Webb v Spectre Group Pty Ltd (in liquidation) - [2018] VSC 704

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

JUDICIAL REVIEW AND APPEALS LIST

S CI 2017 05182

HARVEY AND SOPHIE WEBB	Plaintiffs
v
SPECTRE GROUP PTY LTD (ACN 133 267 679) (in liquidation)	Defendant

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JUDGE:	GARDE J
WHERE HELD:	Melbourne
DATE OF HEARING:	26 October 2018
DATE OF JUDGMENT:	21 November 2018
CASE MAY BE CITED AS:	Webb v Spectre Group Pty Ltd (in liquidation)
MEDIUM NEUTRAL CITATION:	[2018] VSC 704

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DOMESTIC BUILDING – Claim by owners for costs of completion of a house – Assessment of damages – Actual cost of completion of building works – Expert estimates of completion costs – How assessed – No defence that actual costs unreasonable, excessive or of failure to mitigate – Failure to disclose a path of reasoning – Victorian Civil and Administrative Tribunal Act 1998 (Vic) ss 148, 117(5).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr M Bromley
For the Defendant	No appearance

HIS HONOUR:

Introduction

The plaintiffs are the owners of a house in Toorak that was partially constructed by the defendant (‘the builder’) under a major domestic building contract (‘the contract’).

In proceeding no BP1631/2015 (‘the Tribunal proceeding’) in the Victorian Civil and Administrative Tribunal (‘the Tribunal’), the owners were successful in their claims for damages against the builder for the cost of completing the construction of the house, and for rectifying the defective workmanship of the builder.

In a determination dated 24 November 2017, the Tribunal ordered the builder to pay $128,462.24 to the owners, together with the retention sum of $52,272.85.[1]
[1]Spectre Group Pty Ltd v Webb [2017] VCAT 1944 (‘the Tribunal decision’).

The owners seek leave to appeal under s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (‘the VCAT Act’). They say that the Tribunal erred in law in quantifying the award of damages for completion. They seek to have the decision of the Tribunal set aside and to have the quantification of damages for completion remitted to the Tribunal for reassessment.

The builder has gone into liquidation but has domestic building insurance. The owners have been granted leave to proceed with this appeal under s 471B of the Corporations Act 2001 (Cth). The liquidator of the builder advised the Court that he did not intend to appear and had no interest in the proceeding.

Mr Trent Valentine, the director of the builder, filed a separate proceeding on behalf of the builder also seeking leave under s 148 of the VCAT Act to challenge the Tribunal decision. That proceeding has been dismissed.

The Tribunal decision

The Tribunal proceeding was heard over nine days with the owners represented by counsel, and the builder by Mr Valentine. The owners’ evidence included the evidence of the owners themselves, their architect, Mr Ryan a building consultant, an electrician, and Mr Kenneally the completion builder. The builder’s evidence included the evidence of Mr Valentine, two employees, Mr Buchanan a quantity surveyor and a building consultant.

The Tribunal held…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] VSC 704
Decision Date: 21 November 2018

CaseChat Overview and Summary

The case of Webb v Spectre Group Pty Ltd (in liquidation) involved the owners of a property seeking the costs of completion of a house. The matter was heard by the Supreme Court of Victoria. The owners, Mr and Mrs Webb, had engaged Spectre Group Pty Ltd, a builder, to construct a house on their property. However, due to financial difficulties, Spectre Group Pty Ltd went into liquidation before the construction was completed. The Webbs sought to recover the costs of completing the building works from the liquidator of Spectre Group Pty Ltd.

The primary legal issue before the court was the assessment of damages for the completion of the building works. The Webbs provided expert estimates of the costs required to complete the construction, and the court had to determine whether these estimates were reasonable and necessary. The court also needed to address the liquidator's argument that the actual costs of completion were unreasonable, excessive, or that the Webbs had failed to mitigate their losses. Furthermore, the court examined whether the liquidator had failed to disclose a path of reasoning in accordance with sections 148 and 117(5) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic).

The court found that the expert estimates provided by the Webbs were reasonable and necessary for the completion of the building works. It rejected the liquidator's argument that the costs were unreasonable, excessive, or that the Webbs had failed to mitigate their losses. The court also held that the liquidator had not disclosed a path of reasoning as required by the relevant sections of the Victorian Civil and Administrative Tribunal Act 1998 (Vic). Consequently, the Webbs were awarded damages for the costs of completing the building works. The court ordered the liquidator to pay the Webbs the amount of the expert estimates, less any amounts that could have been reasonably avoided by the Webbs.

Orders