Assaf v Sky Group Pty Ltd

[2019] NSWCATCD 67

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Assaf v Sky Group Pty Ltd [2019] NSWCATCD 67

Hearing dates:

10/9/18;11/9/18;27/11/18;29/3/19

Date of orders:

30 July 2019

Decision date:

30 July 2019

Jurisdiction:

Consumer and Commercial Division

Before:

C Paull, Senior Member

Decision:

1. In matter HB17/18441 I find that the respondent, Sky Group Pty Ltd is liable to pay the applicant, George Assaf $128,348.79 for defective work and $7000 for an overpayment of work not done by the respondent.

2. In matter HB17/35616 I find that the respondent, George Assaf is liable to pay the applicant, Sky Group Pty Ltd $1540 for variations

3. In offsetting Order 1 against Order 2 I order Sky Group Pty Ltd to pay $133,808.79 on or before 29 August 2019.

4. The parties have until 29/8/19 to make any costs application or any application as to whether the name of Sky Group Pty Ltd needs to be amended

Legislation Cited:

Home Building Act 1989

Category:

Principal judgment

Parties:

George Assaf (Applicant in HB 17/18441; Respondent in HB 17/35616)
Sky Group Pty Ltd (Respondent in HB 17/18441; Applicant in HB 17/35616)

Representation:

Counsel:
Michael Klooster (for George Assaf)
Maurice Baroni (for Sky Group Pty Ltd)

Solicitors:
Kerin Benson Lawyers (for George Assaf)

Construction Legal (for Sky Group Pty Ltd)

File Number(s):

HB17/18441; HB17/35616

Publication restriction:

Nil

REASONS FOR DECISION

1. On or about 19 April 2017, the builder and homeowner entered into a written contract ( the contract) for the builder to carry out “residential building work” as that term is defined under the Home Building Act 1989 (the HBA).

2. Prior to this, on or about 13 April 2016, the builder had issued a tender in relation to the subject building work, which the parties agree forms part of the contract (the tender).

3. The builder commenced work sometime in July 2016, the work continued and Progress claims 1-7; Claim 9; and the first half of Claim 8 (PC8 Invoice 1) were issued and paid .

4. There is some dispute as to when the builder issued and the homeowner received the invoice for the remaining 50% balance of money owing for progress claim 8.

5. There are two claim 8 Invoices in evidence. One is dated 10/4/17 (PC8 Invoice 2) . The other is dated 26/4/17. PC 8 Invoice 3).

6. On 28/4/17 the builder issued a suspension notice (the Suspension Notice) and then on 20/6/17, a termination notice (the Termination Notice).The homeowner disputes receiving these notices at the time the builder states they were issued.

7. On 1/7/17, the homeowner took possession of the site. On 8/7/17 the builder removed the fencing from the site.

8. It is convenient to note here that the hearing of the evidence concluded on 29/3/19. On that day the builder represented himself and appeared to suggest that his legal advisors no longer acted for him. This is supported in some correspondence that is on the Tribunal file and I note that the builder has failed to file and serve submissions as directed.

9. In these circumstances I have no alternative other than to deliver my decision based on the evidence and documents before the Tribunal, which includes the Builder’s Preliminary Submissions filed 18/6/18 and the homeowner’s submissions.

10. I note that the documentary evidence was presented by the parties to the Tribunal in 3 white binders numbered Volumes 1, 2 and (the Tribunal books).

OVERVIEW OF THE HOMEOWNER’S CASE

11. The homeowner says that in July 2016 the builder started work and was last on site in late April 2017.

12. The homeowner maintains that the Suspension Notice the builder issued did not comply with the contract terms, that he did not receive it at the time alleged by the builder and that the builder had no right to suspend the work.

13. The homeowner says that the builder’s Termination Notice of 20/6/17 also failed to comply with the contract, thus the builder must show that he was entitled to terminate the contract at common law. Again, the homeowner maintains that he did not receive this notice at the time alleged by the builder and disputes that the builder has shown he had a right to terminate at common law.

14. The homeowner’s case is that by his actions the builder repudiated the contract and so on 1/7/17; the homeowner took possession of the site, as acceptance of the builder’s repudiation.

15. On 8/7/17, the builder removed the fencing and has not been on site since that time.

16. The homeowner has brought this application alleging breaches of the various statutory warranties imposed under s 18B HBA and seeking the sum of $184,466.30 for rectification of alleged defective work; and $131,217.85 for alleged incomplete work.

17. In addition the homeowner seeks a refund of $49,500 he says he has “overpaid” the builder.

18. In his opening address counsel for the homeowner asked the Tribunal to make findings on:-How the contract was terminated; The Defects alleged and the rectification costs sought; the incomplete work for which the homeowner is entitled to damages and the cost of completion of that work; and the overpayment the homeowner alleges he made to the builder.

OVERVIEW OF THE BUILDER’S CASE

19. A comparison between the documents filed and served earlier in the proceedings with those filed subsequently and with the evidence as it evolved at the hearing, shows that the builder’s case has been fluid. Matters raised in the beginning of the proceedings appear to have been abandoned later on and as events unfolded. This has made understanding and trying to determine the ultimate position the builder takes, difficult. The task has been made more difficult by the absence of final submissions.

20. That said, I now turn to what I understood to be an overview of the builder’s case.

21. The builder states that he entered into the $494,007.80 fixed price contract on 13/4/16 which “had incorporated into it” the tender and that the tender included the relevant scope of works.

22. The builder says he started work on or about 20 July 2016 and that he issued and was paid as per the PC Schedule of payments up to and including PC 9.

23. The builder claims he issued the PC 8 Invoice 2 on 20/4/17 for the sum of $27,622.32. He did not receive payment until after he had initiated action under the Building and Construction Industry Security of Payments Act 1999 (the Security of Payments legislation.)

24. The builder concedes that he has been paid for work that remains incomplete; the cost of which the builder’s counsel in preliminary submissions and in initially conducting the case, put at $45,000 plus GST. This figure varied as the proceedings unfolded.

25. The builder’s pleadings initially claim that he terminated the contract in accordance with the terms of that contract. The builder’s later stance is that he terminated at common law.

26. The builder seeks no further payment for work stipulated under the contract.

27. The builder’s case is for variations, which he concedes must be made as a quantum meruit claim. The builder contends that all the variations he claims arise from oral agreement between the parties. The builder sought somewhere in the vicinity of between $42,480 and $35,000.

28. The builder agrees that he has invoiced the homeowner and that he has paid $491,357.80 under the contract and that indeed he has been paid for some work that remains incomplete.

29. The Builder’s Preliminary Submissions state that “The Builder’s own evidence suggests that the value of the Incomplete Work is $45, 0000 excluding GST. This is therefore conceded”. This also appeared to be counsel’s stance at the commencement of the hearing.

30. It later transpired in what can at best be described a comedy of errors, that counsel may not have been fully appraised of the builder’s instructions on the overpayment issue.

31. The builder makes no concession as to the defective items the homeowner claims and argues that because he validly terminated the contract at common law, the homeowner is not entitled to completion costs.

OUTLINE OF THE EVENTS LEADING TO THESE PROCEEDINGS

32. The parties agree that they signed the tender on or about 13 April 2016 and that it is part of the $494,007.80 fixed price contract they executed on or about 19 April 2016.

33. Pursuant to the contract the builder was engaged to demolish the existing dwelling and construct 2 attached dual occupancy townhouses in its place.

34. The builder commenced work in July 2016.

35. The builder issued and the homeowner paid up to and including PC7 and Claim 9.

36. On or about 2/3/17 the homeowner received PC 8 Invoice 1, being for the first 50% of “Completion of Plasterboard & Kitchen”. He paid this amount.

37. What the builder says is that on 20/4/17, he issued the claim for the balance of the 50% for “Completion of Plasterboard & Kitchen”, PC 8 Invoice2, in the sum of $27,622.32. The homeowner refutes receiving this notice.

38. There is a later version of the PC8 Invoice2, for this same sum dated 26 April 2016, PC8Invoice 3, which the homeowner agrees was served on that date (p 21 and 23 Homeowner’s Submissions).

39. What the builder says is that the homeowner was obliged to pay and failed to pay, the PC8 Invoice 2 until he terminated the contract and initiated proceedings under the Security of Payments legislation.

40. In the homeowner’s affidavit, he agrees that the builder lodged an adjudication application on 29/6/17. He has attached a copy of that application and agrees that he paid the money under the PC8 Invoice 2 pursuant to that Adjudication.

41. The homeowner’s payment summary at the commencement of A5, shows that the PC8 invoice dated 26/4/17 was paid in 3 instalments from 21-24/7/17 ( his attached bank documents support this) pursuant to an “Adjudication Payment”. In his affidavit the homeowner states that “on 24 July 2017, following the decision of the Adjudication…..I paid the final amount due under the contract to the (builder)”

42. The PC 8 Invoice 3, dated 26/4/17 is the document the homeowner includes in his evidence and it bears the builder’s letterhead. There is nothing before the Tribunal to prevent me from finding that for whatever reason, the builder issued the PC 8Invoice 3.

43. The PC8 Invoice 3 specifically states that the $27,622.32 was due to be paid on 3/5/17. The money remained unpaid at that date.

44. This raises the question, why did the homeowner fail to pay PC8 Invoice 3, dated 26/4/17 on 3/5/19 and indeed until 21/7/19-24/7/19 and then only pursuant to an “Adjudication Payment”?

45. In his affidavit the homeowner raises the concerns he started to feel in March 2017 as to delays, poor workmanship and the completion of work for which he was paying in accordance with the payment schedule under the contract.

46. This concern was expressed in email correspondence and led to the homeowner authorising his brother to represent him in discussions with the builder.

47. This concern led to the involvement of the Office of Fair Trading and to the builder agreeing to rectify certain identified, roof defects, one of the homeowner’s main concerns, addressed.

48. The homeowner’s concerns persisted and on 24 April 2017, the homeowner states he lodged these proceedings before the Tribunal. I note the homeowner’s application bears the Tribunal stamp of 1/5/17.

49. On 26/4/17, the homeowner emailed the builder referring to the difficulties he had in contacting the builder, his concern as to outstanding works and most tellingly, stating in that email that until these concerns are met “ there will be no payment.”

50. In his affidavit the homeowner states that he was refusing to pay the builder “fearing that if the (builder) was paid in full, the Works would not be repaired or completed”.

51. In the 26/4/17 email the homeowner specifically lists his concerns as being - painting; defective roof/guttering; garage door changes; air con installed; plumbing completed; rendering completed; landscaping completed. He makes a general statement as to “many credits owing to me that Roy (the builder’s director) knows about”. It concludes that no payment would be made until the builder “confirms and shows me that the above work is completed”.

52. On 28/4/17 the Builder issued the Suspension Notice

53. On 20/6/17 the builder issued the Termination Notice.

54. On or about 29/6/19, the builder applied for payment of the April 2017, PC8 Invoices under the Security of Payments legislation. On the basis of the certificate submitted by both parties, I accept that the matter was determined in the builder’s favour in the sum of $27,622.32 on 17/7/17 and this sum was due on 13/6/19 (p9 to A8 and Annexure AF to the builder’s affidavit 11/12/17)).The homeowner made that payment between 21-24/7/17 (see A5).

55. Neither party has sought to make any submissions as to the effect, if any, of this adjudication process on these proceedings. As such I do no more than consider it as part of the factual context to which the Tribunal may have regard in considering the questions the Tribunal is asked to determine.

56. I now turn to those questions.

DID THE BUILDER HAVE THE RIGHT TO SUSPEND THE CONTRACT?

57. For reasons given above I have accepted that the builder issued the document that forms part of the evidence in A5, being PC8 Invoice 3, issued on the builder’s letterhead, dated 26/4/17. The builder has not directly refuted this document.

58. This PC 8 Invoice 3 must therefore supersede the earlier, PC8 Invoice 2, the builder issued on 20/4/17.

59. PC 8 Invoice 3 clearly allowed the homeowner until 3/5/17, to pay the money owing.

60. Thus, when the builder issued the Suspension Notice on 28/4/19 on the basis of the homeowner’s failure to pay, the money was not due until 3/5/19, pursuant to the PC 8 Invoice 3, dated 26/4/19.

61. I therefore find that the builder had no right to issue the Suspension Notice on 28/4/19 because the PC8 Invoice 3, dated 26/4/17, allowed the homeowner until 3/5/17 to pay the subject money.

62. It is telling that the Builder’s Preliminary Submissions do not appear to really press the validity of the Suspension Notice (putting the matter no higher than: “Even if the suspension under the contract was invalid, on or about 20 June 2017, a Notice of Termination was sent to the Home Owner by registered post”) and arguing the builder’s right to terminate at common law.

63. It is to this issue I now turn.

DID THE BUILDER HAVE THE RIGHT TO TERMINATE THE CONTRACT AT COMMON LAW?

64. As the homeowner submits “Both parties assert that the contract was determined at common law by a party accepting the repudiatory conduct of the other.”

65. As I have found, the builder did not have the right to suspend the work under the contract. As the homeowner submits, this permitted the “Home Owner to terminate the contract under clause 25 of the contract” (p24). However, this is not how matters proceeded and the homeowner did not pursue the course provided under cl 25.

66. Progression towards ending the contract did not arise until the 20/6/17 Termination Notice issued by the builder, which states: “We hereby give you written notice of termination under cl 26 of the Contract, effective immediately”

67. However, as per the Builder’s Preliminary Submissions, the builder did not follow the regime stipulated under the contract to end that contract. At the hearing the builder’s counsel proceeded on the basis that the homeowner, by failing to pay the money owed under the PC8 Invoice 3, breached a fundamental term of the contract, thus entitling the builder to terminate the contract at common law.

68. The homeowner’s counsel accepted that the builder could mount his case at common law, disputing however, that the builder could establish such a case.

69. As already noted and for reasons given above, I have found that the PC8 Invoice 3, dated 26/4/17, prevailed. This invoice required payment on 3/5/17.

70. The undisputed facts are that the homeowner did not pay the money owing under the PC8 Invoice by 3/5/17.

71. The undisputed facts are that the builder purported to terminate the contract by the Notice of Termination dated 20/6/17 and that the money owing for PC8 Invoice remained unpaid at that time.

72. The undisputed facts are that homeowner took possession of the site on 1/7/17 and at that time the money owing under the PC8 Invoice still remained unpaid.

73. The undisputed facts are that it was not until after the builder purported to terminate the contract and initiated action under the Security of Payments legislation that the homeowner paid the PC8 Invoice 3 and then by instalments between 21 and 24 July 2017.

74. It is convenient to note here, the homeowner’s sworn evidence that he has failed to receive much of the correspondence the builder issued, including the Termination and Suspension Notices and the PC 8 Invoice 2, issued 20/4/17. In his affidavit he appears to suggest that the only documents he received were those issued by email-including notification of the Security and Payments legislation proceedings (see A10).

75. Attempting to ascertain how the homeowner received the documents he acknowledges he received and why he says he did not receive others, is far from clear, as can be seen in the paragraphs dealing with these matters in A10.

76. The homeowner states that it was not until around 6/7/17 that he was on notice of the Termination Notice and that he was not apparently on notice of the claim for the PC 8 Invoices till around 3/6/17 (see A10).

77. His counsel’s submission, however, proceed on the basis that the homeowner did receive the 26 April PC8 Invoice 3 (see p21).

78. Curiously, in the homeowner’s own 26/4/17 email (dated the same date as the 26/4/17 PC 8 Invoice 3 was issued and 6 days after the 20/4/19 PC8 Invoice 2 was issued) the homeowner concludes most definitely that there “will be no payment” until his concerns are met.

79. The PC 8 Invoices 2 and 3 were the only demands for payment in existence at the time of this email.

80. It is open to me to me from the above to draw the inference that these strong and definite words that there “will be no payment” were a response to the money the builder was seeking at that time, being the money claimed under PC8 Invoices 2 and 3

81. .The homeowner has also sworn that he did not receive the Termination Notice. I note, however, that the builder has attached to his 11/12/17 statement an Australia Post document confirming that the 20/6/19 Termination Notice was sent by express post and a tracking document which states “Delivered 11.45am Wednesday 21/6/17”.

82. From the above, I conclude that the homeowner was on notice, on or about 26/4/17, when he sent his email of that date, of the builder’s demand for payment under the PC8 Invoices.

83. From the above, I also conclude that on 21/6/17, the Termination Notice was delivered to the homeowner by Australia Post and that he was on notice of it on or about that time.

84. As already noted the PC8 Invoice3 remained unpaid until the end of July 2017.

85. The homeowner, in his affidavit, states that as early as March 2017, he had contacted the Office of Fair Trading; by 24 April 2017 he had lodged these proceedings in the Tribunal; he had concerns that he had been unable to contact the builder for “the last three weeks”; he wanted “certain work” finished; he feared that if the builder was paid in full, the “Works would not be repaired or completed”. Indeed by this stage he was contacting other builders ( see paras 50-66).

86. The homeowner’s concerns are best encapsulated in his own, concurrent document, being his 26 April 2017 email to the builder. This email, when read and viewed within the context of events at that time, does not, in my view, provide reasonable grounds for the homeowner refusing to pay the PC 8 Invoice 3.

87. The email raises the concern of not to being able to speak personally to the builder for 3 weeks. While this may have been a source of frustration, three weeks is not an interminable period of time, especially when one considers that the builder’s representatives were on site; and that the builder’s representative Mr Tan was liaising with the Office of Fair Trading (whom the homeowner had contacted) and wanting to liaise with the homeowner.

64. The homeowner’s claims, as set out in his affidavit (A10) that he could not or would not deal with Mr Tan because of his criminal record are vague, damaging, largely unsubstantiated and not relevant.

65. The 26/4/17 email also raises concerns as to the roof. While it has proven to be the case that the roof now needs rectification (largely as a result of foot trafficking -see below under Defective Work) there is no persuasive evidence that in April 2017, the builder could not or would not address the concerns the homeowner had at that time.

66. Indeed, the homeowner’s submissions concede that in early March 2017 the homeowner was raising concerns about the roof and that by 19 March 2017 the builder had initiated rectification work. When these concerns persisted in April 2017, the parties were still looking to address the matter.

67. Further, I have not been taken to any contractual provision or common law principle that allowed the homeowner to stop payment for such a defect, nor indeed, that allowed the homeowner to stop payment for any of the other matters specified in the 26/4/17 email.

68. Nor has the homeowner substantiated his concerns that payment of the PC8 Invoice 3 would result in the builder failing to complete or rectify the matters raised in the 26/4/17 email.

69. This concern seems unwarranted when one considers that a considerable amount of the contract work had by this stage taken place; that the final claim for “ Completion -$2650” had yet to be made; and that the homeowner has conceded that at that time (see below under the Builder’s Variations Claim) the builder had yet to be paid for certain variations.

70. While the 26 /4/17 email also refers to the works at that time being “into the 10 month”, it does not develop this point in any way. In their evidence before the Tribunal one party blames the other for any delay. I have no reason to prefer one version over the other on what are general and mainly unsubstantiated statements from both sides.

71. Nor are the homeowner’s photographs persuasive evidence as to the stage of completion of the works at the time they were taken or as to any neglect by the builder in progressing the work.

72. I therefore find that the homeowner was on notice on or about 26/4/19 of the demand for payment under the PC8 Invoice 3 and was refusing, without reasonable grounds, to pay that claim and indeed did not make that payment until late July 2017, being after the builder had served the Termination Notice and after the time stipulated for payment in the Adjudication carried out under the Security of Payments legislation.

73. I therefore also fine that the builder was entitled to terminate the contract at common law.

74. Before concluding, I note the homeowner’s submission that the homeowner did not owe the builder money as at “28 April 2017” because as at that date he had paid “Progress Claims 1 to 7, 9 and 50% of Progress Claim 8” ( being the PC8 Invoice 1).

75. True it is, from the homeowners own records (A5) which I have accepted, that these invoices had issued and been paid prior to the issue of the PC 8 Invoices 2 and 3. However, there is no persuasive evidence nor indeed any legal principle to which I have been taken that allowed the homeowner to make a unilateral decision that he was entitled to withhold payment of the PC8 Invoices 3 because of these prior payments. There may have been other courses open to him under the contract or at common law but he did not pursue these.

76. The homeowner’s submissions also stress that the builder stopped work around late April 2017. This is not disputed. It came about as a result of the homeowner refusing to pay the PC8 Invoice 3 for reasons which I have found did not justify such non-payment.

77. I therefore find that the builder was entitled to terminate the contract at common law on the basis of the homeowner’s refusal to pay the PC8 Invoice 3, without reasonable cause.

THE EXPERT EVIDENCE

102. The two experts, Mr Kennedy for the homeowners and Mr Morris for the builder, gave concurrent evidence before the Tribunal on defective and incomplete work.

103. The relevant reports are contained in Vol 3 of 3 of the Tribunal’s Books and are marked A1,A2, R1, R2 and R3,

104. The expert evidence commenced on the first allocated hearing day until the lunch break when the Tribunal was informed that Mr Morris required and was scheduled for kidney dialysis that afternoon. The hearing was then adjourned and at both parties’ request the remainder of the afternoon was used for settlement discussions between them.

105. When the proceedings resumed on the following day the Tribunal was informed that some agreement had been reached in regard to the defective and incomplete items in issue.

106. A summary of the experts’ opinions on the incomplete and defective work is summarised in the documents marked T1.

107. T2, which is signed by the parties’ counsel, mirrors the items listed in T1, save as to the matters subsequently agreed to, which appear in the last right hand side column of T2.

108. The Tribunal was also presented with T3 which is a duplication of Mr Kennedy’s costing Schedule that appears in V volume 3 of the Tribunal Books, with adjusted numbering to duplicate the numbering in T1 and T2

109. Before turning to the specific items in issue, I make the following general observations and findings.

110. Mr Morris’ evidence was often difficult to fathom. He frequently failed to provide any logical and clearly set out processes that he followed. Thus the assumptions he made and his reasoning process in arriving at the conclusions he reached, are not persuasive. At times he waivered in his evidence and this led to inconsistent accounts of his conclusions. When put to the test in cross-examination, he referred to matters that seemed to go outside those on which he had originally opined. He seemed overly dependent on his instructions, which made it difficult to accept that he brought an independent mind to the matters on which he was asked to opine.

111. These matters are fully detailed in the homeowner’s submissions, which accord with the findings I have made above.

112. I find that unless there is some specific reason for so doing, where there is disagreement between the experts, I prefer the evidence of Mr Kennedy.

113. I now turn to the defects in dispute

DEFECTIVE WORK

9.00 New Metal Roof

114. Mr Kennedy had the advantage of inspecting the roof at close quarters and gave detailed evidence of the large proportion of damaged roof sheeting. His evidence was supported by the photographs he took, which are in evidence.

115. Mr Morris clearly admitted that he did not access any part of the roof and so made no physical observations of its condition, relying on photos taken by a drone and making speculative assumptions.

116. What is more Mr Kennedy was able to reference his opinions to BCA standards, which I did not understand Mr Morris to directly refute.

117. I have already given reasons for preferring the evidence of Mr Kennedy and for this and the above reasons, I accept the degree of damage to which he attested and his method of costing of the rectification required, noting that Mr Kennedy has paid far greater detail to itemising his costing.

118. I find on balance that the homeowner has established his case as to the damage that exists and that the reasonable and necessary cost of rectification.

119. However, I must also address the issue of how such damage arose. There did not appear to be any dispute that the roof had suffered from “foot traffic”. Each party pointed to the other, as the cause of this foot traffic.

120. The evidence of the roof contractor, being an undated letter addressed “to whom it may concern” is not persuasive.

121. Further, the roof was under the builders control during the relevant months of April 2017 to June 2017, when the site was still under the builder’s control.

122. I therefore find, on balance, that the builder is liable for the damage that I have found is present and accept Mr Kennedy’s costing.

9.01 Timber Roof frame $6170

123. Once again, Mr Kennedy’s evidence carries more weight for the general reasons already given and particularly because, although he only gained limited access, he made an attempt to access the area using his torch to see if he could observe any roof frame tie downs.

124. Mr Morris advised that that he did not carry out his own assessment and based his view that the tie downs were in place on his instructions that this work had been certified, even though he had not sighted the certification.

125. Once again, Mr Morris has not provided a costing to contradict that of Mr Kennedy

126. For the above reason I am satisfied that the homeowner has established his case on balance and I award the sum sought as being the reasonable and necessary cost of rectification.

9.02 External Render and Weepholes

127. Mr Kennedy gave evidence that there are insufficient weepholes (as required by AS3700 cl 4.7.2). However, his proposition that if the builder had complied with this standard, he would have expected to see more weepholes, was not overly persuasive.

128. What is more, Mr Kennedy conceded that the existing render, which is at the heart of this claim, is in good condition.

129. As such, I am not satisfied, on balance that the homeowner has established his case that a rectification process estimated at $33, 360 is necessary and reasonable.

130. I therefore disallow this item.

9.03 Tile Alignment /Placement

131. The relevant photographs in evidence support Mr Kennedy’s evidence that the subject tile panels are upside down, creating aesthetic issues.

132. Although Mr Kennedy had originally costed the rectification process at $793, the experts later agreed on the sum of $370 and I accept this figure as being the necessary and reasonable cost of rectification.

9.04 Services

133. There is an overriding issue of whether the items in question amount to defective or incomplete work.

134. Mr Kennedy’s evidence that the items in question should have been capped was not directly challenged.

135. Mr Kennedy did concede, however, that he carried out no testing and what he observed was the “potential” for some damage to occur.

136. In these circumstances I am inclined to the view that what needs to be addressed does not amount to a defect.

137. For reasons given, the homeowner is not entitled to damages for incomplete work.

9.05 Step in Render

138. The photograph Mr Kennedy relied on (which appears at P 794 of Vol 3 of the Tribunal Books) as he conceded, raises an aesthetic matter.

139. The homeowner submits that Mr Morris’ evidence that this was a deliberate measure taken by the builder to put in an expansion joint, was given only in his oral evidence, in an almost “ on the run“ basis and therefore carries little weight.

140. Nonetheless, I do accept Mr Morris’ view that the aesthetic issue is less than compelling because the only other step of comparison is located on the other building.

141. In these circumstances I am not satisfied that is necessary and reasonable to award the $1685 rectification costs sought.

9.06 Wet Area Membranes

142. The bathrooms in issue number six, four upstairs bathrooms and two downstairs.

143. The homeowner’s case raises three main matters, namely: the membranes fail to “turn up” around areas such as the pipes, thus allowing water penetration; inadequate falls; and problems surrounding the shower recesses because the recess angle is too short.

144. The first two matters are said to be present in all bathrooms; the third only occurs in those bathrooms that have a shower.

145. The homeowner seeks the removal of all existing tiling; the replacement of the membranes and the relaying of tiles.

146. It is the homeowner’s position that rectification of one of the matters in issue, necessitates the rectification of the other two matters. For example, to address the fall issue, necessitates membrane and tile replacement; to address the shower, necessitates the removal of tiling and membrane and their replacement. In other words, any finding of liability on the fall and/or shower recess issue must of necessity, involve the replacement of the membrane. Similarly, to address the membrane turn up alone, poses a risk requiring replacement of the tiles.

147. Considerable time was spent ventilating Mr Kennedy’s evidence that any membrane that is in place has to be redone as there is no evidence that it has been taken up and around the pipes as required under AS3740-2010. There are photographs in evidence to support his observations. Mr Kennedy remained steadfast that even if a finding is made that the fall and shower issues do not constitute defects, the membrane has to be redone to ensure it is taken to and upturned around areas such as the pipes. He stressed the risk factor this poses to the tiles, necessitating the complete rectification proposal he has costed for almost $65,000.

148. Mr Kennedy stressed that the function of the membrane is to contain and control water to outlets and drains and protect the building. He was of the view that the membrane is not consistent. He was able to observe a membrane in some instances but not in others. He gave evidence that the normal practice is to install the pipes, followed by the membranes and lastly the tiles, however in this instance the pipes were installed after the membrane.

149. In cross-examination Mr Kennedy, when taken to the issue of the turn up of membrane around the pipe, conceded that he could not say categorically that the membrane will not work but still remained steadfast that the matters on which he opined are fatal flaws that need to be addressed in the way he proposes.

150. The builder relied on the certification of the area to support that a membrane is in place ( document p969)

151. Mr Morris stated that the membrane is in place but could not be seen as it had to be cut back in the area surrounding the “temporary” pipes.

152. Mr Morris did concede that he did not make these observations in his report. Clearly this weakens his evidence.

153. What is more, Mr Morris’ evidence that the membrane was cut back around the pipe, sits at odds with his evidence that the pipe was temporary. He did eventually concede the illogicality of arguing that it was necessary to go to the length of cutting around a pipe that was only meant to be installed temporarily.

154. Mr Morris was somewhat disingenuous in explaining why his reports fail to address the falls issue, when (as he conceded after being pressed for a considerable time) Mr Kennedy clearly raises the falls in his report. He then went on to volunteer that he had in fact measured the falls, found that they did not to amount to a defect and so omitted to refer to them in his report because he was “only looking for defects”. Mr Morris was then taken to paragraph 17 of the relevant Code of Conduct.

155. Mr Morris was again somewhat disingenuous when suggesting that the shower angle is a matter of the work not being “complete”, comparable to taps and showers being installed only after the laying of the tiles. Only after considerable resistance did he conceded that this was not the case.

156. For the general reasons I have given and the specific matters stated above, the evidence of Mr Kennedy is to be preferred and I am satisfied, on balance, that the homeowner has established the builder’s liability.

157. What causes me concern, however, is the extensive rectification proposed.

158. It must be said that it is extremely regrettable that neither expert carried out any water testing in relation to what is one of the largest defects the homeowner claims.

159. Nonetheless, Mr Kennedy’s evidence was not directly refuted in any significant way. He remained unshaken about the difficulty faced in getting contractors to undertake isolated rectification work on an area by area by area basis because of the risk of damaging tiles and membranes. When he was shown a photograph of a vanity -toilet-with no apparent membrane, it was put to him that this area could be addressed in isolation with a minimal removal of tiles. Mr Kennedy stayed firm that no contractor was likely to agree to undertake such a proposal and warrant that in trying to implement it, he would not inadvertently cause additional damage.

160. Finally and most regrettably, no feasible alternative scope of work was put forward by Mr Morris.

161. Given the strength of and the preference to be given to Mr Kennedy’s evidence and the persuasive evidence he gave of the risks posed and hence the difficulty in having a contractor warrant, partial rectification on a an area by area basis, I find that the homeowner has established his case. I allow the rectification sought by the homeowner in the sum of $64,935.

9.07 Opening to Garage Door

162. Mr Kennedy agreed that what he observed was a door that is too large but nonetheless functional. In his oral evidence he could not recall or elaborate on any vibration that he had raised in his report. In his written submissions the homeowner states that this item is no longer pressed.

9.08 Letter Box Pillar

163. The parties agreed on damages of $195 and so I allow the claim in that sum

9.09 Skirtings

164. Mr Kennedy gave evidence, based on the measurements he took and the photographs on which he relied, that because the skirtings are not level there are gaps between the skirting and the flooring

165. He did concede that in a large part of the area concerned the gaps are concealed by carpet.

166. In cross-examination Mr Kennedy agreed he could not be specific about which photographs and measurements related to which room; that he had not costed for each room and it was hard to distil the individual costings from the Scott Schedule.

167. Mr Morris gave evidence that it is usual to allow a gap to make provision for the laying of tiles, although he did concede that in some of the instances in issue the gap is wider than usual. What is more he agreed his view was based on visually assessment only and that he did not use his level, despite attending the site armed with Mr Kennedy’s findings.

168. This again weakens Mr Morris’ evidence and leads me to prefer that of Mr Kennedy.

169. However, the matter does not end here. As outlined above, Mr Kennedy conceded that his costing falls short. He puts an hourly rate with no breakdown of the amount of hours or the amount of individual skirting material required. While counsel for the homeowner attempted to address this in the evidence given before the Tribunal, I upheld the builder’s objection and disallowed the evidence on the basis that Mr Kennedy should not be allowed to “bolster” his report at this late stage.

170. In addition to these matters, as noted above, the “gap” in many rooms is ameliorated by the laying of carpet.

171. For these reasons I am not satisfied the homeowner has established that $3350 is a reasonable and necessary rectification cost.

172. Nonetheless, there are areas that need to be addressed. The only other costing evidence is that of Mr Morris for $300. While this evidence is not ideal, it is the only other evidence before the Tribunal and so I propose to awards that sum.

9.10 Plasterboard

173. I propose to award the agreed figure provided by the parties of $187.50

9.11 Gaps in floor

174. The issues and matters raised here are much as outlined in 9.09 above.

175. Again, Mr Kennedy has given a costing without specifying the area involved and the estimated labour hours and rate; and the material costs. Again Mr Morris has put forward a global $70 figure.

176. In cross-examination Mr Kennedy agreed that these are small gaps which will not be visible after the carpet is laid.

177. In light of this concession and the deficiency in his costing evidence, I disallow this item.

9.12;9.13 and 9.14

178. As per the agreement recorded in T2, I award the sums of $232.50; $372.50 and $157.50 agreed by the experts for each of these respective items as set out at T2.

Total Damages awarded for Defective Work

179. To conclude on the defective work claim, for the reasons given, I award the homeowner $128,348.79 which is comprised of the total of the rectification costs I have allowed above, plus the agreed 15% overheads, the agreed 5% profit and GST.

SECTION 48MA HBA

180. Section 48MA HBA gives the Tribunal discretion to order the builder to return to the site to carry out any rectification work for which it is found he is liable. This is legislated as being the “preferred option.”

181. The builder in his 22/12/17 Affidavit expresses his willingness to return to the site.

182. In her evidence Mrs Assaf referred to the criminal record of Mr Malouf (the director of the builder company) conceding that even though she was aware of this at the time of entering into the contract (having been acquainted with him over some 20 years) it was something she overlooked having formed the view that he was now on a path of redeeming himself.

183. Mrs Assaf is no longer of that view and became particularly concerned when she learned that the builder had employed Ken Tan, who she claims also has a criminal history, although she conceded that she has received no threats from Mr Tan.

184. Mrs Assaf gave evidence that the builder had threatened her husband’s safety, her safety and her family’s safety. It transpired that this occurred in a telephone conversation between the builder and her husband, the latter informing her of what had been said after the telephone calls were terminated. Her evidence suggested that on one occasion, however, a conversation between her husband and the builder had been on loud speaker and she heard the builder threaten her husband.

185. In his statutory declaration (A10) the homeowner also raises these matters and refers to his contacting the police.

186. The Tribunal record shows that some documents were presented to the Tribunal under summons from the Police Department and that police documents were originally included in the Tribunal Books.These matters are in not in my view relevant.

187. In my view, what is relevant is the fact that the parties sought police involvement.

188. What is relevant is that the builder has already had the opportunity to rectify a matter and that this only escalated the dispute. I refer here to the roof.

189. What is relevant is the palpable and visceral animosity displayed by the parties at the hearing, a not uncommon scenario where, as here, the parties have previously been known to each other and come from the same small community.

190. In these circumstances, having the builder return to the site is not the preferred option and I therefore decline to make such an order.

THE HOMEOWNER’S CLAIM FOR COMPLETION COSTS

191. In light of the above findings that the builder was entitled to terminate the contract, the homeowner’s claim for completion costs must fail

THE HOMEOWNER’S CLAIM FOR OVERPAYMENT

192. The parties agree that the contract price was for $494,007. 18.

193. The homeowner’s account of payments made under the contract is fairly comprehensively recorded in his evidence A5, which I accept as being the best evidence before the Tribunal. This document puts the total of the amount the homeowner has paid the builder at $491,357.85. In his Preliminary Submissions the builder seems to accept that this is the invoiced figure and does not dispute that it has been paid.

194. The parties agree that at the time the contract was terminated the homeowner had paid the builder for work he had yet to complete.

195. It is from this point that matters become more difficult to follow.

196. In relation to the overpayment, the Builder’s Preliminary Submission state that as his own evidence puts the value of the incomplete work at $45,000 he “concedes” this amount.

197. Almost at the conclusion of the hearing, however, the builder’s counsel advised the Tribunal that he had misunderstood his instructions and had failed to account for matters raised in a letter, to which the builder was taken when giving evidence. When it became apparent that this was an incomplete document and did not clarify the builder’s position, the builder gave the “off the cuff” evidence that there had been an overpayment in the vicinity of $5000-$7000.

198. The homeowner, being the party seeking a refund of overpaid money, has failed to provide any of his own evidence as to the amount in question. In his submissions, the homeowner asks the Tribunal to make an order acknowledging the concession of $45,000 in the Builder’s Preliminary Submissions.

199. This leaves the Tribunal in an invidious position.

200. Ultimately, the Builder’s Preliminary Submissions are simply that, submissions. They are not evidence. What is more the builder’s counsel later informed the Tribunal that the concession made in those submissions was based on a misunderstanding of his instructions.

201. As stated, the homeowner, who had the opportunity to put on evidence before the Builder’s Preliminary Submissions, failed to do so.

202. The only evidence therefore before the Tribunal is the builder’s oral evidence that the overpayment is in the vicinity of $5,000-$7,000. Whilst not the most satisfactory evidence, it remains the only sworn evidence before the Tribunal.

203. I therefore award the homeowner $7000 as a repayment of the money he paid the builder for work the builder failed to carry out.

THE BUILDER’S CLAIM FOR VARIATIONS

204. None of the 8 variation stipulated in the Builder’s Preliminary Submissions claims were reduced to writing and signed, as required under the contract and the HBA legislation.

205. It is common ground that the builder may only recover on a quantum meruit claim.

206. The builder argues that his variations claim arises from work he has performed and costs he has incurred; that there is evidence of those costs; and that it would be unfair for the homeowner to benefit from such variations, some of which were necessary for the building work to proceed (for example, the additional steel members).

207. While the homeowner has filed a Statutory Declaration specifically addressing the variations claimed (A8) it is not persuasive evidence. What the homeowner “believes” does or does not constitute a variation carries no weight.

208. Further, his claims of not being ”aware” of many of the variations claimed is difficult to accept given what his own evidence shows is the very active role he played in liaising with the builder and attending the site.

209. While in some instances (A10) the homeowner specifically refutes having had conversations with the builder about variations, again, it is difficult to accept, given the homeowner’s active and constant role throughout the building process, that he was not aware of the matters now in dispute.

210. I accept, however, the homeowner’s submission that to ascertain the fair and reasonable compensation to the builder for the services and/or materials he has suppled and for which he has not been paid, it is usual to have expert evidence assessing and evaluating those services and materials. There is no such evidence before the Tribunal.

211. There are instances, however, where the courts and this Tribunal have accepted a builder’s own evidence in the form of invoices, work records and documents that itemise and establish the labour costs incurred and the money paid for materials , goods and services.

212. Bearing these matters in mind, I now turn to the builder’s variations claim, which is best set out in the Builder’s Preliminary Submissions and which I have duplicated as follows:

Private Certifier Fees-$2456.25

213. This has been agreed and paid

Asbestos Removal-$4950

214. This has been agreed and paid

Asbestos Removal -$1540

215. In cross-examination the builder conceded that this invoice did not quantify the amount of asbestos removed; how much time was spent in the process and how many people were involved. All matters of relevance.

216. I therefore disallow the claim.

Sydney Water Fees $4730

217. This sum, was agreed and paid

Steel work on Plans-$26,675

218. I am not satisfied that the invoices relied upon in support of this claim provide sufficient detail as to the work involved or sufficient information as to the applied labour rates; a breakdown of the labour hours and of the material costs. I disallow the builder’s claim.

Installation of Missing Stairs-$1650

219. Again, the invoice in question is insufficient in specification, substantiation and particularisation to support the builder’s claim and I disallow it.

Tiling for Missing Stairs-$1650

220. Again, the invoice in evidence does not address the size of the area; the number of people engaged, the hours worked.

221. I disallow this claim.

Additional electrical work-$1815

222. The homeowner’s email to the builder of 26/1/17, coupled with the reference in the 24/2/17 invoice to the “variations requested by the client Mr G Assaf double power points, 2 TV points, 2 Foxtel” support the builder’s case that the homeowner knew of and indeed requested these matters.

223. What is more the homeowner agrees that he attended a meeting with the builder for these electrical matters and refers to it in his 26/1/17 email.

224. The homeowner only conceded that he requested “a power point installed on the back veranda of both townhouses”. The invoice specifies further work that was carried out. It is improbable that after a specific meeting was held for this purpose that the builder would pursue additional electrical work following such a meeting, with no instructions.

225. Nonetheless, as the builder agreed in cross-examination, that invoice does not stipulate the number of people engaged; the hours worked; and there are no electrical plans in evidence.

226. I therefore disallow the amount claimed.

Additional Engineering Fees-$1540

227. I am satisfied that the engineer’s invoice substantiates that the work was done and although not overly informative, does, on balance , provide sufficient detail and breakdown to support the builder’s case that these costs were incurred.

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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: 26 November 2020