Pathik v Bata
[2025] VCC 43
•3 February 2025
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised (Not) Restricted Suitable for Publication |
BUILDING CASES LIST
Case No. CI-22-01834
| Amitabh Pathik | Plaintiff |
| V | |
| Mark Bata & Ors (according to the schedule attached) | Defendants |
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JUDGE: | HER HONOUR JUDGE BURCHELL | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 9 – 15 October 2024, written submissions 31 October 2024 and 8 November 2024 | |
DATE OF JUDGMENT: | 3 February 2025 | |
CASE MAY BE CITED AS: | Pathik v Bata & Ors | |
MEDIUM NEUTRAL CITATION: | [2025] VCC 43 | |
REASONS FOR JUDGMENT
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Subject:BUILDING CONTRACTS
Catchwords: whether the builder failed to complete the works by the due date – whether the works were defective – whether the defects in the works were carried out under the building contract – whether the builder permitted the works to be carried out by persons who were unlicenced and unqualified – whether the builder caused the plaintiff loss and damage – whether the plaintiff failed to mitigate his loss and damage – whether the plaintiff’s loss and damage arises from breaches of the building contract by the builder – whether the plaintiff was in breach of the building contract by making payment of progress claims on invoices issues by the third defendant - whether the plaintiff is liable to pay the builder
Legislation Cited: Civil Procedure Act2010 (Vic), s 7, s 9; Domestic Building Contracts Act 1995 (Vic), s 8; Evidence Act 2008 (Vic), ss 97 and 98; Penalty Interest Rates Act 1983 (Vic), s 2; Building Act 1993 (Vic), s 108
Cases Cited:Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; Stojanovski v Australian Dream Homes [2015] VSC 404; Mann v PatersonConstructions Pty Ltd (2019) 267 CLR 560; Cardona v Brown (2012) 35 VR 358; Gazcorp Shire Council v Beckhaus Civil Pty Ltd & Ors [2005] NSWCA 248; Ozzie Homes Building & Construction Pty Ltd v Singh [2014] VCC 1337; Draper v Building Practitioners Board (No 2) [2017] VCAT 1402; Zhang v Hu [2023] VCC 248; Woolworths Group Limited v Gazcorp [2022] NSWCA 19; Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359; Tropical Traders Pty Ltd v Goonan (1964) 111 CLR 41; DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] 138 CLR 423; Carbone v Fowler Homes Pty Ltd [2024] NSWSC 1021; Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2010] NSWSC 1073; Cappello v Hammond & Simmons NSW Pty Ltd [2020] NSWSC 1021; Baese Pty Ltd v RA Bracken Building Pty Ltd (1990) 6 BCL 137; J-CorpPty Ltd v Mladenis (2009) WASCA 157; Portbury Development Co Pty Ltd v Ottedin Investments Pty Ltd [2014] VSC 57; Jeffcott v Davesi Construction Group Pty Ltd [2024] ACTSC 366; Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; Lysaght Brothers & Co Ltd v Falk (1905) 2 CLR 421; Coonwarra Pty Ltd v CornoNero Pty Ltd [2023] VSC 781; Flexirent Capital Pty Ltd v EBS Consulting Pty Ltd [2007] VSC 158
Publications: Barnett K and Harder S, Remedies in Australia Private Law (2nd ed, Cambridge University Press, 2021)
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | J Anthony-Shaw | Francke Lawyers Pty Ltd |
| For the First Defendant | A Batzis | Starnet Legal |
HER HONOUR:
Introduction
1In this proceeding, the plaintiff (“the Owner”) seeks damages against the first defendant (“the Builder”) for breach of contract and breach of warranty pursuant to a domestic building contract. The Owners claims that he retained the Builder to construct two units in Seaford which contained defects. The Owner seeks damages, being the difference between the sale which occurred and what he would have obtained had the works been carried out in accordance with the plans and specifications. The Builder denies liability on the basis that it was the third defendant (“Mr Christopher Dimitriou”) who actually carried out the works.
2The Builder further counterclaims that the Owner is liable to him for the sum of $456,811.00, paid by the Owner in respect of the invoices issued by Mr Dimitriou which should have been paid to him direct. The Owner denies liability on the counterclaim and argues that Mr Dimitriou as “project manager” had actual authority, as well as ostensible authority, to invoice the Owner and receive payment.
3Prior to hearing opening submissions, the Builder sought to amend his defence to inter alia withdraw an admission and instead deny the Building Contract as pleaded by the Owner at paragraph 11 of the amended statement of claim, as he alleged that one of the iterations of the Building Contract contained in the Court Book, featured a signature that was not his signature. It is the subject of a police complaint made on 30 September 2024. The Builder, however, relies on the existence of a Building Contract in his counterclaim and as part of the documents referred to in the Construction Project Management Agreement (“the CPMA”).
4The Builder gave instructions that his pleading relied on a version of the Building Contract being document discovery number 1 of his Affidavit of Documents filed on 24 November 2022. The parties agreed that this form of document, now marked Court Book page 2268, was the Building Contract relied on by all parties in the proceeding.
5Leave was granted to the Builder to amend the defence in relation to mitigation and to tidy up the striking out of the variation claims in accordance with the consent orders made on 3 September 2024. Leave was refused for the Builder to rely on further supplementary reports of its civil engineer expert dated 7 and 9 October 2024, based on case management principles as set out in ss7-9 of the Civil Procedure Act2010 (Vic) and Aon Risk Services Australia Ltd v Australian National University.[1]
[1] (2009) 239 CLR 175.
6The Owner clarified that he was not pressing the misleading or deceptive conduct claim and was only pursuing a declaration that the Building Contract is terminated and damages for breach of contract and statutory warranties. The appropriate measure of damages is the diminution in value at the time of the breach.
7In my judgment, the Owner has made out his grounds. My reasons in respect of each ground are set out below.
8Accordingly, I order that there is judgment for the plaintiff in the proceeding (adjusting for amounts received by way of settlement sum from other defendants), together with interest, and the counterclaim ought to be dismissed. I also order that the first defendant pay the plaintiff’s costs of and incidental to the proceeding on the standard basis, in default of agreement, unless either party has a basis for seeking a different order as to costs. I will invite the parties to prepare draft orders to give effect to these reasons and will determine any issue concerning costs and any consequential orders on the third party claim on the papers.
The background facts
9The Owner is the registered proprietor of the property at 1 Kananook Avenue, Seaford (“the property”). The Owner was inexperienced in construction or development and had not undertaken any building projects previously.
10The Owner obtained planning approval for the demolition of the existing single dwelling on the property and the construction of two townhouses, with the property to be subdivided (“the Project”).
11The Owner first engaged with Mr Dimitriou, the third defendant, and ReThink Pty Ltd (“ReThink”), the second defendant in respect of the building works to be carried out. Mr Dimitriou held himself out to the Owner as a builder and project manager and provided to the Owner a tender in respect of the works, on letterhead of ReThink.
12Mark Bata is a registered domestic builder. Mr Bata was advertised on the ReThink website as ReThink’s “Builder/Engineer’”. Mr Bata also trades under the name ‘Terrain Engineering Pty Ltd’ (“Terrain Engineering”).
13The Owner entered into a domestic building contract (“the Building Contract”) with Mr Bata as Builder for the construction of two double storey dwellings on the Property (“the Units”). The Owner supplied the plans and specifications for the works (“the Works”), and the Building Agreement was construct-only. The contract was a ‘domestic building contract’ within the meaning of the Domestic Building Contracts Act 1995 (Vic) (“DBCA”), and that the warranties in s 8 of the DBCA apply.
14Mr Bata ReThink entered into the CPMA with ReThink and Mr Dimitriou dated 18 September 2018. The effect of the CPMA was to purport to assign the whole of the Builder’s contractual and statutory obligations under the contract to Mr Dimitriou and ReThink.
15The Owner had no knowledge of the CPMA until these proceedings.
16Mr Bata obtained two certificates of warranty insurance for the Works. He provided the certificates to the relevant building surveyor.
17Mr Bata received and submitted the building permit application and paid the relevant building surveyor for the permit to be issued. Thereafter, Mr Bata had nothing to do with the supervision or carrying out of the Works. Instead, Mr Dimitriou and ReThink carried out the Works, neither of which party is licenced as a building practitioner in any category.
18Throughout the majority of the Works, the Owner dealt directly with Mr Dimitriou. He was issued invoices for the contract works with the letterhead of ReThink. The Owner paid to ReThink the total sum of $456,851.00 in respect of the Works. The Owner was also issued with an invoice from the Builder directly for the “fix stage” in the sum of $152,586.00. The Owner paid that invoice to the account details contained on the invoice.
19The Owner anticipated that the Works would be completed, and subdivision achieved by May 2019. The Builder disputes the contract period but made no applications under the Contract for extension of time.
20In February 2021, the relevant building surveyor issued a Building Notice and Stop Work Order upon the discovery that Unit 1 was constructed a full 3 metres out of position from the approved drawings. This resulted in a reduction of 3 metres to the space between Units 1 and 2, in breach of the Owner’s planning permit and the approved building permits, preventing the plan of subdivision from going ahead. The garage of Unit 1 was also built in the incorrect location.
21On 15 November 2021, the building permit lapsed, and a further Building Notice and Stop Work Order was issued, halting works on the site as a whole. Neither the Builder, nor ReThink, nor Mr Dimitriou sought to obtain an extension of time or a further building permit.
22The Owner obtained conditional approval from the City of Frankston Council (“the Council”) to amend the planning permission in March 2022, which would enable him to apply for a new building permit, stipulating:
(a) demolition of the existing garage of Unit 1 and reconstruction of a new garage, 3 metres forward at a new level;
(b) demolition and reconstruction of driveway and front porch at Unit 1;
(c) relocation of the electrical meter box to Unit 1 and installation of associated electrical connections;
(d) addition of Unit 2 first floor stair window-screening; and
(e) satisfaction of further conditions imposed by Melbourne Water.
23The Owner claims he was unable to carry out these works due to cost and he formally terminated the contract by May 2022 the latest on issuing the present proceeding.
Issues
24Mr Bata admits entering into a domestic building contract with the Owner and relies on the contract in the CPMA and his counterclaim. It is common ground between the parties that the:
(a) commencement date for the Works was 1 February 2018;
(b) construction period was 212 days and the anticipated date for Practical Completion was 9 September 2018; and
(c) the contract price was $610,344.00.
25The issues for determination are:
(a) Whether the Builder is in breach of his contractual and statutory warranties under the building contract;
(b) The scope of the defects; and
(c) The Owner’s loss and damage.
The Owner’s submissions
26The Owner is a lay person and owner of an investment property. He is in IT and had not previously undertaken any building and construction projects. The Owner first engaged with his tenant, who happens to be the brother of Mr Dimitriou.
27The Owner submits that the Builder and Mr Dimitriou have collaborated in a number of projects. Mr Bata was provided with a number of iterations of the building contract.
28The Building Contract is a domestic building contract. An issue in this proceeding is Mr Bata’s supervision of Mr Dimitriou who is unlicenced and unregistered.
29On 15 September 2018, Mr Dimitriou and Mr Bata entered into the CPMA. Under clause 2.1, the CPMA provided as follows:
“For consideration of the services to be rendered by the PROJECT MANAGER, the BUILDER shall pay the former a total fee equal to 50% of the margin before tax on the Contract price of the 2 dwellings. The budgeted cost of the project is $500,487.00 exclusive of the Builder's margin, therefore the budgeted margin to be shared between the Parties is $109,863.00. on a 50/50 basis. The Parties agree that any variation to the margin will be distributed equally between them. …
2.1.3 All receipts and expenses will be accounted for by the Project Manager to the Builder. …
2.1.6 The Builder may agree to allow the Project Manager, to provide them with access to the Builder's Bank account to pay all invoices, materials, sub-contractor, labours, and services to control the finances of the Project ONLY with the approval by the Builder of each payment prior to any kind of payments.”
30Clause 3.2 further stated:
“The PROJECT MANAGER shall not be subject to the control and supervision of the BUILDER concerning the means and devices to be employed by the PROJECT MANAGER in the performance of its services, it being understood that the BUILDER is interested only on the results of the PROJECT MANAGER's Services under this AGREEMENT. The PROJECT MANAGER shall be free to use any means and devices not contrary to law, rules, and regulations, and existing policies of the BUILDER which the PROJECT MANAGER believes will best enable it to perform its Services and other obligations under this AGREEMENT.
The Project Manager will manage the building works for the project on a daily basis and will be solely responsible for all construction activity works to completion in accordance with the domestic building contract, building permit documents and specifications. The Project Manager will be responsible for receiving the Occupancy Certificate from the Relevant Building Surveyor.
The Project Manager will be solely responsible for any defect work that may come to light on the Project at any time for a period of 10 years from the date of completion of the construction work (the issued date of the Occupancy Certificate). The Project Manager will be solely responsible for the rectification of any defective works to the Project and will undertake such repairs at his own cost for any such period specified by the relevant Builders Warranty Insurance post completion.
The Project Manager indemnifies the builder against all claims made by the owner or any other person or company in relation to any defective or incomplete building works and should the builder need to defend a claim initiated by the owner, the supervisor will refund the Builder for all legal costs and disbursements incurred. The Project Manager will cooperate with the builder in defending any such claims and will take full liability without seeking compensation from the Builder.
In the event any Owner of the Project or their successors or any subsequent purchasers submit any claim relevant to any defective work, the Project Manager agrees to be solely liable and responsible for the rectification of the defective works and will not request any compensation or any money from the Builder as a result of such defects. The Project Manager undertakes to repair and/or resolve any said defective works prior to the Owner taking the matter further.
The Project Manager will not submit any claim through the builder's insurance at any time for any such period specified by the relevant Builders Warranty Insurance after the completion of the works. In the event that the Owner or their successors or any purchasers lodges a claim, the Project Manager will compensate the Builder.
In the event that any Owner of the projects or their successors or any purchasers initiate proceedings against the Builder due to any defective work, the Project Manager agrees that he will compensate the Builder the full amount of costs he may incur defending said proceedings, such costs include but are not limited to lawyer's fees, barrister fees and building report fees. In addition, the Project Manager agrees that he will remain liable and responsible to repair any defects at his own cost should a Court order such repairs.
The Project Manager will be solely responsible to pay any monetary damages or undertake any repairs that may be awarded to the owner or any other party by any Court or tribunal.”
31The Owner contends that Mr Bata was entitled to 50% of the margin. Mr Bata devolved the whole of his 10-year warranty to the project manager. The project manager was to indemnify the Builder. The Owner asserts that the CPMA assigns s 8 DBCA warranties to the project manager. The Owner argues that the CPMA is a licence lending agreement.
32The Owner states that it is not in dispute that Mr Pathik dealt directly with Mr Dimitriou. All invoices, save one, were issued by Mr Dimitriou. One invoice was sent by Terrain Engineering, which the Owner paid.
33The Owner submits that there is a building period set out in the Building Contract. It commences on 2 February 2018 and the Works were to be completed by September 2018. The Owner anticipated at the earliest completion by May 2019. The Owner contends that the Builder did not apply for an extension of time and that the works were substantially delayed.
34The Builder now claims delays were because of the COVID-19 pandemic, but the Owner states that was not an issue until March 2020. The start of the Project was delayed, and Mr Dimitriou had all sorts of excuses for the delay.
35The Owner concedes that he was relatively naïve in these matters. He says that he relied on Mr Dimitriou and did not attend the site. During the COVID-19 pandemic, Mr Pathik left Melbourne and went interstate to care for a relative. It is not said that the Owner had an obligation to oversee the construction.
36The Owner argues that Unit 1 was not built in accordance with the specifications and was built in the wrong location. The Builder did not seek amendments to the plans. The Owner made such applications. The Owner states that, despite promise, the Builder and Mr Dimitriou did not carry out rectification of Unit 1 per the Building Notice. No extension to the building permit was sought by the Builder or Mr Dimitriou. The Owner claims that Unit 2 works did not progress either.
37In March 2022, the Owner obtained amendments to the plans, however, the garage had to be demolished. The driveway and front porch to Unit 1 was also demolished. The open space and overlooking in the planning permission had to be varied regarding screening and Water levels. The Owner claims that he could not afford these Works.
38In early 2021, the Owner issued a Domestic Building Disputes Resolutions Victoria (“DBDRV”) application and Mr Pathik says Mr Bata persuaded him to withdraw the application as he would “take care of it” and make sure the works would proceed, but such a commitment did not eventuate. The property sold in October 2022.
39The Owner claims that the present case is no longer a defects and rectification case, but a diminution in value case. The Owner argues that the actual defects that existed at the time the contract was “abandoned” by the Builder and Mr Dimitriou, are set out in the Ken Ryan Consulting report dated 21 December 2021. The relevance of the expert report is that it presents a clear picture of the condition of the Works at the time the Builder ceased works, the time that the Stop Work Order was put on, and the time the Owner began mitigation of his loss and damage by obtaining alternatives to his planning permission.
40The Owner contends that termination occurred via the issuing of the statement of claim under cover of correspondence dated 13 May 2022 and is set out in the body of the pleading, and the relief set out is declaratory relief in respect of the termination of Building Contract. It is a point in time on the evidence for the Court to determine. The Owner claims that the termination date is 13 May 2022 by abandonment which amounted to a clear indication to him that the defendants did not intend to perform their obligations under the contract. The Owner submits that the Builder did not offer compensation or to refund monies paid, or to come back to rectify. The Owner claims that Mr Dimitriou disappeared, and Mr Bata tried to dissuade the Owner from issuing proceedings. Further, the Owner asserts that it is so contrary to public policy to allow an unlicenced person to undertake the Works and the failure to adequately supervise amounts to a repudiation. The Owner says that Mr Bata did not give Mr Pathik a quote to complete the Works and Mr Pathik had no confidence in the Builder to complete.
41The Owner submits that the Builder’s expert report does not respond to Mr Ryan by way of an inspection of the property. Mr Ryan visited the site in 2021. The Owner contends there cannot be a question of liability anymore as the Builder ceased to carry out further works.
42The Owner claims that the Builder, through his project manager who he clothed in authority to manage the Works and issue invoices and receive payment, has actually invoiced for all of the stages of the Works up to fixing stage. The Owner states that it cannot be now said that the Works were substantially incomplete when each of the stages under the building contract have been issued. The Owner says those stages are complete save for defects. Further, the Works cannot be incomplete because the Builder has been paid for those stages that have been completed. The Owner also contends that there is an issue as to the weight of the Altez Engineering report by Leopold LP Chung dated 17 September 2024.
43The loss sought by the Owner is diminution in value as at May 2019 or May 2022. The Owner seeks the sale price had the Works been completed under the contract, versus what was delivered.
44The mitigation defence is put on the basis that the Owner failed to rectify, failed to complete and failed to sell the property in its developed or subdivided form. The Owner asserts that this cannot be his obligation. One option when there is a breach of warranty or breach of contract is to accept the defects and sue for the loss of value. This is the option currently pursued by the Owner.
45The Owner submits that Mr Bata’s counterclaim no longer relies on variations. In relation to the claim for the payment of the invoices, the Owner contends that the Builder assigned the authority to Mr Dimitriou, the project manager, to issue invoices and obtain payment. The Owner says he discovered this after the proceeding commenced. Mr Pathik states that he only received one invoice very late in the timeframe from the Builder. The Owner contends that the legal question to be determined is the authority in which the Owner was entitled to assume rested with Mr Dimitriou, as granted by the Builder. The Owner argues that Mr Dimitriou as project manager had actual authority under the CPMA and ostensible authority against the world in the way he acted. The Owner states that the terms of the CPMA plainly deal with risk allocation between the Builder and Mr Dimitriou, including remittance of monies and management of accounts. It is not a case of being taken advantage of by Mr Dimitriou. Further, the Owner claims that there is a pattern of licence lending between the two.
46The Owner relies on additional pages of the CPMA which refer to payment terms as follows:
“All receipts and expenses are to be accounted for by ReThink using MYOB Accounting Software. Terrain is entitled to full disclosure of the Project's accounting with reasonable notice.
(v) Such a request may not be denied to Terrain provided reasonable notice is given.”
47Although the Owner did not have a contract with Terrain Engineering, Mr Pathik says it is a company that Mr Bata operated under.
48Clause 4 also provides for the Builder to have the following responsibility:
“4. Obligations of Terrain;
(i) Assist with trade account procurement and utilisation of the Builders existing trade accounts and subcontractors where required
(ii) Weekly review of schedule and site visits
(iii) Terrain to provide and assist with managing trades where requested
(iv) Be bound by the terms and conditions of the Building Contract relevant to the Builder”.
49The Owner submits that it is difficult to say that Mr Dimitriou invoiced without the knowledge of the Builder, and it does not give a basis for the Builder to claim that the Owner must pay, again, for monies already paid under the Building Contract. The Owner contends that breaches of these terms or obligations are between Mr Dimitriou and the Builder.
The Builder’s submissions
50The Builder claims that the situation is not as clear as the Owner would like it to be. There are issues as to how the CPMA was administered and run. Mr Bata argues that the Owner was involved. Mr Dimitriou was at best, a project manager. The Builder further claims that Mr Dimitriou is no longer a party in the proceeding.
51The Builder said that there is a general consensus in relation to the terms of the Building Contract. There is no consensus, however, in relation to the various iterations. Mr Bata claims that he did not know the full actions of Mr Dimitriou on this Project. Mr Bata argues that the CPMA was not adhered to by Mr Dimitriou. There was a reference made to the ability of Mr Dimitriou to collect funds, however, Mr Bata submits that clause 2.1.4 of the CPMA forbids that practice. The agreement was simply regarding the management of the Project. The Builder says the invoices could only be issued by Mr Bata and not by Mr Dimitriou. Instead, Mr Dimitriou issued invoices and collected monies, and as a result, were never remitted to Mr Bata.
52The Builder said that if the Project commenced, then Mr Dimitriou was to commence works with Mr Bata’s consent.
53The Builder states that the Project started without Mr Bata’s knowledge, and he did not receive any funds from the Owner. The Builder contends that communications were not copied to the Builder. The Owner only communicated with the Builder late in the piece, and then met with him for the first time 2 years after the alleged date of the Building Contract. This is inconsistent with a situation whereby someone is the builder and would have intimate knowledge of the management and building of the Project.
54The Builder states that the contract terms apply to both parties. The Builder submits that there is a lack of evidence in relation to abandonment and termination. There is a 13 May 2022 notice of termination. The Builder contends that the weight of the letter must be given in its context. On the one hand, it states that the contract is terminated effective that day. On the other hand, it states that the Builder is no longer in possession of the site and not authorised to attend the site without first seeking permission to do so and “[i]f you have any tools or possessions left on site, please contact the write to arrange time for collection under supervision”. The Builder argues that this is not evidence of abandonment.
55The Builder submits that he and Mr Dimitriou wished to assist the Owner to fix the perceived problem.
56The Builder observes that PSCA Consultants (“PSCA”) were engaged to consider amended planning permits to allow the Owner to build the subdivision and finalise the Project. The Builder argues that the notice of dispute skirts close to termination but was not enough for the Builder to know “for sure”. He further contends that the notice of dispute is invalid.
57The Builder disputes that he abandoned the contract and claims there is no evidence of abandonment or termination.
58The Builder states that mitigation is central to the dispute and that there is a question as to whether the Owner acted reasonably in the circumstances.
59The Builder claims that the Owner did not do enough to mitigate his losses. The Builder contends he had positive good will to assist, particularly in late 2021. Instead, the Owner spent all his money in litigation rather than completing the development. The Builder claims the damages sought are excessive and not reflective of the intentions of the parties in this case.
60There is a question in relation to diminution in value and defects. The Builder submits that this is missing from the reports and the Builder looks to challenge this position. He says there were alternatives that could be taken. The Builder contested the reports of valuation. He claims that the valuation reports contain hypotheticals and neither reports properly address the question of the mis-siting of Unit 1 and what could be done under the circumstances.
61The Builder submits that there is a question in relation to the date of May 2019 and that it is not clear about the intention to complete at May 2019. The Builder says that he did not know there was a project on at the time to ask for an extension of time. The Builder contends that the Owner knew what was going on and he was in constant contact with Mr Dimitriou and he was going along with it or acquiesced to it. The Builder claims this is important to determine when damages runs.
62The property was sold in October 2022 as one block. The Builder asks the question why it took the Owner so long to sell, why works were not effected and why he held the property for such a long time. The Builder claims that the loss can only ever be the maximum loss agreed.
63It is common ground that there was a mis-siting of Unit 1. The Builder claims that he had to stop works due to the Stop Work Order. The Builder asserts that he was ready and prepared to do what was required to fix the defects. The Builder submits that there is no evidence that he or Mr Dimitriou actually left and repudiated the agreement. He says it is not in the pleadings and there is a lack of evidence. The Builder says he cannot be liable in these circumstances.
The Witnesses
Amitabh Pathik
64Mr Pathik generally presented as a careful, considered witness who was ready to make appropriate concessions. There were certainly gaps in his recollection and his evidence was not completely satisfactory. However, his memory lapses were generally explicable by the extensive effluxion of time involved with this case.
65By leave of this Court, Mr Pathik’s evidence was tendered by way of his witness statement dated 30 September 2024.
66Mr Pathik purchased the Property as an investment property in early 2012 for $375,000.00, with finance obtained from Westpac. The Property was then rented out to a tenant named Mr Vasilios (“Bill”) Dimitriou.
67In 2015, Mr Pathik decided to develop the Property, and sought advice from a planning and development consultant, PSCA. Mr Pathik then had discussions with his tenant regarding an intention to demolish the existing house and develop the property into two or more townhouses. Mr Bill Dimitriou then introduced Mr Pathik to his brother, Mr Christopher Dimitriou, who was said to be a builder.
68Mr Pathik said Mr Dimitriou seemed very confident and helpful, and said that the Project was simple and he could do the build quickly.
69In May 2016, Mr Pathik began to look for finance to fund the construction.
70On 28 August 2017, Mr Pathik received a “Preliminary Tender” and project estimate of $588,570.000 from “ReThink Melbourne”. The tender and estimate were contained in a letter dated 25 August 2017, on the letterhead of ReThink Melbourne and signed by Mr Dimitriou. On 1 November 2017, Mr Pathik received Endorsed Secondary Consent from the Council.
71On 8 November 2017, Mr Dimitriou provided Mr Pathik with a Letter of Intent, again bearing the letterhead of ReThink Melbourne. The Letter of Intent was signed by Mr Dimitriou, and stated an intention by Mr Pathik to “appoint ReThink as the builder and project manager”, acknowledged the structural design and architectural advice previously provided, required a deposit to be paid to ReThink and gave ReThink permission to act as an “agent on [Mr Pathik’s] behalf when communicating to utility providers, consultants and the local municipality”.
72The Letter of Intent also included an invoice of $5,000.00, and a covering email containing Commonwealth Bank of Australia (“CBA”) details in the name of ReThink Pty Ltd.
73In November 2017, Mr Pathik was still experiencing issues securing finance. After discussing such difficulties with Mr Dimitriou, Mr Pathik was referred to mortgage broker, Mr Vlad Mukatonin of OzLend. Shortly after, Mr Pathik made contact with OzLend and by 6 November 2024, was informed that they would be able to broker a loan of approximately $600,000.00.
74On 16 November 2017, Mr Pathik was informed that the loan had been reduced by $168,000.00 and $330,000.00 was available.
75On 28 November 2017, Mr Pathik received preliminary approval from a financer that had been located by OzLend named “Firstmac”.
76Mr Pathik gave evidence that on 29 November 2017, Mr Alexander Dimitriou (stating that Mr Dimitriou, was his son) emailed him and enclosed a draft domestic building contract. Attached to the contract were the engineering drawings (prepared by Matrix), the working drawings (prepared by PSCA), the energy rating documents, the geotechnical report (by Soil Test Melbourne), site sketch and tender specifications (these were the specifications previously prepared by Mr Dimitriou and dated 21 August 2017).
77The contract was for $643,000.00 and named the builder as “Terrain Construction Group Pty Ltd” and provided for it to be signed by “Mark Bata”. The contract stated that “Chris Dimitriou” was “The Contractor’s Representative”. It provided for a construction period of 212 days (being 7 months), commencing 1 February 2018.
78Mr Pathik had a telephone discussion with Mr Dimitriou at around the time he sent the draft building contract to him, where he told him that the name of the builder on the contract would be “Terrain”. Mr Dimitriou told Mr Pathik that he had an experienced builder on staff named Mark Bata, who would be responsible for the Project and that Mr Dimitriou had briefed him on the Project. He used the names “Terrain” and “Mark Bata” interchangeably. Mr Pathik understood this to mean that “Terrain” and “Mark Bata” were part of “ReThink”. This was the first time that the name “Mark Bata” was mentioned.
79Mr Pathik visited the ReThink Melbourne website ( at the time and recalled that there were details of Mr Bata on the website as a builder or engineer. He later visited the website again and took screenshots. On the website as at December 2021, Mr Bata was identified as ReThink’s “builder/engineer” and Mr Dimitriou was identified as the “CEO”.
80Mr Pathik contacted the Victorian Building Authority (“VBA”) at about this time. The person he spoke to told him over the phone that Mr Dimitriou was a sub-contractor, who was allowed to undertake building work through a registered builder who would supervise and be responsible for the work, and that Mr Bata was a registered builder.
81By mid-January 2018, Mr Pathik was still having difficulty obtaining finance for the full construction cost, and in addition he had now spent money on plans, permits, and demolition. The advice he received from OzLend was that he would be at least $49,000.00 short.
82By that stage, Mr Pathik was anticipating a 7 month build period, and that the two units would be completed and sold within approximately 3 months – meaning he would be able to pay back the loan in about 12 months. Mr Geoffrey Slater, a friend of Mr Pathik’s, said that he was a member of a fund (called Snowbirds LLC) who could provide a 12-month $160,000.00 loan, at 8% interest which he said would work out to about $14,000.00 - $16,000.00 in interest payable.
83On 16 January 2018, Mr Pathik emailed OzLend and advised that he had sourced the $30,000.00 needed to settle on the loans – being the shortfall to be able to pay out the existing Westpac Bank loans. Mr Pathik acknowledged he would need more than that to complete the construction. Mr Pathik felt the loan with Snowbirds LLC was the “only option” to bridge the gap.
84On 22 January 2018, Mr Dimitriou emailed Mr Pathik a revised draft Building Contract. The revised draft Building Contract was for $610,344.00 and named “Terrain Engineering Group Pty Ltd” as the builder and provided for it to be signed by “Mark Bata”. At the time, Mr Pathik did not notice that the builder’s name had changed or pay much attention to it as Mr Dimitriou continued to use the names “Terrain” and “Mark Bata” interchangeably. Mr Pathik later discovered that Terrain Engineering Group Pty Ltd did not exist, however, there was a business name “Terrain Engineering Group” owned by Mr Bata.
85The Building Contract:
(a) provided a commencement date of 7 February 2018;
(b) provided for a construction period of 7 months (212 days); and
(c) provided a completion date of 9 September 2018.
86Mr Pathik said that the short build period of 7 months was critically important to him, given the 8% interest loan he had received from Snowbirds LLC. Mr Pathik explained this to Mr Dimitriou, and he assured Mr Pathik that the build would be completed within that time. On the basis that construction of the two townhouses would be completed by 9 September 2018, Mr Pathik calculated for:
(a) 1 month (approximately by mid-October 2018) for any final works that needed to be completed prior to sale (including gardening, clean up post-construction etc.);
(b) a marketing period of 3 months (which would then take it through to approximately January 2019);
(c) a “dead” period in January 2019, and that a sale was not likely until February 2019;
(d) a 60-day settlement (ideally, by the end of April 2019); and
(e) on that basis, Mr Pathik calculated that he would have access to settlement funds by 1 May 2019, to pay down the mortgage to Firstmac and loan to Snowbirds LLC.
87Over the course of the next 6 months, Mr Pathik was provided with several different versions of a building contract, each time by Mr Dimitriou. The final version which he signed still contains a date of 22 January 2018. However, another version was sent to Mr Pathik by Mr Dimitriou on 10 September 2018 and was signed in September 2018. Mr Pathik did not understand why there were different versions of the Building Contract (or that this was of any significance), and each time Mr Dimitriou just told him it was “for insurance” purposes.
88Mr Pathik had expected that there would be immediate commencement of the demolition and building work, after signing the first version of the building contract in January 2018 – however nothing occurred.
89In February 2018, Mr Pathik spoke to Mr Dimitriou over the phone, and he told him that demolition would occur in the next 2 weeks and that construction of the two units would begin immediately after the demolition, which he believed and accepted.
90On 14 February 2018, Mr Dimitriou sent Mr Pathik an invoice for $20,599.70 for the demolition. Mr Pathik paid the invoice in full on 15 February 2018.
91On 15 February 2018, Mr Chris Dimitriou emailed Mr Pathik another version of the building contract. Mr Pathik said that the contract price had been reduced by $26,290.00 to reflect the cost saving associated with using the Hi-Tek wall system. This version of the contract named the builder as “Terrain Engineering Group Pty Ltd” (and provided for it to be signed by Mr Dimitriou) and in other parts to “Terrain Construction Group Pty Ltd”. The construction period did not change (remaining 212 days commencing on 7 March 2018). Mr Pathik did not understand the differing references to the named builder and believed that they were all part of the same company.
92On 27 February 2018, Mr Pathik received Tax Invoice 00000499 from ReThink to “supply Hi-Tek Panels base stage $26,290.00”. He paid the invoice.
93The Hi-Tek panels were never supplied. No Hi-Tek panels were delivered to the site nor used in the construction.
94On 5 March 2018, Mr Pathik finally received an approval from Firstmac to borrow $880,000.00 which included refinancing the existing Westpac loans on the property for $499,000.00, and a further $382,000.00 towards the new construction.
95Mr Pathik expected construction to commence immediately, however, it did not. On 19 July 2018, Mr Pathik emailed Mr Dimitriou to ask him why construction had not commenced and reminded him that he needed the construction to be finished by September 2018 if Mr Pathik was going to be on track to pay back the $160,000.00 loan to Snowbirds by January 2019.
96On 12 August 2018, Mr Pathik again emailed Mr Dimitriou because he was very concerned that nothing had occurred on site. He recalled speaking to Mr Dimitriou at the time via telephone, who blamed Mr Bata for the delay, and told him that Mr Bata’s wife had brain cancer, and that Mr Bata had travelled to Mecca on her behalf to perform Hajj. He said that Mr Bata had been unavailable to liaise with the building surveyor to obtain the building permit, but that he would be back soon.
97Mr Pathik became aware (after having viewed emails discovered in this proceeding) that Mr Bata had been corresponding directly with the building surveyor and on 13 September 2018 he had sent the building surveyor two Victorian Managed Insurance Authority (“VMIA”) Policies of insurance (obtained by Mr Bata on 12 September 2018), which confirmed he was the builder and in the email to the building surveyor he wrote “we would like to receive the Building Permit ASAP”. Mr Pathik did not know the building surveyor at the time and had had no contact with him – it was not until 22 September 2018 that Mr Dimitriou emailed Mr Pathik and told him there had been “regulation changes require the Building Surveyor to be formally appointed by the Owner, notwithstanding the Building Surveyor is recommended to the owner by the builder”, and asked him to sign an appointment form, which Mr Pathik did.
98Mr Pathik discovered that Messrs Bata and Dimitriou had also entered into a project management agreement on 15 September 2018. He was not told about the CPMA at the time, and only obtained a copy from Mr Bata’s solicitor after these proceedings were issued.
99On 22 September 2018, Mr Dimitriou sent him an application for a building permit to be signed. The application named the builder as “Terrain Construction Group Pty Ltd”. This is a company controlled by Mr Bata. Mr Pathik signed and returned the application immediately.
100Between 24 and 26 September 2018, Mr Bata had further correspondence with the building surveyor.
101On 9 October 2018, Mr Pathik received a building permit, which named the builder as “Terrain Construction Group Pty Ltd” (with the contact person noted as “Chris” – i.e. Mr Dimitriou). The building work was required to commence by 28 September 2019 and be completed by 28 September 2020.
102Mr Pathik expected the Project to be completed by 1 May 2019 as that was the end date of his construction loan. The contract provided for September 2018. The Builder was very slow. Mr Pathik did not terminate then because he was told that the Builder’s wife was suffering from brain cancer and he thought this was serious and deserved some consideration. Mr Pathik agreed to extend the completion date given the Builder was only applying for a building permit.
103On 20 November 2018, Mr Pathik received a progress claim for “base stage” in the amount of $61.034.00. He paid the invoice.
104On 4 December 2018, Mr Pathik received an invoice for a “variation” from Mr Dimitriou, for $64,869.75, being for “Upgrade Joinery/Face of Wall fittings/Appliances”. Mr Pathik paid the invoice.
105On 8 February 2019, Mr Pathik again emailed Mr Dimitriou because the works were incomplete and not progressing. Mr Pathik was very concerned about the timeframe for constructions because of the interest on the finance which he required to undertake the build.
106By February 2019, Mr Pathik was outside of the anticipated period for repayment of the Snowbirds LLC loan, and it was clear that he was not going to be able to repay the loan imminently. He was under pressure from Mr Slater and, on 19 February 2019, Mr Pathik entered into a written loan agreement with Snowbirds LLC which altered the loan so that instead of 8% interest, interest would be charged at 12% from the commencement of the loan. Mr Pathik agreed to this and signed the loan agreement.
107On 1 March 2019, Mr Pathik received an invoice “#602” from Mr Dimitriou for the sum of $7,957.51 for “utilities”. He paid the invoice.
108On 15 March 2019, Mr Pathik received an invoice “#609” from Mr Dimitriou for the amount of $45,000.00 for “Progress Claim for Base Stage”. He paid the invoice.
109On 19 March 2019, Mr Dimitriou emailed Mr Pathik a further invoice numbered “#609”, but it was for the sum of $91,552.00 for “15% frame stage”. Mr Pathik did recall the reasons why, but he only paid $46,552.00 of that invoice.
110By 2 August 2019, notwithstanding the claims that had been made by the Builder, Mr Pathik’s financier refused to approve payment for the lock up stage, as the construction had not reached that point. On 12 August 2019, Mr Dimitriou reissued invoice “609D” for lockup ($162,379.00) and it was paid by Firstmac.
111Mr Pathik said that 1 May 2019 was the date that he had anticipated the construction would be completed by, under the Building Contract.
112On 14 May 2019, Mr Dimitriou emailed Mr Pathik to say that he was overseas, but that the roof for the Project was ready for delivery. Mr Pathik emailed him back to say, “let me know if work progresses on Seaford”, however, he did not respond, and Mr Pathik did not take delivery of the roof.
113On 29 July 2019, Mr Pathik emailed Mr Dimitriou to ask him why he had not provided details of the DBI insurance he was required to take out. In response, he sent Mr Pathik a copy of an email which Mr Bata had sent him with copies of two VMIA policies.
114Mr Pathik received invoice “#609” from Mr Dimitriou for the sum of $186,420.75 for “Framing Stage” on 19 March 2019. He submitted this to his bank, but they did not pay this invoice because the stage had not been achieved. On 22 July 2019, Mr Pathik received a reissued invoice #609D from Mr Dimitriou for $162,318.00 for the “Framing Stage”. Mr Pathik re-submitted this invoice to Firstmac for payment, however, there were still several queries with the work completed that were not resolved to the bank’s satisfaction until 12 August 2019 when the bank paid the invoice in full.
115In January 2020, Mr Dimitriou asked Mr Pathik for a loan of $50,000.00 for a period of 14 days. He said that he needed the funds for his cash flow to keep working. Mr Pathik agreed to give him the loan, and advanced him $50,000.00 by electronic funds transfer from his Macquarie Bank account to Mr Dimitriou’s nominated CBA Account. Mr Dimitriou only repaid $10,000.00. Mr Pathik later obtained judgment against Mr Dimitriou for this debt in August 2022.
116By January 2020, Mr Pathik had been unable to repay the loan to Snowbirds LLC and was now well outside of the anticipated timeframe for repayment. Still under pressure from Mr Slater, he executed a “Loan Dispute Agreement" with Snowbirds LLC on 26 January 2020.
117From January to June 2020, Mr Pathik pursued Mr Dimitriou regarding the absence of progress on the build, as follows:
(a) On 8 January 2020, Mr Pathik received an email from his land surveyor, in which he said that the subdivision permit was about to expire. Mr Pathik immediately forwarded this to Mr Dimitriou. He then spoke to Mr Dimitriou by telephone and arranged to have a site meeting with him that day, to get a clear understanding of when completion would occur. At 4:13pm that afternoon, Mr Dimitriou emailed Mr Pathik a “construction schedule" indicating that handover would occur by 14 March 2020. Mr Pathik then instructed his land surveyor to submit an extension of time request. The request was granted, and the subdivision permit was extended to 20 June 2021.
(b) On 10 February 2020, Mr Pathik received a loan arrears notice from Firstmac.
(c) On 16 February 2020, Mr Pathik received a further revised construction schedule from Mr Dimitriou.
(d) On 30 March 2020, Mr Pathik sent Mr Bata a “Notice of Default” by registered post to Suite 1/878 Sydney Road Brunswick 3056, addressed to Terrain Engineering. Mr Pathik also emailed a copy to Mr Dimitriou and asked that he send it to Mr Bata.
(e) Mr Pathik was visiting the site regularly and observed that there were some differences in the work that had been constructed and the approved town planning drawings (although Mr Pathik had not realised at the time that townhouse 2 was incorrectly sited). On 18 April 2020, Mr Pathik emailed Mr Dimitriou and stated, “the changes that have been made do vary quite a bit. Do we need to submit another application to the council?”.
(f) On 29 April 2020, the contractor engaged to complete the NBN connection emailed Mr Dimitriou in relation to work not completed.
(g) On 26 May 2020, there were further emails with Mr Dimitriou regarding progress.
(h) On 4 June 2020, Mr Dimitriou sent a further revised construction schedule.
118Mr Pathik said that he received an outcome following the issuing of the notice of dispute which was progress on the works. He, therefore, did not take it any further at that time. He expected the contract to continue.
119On 5 July 2020, Mr Dimitriou emailed Mr Pathik a payment claim (dated 3 July 2020) for the “fix stage” in the amount of $152,586.00. The claim:
(a) Was on the letterhead of “Terrain Engineering Group Pty Ltd”;
(b) Acknowledged having received payments for the deposit, base stage, frame stage and lock up stage, totalling $396,722.00; and
(c) Required payment into a CBA account in the sum of $152,586.00 for “fix stage”.
120Mr Pathik sent the invoice onto OzLend for payment. Mr Pathik then corresponded with OzLend, who required further information from Mr Dimitriou. OzLend made payment on 10 July 2020.
121Mr Pathik agreed he was going along with the Project at this stage and the Builder and Mr Dimitriou were still his builders.
122Mr Pathik followed up Mr Dimitriou regarding progress on 9 September 2020, 16 September 2020, 26 October 2020, 1 November 2020, 7 November 2020, 28 November 2020, 6 December 2020, 26 December 2020. He was continuing to engage with his Builder. Mr Pathik said that in March 2020 his position changed in relation to the completion date on 30 March 2020. He did not terminate the Building Contract at that time or in July 2020.
123On 15 January 2021, Mr Pathik emailed Mr Dimitriou that he intended to terminate the Building Contract. That same day, Mr Pathik received a Notice to Comply from the Council regarding damage by the builder to the footpath. Mr Pathik contacted a concreter directly to arrange for the necessary work to be done (as he had no confidence that Mr Dimitriou would attend to it) and emailed Mr Dimitriou the details.
124Instead of issuing a fresh notice of default, Mr Pathik went to the DBDRV. This, however, did not appear in his witness statement.
125Mr Pathik had not received any updates from Mr Dimitriou, and he emailed Mr Bata directly for the first time on 17 January 2021. Mr Bata did not reply by email, but he called Mr Pathik, and they discussed the matter on 21 January 2021. He asked Mr Bata if there were specific reasons for the delay, such as cash flow. Mr Bata did not provide any real answer, but he assured Mr Pathik that he did not have any cash flow issues. Mr Pathik told him he was concerned that there was a lot of work still to be done in Seaford, which was contrary to Mr Dimitriou’s assertion the building was nearly complete. Mr Bata said he will speak to Mr Dimitriou and that Mr Dimitriou was right in saying the building was near completion. Mr Pathik told Mr Bata that he would take legal action if required. Mr Bata strongly advised Mr Pathik against legal action, saying that he is “very strong in Court”, and that Mr Pathik’s solicitor was giving him “bad advice” by seeking legal remedies. Mr Bata strongly iterated to Mr Pathik that Mr Dimitriou would do as he was told by Mr Bata.
126During the discussion, Mr Pathik was contemplating termination, and he told Mr Bata he wanted to terminate the contract. Mr Bata told him that it was a bad idea. Mr Pathik said he did not see the point of starting an argument with Mr Bata.
127Mr Pathik emailed Mr Dimitriou again on 22 January 2021 (and copied in Mr Bata) and highlighted the details of the lack of progress. Mr Pathik said that his first contact with Mr Bata was the notice of default on 30 March 2020. Mr Pathik said that the emails were much more than mere complaints about lack of progress on site. Mr Pathik could not recall if at that time he wanted to terminate the contract. The 22 January 2021 email relevantly sets out the following:
“I'm also gravely concerned with lack of progress since October on the external plumbing. The concreter also told me yesterday that he can't see any stormwater connections leading the stormwater drains on the street.
I took my concerns to Mark Bata and we had two phone conversations yesterday. I asked him if there were specific reasons for the delay like funds, and he assured me that you didn't have any funding constraints.
You called me following my chat with Mark and undertook to get people on-site today and the weekend, as well as Australia Day on Tuesday next week, to do the fencing and other internal work. Landscaping is slated for mid-next week. You've decided to do the fencing yourself since the person you got is no longer available. As a result of this, and the progress being made on the footpath, I won't initiate termination proceedings this week but will reconsider, following the progress made next week. You and I also agreed last night to go shopping together for plants mid next week.” (emphasis added)
128Mr Pathik did not agree that the parties had come to agreement on the next steps. He held off termination pending progress the following week.
129On 25 January 2021, Mr Pathik receive an email from his land surveyor stating that “what has been constructed on site.. is a fair bit different to the.. endorsed plans..”. Mr Pathik had been to site regularly but had not noticed the siting error previously. Mr Pathik said that he chose to follow due process and inform the Council that the building was in the wrong place and then figure out the next steps to make the Builder responsible for the “mess”.
130At this point Mr Pathik reviewed the information provided by the land surveyor in his email and discovered that Townhouse 1 was 3000mm out of position with the approved drawings and the dwelling was 3000mm closer to the eastern boundary. This has resulted in an increase of 3000mm to the front yard setback to 7.235mm, Townhouse 1 and Townhouse 2 being 3000mm closer to one another and a reduction of the private open space available to Townhouse 2 and the rear of Townhouse 1 as required by the Planning Permit and Townhouse 1 encroaching upon the proposed Lot 2 on the proposed plan of subdivision. The garage was also in the incorrect location and the garage was later required by the building surveyor to be demolished and reconstructed closer to the western boundary. Mr Pathik was devastated that there was such a serious error, especially given the delays that had taken place
131On 29 January 2021, Mr Dimitriou emailed Mr Pathik’s town planner explaining that the construction differed from the approved town planning drawings and asking whether the planning permit could be amended to align with what had actually been built on site.
132On 31 January 2021, Mr Pathik emailed Messrs Dimitriou and Bata about the issue and stated:
“[w]e can all agree that last week this project sank to a new low when Anthony Ralph from JC Land Consultants, in the course of doing the subdivision, discovered that the Dwelling 1 of the 1 Kananook Avenue is built in the wrong place”.
133On 11 February 2021, Mr Pathik’s town planner emailed the Council, advising them that she had spoken with the building surveyor and that a Stop Work Order would issue.
134On 25 February 2021, a Stop Work Order and building notice were issued. Work had completely stopped on site by this point and did not resume. Mr Pathik said that the Stop Work Order was on Unit 1 and not Unit 2, so it did not mean that all work was stopped.
135On 27 February 2021, Mr Pathik emailed Mr Dimitriou to remind him that he had not responded to the notice of default.
136On 20 April 2021, Mr Dimitriou emailed Mr Pathik’s town planner a signed agreement engaging PSCA in relation to the siting issue. The document was also signed by Mr Bata.
137In July 2021, Mr Pathik commenced an application for amended Town Planning Approval. In that application, he was required to obtain altered as-built drawings and an amended plan of subdivision to reconfigure the proposed lots including reducing the size of Lot 2.
138Mr Pathik said the purpose of applying for the amended town planning approval was to make the best out of a bad situation and keep the buildings. He did not agree that the Builder was trying to do the same. Mr Pathik said they just signed a piece of paper only.
139At the same time, Mr Pathik engaged a building consultant (Akiitech Inspect) to assess the status of the works, as he was no longer confident that the works had been completed properly. Mr Pathik later obtained two inspection reports from Akiitech dated 30 July 2021, although they did not contain costings to complete the work.
140Mr Pathik did not agree that both the Builder and he made moves to get approval for the planning permit to align with what had been built on site. Mr Pathik said only he was taking steps to do this. Mr Pathik said that Mr Dimitriou’s email to PSCA marking up the error in the building’s “as built” location was just a futile gesture. He felt this was sent to mollify him and not to fix the situation.
141On 10 August 2021, Mr Pathik’s solicitors wrote to Messrs Bata and Dimitriou, requesting that they show cause as to why the Building Contract should not be terminated. There was no written response. At the time, Mr Pathik was trying to ascertain whether the other work that had been completed (including the plumbing work, for which he had not received a certificate of compliance) was compliant, and whether certificates had been issued which he could give to a new builder if the Building Contract with Mr Bata was terminated. Mr Pathik instructed his solicitor to telephone Mr Bata to ask for a copy of any plumbing compliance certificate that he had, and his solicitor had a telephone conversation with Mr Bata (who joined Mr Dimitriou in the call) on 17 August 2021 and kept a file note.
142By this point, the site had been abandoned by both Messrs Bata and Dimitriou and they did not attend again. Mr Pathik was concerned about what would happen if the two buildings were damaged (by accident, or intentionally by vandals) so he made arrangements to appoint a security company to install cameras on the site, and Mr Pathik obtained site insurance to cover the site.
143Mr Pathik agreed that the letter dated 10 August 2021 from his solicitors to Messrs Bata and Dimitriou was to show cause and included:
“SHOW CAUSE / TERMINATION
43. In the circumstances there appear to be clear grounds for immediate termination of the building contract (to the extent that it may be held to be enforceable).
44. However, out of an abundance of caution, our client wishes to provide each of you with the opportunity to respond to the matters raised above, prior to exercising this option.
45. Unless within the next 14 days you show cause as to why the contract should not be terminated (i.e. evidencing compliance with the Building Act and Domestic Building Contracts Act) our client will terminate the contract.
46. Once terminated, our client will commence proceedings for its losses as outlined in this letter, as well as recovery of the loan with interest.”
144Mr Pathik cannot recall if a termination letter was sent as a result of this letter. He agreed that the letter did not put to the Builder that the Project had been abandoned.
145In late August 2021, Mr Pathik consulted a new builder being Carringvale Construction Management Pty Ltd (“Carringvale”) with a view to appointing them to finish the construction, so that it could be sold. Carringvale provided Mr Pathik with a quote and budget estimate of $537,120.00 on 27 August 2021. This was a shock to Mr Pathik. He spoke with Mr Bryn McMurray from Carringvale at length about the estimate, who made it clear that there were many unknowns, and that Mr Pathik should regard this quote as preliminary only and to expect it to be higher in reality. Mr Pathik asked him what he could do to shore up the figure and he suggested that Mr Pathik retain him to do further work in scoping out what needed to be done. Mr Pathik agreed to engage him and later paid him $5,456.00 on 19 December 2021 for the further work that he did.
146Mr Pathik wanted to complete the units and have them sold and continue with the development. Mr Pathik went to one builder, being Carringvale. He did not shop around but he did get other quotes such as Ken Ryan’s report. He commissioned an expert report to get an idea of what was wrong and how much it would cost. He did not get an alternative quote from another builder. He said that he did not go to other builders because Mr Ryan said there were many unknowns regarding the extent of the defects. He did not think it was reasonable for him to obtain other quotes from other builders in those circumstances. The thing to do was to get an expert report to figure out exactly what was wrong with the work and then make a decision about next steps after that.
147Mr Pathik said that a Greenfields site is easier to quote and so he obtained a number of quotes initially. It was different for a partially built site with unknown defects. He rejected that it was unreasonable for him to obtain more than one quote as he had something better: an expert’s report. At the time of the Carringvale quote, he did not terminate the Building Contract. The quote was preliminary only and Carringvale did not investigate closely what was required to be completed.
148On 16 September 2021, 20 September 2021 and 3 October 2021, Mr Pathik had telephone conversations with both Messrs Bata and Dimitriou. He prepared transcripts of each phone call (using software called “Otter AI”) of the conversations as follows:
“16 September 2021
(a) Mr Bata blamed Mr Dimitriou for the siting error.
(b) Mr Bata said that he had seen money come into his account with Mr Dimitriou for $50,000.00 and had thought it was for the Seaford construction, and said that he did not know about the $50,000.00 loan to Mr Dimitriou.
20 September 2021
(c) Mr Bata again said Mr Pathik should not have loaned Mr Dimitriou $50,000.00.
(d) Mr Bata said he would come to check on the construction.
(e) Mr Pathik said he was concerned about the work on roof.
(f) Mr Bata said he would get his roof plumber to check it.
(g) Mr Pathik told Mr Bata that he had not received a PIC (Plumbing Compliance Certificate).
3 October 2021
(h) Mr Pathik again told Mr Bata he still had not received a PIC for the plumbing work.
(i) Mr Pathik accused Mr Bata of having let Mr Dimitriou use his building licence.
(j) Mr Bata told Mr Pathik not to worry, and said he would fix everything, and said he knew how to control Mr Dimitriou, and asked Mr Pathik to leave it to him to finish the construction and get an occupancy permit.
(k) Mr Pathik asked Mr Bata if he could get Mr Dimitriou to repay Mr Pathik $15,000.00 of the money he had lent Mr Dimitriou. Mr Bata said, “no problem” and “leave it to me”.
(l) Mr Bata asked Mr Pathik to send him copies of documents that Mr Pathik had and told him not to be scared of Mr Dimitriou.”
149In August 2021, Mr Pathik agreed that the Builder and Mr Dimitriou did not say that they would not come back to the site.
150On 5 October 2021, Mr Pathik instructed his solicitor to engage an independent building consultant to assess the status of the works, and the cost to complete. His solicitors sought advice from Mr Ryan.
151On 6 October 2021, Mr Pathik met Mr Bata in person for the first time (Mr Pathik had never seen him previously, and he had not attended the site to his knowledge). The meeting was onsite in Seaford with Messrs Bata and Dimitriou. They discussed the list of outstanding works and how they would get them all done. They met on a Tuesday and Mr Bata said he would be on site from Saturday, stating, “I will start here Saturday. Saturday, Sunday, Monday, Tuesday, until we finish. Yes”. He said that Mr Dimitriou was not the “play maker” and that he (being Mr Bata) was in charge. Mr Bata assured Mr Pathik that Unit 2 could be finished before Christmas and that Unit 1 could begin work after the revised permit was ready. Mr Pathik said that he thought Mr Bata was “lying through his teeth” and Mr Pathik was just going along with what he was saying.
152Mr Pathik could not recall a COVID-19 lockdown from August 2021 that went for weeks. Mr Pathik did not agree that the Builder could not attend the site during lockdowns and said the Builders could go back and do work during this time. Mr Pathik did not agree with the Builder going back on site at that time. Mr Pathik did not agree the Builder would go back on site even though the Builder was telling him he would.
153After the meeting, Mr Pathik emailed Mr Bata a summary of their meeting. Mr Pathik did not reply to his email. Mr Pathik claimed he did not believe what Mr Bata was telling him at the meeting. Mr Pathik had not believed his Builder for months and he was acting “furiously”.
154On 7 October 2021, Mr Pathik called the building surveyor to find out whether he could assist Mr Pathik to get Mr Bata to get the work finished. Mr Pathik was neutral towards the building surveyor. Mr Pathik recorded the telephone conversation he had with the building surveyor. Mr Pathik prepared a transcript (again using the Otter AI software) of the conversation. The substance of the phone call was that:
(a) The building surveyor asked Mr Pathik to try to get the plumbing and electrical certificates from Mr Dimitriou;
(b) The building surveyor said that the building permit had lapsed; and
(c) The building surveyor said that he would put pressure on Mr Bata, and not deal with Mr Dimitriou any longer.
155On 15 November 2021, Mr Pathik received notice by email that the building permit had lapsed.
156On 24 November 2021, Mr Pathik called Mr Bata. No further work had been done. In that call:
(a) Mr Bata discouraged Mr Pathik from taking Victorian Civil and Administrative Tribunal (“VCAT”) action; and
(b) Mr Bata said that he would resolve matters with Mr Dimitriou.
157The transcript of the conversation includes the following exchange:
“Amit: But I did not do that, right? All I was asking is what progress you guys had made. No progress had been made?
Bata: No, no, no, because you know, we’re waiting for the decision from council on 28th of November to get that. Now, we’re waiting for that, okay? We cannot start, without the permit nobody can start any work, inside or outside. This by the law, because there's no building active at all. Now, we’re waiting and we order already French door for unit one, all right? And everything they’re ready to go. When we get this one approval from the council on 28th, when we get the approval, is… Leon, he ask me, get me the approval, I will issue new building permit with new fees, with everything. Okay, I told him the progress, the procedures. And I talked to already, to Chris, and he, we already ordered the French door to add it to sliding to the window there in unit one, as we agree with the current planning. All right?
…
But we’re waiting for the approval from town plan and we finish the job. Okay? And I already talked to Chris and we have all crew. We’ll get the plumber, everything. When we start, we do everything, we will finish in three weeks. This is what I promise you.
…
Bata: Promise, I will finish. I will solve all the problem. Don't worry about that, a hundred percent.
Amit: So you think you can finish the whole place in December?
Bata: Yes, definitely. We will do it.
Amit: Yeah, because again you know December is still tricky, because it's Christmas and where are we going to find…
Bata: We have nothing to do. I will push my people to do it. We need to finish. I need to finish because this one is delaying me as well.
Amit: Yeah, because the problem is we have depended on Chris so far and he doesn't seem to have been able to find the people to do work on this.
Bata: No, no, no, he have the people and I have the people. Look, we’ve done some work there, you cannot deny that. And he done good work there, it’s not bad.
Amit: Yeah, all he’s done is, he’s just put some cabinet doors in and put the kitchen thing in.
Bata: Anyhow. We’ll complete. We’ll complete the work and we will finish it.
Amit: Yeah, and the other issue is all of the certificates and all of that, will all of that be…
Bata: Definitely, we will provide that by the law.
Amit: And all of it can be done in three weeks or two weeks, or three weeks.
Bata: Yes. No, no, no, three weeks is what we agreed.
Amit: So you'll have, so you're planning to have people there from the 3rd of December or what, because that's when you'd have to start, wouldn't you?
Bata: Yes, because we cannot start in work until Leo, he issue building permit.
Amit: Okay. All right.
Bata: All right.
Amit: All righty. Thank you.
Bata: All right, thank you.”
158Mr Pathik recorded that telephone conversation he had with Mr Bata and used the Otter AI software to prepare a transcript. Despite no meaningful work commencing in October 2021, Mr Bata purports to commit to a 3-week completion time for both Unit 1 and 2 following a new permit and warns against taking legal action for going to VCAT. Mr Pathik said he let Mr Bata have his say. Mr Bata said he and Mr Dimitriou would come back and assist and build. No work was done at that time to progress things. Mr Pathik was told that materials generally had been ordered and were coming.
159Mr Pathik again denied that he accepted an extension because he knew that Mr Bata was “lying through his teeth”.
160Mr Pathik said that Mr Bata had shown through his actions in 2021 that he was not working or progressing.
161Mr Pathik did not concede that, in the discussion on 21 December 2021, there was an agreement that Mr Bata would be able to complete the works within 8 weeks from issuing a Building Permit.
162On 6 December 2021, Mr Pathik received a notice from the Council that his application for an amended planning permit had been approved. He was relieved to receive this and was waiting on the endorsed plans. He later received endorsed plans on 7 March 2022, which required:
(a) demolition of the existing garage of Townhouse 1 and reconstruction of a new garage in a new position 3 metres forward (due to the incorrect siting of Townhouse 1 and the existing garage) at a new level being 100mm lower;
(b) demolition of the existing driveway and front porch at Townhouse 1 and reconstruction of a new driveway and front porch;
(c) relocation of the electrical meter box to Townhouse 1 and installation of associated electrical connections; and
(d) the addition of dwelling 2 first floor stair window-screening to the satisfaction of further conditions imposed by Melbourne Water.
163Mr Pathik said he was led to believe that work on Unit 1 would continue from February 2021 and it did not happen. No meaningful work was done on Unit 2 up to November 2021. In his mind, Mr Bata was not his Builder but he had not terminated him. He was going through due process. He said he was waiting for Mr Ryan’s report.
164Mr Pathik had a site meeting with Messrs Bata and Dimitriou on 6 December 2021, where Mr Bata assured him he would be directly involved in completing the construction. That day, Mr Pathik sent an email at 6:13pm to the building surveyor, and another email at 7:57pm to Messrs Bata and Dimitriou, which summarised the meeting. Mr Pathik also emailed his town planner at 6:20pm, in which Mr Pathik mentioned that this was the first time he had met Mr Bata in person.
165On 22 December 2021, Mr Pathik called Mr Bata. In that call:
(a) Mr Bata claimed, for the first time, that he had not received any money from Mr Pathik;
(b) Mr Bata accused Mr Pathik of “playing the game”;
(c) Mr Bata again discouraged Mr Pathik from taking Court action and said that Mr Pathik would get into trouble if he did;
(d) Mr Bata claimed for the first time that the invoice from Terrain Engineering was “a fake” and a “fraud”;
(e) Mr Pathik asked him about the bank account number on the invoice and he said he would check it;
(f) Mr Bata confirmed he was the Builder; and
(g) Mr Bata said that he could complete the construction within 2-3 weeks.
166Mr Pathik recorded the telephone conversation that he had with Mr Bata. Parts of the transcript provide as follows:
“Bata: Me too. I help you, but you like to play game. The building surveyor also, he tried to help you and you push him to cancel the building permit. Now we’re ready to start again, and I am happy to solve the problem in a peaceful way. If you go to the Court it will take two, three years, …
Then please, please again, I just advise you, we have someone and I am, look, I am the Court man. Okay? I know what, I know the law exactly better than any lawyer and the barrister, okay? I just advise you from my heart. I need to help you to finish your project, okay? You concern me like, okay. Send me whatever you send and if you need to start any legal action, I have no problem.
Amit: No, I'm not starting legal action. All I'm trying to do is reconcile... Look, if I thought I had paid some money to you, if I haven't paid money to you, then can you just let me know that the money didn't go to you?
…
Bata: But this Amit, I am with you. I swear God that I am with you. I need to help you to finish, to get occupancy certificate to finish. I thought I already talked to, I went to… what's his name? To Leo, the building surveyor told me that I cannot get me the condition and the town planning approval, and I will issue the building permit immediately OK. Now after all this we have now no problem to complete the job. We will finish it. Two, three weeks, we'll finish everything. I told you when I send him to work until we get this one to finish, he worked and to finish something, it's not finished, but we will finish. Leave this one and we'll finish immediately. Me and Leo, we need to help you to finish it.
Amit: Okay. So the council contacted the architect on the 23rd of December, and they're still looking at it.
Bata: Who?
Amit: The council planner is looking… look, they gave us a permit early December, but the permit had conditions in it, and…
Bata: And two amendment. Two amendments in the plan. …
Bata: When she did that, don't worry. I will get Leo. Leo, he will start, he will back to work on 20 of January. But don't worry about if he did it on 5th of January or something, I'll let Leo coming from his home. I can control Leo. I go to his home, I will take him here, there, and I will ask to issue the building permit. …
Bata: No, no, I was just telling you at the end, you need to finish the work.
Amit: Yeah. And this is the concern I've had, right? Because…
Bata: Amit, you push… Me and Leo need to help you to finish it.
Amit: Yeah. So who's… sorry, who's going to actually finish the work now, because is Chris still going to work on it?
Bata: Definitely. What I doing, I push him to do it. If he not do it, I will do it. I told you.
Amit: Because I don't think he has any money, right? He seems to be owing a lot of money to a lot of people. Because his brother called me as well and says that he…
…
Amit: Yeah, but a lot of the plumbing is still left to do, the roof is a bit dodgy, you know, and the garage has to be demolished.
Bata: Brother, all this cannot take any time. Don't worry about it.
Amit: Yeah. Because look, I did go to the site…
Bata: Please, please. You always, you jump and you need to tell, you need to only to see your point. You don't like to just to get patient. …
Bata: Look, look, look, we need to reduce the money. He took money from you. He took money from me from other projects. Okay? Then what we need, he have the, he have money. I know he have the money. He will… let me to finish the work in my way. I will be there all time there after we get this permit. Because me and Leo, we need to finish it. Okay?
Amit: Okay. So what do you… Yeah, look okay. So you’re going to personally take charge of the project, is that what I'm hearing?
Bata: Yeah. Now when we get the building permit back I will be in charge.
Amit: You'll be in charge?
Bata: Yes.
Amit: Okay. …
Bata: We cannot work now. I cannot work without building permit.
Amit: So how long do you think it's going to take and do I get, can I get a written, like a plan from you as to how long it'll take for things to happen?
Bata: Get me the approval plan from town planning, and I promise you to get the building…
Amit: So can you give me a construction schedule after the building permit is there?
Bata: I give you. No problem.
Amit: So there'll be a construction schedule, and then we'll be able, you'll be able to say. So do you have roughly any idea how long it does take to, for that place to finish?
Bata: I need to go through everything there. I will come to go through everything there. …
Amit: Look, I am actually speaking to real estate agents in the area as well. Because I can't really afford to pay the construction loan anymore. I'm losing some, I'm running out of money. But the thing is, if I sell the place, this is why I didn't really meet, it was not in my interest to actually cancel any building permits, because before I sell the place, it either has to be finished, or if it doesn't get finished in time, then I have to get another building inspector to inspect the place who will then tell me how much money is needed to finish the place. Which I then have to give to the real estate agent who will then use that to actually sell the place. That's what the real estate agents in the area have been telling me I have to do.
So I’m losing… I'm about, I'm having to sell this place as well. I might have to do that where I'm living. So you can see this thing has financially destroyed me completely.
431Mr Bata asserts that the only damages that Mr Pathik ought to be able to claim is the following:
(a) The cost of amending the planning permit;
(b) The costs of compliance with the planning permit to enable the subdivision (i.e. demolition of garage). However, Mr Bata was adamant this would be completed at Mr Bata’s cost;
(c) Any costs of minimum agreed or mitigated defect rectification costs sufficient to realise the subdivision under the amended plans. Again, Mr Bata was adamant this would be completed at his cost and not the Owner’s;
(d) Any difference in sale price under the circumstances (i.e. sale of mis-sited Unit, otherwise defect free). There is no report in evidence which addresses this scenario;
(e) Against the above is the role of Mr Pathik in ultimately interfering with the contractual build process, failure to terminate, failure to co-operate with Mr Bata when assistance was offered and electing not to continue with the Project under the guise of “mitigation”; and
(f) Liquidated damages under clause 16.1 being a maximum of 5% of the contract price which equates to roughly $30,517.00. However, the actual completion date is difficult, if not impossible, to discern especially in circumstances where there was vagueness around a commencement date, acquiescence and multiple execution of contract documents.
Analysis
432I reject Mr Bata’s submission that Mr Prescott’s valuation is flawed because it takes into account the difference in sale price between the date the Building Contract had listed as a completion date (2019), and the date that the Units were actually sold (2022). As I have already stated, 2019 was the date for contractual completion, it was not necessarily unrealistic, and it says more about the workings of Mr Bata that, according to him, this was never achievable.
433The Builder was in breach because Mr Pathik was contractually entitled to have the Property completed by the due date or at all. Mr Pathik is entitled to damages for breach of contract to put him, so far as money can do so, in the same position as if the contract had been performed.[26] In the present circumstances, the prima facie measure of damages is the difference between the contract goods and the goods supplied. The loss therefore is the difference in market value.
[26] Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 at [13].
434May 2022 is the correct reference point for valuation as I have already found that Mr Pathik justifiably thought the Building Contract was on foot as late as August 2021, being the time when he finally (and validly) terminated the contract. I accept Mr Prescott’s evidence that, had the Property been able to sold as a finished product as promised under the original contract as at 2 March 2022, then Mr Pathik could expect to received $1,125,000.00 for Unit 1 and $925,000.00 for Unit 2.
435Mr Pathik should also be able to recoup damages for interest paid under his construction loan, a loan that he understandably thought he would be able to pay back in time with the completion date under the original contract (that it would be fully paid back in 2019). I accept the evidence that the Builder was aware that Mr Pathik was paying for the build by way of a construction loan, and, therefore, ought to have been aware that a loss by way of ongoing interest would occur as a result of the breach.
436I do not consider that the damages for loss ought to be limited to the liquidated damages outlined in clause 16 of the Building Contract as the losses claimed by Mr Pathik do not arise solely by reason of delay in completion of the Works. In my view, the Builder was in breach of the Building Contract, the DBCA warranties and the Building Act and Regulations from the start of the Project when he purported to assign the whole of his contractual and statutory obligations to Mr Dimitriou/ReThink who were unqualified and unregistered persons. This licence lending arrangement is separate and independent from a regime that seeks to provide for liquidated damages to be paid for delay and does not limit Mr Bata’s liability. Clause 16.1 does not capture all losses by reasons of failure to complete as warranted.
437In addition, I accept that, although there were delays arising from the first Stop Work Order, and this was consequent to the discovery of the siting defect, the placement of Unit 1 was defective from the outset. This mis-siting meant that Unit 1 could not comply with the planning permit or the building permit and would have prevented the Works from completion and subdivided by completion date, or at all. I, therefore, allow Mr Pathik’s claim for unliquidated damages under a different ground, other than delay.
438Given the above findings, it is unnecessary for me to consider the ruling of Leeming JA in Carbone[27], as cited by Mr Pathik. Leeming JA’s reasoning relied on the decision of Cappello v Hammond & Simmons NSW Pty Ltd[28], which concerned circumstances where the liquidated damages would present a negligible amount of compensation compared with the overall contract price, there need to be “clear language” that the parties’ rights which would otherwise arise under contract ought to be abrogated.
[27]Carbone.
[28] [2020] NSWSC 1021 at [29]-[32]
439In the Carbone case, the Court of Appeal decided that a nominal liquidated damages amount of AUD $1.00 per day was too small to imply that the parties intended to exclude other damages for breach of contract.[29] Therefore, the Court allowed a claim for unliquidated damages due to the failure to complete by the specified date.
[29]Carbone.
440In the present proceeding, the cap of $30,517.20 limiting damages recoverable to the allotted liquidated damages of $900.00 per week is not nominal. The provision is designed to relieve the Owner of the difficulty and expense of proving actual damage occasioned by the delay. However, on a proper construction of clause 16.1 there is nothing in its language that expresses in clear and unambiguous terms an intention to exclude the common law right to damages for breach of the Builder’s obligation to complete the Works on time.[30] Mr Bata asserts in his closing submissions that clause 16.1 imposes an exclusive remedy through the use of the work “will”. He claims that this language is prescriptive. However, the use of the word “will” simply implies that the Builder “plans to do something” as opposed to the use of the mandatory term “must”. In the present case, the parties cannot be taken to have agreed that unliquidated damages are not available as an alternative to the agreed damages under the Contract for delay damages.[31] The contract does not explicitly preclude Mr Pathik from claiming unliquidated damages.
[30] J-CorpPty Ltd v Mladenis (2009) WASCA 157 at [44].
[31] Baese Pty Ltd v RA Bracken Building Pty Ltd (1990) 6 BCL 137 at [7] and [41].
441The language of the contract and whether clear language has been used to exclude a party’s right to common delay law damages was recently considered by the ACT Supreme Court in Jeffcott v Davesi Construction Group Pty Ltd.[32] In Jeffcott, Baker J reminded that a contract providing for “nil” damages does not exclude a party’s right to common delay law damages unless expressly stated and awarded damages for the failure to achieve practical completion by the required date. The Court emphasised that the parties’ actual interpretation is irrelevant, and rather the critical consideration is the intention of the parties as expressed in the agreement and agreed with the body of precedent which says that such damages are only excluded if the contract is “expressed in clear and unambiguous terms”.
[32] [2024] ACTSC 366 at [100]-[112] (“Jeffcott”).
442Mr Bata does not plead any defence to the operation of the liquidated damages clause and largely repeats the same argument in his submissions, being that Mr Pathik somewhat arbitrarily elected to simply terminate the Building Contract and sell the property as a whole, where he should have provided Mr Bata with the opportunity to rectify the defects at his “own costs” just as he promised and as he gave evidence to the same effect. For this reason, Mr Bata contends that Mr Pathik should only be able to receive damages for the cost of rectification/defects, which he says he would have completed if given the opportunity, not the loss in value.
443For the reasons that I have already stated, Mr Pathik justifiably terminated the Building Contract when he did and was not under an obligation to do anything more to mitigate than he did (i.e. allow for the completion and subdivision of the lots). It was reasonable for him to sell the block under the stressful financial circumstances he found himself him as a result of Mr Bata’s breaches of contract and warranties and extensive delays, and it was not a failure to mitigated that he sold the land as a single block “as-is” and did not wait for it to be rectified and subdivided.
444Given the lack of credibility which I place on Mr Bata’s promises that he would complete the build at his own costs, I accept that Mr Pathik understandably placed no weight on these empty promises. I do not accept Mr Bata’s evidence that he had always planned to rectify and was simply deprived of the opportunity of doing so.
445Owing to these findings, it is acceptable that Mr Pathik’s loss be measured with reference to the condition that he was ultimately compelled to sell under (the whole block, incomplete etc.), and his losses are correctly referenced by Mr Prescott to the value that he would have received had building gone to plan and he received what he had originally bargained for under the Building Contract. It is appropriate that Mr Prescott looks at the value of the Property and its intended use.
446Mr Bata criticises the Prescott Report on the basis of what the “circumstances” relevant to the May 2019 time period are, and the fact that there was a property that was comparable that was sold for $900,000.00 for a full-sized block. Mr Bata complains that the valuation fails to compare “like with like”. Mr Bata misconceives the basis in which quantum must be assessed. Mr Pathik’s loss is the difference between the sale which occurred and what he would have obtained had he got what he bargained for. If the Works had been carried out in accordance with the plans and specifications, the Property would have been capable of subdivision and each unit would have been sold and separately titled for market value and not as an entire property.
447Further, I accept Mr Prescott’s evidence that the reference to “circumstances” which can affect the valuation are set out in the section “sales evidence”. I accept Mr Prescott’s opinion as a registered valuer that the relevant comparables were the sales east of the freeway, based on location.
Did the Owner fail to mitigate?
448The amended defence and counterclaim alleges that Mr Pathik failed to mitigate his loss to the extent that:
“the Plaintiff failed to further develop the works, complete construction and sell the property in its developed and subdivided form, that is, as two separate developed parcels of land”.
449The particulars set out the following matters alleging that Mr Pathik failed to mitigate his loss because he:
(a) did not terminate the Building Contract until pleading the same in his statement of claim dated 13 May 2022;
(b) could have, inter alia, terminated the Building Contract much earlier and not made the payments now claimed by him;
(c) nevertheless made payments to Mr Dimitriou or ReThink or the first defendant under the Building Contract and continued to do so in full discharge of the Building Contract;
(d) failed to further develop the Works in accordance with the amended plans;
(e) failed to complete construction of the Works and the Units, including as required, rectification of any defects; and
(f) failed to sell the Property in its developed and subdivided form, that is, as two separate developed parcels of land as opposed to a single property.
450Mr Bata on the one hand requires that Mr Pathik to mitigate his losses by not performing the Building Contract and on the other hand says that Mr Pathik failed to complete the construction of the Works and the Units, failed to rectify it, and he failed to sell the Property in its developed and subdivided form. The two positions are irreconcilable.
451Justice Garde in Portbury Development Co Pty Ltd v Ottedin Investments Pty Ltd[33] considered the relevant authorities on mitigation and summarised the principles as follows:
“(a) there is in fact no duty to mitigate loss – rather, damages are reduced to the extent that the plaintiff has not acted reasonably;
(b) the onus of proof is on the defendant to show that the plaintiff has not acted reasonably in minimising loss arising from the defendant’s breach of contract;
(c) the defendant must prove the extent of the plaintiff’s failure to minimise loss, i.e. the amount of the plaintiff’s loss that was occasioned by the plaintiff’s failure to act reasonably;
(d) a high standard of conduct is not required of the plaintiff, because the defendant is a wrongdoer; and
(e) a plaintiff will not be held to have acted unreasonably simply because the defendant can suggest other and more beneficial conduct, so long as it was reasonable for the plaintiff to act in the way that he did.”
[33] [2014] VSC 57 at [158].
452I accept Mr Pathik’s submits that Mr Bata seems to import an obligation on him, which goes well beyond his obligations under the DBCA and under the Building Contract itself, in that he is required to actually see the Project through, no matter what.
453In my view, Mr Pathik attempted to mitigate his losses after termination in undertaking remedial steps that he could afford at the time and sought to obtain amended plans and sell the land in order to crystallise his losses. I accept his evidence that:
(a) He obtained amended plans instead of demolishing Unit 1 in response to the siting defect, and intended work to Unit 2 to continue;
(b) He consulted Carringvale in August 2021 and obtained a high-level quote to take over the works in the sum of $537,120.00, which contained many “unknowns”;
(c) Mr Bata made promises to Mr Pathik that Unit 2 would be finished “by December” and Mr Pathik had no confidence in Mr Bata;
(d) He obtained an expert’s report for the cost of rectification to both Units which was estimated by Mr Ryan (at December 2021) to be $765,614.00 and this amount was well beyond Mr Pathik’s ability to pay;
(e) He obtained conditional approved plans from the Council in March 2022, which would enable him to apply for a new building permit, provided that some significant work was carried out, including demolition and reconstruction of the Unit 1 garage, driveway and front entry, relocation of electrical connections, and screening requirements between the two Units; and
(f) He was unable to pay for further works to be carried out and sold the Property.
454Mr Pathik acted reasonably in doing so.
455Mr Pathik seeks the difference between the actual value of the Property and the value it would have without the Builder’s breach (diminution in value). The Courts have regarded this type of award as being concerned with compensation loss. Professor Barnett has taken the view that this type of award seeks to provide an adequate monetary substitute for performance.[34]
[34] Barnett K and Harder S, Remedies in Australia Private Law (2nd ed, Cambridge University Press, 2021) page 143.
456In addition, there was no cross-examination undertaken of Mr Pathik in relation to his consequential losses in the nature of interest on his finance and outgoings. These are not unreasonably incurred losses and ought to be awarded to Mr Pathik.
Quantum
457The parties are invited to provide further submissions on the calculation of finance and outgoings taking into account the Court’s reasons set out above in relation to termination and the relevant valuation date.
The Builder’s counterclaim
Was the Owner in breach of the Building Contract by making payment of progress claims issued by Mr Dimitriou?
The Builder’s submissions
458Mr Bata contends that Mr Pathik is in breach of clause 13.2 by failing to pay him as the named contractor under the Building Contract.
459The amended counterclaim alleges that payments made by Mr Pathik for progress claims were ultimately not received by the Builder, due to payment not having been made to him but rather to Mr Dimitriou. It is pleaded by Mr Bata that, there was a term implied through the course of dealings between the Owner, the Builder and Mr Dimitriou, that:
“(a) Dimitriou or Rethink were project managers at the Project site and would undertake and oversee the construction works at the Project site;
(b) Dimitriou or Rethink had authority to deal with Amitabh [the Owner] as managers at the site on behalf of Bata.”
460The amended counterclaim quantifies Mr Pathik’s alleged non-payment (and breach of contract) as loss totalling the amount of $456,811.00.
461Whilst not clearly pleaded, it is submitted by Mr Bata that Mr Dimitriou was merely a project manager, and the CPMA (nor any other representations) did not grant actual or ostensible authority to Mr Dimitriou to render invoices or collect monies on behalf of Mr Bata. Instead, the Builder alleges Mr Dimitriou and Rethink went beyond what they were authorised to do and the CPMA was merely dictating the management of the Project.
462Mr Bata submits that there is no good reason given by Mr Pathik as to why the overwhelming number of payments were made to Mr Dimitriou. He argues that the Building Contract is clear, that payments were to be made to Mr Bata.
463Mr Bata relies on clause 2.1.4 of the CPMA that provided that:
“All progress claim payments must be submitted only by the Builder to the owner and all payments must be only deposit in the Builder's account.”
464Mr Bata argues that Mr Pathik paid the wrong person, and it is not unreasonable to demand that the Builder be compensated under the Building Contract for the Project.
The Owner’s submissions
465Mr Pathik submits that he was not aware of the existence of the CPMA prior to the filing of Mr Bata’s defence in the present proceeding.
466Mr Pathik contends that under the CPMA, Mr Bata agreed that Mr Dimitriou and ReThink:
(i)Were Mr Bata’s representatives in the “supervision and management” of the works (CPMA, Article 1); and
(ii)Could control the finances of the Works, have authority to issue invoices and receive payments on behalf of Mr Bata in respect of the Works at the property, and have access to Mr Bata’s bank account(s) for the purposes of carrying out the CPMA (CPMA, 2.1.5-2.1.6).
467Mr Pathik argues that the terms of the CPMA were clear, and are as follows:
“This agreement is to be read in conjunction with the building contract … where any conflict exists between the building contract and this agreement, this agreement will take precedence…” [clause 1]
“all receipts and expenses are to be accounted for by ReThink using MYOB Accounting Software. Terrain [Bata] is entitled to full disclosure of the Project’s accounting with reasonable notice” [clause 3 (iv)]
“this agreement does not bind the Owner of the Land as described in the Building Contract” [clause 2]
“ReThink was obliged to be bound by the terms and conditions of the Building Contract relevant to the Builder.” [clause 5 (v)]
468Mr Pathik contends that clause 5(v) in particular provides that Mr Bata agreed that ReThink was to assume all of the Builder’s obligations under the Building Contract which is sufficient to determine the question of Mr Dimitriou’s authority to issue and receive progress claims.
469Notwithstanding Mr Bata’s denial that the CPMA granted actual authority to Mr Dimitriou to act as his agent during the construction of the Kananook Avenue project, Mr Pathik argues that Mr Bata’s representations were also akin to ostensible authority. Mr Pathik contends that whatever the private instructions between a principal and agent are in relation to the issue of invoices and receipt of payment under the CPMA, it can have no effect on the ostensible authority presented to the Owner.[35]
[35] Lysaght Brothers & Co Ltd v Falk (1905) 2 CLR 421 at 428.
470Mr Pathik relies on the recent decision of Coonwarra Pty Ltd v CornoNero Pty Ltd[36], whereby Nichols J relevantly summarised the legal principles of ostensible authority.
[36] [2023] VSC 781 at [746] (“Coonwarra”).
Analysis
471The terms of the CPMA are plain and clear and are reflective of a broader pattern of historical interactions between Messrs Bata and Dimitriou. Mr Bata’s own evidence in chief was that he and Mr Dimitriou had set up the same arrangement for Kananook Avenue as done in the Rosella Street project in that Mr Dimitriou would undertake the Works, assume the role of project manager and they would enter into a profit sharing arrangement for those endeavours. The outcome of such arrangements was that Mr Bata would grant Mr Dimitriou actual authority through the use of a CPMA.
472Whilst I accept that Mr Dimitriou had actual authority (as per the terms of CPMA set out above), for completeness, it is necessary to assess whether Mr Dimitriou also had ostensible authority to render invoices to Mr Pathik and receive payment.
473Nichols J notes in Coonwarra that ostensible authority “will arise where a putative agent is ‘held out as having authority’ to act on behalf of the principal, and a third party has dealt with the agent on the basis of the principal’s holding out”. Justice Nichols further cites Whelan J in Flexirent Capital Pty Ltd v EBS Consulting Pty Ltd[37], when it is stated:
“…the holding out must be conduct by the principal, not the agent. A third party cannot rely upon the agent’s own representations as to authority. But this does not mean that the agent’s conduct is to be ignored. The principal may hold out the agent as having the authority by permitting the agent to act in a certain way or to make representations about himself or herself, or the principal may hold the agent out by equipping or arming the agent with a document or thing which enables the agent to assert authority with the hallmark of authenticity”.
[37] [2007] VSC 158.
474Nichols J also notes that:
“[ostensible authority] binds the principal to the full extent of the apparent authority. The nature of the representation (whether by words or conduct) therefore determines the scope of the authority: See Russo-Chinese Bank v Li Yau Sam [1910] AC 174, 184). Because ostensible authority is concerned with representations (as understood in the context of estoppel), private instructions to the agent (of which the third party has no notice) cannot operate to limit the scope of ostensible authority. An agent’s ostensible authority will only be confined by ‘publicised’ limits placed on it (Lysaght Bros & Co Ltd v Falk (1905) 2 CLR 421, 428).”[38]
[38] [2023] VSC 781.
475In line with Nichols J summations in Coonwarra, in my view, the representations made to Mr Pathik were clear – Messrs Dimitriou and Bata were presented as a dual force, and Mr Dimitriou had a full scope of authority to act on behalf of Mr Bata. Not only was this relationship fully contemplated in the CPMA, it was also reflected in the representations made to Mr Pathik across the course of his interactions with them. Mr Dimitriou had ostensible authority to enter into contractual arrangements, and Mr Bata held him out as having such authority.
476It is a clear conclusion to reach that there was no “publicised” limit to the ostensible authority granted to Mr Dimitriou by Mr Bata. Mr Bata admitted in evidence that he did not carry out any of the base stage Works, did not order bench tops for use, did not arrange for upgraded kitchen and laundry joinery, did not order semicommercial double glazed windows and did not order express metal Colourbond, nor did he order utilities. It is evident from the manner that Messrs Pathik and Dimitriou were communicating, and in the Works that Mr Dimitriou was undertaking, that he had broad authority to make decisions in respect of the project – and this was authorised by Mr Bata.
477For Mr Pathik – Messrs Bata, Dimitriou, and Rethink and Terrian were all operating concurrently and arguably one in the same. In my view, the oral and documentary evidence presented support the conclusion that it was held out to Mr Pathik, that Mr Dimitriou was for all intents and purposes, the agent of Mr Bata and was granted broad authority to act for Mr Bata in respect of carrying out of the Works.
478It, therefore, flows that, Mr Dimitriou was authorised to receive payment for the Works completed – and Mr Pathik was merely following what had been held out to him by paying invoices rendered to him by Rethink.
479I have previously noted that Mr Bata was a difficult witness and at times, presented a confusing and contradictory recollection of key events – admitting liability haphazardly without recognising the gravity of such concessions. Whilst I exercise caution in the evidence presented by Mr Bata as a witness, I also recognise that he repeatedly admitted that he did not carry out any Works (despite an awareness that Works had been carried out) and did not expect to be paid despite invoices rendered to Mr Pathik from Terrain Engineering. It appears to be convenient for Mr Bata, after the fact, to suggest Mr Dimitriou acted outside of authority in receiving funds from Mr Pathik – despite providing him with broad ranging “publicised” ostensible authority throughout the build.
480If Mr Bata did not expect to be paid from Works he did not carry out, there is no basis for a counterclaim. Mr Dimitriou was not acting outside of his authority in receiving payment, and Mr Pathik did not breach the Building Contract in paying the invoices rendered to him given the representations that were made to him across the course of the build.
481Therefore, as the principal in the arrangement, the liability is borne with Mr Bata, not Mr Dimitriou and a fact Mr Bata accepted during cross-examination.
482Noting that I accept Mr Dimitriou had actual and ostensible authority to act as the agent for Mr Bata, it is unnecessary to assess whether a term was implied – especially as this was not clearly pursued in closing submissions and I take this ground to not be pressed by Mr Bata.
483Finally, Mr Bata claims that he ought to be compensated under the Building Contract because he is the named Builder. However, Mr Bata admitted that he did not carry out any of the Works other than by his agents, Mr Dimitriou/ReThink. Further, Mr Bata failed to put on evidence of the cost to carry out the Works the subject of ReThink’s progress claims to identify the contract price, minus the cost of the Builder of carrying out the Works. No independent costings of the Works have been provided by Mr Bata. Therefore, there is no proof as to the quantum claimed.
484For the above reasons, I find that Mr Pathik did not breach the Building Contract and relied on Mr Dimitriou’s authority to issue invoices and accept payment.
Is the Owner liable to pay the Builder?
485Given my anterior findings, the answer to this question is no.
486Even putting a claim for remuneration at its highest, Mr Bata could only have an anticipated entitlement under the terms of the CPMA to 50% of the expected total profit margin in respect of the Works. This liability to pay is that of Mr Dimitriou’s and not Mr Pathik’s.
Conclusion
487Accordingly, for the foregoing reasons, I am satisfied that the Owner’s claim has been made out and the Builder’s counterclaim ought to be dismissed.
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Certificate
I certify that these 116 pages are a true copy of the judgment of Her Honour Judge Burchell delivered on 3 February 2025.
Dated: 3 February 2025
Alexandria Peck
Associate to Her Honour Judge Burchell
SCHEDULE OF PARTIES
Amitabh Pathik
Plaintiff
and
Mark Bata
First defendant
and
ACN 162 737 322 Pty Ltd (formerly known as Rethink Pty Ltd)
Second defendant
and
Chris Dimitriou
Third defendant
and
Building Surveyors Code Pty Ltd (ACN 606 314 676)
Fourth defendant
and
Yavuz Demirel
Fifth defendant
and
Michael Gaffney
Sixth defendant
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