Antonio & Marianna Di Rico v Dion Cominos; Dion Cominos v Antonio & Marianna Di Rico

[2015] NSWCATCD 75

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Antonio & Marianna Di Rico v Dion Cominos; Dion Cominos v Antonio & Marianna Di Rico [2015] NSWCATCD 75

Hearing dates:

28 November 2014 & 4 March 2015

Decision date:

30 June 2015

Jurisdiction:

Consumer and Commercial Division

Before:

D G Charles, General Member

Decision:

1  In the proceedings constituted by File No HB 14/18936, the respondent is to pay the applicants the sum of $47,206.30 within 28 days of the date of these orders.

2  In the proceedings constituted by File No HB 14/18947, the application is dismissed.

3  The Tribunal directs the parties to confer with a view to reaching an agreement between themselves as to payment of the costs in both proceedings.

4  If the parties cannot reach an agreement on costs, then either party has leave to apply to the Deputy Divisional Registrar on or before 31 August 2015, to have the applications relisted for argument on any costs’ orders in both proceedings.

Catchwords:

No written contract for residential building work Uninsured work – insurance “subsequently obtained” Quantum meruit/Quantum valebat
Restitution/unjust enrichment
Amount of reasonable remuneration
Application of Rawlinson Construction Code rates
Conventional Estoppel/Equitable Estoppel
Home owner allegations of defective workmanship
Calculation of reasonable rectification costs – causation of losses
Res Judicata on prior Local Court costs order
Pre judgment interest

Legislation Cited:

Home Building Act 1989
Home Building Regulation 2004
Civil and Administrative Tribunal Act 2013
Civil and Administrative Tribunal Rules 2014
Civil Procedure Act 2005

Cases Cited:

Moloney v Collins [2011] NSWSC 628
Akkari v Sartor [2015] NSWCATAP 79
Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221
Lumbers v W Cook Builders Pty Ltd (in Liquidation) (2008) 232 CLR 635; [2008] HCA 27
AWA v Exicom (1990) 19 NSWLR 705
Verwayen v The Commonwealth (1990) 170 CLR 394
Ryledar v Euphoric (2007) 69 NSWLR 603
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
Sidhu v van Dyke (2014) 251 CLR 505
Razdan v Westpac Banking Corporation [2014] NSWCA 126
Xu v Jinhong Design & Constructions Pty Ltd [2011] NSWCA 277
Darin v Olzomer [2012] NSWCA 60
Berryman v Hames Sharley (WA) Pty Ltd [2008] WASC 59
Jones v Dunkel (1959) 101 CLR 298

Texts Cited:

Mason & Carter’s ‘Restitution Law in Australia’, Second Edition, K Mason, J W Carter and G J Tolhurst, Lexis Nexis Butterworths, 2008

Category:

Principal judgment

Parties:

Applicant in HB 14/18936 - Antonio & Marianna Di Rico (cross respondent in HB 18947)
Applicant in HB 14/18947 - Dion Cominos (cross respondent in HB 18936)

Representation:

Counsel: Ms S Ross (for Antonio & Marianna Di Rico)
Solicitors: Turnbull Hill Lawyers
Dion Cominos (self represented)

File Number(s):

HB 14/18936HB 14/18947

Publication restriction:

Unrestricted

REASONS FOR DECISION

AN OVERVIEW OF THE PARTIES’ DISPUTES

1. These Reasons are given for two applications in the Home Building List. Both applications arise in the Tribunal’s jurisdiction under the Home Building Act 1989 NSW (the “HB Act”). Each matter was transferred to the Tribunal by order of the Local Court of New South Wales, Newcastle Registry, made on 19 March 2014.

2. From at least January 2010 to in or about December 2012, Mr Cominos (hereinafter referred to as the “home owner”) was the owner of residential premises at The Hill, New South Wales (the “property”). At least part of the property was sub-divided in December 2012 but the home owner is still the registered proprietor of the other part of the property.

3. Mr & Mrs Di Rico are the registered owners of the business which trades under the name ‘Tony Di Rico Building Services’. At all material times Mr Antonio Di Rico (whom I shall hereinafter refer to as the “builder”) has held a current contractor licence under the HB Act.

4. In 2010, the home owner wanted to subdivide the property. This required works to be performed including the demolition and removal of a garage and associated slab, the removal of rubbish and debris, levelling, earthworks, the construction of an access road to a proposed battle-axe block of land, the construction of stairs and the construction of retaining walls.

5. In or about January 2010, the home owner was at the builder’s home as a guest at a barbeque. In that social context, the home owner mentioned to the builder his plans to subdivide the property. This prompted some informal discussion about the nature of the works to be done on the property, the persons who might do the works on the property, the likely cost to the home owner of the works and as to how the home owner might finance the works.

6. In the ensuing 14 months, some works including levelling, earthworks and the demolition of the garage and associated slab were carried out on the property. This did not involve the builder. The works were carried out by the home owner as an owner/builder. The home owner retained an earthworks and demolition contractor.

7. The builder did not commence any works at the property until about mid April 2011. During conversations with the home owner towards the end of March 2011, the home owner asked the builder to do the following eight (8) tasks at the property: to build retaining walls, to build a ramped concrete driveway, the concreting of the backyard, to build the front stair case, the concreting of the path from the stairs to the dwelling, the concreting of the front parking space, to build the footpath, and to build the crossing access driveway.

8. There was no written contract between the home owner and the builder. Such circumstance has given rise to key factual and legal issues in dispute between the parties: as to the enforceability of the builder’s recovery action and as to the basis upon which the builder could charge the home owner for work done and for materials and equipment supplied.

9. There is common ground between the parties that the builder carried out three (3) of the eight (8) tasks he was engaged to do: the retaining walls (including the ramp for the driveway), the concreting of the back yard and the concreting of the front car parking space. However, it is the home owner’s case that some of these works were carried out defectively and not in accordance with approved plans and industry standards.

10. The builder also gave evidence that he did other work including removal of rubble and debris, levelling, earthworks and the removal of foundations and that he engaged third party contractors to carry out some of the work.

11. By the end of August 2011 the home owner had not paid all of the builder’s invoices and also had not paid for the costs incurred by the builder to third party contractors. Tasks such as the construction of some concrete stairs and the concrete roadway leading up to the rear block remained to be done. The builder ceased work and did not return to the site.

12. The underlying disputes between the parties bear upon recovery by the builder of the cost to him of labour equipment and materials for the residential building work performed during the period April 2011 to August 2011 and there are also building claims by the home owner for defective work said to have been performed by the builder while he was on site.

13. The builder’s recovery action against the home owner is on the basis of a quantum meruit/quantum valebat (that is, reasonable remuneration for work done and materials provided at the home owner’s request); alternatively, on the basis of restitution/unjust enrichment; further and alternatively, on the basis of common law conventional estoppel and equitable estoppel. The builder seeks payment to him by the home owner of an amount of $47,206.30 which the builder contends is the balance of the reasonable remuneration/sum for work done and a fair market value for materials and equipment provided to undertake that work, at the home owner’s request on the property between April 2011 and August 2011. The claim in the sum of $47,206.30 has two components: remuneration for work done by the builder ($21,797.33) and materials provided by the builder ($25,408.97).

14. The home owner’s action against the builder is in respect of claims for defective work relating to these allegations: incorrectly excavating the front car park, not using jumbo blocks for the car park retaining wall as provided in a Council approved modification, one of the builder’s labourers collapsing a dirt bank behind the front retaining wall and causing damage to a pipe, and not constructing the rear retaining wall to Council approved plans.

JURISDICTION OF THE TRIBUNAL TO HEAR & DETERMINE BOTH APPLICATIONS

15. I am satisfied that the parties’ disputes on both applications relate to “residential building work” within the meaning of the HB Act.

16. Both applications were brought within the time required under the HB Act.

17. In respect of residential building work, the Tribunal has jurisdiction to hear and determine any “building claim” (see s 48A of the HB Act) brought before it in which the amount claimed does not exceed $500,000.00: s 48K(1)of the HB Act.

18. Neither the home owner’s claim nor the builder’s claim exceed $500,000.00, and the nature of both applications otherwise fall within the definition of “building claim” as set out in s 48A of the HB Act.

19. Accordingly, the Tribunal has jurisdiction to hear and determine both applications.

PROCEDURAL HISTORY, APPEARANCES, EVIDENCE & SUBMISSIONS

20. On 20 May 2013, the builder commenced proceedings against the home owner by Statement of Claim in the Local Court of New South Wales. This was a debt recovery action by the builder for the amount of unpaid invoices (his own and third party invoices) plus interest under the Civil Procedure Act 2005 and costs. Default judgment was entered for the builder but this was later set aside on 22 August 2013 on the home owner’s Motion.

21. On 28 August 2013 the home owner filed a defence and cross claim in the Local Court proceedings.

22. The Local Court proceedings were fixed for final hearing on 3 March 2014; however, a final hearing on the merits of all matters in dispute never proceeded. The home owner appointed a solicitor who filed a Motion pursuant to s 48L of the HB Act to have the proceedings transferred to the Tribunal. A hearing of the Motion took place on 10 March 2014. The Local Court then delivered a judgment on 19 March 2014 ordering that the proceedings be transferred to the Tribunal and that the home owner pay the builder’s costs of the Motion to transfer the proceedings to the Tribunal.

23. On 18 June 2014 the Tribunal made procedural directions for the further conduct in the Tribunal of the builder’s claim and the home owner’s claim, respectively. Both parties were given leave to be legally represented. The procedural directions provided for each party to file and serve points of claim and points of defence and also to exchange documents in support of their respective cases including expert reports (complying with Practice Direction 3 for Expert Witnesses), witness statements and (in the home owner’s claim) a Scott Schedule dealing with liability, method of rectification and quantum which is cross referenced to the expert reports and witness statements.

24. On 17 July 2014 the builder lodged Points of Claim for the application in File No HB 14/18936. This document affirms the debt recovery action originally brought in the Local Court for unpaid invoices and third party invoices. The relief sought is either specified amounts totalling $47,689.83; or alternatively, an amount of reasonable remuneration in respect of works done for the home owner at the property and a reasonable sum for materials and equipment supplied. In addition, the Points of Claim specified that the builder sought interest pursuant to Regulation 39 of the Civil and Administrative Tribunal Rules 2014 together with costs pursuant to Regulation 38 of the Civil and Administrative Tribunal Rules 2014.

25. On 13 August 2014, the home owner lodged with the Tribunal a document titled “Response to Points of Claim”. The Tribunal reads this document as the home owner’s points of defence to the builder’s recovery action (the proceedings in File No HB 14/18936) and further as supporting the home owner’s application in File No HB 14/18947 for damages for alleged overcharging and defective work carried out in breach of the statutory warranties in the HB Act (see s 18B) and in breach of contract and/or negligently under the general law.

26. On 1 September 2014 the builder lodged with the Tribunal his Defence to Cross Claim. The Tribunal reads this pleading as a response to the home owner’s application in HB 14/18947.

27. On 28 November 2014 and 4 March 2015 the proceedings were heard by me.

28. The builder relied upon these documents at the hearing: Affidavit of Antonio Di Rico sworn 17 July 2014 (hereinafter referred to as “Di Rico 1”), Affidavit of Martin John Sadlier sworn 17 July 2014 (hereinafter referred to as the “Sadlier Report”), Affidavit of Antonio Di Rico sworn 1 September 2014 (hereinafter referred to as “Di Rico 2”), a statement of Alan Brewer bearing date 1 February 2015 and a statement of Roberto Di Rico bearing date 25 February 2015.

29. The home owner relied upon these documents at the hearing: a Statement of Dion Cominos dated 22 November 2013 (lodged in the Local proceedings), a Statement of Dion Cominos dated 8 July 2014 (lodged in the Tribunal proceedings), a Response of Dion Cominos sworn 17 July 2014 to the Sadlier Report, and a Response of Dion Cominos received by the Tribunal on 25 September 2014 to Di Rico 2.

30. There was also oral evidence given during the two days of the hearing by Mr Antonio Di Rico, Mr Martin Sadlier, and Mr Roberto Di Rico (in the builder’s case) and by Mr Cominos and Mr Dennis Hunt, engineer, in the home owner’s case. The oral evidence was subject to cross examination by the other party. There were competing versions of relevant facts matters and circumstances. Determining some of the disputed factual matters meant that I had to assess and evaluate competing versions of the relevant events in 2011 and 2012, and then to decide the reliability of the lay evidence of each party in the light of the demeanour of Mr Antonio Di Rico and Mr Roberto Di Rico (on the one hand) and Mr Cominos (on the other hand), as witnesses of fact, the credibility of their answers when addressing questions of the Tribunal or the cross examination of the other party, and the extent to which contemporaneous documents (particularly, the annexures or documents exhibited to the statements of evidence and affidavits) substantiated or detracted from one or other party’s version of events.

31. As regards the evidence of Mr Sadlier and Mr Hunt I was also required to evaluate the reliability of the assumptions and information on which each expressed opinion as well as the weight I should attach to their conclusions insofar as their conclusions bear upon the material issues for my determination on both applications.

32. The parties also provided written submissions in support of their respective cases. Apart from the outline submissions provided by each party at the commencement of the hearing on 28 November 2014, I made directions for further submissions (with the findings of fact and law for which each party contends) at the conclusion of the hearing of the evidence on 4 March 2015. In the home owner’s case I received submissions on 15 April 2015 and in the builder’s case I received submissions also on 15 April 2015. Further, each party was afforded an opportunity to respond to the submissions of the other party in their respective cases and this was done by written submissions in reply received in each case on 1 May 2015.

33. To do justice to the issues posed by the parties’ respective cases I have given consideration to all of the evidence presented and the submissions made by the parties before, during and after the formal hearing. However, the evidence and submissions (whether written or oral) are quite extensive. It is simply not practicable for me to spell out in detail every step of my reasoning processes, or to refer to every piece of evidence. Moreover, my duty to give reasons does not require me to do so: see, for example, Moloney v Collins [2011] NSWSC 628 at [63] – [64]; cited with approval by the Tribunal’s Appeal Panel in Akkari v Sartor [2015] NSWCATAP 79 at [48].

34. The home owner’s submissions received on 15 April 2015 also attached further copy documents (the “further documents”) as evidence in the home owner’s case. The builder’s legal representative objected to the home owner being permitted to rely on the further documents. I concur with the builder’s submission that the further documents should have been produced pursuant to the Tribunal’s prior procedural directions (i.e. at an earlier point in the proceedings). It is also fair to say that on a strict application of the rules of evidence, the admission of the further documents into evidence should be rejected. However, the Tribunal may inquire into and inform itself on any matter in such manner as it sees fit subject to the rules of natural justice and it is also required to take such measures as are reasonably practicable to ensure the parties have a reasonable opportunity to be heard or otherwise have their submissions considered in the proceedings: Civil and Administrative Tribunal Act 2013 s 38. As the proceedings do not involve the exercise of the Tribunal’s enforcement jurisdiction, the Tribunal is not bound by the rules of evidence. The home owner submits, among other things, that the further documents address matters arising out of the cross examination of him by the builder’s legal representative and in respect of which (due to time constraints) he could not respond at the conclusion of the evidence on 4 March 2015. Although the home owner has not been cross examined on the further documents, the builder’s legal representative has had an opportunity to address the further documents in her submissions in reply, particularly as regards their relevance and probity. Accordingly, I have decided to read the further documents as part of the home owner’s case but only in the context of their relevance and probity to the material matters for determination by the Tribunal.

RELEVANT LAW

35. The work conducted by the builder was “residential building work” as defined by the HB Act and the Home Building Regulation 2004. There is no written contract as required by s 7 of the HB Act for the “residential building work”. Therefore, the builder is not entitled to damages or to enforce any other remedy in respect of a breach of contract committed by the home owner, and agreements between the parties to perform works on the property are unenforceable by the builder: s 10(1)(b) of the HB Act.

36. The builder is claiming on the basis of quantum meruit/quantum valebat/restitution/unjust enrichment for reasonable remuneration and/or a reasonable sum for work done and materials provided: Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221.

37. Deane J observed at 263 in Pavey & Matthews that the concept of monetary restitution:

“involves … the payment of an amount which constitutes, in all the relevant circumstances, fair and just compensation for the benefit or ‘enrichment’ actually or constructively accepted. Ordinarily, that will correspond to the fair value of the benefit provided (e.g. remuneration calculated at a reasonable rate for work actually done or the fair market value of materials supplied)”.

38. The principle of unjust enrichment (for which an order for restitution may be made) refers to circumstances where there is an enrichment or benefit obtained at an applicant’s expense, in circumstances which make it unjust that a respondent should retain the enrichment/benefit, and no defence is applicable or available: Mason & Carter’s ‘Restitution Law in Australia’, Second Edition, K Mason, J W Carter and G J Tolhurst, Lexis Nexis Butterworths, 2008, page 43.

38. In Lumbers v W Cook Builders Pty Ltd (in Liquidation) (2008) 232 CLR 635; [2008] HCA 27 at [79], the High Court stated, relevantly, that:

“the doing of work, or payment of money, for and at the request of another, are archetypal cases in which it may be said that a person receives a ‘benefit’ at the ‘expense’ of another which the recipient ‘accepts’ and which it would be unconscionable for the recipient to retain without payment”.

40. Section 94(1) of the HB Act provides:

“(1) If a contract of insurance required by section 92 is not in force, in the name of the person who contracted to do the work, in relation to any residential building work done under a contract (the "uninsured work"), the contractor who did the work:

(a) is not entitled to damages, or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, in relation to that work, and

(b) is not entitled to recover money in respect of that work under any other right of action (including a quantum meruit)”.

41. Section 92 refers to the requirement that residential building work must be insured. These sections of the HB Act confirm that a claim by a builder on a non-contractual basis (e.g. quantum meruit) is available where there has been non-compliance with s 7 of the HB Act. However, the work the subject of the claim must be insured and in this regard, “uninsured work” (referred to in s 94(1)) ceases to be “uninsured work” by operation of s 94(3) which provides:

“(3) Residential building work that is uninsured work at the time the work is done ceases to be uninsured work for the purposes of this section if the required contract of insurance for the work is subsequently obtained.”

42. Residential building work must be performed by a builder so as to comply with statutory warranties including performing work with due care and skill and in accordance with plans and specifications and using good and suitable materials: see s 18B(1)(a) – (f) of the HB Act. The warranties are implied in any contract for residential building work regardless of whether the work is performed without written contract and/or without compliance with the other requirements of s 7 of the HB Act and the Home Building Regulation.

43. Accordingly, any claims, if established, by a home owner in respect of breaches of statutory warranties arising from defective and incomplete work by a builder are an available defence to a builder’s claim, whether the builder’s claim is brought on a contractual basis or on a non-contractual basis (such as a quantum meruit). Furthermore, an equitable set off of one claim against the other claim might also arise in the circumstances: see, for example, AWA v Exicom (1990) 19 NSWLR 705.

THE BUILDER’S CLAIM

44. The builder submits that its claim against the home owner (based on quantum meruit, quantum valebat, restitution and/or unjust enrichment), in respect of reasonable remuneration or a reasonable sum for work done and materials provided, is an archetypal case of the kind referred to by Gummow, Hayne, Crennan and Kiefel JJ in Lumbers v W Cook Builders (in Liquidation) at [79].

45. It is submitted that the home owner requested the builder to undertake residential building work at the property in or about April 2011, that the builder undertook work (including the construction of the retaining wall, and the pouring of concrete for the rear slab and the front car park slab) and provided materials to enable such work to be done, that the builder has borne the cost of labour and materials accepted by the home owner, that the home owner has benefited from such acceptance (specifically, without the work done and materials supplied by the builder, the subdivided property could not have been sold in December 2012), and that in all the circumstances, it would be unjust and unconscionable for the home owner to retain the enrichment or benefit without payment. Additionally, the builder puts his case on the basis that even if the home owner had not requested the work and materials (a proposition which the builder says is not made out on the evidence), the home owner has freely accepted those works and materials in that he “did not take a reasonable opportunity open to him to reject the proffered services”: Lumbers v W Cook Builders Pty Ltd (in Liquidation) at [15] per Gleeson CJ.

46. The builder denies the allegations of breach of statutory warranties for defective and incomplete work and further says there is no other circumstance (e.g. ‘uninsured work’ within the meaning of sections 92 and 94 of the HB Act) to preclude him from recovering money based on a quantum meruit with regard to the work done and materials supplied for and on behalf of the home owner. In the latter respect, the builder’s case is that having obtained a contract of insurance on 5 March 2014, the practical effect is that the uninsured work done in 2011 ceased to be uninsured work by operation of s 94(3) of the HB Act.

47. The builder also makes a claim against the home owner on the basis of conventional and equitable estoppel: see, generally, Verwayen v The Commonwealth (1990) 170 CLR 394, Ryledar v Euphoric (2007) 69 NSWLR 603, Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, Sidhu v van Dyke (2014) 251 CLR 505 and Razdan v Westpac Banking Corporation [2014] NSWCA 126.

48. It is submitted that the home owner is or should be precluded from propounding the allegation that there is no money owing to the builder as a result of the works done and materials provided to the home owner and that such estoppel arises whether by denying the existence of an obligation to pay or by a lately raised claim of defective work. The key elements of an estoppel are findings of representation, causation, change of position and prejudice.

49. The builder’s submissions bearing on conventional and equitable estoppel may be summarised as follows:

• For the period from mid-April 2011 to mid-August 2011, the home owner implicitly and explicitly made a representation to the builder that he (the home owner) would pay the builder’s invoices and third party suppliers;

• Relying upon the representation, the builder made the assumption he would be paid and agreed to do the work for the home owner and incur the cost and expense of paying labourers and third party suppliers;

• The home owner paid, without complaint, the first two invoices which included amounts for that labour charged on an hourly basis, all of which were divisible by $50.00;

• Even after the builder had ceased work on the property in August 2011 (in circumstances where the home owner had ceased to pay the subsequent invoices), the builder refrained from taking any debt recovery action at law due to his understanding or further assumption that once the property had been subdivided and sold, all outstanding money would be paid (in this regard, the Local Court proceedings were not taken until in or about February 2013 when the builder became aware the property had, in fact, been sold);

• The demands for payment made during 2011, 2012 and 2013 to the home owner in the correspondence of the builder and the builder’s solicitors (see annexures J and L of Di Rico 1), and the assertions appearing in the correspondence, evidence the builder’s assumption he would be paid;

• The assumptions were mutually adopted and this is evidenced by the home owner’s conduct during 2011 and 2012, specifically, the home owner making no attempt to disabuse the builder of the assumptions the builder would be paid when the subdivided property was sold;

• Upon receipt of demands for payment, the home owner did not complain to the builder or his solicitors as regards the manner in which invoices had been rendered by the builder or in respect of allegations of defective work and overcharging (in fact, such complaints did not arise until after the builder had brought the Local Court proceedings);

• The relevant detriment and prejudice to the builder is to be found in these facts, matters and circumstances: that the builder did work for the home owner on the property in 2011 without payment, that the builder has incurred costs and expenses on behalf of the home owner with labourers and third party suppliers for which he has not been reimbursed, that the builder refrained from taking recovery action against the home owner to enable the home owner to sell the subdivided part of the property in or about December 2012, and further, that such refraining from legal action meant the time the builder was kept out of his money has increased.

50. As regards the quantum of his claim, the builder’s submission is that fair and just compensation is the amount outstanding under the parties’ unenforceable contract (in this instance, due to the absence of a written contract). Such amount is $47,206.30 comprising work done by the builder ($21,797.33) and materials and equipment provided by the builder under third party invoices ($25,408.97)

51. The builder’s evidence as to work done and materials and equipment supplied was set out in Di Rico 1: see, in particular, annexure B to the affidavit which is a record of the work the builder says was conducted on the property. In his oral evidence, Mr Di Rico corrected some information in annexure B; specifically, the reference to 4,500 blocks in item 19, which should read 4,200 blocks, and Mr Di Rico’s acceptance that the home owner provided and paid for blocks so that item 18 should be removed from the table of items in annexure B

52. Mr Martin Sadlier, an expert quantity surveyor, gave evidence in the builder’s case, by way of a report which was prepared for the Local Court proceedings. The Report complies with the Tribunal’s Procedural Direction 3 dated 7 February 2014 (i.e. the Expert Witness Code of Conduct). In the Sadlier Report, Mr Sadlier acknowledges that he has read and understood the Code of Conduct and agreed to be bound by it. The assumptions in relation to work and materials upon which Mr Sadlier based his expert report are set in annexure C, which is, in fact, the same document as annexure B to Di Rico 1. Taking account of the corrections to items 18 and 19 in annexure B of Di Rico 1 (as referred to above), Mr Sadlier’s evidence is to this effect as to the cost of the works and materials: based on the Rawlinson Construction Guide 2011 $130,910.04 (including GST) and based on his training study and experience as a quantity surveyor $126,578.06 (including GST).

53. In addition, Mr Sadlier gave evidence with respect to the wage rates quoted in the Rawlinson Construction Guide 2011 for labourers and tradesmen, being (GST inclusive) figures of $60.90 and $66.81 per hour, respectively. Mr Sadlier said that the Rawlinson wage rates were in line with going rates in Newcastle in the period May 2011 to September 2011 for building and construction works of the type referred to in Di Rico 1. He gave evidence that sometimes a mark-up of 100% to those rates could be considered appropriate depending on the work being conducted and that a rate of $50.00 per hour (including GST) for supplying labour from the building trades was about 10% to 15% less than a reasonable rate for work done between May 2011 and September 2011 in Newcastle.

54. The builder submitted that with respect to the materials provided, the actual costs charged by the various service and materials providers (as summarised in annexure C of Di Rico 1) is the best evidence of ‘fair and just compensation’, because these were the fair market value of materials purchased in ordinary arm’s length commercial transactions with no mark-up applied by the builder. In this respect Mr Sadlier gave evidence that it is usual for a tradesman to apply a mark-up for 10% to 15% on materials supplied.

THE HOME OWNER’S CASE

55. The home owner contends that the builder has been paid in full for work completed and materials supplied in April 2011 to August 2011, that the home owner received no benefit from the builder (rather, it is the case that the home owner’s construction costs increased because of the builder’s poor workmanship), and in consequence thereof, it cannot be said that the builder is owed any additional remuneration under quantum meruit/quantum valebat/restitution/unjust enrichment principles.

56. Moreover, the home owner says that there is no estoppel (conventional or equitable) which operates for the benefit of the builder as alleged in the builder’s case. In particular, the home owner’s evidence was that the builder represented the cost to the home owner of the builder’s works on the property would be ‘no more than $4.00 per block laid, including mortar’ or words to that effect, that such price was in line with the standard price for block laying as per other quotes the home owner had received from other block layers, and that the home owner expected that the builder would charge such ‘agreed sum’.

57. While the home owner accepted that the retaining walls, rear slab and front slab were completed by the builder (that is, three of the eight tasks that the builder was requested to undertake at the home owner’s property), the home owner contended that any liability of him to the builder was to pay in accordance with an ‘agreed sum’. The home owner calculated when one took account of the invoices already paid ($23,000.00) and the unpaid invoices ($21,797.33) the subject of the builder’s claim (i.e. a total of $44,797.33) relative to the number of blocks laid by the builder (3,700 blocks), that it equated to a cost of $12.00 per block. Such per block rate was not agreed and was, and is, beyond industry standard, in the home owner’s submission.

58. The home owner said that the builder did not stop work on the property because of non-payment of the builder’s invoices; rather, it was because the home owner questioned the builder’s manner of charging and enquired as to how the builder would ensure the cost to the home owner (as agreed, in the home owner’s submission) did not exceed $4.00 per block laid.

59. As it is the home owner’s case that the builder has paid an ‘agreed sum’ for the work done, it cannot be said in the home owner’s submission that he has received an ‘extra’ benefit for unpaid work at the home owner’s property. In this regard, the home owner contends that much of the work was done defectively and that he has incurred rectification expenses.

60. The home owner further submits that the evidence of Mr Sadlier should be given little, if any, weight, because the evidence is based on flawed assumptions and incorrect information. In the home owner’s opinion, the Sadlier report is not a valuation of the work and materials supplied by the builder; rather it is a valuation as to the entire works (including works not performed by the builder) on the property.

61. In his application (File No HB 14/18947), the home owner did not press at the formal hearing a claim against the builder for overpayment. In his evidence at the hearing, and in written submissions provided following the hearing, the home owner focussed on the cost to him of rectification/remedial works arising out of defective workmanship by the builder; specifically, allegations that:

1. the front car park was not excavated in accordance with approved plans;

2. jumbo blocks were not used as stipulated by the approved s 96 modifications;

3. the builder’s labourer collapsed a dirt bank behind the front car park retaining wall causing damage to a pipe; and

4. the rear retaining wall was not constructed to the approved plan.

62. To substantiate his case for defective workmanship against the builder, as well as the cost to him of the rectification/remedial works required in consequence of the defective workmanship, the home owner relied upon his own evidence at the hearing (for example, he gave evidence that he was not aware of the ‘incorrect fill’ behind the rear retaining wall). Apart from the evidence at the formal hearing, the home owner relied upon all of his written submissions and annexures, including the further documents which were not tendered into evidence at the formal hearing, but which are appendices to the home owner’s submission dated 15 April 2015 and are said to address issues (by way of re-examination) arising out of the cross examination of Mr Cominos by the builder’s legal representative.

63. The home owner says the further documents annexed to the submission dated 15 April 2015 evidence his costs associated with the front car park and a section 96 application to Newcastle City Council.

64. He also contends that a photograph at appendix 17 of his submission dated 15 April 2015 indicates the builder was aware that jumbo blocks were required, as ’24 mil start bars are used for jumbo blocks’.

65. In addition, the home owner relied upon the evidence of the engineer, Mr Dennis Hunt. Mr Hunt gave evidence that he had inspected the rear retaining wall and had observed that the wall had deflected approximately 80mm at the top right hand corner. There are also photographs in the further documents (appendices 36 and 37) which the home owner says depict the deflection.

66. According to the home owner, the rectification/remedial were works made necessary by the builder’s poor workmanship. The rectification/remedial works are said to have cost the home owner an amount of up to $21,154.04 comprising $11,713.91 for the front retaining wall and $9,440.10 for the rear retaining wall.

67. As regards the allegations relating to the front retaining wall, the rectification/ remedial works embraced this scope of works:

• Increasing the height of the front retaining wall from 1.8 metres to 3 metres;

• Increasing the number of blocks required;

• Fees and expenses for section 96 modifications to Council;

• The stair design changed from timber to concrete;

• The concrete fill increasing from 20mpa to 40 mpa;

• Increasing the size of the steel bars;

• Excavation behind the front car park retaining wall;

• The placing of aggregate behind the front car park retaining wall; and

• The cost of the plumber to repair the damaged pipe.

68. In respect of the allegations regarding the rear retaining wall, the rectification/remedial works embraced this scope of works:

• Excavation of the dirt behind the rear retaining wall;

• The placing of aggregate behind the rear retaining wall;

• The cost of a plumber installing pipes and pits;

• The cost of the pipes and pits; and

• The cost of the piers.

THE BUILDER’S CASE IN RESPONSE TO THE HOME OWNER’S ALLEGATIONS OF DEFECTIVE WORKMANSHIP

69. The builder submits that the home owner has not discharged his burden of proof (i.e. on the balance of probabilities) with respect to the claims of defective workmanship.

70. In her submissions, the builder’s legal representative noted (correctly, in the Tribunal’s opinion) that the home owner’s submissions as regards defective workmanship bear upon the four allegations referred to above and that there is no reference to the Scott Schedule in the home owner’s submission dated 15 April 2015. Consequently the builder made no submissions about the Scott Schedule.

71. Apart from more particular submissions as to the reliability of Mr Cominos’ evidence, the builder’s legal representative also put a general submission that the Tribunal should not accept the home owner’s evidence in support of the case for defective workmanship because the home owner did not have the requisite expertise to give such evidence.

72. Further, the builder’s legal representative submitted that the undated ‘report on Construction of Retaining Walls’ by Mr Dennis Hunt (Appendix B to Mr Cominos’ statement of evidence dated 8 July 2014) should not be accepted by the Tribunal as expert evidence because the report was not prepared in accordance with NCAT Practice Direction 3, does not state what documents were available to Mr Hunt when the report was prepared, is not dated (so it is unclear how long after the material events in 2011 that the report was prepared), and it does not set out the instructions given to Mr Hunt.

73. Despite the builder’s objection, the home owner was permitted to call Mr Hunt as a witness in his case. Mr Hunt was cross examined and the builder’s legal representative made submissions as to the material relevance of Mr Hunt’s evidence and the weight, if any, that should be attached to Mr Hunt’s evidence by the Tribunal as expert opinion.

69. The builder accepted that the front car park was excavated to an extent greater than that depicted on the council approved plans. Mr Antonio Di Rico gave evidence that the reason for the deviation from the approved plans was the presence of water mains which would have been interfered with by the proposed timber staircase had the design of the car park not changed so as to incorporate the stairs internally to the car park. This required an increase in the width of the car park of approximately 0.5 metres. Mr Di Rico gave evidence, which was denied by Mr Cominos, that Mr Di Rico discussed two options with the home owner to deal with the water mains’ issue (i.e. to move the stairs and not interfere with the water mains, or to leave the stairs and move the water mains), and that Mr Cominos chose the (less expensive) option of moving the stairs.

70. The builder submits that he should not be held responsible for any of the costs which the home owner attributes to the increased width of the car park in circumstances where the home owner had prior input and consent to such increased width. Further, the builder points out (referring to admissions made by Mr Hunt during his cross examination) that the front retaining wall did not ever increase in height, and that having regard to the slope of the property it was always going to need to be 3 metres. The builder further says that the home owner’s contention about an increased number of blocks (99 blocks, according to the home owner’s submissions received on 15 April 2015) must be disregarded by the Tribunal, because it was not tested in cross examination at the hearing on 4 March 2015, and also because it is unreliable; i.e. it is not clear on the evidence as to how the figure of 99 blocks was calculated.

71. The builder also submits that:

• The further documents annexed to the home owner’s submission dated 15 April 2015, do not evidence any costs of the home owner associated with the front car park issue and a s 96 application on the property;

• The claim for the concrete and timber stairs is not substantiated because there is no evidence of a price differential between the two designs and otherwise no evidence that the home owner experienced a loss as a result of the change in design.

77. In respect of the issue concerning jumbo blocks, the builder denies that he was at any material time on notice of the need to use jumbo blocks on the front retaining wall. As regards the photograph that is appendix 17 to the home owner’s submission dated 15 April 2015, apart from the general objection that all of the further documents are new evidence not tested by cross examination, the builder points out that there is nothing to prove what the photograph depicts. The builder’s legal representative submits that the Tribunal should accept the evidence of Mr Antonio Di Rico (see paragraphs 44 – 47 of Di Rico 2) he was not told by the engineer (Mr Hunt) to use jumbo blocks, and further that it follows from acceptance of Mr Di Rico’s evidence, the builder cannot be held responsible for the costs associated with any failure to use jumbo blocks on the property. The builder also submits that even if he had been on notice of the need to use jumbo blocks (a proposition which the builder says is not made out on the evidence), the home owner did not supply enough jumbo blocks in any event to complete three courses of the front retaining wall.

78. The builder says that an ‘old and rusted through pipe’ was uncovered when the excavation began and that the pipe was not damaged by his labourer standing on the newly excavated bank behind the front car park retaining wall. In this regard, the builder relies on his own evidence (Di Rico 2 paragraphs 48 – 56) and the evidence of his son, Mr Roberto Di Rico, who said that he did not stand on the bank behind the front retaining wall but was standing on the scaffolding. The builder submits that in those circumstances he cannot be held responsible for any costs associated with the ruptured pipe.

79. As to the allegation that the rear retaining wall was not constructed to the approved plan, the builder relied upon the evidence of Mr Roberto Di Rico and Mr Alan Brewer (the bobcat driver) to this effect: that the home owner insisted on the builder and his contractor putting the dirt from the front car park behind the rear retaining wall, that Mr Roberto Di Rico protested the use of such fill was inappropriate, that he tried to contact the builder but was unable to do so, and that he was concerned that he would be removed from the site if he declined an instruction from the home owner who was acting in the capacity of owner/builder. The builder submits that in those circumstances he cannot be held liable in respect of the claim for excavating behind the rear retaining wall.

80. The builder further submits the evidence of Mr Hunt and the home owner that there was a deflection in the rear retaining wall is unsubstantiated and should be rejected by the Tribunal. In any event, the builder contends that the home owner has not proved, on the balance of probabilities, that there was anything defective with the rear retaining wall; moreover, even if there was a deflection in the wall, that such deflection was caused by incorrect fill behind the wall.

DECISION

Quantum meruit/quantum valebat/restitution/unjust enrichment

81. It is common ground between the parties that the home owner requested the builder to undertake eight tasks on the property. It is also common ground that the builder commenced work on the property in or about April 2011. The home owner accepted in his oral evidence that the builder completed the retaining walls, the rear slab and front car park slab and the ramp for the driveway. The builder also gave evidence that he did other work including removal of rubble and debris, levelling, earthworks and removal of foundations which were a necessary part of the eight tasks he was engaged to do.

82. While it is the fact that the builder did not complete all eight tasks he was engaged to do, Mr Antonio Di Rico gave evidence, which the Tribunal accepts, that he ceased work on the property because the home owner had not paid two of the builder’s invoices and many third party invoices.

83. The Tribunal rejects the home owner’s submission that because works were commenced but not completed the builder is barred from recovery of the reasonable cost to the builder of the works and materials provided for the benefit of the home owner but for which the builder has received no payment.

84. I find that the home owner has obtained an enrichment or benefit at the builder’s expense. In this regard, Mr Di Rico gave evidence at paragraphs [6] – [15] and annexure B of Di Rico 1, of the works undertaken at the property by the builder. The unpaid invoices for the works are at annexures G and H of Di Rico 1. The home owner conceded in his cross examination that those invoices (totalling $21,797.33) remain unpaid. Mr Di Rico gave evidence at paragraphs [17] – [24] and annexure B of Di Rico 1 of the expenses incurred by the builder for materials provided by third parties in undertaking works at the property. The third party invoices at Annexure D amount to $32,741.97 and have been paid by the builder. The home owner has paid $6,849.47 of the third party invoices and the builder concedes $483.53 (being the total of numbers 10 and 11 of annexure C of Di Rico 2). This leaves an amount of $25,408.97 in outstanding third party invoices.

85. Further, I find that that the home owner freely accepted the works and materials provided by the builder in that the home owner “did not take a reasonable opportunity open to him to reject the proffered services”: Lumbers v W Cook Builders Pty Ltd (in liquidation) (2008) 232 CLR 635 at [15]. The costs of construction, including the expenses incurred by the builder, and the cost of the services provided directly by the builder, were costs that the home owner chose to incur. The builder, by incurring costs on behalf of the home owner and providing services, saved the home owner from an expense that he would otherwise have incurred. At no point did the home owner reject the proffered services and provision of materials despite giving evidence that he was on site regularly. In an email sent 4 September 2011 (annexure I Di Rico 1) the home owner requested that the builder undertake further work but said he “totally understand[s] if you do not wish to add to the outstanding amounts already owed to you”.

86. I am satisfied on all the evidence that without the works and materials provided by the builder, the home owner would not have been in a position to subdivide the property into two parcels of land and then to sell one parcel (with the original dwelling) in February 2013 for $495,000.00. The home owner also gave evidence that the other parcel has a value of between $320,000.00 and $420,000.00.

87. I find in all the circumstances that it would be unjust for the home owner to retain the enrichment or benefit without payment.

No Written Contract

88. While there is no written contract as required by the HB Act in this case, this does not preclude a claim by the builder otherwise than on the basis of contract.

89. The general law of quantum meruit/quantum valebat/restitution/unjust enrichment has been applied by the Court of Appeal on many occasions with respect to building cases involving no written contract, in the context of the HB Act: see, for example, Xu v Jinhong Design & Constructions Pty Ltd [2011] NSWCA 277 and Darin v Olzomer [2012] NSWCA 60.

Insurance under the HB Act

90. On 5 March 2014, the builder obtained a contract of insurance for the work undertaken at the property: see Di Rico 1, annexure M.

91. A copy of the contract of insurance was served on the home owner on 5 March 2014.

92. I am satisfied that s 94(3) of the HB Act applies in the circumstances. The practical effect of the obtaining of the contract of insurance on 5 March 2014 is that the “uninsured work” referred to at s 94(1) ceases to be “uninsured work” by operation of s 94(3).

93. I find in the circumstances (specifically, the “subsequently obtained” contract of insurance) that the builder is not precluded from recovering money in respect of work done and materials provided under the law of quantum meruit/quantum valebat/restitution/unjust enrichment.

The Quantum of the Builder’s Claim

94. Where reasonable remuneration is involved, an unenforceable agreement (due to a lack of written contract) may be referred to as evidence on the question of an appropriate amount of compensation: see Pavey v Matthews at 250 and 255.

95. The amount outstanding pursuant to the unenforceable contract is $47,206.30 comprising work done by the builder ($21,797.33) and materials and equipment provided by the builder under third party invoices ($25,408.97). There is evidence to support the integrity of the builder’s calculations of the said amounts: see Di Rico 2 paragraphs 11 – 16 and annexures A (bundle of worksheets) and B (table of invoices). The builder’s usual practice (and a practice which the Tribunal accepts he followed in this case) was to keep a record of work done and materials/equipment provided to enable him to raise invoices and to update that record daily or by the end of the following day after the work had been performed.

96. The builder gave evidence (see Di Rico 1 at paragraph 3) that on or about 25 January 2010 during a conversation between Mr Antonio Di Rico and Mr Cominos, it was agreed between them that any works to be carried out by the builder on the property would be done on a ‘do and charge’ basis at the rate of $50.00 per hour including GST and that any materials and equipment could be obtained on the builder’s account and the cost then passed on to the home owner at no mark-up.

97. In response to the home owner’s contention that there was an agreed ‘per block’ rate for laying of blocks, the builder gave further evidence (see Di Rico 2 at paragraphs 20 – 27) as to a conversation with the home owner shortly before the works commenced in April 2011, to the following effect:

• Mr Cominos asked if the builder would lay the blocks at a ‘per block’ rate;

• Mr Di Rico said that works at a per block rate could not be done as the site was too steep and also because there was too much additional work involved including the carrying of the blocks and mortar from the road to the site up the steep driveway;

• Mr Di Rico reiterated the earlier conversation that the work could be done on a ‘do and charge’ basis for $50.00 per hour inclusive of GST per labourer;

• This was accepted by Mr Cominos as the basis of charging by the builder for the works to be undertaken including the laying of blocks.

98. Where there are differences between Mr Antonio Di Rico and Mr Cominos as regards the substance of what was said during material conversations, I prefer the evidence of Mr Di Rico. I am satisfied that Mr Di Rico made concessions, where appropriate to do so, as regards issues of liability and quantum in the respective cases of each party, and also that he exhibited a willingness to give answers that may have been adverse to the builder’s case. On the other hand, Mr Cominos’ evidence contained inconsistencies. His initial position was that the one and only agreement between him and the builder was that he would pay the builder $4.00 per block laid. Later, during his cross examination, he drew a distinction between block work and the slabs saying that Mr Di Rico wanted $300.00 per day for slab work. However when pressed for, and given time to locate, evidence of any agreement of a daily rate for slab work, he was unable to find that evidence. Mr Cominos had also prepared a two page Excel spreadsheet referring to $37.00 per hour: see attachment to the statement of evidence of Mr Cominos dated 8 July 2014. When questioned about the $37.00 per hour, the home owner then gave evidence that it related to concrete fill work. These inconsistencies make it difficult for the Tribunal to accept the reliability of any home owner’s recollections of the material conversations between the parties.

99. Accordingly, I accept the builder’s evidence as regards the agreed basis of charging for work and services on the property and consequently, I also find that the work in respect of the laying of blocks was not performed on a ‘per block’ basis.

100. I also accept the evidence of the expert quantity surveyor, Mr Sadlier. There was no challenge to his expertise. Other than the non-expert assertions of the home owner (to be addressed later in these Reasons), Mr Sadlier gave oral evidence to supplement his written report which was subject to questioning by the Tribunal and the home owner. His evidence was largely uncontested, and in my opinion, it must be given considerable weight.

101. Mr Sadlier calculated reasonable remuneration for the work and materials provided by the builder to the home owner in amounts which far exceeded the total amount sought by the builder for all the work performed and all the materials provided to the home owner. The lesser amount in Mr Sadlier’s calculations is $126,578.06 including GST, whereas the total amount of the builder’s claim for the four invoices (two of which were paid by the home owner) plus the third party invoices, is $77,055.77.

102. Mr Sadlier’s evidence as regards the Rawlinson wage rates for the work performed and the materials provided by the builder to the home owner was also most persuasive. He referred to the widespread use of the Rawlinson Construction Guide in the building and construction industry and of his own use of the Guide as a quantity surveyor of at least 15 years’ experience. I note also that the Rawlinson Construction Guide was observed by the Supreme Court of Western Australia as being “regarded as the foremost publication on building costs in Australia”: Berryman v Hames Sharley (WA) Pty Ltd [2008] WASC 59 at [642] per Hasluck J.

103. In all the circumstances, I accept Mr Sadlier’s evidence that an hourly rate of $50.00 including GST for supplying labour was about 10% to 15% less than a reasonable rate for work done between May 2011 and September 2011 in Newcastle.

104. As part of his case in response to Mr Sadlier’s report, the home owner made assertions as to the going rates in the construction industry for block laying: see quotations GD Scott Bricklayer and AV Brown Bricklaying dated 18 December 2013 and 26 November 2014, respectively. These quotes include limitations of “some cutting”, “scaffold to 2.4 metres”, “including mortar joints” and “price subject to change due to site conditions and scaffold requirements”. This evidence is most unsatisfactory. The quotes relied upon by the home owner post-date (by at least 20 months) any discussion the home owner may have had with the builder regarding the basis of charging for the works and consequently could not have influenced decisions made between the parties in 2011 as to the pricing of the works. The home owner gave evidence during his cross examination that the property was quite steep (about 45 degrees). It was then put to the home owner later in his cross examination that because the rear retaining wall was 5 metres high and because there was a limitation (i.e. the scaffolding to 2.4 metres) in the quotation of GD Scott Bricklayer which he now relied upon, this inevitably caused an increase in price for block laying on the property. The home owner refused to accept that would be the case. He disputed that the whole property was steep. He informed the Tribunal that the 45 degree gradient only extended to the present location of the front retaining wall. The front retaining wall is about 3 metres from the street boundary of the property. When referred to the plans created by the structural engineer Mr Hunt (which showed a gradient of about 45 degrees from the road extending beyond the present location of the front retaining wall), the home owner stated that the plans of his own expert witness were wrong.

105. In giving his oral evidence, Mr Sadlier expressed the view that the gradient of a property is apt to cause the costing of construction work (including block laying) to increase. I am satisfied that Mr Sadlier’s evidence is to be preferred to the home owner’s evidence as regards the reasonable cost to the builder of the block laying work carried out on the property during 2011 at the home owner’s request. The quotations relied upon by the home owner have no material relevance to the issues in dispute before the Tribunal and the assertions of the home owner (unsupported by expert opinion) about the going rates in the construction industry for block laying carry no evidentiary weight in the Tribunal’s determination of the issues.

106. Accordingly I find the amount claimed for work done by the builder ($21,797.33) is reasonable remuneration.

107. It is also apparent from the quantum of the claim for materials/equipment provided as well as the quantum of the third party invoices at annexure D to Di Rico 1, that Mr Di Rico, in accordance with his oral agreement with Mr Cominos, passed on the costs of the materials to the home owner at the cost incurred by the builder; in other words, there was no mark-up applied at all.

108. Therefore, I find that the builder’s claim is reasonable in respect of the materials and equipment set out in the third party invoices ($25,408.97).

The Home Owner’s Claim: Rectification work and the cost thereof

109. As indicated earlier in these Reasons, the home owner did not pursue any claim for overpayment. Also, in presenting his case to the Tribunal, the home owner did not refer to the Scott Schedule previously lodged with the Tribunal; rather he directed his evidence and submissions to allegations in four (4) specific areas (referred to above) against the builder in respect of defective and incomplete work, the rectification works required in consequence thereof, and the cost to the home owner of such rectification works.

110. However, I am not satisfied, on the balance of probabilities that the home owner has made out a case for relief in respect of any of the claims of defective and incomplete work made against the builder. My reasons for refusing relief to the home owner are more particularly set out below. Those reasons include why I did not find the evidence of the home owner’s expert, Mr Hunt, supportive of the home owner’s case. Indeed, beyond the mere assertions of the home owner, the allegations of defective and incomplete work were not supported by Mr Hunt or by any other expert opinion (whether of a building consultant, a structural engineer or a quantity surveyor).

The allegation that the builder incorrectly excavated the front car park

111. I accept the builder’s evidence that the deviation in the plans (i.e. excavation to an extent greater than that depicted in the plans) was made necessary by the presence of the water mains which would have been interfered with by a proposed timber staircase had the design of the car park not changed so as to incorporate the stairs internally to the car park. I find that the home owner gave his permission to the builder for the stairs to be moved (so as not to interfere with the water mains). To the extent Mr Antonio Di Rico and Mr Cominos gave different accounts of the relevant conversation I prefer the evidence of the builder. It is supported by Mr Roberto Di Rico (the builder’s son) who was present during the relevant conversation.

112. On 28 June 2011, an officer of Newcastle City Council inspected the property, in the presence of the home owner, and issued a Progress Inspection Report (see annexure K of the home owner’s statement of evidence dated 8 July 2014). The report states that various steps needed to be taken (e.g. s 96 application) and also records that various other works were proposed (e.g. a change in materials for the stair). The home owner accepted in his cross examination that by 28 June 2011 the excavation for the car park had occurred but that the concrete had not been poured and the stairs were not in place. The home owner also conceded in his cross examination that certain works or steps would need to be done or taken in order to proceed with the car park at a wider width. This included using different materials for the stairs (concrete instead of timber), a s 96 application, a construction modification, alteration to the plans and also that the front retaining wall would have to be incorporated into the slab. From that evidence, I draw the inevitable inference that even with full awareness of the consequences of proceeding with a car park at an increased width; the home owner did not at any time request that the builder decrease the size of the car park and revert to the original plans.

113. In all the circumstances, I find that there is no causal link between any acts or omissions on the part of the builder and the home owner’s increased costs and that in consequence the builder cannot be held responsible for any of the rectification costs the home owner attributes to the increased width of the car park.

The home owner’s allegation that jumbo blocks were not used as stipulated by the s 96 modifications

114. The structural engineer, Mr Hunt, who gave evidence in the home owner’s case, could not recall whether he spoke to the builder about the specifications for the front retaining wall and the requirement to use jumbo blocks for the first three courses. His recollection was that he spoke to the home owner about using the jumbo blocks and did not instruct anyone on site to do that.

115. Further, during his cross examination, the home owner conceded that he could not recall telling the builder to use jumbo blocks. Mr Cominos also said there were already jumbo blocks (15 blocks) on site but that he did not buy extra blocks to complete the three courses in the front retaining wall.

116. The builder gave evidence that he was not told that the engineer requested the use of jumbo blocks on site. Also, the Progress Inspection Report of Newcastle City Council says nothing about jumbo blocks.

117. Among the further documents provided by the home owner with his submissions dated 15 April 2015 is a photograph (Appendix 17) said to indicate that the builder was aware jumbo blocks were required because “24 mil start bars are used for jumbo blocks”. However, this submission is an assertion only and could not be tested in cross examination as the photograph was not tendered into evidence by the home owner during the formal hearing. Other than the home owner’s assertion that the bars are “24 mil start bars” there is nothing to prove what the photograph depicts. The photograph is of no assistance to the Tribunal in determining the real issues in dispute.

118. I find the evidence establishes that the home owner was on notice of the need to use the jumbo blocks, the builder was not on notice and that the home owner did not supply enough jumbo blocks in any event to complete the three courses in the front retaining wall.

119. Mr Hunt gave evidence that the consequence of jumbo blocks not being used for the bottom three courses of the front retaining wall was an increase in the grade of concrete and steel. Even if a causal connection between the alleged loss of the home owner and any act or omission on the part of the builder had been established on the evidence, I find that the evidence to establish the home owner’s loss is unsatisfactory. The home owner quantifies the loss as for steel bars ($1,057.60) and concrete fill ($667.90). Yet these figures are derived from a quote (appendix 40 to the submissions dated 15 April 2015) which bears date 25 March 2015, and so cannot establish the difference in price for works carried out in 2011.

The allegation that the builder’s labourer collapsed the dirt bank

120. During his cross examination, the home owner conceded that he did not see a complete chain of events that commenced with Mr Roberto Di Rico standing on the bank behind the front retaining wall and causing a pipe to collapse. Mr Cominos’ evidence was that he saw Mr Roberto Di Rico standing on the bank behind the front retaining wall and sometime later he discovered a collapsed pipe. As he put it during his cross examination, Mr Cominos “assumed that Roberto standing on the bank actually caused the pipe to collapse”.

121. I accept the evidence of Mr Roberto Di Rico that he did not stand on the bank behind the front retaining wall but was standing on scaffolding. I also accept the builder’s evidence that the collapsed pipe was a burst sewer.

122. I find that the claim for $2,769.25 against the builder is not made out on the evidence as there is no causal connection between the burst sewer pipe and any or omission on the builder’s part.

The allegation that the rear retaining wall was not constructed to the approved plan

123. The home owner gave evidence that he was not aware of the “incorrect fill” behind the rear retaining wall. However, I prefer the evidence of Mr Roberto Di Rico and Mr Alan Brewer (the bobcat driver) that it was on the insistence of the home owner the clay and soil mix from the excavation of the front car park was used as fill for behind the rear retaining wall. In this regard, Mr Roberto Di Rico gave evidence, which I accept, that he protested at the home owner’s insistence because he knew the fill was inappropriate for behind the rear retaining wall, that he tried to call his father (the builder) but was unable to speak to him, and that he was concerned he would be removed from the site if he refused the instruction of the home owner (who was acting in the capacity of owner/builder).

124. I find that the incorrect fill behind the rear retaining wall was a direct consequence of the home owner’s actions and not any act or omission on the builder’s part, and further that, in those circumstances, the home owner’s claim for rectification costs of up to $9,940.10 should not be visited upon the builder.

125. In any event, I am not satisfied on the evidence that there was a deflection of the rear retaining wall which makes necessary rectification works costing up to $9,940.10. The home owner relied upon the statement in Mr Hunt’s report (annexure B) that he inspected the rear retaining wall and observed that the wall had deflected approximately 80 mm at the top right hand corner. During his cross examination Mr Hunt conceded that he had not in fact measured the rear retaining wall or the wall against which he was measuring any deflection of the rear retaining wall. Mr Cominos also conceded that he had not measured the relevant walls to see if they were plumb and level. In those circumstances any evidence of a deflection in the rear retaining wall is unsafe and unsubstantiated and must be rejected by the Tribunal.

126. Even if I had decided differently the issues of causation in respect of the home owner’s rectification expenses, the evidence of the home owner as regards the quantification of his alleged loss is unsupported by any independent evidence. In particular, there is no evidence from an expert building consultant as to a proper scope of works for rectification or from an expert quantity surveyor as to the reasonable cost of the rectification works within such defined scope of works. This is despite the fact that the Tribunal’s directions made on 18 June 2014 gave the home owner an opportunity to provide expert reports as well as witness statements.

127. There are also instances in the home owner’s calculations of loss which are not properly claimable against the builder; e.g. the cost of the gravel ($1,750.00) for behind the rear retaining wall was a cost the home owner was always going to bear even if the home owner was satisfied that the builder’s work was free of any defects.

The application of the law of estoppel (whether conventional or equitable) to the builder’s claim and to the home owner’s defences to the builder’s claim (including any set off for rectification costs arising out of allegations of defective workmanship)

128. I am satisfied on the evidence that the home owner is estopped from denying payment of the builder’s invoices and the third party invoices whether by denying the existence of an obligation to pay the builder’s invoices and the third party invoices or by lately raised allegations of defective workmanship.

129. In particular, I make the following findings:

1. There was a state of affairs, specifically, the provision of work and materials by the builder to the home owner at the property, for which the builder expected payment by the home owner;

2. Such state of affairs (or assumption) was induced by the home owner’s own conduct, that is, the home owner encouraging and acquiescing in the builder’s reasonable belief that he (the builder) would be paid for his works and that he would be reimbursed for the expenses he incurred on the home owner’s behalf;

3. The builder acted to his detriment by undertaking the works and incurring the expenses, for which he has not been paid or reimbursed;

4. The home owner should not be permitted to, or alternatively, it would be unconscionable to allow him to, depart from the assumption he induced the builder to act upon.

130. I find that in all the circumstances the home owner should be held to the assumption he knowingly induced. It follows from the operation of the estoppel (as well as the law of restitution and unjust enrichment) that the appropriate relief is for the home owner to pay the amounts totalling $47,206.30 claimed by the builder.

131. As regards a set off for indebtedness to the builder by reason of rectification costs in amounts of up to $21,154.04, or any other defence of defective workmanship, I find that the home owner’s claim must be dismissed for the reasons already given; that is, the home owner has not established his incurrence of any of the costs of rectification now claimed were, in fact, for defective or incomplete work, or were otherwise caused, by the builder, nor has the home owner proved that all of the costs now sought as rectification expenses are, in fact, reasonable and properly claimable against the builder.

132. Further and alternatively, I find that an estoppel operates to bar any defences of the home owner which are based upon allegations of defective workmanship. There is a lack of documentary evidence of any complaint (or any written communication at all) by the home owner to the builder whether in respect of the manner in which the invoices were being rendered (specifically, at hourly rates for labour divisible by $50.00) or in respect of defective workmanship. The home owner gave evidence that he raised the complaints with the builder during conversations yet still paid the first two invoices. I prefer the evidence of Mr Antonio Di Rico who said that there was never any conversation arising out of the receipt of the invoices, that he was never informed of any disagreement of the manner in which the work the subject of the invoices had been charged, and that Mr Di Rico did not receive any correspondence from the home owner during 2012 about defective construction of the front and rear retaining walls.

133. Contemporaneous documents support the builder’s position: see, particularly, annexures I and K to Di Rico 1, respectively, being an email from the home owner to the builder sent on 4 September 2011, and a memorandum signed by the home owner in or about September or October 2011. Such documents expressly acknowledge the outstanding amounts after the builder had ceased work on the property. The home owner attempted to explain away these acknowledgements as being a way of encouraging the builder to cease allegedly coercing or calling others to stop working on the property. However, I do not find such explanations as at all credible in the circumstances. The builder gave evidence, which I accept, that he never conducted himself in such manner. Further the builder gave evidence that he either did not know or had not spoken to the various individual and companies identified by Mr Cominos at page 11 of the statement of evidence dated 8 July 2014. Even in the face of such evidence from the builder, there was no evidence called by the home owner from any of the individuals or companies identified by the home owner as being those on the receiving end of such alleged coercion. The home owner has provided no explanation as to why those witnesses were not called. Accordingly, I draw the inference that any evidence from those companies would not have assisted the home owner’s defence to the builder’s claim: Jones v Dunkel (1959) 101 CLR 298.

134. I find that the home owner during late 2011 and 2012 continued to promote the assumption that payment of the outstanding builder’s invoices and the third party invoices would be forthcoming. In doing so, the home owner adopted the practice of referring to “news” as to whether his house had been sold: see the emails sent by the home owner on 25 October 2011, 31 January 2012 and 7 April 2012, respectively, within annexure J to Di Rico 1. Such series of emails has to be read, in my opinion, in the context of the sentence in the home owner’s email of 4 September 2011, which states: “once (the property is) sold all monies owing will be paid immediately”. I am satisfied on all the evidence that the home owner made no attempts to complain to the builder, or to the builder’s solicitors, in the face of the builder’s demands for payment. The first time complaints were raised regarding the manner in which the builder’s invoices had been rendered and any alleged defective workmanship was in the Local Court proceedings commenced on 20 May 2013.

135. There is ample evidence to support a finding that there was a conventional assumption mutually adopted by the home owner and the builder to the effect that the builder would be paid the outstanding accounts and then later, that the builder would be paid once the home owner’s house was sold. Further, it is clear on the evidence that the builder thought the home owner was acting on that conventional basis and also (as importantly) that the home owner knew that the builder was doing so and/or intended that the builder should do so. The builder’s detriment is established by the builder doing the work and incurring costs and expenses with his own workers and third party suppliers. The detriment is further established by the builder giving the home owner some latitude to pay; that is, refraining from taking recovery action against the home owner until May 2013, thereby increasing the time the builder has been kept out of his money.

136. It is also clear that there was a causal connection between the detriment suffered by the builder and the home owner’s conduct as a whole. I find that all the elements of a conventional estoppel are made out on the evidence.

137. Further I am satisfied as to the elements of equitable estoppel in this case. It would be unconscionable for the home owner to arrogate to himself the benefit of all the time and money the builder has spent and for him to depart from the assumptions he promoted that payment be delayed to allow him time to sell his house. Equity requires the Tribunal’s intervention to avoid the injustice resulting from the home owner’s unconscionable conduct: Sidhu v van Dyke (2014) 251 CLR 505 at [85] – [86]. I find that the home owner must be held to all of the assumptions he knowingly induced and that the appropriate relief is payment to the builder of the outstanding accounts and the dismissal of the home owner’s claims of defective workmanship including all the claims for relief arising on the home owner’s application.

The home owner’s claim for reimbursement of ‘out of pocket legal’ expenses

138. Among the documents (appendix 54) provided by the home owner with the submission of 15 April 2015 was an invoice from a firm of solicitors, Perry Legal, apparently addressed to the home owner in an amount of $27,491.03. It appears that the home owner is seeking reimbursement of that amount as part of his application for relief.

139. There is also a claim (at page 31 of the submission dated 15 April 2015) for reimbursement of the costs to the builder’s solicitors ($16,000.00) awarded against the home owner.

140. For the reasons provided above, the home owner has not established an entitlement to any relief on his application. However, even if I had decided differently the merits of his application for relief, the claim for reimbursement of ‘out of pocket’ legal expenses is not supported with evidence of payment by him of the amounts sought to be reimbursed. In any event the home owner’s claim is wholly misconceived. Perry Legal represented the home owner in the Local Court proceedings; specifically, on the home owner’s application under s 48L of the HB act to transfer the proceedings to the Tribunal. The home owner was not legally represented in the proceedings before the Tribunal. Presumably the invoice of Perry Legal relates to the s 48L transfer application. The costs of that application were determined by Cheetham LCM on19 March 2014. It is not available to the home owner to claim those costs in the Tribunal proceedings. A res judicata arises. The issue has already been decided by the Local Court, and the costs already awarded against the home owner have been assessed and a certificate has issued.

ORDERS

141. The builder has made out a case for an order that the home owner pay him $47,206.30. I order that the home owner is to make payment within 28 days of the date of these orders.

142. The home owner has not established a case for any relief on his application. His application is dismissed.

143. In addition to an order in respect of the amount of $47,206.30, the builder seeks interest on that amount plus his costs, including filing fees, service fees, expert’s fees and solicitors’ and counsel’s fees.

144. Presumably, the builder seeks a statutory rate of interest on the $47,206.30 from about September 2011 in an amount to be determined by the Tribunal. No calculation of loss with appropriate rate(s) of interest over the relevant period was provided to the Tribunal.

145. I find that there is no basis in this case to make an order for pre judgment interest, whether based on a statutory rate of interest or some other manner of calculation (e.g. a contractual rate of interest). The Civil and Administrative Tribunal Rules 2014, Div 2, Part 9, section 39 refer to s 101 of the Civil Procedure Act 2005, which relates to post judgment interest. There is no other provision giving effect to s 100 of the Civil Procedure Act which relates to pre judgment interest.

146. Accordingly the Tribunal does not have power to award pre judgment interest under the Civil Procedure Act or any other enabling legislation. In this regard, I am not assisted by the builder’s submissions that since there is also no provision which expressly prohibits the Tribunal from awarding pre judgment interest, it can be said in the circumstances that an award of interest compensates the builder for his loss or detriment of being kept out of money for almost four years. That argument is misconceived because the Tribunal has no inherent jurisdiction to award any such ‘compensation’. Even if the Tribunal did have that jurisdiction, I would not be disposed to award compensation by way of interest to the builder in the circumstances of this case. The builder neglected to take care of any concerns for timely payment because he did not ensure that the works on the property were done under a written contract complying with the HB Act and the HB Regulation and he did not specify a contractual rate of interest in the event of non-payment by the home owner.

141. The builder seeks an opportunity to be heard on costs with respect to his own claim and the home owner’s claim. The builder has been substantially successful in both proceedings, save as to the matter of pre judgment interest on the builder’s claim. In my view, it would be highly desirable and also consistent with the Tribunal’s guiding principle of just, quick and cheap resolution of the real issues in the proceedings (see particularly s 36(3) of the Civil and Administrative Tribunal Act 2013), that the parties confer with a view to reaching an agreement between themselves on the matter of costs. If, however, they are unable to do so, then either party has leave to apply to the Deputy Divisional Registrar on or before 31 August 2015, to have the matter relisted before me for any argument as to costs in both proceedings.

D G Charles

General Member

Civil and Administrative Tribunal of New South Wales

30 June 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: 28 August 2015