Gill v Summit Building Design and Construction Pty Ltd

[2019] NSWCATCD 5

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	Gill v Summit Building Design and Construction Pty Ltd [2019] NSWCATCD 5
Hearing dates:	21 September 2018
Date of orders:	18 January 2019
Decision date:	18 January 2019
Jurisdiction:	Consumer and Commercial Division
Before:	S Thode, Senior Member
Decision:	1. The respondent, Summit Building Design and Construction Pty Ltd shall pay $84,494.00 to the applicants, Paramjit Singh Gill and Taswinder Kaur Brar by 1 March 2019.
Catchwords:	BREACH OF CONTRACT - repudiation– assessment of damages – work order – weight of evidence
Legislation Cited:	Civil and Administrative Tribunal Act 2013; Home Building Act 1989
Cases Cited:	Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2005] NSWCA 248; Clements v Murphy [2018] NSWCATAP 152; Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 at 125; per Dixon J and McTiernan J in Fink v Fink [1946] HCA 54; (1946) 74 CLR 127 at 143; per Einstein J in Murray v Shillingtonsworth (2006) 68 NSWLR 451; Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; Lacchese v McDonnell [2018] NSWCATAP 120; Wesiak v D&R Constructions (Aust) Pty Ltd [2016] NSWCA 353; McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457 NCON V Australia Ltd v Spotlight Pty Ltd [2012] VSC 604. P and M Kaye Ltd v Hosier & Dickinson Ltd [1972] 1 WLR 146; Pattullo v EPK Kitchens Pty Ltd [2015] NSWCATAP 230 Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 33, 40, Shevill v Builders Licensing Board (1982) 149 CLR 620 ; McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457
Category:	Principal judgment
Parties:	Paramjit Singh Gill & Taswinder Kaur Brar (Applicants) Summit Building Design & Construction Pty Ltd (Respondent)
Representation:	Solicitors: Mr Robertson Carroll & O’Dea Solicitors (Applicants) Mr Adams, Adams and Partners (Respondent)
File Number(s):	HB 18/10575
Publication restriction:	Nil

REASONS FOR DECISION

Background

1. For convenience Mr Paramjit Singh Gill and Ms Taswinder Kaur Brar shall be referred to as the owners.

2. Mr Stuart as director of the company shall be referred to as the builder.

3. The following facts are not controversial and are contained in both parties’ chronologies. The parties entered into a contract for residential building work dated 5 December 2017. The contract is a standard Department of Fair Trading Contract for residential building work.

4. In September 2017 the owners made inquiries with the builder about the design and construction of a new house at Katoomba.

5. Mr Gill, on behalf of the owners, indicated he had a $300,000 budget and would like to build a four bedroom, two bathroom house with a study and second living area with a single or double garage. Mr Stuart inspected the prospective site in September 2017 and sent a proposed floor plan to Mr Gill with a quote for $300,000.

6. On 16 September 2017 Mr Stuart telephoned Mr Gill and advised that the floor plan that Mr Stuart had drafted was too large and could not be built for the budget.

7. Throughout September and November the parties exchanged email correspondence developing the design of the house to fit within the budget. On or about 5 November 2017 Mr Gill indicated that he was happy with the draft plan but sought two changes: the front window from the cinema to the patio needed to be changed to a French door; the ensuite size needed to be increased.

8. Mr Gill requested a copy of the contract. Following a number of emails and telephone calls Mr Stuart sent to Mr Gill a standard Department of Fair Trading building contract stating a contract price of $300,000. Mr Gill amended the contract by changing the completion period from 52 weeks to 27 weeks, as agreed by the parties, and included special conditions:

These further conditions form part of the building contract between Summit Building Design and Construction Pty Ltd as the Builder and Paramjit Singh Gill and Taswinder Kaur Brar as owners dated 29 November 2017

31 attached and signed document titled Quote with Inclusions list forms part of this contract

32 attached and signed floor plan is only the initial draft plan. It is agreed that the ensuite/WIR size is to be increased in final floor plan at the time of doing elevations. Such increase in size is to be compensated by decrease in size of bedroom 1 and/or bedroom 2 so that the overall size of the house remains unchanged. The increase in size of ensuite WIR is to be a minimum of 300 mm or more as agreed

33 front window as shown on the draft plan is to be changed with the French door.

Dated 29 November 2017.

…

9. Mr Gill sent a signed version of the amended contract to Mr Stuart on 29 November 2017 and on 5 December 2017 Mr Stuart signed the contract.

10. On 9 December 2017 the builder sent to the owners an invoice for the contract deposit.

11. Mr Gill requested confirmation that the builder had obtained insurance under the homebuilding compensation fund. The builder indicated that he did not have the facility to obtain homeowners warranty insurance (as he was completing other projects) and would apply when he was ready to commence building the house in a couple of months.

12. On 15 December 2017 the builder received a contour survey.

13. The builder telephone Mr Gill and advised him not to worry about the deposit because the survey showed that the fall in the land was greater than he thought and it would cost extra to build the house.

14. Mr Stuart alleges he advised Mr Gill that he was building a project with a similar fall in land and would revise the plans to fit the garage underneath the house (the Davenport plans) as referred to on pages 5 and 7 of the builder’s submissions. There was no agreed amendment of the plans or the contract price.

15. Throughout December 2017, January and February 2018 Mr Gill made a number of attempts to telephone Mr Stuart to discuss the project and received no response.

16. On 5 February 2018 Mr Gill telephoned Mr Stuart and Mr Stuart indicated that he could not continue with the project because the price was not high enough.

17. Mr Gill requested details of any increase in cost and whether options could be explored for example the garage sitting lower underneath the house, doing a cut at the back or having a split slab. None of these offers to amend the contract were accepted by Mr Stuart. Mr Gill alleges he wanted Mr Stuart to put an offer to him, how the contract price may be renegotiated.

18. On 7 February 2018 Mr Gill telephoned Mr Stuart to see if matters could be advanced however, he received no response. On 7 February 2018 Mr Gill made a complaint to the Department of Fair Trading. During the mediation process Mr Stuart advised Fair Trading that the contract price needed to be increased by $80,000. This was the first time that any increase in the contract price was communicated to Mr Gill. At no stage did Mr Stuart offer to amend the contract price or the scope of work nor did the builder ask for a written variation under the contract.

19. On 6 March 2018 the builder sent written notification purporting to terminate the contract pursuant to clause 17 of the contract. Clause 17 provides that if necessary approvals have not been obtained within 60 business days of the date of the contract either party may terminate.

20. On 7 March 2018 the owners notified the builder that there was no entitlement to terminate the contract and referred to clause 26 of the contract providing that a party may not terminate the contract by notice in writing in circumstances where necessary approvals for the work have not been obtained if the failure to obtain those approvals is due to the act, omission or default of the contractor.

21. On 7 March 2018 the builder responded by email to the owners informing them that the contract is terminated.

22. On 30 April 2018 the owners indicated to the builder that the purported termination by the builder was a repudiation and they accepted the builder’s repudiation and elected to terminate the contract.

23. The owners commenced proceedings seeking damages in the sum of $103,254 for breach of contract and completion costs. Mr Gill obtained a quote several quotes estimating that the completed building will cost in excess of $400,000, approximately $100,000 more than the original contract price.

The applicant’s submissions

24. The owners rely on points of claim filed and served on 4 May 2018. It is alleged it was a term of the contract that the builder warranted that the contract price was derived after all relevant investigations were undertaken by an experienced, competent contractor. It is alleged that contrary to good practice the builder did not inspect the site properly, did not obtain a contour survey and as a result of underestimating the slope of the site, the builder underquoted the contract price.

25. It is further alleged that the builder failed to make the necessary application to the local council to obtain development consent for the contract work, and that the builder failed to observe the site and failed to quote for the contract price with due diligence.

26. The owners submit that by emails dated 6 and 7 March 2018 the builder repudiated the contract by issuing a termination notice without valid basis under the contract, thereby indicating an intention to no longer be bound by the contract see (Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 33, 40, Shevill v Builders Licensing Board (1982) 149 CLR 620 at 625 - 6.

27. The applicants state that the letter of 7 March 2018, purportedly terminating the contract, was a repudiation of the contract by the builder, and that the applicants accepted the said repudiation and elected to terminate the contract.

28. As a result of the builder’s repudiation the applicants have suffered loss and damage, being the difference between the contract price, and the cost of completion of the contract works. The applicants submit that they are entitled to be placed in the same situation with respect to damages, as if the contract had been performed.

29. The applicants refer to clause 25 of the contract which provides that the owners may terminate the contract if the contractor is unable or unwilling to complete the work, or abandons the work. If the reasonable cost of completion of the work exceeds that which would have been otherwise been due under the contract, the difference will be a debt payable by the contractor to the owner.

30. Mr Gill has obtained evidence that the cost to complete the contract work, will be approximately $398,000. The estimate relied upon by Jadco Homes Pty Ltd under the hand of its director and chief estimator Mr Ralph, was exclusive of the cost for central heating. There was an agreement with the respondent to share the cost of central heating on a 50-50 basis. The owners obtained three quotes for central heating ranging from $8988 to $10,450.

31. In reliance on the lowest quotes obtained, the applicants claim that the cost of completion is $103,254, being the cost to complete the contract work and half the cost of the central heating. The applicants seek an order in that amount and an order for costs.

The respondent’s submissions

32. The respondent’s submissions were filed on 4 October 2018. All submissions have been considered and specific reference to the relevant submission is made in turn in the consideration below.

Consideration

33. I am satisfied the Tribunal has jurisdiction to hear and determine the issues between the parties as the action by the owners is a building claim within the meaning of s 48A of the Act,

34. The Tribunal needs to determine the following matters

1. Did the builder terminate the contract?

2. If the builder repudiated the contract, what damages flow from the breach of contract?

3. Was the evidence of Mr Ralph admissible, and if so, what weight should be given to the quote of Mr Ralph?

Did the builder terminate the contract?

35. For the reasons that follow I am satisfied that the parties formed a binding contract on 5 December 2017 and that the email letter of 6 March 2018 sent by the builder to the owners constitutes a repudiation of the contract.

36. The builder claims that the contract signed and dated by the parties was only a “draft” contract. It is the builder’s submission that the contract was not “finalised” because of the operation of special condition 32:

32 attached and signed floor plan is only the initial draft plan. It is agreed that the ensuite/WIR size is to be increased in final floor plan at the time of doing elevations. Such increase in size is to be compensated by decrease in size of bedroom 1 and/or bedroom 2 so that the overall size of the house remains unchanged. The increase in size of ensuite WIR is to be a minimum of 300 mm or more as agreed

37. The question of whether special condition 32 rendered the contract a “draft” contract and thereby not binding on the parties is a question of construction.

38. The applicants, through Mr Gill, gave sworn evidence that the contract was finalised after much negotiation between the parties. It was signed and binding on the parties as at 5 December 2017. The builder had ample opportunity to measure the site but provided a quote and executed a contract before arranging for a full site survey and contour plan. The reference to the “initial draft plan” in special condition 32 does not denote that the contract was in draft form. It simply allowed for the ensuite and WIR size to be changed or increased in a final floor plan at the time of doing elevations. It is the owners’ evidence that the reference to the “initial draft plan” did not allow for subsequent wholesale revision of the plans, or for a change in the overall footprint or location of the building. Mr Gill gave evidence that there was no discussion between him and Mr Stuart which would allow for a change of the plans or the contract price. He denies that he was responsible for the preparation of new plans for the purpose of obtaining development consent from the local council. It was at all times incumbent upon Mr Stuart to prepare plans and obtain all necessary council approvals.

39. The builder gave evidence that, as is a builder of 15 years’ experience he almost always “builds in the mountains”. He inspected the slope and estimated that the difference in gradient between the front and back of the house was about 1m. This was an incorrect assessment and the contour survey indicated a differential of about 1.7m between the front and back of the building. On or about 5 February the builder spoke to the owners, suggesting an amendment to the plans “in order that the Builder could lodge those plans with Council” (see submissions paragraph 15). It is the builder’s evidence that the owners refused to amend the plans, preventing the builder from lodging the plans with council and obtaining the necessary approvals. It is the builder’s submission that once the contour plan had been obtained, 8 days after he entered into the contract, it became apparent to him that the plans were unworkable without amendment. He alleges the owners failed to provide him with new plans, or to approve the Davenport plans, and this gave the builder the right to terminate the contract on 6 March 2018.

40. As is clear from the builder’s correspondence that Mr Stuart as director for the builder was purporting to exercise a right to terminate the contract in accordance with cl 17 of the contract. The letter of termination dated 6 March 2018 is repeated verbatim:

TERMINATION OF CONTACT (sic)

I wish to inform that Summit Building Design & Construction Pty Ltd is executing CLAUSE 17 of the contract and terminating the contract between both parties

There has (sic) been expenses paid by Summit in regard to a detailed survey and drafting of plans which have been sent to you in the next couple of days I will send you an Invoice which we are entitled to be paid for

I wish you all the best with your build with another Builder

Kind Regards

Ian Stuart

41. Clause 17 the NSW Government Fair Trading Home Building contract for work over $20,000 states as follows:

Clause 17

Approvals

Unless obtained by one of the parties prior to the date of the contract, the

contractor must promptly apply for, and bear the cost of, all necessary

application fees for approval of the work. The contractor must also apply for

and obtain, at its expense, all approvals required from any public authority to

occupy and use the completed work. The cost of doing so and all fees are

included in the contract price.

The contract price does not include the cost of local government security

deposits and these must be met by the owner.

If the contractor is required to obtain approvals before starting work under

this contract and all necessary approvals have not been obtained within

60 business days of the date of this contract, either party may terminate the contract by notifying the other party in writing at the expiry of the 60 business day period.

If the contract is terminated in accordance with this clause, the contractor is entitled to be paid all reasonable costs associated with applying for the approvals to the date the contract is terminated together with the contractor’s margin on these costs.

If a deposit has been paid by the owner which is in excess of the amount payable to the contractor, the excess must be refunded to the owner within 5 business days of the termination of the contract.

42. It is necessary to set out the NOTES contained in the left hand margin of Clause 17:

Note: As a general rule,

all necessary building and other

approvals for the work should be

obtained prior to the signing of

the contract. If any approvals will

have to be obtained after the date

of the contract the parties should

carefully note the provisions

of Clause 17. …

Note: If it is agreed that the

owner not the contractor will

apply for and obtain, at the

owner’s expense, all approvals

for the work, the first paragraph of

clause 17 will have to be changed

to reflect this.

43. I am of the view that the parties’ retrospective subjective understanding of their negotiations is irrelevant to the interpretation of the contract. The signed contract speaks for itself. The document was executed by the builder on 5 December 2017. The document was prepared by the builder after extensive negotiations between the parties. The contract was signed and was binding on the parties. The builder does not argue that the contract was void ab initio, or that the parties re-negotiated the terms of the contract.

44. The builder in his purported letter of termination solely relies on the effect of Clause 17. Clause 17 requires the builder to obtain all necessary approvals before entering into the contract. It failed to do so. The builder’s failure to obtain the contour plans and the site survey prior to completing all necessary investigations and before obtaining all necessary approvals is contrary to the provisions of the contract and does not shift the burden or responsibility of obtaining plans and approvals onto the owners. This is clearly set out in the plain English Notes in the left hand margin:

if the owners and not the builder have to obtain the necessary approvals, then this must be clearly reflected by amending the first paragraph on clause 17.

45. No such amendment is reflected.

46. I find that Clause 17 does not assist the builder. Insofar relevant, I prefer and accept Mr Gill’s evidence that he was not approached by the builder to provide the builder with new plans, or to approve the Davenport plans. Quite the contrary, Mr Gill accepted that the contour plan rendered the plans obsolete and was willing to engage with the builder to change the plans. He was willing to re-negotiate the price. His evidence was particularly persuasive under cross-examination. He stated that he informed the builder “all I was concerned with was cost, tell me the number and I’ll move forward”.

47. The builder went on annual leave between December 2017- January 2018 and refused to take the owners’ phone calls. When Mr Gill finally reached Mr Stuart in February 2018, the builder did not provide the owners with an amended plan, nor did he offer an increased contract price.

45. At the subsequent mediation the builder informed the owners that the contract price would have to be increased by $80,000 before the works could be completed. This is the first time the builder indicated to the owners the cost of amending the plans to build on the steep site. This estimation is reflected in the quotes which were subsequently obtained by Mr Gill after the contract was terminated. However, no offers were made by Mr Stuart to renegotiate the contract price.

46. I am satisfied that the letter of 6 February 2018 amounts to a repudiation and that the builder had no intention to be bound by the contract. The obligation remains at all times on the builder to “promptly apply for and bear the cost of all necessary approvals of the work”. The builder obtained a contour survey and took no other steps to obtain necessary approvals. In those circumstances the builder cannot avail himself of the termination provision in paragraph 3 of clause 17. The paragraph does not provide a blanket right to terminate to a party who has failed to comply with its obligations. Clause 17 allows a builder to terminate who has taken genuine steps to “promptly apply for approvals”. In circumstances of the instant case were no attempts were made to obtain approval, the builder was not entitled to terminate.

47. The principles of repudiation were discussed in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61 , the joint reasons (Gleeson CJ, Gummow, Heydon and Crennan JJ) at [44] identified two senses in which the word “repudiation” is used. The first sense, their Honours said, “may be termed renunciation”. In this sense, “repudiation” encompasses “conduct which evinces an unwillingness or an inability to render substantial performance of the contract … conduct … which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party’s obligations”. The test of repudiation in this sense, their Honours said, is “whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it”.

48. McDougal J, with whom Beazley P and Simpson JA agreed, stated in Wesiak v D&R Constructions (Aust) Pty Ltd [2016] NSWCA 353 that:

“A finding that a party to a contract has renounced the contract or its fundamental obligations under it (has “repudiated” the contract, in the first sense referred to above) does not depend on the subjective state of mind or intention of that party. The question is whether, regarded objectively, that party’s conduct would convey to a reasonable person in the situation of the other party that the first party renounces the contract or some essential obligation under it. That is made plain in Laurinda: see for example Brennan J at 647; Deane and Dawson JJ at 657-658.

52. In sending the letter of purported termination dated 6 March 2018, either the builder misunderstood that it was his obligation to prepare plans and to submit those to council for approval or, alternatively, in disregard of clause 17, he sought to shift the responsibility for approval to the owners, without negotiation or agreement and to create the impression that the owners were delinquent in their duty to prepare plans. The latter could not be correct in light of the notes in the margin of the contract. He stated “the owners refused to amend the plans in circumstances where the builder could not lodge the plans with council” (see submissions of 4 October 2018 pp 4-5). Either way, the builder’s subjective belief how blame should be apportioned does not inform the contract. The question of whether a party has breached its obligation “does not depend on its subjective state of mind or intention of that party”. The builder was not, as a matter of construction, entitled to terminate the contract in reliance on clause 17 as the builder had failed to perform the contract. In accordance with the principles of Laurinda above, regarded objectively, the builder’s letter of 6 March 2018 would convey to a reasonable person that the builder has renounced the contract.

53. As a matter of generality, it is of little consequence whether the owners were in breach of the contract by not providing a new set of plans. A party to a contract that is itself in breach may accept the other party’s repudiation and terminate the contract unless it was the first party’s breach that provoked the other party’s repudiatory conduct (see Wesiak v D&R Constructions (Aust) Pty Ltd [2016] NSWCA 353 at [145]). I have had regard to the evidence and submissions filed by the builder, including the aide memoire in form of a chronology. There is no contemporaneous evidence to suggest the builder approached the owners with a request to provide him with plans or that the parties reviewed their respective obligations and re-negotiated the terms of the contract. The builder sent an example of a plan to the owners on 17 December 2017. Much is made of the email. The builder alleges that the email attaching the Davenport plans constituted an offer to treat, and the builder sought to negotiate a new contract, including new plans and a new price and that he sought approval for the new amended plans from the owners. However, on analysis the email simply attaches plans with the words “Hi Gill, here’s a copy of the plans Ian asked me to send you, regards Blake Stuart”. Mr Gill tried to contact Mr Stuart to discuss the plans between 18 December 2017 and February 2018 but to no avail, Mr Stuart could not be contacted. When the parties finally did speak Mr Stuart made no offers to amend the plans and did not seek approval for the Davenport plans from Mr Gill.

54. There is no evidence to suggest that the owners provoked the repudiatory conduct or that the owners were in breach of their obligations.

55. For these reasons I am satisfied that the builder’s defence must fail. I am satisfied that the builder repudiated the contract and that the owners accepted the repudiation and elected to terminate the contract. By notice of 20 April 2018 the owner accepted the repudiation and terminated the contract.

56. I note the builder’s submissions that the parties agreed that a certificate of Home Owners Warranty insurance could not be made available until June 2018. I am not of the view that this is relevant. Section 94(3) of the Home Building Act 1998 provides that residential building work that is uninsured work at the time the work is done ceases to be uninsured work for the purposes of the section if the required contract of insurance for the work is subsequently obtained. The failure by the builder to provide home owners warranty insurance on or about 5 December 2017 does not render the contract void ab initio, nor is it a defence to the builder’s repudiatory conduct. The failure to provide a certificate of insurance does not render a contract for residential building work that is executed by both parties a “draft contract.” This argument is not developed further in submissions on page 2 and I am not satisfied that the issue further advances the builder’s defence.

If the builder repudiated the contract, what damages flow from the repudiation?

57. The consequences of repudiation are damages. The party not in default is entitled to claim damages: McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457 at 476-477. The owners seek damages for completion. In reliance on the builder’s evidence the additional cost to perform the work, above and beyond the agreed contract price, is $80,000 as the builder had informed the owners at the mediation.

58. The builder gave viva voce evidence at the hearing that the cost to complete the contract works could be “upward of $80,000”.

59. Further, the applicants rely on the quote of Mr Ralph, of Jadco Homes Pty Ltd at pp 234 to 238 of the court bundle. In an initial email addressed to Mr Gill, Mr Ralph states “thank you for sending the plans through, I estimate that you will need a build budget of $380,000 to construct this design with our Silver Range inclusion pack. See attached.” It appears not to be in dispute that Mr Ralph was provided with a floor plan elevation and a contour survey plan to prepare his tender. It has not been argued or alleged that the floor plan and detailed survey plan sent to Mr Ralph were not the plans previously prepared by the respondent builder. Mr Gill deposed the plans he sent to Mr Ralph were the plans attached to the contract and I accept his evidence.

60. Mr Gill responds:” Thanks for providing the below estimate. Could you please provide a fixed price tender. Please include the following items.

Plain concrete Driveway.

If you have included bricks please change that to cladding all around.

2700 mm ceiling height

Please change stone kitchen bench top to timber bench top.

Tree removal and site levelling if you have not included already.

Hot water system

Please exclude the following items

Floor coverings except the wet areas

Security alarms

Reverse cycle Aircon

Retaining walls

Landscaping

In addition can you please provide me with an estimate for basic central heating separately.

61. In response to this correspondence Mr Ralph reviewed his original quote and states that the total budget to complete the contract is “$396,000”.

62. The respondent submits that the Tribunal cannot be satisfied that the applicants have incurred any losses or damages and should dismiss the owners’ claim. It is submitted that the applicant has failed to discharge its onus of proof and that the Tribunal has insufficient evidence to assess damages.

63. First, the authorities make clear that the mere fact that damages cannot be assessed without difficulty and uncertainty does not relieve a court or tribunal from the responsibility of attempting to assess those damages as best it can: per Deane J in Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 at 125; per Dixon J and McTiernan J in Fink v Fink [1946] HCA 54; (1946) 74 CLR 127 at 143; per Einstein J in Murray v Shillingtonsworth (2006) 68 NSWLR 451 at 458.

64. Even if unchallenged or uncontradicted, a tribunal of fact is not bound to accept evidence it believes to be incorrect, implausible or unreasonable. Where the evidence of quantum is unsatisfactory, a tribunal has a number of options available in carrying out its task of assessment. It can make its best estimate based on the available evidence. It can require further evidence or submissions from the parties. If it is a specialist tribunal it may, in some circumstances, be able to use its own experience and expertise. The one thing it cannot do is fail to undertake the task of assessment of damages (as per Principal Member Rosser in Pattullo v EPK Kitchens Pty Ltd [2015] NSWCATAP 230). In this case I am not of the view that the quote provided by Jadco Homes is so insufficient as to warrant a dismissal of the applicants’ claim for damages. Once it is found that the owners are entitled to damages in the form of completion costs, I am required to estimate the reasonable cost to complete the contract work and to deduct from that amount the (unpaid) contract sum. This is also enshrined in clause 25 of the contract.

65. On balance I am satisfied that the builder and Mr Ralph effectively agree that on any view of the matter, the completion of the contract work will cost at least (emphasis added) $80,000. I find that the applicant has suffered damages and losses and is entitled to an award of damages under s 49O of the Act.

66. The applicants in submissions concede that in the event that the Tribunal does not accept the Jadco Homes estimate of $396,000, the damages should be assessed at $84,494 being the $80,000 additional cost which the respondent on its evidence says that it priced for the works, plus heating cost.

67. I am satisfied, on the balance of probability that the builder was in the best position, after receiving the contour plan, to estimate the cost of building to the plans and specifications he prepared. He expressed to the owners that an additional $80,000 is required to complete the work subject of the contract. In addition the builder for Jadco Homes, seemingly without any input from the respondent, arrived at exactly the same figure when presented with an opportunity to quote on the plans and specifications provided. It appears that on any view of the matter, the loss incurred by Mr Gill and his wife can accurately be assessed as $80,000, based on the plans and specifications prepared by the respondent. Further consideration concerning the admissibility and weight of the Jadco quote is considered at (3) below.

Should the Tribunal make a work order?

68. The respondent submits that the evidence before the Tribunal is insufficient to make an assessment. Further the respondent submits that the builder has agreed to build the house at no extra cost (as is evidenced by Tab 1 of the builder’s submissions) and the owners have provided no evidence as to why this offer is rejected (see page 7 of the submissions by the solicitor for the owners.)

69. However the Tribunal cannot make a work order pursuant to s48MA of the Home Building Act 1989 in circumstances where there is no longer a contract on foot between the parties. See Clements v Murphy [2018] NSWCATAP 152.

70. It was submitted before the Appeal Panel in Clements that at common law, a builder had a “right” to rectify work which was defective or incomplete and that section 48MA reflected that entitlement. In support of this submission counsel for the appellant referred to the decision of Senior Member Bailey in Master Glass Facades Pty Ltd v Pollak [2017] NSWCATAD 45 at [135] to [137] where the Senior Member stated:

The provisions of section 48MA of the HB Act refer to the obligation of the Tribunal when determining a building claim to:

“have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome.”

71. This principle is reflected in the common law by a recognition that apart from having an obligation to rectify, a contractor may have a right to rectify any work which is defective or incomplete: see Diplock LJ in P and M Kaye Ltd v Hosier & Dickinson Ltd [1972] 1 WLR 146, and the concept of temporary disconformity.

72. The right of contractors to exercise an obligation to rectify was addressed in Bellemore, A, “Rectification of Defects by Owner Without Notice to Contractor”, (2001) 17 BCL 325. Such a right may arise by reason of the terms of the contract, or on the basis of an obligation to mitigate. In this instance it was found that the election by the Respondent to exclude the Applicant from having access to rectify and complete is the real proximate cause of the costs incurred and not any breach on the part of the Applicant.

73. It was noted by the Appeal Panel that the decision of Senior Member Bailey was the subject of an unsuccessful appeal to an Appeal Panel (Pollak v Master Glass Facades Pty Ltd [2017] NSWCATAP 203) but the Appeal Panel did not have reason to comment on this part of the decision.

74. It is clear from the authorities and articles cited by Senior Member Bailey (in particular pages 164 to 166 of the opinion of Lord Diplock in P & M Kaye Ltd v Hosier & Dickinson Ltd [1972] 1 WLR 146) that the common law “right to rectify” and the right to complete contract works referred to by the Senior Member only arises prior to practical completion or during the defects liability period; that is, while the contract remains on foot. As I have found above, the contract was terminated by the owners. It is in my view not within the jurisdiction of the Tribunal, as encompassed by s 48MA, to effectively order the parties to enter into a new contract, in circumstances where the initial building contract has been validly terminated by one or other of the parties. I therefore decline to make an order pursuant to s48MA of the Act for the builder to “build the house at no extra cost.”

75. The builder submits that it is not open to the Tribunal to arrive at a finding concerning damages because the owners have failed to “call such evidence as can reasonably be expected in the circumstances … the courts’ obligations to estimate damages as best it can is only triggered where the circumstances are such that the plaintiff is unable to reasonably establish the damages. McGregor on damages states that the word “reasonable” is the controlling one, and the standard of proof only demands evidence from which the existence of damages can be reasonably inferred and which provides adequate data”, as per Robson J in NCON V Australia Ltd v Spotlight Pty Ltd [2012] VSC 604.

76. I have taken the builder’s submissions into account. However, for the reasons as set out, I find that the owners did obtain evidence and that the evidence was admissible and had some weight.

Was the evidence of Mr Ralph admissible, and if so, what weight should be given to the quote of Mr Ralph?

77. The owners relied on the evidence of Mr Gill to establish the losses and damages incurred. Mr Gill deposed in his affidavit that he obtained three quotes. However, the makers of all quotes were requested for cross examination but two were not made available and the tender of those two quotes was rejected by the Tribunal. The maker of the third quote, Mr Ralph was available and was cross-examined at length.

78. The quote was roundly criticised by the respondent. It was submitted at pp 9 and 10 of the written submissions that

• Mr Ralph has a landscape license and was not qualified as a builder;

• The quote was not a fixed price but only an estimate;

• He had the benefit of the contour survey;

• He did not compare apples with apples;

• His estimate was based on a meter square rate of $1500 x 209.49 meters square and not specifically costed;

• His estimate included Jadco’s silver inclusions package, details of the inclusions however had not been included in the evidence;

• The Tribunal should draw a Jones v Dunkel inference that had the silver package inclusions been tendered they would not have assisted the applicants’ case.

79. The builder submitted that the quote by Jadco in its cursory form was of no assistance to the Tribunal and should be afforded no weight. The builder acknowledged the Appeal Panel authority of Lacchese v McDonnell [2018] NSWCATAP 120 which is authority for the proposition that an unaccepted and unpaid quote can be admissible as evidence of the cost of rectification of certain defective work. It is further submitted that the authority of Lacchese is distinguishable because the Jadco quote is so manifestly inadequate in detail that it cannot be relied upon. The builder further submits that “one Principle of Law is that facts are required to be proved. That is the Tribunal may not speculate that certain facts exist or existed. Thus s38 (4) [of the Civil and Administrative Tribunal Act 2014] does not relive (sic) the Owners from the requirement to prove their case”.

80. I disagree with the submission of the builder. I find that the authority of Lacchese is relevant and applicable to the facts in the instant case.

81. The learned Appeal Panel in Lacchese states, inter alia, that work to rectify a defect does not have to have been done before damages are assessed. By parity of reasoning, a quote describing the work required to be but not yet done, and the cost of doing so, is not required to have been accepted or paid at the time damages are assessed. The same principles are applied in respect of incomplete work.

82. So much is made clear by Ipp JA, with whom Hodgson and McColl JJA agreed, in Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2005] NSWCA 248 at [173] – [174]. There was an issue between the parties as to the relevance of the omission of the Council to lead any evidence showing that it intended to rectify the levees in accordance with the Contract. It was found that the intention of a party to rebuild or to rectify is not relevant to the measure of damages: Bellgrove v Eldridge (at 620), De Cesare v Deluxe Motors Pty Ltd (1996) 67 SASR 28.

79. That statement of principle is subject to some exceptions and qualifications, it is true that a quote may not be the best evidence a party could lead in order to prove the scope and cost of rectification, but that would usually be a question of weight. In Lucchese, the builders did not lead any evidence to contradict the quotes or provide alternate costs of rectification.

80. The builders submitted that the Tribunal’s finding was a classic fact-finding exercise justified by the evidence. The builders submitted that Mr Lucchese had conceded in cross-examination that quotes were not reflective of the actual charges he had paid, he was not willing to disclose any actual monies he had paid with respect to quotations and thus doubt was raised as to the reliability of his evidence in relation to quotations. The builders submitted there was no evidence that the work described in the quotes had been done.

81. The Tribunal allowed the quotes into evidence but reasoned that a quote could not (as a matter of law) establish the cost of rectification because it had not been accepted or paid. In the Appeal Panel’s opinion, the owners were not required to have accepted and paid for work in relation to a defect before they could claim the costs of rectification. The Appeal Panel in Lucchese found that such a finding was contrary to the authorities to which I have referred.

82. A quote, albeit not accepted and not paid can be evidence of loss and damage suffered and as such is admissible and carries weight. In the instant case I am persuaded that the quote is admissible by reason of the fact that the maker of the quote was available for cross-examination, is a director of a building company who is experienced in quantifying building work and whose sole function at Jadco Homes is to estimate the contract price of building works. His evidence is not that of an expert witness and as such I need not be satisfied that he has considered or attached the expert code of conduct. Mr Ralph simply provided a quote to a prospective client. He was available for cross-examination. His evidence as a lay witness is clearly relevant and therefore admissible.

83. Turning then to the question of weight. Mr Ralph conceded that without a contour plan he would have had to attend the site in order to arrive at a final estimate. He was given the contour plan and based on the contour plan, the floor plan and an elevation he could arrive at an estimate, based on a square meter average. Mr Ralph was firm under cross-examination and stated categorically that the contract work, based on the floor plan prepared by the respondent could not be completed for $300,000. Mr Ralph further stated that it was normal building practice to provide a quote on a floor plan and on a square meter average. Mr Ralph was adamant that he had prepared his quote correctly, relying on plans prepared by the respondent and taking into account that the site contour showed an elevation of about 2.2m. This, Mr Ralph stated, would require 2 x 1m of cut and fill and a bearers and joist construction. I am satisfied that Mr Ralph’s initial quote is relevant evidence from which the existence of damages can be reasonably inferred and which provides adequate data (as per Robson J in NCON V Australia Ltd v Spotlight Pty Ltd [2012] VSC 604).

84. I am satisfied that the $80,000 increase in price comprises a realistic estimate of the construction cost of the contract work as furnished by Jadco Homes Pty Ltd. The final quote provided by Jadco in the sum of $398,760 included “an upgrade to silver range inclusions”. The builder was critical of this in its submissions because the attachment with the silver inclusions was not attached to the tendered quote. I assume that “silver inclusions” are not of significant value and silver inclusions do not comprise any significant component of the estimate on any view because the increase in estimate from $380,000, to $398,760 included and allowed for the following items, which are all termed “inclusions” : “silver inclusions, standard façade, cladding to all exterior walls to ground, 2700mm ceilings, timber bench top, 5x tree removal including site stumps, instantaneous gas hot water heater, concrete slab for garage only, steel bearer and joists floor construction to remainder, colorbond roof, and a plain concrete driveway.” Silver inclusions alone could not have made a significant difference to the contract price. In any event, the inclusions proposed by the respondent at page 58 of the court bundle far exceed those which are included in the Ralph estimate and I am comfortably satisfied that the inclusions in both quotes were comparable and inability to compare with exactitude the “silver inclusions” to inclusions provided by the respondent does not prevent the Tribunal from accepting the Jadco quote as probative evidence of the applicants’ losses.

85. Even more persuasive is the fact that Mr Ralph’s estimate of $380,000 is identical to the builder’s revised estimate provided to the respondent at mediation. Mr Ralph was not informed that a previous builder had provided a quote and came to the same estimate ($380,000) entirely independently. The $80,000 increase is supported by evidence given by Mr Stuart himself. When asked about the contract price during the hearing he confirmed that the cost to complete the contract works could likely exceed $380,000. Indeed he deposed to this fact at page 342 of the court bundle when he recalls a conversation with Mr Gill on or about 5 February 2018 when he advised Mr Gill that the cost could be “upwards of $80,000”. He further deposes that he advised the Department of Fair Trading in similar terms in a telephone conversation “there is an extra cost of $80,000 because of the excavation, brickwork, staircases and scaffolding. He [Mr Gill] will have to acknowledge the fact that there has to be some changes made or this will cost him extra.” It was open to Mr Stuart to file expert evidence that the contract works could be achieved for less than $380,000 and indeed he could have filed a lay affidavit setting out why, in his opinion, the contract work could have been achieved for less.

86. In the absence of any evidence to the contrary, I am comfortably satisfied that I have enough data, in the words of Robson J, to arrive at a finding that the cost of completing the contract work is not less than $380,000.

The central heating

91. The owners claim that the contract price including central heating. I refer to the evidence of Mr Gill at page 36 of the court bundle; it does not include the cost of central heating. The submissions make no reference to any evidence in respect of the central heating other than to state “Mr Gill has obtained quotes for central heating “Blue Gasco $8988” followed by the submission “there had been an agreement with the respondent to share the cost of central heating”. Mr Gill deposes on 20 August 2018 that “It was an agreement between me and the Respondent that the cost of central heating would be shared on a 50/50 basis”. This is agreed, Mr Stuart deposes that 50% would be borne by the builder (see paragraph 21 of the respondent’s affidavit of 21 September 2018) but states that the cost of $8988 is excessive and that a cost of $7700 for a Bremar Central Heating system with floor vents would be more reasonable. As no quote was attached to the affidavit I accept and prefer the quote tendered by Mr Gill and award $4494 for this head of damage.

Orders

92. The Tribunal makes the following orders:

93. The respondent, Summit Building Design and Construction Pty Ltd shall pay $84,494 to the applicants, Paramjit Singh Gill and Taswinder Kaur Brar by 1 March 2019.

Costs

94. The applicants were successful in their claim. In those circumstances I am of the view that the respondent shall pay the applicants costs of and incidental to the proceedings, on the ordinary basis as agreed or assessed.

95. In the event the parties wish to be heard on the question of costs:

96. The respondent shall file and serve written submissions on the question of costs on or before 8 February 2019.

97. The applicants shall file and serve written submissions on the question of costs in response on or before 22 February 2019.

98. An oral hearing on the question of costs may be dispensed with by consent of the parties. It is the Tribunal’s intention to determine the question of costs on the papers in chambers unless the parties request, in writing, an oral hearing on the question of costs.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 10 April 2019