Robust Builders Pty Ltd v Barai & Anor (No.6)

[2023] NSWDC 376

District Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Robust Builders Pty Ltd v Barai & Anor (No.6) [2023] NSWDC 376

Hearing dates:

22-25, 28-31 August 2023; 1, 5 - 7 September 2023

Date of orders:

15 September 2023

Decision date:

15 September 2023

Jurisdiction:

Civil

Before:

Abadee DCJ

Decision:

See paragraph 363

Catchwords:

CONTRACTS – building and engineering contracts - – builders’ claim for unpaid invoices – question of date the contract was entered – whether collateral contract – whether owners liable for unpaid invoices – whether claimed variations proven - owners’ cross-claim for defective and incomplete works – significance of issue of occupancy certificate and other compliance reports to proof of defective or incomplete works – significance of rectification order

Legislation Cited:

Civil Procedure Act 2005 (NSW), ss 96,100

Evidence Act 1995 (NSW), s 69

Home Building Act 1989 (NSW), ss 7, 10, 11, 18B, 18E, 18BA, 18G, 48E, 48F, 48K, 48L, 51

Uniform Civil Procedure Rules 2005 (NSW), rr 6.20, 14.14, 42.1

Cases Cited:

Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570

Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd (2000) 201 CLR 520

Concut Pty Ltd v Worrell (2000) 75 ALJR 312

Crown Melbourne Ltd v Cosmpolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1

Hoyt’s Pty Ltd v Spencer (1919) 27 CLR 133

L'Estrange v Graucob Ltd (1934) 2 KB 394

Mann v Paterson Constructions Pty Ltd (2019) 267 CLR 560:

Tallerman & Co Pty Ltd v Nathan’s Merchandise (Victoria) Pty Ltd (1957) 98 CLR 93

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165

Texts Cited:

N Seddon and R Bigwood, Cheshire & Fifoot The Law of Contract (11th Australian ed, LexisNexis 2017)

Category:

Principal judgment

Parties:

Robust Builders Pty Ltd (plaintiff/cross-defendant)
Mr P Barai (defendant/cross-claimant 1)
Mrs F Mahjabeen (defendant/cross-claimant 2)

Representation:

Mr D Lambley (solicitor) for the defendants/cross-claimant
Mr R Mehndiratta (as director of and for the plaintiff/cross-defendant)

File Number(s):

2018/00259451

REASONS FOR JUDGMENT

Introduction

The parties’ cases

Issues

The evidence relied upon by the parties

issues associated with the builder’s claim

The date the contract was entered

The Builder’s evidence

The Owners’ evidence

Mr Barai

Ms Mahjabeen

Expert evidence

Submissions

The Builder’s submissions

The Owners’ submissions

The builders’ submissions in reply

Consideration

Credit

Mr Mehndiratta

Mr Barai

Ms Mahjabeen

Forensic consequences of credit findings

Analysis

When the contract was entered into & entry into collateral agreement

Was there a cap on claims for variations?

Summary

The claim for unpaid invoices

The Builder’s evidence

The invoices the subject of the claim

Other documents

The Owners’ evidence

Mr Barai’s evidence

Mr Barai’s position in relation to the invoices he says were received

Mr Barai’s position with respect to the invoices he says he did not receive

Features of Mr Barai’s cross-examination

Ms Mahjabeen

Submissions

The Builder’s submissions

The owners’ submissions

Consideration

Claim in restitution for works performed

The claim in detinue for items not returned to the Builder

The Builder’s evidence

The Owners’ evidence

Submissions

Consideration

ISSUES ASSOCIATED WITH THE OWNERS’ CLAIM

The owners’ lay evidence

Mr Barai’s evidence

Ms Mahjabeen’s evidence

The Builder’s evidence

Other documents

Mr O’Donnell’s evidence

Qualifications and expertise

Mr O’Donnell’s opinion as to defective works

Mr Mehndiratta’s challenges to Mr O’Donnell’s opinion about rectification works and costs

General points

Submissions

The owners’ submissions

The builder’s submissions

Consideration

Statutory provisions

General assessment of Mr O’Donnell and his evidence

Evaluating Mr Mehndiratta’s submissions relating to defects and incomplete works

Quantification of rectification costs

Costs of the proceeding

Orders

REASONS FOR JUDGMENT

Introduction

The parties’ cases

1. In this proceeding, which commenced (on 23 August 2018) almost five years ago to the first day of its hearing, the plaintiff, a building company called Robust Builders Pty Ltd (‘the Builder’) alleges that on 23 December 2016, it entered into a written contract with the defendants (Mr Barai and Ms Mahjabeen, who I will refer to collectively as ‘the Owners’ unless indicated otherwise) relating to their residential home at property at Seven Hills (the Property). The works were for the demolition of the existing structure and the construction of a two storey dwelling. The works were performed throughout 2017 and 2018 and an occupancy certificate was issued on 3 July 2018. From late July 2018, the Builder alleges that it was locked out of the property and that it was unable to reclaim various items of property. The precise circumstances as to how the contract came to an end are unclear (there was no evidence of any written notice of termination, as required by the contract), although it appears to be common ground that the Builder ceased performing work in July 2018 and that the Owners moved back into the property in August 2018.

2. The Builder alleges that the contract price was $510,000 (incl of GST) for which it claims that it received payment of $487,800. It contends that it made some small refunds to the defendants ($2,310 and 4,500). The Builder sues the Owners for the monies representing what its director, Mr Ravi Mehndiratta, characterised in his opening address (T 27) as unpaid invoices for approved variations. The amended pleading sets out a schedule of these invoices. The total claimed is $220,624.25.

3. Part of the Builder’s claim also concerns the value of equipment and other tools which the Builder contends was left on the property and to which it has been improperly deprived access to after being locked out in August 2018. The Builder quantified that particular claim as being in the sum of $92,000.

4. In total, the Builder claims the aggregate sum of $312,624.25 which means that the claim was capable of being brought in the NSW Civil and Administrative Tribunal.¹ It also claims interest, calculated under s 100 of the Civil Procedure Act 2005 (NSW). The Builder sues on actions in contract and, alternatively, on a quantum meruit.

5. In his opening address, Mr Mehndiratta indicated the Builder’s case that there was a single written contract, dated 23 December 2016, which referred to a contract price of $510,000. He further explained that, in substance, the Builder’s claim for unpaid invoices was in respect to variations that had not been agreed to in September 2016 but were subsequently recognised and agreed to by the Owners. The owners’ Bank had paid the progress payments. As I understood Mr Mehndiratta to submit, the variations were recognised either in the December 2016 version of the contract and/or by way of a bundle of correspondence after December 2016.

6. By their Further Amended Defence (28 August 2020), the Owners deny that any written contract was entered into on 23 December 2016. They say that they signed the contract on 24 September 2016. They accept that the contract price was $510,000, but this price included, as a component, the sum of $160,000 representing the variations agreed between the parties in November 2016. They say that there were no additional variations.

7. In his Opening Address, Mr Lambley, the Owners’ solicitor who appeared for them at the hearing, indicated that save for the written contract of September 2016, Mr Barai, in particular, disputed inserting his signature in many of the documents that Mr Mehndiratta had attached to his affidavit, or evidentiary material (Exhibits A and B), to sustain the Builder’s version of the contract contended for.

8. In his opening, when I asked what consequence(s) would follow depending upon the Court’s finding of when the contract was entered, either in September or in December 2016, Mr Lambley, indicated that in the former instance, his clients’ position was that all payments were made; but in the latter instance, Mr Mehndiratta would need to prove, by reference to a contract price, what amount was owing and he, Mr Lambley, did not presently understand what the claim for quantum upon that contingency was.

9. The owners also contend in their Defence that the works were not completed and were rather, defective. The ‘incomplete’ feature of the works was partly indicated by a rectification order made by an inspector on 31 August 2018. A litany of defects were identified in paragraph 8(d) of the Defence. The Owners deny that any valuable equipment owned or belonging to the Builder had been left on the property.

10. One of the owners, the first defendant and first cross-claimant, Pankaj Barai, filed a Cross-Claim (on 21 August 2019, which was amended on 10 February 2021). But at the hearing, Ms Mahjabeen was added as a second cross-claimant^[1] . Mr Barai alleged a series of defects (corresponding to the itemised description of defects in the Defence) and claimed damages for the works required to rectify and complete the works. The cross-claim identified breaches of the contractual term of the contract requiring the Builder to exercise care and skill (clause 3, a general condition to the contract which relevantly required the Builder’s compliance with statutory warranties under the Home Building Act 1989 (NSW) and also compliance with relevant Australian Standards); breach of an implied term that the works would be of merchantable quantity and another implied term that the work would be fit for purpose. The owners also claim interest under the Civil Procedure Act 2005 (NSW).

    1. Home Building Act 1989 (NSW), s48K. It is not apparent whether the owners applied to transfer the dispute to the Tribunal under s 48L

11. In addition to relying upon incomplete and defective works to sustain a cross-claim, the Owners pleaded in their Defence that the same claim operated as a defence of set-off to reduce or extinguish the Builder’s claim.

Issues

12. Neither party supplied the Court with the documents that they are required to supply by the usual orders for hearing that a Court will make, such as chronologies or statements of issues.

13. It appears from the evidence and what I raised with the legal representative for the owners and Mr Mehndiratta, before they delivered their closing addresses, that the issues in dispute are as follows.

14. First, on the Builder’s claim:

1. when was the contract which the Builder seeks to enforce entered into: on 24 September 2016, 20 November 2016, or 23 December 2016?

2. whether the Builder was precluded by the contract (whenever it was entered) from adjusting the contract price on the basis of additional variations once the construction works had commenced?

3. if cl 13 was not varied, whether the variations claimed by the Builder went beyond those which the parties had agreed to prior to the commencement of the works?

4. if the answer to question (c) is that they were, whether:

1. the invoice was issued by the Builder; and

2. the invoice was unpaid by the owners

5. what, if any of the Builder’s equipment was left on the property and what was its value.

15. On the Cross-claim:

1. what, if any, parts of the works were incomplete or defective after the Builder ceased work in July or August 2018?

2. the quantum of reasonable costs for the completion or rectification (as applicable) of the works

The evidence relied upon by the parties

16. Case-management directions throughout the proceeding plainly indicated that evidence was to be by way of affidavit.

17. At the hearing Mr Mehndiratta read his affidavit dated 30 March 2020.

18. He also relied upon a document titled “Lay Evidence By Robust Builders Pty Ltd” (Exhibit A). This document had been lodged by hand with the Parramatta District Court Registry on 8 October 2019. Much of what appears in Exhibit A appears to reprise that which was set out in Mr Mehndiratta’s affidavit of 30 March 2020.

19. Mr Mehndiratta also relied upon a document titled “Lay Evidence Reply By Robust Builders Pty Ltd” (Exhibit B), which he authored. The document was undated but the solicitor for the Owners noted from the Bar Table that he received it on or about 4 April 2023. The document was prepared by Mr Mehndiratta. Although there were problems of form, including argumentative assertions and conclusions in it, it was this document that indicated the substance of the Builder’s position, at least in relation to the state or condition of the construction works, in response to the owners’ evidence and by reason of the Builder’s essentially unrepresented status, some latitude was given as to formal matters from the perspective of rules for the admissibility of the evidence. The critical issue was considering fairness to the Owners in allowing the Builder to rely upon evidence which may have been deficient as to form.

20. Mr Mehndiratta also read an affidavit sworn by a forensic examiner, Ms Melanie Holt (21 October 2021) notwithstanding that she had been engaged to provide expert opinion evidence by the Owners; not the Builder.

21. Although Mr Mehndiratta was precluded by my evidentiary ruling early in the hearing from putting on further (lay or expert) evidence in reply to the Owners’ evidence this ruling was directed to the preparation and service of further affidavit (or opinion) evidence, and a significant number of email and other correspondence upon which he cross-examined the Owners’ witnesses was admitted.

22. In defence of the Builder’s Claim and in support of their Cross-Claim, the Owners primarily relied upon:

1. the affidavit of Pankaj Barai sworn 8 November 2022;

2. the affidavit of Fahima Mahjabeen sworn 7 November 2022; and

3. a report prepared by a building expert, Mr Paul O’Donnell of the firm ‘Canberra Sydney Inspections’ dated 26 October 2022.

issues associated with the builder’s claim

The date the contract was entered

The Builder’s evidence

23. In his affidavit and also in his document lodged with the Court on 8 October 2019 (Exhibit A), Mr Mehndiratta asserts that the parties entered into a written contract on 23 December 2016, although, in his Opening Address, he acknowledged that an earlier contract had been signed in September 2016. This earlier document was ‘amended.’ The reason for his argument that the latter contract superseded the first one was that, according to what Mr Mehndiratta said in his opening address, the second defendant was frequently requesting changes to the contract in the intervening period and, he implied, he wanted a degree of certainty. The December 2016 version (if I could call it that) was supposed to fix the specifications. He contends that the defendants were well aware of and had explained to them (by him) the version of the contract on 23 December 2016.

24. Mr Mehndiratta annexed to his affidavit the contract and what he asserted to be variations signed and acknowledged by Mr Barai. He did the same with Exhibit A. The contract was in the NSW Fair Trading format.

25. On the copy of the contract included at p 5 of Mr Mehndiratta’s affidavit, there is a handwritten annotation that appears on the title page (‘Home Building contract for work over $20,000) that did not appear on the corresponding page in Mr Mehndiratta’s affidavit. The annotation reads:

“Amended Final Contract Pankaj Barai and Rahima Robust Builders Pty Ltd for $510,000 on 23 December 2016. Previous Contracts and Tenders Null and Void.”

Apparently underneath is a signature, but Mr Mehndiratta did not identify whose it was.

26. Page 8 of Mr Mehndiratta’s affidavit is depicted as follows:

27. Page 10 of Mr Mehndiratta’s affidavit (also p 19 of Exhibit A) is depicted as follows:

28. Clause 4 (p 15 of Mr Mehndiratta’s affidavit), which provided for the deposit, indicated a sum of $51,000.

29. Clause 12 (p 20 of Mr Mehndiratta’s affidavit) provided for progress payments at various stages of work.

30. At p 32 of Mr Mehndiratta’s affidavit was the section of the contract titled ‘Record of Adjustments and Variations’. Under this section, reference was made to a contract price of $510,000. There was also handwritten insertions under the sub-heading ‘Variations’ which, when combined, appeared to yield an aggregate sum of just over $72,000.

31. At p 34 of Mr Mehndiratta’s affidavit was a typed document. The typed words were as follows:

“We confirm that the previous contract amount now has changed. We are getting refund from the builder for the couple of stages we agreed upon not to be done by Robust Builders any more as per the agreed terms and conditions with immediate effect.

Pankaj Barai”

32. On the face of this typed document there were various handwritten annotations. So far as they are legible, these included:

“PREVIOUS CONTRACT 350,000 + 160,000 – NULL VOID NOW

NEW CONTRACT 510,000.00 – 23/12/16 APPROVED

REFUND FOR … FLOOR …. 2310.00 APPROVED”

33. Underneath those were various purported signatures. Mr Mehndiratta asserts that these were the signatures of the owners.

34. Other relevant documents were annexed to Mr Mehndiratta’s affidavit (pp 35-39 incl). To paraphrase, they all were documents, purportedly signed by Mr Barai acknowledging certain events occurring on 20 April 2018, 20 February 2018, 20 April 2018 and 6 March 2018 (the last document - which also purported to indicate the second defendant’s signature - in this sequence being undated). These also appeared in Exhibit A.

35. There was a document (pp 40-44 of Mr Mehndiratta’s affidavit) titled “TENDER WITH DETAILED SPECIFICATIONS”. This was purportedly also signed by the Owners (as well as Mr Mehndiratta) on 23 December 2016.

36. In another document (Mehndiratta’s affidavit, p 36), being one purportedly signed by the first defendant on 20 February 2018, there is purported confirmation of a meeting occurring (apparently on that date) in which certain documents were received by Mr Barai. A handwritten annotation indicated that one of the documents was a copy of the contract.

37. The Owner relied upon an insurance certificate issued by icare (which appeared with other documents in Exhibit HH), apparently dated 28 March 2017 which identified as the contract date ‘23 December 2017’.

38. The Owner relief upon an application to HBCF apparently prepared by the builder on 22 March 2017 and which was emailed to the owners on 22 March 2017 (Exhibit GG). In the application, the ‘construction type’ was marked “New Single Dwelling” (notwithstanding that under the sub-heading ‘Construction Description’ reference was made to a “Double Storey House”) and 23 December 2016 was stipulated as the date the contract was signed. The contract price was identified as $510,000.

39. In the course of his closing address, Mr Mehndiratta was granted leave to re-open the plaintiff’s case to tender an email he sent to both owners at 1:37pm on 20 November 2016 (Exhibit QQ). The email attached several documents: a contract signed by the parties, signed plans and Specifications.

40. The first of these attachments was the same version of the contract attached to the owners’ respective affidavits which, amongst other things, stipulated a contract price of $350,000 (but which on the title page bore handwritten annotations including an assertion of a ‘total’ contract price of $510,000).

41. The second document was the ‘Post Contractual Variations’ document which was the second part of Exhibit 1; a document I will later summarise. This included a ‘New Progress Payment Schedule’ (signed by the builder on 20 November 2016) which referred to the contract price as $510,000.

42. A third document was some plans of the property, apparently bearing the initials or signatures of the owners (although the owners were never cross-examined on them, as the existence of the plans was only brought to the attention of the Court during closing submissions).

43. A fourth, and final document annexed to the email on 20 November 2016 was titled ‘Specifications’. It did not bear the signatures of the owners (or Mr Mehndiratta).

44. This email did not attach the first part of Exhibit 1, which was a document titled ‘Tender’. To anticipate somewhat, I note that Ms Mahjabeen gave some evidence consistent with this omission: she said that although she recalled seeing the ‘Post Contractual Variations’ part of Exhibit 1, she did not see the ‘Tender’ part of it.

33. In closing address, Mr Mehndiratta was also granted leave to reopen the Builder’s case so as to entitle it to rely upon an email he sent to both owners at 3:52pm on 21 November 2016 (Exhibit RR). Before I summarise that, I note that in the same Exhibit, there is another email sent by Mr Barai to Mr Barai on 19 April 2016 (at 9:30pm), well before the owners entered a contract with the Builder. Pertinently, in that email, Mr Barai indicated he was sending ‘the contract paper’ to Mr Mehndiratta. Understood in context, this must have been a reference to an unexecuted contract which the owners had received from a different builder. But he also explained that he would send the ‘other s 149 form’ later. It was this last reference which triggered Mr Mehndiratta’s email response on 21 November 2016. He asked Mr Barai to email to him “149 (2 and 5)” and indicated that document should not be older than 3 months.

The Owners’ evidence

Mr Barai

46. Mr Pankaj Barai deposed that he and his wife initially wanted a different builder to undertake the works, but were persuaded by Mr Mehndiratta to engage him. This, he says, occurred in about the middle of 2016.

47. Mr Barai deposed that on or about 24 September 2016 he and his wife were present at home and that at about 5:00pm that day Mr Mehndiratta attended the property and presented a written contract for both of them to sign.

48. The version of the contract that Mr Barai annexed to his contract was the same as that which was annexed to Ms Mahjabeen’s affidavit.

49. Page 22 of Mr Barai’s affidavit and Page 13 of Ms Mahjabeen’s affidavit is depicted as follows:

50. It was pointed out to Mr Barai in cross-examination that on the version of the contract he said he had signed (at p 25 of his affidavit) that in the section headed “Owner and Contractor details” the details of ‘address’ and ‘title details’ were missing. In re-examination, Mr Barai said that Mr Mehndiratta did not suggest, or invite him (or his wife) to fill in those details.

51. In the version he attached, clause 4, which dealt with the deposit, the amount of the deposit was left blank (Barai, p 31). He later said in his evidence that the owners paid a deposit of $45,000. A reference to this figure is contained in Exhibit CC.

52. Also in the version of the contract attached to Mr Barai’s affidavit, under clause 12 the words “Refer to Variation List” were typed. This was another difference to the version of clause 12 in the version of the contract attached to Mr Mehndiratta’s affidavit. I was not able to locate within Mr Barai’s affidavit where the said ‘Variation List’ appeared. On the page titled ‘Record of adjustments and variations’ (Barai, p 50) where provision is made for a list of variations, that part of the document was left blank. (In Mr Mehndiratta’s version of the contract some details for variations were inserted, at page 32 of Mr Mehndiratta’s affidavit).

53. Mr Barai further deposed that Mr Mehndiratta assured him that variations would be included in that price. He deposed that he and his wife signed the parts of the document as Mr Barai had directed them before returning the version to Mr Mehndiratta.

54. But he deposed that after doing so, Mr Mehndiratta said that he had another document that he wanted them to sign. This was a document that contained the same provisions as the earlier document that they have both signed albeit that it was completely blank in terms of handwriting. Mr Barai deposed that Mr Mehndiratta asked him and his wife to sign the document. This, Mr Mehndiratta explained to them, was to cover the situation if Mr Mehndiratta had to change the price or change anything actions. He explained that they should sign in order to save time.

55. Mr Barai deposed that he signed the document because he believed that he could trust Mr Mehndiratta and was anxious for construction to proceed. He and his wife then signed this other document, again, as Mr Mehndiratta directed them. He recalled that after they had done so, Mr Mehndiratta indicated that he would prepare documents and lodge them with the bank, including the tender and other documents.

56. Mr Barai deposed that in late November 2016 he received a telephone call from Mr Mehndiratta. The effect was an assurance by Mr Mehndiratta that he had lodged the contract, with a list of variations, as per the tender to the bank and that the bank would revert to Mr Barai and his wife for the purposes of loan approval. He recalled seeing an email from Mr Mehndiratta or about this time attaching the tender document, which listed variations with a total cost of $160,000.

57. During the hearing, the Owners tendered a document, Exhibit 1, which had not been annexed to either of the owners’ affidavits. There were two parts to this document. The first part was a document titled ‘Tender.’ Both Mr Barai and Ms Mahjabeen generally recognised it as a document that had been prepared by Kurmond Builders. But Mr Barai said in his evidence that whilst this was generally so, the section in this part of the document under the heading ‘Additional Inclusions’ (which was in bold print) was information that the Builder (Mr Mehndiratta) had created. Mr Barai accepted that he signed this part on 20 November 2016. (Ms Mahjabeen recalled seeing it before, but could not recall the circumstances in which she had seen or signed it: T 421.34 – 424.39). Mr Mehndiratta did not challenge what appeared to be his signature on this part of Exhibit 1.

58. The second part of Exhibit 1 (representing the last two pages) relevantly were an attachment titled ‘Post Contract Variations’. This document individually described and quantified items, tallied up the individual values and indicated a “Total Variation” of $160,000, with a “Total Contract Price” of $510,000. The document was signed by Mr Mehndiratta and the two owners and underneath the signature block was a date identified as 20 November 2016.

59. On 16 December 2016, Mr Barai received correspondence (Annexure B to his affidavit) from the National Australia Bank. The letter indicated the Bank’s approval of loan finance to assist with the construction works. Relevantly, the letter identified the contract price (or construction cost) as follows:

“$510,000 including variations”.

60. Mr Barai denied having any meeting or discussions with Mr Mehndiratta in respect to any further contract or documents signed in December 2016.

61. On 4 April 2017, 22 June 2017 and 24 July 2017 Mr Barai sent emails (Annexure C) to Mr Mehndiratta in which he relevantly asked the latter for copies of the contracts (signed by the Builder and Owners), the tenders and the contractor license.

62. In his cross-examination, Mr Mehndiratta referred Mr Barai to a number of documents purportedly bearing Mr Barai’s signature (in Exhibit A at pp 9, 10, 11 and 83; corresponding to pp 39, 34, 36, & 38 of Mr Mehndiratta’s affidavit, respectively). The effect of Mr Barai’s evidence was that he:

1. denied creating or signing the document which, to paraphrase, purported to request that all documents or communications about plans, variations or the supply of materials be supplied in person;

2. denied creating or signing the document purporting to confirm that the previous contract price had changed;

3. accepted that he had affixed his signature to the document confirming (on 20 February 2018) his receipt of a range of documents identified, (by handwritten annotations), as the contract, the stamped plan, Home warranty insurance, an NAB progress claim certificate

4. accepted that he supplied written confirmation (on 6 March 2018) for receiving the sums of $2,310 and $4,500 from the builder.

63. As to the last of these documents, he said that the sum of about $6,000 was supplied in connection with a retaining wall, even though Mr Barai did not recall that work being carried out.

64. Mr Barai was referred to (Exhibit AA). He said in his evidence that the reference to $100,000 was erroneous. He said that there was no other contract in which he entered with the builder for that sum. He was later shown a document purporting to indicate entry into a $100,000 but said he never signed it or saw his wife sign it. (by reason of there being no reference by either party to any contract for $100,000 entered into on 24 September 2016 in their respective pleadings – or for the builder, in any of Mr Mehndiratta’s affidavit, Exhibits A and B - I directed that the evidentiary effect of any answer about this document was limited only to the witness, Mr Barai’s credit). A suggestion appeared to be made to Mr Barai that on 24 September 2016, all that was agreed was that the builder would construct a single storey dwelling. To that end, Mr Barai (but not Ms Mahjabeen) was shown a document which plainly indicated a proposed two storey dwelling (Exhibit EE) prepared on 15 December 2016 – after the date of the contract propounded by the owners and before the date propounded by the Builder.

65. In cross-examination, Mr Barai said that he had arranged for his solicitors to ‘hire’ Ms Holt, the forensic examiner; and did not speak to her himself and did not understand why she did not proceed to prepare an opinion. He also said that it was his solicitors’ responsibility to hire a forensic examiner. He was unaware of any court order that Mr Mehndiratta provide the original of the version of the contract he propounded to Ms Holt.

Ms Mahjabeen

66. Ms Mahjabeen deposed to not entering into any contract with Mr Mehndiratta in December 2016. She only signed a contract in September 2016.

67. She provided some background to this. She recalled that in late August 2016 she and Mr Barai had (initially) decided to retain another builder to construct the property (Kurmond Builders), and were about to enter into a contract with that particular builder, but she and her husband were persuaded by Mr Mehndiratta against Kurmond Builders. She recalled that Mr Mehndiratta promised, in effect, to match what Kurmond Builders could do, but provide a little more. She said (in re-examination) that on 22 September 2016, Mr Barai informed her that Mr Mehndiratta was going to come over to their place for the purpose of signing a contract. She recalled that on 24 September 2016, Mr Mehndiratta came over to her and Mr Barai’s rented property, in the company of Sanya Devi. She said in her cross-examination, that she had received a positive report about Mr Mehndiratta’s work from a friend for whom Mr Mehndiratta had built a granny flat.

68. She deposed that Mr Mehndiratta pulled out a document and informed her and Mr Barai that he had a contract for them to sign. She noted that it had the words “Home building contract for work over $20,000” written on it. She also recalled Mr Barai asking Mr Mehndiratta whether variations were included in the price and Mr Mehndiratta assured them that they were; adding that the tender would be included ‘at the back.’ She recalled seeing her and Mr Barai’s details being handwritten on the document and identification of the contract price of $350,000. She recalled that after she finished reading the contract, Mr Mehndiratta directing them to sign on the second page and initial the others. Each of them signed on the second page and they both initialled the other pages. Mr Mehndiratta then took the document.

69. In cross-examination, she said that she recalled Mr Mehndiratta and Ms Sanya Devi coming over to rented place (in Artarmon). She understood that the contract price was to be $510,000; and that this price was to include, as a component, $160,000 for variations which were to be subsequently supplied by Mr Mehndiratta; but which were to be the same as the variations that had been prepared by Kurmond. She alluded to the very front page of the contract annexed to her affidavit which contained Mr Mehndiratta’s handwritten annotation breaking down the components of the price.

70. Ms Mahjabeen deposed that Mr Mehndiratta presented her and her husband another document for them to sign. This bore the same title as the contract they had signed and was essentially the same document, but without any handwriting in the document. She deposed that Mr Mehndiratta asked them to sign it and explained to them that he would need it if there was ever a need to change the price or have more variations. She deposed that Mr Barai initially remonstrated with being asked to sign a blank document but Mr Mehndiratta told that this was just to save time and indicated that he could not start work unless it was signed. Under cross-examination, she said she went through this document.

71. She deposed that she and Mr Barai then signed and initialled that document. She observed Mr Mehndiratta sign and initial it as well and recalled him saying that he would send the contract to the bank for loan approval.

72. Under cross-examination, when she was taken by Mr Mehndiratta to page 19 of Exhibit A, she denied that she or Mr Barai inserted the handwritten details regarding the contract price or the date. With reference to Exhibit A page 19, she disputed that the printed (capitalised) reference to her was in her handwriting, although she accepted that the signature attributed to her looked like her handwriting.

73. Later, when shown a range of documents annexed to Mr Mehndiratta’s affidavit (pp 35, 39, 40-44, 46-54, 55-57, 58, 59, many of which were reproduced in Exhibits A and C) her common answer was that although a signature looked like her husband’s, she did not see him sign it and Mr Barai did not discuss the contents of the (relevant) document to her. Where a signature or initials resembled her signature or initials, Ms Mahjabeen denied that she applied it or them. On the last of those documents (p 59), there appeared an incomplete handwritten reference to her daughter’s name. Ms Mahjabeen said that she may have verbally referred to her daughter when speaking to Mr Mehndiratta, but indicated that her daughter (apparently about 13 years of age at the time) had no involvement in the construction works. Three of these documents appeared to be purported written variations purportedly signed by Mr Barai and these all seemed to bear the date 5 July 2018. However, she said she did not see her husband sign the documents or have a discussion with her about them.

74. In her affidavit (and in her evidence in Court) Ms Mahjabeen denied signing any document listing the contract price as $510,000.

75. She said in her cross-examination that Mr Mehndiratta had emailed to her (or her husband) variations on 20 November 2016.

Expert evidence

76. Ms Melanie Holt is a well-known forensic examiner. The Owners’ solicitors asked her to forensically examine the version of the written contract which the Builder propounded and, in particular, to opine on whether handwriting on the document had been added to pages on which the owners had applied their signature, by a different pen.

77. In her affidavit, which the Builder read in the hearing, Ms Holt deposed to communications with Mr Mehndiratta on 21 June 2022 and also an arrangement to meet the latter on 25 June 2022. On the last date, she met Mr Mehndiratta and he provided certain documents to her. At the time he provided these documents to her, she did not have much time to check what they were as she had a pressing teleconference to attend to.

78. Later, she deposed, she checked what documents she had been given; but she came to realise (on or about 20 July 2022) that what was omitted from the bundle that she had been supplied with the original of the version of the contract she had been engaged to examine. She alerted the owners’ solicitor to this circumstance.

79. As at the date of her affidavit, she had still not received the version of the contract she had requested and expressed her inability to report her opinion as she had been instructed to do.

80. In his cross-examination of both Ms Mahjabeen, Mr Mehndiratta referred to an email from Ms Holt to himself in which it appeared that she acknowledged receiving the original contract that she had requested. Ms Mahjabeen later said in her evidence that she (and her husband) believed that they could no longer afford to pay Ms Holt. Mr Barai gave evidence substantially to the same effect.

Submissions

The Builder’s submissions

81. Mr Mehndiratta submitted that it was not possible for him to ‘fake’ documents. He was happy to have various documents inspected by Ms Holt. The owners’ explanation for how they effectively dis-engaged with Ms Holt should not be believed: they did not mention to him that they did not have the money to pay her (or want to pay her) to complete her forensic examination.

82. He submitted that a close look at some of the signatures he contended that the owners inserted into the range of documents in Mr Mehndiratta’s affidavit (and Exhibit A) bore some distinctive marks (eg p 10 of Exhibit A) not always apparent in every one of the signatures. This indicated the unlikelihood that he was responsible for all of the signatures.

83. Mr Mehndiratta referred to the documents attached to the icare application (Exhibit HH, whose content he accepted he was responsible for). This had identified the contract date as 23 December 2016.

84. Mr Mehndiratta submitted that the ‘Tender’ document, as part of Exhibit 1, was not part of the contract. He cited the attachments to Exhibit QQ.

The Owners’ submissions

85. Mr Lambley did not disagree with my suggested conception (raised in argument) that the contract was entered into on 24 September 2016 for a contract price of $350,000 but, on the same day, a collateral agreement was entered into whereby the parties agreed that the contract price would be adjusted to $510,000 upon agreement that variations which were on that date within the parties’ contemplation but were still to be negotiated, would not extend beyond $160,000.

86. Mr Lambley argued that both owners denied entering into any contract on 23 December 2016. He noted that the version which the owners propounded was the version which Mr Mehndiratta himself attached to his email of 20 November 2016 (Exhibit QQ). He also noted that Mr Mehndiratta did not give evidence of surrounding circumstances as to how the owners would have agreed to enter into a contract on 23 December 2016. Mr Lambley also observed that until the first day of the hearing (when I effectively determined that it was too late for him to do so) Mr Mehndiratta had not evinced any intention to call Ms Sonya Devi, who the owners had identified in their affidavits as being present at a time when contracts were entered. I inferred from this that the owners were inviting me to draw a Jones v Dunkel inference from the builder’s omission to call her.

The builders’ submissions in reply

87. Mr Mehndiratta submitted that the Court should find that Mr Barai was not a witness of credit and had been exposed as a liar throughout the hearing. Particulars of instances of lying were when Mr Barai:

1. said that he did not have an independent builder expert report (other than Mr O’Donnell) when it appeared from Mr O’Donnell’s report that the latter was instructed that a draft report had been obtained from Capital Management;

2. did not provide to his solicitors certified copies of plans which became Appendix 5 to Mr O’Donnell’s report (the certified plans were tendered in the builder’s case as Exhibit J);

88. Mr Mehndiratta submitted that the Court should find that Mr Barai’s credibility was diminished following differences between his evidence, and the evidence of other witnesses, as follows:

1. he and Ms Mahjabeen gave different accounts as to how they obtained access to the property in July or early August 2018;

2. after initially stating (in his affidavit) that he only received a threat by the builder via an SMS, he later changed his evidence to say that he had also received a call. This was to align with Ms Mahjabeen’s evidence in which the latter had recalled Mr Barai reporting to her that he had received a call;

3. Ms Mahjabeen said that at about the time of the Fair Trading inspection, Mr Barai had mentioned to her that insulation was missing, but Mr Barai said he did not see any missing insulation.

Consideration

Credit

Mr Mehndiratta

89. I did not regard Mr Mehndiratta to be either a reliable or credible witness. As to the former, whilst making allowance for the dated nature of the events at the time he gave his evidence at the hearing, his evidence was nonetheless punctuated by “I can’t recall,” to the point that it resembled a mantra and many of these responses were to questions not about events occurring between 2016 and 2018 but much more recent procedural developments, such as when and in what circumstances he prepared evidence in this proceeding in reply.

90. When he gave evidence, he struck me as often non-responsive and was prone to embellish. He struck me as intent to give answers which he felt might assist the Builder’s case and he gave some evidence which was plainly implausible. Much of this was again centred on the procedural way in which the parties prepared for the hearing. For example, Mr Mehndiratta said that of the O’Donnell expert building report relied upon by the Owners, he said he only received 16 pages and blank pages with exclamation marks, and believed that it was incomplete; but he did not complain to the owners’ solicitors about this. For another example, he conceded he did not prepare an expert report in reply to Mr O’Donnell and explained that he was denied access to the property; but he neither asked the Owners for permission to enter the property to allow an expert to inspect; nor sought an order from the Court to compel such inspection. As a further example, it struck me that he dissembled when explaining the apparent omission from his document (which he did not date) representing his “Reply” to the lay and expert evidence served by the Owners: after initially suggesting that he had not had the opportunity to reply to all of that evidence, he then appeared to suggest that there was some other evidence that he had prepared, which he neither ‘read’ nor tendered in the Builder’s case prior to his being cross-examined.

91. Sometimes also, he tried to shift responsibility to others for not being able to provide responsive evidence. This included what he identified as the Builder’s accountant (whose surname he could not recall spelling) and Ms Devi (the person whom he had unsuccessfully applied to have called as a witness to give evidence in the Builder’s case on the first day of the trial).

92. As I point out elsewhere in these reasons, it appeared at times, through his cross-examination of the owners that Mr Mehndiratta was even casting doubt upon the existence of any contract being entered into on 24 September 2016 and even produced a document, for Mr Barai’s consideration, that purported to prove a $100,000 contract being entered into on that same date where none of the parties, in their pleadings or affidavits, had previously referred to such contract – and where he arranged to send the $350,000 contract of 24 September 2016 to the Owners on 20 November 2016 (Exhibit QQ). I found this conduct cynical and opportunistic.

93. He had a propensity, to the say the very least, of creating documents which he deliberately did not date. This had the effect, if not the design, of creating a confusing and/or contentious paper trail in the event, which materialised all too often in this litigation, that the owners disputed signing documents.

94. At the conclusion of his evidence, I derived no confidence from his evidence save to the extent that it was corroborated independently by reliable documents (ie not those which he or his company had generated) or was consistent with the objective probabilities.

Mr Barai

95. I reject Mr Mehndiratta’s attacks on Mr Barai’s credibility and his accusations of lying. Mere differences in his recollection in comparison to what Ms Mahjabeen or what Mr O’ Donnell had said on any particular topic (major or minor) was not indicative of Mr Barai lying. As pointed out to Mr Mehndiratta in his closing address, he appeared to elide any distinction between a mistaken recollection (about events which in large part occurred over 5 years ago) and lying. As I also pointed out to Mr Mehndiratta in argument, the circumstance that in some respects (which were very small in number) he differed in his recollections with what his wife or Mr O’Donnell said did not derogate from his credibility or reliability: if his evidence was in all respects identical to these two other witnesses, I am quite sure that Mr Mehndiratta would have accused him of engaging in wholesale collaboration with the other witnesses and then used that as a platform to challenge Mr Barai’s credibility.

96. I formed the impression that Mr Barai was doing his best to tell the truth, although his recollections of what occurred were less confident than what appeared from the detailed narrative set out his affidavit. There were some instances where evidence of his recollections about whether he sent an email to Mr Mehndiratta were proven to be wrong (eg Exhibits Y and JJ, NN and OO). Evidence about his recollections in those respects were about emails sent in September 2017 and March 2018, being nearly 6 or 5 years ago (respectively).

97. Mr Barai was softly spoken and struck me as nervous. He was, at times, defensive and was anxious to provide further information than what a particular question may have required. Like his wife, on occasions, he thought it a sufficient answer to a question to simply make cross-reference, without more, to his previously answered a question. These matters led me to form the further impression that he was anxious about the effect of his answers on his (and his wife’s case). My impression of him overall was a man who was earnest and studious, unsophisticated and naïve to a high degree and somewhat timid. Signing blank forms without reading and accepting what he was being told by the builder at face value represents supreme gullibility although in fairness to him, the contemporaneous email correspondence suggests a continuous anxiety, bordering on desperation, about his and his family’s living arrangements throughout the works; which helps to put his conduct into some context.

Ms Mahjabeen

98. Ms Mahjabeen was visibly distressed at certain points when she was cross-examined. At one point, I adjourned the hearing temporarily after she appeared to tremble after Mr Mehndiratta referred to her 13 year old daughter in a question. She struck me as somewhat proud – on occasions she refused to answer some questions raised of her by Mr Mehndiratta until I directed her to do so, but I considered that she was an honest witness. It was also the case that although she professed to have a limited recollection of the surrounding detail of certain events, she indicated, I considered quite spontaneously and genuinely, some additional detail during her cross-examination in response to certain questions. An example of this was her recall was the substance of what Mr Barai had informed her he had reported to Fair Trading in August 2018. She also gave a reasonably detailed answer as to her own recollection of the state of works when and after she and her husband moved in 2018, which I will return to later in these reasons. A qualification was her evidence about how she or her husband accessed the house after the housewarming ceremony in July 2018 which I did not regard as persuasive. She appeared to me determined and was not significantly shaken. I found that she was generally a reliable witness.

Forensic consequences of credit findings

99. Generally, a consequence of my adverse credit findings about Mr Mehndiratta is that absent any admission by the owners, reliable contemporaneous documents and the inferences and objective probabilities arising from other documents or events, I am unable to accept that the owners either signed or initialled documents in the evidence the Builder relied upon at the material dates that the Builder contends that they did. An example of this is the contract of 23 December 2016 which the Builder propounded. Another example was three written documents (contained on pp 55-57 of his affidavit; and also in Exhibit A, pp 53-55) purporting to be variations dated 5 July 2018. And if the Owners did not know of documents the Builder asserted that either or both of the owners signed on the material dates, and the Owner was aware of this state of affairs, the ordinary representation that a party’s signature is taken to convey by signing a document^[2] does not apply.

    2. Pursuant to r 6.20 of the Uniform Civil Procedure Rules 2005 (NSW). Ms Mahjabeen, who was present in Court at the time, verbally consented to her joinder.

Analysis

100. The following analysis deals with the issues of when the contract was entered, whether the owner was entitled to claim for variations (which were, on the owner’s case, additional variations after those agreed on 20 November 2016) after the contract was entered (whatever that date was).

101. The Builder’s case on when the contract was entered into appeared to me ambivalent. In some instances in correspondence Mr Mehndiratta asserted and argued at this hearing is that the contract entered into in December 2016 replaced the one that the Builder admits was entered into in September 2016; rendering the latter as being ‘null and void’. However, it is also the case that other more contemporary documents contained a handwritten annotation, apparently by him, which described the September 2016 contract as being only ‘amended’. The Builder did not plead in any Reply to the Owners’ defence (which identified 24 September 2016 as the date for at least part of the documents constituting the contract), and Mr Mehndiratta did not otherwise assert (at least in his affidavit or Exhibits A or B) that the contract of September 2016 was unenforceable for any want of certainty or completeness.

102. The distinction between a contract that is subsequently modified and a contract that brings an end to an earlier contract is well recognised^[3] , even if it may sometimes be difficult to identify in practice. One important legal consequence is that modifications to a contract are required to be supported by further consideration^[4] ; whereas if an entirely new contract is formed there is automatically a consideration. As explained in Sara Lee at [23] whether a new contract has been entered depends upon the (objective) intention of the parties disclosed by the later agreement ^[5] . Ultimately, though, for the reasons that follow, it is unnecessary to find whether one contract superseded another or whether one version changed to one contract amounted to a variation.

     3. L'Estrange v Graucob Ltd (1934) 2 KB 394 at 403; applied in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [45]-[46]

     4. Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd (2000) 201 CLR 520 (“Sara Lee”) at [22]; Concut Pty Ltd v Worrell (2000) 75 ALJR 312 (“Concut”) at [19]

     5. Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 at [96]

103. The builder contended that the contract entered into on 23 December 2016 was for a contract price of $510,000. The owners contended (and had admitted in their Defences, paragraph 6(vi)) that, by 20 November 2016, the contract price was $510,000. Perhaps contrary to the parties’ mutual expectations, it struck me that what was most material about the question whether the contract was entered was not so much what was the contract price, but more what provision the contract made for variations once the works commenced.

When the contract was entered into & entry into collateral agreement

104. In my view, a contract was entered into on 24 September 2016. Both parties conducted the proceeding on the basis that a binding contract came into existence on that date: the difference was that the builder contended that by reason of events, this contract subsequently was either amended or was rendered ‘null and void.’ That contention was manifest on numerous documents that Mr Mehndiratta relied upon in his evidence; and the owners maintained that they signed the contract on that date to manifest their agreement.

105. It is true that in the version of the contract annexed to the owners’ affidavits, details are missing from one of the pages of the contract identifying the address for the works, including lot details. However, although there is a statutory requirement for there to be a ‘sufficient description of the work’ (Home Building Act 1989 (NSW), s 7(2)(c)), a provision of that kind is for the benefit of the owner and it would be incongruous if a builder could rely upon its absence to avoid the contract. There is no entire agreement clause in the contract that would preclude the owners’ reliance upon parole evidence. Nor is there any statutory requirement (under the Home Building Act 1989 (NSW)) that mandates that all the terms of a contract to which the statutory warranties apply must be written and/or contained in the same document. Moreover, Mr Mehndiratta did not challenge the owners’ versions of conversations that occurred on 24 September 2016 that they signed the document which supplied background known to the owner and the builder or evidence to indicate that the Builder knew where they lived.

106. The contract price for the Fair Trading version of contract annexed to the owners’ respective affidavits was identified as $350,000. Alongside the reference (see for example, Barai, p 25), there was a warning that the contract price could increase and stipulated several reasons for why that was so, including variations.

107. In Crown Melbourne Ltd v Cosmpolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1 at [22] the plurality said:

“a representation made in the course of negotiations may result in an agreement collateral to the main agreement if it can be concluded that the parties intended that the representation be contractually binding. It may be so concluded if the representation has the quality of a contractual promise, as distinct from a mere representation. The question of intention is adjudged by reference to the words and conduct of the parties, but it is an objective test – of what a reasonable person in the position of the parties would necessarily have understood to have been intended.”

108. On the same day, 24 September 2016, the parties also entered into a collateral agreement that (a) this contract price would be subsequently varied to factor in variations that a third party, Kurmond Buildings had quoted the owners (and which had been conveyed to the builder), (b) which variations were the subject of further negotiations between owner and builder, and (c) the Builder promised that the value of those confirmed variations (after negotiations) would not exceed the sum of $160,000. After correspondence between the owners and Builder in the intervening period from 24 September 2016, on 20 November 2016, the parties agreed that the contractual price was varied to $510,000 inclusive of the variations identified, and separately quantified, on 20 November 2016, in Exhibit 1.

109. Exhibit 1 was a composite exhibit, comprising two documents. The ‘tender’ part of Exhibit 1 was substantially created by Kurmond Builders, but was subsequently modified by Mr Mehndiratta. This would be consistent with (a) Mr Barai’s evidence, by which he identified Mr Mehndiratta as being responsible for the section titled “Additional Inclusions” and (b) Ms Mahjabeen’s evidence, which I accept, concerning Mr Mehndiratta’s promise that he could “do the same things that you want from Kurmond” (Mahjabeen, paragraph 10) and the tender he prepared would be “the same one that you have me that you got from Kurmond Builders” (Mahjabeen, paragraph 16; see also Barai, paragraph 11).

110. My conclusions concerning the date the contract was entered and the existence of a collateral agreement are supported by several circumstances.

111. First, it reflects the evidence of the owners of what was said on the subject of price and variations, which I accept.

112. Secondly, the owners’ evidence is supported by the handwritten annotations (which I find was inserted by Mr Mehndiratta) that appears on the title page to the version of the contract each of the owners annexed to their respective affidavits, signalling the ‘base’ price ($350,000), ‘Variations’ ($160,000) with a total of $510,000. As Mr Lambley correctly emphasised, it was this version of the contract which was attached to Mr Mehndiratta’s email of 20 November 2016.

113. It is important, also to recognise, that the contract price was not $510,000 as at 24 September. If it was, then that figure would have been inserted expressly into the stated contract price appearing, for example, in p 25 of Mr Barai’s evidence. The objectively ascertained intention of the parties, manifested by their contract, was that the contract would not increase from $350,000 to $510,000 independently or irrespective of the parties agreeing upon the variations up to the value of $160,000. There would be no benefit to the owners from that.

114. Thirdly, by the National Australia Bank’s loan approval to the Owners which indicated, in the letter dated 16 December 2016 (Barai affidavit, p 51), the contract price of $510,000 inclusive of variations. It is immaterial whether Mr Mehndiratta actually saw this letter – although he implausibly suggested that he had not just because the address referred to in the letter omitted the number from the Builder’s street address. He had the opportunity to (but did not) refer to the letter in his evidence in reply. The Owners had noted (in Exhibit AA) that their lender required details of how the “additional $160,000” would be spent. That additional sum was a reference to a price on top of the ‘base’ contract price of $350,000 identified in the contract on 24 September 2016.

115. I also note that the Fair Trading rectification order of August 2018 also indirectly pointed to 24 September 2016 as the contract date. I say indirect, since the Inspector had allowed the builder until 24 September 2018 – the two year anniversary of the date the contract was entered – for it to complete the works (Appendix 7 to Exhibit 4). The two year period reflected the warranty period that the Home Building Act provides (s 18E(1)(b)) an owner to commence an action for breach of statutory warranties for defects which do not constitute ‘major’ defects. I infer that Mr Mehndiratta would have had the opportunity to inform Fair Trading what his view of the contract date was or to correct the input of the owners in that regard if he believed it was untrue.

116. Incidentally, although there was a reference in the last paragraph in Mr Barai’s email (Exhibit AA) to another contract for $100,000, I accept Mr Barai’s evidence that this was erroneous. In this regard, I reject the proposition that Exhibit EE indicated that the parties were only agreed as to the construction of a single storey dwelling on 24 September 2016 and that this had changed to a double storey dwelling by 23 December 2016 (or some other date post-dating 20 November 2016). I reject that the point is made good by the email sent, on Mr Mehndiratta’s behalf, by Ms Devi (at 8:57pm) on 18 November 2016 (Exhibit FF). Ms Devi did not give evidence to say that there was a ‘second contract’ for $100,000 or what the source of that belief or information was.

117. In the tender part of Exhibit 1, reference was made to a ‘Double Storey home’ (item A1) and in the ‘Post-Contract Variations’ part of Exhibit 1, reference was also made to a ‘Double Storey House’. Particularly in the absence of any pleaded reference to a $100,000 contract in any of the pleadings, in Mr Mehndiratta’s affidavit (and Exhibits A and B), I regarded his question to Mr Barai (and he did not ask Ms Mahjabeen the same question) as to whether the latter had signed a $100,000 contract with the builder for a second, upper storey, as disingenuous.

118. As to the reference in the owners’ email of 4 April 2017 (Exhibit BB), “we signed two papers” alongside the item description (copies of the contracts), this did not amount to an admission by the Owners that a contract was entered into on 23 December 2017. I find that it was a rather loose reference to the owners evidence of applying the date 24 September 2016 and their signatures on one version of the contract on that date and their applying signatures to an effectively blank version of the contract on the same date.

108. Fourthly, the owners’ version is also consistent with the content of Exhibit 1, earlier described and which was titled ‘post-contractual variations’. This indicated, on its face, that the original contract price had been adjusted to include variations whose value ($160,000) brought the total price to $510,000. This particular document was signed by the Owners on 20 November 2016. Contrary to Ms Mahjabeen’s evidence, which appeared to me to be uncertain on the subject, I find that both owners signed both parts of Exhibit 1, being both the Tender and the Post-Contract Variations. It is to be recalled that it was the owners who put Exhibit 1 into evidence in their case, which exhibit partly included the Tender. Their solicitor advocate would not have done so if his instructions were that what purported to be the owners’ signatures on that part of the document were not authentic. Mr Mehndiratta admitted that his signature was on the ‘Tender’ part of Exhibit 1 as well.

109. I recognise that this conclusion is not supported by the attachments which Mr Mehndiratta emailed to the owners on 20 November 2016 (Exhibit GG) which, as I noted, omitted the ‘Tender’ part of Exhibit 1. Nevertheless, this part of Exhibit 1 was signed and neither party pointed to any inconsistency between this part of the document with the Post-Contract Variations.

110. Quite how all of these specifications were supposed to work harmoniously, or what, if any hierarchy was attached to them, was a subject that was given little attention by the parties at the hearing.

111. Fifthly, although the owners affixed a date (24 September 2016) for one version of the contract (in Mr Barai’s and Ms Mahjabeen’s respective affidavits), they did not affix a date for the other version (in Mr Mehndiratta’s affidavit, p 8).That omission meant that a statutory requirement (s 7(1) of the Home Building Act 1989 (NSW)) was not complied with in Mr Mehndiratta’s version; which arguably meant that this version of the contract could be unenforceable for an action in contract at the instance of the builder (s 10(1)(c), although see s 11). It did not matter, however, that the contractor’s initials were left off the version of the contract that the owners propounded (noting, as I have done elsewhere, that it was the owners’ version that Mr Mehndiratta relied upon when sending his email to the owners on 20 November 2016: Exhibit QQ).

112. Sixthly, there is little or no admissible evidence of events that occurred on 23 December 2016 itself, in any of the narrative accounts given by Mr Mehndiratta (in his affidavit or in Exhibits A or B), or any contemporaneous email correspondence passing between Mr Mehndiratta and Mr Barai in which reference was made to any modified or amended agreement being reached on that particular date. In particular, there was nothing corresponding to a signed list of agreed variations such as that which appeared on Exhibit 1 (executed on 20 November 2016) on or around 23 December 2016.

113. Seventhly, some of the cross-examination by Mr Mehndiratta of the owners in the period between 24 September and the commencement date for the works (such as on the documents which were Exhibits M-O) was really beside the point. It was the second part of Exhibit 1 – the part titled ‘Post Contract Variations’ which constituted the final statement of variations agreed to by the parties on 20 November 2016, irrespective of any discussion on that subject between 24 September and 20 November 2016.

114. Eighthly, it is true that there are some documents attached to the affidavit and exhibits which bear the owner or owners’ names and the date of 23 December 2022, but aside from the owners disputing the authenticity of those documents, there is no direct proof that they inserted their signatures on a version of the contract on that date. To repeat what I said earlier about the forensic consequences of my adverse credit findings against Mr Mehndiratta, having regard to what I have said about my adverse view of Mr Mehndiratta’s credibility and reliability, there was no reliable evidence to support the fact of any meeting between the Builder and Owners on 23 December 2016 or the content of it, which would have provided an obvious reason or opportunity for the owners to sign a document, in Mr Mehndiratta’s presence, on that particular date. Moreover, noting the extensive list of variations agreed to as at 20 November 2016, it would be inherently surprising if a new contract price, based upon additional variations, would be entered into just over a month later.

115. I also reject therefore, the builder’s argument that on 23 December 2016, the owners agreed to the content of the document titled ‘Tender with Detailed Specifications’ which appears at p 40-44 of Mr Mehndiratta’s affidavit. Nor is there any evidence to suggest that they approved of the document which is Exhibit F. Further, and in relation to the ‘Specifications’ attachment that was emailed to the owners on 20 November 2016, there was no evidence that the owners approved that document.

116. Ninthly, other documents relied upon by the Builder to establish entry into a contract on 23 December 2016 do not sustain the contention. The document (Exhibit N) which the Builder relied upon did not assist the Builder to establish a contract entered into as at 23 December 2016, even though it was created after 20 November 2016. All that Ms Mahjabeen was doing was making a request for further elaboration (as in explanation) of the inclusions. That was not inconsistent with the proposition that inclusions and a list of variations had been agreed on 20 November 2016.

117. The Icare certificate of insurance (Exhibit HH) did not assist the Builder either. Mr Barai said that he had not seen the document and had no involvement in creating the information supplied to the insurer. Ms Mahjabeen was not asked about it. I infer that it was Mr Mehndiratta who provided the information and, given what I have said about his credit, I am unable to accept the content of the document as information independent from him. Contrary to Mr Mehndiratta’s submission, the attachments to Exhibit HH were not signed by the owners.

118. The position with respect to the HBCF Application (Exhibit GG) was relevantly the same. Mr Barai said he had not seen this document before. Ms Mahjabeen was not asked about it. I find that it was Mr Mehndiratta who was responsible for the information provided to this third party.

119. Tenthly, contrary to the Builder’s submission, Ms Holt’s evidence, such as it was, did not assist the Builder to prove that a contract was entered into on 23 December 2016. At its highest, Ms Holt provided no opinion since for a significant period of time she did not receive the document she needed to express an opinion. Even though Ms Holt eventually did receive the original of the version of the contract annexed to Mr Mehndiratta’s affidavit, I accept Ms Mahjabeen’s and Mr Barai’s common explanation for why the owners did not proceed to get a report from Ms Holt; being that they baulked at paying her expert fees after initially engaging her.

120. I draw no inference adverse to the owners that Ms Holt did not complete the examination with which she was originally tasked. Mr Mehndiratta eventually read her affidavit in the Builder’s case. It was arguably open to the Builder, being put on notice by Ms Holt’s email to him on 6 October 2022 (Exhibit U), which email indicated that the owners did not wish to proceed with her, to engage Ms Holt for itself, to engage that examiner if it wanted to. Given the nature of the task, it is not easy to divine that Ms Holt would have been in receipt of confidential information from the owners that would have presented her with a conflict of competing duties. There is no property in a witness; even an expert one.

121. Mr Mehndiratta submitted in his closing address that it was “impossible” for him to have ‘faked’ documents – presumably, a reference to signatures appearing on documents. That submission however is one of expert opinion, for which Mr Mehndiratta did not demonstrate any specialised knowledge himself; and the submission is rejected.

122. At any rate, the episode concerning attempts to obtain handwriting evidence went nowhere. Ms Holt’s evidence, such as it was, was neutral. This is of some significance in a context where the onus of proving the date of the contract that the builder was suing upon fell upon the builder.

123. Mr Barai said, in his evidence, that he partly paid a deposit on 24 September. A curiosity of his evidence was that he said he paid the sum of $45,000 with a promise to pay an additional amount thereafter. This evidence is significant in two respects. First, it confirms that a contract was entered into on 24 September and before 23 December 2016. Secondly, it provides some support for my finding about a collateral agreement that the stated price of $350,000 would be adjusted to $510,000 once a list of variations was identified and confirmed, which would not exceed the value of $160,000.

124. I prefer the evidence of both Owners that, at Mr Mehndiratta’s request, on 24 September they signed another version of the same contract with handwritten details omitted from important provisions, such as the contract price.

125. For the avoidance of doubt, I say that it is implicit in what I have just reasoned that, unless each of the owners agreed to them (as applicable), I do not regard any of the typed documents annexed to Mr Mehndiratta’s evidence and purportedly bearing the signature of one or both of the owners as reliable documents: they are undated, not appearing on the plaintiff’s letterhead. Their authenticity, in terms of the suggested application of their signatures, was denied by the Owners and it would have been open to the Builder to prove, by admissible and persuasive means that they were given to the Owners, in his evidence in reply. All that Mr Mehndiratta could say (when cross-examined and not in his evidence in reply) in that regard is that they were physically handed to the Owners for their signature. I do not believe that evidence.

Was there a cap on claims for variations?

137. The real issue concerning the contractual provisions, so it seemed to me, was whether the collateral agreement had the legal effect, as the Owners apparently contended, that the builder’s right to claim for further variations (ie beyond those already agreed on 20 November 2016) was modified. The effect of the owners’ contention was that the value of the variations identified and agreed on 20 November 2016 represented a cap on the value of variations with the legal effect that no further adjustment of the contract price could occur on account of variations (as distinct from the operation of other provisions, such as cll 3, 10, 11, 14 and 20). This would amount to a very literal construction of the collateral agreement on 24 September: that the adjustment of the contract price agreed that date could not be adjusted for any further variations.

138. I do not accept the owners’ contention.

139. For one thing, Mr Lambley conceded in his closing address that, on the basis of the evidence of both Mr Barai and Ms Mahjabeen, there was at least one variation which the owners accepted had arisen after the contract was entered into, relating to invoice 1167 concerning the tiling. (Their point was that they negotiated a lower sum than the builder claimed) That concession is inconsistent with the owners’ contention that there was a cap.

140. As was set out in the explanatory comment alongside the statement of the contractual price (a typical feature of the Fair Trading form of building contract for work over $20,000), the contract price can be increased, in accordance with the contract terms “because not all costs can be absolutely determined at the outset although the contractor is obliged to make reasonable estimates given known conditions. The reasons for possible increases include …. Variations, including those due to unforeseen matters..”

141. As at the dates of 24 September 2016 (when the collateral agreement was made) and 20 November 2016 (when the variations for the value of $160,000 were agreed), and before the Builder commenced the works, there remained a prospect of ‘unforeseen matters’ that may result in the need for the Builder to make a claim for variations under cl 13. That is to say, the contract price was inherently subject to the prospect of further variations. Any further or additional variations, after variations were agreed to on 20 November 2016, pursuant to the collateral agreement entered into on 24 September 2016 permitted further adjustment of the contract price. This served the purpose of accommodating ‘known unknowns’ or ‘unknown unknowns’^[6] .

     6. Applying Tallerman & Co Pty Ltd v Nathan’s Merchandise (Victoria) Pty Ltd (1957) 98 CLR 93 per Kitto J at 144; Concut (at [19]

142. The owners’ contention that there were no further permissible variations after the variations agreed to on 20 November 2016 would have the effect of modifying the builder’s subsisting right under cl 13 of the contract to claim variations, to the point of negation. Collateral agreements, to be enforceable, cannot be inconsistent with the terms of the contract in this way ^[7] .

     7. US Secretary of Defence Donald Rumsfield, DOD news briefing, 12 February 2002,

143. Further, viewing the matter objectively, with reference to what the parties knew, the Builder did not, by its conduct, manifest its consent to a situation whereby no matter the cause, it would have to incur additional cost for unexpected reasons not contemplated without the capacity to adjust the contract price.

144. The adjustment made to the contractual price on 20 November 2016 made for a contract price that was still inherently subject to the prospect of further change, for a range of possible reasons including, relevantly, agreed variations.

Summary

145. The relevant consequences of these findings are:

1. The contract was entered into between Builder and Owners on 24 September 2016 with a price of $350,000.

2. On 20 November 2016, the contract price was adjusted to $510,000 pursuant to a collateral agreement also entered into on 24 September 2016.

3. By the same date (20 November 2016), the parties had identified and agreed to variations and inclusions in the works to be performed by the Builder. These are indicated in Exhibit 1, and also Exhibit QQ. The first part of Exhibit 1, titled the ‘Tender’, was substantially sourced in the work that had already been identified by Kurmond Builders; but with this Builder adding certain inclusions. In other words, the Tender effectively represented a modification, by this Builder, of the Kurmond Builders’ document.

4. The Builder had (as of 24 September 2016) and retained (as from 20 November 2016) the right to claim for further adjustment of the contractual price, inter alia, by reason of any further variations in accordance with the provisions made for variations in cl 13.

146. It should also be apparent for these findings that I am not persuaded that the owners approved the Tender and Specifications document on 23 December 2016. This finding has implications for Mr Mehndiratta’s challenge to Mr O’Donnell’s opinions. I will return to this later in these reasons.

The claim for unpaid invoices

The Builder’s evidence

The invoices the subject of the claim

147. By Annexure RB2 to his affidavit, Mr Mehndiratta annexed what he asserted were outstanding invoices. Neither in that affidavit (which, I note, was prepared at a point when the Builder was legally represented^[8] ), nor in his lay evidence in reply to the owners’ affidavit evidence (Exhibit B) did he provide any narrative account to supplement any inferences that would arguably arise on the face of the documents themselves. That can be a forensically risky course for a litigant to take ^[9] .

     8. Hoyt’s Pty Ltd v Spencer (1919) 27 CLR 133. I note that there has been criticism of this ‘inconsistency’ point: see N Seddon and R Bigwood, Cheshire & Fifoot The Law of Contract (11th Australian ed, LexisNexis 2017) at [10.6]

     9. In reasons for decisions on interlocutory applications during the hearing, I observed that the Builder ceased to have legal representation from November 2020.

148. The invoices which Mr Mehndiratta annexed were as follows (in the order they appear in the annexure, with the amounts stated as being inclusive of GST):

1. Invoice 1130 (17 October 2017) for balance owing on ‘next stage framing’ claimed to be $6,680;

2. Invoice 1167 (21 April 2018) relating to variously described works (including floor tiles and bathroom tiles) claimed to be $16,890;

3. Invoice 1150v (18 February 2018) relating to an air conditioner for the claimed sum of $16,500;

4. Invoice 1149v2 (22 December 2017) referring to a power pole variation, for the claimed sum of $2,280;

5. Invoice 1149v (22 December 2017) referred to as ‘variation windows’ for the sum of $1,500;

6. Invoice 1167v (21 April 2018) referred to as ‘lights and intercom’ for the claimed sum of $14,410;

7. Invoice 1193v11 (5 July 2018), concerning variation costs for sewerage, electrical and plumbing lines, for the claimed sum of $5,060;

8. Invoice 1193v (8 June 2018), with the reference driveway and external steps, for the claimed sum of $8,068.50;

9. Invoice 1193v12 (5 July 2018) with variously described works (including pantry area and fridge pantry supply and installation and variations to tiles in bathrooms and final rubbish removal) for the claimed sum of $10,960;

10. Invoice 1194v1 (29 Jun 2018) with the reference ‘Garage variations’ for the claimed sum of $10,780;

11. Invoice 1194v3 (29 June 2018), with the reference ‘Alarm variation’ for the claimed sum of $4,180;

12. Invoice 1194v2 (29 June 2018) with the reference ‘Alfresco Variations’ with the claimed sum of $17,270;

13. Invoice 1194v5 (29 June 2018) with the reference ‘Skipbins Variations’ with the claimed sum of $6,138;

14. Invoice 1194v4 (29 June 2018) with the reference ‘Lawn variations’ for the claimed sum of $473;

15. Invoice 1194v6 (29 June 2018) with the reference ‘Rubbish Removal Variations’ with the claimed sum of $6,160;

16. Invoice 1194v7 (29 June 2018) with the reference ‘Stormwater Variations’ for the claimed sum $2,376;

17. Invoice 1194v6 (29 June 2018) with the reference ‘Tank Variations’ for the claimed sum of $4,180;

18. Invoice 1195 (30 June 2018) with the reference ‘Variations Paint’ for the claimed sum of $2,750;

19. Invoice 1195v1 (24 August 2018) with the reference ‘Variation Inspection Charges, for the claimed sum of $770

20. Invoice 1115 (6 July 2017) bearing the reference ’20 Janice’ and apparently relating to demolition works, for the claimed sum $1,100;

21. Invoice 1115v (10 July 2017) with the reference ‘Swimming Pool Demolition’, for the claimed sum of $18,000;

22. Invoice 1119 (13 July 2017) relating to CDC approval, for the claimed sum of $25,500;

23. Invoice 1125 (20 August 2017), relating to piering for house slab, for the claimed sum of $2,598.75;

24. Invoice 1127 (6 September 2017), relating to the ‘base stage’ of the work, for the claimed sum of $18,000;

25. Invoice 1125v2 (8 September 2017) concerning what was described as the external dropedge beam (30m), for the claimed sum of $18,000;

26. Invoice 1195v2 (4 September 2018) referenced ‘Building Material’ for the claimed sum of $92,000.

149. The combination of the totals for each of the individual invoices yielded a sum owing in an aggregate sum of $220,624.25.

150. Among other documents in (pp 55-57 of Mr Mehndiratta’s affidavit; also Exhibit A, pp 53-55 incl) are what purport to be variations, in the form prescribed by the Housing Industry Association. From the handwriting, they appear to have been dated 5 July 2018. They purport to bear a signature by one of the owners – apparently Mr Barai.

151. At p 35 of Mr Mehndiratta’s affidavit there is the following document:

“Agreement

Porcelain tiles in living area has to be done by the builder but I requested Builder to do tiling in whole ground floor , I (Pankaj) will pay variations on Tiles cost and installation of tiles including material and labour which will be twenty five dollars ($25) per sq m as the allowance is only $25 for installation and $35 per sq m for tiles cost besides Living area and no Carpets to be done

• Mr O’Donnell was also shown a document, titled ‘Record of Inspection’ (Exhibit K). He understood that this was a record of the documents provided by the certifier upon inspection. He did not regard this as relevant to the existence or otherwise of defects. Specifically, and in connection with item 21 in the Scott Schedule, he opined that certification of work had been provided by a licensed plumber in circumstances where the work was unsatisfactory.

Submissions

The owners’ submissions

306. The owners submitted that the Court should accept Mr O’Donnell’s evidence. Mr Lambley acknowledged that some of his answers were long-winded and agreed that Mr O’Donnell harboured a negative attitude towards Mr Mehndiratta. Nevertheless any bias he had against the latter did not infect his opinions.

307. Mr Lambley made other submissions in anticipation of what Mr Mehndiratta was likely to submit:

• As to the delay in the builders affecting repairs to their property, the Court should accept Mr Barai’s evidence that he had arranged for several urgent repairs (such as the gas connection and plumbing) and had otherwise adjusted their living arrangements to deal with the defects (such as using only 2 of the 4 bathrooms). Mr Barai’s understanding was that whilst the proceeding was pending (it commenced in August 2018), he should refrain from making alterations to the condition of the property until a building expert was engaged;

• As to the delay (four years) in engaging a building expert, there was no continuous delay of that length. The owners had engaged another builder expert (Capital Building) and this builder had provided a draft report to Mr O’Donnell;

• The circumstance that the builder obtained an occupation certificate was not conclusive as to the existence or non-existence of incomplete or defective works: as Mr O’Donnell explained, such report did not prove that the works were performed according to specifications.

• The result of the Fair Trading inspection was not conclusive either: Mr O’Donnell’s sceptical view about such inspections should be accepted.

308. The owners submitted that the builder had ample time from the service of Mr O’Donnell’s report (11 November 2022) to prepare an independent expert report in response, but did not do so. Other than any admissions or qualifications that Mr O’Donnell made in the course of his cross-examination by Mr Mehndiratta, there was, in substance, no independent expert evidence that contested his conclusions. What Mr Mehndiratta had stated (in Exhibit B) amounted to only generalised assertions. In the discrete instances where Mr O’Donnell’s conclusions were challenged (such as in relation to items on the Scott Schedule), he gave plausible evidence in response.

The builder’s submissions

309. Mr Mehndiratta emphasised that the owners’ bank had released final payment after its valuer had inspected the property.

310. Mr Mehndiratta argued that any damage to the stormwater system could be sheeted home to Mr Barai, who was not a qualified landscaper. He also argued that the Court should find that it was Mr Barai who was responsible for the damaged garage door.

311. Mr Mehndiratta emphasised the content of the Fair Trading Rectification Order (Appendix 7 to Exhibit 4). Not only was the box not ticked to indicate the inspector’s view that the work done was defective, but also, the order that the builder complete the works was conditional: upon being given reasonable access to the site and making payments as per the contract agreement.

312. Mr Mehndiratta criticised (without singling out either of them individually) other aspects of the owners’ evidence. The suggestion of rusty fittings in the bathrooms was not consistent with a doors that were made of timber. If their evidence was to be accepted, it would mean that they were exposing their teenage daughter to hazards. If they were right about the existence of defects, they did not provide quotes to prove that they had sought repairs.

313. Mr Mehndiratta criticised Mr O’Donnell on many levels. He submitted that:

• Mr O’Donnell lied about his qualifications as a licensed builder. He was only qualified to conduct pest inspections;

• Mr O’Donnell lied about how long he conducted his site inspection for on 15 September 2022 (with reference to the different recollections of the owners);

• He did not explain how he got access to the property for his site inspection;

• In breach of the law and/or the expert code of conduct, Mr O’Donnell did not disclose to the owners his previous dealings with Mr Mehndiratta which suggested a bias against the latter;

• Mr O’Donnell did not take into account documents which would need to take into account if he was to prepare a report containing accurate opinions. When I asked Mr Mehndiratta what documents he was referring to (ie those which Mr O’Donnell did not, but should have, taken into account) Mr Mehndiratta referred to: (a) the contract of 23 December 2016; (b) The Tender and Specifications of 23 December 2016; (c) the CDC Approved plans (Exhibit J)

314. Mr Mehndiratta also asserted that Mr O’Donnell did not use the right tools to conduct an inspection.

Consideration

Statutory provisions

315. Section 18B(1) of the Home Building Act:

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

….

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

316. Section 18G of the Home Building Act provides that:

“A provision of an agreement or other instrument that purports to restrict or remove the rights of a person in respect of any statutory warranty is void”

317. As I have noted the contract – whichever version is accepted – acknowledged (by clause 9) the application and operation of s 18G.

318. Section 18E(1)(b) provides for a limitation period to commence a proceeding for a breach of the statutory warranties in the following terms:

“the warranty period is 6 years for a breach that results in a major defect in residential building work or 2 years in any other case”.

319. The ‘warranty period’ starts on completion of the relevant work to which it relates (s 18E(c)), but if the work is not completed, it starts (relevantly) on the date on which work under the contract ceased (s 18E(d)(ii)) which date, as I have said is in July 2018.

320. For the purposes of s 18E, "major defect" means--

(a) a defect in a major element of a building that is attributable to defective design, defective or faulty workmanship, defective materials, or a failure to comply with the structural performance requirements of the National Construction Code (or any combination of these), and that causes, or is likely to cause--

(i) the inability to inhabit or use the building (or part of the building) for its intended purpose, or

(ii) the destruction of the building or any part of the building, or

(iii) a threat of collapse of the building or any part of the building, or

(b) a defect of a kind that is prescribed by the regulations as a major defect,

321. The cross-claim, to repeat, was filed in August 2019. That date fell within the 2 year limitation period for an action for breach of the statutory warranties in relation to minor defects and within the 6 year period for an action for breach of statutory warranties for major defects.

General assessment of Mr O’Donnell and his evidence

322. There was some debate about the currency of his licence to build, but I accept Mr O’Donnell’s evidence on this point; which I understood was to the effect that the requirement for a builder’s license to be patently apparent on the Fair Trading register was affected by whether the person was engaged to perform building work other than as an owner/occupier. The last time that Mr O’Donnell performed building work himself was on his own home. Further, I do not necessarily accept the implicit premise advanced by Mr Mehndiratta that the weight to be given to Mr O’Donnell’s opinions is diminished by him not being a practising builder, as distinct from a person who has qualifications of a builder. As his resume indicates, Mr O’Donnell was well qualified to express the opinions that he did.

323. Mr O’Donnell’s answers in response to Mr Mehndiratta’s extensive cross-examination of him amply demonstrated his competence as a building expert. He did not hesitate to supply reasoned answers to every question raised of him. Indeed he was positively loquacious in many instances; providing further information than was necessary to answer the question. He did not suffer, in the least bit, in comparison to a ‘practical’ builder like Mr Mehndiratta, during the many adversarial exchanges they had in cross-examination.

324. If I was to be critical of Mr O’Donnell, it was in a tendency in him to spar with Mr Mehndiratta and, on occasions, some of his answers went beyond his basic remit of reporting the results of his inspections. He appeared determined sometimes to prove Mr Mehndiratta did something wrong. I also accept Mr Mehndiratta’s point that Mr O’Donnell had a degree of dislike of Mr Mehndiratta. To this extent, there was a loss of objectivity. In fairness to Mr O’Donnell, given the manner in which Mr Mehndiratta cross-examined him and the content of some of his questions, which squarely challenged his objectivity and honesty, it is not surprising if Mr O’Donnell appeared to be provoked on occasions.

325. It is unnecessary to determine whether Mr O’Donnell disclosed any ‘conflict of interest’ to the owners, or their solicitor, before he was retained. The circumstance, if it was true, that he had previously opined in a way adverse to Mr Mehndiratta did not raise a conflict of interest; nor disqualified him from expressing opinions in this litigation. No foundation was made for the proposition Mr Mehndiratta put to Mr O’Donnell in cross-examination that he had ‘cut and pasted’ apparently damning opinions of Mr Mehndiratta previously expressed in this particular report. Mr Mehndiratta did not deign to show to Mr O’Donnell any instance of any opinion in a previous report in other litigation being identical or substantially identical to his opinion in this litigation.

326. It was not suggested to Mr O’Donnell in what way he did not comply with the Expert Witness Code of Conduct; as Mr O’Donnell had said he had complied with. For that reason alone, it would be unfair of me to find that he did breach the Code. For what it is worth, it did not strike me as even arguable that any of the matters set out in paragraph 3 of that Code appeared to be breached.

327. Notwithstanding the (relatively mild) criticism I have made of a loss of objectivity, I have no doubt that Mr O’Donnell deployed his skill and expertise in a professional manner, consistent with his obligations. Most professionals, or at least honest and competent ones, are able to transcend any personal opinions about the work of other persons about whom they may dislike: the critical question when issues of this kind emerge is whether it is demonstrated, in a transparent way, that an expert’s personal antipathy to the professional who undertook the work being examined has a clear connection to the ultimate conclusions so as to infect them. I am not persuaded that this was shown by Mr Mehndiratta.

328. When challenged about his partiality, Mr O’Donnell not only persuasively indicated that his fees were paid upfront, and therefore were not contingent upon a successful outcome (to the owners, who were responsible for the payment of those fees) to the litigation, but without prompting, he alluded to his paramount duty to the Court; as he had done in the affirmation of his adherence to the Expert Witness Code of Conduct contained in his report.

329. He did not display any embarrassment when shown documents that he had not previously seen and acknowledge that earlier evidence should be corrected (his analysis of Item 19 in the Scott Schedule being an example). Overall, and on balance, his evidence under cross-examination instilled confidence in me as to the probative value of the opinions in his report.

330. Subject to a qualification, Mr Mehndiratta’s attack on the weight that should be given to Mr O’Donnell’s report, because of his omission to refer to certain documents which were not provided to him, was baseless. Firstly, I agree with Mr Lambley’s submission that experts are not responsible for the evidentiary material that they are supplied with (even if they ought to disclose whether or not that material is insufficient to provide an opinion). As explained to Mr Mehndiratta in argument, criticisms about the adequacy of materials that a party’s expert witness rely upon are usually pointed out by the opposing party’s own expert witness. That process did not occur here. So too, I would add, if criticism is to be made of an expert witness’ methodology or process through which the witness forms an opinion, it also usually arises from the opposing party’s expert. Without his own expert, however, Mr Mehndiratta was perforce left only to argue why he would have acted differently to Mr O’Donnell. His opinions about the appropriate methodology to opine upon allegations of defective or incomplete work and conclusions to be drawn were anything but independent but rather were inherently self-serving.

331. Secondly, Mr Mehndiratta did not point to anything in the documents he says Mr O’Donnell ought to have (but did not receive) that was likely to alter his opinions. There was nothing wrong with his omission to refer to the first two documents Mr Mehndiratta alluded to – the version of the contract of 23 December 2016 and the Tender and Specifications document of the same date – since, as I found earlier, neither of those documents had any valid contractual status. As to the CDC Approved plans (Exhibit J), aside from a bare assertion, Mr Mehndiratta was unable to point to anything in those plans to demonstrate how an opinion from Mr O’Donnell was wrong.

332. Thirdly, Mr O’Donnell manifestly indicated that when shown certain documents for the first time during the hearing, they did not change his conclusions in any material respect.

333. The qualification concerned item 19 in the Scott Schedule, concerning external stairs to the property. Mr O’Donnell accepted in his evidence that he had worked from the architectural plans he had been supplied to the assumption that concrete stairs were to be constructed, but the structural plans did not support that view.

334. In my view, this is a singular instance where different documents made a material difference.

335. Accordingly, I do not accept item 19 of the Scott Schedule as being a defect.

Evaluating Mr Mehndiratta’s submissions relating to defects and incomplete works

336. Contrary to his submission, the circumstance of Mr Mehndiratta’s obtaining of an occupation certificate did not have the effect of shielding or immunising him from a claim for damages for incomplete or defective works. That is not its purpose. As Mr O’Donnell explained, the functional significance of the occupation certificate is the indication that the home is fit for the intended purpose of being habitable. But where, as is often the case, defects are latent, problems may only become manifest later in time and are observable by experts.

337. I share Mr O’Donnell’s views of the weight to be given to the various compliance certificates supplied as part of the process for obtaining an occupation certificate. Notable in this regard was Mr O’Donnell’s point, raised in cross-examination, that Mr Mehndiratta himself was the author of the Basix Compliance Certificate referred to in the occupation certificate documentation (within Exhibit B). Neither that certificate, nor the other certificates within that list of documents were produced to the Court. The other authors (apart from Mr Mehndiratta) were not called to give evidence which would open their views for potential scrutiny. I touched upon the risks of a party relying upon business records, without accompanying evidence earlier.

338. In addition, it struck me that there was an air of desperation in the owners to move into their home, given the difficulty in them extending their alternative living arrangements. Attempts by the builder to use this as leverage for the payment of monies he claimed or approval by laypersons in a vulnerable position did not, in the circumstances, lead me to infer that the owners, by their conduct, admitted that their home was free from defects or was complete. As to the extent of leverage by the Builder, it was telling that whilst he was able to email the occupation certificate to the owners bank on 12 July 2018, to facilitate payment of the final progress payment claimed, he still had not emailed it to the owners despite requests that he do so until many days after. I infer he deliberately delayed doing so to force the owners to comply with his demands for payment. The owners desperation was also evident in Mr Barai’s email to the builder on 16 July 2018 (Exhibit W)

339. As was indicated by both clauses 9 and 23 of the written contract, the statutory warranties are not ousted by contractual provisions (including variations) which reduce or limit the builder’s obligations. In this way, the ‘Comprehensive Handover Inspection Summary,’ purportedly dated 5 July 2018, even assuming it was signed and understood by the cross-claimants, would not have ousted the operation of the statutory warranties.

340. As to Mr Mehndiratta’s reference to the NAB’s release of final payment after a valuer’s opinion, I agree with Mr O’Donnell that a valuer’s opinion is inherently not a safe guide to assisting whether outstanding works are defective or incomplete. I note that the valuer’s report is not even before the Court.

341. I have considered the builder’s associated points regarding the owners’ willingness to remain in a property notwithstanding what they asserted were defects and their omissions to obtain quotes from other builders to effect repairs. It is not the case that the owners did not do anything at all. Mr Barai’s recollections of performing certain ‘emergency’ repairs and complaints about other defects was reflected in his email to the builder on 3 September 2018 (Annexure ‘F’, p 61 of Mr Barai’s affidavit).

342. Moreover, these were points which might have supplied an argument that the Owners had failed to mitigate their loss and damage in a Defence to the Cross-Claim. That is a point that could and should have been the subject of pleading so that the owners had a fair notice of the point. I note that at the time that Mr Barai (at that time the sole cross-claimant) filed the original version of the Cross-Claim (21 August 2019), it appears that the builder was legally represented. In the cross-claim, Mr Barai indicated that as part of his Defence and to support the cross-claim, he was asserting a series of defects and breaches of contract which, for a contract that was palpably subject to the Home Building Act would reasonably have suggested a reliance upon statutory warranties. The need to plead a failure to mitigate (a general pleading requirement: see r 14.14 of the UCPR) was all the more apparent where s 18BA of the Home Building Act operated to regulate the obligations of owners who complain of a breach of statutory warranty.

343. At any rate, even if it was fair to treat with the builder’s submission in this regard, the points he raised were not compelling. Whether it was reasonable or not for the owners to place repair work in abeyance until the resolution of this proceeding, in anticipation of recovering a judgment on their cross-claim, it did not derogate from the force of the owners’ lay evidence of the existence of defects and it assuredly did not derogate from the force of the evidence of Mr O’Donnell.

336. Further, in the end, I find that the owners did, in fact, engage another building expert. This much was apparent from Mr O’Donnell’s description of the documents supplied to him by the defendants’ solicitor, including a draft report received from Capital Building Consultants. This document was not disclosed by Mr O’Donnell, and its content was not otherwise adduced in Court, but it strikes me that it was likely to have attracted client legal privilege; so that no inference adverse to the owners from not tendering it could be drawn for that reason alone.

337. If I am wrong about that, however, there was nothing to stop the builder from requesting Mr Lambley’s firm to voluntarily produce the draft report or (if that request was not acceded to) to issue a notice to produce to the owners or subpoena to Capital Building Consultants to produce the document (either of which form of court process might have generated a claim by the owners of privilege for the purpose of withholding production of it). This is another reason why I do not draw any inference adverse to the owners from their not tendering what was a draft report.

338. Further, as I explained to Mr Mehndiratta in an exchange in closing argument, I would have expected Mr O’Donnell to conduct his own inspection and form his own conclusions independently from whatever appeared in the draft report from Capital Building Consultants. He was not tasked to review the correctness of the conclusions of a different expert builder. In no way does the fact that the owners appeared to countenance the preparation of a report by a different building expert derogate from the force of Mr O’Donnell’s conclusions.

339. I take into account the Fair Trading rectification order. But it does not have the effect that Mr Mehndiratta would wish it to have, in the sense of providing conclusive evidence against the owners. Part of the difficulty with that submission is that it runs contrary to the legislation. This rectification order was made pursuant to s 48E of the Home Building Act. It emerged after a building dispute had been notified by the owners (s 48C). But the content of s 48F indicated its limited effect. That provision is in the following terms:

“(1) Except as provided by section 51, a rectification order does not give rise to any rights or obligations.

(2) Subject to section 48I, a rectification order ceases to have effect for the purposes of section 51 if the matter giving rise to the order becomes the subject of a building claim.”

348. Section 51 (a provision under Part 4 of the legislation that concerns disciplinary proceedings against building professionals) was not engaged. The effect of the provision, therefore, was that the rectification order did not give rise to any rights or obligations.

349. Even without this legislative indication, I take into account Mr O’Donnell’s jaundiced, if not slightly cynical view of such reports. I do not accept that Mr Nicholson, with all respect, was likely to have conducted a comprehensive view of the property to examine suggested defects. That would have taken a deal of time and effort. It would be improbable that an agency of the State with as broad a remit as Fair Trading would undertake the task (absent an exceptional reason) where the complainant could not engage a consultant to perform the task of identifying defects itself. Any notes that Mr Nicholson may have made from his own inspection were not tendered as business records of Fair Trading.

350. I place weight upon Mr Barai’s contemporaneous complaints to Mr Mehndiratta, conveyed by email (eg Annexures F and G of Mr Barai’s affidavit) and conveyed by Ms Mahjabeen (Exhibits V and T) regarding the condition of the property from the second half of 2018. Mr Mehndiratta did not adduce any emails which responded to the substance of these complaints. Mr Barai’s complaints (and Mr Mehndiratta’s lack of responsiveness to them) were additional evidence of the truth of what was complained of.

351. I do not accept the Builder’s propositions, which were advanced to Mr Barai in cross-examination, that Mr Barai had tampered with the property, either in a way that was deliberately intended to damage the condition of the property or, unintentionally (such as the garage door or stormwater system). In particular, I find that the suggestion that Mr Barai or anyone else ‘tampered’ with any part of the works is preposterous. These submissions were speculative and should not have been made. It is almost impossible to conceive of any rational basis for an owner to deliberately damage property that they continue to live in. Ironically, the submissions tended to undercut Mr Mehndiratta’s criticism (addressed elsewhere in these reasons) about the owners’ inaction in trying to address the effects of the damage to the property. I also find that Mr Barai’s denial of tampering (deliberately) with any feature of the property was supported by the instances in Mr O’Donnell’s evidence where the expert decried the high improbability of tampering with the property for the reasons the expert expounded.

352. I accept Mr O’Donnell’s evidence of both the incomplete and defective nature or extent of the works which the Builder performed. I agree with the owners’ submission that after being thoroughly cross-examined by Mr Mehndiratta, Mr O’Donnell did not resile from his opinions. The explanations he supplied in response to Mr Mehndiratta’s challenges on individual items in the Scott Schedule were not proven to be implausible.

353. For all of his assertions (in Exhibit B) of the state of the works and approvals from subcontractors, Mr Mehndiratta’s assertions were just that: they were bare assertions. They were not independently corroborated (except as to the reference to inspections I have earlier addressed) and were not exposed to scrutiny. I have indicated the forensic consequences of my adverse findings of his credibility in connection with other issues in the case earlier. Nor did he put to Mr O’Donnell the correctness of those assertions for the latter’s consideration. I give very little weight to those assertions.

354. I find that, subject to item 19, there were defects and incomplete works as summarised by Mr O’Donnell’s report, and supported by the detail set out in his report.

Quantification of rectification costs

355. As indicated Mr Mehndiratta generally had ample opportunity of serving evidence in reply, including the evidence of Mr O’Donnell. Even if he disputed the existence of the defects, it was open to him to have, contingently, served evidence to contest either or both the reasonableness of the rectification works or the quantification of costs of rectification works outlined by Mr O’Donnell which, as indicated, relied upon the Rawlinson guidebook. In terms of adducing evidence, Mr Mehndiratta did not engage with these issues.

356. He again had to fall back on arguments advanced to Mr O’Donnell about the scope of rectification works and the costs of such works during the course of his cross-examination of him. Those attacks (if they could be called that) were relatively few in number however, as summarised earlier in these reasons.

357. Mr O’Donnell did not concede the correctness of the matters raised of him by Mr Mehndiratta; nor resiled from nor qualified his opinions. He said, and I accept, that he had qualifications that would enable him to quantify works and he utilised the authoritative source to enable him to do so. He persuasively explained his calculations in relation to only a few of the items which Mr Mehndiratta tested him on, and there was no evidence to the contrary in relation to those calculations.

358. I accept his evidence of the reasonableness of the rectification works and the costs of rectification works.

359. The cross-claimants are entitled to judgment to reflect the calculations set out in paragraph 303 above. That is to say, they should have judgment in the sum of $196,975.

Costs of the proceeding

360. The owners’ defence of set-off thus succeeds in extinguishing their liability for unpaid invoices and their cross-claim succeeds in establishing an entitlement to damages for breach of the statutory warranties beyond the point where the quantum exceeds the monetary judgment for the builder’s claim.

361. I presently see no reason why costs should not follow the event (Uniform Civil Procedure Rules 2005, r 42.1). Provision will be made, however, in the orders for the parties to apply for a variation of the costs order should they wish to heard on that issue. If that occurs, it will necessitate further directions for submissions to resolve further argument.

362. Liberty to apply should also be given to enable the parties to check the calculations I have made in the light of these reasons.

Orders

363. For the foregoing reasons, I make the following orders:

1. Judgment for the plaintiff on the Statement of Claim (as amended) for the sum of $45,800.

2. Judgment for the cross-claimants on the cross-claim (as amended) for the sum of $196,975.

3. By operation of s 96 of the Civil Procedure Act 2005 (NSW), the Judgment for the plaintiff is taken to be satisfied and the judgment for the cross-claimants is reduced by the amount of the judgment in the plaintiff’s favour, so as to be $151,175.

4. The plaintiff/cross-defendant is to pay the defendants/cross-claimants interest on the sum of money in order 3 under s 100 of the Civil Procedure Act 2005 (NSW).

5. The plaintiff and cross-defendant is to pay the defendants and cross-claimants’ costs of the proceeding on the ordinary basis, as agreed or assessed.

6. If any application is sought in relation to the costs order in order 5, it is to be brought by a notice of motion with supporting evidence, to be filed within 14 days of this judgment and if such motion is brought, the Court will issue further directions on such motion.

7. Liberty to apply is granted on 3 days’ notice.

**********

Endnotes

Amendments

15 September 2023 - Inserted images, corrected formatting and paragraph numbering.

Decision last updated: 15 September 2023