Sabouni v Revelop Building and Developments Pty Ltd

[2021] NSWSC 31

Supreme Court

New South Wales

Medium Neutral Citation:

Sabouni v Revelop Building and Developments Pty Ltd [2021] NSWSC 31

Hearing dates:

26, 27 November 2020 and 20 January 2021

Decision date:

02 February 2021

Jurisdiction:

Equity

Before:

Black J

Decision:

Plaintiff’s claim and Defendant’s Cross-Claim Dismissed

Catchwords:

CONTRACTS – construction contract – whether Plaintiff entitled to amount of second progress claim made prior to Defendant’s termination of contract – whether Defendant entitled to recover additional costs of construction works incurred after termination of construction contract with Plaintiff

Cases Cited:

- Broadway Plaza Investments Pty Ltd v Broadway Plaza Pty Ltd [2020] NSWSC 1778

-Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64

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

- JLW (Vic) Pty Ltd v Tsiloglou [1994] 1 VR 237 at 243

-Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61

- Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623

- Mann v Paterson Constructions Pty Ltd (2019) 373 ALR 1; (2019) HCA 32

-McCrohan v Harith [2010] NSWCA 67

-Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 77 ALJR 768

- Re Hair Industrie Penrith Pty Ltd, Hair Industrie Merrylands Pty Ltd [2015] NSWSC 1578

-Ross T Smyth & Co Ltd v TD Bailey Son & Co [1940] 3 All ER 60

-Southern Cross Autoglass Pty Ltd v Protector Glass Industries Pty Ltd [2014] NSWSC 261

-Schindler Lifts Australia Pty Ltd v Debelak (1989) 89 ALR 275

-State of New South Wales v Moss (2000) 54 NSWLR 536

- Troulis v Vamvoukakis [1998] NSWCA 237

-Uszok v Henley Properties (NSW) Pty Ltd [2007] NSWCA 31

- Vanguard Financial Planners Pty Ltd & Anor v Ale & Ors [2018] NSWSC 314

Category:

Principal judgment

Parties:

Omar Sabouni (Second Plaintiff)
Revelop Building and Developments Pty Ltd (Defendant)

Representation:

Counsel:
Mr A R Vincent (Defendant)

Solicitors:
O Sabouni (Plaintiff) (self-represented)
HWL Ebsworth (Defendant)

File Number(s):

2018/393550

Judgment

1. These proceedings involve claims in respect of the construction of a child care centre at Penrith in New South Wales. They were originally brought by the First Plaintiff, OSC Constructions Pty Ltd (“OSC”), against Revelop Building and Developments Pty Ltd (“RBD”) in the Local Court of New South Wales in December 2018. OSC and the Second Plaintiff, Mr Sabouni, filed an Amended Statement of Claim in April 2019 by which Mr Sabouni contended that he rather than OSC was the proper plaintiff. RBD filed an Amended Defence and Cross-Claim in June 2019; the proceedings were transferred to the Supreme Court of New South Wales in March 2020; and ultimately Mr Sabouni and not OSC pursued the claim against RBD, and RBD pursued a cross-claim against Mr Sabouni and not OSC. The proceedings were heard on 26 November 2020; were adjourned without a substantive hearing on 27 November 2020, by reason of a party’s illness on that day; and the hearing was completed on a second day on 20 January 2020.

Chronology, affidavit and other evidence

2. Mr Sabouni relied on his affidavit dated 23 August 2020, parts of which were admitted with a limiting order under s 136 of the Evidence Act as a description of the documents to which it referred, and parts of which were admitted with a limiting order as submission only, and on correspondence between him and RBD (Ex P1). Mr Sabouni also tendered a bundle of documents (Ex P2), part of which were admitted as submission only, which included extracts from site diaries, invoices and photographs of work at the site. RBD relied on the affidavits of two of its directors, Mr Hazzouri and Mr El-Hazouri, and also on the tender of documents (Ex D1). Before turning to the affidavit evidence and cross-examination, I should first set out a brief chronology of events.

3. By an email dated 29 November 2016, prior to the commencement of construction works for the child care centre and prior to the execution of the construction contract (“Contract”) on 17 March 2017 between Mr Sabouni and RBD, Mr Sabouni advised RBD that he expected that the works could be completed within 16 weeks, absent any slippage. It appears that Mr Sabouni commenced work on the Penrith site in late December 2016, nearly three months before the Contract was executed.

4. In late February 2017, Mr Sabouni or OSC claimed several extensions of time for the project, although the Contract had not then been executed. By a first extension of time claim dated 28 February 2017, OSC claimed that excavation, piering and concreting had been delayed, identifying the cause of delay as wet weather and recovery, for 15-16 December, 19 December 2016, 5, 9, 23 January 2017, 2, 8-9, 20 and 27-28 February 2017 and claimed an extension of time for practical completion of 12 working days. By a second extension of time claim also dated 28 February 2017, OSC advised RBD that work under the contract had been delayed in respect of excavation, piering and concreting by excessive heat, referring to days claimed in a third extension of time, and also claiming 17-18, 30-31 January 2017 and 10 February 2017. Mr Vincent, who appears for RBD, submits that excessive heat is not a valid basis for an extension of time claim, at least in Sydney, but it is not necessary to address that question in order to determine these proceedings. By a third extension of time claim number also dated 28 February 2017, OSC claimed a 7 day extension of time for surveying, excavation, piering and concreting, with the cause of delay identified as “waiting on redesign of plans from architect”. An outline of relevant events set out in that document refer to delays in respect of plans, with revised plans being received on 13 January 2017. By a further extension of time claim made on 29 February 2017, OSC claimed an extension of time of one day for excavation, piering and concreting for 29 February 2017, referable to wet weather. There was no such date in February 2017, which was not a leap year.

5. By an email dated 6 March 2017 (Ex D1, 868), OSC issued a draft first progress payment claim to RBD in the amount of $137,958.70 inclusive of GST, including $15,780 referable to preliminaries, and attaching two pictures of the slab being poured (Ex D1, 871). Mr Sabouni subsequently issued a final version of that claim, reducing the claim for preliminaries to $5,260 and reducing that total claim to $106,704.68 inclusive of GST (Ex D1, 876).

6. On 17 March 2017, RBD executed the Contract, which the parties now accept was with Mr Sabouni rather than with OSC, for a contract price of $1,099,098. The Contract provided for works to commence on the Commencement Date, being two weeks after RBD gave possession of the site to Mr Sabouni, or gave him evidence of its capacity to pay the contract sum or provided him with the required building and planning approvals, and specified the date for practical completion as 16 weeks from the commencement date. Clause 2.1 provides that the builder must carry out and complete the works in accordance with the contract and directions. Clause 22 provided for claims for extension of time for practical completion if Mr Sabouni was delayed in reaching practical completion, unless he directly caused the delay and that cause was within his sole control and he was the sole cause of the delay. That clause also provided a mechanism for such claims, which were to be made evidencing the facts of causation and the delay to the works within 28 days or when Mr Sabouni became aware of both causation and the extent of delay.

7. On 29 March 2017, RBD made a payment of $53,000 to OSC on account of the first progress claim to which I referred above. A second payment was also later made by RDB to Mr Sabouni.

8. By email dated 19 April 2017, Mr Sabouni provided Mr Hazzouri, a director of RBD, with an update on the schedule, advising that:

“-    steel fixers will be continuing the installation of the footing steel Tomorrow;

-    concrete and boom pump has been ordered for Monday;

-   the Remaining Steel Beams and columns are due for Delivery Friday;

-   the Window Frames are due for delivery next week Friday;

-    the Carpenter Roof Framing and steel install will be confirmed tomorrow;

-   the roofer will be confirmed by Friday.”

Mr Sabouni also there referred to several trades which would be “locked in and confirmed next week”.

9. Mr Hazzouri was plainly not satisfied with that update and responded (Ex P2, 267) that:

“Omar, the below schedule is very basic and not detailed enough. By Friday I want a comprehensive schedule and I require a text every day with picture showing the required trades on site and I will be having John [Barich] doing spot checks ensuring these trades are onsite. In the event the trades are not onsite and I have not been informed, the front gates will be locked and the job will be given to a new builder.”

Mr Sabouni accepted in cross-examination that, by 19 April 2017, at least Mr Hazzouri had made clear that he was not happy with progress of the works and that the question of termination of the contract had been raised by that time (T33).

10. On 20 April 2017, OSC issued a second progress claim to RBD (Ex D1, 890), again claiming preliminaries of $15,780 and claiming a total of $100,086.53 inclusive of GST. It appears the preliminaries then claimed amounted to 40% of the total work although the percentages of work indicated that a number of items claimed had not significantly advanced. The issue of that progress claim did not conform with the contractual terms for progress claims, which contemplated that they would be made on the thirtieth day of each month for works done to the fifteenth day of that month. Mr Hazzouri subsequently attended the premises and compared the works completed as against the works claimed in the second progress claim and adjusted the amount of the second progress claim to $14,892.97 by way of handwritten amendments to that claim, which estimated that only a small amount of the total work had been done and significantly reduced the percentage of work complete for several items, and reduced the work complete in respect of concrete slab 2, electrical rough-in, carpentry slab 1 walls (with a notation “defective”) to nil, and reduced the total claim to $14,892.97 inclusive of GST.

11. On or about 22 April 2017, OSC or Mr Sabouni provided a program to RBD outlining further works to be undertaken at the premises. Mr Sabouni accepted in cross-examination that this program indicated that steel fixing had only commenced on 19 April; that carpentry work had not yet commenced; that the installation of structural steel for slab 1 had not then commenced; that concreting for slab 2 had not then commenced and that electrical ground rough-in had not then commenced (T25). Mr Vincent submits, and I accept, that that program indicates that several items claimed in the second progress claim were not advanced to the extent claimed in that progress claim. That program anticipated a completion date for the project of 9 June 2017, assuming the correctness of the programming and that works went in accordance with that program.

12. Mr Sabouni placed particular reliance on an email dated 24 April 2017 which he sent to a representative of RBD seeking confirmation as to the status of an engineer who would not attend the site until he had been paid, which Mr Sabouni says delayed the concrete pour. Mr Sabouni contends that the payment of that engineer was RBD’s responsibility. It was apparent from the cross-examination that there is a substantial dispute as to whether RBD or Mr Sabouni was responsible for contracting and paying the engineer for certification works, although RBD had retained him for some earlier work; Mr Vincent put to Mr Sabouni that he was responsible for the engagement of sub-contractors and other consultants, and Mr Sabouni responded, with some force, that the engineer was not a sub-contractor and this was not a design and construct contract and that the engineer was directly engaged by RBD (T37). I am inclined to accept that position, but it does not assist Mr Sabouni where the delays established by the evidence extend well beyond any matter referable to the engineer’s delay in attending at the site. Mr Sabouni accepted in cross-examination that matters relating to the engineer had not caused any delay to the works prior to 20 April and that no claim for extension of time was made in relation to anything relating to the engineer, although he also observed that the Contract was terminated before issues relating to the engineer were resolved (T37).

13. By letter dated 1 May 2017 (Ex P2, 144; Ex D1, 900), RBD terminated the Contract, identifying the basis for termination as that:

“1.   You continued to cause serious delay to the project;

2.   You continually changed specifications which caused further delays;

3.   You did not meet agreed deadlines or build requirements;

4.   Despite constant attempts to resolve any dispute, you failed to adhere to your build obligations.

5.   Your behaviour and attitude with Charbel Hazzouri of even date was unprofessional and a clear indication you have no desire to remedy the current situation.”

14. By letter dated 24 May 2017, the then general counsel of RBD wrote to Mr Sabouni attaching amendments to the second progress claim and identifying claims as to defects and amounts for deduction, including alleged costs of removal of material dumped on site as to $6,000; rectification of the slab after concrete pour and allegedly incorrectly plumbing and waste in the slab as to $4,500; rectification of a step-down in the slab not shown in plan as to $7,1000; removal of timber work on site as to $4,400; removal of rubbish left on site as to $8,600 and time lost over a five month period in liquidated damages as to $35,000, totalling $65,600 inclusive of GST, and claimed the excess of that amount over the amount of progress claim 2 paid against OSC (as distinct from Mr Sabouni). RBD did not press those claims in those terms in this hearing.

15. By an email dated 16 June 2017 (Ex P2, 283), Mr Sabouni denied that there was illegal dumping although top soil was delivered to be used as backfill; accepted that minor rectification of the slab would be required, and he would accept a penalty of $1,000; and contended that the new builder was not rectifying the stepdown in the slab which was required for the floor finishes and the new builder had confirmed that the timber that was on site was used and not removed. Mr Sabouni also advised RBD of his contention that the piering for slab 2 was completed; excavation of slabs 1 and 2 was completed; the footings were formed and reinforcement installed as to concrete slab 2, which he claimed was 25% complete; that electrical rough-in for slab 2 was for mains running between the two slabs, and he would accept 50%; and that carpentry for the slab 1 walls was not defective and the timber had not been removed and was used, and contended that work was complete; and that structural steel for building 1 was used and confirmed by the builder on site and Mr Sabouni would accept 50% of the amount claimed. Further correspondence in late June 2017 between Mr Sabouni and Ms Celestino did not resolve outstanding claims (El-Hazouri 13.10.20 [91]-[92]).

16. Turning now to the affidavit and other evidence, Mr Sabouni’s affidavit was largely a description of the documents to which it referred. Mr Sabouni was cross-examined by Mr Vincent, commencing on 26 November 2020 and continuing on 20 January 2021. Mr Sabouni accepted that he was also undertaking several other building jobs, at the time he was undertaking work in respect of the construction of the child care centre for RBD (T16). He accepted that his evidence was that he commenced work on the project for RBD on about 19 December 2016 (T17). His evidence was that he did not recall whether he used the same contractors across the several building sites at which he was undertaking building works at the same time (T23). Mr Sabouni also accepted that the site diaries which he had tendered as part of Ex P2 were a selection of some of the site diaries he had maintained in relation to the project, which he attributed to “time constraints”, and that he had selected those pages of the site diaries “at random” by flipping through the site diary taking photos of particular pages and stopping when he had other commitments (T18). No site diaries were tendered evidencing any work performed after 10 March 2017. I accept that orders were made which constrained the time for Mr Sabouni to lead evidence, in the course of directions to prepare this matter for hearing. However, as Mr Vincent put to Mr Sabouni in cross-examination, there was nothing to prevent Mr Sabouni tendering the original site diaries, or producing them on the second day of the hearing once the issue as to his selection of days from the site diary was identified. It is not necessary to infer that the content of site diaries after that date would not have assisted Mr Sabouni; it is sufficient, for present purposes, that the absence of evidence of the site diaries after that date means that there is no primary evidence of the work done after that date, to the extent that it would have been recorded in those site diaries.

17. Mr Sabouni’s evidence in cross-examination was that RBD had authorised him to claim works in the second progress claim issued on 20 April 2017 that would be done in the near future, after the issue of that claim (T26). I am not persuaded by this evidence, which seems to me to be implausible given that RBD was plainly then concerned as to delays in the works and nothing in its conduct suggests that it had any inclination to pay for work that had not yet been performed. Mr Sabouni changed his position in this respect in closing submissions, although it was not clear whether he abandoned his earlier evidence in cross-examination in doing so, by contending that he had in fact done the work which was the subject of the second progress claim by the time he made it, and had not said so in cross-examination by reason of the stress of giving evidence. That proposition was fundamentally inconsistent with Mr Sabouni’s evidence in cross-examination, since there would have been no need to seek or obtain permission from RBD to include works which were to be done in the near future in that progress claim, as Mr Sabouni had said he had done, if those works had already been done. It also seems to me highly implausible that, at a time that RBD was complaining about delays in the project, Mr Sabouni would have submitted a program on 22 April 2017 (to which I referred above) which showed work as not commenced if it had in fact been commenced or was significantly advanced. I am not able to accept that the work had already been done.

18. Mr Sabouni accepted in cross-examination that the second payment claim reflected his assessment of the amount of work concluded for which he was claiming in the invoice (T45); that evidence must be qualified to the extent that that progress claim also included work which had not been completed. Mr Sabouni also accepted that the highest he could put the status of the completed work as at the date of the second progress claim was 20% (T48), but did not accept that, with at least 80% of the work to be completed, it would have taken longer than the month of June to complete the works (T49).

19. Mr Vincent submitted, in closing submissions, that Mr Sabouni would not be accepted as a witness of credit. I have not found it necessary to reach a finding in those terms, although I do not accept aspects of Mr Sabouni’s evidence, including as to one matter where he radically changed his position between cross-examination and closing submissions to which I refer below.

20. As I noted above, RBD relied on the affidavit dated 13 October 2020 of Mr Anthony El-Hazouri, who is a director of RBD, together with his cousin, Mr Charbel Hazzouri. Mr El-Hazouri’s evidence is that RBD was the primary company by which he and Mr Hazzouri carried on a business of property development and property investment and that an associated entity, CCC Letting Group Pty Ltd (“CCC), was used to enter into leases regarding childcare centres. His evidence (El-Hazouri 13.10.20 [12]-[15])) was that, on 4 August 2016, CCC Letting entered into an agreement for lease of the Penrith property and, on 13 June 2018, it entered into a lease for the property and then a sub-lease with Penrith CCC Pty Ltd (“Penrith CCC”), and the premises were to be used as a childcare facility and operated by a group of companies associated with Penrith CCC.

14. Mr El-Hazouri referred (El-Hazouri 13.10.20 [17]ff] to negotiations with Mr Sabouni, in evidence which appears to have been directed partly to establishing that OSC rather than Mr Sabouni was party to the Contract. That proposition is no longer pressed by RBD. Mr El-Hazouri also referred (El-Hazouri 13.10.20 [22]) to an email dated 29 November 2016 from Mr Sabouni (to which I refer below) which contemplated a handover of the premises by 31 March 2016, after a construction period of approximately 16 weeks, excluding public holidays, if work commenced in early December 2016 and there were no stoppages other than public holidays. Mr El-Hazouri’s evidence (read with a limiting order under s 136 of the Evidence Act as submission and not proof of the fact) was that the works under the Contract included works undertaken to reinstate the existing premises; fit-out of the premises (including services) according to a scope of works provided by a sub-lessee; organising contractors at the premises to complete the works in accordance with the timeframe as set out in the Contract; and attending to payment of contractors (El-Hazouri 13.10.20 [30]).

15. Mr El-Hazouri also referred (El-Hazouri 13.10.20 [36]ff) to the progress of the work, and to indications of concern by Mr Hazzouri, between December 2016 and April 2017 that it did not appear that a lot of work was being done at the site and that the works were not being done. The weight that can be given to Mr El-Hazouri’s evidence as to the progress of the works was limited by his evidence that he did not attend the premises during the time that construction was undertaken, although Mr Hazzouri (who gave evidence) and Mr Barich (who did not give evidence) had attended the premises every couple of weeks (El-Hazouri 13.10.20 [37]). Mr El-Hazouri also referred to the correspondence relating to delayed completion of the works, including several occasions on which Mr Sabouni claimed extensions of time for the date for practical completion. Mr El-Hazouri also referred (El-Hazouri 13.10.20 [62]ff) to progress claims made by OSC, a matter that is not wholly consistent with the common ground that Mr Sabouni rather than OSC was party to the contract.

16. Mr El-Hazouri also referred (El-Hazouri 13.10.20 [84]ff) to the termination of the Contract and to his subsequent inspection of the site which he characterised as “an absolute mess”. No expert evidence was led to allow a more informed assessment of the state of the site at the date of termination. Mr El-Hazouri also referred to subsequent correspondence between the parties as to the costs payable in respect of the works and gave evidence (El-Hazouri 13.10.20 [93]ff) that RBD subsequently engaged various contractors, and (in evidence admitted as a submission, so far as it assumed that the works to be done by Mr Sabouni and works later done by other contractors were identical) that the total cost of doing so was $1,930,300.21, being $831,202.21 greater than the cost under the Contract. Mr El-Hazouri also gave evidence (El-Hazouri 13.10.20 [99]ff) , also largely by way of assertion and the tender of invoices, as to the nature of the work done by particular contractors, although it was largely not apparent from his evidence that the work done to complete the child care centre was identical or substantially identical to that which Mr Sabouni had contracted to undertake. I will address that evidence in more detail in determining RBD’s cross-claim.

17. Mr El-Hazouri also responded (El-Hazouri 13.10.20 [167]) to Mr Sabouni’s evidence, again by way of assertion, claiming that the plans provided by RBD did not change over the course of the Contract, although he conceded that “more detail” was provided to OSC as and when requested, and he also there claimed (also by way of assertion) that RBD was not responsible for the payment of any engineer or other sub-contractor for the works during the term of the Contract and that OSC was responsible for that payment. Mr Sabouni cross-examined Mr El-Hazouri including as to whether RBD had raised any concerns regarding the extensions of time (T82) and as to the provision of the plans and structural drawings by RBD to Mr Sabouni (T84). Mr El-Hazouri had limited involvement in those matters, which were largely addressed by Mr Barich.

18. RBD also relied on the affidavit dated 13 October 2020 of Mr Charbel Hazzouri, who is also a director of RBD. Mr Hazzouri also referred to negotiations with Mr Sabouni prior to the entry into the Contract; his evidence was that Mr Sabouni obtained access to the premises in the second week of December 2016 and began work on 21 December 2016 and he referred to the subsequent progress of the works. His evidence, which he characterised as matters of observation but which was partly of a conclusory character, was that he observed that Mr Sabouni was seldom at the premises; that the works appeared to be “progressing slowly” and that it appeared that no further work had been undertaken between his visits to the premises; and that “insufficient resources” had been allocated to ensure that the works were “conducted in a timely manner”, because Mr Sabouni was rarely on site, a number of Mr Sabouni’s tradesman complained about not being paid and his carpenter left the project. Mr Hazzouri also referred, by way of assertion, to the “poor workmanship and poor quality” of the works undertaken by Mr Sabouni generally.

19. Mr Hazzouri also referred to text messages with Mr Sabouni between mid-January and mid-February 2017 regarding the progress of the works and to conversations with Mr El-Hazouri in which he had expressed concerns that the works would not be completed on time and would be significantly delayed, and conversations with Mr Sabouni relating to the “lack of progress” of the works. Mr Hazzouri’s evidence was that, after receiving Mr Sabouni’s second progress claim, he attended the premises about April 2017 and “estimated” that the works were only about 10% complete and would likely take another 16 weeks to complete if Mr Sabouni had the resources to finish them. Although Mr Sabouni, who represented himself, did not object to that evidence, and assuming (without deciding) that Mr Hazzouri had the experience or qualifications to form that opinion, his evidence did not expose sufficient reasoning to support that opinion to allow it to be given significant weight. Mr Hazzouri also referred to the circumstances of the termination of the Contract and to his observations as to the state of the premises at the date of termination. Mr Hazzouri’s evidence was that it has “since cost [RBD] $1,930,300.21 to rectify the defective works and complete the works the subject of the Contract”. Again, that evidence does not establish that the work done to complete the child care centre was identical to that which was the subject of the Contract and is not sufficient to expose any link between the claimed breach of Contract by Mr Sabouni and the particular costs incurred in completing the child care centre.

20. Mr Hazzouri did not accept in cross-examination that RBD was liable to pay the engineer’s costs in certifying Mr Sabouni’s work and contended that Mr Sabouni was liable for those costs (T56). Mr Sabouni also cross-examined Mr Hazzouri as to RBD’s suggested failure to schedule an “emergency crisis meeting” to resolve any issues (T62). That criticism did not advance Mr Sabouni’s case, where the evidence indicates that RBD had raised concerns as to delay both orally and in emails and a failure to call such a meeting does not advance Mr Sabouni’s claim for payment of the second progress claim. Mr Sabouni also cross-examined Mr Hazzouri as to an inconsistency in the amounts claimed by RBD for the completion of the works; it is not necessary to address that question, where RBD has not established that claim for the reasons noted below. Mr Sabouni also cross-examined Mr Hazzouri to seek to establish that the construction program which he had provided was deemed a variation of the contract (T68). That matter was not pleaded by way of any challenge to the termination of the contract and does not assist Mr Sabouni to establish the amount he claims in respect of the second progress claim.

21. RBD did not lead evidence of Mr Barich who appears to have played a significant role for RBD in supervising the works and no explanation was given for his absence. I infer that his evidence would not have assisted RBD.

Mr Sabouni’s claim against RBD

29. Mr Sabouni pleads that he and RBD entered into a contract for construction works on a construction site at Penrith, under which he would perform specified Works in accordance with the Contract for a contract sum of $1,099,098. By its Defence, RBD initially denied entering a contract with Mr Sabouni to carry out the relevant works and contended that it had entered that contract with OSC. RBD ultimately accepted, in the course of the hearing, that the contract was with Mr Sabouni. Mr Sabouni pleads that, between 21 March 2017 and 20 April 2017 he carried out part of the relevant works (FASC [5]). Mr Sabouni pleads (FASC [6]) that he made a progress claim on 20 April 2017 for $100,086.53, and claims that RBD failed to pay the amount of the progress claim or provide a “progress certificate” evidencing its opinion of the monies due within seven days, and that the amount of the progress claim was deemed to be a debt due and payable under the Contract. By his Further Amended Statement of Claim, Mr Sabouni accepted that RBD had terminated the Contract on 1 May 2017 and pleaded that, “notwithstanding the termination”, he was entitled to payment of that progress claim in full and the failure to make that payment represented a breach of contract, for which he claimed damages in the amount due of $100,086.53 (FASC [11]-[13]). By its Defence, RBD largely denied Mr Sabouni’s claim.

30. In substance, Mr Sabouni’s case is that his right to the amount of the second progress payment arises because RBD did not respond to his claim for that payment within the time specified in the Contract. In closing submissions, Mr Sabouni addressed the adverse impact of this matter on his family and indicated his belief that the money which was claimed was rightfully his, and his contention that the works were done and that RBD had not paid for them (T95). He also contended that he had shown through emails and documentation that RBD’s conduct had a severe impact on the delay of the work, and that RBD had not provided him with all necessary documentation and had failed to fulfil its obligations with the structural engineer. He contended that no written direction was given regarding the extensions of time and they should be deemed accepted under the Contract and that the amounts claimed under the progress claims were also deemed to be debts due and payable under the terms of the Contract (T97).

31. In opening submissions, Mr Vincent submits that RBD denies any liability to Mr Sabouni in the amount claimed by him on the basis that the work which was the subject of the payment claim was either not performed as claimed or was otherwise defective, or on the basis that RBD was entitled to set-off against any amount determined to be owing to Mr Sabouni (which liability is denied) for the costs of completing the contractual works which exceeded the contract price by $831,202.21. Mr Vincent also submits that Mr Sabouni’s evidence does not establish the extent to which the works had progressed at the time the second progress claim was issued; the costs he had incurred in respect of the works, or the proper value of the works as claimed under the second progress claim or at all.

32. In closing submissions, Mr Vincent notes, and I accept, that Mr Sabouni’s claim to the amount claimed in the second payment claim, of $100,086.53 depends upon that claim being a valid claim under the Contract and on the contractual provisions which he contends entitle him to payment of that claim, when it was not contested by RBD within the time specified in the Contract. Mr Vincent responds that:

“The Second Payment Claim is invalid and provides no entitlement on the part of Mr Sabouni to payment as it includes false claims for payment for work that was not even commenced by Mr Sabouni … This false claim could never constitute a valid claim for payments under the terms of the Contract and Mr Sabouni has no contractual entitlement for payment for work not performed. …

Further the Second Payment Claim was not a valid claim under the Contract as it was issued prematurely on 20 April 2017, whereas claims were to be issued on the 30^th day of each month for work done to the 15^th day of that month: Clause 21.1 and Item 16 of the Contract.”

In closing submissions, Mr Vincent relied on Mr Sabouni’s acceptance in cross-examination that, as I note above, he had not commenced work which the program he had prepared indicated had not been commenced as at 22 April 2017; and that several items claimed on the second progress claim were shown on that program as having not commenced on 15 April 2017, including piering slab 2; concrete slab 2; electrical rough-in slab 2; carpentry slab 1 walls and structural steel building 1. I have also referred above to, and not accepted, the contrary position put by Mr Sabouni in closing submissions. Mr Vincent submits that Mr Sabouni has no contractual entitlement to payment on that basis.

33. I am not satisfied that Mr Sabouni had accrued a right to payment of the second progress payment by the time of the termination of the Contract, where that progress claim did not comply with the timing requirements of the Contract for such progress claims, and, at least on Mr Sabouni’s evidence in cross-examination and by reference to his program issued on 22 April 2017, had included work which was not properly within the scope of that claim.

34. I note, for completeness, that Mr Sabouni’s claim was not pleaded or put, either when he was legally represented or when he subsequently represented himself, as a quantum meruit or restitutionary claim, nor did he lead evidence of the value of the works done that would have been necessary to support such a claim. The questions considered by the High Court in Mann v Paterson Constructions Pty Ltd (2019) 373 ALR 1; [2019] HCA 32, which involved a claim for quantum meruit following termination of a construction contract for repudiation, do not arise. A further question whether, on termination of a contract, a party can recover an amount under a quantum meruit claim that would not have been due by reason of non-compliance with the conditions for payment under that contract, noted by Ward CJ Eq in Broadway Plaza Investments Pty Ltd v Broadway Plaza Pty Ltd [2020] NSWSC 1778 at [3221]ff] also does not arise. It is preferable that I do not express any view as to these complex questions where Mr Sabouni did not bring such a claim and the parties did not address the relevant principles or the applicable case law.

RBD’s Cross-Claim against Mr Sabouni

35. By its Cross-Claim, RBD initially pleaded a contract with OSC, pleaded that OSC had breached that contract in a manner amounting to a repudiation of the contract which was accepted by RBD, and claimed loss and damage referable to the rectification of works carried out by OSC and the completion of works in the premises. In the alternative, RBD brought substantially the same claim against Mr Sabouni, and that claim is now pressed on the basis that Mr Sabouni rather than OSC was party to the Contract. In particular, RBD pleads that Mr Sabouni was obliged to commence the relevant works by the commencement date (being two weeks after the date of the Contract) and ensure the works reached practical completion by the date for practical completion (being 16 weeks after the commencement date) (Cross-Claim [17]). By his Defence to the Cross-Claim, Mr Sabouni substantially admits the terms of the Contract, but pleads that the date for which practical completion was due was subject to extensions of time and variations and the timeline of 16 weeks did not take into account inclement weather and delays caused by RBD, although he did not there plead any material facts said to give rise to such delays (Defence [17]).

36. RBD also pleads that Mr Sabouni breached the terms of the Contract in that he caused serious delay in respect of the works, continuously caused variations in respect of the works without RBD’s consent, did not meet agreed deadlines in accordance with the Contract, did not carry out the works with due care and skill and carried out the works negligently. Mr Sabouni denies that he had breached the terms of the Contract (Defence [18]) and relies on delays in respect of inclement weather; claimed that RBD failed to provide him with correct and appropriate documentation or to pay the engineer and that caused delay to crucial works, and otherwise denied the claim. I am satisfied that RBD has established that Mr Sabouni had breached the Contract, at least in respect of the delay in respect of the works, but it has not established a failure to carry out the works with due care and skill or that the works were carried out negligently, absent expert evidence to support such a conclusion.

37. RBD also pleads that Mr Sabouni’s conduct amounted to a repudiation of the contract; that RBD accepted that repudiation and terminated the Contract on 1 May 2017. Mr Sabouni denies his conduct amounted to a repudiation of the contract. Repudiation involves an expressed unwillingness or inability to render substantial performance of a contract: Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 659; Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61 at [44]; Vanguard Financial Planners Pty Ltd & Anor v Ale & Ors [2018] NSWSC 314 at [228]. In Southern Cross Autoglass Pty Ltd v Protector Glass Industries Pty Ltd [2014] NSWSC 261 at [123], Kunc J summarised the relevant legal principles as follows:

“A party will be taken to have repudiated a contract if it manifests the intention no longer to be bound by it or to fulfil it only in a manner substantially inconsistent with that party’s obligations and not in any other way. That manifestation may occur before performance is due (known as anticipatory breach) and does not depend upon the existence of an actual intention to repudiate. Rather, the Court looks to how a reasonable person, in the position of the “innocent” party, would view the allegedly repudiatory conduct.”

I recognise that, as Lord Wright noted in Ross T Smyth & Co Ltd v TD Bailey Son & Co [1940] 3 All ER 60 at 71, repudiation of a contract is a “serious matter, not to be lightly found or inferred”.

38. Mr Vincent also refers to the summary of the relevant principles in respect of repudiation, in the context of termination of a construction contract, in DCT Projects Pty Ltd v Champion Homes Sales Pty Ltd [2016] NSWCA 117 at [39]-[42], where Gleeson JA (with whom Macfarlan JA and Sackville AJA agreed) observed that:

“For the conduct of a party to constitute a renunciation of its contractual obligations it must be shown that the party is either unwilling or unable to perform its contractual obligations, that is, it has evinced an intention to no longer be bound by the contract, or stated that it intends to fulfil the contract only in a manner substantially inconsistent with its obligations and in no other way ... Repudiation is a serious matter and is not to be lightly found or inferred …

Where inability to perform is declared the conduct amounts to a refusal to perform and the innocent party need not prove that the other party was actually unable to perform when the time for performance came ...

A renunciation can be made either by words or conduct, provided it is clearly made ... The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it ...

So far as factual inability to perform is concerned, what needs to be shown is that the party in question has become wholly and finally disabled from performing the essential terms of the contract altogether ... It is well accepted that factual inability must be proved “in fact and not in supposition” … [citations omitted]

39. In closing submissions, Mr Vincent contended that repudiation was established by Mr Sabouni’s inability to complete the works by the date for practical completion, where that date had passed by 1 May 2017; by Mr Sabouni’s claiming for work in the second progress claim that he had not performed; and by the claims of 25 days by way of extensions of time on 28 February 2017 of which only six days were within the time for such claims specified in cl 22 of the Contract (which had not then been but was later executed), so far as the other extensions claimed related to events dating back to December 2016. Had it been necessary to determine the question whether a repudiation of the contract was established, I would have accepted that at least the first and second of those matters established repudiation.

40. RBD also pleads that it has suffered loss and damage which it quantifies as the cost of engaging alternate contractors to rectify defects in the works and complete the work, in an amount of $2,021,777.94. Mr Sabouni does not admit that RBD had suffered loss or damage.

41. The damages to which RBD is entitled, in respect of Mr Sabouni’s breach of or repudiation of the Contract is the monetary sum which, so far as money can, represents “fair and adequate compensation for the loss or injury” which it sustained by reason of that breach or repudiation: Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 116 per Deane J. The Court must do the best it can to make a reliable assessment of damages, where damages are difficult to assess, including where a party has failed to lead the best evidence of damages: Commonwealth of Australia v Amann Aviation Pty Ltd above at 83, per Mason CJ and Dawson J, 125 per Deane J, 153 per Gaudron J. In Uszok v Henley Properties (NSW) Pty Ltd [2007] NSWCA 31 at [135], Beazley JA observed that:

“Where there has been an actual loss of some sort, the common law does not permit difficulties of estimating the loss in money to defeat the only remedy it provides for breach of contract, an award of damages … . Such damages should not be nominal only, notwithstanding that the award may be difficult to assess. …” (Citations omitted)

42. On the other hand, the case law also recognises that damages must be proved with a degree of precision which reflects the proof that is reasonably available to the parties: State of New South Wales v Moss (2000) 54 NSWLR 536 at [72]; Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 77 ALJR 768 at [38]. In Schindler Lifts Australia Pty Ltd v Debelak (1989) 89 ALR 275 at 319, Pincus J noted that “if the evidence called on behalf of [the plaintiff] fails to provide any rational foundation for a proper estimate of damages, the Court should simply decline to make one”. That approach was approved by Brooking J in JLW (Vic) Pty Ltd v Tsiloglou [1994] 1 VR 237 at 243 and by the Court of Appeal in Troulis v Vamvoukakis [1998] NSWCA 237 where Gleeson CJ observed that, where damages were susceptible of evidentiary proof, but there was an absence of raw material to which good sense may be applied, “[j]ustice does not dictate that … a figure should be plucked out of the air”. That decision has been approved in subsequent cases, including McCrohan v Harith [2010] NSWCA 67 at [128], where McColl JA (with whom Campbell JA and Handley AJA agreed) held that an estimate of damages, in the nature of a “guess”, should not be made where precise evidence of the damages suffered could have been adduced, but was not. I followed that decision in Re Hair Industrie Penrith Pty Ltd, Hair Industrie Merrylands Pty Ltd [2015] NSWSC 1578 at [20], on which I have drawn for the summary which appears above.

43. As I noted above, Mr El-Hazouri’s evidence was that RBD engaged other contractors following the termination of the Contract (El-Hazouri 13.10.20 [93]). However, that evidence did not identify, in any admissible way, the particular works undertaken by those other contractors, or seek to establish that those works were within the scope of the work which Mr Sabouni had contracted to undertake under the Contract. Mr El-Hazouri’s evidence (admitted with a limiting order under s 136 of the Evidence Act as a submission and not proof of the fact) (El Hazouri 13.10.20 [94]) was also that the total cost to have the other contractors finalise the works prior to September 2017 was $1,930,300.21, being $831,202.21 greater than the cost under the Contract. That evidence again assumed, but did not seek to establish, that the works undertaken by the other contractors were identical to those which Mr Sabouni had contracted to complete by the Contract. Mr El-Hazouri referred to a spreadsheet recording works undertaken in respect of the premises, which identified the other contractor who undertook that work and gave a broad description of the nature of the work and its cost, but again did not establish that the particular works coincided with the scope of the work for which Mr Sabouni was responsible under the Contract.

44. There is, as Mr Vincent largely conceded in closing submissions, no evidence that several items of the costs claimed were within the scope of the Contract between Mr Sabouni and RBD. By way of illustration, those items included the costs of initial cleaning of the premises and cleaning of balcony glass (El-Hazouri 13.10.20 [99]-[100]); costs of installation of “spit fires”, which were not further described (El-Hazouri 13.10.20 [103]-[104]); costs of installation of a mirror at the premises (El-Hazouri [109]-[110]), of fencing and gates (El-Hazouri [116]-[117]), of a stainless steel bench (El-Hazouri [118]-[119] and of unidentified glass at the premises (El-Hazouri [122]-[123]); costs of the installation of a fire-brake and blankets (El-Hazouri [124]-[125]) and of a braille sign (El-Hazouri [128]) and of line-marking works and hardware (El-Hazouri [133]-[134]); costs of acoustic services and testing (El-Hazouri [141]-[142]), provision of tactile and adhesive flooring (El-Hazouri [143]-[144]); costs of window tinting (El-Hazouri [155]-[156]) and costs of provision of an occupational certification (El-Hazouri [163]-[164]). Plainly, the cost of obtaining those items was not caused by any breach of contract by Mr Sabouni if he had not contracted to supply them, and that was not established by RBD. Some other items, for example costs referable to plant supply, landscaping, laying grass and removal of trees at the premises (El-Hazouri 13.10.20 [101]-[102], [107]-[108], [135]-[136], [149]-[152]), costs of building work generally (El-Hazouri [105]-[106], [120]-[121]) and of plumbing works (El-Hazouri [112]-[113], [139]-140]) overlapped with general categories of work within the scope of the contract. However, RBD made no real attempt to establish whether the scope and nature of the works actually undertaken were identical to those which Mr Sabouni had contracted to undertake or, if they were not, how they differed from those which Mr Sabouni had undertaken to complete. The evidence does not establish the extent to which the work undertaken travelled outside the scope of the work which Mr Sabouni had contracted to undertake, and was not caused by any breach of contract on his part.

45. RBD led no evidence from any contractor subsequently engaged to complete the work as to the work which it undertook or that that work was in fact directed to rectifying any defects on the premises as a result of works undertaken by OSC or Mr Sabouni. Mr Vincent’s submissions also did little to establish the basis on which the damages claimed were referable to the loss suffered by reason of termination of the contract. Mr Vincent submitted that, following termination of the Contract, RBD had to engage further contractors to complete the works and rectify defects on the premises as a result of the works undertaken by OSC (or Mr Sabouni). Mr Vincent also submitted that RBD was under time constraints to complete the works as the sub-lessee was to take possession of the premises in September 2017, and I accept that it is likely that RBD wished to complete the works sooner rather than later, although that sub-lessee was an associated entity. Mr Vincent submits that the total cost to RBD to have the contractors finalise the works prior to September 2017 was $1,930,300.21, which was $831,202.21 more than the Contract Price. It is, however, not apparent how that escalation in price originated, or how it is linked to any breach of or repudiation of the Contract by Mr Sabouni, in respect of the delay in works at an earlier point. Mr Vincent also refers to RBD’s estimate, unsupported by expert evidence, that the works were only approximately 5% complete at the time RBD terminated the contract.

46. Mr Vincent submits that there is uncontroverted evidence as to the costs incurred by RBD to complete the contractual works which costs greatly exceed any amount that could conceivably be payable to Mr Sabouni. While I accept that there is evidence as to the costs incurred by RBD to complete the premises, it seems to me that RBD has not established that the work which was done to complete those premises corresponded to that which Mr Sabouni had contracted to complete, or that the whole of the costs incurred in completing the premises, or any particular cost or costs referable to doing so, resulted from Mr Sabouni’s repudiation of or breach of the Contract. There is no rational basis in the evidence led by RBD to hold Mr Sabouni liable for the whole of those costs or to identify any lesser amount that may be recoverable by RBD as a result of the breach. RBD therefore fails in its claim for damages in the Cross-Claim.

Costs

47. My preliminary view is that, where each party has failed in establishing its claim for damages against the other, there should be no order as to costs, but I will allow the parties an opportunity to make written submissions as to that question. I direct the parties to bring in agreed short minutes of order to give effect to this judgment, including as to costs, within 14 days or, if there is no agreement between them, their respective draft orders and submissions, not exceeding 8 pages in one and a half spacing, as to the differences between them.

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Decision last updated: 10 February 2021