requirements of that section. The contract is not accompanied by the mandatory consumer information statement required by section 7AA. This failure attracts a maximum penalty of 40 units in the case of a corporation. Pursuant to section 7A of the Act, a person must not contract to do work under a contract unless the requirements of section 7 have been complied with. A breach of this section attracts a maximum penalty of 8o units in the case of a corporation. Pursuant to section 7B of the act, a holder of a contractor licence must, not later than 5 business days after entering into a contract, give the other party to the contract a signed copy of the contract in the form in which it was made. A breach of this section attracts a maximum penalty of 8o units in the case of a corporation. Pursuant to section 8 of the Act, a person must not (a) demand or receive payment of a deposit if that payment exceeds io% of the contract price, and (b) must not enter into a contract under which the person is entitled to demand or receive payment of a deposit which exceeds io% of the contract price. A breach of this section attracts a maximum of 1,000 penalty units in the case of a corporation. Pursuant to section 92(2) of the Act, a person must not demand or receive payment under a contract for residential building work unless (a) a contract of insurance is in force and (b) a certificate of insurance has been provided to the other party. A breach of this section attracts a maximum of 1,000 penalty units in the case of a corporation. d. In summary: i The lack of relevant insurance or licences are extremely serious matters. ii Archi Lab has breached at least 7 civil remedy provisions, for a total potential penalty of 4,200 penalty units. iii A penalty unit is presently equal to $110. iv Accordingly, Archi Lab is at risk of penalties up to $462,000, among other potential consequences including suspension or cancellation of licence. 4. Resolution of current issues: a. Having regard to the matters above, our client is within his rights to terminate the contract with Archi Lab and pursue Archi Lab for damages. Our client reserves his rights in full. b. Our client also has remedies against Mr Jeong Ui for misleading and deceptive conduct, among other things, in circumstances where our client reasonably assumed that Mr Jeon Ui was appropriately licensed to undertake the works which comprise the contract works. Our client reserves his rights in this regard in full also. c. However it is our client's desire to resolve the issues with Archi Lab and Mr Ui amicably if possible. This will require, at a minimum, the following things to be undertaken: 1. Archi Lab must obtain home warranty insurance in relation to the works; ii. Archi Lab must obtain any necessary licences to undertake the works which are the subject of the contract; iii. Our client must have confidence that the joinery subcontract provides for the same scope of joinery work as the head contract; and iv. The parties must enter into a proper home building contract which complies with the requirements of section 7 of the act, providing for the same scope of works as exist in the current non-complying contract, and for the same price. d. Our client is willing to approach any such conversation flexibly, and with a view to ensuring that both parties legitimate interests are respected and taken account of. e. Our client is prepared to meet at the following times next week: i Wed 11/05 8-11:30am ii Wed 11/05 2-5 iii Fri 13/5 8-ipm iv Tue 17/05 3-5pm f. A solicitor from this firm will also be in attendance. g. Please confirm by reply if Archi Labs is prepared to meet to seek a resolution. If we do not receive your response to this request by 4pm Monday 9 May 2022, our client will take what actions he deems necessary to protect his interests which may include termination of the contract. h. We recommend strongly that Archi Labs seeks urgent legal advice in relation to these matters, and attends any meeting with a legal representative. 5. Our client's rights are reserved in full. Please contact the undersigned directly should you wish to discuss any element of this letter.'
6. The builder responded to this correspondence on 19 May stating that it had received having only seen it on 15 May, it needed time to reply, it had notified its solicitor and was awaiting a reply and would respond when it was prepared to meet to discuss the matter.
7. There is no evidence of the builder replying in writing to the owners' solicitor's letter.
8. On 1 June 2022 the owners' solicitor sent a notice of termination of building work contract to the builder at its address as stated on the contract. The letter stated: '1. We refer to Archi Lab's building contract with Danny Walsh (our client), our letter dated 6 May 2022, and your reply dated 19 May 2022. 2. Archi Lab has abandoned the site as of at least 5 May 2022, and has performed no work since that date. Archi Lab has also refused to engage in discussions that could enable the parties to resolve any differences, and failed to make contact in response to our letter despite the passing of 3 weeks. 3. Our client considers Archi Lab's conduct to indicate a clear intention not to honour the terms of the contract between the parties, which is repudiatory conduct. Our client accepts Archi Lab's repudiation of the contract and hereby terminates same. 4. In addition to Archi Lab's abandonment of the project, our client is also entitled to terminate the contract in circumstances where Archi Lab has engaged in misleading and deceptive conduct, by representing that it was qualified to undertake the work which is the subject of the contract, when in fact Archi Lab does not have an appropriate licence. Our client relies, in the alternative, on your client's misleading and deceptive conduct as the basis for a termination of the contract. 5. In addition to the above, our client has only recently become aware of a large number of regulatory breaches of the Home Building Act, such that he is not lawfully qualified to perform the services which he has contracted to perform. Such breaches include but are not limited to: a. Failing to be appropriately licensed to undertake the contracted works; b. Failing to obtain the required home building insurance in relation to the contracted works; c. Failing to comply with the requirements under section 8 of the Act and as a consequence of that failure breaching section 7A of the Act; d. Neglecting to accompany the building works contract with the mandatory consumer information statement required under section 7AA of the Act; e. Failing to give our client, no later than 5 business days after entering the contract, a signed copy of the contract breaching section 7B of the Act; f. Demanding an advanced payment from our client contravening section 8 and section 92(2) of the Act. 6. Our client also relies, in the alternative to your client's repudiatory conduct described in paragraph 2 above, on these matters in terminating the contract. 7. Our client reserves his rights in full, as against both Archi Lab and Mr Jeong.'
9. On 3 June the builder replied. It stated, with all imperfections,: 'I have received two letters from your legal team. I would like to reiterate that at no time, I have ever mentioned to you that= I would stop working. I have sent several e-mails requesting half of the construction cost for the= additional construction that has already been carried out, and I have not r= eceived any reply from you on this matter. Due to this delay, my other const= ruction work was disrupted therefore I went to your house to retrieve my equ= ipment in order to proceed with my other schedule. The mental and physical abuse Kelly inflicted on me whilst I was at your hou= se to pick up my gear that day (swearing at me, pushing me from behind, putt= ing her mobile phone close to my face taking a video of me without my consen= t, and spitting on me and words that insulted me), they caused great psychol= ogical damage and caused anxiety and insomnia from extreme stress. When I received the first e-mail from your lawyer, the date you wanted to ad= just has already passed three times, and I guess from the date of the first m= eeting, you already had no intention of paying me for the construction fee a= nd were preparing to end the contract with me. I had to arrange a meeting wi= th a lawyer myself as I felt this was coming from you. I cannot agree with the statement that all responsibility for stopping the c= onstruction is on me. I would like to express my intention to disagree with your statement that I h= ave not fulfilled my responsibilities to you.=20 I request an additional payment for the construction I have completed so far= Please note I will proceed with the legal process should you not make the p= ayment'
10. The owners' termination of the contract was based on three grounds. First, that the builder had abandoned the site as of at least 5 May 2022 and had performed no work since that date. Secondly, the builder had had engaged in misleading and deceptive conduct by representing that it was qualified to undertake the work, when it did not have an appropriate licence. Thirdly, that the builder had breached a number of the provisions of the Act and was not lawfully qualified to perform the services that it contracted to perform.
11. In connection with the first ground relied upon by the owners, I find that s18B(1)(d) is relevant in that it is: 'a warranty that the work will be done with due diligence'
12. The builder's 3 June response as set out above in response to the owners' termination acknowledges that due to a dispute over payment it went to the site to retrieve its equipment: 'in order to proceed with my other schedule'
13. The builder also stated that it 'pick(ed) up its gear that day' and that the owner abused him for doing so. The builder also stated that 'I cannot agree with the statement that all responsibility for stopping the construction is on me.'
14. There is no doubt that there was a dispute between the parties about what was included in the contract, variations and payment of money in April and May 2022. On 21 April in that context, the builder stated to the owners: 'I'm talking about payment. You guys do not deposit or payment unit (sic) next Wednesday. I'm stopping this project totally. I'm even worried about final payment when I finish this project. I don't know what's going on with you guys. I cannot play this situation. Time is money, I don't want to waste time again, we are super busy now. anyway make sure payment please.'(emphasis added)
15. On 2 May 2022 the builder sent an email to the owners providing information on additional construction costs. The email concluded by stating: 'If you agree to the above terms, we will start working.'
16. On 3 May 2022 the builder sent the owners another email in which it addressed the subject of its request for the payment of an additional construction cost. The email concluded by stating: 'I know better than anyone what I've done so far, and I know exactly what's left. When work resumes, it will take me a week to finish my remaining work.'
17. The builder's affidavit details the issues that occurred regarding the disputes that arose regarding payment and the relationship between the parties' deteriorating. At [72] of this affidavit the builder acknowledges that the renovation work halted and states that the owners refused him access to the site on 5 May to retrieve his equipment which he states was needed to work on other jobs. At [81] the builder states: 'I had always had every intention of finishing the project but this was no longer possible due to Kelly's threats and the applicants' refusal to allow me access to the site.'
18. I find that the evidence that I have referred to above supports a finding that due to ongoing disputes about payment the builder ceased working on site in the period 21 April to 2 May and did not return to site except to attempt to pick up its equipment so that it could work elsewhere, which is a confirmation that it had ceased work on site. I find that by stopping work on site in the period 21 April to 1 June, the date of the termination letter, the builder had breached s18B(1)(d) by failing to proceed with the work with due diligence.
19. However, the owners do not justify the termination of the contract on the breach of s18B(1)(d). Their case is that by stopping work, which they describe as an abandonment of the site, the builder repudiated the contract.
20. In Longbottom v Boughton [2020] NSWCATAP 53 at [80] - [83] an Appeal Panel stated: 'The principles with respect to repudiation are well-established. Gibb CJ in Shevill v Builders Licensing Board (1982) 149 CLR 620 at 625-626 stated: "As Lord Wright pointed out in Heyman v Darwins Ltd repudiation is an ambiguous word and is used in various senses. We are of course concerned only with a case in which it is admitted that there was a valid and binding contract. Such a contract may be repudiated if one party renounces its liability under it - if he evinces an intention no longer to be bound by the contract or shows that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way." Wilson J in Shevill v Builders Licensing Board at 633 stated: "Repudiation of a contract is a serious matter and is not to be lightly found or inferred. When considering it, one must look at all the circumstances of the case to see whether the conduct 'amounts to a renunciation, to an absolute refusal to perform the contract.'" In Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17, Mason J at [31] stated: "It is often said that repudiation or fundamental breach - in the sense of breach of a condition or breach of another term or terms which is so serious that it goes to the root of the contract, and thus deprives the other party of substantially the whole benefit of the contract (Federal Commerce & Navigation Co Ltd v Molena (1979) AC 757 at 779) - entitles the innocent party to rescind the contract and sue for damages for loss of the bargain." In Progressive Mailing House Mason J also stated at [36] the following: "36. The appellant's next submission is that the evidence does not justify the conclusion that the appellant had demonstrated that it would or could no longer perform its obligations under the Memorandum of Lease or that there had occurred a fundamental breach entitling the respondent to rescind and recover damages for loss of bargain. In support of this submission the appellant points out, correctly, that repudiation of contract is a serious matter that is not to be lightly inferred and that neither a breach of a covenant to pay rent nor a breach of a covenant to repair, without more, constitutes a breach of a fundamental term, or amounts to a repudiation of the lease. 38. … What needs to be established in order to constitute a repudiation is that the party evinces an intention no longer to be bound by the contract , (Shevill, at pp.625-627). Likewise, the primary judge's finding does not amount to a finding that there was a fundamental breach of contract in the sense that the party at fault, though wishing to perform the contract, was guilty of such default in performance that the breach went so much to the root of the contract that it made commercial performance of it impossible."
21. In DB Homes Australia Pty Limited v Kes [2019] NSWCATAP 221 an Appeal Panel stated at [45]: 'Repudiation of a contract occurs when a party breaches a fundamental or essential term of the contract; or there was a sufficiently serious breach of a non-essential term of the contract; or a party demonstrates an unwillingness or inability to render substantial performance of the contract and the innocent party elects to accept the repudiation and treat the contract as having ended: Koompahtoo Local Aboriginal Land Council & Anor v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115'
22. I have stated that the contract was in a 'simple' form. It did not permit the builder to suspend the progress of the building work in certain defined situations. It required the builder to complete the work by the end of April 2022. The evidence is clear that the builder stopped work because he was unable to reach an agreement with the owners about payment disputes. The contract did not allow it to do that. I find that by stopping work and taking action to remove its equipment from the site so that it could work elsewhere, the builder both evinced an intention no longer to be bound by the contract, in that it renounced its obligation to proceed with due diligence and to complete the work by the end of April, and showed that it intended to fulfil the contract only in a manner substantially inconsistent with its obligations and not in any other way, in that it would only proceed with the work if the owners capitulated to its payment demands. The conduct of stopping work and taking action to remove its equipment from the site so that it could work elsewhere also fits the description of an unwillingness to render substantial performance of the contract, as referred to in the quote from DB Homes Australia Pty Limited v Kes.
23. For the reasons that are provided above, I find that the builder did repudiate the contract by stopping work and taking action to remove its equipment from the site so that it could work elsewhere and that the owners by their solicitor's letter dated 1 June 2022 accepted the repudiation of the contract and terminated it. As a result the owners are in accordance with the authorities cited above entitled to damages.
24. The owners claim damages in the following categories: 1. Completion of the building work; 2. Rectification of defects; and 3. Delay by the builder in completing the building work.
25. I will only deal with these claims that the owners referred to in the opening of their case. I note that the owners did not claim for over payment as referred to by their expert in his report. I will not deal with that claim.

Damages for completion of building work

1. At the hearing the owners state that they claimed $86,000.00 in completion costs.
2. The owners' expert states at 4.11 of his report: 'I have been supplied with a bill of accounts that the applicant has paid towards completing the works that was originally within the head contractor scope of works. No bill of quantities was supplied but tax invoices, text messages and emails were supplied which justify costs borne by the applicant which total $240,047.00.'
3. At 4.14 of his report the owners' expert states: 'It is my opinion that the builder has forced the homeowner to spend ($304,347.00 - $214,300.00) $90,047 over and above the contract obligations by the building contractor to complete the project.'
4. The builder's experts state at 5.3: 'Therefore the contractor would not be liable to compensate to the owner for the additional spending to finish their house renovation after the contract was terminated.'(emphasis added)
5. This is a legal conclusion which I find is beyond the scope of the builder's experts' expertise. It also amounts to advocacy on the part of the builder's experts. Otherwise the builder's experts' do not offer an opinion about the additional cost expended by the owners to complete the contract works.
6. As I have stated above the applicable principle is that the owners are to be placed in the same situation with respect to damages, as if the contract had been performed. In addition the builder is to be given a credit for that part of the contract sum that has not been paid by the owners. The approach stated by the owners' expert at 4.14 of his report differs from the applicable principles that I have referred to and is not justified.
7. The evidence is that the contract sum was $214,300.00. The owners' expert acknowledges that there was a variation of $2,579.00 for additional engineering and a variation for an increase in the electrical scope of works of $9,000.00. Refer 4.9 and 4.10 of the owners' expert's report. I reject these paragraphs. At page 12 of exhibit A the owners state they signed a variation for $11,800.00 on 10 March 2022. Refer, also page 316 exhibit A. I will proceed on the basis of the owners' concession that they signed a variation for $11,800.00. I therefore calculate the contract price to be $214,300.00 plus variations of $11,800.00 = $226,100.00. I find that the owners paid the builder a deposit of $64,300.00. There was therefore a balance of $161,800.00 remaining to be paid by the owners had the works proceeded to completion under the contract. I find based on the owners' expert's report that $240,047.00 was spent in completing the works. To be placed in the same position as they were in before the contract was terminated, the owners are entitled to damages of $78,247.00 ($240,047.00 - $161,800.00).
8. In their submissions to me the owners referred to pages 280, 281 and 328 of exhibit A. Pages 280 and 281 are spreadsheets. There is no indication of who prepared them or in what circumstances. At page 280 there is an untitled set of figures which are stated (by the owners) to be completion costs. At page 328 there is a summary page of invoices/receipts which relate to 'Remediation & Completion' which are similar to, but not identical the figures at page 280. There is no indication of what is a remediation cost and what is a completion cost, although it would seem that most are completion costs. I prefer the owner's expert's calculation of completion costs as it was carried out by an expert for inclusion in a report that was to be tendered in the Tribunal. The figures in pages 280, 281 and 328 are unexplained as to who prepared them, and the methodology used in their preparation. On that basis, I have not taken these figures into account.
9. I have not accepted the figure of $312, 096.65 referred to as the cost of having the project completed in 5.3 of the owners' expert's report because it has not been explained, conflicts with 4.13 and 4.14 and has no obvious explanation.
10. For the reasons set out above I will find that the owners have sustained damages of $78,247.00 in completing the works following the termination of the contract.

Defective work

1. The owners' expert states at 5.1: 'Based upon my assessment of the site, I confirm there are defecting building works within the external face brickwork which form part of the builder's responsibility as they carried out this piece of work prior to being terminated.'
2. Unhelpfully, the builder's expert does not give a quantification of the value of rectifying the defective building works in the conclusions section of his report.
3. The owners have referred me to page 281 of exhibit A which refers to: 1. Rear garden remediation which has been estimated at $12,590.00 by their expert; and 2. Kitchen window/door brickwork remediation which has been estimated at $5,940.00 by their expert.
4. I have also been referred to the last page of exhibit B which is an agreement by the experts to $11,000.00 in connection with the rear garden remediation.
5. The kitchen window/door brickwork remediation has not been agreed by the experts as indicated at page 4 of the conclave report.
6. There is little clarity regarding the precise identification of this defective work in the owners' experts report. At best it is on page 4 of exhibit B from the fourth item from the top to the seventh.
7. The builder's experts clarify the issue at 4.15 of their report where they state: 'The cost to rectify the defective brickwork is $5940 as per the entry in the document NCAT Financials'
8. On the basis of the agreements by the parties' experts I will find for the owners in the sum of $16,940.00 being the cost to complete the defective building work.

Damages for delay by the builder in completing the building work

1. The contract provided that the builder was to complete the building work by the end of April 2022. This aspect of the claim is the owners claim for damages for breach of contract, namely that the builder did not fulfill the contractual as regards completion.
2. I have made a number of references to the short form nature of this contract. The contract did not provide for extensions of time. As a result the builder bore the risks of delay to the works. I have been referred by the builder to its claims for extensions of time for inclement weather. The builder had no right under the contract to claim, or receive an extension of time for weather delays.
3. In final submissions the builder referred me to specific instances where he submitted that the owners delayed the completion of the works. In its cross application the builder has also referred to delays. I will consider those matters to ascertain whether owner's delays prevent them from claiming delay damages in whole or part. The builder has raised delays to the progress of the works being caused by a change in the structural engineer, difficulties with the electrical and joinery subcontractors and rain. Rain must be disregarded for the reasons stated above and because rain has nothing to do with an 'owner' caused delay.
4. So far as a change in the structural engineer is concerned, the builder's evidence deals with this at [30] of his affidavit alleging a delay from 28 February to 6 March.
5. The owners' position in their response to the Counterclaim at page 1195 of exhibit A is: 'We agree that our decision to use our own structural engineer did cause some initial delay in the start of the engineering work until we signed off Archilabs' quote of $2579 for the engineering work on 5/03 2022. We also fail to see how the delay in engineering work prevented any other work from being completed as other demolition work was still going ahead and areas upstairs were unaffected,'
6. I find that because of the owners' evidence conceding this delay, the builder has been successful in establishing an owner caused delay in connection with the change of the structural engineer.
7. The builder's evidence in connection with the electrical subcontractor is at [29] - [35] of his affidavit. He states that the electrical subcontractor he engaged withdrew from the job on 23 February because of interference from the owners and also because the electrical subcontractor was concerned that the owners would not pay for extra work. The builder states that there was a two week delay in obtaining a new electrical subcontractor.
8. The owners agree that there was a delay whilst the builder obtained a new electrician but states that they were not the cause of the delay.
9. I accept the builder's evidence as it had the best means of communicating with and receiving communication from the electrical subcontractor. I find that the evidence, including the owners' evidence conceding the delay itself, the builder has been successful in establishing an owner caused delay in connection with the electrical subcontractor,
10. Th evidence concerning the joinery subcontractor is at [55] - [58] of Mr Jeong's Affidavit. Mr Jeong's evidence is that the joinery subcontractor withdrew from the work on 25 March because one of the owners was being unreasonable, demanding, and difficult to work with and returned to site on 8 April. The owners' response to this evidence is more in the nature of submission and commentary and of no evidentiary value. I accept the builder's evidence as it had the best means of communicating with and receiving communication from the joiner. As such the builder's evidence is the only evidence on this issue.
11. I find that the builder has been successful in establishing that the owners caused delay to the progress of the work and in all probability the completion date. I find that the: 1. structural engineering delay was from 28 February to 6 March, 2. electrical subcontractor delay was from 23 February to 10 March, and 3. joinery delay was from 25 March - 8 April.
12. I find that the structural engineering delay was subsumed by the electrical subcontracting delay. I also find that the delays found amount to 31 calendar days. As a result of finding that the owners caused 31 calendar days to the progress of the works, I also find that the probability is that this delay caused a delay to the date by which the builder was to complete this work. The consequence of this is that I find that the owners are unable to claim damages for late completion in a period of 31 days from the end of April when their own actions prevented the builder from completing the work in the time stated in the contract. The result is that I will not allow the owners to recover general damages for delay in the month of May.
13. I find that the owners are entitled to late completion damages from 1 June when the works were to be completed until the owners completed the works. The evidence of the costs of completion indicate that the completion works were being carried out into September 2022 refer page 330 of exhibit A. The builder has not made a case that the owners failed to mitigate their damages by not completing the works before August or some other time.
14. The owners also refer to page 280 in connection with their damages claim under this heading. Relevant receipts are at page 411 of exhibit A. The total claimed is $12,670.00.
15. The claim is made up of eight weeks rent at $1,395.00 per week from 1 May to 25 June, total $11,160.00. In accordance with the reasons set out above, I will not allow rent for May. The owners' rent claim is therefore reduced by 4 weeks 3 days rent, $6,178.00. The amount allowed is $4,982.00.
16. The owners claim rental costs for a taxi box per month in the months of May and June, total $1,090.00. In accordance with the reasons set out above, I will not allow rent for May. The owners' rent claim is therefore reduced by half, $545.00. The amount allowed is $545.00. The owners' evidence at page 430 of exhibit A confirms this deduction.
17. The owners claim the cost of storing a piano at $35.00 per week from 16 June to 19 August, total $420.00. I will allow the total of this item of claim. Refer page 411 of exhibit A.
18. I find that on the evidence available, such as it is that the owners have established that the completion work extended until October 2022, refer page 360. As a result I accept that they are entitled to damages for late completion of the building work in the sum of $5,947.00 as referred to above.
19. I have found for the owners in the sums of: 1. $78,468.00 for the cost of completing the works; 2. $16,940.00 for the costs of rectifying defective work; and 3. $5,947.00 as damages for late completion of the works.
20. The total found in favour of the owners is therefore $101,355.00.

The builder's application - HB 23/02116

1. The builder's application is in the following terms: The home-building contract was signed and entered into on 16 February 2022. The contract price was $214,300, with a deposit of 30% ($64,300). The second instalment of $64,300 was due on the delivery of the cabinets specified in contract. The respondent has paid the initial deposit. Variation of the scope of the work was signed off by both parties on 10 March 2022. However, due to the variation of the scope of work, the 30% deposit was not enough to cover the additional costs for two months of labour and due to delays from tradesmen pulling out. A request for a portion of the second instalment was made by email on 6 April to cover the cost of the deposit for the joinery ($30,000), wood flooring ($20,000) and materials needed to cover the work ($5,900), totalling $55,900, with the remainder of the instalment to be paid when the joinery delivered the cabinet. This was then requested again on 9 April in person but the payment was never made. Delays in schedule and dispute over the scope of the work caused a breakdown in relations between the parties. The delays to the schedule were caused by a number of factors and not within Archi Lab's control. The first delay was caused by a change in the structural engineer, as requested by the respondent in February. Work could only begin after the approved drawing was received (28 February) and after the respondent signed off on the updated quotation. The second and third delays were caused by the electrician and the joinery, Space J, respectively. The tradesmen were reluctant to continue working with the respondent, citing the respondent's increasing demands beyond the agreed scope of work. All the tradesmen reported feeling uncomfortable due to the micro-managing of the respondent, who came directly onto the site in order to ask for additional work. Due to the respondent's behaviour, the joinery requested an advance deposit for their work of $30,000. his was one of the reasons why Archi Lab then requested a portion of the second payment ahead of the contract schedule. The biggest delay was due to unforeseen heavy rain which impacted outdoor work, including installation Archi Lab's request for further payment in order to follow the varied scope of work was reasonable. In refusing to pay and refusing further work to be completed, the respondent has repudiated the contract. Archi Lab seeks payment for work done and inclusive of profit margin. In the alternative the applicant has provided services to the respondent. The respondent has accepted and obtained the benefit of the said services performed by the applicant. By reason of the respondent's failure to pay for the service provided, the respondent has been unjustly enriched. The applicant claims restitution for the services provided on a quantum meruit basis.'
2. From the above material, I discern the builder's claims to be: 1. In connection with a variation stated to have been signed on 10 March 2022; 2. About the payment of a further deposit or the second payment due under the contract; 3. Delays to the progress of the works being caused by a change in the structural engineer, difficulties with the electrical and joinery subcontractors and rain; 4. Repudiation by the owners for non payment; and 5. For a quantum meruit.
3. At the hearing the builder stated that the amount claimed was $70,000.00 made up $50,000.00 for construction work cost and $20,000.00 for expert and legal fees.
4. There are two threshold issues that affect the builder's claim. Both relate to non-compliance with the Act.
5. The first issue is section 10 of the Act which states: '10. A person who contracts to do any residential building work, or any specialist work, and who so contracts - '1(a) in contravention of section 4 (Unlicensed contracting), or (b) under a contract to which the requirements of section 7 apply that is not in writing or that does not have sufficient description of the work to which it relates (not being a contract entered into in the circumstances described in section 6(2)), or (c) in contravention of any other provision of this Act or the regulations that is prescribed for the purposes of this paragraph, is not entitled to damages or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, and the contract is unenforceable by the person who contracted to do the work. However, the person is liable for damages and subject to any other remedy in respect of a breach of the contract committed by the person.'
6. I find that the builder was in breach of both ss4 and 7 of the Act in that the builder did not hold the appropriate licence to carry out the contract work and the form of the contract which it prepared for the signature of both parties did not comply with the requirements of s7 of the Act. As a result the builder is unable to claim damages or any other remedy in respect of a breach of contract committed by the owners. However the authorities state that the builder will be able to make a claim in restitution or unjust enrichment in connection with the work that it undertook. The builder refers to claims of these types as a quantum meruit claim.
7. The next threshold issue that confronts the builder are ss92 and 94 of the Act given that the builder admits that he did not provide the owners with HOWI insurance under s92 of the Act. Sections 92 and 94 of the Act state: '92. A person must not do residential building work under a contract unless - (a) a contract of insurance that complies with this Act is in force in relation to that work in the name under which the person contracted to do the work, and (b) a certificate of insurance evidencing the contract of insurance, in a form approved by the Authority, has been provided to the other party (or one of the other parties) to the contract. Maximum penalty - 1,000 penalty units in the case of a corporation and 200 penalty units in any other case. (2) A person must not demand or receive a payment under a contract for residential building work (whether as a deposit or other payment and whether or not work under the contract has commenced) from any other party to the contract unless - (a) a contract of insurance that complies with this Act is in force in relation to that work in the name under which the person contracted to do the work, and (b) a certificate of insurance evidencing the contract of insurance, in a form approved by the Authority, has been provided to the other party (or one of the other parties) to the contract.' '94 (1) If a contract of insurance required by section 92 is not in force, in the name of the person who contracted to do the work, in relation to any residential building work done under a contract (the uninsured work), the contractor who did the work - (a) is not entitled to damages, or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, in relation to that work, and (b) is not entitled to recover money in respect of that work under any other right of action (including a quantum meruit). (1A) Despite section 92(2) and subsection (1), if a court or tribunal considers it just and equitable, the contractor, despite the absence of the required contract of insurance, is entitled to recover money in respect of that work on a quantum meruit basis.'
8. I interpret the above sections of the Act to mean that despite the builder's ability to claim in restitution/quantum meruit even when it is in breach of ss4 and 7 of the Act, because of its failure to provide insurance under s92 the builder is not entitled to recover money under a quantum meruit unless I considers it just and equitable for it to do so.
9. The builder has not formally sought a 'just and equitable' order. Because it was self-represented at the hearing and its evidence provides a basis for a just and equitable order, I will consider and determine whether it is just and equitable for it to recover money for the residential building work the subject of its claim on the basis of a quantum meruit..
10. The builder's evidence is that its director told the owners that it did not have home warranty insurance and that was a reason why its cost or price for carrying out the work was lower than average and that the owners accepted that explanation. The owners deny that the builder's director told them that it did not have insurance. The builder's evidence is also that its director told the owners that that he was not a licensed builder. The owners do not address this evidence directly. They have stated that having regard to Mr Jeong's communications with them, they assumed that he was properly licensed.
11. In a number of decisions in this division of the Tribunal, I have considered these sections of the Act, the relevant authorities and the principles that apply to the consideration of whether recovery on a quantum meruit basis is just and equitable. The decisions are, Jason and Michelle Zammit trading as Zammit 's Quality Constructions v Saul Markunsky and Shereen Markunsky [2015] NSWCATCD 21, Urban Constructions (NSW) Pty Ltd v Brett Shearer and Bronwyn Shearer [2015] NSWCATCD 9 and Elizabeth Jane Thompson v Andrew Chapman [2015] NSWCATCD (Unreported, 9 June 2015).
12. Section 94(1A) of the Act was considered by Barrett J in Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprise Pty Ltd [2004] NSWSC 273. At [43] - [61] of his judgement his honour considered the 'just and equitable criterion under section 94(1A)' of the Act and the factors bearing upon the just and equitable assessment.
13. In considering the just and equitable criterion, Barrett J. referred to a number of authorities which establish that the words just and equitable are of wide significance. His honour referred to a passage of the judgement of Sheller JA in Stephenson v State Bank of New South Wales (1996) 39 NSWLR 101 where his honour quoted from a decision of the High Court in Talga v MBC International Limited (1976) 133 CLR 622. The passage quoted was: 'Stephen, Mason and Jacobs JJ dealing with the issue raised for the Court by the Banking Act 1974 of whether it was just and equitable that a transaction should be treated as valid, said: 'The court will have before it an existing transaction replete with all its surrounding facts and circumstances and in their light will determine what is just and equitable. In doing so it will certainly be exercising a wide discretion that this is a commonplace of the curial process; the court will be bound to act judicially, exercising its discretion by reference only to such considerations affecting the transaction as, on an examination of the legislation, may be seen to be material to the decision which it is called on to make. Irrelevant matters, matters such as the plaintiffs instanced in the course of argument, which have no rational connection with the policy of the regulations but would be expressive only of the personal predilections of the Court, cannot be allowed by it to play any part in its decision.'
14. Barrett J. observed that this approach was endorsed by Campbell J in Sullman v Sullman [2002] NSWSC 169.
15. At paragraph 49 of his judgement Barrett J. stated in connection with section 94(1A) of the Act: 'The inquiry directed by the statute is therefore, in effect, whether the surrounding circumstances are such as to justify the creation of a right and an obligation as to the payment of the sum separately determined to represent fair remuneration. The Act, as I see it, does not attempt to control quantification. That is left to the general principle imported by the expression "quantum meruit". The Act is concerned with factors influencing a decision whether, in the particular circumstances in which the court finds the parties, it is fair that one receive the quantum meruit sum and the other pay it.'
16. The decision of Hall J in Pender v Robwenphi Pty Limited & Anor [2008] NSWSC 1144 is important. In that case Hall J stated, commencing at [41] in connection with the decision of Barrett J in Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprise Pty Ltd: 'In relation to the analysis undertaken by Barrett J in Eddy Lau Constructions (supra), the following propositions may be derived from the judgment:- (1) The words "just and equitable" are of the widest significance and involve evaluations of questions of fact. (2) In exercising the wide discretion under the provision, a Court or Tribunal is to have regard to considerations affecting the particular transaction as are material to the decision to be made. Irrelevant matters are those that have no rational connection with the policy of the statutory requirement. (3) The statutory discretion under s.94(1A) must be exercised judicially in light of the whole of the circumstances surrounding the relevant subject matter. (4) Inquiry is directed to ascertaining whether the surrounding circumstances are such as to justify the creation of a right and an obligation as to the payment of the sum separately determined to represent fair remuneration. (5) The Act is concerned with factors influencing a decision whether, in the particular circumstances in which the Court finds the parties, it is fair that one receive the quantum meruit sum and the other pay it. It is apparent from the analysis by Barrett J in Eddy Lau Constructions (supra) that the conduct of the party in breach is an important matter for consideration. In that respect, ignorance or oversight of the statutory requirement under the Act stands in marked contrast to a contravention that is wilful or deliberate. In the present case, the determination of the Tribunal was, in effect, that the first defendant's contravention was an inadvertent one, it being a company accustomed to undertaking commercial and industrial work and not home building or renovation work. The Tribunal accepted, as it was entitled to, the evidence given which explained the first defendant's ignorance or inadvertence. These were matters of fact for the Tribunal's determination. In the circumstances of the present matter, on the evidence there was no identification of any particular form of disqualifying conduct by or on behalf of the first defendant that was material to be taken into account in determining what was "just and equitable". The Tribunal was also entitled to have regard, as Barrett J did in Eddy Lau Constructions (supra) to the fact that, if the first defendant was not granted relief under s.94(1A), the plaintiff would receive the benefit of the work undertaken by the first defendant without having to pay for that work and for the materials supplied. I will return to this issue of "benefit" below. Finally, there was no factor establish(ed) that resulted in any detriment flowing to the plaintiff by reason of the particular breaches or contraventions by the first defendant. Again, such matters involve a factual determination for the Tribunal.'
17. I will have regard to the above passages from the relevant authorities in considering the issue of whether or not it is just and equitable that the builder will be entitled to recover on a quantum meruit for the work it alleges that it carried out for the owners and has not been paid for.
18. The builder's evidence gives rise to an inference that it knew that it was required to provide HOWI, but did not provide it. The facts and evidence that I have referred to indicates that the builder prepared a non-compliant contract, contracted to carry out work that he was not licensed to do and failed to provide HOWI when he knew that he was obliged to. His explanation for not providing HOWI is that he told the owners that HOWI would not be provided and they agreed. The owners deny that such an agreement was forthcoming. Because of the owners' denial of the relevant conversation I am not persuaded that the builder did in fact inform the owners that HOWI would not be provided. When being cross examined the builder was asked whether he told the owners in writing that HOWI would not be provided. The builder stated that he sent an email explaining the situation but when asked, he was unable to refer to or identify the email. I take this evidence to be that the builder has without a proper basis grasped at an opportunity to bolster his evidence about informing the owners that HOWI would not be produced. This reinforces the fact that I am not persuaded that the builder did in fact inform the owners that HOWI would not be provided.
19. I find that before entering into the contract the builder knew it did not have the appropriate licence to carry out the building work, that it knew that it was required to provide HOWI and that it knew that it was not providing that insurance to the owners. I also find that the builder prepared a contract for the work the subject of these proceedings which did not comply with the requirements of section 7 of the Act. I find that these failures to comply with the act were not inadvertent, except perhaps preparing a contract that did not comply with s7 of the Act. For these reasons, I do not consider it to be just and equitable to allow the builder to recover on a quantum meruit.

Quantum meruit

1. If I am wrong about whether or not it is just and equitable for the builder to be able to claim on a quantum meruit, I find that in any event the builder has not presented evidence which proves its case for $50,000.00 00 for construction work costs.
2. In the section of their report titled 'Assessment of the value of works performed by the contractor' the builder's experts state: 'We have reviewed the Bill of Quantity document prepared by the owner appointed witness Emilio Calandra and kept the cost review in line with this document for meaningful comparison. The assessment of the building cost was carried out in the following method which we believe appropriate for the matter being heard. This has been demonstrated by reviewing the Estimate - Bill of Quantities against the scope of works outlined within the contract. Each entry has been verified by means of reviewing the contract documents and survey of the records provided by both parties. The contractor was also interviewed to verify the details of the work performed. Our finding for the value of works carried out by the contractor amounts to $95,078.86. The installation of sliding doors were not defective works but variation to the contract due to change of mind by the owner. In our assessment, the cost to supply and install two sets of sliding doors is $18,700. The cost to rectify the damages to the rear yard caused by spray painting is $12,590 as per the cost analysis prepared for the owners. The cost to rectify the defective brickwork is $5940 as per the entry in the document NCAT Financials. This leads to the net value of the work as $76,998.86 performed by the contractor prior to his departure.'
3. The builder's experts state that in their opinion work to the value of $76,998.86 has been performed.
4. This evidence was superseded by the experts' conclave. An expanded list of work that the builder's experts referred to at Appendix B of their report in exhibit 1, is considered on page 1 of appendix A of exhibit B in the 'Revised sum as per conclave' column and stated to be either $62,125.88 or $67,120 73. As the experts do not identify the column which they calculated, I will make an assumption that the builder's expert prepared the column which stated that work to the greater value of $67,120.73 had been carried out.
5. If that is the builder's quantum meruit value of the work carried out by the contractor, I find that two adjustments need to be made. First, an allowance for defective work should be made. As stated by Barrett J in Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprise Pty Ltd at [82] and [87], the correct approach in valuing a quantum meruit is to allow a deduction for the rectification of defects. I have found that the cost of rectifying defects to be $16,940.00. This reduces the builder's quantum meruit valuation to $50,180.73. Secondly, it is common ground that the owners have paid the builder $64,300.00 which I find extinguishes the builder's quantum meruit claim. I find that the builder has not provided evidence to substantiate its quantum meruit claim. If anything the builder has been paid more than the value of the work it carried out, after making an allowance for defective work.
6. The builder's application HB 23/02116 is dismissed.

Costs

1. In the event that a party wishes to bring a costs application, 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 or they receive the application to lodge in the Tribunal and serve on/give to the costs applicant its or their 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 papers lodged 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. Registrar

Amendments 11 August 2023 - Formatting amendments. 03 November 2023 - Correction of year in [54]. 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: 03 November 2023