Elrob Construction Group Pty Ltd v Haddad

[2025] NSWDC 380

District Court

New South Wales

Medium Neutral Citation:

Elrob Construction Group Pty Ltd v Haddad [2025] NSWDC 380

Hearing dates:

11 – 14 November 2024, 28 February 2025

Date of orders:

24 September 2025

Decision date:

24 September 2025

Jurisdiction:

Civil

Before:

Cole DCJ

Decision:

(1) Judgment for the defendant on the plaintiff’s claim. The plaintiff’s claim is dismissed.

(2) Judgment for the defendant on the first cross-claim.

(3) The plaintiff is to pay the defendant the total sum of $226,446.39 for breach of the contracts.

(4) The plaintiff is to pay the defendant the total sum of $25,000 by way of liquidated damages under the contracts.

(5) The plaintiff is to pay the defendant the sum of $95,134.52 by way of restitution.

Catchwords:

BUILDING AND CONSTRUCTION — Contract — Damages – claim by builder for cost of variations – alternative claim in quantum meruit

BUILDING AND CONSTRUCTION — Home Building Act 1989 (NSW) — cross-claim by owner for damages for alleged defects and incomplete works – claim for restitution of money paid under the Building and Construction Industry Security of Payment Act 1999 (NSW)

Legislation Cited:

Building and Construction Industry Security of Payment Act 1999

Home Building Act 1989

Cases Cited:

Bellgrove v Eldridge (1954) 90 CLR 613; [1954] HCA 36

John Holland Pty Ltd v Roads and Traffic Authority of NSW (‘John Holland’) [2007] NSWCA 140

Lumbers v W Cook Builders Pty Ltd (In Liq) (2008) 232 CLR 635

Mann v Paterson Constructions Pty Ltd [2019] HCA 32

Category:

Principal judgment

Parties:

Elrob Construction Group Pty Ltd (Plaintiff/Cross-Defendant)
Sami Haddad (Defendant/Cross-Claimant)

Representation:

Counsel:
G Campbell (Defendant/Cross-Claimant)

Solicitors:
Madison Marcus (Defendant/Cross-Claimant)

File Number(s):

2021/00277709

Publication restriction:

Nil

JUDGMENT

1. In 2017, the plaintiff, Elrob Construction Group Pty Ltd (“Elrob”), entered into two contracts with the defendant, Mr Sami Haddad, to build two double storey brick houses (“55” and “55A”, collectively, “the houses”) on a parcel of land owned by Mr Haddad in San Souci, New South Wales (“the land”). The land was to be subdivided so that each house would have its own allotment.

2. Building work was undertaken, and, in the course of the building work, numerous variations were made to the contracts.

3. In August 2020, Mr Haddad made a complaint to NSW Fair Trading about allegedly defective and incomplete work in the houses.

4. On 18 September 2020, the building certifier issued a list of works to be completed as a pre-condition to the issuing of an occupation certificate to Mr Haddad.

5. On 12 November 2020, Elrob issued payment claims 1111a and 1111b to Mr Haddad, claiming payment, for the first time, for three variations in relation to each house (six variations in total). Claim 1111a related to 55A and claim 1111b related to 55.

6. On 13 November 2020, Elrob filed proceedings in the Civil and Administrative Tribunal of New South Wales (NCAT), seeking an order for payments from Mr Haddad allegedly due under the contract with respect to 55A (“the contract”).

7. On 5 December 2020, Elrob made an application for an adjudication of payment claim 1111b under the Building and Construction Industry Security of Payment Act 1999 (“the SOPA”).

8. On 15 December 2020, a Fair Trading Rectification Order was issued against Elrob with respect to defective and incomplete works.

9. On 23 December 2020, an adjudication determination was made under the SOPA in Elrob’s favour with respect to payment claim 1111b (55) for $90,178.36.

10. On 18 January 2021, Elrob filed the adjudication certificate as a judgment. On 9 March 2021, Mr Haddad paid Elrob $95,382.52 in satisfaction of the judgment debt, including costs and interest.

11. In these proceedings, Elrob seeks the sum of $89,958.15, inclusive of GST, in relation to the variations alleged in respect of 55A, which were the subject of payment claim 1111a.

12. “Further or in the alternative” Elrob makes a claim in quantum meruit with respect to the building work provided by him for the benefit of Mr Haddad.

13. Elrob seeks interest on any damages awarded at the rate of 15%.

14. On 29 November 2021, Mr Haddad filed a cross-claim against Elrob. The cross-claim alleges that building works under the two contracts are defective and incomplete. It is alleged that the defective and incomplete work constitutes a breach of contract and a breach of statutory warranties by Elrob. Mr Haddad claims damages with respect to the defective and incomplete work.

15. Mr Haddad also seeks, in the cross-claim, restitution for the amount he paid to Elrob pursuant to the adjudication determination on the basis that the payment of that amount represents an overpayment, that Elrob has been unjustly enriched by the overpayment and that Elrob is liable to repay the amount of $95,358.52.

Elrob’s claim

16. At the hearing of the matter, Elrob relied upon the affidavit of Mr Mark Zeina of 15 November 2021, and the affidavit of Mr Luke Martin of 15 February 2023, neither of whom were required for cross-examination. Elrob also relied upon the affidavits of Mr Janko Kader dated 21 June 2021, Mr Frank Ehrlich dated 15 February 2023 and Mr Elia Elrob Boujaoude dated 11 August 2021 (‘first affidavit’) and 2 November 2021 (‘second affidavit’), all of whom also gave oral evidence. Mr Boujaoude is the principal of Elrob. He is also Mr Haddad’s wife’s uncle. Elrob also relied upon two expert reports from Mr Mario Bournelis, building consultant, both dated 14 November 2021 (in relation to 55 and 55A, respectively). Elrob relied upon a further expert report from Mr Ken Whyte, quantity surveyor of 22 June 2021. Various emails were also tendered.

17. Mr Haddad relied upon three affidavits of his own, dated 9 August 2021 (with Exhibit SH1), 31 August 2021 and 6 October 2023 (with another Exhibit SH1). He also relied upon two expert reports from Mr Anthony Capaldi, a building construction consultant, dated 10 August 2021 and 17 August 2021.

18. The building experts from each side engaged in a conclave and provided a joint report.

19. In the statement of claim, it is alleged that:

4.   On or around 24 July 2017, the Plaintiff and the Respondent entered into two fixed price contracts for the Plaintiff to construct 2 double storey brick house with flat roof at the Site for the Defendant (the Contracts). At all times the Defendant intended to reside at Lot 55A.

5.   The Contracts were each in the sum of $678,220.00 (plus GST). The total of the Contracts were $1,492,084.00 (inclusive of GST).

Particulars

2 x Master Builders Association Head Contract Residential Building (BC4) dated 24 July 2017.

6.   Provision was made for the Contracts to be varied by way of addition, omission or substitution.

Particulars

Clause 14 of the Contracts

7.   The Contracts were varied on a number of occasions with the knowledge and approval of the Respondent.

8.   It was a term of the Contracts that variations did not have to be in writing and signed before the Plaintiff had an entitlement to be paid.

Particulars

Schedule 4 of the Contract – Special Conditions

9.   The Contracts provided that the Defendant was required to make payment within 5 days of receipt of the Plaintiff’s invoice.

Particulars

Schedule 2, Item 4 (d)

Clause 20 (c) of the Contracts

20. The statement of claim alleges that the sum of $89,958 (inclusive of GST) remains outstanding in respect of the Lot 55A variations and that Mr Haddad has “either refused or neglected” to make the payment in respect of the 55A variations.

21. In the alternative, Elrob claims in quantum meruit with respect to the variations for 55A. Elrob pleads that it has provided the services the subject of the variation document with respect to 55A and that Mr Haddad “acknowledged, accepted and benefitted from the services the Plaintiff provided”. It is pleaded that the benefit Mr Haddad was provided with by way of the variations with respect to 55A was at the expense of Elrob, and that it is unjust in all the circumstances for Mr Haddad to continue having the benefit of the services when Elrob has not been compensated for them.

22. Mr Boujaoude has been a director of Elrob since 2010. “Elrob”, is one of his given names. Mr Boujaoude said, in his first affidavit, that both he and Elrob hold a builder’s licence. He said that the two contracts in this matter were signed on 27 July 2017 “to construct 2 double storey brick houses with flat roofs”. He said that development consent for the houses was obtained by Mr Haddad on 16 March 2018 (‘the DA consent’) and that on 12 June 2018, Mr Haddad obtained construction certificates from private certifiers.

23. There is some doubt about the date on which the contracts were signed. In the course of cross-examination, Mr Boujaoude said (T88.46):

..I was going – yesterday, I was shown contracts and where it had a digital signature on them. I don’t – and it had 27 July. That’s inaccurate. It’s 27 November. I’ve got the emails to show it, to prove it.

24. Mr Boujaoude then produced an email to Ms Haddad dated 27 November 2017 with two attachments called “Signed Revised 55 Sandringham st contract” and “Signed Revised 55A Sandringham st contract”. The two contracts attached are dated 24 July 2017 on the execution page and are only signed by Mr Boujaoude. Mr Boujaoude said that the only revision to the contract was the date. Mr Boujaoude said:

This is to show the date was 27 November 2017, not 27 July. There was two contracts. We re-signed them again. I can’t recall the reason why.

25. Mr Boujaoude said, in his first affidavit, that he obtained Home Building Compensation Fund Insurance for each of the houses on 31 May 2018. Works commenced on the site on or around 20 August 2018. Mr Boujaoude issued progress claims in the course of the works. Mr Boujaoude said that the works were complete by early November 2019.

26. Mr Boujaoude also said, in his first affidavit, that he issued eleven contract variations “during the course of the works” and also issued ten invoices for the variations.

The variations in dispute

27. The alleged variations the subject of the statement of claim are the subject of invoices attached to payment claim 1111a (CB p 2149), dated 12 November 2020, in relation to 55A. For convenience, I will refer to them as variations 003, 005A and 009.

28. Variation 003 “Additional Work” is dated 3 November 2018 and unsigned. The description of the works lists the following:

Description of Works	Add	Deduct
1. Delete and credit internal timber wall & gyprock finish including all pocket doors	$28,850.00
2. Build all internal walls with common bricks with concrete lintels for all openings	$35,560.00
3. Additional charge for chasing brick wall for electrical conduit	$2,640.00
4. Cement render all internal walls (all labour and materials included)	$34,660.00
5. Add extra 2 brick columns 350 x 350 at rear patio and balcony and render finish	$3,610.00
6. Move garage walls one course each side (No Charge)	$0.00
7. Deleted balcony planter box & privacy screen A. Extended balcony and replaced all balcony balustrades with double brick and render	$4,145.00	$2,120.00
8. Added corner brick column for window and render (no charge)	$0.00
Sub Total	$80,615.00	$30,970.00
BOP @ 20.0%	$9,929.00
Total Variation (excl GST)	$59,574.00

29. In his report, Mr Whyte costed the work in Variation 003 at $58,504 (CB p 1171).

30. In his first affidavit, Mr Boujaoude says “After signing the contracts, Sami requested and approved a variation to full brick internal walls. Attached at page 315 of EB-01 is a true copy of text message dated 18 July 2017”. The text exchange says:

18 July 2017

Hi Sammy,

The costing for both house full brick with all inclusions is $1,483,420.00 and costing for brick veneer is $1,290,715.00. Let me know your thoughts.

Regards,

Elrob

18 July 2017

Hi elrob is GST included

18 July 2017

Hi Sammy, apologies but all costing is plus GST, we can reduce costing with certain materials and finishes but you will need to decide between full brick or brick veneer.

18 July 2017

Hi elrob i have to go with full brick our heart was set on it and if you can reduce in some areas that would be great god bless look forward to seeing you soon cheers

18 July 2017

Ok I will let Fadi know to continue with Basix for Full brick houses. Of course we will do our best to reduce costing in areas that will not affect the end result.

Cheers

Elrob

31. The contract is dated 24 July 2017 and was signed either on that date or on 27 November 2017 (or shortly after that date), or on both dates. It was Mr Boujaoude’s case that the contract under which Elrob was building the houses was signed on 27 November 2017. The exchange of emails in relation to the issue of whether the houses were to be double brick or brick veneer pre-dates the contract, whether it was signed on 24 July 2017 or on 27 November 2017.

32. In cross-examination in relation to the Home Building insurance of the houses, the following exchange took place with Mr Boujaoude (T31.7):

Q.   The building was not brick veneer, was it? It was double brick.

A.   Originally, that’s what we spoke about.

Q.   Yes.

A.   And then Mark added double brick, and timber internals.

Q.   Right. But by the time the contract was signed, it was double brick, wasn’t it?

A.   The double brick on the external, yes.

Q.   So this description of brick veneer is not correct, is it?

A.   No.

33. Mr Boujaoude, in cross-examination, agreed that, in his text exchange with Mr Haddad on 18 July 2017, he provided a quote for “full brick with all inclusions” and Mr Haddad replied “… I have to go with full brick, our heart was set on it…” (T43 - 45). Mr Boujaoude said that there were subsequent conversations and an email in which Mr Haddad resiled from that decision, but he did not produce the email and it is not in evidence. Mr Haddad says that he did not change his mind, and expected the houses to be full brick throughout. In other words, Mr Haddad believed that the contract was for a house with external and internal brick walls (see Mr Haddad’s affidavit of 9 August 2021 paragraphs 12 - 15).

34. The contract, on p 5 (see CB p 1442), provides that the “Work to be done at the site address”, which is 55A, is “Build double storey brick house with flat roof”. In Schedule 3, the contract says (CB p 1452):

a) Description of the work to be completed by the Builder

eg a brief description or, as per attached or dated quotation:-

Build a 4 bedroom full brick duplex with car garage.

The façade to be mixed with face brick, render and glass finish.

…

The items charged in Variation 3 “Additional Work” are all referrable to the house being constructed of brick, which was not a variation, but part of the contract.

35. Variation 005A is titled “Tiles for both houses & entry door stain”, is dated 9 September 2019, and is unsigned. The description of works lists the following:

Description of works	Add	Deduct
1. Supply only imperial brown polished marble 300mm x 600mm @ $25sqm² total 46 sqm² (installation is included in original quote)	$1,150.00
2. Supply Light grey Perla concrete look matt glazed porcelain floor tile. Supply 600mm x 600mm floor tiles @ $22 per sqm² total of 95 sqm² for ground floor common area Installation at $55 per sqm² for 86.5 sqm (includes glue, grouting & sealing) 4 pallets delivered at $70 each	$1,925.00 $4,257.40 $280.00
3. Stain front entry timber doors Japanese Black & seal @ $150 per door x 2	$300.00
4. Replace Hallway doors with glass insert @ $140 each x 2 for both houses	$280.00
Sub Total	$8,692.50	$0.00
BOP @ 0.0%	$0.00
Total variation (excl GST)	$8,692.50

36. Mr Whyte did not refer to Variation 005A in his report, and I assume that he was not provided with it. Mr Whyte did, however, refer to Variation 005 in relation to both 55 and 55A. Mr Whyte’s understanding of Variation 005 was that it related to the removal of a planter box from the plans for the first floor level balcony, which reduced the original price for the project by $8,534.60 with respect to 55A and $12,317.00 with respect to 55. In other words, the version of Variation 005 given to Mr Whyte should have resulted in a saving for Mr Haddad.

37. Mr Boujaoude did not give any evidence in his affidavits directly in relation to Variation 005A. In his first affidavit, he gives evidence in relation to Variation 005, which is also dated 9 September 2019. Variation 005 appears at CB p 328 (EB-1 p 259) and is for a total, excluding GST, of $17,165.00. The “Description of Works” is very similar to Variation 005A, except that in Variation 005, the area in item 1 is 92m², the area in item 2 is 190m² in relation to the floor tile and 173m² in relation to installation, the number of doors in item 3 is 3 and the number of hallway doors in item 4 is 4. Both Variations 005 and 005A reference “both houses”. Clearly, the version of Variation 005 referred to by Mr Boujaoude, which is the variation before the Court, is different from the Variation 005 given to Mr Whyte for the preparation of his report.

38. It is apparent, on the face of Variations 005 and 005A, that Variation 005 relates to work in both 55 and 55A, and that Variation 005A relates to the same work, but in relation to 55A only. The work is therefore the subject of both Variations. Mr Boujaoude agreed that Mr Haddad had paid for all variations except for Variations 003, 005A and 009 by the time that payment claim 1111a was issued on 12 November 2020 (T17.14). Mr Haddad gave evidence, in his affidavit of 9 August 2021 (CB p 1360), that he paid Variation 005 in cash. He was not cross-examined in relation to that evidence, and there is no evidence to contradict it. I accept his evidence. The consequence is that the work the subject of Variation 005A has already been paid for. Payment claim 1111a does not claim the full amount of Variation 005A, but claims $1,716.15.

39. Variation 009 is titled “Additional Tiling & retiling work including appliances installation and linen wardrobe”, is dated 21 December 2019, and is unsigned. The description of works lists the following:

Description of Works	Add	Deduct
1. Additional tiling for skirting on rear patio & Balcony supply & install approx 38 LM @ $37.50 LM	$1,425.00
2.a.Layed Marbel flooring in Main bathroom, ensuite and powder room [sic] b.Demolish laid Marble flooring in main bathroom, ensuite & powder room [sic] c. Repair 3 bathroom flooring with sand & cement bedding d.Waterproof 3 patched bathroom floors: 1 primer and 2 coats Dribond	$2,130.00 $1,520.00 $960.00 $1,970.00
3. Additional wiring for 30 downlights and switchs (no charge for Downlights) [sic]	$5,850.00
4. Install only (owner supply appliances) Stove, Rangehood and Dishwasher	$1,140.00
5. Tile extended balcony extra approx. 24.5sqm² supply and install floor tiles	$1,450.00
6. Deleted toilet upstairs (cap off water lines and drain)	$1,655.00
7. Demo hallway brickwall about 1200mm by 2.7m and haulaway A. Hallway Linen cupboard replace hinged doors for glass sliding doors	$635.00 $640.00
8. Install only (owner supply) Stove, Rangehood and Dishwasher	$1,140.00
9. Kitchen increased cabinet space from bench to 770mm from 600mm	$0.00
Sub Total	$18,860.00	$1,655.00
BOP @ 20%	$3,441.00
Total Variation (excl GST):	$20,646.00

40. Mr Whyte does not address Variation 009 in his report, and I assume that he was not provided with it.

41. In his first affidavit, Mr Boujaoude says that Mr Haddad asked him “in or around August 2018” to “remove the wall in the hallway of 55A so make the space wider for a sliding door so I can have more storage”. Mr Boujaoude refers to a text exchange with Mr Haddad on 23 August 2018. The text exchange begins with Mr Boujaoude sending Mr Haddad a photograph of a floor plan with some markings on it. Mr Haddad responds with a text saying “perfect that’s what I wanted”. Mr Boujaoude says, in his first affidavit, that he subsequently had a telephone conversation with Mr Haddad in which he told Mr Haddad that the change would cost about $600.

40. Mr Boujaoude also says, in his first affidavit, that Elrob “replaced these doors” with glass sliding doors.

41. Items 4 and 8 on Variation 009 are substantially the same, including as to cost. Mr Boujaoude agreed, in cross-examination, that the duplication was an error (T79.41).

42. Mr Haddad, in his affidavit of 9 August 2021, said that he never agreed to any variation for $1,425 for additional tiling or skirting to the back patio. Mr Haddad said that the four items in Variation 009 for $6,580 for “lay marble to the main bathroom and demolished, repaired and waterproofed” were for work required because Elrob laid the wrong colour marble and had to remove and replace it with the correct colour. Mr Haddad said that none of the balance of the charges in Variation 009 were agreed or approved by him (see paragraph 154). In cross-examination, Mr Boujaoude said that Ms Haddad made the mistake with respect to the marble selection, and said that he had told Mr Haddad that the extra work would have to be paid for. However, Mr Boujaoude did not provide a written quote for the work and he could not remember whether he gave a verbal quote (T78-79).

43. Mr Kader, a carpenter who was employed by Elrob at the time that the houses were built, said, in his affidavit, that he saw the imperial brown polished marble tiles installed in the bathrooms and that he subsequently helped to arrange for the removal of those tiles and the water proofing and re-tiling of both properties, meaning 55 and 55A. Mr Kader, in his affidavit, also addressed the issue of the installation of lights, but it emerged in cross-examination that his understanding of that issue is based on hearsay, so I disregard it.

44. Mr Ehrlich, a contract electrician who performed electrical work in 55 and 55A in 2018, provided the invoices for the work as annexures to his affidavit. Mr Ehrlich gave evidence that Mr Haddad asked him, on site, as the building work was occurring, to install more downlights and more switches. Mr Ehrlich said, in cross-examination, that he did not discuss with Mr Haddad a price for the downlights and switches, and nor did he discuss a price for additional exterior wall lights or for new wiring and five external power points for 55A and three external power points for 55, all of which he installed. Mr Ehrlich also said that Mr Haddad asked him to install and supply extra “TV points”.

The contract and the variations

47. The contract says, in clause 1(c)(ii):

Any agreement to vary this Contract, or to vary the plans and specifications for work to be done under this Contract, must be in writing signed by or on behalf of each party to this Contract.

48. The contract says, relevantly, in clause 14 (underlining and bold font in original):

(b)   For the sake of clarity, a variation is established by:

(i)   written instructions from the Owner or the Owner’s representative; and or

(ii)   the supply to the Builder of post contract details such as drawings: and or

…

(d) (i)   if the Builder agrees to undertake a variation requested or required by the Owner, the variation is to be detailed in writing and signed by the Owner (or the Owner’s agent) and the Builder. Documents detailing the variation, including as appropriate, amended drawings or specifications, become contract documents.

…

(e)   The Builder, within a reasonable time of receipt of instructions to execute a variation (ie and instruction signed by the Owner or the Owner’s agent) is to notify the Owner, in writing, of the value of the variation.

…

(h)   Where a price has not been previously agreed for additional work, the Builder may proceed with the variation work, and the price to be paid for the work will be the cost as calculated in accordance with Sub-Clause (i) below, together with the allowance specified in Item 1 of Schedule 2 for supervision, overhead and profit.

(i)   The cost referred to in Sub-Clause (h) above, unless otherwise agreed, will be calculated as follows:

(i)   for work by the Builder’s employees, the rates for such labour are those set out in item 2 of Schedule 2. If no rates are shown, then the rates to be used are the rates published by the Master Builders Association of NSW current at the time the variation is made;

(ii)   where the work or some part of it is executed by a sub-contractor, the cost to be paid under Sub-Clause (h) above is the amount properly paid or payable to the sub-contractor which will be established by provision of a proper tax invoice from the sub-contractor engaged to do the extra work.

(iii)   the price for materials is the cost of the materials to the Builder. The Builder is not entitled to any discount other than a discount for prompt of cash payment.

49. None of the three variations the subject of the claim is in writing signed by or on behalf of the parties to the contract. Variations 003, 005A and 009 are not in accordance with clause 1(c)(ii) of the contract.

50. None of the items in the three variations was the subject of written instructions from the Owner or anyone else and nor were they the result of the supply to the Builder of post contract details such as drawings. Clause 14(b) and (d) of the contract have not been complied with.

51. There is no evidence that the Builder provided written notice of the valuation of the variations prior to the issue of payment claim 1111a on 12 November 2018.

52. The exhibit to Mr Boujaoude’s first affidavit, EB-01, at p 136 (CB p 205) includes a copy of a contract for 55. It is signed, but the date is unreadable. Schedule 4 to the contract says:

Any verbal instructions regarding variation will be deemed as approved and signed variations.

53. The exhibit to Mr Haddad’s affidavit of 9 August 2021, SH-01, at p SH1-25 (CB p 1403) and p SH1-59 (CB p 1437) includes a copy of two contracts, one for 55 and one for 55A, both dated on 24 July 2017, but not necessarily signed on that date. Both contracts contain a Schedule 4, which says (CB pp 1419 and 1453):

Any verbal, email or text message instruction regarding variations will be deemed as approved signed variation.

54. On the balance of probabilities, I find that the copies of the contracts provided by Mr Haddad are the contracts applicable to the claim and cross-claim in this matter.

55. I accept Mr Haddad’s evidence (see [40], above) that he did not agree to the items set out in Variation 009. He therefore gave no instruction in relation to those variations.

56. I accept Mr Haddad’s evidence that, by 1 July 2020, he had paid Elrob $1,490,520.78 under the contracts and $267,217.54 for variations. I note that Mr Whyte said, in his report, that the Tender price for the two properties, being $686,447 for 55 and $731,412 for 55A, a total of $1,417,859, was fair and reasonable pricing (see CB p 1010).

57. By 1 July 2020, a dispute had arisen between the parties to the contracts about the completion of the work. On 21 August 2020, Ms Haddad sent an email to Mr Boujaoude saying that she and Mr Haddad would contact NSW Fair Trading if he did not respond to them in relation to the work they considered to be outstanding under the contract. On 24 August 2020, well after the date on which Mr Boujaoude considered the work under the contract to have been completed, Mr Boujaoude sent an email to Ms Haddad attaching “all variation invoices”, which, was the first time that Mr or Ms Haddad had ever seen the invoices the subject of the claim. Mr Boujaoude sent those invoices again with the payment claims served on 12 November 2020.

58. Elrob’s claim is for $89,958 (inclusive of GST). It is not clear how the amount of the claim was arrived at.

59. In any event, Elrob cannot claim again for the work set out in Variation 005A, which Mr Haddad has already paid for as a component of Variation 005. In the statement attached to Payment Claim 1111a, an amount of $1,388.52, exclusive of GST, is cited for Variation 005, and $1,716.15 inclusive of GST, rather than $8,692.50 for Variation 005A, which was annexed to it. Mr Haddad, in his affidavit of 9 August 2021, speculated that the figure in Payment Claim 1111a might be intended to be the GST for Invoice 005, which was paid for in cash but, if so, it is the wrong figure and Mr Haddad’s theory is not consistent with the charging of GST on the amount. Mr Boujaoude’s attention was drawn to the discrepancies in the figures in cross-examination, but he was unable to explain them (T61 – 65).

60. The defendant has established that the total of Variation 009 is wrong because item 4 and item 8 are for the same work.

61. The statement attached to Payment Claim 1111a refers to Variation 8, not Variation 9. However, Payment Claim 1111a, on its face, says that it relates to Variations 3, 5a and 9.

62. Payment Claim 1111a was served shortly after Mr Boujaoude became aware that Mr Haddad had complained to Fair Trading NSW about the building work, and a considerable time after Mr Boujaoude indicated, by text on 1 May 2020, that he believed that work under the contract had been completed (Mr Haddad’s affidavit of 9 August 2021 paragraph 66). Mr Boujaoude had apparently told the home warranty insurer that he had finished the houses in July 2019 (Mr Haddad’s affidavit of 9 August 2021, paragraph 67). The timing of the claim, the confusion in the figures, the absence of any substantiation of the figures and the overlap with previous claims all give rise to doubts about the veracity of the claim. Mr Boujaoude’s inability to clarify the confusion in evidence cast further doubt upon whether the claim has a proper foundation.

63. This is a claim for money due and owing under a contract. It is a claim for a liquidated amount. On the evidence adduced at trial, the plaintiff has not established the veracity of the quantum of the claim on the balance of probabilities.

64. Variation 003 concerns work that Elrob was required to perform under the contract and work which was not, on the evidence, the subject of any instruction by Mr Haddad. It is not a variation under the contract. Variation 005A relates to items previously claimed in the version of Variation 005 which is before me and which has been paid in full. The basis for the charge of $1,716.15 attributed to Variation 005A in payment claim 1111a has not been established by the plaintiff.

65. I am satisfied that the items set out in Variation 009 were not the subject of any request or instructions from Mr Haddad to Mr Boujaoude, either verbally or in writing. There is no documentation of any request or any quote for the items.

66. I find that the variation documents were generated by Mr Boujaoude, without the instructions of Mr Haddad, well after Mr Boujaoude considered that the building work had been finished. On the evidence before me it has not been established that variations were made to the contract in relation to the work set out in Variations 003, 005A or 009.

67. The contract has not been terminated and remains on foot. Mr Boujaoude’s claim for damages under the contract has not been made out.

Quantum Meruit

68. In the alternative to its claim in contract, Elrob makes a claim in quantum meruit.

69. In Mann v Paterson Constructions Pty Ltd [2019] HCA 32 (‘Mann’), Keifel CJ, Bell and Keane JJ said, at [14] – [15]:

14.   Restitutionary claims must respect contractual regimes and the allocations of risk made under those regimes[28]. In Pavey & Matthews Pty Ltd v Paul[29], in a passage cited with approval by French CJ, Crennan and Kiefel JJ in Equuscorp Pty Ltd v Haxton[30], Deane J said:

"The quasi-contractual obligation to pay fair and just compensation for a benefit which has been accepted will only arise in a case where there is no applicable genuine agreement or where such an agreement is frustrated, avoided or unenforceable. In such a case, it is the very fact that there is no genuine agreement or that the genuine agreement is frustrated, avoided or unenforceable that provides the occasion for (and part of the circumstances giving rise to) the imposition by the law of the obligation to make restitution."

15.   In Pan Ocean Shipping Co Ltd v Creditcorp Ltd ("The Trident Beauty")[31], Lord Goff of Chieveley spoke to similar effect:

"[A]s a general rule, the law of restitution has no part to play in the matter; the existence of the agreed regime renders the imposition by the law of a remedy in restitution both unnecessary and inappropriate."

Nettle, Gordon and Edelman JJ said, at [164], when discussing restitution as an alternative to contractual remedies:

164.   Where a contract remains "open" – that is, "not discharged" – there is generally "neither occasion nor legal justification for the law to superimpose or impute an obligation or promise to pay a reasonable remuneration". Such an obligation or promise "would be either inconsistent with the contract or ... would duplicate the contractual obligation". But the position at law for contracts that are "closed", including, relevantly, those terminated for repudiation, is different.

70. Given that the contract has not been discharged and there has been no suggestion that it has been frustrated or avoided or has become unenforceable, Elrob’s claim in quantum meruit for payment claim 1111a must fail.

71. Even if that were not so, I am satisfied that Variation 003 relates largely to works required by the contract and Variation 005A relates to work for which the builder has already been paid. Neither can be the subject of a claim for restitution. Variation 009 includes work which had to be undertaken because Elrob initially laid the wrong tiles in a bathroom, and those costs cannot be subject to restitution. I accept Mr Haddad’s evidence that the other work set out in Variation 009 was not the subject of any agreement between Mr Haddad and Elrob. There has been no attempt on Elrob’s part to prove precisely what work was undertaken, that Mr Haddad received a benefit from that work or to prove that the cost of the work was the cost stated in Variation 009. In all of the circumstances set out above, I do not consider that the Variation documents are a reliable record of either what was done by Elrob or the cost of what was done by Elrob.

72. Elrob’s claims in contract and in quantum meruit have not been made out.

Mr Haddad’s cross-claim

73. Mr Haddad claims, correctly, in his cross-claim, that the statutory warranties in s 18B of the Home Building Act 1989 (‘HBA’) apply to the building works performed under the contracts.

74. The HBA provides, in s 18B:

18B   Warranties as to residential building work

(1)  The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work—

(a)  a warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract,

(b)  a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new,

(c)  a warranty that the work will be done in accordance with, and will comply with, this or any other law,

(d)  a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time,

(e)  a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling,

(f)  a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder’s or person’s skill and judgment.

…

75. Mr Haddad claims that the works carried out under the contracts for 55 and 55A are defective and incomplete, and relies on the reports of Mr Capaldi and the Rectification Order from the Department of Fair Trading dated 15 December 2020 for the particulars. Mr Haddad claims that the defective and incomplete works are breaches of the contracts and breaches of the statutory warranties.

76. Mr Haddad claims $241,661.12 as the cost to rectify the outstanding and defective work (see Bellgrove v Eldridge (1954) 90 CLR 613 at 617 – 618; [1954] HCA 36), comprising:

1. $75,813.07 for defective works in 55.

2. $21,158.73 for incomplete works in 55.

3. $123,234.56 for defective works for 55A.

4. $21,454.76 for incomplete works for 55A.

77. Mr Haddad also claims liquidated damages under clause 10(c) of each of the contracts, which provides:

c) i)   If the Builder fails to bring the works to Practical Completion by the Date for Practical Completion calculated in accordance with Item 5 of Schedule 2, extended as provided for in Clause 11, then the Builder is to pay or allow to the Owner by way of agreed pre-estimated general and liquidated damages, a sum calculated at the rate stated in Item 3(a) of Schedule 2.

ii)   This amount will be applied to the period from the day after the Date for Practical Completion under the contract until the date Practical Completion has been achieved in accordance with Clause 22. Please refer to Clause 22.

iii)   Any amount payable under this clause cannot be deducted from any payment until such time as the actual date of practical completion has been determined.

iv)   if ‘nil’ is inserted or no amount is specified at Item 3(a) of Schedule 2 then it is agreed that no damages are payable in relation to the time to complete the works. Any amount inserted must reflect the actual cost of the delay to the Owner.   

78. Mr Haddad further claims restitution for overpayment under s 32(3)(b) of the SOPA which appears in “Part 3 Procedure for recovering progress payments” and provides:

32   Effect of Part on civil proceedings

(1)  Subject to section 34, nothing in this Part affects any right that a party to a construction contract—

(a)  may have under the contract, or

(b)  may have under Part 2 in respect of the contract, or

(c)  may have apart from this Act in respect of anything done or omitted to be done under the contract.

(2)  Nothing done under or for the purposes of this Part affects any civil proceedings arising under a construction contract, whether under this Part or otherwise, except as provided by subsection (3).

(3)  In any proceedings before a court or tribunal in relation to any matter arising under a construction contract, the court or tribunal—

(a)  must allow for any amount paid to a party to the contract under or for the purposes of this Part in any order or award it makes in those proceedings, and

(b)  may make such orders as it considers appropriate for the restitution of any amount so paid, and such other orders as it considers appropriate, having regard to its decision in those proceedings.

79. The claim for restitution relates to the sum of $95,382.52 paid by Mr Haddad under the SOPA. Mr Haddad claims, in the alternative, that Elrob has been unjustly enriched to the extent of that payment.

80. In its defence to the cross-claim, Elrob does not admit that its work at 55 and 55A was defective or incomplete, but says (in effect) that it remains ready and willing to remedy any defects and complete any incomplete work.

81. As to the claim for liquidated damages, Elrob denies that practical completion of 55A was achieved on 30 September 2020 “and relies on its Notice of Practical Completion issued on 6 November 2019”.

82. Elrob denies that Mr Haddad is entitled to damages for defective or incomplete work and also denies that he is entitled to liquidated damages.

79. Elrob denies that Mr Haddad has paid it more than it was entitled to under the contracts and pleads that Mr Haddad is not entitled to restitution for any overpayment.

Defective and incomplete works (cross-claim)

Defective works in 55

84. The building consultants, Mr Capaldi and Mr Bournelis (‘the building experts’), had a meeting some time before the hearing of this matter and compiled a detailed joint report. Mr Whyte was not requested to arrive at a valuation for the defective or incomplete works, and did not do so. Mr Haddad’s claim for defective and incomplete work relates to both houses.

55 – Defect 1: Horizontal cracking to render

85. There is a crack to the northeast corner of the façade, extending through the render. The crack is about 300mm long and less than 1mm thick. Mr Capaldi considers that the crack is consistent with a horizontal break in the masonry wall for a dampcourse or flashing for which a control joint ought to have been installed in accordance with AS3700-2011. Mr Bournelis considers that because the crack is less than 1mm thick, it need not be repaired and is not a defect. The building experts agreed that the cost of rectification would be $609.89.

86. AS2870 and AS3700 apply. I accept that, to the extent that AS2870 says that rectification is not required if the crack is less than 1mm wide, it deals only with settlement cracks and not cracking arising from other causes, such as the absence of a control joint.

87. I will allow $609.89 for defect 1.

55 - Defect 2: Poor painting to the external wall area above the garage and to the east elevation.

88. The building experts agree that the painting to the external wall above the garage on the east elevation requires remediation in the sum of $358.80

89. I will allow $358.80 for defect 2.

55 – Defect 3: Swarfing marks on the colorbond capping

90. The building experts agree that there are visible swarf marks and stains on the flashings, cappings and rendered parapet walls above the garage and adjoining the north balcony. Insufficient care has been taken to protect these surfaces during building work. The experts agree that the cost of remediation will be $274.00.

91. I will allow $274.00 for defect 3.

55 – Defect 4: Poorly installed gas and water mains and service pipes

92. Mr Capaldi measured the top of the gas service pipe at 80mm below the ground level in the garden bed on the western side of 55 next to the fence. AS/NZS 5601.1 – 2013, p 69 clause 5.4.3 provides that in no case shall depth of cover for consumer gas piping be less than 300mm. In private property (non-trafficable areas) a minimum depth of 300mm is also prescribed. Mr Capaldi also said that the quality of the backfill over the gas pipe was inadequate because it contains stone and debris as well as soil contravening clause 5.4.4 of the standard which required such fill to be “free of stones or other materials which could damage the pipe or pipe coating”.

93. Mr Capaldi measured the top of the water service pipe at 200mm below the ground level at the same location. AS/NZS 3500.1 – 2003 in clauses 5.9, 5.10 and 5.11 says that water service pipes must be installed at a minimum depth of 300mm.

94. Mr Capaldi’s opinion is that the gas pipe and the water service pipe are at risk of damage and need to be exposed and then covered with clean fill or sand. The gas pipe needs to be marked with “danger tape”. A concrete path must then be laid from the driveway side of the fence to the western external wall of 55. Mr Capaldi estimated the cost of the remedial work at $2,291.52

95. It emerged during the giving of concurrent evidence by the building experts that Mr Bournelis had not considered the gas and water pipes in the area Mr Capaldi was concerned about, so he was unable to comment.

96. I accept Mr Capaldi’s evidence on defect 4.

97. I will allow $2,291.52 for defect 4.

55 – Defect 5: Weepholes missing to first floor

98. Mr Capaldi found that three weepholes which should have been installed to the west elevation, adjoining bedroom 2 and the bathroom, have not been installed, contrary to AS3700 – 2011 “Masonry Structures page 41 clause 4.7.2, which says that weepholes are to be installed immediately above the flashing at no more than 1200mm centres”. Mr Capaldi estimated that remediation work would cost $612.00

99. Mr Bournelis believes that this is a “technical breach” because he could not see any evidence of water ingress, and he concluded that the weepholes which had been installed were working adequately.

100. It was argued for the defendant that the Building Code of Australia (‘BCA’) provides, in relation to unreinforced masonry (which includes render), in section 3.3.1.0, that Performance Requirement P2.1.1 is satisfied if it is designed and constructed in accordance with AS3700 or AS47773 Parts 1 and 2. Mr Bournelis agreed that AS3700 is applicable in this case and has been breached, but he characterised the breach as “technical” because he could not observe any detriment to the structure. The defendant submitted, in effect, that this was not the test. The requirements of the BCA, and therefore the National Construction Code (‘NCC’) (of which the BCA is a component) are that the applicable provision must be met, or a Performance Solution must be devised, and it must be demonstrated that the Performance Solution complies with the Performance Requirements (see BCA Sections 1.0.0, 1.0.2, 1.0.3 and 1.0.5). This process would involve that preparation of an expert report, including test results. No such performance solution has been put forward. The defendant’s submissions pointed to Performance requirement P2.1.1 Structural stability and resistance to actions, which require a structure to withstand a long list of “actions to which it may reasonably be expected to be subjected”, including wind, snow, earthquake, liquid pressure, rainwater, ground water and thermal action. These are not matters Mr Bournelis has dealt with in his evidence.

101. Mr Bournelis agreed that, if this defect needed to be addressed, $612 is the appropriate allowance.

102. I will allow $612.00 in relation to defect 5.

55 – Defect 6: Cracking due to brick growth

103. The building experts agree that there is cracking due to brick growth on the western elevation adjoining the garage and on the eastern elevation. The cracking has occurred in four areas. The reason for the cracking is the absence of vertical expansion joints in the external masonry to control cracking and to control brick growth. This is contrary to AS 3700 – 2011.

104. The building experts disagreed as to the cost of remediation work. Mr Capaldi’s estimate was $2,802.32 and Mr Bournelis’ estimate was $1,960.00. Mr Bournelis based his estimate partly on his observation that most of the cracks were less than 1mm thick. However, Mr Capaldi said that the cracking is due to brick growth, rather than settling, so that cracks of all widths should be remediated because they are likely to grow. Mr Capaldi showed, in his report of 27 September 2022, that the cracks are increasing in width over time. In addition, the cracks follow the line of the brickwork rather than cracking from corners as settlement cracking would do, which supports the hypothesis that the cracking is due to brick growth. I accept Mr Capaldi’s evidence.

105. I will allow $2,802.32 for defect 6.

Defect 7: Poorly installed downpipe and stormwater pipes servicing the charge system

106. Mr Capaldi said that the downpipes to the eastern elevation do not extend into the ground to be connected to the stormwater system. The R Squared Pty Ltd stormwater plans allow for the downpipes to extend vertically down the external walls and then be connected in the ground to the main stormwater line. The plans do not allow for the stormwater pipes to be fixed horizontally to the external wall. The builder has failed to install the stormwater and downpipes to the eastern elevation in accordance with the approved drawings. Mr Capaldi estimated a remediation cost of $6,511.15.

107. Mr Bournelis agreed that the downpipes and stormwater pipes have not been installed in accordance with the plans. He said that he observed that the downpipes were all connected to the rainwater tank on the westerns side. In the event that the tank becomes full, Mr Bournelis said that the tank could be connected to the pit in the front yard and gravity fed out to the street for discharge through the council stormwater pipes. Mr Bournelis did not consider this to be a defect.

108. The downpipes and stormwater pipes have not been installed in accordance with the stormwater plans. I find that this is a defect requiring remediation. The approved plans contracted for must be adhered to, and the inconvenience of having to monitor the level of the rainwater tank and periodically change the connection to the pipes to avoid the tank overflowing, under the present system, is patent.

109. The stormwater plans did not provide for the downpipes to be clipped horizontally to the exterior walls, which is unsightly.

110. Mr Bournelis was instructed that there is a stormwater line running down the length of the house to which the downpipes could be connected. On the basis of those instructions, he did not believe that any digging would be required should it be necessary to remediate the system. He estimated a remediation cost of $2,522 in the event that remediation was found to be necessary.

111. The approved stormwater plans show that it was intended that each downpipe connect to stormwater lines which run down both sides of the house (see CB pp 1502 and 1503). Those connections would now require an additional piece of pipe for each downpipe to connect it to the stormwater line. It would be necessary to dig a trench from the wall of the house to the stormwater line for each downpipe so that the downpipes can be extended, attached to the stormwater line and charged without the joints leaking.

112. Mr Bournelis has underestimated the work required to remedy this defect. I prefer Mr Capaldi’s estimate.

113. I will allow $6,511.15 for defect 7.

55 - Defect 8: Excess cement splatter on colorbond fencing

114. The building experts agreed that the colorbond fencing and posts show excessive concrete, mortar and render splatter to nine panels.

115. The experts agreed the cost of remediation at $1,236.00.

116. I will allow $1,236.00 for defect 8.

55 – Defect 9: Poorly constructed render control joint

117. The building experts agree that the builder has constructed a horizontal control joint, but a section of 320mm has been omitted, and this has resulted in horizontal cracking between the control joints.

118. The building experts agree the cost of remediation at $95.89.

119. I will allow $95.89 for defect 9.

55 – Defect 10: Poorly installed balcony outlet

120. The balcony drainage outlet has been cut short of the external balcony wall. This may result in the ingress of surface water. The building experts dealt with this in conjunction with item 41.

55 – Defect 11: Glazed barrier

121. This item was not pressed by the defendant.

55 – Defect 12: Poorly constructed tile control joint

122. The building experts agree that the centre control joint within the verandah body of tiles has been poorly installed in the wrong colour.

123. The building experts agree that the cost of rectification is $134.89

124. I will allow $134.89 for defect 12.

55 – Defect 13: Expansion joint not constructed

125. Mr Capaldi says that the builder has omitted to instal a vertical expansion joint between the main building and the verandah. AS3700 – 2-11 Masonry Structures p 43 clause 4.8.3.1 says that a joint is to be constructed where a wall changes in height more than 20%. Mr Capaldi costed the remediation work at $237.29.

126. Mr Bournelis agreed that the expansion joint had not been installed in compliance with AS3700 but considered that it was a technical breach with no practical consequences. Mr Bournelis pointed out that an expansion joint had been installed above the required area.

127. I accept Mr Capaldi’s evidence in relation to defect 13 in 55. The Australian Standard should be complied with. Failure to comply gives rise to the potential for future damage to occur to the building by way of cracking.

128. I will allow $237.29 for defect 13.

55 – Defect 14: Poorly applied sealant to the roof flashings and delamination to sealants

129. The building experts agree that the silicone sealant used as the primary weatherproofing between the external first floor wall and the roof flashings has been poorly applied and in delaminating in places.

130. The building experts agreed that the cost of remediation is $191.78.

131. I will allow $191.78 for defect 14.

55 – Defect 15: Horizontal cracking to the render

132. The building experts agree that there is horizontal cracking to the masonry and render wall adjoining bedroom 1 and above the garage apron flashings. The cracking appears to be due to a cavity flashing installed below the window and above the apron flashing.

133. The building experts agreed the cost of remediation at $609.89.

134. I will allow $609.89 for defect 15.

55 – Defect 16: Visible fixing anchors to façade cladding

135. In the course of giving evidence, Mr Bournelis conceded that the fixing anchors installed to secure the parapet cladding to the framework were visible. This is the result of the builder adopting a poor fixing technique and failing to finish the external cladding.

136. Mr Capaldi costed remediation at $1,568.80. Mr Bournelis did not provide an estimate.

137. I accept Mr Capaldi’s evidence and I will allow $1,568.80 for defect 16.

55 – Defect 17: Poorly finished concrete surfaces

138. The concrete surface finish to the garage perimeter has been roughly finished because the surface has not been trowelled smooth. Mr Bournelis said that this was because of a decision to make the garage larger than originally planned by building the internal wall further into the entry hall.

139. Mr Capaldi considered that the failure to finish the garage floor contravened HBA 18B(1)(a). Mr Bournelis did not believe that an aesthetic issue could be a defect.

140. I agree with Mr Capaldi. A failure to finish a surface which creates an aesthetic issue is a defect under HBA 18B(1)(a).

141. Mr Capaldi costed remediation at $1,086.10, including painting to conceal the repair. Mr Bournelis costed remediation at $844 without painting, but did not think that remediation was necessary.

142. I accept Mr Capaldi’s costing.

143. I will allow $1,086.10 for defect 17.

55 – Defect 18: Cracking to hallway and kitchen ceilings

144. The building experts agreed that there is visible cracking to the ceiling of the ground floor hallway. There is also visible cracking to the ceiling of the ground floor kitchen adjoining the living room. The builder has failed to instal the control joints required within the ground and first floor ceilings as required by AS/NZS 2589 – 2017 “Gypsum linings – Application and finishing” and the “Gyprock Residential Installation Guide”.

145. Mr Bournelis costed remediation at $874, which did not include the installation of control joints adequate to meet the Australian Standard.

146. Mr Capaldi costed remediation at $2,484.75, which included the installation of control joints in compliance with the standard. This should prevent further cracking. I accept Mr Capaldi’s evidence.

147. I will allow $2,484.75 for defect 18.

55 – Defect 19: Flexible sealant not installed to wet areas

148. The building experts agreed that the junction between the wall and floor tiles to all wet areas has been installed with a rigid grout joint that appears to be cement based. This is a contravention of AS3958.1 “Ceramic tiles – Part 1: Guide to the installation of ceramic tiles” and AS3740 – 2010 “Waterproofing of domestic wet areas”.

149. The building experts agreed quantum at $621.78.

150. I will allow $621.78 for defect 19.

55 – Defect 20: Wall tiles not in alignment in the bathrooms

151. The feature wall tiles to the walls of the bathrooms have been installed with inconsistent horizontal grout lines so that they are out of alignment.

152. Mr Bournelis said that the white tiles were consistent in size, but the grey feature tiles varied from 295 – 305mm, and attributed the issue to that difference in size. Mr Bournelis did not consider that the issue required remediation. Mr Capaldi also measured the tiles, and found that they were of consistent size.

153. It is evident from the photographs that the aesthetic issue with the bathroom tiles is caused by the inconsistent width of the grout, which is an issue for the tiler (see CB pp 21454-6 and 2576-8).

154. Mr Capaldi costed the remediation at $6,675.00. There is no alternative costing, and I accept Mr Capaldi’s costing.

155. I will allow $6,675.00 for defect 20.

55 – Defect 21: Sewer line has not been capped

156. The building experts agree that an airtight removable cap has not been installed on the sewer pipe that connects to the toilet suite in the bathroom.

157. The building experts agree that the remediation cost is $142.00.

158. I will allow $142.00 for defect 21.

55 – Defect 22: Poorly painted doorjambs.

159. The building experts agree that the timber substrate surface of the timber doorjambs is visible because insufficient paint has been applied.

160. The building experts agree that the remediation cost is $89.70.

161. I will allow $89.70 for defect 22.

55 – Defect 23: Cracking to the junction of the wall tiles and ceiling lining

162. The building experts agreed that poor joint setting between the wall and ceiling linings prior to the tiling of the walls has led to cracking at the junction of the wall tiles and ceiling lining.

163. The building experts agree that the cost of remediation is $95.89.

164. I will allow $95.89 for defect 23.

55 – Defect 24: Reverse falls & level areas to wet area

165. The building experts agree that the tiled floors are required to comply with AS3958.1, and that the falls to the floor wastes in the master ensuite and the first floor bathroom were not compliant. The building experts differed, however, on the extent of the work necessary for remediation of the defects in the master bedroom ensuite and the first floor bathroom. Mr Bournelis costed the replacement of two rows of tiles in each room. Mr Capaldi’s scope of work required more tiles to be replaced to achieve the required falls to the floor waste.

166. Mr Capaldi believes that a laundry is a “wet area” and therefore requires a floor waste. Mr Bournelis does not consider a laundry to be a “wet area”.

167. The BCA defines “wet area” as follows, in section 1.1.1:

Wet area means an area within a building supplied with water from a water supply system, which includes bathrooms, showers, laundries and sanitary compartments and excludes kitchens, bar areas, kitchenettes or domestic food and beverage preparation areas.

168. I accept that a domestic laundry is a “wet area” under the BCA and that it requires a floor waste.

169. Mr Bournelis costed the remediation works, being the replacement of two rows of tiles in each bathroom, at $1,458.00. Mr Capaldi costed his scope of works, which included replacing more tiles and work in the laundry, at $3,566.00

170. I prefer Mr Capaldi’s more comprehensive approach to the remediation of the insufficient falls in the bathroom floors. I also find that it is necessary to instal a floor waste in the laundry.

171. I will allow $3,566.00 for defect 24.

55 – Defect 25: Water ingress into the building from the external door

172. The building experts agree that the door to the outdoors in the laundry requires treatment to seal gaps which allow water ingress. The building experts agree to a remediation cost of $131.23.

173. I will allow $131.23 for defect 25.

55 – Defect 26: Poor finishing to the junction of the walls and window/door frames.

174. The building experts agree that the finish between the door and window frames and the rendered and painted reveals has been poorly applied.

175. The building experts agreed to a rectification cost of $251.89.

176. I will allow $251.89 for defect 26.

55 – Defect 27: Poor patching to wall surfaces below and to the surrounds of electrical, light and comms wall plates.

“Finally, s 3(b) makes a judgment entered under s 25 on an adjudication certificate provisional only, both in what it grants and in what it refuses. A builder can pursue a claim in the courts although it was rejected by the adjudicator and the proprietor may challenge the builder's right to the amount awarded by the adjudicator and obtain restitution of any amount it has overpaid.”

550. The contract, in clause 20(e), provides that any payment to the builder is payment on account. Accordingly, the defendant submitted, the making of a payment under the SOPA does not constitute evidence that the work was performed or that the amount was due and owing. I accept that submission.

551. The defendant, by its cross-claim, sought to have the Court make a determination as to the entitlement of the plaintiff to be paid for the work the subject of invoice 1111b on a “final working out of the contractual mechanisms” referred to by the Court of Appeal in John Holland.

552. Payment claim 1111b, on the face of it, is dated 12 November 2020 and refers only to 55 (CB p 2154). The total amount of the payment claim is $90,178.36 including GST. The “Details of Works” specified in payment claim 1111b are:

To carry out building works as per contract and variations. Full details on attached documents. Inv. 3, 4,7 and 8.

553. The contract price had been paid by the date of payment claim 1111b, so the payment claim relates only variations 3,4,7 and 8.

554. The Statement provided with payment claim 1111b was dated 31 August 2020 (CB p 2155). The following was set out on the Statement:

Invoice Date	Invoice No	Description	Amount	GST	Balance
3 Nov 18	3-Additional works	Replace all internal walls with brick and render finish	$55,179.60	$5,517.96	$60,697.56
30 Aug 19	4	Additional work and materials supplied	$ 5,992.73	$ 599.27	$ 6,592.00
21 Dec 19	7	Change Building for free standing bathtub (owner supply free standing bathtub)	$ 291.60	$ 29.16	$ 320.76
21 Dec 19	8	Additional tiling and retiling work. Appliances installation only. Linen wardrobe glass sliding doors.	$20,516.40	$ 2,051.64	$22,568.04
Total amount overdue	Incl GST	$90,178.36

555. The invoice for variation 3 for 55 which was provided with payment claim 1111b is dated 24 August 2018 and is for a total amount of $35,000 (CB p 2156). The invoice is not for the replacement of “all internal walls with brick and render finish”. The Variation is not signed by either party to the contract. Clearly the version of the invoice for variation 3 for 55 is not the variation referred to in the payment claim.

556. There is another invoice for variation 3 called Variation 3 – Additional work. This invoice sets out nine items related to a purported change from timber stud internal walls to brick internal walls. It is almost the same as the variation with the same name in relation to 55A, which I have discussed above at [291]. To the extent that Variation 3 – Additional work enumerates costs associated with the change to the nature of the internal walls, that “change” is not chargeable as a variation because the contract was a contract to build “Double storey brick house with flat roof”. The other items in the invoice are for the deletion of the balcony planter box and privacy screen and the extension of the balcony and replacement of balcony balustrades with double brick and render (item 7). Again, there is no evidence of any documentation of this item as a variation, or of any quote. There is no evidence that the work was done by way of invoices for the work or any materials associated with them. There is no direct evidence of any relevant instruction given by Mr Haddad. Mr Boujaoude was asked about this invoice in cross-examination, and item 7 in particular, and was unable to explain it.

557. On the evidence before me, Elrob has no entitlement to any further payment with respect to either of the versions of variation 3 in respect of 55.

558. The invoice for variation 4 for 55 which was provided with payment claim 1111b is dated 30 August 2019, which is for a total sum of $26,560, and not the $6,592 figure stated on the Statement. The invoice for variation 4 is not signed by either party to the contract. Mr Boujaoude was taken to the invoice for the variation (see CB p 2157) during cross-examination. He said that Mr Haddad had paid for “some of the items” in the invoice for variation 4. Mr Boujaoude did not clarify which portion of variation 4 payment claim 1111b relates to, and it is not obvious from the figures on the invoice. The issue of what work or materials the $5,992.73 is claimed for in payment claim 1111b cannot be ascertained on the evidence before me.

559. Elrob has not established on the balance of probabilities that it has an entitlement under the contract to be paid the sum of $6,592 by reference to the invoice to variation 4 provided with payment claim 1111b. It cannot now be ascertained what work or materials the claim relates to, and, in any event, there is no evidence before me of a variation coming into existence in conformity with the requirements of the contract in subclauses 14(b) and (d) or Schedule 4 of the contract.

560. Payment claim 1111b was not accompanied by an invoice for variation 7. There is, however, a variation 7 in EB-01 at CB p 330, which is unsigned by either party to the contract and which is for both 55 and 55A (CB p 330). Payment claim 1111b is for $320.76. In cross-examination, Mr Boujaoude said that this item was for the extra work that had to be done to change the bathroom design from a built in bath to a freestanding bath. The extra work was to tile the extra floor and wall area and to position the freestanding bath. Variation 7 says, in relation to 55:

Description of works	Add	Deduct
55 Sandringham St San Souci
1. Deleted inbuild acrylic bathtub	$212
A. Tiled behind bathtub wall and floor (supply and install)	$485
B. Install free standing bathtub (Owner supplied bathtub)	$420
2. Deleted intercom system: Credit	$450

561. The total of that part of the invoice for variation 7 which relates to 55 is $243, which does not match the amount claimed for variation 7 in the Statement, which is $320.76. In addition, as became clear in the cross-examination of Mr Boujaoude, no deduction had been made by the builder for the cost of the purchase of the inbuilt bathtub which was no longer required. Only the work to install that bathtub had been credited.

562. On the evidence before me, Elrob does not have an entitlement to the sum of $320.76 from Mr Haddad in relation to variation 7. Again, in any event, variation 7 is not a variation under the terms of subclauses 14(b) and (d) under the contract.

563. The invoice for variation 8 provided with payment claim 1111b is the same as variation 9 provided with payment claim 1111a in relation to 55A. It is affected by precisely the same defects. Items 4 and 9 are duplicates. Item 3 relates to an error by Elrob with respect to the laying of the wrong tiles. In any event, there is no evidence of any of the items in variation 8 being the subject of a variation arrived at under clauses (b) and (d) of the contract. As with all of the purported variations the subject of these proceedings, there was no evidence of written instructions from the builder preceding the carrying out of any work the subject of the purported variation and there is no signed variation document, or any document at all except for the invoice. No written advice as to the price of the variation was given. The purported variation is not in accordance with subclauses 14(b) and (d) or Schedule 4 of the contract. Mr Haddad denied that verbal advice of the price was given. There is no evidence of any subcontractor invoices or receipts for payments for materials.

564. On the evidence before me, Elrob does not have an entitlement to the sum of $22,568.04 in relation to variation 8.

565. It follows that Mr Haddad is entitled under s 32(3)(b) of the SOPA to an order for the restitution of the sum of $95,134.52 paid by him to Elrob under s 23 of the SOPA. Elrob has been enriched by the payment to it of $95,134.52 at the expense of Mr Haddad, who made the payment. The payment was unjust because Elrob had and has no entitlement, as a matter of law, to the sum of $95,134.52 from Mr Haddad and Elrob has not sought to establish a defence to the cross-claim which would prevent an order for restitution (see Lumbers v W Cook Builders Pty Ltd (In Liq) (2008) 232 CLR 635 at pp 665 – 668).

Summary and Conclusion

566. The plaintiff has failed in its claim for the payment of Payment Claim 1111a with respect to 55A.

567. The plaintiff has failed in its claim in quantum meruit.

568. The defendant has succeeded in its claim with respect to defects and incomplete works constituting a breach of contract by the builder. The defendant is entitled to an award of damages in the total sum of $226,446.39 with respect to the defects and incomplete works.

569. The defendant has succeeded in its claim for liquidated damages under the contract in the sum of $25,000.

570. The defendant has succeeded in its claim for restitution with respect to the money paid under the SOPA and is entitled to an order for the payment to it by the defendant of $95,134.52 on that account.

571. The following orders will issue:

1. Judgment for the defendant on the plaintiff’s claim. The plaintiff’s claim is dismissed.

2. Judgment for the defendant on the first cross-claim.

3. The plaintiff is to pay the defendant the total sum of $226,446.39 for breach of the contracts.

4. The plaintiff is to pay the defendant the total sum of $25,000 by way of liquidated damages under the contracts.

5. The plaintiff is to pay the defendant the sum of $95,134.52 by way of restitution.

572. I will hear the parties as to costs.

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Decision last updated: 24 September 2025