AAD Build Pty Ltd v John and Beverley Garside; John and Beverley Garside v AAD Build Pty Ltd and Andrew Dwight

[2015] NSWCATCD 7

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	AAD Build Pty Ltd v John and Beverley Garside; John and Beverley Garside v AAD Build Pty Ltd and Andrew Dwight [2015] NSWCATCD 7
Hearing dates:	4 and 5 March 2014
Decision date:	15 January 2015
Jurisdiction:	Consumer and Commercial Division
Before:	K Rosser, Senior Member
Decision:	HB 13/27106 is dismissed. HB 13/39352 is dismissed.
Catchwords:	Debt recovery; Completion costs; Damages for failure to take reasonable care; estoppel by convention
Legislation Cited:	Home Building Act 1989 Consumer Trader and Tenancy Tribunal Act 2001 Civil and Administrative Tribunal Act 2013 Civil Liability Act 2002
Cases Cited:	Air Tahiti Nui Pty Ltd v McKenzie (2009) 77 NSWLR 299 Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452 MK & JA Roche Pty Ltd & ORs v Metro Edgley Pty Ltd & Anor [2005] NSWCA 39 Moriatic Pty Ltd v Lawrence James Gordon and Anor [2007] NSWSC 5 (18 January 2007)
Category:	Principal judgment
Parties:	AAD Build Pty Ltd – Applicant and Cross-Respondent John and Beverley Garside – Respondents and Cross-Applicants Andrew Dwight – Cross-Respondent
Representation:	Counsel: Ms McMahon for Applicant and Cross-Respondents Mr Davie for Respondents and Cross-Applicants Solicitors: Peter Merity Solicitor for Respondents and Cross-Applicants
File Number(s):	HB 13/27106 and HB 13/39352
Publication restriction:	Nil

reasons for decision

Applications

HB 13/27106

1. In HB 13/27106, AAD Build Pty Ltd seeks an order for payment of money against John and Beverley Garside [the Garsides]. The application is a debt recovery claim that arises out of two contracts to undertake residential building work that were entered into on 16 May and 28 September 2011 respectively.

HB 13/39352

2. In the cross-application HB 13/39352, the Garsides seek an order for damages in respect of completion costs, repair costs and the quoted cost of replacing timber flooring. Most of the Garsides’ claim relates to damage to the Garsides’ house said to arise from a failure by the builder to adequately tie down a tarpaulin, which led to water penetration during a storm. The Garsides claim that the water penetration occurred on the night of 22 July / morning of 23 July 2011, after three days of heavy rain.

Proceedings in the Tribunal

3. The proceedings comprising HB 13/27106 were originally commenced in the Local Court by way of a statement of claim dated 25 January 2013. AAD Build Pty Ltd was the plaintiff in those proceedings. In the defence filed in the Local Court, the Garsides denied that they contracted with AAD Build Pty Ltd, stating at paragraph 2 of the pleadings and particulars “the building contracts dated 16 May 2011 and 28 September 2011 are between Mr Andrew Dwight and the defendants”.

4. By consent of the parties, the proceedings were transferred to the Consumer Trader and Tenancy Tribunal on 2 May 2013. AAD Build Pty Ltd’s proceedings became application HB 13/27106.

5. The application was listed for directions on 18 June 2013. At that hearing, Andrew Dwight (who was a director of AAD Build Pty Ltd at the time the contracts were entered into) was joined to the proceedings as an applicant. The Tribunal made directions in relation to the filing and serving of evidence and the lodging of a cross-application by the Garsides. The parties were given leave to be legally represented. At that time, AAD Build Pty Ltd and Mr Dwight were represented by Snelgroves Solicitors, who filed Amended Points of Claim on 17 July 2013.

6. The Garsides’ cross-application (HB 13/39352) was filed on 22 July 2013.

7. Both matters were listed for further directions on 8 October and 11 November 2014 and for return of summons on 14 January and 13 February 2014. By the time the matter came before the Tribunal on 13 February 2014, Snelgroves Solicitors were no longer representing AAD Build Pty Ltd and Mr Dwight. Ms McMahon advised the Tribunal that she had been retained shortly prior to that hearing. On 7 February 2014, Ms McMahon filed Further Amended Points of Claim, in which Mr Dwight was removed as an applicant in HB 13/27106. He remained a respondent in the Garsides’ application HB 13/39352).

8. The matters were listed for hearing on 4 and 5 March 2014. At the conclusion of the hearing, directions were made for the filing and serving of written submissions. In a written submission in reply in AAD Build Pty Ltd’s claim, Ms McMahon submitted that the Garsides are estopped from denying that AAD Build Pty Ltd is the builder on the basis of a conventional estoppel. This submission led to an application by the Garsides’ legal representative to make further submissions and to an application to re-open the evidence.

9. The matters were accordingly listed for directions on 27 June 2014. The owners’ application to re-open was not opposed and leave was accordingly granted to the Garsides to re-open their case for the purpose of tendering material and issuing a summons to the GIO. A summons return and directions hearing was subsequently listed on 7 August 2014, at which time access orders were made in respect of documents produced by GIO Claims Liability and directions were made for the filing and serving of further submissions.

10. A statement dated 29 July 2014 filed by Mr Dwight was accepted into evidence and is marked Exhibit B7. The documents produced under summons by GIO Claims Liability were also accepted into evidence and are marked as Exhibits H3 – H10.

11. Following the 7 August 2014 hearing, the Garsides’ solicitor filed an exhibit list and all submissions filed and served in both proceedings.

Jurisdiction

12. Both proceedings were commenced in the Consumer, Trader and Tenancy Tribunal when the Consumer Trader and Tenancy Tribunal Act 2001 [CTTT Act] was in force. The Consumer Trader and Tenancy Tribunal was abolished as of 1 January 2014 and the CTTT Act was repealed. The proceedings were not heard prior to 1 January 2014.

13. Transitional provisions in relation to unheard proceedings are set out in Clause 7 of Schedule 1 of the Civil and Administrative Tribunal Act 2013 [NCAT Act]. Pursuant to Clause 7(1), unheard proceedings are taken, on and from 1 January 2014, to have been duly commenced in NCAT and may be heard and determined by NCAT. The application has therefore been determined in this Tribunal in accordance with the transitional provisions of the NCAT Act.

14. It is not in dispute that the applications constitute building claims in respect of which the Tribunal has jurisdiction pursuant to s 48K of the Home Building Act 1989 [the Home Building Act].

Background

15. Central to both proceedings are two contracts for residential building work.

16. The first contract is dated 16 May 2011. The contracting parties are named as John and Beverley Garside and Andrew Dwight. The builder’s licence number recorded on the contract is 228830C, which NSW Fair Trading records as the contractor licence number of AAD Build Pty Ltd. The contract price is $381,987.63 and the works are described as “brick veneer second storey addition using existing concrete roof tiles”.

17. The second contract is a costs plus contract dated 28 September 2011. The contracting parties are named as John and Beverley Garside and Andrew Dwight. The builder’s licence number is 228830C. The building works are described as the supply and installation of wrought iron balustrades to stairs and balcony, the supply and installation of vanities, the supply and installation of internal and external painting upstairs, tiling works to upstairs balconies and bathrooms and air conditioner wall.

18. In both cases the contracts are signed by the Andrew Dwight as the builder. In both cases the Home Owners Warranty Insurance policy records AAD Build Pty Ltd as the builder.

19. On or about 19 June 2012 Mr Dwight gave the Garsides a Final Handover Certificate in respect of the works detailed in the first contract. AAD Build Pty Ltd claims that as at that date the only work to be completed was “clean grout in main bathroom and plain main ensuite window base - check all” and states that this work was carried out. The Garsides dispute this. They claim that at the relevant time, Mr Dwight represented to them that completion of other works not detailed in the handover certificate would commence the following day. These works were:

1. (a) Completion of stairs;

2. (b) Roof capping on lower roofs;

3. (c) Installation of bathroom fittings;

4. (e) Supply and installation of flyscreens;

5. (f) Supply and installation of flooring and skirting around bottom and top of stairs and

6. (g) Repairs to French doors on top level due to binding and inability to close properly.

20. AAD Build Pty Ltd claims that the final progress payment due in accordance with clause 15 of the first contract was not paid and that the outstanding balance payable by the owners in respect of that contract is $19,099.88. AAD Build Pty Ltd originally sought payment of that sum plus interest and costs. By the end of the hearing, it had conceded $3,499.70 in respect of this aspect of the claim. The Garsides originally claimed that they incurred costs of $9,460.00 having the works completed. This sum was later amended to $9,160.00.

21. On 17 December 2012, the second contract was terminated after the Garsides failed to pay outstanding invoices in respect of that contract. AAD Build Pty Ltd claims that tax invoices were issued in accordance with the second contract. Originally, AAD Build Pty Ltd sought the outstanding balance payable by the owners under that contract in respect of three invoices: Invoice 96 ($824.14), invoice 136 ($516) and invoice 205 ($23,521.36), plus interest and costs. One of the items in invoice 205 (the claim in relation to the waste bin) was not pressed after the hearing. The balance of invoice 205 for which payment is sought is $23,162.87. The total sum sought under the second contract is $27,408.22 plus interest.

22. The Garsides dispute a number of aspects of the unpaid invoices.

23. In addition, the Garsides claim that in July 2011, while the building works were being carried out, the builder failed to properly and adequately secure a tarpaulin, which partially blew off during a thunderstorm. This lead to water penetration into the lower part of the building. The Garsides seek an order for damages in respect of damage to the building said to have been caused by water penetration. The builder asserts that the Garsides have not proved that the tarpaulin was negligently secured and have not established the damage for which damages are claimed.

24. The Garsides deny that they contracted with AAD Build Pty Ltd. They maintain that they contracted with Andew Dwight.

Evidence and submissions

25. In making a decision in relation to the applications, I have considered the following documents, as well as the oral evidence given during the hearing and the written and oral submissions made by the parties’ representatives:

• Statements of Andrew Dwight dated 23 July 2013, 10 February 2014 and 29 July 2014 (the latter being marked “B7”);

• Statement of Susan Dwight dated 9 February 2014;

• Report of Max Dietrich dated 7 February 2014;

• Exhibit B1 – a photograph with details from the digital file, tendered by AAD Build Pty Ltd;

• Exhibit B2 – Invoice 205, tendered by AAD Build Pty Ltd;

• Exhibit B3 – Email from Andrew Dwight to John Garside dated 8 November 2012, tendered by AAD Build Pty Ltd;

• Exhibit B4 - Photographs #34 and #36, tendered by AAD Build Pty Ltd;

• Exhibit B5 - Marked ground floor plan (attachment AD4 to Mr Dwight’s statement dated 10 February 2014), tendered by AAD Build Pty Ltd;

• Exhibit B6 – Variation for guttering dated 15 May 2012, tendered by AAD Build Pty Ltd;

• Statements of John Garside dated 3 September 2013 and 12 December 2013;

• Reports of Peter Sykes dated 27 November and 6 December 2013;

• Exhibit H1 – Bureau of Meteorology public rainfall records, tendered by the Garsides;

• Exhibit H2 – photographs, tendered by the Garsides;

• Exhibit H3 – GIO Policy SBL335494 trade insurance for the period 7 July 2011 to 29 March 2012 in the name of Andrew Dwight and Susan Dwight, tendered by the Garsides;

• Exhibit H4 – GIO Policy SBL335494 trade insurance for the period 7 July 2000 to 7 July 2011 in the name of Andrew Dwight and Susan Dwight, tendered by the Garsides;

• Exhibit H5 – QBE Contract Works Policy 132N000877CAR for the period 11 September 2010 to 11 September 2011 in the name of Andrew Dwight and Susan Dwight, tendered by the Garsides;

• Exhibit H6 – GIO Workers Compensation Policy WC466160157 for the period 30 June 2010 to 30 June 2011 in the name of AN Dwight and S Dwight, tendered by the Garsides;

• Exhibit H7 – GIO Workers Compensation Policy WC466160157 for the period 30 June 2011 to 30 June 2012 in the name of AN Dwight and S Dwight, tendered by the Garsides;

• Exhibit H8 - GIO Workers Compensation Policy WC466160157 for the period 30 June 2012 to 30 June 2013 in the name of AN Dwight and S Dwight, tendered by the Garsides;

• Exhibit H9 – Letter dated 15 April 2014 from Cerno Limited to John Garside in respect of a claim made on GIO Public Liability Policy of A and S Dwight, tendered by the Garsides and

• Exhibit H 10 - GIO Claim Lodgement document dated 11 November 2013 in relation to Policy SB9L335494 with the insured being Andrew Dwight and notification made by Susan Dwight, tendered by the Garsides.

Issues

HB 13/27106

26. A threshold issue to be determined in these matters is the correct identity of the builder. As Andrew Dwight is a no longer an applicant in HB 13/27106, the application for payment of monies outstanding under the contract must fail if he and not AAD Build Pty Ltd is found to be the builder.

27. It was submitted on behalf of AAD Build Pty Ltd that a conventional estoppel prevents the Garsides from denying that AAD Build Pty Ltd is the builder. In determining the identity of the builder, I have considered the estoppel issue first.

28. If AAD Build Pty Ltd is the builder, then the issue to be determined is whether the basis for making the order sought has been established.

HB13/39352

29. In respect of the Garsides’ application the issues are:

• Have the Garsides established a basis for an order for completion costs in respect of the first contract?

• Have the Garsides established a basis for an order for damages in respect of damage caused by water penetration?

Determination of the issues

Are the Garsides estopped from denying that AAD Build Pty Ltd is the builder?

30. Andrew Dwight is named as the builder in both contracts. His name appears as such on the first page of the contracts (Schedule 1, Particulars of Contract) and on page 8 of each of the contracts, in the signature block. There is a notation to the right of the signature blocks on each of the contracts, which provides instructions concerning how a contract should be signed if signed on behalf of a company. This instruction was not followed in either contract.

31. Mr Dwight was an applicant in the builder’s application until 7 February 2014, when Ms McMahon filed Further Amended Points of Claim in the builder’s case. Mr Dwight remains a respondent in the Garsides’ application. The Garsides’ written submission in relation to the builders’ claim, which was filed on 7 March 2014, asserts that Mr Dwight and not AAD Build Pty Ltd is the builder. The submission in this regard is consistent with the defence to the application filed against the Garsides in the Local Court, the Garsides’ Points of Cross-Claim dated 13 July 2013, with the Garsides’ defence to the Amended Points of Claim and with Mr Garsides’ statement dated 3 September 2013.

32. In reply to this submission dated 12 March 2014, Ms McMahon argued that a conventional estoppel operates so that the Garsides are estopped from denying that AAD Build Pty Ltd is the builder.

Submissions and evidence in support of the estoppel argument

33. Ms McMahon argued that the Garsides are estopped from denying that AAD Build Pty Ltd is the builder on the basis that:

• Absent any amended pleading the Garsides are estopped from raising any new defence which appears to be a defence in respect of entitlement as of right.

• The new defence only appears for the first time in the Garsides’ closing submissions.

• The parties, by the course of their dealings, put their own interpretation on the terms of the contract, namely that AAD Build Pty Ltd was the builder.

• Having adopted this course of conduct, the parties are now bound by those terms as if they had recorded it as a variation to the contract.

• The doctrine of common law conventional estoppel precludes the Garsides from denying that assumption.

34. The facts said not to be in dispute that operate in favour of an estoppel were submitted to be:

• The quote for the first contract was provided by AAD Build;

• AAD Build’s licence number is on the contract;

• Home Warranty Insurance was provided by AAD Build Pty Ltd;

• Mr Dwight was a director of AAD Build at the time the contract was entered into;

• All invoices sent to the Garsides bear the name of AAD Build;

• The Garsides do not state that any previous payments made to AAD Build under the contracts were made by mistake of fact or law;

• The Garsides do not claim that any or all monies paid to AAD Build under the contracts should be repaid;

• The email dated 27 September 2012 from Mr Garside states that “AAD were appointed as the builder on the 20th April 2011”;

• In their defence to the builder’s application, the Garsides did not raise the issue of AAD Build’s entitlement to completion costs of the first contract.

35. In addition to the evidence to which AAD Build’s 7 March 2014 submission refers, in his statement dated 10 February 2014, Mr Dwight asserts, amongst other things, that:

• He signed the contracts on behalf of AAD Build Pty Ltd, which is why the company’s ABN and licence number appear on the contract documents and the home owners warranty insurance was obtained on behalf of the company.

• His name appearing on the contract documents was “a genuine oversight”.

• It was his understanding that the homeowners understood that the contract was with AAD Build Pty Ltd, based on an email received from Mr Garside on 27 September 2012. This email [which is at annexure AAD 1 to Mr Dwight’s affidavit] is apparently addressed to Mr Dwight and relevantly states “…..AAD Build was appointed as the builder on the 20th April 2011”.

Submissions and evidence opposing the estoppel argument

36. Mr Davie’s 20 March, 16 May, 27 June and 5 August 2014 submissions set out the basis for opposing the estoppel submission.

Consideration of the estoppel argument – the law

37. The estoppel which is said to apply in this case is an estoppel by convention. This is defined as follows:

Estoppel by convention is a form of estoppel founded not on a representation of fact made by a representor and acted on by a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying. MK & JA Roche Pty Ltd & ORs v Metro Edgley Pty Ltd & Anor [2005] NSWCA 39 at 68.

38. In Moriatic Pty Ltd v Lawrence James Gordon and Anor [2007] NSWSC 5 (18 January 2007), Brereton J set out the criteria to be established for a conventional estoppel to be found. He stated:

In common law conventional estoppel, it is necessary for a plaintiff to establish (1) that it has adopted an assumption as to the terms of its legal relationship with the defendant; (2) that the defendant has adopted the same assumption; (3) that both parties have conducted their relationship on the basis of that mutual assumption; (4) that each party knew or intended the other to act on that basis and (5) that departure from that assumption will occasion detriment to the plaintiff [Waterman v Gerling [83], [96]].

Consideration of the estoppel argument – the issues

39. The relevant issues in this case in relation to conventional estoppel are therefore:

• What assumption did AAD Build Pty Ltd adopt as to the terms of its contractual relationship with the Garsides?

• Did the Garsides adopt the same assumption?

• If AAD Build Pty Ltd and the Garsides had a mutual assumption, did they conduct their relationship on the basis of that assumption?

• Did AAD Build Pty Ltd and the Garsides know that the other party conducted the relationship on the basis of the mutual assumption, or intended the other party to do so?

• Would departure from the mutual assumption cause detriment to AAD Build Pty Ltd?

What assumption did AAD Build Pty Ltd adopt as to the terms of its contractual relationship with the Garsides?

40. On the basis of Mr Dwight’s 10 February 2014 statement, I accept that in signing the contracts, Mr Dwight considered that he was doing so on behalf of AAD Build Pty Ltd. I therefore accept that AAD Build Pty Ltd adopted the assumption (or at least that Mr Dwight, as a director of the company at the relevant time, adopted the assumption) that it was a party to the contracts with the Garsides. This is consistent with the Home Owners Warranty Insurance Policy being taken out in the name of that company and with AAD Build Pty Ltd’s licence number being included on the contract.

Did the Garsides adopt the assumption that they had contracted with AAD Build Pty Ltd?

41. I am not satisfied that the Garsides adopted the assumption that they had contracted with AAD Build Pty Ltd.

42. Firstly, I am not satisfied that the Garsides knew or could be expected to know that the licence number on the contract was not that of Mr Dwight or to have distinguished between Mr Dwight’s licence number and that of AAD Build Pty Ltd. Nor do I consider that the fact that the Home Owners Warranty Insurance was taken out by AAD Build Pty Ltd would be sufficient to establish that this is the entity with which the Garsides assumed that they were contracting.

43. Secondly, the quote on which the first contract is based was given not by AAD Build Pty Ltd, but by AAD Build. It appears that this had been the business name of a partnership comprised of Mr Dwight and of his wife Susan Dwight. The trade insurance certificates which were in force during the period of the contracts (Exhibits H3 to H8) are in the partnership name and not in the name of AAD Build Pty Ltd.

44. Thirdly, the invoices rendered to the Garsides are not all in the name of AAD Build Pty Ltd. A number of them are in the name of AAD Build only. (See, for example, invoice numbers 31, 34, 35, 36, 164, 41, 49 and 120 at annexure AD 7 to Mr Dwight’s 10 February 2014 statement). Further, seven out of sixteen of the invoices at AD 7 include Mr Dwight’s personal home building licence number rather than that of AAD Build Pty Ltd, and half of the invoices do not note an ACN.

45. Fourthly, a letter of demand dated 9 November 2012 addressed to the Garsides, which is at annexure AD 14 of Mr Dwight’s 10 February 2014 statement, does not purport to be sent by or on behalf of AAD Build Pty Ltd. Rather the letter is from “Andrew Dwight” and refers to Mr Dwight and not the company taking further action if payment was not made by 15 November 2012.

46. Fifthly, I am not satisfied that the fact that Mr Dwight was a director of AAD Build Pty Ltd at the relevant time or that payments were made to AAD Build Pty Ltd is significant. A contracting party may direct another party to the contract to make payments to a third party. It is clear that the invoices direct payment to AAD Build Pty Ltd, albeit that one of the invoices states that the payment should be made to “AAD Build”. In these circumstances there is no basis for the Garsides to seek repayment of monies paid in respect of the building works. In any event, until shortly before the hearing, Mr Dwight was an applicant in the builder’s proceedings. This means that in respect of the builder’s claim, the identity of the builder was to a large extent academic, as assuming the Garsides owed money at all (which they do not deny), it had to be owed either to Mr Dwight or to AAD Build Pty Ltd.

47. Sixthly, the email dated 27 September 2012, on which weight is placed in Mr Dwight’s 10 February 2014 statement, significantly does not refer to the builder as AAD Build Pty Ltd. It refers to “AAD Build” which was, as noted above, a trading name used by Mr Dwight in partnership with Susan Dwight. I note also the email which constitutes B3. This is an email sent by Mr Dwight apparently in response to Mr Garside’s 27 September 2012 email or if not in response to the email, in response to other correspondence sent by one of the Garsides on the same date. Mr Dwight’s email does not refer to AAD Build Pty Ltd. Instead it refers to “AAD Build” and includes Mr Dwight’s personal licence number rather than the company’s licence number below what could be referred to as the signature block.

48. Overall, I am not satisfied on the basis of the evidence or the submissions made by Ms McMahon that the Garsides adopted the assumption that they had contracted with AAD Build Pty Ltd rather than with Mr Dwight.

49. In these circumstances, I am not satisfied that the Garsides are estopped from denying that AAD Build Pty Ltd is the builder based on an estoppel by convention.

50. As I am not satisfied that there was a mutual assumption about the identity of the builder, it unnecessary for me to consider the consequences of a mutual assumption. However, in relation to the issue of detriment, I note that it is not the lack of a mutual assumption that AAD Build Pty Ltd is the builder that causes that party any detriment. Rather, it is the removal of Mr Dwight as an applicant in the builder’s proceedings in the Further Amended Points of Claim that means that the claim for debt recovery cannot be successful.

Who is the builder?

51. Although I have found that a conventional estoppel does not operate to prevent the Garsides from denying that AAD Build Pty Ltd is the builder, it remains necessary to make a finding as to the identity of the builder.

52. The identity of a contracting party must be determined on an objective basis by examining and construing relevant documents “in the factual matrix in which they were created” and “ascertaining between whom the parties objectively intended to contract”. (See Air Tahiti Nui Pty Ltd v McKenzie (2009) 77 NSWLR 299 at 304).

53. Andrew Dwight is unambiguously identified as the builder in both contracts with the Garsides. While the Home Owners Warranty Insurance Certificate is in the name of AAD Build Pty Ltd and the licence number on the contracts is that of the company, the quote was not from AAD Build Pty Ltd, not all of the invoices were issued by that company, the builder’s letter of demand is from Mr Dwight and the trade insurances in force at the time the work was undertaken were in the name of Mr Dwight and his wife and not AAD Build Pty Ltd.

54. While I have accepted that Mr Dwight considered that he was entering into the contracts on behalf of AAD Build Pty Ltd, I am not satisfied that it has been established that this was the Garsides’ intention, either objectively or, for that matter, subjectively.

55. Overall, I find that that there is insufficient basis upon which to conclude that the builder is AAD Build Pty Ltd. I find that the builder is Andrew Dwight, as set out in the contract.

56. From an examination of documents including the quote, the contracts, the invoices, the trade insurance certificates and Mr Dwight’s email communication which constitutes Exhibit B3, it appears that on a practical level there was no separation of Mr Dwight, Mr Dwight in partnership with Mrs Dwight and AAD Build Pty Ltd as legal entities. It appears that business was conducted as if the various entities were interchangeable.

57. As I am not satisfied that AAD Build Pty Ltd is the builder, it has no standing to recover unpaid contract monies from the Garsides. I have therefore dismissed HB13/27106.

Have the Garsides established a basis for an order for completion costs in respect of the first contract?

58. The Garsides claim damages for completion costs in respect of the first contract. The items to which this part of their claim relates are set out in paragraph 18 above. Initially the completion costs claim was for $9,460.00. This was amended to $9,170 in Mr Garside’s 12 December 2013 statement. One item relevant to this part of the claim – that which relates to the French doors – is for allegedly defective work rather than incomplete work.

59. The sum unpaid under the first contract is $19,099.88. This is the progress payment for stage six. The Progress Payments Schedule in the first contract specifies that the sum was payable “upon practical completion of Fix out carpentry”.

60. The Garsides claim that this sum was not payable because practical completion of stage 6 was not achieved. They also claim that a number of the incomplete items relate to stages other than stage 6 and had therefore already been paid for. The Garsides submit that the failure to complete these items is a breach of the first contract, which was not terminated, for which they are entitled to damages.

61. The Garsides’ submissions in relation to whether the sum unpaid under the first contract was in fact payable when it was demanded and their submissions in relation to an entitlement to damages in respect of incomplete works have some force. However, had the works required under the first contract been completed, then it is clear that the sum claimed in the last invoice would have been payable.

62. In these circumstances, I am not satisfied that it is necessary to determine liability in respect of the claim for incomplete work. This is because the final progress payment under the first contract exceeds the completion costs / repair of the French doors claim. Had the builder’s debt recovery claim not been dismissed, it would have been necessary to credit the Garsides’ reasonable completion costs against the sum determined to be payable to the builder. The sum the Garsides would have been required to pay the builder under the first contract would have been at least $19,099.88 (the final progress payment) less $9160.00 (their completion costs / cost of repair of the French doors); that is, $9,939.88.

63. As it is, the Garsides will not be ordered to pay any sum in respect of the either contract as Mr Dwight was removed as an applicant in HB 13/27106 and that application has been dismissed. As the amount claimed by the Garsides in respect of incomplete work and the French doors is less than the minimum sum they would have paid the builder had the first contract been completed, I am not satisfied that the Garsides have suffered any loss in paying for the completion of incomplete works and repair of the French doors. That part of HB 13 / 27106 is therefore dismissed.

Have the Garsides established a basis for an order for damages in respect of damage caused by water penetration?

64. As noted above, this part of the Garsides’ application relates to damage said to have been caused consequent to water penetration which resulted from a severe storm on the night of 22 July / 23 July 2011. In his 12 December 2013 statement, Mr Garside specifies that the sum sought for repairs (excluding the claim for the quoted cost of floor replacement) is $40,726.82.

65. This sum was adjusted by the Garsides’ Counsel Mr Davie in his submissions in chief in relation to the Garsides’ claim. The adjusted sum (set out in a table at paragraph 25 of that submission) is $37,019.82. This reflects the abandonment of the Garsides’ claim in respect of verandah ceiling repairs and the reduction of the sums claimed for ceiling replacement and painting.

66. However, the sum of the adjusted amounts set out in paragraph 25 is not $37,019.82 as set out in that paragraph. Rather, it is $29,340.00, although it should be $29,340.82, as the sum of $5,836.82 paid by the Garsides (as set out in Mr Garside’s 12 December 2013 statement) is rendered in the adjusted amount column at paragraph 25 of the submission as $5,836.00 only. I assume that the total adjusted amount set out in Mr Davie’s submission is the result of a calculation error and that the sum claimed in respect of repairs (other than floor replacement) is in fact $29,340.82. The claim in respect of timber floor replacement is $122,030.00. The quotes which make up this part of the claim are set out in Annexure 15 of Mr Garside’s 12 December 2013 statement.

Basis of the claim

67. The basis for this part of the application is the claim that in carrying out the building works Mr Dwight failed to take reasonable care and that damage to the existing building was caused by that failure. The Garsides’ Points of Claim specify that the claim is based on a breach of clause 23.2 of the first contract. They therefore assert that their cause of action is for breach of contract.

68. Clause 23.2 of the first contract relevantly states:

The builder is not responsible for:

(a) Loss of damage to the owners’ property or property for which the owner is responsible that is left on site

(b) Subject to clause 23(2)(c), any defect, structural deficiency, settlement or deterioration in the existing building except to the extent that it is caused by the builder failing to take reasonable care in the carrying out of the building works

(c) Damage to ceilings in the existing building except to the extent that it is caused by the builder failing to take reasonable care in carrying out the building works but then only to the extent of repairing and excluding any repainting.

…

69. The Points of Claim states that Mr Dwight failed to “properly and adequately secure a tarpaulin over the existing roof so at to prevent water ingress to the existing building”. In his statement dated 13 July 2013, Mr Garside states at paragraph 24:

…[W]hilst the building works were being carried out, which included the removal of all of the roof tiles to the building, the builder failed to properly and adequately secure a tarpaulin over the existing roof. There was a thunderstorm that day and, because the tarpaulins were not properly secured, extensive water damage was sustained to the following areas:

(a) Bar cabinets

(b) Ceilings to kitchen

(c) Ceilings to dining room

(d) Ceilings to family room

(e) Ceilings to laundry

(f) Ceilings to bathroom

(g) Ceilings to office / bedroom

(h) Two French doors to the family room

(i) Timber floor boards to the family room

(j) Timber floor boards to the dining room, foyer and kitchen

(k) Downstairs verandah ceiling and columns

(l) Light fittings

(m) Sandstone steps

(n) Two rear sets of shutters

70. It emerged early in the hearing that the alleged failure to take reasonable care being in relation to the tying down of a tarpaulin “over the existing roof” did not accurately reflect what had occurred. This is in part because there was no “existing roof” on which to place a tarpaulin, the building works being a second storey addition.

71. It was also suggested that there was no tarpaulin at all. This also does not accurately reflect the facts. The material before the Tribunal shows that when the existing roof of the building was removed, a tarpaulin was placed over the ceilings of the existing building and the floor structure of the addition. The framework and roof trusses for the second storey were erected over this tarpaulin and secondary tarpaulins were then placed over that framework. The claim in respect of water penetration arises from one of the secondary tarpaulins becoming dislodged during a rain storm. The other secondary tarpaulin remained in place and no water penetration occurred in the area of the existing building covered by that tarpaulin.

72. Section 38 of the NCAT Act deals with the Tribunal’s procedure. Under s 38(4) of the NCAT Act, the Tribunal “is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms”.

73. Although the Points of Claim and Mr Garside’s statement do not accurately set out the basis for the claim against the builder in relation to water penetration, Mr Dwight’s evidence makes it clear that he understood the basis for the claim; that is, that one of the secondary tarpaulins installed over the top of the building works because dislodged and water subsequently entered the building. He therefore knew the claim he had to answer and he had the opportunity to answer that claim in his evidence. In these circumstances the inaccuracy of the Points of Claim and Mr Garside’s statement causes no prejudice to Mr Dwight.

How and when did the secondary tarpaulin become dislodged?

74. In his statement dated 10 February 2014, Mr Dwight states (at paragraph 46):

Every night before we left the site we fitted two large tarps over the exposed ground floor. The tarps were tied and screwed through eyelets, they were pulled tight [t]o ensure wind couldn’t get in and on occasions timber would be packed under the tarp to assist with any run off of water, if that occurred.

75. Mr Dwight’s statement goes on to describe an “unexpected storm” that came through the area on 20 July 2011. He states (at paragraph 50):

The wind was so ferocious it ripped one of the secondary tarps on the top roof and water got through this tarp down to the floor tarp below. Due to the volume of water in a short amount of time, a small amount of water managed to get through the floor tarp and onto the existing ceiling below in the kitchen, living and laundry areas.

76. However, under cross-examination, Mr Dwight conceded that the water penetration occurred not on 20 July, but two days later, on the night of 22 July / morning of 23 July 2011. In view of this concession, and in accordance with the evidence of both Mr Garside and Mr Dwight, I find that the secondary tarpaulin on one side of the building was dislodged on that date and that water penetration occurred through the main tarpaulin into the building below.

Was the water penetration caused by a failure to take reasonable care?

77. It has not been disputed that the builder owed the Garsides a duty of care in undertaking the building works.

78. The failure to take reasonable care is the definition of negligence which is set out in s 5 of the Civil Liability Act NSW 2002 [the CLA]. Pursuant to s 5A of the CLA, Part 1A of that Act “applies to any claim for damages for harm resulting from negligence, regardless of whether the claim is brought in tort, in contract, under statute or otherwise”. I am therefore satisfied that Part 1A of the CLA applies in this case.

79. For the following reasons, I am satisfied that there was a failure to take reasonable care and that as the builder Mr Dwight was accordingly in breach of clause 23.2 of the contract.

80. Firstly, as noted above, Mr Dwight’s evidence was that the secondary tarpaulins were “pulled tight to ensure wind couldn’t get in”. The fact that wind did get in under one of the secondary tarpaulins indicates that either that particular tarpaulin was not pulled tight enough or had become loose since it was originally tied. Such a conclusion is supported by Mr Garside’s evidence that the tarpaulin on the affected side of the house was loosely secured.

81. Secondly, the fact that the part of the house below the secondary tarpaulin that was not dislodged remained undamaged suggests that if reasonable steps had been taken to secure the other tarpaulin, it would not have been dislodged and the damage would not have occurred.

82. Thirdly, the evidence does not suggest that Mr Dwight or any of his workers returned to the house after 20 July 2012 to ensure that the tarpaulins had remained secure. I accept that the rain on 20 July 2011 was unexpected. However, the continuing rain on 21 and 22 July should have been anticipated. It would have been reasonable to check the secondary tarpaulins and tighten the fastenings in the aftermath of the initial rain storm on 20 July. Had this occurred, I am satisfied that the relevant secondary tarpaulin is unlikely to have been dislodged. In these circumstances I am not satisfied that Mr Dwight can rely on s 5I of the CLA, as I am not satisfied that any harm suffered results from the materialisation of an inherent risk, that is, from a risk (such as extreme weather conditions) that could not have been avoided by the exercise of reasonable care and skill.

77. Fourthly, the fact that secondary tarpaulins were installed at all leads me to conclude that the floor tarpaulin was not expected to provide a primary waterproofing function. I conclude that the secondary tarpaulins were installed to provide protection to the building. In these circumstances, the exercise of reasonable care required the builder to check that the secondary tarpaulins were still capable of performing that function after the initial rain storm on 20 July.

Did Mr Dwight’s failure to take reasonable care cause damage?

84. In accordance with s 5D of the CLA, in determining whether Mr Dwight’s failure to take reasonable care caused the damage claimed, I have considered:

1. (a) Whether Mr Dwight’s failure to take reasonable car was a necessary condition of the occurrence of the damage and

2. (b) Whether is appropriate for the scope of Mr Dwight’s liability to extend to the damage claimed.

85. I am satisfied on the balance of probabilities that water penetration occurred as a result of the failure to take reasonable care in checking that the secondary tarpaulins remained securely tied down after the rain storm on 20 July 2011. I am satisfied that the water penetration caused damage which would not have occurred but for the water penetration. In these circumstances, I am satisfied that Mr Dwight’s failure to take reasonable care is the factual cause of the water damage. As the builder, Mr Dwight owed a duty of care to the Garsides. As the builder, he was in the best position to ensure that the secondary tarpaulins were securely tied down. I am therefore satisfied that it is appropriate for his liability to extend to the damage caused by the water penetration.

To what damages, if any, have the Garsides established an entitlement in respect of the water penetration claim?

Repairs generally

86. As noted above, the Garsides claim the sums listed in the adjusted amount column at paragraph 25 of Mr Davie’s first submission. The adjusted sum total of $37,019.82 is incorrect and should be $29,340.82. The adjusted sums are those sums claimed in respect of the cost of repairing damage caused by water penetration. The evidence in support of the this part of the claim consists of Mr Garside’s statement of 12 December 2013 and attached material, in particular invoices from D & D Bobin, Shutter Perfection, Professional Kitchen Services and R & J’s Painting and Property Maintenance, as well as photographs taken by the Garsides.

87. A problem with the Garsides’ evidence in relation to this aspect of their claim is that the Garsides did not obtain expert evidence as to the extent of the water damage, the appropriate method of rectification and the cost of rectification at the time the damage occurred. In addition, they undertook the repairs in late 2012 when the second contract was still on foot, although suspended. There is no evidence that Mr Dwight was put on notice that the Garsides had engaged D & D Dobin to undertake rectification work during that period. Further, when the builder’s expert Mr Dietrich inspected the house, he was not permitted to inspect the work the Garsides claim to have had rectified.

88. I am satisfied that the Garsides’ actions in this regard caused some prejudice to Mr Dwight in responding to the claim. While, I am not satisfied that the Garsides are thereby disentitled from claiming damages in respect of the water penetration, I am of the view that it is only appropriate to award damages in respect of those items in respect of which there is some evidence corroborating Mr Garside’s assertion that the items needed to be replaced.

89. I have separately considered the individual items claimed.

Ceiling repairs

90. As noted above, the cost of verandah ceiling repairs is no longer pressed, as Mr Garside conceded that the repairs were not required because of water damage.

91. The adjusted sum for the internal ceiling repairs ($15,620.00) is based on D & D Dobin’s invoice dated 12 December 2012, which is at Annexure 7 of Mr Garside’s 12 December 2013 statement. However, that invoice is also for works involving the removal of bulkheads, wall sheets, cornices, the insertion of lintels across the top of existing doors and the raising of the ground floor ceiling. I am satisfied that these were works contemplated by a variation (Variation 29) and represent an enhancement of the existing building.

92. Further, only some of the photographs tendered in support of the claim for replacement of water damaged ceilings show actual water damage. For example, the photographs at page 57, 58 and 59 of Annexure F of Mr Garside’s 3 September 2013 statement show parts of the ceiling from which skylights had been removed, rather than water damage. While other photographs show what appears to be water damage (the photographs at pp 60-69) and the areas in which water ingress occurred (the photographs at pp 73, 77, 78, 96, 97 and 99), the evidence overall does not support a conclusion that water ingress caused the ceiling to bow. In relation to this, I note that the photograph at Annexure F page 24 showing a bowed ceiling was apparently taken some 18 months after the water ingress occurred during a period when D & D Dobin were on site. Nor does the evidence support a conclusion that all of the ceilings in the affected rooms required replacement.

93. Had the Garsides replaced the ceilings promptly after the water damage occurred, consistently with the principle enunciated by Lord Macmillan in Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452 at 506, I may have been satisfied that they acted reasonably in doing so and should be entitled to recover the cost of replacing the ceilings. However, this is not what occurred. The water damage occurred in July 2011. The ceilings were not replaced until some 18 months later, in late 2012. The emergency created by the water penetration had long since passed and the Garsides had ample opportunity to obtain evidence to demonstrate that the ceilings required replacement and could not be repaired.

94. In the Scott Schedule annexed to Mr Dietrich’s report (at page 67), he estimates the cost of repairing water damaged ceilings at $1,601.68 plus GST ($1,761.84). I am satisfied that this costing is based on Cordells Housing Costs Guide 2013 (See [8.2] of Mr Dietrich’s report). As I am not satisfied that the ceilings required full replacement because of water damage and in absence of a quote for repairs to rather than replacement of the existing ceiling from the Garsides, I am satisfied that the sum assessed by Mr Dietrich is the appropriate quantum of damages in respect of ceiling repairs.

Bar area

95. The sum claimed in respect of the bar area is $2,035.00.

96. I am not satisfied that the bar area was water damaged. There are no photographs showing such damage and the invoice from Professional Kitchen Services at Annexure 8 to Mr Garside’s 12 December 2013 statement relied on in support of the claim does not state that the work was done in order to rectify water damage. I am not satisfied that Mr Garside’s assertion that the bar area was damaged by water penetration is sufficient to establish the fact of and the extent of any loss without corroborating evidence. This part of the application is therefore refused.

Light fittings

97. The sum claimed in respect of light fittings is $2,450.00.

98. I am not satisfied that the evidence establishes that light fittings required replacement as a result of water penetration. The Garsides’ photographs do not demonstrate that this is the case. Nor is there any evidence to that effect from, for example, an electrician. The tax invoice from D & D Dobin at Annexure 12 to Mr Garside’s 12 December 2013 statement refers to lights being replaced in the repaired water damaged ceiling. It does not state that the existing lights were not operational as a result of water damage. This part of the application is therefore refused.

Shutters

99. The claim is for replacement of two shutter doors, at a cost of $5836.00. However, the quote from Shutter Perfection at Annexure 11 of Mr Garside’s 12 December 2013 statement does not suggest that the doors had to be replaced because of water damage. Nor do the photographs provided by the Garsides indicate that two shutters doors were affected by water penetration. Overall, I am not satisfied that the evidence provided by the Garsides supports a conclusion that the shutter doors had to be replaced and the Garsides have provided no evidence of the reasonable cost of repair, even assuming that one or both of the doors required repair. This part of the application is therefore refused.

Sandstone steps

100. While Mr Garside claimed that sandstone steps suffered water damage in his 3 September 2013 statement, no evidence of the cost of repairs was provided in his 12 December 2013 statement. Nor does any claim in respect of the sandstone steps appear in the adjusted damages amount set out at paragraph 25 of Mr Davie’s submission of 7 March 2014. This part of the application is dismissed.

Painting

101. The Garsides’ adjusted claim in respect of this item is $3,399.00.

102. Clause 23.2(c) of the contract purports to exclude liability for the cost of painting in the event that the builder is found liable for damage to the ceiling in the existing building.

103. In his submission in reply in respect of the Garsides’ claim, Mr Davie argued that the failure “to take reasonable care in and about the protection of the works and the building by the placing of tarpaulins” constituted a breach of the statutory warranty in s 18B(a) of the Home Building Act. He submitted that it did not matter that the Garsides’ claim was not made by reference to that section. Mr Davie further submitted that as clause 23.2(c) purports to restrict or remove the rights of a person in respect of a statutory warranty, it is void pursuant to s 18G of the Home Building Act.

104. Whether or not there is merit in Mr Davies’ submission, the Garsides’ case was not run on the basis of a breach of statutory warranty. The Garsides’ Points of Claim articulate the cause of action as the builder’s failure to take reasonable care, which was particularised as a breach of clause 23.2 of the first contract. Neither the alleged breach of a statutory warranty nor the validity or otherwise of clause 23.2(c) were raised or argued during the hearing nor raised in Mr Davie’s submissions in chief.

105. The Tribunal acceded to the Garsides’ application to file a further submission and to ultimately re-open its defence to the builder’s claim in response to the issue of estoppel being raised in a submission in reply filed by Ms McMahon. Ms McMahon did not object to the breach of statutory warranty issue being raised in a submission in reply. However, that does not mean that it is appropriate for the submission to have been made at that point in the proceedings. The Garsides have run their claim for damages in respect of water penetration as arising from a breach of clause 23.2. I am not satisfied that it is appropriate for them to argue that they are not bound by clause 23.2(c), having failed to do so in their Points of Claim, during the hearing or in their submissions in chief.

106. In these circumstances, I find that the Garsides are contractually bound by clause 23.2(c). This means that they are not entitled to the cost of re-painting. Even if I am wrong on this point, it would not make any difference to my ultimate finding that the amount of damages to which the Garsides have established an entitlement is less than the amount they would have paid the builder had the first contract been completed. This part of the application is therefore refused.

Timber floors

The Garsides’ case:

107. The Garsides claim that timber floors in the original building require replacement because of the water penetration. They claim a total of $122,030.00 in respect of this aspect of their claim.

108. In addition to quotes, they rely on the reports of Mr Peter Sykes dated 27 November 2013 and 13 December 2013. In opposing the claim, the builder relies on the report of Mr Maxwell Dietrich dated 7 February 2014. I have considered whether the evidence supports a conclusion that the timber floor was damaged by the July 2011 water penetration and requires replacement as a result of that damage.

109. Mr Sykes bases his opinion on what he was told about the floor by the Garsides, including that rain had leaked “onto all the timber flooring” on the lower level of the house. The Garsides told him that prior to the water leak, the timber floor had been free of visible gaps between the edges of the floorboards, free of visible cupping, relatively flat and had not made noises when walked on. (See [2.7] of the 27 November 2013 report).

110. Mr Sykes reports that after the water leak, the Garsides noticed that there were visible gaps between the floorboards, the floorboards cupped, areas of the floor were not flat, there were gaps between the bottom edges of the skirting boards and the top of the floors and the floor made noises when walked on.

111. Mr Sykes expresses the view that “from the description provided and the measurements taken the gaps between the floorboards were as a result of water ingress”. He states that cupping occurs because “a difference in cover width develops between the top surfaces and the bottom surfaces of the floorboards since laying or sanding”.

112. Mr Sykes relevantly finds:

• There were visible gaps between the edges of most of the floorboards.

• Some floorboards were tight together without visible gaps.

• The gaps measured up to 2.7 mm.

• Most of the floorboards were relatively flat.

• Some were very slightly cupped in a convex manner. The greatest cupping was 0.4 mm over 80 mm.

• In two areas of the family room floor was not reasonably flat. The greatest deviations from flat measured were about 1.6 mm over 1200 mm to the right of the multi fold doors and 1.5 mm over 300 mm towards the front of the house.

• There were visible gaps between the bottom edges of some of the skirting boards and the top of the floors in the entry, kitchen and family room. The gap ranged from up to 5.3 mm.

• The floors did not make noticeable noises when he walked on them.

113. Mr Sykes states that:

• The gaps between the floorboards could be filled with a reasonable filler.

• The cupping of the floorboards could be rectified by the floors being sanded flat and re-polished.

• To make the areas of the floors that were not reasonably flat flatter, consideration could be given to making the substrate flatter prior to re-laying floorboards.

• The gaps between the top of the skirting boards and the top of the floors could be filled or the skirting boards could be fitted tighter to the floors after the floors are made flatter.

• Squeaking in floorboards occurs when there is movement within a tongue and grooved joint between two adjacent floorboards. It may increase of decrease seasonally. If the floors are sanded and re-coated, the noises the floors make when walked on may reduce.

114. Mr Sykes reports the Garsides as saying that prior to the water ingress the edges of the floorboards were tight together without visible gaps or gaps filled with filler. He concludes: “That being so, to return the floorboards to the condition they were in prior to the water ingress all of the floorboards could be removed and new floorboards laid”.

Mr Dwight’s defence:

115. In defending the floor replacement claim, Mr Dwight relies on the report dated 7 February 2014 prepared by Mr Maxwell Dietrich.

116. In reference to Mr Syke’s report (referred to as “the Timber Report”), Mr Dietrich states that it relied “entirely on the information provided by the Owners” and that “it sets out a very narrow assessment of the issues and has not questioned the possibility of alternative issues that are a factor in the performance of timber flooring”.

117. The alternative issues Mr Dietrich refers to are articulated earlier in his report. In summary, they are:

• The effect of changing seasonal conditions and changes in the physical environment on the amount of moisture in the air inside a building;

• Issues with fixing floor boards to a concrete slab, including the design of the slab, edge exposure and whether the slab has an intact moisture barrier from the time of construction and

• The lack of expansion joints in the timber flooring.

118. Mr Dietrich also notes a pre-construction photograph taken by the builder on 31 August 2010, which shows gaps in the floorboards at the corner of the kitchen / dining room located between the rear kitchen doors and the multi fold doors.

Assessment of the expert evidence

119. Based on their reports, I accept that both Mr Sykes and Mr Dietrich have the requisite qualifications and experience to give expert evidence. However, I prefer Mr Dietrich’s report because it exhibits a deeper analysis of the factual background to the issue about the timber flooring.

120. For example, Mr Sykes’ report relies only on the information given to him by the Garsides in relation to the state of the floor pre-July 2011. At least one part of that information is factually incorrect; that is, the assertion that the water “leaked onto all the timber flooring”. That is inconsistent with the photographs taken by the Garsides which indicates that the water penetration was confined to areas under which they placed buckets. On the other hand, Mr Dietrich has considered a pre-construction photograph provided by the builder, as well as the photographs taken by the Garsides in the immediate aftermath of the water penetration occurring.

121. Mr Dietrich’s report also demonstrates a more detailed consideration of issues other than water penetration which could explain gaps in the flooring and the other issues with the flooring of which the Garsides complain. One of the features of Mr Dietrich’s report is his measurement of gaps, which differs from the measurements undertaken by Mr Sykes. That the measurements differ leads me to conclude that Mr Dietrich’s opinion that seasonal factors and changes in the physical environment may be the cause of gaps expanding and contracting, rather than the gaps being caused by the water penetration in July 2011, has considerable force.

122. In addition to this, it is significant that under cross-examination, Mr Sykes conceded that the floor did not require replacement. While Mr Davie has submitted that Mr Sykes’ and Mr Dietrich’s jointly expressed opinion that the floor did not require replacement is incorrect, that submission is effectively based on Mr Sykes’ measurement of gaps. In view of my preference for Mr Dietrich’s report over that of Mr Sykes, I am not satisfied that this is a sound reason for disregarding the opinion of both experts, expressed during the giving of oral evidence, that the floor does not require replacement.

123. Overall, on the basis of Mr Dietrich’s report, I am not satisfied that the Garsides have demonstrated that gaps in the floorboards or other issues with the floors of which they complain were caused by the water penetration in July 2011 and I am not satisfied that the floors need to be replaced. I am therefore not satisfied that the builder’s failure to take reasonable care led to the damage claimed. This part of the Garsides’ claim is accordingly dismissed.

Conclusion

124. I have found that the Garsides expended $9160.00 to complete the first contract. I have also found that they have established an entitlement to $1,761.84 in respect of repairs to the ceiling. The total damages to which the Garsides have established an entitlement is therefore $10,921.84.

125. Had the first contract been completed, the Garsides would have been liable to make a final payment of $19,099.88. Their entitlement to damages is therefore less than the amount that would have been payable under the first contract. Even if they had been successful in establishing that they were entitled to a sum for painting the ceilings, their overall entitlement would still have been less than the sum owed under the first contract, given that the adjusted sum claimed for painting the internal ceilings was only $3,399.00.

124. In addition, while it is not necessary to calculate the sum that would have been payable under the second contract given my dismissal of AAD Build Pty Ltd’s application, it is clear that a further sum would have been payable under that contract, even if less than the full sum claimed.

125. The effect of this is that although the Garsides have established the basis for an order for completion costs, the cost of repairs to French doors and the cost of repairs to the ceiling, if a money order were made in their favour it would lead to them being unjustly enriched. I have therefore dismissed their application.

Costs

128. My preliminary view is that both applications having been dismissed, it would not be appropriate to make an order for costs. This is subject to any submissions the parties might make were an application for costs to be filed.

K Rosser

Senior Member

Civil and Administrative Tribunal of New South Wales

15 January 2015

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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

Decision last updated: 25 March 2015