Harrison v Hancock - [2019] SADC 163

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Application)
HARRISON & ANOR v HANCOCK & ORS
[2019] SADC 163
Judgment of His Honour Judge Rice
4 November 2019
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - COSTS OUT OF FUND OR PROPERTY - FUND, ESTATE OR PROPERTY
The plaintiffs were owners of a block of land at Lonsdale; the block was divided by community division and a number of warehouses were built. The defendants bought two of the warehouses which were being built by the plaintiffs. However, the plaintiffs were unlicensed builders. The defendants failed to make the final payments and the plaintiffs issued proceedings, eventually proceeding on a quantum meruit basis.
The defendants claimed set-offs and initiated a counter-claim.
The plaintiffs succeed in their action subject to a small reduction for set-offs.
Counter-claim dismissed
Community Titles Act 1996 ss 28, 29(1), 29(6), 47(1), 49(1), 75, ; Building Work Contractors Act, 1995 s 6; Competition and Consumer Law Act 2010 Cth; Australia Consumer Law Schedule 2 (ACL) ss 18, 30 & 4; Misrepresentation Act 1972 (SA) s 7; Fair Trading Act 1987 (SA) ss 56, 57 & 59, referred to.
Stankovic v Aufderheide and Anor [2003] SASC 378; Murphy Corp Ltd v Acument Design and Development (Qld) Pty Ltd (1995) 11 BCL 274; Bellgrove v Eldridge (1954) 90 CLR 613, 618-619; Masters v Cameron (1954) 91 CLR 353.; Baulkham Hills Private Hospital Pty Ltd v GR Secrurities Pty Ltd (1986) 40 NSWLR 622 ; Jones v Dunkel (1959) 101 CLR 298 , considered.

HARRISON & ANOR v HANCOCK & ORS
[2019] SADC 163
Introduction

This action is effectively a debt claim in relation to unpaid building works. As will be seen, counsel have simplified the case such that it was unnecessary for the plaintiff to lead any oral evidence; only documentation was tendered as part of the case for the plaintiffs. The defendants led evidence as to set-offs and counter-claim.
Although some explanation will be necessary, the quantum of the plaintiffs’ claim has been agreed at $60,500.00. That quantum is comprised of two amounts: $31,900.00 against the second defendant in relation to Unit 3 on a quantum meruit basis; $28,6000.00 against the third defendant in relation to Unit 4, also on a quantum meruit basis.
No monies are sought by the plaintiffs against the first defendant.
Case for the plaintiffs
Background – contract/quantum meruit – some agreed matters
Some consideration of the factual history of this matter is necessary to understand the issues and how the parties reached their present intractable positions.
In early to mid-2010 the plaintiffs purchased land at 28 Liston Street, Lonsdale. Their intention was to divide it by Community Division (pursuant to the Community Titles Act, 1996) and build a number of warehouses on it. Development planning consent was granted by the Onkaparinga Council on 18 June 2010.
On 6 July 2010, the plaintiffs signed a Commercial Sale Agency agreement with Mr Derek Blacker of Raine and Horne in relation to marketing and selling the future community titles and warehouses.
The plaintiffs were unlicensed builders, which is a significant matter having regard to s 6 of the Building Work Contractors Act 1995.
6—    Obligation of building work contractors to be licensed
(1)     A person must not—
(a) carry on business as a building work contractor except as authorised by a licence under this Part; or
(b) advertise or otherwise hold himself or herself out as being entitled to carry on business as a building work contractor unless authorised to carry on business as such a contractor by a licence under this Part. (penalties omitted)
(2)     A person required by this Act to be licensed as a building work contractor is not entitled to any fee, other consideration or compensation under or in relation to a contract with another on whose behalf the person performed work as a building work contractor unless—
(a) the person was authorised to perform the work under a licence; or
(b)   a court hearing proceedings for recovery of the fee, other consideration or compensation is satisfied that the person's failure to be so authorised resulted from inadvertence only.
The effect of that section is that an unlicensed building work contractor is not entitled to payment in relation to a contract with another on whose behalf building work has been performed. The relevant exception to that provision is if the unlicensed builder is able to satisfy the court that the person’s failure (plaintiffs) to be so authorised resulted from inadvertence only. The plaintiffs here did not seek to bring themselves within that exception.
Having heard Mr Harrison’s evidence (primarily in relation to the set-offs and counter-claim), I accept his evidence that he (they) genuinely believed that they could conduct building works as owner-builders using licensed building work contractors. The plaintiffs did not believe they needed to be licensed building work contractors.
The legal position that is accepted on both sides is that, whilst no claim is able to be made in contract, the plaintiffs are nevertheless entitled to payment on a quantum meruit basis.[1] Further, there are authorities that support the view that a quantum meruit claim may actually be for an amount greater than the contract price (although that would seem to be contrary to the policy underpinning s 6).
[1] Duggan J in Stankovic v Aufderheide and Anor 2003 SASC 378.
The defendants, in their pleadings at least, have suggested there is no breach of s 6(2) and the Building Work Contractors Act 1995.
However, as indicated, the plaintiffs are content to limit their claim to what would have been payable under the contract were it not for the provisions of s 6, that is, for a total of $60,500.00 plus interest and costs. The plaintiffs seek pre-judgment interest from 1 December 2013.
Leaving to one side some aspects of the pleadings, it is agreed that the second defendant is liable to the plaintiffs in the amount of $31,900.00, inclusive of GST (in relation to Unit 3) and the third defendant is liable to the plaintiffs in the amount of $28,000.00, inclusive of GST (in relation to Unit 4), hence the total of $60,500.00.[2] That liability is subject to the set-offs and counter-claim of the defendants. In other words, unless the set-offs and counter-claim succeed to some degree, they are the judgment amounts.
[2] See invoice dated 23 November 2013, Tender Book Volume 3 (TBV3) at pp 674, 673).
Apart from those matters, the amount in relation to the set-offs and counter - claim have been agreed.[3] Liability in relation to the set-offs and counter-claim is very much in issue.
[3] Exhibit P3.
Matters in dispute
Although it will be necessary to examine the facts in detail, and in some instances in minute detail, it is useful even at this stage to identify in a general way the areas or topics that are in dispute:
·time for completion of the building works – delay;
·stamp duty and LTO fees;
·suggested defective building work;
·damages for vexation;
·expert determination;
History of the development
As mentioned earlier, the plaintiffs purchased land at 28 Liston Street, Lonsdale in early to mid-2010. It was intended to build seven warehouses, each on its own separate lot. The development application was lodged on 14 May 2010. As at that time the intention was to build the warehouses with steel framing, clad by zincalume iron sheets. As will be seen, at a later stage the construction of the warehouses changed to pre-cast concrete walls. In its original form, the development plan approval was granted on 18 June 2010.
Also, as mentioned, the plaintiffs entered into a sale agency agreement with Mr Dean Blacker of Raine and Horne. It is part of the case for the defendants that Mr Blacker made misrepresentations to Mr Hancock, mainly in the form of brochures and emails. The misrepresentations related to potential stamp duty savings for the defendants; this is one of the areas of dispute.
Purchase of the first unit by Mr Hancock
On 24 August 2010, the first defendant entered into two contracts with the plaintiffs. The first related to the sale of the land for $55,000.00, upon which one of the warehouses was to be built; it was known as Unit 4 (although in some of the documentation it is referred to Lot 3). The second was a building contract for the construction of the warehouse for the amount of $143,000.00. It should be noted that the land contract was subject to planning consent and approvals in relation to the division of the land and the proposed community plan.
On 27 August 2010, the plaintiffs lodged an application for Development Approval of the land. This was in accord with the General Annexure that forms part of the contract for the sale of the land.
There were various further steps in the approval processes that it is unnecessary to refer to at this stage, but there were delays in these processes.
The General Annexure also provided (Clause 5) that settlement for the land division and the building contract were to occur concurrently within fourteen days of the plan of division being deposited in the LTRO[4] or within fourteen days of the handover of the completed building works, whichever was the latter.
[4] Land Titles Registration Office.
On 4 July 2011, The Plan of Community Division was approved by and deposited with the LTRO.
Change to pre-cast concrete panels
On 25 August 2010, well after 14 May 2010, being the date of the lodgement of the initial development application, the plaintiffs decided to change the cladding or walls of the warehouses to pre-cast concrete panels. In or about September 2010, Mr Hancock was advised of the change and confirmed he wished to proceed with the contracts notwithstanding the change.
The change to pre-cast concrete walls meant that the footings needed to be concrete. That required a varied development application to be lodged with the Council.
This occurred in three stages. The first stage related to the footings, for which development approval was given on 11 March 2011. The second stage related to the superstructure, for which approval was given on 12 July 2011. The third stage or approval related to the exterior sunscreens and blade walls, for which retrospective approval was given on 9 April 2015 (after the work had been carried out).
Purchase of a second unit by Mr Hancock
The next major event was that Mr Hancock purchased a second unit, Unit 3 (sometimes referred to as Lot 2). They were effectively contracts in the same terms as for the purchase of Unit 4 on 24 August 2010. The only qualification to that was that the building contract purchase price was $159,000.00 plus GST. The plaintiffs’ case is that the increase in the building price from the first contract (which was $130,000.00) was because of the increased cost of pre-cast concrete walls and a superior end product. They were dated 29 November 2010 and related to the land and the building of a warehouse, although some of the timetable was pushed back in the General Annexure. In the latter contract, if there was a failure to meet the timetable, each party was given the power to terminate the contract, whereupon the deposit would be refunded. That is said by the plaintiffs to be the remedy available to the defendant for delays.
Although the building under the first contract was changed to pre-cast concrete panels, the price remained the same.
Supplementary agreements
As is noted above, one of the areas of dispute relates to the payment of stamp duty because of the structure of the two sets of contracts for purchase of the Units. There were also some changes to the specifications under the building contracts, particularly the car-park finish.
It was agreed between the parties that the land contracts would settle as at September 2011, together with building works completed to that time. The effect of that agreement was that Mr Hancock would pay reduced stamp duty because the duty is only applied to the purchase of the land and building works as at that time. A payment schedule was worked out for the completion of the works.
There was a separate supplementary agreement in respect of each unit.
Handover of keys
In about March 2012, the keys to both units were provided to Mr Hancock and he began using them, even though some further work was to be carried out. However, as Mr Hancock later said, he could not move in until late 2012 or early 2013. This is a topic to which I will return.
As noted earlier, the plaintiffs did not call any evidence on their claim. As explained above, that was the case for the plaintiffs on the claim.
Case for the defendants
As a matter of convenience, I propose to consider the topics in dispute in the order referred to earlier, the first being the alleged delay in the completion of the building works.
1. Time for completion of the building works - delay
The case for the defendants in relation to delay in the completion of the building works is brought both in contract and in misrepresentation/misleading or deceptive conduct.
Different factual and legal considerations apply to each.
More needs to be said about the facts before considering those bases of liability.
The plaintiffs purchased the land at Lonsdale in early to mid-2010. The Commercial Sale Agency Agreement was entered into on 6 July 2010 with Mr Blacker of Raine and Horne. Mr Blacker set about advertising the development. Mr Hancock saw an advertisement for the development on a commercial real estate website.[5]
[5] T50.
(Although no monies are sought from Mr Hancock, I propose to refer to him by that name as, in effect, representative of all the defendants).
Mr Hancock contacted Mr Blacker and they discussed the details of the development. Brochures were sent to Mr Hancock, including drawings of the proposed appearance of the development, basic specifications relating to building materials and photographs of some fixtures and fittings.
Amongst the material was a particular brochure upon which Mr Hancock relies.[6] The relevant text is reproduced (it is relevant to both the delay heading as well as the stamp duty heading).
[6] See Tender Book V 1 at p 71, pp 72, 82-97.
Impressive Brand-New Factory Warehouse
Why rent when you can own?
High clearance 4.8m warehouse factories in sizes available from 180m² up to 405m² with 3 phase power, 4.5m clearance roller door access, high bay sodium mercury lighting, kitchenette, disabled access toilet and shower.
Perfect for self-managed super funds or owner occupiers.
Be quick Units 1, 2 and 3 sold already!
Unit 4 $180,000
Unit 5 $180,000
Unit 6 $250,000
Unit 7 $330,000
Unit 8 $405,000
Buy off plan and save $$$$.
Estimated completion date November 2010.
Please note all prices quoted are plus GST
At the foot of the brochure this appears:
Please note: Particulars herein are for information only and do not constitute any representation by the Vendors or the Agent. Floor plans and sketches are indicative only and should not be relied upon. Prospective purchasers should make their own enquiries as to the correctness of any contents of this information.
This brochure, in particular, was sent by Mr Blacker to Mr Hancock on 13 July 2010. This was referred to as ‘the 13 July 2010 Estimated Completion Date Representation’. The initial contracts for the purchase of the two units (24 August 2010 and 29 November 2010) do not refer to a settlement date. They do, as noted earlier, refer to a timetable for the various steps in the regulatory approval regime, with rights accruing to the purchaser if certain timetables were not met. The fact that the advertising brochure referred to an ‘Estimated completion date November 2010’ did not give rise to a collateral contract. It was merely representational in nature. In any event, at the time the brochure was provided to Mr Hancock it was not an unreasonable estimate of the completion date given the nature of the proposed build as at that time.
As at the time of the signing of the second contracts on 29 November 2010 (for Unit 4), it could not sensibly be argued that the 13 July 2010 Estimate Completion Date (that is, an estimated completion date November 2010), was operative in any way. Not only had the nature of the build been substantially changed in the interim (from zincalume cladding to pre-cast concrete wall as of August 2010), but the process whereby the various consents and approvals were to be obtained, had barely commenced. Further the proposed builder was not interested in undertaking the work given the gradient of the land.
Implied condition that the work would be completed within a reasonable time
It should be accepted, as the Harrisons do, that it is an implied condition of both building contracts, that the works carried out under those contracts be carried out within a reasonable time. I accept the submissions of the plaintiffs in this regard that the implied term should be framed as ‘practical completion’, that is, the time at which possession of a building is normally given by the builder to the owner. That situation would pertain even though some minor work remained outstanding pursuant to the contract and/or defects needed to be remedied.[7]
[7] Murphy Corp Ltd v Acumen Design and Development (Qld) Pty Ltd (1995 11 BCL 274).
Although it is not determinative of practical completion having been achieved, Mr Hancock was given a set of keys in relation to Units 3 and 4 on or about 7 March 2012.[8]
[8] Tender Book V3 586, T245, T247-T260, T515, T725, Tend Book V5 at 978.
However, Mr Hancock said he did not move into the Units until around December 2012. He said he could not move in in any reasonable fashion until then because the asphalt was not down. He said he had access ‘but I couldn’t completely move all the requirements that I needed to put into that warehouse’.[9] Between early March and mid-December there were internal and some external works yet to be done and defects fixed.
[9] T137.
In my view, practical completion was reached a long time before December 2012. The implication of Mr Hancock’s evidence is that practical completion was not achieved until a time in December. I do not accept that. I find that practical completion was achieve no later than the end of March 2012. His pleadings reflect that approach.
Although I propose later to say more about Mr Hancock as a witness, I make it plain that I did not regard him as a satisfactory witness. At times, he was reluctant to make reasonable and proper concessions. Using this topic as an example, it was clear on the evidence that he was given the keys to the units on or about 7 March 2012. After that time, he had access to the units for his own purposes, particularly the construction of mezzanines. He was interrupted in his full and complete access to the Units because of the need to complete some internal works and remedy others. That did not mean that there was no practical completion, a point that he refused to acknowledge. The remainder of the internal works were completed shortly after this time. He was in a position to obtain a Certificate of Occupancy by about mid-2012.
The clear implication is that the construction of the mezzanines was the only reason why he did not completely move in until about December 2012. Mr Hancock was trying to stretch the completion date to a time as late as possible in 2012. The mezzanines were works separate and independent of the works under the contracts. Mr Hancock kept his other shed in the Lonsdale area until the end of 2012.[10]
[10] T131, T137.
Was it reasonable to achieve practical completion by 7 March 2012?

Before further considering the timetable for the various consents/approvals for the works, it is worthwhile to refer to the evidence of the two experts called as part of the evidence, Mr Jankovic and Mr Centofanti.
Looking first at Mr Jankovic, his report notes two matters. The site would have needed filling to be installed together with compaction of that filling to prepare the area for construction.
Secondly, the use of tilt-up panels would substantially reduce the amount of build time on site. Further he expressed the opinion that the actual construction time allowing for weather conditions for the eight units, should have been in the vicinity of six to nine months. However, that period of time did not allow for planning and building approval which, depending on planning requirements, could take up to twelve months.[11]
[11] Trial Book Volume 4, 879 para 5.
Although in cross-examination he at one stage seems to be saying something different, in the end he appears to have accepted that his original opinion was about right. He acknowledged that various unknowns had the ability to affect such an estimate.[12]
[12] T693, T697, T699.
Leaving the weather to one side, the time for the building would depend, in part, upon whether it was on unlicensed builder or a big company with the ability to attract and redirect tradesmen.
Mr Centofanti also provided a report and gave evidence.
Mr Centofanti’s report did not differ a great deal from that of Mr Jankovic. He said this:
Time on site can be expected to be approximately nine months excluding the time required for casting the panels off site. I believe that six months would not be sufficient time to have completed the project. This would exclude any siteworks such as clearing, cutting, filling and compaction.
He also made the point:
While the use of precast concrete panels may reduce the time on site, generally there is a considerable length of time required from which the panels are ordered to the time which they are delivered on site and erected.[13]
[13] Trial Book Volume 3, 936.
Bearing in mind that development approval for pre-cast concrete panels was not obtained until 12 July 2011 and that substantial completion was achieved in March or April 2012, that was a reasonable timeframe. It was certainly not unreasonable.
For reasons Mr Centofanti explained, he said:
Although not a terribly big job, it’s a long job.
He thought the build would have been in stages, apparently starting at the back of the block and working towards the front because access was awkward.[14]
[14] T700-T702.
I do not find it necessary to recite the history of applications, approvals and consents. For these purposes, I rely upon the chronology of the plaintiffs’ written submissions.[15]
[15] Para 75.
I accept the conclusion that there was not unreasonable delay. In that event there is no need to consider damages for any contractual loss. I also note that no loss or damage has been proved in contract. Further, there is no proper legal or factual basis for an award of mesne profits.
Mr Hancock as a witness
This is a convenient point to return to the topic of Mr Hancock’s presentation as a witness.
In addition to what I have already said, the topic of the change to pre-cast concrete panels and Mr Hancock’s position as to any delay that would cause, is another useful illustration of the unsatisfactory nature of him as a witness.
A little of Mr Hancock’s background.
Mr Hancock is a plumber by trade and said he has spent “…forty years in the building industry with – on major commercial, working with pre-casters, concreters, architects, engineers in design above the ground, below ground water-proofing.” At this time, he had his own company and used a couple of his employees to finish off certain jobs. He was familiar with polyurethane sealants to go between the pre-cast wall and concrete floor.[16]
[16] T67, T86, T104, T134, T225.
One thing is plain namely, that Mr Hancock had a wealth of knowledge and experience in the building and construction industry, particularly pre-cast concrete panels and the sealants that are used to waterproof. He agreed he had an extensive involvement in the construction industry and had been involved in countless construction projects over the years.[17]
[17] T187.
An obvious topic for cross-examination was the potential for the timetable for the build to blowout because of the change to pre-cast panels. Even in questioning in a lead-up to that topic he claimed that, at the time of entering into the contract, he did not give any consideration to whether the building work would require development approval. Even if his work was normally at the other end of such a development, he would have to have known, in a general sense at least, of the need to obtain approval for the division of the land and/or buildings.[18]
[18] T187-T189.
Remarkably, even though the contract in its General Annexure contained conditions that the build was subject to planning consent and approvals, he “…breezed through it, hadn’t thought about it”.[19]
[19] T190-T192.
Cross-examination on this topic is replete with prevarication and obfuscation.[20] Some answers contained the meaningless refrain (in the context) that he did not give something “credence”.
[20] T187-T200.
For example:
QThe effect of that is that, if it wasn’t deposited by that date, then either you or the Harrisons could terminate this contract without any obligation to one another and you would receive your deposit moneys back.
AI didn’t actually understand that, nor did I give it any credence with what I read here at the time.[21]
[21] T191.
There are other examples.[22]
[22] T193, T206, T209, T210.
What also emerges from that questioning is that Mr Hancock did not even try to negotiate a completion date for the units. My overall impression from his evidence is that, at the time of the signing of the contract, he was not particularly concerned when the build was finished.[23]
[23] T192.
He was clearly anxious to see the start, but less so the completion. His constant visits to the site, in conjunction with his copious notes, show a clear concern about getting started and keeping the build moving. He was undoubtedly frustrated about what he perceived to be as slow progress. He also agreed he was a reasonably fastidious type person.[24]
[24] T206.
Turning to the topic of possible delay with the change to pre-cast concrete panels and Mr Hancock’s realisation of that potential, he mostly avoided acknowledging the obvious, namely, the engineering would be substantially different and would cause delay. He must have known that the change would cause delay but refused to properly acknowledge it. This is an additional reason why I found him to be an unsatisfactory and unreliable witness.
I also found it remarkable that he seemed to have an incomplete or no knowledge of the terms of the General Annexure and his rights if the timetable for lodging certain documents was not met. The cross-examination on these topics needs to be read as a whole.[25]
[25] T200-T220.
Claim for misrepresentation/misleading or deceptive conduct
In dealing with the summary of the facts of this case I have referred to the 13 July 2010 Estimated Completion Date Representation. That date was referred to in the brochure sent by Mr Blacker to Mr Hancock on 13 July 2010. The brochure speaks for itself and refers to an ‘Estimated completion date November 2010’. It was no more than that, namely an ‘estimate’ and I have already concluded that that was not an unreasonable estimate of the completion date given the nature of the proposed build as at that time. Put another way, there were reasonable grounds for that estimate as at that time.
The Harrisons contend that the representation in the brochure was in the nature of a prediction which can only be misleading or deceptive as a representation if the Harrisons had no reasonable grounds for making the representation.
The test that I have applied that there were reasonable grounds for the estimate at the time, is not a test directly provided in the legislation. The Competition and Consumer Law Act 2010 (Cth), which enacted what is referred to as the Australia Consumer Law in Schedule 2 (ACL), is relied upon by Mr Hancock, more particularly ss 18 and 30. The terms ‘misleading’ and ‘deceptive’ are not defined in the ACL. However, I do note that in s 4 of the ACL when defining ‘misleading representations with respect to future matters,’ a representation is taken to be misleading if ‘…the person does not have reasonable grounds for making the representation’.
Mr Hancock also relies upon s 7 of the Misrepresentation Act 1972 (SA) and ss 56, 57 and 59 of the Fair Trading Act 1987 (SA). On the assumption that those sections have application by their terms to the facts of this case, there would be, and in some instances, is, a defence if it is proved that the relevant conduct or misrepresentation was believed on reasonable grounds to be true. Although not directly applicable, those sections support the test that I have applied. I make it plain that I do not find that the Harrisons have done anything that is misleading or deceptive. They had reasonable grounds for the representation or prediction in the relevant brochure.
I re-iterate an earlier conclusion. In relation to the 29 November 2010 contracts, it could not sensibly be argued that the 13 July 2010 Estimated Completion Date Representation was still operative. As noted, a myriad of intervening events had reordered that timetable impossible.
In any event, was there reliance upon any misrepresentation/misleading or deceptive conduct?
There needs to be proved a causative link between any misrepresentation or misleading or deceptive conduct and the loss claimed. As put on behalf of the Harrisons, it must be shown that the person was induced or influenced to act or refrain from acting in a certain way, which in turn gives rise to loss or damage.
I accept the submission made on behalf of the Harrisons that the 13 July 2010 Estimated Completion Date Representation had little or negligible, if any, influence on Mr Hancock’s decision to enter into the 24 August 2010 contracts. As I have already observed, what is abundantly plain from portions of Mr Hancock’s evidence to which I have made reference, is that he was not particularly concerned when the building work was completed.
I find Mr Harrison well knew that the change in the building works from iron cladding to pre-cast walls was going to extend the time for completion and he was content to accept any delay because he knew he was getting a far superior end-product. What is more, the contracts did not have a completion date and he did not seek one. I also note that he did not raised any concerns about the progress of the building works until mid-2011.[26]
[26] T220-T222, T237-T238.
I note this additional finding although I do not think, strictly speaking, it is necessary. Not only was there no reliance upon any misrepresentation/misleading or deceptive conduct, the defendants have failed to establish any loss or damage caused by the 13 July 2010 Estimated Completion Date Representation.[27]
[27] See plaintiffs written submissions paras 133-143.
The same conclusions apply to the other Completion Date Representations to the extent they are still relied upon by the defendants.
2. Stamp duty and LTO fees
The dispute under this heading involves some of the wording that forms part of the advertising brochure provided to Mr Hancock on 13 July 2010 by Mr Blacker. The substance of this brochure is quoted earlier. This is referred to as the 13 July 2010 Stamp Duty Representation, relying upon words in the brochure ‘Buy off the plan and save $$$$$’.
The defendants (Mr Hancock) alleged that amounts to a misrepresentation and misleading or deceptive conduct concerning stamp duty and LTO fees.
As mentioned, on 6 July 2010 the plaintiffs signed a Commercial Sale Agency Agreement with Mr D Blacker of Raine and Horne in relation to marketing and selling the future community titles and warehouses. Mr Blacker said the brochure was prepared by him. He said he had no recollection of showing the brochure to the Harrisons and normally the client plays no part in the preparation of such a brochure. He had no recollection of the Harrisons being involved in its preparation. He could not recall where the words ‘Buy off the plan and save $$$$$’ came from. Although he had no previous experience in selling off the plan, he understood that depending upon how the contracts were set up, you could settle on the land and only pay stamp duty on that component, not the improvements.[28]
[28] T1070-T1072.
Mr Blacker said neither Raine and Horne nor himself was giving financial advice.[29]
[29] T1073.
It is common ground that the initial contract of 11 August 2010 (for Unit 4) was a combined land and building contract.[30] In such a situation stamp duty was payable in respect of the land and building works.
[30] Exhibit 14, T1084.
By an email dated 14 August 2010, Mr Hancock wrote to Mr Blacker which, relative to this topic, said as follows:
From our first and subsequent conversations, I have been assured that as I am buying ‘off the plan’, stamp duty is only applicable to, and on, the value of the land and not the building.
Mr Hancock provided a broad calculation to the effect that, by having a combined contract, an additional cost of $5,820.00 would be incurred to him.[31]
[31] Exhibit P105.
Mr Blacker consulted with the Harrisons and new contracts were prepared with the object of separating the sale of the land from the building works. New contracts were signed on 24 August 2010 and 29 November 2010, however, the contracts provided that the contract for the sale of the land would settle at the same time as the building contracts. It was accepted by Mr Blacker that the settling of the land and building contracts concurrently did not achieve the stamp duty saving.[32]
[32] T1085.
Mr Blacker did not respond to the email saying he gave no such assurances, although he said in evidence he would not have given any such assurance. However, he acknowledged that he split the contracts to achieve that objective.[33]
[33] T1084.
The issue was again the subject of emails on and about 24 August 2011 when Mr Hancock again claimed he was not achieving the stamp duty savings for which he had hoped. Various discussions with conveyancers at about that time revealed that when he settled on the land contracts he would also be liable for stamp duty upon the building works completed as at that time of settlement.[34]
[34] T1086.
As noted earlier, it was agreed that the land contracts would settle as at September 2011 together with building works completed to that time. The effect of that was that Mr Hancock would pay a reduced amount of stamp duty as at settlement. Supplementary agreements were signed providing for a payment schedule in respect of the remaining works.
Mr Hancock’s case under this heading
It is alleged by Mr Hancock that there was a misrepresentation or misleading or deceptive conduct arising from what was said to be the stamp duty misrepresentations, more particularly in the 24 August 2010 contracts and 29 November 2010 contracts.
Clearly, Mr Blacker had the authority to promote the sale of the property, including making representations to procure a purchaser, whether those representations were in writing or oral or a combination of a number of mediums. That authority was actual as well as implied, to bind the plaintiffs in respect of the stamp duty representations, because that was well accepted as an advantageous feature for a prospective sale. That authority did not extend to making all statements necessary to achieve a sale. So much does not really seem to be in dispute. This was not a case of ostensible authority on the facts.
It was not a misrepresentation or misleading or deceptive conduct to promote via the brochure or in oral representations, that there was the option to buy off the plan and save money. It is accepted that stamp duty can be reduced by simply paying the duty only on the value of the building works (if any) that were completed as the time of settlement of the land. The brochure was not misleading. If Mr Hancock had been told as much orally, that also is not misleading or deceptive.
When Mr Hancock appeared not to be achieving the savings on stamp duty for which he had hoped, he rightly took it up with Mr Blacker. It should also be accepted that Mr Blacker, or Raine and Horne, were not there to give financial advice. Mr Hancock alleges in his email of 14 August 2010 that Mr Blacker had ‘assured’ him that in buying ‘off the plan’, stamp duty is only applicable to and on the value of the land and not the building.
I do not accept that Mr Blacker gave any such assurance. Not only do I find Mr Hancock to be an unsatisfactory witness, more particularly, as inept as I find Mr Blacker to be, I do not accept that he knew enough to give such an assurance deliberately or inadvertently.
Mr Blacker admitted that he had no previous experience selling off the plan. Again, it is common ground that the 24 August 2010 contracts and the 29 November 2010 contracts were not capable of achieving a saving for Mr Hancock in relation to stamp duty. The question is as to how that arose. As noted previously, although the object was to separate the sale of the land from that of the building works, the contracts were drafted such that the contract for the sale of the land would settle at the same time as the building contracts. That drafting failed to achieve the desired result. This was simply an error in Mr Blacker’s understanding of what he arranged to be drafted. It was a mistake on his part in the drafting and not part of a misrepresentation or conduct that was misleading or deceptive.
Mr Blacker’s email of 16 August 2010 in response to Mr Hancock’s email was not a misrepresentation or misleading or deceptive conduct.
In my view, I do not need to consider further this area of claim. On behalf of the Harrisons, various written submissions are made that would flow from a non-acceptance of their primary submissions. As I have found that there was not misrepresentation or misleading or deceptive conduct, in oral words or written in combination, I do not proceed further. I do indicate, however, that those submissions are very persuasive.
3. Suggested defective building work
Under this heading there are a significant number of items that are said to amount to defective building work. Although it is my intention to deal with each of these items, a real question arises as to whether the defendants are entitled to seek relief for what is common property as distinct from contracted building works specifically relating to each unit. The plaintiffs accept that in the latter situation the defendants can, arguably, mount a common law claim in respect of damages.
Resolution of some of these items requires an examination of the Community Titles Act 1966 (CTA). Section 28 of the CTA defines ‘common property’ in a manner that distinguishes between ‘a lot’ (belonging to a lot owner such as the defendants) and a community parcel (that is, the land divided by a plan of community division).
Section 29(1) of the CTA directs that the ‘…common property of a community parcel is vested in fee simple as tenants in common in the owners for the time being of the community lots in shares proportionate to the lot entitlements of their respective lots’.
The definition of ‘Common Property’ contained in the Scheme Description for this Community Corporation means the common property within the Plan and includes service infrastructure (except for any part of the service infrastructure that provides a service to only one lot).
Section 75 of the CTA provides the functions of a Community Corporation, including managing and controlling common property. Importantly, any decision of the corporation to make any improvements to the common property must be made by a special resolution of the Community Corporation.

The plaintiffs argue from these and other provisions of the CTA that a number of the items of suggested defective building work relate to common property and therefore are beyond the reach of the defendants’ claims.
The defendants argue that they are entitled to enforce the benefit of the building contracts and that their entitlement to the bargain is not lost because of the contractual background, more particularly the creation of a community title. The defendants argue that the CTA does not break the privity of contract, but rather it provides for additional parties to receive the benefit of the contract.
Further, the defendants argue that if the court is satisfied that the contract is a ‘development contract’ for the purposes of the CTA, then subsequent lot owners become privy to the same contract.
Section 47(1) defines the purpose of a ‘development contract’:
(1) The purpose of a development contract is—
(a) to place a developer under a binding obligation to do one or both of the following—
(i) to develop a development lot;
(ii) to develop the common property, or a part of the common property, in accordance with the scheme description; or
(b) to place a developer under a binding obligation to develop a community lot in accordance with the scheme description.
Section 49(1) then picks up the enforcement of a development contract, and relevantly provides as follows:
(1) A development contract will be taken to be a contract made by the following persons:
(a) the developer; and
(b) if the contract relates to a development lot or a community lot—each subsequent owner of the lot to the extent that it relates to that lot; and
(c) the community corporation; and
(d) the owners and occupiers of the community lots; and
Section 49(2) provides as follows:
(2) A community corporation or an owner or occupier of a lot who is, by virtue of subsection (1), a party to a development contract is entitled to take proceedings for its enforcement (including damages for breach of the contract) in the Magistrates Court against—
(a) the developer; and
(b) if the contract is for the development of a development lot or a community lot—the subsequent owner or owners (if any) of the lot,
even though no obligations attach to the corporation, owner and occupier under the contract.
Section 29(6) provides that a community corporation may sue and be sued for rights and liabilities related to the common property as if they were the owner and occupier of the common property.
There is a tension between s 49(2) and s 29(6). In my view s 29(6) should be interpreted as a general enabling provision and s 49(2) as allowing the community corporation (amongst others) to enforce a development contract which includes a community lot (s 49(1)). However, the plaintiffs argue that the power to enforce should be interpreted as relating to enforcing a default by a developer in relation to its specific contractual obligations under the contract, as opposed to seeking damages for an alleged defect with common property.
Although s 29(6) specifically refers to common property, the scheme of the legislation allows lot owners to enforce a development contract (which this is) in respect of both an individual lot and common property. Such an action to enforce can be by the community corporation or an individual lot owner even in respect of an alleged defect with common property.
In this instance, the defendants are entitled to seek damages for an alleged defect with common property. That is not to say there are not difficulties with such a conclusion, particularly as the community corporation is not a party to these proceedings. The present defendants (Mr Hancock) would not be entitled to all of the damages, only an amount proportionate to the lot holding. An appropriate order could be fashioned to allow for a payment to the defendants with the balance paid to the community corporation.
I now deal with the three items that fall under this heading.
The gate
The gate to which this dispute relates is clearly common property as it allows access to the overall site.
It is alleged by the defendants that there was a failure to provide a gate in a reasonable condition and that was properly installed and, in any event, this gate was showing rust at the welding points. Leaving to one side the rusting, it appears that the gate was damaged when it rolled off its tracks and was damaged.
The gate was installed but without a permanent gate stop. It was intended that the permanent stop would be welded in place the following day. A temporary gate stop was put in place as an overnight measure.
I accept that Mr Harrison informed Mr Hancock’s son, Ryan, about the temporary gate stop and told him to ensure that he replaced it if he opened the gate. I accept that the next morning Mr Hancock told Mr Harrison and his son, Tom, that his son had forgotten to put the temporary stop back in place after he had used the gate and it rolled off the track and was damaged. I accept that Mr Hancock said he felt responsible for the damage and would arrange for it to be repaired. The gate was not fixed, although at some stage the guide channels, which were also damaged, were made reasonably operative.
As I have said, I accept the account of Mr Harrison and reject that of Mr Hancock in respect of whom I have already made adverse findings.
In addition to my adverse view of Mr Hancock, the additional relevant factor is that Mr Hancock’s son was not called to give evidence in circumstances where his evidence would have been material to the dispute. Applying Jones v Dunkel,[35] I draw the inference that his evidence would not have assisted Mr Hancock’s defendant’s case in relation to that factual dispute.
[35] Jones v Dunkel (1959) 101 CLR 298.
I find that any damage to the gate was not caused by the plaintiffs (Harrisons) and they should not be responsible for any damage. To the extent there is rust at the welding points, a cold galv spray and a primer would be adequate at minimal cost to rectify.
Drain sumps, garden and exterior, soils and plants
This is a complaint that at handover the drain sumps, garden and exterior were not in a reasonable condition.
This was said to be in breach of contract, an unspecified statutory duty and negligence.
Even accepting Mr Hancock’s assertion about debris in the sumps in the driveway as at the end of 2012, that did not represent an ongoing problem and certainly not one that was causative of any loss to Mr Hancock. It may have been sloppy or careless but no more.
More importantly, and again adverse to Mr Hancock, photographs of the plants and garden bed areas at the end of 2013 show them to be in good condition and the plants in good health. Photographs put forward by Mr Hancock for late 2014 and early 2015, well after handover, show the garden areas outside his unit to be in poor condition. I infer he deliberately allowed the garden areas outside his unit to appear run-down so as to reflect badly on the Harrisons. Such conduct on his part had the opposite effect.
This area of dispute compounds my adverse view of Mr Hancock.
Service area
This item can be dealt with in short order.
This complaint relates to an area of common property away from the units and in the general area of the gate. This particular area contains the water meters for each of the units and the main electrical unit. That area is described as a sunken area or lower than the surrounds, but with a high border plinth. In the normal course of events, little water would accumulate there from rain.[36]
[36] See reports of Mr Jankovic and Mr Centofanti at 6.1.6.
As I understand Mr Hancock’s evidence, this area became flooded shortly after installation. The dispute relates to how this occurred. I accept the evidence of Mr Centofanti that the area would normally only be subject to the rain and not flooding. I accept the evidence of Mr Harrison that it flooded because someone turned on a meter that was not then connected and flooded the area. Someone has smashed a gap in the surrounding plinth to allow the water to escape.[37]
[37] T570-T572, T730.
In my view, there is no fault or defect for which the plaintiffs are responsible. I accept the evidence of Mr Harrison that the area has not flooded at any other time and Mr Hancock could not say that it had. The flooding that occurred was apparently brought about by a person not associated with performing any building works.
Other suggested defective building work
These suggested items of defective building work do not come within common property.
Before considering the individual items, I deal with the legal principles applicable which are to be the effect that a building owner is entitled to ‘reasonable costs’ of rectification work that is necessary to produce conformity with the contract, provided that rectification is a reasonable course to adopt.[38]
[38] Bellgrove v Eldridge (1954) 90 CLR 613, 618-619.
This was referred to in argument and submissions as the ‘conformity principle’.
There does not appear to be any real dispute about the applicable principles, although there are differing views about their application to the facts of the case. On behalf of the Harrisons it is argued that it is necessary to identify the applicable contractual specifications and the manner in which it is said there has been a departure from those specifications. On behalf of Mr Hancock, it is argued, as an extension and application of that principle, the cost of rectification may involve removal and reinstatement of the relevant works.
As a development of the argument put on behalf of the Harrisons, it is submitted that the contracted specifications in relation to the building work are as set out in 24 August 2010 Building Contract and the 29 November 2010 Building Contract, as varied by the Unit 4 Supplementary Agreement and Unit 3 Supplementary Agreement respectively. Therefore, it is said, alleged non-compliance with architectural drawings or engineering specifications, are not, even if established, instances for the application of the conformity principle. Put simply, architectural drawings and engineering designs do not amount to ‘contractual requirements’ (assuming they were not referenced in those contracts). Further, it was submitted, whilst the Harrisons may have constructed the units, as best they could, in accord with the architectural drawings and engineering designs, they were not bound to do so.
It was also submitted that the advertising sketches were even further removed from contractual documents and the application of the conformity principle.
On this basis, the Harrisons contend that the application of the conformity principle is limited to the blade walls, bathroom vanity and the plants.
It is convenient to deal with those three items in the first instance.
If conformity is necessary, quantity is agreed.
Blade walls/panels
In this instance, the Building Schedule specification in the Building Contracts provided for Alucobond decorative blade walls.[39] This is a conformity principle claim whereby it is alleged there was a failure to provide blade walls in accordance with the terms of the Building Contracts.
[39] Tender Book Volume 1 p 54 ‘Blade Wall Panels with Sunscreens’. Note: refer to Engineering Report for Dimensions.
The Building Contracts for Units 3 and 4 provided for ‘External Decorative Panels’ consisting of ‘Aluminium composite panels in gloss orange’. This was not what was installed.
The nature and construction of the blade walls or panels became the subject of discussion and negotiation as the building works progressed. At one stage, it was even suggested that the panels be omitted and Mr Hancock be compensated.[40] Then, on 21 January 2012 Mr Hancock sent an email to Mr Harrison stating that he wanted ‘…the blade/wing panels [to] remain as an item, per plans and as agreed by contract between the parties’.[41]
[40] Tender Book Volume 1 p 535.
[41] Tender Book Volume 1 p 540.
The discussions do not end there. If the blade panels were to be installed as in the detailed engineer’s drawings, it would have needed to be concreted into the ground, a method Mr Hancock did not want. Yet more discussions, emails and photographs ensued such that by October 2013 Mr Harrison wanted a firm decision about one of the proposals. Then, on 17 October in an email from Mr Hancock to Mr Harrison, Mr Hancock, seemingly begrudgingly, agreed to a proposal.[42]
[42] Tender Book Volume 1 p 667, T333.
The characterisation of the change from the original specifications is not without its difficulties. In any event, although reluctantly, Mr Hancock did agree to the blade panels as constructed. Rectification to produce conformity must be a reasonable course to adopt in all the circumstances. One of the circumstances is the acceptance, or at least acquiescence, of Mr Hancock in the course that was adopted. As the expert reports note, some of the work is poorly constructed and rust is evident in some places but that is not, in my view, a sufficient warrant for them to be replaced. Ongoing maintenance may need to be more vigorous and initiated sooner, but that also is not sufficient.[43]
[43] Messrs Jankovic and Centofanti at para 5.5.
The claim in respect of the blade panels fails.
Bathroom vanity units, shelves and shower rails
Vanity Units
This is a relatively straight forward matter.
The vanity units as described in the Building Contracts were not installed. It is agreed between the experts that they should not be installed because to do so would interfere with disability access. Disability basins have in fact been installed at a cost to the Harrisons.
The defendants argue that they should get a credit for the cost of the vanities because the deletion from the contract of those items was a saving to the Harrisons. That is a strange submission. If the defendants are supplied with vanity units, in accord with the conformity principle, they would be supplied with what is currently in place, (anything less would not be compliant). No diminution in value of the units has been shown.
The defendants are not entitled to any credit.
Shelves
The shelves as installed are 300mm in length. Assuming the Building Contracts provided for shelving of 500mm, the defendants are theoretically 200mm short of shelving space. However, as the defendants have installed cupboards at a cost unknown to the court, it is difficult to see that there is any proved loss.
Shower rails
The Building Contracts make no provision for shower rails. The fact that they were not provided should not be surprising.
No loss is proved.
The Hydro–stop
This complaint is a reference to the material used as a moisture barrier at the junction of the concrete tilt-up walls and concrete footings/floor and as between the concrete panels at that level. It is not now possible to determine what was used, without dismantling the structure (which is not suggested).
It should be noted that hydro-stop was not required by the contracts.
The specifications for this barrier changed over time and was eventually to be ‘hydrotite’, but this was not actually used. What was used was a bituminous membrane either in addition to or in substitution for fortecon plastic. This material or materials acts as an adequate waterproofing material and has not been shown to be inadequate or ineffective. The fact that the material used was not hydrotite is not to the point.
Sunscreens
This complaint relates to the provision of sunscreens that, as originally drawn, were to be one metre. The initial conceptual drawing by Mr Dean Bonython, depicted the sunscreens to be one metre deep for Units 1 and 6. The sales brochure generally depicted the sunscreens. However, as with many of these alleged defects, the sunscreens did not form part of the contractual specifications or requirements for Units 3 and 4.
It is said on behalf of Mr Hancock that the sunscreens have not been installed correctly in the sense that they face the wrong way, that is, do not provide shade in summer or light in winter. Mr Jankovic said the sunscreens as installed were not done so correctly because the light simply passes through the mesh providing no real shade.[44]
[44] Mr Jankovic’s Report para 5.8.
Mr Centofanti, both in evidence and in his report, said the sunscreens were installed correctly, that is, facing north so as to provide light in winter and shad in summing.[45]
[45] T640 and Mr Centofanti’s Report para 5.8.
In that situation, one could say the opinions are evenly balanced, but the photographs taken in summer show them operating correctly.
It has not been shown that the sunscreens should be replaced. Conformity with the original brochures is not the appropriate source for conformity.
Driveway/car park spaces -bitumen
The claim by Mr Hancock with respect to replacement of the bitumen driveway and car parking spaces with concrete was abandoned at the commencement of the trial, not least because the contractual specifications for the driveway and car parking spaces were expressly varied by the Supplementary Agreements from concrete to bitumen.
The claim in relation to the bitumen is now confined solely to the car park spaces for Units 3 and 4. It seems undoubted having regard to the email traffic to and from Mr Hancock that he was concerned about the change from concrete to bitumen but, eventually, he accepted that change and it is reflected in the documentation. Mr Hancock well knew that the change to bitumen embraced all areas that were originally to be concrete, that is, the driveway, common areas and car parking spaces.
The evidence suggests that one or a number of spots in car parks 3 and 4 had indentations caused by a narrow on pointy object, something like the jockey-wheel of a trailer, possibly caused in hot weather. There was also evidence to suggest there may have been inadequacies in the construction or laying of the bitumen. It was an area of dispute that needed expert input.
Both Mr Centofanti and Mr Jankovic reported on this aspect of the dispute and gave evidence.
Mr Jankovic questioned the quality of the bitumen to the driveway and car park areas in that it appeared to be ‘bony’ and appeared to be lacking in sufficient bitumen content. He reported that he had been advised that the surface was particularly susceptible to damage on very hot days. He suggested an inspection by an experience licensed proficient installer of bitumen.[46]
[46] Mr Jankovic at para 5.3.
Mr Centofanti said this in his report that the bitumen was not in poor condition and did not required replacement. He noted solvent damage to the surface, possibly caused by spillage. This is not the subject of this claim. Mr Centofanti noted an expert report that the asphalt complies with AS2150 and that the report indicates that the asphalt is suitable and no remedial work is required.[47]
[47] Mr Centofanti at para 5.3.
There is no substance in this complaint.
Roofs
The gist of the complaint under this heading is that there are a number of areas where there is evidence of a roof leak or leaks. Because there are different places where the leaks appear, it is likely that there are different entry points.
There seems little doubt that there were leaks in the roof at an earlier time but a real question remains as to whether the leaks still occur. Emails between Mr Hancock and Mr Harrison in March 2012, show that there were complaints about leaks as at that time. At about that time Mr Harrison’s roofing contractor carried out repairs to the roof. There is no reason to doubt there were leaks present. After heavy rain in May 2012, the leaks appear to have been fixed, except for a small leak in the south west corner of Unit 3. In late May 2012, Mr Harrison said he would send his contractor to carry out further work.
Any complaints about leaks in the roof did not re-surface until April and May 2013. The cause of those leaks, even at that time, was not known.[48] The leaks in the roof seems to be an ongoing problem.
[48] See emails 14/05/2013.

Mr Jankovic expressed the view that, relying upon a series of photographs provided by Mr Hancock, the leaking problems appear to be occurring at the roof flashings where the flashings are fixed against concrete walls.[49]
[49] Report para 5.6.
Mr Centofanti did not observe any marks on the wall inside Unit 4 which are consistent with roof leaks. Areas where Mr Hancock said there were leaks, Mr Centofanti said he did not see any staining.
Neither experts saw any hazardous leaks upon inspection. They did not require any additional work, although over/cover flashings and parapet cappings would provide a superior detail than the existing flashing.
Evidence at trial was given by Mr Dean Bonython, a registered architect, who graduated in 1971. Mr Bonython conducted an inspection of all eight units on 11 December 2013, including an examination of the roof, particularly the surface roof and the box gutters of the building and the flashing surrounding. The inspection did not find any defect with the roof or departure from design.
Water intrusion is insidious but I am not convinced it is an on-going problem here. Even if it is, it must only be minor. Whether inadequate flashing is the problem remains unknown. If the build was in accord with the design and, as Mr Bonython has said, there was no departure from design, the builder has not been shown to be at fault.
Painting of downpipe
It is difficult to believe this trivial item would be advanced as part of the claim.
The complaint is that a water downpipe on the exterior of Unit 3 is showing scratch marks in the paintwork. It is suggested it should be repainted. The cause of the damage is unknown. It has not been shown the Harrisons are legally responsible for its present state or possible repair.
Front door seals and damaged carpets
This complaint relates to an alleged failure to supply front door drop seals and that by virtue of that failure there was damage to the carpet. The doors to Units 3 and 4 face north and are exposed to the wind and rain. There does not seem to be any doubt that the carpet in Unit 4 was damaged by water coming in at or near the doors, but that was only minor. Unit 3 had sheet vinyl floor covers with no damage evident.
The pleaded causes of action are breach of contract, breach of (an unspecified) statutory duty and negligence. The response by the Harrisons, at least in a legal sense, is that door seals were not specified or required under the contracts.
This complaint is complicated factually. I accept that the Harrisons originally installed commercial grade door seals for Units 3 and 4; this was known as a Raven RP4 and was installed some time prior to 21 April 2013. Certainly, some water or moisture was getting in, although it was not entirely clear to Mr Hancock whether it was coming in under the door or a glazing problem.[50]
[50] T415-T417.
In any event, the defendants replaced the original door seals, but there seems to be an on-going problem.[51] This is confirmed in the expert report of Mr Centofanti.[52]
[51] T418.
[52] Report 5.10.
Both experts seem to suggest that the existing seals be replaced with seals that are more suitable for this type of exterior door, Mr Centofanti referring to them as ‘suitable storm seals’.
As sympathetic as I am to damage caused by the ingress of water, the defendants cannot succeed on the basis that the provision of door seals was not required in the contract and the changed nature of the claim without notice.[53]
[53] T419, T445-T446.
Fire blanket
It is complained that there was no fire blanket supplied to either unit.
The provision of such blankets was not required by the contracts or the law.[54]
[54] T994.
As important as this item may be on some occasions, its inclusion in this claim is petty and should not have been maintained.
Shower floors: non-compliance with provisions of AS1428.1 (disability provisions)
This part of the claim relates to an allegation that the bathrooms in each of the units do not comply with AS1428.[55] These requirements are part of the disability provisions.
[55] Designed for access and mobility Part 1.
The experts agree that the shower floors do not comply with those provisions because of the fall of the floors and the absence of a drainage flange.
Having regard to the submissions of the parties, it seems to be common ground that there is either a breach of contract or possibly negligence and the question becomes what, if anything, should be done about it. There has been a failure to build in accord with Australian Standards.
There are two broad solutions if rectification work is reasonably necessary. In my view rectification work is necessary because this is more than a technical problem. The pooling of water can be a major problem because of the risk of slipping. The failure to fit the proper drainage flange can become a major problem in the long term. It may not be visible as a problem at the moment but the future is uncertain and the matter should not be resolved on the basis of existing appearances.
As to the two broad solutions, in my view the lesser alternative suggested by Mr Jankovic is unsatisfactory. Continuity and consistency in colour of floor tiles is essential and the suggested alternative risks a patchy appearance.
The counter claim of the defendants in this regard succeeds in the amount of $5,390.00.
In relation to the toilet roll holders, grab rails and mirrors, the plaintiffs have conceded liability in the total sum of $280.00, because there had been a failure to comply with disability requirements. The counter claim also succeeds to that extent.
These amounts, $5390 and $280 will be divided equally between the second and third defendants.
4. Vexation
Bearing in my conclusions above, there is little that needs to be said about this heading of damages.
In any event, as noted on behalf of the plaintiffs, the contracts in the present case were between the Harrisons and the second and third defendants (both being companies).
Assuming damages for anxiety, disappointment, distress and physical inconvenience are recoverable, a corporation cannot suffer anxiety, disappointment and distress. Vexation may be compensable but not on the facts that I have found them to be.
5. Expert determination
More needs to be said about the background to these proceedings to understand this part of the claim. In essence, it is alleged that there was a binding agreement between the parties to refer their dispute to expert determination but that the plaintiffs repudiated the contract in respect of that agreement.
As is plain from the pleadings and the occurrence of a lengthy trial, the parties had reached intractable positions. That was not always the case. As I explain below, the parties were in lengthy negotiations with a view to referring the matter to expert determination. It is said they reached a binding agreement but that the Harrisons repudiated that agreement. The defendants seek, as damages, the legal costs thrown away by virtue of that repudiation.
As the plaintiffs note, the parties had, as at 8 April 2016, reached an in-principle agreement regarding the potential determination of the issues in dispute between them by Mr Walsh QC, as an expert determinator. It is worthy of note that the negotiations and discussions to progress the ‘in principle agreement’ took about 12-18 months and included an attempted mediation.
On behalf of Mr Hancock, reliance is placed upon the first limb of Masters v Cameron.[56] The High Court identified three classes of case where parties have reached agreement on the terms of their bargain but intend to execute a formal, or more formal, contract at a later date, namely:
1.   The first is where the parties intend to be bound immediately but wish to have the agreement incorporated in a more formal document.
2.   The second is where the parties intend to be bound immediately, but have made performance of one or more of the terms conditional upon the execution of a formal, or more formal, document.
3.   The third is where the parties do not intend to make a binding agreement unless and until they execute a formal, or more formal agreement.
A fourth class was later identified in Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd,[57] namely where the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms.
[56] (1954) 91 CLR 353.
[57] Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 at 628.
Whether the parties intended to enter into a binding agreement is a question to be determined objectively.[58]
[58] Masters v Cameron (1954) at 362.
On behalf of the Harrisons it is noted that the facts of the present case do not fit neatly with Masters v Cameron because that case pre-supposes the parties have reached agreement, whereas in this case the ‘in principle agreement’ was subject to other matters of significance.
The case for the Harrisons is that the matters that needed to be attended to, to finalise the in-principle agreement, were never completed.
The first matter relied upon is that the making of orders by the Court was a condition precedent to a final and binding agreement, and to the referral of the matter for expert determination. The second matter is that it was subject to confirmation of both the plaintiffs’ and the defendants’ instructions as to the options identified by Mr Walsh QC at the conference on 24 October 2016, including as to the acceptance of the cost estimate given by Mr Walsh QC at that conference.
The Harrisons contend that the making of court orders was a condition precedent to a referring of the matter to expert determination. Although in the end result I do not consider it matters, I do not accept that portion of the argument of the plaintiffs. In my view, looking at the various emails and the oral evidence of Mr Radbone and Mr Graham, various matters needed to be attended to but, once achieved, the parties regarded the Court making consent orders was to be a necessary formality for referral for expert determination.
The real question is whether all of the outstanding preliminary matters had been attended to. In my view, they had not.
Discussion
It is clear to me that Mr Harrison had some significant reservations in his consideration of whether the dispute should ultimately be referred for expert determination.
Those reservations or misgivings were not privately held but surfaced in his instructions that found their way into discussions and emails between solicitors. They are capable of objective assessment and determination.
It is unnecessary to traverse all of the emails relevant to this question, but from April 2016 onwards there was ongoing consideration and negotiation as to the Draft Minutes of Order. By way of example, the incorporation of a potential right of appeal was the subject of negotiation. The defendants abandoned that possibility as per email of 5 September 2016, but then wanted Mr Walsh QC to provide reasons for his determination.[59]
[59] Email 4 October 2016.
Solicitors for the parties conferred with Mr Walsh QC on 24 October 2016. Mr Walsh QC put forward some options as to the manner in which the matter could proceed and, depending upon which option was agreed upon, there was a question of significant costs to the parties. Those options were matters upon which the parties needed to obtain instructions. It also emerged from later emails that there was a real possibility that the parties had misunderstood what was supposedly agreed at the conference and what instructions needed to be obtained.
As to what followed, it is sufficient for me to say that I accept the written submissions of the plaintiffs.[60] Those paragraphs reflect the ongoing uncertainty of Mr Harrison that proceeding to expert determination was his preferred course.[61]
[60] Paras 434-436.
[61] Lynch Meyer letter to Mr Radbone of 3 May 2017.
In my view, the defendants have failed to prove their case under this heading.
Orders
Judgment for the plaintiffs against second defendant in the amount of $38,965.00 (inclusive of pre-judgment interest).
Judgment for the plaintiffs against the third defendant in the amount of $33,665.00 (inclusive of pre-judgment interest).
Counter claim is dismissed.