Yeh v Bazdaric Homes Pty Ltd; Bazdaric Homes Pty Ltd v Yeh

Summary of the Decision

1. The Homeowners' complaints against the Builder concerned the Builder's claims for invoiced amounts, the Homeowners responses that the work was incomplete and that the invoiced amounts were not due, and that the Builder owes the Homeowners money. The chief issue concerned the connection to the sewer. The controversy concerning the sewer arose because the pipes from the property to the main sewer connection were not high enough to enable a gravity fed system to operate.
2. On the other hand, the Builder's case was that the work required had achieved practical completion on 6 December 2022 when the house was complete, except for the sewer connection.
3. The Tribunal identified 15 defects for determination. The Tribunal noted at [80] that both parties preferred the Tribunal to make a work order as opposed to an order for payment of money. The Tribunal agreed that the preference imposed by s 48MA of the HB Act should not be displaced.
4. In the result, the Tribunal made an order for work to be undertaken as described in appendix A to the Decision.
5. From [81] the Tribunal dealt with each defect in turn. Item 1 concerned flashing to the canopy roof and the Tribunal decided that this item should be included in the scope of works set out in appendix A.
6. Item 2 concerned subfloor damp and mould growth. The Tribunal accepted that there was a defect and preferred the form of work order proposed by Mr Bullivant (the expert put forward by the Builder). Mr Bullivant's proposal found its way into the work order.
7. Item 3 concerned floor tiling in bathroom one and the issue was whether the fall was adequate. The Homeowners were unsuccessful and the Tribunal found that neither a work order nor a money order was justified.
8. Item 4 concerned floor tiling in the laundry. The Tribunal found that it was appropriate to include in the work order a scope of works proposed by Mr Bullivant.
9. Item 5 concerned floor tiling in the powder room. The Tribunal found that no additional work was warranted.
10. Item 6 concerned floor tiling in the ensuite. The Tribunal found that it was not warranted to include this item in the work order.
11. Item 7 concerned floor tiling in bathroom two. Again, the Tribunal did not include this item in the work order.
12. Item 8 concerned floor tiling in bathroom three. The Tribunal found it appropriate to include in the scope of work the work proposed by Mr Bullivant.
13. Item 9 concerned ceiling insulation. The Tribunal included in the work order the scope of works proposed by Mr Bullivant.
14. Iitem 10 concerned electrical wiring in the ceiling cavity. Again, the wording for work proposed by Mr Bullivant was adopted by the Tribunal.
15. Item 11 concerned uneven timber flooring. The Tribunal found that the evidence did not justify a conclusion that there was defective work constituting a breach of the warranties provided by the HB Act. However, the Tribunal separately considered the position with respect to the hallway on the first floor and found it appropriate to include rectification concerning that item in the proposed scope of works.
16. Item 12 concerned the sewer connection. At [109] the Tribunal identified the issues for determination. The first was whether the Builder was required to make the connection. The second was whether the Builder should be considered responsible for the failure to make the connection. The third was whether the Homeowners mitigated their loss. The fourth issue was what amount, if any, the Homeowners should be awarded as damages.
17. At [110] and [111] the Tribunal referred to the Builder's quote (which included sewer and stormwater connections) and the contract scope of works which included an item requiring the Builder to "design, supply and construct new PVC sewer pipe with I.O to existing sewer main."
18. At [112] the Tribunal found that the Builder was obligated to construct in accordance with the plans and that the plans had been prepared by an architect who was related to Mr Yeh. The Tribunal found that the architect had set the level for the concrete slab "being a level which was too high to enable a gravity fed connection to be made to an existing sewer connection". The Tribunal also noted that the scope of works included a provision to the effect that it was the responsibility of "the contractor to check and verify all dimensional set out, and refer all queries to architect prior to taking any action".
19. At [113] the Tribunal referred to the Erosion and Sediment Control Plan which contain words to similar effect, namely that the contractor must verify all dimensions and existing levels prior to commencement of the work.
20. At [114] the Tribunal found that it was not until after the slab was poured that the Builder discovered the difficulty in making a gravity fed sewer connection. The Tribunal found that the Builder failed to comply with the obligation summarised in paragraphs [112] and [113] and such failure was the "first reason why there was a breach of contract by the Builder in relation to the sewer connection."
21. At [118] the Tribunal found that the failure to consider the ability to make a gravity fed sewer connection prior to pouring the slab constituted a breach of s 18B(1)(a) of the HB Act and the corresponding contractual provision.
22. At [125] the Tribunal noted that the Homeowners had arranged for a sewerage connection to be completed at a cost in excess of $100,000. The Tribunal stated that none of the invoices for that work were addressed to the Homeowners and bank records show that none of the payments for that work were made by the Homeowners.
23. At [126] the Tribunal found that it was not necessary for that work (ie. the work undertaken and described in [125] to be done when the "use of a pump was required by Sydney Water and was the quickest and cheapest option." The Tribunal found that it was not reasonable to incur a cost of more than $100,000 to achieve a sewer connection of a kind which the Homeowners decided they wished to have. At [126] the Tribunal found that there are "exceptional circumstances when more than $100,000 is spent instead of adopting the method required by the by Sydney Water which an experienced expert said would provide the quickest and cheapest option." The Tribunal then stated that applying the principles set out in the judgment of the High Court in Bellgrove v Eldridge [1954] HCA 36 it determined that the Homeowners were not entitled to recover damages of any excess of $100,000.
24. At [127] the Tribunal stated that the Homeowners are not entitled to recover the actual cost of making a sewer connection: only the reasonable cost. The Tribunal stated that the joint report of Mr Bullivant and Mr Xue (the Homeowners' building expert) agreed that a reasonable amount to allow for this item would be $41,757. At [128] the Tribunal stated that by reason of s 18BA(1) of the HB Act, the Homeowners were obligated to mitigate their loss. That section provides: 18BA Duties of person having benefit of statutory warranty (1) Breach of a statutory warranty implied in a contract constitutes a breach of the contract and accordingly-- (a) a party to the contract who suffers loss arising from the breach has a duty to mitigate their loss, and (b) the onus of establishing a failure to mitigate loss is on the party alleging the failure.
25. Further at [128] the Tribunal referred to the statements made concerning mitigation in the judgment in Banco de Portugal v Waterlow and Sons [1932] AC 452. The Tribunal found that the Builder had met the onus of proof in establishing that the use of a pump was required by Sydney Water and that the use of a pump was the quickest and cheapest option.
26. At [129] the Tribunal found that the evidence did not support any finding that the Homeowners have suffered loss. The invoices were not made out to them and none of the payments for those invoices were made by them. The Homeowners have not provided any witness statement, statutory declaration or affidavit and the evidence of Mr Yeh (the son) was that he had incurred that cost. Mr Yeh was not a party to the proceedings, nor a party to the contract and nor was he an owner of the property entitled to the benefit of any statutory warranty.
27. At [131] the Tribunal made a number of findings of fact which may be summarised as follows: 1. There was a breach of contract and a breach of statutory warranty by the Builder in failing to check the ability to make a sewer connection before the slab was poured. This involved checking the plans prepared by the architect. 2. Sydney Water required the use of a pump to make the sewer connection in the circumstances of this case. This was the quickest and cheapest option. 3. The Homeowners decided to have a different solution costing $100,399.99. 4. The reasonable cost of rectification was $41,757. 5. The solution of the Homeowners was neither necessary nor reasonable and in choosing that solution the Homeowners failed to mitigate their loss. 6. As the solution was achieved at no cost to the Homeowners they have suffered no loss.
28. At [132] the Tribunal found that the Homeowners are "not considered to be entitled to damages" for the item concerning the sewer.
29. From [141] the Tribunal considered the claim concerning unpaid invoices. The Tribunal considered the claim for invoice 1845 dated 16 December 2022 for $81,327.50 which the Tribunal described as the final progress claim payable when the house was complete and ready to occupy [144]. The Tribunal found that none of the 15 items considered prevented the house from being occupied other than the sewer connection (item 11). The Tribunal found that the sewer connection was connected on 17 August 2023 and that that date was the date that this invoice (for $81,327.50) should have been paid. From that date interest accrued on the amount unpaid.
30. From [145] the Tribunal dealt with the second invoice numbered 1846 dated 6 December 2022 for $7,703. At [148] the Tribunal stated that there was no evidence as to why this invoice is not payable and therefore it was payable, by the terms of the contract, within five business days of 6 December 2022.
31. At [149] the Tribunal found that the Builder is entitled to be paid $89,030.50 (being the addition of $81,327.50 and $7,703.00).
32. From [150] the Tribunal dealt with the claim for interest on unpaid invoices. In the paragraphs that follow the Tribunal set out in some detail how interest should be calculated and concluded at [157] that the amount due for interest totals $9,300.64. The Tribunal stated that the sum of $98,331.14 is thus the amount to which the Builder is entitled to be paid by the Homeowners. In addition, the Tribunal found that the Builder is entitled to be paid $33.98 for each day after the date of these orders up to and including the date of payment.
33. From [159] the Tribunal dealt with the liquidated damages claim.
34. At [177] the Tribunal found that the date when the work should have been completed was 8 July 2022 and that the date of practical completion was 17 August 2023. The Tribunal found that the delay from 6 December 2022 to 17 August 2023 was caused by the act or omission of the Homeowners in insisting on the method of sewer connection that they preferred. The Tribunal found that the Builder was entitled to liquidated damages for the period from 8 July 2022 to 6 December 2022 and that the amount due on that account totalled $11,550. This is the amount due by the Builder to the Homeowners for the Builder's delay.
35. At [179] the Tribunal found that the Builder was entitled to be paid $98,331.04 and that the Homeowners are entitled to a payment of $11,550. The Tribunal made an order for the net amount due to the Builder ($86,781.04) to be made by the Homeowners to the Builder.

Summary of the Costs Decision

1. On 11 June 2024 the Tribunal published the Costs Decision and made orders as follows: 1. In the Builder's application the Homeowners are to pay the Builder's costs on the ordinary basis as agreed or as assessed. 2. In the Homeowners' application, the Builder is to pay 50% of the costs of the Homeowners on the ordinary basis as agreed or assessed.
2. The reasoning contained in the Costs Decision may be summarised as follows: 1. The Builders made a claim for costs on an indemnity basis based upon a Calderbank letter. 2. The Tribunal found at [26] that the focus of the Builder's application was that the Homeowners should be ordered to pay two invoices and interest and that the Builder was successful in relation to those claims. At [30] the Tribunal found that it was satisfied that the Homeowners should be ordered to pay the costs of the Builder's application on the ordinary basis, as assessed or agreed. 3. The Tribunal found that the issue of the sewer connection was both a substantial and a dominant issue and that in respect of that issue the Homeowners had failed. The Tribunal estimated that the sewer connection to have involved at least half of both the hearing time and the work carried out prior to the hearing. The Tribunal found that the Builder should not be ordered to pay any more than one half of the Homeowner's costs of their application on the ordinary basis as agreed or assessed.

Notice of Appeal lodged by Homeowners

1. On 20 May 2024 the Homeowners lodged a Notice of Appeal. By that notice the Homeowners sought the following orders: 1. The decision dismissing the Homeowners application for damages relating to the sewer connection and the order requiring the Homeowners to pay the Builder $86,781.04 be set aside. 2. Order 2 requiring the Homeowners to pay the Builder $33.98 per day be set aside. 3. The orders relating to costs be set aside and replaced by an order that the Builder pay the Homeowners costs. 4. The proceedings be remitted to the Tribunal for rehearing. In their submissions the Homeowners sought in the alternative judgment in their favour in such amount as the Appeal Panel determines. They also sought an order setting aside the determination that the Builder was entitled to payment of its final payment claim.
2. Attached to the Notice of Appeal marked schedule A are the grounds of appeal which are summarised in the following paragraphs.
3. Ground 1: the Tribunal erred in law in determining that no damages were established in respect of the breach of the Builder's obligation to design and construct a connection to the main sewer because of the absence of evidence of the cost of a cheaper alternative method than that actually undertaken by the Homeowners by reason that: 1. The Tribunal failed to or incorrectly apply the evidential onus in finding that the Homeowners were required to adduce evidence of the cost of an alternative method of connection in circumstances where the Homeowners had demonstrated loss by providing proof it had undertaken and paid for the connection following the refusal of the Builder to undertake the work. 2. The Tribunal should have found that it was the Builder who was obliged to and failed to adduce evidence of a failure to mitigate or as to the reasonableness of the alternative method of construction on which the Builder bore the onus of proof 3. The Tribunal erroneously applied in the consideration of the reasonableness of an alternative method of performance only one factor. That is whether or not the method was "cheaper" rather than, as the Tribunal was required to do as a matter of law, whether or not the alternative method of performance was in accordance with the contractual obligation, as effective as the system installed by the Homeowners and reasonable in all the circumstances. 4. Further, and in the alternative, the Tribunal erred in finding that the alternative method of the sewer connection as proposed by the Builder was "cheaper" or quicker as the Builder did not adduce evidence to support such finding. 5. The Tribunal erroneously found that the Builder established that the alternative method of the sewer connection as proposed by the Builder was "just as effective" or functionally equivalent to the method undertaken by the Homeowners by placing too much weight on an email sent by Matthew Parker dated 13 April 2022. 6. The Tribunal erroneously considered that Mr Parker was an "expert" in circumstances where it did not satisfy the requirement of the Tribunal for such opinion evidence and there were no grounds or facts provided for his opinion or an opportunity to cross-examine Mr Parker with respect to it. 7. The Tribunal failed to apply or incorrectly applied the principles for the determination of contractual damages arising from the failure to perform a contractual obligation rather than in respect of its rectification. 8. The Tribunal should have in applying the principles of damages resulting from the failure to perform work found the loss and damage suffered by the Homeowners to be the costs actually occasioned for the performance of the work or those agreed by the parties' experts as the reasonable cost of performance.
4. Ground 2: the Tribunal erred in law by failing to apply the principle that the Homeowners were entitled to performance of the contractual promise made by the Builder and that there is no issue of reasonableness in the insistence of performance of contractual promises and that the application of principles of loss in respect of the reasonableness of rectifying defective building work was the incorrect application of the legal test.
5. Ground 3: the Tribunal erred in law or in fact at law in determining that, in circumstances where despite evidence of payment for the construction of the sewer connection and where: 1. the Builder's sole director admitted in evidence that he was aware that the payment was on behalf of the Homeowners from sources other than the Homeowners; and 2. the payments had been made on behalf of the Homeowners by their son and related companies and ordinary principles of restitution would create an obligation to repay the monies paid on behalf of the Homeowners; the Homeowners had nonetheless not established that the Homeowners have incurred any loss or damage.
6. Ground 4: the Tribunal should have found, as a matter of law, the loss or damage arose on failure to perform the obligation ( to construct the sewer) and was measured either by the actual or, if evidence was adduced by the Builder, reasonable costs incurred.
7. Ground 5: the Tribunal erred in law or law and fact in reaching a determination that there was no loss or damage to the Homeowners because the payments were made by third parties for performance of the obligation breached by the Builder because such enquiry and determination: 1. did not arise from the evidence; or 2. was irrelevant to the determination of loss and damage; or 3. was not raised by the terms of dispute engaged in between the parties and in particular the Points of Claim, Points of Cross-Claim or defences to either; or 4. the person making or causing the payments to be made for performance of the relevant work was not cross-examined to the effect that it could be established it was a gift; or 5. as a matter of law, the payment by a third party does not affect the occasioning of the loss and damage or the liability for it.
8. Ground 6: the Tribunal did not have jurisdiction to award an amount in respect of the Builder's application. That is, a building dispute arising from the failure to pay a contractual claim on completion of the work on a date of 23 April 2023, as found by the Tribunal, which occurred after the claim had been filed on 17 April 2023. There being no jurisdiction to a building dispute involving a cause of action which had not yet arisen and where there was no amended claim in respect of the application.
9. Ground 7: the Tribunal failed to provide reasons as to why the work was complete within the meaning of the contract and the Builder was entitled to a final payment in circumstances where work orders were made, and no finding was made that: 1. there were minor defects or incomplete work; or 2. the Homeowners are entitled to possession of the property.
10. Ground 8: alternatively to ground 7 above, the work was not completed within the meaning of the contract by reason that work orders were still required to be made and the Tribunal erred in law in determining the criteria for completion in: 1. finding that the work was complete, and 2. finding that the Builder was entitled to its final payment where the work was not completed within the meaning of the contract.
11. Additionally, the Homeowners sought leave to appeal on the basis that aspects of the Decision were not fair and equitable and/or against the weight of evidence.
12. The Builder filed a Reply to the Homeowners' appeal. Essentially it disputed each ground of appeal. The substance of the Builder's submissions will be summarised subsequently in this decision.

Builder's Notice of Appeal

1. The Builder lodged a Notice of Appeal on 28 June 2024 by which the Builder appealed against the order requiring it to pay 50% of the costs of the Homeowners.
2. The Notice of Appeal contended that the Tribunal erred in a "House v King sense" by mistaking the facts or not taking into account a material consideration. The Builder contended that the Tribunal erred because the Tribunal found the conduct of the Homeowners might have been sufficient for the Builder to contend that there was disentitling conduct on the part of the Homeowners, but that issue was not considered as it was not raised by the Builder. The Builder contended that the issue was expressly raised by the Builder at [18] and [9] of the Builder's submissions.
3. The Homeowners have filed a Reply to Appeal, contending that the Builder's appeal should be dismissed and that the Homeowners should have the costs of the appeal paid by the Builder.
4. We will summarise to the necessary extent the response of the Homeowners subsequently in this decision.

Homeowners' submissions in support of their appeal

1. The following paragraphs summarise the Homeowners' submissions.
2. Ground 1: the Homeowners "take issue factually" with the following: 1. that Matthew Parker was, in fact, an "expert" as determined by the Tribunal at paragraph [20] and [126] of the Decision; 2. that the Builder established that by reason of whatever cost saving may have been achieved by a pump system that it was unreasonable to use a gravity fed system; 3. that the Builder proved on the balance of the evidence that the alternative proposed method, being the pump-out system was in fact acceptable either as a matter of the requirements of Sydney Water or as an equivalent solution as determined at paragraph [20], [124], [128] and [131] of the Decision; 4. whether as a matter of fact or law the Homeowners were required to adduce evidence of the cost of an alternative method of the Sewer Works as determined at [129] of the Decision; 5. whether the Tribunal was in a position to determine at paragraph [125] that the alternative pump-out method was cheaper to a degree that could justify the conclusion that a gravity fed system was unreasonable in circumstances where the Builder did not adduce any evidence to support such a finding; 6. whether the Tribunal erred by not considering the performance of the pump- out system in light of the contractual obligations, the effectiveness of the pump-out system versus the gravity feed system installed by the Homeowners and whether it was reasonable in all the circumstances; 7. the Tribunal concluded that the pump-out system was appropriate (without regard to the failure of the Builder to supply such a design) by placing too much weight on the email from Matthew Parker dated 13 April 2022 where it was conceded that it was not equivalent or just as effective as the gravity fed system (see [20] of the Decision); 8. whether the Tribunal erred in failing to apply the principles for the determination of contractual damages arising from the failure to perform a contractual obligation rather than in respect of its rectification. To that end, the Tribunal should have applied the principles of damages resulting from the failure to perform work and found that the loss and damage suffered by the Homeowners were to be the costs actually occasioned for the performance of the work, or those agreed by the parties' experts as the reasonable cost of performance.
3. The Homeowners contend that the Tribunal erred in concluding that Matthew Parker was an "expert" as he was neither independent nor briefed in accordance with the Tribunal's procedural direction 3 - expert evidence dated 23 February 2018 (the Expert Code).
4. The Homeowners contend that the evidence provided by Matthew Parker did not comply with the procedural direction and should not have been given the weight that it was given. The email from Mr Parker referenced at [20] of the Decision and dated 13 April 2022 makes it clear that Mr Parker was not "impartial or reliable and is an advocate for the [Builder]". The email states that he has provided services to the Builder for over 30 years. Additionally, the reliability of Mr Parker as an expert or even as a witness was unable to be tested as he was not called to provide any evidence in the proceedings. Further, there was no evidence of his credentials, experience or expertise. The Homeowners further contended that the language of the email of 13 April 2022 demonstrated that Mr Parker's opinion was not certain. In referring to the pump-out system Mr Parker's email stated that "this option will need to be discussed with your plumber and Fair Trading".
5. The Homeowners contended that Mr Parker's email demonstrated that he was not providing final advice in respect of the sewer works. This is evident in that he described the pump-out system as one that "may be the cheapest and quickest option". The Tribunal failed to consider that Mr Parker's advice was not absolute and was subject to caveats.
6. The Homeowners contend that the Tribunal effectively reversed the onus of proof so that it was on the Homeowners to prove suitability rather than the Respondent.
7. The Homeowners contended, in the alternative, that the Tribunal has committed an error of fact as contemplated in Collins v Urban [2014] NSWCATAP 17 because the Decision was against the weight of evidence and the Tribunal has committed a factual error that was unreasonably arrived at or clearly mistaken.
8. Next, the Homeowners' submissions deal with the Tribunal's findings with respect to the merits of the pump-out system versus the gravity fed system. The Homeowners' submissions refer to generally accepted and basic principles for the assessment of damages at common law for breach of contract. In Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8 at [16] the High Court reiterated the "ruling principle" with respect to damages at common law for breach of contract as stated in Robinson v Harman (1884) 1 Exch 850 where the court said: "The rule of common law is, that where a party sustains a loss by reason of a 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."
9. Applying what was said in Radford v De Froberville [1977] 1 WLR 1262 at 1270; [1978] 1 All ER 33 at 42 the Homeowners submitted that the starting point for determining damages is that the Homeowners should be entitled to the cost of reinstatement in accordance with the ruling principle. In this context, the Homeowners should be provided with the cost of supplying the contracted gravity fed sewer connection as was promised by the Respondent pursuant to the contract.
10. The Homeowner's submissions referred to Bellgrove v Eldridge [1954] HCA 36; 90 CLR 282 where the High Court said that the damages recoverable by a building owner for breach of a building contract are qualified in that not only must the work undertaken be necessary to produce conformity, but also it must be a reasonable course to adopt. However, the High Court went on to say that the test of "unreasonableness" is only to be satisfied by "fairly exceptional circumstances" (Bellgrove at 617 and cited by Tabcorp at [17]).
11. The Homeowners' submissions state that the question of reasonableness is to be looked at from the point of view of whether it is reasonable in achieving the objective of the contract and the cost of an alternative method is not a material factor in respect of assessing reasonableness. Here, the contract provided for a gravity fed system and what was substituted was an entirely different hydraulic system with different approval requirements, maintenance requirements and additional ongoing costs such as electricity supply.
12. The Homeowners' submissions state that the burden of proof for establishing loss lies on the claimant (in this case the Homeowners) but by contrast, the party in breach of contract has the onus of displacing the prima facie rule for assessing damages as to the cost of reinstatement- see Builder's Insurers' Guarantee Corporation v The Owners - Strata Plan no 57504 [2010] NSWCA 23 at [79]. In that case, the Court of Appeal remarked, without deciding, that a defendant may actually have the legal onus of proving functional equivalence.
13. The Homeowners submitted that in this case the Builder (having an evidentiary onus of displacing the prima facie rule for assessing damages as the cost of reinstatement) failed to displace that rule because it did not plead or adduce relevant evidence. Such evidence included evidence that the gravity fed system was unreasonable, that the pump out system was functionally equivalent or just as effective as the gravity fed system, that the pump out system would not involve risks, costs or other issues when compared to the gravity fed system, that the pump out system was in fact cheaper and was the quickest solution.
14. At [20] of the Decision the Tribunal noted that it was agreed by the Builder that the pump out system "had some cost, plus maintenance and required an electrical connection."
15. The Homeowners submitted that the Tribunal was required, consistent with the statements made in the Builder's Insurers Guarantee case to consider whether the pump out system was just as effective and without risks when compared to the gravity fed system. Unfortunately, it appears that the Tribunal did not deal with this critical issue.
16. Further, the Homeowners point out that the Tribunal found that there was no evidence to establish the cost of installing a pump system: see [125] of the Decision. The Homeowners submitted that the onus was in fact on the Builder to adduce evidence that the cost of the pump out system made that system preferable and that the gravity fed system was unreasonable. No such evidence was adduced. We interpose to note that at [129] the Tribunal stated that the cost of "making a sewer connection using a pump" is something for which there is no evidence. The Tribunal described that as "an impediment" but then decided the issue against the Homeowners on a different basis (namely that the Homeowners themselves had not paid for the gravity fed system and therefore there was no evidence of loss).
17. The Homeowners submitted that the Tribunal appears to have been influenced by the thinking that the pump out system was cheaper and quicker (despite there being no evidence that that system would be cheaper). The evidence that the pump out system was something that could be described as "quicker" came from a Mr Ingegneri. The Homeowner's submissions referred to the evidence given by Mr Ingegneri which is to the effect that he assumed that it would take less than a month to purchase and deliver such a system. At [125] of the Decision the Tribunal found that Mr Ingegneri's evidence was that the pump could be obtained within a month. The Homeowners' submissions state that the evidence does not deal with other related issues such as design (including electrical connection), installation and the approval from Sydney Water.
18. The Homeowners submitted that the Tribunal erroneously placed significant weight on Mr Ingegneri's statement as being evidence that the pump out system was a quicker method. The Tribunal further erred in finding that exceptional circumstances had been established on the basis that the pump out system was the quickest and cheapest option.
19. The Homeowners submitted that had the Tribunal considered the matters that it should have considered it would have determined that the Builder had failed to discharge the onus of proof required to displace the "ruling principle". Accordingly, the Tribunal ought to have found that the Homeowners were entitled to damages in the amount of $100,399.99 in respect of the sewer works, or alternatively, $41,757 which was an agreed costs of the quantity surveyors that the Homeowners state was "one based on a more limited work scenario than that which eventually occurred".
20. The Homeowners submitted that this ground also involves an error of fact as contemplated in Collins v Urban because the Decision was against the weight of evidence and involves a factual error that was unreasonably arrived at or clearly mistaken.
21. The Homeowners' submissions take issue with the Tribunal's findings concerning the Homeowners' obligation to mitigate their loss. In summary, the position of the Homeowners is that: 1. The Builder failed to take any responsibility for the sewer works, including at the hearing. 2. The Builder failed to adduce evidence with respect to the pump out system being the quickest and cheapest option and therefore the Tribunal erred in finding that the Builder "had discharged the onus of mitigation". 3. The Sydney Water requirement was not considered at the time Mr Parker sent his email on 12 April 2022 and was raised for the first time by the Builder in the joint report of the hydraulic engineers dated 1 March 2024, being 11 days before the final hearing. 4. Instead of waiting for the dispute to be dealt with in the proceedings, the Homeowners took steps to mitigate the loss by making the decision of carrying out the sewer works themselves, ensuring that there were no further delays or costs arising from the Builder's breach. 5. Consequentially the Homeowners, in installing the gravity fed system, did not face any issues with Sydney Water's requirements and therefore it should not have been a consideration that the Tribunal should have placed considerable weight on.
22. The Homeowners' submissions then deal with the principles concerning mitigation. Here, the Homeowners took steps to reduce their loss and unless their steps are shown to be unreasonable, costs that are incurred in an attempt to mitigate caused by wrongdoing become, themselves, a head of damage that can be recovered: see Arstan v Rixon [2001] HCA 40 at [32]; (2021) 395 ALR 390.
23. The Homeowners' submissions then set out some facts which they say formed part of the evidence which the Tribunal failed to have regard to. The Homeowners submitted that on the evidence it could not have been found by the Tribunal that the Builder discharged its own onus in respect of establishing that the Homeowners had conducted themselves unreasonably as the evidence did not establish that the pump out system was quicker and cheaper than the gravity fed system or that Sydney Water approved the pump out system.
24. Grounds 2 and 4: In the following paragraphs we summarise the Homeowners' submissions concerning these two grounds.
25. The Homeowner's submissions state that the Tribunal erred in failing to apply the "ruling principle" and finding that the Homeowners should be awarded the costs of reinstatement for the gravity fed system. Further and in the alternative, the Homeowners say that the Builder's failure to carry out the sewer works should not be considered the supply of defective goods, rather, it is incomplete works. This means that the principles of common law damages for breach of contract would apply, and not the qualification outlined in Bellgrove.
26. In this case the terms of the contract obliged the Builder to provide a gravity fed system. The Tribunal found that the Builder's liability for the sewer works was due to a breach of the contract: see [114] of the Decision. The Homeowners submitted that, based upon the Builder's failure to take responsibility for its breach, the Homeowners constructed a new sewer line in order to provide a gravity fed system as was contemplated by the contract. It was clearly within the contemplation of the Builder that if the Builder's own breach would lead to a scenario where a gravity fed system could not be installed, then this would result in the loss of having to carry out extra work to ensure a gravity fed system could be installed.
27. The Homeowners' submissions state that the Tribunal ought to have found that the Homeowners were entitled to damages in the amount of $100,399.99 in respect of the sewer works, or alternatively, $41,757.
28. Further and in the alternative, the Tribunal committed an error of fact as contemplated in Collins v Urban because the Decision was against the weight of evidence and the Tribunal has committed a factual error that was unreasonably arrived at or clearly mistaken.
29. Grounds 3 and 5 - third-party payments: in respect of these grounds the Homeowners submitted that the Tribunal made three critical findings: see [129] to [132] of the Decision. At [129] the Tribunal found that the evidence does not support any finding that the Homeowners have suffered any loss in that the relevant invoices were not made out to them, none of the payments for those invoices were made by them and neither of them provided any witness statement, statutory declaration or affidavit, and the evidence of Mr Yeh (the son) was that he had incurred that cost. At [130] the Tribunal found that no damages can be awarded to Mr Yeh since he is not a party to the proceedings, nor a party to the contract and does not have the benefit of any of the statutory warranties as he was not an owner of the property. At [132] the Tribunal found that, as a result, the owners "are not considered to be entitled to any damages for this item".
30. The Homeowners submitted that the Tribunal erred in law because: 1. The payments were made by the son on behalf of the Homeowners pursuant to a power of attorney that the Homeowners had granted to him, entitling him to make payments on their behalf in his own name. 2. The Builder pleaded at paragraph 3 of its Points of Claim that, at all material times, the Homeowners were represented in their dealings with the Builder by the son, exercising authority pursuant to the power of attorney and 3. The Builder admitted at the hearing that he was aware that the payments were made on behalf of the Homeowners.
31. The Homeowners submitted that the Tribunal erred in law because they (the Homeowners) did incur loss as the payments were made on their behalf pursuant to a power of attorney. The Homeowners stated that the contract was executed by the son on behalf of the Homeowners pursuant to the power of attorney and that this was acknowledged directly by Mr Bazdaric in his affidavit of 24 July 2023. In addition, the Homeowners pointed to a letter dated 8 December 2021, by which the Homeowners wrote to the Builder appointing the son and Ming Yang as authorised representatives under the contract. This document was in evidence and was referred to in Mr Bazdaric's affidavit. The letter authorised the son to deal with contractual issues. The Homeowners submissions identified evidence tendered at the hearing and at first instance by which Mr Bazdaric requested the son to make certain payments and statements made by the son to the effect that he is making certain payments.
32. The Homeowners submitted that the payments made by the son in relation to the sewer works were all made pursuant to the Power of Attorney Act 2003 (NSW) meaning that they were made on behalf of the Homeowners and that the Homeowners had a right to recover the payments as damages.
33. The Homeowners' submissions state that it is immaterial that the evidence at the hearing did not disclose the repayment of the amounts paid by the son to the Builder by the Homeowners to the son because the Homeowners' right to recovery does not depend on whatever arrangements they have made with their attorney regarding payment. The Homeowners' submissions state that it is sufficient that a payment was made on their behalf through the exercise of the power of attorney because the resultant loss is referable to the Homeowners as principals.
34. The Homeowners further submit and in the alternative, that the Builder, during cross-examination, admitted that he was aware that the payments made by the son were made on behalf of the Homeowners: see pages 5-6 and 50 of transcript.
35. The Homeowners submitted that there was no evidence that the son made the payments as a gift to the Homeowners. Further, the Homeowners submitted that at common law an agent is indemnified by its principal against all liabilities reasonably incurred or discharged by the agent in the execution of its authority. The loss is therefore loss suffered by the Homeowners in incurring an obligation of indemnifying their agent (the son) for the payments made on their behalf: see Thacker v Hardy (1878) 4 QBD 685 followed by Pavlis v Wetherill Park Market Town Pty Ltd [2014] NSWCA 292 at 45.
36. The Homeowners submitted that the Tribunal also erred in finding that the Homeowners suffered no loss in relation to the sewer works by finding elsewhere in the Decision that the son was making payments pursuant to the power of attorney. Once the Tribunal had accepted at paragraphs [16] to [22] of the Decision that the payments made by the son were made on behalf of the Homeowners (by way of accepting the Builder's evidence to that effect), the only conclusion available in relation to the sewer works was that the Homeowners had suffered loss. In other words, the Builder cannot have it both ways by claiming all other payments made by the son were made on behalf of the Homeowners and that the sewer work payments were made by the son on behalf of himself without having led evidence to that effect. For this reason, the Tribunal also erred in the sense contemplated in House v The King (1936) 55 CLR 499.
37. The Homeowners submitted that the Tribunal's error constituted an error of law by finding that the Homeowners did not suffer any loss and damage despite the undisputed evidence of the power of attorney and the Builder's awareness of such circumstances.
38. Ground 6: the Homeowners submissions with respect to ground 6 are summarised in the following paragraphs.
39. This ground concerns the Tribunal's determination that the completion of the works occurred on 17 August 2023 (see [144] of the Decision). The Homeowners submitted that the Tribunal did not have jurisdiction to award an amount at [149] of the Decision or interest in respect of the application because the completion of the works was found to have occurred after the Builder filed its application on 17 April 2023.
40. The Homeowners submitted that there was no notification of the claim as contractually required and no invoice given. Rather, the Tribunal treated the issue of completion as being at large for the Tribunal to determine. The Tribunal awarded interest not because of a failure to pay on a demand occurring prior to the proceedings or event notified after the proceedings, but because of a date arising as to completion after the proceedings had commenced and which the Builder never notified as the date of completion or made a claim to be entitled to payment.
41. The amount claimed was for, inter-alia, payment of the final invoice which was dated 6 December 2022 for $81,327.50 [144]. That invoice was found not to be owing because it was based upon a completion date which the Tribunal found was not the completion date. The Homeowners submitted that the entitlement to payment arose when the Builder had notified the Homeowners that a stage had reached completion (clause 12 of the contract). Interest is only payable in respect of a claim so notified and resolved in favour of the Builder.
42. The Homeowners submitted that the jurisdiction of the Tribunal arises from the HB Act which confers jurisdiction in respect of a "building claim", a term defined in s 48K. The Homeowners submitted that the term "building claim" as used in the HB Act must mean a cause of action by way of right to recover a payment of money. The jurisdiction of the Tribunal is dependent upon there being a right to claim such an order for payment of money at the time the proceedings are commenced. The Homeowners contended that there is no basis for conferring jurisdiction to hear a claim which is hypothetical in the sense that it has not arisen because the facts required for it to come into existence have not yet arisen.
43. The Homeowners submitted that if there was no valid notification of the claim by invoice or otherwise and the claim only arises after the commencement of the application then at the time it was commenced it was hypothetical. The Homeowners submitted that liability must be on a claim validly made, not some later entitlement to which the Builder had not made a claim. Accordingly, the Tribunal had no jurisdiction to determine such matters or, as a matter of contractual interpretation, there was no claim made for which there was a right to recover interest.
44. Grounds 7 and 8 - completion: the substance of these two grounds has been described earlier. The Homeowners submitted that the Tribunal made critical findings on the issue of completion at [174] to [175]. We note that at [175] the Tribunal found that the work was completed on 17 August 2023 "because that is when the sewer connection was made and there were, at that time, no omissions of (sic) defects preventing the work from being used for its intended purpose."
45. The Homeowners submitted that the Tribunal failed to have regard to clause 6 and the special conditions of the contract which contained a description of when completion is achieved. The Homeowners submitted that the contract in the circumstances as found, in particular as to the need for a work order, should have led the Tribunal to conclude that until the work order was complied with, the house remained incomplete and the obligation for payment had not accrued. Accordingly, the Homeowners submitted that the Tribunal erred in law by failing to consider the relevant special condition which provided that the contract will not be completed "until it was ready to occupy".
46. Further, the Homeowners submissions noted that the Tribunal stated that as at 17 August 2023 there were "no omissions of (sic) defects preventing the work from being used for its intended purpose." The Tribunal did not provide any reasons as to how it had reached that conclusion having regard to: 1. the fact that the house could not be occupied until the Builder completed the defective works that were the subject of the work order, 2. whether the Tribunal considered the works, the subject of the work order, were minor defects or incomplete works, and 1. whether the Tribunal considered that the duration of time that the Builder had to complete the work order, being more than two months, would result in the works not being able to be used for their intended purpose.
47. In summary, the Homeowners submitted that the Tribunal failed to undertake the construction of the contract in accordance with legal principle and also failed in construing it in the manner that it did having regard to the terms of the contract itself as to when payment was required. The Tribunal should have found, as was the case, that the house could not be occupied and that it was not complete at least until the works order had been complied with.
48. The Homeowners contended that the Tribunal fell into error that constituted both errors of law and of fact. The Homeowners contended that in respect of errors of fact leave to appeal should be granted.
49. In conclusion, the Homeowners sought the following orders in the appeal: 1. That the appeal be allowed and leave given as sought in the submissions. 2. The work order maintained and, in effect, the obligation to pay the sum based either on the notification of a claim or based on completion be set aside. 3. The Builder should pay the costs of the primary proceedings and of the appeal.

Homeowners' oral submissions made at the hearing of the appeal

1. During the hearing of the appeal counsel for the Homeowners took us to the joint report of the parties' respective experts, and in particular to page 697 of the joint tender bundle. That page records that the two experts agreed that a reasonable cost for the installation of a gravity fed sewer system would be $41,757. Counsel conceded that that is the maximum amount that the Homeowners can claim for loss in respect of the sewer system which the Homeowners caused to be installed.
2. Counsel clarified the nature of the orders sought by the Homeowners. The Homeowners submitted that the sum of $41,757 be set off against the amount due by them to the Builder for the final payment (to the extent that an amount is due to the Builder) and further that there be an award for liquidated damages from 8 July 2022 until 17 August 2023 pursuant to the terms of the contract.

Builder's submissions in opposition to Homeowners' appeal

1. The Builder submitted that the Homeowners' grounds of appeal did not identify any question of law or provide reasons why leave should be given. To the extent that leave is required the Builder's submissions state that the Homeowners have failed to properly grapple with the requirements for leave to be granted. In the following paragraphs we summarise the Builder's submissions with respect to each ground of appeal.
2. Ground 1: the Builder submitted that the Homeowners failed as a matter of causation. The Builder's case was that there were issues of causation and a failure to mitigate arising from the Homeowners rejection of a method of rectification suggested by Sydney Water. Ground 1 does not address causation, it only addresses mitigation.
3. The Builder submitted that the evidence recorded at [27] of the Decision that Mr Yeh (the son) accepted that the reason that the advice to use a pump was rejected was because Mr Yeh's father preferred a gravity system.
4. The Builder submitted that the finding of the Tribunal at [126] that "It was not necessary for that work [ie. installing a gravity fed system] to be done when the use of a pump was required by Sydney Water" was a finding that the Homeowners had failed to prove any causative link between the Builder's alleged breach and the work that the Homeowners did and being the work that quantified their claimed loss.
5. The Builder submitted that a finding as to causation is a finding of fact, which if based on the assessment of witnesses, will not attract appellate intervention, except in limited circumstances.
6. The Builder submitted that it was "entirely orthodox" for the Tribunal to conclude that the free and deliberate act by the Homeowners to adopt a gravity sewer over a pump, despite advice to the contrary, is capable of breaking the chain of causation, such that there is no causative link between the Builder's alleged breach and the Homeowners' loss.
7. The Builder's submissions draw attention to the fact that in its Reply the Builder has included a Notice of Contention to the effect that all grounds of appeal concerning the sewer works should fail for the additional reason that: 1. the Builder did not breach any obligation in respect of the sewer works, and 2. even if there was a breach, the Homeowners should have failed on the issue of causation.
8. Additionally, the Builder submitted that the Tribunal did not consider Mr Parker to be an independent expert for the purposes of providing evidence in accordance with the Code of Conduct. Rather, the Tribunal meant no more than that it considered Mr Parker to be an expert in his field and someone whose contemporaneous views should be given weight, not as an independent expert, but rather as a person whose contemporaneous views carry weight.
9. The Builder submitted that at [126] the Tribunal found that it was not reasonable for the Homeowners to incur a cost of more than $100,000 to achieve the sewer connection of a kind which they decided that they wished to have. The Tribunal stated that in "applying Bellgrove the Tribunal is not persuaded that the Homeowners are entitled to recover damages of $100,399.99". The Builder submitted that the Tribunal found as a matter of fact that there were exceptional circumstances within the meaning of the Bellgrove test and that that was a factual finding made on the basis of a document issued by Sydney Water and attached to the joint report which provided that a pump was required. That submission was based upon [123] of the Decision in which the Tribunal set out the technical note concerning what Sydney Water would require, a portion of which stated that, in certain circumstances, a pump is required.
10. The Builder further submitted that the adoption of a pump system would not only have mitigated the additional cost of the gravity sewer system but also the significant additional time wasted in constructing the gravity system. The best evidence was that it would take less than a month to obtain a pump system - see transcript 118-119. Accordingly, there was no error by the Tribunal finding as a matter of fact that the Homeowners failed to take reasonable steps to mitigate their loss.
11. Grounds 2 and 4: the Builder submitted that these grounds of appeal depend upon the Homeowners demonstrating that the terms of the contract obliged the Builder to provide a gravity fed system. The Builder submitted that the Homeowners have failed to reference any such obligation in their submissions. The Builder's submissions refer to [110] and [111] of the Decision in which the Tribunal records that the Builder's obligation was to construct "sewer and stormwater connections" and to "allow to design, supply and construct new PVC sewer pipe with I.O. [Inspection Opening] to existing sewer main". The Builder submitted that there was no obligation on the Builder to design, supply and construct that sewer as a gravity sewer, as opposed to a sewer with a pump.
12. Additionally, the Builder submitted in respect of grounds 2 and 4 that these grounds must also fail because the Homeowners fail on causation, reasonableness and mitigation (see ground 1).
13. Grounds 3 and 5: the Builder submitted that the Homeowners suffered no loss as a result of the sewer works because they did not pay for the alternate solution. Another person, not a party to the proceedings, paid.
14. The Builder submitted that the Homeowners have raised for the first time a new argument that Mr Yeh paid for the alternative sewer works as attorney for the Homeowners. The Builder submitted that this point was never put below and where a point is not taken below and evidence "could have been given there which by any possibility could have prevented the point from succeeding" (Suttor v Gundowda Pty Ltd [1950] 81 CLR 418 at 438), it cannot be taken on appeal.
15. The Homeowners' submissions that the payments made by Mr Yeh in relation to the sewer works were all made pursuant to the Power of Attorney Act 2003 (NSW), meaning that they were made on behalf of the Homeowners and that the Homeowners had the right to recover those payments as damages is made for the first time in this appeal. The Builder was thus prevented from challenging that assertion at the hearing by way of cross-examination and/or seeking production of relevant documents, including the power of attorney. The Builder has thus been deprived of the possibility of testing these new assertions. The Builder submitted that the Homeowners' submission cannot now fairly be made.
16. The Builder further submitted that the unfairness is particularly relevant where the submission now made is against the evidence given by Mr Yeh at the hearing which was to the effect that he had incurred the cost to rectify the sewer main: see his affidavit dated 31 October 2023 at [43], joint tender bundle p 157.
17. The Builder further submitted that the Homeowners' submissions do not advance the Homeowners' appeal. The evidence remains that the payments were made by Mr Yeh and not by the Homeowners. Mr Yeh gave evidence that he incurred the costs. There was no evidence that the Homeowners have a liability to Mr Yeh.
18. Ground 6: the Builder submitted that this ground has no merit. Pursuant to s 48K(1) of the HB Act the Tribunal has jurisdiction to hear and determine "any building claim brought before it". Section 48A defines a building claim to include "a claim for the payment of a specified sum of money that arises from the supply of building goods or services…". A claim fitting that description (that is a claim for the payment of money) was brought before the Tribunal. The Tribunal therefore had jurisdiction. The Tribunal determined, in the exercise of its jurisdiction, that on the proper construction of the contract and in light of all of the facts, the Builder's entitlement to payment in respect of the building claim arose later than identified in the claim. The Builder submitted that that finding does not undermine the fact that a building claim was brought before the Tribunal and determined.
19. Grounds 7 and 8: these grounds challenge the Tribunal's finding as to practical completion. At [174] of the Decision the Tribunal set out the definition of practical completion as per the contract and identified that it was the stage of the work where "there are no omissions or defects that prevent the work from reasonably being capable of being used for its intended purpose".
20. Contrary to the Homeowners' submissions, the finding of the Tribunal was not made without reasons. Rather, the Tribunal comprehensively assessed every defect asserted by the Homeowners at [81]-[140] of the Decision. None of those defects were considered to be so significant as at 17 August 2023 that they prevented practical completion from being reached.
21. The Builder's submissions thereafter deal with the Notice of Contention. Those submissions are summarised in the following paragraphs.
22. The Builder submitted that the entirety of the Homeowners' appeal depends on maintaining the Tribunal's finding at [118]-[120] of the Decision that the Builder was in breach of the contract and s 18B(1)(a) of the HB Act by not considering the ability to make a gravity feed sewer point prior to pouring the slab. The Builder submitted at first instance and maintained by way of contention in its Reply to the appeal that the Builder was not in breach of the contract or the HB Act.
23. The Builder's submissions refer to the evidence concerning the formation of the contract. The submissions state that the Builder was sent plans and drawings prepared by the Homeowners' architect on 2 October 2019. On 5 May 2020 the Homeowners' architect provided to the Builder revised versions of the plans and drawings for construction. The parties entered into the contract on 5 May 2020 on the basis of the revised plans and drawings provided by the Homeowners' architect to the Builder. In mid-January 2022 the Builder discovered that the current sewer connection was not adequate to service the home as the connection was too high - that is that the sewer was higher than the floor level of the basement as designed by the architect. The Builder's submissions state that as a result the "sewer could not be connected as planned but rather needed to be connected to an alternate point, resulting in additional time and additional cost". The Builder's submissions state that the architect was responsible for design and provided the design including relevant levels to the Builder who was required to build to it. The Builder did not have the right to unilaterally alter the levels for the purposes of construction.
24. The Builder submitted that clause 1 of the contract required that all plans and specifications for work to be done under the contract are taken to form part of the contract. Therefore, according to the Builder's submission, the Builder was to build to the plans and specifications he was given. The Builder could not vary the specifications and plans without the consent in writing of the Homeowners.
25. The Builder further relied upon quotation 6 (joint tender bundle pages 853, 863) entitled "For Construction of Owner's Design" in which it was stated that the construction and engineering drawings were said to be provided by the Homeowners.
26. The Builder's submissions state that the "high point" of the Homeowners' case was that the "scope of works" document contained note 3 to the effect that "documents" are stated to be "the responsibility of the contractor to check and verify all dimensional set out and refer all queries to architect prior to taking any action". Further under the heading "Plumbing" there was the statement "Allow to design, supply and construct new PVC sewer pipe with I.O. to existing sewer main".
27. The Builder's submissions state that the obligation of the Builder was to check and verify the dimensions prior to taking any action and that is what the Builder did. The Builder did not have responsibility to develop or alter the design. The Builder submitted that the Builder was to design, supply and construct new PVC sewer pipe to the existing sewer main and that the design, supply and construction obligations are in relation to the new PVC sewer pipe only, not the sewer mains or level of that main.
28. The Builder submitted that an obligation to design, supply and construct a particular sewer pipe cannot reasonably and commercially be said to extend to an obligation to redesign all floor levels. Rather, consistent with note 3 under the heading "Documents" all that was required is that prior to taking any action in respect of those works was to check the dimensions and raise any issues with the architect who was responsible for the design.
29. The Builder submitted that the process described above is entirely consistent with clause 18 of the contract. That clause required the Builder to comply with the codes, standards, specifications and conditions of consent. However, if due to such a requirement, the plans or specifications have to be amended, the Builder must immediately advise the owner in writing and explain the reason for the change. The Builder submitted that this is what occurred.
30. Clause 18 further provides that any changes to be made to the work or materials provided that are not as a result of any fault on the part of the contractor will be dealt with as a variation. Here, there was no default of the Builder. There was a problem with the levels on the plans prepared by the architect which was discovered by the Builder during the course of the construction work. Accordingly, the Builder ought to have succeeded for the additional reason that it did not breach the contract or the HB Act.

Homeowners' Submissions in Reply

1. The Homeowners' submissions respond to the Builder's submissions to the effect that the Homeowners have failed to raise a question of law, submitting that such a view is misconceived. The Homeowners submitted that grounds 1 to 8 raise questions of law pursuant to those formulated in Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [13]. The Homeowners submitted that the grounds of appeal raise questions of: 1. Whether the Tribunal applied the correct principles of law in respect of evidentiary onus, mitigation and causation. 2. Whether the Tribunal's construction of completion within the meaning of the contract and legal principles cited in the Homeowners' submissions was an error of law. 3. Whether the Tribunal erred in a House v The King sense in finding that there was no loss or damage to the Homeowners in relation to the sewer works on the basis of payment being made under a power of attorney. 4. Whether there was evidence to support a finding of fact.
2. The Homeowners submitted that the above description of the grounds raise questions of law and were articulated in the Homeowners' submissions. The submissions in reply then deal with each of the grounds.
3. Ground 1: the Builder's characterisation that the Homeowners failed as a matter of causation is misconceived. Causation is a question of fact but a misapprehension of the cause of the damage or the issue in contention as to the causative process is a question of law. In mischaracterising the question, the subject of the appeal, the Builder's submissions failed to grapple with the substantive issues raised by the Homeowners. The appeal raises the issue of whether by conflating causation with mitigation and applying a test to both of reasonableness, the Tribunal misdirected itself.
4. At [118]-[121] and [131(2)] of the Decision the Tribunal found that the Builder was liable in relation to the sewer defect under the HB Act and the provisions of the contract. At [129] of the Decision, the Tribunal went on to consider mitigation.
5. The Homeowners' primary position is that in finding that the Builder was in breach of the HB Act and the contract and that the Builder was required to provide a gravity fed sewer connection pursuant to the contract, the Homeowners were not required to go further by proving that the gravity fed system was reasonable or that they should have acted differently with respect to an alternative method (ie. the pump system). Following that finding, the Builder bore the onus of displacing the prima facie rule for assessing damages as to the cost of providing a gravity fed system as required by the contract. The alternative solution of the pump system was not offered as performance of the contract. Rather the Builder refused to undertake the task for which it had been engaged to provide. To the extent that it was discussed it was only ever raised as a potential variation to the contract, not the provision of performance of it.
6. At [125] of the Decision the Tribunal stated that there was no evidence to establish the cost of installing a pump system. At [129] of the Decision the Tribunal found that the Homeowners' damages should be reduced to the cost of making a sewer connection using a pump and that there was no evidence of that cost. At [131(8)] and [131(9)] the Tribunal noted that the solution that the Homeowners chose was neither necessary nor reasonable and in choosing that solution the Homeowners failed to mitigate their loss. The Homeowners submitted that the Tribunal reversed the onus and required the Homeowners to go further than proving the actual cost of reinstatement of the contractually required system. The Tribunal could not have found that any evidentiary onus was displaced by the Builder in circumstances where there was no evidence of the cost of the pump system. Thus, the Tribunal erred in law in approaching the issue as one where the Homeowners bore the onus where mitigation was an issue for the Builder to establish and causation was established by the failure to provide any contractual performance of the obligation at all.
7. The Homeowners dispute the Builder's contention that the pump out system was suggested by Sydney Water. There was no evidence from Sydney Water, rather the document relied on as evidence of a potential course available by resort to a pump out system was the qualified proposition advanced by Mr Parker in the email of 13 April. That email contains a "caveated opinion" that was untestable by cross-examination, and the acceptance of it by the Tribunal was unreasonable and unfair in the circumstances. It did not contain evidence of actual knowledge of the matters necessary and the absence of that information and a request for payment if further investigation was required demonstrates that the opinion expressed was qualified and not intended to be relied upon as an expert opinion.
8. The Builder's submission that the gravity fed system was preferred fails to explain the differences. The pump out system required a different approval, additional ongoing costs such as electrical supply and regular maintenance.
9. The Homeowners' submissions contest the Builder's submissions in respect of causation describing those submissions as "seriously misconceived". The Tribunal found that the Builder was responsible for producing a gravity fed system. By not doing so, the Homeowners had to arrange and install a gravity fed system as contemplated by the contract. But for the Builder's breach of the HB Act and the contract the Homeowners would not have been required to carry out the Builders obligations. The Tribunal found that the method adopted by the Homeowners was not reasonable or necessary in circumstances where the requisite elements had not been proven by the Builder. That constituted an error of law, not a finding of fact as contended for by the Builder.
10. The Homeowners dispute the Builder's submission that the Tribunal's finding on causation was a finding affected by impressions about the credibility and reliability of witnesses formed by the member as a result of seeing and hearing Mr Yeh give evidence. The Homeowners submitted that the Notice of Appeal and submissions made it clear that the Tribunal erred in applying the contract and the principles of contractual breach. The Tribunal's finding of liability of the Builder in respect of the sewer works required the Tribunal to assess loss and damage by the "ruling principle", unless displaced by the Builder. The Homeowners contended that the Tribunal erred in applying this principle of law.
11. Referring to the Builder's submissions concerning the evidence of Mr Parker, the Homeowners submitted that the Tribunal referred to Mr Parker as an expert multiple times. We interpose here to note that Mr Parker is expressly referred to as an expert at [20] and [126] of the Decision. The Homeowners further contended that the 13 April email is the basis on which the Tribunal's reasons state that the pump system was the cheapest and quickest option. Even if that opinion can be relied upon (contrary to the submissions of the Homeowners), the Homeowners contend that there was no actual evidence as to how the pump system would in fact be a cheaper or quicker alternative. The lack of underlying factual support for the opinion should have been sufficient for the Tribunal to abjure reliance on it.
12. In short, the Homeowners submitted that the Tribunal failed to properly apply the principles of mitigation in reaching its finding and therefore made an error of law. The Homeowners further submitted that there was no evidence that could support a finding that the Homeowners' conduct was unreasonable.
13. Grounds 2 and 4: the Homeowners submitted that at [118] of the Decision the Tribunal stated that it considered that the failure to consider the ability to make a gravity fed sewer connection prior to pouring the slab constituted a breach of s 18B(1)(a) of the HB Act and the corresponding contractual provision. Such a finding was based upon the plans and specification that form part of the contract. The Homeowners submitted that the Builder's submissions with respect to grounds 2 and 4 should be rejected entirely.
14. Grounds 3 and 5: the Homeowners submitted that the matter of the power of attorney was not raised for the first time on appeal. As set out in the Homeowners' submissions in chief, it was common knowledge that Jeffrey Yeh had a power of attorney and was an authorised representative under the contract to make payments. Such matters were in evidence at the final hearing.
15. The Homeowners submitted that Jeffrey Yeh's evidence that he incurred the costs to rectify the sewer main fails to consider the uncontested and accepted evidence that he was an attorney for his parents in respect of the project. The Builder's representative did not ask Jeffrey Yeh whether the payments he was making were gifts for his parents - which would have displaced the known attorney position.
16. The Homeowners submitted that the absence of explicit reference to the statutory right to indemnification in the Homeowners' submissions merely confirms the position advanced below (in oral submissions) that an agent paying upon another's behalf is not presumed to be making a gift and will expect to be repaid.
17. Ground 6: the Homeowners rely on their submissions below.
18. Grounds 7 and 8: the Homeowners maintain their contention that the Tribunal's finding in respect of completion was reached based upon the incorrect construction of the contract.
19. The Homeowners' submissions with respect to the Builder's Notice of Contention are summarised in the following paragraphs.
20. The Homeowners submitted that the contentions raised by the Builder seek to overturn the Tribunal's finding that the Builder was in breach of the contract and the HB Act for the sewer works. Such contentions should have been raised in a separate cross-appeal rather than submissions in response to the Homeowners' appeal. Accordingly, the Homeowners submitted that the submissions of the Builder in this respect should be rejected. We interpose to say that this submission appears to have no utility or merit. We intend to consider the points raised in the notice of contention.
21. The essence of the Builder's contentions is that the contract should be construed in terms differently from the construction given by the Tribunal. The Builder's submissions are based upon the perceived commercial objective of the contract, rather than the words contained in the contract. In this case, the Homeowners sought to have a house completed and habitable for a fixed price. That required a working sewerage system. The concept that the Builder might, once the house was completed, but no sewer built, begin to complain that it was impossible to achieve it in the way originally conceived should be rejected as improbable and inconsistent with the language used in the contractual documents that were agreed.
22. The Homeowners submitted that the Builder's submissions seeks to reinterpret the language of the contract "beyond common sense or any sensible commercial of objective". Overall, the issue raised by the Notice of Contention was rejected by the Tribunal and should be rejected again.

Consideration of the Homeowners' appeal

1. This is an appeal from a decision made in the Consumer and Commercial Division of the Tribunal and is therefore regulated by s 80 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) and by the provisions of cl 12 sch 4 of the NCAT Act. Essentially this means that an appeal lies as of right on a question of law and with leave on the grounds specified in clause 12.
2. The starting point for determination of the appeal is to consider the terms of the contract between the parties. In particular it is necessary to consider the Builder's obligations with respect to the sewer connection.
3. At [110] and [111] the Tribunal identified the Builder's contractual obligation for the sewer which involved connecting a sewer pipe to the existing sewer main. The Tribunal found that the contract required the Builder to check and verify all "dimensional set out" (see [112] of the Decision) and in particular, the contractor [ ie the Builder] "must verify all dimensions and existing levels, prior to commencement of the works" - see [113] of the Decision. It is clear that the Tribunal found that the Builder was contractually obliged to verify existing levels prior to commencement of the works and to verify all information provided prior to "commencement of construction works" - see [113] of the Decision. Having found that the Builder was so obliged the Tribunal found at [114] that the Builder breached its contractual obligations by pouring the slab without taking the verification steps quoted in [113]. The Tribunal also found that the Builder's conduct constituted a breach of s 18B(1)(a) of the HB Act in that the Builder failed to consider the ability to make a gravity fed sewer connection prior to pouring the slab - see [118] of the Decision.
4. The Builder's submissions in support of its Notice of Contention acknowledged that the Builder was to check and verify the dimensions prior to taking any action and the submissions state that that is what the Builder did. In support of this submission the Builder relies upon the Affidavit of Mr J Yeh dated 31 October 2023 [46]-[48], pp 157-158 of the joint tender bundle. However, that evidence states that the Builder took action to verify the dimensions approximately eleven months after the contract was signed when the property had mostly been constructed. The Builder submitted that its obligation was to check the dimensions prior to taking any action "in respect to those works" The contract in fact required the Builder to undertake verification prior to commencement of "the works" ( para 1) and prior to commencement of " construction works" ( para 6).
5. Further, the Builder's contractual obligation as set out in the contract is not to be read down because the plans upon which the Builder relied were prepared by the architect appointed by the Homeowners. Support for this view can be seen from paragraph 6 of the Erosion and Sediment Control Plan, the terms of which are set out at [113] of the Decision. That paragraph states that field investigations are to be carried out to determine the exact position of services and that such information is to be provided by the "property proprietor". The next sentence states: "Notwithstanding this, all information shall be verified by the contractor prior to commencement of construction works". In other words, the contractor accepted the obligation to verify information provided by or on behalf of the Homeowners.
6. Accordingly, the submissions made in the Notice of Contention are rejected. We will now turn to consideration of each of the grounds of the Homeowners' appeal.
7. Ground 1: this ground concerns the contention that the Tribunal erred in its determination that no damages were established in respect of the breach by the Builder of its obligations concerning the connection to the main sewer.
8. We agree with the Homeowners' submission that applying what was said in Radford v De Froberville the starting point for determining damages is that the Homeowners should be entitled to the cost of supplying the gravity fed sewer connection (as was contractually promised).
9. The essence of the decision to deny the Homeowners damages for the cost of installing a gravity fed system is contained in [126] of the Decision, where the Tribunal found that a pump system was "required" by Sydney Water and was the "quickest and cheapest option". From these findings of fact the Tribunal concluded that the cost of the gravity fed system was not reasonable. The Tribunal stated at [127] that the Homeowners were not entitled to recover the actual cost of making a sewer connection, only the reasonable cost. The reasonable cost was $41,757 being the figure agreed by the parties' experts.
10. Earlier we set out the "ruling principle" with respect to the assessment of damages at common law. The application of that principle would point to the Homeowners being entitled to recover the amount spent on the installation of the gravity fed system, being approximately $100,000 subject to whether that figure should be reduced to the amount agreed between the experts ($41,757).
11. The qualification to the ruling principle is explained in Bellgrove v Eldridge in that the work undertaken (and for which the claim for damages is made) must be a reasonable course to adopt.
12. In our view, in assessing whether the Homeowners' decision to install a gravity fed system was a reasonable course to adopt the cheaper cost of the alternative system (ie. the pump system) is but one factor to be considered. We agree with the submissions of the Homeowners that there were other features of the pump system that were relevant in considering the reasonableness of the Homeowners' conduct. These other features included whether the pump system had different maintenance requirements and the ongoing cost of electricity. The Tribunal recorded that the Builder agreed that the pump system had "some cost, plus maintenance, and required an electrical connection" [20].
13. In our view, the Tribunal erred in having regard to only two factors, namely that the pump system was the quicker option and was the cheaper option.
14. We also agree with the Homeowners' submissions that the Builder had the evidentiary onus of establishing that the ruling principle should be displaced. As the Homeowners' submissions point out, the evidentiary onus being on the Builder was recognised in Builder's Insurance Guarantee Corp v The Owners - Strata plan no 57504 (cited earlier) which involved a dispute concerning the Builder's obligation to construct a concrete or brick hob. The court said that the Builder had "at least" an evidentiary onus in terms of adducing evidence that the hobs as installed in that case were just as effective as those specified [79].
15. In our view, the Tribunal erred in not giving consideration to and finding that the pump system would be just as effective in producing conformity with the Builder's contractual obligations as a gravity fed system would have achieved. Rather, the approach of the Tribunal was to rely upon the evidence of a Mr Parker. His evidence was in the form of the email dated 13 April 2022 addressed to Mr Bazdaric. His evidence was, in our view, problematic and of questionable reliability. That is because of the tentative and qualified nature of the opinion expressed in his email, the fact that his opinion evidence was not given pursuant to the Tribunal's directions requiring experts to acknowledge that their paramount duty is to assist the Tribunal impartially, and that he was not someone who could be fairly described as independent. His email states that he had provided professional services to the Builder over a period of 30 years. His email was expressed in tentative language. He said that the pump system "may be" the cheapest and quickest option but that this will "need to be discussed with your plumber and Fair Trading, as they are the organisation that inspects the works".
16. In our view, the evidence of Mr Parker does not form a reasonable basis for making the findings of fact that the pump system was sufficiently in conformity with the Builder's contractual obligations to displace the ruling principle. The Tribunal did not take account of the agreed facts that the pump system had different requirements for approval, for maintenance and that it required the supply of electricity.
17. Further, there was no evidence as to the actual cost of the pump system. That was a factor acknowledged to be relevant by the Tribunal. The Tribunal described this gap in the evidence as an "impediment" [129]. The Tribunal then decided to deny the Homeowners an award for compensation based upon a different ground, namely that there was no evidence that the Homeowners themselves (as opposed to their son) had incurred the cost of the gravity fed system. In our view, the Tribunal did not finally decide that the Homeowners had failed to mitigate their loss. Rather, as is evident at [131], the Tribunal found against the Homeowners on the basis that the gravity fed system "was achieved at no cost" to the Homeowners.
18. We are in agreement with the Homeowners' submissions concerning ground 1. In particular, it is our view that the Tribunal erred in law in its incomplete consideration of the evidence necessary to displace the ruling principle concerning assessment of damages. Further, the Tribunal did not complete its findings of fact concerning the evidence necessary to displace the ruling principle because it decided on a different basis (namely that Mr Yeh, the son) had incurred the cost of installing the gravity fed system) that the Homeowners had in fact suffered no loss.
19. Ground 1 is upheld.
20. In coming to the conclusion expressed about we have considered but rejected the submissions of the Builder. The Builder submitted that the Builder's breach was not causative of the expense incurred in installing the gravity fed sewer system. The Builder's submission was based upon the view that Sydney Water required a pump system to be installed. In our view there was no evidence that the requirements of Sydney Water precluded a gravity fed sewer. It was not contested that a gravity fed system was in fact installed and therefore the basis for the Builder's argument does not exist. There was no error in the Tribunal's finding that the Builder breached its obligation to install a gravity fed system and there clearly was a causative link between that breach and work later done to install a gravity fed system.
21. Grounds 2 and 4: these two grounds are to the effect that the Tribunal erred in failing to apply the principle that the Homeowners were entitled to performance of the contractual provisions of the contract. The Homeowners' submissions are in substance the same as those in support of ground 1. Our reasons for upholding ground 1 also apply to grounds 2 and 4. We add that the evidence relied upon by the Builder to displace the ruling principle was, in our opinion, insufficient. As was explained in connection with ground 1 the evidence in the form of Mr Parker's email could not, in our view, displace the ruling principle, particularly as there was no evidence as to the cost of the pump system. We also agree with the Homeowners' contention that the Tribunal should have found, as a matter of law, that the loss or damage arose on the failure to perform the obligation contained in the contract and that the loss should be measured by the actual, or if evidence is adduced by the Builder, the reasonable costs incurred.
22. Grounds 2 and 4 are upheld.
23. Grounds 3 and 5: this concerns the fact that Mr J Yeh (the son) paid for the gravity fed system and that therefore, according to the Tribunal, the Homeowners suffered no loss.
24. It is apparent that it is common ground that the son signed the contract as attorney for the Homeowners - see the Builder's Points of Claim, particularly paragraph 3. The son's role is confirmed in his affidavit of 31 October 2023 at [9], where the son states that on "behalf of my parents" he engaged the architect. He thereafter described subsequent developments and we take it that his continuing role was on behalf of his parents. The contract itself identifies the Homeowners as the contracting parties with the Builder and the contract is signed by the son with the letters "POA" included, which we understand to mean "Power of Attorney".
25. It is our view that based upon the above uncontested facts, it would follow that the payments by the son as attorney for the Homeowners entitled him to seek reimbursement for money paid in respect of the Homeowners' contractual obligations and that the Homeowners in turn were obligated to indemnify their son. That is the thrust of the Homeowners' submissions in support of grounds 3 and 5 and we agree with them.
26. In Pavlis v Wetherill Park Market Town the Court of Appeal stated at [45] that the position under the general law is that "an agent is indemnified by its principal against all liabilities reasonably incurred or discharged by the agent in the execution of its authority". In our view, an attorney acting under a power of attorney is an agent entitled to such an indemnity. Section 43 of the Powers of Attorney Act provides that an attorney under a power of attorney may, in the exercise of the power, execute any assurance or instrument with the attorney's own signature or do any other thing in the attorney's own name.
27. In our view the consequence of the relationship between the son and the Homeowners was that, to the extent that the son paid for the gravity fed sewer system, he was entitled to be reimbursed by the Homeowners and likewise they were obliged to indemnify him if requested. There was no evidence that the general position as described in Pavlis did not prevail in this case. The four reasons given by the Tribunal do not lead to the consequence that the son intended to and did provide a gift to the Homeowners being the cost of the gravity fed system. The Tribunal referred to the fact that the invoices were not made out to the Homeowners, that none of the payments for those invoices were made by them and that neither of the Homeowners had provided any witness statement, statutory declaration or affidavit and, fourthly, that the son's evidence was that he had incurred that cost. In our view it was not inconsistent for the son, as an attorney acting under the power of attorney, to have requested invoices to be made out to him, to have paid the amounts of the invoices rendered by third parties. The right to be indemnified remained the key issue and that was not considered by the Tribunal.
28. The Builder submitted that the Homeowners had not raised at first instance the argument that the son paid for the gravity fed sewer system as attorney. We do not accept this contention as an accurate reflection of the evidence. The son's evidence was that he had acted under the power of attorney. If the Builder had wanted to put in issue the general principle described in Pavlis, one way to do that would have been to cross-examine the son. That opportunity was not acted upon.
29. We are of the view that the Tribunal erred in law by misconstruing the consequence of the son acting under the power of attorney albeit in his own name and that the Tribunal took into account irrelevant considerations in error which led it to the conclusion that the Homeowners had not suffered loss by reason of the installation of the gravity fed system.
30. Grounds 3 and 5 are upheld.
31. Ground 6: this concerns the Homeowners' submission that the Tribunal did not have jurisdiction to award an amount in respect of the Builder's application because there was nothing due when the application was lodged. This ground appears to have been withdrawn by the Homeowners because they have submitted that in making an award in their favour we should set off any amount due by them to the Builder. In any event, we are in agreement with the Builder's submissions that this ground has no merit. We agree with and adopt the Builder's submissions in this regard which have been described earlier in this decision.
32. Grounds 7 and 8: these grounds are related and concern the Homeowners' contention that the Tribunal erred in determining that the work was complete in circumstances where a work order was made.
33. In our view, there was no error in the way the Tribunal determined the date of practical completion. At [174] of the Decision the Tribunal identified the relevant terms of the contract. Clause 8 of the contract required there to be no defects or incomplete works which prevented the work from been reasonably capable of being used for its intended purpose. The Tribunal found that as at 17 August 2023 (when the sewer connection was made) there were no omissions or defects preventing the work from being used for its intended purpose.
34. However, the Homeowners' complaint is that the Tribunal failed to consider clause 6 and a special condition. Clause 6 concerns the time for completion and states that the Builder must proceed and complete the works within 52 weeks with additional verbiage as to how that period is to be calculated. The relevant special condition states that time of completion means that completion of required building works are to be completed "to practical completion as per Australian standards". Reading clauses 6 and 8 and the special condition together we do not see how the Tribunal fell into error and nor do the Homeowners' submissions explained the alleged error. The Homeowners' submission is limited to the submission that the Tribunal provided inadequate reasons.
35. We agree with the Builder's submissions that the Tribunal assessed every defect and found that none of the defects were considered to be so significant that as at 17 August 2023, they prevented practical completion from being reached. In our view, it is not evident what error of law occurred in the Tribunal's reasoning and nor is it apparent why leave should be granted assuming that there is no error of law.
36. Grounds 7 and 8 are rejected.

Conclusions

1. In our view, the Homeowners are entitled to compensation for the reasonable cost of installing the gravity fed system. In the circumstances of this case we do not think that the ruling principle is satisfied by making an award in the sum of approximately $100,000 (that being the figure that was actually incurred) but rather the appropriate award is in the sum of $41,757 on the basis that that figure was considered to be the reasonable cost of the installation of the gravity fed system by the experts for both parties.
2. It is necessary to say something about the amount due to the Builder. The Tribunal found that from 17 August 2023 the invoice for $81,327.50 should have been paid by the Homeowners. The Tribunal also found that a second invoice for variations totalling $7,703 was due to the Builder and the Tribunal found that the Builder was therefore entitled to be paid $89,030.50. In our view, there is no basis for overturning those findings of fact.
3. The Tribunal also considered whether the Builder was entitled to interest in respect of unpaid invoices and found that an amount of $9,300.64 should be paid to the Builder for such interest. The Tribunal added the sum of $33.98 for each day after the date of the Tribunal's orders (22 April 2024) that the amount due to the Builder was not paid.
4. The Tribunal then considered liquidated damages. At [177] the Tribunal found that the date when the work should have been completed was 8 July 2022 and that the date of practical completion was 17 August 2023. The Tribunal stated that the delay from 6 December 2022 to 17 August 2023 was caused by the act or omission of the Homeowners in insisting on the method of sewer connection they preferred. The Tribunal calculated liquidated damages for the period from 8 July 2020 to 6 December 2022. The resulting figure was $11,550 (at the rate of $110 per business day). Given the reasoning contained in this decision, we are of the view that the Tribunal erred in concluding that the delay from 6 December 2022 to 17 August 2023 was caused by the act or omission of the Homeowners. In our view that period should also be added on in the calculation of liquidated damages.
5. The result of our reasoning is that the Homeowners should have liquidated damages for the period excluded by the Tribunal (6 December 2022 to 17 August 2023). This is in addition to the period awarded by the Tribunal (8 July 2022 to 6 December 2022). The additional amount calculated at the rate of $110 per business day is, on the basis of there being 176 business days between 6 December 2022 to 17 August 2023, $19,360.
6. Accordingly, the Homeowners are entitled to $11,550 (as awarded by the Tribunal) plus $19,360 which totals $30,910.
7. Therefore, ignoring interest due to the Builder, the relevant amounts due between the parties are: (1) Due to the Builder $89,030.50 (2) Less set off for Homeowners' claim $41,757.00 (3) Less liquidated damages $30,910.00 (4) Balance due to Builder $16,363.50 Total: $89,030.50 $89.030.50

1. Interest due to the Builder was calculated from [141] of the Decision and at [142] the Tribunal found that the Homeowners were entitled to withhold from progress payments an amount estimated by them, acting reasonably, equal to their estimate of the value of disputed items.
2. In our view, interest is payable only on $16,363.50 on the basis that the Homeowners were entitled to withhold the balance.
3. Rather than repeat the detailed interest calculations undertaken by the Tribunal we propose to proportionately reduce the interest amount calculated by the Tribunal. The Tribunal awarded interest on $89,030.50, whereas we are of the opinion that interest should have been calculated on $16,363.50. The latter figure is approximately one fifth of the former. We propose to reduce the interest awarded ($9,300.64) by four fifths leaving a figure of approximately $1,860 as interest due by the Homeowners to the Builder.
4. The Tribunal added a daily rate of $33.98 as compensation to the Builder for late payment of invoices. We do not propose to recalculate that figure but give leave to the builder to claim an amount as the unpaid daily rate. Such a claim should be incorporated in the submissions we will direct the parties to make as will be seen later in these reasons.
5. The amount due to the Builder, based upon the above reasons, is $18,223 ($16,363.50 plus $1,860 rounded down).

The Costs Appeal

1. The orders made at first instance, being the orders the subject of the Costs Appeal, cannot stand now that the substantive appeal has been determined with a significant alteration in the amount due to the Builder.
2. Accordingly, it is necessary to set aside the costs orders previously made and in so doing to uphold the Costs Appeal.
3. It is also necessary to invite the parties to make fresh submissions in writing in respect of costs at first instance and costs of the two appeals.
4. Accordingly, the orders of the Appeal Panel are as follows: 1. In the Homeowners' appeal (2024/00186805) the appeal is upheld. 2. Orders 1 and 2 made in proceedings 2023/00409049 are set aside. 3. The Homeowners (Yuan Yeh and Huang Yeh) are to pay to the Builder (Bazdaric Homes Pty Ltd) the sum of $18,223 within 14 days. 4. In respect of the Builder's appeal (2024/00238320), orders 2 (in 2023/00409049) and 2 (in 2023/00379121) are set aside. 5. In respect of both appeals, the parties are given leave to file and serve submissions concerning what orders should be made for payment of costs incurred with respect to the proceedings at first instance and what orders should be made with respect to costs incurred in the two appeals, such submissions to be made within 21 days of today's date. 6. The submissions may include a submission from the Builder as to whether the Appeal Panel should make a further order for payment of interest on the late payment of unpaid invoices. 7. The parties have leave to file and serve submissions in response to the submissions lodged by the other party, such submissions to be lodged within 14 days of the receipt of the initial submissions. 8. The submissions of the parties should include a submission as to whether the Tribunal may determine costs (and any alteration in the amount due by reason of a claim by the Builder for interest on unpaid invoices) on the papers and by so doing dispensing with a further 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 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: 24 January 2025