Drossos v Marvel Homes Pty Ltd - [2014] VSC 384

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

JUDICIAL REVIEW AND APPEALS LIST

S CI 2013 6166

SPIROS DROSSOS & MARIANTHI MAKARIOS	Plaintiffs
v
MARVEL HOMES PTY LTD (ACN 122 993 426)	Defendant

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JUDGE:	KAYE J
WHERE HELD:	Melbourne
DATE OF HEARING:	11 August 2014; supplementary written submissions 12, 13 August 2014
DATE OF JUDGMENT:	19 August 2014
CASE MAY BE CITED AS:	Drossos & Makarios v Marvel Homes Pty Ltd
MEDIUM NEUTRAL CITATION:	[2014] VSC 384

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APPEAL – Leave to appeal and appeal from Victorian Civil and Administrative Tribunal.

BUILDING CONTRACT – Effect of application of s 31(2) of Domestic Building Contracts Act 1995 (Vic) – Builder’s right to claim on quantum meruit – Whether owners retained rights to damages for repudiation of ineffective contract to repair fire damage – Whether error of law by Tribunal in assessing damages for wrongful repudiation by owners of contract for extension works.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr R M Manly QC and Mr M Settle	McMahon Fearnley Lawyers
For the Defendant	Mr D Levin QC and Mr D Pumpa	Lily Ong Solicitors

HIS HONOUR:

The plaintiffs, by originating motion, apply for leave to appeal, and, if leave is granted, they appeal, from a decision of a Member of the Victorian Civil and Administrative Tribunal (“the Tribunal”) dated 30 October 2013. By that decision, the Tribunal ordered that the plaintiffs pay to the defendant the sum of $199,191.52, and that the plaintiffs’ counterclaim be dismissed.

By an order dated 17 December 2013, an Associate Justice of the Court directed that the plaintiffs’ application for leave to appeal be heard and determined by the Court which is to hear and determine the appeal, if leave is granted.

Background

The issues before the Tribunal arose out of building works carried out by the defendant for the plaintiffs at their home at Tanner Grove, Northcote.

In March 2009, the plaintiffs’ home suffered substantial fire damage. The plaintiffs’ insurer, Allianz Australia Insurance Ltd (“Alliance”), indemnified them for the cost of rectifying the fire damage in the amount of $122,747.22. At the plaintiffs’ request, Allianz approved the defendant to carry out the rectification works for the plaintiffs. The plaintiffs and the defendant did not enter into a written contract, for the rectification of the fire damage work, in compliance with the Domestic Building Contracts Act 1995 (Vic) (“the Act”). Instead, they relied on an email dated 15 October 2009 from the insurer’s loss adjustor to the plaintiffs and the defendant approving the carrying out of the fire damage repair works by the defendant in the sum of $122,747.22.

As their home was to undergo substantial rectification works, the plaintiffs decided that they would also add an upper storey extension to their home. For that purpose, they engaged the defendant, under a separate building contract dated 11 May 2010, to carry out the extension works for the sum of $295,900.

The defendant commenced the building works, consisting of the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Drossos v Marvel Homes Pty Ltd

Details

AGLC: Drossos and Makarios v Marvel Homes Pty Ltd [2014] VSC 384
Case: [2014] VSC 384
Decision Date: 19 August 2014

CaseChat Overview and Summary

Drossos, the owner of a property, brought a case against Marvel Homes Pty Ltd, the builder, concerning the execution of repair works following a fire. The dispute reached the Court of Appeal after being initially decided by the Victorian Civil and Administrative Tribunal (VCAT). The primary issues revolved around the application of section 31(2) of the Domestic Building Contracts Act 1995 (Vic) and the builder’s right to claim on a quantum meruit. Specifically, the court needed to determine if the owners retained their rights to damages for the repudiation of an ineffective contract to repair the fire damage, and whether there was an error in the Tribunal’s assessment of damages for the wrongful repudiation of a contract for extension works by the owners.

The court examined whether the owners' repudiation of the ineffective repair contract was valid and if they were entitled to damages. The builder argued that the owners' actions amounted to a wrongful repudiation, thereby entitling the builder to claim on a quantum meruit. The court had to interpret section 31(2) of the Act and decide if the builder's rights under that provision were correctly applied by the Tribunal. Furthermore, the court assessed the Tribunal’s reasoning and outcome regarding the damages awarded to the builder for the owners' repudiation of the extension works contract.

The Court of Appeal held that the owners did not retain their rights to damages for repudiation of the ineffective repair contract as the contract was fundamentally flawed and unenforceable. The court found that the builder was entitled to claim on a quantum meruit for the work completed. Additionally, the court determined that there was no error of law in the Tribunal's assessment of damages for the owners' wrongful repudiation of the extension works contract. Consequently, the appeal was dismissed.

Orders