Kaloriziko Pty Ltd as trustee for Ryde Combined Unit Trust v Calibre Construction Group Pty Ltd (No 2)

1. [1]

   MITCHELMORE JA: I agree with Adamson JA.

2. [2]

   KIRK JA: I agree with Adamson JA.

3. [3]

   ADAMSON JA: The appellants, Kaloriziko Pty Ltd as trustee for Ryde Combined Unit Trust (the developer) and one of its directors, Camile Chanine (Mr Chanine), appeal against a decision of Stevenson J (the primary judge), awarding damages to the first respondent, Calibre Construction Group Pty Ltd (the builder). In the Court below, the builder claimed damages against the developer for various breaches of a design and construct contract (the contract) for the development of an apartment complex in Ryde. The developer argued that the builder’s damages ought be reduced for payments made for variations, which were not actually variations; liquidated damages for delay; and to take account of the benefit obtained by the builder by reason of a settlement by deed of its claims against parties which had a coordinate liability with the developer.

4. [4]

   The primary judge awarded damages to the builder in the sum of $2,137,430.86 plus interest of $568,829.14. The developer claims on appeal that this amount ought be reduced by the following amounts:

5. [5]

   The grounds give rise to five issues as to whether the primary judge erred in finding that:

   1. (1)

      the developer had “approved” and paid certain “variations” and had, therefore, “agreed to vary the work under contract (WUC)”, such that it was now not open to the developer to challenge this “approval” (grounds 1-3);

   2. (2)

      the parties had agreed to vary the contract to exclude the cost of consultants’ fees (grounds 4-5);

   3. (3)

      the date for practical completion of the contract works had been varied separately from the periods for which an extension of time had been granted (grounds 6-7); and

   4. (4)

      his Honour could not assess whether the deed (as defined below) discharged any co-ordinate liability between the mortgagors and the developer and that therefore no reduction in the damages to be awarded to the builder ought be made on that basis (grounds 8-13).

   5. (5)

      by what amount ought the builder’s damages be reduced to take account of the benefit it obtained by the deed (grounds 14-15).

6. [6]

   For the reasons that follow, the appeal must be allowed and the judgment ordered by the Court below set aside and replaced by a judgment in favour of the developer.

7. [7]

   The principal judgment delivered by the primary judge is Calibre Construction Group Pty Ltd v Kaloriziko Pty Ltd atf Ryde Combined Unit Trust; Kaloriziko Pty Ltd atf Ryde Combined Unit Trust v Calibre Construction Group Pty Ltd (No 2) [2025] NSWSC 593. References to paragraph numbers in this judgment will be referred to as “J”. The primary judge also gave a further judgment: Calibre Construction Group Pty Ltd v Kaloriziko Pty Ltd atf Ryde Combined Unit Trust; Kaloriziko Pty Ltd atf Ryde Combined Unit Trust v Calibre Construction Group Pty Ltd (No 3) [2025] NSWSC 646, correcting some matters in the original judgment but it is unnecessary to refer to it.

Background facts

1. [8]

   The developer was incorporated in 2015 with Mr Chanine as its director. In October 2016, the developer purchased land in St Anne’s Street, Ryde (the site) and obtained Development Consent No LDA2015/0654 in respect of that site. In July 2017, the Development Consent was subsequently amended.

2. [9]

   The conditions of the original Development Consent included the following conditions relevant to infrastructure:

3. [10]

   The references to infrastructure in the Development Consent are relevant to issue (1) (and grounds 1-3): whether the builder was entitled to retain the amounts paid for purported variations because they were “excluded items” under the contract, as they amounted to “infrastructure upgrades” (addressed below).

4. [11]

   In November 2017, the developer and the builder entered into the contract pursuant to which the builder agreed to design and construct on the site a multi-storey, mixed use residential and commercial development comprising four towers and a hundred units. The Contract comprised a Formal Instrument of Agreement, General Conditions in the AS 4902-2000 format and ancillary documents: J [1]. The contract required the developer to retain 5% of the contract sum as security (retention) and for the retention to be paid to the builder over a period of 12 months after the issue of a certificate of practical completion. The retention was to be “held in trust” by the developer for the builder. It was common ground that the developer breached the contract by failing to hold the retention on trust for the builder. The terms of the contract are addressed separately below.

5. [12]

   On 14 February 2018, Sydney Water issued a notice of requirements for a compliance certificate pursuant to s 73 of the Sydney Water Act 1994 (NSW). The requirements included adjustment of the water main, sewer main and stormwater, if required by Sydney Water as a consequence of the development on the site. The notice also said:

6. [13]

   On 20 August 2018, the construction certificate was issued. Accordingly, the original contracted date for practical completion was 20 April 2020, as the contract defined the date as the date 20 months from the issue of the construction certificate (see further below).

7. [14]

   On 27 August 2018, approved street lighting plans for the development were forwarded to the developer by Ryde City Council, which indicated the existing configuration of street lights and the proposed arrangement as well as diagrams for the existing and proposed substation.

8. [15]

   On 28 August 2018, Eddie Tran (the third defendant in the Court below and the second respondent in this Court) became a director and shareholder of the developer (with Mr Chanine). Ninth Campsie Pty Ltd (Ninth Campsie), the fourth defendant in the Court below and the third respondent to the appeal, was a company associated with Mr Tran’s daughter, Hillary Tran (Ms Tran). The relationships between relevant companies and their directors and shareholders are significant for issues (4) and (5).

9. [16]

   The builder submitted various claims for extensions of time (EOT). The first, EOT claim 001, dated 13 September 2018 claimed 3 days on the basis of inclement weather. The claim indicated, on the first page, that the “original contracted completion date” was 23 May 2020 (and not 20 April 2020, see above). However, the second page contained the following above the signature of Nicole Rizk (a Project Assistant for the developer), who approved the EOT:

10. [17]

    A similar notation was included on EOT 002, EOT 003, EOT 004, EOT 005 and EOT 006. However, EOT 007, which was submitted on 15 December 2018, contained the following notation above the signature of Ms Rizk:

11. [18]

    This notation also appeared in subsequent EOT claims, including on the final claim, EOT claim 051 (which had been submitted as EOT 036 and was rejected and was resubmitted as EOT 051 on 14 October 2020, after the date of practical completion). The developer’s “approved” stamp was applied on top of the notation above Ms Rizk’s signature and the date of approval, being 20 November 2020.

12. [19]

    The date of 23 May 2020, which was described as the “Original Contracted Completion Date”, was included on page 1 of every EOT claim submitted by the builder and on several other documents. It was also included in the Project Control Group (PCG) reports, including the first PCG report dated 22 December 2018, that were submitted by the builder to the developer from time to time to outline the current status of the development.

13. [20]

    On 26 April 2019, Ms Rizk asked the builder for a PCG report so that she could circulate it to the parties for the meeting the following week. On 30 April 2019, the builder emailed Ms Rizk to assure her that he was working on it. At 9.32am on 1 May 2019, the builder emailed PCG report no. 3, in draft, to Ms Rizk. In her response at 10.10am that day, Ms Rizk asked the builder to “include in the report how far ahead of the updated construction programme [the builder] are”, indicating that “[i]t’ll be good to include this for our financer”. At 10.25am, the builder responded saying that the “[s]tatus line” (indicating the progress of the works by reference to a time line) had already been depicted as a green vertical line in the program and included a screen shot of the relevant page. In an email sent at 10.40am, Ms Rizk asked that it be made “more obvious for the financer”. The builder sent a further revised draft by email at 11.20am. In her email sent at 11.22am, Ms Rizk, said, “[t]his is acceptable. Thanks. I’ll email copies through now” (Emphasis added).

14. [21]

    Ms Rizk’s use of the word “acceptable” was relied on by the builder as an indication that the developer accepted that the date of 23 May 2020, which was described in all PCG reports as “Original Construction Completion Date”, was correctly described and that there must have been an agreement to vary the original date of 20 April 2020.

15. [22]

    The developer relied on the contract to submit that the “original contracted completion date” was 20 April 2020 (being 20 months after 20 August 2018). It claimed liquidated damages of $210,000 ($7,500 per day for 28 days) on the basis that EOT of 102 days (not including weekends or public holidays) had been approved, taking the date for practical completion to 18 August 2020. It was common ground that the date of practical completion was 15 September 2020. The developer’s challenge to the primary judge’s denial of its claim is the subject of grounds 6-7 (issue (3)).

16. [23]

    The builder relied on the date of 23 May 2020 (the provenance of which was not revealed by the evidence) as the starting point, which gave rise to a date for practical completion of 15 September 2020 (taking into account the EOTs of 102 days), which coincided with the date of practical completion.

17. [24]

    By letter dated 8 October 2018, the developer wrote to the builder requesting the submission of a variation for the substation. Although the letter post-dated the contract this was relied on by the builder in support of its argument that infrastructure was an excluded item under the contract. On 26 October 2018 the builder submitted variation 1, entitled “Supply & Install Substation and Street Lighting Up-Grade Works” in an amount of $438,900. The claim contained the following endorsement:

18. [25]

    The variation was approved by Marwan Chanine, Mr Chanine’s son, on behalf of the developer on 31 October 2018.

19. [26]

    The builder submitted claims for “variations” which were stamped “approved” and paid by the developer. The “variations” which are the subject of grounds 1-3 can be summarised as follows.

20. [27]

    The “variation” which is the subject of grounds 4-5, which was approved by the developer but not paid, can be summarised as follows.

The contract

1. [28]

   As referred to above, the contract between the developer and the builder comprised:

   1. (1)

      a Formal Instrument of Agreement dated 30 November 2017;

   2. (2)

      General Conditions in the AS 4902-2000 (the General Conditions); and

   3. (3)

      format and ancillary documents.

2. [29]

   The Formal Instrument of Agreement provided for a Contract Sum of $31 million: cl 2(a). Clause 2(b) provided:

3. [30]

   Clause 3(j) of the Formal Instrument of Agreement provided that the contract sum may be varied in accordance with cl 36.4 of the General Conditions, which provides that the developer’s representative shall price each “variation”, which is defined in cl 1 of the General Conditions (see below).

4. [31]

   Clause 4 of the Formal Instrument of Agreement listed the contract documents, which included the General Conditions.

5. [32]

   Clause 5 provided:

6. [33]

   Clause 1 of the General Conditions contains various defined terms, including the following:

7. [34]

   Clause 11.3 relevantly provides that, except for the “Excluded Work” (a term which is not defined in the General Conditions but which may be a reference to “excluded items”, as was contended by the builder), the builder must, at its expense, procure and maintain all, in effect, permits necessary for the carrying out of the WUC.

8. [35]

   Clause 16A provides, in effect, that the builder shall insure the WUC until the builder ceases to be responsible for their care. The insurance cover is required to be not less than the aggregate of certain nominated items, including “provision in Item 23(c) for consultants’ fees and Principal’s consultants’ fees”: cl 16A(i) (Emphasis in original.). Item 23(c) in the schedule to the General Conditions does not specify a figure for these fees.

9. [36]

   Clause 25.2 includes the following:

10. [37]

    The builder submitted that “Item 2(b)” in this clause ought be understood as a reference to cl 2(b) of the Formal Instrument of Agreement and “Excluded Works” should be understood as a reference to “excluded items”, as defined in cl 1 of the General Conditions. This submission is relevant to grounds 1-3.

11. [38]

    Clause 36 will be set out in full because of its importance to grounds 1-5. It provides for variations as follows:

12. [39]

    Clause 37.2 provides for payment. It provides in part:

13. [40]

    Annexure A to the General Conditions (which “shall be read as part of the Contract”) (the Schedule), provides, in item 7(b), that the period of time for practical completion in cl 1 is “20 months from the date that [the] Construction Certificate is issued”.

14. [41]

    Item 22A of the Schedule provides, for the purposes of cl 11.3, that the approvals which the developer must obtain at its own expense are “S 96 Application and access to neighbouring properties including but not limited to access to airspace, permission to install anchors into neighbouring properties and substation approvals”.

15. [42]

    Item 23 of the Schedule contains provision for “consultants’ fees and Principal’s consultants’ fees”, for the purposes of cl 16A, but no amount or rate has been inserted.

16. [43]

    The documents attached to, and which formed part of, the contract included a construction program prepared by the builder which listed the various items of work. The offsite works included item 47, “Substation – Design and Approval” and item 48, “Substation – Lead Time”. These items were relied on by the developer as an indication that infrastructure of itself was not, as the builder contended, an excluded item.

The proceedings in the Court below

1. [44]

   The builder commenced the proceedings in the Court below on 5 July 2022. The hearing before the primary judge took place on 19, 20 and 21 May 2025.

2. [45]

   On 21 February 2023, the builder obtained freezing orders against the developer (on the basis that the developer was dissipating its assets so as to defeat any eventual judgment against it).

3. [46]

   On 26 May 2023, the Court below noted that the parties had agreed that the freezing orders were to be discharged and substituted with mortgages granted to the builder over five properties owned by entities associated with Mr Chanine and Mr Tran including one owned by Ninth Campsie and one owned by Ms Tran.

4. [47]

   On 29 May 2023, mortgages were granted to the builder by Ninth Campsie (of which Ms Tran was the sole director) over 105/SP102978; by Ms Tran over 47/SP101074 and also by two companies, Marwan Layla Pty Ltd and The Wave Rockdale Pty Ltd, of which Mr Chanine was sole director, over 72/SP96421, 11/SP103369 and 36/SP103369.

5. [48]

   Annexed to each of the mortgages and marked “A” were the terms of an agreement between Ninth Campsie, The Wave Rockdale Pty Ltd, Marwan Layla Pty Ltd and Ms Tran, who were defined collectively as “Mortgagors”, and the builder, as “Mortgagee”. The terms defined “Defendant Parties” as meaning the developer, Mr Chanine, Mr Tran and Ninth Campsie. Each mortgage was security for payment of the Secured Money (which was defined to mean $2,963,529.21 or, upon judgment being entered, the “Relevant Judgment Debt”). The “Secured Moneys” were required to be paid on the latter of 42 days after the time for payment of an agreement to resolve the proceedings or orders being entered for any one or more of the Defendant parties to pay an amount to the builder.

6. [49]

   Subsequently, the builder entered into a Deed of Agreement and Set-Off dated 8 February 2024 with Ninth Campsie, Mr Tran, Apolo Apartments Pty Ltd (Apolo) and Aerial Holdings Pty Ltd (Aerial) (the deed). Mr Tran and Ninth Campsie were defined as “the Tran Parties”. The deed provides for the transfer of “Property” from Apolo defined as the Vendor, and Aerial, defined as the Purchaser.

7. [50]

   Apolo had purchased three adjoining residential properties, 31, 33 and 35 Flora Street, Arncliffe (the Arncliffe properties) four years earlier, on 21 February 2020, from unrelated parties for a total of $6,920,062, which comprised $2.75 million; $2,085,031 (for no. 33); and $2,085,031 (for no. 35). These figures are derived from the registered transfers dated 4 September 2020 which were in evidence before the primary judge.

8. [51]

   I note that the contracts for sale of these properties dated 21 February 2020, which were also in evidence before the primary judge specified that the consideration for each of 33 and 35 Flora Street, Arncliffe was $2,585,031. This Court raised this apparent discrepancy with the parties after the conclusion of the oral hearing.

9. [52]

   The developer submitted (in written submissions on this point dated 28 November 2025):

10. [53]

    In further submissions in reply dated 1 December 2025, the developer submitted in part:

11. [54]

    The builder submitted in written submissions dated 28 November 2025 that the sale price was potentially affected by the fact that the contracts were executed pursuant to an option deed which was executed by the parties in August 2017. Although the option deeds are not in evidence, the notices of exercise of call options dated 21 February 2020 for each of 31, 33 and 35 Flora Street, Arncliffe were in evidence. The builder submitted that the appropriate methodology was the “direct comparison” method based on sales of comparable properties in 2024 and that it was “unsafe to rely on the prices recorded in the 2020 contracts”. This submission was repeated in further reply submissions dated 1 December 2025.

12. [55]

    In light of the parties’ concessions, this Court will proceed on the basis that the sale price of each of 33 and 35 was $2,085,031. The valuation evidence is addressed further below.

13. [56]

    The recitals to the deed stated as follows:

14. [57]

    The deed defined “Litigation Liability” as meaning any amount payable to the builder by the Tran Parties in the proceedings, whether in their own right or as unitholder of the developer, up to 50% of any award, judgment, compromise or settlement entered against the developer in the proceedings.

15. [58]

    The effect of the deed was that Ninth Campsie and Ms Tran were released from their liabilities under the mortgages in exchange for the transfer from Apolo (a party related to Ninth Campsie and Mr Tran), of the Arncliffe properties to a party related to the builder for $5 million.

16. [59]

    Apolo was, as stated in recital C, related to Mr Tran and Ninth Campsie. Its sole shareholder is Trish Quach.

17. [60]

    Ali Mohanna is the sole director of the builder. Mr Mohanna’s wife, Rami Farhat, is the sole shareholder of Aerial.

18. [61]

    In the Court below, the developer disputed that certain work claimed by the builder as “variations” (1, 7, 11, 13 and 21) and which it had paid, constituted “variations” within the meaning of the contract and sought to recover the amounts it had paid in respect of these “variations”. It argued that its payment of any disputed variations was a payment on account only and that it did not vary the WUC.

19. [62]

    The builder disputed these propositions but also submitted, in the alternative, that the variations were “excluded items” under the contact for which it was entitled to be paid.

20. [63]

    The evidence as to variation 44 (consultants’ fees) was as follows. The builder adduced evidence from Ali Mohanna about a conversation with Marwan Chanine as follows:

21. [64]

    The builder alleged that, following that conversation, the contract sum was reduced by $600,000.

22. [65]

    Marwan Chanine denied any such conversation or that the contract sum had been reduced as a consequence.

23. [66]

    At the request of the primary judge the parties set out their respective contentions as to the disputed “variations” in a schedule (the Redfern Schedule).

24. [67]

    The builder, having settled its claim against Mr Tran and Ninth Campsie by the deed, sought to recover the retention from the developer (under contract and on the basis of alleged breach of trust) and Mr Chanine (for being knowingly concerned in the developer’s breach of trust).

25. [68]

    The developer submitted that its liability to the builder was coordinate with that of Mr Tran and Ninth Campsie. It further submitted that the sale of the Arncliffe properties was at an undervalue of about $2.9 million and that the effect of this was to reduce the developers’ liability to the builder by that amount.

26. [69]

    The builder called an expert valuer, Andrew McDonnell, and the developer called an expert valuer, Nicholas Garnsey. Mr McDonnell opined that the value of the Arncliffe properties as at the date of the deed was $5.5 million and Mr Garnsey opined that it was $7.9 million.

27. [70]

    Mr Garnsey was instructed that the sale price of each of 33 and 35 was $2,085,031.11 (which has been confirmed to be common ground). He noted in his report:

28. [71]

    In any event, Mr Garnsey defended his use of the sale prices of the Arncliffe properties in February 2020 as a relevant consideration to their value four years later.

29. [72]

    The primary judge appears to have adopted the second sentence in paragraph 19 of the joint report as the reason why his Honour did not consider the prior sales to be relevant in any event.

30. [73]

    The comparison between the sale price of a property on one date and its value on a later date (which was used by Mr Garnsey but not by Mr McDonnell) is only one part of the process of valuation. Both experts had regard to sales which they identified as comparable (addressed below).

31. [74]

    The evidence which was considered by the valuers was collected by the primary judge and set out in a table which was annexed to his Honour’s reasons and is reproduced below (footnotes omitted).

32. [75]

    As is apparent from this table, Mr Garnsey’s view was that the market growth in the local area between February 2020 and February 2024 was approximately 14%. If that % growth is applied to, $6.9 million, the result is approximately $7.9 million (as set out in the table). Mr Garnsey’s figure of 14% was derived from four sources of evidence: first, the sale of the Arncliffe properties in 2020 being in line with comparable sales; second, the movement in value having regard to comparable properties; third, the information derived from RP Data which showed an increase in median house prices in the area between 2020 and 2024 of 44%; and, fourth, trends in the increasing value of land as reflected in the Valuer-General’s ratings over that period.

33. [76]

    Mr Garnsey’s evidence of the year-by-year movement of the market in Arncliffe was, as set out in the joint report, as follows:

34. [77]

    With respect to Apolo’s purchase of the Arncliffe properties in February 2020, Mr Garnsey had regard to two sites, which he considered to be directly comparable, which comprised several properties with varying dates of exchange and settlement from 2020-2024:

    1. (1)

       site 1 (which comprised six adjoining properties on the same side of Duncan Street, Arncliffe); and

    2. (2)

       site 2 (which comprised 3 adjoining properties on the other side of that street).

35. [78]

    In respect of sites 1 and 2, Mr Garnsey considered that adjustment needed to be made for consolidation.

36. [79]

    With respect to Apolo’s sale of the Arncliffe properties to Aerial on 9 February 2024, Mr Garnsey considered three sites, which he considered to be directly comparable, which also comprised several properties with varying dates of exchange and settlement from 2022-2024:

    1. (1)

       site 3 (which comprised seven adjoining properties on the opposite side of the street as the Arncliffe properties);

    2. (2)

       site 5 (which comprised three adjoining properties on Charles Street, Arncliffe); and

    3. (3)

       site 6 (which comprised four properties on the other side of the street from the Arncliffe properties).

37. [80]

    In respect of these sites, Mr Garnsey considered that adjustment was required for “consolidation and DA where appropriate.”

38. [81]

    Mr Garnsey opined that “sites when purchased piecemeal would achieve a premium of at least 10% when sold in one line and further that sites that sell with DA compared to sites without DA generally obtain a premium of 15%”. He adjusted the raw figures for the comparable sales to take account of these two matters.

39. [82]

    The experts differed as to the relevance of the price paid by Apolo for the Arncliffe properties in 2020. Their respective positions were summarised in the joint report as follows:

40. [83]

    Mr Garnsey’s opinion of the market value of the Arncliffe properties on 21 February 2020 (the dates of exchange in the sale to Apolo), 4 September 2020 (the dates of settlement in the sale to Apolo) and 9 February 2024 (the date of exchange in the sale from Apolo to Aerial) was as follows:

41. [84]

    According to Mr Garnsey, the combined value of the Arncliffe properties as at settlement date in September 2020 of $6,935,625, is of a similar order to the combined sale price to Apolo of $6,920,062. This formed part of the basis of his opinion that the price at which Apolo purchased the Arncliffe properties in 2020 reflected their market value.

42. [85]

    The experts agreed that Mr Garnsey’s sites 3 (7 on the opposite side of the street from the Arncliffe properties, the contracts for the sale of which were exchanged in March 2023) and 6 (4 adjoining properties on the opposite side of the street from the Arncliffe properties, the contracts for the sale of which were exchanged between July 2023 and November 2023) were relevant comparables. Because these sales were in 2023, it was not necessary for an adjustment to be made for time because Mr Garnsey did not consider that there had been any market growth between 2023 and 2024 (see the figures above).

43. [86]

    Mr Garnsey said, on the basis of site 6:

44. [87]

    Mr Garnsey arrived at a value for the Arncliffe properties of $7,906,613 as at February 2024 on the basis of their 2020 sale price, the RP Data and his consideration of comparable sites.

45. [88]

    Mr McDonnell’s figure of $5,533,000 for the value of the Arncliffe properties in 2024 implied a market reduction of 28% from the total amount for which Apolo had purchased them in 2020. Mr McDonnell, as set out above, maintained that their purchase price in 2020 could not be taken into account because of the lack of evidence of the transactions. However, it was not suggested that there was any relationship between the vendors of the Arncliffe properties on the one hand and Apolo on the other. Mr McDonnell accepted that he did not have empirical evidence to support the 28% reduction. Nor did he accept that a comparison between the price at which Apolo purchased the Arncliffe properties in 2020 and the price for which he valued them in 2024 would constitute a “credible check” for his valuation.

46. [89]

    Although Mr McDonnell accepted that, as a matter of arithmetic a reduction of 28% in the value of the Arncliffe properties was inconsistent with the trend as shown in the Valuer-General’s valuations for the same period for the same three properties, he said that there were “different parameters”, which could account for the inconsistency. Mr McDonnell did not accept that Valuer-General’s assessments were useful to test a valuation of a property.

47. [90]

    In the Court below, the primary judge:

48. [91]

    The primary judge’s reasons for 6. above included the following:

49. [92]

    As to 8. (which is the subject of issue (3) and grounds 6-7), the primary judge gave the following reasons:

50. [93]

    As to 10. (which is the subject of issues (4) and (5) and grounds 8-13), his Honour said:

51. [94]

    The primary judge, at J [62]-[63], referred to the valuation evidence adduced by the parties without expressing a preference for either expert or making any finding about the value of the Arncliffe properties at the time of their transfer to the builder. His Honour then gave the following reasons, which are challenged in grounds 8-13:

52. [95]

    The primary judge referred to the effect of the expert evidence (J [70]). His Honour referred to Apolo’s purchase of the Arncliffe properties in 2020 at J [71]. His Honour said, at J [72]:

53. [96]

    The primary judge then referred, at J [73]-[75], to the evidence which was set out in the table, set out above. His Honour said further:

Issue (1): whether the primary judge was in error in rejecting the developer’s claim for a credit for its payments to the builder for variations 1, 7, 11, 13 and 21 (grounds 1-3)

1. [97]

   As referred to above, the primary judge found that variations 1, 7, 11, 13 and 21 were not, in fact, variations, since they fell within the WUC but that the developer was precluded from claiming that they were paid on account as it had costed and paid for them in accordance with cl 36.4 of the general conditions.

2. [98]

   Mr Ashhurst SC, who appeared with Ms Scott for the appellant, submitted that the fact that the pricing mechanism in cl 36.4 was used neither transformed a non-variation into a variation, nor did it override the express words of cl 37.2 that “payment other than final payment shall be payment on account only”. Mr Ashhurst relied on the following summary in Construction Law, Volume II, 2nd ed, Julian Bailey, at 7.40:

3. [99]

   Mr Ashhurst also relied on Al-Atabi v Zaidi [2009] NSWCA 433 (Al-Atabi) and Wormald Engineering Pty Ltd v Resources Conservations Co. International (1992) 8 BCL 158 (Wormald).

4. [100]

   Mr Balafoutis SC, who appeared with Mr Sheldon and Ms Truong for the builder, primarily relied on the amended notice of contention filed in Court on 17 November 2025 to support the primary judge’s finding that the builder was entitled to retain the amounts paid for variations 1, 7, 11, 13 and 21. He submitted that these items were “excluded items” within the meaning of cl 1 of the General Conditions by reason of cl 2(b) of the Formal Instrument of Agreement because they each constituted “work or costs, fees or charges in relation to … services or infrastructure upgrades”. He relied on the definition of “Services”, as defined in cl 1 of the General Conditions (set out above). In the alternative, he submitted that they constituted variations as they had been directed and approved by the developer as such and that there was no contractual mechanism to reverse the payment of the agreed variation.

5. [101]

   Mr Balafoutis submitted that the work comprised in variations 1, 7, 11, 13 and 21 constituted “excluded items” referred to above as:

   1. (1)

      it was plain from the commercial context that the development required an upgrade of the surrounding infrastructure as three residential dwellings were to be replaced by a substantial number of units, giving rise to a need for increased water, drainage, sewerage, power (requiring the installation of a substation), street lighting and other infrastructure;

   2. (2)

      the natural meaning of the word “infrastructure” is the essential services necessary for urban areas to function, with the result that an “infrastructure upgrade” includes modifications to existing infrastructure as well as the construction of new infrastructure;

   3. (3)

      the contract was entered into on 13 November 2017, about a year after development consent was granted in October 2016, but the scope of work to be performed relating to the infrastructure for the development was not known as at the date of the contract because it still had to be determined by the statutory authorities; and

   4. (4)

      various textual matters in the contract, including:

6. [102]

   In Al-Atabi, the primary judge held that the contract was a lump sum contract and that the work set out in the “Variation Advice” was “clearly included in the agreed price of $1.1m”. The primary judge found that, although the principal’s representative had signed the invoice in which the builder made a claim for the variation, this was insufficient to constitute a waiver of the contractual requirements for variations in cl 12 of the contract or to comply with the notice requirements in cl 12 (which included a requirement that notice be given before the work was performed). This Court (McColl JA, Handley and Sackville AJJA agreeing) dismissed the appeal, and said at [48]:

7. [103]

   In Al-Atabi, unlike in the present case, no payment of the claimed variations had been made and the principal had questioned the builder’s entitlement to be paid.

8. [104]

   In Wormald, the Superintendent issued a number of variation orders. The contractor (Wormald) carried out the work for the cost of which it was paid. The payment did not take into account the effect on the performance of the contract or the effect of any dislocations on the performance of the contract. The contractor claimed that the consequence of the variations was that it had to engage additional labour to complete the contract works, as varied and had incurred additional costs in the order of $400,000, which it claimed in arbitration. The arbitrator rejected the claim. Wormald appealed against the award to the Supreme Court, which dismissed its appeal.

9. [105]

   Clause 40.2 of the contract entitled the Superintendent to order the contractor to do additional work and required the contractor to comply with such an order. The Superintendent was obliged to determine that amount of fair and reasonable adjustment to be made to the moneys payable to the contractor as a result of complying with the order. Clause 40.2 also provided:

10. [106]

    The arbitrator found that the contractor had not given notice to the Superintendent under cl 40.2. Rogers CJ (Comm D) held that the arbitrator was correct in holding that Wormald’s failure to give notice in accordance with cl 40.2 was fatal to its claim to recover under it. His Honour said at 161-162:

11. [107]

    I accept Mr Ashhurst’s submission (set out above) that the primary judge was correct to find that the alleged variations were not, in fact, variations. I also accept, for the reasons Mr Ashhurst advanced, based on Al-Atabi and Wormald, that the developer’s “approval” and payment of the amounts claimed did not override the express contractual provision that all payments, except final payments, were payments on account. The primary judge’s finding to the contrary was erroneous.

12. [108]

    I accept Mr Balafoutis’ submission that each of the variations qualified as an “excluded item” within the meaning of cl 1 of the General Conditions for the reasons he advanced. Although the wording of the provision in cl 25.2 extracted above and cl 11.3 is infelicitous because it uses the term “Excluded Work” rather than “excluded items” (which is the term used in cl 2(b) of the Formal Instrument of Agreement and cl 1 of the General Conditions), it is sufficiently plain that this construction accords with the parties’ objective intentions.

13. [109]

    Although resort cannot be had to post-contractual documents, it is plain from the terms of the Development Consent and the plans referred to in the contract documents, which pre-dated the contract, that considerable services and infrastructure would need to be constructed and existing infrastructure and services would need to be upgraded to accommodate the significant increase in the number of dwellings and density of population on the site. These documents evidence the surrounding circumstances against the background of which the contract can be construed: Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 348-352 (Mason J); [1982] HCA 24 (Codelfa). As the language of the definition of excluded item is susceptible of more than one meaning, evidence of the surrounding circumstances is admissible to assist in its interpretation: Codelfa at 352.

14. [110]

    The clauses referred to above evince an objective contractual intention to include works relating to services and infrastructure within the WUC but to provide that the builder was entitled to be paid for them separately because they were not included within the contract sum. It can reasonably be inferred that a reason for this course was to avoid placing the risk on one party or the other for having to estimate the cost of those works in advance, which would have been necessary if the remuneration for the works had been included in the fixed price under the contract.

15. [111]

    Variation 1 concerned installation of an electricity substation and the upgrade of street lighting. Variation 13, which is related to variation 1, is described as “Road Opening Permit incl Road Restoration Costs – Substation & Street Lighting Works”. Variation 7 is described as “Section 73 Sydney Water Works (Part 1) and Variation 21 is described as “Section 73 Sydney Water Works (Part 1). Variation 11 is described as “Locate Underground Services SW Cnr via Pot Holing”, which involved locating underground services at night, which was said to be related to sewer and water connection. It was not suggested that there was any material distinction for present purposes between any of the purported variations. I understood the question to be one of construction of the contract rather than analysis of each of the variations.

16. [112]

    It follows from the construction which I prefer that the builder is entitled to retain the amounts which were paid as variations 1, 7, 11, 13 and 21 because it had a separate right to be paid for the work covered by the purported variations, since, as the work constituted “services or infrastructure upgrades”, it fell within the definition of “excluded items”.

17. [113]

    For these reasons, although the error alleged in grounds 1-3 has been established, the primary judge’s finding that no credit ought be given to the developer for these amounts is supported by the analysis in paragraph 3 of the amended notice of contention. Accordingly, the appeal ought not be allowed on grounds 1-3. It is not necessary to address the builder’s alternative argument that it was entitled to retain the payments by reason of cl 36 of the General Conditions.

Issue (2): whether the primary judge was in error in allowing the builder’s claim for variation 44 (for consultancy fees) (grounds 4-5)

1. [114]

   The primary judge’s reasons for allowing this claim were that the variation had been “approved” by the developer, as indicated on the Redfern Schedule, although not paid. It can be inferred that this was the basis of his Honour’s decision since no finding was made as to whether the pre-contractual discussion about consultancy fees had occurred, as alleged by the builder and denied by the developer.

2. [115]

   Mr Ashhurst submitted that:

   1. (1)

      the alleged pre-contractual discussion was, in any event, irrelevant to the claim since the entire contract clause (cl 5) in the Formal Instrument of Agreement excluded it from consideration and it was not reflected in any of the documents listed in cl 4 as comprising the contact;

   2. (2)

      the absence of any figure in item 23(c) of the Schedule for consultants’ fees supported the submission that such fees were included in the contract sum;

   3. (3)

      the fact of “approval” could not transform a non-variation (because the fees were within the WUC) into a variation (which would require the works to be outside the WUC); and

   4. (4)

      cl 37.2, which provided that “[p]ayment other than final payment shall be payment on account only”, applied in terms.

3. [116]

   Mr Balafoutis accepted that consultancy fees otherwise fell within the WUC and did not fall within the definition of excluded item. However, he submitted that it did not matter that the consultancy fees were not a variation since the effect of cl 36 of the General Conditions was that the builder was not required to give credit for the amounts paid for variation 44 because the developer had approved the variation. He submitted as follows:

   1. (1)

      cl 36.1 provides that the developer’s representative may “direct” the builder to vary the WUC;

   2. (2)

      as cl 1 defines “direction” to include “agreement, approval … notice [and] permission”, the word “direct” in cl 36.1 means agree, approve, notify or permit;

   3. (3)

      cl 36.2 provides that the developer’s representative may give the builder written “notice” of a proposed variation;

   4. (4)

      cl 36.4 provides that the developer’s representative shall, as soon as possible, price each variation and that “that price shall be added or deducted from the contract sum”;

   5. (5)

      the developer’s approval of the variation constituted a direction in writing for the purposes of cl 36.1; an approval of the variation under cl 36.2; and a pricing of that variation under cl 36.4, with the effect that the price approved was added to the contract sum, as confirmed by documents issued by the developer which recorded that the contract sum was increased by the amount of the approved variations; and

   6. (6)

      there was no mechanism to reverse that addition to the contract sum.

4. [117]

   Mr Balafoutis argued that the consequence of the developer approving variation 44 was that the builder was entitled to retain the amount of variation 44, even if it were not actually a variation.

5. [118]

   I reject Mr Balafoutis’ submission. The developer’s approval of a variation cannot transform a non-variation into a variation and could not vary the WUC pursuant to cl 36. Even if the approval constituted an implied admission that the works were a variation, this is simply a piece of evidence which can be displaced by other evidence which shows that the admission was incorrectly made: The Nominal Defendant v Gabriel (2007) 71 NSWLR 150; [2007] NSWCA 52 at [113] (Campbell JA). If the work comprised in the purported variation did not constitute a variation because it was part of the WUC in any event, the builder had no right to be paid for it since the work was covered by the contract sum. Clause 36.4 has no effect because it is a pricing mechanism which is premised on there being an actual variation (rather than a purported or mistaken valuation or something which may, or may not, constitute a variation). This is necessarily implicit in the opening words of cl 36.4 (which requires the developer’s representative to “price each variation”). The pricing of a non-variation does not convert it to a variation. Further, the proposition that, once payment for a non-variation is approved, it cannot be undone is inconsistent with the second sentence of cl 37.2 (that “[p]ayment other than final payment shall be payment on account only”).

6. [119]

   The passages cited above from Construction Law, Wormald and Al-Atabi highlight the importance of strict compliance with provisions such as cl 36. When cl 36 is complied with (that is, that there is a variation which is priced), the builder has a right to payment in addition to the original contract sum agreed but when the conditions for that to occur have not been fulfilled, no such right accrues. If payment is made or, as in this case, allowance for payment is made by an increase in the contract sum, the developer is entitled to credit in that amount, in accordance with cl 37.2.

7. [120]

   For these reasons, I am persuaded that grounds 4-5 have been made out and the developer is entitled to a credit of $133,175 for the approved value of variation 44.

Issue (3): whether the date for practical completion had been varied separately from the total period for which EOTs had been granted (grounds 6-7)

1. [121]

   There was no issue about the total number of days for which EOTs had been approved (102 days) or that the date of practical completion was 15 September 2020. Thus, issue (3) turns on whether the primary judge’s finding that the parties ought be taken to have varied the original contracted date for practical completion, disregarding EOTs, from 20 April 2020 to 23 May 2020 ought be disturbed. If the date was 20 April 2020, the developer was entitled to credit for liquidated damages of $210,000; if it was 23 May 2020, the developer was not entitled to any liquidated damages since the date for practical completion (being the original contracted date plus the total EOTs) would correspond to the date of practical completion.

2. [122]

   Mr Ashhurst argued that, for the date for practical completion to be varied, it would have been necessary for there to be a “written instrument executed by both parties”, as required by cl 5(b) of the Formal Instrument of Agreement. He submitted that, as no such instrument had been tendered, and the matter was disputed, the original contracted date for practical completion was, and remained, 20 April 2020 (being 20 months after 20 August 2018, being the date of the construction certificate). He submitted that none of the documents relied on by the builder, such as EOT approvals or PCG reports (which specified an original contracted date for practical completion of 23 May 2020) met the requirements of cl 5(b).

3. [123]

   Mr Ashhurst further submitted that the inference drawn by the primary judge at J [156] that it was “clear” that Ms Rizk noticed the entry (being the reference to 23 May 2020, rather than 20 April 2020) was erroneous. He submitted that the inference could not properly be drawn in circumstances where Ms Rizk was not called to give evidence; the evidence of the email chain with the builder’s representative showed that she was concerned about highlighting where the works were up to (with a view to putting the progress in a positive light for the financier); and her comment that the PCG Report no. 3 was “acceptable” did not amount to her giving her imprimatur, on behalf of the developer, to every word and integer in it.

4. [124]

   As the first reference to 23 May 2020 being the original contracted date for practical completion was in the first EOT claim dated 13 September 2018, it can reasonably be inferred that any agreement to vary that date must have happened on or prior to that date. Thus, I regard Ms Rizk’s use of the word “acceptable” in her email of 1 May 2019 as ineffective to make a change, even if it were otherwise relevant. Further, the circumstance that she approved EOTs dating from 15 December 2018 (EOT 007) which indicated a start date of 23 July 2018 (rather than the actual date of 20 August 2018 on which the construction certificate was issued) is telling. It is consistent with the inference that her focus was on the length of, and reason for, the EOT sought rather than the background information in the form. The date of 23 July 2018 is also anomalous. It may have derived from someone incorrectly deducting 20 months from the “original contracted completion date” of 23 May 2020 (it is actually 22 months before the 23 July 2018) but there are other possibilities.

5. [125]

   At least the following three hypotheses are open on the evidence:

   1. (1)

      prior to 13 September 2018 (the first EOT claim, which identified the original contracted date for practical completion as 23 May 2020), the parties had varied the original contracted date for practical completion by written instrument signed by the parties in accordance with cl 5(b) of the Formal Instrument of Agreement;

   2. (2)

      prior to 13 September 2018, the parties had orally agreed to vary the original contracted date for practical completion from 20 April 2020 to 23 May 2020; and

   3. (3)

      on or prior to 13 September 2018, someone had miscalculated the date for practical completion (which was the date which derived from the date of the construction certificate), either because they mistook the date of the construction certificate or incorrectly calculated the date 20 months after that date or incorrectly calculated the date 20 months before the date on the document and the error had been replicated in subsequent documents, including EOT claims and PCG reports by authors who were focused on other matters, such as whether the EOT sought ought be granted or the progress of the works.

6. [126]

   Hypothesis (1) is possible but not probable because there is no evidence of any such instrument in writing. Hypothesis (2) is possible but not probable because there is no evidence of any such oral agreement or, indeed, any discussion about changing the original date for practical completion. The only evidence of Mr Mohanna on point was that “the initial date of practical completion was discussed” on 22 October 2018 in connection with the draft PCG report. Not only did this evidence not indicate that agreement had been reached on the topic, the claimed conversation occurred subsequent to the first reference to 23 May 2020 (in the first EOT claim dated 13 September 2018).

7. [127]

   Further, absent a promissory estoppel of the character recognised in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7, an oral agreement or statement relied upon, would not have been effective to vary the date because it would not have met the requirements of cl 5(b). Hypothesis (3) is available and may be the most likely but, once again, is unsupported by any evidence. I regard the choice between the hypotheses as being conjectural and speculative and therefore insufficient to form the basis for a positive inference: Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 at 5 (Dixon, Williams, Webb, Fullagar and Kitto JJ), extracted and applied in Luxton v Vines (1952) 85 CLR 352 at 358 (Dixon, Fullagar and Kitto JJ); [1952] HCA 19.

8. [128]

   Even if a Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 inference were available in respect of Ms Rizk, it would not assist the builder since it would not rise beyond an inference that her evidence would neither have assisted the developer’s case nor supported an inference otherwise available. In any event, the documents she approved contained inconsistencies between dates, as outlined above. Further, Ms Rizk’s use of the word “acceptable” on 1 May 2019, post-dated the first reference to 23 May 2020 (on 13 September 2018, so far as is revealed by the evidence) by some eight months.

9. [129]

   Nor can the question be resolved by reference to the onus of proof. The developer claimed a credit for liquidated damages of $210,000, which were payable if the original contracted date for practical completion was 20 April 2020 but not if it were 23 May 2020. It discharged its onus to a prima facie level by relying on the definition of “date for practical completion” in cl 1 of the definitions in the General Conditions and item 7(b) of the Schedule. The only evidence which the builder adduced to the contrary was a series of documents which did not meet the requirements for a variation of the date for practical completion and which were consistent with hypothesis (3) above.

10. [130]

    For the reasons given above, I regard the primary judge’s finding that the contract date for practical completion had been varied by an undocumented EOT or otherwise as erroneous. Grounds 6 and 7 have been made out, with the consequence that the judgment sum ought be reduced by $210,000.

Issue (4): whether the primary judge was in error in finding that he could not assess whether the deed discharged any co-ordinate liability between the mortgagors and the developer and that therefore allowing no reduction in the damages to be awarded to the builder on that basis (grounds 8-13)

1. [131]

   Mr Ashhurst submitted that, to the extent to which the $5 million purchase price was an undervalue of the Arncliffe properties, the difference between $5 million and their real value amounted to a discharge of the concurrent liability between the developer (the principal debtor under the deed), Ninth Campsie and Mr Tran. Thus, he submitted that the difference between the true value of the properties ($5 million plus $x) and the $5 million which the builder paid for them, that is, $x, ought be applied to the developer’s credit.

2. [132]

   Mr Ashhurst submitted that the relevant question was whether the coordinate liability between the mortgagors and the developer was discharged or reduced by the transfer of the Arncliffe properties to the builder and that, accordingly, the primary judge had to determine the coordinate liability of the mortgagors and whether that liability (in respect of some of the mortgagors) was released by the transfer of the Arncliffe properties.

3. [133]

   On the question of quantum, Mr Ashhurst submitted that no allowance ought be made, in assessing the benefit obtained by the builder under the deed, for the loss of its claims against Mr Tran and Ninth Campsie for their alleged knowing involvement in the developer’s alleged breach of trust as the builder had not proved which portion of the benefit it obtained was referable to the value of the Arncliffe properties, which to the settlement of the claims against Ninth Campsie and Mr Tran and which to costs associated with those claims. He relied on Townsend v Stone Toms & Partners (1984) 27 BLR 26 (Townsend) and Boncristiano and Anor v Lohmann and Ors [1998] 4 VR 82; [1998] VSC 228 (Boncristiano).

4. [134]

   The applicable principles are:

   1. (1)

      “when a person pays more than his or her share of a common monetary obligation, the payment pro tanto discharges the obligation of all who owe the common obligation”: Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17 (Burke) at [38];

   2. (2)

      the principle against double recovery means that the plaintiff cannot recover more than its loss against the defendants to the proceedings: Anderson v Canaccord Genuity Financial (No 2) (2024) 115 NSWLR 1; [2024] NSWCA 161 (Anderson) at [67]ff;

   3. (3)

      the release of one or more people subject to a joint and several obligation does not release them all: Anderson at [170]; and

   4. (4)

      where a plaintiff had received a benefit from a party with which a defendant has a coordinate liability, the defendant is entitled to have credited against its liability the full amount of that benefit unless the plaintiff (who bears the onus) has established the part of the benefit which does not relate to the coordinate liability, in which case the defendant is only entitled to the benefit less the amount established as not relating to the coordinate liability: Townsend and Boncristiano.

5. [135]

   The principle in (1) was expressed in Burke as follows at [38]:

6. [136]

   The rationale for the principle was expressed in Friend v Brooker (2009) 239 CLR 129, [2009] HCA 21 in the following terms at [38] (French CJ, Gummow, Hayne and Bell JJ):

7. [137]

   The primary judge found that, under the mortgages, the mortgagors each had a liability for the amount of any judgment obtained by the builder which was coordinate with the developer’s liability to the builder: J [58]. However, his Honour found that the deed did not discharge any coordinate liability of the developer to the builder: J [55]-[84].

8. [138]

   The appellant challenged that finding in grounds 9-10. The respondent submitted that the finding was correct but that his Honour ought also to have found that the builder received no benefit from the deed and that none of the persons said to be subject to the coordinate liability transferred any property under the deed.

9. [139]

   As referred to above, the mortgagors, who granted mortgages of properties of which they were registered proprietors, were Ms Tran, Ninth Campsie, The Wave Rockdale Pty Ltd and Marwan Layla Pty Ltd. Pursuant to the mortgages, the mortgagors were jointly and severally liable for $2,963,529.21 (being the amount claimed in the proceedings) or, upon judgment in respect of each of the “Defendant Parties” (defined as the developer, Mr Chanine, Mr Tran and Ninth Campsie), the amount of the judgment sum.

10. [140]

    The deed released Ninth Campsie and Ms Tran from their liabilities under the mortgages. Because the deed discharged a liability which was coordinate with the developer’s liability to the builder, the developer’s liability must be reduced accordingly, to prevent double recovery by the builder. The consideration for that release was the transfer by Apolo of the Arncliffe properties to Aerial, a company associated with the builder. The value of the consideration for the release was the difference between the sale price, $5 million and the value of the Arncliffe properties at the time of the sale in February 2024.

11. [141]

    Mr Balafoutis submitted that the transaction (being the transfer of the Arncliffe properties for $5 million in return for the releases given) had to be for the benefit of the builder and that because the transfer was not to the builder, it could not be shown that the builder obtained a benefit. On this basis, he submitted that the Court should regard each company and individual party to the transaction as a separate legal person, whether natural or corporate, for the purposes of determining whether part of the coordinate liability has been discharged.

12. [142]

    As explained in Burke at [38], the applicable principle has both a legal and an equitable provenance but “the equitable principles now cover the field”. Accordingly, the equitable maxim that equity looks to the intent, rather than to the form applies: AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 at 197-198 (Deane J); [1986] HCA 63. As Lord Romilly MR said in Parkin v Thorold (1852) 16 Beav 59 at 66-67; 51 ER 698 at 71:

13. [143]

    As set out above, the recitals to the deed expressly state, “[t]he Vendor [Apolo] is a Related Party to the Tran Parties [Ninth Campsie and Mr Tran]” and that “[t]he Purchaser [Aerial] is a Related Party to [the builder].” It can be inferred that Apolo was only prepared to sell the Arncliffe properties to Ariel for $5 million on the basis that the builder released the Tran Parties from the Litigation Liability and discharged the mortgages granted to the builder by Ninth Campsie and Ms Tran. In these circumstances, the substance of the transaction is that Ninth Campsie and Ms Tran were released from their liability to the builder under the mortgages, which was coordinate with the developer’s liability to the builder. In accordance with the equitable principles referred to above, the Court must look beyond the separate legal personalities of the parties and have regard to the substance of the transaction, which was a commercial one. Otherwise the builder could obtain double recovery by the simple expedient of nominating a related company to be the transferee of a sale of property at an undervalue from a transferor who is related to defendants with which it wishes to resolve the proceedings. The preference for substance over form does not mean that coordinate liability between relevant entities and the developer need not be established with precision. However, once it is, it is important that the Court, when considering the question of double recovery in this context, is astute to analyse the substance of a settlement lest the benefit conferred on a plaintiff be masked by the use of different parties which are related to those with coordinate liability with the defendant who is before the Court.

14. [144]

    The next question is what reduction ought be made in the developer’s liability to the builder as a consequence of the deed and whether any allowance ought be made for the value of the releases granted by the builder to Ninth Campsie and Mr Tran. For the reasons which follow, I consider that the developer’s liability ought be reduced by the full amount of the undervalue and that no allowance ought be made for the value of the releases.

15. [145]

    In Boncristiano, the appellants sued their builders and the local council. In their defence, the builders alleged that the owners were estopped by an earlier compromise. This led the appellants to sue their solicitors. Their claim against their solicitors was settled for $5,000. The primary judge held that $3,000 of the settlement sum of $5,000 paid by the solicitors ought be deducted from the damages awarded. Judgment was given for the owners against the builders and the local council in the sum of $12,249.92. As between them, the primary judge found the builders 70% responsible and the council 30% responsible. The owners appealed on several grounds, including that their damages ought not be reduced by the payment by the solicitors.

16. [146]

    The Victorian Court of Appeal dismissed that ground and held that the primary judge was correct to reduce the damages on account of the settlement with the solicitors. Indeed, Winneke P said at 88 that it may have been appropriate for the primary judge to give credit to the builders for the full $5,000. His Honour said further:

17. [147]

    Winneke P considered Townsend in which an owner sued the builder and the architect in respect of the same works (although the claims were framed differently). The owner settled his claim against the builder by accepting monies paid into court. When entering judgment against the architect, the primary judge gave credit to the architect for the amount of the payment into court. On appeal, the owner submitted that the primary judge ought to have disregarded the monies received by the owner from the builder on the basis that these monies were relevant only when the owner came to execute the judgment. The Court of Appeal rejected these submissions. Oliver LJ said at 38:

18. [148]

    Winneke P said, at 89, after considering Townsend:

19. [149]

    The question of what portion of the monies (paid into court by the builder and accepted by the owner) related to the claim and which to costs was addressed by Winneke P as follows:

20. [150]

    Winneke P then cited Oliver LJ in Townsend at 41 on the question of which party bore the onus of showing that the settlement, either in whole or in part, was not referable to the coordinate liability with the remaining defendant:

21. [151]

    In Anderson this Court (Gleeson, Leeming and White JJA) identified the ratio of Boncristiano at 90 (of Winneke P’s reasons), as follows:

22. [152]

    In Anderson, this Court, at [91], distinguished Boncristiano on the basis that, in Boncristiano the owners had not established that the monies received from the solicitors related to another claim, rather than a concurrent claim, whereas in that case, Mrs Anderson’s claim for equitable compensation was different from her claim for costs and that the settlement deeds executed by the other parties expressly apportioned the amount paid to costs.

23. [153]

    Boncristiano was applied in Ikosidekas v Glenis [2023] VSCA 134. In that case, the plaintiff claimed the same damage against White, MWL and Glenis and settled with White and MWL for a costs-inclusive amount of $160,000. There was no evidence of the amount of costs incurred by the plaintiff in pursuing White and MWL. The trial judge dismissed the plaintiff’s claim on the basis that the whole of the settlement should be applied in reduction of his claim. The plaintiff appealed on several grounds. Relevantly, he argued on appeal that an amount for legal costs ought to have been allowed against the contribution.

24. [154]

    The Victorian Court of Appeal dismissed this ground and said at [53]:

25. [155]

    The jurisprudential basis for the principle established by Townsend and Boncristiano is clear. If it were otherwise, plaintiffs could manipulate settlements with some defendants at the expense of those defendants who choose to defend the claims in court with the consequence that the Court would be powerless to prevent double recovery because it would not know what part of the settlement was referable to the overlapping claims made by the plaintiff against the defendants who resolved their disputes and those who litigated them. By casting the onus of proof on the plaintiff to prove if any part of the benefit received as a result of the settlement is not referable to the coordinate liability between the defendants who are parties to the settlement and the defendants who are before the Court, the Court is in a position to enforce the rule against double recovery and thereby protect its processes from abuse.

26. [156]

    The effect of Boncristiano and Townsend is that the onus of proving what portion of the monies was applied in satisfaction of the liability falls on the person who could have said how the amount paid to settle the claim was to be divided. In the present case, the builder has done nothing to discharge its onus. The appellant has made out grounds 8-11.

Issue (5): by what sum ought the builder’s damages be reduced to take account of the benefit it obtained by the deed (grounds 12-15)

1. [157]

   For the reasons given above, the developer is entitled to a reduction in the damages for which it is liable, for the amount, if any, by which the value of the Arncliffe properties exceeded their purchase price of $5 million.

2. [158]

   The appellant challenged his Honour’s factual finding that, although he was persuaded that the value of the Arncliffe properties was more than $5 million as at the date of the deed, he could not come to a conclusion as to how much more (J [81]).

3. [159]

   The respondent submitted that it was necessary for the appellant, in order to disturb the primary judge’s finding, to establish a House v The King (1936) 55 CLR 499; [1936] HCA 40 error.

4. [160]

   I do not accept this submission. The issues were:

   1. (1)

      whether the Arncliffe properties were worth more than the $5 million which the builder paid for them; and,

   2. (2)

      if so, how much more.

5. [161]

   The primary judge decided (1) but not (2). His Honour’s reasons for not determining the value at the time of the transfer were that he did not feel persuaded that he could, on the basis of the evidence. This finding was erroneous. There was a plethora of evidence from which value could be determined, including relatively recent actual sales of the Arncliffe properties and sales of comparable properties. Judicial determination of property value on the basis of such evidence as was available to the primary judge is commonplace, both in commercial proceedings and also for the purposes of determining compensation for compulsory acquisition of property.

6. [162]

   The present case was neither a case where a party could not, nor had not, adduced precise evidence of the amount claimed: see Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 77 ALJR 768; [2003] HCA 10 at [38] (Hayne J, Gleeson CJ, McHugh and Kirby JJ agreeing). The developer sought to establish the value of the Arncliffe properties on various bases: prior sales of the properties with evidence of capital appreciation in the area; data from the Valuer-General’s ratings of properties in the area at the relevant time; evidence of comparable sales; and the expert evidence of valuers.

7. [163]

   Nor do I consider that there was any basis for his Honour to regard the sales in February 2020 as being other than arms’ length sales at market value between willing but not anxious parties. In MMAL Rentals Pty Ltd v Bruning (2004) 63 NSWLR 167; [2004] NSWCA 451, this Court said at [55]:

8. [164]

   The price specified in the transfers from the three pairs of separate vendors of the three properties which comprised the Arncliffe properties was prima facie evidence of their market value as at the date of the contracts, 21 February 2020. The primary judge was prepared to “presume”, correctly, that “Mr Tran approached each of the homeowners and negotiated the best price he could with a view to creating a development site from the three properties” (J [72]). If the builder wished to challenge this proposition, it was required to adduce evidence to indicate that these were other than arms’ length transactions. Further, although the difference between the price of 33 and 35 Flora Street, Arncliffe as reflected in the contracts for sale and as reflected in the transfers was significant, this disparity does not gainsay the compelling inference that the developer would not have exercised the option to buy the properties had it considered that the price provided for in the option was materially above the market price of the properties.

9. [165]

   It was common ground that, as at February 2024, the highest and best use of the Arncliffe properties (and of the comparable sites) was as sites for the development of blocks of units.

10. [166]

    As his Honour did not make a finding of the value of the Arncliffe properties at the time of their transfer to the builder, it is for this Court to do so on the basis of the evidence. Mr Ashhurst indicated that he considered that this Court might remit the matter to be determined by a single judge, although he would prefer that this Court undertake the task. There are several reasons why remitter would not be appropriate in the circumstances of the present case. First, it would involve the parties in additional expense and cause further delay in the final resolution of the matter. Second, it would not be an efficient use of judicial resources since this Court already has the evidence of the experts and the documentary evidence of value. Third, there is no issue of credibility involved which might make it necessary for the decision maker to see and hear the witnesses. Fourthly, this Court’s powers under s 75A of the Supreme Court Act 1970 (NSW) are ample for the purpose. Fifthly, neither party submitted that remitter was necessary.

11. [167]

    The evidence of Mr McDonnell was unsatisfactory. He was not asked to value the Arncliffe properties as at 2020 and did not accept that the price for which Apolo purchased those properties in 2020 could be relevant to their value in 2024. He accepted that the value he put on the properties as at 2024 represented a 28% discount on the price which Apolo had paid for the properties. He refused to acknowledge the substantial increase in property values in the area in the relevant period (which was established by other objective evidence, including the Valuer-General’s valuations and the RP Data). By contrast, Mr Garnsey’s opinion was supported by the evidence of sales of the subject properties in 2020, analysis of comparable sales and took into account the movement in the market over the relevant period. The primary judge did not address Mr Garnsey’s opinion in any detail. I accept Mr Garnsey’s opinion that the value of the Arncliffe properties as at the time they were sold to Aerial for $5 million was in the order of $7.9 million.

12. [168]

    For these reasons, I am satisfied that the Arncliffe properties were sold to Aerial at an undervalue of $2.9 million in February 2024. This amount must be deducted from the developer’s liability in accordance with the principles of coordinate liability. Grounds 12-14 have been made out.

Conclusion

1. [169]

   All but grounds 1-3 have been made out. The appellant has established its entitlement to a total reduction in the judgment sum (leaving aside interest) of $3,243,175.

Further matter: the builder’s liability to the developer for liquidated damages

1. [170]

   In the Court below, the developer’s claim for liquidated damages for delay was unsuccessful. This Court has upheld the developer’s challenge to the rejection of its claim and found that the developer is entitled to liquidated damages in the sum of $210,000. The amount by which this Court has found the developer’s liability to the builder has been reduced by reason of the transfer of the Arncliffe properties at an undervalue means that the $210,000 for liquidated damages does not need to be taken into account to reduce the developer’s liability to the builder to nil. In its notice of appeal, the appellant has not sought an order for judgment of that amount. It is not apparent why such an order has not been sought. In circumstances where the omission may be due to oversight, it is desirable to permit the parties to address that question. I have included directions in the orders I propose for that purpose. If any party seeks a different costs order from the one I have proposed, submissions to that effect should also be made within the timetable proposed.

Proposed orders

1. [171]

   For the reasons given above, I propose the following orders:

   1. (1)

      Allow the appeal.

   2. (2)

      Set aside orders 1 to 3 of the orders made on 19 June 2025 and, in lieu thereof, order judgment for the first defendant against the plaintiff.

   3. (3)

      Declare that the amount otherwise owing by the first defendant/first appellant to the plaintiff/first respondent is nil taking into account the following reductions, which total $3,243,175:

   4. (4)

      Set aside the costs orders made on 2 July 2025 and, in lieu thereof, order the plaintiff to pay the first and second defendant’s costs of the proceedings in the Court below.

   5. (5)

      Order the first respondent to pay the appellants’ costs of the appeal.

   6. (6)

      Direct the first appellant by 5pm on 10 December 2025 to file and serve and email to the Associates to the judges who constitute the Court for this matter submissions accompanied by a draft minute of order indicating whether it seeks judgment in its favour on its cross-claim in the amount of $210,000 (disregarding interest) for liquidated damages.

   7. (7)

      Direct the first respondent by 5pm on 12 December 2025, in the same manner as specified in (6) above, to respond to any submissions or draft orders proposed.

   8. (8)

      Direct the first appellant to provide any reply by 5pm on 15 December 2025 in the same manner as specified in (6) above.

   9. (9)

      If either the appellants or the first respondent wishes to contend for a costs order, either in the Court below or in this Court, different from the orders proposed in (4) or (5) above, then, failing agreement, the party, or parties, is to provide submissions in support of the different order sought within the timeframes in the timetable specified above.