Carr v Miller - [2018] NSWSC 1424

Supreme Court

New South Wales

Medium Neutral Citation: Carr v Miller [2018] NSWSC 1424
Hearing dates: 02/07/2018, 03/07/2018, 04/07/2018, 05/07/2018, 09/07/2018, 10/07/2018, 11/07/2018, 12/07/2018. Further written submissions on 3/08/2018, 6/08/2018, 15/08/2018.
Date of orders: 20 September 2018
Decision date: 20 September 2018
Jurisdiction: Equity - Technology and Construction List
Before: McDougall J
Decision:
See at [371].

Catchwords:
BUILDING AND CONSTRUCTION – residential property contained substantial defects – where purchaser induced to complete purchase through the provision of fraudulently obtained home warranty insurance certificates – whether third defendant (vendor) vicariously liable for the deceit of the second defendant (son-in-law).

BUILDING AND CONSTRUCTION – damages for defects – where first defendant (builder) named on the insurance certificates did not carry out the building works – whether first defendant estopped from denying the applicability of statutory warranties – assessment of rectification damages.

CONTRACT – interpretation of Deed which purports to deal with any claims relating the building words – whether Deed requires the second defendant to indemnify the third defendant for his deceitful conduct.
COSTS – usual order for hearing not complied with – produced court book was productive of excessive inefficiencies – solicitors not to charge clients for costs in creating and remedying the court book.
Legislation Cited: Environmental Planning and Assessment Act 1979 (NSW)
Evidence Act 1995 (NSW)
Home Building Act 1989 (NSW)
Interpretation Act 1987 (NSW)
Cases Cited: Bebonis v Angelos (2002) 56 NSWLR 127
BI (Contracting) Pty Ltd v AW Baulderstone Holdings Pty Ltd [2007] NSWCA 173
Briginshaw v Briginshaw (1938) 60 CLR 336
Burrows v Rhodes [1899] 1 QB 816
Fountain v Alexander (1982) 150 CLR 615
Hatcher v White (1953) 53 SR (NSW) 285
McTier v Haupt [1992] 1 VR 653
O’Grady v Northern Queensland Co Ltd (1990) 169 CLR 356
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
PMT Partners Pty Ltd (in liq) v Australian National Parks & Wildlife Service (1995) 184 CLR 301
Watson v Foxman (2000) 49 NSWLR 315
Texts Cited: Practice Note SC Eq 3
Category: Principal judgment
Parties: Marcelle Carr (Plaintiff)
Daniel Miller (First Defendant)
Jason Nowytarger (Second Defendant)
Joseph Pascali (Third Defendant)
Representation:
Counsel:
Dr CJ Birch SC / B DeBuse (Plaintiff)
TJ Davie (First and Second Defendants)
S Docker / A Gandar (Third Defendant)
Solicitors:
Watson & Watson (Plaintiff)
Carneys Lawyers (First and Second Defendants)
Kemp Strang (Third Defendant)

File Number(s): 2014/165881

Judgment

HIS HONOUR: The third defendant (Mr Pascali) was the proprietor of a waterfront residence at Seaforth. He arranged with his son in law, the second defendant (Mr Nowytarger), to undertake a very extensive redevelopment, purportedly in accordance with plans and specifications approved by Manly Council. When those works were substantially complete, Mr Pascali agreed to sell the property to the plaintiff (Mrs Carr). The contract was dated 7 June 2012, and called for completion within 120 days from that date.
In these proceedings, Mrs Carr says that she was deceived into completing the contract by the provision of what she claims to have been false certificates as to compliance with the conditions of the development consent, and as to applicable Home Warranty Insurance (HWI) required by s 92 of the Home Building Act 1989 (NSW) (the HB Act). Mrs Carr says that, but for the provision of those allegedly false certificates, she would not have completed the purchase. She quantifies her loss as the difference between the purchase price paid ($8.55 million) and what she says was the true value of the property at the relevant time ($5.325 million).
Mrs Carr says that the building work done by or at the direction of Mr Nowytarger was riddled with defects. It is her case that the substantial difference between the price she paid and the true value of the property reflects the impact of those defects and the cost of their rectification on a proper assessment of market value.
Alternatively, and in many ways against the various defendants, Mrs Carr claims damages in respect of those defects.

The parties

Mrs Carr and her husband Mr Ian Carr owned a residence at West Pennant Hills. They refurbished that residence extensively. However, for personal reasons, they decided to move. They sought a property with access to the water. They found Mr Pascali’s property, which they say was marketed to them as being a new dwelling. Mr Carr handled the negotiations and the instructions to their solicitor, Mr Bryan Thomas.
The first defendant (Mr Miller) is a builder. Prior to the renovation of the property, he had undertaken building work for or in association with Mr Nowytarger. A Mr Monte Taylor worked on some of those projects as a contractor to Mr Miller or to Mr Nowytarger (the evidence is imprecise).
Mr Miller is involved because he signed three contracts, under each of which he undertook to perform residential building work (for the purposes of the HB Act) on the Seaforth property for Mr Nowytarger as “owner”, for varying amounts of cover. Mr Miller obtained HWI in the sum of $170,000 before the first of those contracts was signed.
In September 2012, when the time for settlement of the contract for sale was approaching and Mrs Carr was pressing for evidence of, among other things, appropriate HWI, Mr Miller colluded with Mr Nowytarger to obtain further HWI cover. Two further HWI certificates, evidencing cover in the amount of $170,000 and $450,000 respectively, were issued on 14 September 2012.
Mr Nowytarger is, as I have noted, the son in law of Mr Pascali. Mr Nowytarger and his wife Ms Simone Pascali-Nowytarger are cross-defendants to a cross-claim brought by Mr Pascali for contribution to or indemnity in respect of any amount that Mrs Carr may recover by way of a judgment against Mr Pascali. That cross-claim arises out of a Family Relationship Deed made (relevantly) between the three of them on 2 October 2012.
Mr Nowytarger had worked as a property developer, concentrating on the Northern Beaches region of Sydney. It is clear that he was experienced in building and construction matters. However, he was not a licensed builder.
Mr Pascali entrusted Mr Nowytarger with the renovation (“reconstruction” is a better word) of the Seaforth property, and effectively authorised Mr Nowytarger to do what was necessary to have the residence rebuilt to an extremely high standard, appropriate to its waterfront location and sweeping views of Middle Harbour. Mr Pascali was not a licensed builder. Nor did he obtain an owner-builder permit[1] . And, perhaps a fortiori because he was not the owner of the property, neither did Mr Nowytarger.
1. See Division 3 of Part 3 of the HB Act.

The issues

I set out the statement of issues produced by the parties. As is apparent from that document, there is a contest as to whether some of the issues arise. All footnotes and comments are from the original.

Claim against Mr Pascali for breach of contract
1   On its proper construction, does Special Condition 16 (SC16) require Mr Pascali to deliver evidence satisfactory to Mrs Carr acting reasonably that all building works undertaken on the property in the 6 years preceding 7 June 2012, excepting building works the subject of Special Condition 15 (SC15), (building works):
(a)   have been completed in accordance with the requirements of Manly Council; and
(b)   are covered by a current home warranty insurance policy in respect of the whole of the building works?

2   Did Mr Pascali breach SC16? In particular:
(a)   would the occupation certificates dated 15 August 2012 and 18 September 2012 (Occupation Certificates) have satisfied Mrs Carr acting reasonably that the building works had been completed in accordance with the requirements of Manly Council? [2]
2. It is common ground Mr Pascali did not deliver evidence that the whole of the building works were covered by home warranty insurance.
(b)   did the evidence delivered by Mr Pascali satisfy Mrs Carr that the building works have been completed in accordance with the requirements of Manly Council and are covered by a current home warranty insurance policy in respect of the whole of the building works?
(c)   was SC16 satisfied or discharged by Mrs Carr’s completion of the contract on 26 September 2016?

Paragraphs 1 & 2: The Plaintiff accepts that paragraphs 1 and 2 are issues, however she maintains that the contractual obligations imposed by Special Condition 16 were more extensive than the Third Defendant contends. In particular, they were contractual obligations to:
i.   Complete the works in accordance with the Manly Council condition.
ii.   Have Home Warranty Insurance in regard to all the works.
iii.   That if the certificates were provided, those certificates warranted that the works had been completed in accordance with the requirements, and that all the works were covered by Home Warranty Insurance.
iv.   The obligations under Special Condition 16 did not merge on completion, and were not discharged simply because Mrs Carr accepted the certificates profit and settled.
3   What loss or damage did Mrs Carr from any breach of SC16? In particular [3] :
3. See particulars to [52] FASC CB 1/1210
(a)   did Mrs Carr lose another opportunity and, if so, what was its value?
(b)   is the difference between the purchase price and the value of the property claimable as damages and, if so, what is the value?
(c)   what is the cost of obtaining the certificates required by SC16 [4] and, if they could not be obtained what are the damages for failure to obtain them?
4. The third defendant concedes this is the appropriate measure of damage for breach of SC16, if breached.
(d)   is the cost of remedying the defects set out in paragraph 76 of the FASC claimable as damages and, if so, what is that cost?

Paragraph 3: It is accepted that these are issues in dispute.
Deceit claim against Mr Pascali
4   Did Mr Pascali make the following implied representations (Insurance Representations) [5] by providing Mrs Carr with two Home Warranty Insurance Certificates dated 14 September 2012 (HWI Certificates) on or about 19 September 2012 [6] :
5. FASC [29] CB 1/1203
6. FASC [20], [27] CB 1/1200, 1203
(a)   all of the work undertaken within the last 6 years in respect of residential building for the construction of the home had been undertaken by Mr Miller?
(b)   all of the residential building work was the subject of home warranty insurance?
(c)   the home warranty insurance had been obtained without deception and would not give rise to any entitlement to avoid the policy?
(d)   the residential building work had been undertaken by a licensed builder?
(e)   by provision of the HWI Certificates, Mr Pascali had complied with SC16?

Paragraph 4: In regard to paragraph 4, the representations made by Mr Pascali were not merely implied representations but express representations or implied in the alternative. Further, Mr Pascali obtained the certificates by his agent Mr Nowytarger in circumstances where Mr Nowytarger misled the brokers and insurers (further Amended Statement of Claim paragraph 22), and the deceit extends to those steps taken by Mr Nowytarger as Mr Pascali’s agent to obtain the certificates through deceiving the insurer.
5   Were the Insurance Representations false [7] ? In particular [8] :
7. FASC [41] CB 1/1207
8. The third defendant accepts that Insurance Representations (a), (b) and (d) were false, if made.
(a)   were the HWI Certificates obtained in circumstances of deception by Mr Miller and Mr Nowytarger [9] that give rise to an entitlement to avoid the policies?
9. Such circumstances are pleaded in FASC [22]
(b)   was the residential building work undertaken by a licensed builder [10] ?
10. FASC [10]-[11], [26], [30] CB 1/1198, 1202, 1203
(c)   did Mr Pascali comply with SC16?

Paragraph 5: The Plaintiff accepts that these are issues in dispute.
6   Did Mr Pascali know the Insurance Representations were false or was he recklessly indifferent to them being true [11] ? In particular:
11. FASC [40], [46] and [51] CB 1/1208, 1209
(a)   did Mr Pascali personally know any of the Insurance Representations were false?
(b)   was Mr Pascali recklessly indifferent to any of the Insurance Representations being true?
(c)   is Mr Pascali taken to have the same knowledge as Mr Nowytarger concerning the truth or falsity of the Insurance Representations?
(d)   did Mr Nowytarger know any of the Insurance Representations were false or was he recklessly indifferent to their truth [12] ?
12. FASC [10]-[11], [22], [26], [30], [40], [46], [51] CB 1/1198, 1201, 1202, 1203, 1207, 1208, 1209

Paragraph 6: The Plaintiff accepts that paragraph 6 represents issues in dispute, and that 6(c) raises the issue of whether Mr Pascali is vicariously liable for the deceit of Mr Nowytarger.
7   Did Mr Pascali make the Insurance Representations intending that Mrs Carr be deceived by them [13] , including because Mr Nowytarger intended to deceive Mrs Carr?
13. FASC [47] and [51] CB 1/1208, 1209
Paragraph 7: The Plaintiff does not contend that Mr Pascali personally had the intention of deceiving Mrs Carr, but asserts that he is nevertheless liable for the deceit of Mr Nowytarger.
8   Was Mrs Carr induced by the Insurance Representations to complete the contract on 26 September 2012 [14] ?
14. FASC [43], [44(a)-(b)] CB 1/1207, 1208
Paragraph 8: Mrs Carr gave evidence that she was induced by the insurance representations. The Plaintiff is not aware of any challenge to that evidence.
9   By tendering the Occupation Certificates on or about 19 September 2012 [15] , did Mr Pascali make the following express or implied representations (Development Representations) [16] :
15. FASC [20], [33] CB 1/1200, 1204
16. FASC [37] CB 1/1204
(a)   the house was complete and had been constructed in a proper and workmanlike manner, by a licensed builder, except for the incomplete or defective work identified in the contract and the 20 September 2012 email?
(b)   the house had been constructed in accordance with the Manly Council DA and the construction certificate issued on or about 26 October 2010?

10   Were the Development Representations false [17] ?
17. FASC [41] CB 1/1207
Paragraphs 9 & 10:   The Plaintiff accepts that these are issues in dispute.
11   Did Mr Pascali know the Development Representations were false or was he recklessly indifferent to them being true [18] ? In particular:
18. FASC [39]-[40], [46], [51] CB 1/1205-1207, 1208, 1209
(a)   did Mr Pascali personally know any of the Development Representations were false?
(b)   was Mr Pascali recklessly indifferent to any of the Development Representations being true?
(c)   is Mr Pascali taken to have the same knowledge as Mr Nowytarger concerning the truth or falsity of the Development Representations?
(d)   did Mr Nowytarger know any of the Development Representations were false or was he recklessly indifferent to their truth [19] ?
19. FASC [10]-[11], [26], [39]-[40], [46], [51] CB 1/1198, 1202, 1205-1207, 1208, 1209

12   Did Mr Pascali make the Development Representations intending that Mrs Carr be deceived by them [20] , including because Mr Nowytarger intended to deceive Mrs Carr?
20. FASC [47] and [51] CB 1/1208, 1209
Paragraphs 11 & 12:    The Plaintiff does not contend that Mr Pascali intended to deceive Mrs Carr, and says that he is liable in deceit through his agent Mr Nowytarger.
13   Was Mrs Carr induced by the Development Representations to complete the contract on 26 September 2012 [21] ?
21. FASC [43], [44(c)] CB 1/1207, 1208
Paragraph 13: Mrs Carr gave sworn evidence that she was induced by the development representations, and the Plaintiff is not aware of any challenge to that evidence.
14   What loss or damage did Mrs Carr from any deceit of Mr Pascali? In particular [22] :
22. See particulars to [53] FASC CB 1/1210
(a)   did Mrs Carr lose another opportunity and, if so, what was its value?
(b)   if Mrs Carr claims damages for fraud on the basis of the difference between the purchase price and the value of the property, what is her loss? In particular:
(i)   is the correct date to make this comparison 7 June 2012 or 26 September 2012?
(ii)   are all the defects found after completion of the contract, or those defects that would have been covered by home warranty insurance, subsequent events that may be taken into account to determine the true or real value?
(iii)   should the cost of defects known prior to the end of the cooling off period be deducted from the purchase price to determine true or real value?
(iv)   should an amount on top of the cost of rectifying defects be included for the risk of further defects and cost blowouts and, if so, how much?
(v)   what is the true or real value of the property at the correct date?
(vi) should Mrs Carr have to account for the value of any statutory warranties that she received the benefit of under s18D(1) of the Home Building Act?
(vii)   for what work (if any) was the subject of statutory warranties owed to Mrs Carr?
(viii)   what is the value of those warranties, including any insurance for them?
(ix)   in what amount should Mrs Carr have to account for the contractual rights she obtained under the contract of sale and the contract in the 20 September 2012 email?

(c) is the cost of obtaining the certificates claimable as damages and, if so, what is the cost of obtaining the certificates required by SC16?
(d) is the cost of remedying the defects set out in paragraph 76 of the FASC claimable as damages and, if so, what is that cost?

Paragraph 14: The Plaintiff accepts that these are all issues in regard to the claim in deceit against Mr Pascali.
Deceit claim against Mr Nowytarger
15   By providing the Occupation Certificates and the HWI Certificates to Mr Pascali to be provided to Mrs Carr, did Mr Nowytarger [23] expressly or impliedly make to Mrs Carr:
23. FASC [34], [38] CB 1/1204, 1205
(a)   the Insurance Representations?
(b)   the Development Representations?

16   Were the Insurance Representations or the Development Representations false [24] ?
24. FASC [41] CB 1/1207
17   Did Mr Nowytarger know the following representations were false or was he recklessly indifferent to them being true:
(a)   the Insurance Representations [25] ?
25. FASC [10]-[11], [22], [26], [30], [40], [46], [51] CB 1/1198, 1201, 1202, 1203, 1207, 1208, 1209
(b)   the Development Representations [26] ?
26. FASC [10]-[11], [26], [39]-[40], [46], [51] CB 1/1198, 1202, 1205-1207, 1208, 1209

18   Did Mr Nowtarger make the Insurance Representations or the Development Representations with the intention that Mrs Carr be deceived by them [27] ?
27. FASC [47] and [51] CB 1/1208, 1209
Paragraph 18: The Plaintiff accepts that paragraph 15, 16, 17 and 18 are issues in dispute.
19   Was Mrs Carr induced by the Insurance Representations or the Development Representations to complete the contract on 26 September 2012 [28] ?
28. FASC [43], [44] CB 1/1207, 1208
Paragraph 19: Mrs Carr gave sworn evidence that she was induced by the insurance representations, and is not aware of any challenge to that evidence.
20   What loss or damage did Mrs Carr from any deceit of Mr Pascali?
Paragraph 20: The Plaintiff assumes that this should have been a reference to the decit of Mr Nowytarger.
Negligence claim against Mr Pascali
21   Did Mr Pascali owe Mrs Carr a duty of care to avoid foreseeable economic loss by ensuring the delivery of the HWI Certificates and the Occupation Certificates did not misrepresent the circumstances of their issue so that she was induced into believing each of the certificates [29] ?
29. FASC [48]
22   Did Mr Pascali breach any such duty of care [30] (if any)? In particular:
30. FASC [49], [50]
(a)   was he in breach of duty if he did not establish a right to home warranty insurance for all residential building work completed in the last 6 years?

(b) was he in breach of duty if he did not, and did he, establish that the home had been built in accordance with the Manly Council DA or the CC?

23   What loss or damage did Mrs Carr suffer by the alleged breach of duty of care [31] ?
31. FASC [53]
24   What amount (if any) should any damages award be reduced because Mrs Carr failed to take reasonable care of her own interests in assessing and considering the HWI Certificates, the Occupation Certificates, the Insurance Representations and the Development Representations and in failing to rescind the contract [32] ?
32. Third defendant’s defence [78(a)] CB 1/1236
25   Are any of the following concurrent wrongdoers and, if so, how much should Mr Pascali’s liability (if any) be reduced because of their responsibility [33] :
33. Third defendant’s defence [78(b)-(i)] CB 1/1236-1237
(a)   Mr Nowytarger?
(b)   Mr Miller?
(c)   NSW Self Insurance Corporation, which issued the HWI Certificates by its agent Calliden Insurance Ltd?
(d)   Calliden Insurance Ltd, which issued the HWI Certificates as agent for and on behalf of NSW Self Insurance Corporation?
(e)   MT Law Group Pty Ltd, who acted for Mrs Carr on the Contract for Sale?

Paragraphs 21 to 25: The Plaintiff accepts that each of the matters in paragraphs 21 to 25 are issues in dispute. The Plaintiff is uncertain what evidence, if any, will be relied upon by the Third Defendant in regard to the issues in regard to paragraph 25.
Breach of statutory warranties claim against Mr Miller
26 What work is the subject of the warranties in s18B of the Home Building Act 1989 by Mr Miller? In particular:
(a) what work was the subject of the agreement made on or about 28 September 2010 (Agreement) [34] ?
34. FASC [8] CB 1/1198
(b) what work was the subject of the two contracts executed in 2012 and provided to Brookvale Insurance Brokers on about 3 September 2012 [35] ?
35. FASC [22(a)] CB 1/1201
(c) what work (if any) is the subject of the estoppel alleged against Mr Miller [36] ?
36. FASC [61]-[67] CB 1/1211-1212

27   What work was done in breach of the warranties given by Mr Miller [37] ?
37. FASC [76] CB 1/1214-1216 and Scott Schedule CB 2/3141
28   What loss and damage did Mrs Carr suffer by Mr Miller’s breach of statutory warranties [38] ?
38. FASC [77] CB 1/1216
Breach of statutory warranties claim against Mr Nowytarger
29   What residential building work (if any) did Mr Nowytarger undertake [39] ?
39. FASC [10]-[11], [26], [71] CB 1/1198, 1202, 1213
30 Did Mr Nowytarger give the warranties in s18B of the Home Building Act for such work?
31   What work was done in breach of the warranties given by Mr Nowytarger [40] ?
40. FASC [76] CB 1/1214-1216 and Scott Schedule CB 2/3141
32   What loss and damage did Mrs Carr suffer by Mr Nowytarger’s breach of statutory warranties [41] ?
41. FASC [77] CB 1/1216
Paragraphs 26 to 32: The Plaintiff accepts that the matters in paragraphs 26 to 32 are issues in dispute.
Breach of statutory warranties claims against Mr Pascali
33   What residential building work (if any) did Mr Pascali undertake and does that work include work undertaken by Mr Nowytarger [42] ?
42. FASC [10]-[11], [26], [71]-[74] CB 1/1198, 1202, 1213-1214
34 Did Mr Pascali give any of the warranties in s18B of the Home Building Act for such work as an owner-builder [43] ?
43. FASC [74]-[75] CB 1/1214
35    What work was done in breach of the warranties given by Mr Pascali [44] ?
44. FASC [76] CB 1/1214-1216 and Scott Schedule CB 2/3141
36   What loss and damage did Mrs Carr suffer by Mr Pascali’s breach of statutory warranties [45] ?
45. FASC [77] CB 1/1216
Paragraph 36: The Plaintiff will further contend that it is an issue that the reference to owner/builder in s. 18C of the Home Building Act must be read purposively, and include an owner/builder who does not hold an owner/builder permit.
Contract claim against Mr Nowytarger
37   Did Mr Nowytarger breach the contract evidenced by SC15 and the 20 September 2012 email by failing to complete those works [46] ?
46. FASC [54]-[55] CB 1/1210
38   What loss and damage did Mrs Carr suffer by any such breach [47] ?
47. FASC [56] CB 1/1210
Paragraphs 37 & 38: The Plaintiff accepts that the matters in paragraphs 37 and 38 are issues in dispute.
Mr Pascali’s cross claim against Mr Nowytarger and Simone Nowytarger
39   On the proper construction of clause 5.1(d) of the Family Relationship Deed [48] does the indemnity extend to any liability of Mr Pascali to Mrs Carr:
48. Pascali’s cross claim at [15]-[16]; Nowytargers’ defence to cross claim at [15]-[18]
(a)   for any claims made by Mrs Carr as purchaser of the property, whether or not they relate to the buildings works?
(b)   for the following claims on the basis that they relate to building works conducted at the property in the 7 years before 2 October 2012:
(i)   breach of SC16?
(ii)   deceit?
(iii)   negligence?
(iv)   Mrs Carr’s costs?

40   Should the Court refuse to enforce the indemnity for Mrs Carr’s deceit claim?
41   If Mr Pascali is liable to Mrs Carr because of the acts and/or knowledge of Mr Nowytarger as his agent, is Mr Nowytarger liable to Mr Pascali [49] :
(a)   for breach of authority as Mr Pascali’s agent?
(b)   for breach of fiduciary duty as Mr Pascali’s agent?
49. Pascali’s cross claim at [2]-[7] and [10]-[14]; Nowytargers’ defence to cross claim at [2]-[7] and [10]-[14]

The witnesses

All those whom I have named gave evidence. So too did a number of other witnesses of fact, including (for Mrs Carr) various tradesmen who had carried out what was said to be the rectification of defective work.
There was no sustained attack on the credibility of Mrs Carr, nor for that matter on the credibility of Mr Carr. In general, and subject to the influence of self-interest and the imperfection of human memory (as to each of which, the observations made by McClelland CJ in Eq in Watson v Foxman [50] are apposite, although there is no need to set them out), I think that each of them sought to tell the truth.
50. (1995) 49 NSWLR 315.
There is however one matter of concern. Mrs Carr in particular asserted that the residence had been marketed as new, and represented to be new, and that she contracted on the basis of this belief. She produced a marketing brochure which did indeed, in one place, describe the property as “new”. However, there was other evidence, including of a valuation given to Mrs Carr before exchange of contracts[51] , which indicated that the residence, although extensively renovated and reconstructed, was not wholly new.
51. See at [61] below.
Mr Miller was a most unimpressive witness. He signed (as did Mr Nowytarger) a letter dated 8 September 2012 addressed to an insurance broker, in connection with the belated application for HWI (or further HWI). That letter stated, falsely, that Mr Miller had started the work on a certain basis, that he thereafter completed it on another basis, and that he “has completed all the building works [he was] engaged to do”[52] . The document was egregiously misleading, and intentionally so. It was signed and proffered with the intention of obtaining retrospective HWI cover. In my view, Mr Miller must have known that those statements in the letter were false [53] .
52. See at [123] – [126] below.
53. Having said that, it must be noted that Mr Miller has not been sued in deceit. See T168.26-169.13.
So, too, in my view, Mr Miller’s evidence that he had undertaken the building work in question was false. He did not do any of the work himself, apart from a few odd jobs and some defects rectification. He claimed that he had “undertaken” the work because he had supervised Mr Taylor, who had done some of the work for Mr Nowytarger (see at [99] – [109] below).
When, Mr Taylor did that work, he was neither an employee of nor a contractor to Mr Miller. There is no way that Mr Miller could have had any responsibility for the work in question. His evidence of supervision was uncorroborated by any acceptable evidence[54] , and upon investigation proved to be baseless. In my view, that evidence was falsely given, in an attempt to provide some justification for the fraudulently obtained (as I find it was) further HWI certificate.
54. In particular, it is not supported by Mr Taylor’s evidence: see at [100] below.
I accept that considerations of demeanour provide at best an uncertain guide to veracity. I have tried to put aside, as best I can, my extremely unfavourable impression of Mr Miller’s demeanour in the witness box. Even without those impressions, his evidence was totally unimpressive.
I do not regard Mr Miller as a witness of truth. I am not prepared to accept his evidence on any contested issue of fact unless it is against self-interest, or is corroborated by other, acceptable, evidence, or is consistent with the probabilities viewed objectively.
Much the same may be said, and for much the same reasons, about Mr Nowytarger. He colluded in the preparation, signature and dispatch of the letter, containing false representations of fact, to which I referred at [16] above. Indeed, I think, Mr Nowytarger was the architect of the falsity, because he realised the importance of procuring a further HWI certificate. In this context, it is by no means immaterial that his wife Ms Pascali-Nowytarger was to obtain a very substantial benefit, by way of a payment of $4.17 million out of the proceeds of sale, upon settlement. I think that Mr Nowytarger was prepared to do all that he could, including making false written representations, to procure the necessary HWI certificate, to facilitate settlement and ensure payment of that sum to his wife.
Mr Nowytarger’s attempts to maintain in cross-examination the fiction that Mr Miller had acted as builder, because he had supervised Mr Taylor’s performance of the work, were totally unpersuasive. In my view, they were false, knowingly so, and put forward as evidence for the purpose of advancing Mr Nowytarger’s and his wife’s interests.
Again, I have tried to put out of mind Mr Nowytarger’s unimpressive demeanour in the witness box. The conclusions that I have just expressed, and my view of the acceptability of his evidence, are based, as best can be done, upon the realities of his testimony considered in conjunction with relevant documents and the facts as they appear objectively from all the circumstances of the case.
I am not prepared to accept Mr Nowytarger’s evidence on any disputed question of fact unless it is against interest, or is corroborated by other, acceptable, evidence, or is consistent with the probabilities, regarded objectively. I should make it clear that I do not regard Mr Miller’s evidence as having corroborative value. Nor do I accept that Mr Nowytarger’s evidence provides acceptable corroboration for Mr Miller’s.
Ms Pascali-Nowytarger gave evidence. There was no real attack on her credibility. I accept that she was seeking to do her best to tell the truth, but add that, again, the passage of time and perceptions of self-interest must have influenced her testimony, even if unconsciously.
There was no attack made on Mr Pascali’s credibility. In particular, it was not suggested he was in any way responsible for, or associated with (except, according to Mrs Carr, vicariously, or by delegation), the fraudulent acts perpetrated by his son in law.
Of the remaining witnesses of fact, only Mr Thomas was cross-examined. No real attack was made on his credibility. I accept that he sought to tell the truth to the best of his ability.
Where the other witnesses of fact were not cross-examined, I accept their evidence, so far as it goes.
There were several experts called. For the most part, no question of credibility (in the sense that I have been discussing the credibility of the witnesses of fact) arises. There is however an important exception, in the case of Mr Andrew Daniels. Mr Daniels is a building consultant, retained on behalf of Mrs Carr. He swore four affidavits, to which he exhibited a large number of reports and a substantial quantity of other material.
Mr Daniels was first retained in 2013. Part of his retainer was to provide expert evidence in support of Mrs Carr’s defects claim. As the rectification works progressed, Mr Daniels appears to have been asked to comment upon the defects (in some cases, on the basis of reports supplied by the tradesman who did the rectification work) and to verify the cost of rectification.
It became apparent, in the course of Mr Daniel’s cross-examination, that he had become identified with the cause of Mrs Carr. In my view, that has had an adverse impact on the independence and integrity of his evidence. In particular, in the course of cross-examination, Mr Daniels said in effect that:

at the time the rectification work was done, it was contemplated that there would be a claim made to recover the cost of rectification [55] (it was for this reason, among others, that I ruled that reports of defects observed and work done by the rectifying builder, Mr Glen Maddrell, or tradesman engaged by him, were not business records, and were thus inadmissible in the absence of verification);

he assessed the reasonable value of work done on the basis that if Mrs Carr had paid for an invoice, he assumed that it related to rectification work [56] ; and

his assessment of whether work ought to be regarded as relating to the rectification of defects took into account not only the quality of the work actually done (by or for Mr Nowytarger) but also whether, in some cases at least, the supposed rectification work was to be done to bring the property into compliance with Mrs Carr’s expectations, at the time of purchase, of what she was to receive [57] . Mr Daniels said indeed that “I’m not there to judge – I’m not there to really judge the responsibility of the work. I only judge the work” [58] .
55. T426.24-.28.
56. T427.13-.25.
57. T428.7-.44.
58. T428.46-.47.

I take from this last aspect of Mr Daniels’ evidence that he did not, in all cases, come to a view that the work undertaken by the rectifying builder was necessary to make good defective work existing at the time of settlement of the purchase. That bears directly on the hotly disputed questions relating to rectification and its cost.
In my view, Mr Daniels has become, to a real extent, an advocate for Mrs Carr, rather than an independent expert witness owing his primary duty to the court. In reaching that conclusion, I take into account not only the matters that I have mentioned but also Mr Daniels’ marked tendency to give non-responsive answers to questions, or to add non-responsive follow-ups to otherwise responsive answers.
I add that whilst there was a concurrent evidence session (Mr Bruce Hall, an expert retained for Mr Pascali, gave evidence on a relatively small number of the defects on which Mr Daniels had commented, and to the extent that their evidence overlapped, they gave evidence concurrently), this feature of Mr Daniels’ evidence was relatively restrained. His tendency to give non-responsive answers, or to volunteer non-responsive material, increased very markedly once the concurrent evidence session finished.
In all the circumstances, I do not regard Mr Daniels’ evidence as being particularly convincing. I do not think that it can be accepted uncritically, even where it is not controverted. On the contrary, I think, to accept it uncritically would result in both an over-estimate of the amount of defective work for which any of the defendants could possibly be regarded as liable, and a very substantial over-estimate of the cost of rectification.

The court book

The usual order for hearing [59] was made. Among other things, that order required the production of a court book. The order’s requirements as to the form of the court book were varied in ways that are of no material relevance. A court book[60] that complies with the usual order should contain, in chronological order, all documents referred to in any affidavit or statement proposed to be relied upon at the hearing [61] .
59. See Practice Note SC Eq 3. Annexure 3.
60. See [7]-[11], [15].
61. At [7] – [11].
The usual order requires, further, that there be filed:

no later than 10 working days before the hearing, a folder of all affidavits, statements and reports to be relied upon with an index setting out in alphabetical order details of those statements[62] ; and

no later than five working days before the hearing, two copies, paginated and indexed, of the court book[63] .
62. At [14].
63. At [15].

In the present case, the court book was prepared in blithe disregard of the requirements of the usual order for hearing (as irrelevantly modified). It comprised some 33 volumes in all.
Volume 1 included the pleadings (including numerous superseded pleadings) and an index, some 80 pages long, purportedly to the whole of the court book. The provision of the index may have been intended to overcome, to some extent at least, the deficiencies in the court book to which I am about to turn. Unfortunately, the index did not specifically identify (for example) the reports of a number of experts, nor where they were to be found. That was because those reports were exhibits to one or other of the affidavits filed, and the court book did no more than indicate where those exhibits were to be found. It did so in a way which did not disclose the substance, as opposed to the formal identification (for example, Exhibit “XX4”), of the reports.
It was intended that Volume 2 should include the parties’ pre-hearing submissions, but for some reason it did not do so. The volume did include a copy of what I understand to have been the Scott Schedule on which Mrs Carr relied, and Mr Nowytarger’s response to it.
Volume 3 contained the affidavits upon which Mrs Carr relied. Volume 4 contained the defendants’ affidavits. Volumes 5 to 27 contained the exhibits to the affidavits. Those exhibits included all the documents referred to in the exhibits to any of the affidavits of any of the witnesses of fact, all of the expert reports, and all the documents exhibited to those expert reports.
In consequence of this idiosyncratic method of production, documents that were referred to more than once in exhibits to affidavits (or indeed elsewhere) were reproduced as many times as they were referred to. That made the court book far longer than it had to be, and far less useful than it ought to have been. Its inutility was exacerbated by the inadequacies of the index, to which I have referred already. To make the court book even marginally useful, it was necessary to identify and tab separately each relevant exhibit (specifically, each expert report that was not the subject of an affidavit prepared by its author, but was “proved” through an affidavit of another witness: in particular, Mr Nowytarger).
The final six volumes of the court book comprised, so it was said, all the documents referred to in any of the affidavits of the lay witnesses, arranged in chronological order. Perhaps that represented some nod to the requirements of the usual order. One practical result of the preparation of volumes 28 to 33 is that they contain yet further replication of documents that may also be found elsewhere in the court book.
All in all, the court book was extraordinarily difficult to use, and extraordinarily productive of inefficiency in the conduct of the hearing. Perhaps I should have taken stronger action than I did (I will turn to this in a moment), and vacated the hearing so that a court book could be prepared in which relevant reports were identified by reference to the name of the person who made them, and relevant documents were included once only, and in chronological order. I did not do so. I have to say that my failure to do so arose because I under-estimated the amount of difficulty that would be caused by working with the court book that was produced.
What I did do however was indicate that I did not propose to allow any costs to be charged in respect of the preparation of the court book. Dr Birch of Senior Counsel, who appeared with Mr DeBuse of Counsel for Mrs Carr, sought to be heard on this (understandably, because those who instructed him had prepared the court book). He relied on an affidavit sworn by the solicitor who had undertaken the preparation of the court book. It appeared from that affidavit that this was the first time the solicitor had had to prepare a court book, and that he had not acquainted himself adequately (if indeed he did so at all) with the requirements of the usual order for hearing.

I do not regard that as an excuse that is any way acceptable. Its unacceptability is highlighted by the fact that the solicitors for Mr Pascali, when given the draft index to the court book (which presaged the preparation of what are now volumes 1 to 27), pointed out that a court book so produced would not comply with the requirements of the usual order, and what needed to be done. Unfortunately, that wise advice fell on deaf ears.
I remain of the view that Mrs Carr’s solicitors should not be permitted to charge her any costs or disbursements in respect of the preparation of the court book. I do not see why a client should be forced to pay at all (let alone what must be many tens of thousands of dollars in costs and disbursements) for the preparation of something that did not comply with the court’s orders, that was replete with wasteful duplication, and that was productive of gross inefficiency in the conduct of the proceedings. Nor do I see why, if costs orders are to be made against any of the defendants, they should bear any part of the costs referable to that ill-directed labour.
It is for those reasons that I shall order that no part of the costs or disbursements incurred with reference to the production of the court book should be charged to Mrs Carr by her solicitors. I should make it quite clear that if such costs or disbursements have been charged and paid, allowance will have to be made in some appropriate fashion. I should make it clear also that one of the consequences following from that order is that to the extent that costs are ordered against any of the defendants, they are not to include costs or disbursements referable to the production of the court book.
Unfortunately, the inutility of the court book became even more apparent when, having reserved my decision subject to the provision of written submissions as to defects (something that should not have been necessary had the case been properly prepared and conducted), I attempted to write reasons on the issues where the evidence and submissions were complete. The lack of any effective index to the contents of the court book made it well-nigh impossible to locate relevant factual material.
The parties had not, as is often done, provided marked-up copies of the affidavits and reports, indicating where in the court book the documents in question could be found. Thus, reading (for example) an affidavit of Mrs Carr and chancing upon a reference to a relevant document, it was necessary to fossick through the six volumes of the court book within which Exhibit MC-1 to her first affidavit were contained, or to another volume of the court book to find where Exhibit MC-2 to another affidavit was contained. Perhaps I could have gone to volumes 28 to 33[64] . But counsel had not referred to those volumes in their submissions. The proposition that I should do, unguided, what counsel should have done is unappealing.
64. See at [43] above.
The task of locating the relevant documents would have occupied me and my staff for many weeks. The difficulty of finding the basic factual material was amplified, because the closing submissions for Mrs Carr did not identify in any detail the findings of fact that she wished the court to make, nor (a fortiori) give the evidentiary references for them.
Accordingly, several days after the conclusion of the hearing, I called the parties in for directions. I raised my concerns with them. At one stage, I was tempted simply to dismiss the proceedings (on the basis that the dismissal would not of itself bar the bringing of further proceedings), but on reflection that seemed unduly harsh, given the possibility of limitation defences if fresh proceedings were commenced.
I considered, alternatively, vacating the hearing, so that the parties would have to return and start again. That however would have involved very substantial waste of money, time and effort, and would have been prejudicial to the defendants, in a way that could not necessarily be cured by costs (each of them is an individual, and the stress of litigation cannot be discounted).
In those circumstances, I decided that the appropriate course was to give directions, with a view to bringing some order into the evidentiary chaos that the court book created, but to do so in a way that kept the threat of dismissal in the background as a sanction for non-compliance. On that basis, I made the following orders:

1.   Direct the plaintiff by 26 July 2018 to serve and provide to my Associate an individual index to each of volumes 3 to 27 both inclusive of the court book. The index:
a.   in respect of volumes 3 and 4, must comply with [14] of the usual order for hearing;
b.   in respect of volumes 5 to 27, must identify by exhibit and tab numbers (as per affidavits) each document or group of documents in it; and
c.   when an exhibit in volumes 5 to 27 comprises an expert report, must comply with [14] of the usual order for hearing.
2.   Direct the plaintiff by 26 July 2018 to serve and deliver to my Associate a copy of each affidavit read and each report tendered in the proceedings marked up with the court book reference (by volume and page) to every document exhibited or annexed to each such affidavit and report.
3.   Direct the plaintiff by 26 July 2018 to serve and deliver to my Associate a document setting out:
a.   each finding of fact except in respect of defects that the plaintiff contends ought be made; and
b.   in respect of each such finding of fact, the evidentiary reference (affidavit, report, transcript, or court book volume and page) relied upon to establish it.
4. Order that if the plaintiff fails to comply with any of the foregoing orders, the proceedings be dismissed pursuant to s 91(1) of the Civil Procedure Act 2005 (NSW).

For reasons equivalent to, or that flow from, those I have given at [45] to [47] above, no part of the costs of complying with orders 1 and 2 of those just set out should be charged to Mrs Carr. Again, if costs are ordered against any defendant, they should not include costs referable to those orders.

Events leading up to the formation of the contract

Mrs Carr discovered the Seaforth property through online searches. She contacted Mr David Rothschild of LJ Hooker Seaforth, who was one of two agents named as the “vendor’s agent” on the contract. The other was Mr Lionel Busquets of Ray White Seaforth. Mr Rothschild arranged an inspection. He described the house as “a spectacular new house” in an email to Mrs Carr.
Mrs Carr said that, during the inspection that took place on 1 June 2012, Mr Rothschild repeated the description of the residence as a “new house”. He was not called to say to the contrary. I find that he did.
In the course of the inspection, Mrs Carr was introduced to Mr Nowytarger. He described himself as the “builder” or as the “developer”. I find that he did so describe himself. Mrs Carr said that at no time did Mr Nowytarger disclose that Mr Miller, or for that matter anyone else, had been “the builder”. I accept her evidence on that point.
Either Mr Rothschild or Mr Busquets provided a brochure that had been prepared for or by Ray White Seaforth. That brochure described the residence in glowing terms, emphasising its luxurious character, and at one point referred to it as “newly built”.
I accept that at this time (early June 2012), Mrs Carr had no reason to think that the residence was anything other than “newly built”. In so finding I take into account not only the matters to which I have just referred, but also her observation (factually correct) that the very extensive building works were unfinished at the time of her inspection.
Also on 1 June 2012, another agent from Ray White Seaforth sent an email to Mr Carr. It attached a draft contract for sale, a valuation prepared by a firm known as Pontons Valuations & Consultancy, and other documents. That valuation stated, among other things, that:

“the property has been recently substantially renovated / refurbished throughout with the home essentially presenting as-new.

It included also the following observations:

4.   IMPROVEMENTS
4.1   General Description
Previously constructed to the site was a substantial family residence likely to have been constructed in the circa 1970’s/1980’s utilising full masonry walls and concrete floor construction. The recently completed residence utilised some structural elements of the previous home while making further additions/extensions.
The residence has been architecturally redesigned to improve its efficiency and utility focusing on open plan executive family living and access to the views available and natural light. In my opinion, the residence represents one of the most valuable and desirable waterfront residences in this precinct.
4.2   Construction
Construction comprises:
●   Reinforced concrete floors throughout
●   Double brick external walls with rendered and painted external finishes
●   A mixture of set plaster and rendered brick internal wall linings
●   Predominately painted plasterboard ceiling linings with some feature timber linings also
●   Predominately aluminium framed external windows and doors
●   Pitched metal roof coverings with some concrete sealed sections also.

Although it is of no present relevance, the Pontons valuation assessed the value of the Seaforth property at $9 million excluding GST.
On 4 June 2012, Mr Nowytarger provided to Mr Rothschild a list of works to be completed on the property. Mr Rothschild sent that list to Mr Carr. That list, which comprised some 39 items of incomplete work, formed the basis of a more substantial list, comprising some 52 items of work, that was annexed to the contract for sale. The parties referred to the 52 item list as “the June list”. I shall do likewise. In essence, the June list comprised the original 39 items from Mr Nowytarger’s list and some 13 further items that Mr and Mrs Carr requested be attended to before completion of the purchase.
Over the next few days, Mr Carr negotiated the purchase price with Mr Pascali [65] through the medium of one or other of the selling agents. Ultimately, they agreed on a price of $8.55 million. Mr Pascali stressed that the contracts had to be exchanged that day. Accordingly, Mrs Carr signed the contract and gave it to Mr Rothschild, together with a cheque for $100,000 on account of the deposit. It was only at this stage, Mrs Carr said, that she realised that the vendor was anyone other than Mr Nowytarger.
65. In fact, Mr Nowtarger handed the negotiations for Ms Pascali: see at [96(7)] below.
Mr Rothschild appears to have exchanged contracts, or treated them as exchanged, on 7 June 2012. He sent a sales advice notice to the solicitors. Mr Busquets did the same on the following day.
Because of the circumstances of signature and exchange, Mrs Carr had the benefit of a five day cooling off period. She or Mr Carr arranged for a building inspection to be carried out on 8 June 2012. The report was emailed to them that day. It detailed a number of items of defective or incomplete workmanship. Mr Nowytarger agreed to attend to those matters. He offered to provide a cheque for $50,000 as security for his performance. In that way, I think, the original list of 39 items prepared by Mr Nowytarger expanded to the 52 items comprised in the June list.
Mrs Carr said that she read the building report and drew comfort from a statement in it that “[t]he residence is newly built”. However, just below that description, the report noted that “[t]he house has been built and renovated to a fair to reasonable standard”.
Some days later, but still within the cooling off period, Mr Thomas reviewed the contract for sale. He advised that it should be amended to delete some conditions, and to include a special condition dealing with the building works. After obtaining instructions from Mr Carr, Mr Thomas wrote to Mr Pascali’s solicitor, Mr Gerald Kesby. Mr Kesby, having obtained instructions, confirmed that the relevant conditions (amended slightly from the form that Mr Thomas had first suggested) should be included.
Both solicitors attended to this. The result was that special condition 16, which is the subject of the first issue, became part of the contract for sale.
It is convenient to mention at this point that Mr Thomas gave evidence to the effect that if special condition 16 were not complied with, he would advise Mrs Carr not to complete the contract, and instead to terminate it. There was some challenge to that aspect of his evidence, but I accept it. It is very difficult to understand why a solicitor who had thought the matter to be of such importance as to warrant insistence upon the inclusion of the special condition in the contract would have done other than advise his client to invoke the rights given by it if those rights accrued.
Likewise, Mrs Carr gave evidence that she would have accepted such advice, if given. In other words, she said, her position was that if the requirements of special condition 16 were not satisfied and if Mr Thomas advised her that it would be in her best interests to terminate the contract, she would have done so. Again, there was some challenge to that evidence. Again, I accept it. It is consistent with the probabilities, viewed objectively. Mr and Mrs Carr had committed themselves to spend a very large amount on the purchase of the property. Their solicitor had insisted upon special condition 16 as something necessary for their protection. The prospect that they would have ignored his advice to exercise their rights under that special condition, if those rights became exercisable, is inconsiderable.

Issue 1: the construction of special condition 16

Special condition 16 reads as follows:

16   Completion of this contract is subject to and conditional on the vendor delivering to the purchaser evidence satisfactory to the purchaser acting reasonably that all building works undertaken on the property in the 6 years preceding exchange of the contract (building works):
(a)   have been completed in accordance with the requirements of Manly Council (this may be by a final occupation certificate or similar certificate); and
(b)   are covered by a current home warranty insurance policy in respect of the whole of the building works.
The vendor must use their best endeavours to complete the building works and obtain the home warranty insurance in a manner sufficient to comply with those conditions as soon as possible and in any event no later than the due date for completion. If such evidence is not provided by that date, the purchaser may, by written notice to the vendor, rescind this contract provided that the purchaser may not give a notice of rescission if the vendor provides such evidence to the purchaser before the purchaser gives the vendor a notice of rescission. Despite any other provision of the contract, until such evidence is provided, the purchaser need only pay a 5% deposit with the balance of the deposit payable within 2 business days of the provision of such evidence.

It is worth noting that at the same time as special condition 16 was inserted, so was special condition 15. That condition provided:

Prior to settlement the vendor will in a proper workman-like manner complete the attached building works [i.e., those comprised in the June list].

Since reference was made to it in the course of submissions, I set out the text of special condition 8 – a “whole agreement” clause:

8. Whole Agreement
The Parties agree that this Agreement contains or refers to the whole of thier [sic] Agreement in relation to the sale and purchase of a property and that except where required by law, no further promises, representations, warranties, undertakings or conditions shall be deemed to be implied in this Agreement or to arise between the parties by way of collateral or other Agreement or by reason of any promise, representation, warraty [sic], or undertaking given or made by any party to the other on or prior to the making [sic] this Agreement.

The parties’ submissions

It is not immediately easy to understand the point of difference between the relevant parties (Mrs Carr and Mr Pascali) as to the proper construction of special condition 16. Both Dr Birch, and Mr Docker of Counsel, who appeared with Mr Gandar of Counsel for Mr Pascali, accepted that the special condition included a promissory element. That promissory element is Mr Pascali’s promise to use his “best endeavours to complete the building works and obtain the home warranty insurance in a manner sufficient to comply with [the preceding] conditions”.
In his oral closing submissions, Dr Birch went somewhat further. He submitted that the promissory element of special condition 16 did not merge upon, but rather survived, completion of the contract.
Counsel relied upon a number of decided cases. I shall refer to so many of those as seems appropriate.

Decision

When special condition 16 is analysed, the following points appear:

it is a condition inserted primarily, if not exclusively, for the benefit of Mrs Carr;

it makes completion conditional upon Mr Pascali’s delivering to Mrs Carr evidence satisfactory to her (acting reasonably) that all building works of the kind described have been completed in accordance with the requirements of the Council, and in total are covered by a current HWI policy;

next, Mr Pascali promises to use his best endeavours to complete the works and obtain the requisite insurance so as to comply with those conditions as soon as possible, and in any event no later than the date for completion (which was 120 days following exchange);

next, the special condition provides that if such evidence is not given to Mrs Carr by the date for completion, she may rescind; and

finally, the special condition postpones until the provision of such evidence Mrs Carr’s obligation to pay the balance of the deposit.

Mr Pascali’s promissory obligation was not absolute. It was a “best endeavours” obligation. Further, it was what might be called a purposive obligation: that is to say, an obligation directed towards achieving satisfaction of the specified purpose. That specified purpose was the procuring of a state of affairs that would satisfy the two preceding conditions: in summary, completion in accordance with the requirements of the Council, and availability of current HWI.
I do not think that special condition 16 imposed an absolute obligation on Mr Pascali to complete the building works in every respect. Nor do I think it imposed upon him an obligation that survived completion.
It is clear that a condition such as special condition 16 may impose both a condition precedent to a completion of a contract and an implied obligation on one party to use its best endeavours to bring about the contracted state of affairs. See for example the judgment of Gibbs CJ in Perri v Coolangatta Investments Pty Ltd [66] at 541.
66. (1982) 149 CLR 537.
As Brooking J pointed out in McTier v Haupt [67] at 657, such a condition may encompass both a promissory and a strictly conditional element. The distinction is between obligations, breach of which creates a liability for damages, and conditions, the non-fulfilment of which does not.
67. [1992] 1 VR 653.
In the present case, it seems to me, special condition 16 can be described in the words of Brennan J in Perri at 566: the obligation is not to achieve satisfaction of the condition but, rather, to do all that is reasonable (or in this case, can be done by the use of best endeavours) to that end. As his Honour continued, in words apt to this case (although with a change in the description of the relevant party):

This is not a case where [Mr Pascali] promise[d] that a condition precedent to the obligation to complete will be fulfilled.

The evidence that was produced, as to completion in accordance with the requirements of the Council and as to HWI, was satisfactory to Mrs Carr (on the advice of Mr Thomas). Accordingly, she proceeded to complete the contract. At that time, so it seems to me, special condition 16 became spent. The endeavours used, whether “best” or not, had procured the stipulated result. It is too late now to maintain, as a matter of promissory obligation flowing from special condition 16, that there was surviving completion an ongoing obligation to continue to use those endeavours, and now some extant liability for breach of that ongoing obligation.

Of course, I leave out of all this the separate obligations under special condition 15. I should make it clear, also, that nothing that I have said touches upon Mrs Carr’s formulation of her case in deceit.
Nor do I think that special condition 16 is concerned with the objective truth, or objective accuracy, of the evidence produced. The function of the evidence is limited to that stated in the clause: to persuade Mrs Carr, acting reasonably, that Mr Pascali’s obligations to finish the work in accordance with the requirements of the Council and to procure current HWI, have been satisfied.
Dr Birch contended for a different approach. He submitted [68] :

14. Clause 16 would make no commercial sense if it was construed to have imposed no obligation upon the vendor other than to provide some evidence to Mrs Carr, and if that evidence were accepted by her, and the contract completed then the Clause be treated as spent. Such a construction would have bizarre and paradoxical consequences. It would mean that evidence that was fraudulently obtained, or certificates that were mere forgeries, provided, they led the plaintiff to complete, would nevertheless have seen the Clause satisfied. The provisions in Clause 16 “for the reasonable satisfaction of the purchaser”, was a protection for the vendor against an unreasonable refusal, and would have entitled the vendor to obtain specific performance, if he had produced evidence satisfactory to a reasonable person. However, the purpose of the Clause was to ensure that the building works were compliant and insured, and the contractual conditions could not be satisfied by evidence that was false or misleading. More is said below in regard to the representational claim on this subject.
68. Written closing submissions, [14].

That submission is at first blush attractive. However, on analysis, it accords greater force to the promissory obligation in special condition 16 than the words will bear. And the outcome is neither bizarre nor paradoxical. If the vendor knowingly obtained fraudulent or forged evidence to satisfy the special condition, the result would be that the purchaser, being induced to complete by the provision of that evidence, would have alternative rights.

Issues 2 and 3: consequences of breach

On my view of the proper construction of special condition 16, these issues do not arise.

Issues 4 to 8: the deceit claim against Mr Pascali based on the Insurance Representations

The pleaded case is that by providing the HWI certificates to Mrs Carr, Mr Pascali represented, expressly or by implication that:

all of the residential building work done within the previous six years had been undertaken by Mr Miller;

all of that work was the subject of HWI;

the HWI had been obtained without deception so that there would be no entitlement to avoid the policy;

all that work had been undertaken by a licensed builder; and

by providing the HWI certificates, Mr Pascali had complied with special condition 16(b).

The submissions did not focus closely upon the specific pleaded representations. That led to protests, in particular from Mr Docker, that Mrs Carr’s case was being propounded upon a basis other than that which was pleaded. Understandably, Mr Docker took the position that a plaintiff alleging deceit should be held closely to its pleaded case. In the result, it is not necessary to decide the disputes as to the width of the pleaded case (nor as to the extent that the submissions for Mrs Carr sought to go beyond it). The reasons will become apparent.

Approach to making findings of deceit in civil proceedings

The allegation of deceit is very serious. Although the court is required to be satisfied only on the balance of probabilities that the allegation of deceit has been made good, the court must take into account, in deciding whether it is so satisfied, among other things the gravity of the allegation. See s 140(2)(c) of the Evidence Act1995 (NSW). That requirement is generally thought to reflect the approach stated in, as the first of many cases often cited, Briginshaw v Briginshaw [69] .
69. (1938) 60 CLR 336.
There is no need to set out either the text of s 140 or the relevant observations from Briginshaw (nor, for that matter, observations made in many cases in which the Briginshaw approach has been cited). I am conscious that the allegation of deceit is serious. I am conscious that to find it proved, there must be a feeling of actual satisfaction, although on the balance of probabilities, that the deceitful conduct alleged did take place and that the necessary elements of deceit, including knowledge or wilful blindness, have been made out. I have kept those matters firmly in mind in dealing with Mrs Carr’s case based on deceit.

How Mr Pascali’s liability is said to arise

The starting point is to make it clear that both in respect of the Insurance Representations and the Development Representations[70] , there is no suggestion that Mr Pascali was personally involved in, or had any knowledge of, the matters alleged to amount to deceit. The case is, rather, that Mr Pascali, having entrusted the performance of the building works and the procuring of the necessary occupation and HWI certificates to Mr Nowytarger, is thereby liable for the consequences of Mr Nowytarger’s actions.
70. See at [12] above.
Mr Pascali’s evidence on this point is clear. He said [71] that:
71. Affidavit sworn 23 November 2017 at [52] and following.

he authorised, in particular, Mr Nowytarger to handle the sale, and to “handle all the other decisions for [him]”;

he directed Mr Nowytarger to use Mr Kesby as the solicitor, but took no part in providing instructions to Mr Kesby;

he had no involvement in the appointment of the selling agents, but left those matters to Mr Nowytarger and Ms Pascali-Nowytarger;

he did not pay any of the advertising or marketing costs associated with the sale; they were paid by Mr Nowytarger or Ms Pascali-Nowytarger; and he (Mr Pascali) confirmed this in an email of 24 September 2012 to Mr Kesby;

he did not arrange for or have any involvement with any of the other publicity or other material relating to the proposed sale;

on 15 May 2012, he told Mr Kesby that all instructions were to come from Mr Nowytarger, and confirmed that in an email to Mr Kesby sent that same day;

he had no involvement in the negotiations relating to the sale price;

he left it to Mr Nowytarger and Ms Pascali-Nowytarger to decide on the selling price, and, ultimately, to decide whether to accept Mr Carr’s offer of $8.55 million;

thereafter, at the request of Mr Nowytarger and Ms Pascali- Nowytarger, he signed the contract for sale;

he played no part in giving instructions to Mr Kesby in relation to requisitions on title or in relation to the special condition 16 evidence;

he played no part in obtaining the occupation certificate and the HWI certificates;

he acquiesced in Mr Nowytarger’s giving permission to Mr and Mrs Carr to move into the property prior to settlement; and

he acquiesced in the further agreement made by Mr Nowytarger with Mrs Carr to carry out further works (described in what the parties called, as shall I, “the September list”), and countersigned that list to indicate his approval.

In case there were any doubt about it, Mr Pascali concluded his narrative of his involvement by saying[72] that he did not know if the works comprised in the September list were carried out, and:

I had no involvement in the building works carried out at the Property nor was I involved in any of the subsequent negotiations with Mrs Carr about what additional work she required to the Property following settlement.
72. Ibid at [88].

In short, Mr Pascali entrusted the entire process of carrying out the works, selling the property, and giving instructions to the agent and the solicitor before and following exchange of contracts and up until completion, to Mr Nowytarger, and to a lesser extent to Ms Pascali-Nowytarger.

The role of Mr Taylor

Mr Nowytarger and Mr Miller sought to suggest that Mr Miller had been engaged as the builder for the residential building work done upon the Seaforth property in 2011 and 2012. No one suggested that Mr Miller had done the substantial building work himself. No one suggested that Mr Miller had attended frequently at the site. Mr Taylor, who was engaged on the site from February to December 2011, said that Mr Miller appeared at the site on only three or four occasions over that time.
In the course of cross-examination, Mr Taylor described his interactions with Mr Miller, over the period February to December 2011, in the following words [73] :
73. T177.12-178.13.

Q.    You didn't have any cause to speak to Mr Miller during these works about the day to day conduct of the building, I take it?
A.    I'd liaise with him and give him an update as to where the job was at.
Q.    And that would be in terms of telling him that it was advanced to a particular stage and was going well, or things of that sort?
A.    Correct.
Q.    In a very general fashion?
A.    In a general fashion, yes.
Q.    Indeed it was the case that you were a friend of his and you spoke to him regularly throughout this period, is that correct?
A.    Sorry, I don't understand your question.
Q.    Yes, I'll put it again. You were a friend of Mr Miller's throughout 2011 and in regular social contact with him, is that correct?
A.    Not on regular social contact, but yes, I am a friend of his. Yes.
Q.    How often would you have been speaking with him in 2011?
A.    If it weren't for this job?
Q.    Yes?
A.    Once every three months.
Q.    Not every week or anything like that?
A.    No.
Q.    How often did you speak to him in regard to this job?
A.    Every week.
Q.    Now, I think you've agreed with me that your discussions with Mr Miller did not descend down in too great detail?
A.    In what respect?
Q.    In any respect, I thought you said a moment ago that your discussions with him were of a very general nature?
A.    Well, typically, you may have a detailed conversation if there's a problem.
Q.    He wasn't visiting the site on any regular basis throughout the whole of the works, that's correct isn't it?
A.    That's correct.
Q.    You never saw him come on the site or inspect anything?
A.    He did come on the site.
Q.    Did he come on the site to have a chat to Mr Nowytarger or yourself?
A.    To myself.
Q.    How often did he do that?
A.    Over the course of the job, three or four times.

Messrs Nowytarger and Miller said that the latter had in truth and reality acted as the builder, because he had supervised and directed Mr Taylor. I do not accept that evidence. It found no support in the evidence of Mr Taylor, who said no more than that he was working “on behalf of Dan” and that he spoke to Mr Miller approximately weekly.
Mr Taylor was not at the relevant time an employee of Mr Miller. He was not, at the relevant time, a contractor or subcontractor to Mr Miller. Mr Miller did not invoice Mr Nowytarger for the building work carried out by Mr Taylor. Mr Taylor invoiced Mr Nowytarger, and was paid by Mr Nowytarger, direct.
Mr Miller did not engage the numerous tradesmen who came upon the site to carry out all the necessary works. Nor did Mr Taylor. Those tradesman were engaged by Mr Nowytarger. They were supervised by Mr Nowytarger (in his absence, Mr Taylor would do his best to answer general queries, but played no part in supervision). They invoiced Mr Nowytarger, and were paid by him, direct. Neither Mr Miller nor Mr Taylor invoiced Mr Nowytarger for their services, or for supervising or directing them.
Mr Miller gave the following evidence in cross-examination [74] :
74. T119.20-120.13.

Q.   I'm putting it you that it's false to say, as you have in paragraph 23 of your affidavit, that you provided Monty to do the necessary work?
A.    I've provided the means for Monty [sic, here and following] to be able to do the necessary work.
Q.    Okay, can you identify to me, or to the Court rather, the manner in which you provided those means?
A.    By him working as a supervisor under my builder's licence.
Q.    Well, you didn't hire him to do that, did you?
A.    No.
Q.    He could have just gone and done it, if he'd wished, no matter what, do you agree
A.    No.
Q.    Well, I'll come back to that. Let me just take you to the first sentence in paragraph 23. You see there you say you received payment of between 8,000 and $10,000 after the work had been finished, do you see that?
A.    Correct.
Q.    That's from Mr Nowytarger, I presume?
A.    Yes.
Q.    That was for allowing your builder's licence to be used in regard to the work?
A.    That Monty carried out.
Q.    When Mr Taylor was carrying out that work, you yourself were not engaged in any acts of supervising or checking Mr Taylor, that's correct, isn't it?
A.    No.
Q.    Do you say that you went onto the site and you checked or supervised Mr Taylor while he was undertaking the works?
A.    No.
Q.    Do you say you supervised him without ever going and visiting the works, and seeing what was being done?
A.    I had several conversations with Monty on a weekly basis.
Q.    Now, other than the 8 to $10,000 you've referred to in paragraph 23, and the sum of 1,700 odd dollars I showed to you a short while ago, you did not receive any other payment in regard to all the building work done at these premises, that's correct, isn't it?
A.    Correct.

It is obvious from that evidence (which, being against interest, I am inclined to accept) that Mr Miller did not supervise or give directions to Mr Taylor in any sense in which those words are generally understood in the English language. It is equally obvious, both from that evidence and from the other evidence to which I refer, that Mr Miller was not the builder for any of the works, in the way that those words are generally understood in the English language.
Mr Taylor did not work for the whole of the project. When he came onto the site, the roof had been removed, the top floor concrete slab had been poured, and much of the brickwork for the upper levels of the house had been completed. (Mr Miller had had no involvement of any kind or in any capacity with the performance or supervision of those works.) The remaining brickwork was completed within about a week.
Mr Taylor described the work he was engaged to do as[75] :

…the roof framing, parapet walls, some internal carpentry for the fit out, architraves in the addition [that is to say, the upper levels of the building], some angles for the bathroom for the tiler and the door jambs.
75. Affidavit sworn 23 October 2017 at [16].

In the course of cross-examination, Mr Taylor added one additional work area: external cement sheet cladding on the top two floors of the building [76] .
76. T175.48-176.5.
The obvious inference from the whole of Mr Taylor’s evidence is that he performed such work as he did as an independent contractor, pursuant to a contract direct with Mr Nowytarger. In no sense did Mr Taylor perform that work as some sort of agent or representative or personification of Mr Miller. The proposition that, in the circumstances, Mr Miller acted as the builder is unsustained and unsustainable. The evidence given by Messrs Nowytarger and Miller intended to support it is, in my view, false.
Mr Nowytarger had not made any written contract with Mr Miller for the performance of that work before or at the time the work commenced. Mr Miller had not obtained HWI before or at the time that work was commenced. The acts of procuring signed contracts and HWI were, in my view, done dishonestly, for the purpose of enabling Mr Nowytarger to obtain evidence capable of satisfying Mr Pascali’s obligations under special condition 16 of the contract for sale.

The contracts for residential building work

The evidence includes a contract between Mr Nowytarger and a builder known as WJ Building Pty Ltd dated, it seems, 13 December 2010. That contract was for:

Alteration & addition to dwelling, including second story addition & extention [sic] to garage.

It provided for a construction cost budget of $500,000, and a management fee of $50,000.
WJ Building obtained HWI. The certificate is dated 13 December 2010. It would appear, however, that WJ Building did no work, because on 28 March 2011, the broker who had procured the insurance advised the underwriter’s representative “that cover is not required”, and sought to cancel it. To obtain that cancellation, the principal of the builder made a statutory declaration in which, among other things, he stated:

[N]o “building work” has commenced – this is to be taken as meaning that there has been no commencement of land clearance

The reasons for cancellation were expressed in a letter sending that declaration to the insurer’s representative:

Due to a delayed start date as we had other work programmed which would could [sic] no longer commit to [sic].

I am not prepared to find that the declaration and the letter contained false statements (in particular because the builder’s principal was not called to give evidence). Accordingly, I treat those documents as stating the truth.
Mr Miller and Mr Nowytarger signed an application for HWI on 17 March 2011, well after building work had started (see Mr Taylor’s evidence summarised at [99] to [109] above). The work was described as:

addition to dwelling including second story addition & extension to garage.

The value of the work was said to be $170,000. A certificate of insurance, dated 28 March 2011, was obtained accordingly. It covered work to be carried out by Mr Miller as builder for Mr Nowytarger as owner.
In 2012 (and, I infer, after the contract for sale became binding, so that Mr Pascali was required to produce evidence of, among other things, HWI in accordance with special condition 16), Messrs Nowytarger and Miller signed a form of cost plus contract for residential building work comprising “alterations and additions to dwelling including second story addition and extension of garage” to the Seaforth property. The estimated cost of the works was $620,000. They backdated that contract to 2 December 2010. A notable feature of the contract is that it excluded a number of items of work that Mr Miller stipulated he would not carry out. They were:

1.   Painting
2.   Air conditioning
3.   Kitchen appliances
4.   Bar fridge in bar area
5.   Pool equipment
6.   Land scaping [sic]
7.   Bath room [sic] hardware not including tapware
8.   Builder’s clean
9.   ALL tiling
10.   Water proofing [sic]
11.    ALL garden retaining wall’s [sic]

At about the same time, Messrs Miller and Nowytarger signed another cost plus contract, for “STAG [sic] 1 demolish existing house to first floor & do all new conc [sic] floors, slab’s [sic] in total”, for the sum of $170,000. That too was backdated to 2 December 2010. The work to be done was described in more detail as:

(1) Demolish existing house to first floor;
(2) pour new concrete slab’s [sic];
(3) construct new brick wall’s [sic] to support upper slab;
(4) all brickwork & concrete to be done to top floor;
(5) framework or other work is included in this price.

I have broken up the continuous description given in the contract because, by reference to it, Mr Taylor accepted that he had not done the first, second and third items, nor the great bulk of the fourth item.
There were exclusions in that later contract that were effectively mirrored the first ten in the earlier contract (see at [118] above).
Finally, Messrs Miller and Nowytarger prepared a third form of contract, which they backdated to 16 March 2011. It is plain that the contract was backdated, because it is in a form bearing a copyright note “May 2012”. That contract, for an estimated amount of $450,000, purported to cover the construction of a new roof frame with zinc roofing, the supply and installation of windows and doors, gyprocking, plastering, plumbing and electrical work, and some external wall cladding. It too excluded work, “as on previous contract 2/12/2010”, with an additional but presently irrelevant item.

Mr Davie suggested in his submissions that there was no evidence that the retaining walls need immediate replacement. I do not agree. The evidence of the expert engineer, Mr Vadim Topolinsky, which is supported by other expert evidence, is to the contrary.
The real problem with this aspect of Mrs Carr’s claim is that she is seeking damages representing the cost of repair of a defect that was made known to her. As I have said, she must be taken to have factored this cost into the amount she was prepared to pay for the property.
I accept that the report did not convey what Mrs Carr now says is the urgency of the need for replacement. Nor did it convey the cost, which is said to be of the order of $220,000. But, accepting those points, it is difficult to see how the cost can form part of the damages that she claims. She was deceived into completing the purchase of the property: that is the result of my earlier findings. But she was not deceived into thinking that the retaining walls were structurally sound and would last for any particular length of time. I do not understand how, in justice, the cost of rectification can be allowed as part of her claim for damages for deceit.
Accordingly, I allow nothing for this item.
Were I wrong in this, it would be necessary to consider the cost of rectification. Mr Daniels’ evidence is particularly opaque, even by the standards of his reports overall. It puts the amount at $245,465. The submissions for Mrs Carr conceded that this included invoices exceeding, in total, $22,000 that were not referable to the work. The very fact that almost 10% of the amount of the claim was based on invoices that are now conceded to be irrelevant is something that, to my mind, justifies the cautious approach I have taken in many places to accepting Mr Daniels’ costings.
The net amount for which the claim is pressed is $223,400. Mr Davies’ submissions did not offer any insight, helpful or otherwise, into the breakup or validity of this costing. Were it necessary to do so, that is the sum I would allow for item 29.
Item 30: split and decayed wood to external decking and stairs. What I have said in relation to Item 29 is applicable to this item also. The defective state of the stairs was evident. It was pointed out in the building report obtained by Mrs Carr. There was a requirement in the June list for repair of a section of dry rot in the stairs. Mr Nowytarger said that he did this. Since there is no evidence to the contrary, I am inclined to accept what he says despite my general view of his unsatisfactory testimony. I do not allow anything for this item.
The amount claimed for rectification of this defect is $331,701. Again, the costing is opaque. Again, the submissions are unhelpful. Were it necessary to assess the cost of rectification then, bearing in mind the various observations I have made as to the weight to be placed on Mr Daniels’ evidence, I would allow $300,000.
Item 31: water penetration to boat shed. The substantial issue, I think, is that the water penetration is the or a result of lack of adequate drainage control. Mr Daniels said that in that respect, the works did not comply with the conditions of approval. Mr Davie submitted that since the boatshed was not a habitable area (and this is indisputably correct), there was no problem caused by water from time to time flowing into it. That is a little difficult to accept, giving the propensity of water to cause rust, mould, and decay.
Part of the amount claimed is for temporary work undertaken to lessen water ingress. The remainder is based on a quotation from a firm of landscapers. The total is $23,620. There may be a dispute as to the amount that should be allowed for waterproofing (on the basis that it is not part of the work required to be done to comply with the conditions of consent). The simplest course seems to me to allow $23,000 for this item. Whether that represents a sufficient discount for the cost of waterproofing may be open to question, but in the absence of submissions directed to this point, I do not propose to spend further time on it.
Item 32: apparently not pressed (it is not addressed in submissions).
Item 33: defective automatic gates. The automatic gates were intended to be operable remotely, by use of the telephone system. They were not. They were referred to in the September list, before the telephone system was upgraded. The amount claimed is $1,862. Since that is supported by a quotation from an independent supplier, and in the scheme of things is inconsiderable, I allow it.
Item 34: gas pool heater. Mr Daniels’ evidence was based, at least in part, on a report of a plumber, Mr Luke Stapleton. Those reports were rejected. Mr Daniels is not himself qualified to express the opinions he does. I am not prepared to find that there is a defect (and on that basis the question of quantum does not arise). I allow nothing for it.
Item 35: faulty installation of gas fluid pipe. The existence of the defect and its cost of rectification are agreed. Mr Daniels quantified the cost at $1,428. If that is the agreed figured (and the submissions were not helpful on this point), it should be allowed. If it is not, then whatever the agreed figure is should be allowed.
Item 36: not pressed.
Item 37: water leaks above front awning. This is an agreed defect. Its agreed cost of rectification is $4,813.50.
Item 38: subfloor areas not treated against termite attack. Mrs Carr obtained a pest inspection report prior to purchase. If that report disclosed the problem, she purchased on the basis of it. If it did not, there is nonetheless no reason for sheeting the cost of treatment home to any of the defendants. I do not allow this item.
Items 39 and 40: cracking to internal travertine tiling on the stairs and floors. There is photographic evidence of this defect. Mr Daniels rejected the suggestion that there was only the occasional crack, quite possibly attributable to builders carrying out rectification works. I accept his evidence. The cost of rectification for the two items is $35,833. There is no challenge to the costing (as opposed to liability). I allow this sum.
Item 41: cracked external travertine tiles. There is photographic evidence of this defect. Mrs Carr gives evidence to the effect that the number and extent of cracks have increased over the years. The apparent cause is the want of any expansion joint. The estimated cost of rectification is $86,100. Again, there is no challenge to that costing, as opposed to the liability for it. I allow this sum.
Item 42: no privacy screens. It was a requirement of the Council’s consent that privacy screens be installed in various places. Mr Davie submitted that Mrs Carr had requested that they be omitted. The evidence of Mr Nowytarger on which he relied does not actually say that; and even if it did, I would be loathe to accept it. The better view of the evidence is that the privacy screens were omitted to make the work of formworkers, who were responsible for the construction of the slab on which the screens were to be placed, easier. There is no challenge to the costing, $4,381. I allow that amount.
Item 43: paint damage to the eastern external wall. There is no doubt that the paint work was inadequate or defective. Mr Daniels’ cost of rectification appeared to conflate this defect with a more substantial problem. Mr Hall’s costing is $2,920. In the absence of any other evidence of rectification costs, that is the amount I allow.
Item 44: floor waste drain. There is no doubt that the waste drain was not changed as required by the June list. Mr Nowytarger sought to suggest that Mrs Carr had directed him not to do this. I do not accept that evidence. In the absence of any challenge of the costing, I allow the amount assessed by Mr Daniels, $5,494.
Item 45: supply and install Sonos boxes. To the extent that there is any claim for defects in this work, that claim must fail because it depends upon a report obtained by Mr Daniels that, when tendered, was objected to and rejected. To the extent that it relates to the cost paid by Mrs Carr for the actual supply and installation work, it should be allowed, because it was Mr Nowytarger’s responsibility to do those things. I allow the amount claimed for that, $3,285.
Item 46: not pressed (part of Item 17).
Item 47: CCTV Cameras. The brochure described 13 CCTV cameras. Only 8 were installed. Mr Nowytarger agreed to supply and install the remaining 5, pursuant to the June and September lists. He did not do so. The amount claimed is $2,750. I allow it.
Item 48: not pressed.
Item 49: patch holes. Mr Nowytarger said he has done this work. Mrs Carr says otherwise. I prefer her evidence. I allow the agreed sum, $1,419.
Item 50: Adjust bi-fold doors. Mr Nowytarger said he has done this work. Mr Daniels said that it has not been done, or has not been done properly. I do not accept Mr Nowytarger’s evidence. I allow the sum claimed, $3,297.
Items 51, 52, 53: not pressed.
Item 54: not pressed (supporting evidence rejected).
Item 55: roller blinds in bedroom. There is evidence of damage. Mr Hall was not able to inspect them. The evidence is supported by photographs. The cost of repair, where possible, or otherwise replacement is given by Mr Daniels as $13,090. It is not entirely clear how he has reached this figure. The only documentary evidence appears to be a quotation for $8,815. As I understand it, that is for the supply of new blinds. The balance may be for repair. I am not sure. In the circumstances, I allow $10,000 for this item.
Items 56, 57: not pressed.
Item 58: supply and install safes in main bedroom. The claim appears to be for a safe supplied by Mr Nowytarger (pursuant to the June list) that was not what was required. He took it back, and said he would allow credit. He has not done so. I allow the amount claimed, $1,672.
Item 59: not pressed.
Item 60: loose balustrades. There appears to be little dispute as to this or as to the cost. I allow $285.
Item 61: new lintel to support masonry brickwork. Mr Daniels said that the work, without the lintel, was unsafe. The lintel was installed at a cost of $723. I allow that amount.
Item 62: repair cracked render to front planter. Mr Nowytarger agreed to carry out the repairs (pursuant to the September list). If he did so, he did not do it properly. The complaint now made is that the planter box may not be waterproofed. The evidence (including what was observed during a view) is inconclusive. I am not satisfied that there is a defect, or at least one for which any of the defendants should be held liable in any way.
Item 63: not pressed.
Item 64: not pressed separately (part of item 17).
Item 65: sticking bedroom door. This is an agreed defect. The cost of rectification is agreed at $913. I allow that amount.
Item 66: repairs to front door. This appears on the September list. Mr Daniels inspected the door after Mr Nowytarger had attempted to repair the damage that Mrs Carr had observed. Mr Daniels said that whatever was done did not rectify the damage: “the scratches are still apparent and visible on the door”. He costs the rectification at $2,435. Whilst this seems to be a large amount for the repair of a scratched door, there is no challenge to the costing and accordingly I allow that sum.
Item 67: touch up damaged walls. This item appears on the September list. It would appear that the parties agreed to share the cost of a painter. Mrs Carr’s evidence is that she has paid more than her share. She claims reimbursement of the overpaid amount, $1,000. I allow that amount.
Items 68-73: not pressed.
Item 74: detailing to base of walls in various parts of the property. This is an agreed defect. The agreed cost of rectification is $5,509. I allow that sum.
Item 75: rust marks around garden tap at front of property. It is not at all clear why this is a defect, let alone one for which any of the defendants ought be held liable in any way. I allow nothing for this item.
Item 76: cracked render on boundary wall. It is not clear why this is a defect for which any of the defendants should be held liable in any way. I allow nothing for it.
Item 77: stained ensuite wall tiles. Mr Daniels gives evidence of this defect. Mr Hall claimed that he could not detect it, but it may be that the particular location was not drawn to his attention. Mr Daniels says that it is necessary to strip and re-tile (with associated work). Mr Hall said that cleaning should deal with any problem which may exist. The amount claimed is $17,263. That seems to me to be out of all proportion to the actual cosmetic defect (if any – the area was inspected in the course of the view and I have to say that the matters of which complaint is made were not readily apparent).
In my view, it would be relevantly unreasonable to strip out the bathroom, remove and replace the tiles, and then reconstruct the bathroom, which is in effect what Mr Daniels says needs to be done. Such benefit as may be obtained by that would be out of all proportion to the cost. On the assumption (which I make simply because it is not worth pursuing the matter) that there is a discernible colour variation and that this is the result of some defect in the materials, I allow $500 by way of general damages.
Item 78: Misaligned side panel of walk-in robe. Mr Daniels said that the installation was not done in a proper way, that the panel is not properly fixed, and that as a result it has moved out of alignment. There is support for that both in photographs and from what was observed in the course of the view. He assesses the cost of repair at $3,089. In the absence of any controversy as to the amount, I allow that sum.
Item 79: not pressed separately (dealt with as part of item 40).
Items 80A, 80B: lack of venting or air circulation in various locations. I accept Mr Daniels’ evidence that there should have been, but was not, adequate ventilation of provision for air circulation in the areas that he identifies. He assesses the cost of repair at $2,969. There is no controversy as to the amount. I allow that sum.
Item 81: failure of tiling on level 1 south balcony. Mr Davie suggested that this has already been claimed under item 41, and is therefore a “double-dipping” claim. I do not agree. Mr Daniels explains that they relate to separate areas. There does not appear to be any dispute as to the estimated cost, $32,339. I allow that sum.
Item 82: service hatch. Mr Daniels identifies that a service hatch in a wet area was constructed out of unsuitable material: plasterboard. I accept that evidence. He assesses the cost of repair at $1,485. There is no dispute as to that, and that is the amount I allow.
Item 83: not separately pressed (dealt with as part of Item 41).
Item 84: not separately pressed (dealt with as part of Item 81).
Item 85: defective gas reticulation services. Mr Daniels’ evidence is that the gas piping installed is insufficient to deliver appropriate pressure for the various gas appliances that are served by it. He adds that the installation does not comply with a relevant Australian standard. He assesses the cost of rectification at $24,443, relying on evidence from others which has been put before the court. I find that there is the defect alleged. I assess the cost of rectification in the sum claimed, $24,443.
Item 86: water ingress in south eastern corner. The defect is conceded and the cost of rectification is likewise conceded. I allow the conceded sum, $5,955.
Item 87: not pressed.
Item 88: not separately pressed (dealt as part of Item 2).
Item 89: defective glass security door. Mrs Carr gives evidence of this defect. So, too, does Mr Daniels. Mr Nowytarger sought to blame the problem on a locking mechanism installed by Mrs Carr. Consistent with my general view of Mr Nowytarger’s lack of credibility, I do not accept that evidence. Mr Daniels said that the failure of the door happened because the materials were not suitable for their purpose. I accept that evidence. Mr Daniels assessed the cost of repair at $5,393. That is a cost actually incurred and supported by an invoice. I allow it.
Item 90: kitchen gas oven. It appears to be common ground that the oven is not working properly. It is not at all clear whether this is related to the lack of gas pressure, or due to some inherent problem, although Mr Daniels appears to think that the problem with the operation of the oven is due to the insufficient supply of gas. In addition, Mr Daniels observed buckling to the door, so that it did not seal properly, and that the door would not fully open. It appears that replacement parts cannot be obtained. Mr Daniels said that the oven should be replaced. He assesses the cost of $21,161. Whilst I accept that it would be desirable if the oven door closed properly and sealed completely, it is difficult to understand how it could be reasonable to spend so much money to alleviate some loss of heat (there is no quantitative assessment of the impact, if any, that such heat loss as there is has on the efficiency of the oven). In the absence of evidence on this point, I am not prepared to allow any amount for rectification.
Item 91: underfloor heating. Mr Daniels identified the defects. There is no dispute as to that part of his evidence. He said that the installation needs to be replaced. I accept that evidence. Mr Daniels assessed the cost of rectification at $20,883. In the absence of any controversy as to the amount, I allow it.
Item 92: moisture penetration in the lower ground floor robe area. Mr Davie submitted that this fell under item 13. It does not. Mr Daniels identifies it separately. Likewise, he identifies the cost of rectification. I accept that the defect is present, as Mr Daniels has observed, and that the cost of rectification is the amount of $7,490 that he gives. I allow that amount.
Item 93: gas hot water unit servicing lower ground and ground floors. The defect identified by Mr Daniels is that the unit installed is one suitable for external use, not for use in an enclosed and unventilated space. Mr Daniels was cross-examined to the effect that the space had been enclosed by Mrs Carr, after Mr Nowytarger had finished his work. However, the photographic evidence shows that the “enclosure” was not a full door but some form of gate, with apertures which would allow the escape of gases. The real problem is that the unit was installed in a confined space when it should not have been. The evidence on this point came not just from Mr Daniels but also from Mr Ross Brown, a licensed plumber, drainer and gas-fitter, and hydraulic services engineer. His report was admitted without objection and he was not required for cross-examination. In addition, the report of Mr Ashley Moran dated 21 July 2014 corroborates the defect. That report was admitted without objection. I am satisfied that the defect exists and that it must be rectified. The cost incurred was $18,826. I allow that sum.
Item 94: water seepage to the driveway. Messrs Daniels and Hall agreed that there was evidence of discolouration to the driveway consistent with water staining. They posited (or speculated as to) different causes. Mr Daniels suggested that it was caused by overflow of water from the spoon drain at the top of the driveway. Mr Hall suggested that it was caused by a leaking water meter on an adjacent property. Neither explanation appears to me to involve much more than speculation. In the absence of evidence that the cause is something for which any of the defendants might be held liable in any way, I do not allow anything for this asserted defect.
Item 95: crack to eastern wall of ensuite bathroom. It is agreed that there is a defect. The only difference is as to the cost of repairs. The amount claimed by Mrs Carr includes a relatively small amount for temporary work. In my view, the full sum, $14,220, that is claimed should be allowed.

Item 96: not pressed:
Item 97: amounts paid to Hart Design. As I understand it, this relates to the survey and drafting work undertaken by Hart Design to identify and document discrepancies between the approved plans and what was in fact constructed. Mrs Carr said that it was necessary for her to carry out the work to discover the extent to which he was deceived. I do not think that that amount is recoverable on this basis. If it is to be allowed, it would be a disbursement incurred for the purposes of Mrs Carr’s case. That indeed was the way that Mr Davie put his submission on this item.
Item 98: failure to install stormwater reticulation and drainage system. As I have noted earlier, the conditions of consent required construction of the stormwater drainage system. That was not done. To that extent, the work was not done in accordance with the requirements of the Council. In my view, it is a defect that should be allowed. Mr Daniels assesses the total cost (excluding work referable to some planter boxes) at $17,597. Although there is necessarily some element of contingency there, because not all the work has been performed, that is the amount that I allow.
Item 99: water ingress to dining room from external planter boxes. Mr Daniels gives evidence of this defect. I accept that evidence. He identifies the cost of repair at $32,233. In this case, I revert to my customary approach to Mr Daniels’ costings and allow $30,000.
Item 1A: not pressed.
Item 2A frameless glazed door in cellar. Mr Daniels said that the door fell off because the hinges were inadequate to carry its weight, either because the screws were too short or because there should have been a third hinge. The estimated cost of the repair is $5,003. Mr Davie’s submissions questioned the explanation, without pointing to any evidence that could controvert it. I conclude that there was a defect and that the amount claimed should be allowed.
Item 3A: waterproofing failure on front balcony. Mr Daniels relates this to Item 88 (which in turn relates back to Item 2) but on the basis that it is a separate aspect of the overall defective work. Mr Davie appeared to suggest that whatever the problem was that was referred to in Item 3A, it would have been covered by those earlier defects. I do not agree. Mr Daniels’ supplementary report makes it clear that it is a separate head of claim. The amount claimed is $6,864. I allow $6,000 for this.
Item 4A: drafting costs. Mr Daniels says that this should be related to Item 92, but the appropriate cross-reference would appear to be to Item 97. The suggested purpose relates to obtaining retrospective approval (presumably, pursuant to s 96 of the EPA Act) for the works, to the extent that they depart from the approved plans. Mr Daniels costs this item at $40,995. It is entirely unclear how he has reached that sum. It does not appear to be supported by any documentary evidence. I do not know what if any expertise he has in assessing such costs. In the absence of proof, I am not prepared to allow anything for this item.
Item 5A: investigation of sewer line locations and connections. This claim also arises from the unauthorised changes to the approved drawings. The claim is for the cost of locating the sewer lines, inspecting their connections, and making application for retrospective approval and certification. Mr Daniels costs the work at $88,506. Unlike the previous item, this does seem to fall within the ambit of Mr Daniel’s expertise. Consistently with my general approach, I allow $80,000.
Item 6A: defective frosted glazed panels. Mr Daniels identifies the defect and the work necessary to rectify it. He costs that work at $7,842. I am satisfied, on the basis of Mr Daniels’ evidence, that there is a defect. I allow $7,000 for its rectification.
Item 7A: zinc roof sheets. It appears that some roof sheets lifted as the result of a storm. Mr Davie submitted that it should be the subject of an insurance claim. Mr Daniels, however, gave evidence that the sheets had not been appropriately fixed, including in accordance with the manufacturer’s requirements. He costed the repair at $6,058. I allow that amount.
Item 8A: recessed wall lights in swimming pool. Mr Daniels gave evidence of defects. He costed the rectification at $5,153. I accept his evidence that the work was defective and I assess the cost of rectification at $5,000.

Summary

The parties will have to consider my conclusions and apportion responsibility for the defects and amounts that I have found to:

the breach of statutory warranties claim against Mr Miller, to the extent that he is estopped from denying that he is liable for breach of statutory warranties by reason of having signed the contracts;

the deceit claim against Messrs Nowytarger and Pascali; or

the claim against Mr Nowytarger in respect of the June and September lists.

As I hope I have made clear already, it is not a “one or the other” process. Mr Miller is liable for the work that he is estopped from denying he did. Mr Pascali is liable for the difference between the price paid for the property and its true value, with the limitations that I have already accepted. Mr Nowytarger is liable for defective or incomplete work the subject of the June and September lists.
As to the “true value” case, once the relevant works have been identified and the total rectification cost is calculated, the deceit damages will be that total, with a 35% increment.

Conclusion and orders

Mrs Carr is entitled to succeed to the extent that I have found and in the various ways that I have found. For the reasons I have given, I am simply not in a position to allocate my findings as between the various claims that, I have said, should succeed. The parties will have to do that.
The appropriate course is to give the parties an opportunity to consider these reasons and to seek to agree on the orders to be made to give effect to them (except as to costs, which for the time being, and to the extent that I have not dealt with them already, I will reserve).
I make the following orders:

direct the parties to confer with a view to preparing and agreeing to the orders appropriate to give effect to these reasons.

Stand matter over to 9:30am on 16 October 2018 before me for entry of judgment and for further directions.

Order that no part of the costs or disbursements incurred with reference to the production of the court book are to be charged to the plaintiff by her solicitors.

Order that no part of the costs or disbursements incurred with reference to orders 1 and 2 made on 18 July 2018 are to be charged to the plaintiff by her solicitors.

For the avoidance of doubt, order that no part of the costs referred to in orders 3 and 4 are to be allowed on assessment pursuant to any costs orders that may be made in favour of the plaintiff against any of the defendants.

Subject to orders 3 to 5, reserve costs for further consideration.

**********

Endnotes

Decision last updated: 20 September 2018

Medium Neutral Citation:	Carr v Miller [2018] NSWSC 1424
Hearing dates:	02/07/2018, 03/07/2018, 04/07/2018, 05/07/2018, 09/07/2018, 10/07/2018, 11/07/2018, 12/07/2018. Further written submissions on 3/08/2018, 6/08/2018, 15/08/2018.
Date of orders:	20 September 2018
Decision date:	20 September 2018
Jurisdiction:	Equity - Technology and Construction List
Before:	McDougall J
Decision:	See at [371].
Catchwords:	BUILDING AND CONSTRUCTION – residential property contained substantial defects – where purchaser induced to complete purchase through the provision of fraudulently obtained home warranty insurance certificates – whether third defendant (vendor) vicariously liable for the deceit of the second defendant (son-in-law). BUILDING AND CONSTRUCTION – damages for defects – where first defendant (builder) named on the insurance certificates did not carry out the building works – whether first defendant estopped from denying the applicability of statutory warranties – assessment of rectification damages. CONTRACT – interpretation of Deed which purports to deal with any claims relating the building words – whether Deed requires the second defendant to indemnify the third defendant for his deceitful conduct. COSTS – usual order for hearing not complied with – produced court book was productive of excessive inefficiencies – solicitors not to charge clients for costs in creating and remedying the court book.
Legislation Cited:	Environmental Planning and Assessment Act 1979 (NSW) Evidence Act 1995 (NSW) Home Building Act 1989 (NSW) Interpretation Act 1987 (NSW)
Cases Cited:	Bebonis v Angelos (2002) 56 NSWLR 127 BI (Contracting) Pty Ltd v AW Baulderstone Holdings Pty Ltd [2007] NSWCA 173 Briginshaw v Briginshaw (1938) 60 CLR 336 Burrows v Rhodes [1899] 1 QB 816 Fountain v Alexander (1982) 150 CLR 615 Hatcher v White (1953) 53 SR (NSW) 285 McTier v Haupt [1992] 1 VR 653 O’Grady v Northern Queensland Co Ltd (1990) 169 CLR 356 Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 PMT Partners Pty Ltd (in liq) v Australian National Parks & Wildlife Service (1995) 184 CLR 301 Watson v Foxman (2000) 49 NSWLR 315
Texts Cited:	Practice Note SC Eq 3
Category:	Principal judgment
Parties:	Marcelle Carr (Plaintiff) Daniel Miller (First Defendant) Jason Nowytarger (Second Defendant) Joseph Pascali (Third Defendant)
Representation:	Counsel: Dr CJ Birch SC / B DeBuse (Plaintiff) TJ Davie (First and Second Defendants) S Docker / A Gandar (Third Defendant) Solicitors: Watson & Watson (Plaintiff) Carneys Lawyers (First and Second Defendants) Kemp Strang (Third Defendant)
File Number(s):	2014/165881