Dunne & Co Building Group Pty Ltd v Lazarev - [2024] VCC 68

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

Case No. CI-21-03959

Dunne & Co Building Group Pty Ltd (ACN 640 807 003)	Plaintiff
v
Matthew Lazarev (ABN 85 464 631 494) t/a On Top Roofing	Defendant

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JUDGE:	Her Honour Judge Kirton
WHERE HELD:	Melbourne
DATE OF HEARING:	18 - 21 September 2023
DATE OF JUDGMENT:	12 February 2024
CASE MAY BE CITED AS:	Dunne & Co Building Group Pty Ltd v Lazarev
MEDIUM NEUTRAL CITATION:	[2024] VCC 68

REASONS FOR JUDGMENT
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Subject:SUPPLY CONTRACT – BUILDING AND CONSTRUCTION
Catchwords: Plumbing subcontract – termination or repudiation – defects – assessment of loss and damage
Cases Cited:Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359; Concut Pty Ltd v Worrell (2000) 75 ALJR 312 [2000] HCA 64; Renard Constructions (ME) Pty Ltd v. Minister for Public Works (1992) 26 NSWLR 234; BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266; Clarendon Homes v Zalega [2010] VCAT 1202; Stone v Chappel [2017] SASCFC 72; Wheeler and Anor v. Ecroplot Pty Ltd [2010] NSWCA 61; Bellgrove v Eldridge [1954] 90 CLR 613; Westpoint Management Ltd. v. Chocolate Factory Apartments Ltd [2007] NSWCA 253; Hyder Consulting (Australia) P/L v Wilh Wilhelmsen Agency P/L & Anor [2001] NSWCA 313

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	F Brimfield (of counsel)	Johnston Construction Lawyers
For the Defendant	S Smith (solicitor advocate)	S Smith and Associates Construction and Commercial Lawyers

HER HONOUR:

BACKGROUND

The plaintiff builder, Dunne & Co Building Group Pty Ltd (“the plaintiff"), was engaged to build a residential dwelling house on a rural property in Lancefield in Victoria (“the property”).
In early to mid-May 2021, the plaintiff entered into a subcontract (“the contract”) with the defendant plumber, Mr Lazarev (“the defendant”), for the supply and installation of roof plumbing and wall cladding works at the property (“the works”).
The dwelling was a single-story, multi-gabled residential house, designed by an architect. The plans were provided to the plaintiff by the owners of the property, who were living on-site during construction.
The roof and the wall cladding of the property were specified to be Colourbond corrugated iron sheets. Due to the design of the house, there were thirty-two walls to be clad.
It was agreed between the parties that from early or mid-May 2021 until July 2021, the defendant undertook the works.
There was no dispute that on 7 July 2021, the plaintiff provided the defendant with a written list of alleged defects in the works and photographs showing examples of the defects. The defendant alleged that he rectified defects between 14 July 2021 to about 23 July 2021, but the plaintiff maintained that after the rectification, the works were still defective and incomplete.

On 26 July 2021, the plaintiff’s solicitors sent a letter to the defendant terminating the contract. The works were inspected by an independent inspector engaged by the plaintiff, Mr Hashem Eshlan of Melbourne Roofing Inspections on 5 August 2021, and by the appointed Building Surveyor, Mr Ben Wilby on 6 August 2021.
Following Mr Wilby’s inspection, he issued the plaintiff with a “Written Direction to Fix Building Works,” [1] under Division 2 Part 4 of the Building Act 1993 in respect of the roof plumbing and wall cladding (“the Direction to Fix”).
[1] Exhibit P7, CB470.
On 12 August 2021, the plaintiff engaged a rectifying contractor, Mr Jason McIntyre of Flat Stick Roofing, to undertake rectification of the defendant’s works. Mr McIntyre’s evidence was that he was not prepared to fix the defendant’s work, and that if he were engaged to rectify and complete the work, he would only do so by removing and replacing the existing roofing, cladding sheets and the flashings. The plaintiff agreed to that scope of work and Flat Stick Roofing completed its works between September 2021 and April 2022.
By way of a separate claim against the defendant’s insurer, the plaintiff has recovered the sum of $50,000.00 in respect of the roof plumbing works only.[2] The defendant’s insurance did not extend to the wall cladding.
[2] The specific items of roof plumbing covered by the insurance payment are listed in the release prepared
by QBE and signed by the plaintiff dated 26 April 2022 (“the Release): Exhibit D7, Courtbook (“CB”) 511-512.
The plaintiff commenced this proceeding to recover the amount paid to the rectifying contractor for the balance of its works (i.e. the non-roof works), particularly the installation of flashings and the replacement of the wall cladding.[3] While the plaintiff does not make a claim for damages in respect of the roof plumbing component of the defendant’s works, they are nevertheless relevant to some of the matters in dispute; specifically, the contract price and the grounds for termination of the contract.
[3] Clause 2 of the Release provides that the plaintiff releases the defendant from any further claims in
respect of the roof plumbing works listed in the Release: Exhibit D7, CB511-512.
The defendant counterclaimed for $20,000.00, being the unpaid balance of the contract sum, less the amount for incomplete works. It is agreed between the parties that the final flashing and cladding of a gable wall, estimated by the defendant to be worth approximately $5,000.00 in labour, was not completed.
ISSUES
Prior to the hearing, the parties helpfully filed a list of questions to be determined, together with an agreed chronology. The issues for consideration and the parties’ respective positions can be summarised as follows:
A. What was the Contract Price?
It is the plaintiff’s position that the contract price was $88,500.00. The defendant’s position is that it was $95,000.00.
B. Termination
i.How was the contract terminated?
The plaintiff’s position is that the defendant repudiated the contract and the plaintiff accepted this repudiation by a letter from their solicitor to the defendant dated 26 July 2021, which terminated the contract.
The defendant maintains that the letter from the plaintiff’s solicitor constituted a repudiation of the contract by the plaintiff, which he was forced to accept when following the date of this letter he was denied any further access to the property.
ii.Was the contract improperly terminated?
The plaintiff claims that it was entitled to terminate the contract because the defendant had repudiated the contract by the following conduct:
(a)the defendant had breached an essential term of the contract by providing work that was of poor or substandard quality;
(b)the defendant had breached an essential term of the contract by refusing, or failing to provide the necessary compliance certificate regarding the plumbing works;
(c)the defendant had been given notice of, and opportunity to, remedy the defects that existed in the contracted works. The defendant failed to rectify the defects to the requisite standard;
(d)further to (c) above, there was no implied term in the contract which said that before the plaintiff was entitled to terminate the contract, it must give the defendant:
(i)formal notice and details of any breach; and
(ii)a reasonable opportunity to address and rectify any defects or incomplete works.
(e)Further to (a) above, subsequent to the termination, the relevant building surveyor issued the plaintiff with a written Direction to Fix the works. This direction listed a number of significant defects with the roof plumbing and wall cladding.
The defendant contends that the contract was improperly terminated by the plaintiff because:
(a)at the time of termination there was no serious breach of the contract by the defendant; and
(b)there was an implied term of the contract which meant that if there were defective works, the plaintiff had an obligation to specifically identify the defects and allow the defendant a reasonable opportunity to remedy the same before they terminated the contract. The plaintiff breached this implied term by not giving the defendant formal notice of any remaining defects after 23 July 2021 and by denying the defendant access to the property to complete incomplete works.
C. Plaintiff’s claim for damages
It is the plaintiff’s position that following termination, they were entitled to have the defects in the works remedied by a third-party. The costs of this rectification form part of the loss and damage claimed by the plaintiff.
The plaintiff further contends that the method of rectification, being removal and replacement, was reasonable for the following reasons:
(a)even after the defendant had attempted to rectify the defects, the standard of work was such that it required replacement;
(b)the plaintiff was under significant pressure from the owners of the property who were demanding a full replacement of the defendant’s works;
(c)the rectifying contractor undertook to rectify the contracted works through replacement only and was not willing to rectify by any other means; and
(d)the plaintiff was obliged to comply with the written Direction to Fix issued by the building surveyor or face a penalty.[4] The rectifying contractor was able to begin the works when needed by the plaintiff.
[4] Exhibit P7, CB470 - 473.
It is the position of the defendant that any loss or damage suffered by the plaintiff is the result of:
(a)the commission of excessive rectification works. The plaintiff chose the rectification method of removal and replacement which was neither necessary nor a reasonable response to the state of the works following the termination of the contract;
(b)the plaintiff failed to properly manage or supervise the carrying out of the works carried out by the defendant. I note here that the defendant ultimately led no evidence as to what a “proper” level of management and supervision should be, and made no submissions on this defence, so I have proceeded on the basis that this position was not pressed; and
(c)the costs of the rectifying contractor are not reasonable.
D. Defendant's counterclaim
The defendant’s counterclaim is the balance of the contract price, which he says is $20,000.00. He submits that this amount was wrongfully withheld by the plaintiff in breach of the contract.
Further and alternatively, the defendant claims that the plaintiff has been unjustly enriched by the failure to pay the amount owing under the contract, while utilising the materials which were supplied by the defendant and receiving the benefit of the defendant’s labour. I note here that while this was a question posed before the hearing started, the defendant gave no evidence and made no submissions on this point. Accordingly I will proceed on the basis that this position was not pressed.
THE WITNESSES
The plaintiff called the following witnesses to give evidence:
(a)Mr Ian Johnson of Building and Engineering Consultants, Building Consultant, who prepared two written reports dated 8 December 2022 and 17 July 2023;
(b)Mr Hashem Eshlan, Director of Melbourne Roofing Inspections, Licenced Roof Plumber, who prepared two written reports dated 8 May 2021 and 29 March 2022;
(c)Mr Jason McIntyre of Flat Stick Roofing, rectifying contractor;
(d)Ms Jane Lamb, Building Designer, engaged by the owners of the property to design the kitchen and cabinetry;
(e)Mr Benjamin Wilby, Registered Building Surveyor;
(f)Ms Samantha Dunne , Company Administrator of the plaintiff; and
(g)Mr Tyrell Dunne, Director of the plaintiff.
The defendant called the following witnesses to give evidence:
(a)Mr Robert Quick of QP Consulting, Licenced Plumber and Building Consultant, who prepared two written reports dated 8 March 2023 and 1 September 2023;
(b)Mr Tyler Barnes, Plumber, apprentice to the defendant; and
(c)The defendant, Mr Matthew Lazarev of On Top Roofing, Licenced Plumber.
Mr Ian Johnson and Mr Robert Quick
Mr Johnson and Mr Quick were called as expert witnesses. Both are well-known and well-respected, and no challenge was made to their qualifications or expertise.
Although a significant portion of the hearing was spent hearing the evidence of Mr Johnson and Mr Quick, much it was of only limited assistance to the Court. Neither expert had seen the property before the roof and wall cladding had been replaced. Both were providing their opinions based on photographs and instructions they had been provided with. Both agreed that some of the photographs were of poor quality and this made it difficult to assess the quality of workmanship. There were discrepancies about the locations some of the photographs were taken, and whether the areas were duplicated.
Both experts provided useful evidence about the different possible methods of construction and what is good building practice, especially why soaker flashings behind the corners of the corrugated iron wall sheets were recommended. This was particularly helpful as the manufacturer of the corrugated iron (Lysaghts) did not provide a detail for flashing (per Mr Quick) [5] and there appears to be no standard or code specifically for corrugated sheet metal wall cladding (the experts agreed that the standards and guides referenced in their reports focused on roofing methods, and not on wall cladding).
[5] T 51/11.
Mr Quick observed that there is no legal requirement to have soaker flashings on walls per se, but both experts agreed that a “belts and braces approach”[6] would be to use them. Mr Quick also referred to the parts of the National Construction Code which require a dwelling to be watertight, and both experts agreed soaker flashings on at least the internal corners would be effective to prevent water entry.[7]
[6] T 53/28.
[7] T 45/8 – 53/30; T 91/28 – 92/12.
In Mr Johnson’s opinion, the use of soaker flashings on the internal and external corners of the cladding was also a relevant factor in achieving Bushfire Attack Level (BAL) 19, which was required by the Architectural Drawings for the property.
The differences between Mr Johnson's first and second reports were that the first report included commentary on the state of the works as at 7 July 2021. In the second report, Mr. Johnson was asked to review photos taken following the defendant’s attempt at rectification (after 21 July 2021) and advise whether he maintained that replacement of the wall cladding was necessary. The plaintiff relied on the second report as evidence of the state of the works at the time it decided to terminate the contract on 26 July 2021.
Mr Quick responded to each of Mr Johnson’s reports. The difficulty for both experts was that neither of them had actually inspected the defendant’s works; rather their comments and opinions as to the state of the work in July 2021 were based on the photographs and instructions they had each been given. For example, Mr Quick commented on several photographs that they must have been taken after the rectifying contractor had altered the defendant’s works. When questioned about this conclusion, he conceded that those comments in his report had been his instructions from Mr Lazarev.
Accordingly, in determining whether or not there were outstanding works (including defects not rectified) to justify the termination of the contract as at 26 July 2021, I have found the witnesses who were on site at the time to be more useful than the experts.
Mr Hashem Eshlan
Mr Eshlan was called not as an expert witness but as a witness of fact. He has qualifications and experience as a plumber and investigator, and he and Mr Wilby were the only independent witnesses to inspect the property before the defendant’s roof and wall cladding were replaced. Mr Eshlan inspected the property on 5 August 2021 and prepared a written report which included several photographs.[8] Curiously it is dated 8 May 2021 (“the 2021 report”). At the request of the plaintiff, Mr Eshlan then prepared a second report dated 29 March 2022 (“the 2022 report”),[9] in which he acknowledged and agreed to be bound by the County Court Code of Conduct for Expert Witnesses.
[8] Exhibit P4.
[9] Exhibit P3, CB107-127.
There were several inconsistencies between his two reports, and within the second report itself. In his oral evidence, he was willing to concede the inconsistencies, which he could not explain. He was frank in admitting he did not have a clear recollection of what he had recorded. He was also vague about the relevant standards and specifications against which he was assessing the work. This has affected the quality of his evidence.
However, he was firm that his opinions which he had put down in writing in 2021 would have been accurate at the time. With the exception of Appendix C in his 2022 report (discussed below), I accept that the observations within the 2021 report and the 2022 report, insofar as they are consistent, provide a useful contemporaneous account of the state of the defendant’s works.
In particular, I note his following observations:
(a)“The following expert opinion is relevant to the poor workmanship and installation of the roof which is not installed to AS/NZS 3500.5: 2012;”[10]
(b)“This roof has many defects due to poor and negligent workmanship;”[11] and
(c)“We can conclude that these defects have occurred due to negligence, and furthermore, a recommendation we make is that this roof requires all defects to be repaired and cladding be removed and installed in accordance with Australian Standards.”[12]
[10]        Exhibit P3, CB107-127, 1.2.
[11]        Ibid, 1.6.3.
[12]        Ibid, 1.6.4.
His detailed observations of the roof and wall cladding were as follows:
Hashem Eshlan after careful inspection found the following defects which are in relation to AS/NZS3500.3:2015 & BVA Standards:
2.1.1 Sheets have not been fastened;
2.1.2 Roofing blanket is falling into gutters;
2.1.3 Spacing of battens are incorrect;
2.1.4 Parts of the roof which have flashings and capping’s (sic) have not been fastened or sealed correctly;
2.1.5 Parts of the cladding system have been damaged and have holes;
2.1.6 Roof sheets overhang is not correct;
2.1.7 Eave gutter brackets have not been spaced out correctly;
2.1.8 In some areas the sheets have not been fastened into the roof battens;
2.1.9 Areas of the corrugated roof have not been spaced correctly and sheets have not been fastened;
2.1.10 Cladding not installed as per Australian standards AS/NZS 3500.5:2012, missing screws and have multiple holes across them.
2.2 Installations have been compared to Australian Standards AS/NZS 3500.5:2012.
2.3 Findings have been compared to Australian Standards and our evidence clearly shows that the work carried out is defective and needs removal and replacement.[13]
[13] Exhibit P3, CB107-127, 2.1 – 2.3.
The major inconsistency within the 2022 report (see paragraph 36) is between the body of the report and the Appendix C. In particular, Appendix C includes a conclusion which does not appear to match the summary and findings above. Within Appendix C, Mr Eshlan states:
After careful analysis and extensive investigation. I can conclude that there are currently many defects on this project, all of which are listed and explained above in reference to the Australian Standards wherever applicable. A large portion of the defects are due to incomplete work. If given the opportunity to return on site, the roof plumber can without doubt complete all works in accordance with the standards and regulations. But a few, the majority of the works only need to be completed and not replaced. In regards to the issue of the roof pitch being 1 degree, please find attached the manufacturer’s specifications showing that the product used complies and is within the requirements specified. In conclusion, this project requires the relevant tradesman to return to complete works and finish work which is currently incomplete. These defects are not significant enough to have to start the project again as they are minor defects that requires the roof plumber to return and add finishing touches and complete works.[14]
[14] Ibid, Appendix C, CB127.

I do not accept Appendix C is properly part of the 2022 report for the following reasons:
(a)Appendix C bears a different date, “3/9/21” to that of the rest of the 2022 report;
(b)The headings and language of Appendix C are not consistent with that used elsewhere in the 2022 report. The defects listed within the body of the report are described in terms of faults in installation; e.g. “not sealed adequately…. neither is it watertight;”[15] “not screwed correctly;”[16] “sheet should be folded down and installed correctly.”[17] Whereas Appendix C utilises the language of “incomplete work.”[18] That is, work that needs to be finished rather than needing “removal and replacement.”[19] Appendix C also fails to refer to the defects listed in the body of the report;
(c)Appendix C refers to an issue “of the roof being 1 degree.”[20] This issue is not otherwise addressed in either the 2021 report or the 2022 report, nor was it raised as a problem by anyone else, including the relevant building surveyor or in the insurance claim; and
(d)The conclusion reached within Appendix C does not follow, and is contradictory to, the findings contained within the body of the 2022 report. It is also at odds with the findings and conclusion contained within the more contemporaneous 2021 report.
[15]        Exhibit P3, 4, 5, 8 & 28.
[16]        Ibid, 36.
[17]        Ibid, 10.
[18]        Ibid, Appendix C, CB127.
[19]        Ibid, 2.1.9.
[20]        Ibid.
It was suggested to Mr Eshlan that he had copied and pasted Appendix C from a report on a different property. He was not able to deny that possibility and he had no specific recollection of why he mentioned the roof pitch. For these reasons, I am not satisfied that Appendix C is part of the 2022 report and I will have no regard to its conclusions.
During the hearing, Mr Eshlan was asked about his recollections of the works. His answers indicated that he did not have a clear recollection. For example, the photographs taken by him and attached to the 2022 report show many areas of roof plumbing issues but only one photograph of the wall cladding. The defendant put to Mr Eshlan that this meant he had only found one issue with the wall cladding, and his response was that he could not remember that far back, but it could be “assumed” he had only seen one wall cladding defect because he “probably” would have photographed any others.
When it was put to him that his conclusion in his report that “a recommendation we make is that this roof requires all defects to be repaired and cladding be removed and installed in accordance with Australian Standards” was inconsistent with there being only one wall cladding defect, Mr Eshlan’s response was vague. He referred to the walls being incomplete and said “What I'm not saying is that the cladding should be removed and installed in accordance with the Australian Standards. What I'm saying here is, being a summary, that the roof and the – and the cladding require all defects to be repaired, and removed any sort of 'cause the standards is just talking about the sections that meet that.”[21]
[21]T 237/25
When asked if he was saying there is an Australian Standard for metal wall cladding, he was initially firm that there is, then said he meant there were plumbing regulations, and then said he really meant manufacturer’s specifications. As Mr Quick had established that Lysaght, the manufacturer, had not published any specifications, it is uncertain what Mr Eshlan was referring to.
For those reasons I have accepted Mr Eshlan’s evidence as contained in his contemporaneous written reports, with the exception of Appendix C to the 2022 report, and have given little weight to his oral evidence.
Mr Wilby
Mr Wilby was the relevant building surveyor appointed for the project. On 6 August 2021, Mr Wilby inspected the defendant’s works at the request of the plaintiff. He took with him a licensed roof and general plumber to give him a second opinion.
There was no challenge to his expertise. The defendant initially objected that Mr Wilby should not give expert evidence, but I allowed him to give evidence about what caused him to issue a written direction to fix building work on 6 August 2021[22] (“the Direction to Fix”).
[22] The basis of the defendant’s objection was that he was taken by surprise by Mr Wilby giving evidence.
Even though I found this a surprising submission, given the history of the proceeding, I gave the defendant the opportunity to call expert evidence in response.
I found Mr Wilby to be a valuable witness. He was independent and impartial and carried out his inspection very close to the date the contract was terminated. He provided an objective description of what he had seen on site. He was careful to fairly assess the state of the works, as can be seen by him seeking a second opinion from a licensed plumber. In his oral evidence he had a clear recollection of what he had seen on site, and was confident in his observations and opinions during cross examination.
Ms Jane Lamb
Ms Lamb was engaged by the owners of the property to design the kitchen cabinetry. Ms Lamb is a qualified building designer and is registered as a building practitioner in the category of building design/draftsperson; however, she was not called as an expert witness. She was on site working with the owners at the relevant time, and she had the opportunity of inspecting the defendant’s works. Her evidence was therefore useful in identifying the state of the works at this crucial period. Her qualifications were taken into consideration only insofar as they lent credibility to her observations of the state of the works.
Although she had not been called as an expert witness, in cross examination she was asked for her opinion of the state of the wall cladding. She said she walked around the building and saw problems with every wall and that it was not suitable to be repaired. She noted that the sheets were scratched, dinted and buckled, and said that, “to fix it you can't just pull one sheet of tin off and stick up another sheet.”[23] When challenged on her opinion she said she had formed that view because of her job, credentials, and the knowledge needed for her registration.
[23] T 303/29.
Ms Lamb also had the opportunity of observing the work of the rectifying contractor, Mr McIntyre. Her evidence was that the difference in the standard of work was “glaringly obvious… [The work] looked very neat, all the ends were finished off properly, all the flashings were done.”[24]
[24]T 299/28.
The defendant objected to Ms Lamb giving evidence about conversations she had with the home owners about their concerns, as that is hearsay evidence. I upheld that objection. The plaintiff said that it was not relying on Ms Lamb to prove the home owners’ concerns as there were business records providing evidence of that.
I found Ms Lamb to be an impartial witness. Her main role had been to liaise between the plaintiff and the home owners, who were not satisfied with the progress and quality of the works. She appeared genuinely concerned that their relationship was breaking down and she volunteered to act as an intermediary to help them complete the building project. She had no interest in the dispute between the plaintiff and the defendant and no reason to embellish what she saw on site.
Mr Tyrell Dunne
Mr Dunne is the sole director of the plaintiff and is the registered builder who carried out the building works. He gave evidence about the engagement of the defendant, his observations of his works, the termination of the contract and his engagement of the rectifying subcontractor.
Mr Dunne said he said he left most of the day-to-day management of correspondence and contract administration to Ms Dunne, and so his knowledge was not as detailed as Ms Dunne’s. When challenged in cross-examination, he readily conceded he was not on-site every day and that it was Ms Dunne who had more firsthand knowledge.
I found him to be a straightforward and responsive witness. He was challenged in cross examination repeatedly on his evidence that the defendant had made some defects worse while trying to rectify them, but his evidence remained consistent with the photographic evidence and other firsthand accounts of the post-rectification work. He was also challenged on the reasonableness of paying the rectifying contractor to replace all the roofing and wall cladding, rather than repair, and he was frank in describing the commercial pressures he was facing from the home owners and the fact that Mr McIntyre was not willing to take on a repair job.
Ms Samantha Dunne
Ms Dunne is the wife of Mr Dunne, and her role was the contract administrator. She was often on-site and gave evidence of her observations of the defendant’s work and her communications with the home owners and with the defendant.
I found her to be an impressive and honest witness. Although she was understandably a little nervous in the witness box, she presented as a person doing her best to answer the questions asked of her openly and honestly. She remained calm and objective in giving her evidence, even though she had been emotionally impacted by the events leading up to this litigation. For example, she gave evidence that she had been threatened in her local shop by someone she understood to be an acquaintance of the defendant. She reported this to the police and her sworn statement to the police was tendered.[25] She was cross-examined about these events, and her answers were frank and open, despite the concerns she had for her own safety and that of her children. She also gave evidence that she and her husband had had to sell their family home in order to pay the rectifying contractor to complete the defendant’s work. She was not challenged on this evidence. Further, her version of events was supported by the contemporaneous documents.
[25] CB518.
Mr Jason McIntyre
Mr McIntyre was not a party to the proceeding. He was the rectifying contractor engaged by the plaintiff. He presented as a naturally open and straightforward person. He did not present as a person seeking to argue in favour of a position, and he did not hide the fact that he had benefitted financially from the rectification works, or that he had refused to take on the job unless he was able to replace all the defendant’s works.
After he was engaged by the plaintiff, Mr Lazarev telephoned Mr McIntyre on a number of occasions. Unbeknownst to him, Mr Lazarev had recorded those conversations. Transcripts of the recordings were tendered and with the consent of the parties I also listened to the recordings. Mr McIntyre’s attitude during those conversations was neutral, in that he tried to not criticise either the defendant’s work or the plaintiff’s decision to terminate the defendant’s contract. He was open in saying he was not prepared to take on the risk of repairing the defendant’s work, and that in his view the only successful method of rectification would be replacement.
Mr Matthew Lazarev
I found Mr Lazarev’s evidence to be self-serving and lacking objectivity. It became apparent that he had formed the view in mid-2021 that the plaintiff had made up allegations of defective work, refused him access to property and terminated his contract, as a way of covering up other problems in the building works which were the plaintiff’s responsibility. Mr Lazarev did not deviate from that belief, even when contemporaneous evidence to the contrary was put to him.
For example, Mr Lazarev insisted that he had completed all the rectification work which had been listed in the plaintiff’s email of 7 July 2021, even when shown photographs taken on 21 July 2021, which showed the existing defects had not been fixed. The only response provided by Mr Lazarev was an allusion to the lack of security at the property. When asked why the photos taken on 21 July 2021 did not support his assertion that he had, in fact, rectified all the defects, Mr Lazarev implied that if the photos showed missing soaker flashings or other defects, it was due to some kind of tampering by the plaintiff, and not because he did not rectify the work.
Mr Lazarev’s assertion that the plaintiff or another person had tampered with the defendant’s works to make them appear defective following the period of rectification was also evident in the instructions he gave to his expert, Mr Quick.
Mr Lazarev disputed the evidence of defects in the photographs in Mr Eshlan’s report, simply saying that there was only one photograph of one area of cladding that was defective and therefore everything else was correct. That conclusion ignored Mr Eshlan’s other photographs showing the outstanding roof defects, and his written conclusions about the standard of the wall cladding.
Mr Lazarev also did not accept the findings of the building surveyor, Mr Wilby, although his only basis for disagreeing was that Mr Wilby did not specifically identify individual defects in the wall cladding. Mr Lazarev did not respond to Mr Wilby’s findings in respect of the outstanding roof defects.
I agree with the plaintiff’s submission that Mr Lazarev’s demeanour showed him to be a defensive man who could not see any fault in his work, and who felt he was being hounded by a picky builder. His secret recording of his telephone conversations with the rectifying builder Mr McIntyre is indicative of this defensiveness.
Another example where Mr Lazarev’s evidence lacked credibility was in relation to his connection to the person who threatened Ms Dunne. He denied that this person was involved in his business or this dispute, despite being shown a text message from that person which obviously referred, and responded to, a message sent from Ms Dunne to Mr Lazarev; and despite later text messages in which that person said the defendant was his business partner.
Mr Lazarev was cross-examined at length by counsel for the plaintiff. It was put to him that an honest person does not threaten or intimidate other people, that they do not record telephone conversations with others without their knowledge, and that they do not lie about not having been given an opportunity to rectify works when they had. He disagreed with those propositions, and in my view, this adds to the unreliability of his evidence. I accept that Mr Lazarev may not have instructed his acquaintance to threaten Ms Dunne, but his express denials of his relationship with the person convicted of threatening her leads me to find that he was not honest and truthful in various aspects of his dealings and communications. I accept that he may genuinely have felt that his work was being unfairly criticised by the plaintiff, but his inability to look objectively at the state of the work, or the observations of Mr Wilby, Mr Eshlan and Mr McIntyre, means his evidence has little credibility.
Mr Tyler Barnes
Mr Barnes was an employee and apprentice of Mr Lazarev and was involved in the works which are the subject matter of this dispute. The defects identified by the plaintiff were partly his own and as such, he had an interest in defending their quality. He appeared to have rehearsed his evidence and had pre-arranged his answers, so that even when he was shown photographs which clearly contradicted his statements, he did not change his answers. An example of this was that he was adamant that all the soaker flashings had been installed. He did not concede that there were any missing, even after being shown photographs taken on 21 July 2021 (after the rectification work had allegedly been completed) with missing soaker flashings. Mr Barnes’ evidence was of little assistance.
A. WHAT WAS THE CONTRACT PRICE?
The plaintiff contended that the subcontract price was $88,500.00 and the defendant said that it was $95,000.00.
The parties agreed that the defendant provided a written quotation to the plaintiff dated 26 February 2021 (“the quote”). The quote was for the total sum of $98,000.00 including GST. The parties then communicated by email on 10 March 2021 and agreed on the price of $95,000.00, including GST.
The plaintiff said that the contract price was later varied to remove from the defendant’s scope of works the installation of wall wrap, which instead would be carried out by the plaintiff. The plaintiff submitted that the amount quoted for the wall wrap was $6500.00, and therefore the contract price was reduced from $95,000.00 to $88,500.00. [26]
[26] I note that a temporary scaffold was also included in the quote but not provided by the defendant.
However, neither party made any submission about this variation to the quote or any change in the contract price and so I have had no regard to the scaffold.
In his defence, the defendant denied the allegation of a variation to the contract price, and said that from the inception of the contract, the wall wrap/sisalation was not a component of the works to be undertaken by the defendant.
Mr Lazarev did not give any evidence about whether the wall wrap was included in his scope of works, either in his witness outlines or orally.
Mr Dunne did give evidence, which was not challenged in cross-examination. Based on Mr Dunne’s evidence and the contemporaneous documents (which are discussed further below), I am satisfied of the following matters:
(a)the wall wrap was included as part of the defendant’s original scope of works (as set out in the quote) for $95,000.00 (including GST);
(b)the quoted amount for wall wrap was for $6,500.00 (excluding GST);
(c)the parties had agreed prior to entering into the contract that if an item in the quoted scope of works was not required, it would be taken off the contract price;
(d)the wall wrap was removed from the scope of works and the defendant did not provide or install wall wrap; and
(e)as a result, the contract price should be reduced by the cost of the wall wrap from the quoted amount of $95,000.00.
The contemporaneous documents supporting these findings are the quote and text messages between the parties. The quote set out the scope of works which is summarised as follows:
Cladding:      Colourbond 0.42 Corrugated Profile Cladding, Custom Flashings                $67,000.00 (exc GST).
Flat Sheet     Custom Flat Sheet Folded Flashing to 8 x Feature Piers and
Flashing:      External Fascia to Gable Ends as per drawings $22,000.00 (exc                 GST).
Wall Wrap: Proctor [sic]/Wall Wrap if required $6,500.00 (exc GST).
Temporary   Temporary/Mobile Scaffold Hire if required $2,500.00 (exc GST).
Scaffold:
Subtotal:      $89,090.91
GST:             $8,909.09
Total
[27]        Exhibit P20, CB289.
(inc GST):     $98,000.[27]
As discussed above, the parties agreed that the quoted price was reduced from $98,000.00 to $95,000.00 by email on 10 March 2021. It is clear on the face of the quote that the wall wrap was part of the defendant’s contracted scope of works.
Before the defendant sent the quote to the plaintiff, Mr Dunne had sent a text message to Mr Lazarev (on 29 January 2021) asking whether he would have to organise fall protection or if the defendant would include it. Mr Lazarev sent a text message in response which said “[the quote] will have everything on it you just take off whatever you like if you want me to it will all be on there.”[28] Mr Dunne’s text message in response was “To [sic] easy mate cheers.”[29]
[28] Exhibit P21, CB287.
[29] Ibid.
I am satisfied from that exchange of text messages that the defendant had offered to the plaintiff that, if an item listed in the quote was not required, it would be removed from the defendant’s scope of works and from the contract price. As stated above, the defendant agreed that it did not ultimately install the wall wrap. Accordingly, I am satisfied that the contract price should be reduced by the amount allowed for the wall wrap.
Having said that, there is an arithmetical error in the amount alleged by the plaintiff ($88,500.00). The plaintiff’s calculation does not take into account GST. Instead, it submitted that the GST exclusive amount of $6,500.00 should be deducted from the GST inclusive varied contract price of $95,000.00. That calculation means that the figures are not being compared as “apples for apples:” either GST should be added to $6,500.00 or that amount should be deducted from the net contract price before GST is added to the total.

The defendant made no submissions about the calculation of the amount. I accept the plaintiff’s calculation, as it was not challenged, and because it appears to me that the plaintiff has given the defendant a benefit in its calculation of the adjusted contract price.
It is not possible for me to perform the calculation myself, in the absence of any figures from the defendant. It is not a simple matter of including or excluding GST, as the net cost of each item in the scope of work was presumably varied as part of the agreement to reduce the originally quoted price of $98,000.00 to $95,000.00.
It is not known how much of the $3,000.00 deduction is attributable to wall wrap, and whether I should add 10% to $6,500.00 or to some other figure. If I proceed on the basis that the net cost of the wall wrap was not varied, and include GST on both sides of the calculation, the adjusted contract price would be $87,850.00 (i.e. $95,000.00 less $7,150.00), while the plaintiff alleges it is $88,500.00.
As I am unable to determine an exact figure on the evidence before me, noting that the difference is negligible, and it works in favour of the defendant, I will accept the plaintiff’s figure.
For those reasons, I accept that the adjusted contract price is $88,500.00 including GST.
B. HOW WAS THE CONTRACT TERMINATED?
The plaintiff alleged that the defendant repudiated the contract, and the plaintiff accepted the repudiation in the letter sent by its solicitors dated 26 July 2021. On the other hand, the defendant contended that this letter from the plaintiff’s solicitors constituted a repudiation by the plaintiff. The question to be determined is whether the plaintiff was entitled to terminate the contract on 26 July 2021.
The grounds for termination set out in the plaintiff’s solicitors letter dated 26 July 2021 include the following:
(a)the defendant’s failure or refusal to provide the necessary compliance certificate unless he is paid further monies prior to returning to site;
(b)the defendant’s refusal to return to site unless he is paid monies prior to such return; and
(c)the defendant’s failure to agree to rectify all of the defects identified by the plaintiff.
In respect of the defects identified by the plaintiff as at 26 July 2021, the plaintiff relied on the report of Mr Eshlan and the photographs taken by Ms Dunne on 21 July 2021.
The plaintiff also relies on the existence of incomplete and defective roof cladding and wall cladding works, as identified by the relevant building surveyor, Mr Wilby, at his inspection on 6 August 2021. It is well established that a party may rely on matters which existed at the time of breach, even if they were not aware of them until after the termination, to support a decision to terminate a contract.[30]
[30] Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359, 377–378; Concut Pty Ltd v Worrell
(2000) 75 ALJR 312; [2000] HCA 64, 27 – 28, 42.
The progress of the works between 6 July and 26 July 2021
On 6 July 2021, the owners of the property emailed the plaintiff listing their concerns with the building works. In particular, they referred to advice “from the roofers that this was the finished product.”[31] They then listed a number of issues with a roof leak, the flashing, the roof iron, roofing blanket, internal corner flashings, and box gutter outlet. While the owners of the property did not give evidence, their email is a business record of the plaintiff and is admissible in evidence.
[31] Exhibit P8, CB325.
Evidence was also given by Ms Dunne and Ms Lamb that they were both told by the owners of their concerns with the defendant’s work at around this time. I make no findings as to the veracity of the owners’ statements but I accept that the expression of these concerns was one of the reasons which motivated the plaintiff to issue the defects list to the defendant on 7 July 2021.
By 7 July 2021, $70,000.00 had been paid to the defendant. From the email messages between the parties, it appears that the defendant had asked for a further payment at around that time. In one such email on 5 July 2021, the plaintiff said to Mr Lazarev, “(a)s we have previously discussed the final invoice will be paid on completion of all work. I will be sending an email outlining all areas that need to be addressed…”[32]
[32] Exhibit P22, CB297.
Mr Lazarev replied that same day:
We have completed 95% of the work the only thing left is the wall we can not complete and the gable flashings which will be all completed at the same time as the wall… There is not $25 grand of work remaining on the job… We do not plan on going anywhere and are happy to complete the job and make sure all parties are happy with the end result!! All we ask if you pay the 20 and keep 5 so it takes a lot of pressure and stress off my business to pay out everything…[33]
[33] Ibid.
On 7 July 2021, the plaintiff sent the defendant an email including photographs of 31 items of allegedly defective wall cladding and roof flashing work. The covering email also listed a number of other items to be completed, including works to the roof blanket and the provision of a compliance certificate on completion of work. The defendant was given until 16 July 2021 to rectify all items. Mr Dunne also said, “(w)e have paid you $70,000 to date which is a huge amount of money given the quality of work provided, all final payments will be released on completion.”[34]
[34] Ibid, CB298.
Later the same day, Mr Lazarev emailed the plaintiff and said he would be “attending site on Friday to measure up the flashings and sheets that we will be replacing.”[35] In reply, the plaintiff said, “(c)an you please also ensure every soaker flashing both internal and external are installed as we have noticed quite a few missing as you are aware of.”[36]
[35] Ibid.
[36] Ibid.
An exchange of emails followed on 8 July 2021 and 9 July 2021, in which the defendant sought and was provided with further information about the alleged outstanding and defective work. For example:
(a)the defendant asked whether the whole wall with the “flashing with 130 on it”[37] should be changed, and was told by Mr Dunne, “(yes), this needs to be corrected as this is a shortcut that is not acceptable.”[38]
(b)the defendant asked “(a)s for the barges out the back do you want the screws backed off for the flashing completely changed?”[39] Mr Dunne said, “(t)hese need to be replaced, and new ones not dented when installing. Care needs to be taken… The flashing needs to be at the correct degree of pitch….”[40]
(c)The defendant said, “(t)he few scratches on the sheets I can touch up for you.”[41] Mr Dunne replied, “(t)hese need to be professionally done, if the sheets do not look in “as new” condition, they will not be accepted. Simply dobbing some paint on with your finger… looks terrible and sloppy. We have noticed this has been done on other parts of the home. Once again shortcuts are being made.”[42]
[37]        Ibid, CB310.
[38]        Ibid.
[39]        Ibid.
[40]        Ibid.
[41]        Ibid.
[42]        Ibid.
One of the outstanding issues was the flashing of the triangle windows to the gable wall, which all parties agreed were not ready for completion. Mr Dunne instructed that in respect of this outstanding work, “do not attempt to install the gable end flashings until all other work is rectified.”[43]
[43] Ibid, CB298.
On 9 July 2021, Ms Lidia Lazarev, the defendant’s mother and business manager, sent an email to Mr Dunne which said:
It is extremely disappointing and very unprofessional on your behalf to continuously keep delaying your part of work which reflects and restrains us to complete our work.
Can you attend to your part ASAP so that we can complete the final stage of this project, which will follow a final invoice and certificate of occupancy upon receiving payment.
Once payment has been received we will organise a time/date so we can meet and have a FINAL WALK THROUGH.[44]
[44] Ibid, CB315.
Mr Dunne replied:
Agreed this has gone on long enough, if the work was completed correctly at the beginning none of us would be in this position.… We will be having all work independently inspected from the VBA to ensure compliance… As discussed many times, no payment will be made until all work is completed to a satisfactory standard. Please refer to the previous emails with the defective works for your attention.[45]
[45] Ibid.
Ms Lazarev replied:
We are waiting on YOU to complete [the gable end windows], this is what is causing the issue, once this has been accomplished we will then complete the final stage. Can you confirm the finishing date on [the gable end windows].[46]
[46] Ibid, CB314.
Mr Dunne replied to this email as follows:
The windows are installed ready for flashing to be installed as stated in an email sent at 6:45 am this morning, we do not want you to complete this work until all of the defects are rectified. So definitely not holding you up from completing work required.[47]
[47] Ibid.
Ms Lazarev replied:
Thanks for the email, we are not in a position to rectify any issue that you might have at this stage.
Once this job has been fully completed we will walk through for the final inspection as per normal procedure.[48]
[48] Ibid.
Mr Dunne addressed his reply to Mr Lazarev, as follows:
I have been advised defective work will not be rectified until the whole job is complete from Lidia.
I find this hard to understand, as the work requiring replacement and rectification needs to be completed before the other items are to be installed. This would cause more issues requiring rectification.
It is very evident that these items need to be fixed. Do you disagree?
Like previously stated all defective work listed on previous emails needs to be completed by close of business on 16^th of July. This forms as a written notice giving you the opportunity to complete this work before a complaint will be made to the VBA.
We do not understand why fixing these issues is such an issue for you.[49]
[49] CB673.
Further text messages and discussions took place between the defendant and the plaintiff, which culminated in Mr Lazarev agreeing to rectify the roof and wall cladding issues.
On Tuesday 13 July 202,1 Mr Dunne sent two emails to Mr Lazarev, stating as follows:
Can you please confirm that all defects listed will be rectified this Friday as per our discussion yesterday.
This includes, sheets that are damaged, scratches on sheets, flashing that require replacement, guttering that needs replacing, soaker flashings installed, screws where they should be and blanket that needs to be run into the guttering etc. etc…
[and later] … I also wanted to mention the cladding needs cleaning before Friday so we can see the finished product, so we are all happy.[50]
[50] CB698.
Mr Lazarev replied by email that evening, confirming that he would carry out rectification works. He listed a number of examples of works that he would carry out and concluded, “(a)fter all that is done do you want to inspect it Friday afternoon? Then once it is all clear we can install the gable end flashings on Monday?”[51]
[51] CB700.
On 13 July 2021, the owner of the property contacted Ms Dunne to ask how the rectifying of the cladding was going, “as the more we look the more imperfections and terrible work has been carried out, as you can appreciate we are trying to be patient and understanding however again another week and no one on-site?”[52] Ms Dunne gave evidence that she sent the owners flowers following this message to apologise for the issues.
[52] Exhibit P11, CB421.
The defendant then commenced carrying out the rectification works. There were delays caused by weather but various text messages sent between Mr Lazarev and Ms Dunne on 14 July 2021 and 15 July 2021 confirmed that Mr Lazarus had at least started the work by 14 July 2021.
On 20 July 2021, Ms Dunne sent a text message to Mr Lazarev in which she said, “please send an email regarding defects, listing everything that has been rectified to ensure everything has been completed. We will then organise a time to do an inspection.”[53] Mr Lazarev did not reply to that text message.
[53] Exhibit P16, CB423.
On or around 21 July 2021, Mr Lazarev sent the plaintiff an email which said that he, “had fixed all relevant defects (except scratches that were being done),”[54] and he requested a meeting on-site. Mr Lazarus said this email was sent in response to the email from Ms Dunne of 20 July 2021, in which she had asked him to send photographs of the completed works. [55]
[54] Witness outline of Matthew Lazarev dated 30 March 2023: Exhibit D5, CB41 – 74; 49.
[55] Ibid.
On 16 July 2021 and 21 July 2021, the roof was still leaking and videos of the leak taken by Ms Dunne were tendered in evidence. Ms Dunne also took a number of photos of the roof plumbing on 21 July 2021.
On 22 July 2021, the owners of the property sent a further email to the plaintiff in which they stated:
We would like to obtain an update on where we are at with the work that was carried out by ON TOP Roofing and the next steps.
As you can understand, and I am sure you can see that the work is still of a very poor standard (horrible actually) and hard to stay positive and not get very upset.
As we have discussed, also noted in writing that the job carried out has water leaks, not air tight and damage to flashings throughout a majority of the build…[56]
[56] CB465.
Ms Dunne gave evidence that from 7 July 2021 until 23 July 2021 the defendant was rarely on site. She said that she would visit the site most days and rarely saw the defendant. Mr Dunne gave evidence that during this period he would have attended the property every couple of days and only saw Mr Lazarev occasionally. He then instructed his solicitors to end the contract (which they did by letter dated 26 July 2021) as he said, “I was satisfied he went there to attempt to [rectify the defects] … but I wasn't satisfied with the work that was produced afterwards.”[57]
[57] T 409/29.
The defendant’s response to the notice of termination
In response to the allegation that the defendant had repudiated the contract, Mr Lazarev made two submissions. First, he said that the rectification works had been completed before the contract was terminated. Second, he submitted that if there were still outstanding defects, then the defendant’s position was that he had been denied a full opportunity to rectify them. These submissions are presumably put in the alternative, because both cannot be true.
In support of the first submission, the defendant relied upon photos and videos of the rectification work, taken by Mr Lazarev on or around 20 July 2021 and upon the evidence of Mr Lazarev and Mr Barnes, who participated in the rectification work. Mr Lazarev’s evidence as to the exact date he said the work was competed was vague. He said variously:
(a)"I did … between 10 and 16 July 2021 work to rectify the alleged defects;”[58]
[58]        Witness outline of Matthew Lazarev dated 30 March 2023: Exhibit D5, CB41 – 74.
(b)he emailed the plaintiff on 21 July 2021 saying that he “had fixed all relevant defects (except scratches that were being done);”[59]
(c)Tyler Barnes was to give evidence of “the rectification of alleged defects between 7 and 21 July 2021.”[60] However, Mr Barnes’ evidence was that he could not say what date the works had taken place;[61]
(d)“between the 10 July 2021 and 25 July 2021 my employees and I attended the premises and did everything possible to resolve all the defects listed in the builder’s email dated 7 July 2021. We took photographs of the complaint defects which we rectified at the premises;”[62]
(e)“we rectified defects like I said, there's dates and stuff in there, like I said, as, as for dates, I'm - yeah, I'm pretty sure we did. Like I said, it's all - it's all dated;”[63] and
(f)in response to a question from me, Mr Lazarev said the following:
Q:       You've said a few times, Mr Lazarev, that you're not clear on the dates.    You've prepared two very detailed witness outlines?
A:        Yep.
Q:       And there's a lot of dates in all of those?
A: Oh, when I - yeah, when I was, when, when I'm sitting down and I have to prepare the table and I'm looking at everything, then you can - you've got time to work everything out and work out dates and when it was and how it was. That's why, when, um, especially when like, obviously we were going on, over the stuff before, like in, um - yeah, I can pinpoint it but when you're asking me the question on the spot then and there, I couldn't tell you dates. … But when I'm sitting with the computer and stuff in front of me then I can, I can give you dates.[64]
[59]        Ibid, 49.
[60]        Ibid, 56.
[61]        T 472/5.
[62]        Witness outline of Matthew Lazarev dated 30 March 2023: Exhibit D5, CB41 – 74.
[63]        T 555/7.
[64]        T 557/1.
Although the defendant has an uncertain recollection of the exact date he said the defects had been completed, for the purposes of the questions before me, it is sufficient to accept that the defendant says he had completed the defects by the time the plaintiff purported to terminate the contract. His primary submission is that the defendant had not repudiated the contract because he had rectified the defects in the roof and wall cladding.
I will therefore consider first whether the defendant had in fact rectified the defects by 26 July 2021.
The written Direction to Fix building work on 6 August 2021
Following the decision to terminate the contract, the parties agreed that the defendant’s work should be inspected by an inspector appointed by the Victorian Building Authority (“VBA”). The VBA declined to appoint an inspector, and instead referred the parties to the relevant building surveyor, Mr Wilby.
Mr Wilby carried out an inspection on 6 August 2021. In his oral evidence he said that he was accompanied by a licensed roof and general plumber to give him a second opinion. Following his inspection, he determined that there was non-compliant building work, and he issued a written Direction to Fix Building Work under Division 2 Part 4 of the Building Act 1993.
The Direction to Fix listed nine particulars of non-compliant building work in respect of the roof, and three in respect of the wall cladding. The particulars were as follows:
Carry out building work to ensure compliance with the Building Act 1993, Building Regulations 2018 and/or building permit as follows:
Roof cladding:
a.Remove and replace roof sheets where roof sheets have been damaged (i.e., scratched roof sheets at various locations throughout where the durable surface coating has been compromised, holes left by misplaced screw holes, roof sheets that have been 'crept' to rectify poor initial placement etc.);
b.Install all roof sheeting in accordance with Part 3.5.1 BCA Vol 2, AS1562.1, the manufacturers specifications and in a proper and workmanlike manner;
c.Install and fasten all roof flashings and cappings in accordance with Part 3.5.1.7 BCA Vol 2, AS1562.1, the manufacturers specifications and in a proper and workmanlike manner;
d.Support roof sheets in accordance with Table 3.5.1.3 BCA Vol 2, AS1562.1 and manufacturers specifications i.e. install additional roof battens where roof battens spacing exceed the specified requirements;
e.Fasten all roof sheets on the rib of the roof sheet in accordance with Fig 3.5.1.3 BCA Vol 2 and in a proper and workmanlike manner (roof sheets to be replaced where sheets have been fixed in the valley);
f.Further fastens roof fixings where they are not adequately installed (i.e. fasteners not fully driven);
g.Install under-roof 'blanket' to meet the requirements of AS3959 BAL 19 construction in a bushfire prone area and energy efficiency measures i.e. ensure blanket extends to, but does not exceed, the outer edges of the roof cladding throughout and repair and/or replace blanket wherever cut or damaged;
h.Make all gaps in the roof cladding, cappings and flashing not greater than 3mm in accordance with the requirements of AS3959 BAL19 construction in a bushfire prone area;
i.Support all fascia gutters at not more than 1.2m centres in accordance with Part 3.5.3.4 BCA Vol 2 and in a proper and workmanlike manner;
Wall cladding:
a.Install wall cladding types in accordance with the approved building permit plans and the approved and endorsed planning permit plans;
b.Install all metal wall cladding in accordance with Part 3.5.5 BCA Vol 2, AS1562.1, the manufacturer’s specifications and in a proper and workmanlike manner;
c.Install all metal wall flashings and cappings in accordance with Part 3.5.5 BCA Vol 2, AS1562.1, the manufacturer’s specifications and in a proper and workmanlike manner.[65]
[65] Exhibit P7, CB470 - 473.

At the hearing, Mr Wilby gave detailed evidence about what he observed on site. In summary, he concluded that both the roof and wall cladding works had been carried out very poorly.[66] His detailed evidence is set out below. There was no challenge to Mr Wilby’s expertise or to his ability to give evidence about what he observed on site.
[66] T 315/6; T 318/13.
Had The Defendant Rectified The Works By 26 July 2021?
Perhaps because the plaintiff has been indemnified for the cost of replacing the roof, and this claim is for the defendant to pay damages for the replacement of the wall cladding, the defendant focused its arguments on the condition of the wall cladding and did not address the roof in any detail. However, it is important to highlight that the condition of the roof is a relevant factor in determining whether or not there were defects in the defendant’s works as at 26 July 2021, as this was one of the grounds the plaintiff relied on as evidence of the defendant’s repudiation of the contract. Accordingly I will consider whether the both the roof and wall cladding defects had been rectified by 26 July 2021.
As discussed above, I found only limited utility in the evidence given by the two experts, Mr Johnson and Mr Quick, as neither of them physically inspected the property prior to, nor following, the period of rectification. For this reason, in making findings about the state of the work as at 26 July 2021, I have preferred the evidence of those independent witnesses who were on site at the relevant time, being Mr Wilby, Mr McIntyre, Ms Lamb, and (subject to the qualification mentioned above) Mr Eshlan.
There was a general consensus amongst those witnesses that the standard and condition of the contracted works fell far below the standard that was expected of a new build.
For the following reasons I am satisfied that, despite the defendant’s attempts to rectify them, there were still significant defects in the contracted works as at 26 July 2021.
(a) Roof Defects
Mr Wilby identified numerous issues with the roof plumbing in his Direction to Fix, which are listed above. His impression of the roofing works that he saw was “that it was very, very poorly done.”[67]
[67] T 315/6.
He gave the following answers in his evidence:
(a)“(i)n numerous and various locations, there was significant scratching to the surface coating of the roof sheets, indicating to me that they'd been poorly handled and, and walked over and, and so on in the installation, to the point where to me, it looked as though the surface had been taken off in places and … the longevity of the product certainly wouldn't be there with that, those scratches;”[68]
[68]        T 315/15.
(b)“(i)n terms of flashing and cappings on the roof… (v)ery poor installation. Installation that really couldn't have worked in ensuring that the building would remain weather tight. Folds in the flashing that were basically the wrong way round ensuring that water running down the hill would run in behind the flashing;”[69]
[69]        T 315/25.
(c)“creeping of roof sheets… (y)ou're referring to whether the laps aren't nice and parallel with each other. They've been pushed across. That's what I observed… (S)o when sheet is laid and the next sheet is laid over the top of it, the sheet - there was examples where the sheets had been pushed across or crept, to try and make a correction;”[70]
[70]        T 316/6.
(d)“(f)astening of roof sheets… I saw multiple things. I saw sheets that were fastened in the valley rather than on the crest of the corrugation. The high point if you like. They were fixed in the low point of the corrugation or the valley of the corrugation which is not appropriate. I saw screws that weren't driven home properly or screws that were indeed over screwed and, and distorting the flashing or the roof sheeting”[71]
(e)“(r)oof blanket… I saw the roof blanket both too short as in not extending to the outside line of the building and I also saw it in places where it was too long and it was sitting in the eave gutter and that tends to - when the eave gutter has water in it, it wicks, into the fabric and, and draws into the building. Both of which, you know, (indistinct) detrimental to the building…;”[72]
(f)Q:           In your opinion is there any way to replace or to fix the issues with the roof               blanket other than ripping up the existing roof sheets?
A:           I can't see how it could be done without taking the sheets off;[73]
(g)Q:           And you mention …. The need to ensure that there are no gaps greater than 3          millimetre in accordance with BAL-19 [Bushfire Attack Level]. Did this or did                   the state of the roof meet the requirements for BAL-19?
A:           Well given the poor installation for the blanket I, I don't think it did in    places, no;[74]
(h)Q:           (I)s that a fail item in terms of a surveyors inspection if it doesn't meet    the BAL rating?
A:           That's right, yes, yep;[75]
(i)Q:           All right so based on everything that you had saw in respect of the roof                     would it have been justified in your opinion to remove it and completely                     replace it?
A:           Yes, in my opinion absolutely needed to be replaced;[76]
[71]        T 316/20.
[72]        T 316/31.
[73]        T 317/16
[74]        T 317/25.
[75]        T 318/5.
[76]        T 318/7.
Mr McIntyre also gave evidence about the defects that existed with the roof at the time he was engaged. These included:
(a)sheets not running into the gutter;
(b)insulation blankets not going all the way to the gutter (impacting the BAL level);
(c)a non-compliant sump; and
(d)incorrectly installed flashings.
Mr Eshlan in his initial 2021 report listed the following roof defects:
(a)gutter brackets were not spaced correctly nor fasted securely to the building;
(b)roof flashing and cappings not fastened adequately (at multiple points). The work was not adequate to withstand wind pressure, thermal movements, nor was it watertight;
(c)roof cover discharge over eaves gutter (at multiple points);
(d)roof blanket protruding into gutter (at multiple points);
(e)sheets were not folded down or installed correctly (issues with spacing, fastening, folded edges, screwed into battens etc.) (at multiple points);
(f)insufficient screws in cladding (at multiple points);
(g)hole in capping which has not been sealed, missing rivet;
(h)installation of incorrectly sized box gutter;
(i)flashing missing battens; and
(j)battens not fastened correctly, missing or incorrectly spaced (multiple points). [77]
[77] Exhibit P4.
The defendant did not provide any evidence to dispute these observations and opinions. I accept there were significant defects with the roof plumbing works carried out by the defendant, which is supported by his insurer’s decision to indemnify the plaintiff.
(b) Wall cladding: flashings, cappings and drip trays
Mr McIntyre, the rectifying contractor, gave evidence that soaker flashings were missing from the majority of walls. He gave evidence that he only saw five installed in the building. He also gave evidence that all of the window flashings and drip flashings from around the windows were missing.
Ms Lamb and Mr Wilby also observed missing back and soaker flashings on internal corners. For those that were in place, Mr Wilby observed that some were fastened with a plaster screw and observed that over time, these would rust away.
Mr Wilby was asked why he had dealt with the wall cladding in three fairly short paragraphs in his Direction to Fix. He gave the following answer:
Where there's a large amount of non-compliant work, or, or a large section of a building, it's what I have done in the past and, what other surveyors do, is to just state that this work doesn't comply with the relevant parts of the Code or Australian Standards or other reference document as it may be. It's not practical for me to go around the building and nominate every element that is non-compliant. It's just not a practical and timely way of doing that and documenting that.[78]
[78] T 318/20.
In respect of the waterproofing issues with the wall cladding, his evidence was as follows:
(a)“I saw ends of sheets that weren't screwed off behind over-flashings or cover flashings...;”[79]
(b)“(t)here was sections of the cladding that didn't extend to the underside of the fascia and then so were covered over with a cover strap. Not a flashing as such but just a cover strap rendering the requirement for weatherproofing not met...;”[80]
(c)“(e)xamples where I recall that there was no back flashing or soaker flashing on some internal corners...;”[81]
(d)“(s)ome of the flashings, back flashings or soaker flashings that were installed were pinned with what appeared to be screws that you use to install plaster so either knocked in or screwed in. I'm not sure what, you know, that over time they would simply rust away, those screws...;”[82]
(e)“(i)f there was no soaker flashing, as I recollect in many places there wasn't, then yes, it would be difficult to see how the requirements for the Bushfire Attack Level, the gaps less than 3 millimetres, could be achieved...;”[83] and
(f)Q:           Would that have been a fail item in terms of the inspection or any   mandatory inspection?
A:            That was certainly part of the reason that it was failed, yes.[84]
[79]        T 319/18.
[80]        T 319/19.
[81]        T 320/1.
[82]        T 320/3.
[83]        T 320/15.
[84]        T 320/20.
Both Mr Barnes and Mr Lazarev said that they had installed soaker flashings to all internal wall corners. Neither of them were able to provide any explanation as to why Mr Wilby, Mr McIntyre and Ms Lamb had observed missing flashings. During cross-examination Mr Barnes and Mr Lazarev were shown photographs taken after 21 July 2021 and it was put to them the photos showed there were no soaker flashings visible in certain locations. Neither was able to explain the photographic evidence. Mr Lazarev postulated that as he was not on site every day, someone may have come into the site and removed the wall cladding and the soaker flashings and then replaced the cladding, although he conceded that he was not saying this is actually what happened.
I accept the photographic evidence, supported by Mr Wilby, Mr McIntyre, Ms Lamb, Mr Johnson and Mr Quick that many corners lacked soaker flashings and their evidence that it would be necessary to remove the cladding to install the flashings.
In respect of the complaint about cappings, Mr Lazarev gave evidence about a photograph which showed a dented horizontal capping on one wall of the building. There was a dispute about the location of the capping but I accept Mr Lazarev’s evidence that the various photographs tendered showed the same wall at different times.
Mr Lazarev and Mr Barnes said that they had satisfactorily replaced that capping. This was disputed by Mr Dunne, Mr Johnson and Mr Quick, who said even if it had been replaced, the new capping was still defective. They referred to the photographs taken after the capping had allegedly been replaced. Mr Johnson said those photographs show that the new capping was “buckling.”[85] Mr Quick’s opinion was that the new capping showed “rippling”[86] (however, Mr Quick ascribed this in his report to the rectifying contractor). I accept that those photographs show that the capping which was in place after the defendant had purported to rectify, was buckling or warped.
[85] T 64/29.
[86] Exhibit D2, CB268.
Mr Lazarev also said that if there had been more than one damaged capping on the wall cladding, there should have been more photographs. However he agreed in his evidence that there were legitimate complaints with the roof capping and that his insurer had indemnified the plaintiff for those.
In respect of the drip trays, Mr Johnson said he had been instructed that the windows had been installed by the defendant without adequate sill flashings and drip trays. Mr Lazarev’s response was that he had installed sill flashings behind all the windows and that drip trays were not required for him to be able to provide a compliance certificate. Mr Quick agreed that drip trays were not required and said he had been instructed that sill flashings had been installed. However he noted one photograph which appeared to show a head flashing had not been fixed correctly and fixings were missing.
I accept the defendant’s evidence that drip trays were not installed or required, as this is supported by Mr Quick. I also accept that he had installed sill flashings, as there is no contemporaneous, independent evidence to the contrary. I accept Mr Quick’s view that at least one of the head flashings was not installed correctly.
(c) Wall cladding: scratched / damaged cladding sheets and windows
Ms Lamb’s evidence was that she found that the wall cladding had not been completed with what she described as good workmanship. She perceived faults including scratches, dents and buckling in every wall.
Mr McIntyre also attested to the presence of scratched and damaged sheets. He said that even if he was to deal with just the issues of the scratching on the sheets and replace only those sheets, there would be very few left over not to replace.
Mr Wilby also noted that the wall cladding was significantly scratched in numerous and various locations. In addition to scratches, he observed dints, other damage and that they ”had material all over them.”[87]
[87] T 320/8.
Mr Johnson identified photographs taken after the defendant’s purported rectification works, which showed scratched and damaged wall sheets and a window frame. Mr Quick agreed that the photographs showed damage but said he was instructed this was limited to only three or four areas.
Mr Barnes’ evidence was that there were only three or four scratched sheets and he had repaired them all. Mr Lazarev denied there were more than a few dints or scratches and said he had rectified those that he had identified. He disputed the photographic evidence taken after his works which showed scratches, dints and material stuck on the sheets, saying either the photographs were not clear or someone else must have damaged the cladding after he left site. He also disputed that he had damaged a window frame; and when shown photographic evidence of this damage, he suggested it must have been done by someone else.
I accept the photographic evidence of scratched, damaged, dinted and marked wall cladding sheets. I do not accept the defendant’s contention that he had rectified everything by 26 July 2021, or that the damage shown in the photographs had been caused by someone else after he left the site.
(d) Wall cladding: other defects in installation – size, alignment, screws, rivets
Mr McIntyre and Ms Lamb both gave evidence that some wall sheets were cut too short. Mr Johnson and Mr McIntyre also noted that some sheets had been turned up, some had not.
Mr Wilby also observed sheets that had been cut too short and failed to extend to the underside of the fascia. In some instances, this section was covered with a cover strap rather than a flashing, meaning that the sections were not weatherproof. He also said there were wall sections where, “I recall that it appeared to me the first sheet might have gone in that wasn't horizontal and so to correct that the installer had then saw-toothed the next sheet. So, he put the next sheet on and it was offset from the sheet below to try and correct it as the sheets went up the wall.”[88]
[88] T 319/25.
Mr Wilby also observed that some of the cladding had been installed using second hand screws. This opinion was based on their appearance and he noted, “a new screw … will be freshly painted with it's pre-primed, pre-painted coating. Ones that have been used or reused will be scratched or dirty or have the coating taken off.”[89] He also observed that sheets weren’t fastened behind over-flashings or cover flashings.
[89] T 339/4.
Ms Lamb’s evidence also referred to defects in installation including rippling, creasing, sheets that weren’t finished off properly, sheets that weren’t joined properly and that otherwise appeared generally unfinished.
Mr Johnson also identified areas where screws or rivets were missing. Mr Lazarev’s response was that the photographs were not clear enough to show whether there were or were not rivets in place. He explained the missing screws by saying there may have been a beam behind that area and so he would have had to use a different type of screw, which he had not yet purchased.
Mr Lazarev denied that second hand screws had been used. It was put to Mr Wilby that what he had seen was usual markings from the tool being used to screw in the screw. His reply was that, “what I sort of recall from that was that they were, it stuck in my mind because they were, it was, it was beyond that. It was beyond the sort of first installation where you might get some marking from the socket itself, from the bit.”[90]
[90] T 340/18.
Mr Lazarev's response to the evidence about sheets being cut too short, not turned up and misaligned, was vague. He said his usual practice would be that the apprentice would turn up sheets before they were installed, but it could also be done afterwards. When shown a photograph and Mr Johnson’s comment that it showed, “(e)nds of cladding not turned up;”[91] he replied, “(y)eah, I don't know what you want me to say about it. Like, it just looks like they've started – well, started pulling things down or they've started putting things up or, I don't know what they want me to say about it.”[92]
[91] T489/23.
[92] Ibid.
I agree with Mr Lazarev that the photographs are not clear enough to determine whether rivets were used, or removed. On the other hand, I find it unlikely that the absence of screws was a deliberate decision, because of their location. It is highly unlikely that there would be a beam running along the top of only one third of a window, such that it would lead to a gap in the middle of a row of screws. There was no real challenge to the evidence that the size, alignment and turn up of at least some sheets was not acceptable.
Conclusion on the state of the works as at 26 July 2021
Based on the findings above, I am satisfied that as at 26 July 2021, significant defects remained in the roof and wall plumbing works, despite the defendant’s attempts to rectify them. Some of the defects were minor (such as a few missing or dirty screws or rivets, scratched or dirty wall cladding sheets which could easily be replaced) and if these had been the only complaints, then it would be difficult to justify terminating the contract. However there were many significant defects still unrepaired, notwithstanding the defendant’s advice on 21 July 2021 that the defects had been completed. The roof issues alone were extremely serious, and were not challenged by the defendant. Taken as a whole, the wall cladding defects were serious enough that the only reasonable method to rectify them adequately was to replace the cladding. The defendant had not done this, instead he had replaced just a few sheets.
Was the defendant denied the opportunity to rectify the defects?
The defendant’s alternate submission was that if there were still outstanding defects as at 26 July 2021, then his position was that he had been denied a full opportunity to rectify them, because:
(a)a final ‘walk-through’ was not agreed to by the plaintiff; and
(b)on or around 20 July 2021, the defendant was kicked off site by Mr Dunne, purportedly on the instructions of the owners.
I do not accept this submission for the following reasons.

There is no dispute that from 7 July 2021 until 20 July 2021, the defendant and / or his employees attended the site to attend to the rectification works. This is supported by the testimony of Mr Lazarev, Ms Dunne, Mr Dunne, Mr Barnes and by the emails and text messages exchanged between the plaintiff and defendant during this period (discussed above).
Mr Lazarev gave evidence that, on or around 20 July 2021, he attended the property and was denied entry by Mr Dunne, who said that the owners did not want him on the property. Mr Dunne disputed that he would have kicked Mr Lazarev off the site, but confirmed that the owners no longer wanted him on-site.
Mr Lazarev’s evidence does not provide a basis for a conclusion that the defendant was denied access to the premises to complete rectification work on or after 20 July 2021. His evidence was as follows:
Q:       On 20 July 2021, did you go to the site to have a walk through with Mr Dunne?
A:        I went to the site. I couldn't tell you the date 'cause who knows the date. But I      did go to the site. He said the owners didn't want me there. He didn't want me         there. End of discussion.
…
Q:       Did you say anything?
A:        Just left.
Q:       Right. What did you go there for?
A:        To see what was going on with the job. But he didn't want me there. The clients didn't want me - the big thing was apparently the clients didn't want me there.[93]
[93]        T 534/25 – 535/11.
At its highest, if I accept Mr Lazarev’s recollection, it is that he personally was not allowed to walk through the site on 20 July 2021. It does not establish that Mr Barnes or any other employee was refused permission to continue working from that date. Mr Lazarev and Mr Barnes both gave evidence that it was Mr Barnes who was working daily on site and was physically involved in “doing everything,”[94] as well as “a couple of other boys working with [him] at that time.”[95] Even if Mr Lazarev was not allowed onto the site on 20 July 2021, there is insufficient evidence to conclude that all the defendant’s employees or subcontractors were required to cease works and pack up their tools and leave site that day.
[94] T 525/11.
[95] T 497/19.
Further, Ms Lidia Lazarev’s email to the plaintiff sent the following day indicated that the defects (other than scratches) had been rectified and that the defendant’s workers were still on-site rectifying scratches the day after Mr Lazarev was apparently denied access. She made no mention of issues with access. Instead, she invited the plaintiff to attend the site to see how much had been rectified, which is inconsistent with the position that the defendant’s right to access the site had been removed.
In respect of the defendant’s submission that the plaintiff’s refusal to meet him for a walk-through of the site somehow constitutes a denial of opportunity to rectify, I reject that argument.
First, I do not accept that the plaintiff’s refusal to meet for a walk-through was unreasonable. The defendant’s requests were made in the following emails from Ms Lidia Lazarev to the plaintiff:
(a)on 9 July 2021, where she stated, “(c)an you attend to your part ASAP so that we can complete the final stage of this project, which will follow a final invoice and certificate of occupancy upon receiving payment. Once payment has been received we will organise a time/date so we can meet and have a FINAL WALK THROUGH;”[96] and
(b)on 21 July 2021, which stated, “I am letting you know we have rectified as much as possible by solving the issues that you had, and we strongly recommend that you attend the site and see it for yourself… The minority of the issues left are scratches weather permitting this will be rectified as well. Moving forward we would require the go ahead to complete the project as well as 75% of the remaining payment to be paid no later than Friday 23 July 2021 (the 25% is to be paid on a final walk-thru).”[97]
[96] Exhibit P22, CB315.
[97] CB728.
It was put to Mr Lazarev in cross examination that the meaning of these emails was that he was only going to finish the works, including defect rectification, once he had been paid. He disputed that interpretation. I do not accept his evidence. It is clear from the face of each email that the defendant was insisting on being paid at least 75% of the outstanding balance before completing the work and issuing a compliance certificate (which necessarily includes defect rectification) and then having a walk-through with the plaintiff. I also note that the contract included a term that payments were to be made as “Stage/Progress Payments.”[98] The defendant led no evidence of any stage it had completed following its demand for payment on 7 July 2021.
[98] CB289.
Further, through the evidence of Mr and Ms Dunne, the plaintiff maintained that defects in the defendant’s work that were apparent from early June 2021 were discussed repeatedly and in person with the defendant. The evidence given by Mr Lazarev supports this, as he confirmed that when defects were raised with him, he would either fix these on the spot, or soon after, and that this was normal in the course of his work.
This is further supported by the evidence of Mr and Ms Dunne, who both spoke about the attempts at rectification that had been made. Each attested that Mr Lazarev did attempt to address some of the issues listed within the email of 7 July 2021. However, both Mr and Ms Dunne maintained that following the rectification period, the issues, in some instances, were made worse.
Mr Lazarev maintained that he did complete rectification of the work during the rectification period, subject to the qualification that some of the defects were not his responsibility and therefore not his to rectify. This admission also supports the existence of a reasonable opportunity to rectify any defects.
Accordingly, I do not accept that the defendant was denied the opportunity to rectify the defective work.
Was it a term of the contract that the plaintiff give a formal notice of breach and a reasonable opportunity to rectify before being entitled to terminate?
The defendant submitted that it was an implied term of the contract that before the plaintiff could terminate it for defective work, he should be given a formal notice of breach, details of that breach and a reasonable opportunity to address and rectify any defects and / or incomplete works.
There is no such express term in the contract. Instead, such a term would need to be implied. The defence does not provide particulars of why or how this implication should be made, other than the general statement “(i)nsofar as the contract was implied such implication necessarily arises so as to give business efficacy to the relationship between the parties.”[99]
[99] Particulars to Defence dated 4 November 2022: CB21.
In closing submissions, the defendant referred me to the decision of Renard Constructions (ME) Pty Ltd v. Minister for Public Works[100] (“Renard Constructions”). I understand the submission to be that this decision of the New South Wales Court of Appeal stands for the proposition that to give a contract business efficacy, a principal should not be allowed to exclude a contractor from site for a trivial default. Instead, there is an implied term that the parties to a contract must act reasonably in implementing terms of the contract.
[100] (1992) 26 NSWLR 234, specifically pages 258 & 260.
The plaintiff did not dispute an implied term to act reasonably, but disputed the need to imply as a term the specific requirement suggested by the defendant; that is, a formal notice of breach, with details of that breach, and a reasonable opportunity to remedy the breach. The plaintiff described the contract in the present case as a simple subcontract between a domestic builder and a trade. The plaintiff referred to the long-accepted test set out in BP Refinery (Westernport) Pty Ltd v Shire of Hastings[101] (“BP Refinery”), and submitted that there is simply no need to imply a written termination mechanism into a simple subcontract as between a domestic builder and a subcontractor. There is no common law that recognises the implication of such a term as being customary. It cannot meet the test for implication.
[101] (1977) 180 CLR 266.
The test in BP Refinery is set out at as follows:
(F)or a term to be implied, the following conditions (which may overlap) must be satisfied:
(1) it must be reasonable and equitable;
(2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;
(3) it must be so obvious that "it goes without saying";
(4) it must be capable of clear expression;
(5) it must not contradict any express term of the contract.[102]
[102] Ibid, 283.
I accept the plaintiff’s contention. The implication of the term proposed by the defendant does not satisfy the test in BP Refinery. This is a simple subcontract between a builder and a single trade to provide a limited scope of works. Its simplicity can be seen from its express terms and conditions, which are only nine lines printed at the bottom of the quotation. The defendant has not identified any common law or business practice which recognises the implication of such a term as being customary in such a subcontract.
In the absence of any such industry practice, I do not accept it is reasonable and equitable to imply such a term. Further, the term is not so obvious that it goes without saying and it is not necessary to give business efficacy to the contract. Instead, the reverse is true, that the contract is effective without such a term. Accordingly, I reject the defendant’s submission that it was a term of the contract that the plaintiff had to give a formal notice of breach and the opportunity to rectify, before terminating the contract.
Having said that, in any event, I am satisfied that the plaintiff did notify the defendant in writing of its complaints with the works, and it did give the defendant the opportunity to rectify the defects and / or complete the works, for the reasons set out above. Accordingly, even if the term should be implied per Renard Constructions and/or BP Refinery, I am satisfied it has been complied with.[103]
[103] (1992) 26 NSWLR 234; (1977) 180 CLR 266.
Conclusion on termination
For the above reasons I am satisfied that the defendant had by his conduct repudiated the contract; that is, he evinced an intention to no longer be bound by the contract. This conduct included:
(a)the defendant had breached an essential term of the contract by providing both roof plumbing and wall cladding work that was defective;
(b)the defendant had been given notice of, and opportunity to, remedy the defects that existed in the contracted works. The defendant failed to rectify the defects to the requisite standard;
(c)there was no implied term in the contract requiring:
(i)the plaintiff to give the defendant formal notice and details of any breach; and
(ii)a reasonable opportunity to address and rectify any defects or incomplete works;
before the plaintiff was entitled to terminate the contract;
(d)nevertheless, the plaintiff had in fact given the defendant notice of the defects and ample opportunity to rectify, and the defendant had in fact advised the plaintiff that he had done so; and
(e)the defendant demanded payments which were not in accordance with the terms of the contract and before the works were rectified and complete.
Further, the plaintiff was entitled to accept the defendant’s repudiation of the contract, and I am satisfied that it did so by the letter from their solicitors dated 26 July 2021. The contract was therefore terminated from that date.
In Terminating The Contract Did The Plaintiff Thereby Repudiate The Contract?
For the reasons above, as I have found that the plaintiff was entitled to terminate the contract, the plaintiff did not repudiate the contract.
If the plaintiff did repudiate the contract, is it entitled to damages?
For the sake of completeness, I note that this was a question posed by the parties as an issue for determination. As I have found that the plaintiff was entitled to, and did, terminate the contract by correspondence dated 26 July 2021, the premise of this question fails.
C. THE PLAINTIFF’S CLAIM FOR DAMAGES
The amount claimed by the plaintiff as its loss and damage is set out at paragraph 15 of its Amended Statement of Claim. This is calculated as follows:
(a)contract sum: $88,500.00;
(b)less amounts paid to defendant; $70,000.00;
(c)less the value of the incomplete work (the gable ends): $22,000.00;
(d)less the amount paid to the rectifying contractor for the works carried out by it, excluding the works to the roof (in respect of which the plaintiff has released the defendant: see paragraph 10 above): $100,621.00.
The total amount claimed is $104,121.00, although the plaintiff conceded that amount would need to be altered depending on my findings about the contract price.
As set out above, the defendant’s contentions in relation to the amount of damages are that the plaintiff was not entitled to have the contract works remedied by a third party, as the defendant was prevented from rectifying. Alternatively, that the method of rectification was unreasonable, and that the plaintiff should have looked for a lower cost contractor. I do not accept these submissions for the following reasons.
Was the plaintiff entitled to have the contracted works remedied by a third party?
For the reasons above, I have found that the plaintiff was entitled to, and did, terminate the contract and there was no implied term of the contract that the defendant be given formal notice and opportunity to address the defects in his work before the plaintiff was entitled to terminate the contract.
Further, I am satisfied that the defendant was given that opportunity. It is well established that following the legitimate termination of the contract, the plaintiff was entitled to have the contract works remedied by a third party.[104]
[104] For example, Bellgrove v Eldridge [1954] 90 CLR 613, 618-619 (“Bellgrove”).
Was the method of rectification reasonable?
It is the position of the defendant that the quantum of the loss claimed by the plaintiff is excessive because the method of rectification, being removal and replacement, was unreasonable in the circumstances.
Both parties relied on the well-known test in Bellgrove, namely that the measure of damage is the cost of obtaining the works as contracted, subject to the qualification that the work undertaken is necessary to achieve conformity to the contract and, it must also be a reasonable course to adopt. Reasonableness and necessity are questions of fact.[105]
[105] Bellgrove, 618-619.
The plaintiff also referred to the factors summarised by Senior Member Walker in Clarendon Homes v Zalega.[106] Whilst not binding on this Court, this provides a useful guide to some of the relevant considerations in a domestic building context in assessing whether rectification was a reasonable course to adopt. I note that these considerations were also identified by the Full Court of South Australia in Stone v Chappel.[107]
[106] [2010] VCAT 1202.
[107] [2017] SASCFC 72, 55.
The particular considerations that may be relevant in this case are:
(a)the importance of the defects to the owners of the property;
(b)whether the work was serviceable, even if it was not in conformity with the contract; and
(c)whether the cost of rectifying is disproportionate to the actual damage suffered.
In respect of the first consideration, I accept that the owners had become cumulatively dissatisfied with the work of the defendant, to the point that they required the entirety of the roof and wall cladding to be replaced. This is evident from the emails between the owners and the plaintiff that were tendered as business records.
In respect of the second consideration, I do not accept that the defendant’s work was serviceable. In addition to the evidence of Mr Eshlan and Mr McIntyre, the written Direction to Fix from Mr Wilby clearly establishes that the work did not meet the relevant building standards.
As for the third consideration, there was little evidence put before me as to whether the cost of rectifying was proportionate to the damage suffered. I accept that the chosen method included the additional work of removal, in addition to the reinstallation of the wall cladding. This extra step indicates that the rectification costs would be expected to exceed those of the original contract price.
The plaintiff also placed reliance on the fact that the cost of materials and labour had increased substantially during the COVID years. While no evidence of this was tendered by the plaintiff, I am satisfied that this fact is sufficiently known to be accepted by all parties.
The defendant also referred to the decision of Wheeler and Anor v. Ecroplot Pty Ltd;[108] where it was alleged that the cost of the “proposed rectification is out of all proportion to the benefit to be obtained.”[109] In that case, the respondent constructed for the appellants a home which had its rear portion resting upon fill which exceeded the contractually permitted depth. The respondent opposed the cost of underpinning, on the basis it would be disproportionate to the damage suffered.
[108] [2010] NSWCA 61 (“Wheeler”).
[109] Ibid, 81.
In the present case, I do not accept the defendant’s submission that the replacement of the wall cladding was disproportionate, and that if defects still existed following his attempts at rectification, it was not reasonable for the plaintiffs to remove and replace the entirety of the wall cladding. The works undertaken by the defendant fell far below the quality standard of a new build, which was the standard required under the contract. This was the same result in Wheeler, where the Court held “(t)here is in my view no such radical disproportion in this case, nor any other factor, which would lead to the appellants’ desire to have their home accord with the contractual standard concerning footings being regarded as unreasonable in the relevant sense.”[110]
[110] Ibid.
Additionally, I accept the evidence of Mr McIntyre, Mr Wilby and Mr Johnson that replacement rather than an attempt of rectification was a proportionate response, in light of the state of the works as at 26 July 2021. The defendant did not lead any evidence of alternate methods of rectification which could have been adopted by an alternate contractor.
Mr Wilby’s evidence was that given the standard of work he observed on 6 August 2021, it was justifiable to completely remove the cladding and start again. As the plaintiff had to satisfy the building surveyor’s Direction to Fix, I consider that Mr Wilby’s opinion as to the method of rectification is significant.
Further, Mr McIntyre said that he was not willing to inherit someone else’s problems. As he was required to issue a compliance certificate for the work, he accepted that any issues that did appear down the track would fall back onto him and he would be required to fix them. His evidence was that in order to rectify the work, he needed to replace the sheets and the flashings.
I have found above that following the period of rectification one of the defects still existing in the works included sheets that were cut too short. It is difficult to see how this is a defect that could have been rectified to the standard expected of a new build, by a method other than removal and replacement.
Mr McIntyre also said that one of the potential issues with rectification (rather than complete removal and replacement), was that where rectification required the removal and reinstallation of cladding sheets, it would likely cause additional damage to the surface of the sheets, which would also need to be rectified through touch ups. In Mr McIntyre’s opinion, this was not an appropriate rectification method for damaged sheets. As he explained, “(y)ou can’t touch them up….. (b)ecause it [the touch up] fades quicker than what the COLORBOND does.”[111]
[111] T 261/14.

Mr Wilby supported this view, as he observed that the damage to the surface of the sheets would negatively impact the longevity of the product used to clad the walls.
In cross examination, Mr Johnson was asked when full replacement of the cladding sheets becomes warranted. His answer was that, “(i)t becomes warranted as far as I’m concerned is where there’s soaker flashings missing on corners and the only way to put those flashings back in place is to take the sheets off. And the reason I believe there needs to be soaker flashings is because of water penetration and because of the fire risk.”[112]
[112] T 191/23.
Mr Eshlan said, “a recommendation we make is that this roof requires all defects to be repaired and cladding removed and installed in accordance with Australian Standards.”[113] In the Appendix C to his report, he contradicted this statement saying “(t)hese defects are not significant enough to have to start the project again as they are minor defects that requires the roof plumber to return and add finishing touches and complete works.”[114] For the reasons set out at paragraphs 40-43 above, I accept Mr Eshlan’s opinion in his summary of his report, and do not accept the contents of Appendix C.
[113] Exhibit P3, CB107, 1.36.
[114] Ibid, Appendix C.
In the absence of evidence from other contractors about whether this course of action is one that would have been adopted by any rectifying contractor, I find that the reasons given by Mr McIntyre, in addition to the observations of Mr Wilby, Mr Johnson and Mr Eshlan do not support the defendant’s proposition that method of rectification was unreasonable.
I have also had regard to the evidence of both Mr and Ms Dunne who said that they were forced to sell their family home to fund the repairs. I accept that it is unlikely that they would have resorted to such a measure unless absolutely necessary in the circumstances.
The defendant also relied on Westpoint Management Ltd. v. Chocolate Factory Apartments Ltd.[115] In that case, at first instance a developer had been awarded no damages for so called “amenity defects,” being items which it did not intend to rectify. The New South Wales Court of Appeal considered the authorities in relation to intention and held relevantly as follows:
But the plaintiff’s intention to carry out the rectification work, it seems to me, is not of significance in itself. The plaintiff may intend to carry out rectification work which is not necessary and reasonable, or may intend not to carry out rectification work which is necessary and reasonable. The significance will lie in why the plaintiff intends or does not intend to carry out the rectification work, for the light it sheds on whether the rectification is necessary and reasonable. Putting the same point not in terms of intention, but of whether or not the plaintiff will carry out the rectification work, whether the plaintiff will do so has significance for the same reason, and not through the bald question of whether or not the plaintiff will carry out the rectification work. That question is immaterial, see Bellgrove v Eldridge.
So if supervening events mean that the rectification work can not be carried out, it can hardly be found that the rectification work is reasonable in order to achieve the contractual objective: achievement of the contractual objective is no longer relevant. If sale of the property to a contented purchaser means that the plaintiff did not think and the purchaser does not think the rectification work needs to be carried out, it may well be found to be unreasonable to carry out, the rectification work. An intention not to carry out the rectification work will not of itself make carrying out the work unreasonable, but it may be evidentiary of unreasonableness; if the reason for the intention is that the property is perfectly functional and aesthetically pleasing despite the non-complying work, for example, it may well be found that rectification is out of all proportion to achievement of the contractual objective or to the benefit to be thereby obtained.[116]
[115] [2007] NSWCA 253.
[116] Ibid, 60 – 61.
I do not accept that this decision assists the defendant in the present case. First, the evidence unequivocally established that the plaintiff did intend to rectify the defects, and in fact did so. As stated above, Mr and Ms Dunne sold their family home to pay the rectifying contractor.
Second, it is well established that where the actual cost of repair is known, because the works have been carried out, this is an impeccable method of calculating their cost: Hyder Consulting (Australia) P/L v Wilh Wilhelmsen Agency P/L & Anor.[117] This earlier decision of the New South Wales Court of Appeal was considered by it again in Westpoint, and while Giles JA revisited his comments in Hyder in the context of intention, His Honour did not make any comments indicating he had moved away from the above statement in Hyder.
[117] [2001] NSWCA 313, 19.
In the present case, the rectification works had been carried out, their cost is known, and I accept that this provides an impeccable method of calculating cost.
Should or could the plaintiff have obtained other contractors or quotes?
The defendant also submitted that after terminating the contract, the plaintiff should have ‘shopped around’ for a cheaper contractor, rather than engaging Flat Stick Roofing as quickly as it did.
Mr and Ms Dunne both gave evidence about the pressure the plaintiff was under to rectify the defective works and to complete the build. Evidence of the complaints from the owners of the property is set out above. Further, I accept the email from the owners dated 19 October 2021, in which they stated that the only outcome they would accept was for all cladding and flashings including windows to be replaced.
Further, Mr Dunne’s evidence was that he had to respond to the Direction to Fix by 4 November 2021. The Direction was issued under section 37A of the Building Act 1993, which permits a surveyor to require the rectification of works which the surveyor believes on reasonable grounds fails to comply with the Building Act, the building regulations and the building permit. It obliged the plaintiff to carry out the rectification works or face penalties, including fines or loss of licence.
Mr Dunne also gave evidence that after the experience with the defendant, he was not confident in, “just getting quotes from any man and their dog.”[118] The rectifying contractor came highly recommended by several people which was another driving factor in selecting him for the rectification work.
[118] T451/15.
I am satisfied that the reasons given by Mr Dunne are satisfactory to explain the plaintiff’s decision to in engage Flat Stick Roofing as it did.
I reject the defendant’s contention. In any event, the defendant did not lead any evidence that another contractor would have carried out the work for a lower price. I also note that the amount ultimately charged by Flat Stick Roofing ($100,621.00) was very similar to the defendant’s original quoted price ($88,500.00). The difference of approximately $12,000 can be explained by the costs to Flat Stick Roofing of removing the existing roofing and cladding, as well as cost increases due to COVID (as mentioned above).
D. THE DEFENDANT’S COUNTERCLAIM: IS THE DEFENDANT ENTITLED TO THE BALANCE OF THE CONTRACT SUM?
The balance of the contract sum has been taken into account in my calculation of the plaintiff’s loss and damage. It is trite to say that the plaintiff is entitled to an amount of money to put it in the position as if the defendant had performed the contract. Accordingly, the balance of the contract sum (being the monies still in the plaintiff’s hand) must be taken into account. Similarly, it seems to me that the work not carried out by the defendant (the gable end flashings), is accounted for as part of the work completed by Flat Stick Roofing. However if I am incorrect about this, I will allow the parties to address me on the appropriate calculation of the plaintiff’s loss and damage.
CONCLUSION
For the above reasons, the plaintiff is entitled to an order for its loss and damage of $82,121.00, calculated as follows:

Contract sum

$88,500.00

Less amounts paid to defendant

- $70,000.00

Balance in plaintiff’s hand

$18,500.00

Less the amount paid to Flat Stick Roofing to rectify and complete

- $100,621.00

Balance due to plaintiff

$82,121.00

Accordingly, I propose to make the following orders by 19 February 2024 at 4.00pm unless any objections are received before that time in respect of the calculation of the judgment sum (in accordance with the previous paragraph). Any objection must be notified by email to chambers, with short submissions included. If no objections are received, the following order will be made. If any objection is received, the following order may be amended to include time for responsive submissions before judgment is entered (if appropriate).
Proposed orders
(1)Judgment for the plaintiff against the defendant on the plaintiff’s claim that the defendant pay to the plaintiff the sum of $82,121.00.
(2)The defendant’s counterclaim is otherwise dismissed.
(3)The question of interest and costs is reserved.
(4)By 4 March 2024 at 12.00pm, the parties must file and serve brief written outlines of submissions (generally no more than 5 A4 pages) and file them via CITEC and return email regarding the following matters:
(a)   interest;
(b)   the costs of the proceeding; and
(c)   whether the parties wish to make further oral submissions and, if so, the reasons for requesting a further hearing.
(5)Upon receipt of the parties’ written submissions, or the expiry of the time limited by the order in paragraph 4, further orders will be made by the Court.
(6)Reserve liberty to the parties to apply.

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Certificate

I certify that these 59 pages are a true copy of the judgment of her Honour Judge Kirton delivered on 12 February 2024.

Dated: 12 February 2024

Jessica Meaney
Associate to Her Honour Judge Kirton

Contract sum	$88,500.00
Less amounts paid to defendant	- $70,000.00
Balance in plaintiff’s hand	$18,500.00
Less the amount paid to Flat Stick Roofing to rectify and complete	- $100,621.00
Balance due to plaintiff	$82,121.00