| JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : BUILDING SERVICES (COMPLAINT RESOLUTION and ADMINISTRATION) ACT 2011 (WA) CITATION : THUMOLANO and AFRA CONSTRUCTION PTY LTD [2013] WASAT 17 MEMBER : MS L WARD (MEMBER) HEARD : 15 AUGUST AND 28 SEPTEMBER 2012 LAST DOCUMENTS 16 JANUARY 2013 DELIVERED : 4 FEBRUARY 2013 FILE NO/S : CC 955 of 2012 BETWEEN : LESEGO THUMOLANO Applicant
AND
AFRA CONSTRUCTION PTY LTD
Respondent
Catchwords: Home building work contract Commencement date Completion date Delay Valid extension of time Practical completion Damages for delay in completion Legislation: Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 5(2), s 41(2)(d), s 43(1)
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Home Building Contracts Act 1991 (WA), s 11(1), s 17, Pt 2, Sch 1
Interpretation Act 1984 (WA), s 62(1) Result: Application successful
Summary of Tribunal's decision: The owner and builder signed a standard, HIA 'HBCA Lump Sum Building Contract Form 16G July 2007' on 20 November 2010. The contract was for a single storey dwelling in a strata development. The owner became the registered proprietor of the land on which the unit was built on 19 May 2011.
Under the contract, the home was to have been completed within eight months. The home took at least five months longer than anticipated by the owner. The builder says that the delays arose because the owner's unit was part of a 16 unit development and that the building of all of the units and the surrounding site works were all 'interconnected' and had to be completed together. However, the builder could not take the Tribunal to anything in the contract which linked the building of the owner's individual unit to the building of the 15 other units or to the site works required on the common property. The owner's contract is a stand alone contract to build his individual unit.
The Tribunal found that the contractual date to commence the works was 3 June 2012, when the building licence issued. The Tribunal also found that there was no valid extension of time for completion under the contract, as no notices were issued by the builder relating to events which occurred within the contractual completion time. The Tribunal also found that practical completion occurred on 11 September 2012. Therefore, there was a delay in completion between the contractual date for completion, 2 February 2012, and 11 September 2012.
Applying the normal Hadley v Baxendale [1854] EWHC Exch J70 rules of remoteness, the Tribunal found the the owner was entitled to recover from the builder damages in respect of the delay in the completion of the works in the sum of $11,731.
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Category: B
Representation: Counsel:
Applicant : Self-represented
Respondent : Mr F Afrasiabi (Acting as Agent)
Solicitors:
Applicant : N/A
Respondent : N/A
Case(s) referred to in decision(s):
BGC Residential Pty Ltd and Parker [2006] WASAT 281
Hadley v Baxendale (1854) 9 Exch 341; (1854) 156 ER 145
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REASONS FOR DECISION OF THE TRIBUNAL:
Background 1 Mr Lesego Thumolano (owner) contracted with Afra Construction Pty Ltd (builder) for the construction of a strata title single storey home in Falcon. The owner purchased the property from a developer, Yaran Property Group. The owner intended to have the home built as an investment property as part of the National Rental Affordability Scheme (NRAS). The parties signed a standard HIA 'HBCA Lump Sum Building Contract Form 16G July 2007' on 20 November 2010. 2 The owner claims that under the contract, the unit should have been completed by 18 January 2012, being eight months after he became the owner of the land. Ultimately, the owner received the keys to the home on 11 January 2013. The owner claims that there was at least a five month delay in the completion of his home. The owner claims that he has suffered losses due to the builder's delay in construction. The owner quantifies his losses as being in the order of $21,735. 3 In response, the builder says that the owner's unit was just one of 16 units being built by the builder in the strata development. The builder's main response to the owner's claim is that while it entered into an individual contract with the owner, the whole project, which is the building of all 16 units, was 'interconnected'. The builder submitted that all 16 units had to be settled and completed together with related site works. However, the builder could not take the Tribunal to anything in the contract which links the building of the owner's unit to the building of the 15 other units or the site works required on the common property.
Issues for determination 4 The issues for determination by the Tribunal are: 1) What was the contractual date to commence the works? 2) What was the contractual date to complete the works? 3) Was there any valid extension to the time for completion under clause 9(b) of the contract? 4) On what date did practical completion occur? 5) What damages is the owner entitled to, if any, in respect of the delay in completion of the works? (Page 5)
Each of the above issues will be considered by the Tribunal below.
Legislative scheme 5 This proceeding arises out of a complaint made by the owner to the Building Commission on 19 April 2012 under s 5(2) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (Act)). 6 The complaint was referred to the Tribunal by the Building Commission on 12 June 2012. The Tribunal's powers upon referral to it of a 'HBWC complaint' are set out in s 43(1) of the Act. 7 A 'HBWC complaint' is defined in s 5(2) of the Act and is a complaint about 'a matter referred to in the Home Building Contracts Act 1991 section 17 or 20 or Schedule 1 clause 5'. 8 Section 17 of the Home Building Contracts Act 1991 (WA) (HBC Act) relevantly states that: Breach of contract or Part 2, or entitlement to compensation, procedure in case of If an owner or builder under a contract claims that (a) there has been a breach of (b) the owner or builder is entitled to compensation under Schedule 1, then, subject to the Building Services (Complaint Resolution and Administration) Act 2011, the owner or builder may make a complaint under section 5(2) of that Act. 9 A 'HBWC remedy order' is defined in s 41(2)(d) of the Act and includes an order that a person pay specified compensation for loss or damage caused by any breach of the contract or of a provision of Pt 2 of the HBC Act, or referred to in Sch 1 of the HBC Act. (Page 6)
Proceedings in this Tribunal 10 The matter was listed in the Tribunal for a directions hearing on 3 July 2012. Both parties were selfrepresented before the Tribunal at all times. Various standard orders were made at the directions hearing programming the matter for final hearing on 15 August 2012. The matter continued for a second hearing day on 28 September 2012. 11 During the final hearing, the following witnesses were called by the owner: • the owner applicant; • Mr Dallas Byham, the owner of Lot 6, 15 Ferguson Street, Falcon; • Mrs Byham, the mother of Mr Dallas Byham; • Mr Ron Lyster, the operational manager of Yaran Property Group; and • Mr Michael Brown, the project manager of Yaran Property Group. 12 Both Mr Ron Lyster and Mr Michael Brown were summonsed by the owner to appear before the Tribunal and to produce certain documents. Both witnesses were legally represented before the Tribunal. Ultimately, it was agreed that Mr Lyster and Mr Brown would produce certain documents to the Tribunal on the basis that they would be inspected by the owner only on a confidential basis 'and placed in an envelope marked 'commercial in confidence' on the Tribunal file. 13 During the final hearing, the following witness was called by the builder: • Mr Fred Afrasiabi, a director of the respondent builder. 14 Various documents and photographs were provided by the parties to the Tribunal prior to the hearing. These documents form the hearing book (HB), which comprises 135 pages. 15 The parties both provided the Tribunal with written closing submissions, the last of which was received on 22 October 2012. 16 On 16 January 2013, the owners wrote and advised the Tribunal that they had received the keys from the builder on 11 January 2013. (Page 7)
Credibility of main witnesses 17 The owner, Mr Thumolano, and a director of the builder, Mr Afrasiabi, were the main witnesses at the final hearing. 18 The Tribunal accepts the evidence of Mr Thumalono in its entirety. He gave his evidence in a straightforward and direct manner. Most of his evidence was supported by contemporaneous documents, and his evidence was internally consistent and logical. 19 In contrast, Mr Afrasiabi's evidence on behalf of the builder was less than straightforward at times. While he acknowledged that the project that is, the building of the entire 16 units had been delayed, he sought to sheet home the blame for the delays to either the developer, Yaran Property Group, or to the individual lot owners. In the Tribunal's view, Mr Afrasiabli fundamentally misunderstood that the contract in question is between the builder and the owner. The contract in question is not between the builder and the 16 lot owners together, and nor is it between the builder and the developer. 20 Mr Afrasiabi claimed that there was an 'internal dependency' between the building of the 16 units together. However, he could not take the Tribunal to anything in the contract which linked the building of the owner's unit to the building of the 15 other units or the site works required on the common property. He said that he had to start all 16 units together and finish all 16 units together so that various trades visited the site once only. He said that it was not economical for him to build only one unit at a time. However, in the Tribunal's view, this is precisely what the builder had contracted to do for the owner in this case. 21 Mr Afrasiabi was less than truthful in his email to the Building Commission dated 19 May 2012, where he stated that the building planning approval for 16 units issued on 3 June 2011, and that the building licence issued on 9 September 2011. This claim by Mr Afrasiabi is not supported by the documents provided to the Tribunal. The building licence is dated 3 June 2011 (HB 31). Mr Afrasiabi said under crossexamination that the building licence was later amended. While the building licence may have been amended at a later date, it does not alter the fact that the building licence was, in fact, issued on 3 June 2011. Accordingly, the information provided by Mr Afrasiabi in his email is incorrect in that regard. No copy of the amended building licence has been provided by Mr Afrasiabi to the Tribunal. However, the Tribunal notes that the builder's closing submissions, received (Page 8)
on 22 October 2012, acknowledged that the building licence was issued on 3 June 2011. 22 Based on the above findings, wherever there is a conflict in the evidence between Mr Thumolano and Mr Afrasiabi, the Tribunal prefers the evidence of Mr Thumolano for the reasons given above.
Relevant clauses of the contract 23 The relevant parts of clauses 2, 9 and 19 of the contract are set out below: 2. NECESSARY APPROVALS (a) Subject to Clause 2(b), this Contract is conditional on the following occurring within FORTY FIVE (45) working days from the date of this Contract: (i) a building licence under Part XV of the Local Government (Miscellaneous Provisions) Act 1960 being issued in respect of the Works; … 9. TIME FOR PERFORMANCE (a) Subject to this Contract the Builder shall commence the Works within the number of working days specified in Item 9(a) of the schedule or as soon thereafter as may be reasonably practicable calculated from the latest of the following dates: (i) on which the Owner shall have complied with the conditions referred to in Clause 2; (ii) on which the Owner satisfied all requirements under Clause 3(c), if applicable, and Clause 3(d); (iii) on which the Builder is satisfied that the boundaries of the Site have been adequately delineated; (iv) on which the Builder is satisfied that both an adequate water supply and an adequate power supply for the carrying out of the Works are available to the Site; [and] (Page 9)
(v) on which the Builder has received approval from all relevant authorities. (b) Subject to this Contract the Builder shall complete the Works (bring the Works to Practical Completion Clause 19(a)) by the time specified in Item 9(b) of the Schedule. The Builder is entitled to an extension to the time for completion of the Works due to delay from a cause beyond the Builder's sole control including: (i) any of the following events which affect directly or indirectly access to or the condition of the Site or the Works or any person engaged on or material employed in or to be employed in or in relation to the Works, namely: acts of God, fire, explosion, earthquake, civil commotion, theft or acts of vandalism, flooding, inclement weather, strikes, industrial action, lockouts or holidays granted in accordance with industrial awards, vehicle accidents, unavailability of labour, vehicles or equipment or permits required; (ii) any alterations to the Works; (iii) any instruction or delay in instruction by or any omission of the Owner; (iv) any deliberate and substantial prevention of or interference with the Works or the progress thereof caused by the Owner; (v) any delay in the supplies of materials or transport or labour; (vi) any dispute with or proceeding being taken or threatened by adjoining or neighbouring owners concerning the continuation or variation of delivery to or completion of the Works upon the Site; (vii) any cessation of work pursuant to Clause 7(e)(ii); (viii) any delay caused by the Owner providing materials, goods or work; (ix) any delay in the commencement of or continuance with the Works, caused by or resulting from an order or directive of a relevant authority or proceeding before the Builders' Registration Board or the Building Disputes (Page 10)
Tribunal, the Registrar, a mediator, an arbitrator or a Court; or (x) any delay caused by proper investigation of any of the above by the Builder or the Owner. (c) The Builder shall give to the Owner a notice of any extension of time to which the Builder is entitled within TWENTY (20) working days of the Builder being aware of both the cause and the extent of the delay. 19. PRACTICAL COMPLETION (a) 'Practical Completion' means when the Works are completed except for any omissions or defects which do not prevent the Works from being reasonably capable of being used for its intended purpose. (b) The Builder shall notify the Owner when the Builder considers that Practical Completion has occurred and within FIVE (5) working days the Owner and the Builder or his or her representative shall meet at the Works to carry out a pre-handover inspection. If said pre-handover inspection does not occur the Contract shall be dealt with pursuant to Clause 18 hereof. (c) During the prehandover inspection the parties shall agree to a list of items which require completion or rectification or give notice to the other party within FIVE (5) working days under Clause 18 hereof. (d) The final payment shall be due within TEN (10) working days after Practical Completion and upon payment thereof the Builder shall hand the keys to the Works to the Owner or to such persons as the Owner may direct and on acceptance of the keys the Owner shall be deemed to have entered into possession of the Works and to have acknowledged that the works have been completed by the Builder in accordance with this Contract and the Builder shall thereupon be relieved and discharged from all responsibilities under this Contract other than the Builder's obligations pursuant to Clause[s] 14 and 19(c). …
First issue what was the contractual date to commence the works? 24 The owner submits that according to item 9(a) of the schedule to the contract, the time to commence the works was 'upon settlement of the land'. On 19 May 2011, the owner was advised that the land (Page 11)
at Lot 16/15 Ferguson Street, Mandurah had settled. No certificate of title has been provided to the Tribunal. However, neither party contested the purported date of settlement. Therefore, the Tribunal accepts that on 19 May 2011, the owner became the registered proprietor of the land. Under item 9(b) of the schedule to the contract, the time to complete the works was '8 months from commencement on site'. The owner's evidence was that work commenced on site on or about 7 June 2011. The applicant says that the completion date should therefore be 18 January 2012. 25 However, the builder submits that the commencement date could not have been 18 May 2011, as the owner claims, for a number of reasons, including that: • Clause 9(a) of the contract is subject to the owner satisfying a number of other clauses, including clause 2 of the contract. Clause 2(a)(i) of the contract refers to a building licence being issued in respect of the works. The builder says that the building licence was issued by the City of Mandurah on 3 June 2011, some 11 working days after settlement, and that the construction could not commence until the building licence was issued. • The 'land' referred to in item 9(a) of the schedule to the contract, in 'upon settlement of land', means the settlement of all 16 units, not just the owner's strata lot. 26 The builder relies mainly on clause 9(a)(i) of the contract. No submissions were made in relation to clauses 9(a)(ii) 9(a)(iv) inclusive. 27 The Tribunal notes that the builder also relies on clause 9(a)(v) of the contract, which states that 'contract delays due to utility services such as Water Corporation, Alinta Energy and Synergy are beyond the builder's control'. Clause 9(a) of the contract relates to the commencement date of the contract, and the builder has not provided evidence as to how, if at all, these listed utilities caused a delay in the commencement of the contract that is, the building of the owner's individual unit, not all 16 units. Accordingly, the Tribunal rejects the builder's submission in relation to clause 9(a)(v) of the contract. 28 Having considered the terms of clause 9 of the contract, the Tribunal accepts the builder's submission that the commencement date was not, in this case, the date of settlement. This is because item 9(a) of the (Page 12)
schedule to the contract lists a number of events of which the commencement date under the contract is the latest of those events. 29 Accordingly, in this case, although settlement took place on 19 May 2011, the building licence was not issued until 3 June 2011. The building licence did not issue within 45 working days of the contract being signed. This is because the building licence could only issue once the owner owned the land the subject of the contract. 30 Accordingly, the earliest that the building licence could issue was 19 May 2011. In the Tribunal's view, the issue of the building licence some 11 working days later on 3 June 2011 is well within a time that is 'reasonably practicable' as required by clause 9(a) of the contract. 31 Turning now to the builder's submission that 'land' means the settlement of all 16 units, not just the owners' strata lot, the Tribunal notes that item 3 of the schedule is relevant. Item 3 of the schedule is headed 'site', and it describes the works as defined in clause 1(a) of the contract as being upon the land. The works are described as a 'single story dwelling' at No 25 Baloo Crescent, Falcon, with a certificate of title volume and title reference. A copy of the relevant certificate of title has not been provided to the Tribunal. The owner's evidence was that the 25 Baloo Crescent address was the address of the whole development before the strata subdivision. The Tribunal notes that the duplicate certificate of title issued on 23 February 2011 for Lot 16 on survey strata plan 56808 states that the plan was registered on 18 February 2011. Therefore, when the contract was signed on 20 November 2010, the land was yet to be subdivided into strata lots. Accordingly, the description of the land on which the single story dwelling was to be built is correct, as at the time of signing. 32 However, the description of the land in the schedule does not alter the fact that the contract is between a single owner and the builder. It is not between the builder and every landowner in the development. The natural and ordinary reading of the contract is that once the owner's land had settled, then the building of his 'single story dwelling' would commence. Accordingly, the Tribunal rejects the builder's submission that the time for commencement was when all of the land in the 16 lot development had settled. The Tribunal rejects the builder's submission that the commencement date of the contract was 27 January 2012 when it says that Lots 7, 8, 10 and 11 settled. (Page 13)
33 The Tribunal finds that the contractual date to commence the works was 3 June 2011, being the day the building licence issued.
Second issue what was the contractual date to complete the works? 34 The contractual date to complete the works is specified in item 9(b) of the schedule to the contract to be '8 months from commencement on site'. 35 The owner submits that eight months after the contractual commencement date is the completion date, because he was not notified of any extensions of time relating to events occurring before the contractual completion date. 36 The builder submits that the eight months excludes weekends, public holidays, rainy days and storm damage in June 2012. 37 The Tribunal notes that the contract defines 'working days' but it does not define a 'month'. Item 9(b) of the schedule to the contract refers in handwriting to '8 months from commencement on site'. The pro forma schedule to the contract includes the words 'working days' in item 9(b) of the schedule. The words 'working days' have not been deleted from the schedule. 38 However, in the Tribunal's view, the express term handwritten into the schedule is preferred to the standard pro forma terms wherever there is an inconsistency. The usual and ordinary meaning of 'month' is a calendar month. The Tribunal is guided in relation to the meaning of 'month' by the fact that the contract refers to the HBC Act. The HBC Act refers to 'month' in, for example, s 11(1), in terms of a four month defects period. However, 'month' is not a defined term in the HBC Act. Section 62(1) of the Interpretation Act 1984 (WA) states that '[i]n a written law, month means a calendar month, that is to say, a month reckoned according to the calendar'. 39 Accordingly, the Tribunal is satisfied that the contractual period for completion was eight calendar months from the date on which work commenced, or should have commenced, on site. Based on the finding that the contractual commencement date for the works was 3 June 2011, the contractual date for practical completion of the owner's building is 2 February 2012, subject to any entitlement which the builder has to an extension of time. (Page 14)
Third issue was there any valid extension to the time for completion under cl 9(b) of the contract? 40 Clause 9(b) of the contract provides that, in the event that the progress of the works is delayed for any of a number of stated causes, including inclement weather, then under clause 9(c), the builder 'shall' give to the owner notice of any extension of time to which it is entitled, within 20 working days of the builder being aware of both the cause and the extent of the delay. 41 The giving of a notice in accordance with clause 9(c) of the contract is a condition precedent to any entitlement to an extension of time. Clause 20 of the contract deals with the formal aspects of service of a notice given under the contract. 42 The builder relies on the following two documents as being notices of extension of time: • Unsigned letter from the builder to the owner dated 19 June 2012 stating that: We regret to inform you that the construction site of 15 Ferguson Street[,] Falcon WA was damaged by the severe storms that took place last week. It will take AFRACON approximately 45 weeks to repair such damage which will unfortunately cause completion to be delayed by approximately the same period. AFRACON will work to minimise the delays caused to completion due to the severe storms. • Signed letter from the builder to the owner dated 15 July 2012 stating that: … site works at your property … fully underway … scheduled to be completed by [the] 15th of August. … Due to inclement weather and the recent storms, AFRACON has experienced delays to the completion date of the project. A copy of the April, May and June Australian Bureau of Meteorology reports have been enclosed for your reference which indicates the rainy days that have occurred in this period. The storms in particular caused damages [sic] to the site which further contributed to the delay. (Page 15)
43 The Tribunal notes that both of the above notices under clause 9(c) of the contract are dated after 2 February 2012, which was the contractual due date for practical completion. The notices also refer to events occurring in June 2012 and July 2012. Accordingly, the notices cannot be relied upon by the builder as a claim for an extension to the time for completion, as the events complained of took place after the contract was due for completion. 44 The builder has also made several other claims for an extension of time arising from factors including the following: • the delay in the settlement of four other strata lots in the development not taking place until about February 2012; • the delay with some other owners providing account details to the builder as of 27 July 2012 for Synergy (HB 111) and 12 August 2012 for Alinta Energy (HB 112), and a request by the builder of 26 July 2012 to the Water Corporation to install the sewage inspection shaft before the common access road is surfaced 'next week'; • the delay in the developer, Yaran Property Group, subcontracting the builder to undertake the common property site works; • the eight month completion period does not include weekends or holidays; and • him travelling to the United States of America to attend a family funeral. 45 However as set out above, the giving of a notice by the builder in accordance with clause 9(c) of the contract is mandatory, as the word 'shall' is used. The notice is a condition precedent to any entitlement to an extension of time under clause 9(b) of the contract. Only the above two letters are relied on by the builder as constituting notice under the contract. Without any notice under the contract, it is not necessary for the Tribunal to examine the builder's various other reasons for delay. Accordingly, the Tribunal finds that the builder is not entitled to any extension of time where no notice has been given under the contract relating to events occurring within the contractual period. (Page 16)
46 For the reasons set out above, the Tribunal finds that the builder is not entitled to any extension of the date for practical completion, at all. Accordingly, the contractual completion date remains 2 February 2012.
Fourth issue on what date did practical completion occur? 47 Clause 9(b) of the contract refers to bringing the works to practical completion as set out in clause 19(a) of the contract (see above). 48 At the hearing on 28 September 2012, Mr Afrasiabi stated that the owner's unit had reached practical completion and that handover could occur at anytime. 49 The documentary evidence before the Tribunal of practical completion consists only of the owner's home loan bank statement, which was provided to the Tribunal after the hearing on 5 October 2012. The bank statement shows that on 25 September 2012, the bank made available to the owner the amount of $5,040. This sum equates to the practical completion progress payment amount listed in item 7 of the schedule to the contract. Clause 7(b) of the contract provides that progress payments must be made within 10 working days of the builder giving the owner notice. 50 On 16 January 2013, the owner advised the Tribunal that he had received the keys to his home on 11 January 2013. 51 Accordingly, the Tribunal finds, based on the evidence available to it, that practical completion of the owner's unit occurred on 11 September 2012, being 10 working days before the payment of $5,040 was made. 52 The contractual date for completion was 2 February 2012 and the date of practical completion was 11 September 2012. Therefore, there was a delay in the completion of the owner's unit of about 31.5 weeks.
Fifth issue what damages is the owner entitled to, if any, in respect of the delay in completion of the works? 53 The owner claims a total of $21,735 in losses arising from the delay in the completion of the works, including: • interest on loan as of 5 October 2012 $15,426; • water rates $220; (Page 17)
• land rates $389; • loss of NRAS grant from January 2012 $183 per week over 20 weeks = $3,660; and • missed opportunity to claim depreciation $2,040. 54 The builder rejects the owner's claim for damages. The builder submits that the owner was liable to pay the interest, water rates and land rates irrespective of the delay. In relation to the NRAS grant, the builder submits that the grant is not payable until the unit has been let, so that the owner is yet to suffer any loss. This submission is consistent with the evidence given by Mr Lyster from the Yaran Property Group. The builder also submits that it is not aware of the owner's individual taxation circumstances in relation to depreciation and should not be liable for such damages. 55 Turning now to the basis on which damages are recoverable for a breach of contract, as set out in Hudson A, Hudson's Building and Engineering Contracts (11th ed, 2004) (Hudson) in volume 1 at paragraph 8.162, in the absence of a liquidated damages clause in the contract: … the normal Hadley v Baxendale rules of remoteness will apply in the assessment of the owner's loss caused by delay in completion. The measure of damage in the event of such delay will be largely governed by the type of project undertaken … In the case of a block of flats it may be equally obvious, for example, that a prospective landlord's receipts of rent will be postponed, and he may also have incurred liabilities under agreements with prospective tenants ... It has recently been suggested in New South Wales [Multiplex Constructions Pty v Abgarus Pty Ltd(1992) 33 NSWLR 504]that loss of profit or rents will not necessarily be recoverable under the first branch of the rule in all commercial projects, and that increased cost in the form of the additional 'holding' or financial charges of the owner during the period of delay are to be preferred as the measure of damage under the first branch of the rule … However, in the case of factories, shops, flats and other obviously profitearning projects, the damages for loss of profit are likely to arise under the first branch of the rule, as occurring naturally and in the usual course of things from the breach[.] (Page 18)
56 Accordingly, it is well established that under the first branch of the rule, damages which could be regarded as flowing directly from a breach such as delay, being the failure to complete within time, would be a claim for holding costs during the period of the delay: see BGC Residential Pty Ltd and Parker [2006] WASAT 281 at [20], Hadley v Baxendale (1854) 9 Exch 341; (1854) 156 ER 145 and cases cited in Hudson in volume 1 at paragraph 8.109 footnote 40. 57 The owner is entitled to be placed, so far as money can bring it about, in the same position as he would have occupied had the contract been performed on time. The delay in the builder performing the contract between when it was due on 2 February 2012 and practical completion on 11 September 2012 meant that the owner has continued to pay interest and other holding costs without the benefit of offsetting those costs with rental income. In the Tribunal's view, the holding costs include the interest paid on his loan, water rates and land rates, all of which are apportioned for the period of the delay under the contract. 58 Accordingly, the Tribunal finds, based on the evidence before it, that the owner is entitled to the following amounts as a measure of damages for the breach of contract arising from the builder's delay in completion, namely: • Interest charges based on the bank statement provided (HB 90), the interest charged during the period of the delay (2 February 2012 to 11 September 2012) is as follows: • 15 February 2012 $1,624.40 • 15 March 2012 $1,538.77 • 15 April 2012 $1,650.28 • 15 May 2012 $1,684.38 • 15 June 2012 $1,669.20 • 15 July 2012 $1,566.59 • 15 August 2012 $1,385.34 Subtotal: $11,118.96. (Page 19)
• Water annual service account provided to the Tribunal on 5 October 2012 and in the amount of $534.35 for the period 1 July 2011 to 30 June 2012. Proportion of account in the period of delay (2 February 2012 to 30 June 2012) is approximately five out of 12 months, which is $222.66. • City of Mandurah rates and charges - provided to the Tribunal on 5 October 2012 and in the amount of $935 for the year ending 30 June 2012. Proportion of account in the period of delay (2 February 2012 to 30 June 2012) is approximately five out of 12 months, which is $389.61. 59 Accordingly, the damages the owner is entitled to in respect of the delay in completion of the works total the amount of $11,731.23. 60 In relation to the owner's claim for an award of damages for the NRAS grant and depreciation, the Tribunal declines to make any award of damages. This is because the Tribunal accepts that the owner is yet to suffer any loss of the NRAS grant. The oral evidence before the Tribunal is that the grant will run for 10 years from the date the unit is rented, whenever that occurs. Accordingly, no loss of the NRAS grant has been suffered and that claim is premature. Also, the Tribunal does not accept, based on the evidence before it, that the owner is entitled to any allowance for depreciation. In the Tribunal's view, this claim is too remote and was not in the builder's knowledge at the time of contracting.
Conclusion 61 Accordingly, in conclusion, the Tribunal is satisfied that the owner is entitled to damages for the breach of contract in the sum of $11,731.23 arising from the delay in the completion of the home between the period 2 February 2012 and 11 September 2012.
Order 62 The Tribunal makes the following order: 1. By close of business on 28 February 2013 the builder shall pay the owner $11,731.23. (Page 20)
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