Dewu Pty Ltd v Fabiano

[2015] NSWSC 1915

Supreme Court

New South Wales

Medium Neutral Citation:	Dewu Pty Ltd v Fabiano [2015] NSWSC 1915
Hearing dates:	23 November 2015, 24 November 2015, 25 November 2015, 26 November 2015, 30 November 2015, 8 December 2015
Date of orders:	09 December 2015
Decision date:	09 December 2015
Jurisdiction:	Equity - Technology and Construction List
Before:	McDougall J
Decision:	Judgment for defendant on plaintiff’s claim. Judgment for cross-claimant for $511,762.00 plus interest.
Catchwords:	CONTRACT – plaintiff proprietor engaged defendant builder to carry out works – where each party claims to have validly terminated the contract – application of the terms of the contract to the events that occurred – where the contract included an amended schedule of payment – where the builder issued invoices in accordance with that schedule – where the proprietor refused to pay – whether formal non-compliance of invoice with terms of contract entitled proprietor to take that course – where that provision was facultative not prescriptive – consequence that non-payment amounted to a breach – result that builder validly issued, in response, a contractual notice of suspension of works – where proprietor later re-took possession of the site – result under terms of the contract that practical completion occurred – consequence that later purported termination by plaintiff invalid – further consequence that defendant was entitled to treat the purported termination as repudiation, and to itself validly terminate the contract validly – result that builder entitled to succeed in its cross-claim for damages   EVIDENCE – expert evidence – whether works carried out by builder were defective – where they complied with the terms of the contract – where alleged defects frequently related to future works that builder had not yet been required to perform – result that allegations of defective work not made good – consequence that plaintiff not entitled to damages
Legislation Cited:	Environmental Planning and Assessment Act 1979 (NSW) Oaths Act 1900 (NSW)
Cases Cited:	Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 Hadley v Baxendale (1854) 156 ER 145 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
Category:	Principal judgment
Parties:	Dewu Pty Ltd (Plaintiff) Dominic Fabiano (Defendant)
Representation:	Counsel: A Norrie (Plaintiff) T Di Francesco (Defendant)     Solicitors: JurisBridge Legal (Plaintiff) LAC Lawyers (Defendant)
File Number(s):	2014/148360

Judgment   (ex tempore – revised 10 december 2015)

1. HIS HONOUR: This is a dispute between a proprietor and a builder over a construction contract under which the latter undertook to construct for the former, to a specified stage, some seven townhouses on a site at Merrylands.

2. The plaintiff (Dewu) is the proprietor of the land, which I will call "the site". The defendant (Mr Fabiano) is a builder. The contract between them was made, in the way that I shall explain, in about March 2013.

3. It is common ground that the contract has come to an end. Dewu says that it terminated the contract pursuant to an express contractual right to do so, having given Mr Fabiano notice to rectify breaches consisting of defective workmanship. Mr Fabiano says that Dewu was not entitled so to terminate and accordingly, that its purported termination (as he puts it) was a repudiation. He says that he has accepted the repudiation as discharging him from further performance, and has himself terminated the contract accordingly.

4. Before those events occurred, Mr Fabiano purported to suspend work for non-payment of amounts that he said were due under the contract. Dewu disputes that he was entitled to do so.

5. Dewu claims damages for breach. Mr Fabiano says that nothing is payable. He cross-claims for amounts that he says are due under the contract, or alternatively, for the unpaid value of his works on a quantum meruit basis.

The real issues in dispute

6. The issues for decision are:

1. what were the terms of the contract between Mr Fabiano and Dewu? Specifically, did it include the terms of a quotation given by Fabiani Constructions Pty Ltd (FCPL – a company controlled by Mr Fabiano); a "preliminaries and labour schedule"; and a "schedule of payment" or amended schedule of payment?

2. Did the parties adopt, for the purposes of the contract between them, the amended schedule of payment to which I have referred, which was varied slightly as to amount and as to dates from the first version?

3. Did Dewu fail to pay amounts due under the contract between it and Mr Fabiano? Specifically:

4. (a)    were the progress payments stipulated in the original or revised schedule of payment applicable?

5. (b)    Had Mr Fabiano done the work necessary to entitle him to what he says were the specified progress payments?

1. (c)   Was it a condition precedent to any right to be paid that Mr Fabiano should provide invoices in a specified form?

2. (d)    Does the undoubted failure on Mr Fabiano's part to provide invoices in that form entitle Dewu not to pay?

6. Did Mr Fabiano validly suspend works under the contract? This involves questions as to whether he was in a position to do so, and whether in fact he did so in accordance with the contract.

7. Was Dewu in a position to insist that Mr Fabiano rectify allegedly defective work? This involves the effect of the suspension notice and whether and to what extent there were in fact items of defective workmanship.

8. Did Dewu retake possession of the site so as to trigger practical completion by reason of cl 22(f) of the contract?

9. Was either Dewu's or Mr Fabiano's purported termination of the contract valid?

10. Has Dewu made good its claim to damages, and if so, in what amount?

11. Has Mr Fabiano made good his cross-claim, and if so, in what amount?

7. It should be noted that although I have referred simply to the contract between Mr Fabiano and Dewu, there were in fact two contracts. The first was made on 20 January 2013 between FCPL and Dewu. At some time in March 2013, when it became clear that although Mr Fabiano (who himself held a builder's licence) could get home warranty insurance for the project, FCPL could not, Mr Fabiano became the builder. Since there is no doubt that this was done consensually, and that the contract that resulted was the one pursuant to which the work in question was done, it is convenient to refer to this simply as “the contract”, one arising in effect (if perhaps not strictly) by novation.

The parties and witnesses

8. Dewu is a company associated with Mr Dewu She. He is a Chinese national and a qualified engineer in that country. He is not a director or a secretary of Dewu but is the majority shareholder. He called himself Dewu's "President". There is no doubt that he was the real decision-maker for Dewu, and that he controlled its affairs.

9. Mr She's former wife, Ms Hongmei Ye, is the secretary of Dewu. Their niece, Ms Yuan Guo, is and at all relevant times has been its sole director. She is married to Mr Shaohua "Tony" Sun, who works for Dewu.

10. Dewu's accountant at all relevant times was Mr Peter Wu. He prepared business activity statements, financial statements and the like on instructions ultimately from Mr She.

11. Mr She, Ms Ye and Mr Sun gave evidence. Ms Guo and Mr Wu did not. There was no explanation as to why they were not called.

12. Mr Fabiano is and since about 2000 has been a licensed builder in his own right. He was also the sole director of FCPL during its existence. It too was a licensed builder.

13. For the purpose of negotiating with Mr She and Dewu, Mr Fabiano employed a Mandarin-speaking intermediary, Ms Bernadette Yih, to facilitate his dealings. Both Mr Fabiano and Ms Yih gave evidence.

14. I do not regard Mr She or Mr Sun as reliable witnesses. I make every allowance for the fact that Mr She gave evidence through an interpreter and that Mr Sun gave evidence in what, it is clear, was not his native language. Nonetheless, as I perceived it observing them in the witness box, there are very difficult problems that lie in the way of acceptance of aspects of their evidence.

15. First, Mr She's evidence on some crucial issues was directly inconsistent with evidence that he gave on oath in the District Court before the matter was removed from that Court into this Court.

16. Second, on matters of key importance, Mr She was markedly reluctant, as I saw it, to give responsive answers. If this were isolated, I would tend to regard it as a consequence of or shortcoming in the system of interpretation, and as representing some lack of familiarity with the legal system of this State. Its recurrence, and the times at which it recurred, have made me think that the phenomenon cannot be explained away so innocently.

17. I add that when, finally, Mr She did answer questions, the answers given would often undermine, in significant respects, aspects of his affidavit evidence.

18. Third, there were some fundamental internal inconsistencies in the whole of Mr She's evidence on key matters, including whether (or not) Dewu had received the notice of suspension.

19. Fourth, and more generally, I thought that Mr She's primary concern was to tailor his evidence to what he saw as the requirements of Dewu's case. I did not regard him as someone who was willing to give responsive answers that might be damaging to his case. It was notable that, on the occasions he did so, the answers had to be extracted by repeatedly putting essentially the same question until a responsive answer was given.

20. Fifth, there were aspects of Mr She's evidence that were clearly inconsistent with contemporaneous documents or with the probabilities, viewed objectively.

21. The first of those criticisms does not, as I saw it, apply to Mr Sun's evidence. The other four do.

22. Further, in important respects, the evidence of each of Mr She and Mr Sun was undermined by the evidence of Ms Ye. I had concerns at the accuracy of aspects of her evidence too. Specifically, I came to the clear view that her affidavit was more the work of the solicitor who drafted it than the product of her own memory. I should note that the solicitor did not comply with the requirements of s 37A of the Oaths Act 1900 (NSW). That did nothing to assuage my lack of confidence in the authenticity of the affidavit.

23. Nonetheless, in the course of cross-examination, Ms Ye was mostly direct and responsive in her replies. She gave evidence that was on occasions inconsistent with Dewu's case. Further, and in contrast to Messrs She and Sun, that evidence did not have to be extracted from her piece by painful piece, question by painful repeated question.

24. Mr Fabiano impressed me as a forthright and honest witness. He did not hesitate to give what could have been regarded as evidence unhelpful to his case, where that evidence was called for by the question put to him. Although he made some mistakes in his account, when he was taxed with them, he acknowledged them readily and corrected his evidence.

25. Ms Yih was clear and precise throughout her evidence. I thought she had an excellent recall of relevant events and that her evidence of them was reliable.

26. In general, where there is a conflict between the evidence of Dewu's witnesses on the one hand and that of Mr Fabiano and Ms Yih on the other, I prefer the evidence of Mr Fabiano and Ms Yih.

27. Further, where on the evidence overall inferences may be drawn one way or the other on matters of fact, I draw them more readily in favour of Mr Fabiano when witnesses who could have given evidence for Dewu were not called, and no explanation was offered for the failure to call them. This applies not only to Ms Guo and Mr Wu, whom I have mentioned, but also to Dewu's solicitor, Mr Nolan Qin. He could have given important evidence in relation to service of the notice of suspension, but did not do so.

28. Before leaving the topic of the witnesses, I should mention the experts.

29. Dewu called Mr John James Forrest, an expert engineer. He provided three reports. The first two were not made as an expert witness who acknowledged the Expert Witness Code of Conduct. Mr Forrest purported to rectify this omission in his third report. However, I did not regard the belated recognition of the Code as adding anything to the acceptability of his evidence generally.

30. Mr Forrest is more than an expert witness. He is a witness of fact on some key points, including what he says were agreements reached between Dewu and Mr Fabiano at a site inspection that took place on 1 August 2013. In my view, Mr Forrest has an investment, no doubt subconscious, in maintaining the acceptability of his evidence of factual observations and of matters other than expert testimony comprised in his evidence. That is undesirable, and puts his independence at risk.

31. There were aspects of Mr Forrest's evidence where he displayed an argumentative character, and appeared to be acting more as an advocate than an independent expert who owed his primary duty to the Court. There is a particular example of this in relation to his evidence as to piers that were required to be drilled to support “buttress” dividing walls at the rear of the site. What he said was required (and led to his view as to the existence of a defect) was contrary to the contract drawings. Mr Forrest simply failed to recognise this. He continued to insist on his view that Mr Fabiano's work in this respect was or would be defective, notwithstanding that the contract required Mr Fabiano to comply with the engineering drawings.

32. Mr Fabiano called as an expert Mr Ted Brincat. He was somewhat more temperate in his approach to giving evidence, and less argumentative than Mr Forrest was. To my mind, if one is to compare the evidence of those two at the level that I am presently considering, the matters that I have referred to suggest that Mr Brincat's evidence is preferable.

33. As it happens, that is also a view to which I have come on the merits of their testimony.

34. There is no need to reflect at this point on the virtues (or otherwise) of the other witnesses called.

Factual background

35. Mr Fabiano prepared a quotation (for FCPL) to carry out works at the site. That was for an amount of $1.25 million, inclusive of GST. The quotation included what was in effect a specification for the work. It was said to be to bring the works to "lock-up stage". However, the parties had a somewhat different view of that compared to what my understanding of the industry meaning of the term is. I say that because, specifically, the works to be done did not include doors, windows and the like: matters that would ordinarily form part of bringing a project to lock-up stage. I say that only to avoid confusion; it is not intended to be critical of anyone and has no further relevance.

36. On 20 January 2013, Dewu and FCPL made a written contract for the construction of the works the subject of the quotation. The contract was signed by Ms Guo as the sole director of Dewu and by Mr Fabiano as the sole director of FCPL. I shall return to the question of what were the terms of that contract (including the terms of documents that should be taken to be incorporated in it). It is sufficient to note at this stage that, because the document was clearly of contractual import (and understood to be such), the parties, by signing it, must be taken to have agreed to all the terms stated in it. That is apparent from the decision of the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [35] to [59].

37. In this case, there is no plea of non est factum, nor is there any pleading of any circumstance that might vitiate the effect of the parties' signature to the contract. Thus, as I have said, they are bound by the terms contained in it, on their proper (objective) construction.

38. I should note that every page of the formal contract document was signed by Ms Guo. If it matters, that was done with the express authority of Mr She.

39. The contract referred in Sch 3 to the works to be done "as per attached quotation dated 19 December 2012, and pages following 1 to 6." It is unclear whether or not the quotation was actually attached when the contract was signed. Certainly, the quotation itself was not signed. However, objectively, it is to my mind clear that the parties intended the quotation to form part of their contract, and that they intended the terms set out in it (along with other things) to govern their contractual relationship.

40. In Sch 4, which set out "Special Conditions", the parties referred to two special conditions, 1 and 2. The first referred to an attached "preliminaries and labours schedule". The second referred to an attached "schedule of payment". Again, there may be doubt as to whether those documents were physically attached when the contract was signed. However, again, there is no doubt that the parties intended them to form part of their contract. I add that each of those documents was in fact signed by Ms Guo.

41. I shall return to the detailed terms of the contract.

42. On about 31 January 2013, Dewu paid $42,000 on account of the initial payment of $52,000 due under the contract. Thereafter, Mr Fabiano sought and procured, although in his own name rather than in FCPL's name, a home warranty insurance contract.

43. In March 2013, the novation to which I have referred occurred. As a matter of fact, what happened was that Mr Fabiano crossed out FCPL's name and details, and inserted his own. There is no doubt that Dewu agreed to this.

44. Also in early March 2013, Ms Ye received the main terms of the contract (but not the documents referred to in it) and gave them to Mr Sun.

45. On 13 March 2013, Dewu made two payments to FCPL totalling $72,500. Those payments completed the initial payment, and also satisfied the requirement to pay a deposit of 5% of the contract sum. Two days later, Mr Fabiano commenced works onsite.

46. Later in March 2013 and in early April 2013, there were discussions about the amended schedule of payments to which I have referred. For the reasons that I come to, I conclude either that Dewu did agree expressly to the terms of that amended schedule, or alternatively that it is estopped from denying that it so agreed.

47. Leaving aside some more minor matters, Mr Fabiano undertook the bulk excavation and related works, and issued a tax invoice (in the name of FCPL) to Dewu. The amount claimed, $126,166.67, was consistent with the amended schedule of payment.

48. Dewu paid $65,000 on 2 April, and a further $60,000 on 11 April.

49. On 15 April, having completed further works, Mr Fabiano issued another tax invoice. Again, that was in the name of FCPL. The amount claimed, $138,783.33, was again consistent with the terms of the amended schedule of payment.

50. On 27 April 2013, Dewu paid $140,000 to FCPL. The effect of that payment was to deal with the small arrears on the first of the principal tax invoices, and to pay the second.

51. On 15 May 2013, having completed further works, Mr Fabiano issued yet another tax invoice, again in the name of FCPL. The amount claimed was $138,788.33. Again, that is consistent with the amended schedule of payment.

52. A couple of weeks later, Mr Fabiano issued a progress claim in his own name for the same (15 May) claim. It was slightly more formal, but nonetheless contained some errors (including as to Mr Fabiano's ABN).

53. On 29 May 2013, Dewu paid $70,000 to FCPL. That left about $68,788 outstanding.

54. In early June 2013, Mr She and Ms Yih discussed a translated version of the amended schedule of payments. There is some dispute as to what was discussed. For the reasons that I shall come to, nothing to me seems to turn on this dispute.

55. While all this was happening, Dewu procured a report by a quantity surveyor as to the value of the works completed. The report suggested that the works were not worth the amount claimed. The relevance of that, bearing in mind the undoubted stage that the works had reached and the contractual requirements for payment, is open to doubt.

35. Also around this time, Dewu was seeking construction finance. It received a conditional offer from the Commonwealth Bank. Ultimately, it did not take up that offer and it lapsed.

36. On 15 June 2013, Mr She told Ms Yih that he would not pay any more money for construction work. Mr Fabiano said that he would cancel a concrete pour that had been booked. He arranged to meet on site with Mr She. There is some dispute as to what happened at the site meeting, but it is clear that the parties maintained their positions.

37. On 17 June 2013, Mr Fabiano caused his then solicitors to give what was or purported to be a notice of suspension of the works pursuant to cl 21(a)(i) of the contract. From that time, except for some minor matters to which I shall return, Mr Fabiano did not carry out any substantive work on site. The money in respect of which the notice was given was never paid. Mr Fabiano never resumed work.

38. On 21 June 2013, Mr Qin replied to the notice of suspension. On behalf of his client, he denied that there were outstanding progress claims; and asserted that the claims were not validly made; and they had been rejected in total. The letter also made allegations of defective work, apparently to the extent where (it was said) the works could not be said to have reached the stage of completion that would entitle Mr Fabiano to payment.

39. On 18 July 2013, Mr Fabiano served a notice of dispute in connection with the unpaid progress payments.

40. On 1 August 2013, there was a "walk-over" at the site attended by Mr Fabiano, Mr Forrest and a Mr Savvas Polycarpou. Mr Polycarpou was an engineer who had been retained by Mr Fabiano to carry out inspections at the site and to certify structural steel and the like.

41. On 12 August 2013, Mr Forrest made a report. He set out what he said were agreements reached at the walk-over and what he said was the state of defective work. That report was given to Mr Fabiano.

42. I pass over the events of the next four or five months.

43. On 14 January 2014, Dewu moved goods stored on an adjacent parcel of land onto the site. Those goods comprised, among other things, bathroom vanity units, lavatory sets and the like. There was discussion between Ms Ye and Mr Fabiano about this. Mr Fabiano says that in acting the way Ms Ye did, Dewu retook possession of the site or interfered with his right to exclusive occupation, so as to bring about deemed practical completion.

44. I should note that in her affidavit Ms Ye denied that any goods were moved from the neighbouring land onto the site. However, in cross-examination, she agreed that she did move some goods onto the site. That is one of the aspects of her evidence that has given rise to the concern I mentioned earlier.

45. At about the same time, the formwork contractors whose formwork had been languishing on the site since work was suspended seven months ago sought Ms Ye's permission to enter the site and take back their materials. She told them that they should speak to Mr Fabiano. Nonetheless, she told them also that they should not proceed with pouring any concrete, because it might cover up evidence needed for the purposes of the dispute between Dewu and Mr Fabiano.

46. On 8 February 2014, Dewu served its own notice of dispute. On 3 March 2014, it served a notice of intention to terminate. On 16 April 2014, it served a notice of termination.

47. Although there is some dispute as to precisely how the contract came to an end, it is clear that within a few months of April 2014, the parties accepted that it had. In the District Court proceedings to which I have referred, both sides made that point to the Court.

48. On 21 November 2014, Mr Fabiano filed his defence and cross-claim in these proceedings. By his defence, Mr Fabiano elected to terminate the contract, for what he said was Dewu's repudiation, if he had not already done so.

First and second issues: terms of the contracts

70. The starting point is, as I have said, that the parties signed a formal written contract by which, in the absence of any vitiating matter, they must be taken to have agreed to be bound to the terms stated in that contract.

71. The particulars of the contract originally specified FCPL as the builder and were amended to specify Mr Fabiano as the builder. They describe the contract drawings as comprising some architectural drawings and some engineering drawings. It is unclear who prepared the architectural drawings. The engineering drawings were prepared by MBC Engineering Pty Ltd.

72. The contract price was $1,250,000 inclusive of GST.

73. The second schedule to the contract provided for payment of a deposit of $62,500, for establishment costs of $52,000 and for payments "fortnightly for works completed to date".

74. As I have noted, the third schedule referred to the quotation. For the reasons I have given, I conclude that the quotation functioned as a specification as well as a price estimate, and that it formed part of the contract by which the parties were bound. That has significance in relation to a particular defect.

75. The drawings were specified in some detail. Nothing in particular turns on them.

76. The fourth schedule, dealing with special conditions, referred to the two "attached" schedules to which I have referred. Again for the reasons I have given, I conclude that those schedules formed part of the contract. It is significant to note that they were introduced by way of "special condition": in the words of the contract, conditions that could be described as follows:

If the parties have any terms they wish to add, they should be detailed here as a special condition.

77. The parties did indeed designate the two as "special conditions".

78. Clause 4 of the general conditions dealt with discrepancies and ambiguities. It provided that any discrepancy or ambiguity in the contract documents should be resolved following a stated order of precedence. That ranking was the contract and attached conditions including special conditions; quotations if attached or referred to; larger scale drawings; other drawings; and then the specification itself.

79. There was a requirement for notice as to how any discrepancy or ambiguity should be resolved, and provision for the owner to give instructions. In the event, where there was a suggested ambiguity, those provisions were not followed through.

80. Clause 8(a) dealt with possession of the site. I set it out:

8.   Possession of the Site, Access, and Site Meetings

(a)   (i)   The Builder is to have exclusive and uninterrupted possession of and access to the site for the performance of work. The possession to be given to the Builder includes access to other parts of the property necessary to enable the Builder to carry out work.

(ii)   If access is required to any other property in order for the works to be carried out it will be the responsibility of the Owner to do or authorise any actions necessary to gain such access.

81. Clause 20 dealt with payment. I set out subparas (a) to (d)(i):

20.   Payment

(a)   The Contract price or sum is to be paid to the Builder in accordance with Item 5 of Schedule 2.

(b)   A progress payment claim by the Builder is to show:

(i)   the value of the contract work performed at the date of the claim;

(ii)   the value and brief description of any variations which are included in the claim;

(iii)   other adjustments under the provisions of the Contract;

(iv)   the amount previously paid by the Owner, other than a deposit. (Refer to clause 18);

(v)   the amount claimed by the Builder being the difference BETWEEN the total of paragraphs (i), (ii) and (iii) AND paragraph (iv); and

(vi)   the proper GST charge relevant to the works to which the claim relates.

(c)   The Owner must pay the amount of the progress payment claim to the Builder within the period stated in point (c) Item 5 of Schedule 2. If no period is stated the payment must be made, within five (5) days of the date the claim was submitted to the Owner.

How to determine if a stage has been reached?

(d)   (i)    A stage or aspect of the works to be treated as reached, and therefore enabling a payment claim to be made, when it is complete except for minor omissions, incompleteness or defects which do not prevent the works from progressing. The value of work omitted, incomplete, or defective, should not be claimed by the Builder.

82. Clause 21 dealt with suspension of work. I set out subparas (a), (b):

21.   Suspension of Work

(a)   Should the Owner fail to:-

(i)   pay or cause to be paid any payment or any part thereof including an amount for GST within the time required by Item 5 of Schedule 2;

(ii)   confirm in writing instructions regarding an Owner requested or required variation to the works;

(iii)   provide written instructions in a manner and time so as to reasonably avoid delay to the progress of works; or

(iv)   provide evidence of their capacity to pay the balance of the Contract Sum satisfactory to the Builder as required by Clause 2(b) within five (5) days of the Builders [sic] request;

then the Builder may, without prejudice to his right to

determine this Contract, suspend the works.

Suspension pursuant to this clause will act as a bar to any claim for damages, compensation or offset by the Owner against the Builder which relates to the period of suspension or consequences of such suspension.

(b)   The Builder is to give notice in writing of any suspension under this clause to the Owner.

83. Clause 22 dealt with practical completion. Paragraph (f) is relevant. It provides (with its preceding heading):

22.   Practical Completion

Occupation or use will amount to Practical Completion

(f)   (i)   Should the Owner or any tenant or their employees or agents take possession of the works or any part of the works without the written agreement of the Builder, the date of Practical Completion will be the date possession is taken, unless Practical Completion has already been reached.

(ii)   without limiting the generality of this clause possession being taken will be established by any or all of such things as placement of furniture, use of any part of works, denial of access of the Builder to the works or work site or action by the Owner or their agent which prevents the Builder undertaking work.

84. 84    Clause 23 dealt with payment on practical completion. I set it out:

23.   Payment on Practical Completion

(a)   When Practical Completion is achieved, the Builder is entitled to and must receive the unpaid balance of the Contract price or sum together with any other monies which are payable in connection with this Contract.

(b)   The amount due under this Clause must be paid to the Builder within two (2) days of a written request for payment due because practical completion has been reached. This request is to give brief, accurate particulars of the claim.

(c)   Should the Builder not receive from the Owner any payment or part of any payment on Practical Completion by the due date the Builder is entitled to interest at the rate specified in Item 5 (d) of Schedule 2. If it is left blank then 12% pa will apply.

(d)   The Owner is not entitled to take possession of the works nor receive the keys and any certificates until payment to the Builder of all monies due under this Contract has been made.

(e)   The Builder, at the Owner’s cost is entitled to and required to take all actions to secure the property so as to prevent entry, other than by normal means, prior to final payment being made.

85. There was some dispute as to the requirements of cl 30, dealing with service of notices. Accordingly, I set it out:

30.   Service of Notices – parties need to confirm delivery

All notices (and other documents) will be deemed to have been given, received or served:-

(a)   if delivered to the other party at the relevant address in the Contract or the address last communicated in writing to the person giving the notice;

(b)   and will be effected on the earliest date of:-

(i)   actual receipt; or

(ii)   confirmation of actual and correct transmission of a fax dealing with the matter.

(c)   However a notice or other document which under the contract requires service can not be given, received or served by mail or e-mail unless service as per (b) above is impossible. This is done to ensure that the parties actually receive the notice and or documents.

86. Of the definitions, it is really necessary to refer only to the definition of "work" and related terms:

“Work”, “works” or “work under the contract” means the work that the Builder is required to carry out and complete under the contract. It includes variations, rectification, and the provision of materials required to be supplied by the Builder.

87. Features of the quotation which were relevant included some of its provisions relating to backfilling, waterproof membranes and hydraulics. I set out those aspects of the quotation.

Backfilling

Backfill behind basement retaining walls, using on site fill materials.

…

Waterproof membranes

Paint on bitumen membrane to behind basement retaining walls

…

Hydraulics

…

Agg lines & blue metal behind basement retaining walls

88. It is not necessary to go to the detail of the "preliminaries and labours" document, except to note that it effectively repeats the requirements of the quotation relating to backfilling and waterproof membranes. It does not appear to repeat in terms the requirements of the hydraulics specification as to "agg lines and blue metal".

89. The schedule of payment set out in a number of classifications the stages of the work, what was comprised in them, the dates by which they were to be completed, the amounts payable, and the dates on which those payments would be made. Of present relevance, the first three items of work, or aggregations of items of work, were site preparation, foundations and ground floor works. As it happens, the invoices that were sent related to site preparation and foundations only.

90. The pattern of that schedule of payments was repeated in the amended schedule of payments. However, the amounts were varied very slightly, and the dates were changed to reflect the fact that some months had elapsed since the earlier document was prepared.

91. Objectively, it is clear that the parties intended all those documents (leaving aside for the moment the amended schedule of payment) to form part of the contract, and to bind them. Subjectively (if it matters), it is clear that Mr She understood this.

92. Dewu relied on evidence from Mr Sun that these documents – specifically, the schedule of payments – were prepared not to be part of the contract but to meet some requirements of the Commonwealth Bank. In circumstances where there is no claim for relief based on that evidence, his evidence in this respect goes nowhere of relevance. It is not said, for example, that as a result of the asserted representations, Dewu is entitled to relief in the nature of rescission or rectification, or statutory variation, of the contract.

93. In any event, I do not accept this aspect of Mr Sun's evidence. Mr Fabiano and Ms Yih deny the substance of the conversation as alleged by him. For the reasons that I have given, I prefer their evidence. I find that the representations said to have been made by Mr Sun were not in fact made. In reaching this conclusion, I note that Ms Guo was said to have been present at the relevant discussions but was not called as a witness.

94. There is no dispute as to the novation of the contract. There is no suggestion of any attempt to renegotiate its terms. Hence, what was novated was the whole of the contract. On my findings, that includes the quotation and the two schedules to which I have referred.

95. I turn to the question of the amended schedule of payment. There is no evidence that Dewu expressly, either in writing or orally, accepted the terms of the amended schedule. Mr Fabiano agreed that there had been no such express acceptance. However, in my view, there has been acceptance by conduct of its terms.

96. As I have noted, the tax invoices that Mr Fabiano set out (wrongly in the name of FCPL) were referable specifically to the amended detail contained in the amended schedule of payment. They were paid in circumstances where it cannot be doubted that Dewu knew of the existence of the amended schedule, and knew that Mr Fabiano was relying on it. In my view, the proper conclusion is that the payments made were referenced to, and constituted an acceptance of, the terms of, the amended schedule of payment.

97. Were it necessary to do so, I would conclude in the alternative that in those circumstances, Dewu in any event is estopped from disputing that it has accepted the terms of that amended schedule.

98. Accordingly I find that the second contract – the contract made in March 2013 by novation from FCPL to Mr Fabiano – did include the terms of the written agreement made on 20 January 2013 (there is no doubt about this). I find, further, that it included the terms of the quotation and the two schedules referred to in the first contract.

99. Finally, in this context, I find that after the second contract was made, the parties agreed to the terms of the amended schedule of payments document.

Third issue: breach by non-payment

100. As I have noted, the stages of the work set out in the amended schedule of payment did not differ in any significant way (except for some dollars and for the updated dates) from the detail in the original schedule.

101. The first two payments to be made were the deposit of $62,500 and the set-up costs. They were paid.

102. The next amount to be paid was $126,166.67 for the first group of works: site preparation. Mr Fabiano carried out what he said were the necessary works. He sent tax invoices for the payments, although by mistake in the name of FCPL and for some other reason not containing the detail required by cl 20(b) of the contract. The invoices were, ultimately, paid.

103. The next stage of the works related to the foundations. Again, Mr Fabiano carried out those works, with an exception in relation to backfilling on the western and eastern sides of the development. The fact that that backfilling had not been completed did not prevent works from progressing by the pouring of the ground level concrete slabs. The backfilling was not completed because, according to the drawings, the on-site drainage tanks were to be installed on the western and eastern sides of the project. Obviously enough, the backfilling could not be completed until those tanks had been installed.

104. Mr Forrest eventually conceded that, so far as his inspections revealed, there was no defect in the backfilling on the southern and northern sides of the walls.

105. Accordingly, in my view, Mr Fabiano completed the work that entitled him to the second payment, in the total sum of $277,566.67. Again, as I have noted, he sent invoices for the two components of that claim, and was paid as to one, and as to about half of the other.

106. For the reasons that I give when dealing with the question of defective work, I conclude that there were no significant defects in the work done to this stage by Mr Fabiano that would have disentitled him to be paid. In the language of cl 20(d)(i), I conclude that, if there were any defects or omissions, they were minor and did not prevent the works from progressing.

107. Accordingly, in my view, Mr Fabiano has made good his entitlement to be paid for site preparation and foundation works.

108. I have set out earlier in these reasons the details of the tax invoices provided and the payments made. As I said, there is a shortfall of about $68,788. In my view, unless there were some defect in the form of the invoices which disentitled Mr Fabiano to be paid, Dewu's failure to pay that sum was a breach that entitled Mr Fabiano to give notice of suspension.

109. Dewu submitted that unless tax invoices were provided by Mr Fabiano in accordance with cl 20(b) of the contract, it was not obliged to pay the amount of any progress claim. I do not agree.

110. When one looks at cl 20, the obligation to pay the contract price is imposed by subcl (a). Although that subclause is cross-referenced to item 5 of Sch 2, it is clear that the parties intended the schedule of payment to supersede item 5. That is because the schedule of payment is the subject of a "special condition" - something that the parties "wished to add" to the standard terms (as filled out by hand) of the contract. The proper inference is that the schedule of payment introduced by way of a special condition replaces what had been stated in item 5 of Sch 2.

100. Thus, as I have said, cl 20(a) should be taken as cross-referring to the schedule of payment.

101. So construed, the obligation imposed by cl 20(a) is one to pay the contract price in accordance with the requirements of the schedule of payment. That is the actual source of the payment obligation.

102. By contrast, cl 20(b) is a machinery provision, although a very important one. It provides for the matters to be specified in a tax invoice claiming a progress payment. However, there is nothing in the wording of the paragraph that could be taken to suggest that compliance exactly with its terms is a condition precedent to the right to be paid.

103. It is not uncommon to see building contracts, including in standard forms, that do specify in minute detail the requirements to be observed in making a progress claim, and make compliance with those requirements a condition of any entitlement to be paid. In the present case, as I have said, the obligation to pay comes not from such a provision, but from cl 20(a). It is an obligation to pay in accordance with the staged payment requirements of the schedule of payment.

104. The parties no doubt contemplated that Mr Fabiano would invoice Dewu for each payment. They intended that the invoices would comply with the requirements of cl 20(b). The failure to comply with those requirements might give rise to a claim for damages (for example, if it meant that Dewu lost some opportunity that otherwise it could have enjoyed, and that the consequences of that loss were relevantly foreseeable, and not too remote), having regard to the principles set out in Hadley v Baxendale (1854) 156 ER 145. But it is a long way from saying that a progress claim must satisfy certain requirements, to saying that compliance with those requirements is a precondition of any right to be paid.

105. Thus, in my view, there is nothing in the wording of cl 20 that justifies the proposition on which Dewu relied: the proposition that non-compliance entitled it not to pay.

106. In any event, were it necessary to do so, I would conclude that Dewu had waived compliance with the strict requirements of cl 20(b). Waiver was not pleaded. It was, however, raised by Mr Di Francesco of counsel, who appeared for Mr Fabiano, in final submissions. Mr Di Francesco accepted very properly that he had not pleaded this issue in reply. However, Mr Norrie of counsel, for Dewu, stated that his client did not object to its being raised, provided that this was only in the context of the facts that had fallen out in the course of evidence.

107. The question of waiver arises because Mr She gave evidence that he believed at all material times that Mr Fabiano's tax invoices were not in accordance with what the contract required, but that he authorised payment in any event. He said that he did this because he wanted the works to progress, and he did not want Mr Fabiano to stop work.

108. Regardless, the position established on the evidence is that Dewu, through Mr She at least, knew that the invoices did not comply with the terms of the contract. With that knowledge, it paid them. It did so for its own good reasons. In those circumstances, in my view, it has elected not to take advantage of the apparent breach of cl 20(b): that is to say, it has waived its right to stand on cl 20(b) and refuse to pay. See Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570.

109. There was some evidence given by Mr She and Mr Sun that they complained, or that Mr Sun complained, about the form of the invoices. That evidence was not in any way corroborated. It was denied by Mr Fabiano. Other witnesses who could have given evidence on this point, including Ms Ye, Ms Guo and Mr Wu (who was heavily involved in accounting matters) were not called. I am not prepared to accept the evidence over Mr Fabiano's denials.

110. It should perhaps be noted that Mr Qin, the solicitor to whom I have referred, was available at all times to give legal advice to Dewu about its rights under the contract. He was not called to say that he had advised against payment, or indeed that he had given any advice in respect of cl 20.

111. Finally, on this topic, I note that Ms Ye said in cross-examination that all the invoices were translated into the Chinese language, and that the translated versions were given to Mr She. She said, further, that Mr She authorised payments, and that it was only when he did so that the payments were in fact made. I accept that evidence. It is inconsistent with Mr She's evidence that he did not know that one of the invoices referred to the amended schedule of payment. I do not accept that aspect of Mr She's evidence.

112. On either basis (construction or waiver) Dewu cannot use cl 20(b) as a reason for non-payment. It follows that Dewu's failure to pay was a breach of contract that enlivened Mr Fabiano's right to suspend under cl 21.

Fourth issue: validity of the suspension

124. For the reasons given, Mr Fabiano was entitled to give the notice of suspension. There is a remaining question, as to whether he did so in a way that was effective.

125. The notice was given by email from his then solicitor to Mr Sun. Mr Sun denied receipt of it. However, mysteriously, the email to Mr Sun found its way into the hands of Mr Qin, who replied to the notice of suspension. I do not regard that aspect of Mr Sun's evidence as truthful. I take account of the fact that Mr Qin was not called to say that he got the email otherwise than in the obvious way (from Mr Sun). I conclude that the email was sent and received on the date it bears, namely, 17 June 2013.

126. There are other matters in the evidence that support the conclusion that I have just expressed. It is not necessary to burden these reasons by reciting them all.

127. There is an issue as to validity of the mode of service. That issue relies on cl 30. In my view, the clause is (as its opening words clearly indicate) facultative. Where service in fact is proved, as is the case here, there is no need to resort to cl 30. The purpose of the clause is to ensure that notice is "actually received". For the reasons I have given, that purpose was satisfied.

128. I find that the notice of suspension was validly served on 17 June 2013.

129. The notice was clear and unequivocal in its terms. The payment for which it called was never made. Mr Fabiano was never required to resume work.

130. I should not that Mr Norrie put some submissions based on work done by Mr Fabiano after 17 June 2013. That work included procuring Mr Polycarpou to come to site on two occasions (28 and 29 June) to inspect and certify. That was in preparation for the pouring of the ground level slabs.

131. I accept that Mr Fabiano was trying to keep work on schedule, in the expectation that he would be paid and that work could resume. I do not think that his actions (nor his actions in trying to maintain the site, for a while) are sufficient to displace the clear evidence as to service of the notice of suspension.

Fifth issue: defects and their rectification

132. Mr Forrest's report of 12 August 2013 identified what he said were some 16 defects in, or concerns with, the work as it then stood. It referred also to what Mr Forrest said were "agreements reached during [the] site meeting". Mr Fabiano and Mr Polycarpou do not agree to the full extent of the "agreements" asserted by Mr Forrest. Where the evidence differs, I prefer theirs to that of Mr Forrest.

133. I find in very broad terms that Mr Forrest very greatly overstated both the nature and the extent of the defects and of the agreements that he said were reached in respect of them.

134. The first matter noted by Mr Forrest was that structural engineering certificates should be provided. In fact, as Mr Forrest and Mr Brincat agreed, Mr Fabiano had done that (the certificates given by Mr Polycarpou) by 29 June 2013. If this is to be regarded as a defect (and I accept that Mr Forrest may have been suggesting no more than that it was something required and agreed to be done), nothing turns on it.

135. The next item relates to certificates for the steel reinforcement for certain slabs. Again, it is agreed that Mr Fabiano obtained the relevant certificates at the time. Thus, there was nothing required as at August 2013.

136. It may be that if works were now to resume, fresh certificates would be required. If that proves to be the case, it is, in my view, a consequence of Dewu's failure to protect its own position. On the conclusion to which I have come, the suspension of works by Mr Fabiano was valid right up until the contract came to an end, whenever it did. Accordingly, as cl 21 itself provides, he has no liability for whatever may have happened over the course of that suspension. I should note that this applies also to the second aspect of Dewu's claim, relating to what Mr Forrest described as the "regression" in the works on site between August 2013 and the present time.

137. The third defect, or matter, noted by Mr Forrest was the requirement for a principal certifying authority to certify certain matters. He and Mr Brincat agreed that it was a matter for Dewu, not for Mr Fabiano. That must be right: under the Environmental Planning and Assessment Act 1979 (NSW), it is the owner/applicant for development approval who is required to obtain certification, not the builder, even though the builder commonly arranges for the certifier to attend.

138. The fourth item noted by Mr Forrest is of some significance. I set it out:

4.   Additional SL82 fabric will be placed to the bottom of the slab-on-ground area to the southern section of the rear Block. This additional reinforcement is to compensate for inferior compaction of the fill material in this area.

139. "SL 82 fabric" is steel reinforcement mesh. The basis on which Mr Forrest said that SL 82 was required was that he thought the fill in the area in question had not been properly placed or compacted. Thus, he thought, there was a risk of movement, and the SL 82 mesh was required to control this.

140. In my view, this aspect of Mr Forrest's evidence cannot be accepted. He did not undertake any investigation of the ground conditions directly underneath where the slab was to be poured. Instead, he relied on a test hole dug adjacent to a pier, which was not underneath the area that, Mr Forrest said, needed to be reinforced.

141. Mr Forrest agreed that it would have been an easy matter to drill into the fill area to see if it was defective. He did not do so.

142. Mr Brincat gave evidence of how, as a matter of construction practice, there could be topsoil within the fill adjacent to the area of the slab, but not under the slab itself. Mr Fabiano said, in substance, that the construction method described by Mr Brincat was correct. Mr Fabiano said, further, that the site had been levelled and graded before he started work, and that his obligation was to construct on it what was shown by the drawings. He is undoubtedly correct in this last point. The drawings did not provide for the SL 82 mesh in the particular slabs.

143. Mr Forrest's hypothesis is inconsistent with the evidence to which I have referred. It is also inconsistent with Mr Polycarpou's certificates. It was not put to Mr Polycarpou that his certificates were other than correct. Nor was he questioned about his observations that led them.

144. In my view, Dewu has failed to make good this aspect of its claim. It has not shown that there is any need to depart from the drawings by installing the mesh in the area in question. Far less has it shown that any such hypothetical need is the result of works done or not done by Mr Fabiano.

145. Were it necessary to price the cost of doing it, I would prefer Mr Brincat's assessment of cost to that given by Dewu's expert, Mr Lau. Mr Lau's estimate appeared to me to overcomplicate the exercise to a very significant degree, and also not to take account of Dewu's obvious failure to maintain the site over the period between August 2013 and the present time.

146. The fifth matter noted by Mr Forrest relates to rubbish in the cavities of the blockwork. It is common ground that, as a matter of ordinary building practice, the blockwork would have been blasted (by compressed air or water) and cleaned out before the slab was poured. This is not a defect. It is simply work that was not required to be performed until the slab was ready to have been poured, and hence was not required to have been performed at the time when Mr Forrest carried out his first inspection.

147. The sixth item relates to the plastic below the steel reinforcing in certain areas. The experts agree that ordinary building practice was that the plastic would be straightened out immediately before the pour. Mr Fabiano, I think, agreed with this. Again, it is not a defect, but merely something to be attended to when the slab is poured.

148. The seventh item relates to an area between the front and rear blocks of the development. That is an area that was backfilled. This reinforcement is not called for by the drawings. It is necessary only if the fill underneath this particular slab had not been properly constructed and compacted.

149. For the reasons I have given in dealing with the fourth item, Dewu has failed to make good this aspect of its claim.

150. The eighth asserted defect relates to a flexible component to be placed between a slab (to be poured) and blockwork that has been constructed already. Everyone agrees that Abelflex, or some such material, should be installed between the slab and the blockwork wall. Everyone agrees that it can be done either before the pour or after one of the two slabs has been poured. It is a matter for the builder (Mr Fabiano) as to when this should be done. Again, it is merely something that had not been required as at the date of the first inspection, and something that no doubt would have been done at an appropriate time when the slabs were poured.

151. The ninth item referred to by Mr Forrest is the construction of piers at the northern end of some "buttresses" which constitute dividing walls between adjacent townhouses. It is clear that the engineering drawings required piercing beneath these structures. It is equally clear that the work proposed by Mr Forrest was not what was called for by the drawings but something far more significant. I have referred to this briefly already. In my view, his evidence on this – in particular, what I saw as his ever less rational attempts to maintain his position – was a clear example of his acting as an advocate rather than as an independent expert.

152. At the time Mr Forrest first inspected the site, on 1 August 2013, there was no call for this work to have been done. It was then future work that would have been done when the buttress walls, or dividing walls, were constructed. It therefore cannot be regarded as a defect in the works at the date of the inspection.

153. The tenth item relates to backfill to the perimeter of the basement. The ultimate question is whether the perimeter trench which was to be backfilled should have been filled with granular material, or whether it was permissible to fill it with material taken from elsewhere on site. The engineering drawings appeared to provide for the backfilling to be done by means of some granular material, with an “ag drain” in granular material at the foot of the fill. However, as I have said, the quotation (which ranks above the drawings in the order of precedence) entitled Mr Fabiano to use on-site fill. It did provide for an “agg drain” with granular material at the base of the fill. In my view, this is not a defect at all.

154. Mr Forrest referred to the need for a waterproof membrane between the fill and the wall. Undoubtedly, that was required. However, again, the quotation (and the preliminaries and labour document) authorised the use of a bituminous membrane. That was what Mr Fabiano had done.

155. To the extent that the filling was completed, there is no acceptable evidence to support the proposition that it was compacted inappropriately. To the extent that it was not completed (on the western and eastern walls), that is the result, as I have said, of the need to provide for installation of the on-site drainage tanks in due course.

156. I find that this is not in any way defective work. It is, instead, work in accordance with the contract.

157. Were it necessary to value this work item,, I would prefer Mr Brincat's assessment. Mr Lau's assessment is grossly exaggerated by his mistaken assumption that the material to be dug out has to be disposed of off-site. Mr Brincat allowed, in my view correctly, for on-site disposal.

158. In addition, Mr Brincat gave evidence from his practical experience of the kind of machine that could do the work and the rate at which it could work. Mr Lau, in my view, was not equipped by training or experience to meet that evidence, and I do not accept his attempt to do so.

159. The 11th item relates to certification of the waterproofing membrane. That only applies if there is a need to dig out the fill material. Since there is not, it cannot be a defect.

160. The 12th item relates to a concrete slab between the front and rear blocks. That was not part of the original works. Mr Forrest said that the slab should be profiled so as to prevent flooding. The experts agree that this was something that could and should be done when the concrete is poured. It is not a defect. It is an item of future work. Doing it is part of the cost of pouring the slab. There is no amount of damage proved.

161. The 13th item relates to some blockwork that is required to support the stairs adjacent to a suspended slab. The strip footings have been extended to accommodate the blockwork. Again, as Messrs Forrest and Brincat agree, this is future work. Messrs Lau and Brincat agree that there is no cost to be allowed by way of damages for it.

162. The 14th item in Mr Forrest's schedule relates to engineering certification of the works when completed. Because those works were future works, it is obvious that the certification could only be done once the works were undertaken. There is a question as to whether this was an obligation on the part of Mr Fabiano, or on the part of Dewu. Either way, being future work, it could not be a defect.

163. The 15th item relates to brickwork beneath an edge of the ground slab. Again, that is only something that can be done once the slab is poured and the formwork is removed. Again, as everyone agrees, it is future work. Again, as everyone agrees, the cost of doing it is not an item of damages.

164. Exactly the same may be said of the 16th item, which relates to additional brickwork support for two edges of the slab in a particular point.

165. As I have said, there is in my view no acceptable evidence of any defect in the works, let alone any defect of a sufficient nature either to entitle Dewu not to pay or to sound in damages.

166. I add that if and to the extent that there were some defect that did require costing, then, as I have indicated, I would prefer Mr Brincat's costings to those of Mr Lau. Since this is entirely hypothetical, there does not seem to be any reason to indicate in any more detail than I have given why I have come to this view.

167. Finally, in relation to this issue, I note that because Mr Fabiano had validly suspended work at the time of the inspection, Dewu had no contractual right to call upon him to rectify any defective work, nor had he any contractual obligation to do so.

Sixth issue: deemed practical completion

168. There was a significant dispute in the evidence as to this issue. However, as I have indicated, the evidence of Ms Ye, which is the best evidence from Dewu's point of view, changed radically in the course of her cross-examination. As a result, it is no longer in doubt that Dewu did indeed move goods from the adjacent land onto the site in January 2014. There is no doubt that it placed the goods in the corner of the site. There is no doubt that they remained there at least until the contract came to an end.

169. The question is really whether those acts of Dewu are a sufficient denial of Mr Fabiano's right of exclusive and uninterrupted possession so as to trigger cl 22(f) of the contract. Resolution of that question depends on the effect of placement of the goods where they were placed.

168. Mr Forrest sought to explain away the effect of placement of the goods. His evidence on this point became increasingly hypothetical, and increasingly argumentative, as it progressed. Again, in my view, in giving this aspect of his evidence, Mr Forrest was acting more as an advocate than as an expert.

169. To my mind, the evidence clearly establishes that the placing of the goods where they were placed would have had a significant impact on Mr Fabiano's ability to complete the works if (contrary to what happened) he were called upon to do so. To my mind, looking at the evidence overall, the better view is that the materials were placed in such a position that they would have prevented Mr Fabiano from completing drainage works at the rear of the site, from completing a retaining wall at the rear of the site, and from moving building materials, including blocks, around the site to the rear of the rear (northern) townhouses. Their placement would also, in my view, interfere in a significant way with the placement of scaffolding.

170. Accordingly, I find that in a real and practical and not just notional sense, Dewu's actions in moving goods onto the site in January 2014 did interfere with Mr Fabiano's rights under cl 8(a)(i) of the contract. I find, in the circumstances proved, that Dewu did, in a real and practical and not just notional sense, take possession of a part of the site, within the meaning of cl 22(f)(i) of the contract. In those circumstances, I find, in a real and not just notional sense, Dewu did act in a way that would have impeded Mr Fabiano's work (but for the suspension) and would have prevented him from carrying out work in the area where the goods were dumped.

171. In those circumstances, I find that cl 22(f) has been engaged, and that practical completion is deemed to have occurred no later than the end of January 2014.

172. Whenever deemed practical completion occurred, it occurred well before purported termination of the contract.

Seventh issue: validity of the purported terminations

175. It follows from what I have said, and I find, that:

1. Dewu had no right to terminate the contract as it purported to do on 16 April 2014;

2. by, at the latest, 21 November 2014, Mr Fabiano treated that purported termination as a repudiation, and relied on it as discharging the contract and bringing it to an end; and

3. in those circumstances, Mr Fabiano has validly terminated the contract.

Eighth issue: Dewu’s claim for damages

176. On the view to which I have come, this does not arise. However, I should deal with it briefly in case others come to a different view.

177. Dewu's primary claim is that the works done must be demolished and reconstructed. It says that Dewu is not required to attempt works of rectification. If that is the appropriate way to proceed then it is entirely the consequence of Dewu's failure to protect the works whilst work under the contract remained validly suspended. It is common ground that Dewu took effectively no steps whatsoever to protect the works or its own interests.

178. In any event, I am simply not satisfied that rectification is impossible or substantially impracticable. In this respect, I prefer the evidence of Mr Brincat to that of Mr Forrest.

179. It follows that Dewu has not, in my view, made good its claim to wasted construction costs or demolition costs.

180. If the matter is looked at in another way (cost of rectification), the simple fact is that the first 16 items of so-called defects that Mr Forrest identified do not sound in damages, for the reasons I have given.

181. Mr Forrest identified a further six defects arising from what he called regression of the site. I have no doubt that there has been such "regression". However, for the reasons I have given, that is entirely the consequence of Dewu's failure to protect the site and its own interest.

182. I repeat that in any event, to the extent that regression has occurred as a result of matters that happened after 17 June 2013, the effect of cl 22(f)(i) of the contract is that Mr Fabiano can have no liability for that regression.

183. Dewu claimed other losses including what it said were wasted overheads and lost real estate agents' commission fees.

184. As to the wasted overheads, the evidence is entirely unsatisfactory. Mr She simply pointed to bank statements that, he said, included entries that were referable to the business. Many of those – perhaps the bulk – relate to rental for a property from which, he said, the business of Dewu was conducted. That property was also the address where Ms Ye lived. In the circumstances, it is very difficult to see why the whole of the rental cost could be allowed as a business expense. It is hard to see how the rental could be said to have been wasted, given that Ms Ye, in any event, derived the benefit of occupation.

185. As to the wasted agents’ commissions, no sales were ever completed. Accordingly, on the usual basis, no commissions are payable. If Dewu did pay commissions (or if it did enter into some extraordinary agreement that required it to pay commissions even if the sales fell through), that is a matter for which it alone must bear the responsibility.

Ninth issue: Mr Fabiano’s claim for damages

186. In the events that have happened, cl 23 of the contract provides the starting point. Mr Fabiano is entitled to amounts unpaid under the contract. Those amounts are either non-contentious (in the sense that there is no dispute that he has not been paid certain progress claims), or assessed by Mr Brincat without any dispute. The amount claimed is for unpaid progress claims, unclaimed variations and unclaimed out of pocket expenses. Those claims, allowing for some small amount for defect rectification (which Mr Brincat allowed), total $409,894.

187. It is not entirely clear to me why Mr Brincat allowed the small amount to which I have referred. However, since he did, and since it is no more than $1,320, I will not take up time on this.

188. As I have said, those claims are, prima facie at least, the contractual measure of Mr Fabiano's entitlement on deemed practical completion.

189. Mr Lau purported to value the work that Mr Fabiano had undertaken. He gave a conclusory statement that it was worth about $294,626. That was not an assessment undertaken under the discipline of the Expert Witness Code of Conduct. It is not detailed or reasoned in a way that enables any exploration to be made of the validity of the assessment. More substantially, it ignores the fact that the measure of damages is not some extrinsic or objective (to the extent that Mr Lau could be described as objective) assessment, but, rather, that for which the contract provides.

190. In addition, Mr Fabiano claims his 25% builder’s margin on the work that, but for suspension and termination, he would have done. As a margin figure, that is not in dispute. What he says in substance is that he lost the opportunity to complete the contract, and thus to derive his margin, or profit, on doing so. When one does the sums, it is not contentious, as a matter of arithmetic, that the amount of the margin is $101,868. The question is, is that something to which Mr Fabiano is entitled?

191. In my view, the loss of margin is a direct consequence of termination by acceptance of repudiatory conduct. It is, in other words, the proper measure of damages for loss of the future benefit of the bargain. Thus, in my view, Mr Fabiano is entitled to recover that amount also.

192. On that analysis, the total to which Mr Fabiano is entitled is $511,762. That calculation makes no allowance for interest.

Orders

193. I make the following orders:

1. direct entry of judgment for the defendant on the plaintiff's claim.

2. Direct entry of judgment on the cross-claim for the cross-claimant against the cross defendant in the sum of $511,762 together with interest.

3. Stand the proceedings over to 9.30am on 15 December 2015 with the parties to bring in an agreed or verified calculation of interest and for any argument on costs.

4. Reserve costs.

5. Direct the exhibits be handed out.

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Decision last updated: 16 December 2015