Schmuelly v Elrob Construction Group Pty Ltd (No 3) - [2025] NSWSC 118

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Schmuelly v Elrob Construction Group Pty Ltd (No 3) [2025] NSWSC 118
Hearing dates: 3, 4 February 2025
Date of orders: 6 March 2025
Decision date: 06 March 2025
Jurisdiction: Equity - Commercial List
Before: Rees J
Decision:
Damages awarded.

Catchwords:
CONSUMER LAW — misleading or deceptive conduct — whether builder misrepresented his experience in building luxury homes — represented this was his “passion” — whether representation made – whether representation misleading – “puffery” — principles at [16]-[18].
CONTRACTS — repudiation – principles at [99]-[101] – building ‘stalls’ for a year — owner indecisive about windows and doors quote — builder requests shop drawings for layout and joinery, which are not forthcoming – owner seeks legal advice but does not tell builder of complaints – no response to builder’s follow ups – builder advises intention to remove scaffolding – no reply – scaffolding removed.
DAMAGES — rectification of defects – whether entitled to costs to complete works — mitigation – principles at [91]-[97] – overpayments of milestone payments – overcharged variations.

Legislation Cited:
Civil Procedure Act 2005 (NSW) s 100
Competition and Consumer Act 2010 (Cth) ss 2(1), 236, 237, 243 Australian Consumer Law
Home Building Act 1989 (NSW), ss 18B, 18BA(1)(b)

Cases Cited:
Aslan v Stepanoski [2022] NSWCA 24
Australian Competition and Consumer Commission v Coles Supermarkets (2014) 317 ALR 73; [2014] FCA 634
Australian Competition and Consumer Commission v Telstra Corporation Ltd (2007) 244 ALR 470; [2007] FCA 1904
Australian Competition and Consumer Commission v We Buy Houses Pty Ltd [2017] FCA 915
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited (2007) 233 CLR 115 at 135; [2007] HCA 61
Koufos v C Czarnikow Ltd (The Heron II) [1969] 1 AC 350
Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457
Mediation & Online Dispute Resolution Operating Network P/L [2022] NSWSC 5
Owners SP 76674 v Di Blasio Constructions Pty Ltd [2014] NSWSC 1067
Shevill v Builders Licensing Board [1982] HCA 47; (1982) 149 CLR 620
TC Industrial Plant Pty Ltd v Robert’s Queensland Pty Ltd (1963) 180 CLR 130
The Owners – Strata Plan No 89074 v Ceerose Pty Ltd [2024] NSWSC 1494
Watson v Foxman (1995) 49 NSWLR 315
Wenham v Ella (1972) 127 CLR 454
Wesiak v D&R Constructions (Aust) Pty Ltd [2016] NSWCA 353

Texts Cited:
Damien Cremean, Micheal Whitten, Micheal Sharkey, Brooking on Building Contracts (6th ed, 2020, LexisNexis)

Category: Principal judgment
Parties: Dror Schmuelly (Plaintiff)
Elrob Construction Group Pty Ltd (First Defendant)
Elia Boujaoude (Second Defendant)
Representation:
Counsel:
M Pesman SC (Plaintiff)

Solicitors:
Colin Biggers & Paisley (Plaintiff)
Elia Boujaoude (Second Defendant in Person)

File Number(s): 2022/254588

JUDGMENT

HER HONOUR: This is a claim for damages in respect of incomplete and defective building work. The plaintiff, Dr Dror Schmuelly, seeks damages for breach of contract from builder, Elrob Construction Group Pty Ltd. The plaintiff…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2025] NSWSC 118
Decision Date: 06 March 2025

CaseChat Overview and Summary

Schmuelly, the homeowner, sued Elrob Construction Group, the builder, over allegations of misleading conduct and contract repudiation. The dispute arose from the construction of a luxury home, where Schmuelly claimed that Elrob misrepresented their experience and passion in building such homes. Schmuelly further argued that Elrob repudiated the contract by removing scaffolding without consent. Elrob contended that any representations made were not misleading and that Schmuelly's silence and indecision justified their actions. The court had to determine whether Elrob's statements about their experience constituted misleading conduct under consumer law and whether the actions of Elrob amounted to a repudiation of the contract.

The court examined the nature of the representations made by Elrob concerning their experience and passion for luxury home construction. The court considered whether these representations were misleading or could be considered mere "puffery." Additionally, the court assessed whether Elrob's actions, including the removal of scaffolding, constituted a repudiation of the contract. The principles governing repudiation and the nature of the representations were closely examined to determine if Schmuelly was entitled to damages.

In its reasoning, the court found that Elrob's representations did not amount to misleading conduct as they were not specific enough to be actionable. The court noted that Schmuelly had not acted promptly in communicating their concerns, which impacted the assessment of repudiation. The court held that while Elrob's actions were problematic, they did not amount to a repudiation of the contract. Regarding damages, the court concluded that Schmuelly was entitled to recover costs associated with rectifying defects but found that some of the claimed expenses were not directly related to the builder's actions.

The court ordered Elrob to pay Schmuelly the costs associated with rectifying the defects in the construction. However, it reduced the amount due to Schmuelly's failure to mitigate some of the losses. The court also found that Elrob had overcharged for variations and milestone payments, resulting in an overpayment to Schmuelly, which was to be repaid.

Orders