Tosolini v Temperate Living Pty Ltd ACN 125 472 862 (Civil Dispute) - [2020] ACAT 94

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

TOSOLINI & ORS v TEMPERATE LIVING PTY LTD ACN 125 472 862 (Civil Dispute) [2020] ACAT 94

XD 944/2019
Catchwords: CIVIL DISPUTE – building contract – late completion – effect on builder’s liability for liquidated damages of owners taking possession of part of the works without builder’s written agreement before all works reached practical completion – effect of owner caused delays on builder’s liability for liquidated damages where builder failed to claim extensions of time – ‘prevention principle’ not applicable where contract allows builder to claim extensions of time – defect claims – set off against amounts owed to builder – claim for expert witness expenses not available under section 48(2) of ACAT Act

Legislation Cited: ACT Civil and Administrative Tribunal Act 2008 s 48
Building Act 2004 s 42

Subordinate

Legislation:Building Code of Australia cl FP1.4

Cases Cited:Built Environs Pty Ltd v Tali Engineering Pty Ltd [2013] SASC 84
Burton & Anor v Rojas Constructions Pty Ltd [2018] ACAT 117
CIC Australia Ltd v ACT Planning and Land Authority [2013] ACTSC 96
Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd [2017] NSWCA 151
Spiers Earthworks v Landtec Projects Corporation Pty Ltd (No 2) [2012] WASCA 53
Tincknell v Duthy Homes Pty Ltd [2020] SASFC 24
Turner Corp Ltd (Receiver & Manager Appointed) v Austotel Pty Ltd (1997) BCL 378

Tribunal: Senior Member M Orlov

Date of Orders:  18 November 2020
Date of Reasons for Decision:         18 November 2020
AUSTRALIAN CAPITAL TERRITORY
CIVIL & ADMINISTRATIVE TRIBUNAL           XD 944/2019
BETWEEN:
VALENTINA TOSOLINI
TANYA TOSOLINI
DANNY TOSOLINI
Applicants

AND:
TEMPERATE LIVING PTY LTD ACN 125 472 862
Respondent

TRIBUNAL: Senior Member M Orlov

DATE:18 November 2020

ORDER

The Tribunal orders that:

The respondent must pay the applicants the sum of $875.92 as damages for breach of contract within 28 days of the date of this order.

………………………………..
Senior Member M Orlov

REASONS FOR DECISION

Introduction

This application involves claims and counterclaims arising out of a residential building contract.
The applicants are the owners of a residential property in Narrabundah (the owners). They initially engaged a builder to carry out renovations to the existing house in the second half of 2016. The work progressed slowly, and the owners terminated the contract on 3 April 2017. Plans for a proposed extension were drawn in late February 2017 and received building approval on 3 April 2017. The plans were amended on 21 April 2017 to move the extension closer to the side boundary. The amended plans received building approval on 2 June 2017.
On 5 June 2017, the owners entered into a contract for the respondent (the builder) to build the extension and complete various external works. The work was supposed to be completed by 9 October 2017 but in fact was completed on or about 12 March 2019.
The owners refused to make the final payment due under the contract on the grounds that the builder was liable for substantial liquidated damages and was required to remedy certain defects. The builder refused to do so unless and until the owners made the final payment and claimed that the owners were responsible for the delays to completion.
The owners filed a civil dispute application on 26 July 2019 claiming damages up to the ACAT’s jurisdictional limit of $25,000, comprising a net amount of $12,855.86 for liquidated damages after setting off the final payment due to the builder of $9,607.34, plus unspecified damages for the cost to remedy defects, interest and the ACAT filing fee. The owners subsequently filed a priced Scott Schedule, which quantified the cost of remedying the defects at $44,810.
The builder filed a counterclaim on 11 March 2020 claiming $25,000, comprising the final payment of $9,607.34, interest on the outstanding amount calculated at the contract rate of 20% totalling $4,653.64 to 11 March 2020, and damages of $10,739.02 for lost opportunity to undertake other works due the owners’ delays.
The matter was heard over two days, commencing with a view of the property. The owners were represented by solicitors and counsel. One of the owners, Mr Danny Tosolini, gave evidence. A building consultant, Mr Peter Leary of Peak Consulting Pty Ltd, gave evidence for the owners about defects. The builder was represented by its sole director, Mr Mihovil (Michael) Vidovic, who also gave evidence. At my request, the solicitors for the owners prepared an indexed and paginated joint tender bundle containing all the witness statements, reports, and documents upon which either party wished to rely, for which I express my gratitude. The hearing could not have been completed in two days without that assistance.

Relevant terms of the Contract

The contract is dated 5 June 2017 (Contract) and is based on the standard ACT Home Building Contract issued by the Master Builders Association of the ACT. The parties signed each page of the Contract and initialled each handwritten amendment.
Pursuant to clause 1(a) and (b) of ‘Part 3 – General Conditions’ the builder must “carry out the Works shown on the Approved Plans and described in the Specifications and in the terms of the Contract in a proper and skilful manner.” Pursuant to clause 1(b), the standards of construction required by the Building Act 2004 (Building Act) for residential buildings, apply to the Contract.[1]
[1] See section 42 of the Building Act
‘Part 2 – Definitions’ gives specific meanings to certain words. Relevantly, ‘Approved Plans’ means the drawings and/or condition attached to the Contract concerning the Works that are approved and certified by the relevant authorities. ‘Specifications’ means the specification and/or list of inclusions and/or finishes attached to the Contract. ‘Works’ means the building and construction work being undertaken by the Builder pursuant to the Contract as described in the terms of Contract, the Specifications and Approved Plans, or as varied under the Contract.
By special condition A22(c) the parties agreed that the finishes and inclusions are as set out in the Contract Schedule of Inclusions & Finishes “and the plans which are annexed to this Contract”. The Contract Schedule of Inclusions & Finishes comprises four pages listing materials to be supplied or work to be done, respectively, by the owners and the builder. The parties initialled each page.
A considerable amount of time was wasted at the hearing because the evidence about which drawings were the ‘Approved Drawings’ that formed part of the Contract was unsatisfactory. The owners bore the onus of proof on this issue.
The ‘General Notes for the Owner’ in ‘Part 1 – Overview’ states that “the Approved Plans and Specifications form part of this Contract. You and the Builder must sign and date two copies.”
Mr Vidovic said the contract drawings are the architectural plans at pages 77 to 80 of the tender bundle[2] dated 21 April 2017 and numbered A03/10, A05/10, A06/10, and A08/10. The plans are stamped to indicate they received amended building approval on 2 June 2017. The plans follow immediately after the last printed page of the Contract and are initialled by the parties. As the plans included in the tender bundle are colour copies, it is apparent that the parties initialled the plans using the same coloured pens (blue and black respectively) as they used to initial the Contract Schedule of Inclusions and Finishes. I am satisfied that the drawings in question were initialled at the same time as the Contract was signed and dated and should be taken to have been attached to the Contract at the time of signing.
[2] The tender bundle is Exhibit 1
Mr Tosolini said he and Mr Vidovic discussed and agreed a scope of works and price “based on a finishes and inclusions schedule that was initially prepared by Dana Pollock who did the drawings for the project (and are included in the Contract which is in the Applicant’s Reference Bundle)”[3] but did not identify the particular drawings he claims are the ‘Approved Drawings’ included in the Contract. The index to the tender bundle prepared by the owners’ legal representatives states that the plans at pages 81 to 90 are the “[c]omplete set of Contract Plans as relied [sic] by Danny Tosolini”.[4] These are architectural plans for the proposed extension dated 21 April 2017 and numbered A01/10 to A010/10. There are no structural drawings. The plans are not stamped to indicate they received building approval. Nor are they initialled by the parties.
[3] Exhibit 1 page 121, paragraph [12]
[4] Exhibit 1, page 1 item 5B
The index to the tender bundle identifies the architectural plans at pages 93 to 101 and the structural drawings at pages 102 to 105 of the tender bundle as the drawings on which Peak Consulting relied. They comprise architectural plans dated 21 February 2017 numbered A01/14 – A05/14, A07/14 to A10/14 and structural drawings dated 3 November 2016 and numbered S0 to S3. Mr Leary obtained copies of the plans and drawings from ACTPLA and assumed, apparently without checking with Mr Tosolini[5], that they are the contract drawings on the basis that they received building approval on 3 April 2017. However, the architectural plans were amended, re-numbered and re-issued on 21 April 2017 and amended building approval was given on 2 June 2017, although on the evidence, only in respect to architectural plans A03/10, A05/10, A06/10 and A08/10. None of the architectural plans or structural drawings that Mr Leary assumed were part of the contract are initialled by the parties.
[5] Transcript of proceedings dated 5 August 2020 page 24, line13 to page 25, lines 29
Mr Vidovic claims he never saw or received the approved structural drawings at pages 102 to 104 of the tender bundle, which were prepared by Pierre Dragh Consulting Engineers in November 2016. Mr Tosolini did not give evidence to the contrary. I accept Mr Vidovic’s evidence about this. Mr Vidovic instead identified the structural drawings at pages 91 and 92 as the ones that were applicable to the works.[6] The later drawings were prepared by Compendium Designs Pty Ltd, the first on 21 April 2017 and the second on 3 July 2017. Close examination of the title block reveals that Pierre Dragh’s name and qualifications appear under “Compendium Designs Pty Ltd”.[7] I infer that the owners, or someone on the owner’s behalf, engaged Mr Dragh initially to prepare the original structural design in November 2016. However, neither Mr Tosolini nor Mr Vidovic provided any evidence as to who retained Mr Dragh (now trading as Compendium Designs) to prepare the revised structural drawing of the carport on 21 April 2017 or the revised structural drawing of the footings and slab for the extension on 3 July 2017, or as to when, in what circumstances and for what purposes the Compendium Design drawings were provided to, or came into the possession of, Mr Vidovic. It will be necessary to return to this issue again later.
[6] Transcript of proceedings dated 5 August 2020 page 47, line 33; page 66 lines 19 - 39
[7] Exhibit 1 page 92
Against that background I make the following findings:
(a)The architectural plans dated 21 April 2017 at pages 77 to 80 of the tender bundle, which received amended building approval on 2 June 2017 and are initialled by the parties, are the ‘Approved Plans’ within the meaning of the Contract.
(b)The ‘Approved Plans’ do not include any structural drawings.
(c)Other than the Contract Schedule of Inclusions & Finishes, the Contract does not include any other ‘Specifications’.
(d)The builder was required to carry out the ‘Works’ shown on the ‘Approved Plans’ and described in the Contract Schedule of Finishes & Inclusions and in the terms of the Contract, in a proper and skilful manner and to the standards of construction for residential building work required by the Building Act.
Pursuant to clause 5, the owners were required to provide evidence to the builder of their capacity to pay the contract sum at the times and in the manner specified in the Contract before the commencement of the works. The Contract disclosed that approximately half the cost would be financed but did not identify the lending institution. Pursuant to clause 9, the builder was required to commence the works on 7 June 2017, or within 30 days of the owners complying with clause 5, whichever was the latest. Westpac approved the construction loan unconditionally on 11 April 2017.[8] It appears that after the Contract was signed the owners provided a copy of the schedule of payments to Westpac. On 13 June 2017, Westpac advised the owners that the schedule of payments must be amended to provide for the final payment to be a minimum of 10% of the contract sum.[9] Mr Tosolini forwarded a copy of the bank’s email to Mr Vidovic on 14 June 2017. Presumably, the contract schedule was amended subsequently but there is no evidence as to when that happened. The owners must be taken to have complied with clause 5 on 14 June 2017 at the earliest. Pursuant to clause 9, the builder was required to commence work within 30 days of 14 June 2017.
[8] Exhibit 2
[9] Exhibit 1 page 406
Pursuant to clause 7(a), the builder was responsible to obtain and pay for approval for the commencement of works issued by the appointed certifier. The builder commenced site establishment on 23 June 2017[10] and excavation by 4 July 2017,[11] before a Commencement Notice was issued.[12] This was rectified on 6 July 2017.[13]
[10] Exhibit 1 page 132
[11] Exhibit 1 page 212
[12] Exhibit 1 page 210
[13] Exhibit 1 page 325
Pursuant to clause 10, the builder was required to reach practical completion by 9 October 2017 unless the date for practical completion was extended under clause 15. Liquidated damages for late completion were payable at the rate of $300 per week and were deductible from any money that became payable to the builder.
Pursuant to clause 11(a), the owners were required to give the builder exclusive and uninterrupted possession of and access to the site, subject to an express acknowledgement that “the owners will reside in the house during the works and this is not objected [sic] and allowance is made for any disruption or out of sequence work in the contract sum”. This was a reference to the original house and not the extension.
Clause 15 relevantly provides:
(a)   If the Works are delayed by:
i)         variations;
ii)        suspensions under Clause 24;
iii)       inclement weather;
…
vi)       any act, default or omission on the part of the Owner;
vii)delays by any authority in granting any necessary consents or approval;
viii)anything else beyond the control of the Builder, such as, but not limited to trade contractor shortages or material shortages which affect the Builder’s ability to do the work;
then the Builder is entitled to a reasonable extension of time provided the Builder takes all reasonable steps to mitigate against the effects of the delays.
(b)   The Builder will serve a written Time Variation Notice (Appendix F, Form 1) on the Owner within five (5) Days of a delay described in sub-clause 15(a) occurring. The Time Variation Notice will identify the extended Construction Period and the extended Date for Practical Completion (Items A10 and A13 of Appendix A).
(c)   If the Owner has not served a written response on the Builder within five (5) days of service of the Time Variation Notice, the Construction Period and the Date for Practical Completion are extended by the time proposed.
(d)   The Builder is not entitled to an increase in the Contract Sum if the delay results in an increase in costs.
Clause 17 provides for variations and for a written variation notice (appendix F, form 5) to be served by the party requiring the variation on the other party before any variation is undertaken.
Clause 23 provides for progress payments to be made upon completion of relevant stages of the work, within seven days of the date of service of a progress claim, and for interest to be paid on any overdue amount at the rate of 20% per annum.
Clause 25 provides:
(a)   Practical Completion is achieved when the Works are complete except for minor omissions and/or minor Defects which do not prevent the Works from being reasonably fit for occupation or use by the Owner. For the purposes of this Clause the Works do not include any labour or materials which are to be supplied or fixed by the Owner.
(b)   When in the opinion of the Builder the Works have reached Practical Completion, the Builder will serve on the Owner a written Notice of Practical Completion (Appendix F, Form 6).
(c)   Within 28 Days of service of that notice the Owner must serve on the Builder a written notice stating those things (if any) which in the Owner’s opinion are required by this Contract to be done to reach Practical Completion.
(d)   The Builder will within fourteen (14) Days of service of that notice do all those things necessary for Practical Completion and serve upon the Owner written notice upon completing them.
(e)   If the Owner does not give the notice in sub-clause 25(c), the Works are deemed to have reached Practical Completion.
(f)     If the Owner possesses or uses the Works or any part of them without the written agreement of the Builder, the date of Practical Completion is the date of possession or use, unless Practical Completion has already been reached.
(g)   The Works are at the risk of the Owner on Practical Completion or on the date of possession or use under sub-clause (f). The Owner is responsible for insuring the completed Works in either case.
Clause 26 provides in part:
(a)   On Practical Completion, the Builder is entitled to receive the unpaid balance of the Contract Sum together with any other money which is payable under this Contract.
(b)   The amount due must be paid to the Builder within seven (7) Days of service on the Owner of a written request by the Builder giving particulars of the claim for final payment, or within the period stated in item A12 of Appendix A (if any).
(c)   If the Builder does not receive payment in full by the due date, in addition to other rights it may have, the Builder is entitled to interest at the rate in Item A15 of Appendix A on the shortfall.
Item A15 of Appendix A provides for an interest rate of 20% per annum.
Clause 27 provides in part:
(a)   The Maintenance Liability Period commences upon Practical Completion and continues for the period in Item A14 of Appendix A, or if none is stated, for 90 calendar days.
(b)   Within the Maintenance Liability Period, the Owner may serve on the Builder a written list of any minor Defects and/or minor omissions, which must be rectified within 28 Days of service, unless otherwise agreed.
(c)   The Builder must also rectify any minor omissions and/or minor Defects that they have listed in the Notice of Practical Completion (Appendix F, Form 6) within fifteen (15) Days of service of that Notice, unless otherwise agreed.
Item A14 of Appendix A provides for a 90-day Maintenance Liability Period.
Special Condition A22 provides in part:
(a) Notwithstanding any other clause in this Contract, the owner is entitled to retain $3000.00 as security for the performance of the builder’s maintenance obligation under clause 27.
(b) If the builder defaults in any of its maintenance obligation, including under clause 27, the owner is entitled to keep permanently such part of $3000.00 as they believe is reasonable in their sole and absolute discretion.

The owners’ liquidated damages claim

The date for practical completion was 9 October 2017, unless extended under clause 15. The builder did not claim extensions of time under clause 15. As will appear, Mr Vidovic claims he did not have to. The builder issued a notice of practical completion on 12 March 2019.[14] On that basis, the owners claim liquidated damages in the amount of $22,200, at the rate of $300 per week for 74 weeks from 9 October 2017 until 12 March 2019.
The owners take possession before the works reach Practical Completion
[14] Exhibit 1 pages 106, 374

However, it is common ground that the owners took possession of, and commenced to live in, the new extension in December 2017, before the remainder of the works (particularly the external works) reached practical completion. The building certifier issued a final inspection certificate for the extension on 21 December 2017 and noted that the owners should sign an application form for a certificate of occupancy to be issued.[15] In the absence of evidence of the actual date of possession, I find that the date on which the owners took possession of the extension is most likely 21 December 2017.
[15] Exhibit 1 page 273
Pursuant to clause 25(f), the date of practical completion is the date of possession, unless the owners take possession with the written agreement of the builder. Mr Vidovic gave the following evidence about the circumstances in which the owners took possession:[16]
[16] Transcript of proceedings 5 August 2020 page 60, lines 44 to page 62, line 13
During the course of your doing the construction work, there was damage to the floor?--- No, he moved in in December 2017. He took possession.
He was in part of the extension but that’s all. You are still doing works in there, weren’t you?--- No.
Well, the laundry wasn’t finished, was it?--- Okay, yes, but he was living in there and – and he was living in there and I had to work around him. I had a job to do.
But at the time he moved in, the downpipes still hadn’t been installed, had they?---Correct.
The carport hadn’t been done?--- Oh, I’ve got to check my notes on that one.
Well, this is December 2017. You didn’t build a carport until later in 2018, did you?--- Oh, yes, okay. I could check, my photos, but yes, okay, if you say so. Yes.
The laundry wasn’t complete?--- Right.
So when you say he’s moved in,---?--- Yes.
--- he’s still in the middle of a building site, isn’t he? It’s not like you completed all your works and you’d left the site?--- Yes, that’s---
And he’d taken responsibility?--- I have to – I have to read my contract where it says once he moves in without permission from the builder and I never let him move in, he’s – he’s taken possession.
So are you suggesting you didn’t give him permission to move in at that point?--- No, we had no written agreement.
Let’s pause there. A moment ago you quoted a section that says, ‘If the owner moves in without your approval’?---M’mmm.
That’s taking possession?---M’mmm.
What I’m saying is, are you saying that you didn’t approve him moving in?--- I did not give him approval, yes.
You didn’t give him written approval, but you agreed for him to move in, didn’t you?--- No, he just moved in and I just, yes, went with it because I wanted to get paid, which that didn’t work, either, did it.
So you’re suggesting that he moved in?--- All right.
And you kept working and you made no complaint about that?---Correct.
That’s approval, isn’t it?--- No.
You didn’t say, ‘Hang on. You can’t move in yet, this is still a building site’?--- No.
You didn’t issue a notice at that point to say you’ve now reached practical completion because you’ve now moved in without my approval, did you?--- Not at that time, no.
No, the only time you did that was on 12 March 2019 when you had finished all of the other works, didn’t you?---Correct.
I suggest you did let him move in with your approval and it wasn’t the conclusion of your work?--- I disagree.
I accept Mr Vidovic’s explanation of the circumstances in which the owners took possession of the extension. Mr Tosolini agreed that the owners moved in without obtaining the written agreement of the builder.[17] I am satisfied Mr Vidovic went along with the owners moving in and may be said to have acquiesced in the owners doing so. That does not prevent the clause from operating according to its terms. There was no need for the builder to issue a notice of practical completion. Nor would it have been appropriate for the builder to do so because, unlike clause 25(e), which deems the works to have reached practical completion if the owner fails to respond in time to a notice of practical completion, all that clause 25(f) does is to fix the date of practical completion for the purposes of the Contract. Clause 25(f) operates automatically if two conditions are met: first, the owner possesses or uses the works or any part of them; second, the owner does so without the written agreement of the builder. The date of practical completion is fixed at that point and the owner becomes responsible for insuring the works. The fact that the builder has not brought all of the works to Practical Completion at that time is not an obstacle to the operation of the clause, which clearly is intended to operate as a disincentive for an owner to do what the owners did in this case. It does not mean that the builder is excused from completing the remaining works. It simply means that the timeframe within which the builder must do so is no longer governed by the date for practical completion.
[17] Transcript of proceedings 4 August 2020 page 20
In the absence of written agreement by the builder, the consequences of clause 25(f) cannot be avoided. The owners cannot unilaterally take possession of part of the works without the builder’s written agreement and maintain a claim for liquidated damages incurred after the date of possession.
Although counsel for the owners submitted that the “parties to the contract did not operate their relationship in accordance with that part of the contract” [18], counsel disavowed reliance on any form of estoppel and was unable to identify any legal basis for the Tribunal not to give effect to clause 25(f) according to its terms.[19] In those circumstances, the fact that the builder did not agree in writing to the owners taking possession of the extension is decisive.
[18] Transcript of proceedings 5 August 2020 page 112, lines 32-41
[19] Transcript 5 August 2020 page 113, line 30 to page 114, line 9
Accordingly, I find that the date of practical completion for the purposes of fixing the builder’s liability for liquidated damages is 21 December 2017. The period for which liquidated damages apply is from 9 October 2017 to 21 December 2017, a period of 10 weeks and three days. The rate for liquidated damages is $300 per week. The contract does not provide for liquidated damages to be apportioned pro-rata for part of a week. Prima facie, therefore, the builder is liable for 10 weeks’ liquidated damages in the sum of $3,000 unless there is some other basis upon which he can avoid liability.
Owner caused delays
Although neither party presented a detailed analysis of the causes and extent of delays to practical completion, the evidence satisfies me that the owners are responsible for some of the delay to completion of the external works. The following example is sufficient to illustrate the point.
The construction of a retaining wall at the extremity of the pool area was part of the builder’s original scope of work. The builder claims that the owners always were required to build the retaining wall. This is incorrect as appears from the Contract Schedule of Finishes & Inclusions, which provides that the owners must supply and deliver the brick and the builder must “construct and fill” the retaining wall.[20] The Contract Schedule also makes it clear that the construction of planter boxes shown on the architectural plans adjacent to the pool area, were “deleted from the design” and not part of the builder’s scope of work.[21]
[20] Exhibit 1 page 33 (under ‘Pool Area’)
[21] Exhibit 1 page 33 (under ‘Pool Area’)
The builder programmed to build the retaining wall between 12 and 18 July 2017 and to install the pool paving between 15 and 18 August 2017. [22] The owners were responsible to supply the bricks for the retaining wall and the pavers for the pool area.[23]
[22] Exhibit 1 page 132, transcript of proceedings 5 August 2020 page 49, lines 26-39
[23] Exhibit 1 page 33 (under ‘Pool Area’)
However, the owners were undecided whether they wanted a planter box or to increase the paved area around the pool and whether a retaining wall was needed. They eventually decided in favour of a planter box in late November 2017, which the builder finished building by mid December 2017, but remained undecided about the need for a retaining wall. There was a suggestion that the planter box was built incorrectly but the evidence about this was inconclusive.[24] According to Mr Vidovic, the owners changed their mind and decided the planter box should be filled in to increase the size of the paved area. The builder arranged for part of the pool paving to be laid in late March 2018 but the work could not be finished because the owners remained undecided about the retaining wall.[25] According to Mr Tosolini, the decision to proceed with the retaining wall was made in April 2018:
As part of the ultimate design solution for this area when the paving over the planter boxes occurred in April 2018, it became apparent to myself and my wife that we should put a retaining wall around the perimeter of the parts of the paving, and I raised this with Michael.
After raising this retaining wall idea with Michael, about a month later he gave me a quotation for $8000 (which I no longer have a copy of) from his landscaper who did the tiling over the planter boxes. I felt this quotation was too much, and I then proceeded to arrange my own contractor as quickly as possible which I did.[26]
[24] See e.g. Mr. Vidovic’s evidence at transcript of proceedings 5 August 2020 page 71, line 4 to page 72, line 43 and at page 90, line 11 to page 91, line 14 in relation to Exhibit 10
[25] Exhibit 1 pages 149, 151, 284, 325, 344
[26] Exhibit 1 page 125
Construction of the retaining wall was completed by the owners’ landscape contractor between 10 and 18 August 2018, more than a year late.[27]
[27] Exhibit 3
I am satisfied, however, that once the owners took possession of the extension in December 2017, the builder ‘took his foot off the gas’. There were long periods when Mr Vidovic was difficult to contact and, at one point, he went overseas for a holiday while the works remained unfinished. Both parties therefore share responsibility for how long the project took to finish.
Extensions of time
I mentioned earlier that the builder did not claim extensions of time, although it is likely that there were grounds for him to do so for some, although certainly not all, of the delay to completion. Mr Vidovic suggested he did not need to claim extensions of time for the following reason:
With the whole extension of time, Danny and his sister-in-law, who’s an interior designer, and his wife, they were – always had conflicting ideas of what to design, what not to have, what to have. It was a – it was a slow process. Poor – poor Danny didn’t have executive right. He had to – that’s why he’s still married, listens to the wife. So I had a – he had a lot of time in choosing and designing things, and every time when I got held up he – ‘Everything’s fine. It’s all good.’ I – I did not have to put an extension of time. He was fine with it, ‘It’s my fault. It’s all good.’ We – we got on well.[28]
[28] Transcript of proceedings 5 August 2020 page 51, lines 38-45
In his written evidence, Mr Vidovic claimed that Mr Tosolini “advised of lateness in making decisions, and, in the procurement of building materials” and he “always said he is fine with time extension, especially as it was his fault”.[29] However, Mr Tosolini denied ever apologising to Mr Vidovic about delays or discussing “moving the Practical Completion date”. He said, “Michael never gave me a claim for an extension of time or raised this with me face to face or by telephone”.[30] Critically, Mr Vidovic did not challenge Mr Tosolini’s denials in cross-examination.
[29] Exhibit 1 pages 397-8, paragraph [25]
[30] Exhibit 1 page 275, paragraph [11]
Mr Vidovic gave the following answers in cross-examination:
Sir, you know that in order to make a claim for an extension of time you need to complete the time variation notice, don’t you?--- Yes.
And you did not complete one time variation notice in relation to this project, did you?--- Danny assured me at all times, ‘Do not worry about it. It’ll be all fine’.
Well, I’m saying---?--- And he never, ever spoke to me about it. He’s never – never, ever has he talked about delay, delay, extension of time or anything like that.
On the same basis, sir, that’s exactly how the variations have run in this contract, haven’t they?--- So on a building site, when you talk money, you, you get it signed, but when you’re talking to mates about an extension of time it is fine. It was fine. Like he said, we got on great. Everything was fine, everything got on great. There was no need to do that because it was all, ‘Yes, fine. No worries. It’s my fault, it’s my problem. No worries. It’ll be looked after’.
That is simply not true, sir, and you know it?--- I think you’re not---
If you don’t have an extension of time claim lodged, that can have an impact on the money as well, can’t it, because it can impact on whether there is any liquidated damages paid on a delayed practical completion, can’t it?--- At all times they said, ‘Don’t worry. Everything’s good. We’re all – we’re all fine’. [31] [Emphasis added]
[31] Transcript of proceedings 5 August 2020, page 85, lines 13-37
Mr Vidovic did not explain the context in which he claims Mr Tosolini said “Don’t worry about it. It’ll all be fine” and “Don’t worry. Everything’s good” or identify any specific occasion when he claims Mr Tosolini used those words, or words to that effect. The Tribunal was left to guess about the “it” that Mr Tosolini said Mr Vidovic should not worry about. Mr Vidovic’s claim that Mr Tosolini “never, ever spoke to me about it. He’s never – never, ever has he talked about delay, delay, extension of time or anything like that” serves to further confuse the issue.
The owners’ delays in making decisions may have led Mr Vidovic to assume that time for completion was, in effect, ‘at large’ and he did not need to worry about claiming extensions of time. However, Mr Vidovic’s evidence does not come close to establishing that the parties made an agreement, or mutually adopted a convention, to the effect that it was not necessary for the builder to claim extensions of time to avoid the risk of liability for liquidated damages.
The ‘prevention principle’ does not apply
It may appear harsh that the owners can recover liquidated damages in circumstances where they caused some of the delay for which the builder is liable. At common law, a party generally cannot rely on the failure of another party to perform the contract where the former has hindered or prevented the other party’s performance of the contract. This is often referred to as the ‘prevention principle’.
The operation of the prevention principle was explained by Blue J in Built Environs Pty Ltd v Tali Engineering Pty Ltd & Ors as follows:
1.     A party generally cannot rely upon non-fulfilment of a condition the performance of which has been prevented by that party’s own breach of contract. This principle applies to preclude an owner recovering liquidated damages for delay in the completion of works by the contractor where that delay has been caused by an act or omission of the owner in breach of the contract (“the prevention principle”). It is not entirely clear what is the juridical basis of the prevention principle. It may be that it is a term generally implied into contracts requiring cooperation between the parties. It may be that it is part of the principle of avoiding circuity of action otherwise due to damages to which the principal would otherwise have been entitled for breach of the contract being recoverable back by the contractor as damages arising from the principal’s own breach of contract. It may be that it is a principle in its own right derived from notions of fairness and justice.
2.     Where a building contract contains a provision which gives to the contractor a right to an extension of time for delays caused by the principal’s breach of contract, the prevention principle has no operation.
3.     If a contract imposes procedural limitations (such as time limits for seeking an extension of time), the imposition of those procedural limitations does not affect the negation of the prevention principle by the contractual provision entitling the contractor to an extension of time in accordance with Principle Two above.
4.     If a contract contains provisions empowering the superintendent to extend the time for practical completion on a discretionary basis and requiring the principal to ensure that the superintendent acts honestly and fairly, the principal will be in breach of contract if the superintendent dishonestly or unfairly fails to extend time in the contractor’s favour notwithstanding that the contractor has no absolute entitlement to an extension of time due to time or other procedural limitations.[32]
[32] [2013] SASC 84 at [152] (footnoted citations omitted), approved in Tincknell v Duthy Homes Pty Ltd [2020] SASCFC 24 at [205] per Parker J, with whom Peek and Doyle JJ agreed. See also, Spiers Earthworks v Landtec Projects Corporation Pty Ltd (No 2) [2012] WASCA 53 per McLure JA at [47]-[49] and the explanation of the prevention principle by McColl JA in Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd [2017] NSWCA 151 at [114]-[117]
In Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd,[33] McColl JA (with whom Beazley ACJ and Macfarlan JA agreed) held that where a contract confers a reserve power on the principal to grant an extension of time notwithstanding the contractor is not entitled to, or has not claimed, an extension of time, the principal is obliged to exercise the reserve power:
…honestly and fairly having regard to the underlying rationale of the prevention principle… or, if necessary, because there is an implied duty of good faith in exercising the discretion [the clause] conferred.
[33] [2017] NSWCA 151 at [128]
The rationale for denying effect to the prevention principle where a contract provides a mechanism for the contractor to claim an extension of time for principal caused delays, was explained by Cole J in Turner Corp Ltd (Receiver & Manager Appointed) v Austotel Pty Ltd:
If the Builder, having a right to claim an extension of time fails to do so, it cannot claim that the act of prevention which would have entitled it to an extension of time for Practical Completion resulted in its inability to complete by that time. A party to a contract cannot rely upon preventing conduct of the other party where it failed to exercise a contractual right which would have negated the effect of that preventing conduct.[34]
[34] (1997) 13 BCL 378, at pages 384-385
In this case the Contract enabled the builder to claim extensions of time for owner caused delays but did not confer a reserve power on the owners to extend time where the builder was not entitled to, or failed to claim, an extension of time. The authorities are clear that the prevention principle does not operate in those circumstances.
Accordingly, I find that the builder is liable to the owners for liquidated damages in the amount of $3,000

The owners’ defects claim

Scott Schedule items 2, 3 and 4 – bamboo flooring

The contract provided for the builder to install bamboo flooring supplied by the owners.[35] The owners purchased the bamboo in late November 2016.[36] Some of it was laid by the previous builder during the renovations to the existing house. The rest was stored in a container until the builder required it for the new extension in late November 2017. Problems with the flooring laid by the builder manifested shortly after installation was completed. The report of an inspection carried out on 8 January 2018 by the head installer on behalf of Canberra Floorworld (which was not responsible for the installation) stated:
Overall condition of the floor is quite poor. Upon initial observation of floor surface, it is clearly visible that the floor has swollen, creating an uneven surface, which has now become dangerously sharp to the touch in many areas. Installation was done incorrectly. With further examination it was determined that there is substantial expansion issues that has occurred to the whole floor, which has now damaged the original conditions of flooring and installation as well as surface levels. No expansion was allowed in the floor as a standard requirement in Bamboo Installation Warranty Conditions.[37]
[35] Contract Schedule of Finishes & Inclusions – Exhibit 1 page 30 and following
[36] Exhibit 1 page 283
[37] Exhibit 1 page 259

The report recommended that the floor should be removed and replaced.
In late February 2018, water leaked into the downstairs section of the new extension, causing extensive flooding and water to penetrate under the bamboo flooring in the downstairs hallway and main bedroom.[38] The source of the water was never established definitively. There was some speculation that water may have flooded out of the drain in the new downstairs toilet. The builder claimed that the owners had placed a rubbish bin under a gutter opening located in close proximity to the entry door, where a downpipe was intended to be installed at a later time, to catch stormwater overflowing from the gutter. The builder speculated that the bin had overflowed, causing water to splash under the entry door and onto the timber flooring.
[38] Transcript of proceedings 4 August 2020 pages 15-16
A report prepared on behalf of the owners’ home insurer following an inspection on 22 March 2018, noted the lack of external stormwater drainage and opined that incomplete renovations was the likely cause of water entering the property. The report noted the absence of adequate provision for expansion and that pre-existing damage appeared to be caused by poor installation.[39]
[39] Exhibit 8
Mr Leary noted that the floating bamboo flooring in the upstairs area was installed without adequate provision for expansion and a butt joint at the entrance to the kitchen was fitted poorly. The flooring in the downstairs area was installed without adequate provision for expansion and concealment trims around the perimeter. [40] During my inspection of the property, the downstairs flooring showed obvious signs of water damage.
[40] Exhibit 1 pages 184-185; transcript of proceedings 4 August 2020 pages 36-38, 49-51
Mr Vidovic claims to have told Mr Tosolini that the bamboo flooring was of inferior quality and that he would not provide a warranty for the builder’s work. He claims the flooring was not stored properly before it was supplied to him[41] (although it appears the flooring was stored in a container outside the property to which he could have obtained access if the conditions under which the flooring was stored was of concern to him). He says the owners did not provide him with the manufacturer’s installation instructions, or any expansion joints, trims, or other accessories. He claims the flooring was installed by qualified tradespeople “using common building practices” including leaving a 10mm gap between the floorboards and the walls, but there is no evidence that Mr Vidovic was present when the floor was laid and no evidence was called from the tradesmen who laid the flooring.[42] Mr Vidovic gave the following oral evidence:
So as – as the bamboo flooring, every document that I’ve seen about how to install stipulates it’s got to be a room. If it’s less 8 metres one way or 12 metres the other, it does not need expansion joints. This room did not need any expansion joints other than the ones on the doorways. We left sufficient room all around the whole boundary. The joints that were exposed, Danny said that he would silicon them up or epoxy up or something like that because he wanted them to look smooth and he didn’t want to have these yucky trip hazards everywhere. That’s why everything was left, especially because he was supplying everything, and I just provided the labour, so he wanted to minimise his cost of labour, so that’s why that happened.
[41] Transcript of proceedings 5 August 2020 page 47
[42] Exhibit 1 page 287
I consider it is inherently improbable that Mr Tosolini would agree to undertake work that clearly was the builder’s responsibility. Importantly, the proposition that Mr Tosolini agreed to finish off the work himself, or arrange for others to do so, was not put to him in cross-examination. The Contract required the owner to supply the timber flooring only. The builder was responsible to install the flooring in a proper and skilful manner. The cost of doing so, including everything incidentally necessary to achieving the contracted for result, was included in the contract price. If providing a proper finish required the builder to source concealment trims or provide caulking in the form of flexible sealant or epoxy, doing so was part of the builder’s lump sum scope of work. The builder was not excused from making adequate provision for expansion by the owners’ failure to supply a copy of the manufacturer’s installation instructions, if any existed. If the builder considered the flooring was not in a fit for purpose condition, he should have refused to lay it or, if the owners insisted that he should do so, he should have warned the owners in writing of the risk they were taking.
I find also that the builder is responsible for the damage caused by water penetrating the downstairs area. The fact that the owners had entered occupation of the extension at the time the damage occurred and therefore that the works were at the owners’ risk, does not relieve the builder from liability for defective workmanship. Clause FP1.4 of the Building Code of Australia (BCA) requires that a roof and external wall (including openings around windows and doors) must prevent water penetration that could cause, among other things, undue dampness or deterioration of building elements. Further, even if the extension is considered an ‘existing building’ while the builder was completing external works (including installing stormwater drainage) after the owners had taken possession, the builder was required by clause 1(d) of the Contract to take all reasonable measures during the carrying out of the works to ensure the weatherproofing of those parts of any existing buildings affected by the works.
Mr Leary provided a figure of $3,000 to remove and replace approximately 25m² of flooring in the “Upper Level (Part A and Part B)” (the extent and dimensions of which was not established) and $2,470 to replace approximately 15m² of flooring in the hallway and associated areas on the lower level. [43] No basis was provided for those figures in his initial report. In his second report he provided calculations supporting the total amount of $5,470 on the basis that the hallway (which is on both levels) was 25m² and the bedroom (which is on the lower level) is 15m². No explanation was provided for this apparent discrepancy in his reports and there was no evidence as to the dimensions Mr Leary used to enable the area calculations to be verified.
[43] Exhibit 1 pages 108-109
Further ambiguity is created by the owners’ plan purporting to show the location of the defects by reference to the Scott Schedule.[44] The area affected by flooring defects (identified as “1, 2, 3, 4”) is highlighted in orange and includes the kitchen (which was not part of the builder’s scope of work) and only part of the bedroom on the lower level adjacent to the north facing windows.
[44] Exhibit 1 page 119
The owners tendered a quotation dated 1 May 2020 by Floorworld, who did the initial inspection on 8 January 2018, to remove and dispose of the poorly installed bamboo flooring, supply and install 28.5m² of new bamboo flooring (with standard underlay and matching trims) and supply and install 20 lineal metres of new skirting at a total cost of $4,562.50.[45] The quotation was addressed to Mr Tosolini and presumably was prepared at his request. As it is reasonable to infer that the quotation is based on accurate measurements and the owners must be taken to accept the measurements as correct, otherwise they would not have tendered the quotation, I am satisfied that it is an appropriate basis upon which to make a finding as to the reasonable cost of rectification.
[45] Exhibit 7
Accordingly, I find that the reasonable cost of rectifying the defectively installed bamboo flooring is $4,562.50.
Scott Schedule item 5 – powder room
A grout spall is visible throughout the powder room floor, requiring the floor to be re-grouted and sealed. The builder does not dispute this item. Mr Leary estimates the cost of the work at $100, which I accept as reasonable.
Scott Schedule items 6 to 12 – carport and carport slab
The owners claim damages for the builder’s breach of clause 27(b) of the Contract in respect to the carport and carport slab. Clause 27(b) requires the builder to rectify any defects within 15 days of the owner serving a written list of defects on the builder during the maintenance liability period.
The owners’ solicitors served a list of defects on the builder on 8 April 2019 in the form of a report prepared by Mr Leary. The report identified the following ‘defects’ in the construction of the carport and carport slab:
6.    Most of the rafter support brackets are inadequately fixed.
Although this issue is easily rectified, the overall issue relating to the construction of the carport should be considered as an overarching defect. Refer elsewhere in this report for more detail.
7.    Unknown connection point at longitudinal support beam.
It is likely that these rafters have only been supported by nail or screw fixings.
Brackets are required in order to support the rafters correctly.
Although this issue is easily rectified, the overall issue relating to the construction of the carport should be considered as an overarching defect. Refer elsewhere in this report for more detail.
8.    Visible splitting and “checking” of the LVL rafters is noted in several locations.
It is likely that the LVL rafters were exposed to moisture prior to installation.
Refer to the defect relating to checking of these rafters as this may be reinstated to rectify that defect for more detail.
9.    The condensate blanket has not been extended to the uppermost point of the roof.
The roof sheets will require removal and refitting in order to fit a new condensate blanket to control condensation.
10. The rafters of this carport are specified on the engineering drawings as “rafters to manufacturer’s specifications”.
LVL rafters have been used.
These rafters have been “checked” to fit the box gutter.
The “checking” has reduced the height of the rafter to approximately 100 mm. This constitutes that the rafters which spanned this carport are now in the order of 100 x 45 LVL.
The structural engineer should be consulted to ensure that this alterations and the site cutting of the rafters is compliant with the structural drawings or to make any amendments to same.
11. The longitudinal support beam does not appear to be compliant with the engineers specification.
The engineer specifies B4 design pine 280 x 65 GL 8 whereas the beam appears to be 45 mm in sectional thickness (height unknown due to concealment).
The engineer should be consulted to determine if the alternative beam size is adequate in concert with the remaining work associated with rectification of the carport.
Careful consideration should be given to the additional cantilever requirement to remediate the incorrectly positioned post. Refer to defect No 28.
12. The carport posts are supported only on blob footings.
The structural drawings call for a carport slab with drop beam edge as indicated in section EB1.
The carport will require temporary support and a full width concrete slab, prepared, reinforced and formed to comply with the engineering drawings as required.[46] [Emphasis added]
[46] Exhibit 1 pages 186 to 191
The owners incorporated the abovementioned description into the Scott Schedule as particulars of the owners’ claim. The Scott Schedule claimed $25,000 to rectify defects numbered 6 to 11 (relating to failure to construct the carport in accordance with the engineering drawings and specification) and $5,040 to rectify defect 12 (relating to failure to provide a carport slab in accordance with the engineering drawings).
The references to “engineering drawings”, “engineers specification” and “structural drawings” in Mr Leary’s report and in the Scott Schedule are to the structural drawings prepared by Pierre Dragh Consulting Engineers dated 3 November 2016, which were given building approval on 3 April 2017.
I have found earlier that these drawings were not contract drawings and Mr Vidovic never saw them. The ‘Approved Drawings’ that formed part of the Contract did not include any structural drawings.
To the extent that the owners’ claim relies on the builder’s alleged failure to build the carport in accordance with the Pierre Dragh Consulting Engineers structural drawings, the claim necessarily must fail because they were not the drawings the builder was required to use. The owners did not seek leave to amend the application to claim damages for breach of contract on any alternative grounds.
The builder based the construction of the carport on a different structural drawing prepared by Pierre Dragh (trading as Compendium Designs Pty Ltd) but departed in some respects from the details shown in the drawing. The owners did not lead evidence from a structural engineer to establish that the carport, as built, was structurally insufficient.
The evidence did not establish who retained Compendium Designs to prepare the revised structural drawing or when, in what circumstances and for what purposes the Compendium Designs drawing was provided to, or came into the possession of, the builder. The owners bore the onus of proof on this issue if they wished to claim that Mr Vidovic breached the contract by failing to construct the carport in accordance with the Compendium Designs structural drawing.
Mr Vidovic claimed that the Compendium Design drawing was approved by the building certifier but did not produce a stamped copy of the drawing, which he claimed must be with the certifier. The fact that a certificate of occupancy was issued for the works, prima facie makes it unlikely that the works were carried out without necessary approvals. However, the owners bore the onus of proof on this issue if they wished to claim that the builder failed to construct the carport in accordance with drawings that had been given building approval.
Mr Leary gave an ‘estimate’ that the cost of rectifying the issues relating to the carport was “in the order of $25,000”[47] based on his assessment of the carport by reference to the Pierre Dragh Consulting Engineers structural drawings.[48] His report failed to disclose any basis for the opinion. On the morning of the second day of Mr Leary’s evidence, counsel for the owners sought to tender a three page spreadsheet, prepared by Mr Leary overnight, which was said to comprise a detailed breakdown of his estimate of $25,000.[49] I refused leave to tender the document because of the manifest unfairness to the respondent. I gave limited leave for counsel to obtain some general evidence from Mr Leary about the basis for the figure of $25,000 in his report.[50] At one point, while Mr Leary was being asked questions about the cost of replacing the rafters, which was a major undertaking, I noticed that Mr Leary was referring to the spreadsheet to give his answers. I instructed him to remove the spreadsheet and advised counsel that I would disregard that evidence.[51]
[47] Exhibit 1 page 245
[48] Transcript of proceedings 4 August 2020 page 54
[49] MFI #1
[50] Transcript of proceedings 5 August 2020 page 6, line 20 to page 7, line 25
[51] Transcript of proceedings 5 August 2020 page 10
The fact that the rafter support brackets (item 6) were not adequately fixed was apparent from the site inspection. Mr Leary said this could be fixed with an hour’s work at a cost of $75. The uncertainty about the end fixing of the rafters (item 7) could be fixed with another hour’s work at a cost of $75 plus $50 for materials. I accept these estimates as reasonable.
I am not satisfied that the limited checking of rafters observable in a few locations (item 8) requires rectification in the absence of evidence from a structural engineer that their structural sufficiency has been compromised.
Item 9 concerns the condensation blanket. Mr Vidovic had a quantity left over from another job and offered to install it at no additional cost. Mr Tosolini accepted. Whilst the builder had to install the blanket with due skill and care, the fact that there was insufficient left-over material to cover the underside of the carport roof right to the edge of the wall does not give rise to a claim by the owners. The owners did not pay for the work and materials and have suffered no loss as a result. Mr Leary claimed that the gap between the edge of the blanket and the wall would result in condensation dripping from the underside of the roof sheeting in that area. However, if the condensation blanket had not been installed, or was removed, condensation would drip from the underside of the roof sheeting over the entire area of the carport.
Items 10 and 11 relate to non-compliance with the Pierre Dragh Consulting Engineers structural drawings, which I have found do not apply. There was no evidence from a structural engineer to establish that the as-built structure was structurally insufficient.
Item 12 relates to the failure to provide a carport slab as shown on the Pierre Dragh Consulting Engineers structural drawings. It is apparent from the ‘Approved Drawings’ that the carport was to be constructed over part of the existing driveway, which was to remain. The existing driveway was paved in brick laid in a herringbone pattern. The plans required the herringbone brick paving to be extended to the boundary “to match existing driveway” beside the full length of the carport. The Contract Schedule of Inclusions & Finishes made no provision for the construction of a slab for the carport. I am satisfied that the construction of a carport slab was not part of the builder’s scope of work.
I am not satisfied that the owners have established any entitlement to damages for the carport, apart from an allowance of $200 to repair items 6 and 7.
Scott Schedule item 13 – glass gate to swimming pool
The glass gate providing access to the swimming pool is poorly adjusted and does not lock properly, requiring the gate and support mechanism to be adjusted and realigned. The builder claims that the timber deck on which the gate is a “natural material and will move, buckle, twist, while exposed to the environment”.[52] That may be so, but the builder was responsible to undertake the work with proper skill and care, including to ensure that the gate was supported in such a way that the natural movement of the deck did not adversely affect its operation. I am satisfied that the builder’s work was defective.
[52] Exhibit 1 page 114
Mr Leary estimates the cost of the work at $300, which I accept as reasonable.
Scott Schedule items 14 and 15 – swimming pool fence
The fence enclosing the swimming pool is not adequately secured at each corner, causing some of the fence panels to separate. The gate giving access to the swimming pool from the backyard is located at the north east corner of the swimming pool enclosure on the Contract drawings.[53] Swimming pool gates are required to swing outwards. The builder installed the gate immediately adjacent to the north east corner of the main bedroom, where it interfered with the outward opening door from the bedroom to the backyard. Although I infer that the gate was likely relocated at the owner’s request, the resulting interference with access from the bedroom should have been obvious to the builder and could have been avoided by moving the gate a short distance along the fence line. When the owners noticed the problem, according to Mr Vidovic, they directed that the gate be swung inwards. Doing so, however, means that the gate does not comply with relevant standards.
[53] Exhibit 1 page 78, drawing A05/10
I am satisfied that the builder failed to exercise proper skill and care in installing the swimming pool fence and gate. Mr Leary estimates the cost of relocating the gate and making good the fence at $1,000, which I accept as reasonable.
Scott Schedule items 16 and 17 – paving to swimming pool enclosure
The pavers throughout the swimming pool enclosure are not laid to an acceptable tolerance with visible stepping and lippage throughout, requiring sections to be removed and reinstated to allow adequate compaction of the base and provide a suitably level surface finish. Mr Vidovic says that he was forced to do the paving in two stages because the owners could not decide whether to proceed with the retaining wall at the back of the pool area. That may be so, but the pavers were installed without any form of coping to hold them in place pending completion of the work. As the builder decided to commence the paving before a final decision was made about the retaining wall, the builder was responsible to ensure that the work was done with proper skill and care. I am satisfied that the builder did not do so in this case.

Mr Leary estimates the cost of the work at $2,500, which I accept as reasonable.
Scott Schedule items 18 and 19 – exterior envelope issues
Mr Leary claimed initially that the re-entrant wall, where the extension connects to the existing face brickwork, does not comply with the approved plans and elevations. His first report states:
A section of wall has been rendered whereas the plans indicate that the render was to enter the wall at a specific location so as to not require an additional section of render to be installed at this point.
This issue appears to relate to incorrect set out of the additions in reference to the existing dwelling location.
Consultation with the surveyor and reference to the identification survey are required in order to determine and clarify this defect/discrepancy. [54]
[54] Exhibit 1 pages 196-197
The report notes that the section of re-entrant render is incomplete and should be tidied up and painted in accordance with the remaining building envelope and that the eaves soffit is not adequately finished, with visible gaps and untidy areas visible from a normal viewing position, requiring tidying up and making good.
In reply, Mr Vidovic stated that Mr Leary’s opinion was based on the incorrect drawings. I agree. As I found earlier, Mr Leary assumed incorrectly that the architectural plans given building approval on 3 April 2017 were the contract drawings. However, the plans were amended to move the extension towards the side boundary and amended building approval was given on 2 June 2017. The amended plans are the ‘Approved Drawings’ attached to the Contract. Mr Vidovic provided a copy of the correct (approved) drawing and stated that the work was “built as drawn”.[55]
[55] Exhibit 1 page 305
In a further report, Mr Leary asserted that the as-built structure “grossly deviates from any of the plans provided irrespective of those being approved or not approved” and that “approved and unapproved drawings show a 90° corner without rebate”. He claimed that rectifying the ‘defect’ would involve constructing an additional wall, render and cladding and rectifying the eaves soffit at a cost he estimated to be “in the order of $4400.00”.[56]
[56] Exhibit 1 page 250
In his oral evidence, Mr Leary explained the basis of his opinion that there was a breach as follows:
It’s a breach due to the fact that the materials used to complete the elevation at the rear face don’t comply with the materials that were there, and the architectural intent appears to me to be that that wall was to be a brick wall and the extension was to be a rendered extension, whereas the infilled section has been foam clad and rendered, so my – I put my mind to how that would be rectified to bring about the architectural intent and that would be to demolish the same render and to install face brickwork in that area to match existing.[57]
[57] Transcript of proceedings 5 August 2020 page 3, line 7-15
Mr Leary is a building consultant, not an architect and his opinion about the “architectural intent” is not one he is qualified to give as an expert. The Contract Schedule of Finishes & Inclusions states clearly that the new building envelope is to be constructed from rendered and painted 75mm Green Board. There is no provision for brickwork. The result may not be aesthetically pleasing but, if the owners wanted a different look, they could have directed a variation.
The finishing around the re-entrant corner could be better in my view. However, even if I was satisfied that the workmanship was not up to standard, the owners have not established the reasonable cost of rectification. Mr Leary admitted in his oral evidence that his ‘estimate’ of $4,400 (which was for a much larger scope of work) is a “ballpark figure based on unknowns”,[58] an important matter that was not disclosed in Mr Leary’s report.
[58] Transcript of proceedings 5 August 2020 page 3, lines 38 to page 4
I am satisfied that the owners have not established any entitlement to damages for these items.
Scott Schedule item 20 – linen cupboard
The owners claim $1,000 as the cost of completing the installation of doors to a linen cupboard in the lower level hallway. The figure is based on Mr Leary’s ‘estimate’, for which he provided no details.[59] Mr Vidovic has credited an amount of $550 for the linen cupboard doors. The owners did not dispute this figure.
[59] Exhibit 1 page 251
I am satisfied that the owners have not established any entitlement to a greater sum.

Summary of owners’ claims

In summary, the builder is liable to the owners for the following amounts:
(a)Liquidated damages – $3,000.
(b)Damages for defects – $8,662.50 made up as follows:
(i)     bamboo flooring (Scott Schedule items 2 to 4) – $4,562.50.
(ii)     powder room (Scott Schedule item 5) – $100.
(iii)    carport and carport slab (Scott Schedule items 6 to 12) – $200.
(iv)    glass gate to swimming pool enclosure (Scott Schedule item 13) – $300.
(v)     swimming pool fence and gate (Scott Schedule items 14 and 15) – $1,000.
(vi)    paving to swimming pool enclosure (Scott Schedule items 16 and 17) – $2,500.
(vii)   exterior envelope issues (Scott Schedule items 18 and 19) – nil.
(viii) linen cupboard (Scott Schedule Item 20) – nil.

The builder’s counterclaim

The builder claims damages on the grounds that while he was held up by the owners on this project, he lost the opportunity to do other work. Mr Vidovic did not identify any legal basis for the claim and did not present any evidence to support the claim. I am satisfied that the claim cannot succeed.
The builder claims the balance owed under the Contract in the amount of $9,607.34 plus interest at the contract rate of 20% per annum. The owners accept the builder’s calculation of the unpaid sum under the Contract subject to setting off the owners’ claims.
Mr Vidovic invoiced the owners for the final payment under the Contract on 13 March 2019.[60] Pursuant to clause 26 of the Contract, payment was due within 7 days – i.e. by 20 March 2019 – failing which the owners would become liable for interest on any unpaid amount at the rate of 20% per annum.

Set off

[60] Exhibit 1 pages 172, 360-362

Pursuant to clause 10(c) of the Contract, the owners were entitled to deduct liquidated damages from any moneys that became payable to the builder. The builder is liable for liquidated damages of $3,000. The balance that became payable to the builder on 20 March 2019 therefore reduces to $6,607.34.
As the owners’ claim for liquidated damages is taken to be satisfied at that time, they are not entitled to claim interest in addition.
Pursuant to special condition 22(a) and (b) the owners were entitled to withhold $3,000 as security for performance of the builder’s defects rectification obligations and to retain that amount if the builder defaulted. The balance that became payable to the builder on 20 March 2019 therefore reduces further to $3,607.34.
Correspondingly, the set-off reduces the builder’s liability for defective work from $8,662.50 to $5,662.50. As the reasonable cost of rectifying the defects is assessed as at the date of the hearing, the owners are not entitled to claim interest in addition.
The owners were not entitled to withhold payment of the unpaid balance of $3,607.34 which fell due for payment on 20 March 2019. The owners’ payment obligations and the builder’s defects liability obligations were independent contractual obligations. The owners were not entitled unilaterally to make payment of moneys owed to the builder contingent on the builder returning to the site to undertake remedial works.
The builder is entitled to interest at 20% per annum on the unpaid balance of $3,607.34 from 20 March 2019 to the date of judgment, which for the purposes of calculation I take as 30 October 2020. The interest amounts to $1,179.24.[61] The total amount for which the owners are liable to the builder in respect to the builder’s final payment claim therefore is $4,786.58. That amount must be set-off against the builder’s residual liability for defects, which is $5,662.50, leaving a net liability of $875.92 which the builder must pay to the owners.

Owners’ claim for expert witness expenses

[61] Interest at 20% per annum on $3,607.34 for one year to 20 March 2020 amounts to $721.47. Interest for 33 weeks to 30 October 2020 amounts to $457.77. The total amounts to $1,179.24.

The owners claim Mr Leary’s fees for preparing reports and appearing as a witness at the hearing as expert witness expenses.
Section 48(1) of the ACT Civil and Administrative Tribunal Act 2008 provides that parties to an application must bear their own costs unless the Act or another territory law provides or the tribunal otherwise orders. The Tribunal’s ‘discretion’ to make a costs order under section 48(1) is not at large. The Tribunal’s only source of power to “otherwise order” lies in section 48(2).[62]
[62] CIC Australia Ltd v ACT Planning and Land Authority & Ors [2013] ACTSC 96.
Section 48(2) provides that where the Tribunal decides an application in favour of the applicant, the Tribunal may order the other party to pay the applicant the filing fee and “any other fee incurred by the applicant that the tribunal considers necessary for the application”. The examples of “any other fee” given in the legislation include a fee for a company or business names search, a filing fee for a subpoena and hearing fees. The tribunal held in Burton & Anor v Rojas Constructions Pty Ltd that expert witness expenses were not “any other fee” within the meaning of the section.[63] In my view, the decision is correct. Accordingly, the claim for Mr. Leary’s costs is refused.
[63] [2018] ACAT 117 at [81]
The owners claim the filing fee of $572.50. The discretion in section 48(2) is enlivened only where the Tribunal decides an application in favour of the applicant. However, both parties have succeeded to some degree, the owners to a much lesser extent bearing in mind the amounts they claimed as liquidated damages ($22,200) and for the cost of rectifying defects ($44,810). In the circumstances, I am not persuaded that the discretion under section 48(2), even if it is enlivened in the present circumstances, should be exercised in favour of the owners.

Conclusion

The result will be an order that the respondent pay the applicants the sum of $875.92 as damages for breach of contract.
………………………………..
Senior Member M Orlov

Date(s) of hearing		4 & 5 August 2020
Counsel for the Applicant:		Mr G Blank
Solicitors for the Applicant:		Trinity Law
Respondent:	Mr M Vidovic, authorised representative