Somaskanthan v Hayes

[2025] NSWCATCD 74

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Somaskanthan v Hayes [2025] NSWCATCD 74

Hearing dates:

30 January 2025

Date of orders:

12 June 2025 (Amended 01 July 2025)

Decision date:

12 June 2025

Jurisdiction:

Consumer and Commercial Division

Before:

Senior Member K Ross

Decision:

The Tribunal makes the following amended orders under section 63 of the Civil Administrative Tribunal Act 2013:

(1)   Michael Hayes and Kathleen Jones are to pay Saravanan Somaskanthan and Lyndal Keevers to sum of $61,946.79 on or before 7 July 2025.

(2)   The claim by Michael Hayes and Kathleen Jones is dismissed.

(3)   Saravanan Somaskanthan and Lyndal Keevers (being the Applicants) are to file and serve any application for costs by 23 June 2025. If a lump sum cost order is sought, the submissions should include evidence of the amount claimed, and supporting documentation such as tax invoices and cost agreements.

(4)   Any submissions in reply are to be filed and served by 7 July 2025.

(5)   Submissions must address whether a hearing of the cost application can be dispensed with.

Catchwords:

BUILDING & CONSTRUCTION: Home Building – where Builder unlicensed at date of contract – no insurance – no contract in writing

Legislation Cited:

Home Building Act 1989

Cases Cited:

Alexander & Anor v Gregoriou & Ors [2010] NSWDC 15 (22 February 2010)

Category:

Principal judgment

Parties:

Saravanan Somaskanthan & Lyndal Keevers

Michael Anthony Hayes & Kathleen Jones

Representation:

Both parties in person

File Number(s):

2024/00215311
2024/00283843

Publication restriction:

unrestricted

REASONS FOR DECISION

The applications

1. The applicants (the Homeowners) engaged the respondent Michael Hayes (Michael) to carry out work at their home in Umina Beach. At Michael’s request payments were made to Kathleen Jones (Kathleen). In these reasons I will refer to Michael and Kathleen as “the Builder”.

2. This dispute illustrates the problems which can arise when parties do not comply with the Home Building Act 1989 (the HBA). There was no agreement in writing as required by s 7 of the HBA. The Builder did not hold a current license. The Builder did not provide Homeowners warranty insurance.

3. The Homeowners claim that the Builder breached the warranties in s 18 of the HBA. They claim that the work carried out by the Builder is incomplete and defective, and was not completed in a reasonable time. They allege that the Builder abandoned the contract. They seek compensation for the cost of rectifying the work, and a refund of monies paid to the Builder, on the basis that the Builder breached the HBA in failing to hold a current license at the time the work was carried out, failing to enter into written contracts and failing to provide home warranty insurance.

4. The Builder opposes the orders sought. The Builder says that there is no evidence that the work is defective, or incomplete, and argues that there were in fact 25 separate agreements, each of which fell under the $5000 threshold in the HBA. The Builder claims that there was no agreement for the renovation of the bathroom, or for the replacement of the handrail. The Builder seeks to be paid what he claims to be outstanding in the sum of $25,438.16.

Jurisdiction

5. I am satisfied that these claims are building claims as defined in the HBA. They are brought within time. The Tribunal has jurisdiction to hear and determine the claims.

The Disputed facts

6. Many of the facts in this matter are disputed, and the fact finding task is rendered difficult because of the state of the Builder’s records. The Builder issued quotes but called them invoices. The Builder then issued amended quotes, still called invoices, and invoices which also contained quotes, and in some cases bore dates earlier than the original document.

7. The parties communicated throughout the job in a WhatsAp chat. In many cases, these messages form the only reliable record of what was agreed between the parties.

8. The parties are in dispute about many of the facts, including the following:

The status of the Spreadsheet kept by the Homeowners

9. During the job the Homeowners maintained a spreadsheet, which they shared with the Builder. The Builder said that the spreadsheet was prepared by the Homeowners for the Homeowners. Considering the messages, including this from Michael on 4 March 2024:

“can you please send me a copy of the updated spreadsheet thanks Mick and Katie”

and his response when it was sent to the chat by the Homeowners:

“Hi mate this doesn’t have all the payments to date on it thanks Mick”

it is clear not only that Michael had access to the spreadsheet, but also that he had input into its contents.

10. I find that the spreadsheet was shared with the Builder, and was used to record the claims and payments made. I can have regard to it in determining the facts in this matter.

The status of the Builder’s note

11. The Homeowners provide a copy of a note in the Builder’s writing, which they say was handed to them by Michael on about 21 February 2024 (“the Note”). Michael denied handing the Note to the Homeowners and said during the hearing that it was simply a “jotting” which he had made for himself. Both Michael and Kathleen became most indignant whilst giving evidence, stating that the Note was not dated or signed and should not be relied upon. When asked by the Tribunal how the Homeowners came to have the Note, Michael replied that his ute was unlocked, implying that the Homeowners must have obtained it from there.

12. However, Michael did not question the fact that the Homeowners had the Note when they shared it with him in the WhatsAp chat on 29 February 2024. In addition, even if the Note was initially produced as an aide memoire (and I do not accept that it was) it is still a contemporaneous record, and can be given weight as such.

13. I accept the Homeowners evidence that the Note was provided to them by Michael when they sought an update on when things would be completed. It records a number of matters and is of assistance in resolving some of the other disputed facts.

The scope of the agreed work

The ensuite bathroom

14. The Builder gave evidence that the quote for the bathroom was not accepted by the Homeowners. Michael disputes that there was ever an agreement for the renovation the bathroom, arguing that whenever there was a reference to the bathroom in communications between the parties it was simply that the Builder was accessing the subfloor through the bathroom, and that the agreement was for the Builder to expose the frame for a termite inspection, and resheet it.

15. I do not accept this evidence as it is entirely at odds with the messages in the WhatsAp chat, and the other evidence before the Tribunal. There are references in the messages to waterproofing the bathroom, and to the bathroom set out. The PC items were ordered from Reece Plumbing. I do not accept the Builder’s evidence that this was simply to hold the price. On 30 January 2024 the Homeowners paid $10,119.00 and identified the payment as “ensuite bathroom 40% first day works” reflecting the payment schedule which accompanied the original quote. The Note contains a reference to “bathroom 20% $5094.76 pay by Friday”. This sum is the also reflected in the quote for the bathroom. On 26 February 2024 Michael said: “plan for this week is to get the bathroom back together” and on 3 March 2024 “We are going to pick up the remaining plumbing items tomorrow so that we can set out the final bathroom positioning such as shower position etc”. On 4 March 2024, Michael messaged “Hi have you got a moment just to go over the bathroom setout thanks Mick”

16. I am satisfied that there was an agreement for the renovation of the bathroom, payments were made towards that work, and it was incomplete at the time work ceased at the property.

The handrail

17. The Builder also disputes that there was any agreement to replace the handrail. Again, this assertion is at odds with the evidence in the messages between the parties. I am satisfied that there was an agreement for the replacement of the handrail, a payment was made, but the work was not carried out.

Did the Builder abandon the site?

18. On 29 April 2024, the Builder collected certain items from the property and has not returned to carry out any work since that date. The Builder denies abandoning the site, giving a number of different explanations for having removed the tools and other items, including:

• that the work which required the tools was finished,

• that they did not feel that the items were secure because the Homeowners said that other trades had been asked to inspect the work, and

• that monies were due but unpaid, entitling them to suspend work.

19. Whilst the Builder stated at the time that he had not abandoned the job, I accept the evidence given by the Homeowner Saravathanan in his affidavit that Michael stated on 29 April 2024 in a phone call that “we will not return to your house to finish off the work until we have received an additional $85,000 from you and all our services have been paid for”. The Builder also asserted in that phone call that as each part of the job was less than $5000, the HBA did not apply.

20. I am satisfied that in demanding that the Homeowners pay an additional $85,000 before they returned to site, and in attempting to recast the agreement to exclude the operation of the HBA, the Builder repudiated the agreement. The Homeowners were entitled to accept this as a repudiation, and did so. The Homeowners were entitled to terminate the agreement.

The contested invoices

21. On 2 May 2024, the Builders issued 25 invoices to the Homeowners. Each invoice was for less than $5000. The Builder gave evidence that each invoice reflected a separate agreement for work to be carried out.

22. I do not accept that there were 25 separate agreements, as this assertion is at odds with all of the other documentation, including invoices and payments made up until that time. It is to be noted that none of the 25 contested invoices include the Builder’s expired licence number which had appeared on documentation up until that time. Taken in the context of the phone call on 29 April 2024, I am satisfied that the invoices were issued in an attempt to support the Builder’s claim that the HBA did not apply. They do not reflect the agreement between the parties.

The Builders credit

23. The matters discussed above reflect very poorly on the Builder’s credit. Whilst the evidence was principally given by Michael it was strenuously supported by Kathleen during the hearing. Neither Michael nor Kathleen are witnesses whose evidence can be relied upon. They have tailored their evidence to meet the narrative which they have presented to the Tribunal. In every case where a fact is disputed, the contemporaneous evidence does not support the version offered by the Builder.

24. I do not accept the evidence of either Michael or Kathleen unless is it supported by independent evidence.

The Scope of work

25. I accept the applicant’s evidence that there were 8 agreed items of work:

• Waterproofing the house to address water ingress in the lower level, for an amount of $24,890.50

• Renovation of ensuite including demolition and remodelling for an amount of $25,473.80

• Replacement of second storey decking $4,950.00

• Installation of handrail and balustrade on interior staircase $6,523.00

• Tree cutting services $1000.00

• Plumbing and sewerage services $2000.00

• Roof inspection for leak $180.00

• Replacement of door trims $600.00

The Homeowners’ claims

26. In respect of each item of work the Homeowners claim the cost to rectify any allegedly defective or incomplete work, along with a refund of monies paid to the Builder. The refund is sought in many cases on the basis of breaches of the HBA in failing to be licensed, in not providing homeowners warranty insurance, and in not entering into a written contract.

Claim for refund of all monies paid

27. I am not satisfied that the Homeowners are entitled to a refund of all monies paid to the Builder on the basis only that the Builders are in breach of these provisions of the HBA. In Alexander & Anor v Gregoriou & Ors [2010] NSWDC 15 (22 February 2010) the Court held:

89 The Court was not referred to any authorities in which a court has considered the entitlement for a party to recoup or “claw-back” monies already paid to a builder under a contract which offended the statutory provisions as to contracting, licensing and insurance. In Brodyn Pty Ltd t/as Time Cost and Quality v Davenport [2004] NSWCA 394; (2004) 61 NSWLR 421, Hodgson JA (with whom Mason P and Giles JA agreed) said as to the effect of ss 10 and 94 (at [82]; at 449):

“In my opinion, the civil consequences for an unlicensed contractor for its breach of s.4 are those set out in s.10 , and not any wider deprivation of remedies. In my opinion this is confirmed by the different provisions of s.94, which explicitly precludes, in the event of breach of the insurance provisions, the obtaining of a quantum meruit unless a court considers it just and equitable. In my opinion, the remedy given by the Act is not of the nature of damages or any other remedy in respect of breach of contract nor is it enforcement of the contract: it is a statutory remedy, albeit one that in part makes reference to the terms of a contract, and thus it is not affected by s.10 of the Home Building Act.”

90 To a similar effect, Bryson JA (Santow JA agreeing) in Kalokerinos v HIA Insurance Services Pty Ltd [2004] NSWCA 312 at [34]- [35]: said:

“34 A provision in legislation that a contract is not enforceable is not a provision that rights do not arise under it, and does not prevent establishment of and decision by reference to those rights, if they are relevant in some other context than enforcement of the contract by a person whose right to enforce the contract is forbidden. There is no provision to the effect that the contract is void; and the contract continues to exist and to have whatever effects its provision produce on the rights of other parties than the licensee referred to in s 10.”

35...The actions which the builder took (acceptance of repudiation and termination of the building contract) cannot fall within the concept of enforcement in any way; s 10 does not interfere with the working out of rights under the contract at any point except at a point of enforcement....”

91 It is to be emphasised that contracts made as infringing ss 4(1), 7(1) and 92(1) are not void or illegal, only that they are unenforceable at the suit of the offending contractor; but, it is to be added, enforceable by the innocent party: see Trimtor Building Consultants Pty Ltd v Hilton [1983] 1 NSWLR 259 at 261 and Lee Gleeson Pty Ltd v Sterling Estates Pty Ltd (1991) 23 NSWLR 571 at 585-586.

92 Finally on this aspect, the following reasoning by Deane J in Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221 at 262-263, as to s 45 of the Builders Licensing Act 1971 which had similar terms to s 7 of the Home Building Act as to the unenforceability of contracts not in writing, is authoritative:

“There is no apparent reason in justice why a builder who is precluded from enforcing an agreement should also be deprived of the ordinary common law right to bring proceedings on a common indebitatus count to recover fair and reasonable remuneration for work which he has actually done and which has been accepted by the building owner... Nor, upon a consideration of the words of s 45 in their context in the Act, am I able to identify any legislative intent to deprive the builder of that ordinary common law right. The section does not make an agreement to which it applies illegal or void. Nor do its words disclose any legislative intent to penalise the builder beyond making the agreement itself unenforceable by him against the other party. ... Plainly enough, the survival of the ordinary common law right of the builder to recover, in an action founded on restitution or unjust enrichment, reasonable remuneration for work done and accepted under a contract which is unenforceable by him does not frustrate the purpose of the section to provide protection for a building owner. ...”

93 In Pavey & Matthews it was held by Mason, Wilson, Deane and Dawson JJ, Brennan J dissenting, that s 45 did not prevent the bringing of an action by a builder on a quantum meruit for the value of work done and materials supplied under an oral building contract.

94 It follows, and I so find, that the legislative scheme itself of the Home Building Act does not entitle the Alexanders to recoup from either the Gregoriou company or ASB the monies already voluntarily paid by them under the oral contracts in the respective amounts of $59,400 and $295,830.12. However, the Gregoriou company and ASB are not entitled to enforce the contracts against the Alexanders to obtain the outstanding monies said to be due otherwise than under a quantum meruit. This finding is subject to a consideration of Mr Corsaro’s further submission that a quantum meruit count was not made out so that the monies should be returned. This is the next issue to which attention is to be given.

28. There may be other bases on which a refund is appropriate, and I will deal with that when considering each of the claims.

Claims for defective and incomplete work -lack of expert evidence

29. The Homeowners have not provided a report from an independent expert witness which complies with Procedural Directions 3. They rely instead on advice given to them by contractors. The Builder submitted that in these circumstances, the Homeowners should be prohibited from relying on this evidence.

30. I reject the Builder’s submission. Procedural Direction 3 makes it clear that evidence which does not comply with the procedural direction is admissible. The question will be how much weight is to be placed on that evidence.

31. In respect of each item of allegedly defective or incomplete work:

Waterproofing the house to address water ingress in the lower level, for an amount of $24,890.50

32. In respect of this work, the Builder performed the works without a licence, and did not procure homeowners warranty insurance. The Builder provided a written guarantee that the work would resolve the water ingress issues, but since the work was carried out flooding continued. The Homeowners claim the sum of $31,146.50 for rectification, together with a refund of all monies paid to the respondents for the backyard works ($16,125.50). They also claim that in carrying out the work the respondents damaged an outside umbrella, flyscreen, table and chairs and fence and claim damages of $2621.89. They claim the sum of $7943.57 to replace the carpet in the master bedroom and wardrobes allegedly damaged by further water ingress.

33. The Homeowners rely upon:

1. a report from Urban Logic Pty Ltd dated 10 May 2024. Urban Logic state that they are underpinning and subfloor specialists with experience in sub floor drainage works. The author does not adopt the Code of conduct, nor state that he has read the Procedural direction. Urban Logic say that the work done by the Builder is ineffective because the Builder has not excavated below the lower concrete garage slab and main bedroom floor. The report concludes that the backyard works would have been of no assistance in addressing the drainage problems, and says that the works has been “a complete waste of the client’s funds”.

2. a quotation and scope of works from Urban Logic “concerning drainage and retaining wall works near the water tanks and also under the northern elevation sub floor section”. Dated 15 November 2022, the scope of works is for a retaining wall and associated subfloor drainage. The Homeowners have not provided a copy of the amended quote from Urban Logic referred to in the email dated 27 May 2024 at page 20 of their documents.

3. a quotation from Waterstop Solutions (NSW) Pty Ltd dated 31 May 2024. The scope of work reflected in this quote includes demolishing the existing unfinished system, completely excavating the drain, lining the channel with concrete, installing FC sheet to the turn ups to the timber frame, priming and applying 2 coats of acrylic waterproofing membrane and applying a negative waterproofing membrane to the brick parapet wall at the back of the garage.

34. I accept the evidence provided by the Homeowners and find that the work carried out by the Builder did not resolve the water ingress issues. The Builder says that the work was complete. The Homeowners were entitled, in reliance upon the Builder’s representation, to have a non-leaking house in return for the monies paid to the Builder. On the evidence before me, the work proposed by Waterstop Solutions is necessary to achieve that outcome. I allow the sum of cost.

35. The Homeowners also allege that the respondents damaged an outside umbrella, flyscreen, table and chairs and fence. There is no evidence of the age or value of these items, or their condition before the work was carried out. I am not satisfied that the Homeowners have proven this aspect of the claim and disallow the amount claimed.

36. I am also not prepared to allow the sum of $7943.57 for replacement of the carpet and cupboard. There was water ingress into these areas before the work was carried out, and it is likely that replacement of these items would have been necessary in any event. I disallow this claim.

Renovation of ensuite including demolition and remodelling for an amount of $25,473.80

37. As discussed above, I am satisfied that there was an agreement for renovation of the bathroom. The Builder quoted $25,473.80 for this work. The Homeowners paid $17,761.14. They seek a refund of the amount paid.

38. I accept the evidence of the Homeowners that the work carried out in beginning the demolition of the bathroom amounted to 2-3 hours of labour. I will allow $200.00 for that labour and allow a refund of the balance paid ($17,561.14).

Replacement of second storey decking $4,950.00

39. The Builder was engaged to remove and replace the decking boards with new hardwood and stain the boards, at a cost of $4950.00. When the Builder left, the work was incomplete. The Homeowners give evidence that they paid Brice Built Pty Ltd the sum of $4,483.70 to complete the decking work, and incurred the sum of $187.81 to purchase the stain. I allow the sum of $4671.51.

Installation of handrail and balustrade on interior staircase $6,523.00

40. The Builder was engaged to replace the handrail and balustrade on the interior staircase at a cost of $6,523.00. A deposit of $1,304.40 was paid but no works were carried out. The Homeowners are entitled to a refund of the monies paid.

Tree cutting services $1000.00

41. The Homeowners accepted a quotation and paid $1000.00 to prune various trees including yakka trees. The yakka trees were not pruned. They seek a refund of $300.00.

42. There is no evidence to support the quantum of this claim. The Tribunal does not know how long the pruning of the yakka trees would have taken. Competing quotes for all of the work were between $1300 and $1500.

43. Without any evidence to support the quantum sought this claim is disallowed.

Plumbing and sewerage services $2000.00

44. The Homeowners seek a refund of the amount paid for these services because they were specialist services performed without a licence. This claim is disallowed for the reasons set out above at paragraph 27.

45. The Homeowners also allege that the works were defective, but they do not say in what way, and they have provided no supporting evidence.

Roof inspection for leak $180.00

46. The Homeowners paid for this service, which was not performed. They are entitled to a refund of the amount claimed.

The balance of the Homeowners’ claims

Advance $7000

47. I accept the Homeowners’ evidence that on 25 March 2024 they paid an amount of $7000 to the Builder as an advance. There is no evidence of what work if any was carried out for this sum. I am satisfied that the Homeowners are entitled to a refund of the amount claimed.

Pick axe and outdoor broom

48. The Homeowners claim compensation for a pickaxe and outdoor broom which the Builders removed when leaving the site on 29 April 2024. I accept the Homeowners evidence and allow the replacement cost of these items in the sum of $83.24.

Conclusion – Homeowners’ claim

49. I allow the following:

• Cost to rectify defective waterproofing $31,146.50

• Refund of monies paid for incomplete bathroom renovation less allowance for demolition $17,561.14

• Costs to complete second storey decking $4,671.51

• Refund of deposit for handrail and balustrade $1,304.40

• Refund of amount paid for roof inspection $180.00

• Refund of advance paid $7,000.00

• Compensation for pickaxe and broom $83.24

TOTAL: $61,946.79

The Builders’ claim

50. The Builders claim to be entitled to be paid for the 25 invoices which they issued on 2 May 2024. There are a number of problems with this claim:

1. I do not accept that the invoices are legitimate. As explained above, I am satisfied that they were created in an attempt to avoid the provisions of the HBA. There is no evidence that any monies were due to the Builders for work completed but not invoiced at the time the Builders left the site.

2. The Builders are precluded by s 10 of the HBA from claiming monies due to them otherwise than on a quantum meruit basis.

3. There is no evidence that the Homeowners have benefitted from work done by the Builders for which they have not paid. To the contrary, as found above, much of the work carried out has been ineffective to achieve the outcome promised by the Builder. I am not satisfied that the Builder is entitled to any monies on a quantum meruit basis.

51. For these reasons I am not satisfied that there is any basis for the Builder’s claim, and it will be dismissed.

Costs

52. The Homeowners have been successful in their claim. As costs ordinarily follow the event, it is likely that they will be entitled to have the Builder pay their costs of these proceedings. I will allow for cost submissions to be filed and served.

Orders

1. Michael Hayes and Kathleen Jones are to pay Saravanan Somaskanthan and Lyndal Keevers to sum of $61,946.79 on or before 7 July 2025.

2. The claim by Michael Hayes and Kathleen Jones is dismissed.

3. Michael Hayes and Kathleen Jones are to file and serve any application for costs by 23 June 2025. If a lump sum cost order is sought, the submissions should include evidence of the amount claimed, and supporting documentation such as tax invoices and cost agreements.

4. Any submissions in reply are to be filed and served by 7 July 2025.

5. Submissions must address whether a hearing of the cost application can be dispensed with.

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

Registrar

Decision last updated: 19 September 2025