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Fordham v SP & H Hobson (Dewsash) (Home Building) [2013] NSWCTTT 590 (20 November 2013)

CONSUMER, TRADER AND TENANCY TRIBUNAL

Home Building Division

APPLICATION NOS:

HB12/43117 and HB12/43122 APPLICANT/CROSS-

RESPONDENT:

Mr James Arthur Fordham

RESPONDENT/CROSS-APPLICANT:

Dewsash Pty Ltd t/as SP & W Hobson (Dewsash)

APPLICATIONS:

For payment of money

HEARING:

14 & 15 October 2013 APPEARANCES:

Mr Young of Counsel for Mr Fordham

Mr Shepherd of Counsel for Dewsash

LEGISLATION: Home Building Act 1989 [the Act]

Consumer Trader and Tenancy Tribunal Act 2001 (the CTTT Act)

ORDERS

1. Dewsash Pty Ltd t/as SP & W Hobson is to pay James Arthur Fordham the sum of $82,010.05 by 16 December 2013.

2. If the parties are unable to reach an agreement on costs, they are to

exchange and file submissions in relation to the issue by 23 December 2013, specifying in their respective submissions whether they consent to the issue of costs being determined on the papers.

REASONS FOR DECISION

BACKGROUND

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1. These applications were heard after Taylor SC DCJ allowed in part Mr

Fordham’s appeal to the District Court of New South Wales against orders made by the Tribunal on 17 March 2011 in HB 09/25483 (Mr

Fordhams’s original application) and HB 10/21874 (Dewsash’s original cross-application). On Mr Fordham’s application the Tribunal had ordered that Dewsash was to pay Mr Fordham $8,000.00 immediately.

On Dewsash’s application the Tribunal ordered that Mr Fordham was to pay Dewsash $7,000.00 immediately and that Mr Fordham was to pay

Dewsash’s costs as agreed or assessed. The latter order was stayed for 21 days for the parties to make submissions on costs and was affirmed by an order made on 21 April 2011.

2. On 27 July 2012 Taylor SC DCJ set aside the Tribunal orders and

remitted the matter to the Tribunal for rehearing in accordance with his reasons. (See Fordham v Dewsash Pty Ltd t/as S.P & W Hobson [2012] NSWDC 109).

3. The dispute in these matters concerns a contract between the parties

entered into on 25 June 2002 for the building of a house on Mr Fordham’s land. The contract price was $187,986.75 with no deposit and a schedule of progress payments, the first of which was

$50,000.00 to be paid when the slab and underfloor plumbing were complete. In April 2003, before the slab was poured, Dewsash gave Mr

Fordham invoices totalling $36,000.00, of which Mr Fordham paid $29,000.00.

4. After the slab was poured in May 2003, a dispute arose concerning the adequacy of the slab and expert reports were ultimately obtained. After

some time, Dewsash’s expert Mr Simpson and Mr Fordham’s expert Mr Noonan agreed on a rectification procedure involving the pouring of a topping slab to provide some stiffening of the structure and to allow for

a shower set down. Dewash did not undertake this work. Ultimately, Mr Fordham had the slab demolished.

5. Mr Fordham’s application is for damages in the form of completion and

rectification costs. Dewsash’s cross application is for payment of

$7000.00, being the balance of the claimed cost of work undertaken and the difference between the $36,000.00 invoiced to Mr Fordham

and the $29,000.00 paid by him.

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ORIGINAL PROCEEDINGS

6. In the original proceedings the Tribunal, with the consent of the parties, dealt only with the issue of liability and that part of the quantum which

dealt with the costs of the slab. The balance of the quantum was to be dealt with at a later stage.

7. In his decision in relation to Mr Fordham’s appeal to the District Court, Taylor SC DCJ summarised the Tribunal’s consideration of the issues

and its findings as follows:

“8. The Tribunal member determined that the matter required him to determine

three issues:

(a) Was the slab as built a breach of the building contract;

(b) Did the plaintiff [that is, Mr Fordham] mitigate his loss if there was a breach; and

(c) Which party had the right to terminate the contract.

9. In the course of dealing with these three issues, the Tribunal member made findings which can be summarized as follows:

(i) Contrary to the defendant’s [that is, Dewsash’s] contention, there was no agreement prior to 28 April 2003 (when the invoices were supplied) that $36,000 was payable upon the pouring of the main slab with the veranda slab to be

poured separately.

(ii) On about 28 April 2003 the contract was varied by agreement (or by the

plaintiff allowing the defendant to imagine that he had agreed) so that a further amount of $7,000 (in addition to the $29,000 paid on that day) was to be paid on completion of the slab.

(iii) The refusal by the plaintiff to pay the additional $7000 indicated an unwillingness by the plaintiff to be bound by the contract as agreed and

empowered the builder to stop work .

(iv) This variation of the contract was an informal variation, such that the builder

could not assert a right to payment under the contract but was entitled to rely on a quantum meruit.

(v) The plaintiff was estopped from disputing that the value of the slab was an additional $7,000 in addition to the $29,000 already paid.

(vi) The builder was entitled to succeed on the cross-claim for $7,000.

(vii) There is an argument that the slab satisfied the contractual requirements, but

because other aspects of the case are fatal to the plaintiff’s claim the question of breach of contract need not be decided.

(viii) The compromise reached between the experts about a topping slab was binding on the parties and governed their rights and responsibilities.

(ix) The need to strengthen the slab was a consequence of the way the builder constructed the slab and so the builder must bear the cost of the extra works.

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(x) The only evidence of the value of the extra works was Mr Simpson’s estimate of $8,000, which was accepted.

(xi) Were there a breach of contract by the builder, the plaintiff had a duty to take all reasonable steps to mitigate his loss, by selecting the cheapest solutions

reasonably available. (xii) The plaintiff’s expert, Mr Noonan, withdrew his approval to the slab topping

even though he had agreed previously. It was possible that he had succumbed to pressure from the plaintiff, and as a result, little weight could be given to Mr Noonan in measuring reasonableness. Mr Simpson seemed ready, willing and

able to certify the slab topping, and his evidence was preferred to Mr Noonan’s. (xiii) The plaintiff unreasonably refused to proceed with the topping slab and

failed to mitigate his loss, which would otherwise be $8,000. (xiv) The plaintiff should pay the defendant’s costs.”

THE APPEAL

8. Mr Fordham appealed the Tribunal’s decision on thirteen grounds, asserting the following errors, which are set out in the Court’s decision

as follows:

“1. The finding that there was an agreement for the Plaintiff to pay $36,000 on

completion of the slab.

2. The finding that the Defendant is entitled to a quantum meruit.

3. The finding that the Plaintiff is estopped from asserting that the value of the work related to the completion of the slab was other than $7,000.

4. The finding that the Defendant was entitled to stop work until $7,000 was paid.

5. The Tribunal failed to make any finding as to the Plaintiff’s claim for breach of contract.

6. The finding without evidence that Mr Simpson would have certified the slab as built and will certify the slab as augmented.

7. The finding that there was a compromise agreement binding on the parties.

8. The finding without evidence that Mr Noonan resiled from his previous opinion

offered.

9. The finding without evidence that Mr Simpson had designed the topping slab

and was ready, willing and able to certify it.

10. The finding without evidence that the Plaintiff’s entitlement to a quantum of

loss of $8,000.

11. The finding that the Plaintiff had failed to mitigate his loss.

12. The finding without evidence that the Plaintiff’s claim demolition and reconstruction was (as pleaded) $91,000 in round figures.

13. The Tribunal treated the hearing as a final hearing when it was a hearing on liability and part of quantum only. “

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9. The Court found grounds 1, 2, 3, 4 and 5 established. The effect of this is that findings (ii) to (vii) of the Tribunal’s findings as set out above

were found to be in error. Grounds 6 and 9 were rejected, as it was accepted that there was evidence on which the Tribunal could conclude

that Mr Simpson had designed the slab and was willing to certify it as built. Ground 7 was also rejected on the basis that there was sufficient evidence to enable a finding that a compromise agreement was

reached in relation to the pouring of a topping slab.

10. In relation to Ground 8, the Court found that it was not open to the Tribunal to attribute to Mr Noonan the motivation that he had changed his mind about the topping slab because Mr Fordham’s solicitors had

encouraged him to do so. In relation to Ground 10, the Court found that there was some evidence that the topping slab may cost $8,000.00 and

the fact that a finding of a cost of $9,000.00 or $10,000.00 may sit more comfortably with the evidence was not sufficient to allow a finding that the cost of $8,000.00 as found by the Tribunal had no evidentiary

basis. In relation to Ground 11, the Court found that there was a basis for the Tribunal to find that by not installing a topping slab Mr Fordham

had failed to mitigate any loss to which he was entitled. The Court therefore did not reject this finding.

11. In relation to Ground 12, the Court found that the Tribunal’s decision on costs did not miscarry because of a failure to recognise that the claim

(as then articulated) was for approximately $58,000.00 rather than $91,000.00. However, His Honour noted that the decision on costs was affected by findings of the Tribunal rejected under appeal Grounds 1-5,

and the Tribunal would accordingly need to revisit the question of costs.

12. In relation to Ground 13, the Court found that the proposal of the

parties to separate the cost of the slab from the amount of damages

suffered by Mr Fordham was misconceived and that the Tribunal needed to determine whether there was a breach of contract in order to

determine whether Mr Fordham was entitled to an award of $8,000.00 on the primary claim, which would have an effect on the appropriate costs.

13. The Court allowed the appeal, set aside the orders of the Tribunal,

remitted the matter to the Tribunal for a rehearing in accordance with the Court’s reasons pursuant to subsections 67(3)(b) and (4) of the CTTT Act and ordered that the costs of the appeal be costs of the

proceedings in the Tribunal.

CURRENT PROCEEDINGS

14. Subsequent to the orders made in relation to Mr Fordham’s appeal, both proceedings were initially listed for directions on 23 October 2012

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and for further directions on 30 November 2012, 5 April 2013 and 3 June 2013. The matters were heard on 14 and 15 October 2013.

ISSUES

15. The issues to be determined in these proceedings are:

(a) Was there a breach of the contract? (b) If so, was the contract validly terminated or was a repudiation of the

contract validly accepted? (c) If the contract was validly terminated, what is the proper

assessment of damages?

(d) Is Dewsash entitled to a payment of $7,000.00 on a contractual, quantum meruit or some other basis?

(e) What order should be made in relation to costs?

EVIDENCE AND SUBMISSIONS

16. The evidence before the Tribunal in the current proceedings includes Volumes 1 to 3 of the Appeal Book, which the parties agreed represents the evidence which was before the Tribunal in the original

proceedings and on which they rely.

17. In addition, Mr Fordham provided:

A statement dated 7 March 2013, with attachments;

Reports dated 13 March 2013 and 13 June 2013 by Mr Seib of

GJ Seib Pty Ltd, with attachments, which are in relation to estimated building completion costs;

A report dated 12 March 2013 by Mr Noonan of Barnson Pty Ltd, with attachments, which is in relation to costs of slab rectification

and replacement.

18. Documents tendered during the hearing and marked as exhibits are:

A1: A letter dated 5 December 2012 from Mr Fordham’s solicitor,

Blackwell Short Lawyers to Dewsash’s solicitor, Creagh Lisle Solicitors, stating that Mr Fordham accepts a repudiation of the

contract by Dewsash, without prejudice to Mr Fordham’s assertion that the contract had been validly terminated by letter dated 4 August 2008 or that he had accepted Dewsash’s

repudiation by the commencement of the proceedings;

A2: A copy of Dewsash’s Points of Defence dated 6 October 2009, which were not in the Appeal Book;

A3: A statement dated 14 April 2010 by Mr Noonan and

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A4: An email dated 15 October 2013 (that is, the second day of

hearing) from Mr Seib to Mr Fordham’s solicitor, revising the estimated cost to complete from $171,350 to $165,110 in 2013

terms or $157,680 in 2009 terms.

19. Counsel for Mr Fordham also provided written submissions in relation

to the scope of the current proceedings, the issues to be decided, liability and damages.

20. Dewsash did not provide any additional evidence. Written submissions

in relation to the scope of the current proceedings, the issues to be

decided, liability and damaged were provided, together with a chronology.

21. At the end of the hearing, the parties were given an opportunity to

make written submissions in relation to whether costs associated with

rectifying external plumbing and the septic tank could be included in the completion costs. The Tribunal received a written submission from Mr

Fordham’s legal representative on 22 October 2013. No submission was made by or on behalf of Dewsash.

JURISDICTION

22. I have first considered whether the Tribunal has jurisdiction to deal with each of the applications.

23. Subject to findings made below in relation to the plumbing and septic tank issues, I find that the Tribunal has jurisdiction to deal with Mr

Fordham’s claim pursuant to section 48K(7) of the Act, as it was in force on 28 May 2009, the date on which Mr Fordham’s original application was lodged.

24. I am not satisfied that the Tribunal has jurisdiction to deal with

Dewsash’s cross application. This is because of the operation of subsection 48K(8) of the Act, the current wording of which is the same as was in force on 4 April 2010, the date of Dewsash’s original

application. The effect of subsection 48K(8) is that the Tribunal does not have jurisdiction to deal with an application brought by a supplier of

building services if the date on which the claim was lodged is more than three years after the date on which the contract was entered into. Although I have dismissed Dewsash’s application, its entitlement to a

credit for the value of the building work undertake is reflected in the orders made in favour of Mr Fordham.

FINDINGS AND REASONS

Was there a breach of the contract?

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25. It is not in dispute that the parties entered into a building contract on 25 June 2002. The contract price was $187,986.75. Warranties under

clause 38 of the contract included warranties that the building works would be performed in a proper and workmanlike manner and in

accordance with the plans and specifications, and that the works would be done with due diligence and within the time stipulated in the contract or if no time stipulated, within a reasonable time. These warranties and

others included in clause 36 reflect the statutory warranties set out in section 18B of the Act.

26. Clause 33 of the contract allows a notice to be given if a party is in

substantial breach. The notice must state details of the breach and

advise that if the breach is not remedied within 10 working days, the party giving notice is entitled to end the contract. If the breach is not

remedied within 10 working days, a notice of termination may be given.

27. Mr Fordham’s Points of Claim allege that Dewsash breached the

contract by:

Building a defective slab in that vegetation was in three locations under the slab, settlement of the slab from 1mm to 9mm had occurred in several locations, the slab had risen 2mm to 4mm at

15 locations and 8mm to 9mm at three locations, there had been no provision for wet area set downs and inappropriate tie rods

had rusted;

Failing to rectify the slab;

Ceasing to work on the site and

Abandoning the site.

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28. Dewsash essentially argues that the defects in the slab were minor and capable of rectification and that any defects did not constitute a

substantial breach justifying termination of the contract under clause 33. Dewsash further argues that it was prevented from carrying out the

building works.

29. Regardless of whether the slab as built constitutes a substantial breach

of the contract, in the original proceedings the Tribunal found that the compromise solution concerning the slab which was reached by the

parties’ experts was binding upon them and governed their rights and responsibilities. The Court upheld this finding on appeal. I am therefore bound by this finding.

30. I am also bound by the Court’s findings in relation to Grounds 1- 5 of

the appeal. Specifically, I am bound by the finding that there was no evidence to support a finding that Mr Fordham had agreed to pay $7,000.00 to Dewsash on completion of the pouring of the main slab

and that Dewsash was empowered to stop work until $7,000 was paid.

31. In the original proceedings, the Tribunal found that Dewsash did not undertake pouring of the topping slab because Mr Fordham did not pay $7,000.00. The Tribunal stated [at page 5]:

“I think it is fair to say that the stick ing point was the disagreement over the outstanding $7,000.00. Mr Hobson [that is, Dewsash’s director] insisted on it and

Mr Fordham agreed to pay it. It seems clear to me that, if they had agreed on that point, the work would have recommenced on the basis of the compromise plan agreed on by the engineers.”

32. This conclusion was not disturbed on appeal and is supported by

documents included in the Appeal Book, including a letter dated 29 April 2008 sent by Dewsash’s then solicitor to Mr Fordham’s then solicitor, offering to attend to the rectification work, with payment of

$7,000.00 to be made upon the work being signed off by Mr Simpson.

33. The consequence of the Tribunal’s finding concerning this issue in the original proceedings and the Court’s findings in relation to Grounds 1 -5, is that Dewsash could not refuse to undertake the agreed

rectification work because Mr Fordham had not paid $7,000.00. I am not satisfied that there is any other reason for Dewsash did not

undertake the agreed rectification work of pouring the topping slab which, as found by the Tribunal in the original proceedings, was an agreement binding on the parties. Specifically, I am not satisfied that

Dewsash was prevented or inhibited from pouring a topping slab. Rather, I find that Dewsash did not undertake this work because Mr

Fordham did not pay $7,000.00 to which Dewsash had no entitlement.

34. I am satisfied that the failure to pour the topping slab constitutes a

breach which entitled Mr Fordham to issue a notice under clause 33 of the contract. I am satisfied that the failure to undertake this rectification

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work after it had been agreed on by the parties constitutes a substantial breach of the contract.

Was the contract validly terminated or was a repudiation of the contracted

validly accepted?

35. I find that Mr Fordham was entitled to terminate the contract pursuant

to clause 33 when Dewsash failed to remedy the breach by pouring the topping slab. I find that the notice dated 4 August 2008 is a valid

termination notice for substantial breach.

36. I am further satisfied that at the time the contract was terminated,

Dewsash was in repudiatory breach of the contract, in that it had ceased work because of Mr Fordham’s non-payment of $7,000.00 to

which Dewsash was not entitled. I am satisfied that the commencement of the original proceedings for damages represents a valid acceptance by Mr Fordham of Dewsash’s repudiation of the contract.

What is the proper assessment of damages?

37. I am satisfied that Mr Fordham has suffered loss arising from

Dewsash’s breach of contract. I find that the measure of damages for

Mr Fordham’s loss is to be calculated as:

(a) The cost of completion (made up of what Mr Fordham has paid to build the house so far and, as the building works are not yet complete, an estimate of what he has yet to pay to complete the

works) plus

(b) The slab rectification cost less

(c) What the house would have cost if Dewsash had completed the

works; that is, the original cost.

38. This is subject to Mr Fordham’s obligation to mitigate his loss. I will deal with mitigation in relation to slab rectification below. However, an issue concerning mitigation which arises squarely from the facts in this matter

is the delay in completing the building works. As noted above, the pouring of the slab occurred in 2003. The agreement to pour a topping

slab was reached in late 2007 and early 2008. Neither party appears to have been in any particular hurry to reach a final settlement of the slab issue until then. The contract was terminated in August 2008 after

Dewsash was given an opportunity to undertake the agreed slab rectification work. Mr Fordham then commenced proceedings in May

2009. This was well within the limitation period. Since that time, Dewsash commenced its own proceedings and time has elapsed in the prosecution of both matters.

39. In his statement dated 7 March 2013, Mr Fordham states that the delay

in completing the building works was because the expense associated

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with litigation means that he can only proceed with the building when other funds become available and because as an owner builder he

often had to wait for tradesmen who are otherwise engaged by their regular builders. Under cross-examination, Mr Fordham indicated that

other reasons he had difficulty getting contractors are that the building site is out of town and that the contractors are aware of his dispute with Dewsash.

40. Overall, I am not satisfied that the delay in completing the building

works represents a failure by Mr Fordham to mitigate any loss arising from Dewsash’s breach. Subject to findings in relation to slab rectification, I am not satisfied that Mr Fordham has otherwise failed to

mitigate loss arising from Dewsash’s breach. Further, I am satisfied that damages should be assessed as at the date of the decision – that is, in

2013 terms – and not in 2009 terms.

41. In relation to damages, Mr Fordham relies on his statement and reports

by Mr Seib of GJ Seib Pty Ltd in this regard. As far as Mr Seib’s evidence is concerned, I am satisfied that his reports (supplemented by

Exhibit A4, being an email Mr Seib sent to Mr Fordham’s solicitor subsequent to giving oral evidence) constitute the best evidence of the actual and estimated completion costs. I am satisfied that Mr Seib’s

evidence can be accepted as expert evidence in the field of quantity surveying.

42. I have considered each of the factors relevant to the assessment of

damages in turn.

Completion costs:

43. This comprises two sums: actual costs to date (not including the slab,

but including external plumbing and septic tank rectification work) and

estimated costs to complete.

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44. I find that in accordance with Appendix H of Mr Seib’s report dated 13 March 2013, the actual costs incurred by Mr Fordham amount to

$222,276.80. While this differs from Mr Fordham’s estimate in his 7 March 2013 statement [at para 47], Mr Fordham’s estimate does not

include bricks or windows which he supplied and does include some modifications to the original plan for which Dewsash has no responsibility.

45. As noted above, part of the actual costs incurred relate to the cost of

new external sewer drainage and repair of the septic tank. According to Mr Fordham’s statement, this work was required by Council and was necessitated by defective work being undertaken by Dewsash. The

invoices attached to Mr Fordham’s 7 March 2013 statement (at 23, 24 and 25) indicate that Mr Fordham paid $12,100.00 for this work,

although only $12,000.00 has been included in the actual costs total prepared by Mr Seib.

46. I find that the work required to rectify the septic tank and external plumbing was undertaken to rectify defective work, rather than work

required to complete incomplete work. My finding in this regard is supported by paragraphs 26 to 34 of Mr Fordham’s statement of 7 March 2013 and relevant attachments to the statement. I am satisfied

on the material provided that the external plumbing work undertaken by Dewsash was not undertaken in a proper and workmanlike manner in

breach of the statutory warranty set out in section 18B(a) of the Act. I am further satisfied that the cost to rectify that work is reasonable. The claim in relation to the external plumbing was included in the

documentation attached to Mr Fordham’s original application. I am satisfied that the cost of rectifying the external plumbing can be

considered as part of the damages in these proceedings.

47. However, the issue with the septic tank was discovered, according to

Mr Fordham’s 7 March 2013 statement, in December 2010. This was after the original proceedings had been heard. By this time it was too

late to amend the application to include a claim in respect of the septic tank. I am not satisfied that the application can now be amended to seek damages in respect of defects with the septic tank. Whether Mr

Fordham can lodge a fresh application in respect of the septic tank depends on whether the statutory warranty period in respect of the

work has expired and on whether section 18E(2) of the Act applies.

48. As I am not satisfied that the cost of septic tank rectification work can

be considered as part of this application, I have deducted $8,700 (the sum specified in an invoice dated 11 December 2012 which is

attachment 25 to Mr Fordham’s 7 March 2013 statement) from Mr Seib’s calculation of actual costs incurred by Mr Fordham, resulting in the actual cost figure being reduced to $213,576.80.

49. I find that in accordance with Item A of Appendix K of Mr Seib’s report

dated 13 March 2013 (as adjusted following Mr Seib’s email of 15

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October 2013), the estimated cost to complete the building works in 2013 terms are $165,110.00. I am satisfied that this is a reasonable

estimate to complete a building in accordance with the contract and original plans. I am also satisfied that in electing to proceed as an

owner builder, Mr Fordham’s costs are less than they would be if he had engaged another builder.

50. Overall, I find that the total cost to complete is $378,686.80.

Slab rectification cost:

51. As noted above, after termination of the contract, Mr Fordham did not

proceed with the compromise solution. Rather, he demolished and reinstalled the slab. In accordance with the Court’s finding concerning

Ground 8 of the Appeal, it is not open to me to find that Mr Fordham’s engineer Mr Noonan resiled from his support for the compromise plan because he had been encouraged to change his mind by Mr Fordham’s

solicitors. The Court stated that it would be a matter for the Tribunal to decide whether it made the same finding in circumstances where it was

not entitled to reject Mr Noonan’s revised view on the basis of the alleged possibility that Mr Noonan had succumbed to pressure from Mr Fordham.

52. Mr Noonan’s letter dated 11 June 2008 to Mr Fordham’s solicitor

indicates that he resiled from his previous support for the topping slab solution because of a concern for the liability of a new builder on the project and because the cost of rectification may not be significantly

less than that of a new slab. Significantly, as noted in the Court’s decision on appeal, Mr Noonan’s reasons for changing his mind about

the topping slab “were not relevantly technical” in that he did not find that the topping slab would be defective or inappropriate.

53. I am satisfied that the topping slab was a reasonable rectification procedure, as it had been agreed on between the parties’ experts. The

issue of liability for a new builder did not arise, as Mr Fordham proceeded as an owner builder after termination of the contract. I am satisfied that it was open to him to have a topping slab installed. In the

original proceedings, the Tribunal found that in not installing the topping slab, Mr Fordham failed to mitigate his loss. The Court rejected Ground

11 of the Appeal, which challenged this finding. Accordingly, I find that in electing not to proceed with the reasonable rectification procedure which had been previously agreed to by Mr Noonan, Mr Fordham failed

to mitigate his loss.

54. Ground 10 of the Appeal challenged the Tribunal’s finding in the original proceedings that the cost of rectification of the slab was $8,000.00. The Court rejected this ground of appeal, finding that the

fact that a finding of $9,000.00 or $10,000.00 may have sat more comfortably with the evidence given during the hearing was not

sufficient to allow the Court to find that the cost of $8,000.00 for the

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topping slab as found by the Tribunal had no evidentiary basis. In these circumstances, having found that the topping slab was a reasonable

rectification procedure and that in not installing it, Mr Fordham had failed to mitigate his loss, I am bound to apply the finding in relation to

cost that the Tribunal made previously; that is, that the slab rectification cost is $8,000.00.

Original cost:

55. Mr Seib calculated the total original cost of the building as $304,676.75, being the sum of the contract price of $187,986.75 and the estimated cost of exclusions. I accept Mr Seib’s calculation in this regard, as I am

satisfied that the estimated cost of exclusions is reasonable.

Conclusion in relation to damages:

56. I have found the Dewsash committed a breach of contract in not

carrying out the compromise agreement. I have further found that the contract was properly terminated. I find that Mr Fordham has

established an entitlement to damages in the sum of $82,010.05, being the sum of the completion cost (including the cost of external plumbing rectification but not including the cost of septic tank rectification) and

the slab rectification cost, less the original cost.

Is Dewsash entitled to a payment of $7,000 on a contractual, quantum meruit or some other basis?

57. While I have dismissed Dewsash’s cross application for the reasons set out above under the heading of “Jurisdiction”, the full value of the work

undertaken by Dewsash is accounted for in the assessment of damages, under the heading of the original cost.

What order should be made in relation to costs?

58. Mr Fordham has been substantially successful, meaning that in general terms he would be entitled to a costs order in his favour. However, as advised at the hearing, the issue of costs remains open for further

submissions. The parties are encouraged to resolve the issue through settlement discussions. If the issue is settled, the Tribunal will make an

order for costs by consent in chambers. If the parties cannot agree on costs, they are to comply with order 2 above.

Kim Rosser

Senior Member Consumer, Trader and Tenancy Tribunal 20 November 2013