Vasan v Georges Construction & Building Services Pty Ltd

[2023] NSWCATCD 84

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Vasan v Georges Construction & Building Services Pty Ltd [2023] NSWCATCD 84

Hearing dates:

10 May 2023

Date of orders:

18 August 2023

Decision date:

18 August 2023

Jurisdiction:

Consumer and Commercial Division

Before:

K Ross, Senior Member

Decision:

(1) Georges Construction & Building Services Pty Ltd is to pay to Anoch Vasan the sum of $66,171.95 immediately.

Catchwords:

BUILDING & CONSTRUCTION: Residential building work – work by unlicensed Builder – work incomplete and in breach of warranties in Home Building Act

Legislation Cited:

Home Building Act 1989

Civil and Administrative Tribunal Act 2013

Cases Cited:

Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305

Deacon v National Strategic Constructions Pty Ltd; National Strategic Constructions Pty Ltd v Deacon [2017] NSWCATAP 185

Category:

Principal judgment

Parties:

Anoch Vasan
Georges Construction & Building Services Pty Ltd

Representation:

Applicant in person
George Elias for respondent

File Number(s):

HB 22/55968

Publication restriction:

unrestricted

REASONS FOR DECISION

Application

1. The applicant is a homeowner who engaged the respondent to renovate his newly purchased property, pursuant to a contract dated 8 November 2022. Work commenced shortly after the agreement was signed. The parties fell into dispute in respect of the Builder’s claims for payment and the Homeowner contacted the Department of Fair Trading. The Homeowner then requested the Builder to provide a copy of his builder’s licence. The Builder refused to do so and the Homeowner terminated the agreement. The Homeowner now seeks repayment of the monies paid to the Builder and compensation for the cost of completing and rectifying the work. Full details of the claim are set out below.

2. The Builder opposes the orders sought.   

Jurisdiction

3. I am satisfied that this claim is a ‘building claim’ for the purposes of section 48A of the Home Building Act 1989 (HBA) as it is a claim for the payment of money that arises from a supply of goods or services supplied for or in connection with the carrying out of residential building work: (see definitions of “building claim” and “building goods or services” in s 48A(1), and “residential building work” in Sch 1 to the HBA).

4. The time limits for lodgement of building claims are set out in s 48K and s18E of the HBA. Relevantly, claims for breach of a statutory warranty must be brought within six years for a breach that results in a ‘major defect’ or two years in any other case: HBA s 18E(1)(b).

5. Where the work to which the claim relates was not completed, the warranty period starts on the date the contract was terminated, or if the contract was not terminated, the date on which work under the contract ceased: HBA s 18E(1)(d).

6. Claims for breach of contract must be brought within three years after the last date on which supply of the relevant building goods or services was made: HBA 48K(3).

7. In this case the Tribunal proceedings were commenced on 19 December 2022, which was approximately 2 months after the Contract was executed, and within a week or so of when the Builder ceased working on the site and the Contract was terminated. The claim (both under contract and in respect of the implied warranties) is brought within time.

8. For these reasons I am satisfied that the Tribunal has jurisdiction to hear and determine this claim under the HBA.

The proceedings

9. The proceedings were commenced by the Homeowner on 19 December 2022. A bundle of documents was filed with the application. The proceedings were listed for directions by VMR on 27 January 2023. The applicant and Mr George Elias for the respondent appeared virtually, and the Tribunal made directions for the filing of evidence. The directions were emailed to the respondent’s email address.

10. Pursuant to and in compliance with the directions the Homeowner filed a bundle of documents and a video which he took when he retook possession of the premises after termination of the Contract. He gave evidence on oath that he had posted a copy of the documents and USB device to the Builder’s office address, but they were returned to him. He had attempted to provide the material to the Builder by email but the email bounced back to him, apparently because the Builder had blocked his email address. He attempted to phone the Builder but the Builder had blocked his phone. He attended the business premises, but they were vacant. He also unsuccessfully attempted to serve the documents at the company’s registered office.

11. The respondent’s representative at the hearing, Mr George Elias, did not dispute the applicant’s evidence in respect of the attempts made to serve the documents, and the allegation that the respondent had blocked the applicant from contacting the respondent. The respondent did not provide any evidence to the Tribunal, either before the hearing in accordance with the directions or at the hearing.

12. The Tribunal provided Mr Elias with a copy of the applicant’s documents and an opportunity to peruse the documents. Mr Elias did not seek an adjournment of the hearing nor an extension of time to provide documents in response.

13. The Tribunal was satisfied that the applicant had made reasonable attempts to bring the documents to the attention of the respondent before the hearing in accordance with the Tribunal’s directions and determined that it was consistent with the Tribunal’s guiding principle for the hearing to proceed.

The claim

14. The initial claim in the application was for repayment of the sum of $30,843.50 paid to the Builder. The amended claim set out in the documents lodged with the Tribunal and pressed at hearing was for the Builder to pay the Homeowner the sum of $181,968.26 as follows:

• Repayment of the sum paid to the Builder:       $30,843.50

• Compensation for rectification and repairs in accordance with quotations received            $135,207.43

• Extra works from expert report            $12,200.00

• Fuel to travel to inspect the work and obtain advice and quotations            $659.18

• Loss of income            $840.00

• Costs of proceedings            $2218.15

The legal framework

15. A builder has obligations both under its contract and implied by the HBA. Section 18B of the HBA implies the following statutory warranties:

(a) a warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract,

(b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new,

(c) a warranty that the work will be done in accordance with, and will comply with, this or any other law,

(d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time,

(e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling,

(f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder’s or person’s skill and judgment.

16. The principles applicable to determining whether there has been a breach of the statutory warranties in s 18B of the Act were summarised in Deacon v National Strategic Constructions Pty Ltd; National Strategic Constructions Pty Ltd v Deacon [2017] NSWCATAP 185 as follows (at [46]):

Although objective standards such as Australian Standards, the Building Code of Australia and the Guide are of significant relevance in establishing whether work has been performed in a proper and workmanlike manner (Wheeler v Ecroplot Pty Ltd [2010] NSWCA 61 at [10]), the absence of such evidence does not automatically mean a homeowner has failed to establish breach of statutory warranty. In our view, the relevant principle was succinctly stated by Senior Member Goldstein in G MacFayden and Anor v G Tadrosse [2014] NSWCATCD 194 at [46] as follows:

“…Evidence that work does not comply with the Building Code of Australia would establish a basis for a finding that sub section 18B(c) of the Act has been breached. Evidence of the details in which work does not comply with the contractual plans and specifications would form the basis for a finding that sub section 18B(a) of the Act has been breached. Evidence of work not being carried out in a proper and workmanlike manner would in my view involve identification of the work in question, a statement of how the expert would expect it to be carried out in in a proper and workmanlike manner and then identification of the factors which establish that the way in which the work has been carried out falls short of it being carried out in a proper and workmanlike manner. Evidence of this nature, if accepted, would form the basis for a finding that sub section 18B(a) of the Act has been breached.”

17. The HBA by s 48MA requires the Tribunal to consider making a work order in respect of defective work as the preferred outcome. This requirement does not apply to incomplete work, although the Tribunal may make a work order if it considers it appropriate to do so in all the circumstances.

The applicant’s evidence

18. The applicant gave sworn evidence at the hearing. His bundle of documents included a statement and chronology, a copy of the Builder’s quotation and the signed agreement, evidence from his bank to support the payments made to the Builder, copies of emails between the parties, photos, a video, a building defects report from Ken Barker Building Services, and quotations for completion and rectification of the work.

19. There are a number of shortcomings in the applicant’s evidence. The expert report by Mr Barker fails to meet the most basic requirements for expert evidence (see Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305):

85 In short, if evidence tendered as expert opinion evidence is to be admissible, it must be agreed or demonstrated that there is a field of "specialised knowledge"; there must be an identified aspect of that field in which the witness demonstrates that by reason of specified training, study or experience, the witness has become an expert; the opinion proffered must be "wholly or substantially based on the witness's expert knowledge"; so far as the opinion is based on facts "observed" by the expert, they must be identified and admissibly proved by the expert, and so far as the opinion is based on "assumed" or "accepted" facts, they must be identified and proved in some other way; it must be established that the facts on which the opinion is based form a proper foundation for it; and the opinion of an expert requires demonstration or examination of the scientific or other intellectual basis of the conclusions reached: that is, the expert's evidence must explain how the field of "specialised knowledge" in which the witness is expert by reason of "training, study or experience", and on which the opinion is "wholly or substantially based", applies to the facts assumed or observed so as to produce the opinion propounded. If all these matters are not made explicit, it is not possible to be sure whether the opinion is based wholly or substantially on the expert's specialised knowledge. If the court cannot be sure of that, the evidence is strictly speaking not admissible, and, so far as it is admissible, of diminished weight. And an attempt to make the basis of the opinion explicit may reveal that it is not based on specialised expert knowledge, but, to use Gleeson CJ's characterisation of the evidence in HG v R [1999] HCA 2; (1999) 197 CLR 414, on "a combination of speculation, inference, personal and second-hand views as to the credibility of the complainant, and a process of reasoning which went well beyond the field of expertise" (at [41]).

20. Mr Barker does not adopt the Tribunal’s Code of Conduct for expert witnesses. He does not set out his experience or qualifications, except to include a Builder’s license number and a Building Consultancy License number in circumstances where building consultancy work has not been regulated under the HBA since September 2009. Three pages of the report relate to the work carried out by the Builder whilst the balance of the report is a general inspection report which simply reports on the condition of the premises, akin to a pre purchase inspection report. In respect of the work of the Builder, the report lists 18 items of work said to be incomplete or not to have been “finished correctly” and provides some limited reasoning for the conclusions reached. Estimates are given for the costs to complete or rectify various items, but the basis of the quoted amounts (for example, the scope of work for rectification or completion, the time allowed and the rate used) is not set out.

21. The applicant also relies upon a series of quotations to support the amount he seeks. The quotations for tiling, kitchen alterations, handrail alterations and landscaping under the deck are from East Coast Carpentry Services Pty Ltd. There is a quotation from Ray’s Painting for painting, and quotations from Cornerstone Building Pty Ltd for the bathroom and laundry renovations. None of the quotations set out the rates being charged, and it is almost impossible to compare the work in the quotations with the work set out in the original contract.

22. A further complication arises when the estimates in the expert report are compared to the quotations. Mr Barker estimates an amount of $23,020 for tiling. The quotation provided is for $38,446.68, including an allowance of $52 per square meter for the tiles. The quotation in the original contract did not contain any tile allowance and Mr Barker does not specify an allowance. The painting quote is for $30,000 for internal and external painting. Mr Barker allows $11,500 for internal and external painting, plus $550 for painting the gate, $560 for the driveway and $1550 to remove overspray. The quotations for the bathroom and laundry are $30,008 and $21,527.00 respectively whilst Mr Barker allows an amount of $37,873.50 for both.

The respondent’s evidence

23. As stated above, the respondent did not supply any documentary evidence in support of its defence of the claim. However, Mr Elias gave sworn evidence at the hearing. He said that the claim was false because the applicant had stopped the work before it was finished. He said that the applicant asked him for a copy of his builder’s license, but he had not been prepared to give the applicant a copy because the applicant had indicated a willingness to defraud the tax office (by allegedly asking for invoices to be fraudulently dated to facilitate a claim for the expenses at a later date, when the property was incurring income, claims which the applicant strenuously denied). Mr Elias stated that for this reason, he didn’t trust the applicant to have a copy of his license.

24. The Tribunal then asked Mr Elias if he had his license with him. He stated that he did, and he produced license number 393842C to the Tribunal. A Fair Trading license check was then conducted by the Tribunal and it indicated that the license is a carpenter’s license which was issued on 7 February 2023.

25. When faced with this evidence Mr Elias conceded that neither he nor the respondent company held a current license at the time the work was carried out. He also conceded that he did not organise Homeowners Warranty insurance, but he said that was because “we didn’t talk about insurance”.

26. Mr Elias was an evasive witness. His evidence about his license was misleading, and it was only when faced with the license check that he conceded that neither he nor the respondent company had had a license at the time the work was carried out. He continued to maintain that the work was incomplete because the applicant had terminated the contract and would not accept that the applicant was entitled to do so in the absence of a current license and homeowners warranty insurance. He gave evidence that the applicant had requested the Builder to issue fraudulent invoices, but the applicant said that the Builder offered to do so, an offer which the applicant refused. Indeed the Builder’s quotation states “Cash price will not include GST however please note no invoices will be provided”. This notation supports the applicant’s version of events, particularly taking into account the email requests made by the applicant for the Builder to issue invoices and receipts.

Consideration

27. On the basis of the evidence I find that:

1. The parties entered into an agreement on 8 November 2022 for the respondent Builder to carry out the work in the quotation dated 8 November 2022 at a cost of $61,700.00 (“the Contract”).

2. An issue arose in relation to whether the gate was to be replaced or repainted. The applicant agreed for the Contract to be varied to provide for painting rather than replacement of the gate and the contract price was reduced to $61,400.

3. The respondent carried out work at the respondent’s property between November 2022 and December 2022.

4. At the date of the Contract and at the time the work was undertaken, the respondent was not licensed to carry out the work. Indeed, the license obtained by Mr Elias in February 2023 was a carpenter’s license which would not have entitled the respondent to carry out the work in the Contract, even if it had been valid at the time.

5. The applicant made payments to the Builder totalling $30,843.00.

6. On or about 13 December 2022 the applicant terminated the Contract on the basis that the Builder did not hold an appropriate license.

7. At the time of termination of the Contract the work required by the Contract was incomplete. I accept the evidence of Mr Barker that there was also some completed work which had not been carried out in a proper and workmanlike manner in breach of the warranties in the HBA.

8. There are significant shortcomings in the evidence as to the cost of rectifying and completing the work. I am satisfied that I should accept the estimates of Mr Barker rather than the amount in the quotations. This is because Mr Barker does not stand to benefit from the estimates he has given and is to this extent more independent than the providers of the quotations. It also seems that his estimates more closely reflect the cost in the original quotation.

Work order or money order?

28. I am not satisfied that this is a matter in which a work order is appropriate. The Builder has acted in disregard of its obligations under the HBA, and even at the hearing did not accept that it was bound to operate within those requirements. The respondent still does not hold an appropriate license and did not express a willingness to return to complete any work. The relationship between the parties has broken down and the Tribunal cannot be satisfied that a work order would result in the just, cheap and quick resolution of the real issues in dispute in this matter.

What money order should the Tribunal make?

29. The Homeowner is entitled to be put in the position he would have been in if the Contract had been performed (see Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8). In addition, he is entitled to damages which would flow in the ordinary course of events or which might have been in the contemplation of the parties at the time the Contract was entered into (Hadley v Baxendale (1854) 9 Exch 341).

29. Thus the Homeowner is entitled to compensation of $64,953.80 for the additional cost to complete and rectify the work, over and above the amended contract price ($95,510.30 plus the amount paid to the Builder $30,843.50, less the amended contract price of $61,400).

30. I am not satisfied that the cost of fuel and lost wages flows in the ordinary course from the breach of the Contract, and I am not satisfied that it would have been in the contemplation of the parties that such amounts would flow from the breach of the Contract. These claims are disallowed.

31. As the claim exceeded $30,000, Rule 38 applies and the usual rule in s 60 of the Civil and Administrative Tribunal Act 2013 (that parties pay their own costs unless there are special circumstances) does not apply. The applicant has been successful and in the absence of any disentitling behaviour is entitled to an order that the respondent pay his reasonable costs of the proceedings. I am satisfied that the amounts claimed by the applicant for the filing fee $289.15, ASIC search fee $9.00, printing costs $150.00 and expert witness fee $770.00 are reasonable and I make an order totalling $1218.15 in respect of those costs.

Orders

1. Georges Construction & Building Services Pty Ltd is to pay to Anoch Vasan the sum of $66,171.95 immediately.

*********​​​​​​​

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

Registrar

Decision last updated: 22 September 2023