Shao v AG Advanced Construction Pty Ltd - [2019] VSCA 93

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2018 0046

WENLI SHAO	Applicant
v
AG ADVANCED CONSTRUCTION PTY LTD (ACN 089 153 597)	Respondent

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JUDGES:	WHELAN, KYROU and McLEISH JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	25 February 2019
DATE OF JUDGMENT:	30 April 2019
MEDIUM NEUTRAL CITATION:	[2019] VSCA 93
JUDGMENT APPEALED FROM:	[2018] VSC 116 (Daly AsJ)

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BUILDING AND CONSTRUCTION – Major domestic building contract – Termination by owner under Domestic Building Contracts Act 1995 s 41 – Builder entitled to reasonable price – Defects – Whether termination under s 41 extinguishes damages claim for defective work – Shevill v Builders Licensing Board (1982) 149 CLR 620; McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457, applied – Whether costs of rectifying defects to be calculated in builder’s reasonable price under s 41(5) – Builder paid more than reasonable price – Whether owner entitled to refund – Domestic Building Contracts Act 1995 s 53(2)(b) and (f).

ADMINISTRATIVE LAW – Appeals – Victorian Civil and Administrative Tribunal Act 1998, s 148 – Appeal allowed – Whether to exercise power of Tribunal to order refund – Whether to remit proceeding to Tribunal – Victorian Civil and Administrative Tribunal Act 1998 s 148(7)(b) and (c).

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr R Andrew	Oldham Naidoo Lawyers
For the Respondent	Mr P D Corbett QC with Mr C M Fenwick	Portfolio Law

WHELAN JA

KYROU JA
McLEISH JA:

Section 41 of the Domestic Building Contracts Act 1995 (‘the Act’) gives a building owner the right to end a major domestic building contract if that contract has not been completed within one and a half times the period during which it was required to have been completed. The right arises if the reason for the increased time was something that could not have been reasonably foreseen by the builder when the contract was made. If the owner exercises this right, the builder is entitled under the section to a reasonable price for the work carried out to that point.

The present appeal concerns the rights of the building owner who gives notice under the section and, in particular, the relationship between the builder’s statutory right of recovery and any statutory or contractual claim the owner might have for damages by reason of defects in the building work.

The applicant seeks leave to appeal from orders made in favour of the respondent builder by an associate judge in the Trial Division. By those orders, the associate judge allowed an appeal from orders made by the Victorian Civil and Administrative Tribunal (‘the Tribunal’) and set aside an order that the respondent pay to the applicant the sum of $93,153. The associate judge declined to make further orders in respect of the fact that the applicant had paid the respondent an amount exceeding the ‘reasonable price’ the Tribunal had assessed.

For reasons set out below, leave to appeal should be granted and the appeal should be allowed so that…

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: [2019] VSCA 93
Decision Date: 30 April 2019

CaseChat Overview and Summary

The case of Shao v AG Advanced Construction Pty Ltd was before the Supreme Court of Victoria. The plaintiff, Shao, engaged AG Advanced Construction to construct a house. Disputes arose over the quality of the work, leading to Shao terminating the contract under the Domestic Building Contracts Act 1995. Shao sought damages for defects and a refund for overpayment. The builder, AG Advanced Construction, argued that the termination extinguished the damages claim and that the costs of rectifying defects should be considered in calculating the reasonable price.

The central legal issues were whether the termination under section 41 of the Act extinguished the damages claim for defective work and whether the costs of rectifying defects should be included in the reasonable price calculation under section 41(5). Additionally, the court had to determine if Shao was entitled to a refund for overpayment under section 53(2)(b) and (f) of the Act. Furthermore, the court considered whether to exercise its power under the Victorian Civil and Administrative Tribunal Act 1998 to order a refund or remit the proceeding back to the Tribunal.

The court found that the termination under section 41 of the Act did not extinguish the damages claim for defective work. It applied the principles from Shevill v Builders Licensing Board and McDonald v Dennys Lascelles Ltd to conclude that the termination did not preclude the damages claim. The court also ruled that the costs of rectifying defects should not be included in the reasonable price calculation under section 41(5). As the builder was paid more than the reasonable price, Shao was entitled to a refund under section 53(2)(b) and (f) of the Act. The Supreme Court allowed the appeal, ordering a refund to Shao, and did not remit the proceeding to the Tribunal.

Orders