Duthy Homes Pty Ltd v Tincknell & Tincknell

[2017] SADC 133

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

DUTHY HOMES PTY LTD v TINCKNELL & TINCKNELL

[2017] SADC 133

Judgment of Her Honour Judge Tracey

1 December 2017

CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - PERFORMANCE OF WORK - REMEDIES FOR BREACH OF CONTRACT - DAMAGES

TRADE AND COMMERCE - COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION - CONSUMER PROTECTION - MISLEADING OR DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS

Claim by builder for progress payment and variations in relation to contract for the construction of a house at Mannum – owners counterclaim for breach of contract and statutory warranties - allege delay in the completion of the house resulting in loss of opportunity to invest funds – allege house never practically complete- allege entitled to credit in relation to back charges for work not performed given changes to the scope and design - claim in negligence and breach of Trade Practices Act – owners allege breach of duty by the building supervisor – certain defects referred for determination- owners seek damages and compensation – owners oppose remedial work order pursuant to Building Work Contractors Act 1995 – builder admits some work defective but excluded from the property by owners - builder seeks payment of progress payment and remedial work order in relation to defects, and credit for variations

Held: 

1. The builder is entitled to its progress payment, plus the difference between the ‘float’ for variations, less those items where a remedial work order found to be inappropriate.

2. The owners’ claims for rectification damages is to be assessed in accordance with the general rule in Bellgrove v Eldridge.

3. Certain rectification costs claimed by the owners were unreasonable and the owners were not entitled to damages for breach of contract or breach of statutory warranty on this basis.

4. In relation to certain of the alleged defects, a remedial work order is appropriate.

5. The owners are entitled to be compensated for those defects where a remedial work order is inappropriate.

6. The house was practically complete on 26 February 2013.

7. Both parties were responsible for delay and the claim for delay damages is dismissed.

8. The owners’ stress and inconvenience has been self-inflicted. The claim for pain and suffering is dismissed.

9. The owners’ claim for breach of the Trade Practices Act against the builder is dismissed.

10. The building supervisor was not a party to the contract. The claim against him for a breach of the Trade Practices Act and in negligence is dismissed.

11. I allow the builder’s claim in the sum of $173,049.41.

12. The builder is entitled to interest on its claim.

Building Work Contractors Act 1995 (SA) s 32, s 37, s 42; Trade Practices Act 1975 Generally; District Court Civil Rules 2006 Rule 223, referred to.
Polyaire Pty Ltd v K-Aire Pty Ltd (No 4) [2007] SASC 36; Strazdins & Anor v Clarke & Ors [2015] SASC 134; Bellgrove v Eldridge (1954) 90 CLR 613; Stone v Chappel [2017] SASCFC 72; Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; Ruxley Electronics & Constructions Ltd v Forsyth [1996] AC 344; Marin & Marin v Regent Homes (SA) Pty Ltd [2002] SADC 37; Radford v De Froberville All ER 42; Willshee v Westcourt [2009] WASCA 87; Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344; Pearce, t/a Freestyle Projects v Caswell [2009] QCCTB 192; Coshott v Fewings Joinery Pty Ltd Unreported, New South Wales Supreme Court CA, 15 July 1996; Hadley v Baxendale (1854) 9 Ex 341, discussed.
Willshee v Westcourt Ltd [2009] WASCA 87; De Cesare v Deluxe Motors Pty Ltd (1996) 67 SASR 28; Westpoint Management Ltd v Chocolate Factory Apartments Ltd [2007] NSWCA 253; UI International Pty Ltd v Interworks Architects Pty Ltd [2007] QCA 42; Cirocco Constructions Pty Ltd v Clarke [2015] SADC 98; Robinson v Harmon (1848) 154 ER 363; Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (1970) 69 LGR 1, considered.

DUTHY HOMES PTY LTD v TINCKNELL & TINCKNELL
[2017] SADC 133

DEFINITIONS

The Contract means the Contract dated 7 October 2010 between the Owners and the Builder for the construction of the Works.

The Owners means Mr Tincknell and Mrs Tincknell.

The Builder means Duthy Homes Pty Ltd.

The Site means the land owned by the Owners on which the Builder built their home pursuant to the Contract.

The Works means the building work carried out pursuant to the Contract.
The House means the House constructed by the Builder at 9 River Lane, Mannum.
The Engineers means Trevor John & Associates Pty Ltd.
Artec means Artec Building Designers.
Nova means Nova Group.
BCA means the Building Code of Australia.
OTR means the Office of Technical Regulator.

THE PARTIES AND PERSONNEL

The following witnesses gave evidence in the Owners’ case:

Michael Tincknell (Mr Tincknell)
The owner and first defendant.

Beth Tincknell (Mrs Tincknell)
The owner and second defendant.

Salvatore Maiolo (Mr Maiolo)
A principal of Artec Building Design. Mr Maiolo is an architectural technician who prepared the design drawings for the construction of the House.[1]

[1]    Exhibit D13, D19.

Brian Menzel (Mr Menzel)
Mr Menzel was engaged by Mr Tincknell to provide a report about the gas installation work at the House. He made recommendations and carried out work. He carried out further work at the House and completed a certificate of compliance on 4 August 2014, noting there were some outstanding issues to be addressed.

Ronald Meakins (Mr Meakins)
Mr Meakins is an Officer with the Office of the Technical Regulator (OTR) who was contacted by Mr Tincknell regarding his concerns about the gas fitting work carried out at the House.

Brian Gish (Mr Gish)
Mr Gish is an engineer who was at the relevant time an employee of the Engineers. He undertook the principal work in the preparation of the plans for engineering services and technical specifications for the House.

Trevor John (Mr John)
Mr John is an engineer and formerly the principal of the Engineers. Mr John had an ‘overview’ of Mr Gish’s work.

Adam Nimmo (Mr Nimmo)
Mr Nimmo attended under subpoena. He was the principal of Adam Nimmo Electrical and produced documents relating to the work carried out at the House.

Ryan Voy (Mr Voy)
Mr Voy attended under subpoena. He is an electrician employed by Adam Nimmo Electrical. He carried out electrical work at the House.

Christopher Sale (Mr Sale)
Mr Sale is a quantity surveyor who was retained on behalf of the Owners to provide an opinion on ‘the amount that it would cost to carry out remedial work so as to bring the work into compliance with the building Contract’.

Philip Prider (Mr Prider)
Mr Prider is an engineer who was engaged by the Owners to inspect the Works and provide a report concerning ‘any and all engineering Works that you consider to be defective and/or incomplete.’

Robert Mitchell (Mr Mitchell)
Mr Mitchell is a senior hydraulic engineer with Systems Solutions Engineering Pty Ltd who was engaged by the Owners to provide a report concerning ‘the hot water issue, particularly in relation to whether the plumbing design and installation to be defective or incomplete.’

Christopher Short (Mr Short)
Mr Short is a building consultant engaged by the Owners to ‘inspect the building works and provide a report concerning all of the defects and incomplete works that you detect during your inspection.’

Michael Schmidt (Mr Schmidt)
Mr Schmidt attended under subpoena. Mr Schmidt is a plumber and gas fitter by trade and worked at the House as a subcontractor.
The following witnesses gave evidence in the Owners’ case:

Christopher Duthy (Mr Duthy)
Mr Duthy is the director of the Builder. Up until the incorporation of Duthy Homes Pty Ltd in April 2010, he had traded in partnership with his former wife.

Melanie Lewis (Ms Lewis)
Ms Lewis is Mr Duthy’s current partner, and at the time of the Works, was involved in the Builder’s strategic planning, and dealt with many aspects of the business including administration, marketing, project management, client liaison and Site supervision. She was involved in obtaining quotes for subcontractors and in some instances involved in their coordination and attendance on Site. Ms Lewis attended most Site meetings with Mr Tincknell and Mr Duthy and was responsible for recording the minutes for those meetings.

Mark Goodman (Mr Goodman)
Mr Goodman is the master plumber who carried out all of the plumbing work for the House.

John Goldfinch (Mr Goldfinch)
Mr Goldfinch is an engineer and a director of FMG Engineering. He was retained on behalf of the Builder to prepare a report responding to that prepared by Mr Prider dated 9 May 2014.

Luigi Ienco (Mr Ienco)
Mr Ienco is the Director of TMK Consulting Engineers. He was retained on behalf of the Builder and asked to provide a responding report to the report of Mr Mitchell.

Peter Jankovic (Mr Jankovic)
Mr Jankovic is a building consultant who had been retained on behalf of the Builder to provide advice in relation to ‘claims of faulty and incomplete building work’ at the House.

Kym Fuss (Mr Fuss)
Mr Fuss is a quantity surveyor who was retained on behalf of the Builder dated 13 March 2015 and asked to respond to their report provided by Mr Sale.

Graham Ward (‘Mr Ward’)
Mr Ward is an electrical contractor and the director of Active Connection Electrical Pty Ltd (ACE Electrical). He carried out electrical work on the House.

Jonathan Mills (‘Mr Mills)
Mr Mills is the Builder’s solicitor who was called to give evidence in relation to his efforts to contact Mr Schmidt.

OVERVIEW

1. The Owners entered into the Contract dated 7 October 2010, for the construction by the Builder of the House. The Contract was made up of documents that included the Housing Industry Association (HIA) Building Specification (the HIA Specification), the HIA Building Schedule (the Building Schedule) and the Builder’s Building Specification dated 30 August 2010 (the Builder’s Specification).

2. The land upon which the House was built had been acquired by the Owners in the late 2000’s with a view to the House being their permanent retirement residence.

3. The Contract price was $2.3 million. The House has been built on three levels and is built on River Lane, which faces the banks of the Murray River. The ground floor comprises a garage, storage area which holds rainwater tanks, bathroom and study, lift well and entrance foyer. The second floor comprises four separate units, each containing a bedroom/lounge area, kitchen and ensuite. The third level comprises the main bedroom, ensuite, meals area, family room, kitchen, formal lounge bar area, storeroom, laundry and bathroom and a large outdoor patio area.

4. Mr Tincknell had previously owned a large and successful building company. Following a serious work injury he took early retirement and sold his company, taking on a role as a building consultant and becoming involved in commercial property development. At the time the Owners entered into the Contract, they were living at an address in Dernancourt, that had been built by Mr Tincknell’s building company as a show home and for which his company had won an HIA award for home of the year.

5. The Owners also owned another home on River Lane in Mannum, which had been used primarily as a holiday home. The Owners said they intended to sell their home in Dernancourt and their Mannum holiday home when the House was completed, and invest the monies they received from the sales. By the time Works had started on the House, the Owners were living permanently at their Mannum holiday home.

6. Prior to any dealings with the Builder, Mr Tincknell had engaged Artec and the Engineers to draw up preliminary designs and plans. These documents were provided to Mr Duthy for him to tender for the Works. Mr Duthy presented his quote to the Owners along with his specifications (first specifications). Mr Tincknell accepted the quote and provided Mr Duthy with a copy of the first specifications that incorporated Mr Tincknell’s handwritten amendments. Mr Duthy prepared a further specification (amended specifications), incorporating only those of Mr Tincknell’s amendments the Builder agreed to. This amended document was the version of the specifications that were signed when the parties met to sign the Contract (the Builder’s Specifications). There is a dispute as to whether Mr Duthy agreed that he would incorporate those further changes.

7. The Owners said that the Contract price was increased by $38,132 up to $2.3M as a ‘float’ to provide for future variations to the Works and at trial, the Builder accepted, for the purposes of the trial, that this was the case. The Builder accepted that its claim for the variations it had claimed against the Owners was confined to the sum of $33,301.90. Therefore, what remained in issue was which party was entitled to the balance of the float.

8. A preliminary contract between the Owners and Mr Duthy provided for the commencement of early Works to the land.[2]

   [2]    This Contract came about because at that point in time the Owners’ solicitors were waiting for the Builder, as opposed to Mr Duthy, to be licensed and insured.

9. The Contract provided a start date of 5 July 2010 and a finish date of 29 September 2011. Construction proceeded with various issues arising along the way, some of which have made their way into the Owners’ claim and others which were not raised by the Owners until the proceedings were issued.

10. Mr Tincknell was very involved in the Works and was on Site a good deal of the time. Throughout the Works, there were thirty three formal Site Meetings involving Mr Tincknell, Mr Duthy and Ms Lewis, some of which were lengthy. Minutes of those meetings recorded in detail, issues that arose in the Works and incorporated a ‘to do’ list, attributing what needed to be attended to and by whom. There was also very regular written and telephone communication between Mr Tincknell and the Builder throughout.

11. On 18 December 2012, the Builder issued the last progress claim to the Owners and Mr Duthy met with Mr Tincknell on 20 December 2012. The Builder asserted that the Works had reached practical completion. The Owners disputed the Works were practically complete and have said that the Works are still practically incomplete. The Builder prepared a defects list and returned to the Site to attend to those defects. It issued a revised notice of completion on 26 February 2013. In late March 2013, the Owners’ solicitors informed the Builder that the Owners had taken possession of the Site.

12. The Owners have never lived at the house, despite having curtains and carpets installed and having moved their furniture and personal effects from their house in Dernancourt.[3] While Mr Tincknell maintained that there were a number of issues that meant the house was not fit for purpose, his counsel Mr Jenner, conceded that the only real issue that would have prevented occupation was the issue of hot water. Up until the trial, no hot water had been available at the house, something apparently only discovered by Mr Tincknell in 2014. Following on from my enquiries on the first day of trial, the Owners consented to non-invasive work being conducted by the Builder or Mr Goodman, resulting in success in at least the provision of hot water at the house.

    [3]    The Builder sought initially to establish that the Owners were at least on occasion living in the house.

13. On 23 April 2013, the Builder issued proceedings in the District Court seeking payment of the final progress claim in the sum of $271,434.65 plus interest. On 30 May 2015, the Builder made an application in the Magistrates Court asserting a statutory right to perform remedial work.  On 3 June 2013, the Owners filed their defence and issued a cross action.[4]

    [4]    Second Cross Action (Counterclaim) filed 17 March 2015.

14. The Owners alleged that the Builder is in breach of the Contract and in breach of the statutory warranties in that the Works are defective. They seek damages and compensation. Furthermore, they seek damages for pain and suffering, breach by the Builder of the Trade Practices Act 1975 (TPA) for misleading and deceptive conduct, and for the delay in the investment of funds from the sale of their Mannum holiday home. They seek damages against Mr Duthy in his capacity as supervisor for the performance of the Contract for breach of his duties of care.

15. A number of the Owners’ claims if successful, would require significant compensation. In particular, work the Owners have said is required to bring the waterproofing and termite protection features of the design of the House into compliance with the Contract, would require extensive structural demolition and reinstatement, as would the rectification of defects in the hot water system.

16. The Owners have opposed any remedial work order and say that they have lost confidence in the Builder and Mr Duthy.

17. Before trial, the parties attempted to resolve their issues by way of mediation. Orders were made by Master Norman for a conclave between the various experts who had given their opinions. The mediation failed and further orders were made by Judge Slattery closer to the trial date that the Owners would be dux litis at trial, Scott Schedules were to be prepared and further conclaves between the relevant experts were to take place resulting in the preparation of  joint position papers.

18. Orders were also made for the referral of certain of the defect issues to Mr Brenton Trenorden (Mr Trenorden) for his determination which was to be binding on the parties. Mr Trenorden’s determination[5] was that the Builder was liable to the Owners for work in the sum of $17,436.37 and in the sum of $2,010.23 for work which they were not liable but agreed to do. Mr Trenorden determined that the Works reached practical completion on or about 18 December 2012.

    [5]    Exhibit D1.

19. In his determination, Mr Trenorden wrote:

    15. I found from my inspection that the quality of the building generally was well above that considered to be the level of finish found broadly in the housing industry in South Australia.

    16. It was clear from the documentation presented to me and comments made by the parties at the hearings that during the time the building was constructed and prior to the commencement of construction, the Owners were fully engaged with the process on a day to day basis. The involvement was interrupted only by the Owners holidaying away.

    17. I find that the Owners were Builders for many years and one must assume that during that time significant knowledge about the building process and building practices had been gained.

    18. This involvement by the Owners including tendering of subcontractor packages to be included in the Builder’s work or to establish Prime Cost Sums for the insertion in the contract.

    19. It is clear that with the knowledge of the building industry and their day to day involvement with the process, should have enabled them to mitigate losses that may have incurred in the building process.

    20. The Builder, on the other hand assigned the principal of the company to supervise the work on a day to day basis at the request of the Owners.

20. Joint position papers were prepared by all experts and made available to the parties just before trial, other than the report by the quantity surveyors, who attended to their task after the evidence at trial had narrowed the claims somewhat.

21. The trial occupied 24 sitting days. Over the Owners’ opposition, I conducted a view of the Site on 5 May 2016 in the presence of the parties and their legal advisors.

    THE CONTRACT

22. As mentioned, the Contract is dated 7 October 2010. It was prepared by the Owners’ solicitors, although is expressed from the Builder’s perspective.

1. The clauses most relevant to the proceedings were:

   ·    The Contract expressly provided that the Builder had represented the necessary skill to do the Works and that the Owners had relied on that representation.[6]

   [6]    Recital C.

   ·    The rule of contra proferentem did not apply.[7]

   [7]    Clause 1.2.6.

   ·    The Contract listed the Builder’s main obligations as:

   2.1     We will do the Works at the Site.

   2.2     We will do them properly and skilfully.

   2.3     We will do them as required by any statute.

   2.4     We will use good and proper materials.

   2.5     We will do the Works in accordance with the Contract documents.

   2.6 Subject to any variations under clause 14 or PC adjustments under clause 15, we will do the Works and the price we will charge for doing that will not be more than the GMP.[8]

   [8]    See definition of GMP below.

   ·     The Contract listed the Owners’ obligations as:

   5.2You must not give any instructions to our suppliers or subcontractors, or to our workers.

   5.3When we ask for instructions, you must give them to us within 48 hours unless you and we agree otherwise.

   5.4   You must give all instructions to us in writing unless you and we agree otherwise.

   ·     The Builder was required to refer any ambiguity or discrepancy in the Contract to the Owners and prohibited payment associated with correcting the ambiguity or discrepancy.[9]

   [9]    Clause 6.1.

   ·     The Contract provided an order of precedence in relation to the documents that made up the Contract as follows:

   6.2     If there is any inconsistency in the Contract documents the following order of precedence applies –

   6.2.1        this Contract

   6.2.2        the engineering plans and specifications referred to in clause 1.1.1 (b)

   6.2.3        the plans referred to in clause 1.1.1 (a)

   6.2.4        the specification referred to in clause 1.1.1 (c)

   6.2.5        the schedule referred to in clause 1.1.1 (d)

   6.2.6        the Builders’ specification’ referred to in clause 1.1. (e)

   6.2.7        the consent referred to in clause 1.1.1 (i)

   6.2.8        the approval referred to in clause 1.1.1 (h)

   6.2.9        the Site plan referred to in clause 1.1.1 (g)

   6.2.10        the Clipsal document referred to in clause 1.1.1 (f)

   6.2.11        the specification referred to in clause 1.1.1 (j)

   6.2.12the layout plans referred to in clause 1.1.1 (k)

   ·       The Owners were not to give instructions to builders or subcontractors.[10]

   [10] Mr Tincknell was present at the Works on a regular basis and said subcontractors would approach him for instructions or guidance when Mr Duthy was not available. Ultimately the Builder formally complained. The Owners say there has been no breach of the clause that would give rise to the prevention principle and relevantly there has been no cause of delay by the Owner’s dealings with the subcontractors. If anything, the owner’s involvement facilitated the Works rather than otherwise.

   ·The Contract included a procedure for the Builder to give notice of any delay.[11] There was an obligation for the Builder to notify the owner of the likelihood of a delay, an obligation to minimise delay if it could, to notify of the delay once it is known in writing and for an extension of time to be sought. There was an acknowledgment that there was no other entitlement to an extension of time to bring the Works to practical completion other than those available by reason of a breach of the Contract or otherwise as agreed.[12]

   [11] Clause 12.1-12.8.

   [12] Only two extensions of time were sought by the Builder. One was for inclement weather and was granted and another was sought but rejected. There is no pleaded case from the Builder to explain why it was reasonable to extend the time for practical completion from 29 September 2011 to 18 December 2012.

   ·The Contract was for a Gross Maximum Price, (GMP) which was defined by the following:

   13.1We agree that the GMP includes all of the Works, risks, compliance with all duties and obligations under this Contract unless expressly excluded elsewhere in this Contract and without limiting this, we agree that the GMP includes but is not limited to the following:

   13.1.1 any rise or fall in the cost of labour and materials;

   13.1.2 all Site conditions whether obvious or hidden;

   13.1.3 all payments to our workers, including long service leave, redundancy,  severance, worker’s compensations or superannuation;

   13.1.4 industrial matters;

   13.1.5 taxes including but not limited to customs, duties, sales taxes and GST  applicable to any goods or materials to be used with the Works;

   13.1.6 management and supervisory costs;

   13.1.7 liaising with any third parties affected by the Works (including any authority, or neighbour);

   13.1.8 all services required to do the Works;

   13.1.9 transport and carnage including without limitation the transport of any  construction rubble, materials or waste resulting from demolition work and activities undertaken by us from the Site to a waste disposal facility;

   13.1.10 the cost of obtaining and assisting you to comply with all legal requirements, including all necessary notifications, interfacing, work sequencing, restrictions imposed by work permits and the like; and

   13.1.11 insurances, overheads, administration charges and profit.

   ·The Builder was required to provide the Owners with an unconditional bank guarantee to the value of 5% of the GMP as security for performance of the Contract.[13]

   [13] 4.1-4.7 It is presently held by the Owners who have, notwithstanding their claims, not sought to present the bank guarantee. One of the orders sought is that if I were to find that in relation to the money claims there was money paid by the Builder, they are entitled to present the bank guarantee in satisfaction or partial satisfaction of any amount ordered. The Builder in its pleadings calls for a return of the bank guarantee.

   ·As regard back charges, instead of the Builder supplying a PC item and then claiming it in a progress claim, the Builder agreed with the Owner that the Owner would pay for the PC items himself. The PC items had been identified by the owner prior to the tender. The Owner paid for these items directly and the figure that is now claimed of $31,414, is the Builder’s mark up of 10% on those PC items provided by the Owner.

   ·Clause 14 provided for a way in which variations are to be dealt with. Clause 14.7 provided that the GMP can only be increased in accordance with this clause and the Builder is not entitled to increase the GMP under any circumstances whatsoever.[14]

   [14] The Owners say this will apply to a number of the variations where the procedures have not been met. The Builder will not be able to claim a variation as they don’t comply with clause 14. Furthermore the clause provides that the Builder is not entitled to an extension of time for any variation unless agreed in writing. In the main either the variations did not seek an extension of time, or if they did, it was agreed to.

   ·Clause 18 dealt with the contractual obligation to meet. Meetings continued until September 2012. Ms Lewis minuted all the meetings prior to the meeting on 31 August 2012. She refused to minute for that date and refused to attend at meetings after that date.

   ·Practical completion under the Contract was provided for in the following terms:

   19.1 ‘Practical completion’ is when the Works are substantially complete and reasonably fit for their intended use, and you have received:

   19.1.1 satisfactory test results for all services and items forming part of the Works which appropriately require testing or commissioning

   19.1.2 copies of all appropriate warranties given by others relating to any part of the Works

   19.1.3 all technical information relevant to the Works, or their use or maintenance, including maintenance manuals

   19.1.4 a certificate of compliance under the Building Code for the Works

   19.1.5 a certificate of occupancy under the Development Act for the Works

   19.1.6 certificates of compliance for all services

   19.2  When we believe that the Works are practically complete, we will notify you accordingly and give you a final progress claim.

   19.3  Within 7 days you must inspect the Works with us and give us a list of items that you say are defective or incomplete.

   19.4  If there are no defective or incomplete items, you must pay the final progress claim within 14 days after we are given the list.

   19.5  If you have given us a list of items under clause 19.3, so far as we accept responsibility, we must fix the items written in the list within a reasonable time and in any case within 14 days after we are given the list.

   19.6  When we have fixed the items that we accept responsibility for, we will give you a fresh notice that the Works are practically complete.

   19.7  If we do not fix the items that we are responsible for within the time in clause 19.5, you may engage others to do so and the cost of that will be a debt due by us to you.

   19.8  Within 14 days of completion of all defects noted in the list in clause 19.3, you must pay the final progress claim.

   19.9  Once the final progress claim is paid, we will return possession of the Site to you.

   ·Clause 20 provided for the defects liability period which is 12 months after the date of practical completion.

   ·A procedure for managing any defects was set out as follows:

   20.1  At the end of the defects liability period, you may give us a list of any defective parts of the Works.

   However, if there are problems which arise during the defects liability period that might cause damage unless fixed immediately, you should tell us straight away.

   20.2  So far as we accept responsibility, we must (and subject to this clause we have the right to) fix the Works.

   20.3  We must fix defects at no cost to you and within a reasonable time and in any case within no more than 14 weeks after the defect is notified to us.

   20.4  If we do not fix the defective parts of the Works within the time in clause 20.3, you may engage others to do so and the cost of that will be a debt due by us to you.

2. The Schedule to the Contract included the following:

   1Start date: 5 July 2010;

   2Finish date: 29 September 2011;

   3GMP: $2,300,000 including GST;

   4Defects liability period: 12 months from practical completion of the Works;

   5Site meeting frequency: fortnightly;

   6A list of PC items with the notations ‘this price may change.’

   THE CLAIMS

3. The Builder claims:

   ·Payment of $238,116.25. That is, the last progress claim less the variations to the Contract abandoned by the Builder. It accepts the determination made by the court appointed expert Mr Trenorden, for $17,436.37.[15]

   ·A remedial work order under the Building Work Contractors Act 1995 (SA) (the Act), the consequence of which will be that the whole of the unpaid Contract sum will be payable when any defect work is completed.

   ·Return of its bank guarantee security.

   ·Interest on the money claim from 25 December 2012 until judgment.[16]

   [15] Exhibit D1, p 103.

4. The Owners claim:

   ·The Builder breached the express terms of the Contract and is in breach of the statutory duties in that the Works are defective.

   ·The Builder has failed to comply with the Notice to Remedy issued pursuant to clause 23.2 of the Contract dated 8 February 2013.

   ·Credit for the difference between the cost of the now agreed variations and the $38,132 that had been allowed for possible variations.

   ·The cost of the remedial work and they oppose any remedial work order (save with respect to the plumbing and the provision of electricity to the spa).

   ·The Works were not practically complete as at 18 December 2012 and are still not complete.

   ·Damages for the delay in the completion of the Works.

   ·Damages for the distress, inconvenience and disappointment they have suffered because of the Builder’s breach of the Contract.

   ·Damages for the representation that the Builder had the necessary skill and expertise to carry out the Works, which was misleading and deceptive.

   ·Damages against Mr Duthy for breach of his duty of care in failing to exercise reasonable care, skill and diligence, and failing to properly supervise the Works.

   Principal questions in the action

5. The disputes between the parties at trial were many and varied. The principal questions are:

   1Whether the Works became practically complete, and if so when.

   2Whether the Owners took possession and if so, when.

   3The nature and effect of notices, defects and the defects liability period.

   4Whether or not there was delay and if so, what was the cause of any delay.

   5Whether the Works are defective.

   The defects claims concerned the following topics:

   ·       Waterproofing;

   ·       Termite protection;

   ·       Cracking to the garage floor;

   ·       Height of the garage door opening;

   ·       The colour and pattern of tiles laid on the external balconies;

   ·       Water ‘ponding’ on the external balconies;

   ·       Rendered external finish;

   ·       Hot and cold water service;

   ·       Tile placement on the external stairs;

   ·       Internal stairs;

   ·       Pavers laid to the front of the House;

   ·       Exhaust fan ducts;

   ·       Valley gutter;

   ·       Ceiling exhaust system;

   ·       Cracking to the parapet and eaves;

   ·       Box gutters;

   ·       Down lights.

   6Whether ‘reasonableness’ of the claimed cost to remedy a defect is to be taken into account.

   7The scope of the remedial work.

   8Whether the Builder is permitted by the Court to do the remedial work.

   9Whether the Owners mitigated their loss.

   10The reasonable cost of the remedial work if not to be carried out by the Builder.

   11Assessment of the back-charges claims.

   12Assessment of the claim for inconvenience, loss of enjoyment and disappointment.

   13Assessment of the claim for loss of opportunity to invest the sale monies by the owners.

   14Entitlement to the balance of the $38,000 float.

   15The claim against Mr Duthy as supervisor.

   16The claim pursuant to the Trade Practices Act 1975.

   17The interest claim.

   Interlocutory application

6. Final submissions in the trial were completed on 3 August 2016.

7. On 10 August 2016, the Owners made an application that they were entitled to relief under the Building Work Contractors Act 1995 (SA) (‘the Act’).

8. By their application, the Defendants [Owners] sought the following orders:

   1.…

   2.…

   3.A declaration that Order 2 made on 23 March 2016 in Action No DCCIV 773 of 2015 was an application for the determination of a dispute arising out of a contract for the performance of the building work pursuant to s 37(2) of the Building Work Contractors Act 1995 (SA).

   4.In the alternative an order, nunc pro tunc to 23 March 2016 that from that date the second cross action (counterclaim) filed in Action No DCCIV No 900 of 2013 on 17 March 2015 be treated as the Respondents’ [Owners’] application for the determination of a dispute arising out of a contract or the performance of the building work pursuant to s 37(2) of the Building Work Contractors Act 1995 (SA) in DCCIV No 773 of 2015.

   5.In the further alternative, an order nun pro tunc to 23 March 2016, that the defendants [Owners] have leave to amend paragraph D of their Prayer for Relief in Part 2 of the second cross action (Counterclaim) filed in Action DCCIV No 900 of 2013 to replace the word (Damages) with (Compensation).

   6.That the plaintiffs’ [Builders’] solicitors pay the costs of and incidental to this application on an indemnity basis.

   7.That any order for costs made pursuant to order 6 be enforced forthwith.

   8.Such further or other orders as the court sees fit.

9. The application arose from submissions made on behalf of the Builder in closing submissions. A twelfth affidavit of Nicholas James Graham was provided in support of the application.

10. On 23 March 2016 Judge Slattery had made the following orders in relation to DCCIV-15-773:

    1.The action be reinstated;

    2.The second cross action (counterclaim) filed in action DCCIV No 900 of 2013 on 17 March 2015 be treated as the respondents [Owners’] cross action in the within proceedings.

    3.The fourth defence to cross claim filed in action DCCIV No 900 of 2013 on 5 May 2015 be treated as the applicants’ [Builders’] defence to cross claim in the within proceedings.

    4.The defendants reply to the fourth defence to cross claim filed in action DCCIV No 900 of 2013 on 18 August 2015 be treated as the respondents [Owners] reply to the fourth defence in the within proceedings.

    5.This action be consolidated with DCCIV No 900 of 2013

    6.The costs of these orders be costs in the cause.

11. The Owners’ primary submission was that the meaning of the order made by Judge Slattery on 23 March 2016 was clear. They submitted that as outlined in Polyaire Pty Ltd v K-Aire Pty Ltd, [17] the test to be applied in regards to ambiguity includes an assessment of the context in which the order is made. In Polyaire, Besanko J stated:[18]

    If the orders are ambiguous then that ambiguity must be resolved by the usual process of construction, having regard to such extrinsic material as may be relevant. That material would include not only the reasons for judgment, but also the pleadings, the course of the trial and the submissions of the parties prior to the making of the orders…

    [17] Polyaire Pty Ltd v K-Aire Pty Ltd (No 4) [2007] SASC 36.

    [18] At [44].

12. In Polyaire, the Court was considering orders which were final in nature as opposed to interlocutory orders such as in the present case which Besanko J observed ‘could, without much difficulty, be altered or supplemented …’[19]

    [19] At [33].

13. In the case Strazdins & Anor v Clarke & Ors,[20] Judge Dart considered the approach to the construction of consent orders. Judge Dart observed:

    It is the objective intention of the parties, rather than the subjective intention, that is under consideration. The relevant question to be asked is what is the meaning of what the parties have said; not what did the parties mean to say?

    The court is concerned with determining what a reasonable person in the position of the party to whom the words were addressed would regard as the other party’s intention. It is necessary to consider what is called the factual matrix…

    [20] Strazdins & Anor v Clarke & Ors [2015] SASC 134.

14. Therefore in considering the intention of the orders made, consideration must be given to the surrounding circumstances in which the order was made.[21] In submitting that the order made by Judge Slattery was not ambiguous the Builder’s provided detail of the surrounding circumstances in their written submissions.

    [21] Ibid at [62].

15. They referred to the correspondence between Mr Jenner and solicitors for the Owners when the 2015 action was administratively dismissed seeking consent to have the matter reinstated and consolidated. This consent was given and the consent orders were prepared. An email dated 22 March 2016 from Mr Jenner to Mr Mills, solicitor for the plaintiff with the attached proposed minutes of order, in identical terms to those ordered by Judge Slattery on 23 March 2016, in respect of action DCCIV-15-773 states:[22]

    Please see attached the proposed minutes in respect of [action no. DCCIV-15-773]

    The facilitating orders about the pleadings are intended to sweep up our statutory warranties claim and also your pleas about the remedial orders you seek.

    [22] Exhibit NJG-50 on the application.

16. The Owners submit that the wording of this email is clear. The response received from the Builder was unequivocal.[23] They submit that the sole purpose of the second of Judge Slattery’s orders, was to enable the defendant access to the Act as the cross-action was already before the court.

    [23] NJG-51 on the application.

1. The Owners seek a declaratory order to clarify the purpose of the order made by Judge Slattery. In the alternative they seek an order that from 23 March 2016 the cross-action was to be treated as an application under the Act.

2. The Builder opposed the application, submitting that the Owners never sought relief under any section of the Act and that within the cross-claim the Owners rely on the statutory implied terms in the Act in seeking an order for damages for breach of a contractually implied term. They submitted that this issue has come as a genuine surprise as it “never crossed [their] mind until the closing address that there was any other claim before the court”.[24] It was, the Builder said, never articulated that the Owners were seeking relief under the Act in any documents before the court. In the Second Cross-Action (Counterclaim), filed 17 March 2015 the Owners claim damages for breach of statutory warranties.[25] Throughout the document they submit that the Builder is in breach those warranties. The Builder draws on the fact that there is no difference between the implied terms available under the statutory regime and common law implied terms and this is how they have proceeded with their case.[26] The Owners have not sought relief under s 37 of the Act anywhere within their cross-claim.

   [24] T14 of hearing on 18 August 2016.

   [25] Trial book, p 23.

   [26] T15.

3. The Builder submitted that to allow the application would be a very significant indulgence to the Owners, allowing them to put these matters before the court when before now they have chosen not to. This would prejudice the Builders with regards to the extra delay and cost in these arguments. One aspect of the prejudice would be the fact that they had not put the issue of reasonableness to any witnesses in assessing the difference between a compensation order pursuant to s 37 of the Act or a damages order.

4. I did not accept that submission. The issue of reasonableness is a question of law to be determined by the court, as such, the opinion of witnesses at trial as to the reasonableness of any work to be completed would be of no assistance to the court.

5. The Builder submitted that the relevant order made by Judge Slattery was made as a consequence of the Builder bringing proceedings under the Act as they are required to do, and the relief they sought. They submitted that the language used in the defence pleading, and the cross-claim are not consistent with the language of the Act.

6. Mr Ross-Smith referred to the language used by Mr Jenner when communicating with Mr Mills for the defendant’s solicitors by email dated 23 March 2016. He submitted that the use of language describes that the orders were to address the two things remaining before the court, the statutory warranty claim of the Owners and the Builder’s pleas about the remedial orders they sought. He highlighted that the language used does not mention remedial orders the Owners sought.

7. In referring to the Owner’s response to the Builder’s claim at the Magistrates Court under the Act the Builder highlights that the Owners have not sought any statutory relief under the Act. They submitted that it was an intentional decision for the Owners to rely upon one claim, under the common law, and that is an election which a party can make.

8. I do not accept that the reliance upon the Act by the Owners has come as a genuine surprise to the Builder. Considering all the relevant surrounding circumstances I do not accept that the Owners did not at the very least consider the stance taken by the Builders to be a reasonable possibility. In any event in accordance with 6 DCR 223, a Court may, in the appropriate case give judgment for a form of relief that differs from the kind of relief sought.[27] I do not find that there is any significant prejudice to the Builder if the application were to be granted.

   [27] District Court Civil Rule 223.

9. I granted the application and made an order in the terms of paragraph 4 of the written application.

   THE TRIAL

   ASSESSMENT OF WITNESSES

10. I make the following general comments regarding the principal witnesses. I will make additional findings in relation to their credibility and reliability in my discussion of the various topics.

    Mr Tincknell

11. There is no doubt that Mr Tincknell has been a successful builder who has considerable experience in the industry.

12. From both his evidence and the voluminous written communications he had with Mr Duthy and others, I find that he is a very particular man, who I suspect has in all aspects of his life, very high standards, both for himself and others. He has an attention to detail which no doubt has stood him in good stead in relation to his business activities. My impression is that he is not a man to shy away from dispute or to accept anything he believes to be sub-standard. Mr Tincknell has put a great deal of time and energy into this project and what he at least perceives to be defective or incomplete work, would no doubt be frustrating and distressing to him.

13. My impression from his evidence was that his reputation mattered to him. This was to be, and is, a grand home. The design of the home and the setting in which it is constructed, would not be to everyone’s taste, but clearly Mr Tincknell wished to mirror much of the design and finish of his home in Dernancourt, a home which represented his success as a builder.

14. It was no doubt very difficult for him to come to terms with certain criticism that was expressed within the Mannum community about the design and position of the House. In cross-examination he referred to the ‘total anxiety’ that was created.[28] He said ‘we were getting non-stop comments in the local Mannum Mag… this went on for month after month, after month’. Everything was, he said, very unfavourable and more than anything it was about the size of the building for the area. He said that it was very upsetting for his wife.[29] A copy of what appears to be a flyer, referring the to the House as ‘Stinknells cement monster’ and various letters to the editor of the Mannum Mag, describing the House as ‘tacky’, ‘ugly’, ‘an abomination’ and ‘a classic case of too much money and bad taste’ were tendered.[30]

    [28] T557.

    [29] T556.

    [30] Exhibit D256.

15. Clearly for Mr Tincknell, the House was going to be a representation of his success and of his love for his family. The House had been designed with the needs and the comfort of his family in mind. What I have found was Mrs Tincknell’s distress at some of the community response, would at the very least, have been unsettling to him.

16. I have been left with the impression that Mr Tincknell’s management of many of the issues he has raised against the Builder come from an attempt, albeit perhaps not intentional, to distance himself from the project. I can find no other plausible explanation for his failure to address the hot water issues more quickly and thoroughly and in particular, why he did not respond to communication from Mr Goodman. The Owners were it seems, in no real hurry to take up occupation.

17. If I were to accept that Mr Tincknell was unaware that there was a problem with the hot water supply until 9 September 2014, that in itself is indicative of a decision not to reside in the House earlier.  Given that the hot water was the only real issue that could properly prevent the Owners moving into the House when they had taken possession, not knowing about the problem, I would expect, would have meant an earlier attempt to move in. To my mind there was a deliberate avoidance on Mr Tincknell’s part to take up occupation.

18. Mr Tincknell delayed in getting gas to the site, something which was his responsibility under a variation to the Contract.[31] True it is that the system needed to be commissioned. Mr Goodman conceded that he intended to do the work once the gas was connected. However, Mr Tincknell seemingly went out of his way to ensure he attended to everything other than the real issue between the time the tanks arrived and 4 August 2014, when Haig & Menzel issued a certificate of compliance. Even accepting that the second fix of the gas works were to be carried out by the Builder under the Contract, Mr Tincknell’s decision to engage the services of Haig & Menzel, as early as February 2013, without informing the Builder, was difficult to understand.

    [31] The tanks were connected on 23 September 2013 and gas was first delivered to the House on 21 March 2014; cf Exhibit D136.

19. Mr Tincknell’s failure to address with the Builder, some of the matters about which he now complains is troubling. Given his attention to detail and my assessment that he is not a man to shy away from conflict, it is difficult to appreciate there is a genuine concern as regards to all matters about which he now complains. That is not to say that there are not defects. Clearly, as evidenced in Mr Trenorden’s report, there are defects that should be rectified, however I note Mr Trenorden’s comments about the standard of the finish which accords with my own view. I accept that many of the issues raised by the Owners concerned aspects of the construction that cannot be appreciated by inspection. Certainly, the no doubt expensive fit out creates a deceptive impression, but superficially at least, the Works have been finished to a high standard.

20. Mr Tincknell did not appear keen to allow a proper investigation of the matters that he said were of concern to him. By way of example, I refer to his refusal to allow Mr Jankovic to conduct a test using a hose on the balcony tiles, his instructions to his counsel to oppose the view, not following up with Mr Prider, measurement of the internal stairs, and certain conditions being placed on the attendance by the Builder’s expert as regards to testing water flow.

21. The Builder has pointed to a number of particular instances where it says the evidence of Mr Tincknell cannot be accepted and I will refer to some of those matters in the course of my reasons on the particular topics to which they relate.

22. Generally speaking, I agree that there were occasions when Mr Tincknell has tried to bolster his case. By way of example, I note his evidence regarding the changes he said Mr Duthy agreed to make to the building specifications signed by the parties on 7 October 2010 (the Builder’s Specifications). Following receipt of Mr Duthy’s quote dated 23 March 2010,[32] there was a meeting between Mr Duthy and Mr Tincknell on 3 June 2010 at the Lord Melbourne Hotel. He went through the specifications and the changes he wanted ‘line by line’. Mr Tincknell said that the notes in his diary for that day were written immediately after the conclusion of meeting.[33]

    [32] Exhibit D6, p 1. TB 577.

    [33] T138.

23. Mr Tincknell amended the first version of the specifications that Mr Duthy provided to him.[34] Mr Duthy then provided a second version of the specification dated 30 August 2010[35] (the second specifications).

    [34] Exhibit D6, p 2.

    [35] Exhibit D6, p 37.

24. The third version of the Builder’s Specification, that is, the signed specifications, did not incorporate the amendments Mr Tincknell had noted on the second specifications, but were signed by the Owners along with the Contract, on 7 October 2010.

25. Mr Tincknell agreed that the builder made changes to the specification producing the second specifications, but said that these did not include all of the changes that he wanted.[36] He agreed he was responsible for checking the builder’s specification as his solicitors had written to him informing him that looking at the specification in detail would be left to him.[37]

    [36] T413.

    [37] Exhibit D6, p 43.

26. Mr Tincknell said that he assumed when he had received the signed version from his solicitor that Mr Duthy, ‘had in fact done the relevant amendments as requested’.[38] He agreed he did not check it.

    [38] T414.

27. Mr Tincknell was referred to email communications between his solicitors and the solicitors acting on behalf of the Builder. Mr Tincknell’s solicitor made reference to expecting to receive a revised version of the Builder’s specifications.[39] Mr Tincknell said that before the signing ceremony on 7 October 2010, he received a copy of the specifications ‘that will form part of the contract documents’[40] Mr Tincknell said he assumed that the relevant alterations had been complied with. Mr Tincknell said that he regarded the changes that he made to the two versions of the Builder’s specifications as important and significant to him. There were obvious differences between the signed version and his second amended version.

    [39] Exhibit D6, p 67.

    [40] Exhibit D6, p 68.

28. After the Contract signing meeting finished, Mr Tincknell said he looked at the signed version and observed that the changes had not been made in accordance with his instructions. He then amended the document to reflect the changes. He said he discussed the changes with Mr Duthy and they met. He said:

    I’m not 100% sure on where, only that it was discussed. I believe it may have been the Lord Melbourne, I don’t know.

29. As to when the meeting occurred he said:

    It may have been the following – bearing in mind this is 6 years ago.

30. He said that he believed the meeting was held within a day or so of the signing. The meeting was arranged by phone. Mr Duthy agreed to meet with him in regards to his concerns and agreed to the required amendments.[41]

    [41] T422.

31. Mr Tincknell’s initials appeared on each of the amendments he made to the signed version. The amendments were not signed by Mr Duthy. Mr Tincknell said:

    In hindsight it would have been good and we wouldn’t be sitting here arguing now. Mr Duthy took it away and he was happy that he will get it amended in the text that is required.

32. Mr Tincknell gave the following evidence in cross-examination:

    QWhat happened next in direct dealings between you and Chris Duthy about the changes to this document.

    AI cannot answer that.

    QDid anything happen directly between you and him after the meeting.

    AOnly that he agreed to the context of that.

    QI don’t know what that means. Was there any direct dealings between you and Mr Duthy after the face-to-face meeting you had with him regarding the revisited building specification.

    AI can’t answer that.

    QThe reason I ask you that question is because in your evidence-in-chief you said there was a meeting and then there was a telephone call, is that the case or is that not the case.

    AThere was a telephone call initially to set up the meeting.

    QWas there one after the meeting.

    AThere would have been one after the meeting, but I have no idea of the times, there was many phone calls between the parties.

    Q‘There would have been’, was there a telephone conversation between you and Chris Duthy after the meeting about the revisited specification or was there not.

    AI would say, yes, there was.

    QWhat happened in that telephone conversation.

    AI cannot tell you the context of that, but there would have been a phone call, a telephone conversation.[42]

    [42] T424.

33. I found this evidence unsatisfactory.

34. In his evidence on the issue, Mr Duthy said that towards the end of the meeting at the Lord Melbourne Hotel, Mr Tincknell handed him the quote and specifications. When he received the documents, Mr Duthy said he told Mr Tincknell that he would ‘have a look at it.’[43] He denied that Mr Tincknell took him through the document line by line. He and Ms Lewis did make some changes to the document, having regard to the things that Mr Tincknell had altered in his document. Mr Duthy denied that he received Mr Tincknell’s amended signed version of the building specification at any time before he last went to the Site in March 2013.[44]

    [43] T930.

    [44] T933.

35. In cross-examination, Mr Duthy said that at the conclusion of the meeting at the Lord Melbourne Hotel, he and Mr Tincknell were still in negotiations.

36. With respect to a letter Mr Tincknell sent dated 3 June 2010,[45] Mr Duthy said that while the letter noted that Mr Tincknell was accepting the quote based on ‘amended Duthy Homes Pty Ltd building specification as marked in pencil’, he did not accept that Mr Tincknell expected the document to be changed so that it mirrored the markings Mr Tincknell had made on the document he handed to him at the meeting at the Hotel. He accepted that he did not write to the Owners with respect to the issues,[46] or sit down with Mr Tincknell to advise him that the amendments he was after were not acceptable.

    [45] Exhibit D6 Trial book p 596.

    [46] T1116.

37. I have been told in submissions that the allegations regarding the alleged agreement by Mr Duthy to change the Building Specification was made very late in the proceedings and just before trial.

38. There were no diary entries in relation to either the telephone call Mr Tincknell said he had with Mr Duthy after the Contract was signed, or the meeting thereafter. This is surprising. As I have previously discussed, Mr Tincknell is a man with an obvious attention to detail. There would appear never to have never been any hesitation on his part to commit his views to writing or to document the progress of matters.

39. Mr Duthy did not make the changes that Mr Tincknell wanted. Mr Tincknell said he spoke with Mr Duthy about that, but could not say when. He did not write to Mr Duthy about changes to the signed specifications. While I accept that Mr Duthy appeared to make no attempt to draw Mr Tincknell’s attention to the fact he was not prepared to agree what was being sought, that is not relevant to the issue of Mr Tincknell’s credit. The evidence Mr Tincknell gave was in my view an attempt by him to present himself in a better light and distance himself from any shortcoming on his part.

    Mrs Tincknell

40. I have no hesitation in accepting Mrs Tincknell was an honest witness. She was candid as regards the criticisms that she understood had been made about the House, which I accept had caused her distress. At no time did she seek to bolster the claims Mr Tincknell made and was prepared to concede she had minimal involvement in the Works or knowledge of what went on subsequently. Mrs Tincknell’s evidence as regards her love for the house where she is currently residing was striking and in my view, somewhat telling.

    Mr Duthy

41. I agree that Mr Duthy was knowledgeable about the Works. I noted however, he was on occasion, slow to agree with what ultimately proved to be his agreement with certain propositions put to him in cross-examination. An example of this concerned his answers to questions regarding the plans showing a Nylex strip drain on the southern side of the House. Ultimately Mr Duthy accepted that the footing plan for the ground floor on the western wall showed the Nylex strip drain was to be installed on the western wall.[47]

    [47] T1161.

42. Mr Duthy agreed that the original specification he tendered on contemplated the strip drain rebated into the footing. When asked why, when the footings were being set up to be poured he could not have put the Nylex strip drain into a rebate as shown on the drawing, Mr Duthy gave the following evidence:

    A.The reason it wasn't done was because it was discussed and it was decided that it wasn't going to work.

    Q.    When do you say that discussion occurred?

    A.    In September at some stage.

    Q.I'll give you a date. Assume for my purposes that the footings were first poured on 22 September 2010. Make that assumption for me.

    A.    Yeah, that's correct.

    Q.    When did this conversation about not putting in the Nylex rebate strip drain occur.

    A.    We spoke prior to it and then -

    Q.    Who is 'We'.

    A.    Mike and I.

    Q.    Where did this conversation occur.

    A.    On Site.

    Q.    Do you remember which day.

    A.    I can't recall which day.

    Q.What was said in the conversation in words of 'I said' and 'He said', if you're able to tell her Honour.

    A.The discussion was about the current design on the southern side, that it wasn't going to be possible to do.

    Q.    What did you say to Mr Tincknell.

    A.That we were unable to do the design due to the access and also that the drain was going to be below the street level and we actually wrote up a document in the park and wrote down the issues that we had and we both signed that document.

1. Mr Duthy said he and Mr Tincknell had agreed that the engineering design was not going to work. He said they had agreed that they would move forward and pour the footings. He also agreed that notwithstanding the written advice from Mr Gish not to pour the footings, he went ahead, notwithstanding there was nothing from the engineer as to how to pour those footings, ‘because Mike and I had agreed that it wasn't going to work’. He insisted he had the approval of Mr Tincknell, ‘signing a document in the park’. Later, Mr Duthy accepted that the document to which he was referring was signed on 20 October 2010, by which time the ground floor footings had already been laid.

2. On other occasions throughout his answers in cross-examination, Mr Duthy demonstrated that he was at least prone to arrogance. By way of example, I refer to Mr Duthy’s reliance on the warranty Nova had provided in relation to the work they did on the House, as an answer to why it was he had not complied with direction from Mr Gish on 20 September 2010, and his apparent expectation and reliance on that warranty in the event there are orders made in accordance with Mr Prider’s recommendations.

3. I do accept that the way in which Mr Tincknell conducted himself throughout the Works would not have made Mr Duthy’s job easy. To Mr Duthy’s credit, he did seem, by and large, to have maintained an even temper in the face of someone who many would no doubt describe as a difficult and certainly a demanding client. I accept Mr Duthy too, is someone who values his reputation. He described the various awards he and his company have received for building work. He appeared to readily concede those areas where he agreed Works needed to be rectified.

4. There was nothing specifically before me that would allow a finding that the particular decisions Mr Duthy made which resulted in defects and breaches of the contract were financially motivated.

   Ms Lewis

5. Ms Lewis gave straight forward and credible evidence. She struck me as competent in her work and did not seek to overstate issues. While I am mindful of her personal relationship with Mr Duthy, she did not present as someone who would be prepared to say whatever she thought would be of assistance to the Builder’s case. I will address her evidence further in dealing with those matters where it is of relevance.

   THE EXPERTS

6. The following expert reports were tendered at trial:

7. Engineers

ENGINEER	DATE OF REPORT	EXHIBIT
Mr Philip Prider	9 May 2014 12 March 2015 16 March 2015 30 March 2015 1 July 2015 21 May 2016	D15 D15 D15 D15 D15 D231
Mr John Goldfinch	21 January 2015 15 May 2015 8 September 2015 24 May 2016	P326 P327 P328 P250
Joint Position Paper	29 April 2016 2 May 2016	D2; P250

1. Quantum Surveyors

SURVEYOR	DATE OF REPORT	EXHIBIT
Mr Chris Sale	10 Feb 2015 23 Mar 2015 24 Mar 2015 19 May 2015 15 Jun2015	D18; P373 D18; P373 D18; P373 D355 D18; P373
Mr Kym Fuss	22 Apr 2015 10 May 2015
Conclave Schedule	22 Jul 2016	D356

1. Building Consultants

CONSULTANT	DATE OF REPORT	EXHIBIT
Mr Chris Short	9 Jun 2014 5 Feb 2015 18 Jul 2016	D17; P369 D17; P369 D357
Mr Peter Jankovic	12 Feb 2015 7 May 2015	P369 P369
Joint position paper	2 May 2016	D4

1. Hydraulics

HYDRAULICS EXPERT	DATE OF REPORT	EXHIBIT
Mr Bob Mitchell	22 Jan 2015 30 Jun 2015 20 May 2016 10 May 2016 (meeting minutes)	D16; D366 D16; D366 D303;P358 P358
Mr Luigi Ienco	20 May 2015 13 July 2016 10 May 2016 (meeting minutes)	D366 P358 P358
Conclave	21 Apr 2016	D3; D366; P358

1. Property Valuer

VALUER	DATE OF REPORT	EXHIBIT
Mr Darcy Bruce	undated	D5

ASSESSMENT OF EXPERTS

1. I find that all the expert witnesses in this case were highly experienced in the area upon which their opinion was sought. That of course brings with it certain difficulties in assessing what of the evidence should be accepted in preference to other evidence. While much work had been done, to the credit of those involved, to reach agreement on many of the issues, there remained significant and important areas of difference.

2. I will deal with the basis for any preference of any expert’s opinion regarding defects in the course of dealing with the particular topics.

3. With respect to the evidence of Mr Sale and Mr Fuss as regards the cost to be given to particular aspects of any work to be carried out, after careful consideration of each of the topics they have addressed, I have found it likely that the real cost lies somewhere between the opinions they have each expressed. Except where I have made a particular finding as to the basis for accepting one expert quantity surveyor over the other, I indicate that I will adopt a value that is half way between the figures the experts have put forward.

   The claim for rectification

4. At common law, when considering any remedial work that arises from any breach of a building contract, the reasonableness of that work is to be assessed.

5. In Bellgrove v Eldridge[48] the High Court, in assessing damages in a claim for defective building work, said:[49]

   In the present case, the respondent was entitled to have a building erected upon her land in accordance with the contract and the plans and specifications which formed part of it, and her damage is the loss which she has sustained by the failure of the appellant to perform his obligation to her. This loss cannot be measured by comparing the value of the building which has been erected with the value it would have borne if erected in accordance with the contract; her loss can, prima facie, be measured only by ascertaining the amount required to rectify the defects complained of and so give to her the equivalent of a building on her land which is substantially in accordance with the contract.

   [48] (1954) 90 CLR 613

   [49] At 617.

6. The Court qualified this general rule in that ‘not only must the work undertaken be necessary to produce conformity, but that also, it must be a reasonable course to adopt.’[50] It is a question of fact in each case as to what remedial work is both ‘necessary’ and ‘reasonable’.[51]

   [50] At 618.

   [51] At 619.

7. The issue of reasonableness has recently been addressed in the by the Full Court of South Australia in the decision of Stone v Chappel.[52] As explained by Doyle J, [53] with whom Kourakis CJ and Hinton J agreed:

   The general availability of rectification damages reflects the importance that the law of contract attaches to the plaintiff’s performance interest. That is, it reflects the plaintiff’s interest in securing performance of the contract, even if that reflects some subjective aesthetic or eccentric benefit bargained for by the plaintiff rather than some objective financial benefit. It permits the recovery of damages assessed by reference to the performance the plaintiff bargained for, rather than confining the plaintiff to compensation for the loss of the objective financial or economic benefits of performance.

   [52] [2017] SASCFC 72.

   [53] At [200].

8. And further:[54]

   The qualification to the general rule must thus be understood as a limitation upon the law of contract’s preparedness to give effect to the plaintiff’s interest in the performance of the contract.

   [54] At [202].

9. Doyle J analysed a number of the cases that had followed Bellgrove and in particular, addressed the High Court decision in Tabcorp Holdings Ltd v Bowen Investments Pty Ltd.[55]

   [55] Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272.

10. Tabcorp concerned a commercial leasing dispute where the tenant had moved into premises and in breach of the lease, demolished the foyer, which was not to its taste, without permission. At trial, the property owner was awarded damages on the difference in value of the property in the sum of $34,000. The Full Court increased the damages to the cost of restoration. The High Court dismissed the appeal of the tenant and reaffirmed Bellgrove, noting that the test for unreasonableness ‘is only to be satisfied by fairly exceptional circumstances’.[56]

    [56] Tabcorp at [17].

11. The Court said:[57]

    The tenant stressed that in Bellgrove this court pointed out that there was a qualification to the rule it stated in regard to damages recoverable by a building owner for the breach of a building contract. “The qualification … is that, not only must the work undertaken be necessary to produce conformity, but that also, it must be a reasonable course to adopt”. The example which the court gave of unreasonableness was the following:

    No one would doubt that where pursuant to a building contract calling for the erection of a house with cement rendered external walls of second-hand bricks, the builder has constructed the walls of new bricks of first quality the owner would not be entitled to the cost of demolishing the walls and re-erecting them in second-hand bricks.

    That tends to indicate that the test of “unreasonableness” is only to be satisfied by fairly exceptional circumstances. The example given by the court aligns closely with what Oliver J said in Radford, that is, that the diminution in value measure of damages will only apply where the innocent party is “merely using a technical breach to secure an uncovenanted profit”. It is also important to note that the “reasonableness” exception was not found to exist in Bellgrove. Nothing in the reasoning in that case suggested that where the reasoning is applied to the present circumstances, the course which the landlord proposed is unnecessary or unreasonable.

    [Footnotes omitted]

    [57] Ibid.

12. In Stone, Doyle J, observed that Tabcorp, confirmed the continued operation of the general rule in Bellgrove, and the qualification to that general rule:[58]

    …the Court emphasised the primacy to be afforded to the plaintiff’s performance interest in assessing damages for breach of contract. While identifying that this will result in the “unreasonableness” test underpinning the qualification to the general rule being satisfied in only “fairly exceptional” cases, the Court’s reasons provide little guidance in relation to the application of the qualification.

    [58] Stone at [250].

13. His Honour expressed the view that the ‘unreasonableness’ qualification is a limit on the ‘preparedness’ of the law of contract to protect and give effect to the plaintiff’s interest in the performance of the contract.[59]

    [59] Stone at [252].

14. Considering the proportionality between the rectification cost sought to be imposed and the benefit to be obtained through the rectification work, referred to in the authorities, will include consideration of: [60]

    …the triviality or otherwise of the defendant’s departure from the contractual standard or objective. It has also been suggested that if the unreasonableness restriction is one justified in part by reference to the unfairness of the burden to be imposed upon the defendant, then it may be that this will also permit consideration of the nature or quality of the defendant’s breach. If the defendant’s breach was intentional, sharp, cynical, profit-driven or opportunistic, then it would be more difficult for the defendant to satisfy a court that the burden sought to be imposed upon it was unreasonable.

    I consider there to be merit in this approach to the unreasonableness qualification. However, as the law currently stands, there has been no express identification in the Australian case law of any principle or policy underpinning the notion of unreasonableness. Certainly there has been no express adoption of a principle or policy referable to fairness to the defendant. The matter has been largely left as a question of fact and degree to be determined by reference to the circumstances of the individual case.

    In determining what is reasonable, the issue is one to be determined objectively, there being no suggestion that the plaintiff should be the arbiter of his or her reasonableness. However, the determination must take place in the context of the relevant contract, and hence by reference to the plaintiff’s needs and desires reflected in the bargain he or she struck.

    [60] Ibid at [253]-[255].

15. His Honour noted that while in Tabcorp, the High Court expressed reservation as to the outcome in Ruxley Electronics & Constructions Ltd v Forsyth,[61] and did not expressly endorse the relevance of disproportion, the Court did not expressly cast doubt on the reliance placed in Ruxley on disproportion in determining whether the rectification work would be unreasonable.[62]

    [61] [1996] AC 344.

    [62] Stone at [261].

16. His Honour identified the following matters as relevant, but not limited to, the determination of the reasonableness of what is claimed by way of rectification costs:[63]

    1. ...a proper identification of the plaintiff’s performance interest; that is, the benefit bargained for. Often this will involve going behind the express contractual standard or specification relied upon in order to determine whether the benefit sought to be achieved by the standard or specification was merely functional or economic in nature, or a matter of aesthetic choice or amenity on the part of the plaintiff. If the true contractual objective was purely functional or economic, than a departure from the contractual standard that does not compromise the functionality or value of the building work may not reasonably require an award of rectification damages to adequately protect the plaintiff’s performance interest.

    2. …the extent to which the defendant has, despite departure from the contractual standard, nevertheless achieved the contractual objective, and hence provided the plaintiff with the benefit he or she bargained for. In Tabcorp Holdings, the defendant completely ignored the plaintiff’s contractual desire to control alterations to its premises. Similarly, in the incorrect paint colour and garden folly examples given in the authorities there was a complete failure to achieve the contractual objective. In Willshee v Westcourt Ltd it was relevant that the defendant’s use of inferior quality limestone involved a significant and substantial departure from the benefit contracted for by the plaintiff. On the other hand, in Ruxley Electronics & Construction Ltd v Forsyth, the House of Lords was influenced by the relatively minor, if not technical, departure from the contractual objective and hence relatively minor benefit to the plaintiff from carrying out the rectification work proposed.

    3. …any lack of proportionality between the proposed work and cost, and the benefit to be achieved by the plaintiff through this work. I do not understand the High Court’s reasoning in Tabcorp Holdings to exclude consideration of any disproportion between the rectification work proposed and the benefit to be obtained. While it is plain that any consideration of the issue must be undertaken in the context of the contractual bargain struck by the parties, and hence having regard to the plaintiff’s interest in having that bargain performed, I consider that disproportion remains a relevant consideration in determining whether it would be unreasonable to undertake the rectification work contemplated.

    4. …the plaintiff’s intention and ability to carry out the rectification work. For the reasons explained in the authorities that I have summarised (particularly De Cesare v Deluxe Motors Pty Ltd, Westpoint Management Ltd v Chocolate Factory Apartments Ltd and UI International Pty Ltd v Interworks Architects Pty Ltd) these considerations are not usually decisive or even relevant in their own right. Rectification costs may be reasonable and recoverable even though a plaintiff does not intend to, or is not able to, carry out the rectification work. One cannot say more without knowing the reasons why the plaintiff does not intend to, or is not able to, carry out the contemplated rectification works. Alternatively, rectification costs may be unreasonable and irrecoverable despite the plaintiff intending to, and being able to, carry out the contemplated rectification work. As the authorities make plain, the plaintiff’s intention and ability to carry out the works are relevant only insofar as they shed light on the issue of the true nature of the plaintiff’s loss, or the reasonableness or otherwise of the contemplated rectification works.

    [63] Stone at [257]-[263]

17. Finally, Doyle J noted that while not aware of any authority which had taken into account the nature and quality of the defendant’s breach, a case involving intentional or profit driven breach may cause more reluctance to deprive the plaintiff of rectification damages designed to protect performance interest, an example of which his Honour thought may be seen in Tabcorp where there was ‘an intentional and flagrant breach by the defendant’.[64]

    [64] Ibid at [265].

    Does ‘reasonableness’ apply to an award of compensation?

18. The Works are for domestic building work and fall within the Act.[65]

    [65] Section 37(1).

19. The Act provides that certain statutory warranties on the part of the builder are to be implied into the Contract as follows:

    32—Statutory warranties

    (1)     This section applies to a contract entered into on or after 22 January 1987.

    (2)The following warranties on the part of the building work contractor are implied in every domestic building work contract:

    (a)     a warranty that the building work will be performed in a proper manner to accepted trade standards and in accordance with the plans and specifications agreed to by the parties;

    (b)     a warranty that all materials to be supplied by the contractor for use in the building work will be good and proper;

    (c)     a warranty that the building work will be performed in accordance with all statutory requirements;

    (d)     if the contract does not stipulate a period within which the building work must be completed—a warranty that the building work will be performed with reasonable diligence;

    (e)     if the building work consists of the construction of a house—a warranty that the house will be reasonably fit for human habitation;

    (f)     if the building owner has expressly made known to the contractor, or an employee or agent of the contractor, the particular purpose for which the building work is required, or the result that the building owner desires the building work to achieve, so as to show that the building owner relies on the contractor's skill and judgment—a warranty that the building work and any materials used in performing the building work will be reasonably fit for that purpose or of such a nature and quality that they might reasonably be expected to achieve that result.

20. Further, the Act provides that in proceedings for breach of a statutory warranty, it is a defence for the defendant builder to prove that the deficiencies of which the plaintiff owner complains arose from instructions insisted on by the owner contrary to the advice in writing of the defendant.[66] The Owner submitted that this section is relevant to every instance where the builder seeks to justify defective work on the basis of instructions given by Tincknell, in particular the external stairs. The Builder has not complied with the procedure the section provides.

    [66] Section 32(7).

21. The Act provides the court with powers to deal with any breach of a contract or warranty as follows:

    37—Powers of court in relation to domestic building work

    …

    (6)If, on an application under this section, the Magistrates Court is satisfied that there has been any breach of, or failure to perform or fulfil, a contract or warranty to which the proceedings relate, the Court may, subject to this section, make one or more of the following orders:[67]

    [67] See Cirocco Constructions Pty Ltd v Clarke [2015] SADC 98. The exclusive jurisdiction to commence proceedings in relation to the Building Work Contractors Act is in the Magistrates Court. In this case, the builder, (without contest by the owners) issued an application in the Magistrates Court to give some jurisdiction for the argument. The Magistrates Court proceedings were transferred and consolidated with the District Court action.

    (a)     to the extent to which it is satisfied that it is practicable for the breach or failure to be remedied by the performance of building work—an order requiring the performance of remedial work;

    (b)     an order requiring the payment of an amount due under the contract or an order requiring the payment of an amount by way of compensation for the breach.

    (7)     An order made against a person under subsection (6)(a) may—

    (a)     require the person to perform remedial work specified in the order within the time specified; or

    (b)     if the Magistrates Court is of the opinion that the person is not likely to perform the remedial work properly—require the person to employ at the person's own expense a licensed building work contractor to perform remedial work specified in the order within the time specified.

    (8)If the Magistrates Court orders a person to perform remedial work, or to cause remedial work to be performed, it may further order the person to provide to the Court, within a specified time after completion of the work, a certificate of a person holding qualifications specified in the order certifying that the remedial work has been performed properly in accordance with the order.

    (9)If a person fails to perform remedial work, or to cause remedial work to be performed, in accordance with an order of the Magistrates Court (or an order of the Commercial Tribunal under Part 5 of the repealed Act)—

    (a)     the person is guilty of an offence and liable to a penalty not exceeding a fine of $10 000; and

    (b)     the Court may, on application, order the person to pay to the applicant such amount by way of compensation as the Court thinks just.

    (10)   In this section—

    statutory warranty means—

    (a)     a warranty arising under this Act; or

    (b)     a warranty arising under Part 3C of the repealed Builders Licensing Act 1967.

1. In Coshott v Fewings Joinery Pty Ltd[319] damages were awarded for inconvenience caused by the need for remedial work and for the disappointment for not getting the quality result bargained for where it was unreasonable to remedy the breach.

   [319] Unreported, New South Wales Supreme Court CA, 15 July 1996.

2. I have found that the Owners have chosen not to live in the House. There is nothing in the defect claims that would have prevented the Owners living in the House except that concerning the hot water. The House was practically complete at the end of February 2013 and by March 2013, they had taken possession. As I have said, the Owners’ decision not to move into the House was of their own making. Any distress in my view, is related to their understandable reaction to the very public criticisms of the House in their small community.

3. I dismiss the claim.

   TRADE PRACTICES CLAIM

4. By recital C of the Contract, (the accuracy of which was agreed by the Builder) the Builder, by virtue of clause 26 of the Contract, represented that it had the necessary skill and expertise to carry out the Works on the Site.

5. The Owners said they relied on the representation when entering into the Contract and that this was a representation made during the course of trade or commerce within the meaning of the TPA.

6. Mr Jenner submitted that the Contract is unusual in its terms but the evidence showed that neither the Builder, nor Mr Duthy had the necessary skill and expertise, nor the subcontractors that were engaged. There were a series of problems through this project with the Builder and its subcontractors and accordingly, the Owners say that makes the representation that was reported in the recital, false and actionable in that the defects complained about are so rife throughout the building and so important in terms of its ultimate construction, that it is not just a minor matter. The Owners say they would not have engaged the Builder but for the representation that the Builder had the ability. They would have engaged another Builder and presumably got the work done properly. Mr Jenner conceded there are no authorities directly on point.

7. The claim made is curious to me and is not recognised in law. In any event, the representation made, is arguably one made reasonably, given Mr Tincknell was impressed by the quality of Mr Duthy’s work at the outset of their dealings. Again I note Mr Trenorden’s determination and my own observations.

8. I dismiss the claim.

   MR DUTHY’S PERSONAL BREACH

9. The Owners submit that by virtue of the relationship of Mr Duthy as supervisor, Mr Duthy owed to the Owners duties of care in supervising the performance of the Contract to:

   1.1.    exercise reasonable care, skill and diligence;

   1.2.supervise the Works in a proper and competent manner so as to ensure that the Works would properly perform their intended function and comply with all relevant designs, specifications, engineering, development approvals, drawings, plans, Australian Standards and the Building Code of Australia;

   1.3.ensure, by adequate supervision that the Works were performed in a proper and workmanlike manner using good and proper materials, and completed in compliance with all relevant approvals; and

   1.4.ensure, by adequate supervision that the Works were performed in compliance with the relevant reports, amendments, engineering and approvals for the Works from the relevant authorities and specialists in accordance with the requirements under the Development BWCA and the Development Regulations and comply with same.

10. The Owners submit that Mr Duthy has breached his duties of care.

11. The Contract sets out detailed obligations and rights of the parties. True it is that Mr Duthy is the sole director of the Builder, the controlling mind of the Builder and the holder of a building supervisor’s licence pursuant to the Contract, however he is not a party to the Contract. Any representations made in the Contract are not made by him personally. The claim by the Owners is not supported by any authority that has been provided to me.

12. The claim is dismissed

    BACK CHARGES

13. The Owners claim credit against any sum owed to the Builder for work they say was not done and for expenses they have incurred. Mr Tincknell had prepared a list of these back charges.[320]

    1. Cost of deletion of 4 Concrete Columns

    [320] Exhibit D90, Trial book p 1209.

    $11,682.00

14. The Owners submit that the Builder tendered on plans which included the provision of four columns.[321] The columns were ultimately deleted from the drawings and the Owners say that as the Builder did not have to construct the columns due to the change in engineering detail, it should give the Owners credit for the work it did not have to do.[322]

    [321] Exhibit D14.

    [322] T332-333.

15. Mr Tincknell gave evidence as to how he had calculated the claim. Each of the items listed in the calculations were arrived at from telephone discussions he had with certain suppliers.[323]

    [323] T254.

16. Mr Duthy accepted that by the time he costed the works he made an allowance to build the concrete columns. When asked if he accepted that he should give the Owners a credit for the work he did not have to do, he said.[324]

    Well we had a nil - a variation that we both agreed on with the engineering to have a nil variation that was signed.

    [324] T1408.

17. A fax to Mr Duthy dated 12 March 2011,[325] read that the new engineering drawings were ‘at nil cost’.

    [325] Exhibit D220.

18. As Mr Jenner submitted, that seemed to be something of a recent invention.

19. Mr Duthy did not agree with the calculation made by Mr Tincknell in regards to this work but was unable to provide any specific response to the amount the work should properly be costed.[326] No details of how he had allowed for the cost of the columns in his quotation for the works was forthcoming and I note that the Builder did not call any evidence contrary to that of Mr Tincknell.

    [326] T1410-1411.

20. I allow the claim in the sum of $11,682.00.

    2. Perimeter Bond Beam

    $4,119.50

21. The Owners say that Mr Duthy tendered on plans which included a perimeter bond beam. As the Builder did not construct the perimeter bond beam to the east elevation, they submit that they are entitled to a credit.

22. Mr Duthy said that he constructed bond beams on the second level and also across the first balcony floor in locations according to the most current revision of the engineering drawings at the time of construction. He did not omit to construct something that the engineering drawings required.[327] In cross-examination Mr Duthy said the beams were constructed in accordance with the engineer’s drawings and no beam was been deleted.[328]

    [327] T1027.

    [328] T1415.

23. I accept that the only change by the Builder was the method of reinforcing the beams and that the Builder constructed the bond beam in accordance with the engineering drawings.

24. I dismiss the claim.

    3. Legal and other fees

    $1,536.60

25. The Owners received correspondence from the Mid Murray Council in August 2010, concerning the safety of excavations at the site.[329] The Council issued as enforcement notice dated 12 November 2010.

    [329] Exhibit D270.

26. Mr Tincknell said he sought legal advice on how to respond and deal with the matter. His solicitors rendered an account[330] in respect of that advice. He forwarded a copy of the Council documents to Mr Duthy.

    [330] Exhibit D96.

27. In cross-examination Mr Duthy agreed that the excavation was his responsibility, as well as stabilisation of the excavated faces, but disagreed he was liable for the legal fees and charges in placing rubble on the southern boundary.[331]

    [331] Exhibit D93.

28. The invoice from the solicitors does not contain sufficient detail to establish the basis upon which the charges were rendered, nor is there any evidence before me that establishes the charges were incurred in relation to the performance of the contract.

29. The claim is dismissed.

    4. Grated sumps to rear patio core holes

    $9,698.00

30. The Owners submit that Mr Duthy tendered on plans which included provision for stormwater drainage requiring the drilling of thirty core holes through the concrete slab of the balconies. This was amended such that only nine core holes were drilled.[332] The Owners say they should be credited for the work the Builder did not have to do.

    [332] T345-346.

31. Mr Tincknell calculated a rate of $110 per core which was a figure which came from the workers doing the coring for the Builder on the site as to their normal coring cost.[333]

    [333] T261-262.

32. Mr Duthy agreed in cross-examination that $110 would be an average cost.[334]

    [334] T1422.

33. Mr Duthy’s evidence was that there was never a need to drill core holes through the concrete and the Builder submitted that if the Builder finds a more efficient method of providing the drain holes within the concrete, then the efficiency of using that better method is to the Builder's advantage and he gains the benefit of the profit. In any event, there has been no satisfactory particularisation of the claim.[335] Evidence from one of the engineering experts would have been helpful.

    [335] T2015.

34. The claim is dismissed.

    5. Electrical hot water services

    $5,649.60

35. Originally when tendered, the house was to have electrical hot water which ultimately changed to gas.

36. Mr Duthy said that the hot water system was not within his scope of work and therefore if omitted would cause no adjustment to the contract sum.[336] Mr Duthy said there was a credit applied to the contract sum in respect of the omission of electrical hot water services but that this was a mistake.

    [336] T1028-1029.

37. The Owners submit that Mr Duthy’s evidence is unreliable as he gave evidence that the scope of work to be performed under the contract was limited in relation to the second Scott Schedule in that they did not include electrical hot water services, however the HIA Building Specification at clause 15.1 required the supply and installation of plumbing service as detailed in the HIA Building Schedule which, at clause 31, referred to hot water services to be supplied by the Owners and installed by the Builder.[337]

    [337] T353.

38. The Builder submitted that the contract documents expressly state that the hot water systems were to be supplied by the Owner, so there could be no credit at all. The Builder chose not to ventilate the entitlement in this action for the mistaken credit that had been applied.[338] I do not accept that the Owners are entitled to rely on the mistaken credit. The contract documents expressly state that the hot water systems were to be supplied by the Owners.

    [338] T2016.

39. The claim is dismissed.

    6. Foil Board insulation

    $11,419.25

40. Mr Tincknell said that one aspect of the design of the house was that there were requirements in relation to sustainability and energy rating. He was seeking to achieve a rating of 6.[339]

    [339] T266.

41. He identified that some foil board insulation did not occur when he was observing the plasterboard lining to the first and second floor being applied. He observed that there was no foil board on the external walls as required by a ‘sustainability house’ which forms part of the documentation of the contract.[340] He calculated the back charge associated with the work.[341]

    [340] T266.

    [341] Exhibit D96; Trial book p 1525.

42. The Building Specification at 13.4 Insulation, states 'Where specified in the building schedule insulation shall be installed in ceilings' with reference to the Australian Standards.[342]

    [342] T621.

43. When it was put to Mr Tincknell that none of the building drawings provide for insulation within the Builder’s scope of work, he disagreed stating that the architectural drawings show insulation. He disagreed that it is not of surprise that the contract documents do not provide scope for work including installation as the construction of the House was by precast concrete panels.[343]

    [343] T621.

44. When taken to the Building Schedule the reference for the external walls is ‘as per plan’. Those plans, under the title of ‘general specification’ show an entry for insulation which does not call for foil board insulation, but did he said, call for insulation in walls and ceilings in accordance with the energy efficiency which forms part of the contract.[344]

    [344] T622-623.

45. Mr Duthy said the foil boarding was not within the scope of the Builder’s work and that the contract documents speak for themselves on this point.[345] He disagreed with Mr Tincknell’s calculations.[346]

    [345] T1030.

    [346] T1248-1251.

46. There has been no evidence to say that the Builder did anything less than what was required of it. Leaving aside the issue of whether there was an obligation under the contract to apply foil insulation as Mr Tincknell has alleged, I am unable to accept the evidence in relation to the quantum of the claim.

47. The claim is dismissed

    7. Insulation blanket

    $11,419.25

48. The claim was accepted by the Builder, which had allowed a credit of $4,900. Mr Duthy was unable to explain the basis for the quantum of that credit.

49. In view of the quantity surveyor report, I allow the claim in the sum of $11,419.25.

    8. Smoke detectors

    $3,295.60

50. The provision of a security system was excluded from the Builder’s scope of works and something that the Owner was going to do.

51. The owner submits that when the Builder was tendering on this job, the plans required the provision of smoke detectors and if, because the owner had decided to incorporate the alarms into their security system, the Owners are entitled to a credit for the alarms the plans required it to provide. [347]

    [347] T1922.

52. The HIA building specification provides that ‘smoke alarms shall be self-contained and comply with AS 3786 or be listed in the SSL Register or Accredited Products and be connected to the consumer’s mains power.’ Mr Tincknell prepared a calculation of the claim.[348]

    [348] Trial book p 1526.

53. In cross-examination Mr Tincknell agreed that neither the provision nor installation of smoke detectors was part of the Builder’s scope of work.[349]

    [349] T643.

54. Mr Duthy stated that the provision or installation of smoke detectors was not within the Builder’s scope of work.[350] The Owners obtained quotes for security and smoke alarms from Adelaide Security Services.[351]

    [350] T1030.

    [351] T1031.

55. In cross-examination Mr Duthy did not accept that under the Contract he was obliged to provide smoke detectors. He said that they did not form part of the Clipspec and were part of the security system and therefore a specific exclusion. He disagreed with Mr Tincknell’s calculation of the appropriate allowance for the smoke detectors[352]

    [352] T1423.

56. He agreed with the value of the smoke detectors as agreed by Mr Sale and Mr Fuss as $3,295.60, however said he was not responsible for them under the Contract.[353]

    [353] T1424.

57. Mr Ward said he could not recall if Mr Tincknell opted to have the single unit smoke detectors or the detectors run through the alarm system. He agreed that smoke alarms are depicted on the plans. [354] In his revised quote,[355] he noted that the supply/installation of smoke detectors and or emergency lights was an exclusion as he would have quoted the job based on the C-Bus plan but not the full architectural drawings.[356]

    [354] T1859.

    [355] Exhibit D376.

    [356] T1859-1860.

58. Mr Ward’s evidence was that detectors can be configured either freestanding or connected to the alarm system and in this case, the plans did not indicate either way.

59. The installation of smoke detectors was incorporated into the initial tender. Although security was expressly excluded as the Owners had a separate contract for an integrated security system, an allowance would have been made by the Builder in the GMP.

60. The claim is allowed in the sum of $3,295.60

    9. Concrete panels

    $20,000.00

61. The Owners submit that the Contract included a cost of $250,000 plus GST for concrete panels which were ultimately taken out of the Contract and therefore the Owners are entitled to the GST which was otherwise included in the Contract.[357]

    [357] T380-382.

62. The Owners submitted that originally there was a quote as a PC allowance of $250,000 for the panels. By the time of the meeting of 3 June 2010, Mr Tincknell had reached a fixed price of $320,000 so when the Contract was prepared, the precast panels were no longer a PC item but a fixed item from a nominated supplier at a fixed price.[358]Mr Duthy then offered a discount of $94,000. The Contract price had to be increased by $70,000 because of the change from $250,000 to $320,000 and then it was ‘topped up’ by the figure of $38,000, so rounding it to up $2.3 million.

    [358] T1928.

63. The Builder did not have to take responsibility for the $200,000 (there was an error in Mr Tincknell’s calculation relating to $250,000. The correct figure for the claim to proceed on is $200,000)[359] and therefore the claim is for $20,000.

    [359] T1929.

64. Mr Duthy agreed that the precast panels became part of the Builder’s work, and were not a PC item.[360]In cross-examination he agreed that the Contract price of $2.3 million was inclusive of all GST and that the concrete panels were paid for directly by Mr Tincknell.[361]

    [360] T271.

    [361] T1424.

65. He agreed that he allowed for the panels in his quote, based on the price negotiated with Adelaide Precast.[362]

    [362] T1424.

66. Although an allowance in the GMP was made for this to be provided by the Builder and ultimately was provided by the Owners, without proper particulars, or an accounting opinion as to how the claim is arrived at, the claim cannot be made out.

67. The claim is dismissed.

    10.  Trevor Johns Invoices

    $148.50 – para.115 – Back charge # 9

    $1,188.00 – para 119 – Back charge #13

    $138.60 – para 120 – Back charge #14

    $34,701.70 – para 121 – Back charge #15

68. The Owners say the invoices are for reworking of the engineering designs due to poorly designed footings/waterproofing systems that were not constructible.

69. As set out earlier, I am not satisfied that the Owners have demonstrated the initial design was able to be constructed. Accordingly, I am not satisfied the Builder bears responsibility for these fees.

70. The claim is dismissed.

    11.  Prime Cost items (14) adjustment

    $31,614.00

71. The Owners say that as a matter of contractual interpretation, they are entitled to the Builder’s mark up of 10% on the PC items.

72. Clause 15 of the contract relates to PC items.

73. The Schedule to the Contract provided at item 7, the PC items included in the GMP. The Owners submit that they supplied PC items save for the following:

    ·Air-conditioning

    ·Roof tiling and sarking

    ·Paving and supply

    ·Door hardware supply

74. The Contract makes an allowance of 10% for the Builder’s profit in relation to PC items they supplied. When the Builders did not supply these items, the Owners say they are entitled to the credit back for that margin of 10%.[363]

    [363] T1924.

75. They submit that the Builder only supplied the abovementioned items and if those are excluded from the list, the balance, supplied directly by the owner, adds up to $316,140 therefore they claim for the 10% margin of that figure.[364]

    [364] T1927.

76. I accept that the basis of this claim is one of contractual interpretation however, without a proper accounting analysis on the figures, the claim cannot be quantified with any certainty.

77. The claim is dismissed.

    12.  Tiling

    $3,289.00

78. The Owners say that Mr Duthy tendered on the basis that certain tiling as listed in the document entitled “tiling – credits” would be included. The Owners submitted that as the Builder did not have to supply the labour required for the tiling work, it should give a credit for the work that it did not have to do. There is no evidence to say how the quantum of this claim is arrived at.

79. The claim is dismissed.

    13.  Concrete Slab Credit

    $5,000.00

80. This claim is conceded by the Builder. I allow the claim in the sum of $5,000.00.

    14.  Haig & Menzel

    $1,911.55

81. The Owner claims for work done by Haig & Menzel concerning gas leaks.

82. It came to Mr Tincknell’s attention that there was a hissing noise in the wall between the passage and his wife’s study.

1. He agreed that the claim is for the whole invoice of Haig & Menzel. When it was put to him that what was done was substantially more than testing for the hissing sound, he said that the invoice was for anything associated with the gas service ‘such as the outside barbecue bayonets were incorrect and they were leaking as well, so all that is to do with labour and material of $1,911.55.’ [365]

   [365] T630.

2. He said that Mr Duthy told him that they had tested the connections and that they complied, but Mr Meakins found they did not, so he then subcontracted Haig & Menzel.[366]

   [366] T632.

3. He said he believed he had advised Mr Duthy of the problems and having Haig & Menzel attend at his premises by phone. He believed this was before they attended.[367]

   [367] T644.

4. Mr Duthy said that on 14 February 2013, the day he got access to the site, it was brought to his attention that there was a gas leak. He was told that a local plumber had fixed the issue. He then involved Mr Schmidt who came and retested the service to make sure there was no leak. He was not told of Haig & Menzel doing any work to the House.[368]

   [368] T1002.

5. Mr Duthy said he was never contacted by the Owners about anything regarding the certification of gas connection in the house.

6. The Builder submitted that there was a gas leak but there is no evidence as to the cause. Some intervening event between Mr Schmidt testing the system and Haig & Menzel testing it cannot be excluded. The invoice is not only for repair work but also for gas circuits and they submit that the Builder’s responsibility ends at first fix.[369]

   [369] T2017.

7. I accept that the invoice is for work outside the scope of the Builder’s responsibility.

8. The claim is dismissed.

   15. Re-keying

   $4,742.93

9. The Owners say that the Builder tendered on the basis that it would install security magnets to the aluminium doors and that the locks would be keyed alike.

10. The Owners found a number of the locks had been ‘super glued’. Mr Tincknell said that at the meeting in December 2012, he was provided with a set of keys which was incomplete.[370]

    [370] T366.

11. He spoke to Mr Duthy about this on two occasions one of which was on 18 December 2012. [371]

    [371] T367.

12. In cross-examination, Mr Tincknell said he was not aware that a truck of Mr Duthy’s was also superglued.[372]

    [372] T551.

13. He agreed that the purpose of getting the locks changed was to prevent access to Mr Duthy. He stated that he made it clear to Mr Duthy he was not to enter the premises and on an occasion after receiving the keys, he went to the house and found Mr Duthy present so had the locks changed again.[373]

    [373] T552-553.

14. The very first occasion he changed the locks were because they had been glued up and he only had the affected keys changed. The second occasion he changed all of the locks to exclude Mr Duthy access of the house.[374] Mr Tincknell agreed that he claims the whole cost despite the work being completed 6 months after the Builder left.[375] He agreed that the claim included the provision of security magnets to doors but that the contract did not include this.[376]

    [374] T554.

    [375] T638.

    [376] T645.

15. Mr Duthy said the provision of security magnets was not within the scope of his work.[377] He agreed that he did not provide a full set of keys on 18 December 2012, as Mr Tincknell had not paid his account at that stage.[378] The evidence shows that this work was outside the claim.

    [377] T1037.

    [378] T1427.

16. I dismiss the claim.

    16. ANE Electrical

    $5,464.80

17. The Owners submitted that they are entitled to a back charge on account of engaging Adam Nimmo Electrical to complete the C-Bus System that had not been completed by Mr Ward of ACE Electrical Pty Ltd.

18. Originally, the Owner's claim was based on the invoices that Adam Nimmo Electrical had rendered for the C-Bus work, a sum of $51,121, but in submissions, accepted that in view of Mr Voy’s evidence, they could only recover in relation a total of $5,464.80[379]

    [379] Items 20, 21 and 22 of Exhibit D274.

19. When taken to the calculation to complete the C-Bus System,[380] Mr Voy said that the word ‘unfinished’ was a broad term. He agreed he completed work beyond the original electrician’s quote. The only items which were in the original quote were the items 20, 21, 22, and that everything else was new.[381]

    [380] Exhibit D121.

    [381] T1051.

20. He agreed that from the three invoices[382] he was not able to say how much of the work was connected to those three entries.[383]

    [382] Exhibits D214, D123, D124.

    [383] T1052.

21. Mr Duthy said there was some variation work with ACE Electrical which Mr Tincknell engaged with Mr Ward about directly, taking the Builder out of the equation.

22. There was no mention of C-Bus in the inspection carried out on 20 December 2012. He believed that the photograph[384] showed the state of the premises as at that meeting. He agreed that he did not believe that the C-Bus was complete but that it was the variation work which needed to be completed.[385]

    [384] Exhibit D306.

    [385] T1036.

23. He said that the work shown identified by Mr Voy, was not part of the original C-Bus but was additional to the Clipsal spec. He was not able to identify the variation but as far as he was aware they had completed everything on the Clipsal spec when they left the site. This is what he was told by their electrician.[386]

    [386] T1037.

24. When he received a letter from Mr Ward[387] he appreciated that not all of the C-Bus work had been completed. The letter stated that ‘some of the remaining contract items still require further variation materials and labour to be performed prior to their completion…Supply and installation of AV equipment to house multi-room audio equipment.’[388]

    [387] Exhibit D230.

    [388] T1038.

25. Mr Ward said that there were variations to the work which were “basically extras Mike had requested.” Sometimes these requests were made after commencing the relevant work adding considerably to the time and effort required for the work.[389]

    [389] T1852-1853.

26. He did not install all of the equipment he purchased for the job. For instance some audio was not installed to an AV rack as the rack was to be supplied by a different contractor and their contract was cancelled so the work was never done. He then returned the equipment for credit as they were not getting paid for the variations.[390]

    [390] T1854.

27. He said that leaving aside the items he returned for credit, all of his work under the contract was completed when he left the site. When he told Mr Duthy and Mr Tincknell that he was ready to leave it was not suggested to him that any of his work was defective or incomplete.[391]

    [391] T1855-1856.

28. In cross-examination, he recalled having a conversation with Mr Duthy that Mr Tincknell was not going to pay for the variations.[392] He agreed that he was told by Mr Duthy that Mr Duthy was not going to pay for the variations as Mr Tincknell had not paid him.[393]

    [392] T1866.

    [393] T1870.

29. In those circumstances, I allow the claim in the sum of $5,464.80.

    17. Labour – Tincknell Nominees

    $2,359.50

30. The Owners claim for 39 hours of work at $55 per hour plus GST.

31. The Owners submitted that the Builder tendered on the basis that the rainwater tanks would be supplied, installed and connected and that the water filtration would be supplied and installed by themselves. Mr Tincknell said as he had to complete the installation and connection of the rainwater tanks and the installation of the filtration system, the Owners are entitled to a credit for the work the Builder did not have to do. Mr Tincknell said that a record of his time was kept at some stage but said he did not know how. He maintained that his calculation was accurate. The rate of $55 per hour is what he would charge for that particular type of work.[394]

    [394] T298.

32. In cross-examination, Mr Tincknell agreed this item is not included in the joint defect report, nor the February or April lists.[395]

    [395] T635.

33. He was not sure when he did the work. He believed it would have to have been in 2013.[396]

    [396] T637.

34. The evidence of Mr Goodman was that by February 2013 when he left, he had completed all work within his trade except for commissioning the hot-water service.[397] At the time he left the only remaining item was the filtration system.[398]

    [397] T1568.

    [398] T1568-1569.

35. Mr Duthy’s evidence, on looking at photographs, was that he could not be certain the work was not done by the Builder.

36. I am uncertain as to whether the work that Mr Tincknell did was work that was required of the Builder. Furthermore, there is no record of the time that was taken and no evidence of the work, either prior to work being done or after its completion.

37. I dismiss the claim.

    18. Shane O’Connell

    $2,502.50 – para.164 – Back charge 24

    $3,815 – para.165 – Back charge 25

38. Mr Tincknell said that he retained Mr O’Connell to carry out work at the House at a rate of $70 an hour. Invoices in relation to Mr O’Connell’s work were tendered.[399] He was present when Mr O’Connell attended and the matters attended to by Mr O’Connell are matters that should have been attended to by the Builder.[400]

    [399] Exhibits D125 and D126.

    [400] T299.

39. The attendances on 28 February and 2 March 2014 relate to the installation of side fencing. On 3 March 2014, the work concerned ‘stains and grout, tidying up the top floor outside’ which would have been in relation to the floor grates with the outdoor balcony areas. On 6 March 2014, the work concerned a box gutter leak. The last four attendance s from 24 March – 28 March 2014 relate to the installation of artificial grass on the north-western corner on the second floor to cover up the wrongly installed tiles.[401]

    [401] T300.

40. Mr Tincknell agreed that none of these issues was included in any of his lists.[402]

    [402] T639.

41. When pressed on the scope of the Builder’s work to include fencing he said that it was Mr Duthy’s responsibility to do a section and he himself was to provide the relevant materials, but that he maintained his claims[403]

    [403] T641.

42. In relation to the fifth entry 'Extend other exhaust pipes' he agreed that it did not specify north or south. He disagreed that this was the same work as the claim for defective installation from the ceiling space through the roof tiles. [404]

    [404] T642.

43. Mr Duthy said he was not required by the Owners to do the things that are set out in the property maintenance invoices.

44. He was not told that those things were going to be done and charged back to him prior to the work being done, nor was he warned that there may be a back charge claim relating to those invoices. [405]

    [405] T1040.

45. In cross-examination, Mr Duthy said they did remove all rubbish from the Works. He was not notified of the need to fix a stormwater pipe in the garden bed and stated that that was not within the scope of his works. He disagreed that the plastic coverings over the balcony grates had to be removed, stating that the Owner supplied the grates and they were left on for cleaning purposes. He could not recall whether there was screed remaining on the tiles as at February 2013 when they left the premises. The flue being installed over the BBQ hood was done by the Owner and not part the scope of works. The fences within the scope of works were only on the north and south side for about 6m and the fence was installed in accordance with the drawing but that the three extra fences were organised by Mr Tincknell.[406]

    [406] T1430-1431.

46. He was not clear what ‘vent’ the item of 23 November 2013 related to.[407] If there was grout in the floor traps this was not on any of the defects lists.

    [407] T1432.

47. He agreed that connecting the balcony grate’s downpipe to the front garden was part of his scope of work, but said that it was done.[408] He accepted that if there were stains on the tiles that would have been part of his scope of work however it was not on the defects list. He did not agree with the costs for the installation of fans.[409]

    [408] T1432.

    [409] T1433.

48. Mr Duthy said that he could arrange a tradesperson up for less than the amount claimed. He could not comment on the charges relating to artificial grass as he has no experience in that work.[410]

    [410] T1434.

49. I am not satisfied the evidence established that the work was within the scope of the Builder’s work, given that it is not, insofar as I can tell, detailed in any of the defects lists that Mr Tincknell prepared.

50. I dismiss the claim.

    19. Rinnai – testing hot water services

    $244.42

51. The Owners submit that this was a reasonable cost of the Owners to incur in the circumstances of the Builder failing to commission the hot water services and the cross flow of hot and cold water.

52. In his evidence Mr Goodman stated that he was not required to provide this service as they were waiting for the gas supply to be installed. He agreed that he would have returned to complete the work once this had been done and this is the basis upon which he left it with Mr Duthy.

53. The quantum of the claim was not disputed by the Builder.

54. I allow the claim in the sum of $244.42.

    MR TRENORDEN’S DETERMINATION

55. In keeping with my orders in relation to other defects, I am satisfied it is appropriate to order that the work identified in Mr Trenorden’s determination be carried out by the Builder, including that work agreed to by the Builder without admission of liability.

    THE FLOAT

56. Early in the trial, the Builder conceded that, for the purposes of the trial, it would not pursue the variation claims it made, other than those acknowledged by the Owners. As a result, the Builder sought to recover the sum of $33,301.90. The Owners have said that they are entitled to the difference between the float and the variations that have been agreed, while the Builder submitted that in arriving at the agreement as regards the float, there was nothing said to that effect. I accept the Builder’s position that there was no such agreement and find that it is entitled to the difference between the float and the variations, that is, the sum of $4,830.10.

    SUMMARY OF FINDINGS

57. I set out a summary of the various findings as follows:

SCOPE OF WORKS	FINDING	DAMAGES
Waterproofing	Claim dismissed
Termite Protection	Claim dismissed
Garage Door	Claim dismissed
Garage floor	Claim dismissed
Tiles on External Stairs	Claim dismissed
Hot & Cold Water Systems	Remedial work order in accordance with recommendations of Mr Ienco
Acratex Rendering	Compensation to the Owners	$36,209
Cracked Parapet & Eaves	Claim dismissed
Box Gutters	Remedial work order
Exhaust Systems	Claim dismissed
Flood Gulley	Remedial work order
Front Pavers	Claim dismissed
Tiling	Claim dismissed
Valley Gutters	Claim dismissed
Internal Stairs	Claim dismissed
Spa bath	Remedial work order
Delay Damages	Claim dismissed
Pain & Suffering	Claim dismissed
Trade Practices claims	Claims dismissed
Claim against Mr Duthy	Claim dismissed
Back charges	Claim allowed	$32,106.07
Expert Determination	Remedial work order
Variations	To be credited to the Builder	$4830.10

1. There will be judgment for the Builder in the sum of $173,049.41 plus interest.

2. I will hear the parties on the appropriate orders, interest and costs.