Renbar Constructions Pty Ltd v Sader; Sader v Renbar Constructions Pty Ltd

1. [1]

   By a contract dated 1 July 2014, the plaintiff, Renbar Constructions Pty Ltd, contracted with the defendant, Dr Mark Sader, to demolish an existing structure on a property owned by Dr Sader at Connells Point, and to construct a new residence. [1]

2. [2]

   The contract was a “costs plus” contract.

3. [3]

   The contract provided that the building works must reach the stage of practical completion within 52 weeks. That period commenced on 31 July 2014 when Renbar commenced demolition of the existing residence.

4. [4]

   Subject to any entitlement for a “reasonable extension” of time under cl 9 of the contract, [2] practical completion was due to take place on 1 August 2015. In fact, practical completion took place on 14 April 2018.

5. [5]

   Between 13 June 2014 and 3 February 2018, Renbar issued progress claims 1 to 12 to Dr Sader totalling $1,690,432. These have all been paid.

6. [6]

   There is unchallenged evidence from Renbar’s expert quantity surveyor, Mr David Madden, that the fair and reasonable cost of the work performed by Renbar in constructing the residence was $3,266,198.61, inclusive of Renbar’s 10% margin; that is, aside from the margin, $2,969,271.46.

7. [7]

   Mr Madden also opined that the value of the work was $3,504,290. [3]

8. [8]

   Nonetheless, Dr Sader contends that, on the proper construction of the building contract, and in the events that have happened, Renbar is not entitled to any further payment beyond the $1,690,432 already received for that work.

The critical terms of the contract

1. [9]

   Clause 2 dealt with the “Primary Obligations of the Parties” and provided:

2. [10]

   “[P]rice of the building works” was defined to mean the total of the “cost of the building works” together with the “builder’s fee” (10%).

3. [11]

   Clause 13 dealt with “Progress Payments” and provided:

4. [12]

   Schedule 4 to the contract (referred to in cl 13.2) provided that “the stages for when progress payment claims can be made by the builder” were “monthly for works completed”.

5. [13]

   The effect of cl 13.2, read with Schedule 4 was facultative; enabling, but not requiring Renbar to make monthly progress claims.

6. [14]

   It is common ground that the Progress Claims 1 to 12 made by Renbar to Dr Sader during the course of construction did not comply with the requirements of cl 13 in that they did not include the details required by cl 13.3 and were not accompanied by invoices, receipts and other records, required by cl 13.4. Nonetheless, as I have set out, Dr Sader paid those progress claims.

7. [15]

   The contract made no express provision concerning the nature of Renbar’s rights in circumstances where it carried out the work called for by the contract but did not make a claim for a progress payment in accordance with the contract.

8. [16]

   Dr Sader’s case is that, in those circumstances, Renbar is not entitled to be paid for the work it performed, no matter its cost or value.

9. [17]

   This raises questions as to the proper construction of the contract, and the extent to which the parties conducted themselves otherwise than in accordance with the black letter of the contract.

10. [18]

    There are other terms of the contract which are relevant. I will deal with these below as they arise.

The course of events

1. [19]

   As the following narration of events demonstrates, for many years after the contract was executed and the works commenced, Dr Sader did not insist that Renbar comply strictly with the terms of the contract. Nor did Renbar exercise rights available to it under the contract.

2. [20]

   Although work commenced on the demolition of the existing residence on the site on 31 July 2014, apart from an invoice dated 13 June 2014 which was described as being for a “deposit-5% for estimated building works”, Renbar did not render any progress claim until July 2015, when it made Progress Claims 1, 2, 3, 4 and 5 for a total $400,000.

3. [21]

   As I have said, those progress claims did not comply with the requirements of cll 13.3 and 13.4.

4. [22]

   Nonetheless, Dr Sader paid Renbar for these five progress claims.

5. [23]

   Renbar did not make any further progress claims until June 2016, 11 months later, when it made Progress Claims 6, 7, 8 and 9 for a further $325,000.

6. [24]

   Again, these progress claims did not comply with cll 13.3 and 13.4 of the contract. Nonetheless, Dr Sader paid them.

7. [25]

   Renbar did not make any further progress claims until 2017. On 11 May 2017 it made Progress Claim 10 for $200,000 and on 11 August 2017 made Progress Claim 11 for $100,000. These progress claims also did not comply with the requirements of cll 13.3 and 13.4 of the contract. Nonetheless Dr Sader paid them.

8. [26]

   One complaint Dr Sader makes in these proceedings is that Renbar did not keep him informed of the progressively increasing cost of the build. In that context, a factual dispute emerges.

9. [27]

   The director of Renbar with whom Dr Sader was dealing was Mr Laval Francis.

10. [28]

    In his diary from 12 August 2017, Mr Francis recorded an appointment at 12.20pm with Dr Sader “RE billing”.

11. [29]

    In his affidavit, Mr Francis gave this account of his meeting with Dr Sader that day:

12. [30]

    In his reply affidavit, Dr Sader denied this conversation.

13. [31]

    In cross-examination Mr Hyde, who appeared for Dr Sader, put to Mr Francis that the conversation “simply did not happen”.

14. [32]

    Mr Francis replied:

15. [33]

    Mr Hyde then said:

16. [34]

    In fact, the email, which was sent by Dr Sader to Mr Francis on 13 August 2017, the day after the conversation to which Mr Francis deposed, was in the Court Book and was in these terms:

17. [35]

    The email provides contemporaneous confirmation of the accuracy of Mr Francis’s recollection. In the email Dr Sader expressed surprise that Mr Francis’s “tallying our costs” was “significantly more than your initial estimate of $2.2 million”; consistently with Mr Francis’s recollection of having told Dr Sader that “you are at about $3.1 million”.

18. [36]

    Dr Sader’s reference to looking “at each individual category’s initial quotes and variations received and approved” is also consistent with Mr Francis’s recollection of having shown Dr Sader “an expenses spreadsheet”.

19. [37]

    For those reasons, I accept Mr Francis’s account of the meeting.

20. [38]

    Dr Sader also recorded that he would “need some time to go through all the detail, once the USB is provided”.

21. [39]

    I infer that this is a reference to Mr Francis having said that he would provide a USB stick to Dr Sader containing the information recorded on the spreadsheet that Mr Francis showed Dr Sader on 12 August 2017.

22. [40]

    Mr Francis did not provide this detail to Dr Sader until February 2019, some 18 months later. In the meantime, work progressed without Renbar making any further claim for progress payment.

23. [41]

    But by now, Dr Sader had a good idea of the likely final cost of the build.

24. [42]

    On 23 January 2018 a final occupation certificate was issued.

25. [43]

    On 8 February 2018 Dr Sader sent Mr Francis a “Building Defects Report” prepared by Mr George Drakakis from Building Defects Waterproofing Solutions Pty Ltd. The parties referred to this as the “BDW Report”. The report identified various defects in the construction. I return to these below.

26. [44]

    On 8 February 2018 Mr Francis wrote to Dr Sader saying that Renbar “will execute all defects under my strict supervision.”

27. [45]

    On 4 April 2018 Dr Sader wrote to Mr Francis:

28. [46]

    On 6 April 2018 Mr Francis wrote to Dr Sader stating that “client handover booked for Friday 13th April.”

29. [47]

    Dr Sader replied:

30. [48]

    “Handover” occurred on 14 April 2018. It is common ground that this represents the date of practical completion.

31. [49]

    Clause 23 of the Contract made these provisions concerning practical completion:

32. [50]

    Renbar did not give Dr Sader a “notice of practical completion” prior to 14 April 2018 and did not provide Dr Sader with a “final progress payment”.

33. [51]

    But Dr Sader did not complain about this omission at the time. Both Mr Francis, and thus Renbar, and Dr Sader, were content to achieve practical completion without observance of the requirements of cl 23.

34. [52]

    On 15 April 2018 Dr Sader wrote to Mr Francis:

35. [53]

    The passage I have emphasised provides further confirmation of the parties’ agreement that the requirements of cl 23 concerning a “final progress payment claim” at practical completion not be complied with. However, despite Dr Sader’s reference to invoicing “being finalised”, Mr Francis agreed that he “did nothing about providing [Dr Sader] with detailed invoicing until six or seven months later”.

36. [54]

    On 31 January 2019 some 18 months after the 12 August 2017 conversation and 13 August 2017 email to which I have referred, Mr Francis sent Dr Sader an email with a Dropbox link to a “spreadsheet of expenses”.

37. [55]

    Mr Francis stated:

38. [56]

    The Dropbox contained over 700 pages of invoices.

39. [57]

    It also contained spreadsheets particularising the:

40. [58]

    Dr Sader replied a little over an hour later:

41. [59]

    Dr Sader’s reply shows that he saw the claim made by Renbar in Mr Francis’s 31 January 2019 email as Renbar’s “final” claim. He did not suggest that he would not pay this “final” claim once he had “worked through” its “details”. It is obvious that Dr Sader understood that he was obliged to pay Renbar the cost of the construction, as properly calculated.

42. [60]

    Two days later, Dr Sader wrote to Mr Francis. His email included:

43. [61]

    Dr Sader agreed that his reference to the “Final Claim” in this email was to the claim made by Renbar as attached to Mr Francis’s email of 31 January 2019.

44. [62]

    Thus, Dr Sader’s final paragraph anticipated a final “accurate” statement by Renbar of the amount owing for the project as a whole.

45. [63]

    About an hour later on 2 February 2019 Mr Francis sent Dr Sader an email:

46. [64]

    Neither Mr Francis nor Dr Sader, in their affidavits, gave an account of the telephone conversation to which Mr Francis referred in the opening words of this email.

47. [65]

    As there is no evidence of Dr Sader disputing what Mr Francis stated in this email, I infer that his email sets out an accurate summary of what was discussed.

48. [66]

    Mr Francis’s reference, in the final sentence, to “the Final Claim” was obviously a reference to Renbar’s claim for final payment for all of the work it had done on the project.

49. [67]

    Later on 2 February 2019, Mr Francis sent Dr Sader a further Dropbox link “to access the quotes”. A large number of quotations were included in the Dropbox.

50. [68]

    The following day, 3 February 2019, Dr Sader wrote to Mr Francis:

51. [69]

    Dr Sader attached to that email a spreadsheet setting out what he described as “Discrepancies between quotes approved [that is by Dr Sader] and amount invoiced” in relation to some 20 items.

52. [70]

    Dr Sader’s calculation was as follows:

53. [71]

    Dr Sader’s email concluded:

54. [72]

    In cross-examination Dr Sader said that the “additional $480K Progress Payment” was a payment that he felt he could “justify” at that time.

55. [73]

    Later on the same day, 3 February 2019, Mr Francis caused Renbar to send to Dr Sader Progress Claim 12 for $480,978.

56. [74]

    In his covering email Mr Francis said:

57. [75]

    It is clear neither Mr Francis nor Dr Sader regarded Progress Claim 12 as a final progress claim for the purposes of cl 23 of the contract.

58. [76]

    As I have set out, cl 23 required that “the builder’s final progress payment claim” be attached to the notice of practical completion. Practical completion took place on 14 April 2018. No notice of practical completion was then served nor was any final progress claim then served. Both parties were prepared to proceed on this basis.

59. [77]

    It is plain from the passages in Mr Francis’s email to Dr Sader of 2 February 2019, and Dr Sader’s email to Mr Francis of 3 February 2019 which I have emphasised, that Dr Sader’s proposal that he “transfer an additional $480K Progress Payment” was regarded by both men as being, in effect, on a “non admissions” basis and without prejudice to Renbar’s entitlement to quantify accurately the cost of the work it had done and Dr Sader’s right to insist that Renbar rectify any defects in construction.

60. [78]

    As Mr Hyde accepted in closing submissions, Dr Sader understood at this time “that there was more to pay.”

61. [79]

    Indeed by their 2 February 2019 exchange of emails, Mr Francis and Dr Sader agreed that Renbar should serve a “Final Claim” once the information in the 31 January 2019 spreadsheets “can be quantified more accurately”, to use Dr Sader’s words, or once an “accurate amount for the Final Clam payment” could be “finalised”, to use Mr Francis’s words.

62. [80]

    There is no suggestion in the evidence that, as is now sought to be put on behalf of Dr Sader by Mr Hyde, the parties considered that Progress Claim 12 was “the final claim” within Renbar’s “remit” to make.

63. [81]

    Dr Sader then engaged a quantity surveyor to provide an opinion as to the value of the work done by Renbar on the project.

64. [82]

    On 14 March 2019 that quantity surveyor advised Dr Sader that, in his opinion, the “cost breakup” of the work done by Renbar was then $2,669,766.13, inclusive of a builder’s margin.

65. [83]

    At that time, the amount that Dr Sader had paid Renbar was $1,690,432: almost $1 million less than this figure.

66. [84]

    On 23 April 2019 Renbar sent Dr Sader Progress Claim 13 in the sum of $219,652.

67. [85]

    Mr Francis’ covering email read:

68. [86]

    This email was evidently Mr Francis’s response to Dr Sader’s 3 February 2019 request for a “new Progress payment invoice with allocations”. [5] It was not, as Mr Hyde suggested in his reply submissions, intended by either party to be “a further attempt to satisfy the requirements of clause 23 for final claims”.

69. [87]

    Mr Francis recorded, in this email, that on 22 March 2019 he had stated to Dr Sader that he was “awaiting your assessment of my final claim so we can come to an amicable resolution.”

70. [88]

    Neither Dr Sader nor Mr Francis, in their affidavits, gave an account of their 22 March 2019 conversation. In those circumstances, I see no reason to doubt that, in this email, Mr Francis accurately summarised what the two men had discussed on 22 March 2019.

71. [89]

    Thus, the position, as at 23 April 2019, was that Dr Sader was to make an “assessment” of the claim that Mr Francis had, on behalf of Renbar, made on 31 January 2019. That was the “final claim” to which the men were directing their attention. That is consistent with the fact that Dr Sader had sought his own quantity surveying advice at around this time.

72. [90]

    On 15 May 2019 Renbar sent Dr Sader Progress Claim 14, which was described as “Final Claim for building works” in the sum of $1,287,531.

73. [91]

    In his covering email Mr Francis said:

74. [92]

    Dr Sader replied the same day:

75. [93]

    Dr Sader’s reference here to the “Final Claim” was a reference to Progress Claim 14.

76. [94]

    As I have set out, on 2 February 2019 Dr Sader said that he looked forward “to finalising an accurate amount for The Final Claim payment and paying this in full as soon as it can be quantified more accurately and by agreement”. [6] On 3 February 2019 Dr Sader requested that Mr Francis send him “a new Progress payment invoice with allocations and I will start transferring the money”. [7]

77. [95]

    But now, for the first time, Dr Sader made the points that Progress Claims 13 and 14 were not accompanied by invoices, receipts and other like documents, and thus did not comply with the requirements of cll 13.3 and 13.4 of the contract, and had been rendered more than 52 weeks after the date of the contract.

78. [96]

    This is despite the fact that, before me, Mr Hyde submitted that Dr Sader was “always” prepared to pay up to $2.2M under the contract. Evidently, that was as at May 2019, and is no longer Dr Sader’s position.

79. [97]

    On 4 May 2020, Dr Sader, through his solicitor, wrote to Renbar:

80. [98]

    On 12 May 2020, Renbar, by its solicitor, replied, including:

81. [99]

    On 24 August 2020, Dr Sader, through his solicitor, purported to terminate the contract. Dr Sader’s solicitor’s letter included:

82. [100]

    Clause 31 of the contract entitled either party to terminate the contract in the event of a “serious breach” of the contract.

83. [101]

    Whether or not, as Dr Sader alleged, Renbar had engaged in a “serious breach” by reason of the defective or incomplete works, Renbar’s delay in carrying out the works was obviously, itself, a serious breach of the contract. As I set out below, Renbar accepts, subject to any entitlement to extension, it was 76 weeks late in achieving practical completion. For the reasons I set out below, my conclusion is that it was in fact 141 weeks late in achieving practical completion. [8]

84. [102]

    This was a serious breach of the contract entitling Dr Sader to terminate notwithstanding the fact that it was not the serious breach that he identified at the time. [9]

85. [103]

    Thereafter, on 13 November 2020 Mr Francis sent Dr Sader Progress Claim 15 which was, in effect, a repetition of the claims made in Progress Claims 13 and 14 for a total of $1,575,767.

86. [104]

    This progress claim did comply with the requirements of cll 13.3 and 13.4 of the contract as it contained, in a Dropbox link, all relevant invoices and other like documentation.

87. [105]

    On 20 November 2020 Dr Sader, by his solicitor, wrote to Renbar disputing Dr Sader’s obligation to pay the $1,575,767 the subject of Progress Claim 15.

88. [106]

    As Progress Claim 15 was served after Dr Sader had terminated the contract, the question whether it was effective depends on whether Renbar had, at the time of termination, an accrued right to such payment. I return to this below.

The proper construction of the contract

1. [107]

   Mr Hyde submitted that, on the proper construction of the contract, compliance with cl 13.2, when read with Schedule 4 was an essential precondition for Renbar’s entitlement to be paid for the work done. That is, Mr Hyde submitted that as Renbar had not prior to termination of the contract served progress claims complying with the requirements of cl 13.2, it was not entitled to be paid for the work it had done; notwithstanding the evidence that the cost of that work was, inclusive of the 10% margin, some $3.2 million and some $1.5 million more than it has been paid by Dr Sader.

2. [108]

   Mr Hyde accepted that this was a “harsh” result.

3. [109]

   Indeed, it would be.

4. [110]

   The starting point is cl 2.2 of the contract which, as I have set out, requires Dr Sader to pay the “price of the building works” (that is the cost of those works, together with the builder’s margin) “in the manner and at the times stated in this contract”.

5. [111]

   Clause 13.1 “stated” that Dr Sader must pay the price of the building works “progressively as claimed by” Renbar.

6. [112]

   However, there is nothing in cl 13 that obliged Renbar to make a progress claim. Rather, cl 13.2 stated that “in order to be entitled to a progress payment” Renbar was obliged to give written notice of an appropriate claim, which claim was to include the matters referred to in cl 13.3 and be accompanied by the invoices and other documents referred to in cl 13.4.

7. [113]

   Correspondingly, as I have set out, Schedule 4 was facultative; allowing, but not requiring that any progress claim be made monthly.

8. [114]

   The contract made no provision for Renbar’s entitlements if Renbar did the work called for by the contract but:

9. [115]

   There is thus a lacuna in the contract. The contract does not state “the manner” or the “times” in which Dr Sader was obliged to pay the price of the building works in those circumstances.

10. [116]

    In Creative Building Services Pty Ltd v Jolene Investments Pty Ltd, [10] McDougall J considered a contract which had a clause imposing a payment obligation on the owner indistinguishable from cl 2.2 in the subject contract, and a progress payment clause that contained provisions indistinguishable from those in cll 13.3 and 13.4. However, unlike cl 13.2 in the present case, the equivalent clause in Creative Building Services did require the builder to make progress claims.

11. [117]

    His Honour said: [11]

12. [118]

    I agree with his Honour’s observations. Indeed, his Honour’s reasoning, arguably, has more weight here because, unlike the builder in Creative Building Services, Renbar was not obliged to serve a progress claim.

13. [119]

    In this case, faced with the lacuna to which I have referred, it must be an implied term of the contract that if Renbar carried out the work the subject of the contract but did not make progress claims which complied with the requirements of cl 13 (or did not make progress claims at all), then Dr Sader was nonetheless obliged to pay the price of the building works within a reasonable time of the work being done and of adequate particulars as to the work being provided.

14. [120]

    Implication of a term in a contract by reference to what is necessary to give it business efficacy was described by Mason J in Codelfa [12] as an “exercise in interpretation though not an orthodox instance”. [13] It is accepted in Australia that such implications are made when the conditions set out in BP Refinery [14] are satisfied. [15] Lord Simon of Glaisdale stated the now familiar requirements for implication of a term as:

15. [121]

    Each condition must be assessed at the time the contract was made. [17]

16. [122]

    A term requiring that Renbar should be paid for works carried out, particularly where the price of the work is not fixed, is both reasonable and equitable. It places no additional burden on the owner than that contained in cl 2 of the contract.

17. [123]

    The contract could not operative effectively if the term were not implied, as it would leave the builder in the untenable position that it would not be paid for work it has completed at its own expense.

18. [124]

    The posited term is capable of clear expression and is so obvious that it goes without saying. As Mr Klooster submitted, there is no suggestion that the builder was providing the works gratuitously.

19. [125]

    Finally, nothing in the contract precludes the builder’s entitlement to be paid other than by monthly progress payments. Nor does the operation of cl 13 discharge the owner’s obligation under cl 2.2 to pay the price of the works carried out.

20. [126]

    Thus, assuming that Renbar is unable to sue on Progress Claims 13 and 14 due to non-compliance with the requirements of cll 13.2 to 13.4 of the contract and that Renbar cannot sue on Progress Claim 15, despite its compliance, because the contract by that point had been validly terminated, the contract should be interpreted, in the sense described by Mason J, to imply a term to the effect I have described.

21. [127]

    This has the consequence that, although, as I have discussed above, Dr Sader terminated the contract on 24 August 2020, Renbar had nonetheless accrued a right to be paid for the work properly completed by April 2018. This is, in effect, the contents of its Progress Claim 15.

22. [128]

    The rationale for this is that the owner’s obligation to pay the price of the completed building works arose or accrued upon those works being completed and that this obligation was not affected by the builder’s non-compliance with cll 13.2 to 13.4 or termination or the contract. [18]

23. [129]

    As I have said above, (although not relevant to the exercise of contract construction [19] ) this is in fact how Dr Sader and Mr Francis saw matters in their email exchanges in February 2019; Dr Sader evidently had a change of heart shortly thereafter.

24. [130]

    During final oral submissions, much attention was directed to s 8A of the Home Building Act 1989 (NSW). [20] This was based on counsel’s misapprehension that s 8A, although enacted after the date of the contract, applied retrospectively to it.

25. [131]

    In that context, my attention was directed to observations of Leeming JA [21] in Cappello v Hammond & Simonds NSW Pty Ltd. [22]

26. [132]

    Leeming JA said, albeit in obiter: [23]

27. [133]

    After judgment was reserved, my Tipstaff drew counsel’s attention to the fact that the enactment of s 8A of the Home Building Act was not retrospective, and had no application to the present case.

28. [134]

    Contrary to the submissions made by Mr Hyde after this matter was drawn to counsel’s attention, I cannot see how Parliament’s enactment of s 8A can throw any light on the proper construction of this contract.

29. [135]

    It is therefore not necessary for me to engage with Leeming JA’s observations, save to make the respectful observations that:

The total cost of the work

1. [136]

   As I have set out above, Renbar’s expert quantity surveyor, Mr Madden, opined that Renbar’s total costs in relation to the project were $3,266,198.61 inclusive of its 10% margin.

2. [137]

   Mr Madden said that he had conducted a “full verification” of Renbar’s expenses but that, in relation to expenses totalling $34,922.17 he could not “identify the corresponding invoices”.

3. [138]

   Nonetheless, Mr Madden concluded that Renbar had incurred those expenses.

4. [139]

   In those circumstances I see no reason to make any adjustment to Mr Madden’s figures.

5. [140]

   Dr Sader’s building expert, Mr David Hall, provided an estimate of the “value of the construction” using the “Rawlinsons Construction Cost Guide, 2015 edition”.

6. [141]

   The Rawlinsons guide contains a range of suggested values, on a per square metre basis, for homes of particular descriptions in, relevantly, Sydney.

7. [142]

   The limited use that can be put to the Rawlinsons guide is illustrated in this statement by Mr Hall:

8. [143]

   Mr Hall adopted “the Rawlinsons rates for prestige residential” of $3,120 per square metre.

9. [144]

   Adopting those rates Mr Hall arrived at a “total estimate” of $2,623,693 inclusive of GST.

10. [145]

    As Mr Hall stated in his report, he was giving an estimate of the value of construction.

11. [146]

    The relevant question is the cost of construction.

12. [147]

    Further, unlike Mr Madden, Mr Hall did not carry out an independent detailed construction costs estimate using measurements obtained on site in addition to those on the relevant plans.

13. [148]

    As I have set out above, Mr Madden opined that the value, as opposed to the cost, of the work performed by Renbar, was $3,504,290. Mr Madden said that he arrived at that figure after undertaking “an independent detailed construction cost estimate”.

14. [149]

    I am not persuaded that I should accept Mr Hall’s evidence in preference to that of Mr Madden.

Conventional estoppel

1. [150]

   In his Further Amended Technology & Construction List Response, Dr Sader contended that, in the circumstances I have outlined:

2. [151]

   In closing submissions, Mr Hyde developed the point as follows:

3. [152]

   It is true, as Mr Klooster accepted, that there was little “rhyme or reason” concerning the timing by Mr Francis of Renbar’s claims for payment.

4. [153]

   Nor is there any explanation in the evidence for the delay between Mr Francis’s revelation to Dr Sader in August 2017 that “you are at about $3.1 million” and that “you owe me approximately $1.9 million” and his provision to Dr Sader on 31 January 2019 and 2 February 2019 of the spreadsheets and documents explaining the detail of the costs incurred.

5. [154]

   However, the evidence does not justify the conclusion that Renbar and Dr Sader adopted the assumptions alleged.

6. [155]

   Although Dr Sader regularly complained about Renbar’s delay, he paid Progress Claims 1 to 11 notwithstanding the fact they were not supported by invoices and other requisite documents.

7. [156]

   As I have set out above, Dr Sader actually suggested to Mr Francis that Renbar make Progress Claim 12.

8. [157]

   And as Mr Francis told Dr Sader in August 2017 what the likely cost of construction was, and as the evidence of Mr Madden, which I have accepted, is that the value of the work exceeds its cost, I am unable to see what detriment Dr Sader has suffered by reason of Renbar’s costs achieving the level that they did.

9. [158]

   Dr Sader, and Mrs Sader, were actively involved the evolving decisions that were made concerning construction of their home. They must have understood that those decisions increased the cost of the works.

10. [159]

    Their requirements had the result that Renbar incurred costs of $3.2 million on the project (inclusive of its 10% margin).

11. [160]

    Mr Madden’s evidence is that the value of the work carried out by Renbar exceeded that sum.

12. [161]

    I see no basis in these circumstances for a conclusion that Renbar is estopped by reason of any of the circumstances that occurred during the construction of the project from “any further claim.”

Dr Sader’s loss caused by the delay

1. [162]

   It is agreed that the delay from when practical completion should have been achieved, subject to any entitlement to an extension of time, was 141 weeks.

2. [163]

   Clause 9.1 of the contract provided that Renbar was entitled to “a reasonable extension of the contract period” if the building works were delayed “from a cause, thing or matter beyond the sole control of the builder”.

3. [164]

   Clause 9.2 obliged Renbar to give Dr Sader written notice of its asserted entitlement to an extension of time.

4. [165]

   However, cl 9.3 of the contract provided that:

5. [166]

   Renbar adduced evidence from an expert construction programmer, Mr Josh Carthew, who has opined that Renbar was entitled to a “reasonable extension” of 82 weeks.

6. [167]

   However, Renbar did not, during the life of the contract seek any “extension of the contract period”. Its first claim for an extension of time was made when it served Mr Carthew’s report in December 2020, after the contract had been terminated and after these proceedings had been commenced. Mr Klooster did not suggest that Renbar had an accrued right to claim such an extension, and I cannot see how it did have such a right.

7. [168]

   I therefore find that Renbar delayed achieving practical completion by the full 141 weeks.

8. [169]

   During that period, Dr Sader incurred holding costs that Mr Klooster accepted were $820 per week.

9. [170]

   Dr Sader also claims damages for the loss of opportunity to rent his existing property, also in Connells Point, during that period.

10. [171]

    Dr Sader is entitled to consequential loss for Renbar’s breach of contract if he is able to satisfy the familiar principles in Hadley v Baxendale [25] that such loss:

11. [172]

    The valuation experts engaged by both parties, Mr Mark Ellis for Renbar and Mr Simon Azar for Dr Sader, agree that the weekly rent for Dr Sader’s property during the relevant period was $1,600 in 2015, $1,625 in 2016 and $1,600 in 2017 and 2018.

12. [173]

    However, Mr Klooster submitted that Dr Sader was not entitled to damages for this loss of rent because there was no evidence that Mr Francis, and thus Renbar, was aware, prior to entering into the contract, that Dr Sader’s had another property that was to be rented out once Dr Sader took possession of the subject property.

13. [174]

    However, it must have been obvious to Mr Francis, and thus to Renbar, that if Renbar took longer than the contractually mandated 52 weeks to reach practical completion, Dr Sader would suffer loss either because he would have to secure alternative rental accommodation for himself and his family or, assuming he was in a position where he could retain his existing residence, he would be deprived of the opportunity of renting out that residence for the period beyond the 52 weeks.

14. [175]

    In those circumstances, I find that Dr Sader is entitled to recover damages for loss of rent for the period of the delay.

15. [176]

    In written submissions in reply, after judgment was reserved, Mr Klooster submitted, for the first time, that some discount on the resultant figure should be applied to reflect “the vicissitudes of life as a landlord”. [26]

16. [177]

    This matter was not raised during the hearing. Mr Klooster asked Dr Sader no questions about it. I am not, in those circumstances, prepared to entertain the submission.

Dr Sader’s losses – defective work

1. [178]

   It is common ground that Dr Sader has incurred costs of $27,759 rectifying defective building work.

2. [179]

   It is also agreed there were a number of other defects in respect of which Renbar must pay Dr Sader a total $24,572.13.

3. [180]

   Seven further alleged building defects require resolution.

4. [181]

   I heard concurrent evidence from Mr Hall for Dr Sader, and Mr Finnane for Renbar about these defects.

5. [182]

   The roof tile membrane was damaged when Renbar installed solar panels on the roof. In closing submissions, Mr Klooster accepted that there was no evidence that when the bolts for the solar panels were fixed, the bolt fixings were waterproofed. Mr Hall expressed the opinion that it would cost $13,022.90 to rectify this problem. Mr Klooster accepted that the factual observation underlying Mr Finnane’s competing conclusion that only $930 should be expended was not made out. I allow this item at the rate the subject of Mr Hall’s opinion.

6. [183]

   During the hearing it was agreed that it was necessary for Mr Hall and Mr Finnane to investigate this matter further. The parties have agreed that, if this defect is to be pressed, I may deal with this matter on the papers once Mr Hall’s and Mr Finnane’s further views are known.

7. [184]

   It is common ground that a toilet has been damaged. There was disagreement as to whether the damage shown on a photograph was a scratch or a smear of clear lacquer. The mark appears to me to be a scratch. I allow this item at cost opined by Mr Hall, $1,140.

8. [185]

   In the BWD report, defective paintwork and plasterboard work was identified. Mr Hall and Mr Finnane disagreed as to whether any such problems remain. Mr Hall said that he had looked at the defective painting and agreed that most of the painting identified by BWD as being defective needed to be redone. Mr Hall also said that, so far as concerns plasterboard, there were “obvious imperfections”.

9. [186]

   On the other hand, Mr Finnane suggested that Mr Hall had not identified any particular paintwork or plasterboard that was defective and appeared to him to be relying upon what was said in the BWD report. However, before me, Mr Hall was clear that he had himself inspected the paint and plasterboard work and was satisfied that it needed to be rectified.

10. [187]

    I allow this defect at the rates the subject of Mr Hall’s opinions: $4,194 for the paintwork and $1,148 for the plasterboard work.

11. [188]

    Dr Sader contends that overflow pipes have not been installed on a number of balconies as required by the relevant standards and that the existing drain grates are non-compliant. Mr Hall agreed that there was no sign of water ingress from the balconies and that he had done no testing to show that any water ingress was likely. Nonetheless, Mr Hall maintained that, in the absence of the requisite overflow pipes, there was a reasonable risk that internal flooding might occur. Renbar relied upon a text message sent by Dr Sader to Mr Francis on 16 February 2018 which, it was said, constituted an instruction not to install the overflow pipes. However, Dr Sader said the text message referred to overflow pipes at a different part of the home, and for which a different system was required. I see no reason to doubt this evidence. In these circumstances, I allow this item at the figure of $5,330 the subject of Mr Hall’s opinion.

12. [189]

    Mr Hall said that a door in the ground floor powder room had been left standing after painting and now had a bow with a slight twist. On the other hand, Mr Finnane said that he had inspected the door, had not found any bow and that the door opened and closed properly. I am not satisfied that this door needs to be replaced and do not allow this item.

Quantum meruit

1. [190]

   In light of my conclusions as to Renbar’s contractual entitlements, the question of Renbar’s entitlement to a quantum meruit does not arise.

Insurance issue

1. [191]

   The effect of s 94 of the Home Building Act is that if a Home Warranty Insurance policy required by s 92 of the Act is not in force at the relevant time the contractor who did the work is not entitled to damages or to enforce any remedy in respect of a breach of contract committed by the other party.

2. [192]

   In this case, Renbar procured the issue of a Home Warranty Insurance policy on 5 June 2014.

3. [193]

   The policy recited a “Declared Contract Price” of $1,650,000.

4. [194]

   The Certificate of Eligibility stated, under the heading “Policy Schedule Details”, that the “Maximum Contract Value of Any One Residential Job” was $2.2 million for a “single dwelling” and $1,650,000 for “alterations and additions structural”.

5. [195]

   In relation to that matter, Mr Hyde submitted:

6. [196]

   However, Mr Hyde did not develop this submission or explain what consequences, so far concerns s 94 of the Home Building Act he contended followed. Indeed, in reply submissions, Mr Hyde appeared to accept that Renbar’s entitlement to sue under the contract were unaffected by this matter.

7. [197]

   The fact is that the requisite contract for insurance was in place.

8. [198]

   I cannot see how, in those circumstances, the provisions of s 94 of the Act are engaged notwithstanding the matters accepted by Mr Francis, as recorded in Mr Hyde’s submission.

Conclusion

1. [199]

   For these reasons, my conclusion is that Renbar is entitled to be paid the unpaid balance of the total cost of works as found by Mr Madden.

2. [200]

   However, from this must be deducted damages to which Dr Sader is entitled arising from the delay and the defective works.

3. [201]

   The parties should confer and agree on the resultant figure and on the orders to be made to give effect to these reasons.

4. [202]

   I will hear the parties as to costs. If there is a dispute, the parties should confer and agree on a timetable for written submissions on that question.