Buildom Pty Ltd v Rawson Constructions NSW Pty Ltd & Ors; Buildom Pty Ltd v Everton Constructions NSW Pty Ltd & Anor

These two proceedings, which were heard together and in which evidence in one is evidence in the other, concern a dispute over the supply and installation of pre-fabricated bathroom “pods” by Buildom Pty Ltd (“the plaintiff” or “Buildom”). The pods were designed to be inserted into residential units in development projects being undertaken at Gordon in Sydney and Wollongong by some (or all according to the plaintiff) of the defendants.

The proceedings each on the face of the pleadings involve a myriad of issues and disputes. Those issues and disputes include the identity of the contracting parties, estoppel, misleading and deceptive conduct, unconscionable conduct, whether money is owed by any of the defendants to the plaintiff and cross-claims alleging that money is owed for rectification work undertaken to rectify defects in the pods. Other issues, such as novation, were argued.

The state of the pleadings in each proceeding, and ultimate reliance on the pleaded issues, can best be described as fluid. Amendments were made by several of the parties before and during the hearing. Claims were added or re-framed and many abandoned. This made it difficult for the Court to assess what was really in issue between the parties. A joint list of issues was provided at the end of the hearing. [1] Even then, in closing submissions, the plaintiff’s claims of a joint venture/partnership, unconscionable conduct and for relief under the Australian Consumer Law (“ACL”) for misleading and deceptive conduct were abandoned. During the hearing and in closing submissions, counsel for the plaintiff (correctly) acknowledged the binding nature of some critical documents. One of the cross-claims was abandoned.

This difficulty in assessing the true issues was initially compounded by the provision at the beginning of the trial of a “court book” which comprised 18 volumes of material with 7381 pages. Within those 18 volumes it was said there was a joint tender bundle of documents. The Court refused to receive the 18 volumes as an exhibit. It was plain that there were multiple duplications and thousands of pages that would not be referred to.

The Court directed that a joint tender bundle of documents that would be relied on and referred to be prepared. This still resulted in 10 volumes being provided (“CB”), only 3 of which comprised the joint tender bundle of chronological documents (“JTB”). The balance contained the affidavit evidence and lengthy expert reports and attachments. I will return (briefly) to the expert evidence below but pause to add that it was of little, if any, significance in the outcome of the issues that ultimately needed to be resolved.

Evidence in chief was by way of affidavit. Several affidavits that had been filed and served by the plaintiff were not read. In the end, the plaintiff read affidavits from 2 lay witnesses. The defendants read affidavits from 4 lay witnesses.

Much of the evidence in chief of all the witnesses was left unchallenged by the cross-examination. There was cross-examination, but it will be seen that I do not consider it is necessary to refer to much of that evidence. In light of the findings I have made, it is not determinative of what were ultimately the real issues that the Court was required to address. Accordingly, I do not intend to set out the evidence of each of the witnesses called unless it is necessary.

The Court received hundreds of pages of written submissions by way of opening and closing submissions together with oral addresses. The plaintiff’s claim vacillated from a claim that significant sums for each of the projects were owed to it, despite its acceptance that the pods were defective, to much smaller amounts being owed following concessions made by its counsel.

A joint chronology was provided. [2] It is by reference to that chronology, and the documents and evidence referred to in it, that the Court will focus.

It was accepted by counsel for the plaintiff at the hearing and in closing submissions, [3] that if the Court formed the view that the plaintiff had acknowledged that there were defects in the pods and that the plaintiff had agreed that those defects could be remedied at agreed prices, the ultimate question is whether the plaintiff was owed any part of the contract sums after deduction of proven or acknowledged rectification works that were done. That is, it was really just a question of maths to see what, if anything, was owed to the plaintiff. Despite those concessions, legal issues which did not reflect the reality of the conduct of the parties in the course of their relationships were run and debated. As Mr Marshall, counsel for the first and second defendants said in his opening, the case was really one that is borne out by the documents which evidence the way the parties conducted themselves. [4]

As will be seen, I do conclude that the plaintiff acknowledged that defects affected all of the pods. I do conclude that the plaintiff agreed the rates to be charged to rectify the defects. After a period of time, the plaintiff said it could not continue to assist in the rectification, and TQM/Everton were to do so. Further, the plaintiff acknowledged and accepted as reasonable from time to time, in writing, the costs that were incurred in rectifying the defects.

For the reasons which follow, I have reached the conclusion that no money is owed by any of the defendants to the plaintiff. A (relatively) small amount is owed by the plaintiff to Everton on its cross claim in the Gordon proceedings. There is an amount due to Everton in the Wollongong proceedings but the cross-claim there was brought by Rawson. That cross-claim was abandoned. The amount is for the difference between the cost of rectifying the defects in the pods and the contract price. The amount is not, on the evidence, determined with any certainty. However, what is established is enough to show that the plaintiff is not owed any money for the pods.

I will set out below my factual findings. These findings are based primarily on the documents in the JTB with reference where relevant to the affidavit evidence read and the cross-examination of the deponents (limited as that was). Much of the cross-examination of the experts and defendants’ witnesses was about issues affecting the pods and whether those issues constituted defects. For reasons which will be apparent, it is not necessary to resolve any dispute on the evidence about those matters.

I will refer as necessary to documents by reference to the page number in the JTB. I will chronologically deal with the relevant factual matters for each issue. I will then deal with the legal issues, submissions and my conclusions on those issues.

The plaintiff is Buildom. Its sole director is Mr Lester Huang [5] . The plaintiff is in the business of supplying bathroom pods. A pod is a module that consists of the various components of a finished bathroom, including toilet, shower, waterproofing and basin. Other bathroom items such as vanities, mirrors and bathtubs can be included at the customer’s option. The pods are built on the basis that they will be installed without the need for separate components of a bathroom to be later installed by different subcontractors.

The pods are manufactured by Buildom off-site, transported and crane lifted into the position at the development site. Once inserted into the base building structure, the pods can then be connected to the sewerage/drainage penetrations in the base of the building.

There is no documentary or direct evidence detailing the relationship between the defendants. As there are two proceedings and the parties are not identical in both [6] , I will identify the defendants by their names, or as “the defendants”. There is an ASIC extract of the defendant, TQM Design and Construct Pty Ltd (“TQM”). [7] That extract shows that TQM was incorporated on 8 February 2000. The sole director and company secretary is Mr Maroun Taouk. Mr Mark Taouk was a former director. Each of Mr Maroun Taouk and Mr Mark Taouk hold 1 share. The registered office is Level 10, 6 Mount Olympus Boulevard, Wolli Creek, NSW 2205.

There is an ASIC extract for the defendant, Rawson Constructions NSW Pty Ltd (“Rawson”). [8] It was incorporated on 19 November 2018. The sole director and shareholder is Melissa Azar. The First and Second Defendant’s Third Further Amended Defence (“TFAD”) admits that TQM and Rawson conducted business out of the same address at Level 10, 6 Mount Olympus Boulevard, Wolli Creek. That is Rawson’s current registered office. Until 2021 Rawson’s registered office was 3 Rawson Street Wollongong, NSW, 2500.

There is an ASIC extract for defendant, Everton Constructions NSW Pty Ltd (“Everton”) [9] . Everton was incorporated on 23 October 2017. The sole director shareholder is Bahjet Peter Taouk. Its registered office until 2021 was 19-21 Everton Road, Strathfield, NSW 2135. Its current registered office is Level 10, 6 Mount Olympus Boulevard, Wolli Creek, NSW 2205. The TFAD admits that TQM and Everton conducted business out of the same address.

In closing written submissions, [10] counsel for TQM said, without reference to any evidence, that Everton and Rawson were each an “associated entity” of TQM. There was no further explanation of what was meant by the term “associated entity”. In oral submissions counsel noted that TQM, Everton and Rawson made up a “corporate group” with each of them being separate entities. [11]

It is admitted in the pleadings that TQM held a residential building licence, but Everton and Rawson did not. There is no documentary evidence as to who owned the land on which the developments were occurring or who was undertaking the construction.

It is surprising that no such evidence was put before the Court. That is because there is an issue with respect to the identity of the contracting parties for each of the developments. There is an assertion that one of the contracts was novated from Everton to Rawson. The plaintiff’s pleading alleged a joint-venture or partnership between TQM and one of Everton and Rawson separately for the respective projects, however, this contention was abandoned in final submissions.

The evidence discloses that many of the dramatis personae on the defendants’ side have email addresses linked to TQM. They used these email addresses when engaging in correspondence in respect to the projects, including on behalf of Rawson or Everton.

For the purposes of ascertaining the identity of the contracting parties (which is in dispute) and the terms and conditions of the contracts (which is also in dispute) it is necessary for the Court to do the best it can to piece together the chronological history of the relationship between the plaintiff and the defendants and the arrangements for the supply of the pods to the Gordon and Wollongong projects. I will then deal with the issue of the contractual parties and, in so far as is relevant, the contractual terms. Much of what follows is drawn from the parties’ joint chronology. [12]

The Gordon project was a six-storey residential apartment development comprising, amongst other things, three towers and 144 residential apartments built on the Pacific Highway at Gordon in Sydney.

Mr Habambo, a construction manager employed by TQM, who had an overall supervisory role at both the Gordon and Wollongong projects gave evidence. [13] When asked whether the construction at Gordon was undertaken by TQM, he said that was not his department and that all of TQM’s “contracts were done by Everton”. [14] He was not sure whether TQM would supervise and oversee all of the work that was done. [15] As I have said, there is no documentary evidence of any agreement between Everton and TQM. None of Mr Mark Taouk, Mr Simon Melhem or Mr Pedro Pereira who were called by the first and second defendants, could shed any certainty on the position.

Mr Habambo said his understanding was that at the time the construction of the project commenced, around 90% of the apartments had been pre-sold at a cost of between $600,000-$1,200,000 per apartment.

Mr Habambo said that he saw the benefits of using bathroom pods on the Gordon project to avoid the necessity of engaging a large number of different subcontractors to complete the installation of the different bathroom works which would mean managing the sequence of those subcontractors, supervising their works and signing off on each individual trade. He said his understanding was that the pod system may have been more expensive, but the promised efficiencies far outweighed the costs if the pods were not defective.

Mr Pereira says that from his review of the records held by Everton, on 22 February 2018 Mr Anthony Moran of TQM sent an email to Mr Taouk of TQM discussing the possible use of bathroom pods. [16] That email sent a link to the Buildom website. [17]

He said that he then had a conversation with Mr Taouk in about September 2018 which raised the prospects of using bathroom pods. Mr Taouk agreed that the pods would be good for overall time-saving and would be worth the additional costs.

Mr Huang deposes that between early July 2018 and mid-August 2018 the plaintiff and TQM engaged in negotiations about the design, manufacture, delivery and installation of pods for the Gordon project. He does not say what those negotiations entailed. There is no other evidence from any of the witnesses of the detail of any meetings or discussions prior to the entry into contractual arrangements between any of the defendants and the plaintiff with respect to the possible use of the pods in the Gordon (or Wollongong) projects.

On 13 July 2018 a “revised” quotation was sent by Mr Angel Cavanna of the plaintiff for the provision of pods for the Gordon project. [18] The original quote that was “revised” was not in evidence. Mr Cavanna did not provide an affidavit or give evidence. The revised quote was sent to Mr Anthony Moran of TQM. Mr Moran did not provide an affidavit or give evidence.

The Gordon quote was for a sum of $2,543,652 plus GST (total $2,798,017) for the provision of 211 bathroom pods. The quote contained terms and conditions which included that the plaintiff would commence production of the pods on receipt of a Letter of Intent and that production would be finalised on execution of a Supply Agreement. No Letter of Intent or Supply Agreement were in evidence. Mr Huang said in cross-examination he did not recall if such documents were received or executed. [19]

The terms and conditions also said that the quote was subject to “the Australian Standard Supply”. It is common ground between the parties this is a reference to the General Conditions of Contract for the Supply of Equipment with Installation issued by Australian Standards as AES 4910-2002. [20]

On 9 August 2018 Everton issued a purchase order for the design, manufacture delivery and installation of 211 bathroom pods for the Gordon project. [21] The sum of $2,798,017.20 is stated to be the total price. The identity of the “subcontractor” was blank on the document, but I infer it was intended to be the plaintiff. The document was authorised by Anthony Moran. The purchase order states that all invoices should be made out to “Everton Construction NSW Pty Ltd”.

The purchase order also contains terms and conditions. Relevantly, they include that claims for payment can only be submitted for fully complete stages and that claims for partly or defective stages/sections will not be accepted.

On 15 August 2018 the plaintiff issued a tax invoice to Everton (noted as the customer) for the 10% deposit for the Gordon project. [22] The total value of the project was said to be $2,542,652 including two additional components over and above the pods themselves. The total of the invoiced amount for the deposit was $315,511.24 including GST. On 29 August 2018 Everton paid the full amount of that deposit, namely, $315,511.24. [23]

Mr Habambo says that the plaintiff first attended the Gordon site on or about 28 January 2019 to take steps prior to the delivery of the first pods. He says the first pods were delivered to the site on 4 February 2019 when five pods were delivered and placed into the building structure by crane.

From time to time thereafter, pods were delivered by the plaintiff to the Gordon site and invoices were issued to Everton.

The Wollongong development was a 19-story residential apartment development comprising, amongst other things, 77 residential apartments built at Rawson Street, Wollongong in New South Wales. None of the witnesses gave direct evidence or were specifically cross-examined about the relationship between Rawson, TQM and Everton in relation to the Wollongong project.

The ASIC extract for Rawson that I have referred to stated that Rawson was incorporated on 19 November 2018. [24] There is no documentary evidence of any agreements between Rawson and TQM, or Everton and TQM, with respect to the development.

Mr Habambo said that it was his understanding that at the time the construction of the Wollongong project started, around 90% of the apartments had been presold at a cost of between $600,000-$1,250,000 per apartment.

The Wollongong project started approximately four months after the Gordon project.

Mr Huang deposes that between 20 September 2018 and 26 September 2018 the plaintiff and TQM engaged in negotiations about materials and services to be provided by the plaintiff in relation to the supply and installation of pods for the Wollongong project. Once again, there is no other evidence as to the nature or content of those negotiations

On 20 September 2018 Mr Moran of TQM sent an email to Mr Cavanna of the plaintiff asking if he was going to send through an “updated quote for Wollongong as per our last meeting?” No witness gave evidence of that meeting. There is no evidence of any original quote for the provision of pods at Wollongong.

A revised quote was sent by email from Mr Cavanna to Mr Moran copied to Mr Mark Taouk on 20 September 2018. [25] It appears there were further negotiations between the parties about certain costings, and a further revised quote was sent by Mr Cavanna to Mr Moran and Mr Taouk on 26 September 2019. [26] The proposal by the plaintiff for the provision of the pods shows a tender price of $1,476,000 + GST. It is for 120 pods. [27] The proposal states that it was “prepared for Anthony Moran TQM…”.

As with the Gordon quote, the Wollongong quote contained terms relevantly, that the plaintiff would commence production on receipt of a Letter of Intent and production will be finalised on execution of the Supply Agreement. Once again, no Letter of Intent or Supply Agreement is in evidence. The terms and conditions also state that the quote is subject to the Australian Standard Supply Agreement AS/NZ S4910: 2002. This is the same Australian Standard agreement referred to at [34] above for the Gordon quote.

Unlike the Gordon project, there was no purchase order sent to the plaintiff following receipt of the Wollongong quote. On 28 September 2018, Buildom issued an invoice to Everton for the 10% deposit on the quote amount with two additional costings. The total of the invoice was $182,010.62.

Mr Huang said that the plaintiff agreed to waive the payment of the deposit in order to build a business relationship with TQM. [28] This is confirmed by the email of 3 October 2018 from Mr Youssef from Buildom to Mr Moran and others at TQM. [29] He said:

On 8 October 2018, after other emails with respect to the purchase orders (“POs”) for Eastwood and Wollongong, Mr Youssef sent another email asking that the two POs be sent by close of business that day. [30] On 9 October 2018 Mr Moon Lim from TQM responded that the POs would be emailed later that afternoon. [31] If those POs were emailed, they are not in evidence.

On 12 November 2018 Mr Moon Lim of TQM sent an email to Mr Angel Cavanna and others at the plaintiff enclosing a Subcontract Agreement for the Wollongong project. [32] That agreement was said to be between Everton and the plaintiff (“the Everton Standard Terms”). [33] I note that references in the contract, and its annexures which form part of it, are to the Wollongong project except for the last page which refers to the construction program for the Gordon project and the site address (which is the Gordon address). [34]

On 11 February 2019 Mr Roy of TQM sent an email to Mr Youssef of the plaintiff asking the plaintiff to return a signed copy of the Everton Standard Terms for the Wollongong project. [35] Mr Roy followed this issue up again by subsequent email on 15 February 2019. [36]

On 26 March 2019 Mr Roy sent an email to Mr Youssef with respect to 3 variations for the Wollongong project and said: [37]

Mr Habambo says that the plaintiff first attended the Wollongong site on or about 14 June 2019 and delivered the first pods to the site on 21 June 2019 when seven pods were placed into the building structure.

From time to time thereafter, pods were delivered by the plaintiff to the Wollongong site and invoices were issued. Up until 19 August 2019, the invoices for the Wollongong project were issued to Everton. On that day, Mr Roy of TQM sent an email to “Accounts Buildom”, copied to Mr Youssef and others at both the plaintiff and TQM as follows:

The invoices issued by the plaintiff for the Wollongong project were from that time onwards issued to Rawson. TQM relies on the email referred to in [55] and the fact that all subsequent invoices were sent to Rawson to assert (without pleading it) that the contract between Buildom and Everton for the Wollongong project was novated to be a contract between Rawson and Buildom. I will consider this issue below.

On 29 November 2019 Mr Pereira of TQM sent an email to Mr Suarez at the plaintiff referring to the emails from Mr Roy to Mr Youssef that I have set out above requesting the plaintiff return a signed copy of the Everton Standard Terms. He asked that Mr Suarez get back to him the following Monday. [39] A further copy of the Everton Standard Terms was attached. [40] There are several things to note about this version of the document. First, on the coversheet it was still stated to be between Everton and the plaintiff. Second, the annexure to the document which forms part of the agreement states that the “Main Contractor” is Everton. [41] Finally, the last page which deals with the construction program, still refers to the construction program for the Gordon project and not the Wollongong project. [42]

On 13 December 2019, Mr Pereira of TQM sent another email to Mr Cookson at Buildom asking who from Buildom will get back to him with a signed contract. [43]

On 16 December 2019, Mr Cookson emailed Mr Pereira informing him he has a copy of the contract for the Wollongong project. He expresses concerns about the page numbering and asks for the correct version to be re-sent to him. Mr Pereira asks Mr Cookson to email him the contract he has so he can check it. [44] Mr Cookson does this later that day. Mr Pereira responds on 20 December 2019 stating that this was the correct version but that there were typos in the page numbers. [45]

On 13 January 2020, Mr Cookson emails Mr Pereira as follows [46] :

On 14 January 2020, Mr Pereira replies to Mr Cookson [47] . He said that the reference to Gordon in the contract mentioned by Mr Cookson was a typo and should have been Wollongong. He said, “both contracts were submitted at the same time.” He said he had asked his colleague Simon Melhem and Giuseppe Carlomango (both copied into the email) about whether there had been a contract for Gordon. He said they had sent a copy of that contract by separate email that day and the issue arose because “both contracts drafted at same time…”.

Mr Pereira swore affidavits in each proceeding. He deposes to the sending of the Everton Standard Terms subcontract for the Wollongong project and the emails chasing a signed copy in his affidavit in those proceedings. In his affidavit filed in the Gordon proceedings he does not say that a subcontract for the Gordon proceedings was sent, however, he refers to the emails chasing a signed copy of the Wollongong subcontract. He was not cross-examined about this issue.

On 14 January 2020, Mr Melhem sent an email to Mr Cookson and Mr Picciau enclosing a copy of the contract for the Gordon project. [48] This is the first time the evidence discloses that a subcontract was sent to the plaintiff for the Gordon project. There is no firm evidence to support a finding that it had been sent to Buildom before this date. It seems, however, that it may have been the case that those responsible at Everton for sending the contract to Buildom had thought that a contract for Gordon had been sent as well as one for Wollongong. This would explain why the building timetable for Gordon was included in the draft contract sent for Wollongong (see the emails referred to at [59]-[60] above). This might mean that Everton had been proceeding on the basis that its standard terms had been sent to Buildom for both the Gordon and Wollongong projects (although it only ever chased Buildom to return the signed contract for Wollongong). Alternatively, it may mean that there was just an omission by Everton to send the standard terms contract to Buildom for the Gordon project and the insertion of the Gordon address in the Wollongong contract was just a typographical error.

The copy of the document sent with the 14 January 2020 email is not printed in the bundle with the email, however, at JTB 4398, there is a copy of a Subcontract Agreement between Everton and Buildom for the Gordon project. That document was signed by Mr Huang on behalf of the plaintiff on 16 January 2020. [49] He has initialled each page. The “Formal Instrument of Agreement For Subcontract” [50] signed by Mr Huang on 16 January 2020 states that the agreement was made on 13 December 2018.

Mr Huang says that before he signed this document he had a conversation with one of his staff, Oscar Picciau. [51] Mr Huang deposed that upon being told by Mr Picciau that he had to sign the contract, he told him that Buildom would not sign the contract on the current terms and conditions, and it was for this reason it had not been signed. Mr Huang deposes that he queried why, if TQM considered the document to be so important, it was not in place prior to placing the deposit for the supply and installation of the bathroom pods. Mr Picciau told Mr Huang that all the pods have been delivered and installed, and TQM would use his non-signing of the document as an excuse not to pay him, and that therefore Buildom was not in a position to refuse the request. Mr Huang deposes that he then raised several queries with Mr Picciau as to the necessity of signing the contract, especially given the work had already been completed, and that Buildom had received payment form TQM for other work in which there was no written contract in place. Mr Picciau reiterated that Buildom would not get paid if they don’t sign the contract and that TQM is a big developer and given all the pods had already been delivered, they would pay.

On 17 January 2020, Mr Huang sent an SMS message to “Oscar” (who I infer is Oscar Picciau). The SMS shows a screenshot of the unsigned page from the subcontract with the Formal Instrument of Appointment page stating the agreement is dated 13 December 2018. [52] This must be from the Gordon version of the document. In the text, Mr Huang observed “Date on this page state the agreement was made on 13th of December 2018 but does not have an area to add a date signed (i.e. today)”. Oscar responds: “Just put the date next to your signature”. I do not understand how this exchange took place on 17 January, when the agreement was signed on 16 January 2020 by Mr Huang unless he backdated the contract by a day when he signed it. [53]

Mr Huang also signed the Subcontract Agreement (in the form of the Everton Standard Terms) for the Wollongong project on 16 January 2020. [54] The coversheet of the document contains: “Dated: 16 October 2018”. The “Formal Instrument of Agreement for Subcontract” says that the agreement was made on 10 October 2018. [55] The final page of the agreement has the address for the construction program amended in handwriting from the Gordon address to the Wollongong address (correcting the error mentioned at [51] above). [56]

On 17 January 2020, Mr Huang emails the signed and initialled contracts for each of the Gordon and Wollongong projects to Mr Pereira and Mr Habambo.

Mr Huang does not give any evidence as to whether he noted that the Formal Instrument for Agreement for Subcontract for was said to have been made for Gordon on 13 December 2018 and for Wollongong on 10 October 2018 when he signed those contracts on 16 January 2020. There is no evidence from any Everton witness about this. There is no direct evidence that it was the common intention of the parties that the agreements (or that aspect of them) were to take effect retrospectively so that the parties would be taken to be bound by the terms of those documents from the 2018 dates: see for example Dong v Monkiro Pty Limited & Ors [2005] NSWSC 749 at [61]-[63].

No party made submissions about the retrospective application of those contracts. No party pleaded that the contracts for the respective projects were evidenced by the Everton Standard Conditions by reason of them being dated in the manner described.

It can be seen from the recitation of the evidence that it is perhaps an understatement to say that the parties did not pay attention to the formalities of documenting their agreement for the supply of pods at either Gordon or Wollongong at the time, or immediately after, the quotes were sent by the plaintiff and even at the time of the supply of the pods.

It is not unusual for parties conducting business to move forward with a trading relationship without having clearly delineated contractual relations. In undertaking their business and dealing with the pressures of meeting deadlines, parties may not conduct themselves in a manner bespeaking textbook offer and acceptance of neat, formalised contractual terms. In such circumstances, the Court must do its best to ascertain from the evidence the contractual intentions of the parties. In this case the task was not made easier by reason of witnesses from all sides not being called to give evidence which may have informed these matters.

It was common ground at the hearing that parties to the contracts for each of the Gordon and Wollongong projects were Buildom and Everton. It is not agreed what documents or other matters constitute the terms of the contracts.

Buildom pleaded that TQM was a party to each contract as a matter of objective fact, or alternatively, by way of being in a joint venture or partnership with Everton. The contentions as to a joint-venture/ partnership were abandoned in final submissions. [57] Buildom also pleaded that TQM was estopped from denying it was responsible for payment of all amounts for the pods for each project.

Buildom pleads (Further Amended Statement of Claim (“FASoC”) [5]-[5A]) that for the Wollongong project the contract between it and TQM was evidenced by the quote sent 26 September 2018. [58] As I have said, it was accepted at the hearing that Everton was a party to the contract.

Everton and Rawson plead that the contract for the Wollongong project was between it and Buildom, [59] whereby the offer was the invoice sent by the plaintiff on 28 September 2018 and Everton’s acceptance was by conduct in allowing Buildom to commence the design and construction of the pods. [60] Alternatively, it is pleaded that the offer was made by the Buildom invoice of 28 September and the terms of the contract are evidenced by the Everton Standard Terms which were accepted by conduct from 12 November 2018 onwards by Buildom continuing to design, supply and install the pods aware of those terms and conditions, but being silent about them when Everton repeatedly chased the return of a signed copy.

The plaintiff pleads that the contract is between Everton and Buildom (with TQM as joint-venture partner but abandoning this at trial) on the terms of the purchase order issued by Buildom accepted by Everton on 9 August 2018 when it was signed by Mr Moran and the payment of the deposit by Everton on 29 August 2018. [61]

Everton pleads that Everton and Buildom entered into a contract, the terms of which were express and implied and evidenced by the Purchase Order and Everton’s standard terms and conditions in that Purchase Order. [62]

As I have said, the precise nature of the relationship between TQM, Everton and Rawson is unclear. I found the evidence of Mr Habambo combative at times. Mr Taouk was evasive in his answers. The issue was not really pursued in cross-examination.

The plaintiff submits that the negotiations for entry into both contracts were between Buildom and representatives of TQM. The quote for the Gordon project was issued to TQM and addressed to Anthony Moran of TQM. Whilst the purchase order for Gordon was from Everton (signed by Mr Moran) and there was a direction that all invoices be sent to Everton, the plaintiff submits that this was in the context of, and is consistent with, Everton “providing supervision and direction to the residential building work to be performed by TQM”, being the only entity to have a building licence.

With respect to Wollongong, the plaintiff submits that the quote was prepared for TQM, although it accepts it invoiced Everton for the 10 % deposit. However, it was submitted that by agreement with TQM, Buildom waived payment of the deposit to build a business relationship with TQM. Whilst no PO for the Wollongong project appears to have been provided, the plaintiff submits that both parties proceeded on the basis that there had been one based on subsequent conduct arranging for the supply of various PC items. It submitted that by 9 October 2018 agreement had been reached for the supply of the pods price at the contract form with both TQM and Everton.

Everton and Rawson originally submitted that the contract for the provision of the pods for the Wollongong project was between the plaintiff and Rawson. However, it was accepted by counsel for Everton and Rawson that at the time of that contract, Rawson had not been incorporated. [63] This led to the TFAD which accepted that the contracting parties were the plaintiff and Everton.

Everton submits that TQM was not a party to either of the contracts. It submits that the contracting parties in each case were Everton and Buildom.

TQM denies it was a party to either of the contracts.

For the Gordon contract TQM submits that the contract came into existence upon the issue by Buildom of the invoice responding to the purchase order sent by Everton. It says that the fact that negotiations were conducted by Mr Moran and others who had a role with TQM is irrelevant when the purchase order was issued by Everton.

As to the Wollongong project, TQM submits Everton was originally the contracting party with the plaintiff. That contract came into existence in the context of the contract for the Gordon project already being in place between Buildom and Everton and an invoice being issued to Everton for payment of the 10% deposit for the Wollongong project. Once again, the fact that negotiations may have been undertaken with persons also associated with TQM became irrelevant on the issue of that invoice as confirmed by the subsequent sending of the draft subcontractor agreement naming Everton as the contracting party.

TQM also submits that the contract for the Wollongong project was subsequently novated to become a contract between Buildom and Rawson.

There is no issue that each of Buildom and Everton were parties to each of the contracts for the Gordon and Wollongong projects at the time of their formation. The question is whether TQM is a party to both of those contracts.

I find that the contract between Buildom and Everton for the Gordon project was, at the time of its formation, partly oral and partly in writing. There were the negotiations referred to (but not detailed) in the evidence and email correspondence about the use of the pods at the Gordon site. [64]

The contract was entered into at the time of the issue by Everton of the purchase order on 9 August 2018. This was the acceptance of the offer contained in the quote dated 13 July 2018. The parties then proceeded to execute the contract with the plaintiff issuing the invoice to Everton which was paid on 29 August 2018. [65] Buildom then undertook the manufacture of the pods, the first of which was taken to the site on 4 February 2019.

Alternatively, if that is wrong, the quote from Buildom dated 13 July 2018 was an offer to TQM. The purchase order from Everton dated 9 August 2018 was a counter-offer from Everton which was accepted by Buildom on issuing the invoice to Everton on 15 August 2018. That invoice was then paid by Everton, and the pods were manufactured and delivered.

As I have said, no party submitted that the signing of the Everton Standard Terms by Mr Huang in January 2020, with the Formal Appointment of Subcontractor sections being said to have been made in December 2018 meant that those written terms (or that part of the written terms) applied as the contractual terms from December 2018.

The identity of the parties to the contract is a question of fact to be determined objectively from the surrounding circumstances: In the matter of Beverage Freight Services Pty Ltd [2022] NSWSC 874 at [46], Air Tahitii Nui Pty Ltd v McKenzie (2009) 77 NSWLR 299; [2009] NSWCA 429 at [28] (Allsop P and Handley AJA, Hodgson JA agreeing) and the authorities there cited. I do not accept that TQM was a party to this contract. I do not consider there is any conduct of TQM which indicates it accepted the offer made by the quote prepared for it by Buildom.

As the contract was not wholly in writing, post-contractual evidence can be used to determine the identity of the contracting parties: BH Australia Constructions Pty Ltd v Kapeller & Anor (2019) 100 NSWLR 367; [2019] NSWSC 1086 at [91]. Whilst there were negotiations with and correspondence to and from persons with TQM email addresses, I do not consider that is determinative. Whilst the quote was “prepared for TQM” the purchase order was issued by Everton. [66] It required all invoices to be sent to Everton. [67] The initial invoice requiring the 10% deposit was sent to Everton and so were ongoing invoices related to the project. [68] The deposit was paid by Everton. [69] All subsequent invoices were sent to and paid by Everton. Objectively, these matters point to the parties common understanding and intention that the parties to the contract were Buildom and Everton.

I accept that the TQM staff were engaging with the plaintiff’s staff before the contract was entered into and after. They engaged when the defects in the pods became apparent and undertook the supervision of the remediation of those defects. However, that may be no more than a reflection of the position that TQM was the builder undertaking the works at the site on behalf of Everton which was the developer.

I do not accept Buildom’s submission that the fact that of TQM, Everton and Rawson only TQM held a building licence means TQM must have been a party to the contract. No provisions of the Home Building Act 1989 (NSW) were identified that would preclude TQM as a licenced builder undertaking the building works for Everton (or Rawson) as the developer.

There is no written document which encapsulates all the terms at the time of the contract’s formation. Each of the quote and the purchase order have different terms and conditions. From the chronology I have referred to, I cannot be satisfied on the balance of probabilities that the Everton Standard Terms eventually signed by Mr Huang on 16 January 2020 was sent to Buildom before 14 January 2020 (see [63] above). I do not consider at the time the contract was formed, the Everton Standard Conditions for the Gordon project had been sent to Buildom. They could not therefore have been adopted by the parties as the terms and conditions of the contract at that time (subject to some argument about retrospective operations which was not, as I have said, made by any party).

There are therefore the following possibilities as to the written terms of the contract at the time of entry into it:

As Mr Marshall, counsel for Everton and Rawson submitted, in the end it does not really matter which of those possibilities is correct. That is because:

Mr Debuse, counsel for Buildom made a similar submission as to the terms of the original contracts when in closing submissions he said:

As will be explained later in these reasons, I have found that the pods manufactured and supplied by Buildom at each of the Gordon and Wollongong projects were defective. Further, I have found that there was an agreement entered into on 4 December 2019 (“the 4 December Agreement”) by Buildom and Everton as to the rates that Buildom would pay for Everton or TQM to rectify the defects in the pods at both the Gordon and Wollongong sites. [74] Subsequently, Buildom agreed that Everton/TQM should undertake all of the rectifications to the pods and acknowledged from time to time the costs incurred by the defendants in undertaking those rectifications.

I consider the most probable result for the terms of the Gordon contract when it was formed and in so far as it is contained in writing, is that the quote, accepted by the purchase order incorporates as terms of the contract those terms in AS 4910-2002. In those circumstances counsel for Everton and Rawson accepts the Everton Standard Terms were of no effect for Gordon at that time. [75]

I have referred to the evidence that Mr Huang signed the Everton Standard Terms on 16 January 2020. By that stage, it was apparent (as will be described below) that there were significant defects in the pods. There had also been the entry into the 4 December Agreement. That agreement refers to, and incorporates by reference, clause 30 of the Everton Standard Terms. As I have mentioned, no party submitted that the signing of the Everton Standard Terms by Mr Huang at that time (and the dating of the formal Appointment of Subcontractor as being December 2018) meant that the common intention was to have those terms and conditions retrospectively apply to the parties’ relationship from 2018.

In so far as it is necessary to determine, it seems to me that the effect of the signature by Mr Huang of the Everton Standard terms for the Gordon project on 16 January 2020, was a complete re-statement of the contractual rights moving forward from that time. It involved a rescission of the previous contractual terms and the terms of the Everton Standard Terms prevailed from that time on: see Tallerman & Co Pty Ltd v Nathan’s Merchandise (Victoria) Pty Ltd (1957) 98 CLR 93; [1957] HCA 10 at 143-144 per Taylor J, Australia and New Zealand Banking Group Ltd v Manasseh [2016] WASCA 41 at [78]-[82] per Buss JA. This will not have any impact on the result of the case. No party submitted otherwise.

For the reasons I have stated, in the circumstances where:

Buildom also pleads that TQM is estopped from denying it is a party to the Gordon contract. As it also makes this claim with respect to the Wollongong contract, and on the same basis, I will deal with that issue separately.

Originally, Everton and Rawson pleaded that Rawson entered into the contract with Buildom for the Wollongong contract. As has been observed above, during the hearing, it became apparent that at the time that any contract had been entered into for the Wollongong project, Rawson had not been incorporated. [76] Mr Marshall, counsel for Everton and Rawson, then applied to amend the defence such that it was admitted that the contract for the Wollongong project was between Everton and Buildom. This amendment was not opposed.

The contract for the Wollongong project was entered into by at least the time that Buildom issued the invoice for the deposit for Wollongong on 28 September 2018. [77] I infer that there had been acceptance of the Wollongong Offer which resulted in the generation of the invoice for the deposit. It was agreed that in the interests of building a relationship, the deposit need not be paid. [78] The email correspondence shows that the PO would be issued after it had been approved by relevant staff. [79] No PO was ever issued. However, the parties proceeded as if there was a contract in existence as Buildom must have taken steps to design and build the pods which were then delivered to the site on and from 20 June 2019.

Buildom assert that TQM was also a party to this contract. For substantially the same reason as identified in [95]-[96] above with respect to the Gordon contract, I reject this submission. As was the case for Gordon, the proposal for Wollongong was “prepared for TQM”. [80] However, the invoice was sent by Buildom to Everton. [81] Subject to Rawson becoming the party to whom invoices were sent by the plaintiff from August 2019 (as to which see the discussion on novation below), Everton was sent, and paid, all invoices. Objectively, these matters point to the parties common understanding and intention that the parties to the contract were Buildom and Everton.

The correspondence I have referred to also indicates that for the Wollongong project Everton sent a Subcontractor Agreement (containing the Everton Standard Terms) to Buildom on 12 November 2018. The Agreement sent appears in several places in the JTB. First, it appears at JTB 3578-3627 apparently annexed to the email from Mr Lim to Mr Cavanna.

I have referred to emails sent by Everton to the plaintiff chasing a signed copy of the Everton Standard Terms. The parties to the agreement are said to be Everton and Buildom. There was never any correspondence or communication from Buildom asking for TQM to be added to that agreement. Additionally, once the pods had started to be delivered, there is in evidence numerous “Subcontractor’s Statement(s)” Regarding Workers Compensation, Payroll Tax and remuneration sent by Buildom. These documents state the Buildom had entered into a contract with Everton. [82] In so far as the contract for Wollongong was not wholly contained in writing (as to which see below) and post contract events can be used to identify the parties to the contract, these matters reflect a common intention that the parties to any agreement for the supply of pods for Wollongong were Buildom and Everton.

As to the terms of the contract for Wollongong, Buildom submits that the terms of the contract incorporate AS 4910-2002. Everton agrees with this submitting in the alternative that the Everton Standard Terms bound the parties, they having been performing the contract with Buildom having had those terms since just after the contract was formed, not taking issue with them but omitting to sign those terms until 16 January 2020.

TQM also submitted that the Everton Standard Terms were the relevant terms. It points to the email from Mr Cookson to Mr Pereira of 13 January 2020. [83] Mr Cookson there thanks Mr Pereira for … “the confirmation that the contract I have between Everton and Buildom… dated 16 October 2018 is correct.” He confirms it ... “lines up with the proposal provided by Angel Cavanna...” of 26 September 2018. It was only 3 days later that Mr Huang signed the contract and returned it to Everton.

I agree with TQM’s submission that the Everton Standard Terms contain the terms for the Wollongong contract. I infer the parties had been conducting themselves on that basis noting Mr Cookson’s agreement that those terms lined up with the Buildom proposal. Therefore, as that contract is wholly in writing, it also identifies the parties as being Buildom and Everton.

For the reasons I have explained at [99]-[100] and [105], if I am wrong about these being the terms and the correct view is that espoused by Buildom and Everton (namely that it the terms were contained in AS 4910-2002) there is no material impact on the result of the proceedings.

TQM alleges that the contract between Buildom and Everton for the Wollongong project was novated to a contract between Buildom and Rawson. It is unclear to me why this allegation was made, or pressed, when it did not lead to any other relief for or against TQM, or prevent Buildom from otherwise succeeding on any of its claims. Nevertheless, by reason of the time the issue occupied at hearing and in submissions, I will deal with it briefly.

The argument proceeds on the basis that the parties to the Wollongong contract were Buildom and Everton and that TQM was not a party to that contract. The evidence establishes that Everton had received and paid invoices for the Wollongong project from the commencement of the supply and delivery of the pods by Buildom: see for example the ‘less amount paid’ in the invoice issued by Buildom to Everton regarding the Wollongong project on 29 July 2019. [84]

On 19 August 2019, Mr Roy from TQM sent an email too “Tom” at accounts@buildom.com.au as follows:

The “above attached invoices” referred to in that email are invoices 158A and 168. [86] Each of those invoices were issued by Buildom to Everton for the Wollongong project.

The evidence discloses that from that time, Buildom did issue all further invoices for the Wollongong project to Rawson.

The email of 19 August 2019 and the subsequent issue of invoices to Rawson is the only evidence relied upon by TQM in support of its submission the novation argument.

TQM refers to the decision of Slattery J in Fu Tian Fortune Pty Ltd v Park Cho Pty Ltd [2018] NSWSC 528 at [73]-[77] where his Honour summarises the relevant principles for a contract to be novated. Those principles include (omitting the references to authorities cited):

TQM submits that Buildom originally pleaded that the contract was novated as it submits and this plea was verified by Lester Huang indicating his belief in that allegation. I do not think this assists TQM. The question of whether the contract was novated is an objective one: Hillam v Iacullo (2015) 90 NSWLR 422; [2015] NSWCA 196 (Leeming JA, Basten and Ward JJA agreeing) at [57]. In any event, Buildom amended its pleading and removed this allegation. That amended pleading was also verified by Mr Huang.

I do not accept that the email referred to by itself, even coupled with the subsequent issuing of invoices to Rawson in lieu of Everton, is enough to novate the contract between Everton and Buildom. This is for the following reasons:

In these circumstances, I am unable to infer that each of Everton, Rawson and Buildom intended to novate the contract between Buildom and Everton.

Buildom alleges that TQM is estopped from denying it is a responsible jointly for payment of the purchase price for the bathroom pods and any variations to the price of those pods. [89] It is not quite correct, as was submitted during the hearing, that the pleaded claim is that TQM is estopped from denying it is a party to each of the Gordon and Wollongong contracts, although the effect may be substantially the same. In this sense, the written submissions filed by Buildom on 4 May 2025, after the hearing was complete, do not quite accurately reflect the pleading.

Those submissions assert that TQM “should be estopped from denying it was a party to the Wollongong contract and the Gordon contract where it has consistently represented or held itself out as a party (such that it is subject to liabilities and obligations under those contracts) and most importantly liable for the obligation of payment.” [90] The “liabilities and obligations”, apart from the obligation of payment, referred to are not specified.

In the 4 May submissions, Buildom denies that the way in which it puts the estoppel case is beyond the pleadings. [91] It says it relies on the same material particularised for the pleaded claim. In any event, it submits, there is no prejudice to TQM where the evidence relied upon is the same as that relied on by TQM itself and the Court should determine the claim on the basis of the facts established by the evidence adduced (citing Dare v Pulham (1982) 148 CLR 658; [1982] HCA 70 at 664).

I do not accept that Dare v Pulham stands for the principle asserted by Buildom. That was a case dealing with a jury verdict for damages for negligence which exceeded those claimed in the particulars provided. At 664 the Court said:

Nevertheless, in respect to the estoppel claim, I do not regard the parties as having disregarded the pleadings. Whilst there is a slight difference, the real effect of the estoppel claim as pleaded was that TQM had represented that it would be responsible for all aspects of the management and payment in relation to the purchase of the pods for each of the projects. The representation in each matter is described as the “management and payment representation”.

By reasons of the conclusions that I have reached with respect to Buildom’s claims overall the estoppel claim, even if it was to succeed, would not impact on the overall outcome of the proceedings. It can thus be dealt with more briefly than if the position was otherwise.

I do not accept that the estoppel case is established. Fundamentally, that is because I do not accept that the representations said to have been made by TQM which found the estoppel, and on which Buildom asserts it relied to its detriment, were made. It will be necessary to consider the pleaded and particularised bases for these representations.

Further and better particulars of the “management payment representation” said to have been made in each case were requested by the solicitors for TQM. The reply particularises that each management and payment representation was express and in writing and by implication. [92]

The management and payment representation was said to have been made at the time that Mr Roy made the request for invoices for the Wollongong project to be made out to Rawson. [93] It is alleged that the representation was a continuing one and particulars of it were said to be contained in the documents particularised in paragraphs 3E and 3N of the FASoC. These documents include correspondence with Mr Moran from TQM before the project commenced. Reliance is also placed on correspondence between Buildom staff and TQM personnel during the project about the supply and installation of the pods. In so far as it is said to be implied, the representation was particularised as being that TQM held itself out as being the counterparty to the contract.

It is clear that TQM undertook the construction of the Wollongong project. That must have been for Everton. The fact that there was correspondence between Buildom staff and TQM personnel before and during the project is therefore unsurprising and, without more, does not give rise to the representation relied upon. As TQM was undertaking the construction of the projects, it is not surprising its staff would be involved in the management of those projects.

I have found the identity of the contracting parties above. Payments were made by Everton for the invoices sent to it and subsequently Rawson for the invoices sent to it. I do not consider that because a person of unknown status from TQM requested the change from Everton to Rawson (for billing purposes) that this means that TQM was responsible for payment of those invoices. I accept the submission of TQM that none of the documents relied upon contain any express representation that TQM would be responsible for the payment of invoices issued to Everton (or Rawson) for the Wollongong project. Nor, in my opinion, is such a representation implied.

I also accept TQM’s submission that Buildom has not established any detriment flowing from any representations that were made. The evidence establishes that the invoices issued to Everton (and Rawson) were paid – at least in part – subject to the dispute which then arose with respect to the defects in the pods. As I understand the estoppel argument, it was not that TQM replaced Everton as the contractual party but was an additional contractual party. If the representation was that TQM would be responsible for the management of the project (as it was as the builder) and payment of invoices issued by Buildom (these invoices were paid in part in any event) no detriment has been identified. There is no evidence to support a finding that in light of the dispute which arose with respect to the defects in the pods that TQM would have paid the invoices in full and then sought return of money to rectify the defects. The claim that TQM was estopped from denying it was responsible for the payment of the purchase price for the pods and variations to the price goes nowhere in light of my findings that Buildom accepted that the pods were defective, agreed the rates it could be charged to fix those defects and accepted the amounts claimed to undertake that rectification. [94]

In the circumstances, I do not consider it necessary to deal with the question of whether Buildom relied on any of the asserted representations.

For Gordon, the management and payment representation was particularised in paragraphs 2E and 2N of the FASoC and the document at JTB 4248. Again, these are documents evidencing correspondence between TQM personnel, including Mr Moran, and Buildom personnel, including Mr Huang, prior to the project and once it had commenced. For the same reasons I have identified for the Wollongong project, I do not consider the documents make the representations alleged such as to be the basis for an estoppel. Again, the evidence gives rise to a finding that TQM was undertaking the construction on behalf of Everton. It is unsurprising that it was managing that project. I have found TQM was not a party to the contract for the Gordon project. Buildom relies on the fact that the proposal forwarded by Buildom prior to the project was sent to Mr Moran of TQM. However that may be, it overlooks the purchase order coming from Everton and being accepted by Buildom.

In terms of payment of invoices issued by Buildom to Everton, these were paid by Everton – again, until the defect issues arose.

For the same reasons identified for Wollongong, I do not accept that there is any detriment established by Buildom even if the representations were made. Again, it is not necessary to deal with reliance.

I should for completeness deal with the written reply submissions filed by Buildom on 4 May 2025 on the estoppel issue. It submits that:

The submissions then track correspondence and documents that the plaintiff submits make good the propositions above. These include copies of the Everton Standard Terms sent to Buildom by Moon Lim, the contracts administrator from TQM on 12 November 2018 and a variation for Wollongong sent 26 March 2019 by Buildom to Mr Roy, TQM’s project manager for the project and signed by Mr Habambo. [95]

I accept these documents show the TQM personnel were intimately involved in the negotiation of the contracts for each of the projects. I do not accept this gave rise to a common assumption that it would thus be a party to each of the contracts. For example, the Everton Standard Terms sent by Mr Lim referred to in the paragraph above, note Everton as the contracting party. There is no evidence of anyone from Buildom suggesting that TQM should be included in that document, or any other document that may have formed part of, or evidence, the contractual arrangements for each project.

I also accept that TQM was to be significantly involved in each of the projects. The plaintiff refers in this regard to other correspondence between Buildom (Mr Youssef) and TQM (Mr Roy), including on 1 March 2019 where Mr Roy says that “TQM is coordinating every details including design, procurement and necessary coordination to have a [sic] better PODs”. [96] I do not consider this means that TQM was a party to the contract(s). It is understandable that TQM would have this level of involvement as it was undertaking the construction for Everton. I do not accept the plaintiff’s submission that this statement is an admission by TQM that it was a party to the Wollongong contract.

I also do not accept that Mr Huang’s evidence goes so far to establish that the plaintiff, through him, assumed TQM was a party to the contracts. The passage relied upon by the plaintiff is as follows:

That evidence gets no higher than Mr Huang thought, or assumed, that Everton and Rawson were controlled by TQM, not that TQM was a party to the contracts.

The estoppel claim by Buildom in both proceedings fails.

Having dealt with the contractual issues, it is now appropriate to review the evidence following the delivery and installation of the pods. As will be seen, that evidence will establish that almost immediately from the delivery and installation of the first pods, issues arose with respect to their quality.

The chronological documentary evidence indicates that from at least June 2019 Buildom was being advised that there were defects in the pods being supplied to Wollongong. [98] These defects included shadow lines showing, incorrect placement of vanity taps, wrong colouring for certain items, floor tiles popping up and moving and issues with the vanity stones. Additional emails about defects in the Wollongong pods note other defects including with respect to the elevations of the pods and on those pods up to the ground floor on average having “more than a dozen issues with the pods”. [99] Mr Habambo was requesting that Buildom organise a team to deal with the defects.

The defects were not limited to Wollongong. At Gordon similar issues were arising and being raised with Buildom. On 28 June, Mr Habambo sent Mr Cavanna a multi-page list of defects for the pods then delivered to Gordon. [100] He said: “Building conventionally, I’ve never have (sic.) so many defects. Please speak to your directors to resolve these as a priority”.

Buildom made claims for payment for the pods it had delivered. Everton soon resisted paying until steps were taken to remedy the defects. Relationships appeared to become strained and Buildom threatened delays in delivery of further pods unless it was paid. [101] On 8 July 2019, Mr Habambo wrote to Mr Cavanna and Mr Ayoub at Buildom noting “grave concern” with the pods. He noted that “the amount of defects is alarming. there (sic.) is also a lot of bounce in the floors in various pods”. He said a payment would be made to Buildom out of good faith. [102]

Further complaints about the flooring in the pods, including springy or bouncy floors, were made by Mr Pereira in August 2019. [103] Other defects raised included with respect to elevations of the pods not matching floor levels [104] and issues as to the bathtubs installed. [105] Mr Pereira was chasing Mr Suarez for a rectification program. [106]

Between 24 June 2019 and 25 October 2019, Mr Huang deposed that Buildom had issued invoices totalling $1,855,093.46 for the Wollongong project. Of that amount, Mr Huang says $255,029.12 had been paid by the end of October. For the Gordon project he deposed that the contract price was $3,436,400.176 incl. of GST and only $1,557,381.08 was paid. He said Buildom was under significant financial pressure.

By November 2019, following additional complaints from Mr Mark Taouk of TQM, Mr Suarez, whilst on leave, asked others at Buildom to raise the issue of defects with directors of Buildom. [107] Buildom continued to press for payment of outstanding invoices. [108] There was discussion about the level of work needed to fix the defects and whether Buildom truly appreciated the magnitude of the task. [109] Buildom appeared to resist engaging due to its outstanding invoices. [110] The parties did, however, continue to engage about the defects.

On 29 November 2019, Mr Pereira sent a letter to Buildom enclosing a letter outlining a schedule of rates for rectification works, including by contractors engaged by the defendants, for the pods at the two projects. [111] He chased Buildom for a response on 3 December. [112] Mr Huang had seen this letter and discussed it, and the rates proposed, with Oscar Picciau. Buildom sought to adjust the rates but was told they were not negotiable. [113]

On 4 December 2019 a meeting was held at the defendants’ offices to discuss the issue of defects in the pods, methods and rates for rectification. Mr Huang, the sole director of Buildom did not attend. Mr Liu, Mr Zhang, Mr Picciau attended the meeting for Buildom. No affidavits from Mr Liu of Mr Zhang were read by Buildom. Mr Picciau did not give evidence. I infer nothing they could have said would have assisted Buildom: (Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8).

The meeting was attended by Mr Habambo and Mr Pereira on behalf of the defendants. There is a difference in recollection between Mr Habambo (who says Mr Taouk also attended) and Mr Pereira (who says Simon Melhem and not Mr Taouk attended). Mr Taouk also says he did not attend. There is no need to resolve this difference as it does not impact on what occurred.

Mr S Huang (Lester Huang’s father) gave evidence confirming he attended the meeting. However, he said he could not remember very much about it and this is why there is nothing about what happened at the meeting in his five affidavits read by the plaintiff. [114] There is thus no evidence led by the plaintiff from anyone who was at that meeting going to what was said at the meeting.

From the evidence of Mr Habambo and Mr Pereira, at the meeting the parties discussed the defects in the pods and the issues in rectifying those defects. There was discussion about how long rectification would take and the defendants’ view that Buildom had done little to rectify defects in the preceding months. It was proposed that the TQM/Everton undertake the rectification work. There was discussion about the rates proposed and some rates were reduced. These were adjusted and Mr Picciau on behalf of Buildom signed an amended version of the letter that had been sent to Buildom on 29 November. [115]

At 12.44pm on 4 December, following the meeting, the letter, signed by Mr Picciau reflecting what was agreed at the meeting was sent and addressed to Mr Picciau, Mr Zhang and Mr Liu. [116] The email sending the letter stated:

Mr Huang signed the letter on 5 December 2019. [118] He said he had discussed it with Mr Liu [119] but did not read it before he signed it. [120] I find this surprising as he was the sole director of Buildom, the primary decision maker and effectively controlled the company. [121]

I pause at this point to note that I found Mr Huang to be an unimpressive witness. He did not recall many things. He gave the impression that he was uncomfortable in the witness box and was evasive in answering questions. For example, I do not accept his evidence that he did not know at the time he signed the letter on 5 December 2019 (or even when being asked about it in the witness box) that there were defects in the pods. He said … “there may have been”. [122] This answer flies in the face of documents he signed, including the 4 December Agreement and others I refer to below, which acknowledge and accept that there were defects effecting all the pods at both Wollongong and Gordon.

In his affidavits, Mr Huang deposes to being told by Mr Liu that if he signed the 4 December letter, Buildom would be paid the outstanding amounts for each of the Gordon and Wollongong projects. Mr Liu was not called to give evidence for the plaintiff and the parts of Mr Huang’s affidavits recounting what he said Mr Liu told him were the subject of a restriction under s 136 of the Evidence Act 1995 (NSW) being evidence as to what was said, not as to the truth of what was said.

There are some differences in Mr Huang’s account of what was said to him by Mr Liu after them meeting and his evidence in the witness box. In the Wollongong affidavit, Mr Huang says Mr Liu told him the payments would be received progressively on a “level-by-level” basis for defect rectifications to be undertaken. He said he told Mr Liu that he (Mr Huang) needed to read the document. Mr Liu told him to just sign it. [123] He said he signed the document as he trusted TQM would honour what was said to Mr Liu as it was a large construction company.

In the Gordon proceedings Mr Huang said he was told by Mr Liu that the outstanding amount of $1,879,019.09 owed to the plaintiff would be paid if he signed the document. Mr Huang said he asked if he should get legal advice and that Buildom should get some money before he signed the document. He said Mr Liu told him if he did not sign it, they would get nothing. Mr Huang said the document was an acknowledgement of the rates Buildom would be charged if TQM undertook the defect rectification works (it is unclear how he knew this if his evidence that he didn’t read the document was true). He said Mr Liu told him to just sign it. He said he was reluctant to sign the document but based on the fact that TQM was a large developer, he thought they would honour the payments. As Buildom was in financial hardship, he signed it in the hope TQM “would honour the payment”. [124]

As I have said, Mr Liu was not called to give evidence. I do not accept that he was told by representatives of Everton or TQM that if the 4 December Agreement was signed, the outstanding invoices would be paid, at least without reference to and accounting for the cost to rectify the defects in the pods. A representation that there would be payment for all outstanding amounts on signature of the letter would be contrary to the terms of the 4 December Agreement itself.

The 4 December document is an important document. The text of the letter is relevantly as follows:

It was accepted by counsel for the plaintiff that this letter is binding on the plaintiff as to the rates to fix defects in the pods. [125] Importantly, the 4 December Agreement notes that all pods (approximately 120 for Wollongong and 209 for Gordon) were effected by defects. By signing this letter, the plaintiff accepted this was the case. It was accepted by the plaintiff by signing the letter that the defects were systemic. It does not mean that every pod had been looked at, but that the defects discovered, for example with respect to the fall of the pods, were systemic such that they applied to all pods.

By reason of the concession by counsel for the plaintiff (which was properly made) that the 4 December Agreement is binding, the evidence of Mr Huang as to what he was told by Mr Liu, what he believed may happen afterwards and why he signed it is not material. The agreement takes effect in accordance with its terms and its interaction with the contracts in place. Further, by reason of that concession, the evidence of Mr Huang that he did not read the document before he signed it and did not know its contents (astounding as that evidence is) also does not matter. [126] In any event, as the sole director of Buildom, having signed it and there being no pleaded allegation of fraud or misrepresentation, he bound Buildom to its terms: L’Estrange v F Graucob Ltd [1934] 2 KB 394; Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165; [2004] HCA 52 at [42]-[47]; IWC Industries Pty Ltd & Anor. V Sergienko & Anor [2021] NSWCA 292 at [106].

There are several aspects of the agreement that need to be considered. First, the reference to “Clause 30 [subclause 30.2] of our Works Contract” is accepted by the parties to be a reference to clause 30 of the Everton Standard Terms. That clause provides:

Having found for the Gordon project that the contract when formed (and as at 4 December 2019) was in so far as it was contained in writing the terms in AS 4910-2002, the 4 December Agreement is a contract collateral to those terms dealing with the rectification of defects in the pods supplied: Hoyt’s Pty Ltd v Spencer (1919) 27 CLR 133 at 147 ; Maybury v Atlantic Union Oil Co Ltd (1953) 89 CLR 507 at 517. It incorporated by reference clause 30 of the Everton Special Terms. When the Everton Special Terms for Gordon were signed by Mr Huang on 16 January 2020, the 4 December Agreement continued in effect collaterally to that agreement dealing with the rates agreed for the rectification of defects in the pods.

As for Wollongong, the 4 December Agreement is collateral to the Everton Standard Terms applicable to that project.

The 4 December Agreement also provides an acknowledgement that Buildom did not possess the adequate labour/resources and/or expertise to address the defects in the pods in a timely manner. Everton and TQM on its behalf were to “reluctantly” intervene and undertake rectification works with Buildom and also for Buildom at its cost.

The plaintiff relies on the part of the agreement which states:

The plaintiff says that it never received the actual quantities or invoices for the works for the rectification of the defects in the pods. It says that the defendant bears the evidential onus of proving what each defect was, the cost for rectifying each defect and the quantity of money it spent on rectifying the defects.

Whilst ordinarily there would be force in these submissions, the conduct of the plaintiff as explained below means that the submissions cannot be accepted. The conduct I refer to are acknowledgments by Mr Huang on behalf of the plaintiff accepting the amounts charged by the defendant in rectifying defects in the pods. The amounts were contained in letters and payment schedules which set out the details of the charges incurred in rectifying the defective pods. Counsel for the plaintiff accepted those acknowledgements were also binding on the plaintiff. [127]

The findings I make also mean that there is no need to resolve any differences between the experts called in the proceedings either as to whether some claimed defects (for example “bouncy floors” in the pods) were, in fact, defects or whether the amount expended by the defendants in remedying defects was reasonable. Further, there is no need to determine if defects impacted all the pods as the 4 December Agreement expressly accepts that they did.

I should at this point deal with a matter raised by Mr Debuse, counsel for the plaintiff, about acceptance of the pods by Everton and clause 30.4 of the Everton Standard Conditions. Mr Debuse submits that the pods were accepted by Everton for each of the projects. He submits that the acceptance of the pods by Everton means that there has been substantial performance of the contracts by the plaintiff. He says, therefore, the plaintiff is entitled to receive the whole of the purchase price for the pods to be set off or reduced only by an amount the defendants prove in these proceedings by way of damages for breach of warranty.

In support of this submission, firstly, Mr Debuse relies on Cordon Investments Pty Ltd v Lesdor Properties [2010] NSWSC 1073. At [164] of that judgment McDougall J said:

I do not accept that the reference to “substantial performance” assists the plaintiff in this case. Once it was accepted by the plaintiff, as it was in the 4 December Agreement, that the pods were defective and were not supplied in accordance with the contractual requirements, I do not accept that there has been substantial performance of the plaintiff’s obligations under the contracts. The reference to clause 30.4 in the 4 December Agreement is on the premise that the pods are defective. As McDougall J said in Cordon Investments (at [169]): “Whatever the test for ‘substantial completion’, it must at least encompass that the works said to have been completed substantially are reasonably fit for their contemplated occupation and use”. I do not accept that the plaintiff’s performance in supplying defective pods amounted to completion of its obligations to supply pods which were fit for purpose.

In any event, I do not understand any of the defendants to ever have denied that, in so far as they were a contracting party, they were not relieved from paying the contracted price. Rather, their case is, in essence, that the pods were defective. The defects were systemic, and necessitated rectification works on all the pods. It was agreed by the parties, culminating in the 4 December Agreement, that the defects would be rectified at the rates specified in that agreement and the costs set-off from amounts invoiced by Buildom. In this sense, the argument by the plaintiff about “acceptance” adds nothing apart from, perhaps, the issue that the defendants would need to prove the defects and the cost to rectify them. However, as I have said, the 4 December Agreement accepted that the defects affected all pods. Further, as described below, Buildom signed off and accepted the amounts spent in rectifying those defects at the rates set out in the 4 December Agreement. As such, this argument by the plaintiff really goes nowhere.

A second reason advanced by Mr Debuse as to why Buildom is entitled to the full contract price set off only by defects proven is by reason of this being the result of the proper construction of clause 30.4 of the Everton Standard conditions (reproduced at [171] above) together with clause 40.2 of those terms. However, even if that construction was correct, the terms of the 4 December Agreement note that pursuant to clause 30.2, the defective pods are to be rectified on site pursuant to the rates nominated and accepted by the plaintiff. The 4 December Agreement further states that the plaintiff authorised the amounts required to remedy the defects to be deducted from each progress claim. This is what occurred (as will be seen below) with the plaintiff acknowledging that the amounts specified by Everton as being incurred by it for the rectification of the defects in the pods. I do not accept that what was to occur was for the full amount to be paid to the plaintiff and then a process undertaken by which the defects were repaired and an account taken of what was then owing to Everton for the costs in it making those repairs. That is the effect of the submission of the plaintiff, which I reject.

In any event, the concept of any of the defendants accepting the pods enlivening the right to full payment with a set-off later for proven rectification costs is not pleaded by the plaintiff.

Following the 4 December Agreement, works were undertaken as required to fix the defects in the pods at each of the Gordon and Wollongong sites. Defects continued to be found. [128] They included hollowness in bathroom floors requiring injection of grout, re-fixing the floor shell to the substrate, missing and incorrectly fitted PC items, replacement of floor tiles and re-waterproofing. [129]

On 22 January 2020, a cost summary of rectification costs incurred for the Wollongong project up to 20 January 2020 was sent by Mr Pereira the project manager for Everton for the Wollongong project to Mr Huang and others at Buildom. [130] At that time the costs were projected to be $621,501 plus GST which was to be deducted from progress claims/retentions sums due to Buildom. The email which enclosed the costs projection/summary letter indicated the discovery of further defects in the pods. Mr Pereira said:

Mr Pereira also complained about the lack of responsiveness from Buildom for tasks its staff were to attend to in fixing the defects in the pods. He said:

A detailed schedule of the rectification works was attached in a letter. This was signed and accepted by Mr Huang on 29 January 2020. [131]

On 24 January 2020 Simon Melhem, the project manager for Everton for the Gordon project, sent a letter to Mr Huang itemising the costs at that time for rectification of the pods for that project as $908,537.24 plus GST. [132] Again this amount was to be deducted from progress claims/retention costs due to Buildom. As was the case with the Wollongong project, a detailed schedule of the rectification works was attached as Adjustment Register 1. [133] On 29 January 2020, Mr Huang signed an acknowledgement attached to the letter. His signature was witnessed by Mr Zhang. [134]

By his signature to the letters for each of the Gordon and Wollongong projects, Mr Huang acknowledged [135] that he agreed to and consented for TQM to withhold the sums identified in those letters, plus GST, from any monies subsequently due by Everton for each of the Gordon and Wollongong projects. This reflected, as Mr Huang expressly accepted, the terms of the 4 December Agreement. He also acknowledged that there were still outstanding matters yet to be invoiced or attended to by Buildom site representatives for rectification. As I have observed, counsel for the plaintiff accepted these acknowledgments were binding on the plaintiff.

On 29 January 2020, Everton issued for the Gordon project a combined “Tax Invoice and Payment Schedule made under the Building and Construction Industry Security of Payment Act 1999 NSW” (Payment Claim 11). [136] This document reconciled various invoices for the Gordon project issued by Buildom noting “Contract Work Complete” at $2,815,671.36 with “Variations, Adjustments, Other Matters at -$1,231,456.19” less retention to give a final payment amount of $27,500. The payment schedule sets out in detail items of rectification works and labour costs for those works.

The document was sent to Buildom by Mr Melhem by email on 29 January 2020. [137] In that email, Mr Melhem referred to discussions with Buildom the previous day. Earlier emails in the chain refer to a meeting held at TQM’s office with George Habambo. [138] In Mr Huang’s 11 December affidavit in the Wollongong proceedings at [51] [139] he deposes to this meeting occurring, although he did not attend. He says Mr Liu informed him that it was communicated that it was not possible for Buildom to continue defect rectification work without payment and that it was agreed a payment schedule would be provided if the requisite documents were signed by the plaintiff.

In Mr Huang’s 11 December affidavit for the Gordon proceedings, he deposes that Mr Liu told him he had a meeting with TQM on the 28th of January which concerned the payment the signing of a payment schedule and the structure of ongoing payments to Buildom.

Payment Claim 11 was “signed and accepted” by Mr Huang on 4 February 2020. [140] Mr Huang says he signed these documents so that payment of the $27,500 would be made to Buildom. He said Buildom was experiencing severe financial pressure. That may be the case, however, by signing those documents he had acknowledged and agreed that the rectification works in the schedules had been undertaken, at the agreed rates, and the rectification sums stated were properly deducted from the invoiced amounts to provide a reconciled amount owing to Buildom as at the date of the respective documents.

On 29 January 2020 Mr Pereira emailed Mr Huang with a similar document for the Wollongong project (Payment Claim 7). [141] In that email Mr Pereira stated:

Payment Claim 7 was signed and accepted by Mr Huang.

I consider the effect of the payment claims and acknowledgments are clear. As stated, each of the payment claims for the Gordon and Wollongong projects were signed by Mr Huang. [142] Each set out the details of the rectification works undertaken of the pods by TQM/Everton and the costing of those rectification works. There is no dispute that the costings were at the rates agreed in the 4 December Agreement. There is no evidence of Buildom requiring further information as to the scope or nature of the works, or their cost, as set out in the payment claims from this time.

I do not consider it necessary to set out the details of each of the various payment claims in detail. I find that for each of the projects, Buildom through Mr Huang, accepted the amounts stated in the payment claims as being amounts expended by TQM and the defendants in the rectification of the pods, at the rates agreed. He agreed to have those amounts deducted from any amounts owing to Buildom.

By reason of my findings as to the effect of Mr Huang signing the acknowledgments and payment claims, I reject the submissions of the plaintiff that any of the defendants bear an onus to prove the individual defects in the pods, or to prove the cost for rectification of each of those defects, or that those costs were reasonable. All of those matters were accepted by Buildom through Mr Huang signing and accepting the payment claims and his acknowledgements I have referred to. This finding also makes the expert evidence both as to the nature of any defects (or nature of build quality and whether there were defects) and the evidence of the quantity surveyors, irrelevant.

The plaintiff’s counsel accepted that if I found these documents were an acknowledgement and acceptance by Buildom of the amounts spent in rectifying the defects in the pods, then the ultimate issue was whether, after deducting the amounts so spent, there is anything left owing to the plaintiff [143] . Plaintiff’s counsel also accepted in closing submissions that if I found that by signing these documents Buildom accepted that the work in rectifying the defects was done and accounted for in accordance with the 4 December Agreement, that the plaintiff’s arguments as to the application of s 32 of the Building and Construction Industry Security of Payment Act 1999 (NSW) (“SOPA”) have no relevance [144] .

On 4 March 2020, Mr Picciau from Buildom wrote to Mr Habambo by email headed “TQM (Gordon & Wollongong Projects)- rectification” in the following terms [145] :

It is plain that from this communication, due to cashflow problems, Buildom could no longer continue to contribute to the rectification of the pods. It affirmed that TQM could continue rectification works at the rates agreed in the 4 December Agreement.

Another matter which occupied time during submissions was the effect of credit notes issued by Buildom in each of the projects. The credit notes were issued in the following circumstances.

On 6 February 2020 Mr Pereira wrote to Mr Huang (copied to others) and said: [146]

The email continued with a table setting out the various invoices issued by Buildom for the Wollongong project.

On the same day, Mr Melhem sent another email to Mr Huang (copied to others). [147] He asked for a credit note for the Gordon project as well. He set out a table of the invoices, the amount of the revised works (after the cost of remedying the defects to that date) and stated the credit note should be in the sum of $1,559,060.27.

On 17 February 2020, Buildom issued a credit note for adjustment of the Wollongong accounts in the sum of $1,529,951.74 incl. GST. [148] This credit note was not sent until 17 March 2020. [149]

On the same day it sent a credit note for the adjustment of the Gordon accounts, also dated 17 February 2020, in the sum of $1,714,966.30.

In his affidavit of 11 December 2021 in the Wollongong proceedings, Mr Huang says:

In his affidavit of 11 December 2021 in the Gordon proceedings Mr Huang says:

It is unclear the basis on which Mr Huang says he formed the belief that the provision of the credit notes would release Buildom from further responsibility, at least financially, for defect rectification work in either project. Further, it is plain from this evidence that (at least to his understanding) Mr Huang understood that the provision of the credit note to Buildom for each of the projects was giving Buildom credit from the amount due under the purchase price for the respective projects for the amount specified in the credit notes.

It can be seen that each of the credit notes is dated 17 February 2020, but they were not sent until 17 March 2020. Mr Huang’s evidence above is that he was hesitant to send the credit note and reluctant to forego the large amounts in the credit notes. He says in his affidavit [150] that it was only after the email of 4 March 2020 from Mr Picciau (see [201] above) that he sent the credit note as he assumed after that email that Buildom would be released from further claims or responsibility and there was no further working relationship between the parties. It is unclear to me how he made that assumption from that email or the evidence otherwise before the Court. The email from Mr Picciau simply says that Buildom could not continue with rectification works which were to be done by TQM at the rates agreed in the 4 December Agreement. In any event, no estoppel case is pleaded by the plaintiff arising from any such assumption if it was made by Mr Huang.

This month-long period between the issue of the credit notes and the sending of them also makes Mr Huang’s evidence that he did not have time to take legal advice with respect to the credit notes not credible. [151]

The plaintiff pleads that between 24 June 2019 and 25 October 2019, it issued invoices totalling $1,855,093.46 (inclusive of GST) for the Wollongong project. It then pleads that $255,029.12 was paid to it with the result that $1,600,064.34 is owing to it. [152] That figure changed in submissions.

In the TFAD, Everton and Rawson accept the amount invoiced, but say that the amount invoiced does not have regard to:

Everton and Rawson deny they owe the amount said to be owing to the plaintiff.

Everton and Rawson also plead reliance on the 4 December Agreement founding a promissory estoppel. It is pleaded that in that agreement Buildom represented:

In its Amended Reply, in response to this pleading Buildom denies that the agreement had the effect pleaded and, relevantly, says any monies owing pursuant to the 4 December Agreement “have been fully accounted for by way of a deduction already allowed by then plaintiff in a document styled ‘Credit Note’ (CN-0211) dated 17 February 2020”. [154]

With respect to the Gordon project, the same pleaded matters as in [214]-[218] above are pleaded mutatis mutandis.

The plaintiff now argues that the credit notes do not constitute an adjustment against the purchase price for each of the projects. It says that the credit notes simply reflect the payment schedules at the time they were issued to adjust the invoices referred to in the credit notes. The plaintiff submits the credit notes should not be construed as being agreements to deduct particular sums from amounts due under the contracts. [155]

The plaintiff submits that Mr Huang’s evidence about the credit notes (referred to above) is subjective opinion about the meaning of the credit notes and should not be used to construe their effect. It was submitted that, despite this evidence being led by the plaintiff, “It does not help” [156] .

Everton and Rawson submit that the credit notes have the effect that a credit note usually does, namely, gives credit for the amount specified in the credit note for amounts otherwise owing.

Everton and Rawson also point to the fact that the credit notes were treated this way in Buildom’s own accounts. [157]

I accept the defendants’ submissions. The credit notes are what they purport to be, namely a reconciliation of the invoices issued by Buildom with the amounts expended in rectifying the defects in the pods at the rates in the 4 December Agreement as acknowledged and accepted by Buildom (through Mr Huang) resulting in a credit to Everton for the amounts in those credit notes. The amount of the credit was to apply to the amount invoiced for the respective projects.

Mr Huang’s evidence as to what he understood the credit notes to do, whilst not determinative, is consistent with their plain meaning. It is also consistent with how the credit notes were treated in Buildom’s accounts and, indeed, in Buildom’s pleaded Amended Reply in each proceeding.

With respect to this issue, reference should also be made to a Payment Schedule issued by Buildom to Everton on 25 January 2021 for the Gordon project. [158] That document was issued in response to a notice under s 17(2) SOPA issued by Everton to Buildom [159] . In that document, signed by Mr Huang, a basis for opposition of the s 17(2) notice which claimed monies owing from Buildom to Everton was that the amount of $1,714,966.30 in the credit note was an amount that Buildom “agreed to forego”. Again, this is consistent with the plain construction of the credit notes that the amount in them reduces the amount owing by Everton from the contractual amount, adjusted from time to time to account for costs of rectifications.

I reject the plaintiff’s submissions that the credit notes had some other effect.

The evidence in the joint tender bundle indicates that rectification works on pods at both of the projects continued. On 23 April 2020 Everton sent another email to Buildom with respect to rectification works for pods at the Gordon project. This was by email from Mr Melhem who said: [160]

The attached notification identified the costs of the rectification works as of 24 January 2020 to be $1,020,080.24 + GST. [161] The letter was signed by Mr Huang on that day, witnessed by Mr Zhang. By his signature, according to the terms of the acceptance signed by Mr Huang, Buildom agreed and consented for TQM to withhold that amount from any monies due to Buildom as part of the 4 December Agreement. Mr Huang also acknowledged that there were outstanding matters yet to be invoiced for rectification works. [162]

Also attached was Payment Claim 12 [163] which reconciled Buildom’s invoices with rectification costs in the same form as in Payment Claim 11. This payment claim showed a deficit in Everton’s favour after rectification costs.

Further payment schedules were sent by Everton to Buildom for the Wollongong project, including on 15 May 2020. [164]

Rectification works also continued for the Wollongong project which meant that the costs of rectifying the pods were, at that time, greater than the contract price by $196,516.58. [165] Rawson issued a tax invoice for this amount on 3 December 2020. [166]

The additional payment claims I have referred to were not signed by Mr Huang, nor did he acknowledge those amounts were spent in accordance with the 4 December Agreement. However, it is clear to my mind that this work was done to rectify the pods in accordance with that agreement. No requests for further information, or issues challenging the amounts were made by Buildom (until the proceedings were commenced).

Having made these findings, it is apparent that the exercise to be undertaken really is just a question of maths to assess for each project the difference between the contract price based on the invoices issued and the costs of rectifying the defects in the pods as acknowledged or accepted by the plaintiff in the manner described.

Everton and Rawson each brought cross-claim.. I will not set out the detail of each of the cross-claims. The cross-claims plead, in essence, that by reason of the agreement of Buildom that Everton/Rawson would rectify the defects in the pods at the rates agreed in the 4 December Agreement and the acknowledgment by Buildom of the costs incurred, that Buildom owes more than the respective contract prices for each of the projects.

TQM also brought cross-claims in each proceedings seeking relief in the event it was found to be a party to the contracts. As I have found that they are not parties to the contracts, those cross-claims need not be considered further.

The cross-claim in the Gordon proceedings is maintained and the calculations undertaken by Mr Marshall based upon the payment claims, schedules and credit notes, indicates that the costs of the rectification of the pods is $151,458. 45 more than the contract price.

The plaintiff’s counsel, Mr Debuse, also undertook an analysis (although I say with respect, it moved around in the result from time to time) and provided MFI 27 as to the calculations the plaintiff said were the proper ones. Those calculations ended with the plaintiff submitting that $315,786.48 was owing for the Gordon project.

I accept the submissions made by Mr Marshall on this topic and his calculations by reference to the invoices and other documentary materials he sets out. [167]

The arithmetic he relies on can be summarised as follows:

The total amounts invoiced by the plaintiff, and the amount paid by the defendant is common ground between the parties. [168]

It is the plaintiff’s submission that invoice 90 is fairly included and accounted for in the credit note and should not be removed from the amount owed to Buildom. This fact, combined with the inclusion of an ‘unpaid Retention sum’ leads the plaintiff to the conclusion there is a total outstanding amount, excluding GST, of $315,786.48. [169]

The invoice total of $315,511.24 is composed of a 10% for 3 separate costs: [170]

At [5] of the plaintiff’s written closing submissions it is stated that:

An extract from Buildom’s own accounting software of invoices to Everton showing payments to 11 March 2021 is contained at JTB 5120. The first entry is invoice 90 for $315,511.24 dated 15 August 2018 and marked paid. [171] This figure is factored into the ‘total’ column which cumulative value is, inclusive of the credit note, is $1,721,433.

Invoice 90 is included in the total sum in correspondence between the parties in discussions preceding the issue of the credit note for Gordon. An email from Simon Melhem to Lester Huang (and others) on 6 February 2020 says the following: [172]

Invoice 90 was included in the table outlining what constituted the ‘total cumulative value along with 11 other invoices. [173] The credit note issued for Gordon is for the same amount proposed in the email extracted above, of $1,559,060.27.

It was accepted by Mur Huang that invoice 90 was ‘double counted’, that is I infer, used in the calculation for the total cumulative value of works, when it should have been a credit/deposit for those works. The following exchange took place during proceedings: [174]

The defendant’s submissions and calculations proceed on the basis that the deposit should not be included in the overall amount owed as it had not been properly accounted for by Buildom. I accept this submission.

Therefore, adopting the calculations of Mr Marshall, when the amount of the credit note in favour of Everton, and the amount it paid, are taken from the total contract price it leaves the defendant having overpaid the plaintiff $151,485.45.

As for Wollongong, the reconciliation undertaken by Mr Marshall is exposed in closing oral submissions. [175] His submission is that whilst there is an amount on the documents of $70,122 owing to Buildom after deducting the costs of the rectification of the pods, further additional work was done by Everton/TQM on rectification which exceeds that amount. Evidence was tendered supporting this submission, with the actual amount expended on rectification calculated at $172,921.14 after being adjusted to the agreed rates of the 4 December Agreement. [176] Rather than claim this as an amount owing, Mr Marshall simply relied on it to show that it exceeded the $70,122 so that, he submitted, a finding should be made that no money was owing to Buildom, and it should be denied relief.

Mr Marshall submitted that there was authorisation by the plaintiff to undertake rectification work, the cost for which would be recoverable against the plaintiff. He refers to the email to George Habambo on March 4, 2020, from Mr Picciau of Buildom set out above at [201]. Indeed, as he submitted, in circumstances where Buildom had said it could not and was not going to undertake any more rectification works, but agreed to Everton/TQM doing so, there was no choice but for Everton/TQM to undertake those works.

Mr Marshall accepts that Everton must provide invoices for the remedial work and sufficient detail of the work performed and its cost. He submits the materials provided discharge this onus.

Everton referred to the following costs as being included as costs incurred in the rectification works:

Everton provided an aide memoire which comprised a schedule of all of the costs it says it incurred in rectifying the remaining defects in the pods at Wollongong since 18 February 2020. [184] It has included in the JTB the invoices relied upon. It has adjusted down labour rates to reflect those in the 4 December Agreement as previously noted.

Having examined the material, I am satisfied that the work undertaken is consistent with the rectification of issues previously identified in the pods and was necessarily done, so as to prove that the additional rectification works undertaken at that site exceeds the total amount invoiced by approximately $100,000.

The costs of rectification can be set off from the invoiced amounts. The result is that there is no amount owing for the Wollongong project either, rather an amount is owed to Everton. The cross-claim for Wollongong was, however, brought by Rawson. It has been abandoned.

A joint list of issues was handed up on the first day of closing submissions. [185] I note that by reason of the abandonment of the misleading and deceptive conduct claim and the unconscionable conduct claim, issues 8 and 9 have not been dealt with. The above reasons deal with all the other issues, although not under the same headings.

As I have said above, by reason of my conclusions with respect to Buildom’s conduct in accepting the pods were defective, the rates to be applied in rectifying those defects and acknowledging the costs incurred in that rectification, the plaintiff’s arguments about the applicability of the SOPA do not arise.

I have referred to the fact that the only affidavits read by the plaintiff were from Mr Lester Huang and his father, Mr S Huang. As is pointed out in Everton and Rawson’s Final Written Submissions, [186] a significant number of Buildom employees were involved in the Gordon and Wollongong projects. That involvement included negotiations for the entry into contractual relations for the design, supply and installation of the pods, dealing with respect to alleged defects in the pods, rectification of the pods, meetings and correspondence leading to the 4 December Agreement and the credit notes. These employees included:

I have referred to the absence of evidence from Mr Liu above and inferences with respect to him resulting from the failure of the plaintiff to call him. There is no explanation for the failure to call evidence from any of the other named employees. I agree with the submission of counsel for Everton and Rawson [187] that the absence of evidence from such persons is relevant when Buildom sought to run a case that it did not know of the nature and extent of the defects in the pods, it did not accept the nature of the rectification works undertaken or the cost of those works.

By reason of the absence of evidence from those persons, where there is a factual dispute on any issue and evidence of those persons may have been relevant to the determination of such an issue, I infer that nothing those persons could have said would have assisted Buildom: Jones v Dunkel.

I have not in the course of these reasons dealt expressly with all aspects of each of the pleadings. As I said at the beginning of this judgment, the pleadings and reliance on them were fluid. I have endeavoured to deal in these reasons with the issues as disclosed in the Agreed List of Issues. Fundamentally, I have tried to deal with the issues as they developed and were run at trial. Some of the issues as dealt with were not pleaded. Some pleaded issues were not dealt with.

As I have mentioned, the case was determined primarily on the documents which reflected how the relationship between the parties was conducted. The pleadings sought to raise legal issues which, whilst not unarguable, did not reflect the practical reality of events as they unfolded.

In each proceeding, the current iterations of the respective statements of claim should be dismissed. There should be judgment on the Gordon cross- claim for Everton in the sum of $151,458.45. The Wollongong cross-claim brought by Rawson should be dismissed.

TQM’s cross-claims in each proceeding should be dismissed.

My preliminary view on costs is as follows. I see no reason why costs should not follow the event such that the plaintiff should pay the defendants’ costs of the proceedings. The plaintiff should pay Everton’s costs of the Gordon cross-claim. There should be no order as to costs of the Wollongong or TQM cross-claims. However, the defendants have indicated in final submissions that they wish to be heard on costs. Rather than pronounce orders which may be changed, I will hear the parties on the question of costs.

I therefore make the following orders and directions: