Ling v Xu

[2022] NSWCATCD 77

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Ling v Xu [2022] NSWCATCD 77

Hearing dates:

7 and 8 April 2022

Date of orders:

09 May 2022 [amended 26 May 2022]

Decision date:

09 May 2022

Jurisdiction:

Consumer and Commercial Division

Before:

D Goldstein, Senior Member

Pursuant to Section 63 of the Civil and Administrative Tribunal Act 2013, orders published on 9 May 2022 are amended on 26 May 2022.

Decision:

1. Weijiang Xu also known as Jeff Xu must pay Wei Ling $66,206.39 immediately.

2. HB 21/43872 is dismissed.

3. In the event that a party wishes to bring a costs application, the costs application must be lodged in the Tribunal and served on the costs respondent within 14 days of the date of the orders in these proceedings either attaching or referring to the documents relied upon in support of the application.

4. The costs respondent will have 14 days after the date he/she receives the application to lodge in the Tribunal and serve on the costs applicant his or her submissions, if any, in response to the costs application, such submissions either attaching or referring to the documents relied upon.

5. The parties must state in their submissions whether or not they consent to the costs application being determined on the basis of the parties written submissions and attached documents, if any, without the need for a hearing.

6. Subject to the parties’ submissions, the Tribunal will determine any costs application on the basis of the papers lodged in the Tribunal.

Catchwords:

BUILDING & CONSTRUCTION – Termination – Construction of contract – unlicensed contractor – Quantum meruit

Legislation Cited:

Home Building Act 1989 (NSW)

Home Building Regulation 2014 (NSW)

Cases Cited:

DB Homes Australia Pty Limited v Kes [2019] NSWCATAP 221

Nyunt v North Shore Homes Pty Ltd [2020] NSWCATAP 143

Robinson v Harman (1848) 1 Ex.850

Texts Cited:

None cited

Category:

Principal judgment

Parties:

Wei Ling (Applicant)
Weijiang Xu also known as Jeff Xu (Respondent)
Shuxin Zhou (Second Respondent)

Representation:

Applicant (Self represented)
Respondent (Self represented)
Second respondent (Self represented)

File Number(s):

HB 21/29372 & HB 21/43872

Publication restriction:

Nil

REASONS FOR DECISION

1. In these Reasons I will refer to the applicant, Wei Ling as the owner and to the respondent Weijiang Xu also known as Jeff Xu, as the builder.

2. These proceedings and the parties’ claims against each other arise out of residential building work performed by the builder at the owner’s residence in Dural.

3. The owner’s claim was primarily for a refund of $120,000.00 paid to the builder. The builder’s claim was for $298,100.00.

4. The evidence in the proceedings was:

1. Exhibit A, report of Mr Gordon Xue dated 30 November 2021;,

2. Exhibit B, affidavit of Wei Ling affirmed 5 December 2021;

3. Exhibit C – witness statement of Lijun He;

4. Exhibit D postal records;

5. Exhibit 1, report David Hall filed 22 March 2022; and

6. Exhibit 2, emails regarding site visit.

5. I find that the builder at all relevant times was licensed under the Home Building Act 1989 (the ‘Act’) as a painter and decorator. As will become clearer, the work he undertook extended beyond painting and decorating.

6. The conduct and determination of these proceedings has been hampered by the fact that the parties had engaged lawyers, but for whatever reason disposed of their services. As a result the preparation of evidence was not as thorough as it may have otherwise been. A greater impediment is the fact the parties contracted in Mandarin, and the regulatory requirements of the Act concerning the nature and form of contracts was not followed. A further complication is that there are different translations of the parties’ contracts, which vary in some respects. A finding on what the contract was, is of central importance in these proceedings.

The contract

7. Before they ceased to act, the parties’ solicitors prepared Points of Claim and Points of Defence on behalf of their respective clients. I will proceed on the basis that these documents were based on the parties’ instructions to their solicitors. The owner’s Points of Claim allege that:

1. On 23 December 2020 the parties entered into a contract for the renovation of the owner’s residence;

2. The contract was partly in writing by way of text messages;

3. The scope of work for total price of $108,000.00 was:

1. Removal and change of carpet;

2. change of cupboard;

3. change of fireplace;

4. demolition of the wall between the two bathrooms;

5. change of the wall and floor tiles in the bathrooms;

6. change of toilets and washbasins;

7. building a separate walk in wardrobe in one bathroom;

8. installing glass partitions doors and enclosures to the patio to the back of the house;

9. installing a canopy over one door;

10. building a pergola in the backyard;

11. painting all the ceiling and the walls;

12. removal and disposal of all the construction rubbish; and

13. paint to be used Dulux.

8. The builder’s Points of Defence admits that:

1. on 23 December 2020 the parties entered into a contract for the renovation of the owner’s residence;

2. The contract price was $108,000.00;

3. The contract was in part made up of text messages;

4. The scope of work was that stated at [7(3)] except that the works with respect to the pergola were limited renovating an existing similar structure at the rear of the property.

9. Given the consensus arrived at by reason of the Points of Claim and admissions in the Points of Defence as referred to, I find that the date of the contract was the date agreed upon by the parties, 23 December 2020, that the contract was partly in writing by way of text messages, that the contract price was initially $108,000.00 and that the scope of work was as stated in [7(3)] except that the builder states that the works with respect to the pergola were limited to renovating an existing similar structure at the rear of the property.

10. I refer to the owner’s affidavit of 5 December 2021 which is exhibit B. Annexure A to that affidavit is a translation of text messages between the parties which states at item 9 that the work is ‘building a wooden pergola’. I accept this evidence in preference to other translations which the builder’s expert has had carried out, and do not mention either building a wooden pergola or renovating an existing structure at the rear of the property.

11. I also find that the following warranties were implied into the parties’ contract pursuant to s18B(1) of the Act:

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

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

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

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

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

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

12. The owner’s Points of Claim also plead that there was an agreement between the parties for additional work to be carried out. At [8] of the Points of Claim the owner alleges that on or about 6 March 2021 the parties entered into an additional written contract for additional renovation works as follows:

1. Install air-conditioner;

2. install a Range hood;

3. install underlay and waterproofing for the wooden floor;

4. change of Flyscreens to the doors and windows;

5. removal of the old stone slabs and installing new stone slabs at the entrance of the house; and

6. changing and installing new stone bench top.

13. The builder in its Points of Defence admits that on or about 6 March 2021 the parties entered into an additional written contract for additional renovation works, but does not admit that the work referred to was to be performed.

14. The owner’s affidavit of 5 December 2021 which is exhibit B addresses this extension to the contract at [12]. She states that there was a written statement which contained the 6 March 2021 agreement, a copy of which is at annexure B to her statement. Annexure B is a document written in Chinese which has been certified as being translated from Chinese into English on 8 November 2021. The translation states:

‘1. Installing one air-conditioner in the small room $2950, kitchen ventilator $900.00, gas cooking top $450.00, installation fee $500.00. Installing wooden floor on the particle board including water-proof mulch $1200, window screens and screen door $900.00;

2. Replace main entrance with new paved stones $11000;

3 .Replacing the two main entrance doors with solid wood doors $4000;

4. Installing stone surface of the fountain $2500;

5. You pay for the removal and planting of trees $3600 in total’

15. Based on the owner’s un-contradicted evidence of the March agreement the fact of which is admitted by the builder, I find that the scope of the work to be carried out was as stated above. I have calculated the cost of the work referred to as being $35,200.00. I have not taken into account item 5 as it is not an issue which arises for determination and is not considered by the parties’ experts.

16. I find that the price to be paid by the owner for the work that has been referred to was $143,200.00 ($108,000.00 + $35,200.00). I also find that it is common ground that the owner has paid $120,000.00 to the builder.

17. Mr Hall states that he was provided with a number of documents including a copy of the builder’s photos and writing for the works which are in Chinese and at TAB 11 of his report. He states that he has had the builder’s photos and writing for the works translated and this translated material is at TAB 12. He has attached a two page translated document given to him by the owner at TAB 14.

18. At [7] to [10] and at [13] to [16] of these reasons, I have made findings about the work that the builder agreed to carry out based for the most part on the pleadings produced by the solicitors for the parties, which I find binds them. To the extent that my findings about the work that the builder agreed to carry out are not based on the parties’ pleadings I have made the necessary findings in reliance on the un-contradicted evidence of the owner. To the extent that Mr Hall has been provided with the builder’s photos and writing for the works which are in Chinese and which he has had translated, I do not accept them as documents which evidence the contract because the builder has not given evidence which explains each of the documents and the part it played in the parties’ agreement for him to carry out work at the owner’s residence in consideration for the money to be paid to him. I prefer the owner’s evidence regarding the work to be carried out by the builder because it is for most part confirmed by the parties’ pleadings and to the extent that it is not, it is the subject of an affidavit upon which the owner was available to be cross examined. The documents which Mr Hall has been provided with have not been produced in a way in which they may be subject to scrutiny to ascertain whether they were in fact documents that passed between the parties in the events which led to the agreement between them for the builder to provide residential building work at the owner’s residence.

19. Mr Hall has also referred to a document which he states contains allowances made by the builder. How and when this document was prepared is not explained. Nor is it stated whether the document was ever provided by the builder to the owner. At best the document might be regarded as an internal break-up of the builder’s prices. For the document to have any probative value it would in my view be necessary for the builder to establish that he prepared it before the parties reached agreement on 23 December 2020. The document that meets the description of a break-up of the builder’s prices is at page 16 of Tab 12 to Mr Hall’s report. Given that there is no evidence to establish how and when the document at page 16 of Tab 12 was prepared, I will give it little, if any weight.

Licence

20. I find that at the material time the builder held a painter and decorator’s licence under the Act. Regulation 13 of the Home Building Regulation 2014 states that for the purposes of sections 21(1)(a) and 27 (1)(a) of the Act, trade categories of residential building work included decorating and painting

Termination of the contract

21. The owner’s evidence was that on or about 6 May 2021 she found out that the builder never had a contractor’s licence for the work that he was carrying out and called him stating as follows:

‘I have found out through a friend that you don’t have the contractor’s licence for the renovation work at our property, you have lied to me that you have such licence, and the work you have done is defective throughout the property, and I also found that the people working on our property don’t have proper licences, you have used illegal non-citizens at our property as well, therefore I cannot but to ask you to stop working on the renovation of our property I will make a complaint against you to Fair Trading and Tribunal.’

22. The owner states that the builder replied by stating that he was coming to her house that evening to stab her to death with a knife.

23. In his Points of Defence the builder admits that on or about 7 May 2021 the owner told him to stop working and states that the owner unlawfully terminated the contract and that he treated the unlawful termination as a repudiation of the contract, accepted the repudiation and terminated the contract. How all of that was communicated by the builder to the owner is not alluded to.

24. An issue raised by the pleadings is which party was entitled to terminate the contract. In DB Homes Australia Pty Limited v Kes [2019] NSWCATAP 221 at [45] – [47] an Appeal Panel of the Tribunal stated as follows in connection with the repudiation of contract:

‘Repudiation of a contract occurs when a party breaches a fundamental or essential term of the contract; or there was a sufficiently serious breach of a non-essential term of the contract; or a party demonstrates an unwillingness or inability to render substantial performance of the contract and the innocent party elects to accept the repudiation and treat the contract as having ended: Koompahtoo Local Aboriginal Land Council & Anor v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115

As a general rule, wrongful termination of the performance of a contract, where a party has no legal right to do so, will constitute a repudiation of obligation because such an act indicates an absence of readiness or willingness on the part of the party who has wrongfully terminated to perform its obligations under the contract: Ogle v Comboyuro Investments Pty Ltd [1976] HCA 21; (1976) 136 CLR 444 at 453; Curnow Consulting Pty Ltd v JPD Media and Design Pty Ltd t/as Durie Design [2017] NSWSC 1171 at [344].

It is axiomatic that to terminate a contract based on repudiatory conduct, the first step is to identify the specific purported repudiatory conduct of the other party’

25. Based on the owner’s evidence, the builder’s repudiatory conduct was carrying out the work (which I have found and referred to above) without an appropriate licence under the Act.

26. Section 12 of the Act so far as it related to the builder stated:

‘An individual must not do any residential building work, or specialist work, except as the holder of a contractor licence authorising its holder to contract to do that work’

27. As I have found, the builder at the material time held a painter and decorator’s licence under the Act. Regulation 13 of the Home Building Regulation 2014 stated that for the purposes of sections 21(1)(a) and 27 (1)(a) of the Act, trade categories of residential building work included decorating and painting.

28. I find that section 21(1)(a) of the Act authorised the builder to contract to do any residential building work that was described in his contractor licence when it was issued, namely decorating and painting. I also find that in contracting to undertake the work that is referred to at [9] and [15] above, the builder was carrying out work which went beyond decorating and painting and in so doing was in breach of s12 of the Act.

29. S18B(1)(c) of the Act as referred to at [12] implied a warranty into the parties’ contact that the:

‘work will be done in accordance with, and will comply with, this or any other law’;

30. I interpret that warranty to mean in context of the contract between the parties and the license status of the builder, that the work would be done by persons who were properly licensed under the Act and that requirement applied to the builder as well as his subcontractors. It is clear from the owner’s evidence that she terminated the contract because she had learned that the builder was not properly licensed, a factual basis that I find existed at all relevant times. Although not stated by the owner in terms of breach of relevant provisions of the Act, I find that she was ending the contract because of the builder’s breach of ss12 or 18B(1)(c) of the Act, and is entitled to rely on such breaches at the hearing.

31. The issue of the termination of a contract for a breach of a provision of the Act was discussed by an Appeal Panel in Nyunt v North Shore Homes Pty Ltd [2020] NSWCATAP 143 which found at [114] that even though a warranty such as referred in s18B(1)(c) of the Act arose by way of legislation, a breach may give a right to terminate:

‘The point of the discussion is that a right to terminate and sue for damages may arise from a breach of an obligation imposed or implied by law irrespective of whether it is - as the Tribunal found - "not a direct term of the contract". Bell P noted at [98] that "[T]erms implied by operation of law are not dependent upon the intentions, objectively ascertained of the parties" citing Castlemaine Tooheys at 487 and Heydon on Contract at [10.130]). In our opinion, based on the approach of the Court of Appeal in Ingham Enterprises, the effect and importance of terms implied by operation of law are not dependent upon the intentions of the parties and a right to terminate a contract and sue for damages is no less available to a party because the term relied upon in breach is implied by law.’

32. The next issue is whether a breach of a term such as s18B(1)(c) is sufficiently important to entitle a party to terminate if it is breached. I find that a breach of a warranty which requires a builder to hold an appropriate licence carry out the construction of residential building work is a serious breach of contract since compliance with the regulatory requirements of the Act is a highly important aspect of residential building work in New South Wales, a fact highlighted in s12 of the Act by the imposition of a penalty of 1,000 penalty units for a corporation and 200 units for an individual doing unlicensed building work.

33. As a result I find that the owner was entitled to terminate the contract when she did so on 7 May because of the builder’s breach of s18B(1)(c) of the Act caused by the fact that he contracted to and did in fact carry out building work for which he did not hold the appropriate license authorising him to do the work.

32. The owner will be entitled to damages to rectify any defective work carried out by the builder before 7 May and also damages for work not then completed by the builder, such damages to accord with what was stated in Robinson v Harman (1848) 1 Ex.850:

“that where a party sustains a loss by reason of breach of contract, he is, so far as money can do it, to be placed in the same situation with respect to damages, as if the contract had been performed.”

Assessment of damages

35. The parties relied on experts to provide opinions about defective and incomplete work and the costs of rectifying defects and completing incomplete work.

36. The owner relied upon a report provided by Mr Gordon Xue which is dated 3 November 2021 and which is exhibit A in the proceedings. I accept Mr Xue as an expert able to give opinion evidence in these proceedings. The builder relied on a report prepared by Mr David Hall filed in the Tribunal on 22 March 2022. I also accept Mr Hall as an expert able to give opinion evidence in these proceedings.

37. At the hearing neither of the experts was required for cross examination.

38. Mr Xue assessed the cost of incomplete and defective work to be $153,736.65 including preliminaries, a contingency, builder’s margin and GST. Mr Hall’s report in section 7 deals with ‘Costings’ which appear to relate to defects. Regrettably Mr Hall has not totalled his costing, or allowed for preliminaries or margin. I have totalled his costing to be $24,806.02. Mr Hall also includes a table at section 8 of his report which arranges various pieces of information. One column in the table at section 8 is titled ‘Allowance’ which is no doubt the builder’s internal allowances to which I have referred. Since there is no evidence to establish how this material came into existence, I will give it little if any weight.

39. I find that it would have been clear that Mr Xue’s report represented the owner’s claim in the proceedings. Mr Hall has not in all instances addressed the items raised in Mr Xue’ report in a direct way despite the fact that he states that he was instructed to reply to Mr Xue’s report.

40. I will proceed to consider the claims made on behalf of the owner by Mr Xue on her behalf. I will only have regard to claims for defective and incomplete work in circumstances where a claimed item is within the work which I have found was agreed upon by the parties as the work which the builder would carry out.

41. I will commence with the defects claim which is at section 7 of Mr Xue’s report and summarised at 7.12 where the total cost of rectification excluding preliminaries, margin and GST is assessed at $60,093.00.

42. Mr Xue has claimed $1,500.00 to gain access to work areas in accordance with Work Cover requirements. He has not explained why this allowance is necessary or what work cover requirements must be addressed in the rectification of defective work. As a consequence I reject the claim for this item.

43. Mr Xue has also claimed $2,000.00 for the cover and protection of adjacent surfaces during rectification work. There has been no elaboration of how the cover and protection is to be implemented or why the relevant rectifying tradesmen would not supply their own drop sheets and protective materials. This item is rejected.

Air conditioning Cover conduit

44. Mr Xue states that this work was in breach of s18B(1)(a) of the Act. He has assessed the rectification cost at $240.00. Mr Hall agrees at 7.10 of his report. He has assessed the rectification cost at $261.00, including GST. I will allow the amount referred to by Mr Xue, since all his figures are subject to GST later in his calculations.

Joinery cover to Kitchen ventilator

45. Mr Xue states that this work was in breach of s18B(1)(a) of the Act. He has assessed the rectification cost at $1,515.00. Mr Hall does not address this issue. I will allow the amount assessed by Mr Xue on the basis that his evidence is un-contradicted.

Kitchen ventilator exhaust

46. Mr Xue states that this work was in breach of s18B(1)(a) of the Act. He has assessed the rectification cost at $1,515.00 as part of the above item. Mr Hall does not address this issue.

Installation of gas stove and associated work

47. Mr Xue states that this work was in breach of s18B(1)(a) of the Act. He has assessed the rectification cost at $880.00. Mr Hall addresses this issue at 7.9 of his report. He assesses the rectification cost at $1,173.52 including GST. Ex GST his price is $1,077.75 I will allow this amount on the basis that Mr Hall’s cost break down is more comprehensive.

Front door weather seal missing and gaps

48. Mr Xue states that this work was non-compliant with the National Construction Code which I take to be a failure to comply with s18B(1)(a) of the Act. He assesses rectification cost to be $1,020.00. Mr Hall states at 6.13 that the front doors have been completed to an acceptable standard. I prefer Mr Xue’s evidence since his photographs clearly demonstrate the gaps and lack of a weather seal.

49. I will find for the owner in the sum of $1,020.00.

Demolished wall in the living room

50. Mr Xue states that this work was in breach of s18B(1)(a) of the Act. He has assessed the rectification cost at $2,080.00. Mr Hall does not address this issue. Having regard to the scope of the work to which I have refered, I reject this item on the basis that the parties’ agreement did not include the demolition of a wall in the living room.

Bathroom door binding

51. Mr Xue states that this work was in breach of s18B(1)(a) of the Act. He has assessed the rectification cost at $520.00. At 6.6.9 and 7.4 Mr Hall agrees that bathroom door is binding. He has assessed the ex GST cost at $402.00. The difference between the experts is the number of hours allowed for the rectification work. I prefer Mr Hall’s assessment of 6 hours to Mr Xue’s assessment of 8 hours which I find is possibly too long a period of time to remove and reset a door.

52. I will allow the owner $402.00 in connection with this item, subject to a GST allowance to be made.

Painting

53. At 7.10 of his report Mr Xue states that this item is a combination of defective and incomplete paintwork. He states that this work was in breach of s18B(1)(a) of the Act, so far as it is defective work. He has assessed the rectification cost in three items, namely, $10,640.00, $960.00 and 12,500.00. Mr Hall states that is minor additional work to be carried out, there are inadequate finishes which require attention and that there is paint on curtains. At 7.1 of his report he assesses the cost to be $2,478.00, inclusive of GST on labour rates.

54. The difference between the experts is that Mr Xue at 7.12 has allowed for a repaint of painted areas and a completion of painting to uncompleted areas for 3 men for 1 week with materials of $2,000.00, total $10,640.00. Mr Hall has allowed for 12 hours of work at $918.00. I note that in connection with the separate item laundry, Mr Hall has allowed 8 hours to paint walls at a cost of $520.00. The laundry is included in Mr Xue’s painting cost of $10,640.00. Even taking into account the allowance for the laundry, there is a substantial difference between the experts for hours allowed for painting. I estimate that Mr Xue as allowed for 120 hours and Mr Hall has allowed for 20 hours. The only justification for a repaint of previously painted areas is Mr Xue’s opinion that the builder has not completed base preparation of the surfaces before painting.

55. Exhibit C is the witness statement of Lijun He. This document which is not in the form of an affidavit or statutory declaration states that Mr He has been working for the builder as a painter and decorator. Mr He states in part that at the direction of the builder no undercoat was painted as part of the painting that was done by the builder at the owner’s residence. He states that as a result some gaps occurred on some part of the painting.

56. I accept Mr He’s evidence which confirms and supports Mr Xue’s opinion and find that the builder did not complete base preparation of the surfaces before painting.

57. Mr Hall has allowed a rate of $65.00 per hour for painting while Mr Xue has allowed a rate of about $72.00 per hour for painting. 3 men at 24 hours a day x 5 days = 120 hours x $72 = $8,640.00. Mr Xue has allowed for completion of painting in the laundry and garage, while Mr Hall has only allowed for painting the laundry. I accept Mr Xue’s evidence as it is supported by Mr He’s evidence. I find that Mr Xue’s more substantial scope of painting work is justifiable because I have found that the builder did not complete base preparation of the surfaces before painting. As a result I will allow the owner $10,640.00 for painting.

58. Mr Xue has assessed $960.00 for the replacement of switch covers, which Mr Hall has agreed and $12,500.00 for paint smeared blinds. Mr Hall has allowed $600 to dry clean 4 curtains since he states that as the paint is water based, the curtains can be dry cleaned.

59. I accept Mr Hall’s evidence that the blinds can be dry cleaned and will therefore accept his allowance of $600.00 for cleaning of paint smeared blinds.

60. All told the owner will be allowed $10,640.00 + $960.00 + $600.00 = $12,200.00 for this item with an allowance to be added for GST on the labour component of $8,640.00.

Outside of the House

61. At 7.11 of his report Mr Xue refers to ‘the work to the external balcony as described in Outside of the House Item 1’. He provides details of what is mostly defective work at (a) – (f). Costing of these items is provided in items 15 – 20 of section 7.12 of his report. A total of $21,104.00 is assessed as the rectification cost.

62. The contractual item of work to which Mr Xue is referring is not particularly clear to me. It seems most likely that he is referring to the item of work which is referred to at [7(3)(h)], namely ‘installing glass partitions doors and enclosures to the patio to the back of the house’. Annexure B to the owner’s affidavit describes this item of work as:

‘7. Outside, backyard, patio to be enclosed by classes, (sic) installing the ceiling and painting the ceiling, installing two glass doors;’

63. I find that the work that Mr Xue is referring to is as described at [7(3)(h)] above which is the same work as described in Annexure B to the owner’s affidavit, as extracted above.

64. Mr Hall at 6.8 of his report states that there is defective work. He assesses the rectification cost at $3,145.80.

65. I will deal with each category of defective work addressed by Mr Xue.

66. The first item is stated to be ‘Visible angulation to the set plasterboard ceiling. Mr Xue relies on his photo 60. Mr Xue states that the builder has breached s18B(1)(a) of the Act in that the work was not performed with due care. An amount of $3,584.00 is claimed for this item. By stating that there is visible angulation, I infer that the set plasterboard ceiling is not level. The photograph that Mr Xue relies upon does not give obvious support to his assertion that the set plasterboard ceiling is angulated.

67. Mr Hall does not comment on this assertion by Mr Xue, and importantly does not contradict his assertion that there is visible angulation to the set plasterboard ceiling.

68. Based on Mr Xue’s un-contradicted evidence I will find that the builder breached s18B(1)(a) of the Act in installing the plasterboard ceiling with visible angulation. I will allow the amount assessed by Mr Xue in connection with this item, $3,584.00.

69. The second item is incomplete trim around the window. Mr Xue relies on his photo 61. Mr Xue states that the builder has breached s18B(1)(a) of the Act in that the work was not performed with due care. An amount of $720.00 is claimed for this item, based on 1 man x 1 day. The photograph relied on does lend some weight to this item of claim.

70. As above, Mr Hall does not comment on this assertion by Mr Xue, and importantly does not contradict his assertion that there is incomplete trim around the windows.

71. Based on Mr Xue’s un-contradicted evidence I will find that the builder breached s18B(1)(a) of the Act in leaving an incomplete trim around the window. I will allow the amount assessed by Mr Xue in connection with this item, $720.00.

72. The third item is missing step down and waterproofing from the internal to external area. Mr Xue relies on his photo 62. Mr Xue states that the builder has breached s18B(1)(a) of the Act in that the work was not performed with due care. A reference to AS 4654.1-2021 is also referred to although what the requirement of the Australian Standard is has not been stated. An amount of $13,060.00 is claimed for this item.

73. Mr Hall provides similar evidence in that he states that the two door units supplied by the builder are not provided with door sill flashings or a step down at the outer part of the sill to prevent water entry. He has costed the necessary rectification work at $2,344.00 ex GST. He has also provided a short scope of work costed at 2 men x 16 hours at $67.00 per hour with $200.00 of materials.

74. Mr Xue has also provided a scope of work which is more extensive than Mr Hall. He does not break up the amount of $13,060.00 into the number of hours to be worked and the rate per hour.

75. I prefer the evidence of Mr Hall because he has costed his scope of work. I will allow $2,344.00 ex GST for this item.

76. The fourth item is no power point installed in the laundry. The experts agree this item. Mr Xue has costed the item at $880.00 being 1 electrician x 1day, including $200.00 materials. Mr Hall has costed the item at $534.00 being 6 hours at $89.00. I will allow Mr Xue’s assessment on the basis that it includes materials, which I find would be necessary if there are no power points.

77. The fifth item is paint splatter on the sandstone floor. Mr Xue relies on his photo 65. Mr Xue states that the builder has breached s18B(1)(a) of the Act in that the work was not performed with due care. An amount of $1,240.00 has been assessed as the cost of rectification being 1 man x 2 days at $65.00 per hour + $200.00 materials.

78. Mr Hall does not comment on this assertion by Mr Xue, and importantly does not contradict his assertion that there is paint splatter on the sandstone floor.

79. Based on Mr Xue’s un-contradicted evidence I will find that the builder breached s18B(1)(a) of the Act in leaving paint splatter on the sandstone floor. I will allow the amount assessed by Mr Xue in connection with this item, $1,240.00.

80. The sixth item is no flashing to the top of the window and glazing. Mr Xue relies on his photo 66. Mr Xue states that the builder has breached s18B(1)(a) of the Act in that the work was not performed with due care. An amount of $1,620.00 has been assessed as the cost of rectification being 12 lineal metres at $135.00 per lineal metre. Mr Xue has relied on his experience to assess the rectification cost, as opposed to taking rates from Rawlinsons.

81. Mr Hall discusses a lack of flashing to the roof where it abuts the wall. He does not address the issue identified by Mr Xue that there is no flashing to the top of the window and glazing. Based on Mr Xue’s un-contradicted evidence I will find that the builder breached s18B(1)(a) of the Act in failing to provide flashing to the top of the window and glazing. I will allow the amount assessed by Mr Xue in connection with this item, $1,620.00.

82. The final item of the owner’s defective work claim is the builder’s attempt to clean the external path surfaces, which Mr Xue states was in breach of s18B(1)(a) of the Act. I have had regard to the work that I have found the builder agreed to carry out. I find that there was no agreement that the builder would clean external path surfaces, as opposed to removing the old stone slabs and installing new stone slabs at the entrance of the house. This item is rejected on that basis.

Incomplete work

83. I have found that the owner was entitled to terminate the contract. I have also found that the owner will be entitled to damages for work not completed by the builder, such damages to accord with what was stated in Robinson v Harman:

“that where a party sustains a loss by reason of breach of contract, (s)he is, so far as money can do it, to be placed in the same situation with respect to damages, as if the contract had been performed.”

84. In applying the above principle, a credit equal to the unpaid part of the contract price must be applied to the cost to complete.

85. Mr Xue states that he has calculated the value of incomplete work to be $65,293.00 inclusive of GST. Mr Hall does not provide an assessment of the cost or value of incomplete work, or to be more precise, how much the owner is likely to spend in completing work left incomplete by the builder. Nonetheless the table at tab 8 of his report indicates what work has not been commenced by the builder.

86. I will deal with each item of incomplete work and the estimated cost to complete.

Paving stones at main entrance

87. At 7.6 of his report Mr Xue referred to the new paving stones to the front main entrance not having been sealed. I find that providing paving stones to the main entrance was part of the agreed scope of works.

88. Mr Xue stated that he did not consider that the work had been fully completed. This item was in the defective work items. I find it is more appropriate to deal with it as an incomplete item. Mr Xue estimated the cost of completing this work as $574.00. His estimate was based on a measurement of the affected area of 48m² at a rate obtained from Rawlinsons at $11.95m². Mr Hall states at 6.12.4 of his report that the stone requires cleaning and sealing. He agrees on Mr Xue’s estimate.

89. Based on the agreement of the experts I will allow the owner $574.00 in connection with this item.

Internal Carpet

90. I find that internal carpet was part of the builder’s scope of work.

91. Mr Xue states that he observed the carpet to be replaced, but was advised by the owner that the work was not completed by the builder. The owner does not mention this in her affidavit.

92. Mr Hall also states that he was told by the owner that the work was not completed by the builder. He also states that he was instructed by the builder’s solicitor’s that the carpet in the living room was not installed.

93. So far as costs are concerned, Mr Xue in his scott schedule states that the figure to be attributed to this item is $9,563.00. Mr Xue has calculated this amount by reference to Rawlinsons at 6.1.12 of his report. He has stated the area to be 85m² and calculated the cost at $112.50 per m².

94. Mr Hall states that the quotation has an allowance of $11,800.00 for this item. I have stated that I would give the priced build-up of the builder’s costs little if any weight.

95. I will find for the owner in the sum of $9,563.00 because the evidence is clear that the builder did not carry out this work. And Mr Xue has stated that that he observed the carpet to be replaced. Although the owner has not stated who did carry out the replacement work or how much it cost, I accept Mr Xue’s evidence that it would have cost $9,563.00 based on Rawlinson’s costings.

Installation of laundry cabinets

96. I find that installation of laundry cabinets was part of the builder’s scope of work. Refer [7(3)(b)]. I also find that the parties’ experts agree that this work has not been commenced or completed.

97. Mr Xue in his scott schedule states that the figure to be attributed to this item is $5,010.00. He has calculated this amount by reference to Rawlinsons at 6.1.12 of his report. He has stated the area to be 3 lm at a rate of $1,670.00 per lm. The Rawlinsons price is for polished timber solid framed with a timber insert panel.

98. Mr Hall states that the cost to do this work is $6,879.80. In coming to this figure Mr Hall accepts Mr Xue’s figure and adds other items of work to carry out an associated scope of works which he has described as ‘Reline laundry walls’. Since I have not found that the parties agreed that the builder was required to reline laundry walls, I will not take into account the costs that Mr Hall has assessed as being part of that work.

96. I will find for the owner in the sum of $5,010.00 in connection with this item.

Replacing one fireplace

100. I have found that changing the one fireplace was part of the builder’s scope of work. Refer [7(3)(c)]. I also find that the parties’ experts agree that this work has not been commenced or completed. As with numerous other items of work which I have found the parties agreed on, there is no scope to indicate precisely what the builder was required to do.

101. Mr Xue has assessed the cost of completing this item of work at $11,000.00. He has broken this work up into three elements:

1. Remove existing fireplace - $2,000.00;

2. Provide new fire place - $6,000.00; and

3. Install new fire place - $3,000.00.

102. Mr Hall has assessed the cost of replacing the fire place at $6,207.60. In arriving at this cost he has allowed for a new small gas fireplace which is to be installed into the existing opening for a fireplace with associated gas pipes and an electrical isolation switch.

103. The parties’ agreement had no details of the work that was to be carried out. From the words that were used in the pleadings there can be no certainty that demolition and rebuilding of the fireplace was intended by them. I accept Mr Hall’s assessment of the cost of this item given the ambiguity of the description of this item.

104. I will find for the owner in the sum of $6,207.60.

Installing a canopy for one of the back doors

105. I have found that installing a canopy for one of the back doors was part of the builder’s scope of work. Refer [7(3)(i)]. Mr Xue states that this work is incomplete. Mr Hall does not address this item.

106. Mr Xue has assessed the cost of installing a canopy at $3,000.00. As there is no other evidence in connection with this item, I accept Mr Xue’s assessment.

107. I will find for the owner in the sum of $3,000.00.

Building a wooden pergola

108. As stated at [10] above, I found that the parties’ scope of works included the building of a wooden pergola. Mr Xue states that this work is incomplete. Mr Hall refers to a pavilion above the swimming pool which he has referred to using documents which I have found are not the best proof of the content of the contract. Refer [17] – [19] of these reasons. He has also referred to an allowance of $25,000.00 for that work which I have not given substantial weight to. Refer [19] of these reasons.

109. Mr Xue has calculated the cost of building the pergola as $27,480.00. He has broken this cost down as $15,000.00 in materials and $12,480.00 in labour costs. Refer 6.1.12 of his report. The labour has been assessed at 2 men x two weeks (192 hours) at $65.00 per hour.

110. The experts state either a pergola or a pavilion was to be built, but was not. I will allow the amount assessed by Mr Xue, $27,480.00 as it is based on an assessment of the cost of construction, rather than what at best appears to be the builder’s own assessment of cost at the time of pricing the work.

Front and back yard cleaning of concrete surfaces

111. This item of claim is rejected on the basis that the contract(s) that I have found did not include this work in the scope.

Stone surface to fountain

112. The 6 March 2021 agreement for additional work referred to at [14] of these reasons included:

‘Installing stone surface of the fountain $2500;’

113. The experts agree that this work is incomplete.

114. Mr Xue refers to the allowance of $2,500.00 as referred to above and states that the cost of incomplete work is $2,500.00. Mr Hall states that the capping requires completion. He states that $822.00 is required to complete the capping.

115. I prefer the evidence of Mr Hall who has made an estimate of the cost to complete, albeit that no details are provided. Mr Xue’s evidence on this item lacks logic.

116. I will find in the owner’s favour on this item in the sum of $822.00.

Section 48MA of the Home Building Act

117. Section 48MA of the Act states:

‘A court or tribunal determining a building claim involving an allegation of defective residential building work or specialist work by a party to the proceedings (the "responsible party" ) is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome.’

118. It is necessary that I consider this section for the purposes of deciding whether to make an order requiring the builder to undertake rectification work.

119. I find that it would not be appropriate to order the builder to undertake rectification work as the preferred outcome given that he is unlicensed and that on the owner’s evidence he has threatened her with violence.

120. The owner has claimed $120,000.00 which is the amount that she has paid the builder. I find that she is not entitled to that amount. The builder has carried out work in accordance with the contract. She is entitled to damages for breach of contract due to defective work and also to damages arising on the termination of the contract, for completion of the contractual scope of work subject to the principles that I have referred to above at [83] and [84].

121. Section 42(2) of the Act states:

‘The Tribunal can make an order even if it is not the order that the applicant asked for.’

122. In accordance with s42(2) I will make a damages award in favour of the owner.

123. The owner’s damages are calculated as follows:

Item

Amount

Defective work

AC cover conduit

$240.00

Joinery cover to kitchen ventilator

$1,515.00

Gas stove & associated work

$1,077.75

Front door weather seal

$1,020.00

Bathroom door binding

$402.00

Painting

$8,640.00 labour

$2,000.00 – material

$10,640.00 total

Switch covers

$960.00

Pain smeared blinds

$600.00

Plaster board ceiling

$3,584.00

Incomplete trim around window

$720.00

Step down & waterproofing

$2,344.00

No power points in laundry

$660.00 – labour

$200.00 - materials

Paint splatter – sandstone floors

$1,240.00

Flashing on top of window and glazing

$1,620.00

Total Defective work

$26,822.75

Incomplete work

Paving stones at main entrance

$574.00

Internal carpet

$9,563.00

Installation of laundry cabinets

$5,010.00

Replace fireplace

$6,207.60

Install canopy over back door

$3,000.00

Building a wooden pagoda

$27,480.00

Stone surface to fountain

$822.00

Incomplete work total

$52,656.60

Sub Total ($26,822.75 + $52,656.60)

$79,479.35

Preliminaries 10.3% on defective work

$2,762.74

Sub Total

$82,242.09

Builder’s margin 15% on defective work

$4,023.41

Total

$86,265.50

GST on defective work, preliminaries and margin (excluding materials)

$3,140.89

Total

$89,406.39

124. In compiling the above figures I omitted a contingency of 2.5% which was included by Mr Xue. There was no explanation as to why a contingency was included or why one was necessary. The work that is required to be completed does not have the appearance of complexity or difficulty such as to require a contingency.

125. The incomplete work component of the above figures is $52,656.60. As I have found the total price of the work that the builder contracted to carry out was $143,200.00 and the owner paid the builder $120,000.00. As found the owner is entitled to recover $52,656.60 in bringing the work to completion. Applying the principles referred to at [84] above, the builder will be entitled to a credit of $23,200.00 against the amount of $52,656.60 as the owner would have paid that amount had the builder completed the work.

126. As a result, the amount to be found in favour of the owner must be reduced by $23,200.00 to $66,206.39.

HB 21/43872

127. These proceedings are the builder’s cross application against the owner and her mother. His claim is stated to be for restitution for the work that he carried out at the owner’s residence.

128. He has claimed $178,100.00, presumably for restitution, an order that he does not have to pay $120,000.00, presumably the amount claimed by the owner in her application and an order that he carry out work to the value of $46,900.00 for defective and or incomplete work.

129. The builder has provided no evidence to support his restitution claim. As a result I dismiss that claim.

130. I have stated that I would not make an order in favour of the owner in the sum of $120,000.00, but would make an order for damages in her favour instead. The builder’s application for an order that he does not have to pay the owner $120,000.00 is addressed in that way.

131. I have also addressed the question of the builder carrying out rectification work or completion of incomplete work. I found that it was not appropriate to make order of that nature.

132. For the reasons provided above, the builder’s cross application is dismissed.

Costs

133. In the event that a party wishes to bring a costs application, the costs application must be lodged in the Tribunal and served on the costs respondent within 14 days of the date of the orders in these proceedings either attaching or referring to the documents relied upon in support of the application.

134. The costs respondent will have 14 days after the date he/she receives the application to lodge in the Tribunal and serve on the costs applicant its submissions, if any, in response to the costs application, such submissions either attaching or referring to the documents relied upon.

135. The parties must state in their submissions whether or not they consent to the costs application being determined on the basis of the parties written submissions and attached documents, if any, without the need for a hearing.

136. Subject to the parties’ submissions, the Tribunal will determine any costs application on the basis of the papers lodged in the Tribunal.

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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: 29 July 2022