Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Llamas v Rockwall Constructions Pty Ltd; Rockwall Constructions Pty Ltd v Llamas [2019] NSWCATCD 75 Hearing dates: 14 March 2019 Date of orders: 1 November 2019 Decision date: 01 November 2019 Jurisdiction: Consumer and Commercial Division Before: G.J. Sarginson, Senior Member Decision: 1. In Matter HB 18/47941 Rockwall Constructions Pty Ltd is to pay Rafael Llamas and Kay Llamas the sum of $58,908.85 immediately. 2. In Matter HB 18/47932, the proceedings are dismissed. 3. In both Matter HB 18/47941 and HB 18/47932 Rockwall Constructions Pty Ltd is to pay Rafael Llamas and Kay Llamas costs as agreed or assessed. 4. If either party seeks an alternative or varied costs order, written application must be made to the Tribunal by 14 days from the date of this decision. If such an application is made, the Tribunal will issue further directions regarding the disposition of any costs issues. Catchwords: BUILDING AND CONSTRUCTION---Repudiation of contract by homeowner---Type of damages available—Defective work---Incomplete work---Appropriate remedy---Assessment of damages Legislation Cited: Civil and Administrative Tribunal Rules 2014 (NSW) Home Building Act 1989 (NSW) Home Building Amendment Act 2014 (NSW) Australian Consumer Law 2010 Cases Cited: Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613 David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353 DB Homes Australia Pty Limited v Kes [2019] NSWCATAP 221 Deacon v National Strategic Constructions Pty Ltd; National Strategic Constructions Pty Ltd v Deacon [2017] NSWCATAP 185 Grace v Pepe [2016] NSWCATAP 157 Kurmond Homes Pty Ltd v Marsden [2018] NSWCATAP 23 Mann v Paterson Constructions Pty Ltd [2009] HCA 32 McCrohon v Harith [2010] NSWCA 67 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 Poulos v Eberstaller [2013] NSWSC 1849 Rockwall Constructions Pty Ltd v Nayak [2017] NSWCATAP 226 Rockwell Constructions Pty v Llamas [2018] NSWCATAP 262 Signature Security v Western Suburbs District Leagues [2002] NSWCA 140 Southern Cross Constructions (NSW) Pty Limited (administrators appointed) v Busasia Pty Limited [2012] Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8 ;(2009) 236 CLR 272 Waltons Stores (Interstate) Pty Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387 Zeman v Bollard [2015] NSWCATCD 13 Texts Cited: Cheshire and Fifoot 9th Edition Category: Principal judgment Parties: Matter HB 18/47932 Rockwall Constructions Pty Ltd (Applicant) Kaye Llamas and Rafael Llamas (Respondent) Matter HB 18/47941 Rafael Llamas and Kay Llamas (Applicant) Rockwall Constructions Pty Ltd (Respondent) Representation: Counsel: J. Gatland (Mr and Ms Llamas) M. Sneddon (Rockwall Constructions Pty Ltd) Solicitors: Adams & Partners (Mr & Ms Llamas) Fox & Staniland (Rockwall Constructions Pty Ltd) File Number(s): HB 18/47932; HB 18/47941 Publication restriction: Nil REASONS FOR DECISION 1. The dispute has a long procedural history in the Tribunal, but the factual issues in dispute in the proceedings are of narrow compass. 2. There is a significant dispute between the parties regarding the legal principles to be applied to the claim by Mr and Ms Llamas ('the homeowners') that they should be awarded damages for payments made to Rockwall Constructions Pty Ltd ('the builder') for the difference between the total amount it paid to the builder, and the percentage amount of work actually completed by the builder assessed by the homeowners' expert building consultant Mr Palombo. 3. The reason for the dispute regarding applicable legal principles is that the homeowners concede that the contract was terminated by their repudiation of the contract, and that the builder accepted the repudiation. The applicable legal principles to repudiation of contract are well established (e.g. DB Homes Australia Pty Limited v Kes [2019] NSWCATAP 221 at [45]-[46] ('DB Homes'). However, what is in dispute is the effect of repudiation on the contractual rights of the homeowners (if any). 4. In essence, the homeowners submit that their repudiation of the contract does not prevent them from being awarded damages for "overpayment" to the builder under the contract. The builder submits that no such amount can be awarded as damages in circumstances where the homeowners repudiated the contract. 5. It is not disputed by the parties that they entered into a written contract for the builder to construct a residential dwelling dated 3 June 2014 in the fixed amount (subject to variations and adjustments for provisional sum items and prime cost items under the contract) of $435,000. 6. Work commenced in April 2015. By April 2016 the parties fell into dispute about issues that relevantly included the cost of timber flooring and the kitchen. 7. By April 2016, the homeowners had paid the builder 6 of the 7 progress payment stages under the contract (the contract referred to 6 progress payment stages, but the homeowners paid Stages 1 and 2 together as a single payment). The total amount of progress payment stages paid was $413,250 (affidavit of Ms Llamas dated 18 April 2017 para [50]). The final progress payment due under the contractual progress payment schedule was $21,750 (Stage 7-'drawdown completion'). 8. It was not disputed that the homeowners had paid the builder $421,531.35 (although the written submissions of the homeowner rounded down that amount to "$421,000"). The amounts paid in addition to the progress payments involved two invoices issued by the builder regarding bathroom fittings and tiles, which the parties had orally agreed and accepted as variations, irrespective of the contractual provisions regarding the manner in which variations were to occur. 9. At the hearing in the Tribunal on 14 March 2019, the homeowners conceded that they had repudiated the contract and the builder had accepted the repudiation on 9 November 2016 (homeowner's written submissions dated 24 April 2019 para [43]). The homeowners engaged other contractors to complete the building works. 10. On 21 November 2016, the homeowners commenced proceedings in the Tribunal seeking damages for rectification for defective work; "overpayment" to the builder; interest and costs. 11. The builder commenced proceedings in the Tribunal on 1 February 2017 seeking damages for 2 unpaid variations; adjustment for a provisional sum amount; payment for installation of an intercom/alarm; administration fees; loss of profits; and interest. The original amount claimed was $24,910.06, but this amount was subsequently increased. 12. Both proceedings were heard by a Senior Member of the Tribunal on 28 September 2017, and a decision published on 23 May 2018. In respect of the proceedings, each party had filed and served expert reports by building consultants. The homeowner's expert was Mr Palumbo and the builder's expert was Mr Fleming. Both experts had conferred and prepared a Joint Scott Schedule setting out issues of agreement and disagreement. 13. There was also lay evidence by Mr and Ms Llamas and Mr Mechur, a "project manager" of the builder. 14. When the Senior Member heard the matter on 28 September 2017, the parties were in dispute about who had lawfully terminated the contract. The position of the homeowners at that stage was that they had lawfully terminated the contract by the issue of a Notice of Termination under the contract arising from the builder's substantial breach. 15. It was not in dispute when the matter was heard on 28 September 2017 (or in respect of the subsequent hearing in the Tribunal) that the builder's licence under the Home Building Act 1989 (NSW) ('the HB Act') ceased on 16 December 2016, and the builder was relevantly unlicensed after that date. 16. The builder asserts that its licence was suspended from 16 December 2016 to 6 February 2017 due to not having a nominated supervisor, and was only cancelled from 6 February 2017 (for reasons that relevantly included failure to comply with Tribunal orders). The builder submitted that it would "not have been difficult" to nominate a supervisor and renew the licence between 16 December 2016 and 6 February 2017 (builder's written submissions dated 14 June 2019 para [25]). 17. In any event, the Tribunal made a decision dated 23 May 2018 with published reasons. The builder then appealed that decision to the Appeal Panel of the Tribunal. On 6 November 2018, in Matter AP 18/29234, the builder's appeal was successful (Rockwell Constructions Pty v Llamas [2018] NSWCATAP 262) due to the reasons not adequately dealing with aspects of the claims, including which party lawfully terminated the contract. 18. The proceedings were remitted to the Tribunal for determination. On 20 November 2018 at a directions hearing in the Tribunal, Principal Member Rosser made directions that relevantly included a direction that the hearing would proceed on the basis of the evidence provided in the original proceedings. 19. The matter was listed for hearing before the Tribunal on 14 March 2019. Both parties had prepared a Tender Bundle. Mr and Ms Llamas gave evidence and were cross examined. The builder's expert Mr Palumbo gave evidence and was cross examined. Mr Mehcur, "project manager" of the builder, gave evidence and was cross examined. The builder did not arrange for its expert Mr Fleming to attend the hearing. His report and the Joint Scott Schedule were admitted into evidence without Mr Fleming being cross examined. 20. As discussed previously, at the outset of the hearing on 14 March 2019, the homeowners conceded that they had repudiated the contract and that it was the builder who had lawfully terminated the contract by accepting the repudiation. 21. Further, in the early stages of the hearing, the builder sought leave to amend its Points of Defence to the homeowner's claim to plead s 18BA of the HB Act, which involves the duty of a person seeking to claim under the statutory warranties under s 18B of the HB Act to mitigate their loss (s 18BA (1) (a) of the HB Act). The builder had previously pleaded failure to mitigate in its Points of Defence to the homeowner's claim, but had not specifically pleaded s 18BA of the HB Act. 22. The homeowners objected to the proposed amendment. The Tribunal granted leave to amend as the issue of failure to mitigate had been raised previously in the proceedings and the amendment did not cause relevant prejudice to the homeowners, in circumstances where the homeowners were granted leave to adduce further evidence and make submissions on the issue of what, if any, measures were taken to mitigate. In such circumstances, both parties were able to fairly address at the hearing the issue of failure to mitigate, including the operation (if any) of s 18BA of the HB Act. THE HOMEOWNER'S CLAIM 1. The homeowner's claim was identified in Further Amended Points of Claim filed on 4 December 2018 and in written submissions dated 24 April 2019 as: 2. Damages for "overpayment" to the builder of $73,000. This was calculated on the basis of the following methodology: 1. The homeowners had paid the builder $421,000, which was "95% of the…adjusted contract price"; 2. Mr Palumbo had stated in his expert report that he estimated that "80%" of the work due under the contract had been performed by the builder; 3. 80% of the original contract price ($435,000) was $348,000; 4. The difference between $348,000 and $421,000 was $73,000. 1. Damages for the cost of rectifying defective work, as set out in Items 1 to 18 of the Joint Scott Schedule in the sum of $58,908.85. 2. Total amount of damages: $131,908.85. 3. Costs THE BUILDER'S CLAIM 1. The builder's claim as set out in an Amended Cross Claim" dated 21 September 2017 was: 1. "Outstanding balance as at termination"-$4,267.31; 2. Loss of profits-$4,350; 3. Provisional sum-removal of excess soil-$1,705 4. Intercom and alarm-$1,815. 5. Liquidated damages under cl 14 of the written contract-$19,400; 6. Interest under cl 14 of the written contract-$317.08 1. Total: $31,854.39 2. The builder's written submissions dated 14 June 2019 contain no submissions on why the evidence establishes the claim by the builder. The submissions focus on responding to the homeowner's submissions, particularly on the issue of the damages claimed for "overpayment" of $73,000. The only submission by the builder's counsel in respect of the builder's claim is "There ought to be judgment in favour of the builder on its claim" (builder's submissions dated 14 June 2019 para [34]). EVIDENCE OF THE PARTIES 1. There was brief cross examination of Ms Llamas and Mr Llamas on the issue of whether any variations had been agreed regarding the floorboards and kitchen; and whether or not the floorboards were a prime cost item under the contract. 2. During Mr Llamas' evidence, the homeowners sought to amend the claim to seek damages in respect of a plumbing invoice paid for additional plumbing in the sum of $7,000. Leave to tender the invoice and amend the claim was refused, as the expert building consultants had not addressed the issue and Principal Member Rosser had previously directed that the remitted hearing proceed on the basis of the evidence relied upon before the matter was remitted by the Appeal Panel. 3. Mr Palumbo gave evidence in chief regarding how long it would likely take to complete incomplete work and rectify existing defects. He estimated 6 to 9 weeks. 4. Mr Palumbo was briefly cross examined on issues including how long it would take to complete incomplete work. EXPERT EVIDENCE 1. The Joint Scott Schedule of Mr Palumbo and Mr Fleming contains relatively few items of disagreement. 2. The builder did not call Mr Fleming to give evidence, and conceded at the hearing that if the Tribunal found in favour of the homeowner, to the extent there was any disagreement between Mr Palumbo and Mr Fleming, the Tribunal should accept Mr Fleming. 3. In essence, it was conceded that in respect of defects; method of rectification; and cost of rectification the Tribunal should accept the evidence of Mr Palumbo in the Joint Scott Schedule. 4. Irrespective of this concession, in circumstances where only Mr Palumbo was called to give evidence and was exposed to cross examination, the Tribunal gives greater weight to his evidence over the evidence of Mr Fleming in his report; and in the Joint Scott Schedule. THE HOMEOWNER'S CLAIM-CAN THE HOMEOWNER CLAIM DAMAGES FOR THE ALLEGED 'OVERPAYMENT' UNDER THE CONTRACT WHEN IT HAS REPUDIATED THE CONTRACT? 1. Where a homeowner has lawfully terminated a contract (either because the builder is in breach and the homeowner has exercised its rights under the provisions of the written contract to terminate; or the builder has repudiated the contract and the homeowner has accepted the repudiation) the homeowner is entitled to damages for the increased cost of completing the contract (i.e. the amount the homeowner is to pay to complete the work, less the amount the homeowner would have had to pay the original builder under the contract): DB Homes at [44]. The reason for that is that a party whose breach or repudiation has caused the contract to end is liable to pay the innocent party damages to put the innocent party in the position they would have been in had the contract been performed. In the context of residential building work, if the builder has caused the termination of the contract, this means the cost of completing the residential building work, less the amount that the homeowner would have to pay the builder under the contract which has been terminated. 2. However, where a homeowner has repudiated the contract, it is not entitled to be awarded damages for the increased cost of completing the work, because the conduct of the homeowner has caused the contract to end, and the homeowner is not entitled to damages for a future 'loss' that has been solely caused by its own conduct in repudiating the contract. If the homeowner has repudiated, the builder can be awarded contractual damages for loss of bargain (usually loss of profit) and amounts that were due and payable under the contract prior to the date of termination; or on a limited quantum meruit basis: Mann v Paterson Constructions Pty Ltd [2009] HCA 32. 3. The issue of damages for 'defective' work that exists at the date of termination of the contract is a separate issue to damages for the cost of completing incomplete work, and will be discussed further in this decision after the issue of the homeowner's claim for damages on the basis of "overpayment" is discussed. 4. The claim by the homeowner for "overpayment" is made on the basis of the submission that once a contract is terminated, the rights and obligations of the parties that exist or have been accrued as at the date of termination remain extant, on the well-established principles that follow from the decision of Dixon J in McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 476-477 ('Dennys Lascelles'). 5. The homeowner submits that it had "accrued rights" under the contract as at the date of termination to only pay for the value of the work done and that the rights of the homeowners include the right to seek remedy for breach of statutory warranties under s 18B of the HB Act. The homeowner also relies upon the statement of Principal Member Harrowell (as he then was) in Zeman v Bollard [2015] NSWCATCD 13 at [89] that: "Where the works are not in accordance with the contract and the builder has not, before termination or the time for performance, brought the works into conformance, the measure of damages is the reasonable cost to do so: see Bellgrove v Eldridge (1954) 90 CLR 613". 1. The homeowner also relied upon statements regarding the principles enunciated by Dixon J in Dennys Lascelles in Signature Security v Western Suburbs District Leagues [2002] NSWCA 140 (at [9]); and Southern Cross Constructions (NSW) Pty Limited (administrators appointed) v Busasia Pty Limited [2012] NSWSC 1419 at [15]-[16]. 2. The builder submits that, under the Dennys Lascelles principle, although parties to a contract are not divested of accrued rights at the date of termination, each party is excused from further performance under the contract. The builder also submits that a party cannot take advantage of their own wrong in the context of asserting any purported accrued rights at the date of termination, because it repudiated the contract. The builder cited the discussion of such principles by Pembroke J in Poulos v Eberstaller [2013] NSWSC 1849 at [9]. 3. The builder submitted that because the homeowners repudiated the contract, the builder was denied the opportunity to complete the work, so the homeowners "cannot take advantage of their own wrong". The builder submitted that the homeowner's repudiation had deprived the builder of its contractual right under the defects liability provision in cl 23 of the contract; and, if proceedings were taken in the Tribunal and the homeowner was successful in proving defective work, the builder was deprived of the "benefit" of s 48MA of the HB Act, which states that the "preferred outcome" is that a builder be ordered to rectify the defective work performed by the builder. 4. Further, the builder submitted that by repudiating the contract, the homeowners' breached s 18BA of the HB Act, which obliged the homeowners to give the builder a reasonable opportunity to rectify defects, including allowing the builder access to the property. 5. A difficulty in the submissions of the homeowner is that the homeowner appears to discuss damages for "overpayment"; "incomplete work" and "defective work" interchangeably. Although the concepts of "defective work" and "incomplete work" may be closely related on the facts of a particular case, they are conceptually different. "Overpayment" is also a different concept. 6. In the context of a contract such as a contract to perform residential building work that contains provisions for structured payments after completion of stages of work and provisions to vary the contract, "overpayment" is where the homeowner has paid the builder for work or services that have not yet been performed (i.e. the builder has no contractual right to demand payment, but has been paid); or the builder otherwise has no legal basis to be paid, yet has demanded payment and been paid. 7. "Defective work" is work that has been performed by the builder that fails to comply with the statutory warranties under s 18B of the HB Act. Such warranties are implied by statute into every contract to perform residential building work. The warranties relevantly involve performing work in a proper and workmanlike manner and in accordance with the plans and specifications under the contract (s 18B (a); that materials will be suitable for purpose (s 18B (b)); that work will be done in accordance with any law (s 18B (c)); work will be performed with due diligence (s 18B (d); work will result in the dwelling being reasonably fit for habitation (s 18B (e) and work and materials will be reasonably fit for purpose (s 18B (f)). 8. In Deacon v National Strategic Constructions Pty Ltd; National Strategic Constructions Pty Ltd v Deacon [2017] NSWCATAP 185 ('Deacon') at [46] the Appeal Panel of the Tribunal cited with approval the statement of Senior Member Goldstein regarding the proof required to establish breach of statutory warranties: "Although objective standards such as Australian Standards, the Building Code of Australia and the Guide are of significant relevance in establishing whether work has been performed in a proper and workmanlike manner (Wheeler v Ecroplot Pty Ltd [2010] NSWCA 61 at [10]), the absence of such evidence does not automatically mean a homeowner has failed to establish breach of statutory warranty. In our view, the relevant principle was succinctly stated by Senior Member Goldstein in G MacFayden and Anor v G Tadrosse [2014] NSWCATCD 194 at [46] as follows: …[E]vidence that work does not comply with the Building Code of Australia would establish a basis for a finding that sub section 18B(c) of the Act has been breached. Evidence of the details in which work does not comply with the contractual plans and specifications would form the basis for a finding that sub section 18B(a) of the Act has been breached. Evidence of work not being carried out in a proper and workmanlike manner would in my view involve identification of the work in question, a statement of how the expert would expect it to be carried out in in a proper and workmanlike manner and then identification of the factors which establish that the way in which the work has been carried out falls short of it being carried out in a proper and workmanlike manner. Evidence of this nature, if accepted, would form the basis for a finding that sub section 18B(a) of the Act has been breached." 1. The statutory warranties implied into the performance of residential building work under s 18B of the Act are not dependent upon how the contract came to an end. The warranties apply to the performance of the residential building work. Section 18E of the HB Act, which identifies the time period for a homeowner to commence proceedings for breach of statutory warranties, clearly refers to both situations where work has been completed and not completed under the contract (s 18E (1) (b) and (c)) and s 18E (1) (c) states that proceedings can be commenced before completion of work, even if the work is subsequently completed. 2. No authority has been cited for the proposition that a homeowner loses its right to sue for breach of the statutory warranties implied into contracts to perform residential building work if the homeowner repudiates the contract, and there are numerous decisions of the Tribunal where remedies have been awarded to a homeowner for breach of the statutory warranties under s 18B of the HB Act, even though the homeowner repudiated the contract: e.g. Grace v Pepe [2016] NSWCATAP 157 at [49]. 3. There can be a fine line between "defective work" and "incomplete work", and in some circumstances (such as where the builder has repudiated) it may make no relevant difference to distinguish between the two concepts. 4. For example, a contract may provide that under a progress payment stage in the contract, the builder was to complete a balcony with a railing (as identified in the plans); and the builder had a contractual right to issue a progress payment claim under the contract and be paid when the work identified in the progress payment stage was substantially complete. The builder then issued the progress payment claim, and the homeowner paid the claim. The balcony was constructed, but not the railing, and the contract was terminated before the builder constructed the railing. In such circumstances, although the work was "incomplete", the failure to construct the railing is also defective work in breach of the statutory warranties in s 18B of the HB Act. 5. The issue becomes more complex when the contract is terminated part of the way through a progress payment stage, or the builder has not performed the work in the sequence set out in the progress payment schedule in the contract. The distinction between "defective work" and "incomplete work" becomes important if the homeowner has repudiated the contract. What is "defective work" and "incomplete work" will then depend upon the evidence in the case, including the opinions of any experts. 6. In this matter, the homeowners are not asserting that as of 9 November 2016 when the homeowner's repudiation was accepted by the builder, that the "incomplete work" identified in the expert evidence was "defective work". The claim of the homeowners is that they had "overpaid" the builder in that their expert Mr Palumbo had opined that 80% of the work to complete the contract had been performed, but they had paid 95% of the contract price. 7. The Tribunal accepts that, irrespective of the repudiation of the contract by the homeowners, their accrued contractual rights under the contract were extant up to 9 November 2016. 8. However, to be awarded damages in respect of "overpayments", the homeowners must establish that either: 1. The builder had breached a contractual provision that was extant up to 9 November 2016; or 2. There was no proper legal basis for the builder being paid under the contract; or that the homeowner had some cause of action outside contract which the builder had breached; 3. And the homeowner had suffered loss by reason of the breach of the builder. 1. A difficulty in the homeowner's submissions are that they do not clearly identify any specific contractual breach or separate cause of action and loss caused by such breach, other than the expert evidence of Mr Palumbo that the amount of work performed by the builder under the contract did not correlate to the percentage of the total contract price paid to the builder. 2. Under cl 12 of the contract, the progress payment schedule was set out. Cl. 12 relevantly stated that the owner must pay progress payments within 5 days of the completion of the stages of the work nominated in the schedule and the builder must notify the homeowner in writing when the stage of work has met completion. 3. However, under cl 14 of the contract, if the homeowner disagreed that the builder was entitled to be paid a progress claim or other amount due under the contract, the owner must notify the builder in writing within 5 business day of receiving the claim setting out the reasons for disagreement. If such a notice was given, the dispute resolution provisions of cl 27 of the contract relevantly provided that assistance to resolve the dispute could be obtained from a third party or with the assistance of NSW Fair Trading, but the parties must continue to perform their obligations under the contract so that the work is completed satisfactorily within the agreed time. 4. Importantly, the homeowner had paid the progress payment claims irrespective of whether the builder had strictly complied with cl 12 of the contract, and had not utilised the provisions of cl 14 or cl 27 of the contract Two of the proposed variations had also been paid, irrespective of whether cl 13 of the contract had been complied with. 5. In such circumstances, the homeowners have not established that the builder has breached any accrued rights extant under the contract regarding payment for work performed. The homeowners have also not raised any other non-contractual cause of action against the builder, such as payments made under mistake (David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353); or any breach of any provision of the Australian Consumer Law 2010; or any estoppel (Waltons Stores (Interstate) Pty Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387). 6. Further, even if it is accepted that the homeowners paid for more than the percentage of building work completed prior to the date of repudiation, it is possible that, had the contract remained on foot, the builder would have either completed the work by 16 December 2016 or arranged for a suitably licenced person to complete the work after the builder's licence was suspended; and then given an adjusted final progress payment claim so that the homeowner had not paid an amount about the total contract price. By repudiating the contract, the conduct of the homeowners eliminated this possibility. 7. The Tribunal is not satisfied the homeowners have established a legal right to damages of $73,000 for "overpayment" under the contract. 8. In such circumstances, it is unnecessary to make detailed findings regarding the builder's submissions regarding failure to mitigate and the operation of s 18BA of the HB Act in the context of the claim for "overpayment" damages. However, the Tribunal does not accept that the repudiation of the contract by the homeowner of itself is a failure to mitigate, or enlivens s 18BA of the HB Act (even if that provision was applicable). 9. In respect of the homeowner's claim for breach of the statutory warranties under s 18B of the HB Act for work that was performed by the builder prior to 9 November 2016, the evidence of the experts is clear that there was defective work; and as discussed previously, to the extent of any disagreement between the experts, the evidence of Mr Palumbo is accepted on the defects; method of rectification; and cost of rectification. 10. On the issue of s 48 MA of the HB Act, the Tribunal is satisfied that an order the builder rectify defects is not the preferred outcome: Kurmond Homes Pty Ltd v Marsden [2018] NSWCATAP 23 at [41]-[49]. The builder is unlicensed, and has relevantly been unlicensed for a considerable period of time. It does not matter whether or not the builder's license was suspended for a period of time before being cancelled, or that the builder could have taken measures to have the license re-issued. The fact is that the builder has not been suitably licensed under the HB Act to perform residential building work since 16 December 2016, and did not propose any other suitably licensed builder to perform rectification work. The NSW Fair Trading License search tendered in evidence by the homeowner also showed a history of non-compliance with Tribunal orders. 11. The Tribunal is satisfied that an order for damages under s 48O of the HB Act is appropriate. Applying the well-established principles in Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613 and Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8 ;(2009) 236 CLR 272 that damages for the cost of rectification should be awarded to the homeowners in the amount of $58,908.85. 12. In respect of failure to mitigate: "it is well established that damages cannot be recovered for any loss which could have been prevented by reasonable mitigation action of the injured party: [23.41] Cheshire and Fifoot 9th Edition. A loss which is attributable to the failure to mitigate can be regarded as an aspect of causation: Castle Constructions Pty Ltd v Fekula Pty Ltd [2006] NSWCA 133 at [21].": 1. Per Rockwall Constructions Pty Ltd v Nayak [2017] NSWCATAP 226 at [71]. 2. The builder bears the onus of proving failure to mitigate. 3. The Tribunal is not satisfied on the evidence that failure to mitigate has been established. The homeowners repudiated the contract by sending an invalid Notice of Termination. The builder accepted the repudiation. The builder did not make repeated and clear representations that it was prepared to return to the site and rectify defects. The builder's own conduct caused it to become unlicensed to perform residential building work on 16 December 2016, and it has remained unlicensed. 4. In respect of s 18BA of the HB Act, that provision was introduced by the Home Building Amendment Act 2014 (NSW). Under Sch 4 Part 20 Cl 125 (1) of the HB Act, the provision does not apply to contracts entered into before the commencement of the section. The relevant commencement date for the provision (as set out in the Historical Notes and Table of Amending Instruments in Sch 4 of the HB Act) was 1 March 2015. 5. The date of the written contract was 3 June 2014. Accordingly, the provisions of s 18BA of the HB Act do not apply to this matter. THE BUILDER'S CLAIM-CONSIDERATION 1. As discussed previously, the submissions of the builder to not refer to any evidence in support of the builder's claim, or explain how breach has been established and either the loss that was caused by the breach, or if loss is based on liquidated amounts under the contract, how that amount is calculated. 2. As discussed previously, where a homeowner repudiates a contract the builder can be awarded damages for loss of profit on the remaining work to complete the contract. However, the builder has not established how the amount of $4,350 is calculated. In the absence of sufficient evidence to establish loss, the Tribunal can exercise its discretion not to award any damages: McCrohon v Harith [2010] NSWCA 67 at [122]-[125]. 3. In respect of the claims arising from cl 14 of the contract, the builder had been paid for the progress payments up to the last progress payment, and the work in respect of the last progress payment was incomplete. Accordingly, the last progress payment could not be claimed under cl 14 of the contract, and liquidated damages under that contractual provision do not arise. The builder has also failed to establish on the evidence that there were any other monies payable under the contract to which the provisions of cl 14 of the contract apply, and has further failed to establish the quantum of any amounts claimed. 4. The builder has also failed to establish any claim for damages in respect of the intercom and removal of excess soil, and no quantum meruit claim was clearly agitated in the proceedings. 5. The builder's claim is dismissed. THE ISSUE OF COSTS 1. The homeowners have succeeded in the proceedings and the builder has failed. The amount claimed by the homeowners exceeds $30,000 and Rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) applies, so costs can be awarded without 'special circumstances' being established. 2. The usual order is that costs follow the event and a costs order is made in favour of the successful party. The Tribunal orders the builder to pay the homeowner's costs of the proceedings as agreed or assessed. 3. If any alternative costs orders are sought, the parties have liberty to apply to the Tribunal in writing within 14 days of the date of this decision. In the absence of any such application, the costs order will remain unchanged. ORDERS 1. The Tribunal makes the following orders: 1. In Matter HB 18/47941 Rockwall Constructions Pty Ltd is to pay Rafael Llamas and Kay Llamas the sum of $58,908.85 immediately. 2. In Matter HB 18/47932, the proceedings are dismissed. 3. In both Matter HB 18/47941 and HB 18/47932 Rockwall Constructions Pty Ltd is to pay Rafael Llamas and Kay Llamas costs as agreed or assessed. 4. If either party seeks an alternative or varied costs order, written application must be made to the Tribunal by 14 days from the date of this decision. If such an application is made, the Tribunal will issue further directions regarding the disposition of any costs issues. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Registrar I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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: 15 June 2021