Pearce v Jamatt Constructions Pty Ltd

Case •

[2018] NSWCATCD 44

•

16 August 2018

No judgment structure available for this case.

Civil and Administrative Tribunal


New South Wales

Medium Neutral Citation: Pearce v Jamatt Constructions Pty Ltd [2018] NSWCATCD 44
Hearing dates: 9 and 10 May 2018, close of submissions 28 June 2018
Date of orders: 16 August 2018
Decision date: 16 August 2018
Jurisdiction:Consumer and Commercial Division
Before: S Thode, Senior Member
Decision:

(1) The respondent shall pay $9816.14 to the applicants immediately.

 (2) The respondent shall pay the applicants’ costs of and incidental to the application on the ordinary basis as agreed or assessed.
Catchwords: CONTRACTS — Formation — Agreement — Battle of the forms – Construction Contracts
Legislation Cited: Civil and Administrative Tribunal Act 2013; Home Building Act 1989
Cases Cited: Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; Sopov v Kane [2009] VSCA 141; Thompson v Chapman [2015] NSWCATAP 233; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 [2004] HCA 52; Mac v Antworks Pty Ltd [2016] NSWCATCD 75; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales ; Simic v New South Wales Land and Housing Corporation [2015] NSWCA 413; Green Apple Pty Ltd v La Brasserie Investments Pty Ltd [2018] NSWCATAP 90
Category:Principal judgment
Parties:

Gary Alan Pearce, first applicant; Lidia Palmina Pearce, second applicant (the homeowners);

  Jamatt Constructions Pty Ltd (respondent builder)
Representation: Mr McCall, counsel, instructed by Mr C. Braid of Walters Solicitors for the applicants;
Mr Simpson, counsel, instructed by Messrs Somerville Laundry Lomax Solicitors for the respondent.
File Number(s): HB 17/30079
Publication restriction: Nil

reasons for decision

The proceedings

  1. For convenience Mr and Mrs Pearce shall be referred to as the owners. The proceedings arise out of the construction of a dwelling at xxx Road Alstonville, (the premises).

  2. The builder provided an estimate dated 14 November 2014. The parties entered into a contract for residential building work dated 15 November 2014. The estimate and the contract show considerable disparity. The question the Tribunal must determine is whether the parties entered into a fixed price contract for $500,000 or a “do and charge” or “cost plus” contract. The owners maintain that the contract was a fixed price contract and that they overpaid the builder. The builder maintains that the contract was a do and charge contract and that he was paid an appropriate amount for his work.

The applicants’ claim

  1. The owners claim that the contract was a fixed price contract in the sum of $500,000 and that contrary to the terms of the contract, they were overcharged.

  2. The owners’ claim has two elements:

  1. The overcharge claim for $42,935.63, being the difference between the total adjusted contract price of $640,887.57 and what the owners say they paid to the builder and third parties, being $683,823.20

  2. The defective works claim of $50,047. While headed defective works, this claim has two elements, a claim for defective works ($19,615) and a claim for incomplete work ($18,300) both amounts before margins and GST.

  1. In regards to the construction of the contract, the owners say they entered into a fixed price agreement based on the following findings of fact:

  1. the builder provided a written fixed price agreement, a standard HIA contract document, and not a “do and charge” contract;

  2. the builder gave an estimate to the owners, knowing that the estimate was inaccurate, which was misleading and deceptive;

  3. the builder made an estimate up “on the spot” knowing the estimate to be inaccurate;

  4. the builder included the cost of the painter in the estimate, but then charged an additional amount for painting.

  1. The owners’ written submissions and submissions in reply were received on 31 May and 28 June 2018 respectively. They were comprehensive and collectively spanned 60 pages. All submissions and references to case law were considered.

  2. The owners submit the contract is a fixed price contract. The fixed price is documented in clauses 3, 14, 15, 17 and 21 and the associated parts of the schedule to the written standard HIA contract. The fact that the builder included the letters “EST” for “estimate” in front of the $450,000 figure on page one of the contract does not negate the fact that the contract is a fixed price contract. The builder’s lax practices include a practice of referring to “estimates” even though quotes were obtained from third party subcontractors which would have allowed the builder to form a very clear opinion of what was required to perform the scope of the work. If he included the words “estimate” then this was designed to mislead and deceive the owners into thinking they had entered a fixed price contract when all along the builder had no intention to complete the work for $500,000.

  3. The builder obtained Home Owners Warranty Insurance for $500,000, a further indicia that the contract price was fixed at that sum. The invoices were rendered by the builder and paid by the owners, but in this case this is not indicative of a “do and charge” contract, but simply a contravention of clause 15 of the contract, which sets out the method of payment according to the stages completed. “The builder’s breach of the contract does not change the nature of the signed agreement” (para 19 of the owners’ submissions).

  4. The owners argued they paid significantly more than the contract price because they had no choice if they wanted their premises built. “No weight can be placed on the owners’ willingness to pay those invoices”. The progress payment schedule, in the contract was not completed but this cannot be indicative of the fact that the contract was a “do and charge” contract. It was simply another non-compliance by the builder to properly execute the HIA fixed price contract. The builder’s non-compliance with the contract should not be used to penalise the homeowners.

  5. Although the builder entered the letters “EST” in front of the contract price, the owners claim that they did not notice these letters. It is suggested that the letters “EST” may have been inserted after the contract was signed. In any event, the builder told the owners that the $500,000 contract price covered “everything” and the builder was well versed with the likely cost of the project because he obtained actual quotes rather than estimates from contractors, including Mr Pellegreen’s (the bricklayer’s) labour costs. Following one such quote the builder took the opportunity to revise the contract price from $478,000 to $500,000, this revisions being a further indication that the parties negotiated and agreed a fixed rather than a “cost plus” contract.

  6. The builder sought and was paid $25,000 deposit, further indicative that the contract was a fixed price contract, as contemplated by clause 15.1 of the contract.

  7. In addition, and in support of the claim for overpayment, labour rates and charges were invoiced with little foundation. Tax invoice #6739 dated 4 March 2015, with a labour component of $42,314.55 plus GST was based on “$60 per hour” from Monday to Friday 8 hours per day for six and a half days per week. This, according to Mr Witchard, the director of the builder, being a standard calculation of labour cost. The owners submit if this calculation were to be adopted from 19 January to 4 March 2015 inclusive, then the most the builder could have charged is $30,600. This is further indicative of the fact that the builder’s invoices are not based on realistic calculations based on the contract. The owners paid the invoices because by the time they realized the $500,000 had been exceeded they needed the builder to complete the work. “They may have been naïve in the ways of the proper conduct of a fixed price contract but their naivety should not be interpreted against them to support the Builder’s contention that this signed contract was charged on a “do and charge” basis” (see submissions page 8 para 23).

Written variations

  1. Clause 17 provided a regime for variations to the work which required that the variations be recorded in writing signed by both parties. The builder did not follow those requirements. Two variations were agreed in writing: $70,575.66 for the retaining wall and $19,810.51 for the shed slab. No orders are sought in respect of the agreed variations.

Unwritten “variations” - are they variations?

  1. There were a number of unwritten variations listed in the applicant’s schedule, these did not follow the requirements of clause 17 of the contract. “A variation must be in writing signed by the builder and the owner. Either the owner or the builder may ask for the variation” (see clause 17.1).

  2. The owners acknowledge their requirement to pay the builder on a just and equitable basis, regardless of the fact that he builder has not complied with the writing requirements of the contract, if the owners agreed to the work: see Pavey & Matthews v Paul [1987] HCA 5; Sopov v Kane [2009] VSCA 141; Thompson v Chapman [2015] NSWCATAP 233.

  3. The builder did not provide contemporaneous documents as to how he charged for each variation. The value of the variations was therefore not easy to assess and the parties were required to obtain independent evidence from experts to assist in the quantum meruit values for the work. The owners submit the builder’s invoices are “a hopelessly convoluted and unreliable way for the builder to deal with its claim for the costs of these works”. By the time of hearing the parties had narrowed the issues in dispute to the following variations. The owners addressed each claim for variations in turn. If the owners are successful, they seek a refund /adjustment to contract price in respect of each item:

  1. Item 2 – Tarpaulins: the builder charged $3309.09 to the owners for the use of a tarpaulin. It is submitted that use of a tarpaulin is not necessarily a “variation” but merely good building practice to protect the unfinished floor boards and wood frames from wet weather. This should have been included in the contract price, the owners claim they are not required to pay this amount and were overcharged. The quantum is disputed and Mr Oke, the owners’ expert, has calculated a reasonable cost as $1408.

  2. Item 3 – Change to Ensuite Windows: The builder charged $5293.41 for a change to a smaller ensuite window in the new shower area and changing flyscreens to security screens. The owners claim these variations were not presented by the builder and not signed by the owners. Mr Oke claims on inspection of the GJ James Glass invoice that most costs itemised on the invoice are not relevant to the ensuite window variations and at best the cost should be limited to $2193.

  3. Item 4 - Additional Tiling Labour: The builder charged $6697.73 for additional tiling, the owners concede $6091.92.

  4. The builder charged $200.88 for studs for the toilet, the owners state this is trivial, and a cost that should be included in the contract price.

  5. Item 11 – Electrical works: the owners claim the difference between the actual cost of $22,189.20 as charged and the estimate of $17,900. It is conceded the owners requested additional electrical work. The difference is $4589.20. This amount is conceded by the owners.

  6. Item 14 - concrete slab for water tanks and stairs- the builder charged $5112.68 and the owners submit this should be valued as $4719.20 on a quantum meruit basis, both amounts inclusive of GST. Mr Oke’s retrospective independent calculation should be preferred over that of the builder’s expert.

Prime Cost Items - Included in the contract price?

  1. The owners concede that a fair award should be made for prime costs items such as cabinetry, $9199.65 and tiling $1250.98.

  2. The owners and the builder agree that owners have paid $526,469 to the builder to date.

  3. The owners concede that they have paid $157,354 to contractors directly “which is ordinarily the responsibility of the builder”.

  4. The major point of contention on this issue is whether the bricklayer the painter and the whitegoods were part of the contract works for which the builder was responsible.

  5. The owners claim that that the bricklayer Mr Pellegreen’s cost of $23,595.75 was part of the cost included in the $500,000 fixed contract sum. The builder says that the “Estimate” document formed part of the contract documents and that it clearly stated that the bricklaying was an additional cost not included “at this stage”. The owners submit that the contract document superseded the estimate document and that the estimate should not be taken into account. The section setting out “excluded items” on page 6 of the contract does not mention the bricklayer’s costs, but does specifically exclude other items such as the security system and the painter’s cost, Mr Filippo Rendace. The direct payment of moneys by the owners to the bricklayer was always contemplated by the parties because the bricklayer is a friend of the owners. The fact that the owners paid the bricklayer directly does not preclude the conclusion that the bricklayer’s cost work formed part of the fixed price contract work and should not accrue separately. Bricks formed part of the plans and specifications, the plans form part of the contract documents, therefore the bricks and the cost of the bricklayer must be included in the fixed price contract sum.

  6. The painter, Mr Rendace, was paid $12,289.25. The owners claim this cost was included in the fixed contract sum even though contract “Schedule 3”, setting out Excluded Items (Clause 19) does contain the words “Painting Filippo Rendace”. Mrs Pearce stated that although she paid Mr Rendace directly, she “thought” that this cost would be taken off the contract price. These issues concern findings of facts and credit of the parties, and will be addressed further below.

  7. The owners paid $4000 for whitegoods. The owners claim these are fixtures included in the contract price and they should be given a credit. The electric wall oven and cook top were included in the plans, they were not excluded in “Schedule 3”, and are therefore included in the fixed contract price. The dishwasher was not included in the plans, the sum needs to be excluded from the payments to third parties.

  8. In summary, the owners claim they have overpaid the builder in the sum of $42,935 and seek recovery of that amount. The owners reject the builder’s submission that this is a payment by Mistake of Fact or Law and therefore the Tribunal has no jurisdiction to entertain the owners’ overpayment claim. They submit that an overpayment claim simply requires the Tribunal to reconcile the contract sums, and that this is not an equitable claim, but a Building Claim brought under contract, within the meaning of s 48A of the Home Building Act 1989 (the Act) and that the Tribunal has jurisdiction to hear and determine the overpayment claim.

  9. In addition, the owners claim damages for defective work pursuant to s 18B of the Act. The claim for defects will be addressed individually below.

  10. Thirdly, the homeowners claim damages for misleading and deceptive conduct, because the builder failed to advise or disclose that the contract price of $500,000 would not be reduced by Mrs Pearce completing “Schedule 3. Excluded items” of the contract which specifically excluded the cost of “Painting Fillipo Rendace”. The builder had prepared an “Estimate” which included the painting cost of $16,000, he then “directed or allowed Mrs Pearce to complete Schedule 3 to the effect of excluding from the contract works the work of the painter, her cousin, Filippo Rendace”. Mrs Pearce had the erroneous belief that the owners would be entitled to a credit from the contract price for any moneys they paid directly to the painter. This constituted misleading and deceptive conduct and the owners claim the cost of the painter in the sum of $12,289.25.

Consideration

  1. The Tribunal needs to determine the following matters:

  1. Did the parties enter into a fixed price or cost plus contract?

  2. If the parties entered into a cost plus contract the claim for overpayment and incomplete work must be dismissed.

  3. If the parties entered into a fixed price contract, what is the sum of the overpayment?

  4. Has the builder performed defective work in breach of section 18B of the Act?

  5. If found that the parties entered into a fixed price contract what is the assessment of damages for incomplete work?

  6. Has the builder engaged in misleading and deceptive conduct, and if so, what is the quantum of the damage suffered from such conduct?

  7. The question of costs.

Consideration

Did the parties enter into a fixed price of cost plus contract?

  1. For the reasons that follow I find that the parties entered into a cost plus or “do and charge” contract.

  2. I am not persuaded that the builder communicated to the owners that he was willing or able to perform the scope of work for $500,000. In coming to my conclusion I have taken into account the conduct of the parties at the time of formation of the contract, the information available to them at the time of the contract, and the subsequent conduct of the parties in the performance of the contract (Toll v Alphapharm).

  3. Before formation of the contract, the builder provided a first estimate to the owners in about January 2014. The builder did not provide a fixed price estimate in January 2014. The owners revised the plans and specifications. In September 2014 the owners’ subdivision was registered. On 14 November 2014 the builder provided a written estimate (the Estimate), and presented the Estimate during a meeting. The document bore the title “Estimate” and neither party contends that the estimated price of $478,209.68 was a fixed contract price. The owners further negotiated with the builder, and on 15 November 2014, the parties signed the contract with a contract price estimate.

  4. The contract document is ambiguous but not incapable of interpretation. Although the Standard HIA contract signed by the parties is a document distributed by the Housing Industry Association (HIA), NSW NHC September 2008 version, the parties amended the contract sufficiently so that the written contract as executed performs the function of, and is properly interpreted, as a cost plus contract.

  5. As is well known, Mason J said (with the agreement of Stephen and Wilson JJ) in CodelfaConstruction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352; [1982] HCA 24 that: “The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning.”

  6. Whether there is a constructional choice available to a written contract cannot be determined without first at least considering evidence of surrounding circumstances. In Simic v New South Wales Land and Housing Corporation [2015] NSWCA 413, Nettle and Gordon JJ said at [78] that “The proper construction of each [Undertaking] is to be determined objectively by reference to its text, context and purpose” and the principles were further elaborated on in the recent decision of Cherry v Steele-Park [2017] NSWCA 295 (22 November 2017) where Leeming JA considered:

In Victoria v Tatts Group Ltd [2016] HCA 5; (2016) 90 ALJR 392 at [51], the Court unanimously approved the formulation of principle advanced by three members of the Court (French CJ, Nettle and Gordon JJ) in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 (at [46]-[51]) that, as a general principle of construction, the rights and liabilities of parties under a contractual provision fall to be determined by objective consideration of its text, context and purpose. The relevant enquiry is to be conducted on the footing of what a ‘reasonable businessperson’ would have apprehended the terms to mean in light of the particular language used by the parties, the circumstances addressed by the contract and its commercial purpose. Although the Court was of the view that this process would not uncommonly be possible without reference to evidence of surrounding circumstances, it acknowledged that regard could be had to such evidence if, for example, it assisted in establishing the objective facts known to the parties and thereby elucidated with greater precision the commercial purpose or subject matter of the contract”

French CJ observed at [18] that construction of a contract:

“involves determination of the meaning of the words of the contract defined by reference to its text, context and purpose. Resort to extrinsic circumstances and things external to the contract may be necessary to identify its purpose and in determining the proper construction where there is a constructional choice.”

  1. Having concluded that this is a contract where there is constructional choice, it is necessary to resolve the ambiguity. Unless the ambiguity is resolved, the clause in question would be void for uncertainty. It is necessary to resort to extrinsic circumstances in order to identify the purpose of the term “EST” and I am satisfied that it was the common intention of the parties to enter into a do and charge contract when looking at the performance of the contract by the parties. There is no ambiguity that the letters “EST” stand for Estimate but the nature of the uncertainty is what legal effect the insertion of the word “EST” has in the context of the HIA contract. It is necessary to give some legal meaning to the word and I have taken into account the parties’ mutual conduct in the performance of the contract. Both parties performed the contract in a manner that would suggest they had agreed on a cost plus contract.

  2. The contract stated the words “EST” for “estimate” in front of the contract sum. Insofar it is suggested that the words “EST” were inserted after the fact, by way of deceit, there is no evidence before me to support that proposition insofar it was squarely put to Mr Witchard at all. I note that fraud has not been pleaded. I find that the words EST in large capital letters were inserted for the reason Mr Witchard explained in his affidavit of 2 February 2018: “Lidia and Garry did not want a revised quotation and we agreed to put an estimate of $500,000 so that the contract could be signed and work could begin”. Lidia [Pearce] said words to the effect “Just build it and we will pay as it goes.” I accept as plausible and persuasive Mr Witchard’s evidence that the contract price was an estimate rather than a fixed price because many of the estimates Mr Witchard had obtained “had been obtained during our discussions in early 2014” and had been superseded. I also accept that Mrs Pearce stated she did not want a revised quote because she did not want anything else holding up the construction because she wanted to move out of her mother-in-law’s place. I accept and prefer Mr Witchard’s evidence that the parties agreed that an additional estimate to arrive at a revised fixed contract price sum was not seen as desirable because it would delay the start of construction. The owners may have set out to negotiate a fixed price contract, but they signed a “do and charge contract” based on a $500,000 estimate.

  3. The owners rely on the High Court Authority of Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 [2004] HCA 52 at [40]:

This Court, in Pacific Carriers Ltd v BNP Paribas[6], has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction[7].

  1. Applying the principles of Toll v Alphapharm above, I find that the reasonable person would have understood that by inserting the letters “EST” in front of the contract sum of $450,000 (exclusive of GST) Mr Witchard expressed that he was unable and unwilling to complete the construction of the project for an all-inclusive sum of $500,000.

  2. If I have erred and the insertion of the words “EST” did not create a do and charge agreement, then the surrounding circumstances could have left the owners in no doubt that the contract price they had hoped for could not be achieved. Many of the items normally included in a fixed contract price were subject of separate negotiation between the parties, such as the painting and bricklaying, at the request of the homeowners. The trade quotations of early 2014 had been superseded and could no longer be guaranteed by Mr Witchard as too much time had passed, partially because the homeowners had changed the scope of the work. A full revision and preparation of a fixed contract sum would require time, and the Pearces were not prepared to wait for Mr Witchard to prepare a revised estimate.

  3. In addition, I accept and prefer the builder’s submissions that the parties did not complete the “progress payment” provisions of the contract because the owners knew and accepted that the builder would render bills for his labour costs and the owners would pay contractors directly, which is a contract provision of a “do and charge contract”, which is what transpired.

  4. The builder did not allow for prime costs items because the owners paid directly for prime costs items, as is the custom in “cost plus” or “do and charge” contracts.

  5. The builder rendered all invoices on a “do and charge basis” and the owners paid for them.

  6. The owners paid $145,270.46 directly to third party contractors. In the normal course of events, where parties enter into a fixed price contract, the builder pays all subcontractors directly. If an owner pays a subcontractor directly, the contract sum is adjusted and the owners are credited with any amounts paid to contractors which should have been included in the fixed sum. The owners’ expert suggests, on the instruction that this is a fixed price contract, the contract should be adjusted by $145,000 (see Mr Oke’s report). That is clearly an untenable position and not one pressed in submissions by counsel for the owners. However, if the contract were to be treated as a fixed price contract with an adjusted contract price of $640,887, an adjustment of $145,000 as suggested by Mr Oke would result in the builder incurring a loss of approximately $60,000. The builder’s profit margin, based on provision of labour and materials, was calculated on page 4 of his estimate document, as $81,818.18 plus GST.

  7. These sums do not support a finding that the parties agreed to a fixed contract price of $500,000.

  8. It is important to note that the owners did not seek redress from the builder and demand that the contract price be adjusted, until proceedings brought before the Tribunal. Even when the owners realised they had reached the $500,000 mark, they did not ask the builder to adjust the contract and did not stop paying him. This is consistent with the fact that the owners knew they had entered a “do and charge” arrangement. I am satisfied there was no agreement to enter into a fixed price contract.

  9. I reject Mr Pearce’s contention that he did not notice the words “EST” preceding the amount of $450,000. There is very little handwriting on the contractual documents and I do not accept that the letters “EST” could have been easily overlooked (paragraphs 25 affidavit 4 October 2017).

  10. It is relevant that the builder was paid for every invoice. While subsequent behaviour is not relevant to construing a contract, it is relevant to determining whether agreement was reached on particular terms in the first place. The builder refers to the decision of Spigelman CJ in County Securities Pty Ltd v Challenger Group Holdings Pty Ltd, about the agreement in that case:

The transfer agreement was a contract partly in writing, partly oral and partly to be inferred from conduct. Reliance on conduct was necessary because important aspects of the agreement, when not the subject of express statements, either written or oral, in a form which could constitute the making of an agreement.

  1. Here in the absence of effective terms as to invoicing and payment, it is necessary to have regard to the parties’ conduct as to those matters to infer the relevant terms. That conduct leads to the conclusion that the parties had entered a do and charge contract.

  2. There is no issue between the parties that an agreement was formed. The building was built. The payments were made. In the absence of express terms as to payment of subcontractors and payment to the builder, the question arises as to what the implied terms of the contract were. I am satisfied that the parties entered into a contract “partly in writing, partly oral and partly inferred from conduct” as was the case in County Securities Pty Ltd, above and there was no agreement to complete the work for a fixed price.

  3. Payments to Mr Pellegreen the bricklayers and Mr Racine, the painter were made separately by the owners as per negotiations and by agreement with the builder. In total the owners paid $145,000 to trades and sub-contractors separately. The owners paid approximately $145000 above and beyond what they claim was the fixed contract price without invoking the terms of the contract which would allow for fixed contract price adjustments. I find that this conduct is supportive of the proposition that the owners knew they had entered into a cost plus contract. In light of these findings, any issue of overcharging becomes irrelevant, as does the claim in relation to incomplete work.

The variations

  1. The applicant seeks damages for items they entitle variations. As this is a do and charge contract, the items in contention are not strictly speaking variations. The applicants’ expert, Mr Oke, submits that even on a do and charge contract basis the owners were simply overcharged.

  2. The builder submits that there can be no award for overcharging because the owners voluntarily paid invoices and neither party had any intention following the variation procedure of the contract. The builder states that “the claim is not pleaded as a claim in restitution and that is the only basis on which such payments could be recoverable. …. Any such recovery is contrary to the principles in David Securities Pty Ltd.. and this aspect of the claim must fail in its entirety”.

  3. For reasons set out under a separate heading this argument must fail. The owners argue their claim for overcharging in contract. In light of my finding that the contract is a do and charge contract I can assess on an item by item basis whether the owners were overcharged by analysing the invoices rendered by the builder. The builder claims that “throughout the build all invoices were itemised and all subcontractor’s invoices were provided to Gary along with our invoices at his request (affidavit Kerry Witchard 2 February 2018). The owners argue that, based on the invoices they were overcharged. It is necessary for the Tribunal to determine on an item by item basis whether the owners have established a breach of the contract.

Tarpaulin –

  1. Mr Oke states that the builder has an obligation to protect the works whilst under construction. He submits the builder was required to cover up the floors to prevent damage by exposure to the elements for any length of time that would compromise the wooden floor. The cost of cover should be included in the labour cost as good building practice and not attract an additional charge. I have had regard to the evidence of Mr Pearce who states that the site required protection because of a change in roofing contractor. However , during cross-examination Mr Pearce conceded that he sacked the roofing contractor, thereby delaying the progress of the work. There is no dispute that the protective coating on the flooring is warranted for two months. The evidence does not establish that the flooring was exposed for longer than two months, thereby necessitating cover. The tarp was hired in March and the roof was completed in April. The photographs on pages 357 and following are not probative of the fact that the wood was exposed for any length or for longer than 2 months. On balance I am not persuaded that the owners have established a necessity to cover the floors, or that the tarpaulin was required “as good building practice”. The owners were entitled to direct the builder to erect a tarpaulin. Accepting the contract is a cost plus contract, the builder is entitled to recover his reasonable costs. I accept Mr Nowlan’s opinion that the cost was reasonable based on the invoices presented from Coats Hire “a national company supplying services to the building and construction industry”. The invoice rendered by the builder attaching the Coates invoice and including the 13 hours labour as per JW3 are the best evidence to assess actual (emphasis added) cost incurred. In light of the invoices at JW3, I do not know on what basis Mr Oke alleges that a lesser amount of $1408 should be applied instead. I note that the 13 hours labour charge (for erecting and dismantling the tarpaulins daily) is not specifically addressed by Mr Oke. I am not satisfied that the owners have established a breach of contract either on a cost plus or fixed price basis. The owners were not overcharged. I decline to make an award or allow a contract adjustment in respect of this item.

Ensuite Window

  1. The owners admit they sought a change in the size of the windows as well as changing insect screens to security screens which involved an obvious increase in costs. The builder charged an additional $5293.41. The owners submit they were overcharged. Mr Oke opines the owners were overcharged based on the analysis of the GJ James Invoice for $22233.41 inclusive of GST. I am not satisfied that the agreement between the parties to install different windows is a “variation” for the purpose of a do and charge contract. The owners requested and the builder agreed to change windows. In his affidavit of 2 February 2018 at paragraph 48 Mr Witchard deposes that the owners agreed to the variation and paid for the works. Accepting this is a cost plus contract, if the owners claim overcharging, the expert, Mr Oke, must state why the actual cost (emphasis added) incurred was excessive under the circumstances. The builder is entitled to charge actual cost plus margins plus GST pursuant to a do and charge agreement. I believe the analyses of both experts is not of assistance to the Tribunal. The invoices tendered from GJ James Glass amount to $22,233.41 which exceeded the quoted price ($17039) by $5194. See JW4. The builder properly invoiced in accordance with the revised invoices of GJ James which were attached. I am satisfied that the owners were invoiced for actual costs incurred (and credited $163.90 for a window which was not used). The builder charged 1.5 hours for labour. Mr Oke states that the invoices are unreasonable but does not make clear on what basis this assertion is made. The invoices, which denote actual costs incurred for building supplies and labour are the best evidence before the Tribunal. I do not find, on the evidence as presented, that an overcharge has been established.

Additional tiling

  1. The owners claim a refund/credit/contract adjustment for cost of tiling above and beyond the estimate. During construction the owners changed the tiling as per the original plans. Mrs Pearce selected more expensive tiles from the tiling shop. The additional works were in the sum of $6697.93 as charged by the tiling supplier. The owners now claim they were overcharged by $605.81. The owners claim this additional charge is not accurate or fair and because the selection of Mrs Pearce exceeded the initial PC estimate. I am not certain on what contractual or factual basis the owners are entitled to a refund. I am not satisfied the owners have discharged their onus of proof in respect of this item. The owners were charged based on the actual invoices as provided by Robotham with whom the owners traded directly. There is no evidence of overcharging based on a do and charge contract. Even on a quantum meruit, I find no loss established.

Extra Studs for toilet.

  1. The owners seek a refund, credit of $200. It appears that the builder charged additional pine. The pine was paid for. Additional pine stud was used to frame up the toilet in the shed. The builder submits this did not form part of the contract, he had a deficit of timber, and additional timber had to be purchased to complete the contract work. This was clearly set out in invoice W attachment JW7. I am not satisfied that the owners have taken me to any contract documents to establish that the framing of the shed toilet formed part of the contract. Indeed the shed was excluded from the contract works. It is therefore reasonable that if some pine was used to frame the shed toilet, the builder was required to purchase additional material to finish the contract works (see affidavit Jason Witchard, para 58). The owners paid the invoice. I cannot find this item established. I make no allowance/contract adjustment in respect of this item.

Electrical works –

  1. Mr Oke states in his expert report:

“ the matter documentation suggests that the owner paid for all costs associated with the electrical installation as confirmed in the affidavit of Jason Witchard. …If the Owner has dealt directly with the electrician and paid all costs then the Builder should not be claiming payment for any electrical works whether within the original quote to the value of $4719.20 (words used in paras 78) or in excess of any quotation or estimate. In my opinion there should be nil allowance for this item on a quantum meruit basis.”

  1. The owners who had retained their own electrician for other works, acknowledged this was additional work they requested of the builder. I refer to paragraph 93 of Mr Pearce’s affidavit where he concedes that he requested the work. The owners claim that the Estimate document allowed $17600 for electrical but they actually paid $22,189. They claim the difference of $4589. Accepting that this is a do and charge contract, I am not satisfied that this is an overpayment, or requires a variation in writing. There is no evidence from Mr Oke that the amount paid by the owners was unreasonable, he simply arrives at a legal conclusion which goes to the ultimate question to be determined by the Tribunal. Mr Oke does not state what information he reviewed, or what amount he claims was “overcharged”. The builder is not required to establish an entitlement on a quantum meruit basis. But even if I have erred, Mr Oke does not establish, on analysis of the builder’s or electrician’s invoices on what basis the owners were overcharged. I am not satisfied a loss has been established.

Concrete Slab for Water Tanks and Stairs

  1. The owners seek a credit/refund in respect of the concrete Slab for water tanks and stairs. The owners claim that on the estimate of Mr Oke they were overcharged. For the reasons set out above I have found that the parties entered into a do and charge contract. The owners requested the slab (which was not included in the plans), the builder did the work, rendered an invoice and the owners paid $5112.68. Mr Nowlan, for the builder, considers the charges reasonable. Mr Oke states that the reasonable cost should have been $4719 based on Rawlinson’s guide. There is no evidence that the slab under the back stairs was included in the contract documents. The affidavit of Mr Pearce at paragraph 90 states he “ was under the impression the builder would concrete under the tank” …”we asked the builder to concrete the area” … “the work went ahead”. I am satisfied that the plans did not require the builder to concrete the area. I find that, in the context of a do and charge contract, the overcharging claim based on the invoices from the concreter and the labourer appearing at JW14 of the Witchard affidavit has no foundation in fact. Mr Oke did not cite the invoices and states in three lines that “$4719 is reasonable” “with reference to the Rawlinson construction Guide” for a “concrete driveway”, however this is not a concrete driveway but a slab under the watertank. Without further elaboration on why the expert arrives at this opinion with actual reference to the invoices, I am not satisfied that the owners have discharged their onus of proof by citing Rawlinsons without further explanation. There is no breakdown or analysis of the builder’s invoice offered by Mr Oke which supports a finding of overcharging. On these facts the outcome would be the same, whether the Tribunal found a fixed price or cost plus contract.

Handrail

  1. The owners seek a credit for cost charged for a handrail. I understood from the owners’ submissions that this item was no longer pressed (see page 13 of the owners’ submissions).

Prime Cost items –

  1. The owners state that clause 21 of the contract provided a regime for the variation of the contract price to allow for variations in respect of the prime cost items. The Estimate document makes some reference to Prime Cost items being cabinetry and tiling. The allowance for cabinetry was $28,999.99 inclusive of GST. The actual cost paid by the owners directly to the cabinet maker (emphasis added) was $38,198, the difference is $9199.65. Accepting the contract is a do and charge contract, the claim for a refund by the owners must fail. The owners directly negotiated with and paid the cabinet maker. During construction Lidia Pearce approached the builder and stated that she had changed the cabinet plans with “Ryan” the cabinet maker, without consultation with the builder. The cabinetry and tiling items were increased by the owners. The total invoices from Morrissey cabinetry in the sum of $40,509 were paid by the owners. Insofar the contract required written amendment pursuant to clause 21, it was incumbent upon the owners to facilitate the amendment. Even on a “fixed price contract” the owners claim for overpayment on these facts must fail.

  2. Clause 21 states that the owner must give written notice to the builder of the owners’ selection of prime costs items. If the actual price of the cabinetry and tiling is more than the allowance, (at Mrs Pearce’s request) then the total difference and the builder’s margin applied to that difference is added to the contract price clause 21.6.(b). On the facts as set out above, the builder was entitled to charge a margin on the increase in prime costs items. Only if the price was less than the allowance/estimate would the owners be entitled to a credit (or deduction from the contract price), clause 21.6(a).

  3. Regardless of a “fixed price” or “cost plus” contract, given the owners chose additional tiling and cabinetry through direct negotiation with the subcontractors and tiling suppliers, I am not satisfied that the owners have discharged their onus of proof and established a breach of contract in this regard. Even if I have erred and a breach of contract is established, I am not satisfied that the owners have established what, if any loss, they have suffered. They ordered more cabinetry and tiles and paid for the additional items. The submissions simply suggest that a deduction of the Estimate sum from actual costs cost incurred is commensurate with a loss. However, even on a quantum meruit basis, the owners derived a benefit from work and materials they ordered above and beyond the contract work, for which they paid. I am not satisfied the owners suffered a loss.

Prime Cost item – tiling.

  1. The owners paid $10,787 for tiles and 731 for grates, a total of $11,528.36. The owners claim they were overcharged because the estimate stated $7128 and they paid $8378. The difference is $1250. This submission is not elaborated by the owners. The owners’ calculation does not add the cost of the grates. On balance and for same reasons as set out in paragraphs 62 to 64 above, I am not satisfied that the owners have discharged their onus of proof. I do not find a breach of contract established. Even if I have erred. On the arithmetic before me I do not find a loss established.

Should the owners be reimbursed for the cost of the bricklayer?

  1. The owners claim the cost of the bricklayer $24,784.50 should have been included in the contract price and they seek a credit, contract price adjustment for this amount. However, I am satisfied based on the lay evidence of the parties that each agreed as the bricklayer was a friend of the owners and would be paid directly by the owners. Mr Pearce explained that he had used Mr Pellegreen, the bricklayer for another house, and that he had contact with him through a car club for 30 years. The estimate makes specific mention of Mr Pellegreen at page 39 of the bundle:

“the laying of the bricks was not included at this stage”

  1. Mr Pellegreen was not supervised by the builder, once a foundation was laid and the builder was satisfied that Mr Pellegreen “knew what he was doing” it was assumed by owner and builder that “bricks would go up the wall”. I am satisfied that the bricklaying was not included in the contract sum, and that in accordance with the agreement (whether fixed price or cost plus) the bricklayer was paid for separately by the owners as he was a friend. I do not find that the contract should be adjusted in respect of the bricks.

  2. The fact that the plans and specifications included bricks and mortar does not preclude the parties from excluding the cost of the bricklayer from the contract. Parties are entitled to enter into separate contracts. As the owners did in respect of the many works that were carried out directly by third parties who were paid directly by the owners. I am satisfied that the Estimate document forms part of the contract documents and must be read as part of and in conjunction with the contract and that the Estimate excluded the “laying of the bricks”. It is noted that the Estimate excluded the bricklayer, but the parties did not list the bricklayer in Schedule 3, the contract exclusions, just as they did not list many other items such as the shed, landscaping or the concrete slab under the stairs. Neither party conformed with the terms of the written contract and it is necessary to derive the actual contractual intent from the conduct of the parties. Mr Pellegreen was retained by the owners and paid by the owners. Accepting this is a cost plus contract, the owners have not established a breach of contract, nor am I satisfied that the owners have established a loss.

Painting – Prime Cost

  1. The owners seek a contract adjustment for costs incurred and paid to the painter in the sum of $12,289. Mr Pearce conceded in cross-examination that he allowed the painter’s costs to be excluded because Mrs Pearce wanted to use him specifically as he is a family friend. The contract exclusions show that Mrs Pearce wrote the words “Painting Filippo Rendace” into Schedule 3, the exclusions schedule. On balance I find that the contract document speaks for itself and indicated the exclusion of the painting cost. No credit should be allowed.

White goods

  1. The owners paid for white goods and claim they should reimbursed in the sum of $3435 as whitegoods were included in the plans and specifications and therefore in the contract price. I disagree with the submissions of the owners. The plans demonstrate an allowance and specification for installation of whitegoods. They do not specify the cost or make of the whitegoods. On balance I cannot agree that the mention of an “electric wall oven and 900w electric cook top” in the “general notes” section of the elevation design drawings denotes an inclusion in the contract. It merely allows space for construction. There is no indication in the contract documents that the contract provided for whitegoods. No specific sum for oven or cooktop was allowed in the estimate or contract. In the absence of any specific sum allowance and in light of my finding that the contract was a do and charge contract, I am not satisfied that the whitegoods were included in any contract price, or that the owners are contractually entitled to a refund of $4000. Mrs Pearce’s subjective belief that “we would buy and be reimbursed whatever he [the builder] allowed” is not supported by the contract documents.

Defects

  1. The owners claim losses and damages in respect of four defective items.

Floorboards

  1. Following a conclave of the experts the parties agree that the installation of the floorboards was defective and jointly allow $5300 for this item, plus 20% margin, plus GST, $6996. I make this award by agreement of the parties.

Mortar to Brickwork

  1. The experts agree that the mortar to the feature wall brickwork is defective but disagree on the method of rectification. I am satisfied that the opinion of Mr Oke is to be preferred. He states that the brickwork needs to be demolished and reconstructed. Mr Nowlan states that the darker section of mortar can be ground out and repointed at a minimal cost of $1203. The parties were to consider an alternative solution of a tinted sealer being applied to all mortar joins to provide a uniform colour. At the hearing the expert were unable to agree. I have had regard to the photographs in Mr Oke’s report. I accept that due to the rumble edged brick, which does not produce a straight and regular mortar line, a suitable match of the new to old mortar would be difficult to achieve. I am satisfied that the feature wall requires demolition and reconstruction to achieve conformity with the contract and as this is a feature wall, reconstruction is a reasonable course to adopt. I allow $6300 plus 20% margin plus GST , $8316

Boundary Pegs –

  1. The experts provided a joint conclave report in respect of this item. The issue relates to the removal of a survey peg of a neighbour’s side boundary line and not the northwest corner of the owners’ allotment. The peg does not have relevance to the retaining walls and is the owners’ neighbour’s property that has been displaced during the construction work of the retaining wall. Mr Oke on behalf of the builder advises that if the survey peg has been dislodged during construction work then it is the builder’s responsibility to reinstate. I accept on balance that the peg is the builder’s responsibility and if the neighbour’s land or property has been disturbed the builder should reimburse the owners for the cost of reinstating or making good the neighbour’s property. The parties agree that the cost of this item is $765, excluding margins as this is the surveyor’s cost, but allowing GST I have allowed $841 for this item.

The boundary wall –

  1. The retaining wall was an agreed variation to the contract. There were separate engineering plans provided by Mr Spinaze. The expert agreed in conclave that the retaining wall surface drainage is defective and that the ground area above the wall is defective and that 2 sumps each 300sqm and underground piping, 25 lineal metres, are to be installed and connected to the Council stormwater pit at the head of the roadway. By agreement of the experts I allow $672.50 for this head of damage plus 20% margin plus GST, $887.70.

The boundary wall has been discoloured by Efflorescence -

  1. The experts in conclave could not agree on this issue. Mr Oke claims that the wall is a decorative feature landscape wall to the property and the occurrence of efflorescence should be controlled by the Builder as much as practically possible by appropriate construction methods. This means the prevention of moisture into the wall via the filled side and through the coping, or top edge. Mr Oke states that the builder did not adequately waterproof the wall to prevent moisture ingress which will result in efflorescence stains to the feature side of the wall. Mr Nowlan states that efflorescence is a “naturally occurring phenomenon”. I disagree with the assessment of Mr Nowlan. The photographs show very apparent efflorescence which clearly disfigures the feature wall. On balance, I am satisfied that the builder has failed to adequately waterproof the wall and that the bituminous waterproof membrane has not been applied to the entire height of the wall. As this is a feature wall I am not satisfied with Mr Nowlan’s suggestion that regular acid wash is a proper course for rectification. I have had regard to the cross-examination of Mr Nowlan, I do not accept that the black plastic laid against the wall acts as a waterproof barrier or replaces the function of an applied membrane. The wall was not built in accordance with the engineering specifications of Mr Spinaze. It is more likely than not that the waterproofing barrier was not installed because the discoloration by the efflorescence is consistent along the breadth of the wall, indicative of the whole wall not being protected by a membrane. I allow the method of rectification proposed by Mr Oke, excavation of the ground to allow completion of the waterproofing membrane. Mr Nowlan did not offer an alternative costing, I allow $6577.50, plus 20% margin plus GST, $8677.90.

Broken tile

  1. The parties have agreed to $110 for a broken tile, adding 20% margin and GST, I allow $145.20.

Incomplete work

  1. The owners claim incomplete works for the Front Steps, the Concrete Driveway, the Covered Walkway and the Heater/Woodfire place as incomplete items. Due to my finding that the contract is a “do and charge” contract, there is no basis for liability for the builder. The work was not performed and not charged to the owners.

What is the legal basis for the owners’ claim to recover for overcharging?

  1. Following a finding that the builder has not overcharged the owners because the contract is a “cost plus contract” it is no longer necessary to determine whether or not the Tribunal has jurisdiction to determine such a claim.

  2. However even if I have erred and the parties entered into fixed price contract, I disagree with the builder’s submissions that the payments were made by Mistake and voluntarily thus precluding recovery. The builder relies on the authority of David Securities Pty Ltd v Commonwealth Bank of Australia

“he or she is prepared to assume the validity of the obligation or is prepared to make the payment irrespective of the validity or invalidity of the obligation rather than contest the claim for payment”.

  1. The builder submits that the owners’ claim is a recovery under the “principles of restitution”. And that following the principles in Mac v Antworks Pty Ltd [2016] NSWCATCD 75, the owners are not entitled to restitution, unless they can establish payment under a mistake of fact and or law. I am satisfied that the principles enunciated in Mac v Antwork by a single Senior Member of the Tribunal are quite distinguishable from the instant case. In Antworks the learned Senior Member, with respect, quite correctly stated that the owners could establish no other cause of action which entitled the owners to a repayment of sums already expended. That is different to the submission made by the builder that a cost plus contract can never give rise to a claim for damages for breach of contract because payments have been made. There are instances where damages can be recovered for breach of contract where payments have been made other than by mistake of fact or law. Blatant overcharging for labour not provided or services not rendered may quite conceivably give rise to a cause of action in contract and for orders under s 48O(1)(a) of the Act.

  2. I am of the view that the facts in this case are distinguishable. The owners bring a claim under contract.

  3. Although it provided a “fixed price” HIA document, the builder made no provisions for progress claims. This not a case where the contract could be relied upon to express the intentions of either party, without delving further into the conduct of the parties. Both parties seek to rely upon and disown the express terms of the contract in equal measure, and whenever and however it suits them. In the context of this case I cannot accept the builder’s submission that the owners cannot rely on a cause of action for breach of contract because “they do not identify what particular contractual provision is said to have been breached by the builder”. Nor can I agree with the proposition that follows “in the absence of a contractual prohibition on the builder charging more than it was entitled, there is no breach of contract”. It was the nature of the evidence of Mr Oke that some of the items which were charged, were charged without entitlement. Had the expert evidence been accepted as probative, it is entirely arguable that the owners could have established a breach of contract, if a builder has charged for materials it has not provided, or for labour not performed, a homeowner is entitled to sue for breach of contract. The owners have a cause of action in contract, however, have failed on balance to discharge the onus of proof on the overcharge claims.

Misrepresentation

  1. Any suggestion that the agreement between the parties was vitiated by misrepresentation would be untenable. Mr and Mrs Pearce signed a document which invited them to read the terms and conditions before signing. They were not rushed or tricked into signing the document. They chose to sign it without amending the words “EST”, without filling in the progress claim schedule and without heeding the words of the contract “Do not sign this contract unless you have read and understand the clauses as well as the notes and explanations contained in this document.” They could have sought advice if they wished. Mr Witchard did not set out to conceal from the owners the terms and conditions on the document, or encouraged them not to read them. There is nothing on the face of the document which forbids the form of this HIA contract to be used or amended to create a “do and charge contract”. The contract invited both parties to give notice to another party if they become aware of any “error ambiguity or inconsistency in contract documents” if the owners wanted to challenge the terms of the contract or seek clarification of its terms, then it was incumbent upon them to do so, in writing pursuant to clause 14 of the contract. Neither party sought clarification and proceeded with the execution of the contract. The builder built and the owners paid for invoices as and when they were rendered. I dismiss the builder’s claim for misrepresentation.

Summary of orders in favour of owners

  1. In summary, I find the builder is liable to pay $25,868.70 to the owners.

Builder’s claim for set off

  1. The builder claims $15,902.56 for unpaid invoice 6778 dated 3.3.2016 by way of defence and set off as pleaded on 2 February 2018. It is not disputed that the invoice has not been paid. The builder has not filed a separate application for debt recovery and claims that the unpaid invoice should be set off against any liability the “builder might be found to have contrary to [these] submissions”.

  2. In reply submissions dated 28 June 2018 the owners submit that the builder is not entitled to have the moneys set off. The owners state that “it is recognised that the Tribunal can determine defences including a claim for set off that should be determined as part of a set of proceedings: Green Apple Pty Ltd v La Brasserie Investments Pty Ltd [2018] NSWCATAP 90 at [70] to [85].

  3. However the owners dispute the builder is “entitled” to claim the set off. First, the claim is not made out “on the facts” and there is, in fact, no monies owing to the owners. Secondly the $15,902 claimed is for the remainder of the variation for the retaining wall works. Those works were not a separate contract rather they were variations of the contract works.

  4. The owners submit that if the Tribunal finds that the contract was a “do and charge” contract, then pursuant to s10 of the Home Building Act 1989 the builder could not commence proceedings under its contract because it breached the requirements of section 7 of the Act: “There is a tacit recognition of this impediment by the Builder never pursuing the alleged monies owing. The Builder could have pursued a quantum meruit claim for the sum in conjunction with these proceedings but never did so. Consequently it is submitted that the builder should not be allowed to claim a set off for this sum in these proceedings. …. Section 10 prohibits it from claiming $15902. Rather it should have put on an application for payment, pleading a quantum meruit claim and had that determined at the same time as these proceedings.”

Consideration of the Builder’s claim for set off

  1. I find that the builder provided a contract in compliance with section 7 of the Home Building Act. The fact that the conduct had to be considered to derive the true intention of the parties does not mean that the written contract was void ab initio or irrelevant to the proceedings.

  1. The HIA contract complied with the mandatory writing requirements of section 7 of the Act

HOME BUILDING ACT 1989 - SECT 7

Form of contracts (other than small jobs)

7 Form of contracts (other than small jobs)

Note : Section 7AAA applies to contracts for small jobs.

(1A) This section applies to a contract only if the contract price exceeds the prescribed amount or (if the contract price is not known) the reasonable market cost of the labour and materials involved exceeds the prescribed amount. The

"prescribed amount" is the amount prescribed by the regulations for the purposes of this section and is inclusive of GST.

(1) A contract must be in writing and be dated and signed by or on behalf of each of the parties to it.

(2) A contract must contain:

(a) the names of the parties, including the name of the holder of the contractor licence shown on the contractor licence, and

(b) the number of the contractor licence, and

(c) a sufficient description of the work to which the contract relates, and

(d) any plans and specifications for the work, and

(e) the contract price if known, and

(f) any statutory warranties applicable to the work, and

(f1) the cost of cover under Part 6 or 6B (if insurance is required under Part 6), and

(g) in the case of a contract to do residential building work--a conspicuous statement setting out the cooling-off period that applies to the contract because of section 7BA, and

(h) in the case of a contract to do residential building work (other than a construction contract to which the Building and Construction Industry Security of Payment Act 1999 applies)--details of any progress payments payable under the contract, and

(i) in the case of a contract to do residential building work--a statement that the contract may be terminated in the circumstances provided by the general law and that this does not prevent the parties agreeing to additional circumstances in which the contract may be terminated, and

(j) any other matter prescribed by the regulations for inclusion in the contract.

(3) The contract must comply with any requirements of the regulations.

(4) If the contract price is known, it must be stated in a prominent position on the first page of the contract.

(5) If the contract price is not known or may be varied under the contract, the contract must contain a warning to that effect and an explanation of the effect of the provision allowing variation of the price. The warning and explanation must be placed next to the price if the price is known.

(6) A contract must not include in the contract the name of any person other than the holder of a contractor licence as, or so it may reasonably be mistaken to be, the holder's name.

(7) This section does not prevent the holder of a contractor licence with a business name registered under the Business Names Registration Act 2011 of the Commonwealth from also referring in such a contract to the business name.

(8) This section does not apply to:

(a) a contract that is made between parties who each hold a contractor licence and is for work that each party's contractor licence authorises the party to contract to do, or

(b) a contract to do specialist work that is not also residential building work.

Note : The exception in paragraph (a) applies to a subcontracting arrangement between licensees, and to a contract between licensees for work to be done on premises that one of the licensees owns.

  1. In light of my finding the builder complied with s 7 and that the contract was a do and charge contract, section 10 is not enlivened.

10 Enforceability of contracts and other rights

(1) A person who contracts to do any residential building work, or any specialist work, and who so contracts:

…

(b) under a contract to which the requirements of section 7 apply that is not in writing or that does not have sufficient description of the work to which it relates (not being a contract entered into in the circumstances described in section 6 (2)), …

is not entitled to damages or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, and the contract is unenforceable by the person who contracted to do the work.

However, the person is liable for damages and subject to any other remedy in respect of a breach of the contract committed by the person.

  1. I find that sections 7 and 10 are not relevant to these proceedings and that the builder, who has provided a contract in writing, is entitled to the set off the debt as claimed.

Orders

  1. The Tribunal makes the following orders:

  2. Deducting $15,902.56 from $25,868.70 I find that the respondent is liable to the owners and make the following order:

  3. The respondent shall pay $9816.14 to the applicants immediately.

Costs

  1. The applicants were successful in their claim for damages. On that basis I order the respondent to pay the applicants’ costs of and incidental to the application on the ordinary basis as agreed or assessed.

  2. In the event the parties wish to be heard why the orders in paragraph 96 above should not be made:

  3. The respondent shall file and serve written submissions on the question of costs on or before 27 August 2018.

  4. The applicants shall file and serve written submissions on the question of costs in response on or before 10 September 2018.

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

S Thode

Senior Member

Civil and Administrative Tribunal of New South Wales

16 August 2018

**********

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


Registrar

Decision last updated: 11 December 2018

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Cases Citing This Decision

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Cases Cited

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Statutory Material Cited

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Pavey & Matthews Pty Ltd v Paul [1987] HCA 5
Sopov v Kane Constructions Pty Ltd (No 2) [2009] VSCA 141
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24