Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Salakis v Silvabuilt Pty Ltd; Silvabuilt Pty Ltd v Salakis [2022] NSWCATAP 40 Hearing dates: 19 April and 29 July 2021 Date of orders: 15 February 2022 Decision date: 15 February 2022 Jurisdiction: Appeal Panel Before: The Hon F Marks, Principal Member D Robertson, Senior Member Decision: (1) Leave to appeal refused. (2) Appeal dismissed. (3) Within 14 days of the date of publication of this Decision either party may file submissions or further submissions concerning appeal 2021/00056103 or seeking an order in relation to the costs of appeal 2020/00371175. (4) If a party files submissions pursuant to Order 3 the other party may within a further 14 days file submissions in response. (5) Any party seeking an oral hearing either in relation to appeal 2021/0056103 or in relation to the costs of appeal 2020/00371175 shall include in submissions filed in accordance with orders 3 and/or 4 an outline of why they submit that such a hearing is necessary. Catchwords: BUILDING AND CONSTRUCTION – Contract – Termination – Repudiation – Whether dispute resolution clause excluded possibility of acceptance of repudiation if requirements not complied with BUILDING AND CONSTRUCTION – Contract – Damages – Damages for loss of profits assessed by reference to contractual clause governing payment in the event of reduction in the scope of work – Whether party seeking damages had led sufficient evidence to establish loss of profits - Whether such evidence is necessary where damages are assessed on the basis of a contractual clause Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Civil and Administrative Tribunal Rules 2014 (NSW) Home Building Act 1989 (NSW) Cases Cited: Collins v Urban [2014] NSWCATAP 17 Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54 Dimitropoulos v Capital Constructions Pty Ltd; Capital Constructions Pty Ltd v Dimitropoulos [2018] NSWCATAP 100 DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 H Build Pty Ltd v Nixon [2018] NSWCATCD 20 M & M Building Pty Ltd v Keith [2017] NSWCATAP 88 Mann v Paterson Constructions Pty Ltd [2019] HCA 32; 267 CLR 560 New South Wales Land and Housing Corporation v Orr [2019] NSWCA 231 Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 Robinson v Harman (1848) 1 Exch 850; 154 ER 363 Ryder v Frohlich [2004] NSWCA 472 TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 Category: Principal judgment Parties: Bill Patselis and Vicky Salakis (Appellants in 2020/00371175, Respondents in 2021/00056103) Silvabuilt Pty Ltd (Respondent in 2020/00371175, Appellant in 2021/00056103) Representation: Counsel: G Mackey (solicitor) (Patselis and Salakis) S Mack (Silvabuilt Pty Ltd) Solicitors Pryor Tzannes & Wallis (Patselis and Salakis) Morrissey Law & Advisory (Silvabuilt Pty Ltd) File Number(s): 2020/00371175 (AP 20/48865) 2021/00056103 (AP 21/06903) Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Citation: Not applicable Date of Decision: 26 October 2020 and 15 January 2021 Before: G Sarginson, Senior Member File Number(s): HB 18/27845; HB 18/34119 REASONS FOR DECISION Introduction 1. By a decision published on 26 October 2020 (the Substantive Decision) the Tribunal ordered Mr Patselis and Ms Salakas (the homeowners) to pay Silvabuilt Pty Ltd (the builder), in proceedings brought by the builder, the sums of $151,895.64 and $14,713.41, and ordered the builder to pay the homeowners, in proceedings brought by the homeowners, the sum of $25,443.31. The amounts the Tribunal ordered the homeowners to pay the builder reflected amounts outstanding under invoices issued by the builder and interest on those sums and the builder's loss of profit consequent upon the homeowners' breach of contract. The amount the Tribunal ordered the builder to pay the homeowners reflected the cost of rectification of a number of defects which the Tribunal found existed in work carried out by the builder. 2. In the Substantive Decision the Tribunal also ordered the homeowners to pay the builder's costs of the builder's application and the builder to pay the homeowners' costs of the homeowners' application. The Tribunal granted the parties liberty to apply for different orders in respect of the costs of the proceedings. 3. The builder applied for different costs orders, and on 21 January 2021 the Tribunal published a decision (the Costs Decision) affirming the costs orders made in the Substantive Decision. 4. On 20 November 2020 the homeowners filed a notice of appeal against the orders in the Substantive Decision. On 16 February 2021 the builder filed an appeal against the orders made by the Tribunal in the Costs Decision. 5. Both appeals were fixed for hearing on 19 April 2021. On that occasion the hearing was not concluded, and the appeals were fixed for further hearing on 29 July 2021. The parties were in agreement at the hearing that the costs appeal should not be determined until the decision in the substantive appeal had been published. The parties agreed that the costs appeal could be determined on the basis of further submissions without a further hearing after publication of the decision on the substantive appeal. Accordingly, these reasons for decision address only the substantive appeal. Background to the proceedings 1. In December 2016 the homeowners and the builder entered into a written costs plus contract in the standard Master Builders Association form for the construction by the builder of a two-storey residential dwelling, including garage, basement and pool, on the homeowners' land in Earlwood, NSW. 2. The relevant provisions of the contract, as outlined by the Tribunal in the Substantive Decision, were as follows: "108 Schedule 1 Part A and Part B set out the costs of works payable by the homeowners or at the direction of the builder. Such costs relevantly include: (1) Wages and other entitlements of the builder's employees (Part A (a)). (2) Costs of the individual builder, builder's director, or site supervisor carrying out work (including administrative work) at the rate of $65 per hour (Part A (b)). (3) The costs of having a service provided or a task done in order to have the works carried out (Part A (c)). (4) The cost of "all work carried out by trade contractors engaged by the Builder to carry out work at the site or in relation to the works. This cost is conclusively evidenced by an invoice or statement of costs from the trade contractor". (Part A (d)). (5) The cost of all goods and materials ordered or paid for by the Builder necessary to carry out the works (Part A (e)). (6) The cost of hiring equipment necessary for the builder to carry out the building works (Part A (f)). (7) The cost of correcting, modifying or changing work already completed, which is changed by reason of a variation by the homeowners, or which is defective by reasons other than materials provided by the Builder or the workmanship of the Builder (Part A (h)). (8) The cost of complying with any site specific issues as to safety, pollution and/or waste disposal, as directed by any relevant Authority, the homeowners or the homeowner's agents (Part A (i)). (9) Any other cost or expense the Builder is liable for and/or incurs by reason of the Builder carrying out work pursuant to this contract including, but not limited to, insurance costs and materials owned by the Builder (Part A (j)). 109 Schedule 1 Part B states that the homeowners will pay the Builder: " ... the Cost of Works as determined pursuant to Schedule 1 Part A, together with an additional fee equal to 10% of the Cost of Works and those items referred to in Sub-Clause 17 (c) (ii). This fee is to be applied to a sum covering the Cost of Works which is determined on a GST exclusive basis. See also Clause 14 (e) which may become applicable." 110 Schedule 1 Part B (b) did not identify the agreed date upon which the builder was to make the first payment claim under the contract, but in respect of the time for payments of claims by the builder, the contract stated as follows: "The Owner must pay each claim submitted by the Builder to the Builder (or other persons or entities nominated by the Builder) within 10 business days of the Builder submitting the claim ... " 111 Part A Schedule 2 sets out the labour rates to be used in establishing the Cost of Works performed by the builder. The schedule identifies hourly rate, in regard to tilers; electricians; carpenters; bricklayers; plumbers; plasterers; painters; apprentices; and labourers. 112 Part A Schedule 2 identifies the annual interest rate for overdue payments under Clauses 17 (f) and 21 (c) of the contract as 8%. 113 The conditions of the contract are set out in Clause 1-31. 114 Clause 1 (a)-(d) refer to the manner in which the work is to be performed. Relevantly, Clause 1 (b) reflects the statutory warranties contained in s 18B of the [Home Building] Act. 115 Clause 1 (e) and (f) of the contract pertains to the provision of a budget report, and states as follows: Budget Report to Be Provided (e) The Builder will regularly provide to the Owner a written report on the cost of the works. This will be known as the budget report. If no specific period is agreed to by the parties then a budget report will be done once per calendar month. See Schedule 1 Part D where a date for providing the Budget report can be agreed. The budget report is to be provided no later than five (5) days after this date. (f) The budget report will include: (i) details of the work done, costs known and moneys paid or payable as at the date identified in the budget report; (ii) a summary of work being performed and still to be performed; (iii) details of work about which the Owner needs to provide instructions in order to allow the work to proceed; and.. (iv) a revised estimated total cost of works. The estimate above will be based on the Builder's knowledge at the time the budget report is done. The Builder is to use reasonable care in preparing the budget report. However, the revised estimated total cost of works provided in the budget report is not a lump sum or guaranteed amount and is subject to the impact of the costs and the fees payable or incurred under the contract. Refer to Clause 30 also. 116 Clause 2A of the contract pertains to the joint responsibilities of the homeowner and builder. Section 2A states as follows: 2A. Joint Responsibilities of the Builder and the Owner The parties acknowledge the fact that: (i) the amount payable by the Owner under the contract is not as at the date of the contract known; (ii) the total amount payable under the contract will not necessarily be ascertainable during the course of the contract; and (iii) the amount to be paid by the Owner is the result of the costs incurred by the Builder, the Builder's fee, or rutn [sic] and the impact of the GST on the work done. The parties agree in order to manage this situation that: (a) they will conduct regular meetings (once per week) in order to: (i) review the work done and costs incurred; (ii) review the work to be done and the costs thought to be payable for such work; and (iii) make decisions and choices regarding work under the contract so that the work to be paid for by the Owner is consistent with the Owner's capacity to pay. (b) they will, in the event that there is a conflict between the costs of the work as set out in the budget report and the Owner's capacity to pay, adjust the work to be done so that the conflict is eliminated and as such the work to be done is work for which the Owner has the capacity to pay. The adjustment of the work is to be recorded in writing and signed by both parties and treated as a variation under Clause 14. (c) they will act co-operatively and in a manner in which progresses the works. (d) either party may require a meeting to be held within 5 (five) days of a written request for a meeting. The party calling the meeting will identify the issues to be covered at the meeting. The Builder will provide a report on the matters raised at the meeting within a reasonable time but no later than ten (10) business days after the meeting. (e) for the purpose of improved certainty the scope of the work to be completed by the Builder is limited to that work for which the Owner has made or can make and does make payment. Consequently, any work which is not able to be paid for by the Owner will be eliminated from the work to be carried out by the Builder. 117 Clause 8 of the contract deals with possession of the site; access to the site; and site meetings. 118 Under Cl. 8 (a) (i) of the contract, the builder is to have exclusive and uninterrupted possession of and access to the site. Under Cl. 8 (c) the owner (or the owner's representative; or the lending authority) could have, with consent of the builder, access to the site for the purpose of inspecting the progress of the works. Access to the site without the consent and supervision of the builder was not allowed. 119 Clause 8 (d) and (e) of the contract stated as follows: Site Meetings are Strongly Recommended (d) The Owner or a person authorised by the Owner to provide instructions to the Builder concerning the works is to be available to attend on site at times nominated in any construction program provided by the Builder or otherwise at mutually agreed times. The parties agree to use any such meetings to discuss and resolve issues relating to the works. (e) Neither the Owners nor any duly appointed representative will give or be entitled to give at any time directions to the Builder's workers or Trade Contractors relating to the works or any part thereof. Any instructions concerning the works which are to be in writing and are to be provided directly to the Builder. 120 Clause 10 of the contract deals with date of commencement of and time for completion of the work. Clause 11 of the contract deals with delays and extensions of time. It is unnecessary to detail these clauses in this decision. 121 Clause 14 of the contract deals with variations, and states as follows: 14. Variations-Changes to Scope of Works Post Contract Date (a) The works as initially understood at the time of the contracting may be varied by: (i) the execution of additional work; (ii) changes in the character or quality of any material of work; (iii) changes in the levels, lines, positions or dimensions of any part of the works. (iv) deletions or omissions from the works. For the sake of clarity a variation is established by: • Written instructions from the Owner or the Owner's representative; and or • The supply to the Builder of post contract detail such as drawings; and or • The discovery of an otherwise unknown or latent condition, Which alters the work done, the work to be done or requires adjustments to an existing situation or the work which was otherwise expected to be done. Accordingly, a variation may for example result from such things as a request from the Owner, a choice made by the Owner dealing with latent conditions and complying with the requirements of an Authority. (b) The Builder is not obliged to vary the Contract or carry out any extra work unless he consents, which consent is not to be unreasonably withheld. (c) (i) If the Builder agrees to undertake a variation by the Owner, the variation is to be detailed in writing and signed by the Owner (or the Owner's agent) and the Builder. Documents detailing the variation, including as appropriate, amended drawings or specifications, become contract documents. (ii) The Builder may require, prior to the execution of any variation, that the Owner produce evidence satisfactory to the Builder, of the Owner's capacity to pay for the variation. (d) The cost of all work arising from any such variation is to cost of the works payable by the Owner and is to be valued and paid as such. (e) Deletion or omission of work If the Owner reduces the work to be done by the Builder, the Builder will be entitled, as compensation for the loss of work, to a payment which will be calculated as follows: (i) 50% of the percentage fee listed in Schedule 1 Part B, (ii) applied to the cost of the work now not required to be done, If a nominated lump sum is listed in Schedule 1 Part B then the percentage fee in Sub-Clause (i) will be treated as 20% By way of example; • Owner instructs Builder in writing not to do x. • The fee at Schedule 1 Part B is 25%. • X costs or would cost the Owner $10,000 plus GST • Compensation to the Builder is 50%x 25% x $10,000-$1,250 plus GST. (f) All Directions Concerning Work to be given to the Builder in writing Neither the Owner nor any duly appointed representative will give or are entitled to give at any time directions to the Builder's workers or subcontractors concerning the works or any part thereof. All instructions are to be given to the Builder and are to be in writing. 122 Clause 17 of the contract deals with payment for works performed by the builder. 123 Clause 17 states as follows: 17. Payment NOTE: Ensure that the GST is applied to amounts exclusive of GST so that the proper cost of the works, goods or services is determined exclusive of GST. Add the GST effect to that amount. Clause 17 is subject to the proper effect of Clause 18. (a) The Owner must pay to Builder the Cost of the Works as set out in Schedule 1 Part A and; (i) the fee set out in Schedule 1 Part B; (ii) the percentage referred to in Schedule 1 Part B based on: (1) the Cost of the Works as set out in Schedule 1 Part A; (2) the cost of any goods and/or materials purchased by the Owner if those goods and/or materials are to be installed by the Builder; and (3) the cost of any subcontractor engaged by the Owner if the Builder is requested and/or agrees to supervise that subcontractor. For the purpose of (2) and (3) above, the Owner is to supply the Builder with copies of all invoices for that subcontractor and/or supplier. (iii) GST. Refer to Clause 18. (b) The above amounts must be paid to the Builder in accordance with the timetable set out in Schedule 1 Part B. (c) A claim for payment by the Builder is to identify:- (i) the period during which work was carried out and the work for which payment is required; (ii) the Cost of Works for works performed in this period; (iii) a brief description of any variations relative to the initial scope of works under the contract; (iv) the fees payable under Schedule 1 Part B; and (v) GST. The Cost of Works determined by the above is to be a figure initially exclusive of any GST component. The amount determined by the above processes will be subject to GST pursuant to Clause 18 (This is to avoid compounding the 33 GST or to ensure the GST is only charged once on the aspects or components used to establish the cost of the work and the Builder's fee). (d) All claims for payment of Costs of Works should be evidenced as far as possible by supporting copies of documents such as clear copies of invoices, receipts, and account documents, (e) Payment is to be made within the period stated in Schedule 1 Part B point (c). If no period is stated then the payment must be made within 10 business days of the date the claim was submitted to the Owner. (f) Should the Builder not received from the Owner payment of any part of a payment by the due date the Builder will be entitled to interest.on the overdue amount at the rate specified at Schedule 12 point (e). The Builder may also suspend further work pursuant to Clause 19 if the owner fails to pay for work under this contract. 124 Clause 24 of the contract involves Dispute Resolution. Under Cl. 24 (b) if any dispute or difference arises concerning the contract or the work, the party saying there is a dispute must give the other party written notice of the dispute. If such a notice is given, then under Cl. 18 (c) [sic 24 (c)] the parties must confer at least once within 10 business days to resolve the dispute or agree to methods of resolving the dispute. Under Cl. 18 (c) [sic, 24 (e)], in the absence of such a meeting a party is not entitled to terminate the contract under Cl. 26; Cl. 27; "or otherwise", unless a party has refused to attend such a meeting (and had been given a reasonable opportunity to do so). 125 However, in the circumstances if this matter, it is clear that neither the homeowner, nor the builder, issued a notice of dispute under Cl. 24 of the contract before proceeding to purportedly terminate the contract. 126 Clause 26 of the contract deals with termination by the Owner. It states as follows: 26. Termination by the Owner (a) The Builder is in.default of this contract if the Builder: (i) commits an act of insolvency; or (ii) fails to proceed with the works with due diligence or in a competent manner with regard to the circumstances of the contract works; or (iii) without reasonable cause he wrongfully suspends the carrying out of the works before Practical Completion; or (iv) refuses or persistently neglects- (b) to comply with the requirements of Clause 12 of these conditions; or (c) to remove or remedy defective work or improper materials, so that by refusal or persistent neglect the works are materially affected; or (iv) states that he is unable or unwilling to compete the works or abandons the Contract: AND if, In the case of any default that is capable of remedy the default continues for twenty-five (25) days after the notice in writing has been given to the Builder specifying the default and stating the Owners intention to terminating this Contract, THEN the Owner may, without prejudice to any other rights or remedies, by notice served as allowed by Clause 29, terminate this Contract. (b) The Owner may terminate this Contract in the circumstances provided by the general law however this does not prevent the Owner and Builder from agreeing to additional circumstances in which the contract may be terminated. (c) in the event that the Owner terminates this Contract in accordance with Sub-Clause 26 (a) of this clause the Owner may engage another Builder to carry out the works. 127 Clause 27 of the Contract deals with termination by the Builder. It states as follows: 27. Termination by the Builder (a) The Owner is in default of this Contract if the Owner: (i) refuses the Builder access to the site at any time after commencement of the works; or (ii) fails to provide evidence of title satisfactory to the Builder as required by Clause 2, within ten (10) days of the execution of this Contract; or (iii) fails to produce evidence of capacity to pay for the works as required by Clause 2, within ten (10) days of the execution of this Contract or subsequent written request by the Builder; or (iv) fails to pay the Builder any progress payment claim within 10 business days of a written request or within the period stated in Schedule 1 Part B point (c) whichever is the latter; or (v) commits an act of insolvency, AND, if in the case of any such default that is capable of remedy, the default continues for ten (10) days after notice in writing specifying the same and 35 stating the Builder's intention of terminating the Contract has been given to the Owner, THEN the Builder may, without prejudice to any other rights or remedies, by notice served pursuant to Clause 29 terminate this Contract." 1. In light of the significance which clause 24 of the contract assumed in these proceedings, it is appropriate to set out sub-clauses 24 (b) to (e) in full: 24. Dispute Resolution … Notify the other party of matters in dispute (b) If any dispute or difference (a dispute) concerning this Agreement or work arises between the Owner and the Builder then the party saying there is a dispute must give the other written notice of the dispute. Parties must meet and seek to resolve dispute (c) Within ten (10) business days after the giving of such a notice the parties must confer at least once to attempt to resolve the dispute or to agree on methods of resolving the dispute by other means such as mediation independent review and comment, expert determination or arbitration. The mediator, expert or arbitrator is to be nominated as per Schedule 2(h). At any such conference each party must be represented by someone having authority to settle the dispute. (d) Any agreement reached at the above meeting should be recorded in writing and a copy kept by both parties. An agreement may be relied upon as an addendum to this contract and used as a response to any subsequent action or inaction by a party to this agreement. (e) In the absence of such a meeting a party is not entitled to terminate the contract whether pursuant to Clauses 26 or 27 or otherwise. However, if a party refuses to attend the meeting the other party can rely on it's willingness to attend as satisfying the holding of the meeting and thereby proceed pursuant to Clause 26 or 27 as appropriate. Notification of any meeting under this clause must allow the other party a reasonable chance to attend. 1. The parties fell into dispute in December 2017 and the builder ceased to perform work on the site after 23 December 2017. The parties disagreed as to the circumstances in which the builder ceased work. The homeowners asserted that the contract was terminated by agreement at a meeting between the homeowners and Mr Silva, the director of the builder, on 23 December 2017. On that date Mr Patselis sent the builder an email in which he said: "As discussed today, we have both agreed to cease the contract. Can you please forward the final invoice." 1. The builder denied that it had agreed to terminate the contract. On 24 December 2017 Mr Silva responded to the email: "No Bill, We have not BOTH agreed to cease the contract. You have broken the contract. I will be sending most of the invoices today, and as we have not received all of the invoices from other parties they will be forthcoming as we receive them. Can you please pay the outstanding amount of invoice 69 as it is overdue." 1. After 24 December 2017 the parties exchanged correspondence relating to amounts claimed by the builder to be owing by the homeowners. Mr Patselis and Mr Silva attended a meeting on 19 January 2018. 2. The course of correspondence after that date is set out in the Substantive Decision as follows: "47 On 24 January 2018, the homeowners sent by email a Notice of Dispute to the builder. The Notice of Dispute is of 5 pages in length, and states that is sent "pursuant to condition (sic) 24 of the contract". 48 The Notice of Dispute sets out numerous assertions of breach of contract by the builder, which can be relevantly summarised as follows: (a) Not providing a certificate of home warranty insurance until 18 January 2018, and performing work and accepting payment prior to providing a certificate of home warranty insurance (in purported breach of cl. 16 (a) of the contract and s 92 of the HB Act); (b) Failing to attach drawings and specification to the contract; (c) Failing to provide budget reports on the estimated cost of completion of the works in breach of cl. 1 (e) and (f) of the contract until the builder provided "defective" budget reports on 9 November 2017 and 13 November 2017; (d) Failed to conduct weekly meetings in breach of cl. 2A (a) of the contract; (e) Failed to provide detailed invoices in breach of cl. 17 (c) of the contract; (f) Unlawfully retained the deposit ($30,000); (g) Failed to complete work "with due diligence or in a competent manner" with the "stage 3 works" being "7 weeks behind the schedule"; (h) Defective and incomplete works. 7 items are identified with "losses" quantified; (i) The builder had "overcharged" for labour time (the notice asserts that the homeowners "conservatively" estimated the "overcharging" as being in excess of 200 hours beyond the actual hours incurred; (j) The builder had "overcharged" in respect of the New Form Work Slab. (k) The builder was "not entitled" to invoice charges for toilet hire; (I) The builder was not entitled to invoice for the hot water system, because it would not be new or substantially new when practical completion occurred; the work was delayed in breach of cl. 7 (a) of the contract; and the builder had represented it could be returned to the retail shop from which it was purchased. 49 On 28 January 2018, the builder wrote to the homeowners responding to the Notice of Dispute. 50 The letter of the builder dated 28 January 2018 strongly denied that the builder was in breach of contract. The letter stated that on 23 December 2017, the homeowners had told the builder that they wanted to "cease" the contract with the builder and take over as owner/builders. The letter stated that the builder had replied that the homeowners could not "just terminate the contract" and that the builder had tradespersons "booked in" to continue works, including bricklayers. 51 The letter of the builder dated 28 January 2018 stated that it was the homeowner, not the builder who had "broken the contract" and that the builder had not been paid for outstanding invoices. 52 On 9 February 2018 the homeowner's paid the builder $18,065.45. The covering email dated 9 February 2018 does not refer to any particular invoice, but states that the payment is "in respect of your issued invoices for your building work at the above building site and without further admission by us in that regard". 53 The homeowners engaged Solicitors in about early February 2018. 54 Under covering letter dated 12 February 2018 the homeowner's Solicitors sent the builder a "Notice of Default" under the contract dated 9 February 2018. The document purports to notify the builder the builder is in default under the contract and comprises of 5.5. pages. The purported defaults involved: (a) Not providing a certificate of home warranty insurance before performing work and accepting payment; (b) Failing to attach a copy of the plans and specifications to the contact; (c) Failing to provide "budget reports" on the cost of building works under Cl. 1 (e) and (f) of the contract; (d) Failing to conduct regular meetings with the homeowners; (e) Failing to provide invoices which identify the period the building works was carried out and the building work for which payment was required in breach of Cl 17 (c) of the contract. (f) Failing to refund the deposit amount ($30,000); (g) Failing to complete work in accordance with the "schedule" under the contract and in a timely manner; (h) Overcharging labour amounts on invoices (of not less than 150 hours in total); (i) Overcharging profit margin; (j) Overcharging for the slab and profit margin calculations (k) In respect of toilet hire, failing to "disclose your vested interest in the toilet hire business"; (I) Failing to provide a hot water system that would be new or substantially new by the date of completion of the works. 55 The homeowner's Notice of Default also identified a large number of monetary losses the homeowners asserted they had suffered by reason of the builder's breaches of contract. The losses identified are substantial, and when calculated with interest (which is also identified) are well in excess of $50,000. 56 The homeowner's Notice of Default states that the builder must rectify the default by "no later than 21 March 2018 by either transferring money to the homeowners; or agreeing to credit the amounts identified to contractual payments made, and additionally remedy "each of the other defaults under the building contact capable of remedy". 57 The builder then engaged Solicitors. 58 On 13 February 2018 the builder's Solicitor sent the homeowner's Solicitor correspondence responding to the Notice of Default dated 9 February 2018. 59 The letter dated 13 February 2018 states that the Notice of Default dated 9 February 2018 was, in substance, materially similar to the letter of the homeowners dated 24 January 2018 that the builder had responded to in writing. The builder's Solicitor denied that the builder was in breach of contract, relevantly stating: (a) A copy of the home warranty certificate insurance certificate was delivered "by hand" by the builder on or about 23 January 2017, but a further copy was attached; (b) All invoices of the builder complied with Cl 17 of the contract; (c) The homeowner had provide a copy of the "drawings" to the builder and Mr Silva and Mr Patselis had discussed the work as it progressed. The builder had followed instructions of the homeowners; (d) The builder has provided detailed budgets on 9 November 2017 and 13 November 2017. The builder had also "continually updated" the homeowners regarding the cost of works; (e) The builder had met with the homeowners 3-5 time each week to discuss the works and progress of the works; (f) The invoices provided by the builder were detailed and in accordance with the contract; (g) Under s 8 of the HB Act, the builder was entitled to claim a deposit of up to 10% of the contract price; (h) The works had progressed with due diligence and in a competent manner; (i) There was no entitlement to liquidated or general damages for delay under the contract (Cl 10 (e) (iv) and Sch 2 (i) containing the relevant provisions) and the builder denied it was in breach in any event; (j) The builder denied "overcharging" the homeowners and the invoices fairly reflected the cost of labour, materials, and profit margin; (k) There were no relevantly defective works and any minor omissions or defects would be attended to in the usual course of works; (I) The hot water system was purchased at an early stage of the build at a discounted price for the benefit of the owners, and if the owners did not want the hot water system they were to confirm the same. (m) The issues raised by the homeowner had no proper factual or legal basis and the homeowners remained liable to pay the builder for Invoices 69, 71, 72 and 73, being the amount of $96,879.12 ($114,944.57 minus the payment of $18,065.45). 60 On 13 February 2018, the builder's Solicitor also sent a written Notice of Suspension stating that the homeowner was in breach of contract by failing to pay $96,879.12 and works would be suspended under the contract until the amount was paid. The letter also stated that the builder regarded the homeowner's conduct as a repudiation of the contract and that the builder had (and was) ready, willing and able to perform the contract. The letter stated that the homeowner was to provide an explanation in writing as to why its conduct was not a repudiation of the contract. 61 On 20 February 2018, the homeowner's Solicitors wrote to the builder's Solicitors denying that the homeowner's had repudiated the contract. The letter also denied that the builder was entitled to suspend works, due to the builder (i) failing to provide adequately itemised invoices; and (ii) overcharging the homeowners. The letter stated that the builder was liable to the homeowners for "building contract principal and net interest loss totalling $96,879 or thereabouts". The homeowners asserted that the Notice of Suspension was not a valid notice under Cl 27 (a) (vi) of the contract. 62 On 20 February 2018, the homeowner's Solicitor sent the builder's Solicitor a further letter providing more detail as to why the homeowners denied the factual assertions contained in the builder's Solicitors letter of 13 February 2018. 63 On 22 February 2018 the homeowner's Solicitor sent the builder's Solicitor a further letter whose content is difficult to understand, as it refers to events after 22 February 2018 and appears to contain typographical errors. In any event, the substance of the letter is that the works contained defects and the builder had refused to rectify the defects. 64 On 16 March 2018, the builder's Solicitor sent the homeowner's Solicitor a Notice of Termination of the contact. The letter stated that the homeowner's had repudiated the contact on 23 December 2017 by making clear to the builder that they were not ready, willing or able to perform their obligations under the contract, and the builder now accepted the repudiation. In the alternative, the builder stated that it was entitled to terminate the contract under Cl 27 (a) (iii) and (iv) of the contract, as the homeowner had: (a) Failed to pay the builder's invoices (Invoice numbers 69, 71, and 74 as provided in the builder's letter of 31 January 2018; (b) Failed to provide proper direction to the builder in relation to "the design and otherwise" in breach of Cl. 2 (d) of the contract; and (c) Failed to provide evidence of capacity to pay the contract sum in breach of Cl 2 (a) (ii); 2 (b); and 27 (a) (iii) as requested by the builder in the letter of 13 February 2018. 65 On 5 April 2018, the homeowners Solicitor served a Notice of Termination under the contract. The homeowner's Notice of Termination denied the assertions contained in the builder's Notice of Termination; asserted that the builder' Notice of Termination constituted a repudiation of the contract which the homeowner accepted, entitling the homeowner to terminate the contract." 1. In April or early May 2018 the homeowners entered into a written fixed-price contract with a different builder to complete the residential building works. The alternative builder carried out the remaining building works thereafter. 2. The builder commenced proceedings in the Tribunal against the homeowners in June 2018. The homeowners commenced proceedings against the builder in August 2018. Both sets of proceedings were heard together on 18 and 19 March and 31 May 2019. The Substantive Decision 1. The Tribunal identified the major issue between the parties as being "which party lawfully terminated the contract" and recorded that the homeowners' position was that the parties have mutually agreed to terminate the contract, while the builder asserted that "it was 'sacked' by the homeowners without any legal justification". 2. The Tribunal also noted that there was a dispute in relation to how much the homeowners had paid the builder as a number of payments, including payments by the homeowners directly to sub-contractors, had been made in cash. 3. The Tribunal outlined the builder's claim as follows "the builder claims that the homeowners repudiated the contract and the builder accepted the repudiation, or, in the alternative, validly terminated the contract by reason of the homeowners' breach". The Tribunal identified the amount claimed by the builder as: $66,879.12 for unpaid invoices under the contract for work performed prior to the date of termination; $85,969.30 for loss of profit under the contract; and interest under the contract on unpaid invoices. 4. The Tribunal outlined the homeowners' position as that they denied that they repudiated the contract and denied that they owed any monies to the builder prior to termination of the contract and claimed that they had overpaid the builder the amount of $69,877.24, or alternatively $86,545.98, based upon what the homeowners asserted was the reasonable value of the work performed by the builder. The homeowners also claimed $47,475.87 plus builders' profit margin in respect of the cost of rectifying what the homeowners asserted was defective work. 5. The Tribunal determined that "the contract between the parties has clearly come to an end". The Tribunal found that the homeowners took possession of the site in about March 2018. 6. The Tribunal further concluded that the builder had not made a representation to the homeowners that all of the building work would be completed for an amount less than $1,500,000. 7. The Tribunal found that at the meeting on 23 December 2017 the homeowners "clearly and unequivocally told the builder that they did not intend to proceed with the contract with the builder". The Tribunal rejected evidence from the homeowners that the builder had told the homeowners that he was prepared to walk away from the contract should the homeowners be dissatisfied. 8. The Tribunal held that as at 23 December the builder was not in breach of contract entitling the homeowners to terminate the contract. The Tribunal accepted that the builder had failed to comply with the requirements of the contract that it provide monthly budget reports and that the homeowners had made requests for a detailed budget to be provided. Nevertheless, the Tribunal determined that the homeowners had not issued a notice of dispute under clause 24 of the contract until after 23 December 2017 and that the builder had rectified the breach by providing a detailed budget estimate in early November 2017. 9. The Tribunal concluded that on 23 December 2017 the homeowners repudiated the contract and that the subsequent notice of dispute and notice of termination issued by the homeowners had no proper legal basis as a foundation for terminating the contract. 10. The Tribunal accepted the builder's submission that the builder accepted the homeowners' repudiation and terminated the contract by written notice on 16 March 2018. 11. In relation to the builders claim for unpaid invoices the Tribunal found that each of the invoices disputed by the homeowners was a valid invoice issued in accordance with the contract and that, subject to a claim by the homeowners that they had overpaid the builder for the work the builder had performed, the builder had a contractual right to payment for the invoices. 12. The homeowners' submission that they had overpaid the builder was based upon the proposition that "all payments made by the homeowners to the builder were 'on account'". In support of that submission the homeowners relied upon the Tribunal's decision in H Build Pty Ltd v Nixon [2018] NSWCATCD 20. 13. In that decision, at [192] – [197], the Tribunal held: 192 The Tribunal considers that, as with all building contracts, cost-plus contracts are subject to a principle to the effect that progress payments are provisional only or "on account". Such a principle is evident in those terms in clause 17 which recognise that when payment claims are made the complete documentation evidencing the actual cost may not be available although the builder may know what is yet to be invoiced or charged. 193 The principle that progress payments are provisional is evident in Clause 17 (d); All claims for payment of Costs of Works should be evidenced as far as possible by supporting copies of documents such as clean copies of invoice, receipts and account documents. 194 The Tribunal considers that the absence of a requirement of perfection in the provision of evidence of the Cost of Works in progress claims is clear evidence of the principle. The actual Cost of Works must ultimately be established when all evidence of the Cost of Works as listed in Part A of Schedule 1 is available. … 196 The balance of interests under the cost–plus contract recognises that the builder's recovery is limited to the cost actually incurred and the overhead and profit component is capped by the agreed lump sum or percentage fee. In balance such contracts require that payment of progress claims be made promptly without a review or independent assessment. The ultimate proof of the total Costs of Works incurred must be established in accordance with the contract. 197 There is no express provision, or a term which might be implied, that permits an owner to refuse to pay because they consider that they can demand a level of perfection in the calculation of progress claims which neither the contract nor the HB Act, require. If an independent contract administrator is appointed the opportunity for greater scrutiny of the calculation of claims might be possible. 1. The Tribunal rejected the homeowners' argument concerning the alleged overpayment, holding: 225 The contractual provision under Cl. 17 of the contract (when read in conjunction with Schedule 1 of the contract) is that the builder cannot invoice the homeowner until work has been performed. When work has been performed, the builder can invoice the homeowner. The claim for payment (i.e. the invoice) is to identify the details set out in Cl. 17 (c). The invoice "should" (but not "must") be evidenced as far as possible by the provision of "supporting documents" such as invoices or receipts in regard to amounts charged by sub-contractors or materials. 226 The reference in Nixon to payments being made "on account" should not be interpreted in a manner that creates, in essence, a contractual right for the homeowner to argue that the invoice does not reflect the value of the work actually performed by the builder and sub-contractors. The reference to payments being made "on account" is to deal with a situation where, for example, a homeowner paid for work or materials that were never performed or provided. In that situation, the builder would have been in breach of Cl. 17 of the contract by rendering the claim for payment because the work claimed for had never been performed or the materials not provided. 227 In regards to Invoice 74, the homeowners may have been able to successfully argue that they were not liable to pay for the work of New Formwork (as set out in the invoices from New Formwork attached to Invoice 74) because they had paid in advance for that work (rather than other work); or that the work identified in the invoice had never been performed. However, the evidence did not establish this (including the expert evidence of the quantity Surveyors). The Tribunal is not satisfied on the evidence that the cash payments set out at page 1657 are in regard to the same work that was set out in Invoice 74. 228 Further, the homeowners assert that not only are they not contractually bound to pay Invoices 69, 71, 72 and 74 but they have "overpaid" the builder because the total value of the amounts they have paid to either the builder or sub-contractors exceeds the total value of the work as assessed by the expert quantity Surveyors Mr Sadlier and Mr Whyte. That claim or submission is fundamentally flawed. 229 The homeowners, in the context of a "costs plus" contract do not have any contractual right to have a retrospective re-valuation of the value of the entire work that has been performed. 230 The homeowners also do not have any right to argue what is in essence a quantum meruit claim in reverse. If the homeowners were asserting that they had a cause of action such as that monies had been paid to the builder under a mistake of fact or law (despite monies having been paid pursuant to their contractual obligations) under the principles in David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353; or that the homeowners had any cause of action or right to relief under the Australian Consumer Law 2010; or any other cause of action or defence, then this should have been clearly set out in the pleadings and clearly articulated at the hearing and in submissions. 231 The submissions of the homeowner regarding "overpayment" go no further than the submission that payments were made to the builder "on account" and that homeowners had "overpaid" for the total value of the works. 1. The Tribunal stated that it was satisfied that the builder had a contractual entitlement to payment of $96,879.12 against which the homeowners were entitled to a credit for the amount of the deposit which was $30,000. 2. The Tribunal found that the builder was entitled to interest on the unpaid money by the operation of clause 17(f) and schedule 2(e) of the contract at 8% from 10 business days after the relevant invoices were served upon the homeowners. The Tribunal calculated the amount of interest to which the builder was entitled as $14,713.41 3. The Tribunal held that the builder was entitled to damages for the homeowners' breach of contract, assessed by reference to the contractual terms relating to the removal of works under the contract. The Tribunal assessed the cost of the work remaining to be completed at $1,545,755 (before GST) and calculated the builder's loss of profit by reference to the provisions of clause 14 (e)(i), that is 50% of the builder's margin on the remaining contract value, as $85,016.52. 4. The Tribunal was satisfied that the homeowners "overpayment claim" was not substantiated. The Tribunal also held that, to the extent the homeowners suggested the builder had not mitigated its loss, that submission was not made out. 5. The Tribunal assessed the alleged defects identified by the homeowners and found that the homeowners had established that 11 of the items did involve defective work in breach of the terms implied into the contract by s 18B of the Home Building Act 1989 (NSW). The Tribunal assessed the cost of rectification of those 11 items at $17,792.50, to which the Tribunal determined should be added 30% margin and 10% GST. The Tribunal assessed the amount to which the homeowners were entitled on their claim at $25,443.31. The scope and nature of internal appeals 1. By virtue of s 80(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), internal appeals from decisions of the Tribunal may be made as of right on a question of law, and otherwise with leave of the Appeal Panel. 2. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 the Appeal Panel set out at [13] a non-exclusive list of questions of law: 1. Whether there has been a failure to provide proper reasons; 2. Whether the Tribunal identified the wrong issue or asked the wrong question. 3. Whether a wrong principle of law had been applied; 4. Whether there was a failure to afford procedural fairness; 5. Whether the Tribunal failed to take into account relevant (i.e., mandatory) considerations; 6. Whether the Tribunal took into account an irrelevant consideration; 7. Whether there was no evidence to support a finding of fact; and 8. Whether the decision is so unreasonable that no reasonable decision-maker would make it. 1. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Schedule 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice because: 1. The decision of the Tribunal under appeal was not fair and equitable; or 2. The decision of the Tribunal under appeal was against the weight of evidence; or 3. Significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). 1. In Collins v Urban [2014] NSWCATAP 17, the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Schedule 4 may have been suffered where: … there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance. 1. Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Schedule 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b). 2. In Collins v Urban, the Appeal Panel stated at [84(2)] that ordinarily it is appropriate to grant leave to appeal only in matters that involve: 1. issues of principle; 2. questions of public importance or matters of administration or policy which might have general application; or 3. an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; 4. a factual error that was unreasonably arrived at and clearly mistaken; or 5. the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed. Grounds of Appeal 1. The homeowners' Notice of Appeal set out 32 grounds of appeal under the headings "Builders Claim for Unpaid Invoices", "Builders Claim for Loss of Profits" and "The Homeowners' Claims for Defective Work by the Builder". 2. The homeowners also sought leave to appeal on the bases that the Substantive Decision was not fair and equitable and that it was against the weight of evidence. 3. The 32 grounds set out in the Notice of Appeal did little to elucidate the basis of the homeowners' case and, at the conclusion of the first day of hearing, the Appeal Panel granted the homeowners leave to file an amended Notice of Appeal and submissions in support and the builder leave to file an amended reply and submissions in support. 4. The homeowners filed an amended Notice of Appeal and submissions in support on 7 May 2021. 5. The builder filed a Reply to the amended Notice of Appeal and submissions in support on 17 June 2021. 6. The homeowners filed a response to the builder's reply, and submissions in response to the builder's reply submissions, to which was attached "Further amended Grounds of Appeal". 7. Following the hearing on 29 July 2021 the Appeal Panel gave the parties leave to file further written submissions concerning the termination of the contract and in particular the significance of clause 24 which, as noted above, provided that in the absence of a meeting in response to a notice of dispute, neither party was entitled to terminate the contract "whether pursuant to clauses 26 or 27 or otherwise" except in circumstances where one party had refused to attend a meeting which the other party had been willing to attend. 8. The parties filed further submissions on 12 and 13 August 2021. The builder included in its submissions "a reconciliation of the amounts claimed by the builder in relation to its Unpaid Invoices Claim". 9. The homeowners' amended Notice of Appeal and further amended grounds of appeal were no great improvement upon the homeowners' original Notice of Appeal. In particular, the asserted errors of law relied upon remained unclear. 10. It is convenient to set out in full the homeowners' further amended grounds of appeal: ERROR OF LAW 1. The Senior Member erred at law, and he miscarried by failing in the course of making factual findings, to adequately evaluate competing evidence, by failing to attend properly or at all to discrepancies and inherent improbabilities in the evidence, by failing to provide any or any proper analysis as to why one body of evidence was preferred over another, or by failing otherwise sufficiently to resolve the conflicting evidence: a. TERMINATION i. In finding that the homeowners were bound by the contract subject to legal principles such as fraud or misleading or deceptive conduct and could not otherwise resile from the contract, by way of termination of contract at common law. ii. In finding that: A. the owners had purported to terminate the contract on 23 December 2017, B. such termination was invalid and that they had thereby repudiated the contract and C. that the builder was therefore entitled to terminate it, and iii. By his failure to find that: A. it was the builder who had repudiated the contract by purporting to terminate it by way of its Notice to Terminate on 16 March 2018, when it had no grounds upon which to do so, or, alternatively, by failing to find that: B. the builder had failed to comply with the provisions clause 24 of the contract, in that, within the meaning of that clause, a. it had failed to give the owner written notice of the dispute, and that b. it had not met to seek to resolve the dispute nor attempted to resolve the dispute or to agree on methods of resolving the dispute by other means such as mediation independent review and comment, expert determination or arbitration, C. thereby entitling the owners to accept the repudiation and validly terminate it by its Notice of 5 April 2018. b. UNPAID BUILDER'S INVOICES/OVERPAYMENT BY OWNERS i. in finding that any amount under the unpaid invoices 69, 71, 72 and 74 were due and payable by the owners to the builder and in finding that the owners were liable to pay to the builder $66,879.12 with respect to unpaid invoices, and in failing to properly and adequately: A. assess and determine the amount of the invoices rendered by the builder to the owners, B. assess and determine the amount of the payments made by the owners with respect to such invoices directly to the builder or to subcontractors of the builder, C. reconcile the said payments made by the owners with the said invoices rendered by the builders, D. assess what was thereby due and owing by the builder to the owners, and E. in failing to find, that, as a result: a. that there were no unpaid invoices which the owners needed to pay; b. that the owners had overpaid the builder for work carried out by the builder pursuant to the contract; and c. that the builder was therefore required to account to the owners for such overpayment; and d. that the builder was liable to pay the owners the amount so assessed as due and owing c. LOSS OF PROFITS i. The Senior Member erred at law in determining that the builder had a contractual entitlement, or any entitlement, to claim damages of $85,016.52 from the owners with respect to its loss of profits, upon its acceptance of the repudiation of the contract by the owners. d. CLAIM FOR INTEREST i The Senior Member erred at law in deciding that, as a result of the above findings, the owners were required to pay interest in the amount of $14,713.41. e. INCOMPLETE WORK/RECTIFICATION i. In finding that the owners were not entitled to claim damages from the builder for all of the costs they have incurred or will incur in completing work left incomplete by the builder, and in not assessing and quantifying their entitlement to damages ii. In failing to find that the owners were entitled to damages from the builder for the costs the owners have incurred or will incur in rectifying defective work existing at the time the builder last performed work on site, and in not assessing and quantifying their entitlement to damages. 1. The error of law outlined in the first paragraph of that document is effectively an allegation that the Tribunal failed to give adequate reasons for the conclusions subsequently described. 2. Nevertheless, the homeowners' submissions in support of that proposition do not rise above the proposition that the Tribunal should have accepted the homeowners' evidence in preference to the evidence of the builder (through Mr Silva, its director). 3. We should say at once that we find no substance in the submission that the Tribunal's reasons were inadequate. The Substantive Decision extends over 78 pages and 327 paragraphs. The Tribunal carefully outlined the evidence and made reasoned findings in respect of contested issues of fact. 4. In particular, in relation to the two most substantial factual contests – what was said by Mr Silva about the likely cost of the works prior to the execution of the contract, and what was said by Mr Patselis on behalf of the homeowners and by Mr Silva on behalf of the builder at the meeting on 23 December 2017 – the Tribunal made the following findings: 141 In written submissions, both parties asserted that the evidence of the other parties lay witnesses (i.e. Mr Silva on the one hand, and the homeowner's on the other hand) lacked credibility and that the Tribunal should make broadly based credit findings detrimental to the other party. 142 Frankly, there were aspects of the evidence of both the builder and the homeowners that appeared illogical, self-serving and inconsistent. However, such inconsistencies were not of such a magnitude that the Tribunal is prepared to reject the credibility of each of the witnesses entirely. 143 Rather, the Tribunal takes a more nuanced approach of dealing with the salient events that led to the termination of the contract. … 145 The evidence of both parties contained inconsistencies regarding what was actually discussed prior to the signing of the contract. I accept that, as a matter of logic, there were discussions about the likely total cost of the work, as it would be highly unusual (and illogical) for a homeowner having discussions with a prospective builder not to indicate what their "budget" was and for there to be discussions about the total likely cost of the project, particularly a project of this magnitude and potential cost. 146 The homeowners informing the builder that their "budget" was $1,400,000 to $1,500,000 was not a representation or statement that they would never pay over this amount, but simply a representation in regard to what total amount of money they believed the works would cost and to which they had finance. 147 However, I am not satisfied that on the evidence that Mr Silva, before the contract was signed, made a representation that the total cost of the work under the contract would not exceed $1,500,000. It is possible that he stated words to the effect that it was possible that the total cost of the project may be able to be completed for less than $1,500,000. It is more likely that he indicated a range cost up to his "guestimate" of $1,800,000 to $1.900.000 However, I am not satisfied on the evidence that the builder ever made a representation to the homeowners that all of the building work would be completed for an amount less than $1,500,000 148 In circumstances where the building works were complex and the builder had not provided a written quotation for the work, it is not logical or coherent that the builder would have given a definitive total likely cost for the completion of the work. In this regard, the evidence of Mr Silva was more logically coherent than the evidence of the homeowners on this issue. 149 Had the builder made a clear representation that the cost of the total cost of the project would not exceed $1,500,000, it is logical to expect that the homeowners would have confirmed this in writing either prior to signing the contract or soon thereafter, by way of email or text message. This did not occur. … 153 I am satisfied that at the meeting on 23 December 2017 the homeowners clearly and unequivocally told the builder that they did not intend to proceed with the contract with the builder. 154 I reject the evidence of the homeowners that the builder ever told the homeowners prior to 23 December 2017 (or at all) that the builder was prepared to walk away from the contract should the homeowners be dissatisfied, because the builder "didn't need the stress of the contract. 155 The homeowner's version of events is not only rejected by Mr Silva, it is illogical and inconsistent with the events which occurred and the contemporaneous documentary evidence. The builder performed work under the contract; the slab had recently been poured; and the builder had engaged sub-contractors to perform further works when he was called to the meeting on 23 December 2017. The builder has also provided detailed estimates to the homeowner on 9 and 13 November 2017. The contract was clearly valuable to the builder and there was still a significant amount of work to perform in regard to which the builder would make a profit. I do not accept that the builder agreed to mutually terminate the contract on 23 December 2017. 156 Rather, I accept the evidence of the builder that the homeowners told him words to the effect that they were "taking over" the build. Whether the homeowners actually said that they were intending to become owner/builders rather than engaging another builder is immaterial. The builder was told on 23 December 2017 that its services were no longer required. In this context, the builder was requested to provide a "final invoice" with the clear intention of the homeowners that the builder no longer proceed with the building works and with their intention to pay the builder the amount that they thought appropriate that remained outstanding for the builder's work up to 23 December 2017. 1. In our view, the Tribunal's reasons for reaching the conclusions that it did regarding the alleged representation by Mr Silva concerning the cost of the works and what occurred at the meeting on 23 December 2017 are more than sufficient. The Tribunal referred to the evidence and explained why it preferred one version of events. The logic of the Tribunal's reasoning cannot be faulted. 2. As Bell P held in New South Wales Land and Housing Corporation v Orr [2019] NSWCA 231 at [77]: (i) "Decision-makers commonly express their reasons sequentially; but that does not mean that they decide each factual issue in isolation from the others. Ordinarily they review the whole of the evidence, and consider all issues of fact, before they write anything. Expression of conclusions in a certain sequence does not indicate a failure to consider the evidence as a whole": … (ii) the court should not read passages from the reasons for decision in isolation from others to which they may be related: … (iii) the reasons must be read fairly and as a whole: … (iv) the reasons recorded ought not to be inspected with a fine tooth-comb attuned to identifying error: … (v) there should be a degree of tolerance for looseness in the language of the tribunal, unhappy phrasing of the tribunal's thoughts or verbal slips: … [Citations omitted]. 1. Although, read literally, the homeowners further amended grounds of appeal raise only inadequacy of reasons as an asserted error of law, it is apparent from the homeowners' written and oral submissions that the homeowners also assert that the Tribunal made an error of law in: 1. Finding that the builder was entitled to terminate the contract by reason of the homeowners' repudiation in circumstances where the builder had not complied with clause 24 of the contract. 2. Finding that the homeowners were not entitled to reimbursement of "overpayments" measured by reference to the value of the work carried out by the builder. 3. Failing to undertake a reconciliation of payments made by the homeowners with invoices issued by the builder. 4. Determining that the builder was entitled to damages for loss of profits arising from the homeowners' repudiation of the contract assessed by reference to the contractual provisions concerning the removal of work from the contract. 5. Failing to find that the homeowners were entitled to damages from the builder calculated by reference to the costs incurred by the homeowners in completing the work; and 6. The assessment of the extent of defective work carried out by the builder. 1. We consider it appropriate to approach the consideration of the homeowners' appeal by reference to those six grounds of appeal. Ground 1 Termination of the Contract 1. As we have recorded above, the Tribunal found, at [125], that "neither the homeowner, nor the builder, issued a notice of dispute under Cl. 24 of the contract before proceeding to purportedly terminate the contract". 2. At [134] the Tribunal stated: 134 Even if a party to a contract did not issue a notice to terminate under the contract, or the notice to terminate was non-compliant with the contractual provision regarding the issue of a notice, a party may still terminate a contract at common law (by accepting the repudiatory conduct of the other party) unless the terms of the contract give an exclusive right to terminate pursuant to the contractual terms dealing with termination: Dimitriopoulos v Capital Constructions Pty Ltd; Capital Constructions Pty Ltd v Dimitropolous [2018] NSWCATAP 100 at [60] and the authorities discussed therein. 1. In paragraph [60] of the decision in Dimitropoulos v Capital Constructions Pty Ltd; Capital Constructions Pty Ltd v Dimitropoulos [2018] NSWCATAP 100 the Appeal Panel held: 60 It should also be remembered that cl 33 is a right to end the contract separate to rights at common law to terminate the contract. In this regard, the rights under the general law to terminate should not be regarded as excluded unless the contract manifests an explicit intention to do so: see eg Amann Aviation Pty Ltd v Commonwealth (1991) 100 ALR 267 at 300, Concutt v Worrell [2000] HCA 64; (2000) 75 ALJR 312 at [23], Progressive Mailing House Pty Ltd v Tabali Pty Ltd 157 CLR 17 at 30. 1. The contract under consideration in that case did not contain a provision such as that contained in clause 24 (e) which does, in our view, clearly exclude rights of termination under the general law unless the meeting required by clause 24 (c) had taken place. See M & M Building Pty Ltd v Keith [2017] NSWCATAP 88 at [51]. The Tribunal held, at [174]: 174 The Tribunal is satisfied that on 23 December 2017 the homeowners repudiated the contract, and that the subsequent Notice of Dispute and Notice of Termination issued by the homeowners had no proper legal basis as a foundation for terminating the contract. The Tribunal accepts the submission of the builder that the builder accepted the homeowner's repudiation and terminated the contract by written notice on 16 March 2018. 1. In the course of oral submissions, the Appeal Panel raised with the parties the question whether, if neither party had complied with clause 24, the contract had been terminated by either party and, if not, whether the contract remained on foot or had been abandoned. 2. In DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 434 Stephen, Mason and Jacobs JJ held: Neither party had effectively rescinded. But there can be no doubt that by 5th December 1974, when these proceedings were commenced, neither party, whatever may have been their reasons, regarded the contract as being still on foot. Neither party intended that the contract should be further performed. In these circumstances the parties must be regarded as having so conducted themselves as to abandon or abrogate the contract. The position is similar to that with which Isaacs J. dealt in Summers v. The Commonwealth. The plaintiff did not succeed in his action for damages for breach of contract, but on the other hand the defendant had not rescinded. Time passed during which neither party took any steps to perform the contract. It was held that the parties had so conducted themselves as mutually to abandon or abrogate the contract. 1. The circumstances in which the parties will be held to have abandoned a contract were discussed by McColl JA in Ryder v Frohlich [2004] NSWCA 472, at [135] – [136]: 135 Where it is plain from the conduct of parties to a contract that neither intends that the contract should be further performed the parties will be regarded as having so conducted themselves as to abandon or abrogate the contract: DTR Nominees Pty Limited v Mona Homes Pty Limited [1978] HCA 12; (1978) 138 CLR 423 at 434 (per Stephen, Mason and Jacobs JJ with whom Aickin J agreed); Summers v The Commonwealth [1918] HCA 33; (1918) 25 CLR 144 at 151 – 152 per Isaacs J. The inference of abandonment will be drawn where "an 'inordinate' length of time has been allowed to elapse, during which neither party has attempted to perform, or called upon the other to perform, a contract made between them … What is really inferred in such a case is that the contract has been discharged by agreement, each party being entitled to assume from a long-continued ignoring of the contract on both sides that … 'the matter is off altogether' ": Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420 at 432 per Dixon CJ and Fullagar J. 136 Whether there is abandonment or abrogation of a contract is a matter of fact to be inferred from an objective assessment of the conduct of the parties: see CIC Insurance Limited v Bankstown Football Club Limited (1995) 8 ANZ Ins Cas ¶61 – 232 per Kirby P; Wallera Pty Limited v CGM Investments Pty Limited [2003] FCAFC 279 at [2] per Ryan J, at [30] – [32] per Kiefel J; at [57] per Gyles J; Marminta Pty Limited v French [2003] QCA 541 at [22] per Jerrard JA, Williams JA and Philippides J agreeing. 137 The underlying premise of the abandonment cases is that a period of time elapses during which neither party to the contract manifests any intention to perform the contract, leading to the inference that the contract has been abandoned. It is clear that the question whether an "inordinate length of time has been allowed to elapse" is relative. In DTR Nominees Pty Limited v Mona Homes Pty Limited the High Court was prepared to infer abandonment after a period of less than five months had elapsed during which neither party took any steps to perform the contract. In Fitzgerald v Masters it was held that a contract for the sale of land had not been abandoned even though proceedings for its specific performance were not commenced until 26 years after its execution. 1. As noted above, the parties filed written submissions addressing this issue after the second day of the hearing. 2. The homeowners submitted that their notice of termination of 4 April 2018 had validly terminated the contract on the basis of the builder's repudiation through the issue of the builder's notice of termination on 16 March 2018. 3. In the alternative, the homeowners submitted that the contract had been abandoned when both parties commenced proceedings in the Tribunal. 4. The builder accepted that the finding at [125] of the Substantive Decision that there was no notice of dispute issued by either party was incorrect. 5. The builder submitted that the homeowners had issued a notice of dispute on 28 January 2018, that in the covering letter the homeowners had proposed a meeting on site on 6 February and that the builder had responded on 28 January referring to the request for a meeting and stated "I will be attending the meeting on site at 10 am on Tuesday 6th February 2018 as requested." 6. The builder acknowledged that there was no evidence that a meeting had occurred on 6 February but submitted that a meeting had occurred on 16 February 2018. Although that meeting was not referred to in the Substantive Decision, it is referred to in evidence filed by both parties. 7. The builder submitted that the meeting of 16 February 2018 met the requirements of clause 24 and that, accordingly, the builder was entitled to terminate the contract by reason of the homeowners' repudiation. 8. The builder submitted: "In summary, there was a notice, there was a meeting, and no parties (up until the hearing of the appeal) seriously contended that there was not a notice and not a meeting." 1. The builder further submitted: "No party contends that there was mutual abandonment. It does not form part of any ground of appeal, any pleading or any submission filed by the parties." 1. In oral submissions Mr Mackey, solicitor, who appeared for the homeowners disputed that the meeting of 16 February could have been sufficient for the purposes of clause 24, submitting that the evidence of both sides was that the meeting was short. 2. The evidence of Mr Patselis and Mr Pannuccio, a builder who attended the meeting to assist and advise the homeowners, was that Mr Silva had declined to discuss any disputed items and had told Mr Patselis to get a lawyer. Mr Pannuccio also suggested that Mr Silva had referred to the homeowners' failure to pay invoices. 3. Mr Silva acknowledged that the meeting was short and asserted that Mr Pannuccio's version of the meeting was not accurate but did not otherwise provide any evidence of what was said. 4. Mr Mackey submitted that the meeting had never started because Mr Silva had declined to discuss any issue. In Mr Mackey's submission, Mr Silva's conduct could be characterised as a refusal to attend the meeting. 5. Mr Mack, of counsel, who appeared for the builder, submitted that the requirements for a valid meeting for the purposes of clause 24 were not substantial. In his written submissions, Mr Mack noted that: "Given that the dispute had already been 'thrashed out' to a large degree in a previous site meeting and in correspondence, it is hardly surprising that nothing meaningful came of the16 February 2018 [meeting]. The Contract does not require a meaningful outcome from a meeting." 1. Mr Mack further submitted that: "The Panel would be slow to read any requirements into cl 24 that do not appear in the Contract because: a. the Contract itself does not require perfection. There is no requirement for an agenda, no requirement for a resolution and no requirements for minutes. b. the very nature of the clause is to provide an outlet for the parties to informally discuss their dispute and settle without the need for litigation. … Such a clause could not require parties to compromise their legal rights …" 1. Mr Mack submitted that, whether or not the terms of clause 24 had been complied with, the builder had not abandoned the contract, maintaining that the builder was willing and able to perform the contract if the owners allowed access to the site and paid its invoices. Ground 1 – Consideration 1. Given the Tribunal's conclusion, which we consider to have been correct, that the homeowners expressed an intention to exclude the builder from the site on 23 December 2017 and failed to pay invoices due under the contract, we find no error in the Tribunal's conclusion that the homeowners were not entitled to terminate the contract either on 4 April 2018 or at any other time. 2. We accept the builder's submission that the meeting on 16 February 2018 was a sufficient meeting for the purposes of clause 24. 3. The builder (by Mr Silva) attended the meeting. 4. Accepting for present purposes the homeowners' account of the meeting, it is apparent that the homeowners did not seek to engage in discussions concerning the payment of outstanding invoices notwithstanding that, according to Mr Pannuccio, Mr Silva raised that issue. 5. Clause 24 requires that the parties meet "at least once to attempt to resolve the dispute of agree on a method of resolving the dispute by other means." In circumstances where it becomes clear at the commencement of a meeting that neither party is prepared to compromise, there can be no requirement that the parties continue the meeting beyond that point. 6. We note that the builder's notice of default had been issued on 13 February 2018, that is, before the meeting. 7. We do not need to determine whether the builder was entitled to rely, for the purposes of clause 27, on a notice of default issued before the meeting required by clause 24. 8. The contract does not exclude termination under the general law once a meeting complying with clause 24 has been held. As the Tribunal determined, the homeowner had repudiated the contract on 23 December 2017 by expressing an intention no longer to be bound by the contract. Once the obstacle to termination imposed by clause 24 had been removed, the builder was entitled to accept the homeowners' repudiation and terminate under the general law without compliance with the requirements of clause 27. 9. For those reasons we consider that the Tribunal's finding that the builder validly terminated the contract on the basis of the homeowners' repudiation was correct. However, we consider that the Tribunal's orders can be supported on another basis, even if the builder had not validly terminated the contract on 16 March 2018. 10. The builder's entitlement to payment of its invoices (and its entitlement to interest on the amount of unpaid invoices) did not depend upon the builder having terminated the contract for breach by the homeowners. 11. Subject to the homeowners "overpayment claim" the builder was entitled to payment in accordance with the contract for work performed and materials supplied regardless of whether the contract had been terminated. 12. The Tribunal calculated the builder's loss of profits in accordance with the provisions of the contract regarding reductions in the scope of work. 13. The application of those provisions is also not contingent upon the builder having terminated the contract for breach. Rather, those provisions were applicable in any circumstances in which the homeowners instructed the builder not to carry out works within the original scope of works. 14. Whether the contract was terminated by the builder for breach by the homeowners or the work the subject of the contract was reduced in accordance with its terms, the builder was entitled to payment of half its margin on the work removed from the contract. 15. We do not consider that the builder's entitlements would vary even if the contract had ultimately been abandoned. However, we note that we would not conclude that the contract was abandoned even if we concluded that the builder had not validly terminated for breach. 16. The threshold for finding that a contract has been abandoned is a high one. We cannot conclude on the material before us that "an 'inordinate' length of time has been allowed to elapse, during which neither party has attempted to perform, or called upon the other to perform, [the] contract made between them" or that there is any basis to infer "that the contract has been discharged by agreement, each party being entitled to assume from a long-continued ignoring of the contract on both sides that … 'the matter is off altogether'" (see Ryder v Frohlich at [135]). Ground 2 – Rejection of the homeowners' "overpayments claim" Ground 3 – Reconciliation of payments by the homeowners with invoices issued 1. It is convenient to deal with the second and third grounds together, as they raise similar issues. 2. We have set out above, at [28], the Tribunal's conclusions regarding the homeowners' claim to have overpaid the builder. 3. The homeowners' submissions concerning the overpayments claim and the reconciliation of payments tend to conflate and/or confuse: 1. The amount the builder was entitled to be paid under the contract, being, in summary, the cost of the work carried out plus a margin; 2. The value of the work carried out by the builder as assessed by the quantity surveyors; and 3. The reconciliation of the amounts paid by the homeowners, to the builder and directly to sub-contractors, and the amount of the invoices issued by the builder and by sub-contractors. 1. For the reasons given by the Tribunal it is not open to the homeowners to seek to "revalue" the work the subject of invoices issued by the builder. 2. If the homeowners established that the invoices issued by the builder did not reflect items for which the builder was entitled to be paid as set out in Schedule 1 Part A of the contract, including: 1. Materials supplied by the builder; 2. Amounts charged to the builder by sub-contractors; 3. Wages for the builder's employees at the rates set out in Schedule 2; and 4. Time spent by the builder's director or site supervisor, and the builder's margin on those items, the owners would not be liable to the builder or would be entitled to reimbursement by the builder (or a set-off against unpaid invoices) for any amounts included in the builder's invoices which did not reflect those items. 1. However, it was not open to the homeowners to seek to establish that invoices were excessive by reference to the evidence of the quantity surveyors. 2. The Tribunal addressed the homeowners' submission that insufficient detail had been provided with the builder's invoices at [163] as follows: 163 The homeowners complained the invoices of the builder were not sufficiently detailed. The Tribunal does not accept that there is any substance to this complaint. The details required to be provided by the builder are set out in Cl. 17 (c) of the contract. The Tribunal is satisfied that the invoices issued by the builder contained sufficient detail to comply with Cl. 17 (C) of the contract and any supporting documentation required in regard to materials and engagement of sub-contractors was provided prior to the end of the contract. The homeowners paid invoices without complaint (and additional cash amounts) during the course of the building works, and it was only after the homeowners received the budget estimate of the builder dated 9 and 13 November 2017 and after the homeowners told the builder they were 'taking over the building work on 23 December 2017 that the homeowners raised in any substantial way issues with detail of the builder's invoices. 1. The homeowners submitted that the Tribunal had failed to deal with particular items of evidence which they submitted disclosed that the homeowners had raised issues with the hours charged both for supervision (ie Mr Silva or a site supervisor) and for labour. 2. We are not persuaded that the evidence identified in the homeowners' submissions contradicts the Tribunal's conclusion that it was only after the homeowners received the budget estimate dated 9 and 13 November 2017 and after the homeowners told the builder that they were taking over the building work on 23 December 2017 "that the homeowners raised in any substantial way issues with the detail of the builder's invoices" [our emphasis]. 1. We find neither error of law, nor a conclusion against the weight of evidence, in the Tribunal's findings regarding the builder's invoices generally. 2. The homeowners also submitted that the four unpaid invoices, the subject of the builder's claim were not issued in accordance with the contract. The Tribunal dealt with the unpaid invoices, at [200] to [218], and concluded in respect of each of the invoices that they had been issued in accordance with the contract and that the builder was entitled under the contract to payment. 3. The homeowners' submissions on the appeal do not raise any question of law in relation to those conclusions. The homeowners merely submit that the Tribunal's conclusion was incorrect on the evidence. We are not persuaded that the conclusion that the invoices had been issued in accordance with the contract and were payable was against the weight of evidence or not fair and equitable. 4. In respect of the homeowners' submission that the Tribunal had failed to reconcile the amounts paid by the homeowners with the amount of the builder's invoices, the document provided by the builder after the second day of the hearing clearly disclosed how those amounts were reconciled and, in our view, clearly established that there is no substance in the homeowners' submission. 5. The amount the homeowners asserted that they had paid was $525,688.24. The builder's reconciliation explained that that amount was constituted by $267,784 paid to the builder directly, $233,904 in cash payments made to sub-contractors and $24,000 paid to the demolition sub-contractor. 6. The homeowners asserted that they had only received invoices from sub-contractors in the amount of $49,925. However, they did not, in their submissions, explain why the other cash payments were made. 7. It is apparent from the builder's reconciliation that the homeowners made cash payments to sub-contractors without receiving invoices. There was no evidence from the homeowners to suggest that any invoice issued by the builder included any claim for work for which the homeowners had paid a sub-contractor, other than the amounts paid to the demolition contractor. The Tribunal addressed the homeowners' claim that the builder had duplicated charges in respect of the demolition contractor and concluded that there was no duplication. 8. We reject the homeowners' submission that the Tribunal failed to undertake a reconciliation of payments. It is apparent that the Tribunal did so, and no error is shown in the manner in which it did so. Ground 4 – Loss of profits 1. In their written submissions in support of their amended Notice of Appeal, the homeowners put their case in relation to the award of loss of profits on four bases: 1. That the homeowners had not repudiated the contract; 2. That the contractual provisions relating to the reduction in the scope of work under the contract were irrelevant to the assessment of damages; 3. That the builder had not led any evidence of actual loss of profit; and 4. That the builder had failed to mitigate its loss. 1. We have addressed the first of those bases above in dealing with Ground 1. 2. The Tribunal's reasons for awarding the builder damages assessed by reference to the contractual provisions relating to the reduction in the scope of work under the contract were: 238 Pursuant to the principles set out in Mann v Paterson Constructions, if there is a contractual right to damages for loss of profit then damages are to be assessed pursuant to that contractual provision. 239 The relevant contractual provision for calculation of the loss of profit claim is Clause 14 (e)(i). 1. In Mann v Paterson Constructions Pty Ltd [2019] HCA 32; 267 CLR 560, Kiefel CJ and Bell and Keane JJ said: 11 The second point made by Dixon J [in McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 476–477; [1933] HCA 25] was that when the contract is discharged at the election of the innocent party, the contract is "determined so far as it is executory only and the party in default is liable for damages for its breach". His Honour's reference to "damages for its breach" was a reference to what are commonly referred to as "damages for loss of bargain". Such damages, which are to be distinguished from damages for pior breaches of contract, are a "substitute for performance" of the executory obligations under the contract that the defaulting party is no longer required to perform in specie. "[T]he liability in damages is substituted for the executory obligations to which acceptance of repudiation puts an end." 12 The right to damages for loss of bargain that arises in such a case is, in this respect, no less a creature of the contract than the right to recover sums that become due before its termination. In Lep Air Services Ltd v Rolloswin Investments Ltd, in a passage subsequently approved by Brennan J in Progressive Mailing House Pty Ltd v Tabali Pty Ltd, Lord Diplock said: Generally speaking, the rescission of the contract puts an end to the primary obligations of the party not in default to perform any of his contractual promises which he has not already performed by the time of rescission … The primary obligations of the party in default to perform any of the promises made by him and remaining unperformed likewise come to an end as does his right to continue to perform them. But for his primary obligations there is substituted by operation of law a secondary obligation to pay to the other party a sum of money to compensate him for the loss he has sustained as a result of the failure to perform the primary obligations. This secondary obligation is just as much an obligation arising from the contract as are the primary obligations that it replaces. 13 Lord Diplock's analysis serves to focus attention upon the point that the terms of the contract govern the amount of compensation payable by way of damages for loss of bargain. Even though the innocent party is no longer entitled to performance of the executory terms of the contract, the terms of the terminated contract inform the quantum of damages recoverable: "The damages are assessed by reference to the old obligations but the old obligations no longer exist as obligations." …. [Footnotes omitted]. 1. The homeowners submitted that clause 14 was not directed to the amount of damages payable in the event of breach, but came into operation when the homeowners elected to remove work from the contract and gave written notice. The homeowners submitted that they had not elected to remove work from the contract and had not given written notice. 2. As we understand the Substantive Decision, the reason for the reference to Mann v Paterson was to explain why the builder's loss of profits was not to be assessed by reference to the whole of the margin that the builder would have received if the contract had continued. 3. It is a general principle in the assessment of damages that: "contractual rights should be valued having regard to the known facts and, if the facts allow, it may be assumed that the contract would have been performed in the manner which most reduces the damages payable" (Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54 per Gaudron J at 150). 1. Thus, the appropriate measure of damages was the payment the homeowners would have made if they had elected to remove the balance of the work from the contract. (We note that the homeowners did not suggest or seek to prove that they were not able to pay for further work or that clause 2A(e) of the contract was applicable). 2. To that extent the homeowners received the benefit of the 50% reduction in margin provided by clause 14. 3. It is not open to the homeowners to suggest that the builder should have been required to establish the extent to which the margin it would have received if the contract was not terminated would have been reflected in its accounts as profit. 4. The homeowners submitted: "The equating of the whole of the 10% … Builder's Margin to lost profits is misconceived. Builder's margin and profit are two different concepts which the Senior Member has confused and treated as the same concept." 1. The homeowners also referred to the Tribunal's decision in H Build v Nixon at [397], [406] and [408]: [397] … Under the contract the builder is entitled to receive the Cost of Works as defined in Schedule 1 along with a fee based on a percentage of the value of the work performed, the percentage being 10%. The fee is to cover the cost of administration of the contract by the builder, overhead and profit. The fixing of a percentage is presumably calculated to provide a reasonable return to the builder for the activities other than the direct Cost of Works. … [406] The builder also claims for profit that the completion of the project would have generated for the builder. The calculation of lost profits is a task often undertaken by forensic accountants and is not without some difficulty. … [408] The profit for the builder would be a proportion of the fee of 10% of the Cost of Works and could be based on the most recent estimated cost to complete. … 1. Although the term "loss of profits" is a convenient term for the relevant head of damages, it should be borne in mind that the correct measure of damages is the amount necessary to put the innocent party in the position they would have been if the contract had been performed: Robinson v Harman (1848) 1 Exch 850; 154 ER 363. 2. That measure of compensation would include the contribution to fixed overheads which the builder's margin on the work not completed would have provided. It would be an error to assess "loss of profits" for the purpose of calculating damages by reference to accounting definitions of "profit". 3. In our view it was open to the Tribunal to conclude that, if the contract had been complied with, the homeowners would have utilised the provisions of clause 14 to limit the amount they were obliged to pay the builder. Had they done so, the builder would have received 50% of the margin on the balance of the contract works and incurred no further cost in fulfilling or administering the contract. 4. We find no error in the Tribunal's approach to the assessment of damages. 5. The foregoing is also an answer to the homeowners' submissions regarding the alleged failure to mitigate. The homeowners submitted that, in fulfilment of its obligation to mitigate its loss, the builder was required to seek alternative work to make up its loss of profit on the contract. That might have been correct, if damages were assessed by reference to the full amount of the margin the builder would have received if the contract were not terminated, and it were shown that the builder had limited capacity which had been freed up by the termination of the contract. 6. However, once damages are assessed by reference to the provisions of clause 14, the homeowners' breach of contract cannot be seen as having freed up the builder to perform other work which it could not have performed if the contract had not been breached. 7. The builder's written submissions provided a further answer to the homeowners' case relying upon an asserted failure to mitigate. 8. That answer was that the onus of proving a failure to mitigate lay upon the homeowners (TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 at 158) and they had failed to establish that the builder failed to take any reasonable step open to it to reduce its loss. 9. The homeowners submitted that the capacity to prove the actions taken by the builder to mitigate its loss lay entirely in the hands of the builder. However, that is not to the point. The homeowners were entitled to (and apparently did) issue a summons seeking production of the builder's financial records. Although it appears the homeowners ultimately elected not to pursue that summons, it cannot be said that the homeowners had no capacity to obtain evidence concerning the builder's activity after the termination of the contract. 10. The fourth ground of appeal must be rejected. Ground 5 – Failure to award the homeowners the cost of completing the work Ground 6 – Assessment of the extent of defective work 1. The first basis upon which the homeowners submitted that the Tribunal erred in failing to award them damages for the cost of completing the work under the contract was that the homeowners had not repudiated the contract. 2. We have addressed the homeowners' challenge to that finding above and it is not necessary to address it further. 3. The second basis upon which the homeowners challenged the failure to award damages for the cost of completion was that, in respect of a number of items, the homeowners had paid the builder for the work but it had not been completed by the builder. 4. The homeowners' submissions in relation to this proposition do not identify any error of law. Rather, the homeowners challenge the Tribunal's factual conclusions. 5. The homeowners' submissions in support of their amended Notice of Appeal did not clearly distinguish between what was said to be work paid for and not completed and work said to have been defective. The homeowners did not identify any error of law arising in relation to the assessment of the extent of defective work. 6. The builder's written submissions in response addressed each of the items raised by the homeowners as incomplete or defective work which the homeowners submitted the Tribunal had incorrectly failed to identify as such. 7. We are satisfied that the issues raised by the homeowners relate to the weight accorded to the competing evidence. We are not persuaded that the Tribunal's conclusions regarding the items the subject of the homeowners' submissions were against the weight of evidence or not fair and equitable. Moreover, we are not persuaded that the homeowners have suffered a substantial miscarriage of justice by reason of any conclusion of the Tribunal. Conclusion 1. It follows from our conclusions set out above that leave to appeal must be refused and the appeal dismissed. 2. As the amount in issue in the appeal exceeds $30,000, rules 38 and 38A of the Civil and Administrative Tribunal Rules 2014 (NSW) are applicable and we do not need to find special circumstances before making an order for costs. 3. As the builder has been wholly successful, in the usual course it would be entitled to an order for costs. However, as the builder's appeal against the Costs Decision remains outstanding, we will make orders for the filing of further submissions on costs, including any further submissions concerning the costs appeal. As we have noted above, at the hearing of the appeal the parties indicated that they were content for the costs appeal to be determined on the basis of written submissions and without a further hearing. We would propose that the question of the costs of the appeal against the Substantive Decision be dealt with in the same manner. If either party seeks a hearing in respect of either the costs appeal or the costs of the appeal, they should include in the relevant submissions an outline of why they submit that such a hearing is necessary. Orders 1. Our orders are: 1. Leave to appeal refused. 2. Appeal dismissed. 3. Within 14 days of the date of publication of this Decision either party may file submissions or further submissions concerning appeal 2021/00056103 or seeking an order in relation to the costs of appeal 2020/00371175. 4. If a party files submissions pursuant to Order 3 the other party may within a further 14 days file submissions in response. 5. Any party seeking an oral hearing either in relation to appeal 2021/0056103 or in relation to the costs of appeal 2020/00371175 shall include in submissions filed in accordance with orders 3 and/or 4 an outline of why they submit that such a hearing is necessary. ********** 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 February 2022