Lucien v Mullally; Mullally v Lucien

Case •

[2021] NSWCATCD 145

•

25 November 2021

No judgment structure available for this case.

Civil and Administrative Tribunal


New South Wales

Medium Neutral Citation: Lucien v Mullally; Mullally v Lucien [2021] NSWCATCD 145
Hearing dates: 29 April 2021, 21 May 2021 and 15 September 2021
Date of orders: 25 November 2021
Decision date: 25 November 2021
Jurisdiction:Consumer and Commercial Division
Before:

G Blake AM SC, Senior Member

The decision made on 25 November 2021 is amended pursuant to s 63 of the Civil and Administrative Tribunal Act 2013 (NSW): (amendments are shown in bold type)
Decision:

(1)   The builder Anthony Allan Lucien is pay the owner Nerida Mullally the sum of $31,660.65 immediately.

(2)   If the parties are in agreement as to the costs of the two proceedings, then they shall provide proposed consent orders to the Tribunal within 14 days of the date of the orders in these reasons for decision.

(3)   If the parties are not in agreement as to the costs of the two proceedings, then:

(a)   if any party seeks a costs order, the applicant for costs (the costs applicant) must file and serve a costs application, submissions which shall address the question of whether an order should be made dispensing with a hearing and be limited to five pages, and any evidence in support, within 14 days of the date of the orders in these reasons for decision;

(b)   the respondent to the costs application is to file and serve any submissions which shall address the question of whether an order should be made dispensing with a hearing and be limited to five pages, and any evidence in opposition, within 14 days thereafter;

(c)   the costs applicant is to file any submissions in reply limited to three pages within 14 days after receipt of the submissions and any evidence of the respondent to the costs application.

If you do not receive the money payable to you as directed by this order, you can get a certified copy of this money order from NCAT. You can then register it with the Local Court to enforce the order. For more information about enforcing money orders, visit the NCAT website

Catchwords:

BUILDING AND CONSTRUCTION — Home Building Act 1989 (NSW) — Building dispute – Whether the builder breached the building contract by failing to proceed diligently with the works - Whether the builder breached the building contract by failing to rectify defective work – Whether the owner validly terminated the building contract under its terms - Whether the owner validly terminated the building contract under the general law - Whether the owner is entitled to damages for defective work, incomplete work and for delay - Whether the owner is entitled to restitution for monies paid on behalf of the builder - Whether the builder is entitled to a work order in respect of defective work – What is the amount of the money order to which the owner is entitled for damages and restitution - Whether the builder is entitled to a quantum meruit for work done at the request or for the benefit of the owner - What is the amount of the money order to which the builder is entitled for quantum meruit

Legislation Cited:

Home Building Act 1989 (NSW)

Home Building Regulation 2014 (NSW)

Work Health and Safety Act 2011 (NSW)

Cases Cited:

ACN 057 690 034 Pty Ltd v Mick Wykrota [2019] NSWSC 197

Angelopoulos v Sabatino (1995) 65 SASR 1

Brenner v First Artist Management Pty Ltd [1993] 2 VR 221

DCT Projects Pty Ltd v Champion Homes Sales Pty Ltd [2016] NSWCA 117

Health Care Complaints Commission v Ng [2015] NSWCATOD 85

Hometeam Constructions Pty Limited v McCauley [2005] NSWCA 303

Kitto v TGSBC Pty Ltd [2004] WABDT 28

Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61

Lawrence v Ciantar; Ciantar v Lawrence [2019] NSWSC 464

Leeda Projects Pty Ltd v Zeng (2020) 61 VR 384; [2020] VSCA 192

Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; [2008] HCA 27

Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; [1987] HCA 5

Toplace Pty Ltd v Rashidianfar [2021] NSWCATAP 235

Roude v Helwani [2020] NSWCA 310

Vasco Investments Ltd v Morgan Stanley Australia Ltd [2014] VSC 455

Woodward v D J & T L Mellross Pty Ltd [2018] NSWCATAP 179

Xtraordinary Constructions Pty Ltd v Luppino [2021] SASC 132

Texts Cited:

J Edelman, McGregor on Damages (21st edition, 2020, Thomson Reuters)

New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 6 May 2014

Rawlinsons Australian Construction Handbook (38th edition, 2020, Rawlinsons Publishing)

Category:Principal judgment
Parties:

HB 19/48969:
Anthony Allan Lucien (Applicant)
Nerida Mullally (Respondent)

HB 19/56785:
Nerida Mullally (Applicant)
Anthony Allan Lucien (Respondent)
Representation:

Counsel:
J Hyde (Anthony Allan Lucien)
M Fraser (Nerida Mullally)

Solicitors:
Wilkinson Building & Construction Lawyers Pty Ltd (Anthony Allan Lucien)
Fielding Robinson Lawyers until June 2021; AWB Lawyers from July 2021 (Nerida Mullally)
File Number(s): HB 19/48969; HB 19/56785
Publication restriction: Nil

REASONS FOR DECISION

Overview

  1. These two proceedings, which were heard together, involve disputes arising out of a contract to do alterations and additions (the works) at a property at Newtown (the site or the property according to the context) entered into on 4 October 2017 between the owner, Nerida Mullally, and the builder, Anthony Allan Lucien.

  2. I have decided that the owner is entitled to recover the sum of $27,700.15 from the builder.

The factual background

  1. The factual background of the two proceedings is not in dispute.

The parties and the property

  1. Since 19 November 2008, the builder has held contractor licence no. 210419C under the Home Building Act 1989 (NSW) (HB Act).

  2. At all relevant times, the builder has carried on business under the business names TAL Buiiding Solutions, and Smith & Sons Renovations & Extensions Maroubra.

  3. At all relevant times, the owner has been the owner of the property.

The contract

  1. On 4 October 2017, the parties executed the contract which was in the form of NSW Fair Trading "Home building contract for work over $20,000” and specified a contract price of $812,770.00 inclusive of GST, and comprised the following documents:

  1. NSW Fair Trading “Home Building contract for work over $20,000” general conditions (the general conditions);

  2. Special conditions: “8dfs Addendum to Home Building Contract for work over $20000-00” (the special conditions);

  3. Alexandra Kidd specifications dated 22 July 2016: “Documentation package 1190” (the AK specifications) comprising drawings with the following drawing number and title: AKD-001 (Ground Floor SOW Plan), AKD-002 (First Floor SOW Plan), AKD-003 (Ground Floor Lighting + Mechanical Layout), AKD-004 (First Floor Lighting + Mechanical Layout), AKD- 005 (Ground Floor Electrical Layout), AKD-006 (First Floor Electrical Layout), AKD-007 (Ground Floor Floor-Ceiling-Wall Finishes), AKD-008 (First Floor Floor-Ceiling-Wall Finishes), AKD-11X (Upholstered Bed Head Design Elevation), AKD-100 (Laundry Joinery), AKD-101 (Kitchen Plan Section), AKD-102 (Kitchen Elevation), AKD-103 (Kitchen Island Bench Elevation and Sections), AKD-104 (Ground Floor Bathroom Plan), AKD-105 (Ground Floor Bathroom Elevations), AKD-106 (First Floor Bathroom Plan Layout), AKD-107 (First Floor Bathroom Elevations), AKD-108 (First Floor Bathroom Elevations), AKD-109 (Living Room Entertainment Unit), AKD-110 (Wardrobe Guest Bed Section & Elevation), AKD-111 ( Storage Room Robe Section & Elevation), AKD-112 (Bedroom 1 Plan and Elevation), AKD-113 (1st Floor Bedroom 1 Robe Plan and Elevation), AKD-114 (Bedroom 2 Walk-In Robe Plans), AKD-115 (1st Floor Bedroom 2 Walk-In Robe Elevation-Sections), AKD-116 (New Stair Concept Details) and AKD-117 (Detail Page);

  4. Nerida Mullally specifications dated 29 September 2017 (the owner specifications);

  5. Paul Wilsher Design plans dated 22 September 2015 comprising drawings DA.1001, DA.1002, DA.1003, DA.1004, and DA.1005 (the PW plans);

  6. Camstruct Consulting Pty Ltd structural plans comprising drawings 15171- S01(A) dated 6 May 2016, 15171-S02(A) dated 6 May 2016, 15171-S03(A) dated 6 May 2016, 15171-S04(A) dated 6 May 2016, 15171-S05(B) dated 11 May 2016, 15171-S06(B) dated 10 May 2016, 15171-S07(A) dated 6 May 2016 and 15171-S08(A) dated 6 May 2016 (the CC plans);

  7. Camstruct Consulting Pty Ltd stormwater drainage plans dated 12 August 2016 comprising drawings 15171-SW01(1), 15171-SW01(1) and 15171-SW03(1);

  8. Paul Wilsher BASIX Report A234097 dated 4 September 2015;

  9. Quote - Smith & Sons dated 11 July 2017 (the 11 July 2017 quote);

  10. Alexandra Kidd specification documents dated July 2016 comprising the documents with the following number and heading: WC001 Wallcoverings, WD001 Timber Veneer, ST001 Stone, PT001 Paint, LF001 Light Fixtures, LA001 Laundry, LP001 Laminate, BA001 Kitchen, H01 Hardware, CT001 Ceramic Tiles, BA001 Bathroom, CA001 Carpet;

  11. Diagram of Sanitary Drainage provided by Sydney Water dated 9 January 2015;

  12. Acoustic Report prepared by DK Acoustics Pty Ltd dated 26 November 2015 (the acoustic report);

  13. Bay Street Gardens Landscape plan dated 5 July 2016 and 7 July 2016 (the BSG plan);

  14. Detail Survey prepared by RGM Property Surveys issued 12 February 2015.

The commencement of the works

  1. By no later than 1 March 2018, the builder commenced work under the contract.

Variations

  1. The builder made 16 claims for variations of the contract (variations # 1 to # 16). The owner signed variations # 1, #2, # 4, # 5 and #10, but did not sign variations # 3, # 6 to # 9, and # 11 to # 16.

Progress payments

  1. Following payment of the deposit, the builder made 7 claims for progress payments. The owner paid a total of $646,973.31 exclusive of GST and $711,670.62 inclusive of GST for progress claims # 1 to # 6, and disputed progress claim # 7.

The termination of the contract

  1. On 14 December 2018, the owner, following altercation with the builder, called the police who told him to leave the site, and changed the locks.

  2. On 17 December 2018, the owner and the builder agreed in a conversation that the builder would return to the site and complete the works.

  3. Between 18 January 2019 and 24 April 2019 there was correspondence between the builder’s lawyers and the owner’s lawyers which culminated in the following correspondence:

  1. the document dated 5 April 2019 entitled “owner’s notice of default” from the owner’s lawyers to the builder’s lawyers (the 5 April 2019 notice);

  2. the document dated 24 April 2019 entitled “owner’s notice of termination” from the owner’s lawyers to the builder’s lawyers enclosing (the 24 April 2019 notice);

  3. the letter 6 May 2019 from the builder’s lawyers to the owner’s lawyers asserting that the owner had repudiated the contract, and advising that the builder accepted that repudiation (the 6 May 2019 letter).

The procedural history

The HB 19/48969 proceedings

  1. On 31 October 2019, builder commenced proceedings HB 19/48969 against the owner by filing a home building application in which he claimed $142,031.73 in debt being the total of outstanding invoices and in quantum meruit together with interest under the contract, or damages for repudiation of the contract (the HB 19/48969 proceedings).

  2. On 31 October 2019, the builder filed points of claim in which he relevantly claimed:

  1. $111,192.27, being the total of the balance of progress claim # 7, and the final progress claim;

  2. $16,323.80 on a quantum meruit basis for all works done at the owner’s request;

  3. interest on overdue payments;

  4. damages for the wrongful termination and repudiation of the contract by the owner arising from the 24 April 2019 notice;

  5. costs.

  1. On 19 December 2019, the owner filed points of defence in which she relevantly claimed:

  1. she is not liable for the balance of progress claim # 7 after allowing credits for money she expended on behalf of the builder;

  2. she is not liable for the final progress claim being the builder has no entitlement to the payment;

  3. she is not liable for some of the variation claims;

  4. she did not wrongfully terminate and repudiate the contract, and that she validly terminated the contract in accordance with its terms;

  5. a set off against any monies found to be owing by her to the builder.

The HB 19/56785 proceedings

  1. On 19 December 2019, the owner commenced proceedings HB 19/56785 against the builder by filing a home building application in which she claimed $127,516.07 as damages for breach of the contract being the cost of completing the works or alternatively the diminution in value of the property due to the defects in the works, and the loss from the delay in completing the works (the HB 19/56785 proceedings).

  2. On 19 December 2019, the owner filed points of claim (which were amended in minor respects by amended points of claim filed on 14 October 2020) in which she relevantly claimed:

  1. the builder breached the contract by failing to diligently proceed with the works, failing to remedy defective work and failing to remove faulty or unsuitable materials;

  2. she terminated the contract in accordance with its terms when the builder failed to remedy those breaches after being given notice of them;

  3. the costs of the rectification of the works for breach of the statutory warranties in s 18B(1) of the HB Act;

  4. alternatively, the diminution in value of the property due to the defects in the works;

  5. damages for delay;

  6. damages for breach of the contract, including the costs of the completion of the works;

  7. interest;

  8. costs;

  9. an order that the builder provide to her all certificates in relation to the works carried out by the builder and which are necessary for the owner to obtain an occupation certificate in respect of the property.

  1. On 22 September 2020, the builder filed points of defence in which he relevantly claimed:

  1. he was entitled to extensions of time totalling 305 business days and denied that he failed to proceed diligently with the works;

  2. the owner was not entitled to terminate the contract;

  3. the owner has waived her rights to enforce the statutory warranties in respect minor defects because of her wrongful termination of the contract;

  4. the owner cannot recover for the cost of incomplete works because of her wrongful termination of the contract;

  5. the owner is not entitled to any certificates in relation to the works until final payment is made to him, or the owner has waived such an entitlement.

The hearing

  1. On 29 April 2021, 21 May 2021 and 15 September 2021, the hearing of the two proceedings took place. The first two days were conducted by audio-visual link, and the third day was conducted by telephone.

  2. The builder tendered the following evidence which was admitted without objection:

  1. the witness statement of himself dated 31 October 2019 and the accompanying exhibit (Ex B1) (the Lucien witness statement);

  2. the affidavit of himself sworn on 12 September 2020 and the accompanying exhibit (Ex B2) (the first Lucien affidavit);

  3. the affidavit of himself sworn on 10 December 2020 (Ex B3);

  4. the affidavit of Michael Wilkinson (Mr Wilkinson), the solicitor of the builder, sworn on 9 September 2020 (Ex B4);

  5. the report of Anthony Burton (Mr Burton) dated 6 September 2020 (Ex B5) (the Burton report);

  6. the report of Kanin Mungkarndee (Mr Mungkarndee) dated 14 September 2020 (Ex B6) (the Mungkarndee report);

  7. the report of Peter Lee (Mr Lee) dated 14 December 2020 (Ex B7) (the Lee report) which included the amended scott schedule dated 9 November of the parties (the amended scott schedule).

  1. The owner tendered the following evidence which was admitted without objection:

  1. the affidavit of herself sworn on 3 April 2020 and the accompanying exhibits (Ex O1) (the first Mullally affidavit);

  2. the affidavit of herself sworn on 13 October 2020 and the accompanying exhibit (Ex O2) (the second Mullally affidavit);

  3. the report of Adrian Jamieson (Mr Jamieson) dated 8 April 2020 (Ex O3) (the first Jamieson report);

  4. the report of Mr Jamieson dated 14 October 2020 (Ex O4) (the second Jamieson report);

  5. the report of Scott Clarkson (Mr Clarkson) dated 29 September 2020 (Ex O5) (the Clarkson report);

  6. the report of Hilary Pearce (Ms Pearce) dated 5 March 2020 (Ex O6) (the Pearce report);

  7. the report of Chris Zervos (Ms Zervos) dated 27 March 2020 (Ex O7) (the Zervos report);

  8. the report of Aaron Kyle (Mr Kyle) dated 9 October 2020 (Ex O8) (the Kyle report);

  9. the affidavit of Mr Kyle affirmed on 12 October 2020 (Ex O9);

  10. the report of Sebastian Zakrzewski (Mr Zakrzewski) dated 13 March 2020 (Ex O10) (the Zakrzewski report);

  11. document headed “Quantum of Variations and Additional Work” received by the Tribunal on 13 May 2021 (Ex O11);

  12. an enlargement of a plan of the property in the Kyle report (Ex O11);

  13. three photographs of the laundry (Ex O12).

  1. On 29 April 2020, the owner sought to tender the affidavit of herself sworn on 15 April 2021 and the accompanying exhibit (the third Mullally affidavit) (MFI 1). I rejected the tender and delivered short oral reasons.

  2. The builder and the owner jointly tendered the following evidence:

  1. the joint report of Ms Pearce and Mr Mungkarndee dated 27 October 2020 (Ex J1);

  2. the joint report of Messrs Burton and Clarkson dated 25 March 2021, and Messrs Jamieson and Lee dated 13 April 2021 (Ex J2) (the joint building report);

  3. the builder’s summary of claims received by the Tribunal on 20 May 2021 as corrected (Ex J3);

  4. the owner’s summary of claims received by the Tribunal on 20 May 2021 as corrected (Ex J4).

  1. The builder and the owner gave oral evidence. Messrs Burton, Clarkson, Kyle, Jamieson and Lee gave oral evidence concurrently.

  2. The owner’s claims were set out in the amended scott schedule as follows:

  1. the cost of rectifying defective works: “Part 1 – Defective Works” (items 1 to 18);

  2. the cost of completing incomplete works: - “Part 3 – Incomplete Works (as at termination)” (items 39 to 73); “Part 5 – Work within Builder’s scope paid for by Owner after termination (i.e. cost to complete)” (items 82 to 102);

  3. the amount paid by the owner on behalf of the builder: “Part 4 – Work within Builder’s scope paid for by Owner prior to termination” (items 74 to 81);

  4. the loss of the owner by reason of the delay of the builder: “Part 6 – delay” (item 103).

  1. The builder’s claims were set out in the amended scott schedule as follows: “Part 2 – Variations & Additional Work” (items 19 to 37).

  2. During the hearing the parties advised their position on the following issues:

  1. as to defective works (items 1-18 of the amended scott schedule):

  1. they agreed that items 2.1, 2.2, 3, 4, 5.1, 5.2, 6, 7, 8, 9, 10, 11.3, 13, and 15, and part of item 14, are defective works and the reasonable cost of their rectification is $17,200.00 exclusive of GST;

  2. they agreed that items 1.1 and 1.2 are not defective works;

  3. they disagreed as to whether 11.4 and part of item 14 are defective works;

  4. they agreed that items 11.1 and 12.1 are defective works, but disagreed as to the reasonable cost of their rectification;

  5. they disagreed as to whether the owner is entitled to recover any amount for items 16-18 (preliminaries, overheads and profit of 15%, and contingency of 15%);

  1. as to variations and additional works (items 19-37 of the amended scott schedule from which variation # 9 been omitted):

  1. they agreed that the builder is entitled to claim items 19, 20, 22, 23, 24, 25, 26, and 27 (variations # 1, # 2, # 4, # 5, #6, # 7, # 8, and #10) as a variation and the total amount due is $14,727.21 exclusive of GST;

  2. they agreed that the owner is entitled to claim item 28 (variation # 11) as a variation and the total amount to be credited is $6,865.00 exclusive of GST;

  3. the builder did not press items 21, 29 and 33 (variations # 3, # 12 and # 16);

  4. they disagreed as to whether the builder is entitled to claim items 30 to 32 (variations # 13 to # 15) as a variation;

  5. the builder reduced the amount claimed for item 32 (variation # 15) to $400.00 exclusive of GST;

  6. they disagreed as to whether the builder is entitled to claim items 34 to 37 as additional works;

  1. by reason of the payment of agreed variations the builder was seeking on order for the payment of the amount claimed for items 24, 30 to 32 and 34 to 37 (variations # 6, and # 13 to # 15, and additional works);

  1. as to incomplete works as at 24 April 2019 (items 39-73 of the amended scott schedule):

  1. the owner did not press items 41, 53 (first), 60 and 61;

  2. they agreed that items 44, 46, 51, 52, 57, 58, 59, 64, 69, 70 and 73 are incomplete works and the reasonable cost of their completion is $3,575.00 exclusive of GST;

  1. as to works within the scope of the contract paid by the owner to third parties prior to 24 April 2019 (items 74-81 of the amended scott schedule):

  1. they agreed that the owner is entitled to a credit of $6,810.00 exclusive of GST for item 77;

  2. they agreed that the owner is entitled to a credit of $6,545.45 exclusive of GST for item 78;

  3. they agreed that the owner is not entitled to a credit for item 81;

  4. they disagreed as to whether the owner is entitled to a credit for the remaining items;

  1. as to works within the scope of the contract paid by the owner to third parties after 24 April 2019 (items 82-102 of the amended scott schedule):

  1. they agreed that the owner is entitled to $6,251.82 exclusive of GST for items 82, 85 and 102;

  2. they agreed that the owner is entitled to a credit for items 88, 92, and 100, but disagree as to the amount;

  3. they disagreed as to whether the owner is entitled to a credit for the remaining items;

  1. as to delay costs (item 103 of the amended scott schedule), they disagreed as to whether the owner is entitled to the claimed loss of $151,500.00.

  1. On 15 September 2021, the owner’s lawyers sent an email to the Tribunal attaching a letter dated 13 May 2021 from the owner’s lawyers to the builder’s lawyers (the 13 May 2021 letter) enclosing a document headed “Contract Inclusions” (the Contract Inclusions document) and advising that the owner proposed to tender the 13 May 2021 letter and the Contract Inclusions document. As these documents were not tendered and were the subject of submissions by the builder I have marked them (MFI 2).

  2. The builder relied on the following written submissions:

  1. the builder’s submissions dated 16 July 2021 (the builder’s 16 July 2021 submissions);

  2. the builder’s submissions in reply dated 20 August 2021 (the builder’s 20 August 2021 submissions).

  1. The owner relied on the following written submissions:

  1. the owner’s submissions on issues of law received on 21 May 2021 (the owner’s 21 May 2021 submissions);

  2. the owner’s submissions dated 19 July 2021 (the owner’s 19 July 2021 submissions);

  3. the owner’s submissions in reply dated 28 July 2021 (the owner’s 28 July 2021 submissions);

  4. the owner’s submissions in reply dated 15 September 2021 to the builder’s 20 August 2021 submissions (the owner’s 15 September 2021 submissions).

  1. Each of the builder and the owner made oral submissions.

  2. At the conclusion of the hearing I made procedural directions for the provision of further submissions by the parties and reserved my decision.

  3. The owner provided submissions dated 28 September 2021 regarding items 65, 79, 80 and 88 of the amended scott schedule (the owner’s 28 September 2021 submissions).

  4. The builder provided the following submissions:

  1. the builder’s submissions in reply dated 29 September 2021 to the owner’s 15 September 2021 submissions (the builder’s 29 September 2021 submissions);

  2. the builder’s response dated 5 October 2021 to the owner’s 28 September 2021 submissions (the builder’s 5 October 2021 submissions).

The jurisdiction of the Tribunal

The applicable provisions of the HB Act

  1. Part 2C (ss 18A-18G) contains provisions dealing with statutory warranties. Section 18B deals with warranties as to residential building work, and relevantly provides:

18B Warranties as to residential building work

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

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

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

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

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

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

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

…

  1. Section 18E deals with proceedings for breach of warranty, and relevantly provides:

18E Proceedings for breach of warranty

(1) Proceedings for a breach of a statutory warranty must be commenced in accordance with the following provisions—

(a) proceedings must be commenced before the end of the warranty period for the breach,

(b) the warranty period is 6 years for a breach that results in a major defect in residential building work or 2 years in any other case,

(c) the warranty period starts on completion of the work to which it relates (but this does not prevent proceedings from being commenced before completion of the work),

…

  1. Part 3A contains provisions for resolving building disputes and building claims. Division 1 contains definitions, and relevantly provides:

48A Definitions

(1) In this Part—

building claim means a claim for—

(a) the payment of a specified sum of money, or

…

that arises from a supply of building goods or services whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services, but does not include a claim that the regulations declare not to be a building claim.

…

building goods or services means goods or services supplied for or in connection with the carrying out of residential building work or specialist work, being goods or services—

(a) supplied by the person who contracts to do, or otherwise does, that work, or

…

goods, services and supply have the same meanings as in Part 6A of the Fair Trading Act 1987.

  1. Part 3A Division 4 (ss 48K-48MA) contains the provision dealing with the jurisdiction of the Tribunal in relation to building claims. Section 48K relevantly provides:

48K Jurisdiction of Tribunal in relation to building claims

(1) The Tribunal has jurisdiction to hear and determine any building claim brought before it in accordance with this Part in which the amount claimed does not exceed $500,000 (or any other higher or lower figure prescribed by the regulations).

…

(3) The Tribunal does not have jurisdiction in respect of a building claim relating to building goods or services that have been supplied to or for the claimant if the date on which the claim was lodged is more than 3 years after the date on which the supply was made (or, if made in instalments, the date on which the supply was last made).

…

(7) The Tribunal does not have jurisdiction in respect of a building claim arising from a breach of a statutory warranty implied under Part 2C if the date on which the claim is lodged is after the end of the period within which proceedings for a breach of the statutory warranty must be commenced (as provided by section 18E).

  1. Schedule 1 contains definitions and other interpretative provisions. Clause 2 contains a definition of “residential building work”, and relevantly provides:

2 Definition of “residential building work”

(1) In this Act, residential building work means any work involved in, or involved in co-ordinating or supervising any work involved in—

…

(b) the making of alterations or additions to a dwelling, or

(c) the repairing, renovation, decoration or protective treatment of a dwelling.

…

  1. Clause 3 contains a definition of “dwelling”, and relevantly provides:

3 Definition of “dwelling”

(1) In this Act, dwelling means a building or portion of a building that is designed, constructed or adapted for use as a residence (such as a detached or semi-detached house, transportable house, terrace or town house, duplex, villa-home, strata or company title home unit or residential flat).

…

Consideration

  1. I am satisfied that the Tribunal has jurisdiction to determine the proceedings for the following reasons:

  1. the claims of the builder against the owner, and the owner against the builder, which is each a building claim within the meaning of that expression in s 48A of the HB Act when read with the definitions of building services and supply in s 48A and the definition of residential building work and dwelling in Sch 1 cll 2(1)(b) and (c) and 3(1) of the HB Act, is for an amount within the jurisdiction limit of $500,000 of the Tribunal under s 48K(1) of the HB Act;

  2. as to the claim of the builder against the owner, the HB 19/48969 proceedings were commenced within the period 3 years since the supply of building services as required by s 48K(3) of the HB Act;

  3. as to the claim of the owner against the builder, the HB 19/56785 proceedings were commenced within the period 2 years since the last work was performed by the builder as required by s 18E(1)(c) of the HB Act, and so the jurisdiction of the Tribunal is not excluded pursuant to s 48K(7) of the HB Act.

The issues

  1. Following the concessions made by the parties, the following issues remained for determination:

  1. what is the legal characterisation and consequences of the events on 14 and 17 December 2018;

  2. whether the builder failed to proceed with the works diligently in breach of the contract as at 5 April 2019;

  3. whether the builder failed to remedy defective work or remove faulty or unsuitable materials in breach of the contract as at 5 April 2019;

  4. whether the owner validly terminated the contract under its terms;

  5. whether the owner validly terminated the contract under the general law;

  6. whether the works undertaken by the builder were defective, and if so the reasonable cost of rectifying the defects;

  7. whether the builder ought to be ordered to pay damages rather than rectify the defective work;

  8. whether the works undertaken by the builder were incomplete, and if so the damages recoverable by the owner;

  9. whether the owner paid for work to be undertaken by the builder, and if so is entitled to restitution of the amount paid;

  10. whether the owner is entitled to damages for damages for delay;

  11. whether the builder is entitled to be paid for variations and additional works, and if so what amount;

  12. whether any, and if so what, costs order should be made in respect of the two proceedings.

  1. Neither the owner in the owner’s 19 July 2021 submissions and her oral submissions nor the builder in the builder’s 16 July 2021 submissions and his oral submissions made any submissions about progress claim # 9. In these circumstances I have not determined whether the builder became entitled to be paid for progress claim # 9.

  2. Before determining these issues it is necessary to make findings about the reliability and credibility of the builder and the owner, whose evidence is critical to the determination of these issues.

The reliability and credibility of the builder and the owner

The relevant legal principles

  1. In Health Care Complaints Commission v Ng [2015] NSWCATOD 85 (Ng) at [128]-[130] the Tribunal set out the following observations on assessing the credit of a witness:

“[128] We found the recent discussion by Sackar J in Campbell v Campbell [2015] NSWSC 784 at [73] to [79] to be of considerable assistance. To paraphrase his Honour:

(1)   Where a trial judge is faced with a stark choice between irreconcilable accounts, the credibility of the parties’ testimony, the trial judge’s assessment of the character of witnesses and the manner in which the witnesses give evidence is of primary importance: McGraddie v McGraddie [2013] UKSC 58; [2013] 1 WLR 2477.

(2)   The rational resolution of an issue involving the credibility of witnesses will require reference to, and analysis of, any evidence independent of the parties which is apt to cast light on the probabilities of the situation: Camden v McKenzie [2007] QCA 136; [2008] 1 Qd R 39 at [34] Keane JA; referred to with approval by Leeming JA in New South Wales v Hunt [2014] NSWCA 47 at [56].

(3)   A court, in cases involving events which occurred long before the litigation, usually prefers to rely upon contemporaneous, or near contemporaneous, documents, which will often provide valuable and, usually, more revealing, information than what may be flawed attempts at recollection of those facts by persons with an interest in the outcome of the litigation: Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] FCA 1200 at [1247]. Greater weight is usually accorded to such documents, as often they provide a safer repository of reliable fact, particularly when it is clear that they have been prepared by a person with no reason to misstate those facts in the documents and where there is no suggestion that the documents are other than genuine: Hughes v St Barbara Mines Ltd [No 4] [2010] WASC 160, per Kenneth Martin J, at [157].

[129] His Honour also referred at [75] to the dissenting speech of Lord Pearce in Onassis v Vergottis [1968] 2 Lloyd’s Rep 403, who stated at 431:

a witness, however honest, rarely persuades a Judge that his present recollection is preferable to that which was taken down in writing immediately after the accident occurred. Therefore, contemporary documents are always of the utmost importance. And lastly, although the honest witness believes he heard or saw this or that, is it so improbable that it is on balance more likely that he was mistaken? On this point it is essential that the balance of probability is put correctly into the scales in weighing the credibility of a witness, and motive is one aspect of probability. All these problems compendiously are entailed when a Judge assesses the credibility of a witness; they are all part of one judicial process and in the process contemporary documents and admitted or incontrovertible facts and probabilities must play their proper part.”

[130] The credibility of a witness and his, or her, veracity may also be tested by reference to the objective facts proved independently of the evidence given, in particular by reference to the documents in the case, by paying particular regard to his, or her, motives, and to the overall probabilities: Armagas Ltd v Mundogas S.A. (The “Ocean Frost”) [1985] 1 Lloyd’s Rep 1 at [57]; In the matter of Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547 at [7].”

The builder

  1. I have some reservations about the reliability and credibility of the builder. While cross-examination did not undermine his evidence in any substantial way, his evidence was often vague and lacked precision where it would have been expected he had detailed knowledge of the facts in dispute.

The owner

  1. I similarly have some reservations about the reliability and credibility of the owner. While cross-examination did not undermine her evidence in any substantial way, on several occasions she made speeches in support of her case rather than confining herself to answering the question.

Conclusion

  1. Where there are irreconcilable accounts in the evidence of the builder and the owner, I have applied the principles in Ng at [128]-[130] in weighing their evidence and in deciding which account I prefer.

What is the legal characterisation and consequences of the events on 14 and 17 December 2018?

Introduction

  1. There is no dispute between the parties that:

  1. on 14 December 2018, the police directed the builder to leave the site;

  2. on 17 December 2018, the owner and the builder agreed that they would continue to perform their obligations under the contract.

  1. There is disagreement between the parties as to the circumstances in which the police directed the builder to leave the site, and consequently the legal characterisation and consequences of the events on 14 and 17 December 2018.

  2. In his opening the builder contended that on 14 December 2018 the owner terminated the contract, and on 18 December 2018 the owner reaffirmed terminated the contract. On the basis of this contention the builder further contended that under clauses 5 and 6 of the general conditions the time for commencement began on, and completion began to run from, 18 December 2018.

The evidence

  1. The evidence relevant to this issue is set out in the applicable contractual terms and correspondence between the parties, the first Mullally affidavit, the first Lucien affidavit, and the oral evidence of the builder and the owner.

The applicable contractual terms

  1. Clause 7 of the general conditions relevantly provided:

“Extension of time

If the work is delayed by:

…

•   a suspension of the work by contractor under Clause 24, or

•   any other matter, cause or thing beyond the control of the contractor, the contractor will be entitled to a reasonable extension of time to complete the work. …

…

  1. Clause 19 of the general conditions relevantly provided:

“Access to site and materials handling

…

The contractor must allow the owner … access to the site to view and inspect the work in progress.

The owner must allow the contractor, and any employee or sub-contractor of the contractor, access to the site during the currency of this contract.

The owner or the owner's representative must communicate and deal with the contractor personally or with such person nominated by the contractor as the contractor's authorised representative.

The owner must not give directions to the contractor's employees or sub-contractors.”

  1. Clause 24 of the general conditions relevantly provided:

“Suspension of work by contractor

If the owner, without reasonable and substantial cause:

…

•   denies the contractor or the contractor's sub-contractors access to the site so as to prevent the work from proceeding, …,

the contractor may, without prejudice to any other rights under the contract, suspend the work by giving written notice to the owner in accordance with Clause 28 (Giving of Notices) specifying the reason.”

  1. Document WD001 of the AK specifications specifies that the timber flooring to the ground floor level and staircase is to have a 20mm thickness.

The correspondence between the parties

  1. On 16 December 2018 at 4.53pm, the owner in an email to Mr Wilkinson (the 16 December 2018 at 4.53pm email):

  1. set out an account of verbal threats made by the builder to her on 14 December 2018:

“If you were a man I would punch you in the face.”

“I will make sure that you never get to move into your house. I will smash it all down.”

as a result of which:

  1. she advised him the build was over, and instructed him to leave the property;

  2. she called the police who when they attended the site instructed two employees of the builder to leave the property;

  3. she subsequently changed the locks to the property;

  1. advised that she was willing to meet with the builder to discuss “what possible (if any) grounds exist for the build to proceed”.

  1. On 18 December 2018 at 2.24pm, the owner in an email to Mr Wilkinson advised that following the meeting on the previous day she and the builder had a telephone conversation in which they agreed to complete the build, and that site keys had been made available at 6.00am on that day (the 18 December 2018 at 2.24pm email).

The first Mullally affidavit

  1. In the first Mullally affidavit the owner sets out the following account of the events on 14 December 2018 and their aftermath (at [35]-[44] and [119]-[121]):

“35   On Friday 14 December 2018 I attended the Property to see how the Works were going.

36   The Builder was on site with the site foreman, Mr Tengstrom. At approximately 7:15am I said to the Builder and Mr Tengstrom:

“The planks can't be laid this morning, as you are installing the planks incorrectly. Fixing the planks on battens at 450mm centres over a concrete slab is the correct method of installation for 19mm planks, however the planks to be installed are 16mm and these require a different method of fixing."

37   I also said words to the following effect:

“I am concerned as the moisture barrier which had been installed over five weeks ago has become compromised by tears due to tradesmen walking on it. Also, the plasterers are working at the same time as the painters, so the painting job is going to be compromised by gyprock dust. ”

38   The discussion escalated into an argument culminating in the Builder raising his clenched fist to my face and saying words to the following effect:

“If you were a man I would punch you in the face”.

39   I was scared and stepped away from the Builder and said words to the following effect:

“Leave my properly."

40   The Builder refused to leave the Property and said words to the following effect of:

“I will make sure that you never get to move into your house. I will smash it all down".

41   At this point it was 7:26am and I phoned the police and reported the Builder's intimidating and threatening behaviour. The Builder was standing near me whilst I was on the phone to the police making the report, and he said words to the following effect:

“You have no witnesses”.

42   The police said:

“We will attend your property.”

43   As I was in fear for my safety, I waited outside my house until the police attended at 8:12am. The police attended my property and discovered that the Builder had left the premises via the back door prior to their arrival.

44   The police spoke to the two employees who were left on site (Mr Tengstrom & Mr Archer), took their details and instructed them to leave my property. The police advised me to change the locks to my property. The police left and advised if there was any further trouble to contact them immediately. The police report number for this incident is E72344381. …

…

119   After the police intervention (refer to paragraphs 35 to 45 above) on 14 December 2018 a meeting was held on 17 December 2018 with the Builder and his solicitor present. The Builder’s solicitor gave an undertaking that he would assist in the resolution of ail existing and any future issues (if any) and confirmed that after the meeting he would ensure the Builder provided:

a.   A current schedule of all outstanding works and (realistic) estimated dates of completion noted beside each item;

b.   A copy of the invoice/s Mr Lucien received for all roof glazing and skylights;

c.   A copy of Mr Lucien’s purchase order (including specifications) for the Vergola insert;

d.   A copy of Mr Lucien’s purchase order (including specifications) for the Hella Venetian blind;

e.   Notification of the intended date that the water leak in the upstairs bathroom roof, through the light fitting, will be rectified;

f.   Notification of the intended date that the Rinnai hot water system will be semi- recessed into the wall; and

g.   Notification that the plastering has been completed.

120   The Builder’s solicitor said to me words to the following effect (whilst looking at the list of documents referred to at paragraph 119(a) - (g) out and given to him):

“I will undertake to keep the build on track and ensure that you get the copies of the outstanding documents you requested. We are going to get the build done ....If there are any future issues contact me and I will resolve it."

121   I know the special meaning of the word “undertake” when a solicitor says it. The use of that word made me feel very relieved and optimistic that my build would be back on track and kept on track. Because of this I decided to continue the build with the Builder. After the meeting I phoned the builder and advised him of my decision to continue and that I would put the keys to the site in the letterbox.”

The first Lucien affidavit

  1. In the first Lucien affidavit the builder sets out the following account of the events on 14 December 2018 and their aftermath (at [35]-[44] and [119]-[121]):

“35   In relation paragraph 35, I agree that the owner attend the property.

36   In relation to paragraph 36. I say in reply that in addition to Mr. Tegstrom, Warren Archer, the painting contractors, and the plastering contractor were also on site. I agree that the owner may have made a statement to that effect. The boards were not being laid as the owner had changed her mind after the battens had been fixed for 19mm boards, giving rise to another variation to the contract. The conversation continued to the following effect:

I said: “Nerida there will need to be a variation because you have changed the boards from the 19mm boards you had selected, and we have laid the battens for. Now you want a narrower width with 16mm bords, and we now need to lift up all the battens and relay them to fix the narrow 16mm floorboards to.”

Nerida said: “Your fucking full of shit, you’re a fucking idiot, your useless, you’re a wog...”

I said: “Your comments are inappropriate ...”

37   In relation to paragraph 37, I do not recall this being stated by the owner.

38   In relation to paragraph 38, I make no comment.

39   In relation to paragraph 39, I agree.

40   In relation to paragraph 40, I deny the statement as alleged, and say in reply that I said to the following effect:

“We have a contract and work to do, please leave us to get on with our work.”

41   In relation to paragraph 41, I agree the owner called the police, I disagree that with the alleged conversation and say in reply that I said to the following effect that:

“We have a contact and work to do, please leave us to get on with our work, your breaching the contract and you can’t behave like this.”

42   In relation to paragraph 42, I make no comment.

43   In relation to paragraph 43, I make no comment, other than that I had a doctor’s appointment to attend to that morning.

44   In relation to paragraph 44, I make no comment.

…

119   In relation to paragraph 119, I agree we had a meeting on that date at the neighbour’s house opposite the owner’s house. I do not recall the list of documents being provided to either myself or my solicitor, Mr. Wilkinson as the Owner suggests. I also do not recall Mr Wilkinson providing an undertaking that he would ensure that I would provide all the documents or do the things she has referred to at paragraphs 119(a) to (g) of her affidavit. I say this because it was the 17th of December 2018, and the Christmas shutdown was due to start on Friday 21st December 2018, and the completion of the items the owner has listed at paragraph 119(a) to 119 (g) would be contingent on the suppliers and sub-contractors availability to provide goods and services required to complete the works, and their time frames required to do this, which given the impending Christmas shut down was an issue and could never be achieved. I recall stating to the owner at this meeting to the following effect that:

I said: Nerida, “I will have to speak to the suppliers and sub-contractors about when they will able to provide the materials we need, because they are all about to shut down for Christmas and I don’t know when they will be back to work, and when they will be able to provide the goods and services we need. It’s simply out of my control because of the Christmas shutdown.”

120   In relation to paragraph 120. I do not recall Mr. Wilkinson stating this to the owner at this meeting.

121   In relation to paragraph 121, I say that I do not recall Mr. Wilkinson providing an undertaking as suggested by the owner, and in relation to the telephone call, the owner left me a message on my phone sometime later that night after the meeting and I telephoned her back and a conversation to the following effect took place:

Nerida said: “Hi Tony, I promise I won’t micro-manage the job, I’ll leave you to run it and I won’t keep coming onto the site. I’ll just let you finish the works.”

I said: “Thankyou Nerida I really appreciate it.”

Nerida said: “I can leave the keys in the letter box for you to access the site again in the morning.”

I said: “Ok, that would be good, the trades have all finished up on site for now, and everyone has finished for the year, but we will come to site tomorrow, collect the keys and make sure everything is secure.”

The oral evidence of the builder

  1. The builder gave the following oral evidence:

  1. Mr Greg Tengstrom (Mr Tengstrom) was the site supervisor, and there was nothing preventing him from giving a statement (Tcpt, 21 May 2021, p 39(42)-(47));

  2. when the owner attended the site on 14 December 2018 he was doing the batons (Tcpt, 21 May 2021, p 81(18)-(24));

  3. at 14 December 2018 the 16mm boards were on the site and that the only boards that were delivered to the site were 16mm (Tcpt, 21 May 2021, p 82(30)-(41));

  4. he denied losing his temper and saying to the owner “that she’d never get to move into her house and (he was) going to smash it all down”, and agreed he said to the owner “If you were a man I would punch you in the face” after she yelled obscenities at him (Tcpt, 21 May 2021, pp 83(25)-84(5)).

The oral evidence of the owner

  1. The owner gave the following evidence:

  1. she accepted that the builder possibly said the words firstly attributed to him in the first Lucien affidavit at [36];

  2. she denied that she said the words attributed to her and the builder said the words secondly attributed to him in the first Lucien affidavit at [36].

The submissions

  1. In the owner’s 19 July 2021 submissions and her oral submissions the owner makes the following submissions:

  1. the Tribunal would prefer her evidence;

  2. by his conduct on 14 December 2018 of threatening to deprive her of the benefit of the contract and threatening her person and her property, the builder repudiated the contract;

  3. on 14 December 2018, she elected to affirm the contract. This election did not result in a new contract arising.

  1. In the builder’s 16 July 2021 submissions, the builder’s 20 August 2021 submissions and his oral submissions the builder makes the following submissions:

  1. on 14 December 2018, the owner wrongfully suspended the works;

  2. on 18 December 2018, the owner affirmed the contract;

  3. the owner's wrongful suspension of the works on 14 December 2018 made time at large under the contract after this date, relying on DCT Projects Pty Ltd v Champion Homes Sales Pty Ltd [2016] NSWCA 117 (DCT Projects) at [44].

Consideration

  1. Having regard to the 16 December 2018 at 4.53pm email, I prefer the account of the owner as to the events that occurred on 14 December 2018. There was no contemporaneous evidence which supports the builder’s account of these events.

  2. I am not satisfied that the builder by his threats repudiated the contract. The threatening words of the builder occurred in the context of a heated argument between the owner and the builder. While the owner had been entitled to be on the site pursuant to cl 19 of the general conditions, she had no entitlement to issue any directions as to how the works were performed as set out in the first Mullally affidavit at [36], particularly in circumstances where she had not approved variation # 10. While I accept that “(t)he discussion escalated into an argument”, the evidence is silent as to what words were said and by whom. It was the police who directed Mr Tengstrom and Mr Archer to leave the property. It appears from the 16 December 2018 at 4.53pm email that this direction was given shortly after 8.12am on 14 December 2018.

  3. It appears from the 16 December 2018 at 4.53pm email that the locks to the house on the site were changed at the request of the owner at 5.45pm on 14 December 2018. The changing of locks did not constitute a termination or purported termination of the contract by the owner as she in the 16 December 2018 at 4.53pm email indicated her willingness to meet with the builder to discuss the possible resumption of the works.

  4. The builder never refused to perform any further work under the contract on 14 December 2018. It follows that the agreement reached between the parties on 17 December 2018 which is recorded in the 18 December 2018 at 2.24pm email was not an affirmation of the contract by the owner following a breach by the builder, but their mutual acceptance that they continued to be bound by the contract.

  5. If, contrary to my finding in [67] above, the builder by his threats repudiated the contract, then the contract was never terminated because the owner affirmed the contract in her conversation with the builder on 17 December 2018 which is referred to in the 18 December 2018 at 2.24pm email.

  6. It is unnecessary to determine whether the direction of the police for Mr Tengstrom and Mr Archer to leave the property on 14 December 2018 constituted an “other matter, cause or thing beyond the control of the contractor” within the meaning of that expression in cl 7 of the general conditions entitling the builder to an extension of time under cl 7 because the builder did not seek an extension of time within 10 business days of 14 December 2018 as specified in cl 7.

  7. The changing of the locks by the owner on 14 December 2018 did not entitle the builder to an extension of time under in cl 7 of the general conditions because the builder did not suspend work in accordance with cl 24 of the general conditions on the ground of being denied access to the site so as to prevent the work from proceeding.

  8. I am not satisfied that the concession in DCT Projects at [44] that the previous delays were not to be taken into account arising out of the parties entry into a modification agreement affirming the contract between them has any application in the circumstances of the events of 14 December 2018 and their aftermath. As found in [69] above, there was no affirmation of the contract. Further, as will be seen the parties proceeded on the basis that the provisions of the contract dealing with the time of completion of the works remained binding on them.

Whether the builder failed to proceed with the works diligently in breach of the contract as at 5 April 2019

Introduction

  1. The owner’s claim that the builder failed to proceed with the works diligently in breach of cl 6 of the general conditions as set out in the 5 April 2019 notice is based on the following four circumstances:

  1. the extended time for completion was 11 December 2018, but the works were not complete as at 5 April 2020;

  2. the builder failed to notify the owner of the causes and estimated lengths of any delays within the specified time so as to comply with the requirements for extension of time claims under cl 7 of the general conditions;

  3. the builder had been sporadically carrying out the works since January 2019 In a piece-meal fashion;

  4. the builder had failed to communicate directly with the owner since 21 February 2019, insisting that all communication be through the builder's solicitor, and this had caused further delays to the works.

  1. In the course of the hearing the focus was on the delay by the builder from 11 December 2018 as constituting a breach of cl 6 of the general conditions.

  2. The builder in the 14 variations submitted to the owner which have been accepted or are in dispute (variations # 12 and # 16 are not being pressed by the builder) specified the following number of days for delay resulting from the variation:

  1. variations # 1 dated 21 May 2018, # 2 dated 28 June 2018, # 4 and # 5 dated 9 August 2018, # 6 and # 7 dated 9 August 2018, # 9 dated 12 September 2018, and # 11 dated 22 January 2019: 0 days;

  2. variation # 10 dated 19 December 2018: 1 day;

  3. variations # 8 dated 12 September 2018, and # 13 and # 15 dated 19 March 2019: 2 days;

  4. variation # 14 dated 19 March 2019: 7 days.

  1. Before considering this issue, I have set out the applicable legal principles, and summarised the evidence and submissions of the parties.

The applicable legal principles

  1. In Hometeam Constructions Pty Limited v McCauley [2005] NSWCA 303 (Hometeam) at [169]-[199] McColl JA discussed the failure to proceed with reasonable diligence in a building contract:

“[169] It might be accepted that the appellant’s failure to complete the Works by the date for practical completion might be some evidence of delay (see Westminster Corporation v J Jarvis & Sons Ltd and Another [1970] 1 WLR 637 at 643 per Lord Hodson, at 645 per Viscount Dilhorne). However, whether delay is of itself sufficient to raise an inference of lack of due diligence must depend on the circumstances.

[170] Despite the prevalence of clauses in building contracts requiring the work to be performed with “due diligence”, defining the nature of that obligation has proven elusive.

[171] In Re Stewardson Stubbs & Collett Pty Ltd & Bankstown Municipal Council, Moffitt J observed (at 1675–1676) that:

… [T]he question of what precisely constitutes a failure to proceed with reasonable diligence is a matter of some difficulty. However, it is an allegation of a general failure to proceed with that degree of promptness and efficiency that one would expect of a reasonable builder who has undertaken a building project in accordance with the terms of the contract in question.

…

[173] In Hooker Constructions Pty Ltd v Chris’s Engineering Co [1970] ALR 821 at 822–823, Blackburn J considered whether a head contractor had validly terminated a building sub-contract on the basis that the sub-contractor had failed “to proceed with the works with reasonable diligence” as required by the contract. After observing that the “onus is on the plaintiff to show the [sub-contractor] was in default in a way … caught by this provision”, his Honour said (at 822) that he had “not found it easy to construe this phrase ‘reasonable diligence’ in the context of this case”. He concluded that “a sensible construction of the phrase is that the actual extent of work completed is of some significance” and that “ ‘diligence’ in the contract means … not only the personal industriousness of the defendant, but his efficiency and that of all who worked for him”.

[174] He also said (at 823) that he was entitled to accept as evidence that the defendant had not displayed reasonable diligence, “evidence that the work was, at the material time, seriously incomplete together with evidence that there were no circumstances preventing the defendant from overcoming this situation”.

[175] In Hooker the plaintiff led evidence that at the time it purported to terminate the sub-contract, the defendant’s work was “seriously behind what could reasonably be expected [and] that the situation was not due to anything which was beyond the defendant’s control”. Although the defendant adduced evidence to show that “through no fault of his own, he was unable to get the necessary material to bring the work to the stage where it should have been at the material time”, this did not convince Blackburn J who held the plaintiff had proved the contract was validly terminated.

…

[178] There were, in my view, in the context of the Contract, at least two ways the respondent could have established that the appellant had failed to perform the works with due diligence.

[179] First she could have proved:

(a) the work the appellant was required to carry out under the Contract; as events transpired this included the original contract works and the rectification work;

I always new (sic) the heights would be tight and that you may have had to reduce the ceiling height from 2.5 to 2.4. The ceiling could perhaps be battened out or suspended to achieve a flat surface with minimal loss of height.

The engineer’s plans only show the sloped rafter but they are not to be taken as the finished details as they only show structural members.”

The Lucien witness statement

  1. In the Lucien witness statement the builder gave evidence that he completed the suspended ceiling on the first floor at the request of the owner (at [48]).

The first Mullally affidavit

  1. In the first Mullally affidavit the owner gave evidence that this was never a variation (at [293(c)]).

The first Lucien affidavit

  1. In the first Lucien affidavit the builder gave evidence that a suspended ceiling was required because the owner did not want a raked ceiling and the only way to achieve this was to install a suspended ceiling as she had requested (at [293(c)]).

The oral evidence of the builder and the owner

  1. Neither the builder nor the owner gave oral evidence about this item.

The submissions of the parties

The submissions of the builder

  1. In the builder’s 16 July 2021 submissions and his oral submissions the builder made the following submissions:

  1. the owner's drawings indicated a raked ceiling. She did not want a raked ceiling and requested a suspended ceiling. He constructed a suspended ceiling as instructed. The suspended ceiling was not readily evident in the contract drawings, and as such was not a contract item. There is no dispute that he has performed the suspended ceiling works. He should be paid for these additional works performed, and as claimed;

  2. drawing DA.1003 of the PW plans does not indicate a suspended ceiling;

  3. the acoustic report indicates raked ceilings;

  4. the variation should be valued and awarded in the full amount of $3,500.00 inclusive of GST.

The submissions of the owner

  1. In the owner’s 28 July 2021 submissions and her oral submissions the owner made the following submissions:

  1. the builder relies upon a schematic diagram in the acoustic report showing the placement of insulation between the particle board under the metal cladding and the plasterboard ceiling. The acoustic report is not a building plan;

  2. the builder gives no evidence about how he came to identify the suspended ceiling as additional work or of any negotiation with the owner about it. The first time the claim was made for this item, and the other items of additional work, was at the commencement of proceedings. There is no evidence about the difference in the work required under the contract and the suspended ceiling – both presumably required framing and plasterboard - and the relationship between work done and the amount claimed is unexplained.

Consideration

  1. I am satisfied that there is conflict between drawing DA.1003 of the PW plans, on the one hand, and drawing 15171-S08(A) of the CC plans and the acoustic report in relation to the roof/ceilng, on the other hand. There is no evidence of any discussion between the owner and the builder as required by cl 1 of the general conditions to seek agreement as to the work to be performed. It follows that the builder’s claim for this item fails.

  2. If the contract on its proper construction required a raked ceiling, then:

  1. I would not have been satisfied that, in the absence of any evidence of a request by the owner, the builder had established that he undertook this work at her request;

  2. I would have been satisfied that this work falls within the first class of quantum meruit case identified in Vasco at [339] having regard to the nine factors identified in Angelopoulos at 12-13. In the light of the 11 August 2018 at 12.18pm email I would have been satisfied that the owner received benefit from this work within the principles identified in Vasco at [343];

  3. I would not have been satisfied that the builder had established that the amount of $3,500.00 inclusive of GST was a reasonable amount for this item. This is no evidence of the additional work required for a suspended ceiling as opposed to a raked ceiling, and how the amount of $3,500.00 inclusive of GST has been calculated. Further, there is no evidence that the amount of $3,500.00 inclusive of GST is a reasonable amount for this work.

Item 37 – Additional works – Change floor batten level on ground floor

The correspondence between the parties

  1. Variation # 10 was attached to the 20 December 2018 at 7.38am email.

The Lucien witness statement

  1. In the Lucien witness statement the builder gave evidence that he change the floor batten level on the ground floor at the request of the owner (at [48]).

The first Mullally affidavit

  1. In the first Mullally affidavit the owner gave evidence that she paid for this work under variation # 10 in the amount of $2,567.00 inclusive of GST (at [293(d)]).

The first Lucien affidavit

  1. In the first Lucien affidavit the builder gave evidence that the batten level on the ground floor was required because the battens had initially been installed and set out for 19mm thick floorboards. The owner requested and also required the battens to be removed and re-laid to suit the new 16mm thick floorboards she had ordered herself (at [293(d)]).

The oral evidence of the builder

  1. In his oral evidence the builder was cross-examined about this item. He gave the following evidence:

  1. when first asked about this item (Tcpt, 21 May 2021, pp 59(6)-(16)):

“Q. And the original size specified 19 millimetres, is that right?

A. I believe so, yeah.

Q. And then 16 millimetres was specified?

A. She chose that, yes.

Q. And that’s the timber flooring that got installed?

A. We’d already set up the batons for 19 mil--

Q. Yes.

A. --and then we had to change it again for 16 mil.”

  1. when again asked about this item (Tcpt, 21 May 2021, pp 60(3)-(13)):

“Q. Yeah. There was only one change 19 to 16.

A. No, but what I’m saying we’d already set up for the 19 mil.

Q. Yes. And that - you did what the contract required and then you did a variation for the 16 mil and that was the end of it?

A. No, sorry, I’m just trying to remember because there was so many changes, but I think it was, it wasn’t a 19, I think it actually was a bit more, it was like a, a 21 mil flooring just..(not transcribable)..

Q. Where’s that, where’s that in your evidence?

A. Well, it’s not in there.”

The submissions of the parties

The submissions of the builder

  1. In the builder’s 16 July 2021 submissions and his oral submissions the builder made the following submissions:

  1. the variation arises because the owner changed the width of the floor-boards from 21mm in width to 18mm, which required him to pack up all of the timber floor areas to suit the floor-board change requested by her. This additional work was claimed for in variation # 10, which is not in dispute;

  2. once he had completed these additional works, for the board width change from 21mm to 18mm, the owner changed her mind again and instructed him to change the floor-board width from 18mm to 16mm, which required him to again change the floor heights, which gives rise to the quantum meruit claim for a further $2,500.00 inclusive of GST.

The submissions of the owner

  1. In the owner’s 28 July 2021 submissions and her oral submissions the owner referred to the applicable contract terms and the evidence of herself and the builder, and submitted the builder’s submissions do not set out the evidence accurately. There is no evidence that the battens were re-laid twice on her instructions.

Consideration

  1. I am not satisfied that the builder has established that he re-laid the battens twice on the owner’s instructions and undertook this additional work at her request. The builder’s oral evidence was vague and inconsistent. The submission that the battens were re-laid twice is inconsistent with variation # 10 which relates to the same work as encompassed by this item. Further, even if the builder did undertake this additional work at her request, I would not have been satisfied that he had established that the amount of $2,500.00 inclusive of GST was a reasonable amount for this item. It follows that the builder’s claim for this item fails.

Conclusion

  1. Having regard to the agreed position of the parties and my findings I am satisfied that:

  1. the builder is entitled or liable to a variation of the contract for items 19, 20, 22 to 28, and 30;

  2. the total of the agreed amount and reasonable amount for these items is $8,960.37 exclusive of GST and $9,856.41 inclusive of GST.

  1. It follows that the sum $9,856.41 inclusive of GST needs to be added to the contract price payable by the owner to the builder.

The costs of the two proceedings

  1. I will deal with the costs of the two proceedings as follows:

  1. if the parties are in agreement as to the costs of the two proceedings, then they shall provide proposed consent orders to the Tribunal within 14 days of the date of the orders in these reasons for decision;

  2. if the parties are in agreement as to the costs of the two proceedings, then:

  1. if any party seeks a costs order, the applicant for costs (the costs applicant) must file and serve a costs application, submissions which shall address the question of whether an order should be made dispensing with a hearing and be limited to five pages, and any evidence in support, within 14 days of the date of the orders in these reasons for decision;

  2. the respondent to the costs application is to file and serve any submissions which shall address the question of whether an order should be made dispensing with a hearing and be limited to five pages, and any evidence in opposition, within 14 days thereafter;

  3. the costs applicant is to file any submissions in reply limited to three pages within 14 days after receipt of the submissions and any evidence of the respondent to the costs application.

Orders

  1. I am satisfied that the owner is entitled to an order that the builder pay her $31,660.65 inclusive of GST calculated as follows:

  1. contract sum: $812,770.00;

  2. plus variations (# 1, #2, #4 to # 8, #10, #11 and #13): $9,856.41;

  3. less payments made by the owner to the builder: $711,670.62;

  4. = amount owing to the builder: $110,889.79;

  5. less defects: $64,229.35

  6. less incomplete works: $54,462.70;

  7. less payments made by the owner on behalf of the builder: $23,923.90.

  1. I make the following orders:

  1. the builder is pay the owner the sum of $31,660.65 immediately;

  2. if the parties are in agreement as to the costs of the two proceedings, then they shall provide proposed consent orders to the Tribunal within 14 days of the date of the orders in these reasons for decision;

  3. if the parties are not in agreement as to the costs of the two proceedings, then:

  1. if any party seeks a costs order, the applicant for costs (the costs applicant) must file and serve a costs application, submissions which shall address the question of whether an order should be made dispensing with a hearing and be limited to five pages, and any evidence in support, within 14 days of the date of the orders in these reasons for decision;

  2. the respondent to the costs application is to file and serve any submissions which shall address the question of whether an order should be made dispensing with a hearing and be limited to five pages, and any evidence in opposition, within 14 days thereafter;

  3. the costs applicant is to file any submissions in reply limited to three pages within 14 days after receipt of the submissions and any evidence of the respondent to the costs application.

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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: 16 February 2022

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Cases Citing This Decision

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Cases Cited

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Statutory Material Cited

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ACN 057 690 034 Pty Ltd v Mick Wykrota [2019] NSWSC 197
Abigroup Contractors Pty Ltd v ABB Service Pty Ltd [2004] NSWCA 181
Angelopoulos v Sabatino [1995] SASC 5230