Wan v Daoud Building Group Pty Ltd; Daoud Building Group Pty Ltd v Wan

[2024] NSWCATCD 39

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Wan v Daoud Building Group Pty Ltd; Daoud Building Group Pty Ltd v Wan [2024] NSWCATCD 39

Hearing dates:

1 November 2023

Date of orders:

21 March 2024

Decision date:

25 March 2024

Jurisdiction:

Consumer and Commercial Division

Before:

Dr K George, General Member

Decision:

1.    On or before 21 April 2024 Chi Wai Stephen Wan and Kam Kwan Fung are to pay Daoud Building Group Pty Ltd the amount of $2,317.00.

2.    Application 2023/00393744 is otherwise dismissed.

3.    Application 2023/00377029 is otherwise dismissed.

Catchwords:

BUILDING AND CONSTRUCTION---Home building--- Variations to contract --- quantum meruit --- Assessment of damages---Adequacy of evidence of loss

Legislation Cited:

Home Building Act 1989 (NSW)

Home Building Regulation 2014 (NSW)

Cases Cited:

Beechwood Homes (NSW) Pty Ltd v Hassos [2023] NSWCATAP 184

Briginshaw v Briginshaw (1938) 60 CLR 336

Coshott Family Pty Ltd v Lyons [2022] NSWCA 216

Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7

Hartley v McRae [2018] NSWCATCD 31

In the Matter of Hillsea Pty Limited [2019] NSWSC 1152

Liebe v Molloy (1906) 4 CLR 347

Middleton v Wrona [2023] NSWCATAP 158

Middleton v Wrona [2023] NSWCATAP 158

Pollock v NSW Trustee & Guardian [2022] NSWSC 923

Rekrut and Scott v Champion Homes Sales Pty Ltd; Champion Homes Sales Pty Ltd v Rekrut and Scott [2017] NSWCATAP 187

Roude v Helwani [2020] NSWCA 310

Sabouni v Revelop Building and Developments Pty Ltd [2021] NSWSC 31

SDL Project Solutions Pty Ltd v Kim; Kim v SDL Project Solutions Pty Ltd [2022] NSWCATCD 10

Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251

Xu v Jinhong Design & Constructions Pty Ltd [2011] NSWCA 277

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Chi Wai Stephen Wan and Kam Kwan Fung (applicant/ cross respondent)

Daoud Building Group Pty Ltd
(respondent/ cross applicant)

Representation:

Stephen Wan and Mark Wan (self-represented applicant/ cross respondent)

Robert Daoud, Director (respondent/ cross applicant)
Mihalatos Associates Solicitors (respondent/ cross applicant)

File Number(s):

2023/00393744 (previous file number HB 23/23591)
2023/00377029 (previous file number HB 23/40602)

Publication restriction:

Nil

DECISION

INTRODUCTION

1. Mr Stephen Wan and Ms Fung (‘the owners’) are the owners of a rental property in Chatswood.

2. In February 2022 they engaged Daoud Building Group Pty Limited (‘the builder’) to construct a secondary dwelling (a ‘granny flat’) on the property.

3. The work commenced on or about 19 July 2022. The Occupation Certificate is dated 20 April 2023.

4. The owners’ application includes a claim that money paid for a variation should be refunded and damages for lost rent due to delay in completion. Their application 2023/00393744 (previously HB 23/23591) is dated 22 May 2023.

5. By cross application 2023/00377029 (previously HB 23/40602) dated 1 September 2023 the builder seeks an order for payment of an amount of $38,547.00, being unpaid invoices.

6. The owner Stephen Wan appeared in person at the final hearing. The owners’ son, Chung Hei (‘Mark’) Wan, appeared on their behalf pursuant to a written authority. It was common ground between the parties that from time to time the builder would take instructions from Mark Wan who was acting with the authority of the owners.

7. Mark Wan also gave sworn oral evidence to the Tribunal.

8. An interpreter was present during the hearing to assist the owners, should they have required interpretation of legal terminology. The owners told the Tribunal they were otherwise proficient in English. Ultimately the interpreter’s assistance was not required.

9. By leave of the Tribunal, the builder was represented by lawyers Mr Mihalatos and Ms Papadopoulos.

10. Mr Robert Daoud, a director of the builder company, appeared in person, as did general manager Ms Stephanie Janes. Mr Daoud and Ms Janes gave sworn oral evidence.

11. The owners relied on a number of bundles of documents. The documents were admitted into evidence, subject to weight and relevance, and marked as Exhibits HO1, HO2, HO3 and HO4.

12. The builders relied on a number of bundles of documents. The documents were admitted into evidence, subject to weight and relevance, and marked as Exhibits B1, B2, B3, B4 and B5.

13. Both parties were provided the opportunity to ask questions of the other.

JURISDICTION

14. The building work was the construction of a granny flat on the applicants’ property. The Tribunal is satisfied that the application involves a building claim as defined by section 48A of the Home Building Act 1989 (NSW) (‘the HB Act’).

15. The Tribunal finds that the parties contracted for residential building works as defined in Clause 2(1) of Schedule 1 of the HB Act and that the work is included in the definition of ‘dwelling’ (Clause 3(2) of Schedule 1).

16. The reasonable market value of the work exceeded the minimum threshold of $5,000.00 for a building claim set by Schedule 1 Clause 2(3)(a) of the HB Act and Regulation 12 of the Home Building Regulation 2014 (NSW) (HB Regulation), and the claims are less than the $500,000.00 prescribed limit imposed by sub-section 48K(1) of the HB Act on the Tribunal’s order making power.

17. The Tribunal has the power to make orders relevant to both applications: s 48O.

18. The applications were filed within the timeframes specified in s 48K.

19. The Tribunal therefore has jurisdiction to hear and determine these applications.

ISSUES FOR DETERMINATION

20. At the final hearing and in written submissions, the builder’s legal representative helpfully identified the issues arising from both claims.

21. At the hearing, the parties agreed to the following:

1. The owners are entitled to the amount of $5,750.00 for items withdrawn from the contract;

2. The builder is entitled to payment of invoice #11071 for the kitchen fit out in the amount of $18,898.00;

3. The builder is entitled to payment of invoice #10259 for the Occupation Certificate in the amount of $3,699.00; and

4. The builder has completed rectification works to the stormwater outlet. The owners therefore can recover from Council $4,670.00, being the damage deposit. The owners withdrew this component of their claim against the builder.

22. The parties agreed that the following issues remained for determination by the Tribunal:

1. Whether the owners are entitled to reimbursement of paid invoice #10418 for extra works variation in the sum of $14,500.00? (‘Variation Claim’). This relates to issues arising during the initial excavation of the site;

2. Whether the builder is entitled to payment of invoice #10327 for a price rise in the sum of $13,000.00? (‘Price Rise Claim’); and

3. Whether the owners are entitled to compensation for delay to the building works in the sum of $40,800.00? (‘Delay Claim’).

PROOF

23. Each party bears the onus of proving the facts that are essential elements of their own claim to the civil standard i.e. to the comfortable satisfaction of the Tribunal on the balance of probabilities.

24. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony or indirect inferences (Briginshaw v Briginshaw (1938) 60 CLR 336. See also Hallen J in Pollock v NSW Trustee & Guardian [2022] NSWSC 923 at [74]-[75]).

25. There is strong dispute between the parties about whether some conversations occurred and/or the content of those conversations.

26. In these circumstances, it is appropriate that the Tribunal place primary emphasis on the objective surrounding facts that are either undisputed or established by contemporaneous documents; the apparent logic of events; and the inherent probabilities and improbabilities of purported events (In the Matter of Hillsea Pty Limited [2019] NSWSC 1152 at [16]-[21] and the authorities referred to therein. See also SDL Project Solutions Pty Ltd v Kim; Kim v SDL Project Solutions Pty Ltd [2022] NSWCATCD 10).

THE CONTRACT AND HOME BUILDING ACT 1989

27. All costs are inclusive of GST, unless otherwise stated.

28. On 8 February 2022 the parties entered into a contract for the building of a granny flat in the amount of $188,980.00.

29. The contract was a standard form home building contract for work over $20,000.00 and was signed by both parties.

30. The scope of work was detailed in an attached document headed ‘Quotation Summary’.

31. The builders have a building contractor license under Pt 3 of the HB Act.

32. The contract price exceeded the amount of $20,000.00 prescribed by cl 5(1)(a) of the Home Building Regulation 2014 (NSW), made under the HB Act. Accordingly, by force of ss 6 and 7(1A), ss 7-7E applied to the contract and required, among other things, that the contract and variations be in writing.

33. The HB Act provides relevantly:

7 Form of contracts (other than small jobs)

(1) A contract must be in writing and be dated and signed by or on behalf of each of the parties to it.

…

(4) If the contract price is known, it must be stated in a prominent position on the first page of the contract.

(5) If the contract price […] may be varied under the contract, the contract must contain a warning to that effect and an explanation of the effect of the provision allowing variation of the price. The warning and explanation must be placed next to the price if the price is known.

7A Offence

A person must not contract to do work under a contract unless the requirements of sections 7, 7AAA and 7E in relation to the contract are complied with.

Maximum penalty: 80 penalty units in the case of a corporation and 40 penalty units in any other case.

7E Terms of contracts

(1) A contract must include (and is taken to include) each of the terms set out in Part 1 of Schedule 2. A contract that contains a term that is inconsistent with a term set out in Part 1 of Schedule 2 is unenforceable to the extent of the inconsistency.

10 Enforceability of contracts and other rights

(1) A person who contracts to do any residential building work, or any specialist work, and who so contracts:

(b) under a contract to which the requirements of section 7 apply that is not in writing or that does not have sufficient description of the work to which it relates (not being a contract entered into in the circumstances described in section 6 (2)), or

(c) in contravention of any other provision of this Act or the regulations that is prescribed for the purposes of this paragraph,

is not entitled to damages or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, and the contract is unenforceable by the person who contracted to do the work. However, the person is liable for damages and subject to any other remedy in respect of a breach of the contract committed by the person.

34. There was no submission that the contract did not comply with section 7. I am satisfied that it did and that the builder may enforce its right under the contract.

35. Clause 1 of Schedule 2 of the HB Act requires that the following terms be included in a contract to which s 7 applies:

1 Plans and specifications

(1) All plans and specifications for work to be done under this contract, including any variations to those plans and specifications, are taken to form part of this contract.

(2) Any agreement to vary this contract, or to vary the plans and specifications for work to be done under this contract, must be in writing signed by or on behalf of each party to this contract.

ARE THE OWNERS ENTITLED TO REIMBURSEMENT OF PAID INVOICE #10418 FOR EXTRA WORKS VARIATION IN THE SUM OF $14,500.00? (‘VARIATION CLAIM’)

36. Invoice #10418 includes excavation of the site; removal of rubble; and installation of concrete piers to a depth of 1700mm.

37. Clause 13 of the contract sets out when and how variations to the contract could occur. In brief, before commencing work on a variation, a notice containing a description of the work and the price had to be signed and dated by both parties.

38. It is common ground that the procedure for variations stipulated in clause 13 was not followed, nor was there an agreement in any written form signed by either party.

39. Therefore, the purported variation is not effective, and the builder cannot enforce the variation under the contract.

Quantum meruit

40. The builder may, however, be able to claim for restitution of the benefit conferred on the owners by way of unjust enrichment, on a quantum meruit claim, if the elements of that claim are established: see Xu v Jinhong Design & Constructions Pty Ltd [2011] NSWCA 277.

41. Quantum meruit claims arise where a builder has performed work outside the provisions of a contract, and it would be unjust for the homeowner to retain the benefit of the work done without paying for the reasonable value of the work: SDL Project Solutions Pty Ltd v Kim; Kim v SDL Project Solutions Pty Ltd [2022] NSWCATCD 10 at [485].

42. A quantum meruit claim did not form part of the builder’s original application to the Tribunal, nor does it appear to have been raised prior to the final hearing when the builder’s legal representative, with the Tribunal’s leave and with no objection by the owners, provided written submissions.

43. The builder did not seek leave to amend its application to include a quantum meruit claim, nor was the owner on notice of such a claim prior to the final hearing.

44. Nevertheless, even if leave had been sought and formally granted, I would have dismissed the builder’s quantum meruit claim for 2 separate reasons.

1. There were no additional works performed outside the contract

45. The contract provides that:

1. Excavation is a standard inclusion:

‘Excavate for footings in all materials other than rock or sandstone and remove any excess earth material. Contaminated material in charge (sic) as an addition.’ (B1-53)

2. Piering under the slab up to 1000mm deep is included (B1-20).

46. The builder’s evidence is that the contract works commenced on 19 July 2022 with excavation of the site and that complications arose immediately, necessitating excavation of a rubble pit and installation of piers 1700mm deep.

47. The owners contend that the builder did not perform the purported variation.

48. For the following reasons the builder has failed to prove that the excavation fell outside the scope of the contract:

1. On the builder’s own evidence, it did not excavate sandstone or rock, but a rubble pit;

2. Photographs of the excavation show loose, broken bricks and other fragments;

3. The invoices provided by the builder (B1-108 to 111) describe the material removed from site as ‘mixed brick & concrete’ and ‘mixed light building & demolition waste’;

4. There was no submission that there was any contaminated material in the excavation.

49. The clear conclusion from the evidence is that the excavation and waste removal fell within the original scope of the contract.

50. For the following reasons the builder has failed to prove that piers were installed at a depth in excess of 1000mm:

1. When questioned by the Tribunal Mr Daoud stated that he was not on site during the excavation;

2. There is no evidence before the Tribunal from a person present on site at the time the work was conducted to confirm the depth of the piers;

3. There is no evidence from a suitably qualified expert (e.g. an engineer) that the piers needed to be installed at an increased depth of 1700mm;

4. The invoices provided by the builder for the purchase and pouring of concrete provide no indication of the depth of the piers.

51. More likely than not the works claimed in Invoice #10418 were included in the original scope of the contract. I would dismiss the builder’s claim on this basis alone.

2. The owners did not have actual knowledge of the purported variation as it was being done

52. The builder has also failed to prove that the owner had actual knowledge of the variation as it was being done, one of the essential elements of a quantum meruit claim: Liebe v Molloy (1906) 4 CLR 347; Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251; Hartley v McRae [2018] NSWCATCD 31; Rekrut and Scott v Champion Homes Sales Pty Ltd; Champion Homes Sales Pty Ltd v Rekrut and Scott [2017] NSWCATAP 187 at [235] and [238].

53. The builder contends that the owner was first told of the need for extra excavation work in a telephone conversation between Mr Daoud and Mark Wan on 19 or 20 July 2022. According to Mr Daoud’s statement, Mark Wan gave oral agreement in that conversation. Mark Wan denies this.

54. Mr Daoud’s evidence is that he had a second telephone conversation with Mark Wan on 20 July 2022 in which he reiterated the need for the extra work and Mark Wan replied:

‘Okay, I understand.’

55. Mark Wan denies this conversation occurred.

56. On 23 July 2022 a meeting occurred between Stephen Wan, Mark Wan and Robert Daoud. The builder’s evidence is that the builder’s representatives, Panos Myrianthis and Tim Wai Choi were also present.

57. The parties’ accounts of that meeting differ. In summary, the builder’s evidence is that Stephen Wan gave oral agreement to the extra work for an estimated amount of $15,000.00.

58. However, even on the builder’s own evidence, the discussions with Stephen Wan and Mark Wan were focussed on the need for excavation and removal of the rubble pit. There is no evidence that the concrete piers which are a significant part of Invoice #10418 were discussed.

59. The owners and Mark Wan deny ever providing verbal consent to the purported variation.

60. The builder’s written submissions of 1 November 2023 state:

‘On 19 and 20 July 2022, the Builder arranged for materials to be delivered to the Premises to attend to the removal of the rubble pit and commenced the extra works right away, to ensure as little delay as possible.’

61. Based on contemporaneous documents in evidence, I cannot be satisfied that the owners had actual knowledge of the variation as it was being done from 19 or 20 July 2022. Most likely, they did not:

1. On 20 July 2022 Ms Janes emailed Mark Wan (HO1-43). The email says:

‘As discussed with Robert, please find attached video and images.

We will require a bigger machine to work on the site as the 1.7 tonne machine is sinking into the ground.

The existing rubble pit is noted in the attached images and will need to be removed before we pier down to solid foundations. I have noted on the attached plan also, as requested where the pit is sitting.

Once we excavate and assess the pit, we will confirm where the water is coming from to advise if it requires re location, as we are assuming it is servicing the main dwelling.

The estimate (sic) costs for the works involved is $15,000. As mentioned by Robert, we will need to calculate all costs before confirming the final price and will keep you informed. The pricing will include a breakdown of hours works (sic), machine hours, loads removed etc.

Can you please confirm that we can proceed with the works on site.’

2. The email makes no reference to the concrete piers which form part of Invoice #10418.

3. Less than an hour later Mark Wan replied:

‘I need to have a chat with my dad about this. I have a few questions to ask, what is your number?’ (HO1-44)

4. Mark Wan gave oral evidence that he spoke with Ms Janes who ‘explained a few things.’ There is no relevant evidence from Ms Janes about the telephone conversation.

5. I am satisfied on the basis of the above email exchange that, as at 20 July 2022, the builder was still awaiting the owner’s confirmation to proceed with the purported variation, the owner had not consented and the owner was unaware that the work had already commenced, or was about to commence the same day.

6. Further, I do not consider that the email from Mark Wan to Ms Janes on 23 July 2023 sent after the meeting, establishes that, as at that date, the owners were aware that the purported variation was proceeding:

1. There is no explicit reference to the works having commenced;

2. The cost had not been finalised and Mark Wan requested a ‘breakdown of the cost with rates … for my consideration’;

3. Mark Wan again disputed the source of the water and therefore, implicitly, the need for the variation.

7. There is no correspondence in evidence from the builder providing the owner with the requested breakdown information. The owners state that they never received a response.

8. An email from Ms Janes to Mr Myrianthis dated 28 July 2022 (Annexure “D” to the builder’s application) reports an ‘update from Robs (sic) meeting with this client on Saturday’, that the owners agreed to the variation estimated at $15,000.00. However, given the owners and Mark Wan dispute Mr Daoud’s account of that meeting, and deny ever providing consent to the purported variation, I do not put weight on this email.

9. On 29 July 2022 Stephen Wan emailed Ms Janes:

‘Can you please give me an update on the progress of my granny flat.’

10. Ms Janes replied on the same day:

‘The team is still working on the excavation. Due to the complications on the job, as discussed with Mark, I believe they will require another week before they complete the slab.’

11. I do not accept the builder’s submission that this email exchange demonstrates that the owners were aware of the variation works. The email does not reference any ‘issues with the groundwork.’ There is nothing in the email exchange to indicate that the references to the excavation and slab are anything other than the standard inclusions in the contract.

12. The next correspondence between the parties regarding the purported variation was Tax Invoice #10418 dated 22 August 2022 in the amount of $14,500.00.

13. Mr Stephen Wan’s email response on 13 September 2022 evidences that the owners were likely unaware of the variation as it was being done:

1. It refers to the earlier emails between Ms Janes and Mark Wan querying the need for the variation;

2. It refers to the email from Mark Wan dated 23 July 2023 which ‘specifically addresses this extra work and asked to inform us before proceeding’;

3. It refers to a lack of communication from the builder about the extra work:

‘We have not received any email or phone call or any form of communication in between to explain about this extra work, except we have received an invoice 10418 more than 1 month later … I am not sure of what have been done in this particular invoice and when it was done? Please explain what and where was it done and for what purpose?’

62. In the absence of clear evidence that the owners had actual knowledge of any extra work as it was being done, any claim for payment under quantum meruit would fail in respect of the variation.

Conclusion

63. In summary, the builder was not entitled to payment of Invoice #10418 because:

1. The purported variation is not effective because there was no written agreement between the parties, as required by clause 13;

2. No leave was sought nor granted for the builder to pursue a claim in quantum meruit;

3. Any quantum meruit claim would fail because the builder has failed to prove that:

1. The work included in Invoice #10418 was outside the agreed scope of the contract; and

2. The owners (including Mark Wan as their agent) had actual knowledge of the purported variation as it was being done.

Should the $14,500.00 paid by the owners be refunded?

64. On 25 October 2022, notwithstanding their concerns, the owners paid Invoice #10418 in full, at least in part due to their concerns that the builder would halt works if they did not: see email from Stephen Wan dated 13 September 2022.

65. The owner contends that the payment was made to the builder as a credit, as opposed to a payment of the invoice.

66. Regardless of how the payment is characterised, given my finding above that the builder was not entitled to payment of $14,500.00, the owners are entitled to a refund because it is, in effect, an overpayment.

67. To put it another way, the owners paid the builder $14,500.00 and received nothing in return, beyond what they had already paid for pursuant to the agreed scope of the contract. There has been a total failure of consideration which entitles the owner to restitutionary relief (Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; Middleton v Wrona [2023] NSWCATAP 158).

68. I therefore find in favour of the owners regarding their claim for $14,500.00.

IS THE BUILDER ENTITLED TO PAYMENT OF INVOICE #10327 FOR A PRICE RISE IN THE SUM OF $13,000.00?

69. Invoice #10327 dated 28 July 2022 relates to an increase in the overall contract value due to rises in material costs and ‘industry charges’ between February 2022 (when the contract was signed) and July 2022 (when the work commenced).

70. The builder contends that Stephen Wan gave oral agreement to the price rise variation in the meeting on 23 July 2022. This is strongly disputed by the owners who say they never agreed to the price increase.

71. Furter, citing Giles JA in Hendriks v McGeoch [2008] NSWCA 53, the builder submits that ‘the Owner’s conduct formed the agreement to the price rise’ because the owners did not dispute the invoice until 8 months after it was issued:

‘The Owner should not have allowed the Builder to continue with the Building Works where it had no intention to make payment of the Price Rise Increase Invoice #10327.’ (B5)

72. Regardless, it is common ground between the parties that the procedure for variations stipulated in clause 13 of the contract was not followed, nor was there an agreement in any written form signed by either party.

73. The contract does not allow for variations to be agreed to orally or by conduct.

74. There was no specific provision in the contract for price allowances and adjustments.

75. Therefore, the purported variation is not effective, and the builder cannot enforce the variation under the contract.

76. Nor could the builder have a claim pursuant to quantum meruit, since the increase in dispute does not relate to works outside the scope of the contract.

77. I therefore dismiss the builder’s claim for payment of Invoice #10327.

ARE THE OWNERS ENTITLED TO COMPENSATION FOR DELAY TO THE BUILDING WORKS IN THE SUM OF $40,800.00? (‘DELAY CLAIM’)

78. Pursuant to clause 5 of the contract:

‘The contractor must commence the work within 60 working days from:

The date of this contract, or

if the approval of the local council or other statutory authority has still to be obtained for the work, the date of written notification of that approval’

79. I find that:

1. As at the date of the contract, the local council approval of the work was still pending;

2. The Complying Development Certificate was dated 18 July 2022 (see Annexure “I” to builder’s application);

3. Work commenced on 19 July 2022.

80. Clause 6 of the contract provides:

‘The contractor must diligently proceed and complete the work within 18 calendar weeks from the date the work is due to commence as referred to in Clause 5. The period of time allowed for completion has taken into account any public holidays and other days when it is known that work will not be performed. The time for completion may be subject to amendment in accordance with Clause 7.’

81. Therefore, subject to clause 7, I find that the work should have been completed on or before 21 November 2022.

82. Clause 7 of the contract states:

‘If the work is delayed by:

●   Inclement weather or conditions resulting from inclement weather.

●   any order of a court or tribunal that the work be suspended, unless that order resulted from the fault of the contractor.

●   any act or remission of the owner

●   any industrial dispute affecting the progress of the work (not being a dispute limited to the site or limited to employees of the contractor)

●   the unavailability of materials necessary for the continuation of the work, unless due to the fault of the contractor

●   a variation to the work

●   a suspension of the work by contractor under Clause 24, or

●   any other matter, cause or thing beyond the control of the contractor, the contractor will be entitled to a reasonable extension of time to complete the work. Both the contractor and owner (if applicable) must take all reasonable steps to minimise any delay to the work.

If the contractor wishes to claim an extension of time, the contractor must notify the owner in writing of the cause and estimated length of the delay within 10 business days of the occurrence of the event or, in the case of a variation, from the date of agreement to the variation.

If the owner does not, within a further 10 business days, notify the contractor in writing that the extension of time sought is unreasonable, the completion date for the contract will be extended by the period notified to the owner.

If the owner gives the contractor written notice disputing the extension of time claimed, and no agreement can be reached on the time to be allowed, the dispute must be dealt with in accordance with the dispute resolution procedure (Clause 27).’

83. The owners submit that the builder is not entitled to any extension of time because it did not comply with the requirements of clause 7.

84. The evidence before the Tribunal of purported written notification by the builder of a delay is limited. Mr Daoud’s statement of 27 September 2022 points to 2 emails.

85. First, there is the email dated 29 July 2022 from Ms Janes to Stephen Wan in response to his enquiry about the progress of the work. It states:

‘Thank you for your email.

The team is still working on the excavation. Due to the complications on the job as discussed with Mark, I believe they will require another week before they complete the slab.’

86. I find that this email does not comply with the agreed requirements for an extension pursuant to clause 7. There was no agreement to a variation, as per my finding above. Further, the email does not identify the cause of the delay beyond unspecified ‘complications.

87. According to Mr Daoud’s statement of 27 September 2022:

‘In or about November 2022, the construction of the kitchen was to be undertaken however due to an industry shortage our kitchen suppliers were experiencing supply chain issues from their wholesaler.

Due to the Christmas closure period which affected the whole construction industry we were not able to obtain the kitchen supplies until February 2023. This, together with the Christmas closure period, amounted to a 2.5-month delay.’

88. The builder relies on an email from Project Manager George Bou Serhal dated 14 February 2023 (B1-25). The email does provide an estimate of the length of the delay and identifies the cause as delays in obtaining kitchen supplies. However, on Mr Daoud’s evidence, the email was sent around 3 months after the builder became aware of their wholesaler’s supply chain delays, not within the 10 days required by clause 7.

89. The other reasons for the delay offered by the builder include wet weather, the mailbox fitting and the owners’ failure to pay invoices. I find that none of these events establish a claim for an extension of time because there was no written notification from the builder pursuant to clause 7.

90. It follows from the above that the builder has failed to prove an extension of the agreed completion date of 21 November 2022.

91. Clause 8 sets out the circumstances in which the works will be considered complete.

92. The Occupation Certificate was issued on 20 April 2023.

93. On 5 May 2023 the builder notified the owners by email that the Occupation Certificate has been issued and that the work was complete (B1-189).

94. I find that pursuant to clause 8, the work was completed on 5 May 2023.

95. The delay from the agreed completion date of 21 November 2022 was therefore 23 weeks and 4 days.

96. The owners submit that the delay was longer because the keys were not handed over by the builder until some time after completion. I do not accept this submission because pursuant to clause 15, the builder was not required to provide the keys as the final payment was outstanding.

97. There was no provision in the contract for damages in the event of a delay in completion. The owners make a claim for general damages calculated as follows:

1. Lost rent of $1000.00 per week over 20 weeks for the primary dwelling; and

2. Lost rent of $800 per week over 26 weeks for the granny flat.

98. For the reasons which follow, I dismiss the owners’ claim for lost rent because they have failed to prove a loss.

99. In respect of proof of loss, the relevant principles are set out by Black J in Sabouni v Revelop Building and Developments Pty Ltd [2021] NSWSC 31 as follows at [41]-[42]:

‘The damages to which RBD is entitled, in respect of Mr Sabouni’s breach of or repudiation of the Contract is the monetary sum which, so far as money can, represents “fair and adequate compensation for the loss or injury” which it sustained by reason of that breach or repudiation: Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 116 per Deane J. The Court must do the best it can to make a reliable assessment of damages, where damages are difficult to assess, including where a party has failed to lead the best evidence of damages: Commonwealth of Australia v Amann Aviation Pty Ltd above at 83, per Mason CJ and Dawson J, 125 per Deane J, 153 per Gaudron J. In Uszok v Henley Properties (NSW) Pty Ltd [2007] NSWCA 31 at [135], Beazley JA observed that:

“Where there has been an actual loss of some sort, the common law does not permit difficulties of estimating the loss in money to defeat the only remedy it provides for breach of contract, an award of damages….Such damages should not be nominal only, notwithstanding that the award may be difficult to assess…” (Citations omitted)

On the other hand, the case law also recognises that damages must be proved with a degree of precision which reflects the proof that is reasonably available to the parties: State of New South Wales v Moss (2000) 54 NSWLR 536 at [72]; Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 77 ALJR 768 at [38]. In Schindler Lifts Australia Pty Ltd v Debelak (1989) 89 ALR 275 at 319, Pincus J noted that “if the evidence called on behalf of [the plaintiff] fails to provide any rational foundation for a proper estimate of damages, the Court should simply decline to make one”. That approach was approved by Brooking J in JLW (Vic) Pty Ltd v Tsiloglou [1994] 1 VR 237 at 243 and by the Court of Appeal in Troulis v Vamvoukakis [1998] NSWCA 237 where Gleeson CJ observed that, where damages were susceptible of evidentiary proof, but there was an absence of raw material to which good sense may be applied, “[j]ustice does not dictate that … a figure should be plucked out of the air”. That decision has been approved in subsequent cases, including McCrohan v Harith [2010] NSWCA 67 at [128], where McColl JA (with whom Campbell JA and Handley AJA agreed) held that an estimate of damages, in the nature of a “guess”, should not be made where precise evidence of the damages suffered could have been adduced, but was not. I followed that decision in Re Hair Industrie Penrith Pty Ltd, Hair Industrie Merrylands Pty Ltd [2015] NSWSC 1578 at [20], on which I have drawn for the summary which appears above.’

100. The owners contend that the primary dwelling was left vacant for more than 20 weeks as a result of ongoing construction work to the granny flat at the rear of the primary dwelling. However:

1. There is no evidence - merely the owner’s assertion - that the building work was a cause of the vacancy;

2. There is no evidence about the impact of the building work on the occupants of the primary residence;

3. There is no evidence of the dates the primary residence was vacant;

4. There is no evidence of the rent at the time the tenants vacated the primary residence;

5. When questioned by the Tribunal, the owner described the primary residence as an older style residence with 3 bedrooms, 2 bathrooms and 2 car spaces. This is not sufficient evidence of its size, amenities and finishes to draw a conclusion as to whether the advertisements of the 2 properties relied on by the owner are sufficiently comparable (HO1-74);

6. The 2 advertisements provide only the barest description of the properties said to be comparable to the granny flat;

7. Therefore, I cannot be satisfied that the rent of those 2 properties is an indication of the likely rent of the primary dwelling. Moreover, there is no evidence of the date of the advertisements.

8. There is no expert evidence or market appraisal of the likely rent of the primary residence between 21 November 2022 and 5 May 2023.

101. I also dismiss the claim regarding the granny flat’s lost rent:

1. The Rental Proposal relied on by the owners for the granny flat is dated July 2023 (HO1-71). It provides the rent for 8 rentals listed between April and July 2023. It provides no evidence of rent between November 2022 and March 2023, the relevant period; and

2. The Rental Proposal provides only the briefest of information regarding the properties said to be comparable to the owner’s property. This is not a sufficient basis to conclude that the granny flat could attain a comparable rent.

102. Further, any claim for lost rent must assess the income the owners would have obtained, less the expenses they would have incurred in renting the properties (i.e. their net profit) otherwise the owners would be overcompensated: Beechwood Homes (NSW) Pty Ltd v Hassos [2023] NSWCATAP 184.

103. The owners did not provide evidence of such expenses.

104. All the aforementioned evidence was reasonably available to the owners. They have provided no rational foundation for a proper estimate of damages. Therefore, I decline to make one.

CONCLUSION

105. The total amount payable to the builder is $22,597.00:

1. $18,898.00 – invoice #11071

2. $3,699.00 – invoice #10259

106. The total amount payable to the owners is $20,250.00:

1. $5,750.00 – items withdrawn from the contract

2. $14,500.00 – reimbursement of the variation claim.

107. The order is therefore that the owners pay the builder $2,317.00 on or before 21 April 2024.

108. The applications of both parties are otherwise dismissed.

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

Registrar

Decision last updated: 20 December 2024