District Court New South Wales Medium Neutral Citation: Kyriacou v Bronxx Construction Management Pty Limited [2020] NSWDC 469 Hearing dates: 19 May 2020 Date of orders: 19 May 2020 Decision date: 19 May 2020 Jurisdiction: Civil Before: Neilson DCJ Decision: Verdict and judgment for the plaintiff against the defendant for $544,321.63. Catchwords: CONTRACTS – BUILDING AND CONSTRUCTION – ASSESSMENT OF DAMAGES P obtained default judgment against D for damages to be assessed – Assessment of those damages Category: Principal judgment Parties: Johnathon Kyriacon – Plaintiff Bronxx Construction Management Pty Limited – Defendant Representation: Counsel: P. Folino-Falo – Plaintiff Unrepresented – Defendant Solicitors: Diamond Conway Lawyers – Plaintiff Unrepresented – Defendant File Number(s): 2018/00253614 Publication restriction: Nil. Judgment 1. HIS HONOUR: The plaintiff is and was at all material times the registered proprietor of the land comprised in the Certificate of Title, Folio Identifier lot 61 DP36423, being the property commonly known as 50 Karimbla Road, Miranda, New South Wales 2228. This property is known to me somewhat as I spent most of my youth living two doors away. The defendant is and was at all material times a corporation engaged in the business of design and construction of residential and commercial projects. 2. On or about 29 July 2016, the plaintiff and the defendant entered into a building contract pursuant to which the defendant agreed to undertake the construction of a building to be used as a childcare centre at the property on Karimbla Road, Miranda, owned by the plaintiff. The contract price was for $1,586,612 inclusive of GST. This was a lump sum contract. 3. The plaintiff brings an action for damages for breach of the building contract. The plaintiff has recovered a default judgment against the defendant for damages to be assessed. I am currently assessing those damages. The building contract was comprised of a number of documents. They include a written document entitled, "Head contract for 50 Karimbla Road, Miranda", which can be found at p 184 of the court book. There is also a letter of intent to enter into that contract, dated 3 August 2016, which can be found at p 180 of the court book. The building contract also includes at a tender submission made by the defendant to the plaintiff dated 15 July 2016, which can be found at p 163 of the court book. Finally, the building contract included plans and elevations, and drawings and specifications, which commence at p 122 of the court book. 4. The plaintiff also alleges that besides specific terms of the contract, there were terms implied by law, but liability is not in dispute. The demolition of the pre-existing dwelling house commenced on 15 August 2016. The certificate of occupation was issued by the Sutherland Shire Council on 20 February 2018 as attested to by the plaintiff at [140] of his primary affidavit, which is exhibit B. 5. The plaintiff makes a claim under five different heads. The first claim is for defective work. The plaintiff claims that in breach of the terms of the contract, the defendant failed to carry out works according to the specifications of the building contract, using proper care and skill in relation to the works, resulting in defective and non-complying work. The defective works are set out in detail in various reports. The first report is one under the hand of Jim's Building Inspection, dated 13 February 2018, which can be found at p 961 of the court book. That report was updated on 4 June 2018 and that can be found at p 1047 of the court book. On 9 July 2018, Mr Adam Arden of Mitchell Brandtman assessed the costs of the rectification of the defective works and completion of the contracted works was $258,809.00 inclusive of GST. There is no reason whatsoever to query Mr Arden's assessment. Accordingly I allow $258,809 for defective works. 6. The second head of damages claimed is for delay in completion of the works. The building contract was executed on or about 5 August 2016 as attested to in par [18] of the plaintiff's affidavit. By operation of cl 10(b) of the building contract, the defendant was required to complete and deliver the works to the plaintiff on or before 2 August 2017. As earlier indicated, the occupation certificate was not granted by the Sutherland Shire Council until 20 February 2018. It was known to the builder that the building was to be used as a childcare facility: it is obvious from the very nature of the contractual documents. Accordingly, it was to be contemplated at the time of the entering into the contract that if the project were not delivered on time, the plaintiff would incur loss of expected rental income and other expenses. The plaintiff claims for having to pay interest on a loan obtained from the National Australia Bank from two days after the due date for completion of the work, that is two days after 2 August 2017 up until 20 February 2018. The amount of that interest is $20,012.63. I allow that sum. 7. The plaintiff also claims lost rent from two days after the due date for completion until the issuing of the occupation certificate. This is based on an annual rental of $160,000 or a daily rental of $438.36. That was the rent achieved when the plaintiff was able to let the premises to a childcare provider. The rent is for $438.36 for 187 days and that amounts to $81,973.32. I allow that sum. In addition, the plaintiff was required to allow a 12 day rent holiday to the lessee and the amount of that rent holiday amounts to $5,260.32. I allow that sum. 8. The plaintiff also claimed the cost of utilities during the period of delay and the council rates referable to that period of delay. However the utilities were water rates, and both water rates and council rates run with the freehold rather than the leasehold, and the plaintiff cannot recover either of those costs because they are covered in the lost rent. The total delay costs amount to $107,246.27. I allow that sum. 9. The defendant served a document on the plaintiff purporting to be a, "Variation summary", claiming an additional payment of $257,367.74. The defendant did not comply with cl 14 of the written head contract. There was then a dispute between the plaintiff and the defendant. On or about 2 August 2017, the plaintiff made a payment to the defendant in the sum of $110,000 inclusive of GST. The payment is evidenced by an email which can be found at pp 640 and 641 of the court book. The email bears date 2 August 2017. The ninth numbered clause of that email is this: "The owner reserves his rights at law and in contract, notwithstanding any commercial agreement reached outside the terms of the contract." Learned counsel for the plaintiff rightly points out that this in fact an ex gratia payment. The defendant was not entitled to the variations claimed because it had not complied with cl 14 of the contract. Furthermore many of the alleged "variations" were inclusions in the contract. The plaintiff claims the return of the $110,000 and I allow that sum. 1. The next head of damages claimed by the plaintiff was called by learned counsel for the plaintiff "credits", but this should actually be referred to as allowances. There was a kitchen fit-out. It was an express term that Bosch kitchen appliances were to be installed in the kitchen if they were available. The defendant did not do so, but installed kitchen appliances that were of an inferior quality. Evidence has been given by the plaintiff that Bosch kitchen appliances were available at the time. Furthermore, some of the kitchen appliances actually installed were not fit for the purpose for which they were intended. Another defect in the kitchen fit-out was that the contract required the installation of custom joinery. However the defendant installed pre-fabricated fixtures in the kitchen that were of an inferior quality. The quantity surveyor valued the fit-out work in the kitchen to be $3,050. The allowance which had been made for the fit-out was $13,700. The difference between the two is $10,650. I allow that sum. 2. The contract also provided for lump sums for certain items and the builder was required to reduce the lump sum price by the difference between the provisional sum referred to in the contract, and the actual cost of the provisional items. There was a lift installed in the building. An allowance of $61,594.50 was allowed for the supply and installation of the lift. The actual cost was, however, $53,680. The plaintiff claims the difference between the two of $7,914.50 and I allow that. 3. The contract also provided an allowance of $8,250 for the supply and installation of a shade sail on the property. The actual cost of supplying and installing the shade sail was 5,500. The plaintiff claims the difference of $2,750. I allow that sum. 4. The final head of claim was what learned counsel for the plaintiff described as, "Other expenses claimed." Of the five different items claimed, it appears to me that two of those items are referable to the costs of these proceedings and part of the legal fees claimed are in fact referable to the current proceedings. It was necessary because of representation made by the defendant unnecessarily for a water pressure test to be carried out. That cost $440. It was unnecessary. I allow that sum to the plaintiff. 5. There were urgent repairs that needed to be done on 26 July 2018 or prior thereto. They were urgent and could not await the outcome of any proposed legal proceedings. The cost of those repairs was $4,039.93. I allow that sum. There were three items of legal fees claimed, but only two of them are, in my view, recoverable. Those two amounts of costs amount to $12,122.75. The total of these additional expenses is $16,602.68. 6. The total of the sums which I have allowed is $513,972.45. The plaintiff is entitled to pre judgment interest on the ex gratia payment. That amounts to $16,457. The plaintiff is also entitled to pre-judgment interest on what I have referred to as the delay costs, the allowances, and the other expenses. The total of those three sums is $145,163.45, and the pre-judgment interest is $13,892. When I add the allowances for interest to the total of the damages, I reach an amount of $540,343.45. 7. For those reasons, I give verdict and judgment for the plaintiff against the defendant for $544,321.63. I order the defendant to pay the plaintiff's costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 August 2020